Business / Economics Archive

17 July 2009 4:00 PM

Business / Economics

The Econ Bubble Burst

The Economist:

OF ALL the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself. A few years ago, the dismal science was being acclaimed as a way of explaining ever more forms of human behaviour, from drug-dealing to sumo-wrestling. Wall Street ransacked the best universities for game theorists and options modellers. And on the public stage, economists were seen as far more trustworthy than politicians. John McCain joked that Alan Greenspan, then chairman of the Federal Reserve, was so indispensable that if he died, the president should "prop him up and put a pair of dark glasses on him."

In the wake of the biggest economic calamity in 80 years that reputation has taken a beating. In the public mind an arrogant profession has been humbled. Though economists are still at the centre of the policy debate--think of Ben Bernanke or Larry Summers in America or Mervyn King in Britain--their pronouncements are viewed with more scepticism than before. The profession itself is suffering from guilt and rancour. In a recent lecture, Paul Krugman, winner of the Nobel prize in economics in 2008, argued that much of the past 30 years of macroeconomics was "spectacularly useless at best, and positively harmful at worst." Barry Eichengreen, a prominent American economic historian, says the crisis has "cast into doubt much of what we thought we knew about economics."

14 July 2009 8:30 AM

Business / Economics

The End of Generic Pickup Lines?

Julian Sanchez:

We're at most a few years off from broad adoption of augmented reality applications in widely-used smartphones, which will have all of us radiating reams of data to anyone in our physical proximity who actually cares. Your Facebook profile will dog you like one of those floating Sims icons. You won't just know what the girl sitting across the coffee shop is blasting on her iPod, you'll be able to listen in. All the tech is actually here already, if not in quite the fancy form it's implemented at the link above. All it would take is for someone to integrate the location-sensitive functions of an app like Loopt into the apps for Facebook or Last.fm, and you've got a point-and-profile system. The real question is whether people actually want to signal that much in the physical context. Some of us are chary of giving every stranger in ping-shot a pretext for striking up a conversation.

14 July 2009 7:30 AM

Business / Economics

The IOU Rush

Matt Yglesias:

This story is five days old, but it strikes me as something that deserves more attention--there's a bill being considered in the California Assembly that would have the state accept state-issued IOUs as payment for taxes. That would, of course, give the IOUs some real value to anyone who owes taxes. And that, in turn, means that all kinds of business owners and others would have reason to offer to buy IOUs from IOU-recipients provided they could get some kind of discount. Which is another way of saying that California would be essentially creating a new currency, which James Galbraith suggests over email that we call the "CAIOU" pronounced like "cailloux" (French for pebble), and the discount would be the exchange rate.

In most places I think this would be totally non-viable. But California is very large and California metro areas don't tend to involve inter-state commuters (it's not like New York or Philly or DC, in other words) so you could actually imagine this working. And monetizing the state's debt is something that could look very appealing to legislators once they realize it might be doable. Which doesn't mean it's a good idea. For one thing, what California's already done with the IOUs arguably violates the Constitution's ban on states creating currency. Thus far, nobody's inclined to try to do anything about it, but pushing the envelop might force the federal government to try to do something in order to maintain the credibility of its own debts.

10 July 2009 1:45 PM

Business / Economics

Stimulus, Part Deux?

Ezra Klein says we should think about the wisdom of a second stimulus as follows:

Imagine I'm at the market and I'm predicting how hungry I'll be later tonight. I figure I'll have a big lunch, so I buy a modest dinner. I get busy, though. I don't eat a big lunch. I eat my modest dinner. I'm still hungry.

Did my dinner "not work"? No. My level of hunger changed. And that's what looks to have happened here: The stimulus was built for lower unemployment expectations. We can assume the stimulus will work in blunting some of the impact, but also predict, quite confidently, that it will not be fully up to the task. The question is whether we should go back to the store for more dinner materials after our light lunch, knowing we'll need it later? Or wait and hope that our small dinner is enough, knowing the stores might be closed and we won't be able to get anything?

