China's struggle for innovate

While spending helps, in China's case, it's not the bottleneck (WSJ):

In China, that's an especially tough transition. Chinese scientists complain that Beijing focuses too heavily on headline-grabbing efforts, like building supercomputers—it currently makes the world's fastest supercomputer, in a ranking done every six months by Top500, a group of leading computer scientists—rather than fundamental science that could spawn new industries.

China has become the world's No. 2 spender on R&D behind the U.S., but the U.S. spends 19% of its R&D budget on basic science—the kind of research that can spawn new fields over time—compared with just 5% for China, according to the U.S. National Science Foundation.

"Chinese politics is a major inhibiting factor—with so many circumscribed 'no-go zones' for research," said David Shambaugh, a George Washington University China scholar. Singapore's prime minister, Lee Hsien Loong, noted during a speech to a senior Communist Party school last year, "all eight Nobel Prize winners in science who are of Chinese descent either were or subsequently became American citizens."

Why the poor invest in money losing livestock

Because they don't have better ways to save - or at least that's what this study suggests (ChrisBlattman):

Evidence suggests that the poor are often willing to earn negative interest in order to access reliable saving services… If livestock ownership is seen as a form of savings, the observed negative returns to cows and buffalo provide additional evidence of the high demand for savings, and perhaps specifically for illiquid savings in order to avoid temptation spending.

The question then turns to the supply side of savings: what are the constraints on the supply side that make cows and buffalos better savings alternatives than what banks offer? With technological innovations such as mobile money, the transaction costs are plummeting for offering deposit accounts to consumers in developing countries, even in highly rural areas. Thus this is an area where improvements in ability to store cash outside of the home may lead to more efficient allocation of capital, away from risky or low return home investments.

…If indeed, as we find, owning cows yields low or negative returns, this is of critical importance for NGO and government programs that promote investment in cows with an aim of poverty alleviation. In particular, the results here are critical for programs that engage in livestock grants to help households start or expand income generating activity from raising livestock (this is common amongst “graduation” programs, cited earlier, as well as many NGOs, such as Heifer International or other livestock grant programs)

Ramona Pierson's, Co-Founder of Declara

An incredible story of perseverance (Businessweek)

"Robots vs. Anesthesiologists"

Cool technology - for a specialty in medicine that is amongst "the highest paid". Not surprisingly, the incumbents are fighting back (WSJ):

Anesthesiologists' services usually cost more than the $200 to $400 generally charged by physicians performing the actual colon-cancer screenings, says health plan CDPHP in New York state. An anesthesiologist's involvement typically adds $600 to $2,000 to the procedure's cost, according to a research letter published online by JAMA Internal Medicine in July.

By contrast, Sedasys would cost about $150 a procedure, according to people familiar with J&J's pricing plans. Hospitals and clinics won't buy the machines, instead paying a fee each time they use the device, these people say. The $150 would cover maintenance and all the costs of performing the procedure except the sedating drug used, which would add a few dollars, one of the people says.

With minimum wage come the robot overlords?

John Cochrane, an economist at the University of Chicago, explores what a higher minimum wage may mean (JohnCochrane):

The cost is just as easy to forecast. McDonalds cuts hours, and uses its most experienced and efficient workers more, and fewer people like my hapless server. And they don't get the oh-so-needed on-the-job training. The biggest impact of minimum wages is not so much on existing workers, but on new workers entering the labor force. (See a nice new NBER working paper by Jonathan Meer and Jeremy West.)

The effects fall heaviest on low-skill teenagers, especially minorities. Tom Sowell is eloquent on this point, for example in a recent New York Post OpEd. I was unaware until reading it that minimum wage laws were initially backed in part as conscious efforts to discriminate against minorities and preserve jobs for white people. Sometimes, I guess, policies do have their intended effects.

This much is pretty obvious. Looking around my McDonalds, though, I could see a deeper possibility -- an unexplored avenue for substitution away from low-skill labor.

CrossFit's dirty little secret?

Not quite. A number of friends have forwarded me the link to this article. It's undeniably sensationalist - it's not at all a secret if you can find a multitude of references on the Internet (CrossFit) - and even the article itself points to "Uncle Rhabdo". Nevertheless, my first thought is that (a) I am pretty sure I have nowhere near the willpower to get rhabdo and (b) it's still pretty darn rare. I like Instapundit's response the best: "Any exercise overdone or done badly is dangerous."

More from critics who apparently just have too much time. (NYT via Instapundit)

More on jobs, technology and regulation

Maybe Peter Thiel is onto something. David Harsanyi's observations (theFederalist via Instapundit):

The economy grows, innovation ratchets up — but jobs do not. Even during the 2000s, when productivity grew at a faster pace than it had in decades, median income declined slightly. Is creative destruction breaking the middle class? Has technology outpaced our ability to adapt? Are robots destroying the prospects of a vibrant future? Maybe. But the theory has a few holes. For starters, technology always kills jobs. American industry did not stumble upon innovation in 2007. The first ATM machine was installed in 1969, after all, and some of you may never have spoken to live bank teller. Are today’s modernizations really more disruptive than those hatched during the first half of the 20th century or the Industrial Revolution? It seems unlikely that Facebook is a bigger game-changer than the mass production of the automobile. . . . Question: Which one of these things is more likely to undermine economic activity: a) Twitter b) over 12,000 new pages of regulations added by this administration.

Update: A reminder that automation is also replacing jobs in China (WSJ).

