Archive for July, 2008

“What I’ve learned”

July 28, 2008

You know that recurring feature in Esquire magazine that features a painfully hip bearded celebrity, wearing a linen shirt and sandals, looking out into an impossibly blue ocean as he imparts those nuggets of wisdom formed from a lifetime’s worth of being an awesome dude.

I would never do one of those, because I don’t own any linen. But were I to, number 7 would be:

7: Despite our society’s obsession with “experience,” there is very little that can not be accomplished with three ingredients: A decent head on your shoulders, a little sweat, and Google.

What’s your PhD program or job teaching you that Wikipedia doesn’t already know? Better yet, what’s preventing you from giving it a go without the credential? Maybe we just love the program.



July 27, 2008

While Phil thinks Google beats Facebook (and I agree), I think Facebook beats LinkedIn.

It’s worth giving voice to the LinkedIn believers. They argue that Facebook’s distractions (photos, relationship status, wall comments, etc) make it unsuitable for business networking. The stripped down LinkedIn, then, offers more value in a business setting.

However they are thinking about on-line networking as if it were classified advertising: I want a 1998 Toyota Corolla priced near $10,000; or I want a 12-month lease on a two bedroom in the East Village of Manhattan; or I want a contact in JPM Sales and Trading who knows one of my friends. No frills needed, just show me the info.

No! Internet social networking should not focus on allowing people to “map out” webs of unknown people, like classifieds allow people to map out buyers and sellers. This is not a valuable service.

Internet social networking should focus on content about friends’ or acquaintances’ lives, such as photos, geographical location, current personal and professional activities, associations with groups, etc. Facebook provides these tools to allow people to stay in touch. It is entertaining because you are learning more about your friends’ lives. It is valuable because it facilitates quality real world interactions (and real world introductions too!).

Phil thinks that you will eventually be able to use the web to identify new people to meet in the real world(here and here). However with the exception of on-line dating, I have my doubts. The internet a much stronger tool for staying in touch. Leave meeting new people to the real world.

Tocumen International Airport, terminal 2

July 23, 2008

Tocumen International in Panama City is a hub for travel between Central and South America. I had the pleasure of spending several hours there on a lay-over with hundreds of fellow passengers.

Some statistics:

  1. Number of gates: 28
  2. Percentage of passengers speaking Spanish: >90%
  3. Percentage of attractive women wearing tight clothing: just right
  4. Percentage of unattractive women wearing tight clothing: too much for comfort but enough to make it interesting
  5. Number of electronics stores: 5, all mobbed
  6. Number of stores selling alcohol and perfume: 4
  7. Number of extremely lucrative Lacoste stores: 1
  8. Number of news stands and book stores: 0 (can’t explain this one: may have to do with exclusivity deals signed by other airport retailers)

Tocumen International is one environment to see Latin America’s wealthy interact.

7 Collective action problems

July 22, 2008

Wouldn’t the world be a better place if:

1) It was deemed socially acceptable to jog or run everywhere
2) We all suddenly stopped wearing business casual (a bad compromise of two desirable things)
3) Everyone took the passwords off their WiFi
4) Everyone Twittered their current location all the time
5) People showed up to parties exactly on time
6) Public transportation
7) And the big ones: No more tariffs, no more nukes, no more armies

What makes a city grow?

July 19, 2008

The city

  1. The city, of 1.2 million people, is on the coast and has ports
  2. The city’s rich colonial history, distinct local culture, and Caribbean climate are ideal for tourism
  3. The city is 70 miles from another key industrial city

The country

  1. The country suffers a reputation for killings and kidnappings due to many years of violent drug wars and guerrilla insurgencies
  2. In the recent past, traveling between major cities at night was dangerous, causing a reliance on planes for travel and transport
  3. Recently, the country has become much safer and the guerrillas are nearly defeated

The world

  1. The price of oil is sky high, favoring land and sea transport over air transport
  2. A real estate crisis and shaking equity markets in the United States and Europe are pushing capital into new markets
  3. Economic power is shifting from first to third world

As this country’s reputation catches up to advances in its security, tourism in this city will boom. International investors are already driving up real estate, and the trend will continue. The city’s ports will swell and require expansion. New local wealth will find local consumption and investment opportunities.

The city is Cartagena, Colombia, which is taking off. You can feel energy in the air. Question: if you foresee this growth, how can you invest?

Just add water

July 18, 2008

Presidential campaigns are rife with vague and in-actionable policy proscriptions. For example, “supporting fair trade” or “balancing the budget.”

But you got to feel for the candidates — it’s difficult to find silver bullets. Most real change requires a tough combination of money, organizational capacity, structural change etc.

But not always.

There’s one policy change that will increase US prosperity, raise standards of living, reduce global poverty AND bolster our long-term competitiveness.

Best of all: To implement it will require just a single keystroke.

Take the number of permitted H1B visas this year (85,000). Add a zero to the end.


(some other ideas here with input from readers)

Reverse cultural imperialism fun fact

July 16, 2008

Nuts 4 Nuts: Actually invented by an enterprising Chilean and is all over Santiago.

Nuts 5 Nuts: Invented by a slightly less enterprising Chilean who knew a good thing when he saw it.

Branding countries and Uruguayan Caviar

July 14, 2008

Try playing the word association game with countries. Italy: Pasta. Taiwan: Electronics. Somalia: Hunger.

