tag:blogger.com,1999:blog-58498712024-03-05T18:21:10.015-05:00The World According to NikGame-time, forward-looking thoughts on business, politics, technology, economics, and humanity ... from my personal viewpoint ... with no apologies.NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.comBlogger288125tag:blogger.com,1999:blog-5849871.post-85110159612682298272016-06-20T20:41:00.001-04:002016-06-20T20:44:10.413-04:00Bacteria are Everything<div dir="ltr" style="text-align: left;" trbidi="on">
I've said it before and I'll say it again. The human body is just an architecture for a biome of bacteria and viruses. Many MANY of our bodies behaviors are driven by them. Until we understand and can test for them, we are practicing medicine not much better than witchdoctors of yesteryear.<br />
<span style="background-color: white; font-family: inherit;"><br /></span>
<span style="background-color: white; font-family: inherit; font-size: 24px; line-height: 30px; text-align: center;">Evidence is mounting that intestinal microbes exacerbate or perhaps even cause some of autism's symptoms</span><br />
http://www.scientificamerican.com/article/gut-bacteria-may-play-a-role-in-autism/<br />
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<h2 style="box-sizing: border-box; color: #333333; font-size: 1.75rem; font-weight: normal; line-height: 1;">
<span style="background-color: white; font-family: inherit;">
"A newly released diagram of all life on Earth, the Tree of Life, contains a whole new branch, full of microbes — which appear to dominate Earth’s biodiversity. How did we miss this?"</span></h2>
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http://ideas.ted.com/a-newly-drawn-tree-of-life-reminds-us-to-question-what-we-know/?utm_campaign=social&utm_medium=referral&utm_source=facebook.com&utm_content=ideas-blog&utm_term=science<br />
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<img alt="nmicrobiol201648-f1" src="https://tedideas.files.wordpress.com/2016/04/nmicrobiol201648-f11.jpg?w=770&h=893" /></div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-52652871002535224022016-03-29T09:55:00.001-04:002016-03-29T09:55:38.223-04:00Talk Amongst Yourselves: Earthquakes<p dir="ltr">Many small earthquakes mean fewer large lethal earthquakes. Discuss. </p>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-54537102534802783482016-02-23T20:43:00.001-05:002016-02-23T20:43:53.518-05:00Negativity<div dir="ltr" style="text-align: left;" trbidi="on">
To clarify - quantitative easing (QE) is buying commercial paper of banks, which is equivalent to depositing money at the bank, which is equivalent to giving the bank a loan. CP matures very quickly (1-4 weeks).<br />
<br />
If QE doesn't cause banks to lend more, and if banks have to resort to negative interest rates to discourage the risk-averse practice of depositing excess funds at the central bank (see Japan, Dennmark), then the following are happening:<br />
<div style="text-align: left;">
</div>
<ul style="text-align: left;">
<li>Banks don't want to lend because:</li>
<ul>
<li>They are artificially constrained by government-imposed capital reserve requirements</li>
<li>They are constrained by increasing % of bad loans, which are increasing their capital reserve requirements </li>
<li>They are so administratively inefficient that none of them can do their core business</li>
<li>They are afraid due to uncertainty about future government requirements or actions</li>
<li>They see no viable loan applications</li>
<li>They think <u>inflation</u> will devalue the future repayments they receive</li>
</ul>
<li>Companies don't want to borrow because:</li>
<ul>
<li>People aren't buying their stuff for a profitable price</li>
<li>They are afraid due to uncertainty about future government requirements or actions</li>
<li>They think their company will not grow in the future and/or is already shrinking</li>
<li>They think <u>deflation </u>will make their debt painfully expensive to pay back</li>
</ul>
</ul>
<br />
If QE broadens to include equities or real assets, this is exactly equivalent to government manipulation of markets or nationalization at the extreme. This is not the behavior that made the US the world's largest and strongest economy. This is not the behavior that makes other governments want to sell their <u>own</u> currency and hold their money in USD. This is not the behavior that makes the USD the currency of reference on the vast majority of financial tranactions worldwide, including most oil and other commodity transactions.<br />
<br />
Rather, this is the behavior of a failing state - Post-coup Thailand; Argentina; Ecuador; 1980s Mexico; 1970s Iran; Stallinist Russia, Mao's China.<br />
<br />
But ... isn't the core issue really about lagging demand? If so, that is driven by:<br />
<br />
<ul style="text-align: left;">
<li>Consumers who overspent in the past and are paying down debt (including student debt?) instead of consuming</li>
<li>Consumers who are broke and/or don't have a reliable income and/or are delaying consumption because they are still acquiring skills to build a career </li>
<li>Consumers who are afraid for the future and are saving everything they can</li>
<li>Consumers who are delaying purchases because they think <u>deflation</u> (aka industry-wide discounting) will mean cheaper prices in the future</li>
<li>Fewer consumers (ahem, one-child-China?) </li>
</ul>
While I'm not going to take a position on which of the above are the primary drivers, I will say that we all keep hearing how expensive it is to have kids. Betcha didn't think that's where this was going. No debate about the cost of kids, but it's interesting to break that into component pieces:<div>
<ul style="text-align: left;">
<li>The "we don't want to give up our current level of consumption/lifestyle" aspect</li>
<li>and the "the cost of having kids is high and increasing rapidly" aspect</li>
