OPEC (Organization of Petroleum Exporting Countries)

As oil prices shot past the $57 mark in the crude futures markets on both sides of the Atlantic, OPEC, in a meeting in March 2005, raised its combined output by 500,000 barrels per day (bpd), reversing a December 2004 decision to cut production by 1 million bpd.

How times change! It is instructive to re-visit the incredibly very recent past.

Just two years ago, OPEC was preoccupied with production cuts. Indonesia's then Energy Minister, Purnomo Yusgiantoro, was unhappy with the modest production cut of 2 million barrels per day, adopted by the Organization of Petroleum Exporting Countries in April 2003, to be implemented from June 1, 2003. At the June 11, 2003 get-together in Qatar, he demanded further reductions.

The deal ultimately struck was so convoluted and loopholed that actual output declined by no more than 600,000 bpd, even with miraculously full compliance. Quotas were first raised before the Iraq war to 27.4 million bpd - a theoretical level, not met by actual supply. Crude prices, entering a period of seasonal weakening, dropped further on the June 2003 OPEC news.

Despite Nigerian and Venezuelan crude recovering from months of strife, this downtrend proved to be temporary. Demand soared in both West and East (China). Global excess capacity is at mere 1 million bpd - one fifth its prewar level and one fifth the amount needed to effectively regulate prices, according to the International Monetary Fund’s next "World Economic Outlook" (published in April 2005).

So, is OPEC dead in the water?

Far from it. As North American and North Sea production decline, the importance of Gulf producers soars. OPEC's eleven countries -  Algeria, Indonesia, Iran, Iraq (suspended in 1990, following its invasion of Kuwait), Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela - control one third to two fifths of global oil output and three quarters of the far more important residual demand - traded between net consumers and net exporters. Residual demand is set to double by 2010.

And OPEC counts among its ranks some of its most astute players in the oil markets. Example: Ali al-Naimi, the Saudi oil minister. Al-Naimi is widely credited with engineering the tripling of oil prices to more than $30 a barrel between 1998 and 1999. As the informal boss of the state-owned Saudi oil behemoth, Aramco, he had introduced postwar output cuts. The oil market is so volatile that even marginal production shifts affect prices disproportionately. Al-Naimi is a master of such fine tuning.

Yet, OPEC - led by Saudi Arabia, now off the US buddy list - faces fundamental problems that no tweaking can resolve. Iraq, in the throes of reconstruction and under America's thumb, may opt to exit the club it has founded in 1960 and, thus unfettered, flood the market with its 2.3 to 2.8 million bpd of oil. Insurgency permitting, Iraqi production can reach 7-8 million bpd in six years, completely upsetting the carefully balanced market sharing agreements among OPEC members.

This nightmare may be years away, what with Iraq's dilapidated and much-looted infrastructure and vehement international wrangling over past and future contracts. All the same, it looms menacing over the organization's future.

Far more ominous perils lurk in Russia, the second largest oil producer and growing. Though the cheapest and most abundant reserves are still to be found in the Persian Gulf, Central Asia and Russia are catching up fast.

Saudi Arabia regards itself as the market regulator. It keeps expensive, fully-developed wells idle as a 1.9 million bpd buffer against supply disruptions. It is this "self-sacrificial" policy that endows it with tremendous clout in the energy markets. Only the United States can afford to emulate it - and even then, the Saudi Kingdom still possesses the largest known reserves and sports the lowest extraction costs worldwide.

OPEC is, therefore, not without muscle. Saudi Arabia had punished uppity producers, such as Nigeria, by flooding the markets and pulverizing prices. Yet, the organization is riven by internecine squabbles about market shares and production ceilings. Giants and dwarves cohabit uneasily and collude to choreograph prices in what has long been a buyers' market. These inherent contradictions are detrimental. If OPEC fails to recruit another massive producer (namely: Russia) soon - it is doomed.

Paradoxically, the Iraq war is exactly what the doctor ordered. OPEC's only long-term hope lies in a geopolitical shift, the harbingers of which are already visible. Russia may join the cartel, disenchanted by an imperious and haughty USA - or the Europeans may "adopt" OPEC as a counterweight to the sole "hyperpower" newfound energy preeminence.

America announced its intention to pull out its troops stationed in Saudi Arabia. As this major producer is thrust into the role of the "bad guy", it acquires incentives to team up with other "pariahs" such as France and, potentially, Russia. Controlling the oil taps is a sure way to render the USA less unilateral and more accommodating.

US interests are diametrically opposed to those of oil producers, whether in OPEC's ranks or without. The United States seeks to secure an uninterrupted supply of cheap oil. Yet, a consistently low price level would go a long way towards reducing Russia back to erstwhile penury. It would also destabilize authoritarian and venal regimes throughout the Middle East.

This unsettling realization is dawning now on minds from Paris to Riyadh and from St. Petersburg to Tehran. As the United States looms large over both producers and consumers, the ironic outcome of the Iraqi war may well be a prolonged oil crunch rather than an oil glut.

