Featured Author: Jane Jacobs

Jane Jacobs was a fascinating thinker, economist, urban studies and public policy theorist. Her work addresses the growth of cities and their economies.

Here are some interesting ideas she poses in her work The Economy of Cities.

Why adding new work to old work is crucial to growing an economy (instead of merely dividing existing work more)

Why loosely structured and inefficient economies are better suited to survive change.
Why cities predated agriculture as we know it.
How cities can replace imported goods with their own industries.
Why some villages grow into cities and some do not.
How the design of urban spacies can either promote order or hinder it.

If you are studying urban studies, public policy or economics you need to read her.

For some reason, she has two entries in the catalog. One here, the other here.

Book Review: Moneyball

Moneyball is about an unlikely success: how the cash strapped Oakland A’s baseball team found ways to win without the ability to afford highly priced skills. One simply must find players with unusual and overlooked talents. One does this by identifying talents that no-one else can see – a tough business in a 100-year old game that few thought held any more secrets.

Those people were wrong. Baseball did have secrets. And these were ferreted out by Bill James, an eccentric and charming former night watchman from Kansas. Famed business writer Michael Lewis (Liar’s Poker) tackles the subject of how the Oakland A’s turned baseball shibboleths on their head by using these unconventional insights gleaned from reams of statistical data.

For Moneyball is a story about how insight into statistics can uncover hidden patterns and exploit the holes in conventional wisdom. The A’s used new data that redefined critical aspects of the game and what made a good player effective. And then they found these stealth players whose contributions to the game had been hidden in history.

Even if you’re not a baseball fan, it’s very important to realize that things are not always what they seem. It’s also a great way for people to learn to think about the behavior of numbers and stats – even if they’re not about baseball.

Featured Author: Hernando de Soto, Theorist of 3rd World Property Rights

No, not the conquistador Hernando de Soto! This Hernando de Soto is a Peruvian economist who has put forward his ideas about ending poverty in third world and undeveloped countries and encouraging development in those countries. .

In The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, De Soto tackles one of the oldest mysteries: how can societies unlock their human potential? The answer, as he argues, lies in individual rights and a predictable, open legal system. Which the third world poor lack.

But how do you establish such a thing? De Soto’s central idea is that the poor need titles for their often informally owned land and property. If you have legal title, you can get loans, and grow economically with that capital. But obtaining titles to some of these holdings would be fraught with controversy and entanglement….

This book is more of a thought piece and critics have noted De Soto’s lack of empirical data in his work. But it’s an interesting idea and ideas have to start somewhere.

In The Other Path, Hernando de Soto makes the populist argument for capitalism and property rights in the 3rd world.

The social and economic environment of many 3rd world nations resembles feudalism, with entrenched economic privileges and near-overt ethnic discrimination. The privileges of the elite are protected by law, which creates economic stagnation for the poor – if they follow the law, which, out of the need for survival, they don’t!

So, an informal economy springs up, with noisy microbuses and illegal markets. For the majority of the people, this is where market clearing prices exist. People live as squatters, oftentimes in rather nice houses.

Trouble is, you are outside the law and you do not have formal title to property or legal protection.

De Soto argues that the fait accompli of these markets and businesses should be recognized formally and given protection of the law. This action unlocks capital (via loans), reduces crime, and brings people psychologically into the community.

At the time, Peru was fighting a Maoist insurgency in The Shining Path (hence the title of this book).

Featured Author: Niche Business Theorist Chris Anderson (Think 3D Printing)

Whether you’re interested in 3D printing or selling niche products on the internet, Chris Anderson is a good introduction to your business model.

Anderson is most famous for his book The Long Tail.

Here’s the idea.

For decades, the marketplace revolved around strong demand and limited supply. This dynamic translated into the mass experience and the big hit. The long tail – that part of the graph line after the big hit spike, was uneconomical and difficult to pursue. Due to the realities of production and distribution, keeping niche products around was uneconomical.

Well, those days are gone.

Production is much cheaper and there’s more supply. New models of distribution (as in one big national Internet store) mean cheaper warehousing – which means an explosion of niche demand. And the development of mass number of differentiated products means people can buy stuff they actually love – instead of settling for the one big hit that everybody liked OK, but few actually loved.

Chris Anderson also just wrote The Makers: The New Industrial Revolution.

The advent of do-it-yourself software and especially 3D printing could remake American Manufacturing and small business.

Suddenly, machines and software with vast capacity can be acquired by individuals or very small companies.

Everyone is having visions of  independent living or at least becoming an entrepreneur. But what exactly is the model for getting this to actually work economically?

The upshot is no one quite knows although anecdotal evidence suggests that it will lead to possibly a host of new smaller companies specializing in niche products (the reduced cost of production and sunk costs renders this possible). Anderson gives some examples of these in the book: a company that makes products for Lego that Lego won’t make itself, and an aerospace firm.

And while the heroic individual alone with his 3-D printer probably can’t happen, some people do envision creating self-sustained communities or more local economies.

It’s exciting to imagine a world continuing to evolve beyond mass production where very specific needs can be envisioned and manufactured.

This also might help solve the stubborn high unemployment problem

All in all, a good introduction to a very important topic.