Chinese Price Ceilings on Diesel Fuel Cause Shortages

“Looking for usable coal at a cinder dump in Shanxi Province in China. Inadequate coal in the north limited power production.” Source of the caption and photo: online version of the NYT article quoted and cited below.
The article quoted below uses the word “tariff” in the sense of “price.”

(p. C4) HONG KONG — The Chinese government issued an “urgent notice” on Wednesday to the country’s power generators, coal companies and railways to address an electricity shortage that has led to rationing in more than a third of China’s provinces in recent weeks.
The rationing, mostly achieved by telling factories that their power will be shut off for a day or two each week, coincides with the annual frenzy of factory production to meet orders before shutting down for the Chinese New Year holidays, which fall in early February this year.
. . .
Power executives and government statements attributed the electricity shortfall this winter to a confluence of problems. Many of the problems appear to have their roots in the government’s imposition of a long list of price controls in recent months in an attempt to tamp down inflation, which reached 6.9 percent at the consumer level in November.
Trucks did not deliver adequate coal stockpiles to power plants before winter snows arrived in northern China, partly because of nationwide diesel shortages. Refiners had cut back on the production of diesel because price controls were forcing them to sell the diesel for slightly less than the cost of the crude oil needed to make it.
. . .
Low electricity tariffs, particularly for residential users, have been another problem.
The central government issued an official “suggestion” to provincial governments last fall that they not allow increases in electricity tariffs charged to customers, as part of national price controls.
Provincial governments have responded by freezing tariffs, and even reducing them in the case of Guangdong Province in southeastern China, the home of much of the country’s export-oriented light industry.
The low tariffs have made it uneconomical for oil-fired plants to operate, and many have stopped doing so.
“It makes absolutely no sense for anyone to run a diesel- or oil-fired plant. They’re all shut down,” said a power company executive in China who asked not to be identified because of the sensitivity of commenting on regulatory policies.
The executive added that even when ordered by the government to resume operating at a loss, many state-owned oil-fired plants had not done so, scheduling maintenance and repairs instead.

For the full story, see:
KEITH BRADSHER. “Pinched by Price Controls, Power Plants in China Scale Back.” The New York Times (Thurs., January 24, 2008): C4.
(Note: ellipses added.)

Puzzle: Entrepreneurial Silicon Valley Donates Mainly to Democrats


    Source of graphic:  online version of the NYT article quoted and cited below.

Entrepreneurship thrives when government is small, so it puzzles me when the entrepreneurs in Silicon Valley embrace the Democrats, who generally advocate bigger government.
Of course, my Wabash professor Ben Rogge used to point out that there are always cross-currents that go in a different direction from the mainstream. And among the Democrats, there are what used to be called “new Democrats” who appreciate Schumpeter, and entrepreneurship, and dynamism.
Plus, some Democrats are more respectful of personal, lifestyle choices, and in Silicon Valley, that may be what is given the most weight.
Or, more cynically, maybe there’s a public choice explanation—that Silicon Valley donates to Democrats as a form of ‘insurance,’ in the hope that if the Democrats are elected, they will refrain from over-regulating and over-taxing Silicon Valley. (Even more cynically, compare the case of Florida’s sugar-subsidy-rich Fanjul brothers, one of whom donated huge bucks to the first Bush, while another donated huge bucks to Bill Clinton.)
(Another factor is that, alas, entrepreneurs often do not pay much attention to what conditions encourage entrepreneurship.)

(p. C4)  In a flip from the primary season for the 2000 presidential election, 60 percent of the contributions so far from people in the technology field here are going to Democrats. The Democratic candidates raised $1.4 million from the industry in the first half of this year, while Republican candidates raised $890,000. That total is up from $1.2 million in the first six months of each of the last two presidential primary races.


For the full story, see: 

LAURIE J. FLYNN.  "In Primary, Tech’s Home Is a Magnet." The New York Times  (Fri., August 24, 2007):  C1 & C4.


Persistence and Efficiency Matter More than Teamwork and Enthusiasm, for CEO Success



Source of image: online version of the WSJ article quoted and cited below.


(p. B3)  What are the traits that chief executives of successful companies share? A new study suggests that hard-nosed personal virtues such as persistence and efficiency count for more than “softer” strengths like teamwork or flexibility.

