Without the state

Making hardware 'open source' can help us fight future pandemics - here's how we get there

Making hardware 'open source' can help us fight future pandemics - here's how we get there

elenabsl/Shutterstock

Richard Bowman, University of Bath and Julian Stirling, University of Bath

In factories and industrial estates across the world, exceptional efforts are being made to ensure hospitals have ventilators, and logistics firms have freezers and refrigerators. Behind the scenes, this manufacturing drive has been taking place on an epic, unprecedented scale. In some places, it’s also been horrendously inefficient.

Some of that inefficiency is only to be expected. Manufacturing responsively at such short notice was always going to be messy. But many of the hardware hold-ups we’ve witnessed – from production line bottlenecks to parts shortages – could be avoided in the future by applying an “open source” ethos to the world’s production of hardware.

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Read more: Five ways collective intelligence can help beat coronavirus in developing countries

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Open source design is a form of collective intelligence, where experts work together to create a design that anyone has the legal right to manufacture. The software industry has long shown that “open” collaboration is not only possible, but advantageous. Open source software is ubiquitous, and the servers that power the internet itself are largely run on open technology, collaboratively designed by competing companies.

Early in the pandemic, and in recognition of the global emergency that was unfolding, dozens of the world’s largest companies did actually sign up to the “Open COVID Pledge”, promising to share their intellectual property to help fight the virus. On a smaller scale, more than 100 project teams set out to create and share “open” ventilator designs that could be produced locally, helping address the pressing need for ventilators around the world.

Unfortunately, neither of these initiatives succeeded in producing ventilators at the rate required by stretched hospitals in the early weeks of the pandemic. After examining existing attempts to share the intellectual property of machines, our recent paper concludes that projects must be open from the start in order to make a success of open hardware. Everything from the first doodle on a napkin to the detailed calculations that verify safety must be available if other experts and manufacturers are going to participate in the design.

Medical ventilators have been in particular demand since the beginning of the pandemic. Dan Race/Shutterstock

The road to open hardware

Producing hardware through open collaboration may be daunting. As opposed to the entirely virtual collaboration required for software development, hardware development needs physical parts – raw materials and machinery. It needs testing facilities and engineers to perform stress tests and safety checks.

There are promising signs that these challenges can be met. The RepRap 3D printer project has brought low cost 3D printing to a wider audience, making affordable prototyping possible at a distance. Meanwhile, the CERN White Rabbit project has shown that even the complex electronics that control the Large Hadron Collider can be developed as as open source hardware. But, to be efficient we need better work flows for collaboration – systems to help organise the distribution of tasks and responsibilities on collaborative hardware projects.

The journey from prototype to production is much more difficult, and less exciting, than the technical challenge of prototyping a device. Manufacturers must comply with international standards to ensure quality and manage risk related to their products. This is especially true of medical hardware, upon which lives depend. A key challenge for open hardware will be to achieve this certification in the same way that private companies do today.

Under current regulations, no matter how impressive and safe, ventilators constructed in volunteer maker spaces cannot be certified for medical use. But for equipment which is less strictly regulated, like face shields, open hardware is currently being leveraged successfully.

Achieving similar successes with high-tech medical devices will require organisations that are built to manufacture from open designs – dynamic factories, for instance, which will be responsive to global emergencies. It takes time to establish these organisations. But we can’t afford to wait for the next emergency: we should begin creating them today, in preparation for the next pandemic.

Of course, finding sustainable business models for open hardware is a challenge: can a system be created which shares intellectual property for free while helping designers and manufacturers profit? In one sense, open hardware has an advantage here: people are used to buying products, where online consumers are accustomed to using software for free.

Nonetheless, it’s likely that setting up an open hardware manufacturing ecosystem will need public funding, or investor funding buying into non-traditional business models. This would follow the trajectory of the internet, which began life funded by public institutions and is now home to the world’s biggest private enterprises.