What happens when governments go AWOL

Or at least what's happening in Detroit - "anarchy" (Reason):

War, Not Agriculture, Spawned Complex Societies

An interesting study/hypothesis that suggests that while agriculture was a part of why complex societies evolved, war was a much bigger reason (Wired):

To test the two competing theories, Turchin and company designed two mathematical models for predicting the spread of complex societies. One based only on agriculture, ecology and geography. The other included those three factors, plus warfare. Then, they used data from historical atlases to determine whether these models matched up with the way the different states and empires actually evolved.

The model that included warfare predicted about 65 percent of the historical variance, while the agricultural model explained only about 16 percent, suggesting that warfare was more important in the spread of social norms that lead to complex societies.

Turchin admits that the model is far from perfect — it includes no population data, for example — but for the most part, it was able to predict the spread of large-scale states between 1,500 BC to 1,500 AD. He also notes that whether or not simple societies were warlike is hugely controversial, but says that by the time their models start, warfare was widespread. “Proximate causes for warfare are numerous: competition for resources (mainly territory), revenge and strategic consideration (attack your enemy before they are ready to attack you),” he says.

Cash grants and skill development

An interesting study, though the question I'd wonder is how sustainable it is. One of the problems in microfinance is that it doesn't reach the poorest of the poor. Did this program? At $382 per person, I suspect it didn't - especially since it also required recipients to form groups to request funds.

It would also be interesting to see what the impact would be for something more sustainable like loans - but nevertheless, it's a study where there are demonstrable gains to the intervention - which is a lot more than many other interventions (Chris Blattman):

We study a government program in Uganda designed to help the poor and unemployed become self-employed artisans. The program targeted people ages 16 to 35 in Uganda’s conflict-affected north, inviting them to form groups and submit grant proposals to pay for vocational training and business start-up.

Funding was randomly assigned, and treatment groups received unsupervised cash grants of $382 per member on average. The government’s main aims were to increase in-comes and thus also promote social stability.

The treatment group invests some of the grant in skills training but most in tools and materials. After four years half practice a skilled trade. Relative to the control group, the program increases business assets by 57%, hours of work by 17%, and earnings by 38%.

Development, bad incentives and El Salvador

Incentives in development are sometimes perverse. Autocrats/dictators can get rewarded for creating policies that make their people poorer such that developed countries contribute greater amounts of aid that gets siphoned off to offshore accounts. Recently the US gave El Salvador $277 million in aid (WSJ):

Last week the U.S. government's Millennium Challenge Corporation—an independent foreign-aid agency created by Congress in 2004—approved a new package of $277 million in aid for El Salvador, effectively sanctioning the antidemocratic methods of governance that Mr. Sánchez Cerén represents. U.S. Secretary of State John Kerry is chairman of the MCC board, which includes Treasury Secretary Jacob Lew, U.S. Trade Representative Michael Froman and Morton Halperin of George Soros's Open Society Foundations. To understand why so many Americans distrust Washington's foreign-policy agenda, look no further than this bizarre aid decision.

First some more background: Mr. Sánchez Cerén's onetime guerrilla group—the Farabundo Martí National Liberation Front—is El Salvador's ruling political party, and he is vice president under FMLN President Mauricio Funes.

The Funes-Sánchez Cerén government, in office since 2009, has made El Salvador decidedly poorer and less free. Its international reputation as a destination for capital has seriously deteriorated, and allegations of corruption are rife. The World Economic Forum, the World Bank and Transparency International have all noted the country's worsening investment climate.

Regulation isn't free

And too many seem to forget this (ASI):

Auto-enrollment in the new compulsory pension schemes that the UK government is just introducing. Reports are that this is going to cost firms £15 billion just to fill out the paperwork. Money that, call me misguided if you wish, would probably have been better spent on being put into pension funds for those workers.

The Dodd Frank regulations on conflict minerals. Stopping slave labour at mines in The Congo is a good idea: we were originally told by the Enough Project that the checking system, to make sure no minerals from those mines entered the supply chain, would cost some $10 million a year. The SEC now estimates the cost of doing the paperwork at $4 billion.

The FATCA regulations to stop Americans hiding money abroad, away from the prying eyes of the Internal Revenue Service. This is expected to bring in a few billions a year in additional tax revenues. One estimate I've seen of the cost of compliance with these rules is $1 trillion.

The one thing that is common to all of these cases is that the bureaucracy set up to adminster each scheme has not had to consider the costs to other people of said schemes. That cost of bureaucratic regulation is, if you like, an externality to the legislative system. And as we all know from our studies of climate change externalities must be controlled. The polluter must pay i the most common catchphrase here.

Poverty trumps genes

Being poor can impact your IQ (WSJ):

IQ was much less heritable for people who had grown up poor. This might seem paradoxical: After all, your DNA stays the same no matter how you are raised. The explanation is that IQ is influenced by education. Historically, absolute IQ scores have risen substantially as we've changed our environment so that more people go to school longer.

Richer children have similarly good educational opportunities, so genetic differences among them become more apparent. And since richer children have more educational choice, they (or their parents) can choose environments that accentuate and amplify their particular skills. A child who has genetic abilities that make her just slightly better at math may be more likely to take a math class, so she becomes even better at math.

But for poor children, haphazard differences in educational opportunity swamp genetic differences. Ending up in a terrible school or one a bit better can make a big difference. And poor children have fewer opportunities to tailor their education to their particular strengths.

How your genes shape your intelligence depends on whether you live in a world with no schooling at all, a world where you need good luck to get a good education or a world with rich educational possibilities. If we could change the world for the PKU babies, we can change it for the next generation of poor children, too.

Unfortunately the takeaway that some will get from this is that the solution is either spending more money on broken systems or holding the better kids down instead of bringing the poorer kids up.

