Author Archives: rdmyers75@hotmail.com

best of best of 2014

This time of year, you pretty much have to do a “best of” post. I’ll get to a review of some of my own posts eventually, but in the meantime here are a handful of “best of” posts. I actually don’t know if they are the best of the best of, but they are just a few that caught my eye.

  1. from Wired, The Best and Worst in a Tumultuous Year for Science: Despite the annoyingly un-reader-friendly slide show format, there are some serious eye openers here, such as synthesis of completely new, man-made DNA base pairs; custom-designed monkeys with a “gene-editing system”; a potentially huge breakthrough on diabetes; and a study concluding that the number – not the number of species, but the actual number of wild animals – has decreased by half in the last 40 years.
  2. Longreads Best of 2014: Business Writing: This links to some great articles on education reform, the status and future of Microsoft, and Airbnb. But be warned, these are some seriously long reads!
  3. Economist Money talks podcast, End of year edition. I would always rather read the transcript, but still this goes through some major trends from the year like oil prices, financial regulation, Uber and Lyft, and is worth a listen.
  4. from Wired again, The Best Science Visualizations of the Year. Some interesting ones depict “genetic activity of ocean bacteria”, loss of Arctic summertime sea ice, and the origin and early spread of AIDS.
  5. From Urbanful, Film’s 6 coolest (fictional) hydrid cities. Yes, the Los Angeles version of Blade Runner makes it. So do Gotham City and Metropolis, which are described as “New York by night” and “New York by day”. Finally, “Big Hero 6, the first collaboration between Disney and Marvel, takes place in the futuristic city of San Fransokyo, a fusion of San Francisco, California and Tokyo, Japan.”
  6. One more from Wired: The Craziest Sci-Fi Fantasies That Got Closer to Reality This Year. There’s plenty of Star Wars vs. Star Trek here, but my favorites are that you can now get your dog cloned in South Korea, and a “cheetah robot”.

Happy new year!

health care cost-effectiveness

Here is an interesting blog post on the “forbidden topic” of health care cost-effectiveness. It’s hard because at the personal, human level life and health are of course priceless. But at the scale of a country or civilization with limited resources, there are choices to make, and better information should allow better choices.

Research in this area can be difficult to perform. One of the reasons is that it’s not always easy to measure health outcomes. Some things, like death, can be relatively easy to define, but how do you quantify having diabetes,asthma or a seizure disorder?

A robust methodology exists for doing so, based upon the expected utility theory of John von Neumann and Oskar Morgenstern. Asking people to consider what risks they will take to avoid certain health states, a technique known as the “standard gamble,” can yield what we call a utility value. Another method, which asks people to think about the trade-off between a shorter life in perfect health and a longer life in an unhealthy state (this is a “time-trade-off”) can also be used to determine a utility value.

When you take a utility value and multiply it by a number of years, you can calculate “quality-adjusted life years,” or QALYs. So if interventions improve quality or add years of life (or both), the number of QALYs goes up. Taking the cost of a therapy and dividing it by the number of QALYs gained results in a measurement of cost effectiveness.

programming boot camp

Here’s an article about computer programming boot camps. Marketable job skills are an important thing. Being an educated person who can understand systems, solve problems, and make ethical choices is also a good thing. These two types of education are complementary, but one does not guarantee the other. Corporations are interested in skills because they are trying to exploit some microscopic niche in the economy to make a profit. And that is where most skills apply – in those microscopic niches. When you are exploiting a microscopic niche, you are not thinking about consequences outside your niche. So if that is the only thing we do, it will eventually be possible for highly skilled, highly intelligent, well intentioned people to collectively manage to run our civilization into the ground.

sea vs. land warming

According to a guy named Ka-Kit Tung, we have seen less land surface warming than expected in the last 15 years because the heat has gone into the oceans instead. He thinks the trend of land surface warming will eventually resume. Is he worried about some sudden reversal where the heat trapped in the ocean would suddenly be released? No.

Nobody knows how long the current pause will last. Nonetheless, at some point, the natural cycles will shift; the oceans will cease to absorb the bulk of the planet’s warming; and surface temperatures will begin to climb again. When they do, we can expect the increase to resume the rapid pace observed during the late twentieth century, when surface temperature rose by about 0.17 degrees Celsius every ten years.