A kidney fetches $2700 in Turkey. According to the October 2002 issue of the Journal of the American Medical Association, this is a high price. An Indian or Iraqi kidney enriches its former owner by a mere $1000. Wealthy clients later pay for the rare organ up to $150,000.

CBS News aired, five years ago, a documentary, filmed by Antenna 3 of Spain, in which undercover reporters in Mexico were asked, by a priest acting as a middleman for a doctor, to pay close to 1 million dollars for a single kidney. An auction of a human kidney on eBay in February 2000 drew a bid of $100,000 before the company put a stop to it. Another auction in September 1999 drew $5.7 million - though, probably, merely as a prank.

Organ harvesting operations flourish in Turkey, in central Europe, mainly in the Czech Republic, and in the Caucasus, mainly in Georgia. They operate on Turkish, Moldovan, Russian, Ukrainian, Belarusian, Romanian, Bosnian, Kosovar, Macedonian, Albanian and assorted east European donors.

They remove kidneys, lungs, pieces of liver, even corneas, bones, tendons, heart valves, skin and other sellable human bits. The organs are kept in cold storage and air lifted to illegal distribution centers in the United States, Germany, Scandinavia, the United Kingdom, Israel, South Africa, and other rich, industrialized locales. It gives "brain drain" a new, spine chilling, meaning.

Organ trafficking has become an international trade. It involves Indian, Thai, Philippine, Brazilian, Turkish and Israeli doctors who scour the Balkan and other destitute regions for tissues. The Washington Post reported, in November 2002, that in a single village in Moldova, 14 out of 40 men were reduced by penury to selling body parts.

Four years ago, Moldova cut off the thriving baby adoption trade due to an - an unfounded - fear the toddlers were being dissected for spare organs. According to the Israeli daily, Ha'aretz, the Romanians are investigating similar allegations in Israel and have withheld permission to adopt Romanian babies from dozens of eager and out of pocket couples. American authorities are scrutinizing a two year old Moldovan harvesting operation based in the United States.

Organ theft and trading in Ukraine is a smooth operation. According to news agencies, in August 2002, three Ukrainian doctors were charged in Lvov with trafficking in the organs of victims of road accidents. The doctors used helicopters to ferry kidneys and livers to colluding hospitals. They charged up to $19,000 per organ.

The West Australian daily surveyed in January 2002 the thriving organs business in Bosnia-Herzegovina. Sellers are offering their wares openly, through newspaper ads. Prices reach up to $68,000. Compared to an average monthly wage of less than $200, this is an unimaginable fortune.

National health insurance schemes turn a blind eye. Israel's participates in the costs of purchasing organs abroad, though only subject to rigorous vetting of the sources of the donation. Still, a May 2001 article in a the New York Times Magazine, quotes "the coordinator of kidney transplantation at Hadassah University Hospital in Jerusalem (as saying that) 60 of the 244 patients currently receiving post-transplant care purchased their new kidney from a stranger - just short of 25 percent of the patients at one of Israel's largest medical centers participating in the organ business".

Many Israelis - attempting to avoid scrutiny - travel to east Europe, accompanied by Israeli doctors, to perform the transplantation surgery. These junkets are euphemistically known as "transplant tourism". Clinics have sprouted all over the benighted region. Israeli doctors have recently visited impoverished Macedonia, Bulgaria, Kosovo and Yugoslavia to discuss with local businessmen and doctors the setting up of kidney transplant clinics.

Such open involvement in what can be charitably described as a latter day slave trade gives rise to a new wave of thinly disguised anti-Semitism. The Ukrainian Echo, quoting the Ukrinform news agency, reported, on January 7, 2002, that, implausibly, a Ukrainian guest worker died in Tel-Aviv in mysterious circumstances and his heart was removed. The Interpol, according to the paper, is investigating this lurid affair.

According to scholars, reports of organ thefts and related abductions, mainly of children, have been rife in Poland and Russia at least since 1991. The buyers are supposed to be rich Arabs.

Nancy Scheper-Hughes, an anthropologist at the University of California at Berkeley and co-founder of Organs Watch, a research and documentation center, is also a member and co-author of the Bellagio Task Force Report on Transplantation, Bodily Integrity and the International Traffic in Organs. In a report presented in June 2001 to the House Subcommittee on International Operations and Human Rights, she substantiated at least the nationality of the alleged buyers, though not the urban legends regarding organ theft:

"In the Middle East residents of the Gulf States (Kuwait, Saudi Arabia, and Oman) have for many years traveled to India, the Philippines, and to Eastern Europe to purchase kidneys made scarce locally due to local fundamentalist Islamic teachings that allow organ transplantation (to save a life), but prohibit organ harvesting from brain-dead bodies.

