Friday, July 18, 2014

Surprise! Tech makes us happier

Peter Diamandis (Chairman/CEO of X-Prize Foundation) via Instapundit:

Regardless of what the naysayers believe about human interaction and social media, the data shows us that the abundance of technology is actually increasing the abundance of happiness all over the world.
Related: Is Silicon Valley Funding the Wrong Stuff? (TechCrunch)

Wednesday, July 16, 2014

Uber/Lyft: The best regulators are consumers

Except it means giving up control for actual regulators. Mark Perry via Instapundit:

As I’ve noted before, it’s important to remember that Uber and Lyft are already very heavily regulated ride-sharing services, and in some ways they are regulated even more intensely than traditional taxis by a very ruthless group of regulators – the consumers who use their services. The issue really isn’t regulated versus unregulated ride services; the issue really is who is the primary regulator: a) government bureaucrats and legislators who are often captured by the regulated taxi cartels or b) consumers. And there’s no question that captured regulators almost always put the special interests of the well-organized, concentrated groups of regulated producers like the taxi cartel over the public interest of the dis-organized, dispersed thousands/millions of consumers.

In defense of usury, part xxx

The US Obama Administration is attempting to decimate the pay day lending industry through regulation and coercion. Lawyer, Ronald L. Rubin argues in the WSJ why this is misguided - and these attacks hurt those they are most supposed to help:

The CFPB should only create programs to educate consumers about payday loans, pass regulations to ensure that lenders follow existing laws and prosecute businesses that don't treat borrowers honestly. The Dodd-Frank law requires these actions, and no more. The CFPB wasn't created to protect consumers from themselves.

Informed consumers who take out a loan have calculated that they are better off with that loan than without it. A borrower's desperation does not alter this equation. A man whose car is about to be repossessed may calculate that he is better off taking out a payday loan than losing his job because he lacks transportation. The government is blind to such motivations, and it can harm consumers by substituting its judgment for theirs. It is better to help consumers make good decisions than to make decisions for them.

China's looming bad debt crisis

Something to keep an eye on. From Michael Pettis:

[...] we cannot simply put the bad debt behind us once the economy is “reformed” and project growth as if nothing happened. Earlier losses are still unrecognized and hidden in the country’s various balance sheets. These losses will either be explicitly recognized or they will be implicitly amortized. The only interesting question, as I see it, is which sector will effectively be assigned the losses. This is a political question above all, and its answer will tell us a great deal about how the newly-constituted, “reformed” China will grow over the next few decades.

Monday, July 14, 2014

Too many entrepreneurs not enough factory workers?

While the article is provocatively titled "Please do not teach this woman to fish", Daniel Altman at ForeignPolicy asks if the microfinance industry is overfunded:

Along with them came the microfinance programs -- as well as many other aid schemes designed to promote entrepreneurship -- which were often based in rural villages where repayment would be enforced primarily by peer pressure among the members. These programs tended to target women, who were viewed as more reliable stewards of the groups' money. Some women did manage to start their own businesses with the loans they received, but the verdict of research into microfinance's ability to reduce poverty was decidedly mixed.

There was a simple reason for this. By trying to make microfinance less risky and more sustainable, the program managers also made it less effective. To understand why, consider a common-sense question: How big can a business be in a rural village? There aren't many customers there, and incomes aren't very high either. A business would have to serve several villages to start creating jobs in any significant numbers. Now, consider rural women with families. They may be reliable repayers of loans, but they're much less mobile than single men. Single men can move to cities, or at least cover a lot of ground in the countryside, in an effort to win new customers. By contrast, even women without children face constraints on their movements in plenty of countries.

Microfinance may have given a lot of people a little, but it was never designed to give anyone a lot. Unlike the microenterprises founded in rural villages, businesses that serve lots of customers take advantage of economies of scale in production and distribution. These economies of scale are essential for economic growth. After all, which economy is more productive -- one in which every single person is an entrepreneur, or one in which a minority of entrepreneurs employ the majority of people?

