From the New Yorker profile of Paul Krugman

"Krugman realized that trade took place not only because countries were different but also because there were advantages to specialization. If one country was the first to begin manufacturing airplanes, say, it might accumulate an advantage in economies of scale so large that it would be difficult for another country to break into the industry later on, even though there might not be anything about the first country that made it particularly well suited to airplane-making."

"One implication of Krugman’s theory was that, contrary to economic orthodoxy, industrial policy might have its benefits. If the location of a new industry was essentially arbitrary, then a government, by subsidizing and protecting its emergence, could enable it to gain such a lasting advantage that other countries would find it difficult to catch up."

..."in practice, he believed, it was so difficult to determine which industry should receive government help, at the expense of all the others—so difficult to predict an industry’s future, and so difficult to determine merit when powerful interests would be trying to influence that determination—that in the end industrial policy would be likely to benefit mostly the owners of a few businesses and hurt everybody else."

What Krugman says seems to be true... It might be the Phonecians dying cloth purple and locking in the trade for years, high tech in Silicon Valley, or Air France surviving and thriving after years of government subsidy. I think people should be extremely wary of government subsidy but I do wonder if there might be a practical case to be made for combining Craig Venter's shotgun approach to data collection that I discuss in the below post and some form of widespread, across the board, small scale subsidy to burgeoning industry. I'm sure this has been heavily dealt with in economic literature, but I do wonder.

Craig Venter

Craig Venter in SEED Magazine

"As i have argued, data generation without big questions and computational approaches capable of answering them is only of trivial value. My team now has continued to apply the random selection and shotgun sequencing methods as a major discovery engine, exploring environmental research through "metagenomic studies," investigating life in the Sargasso Sea and also in the human gut."

"Charles Darwin started out observing and collecting species and specimens and only decades later provided unifying principals to explain what he witnessed."

Craig Venter is a personal hero and he very well might change the world. I wonder if this approach has applications to life in general and not just scientific inquiry. Curiosity, new experiences, travel, and gathering new ideas and information are already ways to a richer happier life(IMHO). But it seems like they might also be the foundation for positive human change and advancement. The best ideas can connect disparate things and make them seem clear and simple. My late new years resolution is to be a sponge. Now, how to simultaneously filter and be a sponge? What standards should be used to keep out the superfluous and useless ideas and information? Are appropriate big questions a starting point?

Bill Gates

Michael Shermer (head of Skeptic magazine) blogs his dinner with Bill Gates and others.

Here are some excepts:

"Bill Gates was the star and we were tiny planets in orbit around him, sitting there like acolytes at the feet of the guru, asking him questions and listening to his lengthy and thoughtful answers."

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"I knew Bill Gates was smart, but in my estimation after listening to him for two hours is that he is really smart, off-the-charts smart, super bright, even brilliant. He is obviously well-read on those matters important to him, and he seems to have a steel-trap memory for regurgitating what he has read in great detail. Discussing world health and nutrition led me to ask him about diets and health and what he does personally, to which he answered that he runs 90 minutes a day on a treadmill. Since I do a fair amount of exercise myself (cycling is my poison) I asked him if he listens to audio books, which he said he does but is especially keen on listening to Teaching Company courses while working out, most especially the economics courses taught by Professor Timothy Taylor. Since I have taken all of these courses myself (you can download them into an iPhone and listen to them while driving, cycling, running, hiking, etc.), it was interesting to listen to Gates reiterate what was in them in the course of the evening as we asked him questions about the economy. I could tell that he could call forth from memory intricate details from those courses but in a completely different context in answer to a separate question.

I asked Gates “Isn’t it a myth that some companies are ‘too big to fail’? What would have happened if the government just let AIG and the others collapse.” Gates’ answer: “Apocalypse.” He then expanded on that, explaining that after talking to his “good friend Warren” (Buffet), he came to the conclusion that the consequences down the line of not bailing out these giant banks would have left the entire world economy in tatters."

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"He then schooled us with a mini-lecture on the history of economics (again, probably gleaned from Timothy Taylor’s marvelous course for the Teaching Company on the economy history of the United States) to demonstrate what happens when fluctuations in the price of money (interest rates, etc) swing too wildly. I believe that was the last question I asked Gates for the evening! What do I know? I run a tiny nonprofit science education organization with six employees. I’m just hoping to be able to cover my daughter’s college tuition next year. Gates is the world’s richest man who founded a giant multi-national corporation and heads a powerful nonprofit organization that is trying to save the third world. He surely understands economics and business and finance better than I do, right? I sure hope so!"

Hippie Shit I Buy Into

1. It's important to "commune" with nature.

2. It's important to think about what you eat and where it comes from.

3. Taking certain substances can offer a broadened perspective on the world and generally this is positive.

What hippie shit do you buy into?

Africa's Great Rift Valley

I'm watching parts of Great Rift: Africa's Wild Heart and just the first 30 minutes of the program will put you on stunning scenery overload. Here are some screen caps:

Crime in South Africa

This is a clip from Louis Theroux's Law & Disorder In Johannesburg



South Africa fascinates and amazes me. I've met several South Africans in my life and nearly without fail they have been kind, fun, amazing people. The culture and life there seems so vibrant and engrossing. The country and it's people should be fiercely proud of the progress they've made since apartheid. That said, this clip sends chills to my core. With the level of crime South Africa has combined with its bleak economic outlook I wonder what path such a place can take toward a better future. They seem to have a nation-wide Broken Window Syndrome, and sadly it all looks rather hopeless.

