Quotulatiousness

July 7, 2013

Trying to prevent another “flash crash”

Filed under: Business, Economics, Technology — Tags: , , , — Nicholas @ 10:57

Tim Harford discusses high speed trading and its potential problems:

“High-frequency trading” is a rich environment of algorithms, of predators and prey, all trying to make money by trading financial products at tremendous speed. But the basic proposition is simple to state. When the price of a share rises in New York, the price of related contracts will rise in Chicago just as soon as the news arrives. But if everyone else gets the news on the regular cable, and you’re renting space on the faster cable, you can see into everyone else’s future by (say) 0.7 milliseconds, plenty of time to buy soon-to-rise assets and then, less than a thousandth of a second later, to sell them again.

You don’t have to be a socialist to find this kind of thing discomfiting. There are three concerns. The first is that scarce resources are being spent on high-speed connections that have no social value in what is at best a zero-sum game. The second is that high-frequency traders may be making money at the expense of fundamental investors. The third problem is that such trading appears to introduce systemic risks. The “flash crash” of May 2010 is still poorly understood, which should ring alarm bells — especially since the need for speed means most high-frequency algorithms are simple and therefore stupid.

What, then, should be done? Rather than trying to slow down the algorithms, why not slow down the market? Most financial exchange markets run continuously, effectively assuming that traders can react instantaneously, withdrawing out-of-date offers and replacing them with up-to-the-picosecond prices. It’s this flawed premise — that all trades could be instantaneous — that means that no matter how fast the computers get, there will always be an incentive to go faster still.

A simple way for an exchange to improve matters would be to run an auction once a second, batching together all the offers to buy and sell that have been submitted during that second. Unsuccessful bids and asks would be published and would remain on the books for the next auction, unless withdrawn. One auction a second ought to be enough for anyone; it would deliver a stream of well-behaved data to regulators — currently unable to figure out what is going on — and it is plenty of time for a computer to weigh its options.

July 6, 2013

Matt Ridley on the “shale cornucopia”

Filed under: Business, USA — Tags: , , , , , — Nicholas @ 10:15

It’s a big deal. A really big deal:

A new report (The Shale Oil Boom: a US Phenomenon) by Leonardo Maugeri, of Harvard University, sets out just how astonishing this second shale revolution already is. After falling for 30 years, US oil production rocketed upwards in the past three years. In 1995 the Bakken field was reckoned by the US Geological Survey to hold a trivial 151 million barrels of recoverable oil. In 2008 this was revised upwards to nearly 4 billion barrels; two months ago that number was doubled. It is a safe bet that it will be revised upwards again.

The big reason for the upwards revisions is technology rather than discovery. Thanks to faster and cheaper drilling (which means less-rich rocks can be profitable) and things such as “zipper fracturing”, where two parallel wells are drilled and alternately fractured to help to release oil for each other, the oil recovery rate is rising from 2 per cent towards 10 per cent in places. Gas is now nearer 30 per cent. Well productivity has doubled in five years.

Now the Bakken is being eclipsed by an even more productive shale formation in southern Texas called the Eagle Ford. Texas, which already produces conventional oil, has doubled its oil production in just over two years and by the end of this year will exceed Venezuela, Kuwait, Mexico and Iraq as an oil “nation”.

[. . .]

Mr Maugeri calculates that at $85 a barrel most shale oil wells repay their capital costs in a year. He estimates that even if oil prices fall steadily to $65 in five years, shale oil production will treble in the US because of increasing productivity per well and the easing of transport bottlenecks. By 2017, he thinks, America will be producing nearly 11 billion barrels a day [correction 11 million], equal to its previous peak in 1970. It would need much less in the way of imports. US oil imports peaked at 60 per cent in 2005 and will be below 40 per cent this year.

Internationally the effect is very different for oil compared with gas. Gas is costly to export by sea, requiring liquefaction. This roughly doubles the cost of it, meaning that America’s cheap shale gas boosts its economy at home, and gives it a competitive advantage in attracting energy-intensive industries. (US gas prices are a third or a quarter of what they are here.) Mexico, too, is benefiting because of having a land border with America and pipelines.

