When studying contract law, or when signing any formal contract, you may come across the clause Force Majeure. It means superior force. The lecturer said it refers to act of god. This clause is included in contract in order to avoid some liabilities. It is bad news for the damaged party in the contract. One cannot sue the other party for damages arising from act of god. Definition of act of god is normally stated in the contract, but the description is not exhaustive. Usually such events include natural disasters such as flooding, earthquake, volcanoes and also man-made disasters such as war, strike, riot, crime. The general principle is that events which cannot be controlled by the contracted parties are acts of god.
While natural disasters with causes beyond human comprehension temporarily can be regarded as acts of god, it may a shame to label those human evil deeds as acts of god. On the other hand, on the face of the almighty, all good and evil things we cannot controlled should be attributed to god. This thinking prompts an article in Mckinsey Quarterly entitled What Natural and Economic Disasters have in Common. The author draws parallels between the failures of man-made systems, such as the economy, and of similarly complex natural ones. Please take a look at the article if you are interested.
Economists, financial experts and the like are somewhat disappointed for not foreseeing last year's global credit crisis. They turned to the lexicon of natural disasters, describing the shock as a tsunami hitting markets and as an earthquake shaking the world economy’s foundations. Such reaction reflects the extreme and unexpected nature of the circumstances. In fact, the parallels between the dynamics and failures of man-made systems, such as the economy or the electricity grid, and similarly complex natural ones are bringing new ideas to economic forecasting, strategic planning, and risk management.
Scientists in cooperation with economists are applying complexity theory to economic research, rejecting the traditional view of the economy as a fully transparent, rational system striving toward equilibrium. The geophysics professor and earthquake authority Didier Sornette, for example, leads the Financial Crisis Observatory in Zurich, which uses concepts and mathematical models that draw on complexity theory and statistical physics to understand financial bubbles and economic crises.
Sornette aims to predict extreme outcomes in complex systems. Many other scientists in the field of complexity theory argue that earthquakes, forest fires, power blackouts, and the like are extremely difficult or even impossible to foresee because they are the products of many interdependent “agents” and cascades of events in inherently unstable systems that generate large variations. One symptom of such a system’s behavior is that the frequency and magnitude of outcomes can be described by a mathematical relationship called a “power law,” characterized by a short “head” of frequently occurring small events, dropping off to a long “tail” of increasingly rare but much larger ones. The economy, like other complex systems characterized by power law behavior, is inherently unstable and prone to occasional huge failures.
Act of god is being studied and understood and the focus is on early warning. Similar to the early-warning systems for earthquake, volcano eruption and tsunami, strategists could monitor potential indications that economic stress might be building in their industries. Other lessons to be learnt from nature's complex systems include flexible business models incorporating some slack and flexibility, and examples like controlled damages of small forest fires to avoid large-scale fires.
Tuesday, June 23, 2009
Thursday, June 18, 2009
The New Exodus
About 3400 years ago, Moses led the Israelis away from Egypt to find the promised land. They finally settled in Palestine and built a temple in Jerusalem. This story is recorded in Exodus which is a sacred text worshiped by the Jews, and more than a thousand years later worshiped by the Christians and the Muslims. Exodus has become a symbol of people escaping hardship and finding a bright future.
National Geographic carries a story in the June 2009 issue entitled the New Exodus. This time, the direction has reversed. Christians are now escaping from the promised land; but the meaning and the spirit of Exodus are the same.
The article gives a detailed account of the Christians living in the Levant, which is an area south of Turkey down to Sinai. Christians have been living there since the first century and flourished when the Roman Empire turned Christian. The area was conquered by the Muslims a few hundred years later, but Christians were still living there. The first great disaster to them was the Crusades, claiming to preserve Christianity. Crusaders slaughtered most of the people in the town they captured. There is an old story that the Crusaders could not tell who was Muslim or Christian; so they killed everyone, saying god could tell when these people died. After the Crusades, there were still many Christians living in the Levant alongside the Muslims.
