22 December 2021

Four Dimensions of Progress and The Dramatic Setback to Progress in 2020

You all know that I'm fascinated by economic progress and development. Medieval serfs had very few rights, on average died in their early or mid-30s and had almost nothing in the way of income or goods (or certainly nothing in contrast to what we now have). The fact that the world gradually began to transform its technology - from equipment to institutions - to bring us to today's reality is for me the most delightful thing. Our freedoms, income and life expectancy gives us millions more options than our medieval ancestors had.

There are four simple measures of progress.

1. Did real incomes go up? Do you have a greater choice each year of goods and services to buy and enjoy? Do we have a choice of more great products for each hour of work?

2. Did the community gain more freedoms? Can you be a practicing Protestant without threat of death or expulsion or exclusion from certain key positions and rights? How about Hindu? Or atheist? Are two men free to marry just as a man and a woman are? Can women hold positions of power? Do you have more choice about how to live your life and not just more products to buy?

3. Have life expectancies gone up? Do you have more time in which to live your life choices, to pursue happiness? Between 1900 and 2000, life expectancy rose from 47 to 77. That didn't just radically alter the life span. It meant that one of the coolest inventions of the 1900s was retirement, a period of life in which someone didn't just live decades longer but was free from the obligation of work for some portion of that added time.

4. Are your gains sustainable? Are you reliant on energy sources that your great grandchildren can also enjoy, energy sources that when used don't threaten ecosystems? Are you investing as well as spending so that your grandchildren have a good shot at continuing the progress that you're the beneficiary of?

Progress means progress on these four measures: income, life expectancy, rights and sustainability.

The drop in life expectancy of 2 years in men and 1.5 years for women between 2019 and 2020 is a huge setback to progress.




I'm optimistic enough to think that the advances this pandemic is forcing / facilitating in things like advances in mRNA technology that could actually result in a longer term increase in life expectancy. Setbacks do sometimes force changes that result in a later step function in progress. But that's speculative. The reality, for now, is that COVID, deaths of despair and our responses to both have translated into a setback to progress.

19 December 2021

Comorbidities, COVID and the Excuse du jour for Dismissing a Dangerous Disease

"Well, comorbidities explain a lot about who is dying of COVID," say the same folks who have - at various times - dismissed COVID as no worse than the flu, then explained it as just a blue state or urban problem, then a hoax in that deaths from COVID are grossly over-reported because doctors are keen to collect special COVID premium fees from deaths by other causes like falling out of windows or microwave explosions and falsely attribute the cause of death to COVID. Now the argument is, "Well, comorbidities."

Comorbidity would include conditions like old, obese, or asthmatic. The argument du jour is that COVID isn't real because it is comorbidities that are the real cause, sort of a more subtle twist on the "doctors are falsifying documents" argument.
It's another wave of nonsense and misinformation. Allow me a comparison.

Imagine that you lived on the British Isles in the year 1000 or thereabouts. Vikings periodically invade to rape, pillage and kill. You're trying to discuss this problem.

"This is an atrocity. They killed Elwood and raped his wife and stripped everything valuable from his farm."
"Well of course they killed Elwood."
"What?"
"Comorbidities. You know how scrawny Elwood was. I mean, of course he couldn't stand up to a Viking attack."
"You're saying that he wasn't killed by Vikings but instead because he wasn't sufficiently buff?"
"Essentially, yeah. I mean, it's almost always the scrawny or old guys who are most likely to die."
"And the convent of nuns they attacked and raped?"
"Well, nuns. I mean. They have almost no upper body strength."
"Which explains why the Vikings raped and pillaged their convent?"
"Yes."
"And the problem isn't that Vikings are raiding our coast raping and pillaging?"
"Vikings are going to rape and pillage. Vikings are going to do what they do. You aren't going to change that."
"You don't think that maybe we could form some kind of coastal defense so that it isn't so easy for the Vikings to attack us?"
"That seems like a lot of hassle. And sounds very expensive. Just keep a broad ax handy. And do something to increase your upper body strength. You are not going to have much luck fending off Vikings."

Comorbidities is a fancy way of saying, "COVID is more likely to kill people who are vulnerable." It's self-evident nonsense presented as if it is insightful.

COVID raises the probability of death the same for everyone. It is true that different groups - young and fit high on that list - are less vulnerable and increasing their odds of dying still leave them highly unlikely to die compared to, say, an asthmatic 94 year-old who is incredibly vulnerable. (And of course death isn't the only bad thing that can happen. Long COVID can change your health for ... well no one really knows for how long.)

Saying that the vulnerable are more likely to die of any cause is not an explanation or an insight. It's just another way to dismiss COVID - a disease that has lowered life expectancy in the US for the first time since 1918 - rather than acknowledge its severity and impact.

11 December 2021

They're Making Inflation Sound Worse Than It Is

Inflation after a year of sharp contraction followed by a year of record growth is about as shocking as squealing tires on a car that goes from 75 mph to 25 mph to 65 mph within a couple of minutes.

A couple of thoughts about inflation.

One, inflation is typically overstated. Here's why.

Let's say that you have a local grocery store called Smith's in your town of River Run. They sell eggs for $4 a dozen. Then a Walmart opens in town. They sell a dozen eggs for $2.50. Lots of folks start shopping there. So, obviously this means prices have dropped, right? Nope. For consistency, the folks tracking prices now track the change in prices at Smith's separately from the prices at Walmart. If Smith's lowers their prices to $3.50 to compete, the official price drop will be 13%. If they don't drop their prices at all, the official inflation will be zero. What the officials don't do is calculate the price of eggs as dropping by more than a third in River Run. And then they track price changes for eggs at Smith's and Walmart over time. Or if you find a great supplier online who sells something for half of what they charge at your local hardware store, inflation measures don't show a drop of 50%.

The pandemic has changed buying habits. People are seeking out higher quality, greater convenience or lower prices from any of a number of retail sources - local brick and mortar or online. To the extent that this involves them finding better bargains (higher quality at the same price or lower prices for same quality) from new retailers, that shift is not showing up in measures of inflation. The period from 2020 to 2021 may have involved the most change in who people buy from of any year. That change is not reflected in inflation numbers.

Also, prices measured do not allow for changes in quality. In Robert Gordon's magisterial economics history book The Rise and Fall of American Growth, he compares the TV of his youth with one available in 2014. Electricity costs dropped as they became more efficient. They were so reliable they no longer required a service contract of $50 a year. The 1950 set was $350 for a black and white, 9 inch. By 2014, for $418 one could buy a 40" high-definition with theater surround sound and internet streaming capability. He compared two sets from 1952 and 1983 to make adjustments for quality differences. The official annual inflation rate for TVs in this period was -1.0%, prices dropping by 1% a year. His adjustment for quality improvements suggested a more dramatic annual price drop of 4.3%, a huge difference.

What's the point? Inflation is almost always overstated. It doesn't track changes in sources over time as people seek out cheaper products of the same quality from a different vendor or better quality products for the same price.

Second, stagflation is highly unlikely.

It seems to me that the great period of stagflation in the 1970s always misses a really important event. Stagflation is the worst fear of policy makers. Before the 1970s, people thought that you could have the problem of inflation with low unemployment or the problem of high unemployment with low inflation. There was a tradeoff. But in the 1970s, we had both high unemployment AND high inflation. This was called stagflation.

