Things that are not sustainable...

The phrase "unintended consequences" is paired all too often with government interventions as it is here - as Danes begin realizing the problems around their social welfare system that rewards those who are unemployed even more than some who are (NYT):

It began as a stunt intended to prove that hardship and poverty still existed in this small, wealthy country, but it backfired badly. Visit a single mother of two on welfare, a liberal member of Parliament goaded a skeptical political opponent, see for yourself how hard it is.

It turned out, however, that life on welfare was not so hard. The 36-year-old single mother, given the pseudonym “Carina” in the news media, had more money to spend than many of the country’s full-time workers. All told, she was getting about $2,700 a month, and she had been on welfare since she was 16.

The Story of Sriracha

Great story about a passionate entrepreneur (LATimes via Techcrunch):

Early on, one of Tran's packaging suppliers told him, "Your product is too spicy. How can you sell it?" Add a tomato base, some friends counseled. Sweeten the flavor to pair it better with chicken, others said. But Tran stood firm.

"Hot sauce must be hot. If you don't like it hot, use less," he said. "We don't make mayonnaise here."

Value, Monetization and Mobile Gaming

Not that I think revenues or monetization are bad things (quite the opposite, in fact). Forbes has a look at fast growing SuperCell that makes games through seemingly development decentralized teams:

Ilkka Paananen says the best way to make money in mobile gaming is to stop thinking about making money. Think about fun instead. Fighting a mild case of flu and jet lag from a San Francisco flight back home to Helsinki, Paananen says that companies that place revenue above fun (we’re talking to you, Zynga) will ultimately fail. “It really is that simple–just design something great, something that users love,” says the 34-year-old. [...]

The growth curve steepens: With daily revenue now at $2.4 million, Supercell is already at a run-rate of more than $800 million for 2013 and could reach $1 billion. That would make it more than twice the size of Electronic Arts’ mobile games division, which has 900-plus iOS apps. Supercell now attracts 8.5 million daily players who play an average of ten times per day.[...]

Most game studios have an autocratic executive producer green-lighting the work of designers and programmers. Supercell’s developers work in autonomous groups of five to seven people. Each cell comes up with its own game ideas. They run their ideas by Paananen (he can’t remember ever nixing a proposal), then develop those into a game. If the team likes it, the rest of the employees get to play. If they like it, the game gets tested in Canada‘s iTunes App store. If it’s a hit there it will be deemed ready for global release. This staged approach has killed off four games so far, with each dead project a cause for celebration. Employees crack open champagne to toast their failure. “We really want to celebrate maybe not the failure itself but the learning that comes out of the failure,” says Paananen.

Seemingly bad business ideas that turned out to be great

Cool beans (kottke via Beata).

China's Leap in Reducing Extreme Poverty

Fantastic news. From the World Bank's recent report on extreme poverty (WSJ):

About 1.2 billion people in the world lived in extreme poverty in 2010, subsisting on less than $1.25 a day. That’s down from 1.9 billion three decades ago despite a nearly 60% increase in the developing world’s population.

The total number of people living in extreme poverty has dropped in every developing region over the past three decades. About 21% of the developing world lived on less than $1.25 a day in 2010. In 1981 it was 52%.

The sharpest decline came in China, where the extreme poverty rate fell to 12% in 2010 from 84% in 1981. India’s extreme poverty dropped to 33% of the population from 60% three decades ago.

Morning Giggle - Ikea's "Time for Change"

Came across this ad watching Martin Durkin's Margaret: Death of a Revolutionary (Channel4) which unfortunately isn't viewable if it doesn't think you're in the UK.

The irony is how appropriate the ad is, given the thesis of how Thatcher democratized ownership with the UK the sale of council flats (Wikipedia), and the privatizations of British Steel, British Petroleum, British Airways, Rolls Royce and water/electricity utilities through the 80s.

As a side note, it defies imagination how there are some who now claim that the financial crisis of today was the result of Thatcher's audacity in believing that the poor should have the right to buy the homes they lived in. Anyway, rant over, watch Ikea's ad running in the UK for a giggle:

The World Bank Considers Scrapping/Crippling "Doing Business"

It's the one thing that they clearly do right. And therefore there are those who want to destroy it (CSIS):

For ten years the World Bank’s Doing Business report has shone a spotlight on the complications of official regulation for small and medium enterprises (SMEs) and records the written rules that governments make for SMEs. The facts are summarized in indicators that are comparable across countries and allow them to learn from each other. The focus on the complex area of regulation has supported reform all over the world—stronger protection of property & contracts and less complicated procedures. Importantly, this is reform spurred without large aid payments.

At the same time, indicators that can be compared across jurisdictions have made it possible systematically to study the effects of rulemaking. For the first time, impact evaluation can be considered for some regulatory reforms to isolate the effect of reform. Mexico was the first case, where different states at different times improved the ease of setting up businesses. States that reformed saw business registration increase as well as formal job creation. Competition spurred businesses to improve. Prices fell, creating benefits for consumers and employees. People are now more likely to succeed on the basis of rules rather than connections. The reforms give the Mohamed Bouazizis of this world a stab at success.

The very punch that Doing Business packs has prompted opposition. From the beginning several governments were unhappy. A typical initial reaction is anger and denial but the very unease stirred by Doing Business has led to reviews of problems and ultimately reform efforts. It has been a productive tension for citizens; every year over 200 reforms are recorded by Doing Business with over 2,000 logged in ten years. Apart from Venezuela and Zimbabwe, no country has made life harder for business under the measures captured by Doing Business. As an Indian newspaper put it, the politically optimal way to deal with the report is to “trash it in public and implement it in secret.”

Yet criticism persists. The new World Bank president, Jim Kim, has established a commission to review Doing Business and make recommendations for its future. All options are on the table. Critics claim the data are not robust, the relevance of the data for reform is questionable, and the rankings direct reform efforts to the wrong priorities.

There are few words that appropriately express how absurd I feel this is.

Patton Oswalt: "The good outnumber you, and we always will."

After today's attack in Boston, a sentiment that deserves repeating (theAtlantic via Instapundit):

But the vast majority stands against that darkness and, like white blood cells attacking a virus, they dilute and weaken and eventually wash away the evil doers and, more importantly, the damage they wreak. This is beyond religion or creed or nation. We would not be here if humanity were inherently evil. We'd have eaten ourselves alive long ago.

So when you spot violence, or bigotry, or intolerance or fear or just garden-variety misogyny, hatred or ignorance, just look it in the eye and think, "The good outnumber you, and we always will."

Entrepreneurship ain't just for the young...

It's not exactly a new revelation, but more studies are showing that the average age of entrepreneurs is rising (FT):

But while teenagers make good newspaper headlines, what usually gets ignored is that it is actually their parents’ generation – or people such as Crippen – who are the most active in terms of creating new companies in the US today. Take a look at the data. The Kaufman Foundation (which is dedicated to tracking entrepreneurship) recently analysed the age profile of entrepreneurs and discovered that 34 per cent of them were aged between 35 and 44 and 29 per cent between 45 and 54. Just 18 per cent were under the age of 34 – the same proportion as those over 55. “Entrepreneurship is concentrated among individuals in mid-career, ie between 35 and 44 years of age,” writes Dane Stangler, a researcher at Kaufman.

Admittedly, in some sub-sectors the profile is younger: an MIT study of its graduates, for example, suggests that there are a lot of Zuckerberg wannabes in the computing world; the majority of IT entrepreneurs tend to be in their twenties, and overwhelmingly men. However, what is really notable is that if you look at all sectors of the economy, the age of entrepreneurs seems to be rising, not falling. Back in 2004, a study from the Panel Study of Entrepreneurial Dynamics found that the “bulge” age for entrepreneurs was 25-34, and this was echoed by other research in the 1990s.