In fact, poor countries already have many more entrepreneurs per capita than rich countries. More entrepreneurship is not what they need; economies of scale are. Indeed, the most productive economies are the ones that balance economies of scale with the benefits of competition. Too many businesses, and workers will fall short of their maximum productivity. Too few businesses, and monopolists will gouge consumers, quash innovation, and fail to serve the entire market.
I don't think the problem is with entrepreneurship though - or even subsidies that are reducing the risk of 'subsistence entrepreneurship', but red tape/quagmire that bogs down successful entrepreneurs and an inability to access capital at the same costs as some of their smaller competitors thereby preventing them from scaling.

Chris Blattman: "Development must be seized, through struggle. It cannot be given."

Great quote. Blattman also quotes Owen Barder:

Too often we think of scaling up in development like rolling a new product line across an existing series of shops. That’s the wrong model. Scaling up in development is more like building a series of separate businesses from scratch, each in a different market.

…Instead of thinking that creating capable organisations will deliver results effectively, perhaps successful organisations are the consequence, not the cause, of success. Capability in formal organisations is what happens when successful folk practices, which evolve out of years of struggle and adaptation, are consolidated into formal processes.

Who does "Fairtrade" help?

Guild ridden liberals in the west? Because apparently it's not the low paid workers in developing countries (SOAS).

Thursday, July 10, 2014

"Why does doomsaying dominate discussions about new technologies?"

From GMOs to plastics to energy it's a familiar pattern - I think the most important takeaway here is that the doomsaying is nothing new (Techliberation):

Clive Thompson notes that “dystopian predictions are easy to generate” and “doomsaying is emotionally self-protective: if you complain that today’s technology is wrecking the culture, you can tell yourself you’re a gimlet-eyed critic who isn’t hoodwinked by high-tech trends and silly, popular activities like social networking. You seem like someone who has a richer, deeper appreciation for the past and who stands above the triviality of today’s life.”

[...]Put simply, there exists a wide variety of explanations for why our collective first reaction to new technologies often is one of dystopian dread. In my work, I have identified several other factors, including: generational differences; hyper-nostalgia; media sensationalism; special interest pandering to stoke fears and sell products or services; elitist attitudes among intellectuals; and the so-called “third-person effect hypothesis,” which posits that when some people encounter perspectives or preferences at odds with their own, they are more likely to be concerned about the impact of those things on others throughout society and to call on government to “do something” to correct or counter those perspectives or preferences.

Some combination of these factors ends up driving the initial resistance we have see to new technologies that disrupted long-standing social norms, traditions, and institutions. In the extreme, it results in that gloom-and-doom, sky-is-falling disposition in which we are repeatedly told how humanity is about to be steam-rolled by some new invention or technological development.

No, pro-business really is not the same as pro-markets

Just like crony capitalism isn't the same as well, capitalism - Export-Import Bank edition (WashingtonExaminer):

Sen. Chuck Schumer explained: “The Tea Party is moving the Republican Party so far to the right on important issues like the Export-Import Bank, that the business community is now farther from the Republican Party and closer to Democrats.”

[...]Politico’s MJ Lee explains what these two are up to: “Democrats have formed a united front in support of the bank, seizing on an opening to appeal to the hearts and wallets of the business community ahead of the November elections.”

People respond to incentives: unemployment benefits edition

Charles Krauthammer (via Instapundit):

While liberals hail new job numbers as a vindication of President Obama’s economic policies, it is conservatives who should feel vindicated, said Charles Krauthammer on Thursday’s Special Report. Citing a recent National Review Online post on The Corner by economist Robert Stein, Krauthammer noted that the sharp drop in unemployment has coincided with the end of emergency unemployment benefits. Obama and the Democrats, who insisted that the benefits be extended, wrongly predicted that their expiration would come as a calamity to the poor. Instead, their end has demonstrably had “precisely the opposite effect.”

“These six months coincide with a decrease in the medium length of unemployment from 17 weeks to 13 weeks — the largest six-month decline in the length of unemployment ever measured,” he said. “Which means the real problem of long-term unemployment was a function of this anomaly of emergency-extended unemployment, which should never have happened, and whose end has contributed to this excellent result. The debate on that extension is over, and the conservatives were right.”

Sunday, July 06, 2014

Regulations save lives?

They also take them, and can make existing ones more miserable than they need to be. On the EPA's proposed loosening of radiation limits (Reason):

Other skeleton in the EPA’s closet are environmental limits caused by its policy of “chasing the last molecule.” If EPA could be forced to modify its radiations limits, what about its other extremes? Take sulfur, for example. Its prevalence has already been reduced by 90 percent. Still, using its now discredited LNT theory, EPA is has ordered refiners to eliminate the last 10 percent. This will add between 6 and 9 cents per gallon to the cost of gasoline.

There is another major implication. Many if not most of the EPA's other limits on pollutants and carcinogens are also deduced from the faulty LNT theory. Eliminating 90 percent of some chemical or dust is often easily accomplished, however, eliminating the last 10 percent can cost billions more than the first 90 percent. For example, a Wall Street Journal report on ozone explains that new EPA limits reducing ozone from today’s 75 parts per billion to 60 to 70 ppb would cost industry some $90 billion, according to the EPA itself. These are the costs that many industries are howling about and a real reason that Americans’ standard of living has stopped increasing. Much analysis, beyond the scope of this report, needs to be researched for dozens of other excessive limits imposed by Washington, D.C.

The yearly cost of unnecessary EPA regulations is in the many hundreds of billions of dollars, reducing wages and hurting the world's standard of living.

The science behind building great teams

An interesting paper from HBR:

With remarkable consistency, the data confirmed that communication indeed plays a critical role in building successful teams. In fact, we’ve found patterns of communication to be the most important predictor of a team’s success. Not only that, but they are as significant as all the other factors—individual intelligence, personality, skill, and the substance of discussions—combined.

Should regulation correct ignorance?

ASI makes the case that it was regulations designed to protect the banking system resulted in the underestimation of risk by much of the market.

"Encourage people to do something for its own sake, not for its benefits"

Incentives matter - particularly the right incentives. From Amy Wrzesniewski and Barry Schwartz (NYT):

Whenever a person performs a task well, there are typically both internal and instrumental consequences. A conscientious student learns (internal) and gets good grades (instrumental). A skilled doctor cures patients (internal) and makes a good living (instrumental). But just because activities can have both internal and instrumental consequences does not mean that the people who thrive in these activities have both internal and instrumental motives.

Our study suggests that efforts should be made to structure activities so that instrumental consequences do not become motives.
Personally, I'm of the view that in an ideal world, instrumental consequences reinforce internal consequences. Instrumental consequences can and should, however, guide how you effect internal motivations.

People respond to incentives: North Carolina Unemployment Benefits edition

From the WSJ: Unemployment in the Tar Heel State dropped by 17% in the second half of 2013 after extended benefits expired.

Tuesday, July 01, 2014

Makers Who Are Reinventing the American Dream

I think a better descriptor for it is democratizing the American Dream (PopularMechanics via Instapundit). The companies include Kickstarter, AutoCAD and Stratasys.

Saturday, June 28, 2014

Scott Adams explains the pivot

Scott Adams of Dilbert fame, but recent co-founder of startup CalendarTree.com explains what it means to pivot and why it matters:

So imagine if you will, some of the smartest, most rational humans the world has ever created, wallowing around in the absurdity of Silicon Valley, where success is mostly based on luck. How does one feel good about that? And what is the solution?

Answer: You institutionalize the pivot.

In other words, you move from a goal-oriented approach to a systems-oriented approach. The system involves assembling a team around a starting idea and then pivoting until something lucky happens. No one pretends to know where it will all end up.

Here's the system:

1. Form a team
2. Slap together an idea and put it on the Internet.
3. Collect data on user behavior.
4. Adjust, pivot, and try again.

Thanks to Google Analytics, Optimizely, Bitly, and other tools for measuring customer behavior in real time, a smart team can try different approaches and different products until something works out. A start-up in 2014 is a guess- testing machine.
Update: More here: Five successful tech pivots (TechCrunch)

The arbitrage opportunities a bit of marketing creates...

Well, marketing and user experience I suppose... "people will pay twice as much for an artfully composed salad" (PopSci via Instapundit).