Meanwhile, hundreds of kidney patients from Israel, which has its own well -developed, but under-used transplantation centers (due to ultra-orthodox Jewish reservations about brain death) travel in 'transplant tourist' junkets to Turkey, Moldova, Romania where desperate kidney sellers can be found, and to Russia where an excess of lucrative cadaveric organs are produced due to lax standards for designating brain death, and to South Africa where the amenities in transplantation clinics in private hospitals can resemble four star hotels.

We found in many countries - from Brazil and Argentina to India, Russia, Romania, Turkey to South Africa and parts of the United States - a kind of 'apartheid medicine' that divides the world into two distinctly different populations of 'organs supplies' and 'organs receivers'."

Russia, together with Estonia, China and Iraq, is, indeed, a major harvesting and trading centre. International news agencies described, five years ago, how a grandmother in Ryazan tried to sell her grandchild to a mediator. The boy was to be smuggled to the West and there dismembered for his organs. The uncle, who assisted in the matter, was supposed to collect $70,000 - a fortune in Russian terms.

When confronted by the European Union on this issue, Russia responded that it lacks the resources required to monitor organ donations. The Italian magazine, Happy Web, reports that organ trading has taken to the Internet. A simple query on the Google search engine yields thousands of Web sites purporting to sell various body parts - mostly kidneys - for up to $125,000. The sellers are Russian, Moldovan, Ukrainian and Romanian.

Scheper-Hughes, an avid opponent of legalizing any form of trade in organs, says that "in general, the movement and flow of living donor organs - mostly kidneys - is from South to North, from poor to rich, from black and brown to white, and from female to male bodies".

Yet, in the summer of 2002, bowing to reality, the American Medical Association commissioned a study to examine the effects of paying for cadaveric organs would have on the current shortage. The 1984 National Organ Transplant Act that forbids such payments is also under attack. Bills to amend it were submitted recently by several Congressmen. These are steps in the right direction.

Organ trafficking is the outcome of the international ban on organ sales and live donor organs. But wherever there is demand there is a market. Excruciating poverty of potential donors, lengthening patient waiting lists and the better quality of organs harvested from live people make organ sales an irresistible proposition. The medical professions and authorities everywhere would do better to legalize and regulate the trade rather than transform it into a form of organized crime. The denizens of Moldova would surely appreciate it.

P-Q
Pakistan, Economy of

Causing trouble is sometimes a profitable business. The Taliban is, to a large extent, the creation of Pakistan. Yet, it stands to benefit greatly, economically as well as politically, from the destruction of the Taliban at the hands of the anti-terror coalition. In the process, its autonomous and contumacious intelligence services keep supplying the Taliban with food and weapons. The government denies either knowledge or responsibility but the border remains porous, to the economic benefit of many.

The self-appointed President of Pakistan, General Pervez Musharraf, said a few months ago that Pakistan was "on the road to economic recovery". This was incompatible with a simultaneous official reduction in the economic growth target of country (from 4.5% to 3.8%). But, in May, Pakistan's debt was being rescheduled with the blessings of the IMF (which contributed 200 million US dollars to the effort) and the World Bank (in the process of approving $700 million in soft loans). Yet another Paris Club rescheduling seemed imminent.

Two months later, talk was in the air about a multinationally-managed natural (non-liquefied) gas pipeline from Iran to India, through Pakistani territory. "The Economist" (July 14, 2001) estimated that "... the pipeline might yield Pakistan anything from $250m to $600m a year in transit fees".

There was cause for this optimism.

To their credit, Musharraf's skilled economic team of technocrats went where their predecessors feared to tread. They imposed a highly unpopular and much protested against sales tax on all retail trade. Musharraf threatened to imprison tax evaders and debt defaulters and backed his threat with (constitutionally dubious) arrests. The immediate result was that tax collection (by the outlandishly corrupt tax authorities) increased by c. $800 million in the 12 months to June 30, 2001 (the end of the Pakistani fiscal year) - though mostly from import inhibiting exorbitant customs and indirect taxes.

Funds, doled out by corrupt bank managers to defunct enterprises and used to roll over bad loans - were suddenly recalled. The hitherto symbolic prices of oft-wasted and oft-stolen oil, gas, and electricity were gradually increased and subsidies to state-owned utilities (such as cotton mills) decreased. This brought about a belated wave of painful restructuring and Pakistan's shambolic and patronage-based industries almost evaporated. Serious privatization is on the cards. The phone company is up for grabs and all privatization proceeds (optimists put them at $3 billion, realists at a billion dollars less) are earmarked to pay off foreign debt. The budget deficit stabilized around 5% of GDP (compared to 6.5% the year before), aided by a cut in defence spending (which reached 6% in 1997 but deteriorated ever since compared to India, whose defence spending increased by 40% in the same period). Despite growing energy costs, inflation was tamed, down to 4% (2000) from 8% (1999).

Yet, tax revenues are still less than 17% of GDP and less than 1.5% of all taxpayers bother to file tax returns of any kind. In other words, these largely cosmetic measures failed to tackle the systemic failure that passes for Pakistan's economy. Reform - both economic and political - was still sluggish and half-hearted, Pakistan's current account deficits ballooned (to $3 billion in 1999), the geopolitical neighbourhood roughened, and the world economy dived. Pakistan's imminent economic collapse looked inevitable.

