Power Pal

I read an article in the WSJ about some really fascinating scientific research about the brain. It turns out that people make the best decisions when they trust their instincts and just go with their gut. It's pretty amazing. Apparently, the human mind actually makes a decision 10 seconds before the conscious mind is aware of it. The mind apparently has a decision making process that is deeply embedded in our cells and it takes time for our conscious minds to really grasp it. Here's an excerpt that describes it: In experiments with laboratory animals reported this spring, Caltech neuroscientist Richard Anderson and his colleagues explored how the effort to plan a movement forces cells throughout the brain to work together, organizing a choice below the threshold of awareness . Tuning in on the electrical dialogue between working neurons, they pinpointed the cells of what they called a "free choice" brain circuit that in milliseconds synchronized scattered synaps...

I read an article in the WSJ (Merger, Indian Style: Buy a Brand, Leave it Alone) a while back about how Tata Motors was going to buy Jaguar and Land Rover from Ford. The main focus of the story was how Tata was looking to learn from the US companies: Rather than seeking to wring profits out of two luxury automotive brands that frequently have lost money, Tata is looking to learn from them to help launch its own global expansion in autos, using the brands' own management team and a full roster of employees. I thought that was an interesting trend. I later came across an opinion piece by Matthew Slaughter, an associate dean and professor at Tuck, about what the Tata deal tells us about the benefits of foreign direct investment. He pointed out how these multinationals undertake their "insourcing" deals: It is well known that new FDI can come via "greenfield" investments that build new businesses from scratch. Think photo opportunities of business executives and...

There's a lot of VC money going into "green tech" projects these days - $2.2 billion in 2007! I read an article in Forbes about the next generation of VC's leading the charge. The bios of these folks is truly ridiculous. Here's an excerpt: This trio could get hired anywhere. Aileen Lee was president of her section at Harvard Business School. Trae Vassallo learned to program when she was 7 and at 28 cofounded a wireless e-mail company that Motorola bought for $550 million. Samir Kaul led the effort to sequence the genome of the arabidopsis plant and then built three life sciences companies from scratch. He's only 33. These three are among venture capital's new guard. That's kind of humbling.

I was skimming through Mankiw's blog and came across a post on McCain and Obama's positions on carbon auctions . I mentioned the importance of the carbon auctions in my previous post as a lesson that the US is learning from the mistakes in the EU - i.e. giving away carbon credits in many cases actually serves as a subsidy. Mankiw's point is that you have to go with a full auction system because it most closely resembles a Pigovian Tax, which apparently is the optimal policy response to externalities. A Pigovian Tax is basically just a tax levied to counter negative externalities in a market. If you give away carbon credits for free, there's no price and no incentive to improve. Instead, you have to put a price on the externality and make people pay for it. And then theoretically the revenue that's generated from the tax could be used on research or projects to mitigate the impact of the externalities. I also read an article recently about what's called a ...

I read a few articles about the proposed cap-and-trade system in the U.S. and thought it'd be a good opportunity to read up on the Kyoto Protocol. According to a press release from the United Nations Environment Programme (from Wikipedia): The Kyoto Protocol is an agreement under which industrialized countries will reduce their collective emissions of greenhouse gases by 5.2% compared to the year 1990 (but note that, compared to the emissions levels that would be expected by 2010 without the Protocol, this limitation represents a 29% cut). The goal is to lower overall emissions of six greenhouse gases - carbon dioxide , methane , nitrous oxide , sulfur hexafluoride , hydrofluorocarbons , and perfluorocarbons - averaged over the period of 2008-2012. National limitations range from 8% reductions for the European Union and some others to 7% for the US, 6% for Japan, 0% for Russia, and permitted increases of 8% for Australia and 10% for Iceland. An additional summary from Wikipedia o...

I read a few articles lately about energy created by wind turbines placed in offshore, deep water locations. One article was in Forbes called Deepwater Wind . The other article was in the WSJ called Winds Shift in Energy Debate . It doesn't seem like you can get much cleaner in terms of energy production than wind. But due to problems with the energy grid and transmission capacity, one of the problems with wind turbines is that they need to be close to the markets that will actually consume the energy. For a major city, one of the solutions that has been proposed is to place wind turbines just offshore. The conditions offshore offer consistent, steady wind. But the problem is that the wind turbines obstruct the ocean view. An excerpt about this from the WSJ: Because of favorable wind conditions and the relative ease of siting, much of the U.S. construction to date has been in areas far from big population centers. In many cases, transmission systems lack the capacity to move...