I'd say this analogy is perfect, except that the shopper should take into account the fact that he doesn't actually have any money to pay for more groceries, so that he'll have to put anything he buys on an already maxed out credit card that extends extra buying power only at a hefty interest rate. Also, a good percentage of whatever the shopper buys is going to just fall out of the bag on the way home and be wasted on the side of the road. Nor will the food taste particularly good, or be very healthy.

10 July 2009 11:45 AM

Business / Economics

Where's the Beef?

Rich Lowry argues that the stimulus was a bad idea:

The rosy apocalypse is an artifact of both ideological naïveté and knowing cynicism. The administration genuinely believed, against all historical experience, that government spending would boost us out of the recession. And it knew it had to assume an unrealistically rapid, robust economic recovery, because otherwise the already-horrid deficit projections would look worse. So Obama talked up the crisis to get the stimulus passed, and after that . . . happy days again!

If only the job market were cooperating. In a report prior to the passage of the stimulus, the soon-to-be head of the Council of Economic Advisers, Christina Romer, suggested the unemployment rate wouldn't increase beyond 8 percent. It now stands at 9.5 percent and will go higher. The Obama stimulus is falling victim to the poor timing and inefficiencies of all such recession-fighting spending programs.

10 July 2009 11:15 AM

Business / Economics

Paging Financial Journalists

Please explain this.

10 July 2009 9:30 AM

Business / Economics

Who Needs Paper and Ink?

Michael Crowley likes the New York Times' new e-reading application:

Given that some people spend $5 per day on coffee, paying that much per month for online access the best newspaper in the world strikes me as an absolute no-brainer. I myself would pay twice as much. I hope the idea catches on, and I hope this marks a shift from the days of newspapers panicking to the start of successful new business models.

One way the NYT can make online subscriptions far more appealing is by doing a better job of promoting the terrific new TimesReader 2.0, a simple but slick Adobe-based application that you install onto your computer in like two minutes. I've been meaning to plug this for a while, because it was only after I tried the incredibly user-friendly and print-like TimesReader that I could imagine surviving without the Times on paper. Among other things, it's most excellent for traveling, because it downloads the day's entire print paper (with regular auto-updates from the web during the day) and saves it offline on your hard drive, which lets you read it anywhere, regardless of whether you have an Internet connection.

10 July 2009 7:30 AM

Business / Economics

The Authenticity Con

Yesterday I disparagingly linked this manifesto.

Julian Sanchez didn't like it either:

A handful of genuinely innovative business practices--for certain purposes, at any rate--are planted in horseshit, watered with marketing jargon, and voila, Capitalism 2.0 springs forth and blossoms. There are vague hints that this will somehow produce well-functioning capital markets that aren't as susceptible to bubbles and crashes, but if there's an actual model for enterprises above the scale of the village fruit stand, I'm missing it. But of course, that's not Havas' wheelhouse--their job is to bundle and peddle those elements of true novelty as a kind of meta lifestyle brand, with which to sell their clients to you, and themselves to new clients. And it's a hell of a pitch: Why settle for making consumers crave the self-image you're selling when you can make them dependent on you for Authentic Community?

Bonus points for chutzpah: If you point out that they're not actually, you know, saying anything, these shameless con artists will accuse you of cynicism. I'm hard-pressed to come up with anything more cynical than gussying up the 21st century equivalent of the Burger King Kids Club as a "movement," but I'm funny like that.

That actually might do a disservice to the Burger King Kids Club. Paper crowns? How bad could it be?

09 July 2009 1:12 PM

Business / Economics

The Rise of China

The Economist says the Monroe Doctrine is dead:

YOU could have easily missed a small bit of news this morning: China has supplanted the US as Brazil's biggest trading partner. Beijing, seeking to take advantage of Latin America's raw materials, has greatly increased its activity in the region over the past decade (much as it has done in Africa). The US, meanwhile, has been beset by wars and economic crisis, leaving a vacuum. This is not to say that China is now the dominant force in the region--McClatchy reports that "trade between the United States and Latin America still dwarfs China's trade with Latin America". But it is a useful economic warning sign. Whether you are Lula da Silva or Hugo Chavez, would you rather deal with China's "no-questions-asked" foreign policy or an anti-corruption, pro-transparency, pro-labour, environmentally conscious, human-rights-pushing American government?