Closer inspection

The open source microscope. Author provided

We’ve experimented with our own open hardware project to help us understand how the future of collaborative hardware might look. Our OpenFlexure microscope is designed to be manufactured at low cost in sub-Saharan Africa, to be used for malaria diagnoses. We’ve probably spent more time designing the processes that help us share our knowledge effectively than designing the microscope itself.

In the short term, this slows our progress. In the long term, we expect that manufacturers anywhere in the world will be able to understand our design and adapt it to their local context. As these processes become further standardised, sharing designs for production will become increasingly simple. The final and most ambitious phase of our project will be working with manufacturers to produce microscopes certified for medical use – a huge step towards open source medical hardware we’d need to better fight a future pandemic.

Humanity already knew how to make ventilators decades before this pandemic hit. What was lacking was the access to this knowledge, the skills to work together on adapting a design, and the logistics to rapidly scale the manufacturing of complex machinery. It will take years to address these issues. Starting that process today will help us tackle global emergencies more dynamically and efficiently in the future.

Richard Bowman, Royal Society University Research Fellow and Proleptic Reader, Department of Physics, University of Bath and Julian Stirling, Postdoctoral Researcher, Department of Physics, University of Bath

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Crossrail and HS2 - again!

Back in 2014, I wrote a post looking at the dominance of London and the disproportionate spending on infrastructure in London and the SE compared to the rest of the country. Since then things haven’t improved.

• The bill for Crossrail is probably going to increase by around £4bn – it’s also going to open late
• Similarly the cost of HS2 seems to have been deliberately understated and may end up at more than £100bn.
• On top of that there is substantial speculation that to save money it may not run past Birmingham.
• There have also been substantial cuts in investment in the North of England and in Wales (pdf).
• In particular the so-called Northern Powerhouse is being undermined by cuts

Despite that, noises are still being made about Crossrail 2 and the go-ahead has been given for a third runway at Heathrow.

Brexit will not help.

An end to free movement

Up to now this has been a Brexit free zone, but inevitably as I disengage from Facebook, that must change.

A frequent mantra from the leave side has been the call for an 'end to free movement of people'. It's worth deconstructing that statement to expose the illiberal elements behind so much of the Leave campaign.

The argument is of course couched in terms of stopping 'them' from coming here and taking our jobs. There is no evidence of that in reality, but we'll pass that by for now. Creating the idea of the 'other' is one of the first steps of dictators and would-be dictators everywhere. That 'other ' doesn't even have to exist of course, but if you have a visible target it makes it so much easier. That's what's behind the hyperbole of the leavers as they endlessly and angrily froth at the mouth every time any of the 'little people' has the temerity to speak up.

But we'll pass over that for now, too.

What none of them are saying is that the end to free movement cuts both ways. As we stand, anyone in the EU has unlimited ability to trade, work or study anywhere else in the EU - that's over 500m people and a collective economy worth around $19m representing about 22% of the world economy. The UK economy makes great use of that facility - watch any news item about medical or scientific research and you will see them. According to a report produced by the British Academy some 40,000 non-UK EU staff work in UK universities. These people are critical to maintaining the high standard of UK Universities in international league tables. Looking the other way, research by the Royal Society (pdf) indicates that almost 70% of active UK researchers in the period 1996 – 2011 had published articles for which they were affiliated with non-UK institutions, indicating that they had worked abroad at some point during that period. Some of those researchers may have moved for relatively short periods, but UK-based researchers also move for longer periods: 21% of UK-based researchers worked abroad for a period of two years or more during the same period.

All of this is at risk. In January it was reported that over 2,300 EU academics resigned from British universities in 2016-17,  a 19 per cent increase in departures compared to before the EU referendum, and a 10 per cent rise from 2015-16. It seems likely that this applies outside academia too. The government recently published (pdf) an analysis showing all Brexit scenarios would hurt the economy while a separate report from the Bank of England, warned economic output in the U.K. could drop by as much as 8 percent if Britain drops out of the EU without a deal in place, compared to expectations had the U.K. stayed in. That compares to a 6.25 percent drop during the 2008 financial crisis.

