Growth Matters

NPR: "The Secret Document That Transformed China"

2012-01-21T03:21:00.001-05:00

Fascinating and inspired look by NPR at how markets were unleashed from the ground up in rural China - but also speaks to how frightening, brave but also desperate these villagers were (via HN):

Despite the risks, they decided they had to try this experiment — and to write it down as a formal contract, so everyone would be bound to it. By the light of an oil lamp, Yen Hongchang wrote out the contract.

The farmers agreed to divide up the land among the families. Each family agreed to turn over some of what they grew to the government, and to the collective. And, crucially, the farmers agreed that families that grew enough food would get to keep some for themselves.

The contract also recognized the risks the farmers were taking. If any of the farmers were sent to prison or executed, it said, the others in the group would care for their children until age 18. [...]

It was the same land, the same tools and the same people. Yet just by changing the economic rules — by saying, you get to keep some of what you grow — everything changed.

At the end of the season, they had an enormous harvest: more, Yen Hongchang says, than in the previous five years combined.

Every presentation, ever.

2012-01-16T13:29:00.001-05:00

via swissmiss - it's funny if you don't burst out weeping if you attend or do a lot of presentations:

A few tips on making commitments, and keeping them

2012-01-10T17:19:00.001-05:00

I don't do New Year's resolutions but I've found that this time of the year is useful in looking back at priorities and reassessing. Two recent articles bring up similar ideas on how to make sure you keep your New Year's resolutions, if you do them or any resolutions for that matter. First a look at why we fail from John Tierney (NYT):

They’ll fail because they’ll eventually run out of willpower, which social scientists no longer regard as simply a metaphor. They’ve recently reported that willpower is a real form of mental energy, powered by glucose in the bloodstream, which is used up as you exert self-control.

One solution? Use your willpower less often:

The study, led by Wilhelm Hofmann of the University of Chicago, showed that the people with the best self-control, paradoxically, are the ones who use their willpower less often. Instead of fending off one urge after another, these people set up their lives to minimize temptations. They play offense, not defense, using their willpower in advance so that they avoid crises, conserve their energy and outsource as much self-control as they can.

More at Wired.

Smile. You'll be happy you did.

2012-01-03T01:27:00.001-05:00

The Gap Between Productivity and Failure

2012-01-03T01:19:00.001-05:00

Why productivity enhancements don't work (Seth Godin) -

Until you quiet the resistance and commit to actually shipping things that matter, all the productivity tips in the world aren't going to make a real difference. And, it turns out, once you do make the commitment, the productivity tips aren't that needed.

You don't need a new plan for next year. You need a commitment.

You know that things are bad with the Euro when...

2011-12-20T16:48:00.000-05:00

A country like Iceland wants to adopt the Canadian dollar? (CNBC) In other related news, the President of discount airline Ryan Air slams the EU at an "innovation" summit:

Transcript available at the Spectator.org.

From the Mouths of... Rockers?

2011-11-12T21:43:00.001-05:00

A refreshingly grounded view from KISS er, singer Gene Simmons (sfgate):

The mess is our fault – corporations have no responsibility. Capitalism is the best thing that ever happened to human beings. The welfare state sounds wonderful but it doesn’t work. Governments hand out more money than they have to support welfare and they land in debt. Then they have to borrow money… that’s bad business.

“When I was growing up, my mother went to work. There was no welfare. If you worked, you made money. If you didn’t work, you had to figure it out – you’d go and wash dishes.”

The problem with anarchists...

2011-11-10T20:34:00.001-05:00

via Matt L:

Western Decadence at its...

2011-11-08T18:26:00.001-05:00

most bizarre?

Charity meets um Reality? The Blasphemous Edition

2011-11-07T21:27:00.002-05:00

Milton Friedman on Liberty and Equality, a Reminder

2011-11-01T00:37:00.000-04:00

Has Halloween become too Overcommercialized?

2011-10-31T16:48:00.003-04:00

A few years old but for a bit of levity on a Monday afternoon (theOnion):

In The Know: Has Halloween Become Overcommercialized?

This seems terribly unwise...

2011-10-30T01:41:00.002-04:00

On how the credit default swaps for Greece may not pay out despite well, defaulting (WSJ):

If insurance written by market participants for market participants is invalidated by sovereigns, what is the value of insurance contracts being offered by the sovereigns themselves?

Here I’m referring to the European Financial Stability Facility, which is now being touted as a super insurer of European sovereign debt (albeit maybe only the first 20%). Once again, Buiter makes a critical point: not allowing existing CDS to trigger reduces the credibility of the EFSF protection.

I’d go even further. The whole euro exercise has raised serious credibility issues. Governments used all sorts of accounting fudges, off-balance-sheet accounting and derivatives to meet single-currency membership criteria that had already been stretched to breaking point. Greece consistently misled on the state of its finances.

France and Germany broke the Maastricht treaty obligation to keep their budget deficits below 3% of GDP even before the 2008 financial crisis.

The latest maneuverings just confirm that Eurocrats make used-car salesmen look like the apotheosis of probity, prudence and honesty.

Expect there to be "unanticipated consequences" like higher interest rates, and the fact market participants will generally be wary of buying an insurance product that doesn't actually insure against anything. More here on the short cuts, half measures and games European politicians and finance ministers are playing to forestall what seems increasingly inevitable - and how in doing so, may "unintentionally" be making things worse (Telegraph.co.uk).

More on Income Inequality

2011-10-28T12:18:00.000-04:00

Warren Meyer via theThinker:

If the very rich got that way through special access to government power, then why is the solution to tax them more, and not just to reduce government power?

And if the very rich got that way through hard work and innovation, then why the hell are we proposing to take resources out of these people’s hands?

The Kind of Re-thinking That's Needed in Aid

2011-10-27T17:57:00.001-04:00

From a paper by David Booth (via FindWhatWorks):

If the international community is really interested in contributing to country ownership of development efforts, there should be much more discussion of how to promote a more sophisticated approach to such issues. For the aid business, this would mean first taking a more active stance on non-aid issues in development and next a different concept of what development cooperation is about, implying the acquisition of new skills. But the agencies that we support as taxpayers are not going to be able to transform themselves in the suggested way if there is not a new climate of opinion in donor countries about how development happens and how, at the margin, aid may help.

NGOs and public intellectuals who over the past period have helped to create the public assumption that development and poverty reduction are fundamentally about resource transfers from rich people to poor people have a particular obligation to help build a new consensus about the fundamental role of institutions and leadership in successful development. That the most promising kind of external contribution to development which outsiders can make is skill- and knowledge-intensive engagement with the collective-action problems at the heart of countries’ political systems is a hard message to get across. We need to find ways of doing this.

Richard Epstein on PBS: Why income inequality is a good thing in free markets

2011-10-27T16:03:00.001-04:00

Absolutely decimating a few of the myths on inequality in free markets - 9 minutes well spent. The key I think a lot of people miss is that inequality today in free markets is much different, looks and feels much different than what it's been like historically because the inequality isn't structural.

The perverse effect of pursuing equality in free markets, is that it not only makes everyone poorer, but it entrenches the elites in that society. (Coalitionofthewilling.net via Instapundit.com):

Watch Does U.S. Economic Inequality Have a Good Side? on PBS. See more from PBS NewsHour.

Quote of the Day

2011-10-15T18:22:00.000-04:00

Also via Bakadesuyo on FB: Alfred Hitchcock -

The length of a film should be directly related to the endurance of the human bladder.

Quote of the day

2011-10-12T15:09:00.004-04:00

Ha - Oscar Wilde (Bakadesuyo on FB):

Always forgive your enemies—nothing annoys them so much.

Economic Freedom in the United States

2011-10-12T12:42:00.000-04:00

This just isn't a partisan issue.

