Alex Tabarrok

The NYTimes has a good piece today on the increasing use of noncompete clauses, clauses that say that if you leave a firm you cannot work for a competitor typically for a period of 1 or more years.

Noncompete clauses are now appearing in far-ranging fields beyond the worlds of technology, sales and corporations with tightly held secrets, where the curbs have traditionally been used. From event planners to chefs to investment fund managers to yoga instructors, employees are increasingly required to sign agreements that prohibit them from working for a company’s rivals.

Non competes agreements (NCAs) are dangerous in my view because they put firms into a prisoner’s dilemma: Non competes benefit firms but harm industries by reducing innovation.

Today we all know about Silicon Valley but in the 1950s and 1960s the place for technology was Route 128 in Massachusetts which Business Week called “the Magic Semicircle”. The magic semicircle contained technological leaders like DEC and Raytheon and intellectual powerhouses like Harvard and MIT – this was at a time when Silicon Valley was mostly fruit trees.

When William Shockley left Bell Labs for the Valley it was not considered a promising move. And indeed something strange happened. Shockley wasn’t a very nice person, he couldn’t get any of his former colleagues to come work for him, and within a year of starting his firm in Mountain View, eight of Shockley’s researchers, who called themselves the “traitorous eight,” resigned. The traitorous eight, started Fairchild Semiconductor. Two of them, Robert Noyce and Gordon E. Moore, later left Fairchild to form Intel Corporation. Other people leaving Fairchild Semiconductor started National Semiconductor and Advanced Micro Devices. So it was in this branching off process of new firm creation that Silicon Valley was born.

Now here is the point, if Shockley had started his firm in Massachusetts or in pretty much any other state, the traitorous eight probably would not have left to start their own firm because they would have signed a standard non-compete agreement prohibiting them from competing with their former employer for 18 to 24 months. In California, however, the courts have consistently refused to enforce non-compete agreements. An employee who leaves one company can join a new company and start work the next day and they can do so regardless of any agreement.

Silicon Valley could not operate if non-compete agreements were enforced. Silicon Valley is a hyper-mobile workforce. Moreover, it’s precisely in the circulation of workers that Silicon Valley has one of its advantages the diffusion of new ideas. The key to Silicon Valley and much innovation today is the diffusion, the combination, the integration of different sorts of knowledge and worker mobility has been a big part of this. Not just worker mobility between firms in Silicon Valley but also immigrants, circulation between different countries, university-firm partnerships and so forth.

Firms who come to Silicon Valley know that they cannot use NCA to protect their innovations but they come anyway because the opportunity to learn from other people exceeds the costs of other people learning from you. Thus, worker mobility and the inability to protect IP by restricting mobility is bad for an individual firm but good for the industry as a whole, good for innovation, good for workers and good for consumers.

(Drawn from a talk I gave at a Google Big Tent event in Korea.) Hat tip to Loweeel in comments for some edits.

Chimps Rock at Game Theory

by on June 6, 2014 at 1:18 pm in Economics, Science | Permalink

Economics assumes that people are rational, self-interested, lightning fast calculators. Obviously a bad assumption as we are constantly told. Chimps, on the other hand, are rational, self-interested, lightning fast calculators. That is the surprising conclusion to a great paper by Colin Camerer and co-authors. Camerer had chimps play versions of the matching pennies game also called the cat and mouse game. In the cat and mouse game each player can go left or go right. The cat wins when cat and mouse choose the same strategy. The mouse wins when they choose different strategies. In the simple version the best strategy is 50:50, toss a coin. When the payoffs change, however, the optimal strategies still involve randomization but they change in surprising and nonobvious ways.

Chimps play the cat and mouse game very well. First, the chimps converge on the Nash Equilibrium strategies. In one set of games the Nash equilibrium strategies had randomization frequencies of .5, .75 and .8 and the chimps played .5, .73 and .79. Second, when payoffs change the chimps adapt their strategies very quickly simply by observation of outcomes.

