$20 Bills on the Sidewalk

•September 28, 2010 • 2 Comments

Once someone told me that Bill Gates earns money more quickly than someone would if they were to pick up a $20 bill on the sidewalk. Now, I have no idea whether or not it is true, or what assumptions they made to get to this figure (I’m guessing that it was true, although now Gates has been giving away money much more quickly than he makes it). Regardless, I think that it could form the basis of a really cool thought experiment. What would you do if you had the option to pick $20 bills off of the ground all day long?

I’m guessing that most people would start by frantically picking up $20 bills, especially if they were uncertain about how long this opportunity would last. After a while, they would have to stop for food, water and sleep, but after taking care of these necessities they would be back at picking money off of the ground. A couple of days later, they may want to pay for a back massage, and they would start to catch up on sleep realizing that the endless supply of $20 bills would still be there in the morning.

The interesting thing, however, is that there would clearly be a point at which they would severely limit the amount of time they spend picking up money, or even at some point they might stop entirely for long periods of time. This illustrates nicely the concept of the diminishing marginal returns to income. No one wants to spend the rest of their life picking up money; its what we spend it on that we value. A rational person might, in fact, only pick up money for a day or two a year. A lot of happiness research has shown that people don’t seem to get any happier from increases in income beyond $75,000 a year; up until that point additional money helps to relieve financial stress and buy all of the necessities we need, but anything more doesn’t seem to do very much. If you assume that on average you would spend five seconds picking up each bill, you could make 75 grand in just over five hours!

It would be interesting to see what people would actually do in this kind of experiment, although I doubt anyone would have the budget to finance it. I would guess that most people wouldn’t stop at $75000 (especially if they have debt to pay off or other specific financial goals, such as buying a house or a car). Lets also assume that any inflationary effects are negligible. How long do you think it would take most people to stop?


Colonising New Planets, Peace and Trade

•September 21, 2010 • Leave a Comment

I have been reading quite a lot of science fiction recently, and one of the themes I have noticed is that science fiction authors by-and-large seem to believe that international rivalries (and wars) will be superseded by interplanetary rivalries in the future. In many cases, this leads to interplanetary wars, or an interplanetary empire that eventually disintegrates and devolves into opposing factions. My question, then, is under what conditions this would take place in a hypothetical future in which we colonize other planets.

The obvious place to start, then, is to look at what accounts for peace between some nations today, and why other nations engage in warfare. One of the most important stylized facts is that no two democratic countries with significant trade ties have ever had a meaningful war with each other. In game theoretic terms, they have reached a stable equilibrium as neither side wishes to risk losing the gains from trade for the uncertain spoils of war. This liberal view of international affairs is predicated on two important factors – physical and legal barriers to trade that are not insuperable, and the existence of comparative advantage in production. Trade will only take place if the transaction costs are lower than the relative difference of production costs, or if one product (such as a natural resource) is not available in another country. How well does this transfer to the interplanetary context?

Legal barriers to trade are more of a political issue, so I will set that aside for the moment. Physical barriers to trade are quite large, however. At present, one uses fantastic amounts of fuel to just be able to escape the Earth’s gravitational field, and long travel times in between planets would further increase costs and make storage more difficult. Technological advances could play a large role in decreasing these costs; for example, a space elevator would dramatically reduce the cost of transporting goods into orbit, and if faster-than-light travel is possible and practical then navigating interplanetary voids will be less of barrier. I would venture to guess that these two factors may have a large bearing on the peaceful survival of humans into the future.

The last factor is whether or not different planets would have a large enough comparative advantage in producing different goods to justify interplanetary trade. Between nations, comparative advantage is easier to achieve as physical boundaries limit natural resource endowments and cross-border trade has trivial costs. I wonder, however, if there will be large resource differences among habitable planets. Certainly, in the beginning of space colonization Earth would import natural resources to restore depleted stocks, and export technology and labor. However I am not sure if in the far future it will ever be economical to transfer anything other than luxury goods and people to and from different planets. Here’s to hoping that it will be, as one of the largest positive externalities to trade is peace.


The thesis of Guns, Germs and Steel in one graph

•September 14, 2010 • Leave a Comment

Via Gapminder, I’ve created a simple graph of distance north of the equator and (log) per-capita income of different countries. Now, Jared Diamond is quick to point out that he is not advocating a crude form of geographical determinism. Likewise, feedback loops and cultural/institutional factors (which I believe Diamond underestimates the importance of) make simple correlations like this hardly more than an inadequate starting point. However, graphing the relationship is a good place to start, and it gave me an excuse to play around with Gapminder.

Note: I put income on the vertical axis as it is Diamond’s contention that wealth is caused in some fashion by geographical locations. Clearly, the argument could not be made in the other direction.


