Culture Shmulture - Wherein Romney Gets it Wrong

Romney recently made the following comments (via ForeignPolicy)

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

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

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

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

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

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

The Right Chord of Optimism

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

 

Quote of the Day

William Easterly (via TheThinkerBlog):

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

Yep, that pretty much sums it up...

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

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

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

The world needs more Wal-mart

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

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

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

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

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

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

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

"Spain is not Uganda."

Heh.  "Discuss" (BBC).

On minimum wage and the "race to the bottom"

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

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

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

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

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

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

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

The hardest job in the world...

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

Steve Jobs: "Don't Settle."

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

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

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

What You Know vs What You Do

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

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

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

via JeffreyEllis, Walter E Williams:

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

"The Basic Elements of Creativity"

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

On How the Rich Spend Their Money

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

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

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

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

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

Both are rooted in ignorance.

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

Why Free Markets and Private Property Rights Matter

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

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

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

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

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

Finally, a Sustainable Fiscal Solution

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

The Economics of Glenn Beck's GBTV online venture

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

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

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

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

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

Update on 'Kony 2012' Campaign

Here (Globeandmail via Carson):

It was planned as a tour of Uganda’s poorest towns and villages: the first chance for Joseph Kony’s victims to see the viral video sensation that has excited so many millions of people in North America.

But after a furious reaction, the tour has been cancelled. Too many Ugandans were outraged by the “Stop Kony” video when they saw it. Some even threw stones and shouted abuse, forcing the organizers to flee.

"The Predatory Lending Fallacy"

aka what some financial journalists seem to have problems differentiating (Arnold Kling via thethinkerblog):

Consider the following problems:

1. Qualified borrowers getting bad deals.
2. Unqualified borrowers getting good deals.

(1) is predatory lending. (2) is what caused the housing bubble and crash. Getting that story straight would be a major accomplishment for the media.

Freakonomics: The Rise of the Prize

It would seem the answer is yes (Freakonomics)

Could the incentive prize be the most powerful and yet most underutilized tool we have to tame the wicked problems of the twenty-first century?

Using Particle Accelerators to Make Cheap Solar?

It seems like it's about as cost efficient as thin film though because of the increased solar efficiency (up to 20%), with a smaller footprint (SFGate.com, see also HackerNews):

A device similar to the giant atom smashers used by physicists may be the key to cheaper solar cells.

Twin Creeks Technologies in San Jose has created a machine that uses high-energy protons to carve silicon wafers into thin layers, each of which can then be fashioned into a solar cell.

The layers are about one-tenth as thick as the standard silicon solar cell but generate just as much electricity. The same amount of raw silicon, therefore, can yield far more cells, making each one less expensive to produce.

Founded in 2008, Twin Creeks exits stealth mode today with $93 million in venture capital, a unique product and a focused business plan.

Other articles cite cost to produce as low as 40 cents a Watt - compared to the sale price of about double this from Chinese vendors. If the numbers work out, this is a challenge to thin film solar - not to mention coal fired plants.

"Believe"

Simon Sinek (via swissmiss):

If you hire people just because they can do a job, they’ll work for your money. But if you hire people who believe what you believe, they’ll work for you with blood and sweat and tears.

A Noteworthy Defense of "Vulture Capitalism"

From John Stossel:

"Greed" means you want more for yourself. Fine. If you obtain it legally, without force or privilege -- say, by buying a business and making it more efficient, or shifting resources to where consumers prefer them -- that is a good thing. "Creative destruction" makes America richer. 

Shifting resources does mean some people lose their jobs. That is sad for those who are fired. 

But on balance, it's a good thing. Intuition tells us that it would be better if no one ever lost a job and that capitalists who close businesses are evil. But America would not be better off today if elevator operators and factory workers who made typewriters had their jobs preserved by a "compassionate" government. 

America is richer today because those workers lost their jobs, because money once paid them is put to better use. In addition, most of those workers found new jobs where their skills better served consumers. Some even say they were glad that they were fired, because now they are more productive, and being productive makes people happy.

What you need to know about Kony 2012

A few friends have sent me links to the Kony 2012 campaign, and I gave in and watched the video late last night.  It's difficult to disagree with its aims.  It's also difficult as an armchair marketer not to see the genius in the video as a propaganda tool and all the hooks they plant for people to participate and act.  Here are two links that say it better than I could -

ForeignPolicy: Joseph Kony is not in Uganda (and other complicated things)
FindWhatWorks: Kony 2012: history, nuance, and advocacy’s Golden Rule

I would add that one thing that often bothers me about these campaigns, particularly evident at the beginning of this video, is the "rich white man comes to save poor suffering black people" theme that reeks of self righteousness but also condescension.  Otherwise, for all the criticisms of spending, if enough awareness is generated to get rid of men like Joseph Kony, it's probably money well spent.  I won't be donating to the cause though I support it and while I would gather there are better more efficient ways to spend the money, there are certainly worse (RED campaign).

Also here: The Worst Killer of Invisible Children is Not Joseph Kony (GiveWell, h/t Beata). While I'm sympathetic to their argument, I think it's a mistake much like it is to dismiss September 11 relative to all the deaths from *insert cause here*. That said, malaria is also another senseless killer whose enablers are among us (Reason.com)

World Bank: Number of Poor People Declining Everywhere

A good reason for cheer. From the Economist:

The best estimates for global poverty come from the World Bank’s Development Research Group, which has just updated from 2005 its figures for those living in absolute poverty (not be confused with the relative measure commonly used in rich countries). The new estimates show that in 2008, the first year of the finance-and-food crisis, both the number and share of the population living on less than $1.25 a day (at 2005 prices, the most commonly accepted poverty line) was falling in every part of the world. This was the first instance of declines across the board since the bank started collecting the figures in 1981 (see chart).

