Beach resort rules

In general, I'm not particularly interested in sheer beach resorts, where the most essential activity seems to be lying in the sun and barbecuing oneself - or more nastily put, purposefully making your skin look older and increasing the risk for skin cancer. Nevertheless I'm not entirely against beach life, so in case a specific resort offers something else too, a beach and/or pool are certainly a welcome addition.

However, even with my limited experience on beach resorts, I've still come under the impression that many of them have a rather peculiar practice: since the amount of deckchairs is limited, people wake up early in the morning, pick up towels from the hotel and use them to reserve deckchairs from the beach or the pool, after which they go back to sleep, to have breakfast or to do both. This doesn't make much sense now, does it?

In terms of the enjoyability of a resort in general, this isn't very fruitful: the deckchairs may stand there empty, even though there would be people interested in taking them, and on the other hand the abusers of the system have to wake up earlier than they otherwise would. Wouldn't it be better if the beach would have a guideline like this or something similar:

"Deckchairs cannot be reserved with mere towels or other personal belongings for a time period longer than the duration of a swim."

Based on this, deckchairs having just towels and no-one around could be easily claimed and the actual utilization rate for the decks would be improved.

Despite its simplicity and low meaningfulness, this small problem can actually be seen as analogous with bigger issues in bigger communities, namely societies: some may claim the right for certain commodities or assets, even though it would be more beneficial to others.

In case some one with experience on beach resort deckchair reserving policies ends up reading this blog, I would appreciate any comments on the subject.

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Stability vs. moral hazard - a compromise to deposit insurance

When the Icelandic banks started persuading clients from the UK and the Netherlands with high interest savings accounts, those interested in the offer could be roughly divided into three groups. Some merely saw the interest, and did not think there would be any risk involved. Others predicted that the Icelandic economy would end up in a serious crisis, and thus stayed away. And then there were those, who had a hunch of the emerging problems, but an even stronger confidence that in case of a crisis, deposit insurance would cover the losses - as it did in 2008.

The deposit insurance is not only an important security factor for individuals, it's also an essential element in maintaining the stability of the economic system. Its downside on the other hand is the moral hazard residing in the minds of the aforementioned third group : potential profits are taken to oneself, whereas the risk is socialized to be paid by others. In this sense deposit insurance has a lot in common with the current Greek bailout. Both basically boil down to a conflict between maintaining stability and avoiding moral hazards. The first one (stability) is of course more important, but ignoring the latter entirely may ultimately result in losing the first one too. And it seems to me that moral hazards aren't payed enough attention to.

In case of deposit insurance, perhaps an efficient balance between stability and moral hazards would be to make the deposit insurance reversely progressive. As a simple example, the savings could be fully covered till 20 000 €, 98% covered for the amount of money exceeding 20 000 €, and 95% covered for the amount exceeding 50 000 € up to 100 000 €. Thus, the most basic savings would be fully protected, but with deposits resembling investments, part of the risk would be taken by the depositor. The risk would remain so small that it would not cause a large scale panic on the market.

Another interesting factor is that apparently the promised interests are also a part of the deposit insurance. As a matter of fact, even now and still for about month now, a few thousand clients of the Finnish Sofia Bank are waiting the last 15% of their money - and with interest. By restricting the amount of interest paid in case a bank ends up in receivership and/or by perhaps implementing a reversely progressive deposit insurance, the moral hazard could be avoided. With a model like this there could have been a bit fewer Icesave savings in the Icelandic Landsbanki, which in turn could have made the economic bubble in Iceland at least a tiny bit smaller.

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Greece and bankers should take their responsibility

Greece has agreed to accept the bailout terms. In other words, it accepts taking the helping hand. It is a little bit peculiar to think that the whole process could have been depending on Greece's approval. It is obvious that with or without a bailout, the crisis will have a serious effect on the lives of ordinary Greeks. Yet based on common sense, one would think that the bailout would make the bumpy road of the upcoming years at least a bit more pleasant. So why shouldn't Greece accept the terms? However, the other countries in the eurozone would have at least two reasons not to...

