Sunday, December 27, 2009

Too Big Not to Fail

We all know about "economy of scale," with Wal-Mart as the canonical example.  What about diseconomies of scale

The linked article counts off a number of factors that might contribute to decreased efficiency as companies get larger.  To that list I would add:

  • Beyond hierarchy and its associated communications challenges, size also brings scaling problems.  Organizations have a natural limit on growth rate beyond which the existing employees will be overwhelmed in their attempt to instill the existing culture into the new recruits.  Many large companies grow faster than this rate and "lose their way."
  • Small companies have little to lose and much to gain.  For large companies, this situation is reversed.  As a result, larger companies will adopt more conservative approaches, counting on network effects and bullying in order to maintain their position rather than taking big chances or moving in new directions.  Microsoft is an obvious example here, but so is GM.
  • In some industries, a strong temptation might appear to move from a strategy of providing value to one of rent-seeking.  Interaction with the government becomes important here, as size can have enormous advantages when it comes to lobbying, regulatory capture, no-bid contracts, bailout money and the like.  Defense contractors are terribly inefficient at producing the goods and services that they nominally sell, but probably much more efficient when dealing in the market where they actually compete with one another: the pursuit of influence in Congress and the military.
The answer is probably that more and more medium-sized companies are better.  The mom and pop shop is inefficient, but so is the sclerotic GM.  How to get there?

Saturday, December 26, 2009

Doesn't matter what I'm packin' in my denim it's what's in my genes

So a dude got a reduced sentence after it turned out that he has an aggression gene.

First, I wonder what that has to say about recidivism?

Second, we're eroding the conceptual bedrock of free will rather rapidly, no?

Friday, December 25, 2009

Tuesday, December 22, 2009


Here's a list of the tags that I've applied to posts so far.  Good times...


Tuesday, December 15, 2009

If only we had the time

Economics is about the allocation of resources. At one point in time, physical resources were a big deal. In some cases they still are, but the scantest resource in this day and age is the time and effort of organized groups of intelligent and well-trained people.

The government endeavors to direct this effort into positive social directions like keeping the environment clean, ensuring the safety of things like cars, drugs and planes, blowing up foreigners, keeping the SuperBowl nipple-free and the like.  Despite these efforts, a majority of the allocation of time, effort and collective focus is allocated by the market - folks doing some combination of what they want to do and what others with money pay them to do.

Folks say that they want healthcare for their fellow man and less CO2 and any number of other things, but when it comes time to pull out the wallet or the calendar, they go to the things they actually want. Fantasy football leagues, porn, Farmville, Twilight, CSI  and the like.

XKCD has it right: bajillions of hours were expended by some of the finest minds of the past few generations in order achieve for humanity the sophisticated technology that we now use for viewing goofy videos on the internet.

So... perhaps it's time to put our time and money where our mouth is: Get out there, earn as much as you can by providing whatever it is that you can do that others value (with dollars, not words), and then donate as much of your earnings as you can afford to the cause that you support...  You might not be rich, but you've got time and brains, and that's just as good as money.

Or count on someone else* to do it and... check out this kickass video of a wheelbarrow race.

*Advanced practitioners will move beyond counting on someone else and take the step of voting for the government to force someone else.  YMMV.

Sunday, December 13, 2009

Want you smothered, want you covered...

One of few things that the South has over California.

Friday, December 11, 2009

Tis the season

I can tell from the lights, the music, the ads on the TV...

This is the season when all the Christian conservatives who voted Bush in twice and voted for all those gay marriage prohibitions pray for Peace on Earth and Good Will Toward Men.

Onward, Christian soldiers!

Wednesday, December 9, 2009

Capitas and Caps in Asses

Here's a crazy stat: the US of A spends almost exactly twice as much, per capita, on healthcare as Sweden.

Here's a crazier stat: our per capita spending on the military is thirty times as high.

So, while we should definitely figure out how the Swede's are staying healthy for 2000 a person instead of 4000, it seems far more pressing for us to figure out how they're staying defended for 160 bucks a head instead of 4700.  An order of magnitude more pressing, even.

Thursday, December 3, 2009

Answers that need questioning

The topic is health care.

Public option proponents need to explain why auto insurance works so well despite being privately provisioned (although there are coverage mandates in most states).  Or, I suppose, convince me that auto insurance does NOT work so well.

Public option opponents need to explain why so many other countries have gone that route with apparent success (Canada, most of the EU, etc).

These aren't new or original questions, they've been answered all over the place, by all kinds of people.  Somebody link me up with some convincing arguments.

A few starting thoughts:
  1. You know that Geico commercial with the money and the 80's song?  Or the one with the gecko?  Or the cave people?  What about the health insurer campaigns.  I can't think of one.  Is that because they market to HR reps and not to me?
Private insurers don't generally pay for regularly scheduled service or even unscheduled service that did not have clear cause, like a car accident.  And they total cars if things get out of hand.  And there's nothing in their industry that approximates the costs associated with, say pre-natal care.
  1. I haven't run the numbers, but it seems pretty true across the board that countries with public health care have all, or nearly all averaged significantly lower year-on-year GDP gains over the past few decades.  Might this be the hidden cost?
  2. Is there any credibility to the claim that public plan countries "free load" off the innovations of the US private sector, by providing implementations of technologies developed and later economized by the US?  If so, is the opportunity cost for switching higher in the US than it was in other countries?  Any way we might free load off of, e.g., India?  China?  Too soon for that?