Plane reading, Oct 21 2015

Expert takes worth reading on economics, technology, and other interesting topics from the last week.
Plus, recent news on Uber and on-demand/autonomous vehicles:


Economics and business in emerging markets

1. Tyler Cowen, "The rise and fall of the Chinese economy" at MRUniversity
2. Alphaville, on unsustainable debt growth inside "India's House of Debt" increasing financial stress, particularly as is tied to commodity exposure (and recent price drops)
3. Barry Ritholz, with an excellent infographic from Visual Capitalist comparing the demographics and economies of China with the United States
4. Christopher Balding, on the Chinese service sector's growth capacity to counterbalance the shrinking of China's manufacturing and construction
5. TechCrunch, on Xiomi's new segway-scooter and 4k TV.  I just started reading "Little Rice: Smartphones, Xiomi and the Chinese dream"
6. TechCrunch, on GrabHouse (India) being the latest attempt to eliminate brokers from real estate brokering.  It's not clear GrabHouse has insight into the dynamics of why something simple like Craigslist has stood up under almost all challengers (including Pittsburgh favorite RentJungle).
7. David Warsh, on (mostly) unheralded Chinese economist Du Runsheng
8. AlphaVille, on BofA monthly fund manager survey showing perception of decreased risk from China recession since last month

Economics and Inequality

1. WSJ profile of Harvard's Raj Chetty and bipartisan support of his proposals to reduce inequality.  Unsuprisingly, Chetty's proposals aren't supported by teachers' unions.  WashPo highlights "partial squandering" of $100m in Zuckerberg financing during efforts to reform Newark, NJ schools
2. American Prospect, on the economics of the Bronx (including structural resistance to gentrification)
3. Nick Rowe, on framing countries as "social clubs" and the implications for open borders and debt/gdp ratios
4. Nick Bunker, on (economic) rents being at the center of inequality growth - data showing that excess profits from frontier-firms are being shared with workers and not fully accruing to capital
• The paper from Orzag et al here
• A related Bloomberg piece by Orzag "People aren't unequal, companies are"
5. Mark Thoma, "The lofty promise and humble reality of international trade"
6. NY Fed, reframing the debate about payday lending:  
• "We show that many elements of the payday lending critique—their “unconscionable” and “spiraling” fees and their “targeting” of minorities—don’t hold up under scrutiny and the weight of evidence. After dispensing with those wrong reasons to object to payday lenders, we focus on a possible right reason: the tendency for some borrowers to roll over loans repeatedly."

Economics and environment, including global warming

1. WashPost, on sunscreen apparently being the root cause of bleaching/death of coral reefs
2. NYTimes, on Norway's subsidies of electric car purchases.  Recall our prior look at research suggesting these subsidies were neither cost-effective nor efficient

Economics and Politics (aka public policy)

1. Chicago Fed, a literature review on valuation bubbles' "greater fools" theory of existence
2. New Yorker, on divestment as a (mostly) ineffective strategy to effect social change
3. Noah Smith, on the validity of common critiques of economics.  Related: searching for the "science" in economics (a "social science")
4. Andrew Samwick, on the potential for deferred compensation strategies in prison reform
5. NewVision, on Zambia's day of national prayer to save their currency
6. David Wilson, on the history of "laissez-faire" economics
7. Mark Thoma, excerpting the FT "strong press is best defense against crony capitalism."  This applies to governments, too - an area the US is falling increasingly short in scrutinizing
8. Chronicles of Higher Education - "An economist turns sleuth" about Dani Roderick's quest to exonerate his Turkish (ex-General) father-in-law from a conviction using comically falsified evidence of a coup plot
9. VoxEU, on the lack of clear connection between foreign aid and economic growth.  Conclusion: aid isn't bad per se, but should be evaluated on own merits instead of ascribing economic benefits on top

Economics and business

1. Southern Investigative Reporting Foundation, blowing the doors off a channel-stuffing fraud at Valiant (pharmaceutical) that caused it to lose almost half its market cap (from $60b to $34b) in trading earlier this week.  Alphaville congratulating SIPC, John Hempton, and others for their contributions.  If co-pay waivers are really so lucrative, seems likely other pharmas will be found doing similar things.  Not clear if this tactic could prove a meaningful contributor to runaway health care costs
2. TheGuardian, on the economics of tipping
3. TandF, on "Fighting as a profit maximization strategy in the NHL" (hint: slightly value destructive)
4. Sandeep Baliga (Northwestern), a news interview on Purple Pricing (a uniform price multi-unit Dutch Auction)
5. AvWeb, on an aviation product liability case in front of the US Third Circuit that will set precedent on whether certification is a reasonable standard of care.  Has implications for many physical product businesses
6. Mark Suster, on "The sub-prime unicorn market"
7. Paul Graham on whether, absent further fundraising, your company is by default "alive or dead"
8. Truth About Cars, on Volkswagen emissions scandal as an example of "normalization of deviance" a term first coined following the space shuttle Challenger disaster
9. Fred Wilson, on the potential of limits of network effects and "winner-takes-most" businesses
10. Barry Ritholtz, "Long-term price trends of electronic goods and services" (all cheaper, except for monopolies like cable).  Larger piece in Bloomberg "Monopolies don't give us nice things"

