(Cynical) Quote of the Day

Mark Twain (via Classical Values):

If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man.

HDR Photography

For a bit of a rant break, I've recently discovered HDR photography stumbling across Stuck in Customs. HDR is basically a way to use digital photography to make colors pop in an image by combining a series of photos taken in rapid succession at various settings (called "bracketing" as I'm learning) - and Trey Ratcliff has some fantastic shots.

Lately I've been thinking I should find a somewhat different hobby. My biggest problem is that I can't commit to being in any one place for any long period of time so photography could work... except for the part where I'm pretty clumsy, have no hand eye coordination and already pack more than a pack mule can handle when I travel. Here's a sampling:

More on Trade's Shifting Winds

Robert Driskill, an economics professor at Vanderbilt University asks "why do economists make such dismal arguments about trade?" in Foreign Policy arguing:

Any time a change in economic circumstances creates both winners and losers, the judgment of whether such change was good or bad for the group as a whole is problematic. It becomes a matter of moral philosophy, not number crunching. Economists, as a result of their training, have no more claim to know what is “good for the country” than Joe Sixpack. It’s really that simple.

No, I don't think it is. Greg Mankiw is skeptical (rightfully I think). The Economist also weighs in pointing out the additional relationships between technology and commerce. I don't buy Driskill's view that when economists describe the macro effects of trade they in effect are making a moral proclamation when they point out that there is a net gain in wealth. Further, I think the unease relative to trade is not so much about trade itself but that constant fear of change. Trade becomes an easy bogeyman that politicians can point fingers to of why companies are unable to compete and why they close when it's also empirically easy to point to the plethora of evidence of rising incomes and greater purchasing powers as a result of that same trade - particularly for the most vulnerable.

Sichuan's Political Earthquake

I've been abroad and away from China during the earthquake in Sichuan so I've felt fairly removed from the situation. This has felt particularly true given that the quake happened so soon after Myanmar's devastating cyclone which seems to have taken significantly more lives, though the death tolls of each disaster are still climbing. In context, this recent disaster is far from the worst in China's history, though it has been one of the worst since China's market reforms in the 1980s and has almost certainly been the most publicized.

What is different this time around, is state media's focus and coverage of the event and its openness in allowing foreign news media to report on the events. Some like Mike from Shenzhen Undercover make the claim that the events will be remembered like September 11th in that it is changing the way people think about what they had previously taken for granted. While I've been skeptical, I've also noticed that the death toll continues to rise. The WSJ has an opinion piece that talks in similar lines that this event is changing the way people think about government. While I think both may overstretch given that at least in the case of WSJ's piece, I'm skeptical about how much of China's citizens have believed they could trust in government, in the very least, people are questioning its role. In the long term, that may not be such a bad thing:

The earthquake in Sichuan has transformed China in many ways. Abroad, China has switched from victimizer to victim. At home, Olympic excitement has been replaced by the sadness of death and destruction, and xenophobic anger has been exchanged for a new spirit of volunteerism.

This last change presents the most difficult test for China's leadership, which sees an old and fearsome dragon of civil society raising its head. [...]

Over the past two years, [China's government] has tightened restrictions on NGOs considerably; obtaining the permissions to register a new NGO has become all but impossible. More likely the state will try to co-opt this civic energy. This is already happening. Five government ministries issued a joint set of guidelines for managing donations last week.

In freer countries, philanthropic organizations fill a vital role, and not just in times of disaster. In the wake of the Sichuan earthquake, Chinese citizens are increasingly aware that government can't solve all problems, all the time. Civil society can help. Beijing is right to be worried.

The Costs and Benefits of Housing Regulations

Following the earthquake and subsequent aftershocks in China (the latest of which destroyed 420,000 homes), the libertarian in me here is torn. Are higher building standards are worth it? (Adam Smith Institute) On the other hand, if the cost is so much that people are priced out of owning their own homes what's the point? Like I said, I'm torn (then again China, being China, I wonder how "optional" those regulations will end up being). Maybe there's a happy medium - disclosure allowing people to make the choice for themselves. The Manhattan Institute, for instance, estimates that zoning restrictions have an effective cost of up to 50% of the cost of a condo in Manhattan.

Copenhagen Consensus

For those who are concerned about global development, the Copenhagen Consensus should be of interest. The conference is teeming with Nobel Laureates in economics. The idea is this: with specified limited resources, what should the priorities be to best improve human life? A refreshing alternative view to the trillions that get wasted in development and the media portrayal of issues that ignore resource constraints forgetting the unfortunate tradeoffs that must be made. Ron Bailey is covering the event for Reason Magazine. (h/t Instapundit)

Minimum Wage as Tax on Teens

From the Economist. Not exactly surprising. It's one of those "be careful what you wish for". I've never really understood this idea that wages can be increased without any costs - as this will have no impact to employers. While I think from an employer perspective, it hurts smaller businesses the most, you get more people stuck in that cycle of "how do you get experience if no one will hire you"?

