Canadian Government Explores Social Impact Bonds

There are a number of social problems that don't lend themselves easily to being solved by markets... so the solution that some have proposed? Create artificial markets, bounties and contests to solve them - identifying new solutions and experiments that pay only if they produce the objective outcomes desired. The Canadian government just announced its support for social impact bonds (GlobeandMail via Brian H on FB):

The Conservative government is throwing its support behind social-impact bonds – an experiment that rewards private investors for putting cash toward social causes.

The government on Monday released a list of projects that could be financed in this way, such as programs to build housing for people with disabilities, reduce recidivism among young offenders or encourage more young aboriginals to learn a skilled trade. Ottawa said it will work with interested groups toward launching projects.

The arrangement is not a bond in the traditional sense. An investor pays a group such as a non-profit to deliver a social service and is rewarded with an agreed upon sum from the government if the non-profit achieves a measurable goal. The financial risk falls on the investor. If the goal is not met, no government money is spent and the investor is out of pocket.

This is an idea that's also being explored in the US (NationalPost):

In August, New York Mayor Michael Bloomberg announced the country’s first concrete program, which is aimed at reducing the rate at which young offenders return to crime after their release.

“Currently, nearly 50 percent of adolescents who leave the New York City Department of Correction return within one year,” according to the press release unveiling the plan. “The new program announced today, ABLE, aims to reduce the likelihood of reincarceration by providing education, training and counseling to improve personal responsibility skills, including decision-making and problem-solving.”

Goldman Sachs will finance the plan for four years, which will be operated by MDRC, a non-partisan New York non-profit organization. The loan will be partly guaranteed by a grant from Bloomberg Philanthropies, the mayor’s family foundation. To be judged a success, the program will have to reduce the number of youths returning to jail by 10%, as measured by an independent third party organization. If it works, the city will repay Goldman, plus a profit; if not, the city pays nothing.

Massachusetts is seeking proposals on a similar initiative, and a second program intended to provide stable housing for the chronically homeless. Both homelessness and recidivism are high-cost items for government; if the programs succeed, the public savings would be well worth the profit paid to the backers.

Zoning Kills Affordable Housing

As per usual, regulation is used most often to protect well connected, better financed incumbents (Reason via Instapundit):

In Snob Zones, journalist Lisa Prevost describes the heights of entitlement to which property owners ascend when faced with the prospect of new development, especially multi-family dwellings in neighborhoods dominated by single-family homes. Prevost tours New England and finds an aging, declining populace bent on excluding outsiders. In town after town, affluent and working-class alike, residents line up to shout down new development no matter how modest.

In Darien, the need for the proposed project was clear; the town's senior housing center had a long wait list, as did the last condo development built in the area (in 1994). Still, many townsfolk, expecting the project to open the floodgates to more high-density projects in the resolutely low-density burgh, were incensed.

Incumbent homeowners have a powerful weapon for vetoing change: zoning. In Darien and other exclusive zip codes, mandated minimum lot sizes kneecap developers who want to build something other than super-sized homes. In the process, they put entire towns out of reach for all but the wealthy. In hardscrabble Ossippee, New Hampshire, where it's not uncommon for the working poor to live in tents during the summer months to save on rent, the zoning code flatly prohibits new apartment buildings.

The Problem with Copycats

I tend to agree - but it's more than about being a copycat. It's about the "why" of what is being built - what drives you - is a business about doing great things or making money? Everlane CEO Michael Preysman on Copycats: (TechCrunch via Swiss-miss):

The problem with copycats is that honestly, they have no soul. It sounds silly to say that, but when you don’t have soul and you don’t have a reason for why you’re doing the things you’re doing, you’re always one step behind, and you never really connect with the consumer.

Glenn Reynolds: "Where are the Startups?

Troubling... (USAToday) - this is a great companion piece to Peter Thiel's talk:

At any rate, the latest data indicate that start-ups are becoming rarer, not more common. A new report from JPMorgan economist Mike Feroli indicates that employment in start-ups is plunging. New jobs in the economy tend to come from new businesses, but we're getting fewer new businesses. That doesn't bode well.

In fact, it is yet another sign of a United States that is looking more like Europe: A society in which big businesses have cozy relationships with big government, while unemployment remains comparatively high. If you're fortunate enough to have a job at one of those government-connected businesses, GE, for example, your situation is pretty good. If you're a recent college graduate looking for work, your situation is not so great. If you're a low-skilled worker, your situation is dreadful.

Peter Thiel: You are not a Lottery Ticket

Good talk by Peter Thiel at SXSW on "luck" and how it shapes our world view and how any given society's prevailing view of luck changes how we approach and solve problems (UStream via HN) - it's about an hour long:

Video streaming by Ustream
The talk tracks a class lecture he at Stanford in case you'd prefer to read it (BlakeMasters)

Experiment in paying villagers in India an unconditional basic income

Exploring guaranteed minimum income in India (mondediplo via HN):

The idea of giving money to the poor without asking for anything in return startled some. “They told us the men would use the money to get drunk, and the women to buy jewellery and saris,” said Dewala. “But it’s a middle-class prejudice that the poor don’t know how to use money sensibly. The study showed that a regular income allows people to act responsibly. They know their priorities. When something is rare, people measure its value. (Anyway, in tribal villages, people distil their own liquor.) The main advantage is regularity. It makes it possible to organise, save and borrow. The principle is that a small amount of money generates a great deal of energy in a village.”

In the village of Malibadodiya, a few tens of kilometres from Panthbadodyia, Sewa has been helping women for a decade. At a meeting of the women’s savings group, the members mixed freely, though they were from different castes and backgrounds. In a cheerful atmosphere, they discussed collective projects such as the building of a roof for the temple, and public toilets. Dewala joked: “Own up, how many of you have used the money to buy jewellery?” In response, one showed the sewing machine she had saved for over a year to buy, another proudly announced she had nearly finished paying for her family’s television set, and another held up a 300-rupee blanket for the winter, of far better quality than the one it replaced. Everyone laughed as Mangu, related the adventures of a group of women who had gone to a nearby town on a tractor, to demonstrate against the high cost of living, defying warnings from their menfolk and threats from the police.

“Women are no longer afraid. They are becoming independent, managing money, making plans. In several villages, they have forced the landlord to raise their wages,” said Rashmani. She worked in a bidi cigarette factory for 20 years before becoming a Sewa activist, and now works with more 300 villages. Some union representatives lead district communities with as many as 75,000 members. “We want to show that, if a union manages the money, it will be better shared out, and that if you take care of people, you can succeed.” Dewala added: “The key point we want to make is that the presence of a civil society body makes all the difference.”

Government and Basic Research

A friend had this on his Facebook wall leaving me a bit conflicted:

I have had this conversation almost word-for-word with a historian friend before.

I would also respond by saying that we have no clue where curiosity driven research will lead us. A lot of cures and medical breakthroughs (X-Rays, fMRI, penicillin) came from research that seemed esoteric and silly to outsiders.

source: www.smbc-comics.com

What should the role of government be in basic research? On one hand I'm not sure it should be zero, but given limited resources, what's the limit?

I also made the mistake of assuming that business doesn't do basic research because of its intangible benefits and large costs - but that's not quite true (Cato):

When University of Pennsylvania economist Edwin Mansfield studied the 1960-70 behavior of 16 major American oil and chemical companies, he found that all 16 invested in pure science. The more a firm invested in basic science, the more its productivity grew.

Zvi Griliches of Harvard University, in a study of 911 large American companies, discovered that the companies that engaged in basic research consistently outperformed those that neglected it.

Most of the benefits of a company’s basic science are indeed “captured” by competitors. When Hiroyuki Odagiri and Naoki Murakimi studied the 10 largest Japanese pharmaceutical companies, which collectively enjoyed $13 billion sales in 1981, they found that on average each company had an annual return of 19 percent on its own investment in research and development. But each company obtained the equivalent of a 33 percent annual return on the R&D done by the other nine companies. Each company was, therefore, apparently free riding on the other nine.

But there is no such thing as a free ride in R&D. Only highly skilled research scientists can capture other people’s science. And since the best scientists are those who are actually doing research, to retain their services, companies have to fund them with considerable generosity and considerable freedom.

