Good tip: Save the first few pages of your passport, credit card, and prescription information to the cloud before you start travelling (ApartmentTherapy). Caveat: do what you can to make sure the information is secure.
I love the idea of crowd competitions probably because in many ways they're democratizing and often enabled by the massive advances in communication technology we've had. Ahmad Ashkar, the CEO of the Hult Prize, provides a framework for how to develop competitions that succeed (HBR) - read the whole thing:
But to effectively harness the power of the crowd, you have to engage it carefully. Over the past four years, we've developed a well-defined set of principles that guide our annual "challenge," (lauded by Bill Clinton in TIME magazine as one of the top five initiatives changing the world for the better) that produces original and actionable ideas to solve social issues.
Companies like Netflix, General Electric, and Proctor & Gamble have also started "challenging the crowd" and employing many of these principles to tackle their own business roadblocks. If you're looking to spark disruptive and powerful ideas that benefit your company, follow these guidelines to launch an engaging competition
In fact, as Ann Harrison, the author of a new study from Wharton notes: "If … you were to give African entrepreneurs the same kind of environment as an American or European entrepreneur, they would outperform their counterparts." I'd go further that most if not all of the issues that the authors identify really come back to poor governance and bad policy (Forbes):
According to the researchers, insufficient infrastructure, scarce access to credit and political monopolies cripple these economies. Inefficient telecommunications, a proxy for infrastructure, consistently retains top ranking among the reasons for their perennial disadvantage. The difficulty to gain financing — due to a lack of formal lending sources — garners second place. Single-party rule also inhibits progress to a lesser degree. “If one could adjust the daunting list of geographic, infrastructure, political, economic and institutional factors to the levels [that exist] elsewhere,” the authors write, “Africa possesses an inherent advantage.” Harrison adds that this could be because African firms have had to become stronger and work smarter in order to survive such a challenging environment.
This post popped up on HackerNews which is pretty inspirational: "I'm learning to code by building 180 websites in 180 days. Today is day 115" (JenniferDewalt). But it was the first comment by Derek Sivers that is really resonating with me:
There’s this great story from the book “Art and Fear”, that's very appropriate here:I'm in the middle of trying to pivot, exploring a lot of ideas I've had on the backburner for a while. This is just a good reminder not to get bogged down in trying to make things perfect but to focus more on creating and executing.
The ceramics teacher announced on opening day that he was dividing the class into two groups.
All those on the left side of the studio, he said, would be graded solely on the quantity of work they produced, all those on the right solely on its quality.
His procedure was simple: on the final day of class he would bring in his bathroom scales and weigh the work of the “quantity” group: 50 pounds of pots rated an “A”, 40 pounds a “B”, and so on.
Those being graded on “quality”, however, needed to produce only one pot — albeit a perfect one — to get an “A”. Well, came grading time and a curious fact emerged: the works of highest quality were all produced by the group being graded for quantity.
It seems that while the “quantity” group was busily churning out piles of work-and learning from their mistakes — the “quality” group had sat theorizing about perfection, and in the end had little more to show for their efforts than grandiose theories and a pile of dead clay.
Hmmm... Given that we're consuming less iodized salt (ScientificAmerican), I wonder if it's going to have a reverse impact (BusinessInsider via Instapundit):
A new NBER working paper from James Feyrer, Dimitra Politi, and David N. Weil finds that the population in iodine-deficient areas saw IQs rise by a full standard deviation, which is 15 points, after iodized salt was introduced. Since one quarter of the population lived in those areas, that corresponds to a 3.5 point increase nationwide. We’ve seen IQs go up by about 3 points every decade, something called the Flynn effect, so iodization of salt may be responsible for a full decade’s worth of increasing IQ in the U.S.
USA Today via Instapundit:
As anyone who dreads April 15 knows, the code is a farce that wastes taxpayers’ time and money, caters to the influential lobbies and corrupts Congress. In the quarter-century since the last reform, it has grown so complicated that it costs individuals and companies $160 billion each year to comply. That’s nearly double what the federal government spends annually on highways, bridges, airports and other transportation projects.
Including productivity tips for everyone. Much recommended.(RyanCarson)
That's the study (WSJ). I get the idea that moving outside your comfort zone has its rewards (there are studies for that too! NYT) - but that Extroverts are more motivated because of their sensitivity to dopamine? On the other hand, motivation and productivity (actually getting things done) I suppose aren't the same thing.
So I've been doing CrossFit at CrossFit Toronto for just over a year now starting with a bunch of bootcamps. It's been phenomenal. I've never been in better shape, it's given me a bit more discipline (waking up to go to 515am classes requires discipline) and it's nice having visible abs. And, the founder, Greg Glasman is a "rabid libertarian" to boot:
Parenting tips for those who want to encourage entrepreneurship traits (WSJ):
How do you get kids ready to become entrepreneurs?
The classic answer, of course, is the lemonade stand: Encourage your kids to start a homespun business instead of just bugging you for money. But entrepreneurs and educators say the real solution goes much deeper than that. There are crucial psychological traits an entrepreneur needs to succeed, they say, and parents should help kids develop them at every opportunity.
The standard account of the Bhopal/Union Carbide disaster goes something like this: "In the name of profit, a large American multinational corporation neglected safety; as a result, many people, especially poor people, were killed and maimed, and the corporate executives involved have never been criminally prosecuted." What they disturbingly omit (StephenHicks via Smalldeadanimals):
the standard accounts also omit to mention that the decision to use the hazardous chemical MIC was the Indian government’s, not Union Carbide’s; that government directives also required the building of larger rather smaller facilities; that the Indian government was also pursuing an affirmative action programme, replacing Union Carbide’s foreign experts in engineering and agricultural chemistry with locals; and, finally, that the decision to situate the chemical plant in the middle of a residential community was the Indian government’s, not Union Carbide’s, exacerbated by a re-zoning policy that included giving thousands of construction loans to encourage Indians to build their homes near the chemical plant…
Ensure accountability for decision processes in addition to outcomes (PsychologyToday via Lifehacker):
Research demonstrates that long before outcomes are known, asking employees to explain their decision processes can encourage them to conduct a thorough, evenhanded analysis of the options.
Process accountability can be applied to our own choices, too. It just means setting some criteria for the decision process in advance. Before arriving at the restaurant, you might agree that you’ll only wait for 30 minutes. Prior to choosing an employee to hire, you could decide how much training this position should receive.
