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Lesson 1: Challenge Dogma With Chutzpah

This is part 1 of my series on how Michigan can learn from Israel's economic success.

On January 21st 1988, Roger Smith, the chairman of General Motors, was undoubtedly distressed. A young executive named Elmer Johnson had written a biting critique of the company's culture. He wrote: “We have vastly underestimated how deeply ingrained are the organizational and cultural rigidities that hamper our ability to execute.”

21 years later, another bold executive, Rob Kleinbaum, penned a similar appraisal: "GM’s decision making processes need serious revamping. Despite improvements, most meetings are still exercises in procrastination, rubber stamping or idea killing, without anything that would pass for genuine debate and dialogue. Dealing with complex issues requires genuine discussion, feedback, and intellectual engagement."

Most explanations for General Motor's collapse agree that the company's culture discouraged critical thinking and open debate. This was not the only problem, but it undermined attempts to solve other problems, because the organization's ability to think clearly was crippled.

Contrast this with a story of another company that needed to challenge conventional wisdom to succeed - Intel.

In the microchip industry, faster always meant better. At least until the chips got so fast that they couldn't operate without overheating. Most companies designed elaborate cooling systems to compensate, but Intel's Israeli team of engineers had other plans. They realized that the cooling mechanisms could only help up to a point, were clunky, and used too much power. After months of experimentation and debate, they developed a chip with the equivalent of gears on a car. It could perform at high levels with lower speed. This breakthrough innovation promised to revolutionize the entire industry.

When they pitched the idea to Intel's corporate executives, they met a wall of resistance. No one thought they could sell a technically "slower" chip, when all their competition was focused on speed. The Israelis had the guts to persevere and ultimately convince their bosses to go ahead with their project, and it was a wild success for the company. The technology they invented is now the new industry standard.

......

The difference between winning and losing starts with an organization's dedication to the truth - no matter what the consequence to egos or hierarchy.

Chutzpah is a Hebrew term, roughly meaning "audacity" or "gall". It takes serious chutzpah to challenge the thinking of those senior to you, if they are incompetent. Prudent leaders encourage dissent.

In the Israeli military, junior officers often disagree with their superiors in ways that would surprise even the most progressive American officer. It's not a sign of disrespect - it's a shared cultural value. They understand the importance of the free flow of ideas. They maintain a healthy distance between their ideas and their ego.

If you're possessive of your idea, then an attack on it is an attack on you. You'll do everything you can to defend it, even though it may be wrong. This places far too much importance on ideas. Despite what we often hear, it's not the idea that matters, it's the result. If you have a team striving to achieve a common result, they'll ruthlessly abandon ideas that don't work in favor of ones that do - ones that are closer to truth.

......

How To Nurture A Culture of Chutzpah in Michigan

Education shapes culture. We should design a public education system that intentionally develops high-chutzpah individuals.

Extra-curricular activities like debate gives kids a healthy tolerance for argumentation. If you aren't used to it, debate is emotionally challenging. Over time you learn how to argue without taking it personally.

This is a good first step, but debate isn't enough by itself. For all it's merits, debate doesn't foster a dedication to the truth. You simply learn how to defend a point - any point. Without a firm hold on reality, you end up with a bunch of people arguing in a room about, well, nothing.

To remedy this, we should combine debate with exercises that have groups of students solve complex yet concrete problems. One example is the classic egg-drop experiment, where you have to design a mechanism that allows an egg to survive a two story fall. If you have a group of kids arguing about the best way to build protection for the egg, they ultimately have to reach a compromise and test their idea. The egg either breaks or survives, and the kids learn to value the truth higher than the ideas of the most persuasive speaker.

These are just two initial ideas, but my main point is that it's possible to design a system that intentionally develops a specific type of culture. We're not powerless. If we get serious about this effort, I'm fairly certain Michigan would become a talent hotspot. The economy of the future depends on knowledge and innovation, and the place with the best talent will also be the most prosperous. I would love to hear a discussion on how Michigan can intentionally develop more chutzpah in it's talent.

Michigan's Not Racing To The Top

A lot of Michiganders have already bemoaned the Granholm/Cherry administration's massive cuts to education, but I have one reason to be angry that's not been a part of the conversation yet. In fact, it's not been a part of the conversation in Michigan at all that I can tell - cuts to education or not.

I'm talking about the Race to the Top initiative, by Arne Duncan, the U.S. Secretary of Education. It's $4 billion dollar fund that will award grants to states who compete and win against other states. Hence the name, "race to the top".

Michigan isn't doing a very good job "racing" at all, and we've got some competition that is actually serious about structural reform. Recently, in a speech in Wisconsin, Obama mentioned efforts that some of our rival states were taking to position themselves to win a grant:

I'm proud to say that already a number of states have taken us up on this challenge. Across the country, different groups are coming together to bring about change in our schools -- teachers unions and parents groups, businesses and community organizations. In places like New Haven, educators and city leaders have come together to find a smarter way to evaluate teachers and turn around low-performing schools. In states like California and Indiana and Wisconsin, you're seeing steps taken to remove these so-called firewall laws so we can have a clear look at how well our children are learning and what can be done to help them learn better. States like Delaware and Louisiana, Tennessee and Illinois are all making efforts to let innovative charter schools flourish.

I know we've been busy with our annual embarrassing budget crisis, but is it not possible for us to focus on structural reforms, so maybe the funding cuts won't hurt so bad? What is Michigan doing to compete against these states who are already taking steps to ensure they win in the knowledge economy?

We're cutting vital scholarships and funding, when we have legislators who gave themselves a pay raise a couple years ago, film credits that do more for Hollywood than Michigan, one time tax credits to politically-favored companies, and a shiny new building downtown for our police captains (while their boots on the ground are getting laid off).

I fail to see the logic here.

What Michigan Can Learn From Israel's Economic Success: A Blog Series

I love stumbling upon books that are completely unexpected, yet utterly relevant. Recently, I was browsing in Barnes & Noble, and picked up Start-up Nation: The Story of Israel's Economic Miracle, by Dan Senor and Saul Singer. It explains how a country "of 7.1 million, only 60 years old, surrounded by enemies, in a constant state of war since its founding, with no natural resources-- produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada and the UK".

