The Price of "Doing Something"

It's become a common refrain for those who defend the Democrats and the Obama Administration that one year not enough time to judge their respective performances especially after the mess that the previous administration left behind with wars and bailouts. Didn't Obama have to "do something" after all?

One defense is that it was Bush's budget that was implemented in 2009 though the Obama transition team played a significant role in crafting the response by the government to the financial crisis after the 2008 election (Wall Street Journal). Another argument is that the Bush Administration 'borrowed money to pay for tax cuts to the rich' which has resulted in significant deficits. As of this year, the Bush tax cuts have 'expired' - so presumably the deficits should be gone or at the very least considerably reduced? Besides, how much more could Obama possibly spend more than Bush given that the Iraq war seems to be winding down and the engagement in Afghanistan is much smaller by comparison?

From the Washington Post - Projected Deficits, as of March 21, 2009:

Of course, a lot has changed in the span of a year. From The Hill (emphasis my own): "Annual deficits under Obama’s budget plan would be about $976 billion from 2011 through 2020, according to a CBO analysis of Obama's plan released Friday. [...] The independent CBO and Obama expect a similar amount of government spending over the next 10 years -- about $45 trillion. But the CBO expects Obama's policies to bring in $35.5 trillion in tax receipts, less than the $37.3 trillion expected by the White House." And yes, this data includes all war spending.

But what of "stimulus spending". Presumably that had an effect? Ignoring for a moment the numerous documented bizarre earmarks and spending under the guise of stimulus, at least insofar as 2009 goes, from a study by Joshua Aizanman and Gurnain Kaur Pasricha (Marginal Revolution) - the effect on the economy has been "close to zero":

This note shows that the aggregate fiscal expenditure stimulus in the United States, properly adjusted for the declining fiscal expenditure of the fifty states, was close to zero in 2009. While the Federal government stimulus prevented a net decline in aggregate fiscal expenditure, it did not stimulate the aggregate expenditure above its predicted mean.

Things will only get worse with the mounting unfunded liabilities because of retiring baby boomers and doesn't include any healthcare plan that they're hoping to pass. Definitely not fun times for US taxpayers. Any equivalence to deficits during the times of the Bush Administration (which I also disagreed with and were largely the result of wasteful spending) should and can be rejected on their face and with extreme prejudice. The current administration very much owns their recovery plan and response to the financial crisis upon which I believe they've used as justification for significant spending on a much larger and arguably radical agenda.

Update (March 17, 2010): "Over the last five decades, most forms of government spending have grown. The main exception is military spending, which fell after the end of the Vietnam War and the cold war." (NYT)

Five Lies about the American Economy

Instead of some of the hyperpartisan bickering - from a relatively neutral (libertarian) source: "Five lies about the American economy" (Reason). Of course on the plus side, Americans don't seem to be believing them as evidenced by the, er, popularity of Congress (Rasmussen).

This explains a lot...

"What's our priority for aviation infrastructure? Safety. (Not efficiency)" (Infrastructurist) - I didn't realize that the tradeoff was that great.

Lawyers, Land Rights and Disaster Recovery

Underscoring the need for land rights in the aftermath (not to mention during the recovery) of a natural disaster from Marginal Revolution:

Haiti right now has a massive scarcity of land -- in the legally usable sense -- and is facing a massive recalculation problem as a result. Keep in mind that in relative terms, land is a more important part of the Haitian economy than almost anywhere else. After food, land is arguably the most important market in the Haitian economy and that has ceased to work.

As much as it might sometimes pain me to say this (some times more than others), lawyers can indeed play an important role in development. One of sad truths of extreme poverty is that it's self inflicted by bad governments and compounded by bad policies.

Economics Exemplified in a Picture

For a laugh - from Greg Mankiw:

Boone Pickens on US Energy Policy: 'We're the Dumbest People in the World'

Governments distort markets even when they favor one technology over another - in this case, wind and solar over natural gas. This, despite the fact natural gas could mean that the US could become energy independent and dramatically reduce greenhouse gas emissions not to mention dramatically cheaper (h/t Paul Kedrosky) - imagine filling your car up for under $1 a gallon:

Too Awesome for Words

There's something amazing about Rube Goldberg Machines - I can't even imagine the number of hours of resetting to get it to go right - from OK Go's new video:

Oh, and the music ain't half bad either. Imagine the efforts to get the timing let alone everything to work out right. (And if you're curious, the outsourced the production of the machine itself to Synn Labs).

Life as a Game?

Just clearing my tabs while waiting for the game to get going again. Imagine a world of disposable technology and sensors - where you get points for the game of life starting from when you start brushing your teeth (10 points for doing so, maybe another 30 for doing it for the full 3 minutes?).

My first reaction was it'd be a bit funny, it'd also be a bit of a scary world if this is where we're headed... if you don't have time start watching starting around the 20 minute mark (Kokatu):

Wii Games - E3 2010 - Guitar Hero 5

Documenting a Relationship using Photoshop

If you've got a minute you'll probably enjoy this - a bit of clever marketing by a husband and wife team "documenting their relationship" with the help of photoshop - here's the first image (TheTelegraph):

Fun Times Ahead...

From my blogreader this morning:

Bailout/Nationalization gone awry: Fannie Taps Treasury for $15.3 Billion More After a 10th Loss (Bloomberg)

Self-explanatory: Annual report shows [US] government's financial position hit $11.46 trillion deficit in 2009 (Yahoo/AP)

Obama Administration adds friction to the hiring/firing process of workers, because well, there are obviously too many jobs out there - Alex Tabarrok: Insiders, Outsiders and Unemployment (Marginal Revolution)

The issues are not uniquely American: Man who broke the Bank of England, George Soros, 'at centre of hedge funds plot to cash in on fall of the euro' (DailyMail)

PSA: "Keep off the pounds or lose your mind more rapidly"

Another good reason to keep fit (FuturePundit). Of course, then there's this (JammieWearingFool via Instapundit) - though I don't think my love handles are going to protect me from much of anything at the moment.

Should we at least give them points for honesty?

"Atlanta Progressive News fires reporter for trying to be objective" (Creativeloafing via Instapundit):

Atlanta Progressive News has parted ways with long-serving senior staff writer Jonathan Springston. Apparently, Springston’s affinity for fact-based reporting clashed with Cardinale’s vision.

And, no, that’s not sarcasm.

In an e-mail statement, editor Matthew Cardinale says Springston was asked to leave APN last week “because he held on to the notion that there was an objective reality that could be reported objectively, despite the fact that that was not our editorial policy at Atlanta Progressive News.”

Montana's No Speed Limit Safety "Paradox"

Square quotes mine. Choice quotes here (The Highway Safety Group, from an article in 2000):

This begs the question, do people change the way they drive when there is no speed limit? The evidence suggests the answer is yes. The measured vehicle speeds only changed a few miles per hour as predicted – comparable to data collected from other western states. What changed? The two most obvious changes were improved lane courtesy and increased seat belt use. Did other driving habits and patterns change as well?

