Theme: Incentives

  • Political Strategy: What Is Being Done To Prevent The Development Of A “cold War” Between China And The Us In The Coming Years?

    The USA is attempting to allow China to peacefully rise by use of commercial power rather than military power. Commerce creates consumption which addicts citizens to consumerism, which then makes it difficult for governments to jeopardize without insurrection.  That is the only strategy. The USA prefers the world consist of good commercial citizens.

    The fundamental problem though, is that China is a populous and very poor country that also contains conquered and rebellious territories, open to insurrection, and the wealthy coasts can be militarily devastated, and driven to starvation by blockading access to the South China Sea. The Chinese are quite aware of this vulnerability, plus they have a ‘chip’ on their shoulders from both british conquest, the failure of Marxism, and extended poverty, and the impact of those events upon the cultural mythology of Chinese superiority as the center of the world.

    Furthermore, their rise is complicated by the fact that they do not subscribe to the western moral code that currently is enforced by the United States on world trade — a code we take for granted but is antithetical to the Chinese.  (We resolve conflicts quickly and rely upon honesty and they wait for opportunity using deception. This difference in ethics pervades both cultures.)

    The USA currently polices the world system of trade (largely the seas) because it took over the British naval bases at the end of the world wars. And petrodollars allow us to fund that policing. We sell dollars to other countries as debt, which they then use to buy oil, and then we inflate away the debt. This is how we ‘tax’ the developed world for our expensive military services. 

    However, this system of abstract taxation which is breaking down, and the USA can no longer count on those advantages because of demographic reasons, competitive reasons due to internationalization of labor and technology, and monetary reasons due to the use of other currencies as petroleum and reserve currencies. 

    General consensus among strategic thinkers is that the USA’s power will decline slowly and that Chinese rise will be moderated at some near point by simple economic pressures.  The more radical thinkers suggest that most empires like the USA do not decline slowly, but very rapidly over a period of less than 50 years, and that the standard of living of the average american will be so significantly affected by the loss in purchasing power, that existing political tensions will be drastically exacerbated, sufficiently so that we will have our own problems of insurrection.

    In other words, both countries are more vulnerable to internal pressures due to China’s rise than they are to conflict with one another.  The alternative school of thought suggests that when empires succumb to internal conflict, then they exaggerate external threats in order to pressure the citizens to stay united (see Iran for example).  So that once the states and china experience internal pressures they will conduct a war over it.  I tend to think this is unlikely because the USA’s citizens will have internalized it’s decline by that time.

    As I understand it, that is the current thinking in as short a summary as I can place it.

    https://www.quora.com/Political-Strategy-What-is-being-done-to-prevent-the-development-of-a-cold-war-between-China-and-the-US-in-the-coming-years

  • AQUANTIVE BUST At the time, I viewed it as an act of executive desperation. It w

    http://business.time.com/2012/07/03/microsoft-writes-off-most-of-its-2007-6-3b-ad-business-bet/MICROSOFT’S AQUANTIVE BUST

    At the time, I viewed it as an act of executive desperation. It was.


    Source date (UTC): 2012-07-05 05:38:00 UTC

  • Riffing On Scott Sumner: German Membership In The Euro Is Preventing The Advancement Of The Poorer Countries

    The eurozone excludes Norway, Iceland, Sweden, Denmark, Britain and Switzerland. …Germany is one of the few northern countries that’s actually in the eurozone… And it seems to me that here you have a massive adverse selection problem. Because of Abraham Lincoln, affluent states like Massachusetts can’t suddenly decide they want no part of our fiscal union, and would rather just reap the benefits of our large single market. But Switzerland, Norway can and did make that choice. Britain almost certainly would, and both Sweden and Denmark might as well. In contrast, Bulgaria, Romania and Croatia would like nothing more than to join such a union. And all the likely future expansion of the EU is into areas further east, and much poorer than even Greece and Portugal. Places like Armenia, Georgia, Ukraine (a country nearly the size of France) Belarus, Serbia, Macedonia, Bosnia, Moldova (the saddest place on Earth—even the name is depressing.) And did I mention Turkey? Indeed why not Russia at some distant point in the future? People often compare Europe to the US. That’s wrong; the eurozone is sort of like the US, although a bit poorer. But Europe as a whole is far poorer than the US, far more corrupt, backward, inefficient, whatever other pejoratives you want to apply. Even America at its worst (say the treatment of ethnic minorities) isn’t as bad as the treatment of gypsies in Eastern Europe. My point was not to predict the future, but rather to provide a warning. Once you start down that road [to creating a united states of europe], there will be constant pressure to go further. Quite likely at some point the northern European taxpayers will rebel, and we won’t end up with a United States of Europe. The policy will collapse. The eurozone really only has two options; a more expansionary monetary policy or a breakup. There’s no point in looking for alternative solutions.

