Roll-ups in Agriculture

Once you have the semblance of land rights, these things are possible (NYT). There is a certain delicious irony in the idea that collective farms are being made corporate in Russia. The potential for combining small plots of land in many countries in Africa and turning them into commercial/corporate farms would not only unleash the wealth of many of the poor, but alleviate rising food prices.

Unfortunately as things stand today, while some countries are moving towards the formalization of land rights, they're in the minority.

Wealth as Cure for Caste Bias

As an aside, it's remarkable that these articles are appearing in the NYT - and kudos to them for doing so. I just hope they bother circulating them around the editorial board. Markets are currently our most efficient way to recognize merit - so it should follow that markets reduce prejudice with time (NYT). What India's poor needs are more markets, not less of them:

“Economic expansion is going to neutralize caste in 50 years,” he predicted. “It will not end caste.”

I'm reminded by a quote by a noted Canadian asset manager when asked about the limitations to women and minorities in finance. To paraphrase: 'it doesn't matter if they're a purple martian midget so long as they bring in the numbers.'

"To Make a Stock Pop: Innovate"

Well, duh (NYT). Profits are the result of innovation. It therefore follows and is confirmed that those who spend more money on research and development tend to outperform those who spend less and cut back during hard times.

While it would have been useful if the NYT had bothered with giving us the performance differential between those who spent more on R&D and the control group, the research also undercuts the argument that those who profit have some sort of obligation to give back given the benefits of their research and investments made before the fact and further undercuts the cynical idea that profit is largely achieved through cronyism and what amounts to fraud.

Quote of the Day

From Arnold Kling:

To me, political campaigns are not sacred events, to be eagerly anticipated and avidly followed. They are brutal assaults on reason.

Mostly BizLinks

As it so happens, with the exception of one, there aren't really any residual political/economic tabs that I want to rant about at the moment but there are a few posts/articles that I found to be interesting:

• [Economics] How one Danish professor proposes we rid ourselves of massive cost overruns on infrastructure projects that politicians say "have to" be built (Miller-McCune): benchmarking to other similar projects and adding financial incentives. Seems pretty shocking that this hasn't been done before.
  
  
• [Human Resources, Entrepreneurship] How startups can compete effectively for the best candidates against big, better funded firms (HRWorld). More here from Funnelholic: 3 Keys to Hiring Success.
  
  
• [Manufacturing] Cool new resource on designing and specifying die castings (NADCA via Core77)
  
  
• [Trends, Entrepreneurship] Figuring out what the trends are before they affect you (Inside Retailing via Core77). While it's a bit fuzzy, the way I look at it is understanding what the need you/your business serve / major business costs and understand how that need / costs can change based on both traditional competitors and marginally related/emerging industries.
  
  
• [Manufacturing] They call it mistake-proofing, I call it idiot-proofing (Reliable Plant via Core77). Excellent advice and a source of competitive advantage especially as customers are more apt to consider the broader cost/value of a product/service. The idea is simple, design your products for the lowest common denominator of who you see to be your customers.
  
  
• [Turnarounds, Finance] A profile of Lone Star: a vulture capital firm that specializes in recapturing value in assets other Wall Street firms no longer want (Portfolio). If I had to do things differently, vulture capital is definitely where I would want to be. While I suspect there's a lot of minutiae, the problem solving aspect under tight timelines definitely appeals to me.
  
  
• [Finance, Entrepreneurship] Lessons from a startup buyout (Gigaom). If you're a startup, how to position and prepare yourself (and your firm) for being bought out.
  
  
• [Marketing] Advice I should probably be following: Six Rules for Rewriting (Michael Nielsen). Advice I actually found to be quite useful when you have to proof/rewrite your own work.
  
  
• [Entrepreneurship] 7 startup mistakes (Lending Club)
  

Where US Consumers Plan to Cutback

From Paul Kedrosky, a study by Unilever:

Guy Kawasaki's 5 Lessons Learned as Entrepreneur

Worth the read:

Focus on cash flow.
Make a little progress every day.
Try stuff.
Ignore schmexperts.
Never ask anyone to do something that you wouldn't do.

Global Happiness is on the Rise

At least according to one survey (Businessweek). Their byline reads: "The 2008 World Values Survey found that freedom of choice and tolerance—and not simply wealth—have lots to do with a rise in happiness". I would make the argument that it's wealth that allows us more freedom of choice and incentivizes us to be tolerant but either way, it's good news (though I suppose it depends on how happiness gets defined - see earlier link on Martin Seligman at TED). What the researcher said when asked what the path to happiness was:

While Inglehart does not profess to know the true secrets of happiness, he says that this most recent study has made the picture a bit clearer. In his opinion, benevolence and expressions of gratitude appear to be subtle but powerful ways to bring happiness into one's life and to extend it. Religion and solidarity in the community play a big role in this, he says, but any positive belief system can help. "Latin America seems to understand this," he says.

