You are what you eat

People feel that food which is carefully tended by artisans, loved, coddled, and astonished is better than the industrial, mass market product. The most efficient way to deliver this experience seems to be growing the food industrially, and then selling it off a wooden table at a fair.

Good luck, graduates

One of my favorite U Chicago professors, Austin Goolsbee, has a piece on how the job you get after graduation has a lingering effect on lifetime earnings.

Lost in the argument over whether young people today know how to work, however, is the mounting evidence produced by labor economists of just how important it is for current graduates to ignore the old-school advice of trying to get ahead by working one's way up the ladder. Instead, it seems, graduates should try to do exactly the thing the older generation bemoans — aim for the top.

The recent evidence shows quite clearly that in today's economy starting at the bottom is a recipe for being underpaid for a long time to come. Graduates' first jobs have an inordinate impact on their career path and their "future income stream," as economists refer to a person's earnings over a lifetime.

The importance of that first job for future success also means that graduates remain highly dependent on the random fluctuations of the economy, which can play a crucial role in the quality of jobs available when they get out of school. That is good news for this year's graduates, who are entering the work force with the economy growing, but rather disturbing for recent graduates who were driven by recession into taking less-than-ideal first jobs and are now aiming to work their way up.

I'm not sure how to interpret these findings. Firstly, the original paper he cites look at MBAs joining investment banks. Lots of MBAs want to get investment banking jobs because they pay big bucks, but when the market is down banks do not hire, and may lay people off. This means that an MBA class which graduates during a recession will have fewer banking jobs, and as a consequence, will have lower earnings on average because of this job mix. In a couple of years when things pick up, this same cohort will be competing with ex-bankers (laid off in the last recession) and brand new grads, who may be willing to work the long hours and do the boring work banking requires.

The same, to a lesser extent, goes to college grads where the upper pay ranges come from banking, and to a lesser degree, consulting. Both of those industries tend to hire lots of new graduates or those with prior experience, and are tough to break into for others. If you graduate when those industries are not hiring, your cohort will not do as well on pay, but that does not mean that you will not do as well as an individual wherever you land.

Saw X3 last night

X-Men 3 is not as good as 1 or 2, but I still quite liked it. The one female non-comic book fan who saw the movie with me thought it was terrible, and she enjoyed 1 and 2.

That said, Nacho Libre looks awesome as does My Supehero Ex- Girlfriend.

New Urbanism in Chicago: Glen View

"New Urbanism" is a lot of things, but at its heart is the idea that towns and cities should be built around human needs, at human scales, and to human tastes. Human tastes are often quite plebian and include white picket fences, a WalMart, and golf courses, so when "new urban" towns appear true architects, who think Architecture is Art, criticise them for being comfortable and pleasant to humans.

Many new urbanist developments seem pleasant but odd, often feeling like a cross between an appartment complex and a mall, and while it feels a little fake and cheesy but there is no denying that it's fun and convenient at the same time. Let a decade or two knock some of the freshness off and it will feel like any old neighbourhood that has a lot of chain stores.

Some friends of mine moved from downtown Chicago to Glen View, and new urban development up close to O'Hare a couple of years ago, and they like their new location. They realized that they didn't want to live somewhere that had 100 restaurants, they wanted to live somewhere that was walking distance to 10 restaurants, and Glen View was it.

I thought of this as I read this very condescending piece on the project.

UPDATE: By buddy and boss Mark Hurst points to this NYTimes Magazine article on Biloxi, MI, and it's post-Katrina, New Urbanist recovery effort there.

Housing prices in Boston

The front page of the Globe today says there is a record glut of houses in the Boston area. The forecast prices will fall. As you read through the article, it mentions that MA lost 19K residence between 2003-2005 as people moved to (cheaper) New Hampshire and Vermont, or moved to other parts of the country (Florida, North Carolina). In addition, New England has an old population, and as they age people are trying to move to smaller homes or they head south and west for retirement.

