Et tu, Stimulus?

Any excuse to spend money? Even better when you get to spend gobs of it? Nevermind, of course, the consequences (Boston Review via Instapundit)

Before the recession, the Congressional Budget Office (CBO) projected we would have 5 million more jobs at the end of 2014 than we actually do. It also projected that the GDP would be more than 11 percent higher in 2014 than it is now. This translates into a difference in annual output of roughly $2 trillion or more than $6,000 per person. They predicted that wage and salary income would be roughly 20 percent higher than it is today. Many economists had similar projections.

What about "national socialist" suggests the Nazis were 'right-wingers'?

It's kind of still befuddling why socialism is still considered socially acceptable when Nazis are not...

Related: Well annotated rant on the issue (monsterhunternation).

Where have the entrepreneurs gone?

Not America (LATimes) - "Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does." (Investors.com)

Related: According to Popular Mechanics (via Instapundit), these are the 14 top startup cities, none of which are in Silicon Valley.

Kinda like Rock & Roll and the fall of the USSR?

From Reason.tv: Bollywood vs. Bin Laden (YouTube): Why radical Islam fears pop culture

When it comes to the oil, why it's not the 80s anymore

The Saudis are betting against American innovation - which generally isn't a good bet to make. From the WSJ:

Today, the discovery and development of oil from shale rocks means that oil output is faster paced and near at hand—in Texas and North Dakota, Colorado, Oklahoma, Wyoming, even Ohio. Drilling and hydraulically fracturing a well takes weeks, not years. An expensive well costs $10 million, compared with the billions needed to drill offshore wells and build associated infrastructure. Moreover, expenditure of both time and money are falling fast.

The oil field investment cycle has shortened. Wildcatters in Texas discovered the Eagle Ford Shale in 2008. Within five years, it was pumping a million barrels a day—thanks to an influx of capital that paid for drilling thousands of new wells. Each well roars into life and then drops off fast. Without constantly drilling new wells, these oil fields will peter out. [...]

Companies like EOG Resources Inc. are drilling better wells faster. EOG said recently it takes 4.3 days to drill its average well in the Eagle Ford Shale in South Texas, down from 14.2 days in 2012. What’s more, as it drills more of them, it has figured out how to locate wells to get the highest oil output.

Combining lowering costs and increasing output means that EOG says it can drill wells at $40 per barrel in North Dakota, South Texas and West Texas, while still earning a 10% return. We “pride ourselves on being a very efficient operator,” Billy Helms, EOG’s head of exploration, said at a recent industry conference.

Since oil prices began to fall, many companies have cut their capital spending plan for 2015 and the number of drilling rigs in the U.S. has fallen. But output has continued to increase.

Quote of the day

Michael Cannon at Cato: "People who pay for their own consumption don’t have the luxury of being able to pretend that tradeoffs don’t exist."

'Je suis Charlie'

I think this response from the New Yorker framed it remarkably well:

But the murders in Paris were so specific and so brazen as to make their meaning quite clear. The cartoonists died for an idea. The killers are soldiers in a war against freedom of thought and speech, against tolerance, pluralism, and the right to offend—against everything decent in a democratic society. So we must all try to be Charlie, not just today but every day.

A note of optimism...

If it bleeds, it leads... and probably why this kind of stuff doesn't often reach our monitors - with much of this good news directly as a result of the proliferation and hard won gains of markets and capitalism (Cato): 26 charts and maps that show the world is getting much, much better (Vox)

Missing in the US: young entrepreneurs

The irony is that I would have thought the opposite especially with the emergence of the young tech companies... but the trend is even more troubling as there hasn't even been a shift in increasing entrepreneurship amongst older Americans - this despite the fact that technology makes it easier than ever to start a business (WSJ):

The decline in young entrepreneurs is part of a broader drop in private business ownership over the past 25 years. Between 2000 and 2012, new business formation slowed even in such high-growth sectors as technology, according to economists John Haltiwanger and Ryan Decker of the University of Maryland and Javier Miranda of the Census Bureau.

Slowing U.S. population growth since the early 1980s has reduced the supply of potential entrepreneurs of all ages, and lessened demand for new goods and services, said Mr. Litan of the Brookings Institution. Meanwhile, business consolidation has led to more formidable competition for startups, making it harder for new entrants to gain a spot in the market, he said.

