February 6, 2008

Investment idea

I never have any money-making ideas, but here's a vague concept that somebody might be able to profitably apply.

One reason cell phones are so popular around the world is because, unlike old-fashioned land line technology, they don't require the kind of disinterested organizational ability that Northwest Europeans and Northeast Asians have but that almost nobody else displays. Land-lines tend toward being a natural monopoly -- it's silly to string multiple phone lines into your house to choose among competitors -- so phone companies used to be either government agencies or regulated monopolies. And that meant that most of the world had bad phone service. It wasn't just the Third World -- Italy was notorious for the years you had to wait to get hooked up. Italians are terrific at small scale businesses that react instantly to the latest fashions, but their big bureaucracies are disastrous.

In contrast, cell phones aren't natural monopolies, so they thrive in less civic-minded cultures. The most extreme example was Somalia during the recent decade and a half when it didn't have any central government at all, but it had lots of prospering cell phone providers. (There are costs to anarchy, though -- one Somalian cell phone company I read about had 800 employees, 500 to do the work, 300 to carry guns to protect them.)

The point is that most of the world is a little closer to Somalia than to Sweden when it comes to the civic virtues, so products that don't require large scale cooperation and disinterested diligence will thrive more than those that do.

My published articles are archived at iSteve.com -- Steve Sailer

16 comments:

Anonymous said...

Why don't you have any money-making ideas?
Or rather, if our deepest drive is to feed ourselves, provide shelter and impress women, why is not everyone that way inclined.
You should run a competition for people to come up with money-making ideas for you.

Reader said...

Why don't your turn out your own version of Freakonomics and ride that gravy train? There's a money-making idea for you. I'm sure publishers are dying for books along those lines right about now. You could probably do it just by recycling old material (race as extended family, interracial marriage, why lesbians aren't gay, cousin marriage in Iraq, affordable family formation, etc.) and maybe updating and expanding on it a bit. Even people who wouldn't look twice at your blog would eat up the same material if it were packaged in a neat little volume on the display shelf at Borders.

Fred said...

Cell phones require infrastructure too (e.g., towers), though of course much less than land lines. A lot of the cell phone usage in Africa is due to the work of a Sudanese entrepreneur, Mo Ibrahim. He is now a billionaire, and has set up a $5 million prize to reward good government in Africa. The award goes to an African leader who is reasonably competent, non-corrupt, and leaves office voluntarily under democratic means.

Regarding Italy, the problem there is more a corrupt and inefficient public sector. Italy has plenty of successful companies, many of them large, that manufacture top-quality products, from firearms, to espresso machines, to cars, etc.

Marc said...

Italians are terrific at small scale businesses that react instantly to the latest fashions, but their big bureaucracies are disastrous.

Here's a question close to my heart, which you might wish to consider as a way of rewarding my loyal readership. Do you think Italians would do better if they broke their country up into a number of smaller nation-states? It's not as though the penninsula is under threat of invasion from France these days.

Fred said...

More generally, Steve, it may be time to reconsider the premise that only Northern Europeans and Japanese are capable of "large scale cooperation". Some of the largest and best-run multinational companies are now from Brazil, India, and elsewhere: Arcelor Mittal, Companhia Vale do Rio Doce, etc.

Ali said...

British Telecom was terrible before it was privatised.

William said...

Wasn't there a story out of South Africa where people were tearing up tracks and wires from the trains to sell for scrap?

Yes, there was.

Landlines provide lots of opportunities for theft. A few cell phone towers are easier to protect and tougher to vandalize.

TGGP said...

On Somalia, see Better Off Stateless.

KlaosOldanburg said...

fred:

brazil and india are both places where to say, do something mundane like get a drivers licence, usually involves bribes. imagine what needs to be done in order to run a phone company.


take Transparency International's word for it if you don't believe me.

anony-mouse said...

Like blogging for example?

Anonymous said...

Wiiliam is right about the biggest reason cell phones are a hit in "developing" countries. There's no copper wire to steal and no local exchanges that would need armed guards. Many utilities we take for granted simply cannot survive in the "developing" world because people steal anything that isn't nailed down and seriously guarded. it's not just copper wire and transformers, it's water and drain pipes, gas pipes, lampposts, utility poles -- anything worth a buck. OTOH, now that our own societies are devolving, life here is becoming more like life in the "developing" world, as theives steal copper and construction materials, illegals drive without insurance, et cetera.

Anonymous said...

Marc,
what would those separate nations for Italy?
Cheers!

Svigor said...

Mo Ibrahim. He is now a billionaire, and has set up a $5 million prize to reward good government in Africa. The award goes to an African leader who is reasonably competent, non-corrupt, and leaves office voluntarily under democratic means.

Ah, a bit of good news from Africa. That's pretty cool. Why didn't Bono think of that?

Do you think Italians would do better if they broke their country up into a number of smaller nation-states?

I know nothing of Italy, and my answer is, "almost certainly."

Fred said...

"brazil and india are both places where to say, do something mundane like get a drivers licence, usually involves bribes."

Could be, Klaus, but nevertheless, those companies demonstrate that Indians and Brazilians are able to manage large groups of people in companies that successfully compete against (and sometimes acquire) European competitors. Arcelor Mittal, for example, has 311,000 employees, operations in 27 countries on four continents, and annual revenues of $70 billion.

Bret Ludwig said...

Italy and Germany, as nations, are younger than the United States, and the Italian and German languages are nearly as artificial constructs as is Esperanto. Even today, one can listen to four variants of German on a shortwave radio and not easily recognize them as the same language if one knows none of them.

And it's precisely things like telephone and power distribution Third and Fourth World nations need to be able to do in order to start the path of Westernization. Europeans are Europeans (vis-a-vis Africans) more because of less than a thousand years of good miscreant-slaughtering, cleansing the low element, than the preceding 50,000 years merely of climate differentiation, which Wm. Pierce thought the cause of the huge delta in civilization-enabling qualities Europeans have and which Africans lack.

In this country, Blacks were making fair progress until the Great Society and enforced racial enturbulation. I suspect a couple hundred years of African recolonization would bring Africans up to Black American norms and a couple hundred more would result in a Black population nearly equaling Europeans.

Bret Ludwig said...

The smartest decile of Indians and Brazilians are competent on a comparable level to Americans, but the lowest half are even lower than American blacks.

No short term solution, I favor voluntary sterilization of the low IQ element