We have been closely following for a few years now China’s shrinking labor cost advantage. China has many other tailwinds, but this two decade-plus labor cost arbitrage is the cornerstone of the Chinese Miracle. Losing this advantage, even at the margin, will inevitably change the trajectory of growth in the country. On the flip side, this relative change will make Turkey, Brazil, Mexico and others more competitive in manufacturing, which will have big benefits for workers in these countries.

Internet-driven social media continues to revolutionize how we connect (and re-connect) with others. Most importantly to us from a business perspective, social media changes distribution. Content producers can more effectively target, reach, and interact with identified high-value niches, threatening current content distributors in the process. Google+ is expanding what is possible on its social network.

Mr. Gates provides an update on his work in health, poverty, and education.

If a system is gameable, humans will find a way to game it.

We are not invested in Starbucks (and are not actively considering it), but find the recent announcement that the chain will be serving beer, wine and premium food offerings in select locations notable. It will be interesting to see whether this experiment improves traffic and builds on Starbucks’ reputation as a gathering place, or instead undermines its carefully nurtured ethos.

We believe we are just at the cusp of rethinking the traditional definitions of lectures and textbooks. They should be more integrated and accessible to each other or perhaps indistinguishable eventually. Wikipedia, YouTube, the finest lecturers, graphic artists, animators, filmmakers, writers, software designers, and others will all have a role to play, and the outcome could be a radically better and cheaper way to educate than the current system.

This Wired Q&A with journalist Robert Neuwirth explores what he calls System D: the world’s informal/black market/underground economy that is largely untaxed, unlicensed, and unregulated. He argues that both its size and importance are enormous.

Dan Pallotta makes a case against the increasing use of business jargon. We agree with him.

Two scientists at the Max Planck Institute in Berlin have been studying behavior influenced by probabilities, and their findings are particularly interesting when it comes to the dynamics of crowds.

Manufacturers have spent years building lean global supply chains, but have underestimated the resulting opportunity costs. Natural disasters are showing them just how delicate these networks really are.

Hayek’s approach says: Let us pierce the veil of aggregates and look at the distortive effects on relative prices and relative output produced by boom-time credit expansions.

A new survey of research on money and happiness attempts to explain how the human mind is surprisingly poor at working out what will make us happy.

In the wake of regime reform in Myanmar, change is taking place in the capital city of Yangon. The signs of middle-class life are becoming more evident throughout the area.

Wireless providers are buying and building today's equivalent of new textile looms. Providing data has a high fixed cost and a low marginal cost. We expect all of this to be good for consumers and bad for market participants.

We are always amused by the attention given to decimal places in various macro-economic measures given the impossibility of their accuracy in the United States, much less in places like China.

Battery technology has substantially lagged Moore's Law, and this deficiency has held back all sorts of applications from electric cars to tablets to solar panels.

HTML5 technology is the fifth generation of the programming language that is a foundation of the Web. It updates the way elements like text, graphics, photos and animation work inside Web browsers, leading to results that are more like software programs than Web pages.

It will be interesting to see if China's leadership can thread this housing needle, particularly with social pressures from both sides of the debate. History says that they will struggle to accomplish a soft landing if a bubble does in fact exist.

An interesting article posted this week in The Telegraph discussed how man’s ancestors mated with Neanderthals and other related hominids during human evolution.

We are constantly reminded how critical it is to understand the limitations inherent in financial accounting and the risks that lurk behind the ways individual companies are applying the rules.

Africa is an emerging market for status brands. Because per capita income is still low, marketers have to focus on high income earners while also keeping some products (and their price points) accessible for those with more average income.

If you are not familiar with it, Bayes’ Theorem can be summarized in a simple, qualitative formula: “Initial Beliefs + Recent Objective Data = A New and Improved Belief.”

The competitive dynamics and technology enablement of online education continue to take shape, with University of North Carolina’s Kenan-Flagler as the first top-20 U.S. business school to offer an online program that itself says is fully equivalent to and indistinct from its traditional, bricks-and-mortar M.B.A. degrees.

We are extremely intrigued by Sal Khan and the online Khan Academy he has created. In this video, he discusses how and why he created the series of educational videos offering complete curricula in math and other subjects.

Scientists study the effect of underlying patterns in music.

Greece and its people are caught between a rock and a hard place. Through debt default/restructuring and austerity, the country is basically hitting the reset button by rolling back jobs, wages, and health and retirement benefits that were unsustainable. Operating with a margin of safety (in a government’s case, avoiding long-term spending that is beyond its means) prevents terrible outcomes in situations well beyond investing.

Former Apple retailing executive Ron Johnson, who recently took over as CEO of J.C. Penney, has launched an aggressive plan to completely change the way his department store does business. This strategy will differentiate it from many, if not most, of its competitors. We will follow this transformation closely to see which parts succeed and which parts fail.

How does one best balance the benefits that teams provide for idea generation with the advantages that privacy and solitude afford for productivity?

A little stress is helpful for peak performance, but too much can literally shut down the brain.

Systems are frequently much more complicated than people typically assume on first glance. In this case, thank goodness. As investors, however, we try to be especially watchful of this psychological misjudgment.

Edward Burns blogs about the opportunities that electronic distribution presents for artists. His personal example illustrates how the declining costs of distribution due to technology are going to accrue to the content creator at the expense of gatekeepers (while also leveling the financial playing field among artists).

Fortune’s interview with Stephen Quinn, Wal-Mart’s Chief Marketing Officer, discusses a new approach to 'the customer' at the world’s largest retailer. We continue to be struck by the strength and quality of managers in Wal-Mart's organization.

Kanzunori Asada reflects on his enlightening Van Gogh observation. Was Van Gogh partially colorblind?

This is a funny video that illustrates how people are influenced by the behavior of those around them.

In the letter from our 2011 annual report, we briefly discussed the past occurrences—and potential current risk—of social unrest in China. This article highlights a current case study of Chinese villagers reacting strongly to ongoing mistreatment by their local government.

It seems that we’re complete suckers for the illusion of certainty and the seeming unlikelihood of the unthinkable, even though financial and economic history is one long string of crises. This time always seems different, until it turns out not to be.

Interesting theory/finding on a practical purpose for dreams.

We’ve all experienced it: The frustration of entering a room and forgetting what we were going to do. Or get. Or find.

The happenings in the Eurozone increase the risk of a real-life exploration of the application of the Dodd-Frank rules on a collapsing bank. A simulation put together by The Economist raises some interesting questions.

We enjoy studying Nathan Myhnold's thinking, and this column explores an idea that is an integral piece of our investment process.

eMarketer ran an article on particular in-store vs. online shopping habits that highlights some challenges and opportunities that retailers are facing as consumers use of the internet, particularly when enabled by a smartphone, continues to change how they shop.

A recent study at the Mayo Clinic suggests there may be a way to slow down the aging process. With the research project in its very early stages there is no way to know where it may lead, but count us as interested observers given the potential impact that developments like this could have on medical care costs.

Experts have a poor understanding of uncertainty. Usually, this manifests itself in the form of overconfidence: experts underestimate the likelihood that their predictions might be wrong.

It will be interesting over time to watch how online shopping impacts everyday grocery shopping and how that changes the economic model (for example, capital expenditure levels and mix, labor costs, and advertising budgets) of the relevant retailers.

A true Cinderella story for a man who, due to his extensive research, chose to challenge a core assumption of science.

We couldn’t resist sharing this story about an entire fake Apple store in China. We are not shocked, but it is still incredible.

We continue to look for investment opportunities in China, but remain very careful because of our ongoing concerns around rule of law and property rights (which makes it much harder to reliably avoid permanent impairments of capital, in line with our investment philosophy).

In our past letters and blog entries on education driven topics, we have focused more on the Internet’s impact on how teachers organize content and how students then consume that content. In particular, we have noted how the Internet improves the learning process through the deliverability and wider-spread availability of content.