Then came September 11. Weeks later, US sanctions imposed on Pakistan since 1990 and 1998 (following its nuclear tests) were waived by President Bush and he rescheduled $400 million in Pakistani debt to various agencies of the US administration. The predicted wave - which has yet to materialize - of 1.5 million Afghan refugees - was worth to Pakistan $600 million in US aid alone ($150 million of which were already disbursed).

The IMF - ostensibly an independent organization bent on economic reform and impervious to geopolitical concerns - swiftly switched from tentative approval (the second tranche of the almost twentieth IMF loan was approved in August, before the attacks) to unmitigated praise regarding Pakistan's economic (mis)management. The $200 million it so reluctantly promised in May and the $1 billion a year (for a period of 2-3 years) Pakistan was hoping to secure in August gleefully mushroomed to $2.5-3.5 billion in October. The rupee shot up in response. Debt forgiveness is discussed with Pakistan accorded a status of HIPC - Highly Indebted Poor Country - which it, otherwise, doesn't deserve, on pure macroeconomic grounds.

Consider this:

On September 10, each citizen of Pakistan, man, woman, and infant, owed only $300 in external government debt. This represented a mere 60% of GDP per capita (or 53% of GDP) in 1997. On that same year, Pakistan's GDP per capita was 25% higher than India's, average GDP growth in the two decades to 1997 was 5.7% p.a. (India - 5.8%), and it was rated 3.4 (India - 3.7) on the economic freedom index. After a dip in 1999 (3.1%) - growth picked up again to 4.5% , fuelled by bumper cotton and wheat crops in 2000. Pakistani citizens had as many durables as Indians. Definitely not an HIPC, Pakistan is an emerging middle-class east Asian country.

Admittedly, though, the picture is not entirely rosy.

Pakistan's external debt - mainly used to finance consumption and to plug holes in its uninterrupted string of unsustainable government budgets - was double India's (as proportion of GDP) and it had only 4% of India's foreign exchange reserves (c. $1 billion, enough for three weeks of imports). Per capita, it had 30% as much as India's foreign exchange reserves. As default loomed, growth collapse to 2.6% in 1995-2000, barely enough to sustain the increase in population. The usual IMF prescription (austerity) served only to depress consumption and deter FDI. Foreign direct investment was identical in both 2000 and 1988 - a meager $180 million (less than FDI in Kosovo's neighbour, Macedonia, with its 2 million citizens to Pakistan's 140 million).

Luckily for it, Pakistan has a (largely underground) vibrant though impromptu private sector which fills the vacuum left by the nefarious public sector. Many ostensibly public goods - from bus services to schools, from clinics to policing, from public toilettes to farming - are affordably provided by domestic, small time, entrepreneurs often aided by NGO's.

Yet, an economy is more than the sum of its statistics. A failed, feeble, passive-aggressive central government is largely supplanted in Pakistan by criminally-tainted regional political networks of patronage, venality, nepotism, and cronyism. More than 50% of all food aid may be squandered, "taxed" by local functionaries. Teachers pay schoolmasters a portion of salaries not to teach. Maintenance workers, sanitary squads, telephone installers, medical doctors, surgeons, professors in universities, policemen - all demand, and receive, bribes to fulfill their duties, or, more often, to turn a blind eye. Pakistan habitually trails the The UNDP's Human Development Index (which takes into account the quality of life - things like life expectancy, literacy, and gender and income inequalities). This dismal showing is after Pakistan made strides in literacy, life expectancy and decreasing infant mortality.

Since independence in 1947, Pakistan's GNP has quadrupled and income per capita has doubled. But it still spends more on defence than on health and education combined and less than most developing countries. The botched experiments with "Islamic economy" did not help. Pakistan, like certain belles, still survives on the kindness of others - remittances by expatriates and other external capital flows account for 10% of GDP and 50% of domestic investment. And the main export of this country is its skilled manpower - despite its surprisingly diverse economy. Less than one third of Pakistanis bother to vote - a clear and sad statement by abstention.
Patent Law

Forgent Networks from Texas wants to collect a royalty every time someone compresses an image using the JPEG algorithm. It urges third parties to negotiate with it separate licensing agreements. It bases its claim on a 17 year old patent it acquired in 1997 when VTel, from which Forgent was spun-off, purchased the San-Jose based Compression Labs.

The patent pertains to a crucial element in the popular compression method. The JPEG committee of ISO - the International Standards Organization - threatens to withdraw the standard altogether. This would impact thousands of software and hardware products.

This is only the latest in a serious of spats. Unisys has spent the better part of the last 15 years trying to enforce a patent it owns for a compression technique used in two other popular imaging standards, GIF and TIFF. BT Group sued Prodigy, a unit of SBC Communications, in a US federal court, for infringement of its patent of the hypertext link, or hyperlink - a ubiquitous and critical element of the Web. Dell Computer has agreed with the FTC to refrain from enforcing a graphics patent having failed to disclose it to the standards committee in its deliberations of the VL-bus graphics standard.