"In the old days I would have told you to work hard and save your money," says Inglehart. "It's different today. I just haven't nailed it down yet."

"Financial Incentives Trump Social Networks"

A bit of a retort to an earlier post that money undermines community. It apparently makes the community more productive as well (Slate). Economics researchers work with a farmer to improve strawberry picking productivity at a farm with a series of interesting experiments like the following (read the whole thing):

• The researchers found that managers tended to do their friends favors by assigning them the easiest rows. This made life comfortable for insiders but was unproductive since the most efficient assignment for fruit picking is for the best workers to get the best rows. The researchers responded by linking managers' pay to the daily harvest. The result was that managers started favoring the best workers rather than their own friends, and productivity rose by another 20 percent.
  
  
• "They proposed a "tournament" scheme in which workers were allowed to sort themselves into teams. Initially, friends tended to group themselves together, but as the economists began to publish league tables and then hand out prizes to the most productive teams, that changed. Again, workers prioritized money over social ties, abandoning groups of friends to ally themselves with the most productive co-workers who would accept them. In practice, that meant that the fastest workers clustered together, and again, productivity soared—by yet another 20 percent."

I suspect a number of these experiments would have direct applicability to just about any low skilled labour job.

Dyson & Red

There's something about the energy of entrepreneurs that fascinates me. Here are two good profiles of entrepreneurs who have made a mark in their respective industries making cool products:

• James Dyson: vacuum cleaners (FT via Paul Kedrosky)
• Jim Jannard: founder of Oakley & now developing Red - the high end digital line of cameras (Wired)
  

Game Theory & The Joker

If you haven't seen Dark Knight yet, I'd highly recommend it (I'm actually hoping I can catch it again on an IMAX somewhere sometime soon). For anyone who's remotely interested in economics/psychology, Presh Talwalkar via Club for Growth does a breakdown of the opening scene which happens to be an excellent example of Game Theory.

Dark Days Ahead?

A pretty bleak global economic forecast courtesy of Nouriel Roubini (Bloomberg via Paul Kedrosky). Of course economists wouldn't be economists if there weren't at least one predicting a global meltdown - the problem is that these days, depending on where you are in the economic food chain, things seem pretty uncertain if not bleak.

Whither China? Part II

Not that they weren't already, but I suspect articles like this will be even more common following the completion of the Olympics: "China's Bright Past Belies a Hazy Future" (WSJ). Another article in the same paper ends on this note:

"These have been a good Games, very good for China," said Pei Yuekai, the owner of a corner grocer in downtown Beijing. Mr. Pei had been watching the Games throughout the day on a small television in his store and had thrilled at the Games -- not just the Chinese victories but the sheer excitement of hosting people from so many countries. His son has kept a diary and has plastered his rooms with flags from around the world. "He now realizes how big the world is."

Of course, to China's leaders, that can be both a good and bad thing.

Does Thinking of Money Undermine Community?

Apparently yes according to Princeton's Peter Singer - via Greg Mankiw. But why?

Vohs and her colleagues suggest that as societies began to use money, the necessity of relying on family and friends diminished, and people were able to become more self-sufficient. “In this way,” they conclude, “money enhanced individualism but diminished communal motivations, an effect that is still apparent in people’s responses today.”

Good thing? While I'm not entirely convinced that this is a persistent state I can definitely buy the idea that money and wealth has allowed us to rely less on family and friends. But does it mean that having more money makes us less caring? If it did, wealthier societies wouldn't also be more generous than others. Of course being wealthier, by definition, allows us to be more charitable - but does charity = community? The pursuit of money can also result in less racism and prejudice if the priority becomes profit and, arguably as a corollary, merit. Lots of unanswered questions but definitely an interesting study.

More Reasons to Kill Corporate Taxes

Twenty more from US News via Club for Growth. While I think the ideas may win a few converts, the likelihood that any of the mainstream parties - particularly in the US. I mean it's not that those 'evil faceless multinational corporations beholden to heartless shareholders' do anything except create jobs that pay for government, and generate ideas that make living healthier, happier and better.

Silly Ideas: Economic Ignorance

Austrian Economist Steve Horwitz asks "What is the fallacy of fact and fallacy of theory that the reasonably well-informed layperson believes about economics that are most in need of correction? That is, which ones do the most damage?"

Some Highlights:

• Fallacy of Fact: that the economic well-being of the average American is on the decline.
• Fallacy of Theory: that consumption (rather than savings/investment) is the source of economic growth.
• Fallacy of Fact: All human action is zero-sum.
• Fallacy of Theory: greed causes prices.
• Fallacy of Fact: Moderation, not theory, is most important in policy.
• Fallacy of Theory: Trade deficits are bad.