09 July 2009 12:32 PM

Business / Economics

Public Employee Unions, Cont.

Freddie is upset by a previous post wherein I suggested that public employee unions should be abolished, and a Matt Welch post highlighting the outrageous costs imposed by public sector unions in California.

Freddie writes:

Welch ascribes the lions share of California's fiduciary crisis to (can you guess?)... the unions! Meanwhile, he does nothing to acknowledge why unions exist and why people join them: because unions help workers to improve the material quality of their lives. You could be excused, reading economic conservatives' attitudes about unions, for thinking that unions must be a product of some malevolent intelligence bent on destroying our society. In our discourse about unions we are not allowed to point out that unions exist because they are a net positive influence on the lives of those within them, or that improving the financial security and material well-being of the people within society is one of the basic functions of government.
I'll certainly acknowledge that California's public employee unions improve the well being of its members. The problem is that the outlandish compensation it wins workers comes at the expense of the common good. The most obvious example are public employee pensions. In California, a state worker can retire at age 50, do absolutely nothing all day, and collect 90 percent of their salary for the rest of their lives! 5,000 of these pensions amount to six figures incomes. Nor can the state afford the system it has. As the Matt Welch piece mentions, "the state's annual pension fund contribution vaulted from $321 million in 2000-01 to $7.3 billion last year." That is a rather alarming rate of growth, and an astonishing figure, don't you think? Given that the state is bankrupt and issuing IOUs to its creditors, it doesn't seem unreasonable to complain that public employee unions have extracted benefits that are both obviously unaffordable and far in excess of what is enjoyed by the taxpayers who finance them.

Freddie goes on to write:

We are instead expected only to constantly harp on the horrible greed of Detroit autoworkers or California teachers, who have the temerity to want to maximize their wages, to gain job security through their labor and to collectively bargain with their peers in order to do so. Whether or not on net those positive public goods outweigh the negative economic effects of union is a matter of argument. But to ignore those things entirely is not to have an argument at all. That's where we stand in our discussion of unions, though, with only the bad effects at issue and the positive effects dismissed as sops to special interest groups. This is not weak manning. It's no-manning, thwacking away at an antagonist idea without even a shred of a notion that it is necessary or helpful to consider why people support unions in the first place.
Reading all this, you'd think that Matt Welch and I attacked the idea of unions generally. In fact, we attacked public sector unions in a specific state. The specific argument we're making is that their costs outweigh their benefits. Though Freddie acts as though every union is generally under attack, he mentions the teachers unions and Detroit autoworkers specifically because they are other examples of specific unions that come under fire because their effects are particularly deleterious.

I'm sure that somewhere out there, you'll find an economic conservative who attacks all unions as corrupt and terrible. That would be wrongheaded. Some unions are necessary. Sometimes the benefits of unions outweigh the costs. That isn't the case with California's public employee unions.

One last point I'd like to address before closing:

Welch and Friedersdorf  are comfortably entrenched in the world of elite media. That's not a knock on them, and I'm sure they both deserve it. Nor is it precisely an argument against their position. Whether or not unions are a net good for society that we should defend can't ultimately have anything to do with how critics of unions live.  But I wish on an emotional level that people like Welch and Friedersdorf would take care to think a little bit more about what exactly they are advocating, to acknowledge that real people will face real hardship without unions, and to stop talking like every union member is some nefarious villain.
Ah yes, elite journalism. What a comfortable, well-compensated life we all lead! Folks in a cushy growth industry like ours wouldn't even have any use for lifetime job guarantees or defined benefit pensions. It's no wonder we aren't more deferential to, say, a retired pr flack from a municipal fire department pulling in 90k per year to do nothing from 50 on.

