How cronyism hurts entrepreneurship

It might be shocking to some people, but entrepreneurs don't just do it for the money (USNews)

Psychologists have found the intrinsic desire to master challenges, known as "mastery," to be an important human drive. Economics has emphasized the external or monetary rewards for business, typically to the exclusion of mastery.

The words of entrepreneurs provide evidence for mastery as a business motive. Tom Monaghan, founder of Domino's Pizza, has remarked, "To me, the real substance of life and work is the constant battle to excel." Cable television pioneer Ted Turner observed, "America is about competition and rising above that competition." Michael Bloomberg has said that, "Even today, after toiling for 30 years, I wake up looking forward to practicing my profession, creating something, competing against the best … receiving psychic compensation money can't buy."

And actions speak louder than words. Many members of the Forbes Richest Americans list work long hours, even though they already have more money than one could spend in several lifetimes. A 2013 profile noted that Bill Gates was looking forward to working more with product managers in the upcoming year. Serial entrepreneur Richard Branson has started over 200 businesses and never tires of the challenge of making a new venture succeed.

[...] Cronyism can reward favored entrepreneurs with profits, but not necessarily mastery. Many top athletes would not care to compete in a contest rigged in their own favor. Similarly, some entrepreneurs or businesses, who may be well-positioned to take on a new challenge, do not seek government favoritism. And others may choose not to compete when it's clear that their performance doesn't necessarily equal results in a rigged marketplace.

The extension of cronyism in an economy over time can affect the types of individuals who choose business as a career. Profits for entrepreneurs who successfully court favor with politicians may not satisfy those with a true competitive streak. Imagine a track meet where the organizers rig the races so that their favorites, and not the best runners, win. Such a meet will likely fail to attract the world's best competitors.

The effects on the quality of entrepreneurship could be devastating in the long-term. After mastery-seekers choose other pursuits, the remaining profit-seekers will likely have no qualms about seeking or benefitting from government favors. A vicious cycle of cronyism could ensue, as more favoritism results in a group of business leaders more willing to lobby, leading in turn to more favors.

Victimhood, microaggressions, and a bit of good news

Supposedly the good news is that the national debate in the US over microaggressions is only really a debate because social status is improving among what traditionally have been disadvantaged groups:

As social status becomes more equal, they argue, people become more sensitive to any slights perceived as aiming to increase the level of inequality in a relationship. In addition, as cultural diversity increases, any attempts seen as trying to reduce it or diminish its importance are deemed as a morally deviant form of domination. As the New York University moral psychologist Jonathan Haidt has astutely observed, "As progress is made toward a more equal and humane society, it takes a smaller and smaller offense to trigger a high level of outrage. The goalposts shift, allowing participants to maintain a constant level of anger and constant level of perceived victimization."

Those experiencing what they think are microaggressions seek third-party redress of their grievances by assuming the pose of victim. "People portray themselves as oppressed by the powerful—as damaged, disadvantaged, and needy," write Campbell and Manning. The process heralds the emergence of a culture of victimhood that is distinct from earlier honor and dignity cultures. This is nothing less than demoralizing and polarizing.

Victimhood devalues/ignores individual power and responsibility. The irony is that the solutions proposed by those who supposedly advocate for victims are for entitlement systems that more permanently reduce individual power and transfer it to the state.

Why frequent business travel is so bad for you...

Hmmm... apparently there are a few reasons mixed in with a healthy dose of scaremongering... (Fastcompany):

If aging faster isn’t scary enough, it turns out that frequent business travelers are exposed to more radiation than is considered healthy. "Radiation exposure is hundreds of times higher at high altitude than at ground," says Cohen.

Matter of fact, it’s so high that "there have been calls to classify frequent business travelers as ‘radiation workers,'" he says, and notes that just seven round-trip flights a year from New York to Tokyo (about 85,000 miles) exceeds the limit for public exposure to radiation. As Cohen notes in his paper, "radiation exposure amongst commercial aircrew even exceeds that of nuclear power workers."

NYC's homeless crisis and 'unintended consequences'

It so happens the positions of 'advocates' were for a system that not only preserved the status quo but was self serving - funding the organizations that benefited from homelessness (NYPost via Instapundit):

Then, precisely as we predicted, the number of people in homeless shelters started to rise sharply, going from 38,800 in May 2011 to more than 60,000 at the peak earlier this year.