Bitcoin, blockchain, and more general FinTech

1. NextNewDeal, on Dodd-Frank capital limits/penalties forcing JP Morgan to slim down
2. AlphaVille, on the tension between economic pressure on correspondent banking models and anti-money laundering / fraud / know-your-customer requirements (and costs).
• "The work of cherry picking good clients in high-risk areas is more trouble than it’s worth.... The only problem... is privacy, unfair discrimination and profiling... If respondent banks cannot provide additional information on customers and specific transactions for this reason, correspondent banks may have no alternative but to block or reject suspicious transactions. This could eventually lead to the termination of some correspondent banking relationships, particularly in jurisdictions with restrictive data privacy laws."
3. AlphaVille, on two papers examining ring-fencing proposals for British retail banks
4. Wired, on the (recent, first-time) use of bitcoin blockchain to borrow $10m in stock
5. TechCrunch, on Uphold (nee Bitreserve) moving beyond Bitcoin

Business and Technology

1. Josh Gans, in Digitopoly, on broadband usage caps' inefficiency.  Because cable companies are headed that way.
2. FastCompany, on Microsoft Research's release of auto-complete for animation
3. Wired, on the challenges to fixing laws which permitted Theranos to hide the ineffectiveness of their "revolutionary" diagnostic equipment
4. Jason Lemkin, a nice easy framework to think about broad types of marketing initiatives using Square/Starbucks as an example
5. Wired, on the public beta launch of an automated news writing "bot" from Automated Insights
6. DealBreaker, on Yahoo's replacement by BuzzFeed in snapchat (plus a larger, more general sense of malaise and destroyed value)
7. GigaOm, "Why mass market VR won't come soon" (content, technology/physiology, cost)
8. Slate, on vulnerabilities of Diffie-Hellman (cryptographic key exchange) implementation to nation-state levels of attack
9. Mike Chalfan, on the challenges of building AI apps using machine learning (duh, it's the hard problems that are valuable)
10. TechCrunch, on iOS app store revenue being 80% greater than Android due to China
11. Wired, on ingenious chip-and-pin credit card hack

Other

1. Slate, on "Omar the clock kid" moving to Oman.  Apparently his family is from Sudan, where his father twice stood for election against strongman/dictator/war criminal Omar al-Bashir.
2. AvWeb, a "real" hoverboard demo
3. The Guardian, an update on Chicago's Homan Square extra-judicial "disappearing" of thousands of suspected criminals.  Expect more of this, and in other cities.
4. CBC news, on the debate over high-tech broom technology in the winter sport of curling
5. Jacob Chapman, on the pareto principle and the resurgence of value from expert generalists in a convergence economy
6. Quora (via Slate), on "What is thought leadership"
7. NYTimes, on "Why great leaders see more, and ignore less"
8. Barry Ritholtz, highlighting a Nature infographic "How scientists fool themselves"
9. McKinsey, on B2B companies "talking past their customers" and answering different questions than customers want to know
10. Psychology Today, on colleges teaching "learned helplessness"
11. Aczel et al, "What is stupid?"
• Violations of maintaining a balance between confidence and abilities
• Failures of attention
• Lack of control
• The level of observed stupidity was always amplified by higher responsibility being attributed to the actor and by the severity of the consequences of the action
12. Eater, on Danny Meyer eliminating tipping at his NYC restaurants.  Interesting article, and terrific style/layout/structure

Uber, on-demand rides, ridesharing, hyperlocal logistics, parking, vehicle autonomy etc.

1. Isabella Kaminska on Uber:
• Economics of self-driving taxis don't make sense.  Excellent links plus bonus points for invoking Chesterton's fence (as did I on an earlier Uber post)
• Broader obsession with idle capital assets doesn't make sense with cars (a point I've made too)
• The issues with rehypothecation (rental) of cars implies the natural owner of an autonomous taxi fleet is the state (another point I've made)
2. Aswath Damodaran, an update on his Uber valuation
3. TechCrunch on Opino, a hyper-local logistics/delivery service in India
4. TechCrunch, on Amazon PrimeNow restaurant delivery arriving in Portland
5. VentureBeat, on the ten most important things to know about Tesla's autopilot
6. Reuters, on driverless busses in Singapore
7. TechCrunch, on Uber's driver app being ruled (in Uber's favor) as "not a taxi-meter" in London for what appears to be arcane, technical reasons
8. Slate, on Uber's return to San Antonio after city government passed friendlier regulations
9. Slate, on SanFrancisco learning to live with private bus service use of common pickup/dropoff locations
10. Wired, on GM's "aggressive" plans for self-driving cars
11. GigaOM, on data leaks at Uber exposing drivers licenses, SSNs, ride data, etc.  
• Jason Lemkin says security should be considered a core feature much earlier than most companies currently treat it.
12. TechCrunch, on Honor, an almost-on-demand elder care service
13. TechCrunch, on data showing recent Uber ride increases in Manhattan are replacing taxi pickups 1-for-1 (remember Uber's NYC prices, at ~$2.40/mile, are ~2X the rest of the country's $1-1.20 - and NYC also has some of the highest parking costs in the nation)