Coyote Blog

Jeff Bezos is apparently crowdsourcing philanthropy ideas from the public at large.  I wish him well, and hope he finds some interesting and useful outlets for his excess cash.  I would however encourage him to find something whose model can grow and still remain robust.  I have found that there are many charitable activities that work great because of the passion and vision of one person, but are not easy to grow (many examples of local successful public school reforms fall in the same category).  If Jeff Bezos gives money, a charity is likely to see a huge increase in resources, both from Bezos's money and, because his decision is going to be public and high-profile, from money from others who donate because Bezos did.

Any decision he makes will likely be more to satisfy his inner need to be involved with something new and different rather than the optimal approach to help the maximum number of people.  Because he is presumably uniquely good a creating businesses, probably the best way for him to maximize the use of his money and time in improving the lives of a maximum number of people is to go start another business.  Certainly Amazon has created value for the rest of us that dwarfs the amount he has earned from it.  Taken another way, via Amazon he has hugely improved the lives of many, many people and in turn taken just a small commission for himself on this value created. He has lowered prices for us, he has saved us time, he has brought us many more choices.  He has created a platform for small businesses to sell their product that they could never duplicate themselves.  He has nearly single-handedly created the self-publishing business and provided an outlet for a ton of new authors (myself included).  He helps keep Apple and Google honest (and vice versa) from his competition with them.

Of course, he is likely tired of doing only this kind of stuff so he wants to do something more traditionally charitable, and that is fine, but I am exhausted with the notion that charity helps people but business and commerce do not.  Learning from this, one decision criteria might be that he looks for something that not only needs his money, but needs his expertise and vision as well.  The latter is likely way more valuable than the former.

If I had a billion dollars for philanthropy, I might start a new university with a totally new approach.  I would call Brian Caplan and I'd see if we could build a curriculum and an entire educational approach out of engaging multiple perspectives on each issue.   Admissions essay question #1:  "Tell us about a time you encountered a perspective or opinion on an issue very different from you own and tell us how you responded."

This post and this post came up back to back in my feed reader this morning.  The first explored per capita GDP between Greece and Germany, and wonders why the published numbers can be so close when visual evidence is that the average Greek is far less prosperous than the average German.  Brian Caplan explains the largest difference between Greece and Germany in terms of public sector productivity, with 10% of the workforce in Germany working for the state while a third of Greeks do so.

Knowing the Germans, it's easy to believe that its government employees accomplish as much as the Greeks' despite their smaller population share.  This implies that 25% of the Greek labor force is, contrary to official stats, producing nothing.

So using Sumner's other numbers - and assuming output is roughly proportional to labor force - per-capita GDP is more than 50% higher in Germany than Greece.  First-hand observation tells me that's still an understatement, but it still closes a big chunk of the gap between official stats and reality.  How's that for a mental image?

UPDATE: The NY Times apparently overstated the 1/3 figure, see here.

Right after reading that piece, I read this from Jim O'Brien via Tad DeHaven:

Back in 1990, Halstein Stralberg coined the term "automation refugees" to describe Postal Service mail processing employees who were assigned to manual operations when automation eliminated the work they had been doing. Since the Postal Service couldn't lay off these employees, they had to be given something to do, and manual processing seemed to have an inexhaustible capacity to absorb employees by the simple expedient of reducing its productivity. The result was a sharp decline in mail processing productivity and a sharp increase in mail processing costs for Periodicals class. Periodicals class cost coverage has declined steadily since that time.

O'Brien then tells of visiting seventeen mail processing facilities as part of a Joint Mail Processing Task Force in 1998. During those visits he noted that the periodical sorting machines always happened to be down even though the machines were supposed to be operating seventeen hours a day. Although the machines weren't working, manual operations were always up and running.

A decade later, O'Brien points out that the situation apparently hasn't changed:

More Periodicals mail is manually processed than ever, and manual productivity continues to decline. Periodicals Class now only covers 75% of its costs. How can this dismal pattern of declining productivity and rising costs continue more than two decades after it was first identified, especially when the Postal Service has invested millions of dollars in flats automation equipment?

Years ago, I briefly consulted to the SNCF, the French national railroad.  I say briefly, because thought they technically asked us to benchmark them against US firms, its clear they did not really want to hear the results.  The one figure that sticks in my mind is that they had something like 100,000 freight cars, but 125,000 freight car maintenance employees.  I remember observing to a highly unamused SNCF executive that they could assign one maintenance worker to his very own freight car and still lay off 20% of the staff.  And apparently France is an order of magnitude better on stuff like this than Greece.