December 2009 – Page 2 – artdiamondblog.com

Steve Perry’s Passion for Better Education

Source of book image: http://www.renegadebook.com/Man%20Up!.jpg

I have seen Steve Perry interviewed on education issues a couple of times on CNN, and have been impressed. He makes a credible case for vouchers.
I have not read either of the books pictured in this entry, but have put them on my “to read” list.

The books are:
Perry, Steve. Man Up! Nobody Is Coming to Save Us. Renegade Books, 2006.
Perry, Steve. Raggedy Schools: The Untold Truth. Renegade Books, 2009.

Source of book image: http://www.raggedyschools.com/images/bookstore_photo.jpg

Safe Drinking Water Matters More than Global Warming

(p. A17) Getting basic sanitation and safe drinking water to the three billion people around the world who do not have it now would cost nearly $4 billion a year. By contrast, cuts in global carbon emissions that aim to limit global temperature increases to less than two degrees Celsius over the next century would cost $40 trillion a year by 2100. These cuts will do nothing to increase the number of people with access to clean drinking water and sanitation. Cutting carbon emissions will likely increase water scarcity, because global warming is expected to increase average rainfall levels around the world.

For Mrs. Begum, the choice is simple. After global warming was explained to her, she said: “When my kids haven’t got enough to eat, I don’t think global warming will be an issue I will be thinking about.”
One of Bangladesh’s most vulnerable citizens, Mrs. Begum has lost faith in the media and politicians.
“So many people like you have come and interviewed us. I have not seen any improvement in our conditions,” she said.
It is time the developed world started listening.

For the full commentary, see:
Bjørn LOMBORG. “Global Warming as Seen From Bangladesh; Momota Begum worries about hunger, not climate change.” The Wall Street Journal (Mon., NOVEMBER 9, 2009): A17.

The Wall of Wall Street Failed to Repel the Invaders

“New York City’s history begins in the small space below Wall Street.” Source of caption and map: online version of the NYT article quoted and cited below.

(p. 34) Bowling Green was then part of “a parade ground where soldiers practiced maneuvers,” he continued. “That very quickly turned into a market space where farmers in outlying districts brought their produce to sell. It became a famous place for prostitutes to haunt in the evening. And in the early 18th century it was where people played lawn bowling.”

From the start, Mr. Caldwell said, it was a party town, known for its many taverns, “the all-purpose repositories of night life. There were theatrical performances, dancing, gambling and concerts.”
In 1979 and 1980 archaeologists dug for the remains of two famous taverns that had stood on Pearl Street near Coenties Slip. Transparent panels in the plaza along Pearl Street display part of the stone foundation they found of the King’s House tavern (also known as Lovelace Tavern), built in 1670. Light-colored paving stones nearby outline the modest footprint of the City Tavern (Stadt Herbergh), built in 1641. In 1653 it also became the first City Hall, the Stadt Huys. And it contained a jail.
“So you could, in one day, go from sitting on a court case to a drunken debauch to jail, without ever leaving this little place where we’re standing,” Mr. Caldwell noted.
A few blocks north, at what was then the edge of the city, the Dutch built a defensive wall across the island in 1653. Like Fort Amsterdam, it proved of no use when the British seized New Amsterdam in 1664 and renamed it New York.
“It was essentially an earthwork with a wooden palisade on top,” explained Steve Laise, the National Parks Service’s chief of cultural resources for Federal Hall National Memorial, a Greek Revival landmark on Wall Street. Today’s Wall Street follows the dirt lane that was just inside this defense. “When you walk on Wall Street, you’re literally walking in the footsteps of the burghers of New Amsterdam,” Mr. Laise said.

For the full story, see:

JOHN STRAUSBAUGH. “Weekend Explorer; Home on the Corner of Boom and Bust.” The New York Times (Fri., January 2, 2009): C29 & C34.
(Note: the online version of the article is dated Thurs., Jan. 1st.)

“Every Physicist Wants Two Things: Glory and Money”

(p. 54) . . . in 1950, Shockley published his book Electrons and Holes in Semiconductors, which stood for many years as the definitive work in the field and confirmed his credentials for the Nobel Prize that he shared with Brattain and Bardeen in 1956. The fact was that for his theory of the field effect transistor that later dominated the industry and for the junction transistor that was dominating it at the time, Shockley deserved the prize alone. He had at last made his point.

Yet Shockley was not satisfied. “Every physicist,” he said at the time, “wants two things: glory and money. I have won the glory. Now I want the money.”

Source:

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.
(Note: ellipsis added.)

Chocolate Evidence of Early Indian Trade

“Tests of jars found in the ruins of Chaco Canyon in New Mexico confirmed the presence of theobromine, a cacao marker.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A14) ALBUQUERQUE — For years Patricia Crown puzzled over the cylindrical clay jars found in the ruins at Chaco Canyon, the great complex of multistory masonry dwellings set amid the arid mesas of northwestern New Mexico. They were utterly unlike other pots and pitchers she had seen.

