“Small-Business Marketplace at a Standstill”

WetzelDavidHardware2010-10-23.jpg“David Wetzel tried for two years to sell his New Jersey hardware store.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) Small-business owners banking on a big payoff when they sell their establishments may have to settle for a lot less than planned.

A combination of tight credit, skittish buyers and business owners unwilling to sell at rock-bottom prices–factors similarly affecting home sellers–has left the small-business marketplace at a standstill.
. . .

(p. B4) “Owners still think their businesses are worth what they used to be,” says Thomas Coffey, a partner in Malvern, Pa., with B2BCFO, a provider of outsourced chief financial officers to small businesses. In reality, many “small companies just aren’t earning what they used to earn,” he says.

For the full story, see:
SARAH E. NEEDLEMAN. “Businesses Put Up for Sale Smack Into Harsh Reality.” The Wall Street Journal (Thurs., OCTOBER 14, 2010): B1 & B4.
(Note: ellipsis added.)

All He “Could See Was Cows and Farms” in “Virginia’s High Tech Corner”

(p. A18) . . . government attempts to rejuvenate regional economies have a mixed track record, in the U.K. and elsewhere.

Stuart S. Rosenthal, an economics professor at Syracuse University, remembers driving through Virginia in 1997 and seeing a sign saying, “You are entering southwest Virginia’s high tech corner.”
“And all I could see was cows and farms,” he said. Recent employment data shows that aside from one pocket, little has changed.

For the full story, see:
ALISTAIR MACDONALD. “U-Turn in the U.K.: Big Spending Cuts.” The Wall Street Journal (Fri., OCTOBER 15, 2010): A18.
(Note: ellipsis added.)
(Note: the online version of the article is dated October 14, 2010.)

History Forgets Those Who Leave Little Paper Trail


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

Like most of his fellow students, Barry stayed on just long enough get a grasp on the three Rs without abandoning his Catholic faith. One result of this abbreviated education was a lifelong tendency to keep all correspondence as short and simple as possible. Thus this brave, able man of action left only a minimal paper trail for future historians and biographers. John Paul Jones–an eloquent, prolific and unabashedly self-promoting letter writer–has inspired at least three major biographies in the past few years alone. It has been 72 years since the appearance of the last reliable biography of his rival, William Bell Clark’s “Gallant John Barry.”

For the full review, see:
ARAM BAKSHIAN JR.. “BOOKSHELF; The Revolutionary War’s Other Naval Hero.” The New York Times (Sat., JUNE 5, 2010).

The book under review is:
McGrath, Tim. John Barry: An American Hero in the Age of Sail. Yardley, PA: Westholme Publishing, 2010.

Home Depot Co-Founder Asks Obama to Stop Blocking Startups

Below I quote from the comments that Home Depot co-founder Ken Langone addressed to President Obama:

(p. A21) A little more than 30 years ago, Bernie Marcus, Arthur Blank, Pat Farrah and I got together and founded The Home Depot. Our dream was to create (memo to DNC activists: that’s build, not take or coerce) a new kind of home-improvement center catering to do-it-yourselfers. The concept was to have a wide assortment, a high level of service, and the lowest pricing possible.

We opened the front door in 1979, also a time of severe economic slowdown. Yet today, Home Depot is staffed by more than 325,000 dedicated, well-trained, and highly motivated people offering outstanding service and knowledge to millions of consumers.
If we tried to start Home Depot today, under the kind of onerous regulatory controls that you have advocated, it’s a stone cold certainty that our business would never get off the ground, much less thrive. Rules against providing stock options would have prevented us from incentivizing worthy employees in the start-up phase–never mind the incredibly high cost of regulatory compliance overall and mandatory health insurance. Still worse are the ever-rapacious trial lawyers.
Meantime, you seem obsessed with repealing tax cuts for “millionaires and billionaires.” Contrary to what you might assume, I didn’t start with any advantages and neither did most of the successful people I know. I am the grandson of immigrants who came to this country seeking basic economic and personal liberty. My parents worked tirelessly to build on that opportunity. My first job was as a day laborer on the construction of the Long Island Expressway more than 50 years ago. The wealth that was created by my investments wasn’t put into a giant swimming pool as so many elected demagogues seem to imagine. Instead it benefitted our employees, their families and our community at large.

For the full commentary, see:
KEN LANGONE. “Stop Bashing Business, Mr. President; If we tried to start The Home Depot today, it’s a stone cold certainty that it would never have gotten off the ground.” The Wall Street Journal (Fri., OCTOBER 15, 2010): A21.

