How Big Ideas are Built: Rowan Gibson, ‎Innovation Thought Leader gives us the lowdown

How Big Ideas are BuiltOh well I guess snark can be justified as necessary to keeping standards above some rock bottom. Anyway, I did wonder whether this article on the Renaissance and innovation was the silliest thing written on either. Even ignoring the fact that he is about half a millennium out in equating the mediaeval period with the ‘dark ages’ there’s a deeper deliciousness to the way in which he imagines that, by describing a period he has explained it. “It wasn’t just a change of culture that made Western Europe so conducive to innovation at that time. It was also a change of mindset”. Innovation thrived in the Renaissance because of its more innovative culture – not only that but it’s more innovative mindset. The sedative worked because of its dormative qualities.

Anyway, for your delectation it is reproduced below: Continue reading

Insiders, faux insiders, efficiency and equity in the stockmarket: with a thought experiment and an abstract

We’ve gone from the assumption that there’s a necessary tradeoff between efficiency and equity to a state in which it’s almost de rigueur to point out the ways in which inequity can harm efficiency with quite some speed. Why even the OECD, while it hands homilies about how ‘reform’ is always the answer even if it’s relative absence pretty obviously not the central problem, now publishes papers which claim to calibrate the negative impact of income inequality on growth. Meanwhile at Troppo we’ve always been interested in those beautiful ways in which human utility and solidarity – efficiency and equity – competition and cooperation - can grow together.

One thing that’s always bothered me about the efficiency of the financial markets is the extent to which they privilege those with inside information. So we have a source of inequity – insiders capturing large rents on the information they have – and also inefficiency involving insiders investing resources, both physical and intellectual bandwidth in getting information ahead of rivals. I suspect most people see this as a bit of a boutique problem. A barnacle perhaps, to use the current vernacular, but the price of all that dynamism of financial markets. Continue reading

Cutting tax on dividends: a mugs game (if you wanted to improve economic efficiency that is)

Image result for death and taxesJust as happens with dividend imputation in Australia, corporate structures are remarkably robust to seeing things from the shareholder perspective, leading Troppo’s self-appointed Chief Economist and Joint Pontificator In-Chief to conclude that tax cuts to dividends offer the worst possible combination of equity and efficiency. Lots more inequity, no more efficiency.

Capital Tax Reform and the Real Economy: The Effects of the 2003 Dividend Tax Cut
by Danny Yagan – #21003 (CF PE)


Policymakers frequently propose to use capital tax reform to stimulate investment and increase labor earnings. This paper tests for such real impacts of the 2003 dividend tax cut–one of the largest reforms ever to a U.S. capital tax rate–using a quasi-experimental design and a large sample of U.S. corporate tax returns from years 1996-2008. I estimate that the tax cut caused zero change in corporate investment, with an upper bound elasticity with respect to one minus the top statutory tax rate of .08 and an upper bound effect size of .03 standard deviations. This null result
is robust across specifications, samples, and investment measures. I similarly find no impact on employee compensation. The lack of detectable real effects contrasts with an immediate impact on financial payouts to shareholders. Economically, the findings challenge leading estimates of the cost-of-capital elasticity of investment, or undermine models in which dividend tax reforms affect the cost of capital. Either way, it may be difficult for policymakers to implement an alternative dividend tax cut that has substantially larger near-term effects.

Fair trade coffee: so much more (or less) than it seems, depending on your point of view

From the latest Journal of Economic Perspectives

Fair trade coffee is a cup half full, according to
Raluca Dragusanu, Daniele Giovannucci, and
Nathan Nunn in “The Economics of Fair Trade”
(Summer 2014, vol. 28, no. 3, pp. 217–36). We are
not persuaded.
The authors barely mention the fees imposed
upon current and prospective fair trade coffee
growers by FLO-CERT, the organization that
verifies and certifies fair trade products. By not
spelling out the fees, the authors may leave readers
with a mistaken impression that the fees are
trifling. Elliott (2012) summarizes nicely the latest
fee structure. For cooperatives of poor producers,
the initial application fee is €525, and fees for the
first inspection vary from €1430 to €3470 depending
upon a cooperative’s size. While certifications
are good for three years, annual fees range from
€1170 to €2770 and include interim surveillance of
growers’ practices. In short, Fairtrade International
requires farmers in low-income countries to pay
thousands of dollars in order to participate in a network
presumably intended to offer poverty relief
to its producer organizations as well as protection
from allegedly ruthless local monopsonist coffee
buyers, called coyotes. The existence of these large
and explicit costs to growers casts some doubt on
the relatively optimistic conclusions of this paper.
As the authors acknowledge, only a small fraction
of coffee grown by fair trade producers is able to be
sold as fair trade coffee, but readers should also
be clear that applying to join the fair trade network
does not guarantee a willing buyer on the other
side of the market. As Fridell (2007) notes, newcomers
to fair trade production are the least likely
to benefit because they cannot compete on an
equal footing with established cooperatives in
an already saturated market. Fridell cites Martinez
(2002), who in turn describes the plight of a certified
producer organization that searched for eight
years to locate a willing buyer.