"How politics has shaped the growth of Shanghai, Beijing, and Seoul"

For reference the next time a politician in the West wishes they could force decisions through like they do in China - compare the economic sustainability and vibrance of Seoul, Shanghai and Beijing (CityJournal via ChinaLawBlog):

One finds the most striking evidence of how politics shapes the new Asian megalopolises in the differences between Seoul, South Korea’s capital, and China’s leading cities. After all, the Korean and Chinese cultures are similar. Both are founded on the hierarchical Confucian philosophy; both have been influenced by Buddhism. But Seoul is democratic, and the political debates of an open society have profoundly influenced its development. China’s cities, by contrast, reflect the autocratic and corrupt rule of the Communist Party. [...]

Shanghai is a “costly facade to maintain,” confesses Yan Hansheng, its deputy mayor for finance. The city’s primary financial resources are still its traditional factories, owned mostly by the government, which continue to grind out steel, cars, and textiles. These industries, located west of the city center, remain hidden behind the costly facade; few foreigners ever travel that far. To protect Shanghai’s gleaming appearance further, the government also keeps tight control over the population. Officials view the peasant migrants who work menial jobs in Shanghai as a stain on the Western-oriented city and prevent them from living there or sending their children to local schools. To live permanently in Shanghai, one must be born a Shanghai citizen. (The mother transmits citizenship—a system in effect throughout China.) There are some exceptions, based on merit—holding a university degree helps—or on securing a fake identity card. All other migrants who work in Shanghai, though, must return by night to the shantytowns or shoddy workers’ dormitories at the city’s periphery, far from the cosmopolitan city center.

Staying Motivated by Finding Meaning in Your Work

I get the sense that most of us don't take enough time to consider the value we provide for those around us and how this fits in with what we see as our "purpose" in life. Dan Ariely's TED talk on finding meaning and staying motivated (TED via LifeHacker):

SurveyMonkey's CEO on Culture

FirstRound via HN:

Corporate culture isn’t your company’s ping-pong table. It’s not your catered lunch. It’s not the posters you tape onto the office walls. A real culture is the cumulative effect of productive relationships among employees. Those relationships can take years to develop. And they don’t always work out.

"Crowdsourcing Economics"

An interesting way to fund useful research... though on the other hand, given there's real commercial value for this research, you'd think there would other be viable alternatives (Freakonomics):

The typical household in rural Africa is “off the grid.” With no electricity, such households spend a significant fraction of their income on kerosene for lamps. Yet for about $20, they can buy a solar light, which provides a superior source of light and charges their cell phones. (Yes, cell phone use is common, even in rural households with no electricity; they simply walk to the nearest town and pay to charge their phones.) Given that the light pays for itself in about 6 weeks and lasts for about 3 years, purchasing one seems like a no-brainer. Yet few households have done so. These intrepid economists are trying to figure out why, and want to see whether the barriers to adoption can be overcome in a profitable way. In order to do so, they are running controlled experiments in rural Ugandan villages using various combinations of incentives and financing arrangements.

It’s a terrific and important research question. The only barrier is that they need funding for their research. So they’re trying something new: crowdfunding.

Trading off between Social Impact and Financial Results?

Acumen Fund's Blog cites Linda Rottenberg, CEO of Endeavour who argues (HBR):

“If you want to scale impact,” the headline booms, “put financial results first…[and] when tradeoffs must be made, prioritize financial goals over social ones to maximize the long-term sustainability of the business.”

In a way, this is the flip side of Simon Sinek's comments. Acumen Fund Blog notes a similar reservation that I have on the quote.

To be fair, Linda expands - from HBR:

We found that those who prioritized financial goals over social ones were more likely to grow their social enterprises and achieve greater impact. We also discovered ways to build business models that reduced friction between commercial and social goals, thereby smoothing the path to growth.

The revenues generated from a firm come from the social need that a firm meets. In general, profit comes from better resource allocation - arbitrage and innovation. The idea that either financial or social goals need to be "moderated" is just a false dichotomy - all enterprise is social enterprise.

The GOP's real problem with Immigration

Doing too much rather than too little - that it's not living up to its small government principles when it comes to immigration (Reason via Instapundit). It's also perhaps part of the reason for the appeal of more immigrants towards the Conservative Party in Canada:

So how do Republicans manage to alienate nearly every minority? By applying limited-government principles very selectively. During the last 50 years the GOP has opposed welfare handouts, racial preferences, and multiculturalism. Yet the Party of Lincoln has looked the other way when the government has oppressed minorities through racial profiling, discriminatory sentencing laws, and, above all, immigration policy.

America’s immigration laws are an exercise in social engineering that should offend any sincere believer in limited government. They strictly limit the number of foreigners allowed from any one country, largely to prevent America from being overrun by Hispanics and Asians.

The result: Highly skilled foreigners from India and China have to wait up to two decades to convert their temporary work visas (H1-Bs) to green cards or permanent residency. During this time, they can’t change jobs, and their spouses can’t work. But they have it good compared to low-skilled Hispanics.

The Privatization of Roads and Highways

Interesting (but long - it's a full 1h37m and at times seemingly politically impractical but comprehensive) look at the case for the privatization of roads and highways from Walter Block (via Instapundit whose Glenn Reynolds is also a moderator/panelist of the talk):

Poverty is a Policy Choice

The good news, is that there's been an improvement but Africa remains one of the most difficult places in the world to start a business (HuffingtonPost):

Most Sub-Saharan countries made doing business easier over the past year, but the African region is still the costliest and most complex in the world for entrepreneurs, the World Bank said in a report Thursday.

In its annual ranking of 183 countries, the bank found 36 of 46 Sub-Saharan African nations improved their business environment in the year through June 2011, the highest number since the study began nine years ago.

"We were very excited about Africa's improvement," said Mikiko Imai Ollison, one of the authors of the report. "Obviously, Africa has a lot to catch up on. It's the region with the weakest legal institutions as well as the least efficient procedures."

Of course this also represents an opportunity. Where are the not-for-profits or even for-profits that help other entrepreneurs affordably and quickly get through the red tape? That could be revolutionary for building entrepreneurship in Africa.

Simon Sinek: "Purpose Can Not Be Rationalized"

Simon Sinek via Swissmiss:

Because a true sense of purpose is deeply emotional, it serves as a compass to guide us to act in a way completely consistent with our values and beliefs. Purpose does not need to involve calculations or numbers. Purpose is about the quality of life. Purpose is human, not economic.

It's too bad that we're conditioned to think that altruism and money are incompatible. In posting this, Simon Sinek tells the story of how he is choosing not to work with an organization whose values are not consistent with his.

It's too bad because I'd entirely agree with him except for that last bit. To be human is to be economic. Where purpose isn't "economic" suggests that the purpose is by definition a self serving one and has no value to others - but with alignment (given the example that Sinek gives), comes real satisfaction.

This isn't about sacrificing your values but being true to them. It sometimes means difficult tradeoffs, choices and yes, even costs in the short run - but as an altruist, in the long run, I tend to believe that doing the right thing tends to also be the profitable one.

Tyranny, Taxi Medallions and the Train of Disruption

Technology strikes again as a power for democratization. A reminder that governments rarely let go over power easily - particularly given entrenched interests and what we'll call regulatory capture (Pricenomics via HN):

A number of mobile phone apps, however, are replacing taxi dispatch services and allowing anyone with a car to become a taxi driver without needing access to a medallion. Increasingly, if you want to become a taxi driver, all you need is a car and an app that tells you where to pick up passengers. [...]