The present disaster is a result of the clash between western countries and middle east countries. A quote from the article says:
"Western Christians have made matters worse, he argues, echoing a sentiment expressed by many Arab Christians. It's because of what Christians in the West, led by the U.S., have been doing in the East," he says, ticking off the wars in Iraq and Afghanistan, U.S. support for Israel, and the threats of "regime change" by the Bush Administration. To many Muslims, especially the fanatics, this looks like the Crusades all over again, a war against Islam waged by Christianity. Because we're Christians, they see us as the enemy too. It's guilt by association."
The New Exodus is on-going. Christians in the promised lands are now out-numbered and surrounded by angry voices. They are continuously seeking an exit to other countries, leaving behind only those who are too old to emigrate. The article tells a story about a Christian family. The wife is from Bethlehem while the husband is from Jerusalem, only 10 km away. Because Bethlehem is Palestinian territory, by Israeli law they cannot live together. The wife has to apply for special permit to enter Jerusalem to visit her husband. They are now planning to emigrate to Canada.
The situation is very vivid when I visited Jerusalem and Bethlehem two years ago. Jerusalem is Jewish territory. I saw Judaism worship everywhere. Christianity is only present inside the ancient church relics. Bethlehem is even worse. The Jewish guide could not even get close to the wall surrounding Bethlehem. Tourists were met by a Palestinian guide on the other side. Christianity in Bethlehem is limited to the Church of Nativity. It is not difficult to imagine how hard a Christian is living there. Both the Jews and the Palestinians are not friendly. Not friendly is actually an under-statement.
During Easter, the Christian world suddenly descends on the promised land. Christian tourists from different countries roam the holy land, doing the ritual of walking the Via Dolorosa, crowding the Church of Sepulchure and the Church of All Nations by the Garden of Gethsemane. As seen by this local Christian family:
"Hundreds of pilgrims churned through the church's double doors, filling the cavernous space with warm bodies and pushing us deeper into the church... Lisa gripped the stroller and tried to anchor herself against the river of humanity flowing into the church. Dutch, German, Korean, Nigerian, American, French, Spanish, Russian, Filipino, Brazilian, the crowd surged forward, searching hungrily for a greater proximity to God... Suddenly Lisa's decision to bring Nadia along was looking like a mistake... As we passed through the doors, the crowd thinned out slightly. Lisa leaned in, straining to be heard over the chaos around us. "Do you see how it is?" she asked, gasping for air on the hill where Jesus spent his last night on Earth. "This is our home. And it's like we're not even here!"
National Geographic carries a story in the June 2009 issue entitled the New Exodus. This time, the direction has reversed. Christians are now escaping from the promised land; but the meaning and the spirit of Exodus are the same.
The article gives a detailed account of the Christians living in the Levant, which is an area south of Turkey down to Sinai. Christians have been living there since the first century and flourished when the Roman Empire turned Christian. The area was conquered by the Muslims a few hundred years later, but Christians were still living there. The first great disaster to them was the Crusades, claiming to preserve Christianity. Crusaders slaughtered most of the people in the town they captured. There is an old story that the Crusaders could not tell who was Muslim or Christian; so they killed everyone, saying god could tell when these people died. After the Crusades, there were still many Christians living in the Levant alongside the Muslims.
The present disaster is a result of the clash between western countries and middle east countries. A quote from the article says:
"Western Christians have made matters worse, he argues, echoing a sentiment expressed by many Arab Christians. It's because of what Christians in the West, led by the U.S., have been doing in the East," he says, ticking off the wars in Iraq and Afghanistan, U.S. support for Israel, and the threats of "regime change" by the Bush Administration. To many Muslims, especially the fanatics, this looks like the Crusades all over again, a war against Islam waged by Christianity. Because we're Christians, they see us as the enemy too. It's guilt by association."
The New Exodus is on-going. Christians in the promised lands are now out-numbered and surrounded by angry voices. They are continuously seeking an exit to other countries, leaving behind only those who are too old to emigrate. The article tells a story about a Christian family. The wife is from Bethlehem while the husband is from Jerusalem, only 10 km away. Because Bethlehem is Palestinian territory, by Israeli law they cannot live together. The wife has to apply for special permit to enter Jerusalem to visit her husband. They are now planning to emigrate to Canada.
