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MoviePass worked out great • Bloomberg
Matt Levine on the <a href="">Business Insider story about the flameout that was MoviePass</a>:
<p>under founder Stacy Spikes, MoviePass charged $50 a month for its service, but couldn’t get enough subscribers to break even. Then it was acquired by Helios & Matheson Analytics, whose chief executive officer, Ted Farnsworth, came up with the idea of charging much less:
<p>Why Farnsworth settled on $10 is unclear. Several people told me he wanted a price that would grab headlines. ...

But in July 2017, the MoviePass board agreed to the deal. And on August 15, the price drop went into effect. Thanks to word-of-mouth buzz and press attention, within two days subscriptions jumped from about 20,000 to 100,000. MoviePass had transformed from a scrappy startup trying to keep the lights on to a disrupter in the making.</p>

What an amazing sentence. It went from being “a scrappy startup trying to keep the lights on” (bad) to a buzzy “disrupter in the making” (good) by giving up on trying to keep the lights on. The trick is not to make enough money to cover your costs; it’s to stop trying. Losing a lot of money is better than losing a little money; it has more panache, attracts more attention, certainly gives you that attractive hockey-stick user growth. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. Annual income twenty pounds, annual expenditure three hundred million pounds, result unicorn. </p>

But there was even more associated madness, first involving the cards you'd wave to demonstrate you were a MoviePass subscriber, and then - oh my - the method used to restrict high-volume users from using the service:
<p>Per [new CEO Mitch] Lowe's orders, MoviePass began limiting subscriber access ahead of the April release of the highly anticipated "Avengers: Infinity War," according to multiple former employees. They said Lowe ordered that the passwords of a small percentage of power users be changed, preventing them from logging onto the app and ordering tickets.</p>

finance  vc  unicorn  economics 
17 days ago by charlesarthur
Richard Thaler: ‘If you want people to do something, make it easy’ • Financial Times
Tim Harford:
<p>The key message of [Thaler's book] Nudge was that governments could improve the health and wellbeing of their citizens without infringing on their liberty, simply by more thoughtfully designing their rules, procedures, or even labelling.

“If you want people to do something, make it easy.” Put the cashews in the kitchen and the fruit by the cafeteria checkout.

More recently, Thaler has been thinking and writing about what he calls “sludge”. It’s the same procedure in reverse: if you want people not to do something, make it difficult.

Reaching for an example, Thaler has a bone to pick with The Times. The first review of Misbehaving was published there, and Thaler’s editor sent him a link.

“And I can’t get past the paywall without subscribing.”

But then he notices there’s an offer of a month’s trial subscription at an introductory rate. “But I read further, having written a book about this, and I see that it will be automatically renewed.”

Not only that, it will be renewed at full price, “and that in order to quit, I have to give them 14 days’ notice. So the one month free trial is actually two weeks. And I have to call London [from Chicago] in London business hours, not on a toll free line.”

He pauses and chides me to check that the FT isn’t placing similar sludge in the way of readers who wish to unsubscribe. I assure him that nobody would ever want to unsubscribe, but in any case such knavery would be beneath us. But part of me wonders. “Check your policy at the FT,” he advises.</p>

"Sludge" is a neat idea - in web design you'd probably call it dark patterns. There's plenty more, particularly about Brexit pronouncements and about the announcement to "mind the gap" on the London Underground.
thaler  economics  nudge 
20 days ago by charlesarthur
Facebook's Libra has staggering potential: state control of money could end • The Conversation
Gavin Brown:
<p>Imagine ten years from now if, say, 40% of all US dollars are held on deposit by Facebook/the council to back the issued libra coins, which have by now become widely used across the world. We can hypothesise that US dollars might constitute a 30% weight of libra’s asset-backing basket – to have a steady exchange rate for libra, the idea is to underpin it with a selection of stable and widely traded financial assets.

In the likely event that the US experiences a moderate, or even severe economic crisis, Facebook/the council would need to rebalance the basket of assets to defend the value of libra. Let’s say they decided to revise down the US dollar weighting in their reserve to 25% of the basket. This would involve selling huge sums of US dollars and replacing them with, say, euros, and would significantly drive down the value of the dollar.

This would be a very negative market signal, encouraging other holders of dollars to dump them as well, thereby exacerbating the fall. And even before this happened, Facebook could potentially use the mere threat as leverage in negotiating with nation states on matters of regulation, taxation and so on. Based on Facebook’s current revenues, it would already be 90th in the world by GDP if it was a nation state, so its power to face off in negotiations with states and trading blocs is formidable even without libra.</p>

Brown is senior lecturer in finance at Manchester Metropolitan University. (He's also "a Non-Executive Director and Co-founder at Blockchain Capital Limited, a start-up digital assets fund which has yet to launch. It would not benefit directly from this article but does have an interest in digital asset investments such as bitcoin which leverage blockchain technology.") That scenario isn't so unlikely. And it's slightly worrying, isn't it? Libra's value being like that of a share in an exchange-traded fund is slightly problematic if it's used for transactions.
libra  facebook  economics  currency 
8 weeks ago by charlesarthur
Facebook’s Libra must be stopped • Project Syndicate
Katharina Pistor:
<p>Zuckerberg seems to understand that technological innovation alone will not ensure Libra’s success. He also needs a commitment from governments to enforce the web of contractual relations underpinning the currency, and to endorse the use of their own currencies as collateral. Should Libra ever face a run, central banks would be obliged to provide liquidity.

The question is whether governments understand the risks to financial stability that such a system would entail. The idea of a private, frictionless payment system with 2.6 billion active users may sound attractive. But as every banker and monetary policymaker knows, payment systems require a level of liquidity backstopping that no private entity can provide.
Unlike states, private parties must operate within their means, and cannot unilaterally impose financial obligations on others as needed. That means they cannot rescue themselves; they must be bailed out by states, or be permitted to fail. Moreover, even when it comes to states, currency pegs offer only an illusion of safety. Plenty of countries have had to break such pegs, always while insisting that “this time is different.”

What sets Facebook apart from other issuers of “private money” is its size, global reach, and willingness to “move fast and break things.”</p>

So to put it in words that <a href="">Zuckerberg might understand</a>, "Libra delenda est"?
facebook  libra  economics  money 
8 weeks ago by charlesarthur
Amazon will pay $0 in taxes on $11,000,000,000 in profit for 2018 • Yahoo Finance
Kristin Myers:
<p>While some people have received some surprise tax bills when filing their returns, corporations continue to avoid paying tax — thanks to a cocktail of tax credits, loopholes, and exemptions.

According to a report from the Institute on Taxation and Economic Policy (ITEP), Amazon (AMZN) will pay nothing in federal income taxes for the second year in a row.

Thanks to the new Tax Cuts and Jobs Act (TCJA), Amazon’s federal tax responsibility is 21% (down from 35% in previous years). But with the help of tax breaks, according to corporate filings, Amazon won’t be paying a dime to Uncle Sam despite posting more than $11.2 billion in profits in 2018.

How is that possible?

“It’s hard to know exactly what they’re doing,” said Steve Wamhoff, ITEP’s Director of Federal Tax Policy. “In their public documents they don’t lay out their tax strategy. So it’s unclear exactly which breaks [the company is taking advantage of]. They vaguely say tax credits. One could think of many different ways a corporation could do this, like the depreciation breaks which were expanded under TCJA.”

… this isn’t the first year that Amazon has avoided paying federal tax. The company reported $5.6bn in US profits in 2017 and paid $0 last year as well.</p>

As Vlad Savov tweeted, just by buying a sandwich at an airport in the US he paid more taxes (sales tax) than Amazon. It's incomprehensible to the average person how this can happen.
amazon  economics  profit  taxes 
9 weeks ago by charlesarthur
Uber’s path of destruction • American Affairs Journal
Hubert Horan:
<p>Most public criticisms of Uber have focused on narrow behavioral and cultural issues, including deceptive advertising and pricing, algorithmic manipulation, driver exploitation, deep-seated misogyny among executives, and disregard of laws and business norms. Such criticisms are valid, but these problems are not fixable aberrations. They were the inevitable result of pursuing “growth at all costs” without having any ability to fund that growth out of positive cash flow. And while Uber has taken steps to reduce negative publicity, it has not done—and cannot do—anything that could suddenly pro­duce a sustainable, profitable business model.

Uber’s longer-term goal was to eliminate all meaningful competition and then profit from this quasi-monopoly power. While it has already begun using some of this artificial power to suppress driver wages, it has not achieved the Facebook- or Amazon-type “plat­form” power it hoped to exploit. Given that both sustainable profits and true industry dominance seemed unachievable, Uber’s investors de­cided to take the company public, based on the hope that enough gullible investors still believe that the compa­ny’s rapid growth and popularity are the result of powerfully effi­cient inno­vations and do not care about its inability to generate profits.

These beliefs about Uber’s corporate value were created entirely out of thin air. This is not a case of a company with a reasonably sound operating business that has managed to inflate stock market expectations a bit. This is a case of a massive valuation that has no relationship to any economic fundamentals. Uber has no competitive efficiency advantages, operates in an industry with few barriers to entry, and has lost more than $14bn in the previous four years. But its narratives convinced most people in the media, invest­ment, and tech worlds that it is the most valuable transportation company on the planet and the second most valuable start-up IPO in U.S. history (after Facebook).

Uber is the breakthrough case where the public perception of a large new company was entirely created using the types of manufactured narratives typically employed in partisan political campaigns. Narrative construction is perhaps Uber’s greatest competitive strength.</p>

He then rips apart its economics; you'll be happy to take an Uber (well, perhaps; it's putting taxi drivers who make a profit out of business) but certainly avoid the shares.
uber  business  economics 
11 weeks ago by charlesarthur
The abominable Laffer Curve • Coppola Comment
Frances Coppola:
<p>The Laffer curve is back. [Touted by Tory leadership contender Sajid Javid, who said cutting tax rates "could bring in billions of extra revenue".]

Not that it has been absent for long, really. Seven years ago, to much applause, George Osborne cut the top rate of tax from 50% to 45%. When the cut took effect there was a large increase in tax take. At the time, Conservative pundits crowed that this proved not only that the Laffer curve was real, but that we now know where its peak is.

This is the cut that Javid refers to in the video clip. But sadly he is wrong. The tax cut didn't raise "billions". We don't actually know if it raised anything at all.

The tax cut was advertised a year in advance, giving rich people plenty of opportunity to reorganise their finances so as to avoid the 50% rate and take advantage of the tax cut (this is known as "reverse forestalling"). Predictably, there was a large fall in tax revenue from the rich prior to the cut taking effect, and a large increase afterwards. The 50% rate itself had also been advertised a year in advance, so there was also large increase in tax take from the rich before it took effect and a fall afterwards. Thus, throughout its short existence, tax take from the 50% rate was distorted by forestalling and reverse forestalling effects. We will never know how much tax it would have raised once the forestalling effect had worn off, and we therefore don't know whether Osborne's tax cut increased or reduced tax take. Consequently, we are none the wiser about the Laffer curve peak.

But  there is an even bigger problem. The Laffer curve plots total tax take versus top tax rates, not tax take from the rich versus their tax rates. It thus relies for its shape on multiplier effects from tax changes.</p>

Coppola is an economist, and she eviscerates the very concept of the Laffer curve (sketched, in myth, on a napkin on the Reagan years.)
laffer  economics 
11 weeks ago by charlesarthur
New Zealand’s next liberal milestone: a budget guided by ‘well-being’ • The New York Times
Charlotte Graham-McLay:
<p>[New Zealand] is moving away from more traditional bottom-line measures like productivity and economic growth and instead focusing on goals like community and cultural connection and equity in well-being across generations…

…Under New Zealand’s revised policy, all new spending must advance one of five government priorities: improving mental health, reducing child poverty, addressing the inequalities faced by indigenous Maori and Pacific islands people, thriving in a digital age, and transitioning to a low-emission, sustainable economy.

The government is promoting the new framework as bringing much-needed clarity to the budgeting process. In the past, individual government ministers vied for the new money available in each year’s budget, and “relatively arbitrary” decisions were made about who got what, the country’s finance minister, Grant Robertson, said in an interview.

This year, those ministers have to collaborate on funding proposals with their colleagues, and the proposals must fit the new criteria. “Governments are notorious for their silos, and so we’re actually saying, no, there’s an outcome there that we want you all working together on,” Mr. Robertson said.</p>

That's radical: no more GDP growth targets, but more touchy-feely.
newzealand  economics 
12 weeks ago by charlesarthur
Number go down — the single trade that crashed Bitcoin • Attack of the 50 Foot Blockchain
David Gerard:
<p>The price of Bitcoin went from $4000 in early April, to $6000 on 9 May, to $8000 one week later on 16 May — and Bitcoin fans treated this as only its right and natural due. Number go up!

The crypto blogs put forward all sorts of bad reasons — it’s capital flight from China! It’s Bakkt offering Bitcoin futures! It’s Flexa offering retail payments in crypto! It’s Microsoft experimenting with the blockchain! — even though this was really obviously a manipulated push like so many before.

