Teachers' unions don't represent the best interest of students. They shouldn't be allowed to claim they do.
Friday, August 30, 2013
Teachers' unions don't represent the best interest of students. They shouldn't be allowed to claim they do.
And the end of drug control? Pretty cool stuff. Welcome to the future (Reason):
Both research and production look poised for a revolution, as 3D printing applies its high-tech charms to the business of creating chemical compounds, and turns the production of medicine into a DIY project. Not incidentally, the revolution also promises to kneecap whatever is left of efforts to control chemistry's results, including recreational drugs.
Thursday, August 29, 2013
I'm not a big fan of the idea that culture is one of the driving forces determining which societies succeed and which fail at cultivating entrepreneurs. I tend to believe that it's regulatory policies that drive incentives which in turn drive actions that are often described as being cultural traits.
That said, one of the stronger cases to be made (imho) that culture does matter is in differentiating between the success of immigrants from various countries in the West. Freakonomnics did a blogpost and podcast on where the most successful immigrants come from.
Amazon.com Inc. AMZN +0.85% sells more online than its next 12 biggest competitors combined, including Staples Inc. SPLS -0.50% and Wal-Mart, according to the trade publication Internet Retailer. Despite its greater online scale, Amazon continues to grow quickly and command a hefty share of new Internet sales. Its 30% increase in North American sales in the second quarter outstripped the overall e-commerce market and some competitors as well.
James Clear via AcumenFund:
You’re bound to feel uncertain, unprepared, and unqualified. But let me assure you of this: what you have right now is enough. You can plan, delay, and revise all you want, but trust me, what you have now is enough to start.
It doesn’t matter if you’re trying to start a business, lose weight, write a book, or achieve any number of goals… who you are, what you have, and what you know right now is good enough to get going.
We all start in the same place: no money, no resources, no contacts, no experience. The difference is that some people — the winners — choose to start anyway.
It' s a site with a number of cool and inspirational videos. Not that I agree with everything here - today's focus is Michael Jackson who, despite the value of his music, is perhaps not the best of inspirational examples (GetInspired via Techcrunch).
Wednesday, August 28, 2013
As provided for by the US federal public service loan forgiveness program for college graduates, is thatit undervalues for profit work (Forbes):
The larger problem with the program—one that includes its provisions for non-profits as well as government—has to do with the concept of government seeking to influence the career choices of college graduates in the belief that some jobs do more than others to serve the public interest. Both the government and the non-profit sectors, after all, ultimately rely on the growth and prosperity of the private economy. As Carl Schramm, former head of the Kauffman Foundation, has long argued, entrepreneurs—from Steve Jobs to Sergei Brin and countless others—provide the hope for economic growth. But private sector employment of any kind is effectively made less attractive by the terms of federal student loan forgiveness program. That is not, to coin a phrase, what made America great.
Tuesday, August 27, 2013
The American Association of Professors, on of the largest college teachers unions, is against even the idea of any form of measurement. This might work if budgets were unlimited, outcomes left nothing to be desired and dinosaurs roamed the earth, but this transparent admission shows just how stifling legacy systems and organizations are to the education system in the US (TechCrunch):
In response to President Obama’s push to tie federal college aid to labor-market outcomes, the American Association of University Professors has issued a stern warning against the seemingly uncontentious idea of evaluating colleges before giving them money. “In reality measuring the output of our colleges and universities in a meaningful way is simply not possible,” writes President Rudy Fichtenbaum.
As someone with an advanced degree in the mathematics of social science, I fully appreciate the difficulty in quantifying post-graduate outcomes. But, Fichtenbaum’s opposition isn’t to any specific metric; it’s to the very idea of evaluation– not educational, not civic, not financial– nothing. He wants a blank check, even as colleges fail to improve student outcomes by their own standards.
Monday, August 26, 2013
Because bikes are changing the time-cost of school. Interesting study (h/t GregMankiw):
Saturday, August 24, 2013
My admiration and respect for Muhammad Yunus is a bit tempered by his views on price controls on interest rates, but he deserves far better than this (WSJ):
Mr. Yunus's political effort fizzled, but Ms. Hasina's suspicions endured. When a documentary accused the Grameen chief of misappropriating $100 million from the Norwegian government in 2010, Ms. Hasina blasted him as a tax evader and "blood-sucker of the poor." Norway's government responded that "there is no indication" that "Grameen Bank has engaged in corrupt practices or embezzled funds."
But in Bangladesh the fix was in. Dhaka officials forced Mr. Yunus from his post as Grameen's managing director in 2011 on grounds that he had passed the mandatory retirement age of 60—though he had passed that age 10 years earlier and Grameen's board of directors wanted him to stay. Bangladeshi officials then started chipping away at the power of the directors, the majority of whom are elected by the bank's 8.4 million borrowers (almost all women) who are also its shareholders.
Now the campaign against Grameen may escalate into nationalization, with Dhaka raising its ownership stake to 51% from 25%. That is one of three options recently recommended to Prime Minister Hasina by a government-appointed commission, along with breaking the bank into 19 separate regional entities.
