"Democrats Vs. Uber"

'How can the government possibly help you if you aren't regulated?' (Forbes):

In Hillary Clinton’s recently unveiled economic plan, she heavily criticized Uber and the sharing economy as a major contributor to the rise in income inequality arguing it creates independent contractors, such as Uber drivers, who do not receive government mandated employee benefits.

However, these arguments ignore evidence that in Uber’s top 20 markets, Uber drivers “averaged more than $19 an hour in earnings, compared to $12.90 in average hourly wages for cab drivers based on Occupational Employment Statistics data”, according to a study co-authored by Princeton economist Alan Krueger, one of Hillary Clinton’s named economic advisers.

At least the robots are pleased...

"Wendy’s explains what mandated wage hikes do to jobs at burger joints" (WSJ):

CFO Todd Penegor talked about the pressure to pay higher wages and said that “we continue to look at initiatives and how we work to offset any impacts of future wage inflation through technology initiatives, whether that’s customer self-order kiosks, whether that’s automating more in the back of the house in the restaurant. And you’ll see a lot more coming on that front later this year from us.”

On last week’s call with securities analysts, Wendy’s CEO Emil Brolick was asked how the franchisees who own and operate Wendy’s locations could raise prices to offset the higher wage costs in places like New York. He replied that “our franchisees will likely look at the opportunity to reduce overall staff, look at the opportunity to certainly reduce hours and any other cost reduction opportunities, not just price. You know there are some people out there who naively say that these wages can simply be passed along in terms of price increases. I don’t think that the average franchisee believes that.”

Mr. Brolick elaborated that “we believe that some of these increases will clearly end up hurting the people that they are intended to help. And we continue to believe that one of the great opportunities you have in a business like ours is that an entry-level person, in a very short period of time, can rise to become a manager in a restaurant, and have an income above the median household income in the United States of America.”

Cato: why and how government fails

From the Cato Institute:

Most Americans think that the federal government is incompetent and wasteful. What causes all the failures? A new study from Cato scholar Chris Edwards examines views on government failure, and outlines five key sources of federal failure. Edwards concludes that the only way to substantially reduce failure is to downsize the federal government: “Political and bureaucratic incentives and the huge size of the federal government are causing endemic failure. The causes of federal failure are deeply structural, and they will not be solved by appointing more competent officials or putting a different party in charge.”

The Swedish Welfare State

And the myths that are believed by many... (WeeklyStandard).

Is America becoming a Bureaucratic Tyranny?

Maybe a bit overwrought as I suspect (and hopefully, I'm not wrong that) many of these regulatory regimes are unsustainable politically. In the short(er) run, if America is becoming a "regulatory state" there will be significant costs to both freedom and economic growth (PointsandFigures via Instapundit):

We’re headed for an economic system in which many industries have a handful of large, cartelized businesses— think 6 big banks, 5 big health insurance companies, 4 big energy companies, and so on. Sure, they are protected from competition. But the price of protection is that the businesses support the regulator and administration politically, and does their bidding. If the government wants them to hire, or build factory in unprofitable place, they do it. The benefit of cooperation is a good living and a quiet life. The cost of stepping out of line is personal and business ruin, meted out frequently. That’s neither capture nor cronyism.

Russia after Putin...

Predictions of a breakup (Nextbigfuture via Instapundit, Stratfor). But as a friend wonders, what will happen of their black budgets and nuclear arms?

Why vaccines don't get developed

The NYT piece makes the claim that the primary issue is cost, but doesn't do a good job at looking at why the costs are as high as they are, nor why drug companies aren't able to generate an adequate return on their investments in the space (NYT via Instapundit):

Dr. Berkley and other vaccine experts note a grim irony. Scientists showed that this vaccine was effective in monkeys a decade ago. Thereafter, the vaccine lingered in scientific limbo.

“We should have had an Ebola vaccine at least two or three years ago,” said Dr. Peter J. Hotez, the president of the Sabin Vaccine Institute and a science envoy at the State Department.

[...] Vaccines are one of the great triumphs of science, but the way that modern medicine functions makes it hard to develop new ones. “That model doesn’t work,” said Dr. Hotez. “It hasn’t worked for decades, and it was really brought home with Ebola.”

To make a vaccine, scientists first design experimental forms to test on cells and animals. It may cost $25 million to perform these studies, said Dr. Plotkin. The cost of that basic research is typically covered by governments or philanthropies.

Then researchers have to put vaccines through several rounds of trials in humans. In small initial studies, they evaluate its safety and figure out the right dose. In larger studies, they look more closely at its effectiveness and side effects.

The cost of taking a vaccine all the way through this process is hundreds of millions of dollars, said Dr. Plotkin.

Major pharmaceutical companies can afford to pay for the later stages of vaccine development, said Dr. Adel A.F. Mahmoud, the former president of Merck Vaccines and now a professor of molecular biology and public policy at Princeton.

But drug companies are increasingly reluctant to take the risk. “The next step, nobody is touching,” he said.

Don't follow your passion, do what contributes...

From Ben Horowitz, co-founder of Andreessen Horowitz (Inc.):

There are four big problems with using passions as a guide: (1) They're hard to prioritize, (2) they change, (3) a passion may reflect something you aren’t actually good at and (4) following your passion is kind of self-centered.

American foreign policy reminder: peace is not the absence of war

While it may be a bit early to evaluate the legacy the Obama Administration leaves when it comes to foreign policy, the indicators to date, aren't promising (Cato):

By praising Ethiopia’s repressive regime for being “democratically elected” last week, President Obama was driving home once again something that should be abundantly clear by now: His administration marks a radical departure from previous ones when it comes to democracy promotion.

On the contrary, the Obama legacy will be one of propping up dictatorial regimes around the world. His praise for the government of Prime Minister Hailemariam Desalegn merely took to Africa what Obama and his foreign policy team have already done on a grander scale in Iran, Cuba and Burma.

To be sure, President Obama was standing next to Desalegn at a joint press conference in Addis Ababa when he spoke. Maybe he didn’t want to be a bad guest. And the president did add that the Ethiopian government has “more work to do.” After a slew of criticism at home, he later also questioned why African leaders cling to office rather than leave after their terms are completed.

Of course they would...

Unions demand an exemption from the $15 minimum wage laws they advocated for (theDailySignal).

A bit of perspective on Cecil the Lion

From a Zimbabwean student studying in the US (NYT)

We Zimbabweans are left shaking our heads, wondering why Americans care more about African animals than about African people.

Don’t tell us what to do with our animals when you allowed your own mountain lions to be hunted to near extinction in the eastern United States. Don’t bemoan the clear-cutting of our forests when you turned yours into concrete jungles."

And please, don’t offer me condolences about Cecil unless you’re also willing to offer me condolences for villagers killed or left hungry by his brethren, by political violence, or by hunger

Markets in everything... the lucrative business of disaster rescue

Not sure how much ethics (as Wired claims) come into play here... if there weren't the incentive, the solution wouldn't exist.

Quibbling over the vernacular: "post capitalism"

In general, I like the article but to call the increased efficiency of markets as being "post capitalist" seems as a bit silly and sensationalist but the basic premise is this:

New forms of ownership, new forms of lending, new legal contracts: a whole business subculture has emerged over the past 10 years, which the media has dubbed the “sharing economy”. Buzzwords such as the “commons” and “peer-production” are thrown around, but few have bothered to ask what this development means for capitalism itself.

It's worth noting that the term "capitalism" itself was coined and created as a pejorative by self described "socialists" (econlib)

Puerto Rico defaults on debt

They're not going to be the last... (USAToday via Instapundit):

Puerto Rico's Government Development Bank paid only $628,000 of the $58 million due creditors, the agency said. It said the decision "reflects the serious concerns about the Commonwealth's liquidity" and the need to ensure "essential services (residents) deserve are maintained."

​Given the tiny payout, "Moody's views this event as a default," said Emily Raimes, vice president at the U.S. credit giant.

Puerto Rico's outstanding debt of $72 billion is far bigger than Detroit's $20 billion bankruptcy two years ago but a fraction of Greece's $350 billion in obligations. But unlike Detroit, there's no law allowing Puerto Rico to declare bankruptcy. And Treasury Secretary Jack Lew has said the federal government won't bail out the island, as institutions such as the International Monetary Fund rescued Greece.

While the USAToday article seems to infer that the problem is because of a phase out of corporate tax breaks for the commonwealth, the more obvious reason seems to be that the government spent far too much money on things that didn't result in an economic return (BondBuyer, 2013) - ie they ran out of other people's money.