There were a lot of theories bandied about but I've never heard that one that makes the most sense to me. Throughout the world, former colonies were being transformed by rising nationalism. As the British and French empires were being unwound after WWI and WWII, new nation-states were emerging. Places like Iraq and Saudi Arabia that had huge oil deposits had previously gotten a token fee for their oil as companies like British Petroleum and Standard Oil operated drilling rigs there and shipped the oil to the West. In the 1970s, rising nationalism included the notion that the peoples in a country should be the ones who benefitted from their own land. They insisted on keeping a much, much larger portion of the oil revenue. This amounted to a shift in GDP from countries like the US and UK to countries like Saudi Arabia and Iraq. What happened in the US? Prices went up. (Oil was used for making and distributing a huge portion of the goods we enjoyed and now we were paying more.) GNP stagnated. (A portion of GNP that counted "their" oil as ours was shifted from the US to foreign countries.) Stagflation - it seems to me - wasn't so much a change in the tradeoff between unemployment and inflation as it was an oil shock that came from a shift in international GNP.

What does all this mean? Inflation is not as high as you think. And it is highly unlikely that we'll experience anything like stagflation over the next few years. As we start lowering unemployment less dramatically, measured inflation will probably drop.  Prices are higher now but job creation is at its highest rate on record. Monetary and fiscal policy stimuli have been huge - and rightfully so. That's going to taper off and as new job creation / reinstatement rates lower, the rate of inflation will likely taper off as well. There is still a relationship between inflation and unemployment and the 1970s don't seem to me proof that the relationship has changed.  

09 November 2021

Keynes on How We Tend to Save More and Invest Less Than We Should (And on how old ideas should be exorcised by new)

From John Maynard Keynes' General Theory of Employment, Interest and Money.

"... there has been a chronic tendency throughout human history for the propensity to save to be stronger than the inducement to invest. The weakness of the inducement to invest has been at all times the key to the economic problem. To-day the explanation of the weakness of this inducement may chiefly lie in the extent of existing accumulations; whereas, formerly, risks and hazards of all kinds may have played a larger part. But the result is the same. The desire of the individual to augment his personal wealth by abstaining from consumption has usually been stronger than the inducement to the entrepreneur to augment the national wealth by employing labor on the construction of durable assets…."

Meaning? The impulse to save is greater than the impulse to invest, to put capital to work to create something new. To me that is affirmation that we need initiatives to invest more than people naturally do.

He continues,
"One recurs to the analogy between the sway of the classical school of economic theory and that of certain religions. For it is a far greater exercise of the potency of an idea to exorcise the obvious than to introduce into men’s common notions the recondite and the remote…"

Meaning? The ideas that exorcise obviously bad practices are more powerful than ideas that are esoteric.

How can you not love Keynes?

21 October 2021

20 October 2021 We Lost Csikszentmihalyi, Who Taught Us About Creating a Life of Engagement and Meaning

“A joyful life is an individual creation that cannot be copied from a recipe.”
― Mihaly Csikszentmihalyi

One of my heroes died yesterday.

Mihaly Csikszentmihalyi wrote two books that hugely influenced my worldview. One day over lunch he agreed with my characterization of the first as an answer to the question of how to find engagement and the second an answer to the question of how to create meaning.

Freud explained great accomplishments as sublimation of cruder instincts like sex and violence into socially accepted activities. Skinner explained great accomplishments as all done in response to rewards and punishment. As a young psychologist, Csikszentmihalyi didn't think either explanation was particularly tied to real people doing real things. For instance, he interviewed a lot of folks who were painting. The thought that they were doing this as some odd diversion of energy that would otherwise go into sex and violence struck him as nonsensical. Nor did any of the painters seem to believe that they'd be rewarded as if they were a Picasso for their efforts or punished if they didn't paint. As Csikszentmihalyi talked to these people, they would often use the term "flow," as in, "I began to paint (or write or rock climb or whatever) and just got into the flow of it." His great insight was that the psychology of engagement was not only one that made us happy but was a route to productivity, creativity, and self development. Being fully engaged not only makes us feel better; it actually makes us better.

His Evolving Self never sold as well as Flow but strikes me as even more important. (Apparently I bought it as a gift for my son-in-law at least twice.) Flow was a very successful book and concept but missed something revealed to him when one day he asked a student how his summer was. The student’s eyes lit up as he told Csikszentmihalyi about his amazing job of clubbing baby seals for their fur. More innocuously, video games are a marvelous example of tasks that fully engage us – provide flow – but have dubious value outside of the experience of flow they provide. In Evolving Self he explored how lives – how our actions – have meaning. His conclusion wasn’t wildly different from Sartre’s, building on the notion that we have to create our own meaning, creating and finding flow in tasks that contribute to some greater good that lies outside of ourselves. Our lives have meaning as we connect to something bigger than us.

Csikszentmihalyi helped me – and probably millions of people – to better understand how to find and create engagement and meaning. Now that’s a life.


15 October 2021

A Tentative Theory About Why 30 Year Old Children from the Richest Families Are Less Likely to Work

Curiously, poverty and wealth alike seem to lower employment rate for the children of the poor and wealthy.

This first graph shows that as parental income rises, so does the probability that the children are in jobs. Until you reach about the 94th percentile, after which further increases in income actually lower the odds that your children have jobs at 30.


[from https://fivethirtyeight.com/features/rich-kids-stay-rich-poor-kids-stay-poor/ ]

I'd be curious to better understand this. One of my tentative explanations is based on the fact that the median wage in the US is just under $35,000. Kids raised in the top 5% of households would probably recoil at such paltry wages and thus are less likely to accept half the jobs out there - which might make it tough to get started.
Social security wages just includes income from a job. It doesn't include rental income, money from dividends or business income.

In 2020, the number of people with social security wages over $50 million rose 61% from 2019 - ten times the rate of increase of the number of people making more than $100k. The number of people making a million dollars or more rose 14%. (And yes. There was a pandemic underway and still wages rose this much.)



[social security data from https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2020 ]


13 October 2021

Beware of This Neighborhood Scam

The doorbell rings this morning and I open it to an 8-year-old in costume. “Trick or treat!” he hollers at me.
“What is this,” I ask. “It’s 13 October. What are you doing trick or treating?”
“I’m going as a dyslexic,” he says. “13 October. 31 October. It’s all the same to me.”

I look him over, admiring his costume and his scam. And then I say, “Ha! If you were dyslexic, you’d have said, ‘Treat or trick!’” And then I close the door, pleased with myself that I wasn’t outsmarted by a kid.

About 30 minutes later, he comes back with a taller kid in a suit.
“Now what,” I ask.
“This is my older brother. He’s going as my lawyer and he plans to sue you for insensitivity and discrimination.”

So that’s how I ended up driving two kids to Costco this morning, buying them each a huge bag of candy. How was your morning?

12 October 2021

Interest Rates are at Their Lowest Rate in 5,000 Years (Or Why Biden's Investment and Infrastructure Plan is Too Timid)

The Dutch have interest rate records that go back 500 years. Interest rates never once went negative in that entire period ... until just a few years ago.

It gets better. Adam Tooze recently shared a graph showing that interest rates are their lowest in 5,000 years. [Adam Tooze's tweet and graph are here: https://twitter.com/adam_tooze/status/1446437719283060753/photo/1 ] That's a long time.

Biden wants to invest $350 billion a year in infrastructure and other public sector investments. That works out to about 1% to 2% of GDP during the next 8 years. Democrats are defending it and Republicans are attacking it. It is indefensible. With interest rates this low, we should be investing 2 or 3 times as much. Imagine someone making $100,000 a year saving and investing only $2,000 out of their salary. That would be irresponsible and yet that is Biden's bold plan. 1.8% of this year's GDP and probably about 1% of what GDP will be in 8 years. Now imagine that for every $100 you invested, you had to pay back less than $99 in 30 years. (And that is, indeed, the price of 30-year bonds now.) Why would you not invest to at least match past generations, imitate the great Lincoln and FDR?