The preliminary message of these findings is heartening. If you habitually experience insomnia and don’t currently exercise, Dr. Baron said, start. Don’t, however, expect that you will enjoy or even complete workouts that occur on the day after a broken night’s sleep, or that you will sleep better hours after you’ve exercised.
The process is more gradual and less immediately gratifying than the sleep-deprived might wish. But the benefits do develop. “It took four months” in the original study, Dr. Baron said, but at that point the exercising volunteers “were sleeping at least 45 minutes more a night.” “That’s huge, as good as or better” than most current treatment options for sleep disturbances, including drugs, she said.
Just that *how* the author outsourced, and what he outsourced, resulted in failure (Slate via Instapundit)
Friday, August 23, 2013
Foreign direct investment is ultimately a judgment by the world’s value creators about a country’s institutions, policies, human capital, and prospects. As the world’s largest economy, the United States has been able to attract the investment needed to produce the innovative ideas, revolutionary technologies, and new products and industries that have continued to undergird its position atop the global economic value chain.
From Inc.com (via John, a co-founder of Crossfit Toronto):
No one said building a company was easy. But it's time to be honest about how brutal it really is--and the price so many founders secretly pay.It's one of those things that's tough for others to understand and tough to talk about. For many of us who create businesses, it's difficult to build an identity outside our startups - so even the thought of admitting failure is difficult. On the other hand, the future belongs to those who are willing to take the plunge - and even more encouragingly, the world is changing so that it's increasingly possible to start a business without quitting your job before knowing that your idea will work (TimFerriss).
In recent years, I've found my rhythm with the help of friends and family but also CrossFit Toronto. I've also taken to listening pretty consistently to Mixergy interviews and recently became a premium member.
Tuesday, August 20, 2013
“India is now the sick man of Asia. They are in a crisis.” said one economist. “I think things will get much worse before they get better,” said another. “The government is between a rock and a hard place.” The Sensex, India’s stock index, fell precipitously last week. The rupee hit another record low today.
It wasn’t so long ago that many were writing about how India was destined to rival China as a global power. Various American officials, including President Obama, have endorsed India’s bid to become a permanent member of the UN Security Council. Has this “summer of difficulties” cast all this into doubt?
Probably not. Just as a summer of good news does not mean an economy will be soaring forever, a period of bad news does not mean it will always be flailing. As the chief economist of the World Bank said in a press conference yesterday, ”Growth may not have bottomed out. We have further to go (down), but the situation is not as bad as is being captured by the mood and captured in the headlines. India is nowhere near the 1991 crisis. The gloom is being overplayed.”
As a general rule, the MSM and the Davoisie overreact to trends. America was supposed to be invincible in the 1990s, and after 2008 the consensus voices pronounced that we had entered a terminal decline. Similarly the BRICs were unstoppable and taking over the world a couple of years ago; now they are supposedly roadkill on the economic highway.
Monday, August 19, 2013
ASI provides a bit of historical context and points out that the cost of pollution (though to be fair, it's at least in part because of the horribly inefficient allocation of resources and poor governance in China) has had its benefits (ASI):
It's a standard trope these days that China is so alarmingly polluted that it's killing off the population in droves. And that might actually be true in part as well. But all that filth is the side effect of people not being killed off in larger droves by the absence of food, shelter or industry.See more about the Kuznets curve (Wikipedia).
[...] China is broadly right about one thing: its environmental problems do have historical parallels. With the exception of Chongqing, the largest municipality, most Chinese cities are no more polluted than Japan’s were in 1960 (see chart 1). Excluding spikes like that in Beijing this year, air quality is improving at about the same rate as Japan’s did in the 1970s.
Libertarian ideas are very deeply rooted in America. Skepticism about power and about government, individualism, the idea that we’re all equal under the law, free enterprise, getting ahead in the world through your own hard work — all of those ideas are very fundamentally American. Obviously, from a libertarian point of view, America nonetheless has done a whole lot of things, from slavery to Obamacare, that offend some number of those libertarian values, but the core libertarian attitude is still there. And a lot of times when the government suddenly surges in size, scope, or power, those libertarian attitudes come back to the fore.
In a move sure to dismay the people inside and outside China who hoped Xi Jinping would begin a new era of democratic reform, China’s president has “lurched” to the left, as the WSJ reports, promoting a revitalized version of nationalist Maoism across the country. ”Our red nation will never change color,” Xi said during a ceremony at Mao’s old lakeside mansion in Wuhan, declaring that the villa should become a center to educate young people about patriotism and revolution.Update: More here... with evidence that rhetoric is being turned into action. (Ricochet)
“It isn’t just Mr. Xi’s rhetoric that has taken on a Maoist tinge in recent months,” the Journal reports. “He has borrowed from Mao’s tactical playbook, launching a ‘rectification’ campaign to purify the Communist Party, while tightening limits on discussion of ideas such as democracy, rule of law and enforcement of the constitution.”
Xi appears to have capitalized on some uncertainty at the top levels of the Party after the fall of Bo Xilai, a charismatic and popular leader who also led a Maoist revival campaign and became a threat to the stability of the Party leadership. “Many of Mr. Bo’s former supporters and several powerful princelings have thrown their weight behind Mr. Xi’s efforts to establish himself as much a stronger leader than his predecessor,” party insiders told the WSJ.