09 July 2009 9:30 AM

Business / Economics

Calling All Financial Reporters

This sounds like a bad idea:

July 8 (Bloomberg) -- Morgan Stanley plans to repackage a downgraded collateralized debt obligation backed by leveraged loans into new securities with AAA ratings in the first transaction of its kind, said two people familiar with the sale.
But despite my diligent efforts to understand the finance industry, I can't be sure. Help! Megan? Michael Lewis? Planet Money?

Is this a bad idea?

08 July 2009 5:55 PM


The Pawlenty Plan

08 July 2009 3:03 PM

Business / Economics

Breaking the Bank

Matt Welch on California:

During the last two decades, the Golden State has been transformed from what was once known as the nation's most anti-labor outpost to a state essentially run by public-sector unions. Nearly three in five publicsector workers are unionized, compared to less than two in five public employees in other states. The Democratic Party, which is fully in hock to unions, has controlled the legislature and most statewide posts, with the notable exception of the governor's mansion, for more than a decade. That means more government workers, higher salaries, and drastically higher pension costs. 

According to Adam Summers--a policy analyst at the Reason Foundation, the nonprofit that publishes this magazine--the state's annual pension fund contribution vaulted from $321 million in 2000-01 to $7.3 billion last year. According to public databases, more than 5,000 people are drawing pensions in excess of $100,000 from the state of California each year.

So pervasive is the union influence that big labor doesn't even try to defend its deleterious effects on California's finances. Just before the special election, a member of the Los Angeles Times editorial board asked Service Employees International Union chief Andy Stern to respond to charges that unions are the 21st-century equivalent of the railroads that were once all-powerful in California. Stern verbally shrugged: "I think democracy is an ugly thing at times."

Here's an idea: outlaw public employee unions.

08 July 2009 2:45 PM

Business / Economics

"Let's Treat Borrowers Like Adults"

Todd Zywicki:

Imagine a man in California who speculated in real estate at the height of the housing bubble. He bought a house with no money down and an adjustable-rate mortgage. But before he could flip that house for a profit, the market collapsed. He then owed more than his house was worth, but he knew that under his state's laws it would be impossible for his bank to sue him for the balance of his loan if he abandoned the house to foreclosure.

What is this man likely to do?

08 July 2009 10:30 AM

Business / Economics

Behind the Financial Crisis

Michael Lewis:

Here is an amazing fact: nearly a year after perhaps the most sensational corporate collapse in the history of finance, a collapse that, without the intervention of the government, would have led to the bankruptcy of every major American financial institution, plus a lot of foreign ones, too, A.I.G.'s losses and the trades that led to them still haven't been properly explained. How did they happen? Unlike, say, Bernie Madoff's pyramid scheme, they don't seem to have been raw theft. They may have been an outrageous departure from financial norms, but, if so, why hasn't anyone in the place been charged with a crime? How did an insurance company become so entangled in the sophisticated end of Wall Street and wind up the fool at the poker table? How could the U.S. government simply hand over $54 billion in taxpayer dollars to Goldman Sachs and Merrill Lynch and all the rest to make good on the subprime insurance A.I.G. F.P. had sold to them--especially after Goldman Sachs was coming out and saying that it had hedged itself by betting against A.I.G.?

Since I had him on the phone I asked Jake DeSantis for what Congressman Grayson had asked Edward Liddy: names. He obligingly introduced me to his colleagues in London and Connecticut, and they walked me through what had happened--all of them speaking to someone from the outside for the first time. All, for obvious reasons, were terrified of seeing their names in print, and asked not to be mentioned by name. That was fine by me, as their names are not what's interesting. What's interesting is their point of view on the event closest to the center of the financial crisis. For while they disagreed on this and that, they all were fairly certain that if it hadn't been for A.I.G. F.P. the subprime-mortgage machine might never have been built, and the financial crisis might never have happened.

