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Gene Ellis

Read, I, Pencil | Library of Economics and Liberty - 0 views

www.econlib.org/...rdPncl1.html

shared by Gene Ellis on 26 Apr 13 - Cached
  • Simple? Yet, not a single person on the face of this earth knows how to make me.
  • Not much meets the eye—there's some wood, lacquer, the printed labeling, graphite lead, a bit of metal, and an eraser.
  • a cedar of straight grain that grows in Northern California and Oregon
  • ...16 more annotations...
  • The logs are shipped to a mill in San Leandro, California.
  • The slats are waxed and kiln dried again.
  • The cedar logs are cut into small, pencil-length slats less than one-fourth of an inch in thickness. These are kiln dried and then tinted for the same reason women put rouge on their faces.
  • Don't overlook the ancestors present and distant who have a hand in transporting sixty carloads of slats across the nation.
  • Once in the pencil factory—$4,000,000 in machinery and building, all capital accumulated by thrifty and saving parents of mine—each slat is given eight grooves by a complex machine, after which another machine lays leads in every other slat, applies glue, and places another slat atop—a lead sandwich, so to speak. Seven brothers and I are mechanically carved from this "wood-clinched" sandwich.
  • The graphite is mined in Ceylon.
  • The graphite is mixed with clay from Mississippi in which ammonium hydroxide is used in the refining process. Then wetting agents are added such as sulfonated tallow—animal fats chemically reacted with sulfuric acid. After passing through numerous machines, the mixture finally appears as endless extrusions—as from a sausage grinder-cut to size, dried, and baked for several hours at 1,850 degrees Fahrenheit. To increase their strength and smoothness the leads are then treated with a hot mixture which includes candelilla wax from Mexico, paraffin wax, and hydrogenated natural fats.
  • My cedar receives six coats of lacquer. Do you know all the ingredients of lacquer? Who would think that the growers of castor beans and the refiners of castor oil are a part of it? They are.
  • Observe the labeling. That's a film formed by applying heat to carbon black mixed with resins. How do you make resins and what, pray, is carbon black?
  • My bit of metal—the ferrule—is brass. Think of all the persons who mine zinc and copper and those who have the skills to make shiny sheet brass from these products of nature. Those black rings on my ferrule are black nickel. What is black nickel and how is it applied? The complete story of why the center of my ferrule has no black nickel on it would take pages to explain. RP.18
  • An ingredient called "factice" is what does the erasing. It is a rubber-like product made by reacting rape-seed oil from the Dutch East Indies with sulfur chloride. Rubber, contrary to the common notion, is only for binding purposes. Then, too, there are numerous vulcanizing and accelerating agents. The pumice comes from Italy; and the pigment which gives "the plug" its color is cadmium sulfide
  • Actually, millions of human beings have had a hand in my creation, no one of whom even knows more than a very few of the others.
  • There isn't a single person in all these millions, including the president of the pencil company, who contributes more than a tiny, infinitesimal bit of know-how.
  • Here is an astounding fact: Neither the worker in the oil field nor the chemist nor the digger of graphite or clay nor any who mans or makes the ships or trains or trucks nor the one who runs the machine that does the knurling on my bit of metal nor the president of the company performs his singular task because he wants me.
  • There is a fact still more astounding: the absence of a master mind, of anyone dictating or forcibly directing these countless actions which bring me into being. No trace of such a person can be found.
  • For, if one is aware that these know-hows will naturally, yes, automatically, arrange themselves into creative and productive patterns in response to human necessity and demand—that is, in the absence of governmental or any other coercive masterminding—then one will possess an absolutely essential ingredient for freedom: a faith in free people. Freedom is impossible without this faith.
  • Gene Ellis on 26 Apr 13
     
    " Articles EconLog EconTalk Books Encyclopedia Guides Search "I, Pencil: My Family Tree as told to Leonard E. Read" A selected essay reprint Home | Books | Read | Selected essay reprint Read, Leonard E. (1898-1983) BIO Display paragraphs in this essay containing: Search essay Editor/Trans. First Pub. Date Dec. 1958 Publisher/Edition Irvington-on-Hudson, NY: The Foundation for Economic Education, Inc. Pub. Date 1999 Comments Pamphlet PRINT EMAIL CITE COPYRIGHT Start PREVIOUS 4 of 5 NEXT End "
Gene Ellis

The FDA is cracking down on antibiotics on farms. Here's what you should know. - 0 views

www.washingtonpost.com/...rms-heres-what-you-should-know

shared by Gene Ellis on 21 Dec 13 - No Cached
  • The FDA is cracking down on antibiotics on farms. Here’s what you should know.
Gene Ellis

George Soros: how to save the EU from the euro crisis - the speech in full | Business |... - 0 views

www.guardian.co.uk/...ave-eu-from-euro-crisis-speech

shared by Gene Ellis on 09 Apr 13 - No Cached
  • The crisis has also transformed the European Union into something radically different from what was originally intended. The EU was meant to be a voluntary association of equal states but the crisis has turned it into a hierarchy with Germany and other creditors in charge and the heavily indebted countries relegated to second-class status. While in theory Germany cannot dictate policy, in practice no policy can be proposed without obtaining Germany's permission first.
  • Italy now has a majority opposed to the euro and the trend is likely to grow. There is now a real danger that the euro crisis may end up destroying the European Union.
  • The answer to the first question is extremely complicated because the euro crisis is extremely complex. It has both a political and a financial dimension. And the financial dimension can be divided into at least three components: a sovereign debt crisis and a banking crisis, as well as divergences in competitiveness
  • ...37 more annotations...
  • The crisis is almost entirely self-inflicted. It has the quality of a nightmare.
  • My interpretation of the euro crisis is very different from the views prevailing in Germany. I hope that by offering you a different perspective I may get you to reconsider your position before more damage is done. That is my goal in coming here.
  • I regarded the European Union as the embodiment of an open society – a voluntary association of equal states who surrendered part of their sovereignty for the common good.
  • The process of integration was spearheaded by a small group of far sighted statesmen who recognised that perfection was unattainable and practiced what Karl Popper called piecemeal social engineering. They set themselves limited objectives and firm timelines and then mobilised the political will for a small step forward, knowing full well that when they achieved it, its inadequacy would become apparent and require a further step.
    • Gene Ellis
      Gene Ellis on 09 Apr 13
       