Bridgewater Associates and the "soul of a hedgefund 'machine'"

An interesting look inside Bridgewater and its founder Ray Dalio - particularly as I've been doing a lot of research lately about systematization and processes (WSJ):

How do you build the world's largest hedge fund? Bridgewater Associates founder Ray Dalio says he did it by creating a culture of "radical truth and radical transparency." Mr. Dalio's perhaps radical belief is that "everything is a machine"—including organizations and even the individual people within them. At his firm's Westport, Conn., headquarters, we are discussing the human machines at Bridgewater and the equally fascinating machine known as the U.S. economy.

As for the people at his firm, the idea is to encourage everyone to accept unvarnished criticism as a treasured opportunity to learn and to solve problems. This is intended to allow constant refinement of business processes—also known as machines within the firm—from how Bridgewater buys office furniture to how it evaluates the world oil market.

But human machines don't always welcome complete candor. And at Bridgewater they have to get used to internal software that conducts a non-stop evaluation of their performance based on daily entries from colleagues and even rates their credibility on particular issues. This doesn't mean the software makes all decisions. When the system recently reported that the company's head receptionist was underperforming, executives decided that it was a case of the software not being calibrated to effectively measure her work.

What makes a great leader?

According to Andreessen Horowitz (Ben Horowitz via David Jaxon):

What makes people want to follow a leader? We [Andreessen Horowitz] look for 3 key traits:

The ability to articulate the vision. Can the leader articulate a vision that’s interesting, dynamic, and compelling? More importantly, can the leader do this when things fall apart? More specifically, when the company gets to a point when it does not make objective financial sense for any employee to continue working there, will the leader be able to articulate a vision that’s compelling enough that the people stay out of curiosity?

The right kind of ambition. Truly great leaders create an environment where the employees feel that the CEO cares much more about the employees than she cares about herself. In this kind of environment, an amazing thing happens: a huge number of the employees believe that it’s their company and behave accordingly.

The ability to achieve the vision. The final leg of our leadership stool is competence, pure and simple. If I buy into the vision and believe that the leader cares about me, do I think she can actually achieve the vision? Will I follow her into the jungle with no map forward or back and trust that she will get me out of there?

Clayton Christensen's response to the New Yorker

A response to an (attempted) takedown by Harvard historian Jill Lepore of the idea of "disruptive innovation" (Businessweek).

Conquering chronic procrastination

Yeah I'll admit it... this is could be quite useful: "5 weird (but effective) ways you can conquer chronic procrastination" (Time).

A reminder that innovating isn't just about the technology

It's not just Apple. Why GoPro's success isn't really about the cameras (Wired). Hint: it's about the experience.

Tuesday, June 17, 2014

"High taxes redistribute people, not wealth"

Observation by Fraser Nelson, in the Telegraph (via ASI)

Saturday, June 14, 2014

'Organic' isn't clean or toxin free

If environmentalists really care about the environment, they might not want to promote organic food (Bloomberg):

Like all farms, those that grow organic products rely on fertilizer. Often, organic farmers use animal manure rather than chemicals derived from petroleum or minerals.

In one study of greenhouses in Israel, the use of manure led to much more nitrogen leaching into groundwater compared with use of conventional fertilization. Nitrogen contamination, the study noted, is one of the main reasons for closing drinking-water wells. And by the way, nitrogen from all sorts of farming is one of the main pollutants behind algae blooms, fish kills and dead zones in bodies of water from local farm ponds to the northern Gulf of Mexico.

A broader study of 12 different farm products in California found that in seven cases, those using conventional methods had lower greenhouse-gas emissions. A big reason for the difference? Conventional farming tends to be more efficient than organic farming, meaning fewer inputs are needed to generate the same amount of food.

That hits on a critical issue for organic farming, as noted in a 2012 analysis of more than 100 studies of farming methods across Europe: Getting the same unit production from organic farming tended to lead to "higher ammonia emissions, nitrogen leaching and nitrous oxide emissions." And while organic farming tends to use less energy, it also leads to "higher land use, eutrophication potential" -- that's the dead zones mentioned above -- "and acidification potential per product unit."

Sunday, June 08, 2014

So what killed the American dream?

From the WashingtonPost: "For the first time in a very long time, Americans aren't so sure their kids will have better lives than they do." Again, if it's dead, it's because of self inflicted wounds.