Why Economic Freedom Matters

2011-10-10T10:24:00.000-04:00

From a World Bank working paper of all things... Jean-Pierre Chauffour (via theThinker)

… economic freedom and civil and political liberties are the root causes of why some countries achieve and sustain better economic outcomes. For instance, a one unit change in the initial level of economic freedom between two countries (on a scale of 1 to 10) is associated with an almost 1 percentage point differential in their average long-run economic growth rates. In the case of civil and political liberties, the long-term effect is also positive and significant with a differential of 0.3 percentage point…

In contrast, no evidence was found that the initial level of entitlement rights or their change over time had any significant effects on long-term per capita income, except for a negative effect in some specifications of the model. These results tend to support earlier findings that beyond core functions of government responsibility—including the protection of liberty itself—the expansion of the state to provide for various entitlements, including so-called economic, social, and cultural rights, may not make people richer in the long run and may even make them poorer

More here (theIncindiaryInsight via Instapundit on the "Occupy Wall Street" Protests):

Capitalism is the best economic engine for creating wealth and prosperity that has ever been developed. The West once was capitalist, but today it is a corporatist juggernaut in it's death throes, whereby corporations and banks control the government in their favor, inevitably leading to corruption and decline. This is not capitalism, not even in the broadest interpretation of the word. I've posted a picture in a previous post on North Korea and South Korea to make a point: a capitalist country lives in prosperity, a dictatorship does not. If capitalism is so horrible, why has America lead the way in innovation, technology, scientific output, and made Americans the wealthiest (by far) workers of any nation on earth? The poor in America live better than middle-class Europeans.

It's time to stop demonizing an entity that we have already benefited immensely from. It's damn time for Millennials to stop taking the fashionable position of saying "capitalism does not work" when they are the inheritors of a capitalist empire. The Occupiers in, at last count, 147 cities nationwide, protest a system that has been overtaken by corporations that are already in bed with the government anyway. If they have a problem with wealth, they should aim their frustrations at a government that sucked away trillions in tax-payer money for sinfully corrupt banks. Capitalism is not the enemy here, excessive government control and regulations is.

Peter Thiel: "The End of the Future"

2011-10-09T21:50:00.000-04:00

Essay in the National Review via Paul Kedrosky:

The state of true science is the key to knowing whether something is truly rotten in the United States. But any such assessment encounters an immediate and almost insuperable challenge. Who can speak about the true health of the ever-expanding universe of human knowledge, given how complex, esoteric, and specialized the many scientific and technological fields have become? When any given field takes half a lifetime of study to master, who can compare and contrast and properly weight the rate of progress in nanotechnology and cryptography and superstring theory and 610 other disciplines? Indeed, how do we even know whether the so-called scientists are not just lawmakers and politicians in disguise, as some conservatives suspect in fields as disparate as climate change, evolutionary biology, and embryonic-stem-cell research, and as I have come to suspect in almost all fields? For now, let us acknowledge this measurement problem — I will return to it later — but not let it stop our inquiry into modernity before it has even begun.

II.

When tracked against the admittedly lofty hopes of the 1950s and 1960s, technological progress has fallen short in many domains. Consider the most literal instance of non-acceleration: We are no longer moving faster. The centuries-long acceleration of travel speeds — from ever-faster sailing ships in the 16th through 18th centuries, to the advent of ever-faster railroads in the 19th century, and ever-faster cars and airplanes in the 20th century — reversed with the decommissioning of the Concorde in 2003, to say nothing of the nightmarish delays caused by strikingly low-tech post-9/11 airport-security systems. Today’s advocates of space jets, lunar vacations, and the manned exploration of the solar system appear to hail from another planet. A faded 1964 Popular Science cover story — “Who’ll Fly You at 2,000 m.p.h.?” — barely recalls the dreams of a bygone age.

(Most of) What You Need to Know about China in 10 Minutes (Video)

2011-10-09T21:44:00.001-04:00

via Shanghaiist:

A tribute to Steve Jobs

2011-10-07T10:34:00.000-04:00

Jim Bennett via Instapundit:

There are, fundamentally, two subspecies of entrepreneur. One starts from the present, and visualizes the next logical step from where things are now. This type figures out how to make something better, cheaper, or more widely available, and manages to clear the financial, regulatory, and market barriers to getting it into the marketplace. The other visualizes a different world, one in which things are different and better from the way they are now, and then figures out what path of evolution brings us to that world, and, as the last step, what is the least ambitious step possible that will move things toward that goal.

Steve Jobs was one of the latter group, and one of the most successful of his time.

And "To Steven Jobs on His Thirtieth Birthday" on February 24th 1985 (via technologizer):

But also context: Why Jobs Is No Edison (american.com) - nor was he perfect - here and here (Gawker and HN) - though a few observations seem a bit mean spirited.

Quote of the Day: PJ O'Rourke

2011-10-06T19:40:00.002-04:00

via Bakadesuyo (Facebook):

Smart people don't start many bar fights. But stupid people don't build many hydrogen bombs.

Cato: Why Government Spending Doesn't Create Jobs

2011-10-06T10:56:00.002-04:00

With the growing scandals over stimulus spending, and a proposed new Jobs Bill, this is timely and useful:

Will Protectionism bring us into another Depression?

2011-10-04T11:01:00.001-04:00

A broad overview here (Telegraph). More here and here (Zerohedge and theHill).

It's not looking good for the Better Business Bureau

2011-10-03T17:47:00.002-04:00

Feefighters writes a post criticizing Better Business Bureau's practices. BBB first threatens to take away their accreditation and then follows through. Discussion at HN.

Another way to look at jobs moving overseas...

2011-10-02T12:03:00.000-04:00

Sure a bit depressing but it also allows for resources to be reallocated to more productive uses (Seth Godin via Bill Conerly):

It was the inefficiency caused by geography that permitted local workers to earn a better wage

Read the whole thing - I think I largely agree with Godin on how the world and more specifically the nature of work is changing.

Hans Rosling's 200 Countries, 200 Years, 4 Minutes

2011-10-01T09:55:00.000-04:00

A reminder that markets, trade and technology work. It's tough not to be optimistic... (though the time to have reformed social security was like 20 years ago - and the longer we wait, the worse it will get for governments) - Youtube via Paul Kedrosky:

Shocking, yes. Bureaucrats are people too.

2011-09-30T17:25:00.001-04:00

And yes, they respond to incentives too. From WSJ (via Greg Mankiw):

Managers in the Social Security Administration, struggling to handle a skyrocketing number of disability cases, had an unusual request for their workers this week: slow down.

Social Security judges and employees in Florida, Alabama, Colorado, Georgia, Tennessee, Ohio and Arizona were among those instructed to set aside disability cases this week, with the slowdown allowing managers to boost their performance numbers for the coming fiscal year, which starts Monday.

Top officials, in a bid to meet goals to win promotions or thousands of dollars in bonuses, directed many employees to refrain from issuing decisions on cases until next week, according to judges and union officials. This likely would delay benefits paid to thousands of Americans with pending applications, many of whom are financially needy and have waited for a government decision for more than a year.

The directive stemmed from a wrinkle in the federal calendar, in which this week fell between the federal government's 2011 and 2012 fiscal years. This happens every five or six years, as officials are allowed to count just 52 weeks in their calendar. Counting this week would make the current fiscal year 53 weeks long. That meant any applications for disability benefits completed between Monday and Friday wouldn't count toward the annual numerical targets set for Social Security judges or field offices.

Food Aid is worth just 11% of its Cash Cost to the Poor?

2011-09-28T17:04:00.002-04:00

That's what a study by Jesse M. Cunha, Giacomo De Giorgi, Seema Jayachandran suggests (Chris Blattman via Beata):

Both types of transfers increase the demand for normal goods, but only in-kind transfers also increase supply. Hence, in-kind transfers should lead to lower prices than cash transfers, which helps consumers at the expense of local producers.

We test and confirm this prediction using a program in Mexico that randomly assigned villages to receive boxes of food (trucked into the village), equivalently-valued cash transfers, or no transfers. The pecuniary benefit to consumers of in-kind transfers, relative to cash transfers, equals 11% of the direct transfer.

TED: Matt Ridley - When ideas have sex

2011-09-28T10:13:00.002-04:00

A look at "how we are the only species that becomes more prosperous when we become more populous" - worth the watch (via Adamsmith.org):

American Tax Dollars at Work

2011-09-27T18:34:00.000-04:00

And here I was I thought the Obama Administration was proud that they intervened. TheTruthAboutCars on the White House pressure on Ford to pull ads:

This situation highlights perfectly why bailouts are so un-American. I don’t care who you are or how you felt about the bailout in the first place: at the point that the President is pressuring competitors to government-owned companies to yank truth-telling ads, you’ve got to wonder what happened to this country.

Related here.