The Bitcoin price goes up and down with weird jumps in the graph — nicknamed “Barts,” after the shape of Bart Simpson’s haircut — the telltale signs of market manipulation.

The Bitcoin price is a game for “whales” — the largest traders — to wreck the smaller players. The prize is whatever small amounts of actual-money dollars come into the crypto market.

And then the price dropped again — from a single transaction, around 02:50 UTC on Friday 17 May — in the biggest single-day dip since January 2018.</p>

As Gerard explains, the market manipulation that's going on - where the big players can squeeze out the short players for fun and profit - is quite something to behold. Ignore the usual media narrative around blockchain. It simply isn't being used for anything but financial games.
bitcoin  economics  cryptocurrency  market  short  squeeze 
may 2019 by charlesarthur
How do we go on? • ANU Science
Tabitha Carvan on how to deal with climate despair - the feeling that nothing you can do will make a difference:
<p>“The neoliberal economic system we’ve bought into is completely at odds with how the Earth works,” Professor Will Steffen continues. “We have to change this value system that we operate under. We need a social tipping point that flips our thinking, before we reach a tipping point in the climate system.

“I think Greta Thunberg could turn out to be that tipping element.”

But Greta, the sixteen year-old Swedish activist, hasn’t made a dent on the problem, I say.

“Not yet,” Steffen says. “The thing about a complex system, like our societies, is they are hard to predict because they’re highly non-linear. It’s not simple cause and effect. The state of the system – that is, the neoliberal economic system and our use of fossil fuels – seems so set, so stable, so tough, that nothing’s going to affect it. But it’s getting eroded from underneath - by the students, by legal battles, by increasing extreme weather events.

“Where you have a lot of people waking up and saying, ‘Something isn’t right’, that could be the kind of fundamental thing we need to reach the tipping point. It’s not just the students. I think more people are beginning to sense that too. For the first time, I’m seeing old white men in the bush saying something is changing there too.

“I’m not saying we’re now going to solve climate change but I’m saying we are getting to a point where reaching that kind of social tipping point is our only hope. The solutions are already there. It’s the system that’s preventing it.”</p>
climatechange  society  economics 
may 2019 by charlesarthur
Why pleasure always trumps possessions • Financial Times
Janan Ganesh:
<p>The savings rate among millennials is already dire. In 2017, the property magnate Tim Gurner said they had no right to bewail their asset-poverty while they subsisted on “smashed avocado at $19”. It was what the novelist Joyce Cary once called a “tumbril remark”: a Marie Antoinette-ish incitement to revolution.

Gurner was duly routed on social media for his lavish idea of the millennial lifestyle. No one thought to defend that lifestyle on its own terms. And it is eminently defensible. Is it really intelligent to spend the prime years of your life living below your means? Is the far-off prospect of an asset worth more than a consistent flow of sensory treats in the present?

Shakiest of all is the premise that an asset lasts and an experience does not. Once a pleasure has been consumed — a holiday taken, a concert attended — that is not the end of the matter. The memory becomes itself a kind of asset, and an inflation-proof one at that. It can sustain you later in life. And by later in life, I mean much earlier than I expected. I am already mawkishly wistful about my twenties, which were spent in rented flats that were better than anywhere I could have afforded to buy. The idea that I have “nothing to show for it” is eccentric. I have the best years of my life to show for it. A financial adviser would have had me in a Zone 6 grotto, saving up much cash, storing up no memories.</p>

Because economists can't value what they can't price.
april 2019 by charlesarthur
The truth about dentistry • The Atlantic
Ferris Jabr:
<p>Studies that explicitly focus on overtreatment [unnecessary procedures for financial gain] in dentistry are rare, but a recent field experiment provides some clues about its pervasiveness. A team of researchers at ETH Zurich, a Swiss university, asked a volunteer patient with three tiny, shallow cavities to visit 180 randomly selected dentists in Zurich. The Swiss Dental Guidelines state that such minor cavities do not require fillings; rather, the dentist should monitor the decay and encourage the patient to brush regularly, which can reverse the damage. Despite this, 50 of the 180 dentists suggested unnecessary treatment. Their recommendations were incongruous: Collectively, the overzealous dentists singled out 13 different teeth for drilling; each advised one to six fillings. Similarly, <a href="">in an investigation for Reader’s Digest</a>, the writer William Ecenbarger visited 50 dentists in 28 states in the U.S. and received prescriptions ranging from a single crown to a full-mouth reconstruction, with the price tag starting at about $500 and going up to nearly $30,000.

A multitude of factors has conspired to create both the opportunity and the motive for widespread overtreatment in dentistry. In addition to dentistry’s seclusion from the greater medical community, its traditional emphasis on procedure rather than prevention, and its lack of rigorous self-evaluation, there are economic explanations. The financial burden of entering the profession is high and rising. In the U.S., the average debt of a dental-school graduate is more than $200,000. And then there’s the expense of finding an office, buying new equipment, and hiring staff to set up a private practice. A dentist’s income is entirely dependent on the number and type of procedures he or she performs; a routine cleaning and examination earns only a baseline fee of about $200.

In parallel with the rising cost of dental school, the amount of tooth decay in many countries’ populations has declined dramatically over the past four decades, mostly thanks to the introduction of mass-produced fluoridated toothpaste in the 1950s and ’60s.</p>
Dentist  oversupply  economics 
april 2019 by charlesarthur
US workers are highly taxed if you count premiums • People's Policy Project
Matt Bruenig:
<p>The OECD may not be able to include employer-based health insurance premiums into its model, but I certainly can. And when I add them into the OECD model, I find that the average American worker has one of the highest compulsory payment rates in the developed world.

For this analysis, I take the information from the OECD’s Taxing Wages model and combine it with data from the Medical Expenditure Panel Survey (MEPS). The MEPS data shows the average premium for employer insurance, broken down by type of coverage (family or single) and payer (employer or employee). By counting those average premiums as NTCPs, we can compute a compulsory payment rate that is comparable to the compulsory payment rates the OECD produces for other countries.

To be clear about what I am doing here, the following graph provides a detailed breakdown of the difference between what we normally think of as “employee taxes” and the OECD concept of “compulsory payments.” This graph is for a married wage-earner with two kids who earns the average wage and has a family insurance plan through their employer.

<img src="" width="100%" /></p>

The Netherlands has compulsory private pensions as well as compulsory private health insurance. The UK's down there at 26.1%; Denmark and Norway and Sweden, those crazy socialist places, are 26.7%, 32.4% and 38.3%. And the US up there at 43.2%.

Because private health insurance is inefficient compared to government-run healthcare. Monopsony works, sometimes.
economics  healthcare 
april 2019 by charlesarthur
These hyper-secretive economists are transforming how Amazon does business • CNN
Lydia DePillis, CNN Business:
<p>Estimating inflation is a tricky and complex task. In the United States, the government's Bureau of Labor Statistics sends testers to stores to record the price of everything from cheese to tires, and surveys consumers over the phone about what they spent on gas and funeral services.

Amazon thinks it could do it better.

With help from outside researchers, the company's economists are <a href="">working on a way to measure inflation</a> using thousands of transactions across its own platform. Automatically analyzing product descriptions allows them to better assess the quality of a dress or a juicer or a bathmat, theoretically creating a more accurate, up-to-date index of how much things cost.

That's just one way Amazon is using the squad of economists it has recruited in recent years. The company has turned so many businesses, from retailing to cloud computing, inside out. Now Amazon is upending the traditional role of economists within companies, as well as the field of economics.

Amazon is now a large draw from the relatively small talent pool of PhD economists, which in the United States grows by about only 1,000 new graduates every year. </p>

That's a <em>really</em> small pool. Though how many companies need a doctor of economics? Amazon, Google, maybe Apple, Uber.. Walmart, some of the health insurance companies?
amazon  economics  inflation 
march 2019 by charlesarthur
Whitewood under siege • Cabinet Magazine
Jacob Hodes:
<p>Blue pallets are an inch or so taller, often cleaner, and always more uniform than the pallets [made] of whitewood. Crucially, blues do not have any stringer boards along their sides; instead, their height is obtained by way of nine wooden blocks sandwiched between the top and bottom deck boards. This block design allows forklifts and other tools to enter the pallet with equal ease from four directions. (Most stringer pallets, by contrast, offer either “two-way entry” or “partial four-way entry.”) There are approximately 240m blue pallets in the world, circulating in over fifty countries. On the sides of each are the words, “Property of CHEP.”

CHEP, a subsidiary of Brambles Limited, an Australia-based multinational corporation, is the largest pallet business in the world. The company earned $3.5bn in pallet-related revenues during fiscal year 2013, and in many markets has achieved pallet monopoly… CHEP doesn’t sell pallets; it rents them. This means that, in contrast to the world of whitewood, where a pallet may change ownership many times, CHEP maintains control of its pallets throughout their lives.

…By 2002, there were ten million blue pallets floating around the US, unaccounted for, and a report by Credit Suisse warned investors that CHEP usa was experiencing “a loss of control of [its] pallet pool.”

Despite these lost pallets, CHEP continued to grow. In 2010, in a shock to the industry, Costco announced that it would only accept shipments on CHEP-style block pallets: they break less, they have tighter quality controls, and full four-way entry promises tiny but measurable efficiencies when loading and unloading trucks. Panic ensued in the world of whitewood.</p>

You never knew you could be interested in wood pallets.. until this. Now you're going to notice white and blue pallets everywhere you go for the next week.
design  economics  business  pallets 
march 2019 by charlesarthur
Peak California • Medium
Byrne Hobart:
<p> When Airbnb was just starting out, the founders spent years being nearly broke. It’s hard to imagine someone living in the Bay Area spending a long time “nearly broke” today; they’d spend too much on rent and have to move back home or get a BigCo job. Y Combinator has implicitly acknowledged this. When the program started in 2005, they’d offer founders a maximum of $20,000 to spend the summer running a startup. Now it’s $120,000. That’s a 14% compounded growth rate in the minimum amount of cash on hand needed to start a company. YC has also grown, but it’s hard to count on one organization to hold back the tide here. As long as higher rents raise the cost of starting a pre-revenue company, fewer people will join them, so more people will join established companies, where they’ll earn market salaries and continue to push up rents.

And one of the things they’ll do there is optimize ad loads, which places another tax on startups. More dangerously, this is an incremental tax on growth rather than a fixed tax on headcount, so it puts pressure on out-year valuations, not just upfront cash flow.

According to Social Capital’s 2018 letter, almost 40% of VC money goes to advertising on the largest search, social, and e-commerce channels. Those channels have adapted to a world where they’re the best place to scale because they have the biggest audience, which means there’s more money for them in optimizing their revenue capture. Thus, ads get better-targeted, ad loads rise over time, more content moves into the walled garden, and it becomes progressively harder not to pay an economically efficient (read: very high) ad price.</p>

Hobart reckons that California (particularly San Francisco) has reached the point where you just can't start up there any more. But haven't people felt that way for years?
economics  business  california 
march 2019 by charlesarthur
The “biggest puzzle in economics”: why the “superstar economy” lacks any actual superstars • Pro Market
Asher Schechter:
<p>We live in an age of superstar firms. While the United States and other Western economies become increasingly concentrated, an ever-decreasing number of large firms now accounts for a growing share of economic activity. This, in turn, translates into massive profits for the Googles, the Facebooks, and the Amazons of the world: A 2018 McKinsey report found that 65% of global corporate earnings now go to firms with annual revenues above $1bn and that among the world’s largest firms, 80% of profits go to the top 10%…

…[but] If the “superstar firms are simply better” narrative is true, if today’s superstar firms are indeed more productive, why is this not reflected in the data?

This question, says NYU professor Thomas Philippon, is “the biggest puzzle in economics today.” To solve it, Philippon and co-author German Gutierrez set out to trace the evolution of superstar firms in the US over the past 60 years. The US economy, Philippon tells ProMarket, has always had superstar firms. In the 1950s and 60s, it was companies like GM, GE, and IBM that dominated various aspects of economic activity. Nowadays, it’s companies like Google, Amazon, and Facebook. Are the superstars of today actually better?

The short answer is “no.” In fact, according to Philippon’s and Gutierrez’s findings, contrary to the popular narrative, superstar firms have not become more efficient or more productive over the years. Perhaps most importantly, the superstars of today contribute less to productivity growth than their counterparts in previous decades: The contribution of superstar firms to US productivity growth has decreased by over 40% over the past 20 years.</p>

*raises hand* what if our productivity is leaching away into time spent staring at screens? There's also <a href="">a discussion of this</a> at the European Centre for Economic Policy Research; registration seems to be free.
economics  superstars 
march 2019 by charlesarthur
Tim Harford: how behavioural economics helped kick my phone addiction • Financial Times
Tim Harford cut back on his digital use, starting last November:
<p>The big question was: what to do with my social media accounts? Facebook was simply too troublesome to delete, especially since my personal account is connected in opaque ways to a “Tim Harford” page maintained by my publishers. But I never had Facebook on my phone and after briefly unfollowing or muting all my contacts, I had no problem staying logged out.