It'd be a man bite story if it weren't for how insane the idea was to begin with (Time):
The plan was simple: Thailand’s government would buy rice from local farmers at a generous price, some 50 percent above the market rates. It would hold the rice in warehouses, cutting off exports to the rest of the world. The sudden shortage from the world’s heavyweight champion of rice exports would cause a spike in global prices. Then, payday for the government as it swung open the warehouse doors and sold its stockpile to the world at a premium. Farmers win, the government wins, foreign consumers lose, but then they don’t vote in Thai elections, so what do they matter? The plan was a political no-brainer, except for one problem: Thailand’s government underestimated how quickly the market can kick back at any would-be puppeteers.
[...] And it was Thailand’s great misfortune that exactly one week after it slashed exports, India lifted its export ban, flooding the market with 10 millions tons of rice. Rather than orchestrate a price hike, Thailand helplessly stood by as global prices sank.
David Dawe, a senior economist with the U.N.’s Food and Agriculture Organization, can look at a spreadsheet of historic rice prices and see a roller coaster of emotions. He points to June 2011, when the current Thai administration was campaigning on its rice plan. Even before the election, rice traders had anticipated the coming shortage and bid up the price. “You’ve got this big bump of $100 a ton,” says Dawe. “Thais were probably pretty happy at that point, thinking, ‘Okay not too bad, we can probably drive them even higher.’” Then, in September of 2011, shortly after Prime Minister Yingluck Shinawatra’s administration was swept into office on a wave of votes from the farming sector, India opened the floodgates. Dawe points to this moment and says, “Reality sets in. The Vietnamese started lowering their prices and the Thais just got left behind.” Over the next year, Thailand was knocked from its perch as the world’s top exporter of rice, tumbling behind India and landing just short of Vietnam.
Maybe it's because there's more of an expectation that the "game" will need to be played again in the future? From Freakonomics:
We report insights into the behavior of prisoners in dilemma situations that so famously carry their name. We compare female inmates and students in a simultaneous and a sequential Prisoner’s Dilemma. In the simultaneous Prisoner’s Dilemma, the cooperation rate among inmates exceeds the rate of cooperating students. Relative to the simultaneous dilemma, cooperation among first-movers in the sequential Prisoner’s Dilemma increases for students, but not for inmates. Students and inmates behave identically as second movers. Hence, we find a similar and significant fraction of inmates and students to hold social preferences.
Cool - and exciting (UniversityofTexas via HN):
By creating a small electrical field that removes salts from seawater, chemists at The University of Texas at Austin and the University of Marburg in Germany have introduced a new method for the desalination of seawater that consumes less energy and is dramatically simpler than conventional techniques. The new method requires so little energy that it can run on a store-bought battery.
This idea applies across cultures - particularly given the seemingly unconventional ideas many have (AaonMagazine via Instapundit):
Embracing African medicine means not romanticising it. Science should be the great leveller: it doesn’t matter where brilliant ideas come from, so long as they work. Both Western doctors and African healers will always be tempted to be a little too optimistic about their own healing abilities, which is why it is so important that we use all of our best empirical tools to keep their delusions in check.
Dog bites man: Massive subsidies to industry prove unsustainable. (Forbes via HN)
Not that one ever really knows what qualifies as "green" these days, but from Walter Russell Mead (via Instapundit):
Ask a green what he or she thinks about fracking, and you’re likely to get an earful of criticism about methane leaks, poisoned groundwater, and climate change disaster. But a new report from the ecologically minded Breakthrough Institute (BI) makes the case that shale gas actually has a net environmental benefit. Nevermind the boosts to our energy security, and economy that fracking provides; the controversial drilling process is worth embracing on green merits alone.
Natural gas’s biggest green qualification is the extent to which it displaces coal as an energy source. Burning coal emits roughly twice as much greenhouse gas into the air as natural gas. Thanks to the shale boom, we’re getting less of our electricity from coal-fired power plants and more from natural gas. The BI notes, “From 2008 to 2012, annual coal consumption for US electric power declined, on average, by 50 million tons.” That’s something greens should be cheering, and it’s mostly thanks to fracking.
But natural gas doesn’t just beat coal on carbon emissions. The BI explains why, at the local level, shale gas does less harm than coal.
It seems pretty straightforward at this point: the more natural gas we burn, the less coal we burn. That leads to lower carbon emissions and less harm to the environment and local communities.
Many greens have one final quibble: that the increased share of shale gas in our energy mix will come at the expense of the fledgling solar and wind industries.
Breakthrough has an answer for that as well. Gas plants are a lot cheaper to build than coal plants, and cheaper to scale up if needed. Surprisingly, this is actually good news for solar and wind energy. When the wind isn’t blowing and the sun isn’t shining, we need other sources of energy. Coal plants have high capital costs: they’re generally much more expensive than natural gas plants, which means, once built, they’re going to stay online as long as possible to recoup that initial investment. Natural gas plants are cheaper to build, so there’s less of a need to keep them on when the sun is shining and the wind is blowing. In that sense, natural gas makes our power supply more flexible and boosts the viability of renewable energy sources.
There's a large body of research that suggests high rents are often the result of restrictive zoning and even rent control - but one TechCrunch author argues that it's financial over-regulation that's caused rising rents:
When wealth is created but concentrated in certain ZIP codes, both local areas and the nation’s economy is affected. It all has a cascading effect. With more wealth locked into San Mateo and surrounding counties, the demand for assets rises quickly. House prices skyrocket. Individuals who don’t have enough cash reserved for a down-payment are forced to rent, where competition for rental property creates its own endless race. Contractors rush to meet housing demand, springing up buildings in a boom-time that create noise pollution and closed streets and blocked highway on-ramps, which combines with more and more warm bodies flocking to the Bay Area for the shot to work in the one sector that provides any hope for real, sustainable economic growth. This is why — in large part because of SOX — that your rent is high, why there’s so much traffic and construction, and why it won’t change anytime soon.
There are many, many reasons a great number of people would benefit if private companies operated in an environment where restrictions wouldn’t dissuade shareholders and investors from accessing public markets earlier. Entrepreneurs and investors would have an attractive exit option earlier in their life cycle; entrepreneurs wouldn’t have to rely on “build and shut down” acquisitions to get an exit; employees and insiders wouldn’t feel as much pressure to access liquidity through secondary offerings; wealth-creation would be more spread out and could generate even more jobs; and retail investors would have an equal chance to invest into the next Facebook when its valuation is, say, around a billion dollars versus when its $100B. For a bit of perspective, Google IPO’d after raising a relatively modest amount of venture capital, and Microsoft IPO’d at a $500M valuation — in these cases, the wealth created post-IPO was spread out and technically available to all who could invest in public markets.
Scott Kupor, a Managing Partner at Andreessen Horowitz, wrote a strong piece artfully detailing this view, suggesting over-regulation effectively blocks the entire middle class from participating in the massive wealth creation driven by technological advancement. Over the years, USV’s Fred Wilson has written many great posts on this topic, discussing the nuances of going public early, how public markets can have a harmful effect on company culture, and how potentially distortive the IPO process can be relative to true company value.
