a blog

by Josh Nicholas

Trapped by the destiny instinct

Within seconds of arriving at Tel Aviv airport I was pulled aside and questioned by officials. As far as I can tell, I was the first and only passenger to be treated this way.

This was compounded by similar treatment at the immigration counter, and the knot in my chest has only grown with each lingering stare by a security guard or IDF member.

In some respects I saw this coming. I'm young, brown and male. I'm ethnically ambiguous and have been projected on to by people as diverse as lovely Portuguese tourists and German racists.

But this fresh experience has reminded me of something I recently read in Factfulness by the late, great Hans Rosling. Something he called the destiny instinct:

The destiny instinct is the idea that innate characteristics determine the destinies of people, countries, religions, or cultures. It's the idea that things are as they are for ineluctable, inescapable reasons: they have always been this way and will never change.

All airport security dude wanted to know was where my passport was from and who my parents were. After finding the white woman who had previously passed him was my mother, my passport is Australian, and my father's name is a rather banal Christopher (this was an actual question), he summarily lost interest.

Here's what I haven't been able to let go since - not one question was about something I can control. My skin is sufficient to condemn me. My white mother and the historical accident of my Australian birth were enough to earn a reprieve.

There were no questions about my interest in Israel, education, career, religion, who I associate with, or anything else over which I actually have some power.

His line of questioning betrays thinking trapped by poor assumptions. In essence, that there is something about me that can only be discerned by looking at my parents. That birth is a straight jacket and identities are linear.

This is the ultimate in nature over nurture.

I'm going to stop now, before I extrapolate too far from this one data point. Except, it isn't really just one is it? I was put on the defensive from the moment I arrived. Told that there is something suspicious not in who I am, but where and who I come from.

And now this is all I can see in the eyes of everyone I look at. Even if its all in my head, I too have become trapped by the destiny instinct.

Technology and society as chicken and egg

Is Twitter the cause or the by-product of our half-baked public discourse? Paper by Mark Kurlanksy is a thinly veiled rumination on this question.

Not Twitter exactly, but whether technology shapes society or is instead shaped by it. Kurlanky comes down very much on the latter.

It wasn’t paper and ink that spurred bureaucracy, philosophy, religion, drawing, painting, widespread literacy, or the accumulation and harmonisation of knowledge.

Rather, these technologies filled a pre-existing need, slotting in to a revolution that was well underway. Gutenberg didn't so much kick-start modern mass literacy and learning, as pour petrol on the fire.

A technology that is intended to redirect society will usually fail. In fact, most technology companies do not introduce new technology but new ways to use ideas that already exist.

Of course, Paper is very much a micro-history of, well, paper. Full of anecdotes of European water wheels, wind mills, buddhist monks and holy books. I’ve learned all I ever need to about the acid content of paper and the differences between rags and wood pulp.

But it’s Kurlanky’s reversal of technological causality that really makes this book worthwhile. Especially in the last few decades, we have become very adept at ignoring survivor bias and lesser-known forerunners, giving an extraordinary amount of credit to the Jobs, Zuckerbergs and Pages.

As if Google drove the internet rather than systematising and building upon the work of portals and curators like Yahoo. This is not to take away from these amazing technologies and technologists, but who really had the agency when it came to Google?

In his seminal work Das Kapital, Karl Marx said that the Luddites failed because they opposed the machines instead of the society. He observed: “The Luddites’ mistake was that they failed to distinguish between machinery and its employment by capital, and to direct their attacks, not against the material instruments of production, but against the mode in which they are used.” In other words, it is futile to denounce technology itself. Rather, you have to try to change the operation of the society for which the technology was created...

You cannot warn about what a new technology will do to a society because that society has already made the shift. That was Marx’s point about the Luddites. Technology is only a facilitator. Society changes, and that change creates new needs. That is why the technology is brought in. The only way to stop the technology would be to reverse the changes in the society.

I’m not sure if Kurlanksy has me entirely convinced. But it certainly bears thinking about.

Be more skeptical about fair trade

I've always been a bit skeptical of "fair trade". Supply chains are long and complicated, there's little oversight on retailer margins and it's unclear how much producers actually benefit.

A recently published paper in World Development appears to back up some of these fears. The authors found that less than a third of the premium paid for fair trade Ethiopian coffee makes its way to producers. Exporters grab a healthy slice, and the cost to comply with certification is great for both farmers and cooperatives.

This is based on interviews with 1600 producers, cooperatives's own records (numbering some 150,000 transactions), and data from the Ethiopian Ministry of Trade.