[. . .]

There would be losers. America’s falling appetite for imports may hit Nigeria and Angola harder than the Middle East because of the types of oil they produce, while Canada and Venezuela, whose tarry oil sands are high-cost, would also suffer if oil prices fell. But every oil producer would eventually feel the effect of this falling US demand, so there is no doubting the downward pressure on world oil prices that this revolution is likely to cause.

June 30, 2013

“It’s very difficult to regulate greed”

Filed under: Business, Cancon, China, Law, Wine — Tags: , , , — Nicholas @ 11:30

Icewine is what originally put Canadian wine on the international map. Icewine is an expensive thing to produce, and therefore has drawn a lot of cheaters into the market:

Canada is tightening the rules for producing its popular icewine, a sweet dessert wine that is only made in cold climates, to crack down on fraudsters who sell mislabeled bottles that don’t make the grade.

In regulations published this week, the Canadian government said any bottle labeled and sold as icewine must be made only from grapes that have frozen on the vine.

[. . .]

Because the frozen grapes only yield a tiny amounts of sweet liquid, the dessert wine has a high cost and a high price. Grapes are left on the vine until the temperature falls to -8C (18F) over a prolonged period, and usually harvested overnight.

“It’s liquid gold,” said Paszkowski.

In China, where icewine has become hugely popular, a thriving counterfeit industry is flooding the market with wines that don’t live up to the label, he said.

“It’s very difficult to regulate greed,” said Paszkowski. “We’ve identified counterfeit icewines even in five-star restaurants and hotels.”

H/T to Elizabeth for the link.

June 26, 2013

Petitioning to “save” Kensington Market

Filed under: Business, Cancon, Politics — Tags: , , , , — Nicholas @ 09:21

John Pepall on the claimed 80,000 folks who’ve signed petitions to stop WalMart and Loblaws from moving near the historic area of Kensington Market:

What these people must be saying is that many people who now shop in the Kensington Market would, if the Walmart or Loblaw’s opened, choose to shop at them instead. And they want the City government to deny them that choice.

Just conceivably the petitions could be a kind of voluntary market survey, kindly warning Walmart and Loblaw’s that people won’t shop at their stores. That they will lose money because people prefer to shop at the Kensington Market. But plainly they are not. The petitioners call themselves the Friends of the Kensington Market and claim they are trying to Save the Kensington Market. The big corporations and their big stores are the baddies. And the retailers of Kensington Market are the good guys.

What are they up to then? If they are a statistically significant sample of people who regularly shop at the Kensington Market, they have nothing to worry about. Unless they own shares in Walmart or Loblaw’s. They will continue to shop in a thriving Kensington Market and Walmart and Loblaw’s will struggle and perhaps go away.

Might they? Just might they be people who already shop at the Loblaw’s on Christie or Whole Foods on Avenue Road and, perhaps, fashionable organic farmers’ markets and occasionally go down to Kensington Market for fine cheese or fish, or vintage clothing and a bite at one of its characterful restaurants?

If so, and at over eighty thousand and rising the petitioners must go way beyond the regular household shoppers in the Market, they are basically local tourists who want to restrict the shopping choices of those who live in the Kensington neighbourhood so that they can have a picturesque market to visit when they tire of the Distillery District or funky Queen Street West.

H/T to Colby Cosh for the link.

June 23, 2013

Wine tasting scores are bullshit

Filed under: Business, Media, Science, Wine — Tags: , , — Nicholas @ 11:49

In the Guardian, David Derbyshire takes the modern “science” of wine tasting to the woodshed:

… drawing on his background in statistics, Hodgson approached the organisers of the California State Fair wine competition, the oldest contest of its kind in North America, and proposed an experiment for their annual June tasting sessions.