Why Some Civilizations Fall

2011-09-26T11:39:00.000-04:00

Victor Davis Hanson (via Instapundit) - as Reynolds notes, read the whole thing:

Redistribution of wealth rather than emphasis on its creation is surely a symptom of aging societies. Whether at Byzantium during the Nika Riots or in bread and circuses Rome, when the public expects government to provide security rather than the individual to become autonomous through a growing economy, then there grows a collective lethargy. I think that is the message of Juvenal’s savage satires about both mobs and the idle rich. Fourth-century Athenian literature is characterized by forensic law suits, as citizens sought to sue each other, or to sue the state for sustenance, or to fight over inheritances.

The subtext of Petronius’s Satyricon is an affluent, childless, often underemployed citizenry seeking inheritances and lampooning the productive classes that produce enough excess for the wily to get by just fine without working. Somewhere around 1985 in California I noticed that my students were hoping for a state job first, a federal job second, a municipal job third — and a private one last. Around 1990, suddenly two sorts of commercials were aired everywhere: how to join a law suit by calling a law firm’s 1-800 number or how to get a free power chair, scooter, or some other device by calling the 1-800 number of a health care company that would do the paper work for Social Security on your behalf.

Why is it more moral for a federal bureaucrat in a state-supplied SUV to shut down an offshore oil rig on grounds that it is too dangerous for the environment than for a private individual to risk his own capital to find some sort of new fuel to power his government’s SUV fleet? All affluent societies believe that they are just too rich not to be able to afford another regulation, just one more moralizing indulgence, yet again an added entitlement. But as we see now in postmodern America, idle 250,000 acres of farmland for a tiny fish, shut down an entire oilfield, put off a new natural gas find in worry over possible environmental alteration, add a cent to the sales tax, mandate yet another prescription drug entitlement not funded, or offer yet another in-state tuition discount to an illegal alien — and the costs finally equate to an implosion as we see in Greece or California.

The End of Violence?

2011-09-26T11:20:00.000-04:00

From Steven Pinker (WSJ): "We believe our world is riddled with terror and war, but we may be living in the most peaceable era in human existence. Why brutality is declining and empathy is on the rise":

Top Oktoberfests Outside Germany... #1 Kitchener

2011-09-26T10:42:00.005-04:00

Who knew? The irony is that despite having grown up living in Waterloo, I can't say I've ever done anything Oktoberfest-ish save doing the chicken dance under threat of force in phys-ed oh so many years ago. Ranked according to Cheapflights (Reuters):

1. Kitchener-Waterloo, Ontario, CanadaCanadians pull out all the stops for nine days each autumn to create the largest Oktoberfest celebration outside of Munich. Based in Ontario's twin cities, Kitchener-Waterloo Oktoberfest is a celebration the entire family can enjoy; the German extravaganza offers more than 40 family and cultural events, including the "World's Most Dangerous Bocce Ball Tournament." The celebration culminates at the Thanksgiving Day Parade, a televised spectacle of floats, entertainers and marching bands broadcast across the country. Dates: October 7-16

On Persistence and Passion...

2011-09-24T12:26:00.003-04:00

A pretty incredible chronicling of one artist who learned to paint and practiced daily for 9 years (Conceptart.org h/t HN). Inspiring.

Declining Economic Freedom in the US

2011-09-21T08:29:00.000-04:00

As Jeffrey Ellis points out (The Thinker):

Economic freedom clearly improves the human condition — including lowering poverty — whereas government growth, no matter how well-intentioned, results in reduced prosperity.

In response to Ian Vasquez's notes (Cato @ Liberty):

[T]he United States has had one of the largest declines in the past decade. It now ranks in 10th place compared to 3rd in 2000, largely due to higher government spending and lower ratings on “rule of law” measures. The report documents the strong, positive relationship between economic freedom and a range of indicators of standard of living including wealth, economic growth, longer life spans, better health care, lower poverty, civil and political liberties, and so on. Economic freedom is central to human progress. As the response of activist governments to financial and ongoing debt crises fails to address underlying issues responsible for low growth and high unemployment, this report is an important empirical reminder about the wide-ranging consequences of politics or markets in determining the use of resources.

Do locavores and organic food buyers hate poor people?

2011-09-21T08:23:00.000-04:00

According to Charles Kenny at ForeignPolicy, that's a "yes": "Why ditching your fancy, organic, locavore lifestyle is good for the world's poor."

Oh those Neo-colonialist Americans...

2011-09-20T16:47:00.002-04:00

Some things can't be parodied (WSJ):

“Once we clearly understand the way this world is structured, we won’t be seduced by Gary Locke’s façade,” the Communist Party newspaper Guangming Daily said in an editorial last Friday titled “A Warning on the American Neo-Colonialism Gary Locke Brings” about the first Chinese-American to be named the U.S. envoy to China (in Chinese). “His Chinese-American identity means that he’s capable of attracting the attention and public support of Chinese people around the world, capable of developing an affinity with regular people in China. Who’s to say that isn’t the intention of the U.S., to use a Chinese to control the Chinese and incite political chaos in China?”

The response so far among Chinese Internet users: Bring it on.

“To be honest, I’m looking forward to being colonized,” a user of China’s popular Sina Weibo microblogging service writing under the name Yan Lu’antong commented Tuesday. “We welcome this kind of ‘neo-colonialism’ with open arms!!!” added another user, Liu Xiaodong.

Mr. Locke has enjoyed popularity among Chinese Internet users ever since photos of him buying his own coffee at a Seattle Starbucks and carrying his own bags in the Beijing airport were posted online in mid-August. Almost immediately, the ambassador found himself being held up as a measuring stick against which Chinese officials, routinely pilloried for being imperious and prodigal, come up short.

Mark Cuban: "The Most Patriotic Thing You Can Do"?

2011-09-19T18:25:00.000-04:00

Typically bombastic Mark Cuban, on the most patriotic thing you can do - though patriotism is generally one of understated reasons to build a business (h/t HN):

Bust your ass and get rich.

Make a boatload of money. Pay your taxes. Lots of taxes. Hire people. Train people. Pay people. Spend money on rent, equipment, services. Pay more taxes.

When you make a shitload of money. Do something positive with it. If you are smart enough to make it, you will be smart enough to know where to put it to work.

I don’t care what anyone says. Being rich is a good thing. Not just in the obvious sense of benefiting you and your family, but in the broader sense. Profits are not a zero sum game. The more you make the more of a financial impact you can have.

I’m not against government involvement in times of need. I am for recognizing that big public companies will continue to cut jobs in an effort to prop up stock prices, which in turn stimulates the need for more government involvement. Every cut job by the big companies extracts a cost on the American people in one way or another.

Entrepreneurs are needed to create and grow companies to absorb those people in new jobs. If entrepreneurs don’t create those jobs, the government ends up having to spend more money to help them one way or another.

So be Patriotic. Go out there and get rich. Get so obnoxiously rich that when that tax bill comes , your first thought will be to choke on how big a check you have to write. Your 2nd thought will be “what a great problem to have”, and your 3rd should be a recognition that in paying your taxes you are helping to support millions of Americans that are not as fortunate as you.

Do countries choose between Democracy and Growth?

2011-09-12T11:21:00.001-04:00

That's the question economist Yasheng Huang asks when comparing China and India with a number of unconventional conclusions - a must watch for those interested in development:

More on the demographic differences between India and China (Freakonomics).

On Math Education

2011-09-09T20:57:00.000-04:00

A good look at why math education is broken as it's currently taught from the brother of the founder of Wolfram Alpha (TED.com):

Quote of the Day

2011-09-09T12:34:00.001-04:00

Perhaps a bit surprisingly from the veto pen of the Democratic Governor of California, Jerry Brown (via adamsmith.org, with more on Brown at Reason.com):

Not every human problem deserves a law

As said by Abraham Maslow: If you only have a hammer, you tend to see every problem as a nail. And that's why I think law makers should fully read and understand the laws they pass and they should sit briefly, when they sit at all to pass legislation.

Is inequality the problem?

2011-09-09T10:57:00.002-04:00

Argues Jeff Stibel at HBR:

We also need to face the stark reality of income inequality as an exasperating factor in the economy's decline. These disparities are growing at an alarming rate and have been accelerating throughout the recession. An economy that derives 70% of its GDP from consumer spending cannot sustain stable growth when average consumers don't have money to spend.

Unbalanced growth — growth derived primarily from one segment of the population — inevitably collapses upon itself. From 2000 – 2009, overall GDP grew by 17.8% while average household net worth dropped by 4% when adjusted for inflation. At the same time, the richest individuals and corporations grew net worth by record amounts. This incongruity between rising economic growth and decreased household income is even more remarkable considering there was record low inflation.

