March 26, 2019

Absence of For-Profit Hospitals Hurts New York State



(p. A17) House Democrats' new Medicare for All bill asserts "a moral imperative . . . to eliminate profit from the provision of health care."


. . .


The Empire State's hospital industry has been 100% nonprofit or government-owned for more than a decade. It's a byproduct of longstanding, unusually restrictive ownership laws that squeeze for-profit general hospitals. The last one in the state closed its doors in 2008.

A report last year from the Albany-based Empire Center shows the unhappy results. The state health-care industry's financial condition is chronically weak, with the second-worst operating margins and highest debt loads in the country. And there's no evidence that expunging profit has reduced costs. New York's per capita hospital spending is 18% higher than the national average.

The overall quality of New York's hospitals, even factoring in Manhattan's flagship institutions, is poor. Their average score on the federal government's Hospital Compare report card was 2.18 stars out of five--last out of 50 states. Their collective safety grades from the Leapfrog Group and Consumer Reports magazine have also been dismal.

The state's nonprofit hospitals also fall short on accessibility for the uninsured. On average they devoted 1.9% of revenues to charity care in 2015, a third less than privately owned hospitals nationwide.

Finally, New York's antiprofit policy doesn't even prevent people from getting rich. Seven-figure salaries are common among the state's hospital executives. If banning profit is an effective way to improve health-care, there's no evidence to be found in New York.



For the full commentary, see:

.Bill Hammond. "Banishing Profit Is Bad for Your Health; The Medicare for All proposal from House Democrats follows New York state's bad example." The Wall Street Journal (Tuesday, March 19, 2019): A17.

(Note: ellipsis internal to first paragraph, in original; ellipsis between paragraphs, added.)

(Note: the online version of the commentary has the date March 18, 2019.)






March 25, 2019

Wilbur Wright Circles Manhattan





The YouTube video above shares a story related to my book that is to appear on June 3, 2019:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.






March 24, 2019

Innovative Entrepreneurs Improve Life for All



(p. A19) In a free-market system, society's most productive members tend to facilitate upward mobility for all of us, not just for themselves. And not only through their philanthropy.

Oil refining made the Rockefellers rich, but in the process, they made oil products much cheaper and thus more widely available to the poor. Prior to Standard Oil, whale oil and candles were a luxury that only the wealthy could afford. The rest had to go to bed early to save money, explains Burton Folsom, a professor of history at Hillsdale College. "By the 1870s, with the drop in the price of kerosene, middle- and working-class people all over the nation could afford the one cent an hour that it cost to light their homes at night. Working and reading became after-dark activities new to most Americans."

Rockefeller got rich and America got more productive. Henry Ford did something similar in auto manufacturing, as did Sam Walton of Walmart fame with respect to big-box discount stores. Bill Gates has done more for humanity creating his computer-software fortune than he will ever do giving it away through his foundation. Wealth creation plays a far bigger role than philanthropy or government transfer programs in improving our standard of living, something that those forever trying to "stick it to the rich" either don't understand or choose to ignore out of political expedience.



For the full commentary, see:

Jason L. Riley. "UPWARD MOBILITY; How a Billionaire Spends His Money Is His Own Business; Progressives are more interested in scapegoating the wealthy than they are in relieving poverty." The Wall Street Journal (Wednesday, Jan. 30, 2019): A19.

(Note: the online version of the commentary has the date Jan. 29, 2019.)






March 23, 2019

Aloysius Siow Offers Advance Praise for Openness to Creative Destruction



Art revives the lost art of business history in the tradition of Alfred Chandler to write a definitive history of American entrepreneurship. He uses economic theories to organize his encyclopedic knowledge of entrepreneurial success stories. Unlike books by successful entrepreneurs which recount why they personally succeeded, Art looks for themes which are common to these success stories. He provides modest policy suggestions to improve the environment for these entrepreneurs to thrive.


Aloysius Siow, Professor of Economics, University of Toronto.



Siow's advance praise is for:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.






