Thinks 701

George Hawley on Ranked Choice Voting: “One benefit of RCV is that it resolves the problem of third-party votes seeming “wasted.” Under an RCV system, if you genuinely feel closest to the Libertarian Party, the Green Party, the Constitution Party, or some as-yet-non-existent populist MAGA party, you could list that party as your first choice. If that party comes in third or fourth place, your vote will go to your second choice, rather than simply becoming irrelevant…Under RCV, voters would no longer have to choose between voting their true preference and strategically voting for the candidate most likely to defeat the person they fear or dislike the most. RCV has an additional purported benefit: it disincentivizes uncivil political campaigns. Under current rules, there is no benefit to being anyone’s second choice. There is no reason not to offend an opponent’s base of voters. Under RCV, candidates still want to reach out to voters they are confident will never list them as their first choice—earning the second slot on their ranking of preferred candidates may mean the difference between defeat and victory. RCV may simultaneously encourage candidates and parties to cast a wider net when campaigning and discourage the kinds of ugly, scorched-earth tactics that we have become accustomed to.”

Economist: “India has immense energy needs. It is forecast to be one of the fastest-growing big economies this decade and will need to add capacity equivalent to the size of the European Union’s power system by 2040. After a flirtation with hydro in the 1950s and 1960s it came to rely heavily on coal, which met 58% of its primary-energy needs in 2021. Like many governments, India’s has committed to reaching net-zero emissions (by 2070). The big surprise is that major changes are happening on the ground. In the past decade India has seen a 50-fold increase in installed solar power. In 2021 its renewables accounted for 5% of its primary-energy consumption, and 5% of global renewable primary-energy consumption. Private firms have plans to invest perhaps $200bn in the coming years in everything from generation facilities to green hydrogen plants (by comparison, global investment in wind and solar last year was about $300bn, and India’s was roughly $15bn). The government wants to triple non-fossil-fuel capacity by 2030.”

Peter Boettke: “Let me start with my summary judgement of “The Next American Economy: Nation, State, and Markets in an Uncertain World”: Samuel Gregg has written an outstanding contribution to the theory and practice of political economy for our times. Gregg’s book will appeal more to those on the center-right than to the center-left, but he nevertheless has identified the fatal flaws in the rhetoric and practice of those on the populist right (Trump) and the populist left (Sanders), as well as those who consider themselves more sophisticated representatives of economic nationalism on the right (Rubio) and left (Warren). I say the book will appeal to the center-right and pull them away from the pitfalls of economic nationalism because of the intellectual inspiration that Gregg proudly relies on—the Founding Fathers and the desire to create a commercial republic. The center-left, on the other hand, has grown tired of appeals to constitutional principles and the aspirations of the American promise. In fact, that is the problem that Gregg’s book is motivated to address.”

Hayek: “Thus, though the consistent application of liberal principles leads to democracy, democracy will preserve liberalism only if, and so long as, the majority refrains from using its powers to confer on its supporters special advantages which cannot be similarly offered to all citizens.” [via CafeHayek]

Thinks 700

Hayek: “We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a programme which seems neither a mere defence of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which …does not confine itself to what appears today as politically possible…Free trade or the freedom of opportunity are ideals which still may arouse the imaginations of large numbers, but a mere “reasonable freedom of trade” or a mere “relaxation of controls” are neither intellectually respectable nor likely to inspire any enthusiasm…Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in power of ideas which was the mark of liberalism at its best, the battle is not lost.” [via Michael Munger]

Fadeke Adegbuyi: “Sudowrite and other AI writing tools see themselves in a long line of technological advancements heralding bold forms of creativity, dating back to the advent of writing itself—tools for thought, changing how we think and, maybe, what we think about. They’re thought partners, rather than creative adversaries. They won’t spit out flawless phrases, but they will help you get closer to your own version of perfection. With a thesaurus, a writer gets to choose the word from a list of synonyms, selecting the one that might most meaningfully roll off a character’s tongue. With Grammarly, an essayist can break a grammar rule for effect, ignoring the tool’s red warnings. Similarly, AI writing tools provide writers with possibilities they can discard or build upon. In all cases, tools are assisting human creativity, not replacing it.”

Samuel Gregg: “The idea that the state can fix these problems through raising tariffs or introducing industrial policy strikes me as fanciful. But nonetheless, these social problems, I think, are what are driving many conservatives in this type of direction…I think free marketers’ responses to many of these questions has been inadequate. What do I mean by that? I mean that the response of free marketers has been to focus heavily on the economic problems associated with the economic arguments being made by people on the right who want protectionism and want industrial policy. Free marketers have gone very hard, and I go very hard at them as well, about they don’t understand trade, they don’t understand basic elements of things like comparative advantage, trade-offs, the damage that protectionism does to an economy. They either don’t know or they ignore the very real systematic and epistemological problems with something like industrial policy. And that’s all fine, and that all needs to be said, but if free marketers are basically saying, “Look, these other things don’t work. They’re inefficient. And what we have to offer you is efficiency and effectiveness,” well, that’s fine, but that’s not a compelling narrative at a time in which politics heavily revolves around questions of identity. Who am I?…What community do I belong to? What is my nation? Who is my tribe? Et cetera. If free marketers don’t understand that they need to move their arguments so that they invest them with a narrative that is cognizant of just how much the center of debate has shifted, then they lose.”

WSJ: “Dall-E 2, DreamStudio and other new text-to-image generators let you type in almost any phrase and get an image. The technology is fun but full of potential unknowns…The AI systems interpret your words and create fully original images. You could insert the same prompt and never get this same image…Programmers train AI using hundreds of millions of captioned photos, which it deconstructs in a mathematically complicated process…Then, through another complex process called diffusion, it turns a meaningless cloud of pixels into an image with a reasonably high probability of resembling what you requested.”

Thinks 699

Substack: “The game we’re playing is one that gives power to writers and creators. It’s a game that ensures writers can maintain their independence without most of the drudgery that comes with running their own media operation, and without having to cede control to a gatekeeper. We build tools that give writers and creators the full powers of the internet so their work can have maximum impact, reach, and revenue. We are helping to unlock the potential of existing writers to get greater value for and from their work, and so that new types of writers can enter the media economy and thrive. That’s the movement Substack is helping to drive. We don’t believe it’s going to slow down any time soon. On the contrary, we expect it to accelerate and expand.”

Vijay Kelkar and Ajay Shah: “[India’s] GST is widely criticised for underwhelming outcomes. Design problems have hindered the gains. The rates of 18 and 28 per cent are very high levels of taxation. Some individuals see the piling of a 28 per cent GST on top of a 42 per cent income tax, adding up to one of the world’s highest levels of taxation. What works best is a single rate of 12 per cent that is applied to all goods and services. This needs to go with a simple administrative system where every producer (even an individual) gets offsets correctly. We believe that a 12 per cent rate will generate adequate tax revenues, and potentially after a few years, these revenues can go up slightly if it is not the case.”

WSJ: “Rule number one [of publoc speaking] is to consider your audience, says Matt Abrahams, who teaches strategic communication at the Stanford Graduate School of Business. Everything you say and do should start with this question: What do the people listening to you need? What do you want them to know, feel and do after watching you? Stories are a great way to connect with listeners, he adds, but keep your anecdotes and examples focused, making sure each one has a key takeaway or emotion you want to impart. Stick to tried-and-true structures, such as introducing a problem, outlining the solution and wrapping with the benefit. Or, compare and contrast two things, and then draw a conclusion.”

Washington Post: “Recent years have brought a sharp reaction in many parts of the world, as globalization, political polarization, the rise of social media and a collapse of trust in major institutions have left many people feeling betrayed by their governments, torn apart from their careers and alone in their communities, according to historians, political scientists and sociologists who have studied these shifts in the world’s economies and governments.The result has been a similar quest for nationalist solutions in country after country, and a growing bond among the far-right autocrats in those places…“The trend we are seeing reflects a disillusionment around the world that the democratic process fails to produce effective, charismatic leaders,” said Nikolas Gvosdev, a professor of national security studies at the U.S. Naval War College. “In country after country, the idea spreads that we need strong leaders who get things done.”

Thinks 698

Adam Tooze: “If your currency devalues against the dollar, then you tend to get import inflation, because the goods that you buy from abroad, many of which are denominated in dollars, become more expensive. And the other reason you’d be leery about doing this, especially if you’re an emerging market or low-income country, is that many of your businesses, big businesses, will have borrowed in dollars. Why? Because your local capital markets aren’t big, deep, or sophisticated enough. And the U.S. market is there. And hitherto, borrowing on U.S. markets has been cheap, relatively speaking. And so what big corporates in the emerging market will do is issue debt with the help of investment banks in New York and in Europe onto global dollar markets and borrow there. Now, if your currency severely depreciates against the dollar — and this is a big company, which is earning revenue locally — its problem all of a sudden is that it has liabilities in dollars, which are worth more in assets or as stream of income, which is in a depreciated local currency. And that’s a recipe for financial crisis in big corporations.”

Arnold Kling: “Long ago I offered the aphorism “Markets fail. Use markets.” That is, I readily concede that the market economy is not at some theoretical optimum. The question is what will lead to improvement. I believe that government intervention will often make things worse. Meanwhile, entrepreneurial innovation and creative destruction tends to solve economic problems, including market failures…If “market fundamentalism” is the belief that markets are perfect, then I do not know anyone on the libertarian side who is a market fundamentalist. Economics professors do not have to spend a whole semester arguing against this straw man. I wish that they would spend more time discussing “government fundamentalism,” which is what you are guilty of when you assume that government intervention consists of wise, technocratic solutions.”

Russell Napier: “My structural argument is that the power to control the creation of money has moved from central banks to governments. By issuing state guarantees on bank credit during the Covid crisis, governments have effectively taken over the levers to control the creation of money. Of course, the pushback to my prediction was that this was only a temporary emergency measure to combat the effects of the pandemic. But now we have another emergency, with the war in Ukraine and the energy crisis that comes with it…[This] means governments won’t retreat from these policies. Just to give you some statistics on bank loans to corporates within the European Union since February 2020: Out of all the new loans in Germany, 40% are guaranteed by the government. In France, it’s 70% of all new loans, and in Italy it’s over 100%, because they migrate old maturing credit to new, government-guaranteed schemes. Just recently, Germany has come up with a huge new guarantee scheme to cover the effects of the energy crisis. This is the new normal. For the government, credit guarantees are like the magic money tree: the closest thing to free money. They don’t have to issue more government debt, they don’t need to raise taxes, they just issue credit guarantees to the commercial banks…We’re in for a long social and political journey. What you have learned in market economics in the past forty years will be useless in the new world. For the next twenty years, you need to get familiar with the concepts of political economy.”

Shane Parish: “Most people read the same new books that everyone else has read, not necessarily for the ideas but for the social reward of being able to talk about them with others. Reading the same thing as everyone else is only going to put the same ideas in your head that everyone else has. If you want new ideas, read old books.”

Thinks 697

Ben Hunt: “The business of Wall Street consists of two and only two things: thinking up news ways to create a transferable share of some future economic activity, and thinking up new ways to borrow money today for a promise to repay that money and more in the future. We call the former activity “securitization”. For example, equity promises are securitized into “stocks” and debt promises are securitized into “bonds”, which makes the sale and resale of these promises sooooo much easier. We call the latter activity “leverage”, which is just a ten-dollar word for borrowed money. Every bit of financial innovation over the past ten thousand years or so – all of it! – has been in service to one or both of those two activities: securitization and leverage.”

Shane Parish: “The key to doing anything well is commitment. Not only does commitment help you become better at what you do, but it also makes other people want to help you. If you see your job as punching the clock, not only will you never be great at it, but your employer won’t invest in you. The best relationships are the ones where both partners go all in all the time to make the relationship amazing. If committing sounds like a lot of work, it is. That’s why so many people are half-in. The problem with half-in and half-committed is that it doesn’t get you the results you want. If you’re not committed, get out. The committed person gets both the opportunity and the results.”

Rafal Nadal: “One lesson I’ve learned is that if the job I do were easy, I wouldn’t derive so much satisfaction from it. The thrill of winning is in direct proportion to the effort I put in before. I also know, from long experience, that if you make an effort in training when you don’t especially feel like making it, the payoff is that you will win games when you are not feeling your best. That is how you win championships, that is what separates the great player from the merely good player. The difference lies in how well you’ve prepared.” [via Shane Parish]

WSJ: “What if scientists could engineer the sponge to serve a variety of therapeutic purposes, including storing drugs and enhancing cancer therapies? Such sponges exist, in a class of ultra-porous crystals known as metal-organic frameworks, or MOFs. Research into potential uses for MOFs has accelerated over the past five years, chemists said. They predict the crystalline compounds could transform healthcare, energy and other industries. Some said MOFs could become as widespread as polymers, compounds that form the basis of many man-made materials like plastics, in the next decade or two.”

Thinks 696

strategy+business: “You need to [first] understand the company’s culture—the identity of the organization. A lot of CEOs think they have this understanding, but that’s often at a high level, based on impressions and anecdotes (and of course, CEOs don’t always get the full and unfiltered view). Even when companies conduct formal research, they tend to focus on employee engagement, asking whether employees are happy coming to work, whether their jobs are fulfilling, or whether they’d recommend the company to a friend. Those methods have value, but they answer a different question: whether employees feel positively or negatively about various aspects of their workplace experience. They don’t identify what the culture actually is. To fully understand a company’s culture, you need to go beyond those sentiments. That requires a comprehensive survey of the organization, one that looks at more than just employee engagement. Questions need to be structured to accurately define the dominant traits of an organization and how they might impact its ability to deliver on its strategic goals, as well as the workplace experience it offers to employees. It’s a challenging task, because culture—the unwritten rules for how a company functions on a day-to-day basis—is often invisible.”

Washington Post: “TikTok starts studying its users from the moment they first open the app. It shows them a single, full-screen, infinitely looping video, then gauges how they react: a second of viewing or hesitation indicates interest; a swipe suggests a desire for something else. With every data point, TikTok’s algorithm narrows from a shapeless mass of content to a refined, irresistible feed. It is the ultimate video channel, and this is its one program. The “For You” algorithm, as TikTok calls it, gradually builds profiles of users’ tastes not from what they choose but how they behave. While Facebook and other social networks rely on their users to define themselves by typing in their interests or following famous people, TikTok watches and learns, tapping into trends and desires their users might not identify. The system runs on a sophisticated machine-learning engine — ByteDance researchers have championed its “sub-linear computational complexity” — but to TikTokers, the process could not be simpler. Launch the app. See the video. Passively consume.”

Kenneth Rogoff: “In chess, when a player makes a mistake, they’re much more likely to make another mistake in their next move. People lose their nerve — this is a very human tendency but I worry that’s what we’re seeing with central banks today. They induced too much stimulus, remained unaware as inflation rose and now, they’re panicked and rushing in the other direction. We can’t follow one mistake with another — we need to overlook the past to focus calmly on the situation now.”

Benjamin Reinhardt: “If we draw the thread of ergophilia out into the future, we can build a world where energy too cheap to meter unlocks technology that is indistinguishable from magic. Chunky, fixable technology unconstrained by the need to make everything as efficient as possible. A return to the belief that our children will have better lives than our own. Airships sailing the sky, hypersonic craft skipping along the atmosphere, and ion-belching behemoths plying the stars. Fusionpunk…The great slowdown began when we started rationing energy. Restarting progress means getting energy that is so abundant that it’s almost free.”

Thinks 695

Ninan: “Taking all four decades (1981-2021) together, the IMF numbers show that only three countries did significantly better than India. China was in a category by itself, multiplying its economy 62-fold (in current, not constant, dollars); South Korea was next at 25 times, followed by Vietnam. India fitted into the pack of countries that followed. Along with four others (Egypt, Sri Lanka, Bangladesh and Taiwan), it multiplied about 16-fold, while Thailand and Malaysia were not far behind. So it has been a creditable but not an outstanding record. Nevertheless, the country’s share of world GDP, after shrinking in the 1981-91 decade, from 1.7 per cent to 1.1 per cent, rose to 2.5 per cent by 2011 and then to 3.3 per cent in 2021, with still higher shares to come.”

Leonard Read: “Property – access to valuable resources – is simply a tool to help satisfy human desires. As long as the ownership and use of property is determined and guided by the market forces of open competition, everyone has access to these valuable resources in proportion to his own productive effort. Private ownership means personal control over the tools of production and, thus, personal control over one’s life. But when government owns and controls the property and thereby denies the functioning of the market, then government controls lives.” [via CafeHayek]

strategy+business: “When a business is going well, I’ve seen leadership teams conform to an unwritten 80-20 rule of thumb: They spend about 80 percent of their time focused on growth for the long term and only 20 percent managing the short term. But when things are not going well, I’ve observed the opposite: The temptation is to focus almost exclusively on the short term, with leaders spending a mere fraction of their time looking ahead. An ultra-short-term focus, however, is not sustainable. As pressing as today’s demands are, as businesses continue to struggle with impact of COVID-19 and economic uncertainty, leaders should strive for balance between the short term and long term to produce value that benefits all stakeholders.”

Donald Boudreaux: “In the private sector, we rely upon two core features of markets to protect against…abuse [of government power]. First, each person is free not to patronize firms that fail to deliver sufficient value. Second, firms prosper only by — and only so long as they continue — competing successfully for consumers’ dollars. But because government agencies are funded with taxes — and because those agencies face no competition — greater reliance than is necessary in the private sector must be put on the integrity, altruism and diligence of elected officials to oversee government agencies in ways that ensure that those agencies don’t abuse their awesome powers.”

Thinks 694

Rita McGrath: “Breakthrough innovations are relatively rare, and are often the consequence of years of tinkering and cumulative creativity.  This is a point that is made by both Matt Richtel in his book on creativity “Inspired” and by Safi Bahcall in his work on “Loonshots”.  This is why the story of innovation progress is so difficult to unpack, as it is never a straight line from concept to market-creating impact.”

Economist on China: “Many developing countries see nothing magic about the year 1945, and have limited nostalgia for a time when the West dominated rulemaking. China is ready to offer them alternatives. Seven decades ago, at founding meetings of the UN, Soviet-bloc delegates sought an order that deferred to states and promoted collective rather than individual rights, opposing everything from free speech to the concept of seeking political asylum. In the late 1940s communist countries were outvoted. China now seeks to reopen those old arguments about how to balance sovereignty with individual freedoms. This time, the liberal order is on the defensive.”

Adam Tooze: “It is often said that the dollar wins whatever the state of the world economy. It is a safe haven in crisis; in a boom, money surges into the dollar because US business is the prime generator of profits. But what is increasingly hard to ignore is how the dollar’s monetary pre-eminence is out of proportion to America’s actual economic standing in the world. Thanks to the explosive growth of emerging markets such as China and India, the world economy is increasingly multipolar. As a result, the US accounts for little more than 20 per cent of global GDP and yet its share of currency reserves is closer to 60 per cent and the dollar is involved in 85 per cent of all foreign currency transactions. If currency is conventionally thought of as an attribute of sovereignty, then this preponderance of the dollar would seem to confirm the continued existence of a US financial empire. And yet in 2022 this is at odds with America’s polarised and dysfunctional politics and the great power competition it faces abroad. It seems almost anachronistic that the Federal Reserve still functions as the de facto central bank of the world, like a hangover from the era of the Marshall Plan in the mid-20th century, or the moment of unipolarity in the 1990s.”