Lincoln made massive investments during the Civil War: a transcontinental railroad, and Agricultural and Machinery Colleges all over the country, among other things. After the Civil War, the economy boomed. FDR made massive investments during WWII: huge infusion of capital investments and R&D that first went into the war effort and then into peacetime production. Additionally, the country plowed huge sums into universities, research and highways right after the war. The result? The decades just after WWII broke the record for productivity gains that were set by Lincoln. Investments drive productivity and wage growth. And that was before capital was free.

I keep banging on this drum but rather than invest in creating a great future, both parties seen intent instead on fretting about the future. Don't be sucked in by Democrats' timid plans for the future or Republicans' showing such a lack of faith in the future that they refuse to invest in it. Tell everyone you know, "But interest rates are the lowest they've been in 5,000 years! We'd have to be fools not to invest truckloads of money right now." Even if you don't believe in the future, talk and invest as if you did. It'll make you look like a better person. Pessimism and fear just makes you look small.

11 October 2021

Columbus Day and How Our Descendants Might Look At Us

We've gone from making Columbus out to be a brave hero who sailed over the horizon to discover our home to making Columbus an amoral opportunist who brutalized Americans and unleashed forces that devastated first nations. Is a hero or a villain? 

At the time of the dinosaur, our ancestor was essentially a rodent. "We" have evolved greatly since then but it raises an interesting question: how are we to judge that ancestor's morality?

And while that's a dramatic example, I think the same general complications apply in any attempt to judge generations from centuries earlier. If climate change does irreparable harm to coastlines and their cities, makes species of plants and animals extinct and forces political turmoil and violence with climate refugees, do you really think that your descendants aren't going to be horrified that you took joy rides driving up the coast or that you flew to other continents just to play tourist?

It's the rare individual who constructs their own morality separate from what they see around them. We tend to share language and worldview with the people we consider us.

If we're making progress, we will be aghast at the technology - and worldview and morality and behavior - of our ancestors. It doesn't mean we can't acknowledge when they did things that changed the world - and call out the the things they did that were so casually brutal.

And then rather than decry the treatment of others from that period, champion policies that narrow the gaps between "others" and average Americans. We can't judge a rodent's behavior from the time of the dinosaurs but we also don't have to accept the consequences of that behavior as if we're helpless to change history. We're no longer the rats in the maze; we're the ones in the lab coat who can now change the maze.

08 October 2021

What September 2021 Job Numbers Suggest About the Recovery to Follow

Last month (Sep-2021) the economy created less than 200k jobs, which is far short of what's needed. The good news is that monthly variation is high and with adjustments to prior months, the American economy is still averaging 561k jobs per month this year. This one month dip is less likely a sign of things to come than normal variation within this very weird year.


Unemployment is down sharply for the month, dropping from 5.2% to 4.8%. 




We are still down 5 million jobs from pre-pandemic peak. The breakdown of those jobs raises some questions.

Leisure and hospitality jobs are down 1.6 million. This is for obvious reasons and one can hope that as COVID cases subside so will this number. Meanwhile, tip your server generously.

Health care employment is down 524,00 . About 400,000 of those jobs are in nursing and residential care facilities. My question? How much of this reflects the population drop in these places due to COVID? Between hesitancy to live in such places and the drop in elderly population (official count is 700,000 dead in the US and the Economist estimates this misses about 30% of COVID related fatalities, which would put the total at about 900,000), there is less demand for these services. Given 24 hour, 7-days a week care in these facilities, there is about one job for every 3 residents. The COVID death toll alone could account for 300,000 of those 400,000 jobs lost in nursing and residential care facilities. 

Those nursing home jobs may not be coming back for some time.

Another big source of job loss is in education. Here, jobs are down 676,000 from their pre-pandemic peak. Given the Delta variant is so contagious and that kids are both unvaccinated and coming back into the classroom in large numbers, there is a COVID outbreak among school-age children right now. Some parents seem to be choosing to simply keep their kids at home. It's not obvious what is happening with those kids (private education employment is down about as much as public education). If elderly are not going into nursing homes they may be staying with their children who have school-age children; I'm sure a number of kids are being kept out of school to protect grandparents. Studies suggest about 3 million kids have "disenrolled" from school. Presumably the kids will come back at some point and these jobs in education will be restored. Timing seems like a huge question.

The only sector with higher employment than the pre-pandemic peak is transportation and warehousing, where there are 72,000 more jobs than there were last February. This sounds negligible. And as a portion of the workforce it is. But those supplies that they are shipping and storing flow into factories and retail stores, representing downstream jobs in manufacturing (which is now down 353,000) and retail (now down 202,000). The growth in transportation could be prelude for more general growth in employment. Every one of my clients of late complains about how delays in supply chains is impacting their ability to make product they can then sell; as that problem is addressed, it could mean great things for downstream sectors and employment. It makes sense that transportation and warehousing would lead a recovery.

Meanwhile, it looks like we won't hit something akin to full recovery until next year. The unemployment rate, though, is rapidly dropping as befits an economy creating an average of half a million jobs per month.
 



Finally, the unemployment rate is so much higher for those with less education. Market forces are less likely to address this than is legislation to fund infrastructure projects and subsidize sectors like childcare, for instance. Funding jobs for less educated people is better in dozens of ways than either ignoring their plight or giving them welfare rather than work.

07 August 2021

The Modern Republican Party and the March of Folly

Barbara Tuchman's March of Folly was published in the mid-1980s. She wrote about how Renaissance popes lost northern Europe to the Protestant Revolution and British royalty lost the American colonies.

One thing she never really addressed was how Renaissance popes lived better than any popes before or since. Did that hurt the church? Yes. Did it hurt them? No. Popes Alexander and Julius had - well Renaissance artists decorating their living quarters, mistresses, ate better than royalty and had enormous power. If Raphael has painted your personal living quarters, can things really be so bad? A similar thing was going on with British royalty. The real issue was that personal possibilities and goals were at odds with the institutions they had control over.

What's going on now in the Republican Party shows a similar kind of divide. Matt Gaetz and Marjorie Taylor Greene have no interest in becoming powerful legislators. Members of congress make only $174,000 a year and need to have homes in their district and in DC. That's hardly conducive to building wealth.
Rush Limbaugh died with $600 million and was making $85 million a year. Alex Jones is demonstrably nuts and yet even he is worth millions from his broadcasting.

Will new Republicans who spout conspiracy theories be to the Republican Party what Renaissance Popes were to the Catholic Church or British Royalty was to American colonies? That is, will they cost the institution enormously? Yes.

Will they make enormous sums if they pull off the transition from serious legislator to media personality? Definitely yes.

Perhaps the biggest problem Trump's Republican Party has right now is that the money to be made by promoting conspiracies and odd beliefs is so lucrative that there is little incentive for GOP politicians to play it straight and do the hard - but hardly lucrative - work of crafting policy that could add 0.5% GDP growth each year for the next generation - the stuff of steady progress. Instead they are incented to create controversy that can make them rich now.

27 July 2021

Some mix of history and whimsy and a proposal for rebranding Silicon Valley

Silicon Valley got its name because of employee law that California inherited from Spain. In states back east, if you worked for a shoe cobbler and then left to start your own shoe cobbler business, your former employer could sue you for illegally taking knowledge he'd given you to use in competition against him. In California, he could not.

William Shockley worked for Bell Labs and managed John Bardeen and Walter Houser Brattain, the two guys who did the research on semiconductors that led to the transistor. Shockley, Bardeen and Brattain shared in a Nobel Prize. (Bardeen went on to share in a second Nobel Prize involving the theory of superconductivity.)
Shockley left Bell Labs, moving close to his aging mother in Palo Alto. He started Shockley Labs and hired some uber-bright people. Turns out that Shockley - who was a crackpot whose theories included an embrace of eugenics - was a terrible manager and one day, eight of his best employees left Shockley Semiconductor Labs to form Fairchild. Curiously, given you could easily leave an employer who you felt you could outperform, people left Fairchild as well, and the companies that sprouted up from those exits were referred to as the Fairchild(ren). The most famous of those was easily Intel, founded by Gordon Moore (of Moore's law fame) and Robert Noyce who proved much better managers than Shockley, who died a bitter and committed conspiracy theorist.