1. Greece has enough assets to pay the debt off?

The first, yet perhaps less significant reason not to support Greece is partially moral. Why should we support a country, who cheated its way in joining the EMU? Or should we support their ridiculously low average 53 year retirement ages? Or the pensions that the civil servants' daughters are allowed to collect - civil servants who themselves practically can never be fired? Other curiosities like the bonus for arriving to work on time, 14 month annual salaries or the computer usage bonus basically remind me of the rather silly looking evzones of the presidential guard (on the right): is this the kind of circus other eurozone countries are financing?

Of course the most obscure practices in the Greek economy will most certainly be dealt through the terms of the bailout. And the crisis could have been mostly avoided, with a tighter control on Greece joining the euro or preventing it from getting into this much debt. But now this is the situation we have to deal with, so the question remains: should Greece have a greater responsibility for the problems that it has caused by itself? Although control will probably be tightened due to these experiences, the bailout gives an unconstructive message: if we end up in serious trouble, the others will help - so why not continue our irresponsible economy?

If a country didn't have any possibility to deal with its debt, then forcing more responsibility isn't really an option. However, is this really the case with Greece? According to Financial Times, Greece has properties of over 300 billion euro. If this is true, from what I've understood, this is relatively unmatched in most western countries. Iceland has endured significant losses when Icelanders have had to sell their possessions at low prices due to their crisis. Why shouldn't Greece also need to sell some of its possessions - especially if it really has the assets to do so? Couldn't this be a part of the bailout terms?

2. The bailout is supporting the banks

Another factor is that the bailout is basically supporting the creditors, who took a risk when loaning money to Greece. Biggest of the creditors are German and French banks. From what I've understood they might be the biggest creditors even in comparison to the size of the German and French economies, which would mean that Germany and France benefit the most from the bailout. Can this be right? There are also other creditors, some of which are even outside the eurozone. Do we also want to support them?

The purpose here is of course maintaining economic stability and credibility. But couldn't it be done without giving out the message that banks are free to take risks for profits, but the bigger losses will be socialized anyway? Couldn't the debts be organized in such a fashion that the eurozone countries would get shares of the banks that they are basically supporting? Thus, the current owners would have to face the realized risks, but the economic system would be left almost unharmed.

=> Co-responsibility?

Grasping the entirety of the situation, and evaluating the possible scenarios caused by various courses of action, is of course very difficult. The motivation for the bailout is not saving Greece per se, but maintaining economic stability. However, for the aforementioned reasons the current bailout seems morally wrong and transmitting all the wrong messages. Why should the eurozone pay for the mistakes of Greece and the banks that gave Greece loans? Shouldn't at least part of the liability be pushed to that direction? If Greece would sell its possessions for the worth of even 50 billion, and euro countries would receive shares from the banks they are basically financing, the whole crisis would be a far better lesson in economic morals.

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Expo 2010 - roadmap to a Chinese future

The next world's fair, Expo 2010, will be held in Shanghai, China. It will begin in less than two weeks, starting on May 1st and continuing till the end of October. The area of the Expo will be the largest in the history of world's fairs and it is also expected to reach the largest visitor count in history - a goal I believe it will easily achieve. I also believe it will do more, by exceeding its goal of getting 70 million visitors. However, it can be seen as more than just a hugely popular event.

So far, due to its huge size, China has been a prime example of a country to which western corporations have moved their manufacturing in order to save money in labour costs. This, sometimes referred to as the "China phenomenon", has been a significant factor in China's economic rise and has pushed China towards a more consumerist lifestyle - especially amidst the younger generations. In addition to being a growing market and a place for manufacturing, an emerging trend in the upcoming years will be the increasing amount of also white-collar work moving to China. One factor supporting this is the increasing amount of Chinese with a sufficient knowledge of English or other foreign languages. This in turn will further strengthen the Chinese influence over the world.