Xi’s nationalist streak comes as the country prepares for Bo Xilai’s trial and amid an economic downturn that has caused worry among investors and analysts. At the same time, China and other Asian powers are engaged in a dangerous and accelerating game of military one-upmanship.
Silicon Valley is today's brightest example of the traditional American dream still at work. The investments for most startup companies must come from individuals who can wait 10 years to get a return on investment. Only very wealthy Americans can afford that.
Like many Silicon Valley entrepreneurs, I have reinvested in the next generation of entrepreneurs, in my case via the Sequoia Fund and Kleiner Perkins Caufield & Byers, two venture-capital firms that gave me a shot at the American dream. I also serve as a board member of their portfolio companies.
Does anybody really believe that moving investment decisions from Silicon Valley to Washington by raising taxes on venture capitalists and their investors would make Silicon Valley more productive? Consider the Solyndra debacle: It was obvious to most of us here that the solar-energy company had zero chance of survival. That's why the company had to be government-funded near the end; no real investors were willing to step up.
Sunday, August 18, 2013
June loved this approach. So elegant. Put the immune system on steroids. What if you could train the body to fight cancer on its own? What if, instead of replacing a patient’s immune system (as in a bone-marrow transplant) or pumping him full of poison (chemo), you could just borrow some cells, tweak them, and infuse them back into the patient? In theory, the engineered cells would stay alive in the blood, replenishing themselves, killing any tumors that recurred. It occurred to June that one infusion could last a lifetime.More here:
He was also excited by the flexibility of engineered T cells. Normally, a drug for one kind of cancer couldn’t ever work on another kind; you had to start over from scratch. But here, since you were starting with a T cell and adding a limb, you only had to change the shape of the limb. You could snap a new piece on the end, like a LEGO, that fit into a molecule on the surface of a breast-cancer cell, or a pancreatic-cancer cell, or whatever kind of cancer you wanted to attack.
[...] Before the trial, 90 percent of Walt’s bone marrow cells had been cancerous. Now, doctors couldn’t find any trace of the disease, Porter said. They still had to do more tests. But Walt appeared to be in complete remission. Up to seven pounds of tumor, obliterated, gone.
Saturday, August 17, 2013
For my summer holidays I have been mostly reading Atlas Shrugged. Ayn Rand has her faults but, boy, was she prescient.
One of the things she foresaw was the current nonsensical, dishonest, canting campaign against shale gas. In Atlas Shrugged it takes the form of Rearden Metal, the miracle technology which is going to transform the US economy if only the progressives will let it. But of course, Rand’s fictional progressives don’t want Reardon Metal to succeed any more than their modern, real-life equivalents want shale gas to succeed.
Why not? For the same rag-bag of made-up, disingenuous reasons which progressives have used to justify their war on progress since time immemorial: it’s unfair, it uses up scarce resources, it might be dangerous. Rand doesn’t actually use the phrase “the precautionary principle.” But this is exactly what she is describing in the book when various vested interests – the corporatists in bed with big government, the politicised junk-scientists at the Institute of Science (aka, in our world, the National Academy of Sciences or the Royal Society), the unions – try to close down the nascent technology using the flimsiest of excuses.
While it's not exactly a new issue, it's surprising that Rolling Stone has noticed (via Instapundit): "The federal government has made it easier than ever to borrow money for higher education - saddling a generation with crushing debts and inflating a bubble that could bring down the economy." And more:
The thing is, none of it – not last month’s deal, not Obama’s 2010 reforms – mattered that much. No doubt, seeing rates double permanently would genuinely have sucked for many students, so it was nice to avoid that. And yes, it was theoretically beneficial when Obama took banks and middlemen out of the federal student-loan game. But the dirty secret of American higher education is that student-loan interest rates are almost irrelevant. It’s not the cost of the loan that’s the problem, it’s the principal – the appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008.When the bubble does burst, it's not like those who are still promoting this kind of thing can claim ignorance anymore (Boston Globe).
Update (WSJ via Instapundit): "The amount of education loans outstanding has increased every quarter since the New York Fed began tracking the figure in 2003. They now account for almost 9% of all consumer debt, up from 3% a decade ago."
Michael Pettis has a great post on China's emphasis on promoting urbanization providing a juxtaposition for the Economist's post on "the roots of metropolitan collapse" highlighting Detroit's failures. Pettis points out that urbanization follows need rather than the other way around:
If China is growing so quickly that it desperately needs to move people out of low-productivity jobs in the country and into high productivity jobs in the city, then urbanization is wealth enhancing for China. But urbanization itself does not make China richer. It only allows China to become richer if there is already desperate need for workers in the cities.The Economist also questions the utility of policy interventions to "turn around" cities like Detroit:
So as in the case of razing Chicago to the ground, urbanization itself will not cause growth. It will allow growth to happen if the conditions are already there for rapid growth, and if urbanization allows a transfer of labor from lower productivity jobs to higher productivity jobs. If China isn’t already growing quickly, however, forced urbanization will make it poorer, not richer.