      Excellent point!
  • Unfortunately, the Maastricht treaty was fundamentally flawed. The architects of the euro recognised that it was an incomplete construct: a currency union without a political union. The architects had reason to believe, however, that when the need arose, the political will to take the next step forward could be mobilized. After all, that was how the process of integration had worked until then.
  • For instance, the Maastricht Treaty took it for granted that only the public sector could produce chronic deficits because the private sector would always correct its own excesses. The financial crisis of 2007-8 proved that wrong.
  • When the Soviet empire started to disintegrate, Germany's leaders realized that reunification was possible only in the context of a more united Europe and they were prepared to make considerable sacrifices to achieve it. When it came to bargaining, they were willing to contribute a little more and take a little less than the others, thereby facilitating agreement.
  • The financial crisis also revealed a near fatal defect in the construction of the euro: by creating an independent central bank, member countries became indebted in a currency they did not control. This exposed them to the risk of default.
  • Developed countries have no reason to default; they can always print money. Their currency may depreciate in value, but the risk of default is practically nonexistent. By contrast, less developed countries that have to borrow in a foreign currency run the risk of default. To make matters worse, financial markets can actually drive such countries into default through bear raids. The risk of default relegated some member countries to the status of a third world country that became over-indebted in a foreign currency. 
    • Gene Ellis
      Gene Ellis on 09 Apr 13
       
      Again, another excellent point!
    • Gene Ellis
      Gene Ellis on 09 Apr 13
       
      Not quite... Maggie Thatcher, a Conservative; and Gordon Brown, of Labour, both recognized this possible loss of sovereignty (and economic policy weapons they might use to keep the UK afloat), and refused to join the euro.
  • The emphasis placed on sovereign credit revealed the hitherto ignored feature of the euro, namely that by creating an independent central bank the euro member countries signed away part of their sovereign status.
  • Only at the end of 2009, when the extent of the Greek deficit was revealed, did the financial markets realize that a member country could actually default. But then the markets raised the risk premiums on the weaker countries with a vengeance.
  • Then the IMF and the international banking authorities saved the international banking system by lending just enough money to the heavily indebted countries to enable them to avoid default but at the cost of pushing them into a lasting depression. Latin America suffered a lost decade.
  • In effect, however, the euro had turned their government bonds into bonds of third world countries that carry the risk of default.
  • In retrospect, that was the root cause of the euro crisis.
  • The burden of responsibility falls mainly on Germany. The Bundesbank helped design the blueprint for the euro whose defects put Germany into the driver's seat.
  • he fact that Greece blatantly broke the rules has helped to support this attitude. But other countries like Spain and Ireland had played by the rules;
  • the misfortunes of the heavily indebted countries are largely caused by the rules that govern the euro.
    • Gene Ellis
      Gene Ellis on 09 Apr 13
       
      Well, yes, but this is an extremely big point.  If, instead of convergence, we continue to see growth patterns growing apart, what then?
  • Germany did not seek the dominant position into which it has been thrust and it is unwilling to accept the obligations and liabilities that go with it.
  • Austerity doesn't work.
  • As soon as the pressure from the financial markets abated, Germany started to whittle down the promises it had made at the height of the crisis.
  • What happened in Cyprus undermined the business model of European banks, which relies heavily on deposits. Until now the authorities went out of their way to protect depositors
  • Banks will have to pay risk premiums that will fall more heavily on weaker banks and the banks of weaker countries. The insidious link between the cost of sovereign debt and bank debt will be reinforced.
  • In this context the German word "Schuld" plays a key role. As you know it means both debt and responsibility or guilt.
  • If countries that abide by the fiscal compact were allowed to convert their entire existing stock of government debt into eurobonds, the positive impact would be little short of the miraculous.
  • Only the divergences in competitiveness would remain unresolved.
  • Germany is opposed to eurobonds on the grounds that once they are introduced there can be no assurance that the so-called periphery countries would not break the rules once again. I believe these fears are misplaced.
  • Losing the privilege of issuing eurobonds and having to pay stiff risk premiums would be a powerful inducement to stay in compliance.
  • There are also widespread fears that eurobonds would ruin Germany's credit rating. eurobonds are often compared with the Marshall Plan.
  • It is up to Germany to decide whether it is willing to authorise eurobonds or not. But it has no right to prevent the heavily indebted countries from escaping their misery by banding together and issuing eurobonds. In other words, if Germany is opposed to eurobonds it should consider leaving the euro and letting the others introduce them.
  • Individual countries would still need to undertake structural reforms. Those that fail to do so would turn into permanent pockets of poverty and dependency similar to the ones that persist in many rich countries.
  • They would survive on limited support from European Structural Funds and remittances
  • Second, the European Union also needs a banking union and eventually a political union.
  • If Germany left, the euro would depreciate. The debtor countries would regain their competitiveness. Their debt would diminish in real terms and, if they issued eurobonds, the threat of default would disappear. 
Gene Ellis

