Gongol.com Archives: 2012 Weekly Archives
Brian Gongol

Iowa The Walmart effect is now mostly stabilized in Iowa towns
Sales declines in surrounding communities have supposedly stabilized, according to new research from ISU. The stores are bad for in-town direct competition, but specialty stores nearby actually appear to do a little better, since the Walmart acts like a magnet for shoppers from nearby.

News The really bad idiom: "He has hate in his heart"
Nobody has hate in their heart. They have it in their heads. And then they choose not to think hard enough to overcome that hate.

Business and Finance "Errors, sloppiness, and bad judgment" cost JP Morgan billions
A $2 billion loss isn't going to sink the company. But it's getting to be almost impossible to think that investment bankers (as a class) have really cleaned up their act.

Iowa Iowa's worst rollover spot could be fixed...in 15 years
A redesign for the really awful I-80/I-380 interchange is up for a vote later this month. But it's still going to be long before anything actually happens.

Business and Finance Iowa kids win prize for video about financial literacy

Business and Finance A checklist for keeping bad CEOs out of the executive suite
Managing the managers is the chief job of company boards. But too many directors have been too complacent when it comes to acting in the shareholders' interest.

Broadcasting Upcoming movie will probe the private side of Johnny Carson

Agriculture US could have a big corn surplus this year
That's going to hurt prices

Science and Technology Robots may reach out better to some autistic kids than people can

Socialism Doesn't Work A "week without capitalism"? Go ahead and try.
Groups that apparently have little to no actual contact with reality are talking about spending this as a "week without capitalism", which one might also take as a week without any sort of market activity whatsoever. Good luck with that. The inescapable fact is that the entire world -- human and natural -- is a perpetual cycle of inputs and outputs, trade-offs, production, and consumption. Just look at the activity inside a forest: The sun provides energy, which is captured by green plants. Those plants become food for herbivores, which in turn become food for carnivores. And when anything dies, it becomes food for the fungi, which recycle it into something useful for everything else. If any one part of that cycle becomes unbalanced -- say, if the deer become too populous -- then the market forces of supply and demand make a correction. ■ We may be more sophisticated than the deer and the squirrels, but to think that market forces are anything but massive, natural, and irrevocable is to ignore the basic rules of the universe. We can (and should) be aware of natural corrections that have to be made to the market system to try to corral some of those natural forces so that they don't harm us -- but in general, efforts to force human authority over the system results in poverty and misery for all. ■ Capitalism is simply an acknowledgment that some resources can be stored and that they will tend to seek their highest level of reward -- just like a plant will lean towards the sun. The plant doesn't "think" about it, and money doesn't either. But over time, people will save and then invest their money where it will create more money, whether they are farmers who choose to invest in land and tractors and seeds, or whether they're investors who look for the most profitable companies to own. It's not that it's philosophically good or bad -- it's just the natural order of things. And anyone who tries to push against that natural order for very long will find that nature wins out every time. Just ask the folks who starved under China's Great Leap Forward.

Humor and Good News The State of the Web: Spring 2012
Satirical/comedic site The Oatmeal pretty well nails the state of things. This is the same site, it should be noted, that recently rose to the defense of the honor of Nikola Tesla, because that's what geeks (a term of endearment, here) like to do.

Humor and Good News Thank goodness for Taiwan-imation
(Video) How else would we be able to fully grasp the magnitude of the grandmother-cheerleader tryout story?

Business and Finance Estimate: People pulled $2.3 billion out of the S&P 500 last week
Um...why? American companies are bringing in record-level earnings, and yet stock prices as a multiple of those earnings are well below historical norms. This is hardly a formula for pulling money out of equities. In other words, if you can buy companies that are more profitable than ever, and you are paying less per dollar of profits than normal, why in the world wouldn't you be eager to buy more pieces of those companies (that is, shares of their stocks)?

Science and Technology This is why America will survive anything
Some goofball at MIT has built his own real-life Mario Kart. It's preposterous, it's silly, it's a complete frivolity. But it's hilarious and ingenious as well. And it's an example of what happens when someone wants something -- even if it's just for fun -- and has the resources, knowledge, and freedom to create it. Command economies scoff at things like this, instead taking resources from all of the individuals in the land and turning them over the the authorities, who build their own preposterous monuments -- but do so in the name "of the people". ■ The truth is that exotic and ridiculous Stalinist projects like the Ryugyong Hotel are really just meant to glorify the state and the people who run it. Sure, the Moscow Metro has some magnificently beautiful stations, but did the people of Moscow need a fabulous subway station in 1938, or did they really just need an opportunity to keep more of their own resources in the middle of the Great Purge? ■ Even non-Stalinist states are often too quick to turn over profits to governments which then use them in pursuit of ego trips...the colossal Burj Khalifa/Burj Dubai was heavily funded by government spending. Free economies have their excesses, too -- any trip down the Las Vegas Strip will tell a person that. But what's most important is that individuals have the opportunity to make their own decisions about what to create and how to invest their time. ■ There will be plenty of people who chose to fritter away their lives in front of dull television programming every night. But there will be others who will tinker and experiment and create, and reap the rewards -- whether those are financial or just visceral (like riding a real Mario Kart). And as long as that occasional genius is rewarded and allowed to flourish, everyone else gets a free ride on the results.

Socialism Doesn't Work Taxpayers will contribute $498 million to the new Vikings stadium
The team will pay $477 million. But the team's finances will remain a secret to their partners, the general public.

Science and Technology Honda's new motorized wheelchair looks nothing like what's been built before
Further proof that life keeps getting better -- whether or not people recognize that fact

The American Way Charlie Munger: "I think civilized people don't buy gold. They invest in productive businesses."
Also: "Take the rapid trading by the computer geniuses with the computer algorithms. Those people have the social utility of a bunch of rats admitted to a granary."

Business and Finance "JPMorgan Chase has a big hedge fund inside a commercial bank"
And that's an unnerving situation. According to the New York Times, "[T]he complex position assembled by the bank included a bullish bet on an index of investment-grade corporate debt, later paired with a bearish bet on high-yield securities, achieved by selling insurance contracts known as credit-default swaps. A big move in the interest rate spread between the investment grade securities and risk-free government bonds in recent months hurt the first part of the bet, and was not offset by equally large moves in the price of the insurance on the high yield bonds." Get all that in one take? Of course not. ■ The problem with excessive complexity inside financial markets is that the feedback loop is human-driven and not very easy to feel. Surgery can be complex...flying an airplane can be complex...forecasting the weather can be complex. But in each of these cases, the natural world is a large part of what initiates the complexity -- and we learn every day about how better to manage that complexity. Moreover, we get real and immediate feedback -- an artery bleeds, a rising column of air causes turbulence, or a mesocyclone starts to spin. These things are observable. ■ But financial markets remain the complex results of millions of individuals, many of whom can easily panic at once for no rational reason. We should be apprehensive about making our financial system more susceptible to the herd mentality than is really necessary: It only takes 5% of people going crazy to set an entire group into a panic. ■ If heavily-leveraged, complex, and large financial instruments can be susceptible to the panic of just 5%, then those instruments probably have no real place right next to the deposits that Grandma makes in her passbook savings account. We should give serious thought to reinstating the Glass-Steagall Act.

