Happy employees make for more profitable companies

The virtuous cycle of markets strikes again (BarkingUpTheWrongTree):

The results indicate that employee work perceptions predict important organizational outcomes -- if employees have positive perceptions of their jobs, their organizations benefit via higher employee retention, increased customer loyalty, and improved financial outcomes. Interestingly, the analysis suggests that employee perceptions affect outcomes more than outcomes affect employee perceptions of their jobs.

The #1 Impediment to Development and Growth?

A reminder that it's government (TechCrunch):

It’s ironic that Ethiopia’s current government are the same people who overthrew the brutal Marxists called the Derg twenty years ago; alas, they seem to have inherited some of their archenemies’ fondness for monopolies, protectionism, and bureaucracy. I believe mobile Internet access is a transformational force that could turn African nations into economic lions to rival Asia’s tigers—but only if it’s fast, cheap, and ubiquitous. And that will never happen here while every bit of Ethiopia’s Internet is controlled by a dinosaur monopoly with no competitive incentive to improve.

Rosabeth Moss Kanter: The Four Things the Internet Doesn't Change

I found this list to be useful - how the internet changes everything except these four things (HBR):

1. A great customer experience differentiates winners from losers.
2. The human side is critical to the use of technology.
3. Money needs to change hands.
4. Government and business still talk past one another.

Read the whole thing.

Why Businesses Aren't Hiring

Put me in the camp that believes our economic woes are self inflicted - just perhaps not in the ways we might believe. From Bloomberg:

The man in the aisle seat is trying to tell me why he refuses to hire anybody. His business is successful, he says, as the 737 cruises smoothly eastward. Demand for his product is up. But he still won’t hire.

“Why not?”

“Because I don’t know how much it will cost,” he explains. “How can I hire new workers today, when I don’t know how much they will cost me tomorrow?”

He’s referring not to wages, but to regulation: He has no way of telling what new rules will go into effect when. His business, although it covers several states, operates on low margins. He can’t afford to take the chance of losing what little profit there is to the next round of regulatory changes. And so he’s hiring nobody until he has some certainty about cost.

It’s a little odd to be having this conversation as the news media keep insisting that private employment is picking up. But as economists have pointed out to all who will listen, the only real change is that the rate of layoffs has slowed. Fewer than one of six small businesses added jobs last year, and not many more expect to do so this year. The private sector is creating no more new jobs than it was a year ago; the man in the aisle seat is trying to tell me why.

Read the whole thing.

And I thought I felt strongly about taxes...

Though she has a point... Adele on the taxes she pays in the UK (DigitalSpy via AdamSmith):

I'm mortified to have to pay 50%. Trains are always late, most state schools are s*** and I've gotta give you, like, four million quid? Are you having a laugh? When I got my tax bill in from [my album] 19 I was ready to go and buy a gun and randomly open fire.

Kudos to her for not being a bloviating hypocrite bemoaning the excesses of the rich while running off to some tax haven to blatently avoid taxes (Slate).

The relationship between short term goals, optimism and better health

Apparently the relationship is a positive one (BarkingUpTheWrongTree):

[..] positive expectations do predict better health and this relationship is partially due to the goals people set in their daily lives.

Asking the important questions

Why don't pregnant women tip over? (BarkingUpTheWrongTree):

[...] a woman’s lumbar, or lower back, curve extends across three vertebrae. In men, it extends across two. The joints between the vertebrae also are larger in females and angled differently from those of males to better support the extra weight. The researchers say the extra back support evolved about 2 million years ago, and likely came about as a direct result of walking upright.

A bit of perspective

Jim Treacher on the pressure on McDonald to retire Ronald (DailyCaller via Instapundit): "We can’t have too many problems as a society if people have the luxury of worrying about a circus clown who sells hamburgers to children."

