Linkbait and fakebait

Posted on January 1, 2017 by Nicholas Gruen

Time was (I’m guessing, if it was it didn’t last long) when linkbait had standards. You (I’m obviously still guessing here) took some aspect of something and beat it up a bit. Anyway courtesy of ZergNet (who knew) I just saw this bit of linkbait.

George Michael’s Ex-Wham! Partner Breaks Silence Following Death

Thing is the tweet in question was published on the day after the event about which he was “breaking his silence”. Some silence.

Anyway, this gripe isn’t worth more than a tweet, but it took more than 140 characters to explain. So while I’m here I may as well add my plan to save the world from this kind of thing – or save it a little bit. Perhaps this already exists. Anyway you could have a plugin to your browser which is like an ad blocker on which you can occasionally indicate that you’re really unhappy with some bit of linkbait and then program your plugin to block further linkbait from the same source.

Oh and I know there are technical issues because the links to other stories are sometimes served differently to ads. But this post started as a tweet so all difficulties with my proposal are left for the reader to solve as an exercise.

 

Posted in IT and Internet | Leave a comment

Scaleability and the knowledge economy: or the micro-economics of hyper-bullshit

Posted on January 1, 2017 by Nicholas Gruen

Image result for academic publishing racketsOne of the central contemporary critiques of the industrial revolution was its undermining of crafts and craftsmanship. Today this is happening within the world of ideas. And at least right now, it’s looking like this is not a very happy development. This was brought home to me viscerally recently as I went through the hoops of publishing my first article in an academic journal in a few years. It takes me about five years to forget how agonising the academic publishing is, and then I agree to do it again. (In case you’re interested, the article, which summarises a substantial chunk of my work on the lamentable history of Australian automotive industry policy is here.)

As you’re no doubt aware, over the last few decades a few dominant academic publishers have bought up most of the high-status academic journals. The business model is simple.

  • Freeload off the expertise of academics and those institutions that were built to solve the many free-riding problems of information, knowledge and know-how. Academics are overwhelmingly funded by the state and philanthropy but are now benchmarked like lab-rats in a Skinner box against their publication record in academic journals.
  • Automate by providing an IT platform on which this can be arranged.
  • Offshore lower-skill labour requirements.
  • Fund ‘public relations’ and ‘stakeholder relations’ to obfuscate and delay sensible action.

Continue reading →

Posted in Bullshit, Economics and public policy, Information, Innovation, IT and Internet | 1 Comment

The long run benefits of Good Early Childhood Programs

Posted on December 30, 2016 by Nicholas Gruen

This paper estimates the large array of long-run benefits of an influential early childhood program targeted to disadvantaged children and their families. It is evaluated by random assignment and follows participants through their mid-30s. The program is a prototype for numerous interventions currently in place around the world. It has substantial beneficial impacts on (a) health and the quality of life, (b) the labor incomes of participants, (c) crime, (d) education, and (e) the labor income of the mothers of the participants through subsidizing their childcare. There are substantially greater monetized benefits for males. The overall rate of return is a statistically significant 13.0% per annum with an associated benefit/cost ratio of 6.3. These estimates account for the welfare costs of taxation to finance the program. They are robust to a wide variety of sensitivity analyses. Accounting for substitutes to treatment available to families randomized out of treatment shows that boys benefit much less than girls from low quality alternative childcare arrangements.

By Garcia, Heckman, et al. Paper here.

Posted in Economics and public policy, Education | 5 Comments

Cold showers aren’t always invigorating

Posted on December 30, 2016 by Nicholas Gruen

Foreign Competition and Domestic Innovation: Evidence from U.S. Patents by David Autor, David Dorn, Gordon H. Hanson, Pian Shu, Gary Pisano

Manufacturing is the locus of U.S. innovation, accounting for more than three quarters of U.S. corporate patents. The rise of import competition from China has represented a major competitive shock to the sector, which in theory could benefit or stifle innovation.  In this paper we empirically examine how rising import competition from China has affected U.S. innovation.  We confront two empirical challenges in assessing the impact.  We map all U.S. utility patents granted by March 2013 to firm-level data using a novel internet-based matching algorithm that corrects for a preponderance of false negatives when using firm names alone. And we contend with the fact that patenting is highly concentrated in certain product categories and that this concentration has been shifting over time.  Accounting for secular trends in innovative activities, we find that the impact of the change in import exposure on the change in patents produced is strongly negative.  It remains so once we add an extensive set of further industry- and firm-level controls.  Rising import exposure also reduces global employment, global sales, and global R&D expenditure at the firm level. It would appear that a simple mechanism in which greater foreign competition induces U.S. manufacturing firms to contract their operations along multiple margins of activity goes a long way toward explaining the response of U.S. innovation to the China trade shock.

Posted in Economics and public policy | Leave a comment

The paradoxes of shareholder primacy and ‘short-termism’

Posted on December 29, 2016 by Nicholas Gruen

Image result for Wile E. CoyoteIn a recent speech “Who owns a company?”, Andy Haldane has this to say:

In the earlier period, dividends decreased as often as they increased.  This is as we would expect if profits fluctuate both up and down.  After 1980, however, we see a one-way street. Dividend payout ratios almost never fall.  This is evidence that the short-term quest for smoothing shareholder returns has come to dominate payout behaviour, almost irrespective of profitability.

