Emily Silberstein’s is Head of Asia at Entrepreneurial Finance Lab, which helps lenders use psychological tests to gauge credit risk. In the article linked above, she reports these non-obvious results about characteristics that are predictive of loan repayment:
Honest people are more likely to pay loans, but not if they are super-honest. Emily speculates that super-honest people may be slow to detect the dishonesty of others they deal with.
Optimism is positively correlated with loan repayment for young people, but negatively correlated with loan repayment for older people.
People who feel they have control over their own lives are more likely to repay loans. People who feel that outside forces control their lives are less likely to repay loans. However, cultural difference in the way people answer the questions used to assess this should be taken into account.
What Kimball’s proposal does do, however, is address the normative demands made by egalitarians for higher taxes on the affluent (the notion of paying your fair share) while not directly addressing this structural dynamic. This is arguably a feature of Kimball’s proposal and not a bug, as it undermines the most potent case for higher taxes (the rich should bear more of the burden of making the investments we need to help vulnerable people flourish) without effectively rewarding public sector inefficiency.
Unfortunately, as Kimball would surely acknowledge, this proposal is wildly unrealistic, in no small part because it would drive a shift in resources from the public sector to civil society organizations that will embrace a wide variety of business models, not all of which will be incumbent-friendly. And over time, one assumes that incumbents will work to stymie empowering innovations in this space that prove threatening. That doesn’t change the fact that Kimball’s proposal is extremely interesting.
In this moment, as in all the moments I have, may the image of the God or Gods Who May Be burn brightly in my heart.
Let faith give me a felt assurance that what must be done to bring the Day of Awakening and the Day of Fulfilment closer can be done in a spirit of joy and contentment.
Let the gathering powers of heaven be at my left hand and my right. Let there be many heroes and saints to blaze the trail in front of me. Let the younger generations who will follow discern the truth and wield it to strengthen good and weaken evil. Let the grandeur of the Universe above inspire noble thoughts that lead to noble plans and noble deeds. Let the Earth beneath be a remembrance of the wisdom of our ancestors and of others who have died before us. And may the light within be an ocean of conscious and unconscious being to sustain me and those who are with me through all the trials we must go through.
In this moment, I am. And I am grateful that I am. May others be, now and for all time.
As you can see from the link above, for most people, it might not be that big a deal if paper currency were demoted, as I advocate in my column “How Subordinating Paper Money to Electronic Money Can End Recessions and End Inflation.” For those who actually use paper currency a lot, the system I advocate would help them financially because it would lead to lower inflation, and therefore a lower implicit tax on paper currency. And of course, other than those who use it for illegal purposes, those who use paper currency for a large share of their transactions are more likely to be borrowers than lenders, so they would benefit in the short run from the low interest rates possible when the safest interest rates are negative. And in the long run, they would benefit along with everyone else from a more stable economy.
Question: I can’t resolve a question I have about breaking the ZLB with electronic money, and it’s driving me nuts.
I re-read a couple of your posts that mention a kind of ‘first-mover’ advantage in breaking the zero lower bound: not only does a first-mover get the usual stimulus from lowering the interest rate, but the fact that it is the only country in the world that can offer such a low interest rate is likely to boost demand further.
I’m struggling with the effect on the supply of loanable funds within the first-moving country. Essentially, as the central bank lowers the interest rate, and economy-wide interest rates fall, won’t some investors begin to look abroad for better risk-reward alternatives? I know that it’s not costless or riskless to transfer to a different currency, but it seems that the central bank’s effectiveness in unilaterally changing interest rates would be hampered by the existence of outside options: either some interest rates will remain high or some agents will begin to ‘cash out,’ if you’ll pardon the pun, and move their money abroad.
I hope it’s clear what I’m trying to ask. Would you help me figure out what I’m missing?
Basically, when people start investing abroad because rates of return are higher abroad, that is a capital outflow, and that is why exports go up. Capital outflows put domestic currency in the hands of those abroad. They don’t really want it, so exchange rates adjust until that currency (whether physical or virtual) makes its way back to its home country to buy exports. “Moving money abroad” is a stimulus to exports, because goods follow money.
The only way an outside option would cause trouble is if firms starting setting prices and wages in a foreign currency. It is crucial that sticky prices and/or wages (or at least most of them) be set in terms of the electronic dollar (or whatever the domestic electronic currency unit is called).
In my electronic money seminar, I make the point that, when they occur, negative interest rates on paper currency are not meant to disadvantage paper currency. What those negative interest rates on paper currency do is make it so there is nowhere to hide from the negative interest rates except by spending the money. You can send your own funds abroad, but then the person who took your dollars in exchange for their own currency now can’t hide from the negative interest rates except by spending the dollars. In that situation, by sending dollars abroad, you haven’t eliminated the hot potato of dollars earning a negative interest rate from the world, you have only made it someone else’s problem. The only escape from those negative interest rates is to spend the money, so someone—you or someone further down the chain—will be driven to spend it.
Follow-up Question: Ok. In other words, this kind of behavior (bailing on the domestic currency) will just lead the exchange rate to adjust until some form of interest rate parity is achieved again. Is that the right?
Answer: No. There might continue to be an interest rate difference. But the international flow of funds to the higher interest rate stimulates exports through its effect on the exchange rate.
Here is the key passage, but the whole thing is eminently worth reading:
What actually happened in the 80s, however, was that central banks — most famously the Fed, but also the Thatcherite Bank of England and others — drastically tightened monetary policy to bring inflation down. And inflation did indeed come down — eventually. But along the way there were deep recessions and soaring unemployment, which went on much longer than you could justify with any plausible story about the monetary shock being unanticipated.
This was very much a vindication of more or less Keynesian views about the economy, and the 80s were in fact marked by the New Keynesian comeback.
Models in which human beings are always maximizing their utility perfectly are the simplest kinds of models. But it is hard to maintain that children are always maximizing their own utility perfectly. In a discrete-time model, it is easy to have an initial period in which someone is not nonrational, followed by later periods of full rationality. But In continuous time, there are likely to be an in-between period in which some types of decisions are close to full rationality, while other decisions are far from fully rational in advancing self-interest. (For example, this post on the Edutopia blog talks about the “hyperrational adolescent brain,” but is about anything but.)
I am the last person to undervalue the self-regarding virtues; they are only second in importance, if even second, to the social. It is equally the business of education to cultivate both. But even education works by conviction and persuasion as well as by compulsion, and it is by the former only that, when the period of education is past, the self-regarding virtues should be inculcated. Human beings owe to each other help to distinguish the better from the worse, and encouragement to choose the former and avoid the latter. They should be for ever stimulating each other to increased exercise of their higher faculties, and increased direction of their feelings and aims towards wise instead of foolish, elevating instead of degrading, objects and contemplations. But neither one person, nor any number of persons, is warranted in saying to another human creature of ripe years, that he shall not do with his life for his own benefit what he chooses to do with it.
Notice that in American custom, we tend to add to the kind of deference John is recommending for another adult’s decisions in regard to that adult’s own life, a deference for a parent’s decisions in regard to that parent’s own children. But the logic is unavoidably weaker for deference to parent’s decisions about their own children than it is for an adult’s decisions regarding his or her own life.