Thus we see that “capture” is the solution to, not the problem of, the industrial exploitation of pure research. Basic science is so vast, worldwide, and so unpredictable that no individual company can hope to cover its own needs. So companies have to fund scientists’ in-house pure research to retain their services as agents of capture.

There's also another pretty comprehensive argument at the Cobden Centre.

Depending on who you ask, in the case of the Large Hadron Collider that led to the discovery of the Higgs Boson particle, the cost was as much as $14 billion dollars (StackExchange). It's clearly a discovery that few if any private firms could have undertaken on their own - but that also presumes that the funds were spent efficiently.

On the other hand, we've also seen interesting discoveries/innovation as a result of the X-prizes - but these are defined outcomes when some important discoveries, as noted above, have happened by accident (not that this precludes other unintended discoveries from happening). On the privatize everything side of the argument, it's unclear that these discoveries wouldn't have been achieved in the private sector - and if governments weren't involved, maybe they would have happened earlier (or the counter argument might be given the state of intellectual property rights, some patent troll may have sat on these much needed innovations and/or prevented their development - but that's more a call for a rethink of how property rights are rewarded in the first place).

There are a number of private foundations that aim to fund breakthrough research like Peter Thiel's Breakout Labs that gives grants for early-stage scientific research that is too speculative or long-term to interest the for-profit sector (Wikipedia). I also don't think that scientists are immune to waste and the creation of costly bureaucracies. Further, whenever government is a funder, it tends to crowd out other funds - whether it be in competing for researchers or picking favorites. So what's the balance to strike and are governments currently striking that balance?

Update: Is the LHC a worthwhile project? (Debate.org)

Quote of the Day

Samizdata via Instapundit:

If you want to introduce someone to libertarian thinking, encourage them to try this experiment. Spend a few days reading nothing but technology news. Then spend a few days reading nothing but political news. For the first few days they’ll see an exciting world of innovation and creativity where everything is getting better all the time. In the second period they’ll see a miserable world of cynicism and treachery where everything is falling apart. Then ask them to explain the difference.

The "Aid" that Isn't

That could cynically cover a lot of projects that are intended to help the poor I suppose but it requires a special level of cynicism to support US Food Aid which is designed specifically to help well connected, wealth American farmers (TheEconomist via Instapundit):

It is the sad fate of American overseas food aid to occupy a policy “sweet spot”, says Chris Barrett, an expert in the subject at Cornell University. Its budget, the largest of any country’s, is big enough to attract rapacious special interests, but still sufficiently small and complex that its scandalous inefficiencies rarely make headlines.

Scandalous barely covers it. Since America began donating surplus wheat, corn meal, vegetable oil and other farm commodities to the world’s hungry six decades ago, the programme has been captured by an “iron triangle” of farm interests, shippers and voluntary organisations, with plenty of help from Congress. Rules state that most food aid must be bought from American farmers and processed in America. At least half must then be carried on American-flag ships. With competition severely curbed, ocean shipping eats up 16% of the budget for the largest food-aid programme, Food for Peace.

In a related scandal called “monetisation”, involving non-emergency aid (which represents about 30% of Food for Peace), charities and non-governmental outfits receive American produce, sell it on local markets abroad and then use the proceeds for good works. Compared to directly funding projects, “inherently inefficient” monetisation on average wastes 25% of the money sent, according to the Government Accountability Office. And the food supplied often floods fragile markets, hurting local farmers.

The people who supposedly represent us...

I get that there are many in the media - and NBC specifically, who have an ideological bias - but to so blatantly overlook the brutal totalitarian past that May 1 celebrates is bizarre (Wikipedia) especially as they seem to go out of their way to look for bigotry (ESPN). There are few words... (Mediaite):

While covering a May Day rally in Manhattan’s Union Square on Wednesday, NBC New York reporter Ida Siegal was cornered and asked if her network planned to show the communist imagery the protesters were displaying. Hilarity ensued when Siegal immediately became defensive, denying she had seen any communist imagery and asking of the “Hammer-and-Sickle” flags: “What do they represent?”

“You guys are with channel 4 news,” the videographer noted while addressing Siegal and her production team. “Are you guys going to show any of the people with Hammer and Sickle flags?”

“I haven’t seen any of those flags,” Siegal replied amid the din of the ongoing protests activity. “What do they represent?”

"Overnight Success"

The iOS app Mailbox has gone from zero users to over a million and managing over a hundred million emails a day in just over six weeks (Mashable). As a founder points out, this took years - a good and inspirational reminder that success is rarely a sprint, but more of a marathon (TechCrunch):

“Mailbox is really version 2 of Orchestra, a shared to-do list that we put in the app store in the fall of 2011,” Underwood told me. “Inside the company we were in an endless cycle of prototyping and releases that eventually evolved into Mailbox.”

The road to Mailbox, he said, came as the startup realized that the idea of the to-do list was fundamentally broken. Instead of helping users to organize tasks, they inevitably became a nagging reminder of things people hadn’t yet accomplished. “Everybody fills up to-do lists with things to do, and that’s a great moment because you’re getting your life organized,” he said. “The more people use them, the more they get full of stuff that never gets done.”

The Case against Cronies: "Pro Markets" not "Pro Business"

Yep - "It's time for a free-market corporate social responsibility. Conservatives who rail against government hand-outs should also blast companies who seek shelter from Washington" (theAtlantic). And it's been happening (FT, Bloomberg).

"If People Could Immigrate Anywhere, Would Poverty Be Eliminated?"

Interesting question. I'd suggest that the answer is yes, but it would take time - given that the best people would move to places that offered the greatest economic opportunity, creating a positive reinforcement loop for places that offer better economic policies. To a certain extent this is already happening given the effects of pro market policies.

The problem is that you'd first have to reduce or eliminate some of the entitlements that have been strangling developed countries that were created at a time when their cost wasn't nearly as much as it is today. Eligibility for benefits would need to be reexamined to make an open immigration policy more feasible. The article in the Atlantic also brings up another issue - "if you're coming from a place that has a problem, you are probably part of the problem, and if you move to a new place you might bring the problem with you."

This isn't academic given how there has been significant migration from "blue" states to "red" states which are seen as more business friendly in the US. Glenn Reynolds at Instapundit argues that "someone needs to set up a “welcome wagon” to explain to new immigrants why the states they’re moving to shouldn’t become more like the states they left". Further, Mickey Kaus notes that overly generous welfare systems can reduce the need for social integration breeding resentment and may even be a cause for terrorism (Slate via Instapundit).

More here (TheAtlantic via HN):

If wealthy nations open their borders, won't native workers lose their jobs or see their pay shrink? Not so, according to Clemens. He and his co-authors, through study of all the available economic literature, have found that decades of immigration of tens of millions of people to the United States has reduced real wages for the average American worker by fractions of a percent, if at all. Meanwhile, immigrants to the U.S. from developing countries can increase their income by 100 percent, or 1,000 percent. "Immigration is very, very far from being a zero-sum game of 'their poverty or ours,'" Clemens wrote in 2010. "Within ranges that even slightly resemble current migration levels, it is rather simply 'their poverty or their prosperity,' while we remain prosperous."

Clemens's research also challenges the notion that immigrants take away jobs from Americans. In agriculture, for example, he has estimated that for every three seasonal workers who are brought in, one American job is created across all sectors. Directly, workers need managers, and more often than not those managers are Americans. Indirectly, workers buy things, which means more Americans are needed to sell and produce those things. And yet, Clemens told me, "when a bus of 60 Mexicans is coming up from the border, nobody looks at it and says 'Ah, there's 20 American jobs.'"

But some immigration restrictionists have far bigger worries than workers losing small percentages of their salaries. There are many possible negative consequences of open borders. Naik points out that "political externalities" may be a major drawback of allowing anyone who wants to move to stable, wealthy nations to do so. Gallup polls have found that 700 million people would like to permanently move to another country, many of them from developing nations with failed political systems. If the U.S. or another wealthy nation were to see a sudden large increase in immigrants from these countries, it's possible that the new populace will vote for bad policies in their new home. As Naik puts it, some people believe that "if you're coming from a place that has a problem, you are probably part of the problem, and if you move to a new place you might bring the problem with you."

Robert Samuelson: The Twilight of Entitlement?

