ESG Versus Innovation
Some wise words on ESG and innovation from the excellent Bart Madden:
Excessive focus on looking good in the short term via ESG metrics can be at cross-purposes with a long-term planning horizon keyed to innovation. A sizable portion of a firm’s major innovations may not move the needle much as to ESG metrics but may score high in the eyes of customers as to value creation (and quite possibly improve their customers’ ESG performance). Recent research reveals a tendency during quarterly earnings conference calls for those managements who have reported weaker-than-expected profits to talk less about financial results and more about their ESG progress.31 Keep in mind that innovation is the key to sustainable progress that jointly delivers on financial performance and taking care of future generations through environmental improvements.
Addendum: Bart has a history of smart investing.
Sunday assorted links
1. Sheikh Khalifa of UAE passes away (NYT).
2. George H. Smith has passed away.
3. The Economist on India’s economy, a good feature story.
4. Regulatory obstacles to flying electric vehicles (WSJ).
5. Is current comedy favoring the right wing?
How much should you criticize other people?
I mean in private conversation, not in public discourse, and this is not to their faces but rather behind their back. And with at least a modest amount of meanness, I am not talking about criticizing their ideas. Here are some reasons not to criticize other people:
1. “Complain less” is one of the very best pieces of wisdom. That is positively correlated with criticizing other people less, though it is not identical either.
2. If you criticize X to Y, Y wonders whether you criticize him to others as well. This problem can increase to the extent your criticism is biting and on the mark.
3. Criticizing others is a form of “devalue and dismiss,” and that tends to make the criticizing people stupider. If I consider the columnists who pour a lot of energy into criticizing others, even if they are sometimes correct, it isn’t so pretty a picture where they end up.
4. If X criticizes Y, it may get back to Y and Y will resent X and perhaps retaliate.
5. Under some moral theories, X is harming Y if X criticizes Y, Y doesn’t find out, and Y faces no practical penalties from that criticism (for an analogy, maybe a wife is harming her husband if she has a secret affair and he never finds out about it).
Here are some reasons to criticize others:
4. Others may deserve the criticism, and surely there is some intrinsic value in speaking the truth and perhaps some instrumental value as well.
5. Criticizing others is a way of building trust. In a three-way friendship with X, Y, and Z, if X establishes that he and Y can together criticize Z, that may boost trust between Y and X, and also increase X’s relative power in the group. Criticizing “Charles Manson” doesn’t do this — you’ve got to take some chances with your targets.
6. Criticizing others may induce people to fear you in a useful way. They may think if they displease you, you will criticize them as well.
7. Perhaps something or somebody is going to be criticized no matter what. If you take the lead with the criticism, that is a signal of your leadership potential.
What else? Is there anything useful written on this topic?
I favor bird consequentialism
We have to be more willing to disrupt current animal habitats when building wind or hydroelectric power. That means, to put it bluntly, that we have to be more willing to kill animals. Erecting wind turbines, for instance, often leads to the death of some number of birds. To favor more wind turbines is not to support the death of more birds; it is to support a more robust long-term supply of green energy — which would benefit birds (and of course humans too)…
I favor a much more proactive policy agenda to boost the welfare of animals. That could include subsidies to new “artificial meat” technologies, more research into animal diseases and pandemics, even research into the possibility of bringing back extinct animals through genetic engineering. The US should also have more consistent enforcement of animal cruelty laws.
Protecting birds by limiting wind power is about the most damaging way to try to serve nature and the environment. It is a way of pretending to care about birds. It is also an illustration of how so many institutions are so dedicated to protecting entrenched interests — whether they are in the political or natural world.
Here is the rest of my Bloomberg column. Bell the cat! You should be the one who gets to kill the bird. And while we’re at it, let’s ban octopus farms too.
Who is rich in America?
We now know who is rich in America. And it’s not who you might have guessed.
A groundbreaking 2019 study by four economists, “Capitalists in the Twenty-First Century,” analyzed de-identified data of the complete universe of American taxpayers to determine who dominated the top 0.1 percent of earners.
The study didn’t tell us about the small number of well-known tech and shopping billionaires but instead about the more than 140,000 Americans who earn more than $1.58 million per year. The researchers found that the typical rich American is, in their words, the owner of a “regional business,” such as an “auto dealer” or a “beverage distributor.”
That is from Seth Stephens-Davidowitz (NYT), who covers some other interesting wealth/happiness topics as well.
Covid and reverse discrimination
Earlier in the pandemic, you might have had various theories about who was most likely to infect you, who was most likely not to be vaccinated/boosted, or who was most likely to have been going around without proper mask precautions. Perhaps you went to some greater lengths, either large or small, to avoid those people or to take greater precautions around them. Today, at least in most of the United States, we have entered the funny “reverse discrimination” phase of the pandemic. The higher status the person, the more you should beware! In the last few weeks, some of the higher status people I know have come down with Covid (they are all fine, to be clear), and at much higher rates than “people I know” were getting Covid before.
