Justin B. Hollander argues that the government’s attempts to help the housing market by renting out the 200,000 or so homes it has come to own due to foreclosures and default is harmful. Instead the government should bulldoze them:

• Empty houses are a problem because they fall into disrepair and lower the prices of all property in the neighborhood. Moreover they attract insects and disease.
• By bulldozing them the government would reduce supply, thus increasing housing prices, giving a reason for property owners to invest in housing and fix up their properties.
• Other ways the government could reduce the supply of housing would be to turn the abandoned structures into offices, studios, or even parks and gardens.

To read some statistics related to the problem, and how we now have to deal with the opposite of ‘smart growth’ click here.

Source: Slate

Mark Bowden found out how one man, Don Johnson, won ~$15 million from casinos in a completely legal way through games of blackjack. Highlights include:

• Johnson is a whiz at mathematics with excellent concentration skills. But this is true of every professional gambler.
• What Johnson did differently was that he started playing the game before sitting at a table. Casinos are seeing a decline in revenue and Johnson was able to leverage this to win concessions from the casino about the rules of the game that effectively made the odds 50-50.
• At one point he was betting $100,000 a hand.
• He effectively wiped out a month’s worth of profits of one casino in a night.
• The casinos weren’t prepared for this. They normally incentivize high-rollers to come, offering them private jets, luxury suites, and possibly even the young women seen in the ads, with the expectation that they would lose. Johnson’s requests were different and they led to his victory.

To find out more about how Johnson pulled his tricks, the three-hand sequence that won him $1.2 million, the casinos that banned him, why he wasn’t a card-counter, and what it means to be a ‘big whale’ click here.

Source: The Atlantic

Via: Marginal Revolution

Thomas L. Friedman notes that “Taiwan is a barren rock in a typhoon-laden sea with no natural resources to live off of — it even has to import sand and gravel from China for construction” yet it has one of the most successful economies in the world. Why is this? The answer includes:

• Countries which are not rich in natural resources invest a lot of money in human capital – the education of the children because “when you don’t have resources, you become resourceful”
• This is why resource-barren countries such as Singapore, Finland, Korea and Japan score high in aptitude tests.
• On the flip side those from countries that are laden with precious commodities such as Saudi Arabia, Kuwait and Algeria among others score low.
• Canada, Australia and Norway are exceptions, scoring high despite an abundance of natural resources.

To read about how this relates to the Dutch Disease (and indeed, what the Dutch Disease is), how Moses fits into this, the way to explain the exceptions, and what NASDAQ can tell us about this phenomenon click here.

Source: The New York Times

Casey Johnston reports that researchers have used Google search analytics to see if there’s a difference between the types of things people from rich and poor countries search for, believing that it might reveal something about their mindset. The researchers came up with a measure called the “future orientation index” highlights include:

• People from countries with higher GDPs are more likely to enter search terms related to the upcoming year.
• People from countries with lower GDPs are more likely to enter search terms related to the year that went past.
• This suggests that countries that have people that have a future oriented mindset tend to do economically better than those who don’t.
• The United States is an outlier – it has a high GDP but a low score on the future orientation index.
• According to the measure Canada, the United States and Japan have the brightest futures ahead of them.

To read about the methodology of the study, what the index tells us about Italy and Russia, and some criticisms of the study click here.

Source: Arstechnica

David Ignatius reports that Osama bin Laden wanted to re-brand Al-Qaeda because its image had become too tarnished. Highlights include:

• Since the United States no longer refers to it as the war on terror, focusing instead on a war against Al Qaeda, the United States was able to reduce the perception of its actions as part of some wider battle against Islam.
• Moreover Al Qaeda had killed Muslims, alienating people from its cause.
• Osama bin Laden thus wanted to change the name of the organization so that it implied a stronger sense of Muslim Identity.

To read more about why Osama bin Laden was like a CEO, why he wanted Al Qaeda to refocus on Palestine, the role that Yemen had to play, and the American TV news stations that bin Laden watched, click here.

Source: The New York Times

Via: Marginal Revolution, Mother Jones

Pascal-Emmanuel Gobry notes that the secret behind Amazon’s success is for its founder, Jeff Bezos, to indulge his inner child. Some of his most successful efforts sound like the dreams of an 11 year old, including:

• A bookstore that can beam any book you want into your hand.
• An invisible computer that anybody can access and that is capable of imitating human intelligence.
• (Soon) A Robot Army

To read more examples about the child-like nature of Bezos most successful ideas, and how Amazon plans to become the Wal-Mart of the 21^st century click here.

Source: Business Insider

Via: Marginal Revolution

Since computers are able to beat even the top grandmasters in chess, cheaters often use ‘bathroom breaks’ to consult computers for advice about what moves they should play next. Dylan Loeb McClain reports on the efforts of one Professor to use computers to catch cheaters:

• Calculating the moves that players make which are statistical outliers is difficult due to the small sample size involved. A typical chess tournament only has around 150 moves per player.
• The algorithms also suggest that people have become much better at playing chess. The best players of the 1970s would only rank 40^th today.
• In essence the computer is trying to model human decision making which has several applications beyond chess. Amazon, for example, could use it to advertize particular products to consumers.

To read about how sophisticated the models currently are, what, exactly, is toiletgate, and other applications for the program click here.

Source: The New York Times

Via: Marginal Revolution

Does income inequality generate financial crises? It rose before the Great Depression of the 1930s and before the Recession of the 2000s. The Economist reviewed the causal mechanisms of several economic models that suggest they do. They include:

• As income inequality rises politicians feel pressured to help the middle class and do so by expanding consumer credit. This leads to unsustainable amounts of debt triggering a financial crisis.
• As the rich get richer the poor feel the need to emulate their lifestyle and so borrow money to buy the finer things in life.
• The government borrows more adding to sovereign debt, with the intention of spending that money to help the low and middle-income people.

To read other theories, as well as why income inequality might not be a problem at all, and what all of this says about the responsiveness of the government, click here.

Source: The Economist

Monkeys in New Delhi have caused havoc for local businesses and have even led to the deaths of individuals. In 2007 the courts ordered New Delhi’s government to transport all wild monkeys to a wildlife sanctuary. Stephanie Nolan reports on why the government has been unsuccessful and other details of the problem:

• The city has tried upping the price paid per monkey caught from $8 to $15 but only one person applied for the job despite extensive advertisements.
• This is partly because of the reverence attached to monkeys due to Hanuman, the monkey form of the Hindu God. But most people are just too scared of the monkeys.
• Companies have taken to hiring individuals to patrol the perimeters of their complexes and throw pebbles to keep monkeys away.
• The city reports that “the monkeys are winning.”

To read more details of the problem, where the monkeys prefer to live, and other initiatives that have been taken to solve the problem, click here.

Source: The Globe and Mail

Via: Marginal Revolution