The string of silicon companies led to the nickname Silicon Valley, a description of a new, transformative technology that twice democratized information. Once by its unprecedented processing power and its effect on information technology evolution, an exponential rise in computing power that we've still not fully realized the consequences of. And secondly by creating cultures responsive to the fact that great employees could leave to become competitors so better to give them leadership influence and even equity rather than leave them with incentive to leave your employ to become competitors. This, too, is a consequence we have yet to see the culmination of, a democratization of management and leadership within the corporation.

Silicon Valley is a description that now applies to companies in Seattle. Microsoft, Amazon, Redfin, and Zillow are companies that are casually lumped under the label of Silicon Valley. They - of course - are software companies and rely on, rather than make, silicon. It seems as though Silicon Valley is the wrong label for King County, home to two successive, "richest man in the world" entrepreneurs, Gates and then Bezos.

Perhaps the new label should be Algorithm Alley, a nod to the early 21st century rise of the software that so exploits the potential of the silicon of the late 1900s. Silicon Valley gives way to Algorithm Alley.

26 July 2021

My (and your) Belief in an Afterlife

 I post all the time about politics, policy and stats that seem to describe our world because I have to live with the consequence of your vote and you with mine. There is nothing private about the consequences of politics so I love the notion that we can at least better understand what thinking (or instincts) lie behind particular models of the world. Shared stats and perspectives can make those worldviews - and thus our votes - better.

Religion, though, is a private matter and so I stay away from that. Unlike your choice to vote for someone, your choice to be Catholic or atheist or Scientologist doesn't impact me and is none of my business. But I do want to talk about the afterlife.
I have developed this theory that morality is enhanced by a belief in an afterlife.
"A man finds himself, to his great astonishment, suddenly existing, after thousands of years of non-existence; he lives for a little while; and then, again, comes an equally long period when he must exist no more. The heart rebels against this, and feels that it cannot be true."
- Arthur Schopenhauer
By afterlife, I don't even mean that if you live a good life you'll be playing harp on a cloud or be reincarnated as someone's spoiled dog. By afterlife I mean something more simple: after your life, the world will go on and the lives in it will be just as important as those of you and the ones around you that you love. Perhaps even more important because there will be so many more lives.
Years ago I read a fascinating thought experiment. Imagine that you knew with great certainty that at the moment you died, life for all humanity would end. Giant meteor, terrible pandemic ... whatever. Everyone gone. How does that change your own life?
I think for a lot us, honestly believing such a thing would tend to gut you. It would make so much of what animates you suddenly seem laughable. "What does anything matter?" you might ask. And that thought experiment seems to me proof that our lives are generally animated by a belief in an afterlife and a sense that it's important.
Morality is certainly about now, about caring how we harm or help others. I think it's also about later, making provision for the future we'll eventually be excluded from. Believing that an afterlife matters allows us to take actions on what has the highest impact: things that take years, decades, or even lifetimes to play out.
I don't even think that a belief in an afterlife is a religious matter; it seems to me a demonstrably moral one based on a simple premise: what matters most in the world is so much bigger than me or my lifetime.


21 May 2021

We Invent Products That, in turn, Reinvent Us: Lincoln and the Hirsute Republicans

Abraham Lincoln rather famously grew a beard just before he was elected president, apparently inspired by an 11-year-old girl who suggested it would help him to get elected. He was the first president to have a beard.

He was followed by a succession of Republican presidents with facial hair.



Lincoln and the hirsute Republicans championed policies that made America host to an industrial revolution that triggered a parade of new products.

The list of product inventions from around 1900 includes central heating; stainless steel implements; the electric toaster, iron, and oven; the sewing machine; the dishwasher; the electric elevator; the dial phone; the portable typewriter; radium treatment for breast cancer; heart surgery; the psychiatric clinic; contact lenses; toothpaste in tubes; motion pictures; musical comedy; the gramophone; volleyball and basketball; the Ferris wheel; the jukebox; the striptease; breakfast cereals; milk delivered in bottles; packaged produce; Coca-Cola; margarine; the ice cream cone; the refrigerator; the correspondence course; the full-range department store; the chain store; the shopping center; the coin telephone; the traveler’s check; fingerprinting; the automatic pistol; the electric chair; the automobile and the airplane; the underground city subway train; the pneumatic tire; color photography; rayon and other artificial textiles; and chewing gum.

These products changed the human experience in thousands of ways we can hardly describe.
In 1901, King Gillette invented the disposable safety razor that made it easy for men to shave. It took a while to catch on.

President William Howard Taft, who served until 1913, had a mustache, in keeping with the theme of facial hair for presidents. But by 1915, Gillette sold 70 million blades to a public who had adopted the clean-shaven look. This product changed how men looked.

No president since Taft has had facial hair. (Well, other than eyebrows.) We invent products and then they reinvent us.

17 May 2021

1980s Insubordination at Apple - the Curious Team Dynamics Between Jobs and His Engineers

Excuse the language but this is simply too good not to share.

In 1980, Apple had gone public. This meant that Steve Jobs had more money but less power. The engineering team developing the Lisa computer essentially exiled him from their team. At this time, a woman Jobs had been dating claimed he was her child's father. He denied this. The woman named her daughter Lisa; the engineering team decided to name the computer they were developing Lisa, in the hopes that Jobs would also walk away from them.

So Jobs, lurching about for a project to engage in, found Jef Raskin, who was obsessed with making a friendly computer. Raskin didn't want Jobs encroaching on his Macintosh project but, of course, Jobs did, eventually making it his own.

Here is their relationship as recounted by various Apple people, including Jobs.
Andy Hertzfeld: The Mac was initially a skunkworks. At this time it was not an important project at Apple. It was a very minor thing.
Randy Wigginton: And Steve went over to Macintosh where Jef Raskin was, and he and Jef did not mix well.
Steve Jobs: Jef's a shithead who sucks.
Jef Raskin: Steve would have made an excellent king of France.

Apple may have done well to bring in junior high teachers to help with team dynamics. Or maybe that would have defused all the creative energy. Who knows? You live on a weird planet. Apple is the most valuable publicly traded company in the world, now worth $2.1 trillion. It's hard to know how much of this is because of and how much of this is in spite of men who took projects so personally.

These comments are from Adam Fisher's Valley of Genius.

26 April 2021

Heavenly Relics as Means to Raise Money for Earthly Projects

Like many churches, the Castle Church of Wittenberg where Luther would nail his 95 theses had relics. More than 19,000 of them. The collection of relics included a twig from Moses' burning bush, four hairs of the Virgin Mary, five particles of her milk, a piece of Jesus's swaddling clothes, two pieces of hay from the manger, five pieces of the table from the Last Supper, and eight thorns from Jesus's crown. These were put on display once or twice a year.

Each relic had an associated indulgence that reduced the time a sinner had to spend in purgatory by days or years. Added together, the relics in the church collection could bring about a reduction of precisely 1,902,202 years and 270 days in purgatory.

That may have been the origin of the "must see" exhibition.

Oh, and they then used the money collected by people come to see the exhibit to fund bridges, dikes, schools, hospitals, and cathedrals. People were willing to pay for what they imagined and the authorities used that to pay for what was real. That's an interesting governance model and may have actually been more sustainable than the one we have now.

24 April 2021

The Various Kinds of Racism that Led States to Refuse to Ratify the 15th Amendment

The 15th amendment was ratified in February of 1870. It states,
"The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of race, color, or previous condition of servitude."
Kentucky, Maryland, and Delaware refused to ratify it because they did not want Blacks to have the right to vote.