"Wired" reported yesterday that the Munich Upper Court declared "deep linking" - posting links to specific pages within a Web site - in violation the European Union "Database Directive". The directive copyrights the "selection and arrangement" of a database - even if the content itself is not owned by the database creator. It explicitly prohibits hyperlinking to the database contents as "unfair extraction". If upheld, this would cripple most search engines. Similar rulings - based on national laws - were handed down in other countries, the latest being Denmark.

Amazon sued Barnes and Noble - and has since settled out of court in March - for emulating its patented "one click purchasing" business process. A Web browser command to purchase an item generates a "cookie" - a text file replete with the buyer's essential details which is then lodged in Amazon's server. This allows the transaction to be completed without a further confirmation step.

A clever trick, no doubt. But even Jeff Bezos, Amazon's legendary founder, expressed doubts regarding the wisdom of the US Patent Office in granting his company the patent. In an open letter to Amazon's customers, he called for a rethinking of the whole system of protection of intellectual property in the Internet age.

In a recently published discourse of innovation and property rights, titled "The Free-Market Innovation Machine", William Baumol of Princeton University claims that only capitalism guarantees growth through a steady flow of innovation. According to popular lore, capitalism makes sure that innovators are rewarded for their time and skills since property rights are enshrined in enforceable contracts.

Reality is different, as Baumol himself notes. Innovators tend to maximize their returns by sharing their technology and licensing it to more efficient and profitable manufacturers. This rational division of labor is hampered by the increasingly more stringent and expansive intellectual property laws that afflict many rich countries nowadays. These statutes tend to protect the interests of middlemen - manufacturers, distributors, marketers - rather than the claims of inventors and innovators.

Moreover, the very nature of "intellectual property" is in flux. Business processes and methods, plants, genetic material, strains of animals, minor changes to existing technologies - are all patentable. Trademarks and copyright now cover contents, brand names, and modes of expression and presentation. Nothing is safe from these encroaching juridical initiatives. Intellectual property rights have been transformed into a myriad pernicious monopolies which threaten to stifle innovation and competition.

Intellectual property - patents, content libraries, copyrighted material, trademarks, rights of all kinds - are sometimes the sole assets - and the only hope for survival - of cash-strapped and otherwise dysfunctional or bankrupt firms. Both managers and court-appointed receivers strive to monetize these properties and patent-portfolios by either selling them or enforcing the rights against infringing third parties.

Fighting a patent battle in court is prohibitively expensive and the outcome uncertain. Potential defendants succumb to extortionate demands rather than endure the Kafkaesque process. The costs are passed on to the consumer. Sony, for instance already paid Forgent an undisclosed amount in May. According to Forgent's 10-Q form, filed on June 17, 2002, yet another, unidentified "prestigious international" company, parted with $15 million in April.

In commentaries written in 1999-2000 by Harvard law professor, Lawrence Lessig, for "The Industry Standard", he observed:

"There is growing skepticism among academics about whether such state-imposed monopolies help a rapidly evolving market such as the Internet. What is 'novel', 'nonobvious' or 'useful' is hard enough to know in a relatively stable field. In a transforming market, it's nearly impossible..."

The very concept of intellectual property is being radically transformed by the onslaught of new technologies.

The myth of intellectual property postulates that entrepreneurs assume the risks associated with publishing books, recording records, and inventing only because - and where - the rights to intellectual property are well defined and enforced. In the absence of such rights, creative people are unlikely to make their works accessible to the public. Ultimately, it is the public which pays the price of piracy and other violations of intellectual property rights, goes the refrain.

This is untrue. In the USA only few authors actually live by their pen. Even fewer musicians, not to mention actors, eke out subsistence level income from their craft.  Those who do can no longer be considered merely creative people. Madonna, Michael Jackson, Schwarzenegger and Grisham are businessmen at least as much as they are artists.

Intellectual property is a relatively new notion. In the near past, no one considered knowledge or the fruits of creativity (artwork, designs) as 'patentable', or as someone's 'property'. The artist was but a mere channel through which divine grace flowed. Texts, discoveries, inventions, works of art and music, designs - all belonged to the community and could be replicated freely. True, the chosen ones, the conduits, were revered. But they were rarely financially rewarded.

Well into the 19th century, artists and innovators were commissioned - and salaried - to produce their works of art and contrivances. The advent of the Industrial Revolution - and the imagery of the romantic lone inventor toiling on his brainchild in a basement or, later, a garage -  gave rise to the patent. The more massive the markets became, the more sophisticated the sales and marketing techniques, the bigger the financial stakes - the larger loomed the issue of intellectual property.

