Thursday, May 31, 2012

A map of the free and non-free countries of the world

Here is the 2012 world map from Freedom House showing the free, partly free, and non-free countries of the world. The first thing that strikes me is how freedom or lack thereof is largely contiguous. Europe and the Americas tend to be free; Asia and Africa tend not to be free. Also, in general, free countries tend to be wealthier than non-free countries. (India is a notable exception!)

The evidence suggests that these are not coincidences. First, as Fareed Zakaria points out in The Future of Freedom, when a country becomes a democracy its per-capita GDP largely determines whether it will remain a democracy or revert back to dictatorship.

Second, historically, ideas about both political freedom (John Locke) and free-market capitalism (Adam Smith) came from Great Britain. The map below is largely a map of the influence of Great Britain and later the United States. The ideas about freedom, democracy, and capitalism spread from Great Britain to Western Europe and British colonies around the world. You can see below that the former British colonies of the United States, Canada, Australia, New Zealand, India, Botswana, and South Africa are all green, indicating that they are free countries. The United States in turn has influenced the Americas (the Monroe Doctrine and the Cold War), Western Europe (the Cold War), Japan (we effectively wrote their constitution after World War II), South Korea (the Cold War), and Taiwan (the Cold War). At the southern tip of Africa, South Africa and Botswana were both British colonies, and Namibia was previously controlled by South Africa. All three are green, indicating freedom.

I also find it interesting to see how the number of free countries has changed during my lifetime.

1972: Free - 29%, Partly Free - 25%, Not Free - 46%
2012: Free - 45%, Partly Free - 31%, Not Free - 24%

Tuesday, May 29, 2012

S&P/Case-Shiller national home price index falls again

In the first quarter of 2012, the S&P/Case-Shiller national home price index fell 1.9% year-over-year:
Data through March 2012, released today by S&P Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended the first quarter of 2012 at new post-crisis lows. The national composite fell by 2.0% in the first quarter of 2012 and was down 1.9% versus the first quarter of 2011. The 10- and 20-City Composites posted respective annual returns of -2.8% and -2.6% in March 2012. Month-over-month, their changes were minimal; average home prices in the 10-City Composite fell by 0.1% compared to February and the 20-City remained basically unchanged in March over February. However, with these latest data, all three composites still posted their lowest levels since the housing crisis began in mid-2006. ...

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, posted a 1.9% decline in the first quarter of 2012 over the first quarter of 2011.
Unfortunately, crappy journalists at several different news organizations keep emphasizing the 20-city numbers instead of the national numbers. Why? Why would anyone think that an index that measures a random selection of 20 cities deserves more emphasis than an index that covers the overall country? (Note: The S&P/Case-Shiller national home price index really only measures 70% of the country, but that's still way more than just 20 cities.)

Friday, May 25, 2012

China criticizes U.S. human rights

Personally, I think constructive criticism of America's human rights record should be welcomed. In the case of the Human Rights Record of the United States in 2011, China backs up their criticisms with plenty of references. Here's a sampling from Section 2, "On Civil and Political Rights":
The U.S. imposes fairly strict restriction on the Internet, and its approach "remains full of problems and contradictions." (The website of the Foreign Policy magazine, February 17, 2011) ...

The U.S. Patriot Act and Homeland Security Act both have clauses about monitoring the Internet, giving the government or law enforcement organizations power to monitor and block any Internet content "harmful to national security." Protecting Cyberspace as a National Asset Act of 2010 stipulates that the federal government has "absolute power" to shut down the Internet under a declared national emergency. According to a report by British newspaper the Guardian dated March 17, 2011, the U.S. military is developing software that will let it secretly manipulate social media sites by using fake online personas, and will allow the U.S. military to create a false consensus in online conversations, crowd out unwelcome opinions and smother commentaries or reports that do not correspond with its own objectives. The project aims to control and restrict free speech on the Internet (The Guardian, March 17, 2011). According to a commentary by the Voice of Russia on February 2, 2012, a subsidiary under the U.S. government' s security agency employed several hundred analysts, who were tasked with monitoring private archives of foreign Internet users in a secret way, and were able to censor as many as five million microblogging posts. The U.S. Department of Homeland Security routinely searched key words like "illegal immigrants," "virus," "death," and "burst out" on Twitter with fake accounts and then secretly traced the Internet users who forwarded related content. According to a report by the Globe and Mail on January 30, 2012, Leigh Van Bryan, a British, prior to his flight to the U.S., wrote in a Twitter post, "Free this week, for quick gossip/prep before I go and destroy America?" As a result, Bryan along with a friend were handcuffed and put in lockdown with suspected drug smugglers for 12 hours by armed guards after landing in Los Angeles International Airport, just like "terrorists" . Among many angered by the incident in Britain, an Internet user posted a comment, "What' s worse, being arrested for an innocent tweet, or the fact that the American Secret Service monitors every electronic message in the world?" (The Daily Mail, January 31, 2012) ...
Note that although the report misses this nuance, Leigh Van Bryan, a tourist, used the word "destroy" as British slang for "party", but U.S. officials interpreted the word literally. He was jailed and deported because of this literal interpretation. The creepy thing about this incident is that it suggests the N.S.A. is reading everyone's tweets.
The U.S. continued to violate the freedom of its citizens in the name of boosting security levels (The Washington Post, January 14, 2012). The Electronic Frontier Foundation in 2011 released a report, "Patterns of Misconduct: FBI intelligence violations from 2001-2008," which reveals that domestic political intelligence apparatus spearheaded by the Federal Bureau of Investigation, continues to systematically violate the rights of American citizens and legal residents. The report shows that the actual number of violations that may have occurred from 2001 to 2008 could approach 40,000 possible violations of law, Executive Order, or other regulations governing intelligence investigations. The FBI issued some 200,000 requests and that almost 60 percent were for investigations of U.S. citizens and legal residents ( The New York Times reported on October 20, 2011, that the FBI has collected information about religious, ethnic and national-origin characteristics of American communities (The New York Times, October 20, 2011). According to a Washington Post commentary dated January 14, 2012, the U.S. government can use "national security letters" to demand, without probable cause, that organizations turn over information on citizens' finances, communications and associations, and order searches of everything from business documents to library records. The U.S. government can use GPS devices to monitor every move of targeted citizens without securing any court order or review (The Washington Post, January 14, 2012). ...