Long-term, stable growth cannot be truly sustainable if it is also massively unequal.

Absent from this conversation is whether or not productivity has shifted commensurate to any increases in wealth. The policy implications are sweeping. If in fact productivity of the wealthy or the aggregate number of high income earners is driving economic growth, economic policy should not be to punish the rich (Greg Mankiw) for doing what we want them to do - which is what President Obama has proposed with his new stimulus bill announced yesterday.

In private conversations, there are some who even believe that inequality will lead the poor to revolution, to which Chris Blattman recently noted his skepticism that the poor are any more prone to revolution than at least the middle class. So is this a question of (re)distribution? Or a question of access to opportunity? (Or both?). The conversation is woefully incomplete.

Specifically in Stibel's case, I note that he cherry picks a few numbers. He notes that despite GDP growth of 17.8%, average net worth - not net income (which would be the apples to apples comparison given that is what GDP is), fell 4 - adjusted for inflation (which he may or not have adjusted the 17.8% for). He implies that this suggests that all the subsequent net worth accrued to the rich. This might be plausible if we didn't know that the rich also saw net worths fall in the last recession and the numbers of high income earners have also fallen in absolute numbers - from the WSJ:

While I don't doubt this is a serious issue, I'm not sure the issue is inequality so much as asking what is dragging down income growth for low and middle income earners. Whatever the question, Stibel's exaggerations/leaps in logic (for which he is not alone) are unhelpful.

A lesson on conditional risk

2011-09-08T11:50:00.003-04:00

I had to laugh at this one. Courtesy of xkcd via Freakonomics:

Greater sexual freedom leads to ... more discipline?

2011-09-08T11:31:00.003-04:00

Free markets and free people. When you let people choose for themselves, "shockingly" they tend to do the right thing. From Slate.com (via Justin Wolfers):

Monogamy rates are probably rising, hard as it may seem to believe, because of sexual liberation. People are cheating less because people are less desperate and unsatisfied. Nowadays you're expected and even encouraged to delay marriage and childbirth and spend your youth experimenting both sexually and in relationships, and so now people who make commitments have both gotten some of the curiosity out of their systems, and they have a better idea of what will make them happy when they do settle down.

There were simply more bad marriages in the past, created because of the pressure to marry young, and people in bad marriages are more likely to cheat. I also think it's because people are more open about sex. If you have a need that's going unfulfilled, there's more cultural space to deal with it first by opening your mouth and speaking to your partner instead of leaving the house, casting around for someone who can fulfill it. I'd also add that there's less stigma attached to divorce now, so people are far more likely to end a bad marriage in the early stages of it going sour. No need now to go through the process of laying waste to your marriage through cheating and fighting in order to justify the divorce, not when you can simply say, "I'm not happy anymore," and divorce amicably.

Steve Jobs: America's Greatest Failure?

2011-09-04T19:13:00.001-04:00

One of America's greatest strengths is its willingness to overlook if not even celebrate failure. The struggle for greatness invariably also means epic failures (NationalReview):

Jobs failed better than anyone else in Silicon Valley, maybe better than anyone in corporate America. By that I mean Jobs did what only the greatest entrepreneurs can do: learn from their failures. I don’t mean learn from their mistakes. I mean learn from their abject, humiliating, bonehead, epic fails.

Everyone today thinks of Jobs as the genius who gave us the iPod, MacBooks, the iTunes store, the iPhone, the iPad, and so on. Yes, he transformed personal computing and multimedia. But let’s not forget what else Jobs did.

More on the aid industry...

2011-09-04T15:35:00.003-04:00

Let there be no doubt that it is in fact an industry. According to the President of Doctors without Borders (MSF), aid groups are misleading the public on Somalia (Guardian):

Charities needed to start treating the public "like adults". He went on: "There is a con, there is an unrealistic expectation being peddled that you give your £50 and suddenly those people are going to have food to eat. Well, no. We need that £50, yes; we will spend it with integrity. But people need to understand the reality of the challenges in delivering that aid. We don't have the right to hide it from people; we have a responsibility to engage the public with the truth."

Predictable response from other agencies: "Ian Bray, a spokesman for Oxfam, said it was unhelpful for aid agencies to be seen to be arguing with each other."

One path to better jobs: More density?

2011-09-04T11:09:00.001-04:00

That's a solution proposed in the NYT - but as Paul Kedrosky quotes, the authors have a strong sense of the limitations - and population density isn't what comes first in "job creation" (NYT via Paul Kedrosky):

DENSITY isn’t a magic elixir. One can’t create wealth just by crowding people together; otherwise the super-dense metropolitan areas in emerging Asian countries would be richer than American cities. Density simply facilitates interaction. Interactions translate into wealth when a population is educated and local institutions support private enterprise and entrepreneurship.

That said, I'm not sure that density isn't an effect of "a population educated [to] and local institutions [that] support private enterprise and entrepreneurship."

The story of Akamai and the loss of its founder

2011-09-04T10:04:00.000-04:00

An inspired but heart wrenching story of one entrepreneur's vision after he was killed in the first plane that crashed into the World Trade Center (Boston.com):

On Sept. 11, 2001, in Akamai’s control room, engineers and technicians worked furiously to direct the crush of Web traffic to every spare server. There was no time to grieve. But then and in the decade since, the thoughts of Akamai employees rarely strayed from Lewin and his technology, and what both had made possible.

“The end result is that you and I, without knowing Akamai is involved, get to see our content, and we get it fast, and it comes through clear,’’ said Brian Partridge, vice president of research at the research firm Yankee Group in Boston. “Akamai has had a behind-the-scenes role in the incredible development of the Internet.’’

In 1996, when Daniel Lewin, a former Israeli commando with a bachelor’s degree from Technion, Israel’s famed scientific university, began his studies at the Massachusetts Institute of Technology, computer scientists already knew the Internet would do a lousy job of managing big spikes in traffic. Companies could prepare only by buying vast numbers of extra servers that would be idle most of the time, a big waste of money.

Lewin was already hungry for a challenge like that. “Danny had the kind of mind that comes and says, ‘Well, this is a big problem. Why shouldn’t there be a solution?’ ’’ recalled his MIT professor and Akamai cofounder, Tom Leighton. “And sure enough, he figured out a solution.’’

The Internet needed a better way to instantly locate vast amounts of quickly changing data stored on computers all over the world, and send it to anybody, anywhere. What Lewin and Leighton invented was a mathematical scheme called “consistent hashing’’ that radically sped up the process. Just as important, the system could “scale’’- meaning it would work even as many more people used it. It made possible the advanced Internet services we use today.

Lewin’s innovation allows millions of users to watch streaming video simultaneously, for example, and keeps news websites online during global crises as viewers rush for the latest information.

I highly recommend reading the whole thing.

Gary Becker asks a Good Question

2011-09-03T11:52:00.000-04:00

Gary Becker via Don Boudreaux:

Warren Buffett has persuaded 68 other billionaires to follow his example and promise to give at least half their wealth to charities. But why hasn’t Buffett proposed also that the very rich make large gifts to the federal government to offset what he considers ridiculously low taxes on their incomes and wealth?

My guess is that he and the others who pledged to give away their wealth to charity would have little confidence in how the government would spend such gifts. Buffett, for example, is giving most of his wealth to the Gates Foundation, not to the federal government, and is relying on how this foundation will spend his vast gift. Given this reluctance to make large gifts to the federal government, why should anyone have confidence that the federal government will spend additional tax revenue in a sensible way?

Heh.

2011-09-02T17:07:00.000-04:00

From xkcd (via Beata):

"The Ten Limerick Principles of Economics"

2011-09-01T17:41:00.000-04:00

A fun and racy look at the principles of economics through limericks - here are numbers 2 and 8 (limericksecon.com via Greg Mankiw):

#2. The Cost of Something is What You Give Up to Get It."Never free are the amorous fruits,"
Said a girl who astutely computes,
"For there's much I'd have earned
If these calories burned
Had involved more productive pursuits."

Decision-makers have to consider both the obvious and implicit costs of their actions.

#8. A Country's Standard of Living Depends on Its Ability to Produce Goods and Services.
"My sweet," said a lovable lout,
"Of this there can be little doubt:
The continuing health
Of our national wealth
Is dependent on how you put out."