Colour me skeptical but hopeful - that it happens before it bankrupts us (WashingtonPost via Instapundit):

Bill Clinton has a pithier formulation: “If you work hard and play by the rules, you’ll have the freedom and opportunity to pursue your own dreams.” That’s entitlement. “Responsible” Americans should be able to attain realistic ambitions.

No more. Millions of Americans who have “played by the rules” are in distress or fear that they might be. In a new Allstate-National Journal survey, 65 percent of respondents said today’s middle class has less “job and financial security” than their parents’ generation; 52 percent asserted there is less “opportunity to get ahead.” The middle class is “more anxious than aspirational,” concluded the poll’s sponsors. Similarly, the Employee Benefit Research Institute found that only 51 percent of workers are confident they’ll have enough money to retire comfortably, down from 70 percent in 2007.

Popular national goals remain elusive. Poverty is stubborn. Many schools seem inadequate. The “safety net,” private and public, is besieged.

Experiments in Education

This is pretty remarkable - especially given market concerns over the risk of student loans offered by the US government (Zerohedge). App Academy is offering education with no upfront costs that gets paid after students get jobs (Yahoo via Instapundit):

Here’s how the tuition scheme works: Students study free-of-charge during the course’s duration. Upon gaining employment after graduation, alumni forward 15 percent of their annual base salary to App Academy, but not all at once. Instead, that sum -- typically around $12,000 for the average graduate -- is deducted incrementally from an employed graduate’s bi-weekly pay check for six months.

If a student isn’t hired within one year of completing App Academy, that student won’t be charged tuition. But that hasn’t been a problem for App Academy: Ninety-three percent of its graduates have received offers or are working in tech jobs.

According to Patel, the average App Academy graduate earns $83,000 a year – not bad for someone making a career change or who was previously unemployed. But the course is anything but easy. App Academy’s acceptance rate is less than 10 percent, and once admitted, students put in 80 to 90 hours a week in the lab.

Benjamin Franklin on Minimum Wage

From Freakonomics:

Benjamin Franklin apparently understood the notion that input prices affect product prices, which is a problem because product demand curves are not completely inelastic. Discussing a minimum wage, he noted, “A law might be made to raise their [workers’] wages; but if our manufactures are too dear, they might not vend abroad.” This is one of the best arguments against a minimum wage: in an open economy, which the U.S. increasingly will be at least partly passed on in the form of higher product prices, which will in turn reduce product demand—and eventually employment.

Particularly relevant when legally mandated wages are not a reflection of productivity.

The evolution of Capitalism: It's the Ideas that matter more than the Capital

Technology is not only reducing the barriers of entry but also reducing the transactional costs allowing firms to reach smaller buyers (and it's about far more than the economies of scale, as argued by Jon Evans in TechCrunch):

Don’t look now, but something remarkable is happening.

Instagram had twelve employees when it was purchased for $700 million; all of its actual computing power was outsourced to Amazon Web Services. Mighty ARM has only 2300 employees, but there are more than 35 billion ARM-based chips out there. They do no manufacturing; instead they license their designs to companies like Apple, who in turn contract with companies like TSMC for the actual fabrication. Nest Labs and Ubiquiti are both 200-employee hardware companies worth circa $1 billion…who subcontract their actual manufacturing out to China.

Warren Buffett has long advocated investing in businesses with “moats” around their business model. Often that moat is an economy of scale; the notion that a hundred widgets cost a dollar each but a million widgets only a dime apiece.

Obviously that doesn’t apply to software, or music, or other virtual goods. What’s less obvious is that as time goes by, and technology and interconnectivity advance, it applies less and less to the physical world as well. Industrial capacities that not long ago were available only to gargantuan corporations are today open to anyone and everyone. Amazon, Microsoft, Google, and the OpenStack providers compete to rent economies of scale for web services. Foxconn et al essentially do the same for electronics. So what happens when this trend expands into other sectors? What happens when there are Foxconns for furniture, or cars, or houses, or retail stores? And a Dronenet for transporting physical goods?

Researchers: Depressed? Sleep less

Sleep deprivation apparently elevates mood (though as I understand it, it will also kill you) (ScientificAmerican via HN).

PBS: Twice As Many Entrepreneurs Are Over 50 As Are Under 25

Why entrepreneurship doesn't naturally belong to the young (PBS via HN):

The lesson here is that ideas come from need; understanding of need comes from experience; and experience comes with age. The world may not yet be ready for your idea, but if you believe in it, keep pursuing it until one day the world is ready. It is never too late for you to innovate.

Global Austerity, Debt, Growth and Reinhart-Rogoff

It's a debate replete with vested interests so don't expect it to be settled any time soon. A number of people have been forwarding me this NYMag article "Meet the 28-Year-Old Grad Student Who Just Shook the Global Austerity Movement". The critique has been overhyped (particularly evident in the NYMag article) and those who oppose moderating the massive overspending by governments have overstepped what they see as their momentary advantage.

Of course, things don't quite work that way. Judge for yourself - A roundup of other articles in response:
Researchers Finally Replicated Reinhart-Rogoff, and There Are Serious Problems (HN) Carmen Reinhart and Kenneth Rogoff respond (NYT)
A Study That Set the Tone for Austerity Is Challenged (NYT)
Reinhart-Rogoff reprise (Economist)
Mistakes (Greg Mankiw)

Update (April 28): Refereeing Reinhart-Rogoff Debate (Betsey Stevenson & Justin Wolfers writing in Bloomberg). After taking the adjustment into account:

The finding remains that economic growth is lower in very-high-debt countries (see chart). It has been disappointing to watch those on the left seize on the embarrassing Excel errors but ignore this bigger picture"

Update (April 30): Investors who failed to roll over Greek debt were not scared off by an economic research paper. (WSJ):

When Germany insisted, in return for bailouts, that these countries enact tax hikes and spending cuts, it wasn't because German pols were in thrall to Rogoff and Reinhart.

In inflicting serial fiscal cliffs on itself, Washington wasn't studying Rogoff and Reinhart. It was studying the irreconcilable demands of voters who want no spending cuts, no tax hikes and no deficits.

In the sequestration accident that followed, the culprit wasn't Rogoff and Reinhart. The culprit was the desire of politicians to put off spending discipline until tomorrow—and then, dammit, tomorrow arrived.

Don't be misled because politicians are promiscuous citers of authorities they haven't consulted and papers they haven't read for what politicians would do anyway. As much as some try to invent a fierce debate between "austerians" and advocates of stimulus, the policy consensus, in fact, has been strikingly solid. Michael Kinsley nicely demonstrates in a Los Angeles Times column that even Paul Krugman and his bête noire, deficit hawk Pete Peterson, have been saying the same thing: NO to immediate fiscal stringency, YES to long-term reform.

Now if various blowhards who campaign against austerity and say they are in favor of long-run reform actually supported long-run reform, we might get somewhere.

Update (May 6): Larry Summers: Reinhart-Rogoff Debacle Shows No Policy Should Be Based 'On A Single Statistical Result' [and it wasn't] (HuffingtonPost via GregMankiw)

"How Corruption Strangles US Innovation"

Which just goes to show that despite US growth which is emblematic of the massive gains we've seen, these gains, brought about through innovation, have not come without cost or easily (HBR):

Tesla. Uber. Netflix. Most economies would kill to have a set of innovators such as these. And yet at every turn, these companies are running headlong into regulation (or lack thereof) that seems designed to benefit incumbents. The reason? The devastating impact of money in politics and how it discourages disruptive innovation among new businesses.

Why Economic Growth Matters

This graph is stunning - demonstrating how markets transformed Western civilization (from AEI):

I would boil it down to this: Respect and reward innovators and innovation. As Deirdre McCloskey has put it, the West became a business-admiring civilization and that changed everything:

What changed were habits of the lip. It’s not a “rise of the bourgeoisie,” but a rise in other people’s opinion of the bourgeoisie that makes for economic growth — as it is now doing in China and India. When people treat the marketeers and inventors as having some dignity and liberty, innovation takes hold. It was so to speak a shift in “constitutional political economy,” as James Buchanan puts the point. People agreed on the meta-rule of letting the economy go where it will. This contrasted with the earlier mentality, still admired on the left, that treats each act of innovation as an occasion to go looking for its victims. Victims there were, but they were greatly outnumbered by winners. It was ideas, not matter, that made the winners, and brought our ancestors from $3 to over $100 a day.