Camerer et al. also tested humans in similar games and they found that humans often deviate from NE play and they adjust their strategies more slowly when payoffs change, i.e. they learn more slowly! The only thing that Camerer didn’t do was to play humans against chimps in the same game. That would have been awesome!

If you want to understand how chimps are able to play these games so well check out this video. When you see what this chimp is doing you will be amazed!

Depreciating Capital

by on June 5, 2014 at 7:09 am in Books, Economics | Permalink

Brad DeLong attacks Krusell and Smith for using in some of their thought experiments a depreciation rate of 10%, which is probably too high. Fair point but in my post I assumed a depreciation of just 5% and showed that Solow and Piketty give very different predictions about how the K/Y ratio will change with a change in g.

Furthermore, having read DeLong’s comment, I went to the BEA and compared gross and net domestic product which gives capital depreciation as a fraction of GDP of around 15% in recent decades. At a K/Y ratio of 4 that’s a depreciation rate of 3.75%. Similarly, Inklaar and Timmer in constructing capital stocks for the Penn World Tables estimate a depreciation rate for the U.S. of 4.1%. I reran my simple Excel chart with the lower number, 3.75%.

As you can see, the numbers are very similar to earlier and the key point is still that a decrease in g increases K/Y much more in the Piketty model than in the Solow model. Piketty2 Krusell responds to DeLong here making the additional point that their thought experiments show that Piketty’s assumption about savings is implausible at any depreciation rate (see also Hamilton on this point).

First: if the net rate of saving remains positive as the economy’s growth rate falls toward zero, as Piketty assumes in his second fundamental law of capitalism, the gross saving rate in the economy must approach 100%. This observation is a way of illustrating how unreasonable the behavioral assumptions underlying his theory of saving really are.

Second: according to standard, and much more reasonable, saving theory (based either on the standard textbook Solow growth model or on the permanent-income model), the net saving rate must fall with the rate of growth, and become zero when growth is zero.

…These points are key because Piketty’s predictions are all about what happens as growth falls during the 21st century, as he argues it will.

…both of these results hold no matter what the depreciation rate is (so long as it is positive).

The heart of Piketty’s theory is his expression for the capital share of income in the long run, α = r × s/g with the prediction that if g falls the capital share will rise tremendously. This is a good opportunity to summarize some of the recent points about the theory.

There are no contradictions but many a slip ‘twixt the cup and the lip. Namely, will g fall? If g does fall, will K/Y increase? If K/Y increases will capital’s share of income increase? My answers:

Will g fall? Uncertain. Piketty’s forecast is as good as anyone’s. My own view is that at the global level g has been increasing for several centuries and that this will continue, especially because in this century we will see a massive increase in the number of scientists and engineers as China and then India devote increased human capital to the research frontier.

If g does fall, will K/Y increase? Yes, but probably less than Piketty estimates and more in line with Solow.

If K/Y increases will capital’s share of income increase? Uncertain but more likely no than yes. It depends on the elasticity of substitution between K and L and as Rognlie and Summers argue, the elasticity that Piketty needs is higher than current estimates suggest is the case.

Reporters have been asking the FDA about my paper with DiMasi and Milne, AN FDA REPORT CARD. As you may recall, the upshot of that paper is that there is wide variance in the performance of FDA divisions. Here, for example, is the mean time to approval across divisions. MeanTimetoApproval

Our simple index, discussed in the paper, suggests that these differences are not easily explained by factors such as resources, complexity of task or differences in safety tradeoffs across divisions. In responding to our paper, however, the FDA has said that similar differences in time to approval by drug type are seen at other drug approval agencies. If true, that would be an important criticism.

