Robert Solow on Markets and Their Limitations

Posted inBusiness7 Comments on Robert Solow on Markets and Their Limitations

His review of Cassidy’s book How Markets Fail in the New Republic a couple months ago is superb. He clearly describes basic economics, what a free market can do, and where it falls short.

Excerpt:

…in the course of producing and distributing goods and services, market outcomes generate incomes, wealth, status, and power. Any modification of market outcomes modifies the allocation of incomes, wealth, status, and power. So it is no wonder that the discussion has become thickly encrusted with ideology. And one convenient way to turn subtle argument into ideology is to create dichotomies where there are originally fine gradations of more and less. For example: are you for or against “the free market”?

He also touches in passing on the issue I’m sure the more introspective workers in the finance industry must ponder: How much good am I doing in the world?

I have read that a firm such as Goldman Sachs has made very large profits from having devised ways to spot and carry out favorable transactions minutes or even seconds before the next most clever competitor can make a move. Deep pockets in a large market can make a lot of money out of tiny advantages…A lot of high-class intellectual effort naturally goes into trying to invent ways to find those tiny advantages a few seconds before anyone else.

Now ask yourself: can it make any serious difference to the real economy whether one of those profitable anomalies is discovered now or a half-minute from now? It can be enormously profitable to the financial services industry, but that may represent just a transfer of wealth from one person or group to another. It remains hard to believe that it all adds anything much to the efficiency with which the real economy generates and improves our standard of living.

And so: “…our poorly regulated financial system is not only dangerously unstable, but also too big and too complex, absorbing talent and resources that could be better used doing something else.”

Imagine a world with 50% fewer bankers / brokers and 50% more entrepreneurs.

Comment

Self-Centric vs. Reader-Centric Uses of Social Media

Posted inWeb/Tech3 Comments on Self-Centric vs. Reader-Centric Uses of Social Media

There are self-centric and reader-centric ways to use social media. “Self-centric” = an approach that serves you the author best, “Reader-centric” = an approach that serves your readers best. Some examples:

The frequency of blog posts: Self-centric bloggers blog whenever they feel the inspiration, the reader-centric blogs at traffic-maximizing optimal levels (usually once a day).

Method for sharing links: Almost daily, Tyler Cowen posts “Assorted Links” which is a series of interesting links posted in a numbered form. Steve Silberman does the same on Twitter — he posts tons of interesting links. Tyler and Steve are being reader centric — the link is published in an easily viewable, common format that readers enjoy. But, it does almost nothing for Tyler and Steve. It is very hard to search through and access these links in the future. By contrast, I rarely do link dumps on my blog, and instead have categorized over 6,000 web pages on delicious. I am self-centric — I am storing the links in a bookmarking system that sorts by date and category and can be easily backed-up and searched.

Content of blog posts and tweets: The self-centric writer posts whatever is on his mind, including the proverbial “what I had for breakfast” dispatch. The reader-centric writer thinks hard about what will be interesting to an external audience, and shapes it as a product for a customer. Self-centric blogs are more personal; reader-centric blogs tend to be about a specific topic.

Replying to tweets: Hundreds if not thousands of people have replied to me (@bencasnocha) on Twitter, but I rarely post replies of my own because I don’t find it an efficient conversational medium. (I do read all replies.) Also, I don’t want my main Twitter page to be polluted with all random replies to random people. Compare my Twitter page to this popular twitterer. I’m being self-centric, instead of reader-centric.

If you replace “self-centric” with “selfish” and “reader-centric” with “selfless” you can see how the old adage “it’s selfish to be selfless” applies in this case. Many times reader-centric uses of social media, by increasing total readership, become long-run self-centric.

Comment

Norman Mailer on a Vagina

Posted inRandom2 Comments on Norman Mailer on a Vagina

It was no graveyard now, no warehouse, no, more like a chapel now, a modest decent place, but its walls were snug, its odor was green, there was a sweetness in the chapel.

