Curt Doolittle

Theme: Incentives

  • BANKING: CREDIT UNIONS ARE GOOD. BIG BANKS ARE BAD. AND WHY Banking is a means o

    BANKING: CREDIT UNIONS ARE GOOD. BIG BANKS ARE BAD. AND WHY

    Banking is a means of allowing people with disparate knowledge, means, goals to cooperate by concentrating their capital and cross-insuring each other. Banking is a GOOD BUSINESS for society and society as we understand it is not possible without banking.

    Now, when you get service charges, this is just charging you for the costs you put onto the bank. THis is a GOOD IDEA because otherwise people who do a lot of bank work force people who don’t to pay all oft of costs. That would be an involuntary transfer. That’s bad. It’s stealing.

    The problem occurrs when the state starts putting funny money into banks and creating a ‘hazard’ by doing so. They allow banks to make risky loans. and those risky loans increase consumption at the expense of creating a fragile economy.

    The argument that Keynesians make, is that we get more good out of that fragility than we do bad.

    And that’s not a truth. It’s a matter of preference.

    And the people who would prefer not to have booms and busts that are caused by the government, because they take risks because the cost of money is cheap, and the pricing information that they see around them is distorted. Then the rug is pulled under them by the fragility and it all comes crashing down into a recession and depression.

    Credit unions are good things.

    Use them.

    Big banks are for conducting war. That’s why we have them. thats where they came from. that’s what they do.

    Source date (UTC): 2013-01-22 07:56:00 UTC

  • BANKING: DEATH BY COMPUTER : RESURRECTION BY CREDIT UNION My family has been in

    BANKING: DEATH BY COMPUTER : RESURRECTION BY CREDIT UNION

    My family has been in banking for generations. It is a very good business. For most of history, you could talk to a banker. A banker was like your accountant, lawyer, or priest: he gave you advice and counsel and worked with you. They were reasonably educated people with decision making authority.

    The advent of computers made it possible, and competitive to centralize banking, turn to statistics that measured and compared statistics about what you did WITHOUT the advice and help of a banker to learn about money, interest and credit, instead of PROVIDING you with the advice about what to do with money, interest and credit.

    This created a lot of asymmetry of knowledge in the population. People got more ignorant and became statistical objects rather than members of a portfolio of relationships that banks built.

    Starting in the 1970’s when the USA instituted the petro-dollar, or using the US Dollar as the world currency for buying oil, the USA has been issuing cheap credit both home and abroad.

    The impact on banking has been that the government is essentially insuring increasingly ignorant consumers with cheap credit, who increasingly get unconsciously into debt, and increasingly into default, rather than building knowledgeable consumers of credit and producers of interest.

    community banks, and in particular, credit unions, are more than just a ‘nice thing’ for consumers. They can rebuild our society by removing the asymmetry of knowledge that lets banks prey upon ignorant consumers and sell them into predatory debt.

    Community credit unions are how all consumer credit should be done, even if we have to legislate it. Because big banks are just part of the government. They are part of the century long credit scam that has made us all slaves.

    Why are we slaves? How do you become a US Citizen? You get a driver’s license, a credit card, a loan for a car, and a loan for a house, and now you are controlled by credit, not by moral code, not by cultural norms, not by laws, but by credit. You are a credit slave. And that might not be bad if it works. But for an absurd number of people, they fail at the card, or the car or the house and become indentured servants. SO it is not so much that those of us who succeed do. It’s that we are advocates for a system that creates a permanent and dependent underclass.

    Credit is citizenship and the lack of it makes you a serf.

    And only community banks can provide advice and counsel. We force people into schools so that they don’t become ‘scoundrels’ that we must support through charity. Why is it that we use credit to create a lower class of people ostracized from the system purely out of ignorance? Why is it that we put almost ten percent of our people into prison for minor drug charges, and therefore guarantee they are dependent upon the rest of us to support them, and if not, lead lives of dependence and crime?

    Now I understand that very few ordinary people can tell whether what I’m explaining here is more or less true than any other explanation that they’ve heard. And all I can do is hope that it makes more sense than some conspiracy theory does.

    We may have the best of intentions. But the road to poverty is very often paved with the best intentions. And the road to social fragmentation has been, with certainty, paved with good, but foolish intentions.

    Source date (UTC): 2013-01-21 12:29:00 UTC

  • BUYING ISOLATION It’s very visible. Americans buy spatial freedom as their first

    BUYING ISOLATION

    It’s very visible. Americans buy spatial freedom as their first priority. Spatial freedom, along with the destruction of marriage, are why household incomes are not keeping pace in the lower classes.

