Wednesday, September 2, 2015

Rick Shaw, answer your iphone

Under capitalism in America, man exploits technology to the benefit of man. In China under 'socialism', the same is true.
Didi Kuaidi, which means “Beep Beep Fast Cab,” was a $6 billion merger of China’s two main apps for booking traditional taxis. It soon expanded into also offering Uber-style ride-hailing.
Beep beep yourself, said Uber and entered the market too.
Beijing resident Rachel Zhang, 30, says she rides with both. “For a while, Uber was more convenient because their high subsidies for drivers meant you could get a ride fast,” she says. “Recently, I’m using Didi more, because they have more types of ride services, and Uber’s fares have gone up.”
 To fuel their China expansion, the rivals are building war chests. Uber is raising a billion-dollar funding round for UberChina and secured prominent Beijing-based fund manager Hillhouse Capital Group as an investor in a convertible bond for Uber’s global parent company, say people familiar with the deals. Hillhouse is also an investor in Didi Kuaidi.
So far, we've got benefits for riders. But don't forget labor;
The companies compete for drivers, as retaining them is crucial to keeping rider wait times low. “How to keep the drivers, how to grow the drivers,” Didi Kuaidi’s Ms. Liu says, is “a major challenge for anyone who wants to build something big in China’s mobile transportation sector.”

Both companies have sought to woo drivers with bonuses to those who rack up rides. Uber has offered larger bonuses in an effort to catch up in scale, earlier this year giving as much as 7,000 yuan weekly [$1,100!] to Beijing drivers who completed a high number of rides—quadruple a traditional taxi driver’s wages, according to drivers.
And bureaucrats;
Although analysts say Didi Kuaidi has a leg up on government relations as the local player, Mr. Kalanick [Uber Exec Travis] has crisscrossed China hobnobbing with government officials and businesses. He says Uber is basing its data centers for its China business in the country.
The only people so far who aren't prospering are the investors. Which is the way capitalism is supposed to work.

¡Mira: La etiqueta de la unión!

President Michelle Bachelet wants the richest country in Latin America to be more like its failed neighbors. That is, according to the PanAm Post's Hana Fischer, who says she's into the future of Chile (Uruguay) right now;
Chile’s history is not much different from that of Uruguay. We had the same misguided policies during an era of prevailing populism: from the 1930s to 1950s, both countries applied foreign-exchange controls with a multiple-rate system and an import-substitution model.

But the Uruguayan government went further, enacting mandatory collective bargaining for all sectors. The move disrupted the country’s social harmony, increasing the power of unions and dooming companies to financial disaster.

The governments of Uruguay and Chile claimed to be “defending the working class” with their interventionist policies, but it was workers who paid the price for those policies with their jobs. This then led to social unrest and violent clashes in these countries. In short, they became radicalized, agitated, and traumatized societies.
But in Chile, the people got fed up and supported the military coup that ended the Castroite experiment of Salvador Allende in 1973. And prospered...which sticks in the craw of the left wing of Chilean society. As this Bloomberg story from May makes clear;
Chile is one of only four countries in the 34-member Organization for Economic Cooperation and Development, including the U.S., that allows companies to replace striking workers, thanks to labor laws drawn up during the 1980s when dictator Augusto Pinochet was still in power.

Thirty-five years later, President Michelle Bachelet says it’s time for Chile to repay an historic debt to workers and is backing a bill to ban the practice and boost the power of labor unions.
 .... Under the government’s proposal, unions will become the only organizations allowed to conduct collective bargaining, while companies will be barred from automatically extending benefits obtained through a collective contract to non-unionized employees. It also stops companies from replacing striking workers.
Wanna be like Uruguay? Back to Hana Fischer, who has lived it;
When Marxists take power, the unavoidable result is a society of wealthy politicians and their cronies, while the rest of the public becomes poorer and poorer, both financially and in spirit. 
Here's how she sees Chile's labor market 'reforms';
Chilean President Michelle Bachelet, who supports the bill, said that “the experience in countries with higher levels of union membership and collective bargaining shows that it is possible to arrive at agreements for mutual benefit on a wide range of topics.”

