Even if you’re not involved in the publishing industry you cannot help but notice seismic changes the industry is experiencing: Business models are being reinvented, new entrants are redefining the value chain, and technology is changing how information is created, distributed and consumed. Mighty scions are quaking in their boots as they face aggressive barbarians at their gates.

Yet in the midst of this pitches battle is an island of serenity, and oasis of calmness, a Shangri-La of stability: the public library.

Unfazed by the realities, local governments continue to spend on public libraries stuck in the 18th century model of how knowledge is transferred: books are so scarce that they need to be housed in a central location and shared amongst readers.

My small town of Monroe, Connecticut, recently rebuilt the public library at a cost of $6 million dollars, and spends annually about $750 thousand dollars on the operation of our public library; only $73 thousand of which goes towards the purchase of books. For the same money Monroe could have bought its 19000 residents a Kindle DX and 10 books a year.

Amazon, B&N and others have made books cheap, accessible and ubiquitous. It will take Government a century before it catches up with this fact. In the interim, they spend gobs of money and get no discernable outcome.

I guess nostalgia has a price

My first exposure to computers (aptly named at the time) was to a Dec PDP-10 36-bit machine with punch card. Processors were so expensive than my university owned 2 of them, everyone had to share. Storage was expensive, so you kept your programs on punch cards, your data on mag-tapes.

A few years later, timesharing was allowed, and all your programs and data was stored on the mainframe accessed remotely by dumb terminals some terminals were converted printed, others displayed 80x25 characters on a black and white screen (I remember lusting after a Heathkit H-19 with an external 300 baud modem), other had built in graphics capabilities such as the RamTek terminals.

Still all connected over slow RS232 serial links, limiting what can be done. That was 1979.

Then in 1981 IBM introduced the IBM PC 5150 and things changed for a couple of decades. The personal computer ushered in the era of disconnected computing, data & programs resided in a little beige box in your den.

By 1999, the internet had connected most of these machines into a global network usurping the then dominant client-server metaphor.

So here we are a decade later and a new model is about to take hold, a model quite similar to my original PDP-10 experience: Cloud Computing.

Data (now called “content”) and programs (now called “Services) reside in the Internet “Cloud” accessible via a broadband connection from anywhere in the world using a multitude of devices. Granted these devices are smarter, more colorful, and easier to use than their predecessor, but the fact remains: the Cloud, is the biggest mainframe ever made, it’s just happens to be made of a number of smaller components called servers.

The cloud is the ultimate virtualization of computing: it, in effect, commoditizes not only processor, programming languages, storage, but content as well.

In the next installment I will examine the impact this will have on the existing technology landscape and how it’s changing corporate value propositions.

A lot has transpired since my February demographics blog. A few readers have asked: Where does Greece fall on the chart? Well... Right there.

I also said that the move away from the welfare state is not a question of "if", but of "when".

I think we have our answer. Nuff said.

In a great article entitled “The Case for Economic Doom and Gloom”, John B. Judis argues that the reason for the present malaise in the world economic order is due to, as he puts it, the “global overcapacity in tradable goods production”. In making his argument Mr. Judis focuses on the production side of the equation: as more countries develop, they put on the market additional production capacity that must compete with existing capacity. Driving down prices, lowering profits and hence investments. Capital in search of good returns then flows to real estate or government bonds and feed an unsustainable Keynesian cycle.

Though I’m in overall agreement with this model and its underlying dynamics, I think he is a ignoring the second part of the equation: Demographics. As Western populations age, their consumption patterns slows, further aggravating the overcapacity problem.

There are only three ways outs (in decreasing rosiness) that I can see:

1. Technological breakthrough: As the microprocessor drove the Reagan recovery and the Internet Clinton’s, a new technological breakthrough will drive productivity and consumption and restore growth.
2. Rise of Asian Consumerism: Aging Western consumers are replaced by younger Asian and African ones driving up the demand curve and restoring growth
3. World War III: a major world war manages to destroy significant production capacity all around the world. (This is not an unlikely scenario: as the Great Depression gave rise to Fascism and Communism, a prolonged economic downturn coupled with Islamic Jihadist can yield the same result)

None of these scenarios bode well for environmentalist: it is clear that, as a race, we need to expand or wither. We Simply cannot stand still.

For the sake of everyone, I'm rooting for #1.

Titillating promises of what can be are often more interesting than the real experience.

Like all Apple products, the lovable iPad turns heads. Just because. The guy next to me on the plane felt compelled to open a conversation when he spotted me using it. In fact, you take it into public place to elicit just such a response.

Conspicuous consumption of the 60s and 70s turned to conspicuous morality of the ‘90 and ’00 and now we have graduated to conspicuous coolness, brought on not by a 350hp all wheel drive red coupe, but by a small 8x10 piece of electronics.

The problem is that the iPad’s hipness is not backed by its utility: it simply does not know what it wants to be: Too big for a phone, too small for a computer, too heavy for a book, too fragile for casual handling.

The screen is brilliant except outdoors where thumbprints overpower the content. It’s too heavy to hold with one hand without your thumb wandering into the active matrix area and causing presses you did not intend. I keep swishing for 3 finger holes in the back (like a bowling ball), so I can hold it with one hand and operate it with the other.

It will not charge from most USB ports, and the battery life is so-so. Wifi reception is mediocre, unable to connect where other devices can.

Love seeing the NYT, WSJ and Bloomberg on that brilliant screen. Kindle app, iBook look great, but the device is simply too heavy to sustained reading. I found myself too preoccupied with how to hold the device that with reading.

Google Map is just the bomb! Intuitive, speedy, accurate, just brilliant!

Where the iPad really shines is web browsing. I miss flash, but the web experience is good and intuitive.

But the iPad’s biggest problem is that it simply cannot be used standing up or lying down. It cannot be used on a desk and it cannot be used on a recliner. It’s just too heavy and fragile for that.

So here’s my recommendation: if you’re the kind of person that sits up straight 80% of the time, buy an iPad, otherwise a combo laptop/smartphone is still the best way to go.

Unless you want to look cool. They hurry up and buy one before the charm fades.

As for me, I will continue to use this darned thing for the next couple of weeks and a few business trips. Maybe I’ll finally learn to sit up straight.

Despite recent success, many seem determined to see the half empty glass in the Iraq.

Jeff Miron writes:

In addition, merely holding elections is not the ultimate goal; many countries have held elections that were meaningless in practice. We have yet to see whether Iraq’s “democracy” will become a de facto religous dictatorship.

I understand that elections are not the ultimate goal. However, they are a mean to an end are they not? Would anyone looking in on the United States late 18th Century have predicted anything but the collapse of this aberration/experiment?

Was the goal, in the end, not worth all the struggles?

I understand that we want to disincentivize American military adventurism. I’m all for that.

I understand that the cost in treasure and blood is high. But that cost is sunk at this point.

It’s time to stop beating the doom and gloom drums for Iraq. Give them half a chance will ya?

They deserve it as much as we did in 1776.

BTW - you should buy Jeff's new book Libertarianism, from A to Z

I love simple explanations. Not because they are accurate, because they are not. Not because they are comprehensive, they are not. I love them because they explain things in way that is easy to grasp, and therefore easy to action. As long we keep an eye out for black swans, and are ready to revise our models, simple explanations trump complex ones in sheer utility.

What’s been top of mind lately is the apparent acceleration of the global financial boom and bust cycles. These cycles seem to be not only more frequent but of higher amplitude as well.

Take the current bust cycle: you can argue whether the Fed’s easy money policy led to unsustainable inflation in housing prices, facilitated by government policies implemented by Freddie and Fannie which purchased questionable notes turned them into mortgage-backed securities, and sold them to investment banks which purchased credit default swaps from AIG as a hedge....

And I haven’t mentioned the money supply issue yet.

But there is a simpler explanation: Maslow is at fault. You see, in the US consumer spending accounts for 70% of economic activities so it follows that consumer behavior becomes a significant driver in the economic equation. If we divide consumer spending into tranches following Maslow's hierarchy of needs an interesting pattern emerges.

Over the last 4 decades, consumer spending has steadily climbed the sides of this pyramid. For example, according to the USDA, in 1929, food consumed 29% of personal income, that measure went to 17% in 1960 and is now less than 9%. Similarly, expenditure on cars dropped from 8% of income in 1984 to 5% today, gasoline expenditures dropped by 10% while women’s apparel is up 25% since 1984. In fact many experts now look at discretionary spending as an early predictor of stock market activity (see this and this).

But what does this trend towards higher Maslow state mean? Well to put it simply: higher volatility and deeper boom and bust cycle. A simple assumption about the ease with which consumers can cut 20% of their spending yields a 50% more decrease in economic activity.

As our society trends richer expect deeper more frequent boom and bust cycles. It’s a fact of life, might as well get used to it.

When I wrote my Venus & Mars piece last year, I tried very hard to avoid the male-female analogy. I just did not have the intestinal fortitude to deal with the fallout.

Well, in “The Enduring Mommy-Daddy Political Divide” David Paul Kuhn, with more courage and eloquence, applies this same principle to domestic policy and the R vs. D world view. Great read.

If you do not know who John Maynard Keynes or Friedrich von Hayek are, simply think of this video as 2 white rappers trying to impress white chicks.