Episode #172: Free-rider Friday - December 2017

Ron’s Topics

“Buddha in The C-Suite,” Kevin D. Williamson, National Review, December 18, 2017

Move over Briggs-Myer, Buddha’s coming, a $1 billion industry. Mindfulness  is Buddhism without Buddha.

CMO—Chief Mindfulness Officer, Aetna. Google, Goldman Sachs, Intel, General Mills all offer it, and 20% of companies surveyed offer it, while 21% are planning to.

Executives claim an additional 62 minutes per week of productivity, and 80% of executives reported improved decision-making skills.

Scientifically, mindfulness is right up there with acupuncture, homeopathy, personality profiling.

There is a lack of replicable results, design problems, lack of control groups (less than 1 in 10 have control groups), no placebo effect, and other design flaws.

“No Hands, Full Speed Ahead,” Michael Hendrix, National Review, December 18, 2017

Chandler, AZ hosts Waymo (a subsidiary of Alphabet), as of August 2016. In November, the CEO announced test vehicles will operate with no human driver, achieving Level 4 autonomy (Tesla is at Level 2).

A robo-taxi fleet is coming (600 cars operating in Chandler now).

Business friendly Mayor and Governor, ADOT regulation, required no new legislation; it was done via Executive Order. Permissionless innovation

According to The Economist, General Motors will begin testing autonomous cars in lower Manhattan. 

“The Open Road,” Charles C.W. Cooke, National Review, December 18, 2017

The government is sure to seek to ban driving sometime in the future.

But what about liberty? Cooke writes, “As usual, the opponents of prohibition will be correct. “Please sir, may I move?”

He proposes a legal prophylactic, now: amend the Constitution. The genius of the Bill of Rights is that it protects broad categories of human conduct. This is not so much about driving, but rather movement.

“Congress shall make no law restricting adults from driving licensed vehicles.”

“Creating Wealth Does More Good than Giving it Back,” Paul H. Rubin, FEE, December 20, 2017

The initial creation of wealth always greatly exceeds the giving back portion.

Henry Ford, who was a vicious anti-Semite, created wealth that benefited the Jewish people, but when he gave back by publishing the Dearborn Independent, an anti-Semitic newspaper that Hitler borrowed heavily from.

See our Episode #38 for a discussion of Henry Ford.

The Koch brothers and George Soros: Impossible for them both to be contributing to the social good since they are diametrically opposed.

John Stossel, “Thankful for Property,” November 22, 2017

Pilgrims nearly starved because they farmed collectively, what economists call the tragedy of the Commons.

He did a video on this experiment:

See our Episode #76 for Lessons from the Trading Game for a similar demonstration of the free-market principles of trade.

Net Neutrality

The FCC never had legal authority to enact net neutrality (NN) when Congress declined to do so. The FTC still regulates anti-competitive behavior.

iPhone couldn’t have happened with NN (ATT exclusive). TimWu, Columbia Law Professor, called it at the time “iPhony,” because Apple should allow customer to pick the carrier of their choice.

That exclusivity didn’t prevent Android from being world’s largest smartphone operating platform.

George Carlin taught us that FCC regulates content, so if you’re worried about this, the FCC is wrong body to have regulate the Internet.

Article at Stratechery.com?

“Father of The Internet Skewers FCC: ‘You Don’t Understand How The Internet Works’”

Thomas W. Hazlett: Economist, Clemson University, has written two fantastic books on this topic:

• The Political Spectrum, 2017

• The Fallacy of Net Neutrality, 2011

According to Hazlett: “A truly open Internet allows consumers, investors, and entrepreneurs to choose among many models…The FCC mistakes the benefits of market processes for a planned industrial structure, imposing new rules to protect what evolved without it.”

Marea (Spanish for tide) cable being laid between Virginia and Spain, thin garden hose. Funded by: Microsoft, Facebook, and Telxius.

160 Terabits per minute!

Ed’s Topics

Dropping Traffic signs would make us safer from Jeffrey Tucker in a FEE article, November 27, 2017

In response to a snarky Facebook post in which the commenter said, "Right, let's get rid of traffic lights," I encountered the above article from Jeffrey Tucker. 

Even the folks at VOX seem to agree. Here is a short film link on people driving slower, “Edge friction”

List of self-driving milestones

from www.XKCD.com, December 6, 2017

Tax Bill: Reform or Not?

Ed says it’s not real reform.

Ron says yes it is, but only on the corporate side, not the personal side (though the repeal of the Obama Care mandate is major reform). The corporate reform is mostly due to full expensing—which does expire after 10 years—but also changing to a territorial system, which is a big change.

Also, what about government spending? See Kevin Williamson’s article in National Review on “A Dessert-First Tax Bill.”

What’s going on with Bitcoin?

Are people cashing out at year end? Bitcoin futures market began. First Bitcoin joke: A son asks his father for $10 in Bitcoin. Father replies, “$9.41, what do you need $13.21 for?”

Neat piece from Mark E Leftovic on why BitCoin IS different.

Episode #171: Interview with Johan Norberg

Ron and Ed are thrilled and honored to be interviewing Johan Norberg. Johan is a senior fellow at the Cato Institute and a writer who focuses on globalization, entrepreneurship, and individual liberty. Norberg is the author and editor of several books exploring liberal themes, including the one will will discuss in depth today - Progress: Ten Reasons to Look Forward to the Future. He studied at Stockholm University from 1992 to 1999 and earned a M.A. with a major in the history of ideas. He is also a member of the international Mont Pelerin Society.

Questions by Segment for Johan

Segment One

Would you explain your transition from leftist anarchist to classical liberal?

Life used to be "nasty, brutish, and short," but you point out that a child born today is more likely to reach retirement than his or her forebears were to live to age five.

We shouldn’t romanticize short working hours in the past: people didn’t have enough caloric intake to work long enough hours to produce a surplus of food.

Who is Norman Borlaug? And, why should we know about him?

Your book is very balanced, always pointing out the negative side effects of the progress made. Please comment on that. 

Segment Two

Progress: Ten Reasons to Look Forward to the Future

By Johan Norberg

Buy on Amazon

Your book, Progress: Ten Reasons to Look Forward to the Future (2016, 2017) is a treatise of factual optimism. You point out we’ve made more progress over the last 100 years than in first 100,000! In the last 50 years, poverty fallen more than preceding 500 years.

You deal with 10 major areas:

1. Food

2. Sanitation

3. Life expectancy

4. Poverty

5. Violence

6. The environment

7. Literacy

8. Freedom

9. Equality

10. The next generation

With respect to food, would you discuss the virtual disappearance of famines, and how the almost never take place in a democracy?

With respect to life expectancy, you write that before 1800, not a single country had a life expectancy above 40 years. Today it is 71, while the population from 1950 to 2011 increased from 2.5 billion to 7 billion. But life expectancy increased “not because people bred like rabbits but because they stopped dying like flies.” How did that happen?

Infant mortality declined from 154 to 35 per thousand between1960 and 20156, even in Haiti. This is an untold story.

Segment Three

Would you discuss the myth that the native Americans lived in a utopia, here and in Canada, until the Europeans came along?

Your chapter on violence talks about causes of war can be relatively petty. What do you think of the current dispute in the NFL of players not standing for the national anthem and respecting the flag? Would that have caused a war in the past?

You write about the importance of creativity, which is the theme of this show, and the opening quote from Ronald Reagan. You say that “humans are pleasantly reproducible.”

Even though the end of world poverty might not be within reach, do you believe it is within sight?

Segment Four

In your Next Generation chapter you discuss the decline of child labor and tell the story of a 12 year-old girl’s hands from an Indian village. Would you tell that story, because it is incredibly poignant.

In the Epilogue, you point out that humans tend to be naturally pessimistic, and that most people fail questions regarding the progress you so well document in the book. You give an interesting explanation: things that happen in an instant are mostly bad! But reducing poverty, increasing life expectancy, etc., happens slowly over very long periods of time, which tend to go unnoticed.

Your book is not Pollyannaish. Do you see trends that could derail this progress? Are you optimistic?

We loved the quote from Franklin Pierce Adams: “Nothing is more responsible for the good old days than a bad memory.”

Episode #170: Customer Transformations

In The Experience Economy, B. Joseph II and James H. Gilmore, (2011, 1999) lay out the Progression of economic value:

• If you charge for stuff, you are in the commodity business (fungible)

• If you charge for tangible things, you are in the goods business (tangible)

• If you charge for the activities you execute, you are in the service business (intangible)

• If you charge for the time customers spend with you, you are in the experience business (memorable)

• If you charge for outcomes the customer achieves, then you are in the transformation business (effectual)

Buying experiences makes people happier than just buying products—the best things in life are not things! A common mistake is thinking experiences are mere entertainment. It’s really about engaging customers.

Any shift up to a new, higher-value offering entails giving away the old, lower-value offering. The authors give the example of a birthday cake:

• Mom makes it from scratch in the 1920-30s: .10¢

• Betty Crocker cake mix in the 40-60s, $2

• Bakery slate cake in the 70s and 80s, $10-20

• Chuck E. Cheese, $100-$250 party, the cake is free

 The Easiest way to turn service into an experience: provide poor service! Go from: “How’d we do,” to “What do you remember.” For instance, 90% of car buyers say they are satisfied, yet, only 40% buy next car from same manufacture.

Transformations

Three industries are ripe: Those that focus on making us healthy, wealthy, and wise.

The customer is the product. When you customize an experience you get a Transformation. While Experiences are personal, Transformations are Individual.

Examples: Fitness coaches, psychiatrists, plastic surgeons, CPAs, lawyers, religious excursions, Promise Keepers, GSK Committed Quitters program (50% greater likelihood you’ll quit smoking).

The London Business School: we’re not in education business. We’re in the transformation business. All other economic offerings have no lasting consequence beyond their consumption.

We want to transform ourselves to become different (A New You), which is why Pine and Gilmore call such buyers ASPIRANTS.

There are three separate phases in offering transformations:

1. Diagnosing aspirations (from-to statements—flabby to fit, sick to well, single to married, grief to normal living)

2. Staging transforming experiences

3. Following through (AA)

At end of day: You are what you charge for.

What do you want to be?

What is beyond transformations? Here’s how Pine and Gilmore answer:

“According to our own worldview, there can be no sixth economic offering because perfecting people falls not in the domain of human business but under the province of God.”