<li>and the "we are saving for our own retirement and thus don't need a gaggle of kids to support us when we're old" aspect, which may sound silly until you look at how we took care of the elderly 150 years ago. (Hint: it wasn't an assisted living facility covered by a supplemental insurance policy).</li>
</ul>
<br />
<div>
All of the above decrease the motivation to have more than 1-2 kids, if at all. The planet is crowded, and emerging economies continue to make it more so, but they don't consume at the same levels we do (yet). Coastal China, Mexico, Philippines, and urban India all demonstrate that consumption patterns can swing from subsistence to luxury good quickly (in way less than a generation). So, despair on this front may be temporary. Or maybe not.</div>
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NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-61822567923612959252016-02-06T08:11:00.001-05:002016-02-06T08:11:38.322-05:00What will tomorrow bring? Trump baseball<p dir="ltr">This week is inning 8 in the meltdown story. The 9th inning may be ugly.</p>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-7826501095276508972016-02-06T08:09:00.001-05:002016-02-06T08:09:34.952-05:00Two birds one stone<p dir="ltr"> The Economist magazine this week suggested <u>turning</u> Greece into a giant refugee processing center funded by the entire EU. Brilliant! </p>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-42788933641874541362015-10-20T09:20:00.000-04:002015-10-20T09:21:13.698-04:00Follow Up: Dronestrikes over US Soil? <div dir="ltr" style="text-align: left;" trbidi="on">
One way to address the risk of drone collisions: registering drones like guns.<br />
<br />
http://www.ksdk.com/story/life/2015/10/19/new-drone-rules-to-include-hobbyists/74242146/</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-5153852947278469402015-10-07T14:51:00.000-04:002015-10-07T14:51:41.466-04:00Dronestrikes over US Soil?<div dir="ltr" style="text-align: left;" trbidi="on">
Flying into LaGuardia (NY) this weekend, at probably 2000 feet, I looked out the window to see the sun glint momentarily off a tiny metal object just a few feet below and a few hundred feet to our port side. It was a drone being flown by some idiot in some backyard in Queens.<br />
<br />
If birdstrikes can bring down a passenger plane (remember "Sully"?) what do you think a hobbyist drone would do to an aircraft engine?<br />
<br />
We have the technology to prevent that, and it would be criminally negligent to delay implementation of systems to protect our planes and people. Airports have radar monitoring of their column or airspace. It's probably not accurate enough to find a small hobbyist drone, so it needs to be improved. Once they are identified, the airports need lasers or laser-focused electro-magnetic pulses strong enough to disable a hobbyist drone. These weapons wouldn't be strong enough to hurt a plane (or even a military drone), but could prevent a dumb or malicious hobbyist. </div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-83647492634566611232015-09-14T09:56:00.002-04:002015-09-14T09:56:52.606-04:00What Will Tomorrow Bring: Austri-zona <div dir="ltr" style="text-align: left;" trbidi="on">
<a href="https://c1.staticflickr.com/1/38/79552508_3a241cf186.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://c1.staticflickr.com/1/38/79552508_3a241cf186.jpg" /></a>As Arizona is to the US immigration issue, Austria is for western Europe. The same radical nationalism and anti-immigration politics will blaze through Austrian politics. Some of the same tactics will be tried. Very similar cultural impacts will be felt in terms of dilution of the "Austria-ness" of the place. However, the religious differences will create a vastly more complicated and, at least initially, untenable situation. Mideastern immigrants who are relatively parochial will have a tough choice to make, similar to that faced by countless migrations around the globe in the past, and recently in Europe (north Africans in Paris circa 1980's or Turks in Germany circa 1995). "Do we prefer to live separate from the local culture in order to preserve all our traditions, religions, and mores? Or do we integrate?"<br />
<br />
20 years from now, the answer will be "neither" - as both sides will have met somewhere in the middle or some sort of clash will have occurred.<br />
<br />
By then, the debate will be about what to do about the fact that ethnic non-Austrians, on average:<br />
<br />
<ul style="text-align: left;">
<li>earn less than Austrians</li>
<li>are incarcerated at a greater rate</li>
<li>attend university at a lower rate</li>
<li>and feel they have less opportunity</li>
</ul>
<div>
And, despite likely changes to Schengen to limit mobility, this will not just be an Austrian problem.</div>
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NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-26759699893890710342015-08-19T08:43:00.001-04:002015-09-14T09:20:16.576-04:00Chinese Car Trolls<div dir="ltr" style="text-align: left;" trbidi="on">
In case anyone was still worried about Chinese world domination ... this is the kind of innovation the country is betting their future on:<br />
<img alt="Youxia Ranger X" src="http://ichef.bbci.co.uk/wwfeatures/464_261/images/live/p0/30/1x/p0301xly.jpg" /><br />
<br />
http://www.bbc.com/autos/story/20150818-youxia-ranger-x-is-totally-not-a-tesla<br />
<br />
"<span style="color: #666666; font-family: arial, sans-serif; font-size: 14px; line-height: 18px;">We are no longer surprise by Cinese carmakers paying legally questionable homage to successful Western models"</span><br />
<span style="color: #666666; font-family: arial, sans-serif; font-size: 14px; line-height: 18px;"><br /></span>
