Does Hollywood hate the future?

I wonder how much this has to do with ideology. A recent TechCrunch post looks at Hollywood's futuristic portrayal of technology which is overwhelmingly distopian:

The Matrix, Avatar, Prometheus, now I’m just looking over films I own that fit the mold. All are either dystopian or a net-negative for technology. The most positive one I can find is Contact, which still has plenty of negative technological elements (and this is a film based on a book written by perhaps the quintessential science/technology optimist, Carl Sagan).

Where is the It’s a Wonderful Life set in 2150? Are a few scenes from Back to the Future Part II really the best we got?

Again, I think the answer is that we already live in a technological utopia of sorts. No, the world isn’t perfect, but the recent advances in technology have given us so much. And people go to the movies to escape reality. It’s just too bad that science fiction films have essentially become horror movies.

Are traders and speculators to blame for increasing poverty?

Despite making excellent scapegoats for bad public policy, debunking the myth that speculators harm the poor (ASI):

On the one hand the most limited version of Doane's thesis—that speculation increases prices—is undeniable. When speculators buy into the market, they raise the price then. But the overall case makes little economic sense. If speculators' influence is big enough to boost prices when they buy in, it is big enough to cut prices when they sell out. That is, speculators both add to, and take away from, prices.

A speculator makes money by buying in times of relative plenty, when prices are low, and selling in time of relative scarcity. For helping society ration effectively—making sure the differing scarceness of a good is reflected in its price, thereby improving individual decision-making—the firms earn a return. If a speculator, by contrast, buys in at the top of the market, reducing supply when it is most needed, and sells at the bottom, when it is least needed (relatively) they lose money. This is how the profit and loss system, in a good institutional structure, encourages and rewards socially-minded behaviour. And speculation should smooth volatility in markets. A jump in price will encourage sales from speculators, bringing the price back down. A dip in price will encourage speculators to buy, bring the price back up. This result dates back to a 1953 paper from Milton Friedman, which is hard to find online, despite being cited 2411 times according to google scholar.

An Ode to the Genius of the Humble Shipping Container

From the Economist:

In a set of 22 industrialised countries containerisation explains a 320% rise in bilateral trade over the first five years after adoption and 790% over 20 years. By comparison, a bilateral free-trade agreement raises trade by 45% over 20 years and GATT membership adds 285%.

To tackle the sticky question of what is causing what, the authors check whether their variables can predict trade flows in years before container shipping is actually adopted. (If the fact that a country eventually adopts containers predicts growth in its trade in years before that adoption actually occurred, that would be evidence that the “container” jump in trade was actually down to some other pre-existing trend.) But they do not, the authors say, providing strong evidence that containerisation caused the estimated surge in trade.

Dying baby saved by 3D Printer

If the promise of 3D printing wasn't something you were already excited about, a pretty cool story of how scientists used a 3D printer to save a baby (CNN via Instapundit):

Green, who has been practicing for two decades, and a UM colleague, biomedical engineer Scott Hollister, had been working for years toward a clinical trial to test the splint in children with pulmonary issues when they got a phone call from a physician in Ohio who was aware of their research. “He said, ‘I’ve got a child who needs (a splint) now,’ ” referring to Kaiba, said Green. “He said that this child is not going to live unless something is done.”[…]

What followed in Kaiba’s case was a painstaking process of creating the splint on the printer in layers. Information about each layer is transmitted from the computer to a laser beam, which melts the PCL into a 3-D structure. “We can put together a complete copy of a body part on the 3-D printer within a day,” Green said. “So we can make something very specific for a patient very quickly.” Green then took the splint, measuring just a few centimeters long and 8 millimeters wide, and surgically attached it to Kaiba’s collapsed bronchus. It was only moments before he saw the results. “When the stitches were put in, we started seeing the lung inflate and deflate,” Green said. “It was so fabulous. There were people in the operating room cheering.”

Inside Google Labs

Cool beans (Businessweek):

As the polymath engineers and scientists who work there are fond of saying, Google X is the search giant’s factory for moonshots, those million-to-one scientific bets that require generous amounts of capital, massive leaps of faith, and a willingness to break things. Google X (the official spelling is Google [x]) is home to the self-driving car initiative and the Internet-connected eyeglasses, Google Glass, among other improbable projects.[...]

