Greg Mankiw confronts the pope's screed with reality

Greg Mankiw's response to the pope's unfortunate views on "trickle down" economics (Greg Mankiw):

First, throughout history, free-market capitalism has been a great driver of economic growth, and as my colleague Ben Friedman has written, economic growth has been a great driver of a more moral society. (Amazon)

Second, "trickle-down" is not a theory but a pejorative used by those on the left to describe a viewpoint they oppose. It is equivalent to those on the right referring to the "soak-the-rich" theories of the left. It is sad to see the pope using a pejorative, rather than encouraging an open-minded discussion of opposing perspectives.

Third, as far as I know, the pope did not address the tax-exempt status of the church. I would be eager to hear his views on that issue. Maybe he thinks the tax benefits the church receives do some good when they trickle down.

Update: Glenn Reynolds makes a good point - "I think the key factor here is that he’s from crony-capitalism-capital Argentina, and that he has mistaken what goes on there for the operation of free markets."

"Unwinding inequality" by making them poorer

It's difficult to argue with the initial claim that some of the wealthy and connected seek to have their power entrenched (HBR):

Whether international or domestic, inequality becomes intolerable when individuals who have gotten ahead for whatever reason use their power to pull further ahead—and even to render others worse off in absolute terms. When successful people—businessmen, lawyers, traders, doctors—use their success to change the rules in their favor, by lobbying or funding politicians, that success is no longer something to be celebrated.

But the author goes off the rails with the following claim:

When they push for what they see as important without perceiving that others have different priorities—the rich have little need of public health care or public education, for example—they undermine the provision of public goods on which the rest of us depend. When they make it hard for those without wealth (or not beholden to wealth) to fully participate in society, they undermine the democratic process.

In fact, well intentioned policies often have the exact opposite effect. Take rent control and the housing crisis in San Francisco that threatens to get even worse (Reason):

With the area economy rebounding, San Francisco is in the midst of a housing crisis as many residents are evicted from their apartments. “It is a situation rooted in limited housing stock and surge in demand that has pushed the median rent up from $2,968 in 2010 to $3,414 this year…,” reported the San Francisco Chronicle.

The median home price has soared to nearly $900,000, which helps explain why nearly two-thirds of the city’s residents are renters. So the rent hikes are particularly acute—and have put the city’s tough rent-control laws in the spotlight. As property values have rebounded, an increasing number of San Francisco owners are getting out of the rental business and cashing out their properties to turn them into co-ops.

While the city’s rent-control ordinance places strict limits on the ability of landlords to increase rents, a state law called the Ellis Act allows property owners to take their property off the rental market after providing tenants with a 120-day notice (and much longer for elderly or disabled tenants).

Following a 170 percent increase in such evictions, some Bay Area legislators are calling for changes to the state law. And San Francisco tenant activists recently proposed new regulatory and financial burdens on property owners who want to sell or move into their own properties.

The same is true of policies like minimum wage, public education, and even public healthcare.

Warlords are driven and created by incentives?

Who knew (Chris Blattman)? On the other hand, off the top of my head, either the US republic is an outlier or it suggests there are a number of ways to get to statehood.

Che Guevera's (conveniently) forgotten legacy

It's a topsy turvy world that there exist so many hero worshippers who idolize Che Guevera (TheLibertarian via Instapundit).

Financing entrepreneurship trumps cash handouts?

Interesting study that's oddly/unfortunately gender specific (Chris Blattman).

Towards better aid?

Real aid, starts with trade. Personally, I see this as just fiddling around the margins over what has been disastrous and expensive policymaking (DevEx via Chris Blattman):

Amid pressure to cut costs in an industry largely funded by public money, aid agencies are increasingly hard-pressed to make the case to shareholders, contributors and other constituents that business class travel for staff is worth the cost. It can also be difficult to rationalize the expense in a sector that commonly references mantras such as “value for money.”

The Obama administration, for instance, has publicly rebuked U.N. staff in New York and Geneva for recently spending nearly three-quarters of their air travel budget on business class fare.

(While they don't seem like they're in a position to speak from moral authority, at least you know you're doing something wrong when the Obama Administration is telling you, you're spending too much of other peoples' money on frivolous things...)