My Twitter habit is more of a problem. I have 145,000 followers, gently persuaded over 10 years and 40,000 tweets to follow me — that’s about 10 books’ worth, or 20 years of weekly columns. This alone was a reminder of just what an effort Twitter could be; but deleting the account felt like the nuclear option.

So what could I do? Two years ago, I hid the “mentions” column so that I don’t see what other people say about me on Twitter. (Much is friendly, some hurtful and almost all superfluous.) Yet I was still wasting a lot of time noodling around there for no obvious gain. So I deleted the smartphone app and on November 23 2018, I tweeted that I was planning to “get off Twitter for a bit”. By a pleasing coincidence, the last person I interacted with before logging out was the man who named the endowment effect, Richard Thaler.

But time for what? One of the most important — and misunderstood — ideas in economics is that of opportunity cost. Everything we do is an implicit decision not to do something else. If you decide to go to an evening lecture, you’re also deciding not to be at home reading a bedtime story. If you spend half an hour browsing news websites, that’s half an hour you can’t spend watching football. Those 40,000 tweets cost me something, but I am not sure what and I certainly didn’t ponder the cost while tweeting them.</p>

Well worth it for the explanation of this paragraph:
<p>Fifteen years ago, I would have struggled to explain this sequence of events to my wife. But nowadays, no explanation is really needed. We all know how swiftly and easily “When will it stop raining?” can lead to “What do Tomasz Schafernaker’s nipples look like?”</p>
economics  digital  smartphone 
january 2019 by charlesarthur
Nvidia grapples with cryptocurrency miners’ exit • WSJ
Sarah Needleman:
<p>At the height of the cryptocurrency boom, when even moms in British Columbia were stockpiling videogame graphics cards to generate digital currency, average gamers couldn’t get their hands on their favored hardware. Prices ballooned and inventory vanished.

Those days are over. But inflated prices have taken longer than expected to come down, says Nvidia Corp. , particularly for its moderately powerful chips built on an architecture it calls Pascal.

Nvidia misjudged how quickly prices for the graphics cards that those chips go into would normalize now that cryptocurrency mining isn’t as hot, and the company is now dealing with months of expensive inventory that price-conscious gamers won’t touch.

The company’s message to Wall Street: Videogaming is fine, and the crypto hangover is lasting longer than expected. Still, some analysts don’t see a quick fix.

“The real recovery won’t take place until the second, third and fourth quarters of fiscal 2020,” said Gary Mobley, analyst at Benchmark. “It’s 12 weeks of inventory out there we’re dealing with.”</p>

The cryptocurrency crash - presently underway, because we're just past the anniversary of the big runup in bitcoin's "value" - is going to ripple out in all sorts of interesting directions. Nvidia is just a first-order one.
economics  gpu  bitcoin  mining  cryptocurrency 
november 2018 by charlesarthur
Brexit provides early proof of deglobalization’s costs • WSJ
Greg Ip:
<p>Never in the last 70 years has a major advanced economy left a free-trade area. Brexit is providing the first real-world evidence of the costs that come from undoing the intricate bonds of globalization.

It is of course an extreme case of deglobalization: The European Union’s single market for goods, services, capital and labor is much more integrated than other free trade zones. Yet many of the barriers that are bound to rise between Britain and its partners, such as on regulations, trade penalties and immigration, are similar to those cropping up in the wider world, such as between the US and its partners.

Measuring the effect of Brexit is complicated by the fact it hasn’t happened yet. British and European leaders met Wednesday in an effort to bridge differences on a post-Brexit deal. Without a deal, Britain could see tariff and nontariff barriers snap back to the maximum the World Trade Organization permits.

Yet without a single tariff going up, Brexit has clearly extracted a price. This can be seen by comparing Britain to a basket of peer economies whose performance closely tracked Britain’s until it voted to leave the EU in June 2016. Pierre Lafourcade, Arend Kapteyn and John Wraith of UBS construct such a synthetic Britain from a blend of other members of the Organization for Economic Cooperation and Development.

Actual and synthetic Britain track each other closely from 1995 to mid-2016, then diverge: Actual British output is now 2.1% below this counterfactual. UBS attributes this divergence primarily to household consumption, which is now 1.7% below its counterfactual, and investment, which is 4% lower.</p>

Completely as economic theory would predict - comparative advantage and so on.
economics  brexit 
october 2018 by charlesarthur
What happens when everyone in a room keeps giving dollars to random others? • Decision Science News
Annie Duke:
<p>When we were giving a talk at the Department of Electrical Engineering and Computer Science at Northwestern we met Uri Wilensky, who shared with us a simulation he likes to assign.
<p>Imagine a room full of 100 people with 100 dollars each. With every tick of the clock, every person with money gives a dollar to one randomly chosen other person. After some time progresses, how will the money be distributed?</p>

If on quick reflection you thought “more or less equally”, you are not alone. I asked 5 super-smart PhDs this question and they all had the same initial intuition.

How does the distribution look? Play the movie above to see. [You'll have to click through; the video doesn't have an embed.] Here’s how it works.

The movie shows 5,000 clock ticks in less than a minute.

The Y axis shows the number of dollars each person has. It starts at 45 dollars each.

On the x-axis we have 45 people.

The red bars show the wealth of each person at each tick of the clock.

The blue bars are the same as red bars, but sorted to show how wealth is distributed. The rightmost blue bar is the height of the highest red bar, and so on down.

Don’t believe it? Play with R and tidyverse and gganimate code yourself.

Inequality can arise from seemingly innocuous policies — you need to keep an eye on it.</p>

Ah, hello, Mr Pareto. The penthouse suite as usual? (From Decision Science News, a once-weekly signup newsletter.) There's more discussion <a href="">here</a>.
economics  simulation  statistics  inequality  pareto 
october 2018 by charlesarthur
How to program your job • The Atlantic
Brian Merchant:
<p>It can seem that some of the only workers who have realized any scrap of that rusty old promise of automation are the ones who’ve carved out the code to claim it for themselves.

Programmers, of course, have been writing code that automates their work for decades. Programming generally involves utilizing tools that add automation at different levels, from code formatting to merging to different codebases—most just don’t take it to the extreme of fully or nearly fully automating their job. I chatted, via direct message on Reddit and email, with around a dozen programmers who said they had. These self-automators had tackled inventory management, report writing, graphics rendering, database administration, and data entry of every kind. One automated his wife’s entire workload, too. Most asked to remain anonymous, to protect their jobs and reputations.

“When I started, my job literally took me eight hours a day,” an early self-automator, who I’ll call Gary, told me. He worked for a large corporate hotel chain that was beginning to computerize its workflow in the ‘90s. Gary quickly recognized that he was spending a lot of his time repeating the same tasks, so he started learning to code after-hours. “Over the course of about three months, I built a piece of code in Lotus [1-2-3, then a popular PC spreadsheet program] that not only automated individual repetitive tasks, it effectively automated the entire job.” He didn’t tell his bosses exactly what he had done, and the quality of his working life improved considerably.

“It felt weird to have free time during the day,” he told me. “I spent that time learning about the other systems in the hotel.” He then made himself useful, helping management with bottlenecks in those systems.</p>

What's fascinating - even a little surprising - is how those who did this began to feel. They worried that they ought to be <em>doing</em> something, even though they were "doing" their job.
automation  economics  computing 
october 2018 by charlesarthur
Norway's radical approach to plastic pollution leads to 97% recycling • Huffington Post
<p>While other industrialized nations grapple with dangerously problematic plastic consumption, Norway stands out, recycling up to 97% of its plastic bottles thanks to a nationwide bottle deposit scheme.

Ingrained in the Norwegian model is the idea that the container is on loan; it’s not yours. And why would you want it when you can exchange it over the counter ― at stores, gas stations or one of the several thousand reverse vending machines in public places like schools and supermarkets ― in return for cash or store credit?

Plastic producers in Norway are subject to an environmental tax. The more of their plastic they recycle, the lower the tax. Almost all of them are signed up to the bottle deposit scheme and, if they reach a collective recycling target of above 95%, they don’t have to pay at all. Producers have collectively met that target for the last seven years.

They ensure they reach that target by attaching a deposit value ― the equivalent of around 15 to 30 cents, depending on size ― to each plastic bottle, to be redeemed when it’s returned. The high-quality plastic waste that’s collected can then be recycled into everything from textiles to packaging, including new plastic bottles.

This simple but effective system would seem like a no-brainer for the United States, where recycling rates for plastic bottles have plunged from 37.3% in 1995 to 28% today.</p>

Economic "nudge" systems like this can be surprisingly effective. In the UK a "sugar tax" on drinks with high sugar content has lowered their consumption. A 5p charge on plastic bags in store chains has reduced their use enormously. This tax system worked for glass bottles in the US; it could now for plastic.
Plastic  recycling  economics 
august 2018 by charlesarthur
Bitcoin's use in commerce keeps falling even as volatility eases • Bloomberg
Olga Kharif:
<p>The way Bitcoin is being utilized is changing as well. Because the fees to process a transaction in Bitcoin can be steep and varied - they peaked at $54 in December, but are down to less than $1 today -- not many people are using the coins for small transactions, like buying a cup of coffee. They are spending the virtual currency more to pay vendors like freelancers located overseas: For those cases, using Bitcoin can be cheaper and faster than using traditional financial services.

“In the last six months we’ve seen a large uptick in crypto companies paying their vendors in Bitcoin, including law firms, hosting companies, accounting firms, landlords and software vendors," according to Sonny Singh, chief commercial officer of processor BitPay. His company has seen a five-fold increase in crypto companies paying their bills from last year, he said.

Bitcoin faithful continue to buy bigger-ticket items such as furniture, and still the occasional sports car. At Inc., crypto-based sales are up two-fold in the first half of this year versus a year ago, the company said. Top items bought with cryptocurrency include living-room furniture, bedroom furniture and laptops, according to the site.

Many people, however, are only speculating with Bitcoin or selling off small amounts to convert it into a fiat currency, and use that to pay for goods and services. Long-time advocate Graham Tonkin said he converts his Bitcoin and Ether from time to time to cover credit-card bills.</p>
transaction  Bitcoin  economics 
august 2018 by charlesarthur
SEC slaps 'fraudulent' ICO founder with $30K fine, lifetime ban • CoinDesk
Stan Higgins and Nikhilesh De:
<p>The US Securities and Exchange Commission (SEC) announced Tuesday that it had secured new prohibitions against the founder of a company behind an allegedly fraudulent initial coin offering (ICO).

<a href="">The agency said</a> that it obtained officer-and-director and penny-stock bars against David Laurance and his company, Tomahawk Exploration LLC. Tomahawk, the SEC alleges, sought to raise funds through a "Tomahawkcoin" token sale that utilized misleading marketing materials and false claims about oil drilling licenses.

Further, the Tomahawkcoin is said to have been sold along with the false promise that "token owners would be able to convert the Tomahawkcoins into equity and potentially profit from the anticipated oil production and secondary trading of the tokens," according to the SEC's statement on the matter.

According to the Tuesday announcement, Laurance has neither admitted nor denied the SEC's allegations but he and the company have agreed to the bars along with a $30,000 penalty.</p>

A gloomy day on the crypto range: Bitcoin's value plunged briefly below $6,000, and "Pot Publication High Times Now Says It Won't Accept Bitcoin in IPO". Downer.
economics  bitcoin 
august 2018 by charlesarthur
How to lose $3 billion of bitcoin in India • Bloomberg
Archana Chaudhary and Jeanette Rodrigues:
<p>…on Jan. 4, 2018, the state of Texas filed a cease-and-desist order against BitConnect. North Carolina followed five days later. The news came as the price of bitcoin crashed.

Amid the ensuing market turmoil, the Reserve Bank of India announced measures that virtually banned crypto transactions. Cryptocurrency exchanges responded with a lawsuit that is due to resume hearings in the Supreme Court in September.

Investigators across Gujarat and in the Indian capital of New Delhi say complaints about crypto frauds began pouring in after the U.S. cease-and-desist letters.

Still, those who had been trying to hide untaxed cash were in a quandary. If they went to the authorities, they would have to declare their investments.

So Bhatt and nine accomplices - including Paladiya - kidnapped two BitConnect representatives in Surat and demanded 2,256 bitcoin as ransom, CID investigators alleged. Paladiya, however, wanted more. He contacted his influential uncle, Kotadiya, and tapped the latter’s network in the local police to double-cross Bhatt and allegedly extort his bitcoin, according to allegations in police documents and interviews with investigators.

They were confident of success, gambling that Bhatt wouldn’t go to the authorities and certain that the anonymity of bitcoin would make the heist untraceable, according to the investigators.

They were wrong. Bhatt pressed charges.</p>

All as a result of Narandra Modi's move to ban high-denomination currency in November 2016 - just at the sort of time bitcoin began taking off.
bitcoin  india  economics 
august 2018 by charlesarthur
The story behind Google's secret offer to settle EU’s Android probe • Bloomberg
Aoife White and Stephanie Bodoni:
<p>Vestager indicated in the interview that any settlement offer should have been made in 2016, after the company received the EU’s statement of objections, which detailed the antitrust problems with Android. The EU said the company might breach competition rules by unfairly pushing search and browser apps onto Android phones.