Some scholars believed that Chaco’s inhabitants, ancestors of the modern Pueblo people of the Southwest, had stretched skins across the cylinders and used them for drums, while others thought they held sacred objects.
But the answer is simpler, though no less intriguing, Ms. Crown asserts in a paper published Tuesday in The Proceedings of the National Academy of Sciences: the jars were used for drinking liquid chocolate. Her findings offer the first proof of chocolate use in North America north of the Mexican border.
How did the ancient Pueblos come to have cacao beans in the desert, more than 1,200 miles from the nearest cacao trees? Ms. Crown, a University of New Mexico anthropologist, noted that maize, beans and corn spread to the Southwest after being domesticated in southern Mexico. Earlier excavations at Pueblo Bonito, the largest structure in the Chaco complex, had found scarlet macaws and other imported items.

For the full story, see:

MICHAEL HAEDERLE. “Mystery of Ancient Pueblo Jars Is Solved.” The New York Times (Weds., February 4, 2009): A14.
(Note: the online version is dated Tues., Feb. 3rd.)

“Researchers believe ancient Pueblos used the jars to drink chocolate.” Source of caption and photo: online version of the NYT article quoted and cited above.

Wall Street Bet that Feds Would “Paper Over Mistakes”

In the commentary quoted below, “LTCM” stands for the Long-Term Capital Management hedge fund.

(p. A25) Because families without the real economic means to repay traditional 30-year mortgages were getting them, housing prices grew to artificially high levels.

This is where the real sin of Fannie Mae and Freddie Mac comes into play. Both were created by Congress to make housing affordable to the middle class. But when they began guaranteeing subprime loans, they actually began pricing out the working class from the market until the banking business responded with ways to make repayment of mortgages allegedly easier through adjustable rates loans that start off with low payments. But these loans, fully sanctioned by the government, were a ticking time bomb, as we’re all now so painfully aware.
A similar bomb exploded in 1998, when LTCM blew up. The policy response to the LTCM debacle is instructive; more than anything else it solidified Wall Street’s belief that there were little if any real risks to risk-taking. With $5 billion under management, LTCM was deemed too big to fail because, with nearly every major firm copying its money losing trades, much of Wall Street might have failed with it.
That’s what the policy makers told us anyway. On Wall Street there’s general agreement that the implosion of LTCM would have tanked one of the biggest risk takers in the market, Lehman Brothers, a full decade before its historic bankruptcy filing. Officials at Merrill, including its then-CFO (and future CEO) Stan O’Neal, believed Merrill’s risk-taking in esoteric bonds could have led to a similar implosion 10 years before its calamitous merger with Bank of America.
We’ll never know if LTCM’s demise would have tanked the financial system or simply tanked a couple of firms that bet wrong. But one thing is certain: A valuable lesson in risk-taking was lost. By 2007, the years of excessive risk-taking, aided and abetted by the belief that the government was ready to paper over mistakes, had taken their toll.
With so much easy money, with the government always ready to ease their pain, Wall Street developed new and even more innovative ways to make money through risk-taking.

For the full commentary, see:
CHARLES GASPARINO. “Three Decades of Subsidized Risk; There’s a reason Dick Fuld didn’t believe Lehman would be allowed to fail.” The Wall Street Journal (Fri., NOVEMBER 6, 2009): A25.

Gilder’s Microcosm Tells the Story of the Entrepreneurs Who Made Personal Computers Possible

Source of book image: http://images.indiebound.com/923/705/9780671705923.jpg

Many years ago Telecosm was the first George Gilder book that I read; I enjoyed it for its over-the-top verbal exuberance in detailing, praising and predicting the progress of the then-new broadband technologies. I bought his earlier Microcosm at about the same time, but didn’t get around to reading it because I assumed it would be a dated read, dealing in a similar manner with the earlier personal computer (PC) technology.
In the last year or so I have read Gilder’s Wealth and Poverty and Recapturing the Spirit of Enterprise. There is some interesting material in Gilder’s famous Wealth and Poverty, which has sometimes been described as one of the main intellectual manifestos of the Reagan administration. But Recapturing the Spirit of Enterprise has become my favorite Gilder book (so far).
In each chapter, the main modus operandi of that book is to present a case study of a recent entrepreneur, with plenty of interpretation of the lessons to be learned about why entrepreneurship is important to the economy, what sort of personal characteristics are common in entrepreneurs, and what government policies encourage or discourage entrepreneurs.
In that book I read that the original plan had been to include several chapters on the entrepreneurs who had built the personal computer revolution. But the original manuscript grew to unwieldy size, and so the personal computer chapters became the basis of the book Microcosm.
So Microcosm moved to the top of my “to-read” list, and turned out to be a much less-dated book than I had expected.
Microcosm does for the personal computer entrepreneurs what Recapturing the Spirit of Enterprise did for a broader set of entrepreneurs.
In the next few weeks, I will occasionally quote a few especially important examples or thought-provoking observations from Microcosm.