Intellectual property rights are less about the intellect and more about property. In every single year of the last decade, the global turnover in intellectual property has outweighed the total industrial production of the world. These markets being global, the monopolists of intellectual products fight unfair competition globally. A pirate in Skopje is in direct rivalry with Bill Gates, depriving Microsoft of present and future revenue, challenging its monopolistic status as well as jeopardizing its competition-deterring image.

The Open Source Movement weakens the classic model of property rights by presenting an alternative, viable, vibrant, model which does not involve over-pricing and anti-competitive predatory practices. The current model of property rights encourages monopolistic behavior, non-collaborative, exclusionary innovation (as opposed, for instance, to Linux), and litigiousness. The Open Source movement exposes the myths underlying current property rights philosophy and is thus subversive.

But the inane expansion of intellectual property rights may merely be a final spasm, threatened by the ubiquity of the Internet as they are. Free scholarly online publications nibble at the heels of their pricey and anticompetitive offline counterparts. Electronic publishing poses a threat - however distant - to print publishing. Napster-like peer to peer networks undermine the foundations of the music and film industries. Open source software is encroaching on the turf of proprietary applications. It is very easy and cheap to publish and distribute content on the Internet, the barriers to entry are virtually nil.

As processors grow speedier, storage larger, applications multi-featured, broadband access all-pervasive, and the Internet goes wireless - individuals are increasingly able to emulate much larger scale organizations successfully. A single person, working from home, with less than $2000 worth of equipment - can publish a Webzine, author software, write music, shoot digital films, design products, or communicate with millions and his work will be indistinguishable from the offerings of the most endowed corporations and institutions.

Obviously, no individual can yet match the capital assets, the marketing clout, the market positioning, the global branding, the sales organization, and the distribution network of the likes of Sony, or Microsoft. In an age of information glut, it is still the marketing, the media campaign, the distribution, and the sales that determine the economic outcome.

This advantage, however, is also being eroded, albeit glacially.

The Internet is essentially a free marketing and - in the case of digital goods - distribution channel. It directly reaches 200 million people all over the world. Even with a minimum investment, the likelihood of being seen by surprisingly large numbers of consumers is high. Various business models are emerging or reasserting themselves - from ad sponsored content to packaged open source software.

Many creative people - artists, authors, innovators - are repelled by the commercialization of their intellect and muse. They seek - and find - alternatives to the behemoths of manufacturing, marketing and distribution that today control the bulk of intellectual property. Many of them go freelance. Indie music labels, independent cinema, print on demand publishing - are omens of things to come.

This inexorably leads to disintermediation - the removal of middlemen between producer or creator and consumer. The Internet enables niche marketing and restores the balance between the creative genius and the commercial exploiters of his product. This is a return to pre-industrial times when artisans ruled the economic scene.

Work mobility increases in this landscape of shifting allegiances, head hunting, remote collaboration, contract and agency work, and similar labour market trends. Intellectual property is likely to become as atomized as labor and to revert to its true owners - the inspired folks. They, in turn, will negotiate licensing deals directly with their end users and customers.

Capital, design, engineering, and labor intensive goods - computer chips, cruise missiles, and passenger cars - will still necessitate the coordination of a massive workforce in multiple locations. But even here, in the old industrial landscape, the intellectual contribution to the collective effort will likely be outsourced to roving freelancers who will maintain an ownership stake in their designs or inventions.

This intimate relationship between creative person and consumer is the way it has always been. We may yet look back on the 20th century and note with amazement the transient and aberrant phase of intermediation - the Sony's, Microsoft's, and Forgent's of this world.

Pharmaceuticals ( in Central and East Europe)

In early October 2006, New Jersey-based Barr Pharmaceuticals Inc. has acquired 73% of Pliva Pharmaceuticals, Croatia's and, arguably, the Balkans' largest pharmaceutical company. Pliva, established in the 1920s, specializes in generic drugs. Barr paid almost 3 billion US dollars for its acquisition.

But Pliva is way beyond its prime. In the 1980s it was a major player in the research and development of new drugs in the Eastern Bloc. It maintained facilities in Poland, the Czech Republic, and Hungary. Pliva's antibiotic Sumamed is still a bestseller throughout Europe. But a few years ago it shut down all its non-manufacturing operations and concentrate on marketing its stable of brand and generic drugs through 30 affiliates the world over.

Novartis, the Swiss drug giant announced In mid-January 2003 that it will unite its 14 brands of generic drugs under the Sandoz name, harking back to its origins as a manufacturer of affordable, off-patent, medication and raw materials ("active ingredients"). The rebranding will engulf the company's central and east European units, including Biochemie in Austria and Azupharma in Germany - but not Lek in Slovenia.

This exclusion signifies the strength of the pharmaceuticals sector in the formerly communist countries in transition. Even in economically abysmal Macedonia, Alkaloid, a local drug manufacturer, is thriving. It employs almost 1400 workers and dabbles in chemicals, coatings and cosmetics. It is locally renowned for its research and development, heavy investment in quality control and high wages.

