Another reason I study Chinese

Well, it's not high on the list of reasons why, but it makes more sense to others than the joy of staring at the hordes passing by the Starbucks at Wang Fu Jing. The following an excerpt from a transcript (thanks to Whitney) of a Charlie Munger talk at USCL

Another example of not thinking through the consequences of the consequences is the standard reaction in economics to Ricardo’s law of comparative advantage giving benefit on both sides of trade. Ricardo came up with a wonderful, non-obvious explanation that was so powerful that people were charmed with it, and they still are, because it’s a very useful idea. Everybody in economics understands that comparative advantage is a big deal, when one considers first order advantages in trade from the Ricardo effect. But suppose you’ve got a very talented ethnic group, like the Chinese, and they’re very poor and backward, and you’re an advanced nation, and you create free trade with China, and it goes on for a long time.

Now let’s follow and second and third order consequences: You are more prosperous than you would have been if you hadn’t traded with China in terms of average well-being in the United States, right? Ricardo proved it. But which nation is going to be growing faster in economic terms? It’s obviously China. They’re absorbing all the modern technology of the world through this great facilitator in free trade, and, like the Asian Tigers have proved, they will get ahead fast. Look at Hong Kong. Look at Taiwan. Look at early Japan. So, you start in a place where you’ve got a weak nation of backward peasants, a billion and a quarter of them, and in the end they’re going to be a much bigger, stronger nation than you are, maybe even having more and better atomic bombs. Well, Ricardo did not prove that that’s a wonderful outcome for the former leading nation. He didn’t try to determine second order and higher order effects.

If you try and talk like this to an economics professor, and I’ve done this three times, they shrink in horror and offense because they don’t like this kind of talk. It really gums up this nice discipline of theirs, which is so much simpler when you ignore second and third order consequences.

The best answer I ever got on that subject – in three tries – was from George Schultz. He said, “Charlie, the way I figure it is if we stop trading with China, the other advanced nations will do it anyway, and we wouldn’t stop the ascent of China compared to us, and we’d lose the Ricardo-diagnosed advantages of trade,” which is obviously correct. And I said, “Well George, you’ve just invented a new form of the tragedy of the commons. You’re locked in this system and you can’t fix it. You’re going to go to a tragic hell in a handbasket, if going to hell involves being once the great leader of the world and finally going to the shallows in terms of leadership.” And he said, “Charlie, I do not want to think about this.” I think he’s wise. He’s even older than I am, and maybe I should learn from him.

Makes sense to me.

Movie: Eternal Sunshine of the Spotless Mind

We saw Eternal Sunshine of the Spotless Mind last night (finally) and thought it was very good.

I think the most moving scene was when Jim Carrey and Kate Winslet just broke into the abandoned oceanfront house, the same day they had just met at a beach party. The contrast between their characters manifests itself with Carrey's decision to return to the beach party, "running from his humiliation." At that point the surf is surrounding the house and the rafters are collapsing, indications that this last memory of Winslet are being erased. He begins to share with Winslet that her offhanded comment, "just go," was belittling to him, and that plus his discomfort with illegally entering a stranger's home caused his snap decision to leave. Their final kiss in the scene is made more poignant by his admission that he always regretted his decision to run, and that this last, fading memory would serve as their final goodbye.

I liked the imagery of the Lacuna technicians chasing Jim Carrey's consciousness around as a little dot on a brain scan. It's probably not very accurate as memories are probably big clouds of dots, but consciousness feels like a single dot.

Bezos on quarterly retreats

Watching Bezos interview on Charlie Rose (from Kindle launch on Nov 19, 2007) he talks about his retreat:

Every quarter Bezos takes 2-3 days, completely alone, isolated from family and friends, no phones or interruptions. “With a little bit of isolation, I find I get more creative.” He’ll think, reflect, surf the Internet, see what people are doing, what hobbyists and hackers are doing (things on cutting edge). Then he’ll write several 2-3 page memos – either to himself (wakes up next day and decides they’re worthless) or to others. Once a quarter is the right “Metronome.” Come up with principles, themes, even tactical inventions. Bring back to the office and socialize with broader executive team. At end of process, he’s not sure if he really invented anything or not. Result of having a bunch of smart people, because you get all t heir criticism and suggestions.

This is similar to Bill Gates’s practice of going away occasionally for several weeks, taking a stack of books.

He also mentioned Blue Origin's company theme: "Gradatim Ferociter" (Step by Step, Courageously). Hokey, but it captures the engineering/MIT/Edison ethos.

Comments on Scotch from JoeP

here's a somewhat simple way of thinking about scotch. there are blends and there are single malts. blends tend to have a more balanced taste -- that makes them popular and well liked and that is kind of the point of blending. single malts have a more distinctive character and tend to vary regionally. the older, more expensive stuff tends to be more smooth and complex, while younger scotches tend to me more brash and less sophisticated. there is also a trend now towards casking in oak barrels used for sherry, port, and such, making them kind of subltly "flavored." i mostly look down on this trend. anyway, in my simple model, you can further divide single malts into highland malts and Islay malts. the most popular highland malts are the best-selling (in the u.s.) glenlivet, glenfiddich (the two best selling in the us), and macallan. although the older more expensive stuff can be quite tasty, i am a big fan of Islay scotches, which are distilled on an island dominated by peat bogs that conveys a smokey taste. the most popular islay scotches are laphroig and lagavulin. another very nice scotch is talisker, from the isle of sky. kind of in-between islay and highland. if i was getting steve a bottle, keeping in mine my bias towards my own personal tastes, i would get him lagavulin 16 ($65-95) or talisker. you can even find christmas-y gift boxes that come with cute little glasses -- i know i've seen talisker sold in this fashion.