Even if you are critical of Israel politically, you have to admit that its economy is worth studying. Consider these facts that the book highlights in its introduction:

• In May of 2009, Israel had over 63 companies listed on NASDAQ, the most of anyone besides the US. Canada came in second, with 48, and Japan came in third, with only 6.
• Israel's rate of venture capital investment was over $250 per person in 2008. The U.S. was second, with less than $100 per person, and Ireland was third, with over $50 per person.

As I was reading, I realized that Michigan needs to pay especially close attention, since we're trying to rebuild our economy around an entirely new set of industries than the ones that have traditionally sustained our prosperity. The middle class our parents grew up with was built around a guaranteed supply of high-paying manufacturing jobs that will never return. We must emerge from this recession by creating an environment in which start-ups can thrive, ideas and knowledge are the crucial skill sets, and stagnant institutional thinking gives way to unbounded creative energy.

However, just because we all (mostly) agree that this transition is necessary, we don't agree how to do it. Some argue that tax policy is the most important. The MEDC seems to be focused on advertising and offering special tax credits to specific companies considering coming to Michigan. Non-profits like Michigan Future, who believe talent is the crucial ingredient, are focused on improving education. Young Smart Global Lansing is a consortium of entrepreneurs taking it to the streets in a grassroots effort to get skilled college grads to stay in Michigan and start companies.

The problem is multifaceted, so there is no silver bullet. It's going to take the right leadership, the right institutions, and the right culture to make this effort successful. Most of all, we have to be willing to learn from the past, and shed dogmatic ideologies. Isn't that what innovation is all about, anyway?

I hope to contribute to the conversation by applying Israel's lessons to Michigan in case study that spans a series of blog posts. Obviously, the goal isn't to duplicate Israel - that's impossible. However, we can clarify our understanding of the universal elements of a dynamic, knowledge-based economy, and hopefully apply them to Michigan's particular circumstance.

P.S. - If you want to remember to read the rest of this series, but are busy and prone to forget (like me), why don't you subscribe to the RSS feed or get updates by e-mail?

Detroit Needs Teach For America

I'm considering applying for Teach for America after I graduate, so I have been doing a decent amount of research on the program, and the other day I discovered a troubling story.

The Backstory

In 2001, Teach for America came to Detroit. Student enrollment dropped, and teacher layoffs became necessary. Naturally, some argue, the newest teachers with the least seniority were the first in line to get the axe. In 2004, Detroit's 34 Teach for America teachers left.

Detroit Schools' Decline

It's apparent to anyone following the situation that Detroit schools have been on a steady decline for a very long time. Want visual proof? Check out this info-graphic from the Wall Street Journal, depicting the 50% drop in enrollments over the past decade.


It's not a pretty picture. But that's just the enrollment. The poor student performance is even more shocking. The school district reports that 58% of it's students graduate, but the real numbers are probably much lower. A study by the Alliance for Excellent Education estimates that less than 25% graduate.

Teach For America's Impact

You can measure the impact of Teach for America quantitatively. A study by the Urban Institute shows "The impact on student achievement of having a Teach For America corps member was at least twice that of having a teacher with three or more years of experience relative to a new teacher. A 2009 follow-up, employing a larger sample of corps members and additional comparison groups, corroborated the initial findings."

However convincing these numbers may be, I think the most compelling evidence for TFA's impact is anecdotal. After Detroit kicked them out, the parent of a student in a TFA teacher's classroom had this to say:

Patrice Mosley, whose daughter Precious is in Gall's class, said losing Gall could make her rethink whether to look for a new school for her son. "He's a creative teacher, a caring teacher," Mosley said. "For this school to lose him is horrible."

If a parent considers switching schools after a teacher leaves, you can bet that is one amazing teacher.

Why Teach for America's Critics are Wrong

The most common objection to Teach for America's strategy is that they recruit people who just use it as a stepping stone to other career goals.

The first thing to remember is that TFA teachers have proven success, so this gripe is essentially a personal one. It doesn't say anything about the quality of instruction these teachers give to their students.

Why does it matter if TFA teachers leave after two years? If they are good teachers, it shouldn't matter to us whether or not they stay. The point is to bring idealistic young people into struggling schools so they can inspire a sense of hope and ambition in the students who probably haven't had many people encourage them to believe in themselves. The only real education is a self-education. You have to be inspired to want to achieve and believe in your abilities to actively pursue a self-education. Some are lucky to be born into people who encourage them to believe in themselves. A rare few find it themselves even in discouraging environments. Most are capable of it if they are inspired by someone.

This is the single most important task of an educator. Learning isn't a transaction where the teacher implants knowledge into the student's heads. The students have to want it. The task of the educator is to make the students want to learn. Without that, they are just wasting their time.

I can understand why teachers would be offended by young hot-shots coming in, "taking" their jobs, and then skipping town for greener pastures. It would have been a tough decision for Detroit Public Schools to lay off veterans and keep the rookies. But, as Crain's Detroit reports, that tough decision has been made by every other major school district, even those with strong union influence.

I hope Mayor Bing, Robert Bobb, and other leaders in Detroit will do everything they can to bring Teach for America back to their fallen city.

What The Internet Means

This is the best slideshow I've ever seen. It is about the internet, and what it means. I couldn't possibly sum it up. Just start going through it and you'll probably be hooked.

It's amazing to think how lucky we are to live in such an exciting time.

Digital Strangelove (or How I Learned To Stop Worrying And Love The Internet)

View more documents from David Gillespie.

The Identity Theory of Economic Choice

The assumption that individuals are rational utility maximizers is one of the cornerstones of virtually all modern economic thought. This is commonly referred to as "rational choice theory".

This does not mean that individuals are infinitely and inherently selfish. Gary Becker, Nobel-winning Chicago school economist, argues that "...individuals maximize welfare as they perceive it, whether they be selfish, altruistic, loyal, spiteful, or masochistic."

This argument reveals rational choice theory with greater nuance than most economists, but I think it misses the most crucial point. It answers the question "how do individuals maximize their welfare?" but ignores the larger question "what entity's welfare do individuals maximize?"

Discerning what entity's welfare the individual maximizes concerns the ends of economic activity (what people work for), whereas the traditional theory focuses on the means (how people work for something). The individual as articulated by the traditional theory would say, "I work for my welfare by ______", but in reality, individuals say "I work for _____'s welfare by _____".

Insofar as I identify with an entity, I work for it's welfare. For example, insofar as I identify with my nation, I work for it's welfare. Insofar as I identify with my family, I work for it's welfare.

We all identify with multiple groups, to a greater or lesser extent, and at the most basic level, we identify with our selves. When our multiple identities conflict with one another, this is a true conflict of interest. Conflicts between duty and personal interest are commonly called conflicts of interest, but a rational utility maximizer would not have an emotional dilemma dealing with it. They would simply calculate the costs and benefits. When true conflicts of interest occur, we face a deeper question: who/what do we identify with?

Economics, and all rational choice theories that I know of, assumes that individuals use groups as a tool to maximize their individual welfare. The traditional theory would argue that when we help others, we don't actually identify with others, we satisfy our preference for altruism by giving to others. However, I think in reality we belong to groups for more primal, less calculated reasons, which I will discuss later in this essay.

Some might argue that my concept of identity is too imprecise, and not suited to the positive science of economics. This may be partially true, but my explanation clarifies another eternal mystery of economics - what determines individual preferences?

The theory of evolution has strongly established that the overriding interest of any entity is to ensure its survival. I believe this is to be true of all entities, whether they are groups of people or single celled organisms. Whatever we identify with, we work to ensure its survival.

In a modern economies, where we find it unnecessary to worry about our personal survival most of the time, we still constantly exercise our reflexive drive to survive by channeling it into other identities - groups. This makes self-sacrifice possible.

The only phenomena I can think of that this theory can't explain are suicide, masochism, and other forms of self-destruction. Economics cannot explain these either, they are not rational activities.

As to the question of how we form our identities, that is better left to psychology to discuss.

Here are a few examples that help me illustrate my point:

When you vote, you know that there is a very slim chance your vote will affect the election, and the cost of your time and effort required to actually vote outweighs the potential benefit of your vote being pivotal, but you still do it anyway. Why? Because you identify with the your country and you wish to see it steered in a positive direction.

When you help a family member in need, you aren't doing it for personal benefit, you do it because you identify with that person as a member of your family, and you care for the common good.

What Granholm Did Wrong

If you're not doing the right thing, then fighting harder just makes things worse. You end up digging yourself into a deeper hole.

The Washington Post recently did a piece on Granholm's fight against unemployment in Michigan. It's a serious problem that deserves a valiant effort, but I sure wish she would have spent her energy more wisely.

Consider some of her brilliant tactical moves:

"In her effort to attract employers, the governor has taken up the latest arms in the economic arsenal -- tax credits, loans, Super Bowl tickets and a willingness to travel as far as Japan for a weekend to try to persuade an auto parts company to bring more jobs to Michigan.

...

"She had spent months calling, e-mailing and meeting with city and state officials trying to sway the company to take a package worth about $70 million in tax breaks to stay in Michigan.

...

"A $37 million tax package helped persuade Michigan-based United Solar Ovonic -- she wooed the chairman with a trip to the 2006 Super Bowl in Detroit -- to build a solar panel production plant

Instead of literally begging people to bring jobs to Michigan, offering to subsidize anything that moves, and creating more tax loopholes for certain industries than swiss cheese, why didn't she focus on creating the right environment for organic economic growth?

No matter how many degrees she has from Harvard, Granholm is still not as good as the market at choosing what jobs should come to Michigan. She can try to lure a company to open up a factory in Michigan with Super Bowl tickets, but that is not a responsible long term strategy for growth.

Here's the outcome of one of her brilliant job-creating acts of desperation:

"With a tax incentive package worth more than $100 million, Michigan beat out Arkansas, Missouri and Oklahoma, as well as Spain, in getting Hardee's company and two other alternative-energy firms...

"...In the spring of 2008, Granholm returned to Greenville to tour the United Solar plant that replaced the Electrolux factory.

"They had product orders all the way out until June 2009 back then," said Greenville Mayor Ken Snow. "But the global economy shifted. That left them with more product than orders that need to be filled."

The pesky thing about markets is that they have a tendency to shift. It's a natural and positive process for society. But when you offer $100,000,000.00 in taxpayer money to specific companies to locate in Michigan, you have to either revert to protectionism, reneg on your deal, or lose a $100 million dollar bet that you made with our tax dollars. None of these are good options.

Granholm's erratic behavior has done serious damage to Michigan's economy.

Before, we had the reputation of a state that constantly tried to protect its major industry. We shielded automakers from foreign competition, so they could shut their eyes and pretend the world wasn't changing. But it couldn't' last for long, because all walls eventually fall, and reality came crashing down on Michigan's auto sector and it's overpaid workers. If we had resisted the protectionist temptation from the beginning, maybe the big three would have adapted, GM wouldn't have gone bankrupt, and there would be a lot more jobs in this state. This is why it is crucial for government to be pro-market, not pro-business.

Now, we've succeeded in losing the protectionist reputation, but we have a worse one: erratic. Businesses do not have confidence in the government of Michigan. While Granholm has been traveling the world offering subsidies to anyone who's thinking about bringing a large-scale operation to our state, she's failed to notice that government intervention in the market always creates winners and losers. With every subsidy you offer, you are picking one winner and declaring everyone else a loser. You don't have to be a mathematician to understand that this is a losing equation. This is why it is crucial for government to be pro-market, not pro-business.

However, there is one thing that Granholm got absolutely right. She admits to herself that she doesn't know what she's doing:

"Granholm remembered coming home and telling her husband, "I just don't know what to do for people."

Don't get me wrong - I admire the persistence and effort on her part, I just wish it was more skillfully applied.

I wish she would have fought for tax reform, making the system fairer and simpler, so big corporations can't hire legal departments to find loopholes to exploit while innovative small businesses get stuck paying the lion's share.

I wish she would have fought for efficiency and accountability in government, so we could reduce the tax burden on our struggling businesses, so they can create more jobs and prosperity.

I wish she would have fought for maintaining healthy markets where innovators and entrepreneurs can thrive, and growth can happen organically.