The lower–than–US fatality rates on the German Autobahn (where flow management is the primary safety strategy), and now Montana's experience, would indicate that using speed limits and speed enforcement as the cornerstone of US highway safety policy is a major mistake. It is time to accept the fact that increases in traffic speeds are the natural byproduct of advancing technology. People do, in fact, act in a reasonable and responsible manner without constant government intervention.

It's sort of like red light cameras that are supposedly for our own good. Nevermind that they tend to increase accidents (National Motorists Association) or that the real reason is they provide cash to revenue hungry municipalities.

Quote of the Day: "It's my health, it's my choice"

From Danny Williams, Premier of Newfoundland and ardent defender of public healthcare after he went for heart surgery at a hospital in Florida (NationalReview via Instapundit).

Another Solution to Obesity: More Wal-marts

More on my love affair with Wal-mart (theDailyBeast):

Surprising research suggests Wal-Mart can actually reduce obesity in low-income neighborhoods starved for affordable fresh food. [...]

Wal-Mart significantly lowers prices in the communities where it sets up shop, even for people who never shop at the store. On food alone, Hausman and Leibtag found that Wal-Mart delivers a 25 percent benefit to consumers, which has a disproportionately positive effect on the poor because they spend a larger percentage of their income on food.

Makes sense to me. What doesn't make sense are the people who cling to their Wal-mart hate - it's almost as if they love unions, hate efficiency, poor people and local communities or something.

Quote of the Day

Ilya Shapiro (TheDailyCaller):

It’s refreshing to see Canadians display more patriotism than they have traditionally: it’s embarrassing for a country to define itself as being merely “not the United States”

Indeed. Though I wonder if Shapiro was familiar with Canada's $116 million "Own the Podium Campaign" (Bloomberg) that news commentators have been framing as bringing our medal count to at least parity to the Americans. Of course now that the Americans beat Canada in hockey for the first time since 1960, personally I'm just glad that they're actually looking at spending money on useful things as opposed to doubling down.

$400 million and 8 years later... the Bloombox cometh?

Having raised an eye popping $400 million dollars, the Bloombox, a fuel cell is launching on Wednesday. Fuel cells currently in development are something to pay attention to - and success is all dependent on whether or not they can get the costs of production down to economical levels. That's where skeptics have their greatest doubts.

While they haven't released any numbers that I've been able to find, during his interview with CBS's 60 Minutes, the founder KR Sridhar hopes to have one of these boxes (roughly smaller than a loaf of bread) power every home in North America in 5 to 10 years. Definitely can't fault him for his ambition.

Watch CBS News Videos Online
I'm quite hopeful and optimistic that there will be at least one green technology that will become viable in meeting our energy needs to the point of self sufficiency (and relatively soon) - but it'll all depend on the economics. The technology will become sustainable because of the economics not because of government fiat and that's a good thing.

See more at CBS and CNN.

Update - A Business Week article suggests that it's not yet economical (December 7, 2009) though according to their 60 minutes segment, they're taking advantage of the subsidies in the meantime:

"Sridhar figures it will take three to five years before Bloom boxes reach "grid parity" for home use, or price competitiveness with traditional residential-scale electric supplies.

The internet as a tool for tyranny

An interesting look at how communication technology/social networking can act to diffuse discontent against autocratic governments forestalling change (WSJ):

the role that the Internet played in the recent events in Iran shows us why: Revolutionary change that can topple strong authoritarian regimes requires a high degree of centralization among their opponents. The Internet does not always help here. One can have "organizing without organizations"—the phrase is in the subtitle of "Here Comes Everybody," Clay Shirky's best-selling 2008 book about the power of social media—but one can't have revolutions without revolutionaries.

Contrary to the utopian rhetoric of social media enthusiasts, the Internet often makes the jump from deliberation to participation even more difficult, thwarting collective action under the heavy pressure of never-ending internal debate. This is what may explain the impotence of recent protests in Iran: Thanks to the sociability and high degree of decentralization afforded by the Internet, Iran's Green Movement has been split into so many competing debate chambers—some of them composed primarily of net-savvy Iranians in the diaspora—that it couldn't collect itself on the eve of the 31st anniversary of the Islamic revolution. The Green Movement may have simply drowned in its own tweets.

I'm not sure how much I agree though. Personally, while I suspect that it may delay change - because the Internet allows information to proliferate faster, a larger consensus might make changes less violent - at least that'd be my personal speculation. Further, the internet, is merely a tool that can be used as effectively or ineffectively as people choose. Alternatively, is the takeaway that we should be restricting access if we want change?

Another reason to love Walmart

At least in some cases, their food tastes better! (Reason.com)

Update (Feb 23, 2010): More from The Atlantic: The Great Grocery Showdown.

The downside of "location based" social networking

Please rob me.

Quote of the Day

Colonel George C Marshall: The enemy always has problems of his own of which you are unaware - as David Foster from Chicagoboyz notes, it may be quite appropriate as some fret over the fall of western dominance.

It's not that we need a "different kind of Capitalism"...

...we simply need more of it. I've a great deal of respect for Acumen Fund - though in many respects like Accion, it still puzzles me why they would not pursue a venture capital/private equity type model in the developing world instead of the quasi non-profit model they have.

They have a good reading list out as provided by founder Jacqueline Novogratz (Public Radio via Chris Hughes). In the list I'd recommend William Easterly's The White Man's Burden, Hernando De Soto's The Mystery of Capital, but also add my own - Brink Lindsey's Against the Dead Hand (as recommended in the past as it provides context).

Death of the MegaCorporation and the Evolution of Education

Some interesting thoughts, from Dave Troy, an entprepreneur and blogger in Baltimore, on why the utility of the megacorporation is falling while our education system increasingly fails to deliver the skills that help us adapt. Related thoughts here at the Los Angeles Unified School District, where administrators aren't able to fire bad teachers and instead pay them up to $50,000 USD to leave (LAWeekly).

Bing's Augmented Reality Maps

If you have 8 minutes, check out Blaise Aguera y Arcas' demo of Bing's augmented-reality maps at TED - the possibilities are both stunning and scary:

If you're bored...

I really shouldn't click on these massive productivity killers but I just don't seem to have any self control. If you're bored, check out "failbooking" - funny facebook statuses.

On Happiness

Try the possessions exercise (Jseliger):

List the ten most expensive things (products, services, or experiences) that you have ever paid for (including houses, cars, university degrees, marriage ceremonies, divorce settlements, and taxes). Then, list the ten items that you have ever bought that gave you the most happiness. Count how many items appear on both lists.

Personally, my thinking is that money is what comes after building products and services clients love (or grow to love). Having fun on the way and believing in what I do doesn't hurt either.

Tea Time

The most balanced perspective on the Tea Party Convention that much of the media has been ridiculing of late - and written by one of my favorite political/law bloggers (WSJ). Despite often bizarre attempts to paint these people as the fringe, these are by and large non-partisan (or perhaps avidly anti-incumbent/statist) people who remarkably also have jobs - not only actively challenging Democrats but also the Republican leadership.

The United States: Home of the "Mostly Free"?

