A federation

Though frequently thought of as centralized monoliths, most major national Chinese corporations are relatively divorced from the operations of the same company in other provinces.  For instance, rather than China Telecom being run as a centralized entity throughout China, a better way to conceptualize what takes places is that the Beijing office of China Telecom sits on top of the Guangdong head office, the Fujian head office, and so on.  This means that Beijing has much less control over the head offices throughout China than is frequently believed, with local bosses making their own decisions about what to do.

That’s Christopher Balding. This is consistent with what I learned reading *The Search For Modern China*. Like all large countries, it is an intensely regional (my autocorrect keeps putting in tribal, maybe a better word?) place. A part of me is excited to learn of all the nuance hidden away in China that we well learn about in the coming decades. It will take us by surprise.

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Big box was biggest

Although online retail will surely continue to be a force shaping the sector going forward and may yet emerge as the dominant mode of commerce in the retail sector in the United States, its time for supremacy has not yet arrived. We discuss evidence indicating that the warehouse clubs/supercenter format has had a greater effect on the shape of retail over the past 15-20 years


From the Journal of Economic Perspectives, Fall 2015 issue.

I suppose I’m surprised by this. Big box was bigger than the web for the retail experience?

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On Brain Stimulation

(1) We have no fucking clue how to simulate a brain.

We can’t simulate the brain of C. Elegans, a very well studied roundworm (first animal to have its genome sequenced) in which every animal has exactly the same 302-neuron brain (out of 959 total cells) and we know the wiring diagram and we have tons of data on how the animal behaves, including how it behaves if you kill this neuron or that neuron. Pretty much whatever data you want, we can generate it. And yet we don’t know how this brain works. Simply put, data does not equal understanding. You might see a talk in which someone argues for some theory for a subnetwork of 6 or 8 neurons in this animal. Our state of understanding is that bad.

More here. I suppose I’m a bit if a ‘strong AI’ skeptic. I look at my kids and see how long a road it is to train a real live human supercomputer and think: can we even manage a project that takes decades did reach iteration to mature to see how we’ve done?

In other words, can the development of something like human intelligence, which took billions of years to make the first time be created faster than, what, thousands of years?

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Who Matters Less Than Where, When, Why, with Whom…

I didn’t pay too much attention to this post from Tyler Cowen but wow am I having trouble getting it out of my head:

This position can be seen as a variation on the theme of the “strong situation hypothesis” (Cooper and Withey, 2009).  This hypothesis, based on the work of Mischel (1977), proposes that personality differences are especially like to be outwardly expressed in “weak” situations offering no clear situational clues and a wide range of possibilities as to how to behave.  Conversely, individual differences are expected to have less room for expression in “strong” situations where the choice of behavioral outcomes is severely limited and where everyone is bound to behave in a similar way.…Thus, individual risks could play a magnified role in highly disadvantaged neighborhood contexts.

That is from Tama Leventhal, Véronique Dupéré, and Elizabeth A. Shuey, “Children in Neighborhoods,” In Handbook of Child Psychology and Development Science, edited by Marc H. Bornstein and Tama Leventhal. New York: Wiley, 2015, p.520, academically gated link here, an excellent and consistently interesting survey piece complementing the recent economic studies by Chetty and others.

Ungated Cooper and Withey is here (pdf), also worth your time.  Here is a related Wikipedia entry, perhaps not as clear as it might be.

Circumstances drive actions. Most people behave the same when driving down the highway. I like to think that presidents of the United States are all mostly interchangeable with defeated hopefuls.

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Where the tech boom booms biggest

The biggest opportunities are provided by the Chinese economy’s egregious inefficiency, a legacy of decades of state capitalism. “China has more old-economy, non-transparent and unreasonably profitable firms than does America…the streets are just paved with gold for disrupters,” says Mr Lee.

Lei Jun puts it more colourfully: “Even a pig can fly if it is in the middle of a whirlwind.”

That’s from the economist. The day will come when the largest share of innovation will come from China.

But there will also be way more innovation generally. That’s the most important fallacy we make about economics and innovation. It’s a positive sum game, there is no such thing as a winner in any economically meaningful sense.

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The Engineering Case For Alien Monsters

The net result is that big organisms on Earth are just noticeably sluggish compared to small ones. But big organisms don’t have to be sluggish, that is just an accident of the engineering failures of Earth biology. If there is a planet out there where biology has figured out how to efficiently scale its blood vessels, such as by using continuous pumps, the organisms on that planet will have fewer barriers to growing large and active. Efficiently designed large animals on Earth could easily have metabolisms that are thousands of times faster than in existing animals. So, if you don’t already have enough reasons to be scared of alien monsters, consider that they might have far faster metabolisms, and as a result be very large.

This seems yet another reason to think that biology will soon be over. Human culture is inventing so many powerful advances that biology never found, innovations that are far easier to integrate into the human economy than into biological designs. Descendants that integrate well into the human economy will just outcompete biology.

That’s Robin Hanson. There’s also an interesting discussion on the relationship between biomass density and aggregate energy consumption complete with some back of the envelope model building a la Hamming. Biomass being the sum of all living things in an area.

Anyway, my walking around mental model of human progress is that the engineering achievements of nature are underrated. Take for example a story from this week’s economist where researchers are trying to break the a water speed record by replacing a propeller with a fin!

But don’t mix stocks and flows. Sure we’re frustrated that we can’t replicate or enhance some systems but look around. Much (most) of what we’ve built for ourselves exists because it’s better than what nature gave us. There’s always a new frontier to conquer and isn’t it fun to focus on the drama of the cutting edge.

Yet we’ve come a long, long way.

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China Roundup

The Chinese las Vegas is doing ok.

The Chinese rustbelt is not. At that link we get this map that helps drive home the point that this is a big regional economy.


Here is Scott Sumner

2.  People forget that until recently China had 10% trend growth, so when it goes from 14% to 7%, that’s a big slowdown.  People also forget that some sectors of the Chinese economy are probably growing smoothly.  Health care, college education, subways rides (which are constrained by capacity), etc.  So if the overall RGDP growth rate slows from 14% to 7%, and some sectors are growing smoothly at 10%, then the cyclical sectors are slowing extremely rapidly.  And the cyclical sectors are also the commodity intensive sectors.  You could easily see lots of industry data that seems inconsistent with a 7% RGDP growth rate, during a cyclical slowdown.

And, boom, Michael Pettis

But every “growth miracle” ends up following the same credibility path, with what once seemed an unending stream of sophisticated and dedicated leaders at every level of policymaking suddenly and unexpectedly becoming an administration of clunky, incompetent bureaucrats, as foolish as the rest of us. When the miracle country outperforms expectations year after year during the expansion phase, we assume that brilliant policymaking is the cause, rather than– more appropriately, as I will explain– inverted balance sheets. When this same balance sheet inversion subsequently causes the economy sharply to underperform expectations during the contraction period, our admiration for policymakers quickly turns into contempt for their incompetence, usually tinged with bitterness that our forecasts turned out so magnificently wrong.

And more..

I believe, however, that without a massive and fairly unlikely transfer of wealth from the state sector to the household sector, the average Chinese GDP growth rate under Xi Jinping cannot exceed 3-4%.

This is what had surprised me most, which is that the massive state transfer hasn’t happened, to my personal financial detriment.

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