So behave accordingly, have a beer with your garbage collector, and I suspect this moment won’t last but another week or two.
Slovakian Asks Good Questions About American Suburbs
My questions are:
What do you actually do? Are you always stuck inside? What did you do when you were a child and couldn’t drive?
Why do you have these sorts of strange regulations? Are your officials so incompetent? Is this due to lobbying from car or oil companies? I don’t get it.
Why is there no public transport? It seems like the only thing is the yellow school bus, idk.
He says there can be only one family houses. Why? Why can’t you have idk a commie block in the middle of such a suburb? Or row houses or whatever.
Why are there no businesses inside these? I mean, he says it’s illegal, just why? If I lived in such a place, I’d just buy a house next to mine and turn it into a tavern or a convenience store or whatever. Is that simply not possible and illegal?
These places have front and backyards. But they’re mostly empty. Some backyards have a pool maybe, but it’s mostly just green grass. Why don’t you grow plants in your yards? Like potatoes, cucumbers, tomatoes or whatever. Why do you own this land, if you never use it?
Originally from Reddit.
Saturday assorted links
1. Thomas Schelling 1963-64 syllabus and final exam.
3. Transitioning to post-quantum cryptography?
6. “The FDA won’t allow European formulas to be sold here because of inane labeling concerns…”
7. “New funding effort will deploy a corps of scientist ‘scouts’ to spot innovative ideas.”
8. Biden administration seeking to stymie charter schools (NYT). #TheGreatForgetting
What I’ve been reading
1. Paul Strathern, The Florentines: From Dante to Galileo. It is not just Dante and Galileo, there is also Boccaccio, Petrarch, Machiavelli, Giotto, Botticelli, Leonardo, Fra Filippo Lippi, Michelangelo, Ghiberti, Brunelleschi, and many more, all from one small region of Italy. This book doesn’t answer how that all happened, but it is perhaps the best survey of the magnitude and extent of what happened, recommended and readable throughout, good as both an introduction and for the veteran reader of books about Florence. While we are at it, don’t forget Pacioli and the first treatise on double-entry bookkeeping.
2. Geoff Dyer, The Last Days of Roger Federer: And Other Endings. A hard book to explain, mostly it is about how careers end or collapse or implode, only some of it is about Federer. “De Chirico lived till he was ninety but produced little of value after about 1919.” Calling a book a “tour de force” almost certainly means it isn’t, but this book…is a tour de force.
3. Mason Currey, Daily Rituals: How Artists Work. One or two-page sections on the work habits of famous artists, the selection of names is intelligent and this book is like potato chips in the good sense of the term.
4. Asa Hoffman with Virginia Hoffman, The Last Gamesman: My Sixty Years of Hustling Games in the Clubs, Parks and Streets of New York. A fun look back at the NYC chess world of the 1970s and trying to make a living as a chess and Scrabble hustler. I knew Hoffman a bit back then, and even as a kid I wondered “is this guy happy?” In the book he says he has largely been happy! I am still wondering. Maybe the secret is to play a game many discrete times where your losses are temporary and swamped by rapidly forthcoming wins? I am reminded of the words of the recently deceased grandmaster and centenarian Yuri Averbakh (NYT): “The main thing was that I never obtained great pleasure from winning,’’ he wrote. “Clearly, I did not have a champion’s character. On the other hand, I did not like to lose, and the bitterness of defeat was in no way compensated for by the pleasure of winning.”
5. Christopher Duggan, The Force of Destiny: A History of Italy since 1796. A good and very useful general introduction to the history of the latter part of the story of Italy.
What should I ask Vaughn Smith?
I will be doing a Conversation with him so what should I ask? He is a carpet cleaner. And there is this:
“So, how many languages do you speak?”
“Oh, goodness,” Vaughn says. “Eight, fluently.”
“Eight?” Kelly marvels.
“Eight,” Vaughn confirms. English, Spanish, Bulgarian, Czech, Portuguese, Romanian, Russian and Slovak.
“But if you go by like, different grades of how much conversation,” he explains, “I know about 25 more.”
Vaughn glances at me. He is still underselling his abilities. By his count, it is actually 37 more languages, with at least 24 he speaks well enough to carry on lengthy conversations. He can read and write in eight alphabets and scripts. He can tell stories in Italian and Finnish and American Sign Language. He’s teaching himself Indigenous languages, from Mexico’s Nahuatl. to Montana’s Salish. The quality of his accents in Dutch and Catalan dazzle people from the Netherlands and Spain.
He also has been:
…a painter, a bouncer, a punk rock roadie and a Kombucha delivery man.
Here is the full profile of Vaughn Smith. And here on YouTube. So what should I ask him?
Friday assorted links
1. Umbrex presents Tyler Cowen on Talent.
3. The guys behind the Turkish drones (New Yorker).
5. Catherine Rampell on the inflation conspiracy theory. #TheGreatForgetting
Systemic Bias versus Concentrated Bias
Discrimination exists but rather than being systemic Campbell and Brauer argue it’s due to a small number of prejudiced individuals.