The greatest threat to US economic power isn't China, it's from within. The irony? The US has fallen below Canada in the Heritage Institute's Economic Freedom Index. From Investor's Business Daily:

A nation's corporate tax rate is important. Its effect on a country's competitiveness and its ability to draw or repel investment has a direct impact on economic health.

Companies are being driven offshore by a combined 39.1% federal and state tax rate that is second only to Japan's. In some states, the combination leads the world. California, which would have the world's eighth largest economy as an independent country, teeters on bankruptcy. If you were a CEO, would you headquarter there or in Switzerland or Ireland, which also rank above us?

And with today's budget, the size of government in the US is only set to get bigger (Greg Mankiw). President Obama's exhortations of concern over spending amidst near unprecedented levels of spending (not even taking into account unfunded liabilities like Social Security + Medicare that are set to skyrocket) are like Augustine of Hippo's famous plea (Wikipedia): "Grant me chastity and continence, but not yet".

Update (Feb 13): Welcome Back, Jimmy Carter? (Chicago Daily Observer)

Update #2 (Feb 14): Crony Capitalism returns (Washington Examiner). One of the puzzling strawmen liberals often build is that crony capitalism is the logical conclusion of capitalism and markets when the reality is quite the opposite.

Teetering China?

Michael Pettis provides historical context on why China's foreign currency reserves don't make it more resilient to a crash.

Libertarian Humor

Heh (Instapundit):

One day shortly after the Second World War ended, Winston Churchill and Labour Party Prime Minister Clement Attlee encountered one another at the urinal trough in the House of Common’s men’s washroom. Attlee arrived first. When Churchill arrived, he stood as far away from him as possible. Attlee said, “Feeling standoffish today, are we, Winston?” Churchill said: “That’s right. Every time you see something big, you want to nationalize it.”

And sadly, just as Ontario has banned talking and texting on cell phones without hands free devices, comes a study that "Cell Phone Laws Have No Impact On Accidents". Of course, if I were cynical I'd suspect they would have passed the law anyway.

China's Real Estate Bubble

ChinaLawBlog references a few datapoints on China's real estate market (Chovanec). I'd be curious how rising real estate prices compare to the rising incomes.

Chovanec argues that it's difficult to reconcile rising real estate prices and falling rental prices but not necessarily. If enough people decide that buying a house is better than renting, this will reduce the demand for rentals (the inverse has been happening recently in a lot of US cities where real estate prices have fallen while rental prices rise).

It would be more interesting (and convincing) to compare income levels to real estate prices compared with other developing countries around the world and the cap rate (Wikipedia, equivalent to the price/earnings ratio) of commercial real estate. It's useful to remember that real estate has intrinsic value based on the underlying productivity who live and work there (neoHouston).

Personally, I suspect when you look at both a bubble exists but I'm not entirely convinced that it's as overvalued as some people suspect given that incomes in larger cities rise faster than elsewhere and particularly in China (just based on some basic numbers in Guangzhou).

Whither the University?

A professor of Computer Science at Georgia Tech asks: "Could universities become extinct in the next twenty-five years?" If our goal is to encourage merit, this would be a good thing pre-supposing something will emerge / is emerging that's better.

His bottom up approach to examining how a university creates value and why the traditional advantages conferred to universities is disappearing is interesting. Indeed, quite a large number of interesting opportunities come to mind particularly in developing countries where leapfrog opportunities exist for implementing widescale post secondary education on a broad market.

Because some things are just useful to know...

Popular Mechanics: How to Fall 35,000 Feet—And Survive.

The Most Trusted Name in News...

I'm posting this because I know it will disproportionately bother some people - but the partisan divide sounds about right to me (PDF, and from a "Democratic polling firm" (Rasmussen), PublicPolicyPolling, no less):

A new poll asking Americans whether they trust each of the major television news operations in the country finds that the only one getting a positive review is Fox News. CNN does next best followed by NBC News, then CBS News, and finally ABC News.

49% of Americans say they trust Fox News to 37% who disagree. Predictably there is a large party split on this with 74% of Republicans but only 30% of Democrats saying they trust the right leaning network.

CNN does next best because it is the second most trusted of Democrats, Republicans, and independents. 39% say they trust it compared to 41% who do not, with 59% of Democrats, 33% of independents and 23% of Republicans saying it carries credibility with them.

Given how absurdly biased and partisan much of the mainstream networks have become, it doesn't seem surprising that Fox News, finally attempting to represent a rather large underserved community has rapidly become the most watched news network (though I generally find annoying to watch the rant sessions versus the news segments).

Update: Some are inclined to blame Fox News for everything and that's lead to an amusing correction from yesterday, made even more funny beyond the fact it wasn't caught by editors, was the fact it was written by a former cabinet member in the Clinton Administration (Salon):

The Jan. 25 article "Is the President Panicking" originally stated that Fox News led the charge against Bill Clinton in the '94 midterm elections. Fox News did not come into being until 1996. The story has been corrected. [Correction made 1/27/10]

Checklists Reconsidered

So I've ordered Atul Gawande's The Checklist Manifesto (Amazon). In the meantime, the Wall Street Journal's review disagrees with his approach to applying checklists to most things (WSJ):

In fact, many aspects of modern life suffer from too many checklists. Teachers, for example, are shackled to lists and protocols that prevent them from doing their jobs properly (e.g., disciplining students). Complying with the requirements of due process—a kind of legal checklist intended to protect against abuses of police power—has corroded the authority of teachers to maintain basic standards of order and respect. [...]

Accomplishment is personal. That's why giving people the freedom to take responsibility is so important. Organizational techniques can be useful—we all rely on checklists informally—but formal protocols can disrupt focus and undermine success in many life activities. Dr. Gawande is right to note that checklists are indispensable in situations where a small mistake can lead to tragic consequences, as in surgery. But his call for a broad checklist regime would be counterproductive—fraught with all the dangers of bureaucracy and excessive law.

I get the sense though that where consistency is important and where similar problems arise with a known series of outcomes, using checklists is a good approach. However, ineffective checklists as outlined by the WSJ, may not be a question of a problem with checklists but rather what's in the checklists and how they get applied... but at least that's what I'm thinking for now. I'm looking forward to getting and reading the book and will, with luck and time, draft a summary of it to post.

"The Problems that Dollars Can't Fix"

Another contrarian view on the humanitarian efforts and the plight of Haitians even prior to this disaster (Ottawa Citizen): "Haiti is not a basket case from the absence of foreign aid. Quite the contrary."

One also hopes that this was because of bureaucratic incompetence and not political correctness (USA Today).

The Dramatic Fall of Global Poverty

The best remedy for human suffering and tragedy following natural disasters is to reduce poverty - for this and innumerable other reasons, the dramatic fall in poverty around the world is great news (voxeu via kedrosky):

More on the Forces of Good

Newsflash: Markets work! The more baggage fees that US airlines have been charging customers, the faster their overall revenue has been collapsing.

A Win for the Forces of Good

Republican Scott Brown Wins (Boston Globe) in Massachusetts.