I also have to wonder whether or not this study concludes that IQs have declined or are simply not meeting their potential because of poverty (given that we've gotten considerably wealthier overall at every socioeconomic level as a society over time). That said, there appears to be a significant gap here that I think markets and technology are only starting to solve.

An illustrated book of bad arguments

Cute (and useful) (Book of Bad Arguments)

Why donating medical devices to Africa doesn't help

It's kind of like the effectiveness of donating shoes (WhyDev). Read more at theAtlantic (via AfriTech)

Has Innovation Slowed?

Interesting debate (45 min) with a particular focus on healthcare and education between Peter Thiel and Andy Kessler (WSJ via Instapundit):

More here on whether it's also the end of the American Dream (Economist via HN).

China isn't the biggest threat to American/Canadian Labour

It's (the lack of) productivity (NYT via Instapundit):

Now, companies that want to make things here often have trouble finding qualified workers for specialized jobs and American-made components for their products. And politicians’ promises that American manufacturing means an abundance of new jobs is complicated — yes, it means jobs, but on nowhere near the scale there was before, because machines have replaced humans at almost every point in the production process.

Take Parkdale: The mill here produces 2.5 million pounds of yarn a week with about 140 workers. In 1980, that production level would have required more than 2,000 people.

"Why is Zambia so poor?"

A question asked in Pacific Standard:

So far this story—shitty colonizers, problematic independence, Chinese economic invaders—is the one we hear over and over from this part of the world, a sort of Mad Libs history of Sub-Saharan Africa.

Though they should have started here (DoingBusiness.org). While it's easier said than done, it's also pretty easy to get lost in the excuses before recognizing the fact that the foundations of development isn't dependent on an abundance of resources.

Smartphones, consumerism, and saving the world

An unrepentantly optimistic take on the proliferation of smartphones that some consider unnecessary luxuries as they lament consumerism (WSJ):

Seven years ago, when one-megapixel cameras started appearing on phones, I began working with a group of students in my lab at the University of California at Berkeley to see if those cameras could capture images of human cells similar to those captured on our $150,000 research microscope.

By attaching a simple set of lenses to a Nokia phone borrowed from my sister, we were able to image blood cells, malaria parasites and the bacteria that cause tuberculosis.

Several years and prototypes later, we and collaborators are testing a mobile-phone-based device in Cameroon to screen for parasitic worm infections. We're also testing a modified mobile phone in Thailand to image the back of the eye for retinal diseases, and another in India to provide early warning of oral cancer. Other researchers have created a cellphone stethoscope and a portable ultrasound system. The list goes on.

Our laboratory microscope still has more features than our smartphone microscope, of course, just as hospital medical equipment has more capabilities than the smartphone-based devices that duplicate some of their functions. But with smartphones capable of providing basic primary-care services and diagnostic work, and with expanding wireless services that allow doctors to interpret results and recommend treatments remotely, many of the services we enjoy at the doctor's office will be available in the field—anywhere in the world.

The wealth of China's Congress as compared the one in the US

Indicative of some of the coming challenges China faces when it comes to governance and the legitimacy of that governance (Businessweek):

The richest 70 members of China’s legislature added more to their wealth last year than the combined net worth of all 535 members of the U.S. Congress, the president and his Cabinet, and the nine Supreme Court justices.

The net worth of the 70 richest delegates in China’s National People’s Congress, which opens its annual session on March 5, rose to 565.8 billion yuan ($89.8 billion) in 2011, a gain of $11.5 billion from 2010, according to figures from the Hurun Report, which tracks the country’s wealthy. That compares to the $7.5 billion net worth of all 660 top officials in the three branches of the U.S. government.

Because incentives matter: "Welfare pays more than minimum wage in 35 states"

The disincentives to work are troubling (Reason), that's what makes the idea of the negative income tax so attractive:

More on Detroit's failed governance

Pretty sad though it's also not like the results weren't predictable (WalterRussellMead via Instapundit):

It appears that the city took all of the hallmarks of blue governance to extremes. For years, it tried to address its revenue shortfall by raising taxes, which drove residents out of the city and shrunk the tax base in the process. Detroit lost 61 percent of its residents between 1950 and 2010, and the total value of its property fell from a peak of $45 billion to $9.6 billion in 2012. Meanwhile, even as the city’s revenue base was imploding, public employee benefits remained generous and in some cases even expanded.

The Free Press notes that there were a few periods of hope during thee postwar period when the city’s finances were relatively strong, but each time the city squandered these opportunities and used its good standing to borrow more rather than address the core problems that got it in the mess in the first place. . . . The city has paid a heavy price. Today, Detroit has more pensioners than employees, and a debt that is more than twice what it had in 1960. It spends considerably more on police and fire retirees than active workers. And despite the fact that the city has the highest income and property taxes in Michigan—by a wide margin—the state’s inflation-adjusted revenue is lower than it was in 1960.

Scientific American comes out in favor of GMOs

After the disgraceful and dishonest attacks by Greenpeace on GMO research in the third world, this is encouraging. (ScientificAmerican)

Converting a 2D image into a 3D object in seconds

I can think of a number of commercial applications for this. This is pretty amazing (via core77):

Because they're not there to help

A firm tries to use UAVs in ways that are undeniably good and gets shut down by the U.S. Federal Emergency Management Agency (FEMA) (Wired). Kind of depressing:

There's been some terrible, terrible flooding going on in Colorado. Rain is still falling, making it difficult (or impossible) for airplanes and helicopters to get in and out of the area. Drones can fly, though, and while they're not able to pick up people or drop off supplies, they are able to make damage assessment maps to help relief agencies coordinate their efforts. Or at least, they were, until the U.S. Federal Emergency Management Agency (FEMA) showed up and grounded them.