The case for second-best solutions

I agree... Some progress is better than none at all (Cato):

But again, it isn’t within Cato’s power to wave a magic wand and make free trade or marriage privatization happen. So our scholars usually opt for trying to move policy in a better direction. Center director Dan Ikenson writes, “Despite their flaws, free trade agreements have helped reduce domestic impediments to trade, expand our economic freedoms, and lock in positive reforms, even if only as the residual byproduct of an ill-premised mercantilist process. Ultimately, free trade agreements have delivered freer trade.” Not free trade, alas. But freer trade.

As I put it in a Facebook debate in June, “Best is best, but better is better than worse.” And that’s the standard that has mostly guided us at Cato for 38 years. We want to push public debate and public policy in a direction consistent with liberty and limited government. Sometimes, as in my book The Libertarian Mind and much of the material on Libertarianism.org, that entails laying out the case for libertarianism and strictly limited government. And sometimes, as in many of our policy studies, it involves offering politically realistic reform plans or second-best solutions.

How subsidies increase the cost of tuition

Much like the housing crisis, by making it cheaper to borrow, a bubble has formed in tuition prices schools can charge (WSJ):

Federal student loans allow Americans to borrow at below-market rates with scant scrutiny of their credit and no assessment of their ability to repay. Meanwhile, federal Pell grants, which help low-income college students and don’t need to be repaid, more than tripled to more than $30 billion a year between 2001 and 2012. Education tax credits roughly quadrupled to about $20 billion a year.

The cost of getting a degree similarly exploded. From 2000 to 2014, consumers’ out-of-pocket costs for college and graduate-school tuition rose 6% a year, on average, according to the Labor Department’s consumer-price index. By comparison, medical-care inflation looks meek at an average 3.8%. Overall consumer prices climbed 2.4% a year.

Correlation or causation? The study looked at schools that derive a great share of revenue from student aid with those that derive a small share from aid. It compared tuition growth at those schools during the past decade with several moves made by Congress to increase caps on individual Pell grants and undergraduate subsidized loans, which are based on financial need and have better terms than unsubsidized loans.

The study found that, on average, for a $1 increase in the subsidized-loan cap, tuitions rose by as much as 65 cents. For Pell grants, it translated to 55 cents on the dollar. The study pinpoints private schools—both nonprofit and for-profit—as bigger offenders than public ones.

How (some) tyrannies are born?

NationalReview (via Instapundit):

You know, when I first started pondering the book, I thought it might be all about economics. About ten years ago I went on a junket to Switzerland and attended a talk with the CEO of Nestlé. Listening to him, it became very clear to me that he had little to no interest in free markets or capitalism properly understood. He saw his corporation as a “partner” with governments, NGOs, the U.N., and other massive multinationals. The profit motive was good for efficiency and rewarding talent, but beyond that, he wanted order and predictability and as much planning as he could get. I think that mindset informs the entire class of transnational progressives, the shock troops of what H. G. Wells hoped would lead to his liberal-fascist “world brain.”

If you look at how most liberals think about economics, they want big corporations and big government working in tandem with labor, universities (think industrial policy), and progressive organizations to come up with “inclusive” policies set at the national or international level. That’s not necessarily socialism — it’s corporatism. When you listen to how Obama is making economic policy with “everyone at the table,” he’s describing corporatism, the economic philosophy of fascism. Government is the senior partner, but all of the other institutions are on board — so long as they agree with the government’s agenda. The people left out of this coordinated effort — the Nazis called it the Gleichschaltung — are the small businessmen, the entrepreneurs, the ideological, social, or economic mavericks who don’t want to play along. When you listen to Obama demonize Chrysler’s bondholders simply because they want their contracts enforced and the rule of law sustained, you get a sense of what I’m talking about.

I don’t think Obama wants a brutal tyranny any more than Hillary Clinton does (which is to say I don’t think he wants anything of the sort). But I do think they honestly believe that progress is best served if everyone falls in line with a national agenda, a unifying purpose, a “village” mentality expanded to include all of society. That sentiment drips from almost every liberal exhortation about everything from global warming to national service. But to point it out earns you the label of crank. As I said a minute ago about that “We’re All Fascists Now” chapter, I think people fail to understand that tyrannies — including soft, Huxleyan tyrannies — aren’t born from criminal conspiracies by evil men; they’re born by progressive groupthink.

Surprisingly, a move to push suffocating regulations in the right direction

Great news for consumers and producers of meats in the US (Reason.com):

Late last week, Rep. Thomas Massie (R-Ky.) introduced a bill that would dramatically re-shape the way many animals are slaughtered for food in this country. The PRIME Act, which has several co-sponsors, including Rep. Chellie Pingree (D-Maine) and Reps. Justin Amash (R-Mich.), John Garamendi (D-Calif.), Scott Garrett (R-N.J.), Jared Huffman (D-Calif.), and Jared Polis (D-Colo.), would give states the option of setting their own rules for processing meat that’s sold inside state borders. That’s a power Congress took from the states and handed to the USDA in 1967.

Not so great news for large food processors who have depended on regulation to bury the competition.

The Bruce Lee technique to learning

Focus on one thing, repeat, repeat, repeat (Quartz):

Bruce Lee said, "I don’t fear the man who has practiced 10,000 kicks. I fear the man who practiced one kick 10,000 times."

Automated cars need new laws

It's been exciting watching the rapid development and acceptance of the idea of automated cars. Instapundit points to how laws can/should change in a world with automated cars.

What the dentist who paid $50,000 to kill Cecil the lion did wrong

According to Reason.com:

The problem isn't that Palmer paid a lot of money to hunt a lion, it's that he didn't pay enough money, he paid it to the wrong people, and he killed the wrong lion.

The Reason post goes on to talk about another trophy hunt and how it contributed to conservation. Lost in the outrage is the lack of compassion for the people of Zimbabwe and the suffering they've been subjected to by a highly corrupt government (Reuters) and the primary cause of the destruction of wildlife in Zimbabwe (Cato).

Reframing economics and markets

Economics is about social cooperation, not money or greed (tomwoods).

What if sweat shops made the poor better off?

The evidence suggests it does (ASI). But does it matter?

Do the British owe India reparations for colonialism?

An interesting debate. For the motion. Against.

They didn't earn that?

A "journalist" at Quartz attempts to argue entrepreneurs take risks because they come from families with money. There's one small problem - not only does she somehow avoid actually proving her point in her screed, the facts contradict her views (businessideaslab).

Update: more examples (albeit anecdotes) where her argument clearly doesn't hold (Inc.)

Inadvertent experiments in minimum wage

And their consequences... fallout in Seattle (Fox) while New York announces its own (Reason).

More: what gay marriage has in common with arguments against minimum wage - why should the state intervene in "acts between consenting adults"?

More (DailyCaller): An update on the CEO who raised wages for his workers to $70,000 (NYTimes). I like experiments like this - but they should be kept to the private sector. If this experiment succeeded in building an even greater business it would have meant other companies would have copied those ideas much like how Ford tripled his wages to actually achieve and retain greater productivity in his work force (Forbes).

Update: Glenn Reynolds at Instapundit quips: "but the robot community is very excited."

The deworming wars, antipoverty and fail

A look at a discredited study on the impact deworming has on development (Vox via instapundit).

What they don't tell you about 'liberté, égalité, fraternité'

How the French revolution resulted in mass murder (tomwoods.com).

Yep, pretty much...

Regulated cabs vs Uber (via Reason.com):

How American regulation stifles entrepreneurship

With American entrepreneurship declining, here's a small roadmap for how regulation is creating friction for new entrepreneurs (let alone millenial entrepreneurs) (Forbes).

Africa needs more exploitation

Fantastic video and advocate for more economic freedom in Africa, providing perspective on poverty and development (Reason.tv):

The flaw of socialism...

Read the whole thing (Mises):

So the failure of socialism is not conditional on the culture, time, or place of the victims. Socialism is flawed at its core: the “collective” ownership of the means of production. As such, there is no way to enact a functioning, growth-inducing version of socialism anywhere. In practice, however, the theoretical problems of socialism give way to civil unrest, which is met with state force and results in a death toll higher than any official war ever fought.

Yep, loving CrossFit...

"Keep Hope Alive" CrossFit commercial with Constance Tillett from CrossFit South Brooklyn.

Directed by Robin C at CrossFit South Brooklyn with Constance Tillett and David Osorio. For CrossFit inc.

Opposing the sharing economy is a mistake for any politician...

When politics, markets and technology collide... from pollster Scott Rasmussen (realclearpolitics via Instapundit):

It’s not just consumers who like the Uber experience and the sharing economy; it’s the drivers, as well.

