An interesting idea from Col. Qaddafi

From the Economist:

... from now on oil revenue would be paid directly to every Libyan family every month. They would then decide on their spending priorities, individually or in the form of ad hoc committees interested in investing in a new agricultural or industrial project, or in education, health or housing. These committees would also decide how much tax to pay to the remaining centralised institutions.

One man's foreclosure becomes another man's treasure

From Steven Landsburgh:

None of these foreclosed houses is going to disappear. After a foreclosure, one family moves out, and another moves in. We see the sad faces of the people moving out, but we don't as often see the happy faces of the new homeowners moving in. Nevertheless, those happy faces are out there, and we should not discount them.

Eat the whales

A study from Norway:

"Greenhouse gas emissions caused by one meal of beef are the equivalent of eight meals of whale meat," the study said.

Benefit-cost analysis of global warming policies.

The analytics of the decsion are pretty simple, once you model the uncertainty.

	Take action	Don’t take action
Global warming is real (p)	0	p*(Error Cost II)
Global warming is not real (1-p)	(1-p)*(Error Cost I)	0

To minimize expected error costs, take action if and only if
(1-p)*(Error Cost I) < p*(Error Cost II). Most of the policy debate concerns the probability that Global warming will occur, p, and the size of the Error Costs. Since the costs of taking action are incurred in the present; and the costs of inaction are incurred only in the future, benefit-cost analysis requires a discount rate. A small discount rate favors action. A big discount rate favors inaction.

Is prevention the next big thing in health care?

An interview with the CEO of the Cleveleland Clinic:

Where do you think the US health care system is heading—and what needs to be done?

...The only thing we can do to reduce costs, while still improving quality, is to reduce the burden of disease. Forty percent of the premature deaths in the United States are caused by obesity, inactivity, and smoking, all of which ought to be preventable. Two-thirds of the country is overweight and a third is obese. Over the decades I have operated on a lot of patients with lung cancer, and every one of them was a smoker. So a natural starting point is to help people stop smoking and help them lose weight.

...new employees aren’t allowed to smoke. Applicants are tested for nicotine, and those who test positive are provided with free smoking-cessation assistance but are not offered employment.

NIMBY's create urban sprawl

In a number of past posts we have stressed the importance of "making the rules so your rival's won't," taken from Richard Shell's Make the Rules or Your Rival's Will, as an element of strategy. Now we hear that NIMBY's (Not In My Backyward) are becoming more important to the local zoning battles that are fought between rival hospitals, between rival supermarkets, and between Union and non Union firms. Most interestingly, they push development further out, exacerbating the problem of sprawl. From the Tennessean:

A survey ... found that 78 percent of Americans believe there should be absolutely no new development in their hometown. ... that 78 percent of Americans believe there should be absolutely no new development in their hometown. Once public officials believed buildings created jobs, tax dollars and votes.

Now, public sentiment argues that construction will create traffic, degrade the environment and ruin the quality of life. Pro-growth officials are punished at the polls, Saint said.

The demographic profile of a NIMBY, according to Saint, is a politically moderate, college-educated suburbanite between the ages of 45 and 65 with a household income of $100,000 or more. A supporter of development, meanwhile, tends to be a rural resident with an associate's degree and an annual income of $35,000.

If correct, that's bad for anti-sprawl activists. The key to urban redevelopment is getting builders to put stores, housing and other intense development close to places where people already live. But according to Saint, it's on a city's fringes where developers are least likely to face stiff opposition.

More on Integration Challenges

In a continuing theme (most recent post on The Struggles of a Conglomerate), here's more evidence of the challenges facing companies that acquire other companies. Business Week discusses the problems Sprint has experienced in turning around a poor service reputation after its merger with Nextel.

A typical defense of acquisition / merger is the creation of "synergy" between the two companies. In this case, Sprint initially projected savings from synergy of $12 billion and later raised that estimate to $14.5 billion. Where do synergies come from? In addition to cost savings, another example might be taking some best practice within one of the merged businesses and applying it to the operations of the other. This argument, however, tends to ignore the potential of "negative synergy." As the article notes, importing the quantitative management approach of Sprint to Nextel appeared to have quite a few negative effects, especially in the management of call centers. Customer churn for the merged company rose to 2.4% in 2006, the highest among the major carriers and quite an increase above Nextel's 1.4% pre-merger rate.

Should we be relieved or concerned about this?

While Senator Obama demagogues NAFTA and trade in Ohio (though not in Texas), CTV reports that he sent his chief economic advisor to reassure the Canadians that it was just campaign "rhetoric not to be taken seriously." So at least Senator Obama knows that NAFTA has been good for the United States, but...

"I don't think it's appropriate to go to Ohio and tell people one thing while your aide is calling the Canadian ambassador and telling him something else," McCain said, referring to Obama. "I certainly don't think that's straight talk."

DISCLAIMER: I am supporting Senator McCain.

Even the Democrats are worried about what their candidates are saying

From WSJ:

...Texas Democrat Henry Cuellar recently hosted Mrs. Clinton on the streets of Laredo. He said he explained to her the city was the largest inland port in the South. Trade has transformed his district's border communities -- dropping double-digit employment and curbing rampant poverty. "My philosophy is simple: trade between the United States and other countries is good. You export, you create jobs, you build relationships," says Mr. Cuellar, who was the first Democrat to endorse the Central American Free Trade Agreement, and one of just 15 to vote for it.

...He warns that while it might be tempting to "demagogue" trade in the short term, Democrats will have to perform on the economy if they want a lasting run in office. Remaining strong on trade is "about both the prosperity of the nation, and the prosperity of the Democratic Party," he says.

Keynes on the falling dollar

I don't remember reading this when I was in grad school. From former student John Tamny:

Be it a strong dollar or a weak dollar, changes in the value of money enervate the citizenry most by redistributing wealth. Keynes wrote that "when the value of money changes, it does not change equally for all persons or for all purposes." Sure enough the falling dollar of recent years has enriched those long on land, precious objects and commodities all at the expense of the saver and to a high degree, the investor.