The weekend edition of the WSJ had a fun article titled A Stinky, Pricey Delicacy highlighting the recently increasing price of the durian fruit in Asia. One durian can set you back upwards of $200. Until today, I had not had the pleasure of tasting durian. But the article prompted me to see what all the fuss was about. Here's a quick excerpt from the article describing its unique qualities: Adored by Southeast Asians and Chinese, the durian sends most foreigners fleeing, thanks to its unmistakable odor. "Gasoline" and "blue cheese" are two tame metaphors people often use to describe it; "garbage," "stinky socks" and "manure" also are frequently invoked. Even here in Thailand, durians are banned in hotel elevators, subways and airplanes. Well. We bought one tonight from the Asian market, cracked it open, and dug in. I have to say all the above descriptions were wrong. It was more like a custard version of french onion soup. ...

Ok. I think I've beaten the corporate tax horse to death lately, but I like Greg Mankiw so I wanted to post this one. He wrote an opinion piece in the NY Times a few weeks ago about reducing corporate taxes. A couple good excerpts: A cut in the corporate tax as Mr. McCain proposes would initially give a boost to after-tax profits and stock prices, but the results would not end there. A stronger stock market would lead to more capital investment. More investment would lead to greater productivity. Greater productivity would lead to higher wages for workers and lower prices for customers. Populist critics deride this train of logic as “trickle-down economics.” But it is more accurate to call it textbook economics. Students in introductory economics courses learn that the burden of a tax does not necessarily stay where the Congress chooses to put it. That lesson is especially relevant when thinking about the corporate tax. He continues further to discuss why to focus on corporate ...

I read The Reluctant Fundamentalist by Mohsin Hamid while on vacation in Italy and thought it was really good. The book basically tells the story of a Pakistani man who comes to the US, attends a good university, gets a dream job in financial services in New York, falls in love with an American girl, and then abandons it all to return to his home country after 9/11. Although the story is a little contrived - the parallel between the man's failing romance with the girl and his failing romance with America is a little too obvious - it's really wonderfully written and a real page-turner. Given my ethnic background, how I went to a good school, moved to New York to do consulting, and was there on 9/11, much of the story felt familiar. At its core, for me, it was really a story about identity in the U.S. Particularly about changing your identity here - the ability to transform from an immigrant or an outsider to one of the elite and how America post-9/11 developed an isolationi...

I read an interview with Robert Mundell in the opinion section of the WSJ this morning. Robert Mundell is regarded as the father of supply-side economics and the euro. He won a Nobel Prize for Economics in 1999 (the same year the euro was introduced). In the interview, Mundell offers some interesting commentary on the current state of the economy, including issues like the current marginal tax rate, the corporate tax rate, and the weak dollar. I figured it would also be an opportunity to explore supply-side economics a little further. An aside - why focus on the " marginal " tax rate? The marginal tax rate is looking at the rate at which the next dollar that someone earns gets taxed. So basically, to what extent does someone have an incentive to make that next dollar? The distinction becomes important when you have a graduated or progressive tax system like you do in the U.S. (and many other countries for that matter). Here's a quick view of the progressivity o...

While I was over in Italy there was quite a bit of coverage of the EU referendum in Ireland. On the flight back I read an interesting article in the Financial Times. Ireland had not yet voted on the measure at the time of the article and they subsequently voted No. There was a tremendous amount of campaigning and advertising around both the Yes and No sides. But what I found particularly interesting about the situation is that it was actually the left-wing (unions, etc.) that were pushing for the No vote. And one of the primary reasons they were pushing the No vote was because they claimed that Ireland must lose control of their ability to continue to have low corporate taxes. Unions pushing for lower corporate taxes! Amazing, right? Ireland has corporate taxes hovering around 12.5% and their economy has benefited significantly as a result. Here's a quick excerpt from the article: Ireland's corporate tax take was €6.4bn last year, representing a little less than half t...

I've watched the show SuperNanny quite a few times and think it's a great show. I read an article in the latest US News & World Report called Good Parents, Bad Results . The article highlighted eight things that parents do wrong when disciplining their kids (based on findings of researchers from places like the Yale Parenting Center and Child Conduct Clinic). Here's the rundown of the eight and some excerpts: 1. Parents Fail at Setting Limits If parents don't set limits, children will then try to push the limits because they feel unsafe. They are looking for their parents to respond so that they can get an understanding of what's safe and what's not safe. These kids have problems later in life. But, paradoxically, not having limits has been proven to make children more defiant and rebellious, because they feel unsafe and push to see if parents will respond. Research since the 1960s on parenting styles has found that a child whose mom and dad are permiss...