    The argument I consistently make, is that of course Germanic Protestant northern tax payers will rebel. And likewise, so will germanic northern european americans rebel. Which is what they’re doing today. We call it polarization. Germany, Austria and the Netherlands, should leave the eurozone and germany should reissue the Mark. (Belgium is already divided between french and german cultures, and they despise each other as much as the french and english canadians do.) The success of the euro then, will be as a vehicle for poor countries to unite, and possibly (I say with uncharacteristic hope) focus on group improvement, rather than transfers from the north to the south. In fact, the most important and valuable strategy that the United States could adopt for the world today, is to dismantle the empire both domestically and internationally. The anglo people have succeeded in spreading consumer capitalism. We’ve modernized the planet. But it’s one thing to invent and evangelize a technology. It’s another to try to control it. Europe doesn’t need one federation. It needs two or three. Because germanic, latin, and byzantine europe are different cultures if not different civilizations. They always have been. They always will be. And multiculturalism is impossible.

  • GEM: FROM SCOTT SUMNER: BUT POORER STATES DON’T VOTE TO INCREASE TAXES “There ar

    GEM: FROM SCOTT SUMNER: BUT POORER STATES DON’T VOTE TO INCREASE TAXES

    “There are studies showing places like Mississippi receive massive subsidies from other states. In my view those data are somewhat misleading. If taxpayers in New York pay into Social Security for many years, and then receive benefits when they retire in Florida, it seems a bit misleading to view that as some sort of gift from the state of New York to the state of Florida. Ditto for money spent on things like nuclear weapons silos in North Dakota. Nonetheless, I accept the basic point that poorer states like Mississippi are net receivers of federal money. But Mississippi does not elect Senators who call for higher taxes on the rich with the money going to support poor people in Mississippi.”


    Source date (UTC): 2012-06-28 07:08:00 UTC

  • How Do The Best Graphic And Web Design Firms Handle Sales?

    SALES: It varies by the size of the company.   Small companies generally are hired because they are local and cheap for small projects. Small projects get more attention and quality from small local companies. Big companies hate small stuff and are expensive. Selling to local companies is really just a matter of knocking on doors and showing work until they give you some of it.

    Large agencies are generally hired for their breadth of services, ability to scale, and strategic understanding.  Large agencies are able to attract and pay for a lot of talent in sales and delivery.

    Most opportunities are found through relationships between people who know each other.  But customers are always seeking new agencies and ideas. So customers will sometimes seek out an agency that wins awards or does promotional work for interesting clients.

    But most new companies do not have relationships and must generally produce gratis work for non-profits to promote its abilities. Much of the best award winning creative work is done gratis.  Usually, established companies are too conservative to fund projects that are useful for the agency to use in a sales pitch.

    Rarely do companies get off the ground without one or two accounts to support the startup.

    If I understand your question above, ‘Design Services’ is what you’re selling. 
    The problem is that for marketers, design services are like buying paper towels, toilet paper, and dish soap: they’re commodities. Design isn’t scarce. The difference between all but the top talent is marginal. So to get clients, you need to sell something other than the work itself.  Generally, you’re willingness to do it cheaply, or with greater customer service. Or perhaps because you understand their business or customers.  Largely; it’s “ease, dependability and price”.

    Most agencies MARKET rather than sell themselves.  Most service companies SELL themselves rather than MARKET themselves.  The question is, whether you have the money and talent to market yourself, or whether you are still just a service company and need to sell commodity services directly until you have relationships and business understanding. 

    PROCESS: 1)if you’re small just knock on doors and learn about possible client’s businesses.  Eat whatever ‘bugs’ you have to in order to get in the door.
    2) Develop a pitch team of Creative, Editorial, Technical, Marketing and account management.  Most of the time, in my experience, there are only two strong people out of that set in any given company. 
    3) if you get big enough, then hire a salesperson.  Usually the founders of small firms perform sales.   Sales people are very risky. Almost all business I have purchased in my life have gotten in trouble when the founders try to stop selling and hire salespeople.