The situation is very vivid when I visited Jerusalem and Bethlehem two years ago. Jerusalem is Jewish territory. I saw Judaism worship everywhere. Christianity is only present inside the ancient church relics. Bethlehem is even worse. The Jewish guide could not even get close to the wall surrounding Bethlehem. Tourists were met by a Palestinian guide on the other side. Christianity in Bethlehem is limited to the Church of Nativity. It is not difficult to imagine how hard a Christian is living there. Both the Jews and the Palestinians are not friendly. Not friendly is actually an under-statement.
During Easter, the Christian world suddenly descends on the promised land. Christian tourists from different countries roam the holy land, doing the ritual of walking the Via Dolorosa, crowding the Church of Sepulchure and the Church of All Nations by the Garden of Gethsemane. As seen by this local Christian family:
"Hundreds of pilgrims churned through the church's double doors, filling the cavernous space with warm bodies and pushing us deeper into the church... Lisa gripped the stroller and tried to anchor herself against the river of humanity flowing into the church. Dutch, German, Korean, Nigerian, American, French, Spanish, Russian, Filipino, Brazilian, the crowd surged forward, searching hungrily for a greater proximity to God... Suddenly Lisa's decision to bring Nadia along was looking like a mistake... As we passed through the doors, the crowd thinned out slightly. Lisa leaned in, straining to be heard over the chaos around us. "Do you see how it is?" she asked, gasping for air on the hill where Jesus spent his last night on Earth. "This is our home. And it's like we're not even here!"
Monday, June 8, 2009
數字美麗的誤導
數字表達真是奇妙。人的理解能力有限，不同的數字表達方式有驚人的效果。人的認知範圍只在日常所見的比例，對很大或很小的數目會有誤解。在有些情況下，將數據以不同的方式表達，擴大或縮小，其意義會有變動。另一些被濫用的數據是或然率，因為不容易清楚了解，所以經常被用來誤導讀者。
中國持有約一萬億美元的美國國債，如果美元貶值對中國影響是否很大。一萬億美元下調百份之十即是損失一千億，即等於一家工廠五萬七千年的生產力。如果以一個工人計算，即乘大一千倍，時間會是五千七百萬年，回到恐龍時代。這工人從恐龍時代一直工作到今天，其間生產的總價值就因美元下跌百份之十而全部不見了。
