July 2006 – Page 2 – artdiamondblog.com

Job Hopping May Aid Technological Experimentation

When employees jump from company to company, they take their knowledge with them. ”The innovation from one firm will tend to bleed over into other firms,” Professor Rebitzer explained. For a given company, ”it’s hard to capture the returns on your innovation,” he went on. ”From an economics perspective, that should hamper innovation.”

He found a possible answer to the puzzle in the work of two management scholars, Carliss Y. Baldwin and Kim B. Clark. In their book ”Design Rules: The Power of Modularity” (MIT Press, 2000), they argued that when there is a lot of technological uncertainty, the fastest way to find the best solution is to permit lots of independent experiments. That requires modular designs rather than tightly integrated systems.

”By having a lot of modular experimenters, you can take the best, which will be a lot better than the average,” Professor Rebitzer said. Employee mobility may encourage productive innovation, as people quickly move to whichever company comes up with the best new technology.

. . .

To Professor Rebitzer’s surprise (though not his co-authors’), it turns out that Silicon Valley employees really do move around more often than other people. The researchers looked at job changes by male college graduates from 1994 to 2001. During that period, an average of 2.41 percent of respondents changed jobs in any given month.

But, they write, ”living in Silicon Valley increases the rate of employer-to-employer job change by 0.8 percentage point.”

”This effect is both statistically and behaviorally significant — suggesting employer-to-employer mobility rates are 40 percent higher than the sample average.”

For the full commentary, see:

VIRGINIA POSTREL. "ECONOMIC SCENE; In Silicon Valley, Job Hopping Contributes to Innovation." The New York Times (Thursday, December 1, 2005): C4.

A PDF of the paper by Rebitzer and colleagues is downloadable at: http://www.federalreserve.gov/Pubs/feds/2005/200511/200511abs.html

The book Postrel praises, is:

Source of book image: http://www.amazon.com/gp/product/customer-reviews/0262024667/104-2835260-2878345?redirect=true

Gateway Features artdiamondblog.com

Source of graphic: online version of The Gateway article cited below.

The Gateway, the student newspaper at the University of Nebraska at Omaha, ran a nice feature article on artdiamondblog.com on July 18, 2006, as the first installment of a projected series on blogs created by members of the campus community.

If you click the citation below, you will arrive at the online version of the feature:

Reed, Charley. "Meet the Blogger: UNO Professor Art Diamond." The Gateway (Tues., July 18, 2006): 3.

For your convenience, the text of the feature also appears below.

Continue reading “Gateway Features artdiamondblog.com”

Entrepreneurial Archaeology

In the "Dig for a Day" program, participants pay $25.00 to spend three hours helping to excavate a Tel Maresha cave. Source of the image: the online version of the NYT article cited below.

While most archaeological excavations require hundreds of thousands of dollars, Mr. Alpert said, this one is unusual because it is self-supporting. “We have the people working and paying for the work, which has proven itself archaeologically and from a tourism standpoint,” he said. “That’s why we are able to dig for so long.” The Maresha excavation is licensed by the Israeli Antiquities Authority, and reports are submitted each year to evaluate its scientific contribution.

“This is the ultimate chutzpah,” said Ian Stern, another of the company’s three owners, who has a doctorate in archaeology and emigrated to Israel from New Jersey (the third owner is Asher Afriat, a historian and native Israeli). “We are providing the public with an active educational experience, while they do the work. Their money underwrites the excavation and is used for all the follow-up of putting the pottery together, registering and photographing the finds, and writing the scientific reports.”

For the full story, see:

CAREN OSTEN GERSZBERG. "Family Journeys; Israel; Amateur Archaeologists Get the Dirt on the Past." The New York Times, Section 5 (Sun., July 16, 2006): 11.

Amateur archaeologists excavate a cave. Source of the image: the online version of the NYT article cited above.

Internet Increases Variety of Goods, Services, and Culture

Source of book image: the WSJ review cited below.

According to Mr. Anderson, technology is not just accelerating the delivery of traditional pop culture but affecting the choices we make. The key to such change is a phenomenon he calls "the long tail."

In a traditional graph of sales and demand, there is a stratospheric swoop upward where hot products and services are tracked, and a long descending line tracing the less spectacular performance of low-volume also-rans. For years, these outliers fell off the edge of the market or held only a marginal position, with minimal profits. These days, though, technology has allowed such niche interests to thrive, finding steady customers and rising levels of interest.

For the full review, see:

STEVEN ZEITCHIK. "BOOKS; A Nichefied Mediaquake; Technology has revolutionized distribution, but doesn’t talent still matter?" The Wall Street Journal (Sat., July 8, 2006): P8.

Anderson’s book highlights an important result of the internet revolution: the increase in the variety. In an earlier academic article, that discusses and measures this effect, Erik Brynjolfsson and his co-authors (see below) looked at the effects of Amazon.com on consumers. They found a substantial benefit to consumers from lower book prices, due to more competition, and better information. But their surprising result was that they found a much larger benefit to consumers from the greater variety of books that Amazon.com makes readily available.

The darkened long tail in graph below roughly represents the books available through Amazon that would not be available in even the very largest ‘bricks-and-mortar’ book store.

There are important implications for both readers and writers. Readers are more likely to find the kinds of books they want. Writers are more likely to find a sufficient readership to be able to sustain themselves through their writing.

Source of graph is p. 1589 of: Brynjolfsson, Erik, Yu (Jeffrey) Hu, and Michael D. Smith. "Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers." Management Science 49, no. 11 (2003): 1580-96.

The citation for the Anderson book is:

Anderson, Chris. The Long Tail. Hyperion, 2006. (238 pages, $24.95)

Entrepreneurial Philanthropy

Some major donors who want to make a difference during their lives. Source of graphic: online version of WSJ article cited below.

(p. A1) "If we give it away now, we’re going to do a good job with it, instead of leaving it to future generations of foundation folks," says Herbert M. Sandler, 74 years old. He and his wife, Marion, intend to donate the $2 billion they expect from the sale of the California savings and loan Golden West Financial Corp. before "we shuffle off this mortal coil."

The Sandlers’ plan, like Mr. Buffett’s $30 billion gift to the Gates foundation announced last month, exemplifies the changing pattern of U.S. philanthropy — and the (p. A8) Gates organization’s increasing influence over it. The charitable titans of today are unlike many of the old-school business bluebloods who sought to immortalize their names by setting up foundations that parceled out small gifts forever. Instead, some of America’s wealthiest moguls-turned-philanthropists — Eli Broad, Charles Bronfman, Lawrence Ellison, Michael Milken and Sanford Weill, among others — favor spending money faster, while retaining a high degree of control and demanding more accountability from the programs they fund.

. . .

By contrast, some of today’s tycoons increasingly limit the time frame, leaving tomorrow’s magnates to handle tomorrow’s problems. Mr. Bronfman, an heir to the Canadian liquor fortune, says he plans to exhaust the money in his $120 million foundation by 2020. He is spending at a $12 million to $14 million a year clip. "Why should I saddle the next generation with something I’m passionate about?" he says. "Let them have their own passions and do their own things." Mr. Bronfman, 75, believes in narrowly targeted goals — in his case, they include helping pay for young Jews to visit Israel. So far, his organization has had a hand in sending 112,000 people on such trips.

Mr. Milken, a financier who served two years in jail for securities fraud in the 1990s, funds medical research and K-12 education; he founded the Prostate Cancer Foundation in 1993 after being diagnosed with the disease himself. He said the six foundations he and his brother Lowell have established — which have funds of about $350 million — spend an average of 15% of their assets each year. Three of the six have attracted a total of $300 million in gifts from outside donors who, like Mr. Buffett, preferred supporting existing ventures to starting their own.