Best estimates for British citizens in the rest of the EU are that there are between 1.8 million to 3.6 million British people living part-time or full-time in the EU27. This is imprecise because of the difficulties of reconciling data from 27 different countries with different definitions (so much for the EU juggernaut) but even the lowest is significantly higher than the suspiciously precise ONS estimate in April 2018 of 748,900, although much closer to the UN estimate that had been previously accepted of 1.22m. The difference lies in the fact that thge ONS definition only includes people living elsewhere in the EU for 1year or longer. This excludes seasonal workers, second-home owners, students and other mobile individuals who move backwards and forwards and who, having exercised their rights to freedom of movement, are as likely as any to be affected by Brexit. I'm a case in point - in 2000-2005 I earned  a substantial part of my income from contracts in Ireland, based in the UK, but travelling regularly to Ireland for meetings and site visits.

British residents in Spain appear to be a significant issue. This paper concludes that "there are some frail, vulnerable people that may fall through a support gap, whereby they are no longer the responsibility of UK welfare services, yet not fully recognised in their new country of residence..." Depending on the outcome of Brexit many of these people may find themselves forced to return to the UK, a country they may have left decades before, possibly impoverished and requiring significant social care. The implications for an already stressed adult care system in the UK are unknown.

You will hear none of this from Johnston, Rees Mogg or their ilk. What you get is magical thinking , self-delusion or meaningless empty phrases (pdf).

In real life though:

You have to believe in facts. Without facts there's no basis for cooperation. If I say this is a podium and you say this an elephant, it's going to be hard for us to cooperate.

Barack Obama

As Obama said in the same speech, the denial of facts could be the “undoing” of democracy.

“People just make stuff up,” he said. “They just double down and lie some more. Politicians have always lied, but it used to be that if you caught them lying, they’d be like, ‘Oh, man.’ Now they just keep on lying!”

 

 

An alternative to Hinkley

Hinkley decision is a disaster for UK

The decision to go ahead with Hinkley C is I think pretty disastrous. It ties us, probably for the next 40 years,  to a nasty, poisonous, highly centralised and potentially vulnerable system of energy production, it lumbers us with a hugely expensive long term contract to pay very high prices per unit for the electricity produced.

All the media coverage of the Hinkley decision is about the so-called ‘gap’ we are facing between the demand for energy and the available supply. Completely missing though is any consideration of the savings that could be made by improving energy efficiency. This is a failure of imagination but it also masks a lot of vested interests.  Improved energy efficiency and a move away from centralised generation of energy would damage the profits of the generation companies and their partners the big construction companies. The financial backers also have a lot of money at stake. China in particular has undisclosed political objectives in securing a stake in UK energy and their potential later involvement in design and construction of nuclear plant raises worrying questions of security.

Government failures on energy efficiency

The government has abandoned its commitment to require all new homes from 2016 to be carbon neutral.  That commitment  would have ensured that all new dwellings from 2016 would generate as much energy on-site – through renewable sources, such as wind or solar power – as they would use in heating, hot water, lighting and ventilation. This was to be supported by tighter energy efficiency standards that would come into force in 2016, and a scheme which would allow housebuilders to deliver equivalent carbon savings off site. This back step was done on the back of a claim (pdf file) to be reducing “net regulations on housebuilders.”

CO2 emissions make up about a third of all greenhouse gas emissions and these are projected to rise to 50% by 2050. The UK’s building stock is among the most inefficient in Europe, has the highest levels of fuel poverty of a dozen comparable EU nations, as well as one of the worst proportions of homes in a poor state of repair. Over 10m British families live in a home with a leaking roof, damp walls or rotting windows. The Coalition’s cut to the Energy Company Obligation will by 2017  have led to 400,000 fewer households getting help to reduce energy bills by improved efficiency. This is despite our treaty obligation to reduce emissions by 80% and the new obligations that will come from the Paris Treaty on Climate Change.

The cheapest energy of all is that which isn’t used.