Countries whose workers produce a large quantity of goods and services per unit of time enjoy a high standard of living. Similarly, as a nation's productivity grows, so does its average income.

Spurring growth through Keynesian Economics?

2011-09-01T13:47:00.000-04:00

From Robert J Barro (WSJ) - "Food stamps and other transfers aren't necessarily bad ideas, but there's no evidence they spur growth.":

Theorizing aside, Keynesian policy conclusions, such as the wisdom of additional stimulus geared to money transfers, should come down to empirical evidence. And there is zero evidence that deficit-financed transfers raise GDP and employment—not to mention evidence for a multiplier of two.

Gathering evidence is challenging. In the data, transfers are higher than normal during recessions but mainly because of the automatic increases in welfare programs, such as food stamps and unemployment benefits. To figure out the economic effects of transfers one needs "experiments" in which the government changes transfers in an unusual way—while other factors stay the same—but these events are rare.

Ironically, the administration created one informative data point by dramatically raising unemployment insurance eligibility to 99 weeks in 2009—a much bigger expansion than in previous recessions. Interestingly, the fraction of the unemployed who are long term (more than 26 weeks) has jumped since 2009—to over 44% today, whereas the previous peak had been only 26% during the 1982-83 recession. This pattern suggests that the dramatically longer unemployment-insurance eligibility period adversely affected the labor market. All we need now to get reliable estimates are a hundred more of these experiments.

If only we lived in a world without tradeoffs...

2011-09-01T12:33:00.000-04:00

With environmentalists protesting an oil pipeline from Canada to the US (townhall.com), it's as if they believe that the alternatives are risk free. They aren't. The alternative to ethical oil is Saudi oil:

Meanwhile as the same townhall.com article points out, thousands of protected birds are killed each day from wind farms. My guess though is that there are a lot of environmentalists against those as well. There are many days when I wonder if what it is they really object to is electricity and industrial progress.

The Economist: How important is it to make things?

2011-08-30T16:15:00.001-04:00

As they point out - when it comes to growth and economics, not very:

As the weak recovery continues, various experts continue to linger on the importance of manufacturing to growth in output and employment. America's economy will work again, many argue, when its workers are once again engaged in the critical task of making things. I continue to struggle to understand this focus. Think of the kinds of tasks that make a product possible: the people who identify a market opportunity and come up with a concept, the people who produce a workable product design, the people who design a production method and supply chain, the people who find supplies and labour at prices and qualities consistent with profitable production, the people who manage the logistics of bringing inputs together, the people who actually assemble the inputs, the people who manage the logistics of delivering the goods to markets, the people who actually sell the goods to customers, and the people who track these processes and add up the numbers to make sure things are working as planned. Why is the assembly step obviously the most important to economic activity?

Manufacturing enthusiasts often cite the benefits of manufacturing's high compensation levels for middle-skilled work, but this is a mistaken idea. In the tradable sector, high wages are possible only when there are high levels of value creation. That corresponds to high skill levels or capital intensities, both of which limit the extent to which high-wage manufacturing jobs will be responsible for mass employment. Low-skill jobs in tradable sectors will tend to flow to places with very low labour costs. Of course, America can employ lots of people in non-tradable, middle-skill manufacturing jobs: things like home-building, on-site prepared food manufacture, and the production of shortened hair. Yet employment in construction, restaurant, and personal service jobs doesn't satisfy manufacturing enthusiasts, despite the ample market appetite for such workers.

Geldof: From Live Aid to ... Private Equity Capitalist?

2011-08-30T09:31:00.000-04:00

And in so doing, doing a heck of a lot more good? This seems promising (ReutersAfrica):

Bob Geldof, the former Boomtown Rats singer and Live Aid front man, said a private equity fund he agreed to front last year to invest in Africa was nearing its first close, having raised nearly $200 million.

Geldof helped organise the 1985 Live Aid concert, which reached an estimated 1.5 billion people and did much to raise the profile of those suffering from poverty, starvation and disease in Africa.

Geldof said the private equity fund, called 8 Miles, which represents the shortest distance between Europe and North Africa, had attracted increasing attention because of what he called an existential fiscal crisis in the euro zone.

"It's all about globalisation. Without Africa, this whole game stops," Geldof told delegates at a Julius Baer investor conference in Zurich, focusing on growth. "Last month, of the 10 fastest-growing economies in the world, six were African."

Private equity funds often close to new investors as they deploy the money already gathered, because holding on to large amounts of idle cash while they choose their investments can create a drag on performance.

Crime and Poverty

2011-08-29T12:26:00.002-04:00

A reminder that poverty isn't an excuse for crime - and that when we do so, we debase the vast majority of those who attempt to build better lives for themselves and their families and who some pejoratively dismiss as poor as if it's a chronic and hopeless condition. via City-Journal:

But the notion that unemployment causes crime runs into some obvious difficulties. For one thing, the 1960s, a period of rising crime, had essentially the same unemployment rate as the late 1990s and early 2000s, a period when crime fell. Further, during the Great Depression, when unemployment hit 25 percent, the crime rate in many cities went down. (True, national crime statistics weren’t very useful back in the 1930s, but studies of local police records and individual citizens by scholars such as Glen Elder have generally found reduced crime, too.) Among the explanations offered for this puzzle is that unemployment and poverty were so common during the Great Depression that families became closer, devoted themselves to mutual support, and kept young people, who might be more inclined to criminal behavior, under constant adult supervision. These days, because many families are weaker and children are more independent, we would not see the same effect, so certain criminologists continue to suggest that a 1 percent increase in the unemployment rate should produce as much as a 2 percent increase in property-crime rates.

Yet when the recent recession struck, that didn’t happen. As the national unemployment rate doubled from around 5 percent to nearly 10 percent, the property-crime rate, far from spiking, fell significantly. For 2009, the FBI reported an 8 percent drop in the nationwide robbery rate and a 17 percent reduction in the auto-theft rate from the previous year. Big-city reports show the same thing. Between 2008 and 2010, New York City experienced a 4 percent decline in the robbery rate and a 10 percent fall in the burglary rate. Boston, Chicago, and Los Angeles witnessed similar declines. The FBI’s latest numbers, for 2010, show that the national crime rate fell again.

Building Pre-Fab Homes

2011-08-29T12:13:00.000-04:00

Not sure what I love about production lines but here's a cool vid of how far building homes has come (and still makes up only a fraction of the market) - from Core77:

My buddy Julian works in construction, and for his first week on the job he and his crew were building two-story Motel 6's in New Jersey in the middle of a blizzard. Since he was the new guy, they threw him up on the roof alone with a shovel (and a lone rope tied around his waste as a safety measure) to clear the snow that was stacking up on the half-finished parts of the structure. It was an 8-hour day with nonstop snow. I asked him if that was his worst day on the job. "No," he laughed. "Just my first one."

While pre-fab construction is a merely neat idea for architects, designers and consumers, it must be amazing for the actual construction workers. Putting things together is still hard labor, but imagine being able to do it all indoors, in short-sleeved shirts, in a climate-controlled environment with perfect lighting and an actual plumbed bathroom

Probably.

2011-08-29T02:45:00.003-04:00

Mark Steyn: "The West has incentivized non-productivity on an industrial scale." (NationalReview via Instapundit). While it is the wealth from markets that have allowed governments to prolong unsustainable policies, government largesse seems to have finally exceeded the ability for markets to pay. Read the whole thing.

In Defense of Price Gouging

2011-08-29T02:41:00.000-04:00

A look at how government restrictions over pricing result in unintended consequences. The defense (Washington Examiner):

Disaster pricing often yields more widespread allocation of scarce resources. So everybody has something, and it's less likely someone's sitting on water or batteries they don't need.

Think of those families doubling up in hotel rooms during the hurricane. Those hotels only would double their prices if they thought they could still fill every room. So, if families weren't feeling pressured to share a room, where would the later-arriving families have stayed? In their car during the hurricane?

Greedy exploitation is a different thing. If I run the only store in a town and decide to hike the price for water on a group just because they look thirsty -- even though I'm in no danger of running out -- that's exploitation. But if I'm dealing with a stock that's going to run out, there's nothing wrong with pricing goods so that each good goes to whoever wants it most, rather than whoever can get to it first.

Obviously, we should take care of the poor, as a matter of charity. We all have a duty to take care of the needy, and the class of people fitting into that circumstance expands during a hurricane or other crisis.

