Promising cancer trial: Human trials show 75% success in curing Leukemia

Stunning... and hopeful for those who have known others with cancer (PhillyMag via HN):

June loved this approach. So elegant. Put the immune system on steroids. What if you could train the body to fight cancer on its own? What if, instead of replacing a patient’s immune system (as in a bone-marrow transplant) or pumping him full of poison (chemo), you could just borrow some cells, tweak them, and infuse them back into the patient? In theory, the engineered cells would stay alive in the blood, replenishing themselves, killing any tumors that recurred. It occurred to June that one infusion could last a lifetime.

He was also excited by the flexibility of engineered T cells. Normally, a drug for one kind of cancer couldn’t ever work on another kind; you had to start over from scratch. But here, since you were starting with a T cell and adding a limb, you only had to change the shape of the limb. You could snap a new piece on the end, like a LEGO, that fit into a molecule on the surface of a breast-cancer cell, or a pancreatic-cancer cell, or whatever kind of cancer you wanted to attack.

[...] Before the trial, 90 percent of Walt’s bone marrow cells had been cancerous. Now, doctors couldn’t find any trace of the disease, Porter said. They still had to do more tests. But Walt appeared to be in complete remission. Up to seven pounds of tumor, obliterated, gone.

More here:

Changing Demographics in the US (1900 through 2060)

Interesting graph highlighting how the US is getting older... with obvious policy, business and economic implications (SmallDeadAnimals via AEI):

Shale Gas as Rearden Metal

Telegraph via Instapundit

For my summer holidays I have been mostly reading Atlas Shrugged. Ayn Rand has her faults but, boy, was she prescient.

One of the things she foresaw was the current nonsensical, dishonest, canting campaign against shale gas. In Atlas Shrugged it takes the form of Rearden Metal, the miracle technology which is going to transform the US economy if only the progressives will let it. But of course, Rand’s fictional progressives don’t want Reardon Metal to succeed any more than their modern, real-life equivalents want shale gas to succeed.

Why not? For the same rag-bag of made-up, disingenuous reasons which progressives have used to justify their war on progress since time immemorial: it’s unfair, it uses up scarce resources, it might be dangerous. Rand doesn’t actually use the phrase “the precautionary principle.” But this is exactly what she is describing in the book when various vested interests – the corporatists in bed with big government, the politicised junk-scientists at the Institute of Science (aka, in our world, the National Academy of Sciences or the Royal Society), the unions – try to close down the nascent technology using the flimsiest of excuses.

Rolling Stone Notices Student Loan Bubble

While it's not exactly a new issue, it's surprising that Rolling Stone has noticed (via Instapundit): "The federal government has made it easier than ever to borrow money for higher education - saddling a generation with crushing debts and inflating a bubble that could bring down the economy." And more:

The thing is, none of it – not last month’s deal, not Obama’s 2010 reforms – mattered that much. No doubt, seeing rates double permanently would genuinely have sucked for many students, so it was nice to avoid that. And yes, it was theoretically beneficial when Obama took banks and middlemen out of the federal student-loan game. But the dirty secret of American higher education is that student-loan interest rates are almost irrelevant. It’s not the cost of the loan that’s the problem, it’s the principal – the appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008.

When the bubble does burst, it's not like those who are still promoting this kind of thing can claim ignorance anymore (Boston Globe).

Update (WSJ via Instapundit): "The amount of education loans outstanding has increased every quarter since the New York Fed began tracking the figure in 2003. They now account for almost 9% of all consumer debt, up from 3% a decade ago."

"Environmentalists" vs Science and the Poor

"Global scientific community condemns the recent destruction of field trials of Golden Rice in the Philippines" (Change.org via Instapundit)

Urbanization and De-urbanization: China and Detroit

Michael Pettis has a great post on China's emphasis on promoting urbanization providing a juxtaposition for the Economist's post on "the roots of metropolitan collapse" highlighting Detroit's failures. Pettis points out that urbanization follows need rather than the other way around:

If China is growing so quickly that it desperately needs to move people out of low-productivity jobs in the country and into high productivity jobs in the city, then urbanization is wealth enhancing for China. But urbanization itself does not make China richer. It only allows China to become richer if there is already desperate need for workers in the cities.

So as in the case of razing Chicago to the ground, urbanization itself will not cause growth. It will allow growth to happen if the conditions are already there for rapid growth, and if urbanization allows a transfer of labor from lower productivity jobs to higher productivity jobs. If China isn’t already growing quickly, however, forced urbanization will make it poorer, not richer.

The Economist also questions the utility of policy interventions to "turn around" cities like Detroit:

The much harder question is assessing what if any redevelopment strategy would be effective and would pass a reasonable cost-benefit analysis (the steps outlined above obviously wouldn't). There is a decent amount of evidence which suggests things that don't pass muster, and almost none pointing to things that clearly do (ex ante, at any rate, and taking into account opportunity costs).

In thinking about possible strategies in a general way, one runs into one really hard problem centred on the increasing returns dynamic that drives city growth in the first place. A person living and working in one city is a person not living and working in another. And so to the extent that successful creation of a cluster in one place draws workers away from a cluster elsewhere—reducing the scale, and thus the productivity, of the origin cluster—it's very hard to see how one is generating net benefits.

It's particularly instructive for city leaders everywhere that their ability to "invest" in projects that will never generate an economic return is limited.

Duck calls: A multi million dollar business

Who knew? A pretty amazing story of entrepreneurship and weird enough that they've based a show that's already on its fourth season on the family that founded the business (EOnline):

Duck calls, the product that made them millionaires, is still the Robertson family's true moneymaker. Last year, they sold 60,000 of their Duck Commander callers. This year, they are projected to sell over 750,000, and at an average price of $59.72 (they range from $19.95 to $179.95), they are set to make—wait for it—$44,790,000 on their duck calls in 2013!