The much harder question is assessing what if any redevelopment strategy would be effective and would pass a reasonable cost-benefit analysis (the steps outlined above obviously wouldn't). There is a decent amount of evidence which suggests things that don't pass muster, and almost none pointing to things that clearly do (ex ante, at any rate, and taking into account opportunity costs).It's particularly instructive for city leaders everywhere that their ability to "invest" in projects that will never generate an economic return is limited.
In thinking about possible strategies in a general way, one runs into one really hard problem centred on the increasing returns dynamic that drives city growth in the first place. A person living and working in one city is a person not living and working in another. And so to the extent that successful creation of a cluster in one place draws workers away from a cluster elsewhere—reducing the scale, and thus the productivity, of the origin cluster—it's very hard to see how one is generating net benefits.
Friday, August 16, 2013
Who knew? A pretty amazing story of entrepreneurship and weird enough that they've based a show that's already on its fourth season on the family that founded the business (EOnline):
Duck calls, the product that made them millionaires, is still the Robertson family's true moneymaker. Last year, they sold 60,000 of their Duck Commander callers. This year, they are projected to sell over 750,000, and at an average price of $59.72 (they range from $19.95 to $179.95), they are set to make—wait for it—$44,790,000 on their duck calls in 2013!
Thursday, August 15, 2013
The Big Economic Story of our times has not been the Great Recession of 2007–2009, unpleasant though it was. … The Big Economic Story of our own times is that the Chinese in 1978 and then the Indians in 1991 adopted liberal ideas in the economy, and came to attribute a dignity and a liberty to the bourgeoisie formerly denied. And then China and India exploded in economic growth. … And contrary to the usual declarations of the economists since Adam Smith or Karl Marx, the Biggest Economic Story was not caused by trade or investment or exploitation. It was caused by ideas. The idea of bourgeois dignity and liberty led to a rise of real income per head in 2010 prices from about $3 a day in 1800 worldwide to over $100 in places that have accepted the Bourgeois Deal and its creative destruction.
I can't be the only one who sees a problem with this opening paragraph (Fortune):
When I first heard that Jeff Bezos, founder of Amazon.com, was a Libertarian, I laughed out loud, because I thought it was a joke. Bezos's company, after all, is based on the Internet, which was created during the Cold War by a military research-and-development arm of the federal government, the Advanced Research Project Agency. No ARPANET, no Internet. No Internet, no Amazon, no $25 billion personal fortune for Jeff Bezos.
Wednesday, August 14, 2013
Freakonomics points to a few shining lights of government efficiency... but it kind of misses at least one of the elements of why markets almost consistently outperform government services and administrators... incentives.
Not sure how I feel about this... Have they misidentified the problem? Is it still a surprise that people respond to incentives - even kids? Wouldn't money be better spent developing better opportunities for their parents and these kids after they finish school? (Freakonomics):
Can efforts to promote education deter child labor? We report on the findings of a field experiment where a conditional transfer incentivized the schooling of children associated with carpet factories in Nepal. We find that schooling increases and child involvement in carpet weaving decreases when schooling is incentivized. As a simple static labor supply model would predict, we observe that treated children resort to their counterfactual level of school attendance and carpet weaving when schooling is no longer incentivized. From a child labor policy perspective, our findings imply that “You get what you pay for” when schooling incentives are used to combat hazardous child labor.For reference, this is Nepal's "Doing Business" ranking (WorldBank)
Some academic experts say leftover loans are the biggest impediment to upstart entrepreneurship by those who recently received college or graduate degrees. "I mentor students all the time," says Vivek Wadhwa, a fellow at Stanford University Law School. "The single largest inhibitor to entrepreneurship is the student loans."Note the irony that the high cost of higher ed in the US is significantly and directly related to the high amounts of subsidies to tuition and colleges (HoustonChronicle). High student debt is also being blamed for lower home and car ownership (Forbes).
Recent graduates and college dropouts account for a disproportionate share of the founders of technology startups that have transformed the economy over the past decade, says Shikhar Ghosh, a senior lecturer at Harvard Business School. Many freshly-minted M.B.A.s "are willing to sleep on a couch for a year or two, but they can't do it with the burden of student loans," he adds.
A market for everything... Definitely not cheap though "A customer gets her bag back by repaying the loan at 4% monthly interest within four months" - though perhaps comparable to microfinance? (WSJ)
Maybe a better contender for the opposite of development in the US will be Massachusetts (WalterRussellMead via Instapundit), though California (theHill) and Connecticut can't be far behind. In their infinite wisdom this is a new tax on the books in Massachusetts - already on the books - which means the Massachusetts legislature voted to pass this (FastCompany):
If you buy or sell software or computer services that are used by anyone in Massachusetts, your life just got a lot harder. The State of Massachusetts has recently increased taxes on gas, cigarettes... and software. This tax applies to all “computer software, including pre-written upgrades, which is not designed and developed by the author.”There won't be anything "unintended" about the consequences of this remarkable tax which only go to show the insatiable greed and stupidity of legislators in Massachusetts. More at HN.
