Experimentalist

> That ideal doesn't exist, and probably can't, in the real world.

Yes it does, and it's a reality throughout the economy not just an ideal.

> Hospitals are often losing money because they're covering the cost of procedures for people who can't pay.

No, that's not true. The costs of unpaid bills is very low and not a major cost.

> When 'spending less' means customers get less care

That's not the case. Look at the horrible reputation of the VAs and government medical facilities vs. privately run.

My grandfather had free VA due to his military service, but bought additional medical insurance so he could go to a non-VA hospital instead-- the reputation of VA hospitals has been horrible.

Also there are many top-quality for-profit hospitals, some of the most respected in my area are for-profit hospitals. But also many doctors in practice for themselves provide excellent services as a for-profit practice.

> Long and short, hospitals and medical entities exist to help people with their most basic needs

That's why profitability is important, because it drives down costs and encourages innovation, as opposed to lack of profitability.

> Seeing 'for profit' companies making a profit from misery, illness, sickness and death isn't something that is going to sit well with most people.

Profitable companies help people every day, they make a profit providing a valuable service which is complex and requires a lot of investment and expertise.

They provide advanced medical services and pharmaceuticals and they save millions of people's lives. If you claim otherwise then you are simply clueless.

Profit is what lowers costs and drives innovation and investment. I don't know why you would be on an entrepreneur forum if you think profit is bad-- without profit there would be no entrepreneurship.

Investors/entrepreneurs are attracted to businesses that show promise to be profitable, and turn away from making investment in unprofitable businesses.

This is a basic economics principle - I'm not assuming anything. I cited hospitals as an example to illustrate this, because there are many stats, such as what I posted (not an assumption, but a study), which show it's not a very profitable business (relative other businesses) - and btw, neither is health insurance.

If you disagree, then look it up in a basic economics or finance textbook, here are a few explanatons of the relationship of investment, profitability and ROI:

"In other words, profit-seeking businesses operating in the private sector of the economy will be prepared to go ahead with an investment if they believe that the project will over its projected lifetime yield a real rate of return greater than if the money tied up in an investment project had been invested in the next best alternative way."

Macroeconomics - Capital Investment http://tutor2u.net/economics/revision-notes/a2-macro-capital...

"The owners of a company and the company’s creditors share a similar goal: to increase wealth. They are thus very concerned about profitability in all phases of operations.

Creditors are specifically concerned that the company use its resources profitably so that it can pay interest and principal on its debt. Owners are concerned that the company be profitable so that stock values will increase. Company managers must show they can manage the owners’ investment and produce the profits that owners and creditors demand. Because top management must meet the profit expectations of company owners, it passes down to the lower levels of management those profitability goals, which are then spread throughout the company. All managers, therefore, are expected to meet profitability goals, which are often increased and tightened as each level of management seeks a margin of safety."

PDF - The Importance of Return on Investment: ROI http://media.wiley.com/product_data/excerpt/50/04712037/0471...

> Defendants of the current system argue free market but the result is the most expensive health care I've ever seen.

Interesting, but the current system in the US isn't "free market".

It's communistic.

- 80%+ of health care expenditures are made by a 3rd party not the person requesting a service. (employers, insurance, government)

- 40-50% of health care expeditures in the USA are made by the government. (free market usually doesn't mean paid-for/run by government)

- There are thousands of government regulations and incentives which created the current system we have.

That's a free market? You must not understand the free market- either that or you are intentionally misleading people.

Those in favor of a free market, including myself, are NOT defending the current system - they are against a complete government takeover of the system.

1. Health care does follow the rules of supply and demand. It's erroneous to claim otherwise.

2. Many if not most health care costs are not emergency services, and they include many elective non-emergency procedures, diagnostics, mental health issues, drugs etc. A lot of costs come from behavioral choices and are preventable by responsible individuals.

"Emergency care represents less than 3 percent of the nation’s $2.1 trillion in health care expenditures while covering 120 million people a year."

http://www.acep.org/content.aspx?id=25902

3. Regarding compassion - Hospitals are not staffed with nurses, doctors, advanced medical services based on compassion -- all that costs money, labor and raw materials, and takes investment, education, specializations and entreneurship- all of which are not achieved through compassion.

Economics and finance applies regardless of intention (ie. compassion).

That's one example. There are 5,500+ hospitals in the US, so one example is hardly representative. There would be many more investments if it was more profitable.

As the link I posted states - many are not profitable and many have a very low profit margin. Higher profits would bring more entrepreneurs and investment.

What wrong with a for-profit system? There should be MORE profit, not less.

High profits attract entrepreneurs to compete for customers by offering lower prices and innovating - consumers benefit.

The current system is the exact opposite - there is relatively little and uncertain profit (and high barriers to entry) in insurance and hospitals, and a ton of government interference and regulation. Few entrepreneurs want to get involved, which reduces competition and innovation and keeps prices higher.

"Plunging revenues from investments have forced median profit margins for U.S. hospitals to zero, according to a Thomson Reuters analysis of hospital finances published on Monday.

And half of the more than 400 hospitals studied are losing money, the analysis found."

http://www.reuters.com/article/2009/03/02/us-hospitals-usa-i...

The costs incurred by people not paying for their medical services are relatively small, less than 5% of all health care costs.

A much bigger issue is higher insurance premiums due to unhealthy lifestyles.

Preventable poor health due to obesity, poor nutrition and lack of exercise are a major contributor to health care costs.

That results in higher costs for everybody.

As a healthy, fit, non-smoker and non-drug user, why should I have to pay their costs?

That's a lot of assumptions for 2 sentences.

I think "Ludic fallacy" might be a more accurate fallacy to cite.

The Ludic fallacy refers to making predictions based on past events, even though the probability of future outcomes includes variables not contained in the past dataset.

No, inflation is not only in people's minds, it's a real measurable monetary phenomenon.

Sellers can raise prices but if there is not enough money to pay the price then no transactions occur, The sellers would then have to lower their price to sell the items.

In other words an increasing rate of inflation throughout the economy can only occur if there is enough money/credit available to pay the higher prices. You need more money available, an increasing money supply.

What's wrong with this NPR article is for everybody to think a "cheap trick" is what made it work. No, the tight fiscal policies (ie balanced budget) enacted by Brazil at the same time made it work.

The ideas in this article, coupled with Krugman's debt default idea is sending you down a river to a waterfall.

Also I believe a balanced budget amendment was enacted in Brazil around that time.

Demand should be depressed because it was artificially stimulated before.

ie. if demand for homes was normal and not stimulated by easy money then there would not have been a housing bubble. a dotcom bubble. etc.

Government stimulated demand is the problem not the solution. (see my other post a few msgs above)

We already had way too much government investment encouragement with artificially low interest rates for years. People do not need more incentives to spend. btw, we still have rockbottom low interest rates.

What happened in this crisis is over-investment and over-supply. That waste needs to be rolled back and we need to get back to a balanced budget - which is what Brazil did - it's not even mentioned in that article all the strict fiscal policies Brazil enacted like a balanced budget amendment!!!

The easy money policy causes businesses and people to borrow money they do not have (debt) in false expectation of future profits/income, and they spend money wastefully because they think they have more than they do have.

Now people must save and recapitalize and pay off debt. Some bsinesses must fail. Real estate prices must fall. Public expenditures must be reduced.

People are NOT hoarding cash. Ridiculous. Businesses are saving because look ahead and they know rates will have to increase and the hardships are not over. They are are borrowing at low rates in expectation of higher rates in the future (it would be more expensive to borrow in the future when rates rise)

How about this:

When a blind fat man gets depressed, you console him first. You don't immediately put him in a go-kart with a fistful of antidepressants,a bottle of gin and a sword in order to combat the lack of euphoria that caused the depression.

Taleb's criticism of methodology in economics echoes Austrian criticism of economic engineering and the various mainstream economic models.

For example, in the Black Swan, Taleb mentions Hayek, the Nobel Prize winning Austrian school economist.

When asked about a Feyerband comparison (by reporter Felix Salmon, Taleb emailed "to say he considers himself closer to Hayek than to Feyerabend"

http://blogs.reuters.com/felix-salmon/2009/07/21/taleb-and-f...

I have to disagree.