Capitalism vs Poverty

From AEI (via Instapundit):

The Big Economic Story of our times has not been the Great Recession of 2007–2009, unpleasant though it was. … The Big Economic Story of our own times is that the Chinese in 1978 and then the Indians in 1991 adopted liberal ideas in the economy, and came to attribute a dignity and a liberty to the bourgeoisie formerly denied. And then China and India exploded in economic growth. … And contrary to the usual declarations of the economists since Adam Smith or Karl Marx, the Biggest Economic Story was not caused by trade or investment or exploitation. It was caused by ideas. The idea of bourgeois dignity and liberty led to a rise of real income per head in 2010 prices from about $3 a day in 1800 worldwide to over $100 in places that have accepted the Bourgeois Deal and its creative destruction.

What passes for reason from some journalists

I can't be the only one who sees a problem with this opening paragraph (Fortune):

When I first heard that Jeff Bezos, founder of Amazon.com, was a Libertarian, I laughed out loud, because I thought it was a joke. Bezos's company, after all, is based on the Internet, which was created during the Cold War by a military research-and-development arm of the federal government, the Advanced Research Project Agency. No ARPANET, no Internet. No Internet, no Amazon, no $25 billion personal fortune for Jeff Bezos.

Governments, Efficiency and Incentives

Freakonomics points to a few shining lights of government efficiency... but it kind of misses at least one of the elements of why markets almost consistently outperform government services and administrators... incentives.

Paying kids to go to school in Nepal?

Not sure how I feel about this... Have they misidentified the problem? Is it still a surprise that people respond to incentives - even kids? Wouldn't money be better spent developing better opportunities for their parents and these kids after they finish school? (Freakonomics):

Can efforts to promote education deter child labor? We report on the findings of a field experiment where a conditional transfer incentivized the schooling of children associated with carpet factories in Nepal. We find that schooling increases and child involvement in carpet weaving decreases when schooling is incentivized. As a simple static labor supply model would predict, we observe that treated children resort to their counterfactual level of school attendance and carpet weaving when schooling is no longer incentivized. From a child labor policy perspective, our findings imply that “You get what you pay for” when schooling incentives are used to combat hazardous child labor.

For reference, this is Nepal's "Doing Business" ranking (WorldBank)

High student debt burden kills entrepreneurship in the US?

The spillover effects of the higher ed bubble? (WSJ)

Some academic experts say leftover loans are the biggest impediment to upstart entrepreneurship by those who recently received college or graduate degrees. "I mentor students all the time," says Vivek Wadhwa, a fellow at Stanford University Law School. "The single largest inhibitor to entrepreneurship is the student loans."

Recent graduates and college dropouts account for a disproportionate share of the founders of technology startups that have transformed the economy over the past decade, says Shikhar Ghosh, a senior lecturer at Harvard Business School. Many freshly-minted M.B.A.s "are willing to sleep on a couch for a year or two, but they can't do it with the burden of student loans," he adds.

Note the irony that the high cost of higher ed in the US is significantly and directly related to the high amounts of subsidies to tuition and colleges (HoustonChronicle). High student debt is also being blamed for lower home and car ownership (Forbes).

Pawnbroker Niche: Luxury Handbags in Hong Kong

A market for everything... Definitely not cheap though "A customer gets her bag back by repaying the loan at 4% monthly interest within four months" - though perhaps comparable to microfinance? (WSJ)

Scientists develop glow-in-the-dark bunnies

There are no words... (Discovery via Instapundit):

Sin taxes: Tobacco, Alcohol, Fuel... and Software?

Maybe a better contender for the opposite of development in the US will be Massachusetts (WalterRussellMead via Instapundit), though California (theHill) and Connecticut can't be far behind. In their infinite wisdom this is a new tax on the books in Massachusetts - already on the books - which means the Massachusetts legislature voted to pass this (FastCompany):

If you buy or sell software or computer services that are used by anyone in Massachusetts, your life just got a lot harder. The State of Massachusetts has recently increased taxes on gas, cigarettes... and software. This tax applies to all “computer software, including pre-written upgrades, which is not designed and developed by the author.”

There won't be anything "unintended" about the consequences of this remarkable tax which only go to show the insatiable greed and stupidity of legislators in Massachusetts. More at HN.

Biggest travel mistakes

Courtesy of CNN. Mostly for recreational travel.

Newspaper editor blames Craigslist for giving consumers what they want

As a friend who is a lawyer has pointed out, 'you can never "steal" customers.' It's difficult to feel sympathy for Seattle Times' publisher who blames the newspaper industry woes on Craigslist.

It's too bad that Craigslist's founder Craig Newmark doesn't take at least some credit for giving consumers what they want instead of being held captive by their local newspapers. From Bizjournals:

Seattle Times publisher Frank Blethen blasted Craig Newmark, the founder of Craigslist, for negatively affecting the newspaper industry by disrupting newspapers' classified advertising, but Newmark says he's done nothing of the kind.

Trust. Not Greed

If you want to succeed in business, greed is optional. Trust isn't. More or less a paraphrase of Warren Buffett (via SwissMiss):

We only want to link up with people whom we like, admire, and trust. … We do not wish to join with managers who lack admirable qualities, no matter how attractive the prospects of their business. We’ve never succeeded in making a good deal with a bad person.