That might have been the narrow window to settle the case, but Google’s legal team were spinning dozens of plates in 2016. They had deadlines to respond to the Android charges, the shopping probe was still a major priority and there were new complaints filed to the EU by News Corp. and other rivals.

After the rebuff, the EU stepped up its probe, sending a formal "letter of facts" in November 2017, adding new evidence, two people said. There was little substantive contact between the two sides until Google representatives talked with EU officials in April during a so-called state of play meeting about the case, which was well on the way to the record fine.</p>

Pretty thin gruel, this story; it's clear that Google misread the timings and overestimated its chances of winning.

However the EC's solution is no good. It should have obliged Google to offer Google Play separately. But even then, it's far too late.
google  android  economics 
july 2018 by charlesarthur
Intel and the danger of integration • Stratechery
Ben Thompson:
<p>TSMC [founded in 1987! on the promise that it wouldn't compete with its customers to design chips, only make them] got better, in large part because it had no choice: soon its manufacturing capabilities were only one step behind industry standards, and within a decade had caught-up (although Intel remained ahead of everyone). Meanwhile, the fact that TSMC existed created the conditions for an explosion in “fabless” chip companies that focused on nothing but design. For example, in the late 1990s there was an explosion in companies focused on dedicated graphics chips: nearly all of them were manufactured by TSMC. And, all along, the increased business let TSMC invest even more in its manufacturing capabilities.

<img src="" width="100%" />

This represented into a three-pronged assault on Intel’s dominance:

• Many of those new fabless design companies were creating products that were direct alternatives to Intel chips for general purpose computing. The vast majority of these were based on the ARM architecture, but also AMD in 2008 spun off its fab operations (christened GlobalFoundries) and became a fabless designer of x86 chips.<br /> • Specialized chips, designed by fabless design companies, were increasingly used for operations that had previously been the domain of general purpose processors. Graphics chips in particular were well-suited to machine learning, cryptocurrency mining, and other highly “embarrassingly parallel” operations; many of those applications have spawned specialized chips of their own. There are dedicated bitcoin chips, for example, or Google’s Tensor Processing Units: all are manufactured by TSMC.<br /> • Meanwhile TMSC, joined by competitors like GlobalFoundries and Samsung, were investing ever more in new manufacturing processes, fueled by the revenue from the previous two factors in a virtuous cycle.</p>

When you consider the victory that modularisation has wrought in the right-hand part of that image, you have to marvel at how Apple has managed to navigate the rapids to get to where it is. Every company has to integrate to a degree; the question is how much, and when to stop/start. At Intel, it seems to have continued just that bit too long because the money was so good.
intel  economics  business 
june 2018 by charlesarthur
Solar has overtaken gas and wind as biggest source of new US power • Bloomberg
Chris Martin:
<p>Despite tariffs that President Trump imposed on imported panels, the US installed more solar energy than any other source of electricity in the first quarter.

Developers installed 2.5 gigawatts of solar in the first quarter, up 13% from a year earlier, according to a report Tuesday from the Solar Energy Industries Association and GTM Research. That accounted for 55% of all new generation, with solar panels beating new wind and natural gas turbines for a second straight quarter.

The growth came even as tariffs on imported panels threatened to increase costs for developers. Giant fields of solar panels led the growth as community solar projects owned by homeowners and businesses took off. Total installations this year are expected to be 10.8 gigawatts, or about the same as last year, according to GTM. By 2023, annual installations should reach more than 14 gigawatts.</p>

Solar is unstoppable; the price of making panels keeps falling, and it's additive - you don't have to tear down old installations to put new ones in. And penetration of panels is at a tiny percentage of the potential.

Mining coal is a mug's game: expensive, dangerous, polluting. Speaking of which...
solar  economics 
june 2018 by charlesarthur
How to win a trade war • FiveThirtyEight
Rachael Dottle:
<p>You (Yes, you!) have just been elected president of your very own country. Congratulations! Now it’s time to get to work. There is another country out there that has goods you can buy, and you have goods it may want to buy. Your job is to choose your foreign economic policy — which you’ll do in the little game we’ve prepared for you below.

The rules go like this: You can cooperate with the other country, allowing the free flow of its goods into your country. Or you can defect, imposing tariffs on the foreign goods. And because you will trade with the same country over and over again, you have to decide whether to stick with a single strategy no matter what or whether to change course in response to your opponent. The other country faces the same choice, but you can’t know in advance what plan they’ve chosen. Free trade helps both countries, generating big windfalls for both sides. But it’s possible for a single country to improve its own situation at the other’s expense — you both have a selfish incentive to defect, taxing the imports from the other country and helping only yourself. However, if you both defect, you both wind up isolated, cutting yourselves off from the market and reducing earnings on both sides.

So, give it a try. Another randomly chosen FiveThirtyEight reader will play the part of the other country.</p>

It's Prisoner's Dilemma, iterative version. As has been shown by multiple tournaments, the optimal strategy is "nice tit-for-tat": cooperate (no tariff) in the first round, do whatever your opponent just did to you (cooperate or defect - ie, no tariff, or tariff) in each subsequent round.
economics  game 
june 2018 by charlesarthur
Software is eating the world, Tesla edition • Marginal REVOLUTION
Alex Tabarrok:
<p>Last week Consumer Reports refused to recommend Tesla’s Model 3 because it discovered lengthy braking distances. This week Consumer Reports changed their review to recommend after Tesla improved braking distance by nearly 20 feet with an over the air software update!

…The larger economic issue is that every durable good is becoming a service. When you buy a car, a refrigerator, a house you will be buying a stream of future services, updates, corrections, improvements. That is going to change the industrial organization of firms and potentially increase monopoly power for two reasons. First, reputation will increase in importance as consumers will want to buy from firms they perceive as being well-backed and long-lasting and second durable goods will be rented more than bought which makes it easier for durable goods producers not to compete with themselves thus solving <a href="">Coase’s durable good monopoly problem</a>.</p>

Coase's durable monopoly problem (in case you don't have a JSTOR login) is <a href="">explained on Wikipedia</a>: essentially, it's that in a market where you can't resell a particular product, a monopoly provider will have to go for the lowest, rather than highest, possible price.

Tabarrok is saying that over-the-air updates make items more desirable over time, which keeps pricing higher. Makes sense. There's also some fun discussion in the comments about how Tesla improved its braking distance so much and so quickly.
tesla  software  technology  economics 
may 2018 by charlesarthur
The rapid evolution of Homo Economicus: brief exposure to neoclassical assumptions increases self-interested behavior • Science Direct
John Ifcher and Homa Zarghamee:
<p>Economics students have been shown to exhibit more selfishness than other students. Because the literature identifies the impact of long-term exposure to economics instruction (e.g., taking a course), it cannot isolate the specific course content responsible; nor can selection, peer effects, or other confounds be properly controlled for. In a laboratory experiment, we use a within- and across-subject design to identify the impact of brief, randomly-assigned economics lessons on behavior in the ultimatum game (UG), dictator game (DG), prisoner's dilemma (PD), and public-goods game (PGG). We find that a brief lesson that includes the assumptions of self-interest and strategic considerations moves behavior toward traditional economic rationality in UG, PD, and DG. Despite entering the study with higher levels of selfishness than others, subjects with prior exposure to economics instruction have similar training effects.</p>

economics  selfish 
may 2018 by charlesarthur
After 60 years of nuclear power, what about the cleanup? • The Atlantic
Fred Pearce:
<p>Hanford has not produced plutonium for three decades. Nobody is making new material for bombs anymore. President Trump’s plans for more weapons can be met by recycling existing plutonium stocks. And even the civil nuclear industry, which still generates a fifth of America’s electricity, is in what looks like terminal decline. With cheap natural gas and renewable solar and wind energy increasingly available, the numbers no longer add up. Nuclear power plants across the nation are being closed with years of licensed operation unused.

No new nuclear power stations have come on line in the past two decades. The only new build underway, two additional reactors at Georgia Power’s Alvin W. Vogtle plant near Waynesboro, is five years behind schedule and has seen its costs double. Its planned completion in 2022 remains uncertain.

America’s 99 remaining operational nuclear power reactors, which still deliver power to the grid, are too important to be closed overnight. But nearly half are over 40 years old. The only question is how long the regulators and accountants will allow them to keep going.</p>

Nuclear power's failure is essentially an economic one. It works OK, but the cleanup costs are so horrendous that they make it impossible. Renewable energy is filling in the gap.
nuclear  economics 
may 2018 by charlesarthur
Invisible asymptotes • Remains of the Day
Eugene Wei joined Amazon in its early years, and was given the task of figuring out what might limit its growth - that is, what would determine its asymptotic point:
<p>Fortunately for Amazon, and perhaps critical to much of its growth over the years, perhaps the single most important asymptote was one we identified very early on. Where our growth would flatten if we did not change our path was, in large part, due to this single factor.

We had two ways we were able to flush out this enemy. For people who did shop with us, we had, for some time, a pop-up survey that would appear right after you'd placed your order, at the end of the shopping cart process. It was a single question, asking why you didn't purchase more often from Amazon. For people who'd never shopped with Amazon, we had a third party firm conduct a market research survey where we'd ask those people why they did not shop from Amazon.

Both converged, without any ambiguity, on one factor. You don't even need to rewind to that time to remember what that factor is because I suspect it's the same asymptote governing e-commerce and many other related businesses today.

Shipping fees.

People hate paying for shipping. They despise it. It may sound banal, even self-evident, but understanding that was, I'm convinced, so critical to much of how we unlocked growth at Amazon over the years.

People don't just hate paying for shipping, they hate it to literally an irrational degree. We know this because our first attempt to address this was to show, in the shopping cart and checkout process, that even after paying shipping, customers were saving money over driving to their local bookstore to buy a book because, at the time, most Amazon customers did not have to pay sales tax. That wasn't even factoring in the cost of getting to the store, the depreciation costs on the car, and the value of their time.

People didn't care about this rational math. People, in general, are terrible at valuing their time, perhaps because for most people monetary compensation for one's time is so detached from the event of spending one's time. Most time we spend isn't like deliberate practice, with immediate feedback.</p>

You may be able to think how they did this. But consider what you'd do if you didn't know how they solved it.
amazon  economics  business 
may 2018 by charlesarthur
Bitcoin is the greatest scam in history • Recode
Bill Harris is former CEO of Intuit and the founding CEO of Paypal:
<p>I’m tired of saying, “Be careful, it’s speculative.” Then, “Be careful, it’s gambling.” Then, “Be careful, it’s a bubble.” Okay, I’ll say it: Bitcoin is a scam.

In my opinion, it’s a colossal pump-and-dump scheme, the likes of which the world has never seen. In a pump-and-dump game, promoters “pump” up the price of a security creating a speculative frenzy, then “dump” some of their holdings at artificially high prices. And some cryptocurrencies are pure frauds. Ernst & Young estimates that 10 percent of the money raised for initial coin offerings has been stolen.

The losers are ill-informed buyers caught up in the spiral of greed. The result is a massive transfer of wealth from ordinary families to internet promoters. And “massive” is a massive understatement — 1,500 different cryptocurrencies now register over $300 billion of “value.”

It helps to understand that a bitcoin has no value at all.

Promoters claim cryptocurrency is valuable as (1) a means of payment, (2) a store of value and/or (3) a thing in itself. None of these claims are true.</p>

Shall we put you down as a "undecided voter", Bill?
bitcoin  economics  cryptocurrency 
april 2018 by charlesarthur
Beyond the bitcoin bubble, the benefits of blockchain • Allianz Global Investors
Stefan Hofrichter is head of global economics and strategy at Allianz:
<p>bitcoin ticks all of the boxes that we consider to be essential criteria of any asset bubble:

• “New-era” thinking. Bitcoin is perceived to be an entirely new kind of currency and a monetary innovation in the internet age.<br />• Overtrading. Trading volumes have increased by almost fivefold in the last five years, according to BIS data.<br />• Ultra-easy monetary conditions. Accommodative policy is still in place globally, despite a series of rate hikes by the US Federal Reserve.<br />• A lack of financial regulation. The “Wild West” bitcoin environment is only gradually being addressed by regulators around the world.<br />• The launch of related financial instruments. New products related to the bubbling asset class are popping up – from CBOE and CME futures contracts to the launch of “ICOs” (initial coin offerings).<br />• Rising leverage. Not only has private-sector leverage increased to record highs globally, but leveraged speculation in bitcoin is increasing.<br />• Swindles. Bitcoin has become the instrument of choice for many criminals, thanks to its ability to exist entirely outside of traditional banking channels.<br />• Significant overvaluation. Many other asset classes are pricey in today’s market, but bitcoin’s valuation seems to be without peer.