Each panel of four judges would be presented with their usual “flight” of samples to sniff, sip and slurp. But some wines would be presented to the panel three times, poured from the same bottle each time. The results would be compiled and analysed to see whether wine testing really is scientific.

The first experiment took place in 2005. The last was in Sacramento earlier this month. Hodgson’s findings have stunned the wine industry. Over the years he has shown again and again that even trained, professional palates are terrible at judging wine.

“The results are disturbing,” says Hodgson from the Fieldbrook Winery in Humboldt County, described by its owner as a rural paradise. “Only about 10% of judges are consistent and those judges who were consistent one year were ordinary the next year.

“Chance has a great deal to do with the awards that wines win.”

These judges are not amateurs either. They read like a who’s who of the American wine industry from winemakers, sommeliers, critics and buyers to wine consultants and academics. In Hodgson’s tests, judges rated wines on a scale running from 50 to 100. In practice, most wines scored in the 70s, 80s and low 90s.

Results from the first four years of the experiment, published in the Journal of Wine Economics, showed a typical judge’s scores varied by plus or minus four points over the three blind tastings. A wine deemed to be a good 90 would be rated as an acceptable 86 by the same judge minutes later and then an excellent 94.

Today’s headline is a slightly stronger version of one I ran in May: Is wine tasting bullshit? with this rather amusing caption:

A real wine review

Although that “real” wine “review” illustrates the verbal bullshit side of wine reviewing, the statistical analysis in Robert Hodgson’s tests rather undermines the claims to any kind of actual analysis in most or all wine reviewing.

I’ve said for years that for most people there is a range of wine prices that will satisfy their tastes without emptying their wallets — in Ontario, the range for most people seems to be in the $14-$40 price spectrum. Pay less than that, and you risk buying wine that really isn’t very good (although there are some underpriced gems even there), and pay over $40 and you’re just paying extra for the “prestige” and most of us wouldn’t really be able to detect any flavour differences.

It’s interesting to see what kind of immediate environmental changes seem to be able to directly influence the scores given by reviewers:

More evidence that wine-tasting is influenced by context was provided by a 2008 study from Heriot-Watt University in Edinburgh. The team found that different music could boost tasters’ wine scores by 60%. Researchers discovered that a blast of Jimi Hendrix enhanced cabernet sauvignon while Kylie Minogue went well with chardonnay.

June 18, 2013

Console game industry model is broken – must be patched with huge wads of customer money

Filed under: Business, Gaming, Technology — Tags: , , , — Nicholas @ 10:23

At Techdirt, Tim Cushing explains why the console gaming industry’s problems should not be “fixed” by taking away the customer’s rights:

If the current business model is unsustainable, why is that the consumer’s fault? More specifically, why are customers being pushed into giving up their “first sale” rights, along with being asked to plug the holes in the leaky business model with wads of hard-earned cash?

On top of this imposition is the assumption the current model is the only model [$200m movie, anyone?] and that mankind greatly benefits from “thousands of developers” crafting AAA titles. This is completely backward. The industry exists because of its customers, not despite them. AAA studios are not benevolent deities. They’re companies that exist because there’s a market for their products. If this market dies, so do they. If the prices are too high, customers buy elsewhere. Or not at all.

[. . .]

It’s beginning to look like a few members of the industry have been cribbing pages from the disastrous playbook of the recording industry. Raise prices. Blame customers. Bend the world to your business model. Is it only a matter of time before the gaming industry begins lobbying Congress to shut down secondhand sales?

Oh, and if the above twitrant weren’t galling enough, Cliff B. throws in a little something for those who find the online requirements of the Crossbone to be dealbreaker.

    “If you can afford high speed internet and you can’t get it where you live direct your rage at who is responsible for pipe blocking you,” he said.

Really? Maybe I’ll direct my rage at the entitled jackass who’s supporting a company’s decision to effectively limit its own market simply because it can’t live without some sort of DRM infection. And what if you can’t afford high speed internet? Well, you must be one of those people who live in the area marked “Whogivesashitland” in Cliffy’s mental map. And trust me, plenty of rage has been directed at the “pipe blockers,” but they care even less about their customer base than the area of the gaming industry Bleszinski represents.

