Startups are getting smaller

Startups today are almost half the size than they were a decade ago. It seems that a lot of the collaborative tools that have emerged over the last year help productivity so you can do more work with less employees. And I don’t think its just true for startups, I know at work we’re doing a lot of work with just 3 people in the Digital Media department. Do you think this study accounts for the start ups and open source projects that pioneered the services that make this possible?

Start-ups are now being launched with an average of 4.9 employees, down from 7.5 in the 1990s, according to a recent Kauffman Foundation study. In 2009, new independent businesses created a total of 2.3 million jobs, more than 700,000 fewer jobs than the annual average through 2008, the study found.

HT: With New Technology, Start-Ups Go Lean

Timeless career advice

Russ Roberts has good advice for anyone who wants to earn a decent living.  

You want negotiating power? Get educated. Get a skill. What keeps wages up in a world of 7% unionization in the private sector is that I have alternatives. So stay in school and study something serious that has value alongside whatever else you’re interested in. Or study something interesting that has little market value. But if you do that, don’t complain about your low salary and lack of a union.

Regulatory Capture v. the Nirvana Fallacy

This is a good piece that uses the BP Oil Spill and the Net Neutrality debate to illustrate what "Regulatory Capture" means.  It's a term I've heard before but this served to clarify it quite a bit.

The [so-called] liberals’ fury at the President is almost as astounding as their outrage over the discovery that oil companies and their regulators might have grown too cozy. In economic literature, this behavior is known as “regulatory capture,” and the current political irony is that this is a long-time conservative critique of the regulatory state….

What the Oil Spill Really Says About Net Neutrality: Regulatory Capture v. the Nirvana Fallacy

Dichter: A critique of microfinance

Sometimes when you have a hammer, everything looks like a nail. Thomas Dichter has a critique of the overhype of microcredit. Picked up via BoingBoing and Futurismic.

Yet microcredit is an almost perfect case of a phenomenon that has come
to characterize much of development assistance – a widening gap between
reality and propaganda. For while the promise of microcredit is
irresistible – help the poor out of poverty using their own
entrepreneurial energies, and in the process get our investment back –
the hoped for poverty reduction impact of microcredit remains elusive.

Inequality Debate

One of my favorit bloggers from Cafe Hayek is having a “back-and-forth on inequality”  at the Wall Street Journal Econoblog.  Is the “growing” inqueality really a problem or threat to our society.  I’m not convinced, and I think its usually misused as an umbrella for other societal problems (ie inequality of opportunity, which is different).  See also “Is there really an income gap?“.

Is inequality a serious social problem? Everyone seems
to think so. Heather, you conjure up the same frightening image that is
constantly referenced in media accounts of government data — an elite
slice at the top getting all the gains while the rest of us get crumbs.
The middle class is being hollowed out; we’re becoming a nation of
haves and have-nots.

But the data you cite (and the data cited relentlessly
by those who would use inequality as an engine for social change) mask
what is really going on.

Is there really an income gap?

Cafe Hayek rightly takes an AP reporter to task for not questioning a recent study that found “Rich-Poor Income Gap Growing“. So while it sounds that inflation adjusted wages increased across the board, ie the income distribution (if you can think of it as a bell-shaped normal distribution) moved to the right. Which is good, people overall are wealthier. But it seems the study focused on the range between the highest and the lowest, which is less meaningful. It only tell you that your distribution got wider, not much more than that and certainly very little about overall wealth in your population.

This is fake analysis. It’s comparing two snapshots over time and
pretending that the people in the snapshots are the same people. The
implication is that if you were a poor family in 1980, you barely got
ahead while the rich families, turbo-charged ahead of everyone else and
left them in the dust.

Who sets prices?

Have you heard people like Bill O’Reilly or government officials, or wondered yourself, how markets set prices? For things like, o say oil and gas. Read Prices as the Result of Human Action but Not of Human Design. While it’d be nice to be able to blame evil oil corporations for profiteering from high prices, the actual price is a result of complex interactions. It’s a lesson worth heeding before we try to scapegoat people for “price gouging”.

The price is the result of a wide, deep interaction of many buyers and
many sellers, each bargaining in light of their own unique knowledge of
time, place, and circumstance. (My apologies to Hayek’s ghost for
stealing his phrase.) The same is true of oil prices and gasoline
prices.