California and Oregon did not ratify it because they did not want Chinese to have the right to vote.

Rhode Island did not ratify it because it did not want the Irish to have the right to vote.

From Eric Foner's The Second Founding.

23 April 2021

Debt, Taxes, Revolution and Americans Curious Relationship with Monarchs

The United States was founded at the expense of two great empires. Each paid dearly to address the debt America left them.

After the 7-year war with France in North America (which ended in 1763), Britain's debt was 137 million pounds. The government's annual revenue was 8 million pounds and the interest payment on this debt was 5 million pounds.

When Britain asked the US to pay more in taxes to help pay down this debt, the average person in London was paying 26 schillings a year in taxes while the average person in Massachusetts paid only 1.

Outraged at "taxation without representation," the American colonies revolted against Britain.
The American Revolution would have failed without help from France. France not only helped the Americans with arms and ships but money - running a huge deficit.

Given their accounting was so poor, it took France a couple of years to realize how deep in debt they were left as a consequence of the American Revolution. Proposed tax reforms to address this debt were one of the big reasons the French decided that - like the United States - it would revolt against its monarchy.

Establishing the American colonies cost Britain half of them (only 13 of the 26 British colonies in America revolted in 1776, as places like Newfoundland and Jamaica remained British colonies) and cost France its monarchy. French taxpayers beheaded Louis XVI and Marie Antoinette in 1793.

One curious consequence was that while the Americans did rid themselves of monarchy - replacing King George with President George - the portraits of the king and queen of France continued to hang in Congress in Philadelphia years after the French monarchs had been guillotined in France.

Mitch Hedberg has this brilliant line, "I find that ducks' opinion of me is greatly influenced by whether or not I have bread." Something similar seems true of Americans, whose opinions of monarchs is greatly influenced by whether they are asking for or offering money.

17 April 2021

The Future You're Buying Now Almost Immediately Begins Changing Your Present (Or What To Think About a Mere $2 Trillion Infrastructure Proposal)

1% of household net worth is $1.3 trillion.

Household net worth rose $19 trillion from 1Q to 4Q 2020.

In the Spring of 2021, Biden is proposing an investment of $2 trillion in infrastructure over 8 years.

By no stretch of the imagination is this excessive.

You buy land through simple purchase. You buy the future through investments. The quality and quantity of our investments is an indication of what kind of future we’re trying to buy.

I would love to live in a world in which I feel compelled to holler, "Wait! Don't you think that perhaps we're investing too much in R&D, education, reducing poverty, inclusion, and infrastructure? Aren't we putting too much money into making too many people more productive, creating new knowledge and funding projects to create great new products?"

And if that happens, please just look at me and say, "No. That's a preposterous notion. We would spend even more but for the fact that we've had a momentary lapse of imagination."

One of the many things we’ve learned about these investments? Beyond whatever future education helps kids to create, it creates jobs now. Beyond whatever successful businesses venture capital helps to create, it creates jobs now. Investment doesn’t just change the future. It changes the present. Investments create value twice.

A new highway increases future GDP in the region by making it easier for people to trade and travel. It also increases present GDP as you pay people now to build it. That's one of the more curious things about investments. As you try to change the future, you immediately begin changing the present. And that makes sense. Now was the future just a short while ago.

14 April 2021

A 1962 Doctor's Warning About How Babies Become Socialists

There was an American pediatrician named Dr. Walter J. Sackett Jr. who suggested that you ignore crying babies. He wrote a bestseller in 1962 called, Bringing up Babies: A family doctor's practical approach to child care. And he said that if you didn't ignore crying babies, they would grow up to be socialists.

"If we raise our offspring to expect everything to be provided on demand, we must admit the possibility of sowing the seeds of socialism," he wrote.

If seems fair to say that the Cuban missile crisis reframed how Americans thought about most things.

From Sandi Toksvig on QI

One of the Rarely Reported Ways that Companies Have Transformed in the Last 25 Years

The opening lines of Adam Smith's Wealth of Nations are,

"The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour."

I've been working with teams developing new products as varied as computer chips and drugs, medical devices and engines for more than 20 years.

When I started, it was pretty normal for companies to go outside of the company about 10 to 30% of the time to a subcontractor. Most of the time they had a department that handled this one specialty and experts within it who did the work; sometimes they went outside the company for specialists.

In the last few years, the percentage of work that is assigned to an outside company instead of an inside department has been much higher. Often, more than 50% of the work is actually done by specialists outside the company.

Specialization has become even more specialized and departments within a company often can't compete with specialists outside a company. Specialists thrive with other specialists as coworkers and managers. Every molecule is its own universe; every specialty has its own complexity. Organizations that specialize in one thing get more data points and experience that they can translate into more knowledge and better processes. Experience drives evolution and organizations that get more experience have the potential to evolve more rapidly. An organization that is subcontractor to 5 companies has the potential to add more value for less cost than a department within any one of those 5 companies.

As if that is not enough, it is becoming increasingly common that the subcontractor who has been tasked with some subset of the project work to outsource some or all of their task. Your subcontractors have subcontractors.

If you think this is weird, consider this. If you are making a computer, you will outsource the computer mouse. Do you think that the company to whom you outsource the mouse does not turn to outside vendors to provide the ball and / or shell and / or circuitry, etc.? And that those outside vendors don't have their own suppliers?

The same sort of thing is happening in knowledge work that has been happening for an even longer time in manufacturing.

Specialists turn to specialists who turn to specialists who ...

The division of labor that Adam Smith found so transformative is still not done dividing.

13 April 2021

Lincoln and Darwin Were Born the Same Day - And Also Shared a Sense of How Transformative Small, Incremental Changes Over Time Could Be

Abraham Lincoln and Charles Darwin were born 12 February 1809.

Lincoln is still the only president to hold a patent, which is a delightfully appropriate thing for the president who understood the importance of capital and the innovation and progress it could fund.

Anyone not properly impressed with the effect of compound interest over time either hasn’t learned how to use a spreadsheet or is really hard to impress. Invest $5,000 at 5%. Every year add another $5,000. In 40 years (when you might retire), you will have $640,000. Keep this up for 60 years (when you might die) and you will have $1.8 million. Time turns a small amount into a large amount.

A lot of time turns a small amount into a huge amount. After 250 years the $5,000 to which you added $5,000 and 5% each year turns into $21 billion. 250 years is not relevant to a life but is relevant to a country.

Lincoln and the capitalists who were excitedly investing in big capital projects like the Erie Canal, railroads and factories realized the power of compound interest as key to creating wealth. They had the vision to see the importance of investing now to transform the future.

Darwin took this vision of compound interest to the next level.

Selection was popular among farmers raising crops and animals. I remember looking through a catalog for bull semen at my uncle’s. He used artificial insemination (AI) to turn a herd of Hereford (I think it was) into the Charolais cattle that he preferred. The catalog for the bulls whose semen he was buying had a variety of information. I locked in on two: birth weight and weight after a year. The ideal was low birth weight (fewer complications in birth) coupled with high weight at a year. AI was just the latest technique for doing what farmers had been doing for centuries: intentionally selecting for qualities in breeding.

Darwin presented the idea that nature - like a farmer - also selects. The length and width of a finch’s beak could be naturally selected based on the island they lived on. Darwin studied this difference in the Galapagos Islands and from this drew the conclusion that with enough time, small differences could account for the differences between gorillas and orangutans, or humans and bonobos. Indeed, all of life.

Today’s world is very much shaped by the realization of how much difference compound difference can make. Darwin’s insights give us insight into the rapid evolution of viruses and the intentional reengineering of genes with CRISPR. Lincoln’s notions that big shared investments lift prosperity more generally have been repeatedly proven and we enjoy longer, more prosperous lives because of them.