Technology Adoption

A note on how we use technology (and who uses it) how that's changed (Ben Horowitz via Paul Kedrosky):

20 years ago, the technology adoption curve generally conformed to the following order:

1. Government—specifically Defense and Intelligence organizations
2. Businesses—with large businesses going first and smaller businesses adopting later
3. Consumers

Today things have completely reversed. The latest technology goes to consumers first, followed by small enterprises that behave like consumers, then larger ones, then the military. The stunning reversal is one of many profound side effects of broad scale Internet adoption.

The shift is I think as remarkable as it is empowering.

Unintended Consequences: Copper and China

As it turns out, China's demand for copper (and possibly other commodities?) is driven by a quirk of lending constraints in China by which importers have been using the purchase of copper in order to secure financing for entirely unrelated operations:

With credit conditions tight, importing copper has become a way for businesses to circumvent the government’s lending controls.

A letter of credit—easier to obtain and cheaper than a bank loan—finances the purchase of copper on the London Metal Exchange. If copper prices are higher in Shanghai than they are in London, the importer can cover transport and storage costs, sell their copper at a profit on the mainland and enjoy the use of the yuan proceeds until the letter of credit expires—typically three months to a year later.

A premium of $210/ton for the three month contract in London over the price in Shanghai throws a wrench in the works for importers. But businesses still can use their copper as collateral for yuan loans and keep the copper in storage hoping that the price differential will move their way. Even if that doesn’t happen, demand for credit has been so strong that importers are willing to take a loss on the copper transaction just to get their hands on the cash they need to fund their other operations.

Education and Entitlements

College isn't for everyone. There are a number of degrees that ultimately provide little if any economic benefit to society which raises a question (National Review via Instapundit):

If college today has more to do with personal fulfillment than with contributing to the economy, why is the government paying for it?

CDC: Preparing for the Zombie Apocalypse (and/or other more probable disasters)

Well, at least it's good to know that someone plans for these things (via Instapundit):

If zombies did start roaming the streets, CDC would conduct an investigation much like any other disease outbreak. CDC would provide technical assistance to cities, states, or international partners dealing with a zombie infestation. This assistance might include consultation, lab testing and analysis, patient management and care, tracking of contacts, and infection control (including isolation and quarantine). It’s likely that an investigation of this scenario would seek to accomplish several goals: determine the cause of the illness, the source of the infection/virus/toxin, learn how it is transmitted and how readily it is spread, how to break the cycle of transmission and thus prevent further cases, and how patients can best be treated.

Of course, perhaps slightly more importantly, it lists what's important to have in a home emergency kit - so read the whole thing.

The Search for Happiness

As it turns out, the search for happiness may not only be an exercise in futility, but destructive (Association for Psychological Science via BarkingUpTheWrongTree):

...people who strive for happiness may end up worse off than when they started... "when you’re doing it with the motivation or expectation that these things ought to make you happy, that can lead to disappointment and decreased happiness,” Gruber says. [...]

Too much happiness can also be a problem. One study followed children from the 1920s to old age and found that those who died younger were rated as highly cheerful by their teachers. Researchers have found that people who are feeling extreme amounts of happiness may not think as creatively and also tend to take more risks. [...]

Indeed, psychological scientists have discovered what appears to really increase happiness. "The strongest predictor of happiness is not money, or external recognition through success or fame," Gruber says. "It’s having meaningful social relationships." That means the best way to increase your happiness is to stop worrying about being happy and instead divert your energy to nurturing the social bonds you have with other people. "If there’s one thing you’re going to focus on, focus on that. Let all the rest come as it will."

While I do think finding strong friends and partners in life are important, there's one variable, I think at least for me, that transcends the others insofar as life satisfaction goes: Purpose.

Reasons startups fail

A useful list to ponder of how startups fail (Chubbybrain):

The Role of Politics in Development

Not exactly a surprise but a good reminder. With a view to China (WSJ):

China is making great progress in lifting its people from the ranks of the world's poorest. But if the experience of other countries is any indicator, it will need a revolution to achieve rich-nation status.

Uprisings throughout the Middle East, and China's recent moves to suppress its own "Jasmine Revolution"—with steps such as jailing government critics—underscore a question facing the developing world: Can authoritarian or oligarchic states join the ranks of the world's wealthy, and even gain global economic primacy? Or is political change a prerequisite?

