Monthly Archives: February 2016

You Can’t Have a Prosperous Economy Without an Entrepreneurial Government

By Mariana Mazzucato – What is missing from the public perception is how through the history of modern capitalism, the state has done, and continues to do, what markets simply won’t.

One of the biggest banks in the US is called Chemical Bank because it had its origin in funding the chemical sector—unthinkable today that a bank would be so focused on the real economy!

Yet in recent years finance has not been funding investment or innovation in the real economy but financing … itself. Since the 1970s, financial innovations coupled with deregulation have made it easier to earn profits from speculative investments in financial assets.

Yet capital development of the economy requires ‘patient, long-term committed finance.’ Indeed the IT revolution in the US, was financed initially by patient public finance provided by a network of strategic and mission-oriented agencies: like DARPA in the Department of Defense, NIH in the Department of Health, NSF, NASA, and the Small Business Innovation Research program (which has given more early stage high risk finance to companies than the entire venture capital sector.) more> http://goo.gl/EiEsqE

The Ancient Storytelling Secret That Every Leader Needs To Know

BOOK REVIEW

Illuminate: Ignite Change Through Speeches, Stories, Ceremonies, and Symbols, Authors: Nancy Duarte, Patti Sanchez.

By Patti Sanchez – We already know how crucial storytelling is in business, especially for branding, PR, and marketing. Stories can improve understanding, make ideas more accessible, and make us feel emotions that compel us to action.

But storytelling can also help us conceptualize the future. In leaders’ hands, great stories can help guide teams through long-term changes.

The heroic quest provides an ideal template: In it, a likeable hero answers the call to adventure, overcomes obstacles that test his resolve, and finally gains the object of his desire in triumph (or falls short in tragedy.)

A business’s journey toward a goal isn’t all that different. There’s a beginning, when an idea is formed and gains support; a middle, when a team must fight and slog through hard work to make the vision come alive; and an end, when the venture either fails or succeeds. more> http://goo.gl/T8BdnK

Updates from Georgia Tech

Einstein Was Correct (Again): Gravitational Waves Observed
By Jason Maderer – For the first time ever, a gravitational wave has been observed. A team of global researchers announced the finding on Thursday, February 11. The discovery comes 100 years after Albert Einstein predicted the existence of gravitational waves in his theory of general relativity.

Gravitational waves are ripples in the very same fabric of the universe that bend and distort space-time. They are produced during violent cosmic disturbances.

In this case, the observed wave was created when two black holes collided approximately a billion and a half years ago, sending a ripple hurtling through space at the speed of light. It arrived on September 14, 2015, and was detected by LIGO – the Laser Interferometer Gravitational-Wave Observatory — a National Science Foundation-funded physics experiment that has searched for waves for more than a decade.

The LIGO Scientific Collaboration includes two Georgia Tech College of Sciences faculty members, and their team of 10 postdoctoral fellows, graduate, and undergraduate students. more> http://goo.gl/nQhIfs

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The Digital Divide Is About Much More Than Access

By Rick Paulas – If you look at the numbers, it doesn’t seem like America has much of a digital divide anymore. A new survey of low- and moderate-income families shows that 94 percent of them have Internet access.

Except, the divide hasn’t actually closed. The pace and necessity of Internet-based technology has simply created other inequities. The question we need to consider is the quality of that access.

Dig deeper into the survey data, and you can see the problem with those accessibility numbers.

Of the 94 percent of families that “have” Internet access, 52 percent of them report having slow Internet, 26 percent complain about having to share a computer with too many people in their household, 20 percent say their Internet has been shut off over the past year due to lack of payment, and eight percent are still using dial-up.

Not all Internet is created equal. more> http://goo.gl/yj7hLy

How the Myth of Self-Interest Caused the Economic Collapse

BOOK REVIEW

Ultrasociety: How 10,000 Years of War Made Humans the Greatest Cooperators on Earth, Author: Peter Turchin.

By Mark van Vugt and Michael Price – The financial crisis should teach us some important lessons about the way economies work and the way we design our organizations.

In essence, we have simply made the wrong assumptions about human nature.

The leading model in economic theory is that of Homo economicus, a person who makes decisions based on their rational self-interest. Led by an invisible hand, that of the market, the pursuit of self-interest automatically produces the best outcomes for everyone. Looking at the financial crisis today this idea is no longer tenable. When individual greed dominates, everyone suffers.

We could have known this all along had we looked more closely at human evolution.