More on Bias & Food Science

After reading a bit more about the endocrinologist Dr. Robert Lustig, I found Gary Taubes (who is apparently more reknowned). Taubes is a science journalist who wrote Good Calories, Bad Calories (Amazon), a follow up to New York Times' most controversial piece in 2002 (which is saying a lot for the New York Times) asking if "What if it's all been a Big Fat Lie?" (NYT).

Arguing virtually the same things as Lustig, Taubes points to study after study showing why what we thought we knew about obesity and nutrition has been wrong. The basic premise is this: Atkins was right all along. We get fat because of the way our bodies process carbohydrates. Cut out the processed carbs and simple sugars (especially the fructose as Lustig will tell you), and we can dramatically reduce obesity. By focusing on low glycemic index foods, you prevent obesity, diabetes and heart disease - a few tables here of what foods fall into which categories (PDF, UCLA).

What made this particularly post worthy (which, let's face it, is a pretty low threshold here) was one of Taubes' closing paragraphs in his book (Overcoming Bias):

The institutionalized vigilance, “this unending exchange of critical judgment,” is nowhere to be found in the study of nutrition, chronic disease, and obesity, and it hasn’t been for decades. For this reason, it is difficult to use the term “scientists” to describe those individuals who work in these disciplines, and, indeed, I have actively avoided doing so in this book. It’s simply debatable, at best, whether what these individuals have practiced for the past fifty years, and whether the culture they have created, as a result, can reasonably be described as science.

This doesn't seem to be a problem confined to nutrition. The Sunday Times (UK) reported yesterday that an oversight caused the disproved alarmist claim that the Himalayan glaciers would melt by 2035 to be included in the latest official IPCC report on global warming. With the embarrassing disclosures in the Climategate emails, one wonders what other 'oversights' will ultimately be uncovered.

For more on Gary Taubes' work, have a look at one of his lectures here (though as forewarning, it's 70 minutes long):

Why is/(was) Haiti so Poor?

Tyler Cowen (Marginal Revolution) asked this question a few days ago. Tunku Varadarajan makes the political case for why France owes Haiti (the Daily Beast): "first a brutal colonizer, and then a usurious bully."

While I'm generally not one to shy away from 'blame France' rhetoric (and while I have little doubt as to their historical culpability and the state of many of its former colonies), the clues for their more recent causes of poverty can be found here (World Bank's Doing Business) and here (Heritage Foundation's Economic Freedom Index):

Haiti scores below the world average in business freedom, investment freedom, financial freedom, property rights, and freedom from corruption. Starting a business takes four times longer than the world average, and commercial laws are applied inconsistently and non-transparently. Restrictions on foreign capital are significant, and investment is subject to an arbitrary bureaucracy. Prolonged instability has weakened the rule of law.

While I'm not nearly as pessimistic as to believe that this will be the end of Haiti (the Economist blog), one prays that in the aftermath of this massive tragedy, Haitians will be able to rebuild stronger than they were before.

Trying to imagine the plight of Haiti's 9.4 million inhabitants in the immediate aftermath is sobering. (See the before and after satellite imagery here, ReadWriteWeb)

Update: According to the World Bank: great natural disasters are often a catalyst for huge, positive change.

How *Not* to Help in Haiti

Whatever you do, don't text your donation (GigaOm):

It usually takes 90 days from the time of donation to the time it is received by the intended charity, in part because they are collected through each customer’s normal cell phone billing cycle. That’s eons in disaster recovery time

Update: Please don't contribute to anything to related to the United Nations: "U.S. Sends Help, UN Wants Money" (Claudia Rosett). With the lack of transparency, lack of operational urgency and taking credit for those who have it, it's not difficult to understand how some might conclude the organization were a scam or something.

How to Help in Haiti

Disaster relief is one of the few areas where I advocate giving and giving generously. But like all charity, not every dollar has an equal impact. Aid Watchers has an overview of what you can do for Haiti, probably one of the most depressing corners of the world and where Tyler Cowen highlighted the hopes for progress only yesterday before the quake.

As an aside, Jonah Lehrer talks about the psychology of giving.

Doing the Right Thing: Google Considers Pulling Out of China

Both remarkable and refreshing - Google's new approach to China (GoogleBlog):

We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

Google has been under increasing political pressure elsewhere and while this will undoubtedly also help with those public relations efforts, it's a bold move that I suspect users will reward. The post implies they have proof that the Chinese Government has been enabling hackers who have not only been attacking their corporate servers but have been attempting to infiltrate gmail accounts linked to human rights activists.

I suspect this will only be a short term loss restricted to China on this move. When a "glastnost" comes to China, as it did Russia, if they're clever about marketing, using Google could ultimately be a symbol of new found freedoms. The fact that the Chinese government has made it difficult for them to operate, given competitors an operational advantage and enabled hackers that attack them and other firms, must make it an easier risk to take.

While I imagine they've weighed the business calculus on this, being the idealist I am, I want to believe, and I think there's a good probability that doing the right thing here, will mean greater profits both now and in the future.

Update: A more cynical viewpoint - It's more about business than thwarting evil (TechCrunch)

Update #2: More here from Imagethief, a PR expert based in China.

Missing the Point of Comparative Advantage

Daniel Hamermesh seems to miss the irony in his post on "Sticking to What I'm Good At" where he talks about volunteering two hours of his time basically weeding a sea plant (Freakonomics):

Productive groups generally learn quickly how to maximize output in situations like this, even with no guidance from a manager. Some people in the group (like me) were uniformly relatively good (or bad) at all tasks (had no obvious comparative advantage), so that their skills (or lack thereof) led them to spend the time alternating among all the tasks. I would think that primitive farming groups and, even further back, groups of hunters quickly learned who was relatively and absolutely good at which tasks.

Unless he gets true value in getting rid of sea grape, presuming that he makes more as a professor rather than a menial laborer (ditto for the opthalmic surgeon), it would seem somewhat more economically productive for them to just pay for the menial labor. It's sort of like people who supposedly go and volunteer to plant trees or dig ditches in developing countries - as if they didn't have much cheaper labor to do it with.

I'll side with one commenter here who says it's about the liberal guilt: "The point of doing something like this is to help rich people feel less guilty about vacationing in an island paradise."

Was it "Cheap Money that Made Us Stupid"?

I suspect it'll take an additional number of years for there to be greater consensus over what caused the financial crash that led to our "great recession". Two recent pieces by Megan McArdle, formerly of The Economist and now the Business and Economics Editor at the Atlantic, and Edward Chancellor from the Financial Times offer clues.

From McArdle who points out that it's inconvenient to place the blame on sophisticated bankers who took advantage of unsophisticated home buyers especially in the face of the new collapse in commercial real estate (the Atlantic):

The best explanation for the calamity that has overtaken us may simply be that cheap money makes us all stupid. The massive inflows of international capital, which Ben Bernanke has called the “global savings glut,” poured into our loan markets, driving interest rates lower—and, since most real estate is purchased with borrowed funds, pushing up the price of property in both the commercial and residential sectors. Rising prices, in turn, disguised any potential problems with the borrowers, because if they ran into cash-flow problems, they could always refinance, or sell. Everyone was getting bad signals from the market, and outlandish purchases looked almost rational.