That's who deregulation typically helps the most

The little guy. "In recent years, Texas has improved the regulatory climate for craft beer, small home food entrepreneurs, and farmers markets in the state." (Reason.com via Instapundit)

Study: Fracking doesn't contribute to global warming

"Frackers, rejoice" (NationalJournal via Instapundit) It's remarkably good news considering it's a technology that's driving the rebirth of US manufacturing. On the other hand is the US government also trying to crush natural gas production and in turn fracking? (WSJ)

Reddit co-founder Alexis Ohanian on rejection

theAtlantic via HN (where there's also an interesting discussion on why he's chosen to promote entrepreneurship now):

A lot more at Tim Ferriss's blog.

Big Think Interview with John Mackey

From the founder of Whole Foods: "Health care and education are the two most regulated areas in our society, and they're also the ones that ... are least satisfactory to people. Those are areas that we need to de-monopolize and allow more competition to occur." (YouTube via Crossfit [on Facebook of all places])

Is China proof that low savings rates are because of government reliance?

That's what Don Boudreaux thinks (via ASI):

If Haltom’s claim is correct, the high household savings in China today is evidence that government provision of welfare substitutes to some extent not only for private provision generally, but also for provision at the level of the household. People are neither as personally irresponsible nor as incapable of planning for and providing individually for their own needs as many today – “Progressives” and some conservatives alike – presume them to be.

Researchers: Monkeys are rational economic actors, just like humans

Interesting research (Quartz):

This pretty much approximates the kind of rational human behavior economists assume when they construct economic models. Poor people tend to invest their money in assets where they know they won’t lose it, like US Treasurys or simple stock-market indices. Richer humans are more comfortable taking risks where they can lose money so long as the reward is sufficiently large.

But the behavior goes beyond the pecuniary domain. The experiment suggests that risk-analysis is genetic. Humans and monkeys make rational decisions based on risk and reward. In similar experiments, birds did not.

“The monkeys… seem to share human risk preferences. They were slightly risk averse and we know that humans would behave similarly in these experimental conditions,” Agnieszka Tymula of the University of Sydney’s School of Economics, one of the researchers, told Phys.org. ”Understanding the biological mechanisms underlying risky behaviours that evolved around satiety may provide unique insights about decision-making and consumption wealth.”

The man behind Hello Kitty who is now a billionaire

A cool entrepreneurship story. Who knew? (Video Bloomberg via Fortune)

Real progress in poverty eradication

As ASI notes, it's because of "that strange mixture of capitalism and markets that propelled that North Atlantic world into unprecedented prosperity" (Brad Delong via ASI):

To put it another way: In 1870 the daily wages of an unskilled worker in London would have bought him (not her: women were paid less) about 5,000 calories worth of human, not horse food: not oats (although Scotsmen would disagree) but bread--5,000 wheat calories, about 2½ times what you need to live (if you are willing to have your teeth fall out and your nutritionist glower at you). In 1800 the daily wages would have bought him about 3,500 calories, and in 1600 2,500 calories.

Karl Marx in 1850 was dumbfounded at the pace of the economic transition he saw around him. That was the transition that carried wages from 3500 calories per day-equivalent in 1800 to 5000 in 1870. Continue that for another two seventy-year periods, and we would today be at 10,000 calories per unskilled worker in the North Atlantic today per day. Today the daily wages of an unskilled worker in London would buy him or her 2,400,000 wheat human-food--potato--calories. Not 10,000. 2,400,000. That is the most important fact to grasp about the world economy of 1870. The economy then belonged, even for the richest countries, much more to its past of the Middle Ages than to its future of--well, of you reading this.

Tripling battery life? Yes please

via Fortune:

Venture capitalist John Doerr today said at TC Disrupt that the real energy "game changer" would be tripling battery life, rather than the incremental increases we've seen over the past several years. Then he said that he has invested in a start-up that has pulled off the feat in a lab, but declined to identify it.

I'm not 100% certain, but the company Doerr referred to may be Quantumscape, a stealthy San Jose-based startup led by former Infinera (INFN) co-founder and CEO Jagdeep Singh. Investors include Kleiner Perkins Caufield & Byers (where Doerr is a partner) and Khosla Ventures.

A key requirement to building any great business

Not just healthcare (TechCrunch):

She said (healthcare) startups (in particular) need to give equal thought to doing good as they do to developing their business goals.

“Certainly investors are investing to make money. It’s in their business model,” Tecco said. “The best way to ensure that they’re investing in breakthrough ideas is to align margin and mission. Find a business model where the more money you make, the more good you’re doing. If you can tie those, if you can make money on improving outcomes, everybody wins.”

Quote of the day

Nassim Nicholas Taleb (via Medium):

The three most harmful addictions are heroin, carbohydrates, and a monthly salary.

City of Tampa protects its residents from lower prices

Yeah, because it makes a ton of sense. (Cato)

At the intersection of technology, jobs and inequality

A pretty pessimistic view off TechCrunch from a venture capitalist. Will more jobs will be created or destroyed as a result of the recent wave of technology? (TechCrunch)

First, big-data factories employ many fewer people than their meatspace equivalents of yore. Ford at one point employed 700,000 people. Now Apple, at times the most valuable company in the world, employs only 80,000 people worldwide including its retail staff. Data factories don’t create nearly as many middle-class jobs.

Instead, the data factories get free labor. They distribute what seem like useful services to the world, things like YouTube, Facebook, Twitter, LinkedIn, Etsy, or Kickstarter. Those services help people share, connect, find jobs, sell their own goods, or fund a project. But in actuality, they also collect troves of data and earn tons of money for the tech giants without forcing them to do much work. That money stays concentrated around the data factories and their limited staff instead of distributing it like traditional factories.

