Coyote Blog

I was stuck in the airport at Salt Lake City on Sunday for a bit due to a large snowstorm** and I was trapped watching the CNN airport channel (which certain airports make unavoidable -- you can't get away from the TV's in a way reminiscent of a variety of distopian novels).  Anyway, I heard some discussion about differences between poor and rich nations, and all the usual easy-to-prove-false memes came out to explain the differences.  Natural Resources:  So why do resource-rich Russia and sub-Saharan Africa do so poorly?   Colonialism:  How do you explain Hong Kong, Australia, and Canada?  Exploiting labor:  So why aren't the most populous countries the richest?  Luck:  How do countries like Haiti have so consistently bad luck for over 200 years?

So here is Coyote's First Theorem of Wealth Creation, first expounded in this post on the zero-sum economics fallacy:

Groups of people create wealth faster in direct proportion to the degree that:

1. Their philosophical and intellectual
   culture values ordinary men (not just "the elite", however defined) questioning established beliefs and social patterns.  This is as opposed to having a rigid orthodoxy which treats independent thinking as heresy.
2. Individuals, again not just the elite, have the ability through scholarship or entrepreneurship to pursue the implications of their ideas and retain the monetary and other rewards for themselves.  This is as opposed to being locked into a rigid social and economic hierarchy that would prevent an individual from acting on a good idea.   

China, for example, just by cracking open the spigot on #2, however inadequately, has gone from a country with mass starvation in three or four decades to one where the worry-warts of the world are scared of juvenile obesity.  To a large extent, this theorem is really just a poor restatement of Julian Simon's work.  Simon's key point was that the only relevant resource was the human mind, from which all wealth flows.  All I have done is break this into two parts, saying that to create wealth a society has to value the individual's use of his mind and has to allow that individual free reign to pursue the products of his thinking.

One of the applications where I think this is useful is to explain the great millennial hockey-stick curve.  No, not the temperature hockey stick, which purports to show acceleration of global warming, but the wealth curve.  The world's growth of per capita wealth was virtually flat for a thousand plus years, and then took off in the 19th and 20th centuries.  I previously explained this hockey stick using my wealth creation theorem:

Since 1700, the GDP per capita in places like the US has
risen, in real
terms, over 40 fold.  This is a real increase in total wealth, created
by the human mind.  And it was unleashed because the world began to
change in some fundamental ways around 1700 that allowed the human mind
to truly flourish.  Among these changes, I will focus on two:

1. There was a philosophical and intellectual
   change where questioning established beliefs and social patterns went
   from being heresy and unthinkable to being acceptable, and even in
   vogue.  In other words, men, at first just the elite but soon everyone,
   were urged to use their mind rather than just relying on established
   beliefs
2. There were social and political changes that greatly increased
   the number of people capable of entrepreneurship.  Before this time,
   the vast vast majority of people were locked into social positions that
   allowed them no flexibility to act on a good idea, even if they had
   one.  By starting to create a large and free middle class, first in the
   Netherlands and England and then in the US, more people had the ability
   to use their mind to create new wealth.  Whereas before, perhaps 1% or
   less of any population really had the freedom to truly act on their
   ideas, after 1700 many more people began to have this freedom. 

So today's wealth, and everything that goes with it (from shorter
work hours to longer life spans) is the result of more people using
their minds more freely.

The problem (and the ultimate potential) comes from the fact that in
many, many nations of the world, these two changes have not yet been
allowed to occur.  Look around the world - for any country, ask
yourself if the average
person in that country has the open intellectual climate that
encourages people to think for themselves, and the open political and
economic climate that allows people to act on the insights their minds
provide and to keep the fruits of their effort.  Where you can answer
yes to both, you will find wealth and growth.  Where you answer no to
both, you will find poverty and misery.

Update:  This article from Frank Moss, linked at Instapundit, takes these same concepts forward into the future.

What role will startups play in the future?

I see tremendous economic growth from startups from 10 years ago.
Entrepreneurs will go from the 1,000 startup ventures funded in the
last 10 to 20 years to ideas coming from people working together in
network-based environments, using computers to dream up innovations in
a way they never did before. It could be people in developing countries
with low-cost computers.

You talk about education and the bottom-up effect that millions
more people will play in societal advances. How do you see this
unfolding?

We will undergo another revolution when we give 100 million kids a
smart cell phone or a low-cost laptop, and bootstrap the way they learn
outside of school. We think of games as a way to kill time, but in the
future I think it will be a major vehicle for learning.