But objections to "price gouging" often unhelpfully blend the duty to charity with the dynamics of the market.

If a store owner wants to give discounts or freebies to the poor, that's great. And if he wants to double the price of something he's about to run out of, that should be okay, too.

The Canadian Government's Guide to the United States

2011-08-29T02:33:00.001-04:00

While a lot of us joke that what makes us Canadian is a near universal belief that "we're not American", this presumably unintentionally hilarious guide put out by the Canadian Foreign Affairs Department helps to guide us on how best to interact with Americans so as not to make them feel uncomfortable (via Carson):

In the US, much like in Canada, the personal bubble seems to range between 2 to 3 feet with closer allowances for louder places (such as a night-club or sporting event). In this context, you will usually get closer to allow yourself to be heard and then back away while reaffirming what you just said with the corresponding facial expression.

In a more intimate setting, the space bubble will decrease. In general, you don’t want to be "in someone’s face".

Eye contact is good as long as it is not confrontational (don’t stare). It usually denotes interest and understanding. It is good to nod your head in agreement occasionally to show you are engaged in the conversation.

As in Canada, people are not very tactile at first encounter. There is of course the customary handshake when you meet (right hand only, not too strong), and when you leave. In a social setting, when you don’t know people very well, a smile and wave will usually do. If you really hit it off with someone, you may graduate to the hug and kiss on both cheeks. This is not the norm in a business setting.

In business, you will always want to a firm handshake; look the person in the eye while doing so. If someone shakes your hand without letting go, you can apply slight pressure with your other hand to their shaking arm’s elbow, holding the elbow lightly. This seems to work as a subtle cue to "let go".

Hayek on Keynes

2011-08-28T17:51:00.000-04:00

via AdamSmith.org - a look back for a bit of historical perspective and ideological rigidity that is now ascribed to Keynes but perhaps should not be:

A Four Minute History of Economics

2011-08-26T17:39:00.001-04:00

With gems such as these: "1866... Labour's share of income is rising. Karl Marx's own income puts him in the top 2% of British households. 1867 - Das Kapital goes to press without Karl Marx ever visiting a factory." via Greg Mankiw.

Steve Jobs: America's Greatest Failure?

2011-08-26T10:44:00.001-04:00

A bit of a reminder of why I've been a bit of an America-phile (NationalReview):

Steve Jobs’s announcement that he is stepping down as CEO of Apple is not surprising. He’s a very sick man; and running the world’s largest market-cap technology firm can’t be easy for someone with pancreatic cancer and who-knows-what other ailments.

Lots of digital ink will be spilled about Jobs in the coming days, most of it focusing on his truly marvelous successes.

It’s better to focus on his failures.

Jobs failed better than anyone else in Silicon Valley, maybe better than anyone in corporate America. By that I mean Jobs did what only the greatest entrepreneurs can do: learn from their failures. I don’t mean learn from their mistakes. I mean learn from their abject, humiliating, bonehead, epic fails.

Everyone today thinks of Jobs as the genius who gave us the iPod, MacBooks, the iTunes store, the iPhone, the iPad, and so on. Yes, he transformed personal computing and multimedia. But let’s not forget what else Jobs did.

The genius of the US isn't so much that it celebrates its successes, but rather it does not shame and perhaps in part, celebrates its failures. In so doing, encourages more attempts. Read the whole thing.

Heh. Too true.

2011-08-25T13:41:00.000-04:00

Some truths should be self evident...

2011-08-24T18:50:00.000-04:00

Here's Marco Rubio, junior Senator from Florida speaking at the Reagan Library. While I can't say I understand or agree with his stance on some social issues, here are two comments from the speech that stood out (via NationalReview):

"The free enterprise system has lifted more people out of poverty than all the government anti-poverty programs combined"
“Poverty does not create our social problems; our social problems create our poverty."

The Predictable “Catastrophe” of the Dodd-Frank Conflict Mineral Provision

2011-08-22T22:57:00.001-04:00

David Aronson in the New York Times via Freakonomics:

Unfortunately, the Dodd-Frank law has had unintended and devastating consequences, as I saw firsthand on a trip to eastern Congo this summer. The law has brought about a de facto embargo on the minerals mined in the region, including tin, tungsten and the tantalum that is essential for making cellphones.

The smelting companies that used to buy from eastern Congo have stopped. No one wants to be tarred with financing African warlords — especially the glamorous high-tech firms like Apple and Intel that are often the ultimate buyers of these minerals. It’s easier to sidestep Congo than to sort out the complexities of Congolese politics — especially when minerals are readily available from other, safer countries.

For locals, however, the law has been a catastrophe. In South Kivu Province, I heard from scores of artisanal miners and small-scale purchasers, who used to make a few dollars a day digging ore out of mountainsides with hand tools. Paltry as it may seem, this income was a lifeline for people in a region that was devastated by 32 years of misrule under the kleptocracy of Mobutu Sese Seko (when the country was known as Zaire) and that is now just beginning to emerge from over a decade of brutal war and internal strife.

As Daniel Hamermesh @ Freakonomics notes, "Brownback’s provision has harmed precisely those it was designed to protect, the small-scale miners in the Congo, but it has certainly lowered the price faced by Chinese processors for these inputs. Law of unintended, but what should have been perfectly expected, consequences."

More on Aid and Haiti

2011-08-22T22:15:00.001-04:00

Felix Salmon who I find somewhat inconsistent in his views of the role of state versus that of markets, writes a pretty damning overview of aid and Haiti in the aftermath of the earthquake (Reuters):

What happens when you drop billions of dollars onto a country like Haiti? Immediately after the earthquake happened, in January 2010, I said that “one of the lessons we’ve learned from trying to rebuild failed states elsewhere in the world is that throwing money at the issue is very likely to backfire”. But that’s exactly what we did — with predictable results.

I’d urge you to read Janet Reitman’s full 12,000-word Rolling Stone article on what an enormous amount of foreign aid has done for Haiti; it’s a wonderful piece of journalism, albeit a very depressing one.

The first thing to note is that most of the money given to Haiti hasn’t even started to be spent yet: a whopping $11 billion was pledged by donor countries and financial institutions in the wake of the earthquake, but if you take the US as a good example, it’s so far managed to spend just $184 million of the $1.14 billion allocated to the country. Even the Red Cross is barely halfway into its $479 million fund — all of which has been earmarked for Haiti, and none of which can be spent elsewhere, no matter how much better it might be put to use in some other context.

But even the amount of money that has been spent has been harmful in its own way. Haiti has been known as “the Republic of NGOs” for well over a decade now, but the earthquake just turbocharged their presence while devastating everything else, leaving foreign aid the only game in town

More here.

QOTD: On Conspiracy Theories...

2011-08-14T10:54:00.002-04:00

Because I have a number of friends who are conspiracy nuts - you know who you are ;). Steve Jobs via Paul Kedrosky:

“When you’re young, you look at television and think, There’s a conspiracy. The networks have conspired to dumb us down. But when you get a little older, you realize that’s not true. The networks are in business to give people exactly what they want. That’s a far more depressing thought. Conspiracy is optimistic! You can shoot the bastards! We can have a revolution! But the networks are really in business to give people what they want. It’s the truth.”

Though I don't really consider it depressing given that what we demand is getting better all the time. Not to mention the vapid, mainstream media continues to lose its grip as gatekeepers of the news and continue to hemorrhage viewers to those who seek more comprehensive sources like the net.

More on "Made in China"

2011-08-12T14:35:00.000-04:00

From Fortune:

And despite what you may conclude from shopping at Wal-Mart (WMT) or other large stores -- or hearing big, scary figures about the trade deficit with China -- imports from China make up just a very small portion of our total economy: just 2.5% of gross domestic product in 2010. Overall, products from around the world accounted for only 16% of our GDP last year. "The vast majority of goods and services sold in the United States is produced here," according to FRBSF report authors Galina Hale and Bart Hobijn. The exceptions are furniture and household items, electronic goods, and clothing and shoes. A third of U.S. consumer purchases for clothing and shoes in 2010 carried a "Made in China" label. For furniture, it was one fifth.

Politics & Wealth: Can you get rich without democracy?

2011-08-09T18:15:00.001-04:00

Dani Rodrik via theEconomist:

Yes if you are an individual, but probably not if you are an entire country. As the figure below shows, there are very few countries that have developed beyond $5,000 in 2005 PPP dollars without becoming democracies somewhere along the way (unless they are an oil economy).