What’s the impact? “It means that life is very tough for most everyone in America” says Moritz. That’s not just some ambiguous sense of hardship. The median American household has stagnated. The absolute minimum wage value has decreased significantly. “It’s tough if you’re poor, it’s tough if you’re middle class. It means you have to have the right education to work at [the tech giants]. If you’re not like us, it’s tough” said the highly successful venture capitalist.

As a starting point, I'd point out there's been a lot of other things happening along with the proliferation of the success of these tech companies... but as I've pointed out, I'm sympathetic to something like a basic income so long as you actually get ride of the many things (like minimum wage and welfare) it would replace.

Elon Musk's gesture based design interface

This is pretty cool (PopularScience):

Theranos: Creating technologies towards instant diagnosis

A pretty exciting startup coming out of the valley that has the potential to dramatically change how healthcare is done... created by a woman who would seem to make most people feel unaccomplished (WSJ):

Ms. Holmes, a 29-year-old chemical and electrical engineer and entrepreneur, dropped out of Stanford as an undergraduate after founding a life sciences company called Theranos in 2003. Her inventions, which she is discussing in detail here for the first time, could upend the industry of laboratory testing and might change the way we detect and treat disease.

[...] A Theranos technician first increases blood flow to your hand by applying a wrap similar to one of those skiing pocket warmers, then uses a fingerstick to draw a few droplets of blood from the capillaries at the end of your hand. The blood wicks into a tube in a cartridge that Ms. Holmes calls a "nanotainer," which holds microliters of a sample, or about the amount of a raindrop. The nanotainer is then run through the analyzers in a Theranos laboratory. Results are usually sent back to a physician, but a full blood work-up—metabolic and immune markers, cell count, etc.—was in my inbox by the time I walked out the door.

[...] Theranos is committing to a half-off discount on Medicare fees. "So a test that costs $100 now, we'll do $50 or less. The quote-unquote payer community I don't think has ever seen someone walk in and say we want to bill you at less than you're willing to reimburse," she says. If this strategy succeeds in squeezing down prices—say, lowering testing as a share of total health costs to 1.5% from 2.3% now—it could save Medicare $61 billion over 10 years and Medicaid $96.1 billion, according to what Theranos calls a conservative estimate.

More here (HN).

The economic and technological miracle of fracking

The poor are one of the biggest beneficiaries of fracking with lower prices for natural gas (WSJ):

Thanks to the lower price for natural gas, families saved roughly $32.5 billion in 2012. (That's 7.4 billion MMBTUs of residential use of natural gas times the $4.40 reduction in price.) The windfall to all U.S. natural gas consumers—industrial and residential—was closer to $110 billion. This is greater than the annual income of all of the residents in 14 states in 2011.

Mercator's most notable finding is that the income group helped the most by this bonanza is the poor because energy is a big component of their family budgets. Data from the annual report of the federal Low Income Home Energy Assistance Program (Liheap) show that poor households spend four times more of their income on home energy (10.4%) than do non-poor households (2.6%). That same report says that roughly 40 million households, or 36% of U.S. households, are eligible for Liheap. Though the poor on average spend less overall on heating and electricity, lower natural gas prices have still shaved about $10 billion a year from the utility bills of poor families.

Some industry analysts believe that the biggest economic benefits to manufacturers are to come (ShopFloor via Instapundit):

In their latest report on the economic benefits of the shale revolution, the global research firm IHS makes a number of encouraging findings. IHS estimates that the unconventional oil and gas value chain already supports over two million jobs, is responsible for $1,200 in average additional net income per household and is contributing nearly $300 billion to GDP. The most promising finding for manufacturers is that the best is yet to come. Looking at just one manufacturing sector, the chemical manufacturing sector, capital investments in new plants and expansion at existing plants is expected to more than triple in just four years. These estimates are not theoretical; they are largely based on real projects that are already under development, some of which are identified in the report. Similar growth is expected in several manufacturing sectors, which collectively will drive more production, create more jobs and further fuel the economy.

Meanwhile... Germany's switch to subsidized renewables is causing their electricity prices to soar (WSJ) while ASI restates its case against solar subsidies now.

Teachers' unions versus kids at failing schools

I'm rooting for the latter. It's beyond comprehension to me how teachers' unions could be so brazen and shameless in their attacks on school choice - particularly when it is directed at the worst failing schools (WSJ)

To recap for Mr. Duncan and his staff: Two weeks ago the Justice Department asked a federal court to enjoin 34 school districts in Louisiana from issuing vouchers under the statewide reform that passed in 2012. Only students from families with incomes below 250% of the poverty line and who attend schools graded C or lower are eligible. Ninety percent of recipients are black.

According to the lawsuit, vouchers "appeared to impede the desegregation process" by "increasing the racial identifiability" of certain schools. Incredibly, the suit objected that in some cases the departing black kids left their former schools with a student body with more white students. Meanwhile, studies from Milwaukee, Cleveland and Washington, D.C. have found that voucher recipients increase integration by letting minority children escape geographic school boundaries.

They're fighting a losing battle however, with technology giving a growing edge to parents and students but it's a battle that can't be won soon enough.

"96% of jobs added this year were part time jobs" and other disturbing American economic news

Depending on who you ask an incredible 96% or 59% of new jobs this year were part time ones (MarginalRevolution), meanwhile, the US labor participation rate has fallen to its lowest level since 1978 (WSJ) leading one blogger to comment "Our drop from 8.1% unemployment to 7.3% is analogous to losing 20 pounds by cutting off a body part" (Instapundit). An unintended consequence of Obamacare? (Forbes)

And ironically, these troubling economic times are hitting many of Obama supporter's the hardest (WSJ).

