Poor Genii

Apparently a UK charity recently lost £16m (~$32m) in an entrepreneurial misadventure.

Obviously not all charity workers are conmen, some like Age Concern are just incompetent; fact is, it's very hard to know whether charities are run efficiently.

The Charity Navigator site does go some way to alleviating this problem, by analysing financial data and ranking according to the proportion of total donations which go directly toward helping the poor.

Unfortunately analysing costs does not help one understand how much benefit is generated through a charity's work -- it may have high admin costs, but it may also be more savvy at allocating funds to those who really need it.

Even if a charity is very efficient, it may in fact do as much harm as good.

Charities can attract those borderline needy, who might actually be able to support themselves with a bit of hard work and diligence. Therefore they may suck people into dependency and out of self sufficiency. Charities can also do untold damage to well functioning markets, for example crowding out existing for-profit businesses which supply a portion of the needy with goods and services.

Such crowding out is less likely in developed countries, because the needy are generally those who find it difficult to function in society (e.g. the mentally ill) and therefore rarely participate in markets anyway. In the developing world, crowding out can have a bigger effect, because the needy are nevertheless often fully involved in society or at least fully capable of involvement.

Mr. Yunus has gone some way to circumvent these problems.

Mr. Yunus founded the Grameen Bank which focuses on lending money to poor people. It is a for-profit, self sustaining organisation. Micro-finance is a great innovation in itself, but the real slam-dunk idea is much simpler.

The Grameen Bank pulls the poor out of the cracks between the meshes of markets which sustain us all, by supplying them a product. It welcomes the poor back into into a respectable, self-sustainable life.

[But, why stop at microfinance? The single biggest market for all sorts of goods and services in Indonesia (the poor, 40 million people and rising) is still largely untapped.]

Social capitalism may be the way to improve the lot of the tired, hungry and wretched, because it helps unlock the genius of the poor themselves.

Charitable Black Holes

Charitable organisations (charities, governments) help those that fall down through the cracks found between the meshes of markets which sustain most of us in our daily lives.

The problem found when charitable organisations work in these cracks is that there is a strict dichotomy between those with the needs (the poor) and those with the means of need fulfillment (the donors).

Normally those with needs also possess means of fulfillment. For example, if I feel in need of a holiday, I can fulfill that need by booking a ticket to Manado; if I feel hungry I will order a Chinese or Italian meal, and so on. If a poor housewife in Jakarta needs to pay hospital fees she may not have the wherewithal to fulfill that need.

I, as a well-off person (by some standards) could fulfill her need, but have no idea of the desperation she may be in. Even if she stopped me, explained her situation and asked me to help; I wouldn't really know whether she is for real or whether she is just a good con-artist with a villa up in Punjak Pass.

Charities may have a better idea, but they are merely middlemen. The donors are still separated by a firewall from the needy. I may donate money to a charity, but I have no idea what good my donation is doing. Generally, all I have to go on is a hailstorm of marketing which the best charities diligently provide and indulge their most important donors with (maybe the charity's directors are just suited con-artists with a good taste in BMWs and villas in Punjak pass). Contrast that to when I invest in a company, I need only to glance at how much the stock price has gained or lost since I purchased.

The needy live in the economics version of a black hole.

Meta Evolution

For quite a while I have been wondering whether evolution itself evolves, and how it might evolve.

Evolution is a way for lineages of organisms to adapt to their environments and search for better solutions to the problems which they encounter.

[Plants have found the golden ratio for example, which mathematically maximises the amount of sunlight they are exposed to. And needless to say most animals are mathematical and engineering feats of excellence in their own rights]

I also wonder whether organisms search for these solutions differently, and whether slowly but surely their evolutionary searches improve.

I read recently (Climbing Mount Improbable, Richard Dawkins) that there are areas of evolutionary search which are restricted by organisms. I.e. parts of search space are excluded a priori by the organism, because those parts would probably lead to unfruitful findings. E.g. mammals more often than not, do not evolve asymmetrical features, rather they evolve in a symmetrical fashion.

That idea is fascinating. Organisms contain information which tells them where it's best not to bother looking for good solutions to their problems, thereby focusing on areas where more fruitful solutions can be found.

I wonder how these evolution restrictions are found? And whether there is any fundamental rhyme or reason behind them?