Of course, it's the politicians and journalists who play to these fears that surprise, surprise lead to rent-seeking solutions of regulation and government. The sad irony is that they end up most hurting those on whose behalf they claim they seek to help.

Why Privacy Matters

I'm afraid I've sort of fallen in this trap. I figure the only thing anyone in the government would get by reading my emails and seeing where I go on the internet or say on the phone would be a bad case of boredom. That said, a column by Bruce Schneier at Wired makes sense:

Too many wrongly characterize the debate as "security versus privacy." The real choice is liberty versus control. Tyranny, whether it arises under threat of foreign physical attack or under constant domestic authoritative scrutiny, is still tyranny. Liberty requires security without intrusion, security plus privacy [...] And that's why we should champion privacy even when we have nothing to hide.

Defining "Fair"

(via ASI):

But while the prime minister appears to believe that expanding the state is the key to creating a fairer society, Osborne had a very different take on the subject. He said there were three elements to 'fairness':

• First of all, people should be properly rewarded for their efforts. That means free markets with lower and fairer taxes.
• Secondly, fairness requires equality of opportunity. That means extending choice in education and healthcare to everyone – not just the wealthy – and reforming welfare so that it empowers people to get back to work, rather trapping them in poverty.
• Thirdly, the current generation should not make future generations pay for their mistakes. And that means establishing a long-term price for carbon emissions, and coming up with a new fiscal framework to scale-back government borrowing.

Makes sense. By invoking the idea of "class warfare" some politicians want us to believe that equality of outcomes is "fair" by playing to greed and envy of the electorate. For some it's become more about robbing the rich to pay for the excesses of politicians and less about the poor. In the US, the rich already pay a disproportionate amount in taxes: "The richest 1% of Americans now pays 35% of all income taxes. The top 10% pay more taxes than the bottom 60%."

In market-based economies, wealth is almost always a direct result of innovation. The idea that the rich owe society ignores the reality that they have already given far more than they've received. It seems somewhat idiotic as a matter of policy that you would penalize the people who most benefit society. It's the equality of opportunity and ensuring that incentives to innovate continue to exist that matters.

Brave Soul Indeed...

For some reason I find it perversely amusing when some left wing nutter spouts some ridiculous comment about being "brave" while spouting off about Bush or some odd little conspiracy theory on prime time to some sympathizing interviewer. Now here's someone who's truly brave: Martyn Perks, is a design consultant who calls green design "anti-design" (via core77) in quite the smack-down:

What underpins the general shift towards green design is a widespread sense of guilt and self-doubt felt by many designers about blighting the world with too much stuff. The paradox is that the big idea they turn to for salvation - environmentalism - means that rather than endeavouring to produce something new to solve the problem, one that makes use of the best possible processes, ideas and resources, designers will attempt to regain a sense of purpose and credibility by preaching to the rest of us to lower our horizons. [...]

Every so often, moments do arise which push the boundaries a bit further, or if you are lucky, by a long way. That's called innovation. And when it occurs, it must be seized upon. However, the greening of design 'thinking' only seeks the opposite effect: the deliberate curtailment of that freedom to think. The designer makes a virtue out of doing less and thinking small. This is 'anti-design'. Holding back ideas inevitably means crap solutions. And that affects us all.

I can't say I disagree - I just hope he's prepared for all those villagers with their pitch forks who ironically are often the first to call for censorship of ideas they don't agree with.

On American "Selfishness" & Global "Generosity"

From Instapundit: "that's how it is with nanny-state approaches: They dampen private impulses toward unselfishness, even as officials line their pockets." Americans give some of the most in the world to charity on a per capita basis except they don't do it through government. This is what offends rent seeking bureaucrats and proponents of big government the most. Engaging in ludicrous revisionism, these people would have us forget continued UN ineptitude and the fact that their dithering following the Tsunami resulted in as much as 30% being spent in overhead (Instapundit) - and that's not counting how much was spent in graft.

More from the DC Examiner: "Whatever the case is with his own selfishness, the evidence of an internationally superior American generosity is impressive, beginning with the numbers on our charitable giving. We give twice as much as the British per capita, and according to The American magazine, seven times as much as the Germans and 14 times as much as the Italians. Even in inflation-adjusted dollars, the amount given each year just keeps getting larger, and meanwhile, we do far more volunteer work than in other industrialized countries."

Further, this idea that we can spend our way out of global poverty is truly offensive as it not only takes away from the blame local governments deserve for perpetuating and creating poverty but implies that the world's poorest are somehow naturally less capable than the rest of us.