Robert Greene: People don’t understand that the person above them who seems so powerful and in control often has insecurities. The truth is, the higher up you go in a hierarchy, the more insecure you become. The more you worry about whether people truly respect you.” [via Arnold Kling]

Thinks 693

Richard Wagner: “Everyone, private citizens and political figures alike, acts on partial and incomplete information, for there is no other option in the presence of the scale and complexity of contemporary societies. A chief and a council of five elders might reasonably know everything of relevance for keeping a tribe of 200 performing as they think it should. For democratic systems of tens or hundreds of millions, however, any such presumption is some combination of arrogance and fatuousness.” [via CafeHayek]

Bill Dudley: “The Fed’s aggressive monetary tightening is undoubtedly imposing stress on the rest of the world, in large part by boosting the exchange rate of the dollar to other currencies. In developed countries, this drives up prices of imports such as crude oil, stoking inflation and forcing central banks to respond with matching rate hikes — even in economies where inflation pressures are relatively mild and growth is weaker. The effects are even harsher in developing countries. Aside from more expensive food and energy imports, they face reversals of foreign capital inflows (which makes financing imports harder) and increasing difficulty servicing their already burdensome dollar-denominated debts.”

Gerard Baker: “For years now, the critics of liberal democracy seem to have had the upper hand. They can point to the malaise of the West since the turn of the century: repeated economic failure, disastrous foreign adventurism, cultural collapse and conflict at home. For most of that time the so-called strongmen seemed to be gaining the upper hand. Whatever moral qualms there might have been about the messy moral realities, the long-term strategic advantage seems to be in their favor. But setting aside the moral case for liberty, its essential practical virtue has always been accountability. When you can audit, scrutinize, interrogate and ultimately remove the people who govern you, history and logic tells us you should get better government. Exposing failure and venality and punishing it creates incentives for success and probity. The primary contrast between our system and that of the autocrats is the application of this accountability. We have too much of it. They have too little.”

ET: “Ecommerce in India is expected to grow at a rate of 25-30% annually for the next five years, with a steady increase in user base that is estimated to beat the second largest ecommerce shopper base – United States – in the next one or two years, according to a report by consultancy firm Bain & Co and homegrown e-tailer Flipkart. The online shopper base in India, which was at 180-190 million in 2021, will also increase to about 400-450 million users by 2027 when the industry is estimated to be valued at over $150 billion. The report pegged the ecommerce market at $50 billion this year, up 40% from last year.”

Thinks 692

Annie Duke on quitting: “A common misconception about quitting is that it will slow your progress or stop it altogether. But it is the reverse that is actually true. If you stick to a path that is no longer worth pursuing, whether it’s a relationship that isn’t going well, or a stock that you’re invested in that’s losing money, or an employee that you’ve hired who isn’t performing, that is when you lose ground. By not quitting, you are missing out on the opportunity to switch to something that will create more progress toward your goals. Anytime you stay mired in a losing endeavor, that is when you are slowing your progress. Anytime you stick to something when there are better opportunities out there, that is when you are slowing your progress. Contrary to popular belief, quitting will get you to where you want to go faster.” [via Shane Parish]

NFX: “What city you live in. Who you date or marry. Which job you choose. What clothes you wear. We all think we make these choices ourselves. It certainly feels like we’re in full control. But it turns out that our choices — both in our startups and in our lives — are more constrained than we think. The unseen hand in them all is the networks that surround us and the powerful math they exert on us…Our networks are our most valuable resource. They are the way our lives express themselves. Those networks are made up of all the people you care about, the people you, inspire, move, and help to live their best lives.”

John Reed: “When you first start to study a field, it seems like you have to memorize a zillion things. You don’t. What you need is to identify the core principles – generally three to twelve of them – that govern the field. The million things you thought you had to memorize are simply various combinations of the core principles.” [via Morgan Housel]

Anurag Wadehra: “Customer loyalty pyramid is how a tech business cultivates a cohort of loyal customer champions. A pyramid is an apt metaphor for building loyal customers. Most customers are sporadic users of a company’s product or service, some find enough value to become repeat purchasers, fewer still engage repeatedly in depth to become delighted users or passionate buyers. Every B2B tech business can build a loyalty pyramid for their customers, and help them climb up the spiral path. To do so, you have to start with three elements of the pyramid: a bedrock of customer relationships, the promise of your brand, and the reality of your tech product or service offering.”