<span style="color: #666666; font-family: arial, sans-serif; font-size: 14px; line-height: 18px;">"The driver interacts with that system through a vertically oriented 17in touchscreen display, much like the driver of a Model S would interact with that car’s vertically oriented 17in display. Small world. "</span><br />
<span style="color: #666666; font-family: arial, sans-serif; font-size: 14px; line-height: 18px;"><br /></span>
The idiots who sent this bunch of posers their investment dollars got exactly what they deserved. You are what you invest in.</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-47372027609381063592015-07-25T13:20:00.001-04:002015-07-25T13:20:25.194-04:00Shockinghttp://humanprogress.org/static/3018?utm_content=buffer5b2e9&utm_medium=social&utm_source=facebook.com&utm_campaign=bufferNBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-70930232870355897622015-07-20T06:25:00.001-04:002015-09-14T09:32:29.353-04:00UKISIS<p dir="ltr">Ever the speartip. Brittain, please report to the stage. You must devolve power to local governments, stem the exodus of corporates and financial services, close structural deficits, achieve a cheaper nimbler military, avoid prickles with neighbors, and beat ISIS on home soil. All others, remain in the green room until the UK has written your script. That's global relevance.</p>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-79129783395204095152015-04-17T15:40:00.001-04:002015-09-14T09:58:18.043-04:00Income Inequality<div dir="ltr" style="text-align: left;" trbidi="on">
Nobel and I don't seem to agree much these days. First Obama. Then (no) <a href="http://www.washingtonpost.com/news/volokh-conspiracy/wp/2014/09/29/israel-kirzner-for-the-nobel-prize-in-economics/">Kirzner</a>. Then Piketty.<br />
<br />
I think at a minimum, they should require people to explain their positions before being considered for a prize. Piketty, for example, seems to have watched enough MSNBC and Fox News to master the art of scare-mongering soundbites. He has also mastered the art of economic analysis of large data sets. However, I've yet to see him effectively connect those two things. In other words, he really hasn't been able to convincingly show that his data supports his soundbites. <a href="http://www.democracyjournal.org/33/the-inequality-puzzle.php?page=all">Larry Summers, for one, agrees</a>.<br />
<br />
To wit,I've been thinking about <a href="http://www.hup.harvard.edu/catalog.php?isbn=9780674430006">his position on income inequality</a>. Think about the amount a product or service can be sold for as a function of:<br />
<br />
<div style="text-align: center;">
raw materials + labor inputs (human or machine) + intellectual inputs (human or machine) + profit (or loss)</div>
<br />
Each of those inputs has an associated dollar value, but it also has a contribution factor. For example, people pay a lot these days for fancy tasting menus at top-notch restaurants. The meat and veg and spices to compose the meal might contribute 20% of the cost. The chef had to exert a lot of intellectual work to invent the amazing recipe. This must be amortized over all meals sold, so maybe 10% of the cost. On the other hand, he might spend only 2 minutes per diner to quality-check and coordinate their specific dishes, so maybe only 2% of the cost. The dish washer might exert a lot of labor (so, maybe 5% of cost) but not much intellectual effort (1% of cost). He may use a medium level of machine labor (washing machine) (amortized as 2% of cost) and a low level of raw materials (soap and water contributing less than 1%).<br />
<br />
Here's where I get controversial. In terms of output, clean dishes are only a small contribution to the overall "value" of dinner bill. People expect clean dishes, but they don't pay extra for extra-clean ones. They pay for the experience of good service and interesting tasty fun food. Thus, a stellar chef's contribution to the overall value is huge. He does this through inputs of his labor and intellectual R&D, possibly facilitated by some machine inputs (mixers, stoves). More investment by the chef would drive cost higher but would also support a higher price (El Bulli?). One way to think about this might be to have a line item on the menu and bill for "clean plates." How much would customers be willing to pay for this? Let's assume the restaurant gets customers to pay $36 for the fancy food and $4 for the clean plates. For simplicity, let's leave out the front-of-house (waiters, bartenders, etc.). Maybe this is a fine-dining food truck situation with just 2 workers.<br />
<ul style="text-align: left;">
<li>If the dish washer and chef were paid in the idealistic communist way, they would each get 50% of the money left over after paying for raw materials, equipment, etc (aka "cost of goods sold" in accounting terms). I think most folks would struggle to support Marx at this point, but Piketty certainly tries to argue for forceful wealth distribution in order to move in this direction.</li>
<li>If they were paid in the idealistic socialist way, the dishwasher would get 40% of the money left over, based on his level of effort. This more or less aligns to the classic economic principle of "marginal price of labor capital" <a href="http://mises.ca/posts/blog/marginal-physical-product-of-capital-neither-necessary-nor-sufficient-for-interest/">which has been, like all other economic theories, criticized</a>. </li>
<li>If they were paid in the idealistic capitalist way, the split would be based on labor pricing arbitrage mechanisms and efficient markets where the restaurant would post an open position notice and would seek out the best candidate who responds. Commensurately, each job-seeker would scan the job market and consider all the things they could do with their time (or other capital). The "breakeven" point between these two would determine how much each person got paid. This tends to lead to a fixed wage rather than a percentage of the revenue.</li>
