Wednesday, September 30, 2009

Why additional education spending isn't the answer

[No matter the question]. Granted, this American data - but it's as remarkable as it is dramatic (Cato) - charting US federal spending per pupil and results since 1970:

Tuesday, September 29, 2009

The Media Disconnect

As a libertarian and "believer" (if you can call it that), in free markets, one of the biggest problems I have explaining/figuring out is how some of the traditional media outlets have survived for so long when their facts can be so easily verified and questioned.

Granted, their power (and economic power) is waning and has only been accelerated by the net, but given that they can't possibly be surprised about the unprecedented levels of access that the net provides. I can't tell if they're just remarkably sloppy or actually willful in their disregard for what a reasonable person might consider reality. Sometimes I wonder if there's much of a difference in the quality of news put out by state actors than the level of group think coming out of dead tree journalists.

Let's ignore for a moment what you might think of the more prominent political examples of Acorn or even Van Jones (US News). Let's look at Roman Polanski.

I've long been a fan of because it provides me with what various wire agencies like AP and Reuters consider their top news stories sorted according to things like top news, top international news, etc.. It provides me with some perspective of what I might otherwise miss from my overflowing blog reader. So let's compare and contrast.

Admittedly, I learned first of the Roman Polanski story (that he was arrested - though I had heard of his "plight" long ago, and even sympathized with him because I thought it was just a simple case of statutory rape - ie sex with a minor that happened long ago) from Instapundit that in turn linked from Megan McArdle who states: "You would think we’d busted him for unpaid parking tickets. The guy drugged a thirteen year old girl in order to rape her."

I glance over this morning to the Associated Press and one of what they call their top international news stories: "Polanski asks Swiss court to free him from custody". Nowhere in the article do they say anything about the drugging - in fact they go on to state: "His victim, Samantha Geimer, who long ago identified herself, has joined in Polanski's bid for dismissal."

Alright, I may even accept that some 13 year olds look older well beyond their years. That said I've also been a fan of Megan McArdle, but we all have our bad days and maybe McArdle was just being particularly unsympathetic in a case of what the AP seems to play off as a case of consensual sex admittedly with a 13 year old - and a more youthful indiscretion in the case of Mr. Polanski. Heck, apparently even the person he 'raped' doesn't seem to think it was that big of a deal - which is sort of magnanimous of her - so maybe it was consensual? After all, this is a man whose achievements that the AP goes to great lengths to extol.

So I googled "Samantha Geimer". One of the first articles: Polanski Rape Victim: ‘He Took my Innocence’. Here's an excerpt:

Samantha Geimer — known as Samantha Gailey when the film director plied her with champagne and sedatives before assaulting her when she was just 13 — says the filmmaker knew what he did was “wrong”.

“What he did to me was wrong and he knows it was wrong, I’m still living with it today,” the 45-year-old former model said in an interview in 2005. “He took sex from me and at the same time my innocence.
Granted, the article doesn't say she hasn't joined the bid for dismissal - but surely, her views would merit more than a one liner - unless of course the editors chose to admit it because it didn't fit within the general thrust of the story - ie 'those crazy puritan American bumpkins - how dare they attack a film icon'.

Frankly, I view this story is largely inconsequential (at least to me - there are enough things in the world to be outraged by) beyond what appears now to be the AP's complicity in Roman Polanski's predatory rape of a child. But it defies imagination that some of these journalists are the same ones who lament the stupidity of the general public for not supporting what is supposedly a public good. Let's assume for a moment that they've just been willfully ignorant. At the very least, it makes you wonder what else they aren't covering - especially on issues that have greater meaning and impact to most of us.

As I think Glenn Reynolds pointed out a long time ago, the traditional media outlets aren't being killed by the internet. This is suicide.

Howard Kurtz, a columnist at the Washington Post notes: "If Polanski was an ordinary Roman, and not an award-winning film director, we wouldn’t be having this debate. There is sympathy for him because he’s considered a great artiste. The Hollywood elite wouldn’t give Polanski the plumber the time of day if he had sexually assaulted an underage girl. And that suggests to me a stunning double standard."

Glenn Reynolds goes on to say "You can tell a lot about a governing class from who it’s willing to cover for." Truly.

Sunday, September 27, 2009

What I've Been Reading

I think there have been a number of particularly great articles especially under what I've termed "Productivity, Psychology & Inspiration". Yeah, it seems like the interesting list keeps getting longer... though I suppose maybe this means I should post it more frequently.

Making fun of celebrity advocates (aid watch)

Profits at State Owned Enterprises down 20% (
Stricter rules require government officials to disclose assets (
China inflation could spark yuan appreciation in 2H09 (
Don't worry about inflation in China ... for now (
The dollar is dead - long live the renminbi (

Economics, Politics & Regulation
Outfoxing the chicken tax: People respond to (perverse) incentives (
Telegraph: The UN loves Barack Obama because he is weak (
[Proud to be Canadian:] Canada boycotts Iranian UN speech (
Family businesses prioritize survival over profitability? (
For those who want legislators to read every word of every bill (
How i became a Keynesian (
2010 State Business Tax Climate Index (
And don't let us catch you being neighborly again (

