Whose wealth is it?

The author of a Letter to the Editor in the local paper is tired of hearing about how the richest country in world is broke.

The author makes a common mistake of confusing someone’s wealth for the country’s, or our, wealth.

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Two good ones from Greg Mankiw

I like it when well-respected Harvard economist, Greg Mankiw, gets snippy. In this post on his blog, he snips at Kathleen Sebelius’ lack of understanding of the the term insurance.

Also, I recommend reading Mankiw’s Sunday NY Times opinion column about what fiscal sustainability means.

Signals vs Causes: Bacteria

This NY Times article reviews studies that suggest that the makeup of bacteria in your gut may cause you to lose or gain weight (via Instapundit).

Perhaps as likely, the makeup of bacteria in your gut responds to what you eat, how much you eat and your activity levels.

Who’s on the hook?

According to this article, student loan defaults are surging (HT: Instapundit)

Perhaps schools should also be on the hook when their former students aren’t able to repay their student loans.

More Signals vs. Causes: Business Edition

In the Wall Street Journal, Rachel Emma Silverman reports on efforts by large company managers to learn from startups.

A couple of the observations made me think of the signals vs. causes thread.

Mr. Osifchin also took note of startup-company quirks, such as the large bell that staffers rang to gather colleagues and magnums of Champagne feathered with Post-it Notes encouraging workers to meet deadlines so that the bottles could be opened.

More likely, the large bells and Champagne celebrations reflect milestone celebrations for folks that are heavily invested and stand to benefit a great deal from the company’s true success.

That success probably represents something larger than the standard large company 10 – 20% bonus that is predicated on factors other than your team’s success — like if the rest of the company delivers, or someone limits your payout to get more for their buddies.

In other words, they don’t work better because of the bells and champagne. They work better because of the incentives. The bells and champagne just help them blow off the steam that comes with that kind of effort.

Here’s another one:

After comparing notes, the executives found that senior managers at the startups spent a significant amount of time in product meetings, says Brad Smith, Intuit’s CEO. That observation led the company to decide its executives should spend more time in the product-development trenches, says spokeswoman Cassie Divine.

More likely, senior managers at startups are the original founders of the product and they have a good idea of what they want it to become.

Senior managers at large companies achieved their status with bully bureaucrat skills, not delivering what the customer wants. Put these guys in the trenches and they’ll feel the need to dominate the discussion and show all the underlings why they’re the big-shots.

What is your company focused on? Startups fail. Big businesses fail. Big businesses were once startups that got a hold of a valuable enough value proposition to sustain itself.

But, if you want to learn something from successful startups, learn this. They respond and evolve to what customers want, not what a steering committee full of empty suits who are far removed from their customer base wants. They have to survive.

The senior leaders of startups are closer to their customers. They probably started off solving a problem they were experiencing and discovered others experienced the same problem and were willing to pay for a fix.

Leaders of steering committees will say they are focused on what customers want. They don’t recognize what they really mean is they are focused on the stylized, segmented, homogenized interpretation of what the steering committee members want the customer to want.

Want to replicate a startup? Remove as many obstacles to getting a true read on the customers’ response as possible.

Then, get the startup people out of corporate and give them some rope. If they succeed, the rewards should be rich. If they fail, they shouldn’t get a paycheck. They should lose something.

From the story, I’ll give credit to GE for doing more than mistaking signals for causes:

General Electric Co.’s “GE Garages,” created in partnership with four tech startups, are roaming workshops that allow GE’s own workers and visitors to tinker and noodle together on new products. GE also began a companywide venture-capital initiative earlier this year, making the firm an investor and partner in some 60 startups.

Two Davids, an Optimist and a Diamond

Something made me think about this post from February 2012 and this post from May 2012.

In the first post, I try to explain to David Brooks that his social engineering predecessors created the problem he now wants to solve and he doesn’t recognize that the easiest way to solve it is to undo what they created.

In the second post, I discuss an EconTalk podcast with guest David Schmidtz who cuts right to the nub of the problem with the you-benefit-from-society-so-I get-to-tell-you-what-to-do mindset. The key phrase from Schmitdtz that jogged my memory of this post:

Tell me at what point other people helping me made me your property.

As I re-read that post, I had a couple additional thoughts.

First, not only is the do-gooder presumptuous enough to think they are entitled to tell others what to do, but they derive that belief from what others have done, not themselves. Indeed, when they say they get to tell you to be healthy because they pay for your health care, ask how much they’ve paid so far. Ask for a receipt.

This entitlement to tell others what to do is usually based on the idea that “society” has provided roads, teachers and police protection (again, usually provided by others, not them) in which we all benefit.

But, where did roads come from? From government? From taxes?

Where did those come from?

From wealth creation. At some point in human history we became productive enough through private trading to free up some spare time for some folks to be able to work on things beyond acquiring today’s calories — like protecting us and representing us from and for each other.  Wealth creates government, not the other way around.

For more depth on that topic, I recommend Matt Ridley‘s The Rational Optimist and Jared Diamond’s, Guns, Germs and Steel.

Some thoughts on school safety

There has been a lot talk about arming teachers and administrators in schools to help protect kids. And, there are those who are against that.

Maybe I’ve missed it, but has anyone mentioned arming and training teachers and administrators with non-lethal weapons and techniques like bean bag guns, net shooters, batons, bullet shields, pepper spray and tasers?

It looks like at least one company is thinking this way, too, with a whiteboard that doubles as a bullet shield.

Some inventive people could probably come up with more stuff that can be integrated into classrooms and offer protection from attackers and deterrents.

I’m not sure if they make these, but it seem like some type of device that you throw to the ground and it lets out a smokescreen and expands into a trap that wraps around an attackers legs to trip and contain them might also help, maybe a foam that will seal around their feet and ankles when they step in it..

Rethinking school building design might help. Something like emergency exits on airplanes might work. Pull the lever and the window pops out with an inflatable ramp to exit the building.