Teller has turned his sky’s-the-limit thinking into Google X’s most visible export. Last March he spoke at the South By Southwest Interactive conference in Austin, Tex., telling a packed auditorium, “The world is not limited by IQ. We are all limited by bravery and creativity.” Last year, with longtime Google executive Megan Smith, he co-founded the company’s annual, invitation-only conference, Solve for X, a two-and-a-half-day gathering of a hundred or so big thinkers. At the recent session in February at CordeValle, a golf resort south of San Jose, speakers covered topics such as inflatable robots, eye examinations that can detect the early onset of Alzheimer’s disease, and nuclear fusion reactors. “There is really only one guarantee and that is if we don’t try, nothing is going to happen,” said Charles Chase, a senior program manager for Lockheed Martin’s (LMT) advanced development program, Skunk Works, who gave the fusion talk.

What makes a Risk-Taker?

Many counter the idea of entrepreneurship saying that they're risk adverse - and other than the fact that I think "traditional" jobs, if there is such a thing anymore, can be just as risky, here's some interesting research. "Often cautious people become Daredevils in the right context" (WSJ):

You might not think of yourself as a risk-taker. Think again. Recent studies using new experimental tools are upending the old belief that a person's appetite for risk is mostly inborn and unchanging. In fact, the reasons people take crazy gambles are far more complex. People who are cautious in some contexts may embrace risk in others, depending on factors such as their familiarity with the setting and their emotions at the time. The findings are exploding old stereotypes—that women are innately more cautious than men, for example, or that teenagers are inevitably risk-seekers.

"It has been surprising to learn what a wide variety of reasons people have for risk-taking," says Elke Weber, a professor of international business at Columbia University and a leading researcher on risk. Understanding the roots of risk-taking can guide people in making better decisions, she says. Some long to advance in their careers or have new adventures but overestimate the hazards. Others race quickly and without thinking into dangerous risks.

Quote of the Day: What Startups are Like

Ben Silbermann (birch.co via SwissMiss):

People say doing a startup is like a marathon. It’s actually a roadtrip at night with no headlights. You think you’re going to Toledo but you’re actually going to Miami and you might not have enough gas so you might need to buy gas from someone who might take you out if you aren’t driving well.

The rise of robots and the fall of jobs?

Maybe (Forbes), maybe not (NYT). If history is any guide, I'm going to err on the side of optimism.

If Atomically Precise Printing is too Sci-Fi for you... There's Always 3D Printing

An interview with 3D Systems' CEO, Avi Reichentel on the emergence of 3D printing (Reason.com):

Alibaba's billionaire founder Jack Ma on the Gates Pledge

From the WSJ (via Instapundit):

This idea of giving your money out was not created by Gates and Buffett. It was created by the Communist Party in the 1950s!"

while it's a bit sensationalist of a quote, I can't say I disagree with the thought. I've never been comfortable with the term "giving back". It's giving. Period. It's noble and good but Gates and Buffett will have done far more in building their wealth than giving it away.

"The Jobs Crisis: Bigger Than You Think"

A somewhat bleak view of jobs... but if history is any guide this just moves us further into more jobs that can't be automated, that require creativity and thought (WalterRussellMead via Instapundit):

Essentially, the problem is this: automation and IT are moving routine processing, whether what’s being processed is information or matter, out of the realm of human work and into the realm of machines. Factory floors are increasingly automated places where fewer and fewer human beings are needed to transform raw materials into finished products; clerical work and many forms of mass employment in business, government and management are also increasingly performed more economically by computers than by trained human beings.

The transformation is only beginning to kick in. Self driving cars and trucks may reduce the need for human beings in the transportation and freight industries. Information processing is beginning to change the nature of the legal profession and even as law school applications fall by almost 50 percent there is much more change to come. Computer assisted diagnosis is making itself felt in health care. MOOCs are likely to change the way much of higher ed works.

It is impossible to say now how far and how fast this process will move, but more and more Americans are experiencing the kind of upheaval that blue collar workers in manufacturing began to experience in the last generation and white collar workers and journalists have felt more recently. We are seeing the greatest wave of economic transition since the mechanization of agriculture reduced the percentage of the labor force engaged in farming from more than half the American labor force in 1890 to less than two percent today.

The old engines of job growth, especially in manufacturing, aren’t working, and the competition for good jobs keeps getting tighter. With the entry of billions of Asians and others beyond the old industrial economies of North America, Europe and Japan into the modern economy, the competition is global. And if low wage workers can’t do the job cheaper than you, computers and, increasingly, robots mean that you can still lose your job.