Technology & Trends
The NetFlix prize - another success for crowdsourcing (

Productivity, Psychology & Inspiration
Tightwads and big spenders are attracted to each other and then make unhappy marriages (
Why you should buy 5 year old car and sell it after 10 years. (PDF) (
Catch a liar by making him draw (
If you need to work better, maybe try working less (
We're more likely to behave ethically when we see rivals behaving badly (
Examine hand gestures and smiles to detect lying (
Susquehanna: an inspirational tale in the world of finance (
33 ways to get and keep yourself motivated (
Meet the man who sells $89 million of diapers each year online (

Strategy, Sales & Marketing
Business development: Forming partnerships, brand extensions (
Wronged customers respond better to apologies than cash (
Biggest sales management coaching blunders (

People Management
The kinds of employees you want to hire (

On "Bad" Profits

Ranting on regulations that will end up restricting biotech at the expense of big pharma in the new healthcare bill (the Atlantic):

Profits are good when they result from providing a service people want. When they are the result of capturing the government by cutting special deals, they're immoral and inefficient. And this is just the beginning . . .
This at least explains big pharma's support of the recent US healthcare bill.

Wednesday, September 23, 2009

Why I hate checking luggage

Pretty hilarious standup routine by Welshman Rhod Gilbert:

Monday, September 21, 2009

The Case against Paternalistic Regulation

Paternalistic regulation is the regulatory equivalent of micromanaging - and in many cases a great deal worse. The allure of the supposedly educated saying that they know better than the rest of us is rarely resisted by our political elite. I can't help but think that it's a bit ironic that many of my friends are elitist (and truth be told I can both be a bit of a micromanager and an elitist).

Ilya Somin (via Instapundit) presents a great case against paternalistic regulation. I think Glenn Reynolds summarizes it the best though when he says "my bottom line: Do you think politicians are smarter and more self-disciplined than the rest of society? And if not, why would they be better at deciding for us than we are at deciding for ourselves?"

Even More on the World Bank's Doing Business Report

They seem to be really developing their willingness to use social networking to get the word out having put up a video on YouTube:

Good news - especially for those in the developing world, that it's getting easier to do business.

Sunday, September 20, 2009

What I've Been Reading

Real & sustainable development: Nokia offers phone installments in India (
Hans Rosling: Why the statistics point toward progress (
Small change: does microlending actually help fight poverty? (

China keeps buying Treasurys, confusing Nationalists (
Taiwan & China: Reunification by trade? (
Call for more babies as China turns to grey (

Economics, Politics & Regulation
Obama admin: cap and trade could cost families $1,761/year (
Bad timing: Abandoning missile defense on 70th anniversary of Stalin's invasion of Poland (
"Chaotic legacy of Carter’s mind-boggling cowardice and incompetence" (
Instapundit: "a foul old man, and a disgrace to the office he once held" (
Sweden slashes income taxes to promote job growth (
Being highly positive: disastrous for individuals, great for society (

Technology & Trends
Liposuction leftovers' easily converted to stem cells (

Productivity, Psychology & Inspiration
Vinegar + baking soda will boost absorbancy of old towels (
Common fallacies in investing and decision making (

Strategy, Sales & Marketing
Think of your future relationship when negotiating (theprivateequiteer)
Startups often forget about distribution and cost/how to get out there (
Plan to be flexible: Events often overtake companies (
Greetings: Introducing yourself the right way (

People Management
Right (and wrong) ways to part with a long time employee (
Climbing the wrong hill: considering another career (

Fidelity, Convenience and Higher Ed

More on the meme that education is a sector ripe for disruption. From BusinessWeek:

The vulnerability sensed by McNealy, Fransen, and others has a lot to do with a concept I've been writing about the past few years—the fidelity swap. In our everyday lives we constantly make trade-offs between fidelity and convenience. Fidelity is the total experience of something. At a rock concert, for instance, it's not just the quality of the sound—which often isn't as good as listening to music on a good stereo—but everything else, too, such as the show's ambience and the bragging rights that come with having seen the band live. Convenience is how easy or hard it is to get what you want. That includes whether it's readily available, whether it's easy to do or use, and how much it costs. If something is less expensive, it's naturally more convenient because it's easier for more people to get it.

As it turns out, the most successful products and services tend to be either high in fidelity or high in convenience—one or the other, but not both. In fact, products attempting to be both typically end up with a confused brand. [...] College is a high-fidelity experience. [...] you engage in a rich, all-encompassing experience for four years.
It bears noting that this doesn't apply only to education. But insofar as education goes, be prepared for the "good enough" degrees of convenience.

Saturday, September 19, 2009

Paul Krugman, Re-Examined

At times it feels like the Nobel Prize committee puts politics ahead of achievements - as is almost generally the case of the Peace Prize. The Prize in Economics however was somewhat odd having been awarded to Paul Krugman in 2008 for work done in 1991 but whose work in recent years can more charitably be characterized as being sloppy (particularly his insight, or lack thereof of finance and how financial markets work).

Here are two open letters to Krugman that can best be described as devastating relating to some of his recent writings:

  1. "How did Paul Krugman get it so Wrong?" by John K Cochrane, University of Chicago Booth School of Business, and
  2. "An Open Letter to Paul Krugman" by David K Levine, John H. Biggs Distinguished Professor of Economics, Washington University in St. Louis
There's more from Donald Luskin, but I'd read both - they're easy reads but if I were to guess, the corrections relate to errors that were made by Krugman likely out of political considerations than sincerity which is unfortunate.

Collusion and Free Markets...

... are incompatible. It remains one of those annoyances of mine that supposedly "socially minded" individuals complain that the natural outcome of free markets/capitalism is collusion and autocracy. From Greg Mankiw, a reminder of the words of Adam Smith:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

A Peak Oil Hypothesis I Can Agree With

Iain Reid, a senior oil analyst at Macquarie Bank points out that even over time, the threat to oil prices may not be so much the existence/supply of oil (FT Energy) but "but problems of access, technology and risk". He goes on to acknowledge that while policy and limits of existing technology are significant threats, new technology and reformed policies can also create the biggest opportunities.

Personally, I'd also like to hope that embedded in 'wildcard' of technology exists not just the hope but the likelihood of improved energy substitutes like natural gas (the Oil Drum) or even solar (Wired). Which is to basically to say that I don't think we should be so specifically on oil which may be limited in the short and even medium run, but the availability of more broadly energy, which in the long run is in practical terms unlimited and reducing the friction between the different forms.

The "Front-end" and User Interface (UI) as competitive advantage

There's a story on TechCrunch that highlights how Adobe and Yodlee created the technical backbones that allowed for the success and ultimate sale of YouTube and (for $170M USD on Sept 14, TechCrunch):

A lot of people at Adobe weren’t all that happy when YouTube was acquired by Google for $1.65 billion in 2006. After all, YouTube was just a pretty front end to the core Flash web video technology created by Adobe. YouTube got rich. Adobe got peanuts.

Mint, which sold to Intuit earlier this week for $170 million, is Yodlee’s YouTube. That’s because, like YouTube, the core technology behind Mint wasn’t developed in house. It was licensed from Yodlee, who got paid very little for what they provided.
I think this just highlights the advantage of a good user interface (UI) / front end relative to a web product or service. In fact, you could almost say that it's the most important point of differentiation when it comes to the web. It's the interface that allows users to leverage the underlying technology and without which, the technology would be useless - but take care to put function before form.

At ReadWriteWeb, designer Warren Benedetto distinguishes between design and the user interface, cautioning: "If you have a great app that is easy and intuitive to use, it doesn't really matter what it looks like (e.g., Craigslist,, Google, 37signals' products, the original Twitter design, even Amazon and eBay). By the same token, a great-looking app with poor usability will generally not fly very far. Quality trumps aesthetics every time."

Thursday, September 17, 2009

China's Coming "Magnificent Bubble"?

I think this presumes that one doesn't exist already. James Saft of Reuters makes the case as follows:

If and when China makes its currency convertible and opens its financial system the stage will be set for a bubble that should make the dotcom and housing booms look tame [...] “In the medium term we face the mother of all asset bubbles in China. The fundamental story is a good one; there are just lots and lots of people to sell to,” Grice said.

“If you drop a ton of liquidity on people it is possible that they will do rational things with it, but more likely they will do something pretty stupid.”
I think there are a few problems with this argument including that if I recall, the Japanese banking sector wasn't hiding a large number of underperforming loans. That came after - after the real estate collapse. There's already a sense from within China, at least amongst the people I speak with, that China's growth is unsustainable. Bringing down the restrictions on the RMB could also result in a great deal of capital fleeing China. I'm rather bad at guessing when bubbles will pop or trying to figure out irrational people, but I think it's useful to have your bets hedged in this case.

Wednesday, September 16, 2009

What I've Been Reading

I'm still ploughing through my old links so here's the next batch of articles I found interesting:

The problem with non - as in "non-profit" (
The importance of microfinance and property rights go hand in hand (
Are the new global capitalists African? (
The history of "development": racist, imperialist and British? (aid watch)

China’s demographic roller coaster to peak by 2030 (
China's footprint in Africa: once upon a coup (
Warnings for executives and their laptops/phones travelling to China (

Economics, Politics & Regulation
Bottom or not, homebuilders are buying (
Revealed: the ghost fleet of the recession (
After the stimulus: the hangover (john stossel)
Oregon at risk of contracting California disease (
Reputations one year after the financial crisis (

Productivity, Psychology & Inspiration
Rebecca Saxe: How we read each other's minds (
Be a Monday person: Friday people are unhappier and angrier (
Boost your memory power with a 30-second eye exercise (

Sales & Marketing
Learn about clients from their table manners (
What alienates top performers (
How to stay relevant in sales (
Buy somebody lunch (
Cutting back on business travel could reduce profitability by 17% (
Activating your LinkedIn network (
When considering promotion, think emotion (

Fungus-treated Violin Outperforms Stradivarius

As a (former) violin player, there's something both sad and amazing about this story (ScienceDaily):

The violin they had created using wood treated with a specially selected fungus was to take part in a blind test against an instrument made in 1711 by the master violin maker of Cremona himself, Antonio Stradivarius. [...] Of the more than 180 attendees, an overwhelming number – 90 persons – felt the tone of the fungally treated violin "Opus 58" to be the best. Trusler’s stradivarius reached second place with 39 votes, but amazingly enough 113 members of the audience thought that "Opus 58" was actually the strad! "Opus 58" is made from wood which had been treated with fungus for the longest time, nine months.
There's something immensely empowering to know that this essentially democratizes the soul of a Stradivarius. On the other hand, there's a small part of me that thinks it's a bit of a small loss that a symbol of human achievement like the Stradivarius may in fact be replaceable and even superceded.