The ride-sharing economy started conservatively with Uber allowing anyone to call a black town car via its app. That quickly led to companies like Sidecar and Lyft, that let anyone with a car act as a taxi driver and hybrid services like InstantCab that lets taxi drivers and community drivers both get fares. These companies and their products are called “ride-sharing” apps.

Cheekily, if you hail a ride using one of these ride-sharing apps, the payment is called a “donation.” This sort of seems like a made up legal loophole that can justify any behavior (“Officer I wasn’t paying for sex, I was making a donation!”). But for now that’s one of the ways ride-sharing apps nominally get around local regulations that restrict who can be a taxi.

It's a good article and one that can't help but make you a bit mad if you aren't one of the few who own taxi medallions. Read the whole thing.

The distinction between being "pro-business" and "pro-markets"

It's one I wish those who were pro-markets would make more often (Yahoo via Instapundit):

During Jeb Hensarling's first congressional bid, a man at a campaign stop in Athens, Texas, asked the Republican if he was "pro-business."

"No," the candidate replied, drawing curious stares from local business leaders who had gathered to hear him speak, a former Hensarling aide recalled. "I'm not pro-business. I'm pro-free enterprise." Associated Press Rep. Jeb Hensarling

Now, more than a decade later, that distinction has Wall Street on edge. The new chairman of the House financial services committee wants to limit taxpayers' exposure to banking, insurance and mortgage lending by unwinding government control of institutions and programs the private sector depends on, from mortgage giants Fannie Mae and Freddie Mac to flood insurance.

Banks and other large financial institutions are particularly concerned because Mr. Hensarling plans to push legislation that could require them to hold significantly more capital and establish new barriers between their federally insured deposits and other activities, including trading and investment banking.

Ayah Bdeir@TED: Building blocks that blink, beep and teach

A cool idea. Democratizing electronics:

Down with the Minimum Wage, Up with Minimum Income

Not a new idea. But an idea whose time has hopefully come (FinancialPost):

The alternative to the minimum wage is a minimum income: paid not by employers, but by the state.

The minimum wage is typical of so many bad policies, in so far as it attempts to solve a distributional problem — some people’s incomes are too low — with an instrument designed for a very different purpose. Wages are a kind of price: their role is to connect buyers and sellers in the market for labour in such a way as to ensure there are no shortages and surpluses. Stop them from doing that, and shortages and surpluses you will get.

Fixing wages and prices in this way isn’t an example of Big Government; it’s rather what I call phoney small government. Part of its appeal is that it appears less interventionist than the alternative, as proposed by that early economist Robin Hood: Take from the rich and give to the poor. But it isn’t. It’s just less effective. Pass a law demanding that employers pay each worker a higher wage than they’d prefer to pay, and they have an easy (and perfectly legal) way to avoid it: hire fewer workers. Whereas the Canada Revenue Agency is rather harder to get around.

Social obligations should be socially financed. As a collective ideal, distributional justice is ill-suited to being pursued through markets. That’s not what they’re for. Let us stop shunting our responsibility off on others. In place of the minimum wage, let us fix a minimum income.

Innovation in its many forms

I see a visit to Pizza Hut in my near future. (Wired via Instapundit):

It’s an industry that Americans pioneered and continue to dominate. Homegrown brands are expanding throughout the developing world. The uniform customer experiences they provide are triumphs of industrial engineering and efficiency systems management. And they are constantly spending money to create and introduce new products.”

Can Computers Replace Teachers?

It's 20 minutes well spent for anyone interested in teaching/education policy - a good overview highlighting some of the successes in blended learning (Reason.tv):

The Best Trust Busters

From Fred Wilson:

Monopolies aren't great for society. So we have trust busters in government whose job it is to keep the monopolies in check. But they don't do that so well. And our government is pretty good at handing monopolies out. Just look at the cable industry.

A few entrepreneurs in a garage. Or a few hackers on the Internet. They are the best trust busters of them all. Look what open source Linux did to Microsoft. They put a dent in a machine that the government could not. And look at what Lyft, Sidecar, and Uber did to the medallion owners in San Franscisco. They got cabs on the streets when the government could not.

Massive innovation doesn't just happen in Silicon Valley

I post this as I chomp down on Kettle Chips from Costco, which is unfortunately *not* paleo compliant (via Greg Mankiw):

Yep, pretty much...

via ohgizmo:

"Create a vision for your career. How can you uniquely contribute to the world?"

Good career advice along with a pretty good process to follow. (HBR)

Using entrepreneurship to give former prostitutes a fresh start

Pretty awesome (Businessweek via HN)

"Focus"?

While the idea of "focus" may be oversimplified... (mindvalleyinsights.com via HN) and while there are tools and habits that can increase the number of things you can focus on, at least for me there's a limit before the number of things becomes overwhelming. Something that I'm trying to manage now.

Fracking comes to China

Why fracking could be such a game changer (thediplomat via Instapundit):

China’s oil fields are drying up. The International Energy Agency’s (IAE) World Energy Outlook for 2010 predicts China will import 79% of its oil by 2030, a figure that demonstrates the pressing need for China to develop new energy sources. Enter shale gas and the “unconventionals.”

Estimates of China’s shale gas resources differ. China’s Ministry of Land and Resources estimates reserves of 886 trillion cubic feet (tcf), while the U.S. Energy Information Administration puts the country’s resources at 1,275 tcf. The upper estimates would mean China sits atop more shale gas than the U.S. and Canada combined. According to China’s 12th Five-Year Plan, by 2015 China should be extracting 6.5 billion cubic meters of shale gas per year, with a view of producing 100 billion cubic meters by 2020. China’s goal is to meet 10 percent of the country’s energy demands from shale gas the same year. To successfully meet the goal, China’s oil and gas industry needs to bridge its large knowledge deficit. Despite some progress, recent successes in domestic extraction technology have been modest.

This shouldn't need to be a trend in management...

But it's a good trend nonetheless for public firms - Boards are increasingly shaping management compensation around stock performance (WSJ):

More than half of the compensation awarded to 51 CEOs last year was tied to their companies' financial or stock-market performance, according to a preliminary review of proxy statements by consulting firm Hay Group and The Wall Street Journal. In most cases, the companies must hit specified targets for the CEO to receive the promised money or equity.

By comparison, three years earlier, in 2009, 35% of the compensation for CEOs at the same companies carried performance conditions, Hay says. The rest of their pay came from salaries and grants of stock and stock options with no performance hurdles.

Companies that are doing particularly cool things...

From Wired.com.

Cheap, clean, desalinated water... courtesy of Lockheed Martin?

Promising development to watch (Reuters via Instapundit):

A defense contractor better known for building jet fighters and lethal missiles says it has found a way to slash the amount of energy needed to remove salt from seawater, potentially making it vastly cheaper to produce clean water at a time when scarcity has become a global security issue.

The process, officials and engineers at Lockheed Martin Corp say, would enable filter manufacturers to produce thin carbon membranes with regular holes about a nanometer in size that are large enough to allow water to pass through but small enough to block the molecules of salt in seawater. A nanometer is a billionth of a meter.

Because the sheets of pure carbon known as graphene are so thin - just one atom in thickness - it takes much less energy to push the seawater through the filter with the force required to separate the salt from the water, they said.