Cumulative, incremental change transforms reality – whether in the form of the compound interest that creates wealth or the natural selection that creates new species. The further into the future, the bigger the transformation possible. As we gain more mastery of the technology of genetic engineering that Darwin’s ideas pointed us towards, we - or perhaps our grandchildren - may even be the ones who personally experience the transformation that incremental progress over a period of 250 years can bring.

10 April 2021

Given the Gap in Household Wealth of Folks With and Without College Education is Growing We Need Bolder Infrastructure Plans

The gap in wealth because of education is big and growing.

In 1989, the average wealth of high school dropouts was 21% that of college grads; by 2020 it was only 9%.


If the gap had stayed constant, households with high school dropouts would have $200,000 more in wealth than they now do.

Trump's big idea (and given it is now completely his party, the Republican's big idea) is to return to 1970 and the heyday of manufacturing and strong wages for folks outside the information economy. Put up trade barriers and bring back manufacturing jobs. A lot of people get really excited about this (im)possibility.

The Democrats' big idea has been to create better social safety nets for high school dropouts. Until now.

Biden's infrastructure plan is a reasonable approach to addressing this gap; big construction projects will create really good jobs for folks who haven't learned programming, enabling them to create wealth and some measure of economic security.

How much is Biden's $2 trillion plan that spills across a decade? A paltry sum. Last year, household wealth rose $12 trillion to $130 trillion. $200 billion a year (roughly what Biden's plan proposes spending per year) is less than 2% of the amount by which household net worth ROSE last year.

Spending $200 billion a year is too little but it is a start at the creation of good jobs for folks without college degrees. It doesn't do any of us any good to make the penalty for struggling in school so high.

source:
https://www.stlouisfed.org/household-financial-stability/the-real-state-of-family-wealth/educational-household-wealth-trends-and-wealth-inequality

08 April 2021

You Could Have Been Rich But You Had to Have That iPod - How Corporations Shifted Their Emphasis From Making Products to Making People Wealthy

A curious thing happened through the course of the 20th century: companies shifted their focus from making things to making money. This shift is important and still misunderstood.

In 1900, American homes did not have running water, electricity, a car, a radio, telephone, TV, computer, store-bought clothes, frozen food, takeout, aspirin, a refrigerator, microwave oven, canned goods, sneakers, safety razors, shampoo, or credit cards.

Fortunes were made by the various companies able to produce those goods at affordable prices. And people were largely focused on buying those things.

And then our curious thing happened: given these companies had gone public, they rather inadvertently created a new product. They created wealth. If you owned shares of a company that became successful, you could have one of the more curious products of all: financial independence.

On 23 October 2001, you could have been the first on your block to buy an iPod for $399. Call it $420 with tax. Apple was selling a product that made it easy to enjoy all your favorite songs on one slick device. (And of course, you’d have to pay another $1.29 for each song, so the $400 was just the admission price.)

On 23 October, 2001, for that same $420 you could have picked up 1,500 shares of AAPL – Apple’s stock. As I write this in early April of 2021, those 1,500 shares would be worth $194,325.

Apple was selling products that let you have private concerts at a whim. If you’re not amazed and delighted by that, you probably aren’t that impressed by music. The iPod was a fabulous product. But it likely pales in comparison to the other product for which Apple was becoming famous: its stock.

The person who spent $420 on Apple’s stock instead of Apple’s iPod back in 2001 has wealth to use for any of millions of products and services. The person who bought the iPod probably doesn’t know where it is now. Apple has made a lot of very impressive products. Perhaps none are as impressive as having made people rich.

Between 1900 and 2000, life expectancy rose from 47 to 77. (And no, this was not all due to infant mortality rates dropping. Your odds of dying at any age - from six months to 20 to 50 to 70 - steadily dropped during the 20th century.) People had always gotten old but old age was popularized in the 20th century and retirement was invented.

Pension plans and 401(k) accounts took advantage of decades of compound interest over these newly long lives to create enough wealth to fund retirements. People no longer had to work until they died or rely on the generosity of their children. And in 1900, that is what happened. The bad news is that people worked until they dropped dead. The good news is that they didn’t live that long. (Hmm. Or maybe that’s bad news too.)

At a certain point, more goods have less appeal. Your closet has more clothes than you'll wear, your freezer and pantry have more food than you'll eat, and your garage had more things than you can find. Eventually you realize that it is momentum from previous pursuits of happiness that are driving the purchase of more things. You realize that of all the things that corporations make, you are probably more interested in their ability to make you financially independent than you are whatever goods they’re selling. In fact, with the intense interest in startups, people are increasingly buying the stock in companies before those companies are even selling products. "What are you selling?" "Well, for now it's just stock but we do have a product launch planned."

An amazing, unprecedented economy emerged in the 20th century, providing goods that past generations could not have imagined. Of all the goods it made, though, perhaps the most alluring was its promise of financial independence. Of all the things that companies could make that people were eager to buy, the promise of wealth ranked highest.

It is difficult to properly understand modern companies if you still understand them as institutions focused on making things. That was largely true a century ago. Now, they are largely focused on making people rich. (What does Google "make?" Well, they've made a lot of people rich.)

Henry Ford became famous for making cars affordable for normal people. Previously, they were something only the very few, very wealthy could afford. The challenge of the early part of this century is to do something similar with companies' most interesting product yet: make ownership of wealth more widespread, more common. One of the keys to this will be creating more mechanisms that allow employees to use the company as a vehicle for creating wealth. As with the church and state before it, the corporation is to become a tool for the masses and not just the elites. The popularization of wealth will be a signal that we’ve overcome the limit of entrepreneurship and with it have moved beyond the limit of economics.

04 April 2021

COVID Has Made Everyone's World More Virtual - And Threatens to Make Even the Real World More Virtual for Some

Forced to social distance by COVID, we're online in greater numbers and greater frequency than ever before. Beyond that, COVID strangely simulates the virtual world.

In one study, 86% of people who had COVID lost their sense of smell and after 60 days, 24% still had not recovered it.

It is still not clear whether the folks who permanently lose their sense of smell - and with it often the ability to distinguish tastes beyond salty and sweet - is closer to 2% or 20%.

The five classic senses are sight, hearing, touch, taste and smell. A loss of one or two is disconcerting and I find it odd that more isn't said about this loss of smell and taste.

But it also makes COVID such a weird echo of the online experience. Online is all sight and sound but no taste or smell. COVID - weirdly - has the potential to make our real world seem that much more virtual, a place with sights and sounds but no aromas.

03 April 2021

The Big Penalty for Living in the Past - Or How People in Mississippi Pay $3,000 a Month to Live in the Past

There is a big penalty for living in the past.

Massachusetts was one of the first states to outlaw slavery, back in 1783. Washington and California entered the Union as free states. New York outlawed slavery relatively early - in 1799.

These four states have the highest average incomes in the country - about 25% higher than the national average.

The Thirteenth Amendment outlawed slavery everywhere in the US and was ratified in December of 1865.

Mississippi ratified the Thirteenth Amendment in 1995 - and certified that in 2013. 148 years after it was ratified nationally.

Mississippi has the lowest average income of any state in the country, 31% lower than the national average.

The difference between Mississippi and Massachusetts' average wages is $35,000 a year - nearly $3,000 a month. Folks in Mississippi make roughly half of what folks in Massachusetts make.

There is a huge penalty for worldviews that dismiss or limit the potential of any member of a community. The past is not a better place. You should move out of there daily.

Of note: had it not been for Mississippi, Kentucky would have been the last state to ratify the 13th amendment. The state that gives us Senators Mitch McConnell and Rand Paul ratified the 13th amendment in 1976 - a mere 111 years after the country as a whole. So, if you're ever wondering what kind of people think that McConnell and Paul would make great senators ... well, there you have it.

