Friday, June 20, 2008

On the road again

Yesterday was the first day commuting to work on the new bike. It was much easier than I thought it would be. The ride is just under 4.5 miles each way and it took only about 20 minutes to get to work. Actually it took more time to pack my bag and then unpack and change at work than to actually ride the commute. I suppose I'll have to put photos up later, but I am very much enjoying (so far) the ability to ride to work. It will take about 200 rides for the costs and gas-savings to break even, and my carbon output while on the bike is not insignificant (it's not a totally-green affair), but yesterday I exercised for about 45 minutes and it only took only about 20 minutes of real time (since my commute by car is about 12-15 minutes). And since I committed to run a marathon in January with friends, this is a good way to help get in shape.

Friday, June 13, 2008

What I've been reading

It's pretty good so far. I don't yet believe that his assertion is true, but to be fair, I've just started the book. But I do like paragraphs like this:

Progress is hard enough to achieve in the world without being perceived as a danger. One of the ironies of the recent success of India and China is the fear that has engulfed the United States that success in these two countries comes at the expense of the United States. These fears are fundamentally wrong, and even worse, dangerous. They are wrong because the world is not a zero-sum struggle, but is rather a positive-sum opportunity in which improving technologies and skills can raise living standards around the world. Not only are the Indian IT workers providing valuable goods and services to United States consumers, but they are also sitting at terminals with Dell computers, using Microsoft and SAP software, Cisco routers, and dozens of other pieces of empowering technology imported from the developed countries. As India's technology grows, its consumers opt for a growing array of US and European goods and services for their homes and businesses.

Not every transaction can be a positive-sum transaction, which is why diversified risk is still risk (as we have know realized, in every sense of that word, from the mortgage banking breakdown) and why I doubt the feasibility of the author's prediction that world poverty can be wiped out by 2025, but it is refreshing to read something thoughtful and optimistic in light of the politically-motivated but thoughtless and depressing diatribe so frequently heard during the election season.

Tuesday, June 10, 2008

Why early adoption is not necessarily good, a micahnomics primer

A few years back Jen and I often spoke of thinking in terms of "micahnomics" when making normal decisions. I pulled this term from our friend Shifty and his practice of "shiftynomics", though he doesn't readily discuss this (probably because the description is diminutive or demeaning or both) and he now readily refers to "tiggernomics", but I digress.

Shiftynomics, which may be generally described by the rule "why spend your money when you can spend someone else's?", is a theory I observed enacted (very well) when Shifty was a roommate of mine after college. In those days he routinely paid his portion of the bills well after due dates and often ate more than his portion of the foodstuffs. Now he is a property manager of some 200 rental properties and lives the shiftynomic dream--making money directly from the monies of others.

Realizing the potential of certain simple principles Shifty practiced I then began forming the rudiments of micahnomic theory, which may now be described by the rule "why spend your money now when you can spend it later?"

Now I'm sure there are real, older, and more appropriate names for these practices, but I (and quite a few within my nearer circles) will likely continue to describe these practices as shiftynomics and micahnomics and certainly none will be surprised to see that I am a late adopter (of technology for example) because it is simply good micahnomics.

Take the iPhone as an example. This week we witness the unveiling of the 3rd-generation iPhone just 1 year following the unveiling of the first iPhone. And what of note has happened in this first year? Well, besides rolling out 2 significant model changes, a near 70% reduction in retail price. Or, put it this way: if you had waited 1 year to purchase your iPhone, what would you gain? A product significantly better at 1/3 the asking price and a reduction in phone plan charges of at least $250, or roughly $650 pre-tax dollars before considering the deficiency of your product and how you would adjust those dollars spent for present value. Even if you had invested them in something other than gold or oil (normally a good idea) you would have saved about $300 and ended up with a more desirable purchase.

Or, as Apple puts it: Twice as Fast. Half the Price. What they don't say is Did you really think that owning one year could cost so much?

Or you may consider your local television as a candidate to not adopt early. Had you purchased a flat-panel LCD, plasma, or death-ray tv 5 or 6 years ago when they were first available you would also have paid 3 or 4 times the current value of your tube while getting performance and options that likely do not par what is standard now.

Or you could consider micahnomic principles in the purchase of a new car, whether postponing the actual purchase or postponing the purchase of certain desirable options until a later vehicle. I remember hearing that saving $5000 in options on a car purchased every five years... well, let's just say that turns out to about $50,000 in 25 years if you only count the interest from the lost investment. If you financed that sunroof and navigation system then you may as well round up to a fat $75,000 or so.

What I'm saying is... well, I don't know exactly. But I think it would be fair to conclude that patience, though virtuous, has more direct benefits. And satisfaction (not even beginning to discuss the psychological merits of delayed gratification) can have a fiscal benefit even if it is primarily fruit of a well-adjusted spirit. I'm sure there are many better things that have been said about ideas like these by moral philosophers as profound and well-spoken as Solomon and Adam Smith, but I think it would still be fair to say that late adoption can be a good (if not codgery) practice and fine micahnomic principle.

Indeed, why should you pay for it now when you can pay for it later? (If only it were as easy to agree in practice with what you agree in principle).