Those interested in gutting the resale market to protect their margins are turning potential customers into enemies. If you can’t adapt, you can’t succeed. These moves being made by Microsoft (and supported by industry mouthpieces) are nothing more than attempts to subsidize an unsustainable business model by forcibly extracting the maximum toll from as many transactions as possible. The industry is not a necessity or a public good. If it’s going to make the changes it needs to survive, it needs to give up this delusion.

June 17, 2013

Top this – wine corks meet screw-tops

Filed under: Business, Europe, Wine — Tags: , — Nicholas @ 10:14

BBC News looks at the latest attempt to blend the tradition of the wine bottle’s cork closure with the convenience of the twist-off screw top:

Helix wine bottle closure

The unveiling this week of a new style of cork raises the question of why the traditional kind continues to dominate much of the wine world.

The Helix is opened with just a twist of the hand. No corkscrew is necessary as the top of the bottle has a thread inside.

The glass bottle and cork combination for wine is thought to have started in the 17th Century. But newer materials exist today that some argue are better suited for sealing a bottle than cork.

Screw caps and plastic corks have been embraced by producers fed up with wine becoming “corked” — the unpleasant musty taste, likened to wet dog, which is caused by tainted cork.

Influential US wine critic Robert Parker reckons that during the mid 1990s 7-10% of the wine he tasted was corked. In 2004 he predicted that by 2015 screw caps would dominate the wine industry.

The screw cap — generic name “Stelvin” after its biggest brand — advanced spectacularly in “New World” wine nations. By 2011, 90% of New Zealand wine was sealed this way.

But in Europe and the US the cork remains king.

It’s a little puzzling to some. Wine has become democratic and modern. There are prices and drinking styles to suit everyone. So why hasn’t the closure method evolved?

Portugal, where most of the world’s corks are harvested, has fought back against the chemical compound trichloroanisole (TCA), one of the most common causes of tainted corks.

But the screw cap not only avoids the problem of tainted cork, it forms a tighter seal. Most critics say that this guarantees a better flavour for all but the more expensive wines (which may age better with more oxygen).

“We prefer seals that ensure the wine is not going to be faulty,” says Ewan Murray, spokesman for the Wine Society. “Wines that are ready to drink young are always going to be fresher under a screw cap.”

June 16, 2013

Latest installment of the corporate tax crusade

Filed under: Britain, Business — Tags: , — Nicholas @ 10:16

In Forbes, Tim Worstall explains why a company that has paid full corporate taxes on its income has no further legal or moral obligation to pay more:

Read that through again: they’re saying that the company has already paid full corporation tax on that money. And we don’t tax dividends going to people in foreign countries. Whatever the tax rate is there, we simply don’t tax them. Because of course that’s up to the country where the money goes to to tax: it’s not actually something that is taxable in the UK. For, obviously, they’ve already paid the full corporation tax due.

But it does actually get better. Those dividends, paid out of post tax (and do please note, post tax) profits wouldn’t be subject to further corporation tax in the UK either:

    The general rule is that dividends paid by a UK company to another UK company out of post-tax profits are exempt from further taxation.

That the recipient corporation is in the British Virgin Islands thus makes not one whit or iota of difference to the amount of corporation tax payable. So this is all really a rather strange complaint. Perhaps the newspaper has just got caught up in the frenzied atmosphere over the subject.

[. . .]

As to why this story is being blown up allow me to offer some speculation. There’s a group of people who are quite vociferous in their demands that the corporate tax system must be radically changed. Richard Murphy (who just for complete disclosure, used to write here at Forbes) is one of the leading lights of that group. Various members of the loose knit group have been behind all sorts of claims about Vodafone, Boots, Starbucks, Google, Apple and a number of other companies. The problem with the claims is that none of them have really stuck. There’s been absolutely no finding of illegality anywhere.