08 July 2009 9:00 AM

Business / Economics

The Coming Tax Hike?

Derek Thompson:

The problem with trying to pass a $1.3 trillion universal health care plan, on top of raising the price of carbon emissions, on top of spending over a trillion dollars to stimulate the economy is that, as they say, a trillion here and a trillion there, and pretty soon you're talking about real money. So let's talk about real money. Where're we gonna get some? Your paycheck. How're we gonna do it? Raise your taxes.

So I'm pleased to see the Economix blog is putting together a motley crew of economists and journalists who have said just that: Taxes are coming. With federal revenue less than 19% and federal spending surging over 20% with the bailouts, it stands to reason that even if health care reform miraculously turns deficit-neutral in a decade, we're going to need politicians to get serious about higher taxes -- and maybe not just for the rich.
Naturally, President Obama pledged during his campaign that he wouldn't raise taxes on anyone making less than $250,000. Put another way, if he keeps all of his promises, he is going to put America in an even more reckless, unsustainable position than we're in already. So much for the reality based community.

08 July 2009 2:59 AM

Business / Economics

Google's Big Announcement

PC World:

Alas, poor Microsoft. First Google dominates the search engine market. Then Google enters the Web-based e-mail market. Android invades Windows Mobile's turf. And then Google jumps into the browser market with Chrome. Tonight Google announced that it has upped the ante yet again, and will release a new operating system based on Google Chrome.

The new operating system, aptly named Google Chrome OS, will be an open-source operating system initially geared toward netbooks, Google announced in a press release this evening.

Google claims the new operating system, which should ship in the second half of next year, will be "lightweight" and heavily Web-centric.

With Chrome OS, Google plans to follow the same formula it used with its browser: "Speed, simplicity and security are the key aspects of Google Chrome OS. We're designing the OS to be fast and lightweight, to start up and get you onto the web in a few seconds," Google stated in its announcement. "The user interface is minimal to stay out of your way, and most of the user experience takes place on the web."

Google will also make security a high priority with Chrome, stating that they "are going back to the basics and completely redesigning the underlying security architecture of the OS so that users don't have to deal with viruses, malware and security updates. It should just work."

Good idea! See more here.

04 July 2009 4:24 PM

Festival Panels

ASPEN PANEL: Winning the Green Innovation Race

01 July 2009 2:11 AM

Business / Economics

How Big Business Manipulates the Law

30 June 2009 2:02 PM

Business / Economics

When Everyone Is Big Business Friendly

David Brooks writes:

Democrats learned never to go to war against the combined forces of corporate America. Today, whether it is on the stimulus, on health care or any other issue, the Obama administration and the Congressional leadership go out of their way to court corporate interests, to win corporate support and to at least divide corporate opposition.
This reminds me of an idea Peter Suderman had:

...what if the GOP fumbles around for a while, fails to develop a coherent message, continues to shout "Reagan!" in place of proposing policy, fails to find fresh political talent, and loses a series of elections, to the point where many begin to predict permanent minority status?

Meanwhile, the Democrats spend the next decade or so getting used to power in Washington. A lot of their agenda involves finding new ways to regulate various industries. As this happens, industry, looking for influence, naturally begins to fund Democrats and Democratic lobbyists more heavily (corporate donations are already shifting away from the GOP), and rent-seeking becomes even more prevalent on the Hill. It won't be long before Democrats, regulators, and the lobbying world have a very cozy relationship.

This opens up the opportunity for the right to exploit the anti-corporate outrage in middle America -- outrage we can already see boiling up in the crusades against earmarks (handouts to donors and corporate interests), against CEO pay, against hedge fund tax rates and oil company profits. But instead of running the traditional anti-corporate campaigns, which mainly focus on taxing and regulating big-business, the right runs against the way liberal politicians have gotten into bed with corporations. It's against the Washington favor-racket, against back-room politics, against collusion between business and government. This pleases libertarians somewhat and, if done properly, keeps low-taxers in the fold. 