Is short-termism quite the right expression for this phenomenon? 1 Even if you could divide a company’s share register into those with short and long-term investment horizons, there’s a paradox. Other things being equal, increasing the steadiness of the dividend stream doesn’t meet short-term shareholder needs. Firstly in a liquid share market, the distinction between income and capital value is pretty artificial. Shareholders generally seek the best return of income plus capital gain they can. And not only would you expect that. In a well-functioning market, the payment of a dividend would be reflected in an equal and opposite movement in the capital value of the companies’ shares, but that’s pretty much what you do see – at least on the day that shares go ex-dividend. 2

So it seems to me that this transition towards more steady payment of dividends can’t be explained by a move towards ‘short-termism’, or if it is, there’s something more to be explained – which is why such behaviour is more consistent with the interests of short-term than long-term investors. So I think we need to go looking for the real phenomenon here in the conditions under which the market might reward this kind of behaviour – which is clearly damaging to the wellbeing of companies in the market. It seems to me that the answer is tied up in the transition from some earlier form of capitalism towards managerial capitalism.  If the capital market acted rationally, then, other things being equal, it would mark down companies that maintained continuity in their dividend payments when profitability fell, because this suggests bad management and increases in the firm’s financial fragility. 3 Continue reading →

  1. One preliminary point needs to be got out of the way for the purposes of discussion. There are two sides of the dividend transaction – the company and the shareholder. One possible legitimate reason for companies maintaining a more stable dividend policy is that their shareholders appreciate this and that shares are in competition with other assets like bonds and deposits and that therefore a more stable dividend policy represents a new compromise between the interests of the shareholders and ‘the company’ (ignoring the obvious fallacy of composition in that contrast). So to some extent, this development may not be pathological. I’m proceeding on the assumption that it’s not as simple as this – that this development suggests something fishy is going on. ↩
  2. Indeed, in an efficient capital market, other things being equal, one can think of two reasons those with short-term time horizons might prefer capital gains to income. Dividends generate slow, steady gains whereas capital gains can come quickly as the market reevaluates its view of the long-term potential of a stock. And dividends are usually less tax-efficient than capital gains (though in Australia franking credits complicate this story.) ↩
  3. Again I’m leaving aside the prospect that volatility of profits is likewise suppressed by management’s accounting decisions. ↩
Posted in Bullshit, Economics and public policy | 4 Comments

Want to take you, want to make you but they tell me it’s a crime!

Posted on December 26, 2016 by Nicholas Gruen

I wasn’t a huge fan of George Michael, though I liked his songs, but I absolutely loved this one. So good to horse around on the dance floor to. When I was in my early 20s I was greatly taken with gay culture. It was a liberation movement whose tools were completely different to the others. Civil rights and feminism were full of the self-righteousness of their entirely just cause. One could attach one’s idealism to these causes, but their worthiness limited the extent to which they were naturally celebratory.

The gay rights movement was quite different. It’s whole modus operandi operated through its embrace of the unique culture it had built over the previous centuries in the shadow of the relentless anathematisation of homosexuality. Being a woman or being black wasn’t against the law. Being gay was.

And so gay culture arose from the need for deniability. Polari – a specific gay language 1 – provided one means of communicating what one wanted to without detection, but the principal weapon of choice was irony which allowed initiates to convey meaning – often quite explicitly – in ways that were quite undetectable to others.

As all liberation movements encounter the tension between the struggle for equality and, as that struggle succeeds retaining their own unique history and sensibility, gay culture seemed to be more insulated from those kinds of dilemmas. I expect that was part of the diffidence gay liberation activists of the 1970s have felt towards gay marriage, and in the upshot – in the age of gay marriage, I’m not so sure gay culture is insulated from being homogenised with the larger straight culture.It was a wonderful revelation and a liberation when I encountered it in my university years. George Michael was at the poppy-est end of the gay pop music spectrum, and except for “I’m your man” not my

In any event, it was a wonderful revelation and a liberation when I encountered gay culture in my university years. George Michael was at the poppy-est end of the gay pop music spectrum and, except for “I’m your man”, not my favourite. Meanwhile, New Romantic pop music was the first and perhaps only pop music craze that I really took to.

Anyway, now, sadly George Michael is no longer with us. R.I.P.

  1. Or at least enough words to celebrate a unique sensibility and put outsiders off the scent. ↩
Posted in Cultural Critique | 6 Comments

Cliché led reform

Posted on December 26, 2016 by Nicholas Gruen

Well I came to this passage and thought it was the first thing the World Economic Forum have said in a while that I agree with. “A significant part of the global elite lost the sense of solidarity when it was needed.” But of course it was from the head of the WEF, so he couldn’t help himself adding to the end of the sentence “more than ever before” a particularly efficient way of signalling that one’s lack of concern with substantive matters when a cheap rhetorical cliché might be deployed.

Anyway it then went on to press a few of my buttons – for instance on deliberative democracy, before descending into more blather about “systems leadership”. What we need is “systems leaders” apparently. Srsly. And thus the business class proceeds on its merry, utterly atheoretical way. And just in case we find out what a “systems leader” is, how do we get one of those into a position of political power? Well there aren’t any tips on that alas.

Posted in Cultural Critique | 1 Comment