Weekend reading

  1. Lebanon’s electricity mafia is hindering its development
  2. Saudi Arabia’s authoritarian pivot into modernity
  3. China’s Hayekian (market-innovative) communism 
  4. How Twitch (vlog) streamers make $20k/month (or more)
  5. The foundations of Eastern Europe’s populism? “…many eastern and central Europeans want… to rid themselves of the humiliation of having been imitators, followers of the West rather than founders.”
  6. What’s Financial Independence really about?
  7. The illness (and cure?) for American journalism
  8. It’s a miracle that peer review works as well as it does. And its function is to produce quality-controlled academic output, not to spot fakes.
  9. Risk management comes down to serially avoiding decisions that can’t easily be reversed, whose downsides will demolish you and prevent recovery.
  10. How have the farm animals of today been shaped by centuries of domestication and selective breeding?

Business models compared

I just spent 2 hours making this pretty picture for you:It shows the relative relations of 4 “business models”

For-profits make more than they spend for the private benefit of owners and customers.

B-Corps (or social enterprises) often make less and spend more because they are targeting a sub group of customers and/or spend more on their “inputs” of materials and labor because they are trying to combine social value with a sustainable business model.

Non-profits spend what they make to minimize costs to customers for providing the best service possible at that cost. (That’s the nice way to see them. Those that are abusive or corrupt can overcharge for shoddy service while overpaying their incompetent staff.)

Charities don’t earn revenue but “depend on the kindness of strangers” for support of their charitable works. Charities are more vulnerable to collapse due to a shift in donor attention, but that means that the arrival of an enthusiastic patron can produce a lot of action in a short time.

Is this figure helpful? Any other thoughts? 

Addendum (18 Oct via DC): 

Weekend reading

  1. A really great essay on the bourgeois roots of privilege.
  2. A software engineer calls for less bloat more smart.
  3. Blame consumers or manufacturers when tons of new clothes are burned?
  4. How to become great at anything? Deliberate practice
  5. Maybe Japan’s economy has been doing better than we think?
  6. How Jane Jacobs turned from pro-planner to pro-neighborhood
  7. All of life is suffering — the evolutionary edition
  8. USAID is running a comparison to see if cash helps people more than “programs,” but there’s a lot of resistance from its bureaucrats 🙁
  9. The “people’s canteens” at the center of China’s mass starvation.
  10. The President of the World Bank is pretty impressive.

The value-price gap

I often read or hear journalists, economists and just regular people discussing an industry’s importance in terms of its annual turnover, share of GDP and/or the total capitalization of its major companies. 

These price measures are useful for making “objective” comparisons, but they are misleading if one wants to think of the industry’s value to individuals or society. (Economists say that “consumer surplus” rises as the  gap between value and price increases.)

As a simple example compare the price that you pay to the value you get for gas, electricity and/or water. For me, value is a huge multiple of price for these services. I pay about €1/day for gas and electricity, but I’d be willing to pay 10-30x that price if I was deprived of heat and power. For water, I pay a flat charge per month (!), but I would definitely be willing to pay 10-50x the €2/1,000 liters that metered customers pay. (Assuming we use 50 liters each/day, that’s €0.20/day, so 50x would be €10/day.)

Turning to other industries, you can see a similar huge gap between value and price for food, drink and airline tickets but much smaller gaps for, say, restaurant meals, hardcover books or university tuition. In some cases (bankers, lawyers, social media, insurance and taxes — a huge share of which goes to the military and special interests in the US) value is often below price, but we are often unable to avoid such “charges.”

My one-handed conclusion is that we should think of the value of goods and services rather than their price when thinking about purchases but also (and especially) when making political decisions regarding the relative importance of  industries.