General Electric Adds to Its 'Industrial Internet' - NYTimes.com - 0 views

bits.blogs.nytimes.com/...dds-to-its-industrial-internet

big data internet

shared by Gene Ellis on 10 Jan 14 - No Cached
  • “The rise of industrial big data is moving at twice the speed of other big data. That’s a great opportunity.” said William Ruh, the head of global software at G.E. “There’s all kinds of experiences that we’re going to create.”
  • The other is a kind of application software to help power companies figure out how to best build out and operate their turbines. By October, G.E. hopes to have similar applications out for railway, mining, and oil and gas companies.
  • Effectively, G.E. is taking the data-driven tools and strategies used by Google and Facebook to the much larger global economy.
  • ...7 more annotations...
  • G.E. already manages more than 100 million data-gathering “tags” on its products, and foresees putting out far more than that while also collecting sensor data around the surrounding environment.
  • By 2020, GE figures, total spending on the Industrial Internet will be $23 billion. Better management of processes and understanding of systems will yield $1.279 trillion in value, the company said.
  • What G.E. does not yet have nailed is just how its new products will be used.
  • Cisco Systems is in the middle of an “Internet of Everyhing” strategy that involves selling software and services for a world rich in sensors. This is aimed more at things like traffic and water systems than manufacturing, however.
  • Phillips is also offering data-gathering connectivity in both its health care and lighting products, hoping to boost the efficiency of things like a patient’s medication adherence, or tuning lights
  • compliment
  • “Everybody knows they’ll need this technology, but they don’t know exactly what they’ll do with it yet,”
Gene Ellis

Neil Postman: Five Things We Need to Know About Technological Change - 0 views

www.student.cs.uwaterloo.ca/...neil-postman--five-things.html

shared by Gene Ellis on 19 Feb 15 - No Cached
  • Neil Postman: Five Things We Need to Know About Technological Change
Gene Ellis

Cyprus adds to Europe's confusion - FT.com - 0 views

www.ft.com/...4a-11e2-a4fa-00144feabdc0.html

shared by Gene Ellis on 29 Mar 13 - No Cached
  • First, the eurozone does indeed have the capacity to do the right thing in the end, though not before first exhausting all the alternatives.
  • It protects the small deposits and imposes a rational resolution process.
  • Second, a euro is indeed not a euro everywhere.
  • ...6 more annotations...
  • A consensus on the principle that creditors, not taxpayers, should pay if a bank becomes insolvent does not yet exist across the eurozone. Does anybody imagine the German government would not rescue Deutsche Bank if it were in trouble? Of course it would.
  • The outcome in Cyprus underlines the fact that the value of a euro of bank liabilities depends on the solvency of the bank itself and the solvency of the government standing behind the bank. If both bank and state are insolvent, lenders are likely not only to lose a big proportion of their money outright, but to find that the rest is frozen behind controls,
  • Yet, as Guntram Wolff of Bruegel notes, a currency union with internal exchange controls is a contradiction in terms. Only the willingness of the European Central Bank to finance Cypriot banks without limit could end these controls in the near future. Will it be willing to act soon?
  • The ideal conclusion from the Cypriot imbroglio would be that all eurozone banks should have more capital.
  • A final lesson of this crisis is that what I have called the “bad marriage” that binds the eurozone members together has become worse.
  • Thus the eurozone limps on through crisis after crisis. Can – or will – this continue indefinitely? I do not know.
Gene Ellis

How Apple and Other Corporations Move Profit to Avoid Taxes - NYTimes.com - 1 views

www.nytimes.com/...ove-profit-to-avoid-taxes.html

shared by Gene Ellis on 03 May 13 - No Cached
  • There is something ridiculous about a tax system that encourages an American company to invest abroad rather than in the United States. But that is what we have.
  • “The fundamental problem we have in trying to tax corporations is that corporations are global,” says Eric Toder, co-director of the Tax Policy Center in Washington. “It is very, very hard for national entities to tax entities that are global, particularly when it is hard to know where their income originates.”
  • Some international companies hate that idea, of course. They warn that we would risk making American multinational corporations uncompetitive with other multinationals, and perhaps encourage some of them to change nationality.
  • ...2 more annotations...
  • The other way is to move to what is called a territorial system, one in which countries tax only profits earned in those countries.
  • In this country, notwithstanding the high rate, the corporate income tax now brings in about 18 percent of all income tax revenue, with individuals paying the rest. That is half the share corporations paid when Dwight Eisenhower was president.
Gene Ellis