Reference to Gilder’s MIcrocosm:
Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

Other Gilder books mentioned:
Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992. (The first edition was called simply The Spirit of Enterprise, and appeared in 1984.)
Gilder, George. Telecosm: The World after Bandwidth Abundance. Paperback ed. New York: Touchstone, 2002.
Gilder, George. Wealth and Poverty. 3rd ed. New York: ICS Press, 1993.

Young Firms Create Two-Thirds of New Jobs

(p. A25) While a slight improvement over last month’s numbers, today’s employment update from the Bureau of Labor Statistics presents a dismal picture for American workers. As policy makers search for the best remedies to strengthen our economic performance, they can’t afford to overlook new firms and young firms.

Unfortunately, in troubled economic times the language of recovery is too often tilted toward large, established companies or to “small businesses,” a broad term that traditionally applies to businesses with fewer than 500 employees. The conventional wisdom is that such businesses account for half of the labor force and are therefore the engine of future job creation.
That’s not quite the case. The more precise factor is not the size of businesses, but rather their age. According to the Census Bureau, nearly all net job creation in the U.S. since 1980 occurred in firms less than five years old. A Kauffman Foundation report released yesterday shows that as recently as 2007, two-thirds of the jobs created were in such firms. Put more starkly, without new businesses, job creation in the American economy would have been negative for many years.
. . .
Entrepreneurs have a proven track record of job creation, especially in the early years of their firms. Eliminating or lowering the economic and regulatory hurdles that stand in the way of their success will pave the way for sustained expansion after the government’s current stimulus measures come to their inevitable end.

For the full commentary, see:
CARL SCHRAMM, ROBERT LITAN AND DANE STANGLER. “New Business, Not Small Business, Is What Creates Jobs; Nearly all net job creation since 1980 occurred in firms less than five years old.” The Wall Street Journal (Fri., NOVEMBER 6, 2009): A25.
(Note: ellipsis added.)

Fat-Tailed Distributions Seldom Used “Because the Math Was So Unwieldy”

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

(p. C1) Last year, a typical investment portfolio of 60% stocks and 40% bonds lost roughly a fifth of its value. Standard portfolio-construction tools assume that will happen only once every 111 years.

With once-in-a-century floods seemingly occurring every few years, financial-services firms ranging from J.P. Morgan Chase & Co. to MSCI Inc.’s MSCI Barra are concocting new ways to protect investors from such steep losses. The shift comes from increasing recognition that conventional assumptions about market behavior are off the mark, substantially underestimating risk.
. . .
(p. C9) Many of Wall Street’s new tools assume market returns fall along a “fat-tailed” distribution, where, say, last year’s nearly 40% stock-market decline would be more common than previously thought.
Fat-tailed distributions are nothing new. Mathematician Benoit Mandelbrot recognized their relevance to finance in the 1960s. But they were never widely used in portfolio-building tools, partly because the math was so unwieldy.

For the full story, see:
ELEANOR LAISE. “Some Funds Stop Grading on the Curve.” The Wall Street Journal (Tues., SEPTEMBER 8, 2009): C1 & C9.
(Note: ellipsis added.)

Walt Disney, Like Brer Rabbit, “Constantly Wriggling Out of the Snares Set for Him”

(p. 325) The real Disney may yet elude his most fervent admirers’ and detractors’ suffocating grasp. When he was young, he was a sort of human Brer Rabbit, constantly wriggling out of the snares set for him by the likes of Charles Mintz and Pat Powers (not to mention Laugh-O-gram’s creditors). He emerged finally, and unexpectedly, as the creator of a new art form, one whose potential has still scarcely been tapped, by him or anyone else. It is hard to imagine that man–the passionate young artist, the intense “coordinator,” the man who scrutinized every frame of Snow White and the Seven Dwarfs with a lover’s zeal–trapped forever in anyone’s briar patch.

Source:
Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.
(Note: italics in original.)

Congress Keeps Funding “Parochial” Earmarks

“Reps. Donald Payne and Rodney Frelinghuysen are seeking $1.5 million to equip the Newark Museum, above, with new air-conditioning units.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A3) Energy Secretary Steven Chu set out this year to address America’s energy future with a network of new research labs. But lawmakers drafted their own blueprint: Instead of fully funding Dr. Chu’s request, an energy-spending bill sets aside millions of dollars for such projects as an aviation-research institute, an environmentally friendly locomotive and air conditioning for a New Jersey museum.

When President Barack Obama signed a spending bill for the 2009 fiscal year in March, he said he wanted earmark-laden legislation to be an “end to the old way of doing business, and the beginning of a new era of responsibility and accountability.”
Congress, however, hasn’t given up earmarks — the term for seemingly parochial projects funded at the behest of lawmakers.

For the full story, see:
STEPHEN POWER. “Earmarks Sap Energy Chief’s Priorities.” The Wall Street Journal (Thurs., OCTOBER 15, 2009): A3.