More here: "Fighting Poverty With Actual Evidence" (Freakonomics)

On Detroit

Quote of the day: "Detroit is a case of the parasite having outgrown the host." (Ed Driscoll via Instapundit)

Related: Should we bail out Cities? (Megan McArdle). Not if you're sane. In a way it's sad the question even needs to be asked.

How technology redefines freedom

Marc Andreeson on why driverless cars will win even though many of us like driving cars (Forbes via AVC):

Ask a kid. Take teenagers 20 years ago and ask them would they rather have a car or a computer? And the answer would have been 100% of the time they'd rather have a car, because a car represents freedom, right?

Today, ask kids if they'd rather have a smartphone or a car if they had to pick and 100% would say smartphones. Because smartphones represent freedom. There's a huge social behavior reorientation that's already happening. And you can see it through that. And I'm not saying nobody can own cars. If people want to own cars, they can own cars. But there is a new generation coming where freedom is defined by "I can do anything I want, whenever I want. If I want a ride, I get a ride, but I don't have to worry. I don't have to make car payments. I don't have to worry about insurance. I have complete flexibility." That is freedom too.

Basic income as the "ideal welfare system"

The basic goal of an ideal system? A system that doesn't discourage work (ASI). Sounds good to me.

Mojave Desert: the next Silicon Valley?

It's a whole new world, and magic carpets have nothing to do with it (WashingtonPost via Instapundit)

If there’s one thing that New Space has going for it, it’s that Old Space is in trouble. Old Space and New Space turn out to be symbiotic. New Space companies need NASA contracts, and NASA needs New Space companies to pick up the agency’s slack.

The true believers imagine that, someday soon, robotic vehicles will mine asteroids for precious metals, including gold and platinum. Moon dirt will be transformed into rocket fuel for missions to Mars. Closer to home, FedEx will send a package from New York to Tokyo, via space, in half an hour.

More: on SpaceX's coming commercial geostationary launch (USAToday)

No kidding...

The Chinese Communist Party’s biggest obstacle is the Chinese Communist Party (Time).

Is technology making location irrelevant?

I think there's little doubt that technology - particularly software is changing how we interact and organize (Wired). I'm a bit skeptical that location will be irrelevant but it's difficult to argue that it won't be considerably less so:

Technology is thus enabling arbitrary numbers of people from around the world to assemble in remote locations, without interrupting their ability to work or communicate with existing networks. In this sense, the future of technology is not really location-based apps; it is about making location completely unimportant.

"Let's kill the aid industry"

A sentiment I share (TechCrunch). Note the important distinction the author also makes between "aid" and "disaster relief". I am considerably less supportive of his proposed alternative which does not differentiate between one time grants with ongoing payments (effectively welfare paid for by foreign governments) bypassing corrupt governments and bureaucracies.

Canadian minimum income experiment fails?

There are a number of interesting takeaways from this experiment (Bloomberg). On the other hand, the libertarian version of this operates through a reverse income tax that also replaces other benefits (YouTube). Personally, I favor a reverse income tax only if it is allowed to replace the plethora of regulations meant to "help" the poor(er).

Not surprised

Though the fact that someone thought to do the study is a bit surprising. Study finds cheating students more likely to want government jobs (LATimes).

Wanting a causal relationship does not make it so

Chris Blattman sadly beclowns himself asking "Do Republican Presidents kill babies?" Perhaps a bit ironic considering he gently chides Bill Easterly for being "provocative" only a few posts earlier (Chris Blattman). He should be reminded that there's that little thing called Congress that many armchair statisticians seem to have also forgotten when looking at the relationship between the stock market and the American Presidency (theLibertyProfessor).

Forty percent of development comes from colonialists?

Maybe (Paper by William Easterly and Ross Levine) but more probably as Chris Blattman points out, it's the colonialists that brought ideas like rule of law and property rights that led to development.

China turns to markets?

At least according to communiques (Sinosphere):

“The core issue is properly handling the relationship between the government and markets,” said the communiqué of the meeting, which was summarized by the state-run news agency, Xinhua.