In the meantime, whether the overall risk to our environment has been reduced by the pause remains an open question. Some argue that what went down will eventually come back up. The sloshing back and forth of warm and cold waters – El Niño and La Niña – in the shallow layer of the equatorial Pacific Ocean will continue to produce fluctuations in surface temperatures every year. Over longer periods, however, the risk that the heat currently stored in the deep ocean will resurface is remote.

Who is this guy? He is “a fellow of the American Meteorological Society, is Professor of Applied Mathematics and an adjunct professor of Atmospheric Sciences at the University of Washington.”

If we are saying some end of year thank yous, I would just like to say, thank you, ocean, for keeping our planet habitable for another year.

Elizabeth Warren, Bernie Sanders, and financial stability

Elizabeth Warren continues to warn that another financial crisis may be in the making as big financial companies are able to influence laws shifting large risks onto the taxpayer:

Bernie Sanders also is worried that the big banks have too much influence over policy:

“Over the last several days, it has become abundantly clear that Congress does not regulate Wall Street but Wall Street regulates Congress,” Sanders said. “If Wall Street lobbyists can literally write a provision into law that will allow too-big-to-fail banks to make the same risky bets that nearly destroyed our economy just a few years ago, it should be obvious to all that their incredible economic and political power is a huge danger to our economy and our way of life.”

Sanders said, “Enough is enough…. If Congress cannot regulate Wall Street, there is just one alternative.  It is time to break these too-big-to-fail banks up so that they can never again destroy the jobs, homes, and life savings of the American people.”

William Lazonick vs. Wally

Still thinking about my William Lazonick post from yesterday. One of his arguments is that it is not just stockholders that deserve a part of corporate returns, because they are not the only ones taking risk. As he explains in his working paper, taxpayers and employees also take risk:

Then I show how and why MSV [maximizing shareholder value] is a theory of value extraction that, when applied to corporate resource allocation in the United States, has undermined the social conditions of innovative enterprise and resulted in employment instability and income inequity. I refute the fundamental economic assumption of MSV that of all participants in the business corporation it is only shareholders who bear risk and hence have a claim on profits if and when they occur. Taxpayers in funding government spending on productive resources that are essential to the innovation process and workers in supplying effort to the processes of organizational learning that are the essence of innovation make productive contributions to the enterprise without guaranteed returns. Indeed I argue that public shareholders do not in general invest in the innovation process but just extract value from it, and hence bear little, if any, risk of the failure of that process. I summarize a growing body of empirical research that shows that since the 1980s, backed by MSV ideology, financial interests, including top corporate executives, have been able to extract vast amounts of value from US industrial corporations in excess of value that they may have helped to create.

I contacted Future Yada Yada workplace effort correspondent Wally from Dilbert, who offered the following. (sorry, you have to click – I’m a huge Scott Adams fan but I don’t see an easy, unambiguously 100% legal way to embed his graphic here)

William Lazonick

Recently I did a post or two on the gospel of shareholder value, where I argued that ethical managers need to consider the implications of their decisions on a variety of stakeholders, certainly including employees and customers, but also the larger society and natural environment. William Lazonick, a professor at the University of Massachusetts, argues that the ideology of maximizing shareholder value has also been a big drag on innovation since it came into vogue in the 1980s. In Harvard Business Review:

For three decades I’ve been studying how the resource allocation decisions of major U.S. corporations influence the relationship between value creation and value extraction, and how that relationship affects the U.S. economy. From the end of World War II until the late 1970s, a retain-and-reinvest approach to resource allocation prevailed at major U.S. corporations. They retained earnings and reinvested them in increasing their capabilities, first and foremost in the employees who helped make firms more competitive. They provided workers with higher incomes and greater job security, thus contributing to equitable, stable economic growth—what I call “sustainable prosperity.”

This pattern began to break down in the late 1970s, giving way to a downsize-and-distribute regime of reducing costs and then distributing the freed-up cash to financial interests, particularly shareholders. By favoring value extraction over value creation, this approach has contributed to employment instability and income inequality…

Retained earnings have always been the foundation for investments in innovation. Executives who subscribe to MSV are thus copping out of their responsibility to invest broadly and deeply in the productive capabilities their organizations need to continually innovate. MSV as commonly understood is a theory of value extraction, not value creation.

He goes into much more detail on his theories in this working paper from the “Academic-Industry Research Network“, and with just a little digging I came across this interview with him and this article by him on the “Institute for New Economic Thinking” blog.

When asked for a dissenting view, Gordon Gekko had the following comment: