The Liberal Order

Incredibly Beautiful Photographs

I love the work of Sebastiao Salgado, so much so that I bought one of his photographs (below). His work photographing the Nenets of Siberia is just incredible.

Markets In Everything; There Is No Great Stagnation . . .

. . . whatever, this is one of those.

The Bodymetrics Pod, which launched in the United States during the Denim Days celebration at a Bloomingdale's in Los Angeles, uses Kinect for Windows to digitally ogle your curves and body-map your butt. This is all in the name of hooking you up with a pair of jeans that will flatter you rather than make it look like you crashed into a denim factory at 55 mph.

Cindy Sherman

A nice writeup of one of my favorite photographer/artists.

Kim Jong Il Has Died

Here is an excellent tribute to him by the excellent Matt Stone and Trey Parker.

UPDATE: From the Wall Street Journal:

Mr. Kim died from fatigue during a train ride on Saturday, a weeping television announcer said.

I didn't know that riding in a train took that much out of you.

UPDATE II: Here is Kim Jong Il's legacy.

The number of prisoners held in the North Korean gulag is not known: one estimate is 200,000, held in 12 or more centres. Camp 22 is thought to hold 50,000.

Most are imprisoned because their relatives are believed to be critical of the regime. Many are Christians, a religion believed by Kim Jong-il to be one of the greatest threats to his power. According to the dictator, not only is a suspected dissident arrested but also three generations of his family are imprisoned, to root out the bad blood and seed of dissent.

 

 

Christmas Lights - A Zero Sum Game

My neighbor just put up hundreds and hundreds of new Christmas lights. Now I have to go out and buy hundreds and hundreds more lights and spend the time putting them up. Where is Robert Frank when you need him?

Google "do a barrel roll" and see what happens.

From my daughter, see what happens when you google "do a barrel roll."

This does not work with Safari.

Creative Destruction - Will We Witness the End of Bookstores Soon?

As I shopped at Wal-Mart today, I passed by a display of $5 DVDs. I recalled having paid $89 for the first movie (VHS) I ever bought, one of my all-time favorites. I had no reason to pay even $5 for one of these DVDs given that I already subscribe to streaming Netflix, and if a movie I wish to view is not streaming, I can have it mailed to me as part of my subscription service. 

Book ownership (i.e., purchases) may soon follow the path of the VHS and DVD.

Amazon is considering a Netflix-like service that would let people pay an annual fee to get book "rentals," according to a published report.

Rather than go to either a bricks-and-mortar or online bookstore, or better yet, buy an e-text version online, I can just download a copy as a rental from Amazon.com. This is apparently - and needlessly - scaring publishers.

Quoting "people familiar with the matter," the Journal said some publishers worry that such a service would cut down on the number of people buying books and hurt their relationships with other distributors.

Video rental stores vastly expanded the sales of DVDs following the introction of video rental stores, in large part from sales to rental outlets. Some rental outlets also paid large royalties to movie companies. The same would be true of books from Amazon renting online versions. Taking up Amazon on their offer to rent Kindle versions of their books will a) increase the number of their books read (i.e., demand and quantity demanded); and b) produce royalties for their products at zero marginal cost to the company.

The real question is, will movie companies still be around in ten years?

The Glorious Evolution of Computer Animation

Russ Roberts sings praises for Kung Fu Panda 2.

Obviously animated films like this have improved over time. But it isn’t just the animation but the ability to visually tell the story as a director, that makes a film like this so entertaining and beautiful.

I will respond by singing the praises of market competition and decentralized power as major causes of this transformation of computer animation over the last four decades, but not necessarily the only causes.

If you've not read David Price's Pixar Touch: The Making of a Company, I highly recommend it. (Another good shorter read is Ed Catmull's piece in the Harvard Business Review, "How Pixar Fosters Collective Creativity.") Pixar's successful business model is largely based on a more horizontal corporate hierarchy that develops talent from within, allowing for more cooperative learning and benefitting from knoweldge of particular time and place that each individual worker brings with him or her.

Its success also comes from commitment to developing the story as well as the technical craft. This commitment has prevailed since the very beginnings, before it even became known as Pixar. The result is twelve feature films with only one apparent flop and twenty one short animations.

The following is a good discussion of Pixar with Ed Catmul, Brad Bird, Alvy Ray Smith, and Andrew Stanton.

 

Art and Economics

My family and I enjoyed a great trip to New York City this past week. One of the things I like doing with my kids is teaching them economics through art. The Museum of Modern Art (MOMA) offered great opportunities for this.

First were the photographs by Boris Mikhailov, a Ukranian-born photographer now living in Russia. Images from his "Case History" series on display documented the homeless population in Kharkov, a city in the Ukraine, years after the collapse of communism. As Mikhailov notes, 

“Devastation [from the failures of communism] had stopped. The city had acquired an almost modern European centre. Much had been restored. Life became more beautiful and active, outwardly (with a lot of foreign advertisements)—simply a shiny wrapper. But I was shocked by the big number of homeless (before they had not been there). The rich and the homeless—the new classes of a new society—this was, as we had been taught, one of the features of capitalism.”

My son was understandably shocked by the photographs. (He had gone on ahead of us and we had no idea what this exhibit had on display.) I was able to discuss with them first, the tragedy of extreme poverty exhibited by these photographs, and that povery occurs in any society. There are people who are unable or unwilling to care for themselves regardless of the socio-economic system. Under communism, everyone was certainly taken care of (depending on how you use that phrase "taken care of"), but they were miserably poor. Mikhailov acknowledges that. After the communist regime collapses, most people became richer and the human condition improved, but a few were and still are unable to care for themselves; they have become homeless.

