Crowdsourcing for better government

Challenge.gov is a fascinating experiment under the Obama Administration in its own right but more interesting is how it has been evolving... but also making government more accessible (reason.com):

Others, however, are essentially using the website as a new form of procurement. In some instances, the goods or services they seek are fairly general. The National Institute on Drug Abuse is now offering $100,000 for "bold new ideas" on how to manage and improve the clinical quality of addiction treatment. Others are far more specific. NASA recently solicited designs for a 3D printable handrail clamp assembly for the International Space Station. [...]

And it's not just that these kinds of platforms only reward positive outcomes. Typically, they also end up leveraging the incentive money they offer several times over. In the case of the NASA handrail clamp assembly challenge, the total prize money offered was just $2,000. But it attracted 474 entries. Had NASA been paying market rates to even just the top 10 percent of these entrants for the time they spent designing their submissions, its costs would have been far higher.

In general, crowdsourcing platforms inspire innovation by putting problems in front of more eyes. And Challenge.gov is already working in this fashion. Aaron Foss, who won a 2012 Federal Trade Commission challenge that sought new methods of helping consumers block telemarketing robocalls, told Forbes that he "never would have worked on the robocall problem if not for the challenge." Similarly, a NASA survey of approximately 3,000 challenge participants found that 81 percent had never previously responded to government requests for proposals.

What makes someone become an Islamic extremist?

Great video from Prager University and upending the deep seeded elitist idea that poverty breeds extremism, but rather, it's the other way around:

Even if manufacturing returns to the US, the jobs won't

This probably isn't what the "Out of a job yet? Keep buying foreign!" crowd had in mind (WSJ):

As robots become less costly and more accessible, they should help smaller manufacturers go toe to toe with giants. By reducing labor costs, they also may allow the U.S. and other high-wage countries to get back into some of the processes that have been ceded to China, Mexico and other countries with vast armies of lower-paid workers.

Some of the latest robots are designed specifically for the tricky job of assembling consumer-electronics items, now mostly done by hand in Asia. At least one company promises its robots eventually will be sewing garments in the U.S., taking over one of the ultimate sweatshop tasks.

Of course, this isn't to say all jobs are going away. They are changing though. A potential source of American jobs? China (WSJ):

China’s middle class continues to grow, reaching an estimated 630 million people by 2022. Those consumers want better health care, world-class education and a cleaner environment. China itself will eventually be able to provide those services, but meanwhile, the Internet makes it possible for China to create and sustain American jobs.

Take health care. In 1994, a Chinese university student named Zhu Ling became mysteriously ill. Other students posted her medical details on the Internet, allowing Western doctors to help diagnose her with thallium poisoning and to save her life. It was a famous early instance of effective telemedicine.

U.S. health-care professionals could provide China with a range of services. China had just one general practitioner for every 10,000 people in 2013, according to state media, and many Chinese are dissatisfied with the quality of the care. “China has very few doctors that can gain trust,” said Feng Xue, executive president of Tianjin Telemedicine Association, a nonprofit organization to promote telemedicine. “The U.S. has a strong brand.”

Are wage increases a lagging indicator?

There's been a lot of handwringing over stagnant wages, but economist James Bessen tries to put it in historical context and makes the argument that the cause isn't technology (Vox):

There's been a lot of worry that increasingly sophisticated computers would replace more and more jobs, which could lead to a future where many low-skilled workers are unable to find a job at all.

But Bessen argues that this is a misunderstanding of recent economic trends. "I just don't see evidence of it," he says. "There are very few occupations where everything has been automated."

Bessen points to bank tellers as an example. During the 1990s and 2000s, banks installed thousands of automated teller machines. Yet surprisingly, the number of human tellers actually grew slightly during the same period

A similar interpretation from Ray Dalio at Bridgewater.

Mexican proverb

Great quote: "They tried to bury us. They didn’t know we were seeds." h/t Tim Ferriss

Daimler introduces the world's first self driving semi-truck

Demand isn't slowing down for logistics, but the ability to recruit drivers is. Makes sense and it's already legal in Nevada (wired):

The truck in question is the Freightliner Inspiration, a teched-up version of the Daimler 18-wheeler sold around the world. And according to Daimler, which owns Mercedes-Benz, it will make long-haul road transportation safer, cheaper, and better for the planet.

The Freightliner Inspiration offers a rather limited version of autonomy: It will take control only on the highway, maintaining a safe distance from other vehicles and staying in its lane. It won’t pass slower vehicles on its own. If the truck encounters a situation it can’t confidently handle, like heavy snow that covers lane lines, it will alert the human that it’s time for him to take over, via beeps and icons in the dashboard. If the driver doesn’t respond within about five seconds, the truck will slow down gradually, then stop.