Weekend reading

  1. Watch “why every social media site is a dumpster fire” as it’s the best concise analysis I’ve seen in awhile.
    My gym needs to shut one of these doors…
  2. When are you really Dutch?
  3. The WikiTribune (a crowd-sourced news website) is looking for water stories(and thus writers). At the moment, the proposed titles look more like opinion than journalism, but hopefully they will do an objective job.
  4. A fascinating history (one in a long series) on the rise of the telegraph.
  5. Cities are trying to get access to data on “scooter shares” because they don’t want to get “Uber’d” again. I don’t think they need the data, as much as a policy on parking/using common spaces.
  6. “YouTubers are not your friends” — they’re selling you stuff — or themselves.
  7. Want less frustration and more effectiveness? “Stick with first impressions. Don’t extrapolate.”
  8. The real potential of AI.
  9. The best (short) explanation of the financial crisis I’ve read.
  10. A Neanderthal warns Sapiens of our folly.

H/T to GC

Are students smart consumers?

The relentless rise of university tuition and fees has depleted the savings of parents and left many students indebted. In many analyses (and my opinion), these higher costs have brought not better education but better amenities (housing, gyms and other playthings) and more bureaucracy

This problem is not going away soon in the US because most “solutions” call for increasing subsidies rather than limits on tuition. Here in the Netherlands the problem is smaller because the government gives big subsidies to universities in exchange for price caps. (We charge €2,000 on top of the basic €2,000 per year that most students pay, i.e., about 10 percent of the cost of a similar education in the US.)

But a lack of progress on costs does not mean there cannot be more progress on benefits or — as the English would say — getting more “value for money”.

I’ve already written about the problem with masters programs that advertise lots but deliver little, so I’m going to start there, as I continue to have conversations with my former students that go like this:

Typical Alumni: So I dropped out of that masters program.

Me: Why?

TA: The courses were not what I expected; they want to lecture you on facts that you need to memorize instead of discuss the topics; I can’t get a supervisor for the topic I want; etc.

If you want reality and hard work, then take the red pill. If you want to continue with idle ignorance, then take the blue pill…

Me: Well that’s why I told you to take a few years off, to discover what you want and learn more about the world. Then you will be ready to choose a program that fits your experience and goals. Then you will challenge the oversimplifications put out there by professors who have never worked outside the academic environment. Then you will be a critical consumer who demands time and effort in proportion to the time and effort that you’re putting into this program. Many students only want a piece of paper, and many programs deliver that, but if you want to learn, then you need to tell your professors that you want more — that you want what the marketing people promised: A first-class education. /rant

TA: Oh, that sounds like a lot of work.

Me: Welcome to the real world, Neo.

My one-handed advice is that adulthood is more rewarding to those who put in the work. Those who do not risk a life of passive frustration. Learning means mistakes and frustration, but so does dating: If you want to find the right partner (job, degree), then you need to look around.

Weekend reading

Now THIS is Upcycling!
  1. Some insights from the people Trump hates: Farmworkers and Abortionists.  Let’s thankful they’re helping us.
  2. Name and Praise? Cape Town’s water map shows houses that are meeting use targets.
  3. Correlation is not causation, but maybe we don’t understand causation?
  4. Looking back at 1968: “Antiwar radicals, recoiling from soullessness, challenged the church of technocratic rationality.” At some point, this goal was lost, and we’re still suffering the consequences.
  5. Design thinking: “Solving the problem without addressing the people, or focusing on the people without truly resolving the problem will only lead to frustration, alienation, and failure.”
  6. Psychoanalyzing Americans’ insecurities: “Trump’s deepest appeal lies in an unspoken promise… to undo the Enlightenment, to free us from the burdens of living rationally in a world where nothing is settled and where everything—economic well-being, national borders, gender identities, domestic arrangements—is up for grabs, let the strongest prevail.”
  7. Are the Poles taking advantage of Dutch labor laws or are the laws flawed?
  8. So maybe humans will not vanish in nuclear war or climate disruption catastrophe but because they cannot reproduce? Chemicals in our environment have already reduced male sperm counts by 50%, and it’s still dropping!
  9. “If you work a job with payroll, get products delivered from Amazon, or own a smartphone assembled from parts, you are a beneficiary of the relational-database industrial complex. And a victim of it, too…
  10. A fantastic analysis of the Trump Administration’s failures in Puerto Rico

H/Ts to FD and AM

Liberalism or misery?

I have read The Economist since 1989, and the past 30 years have been good for its mission of promoting liberalism (i.e., the rights of individuals to decide their destiny without impinging upon that of others as well as the value of promoting diversity and competition in the search for “truth” and innovations that will promote the general welfare) and thus for humanity’s progress, but this progress and those ideals are under attack.*

In this week’s issue, TE’s cover article says “Success turned liberals into a complacent elite. They need to rekindle their desire for radicalism.”

You should read the whole article, but I am going to give my own reasons for the importance of this mission  because (1) I have supported this mission for decades and (2) everyone needs to consider the implications of life in a non-liberal world.

First, I am a (classical, not American-style) liberal because I am aware of my limited knowledge and desire for freedom, and thus willing to assert the limits to others’ knowledge as well as their right to be free of my influence. I have for years collected examples of where “power corrupts and absolutely power corrupts absolutely,” so I am humble ab0ut the potential for top-down “solutions” and fearful of the tendencies of (so-called) leaders like Trump, Putin, Orban and Erdogan as they rally their followers to smash various opponents of the majority. (Here’s a paper on aid failure; here’s one on how groups cooperate or not.)

Second, I feel as if we’re in an era that most resembles that of of 1920-1933, when popular misery supported the rise of fascists of the left and right, as well as populists who promised easy answers to tough problems but ended up inmpoverishing or killing their followers while immiserating millions of defenseless and vulnerable minorities. The strengthening currents of authoritarianism dressed up as nationalism or, somewhat more transparently as majoritarianism, not bode well for our species. This article, for example, explains how “China and Russia are very different powers with different strategies, but they share the objective of targeting free and open societies to make the world a safer place for authoritarianism.”

I am writing this from Madrid where two artistic exhibitions have been coloring my thought. First, there is an exhibition of Russian Dadaist arts, which date from the 1920s and mostly highlight the ridiculous situations that Russians found themselves in during the early years of their revolution, which turned from proletarian optimism into fascist slaughter, starvation and terror. The second images are of Picassso’s Guernica, which he painted in 1937 in reaction to the  firebombing slaughter of innocent civilians by Nazis aligned with Franco. That painting, which is credited with “highlighting the need to forever remember and prevent the slaughter of innocent civilians,” seems remarkably relevant right now, at a time when Assad is barrel-bombing innocents and Aung Suu Kyi sits on her hands as Myanmar’s army slaughters innocent Rohinga citizens. I could write more about Venezuela, Turkey, Nigeria, and other places, but you get my point.

Liberalism as a philosophy is simple. It dictates humility, diffusion of power, and cooperation, but these ideals are unpopular with people who feel threatened and politicians who promise easy fast gains.  Sadly, those groups are ascendant as they were in the 1930s, and they do not yet see the obvious connection between their simple-minded, zero-sum view of the world and the obvious fact that attacks lead to counterattacks, and thus cycles of righteous conflict. (Check out Israel and Palestine for a long lesson in that futility.)

My one-handed conclusion is that our turn from faith and practice of liberalism will promote intra- and inter-group conflict at a time (climate disruption) when we should be joining in efforts to protect ourselves from our collective mistakes. Sad.

Addendum (20 Sep): This article is worth a read: “China and Russia assessed that Western liberalism and freedom undermine authoritarian rule. Indeed, many Western policy makers saw this as a desirable side effect: It may be good news for the Chinese and Russian people, but it is bad news for their regimes. And so, China and Russia began to push back.”