Regulatory Capture and the American "Affordable Care Act"

There are few better examples of "regulatory capture" illustrating how larger incumbents will use regulation to shut out competitors, as the US "Affordable Care Act" (better known as Obamacare). This is, of course, to say nothing of the irony that the Act is supposed to break the cost curve on healthcare (WSJ):

The Affordable Care Act aimed to end a boom in doctor-owned hospitals, a highly profitable niche known for its luxury facilities. Instead, many of the hospitals are wiggling around the federal health-care law's growth caps and even thriving.[...]

The curbs are expected to get fresh attention this week. On Tuesday, about 50 physician owners, represented by the Physician Hospitals of America lobby, plan to descend on Congress. Republican Rep. Sam Johnson of Texas, whose state has about 90 doctor-owned hospitals, expects to introduce a bill to loosen limits on expansions that weren't ready before 2011.[...]
The doctor-owned hospitals seeking to loosen hospital-expansion limits have some favorable statistics to cite as they go into battle: new Medicare measurements showing that doctor-owned hospitals represent about half of the top 100 facilities whose performance will merit bonus Medicare reimbursements because of their cost efficiency and patient satisfaction.

But any effort to undo the expansion limits faces an uphill battle with Democrats, because the restrictions were a deal-breaker for hospitals when the White House sought their support for the law in 2009, industry lobbyists say.

So despite being described in even the Wall Street Journal as being "luxury facilities", these facilities are being highlighted by Medicare for being more cost efficient and having more satisfied patients than their competitors.

It seems insane that any government would attempt to limit what amounts to real cost savings and an improvement in service for patients. A possible clue as to why?

But according to the American Hospital Directory, a private firm that provides data about some 6,000 U.S. hospitals, many physician-owned hospitals have enjoyed 20% to 35% profit margins in recent years. U.S. community hospitals' profits hovered around 7% in 2010, according to the American Hospital Association, an industry trade group.

In 2011, the first year of the law's restrictions, more than half of the 30 largest doctor-owned hospitals showed operating margins that either matched or surpassed their 2010 figures, and some had operating margins of more than 40%. Only a handful showed drops of more than a few percentage points that year, according to American Hospital Directory data.

Robert Kocher, a former National Economic Council health adviser who helped get the provision into the federal health-care law, said he was disappointed such facilities had found ways to grow. "It was not how we saw this playing out, but they are resourceful," he said.

Greater homeownership leads to higher unemployment?

It makes sense... given that those at the periphery of being able to afford housing should potentially be most mobile in their careers. It's also potentially yet another unintended consequence of government policy that encourages homeownership by making it cheaper than it should be (WSJ):

Dartmouth College’s David Blanchflower (best known for being the Bank of England member who first pressed for interest rate cuts after the onset of the financial crisis) and Andrew Oswald of the University of Warwick find that a doubling of the rate of home ownership in any U.S. state is followed in the longer run by more than a doubling of the unemployment rate.

The authors stress that they are not arguing that the owners themselves are disproportionately unemployed. They suggest that lower levels of labor mobility, greater commuting times and fewer new businesses all combine to hurt the labor market.

Related: Declining American mobility an ongoing mystery (Slate via Instapundit)

Update: "Homeownership Reduces Your Chances Of Becoming An Entrepreneur, Report Says" (HuffingtonPost):

The study's authors write that homeowners "typically have to overinvest in housing" at the expense of entrepreneurship. This is particularly true for homeowners with a mortgage.

The study found that homeownership reduces "genuine entrepreneurship" in particular: that is, entrepreneurship that is in professional work or involves hiring other employees. That is an important point to distinguish, since the vast majority of U.S. businesses have no employees, according to the Census. Among those 21 million nonemployer businesses, millions of people have been forced to do odd jobs since they cannot find work.

Many U.S. government policies, including the mortgage tax deduction, create incentives to buy a home. Homeownership advocates argue that the incentives are good for everyone because homeowners are more invested in their communities.

Progress on an Eco-engineering Project

Kinda cool (RussGeorge via Freakonomics):

This summer the crew has been aboard ship engaging in what is surely the most substantial ocean restoration project in history. In a large ocean eddy west of Haida Gwaii the project has replenished vital ocean mineral micronutrients, with the expectation and hope it would restore ten thousand square kilometers of ocean pasture to health. Indeed this has occurred and the waters of the Haida eddy have turned from clear blue and sparse of life into a verdant emerald sea lush with the growth of a hundred million tonnes of plankton and the entire food chain it supports. The growth of those tonnes of plankton derives from vast amounts of CO2 now diverted from becoming deadly ocean acid and instead made that same CO2 become ocean life itself. For weeks the men and women, on this village team toiled in stormy overcast weather and fog without a hint of blue sky. In mid-August the skies cleared and revealed the wonder of the mission on which they have laboured. Satellites focused on ocean health that monitor and measure plankton blooms sent back stunning images. Far offshore in these Haida salmon pastures a vast plankton bloom is revealed matching the health and vibrancy of blooms seen in rich coastal waters. The return of such blooms is “the stuff dreams are made of” for all ocean life.