Monday, August 12, 2013
As a friend who is a lawyer has pointed out, 'you can never "steal" customers.' It's difficult to feel sympathy for Seattle Times' publisher who blames the newspaper industry woes on Craigslist.
It's too bad that Craigslist's founder Craig Newmark doesn't take at least some credit for giving consumers what they want instead of being held captive by their local newspapers. From Bizjournals:
Seattle Times publisher Frank Blethen blasted Craig Newmark, the founder of Craigslist, for negatively affecting the newspaper industry by disrupting newspapers' classified advertising, but Newmark says he's done nothing of the kind.
Saturday, August 10, 2013
If you want to succeed in business, greed is optional. Trust isn't. More or less a paraphrase of Warren Buffett (via SwissMiss):
We only want to link up with people whom we like, admire, and trust. … We do not wish to join with managers who lack admirable qualities, no matter how attractive the prospects of their business. We’ve never succeeded in making a good deal with a bad person.
ASI quotes Bono in what must be an astonishing turnabout or a complete misunderstanding of what 'free enterprise' is: "In dealing with poverty here and around the world, welfare and foreign aid are a Band-Aid. Free enterprise is a cure." Nevertheless, ASI takes him at his word and expands on what needs to be done (and counters some of the common arguments against trade and investment - read the whole thing):
Simply giving developing countries money often does not benefit them in the long term. Even in the short term the aid often fails to reach the people who need it; some of it might diverted to a corrupt government. And sometimes it might be a used to prop up dictatorial regimes.
Free enterprise is the cure because it can enable poor countries to generate wealth instead of depending on tiny transfers of it from richer countries. Developing nations become wealthy by enterprise and trade, not by aid, and inward investment is a potent way of assisting this with a range of spillover benefits. It boosts the business environment by assisting capital investment; around the world it accounts for about 15% of domestic capital formation.
More than three dozen volunteers received multiple, intravenous doses of a vaccine produced with a weakened form of the disease, scientists from the National Institutes of Health, the Navy, Army and other organizations reported Thursday.
Though the results were promising, more extensive field testing will be required, the researchers wrote. Nevertheless, the it marks the first time any vaccine trial has shown 100% success in protecting subjects from the mosquito-borne tropical disease, which sickens more than 200 million a year and killed about 660,000 in 2010.
Friday, August 09, 2013
Advice from Fred Wilson:
My advice is to treat coding as a hobby like some people treat photography, painting or knitting
Make stuff and keep making stuff. You will get better, have fun, and, who knows, you might make the next Tumblr!
There seems to have been a lot of hand wringing on Facebook over the sale of the WaPo. According to Freakonomics:
And that, economists say, is a good thing: passing on a company to an heir generally hurts a firm. As we also discuss in the podcast, one reason to keep a business in the family is that there is an absence of reliable markets, laws, and corporate-governance codes. That is one reason why you see such high rates of family ownership in other parts of the world, especially Asia and South America.
So if you get a little weepy as you see these great family institutions passing into the hands of strangers, you can at least comfort yourself with the knowledge that our economy and political structure are relatively robust. Personally, I can’t wait to see what Bezos does with the Post. Is he the best person alive to run it? Who knows. But thinking that the best person to run any company is someone who just happens to share DNA with the company’s founder is, to my mind, a much worse bet.
Though the unintended consequence may be more accurately described as the failed policies of community housing. I find the idea of community housing puzzling. Dumping the poor in poorly maintained city owned housing where they have no roots or ownership closer to downtown city locations in hopes this gives them access to better jobs seems like an exercise in lunacy.
The US created "Section8" vouchers to give families the opportunity to move out of these ghettos. The problem, however, is that it has resulted in diffusing/exporting the effects of prolonged dependence and the related crime into other neighborhoods (theAtlantic):
Studies show that recipients of Section8 vouchers have tended to choose moderately poor neighborhoods that were already on the decline, not low-poverty neighborhoods. One recent study publicized by HUD warned that policy makers should lower their expectations, because voucher recipients seemed not to be spreading out, as they had hoped, but clustering together. Galster theorizes that every neighborhood has its tipping point—a threshold well below a 40 percent poverty rate—beyond which crime explodes and other severe social problems set in. Pushing a greater number of neighborhoods past that tipping point is likely to produce more total crime. In 2003, the Brookings Institution published a list of the 15 cities where the number of high-poverty neighborhoods had declined the most. In recent years, most of those cities have also shown up as among the most violent in the U.S., according to FBI data.I don't think anyone is suggesting however that ghettos are the better alternative. The article from 2008 in the Atlantic points to social support to help families adapt - and in many cases they do. That limited intervention seems a small price to pay for the cycle of "support" that has created the culture of despair in the first place (and this isn't to say that governments are in the best position for reintegration - perhaps a good opportunity to use social bonds?)
Not exactly a surprise - though it's a reminder (UN) that generosity in other countries often gets outsourced using taxpayer funds (IBD via SmallDeadAnimals):
The total of Americans' voluntary social spending reached 10.2% of GDP in 2009, the latest year for which numbers are available.