I don't know how a shrinking population can support the doubling of housing prices Boston saw between 2000-2005, unless stock has been taken out of the market by tearing houses down, which I do not think has happened.

CDs vs Concerts

Like many pairs of similar products, CDs and concerts are both complements and substitutes. To a certain degree, buying the CD of a band means you do not need to listen to them live, but listening to a band live also makes you more likely to buy a CD.

Downloaded mp3s, both legal and illegal, have reduced the value of CDs as evidenced by shrinking CD sales. However, given the huge quantity of mp3s shared online and the fact that the CD business is still around, it's just a little smaller, means that these two goods are far less imperfect substitutes than many (I) had initially thought.

David Bowie argues that the decline in CDs and the rise of mp3s mean that concerts are the only viable ways for musicians to make money.

But now, he says, the link between the two products has been severed, meaning that artists and their managers need to make more money from concerts and feel less constrained in setting ticket prices.

Professor Krueger says this tendency was spotted by David Bowie, who told the New York Times in 2002 that "music itself is going to become like running water or electricity".

Bowie has advised his fellow performers: "You'd better be prepared for doing a lot of touring, because that's really the only unique situation that's going to be left."

Concerts may also end up being the best place to sell CDs.

Zazzle rocks

Zazzle lets you design a t-shirt over the web, and then they make it and mail it to you. It ends up costing about twice what a regular t-shirt does, but t-shirts are cheap, and a custom t-shirt at twice the price is still not a lot of money.

What was remarkable was how quickly they fulfilled -- the shirt arrived 3 days after it was ordered. And it looked great.

I also met the founder of Threadless in New York a couple of weeks ago. Nice guy, but I confess, I'm not entirely sure how the site works.

Inflation woes

One of the great mysteries of the last few years is where has inflation been? The government has racked up large deficits and grown future entitlements, demand for debt has been voracious, and housing prices have been shooting up. But inflation remained tame and interest rates low.

Inflation is calculated by pricing a bundle of goods and services, and it includes rent but not purchase price of housing. This is because owning a house is a mixture of investment (house might appreciate) and consumption (I need a roof over my head) and inflation should be focused on consumption costs. One weird side effect of the housing bubble is that rents have actually been flat to declining in some markets where prices are going through the roof (such as Boston) as people ditch renting to climb aboard the real estate rocket. It seems that this has stopped, and rents are beginning to creep upwards again, which increases the inflation measurement, and suggests that the Fed will continue to raise rates.

In the past, high inflation has been good for borrowers because it erodes away the value of their debt. This is why governments with large deficits invite inflation -- it's a way for them to make their real interest payment obligations lower. But this time, many borrowers have taken out option ARMs where the rate they pay will adjust upwards if interest rates rise, meaning that they will not get the full benefit of a high-inflation, high-interest rate environment. Yes, the real cost of their debt will decrease, but their interest payments will go up.

Stocks have also fallen but the last time I checked they were trading well above historic PEs, so the mystery there was more why they remained so expensive, not if they should come down to historic norms.

Gadgets are too complicated

According to this story, half of all electronics returns work, but the gadget was so complicated people could not figure out how to use it.

Trudy Schuett's top-of-the-line car stereo is so complicated that she hasn't figured out how to change the radio station. She only learned how to work the CD player when her minister, riding in the passenger seat, started pushing buttons and stumbled on the right combination. And forget setting the car clock - she has more important things to do than pull out the owner's manual and hunt for the instructions. She also has an MP3 player she doesn't use, and a digital camera that sits mostly idle because she has to relearn how it works each time she wants to use it.

"I am not an idiot or a technophobe," insists Mrs. Schuett, a resident of Yuma, Ariz., who says some of the useless gadgets belong to her husband or were given to her as gifts. "I have had a computer since the mid-'80s and have been online since 1995. I maintain and repair my own computer system."

The article states the consumers like to buy gadgets with lots of features, but then struggle to manage the complexity that entrails. There is certainly some truth to that, but I challenge folks out there to try and buy a black-and-white cell phone, with no camera. I'm not sure there is one on the market -- certainly there is no cell phone with the grace of the old four-button Nokias.