One interesting area where our culture is shifting in regard to parent’s decisions about their own children is in our attitudes towards spanking. When I was a child, we children took the possibility of spanking (including many elaborated threats of spanking) and sometimes the reality of being spanked for granted. Not long into my experience as a father myself, I realized that social tolerance of spanking was waning. And nowadays, parents who spank their children often have a niggling, if perhaps exaggerated, fear that child-welfare arms of the government (“Social Services”) will punish them.
“Money is the most powerful secular force in the world. … Money is linked to everything—safety, health, relationships, creativity and spontaneity, social belonging. It’s the one thing that intersects everything, and as soon as I’m talking about money, all the family dynamics come out.”—Brad Klontz, author of Mind Over Money, as quoted in Clutchby Paul Sullivan, p. 196.
Mirzakhani likes to describe herself as slow. Unlike some mathematicians who solve problems with quicksilver brilliance, she gravitates toward deep problems that she can chew on for years. ‘Months or years later, you see very different aspects’ of a problem, she said. There are problems she has been thinking about for more than a decade. ‘And still there’s not much I can do about them,’ she said.
Mirzakhani doesn’t feel intimidated by mathematicians who knock down one problem after another. ‘I don’t get easily disappointed,’ she said. ‘I’m quite confident, in some sense.
Her slow and steady approach also applies to other areas of her life.”
In the companion post below, I have collected a few memories, ideas and suggestions that had to be cut out of the Quartz column to make the column flow well. I added some headings to make it clear where each bit fits in:
I spent at least as much time on math when I wasn’t supposed to be doing math as when I was: The teacher might have been talking about social studies, but I was finding the prime factorizations of all the numbers from 1 to 400 by writing “2 ×” for every other number “3 ×” for every third number, “5 ×” for every fifth number, etc.—and then repeating that process for every other even number, every third multiple of 3, every fifth multiple of 5, and so on). The prime factorizations I learned from that satisfyingly tedious task I distracted myself with in elementary school came in handy when I took my SAT’s. And to this day, the way I get a hotel room number firmly into my memory is by doing its prime factorization.
Nothing seemed like a failure: At one point I knew just enough algebra to know that doing the same thing to both side of an equation left it a true equation. So for a long time, I transformed equations endlessly with no idea at all of where I was trying to go with those equations. Later on, when I actually had a purpose in mind for what I wanted to accomplish with a bit of algebra, I was able to draw on all of that experience just wandering around in algebra-land. And because I knew what it was like to do math without having any particular objective, I was able to appreciate how important it was keep the objective clearly in mind when there was an objective.
Proofs on other topics to get kids ready for proofs in Geometry class: Many kids who do well with arithmetic and algebra have trouble with geometry class in middle school or high school. It is often very hard to understand the idea of a proof when can’t see any reason to doubt the proposition to be proved in the first place. It is much better to get kids used to the idea of a proof earlier on in a context where the proof tells them something that doesn’t seem obvious. My favorite is the proof that there are an infinite number of primes. (There is a whole page of Youtube videos to choose from on this.) And a lot of kids wonder if imaginary numbers are numbers at all. The proof that complex numbers with an imaginary components obey all the rules of arithmetic and algebra and therefore can be treated as legitimate numbers not only answers a question kids really have, but uses concepts from “The New Math” that confused many kids in the 1960’s in a way that is obviously useful.
Note: if you want to advertise your tool or method for math instruction here, I encourage you to advertise it in a comment that you post in the comment box below. When I moderate the comments, I will approve comments that advertise tools or methods for math instruction like that unless I have reason to believe there is something wrong with that tool or method.
Here is the abstract I wrote a few weeks in advance for the sermon, followed by the sermon itself:
Abstract: The mystery of consciousness is central to religion. Many religions even claim that consciousness is supernatural. A major job-to-be-done for religion is improving our conscious experience. In particular, much of what seems transcendent to us is in conscious experience, and encouraging certain types of subjective spiritual experiences is a central part of many religions.
Although we care deeply about our own conscious experience, it is not the only thing we care about. Most of us also care about the conscious experience of others, and some of us care about the state of external reality even apart from any difference in conscious experience.
I once read a book by the philosopher Colin McGinn called The Mysterious Flame: Conscious Minds in a Material World. True to the title’s claim that consciousness is a mystery, I felt no wiser about the nature of consciousness when I got to the end of the book than when I started. But I like the image of consciousness as a flame. The symbol of Unitarian Universalism is a flaming chalice; it is easy to see that flaming chalice as in part a symbol of the flame of consciousness.
Conciousness makes possible our perception of beauty, goodness and truth. Beauty, goodness and truth make up the trio of ideas Renaissance Humanists identified as central to the Plato’s philosophy. In his distillation “I think, therefore I am,” René Descartes emphasized the quest for truth as a demonstration of consciousness, but the appreciation of beauty and the judgment of goodness are equally hallmarks of consciousness.
Evolutionary biologist Richard Dawkins begins his book Unweaving the Rainbow with these beautiful words about death and life and the consciousness we are granted by life:
We are going to die, and that makes us the lucky ones. Most people are never going to die because they are never going to be born. The potential people who could have been here in my place but who will in fact never see the light of day outnumber the sand grains of Arabia. Certainly those unborn ghosts include greater poets than Keats, scientists greater than Newton. We know this because the set of possible people allowed by our DNA so massively outnumbers the set of actual people. In the teeth of these stupefying odds it is you and I, in our ordinariness, that are here. We privileged few, who won the lottery of birth against all odds, how dare we whine at our inevitable return to that prior state from which the vast majority have never stirred?
But it is a broader theme of his book Unweaving the Rainbowthat I want to talk about: beautiful and wonderful things are just as beautiful and wonderful even when we understand them. We do get a thrill from secrets and suspense, since it gives us the hope that something might be even more awe-inspiringly beautiful, wonderful or interesting than it really is, but apart from that illusion, there is no reason for understanding to destroy beauty. A rose is still a rose, even if you know that the softness of a rose petal comes from its papilla cells. And a rose with any degree of understanding of its biochemistry would smell as sweet. I want to see if I can’t demystify consciousness a bit, but then point to the preeminent value of improving both our own conscious experience and the conscious experience of others.
Some people are horrified by the idea that according to a standard nonsupernaturalist worldview, you and I are very sophisticated robots. But on the principle that a rose is still a rose, even if you understand the science of roses, if we are robots, then robots are not necessarily robotic. Our notion of “robotic” comes from our experience with relatively simple robots, not our experience with very sophisticated robots such as you and me.
Among the things that make human beings amazing is our consciousness. That consciousness is often pointed to as evidence of the supernatural. The argument is the challenge “How could such a wondrous thing arise from nonsupernatural, mechanical causes?” In the one computer programming class I took in college, back in 1981, one of the assignments was to write code for Conway’s Game of Life. Conway’s Game of Life is a cellular automaton based on extremely simple, mechanical rules, but it can do many things lifelike enough to justify the name of the game.
Here is how simple the rules are: on a chessboard with many, many squares, “live” squares are in black and dead cells are in white. At each tick of the game’s clock (the Game of Life’s third dimension), the following transitions happen (see the Wikipedia article on Conway’s Game of Life):
Any live cell with fewer than two live neighbours dies, as if caused by under-population.
Any live cell with two or three live neighbours lives on to the next generation.