The only country that is remotely close in its generosity is the Netherlands, where the total was 6% of the nation's economy. Only two other nations, Canada and the United Kingdom, exceeded 5%. The U.K. totaled 5.3% of GDP, Canada 5.1%. The rest hardly even register on the chart. The French totaled a mere 2.8%, the Germans 2%. Greece, Italy, Norway and Spain all failed to break the 2% mark.
Because apparently it grows on trees. This seems to be a prevailing view of many, even financial journalists and it's entirely befuddling. James Surowiecki of the New Yorker quotes the left wing think tank Center for Budget and Policy Priorities in stating "The best friend that low-wage workers have is a strong economy and a tight job market."
While this may be true, he also argues that to do so, "a higher minimum wage can be only part of the solution. We also need to expand the earned-income tax credit, and strengthen the social-insurance system, including child care and health care [...] A recent McKinsey report suggested that the government should invest almost a trillion dollars over the next five years in repairing and upgrading the national infrastructure, which seems like a good place to start."
Surowiecki begins by pointing to the largely ignored minimum wage protests (well, at least ignored by everyone except for a few journalists) from fast food workers claiming that the demographics of those who are employed in entry level positions has changed. Everyone who is quoted in the articles I looked at covering the limited walkouts however seems to fit the bill. Further he makes the claim:
More important, more of them are relying on their paychecks not for pin money or to pay for Friday-night dates but, rather, to support families. Forty years ago, there was no expectation that fast-food or discount-retail jobs would provide a living wage, because these were not jobs that, in the main, adult heads of household did. Today, low-wage workers provide forty-six per cent of their family’s income. It is that change which is driving the demand for higher pay.Apparently facts aren't necessary anymore to support claims in journalism because there's no citation or reference - and it's a fact that if not true, it only goes to highlight the ridiculousness of the massive interventions he argues for. In fact, the evidence suggests that while the rich may indeed be getting richer, the poor have as well, albeit at a slower rate - but that purchasing power has increased substantially thanks to the gains in technology. For context: See here
It's too bad journalists almost consistently argue for tired old solutions that only compound problems. In a limited sense - and in the short run, their solutions "work" until the debt collectors come a knocking. Perhaps an even greater irony is that Surowiecki is the author of The Wisdom of Crowds. He should know better.
Update: TheEconomist points out another flaw in Mr. Surowiecki's argument.
Update: This story was false and too fitting to be true apparently and the result of a translation error by Gizmodo (barcepundit):
Builders of a landmark Spanish skyscraper "forgot" to include an elevator (Gizmodo):
The Intempo skyscraper in Benidorm, Spain—standing proud in this image—was designed to be a striking symbol of hope and prosperity, to signal to the rest of the world that the city was escaping the financial crisis. Sadly, the builders forgot to include a working elevator.
Thursday, August 08, 2013
Andy Kessler at the WSJ makes the argument that the emerging technologies of fracking, 3D printing, gene therapy, blood markers, crowd funding, and robots will end up creating far more jobs than they destroy.
I'm pretty optimistic but I'm not sure I necessarily buy the argument that technology will always create more jobs than it destroys - but I'm pretty certain the jobs they do create will be higher paying, requiring more creative capacity than ever before. Read the whole thing:
The road to wealth does indeed pass through the graveyard of today's jobs. But history shows that better, higher paying jobs are always created by technology—even if no one seems to remember this during periods of creative destruction.
The trick is to lower the cost of new machines and inventions that can do things never before possible, making them available for wide use.
Cato makes the case that not only does science not need to be publicly funded, but it shouldn't be, and forcefully also takes on the arguments over the funding of pure science (Cato):
The world’s leading nation during the 20th century was the United States, and it too was laissez faire, particularly in science. As late as 1940, fifty years after its GDP per capita had overtaken the UK’s, the U.S. total annual budget for research and development (R&D) was $346 million, of which no less than $265 million was privately funded (including $31 million for university or foundation science). Of the federal and states governments’ R&D budgets, moreover, over $29 million was for agriculture (to address—remember—the United States’ chronic problem of agricultural over productivity) and $26 million was for defence (which is of trivial economic benefit.) America, therefore, produced its industrial leadership, as well as its Edisons, Wrights, Bells, and Teslas, under research laissez faire.
Meanwhile the governments in France and Germany poured money into R&D, and though they produced good science, during the 19th century their economies failed even to converge on the UK’s, let alone overtake it as did the US’s. For the 19th and first half of the 20th centuries, the empirical evidence is clear: the industrial nations whose governments invested least in science did best economically—and they didn’t do so badly in science either.
[...] as scholars from the University of Sussex have shown, some 7 per cent of all industrial R&D worldwide is spent on pure science. This is also why big companies achieve the publication rates of medium-sized universities. Equally, Edwin Mansfield and Zvi Griliches of Harvard have shown by comprehensive surveys that the more that companies invest in pure science, the greater are their profits. If a company fails to invest in pure research, then it will fail to invest in pure researchers—yet it is those researchers who are best qualified to survey the field and to import new knowledge into the company.
