Friday, October 24, 2014

Coase and Ebola

The Coaseian approach generally is one that if there is a cost to a second party as a result of a first party then the most efficient remedy if transaction costs are zero is to litigate. That is my rephrasing anyhow. This is in contrast to the Government trying to create a law that covers everyone. This of course assumes that the act and actor can be defined and that the damages quantified. We have many such minor cases arise all the time. They generally get settled.

Now to horses. If one has a horse, a very health horse, and one wants to use it in some event in another country then one must quarantine it in the departing country and have it examined before it is allowed to enter the other country. Just look at the Olympics equestrian events. We test for TB on incoming visitors from certain regions.

Now to plants. A couple of decades ago I spent time collecting bryophytes all over Hawaii. From the top of the mountains to the lowest levels. Then before I could bring them back to the mainland I had to wash them in isopropyl alcohol and declare them at the airport to the Department of Agriculture inspector. Made sense.

Yet one can come back to the US having been exposed to the greatest degree to Ebola, heroic as it may have been, and then wander all over New York. Now to Coase. Perhaps if it results in some cost then perhaps one may then seek a Coaseian remedy. Yet in this case it truly requires a Government response. Respect the great efforts but use common sense. A form of quarantine is essential, if for no other reason than to stop the mass concern.

Now to the truly striking, the New York Police dumping their protective Ebola garb into a trash can. In MedCity News they write:

New York City’s Health Commissioner Mary T. Bassett said Spencer “was transported by a specially trained HAZ TAC unit wearing Personal Protective Equipment.” Instead of going to the emergency room, the man was taken directly to an isolation unit. But what’s also disturbing is a video posted by The Daily Mail showing police officers outside of Spencer’s apartment throwing away their gloves and masks in a street trash can. It’s unlikely that these guys had any direct contact with Spencer’s belongings or the inside of his apartment, but regardless, this doesn’t look good.

 Not only does it not look good but it clearly demonstrates a clear lack of command control. Where is the Precinct Lieutenant, or better the Captain, and why did this happen! Would this have happened with a New York born Police Commissioner, very doubtful? Or just one from Boston?

Wednesday, October 22, 2014

Why Unbundling Is Good for Society

CATV bundles packages. Often they do it because they have to if they want any of the content providers channels. In addition certain bundles like those carrying sports channels charge exorbitant rates and any subscriber is forced to pay whether they watch it or not.

Then what happens. This massive charge is some $20 per month per HH, or about $2B per month, goes to the teams, most to football teams. Then the money flows to players who it appears then go out and beat their female associates. Thus we poor folks who are forced to fund this assault on women have no voice in denying it.

Along comes some writer for the NY Times and takes the content providers position and argues:

It would be great if you could pay just for the channels you actually use, right? That’s the idea behind “unbundling,” which some consumer groups have advocated. Cable companies would sell you individual channels rather than vast packages of them. It’s an easy idea to get behind when cable companies, never the most lovable of service providers, are raising prices and merging. But surprisingly, unbundling cable channels wouldn’t make consumers materially better off. The most likely result would be people paying about the same amount for fewer channels.

He seems not to understand the fundamental law of content. It goes where the money is. Just look at CBS going rogue on the Internet with a subscription service. Even the Times is subscription. The author continues:

And consider how the cable channels would react to losing so many subscribers. The networks make money in two main ways: They get per-subscriber carriage fees from the cable companies that distribute them, and they sell advertising. Ad revenue would fall a little, as some viewers would drop channels they used to watch occasionally. The number of customers subject to carriage fees would plummet as consumers chose to order fewer channels. Meanwhile, each cable channel would know its remaining subscribers are mostly people who actually watch the channel, meaning they have a high willingness to pay. Knowing this, they would raise carriage fees — a lot.

Sorry, but perhaps he has not heard of the free market. It does work if compulsion is removed. If people get to choose and if the channels do raise the price then there is a clearing of the market. People will stay until the price exceeds the value.  It works in every other market, so why not content. It works in something we call "the movies". People go and pay to see a film, been doing so for over a hundred years. Forces better content, perhaps. But the above argument in my opinion is worthless, has no merit, and fails both on fact and on logic. 

Unfortunately I have the distinct disadvantage of experience. I spent five years in Cable, the early years, 80-84. I still have close friends there and in a manner the rule that "content follow the money" most likely change cable as well. Namely other distribution channels will evolve, the most challenging is 5G wireless, a Gbps distribution network. That will upset the apple cart. Unfortunately the author of the Times piece seem to be a Psychology major turned business analyst, should have stayed with the rat experiments. "Content follow the money".