Any live cell with more than three live neighbours dies, as if by overcrowding.
Any dead cell with exactly three live neighbours becomes a live cell, as if by reproduction.
I first got an inkling of the philosophical importance of Conway’s Game of Life when I read Daniel Dennett’s book Darwin’s Dangerous Idea, which, more than any other book, tugged me toward being a non supernaturalist. In his earlier book Elbow Room: The Varieties of Free Will WorthWanting, Daniel Dennett talks about something being inevitable or unavoidable as the opposite of free will. He argues that any creature that can avoid something therefore has at least the most rudimentary imaginable form of free will. Animals avoid many things, and so have a bit of capability for voluntary action. But there are also creatures in Conway’s Game of Life that can avoid some of the moving objects coming at them. So by that standard those patterns of black and white squares also have a bit—though a much smaller bit—of capability for voluntary action.
To my human eye, so eager to interpret things in terms of intentions, even a simple blinker seems full of intention. And if Game of Life blinkers, toads, beacons, pulsars, spaceships, gliders and glider guns enchant, intrigue and amaze me, how much more enchanting, intriguing and amazing are human beings.
Not everyone is a fan of Daniel Dennett’s argument that the existence of avoiders in Conway’s Game of Life means that determinism does not imply inevitability. Aaron Swartz says it all rests on a pun between unavoidable and inevitable, which really have two very different meanings. But that depends on what kind of inevitability you care about. The idea that things are in some sense inevitable at the fundamental particle level (which is consistent with at least some interpretations of quantum mechanics) is interesting, but otherwise makes no difference in my life. To me the key fact is that at the human scale bad things can be avoided and good things can be pursued. And if even an avoider in Conway’s Game of Life can avoid things, then maybe we as individuals and as a species can avoid possible catastrophes that might overtake us if we didn’t take care. Acting as if the hand of fate makes it impossible for us to steer our path toward better things is just a way of substituting a stupid deterministic process for a smart deterministic process of trying to predict the consequences of our actions and modifying them accordingly. We are fortunate that for the most part, deterministic processes have favored our being smart in seeing that we have what Daniel Dennet calls a “variety of free will worth wanting,” that we need to exercise carefully.
Let’s now turn to consciousness proper. Consciousness does seem magical. So I have felt some temptation to think that while a sophisticated robot can act as if it is conscious, it can’t really be conscious. “I feel, therefore I am really conscious.” So suppose there was a robot that was an exact copy of me in terms of its quarks, electrons, Higgs bosons, etc. that could only pretend to be conscious, while only I would actually be conscious, since only I would have a supernatural spirit attached to me. Either the supernatural spirit has an effect on the quarks, electrons, Higgs bosons etc. in my body or not. If it does have an effect on those quarks, electrons, Higgs bosons etc., then that effect of that supernatural spirit on fundamental particles should be detectable by the extremely sensitive instruments used by physicists. (Of course, if there is a supernatural realm that is intentionally trying to hide itself, then all bets are off.)
What about the possibility that the supernatural spirit attached to me has no effect on the quarks, electrons, Higgs bosons, etc. of my body, but is what really feels the experiences that my body is going through? The trouble is that, however hard it is for us, and however much we might claim that things are inexpressible, we actually talk about our conscious experiences, and seem to understand to at least some extent what we are saying to each other in that regard. What that means is that if there are supernatural spirits that feel, but have no effect on our bodies, that extra bit of consciousness is not the consciousness we are talking about. We speak and write and talk in sign language with our bodies. So a supernatural consciousness would have to be able to affect the quarks, electrons, Higgs bosons etc. of our bodies in order for us to be talking about it.
The implication that a supernatural spirit would have to have some effect on the quarks, electrons, Higgs bosons, etc. of our bodies is even stronger if the supernatural spirit was supposed to be the source of free will. The Mormonism I was raised in was and is quite anti-alcohol. For a supernatural free decision of my spirit to make the difference between me walking into a bar or resisting the temptation and walking past it, that supernatural spirit has to be able to either directly or indirectly affect some of the particles known to physicists enough cause a neurochemical/neuroelectrical cascade to go one way as opposed to another. Even if that were by a subtle change in quantum-mechanical probabilities, the kind of diligent efforts that convinced the world of the existence of the Higgs boson could detect an effect big enough to do that.
Does that mean there is no such thing as spirit? Not at all. Daniel Dennett points out that there are two very different categories of things: matter/energy and information. Information can be embedded in matter/energy in many, many different ways. For example, the genetic code can be embedded in DNA, RNA, or in the bits and bytes of computer code that store the results of the Human Genome project and its sister projects to sequence the genomes of Neanderthals, Chimpanzees, Horses, Cows, Honeybees, and Grapes. So, body and spirit can be interpreted as matter/energy and information. And surely, the information embedded in human beings is what makes us precious. The unorganized elements alone of which we are composed is little more than a handful of dust. In that sense, by value, human beings are spirit, even with a totally non supernatural view of things.
It is clear that consciousness operates on the spiritual, information side of the ledger. It may be embedded and written in matter, but it is its own thing.The same can be said for free will. It may be embedded in matter and energy and operate according to the laws of physics, but 99.99% of what makes free will of special value is all on the spiritual, information side of things.
Humans as Spiritual Beings
The fact that we humans are spiritual beings who care deeply about the informational side of things is one of the most important things about us.
Think of Maslow’s hierarchy of human needs. I am drawing my account from the Wikipedia article on Maslow’s hierarchy of needs. Maslows idea was that there are some very basic needs that usually need to be satisfied before we start focusing on other needs, that Maslow represented as being at a higher level. At the bottom of the pyramid are physiological needs, such as breathing, food, water, sex, sleep, homeostasis and excretion. At the next level up are safety needs, such as security of body, security of employment, security of resources, security of the family, security of health and security of property. At the third level up the pyramid are love and belonging needs, such as friendship, family, and sexual intimacy. Above that are esteem needs, such as self-esteem, confidence, achievement, and respect of and by others. Finally, at the top of the pyramid are self-actualization needs such as morality, creativity, spontaneity, problem solving, and facing the truth, even when the truth is hard to bear or goes against one of our prejudices.
Notice that, in general, as you go up Maslow’s hierarchy, things move markedly toward the spiritual, informational side of things. Love and belonging needs, esteem needs and self-actualization needs all seem equally spiritual to me in this sense, but those all seem more spiritual than safety needs, which in turn are obviously more spiritual than immediate physiological needs, since judgments of safety require trickier thinking about the future than immediate physiological needs do.
Touched by commerce, but in very much the same vein, there has been a trend toward more and more of an informational content to Gross Domestic Product—GDP—in the process of rich countries getting richer. We can define what is informational by whether something can be sent as an electronic file, or in the olden days, as the contents of a document. By that standard, I am not counting agriculture as an informational component of GDP—at least not in those days when agricultural products used to make up the bulk of GDP. After the period when agriculture dominated GDP, came the rise of manufacturing. Then came the rise of services. And now we see the rise of information goods proper: software, digital music, digitized videos, computer games, Kindle books, mobile apps and communications, the cloud, including the blogosphere and online social networks, and things we are barely beginning to get an inkling of. But so far, the way we compute GDP does a bad job at counting up the true value of information goods. For example, so far, the value to you of anything you can read or see free online when surfing the web isn’t counted in GDP at all, though the value to advertisers of influencing you with online ads is counted according to their willingness to pay for advertising. And the way economists now calculate GDP is even worse at measuring the transformations of human existence that I think are coming next.
Looking forward to the future of cultures fortunate enough to collectively provide more and more opportunities and choices for people—which in economics is the deeper meaning of “getting richer”—I see people wanting in turn food, clothing, shelter and physical security, and of course basic family relationships, then refrigerators, cars, washing machines, indoor plumbing and then the books, movies, radio shows, TV shows etc., that become progressively digitized. Now, I think the big thing people want next, if they have all of those things with some level of security, is an interesting, challenging, rewarding job, with good coworkers. But after that, I think people will turn in earnest toward improving the quality of their own consciousness and the consciousness of others they care about more directly.
It is easier to be happy if you understand how happiness works. And social scientist are beginning to understand better the things that go into happiness: things like good news, sleep, exercise, time with friends, meditation and antidepressants.
Antidepressants are an easy way to get happier, and many people quite appropriately take advantage of them. In the surprisingly distinct spiritual realm of pain and pain reduction, I have been very glad for ibuprofen in the 13 days since my dentist replaced a crown, with all of the disturbance the roots of my tooth that entailed.
Meditation is a path to raising happiness and otherwise improving the quality of one’s consciousness that I think people will turn to more and more in the future as the other things on their wish list besides quality of consciousness get checked off as attained. In my own household, we do a little bit of Transcendental Meditation and a fair bit of Mindfulness Meditation, as well as meditations based on words.
But meditation is part of a larger class of spiritual exercises that have powerful effects on consciousness. With the Dalai Lama’s encouragement, Tibetan monks have been scanned by functional magnetic resonance imaging machines while meditating. Just google "Tibetan monks MRI" to learn about the fascinating results. I would love to see the result from Mormons praying sincerely in MRI machines as well. And I think most religions have some spiritual practice that powerfully affects consciousness. My bet is that, by and large, each changes consciousness in a different way, that would show up differently on the brain scans. I don’t think all religious experience is one experience. It is many, many different experiences.
Internal spiritual experience is a more important strength to religions than many sociologists of religion give it credit for. People value religious community a lot. But it is not uncommon for people to demonstrate by their actions that they value internal spiritual experience—both for themselves and others—even more.
A key moment in my transition away from Supernaturalism was when a friend who was also a Mormon pointed out that subjective spiritual experiences—even subjective spiritual experiences that fulfilled in a striking way a prediction by Mormon scripture—didn’t necessarily mean that there was a supernatural God out there in the universe. What it did mean was that there were remarkable and powerful spiritual experiences here on earth. I am glad I had those spiritual experiences as a Mormon, even though I no longer believe they were supernatural. Not only for the sake of curiosity, but also because the feelings themselves seem valuable, I have an ongoing, though slow-going, project of trying to investigate how close I can get to those spiritual states without having to believe things that I now don’t believe.
My friend Andrew Oswald, who like me does a lot of research on the Economics of Happiness, believes that essentially everything we value can be thought of as some kind of internal mental state. I wouldn’t go quite that far. Most of us at least care quite a bit about the internal mental states of those we love, as well. Many of us care about the internal mental states of animals. And some of us care about things being a certain way in the external world even if no human being could ever know for sure that it was so—and don’t want to be deceived about whether it is so. Nevertheless, internal mental states are a very big part of what we value. And that is as it should be for spiritual beings like us.
People often say “Don’t be so materialistic.” But as I see it, that isn’t the big issue. It isn’t “You shouldn’t be so materialistic,” it’s “Don’t make the mistake of thinking you are more materialistic than you really are.” One of the great values of a religious community is having someone to remind us that we are spiritual beings, whether we like it or not, and even if our spirits could not exist without being etched into patterns of quarks, electrons, Higgs bosons and the other particles and forces we are in the process of discovering, governed by equations that will someday be in every truly advanced physics textbook.
The idea for this column emerged during my trip to Rome, when I talked to Luigi Guiso about the economic and political situation in Italy. I wanted to thank him for all of his insights. Don’t construe that as his endorsement of my proposal, though!
Since soon after I started blogging, I have used Twitter extensively, and have put tweets from Twitter discussions together into “stories” using Storify. I have been surprised at how many views some of these stories have gotten. (A couple of my stories are popular enough that they could have made it into my list of most popular posts.) So I decided to systematically see which ones have been most popular (starting by leaving aside anything with less than 200 views). Here is the result. I cover a lot of topics in Tweets that I don’t have time to write full-scale blog posts on, so I think you will find something of interest in this list of my top 37 Storify stories. And many of my favorite stories didn’t manage to get 200 views yet in order to make this list. You can find all of my stories here.
Here is the list of my most popular sets of storified tweets with links, and the number of views as of August 5, 2014 next to each link:
I liked most of the points you addressed in this article, however, I feel you missed one very important and crucial point. There are a good number of people who also have dyscalculia. This disorder is often times undiagnosed, and while some estimate that 5% of our population has this disorder, I would venture a guess that this in some form could likely affect as many as 20% of our population. Many of the symptoms seem fairly common to people I have helped with math over the years and my wife didn’t even know she had it until I gave her an assessment after she was complaining about how she always switched numbers around. This assessment went over 30 questions that are common symptoms of dyscalculia, and she answered 27 of them with yes.
I myself always excelled in math. This wasn’t due to parental drilling, flash cards, or anything of the sort. This was purely genetic, and this also seems to be the case with my stepson, though I’ve been teaching him more advanced techniques for his age as well as basic physics (he is 8).
I think somewhere along the way, teachers forgot how to teach math and left it to the text books and the curriculum to teach for them while they assist the book in the learning process. I’m sure this is most certainly due to laziness, but most human beings are lazy and just want to get home at the end of their work day. I know I struggled with some of my teachers in my youth, because countless times I’d approached them with easier ways of solving problems from basic math in elementary school all the way through college. I just don’t understand why some teachers are so focused on only teaching one solution to a problem.
You see the problem with dyscalculia, is that it is not impossible to teach math to people who suffer from this disorder. You just have to be creative, even if that means providing creative and abstract solutions at times. I have taught my wife quite a bit simply by using unorthodox approaches to math.
With all of that being said, in a base 10 number system, I feel that it is important that children understand a few basic concepts:
If A + B = C, then C – A = B, and C – B = A. I am not suggesting teaching 5 year olds the concept of substituting numbers with variables, but rather that they understand this concept as much as they will later be expected to memorize their multiplication tables. One exercise, I’ve worked on with my stepson is repetition. We don’t play with flash cards or have any visual representation, because I feel that defeats the purpose of memorization.
So, instead I would go with the range of numbers 0-9, and have him add and subtract different numbers within that range to see the relationships between those addends, sums, subtrahends, and difference. One way I went about this is as follows:
1+1, 1+2, 1+3……2+1, 2+2, 2+3…..3+1,3+2,3+3, and so on until each starting addend was added to zero through nine (despite starting with one in this example).
After I was sure he was comfortable with this, I would then have him add 1+2 for example and then 3-2, and 3-1. I would continue to have him solve addends, and then solve the difference from the sum when one of those addends was converted to a subtrahend, and then solve for the second one.