Those are the things Michigan needed most from her.

Incidentally, these are the things Michigan can expect from Rick Snyder. This wasn't going to be a post about his campaign, but I feel obliged to say that if you agree with my analysis of Granholm's failures, you should seriously look into Rick Snyder.

On Writing Well

Have you experienced the calm that follows reading great writers? It works better than most headache medicines. It soothes the soul to allow beautiful passages to seep in.

I've been reading On Writing Well by William Zinsser, and quickly discovered that the book is amazing. Never before have I paid so much attention to words and phrases. Even skimming will make you a better writer.

Take, for instance, his advice on style:

"First, then, learn to hammer the nails, and if what you build is sturdy and serviceable, take satisfaction in its plain strength."

There is great wisdom in the carpentry metaphor. Writing is a utilitarian act - it must be functional above all else. The most beautiful chair in the world is no good if you can't sit on it. Strip down to the essential. Those who excessively employ "big words" usually do so out of anxiety, not confidence. Only after you build the framework can you add ornament. Style takes a lifetime to develop.

I'll close with two of my favorite quotes (so far) of the book:

"Telling a writer to relax is like telling a man to relax while being examined for a hernia"

"You are writing for yourself. Don't try to visualize the great mass audience. There is no such audience - every reader is a different person."

Why Must My Interests Define Me?

Image via Wikipedia

I suppose it's the nature of my brain. When some new curiosity pops up, I exert much effort towards thinking it through, finding out more about it. I dive in head-first, and I don't like to be bothered to come back up for air. When, inevitably, something else pops up, my interest drags me away. I'm the guy who's dog is really walking him, instead of the other way around. As the metaphor implies, it feels like I don't really have control.

What's really strange is that, today, it is expected that we form our identity around our interests. I, for one, have a hard time doing this. I change my interests too much.

It bugs me beyond belief when someone I haven't talked to in awhile asks me how x is going, even though x hasn't crossed my mind in two years. How strange that someone's entire mental image of me centers around something that was only a passing curiosity. I can't help but feel that they have no idea who I am.

We're confronted with the challenge of defining ourselves in terms of our curiosities at all turns in life. People ask us: "what do you do?" (or if you're in college: "what's your major?") before they ask anything else. They check out our books, magazines, blogs, facebook "info" pages, groups we're involved with, etc. They attach eternal significance to chance topics of conversation we initiate. They judge us accordingly. Their opinion of our interests becomes their opinion of us.

In truth, I suspect that we are in far less control of our interests than we may believe. I might even say that there are no true interests - only curiosities that have overstayed their natural course, due to convenience or other personal attachments.

In my own life I have noticed that I can be interested in anything, if I find the correct point of entry. Most of the time, we only see the external appearance of a subject, and it doesn't make sense to us, so we dismiss it. There are things that I am not gripped by (chemistry, for instance), but that doesn't mean that I couldn't be gripped by it. All I need is the time and a proper introduction. I think that's all anyone needs.

To be clear, a proper introduction does not mean "Chemistry 101". A proper introduction is more like having a real sense of the unknown, the itch that the subject tries to scratch. Some people are so infectious with their itch, that they give their itch to us. These are what we call good communicators.

People who get you itchy are, and always will be, rare.

The prevailing wisdom of today is that the internet will enable a cornucopia of long-tail tribes to flourish. I doubt the niches will be as charismatic as some would describe. Maybe your business benefits from the capitalist principle of specialization, and you are a peddler of highly-specific-use wares. Maybe there are about 50 others like you, now able to connect for the first time due to the internet.

I don't think a tribe will form around it. Capitalism's long tail of trade vastly outstretches the human talent to get others itchy.

I'm Not As Good As I Used To Be (At Taking Pictures)

I haven't uploaded any pictures to Flickr in a long time. Looking at these old gems makes me jealous of my former self. I cannot produce what I used to.



I recently went on a vacation with family to Colorado, and took a lot of pictures there, so I'm kind of getting back into it. Hopefully there will be more updates here soon on my picture-taking progress.

Desiging A Budget

Image by Getty Images via Daylife

I've been thinking about budgeting lately, because the Michigan legislature can't seem to figure out a good way to do it. Every year, they think they have to argue about what to cut, but I think there's a better way.

People and dollars are leaving Michigan, so obviously revenue is shrinking as well. This means that we have to spend less money. It's not partisanship, it's not politics - it's math. I won't even factor in the growing structural deficit that haunts Michigan (it's going to come back to bite us soon).

Yet there seems to be no political will to cut anything. You hear the same line, over and over again: "we've already made sacrifices." Even so, you can't really blame them for being upset. Everyone has their own corner of the universe, and they are more concerned about that than the bigger picture. It's hard to trust someone who is taking away resources from you that "it's really in your best interest." If you add legislators and politicians who have little courage into the mix, you have a recipe for gridlock.

I'm not sure what the solution is, but I think we're going to have to reinvent the way Michigan budgets. There are other states who have solutions that we should at least be discussing and experimenting with.

One good example is Washington. They have an initiative called "priorities of government" that I think is a pretty innovative way to move towards a more common-sense budgeting process. Instead of taking years past and specific departments of the bureaucracy as a given, they simply start with the priority outcomes that the government is expected to produce.

The process goes something like this:

• Determine what the priorities are
• Figure out how much money you have to work with
• Assemble a team of experts, citizens, and government staff for each priority area
• Give each team a certain amount of money to spend to achieve their priority
• Have an open market of people who make offers to solve part of each priority area
• The teams choose the most effective way to spend money

I should point out that this isn't how Washington makes the real budget. They just use this exercise as a way to give out recommendations that eventually make their way into the real budget.

I would be interested to see what a state could achieve if it actually switched to pure outcomes based budgeting.

Design is the Future of Conservatism

Here's a scenario we can all relate to:

You're trying to learn how to use a new computer program. The box seemed cool, and promised all sorts of awesome features that you knew you couldn't live without. You install the thing, boot it up, and all of a sudden it dawns on you:

The program sucks. Nothing works like it is supposed to, it has buttons and levers all over the place, and you have no clue what any of them do. The whole thing is a big overwhelming mess. To make matters worse, you can't just walk away and use something else, you have no choice in the matter, you have to use this terrible program (for your job or something, I don't know, just go with it for the sake of the metaphor).

