BRIEFLY NOTED: For 2023-06-20 Tu
Dan Davies on Warren Buffett as miseducator & value-subtracting business activities; þe end of þe quit boom; Byzantine-era mosaics; & Beatty, Smith, Sandbu, & Orzel on fearing & hiding history, San...
…Francisco’s Doom Loop, þe diminished future utility of þe market economy, and “meritocracy”…
MUST-READ: Value-Subtracting Businesses:
“Moat” as barrier to entry, or moat as operational excellent? Very nice from Dan Davies:
Dan Davies: Stuck in the moat: ‘I don’t know if this ought to be in a miniseries “[Warren] Buffett as miseducator”, or whether he meant it, but [his] concept of a “moat” really caught on… and it’s been an absolute disaster…. Everyone has been mad for getting a “moat” round their business, or at least talking as if they had one. But the trouble is that the original companies Buffett was talking about were things like Coca-Cola or Disney, where the “moat” was the fact that nobody else could make such a great product that everyone wanted…. The main focus was on things that had a kind of intangible asset….
[But] a lot of people who didn’t fancy the hard yards of creating a big intangible asset thought that they could do a “moat” on the cheap, by hiring some lawyers, consolidating an industry through financial engineering or trying to lock consumers into proprietary formats. Ever since the Buffett letter, an ungodly amount of management effort and talent has gone into trying to earn “excellent returns on capital” not by continuing to improve the product but rather by trying to create conditions which allow you to go on charging a premium price for the same thing….
When you hear someone talk about their “moat”, mentally replace it with something like “our… system and proprietary interface… [are] a strong Berlin Wall, preventing our customers from getting out… and forcing them to consume our inferior products for lack of alternative”…
Business leaders who focus on making money by making better things that provide more user value more cheaply, and trusting that that will earn them their returns are an enormous public blessing. Business leaders who focus on making money by figuring out a way to grab a greater share of user value at the price of degrading it are a public curse.
ONE IMAGE: Þe Quitting Boom Ends:
ONE VIDEO: Þe Transformation of þe Roman into þe Byzantine Empire:
San Vitale, begun c. 526–27, consecrated 547, Ravenna (Italy). A conversation with Dr. Steven Zucker and Dr. Beth Harris
Very Briefly Noted:
Scott Lemieux: Ask yourself this question: do you want to be rich?: ‘Every Republican campaign email list is comprised of the leads that are given only to closers, and the least scrupulous parochial strivers will act accordingly…. “House Republican Conference Chair Elise Stefanik (N.Y.)… ‘RUSH A DONATION TO OUR OFFICIAL TRUMP DEFENSE FUND TO STAND WITH PRESIDENT TRUMP’, the email shouts…. A $3,300 donation breaks down to $3,267 for Stefanik and $33 for Trump…
Wikipedia: ‘Engels’s pause is a term coined by economic historian Robert C. Allen to describe the period from 1790 to 1840, when British working-class wages stagnated and per-capita gross domestic product expanded rapidly during a technological upheaval.
Dan Davies: A horror story in four words: ‘Change of valuation basis…
Tassia Sipahutar: Hefty Subsidies: ‘Intel is set to receive almost $11 billion in subsidies from the German government for a chip manufacturing complex… in Magdeburg…
Sreeja Biswas: Vanishing Ice on Highest Mountains Threatens Quarter of Humanity: ‘Rapidly melting glaciers in Hindu Kush Himalayan region can trigger floods, landslides and over time drastically reduce freshwater supplies in 12 rivers…
Rachel Ramirez: Four alarming charts that show just how extreme the climate is right now…
Mark Gongloff: Global Heat Records Are Falling. A Little Panic Might Be in Order: ‘Soaring temperatures this spring should spur governments to finally live up to their pledges to curb fossil-fuel use…
Anjana Ahuja: El Niño’s arrival spells out the stark choices on climate: ‘Governments’ plans to tackle the escalating cost of living will need to factor in crop failures and spiralling commodity prices
Linette Lopez: China’s economy is way more screwed than anyone thought: ‘The problem is that while consumers may be picking up, the biggest drivers of the Chinese economy — property and exports — are going to stay dormant. Consumer consumption makes up about 37% of the Chinese economy (in the US that figure is about 70%). So a return to normal activity from consumers is helpful, but it's not enough to carry the economy…
Eleanor Mueller and Sam Sutton: After Manchin drama, Senate confirms Biden chief economist: ‘Senate Democrats on Tuesday confirmed Jared Bernstein as the White House’s chief economist, despite opposition from Sen. Joe Manchin (D-W.Va.) and Republicans… in a 50-49 vote…. The absence of Sen. Tommy Tuberville (R-Ala.) allowed the liberal-leaning economist to make it through without her help…
¶s:
Why am I increasingly getting the sense that rural and southern America contain a huge number of people who are scared and terrified that if their children learn American history then their children will hate them; and that if Black people are not kept from speaking about American history in public, then Black people will rob them? The right meta-lesson to teach our children is that in many ways the past was a shit show, but that America did much better than most, and can do better still in the future precisely because we are not scared to tell the truth. Or am I myself falling victim to the inverse Fox News Syndrome, and blowing isolated, crazy incidents in a big country out of proportion?: Anne P. Beatty: When We Are Afraid: ‘On teaching in a red state, the silences in our history lessons, and all I never learned about my hometown…. Greensboro, North Carolina…. I never learned about the massacre [in 1979], or the bloody white supremacist coup in Wilmington in 1898…. I learned about the Greensboro Massacre in Vietnam…. I am informed I have three minutes to speak. I begin, “I come to you tonight with this message: Our students are stronger and more resilient than we might think. We must teach our children the whole truth about our country’s history of racial injustice. They are strong enough to handle this truth. In fact, they’re hungry for it. And when students realize they have not learned the full truth, they feel betrayed.” I explain my own sense of betrayal when I learned about historical events only as an adult, and I ask the school board members to trust teachers to facilitate these conversations, to teach students how to think, not what to think…
