Creative Destruction Is Scary, but “Inevitable and Probably Even Desirable”

(p. 5) Development is a complicated phenomenon. Decades before he popularized the phrase “creative destruction,” Joseph Schumpeter, the Austrian School economist, was honing his ideas about innovation and disruptive change in “The Theory of Economic Development.”

Disruptive change, creative destruction, is what I’m living every day. In the big cities, India’s economic development can seem so simple. Business thrives, the middle and upper classes are celebrating, and the country is moving inexorably ahead.
But around here, where a way of life is disappearing and no one knows what will take its place, where someone seems to lose for everyone who wins, it’s a lot harder to know what to make of India’s economic boom. From my vantage point, development seems both wonderful and frightening; it is both inspiring and, at times, dispiriting.
People sometimes ask me how I feel about India’s economic development. I tell them the truth. I say I don’t know. I say I feel ambivalent about the passing of a world I knew as a child, a transition that I know is inevitable and probably even desirable. But I haven’t reconciled myself to it yet.

For the full commentary, see:
AKASH KAPUR. “An Indian Says Farewell to Poverty, With Jitters.” The New York Times, Week in Review Section (Sun., August 8, 2009): 5.

Native Americans Suffer from Government Health Care

(p. A11) Native Americans have received federally funded health care for decades. A series of treaties, court cases and acts passed by Congress requires that the government provide low-cost and, in many cases, free care to American Indians. The Indian Health Service (IHS) is charged with delivering that care.

The IHS attempts to provide health care to American Indians and Alaska Natives in one of two ways. It runs 48 hospitals and 230 clinics for which it hires doctors, nurses, and staff and decides what services will be provided. Or it contracts with tribes under the Indian Self-Determination and Education Assistance Act passed in 1975. In this case, the IHS provides funding for the tribe, which delivers health care to tribal members and makes its own decisions about what services to provide.
. . .
Unfortunately, Indians are not getting healthier under the federal system. In 2007, rates of infant mortality among Native Americans across the country were 1.4 times higher than non-Hispanic whites and rates of heart disease were 1.2 times higher. HIV/AIDS rates were 30% higher, and rates of liver cancer and inflammatory bowel disease were two times higher. Diabetes-related death rates were four times higher. On average, life expectancy is four years shorter for Native Americans than the population as a whole.
. . .
Personal stories from people within the system reveal the human side of these statistics. In 2005, Ta’Shon Rain Little Light, a 5-year-old member of the Crow tribe who loved to dress in traditional clothes, stopped eating and complained that her stomach hurt. When her mother took her to the IHS clinic in south central Montana, doctors dismissed her pain as depression. They didn’t perform the tests that might have revealed the terminal cancer that was discovered several months later when Ta’Shon was flown to a children’s hospital in Denver. “Maybe it would have been treatable” had the cancer been discovered sooner, her great-aunt Ada White told the Associated Press.
. . .
The Chippewa Cree Band runs its own hospital and has hired a registered dietician who has gotten the local grocery store to implement a shelf-labeling system to improve consumer nutritional information. They’ve also built a Wellness Center with a gym, track, basketball court, and pool. These are small steps that won’t immediately eliminate heart disease or diabetes. But they move in the direction of local control and better health.
At a time when Americans are debating whether to give the government in Washington more control over their health care, some of the nation’s first inhabitants are moving in the opposite direction.

For the full commentary, see:
TERRY ANDERSON. “OPINION: CROSS COUNTRY; Native Americans and the Public Option; After decades of government-run care, some Indians are finally saying enough.” Wall Street Journal (Sat., August 29, 2009): A11.
(Note: ellipses added.)
(Note: the online version is dated Fri., Aug.28, 2009)

Andy Grove’s Case Against the Car Bailout

(p. A13) Imagine if in the middle of the computer transformation the Reagan administration worried about the upheaval and tried to rescue this vital industry by making huge investments in leading mainframe companies. The purpose of such investments would have been to protect the viability of these companies. The effect, however, would have been to put the brakes on transformation and all but ensure that the U.S. would lose its leadership role.

The government’s investment in General Motors might be directly helpful if the auto industry only had the recession to contend with. But that is not the case. The industry faces the confluence of a world-wide recession, rising fuel prices, environmental demands, globalization of manufacturing, and, most importantly, technological change involving the very nature of the automobile.

For the full commentary, see:
ANDREW S. GROVE. “What Detroit Can Learn From Silicon Valley; Vertically integrated production is a thing of the past. Will the auto industry’s new overseers catch on?” Wall Street Journal (Mon., JULY 13, 2009): A13.

