US Catholic Colleges say Homeschoolers do Better

Interesting developments even in the field of education

From Catholic Education Daily:

Homeschooled students tend to achieve a high degree of academic success in college, and often outperform their peers, argue several administrators from faithful Catholic colleges recommended in The Newman Guide.

The experience of these administrators with homeschooled students correlates with a 2013 study—conducted for the Journal of Catholic Education—which found significant evidence of higher ACT and SAT scores and overall GPAs for homeschooled students who attend a Catholic university. Marc Snyder, assistant head of school for students at Rhodora J. Donahue Academy in Florida, conducted the study by surveying students attending Ave Maria University.

The study’s sample population was composed of 33.6 percent homeschooled students, 34.8 percent Catholic high school students, and 31.6 percent public high school students. It found “a positive and significant difference between homeschooled students and public schooled students.” Homeschooled students apparently “outperformed traditionally schooled students on two of four measures,” indicating “that homeschooled students are academically valuable to the university,” according to Notre Dame’s Cardus Religious Schools Initiative.

“Homeschooled students are invariably among our better students, and as more enroll, experience continues to confirm this,” said Dr. David Williams, interim vice president for academic affairs and associate professor of theology at Belmont Abbey College in Belmont, N.C., in an interview with The Cardinal Newman Society. “The average range of ability tends to be higher among homeschooled students who study at [Belmont] and compares well with the very best of public and privately-schooled students.”

“We’re always pleased with our homeschooled students,” Williams told the Society. “Not only do they tend to be among the best academically, but they also possess a great deal of initiative and eagerness to participate in the college community.”

Forces of decentralization in progress.

80% of Catalonians Say YES to Independence!

Last night I wrote (bold mine) 

Unlike the failed Scottish vote for independence where Scotland has mostly been a tax consumption economy, so in the fear of the loss of the welfare privileges, the elderly stampeded to cast a NO vote to independence, Catalonia has been the main contributor to the Spanish economy with nearly 19% of Spain’s GDP where her GDP per capita is higher than the European Union average (EU-27) according to the OECD.

In short, Catalonians may be fighting to keep their share of production rather than satisfy Madrid’s political interests by redistributing the former’s resources to the latter’s welfare dependent supporters.

Thus should Catalonia’s independence become a reality, this will likely signify a big setback to the already struggling Spanish political economy.

I am not aware of the political agenda of the leaders of Catalonia, whether they will elect to join the EU and adapt the euro or join the EU and decide to have their own currency or operate independently from the EU.

Moreover an independence victory by Catalonia can set in motion or inspire a string of existing and active secession movements around Europe to ask for political recognition. Should this happen this would serve as the death knell for the centralization plans for the Brussels based bureaucracy.

So should the independence vote prevail, there will likely be huge political uncertainties that will dangle over the political economic domain of EU and of Mr. Draghi’s ECB.

Well, Spain’s PM Rajoy, the EU and the ECB's troubles have come to fore as Catalonians has voted overwhelmingly for independence!

From the BBC.com

An informal vote on independence for Catalonia has shown more than 80% in favour, officials say.

The provisional results followed a day of voting across the autonomous region in north-eastern Spain.

The non-binding vote went ahead after Spain's constitutional court ruled out a formal referendum.

Earlier, Catalan leader Artur Mas hailed the non-binding poll "a great success" that should pave the way for a formal referendum…

The 80% Yes…

Voters were asked two questions - whether they wanted Catalonia to be a state and whether they wanted that state to be independent.

Vice President Joana Ortega said that more than two million people had taken part in the "consultation of citizens" and that with almost all votes counted, 80.72% had answered yes to both questions.

Just over 10% voted yes for the first question and no for the second, he said, and about 4.5% voted no to both questions.

Spain’s Mainstream Resists…

The ballot was held in the face of fierce opposition from the Spanish government.

Speaking beforehand, Spanish Justice Minister Rafael Catala dismissed the exercise as "fruitless and useless".

Opinion polls suggest that as many as 80% of Catalans want an official referendum on the issue of Catalonia's status, with about 50% in favour of full independence.

Spanish unionist parties argue that because the ballot was organised by grassroots pro-independence groups it cannot legitimately reflect the wishes of the region.

More than 40,000 volunteers helped to set up and run the informal exercise.

It is obvious that beneficiaries of Spain's welfare state will refuse to have an independent Catalonia, that’s because these groups get their welfare finances from them! The political parasites would essentially lose their financial and economic hosts!

But if the Spanish authorities will defy the wishes of Catalonians, don’t expect a peaceful transition. At worst, the outcome could be a civil war.

Catalonian experience as I noted above will fire up a string of existing and active secession movements around Europe to likewise ask for political recognition. The wave of decentralization has snowballed. 

The existence of the EU, ECB and the euro are now in jeopardy

Scotland’s Independence Referendum: What will Hayek Say?

What would be the likely insight of the great Austrian economist and Nobel Prize winner Friedrich von Hayek on the coming Scotland independence referendum? 

