Brian Gongol Show on WHO Radio - January 4, 2015
Podcast: Updated weekly in the wee hours of Sunday night/Monday morning. Subscribe on Stitcher, Spreaker, Apple Podcasts, Google Podcasts, or iHeartRadio
Please note: These show notes may be in various stages of completion -- ranging from brainstormed notes through to well-polished monologues. Please excuse anything that may seem rough around the edges, as it may only be a first draft of a thought and not be fully representative of what was said on the air.
Sunk costs
When I got rid of my last car a couple of years ago, I wanted to follow my usual routine: Get another program car with about 20,000 or 25,000 miles on it, and then drive it until the wheels fell off. But that was a couple of years ago, when there just weren't many used cars on the market. The new-car market fell to pieces in 2008/2009, and so there just wasn't much of an inventory of used cars on the market by 2012. Based on what I needed for business circumstances, I realized that the cheapest used car that would come close to suiting the need would cost at least $25,000. Comparably equipped, a brand-new car of the same class would have cost about $30,000. Now, buying a new car runs completely against my normal habits and felt wrong -- I knew that the minute I drove it off the lot, there would be some instant depreciation. But taking everything into account, the difference in price of $5,000 meant getting a car with much more warranty coverage left and at least 25,000 miles of "new" performance. The first $25,000, in economic terms, were a sunk cost -- I had to pay them, no matter what. The question was whether the next $5,000 in cost would gain me at least $5,000 in miles, warranty coverage, and peace of mind. "Sunk cost" is one of the most important concepts in economics -- largely because humans don't use it very well. We get emotionally attached to things, get stubborn about what we paid or what we want to pay, or get hung up on behaving in certain ways "out of principle." But the rational thing to do is to realize that money you've spent is spent. Choices you've made in the past are in the past. The only thing that matters in decision-making is what you're going to do with what you have in the present, and whether you're going to get what you want out of anything additional you spend in dollars, time, effort, mental energy, and your other resources. When it comes to the question whether the University of Iowa should try to squeeze a better performance out of their contract with football coach Kirk Ferentz or just cut ties and start over, the only thing I can sincerely counsel is that anything the university is already obligated to pay him under his contract is a sunk cost. The only thing that matters is what you're going to spend in addition to that amount, and whether it gets you what you want. (But I'd sincerely and strongly recommend that the university take a long, hard look at how it structures its contracts in the future.)On that note, for a great example of viewing a sunk cost with a realistic attitude, see the bride-to-be who got dumped five days before her wedding. She canceled the event, but kept the dress and the photographer -- and had her bridesmaids help her turn it into a celebration of her liberation from what would probably have been a bad marriage.
Yay Capitalism
The Fugio Cent: Benjamin Franklin's admonition to the country
Franklin designed a penny with the image of a sundial and the word "Fugio" (Latin for "I fly"...thus suggesting "Time flies"), and a slogan saying "Mind your business". It's entirely possible -- maybe even likely -- that he intended for the ambiguity of that particular phrasing. "Mind your business" certainly literally means "Attend to your work", but it also can be another way to say "Mind your (own) business". How delightfully American.
Tin Foil Hat Award
Team planning Obama Presidential library is worried about Chicago proposals
The hilarious part: Most of their concerns have to do with political uncertainty, and whether the government and public agencies involved will actually supply the things they want for the library to go through. This, from a group planning a library to honor a Presidential administration that has shown a remarkable affinity for capricious initiation and execution of rules to advance its own political agenda, with great disregard for the consequences to the people who have to live by those rules and laws.
This week
Ebola gets the headlines, but the flu kills more Americans by far
And that's included healthy young people this year, to our great sadness
Terrorist moron geo-tags his Twitter updates
Critics want Gates Foundation to stop focusing on specific diseases
While it's understandable that they want a more holistic approach to "health-system strengthening", they're overlooking the fact that accountability requires at least some specificity. The broader and more vague the mandate, the more likely it is that any organization will fail to actually achieve its mission. One could scarcely expect to get good value by assigning someone a large pile of money and saying, "Go fix transportation". But if instead, the options (air travel, ships, trains, cars, and so on) were carefully evaluated for their likely effectiveness at achieving certain specific goals (like getting food to market, or moving people at low cost to metropolitan centers), then specific and worthwhile investments could be made with a reasonable expectation of getting results. Health is the same: The Gates mission is to find specific causes of illness and death, target them relentlessly, and eliminate them. There will be some unintended consequences, mistakes, and oversights along the way to be sure. But if you're not specific about what you're trying to fix, you're likely to do a lot worse.
"The smuggling and sale of oil provides ISIL with as much as $1 million per day"
"My doctor told me I should vaccinate my children, but then someone much louder told me I shouldn't"
The people behind The Onion strike again with a great piece of satire
Whooping cough may be evolving to evade immunization
That's scary. What's worse is the thought that people are choosing to exempt themselves and their children from immunization programs, which only opens the door further to the risk of the disease among the population as a whole. The awful movement that steers people away from vaccines is only weakening the immunity of the human species at large. We clearly have enough to worry about with the natural evolution of our viral enemies without some of our fellow people turning into traitors against us all.
Outside investors aren't enamored -- at all -- with Japanese stocks
Bloomberg reports that investment inflows are dropped by 94% from 2013 into 2014. To the contrarian investor, it's certainly a signal worth investigating.
Japan's savings rate has turned negative
That's a first