However, the Uruguayan experience refutes Bachelet’s statement. The privileges awarded to unions have resulted in nearly dictatorial power over private companies, and business owners feel they are losing control. Unions have frequently adopted disproportionate and arbitrary measures, in some cases even running afoul of the law.
 Recent polling shows that a majority of Chileans oppose the proposed bill.

Roll over Mao Tse Tung (and Mussolini)

Why couldn't he have died sooner? China took its true great leap forward after he was dead and gone say economists Anton Cheremukhin, Mikhail Golosov, Sergei Guriev and Aleh Tsyvinski;
In order to evaluate the contribution of the post-1978 reforms, we construct a counterfactual where Mao’s policies ... continued in the post-1978 period. We find that reforms were very successful. Compared with the continuation of Mao’s policies, reforms generated an additional 4.2 percentage points of annual GDP growth and a 23.9 percentage point decrease in the share of labour force in agriculture. Without reforms, China’s GDP per capita would have been $2,536 rather than $10,274 (both numbers are in terms of 2012 PPP US dollars), and the share of labour force in agriculture would have been 57% rather than 33%.
Our bold (because a four-fold increase deserves to be highlighted) in the above. But, it would have been even better had less of the state remained in place;
... we further analyse the factors behind growth of non-agricultural total factor productivity by dividing this sector into state and non-state firms following Brandt et al. (2008). We confirm their finding that the growth of productivity in the non-state firms and reallocation of labour and capital from state-owned enterprises are responsible for the bulk of growth of non-agricultural total factor productivity.
Let's hear that again;
...we do not find any evidence that state capitalism is responsible for growth in China. We show that the growth rate of total factor productivity in the state non-agricultural sector was the same post-1978 as in Mao’s era. Rather, non-state total factor productivity growth, relocation of labour and capital from the state to the non-state sector, and the reduction of consumption and production distortions explain virtually all (that is, nearly 100%) of the growth and structural transformation in China.
Everything (or most things) without the state did well. 

Tuesday, September 1, 2015

Better to have them inside the tent...

Uber adopts the advice of LBJ (with regard to J. Edgar Hoover) and hires the hackers for itself;
Charlie Miller, who had been working at Twitter Inc., and Chris Valasek, who worked at security firm IOActive, have resigned from their jobs and will join Uber next week.

Miller and Valasek won wide attention last month after demonstrating that they could hack into a moving Jeep.

Uber said that Miller and Valasek will join the company’s Advanced Technologies Center, a research laboratory Uber opened in Pittsburgh in February and staffed with dozens of autonomous vehicle experts hired away from Carnegie Mellon University.
Nor should drivers for Uber expect to have a long career;
As Uber plunges more deeply into developing or adapting self-driving cars, Miller and Valasek could help the company make that technology more secure.

Uber envisions autonomous cars that could someday replace its hundreds of thousands of contract drivers. The San Francisco company has gone to top-tier universities and research centers to build up this capability.
Autonomous cars wouldn't be paid the minimum wage.

I walk the line...

And the good news is, says Miguel Angel Latouche in the PanAm Post, that in Venezuela your 90 year old father won't have much to carry;
My father can still move about relatively well, though slowly; he walks using a cane and suffers from knee problems. He had surgery a few months ago to remove a cancerous tumor from his neck.

You might say that a person with health issues like these should be resting, enjoying his retirement, and definitely not running errands.
Latouche then explains that in Venezuela's controlled from above retail sector, the consumer must appear personally to buy his needs. Even if he can barely walk.
The truth is that, in this incomprehensible country we live in, the authorities have limited purchases of some staple products, such as corn flour and powdered milk, to specific days and according to the last digit on one’s ID card. In other words, only the people with the right ID numbers can buy items on a particular day, and in person.
Imagine how much more misery could have been inflicted in Lenin and Stalin's Russia, or Mao's China, if they had had the modern technology (fingerprint scanner at point of sale, say). Latouche continues;
There I was with Papá, buying four packages of corn flour, amid pervasive annoyance, people cutting in, and smug expressions stamped on the civil and military officials managing the queue. I must confess that I feel a certain kind of rage when I must stand in a line that is watched over by armed military men intent on keeping order.
That's the Bolivarian Revolution writ in human terms.