Milton Friedman: Economics is about production not money

Social Impact Bonds

An interesting approach to align incentives - a financial instrument that undoubtedly needs time to evolve to develop objective measures and structures that work (the Economist):

That puts her at the front line of a big financial experiment, too. Her work is being funded by an instrument called a “social-impact bond” (SIB), which promises returns to private investors if social objectives are met. The bond raised £5m ($8m) from investors, to be shared between St Mungo’s and another organisation called Thames Reach (responsible for another 400-or-so homeless people).

The cash will fund a three-year programme, the success of which is measured by everything from the number of nights that the rough sleepers spend on the streets to their visits to hospital. As targets are met, payments will flow to investors from the Greater London Authority (GLA), the SIB’s commissioning body.

The arrangement suits all parties. The rough sleepers are frequent users of government services, including accident-and-emergency wards. Cutting their number should save the GLA enough money to fund payments to investors if goals are met. At a time when public spending is under pressure, the taxpayer stumps up only if results are achieved. Investors have the prospect of a return to entice them, of up to 6.5% if targets are met.

More here (PBS)

What were they thinking?

The madness of the bailout in Cyprus (maximise.dk): "Don’t be surprised to see a bankrun in Greece, Spain, Italy or Portugal next week". More here (the Economist), here (the-american-interest.com), and here (zerohedge.com).

Update: The Economist's blog adds: "in addition to the unfairness of the deal it seems an unnecessarily risky move." Shockingly, "after Cyprus bank bailout, depositors race to withdraw their cash. Is the rest of Europe next?" (thedailybeast).

Changing the world one prize at a time

Contests for big breakthroughs are opportunities for interventions that don't result in as many unintended consequences or opportunities for graft - we need more of them (WSJ):

New York hotelier Raymond Orteig liked to drink at his bar with French pilots during World War I. In 1919, Orteig announced a $25,000 prize for the first nonstop New York-to-Paris flight. Pilots worked with gung-ho young airline companies to design planes for the task. The Bellanca was tipped to win, but a mail pilot named Charles Lindbergh worked with Ryan Airlines of San Diego on a single-pilot, single-engine plane named the Spirit of St. Louis. He got the job done in 33½ hours.

In more recent times? Well, in 1990, the unlikely duo of the U.S. Department of Energy and the National Institutes of Health launched a 15-year Human Genome Project to identify the 30,000 genes that make up the human DNA. Craig Venter launched his own unofficial competition with the project and succeeded in sequencing his own genes in 13 years. His prize: patents for his company, Celera Genomics, and a jump-start on business with drug makers.

The U.S. government runs some contests today, for example at challenge.gov, but the prize money is small potatoes—$20,000-$80,000 for things like "design a mobile application to help people 'Live Well. Learn How.' "

No, no. Real contests have to be about BHA—Big, Hairy, Audacious goals. Fortunately, the private sector has taken over. The X-Prize Foundation runs a series of contests, the most famous being the $10 million Ansari X-Prize, which saw 26 teams spend a total of more than $100 million attempting to fly three people 100 kilometers (62 miles) into space twice within two weeks. [...]

If they really want to have an impact on society—beyond the societal wealth already created by Google and Facebook—offer a billion-dollar BrinZuck prize to prevent or stop Alzheimer's, or to regenerate spinal cords and organs, or to cure obesity. Instead of small-ball academic researchers vying for grants from the National Institutes of Health, you'd get entrepreneurs coming out of the woodwork trying innovative approaches to win a $1 billion jackpot. Or maybe the challenge could be to create personal jet packs. Or neuron downloads. Whatever—but something BHA.

Thankfully, there already is a series of contests with $1 billion-plus prizes. Some great (and not so great) companies are funded with the prize of billion-dollar valuations in the public markets. It's called the IPO market and entrepreneurs pull all-nighters writing clever code while wearing dark sunglasses with the brightness on their monitors turned up.

Yet even in that realm, much of what we see is incremental. The Big Hairy Audacious stuff still needs and deserves a breakthrough contest.

Poverty doesn't cause terrorism

It's sad in a way that this is an idea that has to be continually debunked - ironically a claim that's often repeated by those who supposedly advocate on behalf of the poor (DailyCaller).

Minimum wage hurts the poorest

Given the evidence, it's bizarre that this is still a point of contention for some... (Reason.com).

Stop visualizing success...

From Seth Godin (of whom I'm generally a fan):

The thing is: clear visualization, repeated again and again, doesn't actually decrease the chances you're going to fail. In fact, it probably increases the odds.

When you choose to visualize the path that works, you're more likely to shore it up and create an environment where it can take place.

Rehearsing failure is simply a bad habit, not a productive use of your time.

Apparently not. I first read this in Made to Stick (Amazon) but I found a reference online that details the study fairly well at Officer.com.

Basically, a study from UCLA showed that simulating past events (thinking about past problems step by step, going through them in detail, the actions you took, what you said/did, the environment) was much more helpful than simulating future outcomes. Those who simulated past events experienced better moods almost right away and were likely to have taken specific action to solve their problems.

The authors of Made to Stick, Chip and Dan Heath possibly facetiously suggest that counterintuitive to pop psych literature urging you to visualize success, maybe instead of visualizing that we're filthy rich, we should be replaying steps that led to our being poor.

Dale Carnegie vs Ayn Rand

We need both. Glenn Reynolds links to a blog comment: "Let’s just say that the libertarian movement would do well to spend less time reading Ayn Rand and more time reading Dale Carnegie." Libertarians do need to get better at not only developing ideas but communicating them and finding ways to implement them.

Perhaps it's just been my perception, but that the world has moved towards economic liberty has been more the result of government failures than any deliberate attempt to pursue economic liberty, suggests a failure on the part of libertarians.

Is that a rhetorical question?

Forbes asks "are the French lazy?". As previously noted, I generally don't think the effect of culture on economic growth is strong - it's the regulations that reinforce that view of culture that's stifling. As Forbes points out, the French malaise is largely self inflicted:

But the difficulty in hiring and firing workers is just one defect of the French labor system. Small businesses are particularly hurt by the 35-hour law, which forces employers to pay their hourly workers overtime if they work more than 35 hours a week. As a result, the French work fewer hours than just about anybody in the OECD. In fact, the average French employee worked just 1,476 hours in 2011, according to the latest data available from the OECD and the French labor department. In contrast, workers in the U.S. rocked 1,704 hours per year, 21% more than their counterparts in France.

But working a lot more doesn't necessarily mean that Americans are more productive than their French counterparts. One way to gauge productivity is to take a nation's GDP and divide it by the total number of hours its citizens slaved away that year. In 2011, the GDP for each hour worked was $57 in France and $60 in the U.S. Therefore, it appears that while the French work less, they seem to be producing just as much as their U.S. counterparts, on a relative basis. But this snapshot doesn't really show the big problem with the French labor market. Labor productivity, as defined as GDP per hour worked, in the U.S. from 2001 to 2011 grew twice as fast as it did in France. That means the U.S. will most likely widen its lead over France in the years to come unless it makes some big changes to its labor laws.

Hans Rosling: "River of Myths"

Another good look at the progress in the developing world particularly in the area of child mortality (via Freakonomics):

Making "sustainable food" actually sustainable

People who use the word "sustainable" to describe products that don't work as well as their supposedly "unsustainable" counterparts at a much higher cost, don't really know the meaning of the word.

