Saturday, December 8, 2018

Weekend Bonus Links

  • The stock market has soared since 2009, and pension fund asset values have risen, again at least on paper. But benefit payments still equaled 7.9% of pension fund assets in 2016. That year, in order to meet the 4.0% standard, U.S. state and local government pension funds would have required more than $3.5 trillion in additional assets. That is a hidden "pension debt" of 21.8% of all of the personal income of everyone in the United States. While this is a back of the envelope estimate, it is similar to the current estimates of about $4 trillion in U.S. state and local government pension debt made by others. Why did this happen? For one thing the level of pension benefit payouts has soared as more and more public employees retire. [Larry Littlefield]
  • I think this is what almost every American has packed in their dark corners. Clothes that will never be worn. Broken things that will never be fixed. Sentimental objects that will never be fondly looked at or ever touched. [Granola Shotgun]
  • The next morning, I rose with the sun and purchased a five-pound bag of potatoes and another of onions. I then dug into a dusty countertop corner for my secret weapons and truest tests: a menacingly hard loaf of stale bread and a butternut squash. I promptly chipped a Yoshikane SLD Wa-Santoku Suminagashi Enju Double Horn ($424)—borrowed from Donald—on the squash. The Zwillings held steady. The affordable Material and Misen knives managed. I wondered if any knife would distinguish itself. Then one slid through a large Idaho potato as through heavy cream. It turned squash into pudding. It was a Swedish stainless-steel santoku made by Ashi Hamono, a small company in Sakai, Japan. It cost $225, but at this point its feats seemed unlikely to be matched. [Vogue]
  • As it happens there is another, much older industry that is in the business of preserving memories, and that takes all of its income in the form of up-front fees while promising services in perpetuity. Cemeteries. In other countries it works differently. The plots are rented rather than sold, and when the family stops paying the remains are evicted. Or the occupancy of the crypt only lasts so long before the bones are removed and piled up somewhere. Here in New York State, however, there is a law on the books that attempts to ensure the preservation of a gravesite in perpetuity. [Larry Littlefield]
  • At the end of the 19th century it was popular to be a founder of a startup cemetery. You'd raise capital from future residents and then make a land purchase and live off the proceeds. And just like the vaporware startups there were plenty of vaporware cemeteries with grand visions that were simply a vehicle to raise capital before disappearing into the Victorian crowd. Pine Lawn raised their initial capital and purchased a plot of land in what eventually became Farmingdale, NY. The way the cemetery was organized eventual residents pre-purchased shares for their plots and in return were promised that they'd receive 50% of the plot sale proceeds as dividends until the cemetery was full. Initial management wasn't the most honest bunch, and refused to pay out dividends to plot-holders. Plot holders sued and the court forced the cemetery to honor their initial obligation, and they've been doing so for the past 116 years. [Oddball Stocks]
  • The correct metaphor for competition isn't a boxing match that knocks out the inefficient firm. The correct metaphor is a slow tide. Inefficient firms must scramble for a bit of high ground but as the tide ebbs and flows they can occasionally catch a breath when their head bobs above the profit line. An inefficient firm can survive for years before it inevitably sinks. The second lesson from The Profit is that management matters and it matters in systematic and fairly easy to replicate ways. If mis-measurement explained productivity differences, Lemonis would not be able to successfully turn firms around. But he can and does. How? One of the first things Lemonis does in almost every episode is get the numbers right so he can calculate which products are selling and which have the highest price-to-cost margin. Concentrate production on high-margin, big sellers. Drop the rest. Simple; but many firms don't know their numbers. Second, in episode after episode, Lemonis cleans up shop. Literally. He cleans the shop floor and gets rid of inventory that isn’t selling. He then arranges the floor to improve process flow (made easier by concentrating production on fewer products). He then creates an inventory system, tracks orders and the inputs needed to create those orders, and takes advantage of costs savings through economies of scale in input purchases. [Isegoria]
  • These productivity differences across producers are not fleeting, either. Regressing a producer's current TFP on its one-year-lagged TFP yields autoregressive coefficients on the order of 0.6 to 0.8. Put simply, some producers seem to have figured out their business (or at least are on their way), while others are woefully lacking. Far more than bragging rights are at stake here: another robust finding in the literature—virtually invariant to country, time period, or industry—is that higher productivity producers are more likely to survive than their less efficient industry competitors. Productivity is quite literally a matter of survival for businesses. [NBER]
  • I think buying Saraf's shares made a lot of sense at the time, even though in hindsight it now doesn't look so great. At the time the thesis was obviously that Solitron was undervalued, and buying back a large block of shares at market price should have been a good deal. I think the real problem is simply that Solitron isn't as good as a business that people thought it would be with Saraf removed. [CoBF]
  • I always wash my model 3 on my back yard and noticed that every time I back out after washing there's a long trail of water about 50' long right on middle of driveway. This is even after the car sitting there for hours. I looked under car and saw it dripping from rear undercarriage. I started searching online and found photos of other model 3's with rear bumpers falling off and composite material breaking apart. I then opened my trunk and poured water around weatherstripping seal and water runs off to the sides and down but most of the water runs behind rear tail lights and and ends up inside on the rear bumper. The rear bumper has edges which act as a wall holding a lot of water. Once it fills or during driving water shoots forward drenching the composite material. This will be a big problem for many during winter when all that water on bumper freezes adding weight and stress to rear bumper. I then drilled a small 5/16" drain hole (hole #1) on center of bumper and poured more water but a single hole was not enough and water still drained off to the composite material. I added two more holes (holes 2&3) close to the first one but no water drained from there so I ended up drilling 2 more (holes 4&5) closer to where bumper meets composite material. One of these last holes (hole #5) ended up being where it drains the best. I did kind of crappy job drilling as drill motor didn't fit under car so I drilled at an angle. I don't know it having those holes will hurt the aerodynamic functionality of car but at least I won't have a bumper full of water. [Tesla Motors Club]
  • Given the import of the rational ignorance concept to the debate on how best to address bad patents, the time is ripe to revisit this discussion. This Article seeks to conduct a similar cost-benefit analysis to the one that Lemley attempted nearly fifteen years ago. In doing so, we employ new and rich sources of data along with sophisticated empirical techniques to form novel, empirically driven estimates of the relationships that Lemley was forced, given the dearth of empirical evidence at his time, to assume in his own analysis. Armed with these new estimates, this Article demonstrates that the savings in future litigation costs associated with giving examiners additional time per application alone more than outweigh the costs of increasing examiner time allocations. Thus, we conclude the opposite of Lemley: society would be better off investing more resources in the Agency to improve patent quality than relying upon ex-post litigation to weed out invalid patents. Given its current level of resources, the Patent Office is not being "rationally ignorant" but, instead, irrationally ignorant. [SSRN]

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