IMF: Apparently UK 'austerity' worked

There has been much to study and debate over the response governments have had to the "great recession" - and there undoubtedly will continue to be. But for Keynesians, an unexpected setback in the UK's growth and recovery (even if the austerity" wasn't quite so austere according to Reason). The IMF has since acknowledged its growth forecasts in response to 'austerity' were wrong (Telegraph):

Christine Lagarde has asked whether she needs to grovel on her knees before George Osborne over the IMF’s incorrect warnings on the UK economy, as she warned against raising taxes.

“Do I have to go on my knees?” Ms Lagarde, the head of the International Monetary Fund said, when asked whether she has apologised to George Osborne over the fund’s low growth forecasts and calls to adopt a ‘Plan B’ of less austerity – calls the body now accept it got wrong.

In a blow to Ed Miliband, who has called for higher rates of personal taxation and new levies on banks, Ms Lagarde said tax rises are “not recommendable”.

The growth the UK is enjoying now has “resulted” from George Osborne’s policies, she said. The growth now appears to be “pretty sustainable” because it is being driven by private sector investment as well as households consuming more.

A year ago Oliver Blanchard, the IMF’s chief economist, warned Mr Osborne was “playing with fire” with austerity and downgraded Britain’s growth forecast to just 0.7 per cent for 2013. Instead, it grew by 1.7 per cent, and is expected to hit 2.7 per cent this year.
While I think it's laudable that Lagarde has acknowledged the error, it's really the British who are benefiting substantially from the reduced debt burden that was advocated and the stronger economic growth. I can't help but wonder how much better the global economy would be without the seemingly neverending rounds of stimulus funded by debt that will one day need to be repaid.

Wednesday, June 04, 2014

John Stossel: It's income mobility that matters

More on why income inequality shouldn't matter (reason.com):

It's true that today the rich are richer than ever. And the wealth gap between rich and poor has grown. Now the top 1 percent own more assets than the bottom 90 percent!

But focusing on this disparity ignores the fact that over time, the rich and poor are not the same people. Oprah Winfrey once was on welfare. Wal-Mart founder Sam Walton was a farmhand. When markets are free, poor people can move out of their income group. In America, income mobility, which matters more than income inequality, has not really diminished.

Economists at Harvard and Berkeley crunched the numbers on 40 million tax returns from 1971-2012 and discovered that mobility is pretty much what The Pew Charitable Trusts reported it was 30 years ago.

Today, 64 percent of the people born to the poorest fifth of society rise out of that quintile—11 percent rise all the way into the top quintile. Meanwhile, 8 percent of people born to the richest fifth fall all the way to the bottom fifth.

The poor got richer, too [...] over the last 30 years, incomes of rich people grew by more than 200 percent, but according to the Congressional Budget Office, poor people gained 50 percent. That growth should matter more than the disparity. Piketty's data reveal times in our history when income inequality decreased: during world wars and depression. Do we want more of that?

Monday, June 02, 2014

On inequality and the Piketty mess

For anyone who has been following the news in the last few weeks, those who favor redistribution over wealth creation have been dealt a setback with the Financial Times' review of the data Piketty used in his book "Capital in the Twenty-First Century" (Amazon). In a way his book has been a Rorschach test (Qz). While many of his supporters have been reduced to name calling (or dismissing the criticisms, HuffingtonPost) despite some fundamental problems with his claims, I'm not sure why it matters.

As Scott Adams, author of Dilbert points out (Dilbert):

If you could snap your fingers and magically double the wealth and income of every human on earth while somehow keeping inflation in check, would you do it?

Before you answer with some version of "Duh, yes." keep in mind that you would be severely worsening income inequality. And that, as we are often reminded by the media, will destroy civilization.

I'm not entirely clear why income inequality leads to doom, all other things being equal, but I hear it has something to do with the French. The analogy, as I understand it, is that Marie Antoinette and her historically inaccurate philosophy "Let them eat cake" is exactly like Bill Gates pledging his fortune to eradicating malaria, fixing education, and providing clean water to the poor.
Further, as Prof Deirdre McCloskey asks, in the context of the fact we are so much wealthier today at effectively every socioeconomic group than our ancestors, how much does inequality matter?