On why college costs too much

The basic idea? The barriers to competition ( Fortunately that may change..

Related here: "Study finds online education beats the classroom" (NYT)

PSA: Eat more chocolate

They had me at chocolate. Count me in (NYTimes via Instapundit):

In a study that will provide comfort to chocoholics everywhere, researchers in Sweden have found evidence that people who eat chocolate have increased survival rates after a heart attack — and it may be that the more they eat, the better.
Then there's this - doing cardio makes you smarter (NYT). Of course, some might argue it isn't be one or the other... Why can't they just develop a magic pill to simulate cardio?

Tuesday, September 15, 2009

Former President Jimmy Carter, Censor

Perhaps to be expected coming from a man who has supported despots and dictators. Apparently it's no longer allowed to question President Obama (AP) - or call the President "a liar", because it's "racist".

It doesn't matter of course if a speech was littered with misrepresentations, or that calling the President "a liar" happened with frequency under the previous administration - yes, even on the Congressional House floor (GatewayPundit). Nevermind that the posters comparing Obama with Hitler were made by the supporters of those like Carter and Obama (College Politico), not to mention the violence that's being used to suppress dissent (Instapundit).

The facts are irrelevant and debate is entirely unnecessary - any policy disagreement is either grandstanding or obstructionist and of course, according to Jimmy Carter, it goes "deeper than that", it's 'obviously' inherently racist.

History is already quite unkind to the Carter Presidency. My guess is that it will be equally so to his legacy. OK, rant over.

Update: More from Instapundit

Update: Even more, and forcefuly so from Althouse - "Jimmy Carter's supremely sleazy accusation requires a solid, sound rebuke. It is an effort to place the President of the United States beyond criticism [...] And since demanding apologies is all the rage, let me say that I would like the wizened old husk of a former President to beg our forgiveness." Indeed.

"Why Capitalism Fails": Point and Counterpoint

The Boston Globe revives Hyman Minsky to argue "why Capitalism fails." pokes holes in their arguments.

Boston Globe: "Instability is an inherent and inescapable flaw of capitalism." "Instability is an inherent and inescapable flaw of Human Life."

On a related note, CriticalReview chronicles three of the myths as to the causes of the recent financial crisis - irrational exuberance, bankers' bonuses, and capitalism:

If we seek the sources of a systemic failure, a logical place to look is among the legal rules that govern the system as a whole. Unfortunately, being legal mandates, these rules--unlike the different strategies pursued by competing capitalists--aren't subjected to a competitive process. So if they are based on mistaken ideas, we all suffer the consequences. That turned out to be the case with the Recourse Rule.

Contrary to popular belief, then, the crisis of 2008 is best described as a crisis of regulation—not a crisis of capitalism.
Read the whole thing.

Learning Styles are Bunk and Why, according to Cato, "Major Pedagogical Errors" get made

From the Washington Post (via Cato@Liberty):

The prediction is straightforward: Kids learn better when they are taught in a way that matches their learning style than when they are taught in a way that doesn’t. [...] The data are straightforward too: It doesn’t work.
The article goes further: "But a misunderstanding of a pretty basic issue of cognition is a mistake that one does not expect from a major school system." Well yes, one does, counters Cato@Liberty: "public schooling lacks the freedoms and incentives [Cato, pdf] that, in other fields, both allow and encourage institutions to acquire and effectively exploit expert knowledge."

Getting the size of Government right

The empirical evidence against big government - smaller government means faster economic growth and wealthier people (I'm not the biggest fan of the delivery but the content seems sound - Youtube, via ClubforGrowth):

Monday, September 14, 2009

What I've Been Reading

Proposing a new and armed version of the Peace Corps (

Tariffs on tires have wider economic & political ramifications (
China investigates US 'dumping': chickens and autos (
"These protectionist measures…could ratchet up into a full-blown trade war" (

Economics, Politics & Regulation
Energy saving light bulbs offer dim future (
Comparing cleanliness after Obama inauguration and Tea Party protests (
Relying on the power of government to increase their wealth (
Who’s Killing the Electric Plane? (
To make a better world: Legalise drugs (

Technology & Trends
Fossils from animals and plants not necessary for fossil fuels (
Using nanotubes to break through solar cell efficiency barrier (
Prize awarded for lunar landing XPrize challenge (
Realtime GPS can save drivers 4 days/year, cut emissions 21% (
Nanoparticle gel heals injured brain and bone (

Productivity, Psychology & Inspiration
Is happiness contagious? (
Money buys happiness (if you use it to pay for experiences) (
7 ways I’ve almost killed FreshBooks (
Improve creativity: Imagine some else solving the problem (
The invisible grip: using a stare to get what you want (
The hierarchy of success (
Who wants to be a cognitive neuroscientist millionaire? (
Building and selling (
Classic examples of innovation, from the Inc. archives (

Sunday, September 13, 2009

Father of Green Revolution, Norman Borlaug, Dies

Eulogized at Cafe Hayek: "This father of the Green Revolution directly enabled millions of persons to live healthier, longer lives — indeed, millions to be born who otherwise would never have lived." A forceful advocate for the poor, he most recently made the case for reforming food aid (WSJ). Even the AP dubbed him "the greatest man you've never heard of."