This brings us to a key question: what is the fair value of a bitcoin? In our view, its intrinsic value must be zero: a bitcoin is a claim on nobody – in contrast to, for instance, sovereign bonds, equities or paper money – and it does not generate any income stream.</p>

Well this won't be popular with the bitcoin miners.
bitcoin  economics 
march 2018 by charlesarthur
Economists say the rise of monopoly power explains five puzzling trends • Bloomberg
Peter Coy:
<p>Economists have concocted a variety of explanations for five recent phenomena in the U.S. economy that don’t match the “facts” that economists supposedly agree on. Now a Brown University economist and two of his doctoral students claim to have killed all five birds with one stone—advancing a simple explanation that accounts for all the anomalies at once.

Two changes explain all the discrepancies, they say. First, there’s been an increase in monopoly power, likely caused by an increase of power in the hands of dominant companies. Second, productivity growth has slowed and the population has aged, driving down the natural rate of interest.

The economists’ “unified explanation” has policy implications, says Gauti Eggertsson, the Brown economist who shared the work with two students, Jacob Robbins and Ella Getz Wold. The growth in monopoly profits strengthens the case for raising taxes on capital such as dividends and capital gains, and also suggests that antitrust authorities “should do more to prevent monopolies and oligopolies from forming,” they write.

The paper was released on Feb. 12 by the Washington Center for Equitable Growth, where Eggertsson is a grantee and Robbins is a junior fellow. <a href=““>Here is a layman’s summary</a> by Robbins.

The researchers tackle five so-called stylized facts—economists’ lingo for observations about the real world that are so consistent over time that they come to be accepted as true.  For example, one stylized fact asserted by the Hungarian-British economist Nicholas Kaldor in 1957 was that the way the national income is split between workers and capitalists tends to be roughly constant over time. In fact, labor’s share of national income, in the form of wages and salaries, has been on a steady downhill.</p>

A Grand Unified Theory of economics? Could be useful.
february 2018 by charlesarthur
Economist Barry Eichengreen on the dollar losing its status as a dominant reserve currency and the future of bitcoin • Quartz
Eshe Nelson:
<p>Using new evidence on central bank reserves from the 1910s to early 1970s, with particularly focus on the interwar period of the 1920s and 1930s, Eichengreen and his co-authors find that reserve currencies can and do coexist. For example, in the period between the wars, it seems the British pound and the US dollar shared reserve currency status more or less equally, depending on the year. Before the First World War, even though sterling was the most important currency, the French franc and German mark were internationally significant, too.

“From this vantage point, it is the second half of the 20th century that is the anomaly, when an absence of alternatives allowed the dollar to come closer to monopolizing this international currency role,” they write.

This implies that the dollar’s days as the dominant reserve currency will end “sooner rather than later.” The book suggests we’re heading for a return to the time when currencies coexisted on more equal footing in international markets. In the future, the dollar will be forced to share prominence with the yuan and the euro, in particular. The speed of the shift might depend on the actions of Donald Trump, Eichengreen says.</p>

There's an interview with Eichengreen in the article. I'll point out that the US ceasing to be the world's reserve currency is the opening pivot of Lionel Shriver's "The Mandibles" - about a future US. (Don't say "bitcoin!")
economics  finance  currency 
january 2018 by charlesarthur
What do you call a world that can’t learn from itself? • Eudaimonia
Umair Haque:
<p>There is a myth of exceptionalism in America that prevents it from looking outward, and learning from the world. It is made up of littler myths about greed being good, the weak deserving nothing, society being an arena, not a lever, for the survival of the fittest  —  and America is busy recounting those myths, not learning from the world, in slightly weaker (Democrats) or stronger (Republicans) forms. Still, the myths stay the same  —  and the debate is only really about whether a lightning bolt or a thunderstorm is the just punishment from the gods for the fallen, and a palace or a kingdom is the just reward for the cunning.

Hence, I have never once sees in America a leader saying, “hey! See that British healthcare system? That German union and pension system? Why don’t we propose that? They work!!” Instead, the whole American debate is self-referential  —  pundits debating Andrew Jackson (LOL) instead of, say, what the rest of the world does today in 2017. How can a broken society grow only by looking inwards? If you are a desperate, heart-broken addict, what can you learn from yourself? Won’t you only, recounting your pain, reach for the needle quicker?</p>

This is a fabulous essay. As he points out, American life expectancy is also lower than you'll find in comparable European countries, and as he also notes:
<p>The same is true for things like maternal mortality, stress, work and leisure, press freedom, quality of democracy — every single thing you can think of that impacts how well, happily, meaningfully, and sanely you live is worse in America, by a very long way.</p>

But as he also points out, neither is learning the lessons of the other.
economics  culture  america 
december 2017 by charlesarthur
The point of Patreon isn't how many people earn a full-time living • Boing Boing
Cory Doctorow responds to last week's article about <a href="">how many/few people make anything like a living via Patreon</a>:
<p>Art is an irrational market; artists make art without regard to the laws of supply and demand. There are -- and always have been -- more people who'd like to make a living in the arts than the arts will sustain. That means that artists produce material without any rational expectation of any meaningful return on their investments, and this puts them at great risk from the distributors (retailers, platforms) and financiers (publishers/studios/labels, ad networks, etc) who have historically been key to connecting them to their audiences.

What's more, there's returns on scale in both financing and distributing, which is why (for example), we've ended up with five publishers, one major online bookseller, and one major brick-and-mortal bookseller. This anti-competitive concentration in both sectors has the effect of eroding the share of income from successful work that goes to the creator, moving an ever-larger slice to the other parts of the art industry. In 1999, first novels were selling to science fiction publishers for about $7,000 (about $10,200 in 2017 dollars). Today, first novels are selling for...about $7,000. And yet, if anything, more writers are producing first novels than in 1999…

…The right way to look at a 2% success rate in delivering a full-time living to creators on Patreon is to first compare that number to the percentage of people who, for example, send a demo to a record label and then get to quit their jobs to be full-time musicians (that's a lot less than 2%). The right way to look at the remaining 98% of Patreon artists who earn some money from the service is to compare how much money they get, compared to how much money they'd get if they had to rely on more indirect (and less artist-friendly) sources like ad brokers and traditional retail channels.

On both of these metrics, Patreon is performing beautifully. On these metrics, Patreon is a fucking godsend to artists.</p>
economics  art  patreon 
december 2017 by charlesarthur
America’s ‘retail apocalypse’ is really just beginning • Bloomberg
Matt Townsend, Jenny Surane, Emma Orr and Christopher Cannon:
<p>Making matters more difficult is the explosive amount of risky debt owed by retail coming due over the next five years. Several companies are like teen-jewelry chain Claire’s Stores Inc., a 2007 leveraged buyout owned by private-equity firm Apollo Global Management LLC, which has $2 billion in borrowings starting to mature in 2019 and still has 1,600 stores in North America.

Just $100m of high-yield retail borrowings were set to mature this year, but that will increase to $1.9bn in 2018, according to Fitch Ratings Inc. And from 2019 to 2025, it will balloon to an annual average of almost $5bn. The amount of retail debt considered risky is also rising. Over the past year, high-yield bonds outstanding gained 20%, to $35bn, and the industry’s leveraged loans are up 15%, to $152bn, according to Bloomberg data.

<img src="" width="100%" />
<em>(Key: colour represents percent of retail real estate loans that are delinquent by metro areas
Yellow 0-5%; orange 5-10%; red 10-25%; brown 25-53%)</em>

Even worse, this will hit as a record $1 trillion in high-yield debt for all industries comes due over the next five years, according to Moody’s. The surge in demand for refinancing is also likely to come just as credit markets tighten and become much less accommodating to distressed borrowers.

Retailers have pushed off a reckoning because interest rates have been historically low from all the money the Federal Reserve has pumped into the economy since the financial crisis. That’s made investing in riskier debt—and the higher return it brings—more attractive. But with the Fed now raising rates, that demand will soften. That may leave many chains struggling to refinance, especially with the bearishness on retail only increasing.</p>

Higher interest rates, even a little, will create big problems as this debt rolls over: stores will have to generate more money to pay the interest, at a time when the advantages for internet retailers will be growing.
amazon  retail  economics 
november 2017 by charlesarthur
How to destroy our economy • Forbes
David Pridham on why there isn’t any wage growth even while GDP seems to boom:
<p>The sewing machine, electric power, automobiles, acrylics, the zipper, the aircraft industry, the jet engine, the radio industry, the television industry, power steering, the helicopter, rocketry, cellophane, neoprene, air conditioning, the electron microscope, instant cameras, magnetic recording, fluorescent lighting, radar, the safety razor, stainless steel, and the world’s first cyclotron — these are just a few of the breakthroughs that came from entrepreneurs and startups. And those were just the industries created up to the 1950s when Jewkes wrote his book.

To all the above, we must also add the trillion-dollar, world-changing industries of the last 60 years: the semiconductor, consumer electronics, personal computer, software, biotech, mobile telephony, and Internet e-commerce industries. Once again, all were created by small startups — and on the basis of a patented innovation, no less (more on that in a moment).

Startups don’t only create breakthrough innovations and new industries. They also create jobs. Not just many of them, or even most of them. I mean, all of them!

“Across the decades, young companies are really the heavy hitters of job creation,” Arnobio Morelix, an economist at the Kauffman Foundation, told The Times.

In fact, startups have been responsible for literally 100% of all net job growth in the United States over the last 40 years. If you took startups out of the picture and looked only at big businesses, job growth in the U.S. since 1977 would actually be negative.</p>
Economics  wages  startups 
october 2017 by charlesarthur
How Apple’s pricey new iPhone X tests economic theory • WSJ
Josh Zumbrum and Tripp Mickle:
<p>Apple and Samsung have found themselves here partly by necessity. Smartphone makers are running out of new customers. Data from IHS Markit estimates there are just under 100 smartphones per 100 people in the U.S. and about 92 smartphones per 100 people in Europe. (Many people own more than one phone.) By 2020, there will be about 84 smartphones per 100 people globally, IHS projects.

To generate more revenue the big smartphone makers increasingly need to push on price.

“They can create a super-premium model and perception of super-premium that pushes those buyer types into the stratosphere,” said Steven Haines, chief executive of Sequent Learning Networks, which advises companies on product management. “This is classic product management.”

Such segmentation is normal in mature industries, said Mr. Haines, comparing smartphones to what happened with the auto industry, where luxury cars with high prices became a status symbol as car ownership became commonplace.</p>

Zumbrum and Mickle are trying to argue that the iPhone [X] is a Veblen good - where demand rises as the price goes up. Neil Cybart takes this argument to pieces in his latest newsletter (sign up on <a href=""></a>). He points out that iPhone starting prices now range from $349 (iPhone SE) to $999 (iPhone X):
<p>Apple didn't establish the preceding price range in order to push specific "luxury" models, like iPhone X or iPhone 8 Plus. It's not that the higher-end models are priced in such a way as to stoke demand and interest simply because of a higher price. Instead, iPhone pricing is based on capability [such as camera, processor speed, screen size].</p>

Handbags or Vertu phones (which recently went bust) aren't priced on their capability. Vertu phones were arguably less capable than far cheaper devices.
economics  veblen  iphone 
september 2017 by charlesarthur
What we get wrong about technology • Tim Harford
<p>Blade Runner (1982) is a magnificent film, but there’s something odd about it. The heroine, Rachael, seems to be a beautiful young woman. In reality, she’s a piece of technology — an organic robot designed by the Tyrell Corporation. She has a lifelike mind, imbued with memories extracted from a human being.  So sophisticated is Rachael that she is impossible to distinguish from a human without specialised equipment; she even believes herself to be human. Los Angeles police detective Rick Deckard knows otherwise; in Rachael, Deckard is faced with an artificial intelligence so beguiling, he finds himself falling in love. Yet when he wants to invite Rachael out for a drink, what does he do?

He calls her up from a payphone.

There is something revealing about the contrast between the two technologies — the biotech miracle that is Rachael, and the graffiti-scrawled videophone that Deckard uses to talk to her. It’s not simply that Blade Runner fumbled its futurism by failing to anticipate the smartphone. That’s a forgivable slip, and Blade Runner is hardly the only film to make it. It’s that, when asked to think about how new inventions might shape the future, our imaginations tend to leap to technologies that are sophisticated beyond comprehension. We readily imagine cracking the secrets of artificial life, and downloading and uploading a human mind. Yet when asked to picture how everyday life might look in a society sophisticated enough to build such biological androids, our imaginations falter.</p>

Just as filmmakers fail, so do our planners. But we also don't recognise the subtle needs for making lots of things consistently that underlie what happens. This is a great essay; Harford's "Fifty Things That Made The Modern Economy" would be a good Christmas present for the reader in your life.
design  economics  technology 
august 2017 by charlesarthur
Fractal planting patterns yield optimal harvests, without central control •
<p>Bali's famous rice terraces, when seen from above, look like colorful mosaics because some farmers plant synchronously, while others plant at different times. The resulting fractal patterns are rare for man-made systems and lead to optimal harvests without global planning.

To understand how Balinese rice farmers make their decisions for planting, a team of scientists led by Stephen Lansing (Nanyang Technological University) and Stefan Thurner (Medical University of Vienna, Complexity Science Hub Vienna, IIASA, SFI), both external faculty at the Santa Fe Institute, modeled two variables: water availability and pest damage. Farmers that live upstream have the advantage of always having water; while those downstream have to adapt their planning on the schedules of the upstream farmers.