The findings are sure to intensify debate about how much toughness is appropriate in a CEO. Some famously hard-charging bosses of big companies have retired or been shunted aside in recent years. Successors at companies such as General Electric Co., International Business Machines Corp. and Hewlett-Packard Co. are seen as quieter, less strident team-builders.

But the new study, by three University of Chicago business-school professors, draws on detailed personal assessments of 313 CEO candidates to present a starker view of good leadership’s ingredients. Of these candidates, 225 were hired. Their subsequent performance fuels most of the study’s conclusions.

“We found that ‘hard’ skills, which are all about getting things done, were paramount,” says lead author Steven Kaplan, a professor of finance and entrepreneurship. “Soft skills centering on teamwork weren’t as pivotal. That was a bit of a surprise to us.”

Prof. Kaplan and colleagues Mark Klebanov and Morten Sorensen didn’t size up the CEOs themselves. Instead, they tapped into a consultant’s database long coveted by academic researchers. It contains assessments of individuals’ strengths and weaknesses compiled by ghSmart Inc. The Chicago management-assessment company evaluates CEO candidates on behalf of corporate clients.

For the full story, see:

GEORGE ANDERS. “THEORY & PRACTICE; Tough CEOs Often Most Successful, A Study Finds.”  The Wall Street Journal  (Mon., November 19, 2007):  B3.

Included with the WSJ article was an interesting summary table:


Here are five CEO traits that correlate most closely with business success at buyout companies — and five that score lowest, according to University of Chicago researchers.

Traits that matter…

• Persistence
• Attention to detail
• Efficiency
• Analytical skills
• Setting high standards

…and not so much

• Strong oral communication
• Teamwork
• Flexibility/adaptability
• Enthusiasm
• Listening skills

Private Money Supports Quest for Dinosaur DNA


   Source of graphic: the online version of the WSJ article quoted and cited below.


(p. A1)  JORDAN, Mont. — Prospecting in Montana’s badlands, rock ax in hand, paleontologist Jack Horner picks up a piece of the jawbone of a dinosaur. He examines the splinter, then puts it back and moves on. It isn’t the kind of bone he is looking for.

Prof. Horner is searching for something that many scientists believe no longer exists: dinosaur bones that harbor blood cells, protein and, perhaps, even DNA.

"Most people looking for dinosaurs are looking for beautiful skeletons," he says. "We are looking for information."

. . .  

Prof. Horner, a curator at the Museum of the Rockies in Bozeman, is among the world’s most influential and offbeat paleontologists. He pioneered studies of dinosaur parent-(p. A12)ing behavior, species variation and bone cells. He is dyslexic, a former Special Forces operative of the Vietnam War era, a MacArthur Foundation "genius" fellow, and a chaired professor of Montana State University who never finished a formal college degree.

"The lenses that people normally use to look at stuff are broken in Jack," says Mary Schweitzer, an assistant professor of paleontology at North Carolina State University, who has worked with him for years. "That’s what makes Jack such a good scientist. Every now and then, every field should get a renegade weirdo in it who challenges assumptions."

. . .  

"The chances of finding any [dinosaur] DNA are pretty low," Prof. Horner acknowledges. "I am still hopeful."

In a field mostly outside the mainstream of federal research funding, Prof. Horner has a knack for attracting private grants. Star Wars producer George Lucas, Qualcomm co-founder Klein Gilhousen and Wade Dokken, a developer of Montana real estate, have contributed toward his research, the university says. Nathan Myhrvold, formerly chief technology officer at Microsoft Corp. and co-founder of Intellectual Ventures LLC, is helping to underwrite this season’s fieldwork.

This summer, in Montana’s Hell Creek Formation, Prof. Horner is searching the last landscape inhabited by dinosaurs. More than 65 million years ago, this plain was a wetland where herds of horned Triceratops watered. Today, it is an arid outwash of boulders, cactus and sage. The red and gray soil is littered with white shards of petrified wood that ring like bone china when tapped together and countless crumbs of dinosaur bone.

. . .

"As long as you are not bound by preconceived ideas of what you can find," Prof. Horner says, "there are an awful lot of things you can discover."