Fortuitously, some relevant data crossed our desk recently. The Center for Innovation in Regulatory Science (CIRS), a UK based research consortium, compared median review times at the FDA to the next most important drug regulatory agency in the world, the European Medicines Agency (they also look at the Japanese agency). To their credit, the FDA is faster on average than the EMA (thanks PDUFA!). What is relevant for our purposes, however, is to compare differences across divisions.

The CIRS breaks drugs into broader classes than we used but the story they tell for the FDA is similar to ours; anti-cancer drugs, for example, are approved much more quickly than neurology drugs. The story for the EMA, however, is very different than for the FDA. For the EMA all types of drugs are approved in roughly the same amount of time.

FDA Relative to EMA

We have argued that the wide variance in performance at the FDA is suggestive of differences in productivity. The fact that we do not see the same wide variance in performance at the EMA is supportive of our argument. Our goal and conclusion still stand:

We support further study to identify the policies and procedures that are working in high-performing divisions, with the goal of finding ways to apply them in low-performing divisions, thereby improving review speed and efficiency.

I am a founding member of the Authors Alliance.

[The Alliance represents] authors who create to be read, to be seen, and to be heard. We believe that these authors have not been well served by misguided efforts to strengthen copyright. These efforts have failed to provide meaningful financial returns to most authors, while instead unacceptably compromising  the preservation of our own intellectual legacies and our ability to tap our collective cultural heritage. We want to harness the potential of global digital networks to share knowledge and products of the imagination as broadly as possible. We aim to amplify the voices of authors and creators in all media who write and create not only for pay, but above all to make their discoveries, ideas, and creations accessible to the broadest possible audience.

The Authors Guild (a nice medieval name) isn’t happy with the Alliance. Board member T.J. Stiles warns writers not to join the Alliance which he says is for academics and hobbyists and not for real authors like himself. I could reply but let me turn it over to full time professional writer and editor Virginia Postrel:

…the guild has for years actively undermined my interests while claiming in federal court to speak in my name. It channels commercial authors’ understandable anxieties about piracy threats and increasing competition into unjustified attacks on institutions and practices, such as fair use and computer indexing, that help us create new works and promote existing ones. It feeds authors’ fears while working to make it harder to write and sell books.

…In his blog post, Stiles invoked “people who copy and distribute your work without your permission.” You might assume he was talking about plagiarists and pirates. But what he really meant was the scanning, search and snippets offered by Google Books, or the digital preservation and indexing provided by the nonprofit HathiTrust. The Authors Guild has been fighting these projects in court. It claims that scanning books in order to make them searchable constitutes a copyright violation, even if the only thing shared with the public is a tiny bit of text (Google) or the page numbers on which a search term appears (HathiTrust)….

Last November, U.S. Circuit Judge Denny Chin dismissed the Authors Guild suit against Google. His ruling emphatically affirmed the “significant public benefits” of Google Books — including the benefits for authors and publishers — and declared the service easily within the legal definition of fair use. The Authors Guild said it would appeal the ruling. It is also appealing a 2012 circuit court ruling against it in the HathiTrust suit.

If the Authors Guild fears losing its members it has no one to blame but itself for supporting these ridiculous and counter-productive lawsuits.

Piketty v. Solow

by on June 2, 2014 at 7:14 am in Books, Economics | Permalink

Krusell and Smith lay out the Solow and Piketty growth models very nicely but perhaps not in a way that is immediately transparent if you are not already familiar with growth models. Thus, in this note I want to lay out the differences using the Super Simple Solow model that Tyler and I developed in our textbook. The Super Simple Solow model has no labor growth and no technological growth. Investment, I, is equal to a constant fraction of output, Y, written I=sY.

Capital depreciates–machines break, tools rust, roads develop potholes. We write D(epreciation)=dK where d is the rate of depreciation and K is the capital stock.

Now the model is very simple. If I>D then capital accumulates and the economy grows. If I<D then the economy shrinks. Steady state is when I=D, i.e. when we are investing just enough each period to repair and maintain the existing capital stock.

