To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our selection between economy and liberty or profusion and servitude.
If we run into such debts as that, we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are.
Our people, like them, must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses; and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account; but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers.
Our land-holders, too, like theirs, retaining, indeed, the title and stewardship of estates called theirs, but held really in trust for the treasury, must wander, like theirs, in foreign countries, and be contented with penury, obscurity, exile, and the glory of the nation.
This example reads to us the salutary lesson that private fortunes are destroyed by public, as well as by private extravagance. And this is the tendency of all human governments.
A departure from principle in one instance, becomes a precedent for a second, that second for a third, and so on, till the bulk of society is reduced to be mere automatons of misery, to have no sensibilities left but for sinning and suffering.
Then begins, indeed, the bellum omnium in omnia, which some philosophers, observing to be so general in the world, have mistaken it for the natural, instead of the abusive state of man.
And the forehorse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.”
As someone who has been keeping and archiving all their email, while struggling through David Allen's Getting Things Done (Amazon, also more here), this has been a helpful video helping me to rethink how I handle email - More on Merlin Mann's series here (43Folders):
(OK, granted, I haven't quite made it through all 60 minutes quite yet, but I'm getting there).
We establish a political economy model where the effect of democracy on corruption is conditional on income distribution and property rights protection. Our empirical analysis with cross-national panel data provides evidence that is consistent with the theoretical prediction. Moreover, the effect of democratization on corruption depends on the protection of property rights and income equality which shows that corruption is a nonlinear function of these variables. The results indicate that democracy will work better as a control of corruption if the property rights system works and there is a low level of income inequality. on the other hand if property rights are not secured and there is a strong income inequality, democracy may even lead to an increase of corruption. In addition, property rights protection and the mitigation of income inequality contribute in a strong manner to the reduction of corruption.
India is a country that comes to mind. Emphasizing the importance of strong property rights is often forgotten in the pursuit of democracy.
Am being creamed by another inordinate amount of procrastination coupled with actual work but this was too good not to post (The Coming Prosperity via Aidwatch):
If solutions are known, need $$. If solutions are knowable, need evaluations. If solutions are evolving, need entrepreneurs.
While there have been a number of inspiring voices for liberty under the repressive regime of Mubarak. That something better will necessarily come out of this however, is far from certain given how organized the militants are and the likely influences of Iran. From Walter Russell Mead (read the whole thing):
On balance, the US administration has probably helped the government, and Washington’s intervention in the crisis is not (yet) turning out very well. Public pressure on President Mubarak to step down has allowed the Egyptian authorities to wrap themselves in the national flag. “Let’s find an Egyptian solution to Egypt’s problems,” they can say. “President Mubarak will not be running for re-election; do not let the Americans dictate our timetable for change.” Many in the Egyptian army who normally might have wanted to shed Mubarak quickly will now want to let him hang on through the fall to spite Obama if for no other reason. At the same time, foreign pressure gave the government an opening to crack down on foreign (and domestic) journalists, helping to deprive the revolution of the attention and television coverage vital to keeping public excitement and mobilization alive.
In revolution, momentum matters. In a poor country like Egypt, mass demonstrations cannot continue indefinitely. The middle class can stay in the streets, but the poorer people need to feed their families. A few days’ pay is all that stands between many families in Egypt and hunger. Beyond that, the kind of excitement that gives people the courage to defy authorities and risk death depends on an emotional surge that tends to fade as time drags on.
The Egyptian authorities needed to stall for time and slow down the clock. That they seem to have done; if they can hold the line, the regime (though not the Mubarak family) has a reasonable prospect of riding out the storm or of forcing a longer term stalemate.
But another component seems to be that the demonstrators want economic freedom, which is limited under the economic system in Egypt.
Milton Friedman’s view was that economic freedom is as important as political freedom: the right to vote in open elections is valuable, but so is the ability to run a business without oppressive regulation or earn an income without paying most of it in taxes.
A related point is that democracy does not necessarily produce economic development; rather, work by my colleagues Ed Glaeser and Andrei Shleifer suggests that better institutions, by themselves, do not systematically lead to economic growth. Rather, countries adopt better politicial institutions as their level of development progresses.
From a new group blog at the PJ Tatler: “The urge to save humanity is almost always a false-front for the urge to rule it.”
On balance I'd tend to agree, but there are new thought leaders like William Easterly and others who are pushing for change from the ground up and recognizing the power of commerce over subsidies and entitlements in the developing world and for those who seek a better life.
A reminder courtesy of Thomas Thwaites of the manufacturing technology and ideas that go into producing simple as "simple" as a toaster - from scratch:
It it stupefying how out of touch some politicians and their constituents are when it comes to believing that jobs can be created by governments buying and regulating them into existence. Victor Davis Hanson captures this frustration perfectly (Pajamasmedia via Instapundit):
Oz is over with and the Greeks are furious at “them.” Furious in the sense that everyone must be blamed except themselves. So they protest and demonstrate that they do not wish to stop borrowing money to sustain a lifestyle that they have not earned—but do not wish to cut ties either with their EU beneficiaries and go it alone as in the 1970s. So they rage against reality.
The same is true of California. Our elites liked the idea of stopping new gas and oil extraction, shutting down the nuclear power industry, freezing state east-west freeways, strangling the mining and timber industries, cutting off water to agriculture in the Central Valley, diverting revenues from fixing roads and bridges to redistributive entitlements, and praising the new multicultural state that would welcome in half the nation’s 11-15 million illegal aliens. Better yet, the red-state-minded “they” (the nasty upper one-percent who stole from the rest of us due to their grasping but superfluous businesses) began to leave at the rate of 3,000 a week, ensuring the state a Senator Barbara Boxer into her nineties.