In hardware terms, the truck isn’t much different from the latest trucks and passenger cars Daimler is putting on the road. A stereoscopic camera reads lane lines. Short and long range radar scan the road up to 800 feet ahead for obstacles. No sensors face backward, because they’re not needed. There’s no vehicle-to-vehicle communication, no LIDaR. The software algorithms are adjusted versions of those developed for use in Mercedes-Benz’s autonomous vehicles.

Oddsmakers win in UK election upset

Markets again trump pollsters and pundits (TheConversation):

Interestingly, those who invested their own money in forecasting the outcome performed a lot better in predicting what would happen than did the pollsters. The betting markets had the Conservatives well ahead in the number of seats they would win right through the campaign and were unmoved in this belief throughout. Polls went up, polls went down, but the betting markets had made their mind up. The Tories, they were convinced, were going to win significantly more seats than Labour.

I have interrogated huge data sets of polls and betting markets over many, many elections stretching back years and this is part of a well-established pattern. Basically, when the polls tell you one thing, and the betting markets tell you another, follow the money. Even if the markets do not get it spot on every time, they will usually get it a lot closer than the polls.

Efficient markets require security and stability

Ergo, to improve the economic prospect of a city, start with policing argues the NationalReview.

Related: How Colombian President Álvaro Uribe saved Columbia (WSJ).

"Do Strong Religious Beliefs Stifle Innovation?"

According to one paper, yes (WSJ). I'd be curious to see if the particular religion plays a role:

The relationship is apparent when plotting the percent of the population that describes itself as religious against a population-controlled measure of patent applications filed by a country’s residents.

The relationship broadly holds up when the authors make adjustments for differences in gross domestic product, rates of higher education, population and other variables. So it’s not simply a matter of more religious countries being poorer or having fewer resources, Mr. Bénabou said in an interview.

“We’re not making strong claims as to what is causing what,” he said. “The pattern is there and people can offer their own explanation to the pattern.”

Twelve economic concepts every graduate should know

Short and sweet (BusinessInsider). From the speech given by Nobel economist Thomas Sargent to graduates of Cal-Berkeley in 2007.

As Moore's Law turns 50, the revolution is only beginning...

WSJ via Instapundit:

Moore’s Law is creative destruction on steroids. It regularly fosters the next wave of entrepreneurial opportunities made possible by the latest jump in chip performance. It can be blamed for much of the 90% mortality rate of electronics startups.

But because the usual graphic presentation of the law is tamed by the format into a nice shallow line, we don’t get to see the awesome power of the raw curve—which, like all exponential lines stays shallow seemingly for a long time, then suddenly curves almost straight upward in a vertiginous climb. It is the curve of a rocket’s acceleration, of a pandemic, of the cells born from a fertilized egg.

The great turning took place a decade ago, while we were all distracted by social networking, smartphones and the emerging banking crisis. Its breathtaking climb since tells us that everything of the previous 40 years—that is, the multi-trillion-dollar revolution in semiconductors, computers, communications and the Internet—was likely nothing but a prelude, a warm-up, for what is to come. It will be upon this wall that millennials will climb their careers against almost-unimaginably quick, complex and ever-changing competition.

Crowd-sharing, crowdfunding, bitcoin, micro-venture funding, cloud computing, Big Data—all have been early attempts, of varying success, to cope with the next phase of Moore’s Law. Expect many more to come. Meanwhile, as always, this new pace will become the metronome of the larger culture.

Moore’s Law has always induced de-massification: giant mainframe computers become smartwatches, giant vertically-integrated organizations are defeated by what Instapundit’s Glenn Reynolds has dubbed an “Army of Davids.”

Rigid command-and-control structures in every walk of life, from corporations to governments to education, become vulnerable to competition by adaptive and short-lived alliances and confederacies. Now that process is going to attack every corner of society.

Arbitrageurs, meet the disintermediation of tech

The fact that it's taken this long is the only real surprising aspect of this story - that Wall Street is under threat by the rise of info tech (wired):

These so-called “fintech” upstarts are calling attention to the many shortcomings of the gatekeepers who have traditionally controlled lending, paying, and investing. When these incumbents were the only option, they could rest easy assuming annoyed consumers had no other options. Now they do, and a nervous Wall Street, Dimon included, is realizing it has to play along in order to fight back. Amid fears of a growing threat to their market share, Wall Street is now playing catch-up. Banks are launching competitive products (or slapdash imitations, depending on where you sit) to startups’ innovations. They’re financing partnerships. And in some cases, they’re just trying to acquire away threats to their businesses.

More: Inc. profiles a few companies that are making it easier for startups to find money.

The death of "cleantech"? Or the perversions of "free" money?

TechCrunch notes that "old" cleantech was overhyped and is now nearly unfundable but there's an emergence of more sustainable and profitable tech: "They’re looking to be downstream, close to those juicy, fast-growth markets, with new channels and new marketplaces. Even in hardware, they’ve moved to distributed, smaller, modular, automated and intelligent hardware."

Doesn't this just highlight problems with governments trying to choose winners - when it comes to either technologies to pursue or even more insidiously, companies that try to develop those technologies? Could these companies like Nest have gotten there faster if it weren't for all the carrots being dangled to pursue those "overhyped" technologies? And was losing all this money and time really such a "noble way to lose money?"

Why is US entrepreneurship declining precisely when entrepreneurship is getting easier?

This should be alarming for policymakers (Inc):

The Kauffman Foundation, citing its own research and drawing on U.S. Census data, concluded that the number of companies less than a year old had declined as a share of all businesses by nearly 44 percent between 1978 and 2012. And those declines swept across industries, including tech. Meanwhile, the Brookings Institution, also using Census data, established that the number of new businesses is down across the country and that more businesses are dying than are being born. All this at a time when entrepreneurship had reached its cultural apex and was widely viewed as the sole sizzling ember in an otherwise cooling economy. The business and academic worlds were left slack-jawed: How could this be?

The implications are huge. “New businesses are disproportionately responsible for the innovation that drives productivity and economic growth, and they account for virtually all net new job creation,” says John Dearie, executive vice president for policy at the Financial Services Forum. “I would say, as a policy person, this is nothing short of a national emergency.”

I'm not convinced by Inc's theories. Generational? Markets have actually increased with access to more markets globally - and I'd argue risks have actually declined with the costs of starting a business falling.

Big companies? Big companies and the lure of a secure job seem to have been even greater in the past. Funding? Again, I'd suggest it's easier today than ever before. Possibly related, TheSignal has a fairly aggressive column making the argument that the decline in jobs (making the fall in entrepreneurship even more alarming) is the result of government and regulation that's currently sucking the oxygen out of the job market. Maybe it's also true for US entrepreneurship? (And on a related note, maybe it's the dramatic rise in student debt?)

Betting on farming

According to the WSJ, venture capitalists are placing bets on ideas to improve food production and food itself:

The money involved in U.S. food startups is still small compared with Internet companies. But venture-capital investment in agriculture and food soared 54% to $486 million last year, according to Dow Jones VentureSource.

Big agribusinesses have launched their own VC initiatives, and investment managers have raised funds dedicated to food and agriculture technology. New York-based private-equity firm Paine & Partners, for instance, raised $893 million in January for investments in boosting productivity in areas like protein production and food safety, according to its president, Kevin Schwartz.

Driving the investments are a combination of cheap wireless technology, improved tools for collecting data and monitoring crops, and budding entrepreneurs looking to address new market demands and feed a growing global population. Increasingly health-conscious consumers also are scrutinizing what is in their food, pushing vendors to boost the transparency of their supply chains.

Is modern healthcare killing us?

Provocative question from Freakonomics. What I think is entirely clear is that the system in the US is broken. I'm more skeptical of claims that the problems are the result of profit seeking rather than warped incentives:

In our system, we have an asymmetry in price. So we pay a whole lot of money if you cut, scan, and hospitalize patients. If they have procedures, if they go through machines, we pay an enormous amount of money for those things. If you talk to a patient, you actually lose money in many instances. So when a cardiologist walks in the room and talks to your family member, that’s actually a loss leader. That doctor is losing money every moment they stay in a room with your family member. The way they make money is by getting you out of that room and back into the scanner that they’re leasing in the back of the office. That’s not their fault. That’s the fault of how we’ve structured the incentives in the system.

Where's the top programming talent in the world?

Hint: surprisingly, not California (venturebeat). This is just snapshot data, but I'd be curious if there have been any trends here.

How to solve California's water crisis

Not bandaids, but markets (Reason)

How much does the minimum wage help the poor?

Not very much (JStor via MarginalRevolution):

About 35 percent of the total increase in after-tax benefits goes to families with income less than two times the poverty threshold, a common definition of the working poor or near-poor; nearly 13 percent goes to families principally supported by low-wage workers defined as earning wages at or below 117 percent…of the new 1996 minimum wage; and only about 14 percent goes to families with children on welfare.

Unlike most public income support programs, increased earnings from the minimum wage are taxable. Over 25 percent of the increased earnings are collected back as income and payroll taxes…Even after taxes, 27.6 percent of increased earnings go to families in the top 40 percent of the income distribution.

How fracking is changing geo politics

And yet some politicos would rather increase the barriers to fracking rather than drop them. How fracking is reshaping global power (WSJ):

Fracking overnight has relieved Saudi Arabia of its swing-producer dominance. Fracking overnight has relegated the Middle East to a sideshow, albeit a still-important sideshow, in the world economy.

Things change fast and could change back. A sizable share of the world’s oil still flows from the Persian Gulf and so far production has not been disrupted. Prices would shoot up—they’re already creeping up. But a weight on U.S. fracking would also be lifted. At prices below $50, much fracking becomes long-term unprofitable. But then there’s the flip-side: the flexibility exhibited by the U.S. wildcat sector, allowing drilling to ramp up quickly in response to higher prices, helping to counteract any damage to global growth.