Ira Glass: Persistence and Creativity

I think this applies as much to innovation - that "great" doesn't happen overnight - but it takes practice. What I think it doesn't do a good enough job of emphasizing is that you have to love the practice (via SwissMiss):

The next generation of gesture controls

Leap motion as applied to Google Street Maps - pretty cool:

Procrastination as a source of productivity?

Maybe (Lifehacker)

Hyeonseo Lee: My escape from North Korea

A TEDtalk via Garr Reynolds:

Everything you needed to know about sleep

It's at least a really good compilation... (Medium via HN)

Things that are not sustainable...

The phrase "unintended consequences" is paired all too often with government interventions as it is here - as Danes begin realizing the problems around their social welfare system that rewards those who are unemployed even more than some who are (NYT):

It began as a stunt intended to prove that hardship and poverty still existed in this small, wealthy country, but it backfired badly. Visit a single mother of two on welfare, a liberal member of Parliament goaded a skeptical political opponent, see for yourself how hard it is.

It turned out, however, that life on welfare was not so hard. The 36-year-old single mother, given the pseudonym “Carina” in the news media, had more money to spend than many of the country’s full-time workers. All told, she was getting about $2,700 a month, and she had been on welfare since she was 16.

The Story of Sriracha

Great story about a passionate entrepreneur (LATimes via Techcrunch):

Early on, one of Tran's packaging suppliers told him, "Your product is too spicy. How can you sell it?" Add a tomato base, some friends counseled. Sweeten the flavor to pair it better with chicken, others said. But Tran stood firm.

"Hot sauce must be hot. If you don't like it hot, use less," he said. "We don't make mayonnaise here."

Value, Monetization and Mobile Gaming

Not that I think revenues or monetization are bad things (quite the opposite, in fact). Forbes has a look at fast growing SuperCell that makes games through seemingly development decentralized teams:

Ilkka Paananen says the best way to make money in mobile gaming is to stop thinking about making money. Think about fun instead. Fighting a mild case of flu and jet lag from a San Francisco flight back home to Helsinki, Paananen says that companies that place revenue above fun (we’re talking to you, Zynga) will ultimately fail. “It really is that simple–just design something great, something that users love,” says the 34-year-old. [...]

The growth curve steepens: With daily revenue now at $2.4 million, Supercell is already at a run-rate of more than $800 million for 2013 and could reach $1 billion. That would make it more than twice the size of Electronic Arts’ mobile games division, which has 900-plus iOS apps. Supercell now attracts 8.5 million daily players who play an average of ten times per day.[...]

Most game studios have an autocratic executive producer green-lighting the work of designers and programmers. Supercell’s developers work in autonomous groups of five to seven people. Each cell comes up with its own game ideas. They run their ideas by Paananen (he can’t remember ever nixing a proposal), then develop those into a game. If the team likes it, the rest of the employees get to play. If they like it, the game gets tested in Canada‘s iTunes App store. If it’s a hit there it will be deemed ready for global release. This staged approach has killed off four games so far, with each dead project a cause for celebration. Employees crack open champagne to toast their failure. “We really want to celebrate maybe not the failure itself but the learning that comes out of the failure,” says Paananen.

Seemingly bad business ideas that turned out to be great

Cool beans (kottke via Beata).

China's Leap in Reducing Extreme Poverty

Fantastic news. From the World Bank's recent report on extreme poverty (WSJ):

About 1.2 billion people in the world lived in extreme poverty in 2010, subsisting on less than $1.25 a day. That’s down from 1.9 billion three decades ago despite a nearly 60% increase in the developing world’s population.

The total number of people living in extreme poverty has dropped in every developing region over the past three decades. About 21% of the developing world lived on less than $1.25 a day in 2010. In 1981 it was 52%.

The sharpest decline came in China, where the extreme poverty rate fell to 12% in 2010 from 84% in 1981. India’s extreme poverty dropped to 33% of the population from 60% three decades ago.

Morning Giggle - Ikea's "Time for Change"

Came across this ad watching Martin Durkin's Margaret: Death of a Revolutionary (Channel4) which unfortunately isn't viewable if it doesn't think you're in the UK.

The irony is how appropriate the ad is, given the thesis of how Thatcher democratized ownership with the UK the sale of council flats (Wikipedia), and the privatizations of British Steel, British Petroleum, British Airways, Rolls Royce and water/electricity utilities through the 80s.

As a side note, it defies imagination how there are some who now claim that the financial crisis of today was the result of Thatcher's audacity in believing that the poor should have the right to buy the homes they lived in. Anyway, rant over, watch Ikea's ad running in the UK for a giggle:

The World Bank Considers Scrapping/Crippling "Doing Business"

It's the one thing that they clearly do right. And therefore there are those who want to destroy it (CSIS):

For ten years the World Bank’s Doing Business report has shone a spotlight on the complications of official regulation for small and medium enterprises (SMEs) and records the written rules that governments make for SMEs. The facts are summarized in indicators that are comparable across countries and allow them to learn from each other. The focus on the complex area of regulation has supported reform all over the world—stronger protection of property & contracts and less complicated procedures. Importantly, this is reform spurred without large aid payments.

At the same time, indicators that can be compared across jurisdictions have made it possible systematically to study the effects of rulemaking. For the first time, impact evaluation can be considered for some regulatory reforms to isolate the effect of reform. Mexico was the first case, where different states at different times improved the ease of setting up businesses. States that reformed saw business registration increase as well as formal job creation. Competition spurred businesses to improve. Prices fell, creating benefits for consumers and employees. People are now more likely to succeed on the basis of rules rather than connections. The reforms give the Mohamed Bouazizis of this world a stab at success.

The very punch that Doing Business packs has prompted opposition. From the beginning several governments were unhappy. A typical initial reaction is anger and denial but the very unease stirred by Doing Business has led to reviews of problems and ultimately reform efforts. It has been a productive tension for citizens; every year over 200 reforms are recorded by Doing Business with over 2,000 logged in ten years. Apart from Venezuela and Zimbabwe, no country has made life harder for business under the measures captured by Doing Business. As an Indian newspaper put it, the politically optimal way to deal with the report is to “trash it in public and implement it in secret.”

Yet criticism persists. The new World Bank president, Jim Kim, has established a commission to review Doing Business and make recommendations for its future. All options are on the table. Critics claim the data are not robust, the relevance of the data for reform is questionable, and the rankings direct reform efforts to the wrong priorities.

There are few words that appropriately express how absurd I feel this is.

Patton Oswalt: "The good outnumber you, and we always will."

After today's attack in Boston, a sentiment that deserves repeating (theAtlantic via Instapundit):

But the vast majority stands against that darkness and, like white blood cells attacking a virus, they dilute and weaken and eventually wash away the evil doers and, more importantly, the damage they wreak. This is beyond religion or creed or nation. We would not be here if humanity were inherently evil. We'd have eaten ourselves alive long ago.

So when you spot violence, or bigotry, or intolerance or fear or just garden-variety misogyny, hatred or ignorance, just look it in the eye and think, "The good outnumber you, and we always will."

Entrepreneurship ain't just for the young...

It's not exactly a new revelation, but more studies are showing that the average age of entrepreneurs is rising (FT):

But while teenagers make good newspaper headlines, what usually gets ignored is that it is actually their parents’ generation – or people such as Crippen – who are the most active in terms of creating new companies in the US today. Take a look at the data. The Kaufman Foundation (which is dedicated to tracking entrepreneurship) recently analysed the age profile of entrepreneurs and discovered that 34 per cent of them were aged between 35 and 44 and 29 per cent between 45 and 54. Just 18 per cent were under the age of 34 – the same proportion as those over 55. “Entrepreneurship is concentrated among individuals in mid-career, ie between 35 and 44 years of age,” writes Dane Stangler, a researcher at Kaufman.

Admittedly, in some sub-sectors the profile is younger: an MIT study of its graduates, for example, suggests that there are a lot of Zuckerberg wannabes in the computing world; the majority of IT entrepreneurs tend to be in their twenties, and overwhelmingly men. However, what is really notable is that if you look at all sectors of the economy, the age of entrepreneurs seems to be rising, not falling. Back in 2004, a study from the Panel Study of Entrepreneurial Dynamics found that the “bulge” age for entrepreneurs was 25-34, and this was echoed by other research in the 1990s.

"How politics has shaped the growth of Shanghai, Beijing, and Seoul"

For reference the next time a politician in the West wishes they could force decisions through like they do in China - compare the economic sustainability and vibrance of Seoul, Shanghai and Beijing (CityJournal via ChinaLawBlog):

One finds the most striking evidence of how politics shapes the new Asian megalopolises in the differences between Seoul, South Korea’s capital, and China’s leading cities. After all, the Korean and Chinese cultures are similar. Both are founded on the hierarchical Confucian philosophy; both have been influenced by Buddhism. But Seoul is democratic, and the political debates of an open society have profoundly influenced its development. China’s cities, by contrast, reflect the autocratic and corrupt rule of the Communist Party. [...]

Shanghai is a “costly facade to maintain,” confesses Yan Hansheng, its deputy mayor for finance. The city’s primary financial resources are still its traditional factories, owned mostly by the government, which continue to grind out steel, cars, and textiles. These industries, located west of the city center, remain hidden behind the costly facade; few foreigners ever travel that far. To protect Shanghai’s gleaming appearance further, the government also keeps tight control over the population. Officials view the peasant migrants who work menial jobs in Shanghai as a stain on the Western-oriented city and prevent them from living there or sending their children to local schools. To live permanently in Shanghai, one must be born a Shanghai citizen. (The mother transmits citizenship—a system in effect throughout China.) There are some exceptions, based on merit—holding a university degree helps—or on securing a fake identity card. All other migrants who work in Shanghai, though, must return by night to the shantytowns or shoddy workers’ dormitories at the city’s periphery, far from the cosmopolitan city center.

Staying Motivated by Finding Meaning in Your Work

I get the sense that most of us don't take enough time to consider the value we provide for those around us and how this fits in with what we see as our "purpose" in life. Dan Ariely's TED talk on finding meaning and staying motivated (TED via LifeHacker):

SurveyMonkey's CEO on Culture

FirstRound via HN:

Corporate culture isn’t your company’s ping-pong table. It’s not your catered lunch. It’s not the posters you tape onto the office walls. A real culture is the cumulative effect of productive relationships among employees. Those relationships can take years to develop. And they don’t always work out.

"Crowdsourcing Economics"

An interesting way to fund useful research... though on the other hand, given there's real commercial value for this research, you'd think there would other be viable alternatives (Freakonomics):

The typical household in rural Africa is “off the grid.” With no electricity, such households spend a significant fraction of their income on kerosene for lamps. Yet for about $20, they can buy a solar light, which provides a superior source of light and charges their cell phones. (Yes, cell phone use is common, even in rural households with no electricity; they simply walk to the nearest town and pay to charge their phones.) Given that the light pays for itself in about 6 weeks and lasts for about 3 years, purchasing one seems like a no-brainer. Yet few households have done so. These intrepid economists are trying to figure out why, and want to see whether the barriers to adoption can be overcome in a profitable way. In order to do so, they are running controlled experiments in rural Ugandan villages using various combinations of incentives and financing arrangements.

It’s a terrific and important research question. The only barrier is that they need funding for their research. So they’re trying something new: crowdfunding.

Trading off between Social Impact and Financial Results?

Acumen Fund's Blog cites Linda Rottenberg, CEO of Endeavour who argues (HBR):

“If you want to scale impact,” the headline booms, “put financial results first…[and] when tradeoffs must be made, prioritize financial goals over social ones to maximize the long-term sustainability of the business.”

In a way, this is the flip side of Simon Sinek's comments. Acumen Fund Blog notes a similar reservation that I have on the quote.

To be fair, Linda expands - from HBR:

We found that those who prioritized financial goals over social ones were more likely to grow their social enterprises and achieve greater impact. We also discovered ways to build business models that reduced friction between commercial and social goals, thereby smoothing the path to growth.

The revenues generated from a firm come from the social need that a firm meets. In general, profit comes from better resource allocation - arbitrage and innovation. The idea that either financial or social goals need to be "moderated" is just a false dichotomy - all enterprise is social enterprise.

The GOP's real problem with Immigration

Doing too much rather than too little - that it's not living up to its small government principles when it comes to immigration (Reason via Instapundit). It's also perhaps part of the reason for the appeal of more immigrants towards the Conservative Party in Canada:

So how do Republicans manage to alienate nearly every minority? By applying limited-government principles very selectively. During the last 50 years the GOP has opposed welfare handouts, racial preferences, and multiculturalism. Yet the Party of Lincoln has looked the other way when the government has oppressed minorities through racial profiling, discriminatory sentencing laws, and, above all, immigration policy.

America’s immigration laws are an exercise in social engineering that should offend any sincere believer in limited government. They strictly limit the number of foreigners allowed from any one country, largely to prevent America from being overrun by Hispanics and Asians.

The result: Highly skilled foreigners from India and China have to wait up to two decades to convert their temporary work visas (H1-Bs) to green cards or permanent residency. During this time, they can’t change jobs, and their spouses can’t work. But they have it good compared to low-skilled Hispanics.

The Privatization of Roads and Highways

Interesting (but long - it's a full 1h37m and at times seemingly politically impractical but comprehensive) look at the case for the privatization of roads and highways from Walter Block (via Instapundit whose Glenn Reynolds is also a moderator/panelist of the talk):

Poverty is a Policy Choice

The good news, is that there's been an improvement but Africa remains one of the most difficult places in the world to start a business (HuffingtonPost):

Most Sub-Saharan countries made doing business easier over the past year, but the African region is still the costliest and most complex in the world for entrepreneurs, the World Bank said in a report Thursday.

In its annual ranking of 183 countries, the bank found 36 of 46 Sub-Saharan African nations improved their business environment in the year through June 2011, the highest number since the study began nine years ago.

"We were very excited about Africa's improvement," said Mikiko Imai Ollison, one of the authors of the report. "Obviously, Africa has a lot to catch up on. It's the region with the weakest legal institutions as well as the least efficient procedures."

Of course this also represents an opportunity. Where are the not-for-profits or even for-profits that help other entrepreneurs affordably and quickly get through the red tape? That could be revolutionary for building entrepreneurship in Africa.

Simon Sinek: "Purpose Can Not Be Rationalized"

Simon Sinek via Swissmiss:

Because a true sense of purpose is deeply emotional, it serves as a compass to guide us to act in a way completely consistent with our values and beliefs. Purpose does not need to involve calculations or numbers. Purpose is about the quality of life. Purpose is human, not economic.

It's too bad that we're conditioned to think that altruism and money are incompatible. In posting this, Simon Sinek tells the story of how he is choosing not to work with an organization whose values are not consistent with his.

It's too bad because I'd entirely agree with him except for that last bit. To be human is to be economic. Where purpose isn't "economic" suggests that the purpose is by definition a self serving one and has no value to others - but with alignment (given the example that Sinek gives), comes real satisfaction.

This isn't about sacrificing your values but being true to them. It sometimes means difficult tradeoffs, choices and yes, even costs in the short run - but as an altruist, in the long run, I tend to believe that doing the right thing tends to also be the profitable one.

Tyranny, Taxi Medallions and the Train of Disruption

Technology strikes again as a power for democratization. A reminder that governments rarely let go over power easily - particularly given entrenched interests and what we'll call regulatory capture (Pricenomics via HN):

A number of mobile phone apps, however, are replacing taxi dispatch services and allowing anyone with a car to become a taxi driver without needing access to a medallion. Increasingly, if you want to become a taxi driver, all you need is a car and an app that tells you where to pick up passengers. [...]

The ride-sharing economy started conservatively with Uber allowing anyone to call a black town car via its app. That quickly led to companies like Sidecar and Lyft, that let anyone with a car act as a taxi driver and hybrid services like InstantCab that lets taxi drivers and community drivers both get fares. These companies and their products are called “ride-sharing” apps.

Cheekily, if you hail a ride using one of these ride-sharing apps, the payment is called a “donation.” This sort of seems like a made up legal loophole that can justify any behavior (“Officer I wasn’t paying for sex, I was making a donation!”). But for now that’s one of the ways ride-sharing apps nominally get around local regulations that restrict who can be a taxi.

