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jerryking : predictability   3

Canada’s real wealth lies in its institutional integrity, not its resources - The Globe and Mail
Canada’s real wealth lies in its institutional integrity, not its resources Add to ...
Special to The Globe and Mail
Published Thursday, Apr. 17 2014

Canada’s wealth, and the reason why the world beats a path to our resources, lies not in the resources themselves. What makes that endowment almost uniquely valuable in the world is that it exists within another vastly more important endowment of rules, institutions and behaviours.

My list of those institutions and behaviours include the rule of law; independent judges and reasonably speedy and reliable resolution of disputes; the enforcement of contract; the absence of corruption among government officials and the police; respect of private property; a moderate, predictable and stable taxation and regulatory burden; a stable currency that keeps its value; responsible public finances; freedom to trade both domestically and internationally; a well-developed work ethic; and a refusal to resort to violence to resolve political disagreements. That is the greatest endowment that we have.

What happens when you nest a rich natural resource endowment inside this endowment of rules, institutions and behaviours? Companies can invest billions of dollars to unlock opportunities, such as the oil sands, reasonably secure in the knowledge that they know the fiscal, regulatory and contractual conditions they will face over a period of years that are sufficient to recoup their investment and make some money.
natural_resources  institution-building  institutions  Canada  independent_judiciary  integrity  political_infrastructure  predictability  property_rights  civics  rule_of_law  institutional_integrity  work_ethic  oil_sands  judiciary  judges 
april 2014 by jerryking
The Door-To-Door Billionaire Daryl Harms knows how to turn dull businesses into big profits. But can he really do it with your garbage? - May 1, 2003
By Ed Welles
May 1, 2003

Harms spots trends sooner and bears down harder than most entrepreneurs--a combination that has made him wildly wealthy, if not exactly famous. But his next venture--more on that later-- just might transform him into a household name on the order of, say, Warren Buffett. Like Buffett, Daryl Harms, 51, patiently trolls for perfect businesses in which he can build long-term value via his Masada Resource Group, based in Birmingham. He hunts down overlooked opportunities that don't trade on trendy brand names or cutting-edge technologies...When selling cable service, Harms went block to block, zeroing in on houses with the tallest antennas. Other salesfolk reflexively bypassed such homes because they assumed that better reception wasn't an issue for them. Harms targeted those customers first. "I told them, 'I can see you stand tall. Of all the people on the street you understand the value of TV,' " he recalls saying. " 'If we put cable in, you can compare it with what you have now. If you don't like it, we'll come back and take it out.' " Such "influencers," in Harms's lingo, made it easier for him to convert whole blocks....Spurred by a poll that showed that 92% of Americans considered themselves "environmentalists," Harms and his employees spent a year studying the recycling market only to decide that the real money lay in garbage. From there they sought out the best ethanol conversion technology. Having found it--at the Tennessee Valley Authority--they worked for five years to tweak the science, an effort that has earned Masada 18 patents. "Today's risky business climate warrants thoroughness," Harms says..."The theme is that there is always a consumer need to be addressed," explains Wheeler. "People will always talk on the phone, watch television, and produce garbage."...Asking the right question, it seems, comes naturally to Harms. Entrepreneurs fail, he believes, because they "get too microscopic in their thinking. In business it's very easy to get the right answer to the wrong question." According to Wheeler, Harms failed to ask the right question when he set up a venture called Postron, which allowed cable TV subscribers to receive their bills via cable and print them out on a printer attached to their TVs. What Harms didn't ask, says Wheeler, was "whether consumers wanted another piece of hardware." They didn't...Harms finds customers where no one else thinks to look. When he started selling burglar alarms in 1985, he didn't target high-crime areas. Instead he identified places where the perception of vulnerability was greatest--which he determined by calculating how much space the local paper devoted to crime. The first cellphone license he sought was for a desolate stretch of highway between Lincoln and Omaha rather than in a major population center. Why? Because, as Page says, "what else were people going to do in their cars but talk on the phone?" Aside from overlooked customers, Harms seeks another component to every business: recurring revenue of roughly $25 a month per user. "That's a bite that most people can get used to paying," he reasons. For him it translates into healthy cash flow, which fosters predictability and enables a business to survive hard times. Besides, "the more reliable the cash flow, the higher a multiple of that cash flow you can get for your company," he notes.
asking_the_right_questions  cash_flows  consumer_needs  counterintuitive  entrepreneur  hard_times  hidden  latent  moguls  overlooked_opportunities  missed_opportunities  predictability  questions  subscriptions  thinking_big  trend_spotting  unglamorous  wide-framing 
november 2011 by jerryking
Easy Credit and the Depression -
MAY 5, 2009 | Wall Street Journal | by L. GORDON CROVITZ.
Judge Richard Posner's "A Failure of Capitalism: The Crisis of '08 and
the Descent into Depression". Explains behavior that looks irrational in
retrospect shows that it was logical, based on incentives at the time.
Prevention requires regulators with access to public and private
information to track systemic risk and clear, predictable rules for how
the Federal Reserve and other regulators would respond to various risk
L._Gordon_Crovtiz  economic_downturn  Richard_A._Posner  risks  book_reviews  credit  predictability  failure  U.S._Federal_Reserve  regulators  incentives  information  information_flows  irrationality  systemic_risks  causality  public_information  private_information  hindsight  rules-based 
may 2009 by jerryking

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