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

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

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

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

Companies that are doing particularly cool things...

From Wired.com.

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

Promising development to watch (Reuters via Instapundit):

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

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

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

Milton Friedman: Economics is about production not money

Social Impact Bonds

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

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

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

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

More here (PBS)

What were they thinking?

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

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

Changing the world one prize at a time

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

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

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

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

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

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

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

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

Poverty doesn't cause terrorism

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

Minimum wage hurts the poorest

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

Stop visualizing success...

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

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

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

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

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

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

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

Dale Carnegie vs Ayn Rand

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

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

Is that a rhetorical question?

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

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

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

Hans Rosling: "River of Myths"

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

Making "sustainable food" actually sustainable

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

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

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

The deadly opposition to genetically modified food

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

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

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

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

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

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

On Immigrants

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

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

A reminder that education spending doesn't drive growth

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

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

It's a catalyst.

Henry Ford on Reputation

Henry Ford via Swissmiss:

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

Too bad politicians can't be jailed for malpractice

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

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

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

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