Burn Your Boats!

Cortes actually sunk his boats but the reminder of burning the boats and moving forward still remains. The counter to this is the "Wing Walker" Rule' do not let go of something until you have a firm hold of something else. The problem in a start up is the latter and not the former. In the many companies I have done, "Burn your boats" is essential. It is akin to joining a religious order, you have one loyalty, to the new company.

Now in contrast I just read an MIT piece praising those who stay at MIT and also start a company. Frankly it violates the "Burn your boats" mantra. In fact, unless you are consulting or a Board member it is in violent contradiction to what is necessary. You are either one or the other.

The MIT piece says:

Not only is it possible to found one’s first company while at MIT, says Bill Aulet SM ’94 — it’s ideal. Aulet is co-director of the Martin Trust Center for MIT Entrepreneurship, along with MIT Sloan faculty member and Innovation Initiative co-director Fiona Murray. Founded in 1990 by Professor Edward Roberts, the Trust Center provides the expertise, support, and connections MIT students need to become effective entrepreneurs — including an extremely popular start-up accelerator capstone program and access to a rotating roster of entrepreneurs in residence. Up-and-coming founders can also avail themselves of the center’s workspace, which is equipped with such essentials as videoconferencing systems and floor-to-ceiling dry-erase walls.

Frankly dry-erase walls is the last thing one needs. A start up need focus and leadership, and execution, not a nice room. The article continues:

“When I say our students shouldn’t drop out of school to found a company, people always bring up Mark Zuckerberg. Well, you know what — that’s like saying Lebron James didn’t go to college, so you don’t need to. Some people are extreme cases. What about the MIT alumni who cofounded Qualcomm [Irwin Jacobs SM '57, SCD '59 and Andrew Viterbi '56, SM '57]? Their education at MIT gave them the foundation to start that company, not just in technology and engineering and math and science, but also in this carbon-based life form called humans. How do you communicate with people? How do you get along with people?

 Andy and Irwin did the start up at a totally different time. This is a strange and contradictory statement. I was there, Irwin was my Faculty Advisor and we worked together while he had Linkabit and I provide funding for Qualcomm when at NYNEX. The facts contradict what he says. They burned their boats and left academia to do the Qualcomm deal, again I was there.

Thus this article does a great dis-service in my opinion. MIT is a fantastic training ground for technology, and now gives some exposure to business.

But, and this is key, I am reminded by a statement by my students a few years back, "We did not know a MIT PhD could run a company?" My response, "Do I look like chopped liver!" They thought you needed some MBA or attorney from Harvard. You hire them, they do not employ you! But you must be ready to "Burn your boats". You must leave academia, and move forward. Beware quasi-academics who seem to be justifying their existence. The only way to learn how to be an entrepreneur is to do it. I guess it is kind of like sex.

Tuesday, October 21, 2014

Take the Money and Run!

Economists are a strange breed and European ones are the most strange. In a recent Think Progress posting they discuss a paper written by a German post-doc and a German Prof at U Penn. The article states:

A 90 percent tax rate on the top 1 percent of American earners wouldn’t just significantly reduce income and wealth inequality and boost government tax revenues. It would also be the optimal level for Americans’ welfare, according to a new paper from economists ... They find that the top marginal tax rate that maximizes government revenues before being so high as to discourage the wealthiest from earning more is very high, or 95 percent on those who are among the top 1 percent of earners. They also find that a 90 percent tax rate on the richest 1 percent could significantly reduce the Gini index, a measure of income inequality, and wealth inequality would also steadily decline. 

Now being in the top 1% does not mean a great deal if one lives in New York City or in almost all of California. In New York City one's marginal tax rate is 39% Federal, plus 14% City and State, plus 3.5% Medicare. That is 56.5% out the gate, well on the way to the above proposed target.

But the real question one should ask is who best redistributes money. Often those in the top 1% are major donors to Universities and Medical Centers as well as the Arts. For example one need only look at the Hospitals on First Avenue above 61st Street and see what the donors have done. Then compare that to a VA Hospital. It shows that the top 1% create much better outcomes in their redistribution. They really pay attention to what happens with what they give. Unlike the Federal Government whose "gifts" honor former politicians and enrich donors to campaigns. A second example is the New York Botanical Garden, supported by the top 1% and open to all who can come in and explore nature in a pristine location within the confines of New York City.