For the full story, see:

ROBERT LEE HOTZ. "Dinosaur Hunter Seeks More Than Just Bare Bones; Prof. Horner Searches For Traces of Blood, DNA; Lucky Break From T. Rex."  The Wall Street Journal  (Fri., August 24, 2007):  A1 & A12.

(Note:  ellipses added.)


     At top, Prof. Horner; at bottom: "Sarah Keenan, 21, an undergraduate at the University of St. Andrews in Scotland who is working this summer for Prof. Horner, covers the fossilized triceratops frill in a protective jacket of plaster."  Source of caption and photos: the online version of the WSJ article quoted and cited above.


Bill Gates Reads Julian Simon

(p. A15)  A core belief of Mr. Gates is that technology can erase problems that seem intractable. That belief was deepened, Mr. Gates says, by his study of Julian Simon, a now-deceased business professor who argued that increases in wealth and technology would offset shortages in energy, food and other global resources.
Pacing in his office last week, Mr. Gates retold the story of a famous $10,000 wager between Mr. Simon and Paul Ehrlich, a Stanford University professor who predicted that human population growth would outstrip the earth’s resources.  Mr. Simon bet that even as a growing population increased demand for metals such as tin and copper, the price of those metals would fall within the decade ending in 1990. Mr. Simon won the bet. “He cremated the guy,” says Mr. Gates.  Mr. Ehrlich’s administrator at Stanford University said he was out of the country and couldn’t comment on the wager.

For the full story, see:

ROBERT A. GUTH.  “Bill Gates Issues Call For Kinder Capitalism; Famously Competitive, Billionaire Now Urges Business to Aid the Poor.”  The Wall Street Journal  (Thurs., January 24, 2008):  A1 & A15.

The Right Stuff: “Mr. Armstrong Calmly Went About Improvising a Solution”


     “John Young, from the Apollo 16 crew, works on the lunar surface in April, 1972.”  Source of caption and photo:  online version of the NYT review quoted and cited below.


(p. B14)  When the Apollo 11 astronauts toured the world after their July 1969 moon landing, recalls Mike Collins, the pilot of the mission’s command module, he heard the phrase “We did it” everywhere they went. The “we,” he remembers in David Sington’s documentary “In the Shadow of the Moon,” didn’t refer to Americans, or to any nationality, but to the human race. Millions around the world who had watched on television as men walked on the moon for the first time felt that they had participated in a great adventure that ennobled the species.

. . .

Threaded through the film are fragments of taped interviews with eight other Apollo astronauts: Alan Bean, Gene Cernan, Charlie Duke, Jim Lovell, Edgar Mitchell, Harrison Schmitt, Dave Scott and John Young. These snippets appear almost randomly, in no particular order, and it is impossible to keep track of who’s who. Cumulatively, however, they create a group portrait of explorers with “the right stuff”: men with a much higher resistance to fear than average.

Mr. Collins remembers the intense physical sensations that he experienced during the Apollo 11 mission but that he never associated with panic. What could have been more terrifying than the moment when the module’s computer was found to be overloaded, just as Mr. Armstrong and Mr. Aldrin were about to touch down? But Mr. Armstrong calmly went about improvising a solution.

If there was a lack of fear, there were a thousand little worries. Through every phase Mr. Collins fretted about the details that had to mesh for the mission to be successful. But he never feared for his life. That, in a nutshell, is the right stuff. 


For the full review, see: 

STEPHEN HOLDEN.  “MOVIE REVIEW | ‘IN THE SHADOW OF THE MOON’; When the Moon Was a Matter of Pride.”  The New York Times  (Fri., September 7, 2007):  B14. 

(Note:  ellipsis added.) 


    The earth rising over the moon.  Source of photo:  online version of the NYT review quoted and cited above.


3-D Printers Promise Big Benefits for Consumers


“Lower-price 3-D printers like this one from Z Corp. are spawning new businesses.”  Source of caption and photo:  online version of the WSJ article quoted and cited below.

Neil Gershenfeld has argued that in the not-too-distant-future, ordinary people will have the ability fabricate objects of their own design, in their own home.  His lab at MIT has been developing prototypes to fulfil this vision.  The 3-D printers discussed in the article quoted below, are the earliest exemplars of this vision, to make it to the market.

If this vision is realized, the benefits to consumers could be immense, in terms of variety of products, speed in obtaining products, and consumer control over what is consumed.