Lessons from Egypt (NationalReview via Instapundit). As Reynolds, points out:
Elections are necessary but not sufficient for a democratic republic. You also need limits on state power, and civil society. Frankly, what’s most impressive to me is how resilient and robust Egyptian civil society has been in the face of the Muslim Brotherhood’s clear effort to establish an Iran-style theocracy.
Reason discusses how differences in regulation have allowed the broadband access available to consumers in the US to now supercede those of Europe - particularly interesting given how it wasn't so long ago pundits were bemoaning the US's 'moribund' level of competition versus that of Europe:
Meanwhile, Europe’s broadband speeds have remained stagnant. Broadband companies in the U.S. are installing advanced fiber-optic technology faster than Europe, according to a recent study by the Information Technology and Innovation Foundation. That likely ensures that the gap will continue to widen.Developing markets has been somewhat top of mind at the moment as I've recently summarized a book (Scribd) Making Markets (Amazon). I'd highly recommend the book to anyone who is interested in how to build, analyze and design markets.
Indeed, it’s the willingness of telecom companies to invest in new infrastructure that ensures broadband growth. In the U.S. we enjoy what’s known as “facilities-based competition,” which means that broadband providers own their network and compete with each other based on improvements to their facilities. In most of Europe, by contrast, broadband providers lease access to the network from the local phone company at fixed rates. That may mean a greater number of competitors, but also little incentive to improve the network facility.
As the White House report noted, just two U.S. telecommunications companies—AT&T and Verizon—“account for greater combined stateside investment than the top five oil/gas companies, and nearly four times more than the big three auto companies combined.” If companies thought they would be forced to lease their networks to rivals at regulated rates, it’s doubtful they’d make such investments.
Kind of counter intuitive in a way, but also not really - after all, employers put off hiring because they worry about having to fire them if they don't work out for cultural reasons let alone regulatory ones (DivisionofLabour via AdamSmith):
Using 1981–2009 data for the 50 states, this article examines the relationship between economic freedom and the unemployment rate, the labor force participation rate, and the employment-population ratio. After controlling for a variety of state-level characteristics, the results from most specifications indicate that economic freedom is associated with lower unemployment and with higher labor force participation and employment-population ratios.
As Glenn Reynolds notes: "Funny, because for the past 50 years or so we’ve been casting self-control as the enemy of happiness" - at theAtlantic:
Results: The more self-control people reported having, the more satisfied they reported being with their lives. And contrary to what the researchers were expecting, people with more self-control were also more likely to be happy in the short-term. In fact, when they further analyzed the data, they found that such people's increased happiness to a large extent accounted for the increased life satisfaction.
Passion is probably one of the best and most sustainable motivators (and it's one of the things that get you through the ups and downs of entrepreneurship), so this is a pretty good primer (Bakadesuyo):
Researchers found there are two types of passion: harmonious and obsessive. The latter is a bad thing, more like an addiction or being a stalker. We’ll focus on the former, thanks. So what defines harmonious passion?
Robert Vallerand and colleagues came up with a “Passion Scale.” How many of these are true of an activity you engage in?
Via Ungifted: Intelligence Redefined:
1. This activity allows me to live a variety of experiences.
2. The new things that I discover with this activity allow me to appreciate it even more.
3. This activity allows me to live memorable experiences.
4. This activity reflects the qualities I like about myself.
5. This activity is in harmony with the other activities in my life.
6. For me it is a passion, which I still manage to control.
7. I am completely taken with this activity.
That message still resonates today, though it was spectacularly wrong. For example, the authors of The Limits to Growth predicted that before 2013, the world would have run out of aluminum, copper, gold, lead, mercury, molybdenum, natural gas, oil, silver, tin, tungsten, and zinc.
Instead, despite recent increases, commodity prices have generally fallen to about a third of their level 150 years ago. Technological innovations have replaced mercury in batteries, dental fillings, and thermometers: Mercury consumption is down 98 percent and, by 2000, the price was down 90 percent. More broadly, since 1946, supplies of copper, aluminum, iron, and zinc have outstripped consumption, owing to the discovery of additional reserves and new technologies to extract them economically.
Similarly, oil and natural gas were to run out in 1990 and 1992, respectively; today, reserves of both are larger than they were in 1970, although we consume dramatically more. Within the past six years, shale gas alone has doubled potential gas resources in the United States and halved the price.
As for economic collapse, the Intergovernmental Panel on Climate Change estimates that global GDP per capita will increase 14-fold over this century and 24-fold in the developing world.
The Limits of Growth got it so wrong because its authors overlooked the greatest resource of all: our own resourcefulness. Population growth has been slowing since the late 1960s. Food supply has not collapsed (1.5 billion hectares of arable land are being used, but another 2.7 billion hectares are in reserve). Malnourishment has dropped by more than half, from 35 percent of the world’s population to under 16 percent.
An explanation why? (HBR):
Just as larger businesses provide economic stability to society in the form of higher pay, better medical care, and retirement, experienced workers provide intellectual and emotional ballast in the workplace including innovation expertise. Think about it — disruptive innovation is about playing where no one wants to play (low-end), or has thought of playing (new market). As individuals move into Erikson's seventh developmental stage, creating something new isn't just a "nice thing to do" — it is a psychological imperative. The urge to create, to generate a life that counts impels people to innovate, even when it's lonely and scary. Data notwithstanding, some of the companies among us will continue allow these individuals to fall into the arms of independent work, if we don't give them the boot first. The smart companies — and my money is on you — will harness this hunger of the underserved, ready-to-serve corp of talent, and upend the competition.
"Job-Stealing Robots Go Global" (WalterRussellMead via Instapundit):
Asian workers have scored some victories in rising wages, but many are learning something the West has known for some time: Employers will seek out the cheapest labor on offer, and machines are even cheaper than an underpaid human. In the late 20th century, manufacturing jobs shifted from America to China, then from China to Southeast Asia, and now even those are being automated.
For America, at least, this trend shouldn’t be so disconcerting. After all, it’s developed economies like ours that are designing the robots Nike is now using. Low-wage manufacturing jobs are drying up, but they’re being replaced by jobs in building, operating, and repairing the tech in question. Increasingly, companies will be likely to “onshore” these jobs to America, when shipping and distribution becomes much easier and cheaper. Manufacturing, it seems, will come full circle.
Competition is a good thing (ForeignPolicy via ChrisBlattman):
China is a very positive element to this whole picture,and there are two sides to this: There’s the Chinese government and the Chinese entrepreneur. The Chinese government goes in and they say to a country, “Look, we want to be friends.” And then they say, “Look, we know you’ve got this coal, and we need this coal. We can do a deal with you to export the coal into China, but in order to get it out of the country we’ve got to build a railroad. If you’ll do a long-term deal with us, we’ll build the railroad.”