Some big questions

•September 10, 2010 • Leave a Comment

After a long hiatus, Lindsay has convinced me to try and get back into the blog a little bit. I can’t promise that I will have the time to update it regularly, but hopefully I’ll be able to do a better job than I have been doing up until this point. Normally, this will involve random thoughts on various things I read or conversations I have had; this post is going to be a little different.

With my last quarter of college about to begin (a frightening thought), and the necessary self-reflection that that entails, I suppose it is excusable that I put forth some ‘big questions’ I have been thinking about. Before beginning, I should state that I don’t think I have a clear answer to any of them, nor do I believe that I have the ability to alter the discourse in such a way as to grapple with these questions. I also freely admit that they have been asked many times before by many people; I am merely trying to compile my thoughts in one place, and a blog seems like the perfect medium for that.

Without further ado, here are my ‘big questions’ for the 21st century and beyond, not necessarily in order of importance:

1) How can we create and maintain a civil society that accommodates religious, political, cultural, moral (etc. etc.) differences while simultaneously incorporating those elements that are the most anti-democratic and/or those who wish to impose their values onto others?

2) Is cultural homogeneity a necessary end-product of globalization? Is this a price worth paying to avoid cultural conflicts, or is the logic of group identification and persecution too deeply engrained in human psychology to ever prevent this from occurring? In other words, are relative differences sufficient for group conflict, even if absolute differences in cultures narrow significantly?

3) Apropos to the previous question, can we articulate the gains from positive-sum economic interactions such that it overcomes our evolutionary predisposition to think in terms of zero-sum games? Does this require us to view others as equal in value to ourselves, or merely to recognize the opportunity for mutually beneficial actions? If the former is necessary, then conflict can only be lessened if morality changes; if the latter, then economic and political structures may be enough to nudge us down a better path. Let us hope for the latter.

4) All of these questions take on increasing importance against the background of population growth, economic growth, global climate change and technological innovation. Are our institutions up to the task of adapting to these changes in such a way that we avoid the worst of the many potential problems?

5) What are the institutional preconditions for sustained and distributed economic growth, especially in developing countries? How can we make aid more effective in light of the the influence of the corrupt oligarchies that rule many of the worlds poorest nations? More generally, how will the role of accountability evolve in the presence of more ubiquitous and easily accessible information?

6) Finally, what will be the wild-cards of the 21st century (and beyond)? Are there current trends that will only become important in hindsight, or will a shockingly new discovery or unanticipated political event shake everything up? Will we establish colonies on other planets, contact alien cultures or embark on the Singularity? I know better than to make falsifiable predictions (its the best way to be shown wrong!), so I will take the easy way out and predict that we have no idea what is in store for us, which might not be all that bad of a thing.


Retention, Recruitment and Investment

•July 22, 2010 • 1 Comment

As a young, up-and-coming professional, I have learned that there are two types of networking events: events dominated by people my age and those by people older than me. At events where I am on the younger side of the crowd, older (as in anyone over 30) professionals often seem eager to share their pearls of wisdom and pass along a business card. It’s as if karma is telling them to give back for whatever career achievements they’ve happened upon; feeling lucky to be out of my position, they owe it to some higher power to offer me help wherever they can. People my age are less interested in hearing about my career objectives and more interested in finding someone who can land them a job in a year (unless this person is some single guy, because then he’s usually willing to chat for a bit and request a business card with contact information. Social reality: young professionals aren’t just looking for career opportunities).

Last night I found myself at an event that awkwardly landed in between. It attracted mostly fellow interns who cliqued together like middle school friends but was sprinkled with established professionals. Since I didn’t know anyone, I stayed away from guarded groups and gravitated toward outgoing individuals. However, these socially savvy attendees, while friendly enough, were really looking for business cards from those established professionals; I could see their eyes glaze over once I said that I’m an intern. But after finding a couple established professionals for myself, I realized I was probably not the type of person they wanted to talk to either.

You see, this event was hosted by a group called Fuel Milwaukee, a group for young professionals in the Milwaukee region. And I learned quickly that this group was excited to be working in the city. Events like this are meant to connect people who are living in the area, not for those eager to leave it. Thus, when people asked about my goals and I’d mention a career in the District or a one-way flight to Europe, it would create a little tension. Some people I talked to had lived in Milwaukee their entire lives, some relocated recently. But the underlying commonality was that everyone there was in Milwaukee for a job and building a social circle.

I’ve been accused of using this blog as a soapbox to project my desire to relocate to anywhere. While this accusation is likely warranted, don’t get me wrong: Milwaukee (especially downtown) is an exciting area with interesting people. For example, while at this event I met an MBA student who taught English in Ethiopia followed by a stint of freelance writing in the Middle East. He represents, in my opinion, the exact type of talent that the city should want to attract.