<li>An alternative capitalist model might see that customers are willing to pay $4 for plates vs. $36 for food and compensate the chef and dishwasher accordingly. </li>
</ul>
What would Piketty say, based on his worry around human labor being pushed out by machines? To explore this, let's think about machine costs in a way that is comparable with human labor. To do this, we take the initial and ongoing cost of the machine and amortize it over all products/services sold.<br />
<br />
We can represent this graphically as follows:<br />
<br />
<img alt="Inline image 1" class="CToWUd a6T" height="139" src="https://mail.google.com/mail/u/0/?ui=2&ik=71eba28680&view=fimg&th=14b98b1046265811&attid=0.4&disp=emb&realattid=ii_14b9829cec190345&attbid=ANGjdJ9ZgwnXEvG5Nli-es82YtIlOTJ-Dn35Cvs6tq8F6ewFkZqR-2uaIKw3LHGQSouYwCIOMD8gn1PnGURBXEfXqWs4tiQHMTaEGmddAwZF8WeHMBOtZUxmqUkJKgI&sz=w1050-h278&ats=1429299534662&rm=14b98b1046265811&zw&atsh=1" style="background-color: white; color: #222222; cursor: pointer; font-family: arial, sans-serif; font-size: 12.8000001907349px; outline: 0px;" tabindex="0" width="525" /><br />
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<img alt="Inline image 2" class="CToWUd a6T" height="139" src="https://mail.google.com/mail/u/0/?ui=2&ik=71eba28680&view=fimg&th=14b98b1046265811&attid=0.2&disp=emb&realattid=ii_14b982de87488cf0&attbid=ANGjdJ8C1YM-NZRRsuGwlNp6geZxwcTdCXLHlPkFumUKta9QwmBjfY9k9TVH9pqDN-oFNk2i0ImAMxcm3EwNInBpBQPlUvdQe-xWci9-TVQl2M8FfRfX7JXnDeMk0Ok&sz=w1050-h278&ats=1429299534662&rm=14b98b1046265811&zw&atsh=1" style="background-color: white; color: #222222; cursor: pointer; font-family: arial, sans-serif; font-size: 12.8000001907349px; outline: 0px;" tabindex="0" width="525" /><br />
This enables us to play out Piketty's concern. Imagine an entrepreneur was able to have a robot make those fancy dishes from the chef. The piecharts would change:<br />
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<img alt="Inline image 7" class="CToWUd a6T" height="139" src="https://mail.google.com/mail/u/0/?ui=2&ik=71eba28680&view=fimg&th=14b98b1046265811&attid=0.3&disp=emb&realattid=ii_14b9847a046baa1f&attbid=ANGjdJ9VZTROFRkpe7GzgXtWtvbVz2hK3vrsqn8haJA49pOSqpvAriPt-mSKvvu-pnyHwIpcC8ClSVl-ocYBgX2gJ4p-YqqVSr73vxGgH8tAQQ2qWbrWkctKrygy5mg&sz=w1050-h278&ats=1429299534662&rm=14b98b1046265811&zw&atsh=1" style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.8px; outline: 0px;" tabindex="0" width="525" /><br />
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<img alt="Inline image 8" class="CToWUd a6T" height="319" src="https://mail.google.com/mail/u/0/?ui=2&ik=71eba28680&view=fimg&th=14b98b1046265811&attid=0.1&disp=emb&realattid=ii_14b9849648140954&attbid=ANGjdJ-Hh4SzNGygPCx1fnZ-LyKBqE3DXlb1muTiX7Vquya_EqdojrZAdlEmbEMadWBrfHciBQ7-UMmlt2oCFyiAtBicXgnw9N9znVIwDab9cbJLMppQhKle5PytP7w&sz=w996-h638&ats=1429299534662&rm=14b98b1046265811&zw&atsh=1" style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.8px; outline: 0px;" tabindex="0" width="510" /><br />
In our example above, the chef provided the critical intellectual and labor inputs to invent the recipe.The entrepreneur also provided intellectual and manual labor when he designed and created the robots. On a per-meal basis, the amortized fraction of those efforts is tiny if the robot makes a huge number of meals ... or is copied. While the machine has taken over the chef's per-meal labor, the dish washer still has to manually do his part.<br />
<br />
Piketty's million-dollar question is who should get what share of the revenues? Since the dishwasher is the only one really doing manual labor, should he get all the profits? Since the chef is no longer involved in the creation of individual dishes, should he get nothing? Should the chef's paycheck now go to the owner of the robot, even though they don't lift a finger? Piketty worries that this type of shift from human (labor and analytic) effort to machine (labor and analytic) effort will mean that laborers will get a decreasing slice of the pie, while owners of computers/machines will absorb the rest. For this reason, he says wealth will pile up in the hands of "a small elite."<br />
<br />
Bold and headline-grabbing, but pretty full of unsafe assumptions.<br />
<br />
Capitalists might say each owner of capital (intellectual or physical or labor) should get compensated according to their contribution of that capital to the product/service which is sold. They would look to markets and pricing arbitrage to help guide the pie split. For example, If the restaurant put out a dishwasher job posting and got no responses, they'd have to increase the salary until they got enough responses. If the chef didn't feel he was well-enough compensated, he wouldn't share his recipe. And so on. This talks about HOW compensation would get determined, but it doesn't take a position on WHAT each person should get paid. Thus, capitalism is NEUTRAL on the subject that Picketty is probing. His concerns don't point out issues with capitalism. Sadly, he is confused and generally french about this point. "capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based."<br />
<br />
Fallacious logic. Nothing in capitalism forces inequalities or undermines meritocratic values.<br />
<br />
Then he builds on this bad logic to say "because the rate of return on capital is now higher than the growth rate of the global economy, the proportion of the world's wealth that is owned by a small elite will likely keep increasing"<br />
<br />
A couple of counterbalancing considerations:<br />
<ul style="text-align: left;">
<li>As the revenue "pie" grows, there is more to spread around. So, if a dish washer used to get 5% of $100 ... and now they get 2% of $500 ... their income has actually gone up, though their percentage has gone down. Therefore his observation doesn't necessarily lead inexorably to his conclusion (or fear) of poverty-stricken laborers.</li>