It's heartening then that there are some real innovations (not "innovations") being funded by VCs. Gigaom takes a look at the "budding food innovation movement" in Silicon Valley:

The real reason that Beyond Eggs could eventually catch on is because it’s not striving to be an eco or vegan product. It will be about 19 percent cheaper than using eggs, will last longer on the shelf than eggs, is safer to use than eggs, and is better for you than eggs. Then there’s all of the feel good aspects — the poor environmental and inhumane conditions of the egg industry, and the reduced carbon emissions by decreasing the amount of feed (mostly corn and soy) that goes to chickens. But all of those won’t matter if the products don’t pass Tetrick’s “Dad Twinkie” test: in theory deliver a twinkie that’s cheaper and better for you, but that tastes exactly the same.

The deadly opposition to genetically modified food

Instapundit: "Where the connection between policy-advocacy and dead children is much clearer." From the Slate:

Finally, after a 12-year delay caused by opponents of genetically modified foods, so-called “golden rice” with vitamin A will be grown in the Philippines. Over those 12 years, about 8 million children worldwide died from vitamin A deficiency. Are anti-GM advocates not partly responsible?

Golden rice is the most prominent example in the global controversy over GM foods, which pits a technology with some risks but incredible potential against the resistance of feel-good campaigning. Three billion people depend on rice as their staple food, with 10 percent at risk for vitamin A deficiency, which, according to the World Health Organization, causes 250,000 to 500,000 children to go blind each year. Of these, half die within a year. A study from the British medical journal the Lancet estimates that, in total, vitamin A deficiency kills 668,000 children under the age of 5 each year.

Yet, despite the cost in human lives, anti-GM campaigners—from Greenpeace to Naomi Klein—have derided efforts to use golden rice to avoid vitamin A deficiency.

Richard Epstein: "You cannot make the poor richer by making the rich poorer"

Filed under ideas that aren't popular but true (via Instapundit).

On Immigrants

From Steve Case at the US Senate Committee on Immigration (via PandoDaily):

Today, 40 percent of Fortune 500 companies in the United States were started by immigrants or the children of immigrants, employing 10 million people across the globe and doing $4 trillion in revenue. Of the 10 most valuable brands globally, seven of them come from American companies founded by immigrants or their children. In the past 15 years, immigrants founded one quarter of U.S. venture-backed public companies.

A reminder that education spending doesn't drive growth

From the LA Times, an op/ed by Jonah Goldberg (via Instapundit):

British scholar Alison Wolf writes in "Does Education Matter?": "The simple one-way relationship … — education spending in, economic growth out — simply does not exist. Moreover, the larger and more complex the education sector, the less obvious any links to productivity."

It's a catalyst.

Henry Ford on Reputation

Henry Ford via Swissmiss:

You can’t build a reputation on what you’re going to do.

Too bad politicians can't be jailed for malpractice

"Argentina Freezes Supermarket Prices To Halt Soaring Inflation; Chaos To Follow" (Zerohedge via Instapundit):

Up until now, Argentina’s descent into a hyperinflationary basket case, with a crashing currency and loss of outside funding was relatively moderate and controlled. All this is about to change. Today, in a futile attempt to halt inflation, the government of Cristina Kirchner announced a two-month price freeze on supermarket products.

The consequences of heavy handed market interventions are predictable and avoidable. To brush what will be the brutal effects away of these desperate acts of a failed ideology as 'unintended consequences' should be criminal.

Update: Zerohedge on Argentina's Financial Collapse, asking "How was it possible that in so rich a country so many people were hungry?"

Australia: Asia’s Saudi Arabia?

Shale oil and gas are radically changing the geopolitical landscape. Instead of having to negotiate with hostile governments, these resources are increasingly being found not only in democratic countries but near population centers theDiplomat h/t Instapundit:

Linc shares surged 24 percent after it told the Australian Securities Exchange (ASX) on January 23 that its shale oil assets in South Australia’s Arckaringa Basin had the potential to hold up to 233 billion barrels of oil equivalent (BOE) – an amount not incomparable to Saudi Arabia’s estimated oil reserves of 263 billion BOE.

"How the U.N. created an epidemic -- then covered it up."

It's depressing how much of the world still attributes moral authority to the UN because of the ideals it holds... ideals it fails repeatedly.  From FP:

The U.N. team refused to go across the street with us to see the dump pits.

The next day, less than two weeks after the outbreak was first confirmed, the CDC put out the results of an analysis it had undertaken: The cholera in Haiti matched strains circulating in South Asia, including Nepal. It refused to investigate further.

The death toll passed 400.

Authorities defended their refusal to investigate the origin of the outbreak on grounds that pursuing the source would detract from fighting the epidemic. So on Nov. 3, I called one of the most prominent public health experts in Haiti, if not the world. Paul Farmer's medical NGO, Partners in Health, was taking a leading role in tackling cholera. I asked if there was a public health rationale not to investigate. "That sounds like politics to me, not science," Farmer replied.

Oxfam: Confusing Inequality with Poverty

Oxfam makes the claim the rise in wealth by some billionaires is not only making the poorest, even poorer, and by inference they make the claim that the cause of poverty is the lack of resources:

An explosion in extreme wealth is exacerbating inequality and hindering the world's ability to tackle poverty, Oxfam warned today in a briefing published ahead of the World Economic Forum in Davos next week.

The $240 billion (£150bn) net income in 2012 of the richest 100 billionaires would be enough to make extreme poverty history four times over, according to 'The cost of inequality: how wealth and income extremes hurt us all'. The agency is calling on world leaders to curb today's income extremes and commit to reducing inequality to at least 1990 levels.

The richest one per cent has increased its income by 60 per cent in the last 20 years with the financial crisis accelerating rather than slowing the process.

Oxfam warned that extreme wealth is economically inefficient, politically corrosive, socially divisive and environmentally destructive.

One wonders if Ms. Stocking, the CEO of Oxfam, is referring to absolute versus relative poverty. Absolute poverty, in fact, has been falling dramatically (Economist):

The past four years have seen the worst economic crisis since the 1930s and the biggest food-price increases since the 1970s. That must surely have swollen the ranks of the poor.

Wrong. The best estimates for global poverty come from the World Bank's Development Research Group, which has just updated from 2005 its figures for those living in absolute poverty (not be confused with the relative measure commonly used in rich countries). The new estimates show that in 2008, the first year of the finance-and-food crisis, both the number and share of the population living on less than $1.25 a day (at 2005 prices, the most commonly accepted poverty line) was falling in every part of the world. This was the first instance of declines across the board since the bank started collecting the figures in 1981

It's sadly predictable that Ms Stocking's solution for this manufactured crisis is to bring others down than to seeking to bring the poor up. Instead of speaking truth to the power that exists in the often despotic countries Oxfam attempts to "help" - denouncing the autocratic policies that benefit the local elite, Ms. Stocking snipes at the low hanging fruit and the politics of greed and envy in sniping at the economic success of others.

Certainly, some of these billionaires have built their fortunes through the taking of wealth - but the large majority have not, and indeed have created many of the technologies, products and services that have allowed the hundreds of millions to emerge from absolute poverty in the last few decades. Ms. Stocking makes no distinction as a result of craven politics or sheer ignorance (Reason).

It is because of attitudes and beliefs of leaders like her that the poor are often worse off despite the billions spent by organizations like hers - and a reminder that poverty truly is an industry - and if Ms Stocking is looking for those who benefit most from keeping others poor, she should perhaps "invest" in a mirror.

Happiness, Purpose and Markets

Real satisfaction comes from seeking purpose and meaning, not happiness (theAtlantic):

The wisdom that Frankl derived from his experiences there, in the middle of unimaginable human suffering, is just as relevant now as it was then: "Being human always points, and is directed, to something or someone, other than oneself -- be it a meaning to fulfill or another human being to encounter. The more one forgets himself -- by giving himself to a cause to serve or another person to love -- the more human he is."