There’s plenty more here in the whole letter to the JEP.

Metaphor alert on data: should it be anyone’s property?

Prof. Dirk Helbing on the opportunities provided by big data: Will information become the key resource of this century? | T-SystemsMonday’s column in the Fin published as “Debate should be on best-use, not ownership of public data”

Data is in the news but we’re still working out how to think about it. Ladies and Gentlemen, we’ve got the Wrong Metaphor. Let me explain.

There’s endless argy-bargy about who ‘owns’ firms’ customer data – them or their customers? And the government wants access to stored ‘metadata’ on our internet activities – what sites we’ve been to, who we’ve communicated with. Then there’s all that data governments collect through the five yearly census – next due in 2016 – which the government recently wondered aloud whether to scrap. (Should it really cost the best part of half a billion when most citizens could be surveyed online?)

As governments gear up their surveillance armoury and we disgorge terabytes of data to Facebook and Google, we’re jealous of our privacy – as well we might be. In our commercialised age, this becomes a debate about who should ‘own’ data. Yet notions of property arose to help us think about and control physical things – like personal possessions and land. Subtle traps await those using the metaphor of property to deal with incorporeal things like ideas and data. Continue reading

French Film Festibule for Melbourne: with timetable of best films

Here’s another post highlighting a film festival. It derives from my frustration at being able to actually work out what’s worth seeing and when from festival propaganda which is mainly directed at trying to get you to go, not helping you work out what you’d like to see. Regulars know that I’ve been doing this for some time. I get someone in India to identify films that have passed a quality threshold – judged by standard review sites and other reviews and then run them up for me. Then I put them up here for everyone’s benefit.

However I don’t think I’ve ever got any feedback on this, so I’d appreciate it if people could offer some comments on the usefulness of the service. Note because it’s still a hassle to identify a film and then work out where and when a film is on, there’s now a new feature, which is a timetable at the bottom of the list of best films which have been identified. That way if you’re not studiously trying to get to the best films, but want to go out on a particular night or nights and want to know if, where and when there are any good films on that night, you can now do so using the table.

Top Picks

Trailer Icon 03 Gemma Bovery (Opening Night)
Martin, an ex-Parisian well-heeled hipster passionate about Gustave Flaubert who settled into a Norman village as a baker, sees an English couple moving into a small farm nearby. Not only are the names of the new arrivals Gemma and Charles Bovery, but their behavior also seems to be inspired by Flaubert’s heroes.
☆☆☆☆ Cinemablographer
☆☆☆☆☆ IMDB
Show Timings:

Listen mate, do you want to see the game or don’t you?


My one remaining lobster cartoon saved from the flames

I once drew a whole book of cartoons featuring lobsters in various socially awkward situations. One of my favourites was of a lobster trying to get into Princes Park Football Ground (when I drew the cartoon it was the mid 80s and I was living across the road from the ground and I used to go there for last quarters when there was nothing else doing). Anyway in the cartoon, after a goodly wait in the queue, the lobster is confronted by a sign that says “Adults $5, Children $2, Lobsters $27.95. The lobster says “Fair go mate”. Out of the darkness of the box office comes the voice of the attendant. “Listen mate, do you want to see the game or don’t you?” This may not amuse you but I’m afraid it amused me then and it amuses me now.

Anyway many years later I was at Grand Central Station in New York City and talking to a lady behind a grill in a booth selling train tickets. New York is an animated place. It’s got a Jewish sensibility, and though I’m not Jewish my father was Jewish (though not observant or believing) and so half my relatives were Jewish. (Rather more of that side of the family got murdered than my Mum’s side of the family, but then a fair share of them didn’t talk to Mum after she married a Jew and she didn’t speak to them, so that evened things up.)