The claim has thus moved onto, well, OK, so it’s not illegal: all of these companies are indeed obeying the law. But we still don’t think they’re paying enough tax. Therefore the law must be changed simply because we think they should be paying more tax. Which is, when you think about it, a fairly extreme claim. Companies should pay more tax because a group of 20 or so people demand that they should be doing so?

June 14, 2013

QotD: Tax avoidance

Filed under: Business, Law, Quotations — Tags: , — Nicholas @ 09:08

The claim that tax avoidance is immoral is an attack on the very notion of private property. It is, as it were, to say that all money belongs to society collectively, and “we” have an intention as to how much you get to use yourself and how much goes to the state, and if you avoid tax you end up using more of society’s collective money than it intended for you to use. Tax avoidance then becomes a kind of theft. But if my property is fundamentally mine, a tax is an impost, a legal requirement for me to surrender some of my property. Provided I do that, I have behaved perfectly properly. If the overall consequence is that I do not pay what would be regarded as a fair tax contribution, either tax law should be modified, or I could be persuaded that I had a moral duty to make an additional free-will tax contribution.

Andrew Lilico, “Companies have a moral duty to pay no more tax than legally required”, The Telegraph, 2013-06-14

June 12, 2013

New disclosure rules for Canadian oil, gas, and mining companies

Filed under: Business, Cancon — Tags: , , , , — Nicholas @ 08:19

David Akin in the Toronto Sun:

The Canadian government announced new measures Tuesday that will force oil, gas, and mining companies to publicly disclose every penny they pay to any government at home or around the world.

The move is seen as an anti-corruption measure and one that many activists groups that work in the developing world, such as Oxfam, have been demanding for years, particularly since Canada is home to a majority of the world’s mining companies.

The European Union and the United States have already moved towards mandatory reporting requirements for their mining companies.

There have been cases in some developing countries where multinationals pay a host government substantial sums for the rights to oil, gas or minerals, but the local population complains that they do not know how much their governments are getting and, as a result, cannot demand their governments spend some of that wealth on them.

It’s not just in developing countries, either, as some First Nations activists have complained that they can’t get information on what their band councils receive in various resource development deals here in Canada. Of course, some (many?) deals get done with a bit of bribery to sweeten the attraction, but not every country will have (or enforce) rules like this.

June 8, 2013

Don’t put too much faith in denials from Verizon and other companies…

Filed under: Business, Government, Law, Liberty, Technology — Tags: , , , , , — Nicholas @ 10:10

As Mic Wright points out, the companies named in the Prism leaks may not be acting as free agents:

Pastor Niemoller’s “First they came…” poem is over-quoted but with good reason. It is far too easy to be complacent. Addicted and reliant as many of us are on free web services, it’s more convenient to just accept the companies outright denials that they have been complicit with the NSA’s programme. But look closely at those statements and things become rather less clear, as Michael Arrington pointed out.

The tech industry’s denials have been carefully drafted and similarly worded. It is not unfeasible to imagine that those companies have turned over users’ personal information to the NSA in another fashion. Facebook founder and CEO Mark Zuckerberg’s statement was one of the strongest: “Facebook is not and has never been part of any program to give the US or any other government direct access to our servers. We have never received a blanket request or court order from any government agency asking for information…”

Zuckerberg’s words are reassuring until you consider that any company that receives an order under the Foreign Intelligence Surveillance Act Amendments Act — the legislation the Obama administration is using to justify the broad surveillance — is forbidden from disclosing they have received it or disclosing any information about it. It’s not surprising that no mea culpas have emerged from major tech firms or that Palantir — the big data surveillance company with the $5 billion valuation and CIA funding — denies any connection with the project. The NSA has been a Palantir client and one of the company’s co-founders, billionaire investor Peter Thiel, also sits on Facebook’s board.