During the 2011 budget debate, the Coalition for the Homeless dismissed the Bloomberg administration’s predictions about what would happen if the Advantage program was cut by the state. They claimed our dire warnings constituted nothing more than “scare tactics.”

The results speak for themselves.

What makes us who we are?

It's more than an interesting philosophical question as it turns out. A new paper looking at Alzheimer’s and other neurodegenerative diseases suggests that it's not in our intellect or memory but in our moral character (WSJ):

The researchers found that the people who cared for the FTD patients were much more likely to feel that they had become different people than the caregivers of the Alzheimer’s patients. The ALS caregivers were least likely to feel that the patient had become a different person. What’s more, a sophisticated statistical analysis showed that this was the effect of changes in the patient’s moral behavior in particular. Across all three groups, changes in moral behavior predicted changes in perceived identity, while changes in memory or intellect did not.

These results suggest something profound. Our moral character, after all, is what links us to other people. It’s the part of us that goes beyond our own tangle of neurons to touch the brains and lives of others. Because that moral character is central to who we are, there is a sense in which Edith literally, and not just metaphorically, lives on in the people who loved her.

No, communism wouldn't work any better today just because we have better computers...

It's befuddling that anyone would think it would (Bloomberg via Instapundit):

I’ll swing for the fences and argue that no, even with better computers, Communism isn’t going to work. Nor some gauzy vision of post-capitalism that looks like Communism, but with YouTube videos.

In retrospect, Communism seems wildly stupid, or at least, incredibly naive. Did the people who dreamed up this system not understand the enormous incentive problems they were creating? As Ayn Rand dramatized the problem in “Atlas Shrugged”: “It’s miseries, not work, that had become the coin of the realm — so it turned into a contest among six thousand panhandlers, each claiming that his need was worse than his brother’s. How else could it be done?” The incentives of “from each according to his ability, to each according to his need” drive toward falling production, which means there won’t be enough to cover the needs.

Or as a former colleague who fled Communist Poland once told me, “They pretended to pay us, and we pretended to work.” There is a reason that basically all the Communist and Socialist regimes ended in some degree of authoritarianism.

Hugo Chavez: "one of the most disastrous leaders the world has seen"

Another example of how socialism works in practice (Bloomberg):

Yes, he steered a bunch of money to the poor, and did lots of things that drove both labor unions and business leaders nuts. The head of the country’s chamber of commerce even replaced him as president in a 2002 coup attempt that failed after two days. But as of 2005 Venezuela still had the highest per-capita gross domestic product in Latin America (adjusted for purchasing-power parity), and no trouble paying its bills. Chavez supporters could even point to some indicators that poverty and malnutrition were on the decline.

Now, of course, Venezuela’s economy is a disaster. The government stopped releasing regular economic statistics in December, but one official told Bloomberg News the annual inflation rate is 150 percent. The latest estimate from the Troubled Currencies Project run by Steve H. Hanke of the Cato Institute and Johns Hopkins, meanwhile, is that inflation is really 808 percent. Food shortages have become a problem, a debt default seems almost certain, and a complete economic collapse isn’t out of the question. By 2014 Venezuela had, by the World Bank’s PPP-adjusted accounting, slid to fifth place in per-capita GDP in Latin America, behind Chile, Cuba (!), Uruguay and Panama. Mexico and Brazil may pass it this year, despite their own economic troubles. Even next-door neighbor Colombia is getting within striking distance.

The end of (extreme) poverty?

Cato says yes:

Ending extreme poverty may sound like a remote dream voiced by idealists and beauty pageant contestants, but that goal’s attainment is actually closer than you think. The share of people living in absolute poverty (i.e., living on less than $1 a day) has dwindled to around five percent of the world’s population. Much of this progress can be attributed to massive poverty reduction in China that elevated hundreds of millions of people out of destitution.

Ranking the fiscal solvency of American states (and territory)

Not surprisingly, Puerto Rico is dead last. Runners up are Illinois, New Jersey and Massachusetts (Mercatus).

Breakthrough in LASERs could speed rise of self driving cars

As Glenn Reynolds says, faster please (Wired).

Where the moral argument for a "living wage" fails

The war to put additional price controls on wages continues (Mises):

Behind this effort is a philosophical claim that employers are morally obligated to pay “a living wage” to employees, so they can afford necessities (however ambiguously defined) on a single wage, working forty hours per week. This moral argument singles out employers as the morally responsible party in the living wage equation, even though the variables that determine a living wage go far beyond the wage earned.