其實美元在過去不斷波動，升跌百份之十很常見，只有香港不見，因為港元和美元掛鉤。人民幣情況有點相似，因為匯率不是自由浮動。如果匯率可以堅持不變動，賬面不會因美元兌其他貨幣下跌而有損失。當然宏觀地看全世界的經濟會下調，但美元現時是全球儲備貨幣，所有國家都同時受到影響，相對下，對單一國家的影響不會大得驚人。國債的風險最大是政權易手，使之變成廢紙。工廠比喻很有趣，但美金升跌中國不會有工廠消失。
阿媽教仔食飯要食乾淨，不可浪費一粒飯。如果每人都食剩一粒飯而浪費了，全世界六十五億人就每餐浪費六十五億粒飯。以每碗飯一千粒計，是六百五十萬碗飯，足夠一個人食一萬八千年。因為人每餐浪費一粒飯，可能引致一個可以有一萬八千歲的人餓死了。這個結論究竟有什麼問題。如果以阿媽教仔的角度看，是完全沒有問題；如果阿仔因此感動而不浪費食物就目的已達，而六十五億人之中人人都可能會浪費食物亦不算說錯。問題是不能假設人人都食飯，因為很多民族不以米飯作主要食糧，所以接下來的數學程式不成立。另一個假設是不浪費一粒飯就會有另一人食多一粒飯，這個因果關係並不實際，因為糧食供應問題複雜，包括天氣、農業技術、食物市場、經濟因素等等。
另一個更有趣的問題是會否有一個一萬八千歲的人。試想有一個二十八歲的人已生存了一萬天，如果每天都檢查一次，答案是取樣一萬次此人仍然生存。以統計學來說，這個人一直生存至超過一萬八千歲的或然率是非常高。如果說人平均年齡只有八十歲，但卻不能說所有人都會死於八十歲，因為統計取樣只搜集有人死亡時的年齡，而所有仍生存的人都未有死亡年齡數據。這個結論出了問題，可以用黑天鵝現象解釋。歐洲只有白天鵝，所以有說天鵝就是代表白色，但只需要有一隻黑天鵝出現(結果在新西蘭出現了)，無限大的或然率就變得很小。人只要有一日死去，永生的或然率就化為烏有。
另一個著名的數字表達例子是美國唱片業協會RIAA 發放的數據；它說在二零零二年美國人在互聯網下載音樂有二十一億次，每次下載商業上會損失一張唱片的銷售；每張唱片價值十二美元，所以唱片業該年損失二百五十二億美元。這個結論故意錯誤地假設每次下載都成功、整張唱片都被下載而如果不下載會有人一定買一張唱片。該年唱片銷量是八億張，因此音樂下載被說使唱片業損失了百分之七十三的收入。真實的情況是該年唱片銷售數量只是下跌百分之九，而收入只下跌百分之七；而銷量下跌亦受新唱片出版減少和影碟競爭影響。
中國持有約一萬億美元的美國國債，如果美元貶值對中國影響是否很大。一萬億美元下調百份之十即是損失一千億，即等於一家工廠五萬七千年的生產力。如果以一個工人計算，即乘大一千倍，時間會是五千七百萬年，回到恐龍時代。這工人從恐龍時代一直工作到今天，其間生產的總價值就因美元下跌百份之十而全部不見了。
其實美元在過去不斷波動，升跌百份之十很常見，只有香港不見，因為港元和美元掛鉤。人民幣情況有點相似，因為匯率不是自由浮動。如果匯率可以堅持不變動，賬面不會因美元兌其他貨幣下跌而有損失。當然宏觀地看全世界的經濟會下調，但美元現時是全球儲備貨幣，所有國家都同時受到影響，相對下，對單一國家的影響不會大得驚人。國債的風險最大是政權易手，使之變成廢紙。工廠比喻很有趣，但美金升跌中國不會有工廠消失。
阿媽教仔食飯要食乾淨，不可浪費一粒飯。如果每人都食剩一粒飯而浪費了，全世界六十五億人就每餐浪費六十五億粒飯。以每碗飯一千粒計，是六百五十萬碗飯，足夠一個人食一萬八千年。因為人每餐浪費一粒飯，可能引致一個可以有一萬八千歲的人餓死了。這個結論究竟有什麼問題。如果以阿媽教仔的角度看，是完全沒有問題；如果阿仔因此感動而不浪費食物就目的已達，而六十五億人之中人人都可能會浪費食物亦不算說錯。問題是不能假設人人都食飯，因為很多民族不以米飯作主要食糧，所以接下來的數學程式不成立。另一個假設是不浪費一粒飯就會有另一人食多一粒飯，這個因果關係並不實際，因為糧食供應問題複雜，包括天氣、農業技術、食物市場、經濟因素等等。
另一個更有趣的問題是會否有一個一萬八千歲的人。試想有一個二十八歲的人已生存了一萬天，如果每天都檢查一次，答案是取樣一萬次此人仍然生存。以統計學來說，這個人一直生存至超過一萬八千歲的或然率是非常高。如果說人平均年齡只有八十歲，但卻不能說所有人都會死於八十歲，因為統計取樣只搜集有人死亡時的年齡，而所有仍生存的人都未有死亡年齡數據。這個結論出了問題，可以用黑天鵝現象解釋。歐洲只有白天鵝，所以有說天鵝就是代表白色，但只需要有一隻黑天鵝出現(結果在新西蘭出現了)，無限大的或然率就變得很小。人只要有一日死去，永生的或然率就化為烏有。
另一個著名的數字表達例子是美國唱片業協會RIAA 發放的數據；它說在二零零二年美國人在互聯網下載音樂有二十一億次，每次下載商業上會損失一張唱片的銷售；每張唱片價值十二美元，所以唱片業該年損失二百五十二億美元。這個結論故意錯誤地假設每次下載都成功、整張唱片都被下載而如果不下載會有人一定買一張唱片。該年唱片銷量是八億張，因此音樂下載被說使唱片業損失了百分之七十三的收入。真實的情況是該年唱片銷售數量只是下跌百分之九，而收入只下跌百分之七；而銷量下跌亦受新唱片出版減少和影碟競爭影響。
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