Someone certainly needs to say "down with big business."

30 June 2009 8:00 AM

Idea of the Day

Cut Out the Rating Agencies

Virtually everyone agrees that some of the blame for the financial meltdown should fall on the shoulders of the rating agencies, which led investors astray by failing to accurately evaluate the soundness of mortgage-backed securities. Rating agencies could be reformed in several ways, but of the various options, my favorite solution is to get rid of them altogether. Read More

Workingmen 2

29 June 2009 4:12 PM

Business / Economics

Recession Strikes -- Men Hit Hardest?

The Week in Review:

Writing in Foreign Policy, Reihan Salam joins those anointing this downturn a great "he-cession" (more links below) -- in which "the great shift of power from males to females is likely to be dramatically accelerated" across Europe and the United States.

Citing heavily disproportionate job losses among men, Salam notes that, by inflating a housing bubble and attendant blue-collar industries like construction, Wall Street's macho risk-taking may simply have masked longer-term declines in male economic power brought on by globalization.

Now, he writes, the world must figure how to handle a different macho problem: masses of "surly, lonely and hard-drinking men" without jobs, wives or much education, and more prone to mental illness.

29 June 2009 2:18 PM

Business / Economics

Free Falling

Malcolm Gladwell doesn't buy the argument asserted in the new book by Chris Anderson, Free:

There are four strands of argument here: a technological claim (digital infrastructure is effectively Free), a psychological claim (consumers love Free), a procedural claim (Free means never having to make a judgment), and a commercial claim (the market created by the technological Free and the psychological Free can make you a lot of money). The only problem is that in the middle of laying out what he sees as the new business model of the digital age Anderson is forced to admit that one of his main case studies, YouTube, "has so far failed to make any money for Google."

Why is that? Because of the very principles of Free that Anderson so energetically celebrates. When you let people upload and download as many videos as they want, lots of them will take you up on the offer. That's the magic of Free psychology: an estimated seventy-five billion videos will be served up by YouTube this year. Although the magic of Free technology means that the cost of serving up each video is "close enough to free to round down," "close enough to free" multiplied by seventy-five billion is still a very large number. A recent report by Credit Suisse estimates that YouTube's bandwidth costs in 2009 will be three hundred and sixty million dollars. In the case of YouTube, the effects of technological Free and psychological Free work against each other.

So how does YouTube bring in revenue? Well, it tries to sell advertisements alongside its videos. The problem is that the videos attracted by psychological Free--pirated material, cat videos, and other forms of user-generated content--are not the sort of thing that advertisers want to be associated with. In order to sell advertising, YouTube has had to buy the rights to professionally produced content, such as television shows and movies. Credit Suisse put the cost of those licenses in 2009 at roughly two hundred and sixty million dollars. For Anderson, YouTube illustrates the principle that Free removes the necessity of aesthetic judgment. (As he puts it, YouTube proves that "crap is in the eye of the beholder.") But, in order to make money, YouTube has been obliged to pay for programs that aren't crap. To recap: YouTube is a great example of Free, except that Free technology ends up not being Free because of the way consumers respond to Free, fatally compromising YouTube's ability to make money around Free, and forcing it to retreat from the "abundance thinking" that lies at the heart of Free. Credit Suisse estimates that YouTube will lose close to half a billion dollars this year. If it were a bank, it would be eligible for TARP funds.

29 June 2009 10:42 AM

Business / Economics

The Idea of Scarcity

The Washington Post:

To put it bluntly, the fiscal policy of the United States is unsustainable. Debt is growing faster than gross domestic product. Under the CBO's most realistic scenario, the publicly held debt of the U.S. government will reach 82 percent of GDP by 2019 -- roughly double what it was in 2008. By 2026, spiraling interest payments would push the debt above its all-time peak (set just after World War II) of 113 percent of GDP. It would reach 200 percent of GDP in 2038.

This huge mass of debt, which would stifle economic growth and reduce the American standard of living, can be avoided only through spending cuts, tax increases or some combination of the two. And the longer government waits to get its financial house in order, the more it will cost to do so, the CBO says

Flick user HealthServiceGlasses

24 June 2009 4:56 PM

Business / Economics

The Idea of Economic Complexity

RADLEY BALKO: "No single man is capable of making a toaster." Explanation here

24 June 2009 11:02 AM

Business / Economics

Big Business and Big Government

Anyone who's ever read Down with Big Business, the famous Robert Bartley editorial, should also read Tim Carney's piece today on the tobacco legislation that President Obama just signed, and the misleading rhetoric surrounding it:
Read More

22 June 2009 2:43 PM

Business / Economics

Video of the Day

The Atlantic's Bob Cohn and Michael Hirschorn discuss why even as newsweeklies like Time, Newsweek and US News and World Report decline, The Economist is thriving. Video is below the fold.

Mr. Hirschorn's article on the same topic appears in The Atlantic's current issue.
Read More

Flickr user Uncommon Depth

22 June 2009 1:15 PM

Business / Economics

Don't Kill Copyright -- Reform It

Ross Douthat mediates between Mark Helprin, who wants copyrights extended, and Lawrence Lessig, who wants to remake the current system.
Read More

Flickr user Kevin Zollman

22 June 2009 12:33 PM

Business / Economics

"Worst Idea Ever"

E-mail spam.

What an awful drag on a wonderful means of communication.

There's a certain kind of "spam" that seems acceptable -- for example, a guy is looking for a new apartment, and e-mails his grad school list-serv to see if anyone has a room opening up between terms.

But what about the worst kind of spam -- the completely unsolicited junk sent by folks who haven't any connection to you, and aren't even selling anything you'd remotely dream of buying? Check your spam folder now. See what I mean? Sending it out must be profitable, or else it wouldn't happen. But I've never even considered purchasing anything solicited in that manner, nor has anyone I know.

So who is it that's buying the stuff advertised in spam e-mail? Anyone out there? You can comment anonymously.

Flickr User Rob J Brooks

19 June 2009 11:50 AM

Business / Economics

Melts on Your Cake, Not In Your Hands

Okay readers, let me confess that I've been holding back - I've got an idea that could revolutionize the birthday celebration: the chocolate candle. There isn't any shame in admitting that the wax candles you use for even the most momentous birthdays drizzle hot viscous paraffin all over your icing. It isn't pretty, but we've all been there.

What if hot viscous chocolate melted down onto that cake top instead? Too decadent? Please. Life is short, as the birthday milestone ought to remind you. And these chocolate fire sticks are so much more civilized than mom cleaning up after the child who took too long to blow out 20th Century candles by picking wax from the frosting with fingernails that sometimes fall off as readily as they pressed on. Would you rather have a fake fingernail atop your slice or a Ghirardelli complement?

I know what you're now thinking. That you'd expect to pay $40, $50 or even $60 dollars for candles like that. That a recession is no time for coco luxuries. But what if I told you that assuming a cut rate chemist, physical properties amenable to what I've described, a bit of venture capital and a whole lot of string, I could bring you these candles for less than half that. Would it sweeten the deal if I threw in a novelty lighter?

Wax is for surfers and creepy celebrity museums. Chocolate candles are the future.

17 June 2009 12:58 PM

Business / Economics

Go Midwest, Young Man

On a recent cross country road trip, I stopped in Ord, Nebraska, where I interviewed Caleb T. Pollard, a 29 year old man charged with bringing young professionals, businesses, and even tourists to a rural town hours from the Interstate. The goal is for Ord, population 2,269, to avoid the fate of certain other Midwestern communities: a dearth of young people, a steady population decline, a hollowing of downtown, a flight of the professional and creative classes to the big city.

One idea for achieving that goal: "Insourcing."
Read More

17 June 2009 11:55 AM

Business / Economics

Hypocrisy In American Style Capitalism

Joseph Stiglitz has an interesting piece up at Vanity Fair arguing that "when the current crisis is over, the reputation of American style capitalism will have taken a beating."