The way many firms operated in the early 21st century was to deny these cooperative instincts. People who were recruited to the top jobs in banks and utility companies were selected for their ambition and lust for money. As if led by an invisible hand, they would do things that were good for the company or society as a whole. We have seen all too well where this ended. more> http://goo.gl/6ttDhT

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7 Investing Lessons from Behavioral Psychology

Psy-Fi Blog – You could start by not wasting your time clicking on stupid clickbait articles, I suppose. But since you’re here you might as well learn something.

Given the vast amount of information that flies about the investing world you’d be forgiven for assuming that there are a lot of people who know what’s going on.

The truth is exactly the opposite – no one knows anything. Everyone is speculating because that’s what humans do when faced with uncertainty – we try to make sense of it.

But investment experts pontificating on the latest or next market moves are simply the modern day equivalent of prehistory shamans, high on drugs and low on effective prophesy. They have as much chance of predicting the next market earthquake as their ancient counterparts did, and at least the shamans had the consolation of getting high.

Diversification is the one free lunch in the market, and that’s not very exciting. more> http://goo.gl/edgl6v

Losing the thread

BOOK REVIEW

Prehistoric Textiles, Author: Elizabeth Barber.
From Minos to Midas, Author: Brendan Burke.
The Power of Glamour: Longing and the Art of Visual Persuasion, Author: Virginia Postrel.

By Virginia Postrel – Older than bronze and as new as nanowires, textiles are technology — and they have remade our world time and again.

The story of technology is in fact the story of textiles. From the most ancient times to the present, so too is the story of economic development and global trade.

The origins of chemistry lie in the colouring and finishing of cloth.

The textile business funded the Italian Renaissance and the Mughal Empire; it left us double-entry bookkeeping and letters of credit, Michelangelo’s David and the Taj Mahal.

As much as spices or gold, the quest for fabrics and dyestuffs drew sailors across strange seas.

Most conspicuously, the Industrial Revolution started with the spinning jenny, the water frame, and the thread-producing mills in northern England that installed them.

Before railroads or automobiles or steel mills, fortunes were made in textile technology. The new mills altered where people lived and how they worked. more> https://goo.gl/0rYV2h

The Megatrends Trump and Sanders Misunderstand

BOOK REVIEW

The Rise and Fall of American Growth, Author: Robert Gordon.

By Paula Dwyer – To hear Donald Trump tell it, the biggest problems with the U.S. economy can be stopped at the border, where immigrants and cheap foreign goods threaten American livelihoods. Or to hear Bernie Sanders tell it, the source of the middle-class’s affliction is a powerful Wall Street and K Street oligarchy.

Perhaps the biggest challenge is that the U.S. labor force is shrinking.

Economists theorize that the drop in productivity stems from a decline in so-called business dynamism, which measures the rate at which companies enter and exit the economy.

That leads to a third troubling trend: The U.S. is losing its entrepreneurial zeal. Uber, Airbnb and other Silicon Valley unicorns notwithstanding, the rate of new-company formation in the U.S. is about half what it was in the 1980s. more> http://goo.gl/ygB8ls

It’s the 15th Century All Over Again

By Justin Fox – Oxford University historian Peter Frankopan is writing about the 15th-century dislocation that is now most often referred to as the “great bullion famine,” which makes it sound like they ran out of soup. It has also been called the “the economic depression of the Renaissance” and “the Great Depression of the late middle ages.”

In any case, it was bad. In Frankopan’s telling, money ran short, economies shrank, some Europeans became convinced that the world was coming to an end. And in the world’s largest economy, a bubble burst … more> http://goo.gl/3SrBxg

Updates from Chicago Booth

Does air pollution lead to violent crime?
By Brian Wallheimer – An increase in air pollution could contribute to violent crime in urban areas, according to research by Evan Herrnstadt of Harvard University and Erich Muehlegger of the University of California, Davis.

Comparing more than 2 million crimes reported to the Chicago Police Department between 2001 and 2012 with pollution data, the researchers find no correlation between air quality and property crimes such as burglary, robbery, larceny, arson, and grand theft auto.

However, violent crimes, including homicide, forcible rape, assault, and battery, rose 2.2 percent in areas dealing with local air pollution temporarily increased by environmental conditions.

“This discrepancy across crime types may suggest that the primary mechanism is physiological; that is, the pollution might make people more irritable and impulsive, thus leading to more violent crime,” the researchers write. more> http://goo.gl/lexFo8

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