If you're like me (or any other human being) this provokes rage and frustration. The thing is just supposed to work. You want it to work and get out of the way.

Funnily enough, I have the same feelings about the DMV. But I don't think it's just a coincidence. I think it's a fundamental truth that we've lost touch with.

No, I don't think Windows Vista and the DMV both sucking are fundamental truths - I think the principles of good design are fundamental truths, and I think good design can make government better just like it could have made Windows Vista better.

I won't explain why this is conservative yet. I think you'll see what I'm talking about as I flesh this idea out. Just remember - less is more.

• Unity refers to a sense that everything in the artwork belongs there, and makes a whole piece. In the context of a nation, this means so many different things at once. Examples include: some common political culture and beliefs, common units of currency, common structural elements of programs (you want it to be flexible and the different parts of government to be able to work with each other, if everyone is using different standards then a lot gets lost in translation), and much more.

• Variety refers to the use of dissimilar elements, which creates interest. Think capitalist division of labor. Think democratic separation of powers. Think diversity - multiple perspectives that help us figure out what ultimately works for everyone.

• Balance refers to a sense that dominant focal points are balanced and don't give a feeling of being pulled too much to any part of the artwork. If you've read the Federalist papers, you already understand what this means for government. Wisdom means finding balance.

• Harmony is achieved through the sensitive balance of variety and unity. Harmony is what emerges from the system when it works right. Harmony is interesting because it's not a concrete thing. Think about it in terms of music - you have multiple notes that are different but are similar enough to work together to make something beautiful. The harmony is somewhere in between. Harmony is the real goal of society.

Those are the crucial principles of design - the absolute basics. Here's the wikipedia page that lists those, and many others that you might enjoy pondering over.

Admittedly, liberalism also takes much inspiration from the principles of design. But I believe in fundamentally sticking to the principles, which is a conservative attitude to have. If you want more examples of conservative design principles, consider these concepts, and reflect on how they apply to government: worse is better, feature creep, mission creep, second-system effect, code bloat, over-engineering, KISS principle, accidental complexity, Pareto principle, Occam's razor, etc

Notice how all those things kind of said the same thing? I think they're all getting at something important. It's better to just keep it simple. But we also should remember Thoreau's advice:

It is not enough to be industrious; so are the ants. What are you industrious about?

Best. Commercial. Ever.

Three reasons this commercial is amazing:

1. It is the best use of kinetic text I've ever seen
2. It doesn't sell a product, it sells a movement
3. It's just true.

Watch it, and let me know if you agree.

A Great Summary Of Healthcare

I had an extended conversation with a friend of mine about the current healthcare debate. He seemed to believe that healthcare was too important to think about economics or profit motives. I think economics is in everything, and healthcare is too important to try to ignore economics, because if you do, the whole thing will mess up. Unfortunately, I wasn't very good at articulating my point to him. Luckily, I found a great blog post explaining the economics of the thing in terms anyone can understand.

From Planet Utah:

The last time we had a serious debate about U.S. health care was 1993. At that time, the GOP took a "just say no" approach and prevailed.

This time, though, I see and hear prominent Republicans embracing universal coverage as an important element of any major reform. That's a big change, and a welcome one as far as I'm concerned. I welcome it not just because I'd like to see the U.S. have universal coverage, but because if conservatives/Republicans excuse themselves from this discussion, we're more likely to get some version of Kennedycare than a more sensible reform.

Footnote: If anyone told you that we were going to make sure everyone in America had a house of their own, and at the same time that we were going to control the growth of housing prices, you would say, "Cool. And when you're done, can you send a fat-free pizza and an invisible chocolate unicorn to my affordable new house?"

It just doesn't make sense that you can dramatically increase the demand for something and not expect the price of that something to go up. That's why you are correct to be skeptical about the Obama administration's claims that it will achieve universal health care coverage while at the same time keeping costs in check.

The Obama people would undoubtedly tell you, "But there are all sorts of steps we can take to hold the line on prices: making medical records electronic, emphasizing preventive care, researching and disseminating knowledge on the most effective treatments..." Truth is, though, no one knows whether, or to what extent, these things will work to restrain prices. But you gotta say something about how you're going to restrain prices, and it looks like this is the something the Obama administration is going to say.

And if it doesn't work? Well, that's someone else's problem. Obama still gets credit for bringing us universal health care. (Analogy: George W. Bush gets credit for knocking off the Taliban in Afghanistan; Barack Obama has to deal with the very messy aftermath.)

Anklenote: But if the government is such a big player in healthcare--and poised to get even bigger--can't it dictate prices?

Sure, and it already does that to a certain extent. It pays a lot less for services provided under Medicare, for example, than private insurers pay for those same services.

But government can't suspend the laws of physics, or economics. If you squeeze a balloon on one end, the other end gets fatter. And if you constrain payments in a massive public program like Medicare, doctors, hospitals, and other providers simply raise them elsewhere--most notably, in the fees they charge to insurers and (especially) the uninsured.

Shin-note: Okay, well, if that's the problem, then what if there were no private insurers, because government decided to pay all the bills, and what if there were no uninsured, because as the one paying all the bills, government decided to pay the bills for the previously uninsured, too? Wouldn't that solve the problem of cost-shifting?

Sure, that's what single-payer systems are all about. Government is the only game in town as far as paying for services, so when government sets a price, that's the price that gets paid. Problem solved, right?

Not so fast. When government starts setting prices--and, inevitably, setting them substantially lower than the market would set them, just because it can--you have a lot of smart, ambitious, disciplined people who otherwise would have gone into medicine saying, "You know, that's not nearly as attractive a career as it used to be. I think I'll be a shrimp boat captain instead." And you have a lot of entrepreneurial individuals and companies who otherwise would have operated hospitals and other treatment centers saying, "You know, that's not nearly as attractive a business as it used to be. I think I'll start an ostrich ranch instead." And then you start getting serious shortages of medical goods and services. You also get a decline in the quality of those goods and services, as the people providing them are not as smart, ambitious, or disciplined as the people that used to provide them.