[...] And yes, it’s true that plenty of activists regularly denounce landlords as “slumlords” or greedy capitalists for charging the highest rents the market will bear. And there are still plenty of activists who argue for price controls on rents and food. But they’re in a small minority nowadays. The vast majority of voters and policymakers recognize that government-dictated prices on food and housing lead to shortages. Setting a price ceiling on rents or home prices simply means that fewer housing units will be built, while setting a price ceiling on eggs, or milk or bread will simply mean that fewer of those staples will be brought to market.

Such assertions are barely even debated anymore, as can be seen in the near-extinction of new rent-control efforts in the political sphere. You won’t see many op-eds this Labor Day arguing for price controls on fruit, gasoline, and apartments. You won’t see any articles denouncing homeowners for selling their homes at the highest price they can get, when they really should be slashing prices to make homeownership more affordable for first-time homebuyers.

So, for whatever reason, homeowners, grocers, and others are exempt from the wrath of the activists for not keeping real wages low. The employers, on the other hand — those who pay the nominal wage — remain well within the sights of the activists since, for some arbitrary reason, the full moral obligation of providing a living wage falls on the employer.

How markets are triumphing over the Saudis

While they had previously been successful at quashing upstarts by flooding the marketing with cheap oil, that strategy hasn't worked this time for the Saudis (WSJ):

What the Saudis and the naysayers closer to home seem to have forgotten is that the free market is the greatest incubator of technological innovation. Energy producers in this country have gauged the challenges of lower prices, are working to tackle them, and it’s paying off.

The technology behind shale production is advancing rapidly, and its costs are falling. Today the industry can tap multiple separate oil pools from a single vertical hole, drilling horizontally through miles of rock with computer-guided, steerable drill bits. Some of these “octopus” wells can feature as many as 18 horizontal shafts.

Articles about falling rig counts don’t take this into account. We’re seeing additional innovations such as the use of recycled “fracking” water, carbon dioxide and other substances to break formations, reducing the use of precious fresh water in drilling.

An extended period of below-$40 prices—if that’s what’s ahead—will have an effect on the industry and many families will have to endure consolidation and layoffs. Weaker and overleveraged players will go out of business. The oil industry as we knew it before prices dropped may never be the same.

But if history is any guide, oil and gas prices won’t remain low forever. And the technology, the talent and the infrastructure associated with America’s energy renaissance aren’t going away. They’re new facts in the global landscape. When prices rise, American capital will flow back to the oil patch and production will ramp up again.

"Technology eliminates jobs, not work"

Reason's Ron Bailey facetiously asks "why are there any jobs still left?" while pointing out how technology has created far more jobs than it's destroyed:

Despite all these jobs and more lost to automation, U.S. employment continued to steadily rise. Why? Because technological progress is a "great job-creating machine," argue Ian Stewart, Debapratim De, and Alex Cole, three economists at the business consultancy Deloitte. The trio argues that "the current discourse is biased towards the job-destroying effects of technological change due to the relative unpredictability of its creative aspects."

Analyzing technological and employment trends over the past 150 years in the United Kingdom, the three find that while machines have eliminated millions of jobs, they have also conjured into existence many more. Even better, living standards dramatically improved as the technological destruction of old jobs proceeded.

How? First, technology substitutes for labor, thus raising productivity and lowering prices. Since 1950, the percent of British incomes spent on food and clothing has fallen from 35 and 10 percent to 11 and 5 percent, respectively. In addition, the real price of automobiles has been halved. In 1948, a television in the U.S. would have cost the equivalent of $12,000 in today's money. Since then, the price of a TV has since fallen by 98 percent.

Second, the sectors that are the sources of innovation expand, boosting the demand for labor. The Bureau of Labor Statistics reports that the number of people working in computer systems design and related fields rose from 400,000 in 1990 to over 1.5 million in 2011. Similarly, the number of people employed in life sciences (biotechnology, pharmaceuticals) increased from 174,000 in 1990 to 1 million in 2012.

Third, technology improves outcomes in areas such as medicine, leading to increased demand for labor in those areas. Consider that the annual death rate for cardiovascular diseases in the United States has fallen from 805 per 100,000 in 1963 to 236 per 100,000 today. Five-year cancer survival rates have risen from 50 percent in 1970 to 70 percent today. Meanwhile, U.S. health-care employment rose from 2 percent of the workforce in 1950 to 9 percent today—that is, from 1.2 million to 13.4 million workers.