In practice though, arguments about sustainability, CO2 emissions etc are not required. The cheapest energy of all to the consumer is that which they don’t have to use. The requirement for zero carbon homes would have had a huge impact across the board, by reducing fuel bills for those in the houses built to that standard and in the knock on reduction in demand. 

The cost benefit of abandoning the requirement is small. According to a report (pdf) produced in 2014:

• At 2014 prices, the typical additional cost of building a semi-detached house to the zero carbon standard could be less than £5,000.
• Since 2011, costs have roughly halved. There are a number of reasons for this including the falling cost of solar PV, changes in the zero carbon definition, and greater efficiency in meeting air tightness standards.
• By 2020, the cost of building a new zero carbon semi-detached home could be less than £3,500.

In response to a Government consultation in 2014 on exempting small sites from the zero carbon requirement (before they ditched it entirely) the RIBA (Royal Institute of British Architects) argued:

There is a range of evidence-based examples that demonstrate that highly fabric energy efficient homes do not cost more than conventional construction if cost strategies, program management and environmental strategies are built into project plans at the procurement stage.

What can we get for the cost of Hinkley?

Hinkley C is estimated to cost around £19bn to build. Inevitably this will be be higher and on past experience of major capital schemes in the UK it could be as high as £45bn. I'm going to assume a figure for the moment however of £30bn and a 15 year construction period. This equates to £2bn pa. Subsidies on generating costs are estimated at £32bn over 35 years. Rounding that up gives us another £1bn pa. So, ignoring financing costs the annual cost of Hinkley C over the first 15 years is going to be of the order of £3bn pa. The total over the 15 years would be £45bn. What can we get for that money?

Research conducted for the Town and Country Planning Association suggests that we need something like 220,000 new houses in England every year for the next 15 years. This is apparently lower than previous estimates but the research also shows that this is because many people now can’t afford their own home – either to rent or buy - and are living with parents or other people longer than they would like to. Other sources suggest a more realistic figure is around 250 – 300,000. For the ball-park estimates I’m going to make I will assume 250,000.

From the studies cited earlier the additional cost of building these new homes to zero carbon standards will be around £3500 per house. For the purposes of these figures I’m going to assume that this remains at this level, rather than reducing further. So, for 250,000 houses the additional expenditure over current standards would be £8.75m per annum. Over 15 years this adds up to £13.125bn.

The average electricity bill was around £600 pa in 2015 and for gas about £750. Assuming 80% savings in gas and 40% for electricity (very conservative assumptions) reduces these to an annual total of £840 per household which would be released for other spending. At 250k houses per year that is a total of approximately £200m for each tranche of houses built. After 15 years this equates to a continuing annual saving for consumers of £3.3bn and cumulatively over the 15 year period of just over £28bn.  This money would be spent elsewhere in the economy so having a further impact.

Bringing existing houses up to the same standard is more of a problem of course. As far as I can see the number of houses in England is around 21m. Retrofitting these to zero carbon standards will be difficult for many and impossible for some. Doing so may well also involve accepting significant changes in external appearance. Accepting the need to do so, may also shift the balance of what it is economic to refurbish and thus require additional new houses over and above the figure of 250k pa quoted above.

Again for the ball park figures I am aiming to produce, I’m going to assume that something like 20m houses can be brought up to zero carbon standard at an average cost of £10,000 per property. That equates to a total of £200bn. Assuming this work is carried out over a 25 year period, it would require 800,000 houses to be retrofitted every year, with an annual cost of £8bn. The cost over 15 years would be  £120bn This is a substantial sum, but needs to be put into the context of major infrastructure projects such as Crossrail - c£15bn, Crossrail 2 – estimated at £27-32bn, HS2 – estimated at c£50bn including rolling stock, and of course Hinkley itself.

There would also be significant savings in energy use, further reducing demand and energy costs, so releasing money into the economy. Assuming the same levels of reduction in energy costs as with new build, the savings to consumers would be approximately £670m for each annual tranche  of improvements, a continuing annual saving after 15 years of  almost £11bn, cumulatively over the 15 year period I’m using this adds up to about £90bn and over the full 25 years to an astonishing £235bn.