<li>We should really focus on whether his "small elite" are owners of capital (Marx's fear, rewarmed) or idea creators (what happens every day in silicon valley and in every vibrant business). One really could be an ever-shrinking group of ever-more-wealthy "owners" ... the other is an opportunity available to every man. </li>
<li>His statement about global growth and rate of return (ROR) assumes a zero-sum game where the owner's profit increase is necessarily the worker's loss. However, he doesn't prove this through data analysis. In the example above, once the robot steps onto the scene, the chef's and dishwasher's incomes likely go UP even though they don't own the robots because revenue increases 300% but the number of people sharing it only increased by 33%. There's more money to be shared. This will continue as machine automation expands. Therefore, again, even if I agree with all his observations/data, I don't necessarily come to he same conclusion</li>
<li>One way to think about it is to look at the publishing business (music, book, software, photo, etc.) where initial ideas get licensed so the creator (chef AND entrepreneur) get a slice of the profit, but so do the per-item laborers. </li>
</ul>
In my opinion, Piketty's data simply tells us that we need to move to a "publishing" type of compensation model in more and more industries and areas. I say this recognizing that the publishing industry is in crisis, itself and is seeking better ways of operating (<a href="https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=1&cad=rja&uact=8&ved=0CB0QqQIoADAA&url=http%3A%2F%2Ftechcrunch.com%2F2015%2F03%2F31%2Fgiving-away-music-is-how-you-get-people-to-pay-for-it%2F&ei=jCA1VZ_POYedsAWM04H4Cg&usg=AFQjCNF1UyA1N8iAKPl5dYX9WlSy0g5bXg&sig2=XnsYBQskNlXYZy9CfDUI_g&bvm=bv.91071109,d.b2w">TIDAL</a>, for example).<br />
<br />
Capitalism doesn't do the greatest job of this, but it doesn't do damage either. It's answer is that the idea creator should accept bids from investors. The investor who is willing to pay the highest price should get to buy the license to use the idea. They would then put it into place (by combining the idea with financial, physical, and labor capital) and would sell the output for the highest price they can get. Labor capital would get paid for their work. Raw material suppliers would get paid for their stuff. Then the remaining profit (if any) would go to the investor. Hopefully, this profit eventually accumulates to cover the initial payment to the idea creator, after which, yes, there is a lot of profit for the investor, which over time could enable him or her to buy more and more capital, through which he or she would hope to reap more and more profits ... all while continuing to pay the laborers what they always made (or more).<br />
<br />
Or maybe the investor does't really make more and more money as time passes. Maybe the cost of raw materials soars. Maybe someone else copies the idea and is willing to sell the product slightly cheaper. Maybe people stop liking the product. Maybe a new technology renders it obsolete and worthless. Maybe over time there are fewer and fewer laborers willing to do the work and he has to drastically increase wages to retain people. The government could shut him down or take his company. Customers could get sick and sue him. Hackers or disgruntled laborers could take all his secrets.<br />
<br />
It's not easy. Even done right, this requires a ton of information and specifically foresight right upfront when prices are set for labor and for ideas. Since we can't really know the future, that's risky business. To encourage people to risk their hard-earned money on something like that, the potential profit margins have to be pretty awesome. The bigger the gamble, the bigger the potential has to be.<br />
<br />
Having said that, I suspect we need to (and will) find better ways (without throwing away capitalism) to determine those prices for capital, including labor, ideas, etc. This would be a better focus of our collective attention than wringing hands and/or legislating in reaction to Piketty's soundbite.<br />
<div>
<br /></div>
</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-23003717115540670992015-03-08T21:57:00.000-04:002015-03-08T21:57:00.406-04:00Nik's Laws: Don't Spit in Eyes<div dir="ltr" style="text-align: left;" trbidi="on">
Hey, Bibi.</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-24083839500290460292015-03-06T21:41:00.000-05:002015-03-06T21:58:41.844-05:00Nik's Laws: Don't Arm your Future Enemy<div dir="ltr" style="text-align: left;" trbidi="on">
Hey world (and Barack and the useless heap of Congress) are you listening?</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-49752326488609266632015-02-13T09:45:00.002-05:002015-04-16T10:30:49.019-04:00Corporate Newspeak 2015<div dir="ltr" style="text-align: left;" trbidi="on">
<b><u>Perspectives</u></b> (n-pl; no singular) - Statements presented as true and insightful, sometimes conflicting, none of which the speaker will defend if challenged.<br />
<b>Usage: </b>"We'd like to get together with you to share perspectives on this topic."<br />
<br />
<b style="text-decoration: underline;">Unpack</b> (v) - Saying the same thing as someone else, but without codewords, jargon, insider statements, and/or inappropriate intermingling of concepts, all of which are designed to be either 1/brief by excluding certain details, 2/coded to exclude others from comprehending the statement, or 3/coded just to make the speaker feels smarter than others. In some cases, unpack is abused as a a way of pretending to clarify someone else's statement while subtly incorporating your own bias or position on a topic.<br />
<b>Usage: </b>"Let me unpack Steve's email for you."<br />
<br />