    With spatial freedom you no longer have to compromise with others over the mundane things.

    But then your self perceived signals are all contrived. And others don’t reinforce them. And we feel alone and isolated. And contentious.

    Here the majority don’t have that kind of freedom. And so the signals are less misleading.

    And they are more civil because of it. And since relationships are cheap entertainment. And these people are relatively poor – at least for white people – they interact with one another.

    It’s not consumerism that’s the social problem. It’s the epistemically problem of isolation and a failure for our signals to endure the test of exposure to others. 😉

    Source date (UTC): 2012-12-15 19:08:00 UTC

  • THE SOUND OF MUSIC: AMERICANS TALKING FINANCE There are things you miss when you

    THE SOUND OF MUSIC: AMERICANS TALKING FINANCE

    There are things you miss when you’re away. Some of them are obvious. Most of them aren’t: they’re the familiar things we take for granted.

    I was overcome with joy this morning when I heard an American accent. It was the CEO of a large insurance company. He talking about finance with the head of his French operation.

    Something familiar that I took for granted.

    It sounded like music to me.

    We chatted. He laughed.

    Source date (UTC): 2012-12-14 02:18:00 UTC

  • MONOGAMY Let me put it this way: monogamy is not in a man’s interest at all. Or

    MONOGAMY

    Let me put it this way: monogamy is not in a man’s interest at all. Or rather, it is only in the interest of the 30% of men who are undesirable. And many men are undesirable because men vary more than women, particularly at the extremes.

    Monogamy creates artificial scarcity of men. It’s a bad deal for women in gene selection, but it’s a good deal for women in an agrarian economy in terms of support for her offspring. For the upper fifth of men, monogamy is a very high cost of opportunity. For the Tiger Woods’ of the world, its an absurdity.

    The question we have to ask, is if we lose the family, and we lose monogamy, then what will a) those undesirable men do and b) how will men start to signal?

    I look around the world and I look at history, and this is the stuff that heady murder is made of.

    Source date (UTC): 2012-12-07 18:24:00 UTC

  • SCHIFF ON THE MYTH OF THE 91% TAX RATE IN THE 50’S “…the top marginal income-t

    http://online.wsj.com/article/SB10001424127887324705104578151601554982808.htmlPETER SCHIFF ON THE MYTH OF THE 91% TAX RATE IN THE 50’S

    http://online.wsj.com/article/SB10001424127887324705104578151601554982808.html

    “…the top marginal income-tax rate in the 1950s was much higher than today’s top rate of 35%—but the share of income paid by the wealthiest Americans has essentially remained flat since then.

    In 1958, the top 3% of taxpayers earned 14.7% of all adjusted gross income and paid 29.2% of all federal income taxes. In 2010, the top 3% earned 27.2% of adjusted gross income and their share of all federal taxes rose proportionally, to 51%.

    So if the top marginal tax rate has fallen to 35% from 91%, how in the world has the tax burden on the wealthy remained roughly the same? Two factors are responsible. Lower- and middle-income workers now bear a significantly lighter burden than in the past. And the confiscatory top marginal rates of the 1950s were essentially symbolic—very few actually paid them. In reality the vast majority of top earners faced lower effective rates than they do today.

    In 1958, an 81% marginal tax rate applied to incomes above $1.08 million, and the 91% rate kicked in at $3.08 million. These figures are in unadjusted 1958 dollars and correspond today to nominal income levels that are at least 10 times higher. That year, according to Internal Revenue Service records, just 236 of the nation’s 45.6 million tax filers had any income that was taxed at 81% or higher. (The published IRS data do not reveal how many of these were subject to the 91% rate.)

    In 1958, approximately 28,600 filers (0.06% of all taxpayers) earned the $93,168 or more needed to face marginal rates as high as 30%. These Americans—genuinely wealthy by the standards of the day—paid 5.9% of all income taxes. And now? In 2010, 3.9 million taxpayers (2.75% of all taxpayers) were subjected to rates that were 33% or higher. These Americans—many of whom would hardly call themselves wealthy—reported an adjusted gross income of $209,000 or higher, and they paid 49.7% of all income taxes.”

    Source date (UTC): 2012-12-07 08:34:00 UTC

  • BREAKUP OF COUNTRIES IS NO ECONOMIC DISASTER Actually, it’s a fantastic opportun

    http://becker-posner-blog.com/2012/12/breakup-of-countries-no-economic-disaster-becker.htmlTHE BREAKUP OF COUNTRIES IS NO ECONOMIC DISASTER

    Actually, it’s a fantastic opportunity.

    Here is Gary Becker chiming in on the Catalan secession movement.

    To bad he doesn’t turn his attention to what would happen to the united states if we broke up. And how fantastic an opportunity it would be.

    Source date (UTC): 2012-12-04 15:41:00 UTC

  • ON MICROSOFT’S FUTURE : YES SURFACE LOOKS LIKE A FAILURE (From something I poste

    ON MICROSOFT’S FUTURE : YES SURFACE LOOKS LIKE A FAILURE

    (From something I posted on Dave Quick’s page)

    OK. While I’m thinking about it:

    1) everyone knows msft’s problem is a combination of their dependence on OEM’s paired with the threat of suits, especially from governments, if they try to alter this dependence. They must get into the hardware business. but they can’t without buying someone like Asus, Dell or HP.

    2) The first concept of a desktop everywhere was a correct prediction. The second conceptual bet, of owning the living room was a failure. This again, is a hardware ownership problem, and a distribution network problem. The software is trivial.

    3) Abandoning the pc as a gaming platform in favor of attempts at the living room was a failure. Especially in light of the fact that it was the gaming technology that caused advances in processor demand that fueled increasing creative destruction in the field.

    4) Abandoning the application server market to Oracle and IBM is irreversible, and was driven by at least the following factors a) the failure of msft to create sufficiently advanced products for enterprises, b) because of the performance challenges of the architecture and the slow response to the internet c) losing the IQ during the revolution by killing ASP for example rather than improving windows architecture to tolerate transactions rather than processes (and failing to make PHP part of visual studio) and perhaps creating a compiler for it that would give windows an advantage in productivity d) as I have argued for years, because they underfunded their services organization, which did poor work using poor technology and threatened their cash cow of operating system revenue with top customers, and e) letting the sharepoint group kill off both Commerce Server and nCompass, which together, if funded, could have performed as well as the others f) not-in-redmond that ruined the potential for the Navision acquisition to expand beyond accounting.

    4) The vast majority of microsoft employees have meaningless jobs with little to no impact where they are totally isolated from the pricing system and supported only by the network affect. Survival is as much political as anything else. The hardware business is much less tolerant of this extremely politicized environment. And the losses from hardware failures more substantial. These employees cannot transfer to that environment. ( I won’t go into the other cultural problems there.)

    5) Any management that saw technology as joy has been forced out of the company along with most of the evangelists that actually connected the bureaucracy with the consumers. Much of this management has been forced out largely because there is no technical visionary in the company, and the senior execs are operators, not inventors, so they do not actually know what to do with the business. Furthermore, those that do have been forced out of the company as soon as enough analysts suggest that they would be better at replacing Ballmer. Esp Raikes.

    6) Microsoft’s core technology (Windows) is architecturally unsuited for low cost, high performance computers. It was designed to be heavy, and it remains heavy. It should because underneath it’s conceptually still a product of digital equipment’s minicomputer architecture. If you understand this you will also understand that there is almost nothing that can be done about it without some extraordinary invention that alters the user interface (think talking to your box) the way that touch and hi res altered the interactive experience. It is this kind of innovation that makes substantial investment possible. Because it reduces the transaction cost of working with computers – and all information.

    When I spoke with Stephen Elop about this over lunch a few years ago it seemed as if he simply couldn’t even grasp the idea. Of course, when he went to Nokia I understood the strategy. But I also understood that he was not intellectually capable of improving office nor or altering the course of Nokia. In few meetings I’ve had with Ballmer (I’m out of the industry so I feel safe talking about it) his only concerns were expressed in global terms and the company’s overall revenue potential in the middle term. But every time I think about it, I can’t get away from the famous email to Buffett that stated that in ten years anything could happen to MSFT. And it has.

    Continuing on this thread, Touch eliminates the barrier to use for navigating. It reduces transaction costs. It does not require that the user comprehend abstractions. Gramma would never have had trouble with the ipad the way she had to learn the keyboard.

    But touch does nothing for engineering, finance, science, writing contracts, or even making movies. It does very little for content creators.

    THEREFORE

    Microsoft owns the content creation business. It owns the complex interaction business. It has ceded the application business to the major firms. It has ceeded the consumer to Apple. So microsoft’s market has, like IBM before it, narrowed. It’s narrowed to the need for businesses to have an active directory service to manage security, and the administrative desktop tools (Office) needed for clerical work. IE: Microsoft owns the CLERICAL WORKER. That term includes people who use structured data in its loosest form (verbal arguments and persuasion) to those who use it in it’s common form (financial clerical work) it’s next broadest form (statistical information possible only with Excel or other tools), to it’s creative form (engineering and science). But this is all clerical. The inabilty for msft to control display quality (as does apple) prevents it from being in the visual business.

    No one can or is willing to replace Excel, and the vast network of spreadsheets that most companies (foolishly) run on instead of ERP, PSA and other financial systems which are far more expensive to implement. But if someone creates a version of excel that replaces two dimensional functions with n-dimensional processing like sql, then that would be a significant invention that would make the value of the new product worth the transaction cost of changing it.

    When Word came out, it’s fundamental improvement was the use of the paragraph marker to store formatting data, which allowed rapid redrawing of the screen. Wordperfect for example, used document level tagging, which stayed in effect until altered. This meant that wordperfect had to redraw or rather reprocess the document. It wasn’t just marketing. It wasn’t just that word was carrying the burden of it’s dos roots. It’s that architecturally it was a flawed model in the newer context. Even though the paragraph marker is the source of all the stuff we hate about word.

    Now, If you follow writing it’s split between four camps: text fragments that we use for the majority of our work today (email, text, web pages, forms) , simple word processors (glorified wordpads, which is about all anyone needs), html word processors (formatted text processors), business word processor (word) and writers tool’s (Scrivener and Final Cut models). Fundamentally, the writer’s tool has taken over writing in all professional forms except business writing and contracts. This process will continue.

    WHAT DOES THIS MEAN

    So the point here is that it’s not worth it for anyone to get into microsoft’s office business YET. It is possible for microsoft to DEFEND that CLERICAL business. It is probably NOT possible for microsoft to expand into the CONTENT CONSUMPTION BUSINESS. It has no advantage there. And any attempts to do so (windows 8) will probably be a failure. computers are NOT general purpose devices any more. They’re appliances. THe operating system is not a competitive advantage, It’s a commodity. And in microsoft’s case, the windows architecture is a liability.

    What I have suggested in the past, is that once a competitor has the ability and incentive to eradicate microsoft’s lead it’s actually quite easy to do it with software:

    a) active directory replacement

    b) an inexpensive desktop appliance with superior user interface for the majority of clerical workers, that provides increased protection from theft.

    c) the ability to run a window for legacy windows applications until they are replaced with web based (that this is in process should be obvious) or at least iOS level apps.

    d) a spreadsheet with all Excel functions PLUS a sql like or at least close to sql like langage. esp one that handled graphs (not pictures, data structures).

    This will consume the administrative worker that accounts for the majority of desktop systems.

    My prediction was that Apple would do this as soon as either the iphone/ipad revenue stream threatens to peak, and/or the television strategy that they are starting to roll out fails. It is just too easy for them to use brand preference for apple to displace all clerical systems and support for the simple reason that windows user interface and office features sets are too complex for all but a minority of jobs.

    It might not be apple. It will be someone else (who cares abut this opportunity more than I do….)

    So, for the above reasons both the environment at msft, it’s revenue stream, it’s product architecture, and the few points of advantage taht their technology possesses are all weaker than the network effect is powerful.

    And only someone very visionary can change all that. And that person would have to be CEO.

    Source date (UTC): 2012-12-02 14:27:00 UTC

  • MATTER

    http://www.oup.com/us/catalog/general/subject/Economics/Labor/?view=usa&ci=9780199942213INCENTIVES MATTER :

    Source date (UTC): 2012-11-30 22:04:00 UTC

  • MORE ON LIBERTARIAN BUSINESS MANAGEMENT: the attention economy Attention is a re

    MORE ON LIBERTARIAN BUSINESS MANAGEMENT: the attention economy

    Attention is a resource just like time and money. People calculate what they devote their attention to. People seek to minimize the attention and calculation that they devote to the interests of others.

    Although women, because of greater Oxytocin levels, are more so, they also tend to err in favor of consensus while men because of testisterone err on competitive innovation.

    The problem then is in creating a social environment in the work place that maintains the focus of their attention on calculating excellences instead of efficiencies by creating incentives that are social rather than remunerative.

    If I could distill the libertarian organizational strategy to one lesson I think this would be it.

    Efficiency in human organizations is a dirty word. :).

    Source date (UTC): 2012-11-17 22:58:00 UTC