(p. B1)  The expansion by 3-D printers into manufacturing is happening thanks to a steady drop in the price of printers, improvements in the materials they can handle and a proliferation in the amount of 3-D data that can be turned into objects.

Historically, the printers cost hundreds of thousands of dollars and were made by a handful of small companies including Z Corp. and Stratasys Inc. But now those and other new companies are producing more-affordable machines priced below $20,000, a change that has radically expanded sales.

The 3-D printing industry is about 20 years old, and in the past two years alone, it has sold around 8,000 machines, or 36% of the industry’s two-decade world-wide sales total of 22,000, according to consulting firm Wohlers Associates.

And sales are likely to increase further: A Pasadena, Calif., venture called Desktop Factory Inc. has already taken 350 pre-orders for a $5,000 3-D printer it plans to roll out next year, says Cathy Lewis, CEO of the company. About 40% of those orders are from universities and 35% from small businesses, she says. The company predicts printers could start finding their way into homes in five years or so.

For the full story, see:

ROBERT A. GUTH.  “How 3-D Printing Figures To Turn Web Worlds Real.”  The Wall Street Journal  (Weds., December 12, 2007):  B1.


The reference to the Gershenfeld book is: 

Gershenfeld, Neil.  Fab: The Coming Revolution on Your Desktop–from Personal Computers to Personal Fabrication.  New York:  Basic Books, 2005.


“World of Warcraft figure made with a 3-D printer.”  Source of caption and photo:  online version of the WSJ article quoted and cited above.

Cubans Salute General Eléctrico

      “Two artists, Alejandro Leyva, left, and Esteban Leyva, with their “General Eléctrico,” found a new use for an old appliance.”  Source of caption and photo:  online version of the NYT article quoted and cited below. 


(p. 3)  In their decades of isolation from the American economy and from global prosperity, Cubans have been taught to take pride in the way they have kept grandiose old mechanical marvels running — ancient Cadillacs and Russian-built Ladas included.

“They took away my señor and replaced him with a little guy,” said a 47-year-old cook who lives in the Reparto Zamora district in western Havana. Welcoming a visitor to her kitchen, she pointed to the slim, white Chinese-made Haier that had taken the place of the bulky, pink Frigidaire that had been in her family for 24 years.

She called herself Moraima Hernández, but indicated with a wink that she was concealing her real name — the only way she felt able to speak without fear of retaliation. Well, up to a point. She declined to say why she felt Mr. Castro was casting a shadow over items as banal as household appliances.

Instead, she simply opened the Haier to reveal its meager contents: bottles of tap water, a few eggs, mustard, half an avocado and some “textured picadillo,” soy protein mixed with a bit of ground beef.

Her old refrigerator was so big, she said nostalgically, that two legs of pork could fit inside.

. . .

Inspired by the ingenuity it took to keep American refrigerators working so long, a group of Cuban artists last year transformed 52 of them into art. They put on a show called “Instruction Manual” that was a big hit in Cuba and is making the rounds in Europe this year.

In the show, the artists Alejandro and Esteban Leyva pinned medals on an old G.E. refrigerator, painted it olive drab and named it “General Eléctrico.” Another artist, Alexis Leyva, installed oars on his refrigerator, drawing on the politically loaded symbol of the homemade boats Cubans use to leave the island illegally. Others were made into cars, skyscrapers a Trojan horse and a jail cell.

Ernesto García Peña, a painter, turned his into an eroticized female image. “In this heat,” he explained, “the refrigerator is almost worshiped for its role as an absolute necessity of modern life. We treat it with very special affection.”


For the full story, see: 

SIMON ROMERO.  “THE WORLD; In Cuba, a Politically Incorrect Love of the Frigidaire.”  The New York Times , Week in Review Section  (Sun., September 2, 2007):  3.

(Note:  ellipses added.)


  “Cold War Relic.   A 1950s-era American refrigerator dominates one woman’s Havana apartment.”  Source of caption and photo:  online version of the NYT article quoted and cited above. 


Local Food May Have Larger Carbon Footprint


“Produce at the huge Hunts Point Market in the Bronx. Researchers at the University of California, Davis, have been challenging assumptions about the carbon footprint of local foods versus those that are transported long distances.”  Source of caption and photo:  online version of the NYT article quoted and cited below. 