Kenen on the euro | vox - 0 views

www.voxeu.org/kenen-euro

shared by Gene Ellis on 26 Jan 13 - No Cached
  • Early work on optimum currency areas by Robert Mundell had emphasised the symmetry or asymmetry of disturbances hitting different regional economies as a key criterion on which to gauge their suitability for sharing a common currency.
  • Peter took this insight further by arguing that disturbances were often sector specific and that the diversification of regional economies was therefore a key consideration in gauging their suitability for monetary union (the better diversified an economy was, the less likely it was to be badly destabilised by a sector-specific shock). (Kenen 1969).
  • We now know that Kenen flagged a problem for which the Eurozone could have been better prepared. With an outsized capital-goods producing sector, Germany benefitted from a strong positive shock as a result of China’s emergence onto the global stage, given the Chinese economy’s voracious appetite for capital goods.
  • ...5 more annotations...
  • Portugal and Italy, on the other hand, specialised much more heavily in consumer-goods producing sectors and felt the brunt of Chinese competition. No Eurozone member was sufficiently well diversified to shrug off this kind of shock, something that should have made the euro’s architects think twice.
  • Specifically, they should have thought again, Kenen argued, about the coordination of national fiscal policies, the need for a common Eurozone budget, and mechanisms for transferring fiscal resources from booming to depressed regions.
  • More than any other economist, Peter understood that monetary union was a legal as well as an economic construct. His careful parsing of the Maastricht Treaty explained to the economics profession exactly what the treaty did and did not allow (Kenen 1992).
  • Peter even anticipated the debate over TARGET2 imbalances, observing in 1999 that it was possible to “easily conceive of conditions…in which one [national central bank] would be reluctant to build up claims indefinitely on some other national central bank.” (Kenen 1999).
  • Finally, Peter observed that the possibility of a member state exiting from the Eurozone could not be ruled out but warned that European officials should be cautious in bandying about the idea (Kenen 1999). “The costs of defecting,” he wrote back in 1999, “could be very high.”
  • Gene Ellis on 26 Jan 13
     
    Good Eichengreen, Wyplosz EUVox article on Peter Kenen and insights on why the Euro might have difficuties.
Gene Ellis

Eurozone crisis will last for 20 years - FT.com - 0 views

www.ft.com/...97-11e1-963a-00144feabdc0.html

shared by Gene Ellis on 09 Jul 12 - No Cached
  • They agreed that there shall be no common bank recapitalisation until a full banking union is established. And the Bundesbank has reminded us that the latter is not possible without a political union. The logical implication is that we won’t solve the crisis for the next 20 years.
  • What we know now is that Germany will not agree to mutualised deposit insurance. It cannot even agree to give the European Stability Mechanism a banking licence so that it can leverage itself.
  • A narrow majority is still in favour of the euro, but a majority is against further rescues.
  • ...3 more annotations...
  • The banking union that is required is the one Germany will not accept: central regulation and supervision, a common restructuring fund and common deposit insurance. It would take years to create.
  • With interest rates on 10-year government bonds over 6 per cent, neither Italy nor Spain can sustain their membership in the eurozone. This is what Mario Monti and Mariano Rajoy should have made clear to Angela Merkel at the summit.
  • The message I took away from the summit is that the eurozone will not resolve the crisis. In that sense, it was indeed a “historic” meeting.
  • Gene Ellis on 09 Jul 12
     
    Wolfgang Munchau article
Gene Ellis

Ireland's Debt to Foreign Banks Is Still Unknown - NYTimes.com - 0 views

www.nytimes.com/...24banks.html

ireland debt banks unknown nytimes nytimes com com

shared by Gene Ellis on 11 Jul 12 - No Cached
  • Mr. Weber, who is also a member of the European Central Bank’s governing council, said that the statistics reflected Ireland’s status as a financial center: much of what is recorded as claims on Ireland is in fact money funneled through Irish subsidiaries of German banks, and ultimately bound for elsewhere, Mr. Weber said. He said total German exposure was closer to $30 billion.
  • In both cases more than half of the exposure was to Ireland’s private sector, rather than lending to the government or Ireland’s beleaguered banks.
  • Taxpayers will bear the cost, but they may never find out how much. The bad bank, known as FMS Wertmanagement, has no plans to release financial statements, according to Soffin, the German government organization that oversees bank rescues.
  • ...3 more annotations...
  • In Germany, Hypo Real Estate, a property and public sector lender owned by the government after a bailout, owed its near collapse largely to problems at Depfa, its subsidiary in Dublin. Last month Hypo transferred most of its troubled assets to a so-called bad bank that will slowly wind down the investments.
  • The latest figures from the Bank for International Settlements put total European bank exposure to Portugal and Spain at $853 billion, with Germany, France and Britain the biggest creditors.
  • That worst-case forecast highlights another potential hidden risk. Credit-default swaps are typically sold over the counter by investment banks, with little information available publicly about the financial strength of the sellers. “Only then will we know for sure if the institutions that wrote the credit-default swaps have the liquidity and the financial strength to perform as contracted,” Mr. Weinberg wrote in a note last week.
Gene Ellis

No ordinary recession: There is much to fear beyond fear itself | vox - 0 views

www.voxeu.org/...e-much-fear-beyond-fear-itself

shared by Gene Ellis on 18 Jul 12 - No Cached
  • Richard Koo (2003) coined the term “balance sheet recession” to characterise the endless travail of Japan following the collapse of its real estate and stock market bubbles in 1990. The Japanese government did not act to repair the balance sheets of the private sector following the crash. Instead, it chose a policy of keeping bank rate near zero so as to reduce deposit rates and let the banks earn their way back into solvency. At the same time it supported the real sector by repeated large doses of Keynesian deficit spending. It took a decade and a half for these policies to bring the Japanese economy back to reasonable health.
  • At the time, a majority of forecasts predicted that the economy would slip back into depression once defence expenditures were terminated and the armed forces demobilised. The forecasts were wrong. This famous postwar “forecasting debacle” demonstrated how simple income-expenditure reasoning, ignoring the state of balance sheets, can lead one completely astray.
  • The lesson to be drawn from these two cases is that deficit spending will be absorbed into the financial sinkholes in private sector balance sheets and will not become effective until those holes have been filled.
  • ...9 more annotations...
  • The present administration, like the last, would like to recapitalise the banks at least partly by attracting private capital. That can hardly be accomplished as long as the value of large chunks of the banks’ assets remains anybody’s guess.
  • When the entire private sector is bent on shortening its balance sheet and paying down debt, the public sector’s balance sheet must move in the opposite, offsetting direction. When the entire private sector is striving to save, the government must dis-save. The political obstacles to doing these things on a sufficient scale are formidable.
  • The Swedish policy following the 1992 crisis has been often referred to in recent months. Sweden acted quickly and decisively to close insolvent banks, and to quarantine their bad assets into a special fund.2 Eventually, all the assets, good and bad, ended up in the private banking sector again. The stockholders in the failed banks lost all their equity while the loss to taxpayers of the bad assets was minimal in the end. The operation was necessary to the recovery but what actually got the economy out of a very sharp and deep recession was the 25-30% devaluation of the krona which produced a long period of strong export-led growth.
  • So the private sector as a whole is bent on reducing debt.
  • Businesses will use depreciation charges and sell off inventories to do so. Households are trying once more to save. Less investment and more saving spell declining incomes.
  • now that they know how dangerous their leverage of yesteryear was.
  • Fiscal stimulus will not have much effect as long as the financial system is deleveraging.
  • er self-imposed constitutional balanced budget requirements and are consequently acting as powerful amplifiers of recession with respect to both income and employment.
  • Almost all American states now suffer und
Gene Ellis

IMF's Blanchard: Global Economy Gripped By Meta-Uncertainty - WSJ.com - 0 views

stream.wsj.com/...SS-2-33475

shared by Gene Ellis on 17 Jul 12 - No Cached
  • In 2008-09, there was a collapse of global trade. We were all very surprised. Output was not doing well, but the collapse in global trade was enormous. We realized at the time that the elasticity of trade with respect to global output was not 1, as you might think, but more like 3 to 4. So this explained it. And then it recovered like crazy.
  • This is still true. If global output goes down by 1%, global trade goes down by 3% to 4%.
  • What Europe needs to do:
  • ...14 more annotations...
  • These countries have to do what they need to do. There’s no question there has to be fiscal consolidation. We can discuss the pace, but it has to happen. The other is competitiveness, which I see as much tougher of the two.
  • It has to be through a combination of structural reforms, hoping they will work, and nominal wage adjustments, although one cannot be incredibly optimistic about the scope there. We know that that’s going to take a while.
  • Take the big two, Italy and Spain. You can always dream of more, but I think they’re serious about doing it, both on the fiscal front and the structural-reforms front. I think it may well be that even if they do everything they can, and do it right, it’s still not enough. They have to have help — I would say when needed rather than if needed.
  • The banks have to be recapped, and they have to be recapped not using sovereign money. I think that is really very, very high on the agenda. I don’t think they can make it without help to the banks.
  • If the banks were healthier, I think they would lend at lower rates
  • And the sovereigns have to be able to borrow at reasonable rates. As long as they behave and they do all the things they’re asked to do, they have to be able to borrow at lower rates than they currently do. Some way has to be found to do it.
  • It’s not that I don’t care about the way it’s done. But I care about the result. These countries, if they’re doing the right things, they have to be able to finance themselves.
  • Some people say a euro depreciation would help Europe a lot. I think there is an argument for it, even in a multilateral context. You have to depreciate vis-a-vis somebody, so somebody has to appreciate. My sense is we would like most of the depreciation to be vis-a-vis emerging-market countries. Even if there was a depreciation vis-a-vis the dollar, I still think it would be a good thing.
  • We’ve done simulations. Other people have done simulations as well. 10% real depreciation would lead to a 1.4% increase in growth for a year — which at this stage, given the numbers, would be nice. The footnote, and it’s a very big footnote, is that … how much you benefit depends on how big your exports are related to your GDP and where you export — whether you export in the euro zone or outside. Unfortunately the countries that benefit the most are the countries that really don’t need it — Germany, the Netherlands. The countries that benefit the least are Greece, Portugal, Italy, Spain
  • There’s no question, the periphery countries have to improve their competitiveness. That’s not something even monetary policy at the level of the euro or fiscal policy can do. This they have to do through productivity improvements or nominal wage adjustments.
  • It is no secret that they have tended to respond to crises rather than be much more proactive.
  • And now there’s a sense in which they’re thinking about the full architecture.
  • At this stage I think there is a genuine commitment to thinking about the whole beast. That’s why these words — fiscal union, banking union — have come in.
  • Where I think there is still a problem is that all these things will take a lot of time. And some of these things may not happen because they’re unpopular. And meanwhile, there is a fire in the house. So they have to be willing to do more in the short term.
Gene Ellis

Should You Eat Chicken? - NYTimes.com - 0 views

www.nytimes.com/...an-should-you-eat-chicken.html

us technology

shared by Gene Ellis on 09 Jan 14 - No Cached
  • U.S.D.A. does not stand alone. The Food and Drug Administration (F.D.A.), knowing that manufacturers grow animals under conditions virtually guaranteed to breed disease, allows them to attempt to ward off disease by feeding them antibiotics from birth until death. (This despite the stated intention of the agency to change that, and a court order requiring it to.)
  • About a quarter of all chicken parts are contaminated,
  • The F.D.A. must disallow the use of prophylactic antibiotics in animal production.
  • ...1 more annotation...
  • The U.S.D.A. must consider salmonella that’s been linked to illness an “adulterant” (as it does strains of E. coli), which would mean that its very presence on foods would be sufficient to take them off the market. Again, it’s almost as simple as that. (Sweden produces chicken with zero levels of salmonella. Are they that much smarter than us?)
Gene Ellis