The answer isn't encouraging for the world's despots, according to economists who have studied the subject. Evidence suggests countries without good institutions such as universal property rights, impartial courts and equitably enforced laws tend not to rise above a per-capita annual income level of about $15,000. Those institutions coincide with political freedom, which seldom comes about without upheaval.

Considering Closing my Blogger Account

This is outrageous (Google). What makes it worse is the asinine official response from Google. A Save Ann Althouse Blog facebook page here. As Glenn Reynolds at Instapundit notes, it's a blog that's even been featured in the New York Times. No idea what they are thinking but given how notorious Google's customer service is, or lack thereof, it may be time to find a new home for my blog and the other services I use.

Update: I note that while her blog hasn't entirely returned, current posts are back up and Google's hostile representative "nitecruzr"'s thuggish and embarrassing comments have been washed down memory hole (presumably after he had some sense knocked into him). But ugh, add another to-do to find a blog host replacement.

Update #2: For a sense of how offensive the original responses from Google's rep nitecruzr/ Chuck Croll (Livinginagoldenage).

Update #3: The full record of the idiot nitecruzr / Chuck Croll here (Patterico). Where does Google find these people who they empower without apparently any oversight?

More on the Advantage of Renting

Now that blogger has come alive again, in a study from the Federal Reserve Bank of Kansas City (via NYT):

For most ten-year occupancies beginning during the 1970s and 1990s, homeownership unambiguously built more wealth. In contrast, for most occupancies beginning during the 1980s, renting and investing unambiguously built more wealth. Renting and investing is also likely to build more wealth than homeownership for many of the occupancies that started in 2000 through 2009.

More here: "Why I’d Rather Shoot Myself in the Head than Ever Own a Home Again" (Freakonomics)

Ed Glaeser Leaves Economix

One of the authors at Economix signs off - in a remarkable, must read, post on the role of economics in an imperfect world (NYT):

Positive economics attempts to understand the world as it is; normative economics describes how the world should be. Most economists spend most of their time doing positive economics, but most economics columns advocate particular policies, which is implicitly normative economics.

In the wake of the recent crash and recession, it has become fashionable to deride the quants, whether on Wall Street or in the academy. After all, few of them saw it coming. The critics may be right to criticize excessive overconfidence, but they are wrong to suggest that the fault lies in either formal models or statistical work.

Hubris has been part of the human condition, with or without math, long before the Black-Scholes asset-pricing formula. Mathematical models create discipline. They ensure that we specify our assumption and that our conclusions then follow from our assumptions. Statistics then provide us with indispensable tests of our theories.

But we need to always remember that data and statistical tests never prove a theory. Typically, many different theories can explain almost any observed phenomenon. Data allows us only to reject a theory. The theories that survive are those that haven’t been rejected yet, and that’s a good reason for humility.

An Introduction to Crowdfunding

It's an amazing time to be alive. From the Boston Herald on crowdfunding (via Instapundit):

In fact, it’s what you do — or plan to do — that can make or break success in the world of “crowdfunding,” which allows anyone to raise money with online video and blog pitches. Through sites like Kickstarter.com and Indiegogo.com, the top crowdfunding conduits in the U.S., donors big and small can contribute to projects that catch their eye.

“At a time when it’s very challenging to get money, it democratizes the process,” said Tory Johnson, 40, a small-business expert and founder of Spark & Hustle. “People you don’t even know will give you money.”

For British Columbia: The "Environment" is More Important than Education

Despite the financial crisis facing Vancouver's school board, under legislation passed under the previous Premier Gordon Campbell, the board has been forced to divert nearly half a million dollars to carbon offsets (Vancouver Sun).

The budget approved by the Vancouver school board includes $405,725 to pay for such offsets, money that board chair Patti Bacchus said Friday could have been put to better use.

"I could pay for about five teachers," she says.