The question then simply is: who is the best re-distributor of others hard earned wealth, a collection of individuals or the Government. The answer is obvious, especially after examining the Government in the past six years. Individuals make better decisions than any Government official.

Furthermore it seems clear that some German economist most likely will never truly understand the way individualism would and has worked to make the United States what it is today. In my experience they have already two strikes against them; first they are economists and second they are Germans. As economists they see the world through often false paradigms, and from that they develop mathematical models to justify their views. Second, as Germans, based upon my decades of experience, they come from a culture of collectivism and with no inkling of individualism. As individualism was a discovery for de Tocqueville, at least he saw it in action, there never has been such a German equivalent.

Thus what we see coming from these economists in my opinion is their world view, which is reflective more of them than any reality that may exist in Nature.

Monday, October 20, 2014

Ebola and Politics

Ebola has been around for decades, and most likely longer albeit hidden in small communities in Central Africa. The current outbreak is most likely due to a failure of local Health Care systems to manages its spread. What makes Ebola and its sister viruses so worrisome if the way they cause mortality, they just decompose the body's cells at surfaces so that there is bleeding from every possible location in the victim. It is nasty, and highly contagious in the right circumstances. Nigeria seems to have controlled it, the other three countries seem to have let it run loose, most likely due to lack of infrastructure and leadership.

Now to the US. Clearly Texas has been a clear case of "dumb and dumber". All those who touched this issue demonstrated their ineptness and lack of preparedness. Yet it seems that certain commentators want to make this even more political. Take for example the Left wing blog, Syndicate, whose commentator states:

But, as recent events have illustrated, robust health agencies should not be taken for granted. In fact, over the past decade, the government has slashed budgets at several top health agencies, including the CDC, the National Institutes of Health (NIH), and state and local health departments. Between 2005 and 2012, for example, the CDC lost 17% of its funding, and officials recently reported that funding allocated for Ebola-type health emergencies is $1 billion less than it was in 2003.
 Now if we go back a century to the early 20th we see such massive outbreaks of TB and Influenza, much less of a budget but highly competent Public Health people. I recall my grandmother's tales of Seaview Hospital on Staten Island, the NY City TB sanatorium, the City was prepared, the professionals trained and the outbreak controlled. Massive numbers in New York were subject to a plethora of deadly diseases which were handled locally. New York survived. There was no Federal help since it did not exist, it was Harding and Coolidge. 

Yet this author in classic Progressive manners take on the budget cuts as the cause of the problem. The problem arose by what appears to be a deficit in Medical expertise, mistakes, and mishandling. In addition the Federal authorities exacerbated the problem.

This same author continues:

The NIH, which funds important advances in our understanding and treatment of diseases like Ebola, has also suffered cutbacks. Its budget has stagnated for most of the past decade, except for years when it was dramatically reduced, such as in 2013. This has forced productive research laboratories to close, putting potentially life-saving research – like that on an Ebola vaccine – on the back burner.
Now  the problem with Ebola was that it just was not a problem. There were small outbreaks and all generally were controlled. Here in the current situation we have a different problem, one of massive defects in the US system, for which no more money would ever solve. It is akin to just washing one's hands.

This Syndicate piece lacks in my opinion any credibility and just adds more political gasoline to the fire. It is a shame.

Wednesday, October 15, 2014

Microsoft Must Really Hate Its Customers

It appears again that Microsoft demonstrates its contempt for its customers. The issue is a re-release of an update package that results in crashes. A UK Blogger says:

This KB 2952664 update for Windows 7 has been continually pushed out by Microsoft almost every month since April 2014 with various tweaks and revisions. Most have had some degree of install problems or have caused some degree of system instabilities. The October 2014 version appears to be the most problematic. It isn’t needed so don’t install it. It is for reasons like this that I now  recommend NOT to use automatic updates  for windows and do a manual update on 2nd and 4th Tuesdays of the month and check what updates are being installed. Updates are supposed to secure the system and improve it, not cause problems. There have been far too many broken, damaged and unnecessary windows updates forced on a computer recently and it breaks the trust we have with Microsoft updates, that we expect to protect us and only give us automatic  updates we need and that are relevant to the computer.  Updates like this one should be optional and should not ever be pushed down the regular automatic update channel.

 It appears that Microsoft keeps sending out this rather dangerous item and the only solution is as noted above, stop the auto updates and only selectively update.

After the apparent anti-woman outburst by the current CEO one wonders how long this collection of overblown egos will survive.

Remember, if all else fails listen to the customer. This is something that Microsoft has always failed to do.