In New York, as in many cultures – I think this is broadly true across lots of the US and Europe – one can quite vigorously contest things with people – in a good spirit – without things turning nasty. I was sensing this while I was speaking to this lady. There was no train to Philadelphia that evening even though there were three trains to Washington and the relevant train-line went through Philadelphia.  So said to her in an animated way “What are you telling me? That there’s no train to Philadelphia when there are three trains to DC?” You can probably imagine Jerry Seinfeld speaking in a similar way, or Woody Allen or someone similar.

She shrugged and sympathised saying in her NY Jewish(ish) accent “Yeah it’s crazy isn’t it?” with a mutually shared bemused and amused resignation.  I thought about this conversation and my cartoon and realised that I wouldn’t have said those things in that way in Australia – because had I done so it was very likely the person behind the grill would have got shirty with me “Listen mate, I don’t make the rules around here, now do you want to get to Philadelphia or don’t you?”  Now I like Australia a lot, but really this is about the worst place in the world for that kind of low level policing of a certain kind of conformity and hostility to contest, for the alacrity with which people take personal offence and get surly when challenged.

I thought of all this earlier this week when I organised a dinner for ten with a visiting American. When it came to time to pay the bill the waiter insisted that the restaurant wouldn’t split the bill. I told them, starting nicely, that that was going to be too bad for the restaurant because we were only going to pay the bill as a split bill, but that we would make it easy and split it evenly at $50 each. The waiter dug in and finally one of us rang the owner who was a friend. Even at this going over the waiter’s head, he didn’t budge from his demand. Our American visitor was much better than me in this situation and simply politely told the guy the way it was going to be and wouldn’t take “no” for an answer.

Anyway, it occurred to me that the ‘no split bills’ nonsense is another manifestation of this national characteristic of keeping our heads down and conforming with the group. I asked the American visitor if he knew of the practice elsewhere. He said he was unaware of it in the US. I wonder if it exists anywhere else?

Facts, reflections, lobsters please.

On Democracy: Against elections

Some readers of this blog with know my preoccupation with the shortcomings of Vox Pop Democracy. Here are some aphorisms from David Van Reybrouck who’s book Against elections does not appear to have been translated out of Dutch at this stage. They offer some interesting ways of understanding the difference between deliberative and representative democracy.