Steady state is thus when sY=dK so we can solve for the steady state ratio of capital to output as K/Y=s/d. I told you it was simple.

Now let’s go to Piketty’s model which defines output and savings in a non-standard way (net of depreciation) but when written in the standard way Piketty’s saving assumption is that I=dK + s(Y-dK). What this means is that people look around and they see a bunch of potholes and before consuming or doing anything else they fill the potholes, that’s dK. (If you have driven around the United States recently you may already be questioning Piketty’s assumption.) After the potholes have been filled people save in addition a constant proportion of the remaining output, s(Y-dk), where s is now the Piketty savings rate.

Steady state is found exactly as before, when I=D, i.e. dK+s(Y-dK)=dK or sY=sdK which gives us the steady level of capital to output of K/Y=s/(s d).

Now we have two similar looking expressions for K/Y, namely s/d for Solow and s/(s d) for Piketty. We can’t yet test which is correct because nothing requires that the two savings rates be the same. To get further suppose that we now allow Y to grow at rate g holding K constant, that is over time because of better technology we get more Y per unit of K. Since Y will be larger the intuition is that the equilibrium K/Y ratio will be lower, holding all else the same. And indeed when you run through the math (hand waving here) you get expressions for the Solow and Piketty K/Y ratios of s/(g+d) and s/(g+sd) respectively, i.e. a simple addition of g to the denominator in both cases (again bear in mind that the two s’s are different.)

We can now see what the models predict when g changes–this is a key question because Piketty argues that a fall in g (which he predicts) will greatly increase K/Y. Here is a table showing how K/Y changes with g in the two models. I assume for both models that d=.05, for Solow I have assumed s=.3 and for Piketty I have calibrated so that the two models produce the same K/Y ratio of 3.75 when g=.03 this gives us a Piketty s=.138.

SolowPiketty

As g falls Piketty predicts a much bigger increase in the K/Y ratio than does Solow. In Piketty’s model as g falls from .03 to .01 the capital to output ratio more than doubles! In the Solow model, in contrast, the capital to output ratio increases by only a third. Remember that in Piketty it’s the higher capital stock plus a more or less constant r that generates the massive increase in income inequality from capital that he is predicting. Thus, the savings assumption is critical.

I’ve already suggested one reason why Piketty’s saving assumption seems too strong–Piketty’s assumption amounts to a very strong belief that we will always replace depreciating capital first. Another way to see this is to ask where does the extra capital come from in the Piketty model compared to Solow? Well the flip side is that Solow predicts more consumption than Piketty does. In fact, as g falls in the Piketty model so does the consumption to output ratio. In short, to get Piketty’s behavior in the Solow model we would need the Solow savings rate to increase as growth falls.

Krusell and Smith take this analysis a few steps further by showing that Piketty’s assumptions about s are not consistent with standard maximizing behavior (i.e. in a model in which s is allowed to vary to maximize utility) nor do they appear consistent with US data over the last 50 years. Neither test is definitive but both indicate that to accept the Piketty model you have to abandon Solow and place some pretty big bets on a non-standard assumption about savings behavior.

Pi.rate

by on May 31, 2014 at 12:01 pm in Current Affairs, Economics, Law | Permalink

The latest example of Intellectual Privilege running out of control is a guy who trademarked the symbol Pi with a period afterwards. Here is Jez Kemp:

Designers are in uproar and filing counter notices after print company Zazzle upheld a man’s claim to own the pi symbol on clothing.

Paul Ingrisano, a pirate living in Brooklyn New York, filed a trademark under “Pi Productions” for a logo which consists of this freely available version of the pi symbol π from the Wikimedia website combined with a period (full stop). The conditions of the trademark specifically state that the trademark includes a period.

The trademark was granted in January 2014 and Ingrisano has recently made trademark infringement claims against a massive range of pi-related designs on print-on-demand websites including Zazzle and Cafepress.