Baumeister and his colleagues would agree that the pursuit of meaning is what makes human beings uniquely human. By putting aside our selfish interests to serve someone or something larger than ourselves -- by devoting our lives to "giving" rather than "taking" -- we are not only expressing our fundamental humanity, but are also acknowledging that that there is more to the good life than the pursuit of simple happiness.

While others might think that this captures a fundamental flaw in markets, I'd suggest the opposite.

Markets, if anything, are better at this than other systems as they do a much better job at guiding us to see what others and society believes is important. Indeed, I'd suggest that when we seek meaning and achieve purpose while meeting the needs of others, it is here, where the wealth created is reinforcing in a virtuous cycle.

Winners, Losers and Government Spending

The Canadian government shouldn't pick winners but I'm unconvinced the solution proposed by George Takach in the Globe and Mail is any better but the conclusion is one that's difficult to disagree with:

Hiring consultants to throw our money around isn’t the answer. World-class companies are forged in basements and garages, and that’s where policymakers should focus in order to build a better Canadian economy. That’s how to make Canada can work better.

Governments should focus on improving the regulatory environment and reducing structuring disincentives for entrepreneurs - not picking winners and losers or throwing money/bureaucracies at the problem.

Reconciling Technological Progress with Dystopian Fantasies

I find it difficult to reconcile the view of those who believe that a violent revolution is coming in the West (Google) with how enabling and empowering technology is becoming - John Maeda (via SwissMiss):

As organizations shift from neatly ordered hierarchies to chaotic, flattened “heterarchies,” where anyone can “friend the CEO,” a new generation of tools will be invented that will allow design and technology to enable leaders to make true connections among people and inspire change.

Just as design enabled us to have an emotional connection with a piece of glass and aluminum that lives in our pocket, design and technology together will restore some of the humanity in what it means to lead in the 21st century

While technology may fuel the separation in absolute numbers between the wealthiest and poorest, does this really matter if technology also provides the bridge and the ability to move between economic classes? From the WSJ:

Mr. Diamandis said that the gap between the wealthiest and the poorest people may well increase, but that the definition of poverty will keep changing, much as it has over the last 100 years. He noted that 99% of the poorest people in the U.S. have amenities that the wealthiest people of 100 years ago couldn’t imagine. “It’s not about creating a world of luxury, but of creating a world of possibility,” he said. “I think it’s an amazing world,” Mr. Diamandis said.

The Tragedy of Zimbabwe and the Failure of the UN

Assuming the Associated Press interpreted the UN's comments correctly, the UN is attributing the worsening food shortages in Zimbabwe to the following reasons (WP):

The U.N. said this year’s food shortages are “worse” compared to the past three years due to drought, erratic rains and cash shortages to buy seed and fertilizers for impoverished farmers in the countryside, many who took over formerly white-owned farms.

Except they buried the lede. The absolute absurdity of believing that all of a sudden weather is the result of some of the productive farmland in Africa becoming infertile might be plausible if it were not for the fact that they are unable to deny this aid is going to "impoverished farmers in the countryside, many who took over formerly white-owned farms" as if land appropriations were incidental.

With an organization that is unable to speak truth to power, advocating financial assistance to gloss over the political failures of a despotic government, why would anyone want to contribute more resources to their care? Or really, anything at all?

The impact of economic freedom on average life expectancy

Live free or die, literally - pretty self explanatory (RCM):

The impact of economic freedom on average life expectancy is the most striking aspect of the data shown in the [below] Table. More specifically, the average life expectancy is over 80 years in all seven economically free countries (Hong Kong, Singapore, Australia, New Zealand, Switzerland, Canada, and Ireland). Unfortunately, there are over 70 countries that are mostly unfree or repressed which represent almost 5 billion people with shorter life spans: in none of these individual countries is the average life expectancy over 80.

Merry Christmas (and Bah! Humbug)!

"In praise of misers and what I like about Scrooge." (via Greg Mankiw)

'Tis the Season...

Heh. (h/t Greg Mankiw)

On procrastination...

Heh - striking a bit close to home.  From GTDTimes:

Quote of the Day: "The Urge to Save Humanity..."

Sadly true (via Bakadesuyo on Facebook):

The urge to save humanity is almost always a false front for the urge to rule. - H.L. Mencken

Paul Polak: Thinking of the Poor as Customers and not Beneficiaries of Aid

A must watch if you're interested in development -

An Unreasonable Conversation with Paul Polak: Do Charities Work? from Unreasonable Institute on Vimeo.

On Purpose and Productivity

via Swissmiss here and here:

“The satisfaction to be derived from success in a great constructive enterprise is one of the most massive that life has to offer.”- Bertrand Russell 

“You can do anything, but not everything.” - David Allen

Culture Shmulture - Wherein Romney Gets it Wrong

Romney recently made the following comments (via ForeignPolicy)

During my recent trip to Israel, I had suggested that the choices a society makes about its culture play a role in creating prosperity, and that the significant disparity between Israeli and Palestinian living standards was powerfully influenced by it. In some quarters, that comment became the subject of controversy.  

But what exactly accounts for prosperity if not culture? In the case of the United States, it is a particular kind of culture that has made us the greatest economic power in the history of the earth. Many significant features come to mind: our work ethic, our appreciation for education, our willingness to take risks, our commitment to honor and oath, our family orientation, our devotion to a purpose greater than ourselves, our patriotism. But one feature of our culture that propels the American economy stands out above all others: freedom. The American economy is fueled by freedom. Free people and their free enterprises are what drive our economic vitality.

While better than a candidate who doesn't really understand or believe in entrepreneurs and markets as drivers of change and economic opportunity and wealth (WashingtonPost), I'd have to disagree in the strongest possible terms with Mr. Romney.  It isn't "American" to believe in the pursuit of liberty and freedom - and ironically in recent years, Americans have been less than staunch defenders of free enterprise and personal liberties.  No these aren't values specific to Americans - they're values humanity shares.  Wherein Fareed Zakaria gets it right (Washington Post):

Had Romney spent more time reading Milton Friedman, he would have realized that historically the key driver for economic growth has been the adoption of capitalism and its related institutions and policies across diverse cultures. 

The link between economic policies and performance can be seen even in the country on which Romney was lavishing praise. Israel had many admirable traits in its early decades, but no one would have called it an economic miracle. Its economy was highly statist. Things changed in the 1990s with market-oriented reforms — initiated by Benyamin Netanyahu — and sound monetary policies. As a result, Israel’s economy grew much faster than it had in the 1980s. The miracle Romney was praising had to do with new policies rather than deep culture. 

Ironically, the argument that culture is central to a country’s success has been used most frequently by Asian strongmen to argue that their countries need not adopt Western-style democracy. Singapore’s Lee Kuan Yew has made this case passionately for decades. It is an odd claim, because Singapore’s own success would seem to contradict it. It is not so different from neighboring Malaysia. The crucial difference is that Singapore had extremely good leadership that pursued good economic policies with relentless discipline.

The Right Chord of Optimism

So there should be no secret as to where my political leanings are but I try to avoid overtly political messages but I really liked this ad (of course, part of it might just have been the crap day I had but I digress). I should point out that I don't think these characteristics that "make America great" are not exclusively American but I think Americans were one of the first to recognize them -

 

Quote of the Day

William Easterly (via TheThinkerBlog):

Socialism is for perfect people, Capitalism is for people as they are.

Yep, that pretty much sums it up...

"Externalities do not imply that a government can do better."