Sex Abuse by UN Peacekeepers

This stuff still pisses me off. While I sympathize with Reynolds' view that the coverage on these stories would be wildly different if it involved Americans, as if their lives aren't miserable enough, the UN sends 'peacekeepers' to screw 'em over - literally. One would hope that these incidents are isolated but the infuriating thing is that they're not (Google Search: United Nations+Sex Abuse).

The bottom line is this: we can't trust them with money (Google), we can't trust them with kids (BBC) but we expect them to provide us with some type of moral authority? Worse still, we criticize the Americans for withholding dues as they push for greater accountability?

"The Spirit of the Game"

A noteworthy post by Seth Godin. I get the sense that the majority of us rarely pause to consider the origins of wealth and even those of us who do, don't communicate those ideas particularly well given the complexity of the ideas (ok fine, that's just my excuse). Unfortunately this leaves the majority amongst us (and in this case abroad) susceptible to stupid ideas like this:


(from Guy Kawasaki's Blog)

It's one of the reasons why I am highly reluctant to succumb to realpolitik. Winning the battles can ultimately mean losing the war if others see Western politics as corrupt and self serving as those in their own countries. To quote "Tigerhawk" - on the subject of wealth and energy:

If you believe -- as I do -- that wealth is the surest expression of human creativity, then you also believe that America's great inventions spring from our system, not the natural resources with which we have been endowed or the winnings of imperialism. But most peoples of the world (including American leftists) do not understand this -- which is why they do not invent anything important -- and instead view American wealth as if it were looted, rather than created. Hey, if I thought America was rich from theft rather than creativity, I'd feel guilty too.

I therefore view it as encouraging that Seth Godin (who isn't shy of promoting the Democratic Party in the US) recognizes that it's generally far easier to create wealth working through "the system" rather than looting and gaming your neighbours and customers. This is a lesson that too many in China (and many other places in the world where any given transaction is viewed as the the last with any given client) still need to learn - and this above all other "cultural" traits differentiates doing business in China versus in the West.

Clearing out the Tabs

Another link roundup:

• [Operations] A tour of NewEgg's facilities - which between its two warehousing facilities handle $1B of revenues. As someone else termed it - operations porn. (Anandtech)
• [Logistics] Buy insurance or in the very least be disciplined enough to self insure. Stuff happens. Reminds of the time when our goods were delayed because the ship collided with another vessel on open waters (no joke) and we were billed for some of the losses. (Freight Dawg, 3PL Wire)
• [Negotiating] 5 tips for negotiating as taught by the Harvard Negotiation Project. (Gigaom)
• [China] Summary notes the increased difficulties in getting a China Visa and how the rules have changed. (China Law Blog)
  

Jetlag Blues Solved?

This is excellent news (Globe & Mail, h/t Parenting Squad):

U.S. researchers have come up with a new way for travellers to recover quickly from jet lag - don't eat for 16 hours.

The math is easy for a trip from HK where I have the most problems - just don't eat anything once you step on the plane. While that could be rough - I figure the jetlag is worse.

"It's China's Party and You're not Invited"

Thoughts on the Olympics here (Bill Dodson). I also worry that China's pride over hosting the Olympics will turn negative - but I had hoped that the global response to the Chengdu earthquake would have moderated this.

PR Tips for Startups

@ TechCrunch. It's a long article and a bit more focused on tech startups but definitely worth a read for the entrepreneurs amongst us.

Update (May 26): a rebuttal (Loic Le Meur)
More: from Scoble

Why do Startups Fail?

Divergent opinions (David Feinleib @ Mohr Davidow Ventures, 37signals). Also speaks to the tension between vc's and the entrepreneurs that they invest in. I'd tend to agree more with the latter view from 37signals - particularly this point: "'It’s not just how fast you run the race that matters. It’s how fast the race is run. When it comes to startups, speed wins.' That’s just ridiculous." The comments in 37signals' post are also pretty interesting.

Transformational Technologies

This is pretty cool (MIT, h/t Instapundit). Technologies "right around the corner" MIT researchers are working on that have the potential to change the economy (though I guess they've been saying that about fusion for quite some time).

Heh. Japanese Statism Slapdown

Here's a letter in response (Going Private) to protectionist ravings from someone who is apparently "abhors dishonesty, dogmatists, ideologues, mean-spiritedness, Ayn Rand and people who cheat" including the obligatory helping of anti-Americanism. Oh, and claims to be an investment banker in Japan [she/he does point out in the comments she is neither Japanese nor an i-banker]. The struggle against change and for liberal markets is not one that will come naturally nor inevitably but in the process it is the best solution that will and is lifting billions out of poverty. Read it all, but here's an excerpt:

In the end, what is important to remember is this: The perpetuation of a corporation for sentimental purposes is not, of itself, utilitarian.