The estimates for 2010 are partial but, says the bank, they show global poverty that year was half its 1990 level. The world reached the UN’s “millennium development goal” of halving world poverty between 1990 and 2015 five years early. This implies that the long-term rate of poverty reduction—slightly over one percentage point a year—continued unabated in 2008-10, despite the dual crisis. 

A lot of the credit goes to China. Half the long-term rate of decline is attributable to that country alone, which has taken 660m people out of poverty since 1981. China also accounts for most of the extraordinary progress in East Asia, which in the early 1980s had the highest incidence of poverty in the world, with 77% of the population below $1.25 a day. In 2008 the share was just 14%. If you exclude China, the numbers are less impressive. Of the roughly 1.3 billion people living on less than $1.25 a day in 2008, 1.1 billion of them were outside China. That number barely budged between 1981 and 2008, an outcome that Martin Ravallion, the director of the bank’s Development Research Group, calls “sobering”.

New Development Blog: Why Nations Fail

Looks pretty promising by academic powerhouses Daron Acemoglu and James Robinson promoting their book: Why Nations Book (though I hope they keep their blog running for more than just their book's sake).

Happy Valentine's Day, The Economics Edition

Economics geekery from Elisabeth Fosslien as posted at the Freakonomics blog - a sample (with lots more at the link):

Quote of the day: An Ounce of Action

via the Swissmiss, from Ralph Waldo Emerson:

An ounce of action is worth a ton of theory. Don’t be too timid and squeamish about your actions.

Kauffman Foundation: "Will it be you?"

I love inspiring ads like this (and this) - airing at the Superbowl (via Paul Kedrosky):

NPR: "The Secret Document That Transformed China"

Fascinating and inspired look by NPR at how markets were unleashed from the ground up in rural China - but also speaks to how frightening, brave but also desperate these villagers were (via HN):

Despite the risks, they decided they had to try this experiment — and to write it down as a formal contract, so everyone would be bound to it. By the light of an oil lamp, Yen Hongchang wrote out the contract.

The farmers agreed to divide up the land among the families. Each family agreed to turn over some of what they grew to the government, and to the collective. And, crucially, the farmers agreed that families that grew enough food would get to keep some for themselves.

The contract also recognized the risks the farmers were taking. If any of the farmers were sent to prison or executed, it said, the others in the group would care for their children until age 18. [...]

It was the same land, the same tools and the same people. Yet just by changing the economic rules — by saying, you get to keep some of what you grow — everything changed.

At the end of the season, they had an enormous harvest: more, Yen Hongchang says, than in the previous five years combined.

Every presentation, ever.

via swissmiss - it's funny if you don't burst out weeping if you attend or do a lot of presentations:

A few tips on making commitments, and keeping them

I don't do New Year's resolutions but I've found that this time of the year is useful in looking back at priorities and reassessing. Two recent articles bring up similar ideas on how to make sure you keep your New Year's resolutions, if you do them or any resolutions for that matter. First a look at why we fail from John Tierney (NYT):

They’ll fail because they’ll eventually run out of willpower, which social scientists no longer regard as simply a metaphor. They’ve recently reported that willpower is a real form of mental energy, powered by glucose in the bloodstream, which is used up as you exert self-control.

One solution? Use your willpower less often:

The study, led by Wilhelm Hofmann of the University of Chicago, showed that the people with the best self-control, paradoxically, are the ones who use their willpower less often. Instead of fending off one urge after another, these people set up their lives to minimize temptations. They play offense, not defense, using their willpower in advance so that they avoid crises, conserve their energy and outsource as much self-control as they can.

More at Wired.

Smile. You'll be happy you did.

The Gap Between Productivity and Failure

Why productivity enhancements don't work (Seth Godin) -

Until you quiet the resistance and commit to actually shipping things that matter, all the productivity tips in the world aren't going to make a real difference. And, it turns out, once you do make the commitment, the productivity tips aren't that needed.

You don't need a new plan for next year. You need a commitment.

You know that things are bad with the Euro when...

A country like Iceland wants to adopt the Canadian dollar?  (CNBC)  In other related news, the President of discount airline Ryan Air slams the EU at an "innovation" summit:

Transcript available at the Spectator.org.

From the Mouths of... Rockers?

A refreshingly grounded view from KISS er, singer Gene Simmons (sfgate):

The mess is our fault – corporations have no responsibility. Capitalism is the best thing that ever happened to human beings. The welfare state sounds wonderful but it doesn’t work. Governments hand out more money than they have to support welfare and they land in debt. Then they have to borrow money… that’s bad business. 

“When I was growing up, my mother went to work. There was no welfare. If you worked, you made money. If you didn’t work, you had to figure it out – you’d go and wash dishes.”

The problem with anarchists...

via Matt L:

Western Decadence at its...

most bizarre?

Charity meets um Reality? The Blasphemous Edition

Milton Friedman on Liberty and Equality, a Reminder

Has Halloween become Overcommercialized?

A few years old but for a bit of levity on a Monday afternoon (theOnion):

 

In The Know: Has Halloween Become Overcommercialized?

This seems terribly unwise...

On how the credit default swaps for Greece may not pay out despite well, defaulting (WSJ):

If insurance written by market participants for market participants is invalidated by sovereigns, what is the value of insurance contracts being offered by the sovereigns themselves? 

Here I’m referring to the European Financial Stability Facility, which is now being touted as a super insurer of European sovereign debt (albeit maybe only the first 20%). Once again, Buiter makes a critical point: not allowing existing CDS to trigger reduces the credibility of the EFSF protection. 

I’d go even further. The whole euro exercise has raised serious credibility issues. Governments used all sorts of accounting fudges, off-balance-sheet accounting and derivatives to meet single-currency membership criteria that had already been stretched to breaking point. Greece consistently misled on the state of its finances. 

France and Germany broke the Maastricht treaty obligation to keep their budget deficits below 3% of GDP even before the 2008 financial crisis. 