The U.S. lacks basic due lawsuit process protections, and its government continues to claim the right to strip citizens of legal protections based on its sole discretion (The Washington Post, January 14, 2012). The National Defense Authorization Act, signed December 31, 2011, allows for the indefinite detention of citizens (The Washington Post, January 14, 2012). The Act will place domestic terror investigations and interrogations into the hands of the military and which would open the door for trial-free, indefinite detention of anyone, including American citizens, so long as the government calls them terrorists (, December 5, 2011).

Thursday, May 24, 2012

Business lessons from Google

Former Googler Julie Chow, author of a new book, lists five lessons on how to do business like Google:
1. Launch and iterate. Even the smartest of the hyper-educated Google leaders cannot predict which products and features will attract a sizable user base. Instead, they urge teams to launch quickly and iterate based on what they learn from their users. Rather than spending time perfecting a product that might not work, get it out there, and let the feedback guide future development. ...

2. Fail fast. If you try a lot of stuff by launching early and iterating, you'll fail at most attempts. This is the secret to innovation. Failure is not a bad thing, but slow failure in the market is. Launch, iterate, and declare the failures as quickly as you can. Most importantly, learn from those failures to help guide future efforts.

3. Focus on the user. Your customers or users should be your singular focus, always. A question I ask incessantly to maintain this focus is: "What problem are we trying to solve for our customers?" Every product or service must be linked to a problem or challenge that will make their lives easier.

4. Ask forgiveness, not permission. This mantra was important to mobilize every Google employee in the company to do the things they felt were right without worrying about what approvals they needed to do it. The idea is to remove barriers and to empower employees to act quickly. Reward employees for taking initiative, and treat their missteps as any other failure — something to learn from, but not to dwell on.

5. If you see a void, fill it. This is my favorite lesson from Google. It gives explicit permission to employees and the expectation that, if something is broken, everyone is empowered and responsible to fix it. If there is a spill in the kitchen, clean it up. If the copy machine is broken, file a ticket. And if you see a void in the market for an application you believe users will love, then build it.
I think the last sentence of number five is the most important for aspiring entrepreneurs trying to figure out what kind of opportunity to pursue. Figure out what is missing or needs improvement, then make that the market for your business.

Wednesday, May 23, 2012

Housing recovery a long way off

In a CNBC editorial, Michael Yoshikami argues that a housing market recovery is still a long way away:
Housing starts were surprisingly strong this week, while there was improving sentiment from home builders. So should we start to breathe a sigh of relief that the housing market is returning to health? The short answer is no. The headlines say that housing is stabilizing and there are signs of life in the real estate sector. This is true but is only part of the story. Signs of life is far different than a return to healthier times.

While KB Homes and Toll Brothers are reporting sales increases, this does not erase the fundamental problem with the real estate market today; there are too many people wanting to sell and not enough buyers. In some neighborhoods in the United States, every other house is for sale and sitting stagnant with no takers. But this is the obvious sign that the real estate market is troubled; there are deeper problems below the surface.

What is more troubling is in every block in neighborhoods across the United States, there are huge numbers of potential sellers that would sell their house if they could get the price they believe their house is worth. This huge reserve of sellers creates a supply waiting to flood the market when any sign of recovery in real estate capital values returns.

Additionally, banks continue to hold huge inventories of foreclosed properties waiting for a rebound in the market before placing these properties into the real estate market. ...

In addition to supply issues, the U.S. economy is far from healthy. While we are in the midst of an uneven recovery, unemployment remains stubbornly high and the prospects of a more normalized employment rate are far off in the distance.