Why Is Zambia So Poor? And Will Things Ever Get Better? - 0 views

www.psmag.com/...zation-mining-corruption-66080

Zambia Why so poor?

shared by Gene Ellis on 09 Jan 14 - No Cached
  • Sixty-four percent of the population lives on less than $1 per day, 14 percent have HIV, 40 percent don’t have access to clean drinking water. Almost 90 percent of women in rural areas cannot read or write. Name a category—schools, health care, environment—and I’ll give you statistics that will depress the shit out of you.
  • For more than 150 years, the only reason to come to Kitwe—to Zambia, really—was the copper.
  • Most of the buildings in Kitwe, the roads, the health clinics, the schools, were built by the national mining company
  • ...25 more annotations...
  • At its peak, the Zambia Consolidated Copper Mines company employed more than 65,000 Zambians and carried out services like water delivery and waste collection for five cities in the Copper Belt Province.
  • Mining employment has dropped to just 30,000, half of its glory-days peak, and the job of maintaining all that company housing and infrastructure has reverted back to the government.
  • The stats identify Switzerland as Zambia’s primary export market. This is not an indicator that Zambia hosts a thriving chocolate and suspenders sector, but rather that its copper trades are booked in the jurisdiction where they are least likely to be taxed.
  • Many of the mining companies pay just 0.6 percent royalties to Zambia, far below the already-meager industry standard of three percent.
  • And then there’s the Chinese. They arrived like a well-packed picnic, everything in shipping crates ready to be unpacked. Their own materials, their own equipment, their own workers, their own fences. If you were designing a foreign investment not to benefit the host community, this is what it would look like.
  • This is Namwile Uzondile, the director of a rural health education project.
  • Last year Namwile conducted a survey of prostitutes here in Kitwe, and found that at least half of them had education certificates, but couldn’t find work. Most had been married off early, 15 or 16, and since then had either left their husbands or lost them to AIDS.
  • First, you go to the tribal chief. Ninety-four percent of the land in Zambia is customary or traditional, no one has a title to it. It’s not just sitting there, people are living on it, farming, grazing animals, it’s just technically under the control of a chief.
  • In Zambia most of the chiefs require a gift just to get a meeting. This might mean taking them lunch at a restaurant in Lusaka, or it could mean buying their daughter a car—it’s up to them.
  • Another reason Zambia lacks skills is that some parts of the workforce operate as cartels. Take lawyers. Zambia only has 1,000 of them, and they’re concentrated where the money is: Lusaka (government), Copper Belt (mining) and Livingstone (safari tourists).
  • Last year, only six lawyers were admitted to the bar out of 164 who took the exam. The year before that, it was 16 out of 145. Keep in mind, these aren’t people coming in off the streets. These are people who have a law degree.
  • More than 60 percent of Zambia’s government revenue comes from the copper mines.
  • Taxing all this informal activity would be costly in both resources and voter goodwill. In 2012, Zambia collected just $2.3 million in income taxes from its citizens.
  • It goes as high up as you want to follow it. Michael Sata, the president of Zambia, appointed his uncle the finance minister, his nephew the deputy finance minister, his niece the local government minister, and cousins as ambassador to Japan and chief justice.
  • Zambia’s cabinet has ballooned to 20 ministers and 47 deputy ministers, the largest in Africa. With salaries three to four times higher than opposition MPs and each ministerial post bundled with perks like a company car, free fuel, house servants, and mobile phone talk-time, you get the feeling politicians aren’t jumping from opposition into government on moral sentiment alone.
  • But even if Zambia was run by a coalition of charitable technocrats and Mormon philanthropists, that wouldn’t solve the most fundamental problem of all: There simply isn’t that much money to go around.
  • In 2011, Zambia spent a total of $4.3 billion running itself. Stretch that to cover every man, woman, and child, and it amounts to just $325 per person per year. That amount—less than a dollar per person per day—has to cover education, health care, infrastructure, law enforcement, foreign debt … everything.
  • Now she goes all NGO. “Little government capacity,” she says, is the nicest way to put it. “There are simply no systems for routine government services,” she says. Getting a license, a permit, certificates, approvals to start work, visas for expats to fly down here—nothing is in one place, nothing is fast or easy.
  • And that’s just the bureaucracy. Then there are the cops that pull you over to ask for 50 kwacha ($10); the schools with slots reserved for paying parents; the hospitals that swear the earliest appointment, the only available medicine, is six months away until you reach into your pocket.
  • “Sometimes we have to pay for the inspectors to come to our mines,” Jane says.
  • The conversation goes like this: Jane tells the local certification body that she needs an inspector to sign off for a permit. The local certification body tells her that they would be happy to come out to the site, but they don’t have fuel for their cars, or enough petty cash to pay per diems. Jane offers to pay their costs, but only their costs, and the payments aren’t related to clearing the inspection.
  • The company has even paid the police to follow up on complaints or to investigate thefts. “They say, ‘We don’t have this in our budget’ or ‘We’ll need you to pay for it,’” Jane says. So the company fixes the police cars, covers their travel expenses, treats them to lunch.
  • “We tell them, ‘The company I work for, we’re not going to pay up.’ But at the end of the day, they know you’re on a short timeline, and they aren’t.”
  • Thomas’ family told him his nephews didn’t need to be in school. From their perspective, that’s not totally irrational. In a country with so few formal jobs and so much competition for getting them, I can see how spending hundreds of hours, thousands of kwachas, on education would seem superfluous. Thomas’ daughter wants to become a lawyer. You could almost forgive Thomas if he told her that the bar exam failure rate is more than 90 percent, so what’s the use?
  • International investors pledged $750 million last year to build infrastructure.
Gene Ellis