It's a good article and one that can't help but make you a bit mad if you aren't one of the few who own taxi medallions. Read the whole thing.

The distinction between being "pro-business" and "pro-markets"

It's one I wish those who were pro-markets would make more often (Yahoo via Instapundit):

During Jeb Hensarling's first congressional bid, a man at a campaign stop in Athens, Texas, asked the Republican if he was "pro-business."

"No," the candidate replied, drawing curious stares from local business leaders who had gathered to hear him speak, a former Hensarling aide recalled. "I'm not pro-business. I'm pro-free enterprise." Associated Press Rep. Jeb Hensarling

Now, more than a decade later, that distinction has Wall Street on edge. The new chairman of the House financial services committee wants to limit taxpayers' exposure to banking, insurance and mortgage lending by unwinding government control of institutions and programs the private sector depends on, from mortgage giants Fannie Mae and Freddie Mac to flood insurance.

Banks and other large financial institutions are particularly concerned because Mr. Hensarling plans to push legislation that could require them to hold significantly more capital and establish new barriers between their federally insured deposits and other activities, including trading and investment banking.

Ayah Bdeir@TED: Building blocks that blink, beep and teach

A cool idea. Democratizing electronics:

Down with the Minimum Wage, Up with Minimum Income

Not a new idea. But an idea whose time has hopefully come (FinancialPost):

The alternative to the minimum wage is a minimum income: paid not by employers, but by the state.

The minimum wage is typical of so many bad policies, in so far as it attempts to solve a distributional problem — some people’s incomes are too low — with an instrument designed for a very different purpose. Wages are a kind of price: their role is to connect buyers and sellers in the market for labour in such a way as to ensure there are no shortages and surpluses. Stop them from doing that, and shortages and surpluses you will get.

Fixing wages and prices in this way isn’t an example of Big Government; it’s rather what I call phoney small government. Part of its appeal is that it appears less interventionist than the alternative, as proposed by that early economist Robin Hood: Take from the rich and give to the poor. But it isn’t. It’s just less effective. Pass a law demanding that employers pay each worker a higher wage than they’d prefer to pay, and they have an easy (and perfectly legal) way to avoid it: hire fewer workers. Whereas the Canada Revenue Agency is rather harder to get around.

Social obligations should be socially financed. As a collective ideal, distributional justice is ill-suited to being pursued through markets. That’s not what they’re for. Let us stop shunting our responsibility off on others. In place of the minimum wage, let us fix a minimum income.

Innovation in its many forms

I see a visit to Pizza Hut in my near future. (Wired via Instapundit):

It’s an industry that Americans pioneered and continue to dominate. Homegrown brands are expanding throughout the developing world. The uniform customer experiences they provide are triumphs of industrial engineering and efficiency systems management. And they are constantly spending money to create and introduce new products.”

Can Computers Replace Teachers?

It's 20 minutes well spent for anyone interested in teaching/education policy - a good overview highlighting some of the successes in blended learning (Reason.tv):

The Best Trust Busters

From Fred Wilson:

Monopolies aren't great for society. So we have trust busters in government whose job it is to keep the monopolies in check. But they don't do that so well. And our government is pretty good at handing monopolies out. Just look at the cable industry.

A few entrepreneurs in a garage. Or a few hackers on the Internet. They are the best trust busters of them all. Look what open source Linux did to Microsoft. They put a dent in a machine that the government could not. And look at what Lyft, Sidecar, and Uber did to the medallion owners in San Franscisco. They got cabs on the streets when the government could not.

Massive innovation doesn't just happen in Silicon Valley

I post this as I chomp down on Kettle Chips from Costco, which is unfortunately *not* paleo compliant (via Greg Mankiw):

Yep, pretty much...

via ohgizmo:

"Create a vision for your career. How can you uniquely contribute to the world?"

Good career advice along with a pretty good process to follow. (HBR)

Using entrepreneurship to give former prostitutes a fresh start

Pretty awesome (Businessweek via HN)

"Focus"?

While the idea of "focus" may be oversimplified... (mindvalleyinsights.com via HN) and while there are tools and habits that can increase the number of things you can focus on, at least for me there's a limit before the number of things becomes overwhelming. Something that I'm trying to manage now.

Fracking comes to China

Why fracking could be such a game changer (thediplomat via Instapundit):

China’s oil fields are drying up. The International Energy Agency’s (IAE) World Energy Outlook for 2010 predicts China will import 79% of its oil by 2030, a figure that demonstrates the pressing need for China to develop new energy sources. Enter shale gas and the “unconventionals.”

Estimates of China’s shale gas resources differ. China’s Ministry of Land and Resources estimates reserves of 886 trillion cubic feet (tcf), while the U.S. Energy Information Administration puts the country’s resources at 1,275 tcf. The upper estimates would mean China sits atop more shale gas than the U.S. and Canada combined. According to China’s 12th Five-Year Plan, by 2015 China should be extracting 6.5 billion cubic meters of shale gas per year, with a view of producing 100 billion cubic meters by 2020. China’s goal is to meet 10 percent of the country’s energy demands from shale gas the same year. To successfully meet the goal, China’s oil and gas industry needs to bridge its large knowledge deficit. Despite some progress, recent successes in domestic extraction technology have been modest.

This shouldn't need to be a trend in management...

But it's a good trend nonetheless for public firms - Boards are increasingly shaping management compensation around stock performance (WSJ):

More than half of the compensation awarded to 51 CEOs last year was tied to their companies' financial or stock-market performance, according to a preliminary review of proxy statements by consulting firm Hay Group and The Wall Street Journal. In most cases, the companies must hit specified targets for the CEO to receive the promised money or equity.

By comparison, three years earlier, in 2009, 35% of the compensation for CEOs at the same companies carried performance conditions, Hay says. The rest of their pay came from salaries and grants of stock and stock options with no performance hurdles.

Companies that are doing particularly cool things...

From Wired.com.

Cheap, clean, desalinated water... courtesy of Lockheed Martin?

Promising development to watch (Reuters via Instapundit):

A defense contractor better known for building jet fighters and lethal missiles says it has found a way to slash the amount of energy needed to remove salt from seawater, potentially making it vastly cheaper to produce clean water at a time when scarcity has become a global security issue.

The process, officials and engineers at Lockheed Martin Corp say, would enable filter manufacturers to produce thin carbon membranes with regular holes about a nanometer in size that are large enough to allow water to pass through but small enough to block the molecules of salt in seawater. A nanometer is a billionth of a meter.

Because the sheets of pure carbon known as graphene are so thin - just one atom in thickness - it takes much less energy to push the seawater through the filter with the force required to separate the salt from the water, they said.

Milton Friedman: Economics is about production not money

Social Impact Bonds

An interesting approach to align incentives - a financial instrument that undoubtedly needs time to evolve to develop objective measures and structures that work (the Economist):

That puts her at the front line of a big financial experiment, too. Her work is being funded by an instrument called a “social-impact bond” (SIB), which promises returns to private investors if social objectives are met. The bond raised £5m ($8m) from investors, to be shared between St Mungo’s and another organisation called Thames Reach (responsible for another 400-or-so homeless people).

The cash will fund a three-year programme, the success of which is measured by everything from the number of nights that the rough sleepers spend on the streets to their visits to hospital. As targets are met, payments will flow to investors from the Greater London Authority (GLA), the SIB’s commissioning body.

The arrangement suits all parties. The rough sleepers are frequent users of government services, including accident-and-emergency wards. Cutting their number should save the GLA enough money to fund payments to investors if goals are met. At a time when public spending is under pressure, the taxpayer stumps up only if results are achieved. Investors have the prospect of a return to entice them, of up to 6.5% if targets are met.

More here (PBS)

What were they thinking?

The madness of the bailout in Cyprus (maximise.dk): "Don’t be surprised to see a bankrun in Greece, Spain, Italy or Portugal next week". More here (the Economist), here (the-american-interest.com), and here (zerohedge.com).

Update: The Economist's blog adds: "in addition to the unfairness of the deal it seems an unnecessarily risky move." Shockingly, "after Cyprus bank bailout, depositors race to withdraw their cash. Is the rest of Europe next?" (thedailybeast).