At the Lew Rockwell Blog, Austrian economist Thomas DiLorenzo lifts a quote from Mr. Hayek’s masterpiece the Road to Serfdom (Chapter 15, pp. 257-258) for a cue:

We shall not rebuild civilization on the large scale.  It is no accident that on the whole there was more beauty and decency to be found in the life of the small peoples, and that among the large ones there was more happiness and content in proportion as they had avoided the deadly blight of centralization.  Least of all shall we preserve democracy or foster its growth if all the power and most of the important decisions rest with an organization far too big for the common man to survey or comprehend.  Nowhere has democracy ever worked well without a great measure of local self-government, providing a school of political training for the people at large as much as for their future leaders.  It is only where responsibility can be learned and practiced in affairs with which most people are familiar, where it is the awareness of one’s neighbor rather than some theoretical knowledge of the needs of other people which guides action, that the ordinary man can take a real part in public affairs because they concern the world he knows.  Where the scope of the political measures becomes so large that the necessary knowledge is almost exclusively possessed by the bureaucracy, the creative impulses of the private person must flag.  I believe that here the experience of the small countries like Holland and Switzerland contains much from which even the most fortunate larger countries like Great Britain can learn.  We shall all be the gainers if we can create a world fit for small states to live in.” 

(Emphasis by Mr. DiLorenzo).

Third Wave Politics: Failing Nation States and the Growing Secession Movement

Industrial age centralized governments will pave way for decentralization.

In the observation of Europe Day Sovereign Man’s Simon Black writes:   (bold mine)

But what is true is that European imperialists conjured entire nations in Africa out of thin air from their palaces in Brussels, Paris, and London.

And all of this was done without any regard for ethnic, linguistic, religious, and historical divisions among the various tribes that inhabited Africa.

But what few people realize is that Europe is no different.

Think about it—the United Kingdom consists of England, Wales, Scotland, and Northern Ireland lumped together in a political union.

Each is entirely different from the others. And secessionist movements are alive and well. 

Scotland will hold a referendum about its independence in September. And the troubles in Northern Ireland have plagued the region for decades. 

Belgium is a completely artificial country, and the Flemish are actively pursuing independence from the Walloons. 

In the late 19th century, Germany and Italy were both unified into modern countries from diverse fiefdoms and city-states with strong regional identities.

Those regional identities are still present today. Just a few weeks ago, a vote was held in Venice over independence for the wider region. 

The Basque separatist movements in Spain are stronger than ever. The Balkans were an absurd experiment. I could go on and on.

Europe is the best example that borders and countries are completely arbitrary. 

They are created to serve one purpose—consolidating authority over a piece of land and the people living upon it. 

Today just happens to be “Europe Day”, a holiday in which Europeans are supposed to commemorate the Schuman Declaration that jumpstarted today’s European Union. 

This is a continent that has a long history of constantly going to war with itself.

They slapped lines on a map, formed some new countries, and expected that everything would be OK.

Then they made those lines even broader when they consolidated everything into the European Union. And EU politicians are trying to make things even bigger.

History shows that when economic times are good, people are happy about unity. 

But when times are tough as they are now, divisions start creeping up. People look around and say “this system isn’t working”. 

They demand change. Sometimes violently. And we would be foolish to presume that this time is any different.

The immediate avenue for this conflict to play out is still through peaceful means—referendums and the rise of nationalist and Eurosceptic political parties. 

But it’s clear that the trend is to get smaller, not bigger. And for the system to change entirely. 

Like feudalism before it, the nation state is a failed experiment that will ultimately be replaced. It’s already happening. 

Pls continue to read here 

I previously noted that growing secession movements marks the “gradual confirmation of the predictions of futurist Alvin Toffler as elucidated in his highly prescient 1980 book, The Third Wave (p.317)

National governments, by contrast, find it difficult to customize their policies. Locked into Second Wave political and bureaucratic structures, they find it impossible to treat each region or city, each contending racial, religious, social, sexual or ethnic group differently, let alone treat each citizen as an individual. As conditions diversify, national decision-making remains ignorant of the fast-changing local requirements. If they try to identify these highly localized or specialized needs, they wind up deluged with overdetailed, indigestible data…

In consequence, national governments in Washington, London, Paris or Moscow continue, by and large, to impose uniform, standardized policies designed for a mass society on increasingly divergent and segment publics. Local and individual needs are forgotten or ignored causing the flames of resentment to reach white heat. As de-massification progresses, we can expect separatist or centrifugal forces to intensify dramatically and threaten the unity of many nation-states.

The Third Wave places enormous pressures on the nation-state from below.

Bursting bubbles will only compound on such trend.

Why Small is Beautiful

At the Daily Reckoning, Dominic Frisby has a splendid article on why small societies have mostly been prosperous

First Mr. Frisby notes of the role played by decentralization and centralization in shaping Italy's present conditions

In the story of man, Italy has twice been the global center of innovation and invention — once under the Romans, and then again during the Renaissance, when it produced such great men as Leonardo da Vinci, Michelangelo and Galileo. No other part of the world can claim such an emphatic double — not China, not Britain, not the USA. You cannot doubt the potential of the Italian people. You cannot doubt their talent.

Yet throughout the 20th century, Italy has been (and still is) a cradle of corruption, political infighting, bureaucracy, crime (think Mafia and Camorra), corruption, rent-seeking, inflations, division, fascism, communism and goodness knows what else. Its state is bloated, its political system dysfunctional. The country might be nominally unified, but in reality it is anything but.