Once that begins, then you have Chinese contractors, Chinese workers coming in and establishing small businesses and trading. And their relatives come in and they see the opportunities. So you begin to get a private market in Chinese products and to expand and attract other people, and you begin to have more of a market economy.
Then you have people like retail outlets in South Africa wake up and say, “Hey, they’re in the market here. The Chinese are selling this and that. Why don’t we go in and set up a business?” So I would say that generally speaking, the influence of the Chinese has been very positive for these countries.
Of course there are some downsides. Some countries say that the Chinese are doing all the work and we don’t have any jobs and so forth and so on, but these are things that can be ironed out.
The State Department is very much aware of what’s going on,but at the policy level they have not committed the kind of resources that the Chinese have committed. And that’s highly unfortunate, but I think going forward there will be more private-sector involvement from the U.S. in particular.
DDNews via Instapundit:
Affordable higher education follows innovating economies, and doesn’t create them.
Waiting for superman never did seem like a particularly good strategy for developing countries. From a new study (SSRN via Blattman):
Leadership is an under-studied topic in the international development literature. When the topic is broached it is usually in support of what might be called a ‘hero orthodoxy’: One or other individual is identified as the hero of a specific achievement. The current article offers a three part argument why this orthodoxy is problematic and wrong for many developing countries, however. It suggests first that heroes have not emerged in many countries for a long period and individuals who may have been considered heroes in the past often turned out less than heroic. It posits second that heroes are actually at least as much the product of their contexts as they turned out to be the shapers of such. It proposes third that the stories about hero-leaders doing special things mask the way such special things emerge from the complex interactions of many actors—some important and some mundane. Leadership, it appears, is about multi-agent groups and not single-agent autocrats. The conclusion posits that romantic notions of heroic-leadership in development become less convincing when one appreciates these three arguments. It calls development theorists and practitioners to go beyond the heroic-leader perspective.
First, the message can be misunderstood. It is not, “Cash transfers to the poor are a panacea.” More like, “They probably suck less than most of the other things we are doing.” This is not a high bar.Update (Aug 19, 2013): Even more on giving cash to the poor (Chris Blattman)
Second, cash transfers work in some cases not others. If a poor person is enterprising, and their main problem is insufficient capital, terrific. If that’s not their problem, throwing cash will not do much to help. I recommend the paper for details. Apologies: It is even more boring that Das Kapital.
Third, a cash transfer to help the poor build business is like aspirin to a flesh wound. It helps, but not for long. The real problem is the absence of firms small and large to employ people productively. The root of the problem is political instability, economic uncertainty, and a country’s high cost structure, among other things. A government’s attention is properly on these bigger issues.
Caffeine may be good for creativity? (theAtlantic) in response to an earlier article in the NewYorker.
Apparently it isn't price - an interesting compilation of studies from Pricenomics (via HN):
A Lafite Rothschild Bordeaux sells for a minimum of around $500 a bottle, while humble brands like Charles Shaw and Franzia sell for as little as $2. But as far as “wine economists” are concerned, the level of correlation between the price of a bottle of wine and its quality is low or nonexistent. In a number of damning studies, they suggest that wine is not just poorly priced, but that the different tastes we describe in wine may all be in our heads.
A 2008 paper in The Journal of Wine Economics, for example, found that when consumers are unaware of a wine’s price, they “on average enjoy more expensive wines slightly less [than cheap ones].” Experts do not fare much better. The study could not conclude that experts preferred more expensive wine: “In sum, we find a non-negative relationship between price and overall rating for experts. Due to the poor statistical significance of the price coefficient for experts, it remains an open question whether this coefficient is in fact positive.”
In another experiment, critics tasted one red wine and one white wine. They described the red in language typical of reds and the white in language typical of whites. The problem? Both were identical white wines; the “red” had been tinted with food coloring.
Another study looked at the accuracy of the influential 100 point scale invented by wine critic Robert M. Parker Jr. By having judges at a tasting rate the same wine multiple times, retired statistician and hobbyist winemaker Robert Hodgson found that the judging was completely inconsistent
New paper: "It’s the Market: The Broad-Based Rise in the Return to Top Talent" by Steven N. Kaplan and Joshua Rauhvia via Greg Mankiw:
We believe that the U.S. evidence on income and wealth shares for the top 1 percent is most consistent with a “superstar”-style explanation rooted in the importance of scale and skill-biased technological change. In particular, we interpret the fact that the top 1 percent is spread broadly across a variety of occupations as most consistent with an important role for skill-biased technological change and increased scale. These facts are less consistent with an argument that the gains to the top 1 percent are rooted in greater managerial power or changes in social norms about what managers should earn.
Chris Blattman asks: "End poverty by giving cash to the poor?" (Blattman). It's difficult to see how this would be true in the West where extreme poverty has almost entirely been eliminated. More previously.
You're probably familiar with at least a few of them (e.g. multi-tasking is bad), but good pointers to the underlying studies (via Lifehacker)
It's befuddling that states/countries would deliberately handicap themselves when it comes to jobs - but that they do. As WSJ puts it, "Andy Puzder, the man who revived Carl's Jr., explains why he's not expanding in California and how the Affordable Care Act is hurting employment. Expect to order with an iPad:"
These days, California is one of the few states where the company isn't looking to expand. "Like many businesses, we love California and would love to build more restaurants," he says. But "California is not interested in having businesses grow," even though many multinational companies, including CKE, have headquarters there.
Consider how long it takes for one of his restaurants to get a building permit after signing a lease. It takes 60 days in Texas, 63 in Shanghai, and 125 in Novosibirsk, Russia. In Los Angeles, it's 285. "I can open up a restaurant faster on Karl Marx Prospect in Siberia than on Carl Karcher Boulevard in California," he says.
Then there are California's cumbersome labor regulations, which appear designed to encourage litigation. The company has spent $20 million in the state over the past eight years on damages and attorney fees related to class-action lawsuits.
Mr. Puzder's favorite California-bites-business story is a law that requires employers to pay general managers overtime if they spend 50% of their time on non-managerial tasks like working the register if they're short-staffed, "which is what we pay and bonus them to do in just about every other state." Since managers were filing class-action lawsuits against the company for not being paid overtime, "every retailer in the state basically has now taken their general managers and made them hourly employees."
The managers hated the change "because they worked all their careers to get off the base to become managers," he says, and paying themselves overtime could hurt their restaurants' bottom lines and chances of a bonus. Mr. Puzder adds that his company must now fire managers who don't report their work hours because they present a legal risk.