The New York Daily News recently headlined a column, “Uber Job Beats Working for Yellow Cab,” by one such driver. Rabiul Karim said, “With Uber, it’s like 50 percent stress is gone right there, because you don’t have to look for passengers.” Reducing stress among drivers is a good thing for all of us!

[...] The New York Daily News described the mayor’s anti-Uber plan as “a protectionist crusade for an entrenched industry, absurdly claiming to stand for the thousands of New York passengers and drivers who have flocked to Uber.”

The New York Post noted that the beneficiaries of the mayor’s plan would have been “a yellow-cab monopoly, and fleet owners who’d donated more than $550,000 to de Blasio’s mayoral campaign.”

Update: Is technology a natural enemy of "traditional constituencies"? WSJ thinks so:

First, innovative new business models always threaten traditional constituencies, and many of these are Democratic. In New York, for example, Airbnb may be even more disruptive than Uber, because by providing a way for apartment dwellers to make some money by renting out their homes, it is also enabling visitors to make an end run around the high taxes and labor costs (think hotel unions) that help make a hotel room in the Big Apple so pricey.

"The end of doom"

Interview of Ron Bailey, the science correspondent at Reason with a number of interesting/hopeful predictions (via reason.tv):

How markets reduce discrimination

Steve Forbes on Reason.tv - "You may not love your neighbor but you want to sell to your neighbor":

Markets in action - undermining the caste system in India (Cato.org):

Karl Marx was wrong about many things but right about one thing: the revolutionary way capitalism attacks and destroys feudalism. As I explain in a new study, in India, the rise of capitalism since the economic reforms of 1991 has also attacked and eroded casteism, a social hierarchy that placed four castes on top with a fifth caste—dalits—like dirt beneath the feet of others. Dalits, once called untouchables, were traditionally denied any livelihood save virtual serfdom to landowners and the filthiest, most disease-ridden tasks, such as cleaning toilets and handling dead humans and animals. Remarkably, the opening up of the Indian economy has enabled dalits to break out of their traditional low occupations and start businesses. The Dalit Indian Chamber of Commerce and Industry (DICCI) now boasts over 3,000 millionaire members. This revolution is still in its early stages, but is now unstoppable.

Sleep more, earn more

According to Freakonomics, The Economics of Sleep:

And we find that permanently increasing sleep by an hour per week for everybody in a city, increases the wages in that location by about 4.5%.

But, as they also point out, there are limits.

Unintended consequences: the Frank-Dodd edition

Incredibly sad - because their lives weren't already miserable (Reason):

There's strong evidence to suggest that "conflict mineral" regulations in Section 1502 of Dodd-Frank directly led to an increase in looting in affected regions of the Congo.

The result was a drop in demand that caused the DRC's tin, tantalum, and tungsten mines to become much less profitable. Section 1502 succeeded, in other words, at "cut[ting] off funding" to the region's militias. But the militias responded to the change by hurting more innocent people instead of less.

[...] According to Parker, violence increased on two fronts: First, some of the militias in the 3T regions left for greener pastures—in this case, the regions containing gold rather than tin or tungsten mines. They then went to war against the established militias in those places, vying through violence for control of the now-more-lucrative flow of gold.

But other militias saw a different path to replacing their lost income: looting local villages. Indeed, Parker and Vadheim found the incidence of looting increased by nearly threefold in the two years after Dodd-Frank was enacted. As a side-effect, violence against civilians shot up as well.

Read the whole thing (Reason).

"Data Justice" warrior's hate-on for Uber and self-driving cars gets ridiculed

A succinct rebuttal to a ridiculous post in the Huffington Post (PJMedia via Instapundit):

Modern progressivism keeps its adherents riveted to the narrative by hypnotizing them with two simple, all-encompassing mantras: spend more on education and spend more on infrastructure. These are the perfect arguments for non-thinking puppets to make, largely because both are evergreen (there’s never enough spending, according to them) and involve polysyllabic catch words that make the puppets feel as if they have functioning intellects.

That’s how you get to the a place where you find the city bus more innovative than Silicon Valley.

Ed Driscoll asks at Instapundit: "shouldn’t the Huffington Post “data justice” director want to ban air-conditioned electrically-intensive server farms first? Or at least set an example to the world by demanding your own Website voluntarily going offline?"

Re-envisioning the American Mall

I'm skeptical we need zoning regulations like we do, but here's a cool look at how North America's now dead malls could rebuild (CityJournal via Instapundit):

In 1952, Austrian architect Victor Gruen dreamed of building the perfect downtown on an immense plot of windswept prairie grass, just south of Minneapolis. Residents would walk through mixed-use developments, flush with greenery and eateries. Public spaces would flourish amidst the amenities of urban life, from apartments to townhouses and clinics to schools. Gruen’s paradise never materialized. Instead of fashionable promenades and village greens, the city of Edina, Minnesota got the Gruen-designed Southdale Center—the original shopping mall. [...]

Southdale Center sat like a city on a hill, drawing shoppers from the Twin Cities and beyond. It became a destination address all by itself. But Southdale was never meant to end at its walls. “Gruen’s original vision was to foster community,” said D. Jamie Rusin, an architect and planner speaking recently to The Wall Street Journal. “He originally saw the mall as a place you could go to shop, eat, see the doctor, have an office—a community center for people who didn’t have one.”

What Gruen imagined for Southdale was a not-too-distant cousin to today’s New Urbanist vision. It was really just an old-fashioned town square dressed up in modern clothes. Around it were to be clusters of walkable mixed-use developments, built with an eye toward providing life and space for community to flourish. Gruen recognized that postwar American suburbs were being built to conform to the arterial highway system. The traditional Main Street was fading. Gruen’s mall would be the new urban core. The goal was to encourage families to cluster in residential communities off the highway, where they could walk and talk with their neighbors as they shopped.

As John Tierney notes - "To survive, the old shopping centers need to reinvent themselves, and suburban officials need to change the zoning codes that have stifled innovation for so long by making it illegal to build homes near stores and offices."

Hanoi's capitalist transformation

A model to follow (CityJournal via Instapundit):

Since then, however, Hanoi has transformed itself more dramatically than almost any other city in the world. Today, the city is an explosive capitalist volcano, and Vietnam is rapidly on its way to becoming a formidable economic and military power. “Many revolutions are begun by conservatives,” Christopher Hitchens once said, paraphrasing John Maynard Keynes, “because these are people who tried to make the existing system work and they know why it does not. Which is quite a profound insight. It used to be known in Marx’s terms as revolution from above.” That’s exactly what happened in Vietnam, though the revolutionaries weren’t conservatives. They were Communists.

People who hate Uber, must also hate poor people?

At least according to an Uber funded study... a study that frankly, makes sense:

According to one Uber-funded study released today, they do.

Research group Botec Analysis found that summoning an UberX, the company’s budget tier, took less than half as long as calling for a taxi in several low-income neighborhoods in Los Angeles. What’s more, the trips themselves cost less than half as much. Calling for an UberX was more reliable and wait times were shorter, according to the study.

“The answer was clear-cut, and consistent across neighborhoods and days,” writes study co-author Mark Kleiman.

To gather data, pairs of riders called for a taxi and an Uber along pre-planned routes. The riders recorded the time between picking up the phone or opening an app and getting in a car. They also tracked how much each ride cost, then switched off. After each ride, whoever took a taxi last time took an Uber next time.

Kleiman says the riders didn’t know Uber had funded the effort but acknowledged that Uber’s backing “makes some skepticism about our results natural and proper.”

“We would be happy to share our data and methods with other research teams for re-analysis and replication,” he says.

Anecdotally and proven by its pervasive success I'd say that Uber is more convenient and cheaper than cabs for rich people, so why wouldn't that hold true for the poor? Update (NYT): Uber wins in NYC. Or more accurately, the people of NYC win.

Update #2 (TechCrunch): A reason Uber prevailed? Uber counters NYC's mayor's opinions with data - "while de Blasio has argued that Uber and other ride sharing companies are the main reason for NYC’s increased congestion, the data revealed by Uber today suggests otherwise." The post also notes, "records obtained by TechCrunch show that the NYC Taxi Industry has donated over $500,000 to Mayor de Blasio’s campaign, and are the second-highest donor behind the real estate industry. Additionally, the bill capping new driver sign-ups was first sponsored by the taxi industry three months ago."

Dodd-Frank five years later: failure or success?

Writing in Fortune, liberal economist Dean Baker claims that the financial regulations enacted in reaction to the financial crisis of 2009, is a success:

First and foremost the complaint was that the bill would make it more difficult for businesses to raise capital. This argument has not held up well in the last five years. Certainly the businesses that can raise money in the stock market have little basis for complaint. With price to earnings ratios in the stock market at their highest level since the tech bubble, these companies can raise money at extraordinarily low prices.