Charles Stross talks about writing The Jennifer Morgue

Filed under: Books, Britain, Business, Media — Tags: , , , — Nicholas @ 09:07

If you haven’t yet read any of the “Laundry” books by Charles Stross, you really are missing out on a treat. The Jennifer Morgue was the second in the series and Charles has a blog post up about how the book came to be written:

All stories have several seeds. In the case of “The Jennifer Morgue”, the first seed was the surprising success of “The Atrocity Archives”. The novel my agent initially thought was unsaleable sold to Golden Gryphon, a small but respectable Lovecraftian publisher in the United States. It went gold, going into reprint and becoming their second-best selling title at the time. Then, to everyone’s surprise, the additional novella I wrote for the book (“The Concrete Jungle”) made the shortlist for the Hugo award in 2005. This was a stunning surprise. GG had only sold around 3000 copies of the book; the other novellas on the shortlist had all appeared in magazines or anthologies with four to ten times the number of copies sold! After some hurried email consultation, Gary and Marty at GG agreed to let me put the whole novella on the web, to make it more readily available to the Hugo voters. I don’t know if that’s what did the trick, or if there were additional home-mover effects from the Worldcon in 2005 being held in Glasgow (thus bringing more British voters in than normal) but at the end of August that year I became the dazed and surprised owner of a very shiny trophy.

(And the performance anxiety that had been haunting me for years—”I’m not a real writer, I’m just winging this”—went away for a while.)

But anyway. This success coincided with a French publisher making an offer for translation rights to “The Atrocity Archives”, which in turn got my agent’s attention. She proposed a sequel, and James Bond was so obvious that I don’t think I even considered any alternatives. It would have to be the Movie Bond franchise, for most people these days don’t grow up on the original Ian Fleming novels (the way I did); the humour would come from the incongruity of Bob Howard in James Bond’s shoes. We decided to auction the new book, along with paperback rights to “The Atrocity Archives”, and ended up cutting a deal whereby Golden Gryphon would publish “The Jennifer Morgue” in hardcover while Ace rolled “The Atrocity Archives” in trade paperback, and eventually in mass market. Which then left me pondering what to write … because every Bond movie (or novel) needs a Bond-sized plot device, doesn’t it?

By this time we were into late October 2005. One evening, we were eating a Chinese take-away in front of the TV, watching a documentary on the Discovery Channel about one of the most bizarre CIA projects to happen during the Cold War — Project Azorian (better, but mistakenly, known to the public as “Operation Jennifer”). Seriously, if you don’t know about it, go follow that link right now; it’s about how the CIA enlisted Howard Hughes to help them build a 63,000 ton fake deep-see mining ship, the Glomar Challenger, as cover for a deep-sea grapple that would descend 4,900 metres and raise the hull of a shipwrecked Soviet nuclear missile submarine, the K-129. (Project Azorian was so James Bond that the engineering crew working on the ship were cracking jokes about the bald guy stroking the white cat in his seat on the bridge. How post-modern can you go?)

June 7, 2013

Taking the battle to the patent trolls

Filed under: Business, Law — Tags: , , , — Nicholas @ 08:01

In The New Yorker, Tim Wu suggests some lines of counter-attack to use against patent trolls:

There are good laws in place that could fight trolls, but they sit largely unused. First are the consumer-protection laws, which bar “unfair or deceptive acts and practices.” Some patent trolls, to better coerce settlement, purposely misrepresent matters such as the strength of their patents, the extent of other settlements, and their actual willingness to litigate. Second, there are plenty of remedies available under the unfair-competition laws. Some trolls work by aggregating an enormous number of patents, and then present the threat that one of their thousands of patents might actually be valid. The creation of these portfolios for trolling may be “agreements in restraint of trade” under Section 1 of the Sherman Antitrust Act, or they may “substantially lessen competition” under the Clayton Antitrust Act. More generally, the methods of the trolls are hardly what you would call ordinary methods of competition; they should be considered, rather, what the Federal Trade Commission calls “unfair methods of competition” under Section 5 of the F.T.C. Act. The Commission has the power to define and punish methods of business that are inherently harmful with few or no redeeming benefits, and that’s what trolling is. Finally, it is possible that the criminal laws barring larceny and schemes to defraud may cover the conduct of some trolls.