I also explained to my kids the importance of institutions (i.e., sound government) and that a) path dependence and culture can create dependency for generations, which can breed homelessness, and b) Russia is hardly a free market economic system for judging the results of free markets. A social safety net may indeed be needed, but it is certainly lacking in Russia. However, people make choices, and when there is a safety net to catch us when we fall, no matter how weak is that safety net, we risk the possibility that the safety net becomes a hammock.

It was also disturbing to see so many photographs of women obviously of some mental deficiency exposing themselves for the photographer. If this wasn't abusive on the photographer's part, it bordered on it.

This notion of choice brought us to another piece of art that intrigued me, Otto Dix's "The Nun." Here Dix vividly illustrates the concept of choice, the opportunity cost that choosing entails, and the possibility of regret. The nun is obviously distraught and sad as she contemplates the ultimate sacrifice she made to pursue her faith to the extreme - she gave up earthly delights to beame a nun. Looking at the picture we see to the right of her face a pregnant woman and to the left  a vulval shape. Just above her head to the left is Christ appearing to be crucified on the cross. (Is she feeling cruicified?) The nun made the ultimate sacrifice to pursue her faith - forswearing motherhood and the pleasures of intimacy that go with that. Life is about tradeoffs however, and though most of our choices don't produce the extreme angst depicted in this painting of the nun, we still make many life altering decisions throughout our lifetimes. Should I finish high school? Should I go on to college. What do I want to be? Should I marry? And to whom? What do I give up if I choose to marry one pursuer rather than another? (Remember, perfection is not possible, so when deciding whether to marry someone rather than stay single and keep looking, you have to settle for "they're good enough that it's not worth the additional time searching for a more perfect spouse." I think my wife understand this.) Sometimes we experience regret or remorse about our choices, but they are just that - our choices - and we must live with the consequences.

Lastly, looking at this painting of Gauguin's "Washerwomen," I was reminded of Hans Rosling's video about his family buying their first automatic washing machine and about how much more dynamic our lives have become and progressed. We are so much better off today than even just a decade ago in terms of work and the human condition. We have so much today that makes our lives so much easier and enjoyable, and that's good. But I was also thrown back to Boris Mikhailov's photographs. The artist is a social critic and his or her job is to not only reveal beauty in life and nature and objects, especially those mundane things we so often overlook, but it's also to expose the drudgery of life - our misery and our human failings. Compare Gauguin's work of 1888 with this contemporary photograph of how clothes get washed today in my household. (It's actually from an advertisement.) I don't know, I kinda like the photograph of the washing machine, but I believe it just doesn't have the same appeal as Gauguin's women toiling in the river. Gauguin's depiction seems like, well, so old and romantic. Why?!? 

But I do know this: I'm far more appreciative of capitalism, despite all it's failings, after I see depictions today of what life was like even just a short period ago or in different countries right now.

The Success of Apple's Retail Stores

More people now visit Apple's 326 stores in a single quarter than the 60 million who visited Walt Disney Co.'s four biggest theme parks last year, according to data from Apple and the Themed Entertainment Association. Apple's annual retail sales per square foot have soared to $4,406—excluding online sales, according to investment bank Needham & Co. Add in online sales, which include iTunes, and the number jumps to $5,914. That's far higher than the sales per square foot and online sales of jeweler Tiffany & Co. ($3,070), luxury retailer Coach Inc. ($1,776), and electronics retailer Best Buy Co. ($880), according to estimates.

Story here.

Further down is this:

Apple's success with its stores stands out at a time when many retailers have struggled. In 2009, when retail sales declined 2.4%—the first down year in several decades, according to retail consultancy Customer Growth Partners—Apple's retail sales rose roughly 7%. In 2010, Apple's retail sales, excluding online, jumped 70% to $11.7 billion, or about 15% of its revenues of $76.3 billion, handily exceeding the overall retail industry's sales growth of 4.5%.

Other retailers have tried to copy everything from Apple's in-house tech support to store layout. Best Buy acquired computer repair service Geek Squad in October 2002, a year after Apple opened its first store, but it has failed to reinvigorate its business. Best Buy's profit margin hovers at about 1% before taxes and excluding online sales, estimates Customer Growth Partners. In comparison, Needham & Co. puts Apple stores' profit margin at 26.9%.

It's all about the experience. Apple's products are the "cool" in products to own. Its competitors are even made fun of in popular television shows. (See the video clip below.)

When you walk into an Apple store you want to play with the products and Apple facilitates that desire. Like going to Las Vegas, you walk into Caesar's Palace and feel the ambiance - the marble and the brass statues, the furniture and window treatments, the vaulted ceilings, the expensive shops - all that luxury just sitting there urging you to splurge. Apple's stores create the same feeling. You walk in with the attitude, "Man I'd like to own an iPad, but I just can't afford one." Sure enough, you're walking out with an iPad and asking yourself, "How did I ever get by without one?"

Compare the experience of shopping at an Apple store with shopping at Best Buy or Wal-Mart. First, you're inundated with too much stuff packed into a far too complex store layout. Second, even if you could play with the merchandise, much of it is somehow inoperable or just not fun, and it's not cool. And in the case of Wal-Mart, too much of the stuff you can't touch and play with, and too much of it is broken.