Longreads + Open Thread

Longreads

• Construction Physics has an overview of how environmental impact reviews have become a growing burden through bureaucratic inertia. It would be interesting to think about ways to streamline this process, especially by shifting the burden of proof in some cases. (This could reduce certainty, but setting a time limit would essentially enforce triage: if you can't come up with a solid objection in a few months or weeks, the project goes ahead.)
• Wired has a great look at a family business that started out aggressively running FOIA requests about military equipment and branched out into more dubious sources of data. One thing this piece illustrates is that organizations that rely on just one supplier need to be very careful to keep that supplier happy, even if they're confident the supplier is legally compelled to work with them.
• The Atlantic on how little we know about Xi Jinping. Half of the problem with tracking the CCP is the lack of some crucial information, and the other half is the incredible abundance of information that has to be sorted through and understood. It's hard to centrally coordinate behavior in an enormous country without leaving lots of written records, so we do have ways to see how the party's priorities shift over time. But that same centralization means that there are some things we just don't know.
• The New Yorker has a wonderful piece on the difficulties of assembling a "cold chain" in Africa. Most things are cheaper in developing countries, but power is more expensive and reliable infrastructure is sometimes impossibly so. And cold chains don't mean much if they're only 80% implemented, or only 99% implemented. So for many of these countries, the marginal cost of catch-up growth can be surprisingly high; the low certainty and high price means it's common to run out of money or political will before getting a return.
• Michael Pettis has a long analysis of the Chinese property market, with a focus on the feedback loops that have made it so significant as a threat to stability. Good policy is not just a matter of putting out fires, but of avoiding incentive structures that ratchet up risk over time in a procyclical way.

Books

• Anglo Republic: Inside the bank that broke Ireland: One of history's sharpest turnarounds in economic performance is what happened to Ireland during the financial crisis, when a country that had grown at an above-average pace for decades suddenly had to issue a government guarantee of bank deposits worth twice its GDP. This book is an analysis of Anglo Irish, one of the most aggressive banks in this period. The very irritating thing about this book is that the first half describes a company that did lots of things right—Anglo Irish's model was to charge higher rates than competitors, but to underwrite individual deals quickly and carefully so they'd win on fast turnaround times for big loans. And then the last half of the book talks about how the same company used its risk tolerance and bias for action to make big mistakes fast.
  
  Part of what killed the company was a funding crisis, exacerbated by declining loan quality. And part of what ruined them was the disastrous decision to lend money to their own big shareholders. The bank's thinking was that if large shareholders sold, the drop in the stock price would scare depositors and lead to a run on the bank. The undertook a set of increasingly dubious moves to prop up the share price (at one point, their largest shareholder was getting margin calls, and they organized a deal where part of that stake was bought by a syndicate of smaller investors, each of whom borrowed 75% of the purchase price for their shares from the bank). This behavior made the eventual collapse worse than it could have been.

Open Thread

• Drop in any links or comments of interest to Diff readers.
• Last week's post on hard-to-scale strategies led to lots of offline responses on now-large companies that started out specializing in something lucrative that couldn't grow much. If you were to look for such companies today, what strategies would you start with?

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