The latest maneuverings just confirm that Eurocrats make used-car salesmen look like the apotheosis of probity, prudence and honesty.

Expect there to be "unanticipated consequences" like higher interest rates, and the fact market participants will generally be wary of buying an insurance product that doesn't actually insure against anything.  More here on the short cuts, half measures and games European politicians and finance ministers are playing to forestall what seems increasingly inevitable - and how in doing so, may "unintentionally" be making things worse (Telegraph.co.uk).

More on Income Inequality

Warren Meyer via theThinker:

If the very rich got that way through special access to government power, then why is the solution to tax them more, and not just to reduce government power? 

And if the very rich got that way through hard work and innovation, then why the hell are we proposing to take resources out of these people’s hands?

The Kind of Re-thinking That's Needed in Aid

From a paper by David Booth (via FindWhatWorks):

If the international community is really interested in contributing to country ownership of development efforts, there should be much more discussion of how to promote a more sophisticated approach to such issues. For the aid business, this would mean first taking a more active stance on non-aid issues in development and next a different concept of what development cooperation is about, implying the acquisition of new skills. But the agencies that we support as taxpayers are not going to be able to transform themselves in the suggested way if there is not a new climate of opinion in donor countries about how development happens and how, at the margin, aid may help.

NGOs and public intellectuals who over the past period have helped to create the public assumption that development and poverty reduction are fundamentally about resource transfers from rich people to poor people have a particular obligation to help build a new consensus about the fundamental role of institutions and leadership in successful development. That the most promising kind of external contribution to development which outsiders can make is skill- and knowledge-intensive engagement with the collective-action problems at the heart of countries’ political systems is a hard message to get across. We need to find ways of doing this.

Richard Epstein on PBS: Why income inequality is a good thing in free markets

Absolutely decimating a few of the myths on inequality in free markets - 9 minutes well spent. The key I think a lot of people miss is that inequality today in free markets is much different, looks and feels much different than what it's been like historically because the inequality isn't structural.

 The perverse effect of pursuing equality in free markets, is that it not only makes everyone poorer, but it entrenches the elites in that society. (Coalitionofthewilling.net via Instapundit.com):

Watch Does U.S. Economic Inequality Have a Good Side? on PBS. See more from PBS NewsHour.

Quote of the Day

Also via Bakadesuyo on FB: Alfred Hitchcock -

The length of a film should be directly related to the endurance of the human bladder.

Quote of the day

Ha - Oscar Wilde (Bakadesuyo on FB):

Always forgive your enemies—nothing annoys them so much.

Economic Freedom in the United States

This just isn't a partisan issue.

Why Economic Freedom Matters

From a World Bank working paper of all things... Jean-Pierre Chauffour (via theThinker)

… economic freedom and civil and political liberties are the root causes of why some countries achieve and sustain better economic outcomes. For instance, a one unit change in the initial level of economic freedom between two countries (on a scale of 1 to 10) is associated with an almost 1 percentage point differential in their average long-run economic growth rates. In the case of civil and political liberties, the long-term effect is also positive and significant with a differential of 0.3 percentage point… 

In contrast, no evidence was found that the initial level of entitlement rights or their change over time had any significant effects on long-term per capita income, except for a negative effect in some specifications of the model. These results tend to support earlier findings that beyond core functions of government responsibility—including the protection of liberty itself—the expansion of the state to provide for various entitlements, including so-called economic, social, and cultural rights, may not make people richer in the long run and may even make them poorer

More here (theIncindiaryInsight via Instapundit on the "Occupy Wall Street" Protests):

Capitalism is the best economic engine for creating wealth and prosperity that has ever been developed. The West once was capitalist, but today it is a corporatist juggernaut in it's death throes, whereby corporations and banks control the government in their favor, inevitably leading to corruption and decline. This is not capitalism, not even in the broadest interpretation of the word. I've posted a picture in a previous post on North Korea and South Korea to make a point: a capitalist country lives in prosperity, a dictatorship does not. If capitalism is so horrible, why has America lead the way in innovation, technology, scientific output, and made Americans the wealthiest (by far) workers of any nation on earth? The poor in America live better than middle-class Europeans.  

It's time to stop demonizing an entity that we have already benefited immensely from. It's damn time for Millennials to stop taking the fashionable position of saying "capitalism does not work" when they are the inheritors of a capitalist empire. The Occupiers in, at last count, 147 cities nationwide, protest a system that has been overtaken by corporations that are already in bed with the government anyway. If they have a problem with wealth, they should aim their frustrations at a government that sucked away trillions in tax-payer money for sinfully corrupt banks. Capitalism is not the enemy here, excessive government control and regulations is. 

Peter Thiel: "The End of the Future"

Essay in the National Review via Paul Kedrosky:

The state of true science is the key to knowing whether something is truly rotten in the United States. But any such assessment encounters an immediate and almost insuperable challenge. Who can speak about the true health of the ever-expanding universe of human knowledge, given how complex, esoteric, and specialized the many scientific and technological fields have become? When any given field takes half a lifetime of study to master, who can compare and contrast and properly weight the rate of progress in nanotechnology and cryptography and superstring theory and 610 other disciplines? Indeed, how do we even know whether the so-called scientists are not just lawmakers and politicians in disguise, as some conservatives suspect in fields as disparate as climate change, evolutionary biology, and embryonic-stem-cell research, and as I have come to suspect in almost all fields? For now, let us acknowledge this measurement problem — I will return to it later — but not let it stop our inquiry into modernity before it has even begun. 

II. 

When tracked against the admittedly lofty hopes of the 1950s and 1960s, technological progress has fallen short in many domains. Consider the most literal instance of non-acceleration: We are no longer moving faster. The centuries-long acceleration of travel speeds — from ever-faster sailing ships in the 16th through 18th centuries, to the advent of ever-faster railroads in the 19th century, and ever-faster cars and airplanes in the 20th century — reversed with the decommissioning of the Concorde in 2003, to say nothing of the nightmarish delays caused by strikingly low-tech post-9/11 airport-security systems. Today’s advocates of space jets, lunar vacations, and the manned exploration of the solar system appear to hail from another planet. A faded 1964 Popular Science cover story — “Who’ll Fly You at 2,000 m.p.h.?” — barely recalls the dreams of a bygone age.

