The App Economy

Posted on by David Wright

Michael Mandel’s article on the app economy is up. My initial comments here, though they now sound off mark against Mandel’s Atlantic piece.

My favorite bit:

Historically, industries that are job leaders during recessions tend to drive the expansion that follows. Once again, we confirm that innovation creates jobs in ways that cannot be anticipated beforehand. This is the future of industrialized countries.

It’s interesting to imagine what a world with a more substantial app economy would look like. More distributed, more virtual. This would probably be an economy marginally less dependent on large capital deployments and more dependent on open-source projects to upgrade infrastructure.

I’d be very interested to hear Tyler Cowen speculate on the implications for the app economy on TGS.

Some earlier comments of mine on the app economy.

Good Jobs

Posted on by David Wright

Here is David Pogue on the everlasting Foxconn saga. He is writing on the side of “our definition of sweat shops is a bit weird in the context of China”. Here is a salient quote:

The second enlightening twist, for me, was a note sent to me from a young man, born in China and now attending an American university.

My aunt worked several years in what Americans call “sweat shops.” It was hard work. Long hours, “small” wage, “poor” working conditions. Do you know what my aunt did before she worked in one of these factories? She was a prostitute.

And the article goes on with lots of interesting anecdotes. It’s good for my bias and all, so I post it here.

But the thing that intrigues me is a contradiction (hypocrisy?) in the way many in our culture look at manufacturing. We revere it, of course, but why? These don’t look like the kind of jobs that I want my kids to have.

It didn’t look like a sweatshop, frankly. The assembly-line work was certainly mind-numbingly repetitive — one woman files the burrs off the iPad’s Apple-logo hole 6,000 times a day — but that’s the nature of assembly-line work. Meanwhile, this factory was clean and modern.

More tellingly, the broadcast showed 3,000 young Chinese workers lining up at the gates for Foxconn’s Monday morning recruiting session.

Now, these workers know about the 2010 Foxconn suicides. They know that the starting salary is $2 an hour (plus benefits, and no payroll taxes). They know they’ll have 12-hour shifts, with two hourlong breaks. They know that workers sleep in a tiny dorm (six or eight to a room) for $17 a month.

And yet here they are, lining up to work! Apparently, even those conditions, so abhorrent to us, are actually better than these workers’ alternatives: backbreaking rural farm work that doesn’t prepare them to move up the work force food chain.

Isn’t a rich society one that is free from such toil? I still don’t really ‘get’ the manufacturing fetish.

Some Links For You

Posted on by David Wright

Fact checking Bob Dylan.

“These are the telephone tapes made by A.J. Weberman of two phone calls (Jan 6th & 9th, 1971) to Bob Dylan regarding an article published by Weberman concerning Bob Dylan. Weberman became infamous for going through Dylan’s trash and selling the garbage he found. I obtained this copy of these recordings from a generation-counting private collector in Ireland 15 years ago and, at the time, I was told they were sourced from a reel to reel copy made from Weberman’s cassettes, rather than from the Folkways LP edition. The material shows amazing insight into Dylan as a human being, a family man and an artist. I decided not to try to clean up the material using DSP since the previous trader left it as he got it.”

Jay Kang of Grantland on Linsanity.

Emphasis for my study tips: work out!

Paul Graham is building a real social network. I envy Y Combinaires (Y Combinatorians? Y Combinatorials? Y Combinastanis?).

Addendum:

Free marketeer porn!!

Boxing’s Great Weakness

Posted on by David Wright

In every other sport, we see the best vie with the best for props and trinkets. In boxing, the best control their own fate.

The downside? No champs.

Here is Kevin Iole interviewing Manny (via BLH):

Mayweather, it was suggested to Pacquiao, is winning the public relations contest handily, at least in the U.S. At that, Pacquiao looked up from his plate and put down his fork. His eyes widened and he leaned forward, staring intently across the table.

“He talks, he says all this, but you know what: He doesn’t want the fight,” Pacquiao firmly told Yahoo! Sports in an exclusive interview. “I want the fight. I’m the one who has wanted this fight all along.”