The Economist: Why Free Trade

The Economist was founded to "campaign for free trade" in 1843 (you learn something every day). It digs up some of its old arguments, explores new ones and again makes the case for free trade with arguments that remain as true today as they were back then:

However, some more recent economists have identified situations where the benefits of free trade can be inhibited. Charles Bickerdike and Francis Edgeworth argued in the early 1900s that large countries could benefit from imposing “optimal tariffs” by abusing their monopoly power over global markets. Similarly, John Maynard Keynes argued in 1931 that the introduction of tariffs in Britain, a big country, could help its economic recovery from the Great Depression. A 1989 paper by Michael Kitson and Solomos Solomou suggests there might be some credit in Keynes’ line of thought. They argue that the imposition of the General Tariff in Britain in 1932 “benefitted the British economy” by boosting new industries and accelerating the trend rate of growth in the 1932-37 period.

But economists are quick to admit that these policies only work in specific or temporary circumstances, if ever. Bickerdike and Edgeworth always maintained that free trade was only policy that could boost growth in the long run on a global basis. “Optimal tariffs” as a policy to them were “contrary to the highest morality”. Keynes himself never deviated from view that the free trade was the best policy for growth in the long run. Even Mssrs Kitson and Solomou admit that the lack of competition the General Tariff produced may have damaged “long-term economic growth” in Britain’s “1950-73 boom”. Perhaps the persistence in economic history of the idea that free trade provides the optimal long-run conditions for growth may be a better reason than any other why The Economist still supports free trade today— just as it did 170 years ago.

Wherein reality and the theories of Jeffrey Sachs collide

It's not like it wasn't both predictable and predicted, but this book review of Nina Munk's The Idealist, gives a pretty good and broad overview of Jeffrey Sach's Millenium Village experiments (WSJ):

In the fall of 2004, I attended a meeting of the African Union, in Addis Ababa, Ethiopia, to which the economist Jeffrey Sachs had been invited. In his speech before the assembled heads of state, Mr. Sachs laid out the argument he would make the following year in the book that made him famous, "The End of Poverty." "The diagnosis that Africa is poor because of poor leadership," he said, "is wrong." Sub-Saharan Africa suffers from geographical and ecological misfortune, he went on, and a crippling history of colonialism to boot. The rich nations of the West have the financial means and the moral obligation to help Africa—but they are too selfish to do so. The presidents for life gave Mr. Sachs a tremendous round of applause.

Afterward, Meles Zenawi, the prime minister of Ethiopia and a pro-growth autocrat, politely but firmly disagreed with his American guest. The main causes of persistent African poverty, Zenawi said, are in fact bad governance and instability. "We have not mobilized our resources properly," he said. African states were too dependent on "handouts from abroad." At times, he said, "we use the failure of the international community to justify our own actions."

This debate has divided experts and policy makers for the past two decades, and no one has made the case for foreign aid more cogently, or more vehemently, than Mr. Sachs, who for years played Sancho Panza to Bono's Don Quixote, together tilting at windmills at the White House, the G-8 summits, Davos and wherever else the high and mighty gathered. They lost, mostly: Development assistance has barely budged over the past decade. In 2005, wealthy nations pledged to give 0.7% of their GDP annually in aid; the figure is now 0.29% and falling. Yet, during the same period, a number of African countries have experienced the takeoff that Mr. Sachs insisted couldn't happen without big infusions of aid. Ethiopia's economy, for example, has grown by an average of 10.9% over the past nine years. In part for that reason, the balance of the debate has tipped to the Zenawi side—so decisively, in fact, that it has become difficult to make the case for aid at all. Mr. Sachs remains undeterred.

[...]Mr. Sachs deserves great credit for insisting, in the face of "donor fatigue" and self-serving cynicism, that outsiders can make a dent in global poverty and therefore must try to do so. But his diagnostic metaphor envisions aid as a transaction between a wise (Western) doctor and suffering victims. There is, in his worldview, no state and no politics, no culture or history. The actual wishes and preferences of the recipients have shrunk into irrelevance. That's not development, in the words of one of the many critics Ms. Munk cites—it's charity.

Offshoring entrepreneurship

Awesome - but not sure $2800 a month qualifies as "cheap" (WalterRussellMead via Instapundit):

These are not just ordinary locations, but luxury residences in exotic locations with five-star amenities like onsite massage therapists, gourmet chefs and maid service. And the kicker? The claim they can do it for less than what it costs to have an average lifestyle in the United States. The all-in cost of staying in a Happy Hub per month is just $1,000 a week or $2,800 a month, this includes everything from accommodations to food and spa amenities and shuttle service to a popular surfing beach. The whole key to living the six-figure lifestyle without the six-figure pay check is that you must be ‘location-independent’ meaning that you work on the computer or over the phone.

Tiny Thorium Reactors and Global Energy Independence?

I'm a bit skeptical of the need/urgency as far as financial resource allocation goes... but if only for the purposes of weaning the waning power that the despots in middle east have, maybe it'd be worth it. According to PopSci - "Development of tiny thorium reactors could wean the world off oil in just five years" (PopularScience):

An abundant metal with vast energy potential could quickly wean the world off oil, if only Western political leaders would muster the will to do it, a UK newspaper says today. The Telegraph makes the case for thorium reactors as the key to a fossil-fuel-free world within five years, and puts the ball firmly in President Barack Obama's court.