Unfortunately, other than in Vermont, these laws remain largely unenforced, for reasons that aren’t particularly good. Trolls, to switch metaphors, are like cancer cells: they mimic ordinary activity, namely the assertion of patent rights. A war on trolls could become a war on patent holders in general. Since the line between the two can be fuzzy, the argument is that war might deter some real invention. It might, for example, lump universities in with the extortion artists.

But that justifies caution, not inaction. All law enforcement involves this problem of sorting. There is a narrow line between the legitimate trader who knows the stock market well and the criminal inside trader, yet that doesn’t mean securities laws should be left unenforced.

June 6, 2013

Rail technology changes on a slower timescale than other transportation systems

Filed under: Business, Railways, Technology — Tags: , , , , — Nicholas @ 09:50

The Economist looks at innovation in the railway business:

Compared with other modes of transport, train technology might seem to be progressing as slowly as a suburban commuter service rattling its way from one station to another. Automotive technology, by contrast, changes constantly: in the past decade satellite-navigation systems, hybrid power trains, proximity sensors and other innovations have proliferated. Each time you buy a new car, you will notice a host of new features. Progress is apparent in aircraft, too, with advances in in-flight entertainment and communication, fancy seats that turn into beds, and quieter and more efficient engines. Trains, meanwhile, appear to have changed a lot less.

Actually, the perception of change is much greater for cars and airplanes, but there are few changes in those areas that are not merely evolutionary rather than revolutionary. Incremental changes are the rule of the day, as neither cars nor planes travel significantly faster than they did thirty years ago … but they do it safer and more comfortably now.

This comparison is not entirely fair. For one thing, people buy their own cars, so they pay more attention to automotive innovation. Carmakers are engaged in a constant arms race, trumpeting new features as a way to differentiate their products. Nobody buys their own trains. Similarly, air passengers have a choice of competing airlines and are far more likely to be aware of the merits of rival fleets than they are of different types of train. In addition, notes Paul Priestman of Priestmangoode, a design consultancy that specialises in transport, trains have longer lives, so technology takes longer to become widespread. The planning horizon for one rail project he is working on extends to 2050. “You have to think about longevity, whereas the car industry wants you to buy a new car in two years,” he says.

Another big difference is that the way railways operate — with a small number of powered units (locomotives) and a very large number of unpowered units (freight cars and passenger cars) that have to be reliably connected to one another and operate successfully. A car can go on any kind of road (or even none, in many places) and a plane can fly in any part of the sky, but a train needs an engineered right-of-way that falls within established standards of curvature, elevation change, and overhead and side clearance. Because of this, any piece of railway equipment that does not run on its own isolated track (like monorails or the various flavours of high speed railways) must always meet the existing standards … which have been slowly evolving since the mid-nineteenth century. With so much capital invested in existing right-of-way and rolling stock, the costs for introducing significant changes can be astronomical.

There’s also the fact that unlike other forms of transportation, passenger and freight trains operate in different and sometimes conflicting ways. Passenger trains need to operate on a known schedule between high population centres at relatively high speed. With higher speed goes a need for better braking systems and more capable signalling methods. Unlike a train full of new cars or iron ore, you can’t just park a train full of living human beings on a siding for a few hours to allow slower trains to clear the way (unless you’re Amtrak or VIA). Passenger trains have to have top priority, which often means the railways have to delay freight traffic to ensure that the passengers are not unduly delayed.

One solution to the problem is to provide separate tracks for the passenger trains, but this can be very expensive, as the places where the extra tracks would be most effective is also where the land is at peak cost: in and around major cities. Most passenger trains are now run by government agencies or corporations acting as agents for local, regional, or state governments, so they sometimes use the power of eminent domain to gain access to the land. This is a politically fraught area, as the more land they need to take, the tougher the process will get.