Is this time really different? Will technology end up destroying more jobs than it creates? (Instapundit) While I'm optimistic this isn't the case, regardless of where you stand on the idea, it seems terribly unwise to create artificial barriers in areas where we're just starting to see innovation and new ideas are just starting to flourish (TechCrunch).
Update: How Technology Is Destroying Jobs (TechnologyReview)
It explains why some cling so fiercely to ideas that we know will have "unintended consequences" and stop at nothing to realize them. Barbara Oakley defines pathological altruism as "altruism in which attempts to promote the welfare of others instead result in unanticipated harm." (James Taranto via Instapundit):
Pathological altruism is at the root of the liberal left’s crisis of authority, which we discussed in our May 20 column. The left derives its sense of moral authority from the supposition that its intentions are altruistic and its opponents’ are selfish. That sense of moral superiority makes it easy to justify immoral behavior, like slandering critics of President Obama as racist–or using the power of the Internal Revenue Service to suppress them. It seems entirely plausible that the Internal Revenue Service officials who targeted and harassed conservative groups thought they were doing their patriotic duty. If so, what a perfect example of pathological altruism.
Oakley concludes by noting that “during the twentieth century, tens of millions [of] individuals were killed under despotic regimes that rose to power through appeals to altruism.” An understanding that altruism can produce great evil as well as good is crucial to the defense of human freedom and dignity.
An essay in the Journal of Economic Perspectives (Harvard via Greg Mankiw)
Update (June 20, 2013): In defense of Greg Mankiw (TVHE via GregMankiw)
The resulting tax changes are shown to be unforecastable on the basis of past macroeconomic data. I find that a 1 per cent cut in taxes stimulates GDP by 0.6 per cent on impact and by 2.5 per cent over three years. These findings are remarkably similar to the corresponding estimates for the United States.
Coming off a bizarre cold just as summer is settling in, I may try this now. It's a great idea for travel though if you're someone who normally brings a waterbottle/thermos anyway (theKitchn).
ASI asks: "Do technological advances destroy jobs without creating new ones?":
Perhaps the line which most annoys me is "the belief that technology doesn't destroy jobs, but merely creates new and better ones, is, like so much else about bourgeois economics, a baseless assumption."More: The BBC asks, is the solution for more jobs lower wages? And that's also why most economists dispute the need or effectiveness of the minimum wage...
Does Mueller really believe that claim? Unemployment is 7.8%. Employment is touching 30m, its highest level ever. Since the 1750s there has been a tide of vastly transformative technological improvement and yet somehow a much larger population is employed. At the same time, this larger workforce is working much fewer hours and enjoys much greater abundance. Surely these widely available facts are enough to suggest that the assumption technology creates—as well as destroys—jobs is more than just a "baseless assumption"?
By no means is it certain that the trends of the past, which have seen mobile phones, more hygienic toilets and tasty soft drinks spread to even the poorest areas of the world, will continue. But certainly some evidence (e.g. the graph above) seems to suggest that technologies are spreading throughout society—and benefiting the general populace, not just the wealthy—faster than ever before. This is great, and implies that we can hope for greater abundance and leisure without smashing new technologies. If it turns out that not all benefit, then what we need is something like Krugman's universal basic income, not drastic societal upheaval.
The idea of social impact bonds is developing. From the WashingtonPost:
The competition for technical assistance attracted 28 applications — a number that surprised officials at Rockefeller and Harvard.
The six winners are developing programs that range from early childhood education to efforts aimed at helping senior citizens remain in their homes longer.
“I love this pay-for-success model,” said South Carolina Gov. Nikki Haley (R), whose state is planning a nurse-family partnership program aimed at reducing the state’s infant mortality rate, which at 7.4 per 1,000 births is among the highest in the nation. “We have tried to make different moves to try to fix that number. This will allow us to go farther.”
Colorado plans to target homelessness in a way that Gov. John Hickenlooper (D) said would be fiscally impossible through the normal government funding channels.
“The hardest money for us to raise is when we have a new idea and it has been in a couple of places but is not widespread,” he said. “There is an inclination in mayors’ and governors’ offices to avoid risk. But investment funds that have a strong social component will inherently take more risk.”
Leviathan. According to Dan Primack at Forbes:
Sidecar CEO Sunil Paul said yesterday at a conference that U.S. auto ownership will be cut in half over the next decade thanks to social car-sharing services like his. It sounds ludicrous for any number of socio-demographic reasons, but what if you allow yourself to drink the battery fluid? What would the rise of companies like Sidecar mean for the country?Primack's take seems somewhat bizarre though. While I can respect that it's necessary to be aware of "both sides of the equation", the problem isn't the innovation that allows for us to use what we own more effectively as it's framed, it's taxing the wrong activities, it's the overspending, it's the over regulation.
Less traffic? Likely. A cleaner environment? Probably. A massive cut in state tax revenues. Definitely.
According to an April study by the Center for Automotive Research, the auto sector was responsible for approximately $91.5 billion in state taxes for 2010 -- or around 13% of all such receipts. Included in that figure was $30 billion from the sale of new and used vehicles and $20 billion from vehicle registration fees. Not included were such things as excise taxes or title fees.[...]
To be sure, there are all sorts of social and environmental benefits to car-sharing specifically, and to the larger notion of a sharing economy. But there also are significant national costs to decreased ownership of major goods like automobiles. At the very least, Paul and other sharing economy evangelists should be aware of both sides of the equation.
It's too bad organizations that get government support through tax breaks and other incentives don't get the same level of scrutiny as many private companies out there. The list is here (TampaBay), and the preamble is here (CNN):
The 50 worst charities in America devote less than 4% of donations raised to direct cash aid. Some charities gave even less. Over a decade, one diabetes charity raised nearly $14 million and gave about $10,000 to patients. Six spent no cash at all on their cause.
Even as they plead for financial support, operators at many of the 50 worst charities have lied to donors about where their money goes, taken multiple salaries, secretly paid themselves consulting fees or arranged fund-raising contracts with friends. One cancer charity paid a company owned by the president's son nearly $18 million over eight years to solicit funds. A medical charity paid its biggest research grant to its president's own for-profit company.
Some nonprofits are little more than fronts for fund-raising companies, which bankroll their startup costs, lock them into exclusive contracts at exorbitant rates and even drive the charities into debt. Florida-based Project Cure has raised more than $65 million since 1998, but every year has wound up owing its fundraiser more than what was raised. According to its latest financial filing, the nonprofit is $3 million in debt.
I'm somewhat surprised the Economist noticed this one. It also points to the reason why, more generally, the US has been having problems finding economic growth (The Economist).