"How the IRS Wrecked your Pension"

When tax shelters, aren't (MeganMcArdle via Instapundit):

Back in the day, long before the stock market boom began, the IRS decided that pension funds were a problem, taxwise. As I understand it, this problem was mostly in small professional practices like doctors and lawyers offices. The doctors and lawyers would employ one or two other people, most of them transient single women who could be expected to leave to get married long before their pension vested. So you’d set up a “pension plan” in which, realistically, you were going to be the beneficiary. Then you’d stuff it full of money, far more than you needed to pay out your pension. It was a pretty nice tax shelter.

So the IRS got very strict about pension overfunding: they didn’t allow it. Or rather, they allowed it, but they wouldn’t let you deduct any payments into an already overfunded plan. Farewell, tax shelter.

This was fine in the 1970s, when the market just sort of lay there like a dying fish, occasionally flopping around, but mostly just gasping for air. However, by the late 1990s, a whole lot of pension plans were overfunded. Which created something of a problem. In popular legend, all these pension fund managers were total idiots who didn’t understand that the market was in a bubble, dammit. Undoubtedly, in some cases, this legend is even true. But in most cases, it wasn’t. The pension consultants and money managers who were responsible for calculating the required contributions were well aware that the rocket-fuelled 1990s price increases were not likely to continue forever. They even understood that prices were likely to fall, leaving the funds not-so-funded. They wanted to keep pouring contributions into the funds in order to protect against the inevitable decline. But the IRS wouldn’t let them.

Diamond Rings from Costco? Who knew...

Now you know... (Businessweek, via Instapundit and yet another reason to like Costco):

The assumed benefit of a Costco ring is that even at $40,000, you’re getting a higher-quality diamond than you’d be able to afford at a more prestigious store. As with any other name-brand product, Tiffany’s reputation (not to mention the classy Audrey Hepburn endorsement) raises the price of its jewelry.

Meanwhile, that Costco diamond might actually be worth more than its price tag. In 2005, Good Morning America appraised both a Tiffany diamond and a Coscto diamond. As it turned out, the $16,600 Tiffany cut was 58 percent more expensive than its $10,500 value, while the $6,600 Costco version was actually 17 percent under its appraised value of $8,000. On the WeddingBee.com blog, several women admitted to having Costco rings and said that when they had them appraised, every single ring was worth more than they paid, sometimes by thousands of dollars.

Tiffany offers more services than Costco. Its expert jewelers teach customers about the different cuts and qualities of diamonds. And once a ring is purchased, it can be returned for cleaning or resizing at any time.

Costco doesn’t resize rings. But it does sell six-pound packages of cheese.

"Schools are obsolete" and the future of learning

If you have any interest whatsoever in education and learning this is a must watch. Inspirational and exciting TED talk by Sugata Mitra on what the future of learning could look like - but even more than that, how education can turned into an equalizing force (TED via FredWilson):

The Bear Case for China

China may not overtake America this century according to Ambrose Evans-Pritchard. Not surprisingly, its biggest obstacle is political (Telegraph):

China's ageing crisis is tracking Japan's tale with a 20-year delay. China can expect to see the same decline in "marginal productivity" that has afflicted every other facing a rise in the old-age dependency ratio.

The authorities can of course keep the game going if they wish with another burst of credit, but risks are rising and the potency of debt is wearing off. The extra output created by each yuan of lending has halved in four years. Mr Li knows the game is turning dangerous.

A 2010 book by People's Army Colonel Liu Mingfu - "China Dream: Great Power Thinking and Strategic Posture in the Post-American Era" - is still selling like hot cakes in China. Yet it already has a dated feel, a throwback to peak hubris. China has everything to play for. With skill and a blast of freedom, it can take its rightful place at the forefront of world affairs. But nothing is foreordained.

How regulation fails (and how not to innovate)

How government wrecked the gas can (LaissezFaireClub via Instapundit)

An ominous regulatory announcement from the EPA came in 2007: “Starting with containers manufactured in 2009… it is expected that the new cans will be built with a simple and inexpensive permeation barrier and new spouts that close automatically.”