Free trade, Aid and Bono

ASI quotes Bono in what must be an astonishing turnabout or a complete misunderstanding of what 'free enterprise' is: "In dealing with poverty here and around the world, welfare and foreign aid are a Band-Aid. Free enterprise is a cure." Nevertheless, ASI takes him at his word and expands on what needs to be done (and counters some of the common arguments against trade and investment - read the whole thing):

Simply giving developing countries money often does not benefit them in the long term. Even in the short term the aid often fails to reach the people who need it; some of it might diverted to a corrupt government. And sometimes it might be a used to prop up dictatorial regimes.

Free enterprise is the cure because it can enable poor countries to generate wealth instead of depending on tiny transfers of it from richer countries. Developing nations become wealthy by enterprise and trade, not by aid, and inward investment is a potent way of assisting this with a range of spillover benefits. It boosts the business environment by assisting capital investment; around the world it accounts for about 15% of domestic capital formation.

Government, Innovation and Marianna Mazzucato

Though a rising star among statists for her ideas, Mazzucato's arguments get picked apart and found wanting by Tim Worstall at the ASI.

Breakthrough in malaria vaccine

This is fantastic news if the results hold (CNN via Instapundit):

More than three dozen volunteers received multiple, intravenous doses of a vaccine produced with a weakened form of the disease, scientists from the National Institutes of Health, the Navy, Army and other organizations reported Thursday.

Though the results were promising, more extensive field testing will be required, the researchers wrote. Nevertheless, the it marks the first time any vaccine trial has shown 100% success in protecting subjects from the mosquito-borne tropical disease, which sickens more than 200 million a year and killed about 660,000 in 2010.

On developing coding as a hobby

Advice from Fred Wilson:

My advice is to treat coding as a hobby like some people treat photography, painting or knitting

Make stuff and keep making stuff. You will get better, have fun, and, who knows, you might make the next Tumblr!

Why the sale of the Washington Post should be celebrated

There seems to have been a lot of hand wringing on Facebook over the sale of the WaPo. According to Freakonomics:

And that, economists say, is a good thing: passing on a company to an heir generally hurts a firm. As we also discuss in the podcast, one reason to keep a business in the family is that there is an absence of reliable markets, laws, and corporate-governance codes. That is one reason why you see such high rates of family ownership in other parts of the world, especially Asia and South America.

So if you get a little weepy as you see these great family institutions passing into the hands of strangers, you can at least comfort yourself with the knowledge that our economy and political structure are relatively robust. Personally, I can’t wait to see what Bezos does with the Post. Is he the best person alive to run it? Who knows. But thinking that the best person to run any company is someone who just happens to share DNA with the company’s founder is, to my mind, a much worse bet.

The problem with diffusing the families in community housing... and unintended consequences?

Though the unintended consequence may be more accurately described as the failed policies of community housing. I find the idea of community housing puzzling. Dumping the poor in poorly maintained city owned housing where they have no roots or ownership closer to downtown city locations in hopes this gives them access to better jobs seems like an exercise in lunacy.

The US created "Section8" vouchers to give families the opportunity to move out of these ghettos. The problem, however, is that it has resulted in diffusing/exporting the effects of prolonged dependence and the related crime into other neighborhoods (theAtlantic):

Studies show that recipients of Section8 vouchers have tended to choose moderately poor neighborhoods that were already on the decline, not low-poverty neighborhoods. One recent study publicized by HUD warned that policy makers should lower their expectations, because voucher recipients seemed not to be spreading out, as they had hoped, but clustering together. Galster theorizes that every neighborhood has its tipping point—a threshold well below a 40 percent poverty rate—beyond which crime explodes and other severe social problems set in. Pushing a greater number of neighborhoods past that tipping point is likely to produce more total crime. In 2003, the Brookings Institution published a list of the 15 cities where the number of high-poverty neighborhoods had declined the most. In recent years, most of those cities have also shown up as among the most violent in the U.S., according to FBI data.

I don't think anyone is suggesting however that ghettos are the better alternative. The article from 2008 in the Atlantic points to social support to help families adapt - and in many cases they do. That limited intervention seems a small price to pay for the cycle of "support" that has created the culture of despair in the first place (and this isn't to say that governments are in the best position for reintegration - perhaps a good opportunity to use social bonds?)

American generosity makes UN's 0.7% GNP targets look miserly

Not exactly a surprise - though it's a reminder (UN) that generosity in other countries often gets outsourced using taxpayer funds (IBD via SmallDeadAnimals):

The total of Americans' voluntary social spending reached 10.2% of GDP in 2009, the latest year for which numbers are available.

The only country that is remotely close in its generosity is the Netherlands, where the total was 6% of the nation's economy. Only two other nations, Canada and the United Kingdom, exceeded 5%. The U.K. totaled 5.3% of GDP, Canada 5.1%. The rest hardly even register on the chart. The French totaled a mere 2.8%, the Germans 2%. Greece, Italy, Norway and Spain all failed to break the 2% mark.

The solution to poor pay? Spend more government money...

Because apparently it grows on trees. This seems to be a prevailing view of many, even financial journalists and it's entirely befuddling. James Surowiecki of the New Yorker quotes the left wing think tank Center for Budget and Policy Priorities in stating "The best friend that low-wage workers have is a strong economy and a tight job market."

While this may be true, he also argues that to do so, "a higher minimum wage can be only part of the solution. We also need to expand the earned-income tax credit, and strengthen the social-insurance system, including child care and health care [...] A recent McKinsey report suggested that the government should invest almost a trillion dollars over the next five years in repairing and upgrading the national infrastructure, which seems like a good place to start."

Surowiecki begins by pointing to the largely ignored minimum wage protests (well, at least ignored by everyone except for a few journalists) from fast food workers claiming that the demographics of those who are employed in entry level positions has changed. Everyone who is quoted in the articles I looked at covering the limited walkouts however seems to fit the bill. Further he makes the claim:

More important, more of them are relying on their paychecks not for pin money or to pay for Friday-night dates but, rather, to support families. Forty years ago, there was no expectation that fast-food or discount-retail jobs would provide a living wage, because these were not jobs that, in the main, adult heads of household did. Today, low-wage workers provide forty-six per cent of their family’s income. It is that change which is driving the demand for higher pay.