Chancellor goes on to note the bubble wasn't restricted to the US (FT):

For a start, securitisation is unlikely to be a prime cause of the global housing bubble since home prices soared in many countries, such as Spain and Australia, which didn’t abound with exotic mortgage products. Given the dollar’s role as the global reserve currency, the Fed’s loose monetary policy had a far more extensive effect. [...] The connection between a loose monetary policy and asset price bubbles is pretty obvious to anyone with the slightest economic intuition: low rates make it cheaper to borrow, while acquisitions financed with credit drive up asset prices.

He goes on to warn that the US Fed seems to have learned little from the unravelling:

The Fed has returned to its old view, maintained during the Greenspan years, that bubbles cannot be recognised ex ante. Nor does the Bernanke Fed accept that glaring macroeconomic imbalances that characterised the last decade – such as the rapid growth of private sector credit, the falling savings rate, and the gaping current account deficit of the mid-2000s – were useful leading indicators of an approaching crisis.

Meanwhile, some economists are already warning that expansive monetary and spending policies today are already repeating the mistakes that caused this recent bubble and creating the environment for yet another asset bubble. From the WSJ, December 14: "Some analysts believe certain asset prices, including in emerging markets and corporate bond markets, may already be rising unsustainably, following a speedy recovery in recent months."

PSA: The Problem with Fructose and Why a Calorie is not a Calorie

I'm pleased to say that while I've reached most of my rather superficial health goals, I do have a couple more pounds that I want to lose. If you've got 90 minutes, this video by a UCSF endocrinologist, Robert H. Lustig, is worth watching on why everything you thought you knew about nutrition and obesity is wrong:

The basic notes:

• a calorie is not just a calorie: eating less and exercising more alone does not work; sugar/calories are processed by the body differently
  
• a high sucrose/fructose diet IS a high fat diet and fructose/sucrose makes you feel hungrier; limit fructose, sucrose and alcohol consumption
• fructose/sucrose gets processed by body like ethanol (alcohol) without the buzz - for this reason, chronic fructose consumption results in 8/12 chronic diseases associated with alcohol abuse - metabolic syndrome: insulin resistance (type 2 diabetes), high blood pressure, high LDL cholsterol
• exercise is important as it speeds up the metabolism of calories and is the single thing that reduces stress and stress also causes obesity
• fiber reduces carb absorption - eat carbs with fiber: fruit ok (includes the fiber); fruit juice is not
• drink only milk and water, cut out everything else
  

More on that Race to replace Senator Ted Kennedy

Quote of the day (Instapundit):

It must be troubling when your push-pollers ask people if it would affect their vote if the guy was a Nazi and the respondents say “Nope, he’d still be better than Coakley.”

Of course, the Democrats don't intend to play fair even if Coakley loses (Sissy Willis): "Democrats have admitted to a scheme to ram through the Healthcare Rationing vote before Scott Brown can be sworn in as Senator, should he defeat his Democrat opponent on January 19th." Is there a better reason for why Coakley shouldn't be elected?

Should you be allowed to sell a kidney?

If you ask Alex Tabarrok, the answer's yes (WSJ). I watched Daybreakers (imdb) a few days ago - which incidentally, is a movie that could have been great but made somewhat churlish on the editing floor. I suggested to my hippie friend that if there had been a true market for blood, there wouldn't ever have been a shortage of humans. He was less than appreciative.

With the unending parade of ineptitude and corrupt bureau/politicians, it boggles the mind there are people who continue to say "xyz is so important, how can we possibly trust markets?" The real burden of proof should be "if xyz is so important, how can you trust the government to act in your best interest?"

Update: Also apropos to ensuring a violent vampire outbreak doesn't happen, this is what we need to do (PopularMechanics)

"We are all Spartacus Now"

Them's fighting words. From the newly launched, "BigJournalism", the first editorial by Michael Walsh.

Tea Party Anyone?

[And a note for my largely apolitical sister, Beata, below] I have difficulty understanding the level of visceral hate over politicians and ideas that some people have never experienced. I try to be pragmatic about these things but for me at least they've got to have done something pretty horrible to deserve anything similar to the scorn that's heaped on those like Sarah Palin.

I was talking to friends over Christmas who were stunned that I lack animus for someone like Palin who is apparently so "stupid." Granted, I don't really have insight into who she is as a person, but I suspect they don't either especially after the media filter (fool me once?). And then there are the 'Tea Partiers' (which really isn't a political party at all - yet) who are often portrayed by another set of friends on Facebook as racist cavepeople and the minority fringe until Rasmussen found that people have a more favorable view of the "Tea Party" over the Democrats and Republicans (Rasmussen). And as for that racist thing? Despite what the literally color blind Chris Matthews might think, as Instapundit responds, "That’s not the moral high ground you’re standing on . . . it’s a big ol’ pile of crap."

David Brooks (of the NYT) wrote a column of how unhappy Americans are with their institutions over the weekend. While I have no quibbles with the underlying content, what strikes me as curious is the remarkable level of condescension he has for the disenchanted: "The public is not only shifting from left to right. Every single idea associated with the educated class has grown more unpopular over the past year." Right. David, to understand and adopt "right" ideals is to be an uneducated country bumpkin.

To quote Donald Luskin: "No, Mr. Brooks, the people are not rebelling against the “educated class” because they are “educated,” they are rebelling against being corralled, taxed, regulated and bullied into acquiescing to the unconstrained, misdirected, dangerous course of government."

I've never really understood those who value party over ideas but then again, as my sister and/or close friends might point out, very few people understand me. For the supposedly "educated class" that David Brooks presumably counts himself a part of, perhaps renaming the movement the "Throw the Bums Out" Party would be helpfully more explicit.

Oh, and Beata, in the coming Senate election, unless you want a healthcare system that's taken the worst of the Canadian system and made a whole lot more expensive (brought to you by the same types of people who brought you the Big Dig), please suggest to Loren (and other friends) that they might want to vote for Scott Brown to replace Ted Kennedy for Senator on January 19th. Notes here (BigGovernment) and here (Jules Crittenden; I mean Democrats don't even really like her). Oh one more - more love for Martha Coakley.

OK, I know, that's enough politics blogging for now.

Viva la revolución (racista)?

The Castro brothers' big dirty secret (Cato). I guess being young allows you the excuse of being impressionable and naive - but that doesn't explain Hollywood's ongoing fascination with Cuba's socialist "revolución" and Che Guevera - glossing over the bigotry and mass murder. Free(er) markets empower minorities while socialist, statist societies do not.

What Rule of Law?

Wow, this is shocking. For the record, I'm not generally a fan of Glenn Beck (or much of Fox News for that matter - though admittedly often it's a stylistic disagreement than a substantive one). Glenn Reynolds wonders if this the "worst on-air mauling ever" - and it's relevant because the man he interviews/batters is currently leading polls to replace the corrupt Senator Chris Dodd (who resigned this morning) in Connecticut (via Ed Driscoll):

I agree with Beck that it's frightening when those who are supposed to enforce the law so flagrantly abuse it to political ends. Perhaps worse still is the fact that the people of Connecticut just don't seem to care. It bears reminder that the result of a political elite unconcerned with re-election was the very thing that enabled the arrogance and ultimately the corruption of Chris Dodd.