Glenn Reynolds eulogizes: "This article by Gregg Easterbrook is worth reading. Borlaug may have saved a billion lives, yet he’s barely known. The lives he saved were poor people, and he saved them with science. Doesn’t fit the narrative."

His contributions and achievements will not soon be forgotten.

When is a Protest not worthy of Reporting?

I confess this is the first time I've been totally dumbstruck at the disconnect between the blogs I follow and the mainstream news. Certainly on some controversial topics the emphasis is often a little (sometimes a lot) different but when it came to the protests in Washington DC, it was as if they didn't even happen for some in the mainstream press (just looking at the Google News roundup).

Except that they did. Irrespective of your political views, there's something seriously wrong when they choose not to report on a significant issue when it doesn't fit within their political view of the world. Have a look at the viciousness of ABC News when they state, "ABC News Reported D.C. Rally Size in Tens of Thousands, Not 1M to 1.5M as Activist Said." I wonder when the last time they quibbled on something they've gone out of their way to make seem so irrelevant.

To find the most seemingly objective news (versus how it seems much of the press would like to paint the protesters as conservative trolls and a fringe unenlightened minority) it would seem you have to look abroad. The Daily Mail (UK) reports it was "up to two million people marched to the U.S. Capitol today, carrying signs with slogans such as “Obamacare makes me sick” as they protested the president’s health care plan and what they say is out-of-control spending."

According to QandO, "Now perhaps the count is a bit high – Michelle Malkin quotes Parks and Recreation estimate 1.2 million and DC Police 1.5 million." CNN doesn't even bother reporting a number. Now compare this to the overestimates of the Iraq war protests where the Los Angeles times acknowledges that in the previously quite widely publicized numbers, "in 2003, San Francisco police and organizers estimated that 200,000 attended an anti-Iraq-war protest. But when the San Francisco Chronicle had experts review aerial photos of the march, they concluded that only 65,000 participated."

I'm not going to guess at what the right number is - I'm sure we'll get more accurate numbers in the aftermath but even judging by the pictures and video that are coming out, compared with other protests or even large crowds I've been in, the 65-70,000 numbers ABC has insisted on reporting appear overabundantly cautious or worse. It really makes you wonder - has this always been happening? If they can't report on relatively simple, objective facts, why would we trust them to report on serious issues?

The barriers shielding journalists from immediate economic threats and their reporting appear to be working perhaps too well though I used to think that the mainstream media was at least self interested enough in survival. The scarcest and most valuable commodity in any commerce is trust - and this must be at least doubly so for those who provide us with the news. Apparently the editors at these organizations just no longer care.

Update: Maybe I'm burying the lede here. This protest is remarkable however for a variety of reasons that are worth mentioning - "most of those in attendance came on their own and said they had never taken part in any type of protest before Saturday ... Rally-goers said they are not strictly anti-Obama, or anti-Democrat, but instead are fed up with big government, corruption, high taxes, and runaway spending. They said they have had enough of politicians who don't listen to their concerns and are more afraid of special interests than they are of the voters. Many in the crowd said they were Democrats or independents. The protestors were clearly from across the political spectrum, young and old, black and white, male and female. It will be hard to dismiss them as being only angry Republicans" ( Except that they will and are.

Like the buildups to the removal of Van Jones and Acorn, it would seem it is difficult to see how the mainstream press can claim ignorance of events that were neither surprising nor shocking. Except that they do. May they reap what they sow.

Update (09/14/09): "Doing their jobs honorably would mean a setback for the Leftist cause, and so they chose B. The good news is that this appears to be a suicide run" (Ed Driscoll). Indeed. And it won't happen soon enough.

Update (09/14/09): "Public respect for the media has plunged to a new low, with just 29 percent of Americans saying that news organizations generally get their facts straight." (Washington Post, h/t Instapundit). I'm on the fence as to which is worse - reporting the wrong facts (if unintended - ie incompetence) versus trying your hardest not to barely report them even when they're relevant (ie malicious and deceitful).

When Regulators don't embrace failure

One of the pillars of US economic growth has ironically been its willingness not only to accept but embrace failure ( The slate is even ultimately wiped clean following a bankruptcy with financiers/venture capitalists willing to look beyond past failures.

Paul Kedrosky does "an eye-opening comparison of the differential ease of starting and closing a business in various countries":

After all, if you're an entrepreneur in these countries, the incentives for creating any startup (let alone a riskier one) drop dramatically if the costs of failure are excessively high.

Saturday, September 12, 2009

The Choice Society Makes: Unequally Wealthy or more Equally Poor

There isn't a middle ground - and this is only highlighted by the recent financial crisis (WSJ). Personally I only consider inequality an issue if there doesn't exist equality of opportunity (the proof of which is income mobility) - and as I think I've attempted to make painfully clear in the past, I actually think that's improving with technology.

US Administration fails Trade Litmus Test

via Greg Mankiw, from the AP:

Obama to impose tariffs on Chinese tires
President Barack Obama on Friday slapped punitive tariffs on all car and light truck tires entering the United States from China in a decision that could anger the strategically important Asian powerhouse but placate union supporters important to his health care push at home.
I can't say it is terribly surprising based on some of the policy decisions in the last several months. I would however quibble with the AP's throwaway comment that somehow this decision was necessary for union support on healthcare given how aggressive they have been at pushing the healthcare bill on their own (Patterico). In what amounts to a de facto tax grab for unions, it is consumers who will bear the greatest costs.