A Perfect Logo for Government & Innovation

2011-08-09T15:33:00.001-04:00

via Beata / Michelle Malkin:

[The propaganda for the launch of the blog and logo for it:]
It made for one fine sound bite. But it hasn’t exactly inspired a bunch of innovation rallies and bake sales. So in the spirit of banging the drum for new ideas and fresh thinking, this blog will track all things innovative, not just in science and technology, but also in how we live, how we learn, how we entertain ourselves.
“Check out the logo. 3 interlocking gears arranged in this fashion will not move in any direction. They are essentially locked in place. Which when you think about it, is a perfect analogy of today’s government!”

Made in China? Apparently not so much...?

2011-08-08T18:57:00.001-04:00

From Paul Kedrosky:

Thus, on average, of every dollar spent on an item labeled “Made in China,” 55 cents go for services produced in the United States. In other words, the U.S. content of “Made in China” is about 55%.

Thought of the Day: On Anger

2011-08-08T09:07:00.001-04:00

Jeffrey Ellis from TheThinkerBlog:

Anger causes us to lose our empathy, our ability to relate to others and see things from their viewpoint [...] human evil is the result of an erosion or lack of empathy [...] Anger is an emotion that enables humans to be evil.

The "Live Aid" Legacy

2011-08-05T15:23:00.000-04:00

Just a reminder that good intentions really aren't enough (from the blog of the same name) and a look back at the disturbing legacy of Live Aid and how it ended up being a step back:

Starving children with flies around their eyes
80% of the British public strongly associate the developing world with doom-laden images of famine, disaster and Western aid. Sixteen years on from Live Aid, these images are still top of mind and maintain a powerful grip on the British psyche.

Victims are seen as less than human
Stereotypes of deprivation and poverty, together with images of Western aid, can lead to an impression that people in the developing world are helpless victims. 74% of the British public believe that these countries “depend on the money and knowledge of the West to progress.”

False sense of superiority and inferiority
The danger of stereotypes of this depth and magnitude is the psychological relationship they create between the developed and the developing world, which revolves around an implicit sense of superiority and inferiority.

Powerful giver and grateful receiver
The Live Aid Legacy defines the roles in our relationship with the developing world. We are powerful, benevolent givers; they are grateful receivers. There is no recognition that we in Britain may have something to gain from the relationship.

Confidence in out-of-date knowledge
Researchers remarked on the respondents’ confidence in such one-dimensional images. British consumers are not hesitating or seeking reassurance for their views. Unconsciously accumulated images of the developing world have led to a certainty on the part of consumers that they have all the facts.

Quote of the Day

2011-07-20T08:11:00.001-04:00

Winston Churchill (themellowjihadi.com via Instapundit):

The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.

Of course, "socialism"/central planning in the real world generally translates into the worst of both.

Nathan Myhrvold: Cooking as never seen before

2011-07-18T10:49:00.001-04:00

Pretty darn cool via TED.com.

Ben Pieratt: Why graphic designers (and more broadly, just about anyone) should work for a Startup

2011-07-14T10:01:00.004-04:00

Ben Pieratt via Swissmiss:

The internet, at this time in history, is the greatest client assignment of all time. The Western world is porting itself over to the web in mind and deed and is looking to make itself comfortable and productive. It’s every person in the world, connected to every other person in the world, and no one fully understands how to make best use of this new reality because no one has seen anything like it before. The internet wants to hire you to build stuff for it because its trying to figure out what it can do. It’s offering you a blank check and asking you to come up with something fascinating and useful that it can embrace en masse, to the benefit of everyone.

The Gell-Mann Amnesia effect

2011-07-11T13:55:00.004-04:00

Michael Crichton (via Paul Kedrosky):

Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them.

In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.

Tim Worstall on Trade

2011-07-07T12:16:00.005-04:00

In his Forbes column, I think Worstall makes two important points in rejecting some of the arguments for encroaching protectionism:

1. "There are, for example, only 30 production jobs inside the US associated with the iPod manufacture. [...] the majority of the wages paid as a result of the iPod are inside the US. Even while a minority of the jobs aren’t the US, the majority of the wages are: meaning that whatever is being done in the US is obviously and clearly higher paid than the manufacturing which isn’t being done in the US. It is true that in the past manufacturing jobs in the US were highly paid. But now manufacturing jobs are low paid, as we can see from these figures. So the call to bring back those “high wage manufacturing jobs” to the US doesn’t work: there aren’t any high wage manufacturing jobs to take anywhere."

2. "We shouldn’t be worrying about the jobs of the producers, their wages nor profits, in fact, anything else about the producers at all. We’re talking economics here, the allocation of scarce resources so as to satisfy the maximum amount possible of human desires and wants. Which means attending to the consumer, the ability of the consumer to consume, nothing else."

Are Not For Profits More Virtuous? No.

2011-07-06T00:54:00.005-04:00

In many ways, quite the opposite. From Arnold Kling (via Beata):

I think that profit-seeking enterprises serve the community, also. In fact, they do it in a way that is more sustainable and more accountable. It is more sustainable, in that the value of what they produce is greater than the cost of the resources (including labor) that they use. Otherwise, they would not make a profit. However, a non-profit can very well use more resources than the value of what it produces. A profit-seeking enterprise is more accountable, in that a profit-seeking business must satisfy consumers or else go out of business. Hence, it must provide something of value to its customers. On the other hand, if a non-profit fails to provide any benefit to its customers, it still might be able to obtain grants from the government or from donors.

More here (Arnold Kling).

The Relationship Between Economic Freedom & Quality of Life

2011-06-30T00:29:00.001-04:00

via Instapundit:

Robert Heinlein: Poverty is the normal condition of man

2011-06-20T11:05:00.003-04:00

We know enough about poverty and development to know the broader policies that work, but more importantly the many that do not. As Glenn Reynolds points out, this is a dictum worth repeating (Instapundit):

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as “bad luck.”

A definition of "work" to strive for

2011-06-17T16:04:00.002-04:00

Response to question from the SwissMiss by iconic Swiss Designer Jost Hochuli:

Swissmiss: “What’s your definition of work?”
Jost Hochuli: “70% pleasure!”

Paul Graham: Ignore Competition, Focus on Improving Lives

2011-06-17T15:46:00.002-04:00

I suspect there's a bit of a selection bias (in that he's only ever invested in one company that was ultimately killed off by a larger competitor), but it's a point that I agree with and a video worth watching: YouTube (Video embed on this disabled - 14 minutes).

Bjorn Lomborg: Our lifestyle is unsustainable but that's irrelevant

2011-06-14T02:47:00.003-04:00

An interesting read - Lomborg argues we consistently underestimate our capacity to innovate (Newsweek via Instapundit):

Climate alarmists and campaigning environmentalists argue that the industrialized countries of the world have made sizable withdrawals on nature’s fixed allowance, and unless we change our ways, and soon, we are doomed to an abrupt end. Take the recent proclamation from the United Nations Environment Program, which argued that governments should dramatically cut back on the use of resources. The mantra has become commonplace: our current way of living is selfish and unsustainable. We are wrecking the world. We are gobbling up the last resources. We are cutting down the rainforest. We are polluting the water. We are polluting the air. We are killing plants and animals, destroying the ozone layer, burning the world through our addiction to fossil fuels, and leaving a devastated planet for future generations.

In other words, humanity is doomed.

It is a compelling story, no doubt. It is also fundamentally wrong, and the consequences are severe. Tragically, exaggerated environmental worries—and the willingness of so many to believe them—could ultimately prevent us from finding smarter ways to actually help our planet and ensure the health of the environment for future generations.

Because, our fears notwithstanding, we actually get smarter. Although Westerners were once reliant on whale oil for lighting, we never actually ran out of whales. Why? High demand and rising prices for whale oil spurred a search for and investment in the 19th-century version of alternative energy. First, kerosene from petroleum replaced whale oil. We didn’t run out of kerosene, either: electricity supplanted it because it was a superior way to light our planet.

For generations, we have consistently underestimated our capacity for innovation. There was a time when we worried that all of London would be covered with horse manure because of the increasing use of horse-drawn carriages. Thanks to the invention of the car, London has 7 million inhabitants today. Dung disaster averted.