(Most of) What You Need to Know about China in 10 Minutes (Video)

via Shanghaiist:

A tribute to Steve Jobs

Jim Bennett via Instapundit:

There are, fundamentally, two subspecies of entrepreneur. One starts from the present, and visualizes the next logical step from where things are now. This type figures out how to make something better, cheaper, or more widely available, and manages to clear the financial, regulatory, and market barriers to getting it into the marketplace. The other visualizes a different world, one in which things are different and better from the way they are now, and then figures out what path of evolution brings us to that world, and, as the last step, what is the least ambitious step possible that will move things toward that goal. 

Steve Jobs was one of the latter group, and one of the most successful of his time.

And "To Steven Jobs on His Thirtieth Birthday" on February 24th 1985 (via technologizer):

But also context: Why Jobs Is No Edison (american.com) - nor was he perfect - here and here (Gawker and HN) - though a few observations seem a bit mean spirited.

Quote of the Day: PJ O'Rourke

via Bakadesuyo (Facebook):

Smart people don't start many bar fights. But stupid people don't build many hydrogen bombs.

Cato: Why Government Spending Doesn't Create Jobs

With the growing scandals over stimulus spending, and a proposed new Jobs Bill, this is timely and useful:

Will Protectionism bring us into another Depression?

A broad overview here (Telegraph).  More here and here (Zerohedge and theHill).

It's not looking good for the Better Business Bureau

Feefighters writes a post criticizing Better Business Bureau's practices.  BBB first threatens to take away their accreditation and then follows through. Discussion at HN.

Another way to look at jobs moving overseas...

Sure a bit depressing but it also allows for resources to be reallocated to more productive uses (Seth Godin via Bill Conerly):

It was the inefficiency caused by geography that permitted local workers to earn a better wage

Read the whole thing - I think I largely agree with Godin on how the world and more specifically the nature of work is changing.

Hans Rosling's 200 Countries, 200 Years, 4 Minutes

A reminder that markets, trade and technology work.  It's tough not to be optimistic... (though the time to have reformed social security was like 20 years ago - and the longer we wait, the worse it will get for governments) - Youtube via Paul Kedrosky:

Shocking, yes. Bureaucrats are people too.

And yes, they respond to incentives too.  From WSJ (via Greg Mankiw):

Managers in the Social Security Administration, struggling to handle a skyrocketing number of disability cases, had an unusual request for their workers this week: slow down.  

Social Security judges and employees in Florida, Alabama, Colorado, Georgia, Tennessee, Ohio and Arizona were among those instructed to set aside disability cases this week, with the slowdown allowing managers to boost their performance numbers for the coming fiscal year, which starts Monday.  

Top officials, in a bid to meet goals to win promotions or thousands of dollars in bonuses, directed many employees to refrain from issuing decisions on cases until next week, according to judges and union officials. This likely would delay benefits paid to thousands of Americans with pending applications, many of whom are financially needy and have waited for a government decision for more than a year. 

The directive stemmed from a wrinkle in the federal calendar, in which this week fell between the federal government's 2011 and 2012 fiscal years. This happens every five or six years, as officials are allowed to count just 52 weeks in their calendar. Counting this week would make the current fiscal year 53 weeks long. That meant any applications for disability benefits completed between Monday and Friday wouldn't count toward the annual numerical targets set for Social Security judges or field offices.

Food Aid is worth just 11% of its Cash Cost to the Poor?

That's what a study by Jesse M. Cunha, Giacomo De Giorgi, Seema Jayachandran suggests (Chris Blattman via Beata):

Both types of transfers increase the demand for normal goods, but only in-kind transfers also increase supply. Hence, in-kind transfers should lead to lower prices than cash transfers, which helps consumers at the expense of local producers.

We test and confirm this prediction using a program in Mexico that randomly assigned villages to receive boxes of food (trucked into the village), equivalently-valued cash transfers, or no transfers. The pecuniary benefit to consumers of in-kind transfers, relative to cash transfers, equals 11% of the direct transfer.

TED: Matt Ridley - When ideas have sex

A look at "how we are the only species that becomes more prosperous when we become more populous" - worth the watch (via Adamsmith.org):

American Tax Dollars at Work

And here I was I thought the Obama Administration was proud that they intervened.  TheTruthAboutCars on the White House pressure on Ford to pull ads: 

This situation highlights perfectly why bailouts are so un-American. I don’t care who you are or how you felt about the bailout in the first place: at the point that the President is pressuring competitors to government-owned companies to yank truth-telling ads, you’ve got to wonder what happened to this country.

Related here.

Why Some Civilizations Fall

Victor Davis Hanson (via Instapundit) - as Reynolds notes, read the whole thing:

Redistribution of wealth rather than emphasis on its creation is surely a symptom of aging societies. Whether at Byzantium during the Nika Riots or in bread and circuses Rome, when the public expects government to provide security rather than the individual to become autonomous through a growing economy, then there grows a collective lethargy. I think that is the message of Juvenal’s savage satires about both mobs and the idle rich. Fourth-century Athenian literature is characterized by forensic law suits, as citizens sought to sue each other, or to sue the state for sustenance, or to fight over inheritances. 

The subtext of Petronius’s Satyricon is an affluent, childless, often underemployed citizenry seeking inheritances and lampooning the productive classes that produce enough excess for the wily to get by just fine without working. Somewhere around 1985 in California I noticed that my students were hoping for a state job first, a federal job second, a municipal job third — and a private one last. Around 1990, suddenly two sorts of commercials were aired everywhere: how to join a law suit by calling a law firm’s 1-800 number or how to get a free power chair, scooter, or some other device by calling the 1-800 number of a health care company that would do the paper work for Social Security on your behalf. 