If an average Ethiopian coffee farmer, who annually sells the equivalent of 400kg of red cherries, were to market all his or her red cherries as VSS certified, with current VSS premium transmission rates, the farmer’s annual income would increase by 6.7 USD compared to the non-certified cooperative farmer (assuming both types of farmers sell all coffee to the cooperative). Even in the case of a perfect transmission, the annual income of the average certified coffee farmer would only increase by 22USD compared to a non-certified cooperative farmer

The paper also notes that certification poses significant barriers to entry. For instance, it requires detailed documentation in areas where many have not gone to school. Environmental and labor standards are admirable, but they also increase the costs for producers.

Producers that are able to comply with all of this are likely those relatively better off in the first place. The paper notes that certified households are more likely to be located close to paved roads and coffee cooperatives, and have heads of households that are older and more likely to have gone to school.

And if that wasn't bad enough, do these standards really achieve anything?

...farmers in these settings often have diverse crop portfolios. They may be able to use sustainable production practices on their coffee plots but not on their other crops. Moreover, resources can be re-allocated within the farm from coffee to other crops, e.g., no child labor on coffee plots might mean more child labor on other plots. While coffee might have been sustainably produced and certified, it is possible that little might have changed in the aggregate at the farm, village, or country level.

Now, this is one study, and it's an analysis of just one country and cash crop. But at the very least it invites more skepticism.

Paying players pays

Is Stephen Curry actually worth more than $30 million a year? How about Lebron James, Russell Westbrook or James Harden?

Five Thirty Eight make a pretty good case that NBA superstars are generally underpaid, relative to what they would earn in an open market.

But that analysis is based on their impact on the court.

This is the top-heavy nature of production in the NBA, and why superstars are so valuable just as a basic bookkeeping cheat code: They create surplus value for their teams (and more generally the league as a whole) that is funneled into less productive players.

What is the business case for paying Stephen Curry >$30 million?

Well, according to a paper by Harrison Li at Berkeley, both superstars and wins add to the bottom line.

..every extra win during the season will bring in .3% more revenue to a team. To put this into context, each individual win for a team like the Los Angeles Lakers, who gained about 214 million dollars in revenues this past year, brought in about 642,000 dollars.

As only five players take the court at a time, one person can have a huge impact on winning. More wins mean more people coming to the games (yay bandwagon fans).

It also means teams can charge more for season tickets and premium seats, and more lucrative local television deals (something a lot of teams depend on). Of course, not all of this is realised immediately. Television deals, for example, are negotiated only every few years.

When the Boston Celtics (my team) added superstars Ray Allen and Kevin Garnett in 2007 the team's salary went up by $25.5 million. But Li estimates revenue increased by over $40 million due to the extra wins and playing more games (thanks to making the playoffs and winning the championship).

So it seems like paying players does pay. Although this paper is a bit old now. It would be interesting to see some fresh analysis, accounting for the new collective bargaining agreement and stratospheric increases in the salary cap.

The flipside of palm oil

An interesting new paper suggests that the Indonesian palm oil industry has made a significant dent in rural poverty.

...my most conservative estimate suggests at least 1.3 million out of the approximately 10 million people lifted from poverty over the 2000s have escaped poverty due to growth in the oil palmsector. Poverty gaps significantly narrow, suggesting not only those near the poverty line are being lifted up.

Of course, as several have pointed out on Twitter, this is not an optimal method of development. Beyond the environmental damage you have negative impacts on health and a lack of incentive to invest in capital and human capital.

However, there are peculiarities of the palm oil industry that break in its favour. Palm oil production has a greater positive impact on poverty than other crops. One of the reasons is that palm oil has to be processed within twenty four hours, leading to decentralised infrastructure.

The observed poverty reduction can be explained by more rapid increases in household expenditures for people in the bottom quintile and agriculture, and through greater provision of public goods most related to agricultural manufacturing, specifically roads and electricity.

Indonesia’s over 1600 palm oil mills each buy fresh fruit bunches fromdozens of villages, often through a complex network of traders providing important aggregation and logistical functions for independent smallholders and farmer groups needing to get their fruit to the mill within 24 hours of harvesting. Urgent processing requirements mean the area feedingeach mill is roughly a 50 kilometer radius.

All that being said (and I recommend reading the paper in full), there is one big takeaway. Roughly 90% of recent increases in production have come from expansion in land use, and the large number of small holders are significantly less efficient than the larger operators.

Part of this is due to economies of scale that the smallholders can’t achieve. But with so many of our products containing palm oil, one way to tackle the environmental problem may be to invest in Indonesian smallholders to raise productivity.

Yield maximizing practices relate to pest management, fertilizer application, pruning, and harvesting at the optimal time... The key on-farm technology is seed quality, determined at the planting stage... Roughly two laborers are needed for every five hectares of Indonesia’s current 7 million hectares of industrial plantations.