The last few months have been transitional. I'd apologize for taking an unannounced break from blogging, but it happens. There's a lot of pent up blogging that I want to do time permitting but I've also taken on a few new large projects as I pivot with changing responsibilities at the company that I have been building over the past several years.
H/T Brian J (fb). While I enjoyed this, I confess if I were in the middle of it, I suspect I'd probably be that one surly impatient guy just trying to get out of there - I can only imagine the level of coordination that had to have gone into this:
You can be pretty certain that anyone who frets about how attack ads are nasty or that politics is divisive - at least when it comes to the American politics has little historical context or engaging in demagoguery. From Reason.com:
What's the right policy toward China? They put a few trillion dollars worth of stuff on boats and sent it to us in exchange for U.S. government bonds. Those bonds lost a lot of value when the dollar fell relative to the euro and other currencies. Then they put more stuff on boats and took in ever more dubious debt in exchange. We're in the process of devaluing again. The Chinese government's accumulation of U.S. debt represents a tragic investment decision, not a currency-manipulation effort. The right policy is flowers and chocolates, or at least a polite thank-you note.
Yet Mr. Geithner thinks that the Chinese somehow hurt us. There is at work here a strange marriage of Keynesianism and mercantilism—the view that U.S. consumers supported the world economy by spending beyond our means, so that other people could have the pleasure of sending things in exchange for pieces of paper.
This is all as fuzzy as it seems. Markets and exchange rates are not always right. But it is a pipe dream that busybodies at the IMF can find "imbalances," properly diagnose "overvalued" exchange rates, then "coordinate" structural, fiscal and exchange rate policies to "facilitate an orderly rebalancing of global demand," especially using "medium-term targets" rather than concrete actions. The German economics minister, Rainer Brüderle, called this "planned economy thinking." He was being generous. Planners have a clearer idea of what they are doing.
I've never really understood California. For as much as you get the beach bum 'live and let live' type vibe when you're there and for all the technological innovation being churned out in silicon valley, the people seem to consistently elect politicians who have this affinity for unions, regulations and bigger government.
Last week San Francisco car matching startup UberCab was served a cease and desist order by the city of San Francisco because it did not have taxi licenses or taxi insurance and went beyond the normal scope of a limo service by picking people up right away.
As UberCab (which has now changed its name to Uber) serves primarily tech industry elite, there is much Internet debate over whether this is another case of “Innovation vs. Establishment” or a startup just straight up breaking the law.
Michael Arrington inked an editorial that noted out "The outpouring of support from the community will be huge. And given that this model has potential to shake up the industry is all the major metropolitan areas across the country, there’s going to be a ton of interest in this case from all around. And UberCab will bathe in free publicity."
“Given the cease-and-desist [orders], it’s been a busy week,” laughs Kalanick. “We’ve seen waves of social media interest. We were a trending topic on Twitter. It’s business as usual at this point, but with a lot more attention and activity.”
It’s great news for a company that right now has plans to move into new markets, including New York and Los Angeles, and will undoubtedly be facing knockoffs if it doesn’t hustle.
When they wrote this year’s legislation, policymakers had a choice: They could emphasize near-universal coverage, or they could emphasize controlling costs. They opted for near-universal coverage. As a result, business owners and higher income Americans (many of whom, like me, are one and the same) will soon pay an array of higher taxes to finance the broader coverage that President Obama and congressional Democrats mandated.
So I now find myself responsible for paying for health insurance for more than 30 million strangers. Yet the cash needs of my business, which is growing despite the difficult economy of the past few years, are not going to decline. Nor are my personal financial commitments going to decrease. The only way to make financial room for those 30 million strangers is to stop paying for insurance for the 20 people I work with every day.
Politics mandated that Obama and his fellow Democrats at least pretend that their legislation will constrain runaway spending. The new law’s very name is part of that pretense. But there is little in the actual legislation that has any real prospect of controlling spending; instead, the law attempts to control premiums by fiat through new regulations and oversight. Government may be able to prevent insurers from pricing policies in ways that make sense, but it can’t force them to operate at a loss. The other shoe, in the form of higher premium prices or a rollback of the new law’s mandates, is certain to drop. Higher prices are the more likely outcome. [...]
The law’s supporters will portray employers like me as bad guys who are using the new law as a smokescreen to make changes we wanted to make anyway. Though the accusation is false, it has a germ of truth: Runaway health insurance costs have been a burden for every business that pays them. Every sensible manager has at least considered steps to stem this financial hemorrhage. Many of us were just holding on so as not to disrupt employees’ lives while we waited for policymakers to do something.
Now they have done something, and it only made the problem worse. There is no longer any reason to wait.
People have a great misconception in this way they think the way you solve things is by electing the right people. It's nice to elect the right people but that isn't the way you solve things. The way you solve things is by making it politically profitable for the wrong people to do the right thing.
One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—and that they could repatriate to the United States. That money, in turn, could be invested in U.S. jobs, capital assets, research and development, and more.
But for U.S companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world—except here. [...]
By permitting companies to repatriate foreign earnings at a low tax rate—say, 5%—Congress and the president could create a privately funded stimulus of up to a trillion dollars. They could also raise up to $50 billion in federal tax revenue. That's money the economy would not otherwise receive.