Not long after he was granted a conditional boxing license by the Nevada Athletic Commission to fight Cotto, Mayweather made a big deal of Pacquiao turning down a $40 million guarantee to fight him.

But Pacquiao said that was simply a bluff, a public relations stunt that didn’t bear any semblance to reality.

“He offered me $40 million, and no pay-per-view [money],” Pacquiao said, breaking into a laugh. “No pay-per-view. Can you believe that? Would you do that? Come on. What would he say if I offered him $50 million – not $40 million, $50 million – and said ‘No pay-per-view. Take this money and be happy, but no pay-per-view.’ He wouldn’t do it, either.”

This song has been on repeat for three years.

I’ll spare you the effort, here are your likely responses:

  • Why not just fight for the money? That’s so much money!
  • That blood test thing made me think Manny was scared (or worse) and wanted an excuse. Now I think maybe Mayweather does!
  • The fans want this fight! Don’t they want to see who is the best?
  • These prima donnas are so greedy. That’s so much money!
  • etc…

Unfortunately, you’d be missing the point.

It’s a old lesson, but Mike Tyson made me think of the psychology of ultra-high performance. He believed you can literally intimidate another fighter into folding under your knockout blow. One’s confidence must be unshakable to be champ.  In any sport.

Now consider Mayweather. He prides himself as much on escaping from Top Rank boxing to self-promotion as his boxing ability. He’s endlessly talking about his negotiating triumphs.

He’s so into it that taking a 50-50 deal means stamping a big ‘L’ on his own forehead. And if he loses at the negotiating table does that dent his confidence in the ring?

Tiger teaches us that a champ’s sense of invincibility must be complete. Would a wiser champ not expose himself to failure in so many arenas? In the mind of a champ, perhaps such admission of fallibility is just as deadly.

Manny, newer to the uber-champ game, probably feels this less keenly. He does sense, just like Haye and Chisora in that video, that the other guy is trying to push him around. And he’s pushing back. It’s the blood testing thing all over again: Mayweather’s mind games and Manny calling BS.

So now we have two alpha dogs angling for initial advantage. A 50-50 deal is a Manny victory, so Mayweather will happily never take the fight at those terms.

This is why you employ third parties to negotiate, by the way. These two have probably locked themselves into classic no-back-down positions. Their intermediaries should be ashamed of themselves. This is the richest opportunity on the table and they effed it up.

A caveat, of course, is that this fight becomes irrelevant the minute one or both of these guys loses his edge. Ironically, that’s all that will make it happen.

There’s plenty of precedent suggesting it’s just a matter of time.

Not From Jersey Shore

Posted on by David Wright

Ho, man.

Imagine a bar fight between two top-10 heavyweights?

Nearly happened tonight after Chisora lost to Vitali. I mean a literal barfight. During the post-fight presser.

(and it was a good main event, despite the laggy Epix livestream)

The dirt squirrel in me giggled through the whole 6:27. The rest of me is embarrassed to be a fan of this sport.

What a bunch of [bleep].

Resistance is Futile

Posted on by David Wright

Here’s a story on the Federal reserve of the 70s. Stagflation. Worst episode ever.

The upshot is that some guy named Arthur Burns got called to his doom as chair of the fed at the beginning of that era. Going in he was a VERY Bernanke-esque ‘best candidate available’. He understood monetary policy. Milton Friedman was a buddy and sang his praises. He espoused cutting-edge views on the drivers of inflation and these views are held as correct thirty years later.

Then he got assimilated.

Suddenly the rhetoric changed. Suddenly HE thought it was a good idea to keep those purse strings pulled wiiiide open. Suddenly he conjured up the demons that lie in wait under the beds of inflation hawks everywhere and set them loose upon the land.

Those boogeymen were real back in those olden days. And they were worse than Voldemort and they were ARTHUR BURNS’ fault.