Why is it more moral for a federal bureaucrat in a state-supplied SUV to shut down an offshore oil rig on grounds that it is too dangerous for the environment than for a private individual to risk his own capital to find some sort of new fuel to power his government’s SUV fleet? All affluent societies believe that they are just too rich not to be able to afford another regulation, just one more moralizing indulgence, yet again an added entitlement. But as we see now in postmodern America, idle 250,000 acres of farmland for a tiny fish, shut down an entire oilfield, put off a new natural gas find in worry over possible environmental alteration, add a cent to the sales tax, mandate yet another prescription drug entitlement not funded, or offer yet another in-state tuition discount to an illegal alien — and the costs finally equate to an implosion as we see in Greece or California.

The End of Violence?

From Steven Pinker (WSJ): "We believe our world is riddled with terror and war, but we may be living in the most peaceable era in human existence. Why brutality is declining and empathy is on the rise":

Top Oktoberfests Outside Germany... #1 Kitchener

Who knew? The irony is that despite having grown up living in Waterloo, I can't say I've ever done anything Oktoberfest-ish save doing the chicken dance under threat of force in phys-ed oh so many years ago.  Ranked according to Cheapflights (Reuters):

1. Kitchener-Waterloo, Ontario, Canada Canadians pull out all the stops for nine days each autumn to create the largest Oktoberfest celebration outside of Munich. Based in Ontario's twin cities, Kitchener-Waterloo Oktoberfest is a celebration the entire family can enjoy; the German extravaganza offers more than 40 family and cultural events, including the "World's Most Dangerous Bocce Ball Tournament." The celebration culminates at the Thanksgiving Day Parade, a televised spectacle of floats, entertainers and marching bands broadcast across the country. Dates: October 7-16

On Persistence and Passion...

A pretty incredible chronicling of one artist who learned to paint and practiced daily for 9 years (Conceptart.org h/t HN).  Inspiring.

Declining Economic Freedom in the US

As Jeffrey Ellis points out (The Thinker):

Economic freedom clearly improves the human condition — including lowering poverty — whereas government growth, no matter how well-intentioned, results in reduced prosperity.

In response to Ian Vasquez's notes (Cato @ Liberty):

[T]he United States has had one of the largest declines in the past decade. It now ranks in 10th place compared to 3rd in 2000, largely due to higher government spending and lower ratings on “rule of law” measures. The report documents the strong, positive relationship between economic freedom and a range of indicators of standard of living including wealth, economic growth, longer life spans, better health care, lower poverty, civil and political liberties, and so on. Economic freedom is central to human progress. As the response of activist governments to financial and ongoing debt crises fails to address underlying issues responsible for low growth and high unemployment, this report is an important empirical reminder about the wide-ranging consequences of politics or markets in determining the use of resources.

Do locavores and organic food buyers hate poor people?

According to Charles Kenny at ForeignPolicy, that's a "yes": "Why ditching your fancy, organic, locavore lifestyle is good for the world's poor."

Oh those Neo-colonialist Americans...

Some things can't be parodied (WSJ):

“Once we clearly understand the way this world is structured, we won’t be seduced by Gary Locke’s façade,” the Communist Party newspaper Guangming Daily said in an editorial last Friday titled “A Warning on the American Neo-Colonialism Gary Locke Brings” about the first Chinese-American to be named the U.S. envoy to China (in Chinese). “His Chinese-American identity means that he’s capable of attracting the attention and public support of Chinese people around the world, capable of developing an affinity with regular people in China. Who’s to say that isn’t the intention of the U.S., to use a Chinese to control the Chinese and incite political chaos in China?”

The response so far among Chinese Internet users: Bring it on. 

“To be honest, I’m looking forward to being colonized,” a user of China’s popular Sina Weibo microblogging service writing under the name Yan Lu’antong commented Tuesday. “We welcome this kind of ‘neo-colonialism’ with open arms!!!” added another user, Liu Xiaodong.

Mr. Locke has enjoyed popularity among Chinese Internet users ever since photos of him buying his own coffee at a Seattle Starbucks and carrying his own bags in the Beijing airport were posted online in mid-August. Almost immediately, the ambassador found himself being held up as a measuring stick against which Chinese officials, routinely pilloried for being imperious and prodigal, come up short. 

Mark Cuban: "The Most Patriotic Thing You Can Do"?

Typically bombastic Mark Cuban, on the most patriotic thing you can do - though patriotism is generally one of understated reasons to build a business (h/t HN):

Bust your ass and get rich. 

Make a boatload of money. Pay your taxes. Lots of taxes. Hire people. Train people. Pay people. Spend money on rent, equipment, services. Pay more taxes. 

When you make a shitload of money. Do something positive with it. If you are smart enough to make it, you will be smart enough to know where to put it to work.

I don’t care what anyone says. Being rich is a good thing. Not just in the obvious sense of benefiting you and your family, but in the broader sense.  Profits are not a zero sum game. The more you make the more of a financial impact you can have.

I’m not against government involvement in times of need. I am for recognizing that  big public companies will  continue to cut jobs in an effort to prop up stock prices, which in turn stimulates the need for more government involvement.  Every cut job by the big companies extracts a cost on the American people in one way or another.

Entrepreneurs are needed to create and grow companies to absorb those people in new jobs. If entrepreneurs don’t create those jobs, the government ends up having to spend more money to help them one way or another.

So be Patriotic. Go out there and get rich. Get so obnoxiously rich that when that tax bill comes , your first thought will be to choke on how big a check you have to write. Your 2nd thought will be “what a great problem to have”, and your 3rd should be a recognition that in paying your taxes you are helping to support millions of Americans that are not as fortunate as you.

Do countries choose between Democracy and Growth?