More on Economists as Cheapskates

From the Freakonomics blog that says it's just because economists understand and believe in the idea of comparative advantage: "Alan Blinder has said that he wouldn’t trust an economist who mowed his own lawn, because it reveals that they don’t believe deeply in the principle of comparative advantage. And what goes for mowing your lawn surely holds equally for trimming the tree."

Useful Operational Note

Ugh. Another book as recommended by the Freakonomics blog, to add to my ever overflowing booklist: Atul Gawande's The Checklist Manifesto. What piqued my curiosity:

The book’s main point is simple: no matter how expert you may be, well-designed check lists can improve outcomes (even for Gawande’s own surgical team). The best-known use of checklists is by airplane pilots. Among the many interesting stories in the book is how this dedication to checklists arose among pilots.

Definitely in line with one of the many things I've been thinking about lately.

Proving Economists are an Odd Bunch

The WSJ has done a profile on economists and their quirks. A sampling:

• Some of the world's most famous economists were famously frugal. After a dinner thrown by the British economic giant John Maynard Keynes, writer Virginia Woolf complained that the guests had to pick "the bones of Maynard's grouse of which there were three to eleven people." Milton Friedman, the late Nobel laureate, routinely returned reporters' calls collect.
  
  
• Children of economists recall how tightfisted their parents were. Lauren Weber, author of a recent book titled, "In Cheap We Trust," says her economist father kept the thermostat so low that her mother threatened at one point to take the family to a motel. "My father gave in because it would have been more expensive," she says.
  
  
• Mr. Bauman, who has a stand-up comedy act he'll be doing at the economists' Atlanta conference Sunday night. Among his one-liners: "You might be an economist if you refuse to sell your children because they might be worth more later."

Charity: Who Cares

Not sure how I missed this one from Mint - a fantastic infographic on charitable giving (you'll have to go to their blog to see the full resolution post).

Productivity Notes

As I sit here procrastinating on a Saturday night at the beginning of a new year, I figure it'd be appropriate to dump the past links on productivity, psychology and inspiration I've read and found interesting in the last few months:

Most of us have a finite supply of willpower (eurekalert.org)
Lifehacker Readers' Favorite Pens (lifehacker.com)
Jonah Lehrer: What you do affects others in your social network (scienceblogs.com/cortex)
Jonah Lehrer: How low blood suger affects decision making (scienceblogs.com/cortex)
The relationship between wealth and fat: both cause and effect (freakonomics.blogs.nytimes.com)
The Einstein Principle: Accomplish More By Doing Less (calnewport.com)
Listening to Your Pulse (scienceblogs.com/cortex)
Working After Retirement Boosts Health? (futurepundit.com)
The Pmarca Guide to Personal Productivity (pmarca-archive.posterous.com)
Learn any language in 3 months (fourhourworkweek.com)
The Personality Paradox (scienceblogs.com/cortex)
Clever fools: Why a high IQ doesn't mean you're smart (newscientist.com)
80 Min Exercise Per Week Prevents Visceral Weight Gain (futurepundit.com)
Does being sad, or complaining, make you smarter? (marginalrevolution.com)
Jonah Lehrer: Sleep (scienceblogs.com/cortex)
Want to think logically? Trust your emotions (psychologytoday.com)
Rejection massively reduces IQ (newscientist.com)
How to Follow Through: The Emerging Science of Self-Control (rolfnelson.com)
The Organization Myth (freakonomics.blogs.nytimes.com)
Avoiding Confirmation Bias (wsj.com)
Depression as deadly as smoking, but anxiety may be good for you (eurekalert.org)
Fixed-Schedule Productivity: How I Accomplish a Large Amount of Work in a Small Number of Work Hours (calnewport.com)
Spinning wheels and recovering from burnout (inhumanable.com)
Loneliness is transmittable, researchers say (washingtonpost.com)
How to achieve greater productivity of teams (news.ycombinator.com)
Eight Tips to Know If You're Being Boring (psychologytoday.com)
Dogs Better than Human Walking Companions (futurepundit.com)
Be Lucky - it's an easy skill to learn (telegraph.co.uk)
Willpower (scienceblogs.com/cortex)
Sex and shopping - it's a guy thing (newscientist.com)

A quick look at emerging tech themes in 2010

From Fred Wilson (a venture capitalist): mobile, gaming, new forms of commerce and currency, cloud based platforms and APIs, and education and the energy/environment.

Welcome Instapundit Readers

I got Instalanched. Thanks Glenn! For new readers poking around, welcome and I hope you enjoy your visit.

While the selfish part of me hopes you stick around, please do click through on the plea to President Obama not to decertify Madagascar from AGOA's preferential tariffs. The best way we help poor countries develop is through trade not aid while sanctions punish the people and not their leaders.

Welcome to the Revolution Kid

The Corner via Instapundit:

"They Just Took My Money": That's what my 8-year-old son said about the sales tax on the ride home from Borders a few minutes ago. He had a $10 gift card from Christmas, bought a Clone Wars book for $7.99, looked at the receipt, and wondered why he still didn't have a full $2.01 on it.

This is how conservatives are made.

Making Air Travel More Fun Than it Already Is

I am hoping that these measures are temporary: TSA Security Directive SD-1544–09-06 (BoardingArea). On the other hand, maybe this will mean even fewer travelers through the US and cheaper flights?

Update - Megan McArdle via Instapundit: "I don't know what annoys me more: Janet Napolitano saying "the system worked" when what she means is "the system failed, but smart passengers proved that the system is unnecessary", or the moronic new rules the TSA is apparently putting into place in order to "prevent" future such occurances. The TSA's obsession with fighting the last war is so strong that I expect any day to see them building wooden forts at our nation's airports in order to keep the redcoats at bay."

Update #2 - The TSA bans snowglobes: "FINALLY! The TSA Bans The Right Thing. We're saved. No terrorist is going to ever blow up a plane with a snow globe again" (Business Insider)

So maybe all Chinese people look the same after all...

Being rather poor at placing names and faces, I usually joke (if they're Caucasian) that all white people look alike given their difficulties in differentiating Chinese people.

We let go a new hire (still on probation) because while he had demonstrated the requisite technical skills, his English was atrocious despite having achieved a level higher than any of his other colleagues. Before he left, he admitted he had paid someone to sit for him - so much for photo ID. I asked around.

Apparently, according to colleagues, it's not uncommon students to trade exams and to "sit" for each other during the mandated exams - so I guess it's true. We all must look alike.

Next Generation Nuclear: safe, clean, can't be weaponized?

The idea of using Thorium instead of Uranium to generate nuclear energy is pretty exciting if it proves to be economical (Wired):

Named for the Norse god of thunder, thorium is a lustrous silvery-white metal. It’s only slightly radioactive; you could carry a lump of it in your pocket without harm. [...] It’s abundant — the US has at least 175,000 tons of the stuff — and doesn’t require costly processing. It is also extraordinarily efficient as a nuclear fuel. As it decays in a reactor core, its byproducts produce more neutrons per collision than conventional fuel. The more neutrons per collision, the more energy generated, the less total fuel consumed, and the less radioactive nastiness left behind.