The upside is that the investments made by these companies would almost certainly be invested more efficiently and on more sustainable businesses than the US government spends. The downside, is exposure to the demagoguery of activists who decry supposed tax breaks for the rich and corporations. More cynically, what Chambers and Katz haven't quite considered, is that if it's companies who invest and repatriate money then politicians no longer have the control - and to date, that's seemed to be an influential consideration in stimulus spending. If only we lived in a more rational world...
More on that theme that capitalism doesn't require nearly as much capital anymore. It turns out that the cost of doing biotech is falling - in some cases dramatically to the point that it's possible to do research in your bedroom/basement (naturenews):
Carlson penned essays and articles that fanned the embers of the idea. "The era of garage biology is upon us," he wrote in a 2005 article in the technology magazine Wired. "Want to participate?" The democratization of science, he reasoned, would bring in new talent to build and improve scientific instrumentation, and maybe help to uncover new industrial applications for biotechnology. Eventually, he decided to follow his own advice, setting up a garage lab in 2005. "I made the prediction," he says, "so I figured maybe I should do the experiment."
Carlson is not alone. Would-be 'biohackers' around the world are setting up labs in their garages, closets and kitchens — from professional scientists keeping a side project at home to individuals who have never used a pipette before. They buy used lab equipment online, convert webcams into US$10 microscopes and incubate tubes of genetically engineered Escherichia coli in their armpits. (It's cheaper than shelling out $100 or more on a 37 °C incubator.) Some share protocols and ideas in open forums. Others prefer to keep their labs under wraps, concerned that authorities will take one look at the gear in their garages and label them as bioterrorists. [...]
Still, five years after taking science into his garage, Carlson says he's convinced that biohacking has the potential to trigger a technological revolution. "We're going to see a lot more at the garage level that will produce a variety of products in the marketplace, one way or another," he says.
Despite the discomfort of thinking that your neighbours next door could be brewing anthrax, that's always been the risk. They could be making fertilizer bombs now for all I know but the potential rewards and potential breakthroughs are substantial as more amateurs consider new ways to solve real problems - and that's the essence of markets and capitalism.
Texas already looms large in its own imagination. Its elevated self-image didn’t need this: More than half of the net new jobs in the U.S. during the past 12 months were created in the Lone Star State.
According to the Bureau of Labor Statistics, 214,000 net new jobs were created in the United States from August 2009 to August 2010. Texas created 119,000 jobs during the same period. If every state in the country had performed as well, we’d have created about 1.5 million jobs nationally during the past year, and maybe “stimulus” wouldn’t be such a dirty word.
What does Austin know that Washington doesn’t? At its simplest: Don’t overtax and -spend, keep regulations to a minimum, avoid letting unions and trial lawyers run riot, and display an enormous neon sign saying, “Open for Business.”
More (10/20): Here (WILLisms) with a comparison to California.
“The only way to fight poverty is with employment,” [Carlos] Slim [, the richest man in the world] said at a conference in Sydney last month. “Trillions of dollars have been given to charity in the last 50 years, and they don’t solve anything.”
As previously noted, it's important to differentiate between relief and economic development - but otherwise Carlos Slim (despite how he came into wealth and has protected it) is right.
I know I haven't done as much China blogging lately. To be honest, I'm not sure what to make of things. A lot has been happening. Protectionism is creeping up which ironically has benefited us since we developed alternative manufacturing sources through Asia as a contingency plan. China continues to grow while the rest of the world stagnates - and that has created resentment - but I suspect China's growth is uncertain at best. Capital is deployed inefficiently and creating bubbles in China. From economist Andy Xie (China International Business):
Profit drives investment, which in turn powers employment, and that then grows consumption. When profit is due to asset appreciation and not sustainable, it may lead to crisis. Large bubbles often occur during prolonged prosperity, when people stop paying attention to risk and there is excessive demand for risky assets, leading to an asset bubble that prolongs prosperity beyond the normal cycle.
Possibly half of China's bank lending is going into property-related businesses or local governments that are pledging land as collateral. While the current boom has catapulted China ahead of Japan to become the world's second-largest economy, we must remember the excesses in this cycle and the need for an adjustment as soon as possible. Nothing reveals the vulnerabilities more than the banking system's exposure to unsustainable economic activities that are dependent on land appreciation. China should proactively bring about the needed economic adjustment.
Paulus pointed me to this vid (Thanks!). The key takeaway:
For simple straightforward tasks ... the carrot and stick approach to motivation is outstanding [...] When a task gets more complicated, requiring some conceptual, creative thinking, those types of incentives demonstrably don't work.
What works? Connecting work to purpose. Organizations get in trouble when there is a disconnect between the profit motive and purpose. Definitely worth 10 minutes of your time if you spend any amount of time thinking about these things.
Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education alone will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.
For multinational firms, the opportunity seems obvious: If you operate in a sexist country full of educated, experienced women with expertise on their home country, then it makes sense to hire those women into management roles. "You can tap into their underutilized talent and benefit from their insights," Siegel says.
I'm pretty sure this type of thing applies to all groups that are discriminated against. Markets favor merit, create incentives and positive feedback loops. Government imposed regulations and policies? Not so much.
Jeffrey Ellis at The Thinker points to Horwitz's First Law of Political Economy: "No one hates capitalism more than capitalists" but makes note of its corollary -
"No one loves capitalism more than consumers." Because consumers are the ones who benefit the most from free markets and competition.
Eighty-six percent of all prestige or luxury makes of motor vehicles are driven by people who are not millionaires.
Typically, millionaires pay about $16 (including tip) for a haircut.
Nearly four in 10 millionaires buy wine that costs about $10.