Wednesday, August 07, 2013
I'm a bit late reporting this (forgot to dump my tabs off my iPad) but this may allay some of the fears over our Conservative government (DigitalJournal):
The Reputation Institute has released its 2013 list of 50 countries ranked according to what the firm claims is the trust, admiration and respect outsiders have for the countries.
Canada topped the list for the third year in a row, with Sweden and Switzerland coming second and third respectively.
Tuesday, August 06, 2013
Monday, August 05, 2013
Cristiano Antonelli and Claudio Fassio decided to open this Pandora box and concentrate on one impact: economic growth. They perform a cross-country study and take the number of graduates in each field as an indicator of academic output, and see where that leads us in terms of economic achievement. They make the distinction between engineering, hard, social, medical sciences, and humanities in a 11-year panel of 16 OECD countries. The horse race ends with two clear winners, engineering and social sciences, and two big losers, medical sciences and humanities, the latter having a significant negative contribution to growth.
That said, should we believe those results? Beyond the obvious issue with panel cross-country regressions, the problem is that we are still comparing apples to oranges. In some countries, medical studies are at the graduate level only, while it is undergraduate elsewhere. There are also stark difference for Economics as well. In the US, many students graduate in that field and have actually only two years of classes in this major, having to take general education classes first for two years. In Europe, Economics students spend their whole four years on the topic. And the same applies to other fields. Thus counting students, and especially if you want to make the claim they are specialized in a particular field, is rather heroic. I would not yet claim social sciences have won this battle.
Saturday, August 03, 2013
For those who are interested in doing business in China, ChinaLawBlog highlights what they think are the top 5 - they seem about right: Education, Healthcare, Food, Clean-tech/green-tech, and Software. Read the whole thing.
And that's awesome (BusinessWeek via Freakonomics): "These numbers suggest something surprising: a world of ubiquitously increasing wealth, where predictions of Malthusian traps and permanent poverty look increasingly archaic."
The scale of Korea's education market is mind blowing: "Nearly three of every four South Korean kids participate in the private market. In 2012, their parents spent more than $17 billion on these services. That is more than the $15 billion spent by Americans on videogames that year, according to the NPD Group, a research firm."
Great teachers build brands and the WSJ article highlights one teacher who employs 30 people and manages to make more than $4 million (USD) a year. Interestingly it points to private market solutions to our public education system dilemma - but it's also one that highlights how bad Koreans think their public education system is (WSJ):
But are students actually learning more in hagwons? That is a surprisingly hard question to answer. World-wide, the research is mixed, suggesting that the quality of after-school lessons matters more than the quantity. And price is at least loosely related to quality, which is precisely the problem. The most affluent kids can afford one-on-one tutoring with the most popular instructors, while others attend inferior hagwons with huge class sizes and less reliable instruction—or after-hours sessions offered free by their public schools. Eight out of 10 South Korean parents say they feel financial pressure from hagwon tuition costs. Still, most keep paying the fees, convinced that the more they pay, the more their children will learn.
For decades, the South Korean government has been trying to tame the country's private-education market. Politicians have imposed curfews and all manner of regulations on hagwons, even going so far as to ban them altogether during the 1980s, when the country was under military rule. Each time the hagwons have come back stronger.
"The only solution is to improve public education," says Mr. Kim, the millionaire teacher, echoing what the country's education minister and dozens of other Korean educators told me. If parents trusted the system, the theory goes, they wouldn't resort to paying high fees for extra tutoring.
To create such trust, Mr. Kim suggests paying public-school teachers significantly more money according to their performance—as hagwons do. Then the profession could attract the most skilled, accomplished candidates, and parents would know that the best teachers were the ones in their children's schools—not in the strip mall down the street.
Schools can also build trust by aggressively communicating with parents and students, the way businesses already do to great effect in the U.S. They could routinely survey students about their teachers—in ways designed to help teachers improve and not simply to demoralize them. Principals could make their results far more transparent, as hagwons do, and demand more rigorous work from students and parents at home in exchange. And teacher-training programs could become far more selective and serious, as they are in every high-performing education system in the world—injecting trust and prestige into the profession before a teacher even enters the classroom.
Friday, August 02, 2013
Though to be fair, it's not a problem that's anywhere near restricted to Church based foreign aid programs (Forbes via Instapundit):
Within the nonprofit space, we’ve created a system where he/she who tells the best story is the one that’s rewarded. There’s an incentive to push down the stories that are not of positive impact. There’s the incentive to pretend that there are no negative things that happen, there’s the incentive to make sure that our failures are never made public, and there’s the disconnected between who’s paying for the service and who’s receiving the services. When you disconnect those two aspects, you do not have accountability that acts in the best interest of the people who are receiving what we are all trying to do, which is just to help in places of great need.What's a bit sad is how long it takes for some people to come to this realization. Read the whole thing.