To get a sense of the economics, a (theoretical) Liquid Fluoride Thorium Reactor could produce 1 GW for an annual cost of $10,000 compared to 50-60M for uranium because of the scarcity of the material. It produces less waste, and what waste it does leave behind can't be weaponized. And to get a sense of the abundance of this stuff: "If the US reactor fleet could be converted to LFTRs overnight, existing thorium reserves would power the US for a thousand years."

Predictably, it's a technology that seems to be getting a lot more interest in places like Russia and China. That would be a remarkable scenario... if China were to find energy independence in the next few decades with just the new technologies coming on stream - be they in alternatives, nuclear or even production and discovery of a massive abundance of natural gas as is being anticipated. More on Thorium here (Thoriumenergy.blogspot.com).

For er, something different...

For those of us who have a somewhat warped and dark sense of humor - Jack Bauer interrogates Santa Claus (Amazon via Instapundit):

"President Obama: Please don’t harm one half million of the poorest people in Africa."

More here (Aid Watchers).

Update (December 31, 2009): Got Instapundited for the first time! Cool. Thanks for dropping by and I hope you enjoy your visit. Please check out the letter as republished at William Easterly's Aid Watchers.

PSA: Scientists prove dogs are better than cats

Anyone who has a dog realizes that there was never any question of this fact, but when evaluated against 11 different categories, scientists empirically conclude that dogs are better (in a score of 6 to 5) - noteworthy quote (NewScientist via Freakonomics):

Daily dog walks may be a chore, but they repay the effort, not just in terms of regular exercise, but also by providing immune-boosting opportunities for social contact with other dog walkers. That's why in a head-to-head contest of health benefits, it's dogs all the way

Anyway, just thought you should know.

A Form of Stimulus They're Loathe to Try...

From Greg Mankiw who points out that "tax cuts might accomplish what spending hasn't" (NYTimes). To borrow the cynical words of Glenn Reynolds (Instapundit): "Nonstarter. No opportunity for graft."

"Can organic produce and natural shampoo turn you into a heartless jerk?"

"Yes", according to science (from the University of Toronto no less! And hey, how can you dispute the science?) via Instapundit, Slate:

Virtuous shopping can actually lead to immoral behavior. In their study (described in a paper now in press at Psychological Science), subjects who made simulated eco-friendly purchases ended up less likely to exhibit altruism in a laboratory game and more likely to cheat and steal.

Things that make you go hmmm....

Move along, nothing to see here. From USA Today via Instapundit: "Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession's first 18 months — and that's before overtime pay and bonuses are counted."

Invictus

Latin for "unconquered" and named after a poem, Invictus is a great movie. Invictus is about the human struggles faced by Nelson Mandela while President and how he used the national rugby team and its success as a symbol to unite the nation.

Watching the movie got me curious about the poem that inspired Mandela through some of his darkest days. It's a remarkable poem of defiance, empowerment and struggle:

Invictus
Out of the night that covers me,
Black as the Pit from pole to pole,
I thank whatever gods may be
For my unconquerable soul.

In the fell clutch of circumstance
I have not winced nor cried aloud.
Under the bludgeonings of chance
My head is bloody, but unbowed.

Beyond this place of wrath and tears
Looms but the Horror of the shade,
And yet the menace of the years
Finds, and shall find, me unafraid.

It matters not how strait the gate,
How charged with punishments the scroll.
I am the master of my fate:
I am the captain of my soul.

William Ernest Henley

If you have several hours this weekend (it's a bit of a long movie) I'd highly recommend seeing Invictus. Whether by design or because of what came naturally, Mandela was a political genius in understanding how to communicate ideas and values through symbols. For those who aspire to be great leaders and for those who need just a bit of inspiration over the Christmas holidays, there's much to glean from this movie.

When it Pays to Nickel and Dime Your Customers

Maybe it's because my primary business is a commodity type business - I've generally believed in trying to price to clients in a way that accurately allocate costs they incur to our business. It's not as easy as it should be as I'm always still fighting to ensure our business is simple enough to understand. Fighting to charge for the cost of credit/working capital for instance is often an uphill battle.

It goes back to clearly understanding where and how you build and generate value for your clients and charging accordingly for those goods and services.

Michael O'Leary from Ryanair may be my new hero. He makes a fantastic point that nickel and diming isn't meant to generate revenues it's meant to change behavior (WSJ):

We now have to be more inventive in the way we lower costs, which is why we're looking at things that seem revolutionary to other people.

Like, paying for checked-in bags: It wasn't about getting revenue. It was about persuading people to change their travel behavior—to travel with carry-on luggage only. But that's enabled us to move to 100% Web check-in. So we now don't need check-in desks. We don't need check-in staff. Passengers love it because they'll never again get stuck in a Ryanair check-in queue. That helps us significantly lower airport and handling costs.

Now we're looking at charging for toilets on board—not because we want revenue from toilet fees. We'd happily give the money away to some incontinent charity. What it means is, if by charging for toilets on board, more people would use the toilets in the terminals before or after flights, I could take out maybe two of the three toilets on board, add six extra seats and reduce fares across the aircraft by another three or four percent.

So, there's always new ways of lowering costs, but you have to come at it with some imagination and some passion.

Remarkably, despite the mother of all recessions, Ryanair is "on course to keep growing and post strong profits again this year".

Making the US Healthcare System Work

A rather more elegant solution than this (CNN). More here (Reason.com). [Sorry, still really bogged down with work... more blogging to come]

Laugh of the Day

The 20 Unfortunate Lessons Girls Learn from Twilight via Instpundit:

From a male point of view, the only redeeming feature of the Twilight books and movies is the ammunition they provide against female claims of innate moral superiority over men.

I confess I've seen New Moon. I was fortunate enough not to see it in a packed room of screaming teenage girls, just three who were sitting behind us. The most hilarious part of the movie was when they all audibly gasped when Taylor Lautner took off his shirt in a ridiculous scene to dab a small bit of blood off Kristen Stewart.

Summarizing the Subtleties of the Sino-American Relationship (in 7 minutes)

Mildly offensive, quite amusing and unfortunately but substantially true (NBC embed):

From Daniel Drezner (FP): "Over the weekend, Saturday Night Live's cold open managed to summarize the subtleties of the Sino-American economic relationship in under seven minutes. Note that, although it appears that President Hu has the power because he is repeatedly berating Obama, the content of the skit suggests otherwise. Hu's repeated complaints that the United States is, er, "doing sex" to him demonstrates the very limited leverage China has over U.S. policy."

(If the embedded video doesn't work because you're not in the US, assuming it's still up, check it out at Youtube)

Tax Cuts vs Stimulus Spending

Imagine that: the People are/were right. It turns out that it's tax breaks that make a bigger difference to economic growth: "Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases." From Harvard's Alberto Alesina and Silvia Ardagna via Greg Mankiw.

