A short but interesting posting that helped liberate an idea for me. Globalization’s fans claim the market for much of their ethical underpinnings. The market is good; globalization is an example of the spreading reach of markets, hence it’s a wonderful thing.

But, but. It seems to me that it’s just not that simple. It seems to me that much of globalization owes it’s motive force to state actions. These range from the huge successes in India to educate it’s population, which took place under governments that were to say the least somewhat suspicious of market forces, through international trade negotiations. Those have been largely co-opt’d by the largest firms in the markets. It’s a stretch to say that these large firms are exemplars to what most people mean when they speak of the wonders of markets.  The posting adds another to those two; the question of how states have deployed their wealth in support of globalization.

I like threes and I’m currently quite interested in how we manage (pilot?) our attention. How we make our choices. how we decide what to do.  So I liked the intro to Kahneman and Lovallo’s 1993 paper on how “decision makers” go about their work. The paper is introducing a behavioral model for that, but the introduction briskly suggests two others to get things going.  So I get my threesome.
First, the rational man model presumes we reach into at our basket of risky alternatives, gambles, and carefully withdraw the one with the maximum expected utility. This process involves a lot of quantitative statistical talent coupled with stellar data sampling. It’s has a kind of chess club tone to it.

Amusingly few professional decision makers sign up to that model.  Rather, they talk of their skill, prudence, focus, and self control.  That’s all a process involving a lot craft knowledge.  It has a kind of top flight athlete tone to it.

Model #3, that Kahneman and Lovallo put forward, is cognitive. In crude form it argues that we pull our decisions out of a thicket of cognitive failures.  They broadly sort those into two camps. We shun a range of decisions because we are too timid, while on the other hand grabbing those about which we are excessively bold. This treats the decider’s free will in a more nuanced, more respectful of his animal nature.

So there you have it, three models of how we make our decisions:

1. Selecting choices to maximize expected outcome.
2. Deciding based on determined skill.
3. Course selection via a lousy rudder that’s simultaneous too bold and too timid.

Here’s a nice sentence template:

“This mechanism is called Z and Z is a pivotal driver of Y.  See W for an approachable introduction to the theory of Z. But be forewarned that there is a lot of artistic praxis involved as well.”

I’ve always liked the word praxis, or “practice or exercise of a technical subject”.  It also has a common usage in political theory naming the puzzling part: how to connect your grand theory of the world to practical application, or “that through which theory or philosophy is transformed into practical social activity.”

The original of sentence which I distilled that template was about financial futures.  It is a nice example of the two meanings playing off each other.  The practitioners of a craft are all about praxis, and are likely to scoff at contents of W; while readers of W are likely to find that they can’t quite make actionable the lovely theory found there in.

Consider this quote: “about 320,000 foreclosures – or repossessions – were begun in each of the first two quarters of 2007 he said, against an average of 225,000 per quarter in the past six years.” What are we to make of that? Some easy calculations: thats up 92 thousand per quarter or 42%; or from .9M/year to 1.28M/year.

To do more we need some other numbers.

In 2000 (pdf), there were 115 million housing units, and 105 of those were owner occupied. So 1.28M/year is about 1% of the total installed base of housing.

But it’s is probably better to look at the housing market flows, not the housing installed base: 6.4 millions homes were sold in 2006 in the US; so that 1.28M is 20% of that, up from 14% of home sales over the last 6 years. We can also look at inventories; and I find those numbers interesting. In 2004 there were 2.3 million houses on the market and in July 2007 there were 4.6 million. Makes for interesting times in the housing markets.

Of course this effects real people, displacing them from their homes. That 1.28M/year is a lot households displaced. Unemployment is another significant displacing event for households; a 1% shift in that rate effects 1.5 million people; over the last 16 years the typical year to year swing in that rate has been .55% so this 2-3 times that. It’s rude comparison, but you can compare this to international displaced people counts. I wonder how many people were displaced by Katrina?

At the bank this morning they patiently explained their inability to do a particular thing what wanted doing because of “security.”  I had a flash back to an analogous experience at a bank in the early 1970s. Thought at that time the explanation was “our insurance company won’t let us do that.”  Both then and now I suspect the real reason was “our software sucks.”

Both excuses, insurance-company-rules and security-rules, resolve the question by introducing an immovable object into the discussion.  Using security is better than the insurance company because it implies that the immovable object serves our both the bank and my interests.

There is a whole craft of objection handling.

Joel Garreau wrote Edge City quite a few years ago. In the literature about the growth of the suburbs it’s somewhat unique. He love’s them, and he really loves their developers. Which is fun because he can cheerfully explain all their jargon without the least bit of eye rolling. That, in turn, allows the reader to remain a cherry bemused detached observer.

It’s a book well worth reading but I wanted to mention it because there is are a few terms in there that ought to be more widely adopted.

One is ground cover, which I’ve discussed at much greater length before. Ground cover is a developer’s term for the crap you build on a property while your waiting for the right time to build your office park or 500 town houses. The important thing about ground cover is that it should a) pay your taxes, b) make a small profit, and c) be sufficiently ugly that when you want to tear it down the community will thank you rather than put up a fuss. U-storage facilities, use car dealer ships, and many low end malls are actually ground cover.

A lot of Googles recent offerings strike me as a bit like ground cover, i.e. their blog search engine.

Another term is plop-art. I.e. the art that developers place about their creations, art that must must never ever offend anybody. You see this a lot in packaging, graphic design for web sites, page back grounds, carpet and wall paper design.

If your buy into importance of plop-art then what Google does with the banner on their home page is actually very daring. Plop-art is the art that can not be tagged.

Today’s term is the “Ooh Ah.” High end real estate will always feature a few Ooh Ahs. The high end home will have a bidet, for example. The high end office building will have hair dryers in the men’s rooms. The point of a “Ooh Ah” is to cause the buyer to pause and say “Ooh” and then a moment later ‘ah’. So bathroom fixtures are good. But huge atriums, fountains in unexpected places, surprise views, clever parking gadgets, will all fill the need.

In part the “Ooh Ah” role is to give the buyer something to talk about after the viewing. A conversational hook later when he’s discussing the property with other decision makers. It should be one or more of light, amusing, striking, etc.

Microsoft recently revealed a very good “Ooh Ah” as part of their rebanding of virtual earth under the Live.com brand. These really striking photographs taken from various angles at low altitudes. They bought those from a company that sells them to people who are interested in keeping their eye’s on the real estate. Local government highway departments for example. In my state all the local towns have access to these. (see PictoMetry).

You really always ought to have some “Ooh Ahs” in your offerings. I’m thinking of getting an atrium installed in my personality.