This is true for bonds as well, as we see both very low interest rates and unusually low spreads between the interest rate paid by even relatively high risk companies and Treasury bonds. In fact, these spreads are so low that Federal Reserve Chair Janet Yellen saw fit to warn markets about a bubble in the high yield market last summer. And for smaller businesses, according to the Federal Reserve Board’s data, banks made an average of more than $230 billion in new loans in the last three years, up from an average of just over $200 billion in the 3 years before the crash.

We also had warnings that the Consumer Financial Protection Bureau (CFPB) — the creation of which was authorized by Dodd-Frank — was going to impose such high costs through rules and regulations that it would sharply limit access to consumer credit. This also does not appear to be happening. Consumer credit overall is up by almost a third since the passage of Dodd-Frank. In fact, the news in the consumer credit market is in the abuses in the subprime auto loan market, a market not covered by the CFPB thanks to lobbying by the auto dealers.

Let's not forget that the crisis resulted from subprime lending on overpriced real estate. "Of the 19.2 million subprime/low quality loans on the books of government agencies in 2008, 12 million were held or guaranteed by Fannie and Freddie" (The Atlantic). Now that the US government owns all of Fannie and Freddie, you might think they would be quite conservative. You'd be wrong: "Fannie Mae and Freddie Mac unveil mortgages with 3% down payment" (LA Times).

Meanwhile the facts show that it's gotten more difficult for small businesses to get credit (Bloomberg):

The number and value of small loans has shrunk substantially over the past five years. Federal Deposit Insurance Corporation Call Report data show that both the number of and the inflation-adjusted value of non-farm, non-residential loans of up to $1 million—a common proxy for small business loans—declined by 27 percent fromk June 2008 to June 2013.

Twenty-five percent of respondents to the third quarter 2013 Wells Fargo/Gallup Small Business Index, a survey (PDF) of approximately 600 small business owners conducted every three months by Gallup on behalf of Wells Fargo, said that obtaining credit was difficult over the past 12 months, while 22 percent said it was easy. In the third quarter of 2008, those percentages were 14 percent and 41 percent, respectively.

The WSJ goes further:

Dodd-Frank was supposedly aimed at Wall Street, but it hit Main Street hard. Community financial institutions, which make the bulk of small business loans, are overwhelmed by the law’s complexity. Government figures indicate that the country is losing on average one community bank or credit union a day. Before Dodd-Frank, 75% of banks offered free checking. Two years after it passed, only 39% did so—a trend various scholars have attributed to Dodd-Frank’s “Durbin amendment,” which imposed price controls on the fee paid by retailers when consumers use a debit card. Bank fees have also increased due to Dodd-Frank, leading to a rise of the unbanked and underbanked among low- and moderate-income Americans. [...]

[...] Adhering to the new rules takes time and money, reducing the resources that bankers have to make loans. As Greg Ohlendorf, president and chief executive officer of First Community Bank and Trust, told Congress, “This compliance burden is a distraction from our small business lending. Every hour I spend on compliance is an hour that could be spent with a small business customer.”

Because many small business owners borrow personally to finance their businesses, they have also been caught up policy makers’ efforts to increase consumer financial protections. [... New regulations have led] credit issuers to increase the interest rate spread on their loans, according to an additional Federal Reserve report.

Higher interest rates necessarily mean that small companies need to pay more to borrow funds. Second, fewer small businesses can get loans. The inability to re-price loans has made the high risk segment of the credit-card market less profitable to lenders, causing many of them to reduce their participation in that part of the market. As a result, a sizable minority of high-risk small business borrowers that once obtained credit-card loans can no longer get them.

Sounds like a fail to me.

Ayn Rand on Racism

In The Virtue of Selfishness, Rand wrote (AynRandLexicon via Instapundit):

Racism is the lowest, most crudely primitive form of collectivism. It is the notion of ascribing moral, social or political significance to a man’s genetic lineage—the notion that a man’s intellectual and characterological traits are produced and transmitted by his internal body chemistry. Which means, in practice, that a man is to be judged, not by his own character and actions, but by the characters and actions of a collective of ancestors.

Learning from startup successes and failures

From TechCrunch - aggregated data on some of the startups that made it to billion dollar valuations. And from VentureBeat: a compilation of post mortems of failed startups.

Related (TechCrunch): Good advice to consider when you're working to raise capital.

Crony capitalism: winning through superior lobbying dollars

Not sure what it is about transportation policy and crony capitalism, but Reason gives another example of Peter Pan busing, working to put Fung Wah in NYC/Boston out of business:

Eleven years later, Peter Pan's move against Fung Wah is paying big dividends. Fung Wah has long been one of the best-operated and safest bus operators on the road, and yet two years ago it was forced to halt its operations because of an incompetent safety inspection carried out by two Massachusetts state employees. That ensnared the company in federal regulatory maze of Kafka-esque proportions. Twenty-one months later, after the company had burned through $3 million buying a new fleet of buses, paying lawyer's fees, and keeping its doors open, Fung Wah finally got the OK to reopen.

Not so fast. As the Boston Globe first reported in May, the two state agencies that run Boston's South Station are refusing to give Fung Wah a spot in the facility to resume its operations. And this week, DNA Info reported that New York City Councilwoman Margaret Chin (D-Dist. 1) was told by Fung Wah's Liang that he was throwing in the towel. If the company were permitted to operate from a street curb, like in practically every other city, this wouldn't be an issue.

"Startup fever" in Waterloo, Canada

While it's a neat story about my home town (Globe and Mail), it also highlights one of the dumb things about governments taking a build it, and then they'll come approach to economic development using fictitious numbers to justify infrastructure.

On one hand, community leaders complain about the lack of funding available to local businesses but somehow find a way to justify spending $800 million on a light rail transit line that runs through the city.

Healthcare insurance premiums rising with Obamacare

Mugged by reality (Cato):

ObamaCare doesn’t make health insurance more affordable. It robs Peter to pay Paul. When selling ObamaCare, supporters told everyone, 'Don’t worry, you’re Paul.' But as time goes by, more Americans are realizing they’re not Paul. They’re Peter.

Uber names a feature after New York's Mayor

I gotta say, I like how aggressive Uber is in fighting provincial politicians (TechCrunch):

Instead of calling a car, the feature prompts users to take action and send an email to Mayor de Blasio and City Council opposing the new bill. Users will of course still be able to use the other Uber features like UberX and Uber Black.

Uber told TechCrunch that the new feature will “demonstrate what life for NYC riders would be like if de Blasio’s plan to limit Uber is passed into law”.

The bill up for consideration would require the Taxi and Limousine Commission (TLC) to severely limit the issuance of new for-hire vehicle licenses. The law would last one year, during which the TLC would complete a study on the impact of for-hire vehicle services on the city.

How Uber is shining a light on the dirty politics of Toronto's cab industry

I can't help but wonder if the coverage is just a bit too optimistic... but I hope it's right (Globe and Mail):

In September 2012, one of Toronto’s taxi licenses sold for $360,000. As it turned out, this was a peak that presaged a major slide. By 2013, the average selling price of a cab plate had fallen to $153,867. In 2014, it was $118,235.

The reason behind this plunge is Uber, the online service that lets you order a ride through your smartphone. By the looks of it, Uber may drive a stake through the heart of the cab business. It’s about time.

[...] After my investigation of the industry, my name was mud among the city’s taxi plate holders, who were worried about losing their golden goose. One woman, who inherited a pair of plates from her father, called me a “communist” for recommending that the taxi plate system be abolished. “This is free enterprise,” she declared.

In fact, Toronto’s taxi plate system is anything but free enterprise. Instead, it is based on the artificial restriction of a natural market, and the granting of licences to a fixed number of participants. Even those who paid top dollar for a plate used to enjoy an annual return of more than 12 per cent. And for those who inherited plates, the return was manna from heaven.

On the other side of the coin were drivers and customers. Passengers paid too much for rides in old junkers, and drivers found themselves trapped in a system that skimmed the lion’s share of their revenues. Many have compared the Toronto cab industry to the feudal system, which is probably not far off the mark.

To understand how the taxi plate system and the interests behind it have contorted the Toronto cab industry, imagine how other businesses would work if operated the same way.

Politicians often need reminding that being pro-business and pro-markets is not the same thing.

The promise of self driving cars: less local government?

Sign me up (Reason.com):

One of the propelling concepts behind self-driving cars isn't just innovation for the sake of innovation, leading us to our sci-fi Jetsons future. If successfully implemented, it will make ground travel safer, particularly in higher population areas, increase transportation efficiency and ultimately human productivity.