Monday, August 31, 2015

We're from the CFPB, and here to raise the cost of your auto loan

The WSJ reports on the latest coup from Obama Administration--thanks to Dodd-Frank;
A federal regulator’s campaign to fight bias against minorities is changing the way many car loans are priced. Those efforts could mean some consumers will pay more.
The Consumer Financial Protection Bureau has reached more than $200 million in antidiscrimination agreements since 2013 with several large car-financing companies, including Ally Financial Inc. and American Honda Finance Corp., over allegations that dealers charged higher interest rates for African-Americans, Hispanics and other minority buyers.
The CFPB was specifically prohibited from interfering in the car lending business, but where there's a will.... All that the Bureau has accomplished is to change the way different components of an auto loan are structured. Apparently eliminating the most efficient--competitively arrived at--method for lenders and auto dealerships. So, with a less efficient process...surprise!
As part of its settlement with the CFPB and Justice Department, Honda’s lending unit agreed to lower its maximum dealer-markup cap to 1.25 percentage points from 2.25 points. But it has also decided to pay dealers 1% of the loan value out of its own pocket, while also raising the wholesale rate for car loans.

Under Honda’s new pricing plan, borrowers with a relatively high credit score of 760 or above would pay a wholesale rate of at least 3.4% for a new car loan, up from 2.3% before the settlement, according to a pricing sheet distributed by Honda to dealers in Texas and reviewed by The Wall Street Journal. Add in a dealer markup of 0.5 percentage point, for example, and the borrower could end up with an annual percentage rate of 3.9%, compared with 2.8% before. Over the life of a four-year $25,000 loan, that would add $586 in interest payments.
Hey, to the CFPB mafia, it's other people's money.

That's Entertainment Law!

While its practitioners are unusual amongst business and corporate lawyers, they are comfy with the left-leaning ideologues common in the legal profession. That is, according to some clever statistical analysis by scholars Adam Bonica, Adam S. Chilton and Maya Sen, in their paper The Political Ideologies of American Lawyers.
The practice that predicts the most liberal CFscore is entertainment law.
CFscores are measures of political campaign contributions. Bonica et al. have combined those scores with a data base from Stanford University; Database on Ideology, Money in Politics, and Elections (DIME). In their section on Ideology of Lawyers by Practice Area they break down where the areas are most ideological. Entertainment is even more left-ish than Civil Rights--Oil and Gas practice being the most conservative.

What HSIB finds to be particularly disturbing is that the legal profession as a whole is so unlike the rest of the population. Especially noteworthy is the data on the elite law schools' graduates.
The most striking result ... is that all 14 top law schools have distributions that lean to the left. That is, there are more liberal alumni from those schools than there are conservative alumni. Not only do all of the schools lean to the left, the skew is fairly extreme in several schools. ...University of California, Berkeley has the most liberal leaning distribution of alumni of all the elite law schools. .... all of the top six law schools--Yale, Harvard...Columbia...--have a relatively small number of graduates with conservative CFscores.
We bolded above the three law schools from which all nine current Supreme Court Justices have their degrees (and elided Stanford, Chicago and NYU). It's hardly surprising that a character like Donald Trump might find his opinions resonating with the broader American public, when they consistently see public policy reflecting not their preferences, but (in Thomas Sowell's famous formulation) the rampaging presumptions of their betters from the nation's elite law schools.

The Bonica et al. paper deserves a wide readership. Wider than it will probably get...unless Rush Limbaugh catches it, that is.