On Inspiration and Just Getting Things Done

2011-06-13T11:18:00.001-04:00

via swissmiss, Chuck Close:

Inspiration is for amateurs; the rest of us just show up and get to work.

On the enlightenment of organic farming

2011-06-12T00:02:00.002-04:00

From a comment on SmallDeadAnimals:

One German organic farm has killed twice as many people as the Fukushima nuclear disaster and the Gulf Oil spill combined.

Time to invoke the precautionary principle? (Washington Times via SmallDeadAnimals)

On the lightbulb ban

2011-06-10T11:29:00.001-04:00

Yep, pretty much (Virginia Postrel @Bloomberg via Instapundit):

The bulb ban makes sense only one of two ways: either as an expression of cultural sanctimony, with a little technophilia thrown in for added glamour, or as a roundabout way to transfer wealth from the general public to the few businesses with the know-how to produce the light bulbs consumers don’t really want to buy.

Foreign Aid in Haiti: Oops

2011-06-10T10:17:00.009-04:00

I didn't plan this juxtaposition - but this highlights the difference between aid and commerce. The lack of development is not from the lack of resources.

For private firms, the money runs out and they try something different, charities, not-for-profits often don't have similar constraints - or are at least not bound to the same level of accountability and often do the same things. What's worse is that the impact of botched aid are so much worse than failed firms. One aid practitioner in Haiti argues it's time to give up and after 200 years of attempted assistance, Haiti is a "massive debacle" (TakesfromtheHood via Beata):

I think it’s time for Aid to leave Haiti.

I’ve certainly defended Aid enough on this blog, including different things about the earthquake response in Haiti. In this case, though, I see the earthquake response in Haiti as simply the icing on the cake. Many have said that Haiti was a disaster before the earthquake, and I’d agree. What is said less often, is that Aid also was broken in Haiti before the earthquake. Depending on which numbers you crunch, and how you crunch them, Haiti is only incrementally worse off now than it was on January 9, 2010. I do not say this to in any way compliment the combined, inter-agency relief response, but rather to highlight just how bad things were pre-earthquake, despite decades of foreign assistance. It’s time to call this what it is: a massive debacle.

I honestly think that the very best thing for Haiti would be for us all to leave. I do not (yet) believe that Aid is broken globally. But it is certainly broken in Haiti. I sincerely believe that in the grand scheme of things we are not doing Haiti any real favors by staying on. We need to get out. All of us. All of the foreign governments with their incentives and their politicians who visit and make speeches about “Haiti’s bright future.” All of the UN and INGOs with their massive compounds and their VHF radios and their strategies. All of the hippy architects with their houses made out of recycled trash, the BOGO entrepreneurs with their GIK dumping, the bright-eyed innovators with their “platforms” and their earth-friendly gadgets. For heavens’ sake, all of the church groups with their matching T-shirts and their pet orphanages.

I should note that having worked in development, I recognize how difficult this conclusion is. It's advocating effectively abandoning friends and people who you have struggled to help. It's also recognizing what a failure your time has been in building something sustainable. But it is doing so in hopes of something better.

Groupon in China: Oops

2011-06-10T08:48:00.002-04:00

Remarkable - am sure this would make a great textbook case study of what not to do at some point. No idea what they were thinking, but I have to imagine they have some amazing offices (TechCrunch):

This all matters greatly for potential investors, because as the S1 showed, much of Groupon’s warchest of venture capital has gone to its aggressive international expansion. As we reported last week, Groupon’s U.S operations lost only $10.4 million last year, whereas the international operations lost $170.6 million.

Much of that has gone to China. Five days after Groupon’s January near-$1 billion venture round was raised, a job board advertising Groupon positions in China boasted “near endless” resources from that round to build out the office. Reading that ad and looking at how Groupon has done in China, one could argue not all that money was, shall we say, judiciously spent. A more blunt way of putting it would be Groupon’s China team made drunken sailors look fiscally responsible.

Despite Mason’s blithe statements to the contrary on stage at All Things D, China is not going well for Groupon. In fact, by all accounts, Groupon has made every classic Silicon-Valley-Web-company-enters-China mistake in the book: Sparring with its local partners, putting foreigners who have little understanding of the local market in charge, and focusing hiring on bankers and international MBAs, not locals.

TED: Redefining Success, Finding Happiness

2011-06-08T15:20:00.004-04:00

A thoughtful (and witty) TED Talk by Alain de Botton who points out among many other things, that our increasingly egalitarian society means that we're also more likely to be envious of others (via swissmiss):

(Unintended?) Consequences...

2011-06-07T15:53:00.004-04:00

A study in what happens when you have a government and bureaucrats brazenly and opportunistically take over private assets for personal gain - How to Steal a Russian Airport (NYT):

In truth, as long as the plutocrats thumb their noses at the rule of law and steal corporate assets with impunity, no Russian company is going to get the price their assets may deserve. That’s the real market condition. It won’t change until the practice ends.

For that to happen, though, the plutocrats would have to start caring about their country — and not just themselves.

World Bank: Economic Freedom, Civil & Political Liberties Cause Better Economies

2011-06-06T14:55:00.003-04:00

Color me not shocked. From a study at the World Bank Dan Mitchell (via Instapundit):

Reviewing the economic performance—good and bad—of more than 100 countries over the past 30 years, this paper finds new empirical evidence supporting the idea that economic freedom and civil and political liberties are the root causes of why some countries achieve and sustain better economic outcomes. For instance, a one unit change in the initial level of economic freedom between two countries (on a scale of 1 to 10) is associated with an almost 1 percentage point differential in their average long-run economic growth rates. In the case of civil and political liberties, the long-term effect is also positive and significant with a differential of 0.3 percentage point. In addition to the initial conditions, the expansion of freedom conditions over time (economic, civil, and political) also positively influences long-run economic growth. In contrast, no evidence was found that the initial level of entitlement rights or their change over time had any significant effects on long-term per capita income, except for a negative effect in some specifications of the model. These results tend to support earlier findings that beyond core functions of government responsibility—including the protection of liberty itself—the expansion of the state to provide for various entitlements, including so-called economic, social, and cultural rights, may not make people richer in the long run and may even make them poorer.

Contrasts in courage

2011-06-05T21:08:00.005-04:00

For those who may have not have seen the story of the 21-year old parliamentary page who, following the recent federal election where the Harper government achieved a majority government, decided to stand up with a sign that said "Stop Harper" and called for an "Arab Spring", a contrast in courage (Terry Glavin via SmallDeadAnimals):

Brigette DePape: The 21-year-old graduate from the University of Ottawa made headlines for holding up a protest sign that read 'Stop Harper' at the start of the Throne Speech: "This country needs a Canadian version of an Arab Spring." DePape has since received several job offers and is considering taking a position with the Public Service Alliance of Canada.

Hamza Ali al-Khateeb: A 13-year-old Syrian boy who tagged along at an antigovernment protest in the town of Saida a few weeks ago, was arrested, was burned, beaten, lacerated and given electroshocks. His jaw and kneecaps were shattered. He was shot in both arms. When his father saw the state of Hamza’s body, he passed out.

Yes, because a Canadian Conservative government is exactly like the Syrian dictatorship. In a way I hope that DePaper gets hired by PSAC (a union) - as the precedent has been set - though by the very job offer I wonder if it has been set already and that in the coming years PSAC will get everything they deserve. Perhaps in a truly just world DePape would be exported to protest in a similar way in Syria though I don't think I would be so cruel.

Taking the Capital out of Capitalism

2011-06-03T15:55:00.005-04:00

Technology is making prices and value more transparent allowing for the development of new business models that rent out excess capacity, and as a corollary, making the need for capital less important than it was before (WSJ):

A second wave of online rental sites is catching fire with consumers and investors, with start-ups like spare-room market Airbnb Inc., textbook lender Chegg Inc. and fashion outfit Rent the Runway following the success of pioneers like Netflix Inc. and Zipcar Inc.

While many of the companies took off during the frugal days of the recession, they are continuing to do well in a climate where consumers remain cautious about paying full price for things they don't need or want to own.

More on how the web is bringing liquidity and transparency to previously illiquid assets (TechCrunch).

Happy employees make for more profitable companies

2011-05-30T17:15:00.002-04:00

The virtuous cycle of markets strikes again (BarkingUpTheWrongTree):

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

The #1 Impediment to Development and Growth?

2011-05-30T17:05:00.002-04:00

A reminder that it's government (TechCrunch):

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