Surprisingly, Zazzle accepted his claim and removed thousands of clothing products using this design, emailing designers that their work was infringing Pi Productions’ intellectual property – even designs not using a full stop.

At first Zazzle’s Content Review team responded to their very angry designers and store keepers with generic emails, suggesting they file counter notices if they felt aggrieved.

But now Zazzle’s latest response is that they are acting to protect Paul Ingrisano’s “intellectual property” from “confusingly similar” designs as under the Lanham Act 1946 - including designs which do not even contain the pi symbol, but just the word “pi” in their design name.

I don’t expect this particular outrage to last but as with absurd patents the real outrage is that this does accurately represent the law as it exists today.

Cap and trade is going nowhere at the federal level but the California program is large and expanding and the CA program allows for properly monitored and regulated offsets to be purchased from anywhere in the United States. As a result, a price on carbon is being established nationally.  As the NYTimes indicates in a very good article, once a market and a price have been established, contentious politics turns into mutually beneficial economics.

Experts who support cap and trade contend that a market mechanism can reach more deeply into the economy than any other approach, changing the behavior even of people and companies that might not necessarily care about global warming.

The Wisconsin dairymen perhaps serve as an example of that.

Even as the methane-powered generator roared on his property, John T. Pagel said he was not convinced that the climatic changes happening in the United States were a result of human emissions. He suspects they might be part of a natural cycle. But with Californians dangling cash in exchange for his willingness to cut emissions, he jumped at the chance to build his digester.

“We are doing exactly what they asked us to do to get paid to reduce carbon,” Mr. Pagel said. “If somebody else believes in it enough to put up the money, that’s all I need to know.”

Financial Literacy

by on May 21, 2014 at 7:22 am in Books, Economics, Education | Permalink

Consider the following three questions (from Lusardi and Mitchell):

1. Suppose you had $100 in a savings account and the interest rate was 2% per
year. After 5 years, how much do you think you would have in the account if you
left the money to grow.

More than $102. Exactly $102,. Less than $102? Do not know. Refuse to answer.

2. Imagine that the interest rate on your savings account was 1% per year and
inflation was 2% per year. After 1 year, would you be able to buy.

More than, exactly the same as, or less than today with the money in this account? Do not know. Refuse to answer.

3. Do you think that the following statement is true or false? ‘Buying a single
company stock usually provides a safer return than a stock mutual fund.’

T. F. Do not know. Refuse to answer.

Sadly, most Americans rate themselves high on financial acuity but they cannot answer all three questions correctly.

Only about a third of Americans answer all three questions correctly (and that figure is inflated somewhat due to guessing). The Germans and Swiss do significantly better (~50% all 3 correct) on very similar questions but many other countries do much worse. In New Zealand only 24% answer all 3 questions correctly and in Russia it’s less than 5%.

Some of the variation can be explained by experience. The Japanese, for example, don’t have much experience with inflation in recent decades and they perform poorly on that question. The questions, however, can hardly be considered esoteric and a large literature indicates that the ability to answer these questions correlates with the ability to intelligently make real and important financial decisions regarding mortgage refinancing, credit card borrowing, and retirement planning.

Most states now require that financial literacy be taught to high school students and there is some evidence that teaching financial literacy improves financial outcomes later in life but the evidence is not strong and most teachers still feel that they are unqualified to teach the basic concepts.

In my opinion, improving financial literacy is one of the areas in which principles of economics teachers can make a great contribution to their students. Modern Principles, my text with Tyler, contains extensive material on these topics including a chapter on stock markets and personal finance but more needs to be done.

Addendum: Take the quiz here (with a few more questions). Hat tip: PD Shaw and Tim Ogden for an added link.

