The Excel mistake that changed the world

In 2010, two leading Harvard economists, Carmen Reinhart and Kenneth Rogoff, published a paper. They had found that debt levels exceeding 90% of GDP led to a decline in economic growth. Governments took notice, and policies were implemented to reduce debt, with sometimes draconian austerity measures.

George Osborne quoted the paper as he introduced his measures to repair Britain’s economy. We are still living with the consequences.

The problem is that their results were wrong.

The Harvard professors had used Excel, and had accidentally only included 15 of the 20 countries under analysis in their key calculation. It made a big difference to their results. Their finding of a decline in GDP of 0.1% was really a increase of 2.2%.

As their data had grown, they had failed to change the formula.

Excel is a great tool. It’s intuitive, easy to work with, and presents results well with graphs and pivot tables.

It’s the best tool for creating and checking complex algorithms, doing financial projections, and quick and dirty calculations.

It falls down when handling big data, data that grows over time, or there are multiple users making updates.

It’s easy to end up with multiple versions of the data, and then have to decide which is correct.

Excel makes entering data easy. But it’s also easy to make mistakes. Validations to guard against bad data have to be programmed in. Garbage in – garbage out.

Ray Panko, a professor at the University of Hawaii and the elder statesman of small coterie of research academics who study Excel errors, claims that 84 percent of spreadsheets contain some kind of materially significant error. Other economists agree.

Databases are not visual, not in the way that Excel is. The terminology and design can seem arcane. You can’t just open a database and start entering data. They’re not intuitive. They are also not as complex as they seem.

So, which should you use? – The answer: both.

It’s a matter of deciding which is the right tool for the job. It’s not necessary to decide up front. Using Excel to become familiar with the data is a great way to start a database project. When you get going, importing the initial data into the database is easy. so nothing’s lost.

Having an existing spreadsheet that should be a database is an excellent way to learn. The best choice for a project is one where you’re struggling to tie up the relationships in the data. What’s difficult in Excel is easy in a database.

Great, now the data is in a database, but now you need to present the result of your analysis. Simple. Export the summaries into Excel and do it there. It’s easy to do, and it’s the best tool for the job.

What about the cost? Unlike Excel, many of the best databases are open source and free.

So, how do you get started. Next time.

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A surprise solution

Like many wealthy countries, Switzerland’s population is aging fast. In 1960, the median age was 32.7. Now it’s close to 43. The fertility ratio is well below the 2.1 replacement level, at 1.54. The age dependency ratio has moved from 15.5% in 1960 to 27.6% today. But Switzerland’s incredible wealth hides the growing problem.Switzerland age dependency ratioSwitzerland fertility rate

The country is attractive. It’s close to the top of most global rankings. The immigration queue is long. Few get in. Even the very rich can struggle. Roman Abramovich was refused citizenship because he posed a “reputation risk”. And for those who aren’t in the 1%, the cost of living is a concern.

The growing shortage of young working people shows up fastest in the job categories that are least attractive. When demand exceeds supply, the price goes up. That’s happening.

A recent experience provides an example. We had a problem with hot water. The plumber quoted CHF4,148 ($4,160) to replace the hot water cylinder, an extraordinary amount in any other country. Not only that, a little experimentation revealed that the hot water cylinder was not the source of the problem.

Refugees offer the solution. In a conservative country, that seems like political suicide. Not handled properly, it is.

Xenophobia aside, refugees become a real problem when they can’t or won’t integrate. Integration works best at the community level. National policies cannot create community acceptance. Acceptance requires leadership at the community level, and a community that is a community.

Switzerland accepts refugees. Anecdotal evidence suggests that refugees are increasingly turning to crime. In the past 9 years Switzerland’s overall crime rate has dropped by over 20%. That improvement hides the growth in some categories of minor crime. If the anecdotal evidence is correct, then some refugees are not integrating.

The two problems have one solution. Train the refugees to provide services that are becoming overpriced. To be sure, it’s not that simple. That’s where the community comes in. People working together find answers to challenges that initially seem intractable.