Apparently facts aren't necessary anymore to support claims in journalism because there's no citation or reference - and it's a fact that if not true, it only goes to highlight the ridiculousness of the massive interventions he argues for. In fact, the evidence suggests that while the rich may indeed be getting richer, the poor have as well, albeit at a slower rate - but that purchasing power has increased substantially thanks to the gains in technology. For context: See here


It's too bad journalists almost consistently argue for tired old solutions that only compound problems. In a limited sense - and in the short run, their solutions "work" until the debt collectors come a knocking. Perhaps an even greater irony is that Surowiecki is the author of The Wisdom of Crowds. He should know better.

Update: TheEconomist points out another flaw in Mr. Surowiecki's argument.

Breathtaking, symbolic and yet, somewhat fitting...

Update: This story was false and too fitting to be true apparently and the result of a translation error by Gizmodo (barcepundit):

Builders of a landmark Spanish skyscraper "forgot" to include an elevator (Gizmodo):

The Intempo skyscraper in Benidorm, Spain—standing proud in this image—was designed to be a striking symbol of hope and prosperity, to signal to the rest of the world that the city was escaping the financial crisis. Sadly, the builders forgot to include a working elevator.

Creative Destruction and Technology

Andy Kessler at the WSJ makes the argument that the emerging technologies of fracking, 3D printing, gene therapy, blood markers, crowd funding, and robots will end up creating far more jobs than they destroy.

I'm pretty optimistic but I'm not sure I necessarily buy the argument that technology will always create more jobs than it destroys - but I'm pretty certain the jobs they do create will be higher paying, requiring more creative capacity than ever before. Read the whole thing:

The road to wealth does indeed pass through the graveyard of today's jobs. But history shows that better, higher paying jobs are always created by technology—even if no one seems to remember this during periods of creative destruction.

The trick is to lower the cost of new machines and inventions that can do things never before possible, making them available for wide use.

The Economics of Science: Should science be publicly funded?

Cato makes the case that not only does science not need to be publicly funded, but it shouldn't be, and forcefully also takes on the arguments over the funding of pure science (Cato):

The world’s leading nation during the 20th century was the United States, and it too was laissez faire, particularly in science. As late as 1940, fifty years after its GDP per capita had overtaken the UK’s, the U.S. total annual budget for research and development (R&D) was $346 million, of which no less than $265 million was privately funded (including $31 million for university or foundation science). Of the federal and states governments’ R&D budgets, moreover, over $29 million was for agriculture (to address—remember—the United States’ chronic problem of agricultural over productivity) and $26 million was for defence (which is of trivial economic benefit.) America, therefore, produced its industrial leadership, as well as its Edisons, Wrights, Bells, and Teslas, under research laissez faire.

Meanwhile the governments in France and Germany poured money into R&D, and though they produced good science, during the 19th century their economies failed even to converge on the UK’s, let alone overtake it as did the US’s. For the 19th and first half of the 20th centuries, the empirical evidence is clear: the industrial nations whose governments invested least in science did best economically—and they didn’t do so badly in science either.

[...] as scholars from the University of Sussex have shown, some 7 per cent of all industrial R&D worldwide is spent on pure science. This is also why big companies achieve the publication rates of medium-sized universities. Equally, Edwin Mansfield and Zvi Griliches of Harvard have shown by comprehensive surveys that the more that companies invest in pure science, the greater are their profits. If a company fails to invest in pure research, then it will fail to invest in pure researchers—yet it is those researchers who are best qualified to survey the field and to import new knowledge into the company.

Reputation Institute: Canada's #1!

I'm a bit late reporting this (forgot to dump my tabs off my iPad) but this may allay some of the fears over our Conservative government (DigitalJournal):

The Reputation Institute has released its 2013 list of 50 countries ranked according to what the firm claims is the trust, admiration and respect outsiders have for the countries.

Canada topped the list for the third year in a row, with Sweden and Switzerland coming second and third respectively.

Startup Cities?

An interesting overview of what's happening in Honduras but also other experiments in governance (Reason):

A Brief History of American Infrastructure

WSJ (via Instapundit): "Entrepreneurs built our roads, rails and canals far better than government did." Read it all.

What academic fields contribute most to economic growth?

I imagine that subsidies bias students skew incentives towards fields that don't generate as much economic growth - and despite its issues, an interesting study (Economiclogic via Adamsmith):

Cristiano Antonelli and Claudio Fassio decided to open this Pandora box and concentrate on one impact: economic growth. They perform a cross-country study and take the number of graduates in each field as an indicator of academic output, and see where that leads us in terms of economic achievement. They make the distinction between engineering, hard, social, medical sciences, and humanities in a 11-year panel of 16 OECD countries. The horse race ends with two clear winners, engineering and social sciences, and two big losers, medical sciences and humanities, the latter having a significant negative contribution to growth.

That said, should we believe those results? Beyond the obvious issue with panel cross-country regressions, the problem is that we are still comparing apples to oranges. In some countries, medical studies are at the graduate level only, while it is undergraduate elsewhere. There are also stark difference for Economics as well. In the US, many students graduate in that field and have actually only two years of classes in this major, having to take general education classes first for two years. In Europe, Economics students spend their whole four years on the topic. And the same applies to other fields. Thus counting students, and especially if you want to make the claim they are specialized in a particular field, is rather heroic. I would not yet claim social sciences have won this battle.

