Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are the 8 most fascinating ones I read this week.
The "One Laptop Per Child" project dumped an unopened box of tablets with Google's (Nasdaq: GOOG ) Android software into a village in Ethiopia. "Just to give you a sense of what these villages in Ethiopia are like, the kids (and most of the adults) there have never seen a word. No books, no newspapers, no street signs, no labels on packaged foods or goods," writes DVice. Here's what happened next:
We left the boxes in the village. Closed. Taped shut. No instruction, no human being. I thought, the kids will play with the boxes! Within four minutes, one kid not only opened the box, but found the on/off switch. He'd never seen an on/off switch. He powered it up. Within five days, they were using 47 apps per child per day. Within two weeks, they were singing ABC songs [in English] in the village. And within five months, they had hacked Android. Some idiot in our organization or in the Media Lab had disabled the camera! And they figured out it had a camera, and they hacked Android.
James Surowiecki of The New Yorker succinctly explains why having more skin in the game of high-deductible health insurance policies can backfire:
And while a well-known study called the Rand Health Insurance Experiment showed that higher co-pays can encourage people to forgo unnecessary care, the same study showed that higher co-pays also encourage sick people to forgo necessary care, which raises costs in the long run.
Here's Josh Brown of The Reformed Broker:
There's going to be such a brutal bond investor slaughter at some point over the next decade that the streets of Boston's mutual fund district will run red with blood, the skies will be shot through with the lightning and thunder of unexpected capital losses and those who manage to survive will envy the dead.
Now a slaughter in bonds will not look like an equity market crash, the volatility characteristics are different and bonds eventually mature. But in some ways it will feel much worse than a stock crash because the money parked in bonds is thought of as low or no-risk. ...
Far too many investors are waltzing around as though they're somehow "safe" because of these massive bond allocations they're nurturing. They are walking beneath a dangling piano hoisted 10 stories above their heads, its shadow barely noticed in the noon-day sun.
Writes The Wall Street Journal:
More Americans are postponing retirement until their 80s as they struggle to build reliable nest eggs, according to a Wells Fargo study cited by CNNMoney. Thirty percent of middle-class Americans -- those making $100,000 or less -- plan to work until their 80s, up from 25% a year ago.
Slate business and economics correspondent Matt Yglesias makes an incredibly important point about Amazon (Nasdaq: AMZN ) :
In any line of business where you're earning healthy profits you always need to worry that a competitor will undercut you on price. But normally you can also have some confidence that they'll be restrained in their price cutting by the need to maintain profits of their own. Amazon is totally off the leash in this regard. Wall Street treats it like a brand new start-up that just needs to think about growth and can find a viable business model later. Which means that if they come after you, you have no recourse. Your profits are going to shrink, and your investors are going to punish you for it but Amazon's profits don't necessarily need to grow proportionally. They just need to show they can poach your market share.
The New York Times makes a good point: Layoffs over the last few years haven't been that bad in the grand scheme of things. But those who have been laid off are struggling to find new work:
[Economist Daniel Hamermesh] noted that during the recession and the recovery, relatively few workers have cycled through unemployment.
"There are fewer of us experiencing unemployment, but those who are out are out a lot longer," Mr. Hamermesh said. "They then become increasingly isolated, which decreases the will to do anything, because they are a less important group."
Supply and demand
A reader of The Wall Street Journal responds to an op-ed by Microsoft (Nasdaq: MSFT ) general counsel Brad Smith complaining about America's skill shortage. This is debatable and controversial, but thought-provoking nonetheless:
The reality is that Microsoft and many other Fortune 500 companies created the skills shortage. Their first strategic error was to lay off thousands of American employees and replace them with lower-paid foreign labor brought in through a host of political maneuvers, most notably H-1B visas.
The successful lobbying for foreign labor visas has resulted in the flattening of the compensation for high-tech labor, and this lobbying is always amid the chorus of "Americans are not smart enough" or "our schools are inadequate." In reality, the systematic flattening of compensation has predictably diminished the pipeline for trained Americans to meet the demands of the global economy.
Trust the law of supply and demand: When the compensation for high-tech labor truly reflects the economic benefit society derives from that labor (and is not retained by the executive suite), then all the problems Mr. Smith describes will fade away.
The blog Farnam Street shares a list by professor Paul Gary on what it means to think critically. There's commentary on each point here:
- The ability to think empirically, not theoretically.
- The ability to think in terms of multiple, rather than single, causes.
- The ability to think in terms of the sizes of things, rather than only in terms of their direction.
- The ability to think like foxes, not hedgehogs.
- The ability to understand one's own biases.
Enjoy your weekend.
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