In my MRUniversity video on the economics of bundling I argue that bundling raises total surplus and that requiring the Cable TV companies to price by the channel is unlikely to reduce most people’s cable bill (see also Does Cable TV Ripoff People Who Don’t Like Sports?). Pragmatarianism offers an excellent critique. Here is one bit from a longer post worth reading in full:

The flaw in Tabarrok’s logic is that it completely ignores the necessity of determining what the actual demand is for the individual components in the bundle.  For example, when I subscribed to cable…Charter had no idea how much I valued the Discovery Channel.  Neither did the Discovery Channel.  But is my valuation relevant?  According to Tabarrok…it really isn’t.  Uh, what? 

How could the Discovery Channel and Charter and Tabarrok not care what the actual demand is for the Discovery Channel?  In the absence of consumer valuation…how could society’s limited resources be put to their most valuable uses? 

Tabarrok is basically arguing that we don’t need accurate information in order to efficiently allocate resources.  Except, does he really believe that?  Let me consult my magic database…

The most valuable public goods are constantly changing, just as the most valuable private goods are constantly changing.  The signal provided by prices and mobility is therefore of great importance. - Alexander Tabarrok, in The Voluntary City

Huh.  Hmmm.  Is the Discovery Channel a private good?  Yes.  Is its value constantly changing?  Yes.  So…according to Tabarrok…it’s of great importance that the Discovery Channel should have its own price.  But this sure wasn’t what he said in his video. 

An excellent point that was made most forcefully by Ronald Coase in The Marginal Cost Controversy. Coase argued that pricing goods with high fixed cost at marginal cost would generate static efficiency but at the price of dynamic efficiency because we would not be able to say with assurance that the total value of the product exceeded total cost. Similarly we lose some information with bundling, perhaps especially so because marginal cost in this case is zero. With bundling, we know that the total value of the bundle exceeds the total cost but we are less certain that the total value of each bundle component (channel) exceeds the total cost of each component.

But this cannot be the whole story because in another paper, The Nature of the Firm, Coase pointed out that sometimes we choose not to use prices. Firms, for example, are islands of central planning in a market ocean (see Yglesias for a good discussion).

A channel such as HBO is itself a bundle of dramas, comedies and documentaries. Should Girls and Game of Thrones always be priced and sold separately and not through the HBO bundle? HBO certainly learns something from individually priced downloads on iTunes and that information helps HBO to improve its service. But how much is this information worth?

In 2002 should HBO have individually priced episodes of the Sopranos and sold them through AOL?  Individual pricing generates value but it also has costs. Tradeoffs are everywhere. And, to the crux of the issue, if a law had been passed in 2002 requiring HBO to sell The Sopranos on an episode by episode basis would that have resulted in better and more programming at lower prices? I think not. Similarly, I see few reasons to think that welfare would be improved by a law requiring cable TV companies to price by channel.

More generally, the price system is embedded in the larger field of the market economy which includes non-price institutions such as firms; and the market economy is embedded in the larger field of civil society which includes non-profits and non-market institutions such as the family. Economists often focus on the virtues of the price system but that should not blind us to the many virtues and many margins on which a free society operates.

In the course of making the case that China’s property bubble is popping the FT notes:

In just two years, from 2011 to 2012, China produced more cement than the US did in the entire 20th century, according to historical data from the US Geological Survey and China’s National Bureau of Statistics.

Copyright Control to Major Tom

by on May 13, 2014 at 7:16 pm in Law | Permalink

Copyright control to Major Tom

commencing countdown

permissions gone

There’s something wrong

Can you hear me, Major Tom?

Background here.

Should the Future Get a Vote?

by on May 13, 2014 at 7:14 am in Uncategorized | Permalink

Philosopher Thomas Wells argues that future citizens need the vote today:

…future generations must accept whatever we choose to bequeath them, and they have no way of informing us of their values. In this, they are even more helpless than foreigners, on whom our political decisions about pollution, trade, war and so on are similarly imposed without consent. Disenfranchised as they are, such foreigners can at least petition their own governments to tell ours off, or engage with us directly by writing articles in our newspapers about the justice of their cause. The citizens of the future lack even this recourse.