    RFP’s: have a very bad name largely because customers will steal ideas, and because most of the time you’re just ‘column fodder’.  Pitches are EXPENSIVE.    A big agency for example only might put in five pitches a year. But they would spend hundreds of thousands of dollars on each pitch. A midsized agency might spend over 50K for each pitch and do more of them, and a small agency less than that. It’s expensive.  A commodity agency might never pitch just sell services based upon proposals.  So, if you’re in the pitch business, it’s best to pick the RFP’s you’re capable of winning and then to absolutely kill it with good ideas, and price on the pitch. 

    My main bit of criticism, as someone who almost never loses a pitch, is that it’s not worth pitching something that you havent given your all.  So only pitch when you’re willing to give it your all, and where what you’re pitching is really valuable to the customer.  Everything else is a waste of time and money.  Count on at least one-quarter of your business leaving each year, so that if you want a greater than 20% growth rate – which is what attracts customers and talent – then you need to sell enough pitches to generate 40-50% of your revenue a year. If you figure out the average size of your accounts as they exist today, then the size of the pitches you feel you can win, then the rate of your wins, it’s just some simple math.   (Most agencies are puny, at under 5M in billings.) 

    (I’m trying to keep this simple enough for a Quora posting, so if something isn’t clear then ask.)

    SOFTWARE: Adobe suite. Macs. You need to be able to speak PC well enough to work with and deliver customers assets though.

    REFERENCES: There are notoriously few books on this business that are worth reading.  Ogilvy on Advertising is about all you really need to know.  There is one on copywriting the name and author escapes me.  Maister’s book on being a “Trusted Advisor” is as timeless as Ogilvy’s.   Other than Seth Godin’s attempt to shock the old guard into thinking about the identity of consumers today little has been written that’s really valuable. (There book about the marketing history of Mazda is good too.) Generally, high minded and fashionable books on marketing and advertising are just nonsense.  Find work. Take care of clients. Accumulate talent.  Try to survive. It’s a craft. Not a science.  It’s not that complicated.

    LAST BIT OF ADVICE: Creativity is not magic. It is the process of filling your mind with related information then playing while the subconscious does its thing.  It’s repeatable. It’s procedural. And you can get good at it as an individual or team.  The best defense against doing bad work is to simply collect as much work as possible and keep examples of both good and ‘failures’.  I can’t tell you how many ideas I’ve shot down by using an example of a known failure.

    OVERALL: It is a murderously overpopulated business in transition from a highly profitable past to a less profitable future, where you are little more than a commodity and where you live hand-to mouth in exchange for the freedom to work in a field that accepts “playing” as doing work.

    https://www.quora.com/How-do-the-best-graphic-and-web-design-firms-handle-sales

  • MAGICAL THINKING? A DIFFERENCE IN PREFERENCES. QUESTION: “What are the best exam

    MAGICAL THINKING? A DIFFERENCE IN PREFERENCES.

    QUESTION: “What are the best examples of “magical libertarian thinking about markets?”

    ANSWER: “I am not sure that there is anything magical. I think that libertarians prefer to pay one set of consequences, and statists to pay different consequences. A libertarian is perfectly OK with it taking ten years to solve a problem. A statist isn’t. A libertarian would rather have to battle an irresponsible corporation using the market than an irresponsible government that is outside the market. And in the end, that’s really the only difference.

    I have been debating these topics for a long time and I am pretty sure that it all boils down to that distinction. The libertarians are right that the state creates monopolies, and that most of the problems we face are the product of government. The left is right in that the market works slowly and that there are consequences to relying upon it exclusively. Some people seek to define the best balance of market and state. Others seek the extremes.”


    Source date (UTC): 2012-06-16 15:04:00 UTC

  • In The Us, Is It Realistic To Try To Achieve Labor/progressive Goals In Businesses Through More Active Shareholder Participation Rather Than Government Regulation?

    Being a shareholder is like being a voter. It’s more symbolic than meaningful. Companies of any size are affected either by a) threats to the brand perception by customers or b) threats at regulation.  These two are more effectives strategies than minority share ownership.