That description of female genitals is evidence of Mailer's "hopped-up, quasi-religious view of sex," according to the interesting long-ish essay titled The Naked and the Conflicted. It compares how Roth, Updike, Mailer, etc. prolifically and wildly deployed sex in their novels compared to today's young talents like Wallace (RIP), Eggers, and Kunkel, who cast a more skeptical eye on sexual impulses.

Here's Mailer on lust:

Lust exhibits all the attributes of junk. It dominates the mind and other habits, it appropriates loyalties, generalizes character, leaches character out, rides on the fuel of almost any emotional gas — whether hatred, affection, curiosity, even the pressures of boredom — yet it is never definable because it can alter to love or be as suddenly sealed from love.

Comment

Who Should and Should Not Be Going to College?

Posted inSchool / Education22 Comments on Who Should and Should Not Be Going to College?

I divide this question into three categories of high school students: academic underachievers, academic overachievers, and independent overachievers.

1. I think a lot of underachieving high school students should not be going to four year colleges. Marty Nemko says the “U.S. Department of Education reports that among the hundreds of thousands of college freshmen who graduated in the bottom 40% of their high school class, 2/3 do not graduate even if given 8 1/2 years. Most mediocre high school students would be wiser to consider apprenticeship programs, short-term career training programs at community college, or learning entrepreneurship at the elbow of good and ethical small business owners.”

2. Among high achieving high school students, I think most should enroll in a four year college. This includes liberal arts programs. Even stand-out students in high school may not be motivated enough to do independent education. Many benefit from structure. All benefit from obtaining the credential.

3. Maybe 5-10% of high school high achievers should pursue higher education without attending a four year traditional college. This is the “Real Life University” option for entrepreneurial spirits. This is for folks who can learn a lot on their own, can assemble mentors and advisors to guide the process, and most of all find their creativity smothered by drudgery of school — or otherwise are on a trajectory higher than what college can offer — and therefore need an alternative path. Dropping out after a semester or two may be the optimal point in terms of a taste of a common experience and the institutional affiliation…

So, I would say among high school grads currently enrolling in four year college, ~ 25% of them should instead be going to vocational schools and the like, ~ 65% should stay in four year colleges, and 10% (the more independent of the high achievers) should be exploring alternative paths to get educated.

I expect the percentage of students in #3 — those high achievers who choose to not graduate from a four year — will grow over time thanks to the weakening signaling value of a B.A. and the emergence of semi-structured learning options for high potential 18 year-olds.

Here is my post on the three categories of benefit of going to college. For clarity and concision, I believe it stands above my other posts on the topic.

Comment

Luna de Vieja, Atacama

Posted inChileLeave a comment on Luna de Vieja, Atacama

Atamca
[Wrote this offline and forgot to post it back in April]

There are three main tours to do in Atacama. Two of them leave very early in the morning to catch the sunrise, the other leaves in the afternoon. As a tour salesman began explaining the morning tours, we interrupted him: it's ok, we're not interested in waking up at 4 or 6 AM, regardless of what the tour actually involves. First, one sleeps. Then, one lives.

We signed up for the afternoon tour of Luna de Vieja. It was a delightful experience. Van picked us up, guide explained what we were going to do, we got out, and started walking across the desert landscape.

There were big drop points, Grand Canyon style, as well as white salt plains that inspire the name "moon."

We walked down a huge sand dune. We crawled through a cave. We trekked (gently) through canyons that resembled Bryce or Zion in Utah. The guide explained the different rock formations. I made small talk with a Canadian woman and a Mexican woman. We chatted with two Germans who denied that there was such a thing as a "German breakfast." As an American, I felt empowered to promptly correct them about their own culture. (Joke, joke.)

At the end, we drove to an area where we could rock-climb to the top of a canyon and watch the sun set. Quite a beautiful sight — desert for as long as the eye can see, with the sun setting behind a canyon in the distance. Our guide, who appeared to be dating one of the participants on the trip, turned on a Queen song and blasted it out of his iPod. Bizarre and at first unwelcome, I soon warmed to it as the soundtrack of the sunset moment, in the middle of a vast expanse in the remote part of northern Chile.

Comment