Curiously, I note that this was released on the Friday night of a shortened week. It is a long standing tradition that organizations release bad news on Friday nights in hopes that people will forget by Monday morning. Unfortunately, the costs of a policy like this will live on long after. I simply hope that consumers will remember just as long.

Friday, September 11, 2009

Insight into the Google Machine

Cringely has a remarkable (and short) profile of how the Googleplex works. Ideas that clearly wouldn't work for most companies/markets but are fascinating to consider. A few highlights:

  • "Peer review at the heart of everything" (up to 20% of an employee's time)
  • "Most decisions seem to be reached through a combination of peer review-driven concensus and literal popularity polls"
  • "Process is s-l-o-w but the code is clean"
  • "Google developers outnumber testers by 50-to-1"
  • "Typical Google manager has 50-60 direct reports and has time for nothing but meeting after meeting"
  • "Developers bid for what they want to do with their time. If there’s a big job to be done people commit to parts of it. And the parts nobody commits to do? They don’t get done."
  • "There is no marketing input. Effectively, there is no marketing."
  • "Google isn’t a software company at all. It’s an advertising company."

What I've Been Reading

I keep saving all these links that I keep intending to post about but never do. As a result, I have a few massive text files on my computer desktop that keep getting bigger. Instead of attempting to digest them for you, I figure I'll just link them with brief descriptions.

Africa desperately needs trade links - cause or effect? (aid watch)
The age of the celebrity tyrant (
Healing in a post-genocidal world: a survivor returns to Burundi (

Segmenting 22 groups among China's consumers (
China's growing shanzhai / open fabrication movement (
Lost opportunities: "Enterprises that should have disappeared, survive" (
China warms to new credo: business first (
The China consumption versus the rest of the world (

Economics & Politics

Having more money kills people says a new NBER paper. (
Ocean freight update: GRA increase of $400-500 (
Net insider selling: 'investors will get big shock this fall' (
The revolt of the masses: global non-confidence vote (
A tale of two $100,000 jobs; a tale of two Americas (
Americans rate government, self employment as top job choices (

Technology & Trends
The growing role of the private sector in space flight. (
The human brain is even more efficient than we thought. (
Thin film solar startup Nanosolar announces $4B in contracts (
Super-strong German steel velcro (

Choice and Development

A paragraph from an Acumen Fund Blog posting that may be as controversial as it's true:

The sessions closing sentiment related to each firms contribution to change in the developing world. Tim explained IDEO is about enabling choice; creating new choices that didn’t exist, so that people can make them if they desire. At the core of what both firms seek to produce, Jacqueline concluded, “real dignity ultimately comes from choice and opportunity.”
Now compare that to the approach NGOs and developing agencies take in the developing world and you only begin to understand the extent of the problem.

More on the World Bank's Doing Business Report

On the global state of markets and regulation from Freakonomics (em. mine):

The World Bank’s annual Doing Business report indicates that capitalism has fared better than feared in the recession. For the year ending in May 2009, 131 countries introduced 287 reforms, more than in any year since the survey began in 2004. Rwanda led the way, followed by other low and lower-middle-income countries. Research has shown that pro-business reforms are particularly beneficial in developing countries. The Economist notes that, “One study shows that, in poor countries, a ten-day reduction in the time it takes to start a business can lead to an increase of 0.4 percentage points in GDP growth.

Thursday, September 10, 2009

"Law and Hoarder": The problem banning anything in absence of immediate harm

Edward Tenner, from the Atlantic (via Instapundit):

There are three problems with a legislative ban on anything in the absence of immediate harm.

The first, as the German case shows, is that some people who might have increased their use of energy-saving bulbs, will protest limits on their choice by hoarding -- resulting in more energy spent producing bulbs that may outlive their purchasers.

The second is that it removes an important incentive for the development of compact fluorescent lamps and light-emitting diodes that produce a more pleasing light, killing off the competition and reference standard.

And the third is that it is an arbitrary and inconsistent way to promote energy saving; there's no limit to the wattage of new-style bulbs. The industry failed to learn from its founder, Thomas Edison, whose light bulb was designed to be not only more convenient than gas light, but more pleasant, according to Charles Bazerman's study.

Dismembering University

I'm not exactly sure why I'm seeing all these articles lately - hopefully it's not just wishful thinking on the part of parents paying tuition bills this week but here's another article on how the web will disrupt education (BigMoney) - much in the same way it's changed journalism/the news (for the better while killing off the slow and weak? [TechCrunch]).

BigMoney focuses on especially low cost liberal arts degrees and ever rising tuitions. While it's a nightmare scenario for some, if these institutions are able to adequately build or identify the quality of thinking their offline counterparts do, this will be a boon especially to the poor (both relative and absolute) around the world who have even greater access to higher ed:

When this happens—be it in 10 years or 20—we will see a structural disintegration in the academy akin to that in newspapers now. It will mean fewer professors and worse pay; low-paid, untenured faculty will do much of the teaching. Online instructors are already joining freelance reporters in the underpaid, insecure, overeducated work force that works from home. The market will encourage this trend. The typical 2030 faculty will likely be a collection of adjuncts alone in their apartments, using recycled syllabi and administering multiple-choice tests from afar.