Also, a point of follow up. In a <a href="http://nik-o-laus.blogspot.com/2010/07/new-newspeak.html">2014 Corporate Newspeak post</a>, I said "nimble" would infect the business world. If you doubt this has happened, <a href="https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=corporate%20nimble">Google it</a>. Or just look at the <a href="http://www.nytimes.com/2014/01/05/business/management-be-nimble.html?_r=0">NY Times</a>.</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-86824282569935799932014-12-23T13:13:00.001-05:002014-12-23T13:14:17.527-05:00That moment when terrorism becomes guerrilla warfare <div dir="ltr" style="text-align: left;" trbidi="on">
Are we all clear on what's happening here?<br />
<br />
http://www.reuters.com/article/2014/12/23/us-northkorea-cyberattack-idUSKBN0K107920141223<br />
<br />
http://theweek.com/article/index/274145/why-america-would-be-foolish-to-wage-a-cyber-war-against-north-korea<br />
<br />
http://www.bbc.co.uk/news/world-asia-30587837<br />
<br />
http://www.usnews.com/news/articles/2014/12/23/china-likely-irked-by-north-koreas-sony-hack<br />
<br />
<br /></div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-4087473049701237582014-12-18T21:07:00.001-05:002014-12-19T08:22:03.536-05:00Mary Hawking on Religion<div dir="ltr" style="text-align: left;" trbidi="on">
Theology is a great topic for kids, because you don't need any facts at all.</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-46453204254407158192014-12-17T16:49:00.000-05:002014-12-18T16:50:26.055-05:00Finally.<div dir="ltr" style="text-align: left;" trbidi="on">
Yes, finally.</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-64610444122857262622014-09-19T12:11:00.000-04:002014-09-19T12:11:12.877-04:00Should NFL Players be Role Models?<div dir="ltr" style="text-align: left;" trbidi="on">
The NFL's sponsors are rattling their sabers because of the flood of negative headlines and stupid apish behavior of the players.<br />
<br />
Their response has demonstrated bunker mentality. They're working their backchannels with the sponsors, throwing money/perks at them, and hoping it goes away.<br />
<br />
Meanwhile, the talking heads debate <i>ad nauseum</i> about whether athletes should be role models.<br />
<br />
They're on to something. The NFL should launch a "<b>Role Models</b>" program.<br />
<br />
Players who DON'T qualify (see criteria below*):<br />
<br />
<ul style="text-align: left;">
<li>Cannot sign sponsorship deals</li>
<li>Cannot appear in NFL promotional media (ads, spots, visuals, interviews) or any off-field activities/media related to the NFL</li>
<li>Cannot play in the Pro Bowl or other off-season promotional events</li>
<li>Cannot be admitted to the Hall of Fame</li>
</ul>
Conversely, if they do qualify they get:<br /><ul style="text-align: left;">
<li>A significant annual bonus directly from the NFL, payable in installments over the subsequent 2 years unless they are removed from the program</li>
</ul>
* Eligibility criteria would be the following with a zero tolerance, one-strike-you're-out policy:<br />
<br />
<ul style="text-align: left;">
<li>2+ years with the league</li>
<li>No criminal activity for the past 5 years</li>
<li>No suspensions or fines from the team or NFL </li>
<li>No violations of NFL or NCAA policies on drugs, conduct, etc.</li>
</ul>
They'd have to be careful about due process and presumed innocence, but they should not allow any wiggle room within their rules. </div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-46901127545875606332014-09-16T12:15:00.001-04:002016-02-06T08:13:03.066-05:00Hedge Fund ROI<div dir="ltr" style="text-align: left;" trbidi="on">Many hedge funds are the equivalent of Fiji water. Overcharging for a product which could be gotten elsewhere much cheaper, but is supported by purported vague magical differentiation. People need to look at the ROI of the fees they charge when deciding who manages their money.</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-2850245791691990232013-12-23T14:12:00.000-05:002013-12-23T14:12:26.861-05:00What Will Tomorrow Bring: Rough Waters<div dir="ltr" style="text-align: left;" trbidi="on">
China liquidity crisis. I repeat, China liquidity crisis. Hold on to your hats, kids. I think we're in for a blow. </div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-50418200926402352462013-09-05T12:06:00.001-04:002013-09-05T12:06:58.467-04:00Five Rules to Guide Syria Policy<div dir="ltr" style="text-align: left;" trbidi="on">
<div style="text-align: left;">
</div>
<ol style="text-align: left;">
<li>Don't let Iran win the Syrian civil war</li>
<li>Don't fall into the trap of being the World Police. Athens, Constantinople, Rome, and England already tried that</li>
<li>No matter which Syrian faction you choose to ally with, 75% of the country will hate and resent and fight you. Don't pick sides</li>
<li>Because of #2, the only acceptable justification for intervention is on humanitarian grounds</li>
<li>Syrian peace is not a vital US interest. It IS a vital interest of Syria's neighbors: Lebanon, Jordan, Iran, Iraq, Turkey, Saudi Arabia, UAE, and (gasp) Israel. They are getting flooded with refugees. They are at risk of receiving SCUDs. They are at risk of spill-over instability. They should lead any intervention. They should build humanitarian supply/evacuation lines. They should host any refugees (humanely). To the extent they don't want to participate, they should fund intervention. If they lack specific technical capabilities, they should request US assistance. The UN, thanks to Russia and China is useless. Don't waste your time with that</li>
</ol>
It may very well be that the best response is, until five-way peace agreements are signed, a total economic, commercial, and travel embargo of the country, supplemented by an oil-for-food style humanitarian plan, led and executed by Syria's neighbors.<br />
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