Europe Haggles Over New Rules Aimed at Saving Fish Stocks - WSJ.com - 0 views

online.wsj.com/...4263404578613472428647506.html

fish Europe

shared by Gene Ellis on 09 Jan 14 - No Cached
  • Fishermen currently discard nearly a quarter of Europe's total catch on average, and as much as 70% of the hauls in some areas, European Commission data show
  • "The law has been made by someone who doesn't know fisheries," said fisherman Geert Luickx as he painted his boat here in this North Sea port. Without financial assistance, more crew, and a bigger boat, he said, he won't be able to comply with the new law.
  • Commission data show 80% of stocks in the Mediterranean, including swordfish, and 47% of stocks in the Atlantic, including whiting off Scotland's western coast, are being exploited at levels that will lead to extinction.
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  • Much of this unwanted catch will likely be sold to fish farmers to feed high-value fish like salmon.
  • though there are no legally binding targets for rebuilding fishing stocks.
  • How to enforce the new discards law is also under debate. Installing video cameras on all vessels or employing observers to ensure fisherman follow the law has been proposed, but nothing yet has been settled. "We do not have the resources for this kind of enforcement,
  • Organizations notes that Norway—which, along with Iceland, is one of two non-EU nations to ban discards—took 20 years to eliminate them.
Gene Ellis

Economic Statistics Miss the Benefits of Technology - NYTimes.com - 0 views

www.nytimes.com/...he-benefits-of-technology.html

benefits of IT

shared by Gene Ellis on 10 Jan 14 - No Cached
  • “Pretty much every human on earth can access all human knowledge,” said Hal Varian, Google’s chief economist.
  • o how to measure the Internet’s contribution to our lives? A few years ago, Austan Goolsbee of the University of Chicago and Peter J. Klenow of Stanford gave it a shot. They estimated that the value consumers gained from the Internet amounted to about 2 percent of their income — an order of magnitude larger than what they spent to go online. Their trick was to measure not only how much money users spent on access but also how much of their leisure time they spent online.
  • Earlier this year, Yan Chen, Grace YoungJoo Jeon and Yong-Mi Kim of the University of Michigan published the result of an experiment that found that people who had access to a search engine took 15 minutes less to answer a question than those without online access.
  • ...4 more annotations...
  • the consumer surplus from free online services — the value derived by consumers from the experience above what they paid for it — has been growing by $34 billion a year, on average, since 2002. If it were tacked on as “economic output,” it would add about 0.26 of a percentage point to annual G.D.P. growth.
  • The consumer surplus from television is about five times as large as that delivered by free stuff online, according to Mr. Brynjolfsson’s calculations.
  • As the economist Paul Samuelson once pointed out, if a man married his maid, G.D.P. would decline.
  • “We know less about the sources of value in the economy than we did 25 years ago,” wrote Mr. Brynjolfsson and Adam Saunders of the University of British Columbia. If we really want to understand the impact of information technology on our future well-being, we first need to find a consistent way to measure it.
Gene Ellis