"Resource curse" hits Brazil

The "resource curse" that typically hits developing countries really doesn't accurately describe the principle problem: bad government. Brazil is no different whose politicians can most charitably be described as idiots (WSJ):

Buoyed by China trade, nationalist-minded politicians launched a foreign policy meant to reduce the role of the U.S. in Latin America. Brazil blocked a U.S. free-trade initiative for the Americas. They teamed with Venezuela to create a regional security council to supplant one that included the U.S. The foreign minister worked from an office with a huge map of the world upside down, offering the message that the era of emerging markets was at hand.

But the world wasn’t upside down. While Brazil tied itself more closely to anti-American governments like Venezuela, Argentina and Iran, some regional neighbors—Chile, Colombia and Peru—went around Brazil and cut individual free-trade deals with the U.S.

Brazil also started spending its commodity windfall before its oil and ore were out of the ground—another feature of the resource curse.

Anticipating commodity sales, the government spent increasingly heavily. Government banks supplied Brazilians with easy credit. Brazil subsidized energy bills, issued cheap loans to big companies with government ties and built stadiums to host global events such as the 2014 World Cup and the 2016 Olympics.

Americans have more, and work less than 30 years ago

In a way it's depressing that there's almost never any historical context in current political discourse... especially since the demagoguery is used to enact policies that counteract some of the gains they've seen:

Not only are Americans wealthier on average, but they are also working less. The average American worker in 2015 works 30 fewer hours in a year than her counterpart in 1988, and yet is almost $18,000 dollars richer in real terms.

Is capitalism on the decline?

Nope, it's flourishing (TheEconomist via Instapundit):

If you define capitalism as the interaction of individuals with a market economy, the system is advancing, not retreating. New-economy websites such as Airbnb and Etsy allow people to earn money in new ways—renting out their homes while they are on holiday, or selling arts and crafts. In the past, homeowners might have struggled to find renters and hobbyists to find buyers; aggregator websites make the task much easier.

It is true that some of these new websites undermine existing business models, just as file-sharing wrecked music-publishing companies. But investors expect most of these companies to be profitable eventually, judging by the valuations they attract. Google started as a free internet-search business but has found a way to monetise its reach. The move from an economy based on physical goods to one based on software and intellectual property seems to be allowing higher returns on capital than before. The internet has been in wide use for 20 years or so, and corporate profits are close to a post-war high as a proportion of American GDP.

By reducing the cost of information, the internet kills some business models. But not all. New models will appear and people will always be willing to pay for products that convey status, whether luxury watches or fast cars or branded clothing. They can stream music for nothing, but people will spend vast sums to hear rock bands play live.

Another new-economy effect is that the old idea of lifetime employment is fading. More people will follow “portfolio careers”, switching from one employer, or even industry, to another as the economy changes. This will require them not just to learn new skills as they age, but to monitor the economy for new opportunities.

Many more people are likely to be self-employed, offering services to a wide range of customers. In a sense, they will be artisans, not employees. Activities such as sales, marketing and accounting—matters that salaried employees leave in the hands of specialist colleagues—will become the responsibility of the individual. Such workers will have to be more, not less, sensitive to the market economy than the typical office drone.

And then there are pensions. Two decades ago, many workers could rely on a paternalistic system under which companies provided a retirement income linked to their final salary. New private-sector workers merely build up a savings pot, which they must use to see them through their retirement years as best they can.

California: now with more poverty than Mississippi

A bit of a surprise (NewGeography):

Back in the years when the nation had a "California Dream," it would have been inconceivable for things to have gotten so bad --- particularly amidst what is widely hailed as a spectacular recovery. The 2013 data shows California to have the worst housing cost adjusted poverty rate among the 50 states and the District of Columbia. But it gets worse. California's poverty rate is now more than 50 percent higher than Mississippi, which long has set the standard for extreme poverty in the United States

The rush to regulate the "gig economy"

Yep (TechCrunch):

With a number of technologies emerging together to enable the unprecedented ability to coordinate and allocate resources in real time, a corresponding rise of new work and organizational structures may be an inevitability.

Despite this, a number of policy leaders and many in the media are still having the wrong conversation about these platforms, not asking the right questions about the underlying technology shifts taking place.