    IMHO there is a trending body of thought that suggests shareholders are not owners but speculative lenders. The recent Apple dividend distribution was caused by economists blogging and publicly decrying the company’s hoard.  This caused the company to issue dividends defensively.  And the powerlessness (and frankly, lack of utility) of shareholders was part of that discussion.  Lynn Stout has written a book “The Shareholder Value Myth” and I think it accurately represents the mythology around shareholder ownership.

    https://www.quora.com/In-the-US-is-it-realistic-to-try-to-achieve-labor-progressive-goals-in-businesses-through-more-active-shareholder-participation-rather-than-government-regulation

  • What Are The Best Examples Of “magical Libertarian Thinking About Markets”?

    I am not sure that there is anything magical.  I think that libertarians prefer to pay one set of consequences, and statists to pay different consequences.  A libertarian is perfectly OK with it taking ten years to solve a problem. A statist isn’t. A libertarian would rather have to battle an irresponsible corporation using the market than an irresponsible government that is outside the market. And in the end, that’s really the only difference.  

    I have been debating these topics for a long time and I am pretty sure that it all boils down to that distinction.  The libertarians are right that the state creates monopolies, and that most of the problems we face are the product of government, and that the government exacerbates those problems. The left is right in that the market works slowly and that there are consequences to relying upon it exclusively.  Some people seek to define the best balance of market and state. Others seek the extremes.

    https://www.quora.com/What-are-the-best-examples-of-magical-libertarian-thinking-about-markets

  • What Are The Advantages And Disadvantages Of Different Philosophies Of Economics?

    You listed political philosophies but not economic philosophies.  They are two sets of questions.

    1) Political philosophies consider three different questions:
    a) How is the institution of property constructed (is property owned by individuals, the collective, an institution, or an authoritarian figure, and what are the limits on the use of that property)
    b) what institution is used to determine the use of property (the market, heads of families, bureaucracy, or a dictator)
    c) what claims do citizens (shareholders) have on the results of production or the profits from exchange. (Which are technically the same thing.)
    Everything else is trappings.  We know that incentives and the ability to calculate and plan determine the rate of innovation and effort put into work.  So the more individual property rights are, the more consumption is possible at the lowest cost.

    2) Economic philosophies fall into temporal categories from the short term to the long term, and advocates differer not so much on the utility of any given tactic, but on their approval or disapproval of the externalities (secondary consequences) of using the tactic. Economists then, tend to ally with political philosophies based upon those SECONDARY outcomes.

    These outcomes are driven by ‘fears’.  The liberal fears that the poor or less able will experience discomfort.  The conservative fears that society will be made fragile and uncompetitive.  If we work very hard and save then society will become hierarchical but safe.  If we redistribute and only a few work hard then society will have less discomfort but more fragility.  At least, that’s the theory. The left tolerates fragility and the right tolerates discomfort. It really boils down to that simple a difference.

    What economists do agree upon is that stimulating demand (consumption) stimulates the economy and does it quickly.  What they disagree upon is the good or bad consequences that come from stimulating the economy. The different economic strategies insert money into the economy in a range from very short to very long time frames.

    And the political ideologies are biased toward these two time frames: conservative the long term and liberal the short term.  In effect, the left wants the most redistribution possible right away in order to diminish the stress of the natural difference between teh classes, and think incentives are a means of coercion, and the right wants a meritocratic society where people have an incentive to be productive. (These are simply expressions of the feminine and masculine reproductive strategies. Nothing more.) 

    The different economic tactics below are organized from short term (liberal) to long term (conservative).  Economists tend to fall into camps that PREFER one or more of the tactics. 

    The Economic Tactics:
    a) Modern Monetarists (MMT): when necessary, just give money directly to people in order to stimulate consumption.  MMT is a counter intuitive theory that is widely disputed.  But the idea that we should be able to bypass the financial sector and directly credit consumer bank accounts is not a bad one. The data shows that tax incentives are not useful in the short term. (I was one of the people advocating that we just pay down consumer mortgages by 200K – it would be cheaper than letting the world economy collapse for a decade. Galbraith recommended the same thing before he died. And he and I are at opposite ends of the political spectrum.)   The counter arguments are that there isn’t any way to do this today, and it’s pretty hard to not create a moral hazard, and it’s pretty hard to be equitable, because you’re effectively rewarding people who used bad judgement.  FAVORED BY THE RADICAL LEFT

