Danny Crichton

I just finished reading this short interview with Cullen Roche, who has some out-of-mainstream views on current monetary economics. One of his major points concerns the importance of heterodox economics to the current discussion about the global financial system: "Many of the heterodox economists are overlooked though some take extreme political positions which explains why the mainstream shuns them."

This is an unfortunate state of affairs. Most economics departments are still filled with professors trained in the neoclassical economic approach to the economy, which is by far the reigning paradigm in the field. The rigorous exclusion of alternative theorists in economics is, in my humble view, one of the major reasons that few predicted the financial developments of the last year. The only area where some have gotten through is in behavioral economics, although even this sub-field certainly takes neoclassical economics as its core paradigm.

Unfortunately, economics, like venture capital and finance, is an imprecise science. There are techniques and tools that allow us to reduce complex phenomenon into its constituent parts, but it can be difficult to understand the interaction of these different variables. Economics is less mathematical in real life, and far more human. People follow others, get excited, get depressed, and just do irrational things. Unfortunately, I feel that we are going the wrong direction in academic disciplines of guaranteeing a plurality of intellectual viewports.

One of the advantages that Silicon Valley has over other innovation regions is the sheer number of start-ups that are in existence. We have an amazing level of diversity in almost every space, and if a particular approach is not around, entrepreneurs have an opportunity to fill it and potentially have a lucrative exit. In fact, some of the most important corporations here developed from doing something the opposite of

Evgeny Morozov remains my favorite critic of technology writing today. His book, Net Effect, is still the gold standard for criticism of Web 2.0 technologies, and the "techno-optimism" that pervades Silicon Valley. One of my largest concerns in the world today is that we have started to frame all problems in terms of technology - rather than in terms of humans, or politics, or really anything else. TED Talks are probably the largest purveyor of that notion today, and its ideology has become one of the main frameworks for thinking about the world today.

Morozov just wrote one of the most damning critiques I have read about this entire ecosystem. Everyone should read this article. Period, full stop Think critically about it, and then start to look at the world around us. I realize that not everyone will read the article, so I picked my top 10 favorite attack lines to summarize it.

The book review focuses mainly on Parag Khanna and his attempt to push his "Hybrid Reality."

Only the rare reader would finish this piece of digito-futuristic nonsense unconvinced that technology is—to borrow a term of art from the philosopher Harry Frankfurt—bullshit.

Describing Khanna's approach:

All of these insights are expressed in linguistic constructions of such absurdity and superficiality (“a world of ever-shifting (d)alliances,” “peer-to-peer micromanufacturing marketplace”) that Niall Ferguson’s “Chimerica” looks elegant and illuminating by comparison.

Summarizing the author's work:

Khanna’s contempt for democracy and human rights aside, he is simply an intellectual impostor, emitting such lethal doses of banalities, inanities, and generalizations that his books ought to carry advisory notices.

On Khanna's Hybrid Reality Institute, which can help companies handle the Singularity:

So far the firm’s main accomplishment seems to be convincing the TED Conference

Let's get philosophical for a second. What is reality? This is an on-going area of debate, dealing with human perception, reasoning and verification. When we see something, is it just us, or is it in the "real world"? Since none of us can inhabit another's mind, it is impossible for us to truly understand what another person perceives.

Today, there are increasingly visible fragmented realities. Different people can have radically dissimilar notions of the world, from science to personal values. This has been true forever -- in the 1500s for instance, members of the Aztec civilization had different realities than Europeans did. Yet, there was little interaction between these disparate groups, and these realities rarely clashed (of course, they eventually would, leading to the history of colonialism and imperialism of the past few centuries).

Due to the power of the internet and mass media, there has been a blending of realities to create a sort of global norm, while simultaneously, there has been a strengthening of alternative realities. Pop culture from Hollywood is blasted throughout the world building connections between cultures and their underlying realities. At times, the power of this global culture can seem inescapable -- there are even KFCs in Mecca these days.

Yet, some realities seem to be hunkering down, fighting off this global synchronization. We got to witness this dynamic the past weekend with the comments from Congressman Akin in Missouri regarding "legitimate rape." That phrase, while deeply disturbing, was hardly the worst part of his language. Akin also intimated his view that women have the ability to willingly abort fetuses on a lark. That is his reality.

There continue to be different realities in this country, but generally, they are compatible with each other. Different religions, ethnicities, and politics generally get

I have now added a new theme for mobile. If you are using an iPhone or Android phone, you should be automatically converted to a far more pleasing single-column layout. If there are any issues, please send me an email.

Last year, I was working at Google on Google+, and the outlook was grim. There were scores of editorials and blog posts discussing the imminent downfall of the search giant. The issue revolved around "social" -- and the anti-social nature of Google's technology. Google was going to fall to other search engines and Facebook or Quora as people started asking their friends for searches. Furthermore, without social data, Google's search engine wouldn't provide the personalized recommendations that consumers would soon demand, making Google's vaunted search algorithms useless.

