Archive for the ‘economics’ tag
I read this essay over the summer, but then forgot about it until I saw a tweet from Paul Ford. It’s an interesting consideration of the economics of bike theft. The heart of the issue, as you may already recognize, is this:
For all practical purposes, stealing a bike is risk-free crime. It turns out there is a near zero chance you will be caught stealing a bike (see here) and if you are, the consequences are minimal.
Conor Friedersdorf has an interesting theory about the online illegal drug marketplace, The Silk Road, that authorities shut down a few weeks ago:
But for all of the DOJ details that, if accurate, make The Silk Road an indefensible enterprise, I can’t help but conclude, after reading the complaint, that the world is actually going to be a more dangerous place in the absence of the online marketplace.
It’s an interesting idea, and one I find believable.
That said, I do think it’s likely that this specific market contained almost exclusively nerdy and/or upper-class shoppers. I find it hard to buy that those demographics are typically involved (or victimized by) violent drug markets. Suburban (or more controversially: white, rich) drug distribution is a almost always — for better or worse — ignored by authorities specifically because it’s free of the side-effects Friedersdorf is positing that the Silk Road didn’t have.
Perhaps this just shows that I like Apple, but I really like John Gruber’s essay about why Clayton Christensen’s famous disruption theory seems to be sustainably inaccurate in the case of Apple.
There have been periods of low-end Clayton Christensen-style disruption — the Japanese imports in the ’70s and ’80s and corresponding collapse of Ford, GM, and Chrysler’s collective market dominance is a good example. But it is undeniably true that there is a sustainable and profitable high-end of the market, occupied by companies like BMW, Mercedes-Benz, and Porsche. Point this out and someone will inevitably argue that sure, those companies are thriving, but they all have tiny market share. But Apple is sort of like BMW, Mercedes, Porsche, and Lexus all rolled into one. There just aren’t that many competitors for this segment of the market in phones and tablets, and most of them aren’t very good.
Building on his idea of three capitalisms (LB), I really liked this piece from Michael O. Church about how we can understand the economy in terms of the biological idea of breeding strategies. It won’t blow up your head, but it’s a really interesting lens to apply.
An r-strategist doesn’t care about social stability, because the general assumption is that with a few hundred offspring, some will thrive no matter how damaged the environment becomes. K-strategists, on the other hand, want social progress because a fair, reasonable, predictable, and progressively improving society is the one in which quality offspring have the best chances.
I enjoyed Freddie Deboer’s review of Jaron Lanier’s Who Owns the Future, a book about which it seems I was right to be both interested in and dubious of. This paragraph is, I’m increasingly convinced, the trenchant and unanswered question facing the future of the capitalistic economies:
It is hard to overstate: This country, in its current condition, has no other option but something close to full employment. Our pathetic social safety net, even absent the contracting effect of austerity measures, can’t fill in the gaps caused by the demise of ubiquitous employment. Even the counterrevolution has no other idiom; the most common epithet directed toward Occupy protests, after all, was “Get a job!” That the near impossibility of getting a job was the point for many who were protesting was too destabilizing a notion to be understood. In the short term, I have no doubt that the unemployment rate will fall. The question is the long-term structural dependability of a social contract built on mass employment.
I’m no economist nor libertarian, but I was pretty intrigued by the points Michael Munger makes about recycling in this essay. A non-recycling thing (that turns out to be pretty important) I was surprised by:
Officials need keep landfill prices artificially low to discourage illegal dumping and burning.
This is one of those points that’s obvious once stated but rarely considered. The Heteconomist breaks down exactly why the kind of job you want to have is precisely the opposite of the kind of job an employer wants to offer.
Satisfying jobs – let’s call them ‘good jobs’ – will generally be ones where learning occurs at a steady pace more or less indefinitely, probably as part of a defined career path. Bosses would prefer not to offer these, and will always be looking for ways to deskill roles that, for now at least, need to allow workers greater autonomy, ingenuity, and scope for on-the-job learning.
(via Marginal Revolution)
Jared Diamond’s review of Why Nations Fail isn’t all that positive, but this distinction from the book was one I’d never thought of:
Among non-European countries colonized by Europeans during the last five hundred years, those that were initially richer and more advanced tend paradoxically to be poorer today. That’s because, in formerly rich countries with dense native populations, such as Peru, Indonesia, and India, Europeans introduced corrupt “extractive” economic institutions, such as forced labor and confiscation of produce, to drain wealth and labor from the natives. (By extractive economic institutions, Acemoglu and Robinson mean practices and policies “designed to extract incomes and wealth from one subset of society [the masses] to benefit a different subset [the governing elite].”)
But in formerly poor countries with sparse native populations, such as Costa Rica and Australia, European settlers had to work themselves and developed institutional incentives rewarding work. When the former colonies achieved independence, they variously inherited either the extractive institutions that coerced the masses to produce wealth for dictators and the elite, or else institutions by which the government shared power and gave people incentives to pursue. The extractive institutions retarded economic development, but incentivizing institutions promoted it.