Here, pests enter the scene.</p>

yes, really: fractal planting, without central control, produce pretty much optimal outcomes.
economics  fractal  bali 
june 2017 by charlesarthur
The US has forgotten how to do infrastructure • Bloomberg
Noah Smith:
<p>There is reason to suspect that high US costs are part of a deeper problem. For example, construction seems to take a lot longer in the US than in other countries. In China, a 30-story building can be completed in only 15 days. In Japan, giant sinkholes get fully repaired in one week. Even in the US of a century ago, construction was pretty fast - the Empire State Building went up in 410 days.

Yet today, it takes the US many years to spend the money that Congress allocates for infrastructure. New buildings seem to linger half-built for months or years, with construction workers often nowhere to be found. Subways can take decades. Even in the private sector, there are problems - productivity in the homebuilding sector has fallen in recent decades.

That suggests that US costs are high due to general inefficiency - inefficient project management, an inefficient government contracting process, and inefficient regulation. It suggests that construction, like health care or asset management or education, is an area where Americans have simply ponied up more and more cash over the years while ignoring the fact that they were getting less and less for their money. To fix the problems choking US construction, reformers are going to have to go through the system and rip out the inefficiencies root and branch.

Unfortunately, this is going to be hard, given all the vested interests and institutional inertia blocking deep reform of the construction sector. As [Matt] Yglesias <a href="">ruefully notes</a>, a study by the Government Accountability Office looking into the problem of high train-construction costs was recently killed by Congress, with no explanation given.</p>

Before you kneejerk, the article goes through possible culprits (salaries; unions; land acquisition costs; geography) and finds none explains it. A side-by-side comparison of two projects, one in the US and one elsewhere, would be educative. But it seems the GAO has been told not to look into this either.
economics  infrastructure  us 
june 2017 by charlesarthur
Damage • Matt Gemmell
On the App Store's effect on peoples' expectations of pricing:
<p>One measure of the value of a person’s creative output is what another person is willing to pay for it. Low prices actively court those who place less value on work. That’s not an admonishment; it’s just a simple fact. And no, you can’t balance the price-point and the sales figures to achieve the same income: there are far, far more people who will only buy at $1 (or free, if you’re trying to sell in-app purchases). If you sell at $3 instead, your number of sales will go down by much more than the factor of three that you increased the price by.

If your goal is just to make money temporarily (which is up to you), then the race to the bottom — with all its attendant risks, and its environmentally corrosive effect — is probably your best bet. You also need to acknowledge that you’ve marked your work as being essentially worthless, and that it’ll be discarded just as quickly. Your most vocal supporters will turn on you the minute you ask for more money (remember the extra levels for Monument Valley?). They simply won’t value you enough to even consider paying again, because you’ve already taught them that your work isn’t worth it.</p>

Umm, sort of. Except when the App Store first opened, prices were a *lot* higher, for games such as Super Monkey Ball. Nobody could force them to drop their prices. But there was competition for attention. The culprit is the internet, which exposes anything that depends on attention (via price) to competition from the rest of the world. If you can't defend your niche against that, you'll be forced to lower your price - perhaps to destructive effect.

I'd also observe that average prices on Google Play are lower than on the App Store, due to advertising.
apple  economics 
may 2017 by charlesarthur
Building something no one else can measure • []
Siram Krishnan:
<p>Any large system picks a metric to goal itself on. Entire books and way-too-long Medium posts have been written on the importance of said metric - it influences everything from people’s incentives to how quickly you can optimize your business. In an organizational equivalent of Schrödinger’s cat, picking the metric itself can cause weird cultural distortion (see Goodhart’s Law).

Since it is near impossible to perfectly measure human behavior, most large teams/products pick a proxy metric to measure underlying behavior. For example - ‘clicks’ are a proxy for “did I read this?” and “will I buy this product sometime in the future?”, ‘time spent’ is a proxy for “did I enjoy this content?” and NPS is often a substitute for “do I love this company?”. You convert a nebulous human emotion/behavior to a quantifiable metric you can align execution on and stick on a graph and measure teams on. Engineers and data scientists can’t do anything with “this makes people feel warm and fuzzy”. They can do a lot with “this feature improves metric X by 5% week-over-week”. Figuring out the connection between the two is often the art and science of product management.

This is where opportunities arise for startups and insurgents.

These metrics never really capture the underlying human emotion or behavior they are trying to measure. To make things more interesting, they almost always create secondary behavior which makes the metric go up but in a way the system designers didn’t anticipate or want.

For example, in terms of what designers wanted, what they built/measured and what they unintentionally caused:

• Quality journalism → Measure Clicks → Creation of click-bait content<br />• Whether an ad resonates with a human being → measure how long someone saw an ad → varied tactics to game people into seeing an ad.

If you take this outside tech, you could vaguely apply this framework to broader issues.</p>
economics  metrics  product 
april 2017 by charlesarthur
The West’s largest coal-fired power plant is closing. Not even Trump can save it • The Washington Post
Brady Dennis and Steven Mufson:
<p>As a presidential candidate, Donald Trump promised to help revive the struggling coal industry.

It’s looking like a tough promise to keep.

In the past three weeks, owners of two of the nation’s biggest coal-fired power plants have announced plans to shut them down, potentially idling hundreds of workers. One plant in Arizona is the largest coal-fired facility in the western United States.

“[We’re] bringing back jobs, big league,” President Trump said Tuesday after signing legislation that would scrap requirements for natural resources companies to disclose payments to foreign governments. “We’re bringing them back at the plant level. We’re bringing them back at the mine level. The energy jobs are coming back.”

Yet even with his efforts to roll back Obama-era energy regulations, a lot of coal jobs won’t ever return, mainly because of harsh economic realities.</p>

Again, the laws of economic gravity are inescapable. Wishing - and blustering - won't change them.
economics  coal 
february 2017 by charlesarthur
Luckily, bots’ conquest of knowledge is not yet complete • FT
Diane Coyle:
<p>robo-pricing bots can monitor each other’s decisions far faster than humans can know and react. Online sellers are increasingly able to overcome Hayek’s objection that it is not possible to know the details of supply and demand conditions. “Big data” is in this sense the opposite of “statistics”; it retains all the detail. Individuals know about their own preferences; the bots know about millions of people’s preferences.

If one, or a few, bots used this wealth of information to achieve the most efficient use of resources in society, it would mark an improvement in economic welfare. The catch comes with the distribution of those efficiency gains; the superior information held by the algorithms enables them to capture the additional social surplus.

In the early days of online shopping, the expectation was that greater competition would increase transparency — through easy comparison — and therefore reduce consumer prices. However, pricing bots’ speed gives them the advantage. Economists have looked for evidence of increasing online price discrimination — getting the maximum possible out of each consumer — and not found it; but it is not obvious that the data to test this are readily available. With such targeting standard in some markets (such as airline tickets), it would be surprising if the practice were not spreading.

This is more than a headache for competition regulators. It is a Hayekian challenge to the economic system.</p>

The relief - so far, she points out - is that bots don't quite understand everything, and knowledge has to be constantly acquired, renewed and discarded once outdated.
bots  economics 
january 2017 by charlesarthur
World energy hits a turning point: solar that's cheaper than wind (and coal) • Bloomberg
Tom Randall:
<p>It started with a contract in January to produce electricity for $64 per megawatt-hour in India; then a deal in August pegging $29.10 per megawatt hour in Chile. That’s record-cheap electricity—roughly half the price of competing coal power. 

“Renewables are robustly entering the era of undercutting” fossil fuel prices, BNEF chairman Michael Liebreich said in a note to clients this week.

Those are new contracts, but plenty of projects are reaching completion this year, too. When all the 2016 completions are tallied in coming months, it’s likely that the total amount of solar photovoltaics added globally will exceed that of wind for the first time. The latest BNEF projections call for 70 gigawatts of newly installed solar in 2016 compared with 59 gigawatts of wind. 

The overall shift to clean energy can be more expensive in wealthier nations, where electricity demand is flat or falling and new solar must compete with existing billion-dollar coal and gas plants. But in countries that are adding new electricity capacity as quickly as possible, “renewable energy will beat any other technology in most of the world without subsidies,” said Liebreich. </p>

Seemed worth marking this point.
solar  economics  energy 
december 2016 by charlesarthur
As Zimbabwe's money runs out, so does Mugabe's power • Reuters
Ed Cropley on plans to issue new Zimbabwean currency which will be traded 1:1 with the dollar:
<p>The notes' first test will come in the informal foreign exchange markets on the streets of Harare.

If they fall heavily in value, they are likely to unleash an inflationary spiral that could bleed the banking system of its last few dollars and wipe out Zimbabweans' savings for the second time in less than a decade, economists say.

The same happened in 2008: powerful individuals with access to dollars at the official 1:1 rate were able to buy bond notes at a discount on the unofficial market and then convert them back to dollars at face value.

"You start with one dollar, then you've got 10, then you've got 100, then you've got 1,000 – and it's not even lunchtime," said John Robertson, one of Zimbabwe's most respected private economists.

In Harare's chaotic Road Port bus station, the main terminus for those heading to and from South Africa, Zimbabwe's biggest trading partner, some bus operators are fearing the worst.

Required to pay nearly all their expenses - fuel, road tolls and police bribes in Zimbabwe and South Africa - in hard currency cash, they are particularly exposed.

"It's like being on death row. You don't know when the hangman is going to open your cell door," said ticket-seller Simba Muchenje, pulling a wad of worthless 2008 Zimbabwe dollars from his briefcase and tossing them onto the counter.

If it melts down, it will be very, very ugly.
Zimbabwe  economics  currency 
november 2016 by charlesarthur
The weird economics of Ikea • FiveThirtyEight
Oliver Roeder:
<p>Although [Boston University economist Marianne] Baxter can’t yet prove its particulars — more data cleaning and analysis is necessary for her ultimate Ikea project — there is a sort of evolutionary dynamic at play in the annual Ikea catalog: survival of the fittest furniture. She noticed that the company tends to discontinue products that remain expensive. “If they can’t figure out how to make them more cheaply, or retool them or slightly redesign them, it seems like the things disappear,” she said.

Indeed, the products have evolved. In 1992, <a href="">part of the Poäng was changed from steel to wood</a>, allowing the chair to ship more densely and efficiently in the company’s flat packs. (“Shipping air is very expensive,” [Ikea product PR manager Marty] Marston said.) And the Lack table was changed from solid wood to a honeycomb “board on frame” construction, decreasing production costs and increasing shipping efficiency. Baxter theorizes, though, that if a product is finicky — requiring design in Sweden, manufacture in China and intricate pieces from Switzerland, say — it may eventually be abandoned.

Marston thought the Darwinian idea was interesting, but that the deletions from the catalog were less about persistently high prices and more about popularity. “If a product doesn’t perform well — we have certain sales expectations — then it will cease to exist. The public didn’t like it for some reason, so why continue to sell it?” she said.</p>
ikea  design  economics 
october 2016 by charlesarthur
Machine logic: our lives are ruled by big tech's 'decisions by data' • The Guardian
Julia Powles:
<p>With artificial intelligence and machine learning, technologies that are fast becoming very significant actors, “we are in another moment of irrational confidence”, says renowned technology and culture researcher <a href="">Kate Crawford</a>.

Aiming at population-level <a href="">predictive gambles</a>, these technologies <a href="">filter who and what counts</a>, including “who is released from jail, what kind of treatment you’ll get in hospital, the very news that you see”. <a href="">How we respond</a> is “the biggest challenge facing us for the next 50 years”.

Crawford and three other women at the leading edge of digital scholarship and activism are headlining the 17th annual Association of Internet Researchers conference in Berlin. Their resounding message is that we have an urgent problem with “the machine logics that bind human and non-human rulers together”.

Crawford points to the recent international outrage at Facebook’s censorship of a Pulitzer prize-winning photograph as the tip of the iceberg. This is a high-profile example on top of “<a href="">a much larger mass of unseen hybrids</a> of automated and semi-automated decision-making,” she says. “They are embedded in back-end systems, working at the seams of multiple data sets, with no consumer-facing interface. Their <a href="">operations and rules</a> are <a href="">not apparent to us</a>.”</p>
ai  data  economics  blog 
october 2016 by charlesarthur
The free-time paradox in America • The Atlantic
Derek Thompson:
<p>60 years later, it seems more true to say that it is not leisure that defines the lives of so many rich Americans. It is work.

Elite men in the US are the world’s chief workaholics. They work longer hours than poorer men in the US and rich men in other advanced countries. In the last generation, they have reduced their leisure time by more than any other demographic. As the economist Robert Frank wrote, “building wealth to them is a creative process, and the closest thing they have to fun.”

Here is the conundrum: Writers and economists from half a century ago and longer anticipated that the future would buy more leisure time for wealthy workers in America. Instead, it just bought them more work. Meanwhile, overall leisure has increased, but it’s the less-skilled poor who are soaking up all the free time, even though they would have the most to gain from working. Why?</p>

He then offers three alternatives: less available work for poor men; "social forces" cultivate "industriousness"; leisure is "leaking" into work, and vice-versa.