You see, I don’t believe in waiting for children to memorize addition and subtraction on their own. They should be able to look at any two numbers and solve either the sum or difference just as easily as they breathe.
The same can be said for multiplication when they are ready. They should not only write their multiplication tables out ten to twenty times a day until they have them committed to memory, but much like in my above example, they should understand the following:
If A * B = C, then C / A = B, and C / B = A.
This is the way to teach children math. I also firmly believe that until a child has memorized their multiplication tables at least through ten as well as committed addition and subtraction to memory, that they should not be allowed to even learn how to use a calculator. Genetic dispositions, as well as disorders, can be toppled by the human brain’s efficiency at memorization through repetition. If we are to believe that the day may come when no one will utter the words “I’m just not good at math.”, we also need to believe that there is a better way of instilling confidence in those young minds. Without the fundamentals of understanding the basic building blocks as I’ve described here, it’s really no wonder why so many children bomb in basic math much less algebra, geometry, trigonometry, and calculus. If Einstein could find a way to overcome dyscalculia, anyone can.
As soon as any part of a person’s conduct affects prejudicially the interests of others, society has jurisdiction over it, and the question whether the general welfare will or will not be promoted by interfering with it, becomes open to discussion. But there is no room for entertaining any such question when a person’s conduct affects the interests of no persons besides himself, or needs not affect them unless they like (all the persons concerned being of full age, and the ordinary amount of understanding). In all such cases there should be perfect freedom, legal and social, to do the action and stand the consequences. It would be a great misunderstanding of this doctrine to suppose that it is one of selfish indifference, which pretends that human beings have no business with each other’s conduct in life, and that they should not concern themselves about the well-doing or well-being of one another, unless their own interest is involved. Instead of any diminution, there is need of a great increase of disinterested exertion to promote the good of others. But disinterested benevolence can find other instruments to persuade people to their good, than whips and scourges, either of the literal or the metaphorical sort.
One big reason to limit efforts to change what seems like someone else’s self-destructive behavior to advice and preaching rather than punishing or stigmatizing is that one might be wrong. But another reason is that punishing and stigmatizing cause direct harm. For example, the many people in prison for drug use have lives that were already blighted by drugs now blighted by prison as well. Finally, punishing and stigmatizing may often be ineffective because the elements of a riven psyche one wants to encourage may have trouble seeing a punisher or stigmatizer as friendly.
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Concern about income inequality, and the even more striking inequality in wealth in the United States, is a key theme for the 2014 US congressional elections and has made Thomas Piketty’s book Capital in the Twenty-First Centurya surprise bestseller. There are many reasons to be concerned about wealth inequality itself, regardless of the source of that inequality, but it is hard to pursue a discussion on the topic for long before someone makes a claim about whether the wealthy acquired their money in a deserving way. Partisans on the political left and right know which side of this argument they are supposed to emphasize: many who feel the government needs more revenue conveniently argue as if almost all wealth comes from underhanded, unscrupulous skullduggery, while many who feel the government needs less revenue conveniently argue as if almost all wealth were created by the likes of Steve Jobs, who brought us i-everything. But unlike these partisan stories, in every list of 1,500 or so billionaires, many deserve their wealth while others deserve very little of the wealth they have. While in some cases the principles for whether wealth is deserved or not are obvious, in other cases they are quite subtle.
To start with an easy category, wealth obtained by deceit is illegitimate. For example, given the way tobacco companies lied about the dangers of smoking,the gigantic legal judgments against them seem appropriate (though it is too bad how big a share of that money went into the pockets of lawyers). And although the magnitude of the crime might not be as great, GM’s recently outed behavior inhiding problems with ignition switches has a disturbing resonance with the earlier behavior of the tobacco companies. As these examples make clear, standard legal principles often make it possible to take away wealth obtained by deceit once that deceit is well established. But a greater hatred of deceit on the part of juries, judges, and legislators would help in further neutralizing this form of wealth.
If undeserved wealth always arose in cases where the logic was as simple as that for deceit, and were similarly reprehensible from a criminal or civil law point of view, then the issue of undeserved wealth could be appropriately handled in the courts.In an IMF paper, Harvard Economics professor Michael Kremer and Northwestern University Economics professor Seema Jayachandran make the intriguing proposal that debt incurred by a non-democratic government (after the appropriate international organization has declared that the debt is not in the interests of the people of a country) should be considered “odious debt” that later (and hopefully better) governments of that country need not pay back.
We could similarly talk about “odious wealth”—wealth that is hateful in its origin. But our instincts about the merits of different means of acquiring wealth often go astray. Let me take two extreme examples: old songs that people love and the kind of “vulture capitalism” whose reputation helped sink Mitt Romney’s chances in the 2012 presidential election.
There is currently a dispute over whether songs recorded before 1972 should continue to earn royalties. By naming their bill to extend royalties to pre-1972 recordings the “Respecting Senior Performers as Essential Cultural Treasures Act or “RESPECT” Act, congressmen George Holdings and John Coyners are using the fact that the musicians who recorded songs before 1972 (that we still listen to 42 years later) inspire feelings of gratitude, since songs of lasting popularity give many listeners much more pleasure than those listeners have paid for the right to listen to those songs. But the prospect of that very gratitude, plus 42 years of royalties, would have provided more than enough motivation for musicians to work hard back in 1971 to make great songs, if they had the ability.
Forty-two years is a long time. And money coming in the near future looks (and is) more valuable than money coming in the more distant future. And even songs that last typically get more play in their early years. So at the time a musician is working hard on a song, the prospect of 42 years of royalties and undying fame should, to a surprisingly close approximation, be just as motivating as, say, 80 years of royalties and undying fame. So we don’t need to extend royalties to pre-1972 recordings to bolster the confidence of musicians making songs now that they will be properly rewarded for their efforts. And on the downside, charging royalties for pre-1972 songs has the potential to inhibit the development of internet and satellite radio—and in particular how often people get to listen to the best pre-1972 songs on internet and satellite radio. So there is a lot of of downside, not much upside to extending royalties to pre-1972 recordings. But the folks who would earn those royalties, if they are still alive, are attractive recipients of the money, even in cases where they are relatively wealthy.
A man makes a $250 million fortune loading up companies with debt and then extracting million-dollar fees from those same companies, in exchange for the generous service of telling them who needs to be fired in order to finance the debt payments he saddled them with in the first place. …
Instead of building new companies from the ground up, we took out massive bank loans and used them to acquire existing firms, liquidating every asset in sight and leaving the target companies holding the note.
This is what I am calling “vulture capitalism.” But vultures have an important place in the ecosystem. Just like literal vultures, who help clear away dead carcasses, vulture capitalists help in the difficult process of moving workers from making and doing things that people don’t need as much anymore to making and doing things that people are eager to pay for. For example, Mitt Romney helped unwind K-B Toys, whose toys could no longer compete with video games. This was enormously painful for the employees of K-B Toys, who were ultimately sent on their way in an arduous transition to new jobs (and some to early retirement). But an enormous amount of good work has been accomplished by former employees of K-B Toys in new jobs with efforts that would have been squandered on trying to make unwanted toys if K-B Toys had been kept limping along for a few more years.