What's the opposite of development?

Connecticut? (Forbes)

ChinaLawBlog: The best opportunities in China

For those who are interested in doing business in China, ChinaLawBlog highlights what they think are the top 5 - they seem about right: Education, Healthcare, Food, Clean-tech/green-tech, and Software. Read the whole thing.

The whole world is getting richer

And that's awesome (BusinessWeek via Freakonomics): "These numbers suggest something surprising: a world of ubiquitously increasing wealth, where predictions of Malthusian traps and permanent poverty look increasingly archaic."

Korea's Market for Private Education

The scale of Korea's education market is mind blowing: "Nearly three of every four South Korean kids participate in the private market. In 2012, their parents spent more than $17 billion on these services. That is more than the $15 billion spent by Americans on videogames that year, according to the NPD Group, a research firm."

Great teachers build brands and the WSJ article highlights one teacher who employs 30 people and manages to make more than $4 million (USD) a year. Interestingly it points to private market solutions to our public education system dilemma - but it's also one that highlights how bad Koreans think their public education system is (WSJ):

But are students actually learning more in hagwons? That is a surprisingly hard question to answer. World-wide, the research is mixed, suggesting that the quality of after-school lessons matters more than the quantity. And price is at least loosely related to quality, which is precisely the problem. The most affluent kids can afford one-on-one tutoring with the most popular instructors, while others attend inferior hagwons with huge class sizes and less reliable instruction—or after-hours sessions offered free by their public schools. Eight out of 10 South Korean parents say they feel financial pressure from hagwon tuition costs. Still, most keep paying the fees, convinced that the more they pay, the more their children will learn.

For decades, the South Korean government has been trying to tame the country's private-education market. Politicians have imposed curfews and all manner of regulations on hagwons, even going so far as to ban them altogether during the 1980s, when the country was under military rule. Each time the hagwons have come back stronger.

"The only solution is to improve public education," says Mr. Kim, the millionaire teacher, echoing what the country's education minister and dozens of other Korean educators told me. If parents trusted the system, the theory goes, they wouldn't resort to paying high fees for extra tutoring.

To create such trust, Mr. Kim suggests paying public-school teachers significantly more money according to their performance—as hagwons do. Then the profession could attract the most skilled, accomplished candidates, and parents would know that the best teachers were the ones in their children's schools—not in the strip mall down the street.

Schools can also build trust by aggressively communicating with parents and students, the way businesses already do to great effect in the U.S. They could routinely survey students about their teachers—in ways designed to help teachers improve and not simply to demoralize them. Principals could make their results far more transparent, as hagwons do, and demand more rigorous work from students and parents at home in exchange. And teacher-training programs could become far more selective and serious, as they are in every high-performing education system in the world—injecting trust and prestige into the profession before a teacher even enters the classroom.

Your Help Is Hurting: How Church Foreign Aid Programs Make Things Worse

Though to be fair, it's not a problem that's anywhere near restricted to Church based foreign aid programs (Forbes via Instapundit):

Within the nonprofit space, we’ve created a system where he/she who tells the best story is the one that’s rewarded. There’s an incentive to push down the stories that are not of positive impact. There’s the incentive to pretend that there are no negative things that happen, there’s the incentive to make sure that our failures are never made public, and there’s the disconnected between who’s paying for the service and who’s receiving the services. When you disconnect those two aspects, you do not have accountability that acts in the best interest of the people who are receiving what we are all trying to do, which is just to help in places of great need.

What's a bit sad is how long it takes for some people to come to this realization. Read the whole thing.

Estonia's Rise as a Technology Leader

Their experience would seem instructive. While there was undoubtedly a bit of luck involved (in being where Skype was founded), their politicians also radically reshaped government that allowed for Skype and other tech firms to flourish - read the whole thing (Economist):

When Estonia regained its independence in 1991, after the collapse of the Soviet Union, less than half its population had a telephone line and its only independent link to the outside world was a Finnish mobile phone concealed in the foreign minister's garden. Two decades later, it is a world leader in technology. Estonian geeks developed the code behind Skype, Hotmail and Kazaa (an early file-sharing network). In 2007 it became the first country to allow online voting in a general election. It has among the world’s zippiest broadband speeds and holds the record for start-ups per person. Its 1.3m citizens pay for parking spaces with their mobile phones and have their health records stored in the digital cloud. Filing an annual tax return online, as 95% of Estonians do, takes about five minutes. How did the smallest Baltic state develop such a strong tech culture?

Toyota gives efficiency instead of money to New York food banks

A reminder that the strengths companies have are ones that can be shared with other organizations - and are sometimes worth a lot more than cash. In this way, it also gives employees an opportunity to hone their craft creatively. From the NYT (via HN): "In Lieu of Money, Toyota Donates Efficiency to New York Charity":

At a soup kitchen in Harlem, Toyota’s engineers cut down the wait time for dinner to 18 minutes from as long as 90. At a food pantry on Staten Island, they reduced the time people spent filling their bags to 6 minutes from 11. And at a warehouse in Bushwick, Brooklyn, where volunteers were packing boxes of supplies for victims of Hurricane Sandy, a dose of kaizen cut the time it took to pack one box to 11 seconds from 3 minutes.

Toyota has “revolutionized the way we serve our community,” said Margarette Purvis, the chief executive and president of the Food Bank.

"M.B.A. Admission Tip: Always Go for an Easy 'A'"

Kind of depressing for anyone who believes in the idea of merit (WSJ):

In one experiment, 23 admissions officers evaluated nine fictional business-school applicants from schools identified as being of similar quality but with different grading standards. Even after acknowledging that other students worked harder to earn their high marks, the reviewers still admitted students with inflated grades at a higher rate. [...]