Thorium, named for the Norse god of thunder, is much more abundant than uranium and has 200 times that metal's energy potential. Thorium is also a more efficient fuel source -- unlike natural uranium, which must be highly refined before it can be used in nuclear reactors, all thorium is potentially usable as fuel.

The Telegraph says thorium could be used as an energy amplifier in next-generation nuclear power plants, an idea conceived by Nobel laureate Carlo Rubbia, former director of CERN.

Did Marx get something right?

I'm not sure how this passes as insight at theEconomist's blog but here it is:

The Prebisch-Singer hypothesis (PSH) was a staple of leftist economics during the second half of the 20th century. Raúl Prebisch and Hans Singer, working independently, showed that the “terms of trade” between primary products and manufactured goods tended to decline over time. In other words, producers of crops and raw materials gradually became poorer relative to producers of cars and household appliances. If true, the theory would have important implications for world trade; it would suggest that commodity-focused economies must diversify into other sectors or risk falling ever further behind richer countries.

The evidence they show is how commodity prices have gone down over time - which to me seems to fit more with Julian Simon's views (WSJ) than really any validation of Marx's other views.

So countries that create value using commodities get wealthier than countries that just produce commodities. Hard not to be sarcastic here, but put me in the camp that's not shocked.

Taking the perfect nap

Pretty good visual and article from the WSJ:

Another trick to waking up perky after a short nap is to drink a cup of coffee before sleeping. Caffeine won't hurt such a short break and should lessen the effect of sleep inertia.

Dr. Dinges recommends sleeping partially upright to make it easier to wake up. Studies, he said, have found that not laying totally flat results in avoiding falling into a deeper sleep.

"A lot of people say, 'I only need four hours of sleep a night.' There's a few of them around but not very many," he said.

The STEM crisis is a myth

Or at least that's what an article in IEEE convincingly claims (IEEE via Instapundit). More discussion here (HN). Not sure I care for the conspiratorial anti-immigration (or maybe it's just skepticism?) undertones but the general ideas seem to make sense.

Why do some environmentalists want poor kids to die?

There's so much about this story that I find frustrating. Supposed "environmentalists" destroyed a field of Golden Rice in the Philippines (NationalPost):

Aided by well-meaning but misguided organizations such as Greenpeace, such mobs are potentially destroying the opportunity to avoid 680,000 deaths each year. That is morally indefensible.

Golden rice is genetically modified (GM) to have vitamin A. This is important because 3-billion people depend on rice as their staple food, and about 10% are at risk for vitamin A deficiency. The World Health Organization estimates that lack of vitamin A makes 250,000-500,000 kids go blind annually. And studies published in The Lancet estimate that each year, 668,000 children under 5 die from vitamin A deficiency.

Yet, campaigners from Greenpeace to Naomi Klein have derided the attempt to use Golden Rice to avoid such deficiency.

A favorite claim has been that you need to eat 7 kg (15 pounds) of rice per day to get sufficient vitamin A from Golden Rice. This is simply wrong. Two recent studies show that just 50g (2oz) golden rice can provide 60% of daily vitamin A – even better than spinach.

The co-founder of Greenpeace, Dr. Patrick Moore argues that biotech opposition is a crime against humanity (Biotech-now via Instapundit):

He was asked about genetically modified crops, something he describes as one of the most important scientific advancements society has made. That’s why he is particularly concerned about Greenpeace’s success in blocking the introduction of Golden Rice, a GM crop.

“Other GM rice varieties are able to eliminate micronutrient deficiency in the rice eating countries, which afflicts hundreds of million people, and actually causes between a quarter and half a million children to go blind and die young each year because of vitamin A deficiency because there is no beta carotene in rice,” says Moore. “We can put beta carotene in rice through genetic modification, but Greenpeace has blocked this.”

Moore says this is a crime against humanity because they are preventing the curing of people who are dying by the hundreds of thousands a year due to vitamin A deficiency.

He says another example of the positives genetically modified crops provide is they’ve allowed agriculture to do things it couldn’t do otherwise, for example growing soybeans that produce omega-3 fatty acids. He says this will be a boon for the aquaculture industry, vastly increasing its feedstock.

“One of the limitations on aquaculture is that fish and shellfish need omega-3 fats, and the best place to get them is from fishmeal, but fishmeal is a limited supply,” says Moore. “But if we can grow soybeans and other terrestrial crops that have the foods necessary for fish production, we can vastly increase aquaculture.”

What the anti-GMO protesters got wrong (Slate).

India's Growing Economic Crisis

A story that's being eclipsed by Syria but may have much larger implications (WalterRussellMead via Instapundit):

The economic crisis in India represents a much more fateful moment in world politics than anything happening in Syria.

What’s so important about India’s economic problems? It’s more what they tell us about the state of the country than the severity of the problems themselves. The stock market jitters, the currency crash, the GDP slowdown and the government deficit aren’t enough in themselves to sink India. All economies go through rough patches every now and then, but the question isn’t about a downturn. The question is whether the Indian political system has what it takes to get the economy back on track.

Two horrible things happened in India this week: an inept government reeling from serial corruption scandals and mounting evidence of economic failure pushed two bad bills towards enactment. There’s a wasteful “food security law” that will do much more to nourish India’s rich world of government corruption than to help the poor on a sustainable basis, and a poorly designed “land reform” law that could be even more crippling.