Alkaloid is a veritable multinational with operations in Switzerland, Russia, Slovenia, Croatia, Bosnia & Herzegovina, Yugoslavia, Bulgaria and Albania. It is partly owned by the European Bank for Reconstruction and Development (EBRD) and the World Bank's International Finance Corporation (IFC).

Still, with annual sales of c. $50 million, it is a minion compared to the likes of Lek Slovenia and the Croatian Pliva.

Lek Slovenia has subsidiaries in twenty countries, including Nigeria, Pakistan and virtually all of central and east Europe. Besides drugs, the group manufactures - usually through autonomous companies - animal care products as well as medical devices.

The group employs 4000 people worldwide. Production is distributed. In July 2002, Lek laid the foundation stone for a factory in Romania, for instance. This was followed in September 2002 by a cornerstone for a new logistics and production center in Poland. It maintains representative offices from Bulgaria to China.

Lek is an aggressive mid-sized player. It just started marketing, in the lucrative US market, Augmentin, the generic form of GalxoSmithKline's (GSK) off-patent blockbuster. GSK promptly sued Lek and three other firms in Switzerland, India and Israel. But Lek is undeterred. It expected to sell $100 million of Amoxiclav, its version of the drug annually - but booked $27 million of orders on the first day.

Lek's sales exceeded $420 million in 2002 and grew by a whopping 42 percent the year after, according to its management. Most of this phenomenal growth is attributable to Amoxiclav.

Pliva is by far the region's pharmaceutical behemoth. With its $750 million in consolidated revenues and 30 percent income growth rate it combines a mid-tech business with hi-tech growth. Pliva's net income in 2002 exceeded $140 million and earnings before interest and taxes - excluding extraordinary items - is at a respectable, though uninspiring, 8 percent.

The expiry in 2005, of the US patent of Azithromycin, the company's flagship product, made a serious dent in its portfolio. It is feverishly developing in-house generic and specialty products to weather the anticipated blow to revenues and operating profits. Pliva has R&D collaboration agreements with leading global pharmaceutical firms, such as GlaxoSmithKline.

Pliva's total assets are close to $1.5 billion with $750 million in shareholders' equity. Its current cash flow is much sounder than in the early 2000s though the picture is marred by a precipitously declining net working capital and hefty increases in liabilities. Pliva's leverage surged by almost half to 57 percent by end-September 2002.

The company is expanding aggressively throughout the world, even in in rich markets such as the United States, where it purchased Sidmak Laboratories last year and Denmark, where it took over 2K Pharmaceuticals (renamed Pliva Pharma Nordic). Other target countries included Germany, France, the United Kingdom and the Czech Republic. In 2002, the first drug developed in-house by Pliva was registered in the European Union.

Pliva's cosmetics, food and agrochemicals production units were divested and spun off as stand alone companies. Some of these, in turn, were sold to erstwhile competitors. Like many European drug companies, Pliva subcontracts the manufacture of many of its formulas to cheaper developing countries, such as India, where, earlier this month, it inked an agreement with a production and marketing outfit called Kopran.

Pliva also doubles as a distributor. In October 2002, for instance, it became the exclusive distributor in central and east Europe, NIS and Turkey of the British firm, Allergy Therapeutics. These regional markets - even the most advanced ones in the EU candidates - are considered so idiosyncratic and risky that western manufacturers opt to work through indigenous venues rather than establish their own presence.

Consider one of the most promising - and hitherto, disappointing - markets: the Czech Republic and Slovakia. It is teeming with activity. In January 2003, for instance, Warburg Pincus, an American investment fund, acquired Slovakofarma by merging it with Leciva, another Slovak manufacturer double its size. This yielded the largest pharmaceutical firm in central Europe with intentions to expand in Poland, Russia and the countries of the former USSR.

Yet, underneath the veneer of civility and financial froth lurk serious faults.

Producers are forced by Czech healthcare providers, health authorities and domestic insurance companies to trim their prices. Even so, the entire health care system in the Czech republic - especially public hospitals - is close to insolvency. The Prague Tribune reported how AVEL - the Association of Drug Distributors - decided to sue debtor hospitals. Among the litigants, pharmaceutical distributors Aliance Unichem, Phoenix, Purus, and Gehe, which account for 70% of the market, and are owed c. $25 million. This illiquidity and coercive differential pricing encourage the use of cheap generics.

The Prague Tribune quotes Pavol Mazan, the executive director of the International Association of Pharmaceutical Companies (MAFS):

"The Ministry of Health boasts that in this country there is a fully paid drug for every disease. But the problem is that a drug paid for (by the insurer) is the least expensive, and in many cases it is less effective. The result is that of the six most important therapeutic groups, there are no new, imported drugs in five of them."

The paper notes that, in the Czech Republic, generic drugs account for 45 percent of all medications sold, compared to 15 percent in the EU. Next year's accession is supposed to improve market conditions considerably, though.