In the United States, there are nearly three times as many millionaires living in homes with a market value of less than $300,000 than there are living in homes valued at $1 million or more.
Forget the Manolo Blahnik high-priced shoes. The No. 1 shoe brand worn by millionaire women is Nine West. Their favorite clothing store is Ann Taylor.
I think too many of us have been spending too much with borrowed money particularly in the US and Canada. That being said, these are personal choices we all make, and the lessons we learn while far from ideal, are healthy ones. With choices come consequences, and unfortunately I doubt we've truly dealt with the full aftermath. Not sure that I think things are this dire but follow on thoughts here from James Quinn @ FinancialSense (via Instapundit).
Maybe you are looking forward to a particular actor’s next movie or a particular novelist’s next book. Perhaps you wish that your favorite singer would have a concert near where you live. Or, someday, you may need treatment from a highly trained surgeon, or your child may need braces from the local orthodontist. Like me, these individuals respond to incentives. (Indeed, some studies report that high-income taxpayers are particularly responsive to taxes.) As they face higher tax rates, their services will be in shorter supply.
Reasonable people can disagree about whether and how much the government should redistribute income. And, to be sure, the looming budget deficits require hard choices about spending and taxes. But don’t let anyone fool you into thinking that when the government taxes the rich, only the rich bear the burden.
An interesting discussion at HN that questions the validity of a few of his assumptions. There are two basic issues I have with most of the criticism - the first is this assumption that taxed revenues are being redeployed in something useful other than feeding ever larger bureaucracies that provide a net benefit to overall society and the second, if we understand high income earners (not to be confused with the wealthiest) to be the most economically productive in society, should there be any surprise if the productivity of society falls as these individuals choose not to work as much or as hard?
"When you saw the beaming look on Che's face as the victims were tied to the stake and blasted apart by the firing squad," said a former Cuban political prisoner Roberto Martin-Perez, to your humble servant here, "you saw there was something seriously, seriously wrong with Che Guevara." As commander of the La Cabana execution yard, Che often shattered the skull of the condemned man (or boy) by firing the coup de grace himself. When other duties tore him away from his beloved execution yard, he consoled himself by viewing the slaughter. Che's second-story office in Havana's La Cabana prison had a section of wall torn out so he could watch his darling firing-squads at work.
Even as a youth, Ernesto Guevara's writings revealed a serious mental illness. "My nostrils dilate while savoring the acrid odor of gunpowder and blood. Crazy with fury I will stain my rifle red while slaughtering any vencido that falls in my hands!" This passage is from Ernesto Guevara's famous Motorcycle Diaries, though Robert Redford somehow overlooked it while directing his heart-warming movie. ...
The one genuine accomplishment in Che Guevara's life was the mass-murder of defenseless men and boys. Under his own gun dozens died. Under his orders thousands crumpled. At everything else Che Guevara failed abysmally, even comically.
Einstein's desk was famously messy so he stood as an example of a person who could be extremely efficient and extremely creative but at the same time very very messy. People with messy desks tend to be more open to new experiences, and [it] reflects their mental process.
There are takers and makers in this world. Takers make their money by taking from others. They are usually bad business people and their careers often end in failure. Makers build things. They create value for society, their employees, their shareholders, and themselves.
Not entirely sure if I believe "takers" usually get their comeuppance, but I do believe that the upside in life is far greater for "makers" than "takers".
I should note that I have a friend who is an avid environmentalist and a 'warmist' who is absolutely appalled by the original video. While I'd argue it's a logical conclusion based on the arguments that many environmentalists make, this is probably the best parody of the original (Warning - it's graphic, via DailyCaller):
I saw The Social Network (imdb) with Anthony Del Col (Kill Shakespeare) on Friday. It was surprisingly entertaining, but also a bit empty. Like Anthony, I can't say I really empathized with the characters, and while I confess I felt like a bit of an underachiever afterwards, it was also quite motivating.
For comparison’s sake, consider another pair of Massachusetts entrepreneurs, Tom First and Tom Scott. After graduating from Brown in 1989, they started a delivery service to boats on Nantucket Sound. During their first winter, they invented a juice drink. People liked their juice. Slowly, it dawned on First and Scott that maybe there was a business here. Nantucket Nectars was born. The two Toms started the long slog of getting distribution. Ocean Spray bought the company. It later sold the business to Cadbury Schweppes.
At each step after the first, along the way to giving their customers what they wanted, the two Toms had to ask permission from someone. They needed permission from a manufacturer to get into his plant. Permission from a distributor to get into her network. And permission from stores to get before the customer. Each step between the idea and the customer was a slog. They made the slog, and succeeded. But many try to make that slog and fail. Sometimes for good reasons. Sometimes not.
Zuckerberg faced no such barrier. For less than $1,000, he could get his idea onto the Internet. He needed no permission from the network provider. He needed no clearance from Harvard to offer it to Harvard students. Neither with Yale, or Princeton, or Stanford. Nor with every other community he invited in. Because the platform of the Internet is open and free, or in the language of the day, because it is a “neutral network,” a billion Mark Zuckerbergs have the opportunity to invent for the platform. And though there are crucial partners who are essential to bring the product to market, the cost of proving viability on this platform has dropped dramatically. You don’t even have to possess Zuckerberg’s technical genius to develop your own idea for the Internet today. Websites across the developing world deliver high quality coding to complement the very best ideas from anywhere.