Small Business Sceptical of Big Government Health Plan

BriguglioPatty2009-08-14.jpg“No, I mean it,” said Ms. Brigugulio, “I expect you to keep your word on this.” Source of the photo and caption: http://boss.blogs.nytimes.com/2009/07/30/mr-prez-meets-ms-biz-the-story-behind-the-photo/

(p. A11) Patty Briguglio thinks President Obama may have a public relations problem selling his health care plan to small-business owners.
And Ms. Briguglio, who was photographed exchanging a wagging finger with the president at his health care forum Wednesday in Raleigh, N.C., should know: she runs her own small business, MMI Associates, a public relations firm in Raleigh.
Ms. Briguglio pays much of the cost of health insurance for her firm’s 19 employees, though she does not offer a group plan. Because the members of her staff are so young, it is cheaper simply to provide an allowance for them to buy individual policies.
When Mr. Obama called on Ms. Briguglio at Wednesday’s forum, she asked, ”What current long-term social program created and run by the government should we look to as a model of success and one that we as taxpayers should be confident that a new government-run health care system would be better than the current system in place?”
The president suggested Veterans Affairs hospitals and Medicare, both of which, he said, ”have very high satisfaction rates.”
And, he added, ”Medicare costs have gone up more slowly than private-sector health care costs.”
Ms. Briguglio was not completely satisfied. ”I’ve never associated any government program with ‘cost effective’ or ‘efficient,’ ” she said in a telephone interview on Thursday. ”I don’t believe that the government will be a better steward of the money that I set aside for health care for my employees than I will be.”

For the full story, see:

ROBB MANDELBAUM. “To Challenges For Obama, Add Another.” The New York Times (Fri., July 31, 2009): A11.

(Note: the online version of the article does not have the photo of Briguglio wagging her finger, that was published in my print version of the paper. The photo above is from later in the exchange, and appeared on the NYT blog.)

In Early Days Entrepreneur Honda “Pawned His Wife’s Jewelry for Funds”

(p. 217) At the root and origin of all great empires of industry can usually be found a perspiring entrepreneur, often frustrated and fatigued, struggling over a machine that won’t quite work.

Honda, for example, was to become the world’s single most brilliant and successful entrepreneur of mechanical engineering since Henry Ford. But only the perspiration of genius was in sight during that period before the war when he embarked on a siege of day-and-night study and experiment in the techniques of casting, in his attempt to make a piston ring. He lived at the factory, turning from a gay blade into a hirsute and harried hermit, stinking of grease and sweat, while his savings ran out, his friends fretted, his parents reminded him of promising opportunities in auto repair, and he pawned his wife’s jewelry for funds.

Source:
Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

“How Do We Get on the Special Interests, Special Treatment Bandwagon?”

SodiumSilicatePouredIntoClunker2009-08-12.jpgUncreative destruction. “Jose Luis Garcia pours sodium silicate into a junkyard car engine to render it inoperable at a lot in Sun Valley, Calif., on Tuesday. The process destroys the car’s engine in a matter of minutes.” Source of photo and part of caption: online version of the WSJ article quoted and cited below.

(p. A4) WASHINGTON — Who doesn’t like the government’s “cash for clunkers” program? Your mechanic, for one.

Owners of automotive repair shops say the program to help invigorate sales of new cars is succeeding at their expense.
Bill Wiygul, whose family owns four repair shops in Virginia, said he has already had five or six customers decide against repairs. A man who sits on the board of Mr. Wiygul’s bank traded in his car rather than repair it. “He’d been a customer at our Reston store since it opened,” Mr. Wiygul said.
The clunkers program, formally known as the Car Allowance Rebate System, offers subsidies of as much as $4,500 to consumers who trade in older vehicles and buy new, more fuel-efficient models. The program was initially given $1 billion. That money was spent in one week.
The Senate reached a deal to extend the clunkers program Wednesday night, agreeing to vote on a measure Thursday that would add $2 billion to the program, the Associated Press reported.
The House approve a $2 billion extension last week.
For Mr. Wiygul and other mechanics, until now the recession has brought them more customers as people fixed cars rather than go into debt for new ones. He has hired five people and is expanding one of the shops.
Auto dealers who offer the rebates on new cars in exchange for clunkers must agree to “kill” the old models by disabling the engines and shipping the dead vehicle to a junkyard.
The loss of such potential work — as many as 250,000 vehicles will be destroyed in the program’s first round — prompted Mr. Wiygul to question the federal program’s focus on dealers and big business at the expense of the little guy.
“How do we get on the special interests, special treatment bandwagon? How much is it going to cost me and to whom shall I send the check?” he said. “Who picks the winners in this game ’cause obviously the game is fixed.”

For the full commentary, see:
GARY FIELDS. “Clunkers Plan Deflates Mechanics.” The Wall Street Journal (Thurs., AUGUST 6, 2009): A4.

Wikipedia Continues to Gain Respect

(p. B5) Recognizing that the online encyclopedia Wikipedia is increasingly used by the public as a news source, Google News began this month to include Wikipedia among the stable of publications it trawls to create the site.

A visit to the Google News home page on Wednesday evening, for example, found that four of the 30 or so articles summarized there had prominent links to Wikipedia articles, including ones covering the global swine flu outbreak and the Iranian election protests.
. . .
The move by Google News was news to Wikipedia itself. Jay Walsh, a spokesman for the Wikimedia Foundation, said he learned about it by reading an online item on the subject by the Nieman Journalism Lab.
“Google is recognizing that Wikipedia is becoming a source for very up-to-date information,” he said, although “it is an encyclopedia at the end of the day.”

For the full story, see:

NOAM COHEN. “Google Starts Including Wikipedia on Its News Site.” The New York Times Company (Weds., June 22, 2009): B5.

(Note: ellipsis added.)