That's the question economist Yasheng Huang asks when comparing China and India with a number of unconventional conclusions - a must watch for those interested in development:

 

More on the demographic differences between India and China (Freakonomics).

On Math Education

A good look at why math education is broken as it's currently taught from the brother of the founder of Wolfram Alpha (TED.com):

 

Quote of the Day

Perhaps a bit surprisingly from the veto pen of the Democratic Governor of California, Jerry Brown (via adamsmith.org, with more on Brown at Reason.com):

Not every human problem deserves a law

As said by Abraham Maslow: If you only have a hammer, you tend to see every problem as a nail. And that's why I think law makers should fully read and understand the laws they pass and they should sit briefly, when they sit at all to pass legislation.

Is inequality the problem?

Argues Jeff Stibel at HBR:

We also need to face the stark reality of income inequality as an exasperating factor in the economy's decline. These disparities are growing at an alarming rate and have been accelerating throughout the recession. An economy that derives 70% of its GDP from consumer spending cannot sustain stable growth when average consumers don't have money to spend. 

Unbalanced growth — growth derived primarily from one segment of the population — inevitably collapses upon itself. From 2000 – 2009, overall GDP grew by 17.8% while average household net worth dropped by 4% when adjusted for inflation. At the same time, the richest individuals and corporations grew net worth by record amounts. This incongruity between rising economic growth and decreased household income is even more remarkable considering there was record low inflation. 

Long-term, stable growth cannot be truly sustainable if it is also massively unequal.

Absent from this conversation is whether or not productivity has shifted commensurate to any increases in wealth.  The policy implications are sweeping.  If in fact productivity of the wealthy or the aggregate number of high income earners is driving economic growth, economic policy should not be to punish the rich (Greg Mankiw) for doing what we want them to do - which is what President Obama has proposed with his new stimulus bill announced yesterday.

In private conversations, there are some who even believe that inequality will lead the poor to revolution, to which Chris Blattman recently noted his skepticism that the poor are any more prone to revolution than at least the middle class.  So is this a question of (re)distribution?  Or a question of access to opportunity?  (Or both?).  The conversation is woefully incomplete.

Specifically in Stibel's case, I note that he cherry picks a few numbers.  He notes that despite GDP growth of 17.8%, average net worth - not net income (which would be the apples to apples comparison given that is what GDP is), fell 4 - adjusted for inflation (which he may or not have adjusted the 17.8% for).  He implies that this suggests that all the subsequent net worth accrued to the rich.  This might be plausible if we didn't know that the rich also saw net worths fall in the last recession and the numbers of high income earners have also fallen in absolute numbers - from the WSJ:

While I don't doubt this is a serious issue, I'm not sure the issue is inequality so much as asking what is dragging down income growth for low and middle income earners.  Whatever the question, Stibel's exaggerations/leaps in logic (for which he is not alone) are unhelpful.

A lesson on conditional risk

I had to laugh at this one.  Courtesy of xkcd via Freakonomics:

Greater sexual freedom leads to ... more discipline?

Free markets and free people.  When you let people choose for themselves, "shockingly" they tend to do the right thing. From Slate.com (via Justin Wolfers):

Monogamy rates are probably rising, hard as it may seem to believe, because of sexual liberation. People are cheating less because people are less desperate and unsatisfied. Nowadays you're expected and even encouraged to delay marriage and childbirth and spend your youth experimenting both sexually and in relationships, and so now people who make commitments have both gotten some of the curiosity out of their systems, and they have a better idea of what will make them happy when they do settle down. 

There were simply more bad marriages in the past, created because of the pressure to marry young, and people in bad marriages are more likely to cheat. I also think it's because people are more open about sex. If you have a need that's going unfulfilled, there's more cultural space to deal with it first by opening your mouth and speaking to your partner instead of leaving the house, casting around for someone who can fulfill it. I'd also add that there's less stigma attached to divorce now, so people are far more likely to end a bad marriage in the early stages of it going sour. No need now to go through the process of laying waste to your marriage through cheating and fighting in order to justify the divorce, not when you can simply say, "I'm not happy anymore," and divorce amicably.

Steve Jobs: America's Greatest Failure?

One of America's greatest strengths is its willingness to overlook if not even celebrate failure.  The struggle for greatness invariably also means epic failures (NationalReview):

Jobs failed better than anyone else in Silicon Valley, maybe better than anyone in corporate America. By that I mean Jobs did what only the greatest entrepreneurs can do: learn from their failures. I don’t mean learn from their mistakes. I mean learn from their abject, humiliating, bonehead, epic fails. 

Everyone today thinks of Jobs as the genius who gave us the iPod, MacBooks, the iTunes store, the iPhone, the iPad, and so on. Yes, he transformed personal computing and multimedia. But let’s not forget what else Jobs did.

More on the aid industry...

Let there be no doubt that it is in fact an industry. According to the President of Doctors without Borders (MSF), aid groups are misleading the public on Somalia (Guardian):

Charities needed to start treating the public "like adults". He went on: "There is a con, there is an unrealistic expectation being peddled that you give your £50 and suddenly those people are going to have food to eat. Well, no. We need that £50, yes; we will spend it with integrity. But people need to understand the reality of the challenges in delivering that aid. We don't have the right to hide it from people; we have a responsibility to engage the public with the truth."

Predictable response from other agencies: "Ian Bray, a spokesman for Oxfam, said it was unhelpful for aid agencies to be seen to be arguing with each other."

One path to better jobs: More density?

That's a solution proposed in the NYT - but as Paul Kedrosky quotes, the authors have a strong sense of the limitations - and population density isn't what comes first in "job creation" (NYT via Paul Kedrosky):

DENSITY isn’t a magic elixir. One can’t create wealth just by crowding people together; otherwise the super-dense metropolitan areas in emerging Asian countries would be richer than American cities. Density simply facilitates interaction. Interactions translate into wealth when a population is educated and local institutions support private enterprise and entrepreneurship.