Stress and health

This interesting Slate article looks at a study which compared similar English males with American males. All in all, the English males were healthier, even after taking income, fatness, smoking, drinking, etc. into account. A surprising result given how much more the US spends on healthcare and the UK.

The study's author has also looked at the impact stress/socio-economic status has on health. Basically, if you are in a job with a lot of responsibility but no control, you are less likely to be healthy than otherwise. I'm not sure if Americans are more stressed than Englishmen, the employment rate in the US is better, the country as a whole is richer, and the UK has a fairly dynamic capitalist economy (unlike, say, France).

One thing not mentioned in the article was whether Americans were less healthy than the British because they were less dead. Advances in medical care have basically moved people from being dead to being alive but unwell, which is why all arguments that better health reduces medical costs are bogus (they may delay some medical costs, but we all need to go sometime and we usually do it kicking, screaming, and running up expensive medical bills). Maybe the right comparison isn't between unhealthy Americans and less unhealthy Englishmen, it's between unhealthy Americans and dead Englishmen.

Net neutrality

If net neutrality really is a ploy to protect large incumbent cable companies and support cartel pricing, we should see smaller, hungrier cable upstarts arguing against it.

Bush trades nuclear secrets for tropical fruit

A line so good it could have come from the Onion, but it's true. As part of Bush's recent visit to India, the Indian mango can now be imported in the US. The Indian mango is much better than the south american mangos you usually get here.

Unfortunately, Pakistan, which has better mangos IMHO, does not export. People tell me it's because "they are so good they want to keep them all to themselves". I tell them about comparative advantage. They look at me blankly.

Ignore your customer

Sometimes you should ignore your customers. Sometimes your customers are, quite frankly, crazy, and listening to them will make you do things to your products which will turn off everyone else who buys from you. Which customers are the most dangerous to listen to? Ardent geeky fans.

Take this blog, joystiq. In typical geeky fan fashion, it's written by folks who are passionate about video games and passionate about technology. They love the XBox360 but wish it had more features, and love the PS3 but wish it was more powerful.

They are confused by the Nintendo Revolution (now renamed the "Wii"). It has less power than the other two platforms. It has a fewer buttons than the other two platforms. Yet, in some polls, it seems that people are looking forward to this new device even though it has less power, and fewer buttons.

To set some context, the video game console business is locked in a features war where different companies strive to create games and platforms that are more realistic, have faster graphics, etc. than the last. Nintendo has decided to quit this game and is focused on easier games that are quicker to learn and play. They've decided that graphics are fancy enough and are instead focusing on a controller that has fewer buttons but is sensitive to gestures, hoping to encourage innovative, simpler games for non-geeks.

Thankfully though, Sony has ridden to the game geeks rescue by adding gesture sensitivity to its controller. So the Sony controller now has 3 joysticks, 8 buttons PLUS gestural input, which is clearly superior to the Nintendo's single joystiq plus 4 buttons plus gestural input.

Moreover, Nintendo's use of gestural input isn't even that technologically innovative because Logitec put it in their mouse way back in 1999. So there.

Now that the cognitive dissonnace is over, the game geeks can get back to arguing over which platform can render more polygons more quickly.

Sheesh.

Mongolian goat herders and American home owners

This nice post by Surowieki discusses house price insurance in the US (or rather, a new residential real estate futures market, that you can use to lock in current gains, hedge against future losses, and bet on future appreciation).

I'm a big fan of this idea, as I think young people should want a hedge against appreciation and so are a natural trading partner for folks who own houses but are worried that prices will fall.

Once additional point that Surowiecki mentioned was the emotional component to getting folks to sign onto this. Just as it took a great fire in London to make fire insurance popular, would it take a great crash in RE to make real estate "insurance" popular? He did not mention what happened to the poor mongolian goat herders.

On the road

Am on the road. Posting will be light for the week.