Another study considered more than 30,000 recent applicants to elite business schools, and again found that those from more lenient undergraduate institutions—determined by measuring average GPAs at those schools—had a better shot at acceptance than did those who attended more rigorous schools.

Though it does suggest a solution, which apparently applies as much to business as it does for admissions offices: "Sam Swift, a postdoctoral fellow at Haas and the lead researcher, says the solution is to bar decision makers from ever seeing the raw scores and only present to them relative performance data."

School Vouchers: What mattered to Milton Friedman most

From English MEP Daniel Hannan (Telegraph):

Friedman did not limit himself to academic theories; he had a keen sense of how to translate ideas into action. He understood politics very well, and used to say that his aim was not to get the right people elected, but to create a climate where even the wrong people would do the right thing. Every year I spend in politics I find that insight more brilliant.

What mattered to him most of all? Oddly enough, it was nothing to do with monetary policy, or indeed with economics at all. He believed that the single measure that would do most to ameliorate society was school vouchers. He had first suggested the idea as early as 1955 – in an intellectual climate so unfriendly that he might as well have been proposing that children be cooked and eaten. But the climate shifted, not least through Friedman’s own interventions and, by the end of his life, a few places were prepared to give his idea a go. Chile had led the way in the 1980s, followed by Sweden in the early 1990s. Milwaukee became the first city in the US to adopt vouchers 23 years ago, and around a quarter of a million American pupils are now benefiting. The idea has been taken up by Pakistan and India, bringing many thousands of children who previously had no schooling at all into the system. Though Britain has stopped short of full-blown vouchers, Michael Gove has plainly embraced the idea that governments can fund schools without running them, and the free schools programme is one of the greatest of the Coalition’s achievements.

On NYC's housing policies: Replacing one set of bad government policies with another

From Megan McArdle via Instapundit - clearly, China does not have a monopoly on bad ideas:

I think the experience of New York is instructive. It suggests that if we shifted away from the current high rates of homeownership, we might lose some of the skewed political incentives to artificially restrict the supply of housing . . . but only by replacing them with different, equally troubling incentives. . . . You used to hear that rent controls were a stupid vestige of the past, slowly but surely being phased out. But the city keeps stepping in to slow down the pace of decontrol. And no wonder, if renters are a majority of the city, and the majority of renters are in some sort of controlled or subsidized housing. Meanwhile, you don’t even get the benefits that should accrue to a high-renter city — like fewer ridiculous zoning restrictions — because rent control regulations have given tenants property-like interests in their apartments.

China's Banking Sector

China's financial services sector is artificially supported - I doubt there's anyone out there who doesn't believe this. The open question is whether or not this can be managed (Megan McArdle via Instapundit):

Banks are controlled by the government, with interest rates for both deposits and loans set by fiat. The government also feels free to tell banks how much to lend, and to mandate that they buy government bonds at particular prices. When I went to China in 2010, one of the bankers there told us that a huge chunk of their Tier One capital consisted of special government bonds that couldn’t be sold and paid about 5 percent interest — at a time when inflation was, according to most of the experts I talked to, well above that.

In a Western banking system, you’d expect this to lead to a crisis. But what would that even mean in China? Its currency isn’t convertible, and financial links to the outside world are tenuous. Maybe the government can just keep ordering banks to keep making loans at low interest rates, and declare by fiat that the loans are performing. That seems like a crazy thing to say, but it’s also hard to describe how a crisis would happen.

Adds Glenn Reynolds: "Everybody hates the bust, but the real harm is done in the boom, with capital being diverted to things that don’t make sense, because the boom’s distortions make them seem to make sense."

The secret to productivity? Focus

Something that's drilled into you if you're follower of GTD, but something apparently one Harvard Economist has discovered (GTDTimes):

But time isn’t the problem, says Harvard economist Sendhil Mullainathan. The ultimate barrier to success is a shortage of mental “bandwidth,” or the ability to focus on a task in the moment. A lack of time isn’t the issue; a lack of focus is.

Hacks to Happiness

Based on studies - Buy experiences, not possessions; Focus; and Give (Lifehacker).

More in China's debt

A big part of the problem is the lack of transparency - but that's hardly an issue that's isolated to China's debt (WSJ) - and by way of reference, Canada's net Debt to GDP ratio hovers somewhere around 35% while the US hovers around 107% and climbing:

The sustainable way to deliver economic growth

Freedom, not regulation. Read the whole thing (Reason):

President Obama is again turning his attention to the elusive economic recovery. His “pivot” will be for naught, however, as long as he continues to ignore two important points: first, government is a major squanderer of scarce resources, and second, its regulations are impediments to saving and investment.[...]

The market test assures that bad trade-offs are avoided, or at least quickly corrected if they are made. If steel is being used to make one product when consumers are demanding something else, the competitive entrepreneurial process sees to it that steel will be redirected.

No corresponding process exists in the political realm. It contains no incentives to look out for the consumers’ welfare. Instead, we have political theater and value destruction.

UBS: How much money makes you wealthy?

Not surprisingly, "wealth" is relative to the economic freedom it buys (Bizjournal):

How much money makes you wealthy? In a recent survey, investors told UBS $5 million.

Most of them said, however, that the amount isn’t as important as the freedom of no financial constraints on what they do. A large cash reserve helps.

Thirty-one percent of millionaires surveyed said they don’t consider themselves wealthy.

Early birds happier but less productive, intelligent and wealthy than night owls?

That's what some research suggests (Independent, HuffingtonPost). I tend to be a night owl but I fight those impulses somewhat successfully since starting CrossFit at 515am.

Labor unions, technology and Silicon Valley

TechCrunch makes the argument that what makes unions and Silicon Valley incompatible to dislike technology is not only the fear that technology will replace them but it will affect their jobs. Of course, I'd observe that job "protection" only makes them less sustainable and those being "protected" subject to greater loss when that protection finally goes away.

These attitudes help to explain why unions have lost so much ground over the past several decades.

Profits and healthcare: Heart Surgery in India for $1,583 Costs $106,385 in U.S.

This is pretty exciting. The money quote (Bloomberg via HN):

Shetty is not a public health official motivated by charity. He’s a heart surgeon turned businessman who has started a chain of 21 medical centers around India. By trimming costs with such measures as buying cheaper scrubs and spurning air-conditioning, he has cut the price of artery-clearing coronary bypass surgery to 95,000 rupees ($1,583), half of what it was 20 years ago, and wants to get the price down to $800 within a decade. The same procedure costs $106,385 at Ohio’s Cleveland Clinic, according to data from the U.S. Centers for Medicare & Medicaid Services.

“It shows that costs can be substantially contained,” said Srinath Reddy, president of the Geneva-based World Heart Federation, of Shetty’s approach. “It’s possible to deliver very high quality cardiac care at a relatively low cost.”

Medical experts like Reddy are watching closely, eager to see if Shetty’s driven cost-cutting can point the way for hospitals to boost revenue on a wider scale by making life-saving heart operations more accessible to potentially millions of people in India and other developing countries.

“The current price of everything that you see in health care is predominantly opportunistic pricing and the outcome of inefficiency,” Shetty, 60, said in an interview in his office in Bangalore, where he started his chain of hospitals, with the opening of his flagship center, Narayana Hrudayalaya Health City, in 2001.

Bankrupt Detroit moves ahead with stadium

Highlighting and proving yet more useful future examples of how not to do economic development (WalterRussellMead). The evidence that publicly funded stadiums are a bad idea (Reason), is pretty universal (theAtlantic). And yet, they do so anyway. That they are moving ahead in already bankrupt Detroit on a half a billion dollar stadium, makes me think that Reason is right - Detroit won't get a chance at a second act.

What Capitalism Isn't: Imperialism

Contrary to the views of some, the basic underlying principles of imperialism and capitalism are contradictory and unable to co-exist:

Cause for techno-optimism?

Are we in an "innovation drought"? No, argues economic historian Joel Mokyr of Northwestern University:

Part of the answer is that new types of work will emerge that we cannot foresee. A hundred years ago, people were wondering what would happen to the workers who would no longer be able to find work farming. Nobody at the time would have been able to imagine the jobs of today, such as video game programmer or transportation security employee.

But if the bulk of unpleasant, boring, unhealthy and dangerous work can be done by machines, most people will only work if they want to. In the past, that kind of leisurely life was confined largely to those born into wealth, such as aristocrats. Not all of them lived boring and vapid lives. Some of them wrote novels and music; many others read the novels and listened to the music. Some even were engaged in scientific research, such as the great Robert Boyle (one of the richest men in 17th century England), and a century later, Henry Cavendish, the English chemist and physicist who identified hydrogen gas.

Aristocratic life in the past depended on servants, and the servants of the future may be robots -- but so what? More worrisome, the aristocratic life depended on a flow of income from usually hard-working and impoverished farmers paying rich landowners. The economic organization and distribution in a future leisure society may need a radical re-thinking. As John Maynard Keynes wrote in 1931 in his "Economic Possibilities for our Grandchildren," "With a little more experience we shall use the new-found bounty of nature quite differently from the way in which the rich use it today, and will map out for ourselves a plan of life quite otherwise than theirs."

PSA: Coffee dramatically reduces suicide risk?

Not that I plan on starting to drink coffee anytime soon... but does Tiramisu count? (Harvard Gazette via Instapundit)

Drinking several cups of coffee daily appears to reduce the risk of suicide in men and women by about 50 percent, according to a new study by researchers at the Harvard School of Public Health (HSPH). The study was published online July 2 in The World Journal of Biological Psychiatry.

Wherein Warren Buffett's Son Misunderstands the Difference Between Inequality and Poverty

Not sure where to begin in dissecting this opinion piece in the NYT. First, it confuses poverty and inequality:

Because of who my father is, I’ve been able to occupy some seats I never expected to sit in. Inside any important philanthropy meeting, you witness heads of state meeting with investment managers and corporate leaders. All are searching for answers with their right hand to problems that others in the room have created with their left. [...] But this just keeps the existing structure of inequality in place. The rich sleep better at night, while others get just enough to keep the pot from boiling over.

Second, he creates a straw man rejecting ideas of accountability and financial sustainability:

And with more business-minded folks getting into the act, business principles are trumpeted as an important element to add to the philanthropic sector. I now hear people ask, “what’s the R.O.I.?” when it comes to alleviating human suffering, as if return on investment were the only measure of success. Microlending and financial literacy (now I’m going to upset people who are wonderful folks and a few dear friends) — what is this really about? People will certainly learn how to integrate into our system of debt and repayment with interest. People will rise above making $2 a day to enter our world of goods and services so they can buy more. But doesn’t all this just feed the beast?

And finally, I'll highlight is his fuzzy approach to "poverty" and his lack of context:

Nearly every time someone feels better by doing good, on the other side of the world (or street), someone else is further locked into a system that will not allow the true flourishing of his or her nature or the opportunity to live a joyful and fulfilled life. [...] I’m really not calling for an end to capitalism; I’m calling for humanism.

Are the poor on the other side of the world really the same is those across the street? Compare the "poor" in the west who are far more likely to suffer from morbid obesity to those who suffer under oppressive regimes who face starvation - how similar are they? Compare the poor in the west today - often with cellphones, microwaves, access to much greater varieties of food and products from around the world and other conveniences of modernity, to those decades earlier against the metric of "true flourishing of his or her nature or the opportunity to live a joyful and fulfilled life." Have things really gotten worse? Are the problems facing the poor really the same? Heck, even compare the opportunities to entrepreneurs today over decades earlier - has it really gotten worse?

But he does make one useful observation: charities are growing rapidly. While they are growing faster than government and business, they lack accountability and transparency:

According to the Urban Institute, the nonprofit sector has been steadily growing. Between 2001 and 2011, the number of nonprofits increased 25 percent. Their growth rate now exceeds that of both the business and government sectors. It’s a massive business, with approximately $316 billion given away in 2012 in the United States alone and more than 9.4 million employed.

China's Detroit?

A reminder that the sometimes hysterical fears (or even perverse admiration for their central planning) some people have of China's rapid ascent are not based on reality. China has many massive hurdles to overcome on its way to becoming a superpower (ABS-CBN):

Many of the province's mainstay industries, including shipbuilding and the manufacturer of solar panels, are drowning in overcapacity. Profits are dwindling, and the government's tax growth is braking hard.

That leaves Jiangsu vulnerable as President Xi Jinping and Premier Li Keqiang slow the country's giant economy to push through reforms aimed at reducing its reliance on the massive investment that made the country the factory to the world in favour of more services- and consumption-led growth.

As part of that, Beijing has ordered a clamp down on provincial government borrowing and land sales, the mainstay income for many local administrations. But equally, Beijing expects local governments to absorb much of the cost of downsizing many industries, leaving provinces like Jiangsu caught between a rock and a hard place.

Standard Chartered, Fitch and Credit Suisse have estimated local government debt in China at the equivalent of anywhere between 15 percent and 36 percent of the country's output, or as much as $3 trillion based on World Bank GDP figures for 2012.

A bit of a caveat on the pursuit of growth...

While the upside is that markets have become increasingly larger, Fred Wilson (AVC) notes the downside to rubbing up against the limits of growth:

Of course, you can come up with new lines of business, new hit products, or make acquisitions to keep on the growth treadmill. But recognize that is what you are on. You can and will become a slave to it.

Startups and their rich uncle pennybags (VCs) are particular slaves to this drug. We build and finance companies that are designed to grow and grow and grow. That's how we create wealth, jobs, and impact. It's a fantastic ride that I cannot get off. But these rides do slow down and even end sometimes. And that's a bitch.

TerraPower's search for better nuclear power

Fracking, I think, is only the bridge technology to something cheaper and even cleaner... Updates on TerraPower (Weinberg Foundation via HN)

TerraPower’s interest in alternatives such as molten salt reactors (MSRs) came to light last month when the company’s director of innovation, Jeff Latkowski, surfaced in the audience at the Thorium Energy Alliance Conference in Chicago. The two-day gathering included presentations on thorium fuel and on reactors including molten salt reactors, high temperature solid fuel reactors, accelerator driven reactors, and others.

Latkowski quietly joined the five-year-old Bellevue, Wash., company a year ago to look after alternative approaches to nuclear. “My job at TerraPower is everything outside the Traveling Wave Reactor,” Latkowski told me in an email exchange after the Chicago event.

Travel Tip: 3 Images to Save to the Cloud Before You Start Travelling

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.

Develop crowd competitions that work

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

The problem with economic development in Africa isn't with its entrepreneurs

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.

Focusing on Quality over Quantity? Maybe you shouldn't

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:

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.

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.

How adding iodine to salt resulted in a decade's worth of IQ gains for the US

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.

Why Tax Code Simplification Matters

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.

Ryan Carson, Founder of TeamTreehouse: Tips for Founders

Including productivity tips for everyone. Much recommended.(RyanCarson)

Study: Extroverts are happier, Introverts should act like Extroverts to feel happier?

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.

37Signals: Bootstrapped, Profitable and Proud

An awesome series from 37Signals (via HN).

CrossFit Founder Greg Glasman: "I'm a rabid libertarian"

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:

How to Raise an Entrepreneur

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.

Highly effective tips of highly ineffective people

Heh. But it makes sense. (Lifehacker)

Bad News: The middle class has be disappearing in the US

Good news: they're becoming upper-income earners (Mark Perry via Greg Mankiw):

What they didn't tell us about the Bhopal/Union Carbide disaster

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…

For Better Decisions...

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.

The Art of the Humorous Amazon Review

Heh. These are fantastic from one of my favorite retailers (Brainpickings).

Thai Politicians Learn Markets Anticipate

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.

Milton Friedman Makes the Case for the "Negative Income Tax"

via HN:

"How Do Real Prisoners Play Prisoner’s Dilemma?"

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.

Cheaper, lower energy way to desalinate water one nanoliter at a time

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.

Avoiding the Romanticizing Traditional Medicine

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.

Germany's Solar Industry is Imploding

Dog bites man: Massive subsidies to industry prove unsustainable. (Forbes via HN)

Shale Gas is even Green!

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.

Is financial over-regulation increasing rents in the Bay area?

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.

Elections are not democracy

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.

Designing markets that work

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.

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.

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.

Making it easier to fire people means more people get hired

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.

Research: People with a lot of Self-Control are Happier

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.

Finding your Passion

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.

The Club of Rome is still wrong

Bjorn Lomborg in the Slate:

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.

HBR: Entrepreneurs get better with age

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.

The real threat to jobs isn't China

"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.

For those who fear China's ambitions in Africa

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.

"Which Came First: The University, Or The Economy?"

DDNews via Instapundit:

Affordable higher education follows innovating economies, and doesn’t create them.

Pretty good advice on money

Courtesy of Seth Godin.