Other impacts of the programme will be significant.

I have so far ignored the multiplier effects of the increased spending power released by the savings on energy. This depends on household’s marginal propensity to consume (mpc) or its marginal propensity to save (mps).

The following general formula to calculate the multiplier uses marginal propensities, as follows:

1/1-mpc

Hence, if consumers spend 0.8 and save 0.2 of every £1 of extra income, the multiplier will be:

                1/1-0.8

                = 1/0.2

                = 5

Hence, the multiplier is 5, which means that every £1 of new income generates £5 of extra income.

Using that 80/20 split, which seems close to the current figure for lower income households, and applying it to the total annual savings in year 15 of £118bn, would mean the generation of some £600bn of extra income in that year alone. This is probably an overestimate, since this is a transfer of expenditure from energy bills. However the impact of that money dispersed through the economy is likely to be greater than when spent on energy, particularly since so much of the energy sector is foreign owned, so transferring money out of the UK.

Even assuming a figure of only 25% of that, the impact would be significant.

Summary

To summarise therefore:

• Cost of Hinkley estimated at £30bn.
• Subsidies on generating costs £32bn
• Construction period 15 years

This should be set against:

• Additional cost of new build to zero carbon standard over 15 years estimated at £13.125bn
• Cost of retrofitting existing stock to zero carbon standard over 15 years estimated at  £120bn

Estimated reduction in household energy costs over 15 years.

• New Build estimated at £28bn
• Existing stock estimated at £90bn

Multiplier effect of expenditure transferred from energy bills

• in year 15 - £13bn
• over full 15 year period - £113bn.

Conclusion.

All these figures are very crude, but show two things:

1. The approval of Hinkley was a bad decision and poor value for money.
2. The substantial gains to be made by investing in energy efficiency on a scale comparable to the major infrastructure projects like Crossrail, HS2 and Hinkley. These have been ignored by successive governments. We cannot afford to continue to do so.

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Why is London so dominant?

A recent  TV program (Ep 1; Ep 2)by the BBC’s Evan Davis asked this question. The answer seems to be that it is successful because it is successful. As it grows, the economic benefits of ‘agglomeration’ accelerate. This term describes the benefits that firms obtain by locating near each other ('agglomerating'). As firms in related fields of business cluster together, their costs of production decline significantly (firms have competing multiple suppliers, greater specialization and division of labour result). Even when competing firms in the same sector cluster, there may still be advantages because the cluster attracts more suppliers and customers than a single firm could achieve alone. Cities form and grow to exploit these economies of agglomeration. A big factor in this seems to be connectivity. Despite London’s congestion problems, it is still easier to get together with like minded people within London, than to do so with people in Manchester, Birmingham or Edinburgh – hence the huge investment going into London on Crossrail.

London mayor Boris Johnson claimed in an interview with Davis that this huge growth in London was to the benefit of the rest of the country. London was the main driver of the UK economy, but the benefits would spill over into the rest of the country. This seems not to be proven to me. It probably isn’t a coincidence that the alternate term for this approach is trickle-down theory (more promulgated by politicians than economists so I suppose Boris would suggest this) as any benefits that do spill over will almost certainly be little more than a trickle compared to the torrent flowing into London. 

Economic impact of London’s dominance

Davis also cited a survey which suggested that something like 75% of the population did not believe the growth of London damaged the UK economy as a whole. That may be true in that London’s growth is not holding the UK back, but is it the right question? Perhaps it would be better be to ask about the damage being done to ‘regional’ economies. Even this question shows a London centred perspective. London and the SE are also regions, but their political and economic clout makes the view from London the view that dictates national policy, whether we like it or not.

In this item on the BBC web site Davis refers to Zipf’s Law which seems a good approximation of the distribution of all sorts of phenomena from the most common words, to the size of cites. If it holds true for city size, which it does in many countries, the next city in the  UK after London would be about half the size. In fact London is as big as the next six urban areas put together - Greater Manchester (2.5m), the West Midlands (2.4m), West Yorkshire (1.8m), Greater Glasgow and Clyde (1.2m), Liverpool (0.9m) and South Hampshire (0.9m). Greater Manchester and the West Midlands are both only half the size they would be expected to be if the usual size distribution applied.

From the article:

As the eminent economic geographer from the London School of Economics, Henry Overman, puts it: "These kind of arguments imply that the problem with Britain's urban system is not that London is too big. Instead, if anything, it's that our cities are too small."

Our second tier cities in particular.

Having cities that are too small is potentially an economic problem because we know that big cities act as hubs which boost whole regions.

We know that cities are where a disproportionate amount of business gets done. And we know that, typically, bigger cities are more productive than smaller ones.

One World Bank report summarised it thus: "The large and growing academic literature suggests that doubling city size increases productivity by 3% to 8%."

In other words, if you could make Manchester the size of London (by doubling it and doubling it again) you would expect it to be about 6% to 16% richer.

This seems to support my point that the dominance of London is damaging growth in other parts of the country – and I suppose therefore it is damaging the overall UK growth, since Manchester growing doesn’t have to mean London shrinking. If that were the case the trickle-down effect would have even less going for it than it does.

So why is the UK apparently the exception to this apparently universal principle? Given the title of this blog it would be tempting to argue that State interference has distorted the normal workings of urban economics, and to a degree that is probably true, although I’m sure the roots of this distortion are much more complex.

HS2 - an arrow pointed at London

For this post however I want to look at the implications for policy, in particular whether it represents good value to continue to pour tax money into a small part of the country in order to make a limited number of people even richer, in the probably vain hope that a few crumbs will fall to the rest of us. As you may have guessed my answer is no!

A prime example is the case of HS2. The tables from the official HS2 web site found here show projected journey times from various cities once Phase 2 is open. Taking the existing figures at face value (although the ones I checked seemed optimistic)  the reduction in journey times between Birmingham and destinations further north appear to be of the same order as the improvements between London and Birmingham. HS2 is however an arrow pointed at London. Despite sweeping claims on the HS2 site that “return journeys (for business or leisure) between English cities will become the work of a morning or afternoon, not a day” it will do little or nothing to improve journey times between Northern cities. Such benefits as do accrue will be secondary and even then only after Phase 2 opens. Before then Phase 1 will continue to reinforce the centrality of London. The £43bn expenditure on HS2 would continue the disproportionate spending on transport in the South East and in London in particular that is evidenced by the £15bn cost of Crossrail 1 and the likely cost of £12bn for Crossrail 2. By contrast the so-called Northern Hub will involve expenditure of approximately £560m on improvements to rails services in and around Manchester and improved east-west rail links across the north. The disparity in investment is huge.

IPPR North analysis in 2011 showed transport spending is:

• £2731 per head in London     
• £792 per head in the South East       
• £311 per head in the East Midlands  
• £269 per head in the West Midlands 
• £201 per head in Yorkshire & Humber
• £134 per head in the North West
• £43 per head in the East
• £19 per head in the South West
• £5 per head in the North East

The analysis showed that almost half of major transport projects involving public funding benefit only London and the South East accounting for 84 per cent of planned spending. This is compared to 6 per cent in the North of England as a whole and only 0.04 per cent in the North East. An updating of these figures in 2013 showed no significant change - £2,595.68 in London but just £5.01 per head in the North East.

The effect of spending in the north at HS2 rates

The total population of Greater Manchester, West Yorkshire and Liverpool is around 4.2m (using the figures cited earlier). If transport expenditure in these regions was to be at the same level as in the South East, ie £792 per head the total expenditure would be £3.3bn. If the level of spending on HS2/mile were allocated to a high speed link between Liverpool and Leeds it would only equate to around £6bn.  Extending this to say Newcastle would perhaps double that figure to say £12bn. Add in contingencies of say 15% and it would still only be around £14bn. Although these are very crude figures, when compared to the £43bn for HS2 (£22bn for Phase1)  £15bn for Crossrail 1 and another £12bn for Crossrail 2 which largely benefit only the South East and London, the disparity becomes clear.