Turkey, the UAE, and Saudi Arabia in particular are vying for recognition that they have "turned a corner" from their insular, murky, iron-fisted past into first-world regional powers. They should view the current situation as a grand opportunity to demonstrate they are world-class by acting world-class.</div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
Rule #3 aside, and broader than the Syrian civil war, is the Kurd issue. Creating a Kurdish state or independent self-administered region would create stability and solve numerous simmering conflicts all at once. Kurdish regions of Turkey, Syria, and Iraq have proven largely stable, predictable, and trustworthy. They are able to generate relatively stable governance structures and effective economic activity even under very poor circumstances. Turkey, Iraq, and Syria need to mature their approach from current passive-aggressiveness to acknowledging that current borders simply don't reflect the cultural and national landscape. There is something for each of them to gain by ceding political control, economic control, and even territory in the interest of furthering regional peace and stability. While any mideastern solution seems to cause 20 new mideastern conflicts, this one might be a risk worth taking.</div>
</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-39358268106093387892013-07-21T10:06:00.000-04:002013-07-21T10:06:11.879-04:00Bobbleheads<div dir="ltr" style="text-align: left;" trbidi="on">
Dear Malcolm Gladwell,<br />
<br />
Please stop talking.<br />
<br />
Thanks,</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-33750835980430421062013-07-19T12:49:00.000-04:002013-09-05T12:22:55.500-04:00Motown Lowdown<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
As far as I'm concerned, city bankruptcies are good with one possible exception.<br />
<br />
The exception is pension funds. If the city changes the pension payments they promised to retirees, that strikes me as pretty evil. People plan their whole life for retirement based on the assumption that they will get certain pension benefits. These should be preserved. If Detroit had been smart, they would have insured or offloaded this liability long ago. It's simple math and stochastics. Let the experts in the financial world make it work.<br />
<br />
Bondholders should be aware of the risks of lending money to cities with large deficits, so it shouldn't be any surprise that they'll get a "haircut" meaning less than 100% of their value back. In the mean time, they got interest on the bonds.<br />
<br />
Aside from that, city bankruptcies allow cities to renegotiate every contract - suppliers, vendors, unions in a public way (as opposed to back-room deals). I guarantee you that there's plenty of fat to be cut here.<br />
<br />
What is sadly missing from most municipal bankruptcies is austerity. Bondholders should really pressure Detroit to not only pay less for what they buy (my prior point) but also to buy less, cut services or at least make them cheaper, privatize or close inefficient departments, etc. These are tough decisions, of course, and can create a negative-reinforcement cycle where the city gets worse and more people move out. Ideally, they offset this by improving the economy and thus increasing revenues.</div>
NBWhttp://www.blogger.com/profile/17871922481910861175noreply@blogger.com0tag:blogger.com,1999:blog-5849871.post-26404784473579710112013-05-08T15:26:00.002-04:002013-09-05T12:21:24.232-04:00What Will Tomorrow Bring: Is it a Bubble?<div dir="ltr" style="text-align: left;" trbidi="on">
<div style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.800000190734863px;">
Stock market indexes have broken records multiple times in past weeks. Yes, this is a stock bubble.</div>
<div style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.800000190734863px;">
<br /></div>
<div style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.800000190734863px;">
It will likely turn into a more general bubble on the price of everything ... which is another way of describing .... inflation. This is just the mathematical result of the very-very-very low interest rates. </div>
<div style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.800000190734863px;">
<br /></div>
<div style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.800000190734863px;">
On the other hand, the Fed (or Congress) can reverse the inflation in a couple of ways, all of which are like hitting the brakes on the Titanic ... the effect takes a long time to be felt, by which time the facts on the ground have largely changed. They can:</div>
<div style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.800000190734863px;">
<ul>
<li style="margin-left: 15px;">Threaten to change interest rate policy and people would immediately change their behavior. People would borrow a lot and buy a few big items in the short term, but would reduce spending in the longer term</li>
<li style="margin-left: 15px;">Increase interest rates or bank reserve requirements. Both would have the effect of reducing new borrowing, which would in turn reduce industrial production as well as family consumption. People don't buy cars as often when car payment interest rates are high.</li>
<li style="margin-left: 15px;">Increase tax rates without increasing spending ... or reduce spending without changing tax rates</li>
<li style="margin-left: 15px;">Toy with the exchange rate of the dollar (for example, through tariffs or WTO complaints)</li>
<li style="margin-left: 15px;">Continue to be unclear about future US taxation and regulation policy. People are more conservative when they don't know what the future holds</li>
<li style="margin-left: 15px;">Impose uncomfortable (or unknown) rules on future taxation and/or regulation of borrowing, buying, selling, and/or profits. </li>
<li style="margin-left: 15px;">"Prick" the stock market bubble either through taxes/rules or by convincing big investors that the world is scarier than they thought it was</li>
</ul>
</div>
<div style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.800000190734863px;">
However, all of the above will also reduce GDP and growth, which will increase unemployment.</div>
<div style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.800000190734863px;">
<br /></div>
<div style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.800000190734863px;">
The tougher question is how can we avoid getting drowned by the inflation if it happens. Options would include:</div>
<div style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.800000190734863px;">
<ul>
<li style="margin-left: 15px;"><b>Horde stuff </b>now which will rise in value faster than the coming inflation ... tough to know what this would be. You have to look at supply and demand (SnD) forecasts</li>
<ul>
<li style="margin-left: 15px;"><b>Gold </b>is one option, but as recent history shows, the SnD situation is sketchy. The majority of the supply is held by basically a cartel of central banks (US, Germany, Italy, France, China, Switzerland, Russia, Japan in descending order ... google "world gold holdings" for details) who keep threatening to dump it. If this happens, then individuals who own gold would get screwed. Recently, the ECB has tried to make countries sell their gold prior to getting a bailout. If Italy or Japan decided to do this, gold value would fall steeply. I prefer to protect my money from politics as much as possible.</li>
<li style="margin-left: 15px;">Other <b>commodities </b>are another option (metals, minerals)</li>
<li style="margin-left: 15px;"><b>Oil </b>is another option, but the recently-found supplies and the alternative energy investments may mess up supply as well as demand, and the mideast can always be annoying. Politics and money again.</li>
<li style="margin-left: 15px;"><b>Real estate</b> is another one. The US SnD situation is pretty predictable, but the possibility of a change to the mortgage-interest-tax-<wbr></wbr>deductibility rules might screw things up. Real estate abroad is often subject to politics.</li>
<li style="margin-left: 15px;">Other limited-supply and high-demand <b>valuables</b>. Fancy cars. Wines. Jewelry. Industrial metals. Bubaru. Whatever.</li>
</ul>
<li style="margin-left: 15px;">Move money into assets in a <b>foreign currency </b>which is not going to have as much inflation. For example, if it's $1 per 1 EUR today ... and you think that USD will inflate faster than EUR for the next 10 years ... then you might want to convert your money to EUR today. Then, in 10 years, when it's $2 per 1 EUR, you could convert it back to dollars and buy stuff here. The key to this is finding assets in that foreign currency which will appreciate at an acceptable rate vs. what you could get in $.<br />For example, assume you have $1000. You can:</li>
<ul>
<li style="margin-left: 15px;">keep it in dollars and buy something like IBM stock which will increase in value. Assume USD inflation is 10% and IBM stock increases at 15% per year. This would mean that over time you would neutralize inflation PLUS gain an extra +5% of appreciation each year. The net impact on your purchasing power (=what you can buy with your money) would be an increase of<b>+5% per year</b>. At the end of the first year you'd have <b>$1050</b></li>
<li style="margin-left: 15px;">OR you could convert it to EUR1000 and buy something like BNPP stock. Assume that the USD/EUR exchange rate depreciates by 5% per year due to the US inflation situation. Also assume BNPP stock increases 7% per year. This would mean that over time your total appreciation in USD terms would be 5%+7% = 12%. This would neutralize USD inflation plus an extra<b> +2% per year</b>. At the end of the first year, you'd have <b>$1020</b> if you converted back to USD, so it wouldn't be worth all the trouble. There's also the possibility of paying double-taxes on foreign income once you bring it back to the US.</li>
</ul>
<li style="margin-left: 15px;">Which brings us to <b>inflation-proof profit-generating assets</b>. Owning companies (or investment properties) creates a cash flow. Some companies/properties will "float" like a boat meaning that they can increase their prices at the same rate their costs increase (at least). These "inflation proof" companies would be good investments assuming they:</li>
<ul>
<li style="margin-left: 15px;">Have an innovation/growth/improvement/<wbr></wbr>efficiency plan which will allow them to expand their market share and/or charge higher prices than competitors, </li>
<li style="margin-left: 15px;">Are in good financial health</li>
<li style="margin-left: 15px;">Are not vulnerable to other inflation-related issues like floating interest rates on loans (or short-term loans that they have to frequently roll over)</li>
</ul>
<li style="margin-left: 15px;">Or you can just ignore it and hope that Social Security increases with inflation ... which it historically hasn't</li>
</ul>
</div>
<div style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 12.800000190734863px;">
<div>
As always, a "portfolio" approach is probably best, rather than putting all your eggs in one basket. </div>
<div>
<br /></div>
<div>
<span style="font-size: 12.800000190734863px;">An alternative is to outsource the decision to somebody you think is super smart. Obviously, an investment advisor is one way to do this, but another way is to invest in a company that you think will be smart about maximizing value in the face of inflation. For example, Warren Buffett has survived several periods of inflation and is very watchful of inflation. His Berkshire Hathaway would ... probably ... maybe ... figure out the smartest way to preserve value. Buying shares in that company lets you ride his coattails.</span></div>
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