Mr. Milken said he negotiates with medical centers to make sure gifts go to research and clinical trials rather than overhead. In return, his foundations waive patent rights to any discoveries made as a result of their funding. "You can’t just write checks," he said. "You have to be actively involved. You have to introduce new management, marketing, other types of activities to empower medical research."

Mr. Sandler and his wife, Marion, have no patience for big foundations that spend 5% annually. "They are never going to give it [all] away," he says. Many foundations, he adds, "become bureaucratic."

He and his wife built their Oakland S&L, Golden West, from a small thrift into the nation’s second largest savings and loan by emphasizing lean operations and a laser-like focus on home lending. The couple, who are co-chief executives, recently agreed to sell the company to Wachovia Corp.

The Sandlers have already given heavily to start the Center for Basic Research in Parasitic Diseases at University of California at San Franciso’s medical school. The center focuses on Third World diseases neglected by major drug companies. Along with malaria, the family’s philanthropy has focused on finding treatment for the millions in South America afflicted by Chagas disease, a deadly insect-born ailment. A donor to the Democratic Party, Mr. Sandler has also backed progressive causes, including Human Rights Watch, the American Civil Liberties Union, and Association of Community Organizations for Reform Now, Acorn.

Mr. Sandler patterns his giving after the Gates foundation. He admires the Gates foundation’s program in Zambia, fighting malaria, and hopes to work together to replicate its methods in other countries. Like Mr. Gates, Mr. Sandler is looking for "gaps" in giving that he can fill, such as basic scientific research shunned by most big drug companies. Another interest: fighting asthma, which disproportionately afflicts the poor in inner-city America.

Mr. Sandler says he’s not afraid to take risks with his money, the same way he did in business. And he doesn’t want a foundation that, after his death, would spend frugally just to stay in business, or support causes far from his heart. "One prays that when we are going down the tubes, we will be giving that last million dollars," he says.

For the full story, see:

JOHN HECHINGER and DANIEL GOLDEN. "The Great Giveaway; Like Warren Buffett, a new wave of philanthropists are rushing to spend their money before they die." The Wall Street Journal (Sat., July 8, 2006): A1 & A8.

Source of graphic: online version of the WSJ article cited above.

Entrepreneurs Saluted in Orange Business Services Ad

Source of screen captures: the downloaded Orange Business Services BBC World ad cited below.

Last month (June 2006) when I was in France, I saw a fun Orange Business Services ad on BBC World. Two entrepreneurs open their fast food truck in the middle of an empty desert. Something like a comet strikes the desert and a crowd of cars appears and a line forms at the truck. The entrepreneurs smile. Tag line: "here’s to the entrepreneur in all of us."

Orange Business Services let’s you watch, or download, the ad at: http://www.francetelecom.com/sirius/obs/en/index.html?cmp=BAC-van-bbcworld

(I saw the ad in Sophia Antipolis, France on BBC World, at about 7:10 AM, French time, on 6/23/06.)

Free International Labor Markets

As a fellow-signer of the Open Letter, I second Professor Armentano’s response to Rep. Rohrabacher:

So according to Rep. Dana Rohrabacher (Letters, July 5), economists who advocate relatively free international labor markets must be "lefty academics." Oh, yeah? I thought that "lefties" took the opposite position, that government (and not the market) should control resource availability in the so-called "national interest." And I also thought that advocating the removal of restrictions and penalties on the free movement of labor and other resources was the essence of a free-market position.

The economists (such as myself) who signed the Independent Institute’s Open Letter to the President on immigration were taking a consistent free-market position. We hardly need to be slandered with a label that implies the exact opposite

Source:

Dominick T. Armentano. "Open Letter to President Was a Free-Market Stance." The Wall Street Journal (Sat., July 8, 2006): A11.