By all accounts I’ve seen Charles Murray’s new book is important. David Brooks offers a pretty succinct summary of why:
His story starts in 1963. There was a gap between rich and poor then, but it wasn’t that big. A house in an upper-crust suburb cost only twice as much as the average new American home. The tippy-top luxury car, the Cadillac Eldorado Biarritz, cost about $47,000 in 2010 dollars. That’s pricey, but nowhere near the price of the top luxury cars today.
I enjoy occasional dips into the field of Marxist cultural analysis, but I know it’s not for everyone. If you like it too, or are just interested to try some, this piece by Slavoj Žižek highlights many of the best things that those theories can contribute to out modern understanding of the world. A sample:
If the old capitalism ideally involved an entrepreneur who invested (his own or borrowed) money into production that he organised and ran and then reaped the profit, a new ideal type is emerging today: no longer the entrepreneur who owns his company, but the expert manager (or a managerial board presided over by a CEO) who runs a company owned by banks (also run by managers who don’t own the bank) or dispersed investors. In this new ideal type of capitalism, the old bourgeoisie, rendered non-functional, is refunctionalised as salaried management: the new bourgeoisie gets wages, and even if they own part of their company, they earn stocks as part of their remuneration for their work (‘bonuses’ for their ‘success’).
(via The Browser)
Have I ever told you how much I love David Brooks? (Yes, yes I have.) It’s because he says sensible things like this:
In sum, in the progressive era, the country was young and vibrant. The job was to impose economic order. Today, the country is middle-aged but self-indulgent. Bad habits have accumulated. Interest groups have emerged to protect the status quo. The job is to restore old disciplines, strip away decaying structures and reform the welfare state. The country needs a productive midlife crisis.
I link to this disproportionately popular article mostly because I linked to “I, Pencil” recently and it’s essentially the same thing, only food based. (And in this case, rather than having an irrelevant plea for privatized mail service tacked on at the end, we get one about home-grown turkey.) But it remakes a point I think absolutely vital:
Anyone who tells you that life was better in the past is a dummy. Anyone who dreams of self-sufficiency a fool. We live in a magical time filled with uncountable objects no person would ever dream of making on their own. Everything about our lives is a minor miracle; we’re far more deeply connected than we even realize.
That felt good. Thanks for listening, internet.
This is another one of those stories I ignored the first five times I saw it. But it actually raises some very interesting issues about the nature of McDonald’s, modern food production, and economics, and thus worthwhile regardless of the defensibility of its core conceit.
(John Gruber is the reason I actually read it)
The basis of “I, Pencil” is one of the most important ideas you’re likely to ever encounter. Anyone who, encountering its premise for the first time, is not at least a little awed is probably dead inside.
I am a mystery—more so than a tree or a sunset or even a flash of lightning. But, sadly, I am taken for granted by those who use me, as if I were a mere incident and without background. This supercilious attitude relegates me to the level of the commonplace. This is a species of the grievous error in which mankind cannot too long persist without peril. For, as a wise man observed, “We are perishing for want of wonder, not for want of wonders.”
[I refer in my generous praise to the first two-thirds of the piece. While the bit about the mail isn’t obviously wrong, it’s much less obviously right than the part about the pencil. While I won’t here mount a strong defense of the US Postal Service, I believe one can adequately be mounted. I favor wonder and awe, not militant libertarianism in all matters.]
(via Google, The Rational Optimist, and an email I was drafting)
I’m not sure whether to blame myself, or America’s Zionist or nothing relationship to Israel (non-Zionists only really care about Israeli-Palestinian relations, not Israel itself), but I learned a lot about modern Israeli society from this story about the summer housing protests there. (Like for example, the fact that there were widespread protests.)
I saw this about five times before I gave it a serious look, but I actually think there’s a lot of good, thought-provoking stuff in this essay by Douglas Rushkoff. This rings true to me:
Our problem is not that we don’t have enough stuff — it’s that we don’t have enough ways for people to work and prove that they deserve this stuff.
Another in the large pile of “most things about wine are bullshit” stories. This author did a statistical analysis:
Using descriptions of 3,000 bottles, ranging from $5 to $200 in price from an online aggregator of reviews, I first derived a weight for every word, based on the frequency with which it appeared on cheap versus expensive bottles. I then looked at the combination of words used for each bottle, and calculated the probability that the wine would fall into a given price range. The result was, essentially, a Bayesian classifier for wine.
(via more of what i like)
An interesting idea from David Brooks:
If you look at America from this perspective, you do see something akin to the “British disease.” After decades of affluence, the U.S. has drifted away from the hardheaded practical mentality that built the nation’s wealth in the first place.
The shift is evident at all levels of society. First, the elites. America’s brightest minds have been abandoning industry and technical enterprise in favor of more prestigious but less productive fields like law, finance, consulting and nonprofit activism.