The asymmetry between past and future is more than unfair. Our ancestors are beyond harm; they cannot know if we disappoint them. Yet the political decisions we make today will do more than just determine the burdens of citizenship for our grandchildren. They also concern existential dangers such as the likelihood of pandemics and environmental collapse. Without a presence in our political system, the plight of future citizens who might suffer or gain from our present political decisions cannot be properly weighed. We need to give them a voice.

But how can we solve this problem? Wells has some very good insights:

If current citizens can’t help but be short-sighted, perhaps we should consider introducing agents who can vote in a far-seeing and impartial way. They would need to be credibly motivated to defend the basic interests of future generations as a whole, rather than certain favoured subsets, and they would require the expertise to calculate the long-term actuarial implications of government policies.

But then his solution turns laughable:

Such voters would have to be more than human. I am thinking of civic organisations, such as charitable foundations, environmentalist advocacy groups or non-partisan think tanks.

Well’s solution (give these groups votes) is so tied to his conception of what the “enlightened” future will bring that it clearly fails the far-seeing, impartiality, credibly motivated and expertise requirements that he outlines as desirable. We need not conclude, however, that Well’s plea is disingenuous or impossible but we do need a better implementation.

Robin Hanson’s government of prediction markets (“futarchy“) is a better approach. It is know well understood that relative to other institutions prediction markets draw on expertise to produce predictions that are far seeing and impartial. What is less well understood is that through a suitable choice of what is to be traded, prediction markets can be designed to be credibly motivated by a variety of goals including the interests of future generations.

To understand futarchy note that a prediction market in future GDP would be a good predictor of future GDP. Thus, if all we cared about was future GDP, a good rule would be to pass a policy if prediction markets estimate that future GDP will be higher with the policy than without the policy. Of course, we care about more than future GDP; perhaps we also care about environmental quality, risk, inequality, liberty and so forth. What Hanson’s futarchy proposes is to incorporate all these ideas into a weighted measure of welfare. Prediction markets would then be used to predict and make policy choices based on future welfare. Incorporated within the measure of welfare could be factors like environmental quality many years into the future. 

Note, however, that even this assumes that we know what people in the future will care about. Here then is the final meta-twist. We can also incorporate into our measure of welfare predictions of how future generations will define welfare. We could, for example, choose a rule such that we will pass policies that increase future environmental quality unless a prediction market in future definitions of welfare suggests that future generations will change their welfare standards. It sounds complicated but then so is the problem.

In short, more than any other form of government, futarchy is based on far seeing, impartial, expertise driven and credibly motivated predictions of future welfare and it is flexible enough to allow for a wide definition of welfare including taking into account the interests of future generations.

Hat tip: Carl Close.

Vegetable Eggs

by on May 12, 2014 at 10:08 am in Economics, Food and Drink, Religion | Permalink

Technology Review: Hampton Creek’s CEO, Josh Tetrick, wants to do to the $60 billion egg industry what Apple did to the CD business. “If we were starting from scratch, would we get eggs from birds crammed into cages so small they can’t flap their wings, shitting all over each other, eating antibiotic-laden soy and corn to get them to lay 283 eggs per year?” asks the strapping former West Virginia University linebacker. While an egg farm uses large amounts of water and burns 39 calories of energy for every calorie of food produced, Tetrick says he can make plant-based versions on a fraction of the water and only two calories of energy per calorie of food — free of cholesterol, saturated fat, allergens, avian flu, and cruelty to animals. For half the price of an egg.

At present, Hampton Creek is focusing on finding vegetable proteins than can substitute for eggs in cakes, salad dressings, mayo and so forth rather than replacing the over-easy at the diner. As with in-vitro meat, however, vegetable eggs pursued for economic reasons will end up greatly supporting the 21st movement for vegetarianism.

Type-I-and-II-errors1-625x468

Hat tip: Flowing data. Original?