Wednesday, September 09, 2009

Neuroeconomist Paul Zak on the "Innately Virtuous" Nature of Markets


Zak discusses his oxytocin argument, presented in Moral Markets: The Critical Role of Values in the Economy and why even the most untrustworthy among us leads to a healthy and moral marketplace.

Burying the Lede on Solar

According to The Information Network, "Solar crisis [is] set to hit in 2010, 50% of [solar] manufacturers may not survive". Except there's this little nugget:

Average selling prices could drop below US$1 per watt in 2010 and US$0.50 in 2011. As many as 50% of the more than 200 solar manufacturers, mired in red ink with current selling prices above US$2.00 per watt, may not survive, The Information Network stated.
So basically, the companies that are inefficient are going to cease to exist. That's what's supposed to happen. Further, if they're right about the $1 per watt costs, this could mean that we're about to experience a revolution in energy. $1 is the tipping point that solar becomes cost competitive at an installation level. Add to the fact that solar doesn't require fuel, so that operational costs are minimal makes this very exciting. So other than the fact that we may have finally reached a nirvana in cheap and abundant energy, maybe this is a crisis after all (note: set sarcasm meter to high).

It's an incredible time to be an entrepreneur

In the midst of our little financial crisis, it never ceases to amaze me the companies that have continued to thrive. Here's a tidbit of SurveyMonkey - something I remember first using in university and a company that has kept a pretty low profile (and maybe this is why) - from TechCrunch:

They never raised outside funding and grew the business to a rumored $30 million in revenue in 2008, with 85% EBITDA margins. This year revenue will be more like $45 million, we’ve heard (the company won’t comment).
The leverage of the internet and the ability to reach across borders and thousands of miles at a cost of less than a penny is unprecedented. As the Guardian notes, "startups are able to run leaner and meaner" against their often better funded counterparts. It's also not the college students who are succeeding - according to Vivek Wadhwa, "old guys rule" (TechCrunch):
I’ve got a message for all the Silicon Valley venture capitalists who think a CEO is over the hill after age 40. Old guys rule. And they are far more likely to be the founder of a successful technology company than most of you understand. How do I know this? Research that my team conducted, based on a survey of 549 entrepreneurs in high-growth industries, showed that the average founder of a high-growth company launched his venture at age 40. We also learned that these founders are likely to be married and have two or more kids. They typically have six to ten years of work experience and real-world ideas. They simply got tired of working for others and wanted to rise above their middle-class heritage.
So where to start? If I may be so bold, have a look at the compendium of links that I've been saving up and updating and also my latest book summary (though I'm planning on reorganizing and rewriting it).

Tuesday, September 08, 2009

World Bank's Doing Business 2010 Released

The great news is that there have been significant reforms over the last year despite (or perhaps because?) of the turmoil in the financial markets. "This year's top reformer is Rwanda, a first for a Sub-Saharan African economy." Read on!

Trade, not aid - Entrepreneurs in Africa

Real sustainable solutions to development: a look at a few entrepreneurs in Africa (Freakonomics). The one criticism is that it treats Africa as a monolith that it's not. Policies in economic development and entrepreneurship vary dramatically from country to country.

Wait times and my family doctor

I live in a community that is about an hour away from Toronto (sort of, with the rest of my time spent in Asia or the US). At the insistence of the parental units, I'm going to make an appointment for a checkup with my family doctor (they're concerned about the 1-2 eggs I eat). I was told it will be a half a year wait.

I couldn't help but laugh (and being a guy and having no health issues at the moment and quite close to reaching my workout goals, it is somewhat unimportant to me anyway). Basically in my community, there is a shortage of family physicians so quite a few of my friends who have moved into the area don't even have one and need to use an urgent care clinic for their basic medical needs. At my doctor's office, I've learned that it takes about a week if you need to see her on a specific non-urgent issue and up to a few days where they would double book for a more urgent issue.

Further, if I were to decide I couldn't wait and go to an urgent care clinic, the government (this being a one payer system) would penalize my doctor for my doing so. Ah, fun times and government run healthcare... I have been saving up for a mega rant on healthcare... we'll see if I end up having time to do the round up this week.

Monday, September 07, 2009

Happy Labour Day

I'll let John Stossel take it from here.

Sunday, September 06, 2009

More on Disrupting Higher Ed

On the institutions of higher learning, in the words of Cringley - "Burn baby burn":

We’re on the cusp of a new era where the marginal cost of insight is low enough to create new kinds of virtual education institutions. The important concept here is insight, which means more than fact, more than knowledge. It is the link between facts and knowledge, a true act of understanding that enables thinking people to create something completely new. Without insight you don’t know jack. But insight generally comes through personal connections — connections that to this point we’ve typically had to create campuses and pay $50,000 per year to enjoy.
How? "What’s missing here is the higher education equivalent of a GED. Someone will come up with one, or they should, because all the other parts of the system are ready to go." Read more here.

While I agree that change is coming, and maybe certifications/GED-equivalents will fill part of the void, the one thing as an employer that I realize is that there is a large gap between how those who have completed university and those who haven't approach problems and think. This may end up being a gross generalization based on a rather poor sample size, but I suspect universities and the time spent often engrain a greater level of curiosity and also a structured approach to problem solving.