Improvements on this scale across the north would still benefit London and the South East. Economic growth in the North would reduce the pressures on London airports (I haven’t mentioned ‘Boris Island’ at an estimated cost of £24bn) with existing airports in Liverpool, Manchester, Leeds/Bradford and Newcastle all with spare capacity. A direct high speed link between Liverpool and Manchester would allow transfer between the two comparable in time with the transfer simply between terminals at Heathrow. Although not the point of this post a similar argument could probably be made about Edinburgh and Glasgow airports.

Impact of HS2 elsewhere

A study by KPMG published in 2013 described the benefits to cities linked by HS2. However an FOI request by the BBC revealed significant costs to other areas, not included in the KPMG report. The benefits claimed therefore need to be discounted by losses elsewhere, in areas like South Wales, NE Scotland and Norfolk. Even without that caveat, something like 1/3 of the projected £15bn benefits from the full HS2 network would still accrue to the Greater London area. This assumes also that the economic benefit of increased access to Greater London manifests itself locally and not in the form of a further southward migration of business and people. 

Conclusion

This is obviously not a detailed analysis of alternatives. Even so it seem clear to me that the public infrastructure expenditure directed towards London is grossly out of kilter. It is almost certainly holding back the potential of the North for economic growth and in so doing possibly limiting the potential of the UK economy as a whole.  The share of growth in UK GDP that went to London and the South East increased from 37% in the period 1997-2006 to 47% between 2007-2011. It seems unlikely that this situation will change without serious congestion related problems in London triggering even greater infrastructure expenditure or a major effort to boost growth elsewhere as I suggested above.

del.icio.us Tags: economics,transport,infrastructure,London,Northern England,HS2

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Start your own business?

A recent item on the BBC web site briefly looked at the question of whether start ups could be the answer to Spain’s economic problems. Given that the example they chose was yet another cup cake seller, you could be excused for dismissing this as hyperbolic nonsense. It isn’t though.

Out of curiosity I created a very simple spread sheet model that looked at what might be the position five years after the creation of a notional cohort of new businesses. For simplicity I assumed each of these would be a single person at the outset, but it would not be too difficult to refine things to allow for a range of business sizes from the outset. I found some data which suggested that, in the UK at least, 45% of startups were still trading after five years. That is actually better than I expected, but I took that, and constructed a year on year table of survival rates that led up to that figure. New starts also tend to grow more rapidly so I also created another table of year on year growth rates. I’m looking for some data to make this a bit more robust.

From these two simple tables I set up a spread sheet to see what the situation would be after five years. The proponents of big business, politicians and the apologists for the big state will all use the relatively high failure rates of startups as an argument for putting large amounts of state money into supporting the work of large firms. What I already knew , and which seems to be confirmed by the figures from my simple model is that it isn’t the failure rate that counts, although if that can be reduced it is a bonus. What makes the difference is that because of the higher growth of new starts it doesn’t take long before the employment in surviving businesses more than makes up for the failures. In fact even on quite pessimistic assumptions about growth, the increased employment in surviving businesses almost replaces the failures, while on moderately pessimistic ones after five years there has been no reduction. On the sort of growth historically seen, the employment generated can be quite startling.

If we add to this an assumption of fresh cohorts of new startups in each subsequent year, a not unreasonable assumption even for a small town, then the numbers begin rapidly to accumulate. This isn’t just a model though. The small town of Fairfield in Iowa, popln 9000, managed to create 2000 jobs in 15 years.

The problem is that we tend to look on a new start that doesn’t succeed as a failure, whereas it isn’t, it is an experiment and sometimes experiments give us different answers to the ones we expect. We need to look for ways to avoid the stigma of failure attached to unsuccessful business ventures. Government intervention in support of large scale projects hasn’t exactly got an unblemished reputation either and the money lost in fiascos like De Lorean, or in shoring up the banks vastly outstrips what is lost in small business failures.

