Worthwhile Reading and Viewing

An MBA student who was raised in Communist China reads Hayek.

Has Silicon Valley hit peak arrogance?

Is high testosterone inversely correlated with hedge-fund performance?

Anti-Semitism and the Democratic Party.

A manufacturing engineer looks at Tesla manufacturing.  Related:  Elon Musk now thinks his use of robots to build the Model 3 was excessive.

(I wonder if Musk was aware of the history of Roger Smith and the robots at GM when he established his manufacturing strategy.)

15 facts about Renoir’s Luncheon of the Boating Party.



20 thoughts on “Worthwhile Reading and Viewing”

  1. Last year before Tesla entered production of the Model 3 there were reports that they were skipping a major step in product development by relying on computer simulations instead of physical prototypes.

    Toyota has set the industry standard of 36 months from design to production. This is compared to GM, who usually takes 4 or 5 years to get a car to market. Tesla tried to match Toyota’s speed, not by making their system more efficient, but hoping advanced technology would speed things up.

    You can see the basic problem. Toyota makes their cars so well because of subtraction. They take waste out of the system. Tesla tried to do it by addition, adding processes and technology, much of it unproven.

    It was possible Tesla’s method might’ve succeeded and come up with something better but not probable. On the other hand, Toyota’s method will always come up with something better, but it might take years, possibly generations, to figure out how best to do it.

  2. You can see the basic problem. Toyota makes their cars so well because of subtraction. They take waste out of the system. Tesla tried to do it by addition, adding processes and technology, much of it unproven.

    It was possible Tesla’s method might’ve succeeded and come up with something better but not probable. On the other hand, Toyota’s method will always come up with something better, but it might take years, possibly generations, to figure out how best to do it.

    During all that phone news about Toyota having sticking accelerators, I read that over time they had reduced the parts of the accelerator linkage by a substantial amount. Forget the numbers of parts reduced but it was impressive.

  3. Bill, check out the teardown



    Munro says. “It’s heavy and much more expensive than even the carbon-fiber BMW i3.” A careful study in industry best practices could dramatically slash the body’s cost and weight (benefiting range). One piece of low-hanging fruit: figure out how to assemble the body without an almost unheard-of 165 feet of pumpable body sealant.

    That’s a lot of caulk.

    Don’t get me wrong. I would love to drive one of these and think they’re on the right track to something, but innovation only goes so far without execution. They need to farm out production to someone who knows what they’re doing.

  4. As a driver of and (former?) Toyota driving enthusiast (3 Tacoma pickups over the last 18 years) I won’t disagree WRT the manufacturing efficiency of the company but the quality and usefulness of the features has decreased dramatically. We could discuss backup cameras that are useless in sunlight, radio controls ditto, and the lack little convienience features such as locking gas doors. Mechanical deficiencies: My mechanic is currently addressing an A/C evaporator that is a common failure that was downsized and buried into the dashboard.

    The 2014 does not have a transmission dipstick…indeed there is no way to practically access the transmission fluid (other than an expensive arcane procedure which, because it’s not done often, may create an issue WRT mechanic competency) and the company has suggested in the past (since retracted) that transmission fluid doesn’t need to be changed for the life of the vehicle. This is absurd for any vehicle but you might imagine my feelings about this as I got the towing package and do a lot of towing. This is a design flaw of monumental proportions IMHO…wish I had known about it before I bought.

    Toyota has sold this Tacoma model/generation for years and still touts that 87 octance fuel is OK. Every owner of a Tacoma knows it does run on 87 but the engine pings with the low octane fuel. I guess the folks at Toyota haven’t noticed yet.

    I rather think that Toyota is moving away from the idea of a practical mechanical quality in the direction of Nissan and others which I believe manufactures more of a throw-away vehicle … less serviceability for the consumer but more ease and less cost in manufacturing. This is not what set Toyota apart in days gone by.

  5. The Hayek/PRC grad student article was outstanding. I wonder if the Beijing/Shanghai split has the potential to become the equivalent of a saltwater/freshwater, Keynesian/neoclassical split in the PRC?

  6. Interesting comment about Toyota. I drove a Highlander for 6 or 7 years, then traded it in on a Honda Pilot. I dd not like the body shape of the new Highlander and of the new Pilot, either, I bought a used Pilot with the 2013 body style.

    It’s heavier and the gas mileage is not quite as good as the V6 Highlander but it has been quite satisfactory.

    I had a 1996 Nissan pickup that I gave to my daughter and I found recently she had sold it. It was a great little pickup and was very low mileage as I rarely drove it.

  7. “Every owner of a Tacoma knows it does run on 87 but the engine pings with the low octane fuel. I guess the folks at Toyota haven’t noticed yet.”

    This is either apocryphal or something is seriously wrong. No modern cars ping. They run the time off, among other things the knock sensor, which should catch ping long before its audible.

    I used to build cars. I built motors, many of em’, and getting time right was a bit a black art. You can certainly use a timing light to get close, but trial and error was the way you got it perfect. Pull after pull, and adjustments as needed got my time right. BTW a hard ping on a healthy big block will snap a cast crank, every time. Forged was very expensive but necessary.

    I know a bit about time. My 2017 Ford Fiesta with the 998cc turbo is just a hoot to drive and I bought it for the motor. It will happily run 87 octane and just fumbles a bit around 1600 rpm if you apply power. I run 94 octane, its a turbo, and no fumbling down low and quite a bit more power. Only turbos and motors with variable compression benefit from this extra power with better gas. The computer does not have to pull nearly as much time and the various strategies used, time, valve time and boost dump, do not come into play nearly as much.

    Anyhoo its hard to believe Toyota has not got this right.