1. Democracy is not meant to make people happy, it is meant to teach people how to be unhappy.
2. Democracy is not meant to be exciting, but to be boring.
3. Democracy is not about solving conflict, it is about learning to live with conflict. (Luc Huyse)
4. A world in which conflicts are constantly being minimized is not a democracy, it is utopia.
5. A world in which conflicts are constantly being maximized is not a democracy, it is hysteria.
6. A world in which conflicts are valued as sources of insight into each other nurtures the culture of democracy.
7. Of all political systems, democracy is the one that celebrates conflict the most.
8. Democracy is not about consensus, it is about conflict.
9. A world in which conflicts are being dealt with before they turn into violence fosters the culture of democracy.
10. A world in which conflicts are neither buried nor blown up is in the process of becoming democratic.
11. Democracy is an early harvest of what otherwise would grow into war.
12. In order to remain democratic, the pursuit of happiness should go hand in hand with the acceptance of unhappiness.
13. Happy the society whose inhabitants are all slightly unhappy, for this may betray the culture of democracy.
14. Democracy is about the even distribution of unhappiness. This is its utopian ideal. In the absence of its full realisation, it teaches people to be moderately happy about their moderate unhappiness.
15. Democracy is government of the people (tick), for the people (tick), by the people (question mark).
16. Universal suffrage does not suffice to allow us to speak of ‘government by the people’.
17. If elections once belonged to the nature of aristocracy, universal suffrage was only a form of ‘quantitative democratisation’, not ‘qualitative democratisation’ (Bernard Manin). People got a right to vote, not to speak.
18. The person who casts his or her vote, casts it away. This is called: the principle of delegation. The only way of reclaiming that vote, is by sanctioning candidates at the next election.
19. Today, people despise the elected, but worship the elections. This is wrong: rather than being upset about politicians, parties and parliaments, they should be upset about the electoral
20. For the very first time in the history of representative government, the weight of the next election has become bigger than the weight of the previous election. The danger of the sanction has become bigger than the power of the delegation.
21. The theory of electoral democracy: let the past push the present (delegation). The practice of electoral democracy: the future hinders the present (sanction). This cripples action. We are being ruled by a misty void. This void is not the future, but the fear of the future.
22. Elections are not only outdated as a democratic procedure, they were never meant to be democratic in the first place. Elections were invented to stop the danger of democracy. This is not
blasphemy, but history.
23. Three thousand years of experimenting with democracy, and only two hundred years of playing with elections: and yet, we believe that elections are sacred.
24. There is nothing sacred about elections. They are only procedures, aristocratic procedures that people have tried to democratize, with considerable success, over the past two centuries.
25. There is nothing sacred about ‘one man, one vote’. It is only the historically contingent expression of a deeper democratic concern: the equal distribution of political chances.
26. If democracy is government through debate, electoral democracy is fairly mute: citizens wait, citizens listen, citizens cast their vote, citizens wait again.
27. In a world that is becoming increasingly horizontal, elections are an obsolete vestige of more vertical times.
28. In a world where information spins fast, voting once every four years is no longer enough.
29. In a world where technology empowers people, citizens not only want to vote, but voice their opinions, too.
30. Democracy through periodic delegation and sanction is rapidly loosing its legitimacy.
31. In a communication society like ours, it is natural that people want to engage in public discussion on the future of their society, it is positive that they want to take part in collective affairs and help shape the future of their communities.
32. People have the right to vote, they now ask for the right to speak.
33. How should the right to speak be organized? We have to avoid that only those with money, degrees and contacts get heard. We should not repeat the mistakes from the past: a new democracy should never become an elitist democracy.
34. The right to speak should be evenly distributed. The best way to do so is by sortition, i.e. by random sampling.
35. Sortition is the blind selection procedure by which a random sample of a population is drafted in order to get an adequate representation of that population.
36. If elections create representation on the basis of virtue, sortition creates representation on the basis of equality.
37. Both have their advantages: elections may guarantee more competences, sortition guarantees more freedom. Those who are drafted have to rotate after a while, their decisions will not be influenced by the need for reelection.
38. Two key notions for elections: delegation and sanction. Two key notions for sortition: equality and rotation.
39. If democracy is about the equal distribution of political chances, sortition guarantees that everybody has the same chance of being selected.
40. ‘One man, one vote’ now becomes ‘One person, one chance’.
41. Sortition is commonly used in contemporary democracies: it forms the basis of the entire polling business.
42. Opinion polls measure what people think when they don’t think; it would be much more interesting to know what they think when they had a chance to think (James Fishkin).
43. Giving a random sample of people a chance to think by letting them talking to each other and to experts and by giving them time to get at their own conclusions is the very nature of deliberative democracy.
44. Deliberative democracy is not about voting but about talking; it is not about avoiding conflict but about embracing it; it is not about consensus but dissensus.
45. Because deliberative democracy is both about the pursuit of happiness and the acceptance of unhappiness, it is a much needed complement to classical electoral democracy

Daniel Ellsberg on life and groupthink

HT Paul Monk who cites this as one of his favourite passages. It’s now one of mine. And a nice explanation of how easy it is – whether within an organisation or the caverns of one’s own riotous psyche - to slip into the pathologies of groupthink and self-deception. Somehow this doesn’t quite get the emphasis it should (if it gets any at all) in schools of management and/or government.

The urgent need to circumvent the lying and the self-deception was, for me, one of the ‘lessons of Vietnam’; a broader one was that there were situations – Vietnam was an example – in which the US Government, starting ignorant, did not, would not, learn. There was a whole set of what amounted to institutional anti-learning mechanisms working to preserve and guarantee unadaptive and unsuccessful behaviour: the fast turnover in personnel; the lack of institutional memory at any level; the failure to study history, to analyse or even record operational experience or mistakes; the effective pressures for optimistically false reporting at every level, for describing ‘progress’ rather than problems or failure, thus concealing the very need for change in approach or for learning. Well, helping the US Government learn – in this case learn how to learn – was something, perhaps, I could do; that had been my business.

Daniel Ellsberg Papers on the War, Simon and Schuster, New York, 1972, p. 18.