Where did Italy go wrong? The answer: It unified.

Admittedly, this unification was forced on it. As the city-states lost their independence, it came under foreign domination, first under Spain (1559-1713), then Austria (1713-1796), then France, then the Austrians again. Finally, in the mid-19th century, came the Italian Wars of Independence, unification, and birth of the Italy we know today.

Next he narrates a short history of "small is beautiful" in the global context.

Small is beautiful. In A.D. 1000, Europeans had a per capita income below the average of the rest of the world. China, India, and the Muslim world were richer and had superior technology: China had had the printing press for 400 years. Her navy “ruled the waves.” Even as late as 1400, the highest standards of living were found in China, in the robust economies of places like Nanjing. But the empires of the East became centralized and burdened with bureaucracy and taxes.

In Western Europe, however, made up of many tiny nation-states, power was spread. There was no single ruling body except for the Roman Catholic Church. If people, ideas, or innovation were suppressed in one state, they could quickly move to another, so there was competition. The cities, communes, and maritime republics that made up what we now call Italy — Genoa, Rome, and Florence, for example — became immensely prosperous. Venice in particular showed great innovation in turning apparently useless marsh and islands into a unique, thriving metropolis that would become the wealthiest place in the world.

In the 16th century, the repressive forces of Roman Catholicism, which was becoming corrupt, began to be overturned in Northern Europe. The Bible was translated into local vernacular. The Protestant movement saw deregulation and liberalization. Gutenberg’s printing press, invented a century earlier, was furthering the spread of knowledge and new ideas — and thus the decentralization of power.

Over the next two hundred years, Northern Europe caught up with Southern Europe, which remained Catholic, and then overtook it. First, it was the Dutch, also made up of many small states. Then, in the 18th century, it was England, which, in spite of its union with Scotland and its later empire building, had further dispersed centralized power by reducing the authorities of the monarch after the civil war of 1642-51 and by linking its money to gold.

Meanwhile, out East, the Ottoman Empire and China went into a relative dark age, centrally governed by autocratic or imperial elites, burdened with heavy taxes and slow to react and unable to cope with the plagues and wars that befell them. By 1950, the average Chinese, according to author Douglas Carswell, was as poor, if not poorer, than someone living there a thousand years before.

Third, Small is beautiful exists until today…

Nothing changes… The success of small nation-states continues even today. If you look at the World Bank’s list of the richest nations in the world (as measured by GPD per capita at purchasing power parity), you see Luxembourg, Qatar, Macau, Singapore, Norway, Kuwait, Brunei, Switzerland, and Hong Kong. Perhaps Macau and Hong Kong, as parts of China, should not be included, in which case you add the U.S. and the United Arab Emirates (similar nations appear on the International Monetary Fund’s list).

Why is being small beautiful?

In a small state, there is less of a gap between those at the top and bottom, there is more transparency and accountability, it is harder for the state to hide things, there is more monitoring, less waste and more dynamism. Small is flexible, small is competitive — small really is, as economist E.F. Schumacher said, beautiful.

Read the rest here

Small is beautiful because of decentralization. Decentralization promotes a culture of spontaneous diversity, heterogeneity, specialization, tolerance of failure, trial and error, and competition necessary for greater efficiency in the allocation of resources and innovation.

Decentralization thus extrapolates to individual advancement that accrues to, and reflects on the society level.

In short, small is beautiful because it is a bottom up dynamic where commerce or free markets drive real (not statistical) prosperity

Importantly decentralization disperses risks and promotes legal institutions which have mostly been attuned with local customs, traditions and grassroots social interactions.

Decentralization also is an optimum way for people to convert localized knowledge into productive activities.

As the great Austrian economist Friedrich von Hayek wrote: (bold mine)

If we can agree that the economic problem of society is mainly one of rapid adaptation to changes in the particular circumstances of time and place, it would seem to follow that the ultimate decisions must be left to the people who are familiar with these circumstances, who know directly of the relevant changes and of the resources immediately available to meet them. We cannot expect that this problem will be solved by first communicating all this knowledge to a central board which, after integrating all knowledge, issues its orders. We must solve it by some form of decentralization. But this answers only part of our problem. We need decentralization because only thus can we insure that the knowledge of the particular circumstances of time and place will be promptly used. 

In centralized political systems, “small is beautiful” can be seen in the informal economy.

And with the fast advancing information age, the world will eventually evolve towards decentralization. But the transition will not be smooth as the friction from the resistance to change by 20th century based centralized political systems vis-à-vis technology based decentralization have only intensified.

Quote of the Day: The Fed’s enormous power is concentrated

Today, enormous power is concentrated in the hands of the 12-member Federal Open Market Committee, which sets interest rates and regulates the money supply behind closed doors – decisions that are not subject to review or challenge. Retirees can sue if their homes are seized for urban renewal, but not if the Fed’s financial suppression deprives them of a return on their savings

This is from Tufts University legal professor and author Amar Bhidé arguing for a decentralized FED at the Project Syndicate. (hat tip Café Hayek’s Russ Roberts)

Since money is half of almost every transaction, a centrally planned 'politicized' monetary system will have significant influences on the configuration of the political economic system.