Since they are unlikely to get much gratitude from their brutal but useful work, vulture capitalists have to be rewarded with money. Otherwise, who would want to do that task of dismantling companies and letting go of people and other resources that should be devoted to other purposes?
None of this is to say that the incentives for vulture capitalism are precisely right. It is unfortunate when, as is too often the case, the efforts of highly trained professionals are focused on transactions that make sense only because of quirks of the tax law. But the basic idea that the old must sometimes be dismantled to provide the human and non-human building blocks for new things is sound. And if something that painful is going to happen, it sometimes makes sense to say as Jesus said to Judas: “What you are about to do, do quickly.” The wealth earned by vulture capitalists may then look like the 30 pieces of silver Judas was given for betraying Jesus, but it must be considered legitimate, nonetheless, because the job needs to be done.
There are two points to take away. First, it is not right to treat all large fortunes as odious wealth (or as otherwise illegitimate in origin) or to treat all large fortunes as beneficent wealth. Second, without careful analysis, our instincts will often lead us astray about which is which.
Although people complain a lot about wealth and income inequality, I suspect that a great deal of that anger comes from how the rich made their fortunes. An ideal version of capitalism—the version in the economic models taught in introductory economics classes around the world—would make it impossible to get rich without doing great good for society. There are certainly areas where doing great good for society is not understood and therefore not appreciated. But there are also many areas where the wrong things are rewarded because of market distortions, or where the government piles on rewards beyond those that are needed.
Among market distortions, lies and deception are a key category. But it is also a problem that the legal remedies available to deal with lies and deception are not matched by any ability to bring a legal tort claim for, say, raising the planet’s temperature by burning coal.
Wealth and income inequality are a topic of perennial fascination. But the heat has been turned up not only by increases in such inequality, but also by the feeling that the 2008 financial crisis and the Great Recession suggest that something is fundamentally wrong with our economic system. Among the many reasons to redesign the monetary plumbing of our economic system to avoid a repeat of the Great Recession, one of the most important is to help us gain clarity on the many long-run issues we face, of which economic inequality is one of the most difficult to deal with.
“In the 20th century, the development of bureaucracy had increased the potential power of the nation state enough that the Keynesian situations caused by the disabling of short-run monetary policy inherent in the gold standard made Fascism, Socialism and other variations on the theme of central planning look attractive to those who didn’t realize where it would lead.”—Miles Kimball
As an admirer of well-written nonfiction books and their authors, Virginia Postrel is someone who was famous to me before I ever started blogging. So I was delighted to have some interactions with her since I started blogging, especially on Twitter. One of the first interactions was when she said in the comments to Tyler Cowen’s post, "Reminiscences of Miles Kimball, and others" (near the bottom) that she wondered if I was dead, since as she later tweeted to me, Tyler’s post sounded a bit like an obituary.
Safe, Legal, Rare and Early: Thoughtful & true post on abortion by @mileskimball
I am on the waiting list at the library for her latest book, The Power of Glamour, about which Tyler Cowen says:
Her best and most compelling book. It is wonderfully researched, very well written, the topic is understudied yet of universal import, and the accompanying visuals are striking.
Wikipedia currently says that Virginia “is an American political and cultural writer of broadly libertarian, or classical liberal, views.” But I am wondering if maybe she is at heart a Supply-Side Liberal.
Marjorie Drysdale: Even When You Can Do Math, You May Not Love It
Marjorie Balgooyen Drysdale is a classical soprano, music teacher, conductor, and the author of the book Tagalong Kid.
Not all of the emails Noah Smith and I received in response to our column “There’s One Key Difference Between Kids Who Excel at Math and Those Who Don’t" agreed with us. Some people said they had tried as hard as they could and still couldn’t do math. In a few cases, genuine dyscalculia might be at issue. But more often, I suspect the problem is with the quality of the math teaching. Elizabeth Green had a fascinating New York Times article "Why Do Americans Stink at Math?" a few days ago that pointed the finger squarely at the lack of adequate instruction for math teachers in how to teach math.
Marjorie Drysdale, who received a Master’s degree in Music from the University of Michigan, graciously agreed to share this email she made in response to Noah’s and my column. In addition to the issue of how math is taught, and where one is at when the math is taught, she points out that just because you can do something doesn’t mean you will love it. I agree. There are always tradeoffs in life, and time spent doing math is time away from doing something else that you may love more—maybe a lot more. But at least if you know how to do math, you can make the choice. And if math is taught well, what you learn will have some value for your life.
I was an excellent high school student. I worked hard, prepared, and was self-confident. I always made the high honor roll. I graduated 2nd in my class.
I went on to a competitive college and graduated with highest honors, phi beta kappa. I had two majors. I was always on the Dean’s List.
I went on to get a master’s degree and graduated with honors there, too. I became a professional musician. Supposedly, math and music go together. Not with me.
After geometry, I simply “didn’t get it.” I took one more year of math—-a course which, in the 60’s, was called “fusion.” It was a combination of trigonometry and advanced geometry. That did me in. Until then, I had always earned A’s in math. I barely passed “fusion.”
It might have made a difference that I had skipped a grade and then was put into the “honors group”—-an accelerated class. (In those days, classes were “tracked.”) In that class, we were taking courses a year ahead of our peers. Therefore, I was taking courses two years ahead of my peers. Perhaps I simply had a “readiness” problem.
I “hit a wall” and never went back to math. It had nothing to do with lack of effort, believe me.
Oddly, when I took my GRE exams after college and two years of work, my verbal and math scores were both in the 700’s. This truly surprised me. I hadn’t taken a math course in seven years.
I think that “readiness” in my case was more of a determining factor than “hard work.”
As I grew older, I understood it better, but I still didn’t like it. There are people who adore math. They light up about it. They enjoy it from the get-go. Therefore, I do think there is an innate element to these differences. Some people love math; others don’t.
I adore classical music. Most people couldn’t care less about it. The first time I heard it, I was hooked. That had nothing to do with hard work, either. Succeeding in it required hard work, of course, but the love came first.
I’d like to thank Quartz and Profs. Kimball and Smith for the wonderful article on math capabilities in kids released on October 27th, 2013. Reading it reminded me of my personal relationship with mathematics, as a subject and as a life/job-related skill.
I was born and raised in Kenya, and here the attitude toward math takes on a sexist connotation in favor of male students. It’s rare to hear of a female student saying that she excelled in math not only for the sake of passing the exams and getting into a good school or university, but also because she LOVES the subject.
From my personal experience, I was one of a handful of students in secondary school who fell in the latter category. This has proved (to date) to be a slight challenge whenever the topic of attitude towards math arises in a discussion with my female friends - they talk about how poorly they performed especially in secondary school, to the point where it comes across like they’re actually proud of the grades they got (Cs and below). I cannot contribute to the self-mockery because I got As all the way to my final exam…and the same applies to Chemistry.
Reading about the criticism-to-work-harder approach employed by students in China reminded me of my mother’s toughness towards my performance in math. From the age of 8 she would literally slap my wrists if I worked sloppily at a sum, and it was worsened by my teachers’ constant comments in my report book about my propensity to make careless mistakes.
