A Rule Of Life

If someone offers you gum or a mint or any other breath freshener, take it.

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Those who like to learn, teach

Ho and Isaac Chuang, a professor of electrical engineering and computer science and senior associate dean of digital learning at MIT, led a group effort that delved into the demographics of MOOC learners, analyzed participant intent, and looked at patterns that “serial MOOCers,” or those taking more than one course, tend to pursue.
“What jumped out for me was the survey that revealed that in some cases as many as 39 percent of our learners are teachers,” Chuang says. “This finding forces us to broaden our conceptions of who MOOCs serve and how they might make a difference in improving learning.”

More here via MR. Would it surprise you if you learned NBA players watched lots of basketball or directors watched lots of movies?

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Who is Smarter?

In Sapiens, Yuval Noah Hariri argues that foragers need more intelligence than farmers. Foragers need to know much more about their environment, including information about many varieties of plants. Farmers just need to know a routine for raising a staple crop.

One can argue that ordinary workers in the early stages of the industrial revolution did not need to know much, either. More recently, the skill demands of jobs have gone up, so that we may be reverting to forager-level intelligence.

That is Arnold Kling.

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Be a Vampire

Your job, I often tell the junior people under my watch, is to make everyone above you more productive. Sometimes I call it a pyramid and that everyone’s job is to push everyone else up the pyramid to higher value activities. Right up to the top where the job is to identify and focus the organization on the problems of the world.

OK that’s one principle. Next one: waste. Wasting higher value resources is much more costly than lower ones. So to the extent that it can, an organization will concentrate the waste on lower value resources rather than higher ones.

So to lower level employees, who generate much more waste, work can look insane. Why do we waste so much time?

I often delegate tasks to others and when they’re done tell them to wait until I have the time to review it. Sometimes I totally forget and they sit idle for a while. Then when I get around to it I realize that I actually want something a bit different and make the redo everything. And they get pissed off a bit with me. And feel like they’re wasting their time.

I suppose that’s true but the waste would be much greater if I had been forced to walk down that blind alley. Likewise between me and my boss. So in a sense, organizational hierarchy makes Vampires out of its managers, sucking the life out of subordinates.

And I’m here to say that’s a good thing. The alternative isn’t no waste. The alternative is worse waste.

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Well, Google went and did it

Google has built its insurance aggregator.

Insurance aggregators are no new idea, yet many note that Google has carved out an excellent business in the airline aggregator business and expect them to do the same here.

Sure, probably. But I’d say Google’s business model is half of what it should be. The real quirk in the insurance business isn’t that it’s hard to find the best price for your auto insurance. It’s that staying at the best price requires switching fairly frequently and that is costly. Good risks don’t think too hard about their insurance too often and that lets insurers crank up the prices slowly. All insurers make their money on renewal business, not on new business.

If Google wanted to really shake things up they would build an aggregator that would notify you immediately as soon as another good deal comes up at your renewal. Increasing churn would hurt the giant auto insurers and benefit consumers.  Until insurers react, anyway.

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Job Training

There has apparently been a decline in on the job training:

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My hackles are raised.

In my world, the average employee is much, much more skilled today than even when I started 11 years ago and this has nothing to do with formal training. I am defining skills as using technology to get jobs done.

And we aren’t just more skilled, we are required to be more skilled. There is a lot of survivorship bias in what you observe today. Not everyone made it.

So more skills but less formal education. What gives? One key maybe is that training on the job is much easier than it once was. Wikipedia, open offices, small teams. All favor smaller increments of learning in the key moments when something needs to be achieved.

Cheaper, more effective. A better way of learning, to me. But not measurable, so no articles celebrating its effectiveness.

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The Most Undervalued Business Insight

Cramer is very close to the following insight: the reason why more companies don’t imitate Berkshire Hathaway is that they would have to destroy too much of their existing corporations to make it worth their while.  As such, the “secrets” of Berkshire Hathaway can be hidden in plain view of all, because the only way to create something like it would be to start from scratch.  Yes, you can imitate pieces of it, but it’s not the same thing.

Creating a very profitable diversified industrial conglomerate financed by insurance liabilities is a very unique strategy, and one that few would have the capability of replicating.  It required intelligent investing, conservative underwriting, shrewd analysis of management teams so that they would act independently and ethically, and more.

That’s David Merkel. I first started thinking about this reading and listening to Horace Dediu, for example here commenting on Microsoft’s firing of Steve Ballmer:

To succeed with a new business model, Microsoft would have had to destroy (by competition) its core business. Doing that would, of course, have gotten Ballmer fired even faster.

Say there is a clearly superior strategy presenting itself to a business and changing over is not an incremental change, it’s a revolutionary change. Lots of existing processes go out the window. Certain stakeholders ‘lose’ in this trade. So they block it.

There’s an entire branch of economics dedicated to this kind of thinking, called Public Choice. It mostly focuses on how government employees typically act in their own narrow interests. Zooming out even more, this is a refinement of agency theory and agency costs. The lazy, uncharitable interpretation is that all these people are evil or stupid. Easy to say. Probably false. Instead I like to say obstructionists emphasize knowledge problems (‘how do you know it’s a better strategy?’ or ‘do you really understand that strategy?’) or the real risks of change (what if it doesn’t work and we can’t go back?) . All reasonable objections to any high stakes decision.

Ideas, as they say, are cheap. And they’re cheap because there isn’t any demand for them, in the deep sense of people actually using new ideas. We all like to say we care about ideas, because we want to think we’re smart folks.

But in the end, our interests are typically much less high minded.

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