Adding insult to injury, the board is required to pay the province about $45,000 for a "smart tool" to assess its carbon footprint and to supply staff to make it work. Bacchus said the payments are particularly galling because many of the schools operated by the VSB are old, poorly insulated and inefficient, so they have high energy costs.

"These are schools that are cold in the winter because we've turned down the heat to save money and we have parents and children and staff shivering and complaining about that," she said.

More unintended (?) consequences (SF Chronicle via Instapundit)

Chile: The Land of 15% Growth

Another reminder that the best form of disaster prep is economic growth and wealth. Chile, however, also shows the world of developed nations a path to sustainable economic growth (Investors' Business Daily):

A year ago, Chile lay in rubble, victim of the world's fifth most powerful earthquake. So Chile's 15.2% growth is a big bounce from a bad setback.

But it shouldn't be dismissed as an anomaly. It's a showy number, but not the only one.

The same day Chile released its data, Goldman Sachs raised its 2011 growth forecast for the country to 6.4% from 6%. In its annual regional business index, Latin Business Chronicle ranked Chile as having the best business climate in Latin America in 2011. [...]

Bamrud says Chile has been turning heads with investors the past year and a half because of its emphasis on improving its corporate environment, its tax regime and its economic freedom, all of which rate highly.

"Chile has always been held out as a model for Latin America, but the reality is ... it's now a model for the U.S.," he said.

Corporate taxes are the second lowest in Latin America at 18%, behind Paraguay's 10%. The Latin average is 28%.

Meanwhile, Goldman Sachs' chief economist for Latin America, Alberto Ramos, says Chile has wisely fostered growth by reducing the size of government and not printing too much money.

In 2011, it cut government spending to 5% of GDP, or $700 million, more than its projected 5.5%. So GDP has room to grow 6.4%, rather than 6% as first estimated.

For the average household, renting better than buying?

An interesting study to look at in greater detail later:

A new academic article in Real Estate Economics turns this conventional wisdom on its head. Using data from 1979 to 2009, the authors demonstrate that renting was the superior investment strategy for most of the past 30 years. Counterintuitive as the finding may be to some, it is actually quite logical. Unless someone possesses the cash necessary to buy a residence, he or she will be renting one way or another. The choice is between renting the property directly or instead renting the capital necessary to buy the property. The amount of capital to be rented is a function of house prices, while the bulk of a mortgage payment is interest, which is the rental payment on this capital. After 2 years, the typical 30-year amortizing mortgage balance has been reduced by less than 3%. This means that a household that took out a $300,000 mortgage with a 5% interest rate to buy a home has only reduced its mortgage balance by $8,600 after two years despite spending nearly $39,000 in total over this period.

Update: Not sure I agree entirely with this study. The basic question of rent vs buy comes down to whether or not you could make more money with the money you would otherwise use to pay for your mortgage/downpayment.

For many people though, I suspect that without the mortgage interest rate deduction (and given rent you pay on residential property is not tax deductible in the US), rent makes more sense financially than buying.

Megatrend Watch

From VC Fred Wilson:

But right now we are in the midst of a number of these megatrends all happening at the same time. There are at least four big ones going on at the same time:

- Mobile - yesterday I wrote that at least 16% of the visits to this blog are coming from mobile devices and that number is up from essentially zero six quarters ago

- Social - Facebook will have 1bn users in the next year or so

- Cloud - A third of Netflix' new subscribers are opting for the streaming only plan

- Global - companies like Skype, Facebook, Twitter, Google see upwards of 80% of their users from outside the US and these numbers are growing faster than ever

Each one of these megatrends would be an investable wave on its own. But we are in an environment when all four are crashing on the shore ata the same time. Twitter, for example, is mobile and social and global. It is the world in your pocket. And it is changing the world too.

Quote of the Day

John Adams (via Instapundit):

Be not intimidated… nor suffer yourselves to be wheedled out of your liberties by any pretense of politeness, delicacy, or decency. These, as they are often used, are but three different names for hypocrisy, chicanery and cowardice.