As I look back now I cannot help but be proud of my love for math (and the sciences in general), even though I ended up pursuing a different academic path - studied literature in my undergraduate, and currently work in web content management. I hope to find a way to help do away with that sexist attitude in schools in my country especially since, as it was indicated in the article, poor attitude toward math makes many people lose out on critical life skills and lucrative career paths.
Thanks once again for the wonderful article. Have a wonderful week!
I tell the story of our Provo High School Forensics Team at the 1977 National Speech Tournament starting on page 2 of the storified tweets in "A More Personal Bio: My Early Tweets." Here is the relevant newspaper article from 1977 to back up my story.
In the newspaper article, you can see my name at the top of the second column.
The Pew Research Center recently did an interesting survey asking Americans how they felt about various religious groups.Here are the findings in a single table, shown above.
I was actually surprised by the low numbers across the board - there was almost no category in which more than 70% of people of one religion felt warmly toward people of another religion. But I wouldn’t put too much stock in that, actually - answers to these surveys usually tend to change a lot depending on how you phrase the question. The relative ratings are more interesting. Some of the findings are easily explained—the low ratings given to Muslims, for example are obviously an unfortunate result of the current political troubles with jihadist terrorist groups. But other findings are more surprising and intriguing. Here are some thoughts I had, looking at the numbers.
Why do Americans like Jews?
As many have noticed, Jews received the most positive ratings of any religious group in America. This confirms that American society is not in any meaningful way anti-Semitic, which is good news. But why do people like Jews so much?
Hypothesis 1: Nobody knows what Jews even are. When I was in high school in a medium-sized Texas town, another kid asked me about my religion. He asked: “Are you…Hanukkah?” So maybe people just have no idea what Judaism is, and figure it must be a minor thing that is no threat to their own faith.
Hypothesis 2: Jews are no threat. Jewish culture has a strong stigma against proselytization. I’ve criticized that insularity, but maybe it’s paying dividends. People don’t like threats - that’s why Japan and Germany are such popular countries these days. Judaism is not going to knock on your door and ask you if you’ve heard about Yahweh.
Hypothesis 3: The entertainment industry.There are lots of Jewish actors, comedians, etc. If you ask the average American to name someone Jewish, she’ll probably think of a funny guy like Jerry Seinfeld or a cute girl like Natalie Portman, or maybe a musician like Bob Dylan. If people knew that Drake, Scarlett Johansson, and James Franco were Jewish, they’d probably like us even more!
In addition, the two main drivers of anti-Semitism—European conspiracy theories and Muslim anger about Palestine—are both notably absent in America.
Why don’t Americans like Mormons more?
Mormons get middling low ratings in the poll. I guess this shouldn’t be surprising, given the prevalence of anti-Mormon discrimination in America. But what is the cause of the discrimination? David Smith, a political scientist at the University of Sydney (and no relation to Yours Truly, though we have clinked a few glasses over the years), finds that many Americans consider Mormons as an “outsider” group, which is strange considering that Mormonism is the only major religion to begin on American soil. Why do people see Mormons as outsiders?
Hypothesis 1: Proselytizing. One possibility is that the rapid spread of Mormonism poses a threat to other, more established religions. In this respect, Mormonism is the polar opposite of Judaism—every Mormon man must go out and convert people. That’s threatening, no matter how politely it’s done.
Hypothesis 2: The perception of secrecy. There is a perception of secrecy and exclusivity surrounding Mormonism. Anyone can go participate in any Jewish prayer service. But not even all Mormons can enter “dedicated" Mormon temples! Some Mormon weddings exclude non-Mormons. And there’s a perception that many other aspects of the religion are secret. Secrecy seems alien, and exclusivity is suspicious.
I think anti-Mormonism is a bad thing, but I don’t know how to combat it.
Why don’t Jews like Evangelicals?
One interesting finding from the poll is that although 69% of Evangelical Christians expressed positive feelings toward Jews (one of the highest ratings given), only 28% of Jews expressed positive feelings toward Evangelical Christians (one of the lowest ratings given). This is weird, since Evangelical Christian sects - unlike, say, the Catholic Church - have no history of anti-Semitism or persecution of Jews. Also, the asymmetry itself is strange. Why don’t Jews like Evangelicals more?
What’s going on?
Hypothesis 1: Instinctive fear of dominant religion. Jews in Europe and the Mideast had a long history of being persecuted by whatever the dominant religious sect in the area happened to be - the Catholic Church, Islam, or the Eastern Orthodox Church. Jewish culture may have simply inherited an instinctive distrust of whatever the most powerful religious group seems to be.
Hypothesis 2: Politics. American Jews are generally liberal, while Evangelicals are generally conservative. In America, politics is often a stronger religion than actual religion. In addition, some Jews may be afraid that Evangelicals only like them because of a millenarian desire to see Israel recreated and then destroyed (in accordance with Biblical prophecy), or perhaps a cynical desire to use Israelis as expendable shock troops against the Muslims. This is probably not a motivating factor for most Evangelicals, but it does get some play in the media.
Hypothesis 3: Anxiety about the end of Judaism. Non-Orthodox Judaism is a dying religion. In America (and Britain), Jews are marrying non-Jews and ditching their ancestral religion at an astounding rate. It turns out that integration and assimilation destroys Judaism, while pogroms, ostracism, and oppression keep it going (someone might have bothered to mention this to Hitler!). Many Jews are naturally anxious about the end of their distinctive culture, and may tend to displace this anxiety by feeling bad about America’s “dominant” religion - Evangelical Christianity.
I think this attitude is a bad one. Evangelical Christianity is far more pro-Jewish than any other branch of Christianity has ever been. Furthermore, Evangelical Christianity has been an important factor in the creation of American society, the most philo-Semitic Western society in history. Jews should have a more positive view of Evangelicals.
Ökonomen wie Kenneth Rogoff oder Miles Kimball wollen das Bargeld abschaffen.
I made it into the German press for wanting to demote—not abolish—cash, along with Ken Rogoff, who does indeed want to get rid of cash. (i wrote about Ken Rogoff’s views here.) Google Translate works fine on this article. Thanks to Rudi Bachmann for letting me know about this article.
I was interested in the news about the US Math Team (of high school students) this year because I was asked to be an alternate to the US Math Team in 1977, the end of my senior year in high school. I tell that story here, in a set of storified tweets that I link at my sidebar:
… the [Harvard] Faculty of Arts and Sciences disclosed a $17-million donation from the Pershing Square Foundation—founded by Bill (William A.) Ackman ‘88, M.B.A. ‘92, CEO of the Pershing Square Capital Management hedge fund, and Karen Ackman, M.L.A. ‘93—for a “foundation of human behavior” initiative grounded in behavioral economics and other disciplines. That gift provides for three new professorships and a research fund.
Clay Christensen, Jerome Grossman and Jason Hwang on the Three Basic Types of Business Models
In The Innovator’s Prescription, Clay Christensen, Jerome Grossman and Jason Hwang make good use of a typology of business models laid out by C. B. Stabell and Øystein Fjeldstad in their May, 1998 Strategic Management Journal article “Configuring Value for Competitive Advantage: On Chains, Shops and Networks." Modifying Stabell and Fjeldstad’s terminology a bit for clarity, Clay and his coauthors call the three types of business models solutions shops, value-adding processes, and facilitated networks. Clay, Jerome and Jason argue that these three types of business models are so different that it is difficult to efficiently house them under one roof. They give these definitions for these three types of business models (from about location 360):
These “shops” are businesses that are structured to diagnose and solve unstructured problems. Consulting firms, advertising agencies, research and development organizations, and certain law firms fall into this category. Solution shops deliver value primarily through the people they employ—experts who draw upon their intuition and analytical and problem-solving skills to diagnose the cause of complicated problems. After diagnosis, these experts recommend solutions. Because diagnosing the cause of complex problems and devising workable solutions has such high subsequent leverage, customers typically are willing to pay very high prices for the services of the professionals in solution shops.