“Give markets a decisive role in resource allocation and give better play to the role of government.”

Some entrepreneurs remain skeptical...

Venezuela's experience with price controls

... is not a beautiful thing (ASI).

Update (November 12): This will not end well. (MeganMcArdle)

More (November 21): Here (MeganMcArdle)

The challenges China faces to growth

... probably doesn't start with its entrepreneurs - but it's a big problem (WTOP):

At the forum, prominent attorney Li Zhuang described how a former client, Chongqing businessman Gong Gangmo, was handcuffed by police interrogators to high window bars for eight days until he signed a confession that he was the ringleader of a triad, as Chinese criminal gangs are known. Li said the charges were trumped up to strip Gong of his assets.

His ordeal was part of a crackdown on business owners in the southwestern city of Chongqing under Bo Xilai, the populist leader now serving prison time after his vaulting ambition unsettled the top echelon of the Communist Party. Entrepreneurs were tortured and jailed after summary trials, their assets seized.

Though the crackdown took place years ago, Chinese authorities have never provided a full account of the abuses, and many in the business world are only now hearing some details. Those who had misgivings about Bo's campaigns, which included mass Communist sing-along sessions, kept silent.

"At the time, I was repulsed by Bo Xilai's 'red song' and 'anti-mafia' campaigns, but I did not publicly speak out," said Wang Shi, head of China Vanke, the country's biggest property developer, at a June forum organized by online portal Tencent.

"As an entrepreneur, one cannot just work and not say anything," he said. "You must still stand up and say no when society is facing a backslide or a moment of danger."

Things the rich do differently?

I'm a bit suspicious of some of these numbers but I suspect a lot of these are correlations rather than causal (DaveRamsey via fb). I don't really like how the rich isn't differentiated between say high income earners versus those who have wealth for any multitude of reasons but I do suspect that "the rich" tend to be far more forward thinking, they tend to plan and use their down time more effectively.

The secret world of cargo ships

The awesome impact containers had on logistics and the regulatory/security challenges ahead (theWeek):

But the rewards of containerization were too great for the dockers to defeat change. Before containers, transport costs ate up to 25 percent of the value of whatever was being shipped. With the extreme efficiencies that intermodality brought, costs were reduced to a pittance. A sweater can now travel 3,000 miles for 2.5 cents; it costs 1 cent to send a can of beer. Shipping a container can cost next to nothing, an invaluable advantage in hard economic times, when there is more supply than demand.

More on the logical response to high cost unskilled labor: automation

Bolt Burgers - "the most high tech burger" (Washington Post via Instapundit).

More young US veterans become entrepreneurs

Which makes sense given their training and discipline - why shouldn't military training and experience be a signal like any other, say a university degree? (WSJ via Instapundit):

Last year, 7.1% of veteran business owners were under the age of 35, up from 4.6% in 2008, according to a brief released Friday by the U.S. Small Business Administration’s Office of Advocacy.

The weak job market may be partly accountable for the trend. The nation’s unemployment rate has remained above 7% since November 2008.

Another driving force may be the growing list of franchise companies that offer former service men and women discounts on startup fees, including 7-Eleven, Tim Horton’s. and Aamco Transmissions, to name a few.

How to be more productive at the things that matter most

Tips from Bakadesuyo. Summary of some available research - sometimes counterintuitive tips.

Video: Former President Bill Clinton and Bill Gates discuss how connectivity is changing the developing world

It enables the poor by making markets more efficient - pretty exciting stuff (sadly this is only the teaser for the full interview to be released on November 13) (via Wired):

Update: Bill Gates' outlines his plan to improve the world (Wired).

Thoughts on putting the brakes on debt

Consumer debt (Megan McArdle) and national debt (Cato).

The decline of creative destruction?

Not good... (Econlib via Instapundit)

The value of a job

Chris Blattman references two interesting Indian studies - one that shows workfare in India appears to be reducing violence while another shows how women, 4.5 years after getting jobs in textile mills not only marry later, have fewer kids, but are having them later - but these effects are also being reflected in their younger siblings.