Except that they weren’t, of course. Burns lost his soul and free will when he assumed the mantle of great status. He is no more an author of 70s stagflation than Bubba was of the Internet bubble or Dubya of the Afganistan war. These things are bigger than the personalities ‘in charge’ who, in societies like ours, merely reflect the median view as faithfully as possible.

Sumner then nails it:

Over the last few years I’ve occasionally argued that macroeconomists as a class are mostly to blame for the global economic crisis, not bankers or regulators. Seeing what happened under Burns makes me even more convinced that we macroeconomists are to blame.

Those who criticize Bernanke would do precisely what he has ‘done’ in his place, which is to hold up a small candle of influence to the fusion reactor of policy direction. He is a high status observer and were he out in the wild, the Bern-ank’s blog would be just as exasperated as the next.

Perhaps.

And part of it is looking the other way; part of it is this claim I make that there’s over 100 economists in the United States that think they are in the top 10 of economists, right? So they think they are in the running for Chair of the Fed or the Council of Economic Advisers or the National Economic Council, and so they hold their fire. I think we are a little bit captured.

Reasons Why Dave Grohl Is Awesome

Posted on by David Wright

I am an unabashed fan of Dave Grohl. I don’t have many (any other?) heroes, but this guy effing rocks. Pun intended.

For instance:

I didn’t know the backstory about this song (and it was my immediate fav from that album):

In May 2006, Grohl sent a note of support to the two trapped miners in the Beaconsfield mine collapse in Tasmania, Australia. In the initial days following the collapse, one of the men requested an iPod with Foo Fighters album In Your Honor, to be sent down to them through a small hole. Grohl’s note read, in part, “Though I’m halfway around the world right now, my heart is with you both, and I want you to know that when you come home, there’s two tickets to any Foos show, anywhere, and two cold beers waiting for yous. Deal?”[39] In October 2006, one of the miners took up his offer, joining Grohl for a drink after Foo Fighters acoustic concert at the Sydney Opera House.[40] Grohl wrote an instrumental piece for the meeting, which Grohl pledged he would include on the band’s next album.[41] The song, titled “Ballad of the Beaconsfield Miners,” appears on Foo Fighters’ 2007 release Echoes, Silence, Patience & Grace, and features Kaki King.

There’s this:

And this.

And that’s just stuff I read today.

My first experience watching Dave was at this concert. I can’t tell you the pleasure of owning the dvd of my first time seeing my favorite band. And it was an awesome show. He always puts on an awesome show.

He is too rare a combination of success, work ethic, unaffected empathy, compassion, good humor and unselfconscious charisma.

And I suspect he’d hate to read such sycophantic claptrap about himself.

The good guys can win, too.

Agents

Posted on by David Wright

By 1999, Goldman’s reputation had recovered to its previous zenith–to the point that a public offering again was possible. Its partners had debated the merits of such a change for years, and, even when the decision was made to go forward, the decision was reached only after vigorous debate and much disagreement. In favor of going public were those partners who saw a need for a larger capital base to allow the firm to compete in the increasingly globalized economy with the larger players both in the U.S. and overseas. Furthermore, once a public market was established for its shares, Goldman would have a currency other than cash with which to acquire other businesses and grow into financial services it could not afford to enter as a private partnership. On the other side of the argument were those partners who were worried about the impact that transition to a public firm would have on the firm’s culture. Heretofore, the firm had been known for its low ego and gang-tackling ethos, with aggressive personalities kept in check by the partnership potential that was strongly linked to both productivity and cultural fit.

What neither the firm’s partners nor outside observers were able to foresee was the resulting change in the firm’s risk tolerance. Goldman Sachs was the last of the major Wall Street houses to go public. (Donaldson, Lufkin and Jenrette had been the first in 1970.) As of May 4, 1999, all of Wall Street were now playing with other people’s money (whose acronym, OPM, is not coincidentally pronounced “opium” in financial circles).

That’s a former Goldman Partner.

What goes unsaid is that it isn’t just shareholders and bondholders that got screwed. It’s that, somehow, lax oversight can lead to systemic armageddon.