Vinod Khosla, one of the world’s leading clean tech investors, at the TechCrunch Disrupt conference (TechCrunch):
Environmentalists get in the way…and do more damage than they know
TechCrunch goes on to explain:
Self-described environmentalists demand or adopt technology that sounds promising without a sense of its true cost or impact to the environment. “Painting your roof white is better for the environment than driving a Prius or similar vehicle,” Khosla pointed out.
Friedrich Hayek, The Fatal Conceit (via Greg Mankiw): "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."
Simon Sinek: "We follow those who lead not for them but for ourselves. It is those who start with 'why' that have the ability to inspire those around them or find others who inspire them." Another interesting thought was that people should be hired not for what they do, but why they do it. Another book to add to my ever flowing list of books to read. In the meantime, watch his TED presentation here (via Swissmiss):
"Stupid people think you are as stupid as they are." It's sometimes a bit difficult to tell if you're the stupid one in the equation. Colorful anecdote here (kikabink.com).
I guess they're bringing out the PR wagon for the upcoming book launch, and based on this presentation and the TED presentation, it looks like it'll be a very worthwhile read:
"People who are in romantic relationships - instead of having the typical five [individuals] on average, they only have four in that circle," explained Robin Dunbar, a professor of evolutionary anthropology at Oxford.
"And bearing in mind that one of those is the new person that's come into your life, it means you've had to give up two others."
At least 45 million people were worked, starved or beaten to death in China over these four years; the worldwide death toll of the Second World War was 55 million. [...] Between 1958 and 1962, a war raged between the peasants and the state; it was a period when a third of all homes in China were destroyed to produce fertiliser and when the nation descended into famine and starvation, Mr Dikötter said.
For those who committed any acts of disobedience, however minor, the punishments were huge. State retribution for tiny thefts, such as stealing a potato, even by a child, would include being tied up and thrown into a pond; parents were forced to bury their children alive or were doused in excrement and urine, others were set alight, or had a nose or ear cut off. One record shows how a man was branded with hot metal. People were forced to work naked in the middle of winter; 80 per cent of all the villagers in one region of a quarter of a million Chinese were banned from the official canteen because they were too old or ill to be effective workers, so were deliberately starved to death.
In the face of this evidence, what defies imagination is that there are those who blame colonial powers for China's poverty, saying they robbed China of its resources prior to Mao's ascendence.
For similar reasons that I'm skeptical that gold will remain being a useful/safe peg of value, there are supposedly smart people from the dawn of time who believe that they can manipulate or corner the market on XYZ commodities (and the corollary of politicians who flame fears of shortage).
With prices spiking following the latest in a series of annual export quota reductions by Beijing earlier this summer, miners have been scrambling to develop deposits of the essential industrial minerals worldwide. Now Japan’s Nikkei business daily reports that Japanese manufacturers have developed technologies to make automotive and home appliance motors without rare earth metals. Hitachi has come up with a motor that uses a ferrite magnet made of the cheaper and more common ferric oxide. Meanwhile the chemicals conglomerate Teijin and Tohoku University have co-developed technology to make a powerful magnet using a new composite made of iron and nitrogen.
Take another step back and you also see the remarkable power that pricing communicates to the market. While the reactionary political response invariably is to further restrict and regulate trade, it would be refreshing if the opposite were pursued - that measures to innovate and unleash innovation to find additional or create alternative resources were pursued. Alas, dare to dream.
Christie didn’t “lambaste” teachers, he said, he lambasted the teacher’s union, especially its leaders. Why were so many teachers laid off in New Jersey? Because when the Governor called upon teachers to take one-year pay freeze and contribute 1.5% — one-and a half percent! — of their salaries to the cost of their health care (full-family medical, dental, and vision coverage, by the way), the union leaders said “No way. Not a penny.” Result: nearly a billion-dollar shortfall in the budget, which necessitated scads of lay offs. (Had Gov. Christie’s proposal been accepted, the state would have saved more than $700,000,000.) “So who’s really to blame?” he asked: the Governor or the intransigent teachers unions?
I think technical people, and engineers in particular, will always have good job prospects. But what if you don't have the aptitude or personality to follow a technical path? How do you prepare for the future?
I'd like to see a college major focusing on the various skills of human persuasion. That's the sort of skillset that the marketplace will always value and the Internet is unlikely to replace.
Not sure if I agree about all his specific ideas but I think the basic premise is a sound one - taken one step further, it's businesses that maximize the potential of its people who are most sustainable. And it's difficult to do that without managers and staff who have those skill sets. Read the whole thing.
Something to explore later when I have more time, but is Megan McArdle saying that Maslow's Hierarchy of Needs was developed to fit his view of the world rather than his observations of it? From a passage she quotes on her blog [emphasis mine] (the Atlantic):
Maslow admired many people I admire, Abraham Lincoln for example. But he and I can't admire Lincoln through some objective lens as psychologists or scientists. We can only say we admire Lincoln with the same level of objectivity that someone else might admire Jefferson Davis. Maslow wanted to give an objective validation that, for example, the Viet Nam war protestor was objectively superior to the Viet Nam general, the environmentalist was objectively superior to the captain of industry etc. Many cultural elites ate it up, just as Soviet elites ate it up when their psychiatrists said that anyone who didn't love the government was mentally ill and needed electroshock treatment post-haste.
Psychologists and social scientists generally still venture repeatedly today into the territory of human values and attempt to claim the ability to make objective judgments about which are the most healthy or scientifically validated. They don't ever seem to learn that they are often just trying to rationalize cultural fashions: In the 1940s the "mentally healthy" person was one who respected tradition, but he morphed into the to-be-pitied "organization man" in the 1950s. Psychologists valorized divorce as the "mentally healthy choice" for those who were not "growing" in the 1970s, whereas today they tend to say that it's better to stick it out and stop complaining so much.