Wired Interview With Peter Thiel (Co-Founder of Paypal)

http://www.wired.com/magazine/2010/01/st_thiel/

Wired: You say that we have big problems in the US economy and that investors have unrealistic expectations. We’ve certainly been through a major crisis, but over the long term the stock market seems to grow fairly reliably.

Thiel: People take it for granted that their retirement funds can earn 8.5 percent a year. That’s what their financial planners tell them. And sure, you look back over the past 100 years, the stock market has generally gone up 6 to 8 percent a year. But in a larger historical perspective, that kind of growth is exceptional. If you had done the equivalent of investing in the stock market from, say, 1000 to 1100 AD, you would not have made 8 percent a year. During the fall of the Roman Empire, you’d have been lucky to get zero. We’ve been living in a unique period of accelerating technological progress. We’ve gone from horses to cars to planes to rockets to computers to the Internet in a very short time. It’s not automatic that that continues.

Wired: What happens if we don’t get the growth everyone expects?

Thiel: If it doesn’t happen, people will go bankrupt in retirement. There are systemic consequences, too. If we don’t have enough growth, we will see a powerful shift away from capitalism. There are good things and bad things about capitalism, but inequality becomes completely intolerable to society when everything’s static.

His points are well taken and should really underline the importance of scientific research (public and private), a rational scientifically literate populace, and a system that rewards innovation and risk taking.

More Casnocha

"The key if you memorize something -- be it a sales pitch, a VC pitch, or asking a girl out on a date -- is that you be able to get back on-script if you're interrupted, or be able to throw out the script altogether if something goes horribly wrong. That's the real skill."

Tyler Cowen on the possible need for a VAT

1. The United States is on an unsustainable fiscal path.

2. For whatever reason, long-term interest rates don't reflect this problem. There will either be a sudden collapse of demand for government securities, or the current market already is figuring we will get a VAT. Either way it is more revenue for the government or a Greece-like scenario writ large.

3. I would prefer spending cuts, but voters seem too irrational to be willing to cut spending; here the libertarian argument comes back to bite us on the bum. They might be willing to cut spending once a financial crisis arrives (though maybe not), but then there will be days or only hours for decisive action.

4. We could, for now, wait and postpone fiscal reform. That means encountering a sudden collapse some number of years from now. We will then clean up the budget in some way, but under a TARP sort of mood rather than what we might do today.

5. We'll get a better deal, and make wiser decisions, if we do it today rather than in a panic. Plus another financial crisis would prove deadly to both the budget and to the quality of economic thinking.

6. There exists a credible bipartisan deal which involves at least half the VAT revenue for deficit reduction, combined with cuts, or slower increases, in marginal tax rates on income and perhaps an elimination of the corporate income tax. Spend some of the rest on health care for the poor, if that is the deal on the Democratic side.

Ben Casnocha on why he hasn't done drugs

Ben Casnocha articulates why I didn't do drugs before I had ever "done drugs"

1. Not doing drugs when young actually was the risk-taking behavior. Most people around me were smoking at least marijuana. There was a lot of social pressure to do drugs. By choosing not to, I risked social alienation while also signaling independence and free spiritedness.

2. Early on I became known as the guy who "doesn't smoke" and therefore a no-drugs attitude became part of my identity. Once an identity forms, it's hard to act in ways that contradict it.

3. My first exposure to drugs was in high school and the people who did a lot of drugs, including marijuana, tended to be the stupidest in terms of raw horsepower and work ethic. I associated weed with those people, and I did not want to be those people.

4. I am unusually health-conscious and I perhaps unfairly lump all drugs together when assuming they harm physical and/or mental health.

5. I am deferential to the law (though I often challenge the authority structure in other situations). I have never been arrested or in jail. While I drank alcohol when under-age, alcohol would soon become legal at age 21 so it seemed less-bad than smoking marijuana, which is always illegal no matter the age.

6. At this stage in life I do not know where I would buy drugs, how much to buy, how it works, how to verify purity, and so on. There is a non-trival logistical barrier.

7. The benefit of drug use is unclear and since I cannot calculate it, I would rather spend my money on other things.

8. I fear addictions. This explains, by the way, why I do not drink coffee.

9. I like to be in control of most situations and I fear relinquishing that control if high on a drug.

Sentence of the week

From Pattern Recognition by William Gibson

"He'd told her that Poland, from the air, looked like Kansas as farmed by elves."

To begin my life with the beginning of my life, I record that I was born...

First Paragraph of David Copperfield

I AM BORN

Whether I shall turn out to be the hero of my own life, or whether that station will be held by anybody else, these pages must show. To begin my life with the beginning of my life, I record that I was born (as I have been informed and believe) on a Friday, at twelve o'clock at night. It was remarked that the clock began to strike, and I began to cry, simultaneously.

Sustained Laughter

From unhappyhipsters.com

So focused on erecting a structure that would be impervious to atmospheric whims, he’d forgotten the obvious: an exit.

Without the daily self-portraits, he feared he might disappear completely.

Fever Ray Remix