March 22, 2019

Ports Can and Do Adapt to Rising Sea



(p. B5) When the Port of Virginia began a sweeping renovation of its major Norfolk International Terminals, some easy-to-miss line items on the $375 million agenda included boosting the site's electric power stations several feet off the ground and adding data servers as far back from the water as possible.

The actions at the fifth-largest container gateway in the U.S. are among the small steps seaports are starting to undertake as more reports project rising ocean levels in the coming years and cargo terminals consider the impact of higher waters and increasingly forceful storm surges.


. . .
Most major ports have infrastructure plans that don't extend as far into the future as the forecasts for climate change, said Walter Kemmsies, an economist specializing in ports and infrastructure at real-estate firm Jones Lang LaSalle Inc.


. . .


Ports whose berths are at least 14 feet above sea level at high tide should be safe from flooding for the near future, Mr. Kemmsies said. "As long as the probability is really low and it wouldn't matter if you raised everything by a foot or two, you leave it alone until the cost-benefit ratio might be higher," he said.

That is the case at the Port of Houston, where officials said container docks stand 18 feet above the water.

Houston is the largest U.S. hub for energy exports and a rapidly growing container port. It also has withstood some of the worst storms to hit the U.S. in recent years, including Hurricane Ike in 2008 and Hurricane Harvey in 2017.



For the full story, see:

Erica E. Phillips. "Seaports Add Protections as Ocean Levels Rise." The Wall Street Journal (Tuesday, Feb. 12, 2019): B5.

(Note: ellipses added.)

(Note: the online version has the date Feb. 11, 2019, and has the title "At the Water's Edge, Seaports Are Slowly Bracing for Rising Ocean Levels.")






March 21, 2019

Small Spanish Firms Less Likely to Hire with Higher Minimum Wage



(p. B1) MADRID -- As Spain grapples with a turbulent political crisis, one of Europe's last Socialist governments may soon fall amid the rise of a new nationalism in the country. But whatever the outcome, Prime Minister Pedro Sánchez is leaving behind a signature legacy: a record increase in the minimum wage.

The 22 percent rise that took effect in January, to 1,050 euros (about $1,200) a month, is the largest in Spain in 40 years. Yet the move has ignited a debate over whether requiring employers to pay more of a living wage is a social watershed, or a risky attempt at economic engineering.


. . .


(p. B4) Over 95 percent of businesses in Spain are small and medium-size firms, many of which operate with thin margins, according to Celia Ferrero, the vice president of the National Federation of Self-Employed Workers.

"You won't find people disputing that higher wages are needed," said Ms. Ferrero, whose organization represents many smaller businesses. "The question is whether firms can afford it. Higher wages and social security taxes simply make it more expensive for employers to hire or maintain staffers."

"It's not that they don't want to pay; they literally can't," she added.

Lucio Montero, the owner of General Events, which makes booths and backdrops for firms displaying wares at big conventions, employs eight workers on the outskirts of Madrid. He pays each €1,400 a month.

The higher minimum wage and increased social security charges will put upward pressure on his labor bill and already thin margins, he said. It is a cost that he can ill afford.

"I would need to think twice about hiring more people," said Mr. Montero, walking around his tiny, sawdust-covered factory floor.



For the full story, see:

Liz Alderman. "Spain's Minimum Wage Has Surged. So Has Debate." The New York Times (Friday, March 8, 2019): B1 & B4.

(Note: ellipsis added.)

(Note: the online version of the story has the date March 7, 2019, and has the title "Spain's Minimum Wage Just Jumped. The Debate Is Continuing.")






March 20, 2019

Hot Job Market Helps the Least Well-Off



(p. A15) This past weekend [Sat., March 2, 2019], The Wall Street Journal published a series of stories titled "Inside the Hottest Job Market in Half a Century." As far as I'm concerned, this jobs record is the story of the year. The Journal's articles transformed a year of economic data into the new daily reality of getting paid to work in America.

"All sorts of people who have previously had trouble landing a job are now finding work," the Journal reported. "Racial minorities, those with less education and people working in the lowest-paying jobs are getting bigger pay raises and, in many cases, experiencing the lowest unemployment rate ever recorded for their groups. They are joining manufacturing workers, women in their prime working years, Americans with disabilities and those with criminal records, among others, in finding improved job prospects after years of disappointment."

Example: A 23-year-old woman, Cassandra Eaton, a high-school graduate and single mother who was working for about $8 an hour at a day-care center in Biloxi, Miss., is doing now what previously would have been unimaginable. She's an apprentice welder making $20 an hour at a shipyard in Pascagoula.

The unemployment rate for high-school dropouts, a status many depressing books and studies show puts one close to the bottom of the barrel for getting ahead in America, is 5%. Their median wages the past year rose 6%.



For the full commentary, see:

Daniel Henninger. "WONDER LAND; Story of the Year; You have to be obtuse to stare at this jobs record and pretend it isn't happening." The Wall Street Journal (Thursday, March 7, 2019): A15.

(Note: bracketed date added.)

(Note: the online version of the commentary has the date March 6, 2019.)






March 19, 2019

Chernobyl Discredited Communism, Not Nuclear Power



(p. C2) In his chilling new book, "Midnight in Chernobyl," the journalist Adam Higginbotham shows how an almost fanatical compulsion for secrecy among the Soviet Union's governing elite was part of what made the accident not just cataclysmic but so likely in the first place. Interviewing eyewitnesses and consulting declassified archives -- an official record that was frustratingly meager when it came to certain details and, Higginbotham says, couldn't always be trusted -- he reconstructs the disaster from the ground up, recounting the prelude to it as well as its aftermath. The result is superb, enthralling and necessarily terrifying.


. . .


Higginbotham describes young workers who were promoted swiftly to positions of terrific responsibility. In an especially glaring example of entrenched cronyism, the Communist Party elevated an ideologically copacetic electrical engineer to the position of deputy plant director at Chernobyl: To make up for a total lack of experience with atomic energy, he took a correspondence course in nuclear physics.

Even more egregious than some personnel decisions were the structural problems built into the plant itself. Most fateful for Chernobyl was the baffling design of a crucial safety feature: control rods that could be lowered into the reactor core to slow down the process of nuclear fission. The rods contained boron carbide, which hampered reactivity, but the Soviets decided to tip them in graphite, which facilitated reactivity; it was a bid to save energy, and therefore money, by lessening the rods' moderating effect. Higginbotham calls it "an absurd and chilling inversion in the role of a safety device," likening it to wiring a car so that slamming the brakes would make it accelerate.


. . .


. . . Chernobyl exposed the untenable fissures in the Soviet system and hastened its collapse; the accident also encouraged Mikhail Gorbachev to pursue drastic reforms with even more zeal.

Higginbotham observes that the plant was run like the Soviet state writ large -- with individuals expected to carry out commands from on high with an automaton's acquiescence. At the same time, when it came time to assess responsibility for the disaster, any collectivist fellow feeling evaporated, as the ensuing show trials insistently scapegoated a few individuals (some of them already dead) in a desperate attempt to keep a crumbling system intact.

The accident also decimated international confidence in nuclear power, and a number of countries halted their own programs -- for a time, that is. Global warming has made the awesome potential of the atom a source of hope again and, according to some advocates, an urgent necessity; besides, as Higginbotham points out, nuclear power, from a statistical standpoint, is safer than the competing alternatives, including wind.



For the full review, see:

Jennifer Szalai. "BOOKS OF THE TIMES; Nuclear Disaster In Chilling Detail." The New York Times (Thursday, Feb. 7, 2019): C2.

(Note: ellipses added.)

(Note: the online version of the review has the date Feb. 6, 2019, and has the title "BOOKS OF THE TIMES; An Enthralling and Terrifying History of the Nuclear Meltdown at Chernobyl.")


The book under review, is:

Higginbotham, Adam. Midnight in Chernobyl: The Untold Story of the World's Greatest Nuclear Disaster. New York: Simon & Schuster, 2019.






March 18, 2019

Farsighted Engelbart Saw That Computers "Would Aid Humans, Not Replace Them"



(p. A15) On Dec. 9, 1968, Doug Engelbart of the Stanford Research Institute presented what's now known as "The Mother of All Demos." Using a homemade modem, a video feed from Menlo Park, and a quirky hand-operated device, Engelbart gave a 90-minute demonstration of hypertext, videoconferencing, teleconferencing and a networked operating system. Oh, and graphical user interface, display editing, multiple windows, shared documents, context-sensitive help and a digital library. Mother of all demos is right. That quirky device later became known as the computer mouse. The audience felt as if it had stepped into Oz, watching the world transform from black-and-white to color. But it was no hallucination.


. . .


The coolest thing about this story is that, starting 20 years ago, Doug Engelbart was my next-door neighbor.


. . .


One of Engelbart's biggest influences was Vannevar Bush's 1945 essay, "As We May Think," which envisioned a "memex" machine--a portmanteau of "memory" and "index"--that would enhance human cognition. While I chased my kids' errant basketballs in his backyard, Doug would tell me about this sort of "human augmentation," arguing that computer science was developing in ways that would aid humans, not replace them.



For the full commentary, see:

Andy Kessler. "Life as We Know It Turns 50; The 1968 'Mother of All Demos' showed the world a vision for modern computing." The Wall Street Journal (Monrday, Dec. 3, 2018): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Dec. 2, 2018.)






March 17, 2019

Entrepreneur Shafer Learned from Sweet Serendipitous Mistake



(p. 24) John Shafer, who abandoned a career as a Chicago publishing executive to join the vanguard of a new generation of vintners in California's Napa Valley, died on March 2 [2019] in the city of Napa.


. . .


Mr. Shafer (pronounced SHAY-fer) was 47 when he resolved to acquire a winery as an absentee owner and one day retire as a gentleman farmer. His horticultural experience had been limited to planting flowers in his front yard.

But within six months of that decision, he took a leap. He left his job at what he described as an ossified company to take up a second career in which he could be his own boss and work outdoors.


. . .


. . . as a newcomer to the Napa Valley, which was just beginning to attract winemakers who popularized individual vineyards, he had neglected to hire a sufficient number of grape-pickers far enough in advance. That left the fruit riper -- and sweeter -- than the industry norm when the grapes were harvested.

"Shafer thought he ruined his wine, but instead it turned out to be the ripe signature style that has defined Shafer wines for the past four decades," Wine Spectator magazine said.



For the full obituary, see:

Sam Roberts. "John Shafer, Executive Turned Winemaker, Dies at 94." The New York Times, First Section (Sunday, March 10, 2019): 24.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the obituary has the date March 7, 2019, and has the title "John Shafer, 94, Who Made Triumphant Leap Into Winemaking, Dies.")


.







Eight Most Recent Comments:



PaulS said:

The "Machines Are Not Capable of Creativity" argument and the no-human-obsolescence argument seem to talk directly past each other. After all, the present-day world is stuffed to the brim (and well beyond) with government and other regulations expressly designed to suppress "creativity" at all cost, in the name of "safety". That is, in a context of irrationally radical risk aversion - the quest for absolutely zero risk - the societal "we" often seek to rid ourselves of "creativity".

Thus, "creativity" has become largely restricted to a minuscule minority (further shrunken by metastasizing copyright and patent regulations that concentrate funds ever more narrowly), and/or, sometimes, to tasks that matter little, such as entertainment. Most "jobs" or "gigs" are left as tightly controlled drone work. "True" artificial intelligence is thus utterly unnecessary to obsolete most of the humans performing them. "Big Data" and "Big Software" will completely suffice. (The last thing you want in a self-driving taxi, or even in a political-correctness-driven professorship, is "true" AI: at least for now, it would be a lawsuit magnet, far too unpredictable.)

With the definition of "safety" steadily metastasizing to include even the most utterly trivial discomforts (viz. the campus 'snowflakes'), the only excuse left for most jobs to exist might be a desire for "the human touch". Indeed, the lack of said touch is one complaint about kiosks that replace restaurant counter clerks or waiters.

But once the primary justification for jobs to exist is to enable the most affluent to go on receiving "the human touch" - i.e. to enable them to pull rank - the process will not end well. People hate to be on the receiving end of rank-pulling. We will become stuck with either a guaranteed-income approach, or else a widespread, intensely Luddite reaction.

This is all destined to become "interesting" - but likely, alas, mainly in the accursed sense.



PaulS said:

Probably this should be unsurprising for a number of reasons, even going beyond the article.

Today's zeitgeist, of course, tells us that everyone should become a Web designer living four to a tiny dorm room in a skyscraper in grossly overpopulated urban California. As if most tech products haven't been fully mature for years or even decades, with updates mainly confined to befuddling customers with never-ending capricious changes to the functions of device or software controls (e.g. quick, how exactly do you summon up the "home screen" this week? Or is said screen now a wholly inscrutable tri-level icon-menu?)

So, what use are more techies? But even if there are better things to do, many such things "don't get no respect" amidst the STEM panic.

Then there's the seasonal aspect. The great majority of construction - homes and otherwise - seems to be done, these days, in the torrid (and ever-rising, especially in paved-over urban areas) heat of high summer. This is not completely new, but, well, air-conditioning has been widespread for decades now. There's no longer much need or desire to go outside to escape the even worse heat inside buildings and houses. Even poor-ish countries like China are rapidly acquiring A/C.

Now, once central heat became widespread, people stayed inside to escape the freezing, dark depths of winter. That is a trope, for example, with Christie's Hercule Poirot, derided as a "dandy" by his presumably more manly fictional contemporaries, for disliking cold, chilly old English houses lacking proper heat. And indeed, rather little outdoor construction goes on in the north in January.

Given that, why wouldn't sensible people now also want to stay inside during the blistering heat of high summer? Certainly, there are many ways to earn a living without torturing oneself in a furnace. (And, ignore all the caterwauling, why wouldn't sensible kids want to play video games in a nice comfortable living room instead of parboiling miserably outside?)

At the end of the day, construction - i.e. working under awful conditions few humans wish to tolerate any longer - seems like a great opportunity for robotics. Alas, what is hyped as "artificial intelligence" (AI) is usually nothing of the kind, or else is so ultra-narrowly specialized (think chess or go) as to be of little or no broad use. Nonetheless, a great deal of robotics can be built already without true AI, and such AI will eventually arrive too.

So why isn't more robotics used? Why isn't more outdoor construction shifted away from high summer, as it is from the worst of winter, i.e. to spring and fall? Why isn't there tremendously more factory prefabrication? Why do so many construction sites - buildings and highways - still look, despite the use of diesel engines and such, so very nineteenth-century?



PaulS said:

Wonderful. Let's go for strict temporal gating as well as spatial gating. Exile everyone not made of money to the anti-social hours of the clock as well as the monster commutes of the far reaches of Queens and Staten Island. How about fixing the subways, and abolishing the nonsense that makes it take 90 years to build one small 2nd Ave line? How about dispersing the overconcentration of people a bit? It's a huge country and modern communication exists. How about paying for same by taxing the living daylights out of the billionaire rentier class who create the problem by forcing ever more people to cram into highly dysfunctional megacities as the price of having any income at all? You gotta love the nexus between airheaded liberals who want to pile everyone on Earth with a sob story into a few US-ian megacities (rather than fix their own governments and problems), and economics types who then want to punish the very same folks by blocking off absolutely everything with an extortionate toll gate. Not.



PaulS said:

"when the alternative is to have $10 and go thirsty"

In the real world, the politics will get "interesting" with respect to folks who *don't* have $10 to pay for what normally costs $1 or $0.10, and will therefore go thirsty, or be stranded, or worse. Then, also be aware of simple resentment. Then, aggravate the anger with runaway inequality so extreme that the elites running the show will not be inconvenienced in the slightest by any likely level of 'gouging'. Then brace for a social explosion.

All told, it seems fatuous to expect very many people to be happy about being charged, say, an entire car payment just to get home across town from the holiday party. (It seems even more fatuous to expect happiness when the 'gouging' comes as an ongoing life-upending surprise, as with I-66 in Virginia.)

It helps to instead ground oneself in reality. After doing so, it's ridiculously easy to imagine the relevant government and/or employer simply declaring, for example: "If you wish to be allowed to drive a taxi at all, then you will make yourself available, to some specified extent, even at times that may be inconvenient for you."

Indeed, such rules and regulations are utterly banal and commonplace. Nary a soul would weep for Uber if it and its drivers were regulated - even rather harshly - in such a manner. Of course, some souls would become exercised over the minor economic inefficiency of such regulation, but they would number far too few to matter.



PaulS said:

"Dr. Gray was skeptical about the causes of climate change, prompting vitriolic exchanges with other scientists. Judith A. Curry, who was chairwoman of the School of Earth and Atmospheric Sciences at the Georgia Institute of Technology, accused him of 'brain fossilization.'"

I had no idea. These days, after all, Curry is very much in the doghouse as a "climate denier". Wow. What, then, can we deduce about the typical (or merely politically-correct?) level of hysteria in the "climate community"? Of course, many in said "community" would force most of us back into the Stone Age while they themselves continue to jet across the world at whim to attend "conventions" in order to signal virtue by delivering half-hour diatribes on saving the "planet" from impending doom.

Maybe, then, The Donald is right (???!) that it is fairly safe to behave just as the doomers do, and ignore the threat - and their own diatribes - as a practical matter? Wouldn't that be weird?



PaulS said:

Another case in point: between them, Google, Tesla, and others have spent countless billions on mapping the USA, enough for at least $1000/mile including every last obscure Forest Service track. That should be more than enough to catalog everything down to the embossing style on every manhole cover. And yet a person can find their way to Grandma's new house with vague turn-by-turn directions or a vague line-sketch that shows no details whatsoever about the road surface or the sidewalks or the crosswalks. And a person will manage the task without needing, in advance, a finely detailed map of the current construction projects, including lane changes etc. But that severe incompleteness won't stop morally-posturing politicians from forcing autonomous cars onto the populace years or even decades before they are actually ready for unsupervised consumer use. That is the essentially only kind of use they will get in the real world. After all, politicians love to posture, they love to toady up to rent-seeking billionaires, and they love photo-ops of themselves gawking at shiny new tech gadgets. Note that when signals were first installed on the Chicago El, the accident rate went up for a time, as trained motormen became careless about watching where they were going. Not-so-trained consumers will be far too busy fiddling with their phones to be ready to take over on a split-second's notice.



PaulS said:

And there will be unicorns. So we'll have some remote working, but we'll be jailing ever more techies in a few obscenely overcrowded, otherworldly-expensive megacities. Just as Microsofties once told us wasting two days on the now-infamously godawful airlines just to physically attend an hour meeting was going away, but both the meetings and the airlines only got worse and worse.

So not really a big deal, just another stylistic business fad. Those come and go like mayflies - while being crammed, confined, and nailed down, remains eternally.



rjs said:

there's a lot GDP doesnt capture, but i'm not sure where Feldstein is coming from about statins...the consumption of drugs is included in the non-durable goods component of PCE, consumption of health care services by themselves account for 12% of GDP, and R & D would be included in investment in intellectual property products.. the problem is that everyone is trying to make GDP into something it's not...it's a measure of goods and services produced by the economy, full stop. it's not intended to measure increases in life expectancy or well being, or any other intangibles..





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