Over the years, I've heard that the Hierarchy of Needs wasn't evidence based nor had there been much corroborating research but this is the first time I've heard how it was developed. Definitely something to explore further.
For the time being, we’re in a vicious cycle. Consumers won’t step up their spending until unemployment eases, which won’t happen until consumers step up their spending enough to make it profitable for companies to hire additional employees.
Over the long run, though, the economy will perform better and unemployment will be lower if we reduce the drag of taxes and regulations that can’t be justified by tangible benefits. That’s the story business leaders should make if they want to help themselves and allow Adam Smith’s Invisible Hand to help the country
via Fred Wilson - "I saw this film last night. It made me angry and upset. Go see it. It will be in the theaters on Sept 24th.":
It would seem that the movie has been getting a lot of press. More here (NYMag):
For decades, the conversation about our schools has been the preserve of the education Establishment—and the result has been a system that, with few exceptions, runs the gamut from mediocre to calamitous. Waiting for “Superman” is no manifesto. It offers no quick fixes, no easy to-do lists, no incandescent lightbulbs to unscrew. What it offers is a picture of our schools that isn’t pretty, but that we need to apprehend if we’re to summon the political will necessary to transform them. “Nobody ever wants to call a baby ugly,” says Duncan. “This is like calling the baby ugly. It’s about confronting brutal truths.”
It takes a special kind of someone to use the words "best practice" and marriage or relationship in the same sentence. Not that I have any expertise in the area - quite the opposite really, this showed up on one of the VC blogs I follow, from Brad Feld:
Amy and I created a tradition about a decade ago we call “four minutes in the morning.” We try to – fully clothed – spend four minutes together every morning 100% focused on each other. [...] Of course, the “four minutes” is metaphorical. Sometimes it’s 15 minutes. A few times a year it turns into an hour when we end up in a discussion about something. But it’s always 100% bi-directional attention, except for our dogs who often want in on the discussion.
Seems like a good idea, makes sense and something to try (if I'm ever lucky enough to find myself in that situation).
I have adopted many of my father’s sayings as I have grown older, and this particular phrase “ain’t rocket science” I tend to use all the time about economics. Yesterday the report came out that housing sales were down, and the stock market fell. I woke up this morning to emails from a very good friend in the investment business with dire predictions from Morgan Stanley and even Goldman Sachs that the US economy is going to tailspin into a deeper recession.
I don’t possess a crystal ball, so I cannot forecast the economic future. But I do know that it is not good to expand the monetary base 140% or to run deficits the size we have, or accumulate public debt as we have.See Laurence Kotlikoff in The Economist. This “ain’t rocket science”! There will be a day of reckoning due to the monetary mischief and fiscal irresponsibility.
I also know that the problems we are facing are not “market problems” — it is not that actors are all of a sudden ‘irrational’, and it is not that markets are inherently ‘unstable’. Everything we are seeing in market behavior is a rational response to the environment created by public policy. This is not a psychological problem we are dealing with, it is a public policy problem. Bad public policy produce bad incentives which in turn produce bad results. Ultimately, this is a problem of bad ideas which result in bad public policies. Again, this ain’t rocket science.
The Economist suggests that maybe manufacturing job losses in the US aren't about China. Markets are harsh and inherently unstable. They force an unending cycle of improvement or else you die. It might seem bleak - but the flip side of that, is that those who do innovate and meet the needs of customers thrive and profit. With mounting job losses and governments looking for easy targets to blame, China's an easy scapegoat.
[This is] manufacturing employment as a share of total employment. The downward trend is over 50 years old. It predates the end of Bretton Woods. It predates the union-crushing, deregulating era of the late 1970s and early 1980s. It predates the era of Japanese dominance, the rise of the Asian tigers, and the recent surge in Chinese growth. And what it is driving this trend, overwhelmingly, is technology. Manufacturers have steadily improved manufacturing productivity, routinising and then automating occupations.
A plunging dollar, a "get tough" approach to China, and an embrace of industrial policy won't reverse this trend. Eventually China will face the same dynamic and the same decline in manufacturing employment. Time to accept that reality and figure out how best to prepare workers for the good jobs to come.
A look at what and who libertarians are. One pointed quote: "Libertarians are treated as if they have quirky beliefs precisely because they are consistent. In a country where a lot of people have inconsistent beliefs, a consistent adherence to priciple sometimes looks pretty unusual."
And a useful reminder: "A lot of the people who say they favor smaller government in the abstract, tend to favor larger government in the particular. You don't get that many true libertarians in big business because [..] big business likes regulation that disadvantages their competitors."
What are the chances, after all, that the two forces behind the Giving Pledge will contribute anywhere near as much to the betterment of society through their charity as they have through their business pursuits? In building Microsoft, Bill Gates changed the way the world creates and shares knowledge. Warren Buffett's investments have birthed and grown innumerable profitable enterprises, making capital markets work more efficiently and enriching many in the process.
[...] While businesses may do more for the public good than they're given credit for, philanthropies may do less. Think about it for a moment: Can you point to a single charitable accomplishment that has been as transformative as, say, the cell phone or the birth-control pill? To the contrary, the literature on philanthropy is riddled with examples of failure, including examples where philanthropic efforts have actually left intended beneficiaries worse off. The Gates Foundation has itself acknowledged that one of its premier initiatives—a 10-year, $2 billion project to reorganize high schools around the country into schools with fewer than 400 students—was a complete bust. Good for them for admitting it. In that, they are unusual. In the failure, they are not.
But the local food movement now threatens to devolve into another one of those self-indulgent — and self-defeating — do-gooder dogmas. Arbitrary rules, without any real scientific basis, are repeated as gospel by “locavores,” celebrity chefs and mainstream environmental organizations. Words like “sustainability” and “food-miles” are thrown around without any clear understanding of the larger picture of energy and land use.
[...] The statistics brandished by local-food advocates to support such doctrinaire assertions are always selective, usually misleading and often bogus. [...] Agriculture, on the other hand, accounts for just 2 percent of our nation’s energy usage; that energy is mainly devoted to running farm machinery and manufacturing fertilizer. In return for that quite modest energy investment, we have fed hundreds of millions of people, liberated tens of millions from backbreaking manual labor and spared hundreds of millions of acres for nature preserves, forests and parks that otherwise would have come under the plow.
The war between competing Android and iPhone app markets is one to watch. When built properly (even the best markets require some form of regulation and boundaries within which players can innovatea), markets will almost always trump the selection/tastes of an individual - or even a group of individual - and that's why I suspect Android's opensource experiment and their market will trump Apple's with time. From the P2P foundation via swissmiss:
A good example of manual curation vs. crowdsourced curation is the competing app markets on the Apple iPhone and Google Android phone operating systems. Apple fans complain that the Android marketplace has too many low-quality apps for any given task. They complain that it’s hard to find an “official” or “sanctioned” app. On the other hand, Android fans criticise Apple for limiting their choices. They don’t want to be beholden to the whims of a select few. Apple is a monarchy, albeit with a wise and benevolent king. Android is burgeoning democracy, inefficient and messy, but free. Apple is the last, best example of the Industrial Age and its top-down, mass market/mass production paradigm. They deal with the big head of the curve, and eschew the long tail. They manufacture cool. They rely on “consumers”, and they protect those consumers from too many choices by selecting what is worthy, and what is not. Google Android is building itself as a platform for bottom-up innovation. Their marketplace publishes first, filters second, utilizing little more than the rankings of the community.
For every Lee Kuan Yew of Singapore, there are many like Mobutu Sese Seko of the Congo.
Democracies not only out-perform dictatorships when it comes to long-term economic growth, but also outdo them in several other important respects. They provide much greater economic stability, measured by the ups and downs of the business cycle. They are better at adjusting to external economic shocks (such as terms-of-trade declines or sudden stops in capital inflows). They generate more investment in human capital – health and education. And they produce more equitable societies.
[...] At first sight, China seems to be an exception. Since the late 1970’s, following the end of Mao’s disastrous experiments, China has done extremely well, experiencing unparalleled rates of economic growth. Even though it has democratized some of its local decision-making, the Chinese Communist Party maintains a tight grip on national politics and the human-rights picture is marred by frequent abuses.
[...] For the true up-and-coming economic superpowers, we should turn instead to countries like Brazil, India, and South Africa, which have already accomplished their democratic transitions and are unlikely to regress. None of these countries is without problems, of course. Brazil has yet to recover fully its economic dynamism and find a path to rapid growth. India’s democracy can be maddening in its resistance to economic change. And South Africa suffers from a shockingly high level of unemployment.
Yet these challenges are nothing compared to the momentous tasks of institutional transformation that await authoritarian countries. Don’t be surprised if Brazil leaves Turkey in the dust, South Africa eventually surpasses Russia, and India outdoes China.
So unless you've been under a rock you probably know that China surpassed Japan as the second largest economy (though on a per capita basis, China remains one of the poorest in the world). To give some context, from the Economist:
While I can't say I'm that surprised about China given how poorly Japan did, looking at the historical share of global GDP, all the accolades given to Indian graduates, I can't help but wonder, what happened to India?
A talk on how to be more creative. To sum up - use boundaries of space and time, create an oasis in your life (offline). These are moments where you can think uninterrupted which are separate from your ordinary life. Interruptions are disastrous to the creative process. And sometimes, (maybe often?) starting from scratch results in a better work product than the original. (via HackerNews):
As a struggling businessman creating new start-ups, he could not compete with what NGO's were paying for some of the best and brightest. And even worse, he said, "by the time the NGO's are done with them, there isn't an ounce of entrepreneur left."
An issue as true back when I was in Uganda as it is today.
Ten years ago this summer, Portugal became the first country in Europe to decriminalize all illegal drugs -- marijuana, cocaine, methamphetamine and even heroin. Hefty fines and prison sentences still await drug traffickers and dealers, but users caught with less than a 10-day supply of any drug are no longer considered criminals. Instead, they're referred to a panel comprised of a drug-treatment specialist, a lawyer and a civil servant, who usually recommend treatment -- and pay for it, too. If the users decline treatment and go back to abusing drugs, that's their prerogative.
But statistics show they're not doing that. Instead, about 45 percent of the 100,000 heroin addicts Portugal's Health Ministry recorded in 2000 had by 2008 decided to at least try to quit the habit, without the threat of jail time. And the number of new HIV cases among users fell from 2,508 in the year 2000 to 220 cases in 2008, Alun Jones, a spokesman for the U.N. Office on Drugs and Crime, told AOL News. "This was a major success," he said.
The paper, published by Cato in April, found that in the five years after personal possession was decriminalized, illegal drug use among teens in Portugal declined and rates of new HIV infections caused by sharing of dirty needles dropped, while the number of people seeking treatment for drug addiction more than doubled.
“Judging by every metric, decriminalization in Portugal has been a resounding success,” says Glenn Greenwald, an attorney, author and fluent Portuguese speaker, who conducted the research. “It has enabled the Portuguese government to manage and control the drug problem far better than virtually every other Western country does.”
Compared to the European Union and the U.S., Portugal’s drug use numbers are impressive. Following decriminalization, Portugal had the lowest rate of lifetime marijuana use in people over 15 in the E.U.: 10%. The most comparable figure in America is in people over 12: 39.8%. Proportionally, more Americans have used cocaine than Portuguese have used marijuana.
Prohibition in any form creates incentives for underground markets, increases costs and builds bureaucracies around enforcement, which in turn drives prices even higher resulting in a vicious cycle.
One would think a Harvard Law School professor and director of a something-something Center for Ethics would not be so naive. Criticizing the president for promising to change politics and then, once in office, playing the same old politics is like criticizing parents for telling their kids about Santa Claus.
There are no unicorns, Prof. Lessig, as much as you and I both wish there were. Our best hope for changing Washington is not to let hope triumph over experience and believe if we just elected the right person everything would change, but to make the structural changes that will deny the politicians the power they always abuse.
Only a smaller government is one that will do less damage when wielded by politicians, no matter what their stripe or promises to behave. Republicans promised fiscal restraint when they took the House, and we got profligate spending; Obama promised to drain the swamp, and yet the alligators and mosquitoes still infest it. When will we learn?
There's a subset of bureaucrats and regulators who want us to believe that the only thing separating us from chaos/imminent disaster is another rule or law. So what happens when you turn off the traffic lights? From John Stossel at creators.com:
In some cases, traffic moves better and more safely when government removes traffic lights, stop signs, even curbs.
It's Friedrich Hayek's "spontaneous" order in action: Instead of sitting at a mechanized light waiting to be told when to go, drivers meet in an intersection and negotiate their way through by making eye contact and gesturing. The secret is that drivers must pay attention to their surroundings — to pedestrians and other cars — rather than just to signs and signals. It demonstrates the "Peltzman Effect" (named after retired University of Chicago economist Sam Peltzman): People tend to behave more recklessly when their sense of safety is increased. By removing signs, lights and barriers, drivers feel less safe, so they drive more carefully. They pay more attention.
In Drachten, Holland, lights and signs were removed from an intersection handling about 30,000 cars a day. Average waiting times dropped from 50 seconds to less than 30 seconds. Accidents dropped from an average of eight per year to just one.
On Kensington High Street in London, after pedestrian railing and other traffic markers were removed, accidents dropped by 44 percent.
"What these signs are doing is treating the driver as if they were an idiot," says traffic architect Ben Hamilton-Baillie. "If you do so, drivers exhibit no intelligence."
At the town center, in a crowded four-way intersection called the Laweiplein, Monderman removed not only the traffic lights but virtually every other traffic control. Instead of a space cluttered with poles, lights, “traffic islands,” and restrictive arrows, Monderman installed a radical kind of roundabout (a “squareabout,” in his words, because it really seemed more a town square than a traditional roundabout), marked only by a raised circle of grass in the middle, several fountains, and some very discreet indicators of the direction of traffic, which were required by law.
As I watched the intricate social ballet that occurred as cars and bikes slowed to enter the circle (pedestrians were meant to cross at crosswalks placed a bit before the intersection), Monderman performed a favorite trick. He walked, backward and with eyes closed, into the Laweiplein. The traffic made its way around him. No one honked, he wasn’t struck. Instead of a binary, mechanistic process—stop, go—the movement of traffic and pedestrians in the circle felt human and organic.
A year after the change, the results of this “extreme makeover” were striking: Not only had congestion decreased in the intersection—buses spent less time waiting to get through, for example—but there were half as many accidents, even though total car traffic was up by a third.
The NHTSA had volunteers drive a test track in cars with automatic lane departure correction, and then interviewed the drivers for their impressions. Although the report does not describe the undoubted look of horror on the examiner’s face while interviewing one female, 20-something subject, it does relay the gist of her comments.
After she praised the ability of the car to self-correct when she drifted from her lane, she noted that she would love to have this feature in her own car. Then, after a night of drinking in the city, she would not have to sleep at a friend’s house before returning to her rural home.
"When I see that people are using children with seizures as a lever to get more nurses in schools, I think it's wrong." Well, duh. Figures that it's also happening in California. And yet there is probably no clearer example that teachers unions are a greedy and immoral special interest group than this -
More on teachers and their lobbying from Cato. Then there's the supposed $26 billion jobs bill, "which includes $10 billion in grants to districts to keep up to 130,000 education jobs on life support. Where are they coming up with the money? At some point in the future, they're going to pay for part of it by cutting food stamps" (Reason.com). Yep, they're serving teachers unions at the expense for food for poor people. Classy.
It's hardly unusual to hear small-business owners gripe about licensing requirements or complain that heavy-handed regulations are driving them into the red.
So when Multnomah County shut down an enterprise last week for operating without a license, you might just sigh and say, there they go again.
Except this entrepreneur was a 7-year-old named Julie Murphy. Her business was a lemonade stand at the Last Thursday monthly art fair in Northeast Portland. The government regulation she violated? Failing to get a $120 temporary restaurant license.
While I'm guessing that there aren't many people who follow this blog who actually like country (sister notwithstanding), I got forwarded this link from a friend of a song that's a cute twist on "can't we all just get along?".