Knee-note: Okay, well, if that's the problem, then why not just have government set prices at a level high enough not to create these disincentives? Won't that solve the problem?

Yes, but only in theory. As you might imagine, running things this way is HUGELY expensive. I mean, you're talking about taking all of the medical bills being paid today by individuals and insurers, and all of the medical fees that providers don't charge in the first place or never collect, and giving government an invoice for ALL of it.

It's a gigantic bill. Government won't want to pay it, and won't be able to without massive borrowing, massive tax increases, or massive spending cuts.

When confronted with options like this, politicians typically choose "none of the above." Specifically, they pick a number--let's say it's 65% of the total bill--and say, "This is how much we can afford to pay. Take it or leave it."

Providers will take it, but they'll also say, "If you're only going to pay 65% of the bill, we're only going to provide 65% of the service."

In practical terms, this means that if 100 people need a kidney transplant, only 65 people are going to get their kidney. Call that what you want, but most people call it health care rationing. It's a fact of life, and death, under single-payer systems. It's the reason you hear about Canadians crossing the border into the U.S. to get health care. It may be crazy-expensive here, but at least you can get it...

Punch-line: To paraphrase C. Everett Koop for about the millionth time in my blogging life, "We all agree that we want first-rate health care, universal coverage, and cost containment. Well, we can't have all three. So, let's pick two and make the best of it."

Again, though, politicians hate having to make choices like that, so they usually convince themselves that they don't have to.

I think that clears up a lot of things.

PS - Interesting fact - Utah recently achieved a bipartisan healthcare reform that most agree is a pretty monumental achievement.

It's All According To Whom You Talk With...

Do yourself a favor, and read Talks With Great Workers on Google Books.

Anonymity Is The New Privacy

We don't just live in an information economy - we live in an information society. More and more everyday, I am convinced that the way we gather and act upon data will determine our collective prosperity. The more we know, the sooner we know it, the better the data is - the better decisions we can make.

Here is a prime example of what I'm talking about:




Having all this data at our disposal is very empowering. I think the old adage, "knowledge is power" is absolutely true. However, we also have to remember that "with great power comes great responsibility. Knowledge and power is like any weapon - it can be used for good or for ill. No one wants to live in an Orwellian society, but it appears we are moving in that direction.

For example, consider this recent incident in the UK. The police busted a party because it was tagged as an all-nighter on facebook, and for whatever reason they felt like they should stop it. The funny part is that they intervened via helicopter at 4:00 pm - before the "crime" ever occurred. Sound familiar?

That was just an aside that I found funny, but it does have serious implications. The amount of data stored on each of our personal lives is tremendous, and it will only increase. However, there is a tendency for activists to psychologically separate the positive power of data from the negative power of data. You can't have your cake and eat it too, and you can't have the benefits of power without the risks.

I think this is a broader pattern of our society, possibly of human nature. Skip to 3:22 on this video and you'll see an interesting proof of this point.



But, returning to the point on information and privacy, what are we going to do? We need information in order to create shared prosperity. We can't just regress to the stone age. I think the solution is to think hard about anonymity. With anonymity you share your data but it doesn't identify you as an individual. In contrast, I think privacy means your data isn't shared at all. Of course, there will always be a way to figure out who you are and reveal your anonymity. I think this is where privacy policies come in. We will be thinking more and more about what goes into those legal documents, and I think that segment of the lawyer industry is going to grow a lot over the next decade, when more and more of these issues surface due to advancing technology.

I think the lighthearted reference I made earlier to the movie Minority Report is actually pretty instructive here. We need to think about the moral implications of stopping crimes before they happen, because technology is just going to move further in that direction. I think the best thing we can do is to realize that you can never get something for nothing, and to be cognizant of the risks.

A City That Thinks Like The Web

This is pretty awesome. I need to digest it a bit more and then I might edit the post with some of my thoughts. For now I just wanted to share.

A City The Thinks Like The Web

View more presentations from David Eaves.

Keep Your Ideology (Mostly) To Yourself & Understand The Other Side

In America we are big fans of free speech - which is a very good thing - but a society of individuals who enjoy broadcasting their views also has downsides. People who seriously understand the problems with free speech can learn to manage and adapt, and will be rewarded for doing so.

Once people start freely saying things, they tend to disagree. When people disagree, it is obviously hard to work together. Look at the Michigan legislature - they are consistently gridlocked. Last year the government shut down because they couldn't agree on a budget. In a democracy, we have to learn to work together better to get things done and to make the right decisions. Personal virtue is the grease to the gears of democracy. After awhile, the friction gets things too hot and the whole thing breaks down. Benjamin Franklin said America will fail if it's people aren't virtuous, and I think he is 100% correct.

So why do we disagree so much? I think this is one of the most interesting questions of all time. Have you ever just stopped to think about how crazy it is that two similar people can see one issue so differently? It is really easy to just label those who disagree with you as crazy, like Ann Coulter and Keith Olberman are fond of. It is really easy to just throw your hands up and be baffled at their stupidity.

It is also lazy, and won't get us anywhere. If you are truly passionate about something and you want to make a difference in the world, here is the best piece of advice I have ever heard: keep your ideology (mostly) to yourself and understand the other side.

Let's be realistic. If some change hasn't happened yet, it is because people haven't made it happen. People need to agree that it should happen and be motivated in order for something to happen. It obviously hasn't happened yet, so you need more people to agree and be motivated. People who aren't motivated yet don't understand why they should care that much. People who don't agree that it should happen don't understand why you think it should happen. So, you need to make people understand why they should agree and why they should be motivated. How do you think you should go about doing that? Do you think you should simply be louder? That isn't so great at authentically motivating people, and it never convinces people of anything.

So many people get caught up in the mindset of "rally the troops" but it is devastatingly ineffective. It is comfortable, and it is easy, but it doesn't work. If you want to actually get anything done, you need to think differently.

First, stop being so loud about your beliefs. It is one thing to think something and another to say it. Obviously you haven't made the change you want to make, so it isn't really hurting you to try something different. Every time you communicate your ideology it becomes a bigger and bigger part of your identity. You define yourself as your cause. You feel bad about changing your mind because then other people (and you) won't know who you are anymore. This is a recipe for a lazy mind. I would rather define myself as who I really am - just me. Not any particular cause, thought, or anything else. Just being me is good enough. I believe in things but they don't define me. If what you believe is really true then it will continue to hold under rational analysis. You can't do rational analysis on something that defines you.

