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

Sadly true (via Bakadesuyo on Facebook):

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

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

A must watch if you're interested in development -

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

On Purpose and Productivity

via Swissmiss here and here:

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

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

Culture Shmulture - Wherein Romney Gets it Wrong

Romney recently made the following comments (via ForeignPolicy)

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

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

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

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

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

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

The Right Chord of Optimism

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

 

Quote of the Day

William Easterly (via TheThinkerBlog):

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

Yep, that pretty much sums it up...

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

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

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

The world needs more Wal-mart

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

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

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

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

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

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

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

"Spain is not Uganda."

Heh.  "Discuss" (BBC).

On minimum wage and the "race to the bottom"

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

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

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

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

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

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

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

The hardest job in the world...

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

Steve Jobs: "Don't Settle."

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

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

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

What You Know vs What You Do

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

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

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

via JeffreyEllis, Walter E Williams:

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

"The Basic Elements of Creativity"

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

On How the Rich Spend Their Money

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

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

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

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

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

Both are rooted in ignorance.

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

Why Free Markets and Private Property Rights Matter

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

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

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

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

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

Finally, a Sustainable Fiscal Solution

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

The Economics of Glenn Beck's GBTV online venture

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

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

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

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

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