Computers and the Internet Good idea: Taking lots of pictures and videos of your kid
Bad idea: Putting all of those pictures and videos on the Internet. The advent of digital photography and video make the cost of recording family memories virtually zero. But there's an implicit cost to sharing everything on the Internet: It causes the child's digital identity to become something the parent forms, whether deliberately or inadvertently. If employers are asking for Facebook passwords today, and burglars are targeting the homes of people who post on Facebook that they're away, and all of that is happening today (when the Internet is, after all, still pretty young), then parents really shouldn't be sharing much -- if anything -- about their kids online. ■ Register the child's name as a domain name, yes. That will help them later. But don't pile on the content in the child's name. The kid will need as much of a blank slate as possible by the time they actually need to use the Internet to apply to college or to a job. And parents should really think twice about the security risks involved in sharing pictures and videos of their children on the Internet -- where you simply don't know what kinds of creeps might be looking for them. ■ There are already too many chances for a young person to screw up on his or her own, and to do a virtual face-plant in front of the world via the Internet. Lots of them don't have adequate discretion to be sharing things in front of a global audience without making serious errors of judgment. Parents shouldn't stack the deck against them by also sharing pictures and videos that may someday turn out to be embarrassing. Sure, Jessica's daily affirmation is hilarious and charming, but she and David of the dentist's strong anesthesia are both going to be defined for a lifetime by their childhood YouTube fame, no matter whatever else they do. (Make no mistake: There's still nothing funnier in the universe than the laughing baby. But a lot of parents seem to think it's a good idea to publicly document everything about their children, as though they're auditioning for some life-changing theatrical role. But are we quite sure that growing up in the public eye was the best thing for the Olsen twins?

Business and Finance Berkshire Hathaway becomes an overnight newspaper empire
Warren Buffett's company just paid $142 million for a group of 63 newspapers. It helps pull the selling company out of a serious financial hole, and it adds what Buffett called "keepers" to the company's roster of subsidiaries. What's amusing about this is how minor the acquisition is for Berkshire: The company brought in $3.245 billion in net earnings in the first quarter, or about $35 million a day. So the entire newspaper chain cost about 4 days' worth of profits from elsewhere in the Berkshire empire. What a bizarre sense of scale. (Full disclosure: Written by a Berkshire Hathaway shareholder.)

Iowa 200 buffalo now roam free across northwestern Iowa
They escaped from a ranch near Sibley.

News Debt is relatively on the rise again in Africa
Borrowing by governments is growing faster than the economies of those countries

Humor and Good News Cubs versus White Sox
(Video) Credit is due to whomever put together the New Era Cap ads featuring Nick Offerman and Craig Robinson. "Would you go skinny-dipping in Lake Michigan in December?" "Again?"

The United States of America A milestone in demography
Canada and the United States are both places defined by ideas and ideals, not the color of a person's skin. And that's a good thing.

Computers and the Internet On the Facebook IPO
A lot of people who were early investors are getting rich. But: Suppose I own a small business. Five years ago, it lost $13,800. Four years ago, it lost $5,600. Then it started to turn a profit. In the next three years, it made $22,900, then $60,600, and then $100,000. ■ If I told you today that I'd be happy to sell you half of that business for $5 million, but that you would have no say in its management, would you buy it? No? Then don't buy Facebook stock today.