Second, read everything you can about the opposing point of view, and keep an open mind. This is not weakness. This is strength. Like Aristotle said, "it is the mark of an educated mind to be able to entertain a thought without accepting it." But you aren't doing it right if you just read everything and come up with answers to it. I think what Aristotle said is actually much more profound than that.

What Aristotle really means has to do with the way people hold thoughts. A thought isn't really a good enough word for it, because ideologies aren't just one single idea. They are multiple ideas woven together to form a coherent narrative and worldview. I think it the phrase "pattern of thought" is a lot more accurate.

So when you read an opposing viewpoint just to think of answers to the other side's argument, you aren't really ever entertaining the thought. To truly entertain the thought is to jump into it and allow yourself to temporarily believe it. You have to jump into the other ideology, the patterns of thought, in order to really see what other people believe. It requires a leap of faith. Try to recognize and immerse yourself in the true patterns of thought of the ideology. Then, go back and read things that you (normally) agree with, from the perspective of the other side.

This is like looking in the mirror, and I find it extremely useful. The better you are at authentically entertaining thoughts (i.e. temporarily accepting them), the wiser and smarter you will be. It takes practice just like anything else, and I am not very good at it, to be honest, but at least I think it is the right thing to do, and I'm working on it.

Ideologies are like circles - each individual thought ends up contributing to the whole worldview, and in order for it to make sense all the pieces have to be in place. One argument proves another, which proves another, which proves the first argument, and it goes around and around and never stops.

I think it is our moral duty to take of the lens of ideology and try to see things as they really are. The best way I have found to take of the lens of ideology is to put on a bunch of different lenses temporarily so you start to notice their effects on your thinking. Look at ideas from different angles, and you'll start to get a more complete picture. You'll also understand how other people thing and be able to emphasize with them, talk to them in their language, and maybe even get them on your side for some change you think should happen.

The New American Dream

In school, we learned that America was the greatest country in the world because anybody, if they worked hard enough, could be a success. We learned that anything is possible if you put your mind to it. There is no aristocracy in America, no class of ruling elites. All of us are created equal. This bold idea inspired the creation of our nation, but we seem to be losing touch with it.

I think we're losing touch with it largely because we hear all the bad stories, and few of the good ones. How many times have you heard about a greedy CEO who ruthlessly hurt others in a grab for money and power? How many times have you heard about politicians selling their souls in corrupt backroom deals? How many times have you heard about workaholics that strain their personal relationships but still never seem to get ahead?

Now compare that with how many times you've heard about someone who did the right thing and was rewarded for it. I bet you can't think of as many examples. As a society we are undergoing a dramatic shift in assumptions: for the first time in the American experiment, we no longer praise success - we are suspicious of it.

To illustrate the point, let me share an experience I recently had. I have been volunteering for Rick Snyder's campaign for governor of Michigan. It is likely that you haven't heard of Rick Snyder, and for a good reason: he's not a politician. He is a venture capitalist specializing in health technology from Ann Arbor, and before that (in the 90's) he was COO and President of Gateway Computers. The opposition's instinct was to label Rick an "out of touch millionaire CEO, trying to buy the office." I guess if you take things at face value, the smear sounds reasonable enough, but it doesn't tell you anything about Rick's history. If you knew Rick, you would know that nothing could be further from the truth. In fact, Rick had a modest upbringing in Battle Creek, worked for less than 2$ an hour in high school, and to top it off he paid his way through the University of Michigan and worked tirelessly to earn his undergrad, MBA, and JD by the time he was 23. From there he had a successful career through hard work and doing the right thing. Now, regardless of your views on the substance of Rick Snyder's campaign, I think we should be praising the guy for his work ethic - not blasting him for his success.

But this isn't about Rick Snyder's campaign - that was just a recent example that I wanted to share. This is about our recent suspicion of success. I'm not sure if the old version of the American Dream can ever come back, because I don't think it was really complete. I think we need to update the American Dream.

For our generation, the American Dream is about being successful and using our success to do good in the world. We should be unashamed of living comfortably, but we should also strive to use our wealth to build a better world. The concept of social entrepreneurship is really useful here: our generation sees no conflict between making money and doing good. The old way of thinking is based off the notion that there is a limited amount of wealth in the world, and that anyone who is a success grabbed more than their fair share. Our new (and true) way of thinking is based off the notion that wealth is dynamic and we can grow the pie for everybody. I am no economist, but it is pretty plain to see that people are on average better off today than they were 2,000 years ago. (At the bottom I attached a google books thing that lets you see a graph showing growth in total human wealth over time from the great book The Origin of Wealth)

There are still great disparities, but we need to realize the fundamental truth that the pie is not fixed, and we should not be skeptical of success, but we should encourage it. Why? Because we know that people that are successful are innovators, and they create wealth that rises all boats.

Can More Republicans Please Sound Like This?

There is so much about this video that I agree with. It is exciting to watch things like this, especially because I'm not used to hearing the right talk this way.

The Future of Business is Small

In the past, companies had to be big because they had to in order to stay organized. Communications and transportation technologies were slow and expensive, so they needed a hierarchical chain of command to maximize efficiency. You can't have an open discussion about an important business decision very well via snail mail.

Another reason bigger used to be better is that there were fewer competitors and they were mostly producing physical objects of some sort. If you sold 100 widgets a day, you could beat out the guy selling 10 widgets a day on sheer scale, because there wasn't much possibility for differentiation of the products. They just had to work.

But now, product differentiation and company flexibility matter a lot more.

The number of businesses has increased vastly, therefore, the number of choices have increased with it. All those choices have made a crowded marketplace, and it seems to me that people are less and less satisfied with a product just being a good deal. They want the product to stand out, to have good design, to meet some special niche need, and on top of that, they also want it to be cheap and they want it to work. When a product stands out it gives people a reason to not have to sort through every last boring alternative to see which one is marginally better.