The text of the Open Letter can be found at: http://www.independent.org/newsroom/article.asp?id=1727

Or access the Open Letter by clicking the link below:

Continue reading “Free International Labor Markets”

When Public Schools Fail, Give Parents a Refund

Writing on Weds., July 12th, libertarian litigator Clint Bolick, seeks to improve failing schools by using the courts to increase parental choice:

A world of education reform will change tomorrow when a group of families files a class action lawsuit in Chancery Court in Newark, N.J. They are asking for an immediate and meaningful remedy for 60,000 children trapped in failing schools — by transferring control over education funds from bureaucrats to parents.

Seeking to vindicate the state constitutional guarantee of a "thorough and efficient" education, the plaintiffs in Crawford v. Davy ask that children be allowed to leave public schools where fewer than half of the students pass the state math and language literacy assessments that measure educational proficiency; and that the parents of these children be permitted to take the pro rata share of the public money spent on their children, to seek better opportunities in other public or private schools. Supporting the families are three prominent New Jersey groups: the Black Ministers Council, the Latino Leadership Alliance, and Excellent Education for Everyone.

The remedy these parents seek is fundamentally different from the one established by more than three decades of litigation across the country. Courts in states like New York, Texas and California have ordered massive increases in school funding to fulfill state constitutional mandates for educational "equity" or "adequacy," all on the belief that more money will boost school quality and student performance. The funds have produced new programs and bureaucracies, but too often they fail to trickle down to the students by way of improved educational quality.

In any area other than education such a remedy would be considered bizarre. Suppose you purchased a car whose warranty promised "thorough and efficient" transportation, and it turned out to be a lemon. If you sued to enforce the warranty, would a court order a multibillion dollar payment to the auto maker in the hope that someday it would produce a better product? Of course not: It would order the company to give your money back so you could buy a different car.

For the full commentary, see:

CLINT BOLICK. "Remedial Education." The Wall Street Journal (Weds., July 12, 2006): A16.

Buffett and Gates Should Strengthen Foundations of Free-Market

If Warren Buffett is as serious about doing good with his wealth, as he was in becoming wealthy, he would ponder the Wall Street Journal‘s sage editorial page advice:

We can’t think of two people less in need of our two cents than Messrs. Buffett and Gates. But since giving free advice is our business, we’d suggest that they put at least a smidgen of their money back into strengthening the foundations of the free-market system that has allowed them to become so fabulously rich. There’s something to be said for reinvesting in the moral capital of a free society and trying to sustain and export free-enterprise policies.

Capitalism has done very well not just by Mr. Buffett but also by the world’s poor, as several hundred million Chinese and Indians might attest. African nations in particular need property rights and a rule of law as badly as they need vaccines. On that score we were encouraged by a report this week that the Gateses thanked Mr. Buffett for his gift by presenting him with a book from their personal library: Adam Smith’s "The Wealth of Nations."

For the full editorial, see:

"Mr. Buffett’s Gift." The Wall Street Journal (Weds., June 28, 2006): A14.

Test That Showed No Life on Mars, Now Also Shows No Life on Earth, Either

One of the Viking landers on Mars. Source of photo: http://www.msss.com/mars/pictures/viking_lander/viking_lander.html

When scientists announced Monday that the search for life on Mars 30 years ago may not have been quite the bust it has long been portrayed, it didn’t mean that the mission had missed any microorganisms, let alone advanced life forms. But it did underline the growing sense that decades of assumptions about extraterrestrial life need serious re-examination.

In 1976, scientists studying data sent back by the Viking landers were quick to dismiss life on Mars. . . .

. . .

Some three decades later, more-sophisticated instruments have shown that the Vikings couldn’t have detected organic molecules even if any were present. When scientists fed soil from the Atacama Desert of Chile and Peru, and the Dry Valleys of Antarctica, experiments like those the Vikings conducted came up empty. Yet, new techniques show the samples contained 10 to 1,500 micrograms of carbon per gram.