The "micro-sites" you are talking about, and the long-tail SEO people are complaining about, are nothing new at all. It's been common for SEOs to build and rank sites like that for at least 5+ years.

The difference is Google made a big change to it's search algo back in April and in my opinion it was for the worse.

It actually ranked bigger sites (bigger than micro-sites but not necessarily the biggest ones) higher for less relevant long tail searches, presumably to weed out the micro-sites.

So the difference between now and 2 years ago is you are getting a less relevant result list, not that you are getting an SEOd micro-site.

I have a medium-sized website which relies mostly on long tail SE traffic,

Contrary to what many are posting here about this hurting sites that rely on long tail-- my traffic is above normal today. I'm not seeing a decline due to this search change.

I also would not see it in Google's interest to have less long tail searches, since those tend to earn it more money.

Capitalism doesn't work because of accumulation of capital - in fact it might be argued that the more capital is transferred around the better in capitalism, which is why free markets and trade are advocated.

Capitalism works because of increasing productivity and because it is a more efficient method of allocating resources than a planned economy.

"I just think that purely mathematical errors are relatively rare"

It's more common than you would think.

Math error equals loss of Mars orbiter NASA reported Sept. 30 that it had lost the $125 million Mars Climate Orbiter because the force exerted by the orbiter's thrusters remained in the system of units based on pounds and feet rather than being converted to metric. http://findarticles.com/p/articles/mi_m1200/is_15_156/ai_571...

A cosmic mistake Mankind's first cosmic message, beamed to the stars on Monday, contains two mathematical errors, it has been revealed. http://news.bbc.co.uk/2/hi/science/nature/353409.stm

Misuse of statistics http://en.wikipedia.org/wiki/Misuse_of_statistics

And my point, which you get to at the end of your msg, is that a mathematical or logical error can invalidate a hypothesis regardless of the subject matter of the datapoints being measured.

If you say 10 nuclear reactors + 10 nuclear reactors = 25 nuclear reactors. I can prove that wrong mathematically without knowing anything about nuclear reactors.

That's all I'm saying-- you don't have to necessarily have to know something about the subject matter to prove it wrong logically.

Likewise, I can evaluate a statement on the correlation of datapoints of a genome without knowing anything about what a genome does or is. (assuming you have defined the datapoints)

I agree with most of what you said.

However, you don't need to be knowledgeable of a particular field to find faults in a scientific study.

Logic, reasoning and mathematics can be used to identify methodological errors regardless of the subject matter or your knowledge of it.

Also, many seem to forget, science is a process not a conclusion.

We can certainly say a scientific theory is a strong theory supported by numerous scientific studies, evidence and rigorous testing. But all scientifically supported theories, by definition of using that methodology, are subject to modification and falsification based on new research.

I only point this out because of the predilection of some to brand as "kooks" people who dare question scientific conclusions. In fact questioning science is part of science.

Technology isn't the only comparative advantage.

Nor, is it necessarily the best option when maximizing comparative advantage over another firm.

Nor, is implementing new technology necessarily a comparative advantage, it could be a disadvantage (ie. if the technology fails either technically or on the business side)

It's often the most difficult or worst option because of the costs and risks involved.

I'm glad to see a post highlighted here which shows the limits of bright engineers and hacking in a business. Google Wave is just one high profile example..

Being full of engineering-minded people, Hacker News has a strong bias favoring the idea that if you hack away and create an interesting piece of technology, then that is what is required for a successful startup business.

That idea is wrong. That idea is more of a love of inventing and obsession over technology rather than successful business.

A successful business doesn;t need neat technology or having brilliant engineers.

It requires a product/service meeting consumer demand at the right time in a sustainable way at a cost that enables a profit for the business.

That's where Google Wave failed. Despite a huge financial backing in engineering and promotion, people didn't want it.

The core for a successful business is not innovative technology-- it's Business Operations.

If the business operations are wrong -- ie a product isn't fulfilling a consumer demand or has an sunsustainable cost-- then the startup is going to tank. (unless angel investors keep throwing money at it, but eventually they won't anymore)

On the other hand... if the business operations are right, ie. there is strong sustainable consumer demand for the product/service and a cost enabling a profit, then the the company will prosper regardless if the engineers are decent, great or so-so.

There are plenty of companies making good profits year after year, growing there business and equity sustainably, which have just ok engineers and average non-innovative software.

It would be nice to see more startup-related articles here on Hacker News showing technology failures, not wasting money on too much engineering and the importance of the business operations side of things.

(edit: reply to _delirium, not sure this might be out of order, oops)

As you mention, those stats are only for the UC system (no source), but leave out a whole chunk of other relevant data. The author is addressing what he believes is the decline of public educaiton in general in California, not just UC.

Some people outside CA may not understand that the UC system (University of California) is only one part of the public college and public education system in California.

As far as colleges, California also has substantial state funding for a lot of other non-UC California state colleges (CSU, California State University -- 23 campuses compared to 10 UC) and community colleges.

Of course, additional funding goes to non-college education as well, and grants that people receive who attend private colleges and schools.

Also future liabilities and pensions which are not included on budget.

So my point being--just focusing on your UC stats is misleading.

1. How about the whole California state college system? 2. How about community colleges, vocational education? 3. How about other forms of public education? 4. How about all education grant totals made with public dollars? 5. Also while you are at that, how about adding in future liabilities/pensions which are not included in the yearly budget?

"Forum traffic, unless it's very targeted to a specific niche, does NOT convert well. You won't get a good CPM no matter what."

No, I'm talking about informational and news/blog sites that have hundreds or thousands of subtopics. They can get excellent CPMs with Adsense.

"That said, you will still do better with ad sales people even if you're selling general, untargeted inventory, especially if you're selling to brand advertisers."

No that's not true, unless you have a big enough company to support a lot of salespeople and really high untargeted traffic -- which is not most startups. (That's why I mentioned in my original reply that it partly depends on your traffic.)

"you're wrong about how banner buys work"

No I'm not wrong. First, I'm not interested in developing an app to sell low CPM banners. Low CPM means you are untargeted--I'm targeted. Second, the vast majorty of people on this site and doing startup do not have boatloads (100s of thousands of pageviews per day) to justify the type of ad buying your are recommending. They don't have the time nor overhead capacity to hire a staff of salespeople. Nor, do they need the headache of managing them.

They would be better of with Adsense.

"As for Demand Media, you're wrong about how banner buys work."

Actually Demand Media does both -- they are using Google Adsense, its lower on the page often integrated into the articles.

"Typically, AdSense pays much, much more poorly than individually negotiated advertising buys"

What you are saying is true in some but not all cases... It's a bit more complicated than that and depends on how targeted your app/site is, as well as how much traffic you are getting.

Small startups with a lot of possible advertising topics can't solicit every possible niche. You would have to have a sales person selling bingo ads one minute, then the other niche, then the other niche etc. and then manage all those relationships.

What Adsense does is manage all that for you. No salesperson investment, no ad software investment, no prospecting etc. Also, Adsense does some other things like customizes the ad to the user's behavior (across sites), not just the page content.

Maybe what you are saying makes sense in the case of Demand Media because they have a lot of sales people.

But it's not practical for a small startup if they cover more than a few topics. They will end up with less-targeted run of site ads with lower CPM and more ad management headaches.

This article is a misguided gross oversimplificaton of the issue.

I agree that you shouldn't only rely on adsense the rest of your life. But if you are starting with either solid CPM targeted traffic or a lot of traffic or both, then it's a good way to get begin booking some revenue.

Why? If you are a developer you probably don't want to spend your initial days soliciting people for advertising instead of developing your product.

Plus, Adsense can more effectively target customers than the few companies you solicit with your meager resources.

Also maybe look to see if you can write it somehow to interface with Google Analytics api -- a lot of sites use that for their own backend stats.

As I understand it, you're basically talking about stats for the creator of the content who is creating it on another site,

I think there might be potential for something like that.

However, you would just have to nail down your market better, check competitors and survey some medium-size user generated content sites on what they would want. Talk to them. Ask them, get free feedback, enlist them for a beta. Make contacts, then they will be potential customers later.

The extra $5k people have to spend would increase the price people are willing/able to pay for a car - and increase demand-- which would lead the car sellers to raise their prices.