Socialism Doesn't Work With Hollande on the scene, is President Obama no longer the "last Keynesian standing"?
For one to dismiss everything about Keynesianism out-of-hand would be unfair and short-sighted. The key is to understand that Keynesianism makes a lot of promises on the backs of the people of the future. Even if "in the long run, we are all dead", the long run is still made up of lots of short runs, all chained together. And if our decisions are made largely on the basis only of short-run thinking (which is what Keynesianism tends to use), then sooner or later, the consequences of short-run thinking start to catch up with us. ■ Consider it like this: If a business person is known as a ruthless negotiator, then he or she may do very well on some early deals. But after a while, that reputation for ruthlessness may start to make people wary of working with them. Vendors may start to go into negotiations with inflated starting figures, in the expectation of being beaten over the head for discounts. What works once or a few times early on for that "tough negotiator" may turn out to adjust the expectations of other parties, who start to implicitly account for those expectations. ■ The same goes for an economy. If people start to anticipate that governments will intervene in "stimulating" ways to support the economy when things get slow, then the effect of that stimulation may be so widely-anticipated that it no longer counts for anything. Look at the last few years: We've had Cash for Clunkers, housing bailouts, bank bailouts, student-loan bailouts, and even government subsidies for the replacement of old appliances. At some point or another, people start to assume that they'll get government support when things go bad...which in turn may only encourage more of the behavior that leads to trouble in the first place. ■ The solution isn't for the government to do nothing at all. That may be what the Austrian School wants, but the modern Austrian movement has to be careful about going too far. There is a valuable recognition of reality and practicality that is offered by the Chicago School that pulls Austrianism's extreme libertarianism back from the brink just enough to keep it from giving people complete economic indigestion. But if there is any rationality at all to how economies behave, then the Keynesians need to realize that, like a junkie for whom only ever-escalating hits of a drug deliver the same high, the people who make up an economy also get used to anticipating intervention. And if they're too inoculated by intervention to take responsibility for their own personal and household and business behavior, then trouble is most certainly ahead.

Business and Finance Survey says college students are infatuated with the idea of going to work for Google
Business majors...computer majors...even liberal-arts majors want to work there. For all the loudmouths who constantly bemoan "corporate America", there sure are a lot of people looking to work for big corporations. It would be interesting to know what proportion of students think seriously about working for much smaller companies, where their impact on results is much more direct.

Aviation News First private-sector delivery to International Space Station scheduled for Saturday
NASA is outsourcing deliveries to the ISS to contractors -- SpaceX and Orbital Sciences Corp. SpaceX is planning to make their first launch this weekend.

Health Take two minutes for a self-exam today
Take a minute or two and conduct some basic self-screenings for cancer. Early detection saves lives. There's lots of misinformation about cancer that finds its way around the Internet, largely because we've been trained to wait expectantly for some sort of magic-bullet solution to cancer. But cancer risks can be significantly reduced through a balanced diet, exercise, and early detection and treatment. Meanwhile, science is making great progress towards improving genetic detection, which holds great promise for some types of cancer. Instead of forwarding hoax-ridden e-mails about "cancer cures" and false threats, people should instead remind their friends and family to assess their health once a month.

Broadcasting Shareholders need to start voting "No"...a lot
Transcript from a 16-minute segment from the "Brian Gongol Show" on WHO Radio last Sunday.

Computers and the Internet A change to Google search results
They're calling it the "knowledge graph", a riff of sorts on Facebook's "social graph". The idea is that Google will start delivering summaries of information about a topic, rather than just a series of links. They're trying to answer the "next question" people are likely to ask about a given topic. This isn't anything new -- WolframAlpha has been serving up these kinds of results for a long time. But it's definitely a change of pace by Google.

Computers and the Internet Court order blocks access to lots of mainstream file-sharing sites in India
A court ruled in favor of the producers of some films being made in India, who argued that sites like Vimeo were allowing people to share their work and cut into their profits. But legitimate content on those sites is being blocked, too.

Computers and the Internet Facebook versus Google by the numbers

Computers and the Internet How your friends may be undermining your online security
Even innocuous things like untagged photos on Facebook or Twitter may still give away clues about your identity that you might want to think twice about letting out

Computers and the Internet American parents are some of the world's snoopiest
A survey for antivirus company AVG says that 61% of American parents access their teenagers' Facebook accounts without the kids knowing. Ideally, there would be more openness and transparency about what happens online -- but there are likely a lot of kids who wouldn't willingly let their parents supervise their Facebook habits. Let it be noted, of course, that now that Facebook is entirely mainstream and known by everyone, that there is a tremendous market opportunity for an "anti-Facebook" alternative where kids could go about their social networking with less notice and supervision...while still being able to technically tell their parents the truth when asked, "Can I see what's on your Facebook page?" Youthful rebellion will always present lucrative opportunities to those who are paying attention.