They even go further, pointing out that to reduce debt and deficits, spending cuts are more effective than tax increases.

Update: I just don't get it sometimes. 56% of New Yorkers believe the state will be broke by year end (RasmussenReports). So far not so surprising. But then there's this: "An overwhelming 81% of say the bigger problem in New York State today is not that voters are unwilling to pay enough in taxes but that politicians are unwilling to control government spending. Just eight percent (8%) think the bigger problem is voter unwillingness to pay enough taxes." Do these people vote?

WSJ: The Henry Ford of Heart Surgery

You don't have to be a healthcare policy wonk to appreciate the achievements made at the Narayana Hrudayalaya Hospital in Bangalore, India. It's a hospital that has a higher success rate, performing far greater volumes at a cost that's a 10th of what a typical American hospital might charge for open heart surgery. As founder Dr. Devi Shetty notes, "What health care needs is process innovation, not product innovation."

Here's a graphical summary from the WSJ (makes you wonder what the Christina Yang's (Wikipedia) of the world are doing in the US):


For the bleeding hearts out there, here's an anecdote of how Dr. Shetty makes healthcare affordable:

K. Parashivappa, the boy's father, a sugarcane worker from a village eight hours away, held a cup of water to his son's lips. He says he's known his son needed surgery since he was born with a congenital heart defect. The boy has never been able to run and play cricket like other children, hobbled by chronic shortness of breath and weakness.

Mr. Parashivappa says he can't himself pay for the surgery, but it is covered by a farmers' insurance plan that Dr. Shetty began several years ago in partnership with the state of Karnataka, which includes Bangalore.

Nearly one third of the hospital's patients are enrolled in this insurance plan, which costs $3 a year per person and reimburses the hospital $1,200 for each cardiac surgery.

That is about $300 below the hospital's break-even cost of $1,500 per surgery.

The hospital makes up the difference by charging $2,400 to the 40% of its patients in the general ward who aren't enrolled in the plan. An additional 30% who opt for private or semi-private rooms pay as much as $5,000.

The father, in an untucked brown shirt, raised both hands to offer the traditional Indian greeting, "Namaste," to Dr. Shetty as the hospital head stopped by his son's bed. "Thank you for giving my son his life back."

Read the whole thing (WSJ). While I'd be somewhat uncomfortable with whether the level of subsidization is sustainable, the hospital has a higher level of profitability than its American counterparts. With any luck, Narayana Hrudayalaya Hospital will do for healthcare what Compartamos is doing for microfinance. Of course, the ideas here aren't exactly new but probably executed far better than the US system allows.

The term "focused factory" in healthcare was termed and popularized by US researcher Regina Herzlinger (I first learned of her work with her book Market Driven Health Care). Perhaps I'm burying the lede here, but there's a healthcare revolution already happening in the US and while I've worried that healthcare legislation winding through both Houses would crush innovation, stories like this show that if the US doesn't lead the world, others will.

Giggle of the day

From a time lapse image gone awry (AwkwardFamilyPhotos):

Optimism for Humanity Just Rose a Few Notches...

RasmussenReports: "To Create Jobs, Voters Say Cut Taxes and Stop Spending". Sorry, have been battling a rather bad round of jet lag as of late. A bit annoyingly am looking at returning back to Asia fairly shortly. Lots that I want to talk about but that's a bit of the problem. Having to pick and choose... while trying to wade through a mindblowing amount of work.

Aid, Marketing and Faking Accountability

Bill Easterly's Aidwatch has a good new post on the Bill and Melinda Gates' "successes" in fighting malaria in Zambia.

Preparing to return to a long dark winter (and a few notes on microfinance)

Perhaps the recent cold miserable winters have something to do with the fact Americans are starting to lose interest in global warming (via the Opinionator, NYTimes). Myself, I'm just dreading my returning to the cold from the considerably more tropical climes of China (not to mention Cody) though it's been a rather busy visit and I haven't yet finished everything I've wanted. As something of a PSA, here's a posting on how to put together an emergency winter kit.

I also wanted to welcome any new readers (I seem to have gotten a small spike) from a recent mention on the MicrofinancePracticeGroup listserv (Nabble) where I'm a sometimes and reluctant participant. It certainly wasn't publicized in the most complimentary of ways, but appreciated none the less.

While I'm not convinced that I'm not an ideologue - particularly if that means I'm driven by a set of beliefs and ideas, but I'd like to think that in the very least I'm pragmatically so. And insofar as my interest in microfinance and development goes, I have a few strong opinions as to what will work and what won't based on what has worked and what hasn't. While I can't say that it's changed much since I first became a participant on the group, and while there are clearly a number of notable exceptions, I find it most unfortunate particularly for those in under developed countries, that for some participants, microfinance is nothing more than another form of social activism where the laws of economics and reality have no place.

For me, the most fundamental question in this debate over high interest rates and profitability in microfinance is not whether I or anyone else feels uncomfortable or finds it "reprehensible" or "indensible", but rather, does it work? Paradoxically, the evidence seems to suggest it does (WSJ) - just as economic theory suggests it should. Further, I find it strange that these same social advocates refuse to acknowledge that a choice often exists between the provisioning of financial options and high(er) interest rates.

Borrowers readily accept these options given that the alternatives are not only worse, but in the case of working capital loans they're able to achieve returns significantly greater than the interest rates charged. Microfinance is also not a panacea. It's not the ideal intervention in countries where the basic preconditions for economic do not exist - ie political stability and property rights, it's an accelerant to the seed of entrepreneurship that exists in all cultures because of the search to build a better world not only their progeny but the rest of us.

Finally, a travel guide I can use...

Internet speeds and costs around the world (courtesy of SwissMiss):

Learning Engrish

So I've been swamped in China and it hasn't quite been convenient to post but I thought I'd briefly break my silence to let a few people who care about these things that I'm still alive.

A number of my colleagues use this English learning software that teaches them a phrase each day though I'm beginning to wonder about the content provider's sense of humor. Today's phrase? "Do you get a kick out of watching me suffer?" to which I of course happily responded "yes."

The Power of Lean Startups

If you're interested in startups, watch this video! It makes a number of remarkable observations of how and why this is an amazing time to develop a startup while increasing the probability of success -

Oddly seductive

As I rush to tie up loose ends before I head back to China - while Crunchgear might find it too creepy to have around, I think these are pretty cool... It's made by Panasonic and it seems to already be in the market in Japan. This could replace your Roomba (I find it somewhat remarkable how many people I know have Roomba's) - a robotic pillow-like slug:

Stewart Brand: urbanization, development and environmental 'heresies'

From "the man who helped usher in the environmental movement in the 1960s and '70s has been rethinking his positions on cities, nuclear power, genetic modification and geo-engineering."

While he's clearly gotten a lot more optimistic in many ways, his views on resources in the long run (and his view that we'll have resource wars) are, um, limiting and are still wrong because they discount energy substitutes like natural gas, and advancements in technology. Still, some pretty brilliant observations on development and urbanization. Watch the presentation here (TED):

Must be in a silly mood...

Had a good chuckle over this (Instapundit).