If anyone is interested I can send you a copy of the spread sheet to try for yourself. I would love to do an interactive version but don’t have the skills.

Previous posts on related topics:

http://www.withoutthestate.com/panchromatica/2010/03/a-tale-of-two-ecovillages-damanhur-and-findhorn.html

http://www.withoutthestate.com/panchromatica/2004/07/africa_is_not_y.html

http://www.withoutthestate.com/panchromatica/2004/06/economic_garden.html

EDIT: This paper from 2004 published by Warwick University looks at the issue of firm growth from a number of perspectives.

Start-up size and subsequent growth: English and Spanish new businesses compared

Google, privacy and the state

According to Google they "mistakenly collected unencrypted WiFi payload data (information sent over networks) using our Street View cars."

They have never admitted however how this so-called "mistake" occurred. Nothing held on private networks can have any impact on the usability of Street view, so why did the project "collect publicly broadcast SSID information (the WiFi network name) and MAC addresses (the unique number given to a device like a WiFi router) ..." in the first place? Surely all they needed was GPS and a  huge disk to hold the video data.

We all know the state collects and holds private information about virtually everyone and moreover has the capacity to correlate that data across the board. Now we have it confirmed that a large public company, with a pretty dodgy record on privacy and human rights is doing the same thing.

What is building before our eyes is a corporate state of even greater power than that envisaged by Italian fascism in the '20s and '30s. Huge companies like Google or Microsoft can only exist in mutual parasitism with the state. Somehow we have to find ways to curb not just the centralising powers of the state, but the same tendency in the corporates that dominate our economic life. It may be too late of course - try searching the web without using Google or Bing, Microsoft or Apple - it can be done, but much less effectively.

You should start by securing your WiFi network! Other possibilities include anonymising proxy servers and anonymised e-mail services. Of course by using such services yoou run the risk of drawing attention to yourself, because the state will assume that anyone hiding themselves behind anonymity is a potential threat.

 

A Tale of Two Ecovillages: Damanhur and Findhorn

Damanhur in Italy and the Findhorn Community in Scotland have consciously set out to reduce their dependence on the global corporate economy and to re-weave the web of a more complex, locally based, social economy. In an era where local shops, post offices, schools and other facilities are closing down in unprecedented numbers across Europe, these two communities are experiencing substantial growth and diversification, opening new enterprises and generating new employment.

via trustcurrency.blogspot.com

The lucky generation?

Am I a member of the luckiest generation in history?

via stumblingandmumbling.typepad.com

Controlling the growth of the state

You don't have to be an anarchist, a libertarian or even just politically on the right, to want to see a reduction in the size and span of state control. However, convincing those on the non-anarchist, non-libertarian left of this is likely to be difficult, despite the fact that much left-wing political activity and tactics has revolved around exactly the same sort of community and work based institutions as would be needed to continue civil society in a minimalist state - however you define 'minimal'.

Doing this full justice would require a book, indeed several books. I have touched on it before here. What I intend to do now, in what I hope will be a series of linked posts, is to take a range of institutions in present (UK) society where the conventional wisdom is that these institutions are needed to 'protect the community' in some way and to examine whether a) they are genuinely needed in the first place and b) if indeed they represent some real need, how that might be met without the state, or at very least with a much reduced role for it.

In this context, by 'the State' I mean not just all the national apparatus of the Civil Service and Parliament, but also that huge and growing collection of agencies and quangos at national level together with the parallel bureaucracies of local government and their dependencies, such as housing associations, care agencies and the like.

If everyone capable of benefiting from the alternative economy participates in it, and it makes full and efficient use of the resources already available to them, eventually we'll have a society where most of what the average person consumes is produced in a network of self-employed or worker-owned production...

http://mutualist.blogspot.com/2005/03/building-structure-of-new-society.html