Think of Apple for example. Mac computers cost more on average than their PC counterparts, but people still buy them. Why? They perform the same tasks as a PC but they do it with style. They are fun to use as works of art themselves, not just a means to some end.

I'm sure a lot of people will say, "You're just describing the luxury market, nothing has really changed." This is part true, but I think that we shouldn't underestimate the momentous shift caused by the internet. Before, branding was an expensive thing, you had to pay for advertising which was really expensive. Now, any company can make a snazzy looking product and advertise and brand it themselves online for much cheaper. We're seeing a branding arms race. People want to be a part of a community and companies want communities formed around their products. The internet is enabling this to happen to a greater and greater extent.

So back to my initial thesis, that the future of business is small. The reason I think we'll start to see a trend toward leaner business is that people are starting to reject mass-advertising. Friends are much more trustworthy than some marketer. With the internet, it is becoming easier to rely on real connections with people we trust to make purchasing decisions. I'm describing businesses that are more like movements. They are smaller and more flexible, so they can always outpace their bigger rivals when the markets shift. They'll be able to stay on top of trends. They'll have a more loyal customer base. They can get in touch with suppliers through similar social networks, rather than the traditional good-ole-boy network. These suppliers can come from anywhere in the world.

The global market is getting a lot more competitive, and the products that stand out, and are made by lean companies will win.

Where Does Republicanism Go From Here?

I think I may be the only person in the world who switched from Democrat to Republican this spring. I didn't do it because I like the Republican party, I did it because I admire conservative principles. I think these are the right principles to lead us forward to a new era of American productivity and prosperity, but unfortunately there are a lot of Republicans who have confused principle with policy. Different times demand different policies, and we shouldn't consider any change to be a dilution or moderation of classic conservative principles.

The most important thinker of the conservative movement was the Irish statesman Edmund Burke. He wasn't a political philosopher as we think of them today, and he published no grand treatises or magnum opuses. Instead, Burke articulated his vision of politics mostly through speeches in the British Parliament. This was particularly fitting, because one of his greatest contributions to political philosophy was that we should be wary of grand theories - reality is complicated and humans aren't capable of experiencing enough to be able to ever have the final word.

This critique was articulated on the occasion of the French Revolution, a time in which men rejected any reformist compromises and challenged everything that came before. The French Revolutionaries were certainly right to question the rule of an absolute monarch, but everyone can agree that they took it too far with the reign of terror. This bloody purification was exactly the type of excess that Burke warned against.

Conservatives are at their best when they remember that no action is better than a bad action. But this doesn't give us a license to reject every proposal that comes along, we also have to understand that no action is perfect and circumstances sometimes necessitate a swift response. I believe it is the duty of the true conservative to reflect on the unintended consequences of policies and proposals, and to be watchful for zealous moralizing.

However, the modern conservative movement, embodied by the Republican party, has lost touch with this at times. We need a reality check, the kind of reality check that Burke would have slapped us with.

We need to recognize that a large percentage of America thinks abortion should be legal. We are unable to force any big policy changes down the throat of the public. Even if we had that kind of strength, it would be counter-productive. Isn't the point of pro-life politics to reduce the number of abortions that happen in the world? Why not work within the current system, alongside pro-choice-rs, to reduce the number of unintended pregnancies? Why not make adoption more available? I may be crazy, but I even think it would be good to have honest discussions about why each side feels the way they do about the issue. The point isn't to drag them over to your side, it's to promote mutual understanding and heal old wounds. I bet the number of abortions in America would be cut in half if that kind of co-operation happened. This is just an example of one specific issue, but there are many more areas for common ground and I'm sure I'll go into some of those in the future on this blog.

We need to embark on the journey of rediscovering the wisdom of the Founders, and of great political philosophers like Burke, Plato, and Aristotle. We need to open our minds and realize that the true and profound meaning freedom is not something we are automatically blessed with by virtue of living in America. Freedom is an ideal to aspire to. We all have our imperfections, and they hold us back from being the people we want to be. But the good news is that those imperfections can be minimized through hard work and determination. Only insofar as we are wise and exercise self control are we truly free. Freedom doesn't mean "do what I wanna do, with no stinkin' government in the way." But this should already be obvious because conservatives support strong enforcement of the rule of law. We need to be unafraid of acting like it, and we need to stop pandering to the narcissism and laziness of some in our party.

We need to realize that giant corporations are just as detrimental to individual liberty and free markets as big government is. Power corrupts, and nobody with a personal interest really wants a level playing field. Everybody wants an edge. The founding fathers meant to solve this problem in government by pitting ambition against ambition, and dividing up the powers in our ingenious constitutional design. But they couldn't foresee the mammoth corporations that have been enabled to exist by communications and transportation technology. I want to see economic policies that are focused on enabling entrepreneurship and small business. I want to see stagnant markets un-clogged with stronger anti-trust enforcement. We should not regard every government regulation as a bad one. What is a law other than a regulation? Do we not need laws to have order in society?

The real issue is, the law has to be applied equally and blindly. The law can't have political favorites, and big donors. This is why Republicans should push for strong campaign finance reforms, so that another slick Barack Obama cannot break another promise. The political campaign is not a free market, it is a job application process, and the government can and should regulate it more strictly. This is crucial to lessen the moneyed interests and create a more level playing field, to maximize everyone's freedom.

We also need to renew our vision of small government. A small government is only good if it is still strong enough to protect the individual liberties of each citizen. America is at its best if we have a society of individuals creating prosperous, healthy communities by working together. Markets are essentially communities of people, trading goods and services. I think a lot of the left's skepticism of markets is actually a skepticism of overly large, exploitative corporations that have the resources to buy political favors. But conservatives know that free markets are the engine of real progress. We should enable markets to develop solutions to America's problems by getting out of their way and breaking up their clogged arteries, and getting big government and old corporate favorites out of the way, freeing room for innovative individuals to go to work and be rewarded for their efforts. The future of business is small.

On social issues, we need to make sure we're picking the right goals (results, not politics) in order to make real progress and heal old wounds.

We need to change the Republican culture to be more reflective and less ideologically driven - Burke would be turning over in his grave if he watched an episode of Hannity.

We need to be pro markets, not pro business.

We need to gain back America's trust after the Bush/Cheney/Rove years damaged it badly.