Economist 7/4/16

  1. On July 4th, 1776 America’s newly-formed Continental Congress ratified the Declaration of Independence, formally separating ties with the British crown. While the geopolitical consequences of Amexit are clear, relatively little attention has been paid to the economic flows to and from Britain slowed and government debt rose from 106% of GDP to over 150% by the end of the war. Investors were worried: yields on consols (government bonds with no expiration date) shot up two percentage points, while share prices fell and would not recover until five years after the war. Breaking up is hard to do.
  2. AS NIGHT follows day and Eid al-Fitr follows Ramadan, there is anticipation over the release of Salman Khan’s movie “Sultan”which is about a down-and-out wrestler.He represents one of Bollywood’s triumvirate of stars, all called Khan (unrelated to each other). Each dominates a different annual holiday. Shah Rukh Khan, a favourite of the middle classes, is the hero of the Diwali weekend. Aamir Khan, more highbrow, dominates Christmas. Between them, the trio have released a film on 14 of the past 15 big festive weekends, occasionally switching around.Other actors and their producers must release their films at other, less profitable times, such as Independence Day—or await an off-year for the Khans.As the industry churns out more big films, a successful launch is more important than ever. With a “carpet-bombing” publicity strategy, the opening weekend of a blockbuster can account for as much as 60% to 70% of box-office takings.
  3. For economists,auctions is the best solution to most problems. It is more elegant than the other two main forms of setting a fee: haggling and menu pricing. The former is inefficient because the seller might not be negotiating with the person prepared to pay the most. The latter will be inefficient unless the seller has exhaustive knowledge of the supply and demand conditions and can quickly adjust his prices accordingly.Airlines generally take a version of the latter approach. They use dynamic pricing that calculates demand for seats on their planes and updates the fare accordingly.Singapore Airlines has unveiled a new bidding system in which economy-class flyers can bid for a swankier seat in premium economy. Passengers receive an e-mail around a week before the flight asking whether they would like to bid for an upgrade and setting a minimum price. This can then be changed or cancelled any time until 50 hours before the flight, when the “winners” are informed.
  4. Road names and building numbers are so sparse there that fewer than 1% of Mongolians do.Mongol Post is adopting an ingenious new system of addresses that can locate any place in the country—and, indeed, in the world. Instead of house number, street name, town, province and so on, or the unwieldy co-ordinates of latitude and longitude, this system, the brainchild of Chris Sheldrick, boss of What3Words, a firm based in London, divides the Earth’s surface into nine-metre-square blocks.Each block is then given names consisting of trios of randomly selected, unrelated words. One patch of Siberia, for example, is called, in English, “mirroring.surrendered.epidemics”.
  5. Divvying up Earth’s surface into nine-metre-square blocks requires nearly 57 trillion addresses (to be precise, 56,764,364,951,858 of them). That sounds a lot, but Mr Sheldrick realised that 40,000 words would be enough to do the job—indeed, more than enough, since that number actually yields 64 trillion three-word combinations. Moreover, places that are at sea have only English addresses. The other languages, restricted to the land, thus require a mere 25,000 words each.Besides nailing down locations in Mongolia, Mr Sheldrick’s system is also proving useful in the favelas of Rio de Janeiro. That city’s government has, according to Sila Vieira da Silva, failed to generate addresses fast enough to keep up with the new shacks and alleyways appearing in these shanty towns. Not only are they easy to memorise, type out and communicate by phone, Mr Atalla says people also like the precision of directing others to, say, a specific entrance rather than an entire building, or to a picnic spot instead of the whole park.

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