Overall, the U.S. “startup rate”—new firms as a portion of all firms—fell by nearly half between 1978 and 2011, according to an analysis by Mr. Litan and his research partner, economist Ian Hathaway.

Building a sustainable business model for primary healthcare

With the turbulence in the US healthcare system while Canada's healthcare system frays at the seams, keeping up with the Qliance model for affordable concierge medicine is fascinating (Time):

Since then, they’ve signed up previously undreamed-of populations: big private employers like Expedia and Comcast, public and industry employee unions like the one for Seattle firefighters and–most radical of all–at least 15,000 Medicaid patients.

The private company’s results so far suggest that the model is scaling up nicely. Qliance now serves some 35,000 patients; the cost of about half of them is paid by the government through traditional and expanded Medicaid programs. Treating a wide variety of patients–young and old, healthy and chronically sick, well-off and poor–Qliance claims to be saving approximately 20% on the average cost of care compared with traditional fee-for-service providers. The company’s staff has tripled over the past year, and Qliance is looking to expand beyond Washington.

SpaceX: A launch towards affordable space travel to watch for January 6th

This is pretty exciting... SpaceX will attempt to land a rocket after launch (PopSci):

Landing on such a small platform that isn’t completely stationary won’t be easy, and Musk estimates a 50 percent chance of success on January 6. Plus, the landing will occur after the first stage separates from the second stage -- the part of the rocket that will take the cargo capsule the rest of the way to the ISS. That means not all of the rocket will be saved, as the second stage will never be recovered. (However, Musk plans to recover the second stage in future launches.)

Still, the fact that SpaceX is attempting such an endeavor instills hope for a cheaper commercial spaceflight industry. According to Quartz, the cost to build a Falcon 9 rocket is $54 million, but the cost of its fuel is only $200,000. If launching a rocket in the future only required refueling and other servicing costs on the ground, that could bring down the price of going to space by millions of dollars.

George Deeks; "In order not to be reduced to sorrow and bitterness, we must look forward."

I found this speech remarkable in a number of ways. While probably an oversimplification, I think that it encapsulates a fundamental difference in approaches one can take to, and ultimately overcome, adversity/tragedy: look forward, and "secure the future" instead of dwelling on the past. George Deeks is a Christian Arab and Israel's Deputy Consul to Norway:

Office politics are unavoidable

...it's all in how you manage them and prevent them from becoming toxic (HBR):

The best managers recognize the psychological underpinnings of office politics and do two things in response: they manage the way they themselves behave, and they are careful about how they motivate others. People who are perceived as apolitical display high levels of congruence between what they say and what they do, and they are also good at rewarding others for what they were required to do, while holding them accountable for what they fail to deliver.

As such, good leaders focus on the bright-side personality characteristics associated with their ability to navigate office politics: social skills, emotional intelligence, and intuition. They recognize that the more secretive, selfish, hypocritical, hierarchical, and incompetent they appear in the eyes of employees, the more political the organization will become. So they are driven to come across as competent, transparent, approachable and altruistic.

And in motivating their employees to try harder, they avoid pitting employees against one another and instead focus on out-performing common adversaries: the company’s competitors. They do this through articulating a meaningful mission — a vision that resonates and motivates people to achieve a collective goal. This keeps the team focused on beating their competitors, rather than each other.

"The final nail in the Keynesian coffin?"

I'll say no. Have politicians ever let evidence stand in their way of consolidating power and increasing spending? Cato's Dan Mitchell is also skeptical but points to one academic - Professor John Cochrane of the University of Chicago:

The tide also changed in economic ideas. The brief resurgence of traditional Keynesian ideas is washing away from the world of economic policy. …Why? In part, because even in economics, you can’t be wrong too many times in a row. …Our first big stimulus fell flat, leaving Keynesians to argue that the recession would have been worse otherwise. George Washington’s doctors probably argued that if they hadn’t bled him, he would have died faster. With the 2013 sequester, Keynesians warned that reduced spending and the end of 99-week unemployment benefits would drive the economy back to recession. Instead, unemployment came down faster than expected, and growth returned, albeit modestly. The story is similar in the U.K.