Quote of the Day: Liberalism’s trifecta

The industry was liberalism’s trifecta: newspapers, television networks, and the school system. Two are bleeding red ink. The third soon will be, as online education enables students to live at home, take courses online, graduate with accredited degrees, and pay $15,000 in tuition, total. A widely accepted estimate is that half of all American universities will go under over the next five decades. It won’t take anywhere near that long. The no-name private colleges will go under first, Cutbacks in tax funding will complete the procedure. Legislators will figure out that they can fire two-thirds of the faculty and replace them with online lectures and low-paid, untenured professors and graduate students to grade written exams.

All that liberalism will have left is the public school system, K-12. This dinosaur has been caught trapped in the tar pit ever since 1963, when SAT scores peaked. Online education is invading today. The American Federation of Teachers is on the defensive. In 50 years, the suburban schools will be online. Competition will demonstrate that the public school bureaucracies cannot compete.

Liberalism made entrepreneurial decisions on where the future was headed. The World Wide Web is taking the world in a different direction. It is leaving liberalism behind.

Liberals call this process of ideological decentralization “Balkanization.” I call it the break-up of a cartel that can no longer compete on the free market.

This is from Austrian economist Gary North at the lewrockwell.com. Decentralization will likewise erode the 20th century top-down political institutions.

Spielberg-Lucas Fearless Forecast: Movie Industry Will Implode!

I have been constantly saying that the information age will reconfigure almost every aspect of our lives. And much of the social frictions I have been posting here signifies as the angst of the transition from the legacy of the industrial age dynamics of top down, centralized and mass production, mass media and mass market forces to the decentralized, bottom up, highly specialized, niche production, niche media and niche based market forces of the information age.

Movie moguls Steven Spielberg and George Lucas predicts that the movie industry will suffer a disorderly evolution. Hollywood may suffer a meltdown!

Here is David Cohen from the Variety.com (bold mine)

Looking into their crystal ball, George Lucas and Steven Spielberg predicted the imminent arrival of a radically different entertainment landscape, including pricey movie tickets, a vast migration of content to video-on-demand and even programmable dreams.

Speaking on a panel at the USC School of Cinematic Arts, Spielberg and Lucas took a grim view of the future of the majors and predicted theatrical motion pictures will become a niche market.

“They’re  going for the gold,” said Lucas of the studios. “But that isn’t going to work forever. And as a result they’re getting narrower and narrower in their focus. People are going to get tired of it. They’re not going to know how to do anything else.”

Spielberg noted that because so many forms of entertainment are competing for attention, they would rather spend $250 million on a single film than make several personal, quirky projects.

“There’s eventually going to be a big meltdown,” Spielberg said. “There’s going to be an implosion where three or four or maybe even a half-dozen of these mega-budgeted movies go crashing into the ground and that’s going to change the paradigm again.”

This would be the forces of creative destruction at work, which should benefit the movie consumers as well as the industry, who will have to compete to reformat or restructure to suit the desires of the consumers, overtime.

Chart of the Day: 12 technologies will drive our economic future

The Washington Post cites a chart from a study by McKinsey Quarterly:

Most of the aforementioned technologies can be summed as the entwined functionalites of the ongoing revolutions of big data, communications and smart manufacturing. Such technologies are bound to decentralize the global economy that would intensify frictions with the current state of centralized political systems. 

Yet if central bankers and power insatiable politicians have not been pushing the economic system to Hades, I would dwell heavily on the above technologies.

CNN: 3D Printed Assault Weapons Available by End of April

The technology is there and continues to improve, so applications will also continue to expand to cover wide ranges of products, including controversial guns.

Assault weapons from 3-D Printing will be available by the end of April according to this report from CNN (hat tip lewrockwell.com)

Firearms 3D printer Cody Wilson of Defense Distributed and the Wiki Weapon project has been making wave after wave with every one of his statements, updates, videos and blog posts. He’s been making the circles, with an interview with Vice Magazine and now CNN.

His most recent proclamation is will alarm many, bring hope to a few, but leaves us with our heads scratching. Wilson has said that they will have the technology to 3D print a firearm by “the end of April.”

“Well to have a printable gun — it’s my intention to have that done by the end of this month and we’re at the end of March now so it’s my intention to have it done by April,” he said. This would, in theory, prompt a new era in personal firearm manufacturing and a new paradigm for gun control.

“The assumption is one day the technology will become more ubiquitous and widespread,” Wilson said on “The Lead with Jake Tapper.”

“It will fall in price, and materials will be developed in a better place than they are now, so yes, if you were to have one in your home and you have the gun file, you can just click print and have the gun.”

The rate of advance of 3D technology will only render prohibition and other regulatory statutes obsolete. Of course, we expect government eventually to attempt to "regulate" 3D. But again such measures are bound to lag and thus fail.

3D technology in combination with others (mobile computing, nanotech and etc...) will change the way we do things and force us to specialize. A wider adaption of the 3D technology also means the path towards social decentralization.