The government never said “no vents.” It abolished them de facto with new standards that every state had to adopt by 2009. So for the last three years, you have not been able to buy gas cans that work properly. They are not permitted to have a separate vent. The top has to close automatically. There are other silly things now, too, but the biggest problem is that they do not do well what cans are supposed to do.

And don’t tell me about spillage. It is far more likely to spill when the gas is gurgling out in various uneven ways, when one spout has to both pour and suck in air. That’s when the lawn mower tank becomes suddenly full without warning, when you are shifting the can this way and that just to get the stuff out.

There’s also the problem of the exploding can. On hot days, the plastic models to which this regulation applies can blow up like balloons. When you release the top, gas flies everywhere, including possibly on a hot engine. Then the trouble really begins. [...]

Soap doesn’t work. Toilets don’t flush. Clothes washers don’t clean. Light bulbs don’t illuminate. Refrigerators break too soon. Paint discolors. Lawnmowers have to be hacked. It’s all caused by idiotic government regulations that are wrecking our lives one consumer product at a time, all in ways we hardly notice.

It’s like the barbarian invasions that wrecked Rome, taking away the gains we’ve made in bettering our lives. It’s the bureaucrats’ way of reminding market producers and consumers who is in charge.

Is Urbanization a Threat to Autocratic Regimes?

Interesting post - with references to China, and China's reluctance to allow for unfettered urbanization (WSJ):

Chinese leaders since Mao Zedong have been wary of letting China’s largest cities reach megacity proportion. The usual reason cited is the fear of turning Beijing, Shanghai and other such cities into Latin American-style slums.

But Ohio State University political scientist Jeremy Wallace says there may be another reason: regime survival. In a study of authoritarian regimes between 1946 and 2004 (pdf), he finds that “regimes with capital cities that dominate the urban landscape fail nearly four years sooner and face 60% greater death rates.”

Specifically, for 237 nondemocratic regimes he studied with densely packed cities, the average duration was 8.6 years and the annual regime “death rate” was 9.2%. The 198 authoritarian regimes with low levels of urban concentration lasted, on average, 12.4 years and had an average annual death rate of 5.6%.

Catastrophic Success

Exciting but frightening possibilities... (Transparency Revolution via Instapundit):

I’m reading K. Eric Drexler’s new book Radical Abundance, which explores the impact of atomically precise manufacturing (APM). Drexler predicts that APM will be with us soon and that it will transform the global economy in ways that can be compared to the industrial revolution of the 18th century or the advent of agriculture some 10,000 years ago. That is to say, he predicts it will be among the biggest shifts that have ever occurred.

Drexler compares the introduction of APM with the digital revolution of the past few decades, asserting that APM will essentially turn the production of physical goods into a form of information technology. Just as digital technologies made it possible to produce unlimited copies of information products (books, recorded movies, music) at essentially zero cost, APM will enable the production of physical goods at a tiny fraction of the cost of producing them today — enabling a world of radical abundance per the book’s title. This transition will not come without problems, however. Imagine the kind of disruption which has occurred in the music business over the past decade and a half applied to manufacturing, agriculture, and energy production. The elimination of infrastructure, businesses, and employment will be staggering. Drexler warns that with the introduction of APM we may face a period of “catastrophic success.”

That’s an interesting turn of phrase. We’re all familiar with the concept of “creative destruction,” wherein a new technology or set of technologies come along and supplant the old order — taking businesses and livelihoods with them, but producing far more opportunity than they eliminated. Catastrophic success, it would seem, is an advanced form of creative destruction.

"We’re '80% Of The Way' To Fake Meat That’s Indistinguishable From The Real Thing"

Cheaper meat, that's presumably healthier for you and that actually tastes like meat. Instead of building technology that makes designs tangibly worse for the sake of arbitrary constraints, this is how innovation is supposed to work (TechCrunch). Prizes like this (PETA) should help.

Steve Blank: Building a Lean Startup

Steve Blank, a professor at Stanford and entrepreneur himself has been one of the principal developers of the Lean Startup movement - a movement that fundamentally changes the static business plan that assumes we know far more about the future and market reactions than we do, and instead focus on the validation of a given business model.

From Wikipedia: "The Lean Startup approach relies on validated learning, scientific experimentation, and iterative product releases to shorten product development cycles, measure progress, and gain valuable customer feedback."

Pretty much invaluable to anyone interested in starting a business, new product or service, I'd highly recommend taking his free online course on Udacity, and reading up on the idea here (HBR) and here (SteveBlank) with the Harvard Business Review now offering free reprints of their May 2013 cover article.

Update: Great infographic of the process (SachaChua)

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: