Value Prop: Print vs. Kindle will be attempting to fix one advantage print has over Kindle by introducing a book loan feature (maybe my local library will be able to use this somehow). states that the loan period will be a 14 day window.  If I were designing this feature, I’d make it as true to print loaning as possible.  When you loan someone a book, you don’t have access to that book until the borrower returns it.

If you wish to give them the book, so be it. might argue that the inability to pass the book along is reflected in the lower price, but I don’t buy that.

It would be really neat to be able to gift a Kindle copy of a book away when you’re finished and then track where it goes from there.  Maybe 10 years later, you see the copy of Basic Economics by Thomas Sowell that you originally purchased was read by 20 people.  Might be a good conversation starter when you meet those people.

One other advantage print has over the Kindle is more reading time on airplanes.  With print you can read gate-to-gate.  Since Kindle is an electronic device airlines require you to turn off and stow at the beginning and end of flights, you can lose a considerable amount of reading time on planes leaving you to stare at the seat back in front of you when you could be getting in some quality reading.

It would be nice to be able to overcome this restriction.

If you plan accordingly, you can have the bulky books on the Kindle and a slim magazine to read during Kindle stow time.  But, it would be nice not to have to do that.


We Should Expect Better for WSJ and Gates

Last weekend the Wall Street Journal ran the type of feature that I enjoy very much.  It was a debate-style format between Bill Gates and Matt Ridley, author of The Rational Optimist.

Gates’ portion of the debate can be found here.   Ridley’s here.

The debate covered several areas and focused on global warming and improvement in Africa.

I’m disappointed that so much of the debate relied on misunderstanding the opponent’s position.  It seems we could have much more productive discussions if we get better at recognizing when our view of the opponent’s position is flawed.

Quite frankly, I don’t believe the following portion of debate should have made it to print.

Gates writes this about Ridley:

In discussing Africa, Mr. Ridley relies on critics who say, essentially, “Aid doesn’t work, hasn’t worked and won’t work.”

Ridley responds:

Far from saying that aid “doesn’t work, hasn’t worked and won’t work,” I actually say this in my book: “Some of the most urgent needs of Africa can surely be met by increased aid from the rich world. Aid can save lives, reduce hunger, deliver a medicine, a mosquito net, a meal or a metalled road.”

I go on to say that “statistics, anecdotes and case histories all demonstrate that the one thing aid cannot reliably do is to start or accelerate economic growth.” Now here I admit that Mr. Gates does have a point. Unintentionally, I have given him and perhaps other readers the impression that, in my view, combating malaria or AIDS does not pay economic dividends. It does.

What I do take issue with is economic aid designed to stimulate economic growth. For example, a 2006 study by Simeon Djankov of the World Bank (now deputy prime minister of Bulgaria) and his colleagues concluded that “foreign aid has a negative impact on the democratic stance of developing countries and on economic growth by reducing investment and increasing government consumption.” Economic aid diverts resources into projects that fail, puts money into the pockets of corrupt government officials and crowds out the efforts of entrepreneurs. In one example, only 13% of educational aid to Uganda reached schools; the rest was siphoned off by rent-seeking officials.

“Why do people go to restaurants if we can make food at home?”

I received this great question from a 5-year-old as we drove into the parking lot of Red Robin.

There are many reasons why restaurants exist alongside our kitchens, pantries and grocery stores.  Those reasons roll up to one economic concept: opportunity cost.

Opportunity cost naturally drives many of our economic choices, most of the time without us even realizing it.

In some cases, we value what we get by choosing a restaurant over fixing the meal at home.   That night the value of the convenience of being able to get a wide menu selection, reasonable quality food and entertainment for the kids outweighed the value of prepping the food at home.

Do No Harm

An interesting thread came up on this blog post on Cafe Hayek.

One commenter, JohnDewey, defended government agencies calling it unfair to say that government agencies do not add any value.  He admitted that agencies like the USDA may not operate as efficiently as a private solution, but it’s still better than nothing and therefore it adds value.

I disagreed.

Dewey used an example of an untilled field.  He said a man and horse-drawn-plow adds some value to the field.  Maybe not as much as a man and a powered tractor, but let’s not forget it adds some value.  In his example, government agencies were the man and horse-drawn-plow.

I disagreed as did others.  A commenter known as vikingvista pointed out that Dewey lacked the imagination to consider what Bastiat wrote about in the 1800s as the unseen, or how much different and potentially better things could be without government involvement.

I agreed.  But, this is a difficult point to grasp because it’s abstract.  It’s difficult to imagine how things might be different.  That’s because most good things are a result of accidental innovation.  None of us can really imagine the unseen because that would require us to be able to predict something we can’t predict — which accidental experiments will be successful.  If you could predict such things, you should do very well investing in the stock market or directly in business start ups.

But, I wanted to try to bring this abstract point home.

I wrote to JD that he was using the wrong reference point to determine if the horse and man add value.  He was using “nothing” or an untilled field as the reference point. Certainly, a horse and man can produce more crop than an untilled field.

But, the untilled field is not the correct reference point.  It ignores opportunity cost.  A better comparison is the powered tractor field because powered tractors are readily available an in use these days.  The horse and man will produce less per unit of input than the tractor and man.  Even if the man can’t afford to buy the tractor, he can afford to buy crops grown by other people with tractors.  So, it’s not worth his time to try to produce crops with his horse.

JohnDewey disagreed.  He still contended that man/horse added some value.

I used one more example.

I appointed myself his new manager at work and declared that I didn’t trust any technology that’s been developed in the last 40 years, so he and his co-workers must carry out their work with tools and methods that have been around longer than that.

I imagine when my superiors experience my team’s productivity sinking to a fraction of what it was before, they wouldn’t buy JohnDewey’s argument that “it’s better than nothing.”  Neither will shareholders.  They’ll correctly compare our new output to what it could be using modern tools and methods and fire me because they will have correctly viewed that I damaged, rather than helped, the team.

How to Save Newspapers From Failing

The quality of the Wall Street Journal Opinion section seems to be on the slide.  That’s just my opinion.

I use to count on it weekly to provide some interesting commentary, but have found it rather blah and disappointing over the past few weeks or months.

I’m not sure if that reflects my changing tastes or an actual change in quality.  Perhaps I’m just finding higher quality writing on the blogs I visit and the quality and format of newspaper opinion columns are becoming dated.

I consider the blogs I read to be of high quality, thought-provoking and interesting.  They give fair representations of of the issue and debate the merits, not just the talking points or straw man versions of the issue.

I also like reading the comments of the blogs.  While there is a lot of noise in the comments, some comments add constructively by making valid criticism, pointing out logical errors or linking to more resources on the subject.  Also, good tools are emerging to let you filter out the noise and focus on the good comments based how other readers have rated the comments.

My idea to help newspapers become more interesting to read is to bring in content from popular blogs and the comments section of the blogs.  Instead of using its own staff of writers and editors to shape the discussion, perhaps the newspapers can report on the discussion as it happens.

I was pleased to see Forbes magazine take a step in this direction by starting to include web comments in its magazine.

I’d caution them to be careful on how they select the comments.  I’m not sure if the selection is based on editor preference or reader preference.   They appeared to be based on editor preference, which I think is a mistake and gets to the key reason why newspapers and magazines are languishing.  Editor preferences simply don’t reflect the preferences of large swaths of the population.

I imagine editors desperately want to believe they still add value and can still pick content better than consumers.  But the reality is that the web makes it easy for people to find the content that meets their preferences.

This ties back to my previous post on zero sum thinking.  Editors see their world as zero sum.  Part of the perk of their job is believing that they are a useful filter on information for their readers, but tools are emerging on the web that are much better.

If I were an editor, I’d get over that zero-sum thinking and and utilize the  market of ideas on the internet to make it a positive sum game for the newspaper, myself and readers.  I’d seek out the best content, based on reader preferences (most sites have some indication from voting on which posts and comments are well liked by readers), on  blogs and the comments section and print it.  I’d put my writers on the task of engaging the real discussion as it happens.

Zero Sum Thinking at The Office

Zero sum game thinking can hold organizations back.

When the underlying assumption at the organization is that there are only so many plum jobs, politics — rather than merit — becomes the driving factor for who gets those positions, even in the best-case scenario where management intends to get the best people in those jobs.

That’s because the people seeking those plum positions do what it takes to make themselves look good by overemphasizing their roles in success and others’ roles in failures, while under-emphasizing their own roles in failures and others’ roles in successes.  Think Michael Scott in television show The Office.

The best at playing this game tend to get rewarded with the plum jobs.

Positive sum game thinking is implicit in high performing organizations.  In such organizations, plum jobs don’t exist.  Here, plum jobs aren’t used to reward perceived stardom.  Good jobs are used to test whether you’re any good and whether you can produce results for the organization.

Do you see an opportunity to improve on a process or start a new business?  At a high-performing you may be asked to prove out the idea by being put in charge of making it happen.

The Michael/Darrel storyline on the Halloween episode of The Office made me realize that Michael Scott’s Dunder-Mifflin is an excellent example of a zero-sum organization.

Michael couldn’t understand why Darrel went over Michael’s head to get an idea heard by Corporate — an idea that Michael had previously shut down and Corporate liked and implemented once they heard it.

Darrel pointed out that Michael never did anything for him and had kept him at the same level for years, while someone else had recognized Darrel’s potential, promoted him and listened to his idea.

In Michael’s world, the Scranton office is all about satisfying Michael’s ego.  He wants to be the star.  Even in this situation, Michael was more concerned that his employee disrespected him than he was that his employee had a good idea, which is the sure sign of a zero sum organization.

To Michael, having the power to shut down an idea was a perk of his plum position.  Also, Michael didn’t want Darrel’s idea to overshadow him.

Zero sum organizations will never meet their potential.  The people who hold the plum jobs will make sure of that.  They’ll use the organization to satisfy their own needs first.

In a positive sum organization, Micheal would have sponsored Darrel’s idea and both could have rode it to glory if it did well for the organization.

The Special and Dangerous Gift of a Skillful Politician

The special of dangerous gift of a skillful politician is to say unreasonable things in a way that sounds reasonable.

That’s why it’s always prudent to be skeptical of a politician, even if you think he or she is on your side and you think that person seems like a someone you might want to sit down and have coffee with.

George Lopez Agrees With Louis CK

I saw George Lopez live last night.  Very entertaining, though he seemed a bit punch drunk and bitter from a divorce.

A common theme in Lopez’s act was how well we live compared to even just a generation ago, which reminds me of the comedian Louis CK’s “Everything’s Amazing and Nobody’s Happy.”

He harped on how good our kids have it and showed that he’s a good economics thinker by asserting that we’re raising our kids as dependent wimps and that probably won’t end well.  We are the broken feedback loop.

One story he used to illustrate the point is how he baby-proof our homes to prevent our young children from getting hurt.  This is me, paraphrasing:

We put rubber on the corners, we plug the outlets.  When I was a kid, if we were walking around with a butter knife, adults encouraged us to stick it in the wall socket.  We’d shoot across the room and as we’re lying on the floor recovering the adult would come over and tell us to use our brains.

Kid walks into the kitchen and asks, “Is that pan hot?”  Adult: “You tell me.”

He talked about how we don’t even think twice about spending $30 here and there to buy our kids stuff now.

Back then $30 was a lot of money.  Heck, today it’s a lot of money.  We give our kids so much.  We didn’t have that back then.   We climbed trees, played marbles and doctor!

One line of Lopez’s reminded me of a Tony Blair, and perhaps Churchill quote: “You can take a true measure of a country by looking at the number of people trying to get in and the number trying to get out.”

Lopez:  “America is a great country.  You can tell because a lot people try to sneak in and not very many want to sneak out.”

And, I agree with Lopez on immigration.

Most immigrants come here to work and earn a better life than they had by doing jobs that Americans don’t really want to do.  Let them.

We all benefit from immigrants and most of us are too dumb to realize it.

I think the the biggest immigration problem we have is that our government places artificial limitations on the number of immigrants to admit and it creates other artificial barriers to them becoming legal, like the minimum wage.

Great Explanation of QE2

Here’s the best explanation I’ve seen on Quantitative Easing from Steven Landsburg.   I recommend reading the whole post, but if you are curious about what exactly QE is, here it is in a nutshell:

They’re creating 600 billion new dollars and using those dollars to pay down the government’s debt.

The rest of Landsburg’s post does a great job of explaining potential results of this action.

If I understand it correctly, the net effect will likely be the transfer of wealth from those who are holding to dollars to the folks who sold their bonds back to the government.

Thanks to Steven Landsburg for taking the time to explain this.

What will health insurance look like on the new exchanges?

Here’s a reasonable guess from Megan McArdle:

What people are expecting seems to be a very expensive form of insurance (no gatekeepers or restrictions) on the cheap.  What they’re going to get is cheap insurance that they will be forced to buy.

Or as the Rolling Stones put it, You Can’t Always Get What You Want.

Here’s my comment to Megan’s blog post:

Remember the ’08 election issues? Solving the perceived problem of 45+ million uninsured was a major one.

Who knew it would be so easy to fix? Simply make it unlawful for these 45+ million to choose to be uninsured. Problem solved.

Just think of all the things we can solve.  Maybe we should outlaw unemployment.