Thursday, August 01, 2013
Their experience would seem instructive. While there was undoubtedly a bit of luck involved (in being where Skype was founded), their politicians also radically reshaped government that allowed for Skype and other tech firms to flourish - read the whole thing (Economist):
When Estonia regained its independence in 1991, after the collapse of the Soviet Union, less than half its population had a telephone line and its only independent link to the outside world was a Finnish mobile phone concealed in the foreign minister's garden. Two decades later, it is a world leader in technology. Estonian geeks developed the code behind Skype, Hotmail and Kazaa (an early file-sharing network). In 2007 it became the first country to allow online voting in a general election. It has among the world’s zippiest broadband speeds and holds the record for start-ups per person. Its 1.3m citizens pay for parking spaces with their mobile phones and have their health records stored in the digital cloud. Filing an annual tax return online, as 95% of Estonians do, takes about five minutes. How did the smallest Baltic state develop such a strong tech culture?
A reminder that the strengths companies have are ones that can be shared with other organizations - and are sometimes worth a lot more than cash. In this way, it also gives employees an opportunity to hone their craft creatively. From the NYT (via HN): "In Lieu of Money, Toyota Donates Efficiency to New York Charity":
At a soup kitchen in Harlem, Toyota’s engineers cut down the wait time for dinner to 18 minutes from as long as 90. At a food pantry on Staten Island, they reduced the time people spent filling their bags to 6 minutes from 11. And at a warehouse in Bushwick, Brooklyn, where volunteers were packing boxes of supplies for victims of Hurricane Sandy, a dose of kaizen cut the time it took to pack one box to 11 seconds from 3 minutes.
Toyota has “revolutionized the way we serve our community,” said Margarette Purvis, the chief executive and president of the Food Bank.
In one experiment, 23 admissions officers evaluated nine fictional business-school applicants from schools identified as being of similar quality but with different grading standards. Even after acknowledging that other students worked harder to earn their high marks, the reviewers still admitted students with inflated grades at a higher rate. [...]Though it does suggest a solution, which apparently applies as much to business as it does for admissions offices: "Sam Swift, a postdoctoral fellow at Haas and the lead researcher, says the solution is to bar decision makers from ever seeing the raw scores and only present to them relative performance data."
Another study considered more than 30,000 recent applicants to elite business schools, and again found that those from more lenient undergraduate institutions—determined by measuring average GPAs at those schools—had a better shot at acceptance than did those who attended more rigorous schools.
From English MEP Daniel Hannan (Telegraph):
Friedman did not limit himself to academic theories; he had a keen sense of how to translate ideas into action. He understood politics very well, and used to say that his aim was not to get the right people elected, but to create a climate where even the wrong people would do the right thing. Every year I spend in politics I find that insight more brilliant.
What mattered to him most of all? Oddly enough, it was nothing to do with monetary policy, or indeed with economics at all. He believed that the single measure that would do most to ameliorate society was school vouchers. He had first suggested the idea as early as 1955 – in an intellectual climate so unfriendly that he might as well have been proposing that children be cooked and eaten. But the climate shifted, not least through Friedman’s own interventions and, by the end of his life, a few places were prepared to give his idea a go. Chile had led the way in the 1980s, followed by Sweden in the early 1990s. Milwaukee became the first city in the US to adopt vouchers 23 years ago, and around a quarter of a million American pupils are now benefiting. The idea has been taken up by Pakistan and India, bringing many thousands of children who previously had no schooling at all into the system. Though Britain has stopped short of full-blown vouchers, Michael Gove has plainly embraced the idea that governments can fund schools without running them, and the free schools programme is one of the greatest of the Coalition’s achievements.
I think the experience of New York is instructive. It suggests that if we shifted away from the current high rates of homeownership, we might lose some of the skewed political incentives to artificially restrict the supply of housing . . . but only by replacing them with different, equally troubling incentives. . . . You used to hear that rent controls were a stupid vestige of the past, slowly but surely being phased out. But the city keeps stepping in to slow down the pace of decontrol. And no wonder, if renters are a majority of the city, and the majority of renters are in some sort of controlled or subsidized housing. Meanwhile, you don’t even get the benefits that should accrue to a high-renter city — like fewer ridiculous zoning restrictions — because rent control regulations have given tenants property-like interests in their apartments.
China's financial services sector is artificially supported - I doubt there's anyone out there who doesn't believe this. The open question is whether or not this can be managed (Megan McArdle via Instapundit):
Banks are controlled by the government, with interest rates for both deposits and loans set by fiat. The government also feels free to tell banks how much to lend, and to mandate that they buy government bonds at particular prices. When I went to China in 2010, one of the bankers there told us that a huge chunk of their Tier One capital consisted of special government bonds that couldn’t be sold and paid about 5 percent interest — at a time when inflation was, according to most of the experts I talked to, well above that.Adds Glenn Reynolds: "Everybody hates the bust, but the real harm is done in the boom, with capital being diverted to things that don’t make sense, because the boom’s distortions make them seem to make sense."
In a Western banking system, you’d expect this to lead to a crisis. But what would that even mean in China? Its currency isn’t convertible, and financial links to the outside world are tenuous. Maybe the government can just keep ordering banks to keep making loans at low interest rates, and declare by fiat that the loans are performing. That seems like a crazy thing to say, but it’s also hard to describe how a crisis would happen.