That said, I'm not sure that density isn't an effect of "a population educated [to] and local institutions [that]  support private enterprise and entrepreneurship."

The story of Akamai and the loss of its founder

An inspired but heart wrenching story of one entrepreneur's vision after he was killed in the first plane that crashed into the World Trade Center (Boston.com):

On Sept. 11, 2001, in Akamai’s control room, engineers and technicians worked furiously to direct the crush of Web traffic to every spare server. There was no time to grieve. But then and in the decade since, the thoughts of Akamai employees rarely strayed from Lewin and his technology, and what both had made possible.

“The end result is that you and I, without knowing Akamai is involved, get to see our content, and we get it fast, and it comes through clear,’’ said Brian Partridge, vice president of research at the research firm Yankee Group in Boston. “Akamai has had a behind-the-scenes role in the incredible development of the Internet.’’

In 1996, when Daniel Lewin, a former Israeli commando with a bachelor’s degree from Technion, Israel’s famed scientific university, began his studies at the Massachusetts Institute of Technology, computer scientists already knew the Internet would do a lousy job of managing big spikes in traffic. Companies could prepare only by buying vast numbers of extra servers that would be idle most of the time, a big waste of money.

Lewin was already hungry for a challenge like that. “Danny had the kind of mind that comes and says, ‘Well, this is a big problem. Why shouldn’t there be a solution?’ ’’ recalled his MIT professor and Akamai cofounder, Tom Leighton. “And sure enough, he figured out a solution.’’

The Internet needed a better way to instantly locate vast amounts of quickly changing data stored on computers all over the world, and send it to anybody, anywhere. What Lewin and Leighton invented was a mathematical scheme called “consistent hashing’’ that radically sped up the process. Just as important, the system could “scale’’- meaning it would work even as many more people used it. It made possible the advanced Internet services we use today.

Lewin’s innovation allows millions of users to watch streaming video simultaneously, for example, and keeps news websites online during global crises as viewers rush for the latest information.

I highly recommend reading the whole thing.

Gary Becker asks a Good Question

Gary Becker via Don Boudreaux:

Warren Buffett has persuaded 68 other billionaires to follow his example and promise to give at least half their wealth to charities. But why hasn’t Buffett proposed also that the very rich make large gifts to the federal government to offset what he considers ridiculously low taxes on their incomes and wealth? 

My guess is that he and the others who pledged to give away their wealth to charity would have little confidence in how the government would spend such gifts. Buffett, for example, is giving most of his wealth to the Gates Foundation, not to the federal government, and is relying on how this foundation will spend his vast gift. Given this reluctance to make large gifts to the federal government, why should anyone have confidence that the federal government will spend additional tax revenue in a sensible way?

Heh.

From xkcd (via Beata):

"The Ten Limerick Principles of Economics"

A fun and racy look at the principles of economics through limericks - here are numbers 2 and 8 (limericksecon.com via Greg Mankiw):

 #2. The Cost of Something is What You Give Up to Get It."Never free are the amorous fruits,"
Said a girl who astutely computes,
"For there's much I'd have earned
If these calories burned
Had involved more productive pursuits."

Decision-makers have to consider both the obvious and implicit costs of their actions. 

#8. A Country's Standard of Living Depends on Its Ability to Produce Goods and Services.
"My sweet," said a lovable lout,
"Of this there can be little doubt:
The continuing health
Of our national wealth
Is dependent on how you put out."

Countries whose workers produce a large quantity of goods and services per unit of time enjoy a high standard of living. Similarly, as a nation's productivity grows, so does its average income.

Spurring growth through Keynesian Economics?

From Robert J Barro (WSJ) - "Food stamps and other transfers aren't necessarily bad ideas, but there's no evidence they spur growth.":

Theorizing aside, Keynesian policy conclusions, such as the wisdom of additional stimulus geared to money transfers, should come down to empirical evidence. And there is zero evidence that deficit-financed transfers raise GDP and employment—not to mention evidence for a multiplier of two.

Gathering evidence is challenging. In the data, transfers are higher than normal during recessions but mainly because of the automatic increases in welfare programs, such as food stamps and unemployment benefits. To figure out the economic effects of transfers one needs "experiments" in which the government changes transfers in an unusual way—while other factors stay the same—but these events are rare.

Ironically, the administration created one informative data point by dramatically raising unemployment insurance eligibility to 99 weeks in 2009—a much bigger expansion than in previous recessions. Interestingly, the fraction of the unemployed who are long term (more than 26 weeks) has jumped since 2009—to over 44% today, whereas the previous peak had been only 26% during the 1982-83 recession. This pattern suggests that the dramatically longer unemployment-insurance eligibility period adversely affected the labor market. All we need now to get reliable estimates are a hundred more of these experiments.

If only we lived in a world without tradeoffs...

With environmentalists protesting an oil pipeline from Canada to the US (townhall.com), it's as if they believe that the alternatives are risk free. They aren't. The alternative to ethical oil is Saudi oil:

Meanwhile as the same townhall.com article points out, thousands of protected birds are killed each day from wind farms.  My guess though is that there are a lot of environmentalists against those as well.  There are many days when I wonder if what it is they really object to is electricity and industrial progress.

The Economist: How important is it to make things?

As they point out - when it comes to growth and economics, not very:

As the weak recovery continues, various experts continue to linger on the importance of manufacturing to growth in output and employment. America's economy will work again, many argue, when its workers are once again engaged in the critical task of making things. I continue to struggle to understand this focus. Think of the kinds of tasks that make a product possible: the people who identify a market opportunity and come up with a concept, the people who produce a workable product design, the people who design a production method and supply chain, the people who find supplies and labour at prices and qualities consistent with profitable production, the people who manage the logistics of bringing inputs together, the people who actually assemble the inputs, the people who manage the logistics of delivering the goods to markets, the people who actually sell the goods to customers, and the people who track these processes and add up the numbers to make sure things are working as planned. Why is the assembly step obviously the most important to economic activity?