(p. 11)  The local food, or locavore, movement has so much momentum that some of the food glitterati have declared that such food is better than organic.

But now comes a team of researchers from the University of California, Davis, who have started asking provocative questions about the carbon footprint of food. Those questions threaten to undermine some of the feel-good locavore story line, not to mention my weekend forays for produce. (A carbon footprint is a measure of the impact of human activities on the environment in terms of the amount of greenhouse gases produced.)

While the research is not yet complete, Tom Tomich, director of the University of California Sustainable Agriculture Research and Education Program, said the fact that something is local doesn’t necessarily mean that it is better, environmentally speaking.

The distance that food travels from farm to plate is certainly important, he says, but so is how food is packaged, how it is grown, how it is processed and how it is transported to market.

Consider strawberries. If mass producers of strawberries ship their product to Chicago by truck, the fuel cost of transporting each carton of strawberries is relatively small, since it is tucked into the back along with thousands of others.

But if a farmer sells his strawberries at local farmers’ markets in California, he ferries a much smaller amount by pickup truck to each individual market. Which one is better for the environment?

Mr. Tomich said a strawberry distributor did the math on the back of an envelope and concluded that the Chicago-bound berries used less energy for transport.


For the full story, see:

ANDREW MARTIN.  “THE FEED; If It’s Fresh and Local, Is It Always Greener?”  The New York Times, SundayBusiness Section  (Sun., December 9, 2007):  11.


Recent Years Were Not as Hot as Thought


HotestYearsGraph.gif    Source of graph:  online version of the NYT article quoted and cited below.


(p. 19)  Never underestimate the power of the blogosphere and a quarter of a degree to inflame the fight over global warming.

A quarter-degree Fahrenheit is roughly the downward adjustment NASA scientists made earlier this month in their annual estimates of the average temperature in the contiguous 48 states since 2000. They corrected the numbers after an error in meshing two sets of temperature data was discovered by Stephen McIntyre, a blogger and retired business executive in Toronto. Smaller adjustments were made to some readings for some preceding years.

All of this would most likely have passed unremarkably if Mr. McIntyre had not blogged that the adjustments changed the rankings of warmest years for the contiguous states since 1895, when record-keeping began.

Suddenly, 1934 appeared to vault ahead of 1998 as the warmest year on record (by a statistically meaningless 0.036 degrees Fahrenheit). In NASA’s most recent data set, 1934 had followed 1998 by a statistically meaningless 0.018 degrees. Conservative bloggers, columnists and radio hosts pounced. “We have proof of man-made global warming,” Rush Limbaughtold his radio audience. “The man-made global warming is inside NASA.”

Mr. McIntyre, who has spent years seeking flaws in studies pointing to human-driven climate change, traded broadsides on the Web with James E. Hansen, the NASA team’s leader. Dr. Hansen said he would not “joust with court jesters” and Mr. McIntyre posited that Dr. Hansen might have a “Jor-El complex” — a reference to Superman’s father, who foresaw the destruction of his planet and sent his son packing.


For the full story, see: 

ANDREW C. REVKIN.  "Quarter-Degree Fix Fuels Climate Fight."  The New York Times, Main Section  (Sunday,  August 26, 2007):  19.


Schumpeter in The Age of Turbulence


AgeOfTurbulenceBK.jpg    Source of book image:,,9781594201318,00.html#  


Joseph Schumpeter was born on this date in 1883.

Alan Greenspan’s much-discussed memoir, is full of thoughtful discussions of Schumpeter’s central mesage of creative destruction.  Here are a few lines from the first of those discussions:


(p. 48)  Working with heavy industry gave me a profound appreciation of the central dynamic of capitalism.  “Creative destruction” is an idea that was articulated by the Harvard economist Joseph Schumpeter in 1942.  LIke many powerful ideas, his is simple:  A market economy will incessantly revitalize itself from within by scrapping old and failing businesses and then reallocating resources to newer, more productive ones.  I read Schumpeter in my twenties and always thought he was right, and I’ve watched the process at work through my entire career. 


The reference to Greenspan’s book is:

Greenspan, Alan. The Age of Turbulence: Adventures in a New World Economic Flexibility. New York: Penguin Press, 2007.