Forbes: Profile of Nick Woodman, billionaire founder of GoPro

The remarkable story of the founder of GoPro, including the dips before finding success (Forbes):

That’s how Woodman can now fly via G-III, versus the days he spent sleeping out in his 1971 Volkswagen bus or driving Penske trucks to set up trade show booths with accessories he would later return to Home Depot after use. Back then he was a trade show fiend, learning to sweet-talk executives and sell his passion on the floors of conference centers from San Diego to Salt Lake City. His big break: REI. Woodman spent months messaging executives and shooting over progress reports before the outdoor sports giant succumbed, giving the company (which is still technically called Woodman Labs) a huge dose of validation.
Read more here.

Marc Andreessen: 'Do what contributes - not what you love'

Apparently his tweets were controversial - but I'd agree... plus it helps to actually love doing something that contributes (BusinessInsider):

Better career advice may be "Do what contributes" -- focus on the beneficial value created for other people vs just one's own ego. People who contribute the most are often the most satisfied with what they do -- and in fields with high renumeration, make the most $. Perhaps difficult advice since requires focus on others vs oneself -- perhaps bad fit with endemic narcissism in modern culture? Requires delayed gratification -- may toil for many years to get the payoff of contributing value to the world, vs short-term happiness.

Self driving cars and the future of logistics

It's difficult to see the downside, especially if the technology is showing that it's better than human drivers (MITTechReview) - even if driving through the downtown of any major metropolitan city, it doesn't seem like a high bar to reach. But it's fascinating to follow the iterations the Google team has been making in testing its prototypes:

The idea was that the human drives onto the freeway, engages the system, [and] it takes them on the bulk of the trip—the boring part—and then they re├źngage,” said Nathaniel Fairfield, a technical lead on the project, speaking at the Embedded Vision Summit in Santa Clara, California, on Thursday.

That approach had to be scrapped after tests showed that human drivers weren’t trustworthy enough to be co-pilots to Google’s software. When people began riding in one of the vehicles, they paid close attention to what the car was doing and to activity on the road around them, which meant the hand-off between person and machine was smooth. But that interest faded to indifference over weeks and months as people became too trusting of the car’s abilities. “Humans are lazy,” says Fairfield. “People go from plausible suspicion to way overconfidence.”

And so Google’s new vehicle design takes a leaf out of NASA’s design book to cope with such eventualities. “It doesn’t have a fallback to human—it has redundant systems,” said Fairfield. “It has two steering motors, and we have various ways we can bring it to a stop.”
While Wired calls it sneaky, incremental technology improvements are already making their way into mass produced cars. The developing technology also seems to seeping into other industries where we may see more immediate gains with technologies that are allowing trucks to drive in platoons reducing wind drag and increasing fuel efficiency as much as 10% for the rear truck (MITTechReview). Exciting developments to watch...

Saturday, May 17, 2014

Developing space, profitably

It's pretty exciting watching the emerging space industry literally get off the ground (MITTechReview):

The Explorers Club event provided a snapshot of what may be a new industry in the making. In an era when NASA no longer operates its own spacecraft and government funding for unmanned missions is tight, a host of startups—most funded by space enthusiasts with very deep pockets—have stepped up in hope of filling the gap. In the past few years, several have proved themselves. Elon Musk’s SpaceX, for example, delivers cargo to the International Space Station for NASA. Both Richard Branson’s Virgin Galactic and rocket-plane builder XCOR Aerospace plan to perform demonstrations this year that will help catapult commercial spaceflight from the fringe into the mainstream.

The advancements being made by space companies could matter to more than the few who can afford tickets to space. SpaceX has already shaken incumbents in the $190 billion satellite launch industry by offering cheaper rides into space for communications, mapping, and research satellites.

However, space tourism also looks set to become significantly cheaper. “People don’t have to actually go up for it to impact them,” says David Mindell, an MIT professor of aeronautics and astronautics and a specialist in the history of engineering. “At $200,000 you’ll have a lot more ‘space people’ running around, and over time that could have a big impact.” One direct result, says Mindell, may be increased public support for human spaceflight, especially “when everyone knows someone who’s been into space.”