Part of a bigger essay on fairness and markets - worth the read (Bleedingheartlibertarians): 

Externalities do not imply that a government can do better.  Publicity does better than inspectors in restraining the alleged desire of businesspeople to poison their customers.  Efficiency is not the chief merit of a market economy: innovation is.  Rules arose in merchant courts and Quaker fixed prices long before governments started enforcing them.

The world needs more Wal-mart

Tyler Cowen on Wal-Mart and world hunger (ArabicKnowledge@Wharton via Freakonomics):

Cowen: If you look at wheat and rice, there have been price spikes over the last five years and they’ve made food a lot harder for poor people to afford. The so-called “Green Revolution” has somewhat slowed down. This is an unreported story. Crop yields are stagnant. It isn’t a problem we can solve overnight but it’s really one of the biggest problems in the world. It hardly gets any publicity. But for poor people in India, the Middle East and parts of Africa, it really matters. 

Some of the problems are we don’t have enough trade. It could be either legal barriers or just costly to transport or trade things. If there could be a shortage of rice in one place, it actually not that easy to ship a lot of rice in there because of bad roads and so on. 

Arabic Knowledge@Wharton: So if countries worked on improving the transportation infrastructure, that would lower food prices in some parts of the world? 

Cowen: Exactly, that would do a lot to feed people. Again, it sounds much more mundane but it’s more important than what people in the food world usually talk about. 

Arabic Knowledge@Wharton: So when companies like Wal-Mart bring their logistics ability to Africa, it actually could be a good thing for the poor people of Africa? 

Cowen: It’s exactly what we need more of. Yes.

"Spain is not Uganda."

Heh.  "Discuss" (BBC).

On minimum wage and the "race to the bottom"

Minimum wages make for great politics, bad economics. Despite hurting most those they are supposed to help, it seems unlikely that we will see their repeal anytime soon.  Andrew Coyne from the National Post:

Much popular thinking about the economy inclines to the former view. We grow richer, in effect, by overpaying each other, and overcharging each other in our turn. To leave the setting of wages to the market would, on this view, lead inevitably to a “race to the bottom.” Only by pegging wages above-market levels, whether directly in law, or by means of union representation, is there any hope even of maintaining such progress as has been achieved, let alone making further gains. 

But if the pop economics story were true, it would be hard to explain why anyone made more than the minimum wage — anyone, that is, who did not work in a union shop. In fact only about 5% of workers in Canada make the minimum, while just 16% of the private sector workforce now belongs to a union. 

Yet, far from stagnating, as the Star story claims, living standards in Canada have in fact been rising steadily for most of the last two decades: from 1993 to 2008, median family income grew by 21.5% after inflation. Incomes fell, it is true, in the previous decade, but for an obvious reason: the two bone-crunching recessions that began and ended it. When large numbers of people are earning no income — because they are unemployed — the median tends to lag a bit.

And similar stats are mirrored in the US according to John Stossel:

But without a minimum wage or union protection, wouldn't employers abuse workers? In a real free market, no, they can't. Because workers have choices. Employers have an incentive to maintain a good relationship with employees — one that keeps them reasonably loyal — because workers can quit and go work for a rival. 

If globalism leads to a "race to the bottom," why do 95 percent of American workers make more than minimum wage? It's not because companies are generous, but because competition forces them to offer higher wages to attract good workers. Companies may move jobs overseas to escape high U.S. wages (or U.S. taxes and regulations), but they clearly prefer to keep jobs here, close to their headquarters, suppliers and customers.

The hardest job in the world...

... is also the best job in the world.  For those of you who drink the koolaid, this is an amazing ad (and thanks mom!):

Steve Jobs: "Don't Settle."

From the commencement speech he gave in 2005 (via swissmiss):

Sometimes life hits you in the head with a brick. Don’t lose faith. I’m convinced that the only thing that kept me going was that I loved what I did. You’ve got to find what you love. And that is as true for your work as it is for your lovers. 

Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don’t settle.”

What You Know vs What You Do

To some this saying could be a rebuke (Don Surber), to others it should be inspiring - Tony Wagner (via swissmiss):

The world doesn’t care what you know. What the world cares about is what you do with what you know.

Quote of the Day: "Capitalism is relatively new... "

via JeffreyEllis, Walter E Williams:

Capitalism is relatively new in human history. Prior to capitalism, the way people amassed great wealth was by looting, plundering, and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man.

"The Basic Elements of Creativity"

Simple, elegant, and illustrated (brainpickings.org via swissmiss):

On How the Rich Spend Their Money

Surprise, surprise, the rich are cheap, and aren't generally sophisticated about their investing (Barron's):

Here are some of my favorite myth-busting factoids: the vast majority of the super rich and affluent shop at Walmart (74%), Target (73%), and Home Depot (63%). That compares with Brooks Brothers (6%), Tiffany & Co. (5%), DKNY (3%), Burberry (2%), and Luis Vuitton (2%). The wealthy are also big users of coupons; 71% of the affluent use paper coupons every month, with 54% using online coupons every month. 

Conclusion: Pick your retail stocks carefully. I am hearing a lot of “common wisdom” at the moment that luxury stocks are the “safest” because the wealthy continue to buy while middle income households are tapped out. That’s partly true but the picture is much more nuanced than that. Yes, the wealthy will spend on beautiful trinkets, but, as these stats suggest, they also don’t like overpaying and are always on the lookout for bargains. 

The wealthy are not always wise investors, contrary to popular opinion. I’ve met some who are brilliantly savvy about financial markets and many others who really do not have a clue. Here’s a bit of truth-telling about the wealthy I found totally believable: only 8% of the affluent know what private equity firms do. A tentative 26% considered themselves to be “somewhat familiar” with private equity. In other words, a full 67% of the affluent are in the dark about how private equity firms make their money acquiring, buffing up, and selling companies. 

Conclusion: Stereotypes about the rich are as prevalent as stereotypes about the poor.

Both are rooted in ignorance.

Of course this shouldn't be a surprise...

Why Free Markets and Private Property Rights Matter

The impact of capitalism is difficult to understate on the reduction in poverty (Reason) - a fact those who argue for a reduction in income inequality seem to forget:

The start of most global trends is hard to pinpoint. This one, however, had its big bang in the early 1970s, in Chile. After a socialist government brought on economic chaos, the military seized power in a bloody coup and soon embarked on a program of drastic reform -- privatizing state enterprises, fighting inflation, opening up foreign trade and investment and unshackling markets. 

It was the formula offered by economists associated with the University of Chicago, notably Milton Friedman, and it turned Chile into a rare Latin American success. In time, it also facilitated a return to democracy. Chile was proof that freeing markets and curbing state control could generate broad-based prosperity, which socialist policies could only promise. 

If that experiment weren't sufficient, it got another try on a much bigger scale when China's Deng Xiaoping abandoned the disastrous policies of Mao Zedong and veered onto the capitalist road. The result was an economic miracle yielding growth rates that averaged 10 percent per year. 

The formula was too effective to be ignored. Over the past two decades, poorer nations have dismantled command-and-control methods and given markets greater latitude. Economic growth, not redistribution, has been the surest cure for poverty, and economic freedom has been the key that unlocked the riddle of economic growth.

Finally, a Sustainable Fiscal Solution

While simple and effective, perhaps a bit politically infeasible (via Greg Mankiw):

The Economics of Glenn Beck's GBTV online venture

The economics of this are incredible. I pretty much thought he had drifted into obscurity, apparently not. Say what you will about his politics, but striking out on his own seemed like a huge gamble at the time (WSJ):

The transformation is also evident in the economics of the business. On Fox News, Mr. Beck averaged 2.2 million daily viewers and was paid $2.5 million a year. GBTV, which jumped on the scene in September, is expected to bring in at least $40 million in revenue this year, supported by advertising and more than 300,000 subscribers paying as much as $9.95 a month for full access to GBTV, according to a person close to the company. While it is significantly smaller than his audience at Fox News, it's still more than an established network like CNBC, which drew an average of 189,000 viewers over the course of the total day in February, according to Nielsen.