None of my banking spreadsheets ever looked this good - though probably with good reason. On the other hand, they might have been less useful. (Spoon & Tamago via Chris Blattman):
As Niall Ferguson points out in the WSJ, even the World Bank's "Doing Business" points out it's becoming more difficult to well, do business in the US. Ferguson argues the problem of anemic growth won't be solved with more stimulus (WSJ):
Consider the evidence from the annual "Doing Business" reports from the World Bank and International Finance Corporation. Since 2006 the report has published data for most of the world's countries on the total number of days it takes to start a business, get a construction permit, register a property, pay taxes, get an export or import license and enforce a contract. If one simply adds together the total number of days it would take to carry out all seven of these procedures sequentially, it is possible to construct a simple measure of how slowly—or fast—a country's bureaucracy moves.Of course, there's also a Fed study "that nine-tenths of that projected 1 percentage point excess fiscal drag comes from tax revenue rising faster than normal as a share of the economy" (via Washington Examiner).
Seven years of data suggest that most of the world's countries are successfully making it easier to do business: The total number of days it takes to carry out the seven procedures has come down, in some cases very substantially. In only around 20 countries has the total duration of dealing with "red tape" gone up. The sixth-worst case is none other than the U.S., where the total number of days has increased by 18% to 433. Other members of the bottom 10, using this metric, are Zimbabwe, Burundi and Yemen (though their absolute numbers are of course much higher).
Why is it getting harder to do business in America? Part of the answer is excessively complex legislation. A prime example is the 848-page Wall Street Reform and Consumer Protection Act of July 2010 (otherwise known as the Dodd-Frank Act), which, among other things, required that regulators create 243 rules, conduct 67 studies and issue 22 periodic reports. Comparable in its complexity is the Patient Protection and Affordable Care Act (906 pages), which is also in the process of spawning thousands of pages of regulation. You don't have to be opposed to tighter financial regulation or universal health care to recognize that something is wrong with laws so elaborate that almost no one affected has the time or the will to read them.
Ground breaking (pardon the pun) if true (WSJ):
There's increasing doubt about whether all natural gas (which is 90% methane) comes from fermented fossil microbes. Some of it may be made by chemical processes deep within the earth. If so, the implications could be profound for the climate and energy debates. [...]
When the ocean floor is driven down deep into the molten mantle, in the so-called subduction zones where continents are barging their way over the oceanic crust, this carbonate gets heated and pressurized. In 2004, Henry Scott of Indiana University and his colleagues discovered that ideal conditions exist for this carbonate to lose its oxygen and gain hydrogen instead, making methane on a massive scale.
In effect, this would recycle the Earth's carbon dioxide by turning it back into the fuel from which it was made when burned or breathed. Maybe this explains why so much methane bubbles up through hydrothermal vents on the ocean floor. Moreover, a new paper by Vladimir Kutcherov of the Royal Institute of Technology in Stockholm argues that this might also explain why vast quantities of hydrated methane (known as fire-ice) have been found under the seabed near the continental margins: Perhaps it has come up from the mantle. Recently the Japanese announced a successful pilot project to extract some of this methane as a source of energy.
Dr. Kutcherov thinks the evidence "confirms the presence of enormous, inexhaustible resources of hydrocarbons in our planet." If he is right—and America's new Deep Carbon Observatory aims to resolve the question in the next few years—natural gas may effectively never run out.
I used to be fairly skeptical about the idea but it's also fairly obvious there's a gap in the market traditional banks aren't meeting. But is the issue regulatory? Or is it something else that technology may be able to solve? An interesting discussion - about 30 minutes worth, on crowd lending at Le Web (AVC):
I can't help but be uncomfortable at the handwringing over the fear that there won't be enough jobs in the future. There's even a hashtag for it #peakjobs (Twitter). ASI argues that the jobs technology destroys is a good thing - but it does require faith that like every time in the past, more new more productive jobs - many we haven't even conceived of, replace the ones destroyed:
Think about it for a moment, if we still had 22% in farming and 36% in manufacturing then that's 58% of the people. Currently 81% of the population work in services (there's a bit in construction, water etc as well). If we've 58% who cannot be in services because they're in food or manufacturing then we'd, just as in 1841, only be able to have 33% working in services. So, which half to two thirds of the services we currently do get would you like to give up simply because we don't have the people available to do them? OK, we all agree the diversity advisers can go but beyond that?
Quite. By mechanising agriculture and manufacturing we've been able to get the production of both of those that we desire and also have a vast expansion of services that we also get to enjoy. We have more thus we're richer. And that of course is the point of doing such mechanisation: to make us all richer and long may it continue.
Little wonder, given the stellar journalism in the mainstream press (WSJ via Freakonomics):
In fact, Americans’ grasp of concepts such as investment risk and inflation has weakened since the recovery began in mid-2009. Research released last week shows that on a five-question test (take the test here), respondents did worse in 2012 than in 2009. The average number of correct answers fell to 2.9 in 2012 from 3.0 on the test in 2009.
William J. Reilly via Chris Blattman:
There is only one way in this world to achieve true happiness, and that is to express yourself with all your skill and enthusiasm in a career that appeals to you more than any other. In such a career, you feel a sense of purpose, a sense of achievement. You feel you are making a contribution. It is not work.
I haven't posted a video in a while... and given that I'm on a CrossFit kick at the moment, and Father's day is coming up, I thought this was appropriate:
Something to keep in mind the next time you're in a metropolitan city and someone complains about housing prices and calls for regulation. Maybe the reason for the high prices *is* regulation (Economist):
This is the subject of ongoing debate in Britain; witness the furore over whether to allow construction on London's "greenbelt". Construction is a constant point of contention in built-up areas as well. The magnitude of the impact of these supply restrictions on real estate costs is astounding. In a 2008 paper, Paul Cheshire and Christian Hilber estimated the "shadow tax" imposed by such regulations on office prices in London and other major cities. They found a shadow tax rate of planning restrictions (above construction costs) of about 800% in London's West End, and of nearly 500% in the City of London. The comparable rate is about 300% in Paris, 68% in Brussels, and 50% in Manhattan. (The Manhattan estimate is for the year 2000; other city estimates are for the early 2000s.) [...]
London property owners, as a class, are effectively an incredibly successful rent-seeking operation greedily sucking up the economic surplus generated by the city's economy. When a London firm brings someone to London, they do so, presumably, because the move generates a productivity increase which generates gains that can be shared between firm and worker. But the lion's share of that increase flows not to the firm or the worker but to the owner of the firm's office space and the worker's flat. As a result, London winds up with many, many fewer firms and workers than it could otherwise expect to have. As does Britain, because firms and workers deflected from London are more likely to wind up in New York or Hong Kong than in Newcastle.
Keep that in mind when you read stories about Britain's struggling economy; its lagging growth and productivity performance, and its difficulties raising exports. It's largely down to those great vampiric beasts that bestride London's economy. You know, the homeowners.