And working towards a common goal integrates the community.

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Letter to the Managing Director of Pickfords

Attention: Mr Russell Start
Managing Director
Pickfords

Dear Sir,

Moving home is stressful even for people that do it regularly. It is no doubt the reason that Pickfords’ advertising places emphasis on customer satisfaction, telling prospective clients that everything is in good hands.

With years of familiarity with the brand, it was reassuring to hear that Pickfords had been selected as my mover. My experience has not borne out that confidence.

The moving team were courteous, efficient and competent. The rest of the experience was horrible.

Like an increasing number of Britons, I’m a keen cyclist. Packing a high end bicycle requires specialist knowledge. The pre-packout inspection report raised the suspicion that Pickfords does not have that knowledge.

The most crucial components on a bicycle are left exposed to damage with the usual approach using plenty of bubblewrap and a bespoke box. It is more cost-effective, both for the client and the mover, to use boxes that are specifically designed for transporting bicycles. Anyone who has bought a bicycle online will be familiar with the packing that works.

On raising the concern, the response from Pickfords did little to allay my fears. The clichés about following international standards failed to confirm that Pickfords uses boxes that protect a bicycle properly. And so it turned out.

During the packout inspection, I’d stressed the bicycles, and the Chiwara, an almost irreplaceable artefact from Mali. The issue of batteries for the airfreight portion of the shipment was raised, and I had confirmed that the batteries from the drone would be removed.

On packout, the failure to provide the correct boxes for the bikes increased the shipping weight exponentially. For example. the frame of one of the bikes, which weights less than 5kg, resulted in a packed weight of 15kg, with an increased risk of damage to some of the most expensive components.

Soon after packout the Pickfords adminstrator contacted me saying that customs had raised an issue about the batteries in the airfreight, particularly the drone which locked in a protective casing. These items had not been shipped. I explained that the lock is TSA compliant, and that all batteries were in compliance with international airfreight regulations. It was clear from the exchange that the Pickfords team had no familiarity with the relevant regulations and entered into a polemic on the subject. Eventually, once provided with the regulations, they conceded that they were wrong.

In frustration, I provided the combination for the TSA lock to the Pickfords administrator, under the condition that the drone was repacked exactly as it had been when opened, allowing them to confirm that the battery had been removed. To justify their ignorance of the regulations, they claimed that the battery in the drone controller was an issue, and removed the controller.

Without informing me, the items with batteries that were in the airfreight were put into my wife’s shipping. My wife is headed for the Americas. I am in Europe. I will never see those things again.

The bikes arrived undamaged. The Chiwara is broken.IMG 557927742 The drone had not been properly repacked, and the gimbal was left exposed, putting that sensitive part at risk of damage.

Perhaps these failures explain why, in Pickfords’ 400 year history, in the past 10 years it has been under administration twice. Companies that put their customers first succeed. Pickfords is not one of them.

Sincerely,
Roy R Dalle Vedove

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Where are Vietnam’s traffic police?

With it’s extraordinary road mortality rate, it’s fair to wonder what Vietnam’s traffic police are doing.

2017 05 25 10 11 48 1

The largest proportion of road fatalities are motorcyclists. In Vietnam, motorcycles aren’t just a form of transport. They are an important part of the haulage system. It is not unusual to see a television or a washing machines, bleating livestock, and passengers on the back of a motorcycle.2017 05 26 08 57 30 So, the traffic police concentrate on motorcyclists. It is in the implementation that the problem becomes evident. The police usually stop motorcyclists to inspect papers, rather than for infractions of the road regulations.

201512110010While casual observation suggests an almost equal distribution of the sexes amongst motorcyclists, it is often women who are the target of inspections. Because women frequently have to transport their children, so tend to be conservative drivers. The men, particularly the young ones, are are those who are reckless.

IMG 522466305

Also. the location of the inspections is questionable. They appear to be chosen for a suitability to ambush, rather than with any consideration to the danger that they may pose. Motorcyclists are banned from using the motorways, except when they are the only means of crossing rivers. The on ramp onto a motorway is potentially hazardous under any circumstances, and especially so if it is selected as an ambush point.

And so it proved when a motorcyclist swerved into me as a traffic officer ran into the road to make a stop. No one fell off, and in Vietnam minor collisions don’t even warrant stopping to check for damage. Except that the point of contact on the bicycle was the derailleur, the most expensive component on an already expensive bike.2017 07 23 09 55 46

The traffic police denied all culpability. If anything, they appeared to be amused. In their opinion, it was the motorcyclist’s fault. Their failings, in the location of the ambush, causing the motorcyclist to swerve, and failing to prevent him from leaving the site of an accident, were not a problem in their opinion.

There is an issue with training, and until that is resolved, Vietnam’s motorcyclists will continue to die.

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Vietnam’s Upcoming FATF Mutual Evaluation Report

After China, Vietnam has enjoyed the world’s second fastest growing economy for the past 25 years1. Adopting the formula established by Japan, Korea, and China, Vietnam’s success is export driven. The country’s strength is its young, educated and productive workforce1)Vietnam’s success merits a closer look.20160806 FNC215

In 2012, Vietnam’s economy suffered a setback to both exports and economic growth as China’s economy slowed, and the FATF downgraded Vietnam’s status to that of a jurisdiction not making sufficient progress2)Improving Global AML/CFT Compliance: on-going process – 16 February 2012.

At least two international Banks, HSBC and Wells Fargo terminated their corresponding banking relationships with domestic Vietnamese banks making it extremely difficult for the Vietnamese banks to conduct business on the world stage.
Vietnam GDP growth

By February 2014, Vietnam’s status with the FATF had been restored to that of a jurisdiction no longer subject to the FATF’s on-going global AML/CFT compliance process3)High-risk and non-cooperative jurisdictions and the country’s economic progress was restored4)Vietnam.

The first FATF AML/CTF Mutual Evaluation Report (MER) for Vietnam occurred in 2009. It was that evaluation that led to the 2012 downgrading. Vietnam’s next evaluation is scheduled 2019, and will be based on criteria set out in the 2012 FATF recommendations5)Methodology for Assessing Technical Compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems which place increased emphasis on effectiveness, rather than just compliance.

Vietnam is a known trade route into China for illicit Ivory and rhino horn. Increasingly it is also believed that the illegal wildlife traders worldwide are linked to drug smuggling6)Do dope-smugglers also peddle ivory?. Vietnam has a reputation as one of the worst wildlife trafficking hubs7)Vietnam’s crackdown on traffickers of endangered species is only superficial, which makes it surprising that it has such a poor track record for the AML/CFT prosecutions.

It appears that vested interests are a serious factor undermining the willingness of authorities to introduce the necessary legislation, and then investigate and prosecute the crimes8)Graft-busting in Vietnam.

According to Transparency International, Vietnam has the second highest level of corruption in the Asia Pacific region9)People and Corruption: Asia Pacific. The banks, which are key to the effectiveness of AML/CFT, are also riddled with corruption10)What a spate of arrests says about Vietnam’s banking sector.

Direction from senior party leadership is required to give the relevant authorities the motivation to save Vietnam from a relapse in its FATF status.

If Vietnam’s economic growth is to stay on course, it’s leaders will need to recognize the threat that the country faces from failure to prove the effectiveness of its commitment to AML/CFT, at the next MER.

As Asian countries compete with each other, the importance of GDP figures for political leaders cannot be overstated. As evidence, Vietnam has the reputation of publishing GDP statistics impossibly early, before the end of the year11)Is India Lying About Its World Beating Economy?.

Sustained commitment to meeting the FATF recommendations at the highest level of government is the only way for Vietnam to ensure that it obtains a positive evaluation in 2019.

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Footnotes

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