Social Media in the Shadow of the War on Drugs

In the light of Mexico’s war on drugs, social media has reportedly replaced traditional media as the main source of information

From Juan Carlos Hidalgo of the Cato Institute,

Unfortunately, one of the biggest casualties from the bloodshed that besets Mexico is freedom of the press. Drug cartels have targeted traditional media outlets such as TV stations and newspapers for their coverage of the violence. Mexico is now the most dangerous country to be a journalist. However, a blackout of information about the extent of violence has been avoided because of activity on Facebook pages, blogs, Twitter accounts, and YouTube channels…

Andrés Monroy-Hernández from Microsoft Research presented the findings of his paper “The New War Correspondents: The Rise of Civic Media Curation in Urban Warfare” which shows how Twitter has replaced traditional media in several Mexican cities as the primary source of information about drug violence.

Hmmm. Things have been changing at the margins.

Telecommuting: 10% of US Employees are Home Based

I wrote here and here denoting of how the forces of decentralization, which has been underpinned by the deepening of technology innovation trends, will likely upset on mainstream’s mantra of urbanization. 

Work will increasingly become mobile and move away from fixed time and or location as globalization spreads.  And such dynamic will reconfigure people’s lifestyles.

We are seeing more signs of such dynamic in play through increases in home based employment which now accounts for 10% of US employment.

From the Wall Street Journal Blog, (bold mine)

About one in 10 workers toils at least partly from home now, an emerging trend that could boost the productivity of the entire economy.

The U.S. Census Bureau said in a report Tuesday that some 13 million people, or 9.4% of the working population in 2010, worked at least one day at home per week, compared with just 9.2 million people in 1997, when 7% worked at least partly from home. People working either entirely or partly from home were more likely to be in management and business. Those in computer, engineering and science jobs saw among the biggest shifts home-ward: “Home-based” work in these fields jumped around 70% from 252,000 workers in 2000 to 432,000 workers in 2010. (Home-based workers work exclusively or part of the time from home.) According to Census figures, 5.8 million people or 4.3% of the U.S. workforce worked from home most of the week in 2010 — an increase of about 1.6 million since 2000.

Around the world, advances in technology are making it easier for millions to work from home. But there is much debate over the benefits of telecommuting Yahoo  Chief Executive Marissa Mayer set off a recent round of debate when she ended the company’s work-from-home arrangements.

Public or private projects based on the concept of centralization, such as urbanization, will be faced with greater risks.

Information Age: Individual Job Outsourcing

Outsourcing has been largely thought as mainly company based commercial operations. However in the real world, given today’s deepening of the digital economy or information age, the application of outsourcing has been broadening to include individual operations.

The oxymoronic account  of where a company caught an employee  outsourcing one’s job, from CNN.com, which led to his termination, seems like a manifestation of such snowballing dynamic

After a U.S.-based "critical infrastructure" company discovered in 2012 its computer systems were being accessed from China, its security personnel caught the culprit ultimately responsible: Not a hacker from the Middle Kingdom but one of the company's own employees sitting right at his desk in the United States.

The software developer is simply referred to as "Bob," according to a case study by the U.S. telecommunications firm Verizon Business.

Bob was an "inoffensive and quiet" programmer in his mid-40's, according to his employee profile, with "a relatively long tenure with the company" and "someone you wouldn't look at twice in an elevator."

Those innocuous traits led investigators to initially believe the computer access from China using Bob's credentials was unauthorized -- and that some form of malware was sidestepping strong two-factor authentication that included a token RSA key fob under Bob's name.

Investigators then discovered Bob had "physically FedExed his RSA token to China so that the third-party contractor could log-in under his credentials during the workday," wrote Andrew Valentine, a senior forensic investigator for Verizon.

Bob had hired a programming firm in the northeastern Chinese city of Shenyang to do his work. His helpers half a world away worked overnight on a schedule imitating an average 9-to-5 workday in the United States. He paid them one-fifth of his six-figure salary, according to Verizon.

Some thoughts

Programmer Bob’s offense has really not been about outsourcing but of the unauthorized disclosure of what has been internal corporate affairs to a third party.

In the digital economy or the information age, non-contiguous work requirements enable outsourcing on an international scale. The non-sensitivity to geographic confines means that work can be delegated to a specialty agent wherever access to connectivity is present. This translates to job  decentralization or semi-autonomous jobs or jobs that allows for “home based” work or telecommutation.  I may add that semi-autonomous work may not really be “home based” or static work location but about mobility.

Deepening decentralization of industries and jobs will translate to decentralization of living areas. Thus, the incompatibility of mainstream concept of industrial age “urbanization” with decentralization.

Outsourcing, which contributes to the informal economy, should continue to grow as the world’s economy gravitates towards technology inspired specialization.

Deepening of the Information Age: More Signs of Telecommuting

Why I don’t buy the mainstream’s embrace of the supposed deepening trend of urbanization? Because the past is hardly the future. Technological advances extrapolates to increasing decentralization of social activities. And this covers commercial activities that can be seen from corporate operations. 

Proof?

From Wall Street Journal Blog

With nearly half its employees working from home now, Aetna Inc. is convinced it is saving a good deal of money with no adverse effect on productivity.

A nine-month experiment at Ctrip, China’s largest travel agency, overseen by academic economists at Stanford and Beijing University, suggests Aetna’s experience may not be unique.

Ctrip, was looking to save money on real estate costs and cut turnover. It asked 996 employees in its Shanghai call center if they’d be interested in working at home four days a week. Half were interested, and 252 qualified for the experiment by virtue of having at least six months on the job and broadband access from a quiet corner of their home. Those with birthdays on even days were selected to work at home, those with odd birthdays stayed in the office, making this the sort of random experiment that academics relish.