We’ve noted the food bill before; the land law is new and its consequences could be devastating enough to India’s growth prospects to change the course of world history. In India, under a law dating from the British Raj, the government has wide powers of eminent domain. Essentially, the government is the nation’s real estate agent, organizing transactions between buyers (often Indian or foreign companies who want to build factories, or Indian government organizations wanting to build roads or other infrastructure) and the farmers and others who own the land. For many Indians, this approach makes sense for two reasons. First, there are so many small plots in India that without the convenience of government organization (and its powers of eminent domain to force unwilling holdouts to sell), it would difficult if not impossible for private organizations to get the land for big projects. The second reason is that given the low level of education among many rural people in India and their lack of economic sophistication, there is a fear that unscrupulous investors will swindle the poor unless the government is there to protect them.

More here (Hindustan Times):

This provision could well spell the end of India’s dreams of emerging as a manufacturing superpower. The only way to quickly lift what the western media pejoratively refers to as India’s teeming millions into the lower middle classes and then progressively higher, is to create industrial jobs.

The farm sector accounts for 16% of GDP but supports 60% of the population. This is clearly unsustainable. We need rapid industrialisation. And for this, we need land — not land that has been acquired from their owners for a pittance and given to industry cheap, but land that has acquired at a fair value and given to industry at a price that keeps projects viable.

Good news on the gender-wage gap?

It's hardly ideal, and I have to imagine that the gap is far larger in developing countries, but "you know that 'women make 77 cents to every man’s dollar' line you’ve heard a hundred times? It’s not true" (Slate):

The fact that men are more likely to be in unions and have their salaries protected accounts for about 4 percent of the gap. The big differences are in occupation and industry. Women congregate in different professions than men do, and the largely male professions tend to be higher-paying. If you account for those differences, and then compare a woman and a man doing the same job, the pay gap narrows to 91 percent. So, you could accurately say in that Obama ad that, “women get paid 91 cents on the dollar for doing the same work as men.”

That said, there is a larger discussion that needs to be had:

Goldin and Lawrence Katz have done about as close to an apples-to-apples comparison of men’s and women’s wages as exists. (They talk about it here in a Freakonomics discussion.) They tracked male and female MBAs graduating from the University of Chicago from 1990 to 2006. First they controlled for previous job experience, GPA, chosen profession, business-school course and job title. Right out of school, they found only a tiny differential in salary between men and women, which might be because of a little bit of lingering discrimination or because women are worse at negotiating starting salaries. But 10 to 15 years later, the gap widens to 40 percent, almost all of which is due to career interruptions and fewer hours. The gap is even wider for women business school graduates who marry very high earners. (Note: Never marry a rich man).

If this midcareer gap is due to discrimination, it’s much deeper than “male boss looks at female hire and decides she is worth less, and then pats her male colleague on the back and slips him a bonus.” It’s the deeper, more systemic discrimination of inadequate family-leave policies and childcare options, of women defaulting to being the caretakers. Or of women deciding that are suited to be nurses and teachers but not doctors. And in that more complicated discussion, you have to leave room at least for the option of choice—that women just don’t want to work the same way men do.

Why does the government need to deliver the mail?

With Brits selling off the Royal Mail, it's an idea that's again being discussed in Canada - particularly in light of mounting and growing estimates of future losses (Toronto Star):

Currently, taxpayers pay no subsidy to the post office, but a Conference Board of Canada report commissioned by Canada Post warned that if the crown corporation doesn’t change, it faces a $1 billion deficit by 2020.

That said, I'd take exception to the idea that there aren't subsidies paid given that these resources could be freed up either to firms that can provide a better service or in resources that could be reallocated to other services that the government could do better. And lest there be any doubt, there are developing companies that continue to eat away at the rationale for government run mail - even if they're just in the US for now (TechCrunch):

But Outbox believes a staff of city navigation experts such as Gonzalez combined with a phalanx of compact Priuses can outmaneuver its parcel delivery rivals in the shuttling of small packages around town. By staying in-city and keeping the packages below a certain size, Davis estimates its drivers can make 200 to 300 stops per day and connect with up to 500 residents daily, taking multi-unit dwellings into account. Outobox calls the concept “hyperlocal distribution” — a concentrated delivery network in which digitizing the mail is just one feature on top of a versatile logistics platform.

“We’re not focused on shipping things around the world. We’re focused on just your city.” Davis says.

Outbox’s ability to expand into a full-fledged distribution and delivery service could depend on how many people sign up for the mail service, which would give its fleet reason to expand. Or maybe parcels become the main business and digitized mail a nice add-on. Either way, as the Postal Service itself learned to its dismay in its losing battle with UPS and FedEx, mail may be nice but packages pay. It’s the American way.

Perspective on the US, India and China

Despite all the problems the US and much of the west share, here's some useful perspective from an Indian international student (BusinessInsider via Instapundit):

Strong ethics — everyone has a lot of integrity. If someone cannot submit their completed assignment in time, they will turn in the assignment incomplete rather than asking for answers at the last minute. People take pride in their hard work and usually do not cheat. This is different from students from India and China as well as back home in India, where everyone collaborates to the extent that it can be categorized as cheating.

[...] An almost-classless society: I’ve noticed that most Americans roughly have the same standard of living. Everybody has access to ample food, everybody shops at the same supermarkets, malls, stores, etc. I’ve seen plumbers, construction workers and janitors driving their own sedans, which was quite difficult for me to digest at first since I came from a country where construction workers and plumbers lived hand to mouth.

Also, despite all the criticism leveled at the difficulty of immigrating, moving to or doing business in the US, consider the inverse: "India's visa maze ensnares foreign entrepreneurs" (TechCrunch). At least there's enough of a vocal reminder in places like the US that it is somewhat insane to restrict access from some of the most (and those who want to be the most) productive people in the world.

Being Cheap Pays

A number of useful tips on how to score discounts "on almost anything" (Lifehacker).