To turn that revenue into profit, Mr. Beck keeps costs low by using staff and equipment already in place for other parts of Mercury Radio Arts, Mr. Beck's multimedia mini-empire, which includes best-selling books, a syndicated radio show that draws some 10 million listeners a week, public events, and Blaze, a news and opinion website. As a result, Mr. Beck's initial investment in the network was paid off in the first two months, according to a person close to the company.

Some 120 people now work in the wider Beck kingdom, which is expected to bring in $80 million in revenue this year, according to the same person. The business is flush enough now to afford two sets—the one in New York and a second in Dallas, where the network's headquarters is being built—the capital of Glenn Beck Inc.

Related: things the press doesn't seem to be reporting on Rush Limbaugh - here (DailyCaller) and here (LegalInsurrection via Instapundit).

Update on 'Kony 2012' Campaign

Here (Globeandmail via Carson):

It was planned as a tour of Uganda’s poorest towns and villages: the first chance for Joseph Kony’s victims to see the viral video sensation that has excited so many millions of people in North America.

But after a furious reaction, the tour has been cancelled. Too many Ugandans were outraged by the “Stop Kony” video when they saw it. Some even threw stones and shouted abuse, forcing the organizers to flee.

"The Predatory Lending Fallacy"

aka what some financial journalists seem to have problems differentiating (Arnold Kling via thethinkerblog):

Consider the following problems:

1. Qualified borrowers getting bad deals.
2. Unqualified borrowers getting good deals.

(1) is predatory lending. (2) is what caused the housing bubble and crash. Getting that story straight would be a major accomplishment for the media.

Freakonomics: The Rise of the Prize

It would seem the answer is yes (Freakonomics)

Could the incentive prize be the most powerful and yet most underutilized tool we have to tame the wicked problems of the twenty-first century?

Using Particle Accelerators to Make Cheap Solar?

It seems like it's about as cost efficient as thin film though because of the increased solar efficiency (up to 20%), with a smaller footprint (SFGate.com, see also HackerNews):

A device similar to the giant atom smashers used by physicists may be the key to cheaper solar cells.

Twin Creeks Technologies in San Jose has created a machine that uses high-energy protons to carve silicon wafers into thin layers, each of which can then be fashioned into a solar cell.

The layers are about one-tenth as thick as the standard silicon solar cell but generate just as much electricity. The same amount of raw silicon, therefore, can yield far more cells, making each one less expensive to produce.

Founded in 2008, Twin Creeks exits stealth mode today with $93 million in venture capital, a unique product and a focused business plan.

Other articles cite cost to produce as low as 40 cents a Watt - compared to the sale price of about double this from Chinese vendors. If the numbers work out, this is a challenge to thin film solar - not to mention coal fired plants.

"Believe"

Simon Sinek (via swissmiss):

If you hire people just because they can do a job, they’ll work for your money. But if you hire people who believe what you believe, they’ll work for you with blood and sweat and tears.

A Noteworthy Defense of "Vulture Capitalism"

From John Stossel:

"Greed" means you want more for yourself. Fine. If you obtain it legally, without force or privilege -- say, by buying a business and making it more efficient, or shifting resources to where consumers prefer them -- that is a good thing. "Creative destruction" makes America richer. 

Shifting resources does mean some people lose their jobs. That is sad for those who are fired. 

But on balance, it's a good thing. Intuition tells us that it would be better if no one ever lost a job and that capitalists who close businesses are evil. But America would not be better off today if elevator operators and factory workers who made typewriters had their jobs preserved by a "compassionate" government. 

America is richer today because those workers lost their jobs, because money once paid them is put to better use. In addition, most of those workers found new jobs where their skills better served consumers. Some even say they were glad that they were fired, because now they are more productive, and being productive makes people happy.

What you need to know about Kony 2012

A few friends have sent me links to the Kony 2012 campaign, and I gave in and watched the video late last night.  It's difficult to disagree with its aims.  It's also difficult as an armchair marketer not to see the genius in the video as a propaganda tool and all the hooks they plant for people to participate and act.  Here are two links that say it better than I could -

ForeignPolicy: Joseph Kony is not in Uganda (and other complicated things)
FindWhatWorks: Kony 2012: history, nuance, and advocacy’s Golden Rule

I would add that one thing that often bothers me about these campaigns, particularly evident at the beginning of this video, is the "rich white man comes to save poor suffering black people" theme that reeks of self righteousness but also condescension.  Otherwise, for all the criticisms of spending, if enough awareness is generated to get rid of men like Joseph Kony, it's probably money well spent.  I won't be donating to the cause though I support it and while I would gather there are better more efficient ways to spend the money, there are certainly worse (RED campaign).

Also here: The Worst Killer of Invisible Children is Not Joseph Kony (GiveWell, h/t Beata). While I'm sympathetic to their argument, I think it's a mistake much like it is to dismiss September 11 relative to all the deaths from *insert cause here*. That said, malaria is also another senseless killer whose enablers are among us (Reason.com)

World Bank: Number of Poor People Declining Everywhere

A good reason for cheer. From the Economist:

The best estimates for global poverty come from the World Bank’s Development Research Group, which has just updated from 2005 its figures for those living in absolute poverty (not be confused with the relative measure commonly used in rich countries). The new estimates show that in 2008, the first year of the finance-and-food crisis, both the number and share of the population living on less than $1.25 a day (at 2005 prices, the most commonly accepted poverty line) was falling in every part of the world. This was the first instance of declines across the board since the bank started collecting the figures in 1981 (see chart).

The estimates for 2010 are partial but, says the bank, they show global poverty that year was half its 1990 level. The world reached the UN’s “millennium development goal” of halving world poverty between 1990 and 2015 five years early. This implies that the long-term rate of poverty reduction—slightly over one percentage point a year—continued unabated in 2008-10, despite the dual crisis. 

A lot of the credit goes to China. Half the long-term rate of decline is attributable to that country alone, which has taken 660m people out of poverty since 1981. China also accounts for most of the extraordinary progress in East Asia, which in the early 1980s had the highest incidence of poverty in the world, with 77% of the population below $1.25 a day. In 2008 the share was just 14%. If you exclude China, the numbers are less impressive. Of the roughly 1.3 billion people living on less than $1.25 a day in 2008, 1.1 billion of them were outside China. That number barely budged between 1981 and 2008, an outcome that Martin Ravallion, the director of the bank’s Development Research Group, calls “sobering”.

New Development Blog: Why Nations Fail

Looks pretty promising by academic powerhouses Daron Acemoglu and James Robinson promoting their book: Why Nations Book (though I hope they keep their blog running for more than just their book's sake).

Happy Valentine's Day, The Economics Edition

Economics geekery from Elisabeth Fosslien as posted at the Freakonomics blog - a sample (with lots more at the link):

Quote of the day: An Ounce of Action

via the Swissmiss, from Ralph Waldo Emerson:

An ounce of action is worth a ton of theory. Don’t be too timid and squeamish about your actions.

Kauffman Foundation: "Will it be you?"

I love inspiring ads like this (and this) - airing at the Superbowl (via Paul Kedrosky):

NPR: "The Secret Document That Transformed China"

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.

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

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.

The Gap Between Productivity and Failure

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.