All of this has made the Chinese economy growing at a very rapid annual rate of about 10% during the past few decades. It is almost inevitable that it will, at some point, surpass the U.S. as the biggest economy on the planet. It may be unlikely that it would happen as soon as during this decade, but even so, it probably will happen during the 2020's. As a consequence not only is the Expo 2010 a huge event, but it can be seen as a sign of what is to come. Just like the expo held in Shanghai will most likely be the biggest of its kind so far, so will China very likely soon be the most powerful country in the world - at least in the economic sense. Therefore, when looked from the late 21st century, this year's Expo might be regarded as a harbinger of a new era.

What kind of consequences this power shift to the east will have remains to be seen. It is to be hoped for that issues related to human rights, corruption and freedom of speech will be improved by the time China reaches the status of the biggest economy in the world. At that point the importance of China as a market will be bigger than ever, and this will most certainly affect the way China views the rest of the world. As staying in China will become even more important to most multinational corporations, China has little need to specifically persuade any company or to try to please western organizations. Thus, the drive for change has to come from China itself.

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Life in a complete world

We are living in a constantly changing world. Technological progress is continuously changing our every day lives, world population is still strongly growing, fossil fuels are being depleted, the power balance between countries is changing, countries split, international collaborative organizations are established and expanded, demographics are changing due to immigration among other things, man is shaping nature and environment, languages die and globalization unifies cultures.

What if we would live in a world, where all this was no longer true? Technological progress would have practically reached its peak. Population growth would have stopped and would be controlled for example through jurisdiction if needed. The social structure of the population and the possibly still existing countries would have been stabilized. Fossil fuels would have long ago been completely or almost completely replaced by alternative energy sources, and the human relation with nature would also otherwise be in balance. Real economic growth would have stopped and the division of wealth would be stabilized. Everyone on earth would either have the same mother tongue or at least the amount of languages and their power relationship would not change.

None of these are close, but the idea is not impossible in the very long run. It may also be that the pace of change is currently at its highest, and in the upcoming decades life will change slower. At least so far the most rapid technological revolution in the entire history might have been the way mobile phones and internet have conquered the world during the last two decades. In practice, we are currently just adapting to the effects of this revolution – both on individual and societal levels.

Then what would it be like to live in a truly complete world? The world would probably be, if not entirely equal, a lot more equal than it is today. There would be no war-torn countries nor significant violent conflicts between cultures. In addition to an abolished global inequality, there would also be no inequality between generations: no real economic growth and no new technologies or technological applications would emerge to make life easier. There would also be very little if any reason to fear population growth, global warming, great wars or technological progress potentially going too far.

Apart from the positive factors like equality and safety, also downsides can be seen. From the perspective of the contemporary man a future without linguistic or cultural diversity might seem like a depressing scenario. On the other hand would one be able to miss something that one has never experienced? Some probably would miss, but most perhaps would not – at least not on a substantial or conscious level.

How about what life in general would feel like, if the world would have been approximately the same for centuries, and there would be no reason to assume that the following centuries would in any way differ from this? Would it result in a lack of objective and healthy ambition? In science there would be no new discoveries to be found. No industry or profession would be facing any kinds of changes. Of course this would result in a general feeling of safety, but perhaps also a feeling of purposelessness. No new ideas would be brought up in any area of life – not in technology, literature, art, pastime nor in social relations.

Also in the entertainment culture practically everything would have been experienced. In movies and games or their future equivalents all the stories and phenomena would have been seen. Since similar entertainment - both technologically and in terms of content - would have been produced for centuries and all the old production would be easily available, entertainment consumption would most likely be far more fragmented than it is today. Both in entertainment and in fashion there could of course be short-term variation, but in practice everything would be repetition of something old. Everything would have been already experienced. But although we would have reached our final goal as a race, there still might be space for individual dreams and goals.

A lot of people may consider a utopia like this rather impossible. Maybe it is, maybe not, which is of course largely dependent on how tightly the term “complete” is defined in this context. In any case, in spite of its perks, the state of goallessness, that is an inherent part of a complete world, might not be entirely worth striving for – although there would perhaps be even less sense in trying to purposefully avoid it. Either way, the current speed of change and progress does not always feel right to the human nature. The older one gets, the more exhausting the surrounding invisible turmoil may feel.

For the time being the train of progress is continuing its journey at high speed. Each of us may decide for oneself, how perseveringly one is willing to chase it.

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