Creative expression (is another area). No longer will just a few
write or create music. We will see 100 million people creating the
content and art shared among them. Easy-to-use programs allow kids to
compose everything form ringtones to full-fledged operas. It will
change the meaning of creative art in our society.

We are already seeing early signs of it in blogs. The source of
creative content is coming from the world. That revolution will go well
outside of the written word to all forms of visual and performing arts.

** Kudos by the way to the SLC airport - when I drove in, I couldn't see 10 feet in front of me on the road due to the snow, and I was sure that I would be trapped for the day.  Living in Phoenix, where air traffic is backed up if someone sneezes on the runway, I didn't think any planes would be landing and taking off for hours.  In fact, operations continued right through the blizzard, and my flight was delayed less than an hour, including de-icing time.  Amazing.  Now if only the SLC airport could increase their security capacity - its only been, what, 4.5 years since 9/11 and most airports seem to have licked this problem.

I can't help but suspect of late that the whole Dubai ports mess signals an intent by protectionists of many stripes to hop on the security bandwagon as a way to repackage protectionism.  One had but to observe the many Congressmen who up to date have shown very little interest in security issues suddenly becoming born-again hawks with on the Dubai issue.  Democratic politicians who up to this point had opposed any actions targeted at Arabs or Muslims as profiling and hate-based suddenly saw the light and opposed the deal based on absolutely no other evidence than the fact the owners were from Dubai.  I particularly laughed at the quote by Howard Dean lamenting that "control of the ports of the United States must be retained by American companies" (funny, since Dubai-ownership was taking over operations from a British company, not an American company).  The Dubai ports deal opposition was first and foremost protectionism, begun at the behest of a domestic company that lost a bid in Miami and a number of domestic unions.

Now we can start to see this bandwagon grow.  I was in the airport and saw one Congressman (Duncan Hunter, I think, but I am not positive) on CNN proposing new legislation to ban foreign ownership of any infrastructure deemed security-sensitive.  He specifically mentioned power plants, which told me that he was thinking pretty expansively. This is rank protectionism, pure and simple.  You can quickly imagine everything from power plants to oil companies to telephone providers - really just about anyone - coming under the auspices of a critical industry that should be all American.  Just check out the case of low-cost airline upstart Virgin America to see how this security dodge is being used to protect companies from competition and prevent consumers from getting more choices and lower prices (also see WSJ$).

Xenophobia, in terms of this protectionism and the new immigrant backlash, appears to be one of the few bipartisan issues that politicians from both sides of the aisle can get behind.  I fear a new McCarthyism in the works.

Apparently Yale's Econ 109 Microeconomics class has been assigned my post on Business Relocation and the Prisoner's Dilemma as part of this week's reading.  They are paying tens of thousands of dollars to read this site, while my 17 regular readers are getting it for free!  I'm not sure I am a huge Yale fan, given I attended Princeton and later Harvard, but I may have underestimated them now that I know what discriminating taste they have in blog reading.

Interesting Arcana:  The actual reason I think the professor found my article is probably because he used the spelling "dilemna" rather than "dilemma" when Google searching, as I did in the post title.  For some reason, I have always gravitated to this funny spelling with an "n" rather than a second "m".  I don't seem to be the only one - Google has hundreds of thousands of hits for dilemna.  What is the deal here?  I can't find dilemna as an alternate spelling anywhere in a dictionary, but it gets used a lot.  Hell, its in a CNN headline here.  A bunch of the Google hits for "dilemna" are in articles written by university professors.

So here is where you really have to love the web.  It turns out that this has actually been a discussion board topic in a number of places.  Here is part of a thread, for example, on dilemna vs dilemma.

John's note about being certain the word was spelled "dilemna" really hit home for me. It's almost as though at some point in my life I learned that was indeed the correct spelling and somehow had an edge on the masses. As with John, when I write I tend to pronounce words in my mind the way they are spelled - ie. FebRUary, WedNESday, etc. And as a champion speller in my younger days, it only seemed natural that I would be in the know.

As it happens, I'm writing a book right now, and the word came up. Though I spelled it the way I always knew was correct, I decided to double check with the dictionary and suddenly it was as though I was in the Twilight Zone. It was gone. Since dilemna is not as the word sounds, I can't figure out how the situation developed. I'm still convinced the spelling has changed somewhere along the way (ha!). I also recently had this same revelation with the word "pom-pom" (as in cheerleader's) which I always thought I was so smart in spelling as  "pompon." At least pompon is in the dictionary, though it has a slightly different meaning as the head of a chrysanthemum.