Changing the world one prize at a time

Contests for big breakthroughs are opportunities for interventions that don't result in as many unintended consequences or opportunities for graft - we need more of them (WSJ):

New York hotelier Raymond Orteig liked to drink at his bar with French pilots during World War I. In 1919, Orteig announced a $25,000 prize for the first nonstop New York-to-Paris flight. Pilots worked with gung-ho young airline companies to design planes for the task. The Bellanca was tipped to win, but a mail pilot named Charles Lindbergh worked with Ryan Airlines of San Diego on a single-pilot, single-engine plane named the Spirit of St. Louis. He got the job done in 33½ hours.

In more recent times? Well, in 1990, the unlikely duo of the U.S. Department of Energy and the National Institutes of Health launched a 15-year Human Genome Project to identify the 30,000 genes that make up the human DNA. Craig Venter launched his own unofficial competition with the project and succeeded in sequencing his own genes in 13 years. His prize: patents for his company, Celera Genomics, and a jump-start on business with drug makers.

The U.S. government runs some contests today, for example at challenge.gov, but the prize money is small potatoes—$20,000-$80,000 for things like "design a mobile application to help people 'Live Well. Learn How.' "

No, no. Real contests have to be about BHA—Big, Hairy, Audacious goals. Fortunately, the private sector has taken over. The X-Prize Foundation runs a series of contests, the most famous being the $10 million Ansari X-Prize, which saw 26 teams spend a total of more than $100 million attempting to fly three people 100 kilometers (62 miles) into space twice within two weeks. [...]

If they really want to have an impact on society—beyond the societal wealth already created by Google and Facebook—offer a billion-dollar BrinZuck prize to prevent or stop Alzheimer's, or to regenerate spinal cords and organs, or to cure obesity. Instead of small-ball academic researchers vying for grants from the National Institutes of Health, you'd get entrepreneurs coming out of the woodwork trying innovative approaches to win a $1 billion jackpot. Or maybe the challenge could be to create personal jet packs. Or neuron downloads. Whatever—but something BHA.

Thankfully, there already is a series of contests with $1 billion-plus prizes. Some great (and not so great) companies are funded with the prize of billion-dollar valuations in the public markets. It's called the IPO market and entrepreneurs pull all-nighters writing clever code while wearing dark sunglasses with the brightness on their monitors turned up.

Yet even in that realm, much of what we see is incremental. The Big Hairy Audacious stuff still needs and deserves a breakthrough contest.

Poverty doesn't cause terrorism

It's sad in a way that this is an idea that has to be continually debunked - ironically a claim that's often repeated by those who supposedly advocate on behalf of the poor (DailyCaller).

Minimum wage hurts the poorest

Given the evidence, it's bizarre that this is still a point of contention for some... (Reason.com).

Stop visualizing success...

From Seth Godin (of whom I'm generally a fan):

The thing is: clear visualization, repeated again and again, doesn't actually decrease the chances you're going to fail. In fact, it probably increases the odds.

When you choose to visualize the path that works, you're more likely to shore it up and create an environment where it can take place.

Rehearsing failure is simply a bad habit, not a productive use of your time.

Apparently not. I first read this in Made to Stick (Amazon) but I found a reference online that details the study fairly well at Officer.com.

Basically, a study from UCLA showed that simulating past events (thinking about past problems step by step, going through them in detail, the actions you took, what you said/did, the environment) was much more helpful than simulating future outcomes. Those who simulated past events experienced better moods almost right away and were likely to have taken specific action to solve their problems.

The authors of Made to Stick, Chip and Dan Heath possibly facetiously suggest that counterintuitive to pop psych literature urging you to visualize success, maybe instead of visualizing that we're filthy rich, we should be replaying steps that led to our being poor.

Dale Carnegie vs Ayn Rand

We need both. Glenn Reynolds links to a blog comment: "Let’s just say that the libertarian movement would do well to spend less time reading Ayn Rand and more time reading Dale Carnegie." Libertarians do need to get better at not only developing ideas but communicating them and finding ways to implement them.

Perhaps it's just been my perception, but that the world has moved towards economic liberty has been more the result of government failures than any deliberate attempt to pursue economic liberty, suggests a failure on the part of libertarians.

Is that a rhetorical question?

Forbes asks "are the French lazy?". As previously noted, I generally don't think the effect of culture on economic growth is strong - it's the regulations that reinforce that view of culture that's stifling. As Forbes points out, the French malaise is largely self inflicted:

But the difficulty in hiring and firing workers is just one defect of the French labor system. Small businesses are particularly hurt by the 35-hour law, which forces employers to pay their hourly workers overtime if they work more than 35 hours a week. As a result, the French work fewer hours than just about anybody in the OECD. In fact, the average French employee worked just 1,476 hours in 2011, according to the latest data available from the OECD and the French labor department. In contrast, workers in the U.S. rocked 1,704 hours per year, 21% more than their counterparts in France.

But working a lot more doesn't necessarily mean that Americans are more productive than their French counterparts. One way to gauge productivity is to take a nation's GDP and divide it by the total number of hours its citizens slaved away that year. In 2011, the GDP for each hour worked was $57 in France and $60 in the U.S. Therefore, it appears that while the French work less, they seem to be producing just as much as their U.S. counterparts, on a relative basis. But this snapshot doesn't really show the big problem with the French labor market. Labor productivity, as defined as GDP per hour worked, in the U.S. from 2001 to 2011 grew twice as fast as it did in France. That means the U.S. will most likely widen its lead over France in the years to come unless it makes some big changes to its labor laws.

Hans Rosling: "River of Myths"

Another good look at the progress in the developing world particularly in the area of child mortality (via Freakonomics):

Making "sustainable food" actually sustainable

People who use the word "sustainable" to describe products that don't work as well as their supposedly "unsustainable" counterparts at a much higher cost, don't really know the meaning of the word.

It's heartening then that there are some real innovations (not "innovations") being funded by VCs. Gigaom takes a look at the "budding food innovation movement" in Silicon Valley:

The real reason that Beyond Eggs could eventually catch on is because it’s not striving to be an eco or vegan product. It will be about 19 percent cheaper than using eggs, will last longer on the shelf than eggs, is safer to use than eggs, and is better for you than eggs. Then there’s all of the feel good aspects — the poor environmental and inhumane conditions of the egg industry, and the reduced carbon emissions by decreasing the amount of feed (mostly corn and soy) that goes to chickens. But all of those won’t matter if the products don’t pass Tetrick’s “Dad Twinkie” test: in theory deliver a twinkie that’s cheaper and better for you, but that tastes exactly the same.

The deadly opposition to genetically modified food

Instapundit: "Where the connection between policy-advocacy and dead children is much clearer." From the Slate:

Finally, after a 12-year delay caused by opponents of genetically modified foods, so-called “golden rice” with vitamin A will be grown in the Philippines. Over those 12 years, about 8 million children worldwide died from vitamin A deficiency. Are anti-GM advocates not partly responsible?

Golden rice is the most prominent example in the global controversy over GM foods, which pits a technology with some risks but incredible potential against the resistance of feel-good campaigning. Three billion people depend on rice as their staple food, with 10 percent at risk for vitamin A deficiency, which, according to the World Health Organization, causes 250,000 to 500,000 children to go blind each year. Of these, half die within a year. A study from the British medical journal the Lancet estimates that, in total, vitamin A deficiency kills 668,000 children under the age of 5 each year.

Yet, despite the cost in human lives, anti-GM campaigners—from Greenpeace to Naomi Klein—have derided efforts to use golden rice to avoid vitamin A deficiency.

Richard Epstein: "You cannot make the poor richer by making the rich poorer"

Filed under ideas that aren't popular but true (via Instapundit).

On Immigrants

From Steve Case at the US Senate Committee on Immigration (via PandoDaily):

Today, 40 percent of Fortune 500 companies in the United States were started by immigrants or the children of immigrants, employing 10 million people across the globe and doing $4 trillion in revenue. Of the 10 most valuable brands globally, seven of them come from American companies founded by immigrants or their children. In the past 15 years, immigrants founded one quarter of U.S. venture-backed public companies.

A reminder that education spending doesn't drive growth

From the LA Times, an op/ed by Jonah Goldberg (via Instapundit):

British scholar Alison Wolf writes in "Does Education Matter?": "The simple one-way relationship … — education spending in, economic growth out — simply does not exist. Moreover, the larger and more complex the education sector, the less obvious any links to productivity."

It's a catalyst.

Henry Ford on Reputation

Henry Ford via Swissmiss:

You can’t build a reputation on what you’re going to do.

Too bad politicians can't be jailed for malpractice

"Argentina Freezes Supermarket Prices To Halt Soaring Inflation; Chaos To Follow" (Zerohedge via Instapundit):

Up until now, Argentina’s descent into a hyperinflationary basket case, with a crashing currency and loss of outside funding was relatively moderate and controlled. All this is about to change. Today, in a futile attempt to halt inflation, the government of Cristina Kirchner announced a two-month price freeze on supermarket products.

The consequences of heavy handed market interventions are predictable and avoidable. To brush what will be the brutal effects away of these desperate acts of a failed ideology as 'unintended consequences' should be criminal.

Update: Zerohedge on Argentina's Financial Collapse, asking "How was it possible that in so rich a country so many people were hungry?"

Australia: Asia’s Saudi Arabia?

Shale oil and gas are radically changing the geopolitical landscape. Instead of having to negotiate with hostile governments, these resources are increasingly being found not only in democratic countries but near population centers theDiplomat h/t Instapundit:

Linc shares surged 24 percent after it told the Australian Securities Exchange (ASX) on January 23 that its shale oil assets in South Australia’s Arckaringa Basin had the potential to hold up to 233 billion barrels of oil equivalent (BOE) – an amount not incomparable to Saudi Arabia’s estimated oil reserves of 263 billion BOE.

"How the U.N. created an epidemic -- then covered it up."

It's depressing how much of the world still attributes moral authority to the UN because of the ideals it holds... ideals it fails repeatedly.  From FP:

The U.N. team refused to go across the street with us to see the dump pits.

The next day, less than two weeks after the outbreak was first confirmed, the CDC put out the results of an analysis it had undertaken: The cholera in Haiti matched strains circulating in South Asia, including Nepal. It refused to investigate further.

The death toll passed 400.

Authorities defended their refusal to investigate the origin of the outbreak on grounds that pursuing the source would detract from fighting the epidemic. So on Nov. 3, I called one of the most prominent public health experts in Haiti, if not the world. Paul Farmer's medical NGO, Partners in Health, was taking a leading role in tackling cholera. I asked if there was a public health rationale not to investigate. "That sounds like politics to me, not science," Farmer replied.

Oxfam: Confusing Inequality with Poverty

Oxfam makes the claim the rise in wealth by some billionaires is not only making the poorest, even poorer, and by inference they make the claim that the cause of poverty is the lack of resources:

An explosion in extreme wealth is exacerbating inequality and hindering the world's ability to tackle poverty, Oxfam warned today in a briefing published ahead of the World Economic Forum in Davos next week.

The $240 billion (£150bn) net income in 2012 of the richest 100 billionaires would be enough to make extreme poverty history four times over, according to 'The cost of inequality: how wealth and income extremes hurt us all'. The agency is calling on world leaders to curb today's income extremes and commit to reducing inequality to at least 1990 levels.

The richest one per cent has increased its income by 60 per cent in the last 20 years with the financial crisis accelerating rather than slowing the process.

Oxfam warned that extreme wealth is economically inefficient, politically corrosive, socially divisive and environmentally destructive.

One wonders if Ms. Stocking, the CEO of Oxfam, is referring to absolute versus relative poverty. Absolute poverty, in fact, has been falling dramatically (Economist):

The past four years have seen the worst economic crisis since the 1930s and the biggest food-price increases since the 1970s. That must surely have swollen the ranks of the poor.

Wrong. 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

It's sadly predictable that Ms Stocking's solution for this manufactured crisis is to bring others down than to seeking to bring the poor up. Instead of speaking truth to the power that exists in the often despotic countries Oxfam attempts to "help" - denouncing the autocratic policies that benefit the local elite, Ms. Stocking snipes at the low hanging fruit and the politics of greed and envy in sniping at the economic success of others.

Certainly, some of these billionaires have built their fortunes through the taking of wealth - but the large majority have not, and indeed have created many of the technologies, products and services that have allowed the hundreds of millions to emerge from absolute poverty in the last few decades. Ms. Stocking makes no distinction as a result of craven politics or sheer ignorance (Reason).

It is because of attitudes and beliefs of leaders like her that the poor are often worse off despite the billions spent by organizations like hers - and a reminder that poverty truly is an industry - and if Ms Stocking is looking for those who benefit most from keeping others poor, she should perhaps "invest" in a mirror.

Happiness, Purpose and Markets

Real satisfaction comes from seeking purpose and meaning, not happiness (theAtlantic):

The wisdom that Frankl derived from his experiences there, in the middle of unimaginable human suffering, is just as relevant now as it was then: "Being human always points, and is directed, to something or someone, other than oneself -- be it a meaning to fulfill or another human being to encounter. The more one forgets himself -- by giving himself to a cause to serve or another person to love -- the more human he is."

Baumeister and his colleagues would agree that the pursuit of meaning is what makes human beings uniquely human. By putting aside our selfish interests to serve someone or something larger than ourselves -- by devoting our lives to "giving" rather than "taking" -- we are not only expressing our fundamental humanity, but are also acknowledging that that there is more to the good life than the pursuit of simple happiness.

While others might think that this captures a fundamental flaw in markets, I'd suggest the opposite.

Markets, if anything, are better at this than other systems as they do a much better job at guiding us to see what others and society believes is important. Indeed, I'd suggest that when we seek meaning and achieve purpose while meeting the needs of others, it is here, where the wealth created is reinforcing in a virtuous cycle.

Winners, Losers and Government Spending

The Canadian government shouldn't pick winners but I'm unconvinced the solution proposed by George Takach in the Globe and Mail is any better but the conclusion is one that's difficult to disagree with:

Hiring consultants to throw our money around isn’t the answer. World-class companies are forged in basements and garages, and that’s where policymakers should focus in order to build a better Canadian economy. That’s how to make Canada can work better.

Governments should focus on improving the regulatory environment and reducing structuring disincentives for entrepreneurs - not picking winners and losers or throwing money/bureaucracies at the problem.

Reconciling Technological Progress with Dystopian Fantasies

I find it difficult to reconcile the view of those who believe that a violent revolution is coming in the West (Google) with how enabling and empowering technology is becoming - John Maeda (via SwissMiss):

As organizations shift from neatly ordered hierarchies to chaotic, flattened “heterarchies,” where anyone can “friend the CEO,” a new generation of tools will be invented that will allow design and technology to enable leaders to make true connections among people and inspire change.

Just as design enabled us to have an emotional connection with a piece of glass and aluminum that lives in our pocket, design and technology together will restore some of the humanity in what it means to lead in the 21st century

While technology may fuel the separation in absolute numbers between the wealthiest and poorest, does this really matter if technology also provides the bridge and the ability to move between economic classes? From the WSJ:

Mr. Diamandis said that the gap between the wealthiest and the poorest people may well increase, but that the definition of poverty will keep changing, much as it has over the last 100 years. He noted that 99% of the poorest people in the U.S. have amenities that the wealthiest people of 100 years ago couldn’t imagine. “It’s not about creating a world of luxury, but of creating a world of possibility,” he said. “I think it’s an amazing world,” Mr. Diamandis said.

The Tragedy of Zimbabwe and the Failure of the UN

Assuming the Associated Press interpreted the UN's comments correctly, the UN is attributing the worsening food shortages in Zimbabwe to the following reasons (WP):

The U.N. said this year’s food shortages are “worse” compared to the past three years due to drought, erratic rains and cash shortages to buy seed and fertilizers for impoverished farmers in the countryside, many who took over formerly white-owned farms.

Except they buried the lede. The absolute absurdity of believing that all of a sudden weather is the result of some of the productive farmland in Africa becoming infertile might be plausible if it were not for the fact that they are unable to deny this aid is going to "impoverished farmers in the countryside, many who took over formerly white-owned farms" as if land appropriations were incidental.

With an organization that is unable to speak truth to power, advocating financial assistance to gloss over the political failures of a despotic government, why would anyone want to contribute more resources to their care? Or really, anything at all?