"If we knew this 30 years ago, our interpretation of the Viking results would have been very different," says Rafael Navarro-González of Mexico’s National Autonomous University, who led the study published in Proceedings of the National Academy of Sciences.

For the full story, see:

SHARON BEGLEY. "SCIENCE JOURNAL; Scientists Revisit Data On Mars With Minds More Open to ‘Life’." The Wall Street Journal (Fri., October 27, 2006): B1.

Global Warming Ranked at Bottom of World Priorities by Economists and Ambassadors

Bjorn Lomborg. Source of image: online version of WSJ article cited below.

(p. A10) Bjorn Lomborg busted — and that is the only word for it — onto the world scene in 2001 with the publication of his book "The Skeptical Environmentalist." A one-time Greenpeace enthusiast, he’d originally planned to disprove those who said the environment was getting better. He failed. And to his credit, his book said so, supplying a damning critique of today’s environmental pessimism. Carefully researched, it offered endless statistics — from official sources such as the U.N. — showing that from biodiversity to global warming, there simply were no apocalypses in the offing. "Our history shows that we solve more problems than we create," he tells me. For his efforts, Mr. Lomborg was labeled a heretic by environmental groups — whose fundraising depends on scaring the jeepers out of the public — and became more hated by these alarmists than even (if possible) President Bush.

Yet the experience left Mr. Lomborg with a taste for challenging conventional wisdom. In 2004, he invited eight of the world’s top economists — including four Nobel Laureates — to Copenhagen, where they were asked to evaluate the world’s problems, think of the costs and efficiencies attached to solving each, and then produce a prioritized list of those most deserving of money. The well-publicized results (and let it be said here that Mr. Lomborg is no slouch when it comes to promoting himself and his work) were stunning. While the economists were from varying political stripes, they largely agreed. The numbers were just so compelling: $1 spent preventing HIV/AIDS would result in about $40 of social benefits, so the economists put it at the top of the list (followed by malnutrition, free trade and malaria). In contrast, $1 spent to abate global warming would result in only about two cents to 25 cents worth of good; so that project dropped to the bottom.

"Most people, average people, when faced with these clear choices, would pick the $40-of-good project over others — that’s rational," says Mr. Lomborg. "The problem is that most people are simply presented with a menu of projects, with no prices and no quantities. What the Copenhagen Consensus was trying to do was put the slices and prices on a menu. And then require people to make choices."

Easier said than done. As Mr. Lomborg explains, "It’s fine to ask economists to prioritize, but economists don’t run the world." . . .

So all the more credit to Mr. Lomborg, who several weeks ago got his first big shot at reprogramming world leaders. His organization, the Copenhagen Consensus Center, held a new version of the exercise in Georgetown. In attendance were eight U.N. ambassadors, including John Bolton. (China and India signed on, though no Europeans.) They were presented with global projects, the merits of each of which were passionately argued by experts in those fields. Then they were asked: If you had an extra $50 billion, how would you prioritize your spending?

Mr. Lomborg grins and says that before the event he briefed the ambassadors: "Several of them looked down the list and said ‘Wait, I want to put a No. 1 by each of these projects, they are all so important.’ And I had to say, ‘Yeah, uh, that’s exactly the point of this exercise — to make you not do that.’" So rank they did. And perhaps no surprise, their final list looked very similar to that of the wise economists. At the top were better health care, cleaner water, more schools and improved nutrition. At the bottom was . . . global warming.

For the full interview, see:

KIMBERLEY A. STRASSEL. "The Weekend Interview with Bjorn Lomborg; Get Your Priorities Right." The Wall Street Journal (Sat., July 8, 2006): A10.

(Note: first ellipsis is added; the second ellipsis is in the original.)

Source of book image: http://www.amazon.com/gp/product/customer-reviews/0521010683/ref=cm_cr_dp_2_1/104-0101568-2686373?ie=UTF8&customer-reviews.sort%5Fby=-SubmissionDate&n=283155