I find myself somewhat less optimistic about San Francisco than Noah is. The Bay Area as a whole is going to do fine. The international, national, and local tourist spot, and playground that is composed of the public and commercial spaces of San Francisco may well not do fine. Why not? Pecisely because its government does not seem to understand how much rides on its making a success of the tourism-and-playground business: Noah Smith: Did “tech bros” ruin San Francisco?: ‘No. But the city's position as a knowledge industry cluster put strains on it that its political coalitions were not prepared to accommodate…. A nationwide industrial shift, local clustering effect, and perverse California tax law drove up housing demand, while local NIMBYs and urban fragmentation made it impossible to increase supply to compensate. SF’s middle and working classes were driven out and homelessness went way up…. [Recently] tech workers have contributed somewhat to the downtown doom loop, this time simply by not showing up…. Tech… played only an accidental role in SF’s unhappy drama. Progressives who kick against tech… are simply nostalgically wishing that the whole rise of the tech cluster hadn’t happened in the first place. But the old SF can never return…. The only way out is through—to build denser housing, to build more transit, and to do whatever it takes to make regular people feel safe walking the streets… to make SF a place where both the rich and the middle and working class can live, once again. If we refuse to build, and instead content ourselves with bitter nostalgia and finger-pointing, then SF will remain a dysfunctional, chaotic playground for the rich…
The decentralized private property von Hayekian market economy has served us very very well for the past five centuries because there has been an alignment between what is socially valuable to do and what is privately profitable to do. That alignment was generated by the shape taken by the processes of production and by the types of things and experiences of utility that existed. But there is no good reason to think that that alignment will continue into the future, at least not to the degree that it has in our past history.: Martin Sandbu: We must prepare—institutionally and politically—for the permanently higher state investments new times require: ‘Brad DeLong… [on] why we should expect government spending to be higher in the 21st century than in the 20th. DeLong’s 2015 thesis was that the structural changes in advanced economies meant more of their resources would have to go to things that are state responsibilities (health because of ageing, education because of the knowledge economy), or have significant “externality” or spillover effects that markets don’t handle efficiently (information, climate change). Those responsibilities have only become more pressing…
Why do we have "tournaments" in the first place? Situations in which there is a very large return to "winning" and next to no return to coming in second or worse—they make very little abstract sense. They are, primaril,y sources of randomness, inequality, and unfairness. A true and a good meritocracy would not award a few large prizes largely by luck to those who just happen to be in the exactly right place at the exactly right time with the exactly right preparation: Chad Orzel: The Rhetorical Power of Meritocracy: ‘It's always been messaging…. What was striking to me, though, was how effectively Cowen used the rhetoric of meritocracy…. The contrast with ideas more common in the left-leaning world where I spend most of my time…. I struggled to write… in a way that doesn’t come off as uncharitable…. I think there’s a kind of fundamental incoherence to a lot of this line…. I keep ending up with something close to the maximally uncharitable summary of the argument, namely “All selective systems are inherently biased, so they might as well be biased in a way that I find congenial.” And it’s really remarkable how rhetorically unappealing that is, especially compared to Cowen’s rhetoric of meritocracy. I feel like this is a relatively recent change, for values of “relatively recent” that go back a decade or two…. There’s a kind of gut appeal to “we want to select the very best people” that’s really powerful. Cowen’s use of it in the frame of matching talents to jobs is particularly deft, helping to blunt a bit of the negative aspects of not being selected— you might not have been the best person for the job you didn’t get, but it holds out the hope that you will be for some other job that’s matched to your personality and skill set. Ceding that to folks on the political right(-ish) seems to me to be a real loss…
COVID provided a lot of people with a locus poenitentiae, a time to think and evaluate. People were laid off. They had money in their pockets. They had time to think. A lot of people were considering a career change or even just a job change but didn't have the resources for the transition. It costs money to move. It costs money to quit working and hunt for a new job. It's hard to pay one's bills when one has to show up at work every day for as many hours as you can get. COVID gave a whole class of people breathing room. It's no surprise the quit rate soared. A lot of people stuck in jobs they hated got the resources to move to jobs they hated at least somewhat less.
I always take issue with "best for the job" type arguments because they're always misdirection. We lack the ability to pick "the best" for any job without putting candidates through the exact rigor of the specific work that needs doing, and while the nature of that work may be largely consistent, the "best" will always change between specific work under specific constraints.
Thus most of our attempts at choosing "the best" are just entertainment by another name. We get a thrill from watching people compete with one another. It allows us to cast aside the responsibility of picking qualified candidates and weighing difficult trade-offs (while avoiding some altogether for legal reasons) to choose just one candidate among many, putting the onus of a mistake on our own shoulders from our own choices we don't have full confidence in making.
If competition gets us a qualified candidate or if it doesn't, it is a fault of the system and the "combatants," not those that ran the show.