  8. From the Rose Wilder Lane post:

    Lane offers an interesting analysis of Biblical/Jewish history, and argues that the Ten Commandments were a major advance specifically because of their negative nature, and that this attribute made them a particularly appropriate corrective for a people emerging from slavery. She sees the Jews as having been the historical carriers of the idea of individualism, and believes that anti-Semitism on the part of traditional European regimes was largely motivated by the connection of Jews to the idea of freedom.

    I just finished Undaunted Courage: Meriwether Lewis, Thomas Jefferson, and the Opening of the American West by Stephen Ambrose (1997). In it Lewis laments the trade monopolies granted by Spain and Britain in North America, rightly saying that trade should be open to competition for the most benefit to Americans. But when he got back he worked a crony capitalist deal for a monopoly on the Upper Missouri River fur trade. That monopoly failed. Power corrupts. Good things happen when people are forced to lived by their wits, like the Jews in Europe and like most of the history of the United States. From the Hayek article:

    The essay writer observed, “I was always amazed by the great wealth the United States has created over such a short period of history compared to that of China.” Formerly, he attributed the success of America to, “its abundant natural resources, its youth and talented population coming from all over the world.”

    The Chinese government, he explained, had ready excuses for its failures: “On the other hand, I ascribed China’s slow progress to its scarce natural resources, the burden of its long history of feudalism and poor education of the population. My view was quite similar to what our government explained to us.”

    Over the course of the semester, the student recounts how he came to see “individuals are the source of the nation’s greatness, not the government.”

  9. “Anyhoo its hard to believe Toyota has not got this right.”

    Yeah. I suppose that, with a goal of maximizing fuel economy (not to say “fudging”) to meet EPA fleet requirements, Toyota pushes the envelope with highly tuned examples of the models that are not reflective of real world engine conditions. And/Or, similarly, perhaps, the fuel supplied out of the highway pump is a bit less combustible (due to some slight processing/delivery loss?) that tested vehicles (with monitoring chemical engineers and laboratory conditions) don’t suffer from.

    Toyota does adapt. I note that they do not offer a diesel model in this country so imagine how difficult (or unprofitable) it would be for them to make a diesel engine compliant.

  10. It could be that T level correlates negatively with fund ROR for the reasons put forward in the CNBC article. I suspect that this is often true for discretionary traders. However, it seems also conceivable if not likely that low-T individuals on average are less likely to be attracted to fund management as a career than are high-T individuals, because fund management is a competitive industry that is going to attract disproportionately many high-T individuals as decisionmakers in any case. So, saying that low-T individuals might be better fund managers is as meaningless as saying that low-T individuals might be better linebackers, trial lawyers or fighter pilots. The applicant pools for these occupations will tend to be comprised overwhelmingly of high-T men and will never be representative of the population as a whole.

    The real world response to any strong evidence that high testosterone levels negatively affect trading performance will take the form of increased automation to minimize the influence of such biases, which is what we have actually seen, rather than efforts to hire more women and low-T men as fund managers as politically correct journalists imagine.

  11. “The Hour Between Wolf and Dog”, by a trader-turned-neuroscience-researcher, suggests that in *trading*, men generally do better than women, probably because of testosterone rather than social factors. (However, he also things there is such a thing as a testosterone cascade, in which successful risk-taking drives higher T which drives more risk-taking which drives…until the whole thing collapses)

    The study I referenced in the link stratifies the fund-management population by (an indirect measure of) T levels. I was curious about the claimed 5.8% performance delta, because this could mean one of two very different things, and journalists don’t generally comprehend the difference. First, it could mean a swing between, for example, a 10% return and a 15.8% return…OR it could mean the difference between a 10% return and a 10.58% return, that latter number being 5.8% higher than the first. I was a little surprised that the study really does claim 5.8% in the first interpretation.

    From the study, which is available at SSRN, it appears that the high-T underperformance is concentrated in the highest 2 of the 10 categories.

  12. Everyone is overconfident to some degree, i.e., we all think we know more than we do. This is human nature. Some people are more overconfident than others. I am guessing that in specific individuals higher T levels correlates with increased levels of overconfidence. Too much overconfidence is bad for trading performance because trading is an odds game and people who are very overconfident tend to misjudge market odds. As an extreme example, I had a discussion at a party with a guy who insisted that Bitcoin will double, triple, etc. (this was after it had gone up to ~$20k and then crashed). He was certain that this would happen. It seemed to me that he was excessively overconfident in his forecast and was ignoring the actual behavior of the Bitcoin mkt and its similarities to many historical examples of mkts that had zoomed and crashed. Maybe he is a genius trader but I would bet against it.


    -Can you predict trading behavior in different groups by looking at the group members’ average T levels? Who knows.

    -Can you predict trading behavior in individuals based on their differing individual T levels over time? Who knows.

    -Could it be that T levels as inferred in the study were really proxies for other variables that mattered more? Who knows.

    -Could it be that high/low-T individuals perform better at different types of trading – e.g., do high-T people do better at market-making and relatively short-term speculative trading while lower-T people do better at longer-term trading? Who knows.

    Perhaps there isn’t enough information to draw conclusions.

  13. Silicon Valley – he won’t give any examples even if anonymous – what the @!#$% is he talking about? Granted, I’d say the “easy money” has been coming so fast but he is saying things are getting crazy but no examples.

    It’s a whole bunch about nothing, it seems.

  14. Bill, there are clearly lots of bad things happening in SV regarding excessive politicization of the work environment–Google seems to be one of the worst—and my perception is that there is too much fad-following in startups and investments therein. It seems unlikely that groupthink, especially in a particular geographical area, would stay confined to politics.

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