I'm betting on technology, American entrepreneurs and human ingenuity

I suspect that the WSJ article even underestimates the value of technology here that will keep driving costs of production lower. If I'm right, the world of hurt couldn't be happening to nicer people... (WSJ)

Saudi Arabia is taking a risk by letting oil prices plunge, said Arab, American and European officials. Saudi officials have said their economy can survive at least two years with low prices, thanks partly to the kingdom’s $750 billion foreign-exchange reserves. Arab officials believe many less-efficient producers will be driven out of the market.

Still, some oil-industry executives said, Riyadh and Mr. Naimi may underestimate how technology and the shale-oil boom have fundamentally altered energy markets. Many U.S. companies, they said, can make money or break even with oil below $40.

Not so shocking: trade leads to development

Again reinforcing that what's needed for economic development is trade, not aid - when a random group of small rug producers was given the opportunity to export handmade carpets to high-income markets (study by Atkin, Khandelwal and Osman, via Chris Blattman):

Treatment firms report 15-25 percent higher profits and exhibit large improvements in quality alongside reductions in output per hour relative to control firms.

These findings do not simply reflect firms being offered higher margins to manufacture high-quality products that take longer to produce. Instead, we find evidence of learning-by-exporting whereby exporting improves technical efficiency.

First, treatment firms have higher productivity and quality after accounting for rug specifications. Second, when asked to produce an identical domestic rug using the same inputs, treatment firms receive higher quality assessments despite no difference in production time. Third, treatment firms exhibit learning curves over time.

Finally, we document knowledge transfers with quality increasing most along the specific dimensions that the knowledge pertained to.

New Orleans: A successful experiment in school choice and the unintended consequences of regulation

The Japanese economic recovery that wasn't

Inspired by the acolytes of Keynesian economics, Abenomics doesn't appear to be working out so well (Cato):

The government spending of tens of billions of dollars into public works projects — “investments,” as President Obama calls them–caused the Japanese debt burden to catapult from 19 percent of GDP, among the lowest in the industrialized world, to over 142 percent, among the highest.

Meanwhile Japan keeps printing money, as if it can devalue its way out of the crisis. From the late 1980s through 2000, the central bank’s balance sheet more than doubled — a precursor to the “quantitative easing” carried out by the U.S. Federal Reserve. And since 2000, the balance sheet has doubled once again.

But where is the promised recovery?

The expected Keynesian “multiplier effect” from spending and a flood of yen into the market never arrived.

Housing starts in Japan are still lower than the level nearly 25 years ago. Unemployment is still low by international standards, but wages have been flat.

It’s all a tragic story of economic playmaking that has gone all wrong. But don’t tell that to Paul Krugman of the New York Times, who predicted Japan “may end up showing the rest of us the way out” of stagnation.

Joseph Stiglitz, a fellow Nobel laureate of the Keynesian variety, advised American politicians to use the same strategy: “What we really need in the U.S. is expansionary policies that Abenomics is bringing into Japan.”

Differentiating between democracy and freedom

A useful quote (FoxNews):

Real freedom means doing what you choose as an individual, not waiting for the rest of society to vote on whether you can.

What comparing the growth of students from India and China says about their respective development

From WSJ:

China’s rise to the top—it had 200,000 more students last year to the U.S. than it did just eight years earlier—reflects the growing incomes and increasing globalization of the country’s citizens, analysts say.

Chinese students were much more likely to go to the states for undergraduate studies than Indian students. Only around 12% of Indians that study in the U.S. were there for undergraduate studies during the past school year, compared to 40% of Chinese students, the IIE study showed.

It makes sense, said Akhil Daswani, chief operating officer of OnCourse Vantage, an education consulting company in India, an undergraduate degree is a luxury few Indians can afford.

“If you are going to spend $250,000 over four years you have to have a considerable amount of disposable income,” Mr. Daswani said. “Undergraduate schools are marketing heavily (in China). It is the first place they want to go because they are getting so much business.”

When they go for an international degree, Indians prefer to get more bang for their rupee, they tend to go for two-year graduate courses that lead to high-paying jobs.