What if the Secret to Success Is Failure? - NYTimes.com - 0 views

www.nytimes.com/...ret-to-success-is-failure.html

Duckworth

shared by Gene Ellis on 15 Jan 14 - No Cached
  • In the winter of 2005, Randolph read “Learned Optimism,” a book by Martin Seligman, a psychology professor at the University of Pennsylvania who helped establish the Positive Psychology movement.
  • Seligman and Peterson consulted works from Aristotle to Confucius, from the Upanishads to the Torah, from the Boy Scout Handbook to profiles of Pokémon characters, and they settled on 24 character strengths common to all cultures and eras. The list included some we think of as traditional noble traits, like bravery, citizenship, fairness, wisdom and integrity; others that veer into the emotional realm, like love, humor, zest and appreciation of beauty; and still others that are more concerned with day-to-day human interactions: social intelligence (the ability to recognize interpersonal dynamics and adapt quickly to different social situations), kindness, self-regulation, gratitude.
  • Six years after that first meeting, Levin and Randolph are trying to put this conception of character into action in their schools. In the process, they have found themselves wrestling with questions that have long confounded not just educators but anyone trying to nurture a thriving child or simply live a good life. What is good character? Is it really something that can be taught in a formal way, in the classroom, or is it the responsibility of the family, something that is inculcated gradually over years of experience? Which qualities matter most for a child trying to negotiate his way to a successful and autonomous adulthood? And are the answers to those questions the same in Harlem and in Riverdale?
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  • According to a report that KIPP issued last spring, only 33 percent of students who graduated from a KIPP middle school 10 or more years ago have graduated from a four-year college.
  • As Levin watched the progress of those KIPP alumni, he noticed something curious: the students who persisted in college were not necessarily the ones who had excelled academically at KIPP; they were the ones with exceptional character strengths, like optimism and persistence and social intelligence. They were the ones who were able to recover from a bad grade and resolve to do better next time; to bounce back from a fight with their parents; to resist the urge to go out to the movies and stay home and study instead; to persuade professors to give them extra help after class.
  • “The thing that I think is great about the character-strength approach,” he told me, “is it is fundamentally devoid of value judgment.”
  • Duckworth’s early research showed that measures of self-control can be a more reliable predictor of students’ grade-point averages than their I.Q.’s.
  • People who accomplished great things, she noticed, often combined a passion for a single mission with an unswerving dedication to achieve that mission, whatever the obstacles and however long it might take. She decided she needed to name this quality, and she chose the word “grit.”
  • Last winter, Riverdale students in the fifth and sixth grades took the 24-indicator survey, and their teachers rated them as well. The results were discussed by teachers and administrators, but they weren’t shared with students or parents, and they certainly weren’t labeled a “report card.”
  • Back at Riverdale, though, the idea of a character report card made Randolph nervous. “I have a philosophical issue with quantifying character,” he explained to me one afternoon. “With my school’s specific population, at least, as soon as you set up something like a report card, you’re going to have a bunch of people doing test prep for it. I don’t want to come up with a metric around character that could then be gamed. I would hate it if that’s where we ended up.”
  • She and her team of researchers gave middle-school students at Riverdale and KIPP a variety of psychological and I.Q. tests. They found that at both schools, I.Q. was the better predictor of scores on statewide achievement tests, but measures of self-control were more reliable indicators of report-card grades.
  • The CARE program falls firmly on the “moral character” side of the divide, while the seven strengths that Randolph and Levin have chosen for their schools lean much more heavily toward performance character: while they do have a moral component, strengths like zest, optimism, social intelligence and curiosity aren’t particularly heroic; they make you think of Steve Jobs or Bill Clinton more than the Rev. Martin Luther King Jr. or Gandhi.
  • The topic for the assembly was heroes, and a half-dozen students stood up in front of their classmates — about 350 kids, in all — and each made a brief presentation about a particular hero he or she had chosen:
  • I came to Witter’s class to observe something that Levin was calling “dual-purpose instruction,” the practice of deliberately working explicit talk about character strengths into every lesson.
  • It is a central paradox of contemporary parenting, in fact: we have an acute, almost biological impulse to provide for our children, to give them everything they want and need, to protect them from dangers and discomforts both large and small. And yet we all know — on some level, at least — that what kids need more than anything is a little hardship: some challenge, some deprivation that they can overcome, even if just to prove to themselves that they can.
  • The idea of building grit and building self-control is that you get that through failure,” Randolph explained. “And in most highly academic environments in the United States, no one fails anything.”
Gene Ellis

Europe's banking union: Till default do us part | The Economist - 0 views

www.economist.com/...s-it-solves-till-default-do-us

shared by Gene Ellis on 29 Oct 13 - No Cached
  • Almost a year ago, as the euro crisis raged, Europe’s leaders boldly pledged a union to break the dangerous link between indebted governments and ailing banking systems, where the troubles of one threatened to pull down the other.
  • Almost everyone involved agrees that in theory a banking union ought to have three legs.
  • a single supervisor
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  • the powers to “resolve” failed banks
  • these powers also require a pot of money (or at least a promise to pay) to clean up the mess l
  • The third leg is a credible euro-wide guarantee on deposits to reassure savers that a euro in an Italian or Spanish bank is just as safe as one in a German or Dutch bank.
  • He dryly notes that Germany couldn’t even force its own savings banks to join its national deposit-insurance scheme.
  • Each country in the euro has its own bankruptcy code
  • Putting the European Central Bank (ECB) in charge of the region’s biggest banks should end the cosy relationship between banks and regulators that allowed Irish and Spanish banks to keep lending during property bubbles and the likes of Deutsche Bank to run with so little capital. If the ECB proves itself an effective supervisor
  • without ready access to a pot of money to fill these holes, the ECB could be reluctant to force banks to come clean. “It is madness to expose capital shortfalls if you don’t know where new capital is going to come from,” says one bank supervisor.
  • “If you wanted to challenge a decision, where would you go to court?” asks the head of a European bank regulator.
Gene Ellis

How to Get a Job at Google - NYTimes.com - 0 views

www.nytimes.com/...ow-to-get-a-job-at-google.html

shared by Gene Ellis on 25 Apr 14 - No Cached
  • How to Get a Job at Google
  • noted that Google had determined that “G.P.A.’s are worthless as a criteria for hiring, and test scores are worthless. ... We found that they don’t predict anything.”
  • “Good grades certainly don’t hurt.” Many jobs at Google require math, computing and coding skills, so if your good grades truly reflect skills in those areas that you can apply, it would be an advantage.
  • ...10 more annotations...
  • your coding ability
  • the No. 1 thing we look for is general cognitive ability, and it’s not I.Q. It’s learning ability. It’s the ability to process on the fly. It’s the ability to pull together disparate bits of information.
  • The second, he added, “is leadership — in particular emergent leadership as opposed to traditional leadership.
  • What we care about is, when faced with a problem and you’re a member of a team, do you, at the appropriate time, step in and lead.
  • What else? Humility and ownership. “It’s feeling the sense of responsibility, the sense of ownership, to step in,” he said, to try to solve any problem — and the humility to step back and embrace the better ideas of others.
  • “Successful bright people rarely experience failure, and so they don’t learn how to learn from that failure,” said Bock.
  • You need a big ego and small ego in the same person at the same time.
  • The least important attribute they look for is “expertise.”
  • Too many colleges, he added, “don’t deliver on what they promise. You generate a ton of debt, you don’t learn the most useful things for your life. It’s [just] an extended adolescence.”
  • For most young people, though, going to college and doing well is still the best way to master the tools needed for many careers. But Bock is saying something important to them, too: Beware. Your degree is not a proxy for your ability to do any job. The world only cares about — and pays off on — what you can do with what you know (and it doesn’t care how you learned it)
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