01 April 2021

In Which Your Blogger Affectionately Mocks Baseball on Opening Day

I don’t know which came first: April Fool’s day or this being the opening day of baseball. In any case, fans from 30 different teams all believe that their team has a chance to win the whole thing this year. On opening day, every team has a perfect record. This encourages a form of foolishness.

In baseball, the pitcher tries to keep anything from happening and the batter tries to change that. Most of the time, nothing happens and then suddenly it does. That’s also how life works.

No matter how great a hitter you are, you have to wait for 8 other guys to go to the plate before you get another turn. Imagine that sort of turn taking in basketball or football. “Pass me the ball!” “No. It’s not your turn.” 

They call time out in baseball and yet no one pays attention to the clock or can tell you how many minutes are left in the game.

It’s a weird game, too, in that when a team goes on offense, they literally (well, most of them anyway) retreat into the dugout. On defense, you go out into the field and stand around. On offense, you go into the dugout and sit down. Possibly they first made baseball players begin to wear uniforms because given their penchant for sitting down to watch the game people were having a hard time telling the players and fans apart.

Baseball fans are obsessive about small differences in batting averages, pitching counts, etc. It’s a game with strict rules but the distance you have to hit a ball for a homerun randomly changes from park to park. Can you imagine a football stadium where an announcer says, “Defenders love this field. It’s 111 yards long.”

It’s hard to tell whether baseball players are overly optimistic about speed or very pessimistic about risk. In either case, it seems odd that they wear helmets when running the bases.

Players are constantly called out in baseball. It’s the thing that happens most. But the umps are nice about it. They give you a little thumbs up when they call you out.

I’m still waiting for the first baseball coach to abandon the traditional zone defense (“You play third base, you play right field …”) to pioneer a man-to-man defense (“I don’t care if he is on the bench, you stay on Jenkins …”).

Baseball encourages a philosophical bent. The most dominating teams still lose more games than the athletes in other sports play in a season. And your best hitter gets out twice as often as he gets on. To watch a game is to watch failure. That alone may be a reason it has held our attention for more than a century, another way in which it is less an escape from reality than a way to closely study it.

31 March 2021

LBJ and The Economic Reality That Had to Change Before Civil Rights Legislation Could Pass

In one of my earliest memories, I was sitting in a tree with my sister and neighbor Jeff, older kids I was apparently trying to impress. I said, “LBJ is a SOB.” I knew who LBJ was but didn’t know what SOB meant. When my mother found out she washed out my mouth with soap (for the first and only time in my life). She told me, “You don’t talk that way about a president.”

It left an impression. I’ve been fascinated with politics ever since.

American president Lyndon Baines Johnson (LBJ) averaged only 4 to 5 hours of sleep a day and worked most of the rest; his wife once said, “Lyndon acts as if there is never going to be a tomorrow.” He might sleep from about 2 am to 5 am, work until lunch, then take a nap around 2 pm, before working until the early hours of the morning. These “double days” were exhausting for everyone who worked with him but the man signed a lot of legislation.

He once called a congressman at 3 a.m. to discuss a piece of pending legislation. When Johnson asked, “Were you asleep?” the congressman responded, “No, Mr. President. I was just lying here hoping you’d call.”

One of the things he liked to do, at the start of formal meetings, is ask where the folks present had gone to university. As you may imagine in a meeting at the White House, he would hear answers like Yale, Princeton, Harvard - the usual suspects. Then he would pause and say "It looks like I'm the lone representative of Southwest Texas State Teachers College."

He was colorful. Once asked whether he might force J. Edgar Hoover out of the FBI (Hoover had abused his power more than once) LBJ quipped, “I’d rather have him in the tent pissing out than outside the tent pissing in.”

LBJ described himself as a protégé of FDR. His Great Society was a continuation of FDR’s initiatives that focused on labor – that is, on people - more than capital.

A video at the Johnson Library in Austin includes LBJ explaining a new bit of legislation that he’d signed to fund free school lunches. He recounted how as he watched the poor kids come into his classroom, unable to afford lunch – early in his career he taught in a part of Texas with a lot of poor Mexican-American kids – he vowed that if he ever had the power to change this fact of hungry kids at school he would. “Well,” he said, “I now have that power and I intend to use it.”

He also tasked Sargent Shriver – JFK’s brother-in-law – to lead the war on poverty. Shriver said that he had asked for data on who in America was poor and was shocked when he saw a pie chart: 50% of America’s poor in the mid-1960s were children. One of the programs that Shriver quickly scaled up was Head Start, funding and drafting volunteers to go into the country’s poorest neighborhoods to give these kids a head start with summer school and healthy food.

LBJ also got universal healthcare (at least for those over 65 in the form of Medicare).

His most defining legislation might have been his Civil Rights legislation that forbade discrimination in jobs and public services and then – after his overwhelming victory against Barry Goldwater in 1964 – the Voting Rights Act of 1965 that protected minority registration and voting, ending a century of denying Blacks access to the ballot. The courage of Martin Luther King, John Lewis and others had helped to shift American opinion; after peaceful protests in Birmingham, Alabama were made violent by local authorities, LBJ accelerated his agenda for Civil Rights. When he signed the Voting Rights Act Bill, he reportedly said, “We have lost the south for a generation.” As it turns out, the south that once reliably voted against the Republican Party that freed the slaves still reliably votes Republican two generations later. And counting. It is now the Republican base.

One of the rarely reported on reasons that presidents in the 1900s fought for and gave so many rights to women and minorities? If the US only invested in white, non-Hispanic males – only allowed these men to realize their potential and have full access to the institutions that are key to success - it would only let 30% of its adults realize their potential. Again, if a society is caught up in win-lose thinking and thinks that one person’s prosperity comes at the expense of another (a mostly accurate description of reality in an economy based on land), this matter of only 30% of adults being able to realize their potential is not a big deal. In fact, even 30% might be too many to compete with for scarce resources.

But once the limit to economic progress shifted to labor, progress became dependent on having more people solving more problems and creating more new possibilities. The economy grew as the portion of people fully engaged in it grew.

Only 30% of adults are white males. Add in all the minority men and we’re now engaging 49% of adults. Add in all the women and we’re now engaging 100%. The community that engaged and gave opportunity to 100% of its adults is obviously going to do better than a community that only engages 30%.

Slavery had always been bad morality; after the automation of manual work brought on by the industrial revolution and its machinery, slavery became bad economics. It was then that policy made slavery illegal.

Discrimination against women and minorities had always been bad morality; after labor – and particularly knowledge work – became the limit to progress, discrimination became bad economics. It was then that policy made discrimination illegal. It was then that men like FDR and LBJ could win by overwhelming margins and sign legislation that changed reality for millions.

And lest you think that discrimination doesn’t make a difference, it is worth pointing out that the Deep South that voted for segregationists into the 1960s still lags the nation in income. Average income in those states is 20% lower than the national average. There is a penalty for failing to invest in and include as many people in your community as you can.

The great thing about labor as the limit to progress is that a community intent on realizing its potential is going to be intent on investing in as many of its members as it can – regardless of their accents, eyelids, pigment, hair, genitalia or with whom they use it. By our standards, LBJ was racist, sexist and homophobic. He was – as a four-year-old in a tree once pointed out - an SOB. And yet he lived at a point in history in which progress meant investing in everyone because with labor as the limit, a community could not afford to exclude anyone and he was smart enough to know this and champion the policies that changed it.

We’re bigger for LBJ’s policies. “We” literally encompasses all of us now instead of just a portion of us. And we’re better for it.

26 March 2021

What a Growth in Free Time Could Mean for Entrepreneurial Opportunities for Structuring Consciousness

Between 1900 and 2000, life expectancy rose from 49 to 77 and the average workweek dropped from 53 to 37 hours.