But there's one little problem, noted by the government analysts of the Brooking Institution and subsequently highlighted by Wired: Local governments have become increasingly dependent on human screw-ups as a way to raise money. Speeding tickets. DUI citations. Parking violations. Those are all big money-makers for municipalities that could very well go away under a regime of self-driving cars. That's billions of dollars of revenue across the country.

Change without the Hope

Rate Of New Business Formation On Steady Decline, Even In Tech - company size growing (FuturePundit via Instapundit)

Obama, Reagan, and Blacks in America

The Obama Presidency isn't done - but I already suspect history will not be kind in remembering his impact on either race relations or advancing the economic condition of Blacks in America. Others seem to be noticing (BlackPressUSA):

Unemployment. The average Black unemployment under President Bush was 10 percent. The average under President Obama after six years is 14 percent. Black unemployment, “has always been double” [that of Whites] but it hasn’t always been 14 percent. The administration was silent when Black unemployment hit 16 percent – a 27-year high – in late 2011.

Poverty. The percentage of Blacks in poverty in 2009 was 25 percent; it is now 27 percent. The issue of poverty is rarely mentioned by the president or any members of his cabinet. Currently, more than 45 million people – 1 in 7 Americans – live below the poverty line.

The Black/White Wealth Gap. The wealth gap between Blacks and Whites in America is at a 24-year high. A December study by PEW Research Center revealed the average White household is worth $141,900, and the average Black household is worth $11,000. From 2010 to 2013, the median income for Black households plunged 9 percent.

Compare that to the Reagan Administration - who the previous author seems to hold in contempt (UTSanDiego). Somebody ought to tell her the issue isn't so much "trickle down" economics as well, economics.

What's the most racist urban area in America?

According to the Department of Housing and Urban Development (HUD)'s own criteria.... it's San Francisco (Cato).

The music at the heart of Capitalism

A profile of the head of the American Enterprise Institute that speaks a little to the culture wars being waged (and for some, it's a war that's being lost by economic conservatives):

While the mission remains unchanged, Mr. Brooks believes his obligation goes far beyond the production of academic tomes. These have their place, but if the champions of free markets hope to sell the message to those who aren’t already sold, he says they need to speak to the heart as much as to the head.

It’s what he means by “the music.” It begins by emphasizing that those who benefit most from freer markets are the have-nots: those without inherited wealth, prestigious credentials, social or class advantages—in other words, people whose only hope for a better life is a social order that will reward their hard work and enterprise.

Certainly that has been borne out by the world’s experience. In 1938 it might not have been clear that capitalism was the key to human flourishing. But no longer.

When he was a child, Mr. Brooks notes, one of four people lived on less than a dollar a day. Today, though we still have far to go, the advance of trade and a globalized economy has shrunk that figure to one of 20.

The liberation of hundreds of millions from desperate poverty ranks among the greatest success stories in history. But it’s a story that remains largely untold and mostly unheralded. In his new book, “The Conservative Heart,” Mr. Brooks puts it this way: “Capitalism has saved a couple of billion people and we have treated this miracle like a state secret.”

More here (Cato):

The canaries who were ignored in the Greek coalmine

Stories of the struggle to reform the Greek state before it ran out of other people's money (WSJ):

Their reform proposals were fought by their colleagues in parliament and savaged by the media and labor unions. They invariably found themselves sidelined.

[...] Since the eruption of Greece’s debt crisis in 2010, successive governments have prioritized fiscal austerity—trying to raise government revenue and cut expenditure—instead of tackling deeper reforms of the system head on.

Many foreign officials involved in Greece’s ill-starred bailout efforts over the past five years say they have learned what Greece’s past would-be reformist politicians always knew: In Greece, hurting vested interests is harder than taxing citizens to death.

[...] Today, more so than in their times in government, these three politicians and a few others are coming to be seen as among the minority of officials who spotted and attempted to change early on some of the core problems that have led to Greece’s almost intractable crisis today.

“They called me ‘the Cassandra’” said Mr. Giannitsis of the headlines during his unpopular push for reforming the pension system.

Cassandra, in the Greek myth, was a clairvoyant doomed to always be right, but never believed. She went crazy.

Licensing and crony capitalism

Great (and old) news from Texas (The American Interest via Instapundit):

In a victory against crony capitalism in Texas, the state’s Supreme Court recently struck down a licensing requirement. [...]

Here’s Eugene Volokh at The Washington Post explaining the case: Here’s what happened in this case: The plaintiffs practice “eyebrow threading,” which is apparently a technique for shaping eyebrows and removing eyebrow hair using a cotton thread. Since 2011, Texas has required them to get a cosmetology license, just as it requires for other cosmetologists; and that requires 750 hours of training, of which at least 320 hours — by the state’s own concession — “are not related to activities threaders actually perform.”

In a 5-4 ruling, the court ruled against the cosmetology license requirement for eyebrow threaders on the grounds that it “is not just unreasonable or harsh, but it is so oppressive that it violates” the Texas State Constitution. [...]

Too often, licensing rules are nothing more than a mechanism for the dominant players in an industry to shield themselves from competition—suppressing jobs (especially for the poor or undercapitalized), raising prices, and stifling creativity along the way. We are glad to see this Texas regulation come down, and hope that others will follow.

Stem cell dental implants and using lasers to burn away mental illness

Scientists are commercializing a way to use stem cell dental implants to grow new teeth directly in your mouth (PopSci via Instapundit) while others are proposing to use lasers to burn away some mental illnesses (Wired) - as others have pointed out with the latter, what could possibly go wrong?

On Greece

Pretty much... after all, people - even kids, respond to incentives (Instapundit):

Yep–this is what happens when you let progressives run a country. They spend like drunken sailors, then demand a bailout from others, accusing them of bigotry and hatred if they don’t acquiesce. Most families have at least one of these types. They have the emotional and financial maturity of a two year-old (sorry, two year-old readers out there). By repeatedly caving into these childish demands, the EU acts like parents who enable their children’s prodigal habits. It never turns out well.

More here (Bloomberg): "Germany deserved debt relief, Greece doesn't"

Experiments in poverty

Evidence based interventions in poverty - randomized control trials (WSJ):

World-wide, in 1981, 2.6 billion people subsisted on less than $2 a day; in 2011, 2.2 billion did. Most of that progress came in China, while poverty has barely budged in large swaths of sub-Saharan Africa, South Asia and Latin America.

Is it time for a new approach? Many experts who study poverty think so. They see great promise in a new generation of experimental programs focusing not on large-scale social support and development but on helping the poor and indebted to save more, live better and scramble up in their own way.

Not surprisingly, those who have been on the edge of the status quo of the interventions and the billions of dollars spent that have done little to nothing, are skeptical:

Prof. Sachs says that “many, almost surely most, of the cutting-edge breakthroughs in actual development in recent years did not result from [randomized controlled trials].” He believes that tackling problems at the level of communities or entire societies, rather than just households, is likely to be more effective—though, he adds, randomized controlled trials should be “a part of a diverse arsenal of analytical and policy tools.”

Government interventions that can radically reduce poverty

...while reducing the amount of harm to the economy - though entrenched interests will be the primary casualty (ASI): deregulating childcare and healthcare, reduce payroll taxes on low income earners and well, just giving money to them through a basic income or negative income tax.

The coming tech in food production

A trend to watch: food tech used to be about scale - the next wave is about both scale and improving quality (MITTechReview):

For years, the most important food technologies were all about scale. How could we feed a fast-growing population at less expense? By doing everything bigger: food grown on bigger farms was sold by ever-merging global food giants to grocery chains of superstore proportions.

Many of today’s food technologies seem to be moving in the opposite direction, toward methods and products that are economical for small farms as well as large corporate ones. This does not mean an end to big food: with the planet’s population projected to reach 9.6 billion by 2050, agriculture and food production will still have to achieve a massive scale, with help from technology and innovative research. Still, evolving technologies, including inexpensive sensors, mobile devices, and data analysis, have helped an increasing variety of food companies, retailers, and producers lower their costs and compete in many specialty markets.

This could be the start of a new food economy—one that reflects more competition and more innovation, provides opportunity for a broader group of investors, and is more dynamic and responsive than the industrial model that has dominated for decades.

More here (MITTechReview): Robots Start to Grasp Food Processing

Driving down the cost of American healthcare

May start with radically reforming the FDA (Reason).

More on how Obamacare may be inadvertently driving a consumer-driven healthcare revolution

"The law is driving people into high-deductible plans" (WSJ):

The widespread adoption of high-deductible plans does, however, face two major challenges.

First, advocates of consumer-directed health care suggest that much of the money saved in premiums—high deductible plans can be thousands of dollars less expensive than comprehensive plans—be put into health-savings accounts to help pay for routine care. Over time, that savings can grow into a large nest egg.

But without that backstop, Americans will face the worst of both worlds: no coverage for everyday care and no dedicated financial resources to offset new expenses. Hence, critics cry that high-deductible plans leave patients “underinsured”—and that they will avoid or delay needed care as a result. The evidence is mixed. But it seems to be a problem particularly among those who enroll in high-deductible plans on the ObamaCare exchanges; few appear to be establishing health-savings accounts. One problem is that the exchanges make it very difficult to identify HSA-eligible plans.

Second, consumer-directed health care works because it encourages competition. Unfortunately, competition in medicine seems to be falling as hospitals and insurers merge, potentially leading to higher and more opaque prices.

I think even the WSJ is underestimating the potential for concierge care.

Crowdsourcing for better government

Challenge.gov is a fascinating experiment under the Obama Administration in its own right but more interesting is how it has been evolving... but also making government more accessible (reason.com):

Others, however, are essentially using the website as a new form of procurement. In some instances, the goods or services they seek are fairly general. The National Institute on Drug Abuse is now offering $100,000 for "bold new ideas" on how to manage and improve the clinical quality of addiction treatment. Others are far more specific. NASA recently solicited designs for a 3D printable handrail clamp assembly for the International Space Station. [...]

And it's not just that these kinds of platforms only reward positive outcomes. Typically, they also end up leveraging the incentive money they offer several times over. In the case of the NASA handrail clamp assembly challenge, the total prize money offered was just $2,000. But it attracted 474 entries. Had NASA been paying market rates to even just the top 10 percent of these entrants for the time they spent designing their submissions, its costs would have been far higher.

In general, crowdsourcing platforms inspire innovation by putting problems in front of more eyes. And Challenge.gov is already working in this fashion. Aaron Foss, who won a 2012 Federal Trade Commission challenge that sought new methods of helping consumers block telemarketing robocalls, told Forbes that he "never would have worked on the robocall problem if not for the challenge." Similarly, a NASA survey of approximately 3,000 challenge participants found that 81 percent had never previously responded to government requests for proposals.

What makes someone become an Islamic extremist?

Great video from Prager University and upending the deep seeded elitist idea that poverty breeds extremism, but rather, it's the other way around:

Even if manufacturing returns to the US, the jobs won't

This probably isn't what the "Out of a job yet? Keep buying foreign!" crowd had in mind (WSJ):

As robots become less costly and more accessible, they should help smaller manufacturers go toe to toe with giants. By reducing labor costs, they also may allow the U.S. and other high-wage countries to get back into some of the processes that have been ceded to China, Mexico and other countries with vast armies of lower-paid workers.

Some of the latest robots are designed specifically for the tricky job of assembling consumer-electronics items, now mostly done by hand in Asia. At least one company promises its robots eventually will be sewing garments in the U.S., taking over one of the ultimate sweatshop tasks.

Of course, this isn't to say all jobs are going away. They are changing though. A potential source of American jobs? China (WSJ):

China’s middle class continues to grow, reaching an estimated 630 million people by 2022. Those consumers want better health care, world-class education and a cleaner environment. China itself will eventually be able to provide those services, but meanwhile, the Internet makes it possible for China to create and sustain American jobs.

Take health care. In 1994, a Chinese university student named Zhu Ling became mysteriously ill. Other students posted her medical details on the Internet, allowing Western doctors to help diagnose her with thallium poisoning and to save her life. It was a famous early instance of effective telemedicine.

U.S. health-care professionals could provide China with a range of services. China had just one general practitioner for every 10,000 people in 2013, according to state media, and many Chinese are dissatisfied with the quality of the care. “China has very few doctors that can gain trust,” said Feng Xue, executive president of Tianjin Telemedicine Association, a nonprofit organization to promote telemedicine. “The U.S. has a strong brand.”

Are wage increases a lagging indicator?

There's been a lot of handwringing over stagnant wages, but economist James Bessen tries to put it in historical context and makes the argument that the cause isn't technology (Vox):

There's been a lot of worry that increasingly sophisticated computers would replace more and more jobs, which could lead to a future where many low-skilled workers are unable to find a job at all.

But Bessen argues that this is a misunderstanding of recent economic trends. "I just don't see evidence of it," he says. "There are very few occupations where everything has been automated."

Bessen points to bank tellers as an example. During the 1990s and 2000s, banks installed thousands of automated teller machines. Yet surprisingly, the number of human tellers actually grew slightly during the same period

A similar interpretation from Ray Dalio at Bridgewater.

Mexican proverb

Great quote: "They tried to bury us. They didn’t know we were seeds." h/t Tim Ferriss

Daimler introduces the world's first self driving semi-truck

Demand isn't slowing down for logistics, but the ability to recruit drivers is. Makes sense and it's already legal in Nevada (wired):

The truck in question is the Freightliner Inspiration, a teched-up version of the Daimler 18-wheeler sold around the world. And according to Daimler, which owns Mercedes-Benz, it will make long-haul road transportation safer, cheaper, and better for the planet.

The Freightliner Inspiration offers a rather limited version of autonomy: It will take control only on the highway, maintaining a safe distance from other vehicles and staying in its lane. It won’t pass slower vehicles on its own. If the truck encounters a situation it can’t confidently handle, like heavy snow that covers lane lines, it will alert the human that it’s time for him to take over, via beeps and icons in the dashboard. If the driver doesn’t respond within about five seconds, the truck will slow down gradually, then stop.

In hardware terms, the truck isn’t much different from the latest trucks and passenger cars Daimler is putting on the road. A stereoscopic camera reads lane lines. Short and long range radar scan the road up to 800 feet ahead for obstacles. No sensors face backward, because they’re not needed. There’s no vehicle-to-vehicle communication, no LIDaR. The software algorithms are adjusted versions of those developed for use in Mercedes-Benz’s autonomous vehicles.

Oddsmakers win in UK election upset

Markets again trump pollsters and pundits (TheConversation):

Interestingly, those who invested their own money in forecasting the outcome performed a lot better in predicting what would happen than did the pollsters. The betting markets had the Conservatives well ahead in the number of seats they would win right through the campaign and were unmoved in this belief throughout. Polls went up, polls went down, but the betting markets had made their mind up. The Tories, they were convinced, were going to win significantly more seats than Labour.

I have interrogated huge data sets of polls and betting markets over many, many elections stretching back years and this is part of a well-established pattern. Basically, when the polls tell you one thing, and the betting markets tell you another, follow the money. Even if the markets do not get it spot on every time, they will usually get it a lot closer than the polls.

Efficient markets require security and stability

Ergo, to improve the economic prospect of a city, start with policing argues the NationalReview.

Related: How Colombian President Álvaro Uribe saved Columbia (WSJ).

"Do Strong Religious Beliefs Stifle Innovation?"

According to one paper, yes (WSJ). I'd be curious to see if the particular religion plays a role:

The relationship is apparent when plotting the percent of the population that describes itself as religious against a population-controlled measure of patent applications filed by a country’s residents.

The relationship broadly holds up when the authors make adjustments for differences in gross domestic product, rates of higher education, population and other variables. So it’s not simply a matter of more religious countries being poorer or having fewer resources, Mr. Bénabou said in an interview.

“We’re not making strong claims as to what is causing what,” he said. “The pattern is there and people can offer their own explanation to the pattern.”

Twelve economic concepts every graduate should know

Short and sweet (BusinessInsider). From the speech given by Nobel economist Thomas Sargent to graduates of Cal-Berkeley in 2007.

As Moore's Law turns 50, the revolution is only beginning...

WSJ via Instapundit:

Moore’s Law is creative destruction on steroids. It regularly fosters the next wave of entrepreneurial opportunities made possible by the latest jump in chip performance. It can be blamed for much of the 90% mortality rate of electronics startups.

But because the usual graphic presentation of the law is tamed by the format into a nice shallow line, we don’t get to see the awesome power of the raw curve—which, like all exponential lines stays shallow seemingly for a long time, then suddenly curves almost straight upward in a vertiginous climb. It is the curve of a rocket’s acceleration, of a pandemic, of the cells born from a fertilized egg.

The great turning took place a decade ago, while we were all distracted by social networking, smartphones and the emerging banking crisis. Its breathtaking climb since tells us that everything of the previous 40 years—that is, the multi-trillion-dollar revolution in semiconductors, computers, communications and the Internet—was likely nothing but a prelude, a warm-up, for what is to come. It will be upon this wall that millennials will climb their careers against almost-unimaginably quick, complex and ever-changing competition.

Crowd-sharing, crowdfunding, bitcoin, micro-venture funding, cloud computing, Big Data—all have been early attempts, of varying success, to cope with the next phase of Moore’s Law. Expect many more to come. Meanwhile, as always, this new pace will become the metronome of the larger culture.

Moore’s Law has always induced de-massification: giant mainframe computers become smartwatches, giant vertically-integrated organizations are defeated by what Instapundit’s Glenn Reynolds has dubbed an “Army of Davids.”

Rigid command-and-control structures in every walk of life, from corporations to governments to education, become vulnerable to competition by adaptive and short-lived alliances and confederacies. Now that process is going to attack every corner of society.

Arbitrageurs, meet the disintermediation of tech

The fact that it's taken this long is the only real surprising aspect of this story - that Wall Street is under threat by the rise of info tech (wired):

These so-called “fintech” upstarts are calling attention to the many shortcomings of the gatekeepers who have traditionally controlled lending, paying, and investing. When these incumbents were the only option, they could rest easy assuming annoyed consumers had no other options. Now they do, and a nervous Wall Street, Dimon included, is realizing it has to play along in order to fight back. Amid fears of a growing threat to their market share, Wall Street is now playing catch-up. Banks are launching competitive products (or slapdash imitations, depending on where you sit) to startups’ innovations. They’re financing partnerships. And in some cases, they’re just trying to acquire away threats to their businesses.

More: Inc. profiles a few companies that are making it easier for startups to find money.

The death of "cleantech"? Or the perversions of "free" money?

TechCrunch notes that "old" cleantech was overhyped and is now nearly unfundable but there's an emergence of more sustainable and profitable tech: "They’re looking to be downstream, close to those juicy, fast-growth markets, with new channels and new marketplaces. Even in hardware, they’ve moved to distributed, smaller, modular, automated and intelligent hardware."

Doesn't this just highlight problems with governments trying to choose winners - when it comes to either technologies to pursue or even more insidiously, companies that try to develop those technologies? Could these companies like Nest have gotten there faster if it weren't for all the carrots being dangled to pursue those "overhyped" technologies? And was losing all this money and time really such a "noble way to lose money?"

Why is US entrepreneurship declining precisely when entrepreneurship is getting easier?

This should be alarming for policymakers (Inc):

The Kauffman Foundation, citing its own research and drawing on U.S. Census data, concluded that the number of companies less than a year old had declined as a share of all businesses by nearly 44 percent between 1978 and 2012. And those declines swept across industries, including tech. Meanwhile, the Brookings Institution, also using Census data, established that the number of new businesses is down across the country and that more businesses are dying than are being born. All this at a time when entrepreneurship had reached its cultural apex and was widely viewed as the sole sizzling ember in an otherwise cooling economy. The business and academic worlds were left slack-jawed: How could this be?

The implications are huge. “New businesses are disproportionately responsible for the innovation that drives productivity and economic growth, and they account for virtually all net new job creation,” says John Dearie, executive vice president for policy at the Financial Services Forum. “I would say, as a policy person, this is nothing short of a national emergency.”

I'm not convinced by Inc's theories. Generational? Markets have actually increased with access to more markets globally - and I'd argue risks have actually declined with the costs of starting a business falling.

Big companies? Big companies and the lure of a secure job seem to have been even greater in the past. Funding? Again, I'd suggest it's easier today than ever before. Possibly related, TheSignal has a fairly aggressive column making the argument that the decline in jobs (making the fall in entrepreneurship even more alarming) is the result of government and regulation that's currently sucking the oxygen out of the job market. Maybe it's also true for US entrepreneurship? (And on a related note, maybe it's the dramatic rise in student debt?)

Betting on farming

According to the WSJ, venture capitalists are placing bets on ideas to improve food production and food itself:

The money involved in U.S. food startups is still small compared with Internet companies. But venture-capital investment in agriculture and food soared 54% to $486 million last year, according to Dow Jones VentureSource.

Big agribusinesses have launched their own VC initiatives, and investment managers have raised funds dedicated to food and agriculture technology. New York-based private-equity firm Paine & Partners, for instance, raised $893 million in January for investments in boosting productivity in areas like protein production and food safety, according to its president, Kevin Schwartz.

Driving the investments are a combination of cheap wireless technology, improved tools for collecting data and monitoring crops, and budding entrepreneurs looking to address new market demands and feed a growing global population. Increasingly health-conscious consumers also are scrutinizing what is in their food, pushing vendors to boost the transparency of their supply chains.

Is modern healthcare killing us?

Provocative question from Freakonomics. What I think is entirely clear is that the system in the US is broken. I'm more skeptical of claims that the problems are the result of profit seeking rather than warped incentives:

In our system, we have an asymmetry in price. So we pay a whole lot of money if you cut, scan, and hospitalize patients. If they have procedures, if they go through machines, we pay an enormous amount of money for those things. If you talk to a patient, you actually lose money in many instances. So when a cardiologist walks in the room and talks to your family member, that’s actually a loss leader. That doctor is losing money every moment they stay in a room with your family member. The way they make money is by getting you out of that room and back into the scanner that they’re leasing in the back of the office. That’s not their fault. That’s the fault of how we’ve structured the incentives in the system.

Where's the top programming talent in the world?

Hint: surprisingly, not California (venturebeat). This is just snapshot data, but I'd be curious if there have been any trends here.

How to solve California's water crisis

Not bandaids, but markets (Reason)

How much does the minimum wage help the poor?

Not very much (JStor via MarginalRevolution):

About 35 percent of the total increase in after-tax benefits goes to families with income less than two times the poverty threshold, a common definition of the working poor or near-poor; nearly 13 percent goes to families principally supported by low-wage workers defined as earning wages at or below 117 percent…of the new 1996 minimum wage; and only about 14 percent goes to families with children on welfare.

Unlike most public income support programs, increased earnings from the minimum wage are taxable. Over 25 percent of the increased earnings are collected back as income and payroll taxes…Even after taxes, 27.6 percent of increased earnings go to families in the top 40 percent of the income distribution.

How fracking is changing geo politics

And yet some politicos would rather increase the barriers to fracking rather than drop them. How fracking is reshaping global power (WSJ):

Fracking overnight has relieved Saudi Arabia of its swing-producer dominance. Fracking overnight has relegated the Middle East to a sideshow, albeit a still-important sideshow, in the world economy.

Things change fast and could change back. A sizable share of the world’s oil still flows from the Persian Gulf and so far production has not been disrupted. Prices would shoot up—they’re already creeping up. But a weight on U.S. fracking would also be lifted. At prices below $50, much fracking becomes long-term unprofitable. But then there’s the flip-side: the flexibility exhibited by the U.S. wildcat sector, allowing drilling to ramp up quickly in response to higher prices, helping to counteract any damage to global growth.

American regulation drives innovation north...

You can't stop the signal... or the drones apparently (TechCrunch)

It’s happening here, and not 2,000 ft to the south, because the U.S. Federal Aviation Authority, has been dragging its heels on green lighting testing in Washington on existing Amazon company property. Last week, the FAA did finally relent and approve experimental testing for Amazon, but the company responded (with no small amount of evident pique) by noting that the actual drone approved from testing was a prototype that has since become obsolete thanks to more recent technical advances.

In Canada, by contrast, Amazon endured only a single three-week licensing undertaking, after which it has received what the Guardian says is essentially “carte blanche” permissions regarding its full fleet of drones for testing. Of course, one could argue that given Canada’s much, much lower population density and less charged political climate, comparing the FAA’s responsibilities with those of its equivalent body in Transport Canada from the neighbor to the north is essentially comparing apples to oranges.

Still, Canada’s openness to work with drone companies on early testing might usher in a small industry boom – already in 2014, Transport Canada has approved 1,672 companies for commercial drone use, compared to just 48 total for the FAA, the Guardian notes. Canada offers some big benefits to companies hoping to eventually serve the U.S., too, including general geographic and climatological similarity with its southern companion.

Drone companies, especially those focused on solving the hard problems surrounding machine learning and autonomy, are already springing up like weeds in Canadian innovation hubs like Waterloo and Toronto, so the FAA’s sluggishness may prove vitalizing to Canada’s emerging flying robot industry.

"The higher the minimum wage..."

"the faster the Age Of Machines is born." (Instapundit)

Earth Hour

A yearly reminder that some environmentalists would prefer that we return to the dark ages.