The diagnostic work performed in general hospitals and in some specialist physicians’ practices are solution shops of sorts. …
Organizations with value-adding process business models take in incomplete or broken things and then transform them into more complete outputs of higher value. Retailing, restaurants, automobile manufacturing, petroleum refining, and the work of many educational institutions are examples of VAP businesses. Some VAP organizations are highly efficient and consistent, while others are less so.
Many medical procedures that occur after a definitive diagnosis has been made are value-adding process activities….
These are enterprises in which people exchange things with one another. Mutual insurance companies are facilitators of networks: customers deposit their premiums into the pool, and they take claims out of it. Participants in telecommunications networks send and receive calls and data among themselves; eBay and craigslist are network businesses. In this type of business, the companies that make money tend to be those that facilitate the effective operation of the network. They typically make money through membership or user fees.
Networks can also be an effective business model for the care of many chronic illnesses that rely heavily on modifications in patient behavior for successful treatment. Until recently, however, there have been few facilitated network businesses to address this growing portion of the world’s health-care burden. …
Clay, Jerome and Jason’s central idea is that medicine will be more efficient if there is one medical institution designed for inherently expensive “solution shop” activities such as difficult diagnoses, other much more convenient and inexpensive clinics for the routine treatment of well-diagnosed diseases, and online networks for patients to discuss their contribution as patients to disease management with others who have the same disease. What wouldn’t survive would be the current hospital model where the solution shop aspect of what they do confers high expense on many other activities that don’t have to be so expensive. Here is the way Clay, Jerome and Jason say it:
The two dominant provider institutions in health care—general hospitals and physicians’ practices—emerged originally as solution shops. But over time they have mixed in value-adding process and facilitated network activities as well. This has resulted in complex, confused institutions in which much of the cost is spent in overhead activities, rather than in direct patient care. For each to function properly, these business models must be separated in as “pure” a way as possible.
This is not just a matter of static efficiency:
The health-care system has trapped many disruption-enabling technologies in high-cost institutions that have conflated two and often three business models under the same roof. The situation screams for business model innovation. The first wave of innovation must separate different business models into separate institutions whose resources, processes, and profit models are matched to the nature and degree of precision by which the disease is understood. Solution shops need to become focused so they can deliver and price the services of intuitive medicine accurately. Focused value-adding process hospitals need to absorb those procedures that general hospitals have historically performed after definitive diagnosis. And facilitated networks need to be cultivated to manage the care of many behavior-dependent chronic diseases. Solution shops and VAP hospitals can be created as hospitals-within-hospitals if done correctly.
Further Musings: Even apart from this application to health care, I have found the typology of solution shop, value-adding process and facilitated network very interesting to think about for understanding my own work life (as a complement to the kind of analysis I talked about in my post "Prioritization").
I work at the University of Michigan. Universities combine research—which is quintessentially a solution shop activity—with teaching, which has a big component of value-adding processes. And of course, Tumblr, Twitter and Facebook, where I put in effort as a blogger, are facilitated networks.
The idea of a value-adding process highlights the gains to be had from routinizing something. It is good to periodically ask oneself if there is anything in my daily activities that I can make more routine and streamlined.
The idea of a facilitated network highlights the gains to be had by having users do a lot of the work. That in turn is related both to the benefits of laissez faire under a decent system of rules and the idea of delegation, which typically involves giving up some control at the detailed level.
I find for me, however, that I love the “solution-shop” aspect of life so much that I think I resist routinization. I don’t know if this is what I should be doing, but I would rather keep thinking about how I am doing things than have everything fade into the background of routine. That does cost me extra time, as I do things inefficiently because I am thinking too much about them as I do them.
From 8:30 a.m. to 4 p.m. Monday through Friday the children learn math, interspersed with some reading, physical education and lunch. Each gets 120 hours of instruction during the three weeks, equivalent to what they would get in a year at a typical public school.
Among many other serious problems with education in the United States, our attachment to the idea of summer vacation is an important one.
What, then, is the rightful limit to the sovereignty of the individual over himself? Where does the authority of society begin? How much of human life should be assigned to individuality, and how much to society?
Each will receive its proper share, if each has that which more particularly concerns it. To individuality should belong the part of life in which it is chiefly the individual that is interested; to society, the part which chiefly interests society.
Though society is not founded on a contract, and though no good purpose is answered by inventing a contract in order to deduce social obligations from it, every one who receives the protection of society owes a return for the benefit, and the fact of living in society renders it indispensable that each should be bound to observe a certain line of conduct towards the rest. This conduct consists first, in not injuring the interests of one another; or rather certain interests, which, either by express legal provision or by tacit understanding, ought to be considered as rights; and secondly, in each person’s bearing his share (to be fixed on some equitable principle) of the labours and sacrifices incurred for defending the society or its members from injury and molestation. These conditions society is justified in enforcing at all costs to those who endeavour to withhold fulfilment. Nor is this all that society may do. The acts of an individual may be hurtful to others, or wanting in due consideration for their welfare, without going the length of violating any of their constituted rights. The offender may then be justly punished by opinion, though not by law.
John’s argument that “every one who receives the protection of society owes a return for the benefit” is one that Elizabeth Warren has been echoing to argue for the legitimacy of taxation to support a wide range of government activities. E. J. Dionne’s review of her book A Fighting Chance in the Washington Post offers these quotations from the book:
1. “There is nobody in this country who got rich on his own,” she said. “Nobody. You built a factory out there? Good for you. But I want to be clear: You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for.” …
2. “There’s nothing pro-business about crumbling roads and bridges or a power grid that can’t keep up,” she writes. “There’s nothing pro-business about cutting back on scientific research at a time when our businesses need innovation more than ever. There’s nothing pro-business about chopping education opportunities when workers need better training.”
Although her specific examples of government action in these quotations sound fairly benign, the way Elizabeth is using the argument that ”every one who receives the protection of society owes a return for the benefit” does not provide any obvious principle for putting a bound on what the government can legitimately raise taxes for. I suspect that, if magically revived in the modern world, John Stuart Mill would argue for a more limited government than the one Elizabeth Warren advocates. (And it is clear from the passage in On Liberty quoted above that he would not go along with her invocation of a “social contract.”)
I think you missed an opportunity to criticize academic journals for excessive cost and severe paywall constraints. The inability of many readers to access the underlying research is a major problem for blogs to advance serious debate. While in many cases, working paper versions can be located, this applies to only a fraction of the research that is out there. You should criticize academics who don’t post their work in places like SSRN or on personal web sites. My understanding is that unless you literally sign away your rights, you have the right to post your own work on your own web site.
In other words, each of us who produces published research has a lot of discretion to make the results of our research available inexpensively. Let’s do it.