In light of this, I offer a marketing suggestion for Milwaukee: instead of focusing too much on retaining talent already here, increase focus on recruiting talent from elsewhere. I have found among my peers that my desire to leave home is not uncommon. So, don’t fight that tendency. Let students like me from Milwaukee move to wherever (should they want to), and convince people from wherever else that they should want to relocate to Milwaukee. In order to do this, Milwaukee and Wisconsin at-large need to make sure we are investing in the most supportive business climate possible –for Bucyrus, for Harley Davidson, for anyone really. Attracting businesses means creating jobs, which means attracting professionals from all over. And ultimately, with a thriving economy and enticing culture, students like me could be driven right back to Milwaukee or even persuaded to stay in the first place.

- lb

Know Sharron Angle? It doesn’t really matter.

•June 19, 2010 • Leave a Comment

Today my parents received in the mail a piece of campaign literature from the Republican Party of Nevada (never mind for a moment that we’re from Wisconsin). On the front of the envelope in big, bold, red, italicized letters it reads: “Help defeat the highly vulnerable U.S. Senate Majority Leader Harry Reid”. Normally campaign literature like this goes from my parent’s hands and into the trash bin. However, I make a hobby out of intercepting such literature, you know, for fun.

What strikes me as most interesting about this particular lit drop is that it is 100% defensive. It does not once mention Reid’s challenger, Sharron Angle. Angle, supported by the fearsome Tea Party, has been criticized as out of touch with most Nevada voters. The Tea Party movement, in general, has received similar criticism as being extreme. And it would seem from this letter that the Republican Party of Nevada has decided to ignore her, at least as much as they can in campaign materials.

Instead the Party focuses on the perceived national interest in defeating the Senate Majority Leader, explaining why this letter made it to us in Wisconsin. Note the first sentence of the letter: “I urge you to join leading conservative Republicans from coast-to-coast in a national effort to defeat the highly vulnerable Senate Majority Leader Harry Reid in the fall.” Our friend Robert List (whom this letter is from) instead wants to appeal to Republicans nationally who do not particularly agree with Senator Reid. His audience extends beyond state lines.

We could just write this off as a far-flung (note: not far-fetched) fundraising strategy. Reid is among the foremost visible Democratic officeholders nationally. Even if you couldn’t name a single other Democrat in the Senate, you probably recognize the name Harry Reid. And the letter also emphasizes how Nevada is a pretty small state, so even your small donation could make a difference (the letter actually uses the phrase “wildly disproportionate impact”).

However, I speculate this is also an example of the tension Tea Party candidates create for ‘established’ Republicans. Many Republicans fear that an extremist Tea Party candidate, like Sharron Angle, (extremist because she is Tea Party affiliated, of course) will scare away the average Nevada voter. Instead it is safer for the Republican Party of Nevada, and across the U.S., to shift attention to defeating the Democrats rather than advocating a win for Republicans. I just wonder how this sort of rhetorical strategy might be different if there were less rivalry within the GOP itself.


#worldcup played on a flat globe

•June 12, 2010 • Leave a Comment

Some of my favorite tweets from the World Cup. What would the world be without globalization? Loaded question much.

nickschifrin Watching #worldcup in Kabul #Afghanistan at a French restaurant, which means I have to watch the match in French. hm.

horwichwarrior Dear FIFA, don’t ever allow a developing country to host the #WorldCup again. Those fucking trumpets are taking the beauty out of the game.

stilez Why does the England team have an Italian coach?? Just sayin. #WorldCup

chupeflash Ya que entre los mexicanos el “gringo” Torres y Hercules Gomez. Ellos nos representan ja.

irish_eagle Greek presence at #WorldCup seems more unjust than French. #Irelandshouldbethere

eduardopalacios Los gringos serán lo que sea, pero le están sacando un empate a los que inventaron el football #worldcup

markgonzalesIS: Any child whose labor has ever made futbol/soccer gear should get a free flight//board/entry ticket to #WorldCup .

BrunoHoffmann Na pior das hipóteses, que nenhum colonizador da Africa vença essa Copa! #goafrica #worldcup

KiDazed Why is it that we can successfully organise a global footy match, but can’t pull off a climate change deal? #worldcup #eng ‘> #usa

MaisieTaylor_Deffo feel sorry for the men out in Afghanistan who have to watch the football with some Americans out there in the army aswell.. awkward.

chiefchimpanzee If the USA lose, technically Google, Microsoft, Yahoo, FB & Twitter could delete all online history of this match #worldcup

703AstrosFan If US wins #WorldCup game today, it’s burgers for dinner. If England, fish n chips. If a draw, French.

AndyMesa Just like the election, there wasn’t a winner. #ENG should form a coalition with #ALG to keep the #USA ‘> out#worldcup

gpollowitz #USA ‘> votes “present” in game one of the#worldcup

garethcopley Barack 1 – 1 British Petroleum #worldcup #eng ‘> #usa

Did I mention that How Soccer Explains the World is on my reading list?



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