I am sorry that your firm has responded poorly to the new exposure to global trade. I am sorry that its encounter with the realities of a market economy, which Japan has thankfully, and finally embraced to- at long last- bolster Gross Domestic Product growth into the 2% range, has been difficult. But it is entirely possible that yours is a firm that should not survive once required to provide shareholders with competitive returns. The problem with protectionism is that, in the absence of a sure competitive advantage or unique product, its benefits always come due- with interest.

Indeed, you may not thank me for your firm's present fate. You may, however, thank me for Japan's.

Breaking OPEC?

Robert Zubrin from the Washington Times proposes legislating flex-fuel to break OPEC's oligopoly over oil (h/t Instapundit). Cato's Jerry Taylor disagrees about 4 months ago but he makes a few interesting and broader points about policy making in general:

The conceit that government can create jobs by creating industries out of whole cloth glosses over the fact that the money needed to create those industries and those jobs starves other industries of cash that will, in turn, eliminate other jobs. While it’s not inconceivable that government could on balance create more jobs than it destroys in this manner (that is, that the industry created is more labor-intensive than the industries harmed), that’s still not a good reason to go forward. After all, one might on balance increase employment in the United States by banning modern farm machinery and food imports, which would put a lot of people into the fields. But no sane person would endorse such a thing on economic grounds.

That said, I think that most people would agree that this is a horrible idea by any standard (NYT, h/t Greg Mankiw, who oddly, isn't usually sarcastic). Others blame US Congress (IBD).

Management Notes

Something I've suspected, that's difficult to quantify and even harder to implement. Sometimes, financial incentives cheapen and are demotivating relative to the perceived value of the work that's done. From Incentive Intelligence who pulls quotes from the book Predictably Irrational:

Money, as it turns out, is very often the most expensive way to motivate people. Social norms are not only cheaper, but often more effective as well."

In a market where employee's loyalty to their employers if often wilting, social norms are one of the best ways to make workers loyal, as well as motivated."

Although some companies have been successful in creating social norms with their workers, the current obsession with short-term profits, outsourcing, and draconian cost-cutting threatens to undermine it all. In a social exchange, after all people believe that if something goes awry the other party will be there for them, to protect and help them.

In my limited experience, I think most people believe their work is undervalued. So while social norms can be useful, people ultimately still want to know that they are being paid fairly though there are the instances that I think we can all cite of friends who are underpaid but happily so because of the positive work environments they're in or the experience they're getting. I think part of the solution is to at least try to quantify bonuses and financial incentives as a reflection of the value each person creates.

Woe to be a Libertarian?

I'm a libertarian. I'm an ideologue when it comes to believing in free markets and free people though I do hold some fairly conservative personal convictions - broadly speaking, I do believe that it's ultimately a matter of personal choice what people believe so long as they do not harm others. It's unfortunate that the Libertarian Party in the US gets known as the party of whack jobs, hippies and pot smokers. For those who know me, I'm probably only ever confused with the first. But here's a response to a column in the WSJ over a few of the other popular misconceptions of libertarians.

Protectionism Kills Jobs

I would imagine there are some aluminum extruders who wish I weren't in business, but politicians who think that by eliminating more cost competitive foreign suppliers like us tend to be somewhat shortsighted. This is particularly when you realize that our clients are able to use the savings to reinvest in their businesses. In what must be a plethora of examples, Marginal Revolution points to an analyses that quantifies the costs of tariffs on hangers and the effects on dry cleaners and those who use dry cleaning services:

There are roughly 30,000 dry cleaners in the U.S., and on average, each pays an additional $4,000 per year due to the hanger tariff. This indicates an average annual cost of 30,000 firms x $4,000 per firm = $120 million. According to the U.S. International Trade Commission's report, U.S. employment in wire hanger manufacturing was 564 workers in 2004 and fell to 236 workers by 2006. Let's assume that employment in this sector would have fallen to zero in the absence of the tariff, and that with the tariff, employment will recover to 2004 levels. In other words, assume the tariff "saves" 564 jobs. Dividing the cost of the tariff to U.S. dry cleaners ($120 million year) by the number of jobs saved (564 jobs) indicates that each job saved costs about $212,765 per year. Keep in mind that the typical full-time worker in this sector earns about $30,000 per year. Even if we assume that industry employment doubles, the cost of the tariff is still roughly $120,000 per job.

More from the Economist. Given the way the US seems to be headed politically, I'm worried that Carl Icahn may be right (Club for Growth).