A forceful and passionate attack on the aid industry... but one that's much needed (thisisAfrica via Afritech):
As The Spectator put it, the fiercest defenders of aid are invariably white, and the most trenchant critics tend to be African intellectuals like Ghana’s George Ayittey and Uganda’s Andrew Mwenda. Foreign aid is a comparatively middle- and upper-class business and a middle- and upper-class enthusiasm. It starts with a gap year to exciting places like Nairobi or New Delhi, being driven around in Land Cruisers and lecturing adults on how to run their countries. To some, aid work is attractive because of the adventure and the thrill of danger. To others, the lure is endless gap-year exoticism and third-world partying (with the additional benefit of being one of the good guys). You can earn a decent, high-status living in the aid world, without soiling your hands in trade or industry.
Interesting new study (Federal Reserve Bank of St Louis via Paul Kedrosky):
When the relationship between government wages and corruption is modeled to vary with the level of income, we find that the impact of government wages on corruption is strong at relatively low-income levels.
A pretty good idea: have a frozen/easy to make meal ready for you when you get back (thekitchn). Especially useful for those +12 hour trips when all you want to do is burn your clothes let alone be seen in public after you get back.
I wonder if this was what journalism was like as the West began industrializing (TechCrunch):
So the good news is, if you lose your job some years from now, with any luck the same technological advances that devour it will also have generated enough wealth that the government will pay you and your family a basic income while you’re unemployed. The bad news is that you’re not likely to get another long-term job–ever–and that basic income will probably be only just enough to scrape by on.More here.
Do you believe education will save you, and/or your children? Sorry. Not all of the well-educated will find good jobs; increasingly, some won’t find jobs at all. Meanwhile, the cost of higher education keeps climbing higher and higher. Peter Thiel is already arguing that “we’re in a bubble and it’s not the Internet. It’s higher education.”
It’s possible that universities will start to seem almost like casinos: great for the winners, but you’d actually be better off not going at all than paying to go and failing to win. Obviously an engineering or CS degree will improve your chances much more than, say, English Lit…but not everyone can be a tech worker, and what’s more, it’s only a matter of time before technology starts eating tech jobs, too.
If this scenario plays out, the world will divide into a dwindling minority of the very rich — tech workers, finance barons, and those who inherited their wealth, mostly — living in a handful of idyllic cities dripping with wealth, and/or their summer homes on nearby beaches, lakes, and mountains … and the majority who barely get by, doing occasional contract work or odd jobs for a little extra money, too poor to even visit the places where the rich live, work, and play. Aside from those few with government jobs, there’ll be hardly any middle class at all between those two groups.
Does that sound implausible or unstable? No: it’s how most of the world works today. That’s a reasonable description (albeit to varying degrees, and in varying forms) of Brazil, Russia, India, China, and South Africa today. Until recently the expectation has always been that they would evolve and grow to become more like North America, Western Europe, and Japan. But it seems likely to me that the converse is true–that for the next few decades, at least, the rich world, even as it grows wealthier, will begin to look a lot more like the BRICS. It’s a sobering thought.
When I first saw the title of this, I was kind of optimistic. And in a way, it's a step in the right direction (WashingtonPost via Brian H):
Trigg makes money just to give it away. His logic is simple: The more he makes, the more good he can do.In a way it's kind of sad - the idea that you should work in a field that you're not really passionate about, to make money to put to use in things that you do. It's a false choice. The article seems to divorce the signal markets make for valued skills from the fact that these actually have a measurable impact in helping society - ie undervalues the work that finance and other high paying fields do.
He’s figured out just how to take measure of his contribution. His outlet of choice is the Against Malaria Foundation, considered one of the world’s most effective charities. It estimates that a $2,500 donation can save one life. A quantitative analyst at Trigg’s hedge fund can earn well more than $100,000 a year. By giving away half of a high finance salary, Trigg says, he can save many more lives than he could on an academic’s salary.
In another generation, giving something back might have more commonly led to a missionary stint digging wells in Kenya. This generation, perhaps more comfortable with data than labor, is leveraging its wealth for a better end. Instead of digging wells, it’s paying so that more wells are dug.
“A lot of people, they want to make a difference and end up in the Peace Corps and in the developing world without running water,” Trigg says, “and I can donate some of my time in the office and make more of a difference.”
Financial equality or wealth creation? What would you prefer our economic leaders optimize for? (TechCrunch):
There is an important role for the government to provide safety nets and job training, but indirectly blaming innovators isn’t a productive message.What is sometimes depressing is that I know there is not an insignificant number of people who believe we should optimize our societies for financial equality.
But, financial equality has never been, and will never be, a goal of the Internet economy. The goal is wealth creation. For those who can now access world-class professors and medical treatment anywhere in the world, Silicon Valley has lived up to its promise.
The results are impressive (Berkeley) and as interpreted by Matthew Yglesias (Slate via Chris Blattman):
The research comes from a 2008 initiative in Uganda’s very poor northern sections. The government announced plans to give roughly a year’s worth of average income (about $382) to young people aged 18-34. Youths applied for the grants in small groups (to simplify administration) and were asked to provide a statement about how they would invest the money in a trade. But the money was explicitly unconditional—parceled out as lump sums with no compliance monitoring. [...]Yglesias may be a bit overenthusiastic to conclude that "the message is that taking a huge bite out of global poverty may be easier than most people realize. Poor people just need more money." He/Blattman hypothesize that at least some of the poverty is as a result of the lack of access to "affordable" capital. There is however research that suggests that even "unaffordable" capital has significant long term benefits (WSJ).
The government selected 535 groups—a total of about 12,000 people—for the experiment. Of the 535 groups, about one-half were randomly selected to actually get the money, and the rest were denied. Blattman, Fiala, and Martinez then surveyed 2,675 youths from both the treatment and the control group before dispersal of money, two years after dispersal of money, and four years after dispersal of money. The results show that the one-off lump-sum transfer had substantial long-term benefits for those who got the cash. As promised, the people who received the cash “invest[ed] most of the grant in skills and business assets,” ending up “65 percent more likely to practice a skilled trade, mainly small-scale industry and services such as carpentry, metalworking, tailoring, or hairstyling.” Consequently, recipients of cash grants acquired much larger stocks of business capital and thus earn more money—a lot more money. Compared to the control group, the treatment group saw a 49 percent earnings boost after two years and a 41 percent boost after four.
I think it's fair to say that most people don't understand the physical size and scale of Africa (Isomorphismes via Beata/Chris Blattman)
Richard Epstein at Hoover (via Instapundit): "The IRS is embroiled in scandal but Congress is more concerned with the entirely legal tax transactions of a profitable American company."