With Chile, you always hear the same two: Wine and skiing (occasionally sea bass). This is somewhat intentional — the tourism officials don “land of wine and snow” paraphernalia. Chile has successfully branded itself and is seeing a surge in wine (and other luxury goods) exports and tourism as a result

But until very recently I had never thought about country-branding as a development tool.

When playing the word association game with Uruguay, most people draw a blank. Maybe for good reason — the country only has about 3 million residents.

A Urugruyan enterpreneur attended Endeavor’s recent selection panel with the hope of making Caviar the symbol of Uruguay. Caviar has forever been dominated by the Iranian and Russian brands, but apparently Uruguay is a perfect place to farm it. So this entrepreneur going to try to build the Uruguayan caviar industry from scratch, creating jobs and export revenue in the process. But even more, he’s going to build a brand for his country.

Soon when you think Uruguay, you’ll think caviar.

Why will there be blood?

July 10, 2008

There Will Be Blood, an expose of the early 20th century American oil industry, follows an oil entrepreneur who learns drilling technology and travels the country, buying land from local communities to harvest oil. One theme in the movie is the inevitability of violence, caused both by the unsafe drilling operations and the increasingly hostile relationship between the savvy driller and the rural community in California.

I’m not an American historian, but I can believe that violence was an integral part of early American oil exploration. There are plenty of historical and semi-fictional examples of violence surrounding oil, such as: recent history of Iraq, Syriana, Blood Diamond (diamonds and oil are similar), and lesser publicized events such as conflict amongst Ecuadorian Indians.

So it is intuitive that There Will Be Blood. But Why Will There Be Blood?

What does the econ 101 model say? Everyone should be better off with the discovery of oil: the community gains and controls a valuable resource; the entrepreneur has another application for his technology. Win win.

Here are some reasons for the violence (I think all of these boil down to each side believing they should get a larger portion of the pie):

  1. Asymmetrical information: the driller knows much more than the local community about how much a field may be worth, how much environmental damage drilling will cause, how to write contracts to avoid responsibility, etc
  2. Asymmetrical power: the driller has much more technology, worldliness, and prowess than the local community, and can exercise that power to its advantage in a way that often results in violence; see Guns Germs and Steel; see Spanish General Pizarro meets Inca ruler Atahualpa
  3. Uncertainty: in environments of uncertainty (specifically, how much oil, how much environmental damage, who profits) it is always easier to justify your own actions (I took on risk!) or claim you have been cheated (they promised me something and didn’t deliver); violence ensues

In addition to these reasons, conflict can also arise when the government controls the land and doesn’t represent the people who live on it.

Are there other reasons for the violence surrounding oil? Why does the media paint an ugly picture of oilmen (e.g. Syriana) but a more friendly one, say, of wealthy tech gurus, or even (gasp) hedge fund managers?

Language struggles

July 5, 2008

Speaking to someone who doesn’t know a language well is like having a conversation with Google.

It’s all “keyword” based”

To fill the empty space and compensate for lack of apprehension, one is forced to simply riff off of the few understood words to impress the veneer of actual conversation.

Example of how this works (fictionalized):

Chilean: “My uncle was run over by a Volvo downtown last week. The funeral is Saturday” (words I understood in bold)

Me: “I used to drive a Volvo! Great cars!”


Another strategy from Bri:

usually I just take the last word and add a question mark, while nodding my head with look of extreme
concentration and engagement. then I try to make that sound I hear from the Chileans, the mysterious “ah yah.”

Chilean: “My Uncle was run over by a Volvo downtown last week. The funeral is Saturday.”

Bri: “Saturday? Ah yah.”

The real villian

July 2, 2008

In the vein of Richard Posner, Thomas Sowell can be a arch-conservative whackjob, but he can also be quite insightful. One of my favorites is his thoughts on the “Animistic Fallacy”:

The simplest and most psychologically satisfying explanation of any observed phenomenon is that it happened that way because someone wanted it to happen that way.

What the animistic fallacy yields is the invention of “villians” and “heroes” to explain large-scale phenenema: If it happened, someone or something powerful must have willed it to be.

Generally you hear about the villians more. From gas prices (greedy oil CEOs) the housing bubble (speculators?) campaign idiocy (it’s the media!) . Or here in Latin America Argentines blame fallow soy fields on Bush (US soy demand leads to poor crop rotations). Of course, the world simply doesn’t concentrate power in a way that individuals can perpetrate large-scale phenomena.

The real power of economics is that it provides an alternative to the animistic fallacy. And this is why it should be taught to everyone (e.g. a high school requirement, not a college elective)

Economics teaches an inevitability of large-scale phenomena. Things happen, bad and good. And it’s not always because someone wanted it to be that way. It’s a democratic conspiracy — the sum of the small individual choices we all make day-to-day in pursuit of our individual best interest. And the writing is already on the wall long before the event.

The animistic fallacy gives hope to those that try to turn back the effects of inevitable large-scale phenomena. Globalization, shifting comparative advantage, commodity prices. The fallacy is this: Someone is making it happen and someone can stop it! Unfortunately for those adversely affected, this is simply not true.

As Sam often points out, economists turn a blind eye to the disadvantages of a more globalized world. I agree with him completely, but to me it’s a moot point. It’s happening and there’s nothing any one entity can do about it. The only question in my mind is how we should react.