    b) Monetary Policy: when necessary, reduce the cost of credit (interest rates) so that people are more willing to borrow money. This puts cheap money into the banking system and money works its way through consumers and business into the economy.  This works well in ordinary times mostly as fine tuning, but when we are subject to shocks, like the recession, we can’t make money cheap enough that people actually will spend it. Right now, given the rate of inflation, money is effectively free to borrow. But people still aren’t lending or borrowing.  There is wide consensus that monetary policy is necessary under fiat (monopoly) money.  There is wide consensus that monetary policy can decrease the problems of money shortage compared to the gold standard. The criticism is that monetary policy exaggerates booms and busts.  WIDESPREAD CONSENSUS OTHER THAN LIBERTARIANS

    c) Fiscal Policy (Keynesians) : when necessary, the government borrows (or prints) and spends money on all sorts of programs in order to put money into the economy using the goverment’s spending network.  The problem is that it does take some time to work its way into people’s hands. There are not “shovel ready’ projects available and they take time.  And the real reason people object is because it finances political corruption, and the party in power tends to spend it in partisan fashion. (WHich is why the republicans won’t allow it right now.)  The other reason is that people just don’t trust the government any longer.  So they don’t want to reward the government.  The third reason is that conservatives in particular do not want to expand the government, but contract it.  FAVORED BY THE LEFT

    d) Industrial Policy: the government should (as do most other countries) invest in particular industries that will create jobs and lead to a competitive advantage.  INdustrial policy is usually accompanied by TRADE POLICY (import export controls and taxation).  The asian countries have used these policies to their benefit. China in particular.  The right and libertarians abandoned industrial policy and moved to free trade when the unions allied with the left.  But industrial policy is naturally attractive to the right.  For all intents and purposes, industrial policy has been abandoned in the USA. FAVORED BY THE RIGHT, DESPISED BY LIBERTARIANS.

    e) Human capital policy (Education) : Education policy is the means of improving the competitive value of citizens in relation to other countries.  It takes a very long time for  education policy to take effect.  The germans have demonstrated the best understanding of education. Although most americans would find their model invasive.
    FAVORED BY THE RIGHT, FAVORED BY LIBERTARIANS, ACTIVELY UNDERMINED BY THE LEFT.

    f) Strategic Policy (Military Policy): control of global trade routes, oil, and petro dollars is one of the most important reasons for the USA’s standard of living, despite the relative lack of competitiveness of it’s working classes.  This is a very complex and long topic, but strategic policy IS ECONOMIC POLICY.  The average american gets a pretty big return on his military expenditures. But that’s an unpleasant reality for many.  Strategic policy takes a very long time to play out. But most countries engage in it.  Iran for example is trying to become the core state of islamic civilization and control world oil supplies and prices, and by doing so, eliminate the discount that western citizens pay for oil. 
    FAVORED BY THE RIGHT, DESPISED BY LIBERTARIANS AND THE LEFT

    This needs to be a book length topic but hopefully it illustrates that political philosophy and economic philosophy are two different things.  But that economic philosophy is divided into specialties that correlate with the different sides of the political spectrum.

    One thing is for certain: economists will talk as if they are far more certain than they are or can be. We are too inexperienced in the field of economics, and the problem is far too complex for us to be sure of what we are doing. In effect, we are running a very big experiment on humanity. It seems to be working reasonably well. But some patients are definitely harmed in the process.  The most important of which is that we are expanding the population to questionable levels.

    (I have a splitting headache so i will have to come back and check this for edits this later.  -Cheers)

    https://www.quora.com/What-are-the-advantages-and-disadvantages-of-different-philosophies-of-economics

  • In The Us, Is It Realistic To Try To Achieve Labor/progressive Goals In Businesses Through More Active Shareholder Participation Rather Than Government Regulation?

    Being a shareholder is like being a voter. It’s more symbolic than meaningful. Companies of any size are affected either by a) threats to the brand perception by customers or b) threats at regulation.  These two are more effectives strategies than minority share ownership.

    IMHO there is a trending body of thought that suggests shareholders are not owners but speculative lenders. The recent Apple dividend distribution was caused by economists blogging and publicly decrying the company’s hoard.  This caused the company to issue dividends defensively.  And the powerlessness (and frankly, lack of utility) of shareholders was part of that discussion.  Lynn Stout has written a book “The Shareholder Value Myth” and I think it accurately represents the mythology around shareholder ownership.

    https://www.quora.com/In-the-US-is-it-realistic-to-try-to-achieve-labor-progressive-goals-in-businesses-through-more-active-shareholder-participation-rather-than-government-regulation