On so many levels... From WSJ's China Blog:
“American Dreams in China,” a comedy about business partnership and success, is now the weekly champion of China’s box office, beating Hollywood blockbusters “Iron Man 3” and “The Croods.” While some among the Chinese audience are cheering for the entrepreneurial spirit the movie endorses, others say skeptically that it equates success with wealth and fame.
Particularly relevant given the recent tragedy in Bangladesh, ASI's latest takedown of the book 23 Things They Don't Tell You About Capitalism (Amazon) attacks the idea that it's capitalists who have claimed that the poor in developing countries "are not entrepreneurial":
Chang's claim is that we all get browbeaten into believing that poor countries are poor because the people there are not entrepreneurial. He does on to point out, quite rightly, that this is an absurd thing to believe. The poor everywhere are vastly more entrepreneurial than us bourgeois middle class types: they have to be in order to survive. This is as true of poor people in rich countries as it is in poor too. The ducking and diving that goes on to make a life on benefits more pleasant is entrepreneurialism in a raw form. All of which is why no one at all does go around claiming that the poverty of some countries is based upon a lack of that raw entrepreneurialism making that claim something of a strawman.
Chang is also quite right in pointing out that the reason why this greater extent of entrepreneurialism amongst the poverty stricken doesn't then go on to create great wealth is not because of some deficiency in the people themselves. Nor in their ability to do that ducking and diving. The lack is in the institutions in that society that allow the microbusiness to flower into the larger one. This is indeed quite true.
I don't think I've ever seen the rivalry explained so succinctly - though perhaps the most depressing part of this is that despite how the financial crisis was created in Washington through incentives structured badly, it's Wall Street got the blame (Slate via Instapundit):
“Isn’t this exciting?” Rep. Ed Markey enthused to me on Oct. 19, 1987 (“Black Monday”). A young congressional correspondent for Newsweek with nary a stock or bond to my name, even I was taken aback by Markey’s undisguised pleasure. When you stop and think about it, though, it makes perfect sense. Modern Washington owes its very existence to the 1929 crash, which occasioned a vast expansion of the federal government under President Franklin D. Roosevelt. A legacy of the increase in federal power during that era, largely undiminished during a 28-year electoral backlash against big government, is that Washington became Wall Street’s principal rival when it came to running the world. Which wielded more power—the financial markets or the government? Uncle Sam had the world’s largest military, but Wall Street had all that goddamned money. The mansions in Greenwich, Conn.; the trophy wives; the private jets—by comparison, the people who wielded power in Washington—including most presidents—were petits bourgeois. Even libertarian conservatives resent, on a personal level, the Wall Street swells whose interests they fight for daily. There aren’t a lot of millionaires working at the Cato Institute [...]
Let me put it in terms a smart financial journalist like Brauchli can readily understand. On Wall Street, financial crisis destroys jobs. Here in Washington, it creates them. The rest is just details.
Because of Apple's testimony before US Congress last week, it's been made a bit of a whipping boy for the tax planning those like Apple have done (Reuters). The argument can easily be made that it's not only in the best interest of Ireland to keep its taxes low, but that anyone who is interested in seeing economies like Ireland develop, should support them (ASI):
The reason is that thing called tax incidence. Companies don't pay corporation tax: it's some combination of the shareholders and the workers who do. This is not a point in argument: the only argument is about what the portions are, not the fact that the burden falls upon these two groups. We also know what it is that influences which group: it's how large the economy is in relation to the world economy and how open it is to capital movement. The smaller and more mobile, the more the workers get it in the neck.Update: The Tax Foundation 1 – New York Times 0 (Dan Mitchell)
The mechanism is simple enough. It's pretty much straight from Adam Smith in fact. There's an average rate of return to capital: a jurisdiction that taxes that return to capital will have a return lower than that global average. So, some domestic capital will flow out seeking the higher foreign returns, some foreign capital will not flow in for the lower domestic ones. There's thus less capital employed in the economy. Adding capital to labour is what drives up the productivity of labour: the average wages in a country are determined by the average productivity in that economy. So, tax companies, get less capital employed, wages are lower than they otherwise would be. The workers are bearing part of the burden.
As I say, the smaller the economy and the more open it is then the more of that burden is upon the workers. And in a wonderful result back in 1980 Joe Stiglitz showed that the burden upon the workers can actually be more than 100%. That is, the workers lose more in wages than the government gets in tax.
Well, yes (NPR) - interview with author Wenguang Huang, on NPR:
We try to point out the fact that the China model, which is development without democratic reforms, is not sustainable. Even the senior leaders in China right now, they start to recognize that. Look at this Bo Xilai scandal, because of this lack of transparency in the succession process. And then there is all kinds of political conspiracies, persecutions and murders. In order to get ahead, people have to do this. In other words, we feel like, if China does not introduce political reforms, and does not introduce open, fair elections in China, there will be more political earthquakes.
In the aftermath of the collapse at Rana Plaza in Bangladesh, where the death toll has now risen to 1129 (Business Standard), there have been many to scapegoat "unchecked capitalism" (Hopeforthesold). The reality is somewhat different (Reason) - in fact, the opposite:
Much as in Britain after the Enclosures, urban migration swells the ranks of workers, allowing employers to take advantage of them. Since Bangladesh does not have a free-market economy, starting a business is mired in regulatory red tape — and worse, such as “intellectual property” law — that benefit the elite while stifling the chance for poor individuals to find alternatives to factory work. (The owner of the Savar factory, Mohammed Sohel Rana, got rich in a system where, the Guardian writes, “politics and business are closely connected, corruption is rife, and the gap between rich and poor continues to grow.”) Moreover, until the factory collapse, garment workers could not organize without employer permission.What is even worse is that those like Hopeforthesold are seemingly advocating that Westerners turn their backs on Bangladesh substituting trade for unsustainable aid.
Crony capitalism deprives Bangladeshis of property rights, freedom of exchange, and therefore work options. The people need neither the corporatist status quo nor Western condescension. They need radical land reform and freed markets.
Apparently (TSP). Another hypothesis? Those who recognize that happiness is found within and take responsibility for their own happiness tend to also be wealthier:
Looking at comparisons among countries and within countries, [Betsey Stevenson and Justin Wolfers] find that when it comes to happiness, you can never be too rich.
Stevenson and Wolfers also find no “satiation point,” some amount where happiness levels off despite increases in income. They provide US data from a 2007 Gallup survey:
The data are pretty convincing. Even as you go from rich to very rich, the proportion of “very satisfied” keeps increasing. (Sample size in the stratosphere might be a problem: only 8 individuals reported annual incomes over $500,000;100% of them, though, were “very happy.”)
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.
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.
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.
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.”
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.
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.
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.
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.
