The most general and the most pervasive way I make sense of the world is through economics. Concepts inspired by the great economic thinkers and philosophers applied to business and life. Here are their stories and my stories......
See also my blog Eye2theLongRun

By STEVE LOHR (WSJ HT David H)

Published: January 26, 2012

In business as in jazz, the tension between training and improvisation can result in great new works, says John Kao, the innovation adviser (and pianist).

That’s the message that John Kao, an innovation adviser to corporations and governments — who is also a jazz pianist — was to deliver in a performance and talk on Saturday at the World Economic Forum in Davos, Switzerland. Jazz, Mr. Kao says, demonstrates some of the tensions in innovation, between training and discipline on one side and improvised creativity on the other.

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The following is applicable to N.Z. - especially at present in the light of obsessive and irrational fear of foreigners notably Chinese.

At a conference in Philadelphia earlier this month, a Wharton professor noted that one of the country's biggest economic problems is a tsunami of misinformation. You can't have a rational debate when facts are so easily supplanted by overreaching statements, broad generalizations, and misconceptions. And if you can't have a rational debate, how does anything important get done?

As author William Feather once advised, "Beware of the person who can't be bothered by details." There seems to be no shortage of those people lately.

Here are three misconceptions that need to be put to rest.

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There is a high level of wailing and gnashing of teeth about equality, gaps, the 1%, the none % and the like in N.Z. at present. Much confusion arises because of very limited understandings - or worse, inability to accept the reality - of wealth generation and distribution processes. Comfy stories which tell us "we" are humane and noble while others are "rich and mean" are more popular than ever - they are also self indulgent, lazy and wrong.

The various attacks on Mitt Romney in the U.S. for his spectacularly successful private equity business ventures provide a cogent example and below Holman Jenkins provides a well reasoned update of the "creative destruction" process first highlighted by economist Joseph Schumpeter.

The Truth About Bain and Jobs (ex WSJ thanks to D. Haarmeyer for the pointer)

Job creation and destruction are both relentless. The small difference between the two is what we call prosperity.
By HOLMAN W. JENKINS, JR.

Mitt Romney and his GOP rivals are engaged in a fruitless argument in South Carolina over whether private equity creates more jobs than it destroys. The debate is fruitless because voters and politicians don't believe jobs should ever be destroyed.

The American voter is not about to become sophisticated about the place of private equity in American life. But the American voter can become inured to it. So let backers of Newt Gingrich's flaming candidacy run a "King of Bain" video savaging Mr. Romney's leveraged buyout career on South Carolina TV.
All such productions are but poor reprises of a story that appeared in this paper on May 16, 1990, written by a reporter named Susan Faludi, later to become famous as an angry feminist author.

In 7,770 words, Ms. Faludi described...

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Extraordinary cases, the principles of freedom behind them and the economic import of getting legal argument and Court decisions right.

WSJ THE WEEKEND INTERVIEW
JANUARY 7, 2012 HT D. Haarmeyer


By COLLIN LEVY
The Republican presidential campaign is at full boil, and among the biggest players are so-called super PACs, political-action committees that can raise and spend as much money as they like. Mitt Romney's version helped ruin Newt Gingrich in Iowa, for example. For that right to free speech (not the ads), you can thank or blame Chip Mellor, who runs the most influential legal shop that most people have never heard of.
Mr. Mellor is the 61-year-old chief of the Institute for Justice, which has been celebrating its 20th anniversary of guerrilla legal warfare on behalf of individual freedom. He's worth getting to know because he and his fellow legal battlers are behind a larger campaign to restore some of the Constitution's lost rights. And they're often succeeding.

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I have long regarded the entire "patent industry" with grave suspicion. The idea of state granted monopolies to inventors seems superficially plausible as a means of creating incentives and protecting hard work but is it that simple? No patent was required for the bow and arrow to be invented. Whither the wheel? And since the monopoly is about exclusive rights to access profits why not simply subsidise innovation? We do - but nowhere near to the extent to which the patent grants privileged access to undue profit.

Alex Tarbarrok is the expert on this and his dirt cheap $2.99 e-book provides a sharp, economical explanation replete with numerous examples of why the patent system is stunting not encouraging innovation.

This diagram gives some idea of the size of the problem.....

Two papers I wrote in 2011:

Summary of principles of governance:..........Principles of Governance
Risk management for Boards of Directors:... Risk Management for Boards

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Rising credulity
Nils-Axel Mörner
3 December 2011

It has now become traditional for climate change summits to open with a new, dazzling prediction of impending catastrophe. The UN Climate Conference under way in the South African coastal town of Durban is no exception. This year’s focus is on a familiar and certainly arresting argument: that sea levels are rising at a catastrophic and unprecedented rate mainly due to man-made global warming.

No one makes this point with quite so much panache as Mohamed Nasheed, president of the Maldives. In the run-up to the summit, he declared that he leads ‘an island nation that may slip beneath the waves if all this talk on climate does not lead to action soon’.

Since chairing a meeting of his Cabinet underwater, Nasheed has been busy rallying other low-lying countries to make similar points. He chaired a summit of them in Bangladesh, to compare notes ahead of the Durban summit, and they agree to limit their own carbon emissions. Ban Ki-moon, the head of the United Nations, was delighted — saying that it was unfair to ask ‘the poorest and most vulnerable to bear the brunt of the impact of climate change alone’ and called for them to be given subsidies by richer countries to adapt. Such funds do not seem to be forthcoming. It seems the summit in Durban will, like so many climate summits, be disappointing.

I may be able to help.

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From Greece to Washington to New York state, there's no effective mechanism to control spending.

By DAVID MALPASS

Across Europe and the United States, the fiscal crisis is setting up an epic battle among government services, pensioners, government employees, creditors and taxpayers. There is simply not enough money coming in to pay all the promises politicians have made. The shortfalls and fights are challenging our democracies and shifting wealth from the private sector to ever bigger government.

The hope has been that Europe's debt crisis would force government downsizing in time to meet cash flow requirements. Newfound fiscal discipline would provide a silver lining to the debt crisis. But that's not working out.

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From the ever reliable Aguanomics.... the book covers a multitude of critical tipics but in an approachable manner. TY for the alert David Haarmeyer.

Posted: 08 Dec 2011 04:30 AM PST

It's generally true that writing gets better with each draft, but at some point a writer must stop, as his cost of re-drafting exceeds his benefit (the benefit to readers is a different story).

But sometimes we get the chance to re-write an earlier work, not just to finesse the original perspective but to add wisdom and highlight important points.

Edwin G. Dolan has taken this second path with his "Version 40.0" 2011 update of his 1971 book, TANSTAAFL (There Ain't No Such Thing As A Free Lunch) - A Libertarian Perspective on Environmental Policy.*

Now some readers may be tempted to stop reading this review, since they are not interested in a "libertarian" book on environmental policy. Don't libertarians, after all, think that money should determine who gets what, in some kind of Darwinist struggle to allocate rainforest to the richest?

Not really, and definitely not in this book.

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