If retirement remained constant at age 65, the additional life expectancy gave a person 12 new years of free time - years that never had to be - never got to be - filled before. The shorter workweek gave a person in 2000 an additional 16 hours a week.

We rightfully get kids thinking about what they are going to do for work from an early age. It's a big decision and should be given a lot of consideration.

I wonder, though, if we don't do enough to get kids thinking about who they want to be in their free time. It's a nontrivial question and could do as much to define you and your quality of life as your work.

Csikszentmihalyi notes that in studies of free time most people lapse into things like watching TV. It's easy to do but people generally report feeling less than engaged or happy doing it. The problem is, activities like tea parties, building cars, and group hikes that are more engaging are also more work; it takes a lot to set up the activities that create flow. Setting people up for more flow-inducing activity may become one of the big growth industries as growing affluence means that more people will be retiring before 65, adding even more free time to lives.

The good news is that we have more hours and years of free time than ever before; even better news for aspiring entrepreneurs is that this suggests more demand for someone to structure the activities that structure our consciousness. Retirement planning will become much bigger than cash flow management.

23 March 2021

How the Success of the University of California System Has Created a Crazy Obstacle to Higher Education in California

These poor kids trying to get into UCs. It's not enough that the average GPAs for the kids they admit are over 4.0. The success of these campuses as a hub for activity, research, new businesses, and - of course - education has made them some of the most expensive areas to live in California.

The median home price in California is $635,000. Home prices in some UC neighborhoods are about 2 to 3X that.
Median home prices are
$1,850,000 around UC Berkeley
$1,500,000 around UC Los Angeles
$1,875,000 around UC San Diego
$1,050,000 around UC Irvine
$1,300,000 around UC Santa Barbara
$1,100,000 around UC Santa Cruz
My mother moved from Montana to Berkeley in the 1950s. She told me about one guy she'd met who had inherited money, tried work but found that boring, so he'd just been going to UC Berkeley for years and years. They don't let you do that now but what a lifestyle. And what an income you'd need to do that even if they did let you.
In 1968, the UCs first began charging tuition ("to keep out the riff raff") of $300 a year. Back then median home prices in Berkeley were $23,000.
Last year at UC Berkeley, tuition, health insurance, and room and board was $35,000. That's if you could get a place on campus.

18 March 2021

The Counterintuitive Approach to Raising Average Wages

A minimum wage is necessary but it won’t do much for raising average wages. If you want to raise wages, shift from policies focused on labor to policies focused on entrepreneurship. It may sound counterintuitive but there is precedent.

By Lincoln’s presidency, America’s conquest of land was largely done. Lincoln and the New Republicans shifted the focus from acquiring new land to creating new capital. As a result, the value of land rose. Dramatically.

When Lincoln took office, New York City still had farmland and single-story housing. In 1910, the average price per square foot for an apartment was $8. It is now $1,300. That is even more dramatic than it sounds. If your average building is 2 stories high, $8 per square foot works out to about $700,000 per acre. If your average building is 10 stories high (and more than 7,000 buildings in New York are at least this high), $1,300 works out to over $500 million per acre.

Capital made land more valuable. Steel and elevators made it possible to build skyscrapers. Trains and cars made it possible to draw workers from a wider circle. All of these require capital and as cities created more capital, the value of land rose.

From the start of Lincoln’s presidency in 1861 to the end of Herbert Hoover’s presidency in 1933, Republicans focused on creating capital. After that, policies shifted to the problem of keeping labor fully employed and making labor more valuable. The result for capital was very similar to what happened to land after 1860.

The Federal Reserve has a simple charter: keep unemployment and inflation low. There is nothing there about ensuring that capital gets a high return. Financial markets are no longer subordinate to capital; they are subordinated to labor.

So, what happened to capital after the Fed found tools to better fulfill its charter? In 1945, household net worth in the US was $11.5 trillion. (Adjusted for inflation.) At the end of 2020, household net worth had reached $130 trillion, 11X more.

When the limit shifted from capital to labor, capital did fine. At the risk of hyperbole, you might even say it has done spectacularly. One of many reasons is that a growing number of employees are also capitalists: through pension funds, 401(k) accounts, and home ownership most workers also have a stake in the country’s assets.

Want to increase the value of land? Create more capital.

Want to increase wealth? Develop labor.

Want to raise wages? Make more people more entrepreneurial.

What evidence do we have of this? Well, for now it is anecdotal but the wages in Silicon Valley and Seattle are absurdly high by national – much less global – standards.

Do we need minimum wage laws? I think so.

Are minimum wage laws a good way to raise wages for folks outside the bottom 20%? Probably not.

The way to drive up average wages is to create so much demand for labor through startups that the limit to the number of startups has far less to do with capital than labor. And if that is the case – the priority by which startups get funded is determined by which key people they can get and not which investors they can find (and spoiler alert – that is already happening in places like Seattle and Silicon Valley) – it will drive up wages. Silicon Valley is not just the region with the highest wages in the country; it is the region where wages are growing the fastest. Based on weekly wages in the third quarter of 2020, the average wage in the US is $61,000, up 7.4% in the last year. In San Mateo, San Francisco, and Santa Clara, California, average wages are $148,000 – up more than 20% in the last year. Silicon Valley not only gets more venture capital funding than any other region in the US but more than any other country in the world. One of the many ways that Silicon Valley leads is that it is a place where a relative abundance of entrepreneurship is driving the demand for knowledge workers and raising wages to record levels. In King County, Washington, home to Amazon and Microsoft, the average wage for information workers in the third quarter of 2020 was $327,000. That’s five times the national average for all workers, which means that these workers are making each day what the average American worker makes in a week.

You may be inclined to dismiss these high wages as something reserved for only knowledge workers, arguing that these wage premiums only go to college graduates. It actually raises wages more broadly. Enrico Moretti, in his The New Geography of Jobs, writes, “Compare San Jose, number five from the top [by the measure of percent of workforce with BA or more], with Merced, at the very bottom. Both cities are in California, less than 100 miles apart, but their labor markets belong to two different universes. San Jose, in the heart of Silicon Valley, has more than four times the number of college graduates per capita as Merced and salaries that are 40 percent higher for college graduates and a whopping 130 percent higher for workers with a high school diploma.”

A barber cutting hair for folks making $30,000 a year will make less than a barber cutting the hair of folks making $300,000.

Wages in a region go up with levels of entrepreneurship. We raised the price of land with more capital. We will raise wages by making more people more entrepreneurial which will create more demand for labor in the same way that New York's financial markets, subways and skyscrapers created more demand for land.

16 March 2021

British and French Alternatives to Jefferson's Pursuit of Happiness

Thomas Jefferson insisted that the phrase "the pursuit of happiness" be kept in the Declaration of Independence.

"The Declaration of the Rights of Man of August 1789 was largely the work of Lafayette, Mirabeau and Jean Joseph Mounier, 'but it derived philosophically from the American Bill of Rights." (While he had been in Paris, Jefferson was constantly consulted in secrecy by Lafayette: the 'pursuit of happiness' became in Lafayette's French, la rescherche du bienentre.)"
[from Peter Watson's Ideas]

John Locke - the British Enlightenment philosopher wrote that natural rights included "life, liberty and property." Jefferson revised that to "life, liberty and the pursuit of happiness." Lafayette - the French aristocrat who fought with Washington to help the Americans win their independence before returning to France to spark revolution there - turned Locke's property and Jefferson's pursuit of happiness into "the search for well-being."

Curious how the code that defines one's social norms can lead to such different outcomes.

The British got an empire that spanned the globe - an abundance of property.

The Americans got sitcoms and standup comedy.

The French got existentialism.