The stories of drug companies in central and east Europe revolve around the same axes: international diversification, poaching the off-patent portfolios of other pharmaceuticals, mixing generic and specialty drugs, in-house research and development heavily titled towards generics, expanding through mergers and acquisitions, subcontracting production to cheaper locales, divesting non-core activities and catering to the marketing and distribution needs in central and east Europe of American and west European drug multinationals.

Consolidation is inevitable. Global giants, such as Novartis (Europe's third largest) are already gobbling up mid-sized manufacturers in the countries in transition. These, in turn, look to purchase and assimilate small to puny producers, such as Alkaloid in Macedonia. Those who survive the onslaught will be either huge (by regional standards) or specialty niche players (boutiques). Such polarity will make for a much healthier industry, able to invest in the spiraling R&D costs of new product development.

The latest census in Ukraine revealed an apocalyptic drop of 10% in its population - from 52.5 million a decade ago to a mere 47.5 million last year. Demographers predict a precipitous decline of one third in Russia's impoverished, inebriated, disillusioned, and ageing citizenry. Births in many countries in the rich, industrialized, West are below the replacement rate. These bastions of conspicuous affluence are shriveling.

Scholars and decision-makers - once terrified by the Malthusian dystopia of a "population bomb" - are more sanguine now. Advances in agricultural technology eradicated hunger even in teeming places like India and China. And then there is the old idea of progress: birth rates tend to decline with higher education levels and growing incomes. Family planning has had resounding successes in places as diverse as Thailand, China, and western Africa.

In the near past, fecundity used to compensate for infant mortality. As the latter declined - so did the former. Children are means of production in many destitute countries. Hence the inordinately large families of the past - a form of insurance against the economic outcomes of the inevitable demise of some of one's off-spring.

Yet, despite these trends, the world's populace is augmented by 80 million people annually. All of them are born to the younger inhabitants of the more penurious corners of the Earth. There were only 1 billion people alive in 1804. The number doubled a century later.

But our last billion - the sixth - required only 12 fertile years. The entire population of Germany is added every half a decade to both India and China. Clearly, Mankind's growth is out of control, as affirmed in the 1994 Cairo International Conference on Population and Development.

Dozens of millions of people regularly starve - many of them to death. In only one corner of the Earth - southern Africa - food aid is the sole subsistence of entire countries. More than 18 million people in Zambia, Malawi, and Angola survived on charitable donations in 1992. More than 10 million expect the same this year, among them the emaciated denizens of erstwhile food exporter, Zimbabwe.

According to Medecins Sans Frontiere, AIDS kills 3 million people a year, Tuberculosis another 2 million. Malaria decimates 2 people every minute. More than 14 million people fall prey to parasitic and infectious diseases every year - 90% of them in the developing countries.

Millions emigrate every year in search of a better life. These massive shifts are facilitated by modern modes of transportation. But, despite these tectonic relocations - and despite famine, disease, and war, the classic Malthusian regulatory mechanisms - the depletion of natural resources - from arable land to water - is undeniable and gargantuan.

Our pressing environmental issues - global warming, water stress, salinization, desertification, deforestation, pollution, loss of biological diversity - and our ominous social ills - crime at the forefront - are traceable to one, politically incorrect, truth:

There are too many of us. We are way too numerous. The population load is unsustainable. We, the survivors, would be better off if others were to perish. Should population growth continue unabated - we are all doomed.

Doomed to what?

Numerous Cassandras and countless Jeremiads have been falsified by history. With proper governance, scientific research, education, affordable medicines, effective family planning, and economic growth - this planet can support even 10-12 billion people. We are not at risk of physical extinction and never have been.

What is hazarded is not our life - but our quality of life. As any insurance actuary will attest, we are governed by statistical datasets.

Consider this single fact:

About 1% of the population suffer from the perniciously debilitating and all-pervasive mental health disorder, schizophrenia. At the beginning of the 20th century, there were 16.5 million schizophrenics - nowadays there are 64 million. Their impact on friends, family, and colleagues is exponential - and incalculable. This is not a merely quantitative leap. It is a qualitative phase transition.

Or this:

Large populations lead to the emergence of high density urban centers. It is inefficient to cultivate ever smaller plots of land. Surplus manpower moves to centers of industrial production. A second wave of internal migrants caters to their needs, thus spawning a service sector. Network effects generate excess capital and a virtuous cycle of investment, employment, and consumption ensues.

But over-crowding breeds violence (as has been demonstrated in experiments with mice). The sheer numbers involved serve to magnify and amplify social anomies, deviate behaviour, and antisocial traits. In the city, there are more criminals, more perverts, more victims, more immigrants, and more racists per square mile.

Moreover, only a planned and orderly urbanization is desirable. The blights that pass for cities in most third world countries are the outgrowth of neither premeditation nor method. These mega-cities are infested with non-disposed of waste and prone to natural catastrophes and epidemics.

No one can vouchsafe for a "critical mass" of humans, a threshold beyond which the species will implode and vanish.

Luckily, the ebb and flow of human numbers is subject to three regulatory demographic mechanisms, the combined action of which gives hope.