And as I noted in the past

I would add that increasing specialization will hallmark the knowledge economy. And specialization will diminish the economics of urbanization.

The changing nature of work can be exemplified by the telecommuting jobs, which have been rapidly growing.

These jobs are based on the web, are flexible and are not location sensitive (working from home, or elsewhere).

The trend of web and knowledge based work localization and flexibility will further deepen.

Many Wealthy Chinese Exit China

More accounts of wealthy Chinese reportedly seeking safehaven by emigration.

From CNBC.com 

A new report in China shows that 150,000 Chinese – most of them wealthy – emigrated to other countries in 2011. While that number may not seem high for a country of more than a billion people, the flight of China's richest – and the offshoring of their fortunes – could cost the country jobs and economic growth, according to the study from the Center for China and Globalization and the Beijing Institute of Technology.

"The private economy contributes more than 60 percent of China's GDP and it absorbs a majority of employees. So if private business owners emigrate with their capital, it would mean less investment in the domestic market, so fewer jobs would be created," Wang Huiyao, director of the Center for China and Globalization, told the state-run China Daily today.

The fleeing millionaires mainly made their money in real estate, foreign currency and deposits and stocks, among other fields, according to the report. They are mainly leaving Beijing, Shanghai and coastal provinces such as Zhejiang, Guangdong and Jiangsu.

I guess there could be various personal reasons for these. Some may even be cronies or relatives of Chinese officials who may be trying to protect their wealth

But many of the exiting wealthy class appear to be jumping from the proverbial frying pan to fire.

More from the same article.

China's wealth flight, however, has been America's gain. The United States was the top destination for wealthy Chinese in 2011, according to the report. Canada and Australia came second and third.

The report said that the United States had granted 87,000 permanent resident permits to Chinese nationals in 2011. Of those, 3,340 were approved through special investment visas, which allows wealthy foreigners to apply for American citizenship if they agree to invest more than $500,000 on job-creation projects. The program has become largely Chinese, with more than more than two thirds of all of the visas granted going wealthy citizens of mainland.

Chinese migrants to the US will likely be faced with higher taxes, and the prospects of instability from America’s degenerating fiscal and political conditions

Yet recent developments suggest that there has been a ballooning tension between China’s centralized ‘communist’ government and the fast expanding decentralized forces from the entrepreneurship class. The new leaders seem to represent the status quo fundamentally employing the same Keynesian policies.

Eventually either the Chinese government will adapt political reforms to conform to the changes of the economy or that Chinese government will have to reverse the recent economic reforms. Such transition increases the risks of political instability where perhaps fleeing wealthy Chinese could be a symptom

War on Internet: Internet Freedom Prevails over UN Sponsored Regulations

The United Nations via the International Telecommunication Union has failed in her mission to put a centralized legal kibosh on the internet.

From Forbes.com

For the last two weeks some of the planet’s most oppressive regimes have faced off against some of the most powerful Internet advocates in an effort to rewrite a multilateral communications treaty that, if successful, could have changed the nature of the Internet and altered the way it is governed.

On Thursday night that effort failed, as a US-led block of dissenting countries refused to sign the proposed updates, handing the United Nation’s International Telecommunication Union a humbling defeat.

The United States, which framed its dissent as defending “the open Internet,” was joined by more than 80 other countries, including Australia,Canada, Chile, Costa Rica, the Czech Republic, Denmark, Egypt, Finland, Greece, Italy, Japan, Kenya, the Netherlands, New Zealand, Poland, Portugal, Qatar, Sweden and the United Kingdom. (Some of the non-signers seemed to be seeking to avoid making too overt of a political statement, saying, regrettably that they could not sign because they had to “consult with capital.”)

On Friday, the remaining members of the ITU, which is made up of 193 countries, signed the treaty, known as International Telecommunications Regulations, but the gesture in many ways was hollow.

Like other U.N. agencies, the ITU strives for consensus, and it’s within that consensus that the ITU derives its authority. The ITU can’t force a country to abide by its treaties, but if representatives of all member countries agree to a global telecommunications framework, and subsequently pass laws enforcing the framework, the ITU itself grows stronger.

Dissenting countries led by the US have not really been for defending “open internet”, as the US for instance have pursued various forms of social media censorship (some examples see here here here and more). The difference, I think, is that these supposed “open internet” faction don’t want to be tied up with or submit to a global regulator via such treaty.

They seem to prefer approaching the internet via domestic policies.

The same article seem to give such a hint,

Interpreted as a power grab by the United Nations, the secrecy rang alarm bells. Distrust of the ITU began to approach panic after the contents of more controversial proposals became known. Some of the proposals endorsed by authoritarian countries would have increased censorship, potentially restricted the free flow of information and undermined the voluntary framework that forms the basis of today’s Internet.

In addition, upholding the treaty may also extrapolate to the dilution of power by the opposing bloc to the UN consensus led by authoritarian governments which would be unacceptable to opposition many whom are developed economies.

The good news is that forces of decentralization embodied by the internet continues to sow division on governments. Such factionalism will likely be more pronounced when the next debt crisis surfaces.

Quote of the Day: Every Act of Entrepreneurship is Revolutionary

Every act of entrepreneurship is revolutionary and rooted in the anarchist spirit. It strikes at the heart of the status quo. It dares to be dissatisfied with what is. It imagines something new and better. It brings about unexpected, unapproved, and progressive change by adding a new dimension of experience to how we understand ourselves and how we interact with others.

Without entrepreneurship, history would lack forward motion, our understanding of the uniqueness of our time in this world would be forever undefined, and society itself would atrophy and finally die. With it, every attempt to control and freeze the world faces opposition and long-run failure.

History teaches that those who dare stand in the way of human progress will eventually be run over. Yes, there is plenty of friction and too many victims as we get from here to there. But we will get there, one creative act of disobedience at a time.

This is from the highly articulate publisher and editor Jeffrey A. Tucker of the Laissez Faire Books on the forces of decentralization founded on entrepreneurship.

Third Wave Politics: Secessionist Parties in Spain Gains Political Footing

In the information age, forces of decentralization will function as the key agents of social change.

In the realm of politics, such evolutionary transition will likely be channeled through secessionist movements.

In Spain, the secessionist parties of Catalonia may have just gotten the momentum that could trigger a potential chain of events.

From Bloomberg,

Pro-independence parties in Catalonia won a regional vote, strengthening a drive for a referendum on secession in defiance of Spanish Prime Minister Mariano Rajoy.

Catalan President Artur Mas, who called early elections to force the debate on independence, won 50 of the 135 seats in the regional assembly for his Convergencia i Unio party, down from 62, with 99 percent of the vote counted. The separatist Catalan Republican Left, known as the ERC, more than doubled its seats to 21 from 10. Two smaller parties that also back a plebiscite secured 16 seats.

Rajoy, weakened by recession and speculation that Spain needs a European bailout, says a referendum on secession is unconstitutional. Mas’s losses showed his bid for a mandate backfired, leaving him dependent on anti-austerity separatists to govern Spain’s largest regional economy.

“With a majority, Mas could have negotiated for all kinds of goodies to postpone the referendum but clearly that’s not an option anymore,” Ken Dubin, a political scientist at Carlos III University and IE business school in Madrid. “He was hoping he’d have a stronger hand to negotiate some intermediate status, but his bluff has been called.”

Rajoy’s People’s Party won 19 seats, a gain of one. The Socialists took 20 seats, down from 28.

Mas has pledged a referendum within four years. In contrast, the ERC would be willing to declare independence unilaterally in 2014.

The above developments reminds me of, and appear as gradual confirmation of the predictions of futurist Alvin Toffler as elucidated in his highly prescient 1980 book, The Third Wave (p.317)

National governments, by contrast, find it difficult to customize their policies. Locked into Second Wave political and bureaucratic structures, they find it impossible to treat each region or city, each contending racial, religious, social, sexual or ethnic group differently, let alone treat each citizen as an individual. As conditions diversify, national decision-making remains ignorant of the fast-changing local requirements. If they try to identify these highly localized or specialized needs, they wind up deluged with overdetailed, indigestible data…

In consequence, national governments in Washington, London, Paris or Moscow continue, by and large, to impose uniform, standardized policies designed for a mass society on increasingly divergent and segment publics. Local and individual needs are forgotten or ignored causing the flames of resentment to reach white heat. As de-massification progresses, we can expect separatist or centrifugal forces to intensify dramatically and threaten the unity of many nation-states.

The Third Wave places enormous pressures on the nation-state from below.

It is happening.

Nassim Taleb on AntiFragility: 5 Rules Where Society can Benefit from Volatility

At the Wall Street Journal, my favorite iconoclast Black Swan theorist and author Nassim Nicolas Taleb explains his 5 rules where society can benefit from randomness, volatility or anti-fragility

Definition of fragility and antifragility:

Fragility is the quality of things that are vulnerable to volatility. Take the coffee cup on your desk: It wants peace and quiet because it incurs more harm than benefit from random events. The opposite of fragile, therefore, isn't robust or sturdy or resilient—things with these qualities are simply difficult to break.

To deal with black swans, we instead need things that gain from volatility, variability, stress and disorder. My (admittedly inelegant) term for this crucial quality is "antifragile." The only existing expression remotely close to the concept of antifragility is what we derivatives traders call "long gamma," to describe financial packages that benefit from market volatility. Crucially, both fragility and antifragility are measurable.

As a practical matter, emphasizing antifragility means that our private and public sectors should be able to thrive and improve in the face of disorder. By grasping the mechanisms of antifragility, we can make better decisions without the illusion of being able to predict the next big thing. We can navigate situations in which the unknown predominates and our understanding is limited.

Mr. Taleb’s five rules accompanied by excerpted elucidations (italics mine)

Rule 1: Think of the economy as being more like a cat than a washing machine.

We are victims of the post-Enlightenment view that the world functions like a sophisticated machine, to be understood like a textbook engineering problem and run by wonks. In other words, like a home appliance, not like the human body. If this were so, our institutions would have no self-healing properties and would need someone to run and micromanage them, to protect their safety, because they cannot survive on their own.

By contrast, natural or organic systems are antifragile: They need some dose of disorder in order to develop. Deprive your bones of stress and they become brittle. This denial of the antifragility of living or complex systems is the costliest mistake that we have made in modern times. Stifling natural fluctuations masks real problems, causing the explosions to be both delayed and more intense when they do take place. As with the flammable material accumulating on the forest floor in the absence of forest fires, problems hide in the absence of stressors, and the resulting cumulative harm can take on tragic proportions…

Rule 2: Favor businesses that benefit from their own mistakes, not those whose mistakes percolate into the system.

Some businesses and political systems respond to stress better than others. The airline industry is set up in such a way as to make travel safer after every plane crash. A tragedy leads to the thorough examination and elimination of the cause of the problem. The same thing happens in the restaurant industry, where the quality of your next meal depends on the failure rate in the business—what kills some makes others stronger. Without the high failure rate in the restaurant business, you would be eating Soviet-style cafeteria food for your next meal out.

These industries are antifragile: The collective enterprise benefits from the fragility of the individual components, so nothing fails in vain…

Rule 3: Small is beautiful, but it is also efficient.

Experts in business and government are always talking about economies of scale. They say that increasing the size of projects and institutions brings costs savings. But the "efficient," when too large, isn't so efficient. Size produces visible benefits but also hidden risks; it increases exposure to the probability of large losses. Projects of $100 million seem rational, but they tend to have much higher percentage overruns than projects of, say, $10 million. Great size in itself, when it exceeds a certain threshold, produces fragility and can eradicate all the gains from economies of scale. To see how large things can be fragile, consider the difference between an elephant and a mouse: The former breaks a leg at the slightest fall, while the latter is unharmed by a drop several multiples of its height. This explains why we have so many more mice than elephants…

Rule 4: Trial and error beats academic knowledge.

Things that are antifragile love randomness and uncertainty, which also means—crucially—that they can learn from errors. Tinkering by trial and error has traditionally played a larger role than directed science in Western invention and innovation. Indeed, advances in theoretical science have most often emerged from technological development, which is closely tied to entrepreneurship. Just think of the number of famous college dropouts in the computer industry.

But I don't mean just any version of trial and error. There is a crucial requirement to achieve antifragility: The potential cost of errors needs to remain small; the potential gain should be large. It is the asymmetry between upside and downside that allows antifragile tinkering to benefit from disorder and uncertainty…

Rule 5: Decision makers must have skin in the game.

At no time in the history of humankind have more positions of power been assigned to people who don't take personal risks. But the idea of incentive in capitalism demands some comparable form of disincentive. In the business world, the solution is simple: Bonuses that go to managers whose firms subsequently fail should be clawed back, and there should be additional financial penalties for those who hide risks under the rug. This has an excellent precedent in the practices of the ancients. The Romans forced engineers to sleep under a bridge once it was completed…

Read the rest here

In complex systems or environments, it is a mistake to see the world as operating mechanically like a ‘textbook engineering problem’ where any presumption of knowledge applied through social policies only leads to greater volatility and risks. 

Differently said, social policies that have been averse to change or designed to eliminate change leads to unintended consequences. Economist David Friedman’s take on the mistake of adhering to the change averse "precautionary principle" rhymes with Mr. Taleb’s antifragile concepts.

Also the idea of centralization only concentrates systemic risks and volatility. Whereas decentralization not only distributes and reduces the impact of volatility but also encourages innovation and thus progress.

Bottom line: Randomness, volatility and antifragility is part of human life. Society would benefit more by learning and adapting. Decentralized institutions are more suited to deal with antifragility. Presuming away the reality of change, which has been embraced by populist politics, only defeats the 'feel good' and ‘noble’ intentions of such social policies.

US Post Election Politics: 20 States Petition to Secede

In the Philippines, accusations of cheating typically marks the post-election political environment.

In the US, the recently concluded presidential and national elections has prompted malcontents from 20 states to petitioned the White House to secede.

From the BBC,

More than 100,000 Americans have petitioned the White House to allow their states to secede from the US, after President Barack Obama's re-election.

The appeals were filed on the White House's We the People website.

Most of the 20 states with petitions voted for Republican Mitt Romney.

The US constitution contains no clause allowing states to leave the union. By Monday night the White House had not responded.

In total, more than 20 petitions have been filed. One for Texas has reached the 25,000-signature threshold at which the White House promises a response.

'Blatant abuses'

The last time states officially seceded, the US Civil War followed.

Most of the petitions merely quote the opening line of America's Declaration of Independence from Britain, in which America's founders stated their right to "dissolve the political bands" and form a new nation.

Currently, the most popular petition is from Texas, which voted for Mr Romney by some 15 percentage points more than it did for the Democratic incumbent.

The text complains of "blatant abuses" of Americans' rights

Growing secession movements in the US and in Europe are symptoms of snowballing forces of decentralization, or the paradigm shift to localize and diversify power which have been gnawing at the architectural foundations of the 20th century political establishments.

Yet secession movements could turn out to be bloody as governments typically tend to resist or counteract the prospects of yielding territorial and taxation privileges by the suppression of political dissident by force.

Nevertheless secession movements are signs of grassroots opposition to centralized political power.

As Austrian economics Professor Thomas DiLorenzo duly notes,

Government will never be limited unless the citizens take matters into their own hands by resurrecting the states’ rights mechanisms of nullification, interposition, and secession.