Blossom

Meritocracy in Economics

In general social sciences have less of a tendency to show characteristics of a meritocracy than the natural sciences. When a physicist puts up a great explanatory experiment or a new formula it may take some time until it is finally accepted in he research community but in the end it will be very difficult for anyone to refuse the new wisdom. Economics knowledge on the other is much more of a social product, which is born out of the interaction and consensus building of the top economists who happen to have their hands or their friends hands on what gets published and therefore on how scientific carreers become possible and what areas of research are important. Indeed in the field of economics it is much more important to be socially exposed to the consensus building (and at times consensus destroying) community of top researchers than in other disciplines.
I think that it is difficult to find another profession where the ratio of professors teaching at the top 20 research universities, who have also earned their PhD exactly from one of these top 20 research universities is as high as in economics. Not necessarily a sign of meritocracy in action.... But after all yes with hard work one can achieve everything, probably even in economics...

By this guy posted here.

The Largest Muslim Nation

I read it again and again.

Let me make this clear! Indonesia is NOT a Muslim country! And for good reason.

If Indonesia was a Muslim country, it wouldn't be Indonesia anymore, rather it would be called Sumava or Javatra (yeh, I know it's not quite as simple as that, but you get the point).

The founding fathers were a lot of things, but they were NOT stupid.

If Indonesia ever became a "Muslim" country it would cease to exist, evaporating almost instantaneously.

[What is a "Muslim" country anyway? Cak Nur famously said that the *USA* was closer to being an ideal Muslim society than most (every?) society which is known as Muslim. Something to ponder for all those who get worked up about Bintang Zero (0% alcohol) and Playboy Indonesia (0% flesh).]

Truly Inspiring

BHAKTI LUHUR

Disabled people are not sick.

"When you think other people are stupid"

"When you think other people are stupid it is not a good quality"

-- Jose Mourinho on Sir Alex Ferguson

“Nobody is suffering more than the Palestinian people.”

“Nobody is suffering more than the Palestinian people.”

-- Barack Obama

Unfortunately later his spokesman had to backtrack (due to the US media outrage) [link].

How could any sane person disagree with that quote??

Agreeing on shared principles is a way to end the problems in conflicts.

There isn't a hope in hell of resolution when you cannot say something so obvious, true and simple.

Poisoning Google

Having a high ranking on Google can get your website lots of visitors and most importantly, make millions dollars.

People use Google because distills the best of the web for any topic you pick out of your head. When I first used Google I experienced one of those spine tingling moments where technology comes closest to pure magic - the best of the Internet was /finally/ at my finger tips!

Google's search results have degraded somewhat from the early days. Search engine optimisers (SEOs) have started to work out what makes Google tick and have crafted webs of websites within the web, designed make their websites /look/ plastic-surgery-super-model-attractive to the Google's search spiders, unfortunately they read like super-high-dumb-bimbos.

This upshot is that Google finds it difficult to differentiate between those websites which users will genuinely find interesting and those which it's search engine believes is useful for the user.

This, as you can imagine is a major headache for Google, the whole point of Google is that it filters out the spam, marketing, ad driven websites and only leaves the truly useful ones for you to browse through. In fact if Google couldn't filter out the dross from the genuine article it would lose most of its competitive advantage.

Google of course has been taking evasive action and has been stamping out on such "black hat" (from their view) SEO operations. They even have a blog up and run conferences specifically aiming to coax SEOs into more cooperative behaviour; they would like to convince SEOs that it's impossible to use covert methods to boost your ranking, and that user focused websites are are the only way to go.

Fundamentally Google is wrong (however they obviously have enough cash to make it complicated (and expensive) to use covert methods successfully).

Google are continually trying to refine a mechanism which will rank websites higher if (and only if) webmasters create better content for Internet users; i.e. there's no point trying to trick the search engine into it giving higher rankings, it will spot your tricks, and maybe even knock you off the ranking completely.

Economists have long known that it is always possible to manipulate all but the most simple mechanisms. I.e. it will always be possible for webmasters to undermine Google's endeavors to make sense of the web.

Does that mean you should sell or even short your Google stock anytime soon?

Probably not. Google has a lot of cash, and has been sinking wads of it into refining results in order to make successful hoodwinks very difficult (and expensive).

The problem for Google is: the better the quality of its results, the more users trust it; which drives up the value of those top ranked search positions, making it more temping for smart people to enter the SEO industry and create search engine optimisation algorithms which can systematically outfox Google and stay one step ahead.

[This article was part of my inspiration for this post]

North Korean Diplomat's Kids

North Korean diplomat's aren't sending their kids back home, going against orders from their supreme leader.

Apparently, only the most loyal to Kim get to be foreign diplomats, but even they seem to treasure their families' new found freedom over possibly terrible retribution if they ever get home.

North Korea is by all accounts a truly hellish regime; how long would it last if the freedom of movement was commonly recognised?