Fast-forward to today. The doom is now directed toward Facebook over the issue of monetization. This week, Facebook and particularly Zynga were hammered for failing to meet market expectations, begetting a whole new debate over the actual utility of social.

These ebbs and flows in news coverage, particularly in tech journalism, are commonplace. But, in this case, careful PR management of Google was just as much to blame as the vanities of the press.

The high water mark for the coming Google apocalypse came on March 22, 2012 in a lengthy Gizmodo piece by Matt Honan called "The Case Against Google." In it, he takes the company to task for the kerfuffles related to privacy, and also zeroed in on Google's social problem. This piece generated a lot of attention, and the mainstream press began writing similar pieces as well. The coming death of Google seemed almost imminent.

Yet, less than two weeks later, the narrative would suddenly change on April 4 with the public unveiling of Google's Project Glass, their take on the classic imagined design of the augmented reality glasses. The announcement created a press storm and excitement like nothing that Google had really done in some time, capturing the imagination of readers in a way that

In the last few years, there has been a growing criticism of the high cost and low impact of contemporary higher education. On the micro-level, individuals like Peter Thiel have devoted significant resources to creating alternative pathways to traditional higher education institutions, while on the macro-level, there is stronger oversight by Congress and politicians regarding the value of education today.

On a holistic level, the idea that "everyone should go to college" doesn't make sense. This simplistic refrain fails to consider the individual needs of a diverse population, as well as the actual economic needs of the marketplace. While education most certainly should not be reserved for elites, the logical opposite is not necessarily better.

All this debate about costs though has raised the question: how should you think about investing in further education? Some emphasize elements like quality of living/career, happiness or personal interest as reasons to continue being educated, but economists take a much more utilitarian approach to the question. Instead of focusing on soft qualities, economists (using the Human Capital model) remove the distinction between a financial investment and further education. In other words, the same thought process that guides our decisions with regards to stocks or bonds, for instance, should also be applied to higher education. In summary, we should use the present value of all future gains on income and compare this to the total economic cost of further education.

This process though has some peculiarities, and is the subject of this post.

The Model

What is the cost of further education? This simple question is actually quite complex to answer, so let's start simply and go from there.

The basic human capital model for education is as follows. The cost of education is the price of tuition plus the opportunity cost

Policymakers across the world desperately desire to increase the levels of entrepreneurship within their borders. Whether it is the United States increasing funds for STEM education in the Educate to Innovate program, the extensive programs for new business formation in South Korea, or building one of the most well-endowed science and technology universities in Saudi Arabia (KAUST), governments are putting new venture formation, entrepreneurs, and science and technology on an ever greater pedestal. They are the panacea to all of our economic problems.

Despite the grand visions of politicians, few policymakers have successfully guided their economies to reach this entrepreneurial target. Saudi Arabia is hardly a paragon of innovation today, despite KAUST's existence for the past few years. The Research Triangle in North Carolina, while not a failure, has never reached its full potential to become a major innovation hub. Today, the only region that looks promising is New York City, where a start-up ecosystem has grown in the ashes of the Wall Street financial collapse and the city government is devoting significant resources to grow and sustain a technical workforce.

Why is it so difficult to build these kinds of regions? I can think of a couple of answers:

• Policymakers aren't entrepreneurs.
  This not only means that it is difficult to build good policies, but it also means that the implementation of the policies can be extraordinarily hard as well.
• Policy often lacks focus.
  I don't believe that building an entrepreneurial region is hard, but what is your price? It's not just about money here, but also attention and time. Are you willing to change every policy (labor law, patents, taxes, etc.) to support such an environment, or do such changes get mired in politics?
• Policy often lacks geographic focus.
  Most entrepreneurship happens in very well-defined regions. In the

BusinessWeek just wrote a short piece on the rise of state capitalism, and how governments are not completely naive when it comes to generating innovative industries. The article gives several examples of countries that have successfully developed companies, including Brazil with Embraer and Singapore with several of its research companies. What's exciting about this story is that the free-market capitalism press is beginning to write about state capitalism without the vitriol seen in the past few decades.

Honestly, we are starting to see the small cracks in the so-called "Washington Consensus" that has dominated development approaches for the past three decades. That Consensus entails privatization of state-owned properties, deregulation, and policy reforms like taxes to spur investment and create a stronger free-market environment for growth. The problem with the Washington Consensus, of course, is that it has been an unmitigated failure in pretty much any country in which it has been applied to.

State capitalism, development states, and other names all refer to one approach to development: namely, the use of government as a coordinating force in the economy. Poor countries that wish to grow are stymied by the "all-or-nothing" problem (my term for it) -- how do you build multiple companies and sectors of the economy in synchronicity without strong private investment (since no money exists to invest)? The free market is great at coordination in relatively developed markets today, where innovation and creative destruction build new industries to replace old ones. It is less useful in countries that have few industries and need long-term development on the order of decades. There is little private capital that will support that investment horizon.

State capitalism is the theoretical approach that the Asian tigers and Japan embraced to develop throughout the latter half of the 20th century.