I like the third one best.
economics  workflow 
september 2016 by charlesarthur
How falling behind the Joneses fuelled the rise of Trump • The New York Times
THomas Edsall:
<p>A May 2015 Federal Reserve report provides a window into the financial condition of many in the working class. It found that 47 percent of Americans do not have the resources to cover a $400 bill for such unanticipated costs as a car repair or a health emergency. They would be forced to borrow from friends of family, to sell something, to go to a payday loan company or to add to their credit card debt.

For those in the bottom third of the income distribution, even essential expenditures have become unaffordable: the $7,000 to $10,000 average cost of a funeral, the $33,865 average cost of a new car, the $18,000 average annual cost of child care.

Crucially important is the fact that rising inequality constitutes a double whammy. It raises the cost of sought-after goods and it increases the economic gap between the working class and the affluent, spurring nostalgia for what was (even if what was really wasn’t).

This point was well put in an essay, “<a href="">Keeping Up With the Joneses</a>,” by Neil Fligstein, a professor of sociology at Berkeley, Pat Hastings, a Ph.D. candidate at Berkeley, and Adam Goldstein, professor of sociology at Princeton, which was presented at the annual meeting of the American Sociological Association:

Growing income inequality in the U.S. has meant that as those at the top are able bid up the price of valued goods like housing and access to good schools, those in lower groups have struggled to maintain their positions.</p>
inequality  economics 
july 2016 by charlesarthur
Why did the Stars Wars and Star Trek worlds turn out so differently? • Marginal Revolution
Tyler Cowen:
<p>That question came up briefly in <a href="">my chat with Cass Sunstein</a>, though we didn’t get much of a chance to address it.  In the Star Trek world there is virtual reality, personal replicators, powerful weapons, and, it seems, a very high standard of living for most of humanity.  The early portrayals of the planet Vulcan seem rather Spartan, but at least they might pass a basic needs test of sorts, plus there is always catch-up growth to hope for.  The bad conditions seem largely reserved for those enslaved by the bad guys, originally the Klingons and Romulans, with those stories growing more complicated as the series proceeds.

In Star Wars, the early episodes show some very prosperous societies.  Still, droids are abused, there is widespread slavery, lots of people seem to live at subsistence, and eventually much of the galaxy falls under the Jedi Reign of Terror.

Why the difference?  Should we consult Acemoglu and Robinson?  Or is it about economic geography?  I can find think of a few factors differentiating the world of Star Wars from that of Star Trek.</p>

And they're not as trivial as you might think this topic would mean.
economics  startrek  starwars 
july 2016 by charlesarthur
Inside Uber’s auto-lease machine, where almost anyone can get a car • Bloomberg
Eric Newcomer and Olivia Zaleski:
<p>[Uber's short-term lease offering] Xchange isn't intended to be a moneymaker, said an Uber spokesman. But it has plenty of critics who accuse the company of looting the pockets of its drivers. The program is plagued by a lot of questions that surround other subprime lending programs aimed at risky borrowers with bad credit. Is Xchange really offering good deals? Does it ensnare drivers with commitments they can't meet? "You can buy the car for what they're charging you in weekly payments," said Greg McBride, chief financial analyst at personal-finance website But for many drivers who sign up with Xchange, it's their only option.

The terms of an Xchange lease run 28 pages. Drivers pay a $250 upfront deposit and then make weekly payments to Uber over the course of the three-year life of the lease. As the video promoting the arrangement puts it: "The best part: Payments are automatically deducted from your Uber earnings." At the end of three years, Uber keeps the $250 deposit to release the drivers from the lease. If they want to buy it, they'll need to fork over the residual value of the car, which could run many thousands of dollars. Uber declined to provide an average figure.</p>

Sub-prime, sub-optimal.
uber  economics  cars  leasing 
june 2016 by charlesarthur
Why the economic payoff from technology is so elusive • The New York Times
Steve Lohr:
<p>for several years, economists have asked why all that technical wizardry seems to be having so little impact on the economy. The <a href="">issue surfaced again recently</a>, when the government reported disappointingly slow growth and continuing stagnation in productivity. The rate of productivity growth from 2011 to 2015 was the slowest since the five-year period ending in 1982.

One place to look at this disconnect is in the doctor’s office. Dr. Peter Sutherland, a family physician in Tennessee, made the shift to computerized patient records from paper in the last few years. There are benefits to using electronic health records, Dr. Sutherland says, but grappling with the software and new reporting requirements has slowed him down. He sees fewer patients, and his income has slipped.

“I’m working harder and getting a little less,” he said.

The productivity puzzle has given rise to a number of explanations in recent years — and divided economists into technology pessimists and optimists…

…Some economists insist the problem is largely a measurement gap, because many digital goods and services are not accurately captured in official statistics. But <a href="">a recent study</a> by two economists from the Federal Reserve and one from the International Monetary Fund casts doubt on that theory.</p>

So much doubt, so little clarity. The most likely explanation? Technology actually hasn't gotten that far into the economy.
technology  economics 
june 2016 by charlesarthur
The market failure of first dates • Priceonomics
Sarah Scharf:
<p>While not rocking the boat may seem like ideal strategy for getting a second date, [economist Dan] Ariely argues that sticking to neutral topics (haven’t we all been on a date where the weather was discussed ad nauseum?) creates a "bad equilibrium"—an outcome where both sides converge, but neither side is pleased with it.

In an experiment he ran with online daters, subjects were forced to eschew safe topics in their messages and only throw out probing, personally revealing questions like “How many lovers have you had?” or “Do you have any STDs?”

The result? Both sides were more satisfied with the outcome. So the next time you find yourself on a “boring” date, the solution may be to push the envelope—and converge upon a new equilibrium. </p>

This economic look at why and how dates work is great. (Note: I haven't been on a first date for more than 20 years but am guessing stuff hasn't really changed.) the next article in the series is how Subaru targeted lesbians to get a foothold in the US market. I'm agog.
dating  economics 
may 2016 by charlesarthur
Unsafe cars can save lives • Marginal REVOLUTION
Alex Tabarrok:
<p>David Ward, secretary general of Global NCAP told the Wall Street Journal:
<p>Global NCAP strongly believes that no manufacturer anywhere in the world should be developing new models that are so clearly sub-standard,” he said. “Car makers must ensure that their new models pass the UN’s minimum crash test regulations, and support use of an airbag.</p>

Let’s take a closer look. These cars are very inexpensive. A Renault Kwid, for example, can be had for under $4000. In the Indian market these cars are competing against motorcycles. Only 6 percent of Indian households own a car but 47% own a motorcycle. Overall, there are more than five times as many motorcycles as cars in India.

Motorcycles are also <a href="">much more dangerous than cars</a>.</p>

So easy to overlook the prevailing market conditions. How many motorbikes have airbags? A car without one is still safer.
economics  india  car  safety 
may 2016 by charlesarthur
Many middle-class Americans are living paycheck to paycheck • The Atlantic
Neal Gabler:
<p>[In a survey] The Fed asked respondents how they would pay for a $400 emergency. The answer: 47% of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?

Well, I knew. I knew because I am in that 47%.

I know what it is like to have to juggle creditors to make it through a week. I know what it is like to have to swallow my pride and constantly dun people to pay me so that I can pay others. I know what it is like to have liens slapped on me and to have my bank account levied by creditors. I know what it is like to be down to my last $5—literally—while I wait for a paycheck to arrive, and I know what it is like to subsist for days on a diet of eggs. I know what it is like to dread going to the mailbox, because there will always be new bills to pay but seldom a check with which to pay them. I know what it is like to have to tell my daughter that I didn’t know if I would be able to pay for her wedding; it all depended on whether something good happened. And I know what it is like to have to borrow money from my adult daughters because my wife and I ran out of heating oil.</p>

Tell me again how you don't understand how Donald Trump's populist neo-fascist calls to bring work back to America strike a chord with some.
economics  economy  america 
may 2016 by charlesarthur
The economic impact of open data: what do we already know? » Medium
Jeni Tennison and Jack Hardinges of the Open Data Institute:
<p>Open data fuels economic growth. Many believe in the theory and ask for the proof. A new report by Nesta and the ODI adds to the evidence of the impact of open data. The report’s analysis, undertaken by PwC, examines the effects of the Open Data Challenge Series (ODCS) and predicts the programme will result in a potential 10x return (£10 for every £1 invested over three years), generating up to £10.8m for the UK economy.</p>

Seems amazing that ten years ago I was having to fight government departments tooth and nail to persuade them that releasing open data could have an economic benefit.
economics  opendata  freeourdata 
january 2016 by charlesarthur
The future is here. It just needs a big push » WSJ
Christopher Mims:
<p>Past technological revolutions—the steam engine, electricity, the automobile, the telephone—have brought gains in welfare to all corners of the world. Continued sharp declines in poverty in Asia and Africa can be traced to the belated adoption of these old technologies.

But if the automobile, to take one revolution, helped make possible one of the greatest sustained economic booms in U.S. history, one that led to unprecedented prosperity for the middle class, why isn’t the more recent tech revolution doing the same?

Economists and economic historians think they have an answer. To put it bluntly, they say, the problem with the current technological revolution is that, despite multiple Internet booms, we have yet to figure out how to allocate enough capital to information technology and all it enables.</p>

I was ready to say "but everyone has smartphones, even those fleeing countries"; however Mims's argument is much more subtle: see the graphic below. Productivity isn't rising. Why not, given all this technology?

<img src="" width="100%" />
technology  economics  productivity 
january 2016 by charlesarthur
App economy jobs in the United States (Part 1) » Progressive Policy Institute
Michael Mandel:
<p>Is 1.66 million a reasonable figure for US App Economy employment? This figure is based on our estimate of roughly 550,000 core app economy workers. That’s out of roughly 5 million people employed in computer and mathematical occupations or as computer and information systems managers. In effect, core app economy workers make up roughly 11% of the tech workforce.

Informal discussions with tech executives suggest that it’s reasonable to attribute roughly 11 percent of the tech workforce to the App Economy in the United States. Large portions of software development involve backend systems, such as financial and operation databases, which are not mobile specific. On the other hand, software development focused on online consumer or individual interactions must necessarily involve apps, because Americans increasingly access the Internet via their smartphone or other mobile devices. Going forward, mobile is likely to become more important rather than less, further pushing up the number of App Economy jobs.

We can do another comparison. In 2007, before the introduction of the iPhone, there were roughly 3.9 million people employed in computer and mathematical occupations or as computer and information systems managers. Since then tech employment has risen by 1.1 million, suggesting roughly half the net gain in tech occupational employment since 2007 has come from the App Economy.</p>

For the job breakdown, it puts iOS at 1.4m (87%), Android at 1.1m (70%), BlackBerry at 107,000 (6%) and Windows Phone/Mobile at 45,000 (3%). Adds up to 166% because some people (two-thirds?) work on multiple ecosystems. (Via <a href="">Horace Dediu</a>.)
economics  apps 
january 2016 by charlesarthur
A top venture capitalist thinks startups are causing inequality. He’s wrong. » Vox
This critique is a week old, but <a href="">Ezra Klein</a> makes a number of good points (all of them worth reading) about this much-debated essay, including this:
<p>An important point Graham makes is that while people are angry about income inequality, they usually prioritize fixing other problems. When it comes down to it, they really care about poverty, or social mobility, or median wages, or political power.

Consider two worlds. In one, the Gini coefficient — the standard measure of inequality — remains the same, but median wages are double their current level. In another, the Gini coefficient falls, but median wages are 10 percent lower and poverty is 3 percentage points higher.

Would anyone choose the second world? Bueller?

But having made that point, Graham spends much of his essay grappling with strawmen. Statements like "Ending economic inequality would mean ending startups" confuse the conversation. No one is talking about ending startups. No one is even talking about ending inequality. And you can certainly ameliorate inequality without destroying the ability to found new companies. Sweden, for instance, <a href="">has a higher startup rate than America</a>, and less income inequality — as do a number of other countries.</p>

He also includes this useful graphic to show that, au contraire Mr Graham, the number of startups is actually falling as a percentage of all companies in the US: <img src="" width="100%" />

It feels important to bear these things in mind: Silicon Valley suffers from an extreme myopia, which is fine if you're trying to build a web service, less so if you're doling out world advice.
economics  paulgraham 
january 2016 by charlesarthur
The staggering impact of IT systems gone wrong » IEEE Spectrum
<p>We’ve scoured our archives to create a rogues’ gallery of the most notable, interesting, and emblematic failures from the past decade. We’ve included a diverse assortment of failures, which means there’s no single metric for measuring their impact. Some, like failed IT system upgrades or modernization projects, have straightforward financial consequences. Others, like operational outages and disruptions, are better measured by the time wasted and the number of people affected.

Keep in mind that the failures below are just the tip of the iceberg. They’re just a tiny fraction of the hundreds of incidents we’ve covered in Risk Factor, and an even smaller fraction of the global total. A complete list would be several orders of magnitude larger.</p>

The UK comes out top for the NHS IT writeoff! Hooray! No, wait. (Via <a href="">Matt Ballantine</a>.)
economics  software  engineering 
october 2015 by charlesarthur
I Don’t Own, I Uber » Medium
Megan Quinn:
the move [from San Francisco to London, UK] meant [the car] had to go, and so it was sold for next-to-nothing to a really nice dad with two kids.