Brakes are also getting an upgrade. Stopping a train can take so long that locomotive-operators, also known as engineers, often have time to contemplate their fate before an impact. “Your life races before you,” says a former operator who, years ago in Alabama, helplessly watched as his freight train, its emergency brakes screeching, headed towards a stalled truck that ultimately managed to pull off the tracks in time. Stopping a train pulling a hundred cars at 80kph can require 2km of track. Road accidents take far more lives, but 1,239 people were killed in more than 2,300 railway accidents in 2011 in the European Union alone.

Much of the problem is that the faster a train’s wheels are spinning, the hotter its brake shoes get when engaged. This reduces friction and hence braking power, a predicament known as “heat fade”. Moreover, nearly all trains power their brakes with compressed air. When switched on, air brakes activate car by car, from the locomotive to the back of the train. It can take more than two minutes for the signal to travel via air tubes to the last car.

Again, it’s not physically or financially possible to switch over all existing cars to newer technology in one fell swoop, so any updated brake technology must be 100% compatible with what is already in use, or you risk creating more dangerous situations because some brakes may operate out of sequence which will increase the chances of accidents.

Norfolk Southern, an American rail operator, now pulls roughly one-sixth of its freight using locomotives equipped with “route optimisation” software. By crunching numbers on a train’s weight distribution and a route’s curves, grades and speed limits, the software, called Leader, can instruct operators on optimum accelerating and braking to minimise fuel costs. Installing the software and linking it wirelessly to back-office computers is expensive, says Coleman Lawrence, head of the company’s 4,000-strong locomotive fleet. But the software cuts costs dramatically, reducing fuel consumption by about 5%. That is a big deal for a firm that spent $1.6 billion on diesel in 2012. Mr Lawrence reckons that by 2016 Norfolk Southern may be pulling half its freight with Leader-upgraded locomotives. A competing system sold by GE, Trip Optimizer, goes further and operates the throttle and brakes automatically.

This is a good use of computer technology: you add the software on top of the existing infrastructure and use it to detect operational gains without needing to make system-wide changes to all freight cars.

QotD: The CBC is “nothing but a zombie, slowly sucking up a dwindling fund of goodwill and nostalgia”

Filed under: Business, Cancon, Media, Quotations — Tags: , , , — Nicholas @ 08:22

As Postmedia and other newspaper empires pull paywalls down over their digital incarnations, CBC minions on Twitter have been caught crowing about their “no paywall” status, purchased by the taxpayer at the sensational bargain price of $1.2 billion a year.

It may be hard for readers to feel bad for the cartelizing Paywall Gang, but it is surely a tactical error for the CBC to call attention to its incredibly expensive “free” nature. The Broadcasting Act says the Corporation shall operate “radio and television” services; it doesn’t say anything about a website, much less a website that functions as a telegraphic gazette. Of course, times change and new media paradigms develop and blah blah blah, but the distinction here is crucial: The original pretext for the creation of the CBC was the limited, theoretically public nature of broadcast spectrum. To the degree that the CBC is now just one digital content provider among many, with a hypothetized mandate that puts it in a position to compete with newspapers, it can rightly be privatized, or destroyed, or handed over to its own employees, in order to unburden the public treasury.

Polls always demonstrate high levels of purported political support for the CBC. The public subsidy to the CBC is a forced transfer of wealth from people who don’t like it to people who do, and the “dos,” unsurprisingly, like the set-up just fine. In the U.S., donor-funded, non-profit “public” radio is equally adored by fans; the only difference is that they’re asked to chip in for their preferred electronic smarm or go without. No social or economic arguments against privatization of the CBC are possible. It’s nothing but a zombie, slowly sucking up a dwindling fund of goodwill and nostalgia. Mr. Dressup is dead, folks.

Colby Cosh, “Why the CBC has outlived its usefulness”, Maclean’s, 2013-06-06

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