The only thing I can conclude is that I must have been living a parallel life in which these words were indeed spelled this way, and somehow made a crossover in recent years ....  (Twilight Zone Theme: do-do-do-do do-do-do-do)

There is a whole string of conjectures like this, but no real answer.  I will admit, now that this guy has, that I too had a certain Ivy-League-smarter-than-the-masses confidence that I had it right.  Ooops.

Gerry Thomas, inventor of the TV dinner, died here in Phoenix at the age of 83.  Though decried by the intelligentsia of this country, the TV dinner opened the door for a huge influx of products aimed at letting people who don't want to or can't cook create a decent meal.  As a kid, it never ceased to be a treat to get one of these for our evening meal, and looking back, Mr. Thomas and his successors probably cooked for me more than my mom.  Mr. Thomas is a member of the Frozen Food Hall of Fame (I kid you not) in Orlando.  This strikes me as a story that James Lileks should be all over.

Update:  According to CNN, James Doohan, recently diagnosed with Alzheimer's, has died as well.  How many times have you asked this guy to get you out of a tough spot?  Beam me up, Scotty.

Via Wizbang, who helped point the finger at the CBS forged memos, comes this story about an AP Report of a American service man supposedly held hostage:

Iraqi militants claimed in a Web statement Tuesday to have taken an American soldier hostage and threatened to behead him in 72 hours unless the Americans release Iraqi prisoners.

The posting, on a Web site that frequently carried militants' statements, included a photo of what appeared to be an American soldier in desert fatigues seated with his hands tied behind his back.

A gun barrel was pointed at his head, and he is seated in front of a black banner emblazoned with the Islamic profession of faith, "There is no god but God and Muhammad is His prophet."

It even is accompanied with this picture:

Only problem is that this is actually a photo of a GI Joe doll. 

The "professionals" at the AP were taken in hook line and sinker, leaving it to "amateurs" on the web to debunk the hoax in about a half and hour.  Read all about it at the Wizbang link above.

Update:  CNN has caught up on the story

Via Wizbang, who helped point the finger at the CBS forged memos, comes this story about an AP Report of a American service man supposedly held hostage:

Iraqi militants claimed in a Web statement Tuesday to have taken an American soldier hostage and threatened to behead him in 72 hours unless the Americans release Iraqi prisoners.

The posting, on a Web site that frequently carried militants' statements, included a photo of what appeared to be an American soldier in desert fatigues seated with his hands tied behind his back.

A gun barrel was pointed at his head, and he is seated in front of a black banner emblazoned with the Islamic profession of faith, "There is no god but God and Muhammad is His prophet."

It even is accompanied with this picture:

Only problem is that this is actually a photo of a GI Joe doll. 

The "professionals" at the AP were taken in hook line and sinker, leaving it to "amateurs" on the web to debunk the hoax in about a half and hour.  Read all about it at the Wizbang link above.

Update:  CNN has caught up on the story

CNN has some pretty fun exit poll data here.  As both an engineer and an analyst at heart, I enjoy plowing around in data to find new conclusions.

One interesting thing I found was where the vote for Bush and Kerry came from in terms of urban vs. rural locations:

Because people are thinking of the red/blue state map, and even more the red/blue county map, they want to portray the red/blue split in part as an urban-rural split.  This is reinforced by the perception of Bush as the NASCAR loving gun toting country redneck and Kerry as the overeducated stiff urban intellectual. 

The problem is that the exit poll results don't necessarily support this.  Note two things:

1. The suburbs drive the result.  Rural and urban basically cancel each other out, with a larger urban than rural population but a larger relative Bush lead in rural.  In both '00 and '04, the suburban vote split closely mirrors the total tally.
2. Bush won the popular vote because he improved about 3 points and added 4 million votes to his differential.  This table says that nearly all of that came in the urban vote, with a whopping 10 point improvement that drove a 3 point improvement in the total.

Because a lot of this urban improvement occurred in Blue states, the electoral college margin was still close because he ended up closing the gap in blue states rather than flipping many.

Assymetrical Information mines the same data to demonstrate the surge in Latino support for Bush.  Interestingly, it also shows that Bush led among both high school and college graduates (defeating some of his stereotype).  Kerry, on the other hand, carried both high school dropouts and post-grads (ie, the under and over-educated)

UPDATE

Welcome to Professor Bainbridge readers.  If you are not burned out on election news, here is my winner for the most over the top post-election article, and my response.

UPDATE #2

Confirming data from New York City via The Galvin Opinion