* I forgot to add a comment on how US politics has played a major role in this deterioration. In 1989, the Wall fell and the Warsaw Pact countries left Soviet influence. In 1991, the USSR itself fell apart, freeing the Baltic countries to pursue their freedoms while leaving most of the other dozen republics to struggle with reform, corruption and authoritarianism. These moves were helpfully supported by George HW Bush as well as Clinton, but the lack of an “external enemy” led Republicans (under Newt Gingrich) to turn to dirty politics as a means of gaining domestic power. Those shenanigans (including the impeachment of Clinton before the House) previewed the gridlock that plagued Obama’s years. Perhaps the worst “luck” was the (fraudulent) election of George W Bush in 2000, which gave power to an incompetent who invaded Iraq (for no good reason), failed the people of New Orleans after Katrina, reversed progress towards a global agreement on climate change, and fueled the economic bubble that led to the Great Recession, which hurt the average person but protected bankers from their own failures. Obama did a heroic job with the shit-sandwhich he was given, but the Republicans spent all their time undermining him rather than helping the country and its vulnerable people. Sadly, their strategy enabled the election of Trump, who has got to be the worst person ever to sit in the White House (and I’m including Jackson, Nixon and Bush 2). Given the current clusterfuck in the US, I am sure that we’ve yet to see the worst of Trump’s presidency. I certainly hope that the damage is not too deep and that those responsible are punished, but that justice will only recover 1% of the damage Trump and the Republicans are doing to the US and the world.

Weekend reading

  1. The first “Nigerian scammers” were French prisoners from 100 years ago.
  2. A conversation on triggers, political correctness and free speech
  3. Fail fast for happiness.
  4. A look back from a future in which we only talk to others in our bubble.
  5. “Fox News has normalized racism, lying, scapegoating and corruption”
  6. How is (maybe) Tesla disruptive?
  7. A 1989 report from the Berlin Wall, on the future…
  8. A modern What Color Is Your Parachute? (thoughts on career)
  9. How technology will be used to control us: “In the 20th century, the masses revolted against exploitation… Now the masses fear irrelevance, and they are frantic to use their remaining political power before it is too late. [Thus]… Brexit and the rise of Donald Trump.” 
  10. “There is no controversy in calling Winston Churchill a white supremacist or in noting that the British Empire was predicated on racism.

H/T to FD

The Ostroms on funding municipal services

I’ve tagged this post “from the archives” because I intend to draw attention to old but useful work that is no longer in broad circulation.

Vincent and Elinor Ostrom gave their 1977 chapter the less-than-exciting title of “Public Economy Organization and Service Delivery,” but the work is important for two reasons.

First, it’s the earliest publication (that I’ve found) that describes, defines and compares the four types of goods in the 2×2 matrix* that I use all the time:

In this blog post, I explain how excludable goods are best managed in markets (via economic tools) while non-excludable goods are best managed through political (top down) or community (peer-to-peer) processes where people can be (and must be) jointly obligated to fund public goods (via taxes) or constrained from over-appropriating common pool goods (via regulation). Besides that difference, it’s also important to know that many goods can end up in any of these boxes, depending on governance and the (im)balance between supply and demand. In this paper, we explored how drinking water in the Netherlands cycled among them. 

Second, the chapter’s theoretical discussion is used to set up the case study of interest, i.e., how falling tax revenue may make it difficult for Detroit to offer municipal services (public goods), especially when those goods are “subtractable” (common pooled goods) and insufficient in supply to meet demand. Detroit’s decline — under the twin influences of white flight to the suburbs (where politicians did everything possible to keep tax revenues to themselves) and rising poverty and crime — is well known by now, but this paper’s date suggests that the decline was decades in the making and clearly understood. I wonder how the chapter (or the book that included it) was received by local citizens and policy makers.

It’s nice to learn from the wisdom of the past.

What’s in your drawer that’s worth a read?


  • Their 2×2 is turned on its side, and they are still a bit vague about the difference between public and common pooled goods — as they were in their 1971 paper that doesn’t really mention those latter goods.