The fall of the Berlin Wall, in 1989, marked the end of Communism as a viable idea. Yes, the problems with Communism had been manifest for decades. But after 1989 it was hard for anyone to say a word in its defense. For a while, it seemed that the defeat of Communism meant the sure victory of capitalism, particularly in its American form. Francis Fukuyama went as far as to proclaim "the end of history," defining democratic market capitalism as the final stage of social development, and declaring that all humanity was now heading in this direction. In truth, historians will mark the 20 years since 1989 as the short period of American triumphalism. With the collapse of great banks and financial houses, and the ensuing economic turmoil and chaotic attempts at rescue, that period is over. So, too, is the debate over "market fundamentalism," the notion that unfettered markets, all by themselves, can ensure economic prosperity and growth. Today only the deluded would argue that markets are self-correcting or that we can rely on the self-interested behavior of market participants to guarantee that everything works honestly and properly.
It's always a fraught exercise to predict what idea historians are going to take away from a period that you're still living. Were I to hazard a guess, however, I'd say that looking back on this economic crisis, historians are going to conclude that it pales in importance to the rise of China and India as economic powers -- and that their rise is due to the fact that they've essentially grafted the core insights of American capitalism into their societies.
Read More

Flickr user Duchamp

17 June 2009 9:32 AM

Business / Economics

"Worst Idea Ever"

Charles Homans of The Washington Monthly offers an inspired nomination: "the ketchup packet." As soon as I saw the words I concurred, but I followed up to make sure I knew exactly what he meant.

"Any non-obvious reasons for your pick?" I asked.

"The design flaws are pretty obvious," he wrote. "Difficulty of operation, wastefulness, insufficient quantities for any conceivable ketchup application. That's what makes its existence in present form--and the lack of design improvements over however many decades--so baffling. Mayonnaise packets were actually able to solve most of these problems. It suggests to me that there must be someone powerful with a vested interest in the ketchup packet as it stands."

Of course, there are powerful people behind ketchup, and dedicated men have tried and failed to challenge its status quo before.

(Send your own "Worst Idea Ever" nominations to Thinkingbig@theatlantic.com)

17 June 2009 6:15 AM

Business / Economics

"The Story of a Great Monopoly"

In March 1881, The Atlantic published "The Story of a Great Monopoly," one of the earliest pieces of progressive muckraking to run in a national, well-respected magazine--and the first exposé of the Standard Oil Trust to be taken seriously. "The issue in which the article appeared sold out seven printings, and it helped bring antitrust legislation to the forefront of national debate," notes Sage Stossel, a longtime Atlantic editor who is one of the magazine's most knowledgeable and dedicated historians.

It is no wonder that the article augured the passage of the Interstate Commerce Act of 1887 and the Sherman Antitrust Act of 1890 -- after laying out numerous specific complaints against the biggest corporations of the day, it concludes by offering as powerful an objection against the idea of monopoly power as has ever been written:
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16 June 2009 10:59 AM

Business / Economics

Notes on the Flying Car

As a kid, I desperately wanted one of the hover boards featured in Back to the Future II. I wasn't alone. The devices seemed so compelling that Snopes had to debunk rumors of their existence that circulated in elementary schools including mine. Even in the films, however, hover boards were for kids and teenagers. The dream for the 16-and-up set was the flying DeLorean, perhaps the most iconic depiction of humanity's long running, ongoing quest for the flying car.

A staple of futuristic films and cartoons, it feels as though we've been promised the flying car as surely as a machine to teleport us from place to place -- and that we're destined to be disappointed for quite awhile longer. Though we lack teleportation technology, however, we possess the tools to fly and to drive. So why no flying car? What's the hold up? I've long thought the fundamental flaw in our approach is a focus on making cars fly, rather than making a plane that drives better.

And it seems my hunch is being vindicated.
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