Resilience, Grit and Learning

A somewhat related and hopeful, if tangential, article to the discussion of "safe zones" sheltering students from ideas (or White people) at institutions of learning (NationalPost) - resilience can be learned (WSJ):

He and Mr. Charney came up with 10 traits of people who survived war, assault and disasters, as well as less traumatic events, and ultimately thrived. These people tend to be optimistic—thinking things will work out—and are able to accept what can’t be changed and focus on what can be, he says. They recognize that even though they didn’t have a choice in their loss, they are responsible for their own happiness.

Although genetics plays a role in being resilient, it isn’t a huge one. Resilience can be learned and enhanced, he says. For example, people can develop a more optimistic view by cultivating friendships with positive people and challenging negative thoughts.

“When you change the way you are viewing things, it has a pretty big impact on all sorts of things,” Mr. Southwick says. It isn’t easy to do, he acknowledges.

Harvard researcher Angela Duckworth defines grit as being "the ability to persist and passionately pursue your goal of winning, whatever it takes." According to Ducksworth, when it comes to success, grit is more important than talent. (99u)

Tech to watch: DNA nanobots to cure cancer

This is amazing (nextbigfuture):

In a brief talk, Bachelet said DNA nanobots will soon be tried in a critically ill leukemia patient. The patient, who has been given roughly six months to live, will receive an injection of DNA nanobots designed to interact with and destroy leukemia cells—while causing virtually zero collateral damage in healthy tissue.

According to Bachelet, his team have successfully tested their method in cell cultures and animals and written two papers on the subject, one in Science and one in Nature.

How high taxes drive away innovators

People respond to incentives. Even inventors (via ASI):

This paper studies the effect of top tax rates on inventors’ mobility since 1977. We put special emphasis on “superstar” inventors, those with the most and most valuable patents. We use panel data on inventors from the United States and European Patent Offices to track inventors’ locations over time and combine it with international effective top tax rate data. We construct a detailed set of proxies for inventors’ counterfactual incomes in each possible destination country including, among others, measures of patent quality and technological fit with each potential destination. We find that superstar top 1% inventors are significantly affected by top tax rates when deciding where to locate.

The elasticity of the number of domestic inventors to the net-of-tax rate is relatively small, between 0.04 and 0.06, while the elasticity of the number of foreign inventors is much larger, around 1.3. The elasticities to top net-of-tax rates decline as one moves down the quality distribution of inventors. Inventors who work in multinational companies are more likely to take advantage of tax differentials. On the other hand, if the company of an inventor has a higher share of its research activity in a given country, the inventor is less sensitive to the tax rate in that country.

The effects of the minimum wage hike in Seattle

More unintended consequences (Shiftwa)? Pretending that effects like these are accidents is either political malpractice or simple idiocy at this point...
Related: "The Minimum Wage and the Great Recession: Evidence of Effects on the Employment and Income Trajectories of Low-Skilled Workers" (Cato)

Falling commodity prices

Trying to predict commodity prices isn't dissimilar to trying to catch a falling knife - but it shouldn't surprise anyone how quickly neo malthusians were once again proven wrong (Reason):

Plunging oil prices have been big news over the past year. Since mid-summer 2014, the price for benchmark West Texas Intermediate (WTI) crude has fallen from $105 to $48 per barrel. But it's not just the price of petroleum that has plummeted. The prices of lots of other industrially important commodities have also been dropping.

Erten and Ocampo also point out, "The magnitude of cumulative decline during the downward trend is 47 percent for the non-fuel commodity prices, with recent increases of around 8 percent far from compensating for this long-term cumulative deterioration." The recent upswing phase of the current super-cycle did not boost commodity prices to nearly what they were a few cycles back.

However, Erten and Ocampo report that metals have been an exception—the mean of the last cycle was higher than the preceding one. Still, they note, "The contraction phase of this cycle has not even begun yet, which can lower the mean of the whole cycle in the upcoming years." It now appears that commodity prices were just reaching their pinnacles when Erten and Ocampo were writing up their results back in 2011. Instead of peak resource production we are most likely now past peak commodity prices—and heading lower for at least for the next ten to fifteen years.

Bridge International Academies: privatized mass education in developing countries

Developing countries need more entrepreneurs and business selling solutions that people want and need vs bureaucrats forcing interventions down their throats 'for their own good.' This is exciting. From the WSJ - "For-profit Bridge International Academies is challenging the assumption that governments and charities should lead education programs in impoverished countries":

Bridge’s founders are challenging the long-held assumption that governments rather than companies should lead mass education programs. The company’s goal is to eventually educate 10 million children and make money by expanding its standardized, Internet-based education model across Africa and Asia.

The Internet and Barnes & Noble Inc. Nook tablets are used to deliver lesson plans, which are then used by teachers. The tablets also are used to collect test results from students scattered across hundreds of towns and villages and serve as a means of monitoring their progress.

“It’s like running Starbucks,” said Greg Mauro, a partner at California-based venture-capital firm Learn Capital LLC, the largest shareholder in Bridge with a 15% stake, likening it to the coffee chain with standardized systems and procedures that can be replicated across new locations. If all goes to plan, the American-run, Nairobi-based education startup will seek a stock-market listing in New York in 2017, according to Mr. Mauro.

The endgame of Chinese communist rule?

Cautiously optimistic... an even bigger question is what comes after (WSJ):

The endgame of Chinese communist rule has now begun, I believe, and it has progressed further than many think. We don’t know what the pathway from now until the end will look like, of course. It will probably be highly unstable and unsettled. But until the system begins to unravel in some obvious way, those inside of it will play along—thus contributing to the facade of stability.

Communist rule in China is unlikely to end quietly. A single event is unlikely to trigger a peaceful implosion of the regime. Its demise is likely to be protracted, messy and violent. I wouldn’t rule out the possibility that Mr. Xi will be deposed in a power struggle or coup d’état. With his aggressive anticorruption campaign—a focus of this week’s National People’s Congress—he is overplaying a weak hand and deeply aggravating key party, state, military and commercial constituencies.

Piketty: About that inequality? Nevermind.

Piketty's correction (WSJ):

Though his formula helps explain extreme and persistent wealth inequality before World War I, Mr. Piketty maintains, it doesn’t say much about the past 100 years. “I do not view r>g as the only or even the primary tool for considering changes in income and wealth in the 20th century,” he writes, “or for forecasting the path of inequality in the 21st century.”

Instead, Mr. Piketty argues in his new paper that political shocks, institutional changes and economic development played a major role in inequality in the past and will likely do so in the future.

When he narrows his focus to what he calls “labor income inequality”—the difference in compensation between front-line workers and CEOs—Mr. Piketty consigns his famous formula to irrelevance. “In addition, I certainly do not believe that r>g is a useful tool for the discussion of rising inequality of labor income: other mechanisms and policies are much more relevant here, e.g. supply and demand of skills and education.” He correctly distinguishes between income and wealth, and he takes a long historic perspective: “Wealth inequality is currently much less extreme than a century ago.”

More here (WSJ): "Why Thomas Piketty’s Revisions Don’t Fix His Book."

How automation will wipe out (private sector) unions...

It's pretty basic economics (Reason):

Forecasts differ on the specifics, but they generally point to automation being disruptive as far as traditional workplace roles are concerned. A recent Oxford University study put nearly half (47 percent) of all jobs at risk of replacement by automation in two decades. A Wired article puts the number at 70 percent by the end of this century.

Computers are getting smarter and stronger while employees, with their health insurance, pensions, and vacation time are becoming increasingly expensive. The writing is on the wall; plenty of jobs, at least as performed by humans, aren't long for this world.

I think the more interesting question will be how long we will tolerate the public sector unions who earn far more than their private sector peers and the politicians who have been beholden to them.

Turning beehives into honey on tap

This is cool (wired):

Beekeepers Cedar Anderson and his father Stuart have, essentially, hacked the honeycomb—a nearly flawless geometric and structural achievements—to make it more mechanically efficient. In a nutshell, Flow frames have a partially formed honeycomb matrix within a transparent frame. Bees complete the comb, fill the cells with honey and cap them. To harvest the honey, the beekeeper inserts a tool into the top of each frame and twists, a move that splits each cell in the honeycomb vertically, allowing the honey to flow freely. It is collected at the bottom through a tube. Presto! Honey on tap. [...]

“There’s more to bees than harvesting honey. Over one third of the food we eat is dependent on bees for pollination,” Cedar says. Without the help of bees, our crops would suffer devastating consequences, and with available areas for natural bee habitats disappearing each year, systems that make it easier for humans to look after bees are crucial.

Crossfit is great for entrepreneurs...

6 reasons why, according to Entrepreneur. I confess I require a bit of the external motivation that Crossfit provides (that is when I drag myself out of bed at 440am...).