There are obviously exceptions. On the other hand, I also don't know if university degrees are the cause or merely indicators of the quality that existed already. This is not to say that I don't believe we can either build critical thinking skills in other ways, or find better ways to identify it for those who have them - because I believe we can. I think the segmentation and reconstitution of the value in higher education will happen - it's just a matter of when and how and we're already reaching a tipping point where the technology exists and the pressure (ie economic incentives/need) for it to happen is only continuing to build.

Update: On the effectiveness of online schooling K-12 (ReadWriteWeb) - "A key finding of the report is that students doing partial or all course work online rank, on average, in the 59th percentile, meaning better than 59% of all those who were scored; whereas students in traditional classrooms ranked in the 50th percentile."

Friday, September 04, 2009

Bending the Cost Curve on Education

Some have even concluded that "college, as an asset class, is a bubble" (InvestingwithOptions). Technology, in its ability to provide cost effective alternatives may change all that. Washington Monthly profiles StraighterLine, a company that offers accredited courses for an incredible cost of $99/month allowing you to finish as many courses as you can in that time period:

Crucially for Solvig—who needed to get back into the workforce as soon as possible—StraighterLine let students move through courses as quickly or slowly as they chose. Once a course was finished, Solvig could move on to the next one, without paying more. In less than two months, she had finished four complete courses, for less than $200 total.
Another interesting datapoint is one made by the Economist blog that suggests "an increase in tuition makes the school more desirable as a status symbol" and increases networking opportunities for students. What I find fascinating about these stories (beyond the obvious that markets force accountability) is that technology is unbundling university into its component parts - offering knowledge and the recognition of learned knowledge without the extra "features" that consumers aren't interested in. This does not bode well for institutions that ignore the idea that prices can be sustainably divorced from the reality of the underlying value they offer.

Thursday, September 03, 2009

Are the Limits to Development Financial?

The most recent posting on "Bill Easterly Watch" is telling of the types of advocacy and solutions that they (and indeed many in the aid world) seek from Dr. William Easterly's blog, and why I somewhat harshly note that they 'just don't get it':

Why the single minded focus on aid effectiveness when we know that the limiting factor in many instances is financial. Primary education, food production, disease control, health, infrastructure, are all in many instances limited by the funds available to be deployed on them.
Do we really "know that the limiting factor in many instances is financial"? If they had read William Easterly's books, like the Elusive Quest for Growth (Amazon), they might learn for example (to roughly paraphrase) that investments in education, while a potential catalyst once economic growth gets going, poorly correlates to economic growth. Their conclusion based on this questionable assumption is that what we need is "more and better aid".

They should have a look at governance indices like The Heritage Foundation's Freedom Index, the World Bank's Doing Business Index, Transparency International's Corruption Perception Index or the International Property Rights Index. While I won't rule out the possibility that it's a massive coincidence that the better a country performs on the various scales also correlates positively with greater the economic growth, I doubt this is the case. Further, not one of these indices cites "aid" as a factor in growth.

I'm not sure if there are any countries in the world that have industrialized as a result of aid initiatives. Indeed, I would suspect there are enough instances where quite the opposite is true - that aid has actually stalled economic growth encouraging the type of centralized solutions that developing countries need the least instead of reinforcing property rights, exiting government involvement where private industries can move in, freer trade and finally, better access to foreign investment.

No Mr. Turner, what we need isn't more and better aid. The problem with aid isn't Bill Easterly either as your blog's name somewhat churlishly suggests. Dr. William Easterly is simply one of the leading voices to call for greater accountability and question the role of aid in development with a growing body of work whose authors include Dr Easterly, Dambisa Moyo, Hernando De Soto, Brink Lindsey among many others.

What we need is less aid and better governance. Countries who nurture these conditions have greater access to foreign investment that greatly surpasses funds available through aid and is generally more accountable.

Wednesday, September 02, 2009

When "Do Nothing" is better than "Doing Something"

One of the reasons I enjoy William Easterly's blog is his willingness to publish and respond to criticisms by others even when they just 'don't get it' as is the case with the most recent posting by Bryan Turner, founder and coordinator of Students To End Extreme Poverty and Youth Engagement Coordinator of Make Poverty History Canada.

"Aid" is an intervention into a market - a market that may be poorly functioning or even thriving. For this very reason, and for the fact aid by its very nature is unsustainable (if it were sustainable, they'd be called profitable businesses), "doing something" by the well intentioned as Mr. Turner proposes, may be worse than those who look with apathy and "do nothing". Further, real sustainable solutions often have very little to do with the lack of the well intentioned or even the lack of money/resources.

One issue I remember personally experiencing was finding qualified staff in Uganda with distortions caused by aid agencies paying substantially higher wages. Another is the obvious issue of funds being redirected to or alleviating the pressure on corrupt agencies and officials. These are not "straw men" as Mr. Turner proposes. Only the most recent example of waste is highlighted on Easterly's blog - developing the failed "Women's World Market" in Kabul that offered nothing unique, was in a poor location and expensive to boot. This being said, I do think it's pretty important for any dialogue/debate to distinguish between "relief" and "economic development". It is the latter that Easterly most viciously and rightfully criticizes for its abject failure over the last 50 years.