While I may have been sad to see my car go, I wasn’t concerned about being car-less because — when not on strike — public transportation is pretty good in Europe, and Uber is nearly ubiquitous in major cities. I knew Uber was more expensive in London, but everything was more expensive in London and I had factored that into my decision to move in the first place.

What I didn’t expect was that depending on Uber (UberX specifically) would actually be cheaper than owning and driving a car. Much cheaper. Yes, the company says this, but I didn’t think it was realistic yet.

Well, it is. At least for me.

About half the price, even allowing for the fact that petrol costs virtually nothing in the US compared to the UK. And that's before amortisation of the car's value. Mark this: it's significant.
uber  economics 
august 2015 by charlesarthur
Between Kickstarter’s frauds and phenoms live long-delayed projects » Ars Technica
Casey Johnston:
Ethan Mollick, a professor in management at University of Pennsylvania's Wharton School, does some of the most quoted research on the business of crowdfunding. In a 2013 study, he found that 316 of the 471 successfully funded projects analyzed—all with estimated delivery dates of July 2012 or earlier—promised to deliver a physical product. Only three of those 471 projects had declared failure and offered refunds, while another 11 dropped off the map and stopped responding to their backers. Actual shameless fraud appeared rare.

"The concerns about the ability of projects to deliver, however, are supported," Mollick wrote. Only 24.9% of the projects analyzed delivered on time, and 33% "had yet to deliver" at the time of analysis. The average delay measured 2.4 months. Projects that raise ten times their goal are half as likely to deliver on time.

Mollick also found a correlation between how much money a project raised and delays: projects that raised under $50,000 had a near-perfect delivery rate after eight months' delay, while projects that raised more than $50,000 hovered around a 75 percent delivery rate eight months later. According to the New York Times Magazine, Mollick reported that since his 2012 evaluation, another 14 percent of projects had delivered either nothing or a subpar product.

Mollick takes the opposite stance. "I'm impressed so many things get delivered at all," he told Ars.

Good to have some statistics on this.
crowdfunding  economics  kickstarter 
june 2015 by charlesarthur
Apple Music » Lefsetz Letter
Bob Lefsetz has a typically nuanced take on Apple's new offering:
It’s toast.

Its success was based upon eliminating free. But that positively non-techie entity known as the government put the kibosh on that. Now the labels and Apple are too scared to enact their plan of eliminating freemium. So while the techies leap ahead, creating solutions to problems we didn’t even know we had, those in the music business stay mired in the past, believing backroom dealings and brawn will get them what they want.

But it won’t in the new world.

What I find puzzling is that nobody at the record labels has heard of the <a href="">Laffer curve</a>.
apple  music  spotify  economics 
june 2015 by charlesarthur
Self-driving trucks are going to hit us like a human-driven truck » Medium
Scott Santens:
This is a map of the most common job in each US state in 2014.

<img src="*FAOTYaCoYpUhjiAe3sjofA.png" width="100%" />

It should be clear at a glance just how dependent the American economy is on truck drivers. According to the American Trucker Association, there are 3.5 million professional truck drivers in the US, and an additional 5.2 million people employed within the truck-driving industry who don’t drive the trucks. That’s 8.7 million trucking-related jobs.

We can’t stop there though, because the incomes received by these 8.2 million people create the jobs of others. Those 3.5 million truck drivers driving all over the country stop regularly to eat, drink, rest, and sleep. Entire businesses have been built around serving their wants and needs. Think restaurants and motels as just two examples. So now we’re talking about millions more whose employment depends on the employment of truck drivers. But we still can’t even stop there…

…Truck driving is just about the last job in the country to provide a solid middle class salary without requiring a post-secondary degree.

You can argue about the exact numbers, but the point that it's not just the driving that's affected is important. See also the later link about sewing.
cars  economics  jobs  technology 
june 2015 by charlesarthur
I was an undercover Uber driver » Philadelphia City Paper
Emily Guendelsberger, who was that undercover driver:
it's no wonder the taxi industry is having so much trouble competing with Uber — taxi companies have to pay to maintain, acquire and insure all the cars in a taxi fleet. Uber's drivers shoulder that burden themselves, with expenses eating around 20 percent of total gross fares. And Uber's gross fares, according to a Business Insider tipster, are expected to hit $10 billion in 2015.

And it makes complete sense for Uber to continue cutting fares to as cheap as possible while flooding the market with more and more drivers and encouraging people to use Uber for shorter and shorter distances — all of which correlate with reduced take-home pay for each individual driver…

…after 100 rides, I felt like I had enough [data] to work with. Over that duration, during which I maintained a 4.83 [star] adjusted rating, high enough to qualify me for Uber's VIP program, Uber would say I "earned" $17 an hour in gross fares. But subtract the 28 percent that went to Uber and the 19 percent that went to expenses, and I actually made $9.34 an hour (plus a grand total of $16 in tips, $10 of which were for meeting up with a guy who left his Porsche keys in my backseat).

Driving for UberX isn't the worst-paying job I've ever had. I made less scooping ice cream as a 15-year-old, if you don't adjust for inflation. If I worked 10 hours a day, six days a week with one week off, I'd net almost $30,000 a year before taxes.

But if I wanted to net that $90,000 a year figure that so many passengers asked about, I would only have to work, let's see ...

27 hours a day, 365 days a year.
business  economics  uber 
may 2015 by charlesarthur
The hidden politics of video games » POLITICO Magazine
Michael Peck:
Sim City lets you indulge your wildest fiscal fantasies. Banish the IRS and set taxes to zero in Teapartyville, or hike them to 99 percent on the filthy rich in the People’s Republic of Sims. Either way, you will discover that the game’s economic model is based on the famous Laffer Curve, the theoretical darling of conservative politicians and supply-side economists. The Laffer Curve postulates that raising taxes will increase revenue until the tax rate reaches a certain point, above which revenue decrease as people lose incentive to work.

Finding that magic tax point is like catnip for hard-core Sim City players. One Web site has <a href="">calculated</a> that according to the economic model in Sim City, the optimum tax rate to win the game should be 12% for the poor, 11% for the middle class and 10% for the rich.

In other words, playing Sim City well requires not only embracing supply-side economics, but taxing the poor more than the rich. One can almost see a mob of progressive gamers marching on City Hall to stick Mayor McSim’s head on a pike.

The subtle reinforcing effects of such models isn't much thought about. Philip K Dick did, for his short story <a href="">War Game</a>.
economics  games 
april 2015 by charlesarthur
The $1,000 CPM » Medium
Hank Green:
Imagine that you would like to consume a piece of content, but in between you and that content is a paywall. They’re asking $15 for one person to view the content one time. While a YouTube video might net you $2 per thousand viewers, this fantasy world I’ve just described will net you $15,000 per thousand impressions…A $15,000 CPM!

With a $15,000 CPM, every two thousand views is a full-time, living-wage human per year!

Of course, this model would never work…except that it works every day at every movie theater in America.

Oh yeah. Then again, making a movie is incredibly expensive: the paywall around <em>that</em> process is unbelievable, running to millions of dollars. The barrier to entry for YouTube is effectively zero.
economics  video  movie 
april 2015 by charlesarthur
John Lanchester reviews ‘The Second Machine Age’ by Erik Brynjolfsson and Andrew McAfee and ‘Average Is Over’ by Tyler Cowen » London Review of Books
One should always read anything Lanchester writes:
This has been a joke or riff for so long – such and such ‘reads like it was written by a computer’ – that it’s difficult to get one’s head around the fact that computer-generated news has become a reality. A company called Automated Insights owns the software which wrote that AP story. Automated Insights specialises in generating automatic reports on company earnings: it takes the raw data and turns them into a news piece. The prose is not Updikean, but it’s better than E.L. James, and it gets the job done, since that job is very narrowly defined: to tell readers what Apple’s results are. The thing is, though, that quite a few traditionally white-collar jobs are in essence just as mechanical and formulaic as writing a news story about a company earnings report. We are used to the thought that the kind of work done by assembly-line workers in a factory will be automated. We’re less used to the thought that the kinds of work done by clerks, or lawyers, or financial analysts, or journalists, or librarians, can be automated.
automation  economics  technology 
march 2015 by charlesarthur
Why I’ve found that online communities on media sites always seem doomed to fail » Martin Belam
I used to work with Martin at The Guardian (he's now at the Daily Mirror); he's got great insights into how communities fail or work. His key points - "The behaviour of the regular users becomes self-limiting for the community as a whole" and "The community believes they are representative of the primary audience" are, to me, the essence of the problem.

As a reminder, I did <a href="">a pseudo-economic analysis of why comments on media sites just don't work</a>, which comes down to "the crap drive out the good". I think that's what Martin's saying in his first point, only more nicely. Also, as he notes:
At the moment we don’t have comments on the Mirror site where I work, and I must confess it is a slight relief not to be immediately called a twat every time I press publish, but equally I find sites without comments don’t feel as alive. You know an article has had an impact when it has generated hundreds of comments.

I'd disagree on that latter point. You know an article has generated hundreds of comments when it generates hundreds of comments. But if you read them, you might find there's no actual <em>impact</em> at all - as in, the comments haven't added to the sum of human knowledge in the slightest.
economics  comments 
february 2015 by charlesarthur
Mathematicians have finally figured out how to tell correlation from causation >> Quartz
Zach Wener-Fligner:
determining causal relationships is really hard. But techniques <a href="">outlined in a new paper</a> promise to do just that. The basic intuition behind the method demonstrated by Prof. Joris Mooij of the University of Amsterdam and his co-authors is surprisingly simple: if one event influences another, then the random noise in the causing event will be reflected in the affected event.

For example, suppose we are trying to determine the relationship between the the amount of highway traffic, and the time it takes John to drive to work. Both John’s commute time and traffic on the highway will fluctuate somewhat randomly: sometimes John will hit the red light just around the corner, and lose five extra minutes; sometimes icy weather will slow down the roads.

But the key insight is that random fluctuation in traffic will affect John’s commute time, whereas random fluctuation in John’s commute time won’t affect the traffic.

Smart - watch for this to filter through into all sorts of everyday algorithms in the next few years.
analysis  economics  mathematics 
december 2014 by charlesarthur
No, you can’t manufacture that like Apple dos >> Medium
What happened when Apple wanted to CNC machine a million MacBook bodies a year? They bought 10k CNC machines to do it. How about when they wanted to laser drill holes in MacBook Pros for the sleep light but only one company made a machine that could drill those 20 µm holes in aluminum? It bought the company that made the machines and took all the inventory. And that time when they needed batteries to fit into a tiny machined housing but no manufacturer was willing to make batteries so thin? Apple made their own battery cells. From scratch.

Pretty much no company, big or small, can afford to do these things. Yes, Apple has done a great job building many of these products and yes, consumers have come to love many of these difficult-to-manufacture features. But you are not Apple. So long as you’re providing value to your customers, taking the fit and finish of your product down a notch is okay. Especially for your first few production runs.

So what should you avoid? Here’s a few things that Apple often does that can cause problems for a startup.

The "white plastic" one in the list that follows is so obvious when you think about it, but non-obvious until it's pointed out (or seen).
apple  economics  manufacturing  startup 
december 2014 by charlesarthur
Is Monument Valley overpriced? Yes. >> Terence Eden's Blog
We live in times of desperate austerity. When you say "well, it's only the price of a cup of coffee!" you utterly fail to realise that for many people Starbucks represents an unobtainable level of decadent spending.

People have hard lives. After working two jobs, slumped on an endless night bus home, they want relief from the pain and tedium of the working day. Pulling out an old phone - perhaps a hand-me-down, or one bought in happier times - they want to spend what little disposable income they have wisely. Something that gives them bang for their buck.

Renting a movie, like Transformers, works out at £1.30 per hour of enjoyment. Twice as cheap as Monument Valley.

Reading a book, knitting, chatting on the phone with a friend - all cheaper.

As the reviewer [quoted earlier in the post] said - there are many games which are just as good looking as Monument Valley, with far longer play times. Often for free.

This is a classic "functional pricing" argument, which I find is much more widely made (especially over PCs and smartphones and tablets, where "measurement" seems superficially easy - x GHz processor, y RAM, z hard drive storage). It's also meaningless. I wouldn't rent Transformers; you could offer it to me free and I wouldn't watch it. Why? Because in my view it's crap. Therefore no (non-negative) price is sufficiently low for me.

By contrast, I find Monument Valley to be fascinating, clever, unexpected, memorable - all those things that for me Transformers is not. As for other games that have longer play times and are free - sure, but is Doodle Jump or Angry Birds as memorable as Monument Valley?

I don't often disagree with Eden, but this seems to me a classic case of mistaking price and value. Equally, it's one that lots of people make when it comes to apps - which is the problem app makers face.
price  value  economics  monumentvalley 
november 2014 by charlesarthur

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