Instead, they are attempting to categorize the entire industry as either good or bad. In our view, this is almost like 19th century politicians trying to hold a Yes/No vote on industrialization.

What's wrong with the West's economies?

Essay about some of the apparent failings of economies in the west and exploring the role education has to play (NYBooks):

In the classical models I have been describing, no one is trying to think up something new (except perhaps new profitable investments) and no one is attempting to create it. There is no conception of human agency, only responses to wages, interest rates, and wealth. The economy is mechanical, robotic. The crops may be growing, but there is no personal growth. In the classical canon, Bentham, with his “sum of utilities,” portrays individuals like machines working to contribute their share to the general welfare. Joseph Schumpeter portrays “innovation” as produced by hard-driving entrepreneurs who make “obvious” applications of discoveries occurring outside the nation’s economy—as if the economy’s central participants possessed no imagination whatever.

Such classical models are basic to today’s standard economics. This economics, despite its sophistication in some respects, makes no room for economies in which people are imagining new products and using their creativity to build them. What is most fundamentally “wrong with economics” is that it takes such an economy to be the norm—to be “as good as it gets.” The cost is that elements of the Western economies are becoming products of this basically classical economics, which has little place for creativity and imagination.

Why do so many intellectuals hate markets?

Because they don't trust people... interesting discussion/podcast (Cato):

Robert Nozick, in his essay “Why Do Intellectuals Oppose Capitalism?” proposed that many highly-educated public intellectuals tend to lean towards collectivism and authoritarianism because they expect society to work best in the way that schools and the academic system (which is the system they are most familiar with) operates.

Why no one really wants to make vaccines anymore...

So the companies that may have cured Ebola don't actually expect to make money from it... there's something horribly bizarre about this (fool.com via Instapundit):

However, for investors who bid up Ebola vaccine developers in 2014, there may not be much financial reason to cheer. Even if Merck and NewLink are successful in bringing rVSV-ZEBOV to market, it may not wind up making either company a profit (aside from the $50 million NewLink received upfront from Merck for worldwide rights to the vaccine). The reason is that vaccines are wholly dependent on outbreaks and government stockpiling demands. Out of the gate there could be strong initial demand for the vaccine, especially in select developed nations and the worst-affected African countries. Beyond an initial stockpiling, though, sales of rVSV-ZEBOV could dry up, or at best be incredibly lumpy.

Of course, there are some who also believe that drug companies should take this approach to all their drugs... and then wonder why no one wants to create new drugs.

Tipping and travel...

Useful but recurring issue... how much to tip while travelling abroad? (WSJ)

This is the charter school that NYC's mayor wants shut down

"New York's largest charter network outperformed traditional public schools in wealthy zip codes" (Reason.com):

Success Academy schools did well in English—68 percent of students were proficient, compared with 30 percent in the city over all—but in math, the scores were astonishing. Ninety-three percent of Success Academy test-takers were proficient in math, compared with 35 percent citywide.

To put that into perspective, of the 1,282 public schools tested, just 12[*] were part of the Success Academy network, or 1 percent of the total. Yet 5 out of the 10 schools that scored highest in math were part of the Success Academy network. Of the 20 schools that did best in math, 9 were part of the Success Academy network. All twelve schools in the network were ranked in the top 40 for math. Results of this sort were unheard of before Success Academy arrived on the scene.

And they say that conservatives are the "mean ones"? (paulg on Twitter)

As true then as it is now...

Uber is so obviously a good thing that you can measure how corrupt cities are by how hard they try to suppress it.

— Paul Graham (@paulg) July 9, 2012

More: Researchers at Philadelphia’s Temple University that suggests the entry of Uber’s low-cost ride service, Uber X, into 14 California counties led to a 3.6 to 5.6 percent decline in drunken driving deaths (KQed via PaulG).

Share of people in and out of poverty

How can you not be incredibly optimistic when you see stuff like this? Two centuries ago your chance of living in poverty was 94% Today it's 14%. Though, apparently you can as the first comment in the twitter stream is asking about inequality (Max Roser)

Brink Lindsey's guide to fixing the US economy *and* inequality

Four steps (Reason.com): fix intellectual property rights - restrictive patents, free immigration particularly for highly skilled workers and entrepreneurs, dismantle excessive occupational licensing and zoning. Read the white paper (PDF, Cato).

Update: Even the White House agrees that occupational licensing hurts jobs and consumers (Reason.com).

"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.”