Markets in everything: financing piracy

Somali piracy is "more sophisticated that you thought" (Economist via Freakonomics):

Financing pirate expeditions can be quite cheap by comparison. The most basic ones cost a few hundred dollars, which may be covered by those taking part. Bigger expeditions, involving several vessels, may cost $30,000 and require professional financing, This comes from former police and military officers or civil servants, qat dealers, fishermen and former pirates. They take anywhere between 30% and 75% of the ransom.

A typical operation has three to five investors. Some provide loans or investment advice to other financiers. Some financiers, especially those in the Somali diaspora who have little cash inside Somalia but large deposits abroad, employ what the report describes as “trade-based money-laundering” to send funds to Somalia. This involves finding legitimate Somali importers willing to use a financier’s foreign money to pay for their shipments and reimburse him at home in cash once the goods are sold.

The birth of cheap gas

The dramatic rise of cheap natural gas is an interesting story. One that that happened under the noses of big oil and has flooded the North American market with cheap abundant energy (WashingtonExaminer).

XPRIZE Unveils Medical Tricorder Teams

Pretty cool (ScientificAmerican via Instapundit)

Wired: How Minecraft was born

An interesting story about how one of the most successful independent game makers started... and they weren't nearly as creative as you might have thought (Wired).

Dad prints 3-D prosthetic hand for son

This is pretty cool on so many levels - that 3D printing has gotten cheap enough to do this, that someone has already shared opensource designs online, that the dad was able to do minor modifications to customize the design and that the dad *is* really that awesome (msn via HN).

The difference between absolute poverty and "the top level of development"

According to the Global Energy Network Institute, it's at least 4000 kWh and $5000 per capita PPP (NextBigFuture):

About 1000-2000 kwh per year per capita is needed to get out of the worst quality of life and shortened life span. Per capita electricity usage also correlates to per capita income. Both correlate to life expectancy and quality of life.

Tim Ferriss: Productivity Tips

A number of ideas from someone who seems absurdly productive (TimFerriss). A lot of them seem similar to ideas from Peter Bregman's 18 minutes (Amazon, book summary here) - and fundamentally to become more productive it's not about doing more things. It's about doing the right things.

Quote of the Day

via Bakadesyo on Facebook:

Work to become, not to acquire. - Elbert Hubbard

Observations of billion dollar tech startups

An interesting look at "U.S.-based tech companies started since January 2003 and most recently valued at $1 billion by private or public markets" (TechCrunch). A few surprising ideas including that "The “big pivot” after starting with a different initial product is an outlier" and "consumer-oriented [firms] have been more plentiful and created more value in aggregate, even excluding Facebook."

Update: More here (AVC)

Ray Dalio, founder of Bridgewater Associates: How the Economy Works

This is fantastic - a succinct, easy to understand 30 minute summary of how the economy works (Freakonomics):

Mind hacks - influencing others and building rapport

Lifehacker summarizes an article in Psychology Today on classic sales techniques that work while Barking up the Wrong Tree describes the top techniques the FBI Behavioral Unit uses to build rapport. Both seem useful.

Didn't get enough sleep? Take a nap - it works

Via NYTimes Dealbook:

But a growing body of research suggests that even short naps can be a powerful and highly efficient way to temporarily compensate for an inadequate night’s sleep, specifically in the hours following the nap. The exception is among those who are already severely sleep deprived.

In one study, subjects who had slept five to six the previous night were told to take naps of five, 10, 20 and 30 minutes. The five-minute nap didn’t have much impact. But the subjects who took 10-, 20- and 30-minute naps consistently improved their performance on cognitive tests of memory and vigilance conducted in the subsequent two and a half hours.

Cooperation, Competition and Culture

Driven by production technology? (MarginalRevolution via ASI)

The paper appears on the surface to be affirming the importance of cultural differences and to be agreeing with the kind of literature that stresses the idea of self-interest and individualism as western and contingent. Yet, in fact, the paper is suggesting that at a deeper level so-called cultural differences may not be transmitted down through the generations but instead are learned responses to very particular production techniques. Note that such learned responses may change rapidly as production techniques change and that the sea and lake villages are both unusual in the modern world in relying on just one dominant production technique with few other options for learning.