Manufacturing enthusiasts often cite the benefits of manufacturing's high compensation levels for middle-skilled work, but this is a mistaken idea. In the tradable sector, high wages are possible only when there are high levels of value creation. That corresponds to high skill levels or capital intensities, both of which limit the extent to which high-wage manufacturing jobs will be responsible for mass employment. Low-skill jobs in tradable sectors will tend to flow to places with very low labour costs. Of course, America can employ lots of people in non-tradable, middle-skill manufacturing jobs: things like home-building, on-site prepared food manufacture, and the production of shortened hair. Yet employment in construction, restaurant, and personal service jobs doesn't satisfy manufacturing enthusiasts, despite the ample market appetite for such workers.

Geldof: From Live Aid to ... Private Equity Capitalist?

And in so doing, doing a heck of a lot more good?  This seems promising (ReutersAfrica):

Bob Geldof, the former Boomtown Rats singer and Live Aid front man, said a private equity fund he agreed to front last year to invest in Africa was nearing its first close, having raised nearly $200 million.

Geldof helped organise the 1985 Live Aid concert, which reached an estimated 1.5 billion people and did much to raise the profile of those suffering from poverty, starvation and disease in Africa.

Geldof said the private equity fund, called 8 Miles, which represents the shortest distance between Europe and North Africa, had attracted increasing attention because of what he called an existential fiscal crisis in the euro zone.

"It's all about globalisation. Without Africa, this whole game stops," Geldof told delegates at a Julius Baer investor conference in Zurich, focusing on growth. "Last month, of the 10 fastest-growing economies in the world, six were African."

Private equity funds often close to new investors as they deploy the money already gathered, because holding on to large amounts of idle cash while they choose their investments can create a drag on performance.

Crime and Poverty

A reminder that poverty isn't an excuse for crime - and that when we do so, we debase the vast majority of those who attempt to build better lives for themselves and their families and who some pejoratively dismiss as poor as if it's a chronic and hopeless condition. via City-Journal:

But the notion that unemployment causes crime runs into some obvious difficulties. For one thing, the 1960s, a period of rising crime, had essentially the same unemployment rate as the late 1990s and early 2000s, a period when crime fell. Further, during the Great Depression, when unemployment hit 25 percent, the crime rate in many cities went down. (True, national crime statistics weren’t very useful back in the 1930s, but studies of local police records and individual citizens by scholars such as Glen Elder have generally found reduced crime, too.) Among the explanations offered for this puzzle is that unemployment and poverty were so common during the Great Depression that families became closer, devoted themselves to mutual support, and kept young people, who might be more inclined to criminal behavior, under constant adult supervision. These days, because many families are weaker and children are more independent, we would not see the same effect, so certain criminologists continue to suggest that a 1 percent increase in the unemployment rate should produce as much as a 2 percent increase in property-crime rates.

Yet when the recent recession struck, that didn’t happen. As the national unemployment rate doubled from around 5 percent to nearly 10 percent, the property-crime rate, far from spiking, fell significantly. For 2009, the FBI reported an 8 percent drop in the nationwide robbery rate and a 17 percent reduction in the auto-theft rate from the previous year. Big-city reports show the same thing. Between 2008 and 2010, New York City experienced a 4 percent decline in the robbery rate and a 10 percent fall in the burglary rate. Boston, Chicago, and Los Angeles witnessed similar declines. The FBI’s latest numbers, for 2010, show that the national crime rate fell again.

Building Pre-Fab Homes

Not sure what I love about production lines but here's a cool vid of how far building homes has come (and still makes up only a fraction of the market) - from Core77:

My buddy Julian works in construction, and for his first week on the job he and his crew were building two-story Motel 6's in New Jersey in the middle of a blizzard. Since he was the new guy, they threw him up on the roof alone with a shovel (and a lone rope tied around his waste as a safety measure) to clear the snow that was stacking up on the half-finished parts of the structure. It was an 8-hour day with nonstop snow. I asked him if that was his worst day on the job. "No," he laughed. "Just my first one."

While pre-fab construction is a merely neat idea for architects, designers and consumers, it must be amazing for the actual construction workers. Putting things together is still hard labor, but imagine being able to do it all indoors, in short-sleeved shirts, in a climate-controlled environment with perfect lighting and an actual plumbed bathroom

Probably.

Mark Steyn: "The West has incentivized non-productivity on an industrial scale." (NationalReview via Instapundit). While it is the wealth from markets that have allowed governments to prolong unsustainable policies, government largesse seems to have finally exceeded the ability for markets to pay. Read the whole thing.

In Defense of Price Gouging

A look at how government restrictions over pricing result in unintended consequences.  The defense (Washington Examiner):

Disaster pricing often yields more widespread allocation of scarce resources. So everybody has something, and it's less likely someone's sitting on water or batteries they don't need.

Think of those families doubling up in hotel rooms during the hurricane. Those hotels only would double their prices if they thought they could still fill every room. So, if families weren't feeling pressured to share a room, where would the later-arriving families have stayed? In their car during the hurricane?

Greedy exploitation is a different thing. If I run the only store in a town and decide to hike the price for water on a group just because they look thirsty -- even though I'm in no danger of running out -- that's exploitation. But if I'm dealing with a stock that's going to run out, there's nothing wrong with pricing goods so that each good goes to whoever wants it most, rather than whoever can get to it first.

Obviously, we should take care of the poor, as a matter of charity. We all have a duty to take care of the needy, and the class of people fitting into that circumstance expands during a hurricane or other crisis.

But objections to "price gouging" often unhelpfully blend the duty to charity with the dynamics of the market.

If a store owner wants to give discounts or freebies to the poor, that's great. And if he wants to double the price of something he's about to run out of, that should be okay, too.