Discrimination has persisted in our society despite steady improvements in explicit attitudes toward marginalized social groups. The most common explanation for this apparent paradox is that due to implicit biases, most individuals behave in slightly discriminatory ways outside of their own awareness (the dispersed discrimination account). Another explanation holds that a numerical minority of individuals who are moderately or highly biased are responsible for most observed discriminatory behaviors (the concentrated discrimination account). We tested these 2 accounts against each other in a series of studies at a large, public university (total N = 16,600). In 4 large-scale surveys, students from marginalized groups reported that they generally felt welcome and respected on campus (albeit less so than nonmarginalized students) and that a numerical minority of their peers (around 20%) engage in subtle or explicit forms of discrimination. In 5 field experiments with 8 different samples, we manipulated the social group membership of trained confederates and measured the behaviors of naïve bystanders. The results showed that between 5% and 20% of the participants treated the confederates belonging to marginalized groups more negatively than nonmarginalized confederates. Our findings are inconsistent with the dispersed discrimination account but support the concentrated discrimination account. The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes. Our results suggest that the Pareto principle also applies to discrimination, at least at the large, public university where the studies were conducted. We discuss implications for prodiversity initiatives.
The cause of discrimination matters because as Hambrick notes writing about this paper in Scientific American:
In recent years, the view that most people engage in discriminatory acts because of implicit biases has gained widespread public acceptance. In a 2016 presidential debate, Hillary Clinton commented that “implicit bias is a problem for everyone.” Campbell and Brauer’s findings suggest it’s still not clear the extent to which implicit biases explain discriminatory conduct. (Other work has called into question the validity of implicit bias measures for predicting real-world discrimination.) Research aimed at answering this fundamental question will inform the design of interventions that may one day meaningfully reduce levels of discrimination.
….If, for example, a small number of explicitly prejudiced people are responsible for most or all of the discrimination occurring in a company, an intervention that requires all employees to undergo implicit bias training will probably fail to address the problem. Research suggests that interventions that convey the message that nearly everyone engages in discriminatory behavior may even make the workplace atmosphere worse for marginalized employees, because after the training, nonmarginalized employees may avoid interacting with them out of fear of unwittingly discriminating.
Is Sri Lanka becoming a failed state?
The economic crisis is a result of mismanagement by the Rajapaksa administration (and its predecessors) as well as Sri Lanka’s vulnerability to external shocks. The pandemic and Russia’s invasion of Ukraine have had a devastating impact. The Rajapaksas pursued populist economic policies — including unaffordable fuel and food subsidies and printing money to finance them — that spurred inflation. The president was heavily criticized for a disastrous “100% organic” policy that aimed to reduce the strain on foreign currency reserves by banning the import of chemical fertilizers. The policy resulted in slashed agricultural output at a time when food supplies were already running low and prices were soaring.
Meanwhile, foreign tourism — a key source of jobs, economic growth, and foreign currency — fell after the 2019 Easter bombings and then collapsed during the pandemic. The spike in international commodity prices, which has been exacerbated by Russia’s invasion of Ukraine, has piled further economic pressure on Sri Lanka. The country relies heavily on imports of food, fuel, and other essential goods to feed the people and keep the lights on.
Here is more from GZero.
How to make talent scouts work for you
With Daniel Gross, here is a (very much) shortened bit from Talent: How to Identify Energizers, Creators, and Winners Around the World, published at a16z, excerpt from the chapter on when to use talent scouts:
It is worth thinking about why the scouting model works in this context [finding supermodels]. First, the relevant talent could come from many different parts of the world, and the number of people to be scouted is very large. It is hard to imagine a centralized process getting the job done. Second, many of the scouts plausibly have a decent sense of who might make a good model. Looks are hardly the only factor behind modeling success, but they are a kind of “first stop,” and expecting the scouts to judge looks well from first impressions is more plausible than expecting the scouts to use first impressions to judge talent well for skill in, say, quantum mechanics. Third, a follow-up investigation to judge the modeling talent of the chosen candidates is not extremely costly. You can have them in for a photo shoot and see how popular they prove in the market without having to invest millions of dollars right away…
Scouting is also becoming more important as the options for self-education are rising. With more people trying their hand at various avocations than ever before, that places more and more burden on talent search. We need to be more open to the accomplishments of self-taught individuals without traditional training, and that holds all the more true for the tech world, where many of the most important founders have eschewed the institutions of traditional education.
There is much more at the link, we also consider when scouting models fail relative to centralized evaluation, and which kinds of incentives should be given to scouts.
Thursday assorted links
1. Megyn Kelly interviews me, after about half an hour we get to Talent; the earlier inflation material will not be new to MR readers.
2. Rene Saenz: “What Cowenism Is,” a short essay.
3. Switzerland pondering whether Liechenstein is really very different, or not.
4. Kevin Kelly on Vanishing Asia.
5. New Vitalik/Glen paper, Puja Ohlhaver too.
6. The new project of Bloomberg UK (NYT).