Manuel “Muso” Ayau, RIP


Manuel “Muso” Ayau. Source of image: online version of the WSJ article quoted and cited below.

(p. A21) Lago Amatitlán, Guatemala

High on a hill overlooking this picturesque volcanic lake, Manuel “Muso” Ayau–arguably Latin America’s most influential champion of liberty in the second half of the 20th century–was laid to rest last month.
. . .
Ayau and his colleagues read voraciously and debated vociferously. “All of us were self-taught in these subjects, which would come to absorb much of our time,” he recalled. Over the next half century CEES would publish over 900 pamphlets in defense of the market. Ayau’s many contributions (98) had titles like “On the Morality of Government,” “Planning: Rational or Absurd,” and “Robinson and Friday Invent the Common Market.” In October 1978 he wrote an essay in a CEES pamphlet called “Price Controls,” while Milton Friedman penned “In Defense of Dumping” in the same publication.
Those pamphlets went all over the region. Peruvian Enrique Ghersi, one of the co-authors of the 1986 best-seller “The Other Path,” says that one called “Ten Lessons for Underdevelopment” was “key to awakening in me the vocation and commitment to defend liberty.” CEES brought to Guatemala such intellectual giants as Ludwig von Mises (1964), Friedrich Hayek (1965) and Ludwig Erhard (1968).

For the full commentary, see:
MARY ANASTASIA O’GRADY. “Manuel Ayau: Champion of Liberty; He opened Latin America’s eyes to the true source of prosperity.” The Wall Street Journal (Mon., SEPTEMBER 20, 2010): A21.
(Note: italics in original; ellipsis added.)
(Note: the online version of the article is dated SEPTEMBER 19, 2010.)

IMG_2452-2.JPGOn the left is a photo autographed by Ayau and Hayek. On the right is a bust of Hayek. Source of photo: taken by Art Diamond on April 4, 2009 at the APEE meetings held at Francisco Marroquín University (UFM) in Guatemala City.

Stimulus Money Sent to the Jailed and the Dead

(p. A8) The Social Security Administration sent about 89,000 stimulus payments of $250 each to dead and incarcerated people–but almost half of them were returned, a new inspector-general’s report found.
. . .
. . . 17,000 payments went to recipients who were in prison at the time the payment was made in May 2009. However, not all of those payments were necessarily against the letter of the law. While lawmakers intended to prevent payments to people in prison, the law included only a provision prohibiting payments to people incarcerated in the three months before the plan was passed–from November 2008 through January 2009.
. . .
. . . : The SSA says that the stimulus package didn’t include a provision allowing it to try to retrieve funds that were mistakenly sent out, so it can’t try to retrieve the rest of the money. Money transferred electronically may be sitting untouched in bank accounts of dead people.
The combined total of the mistaken payments is $22.3 million. About $12 million hasn’t been returned.

For the full story, see:

LOUISE RADNOFSKY. “Stimulus Checks Sent to Dead, Incarcerated.” The Wall Street Journal (Fri., OCTOBER 8, 2010): A8.

(Note: ellipses added.)
(Note: the online version of the article was dated OCTOBER 7, 2010.)

Entrepreneurial Improvisation is Like “Jumping Rock to Rock Up a Stream”

HoppingCreekStones2010-10-04.jpg“Crossing the Sulphurous River.” Source of caption and photo: http://www.flickr.com/photos/33506763@N00/211985842#/photos/sparlingo/211985842/lightbox/

In The Venturesome Economy book, and later (pp. 129 and 142) in the book quoted below, Bhidé describes the entrepreneur’s decision process as “improvisation.”

(p. 18) Entrepreneurs who start uncertain businesses with limited funds have little reason to devote much effort to prior planning and research. They cannot afford to spend much time or money on the research; the modest likely profit doesn’t merit much; and the high uncertainty of the business limits its value.

Sketchy planning and high uncertainty require entrepreneurs to adapt to many unanticipated problems and opportunities. One entrepreneur likens the process of starting a new business to jumping from rock to rock up a stream rather than constructing the Golden Gate Bridge from a detailed blueprint. Often, to borrow a term from Elster’s discussion of biological evolution, entrepreneurs adapt to unexpected circumstances in an “opportunistic” fashion: Their response derives from a spur-of-the- moment calculation made to maximize immediate cash flow. Capital-constrained entrepreneurs cannot afford to sacrifice short-term cash for long-term profits. They have to play rapid-fire pinball rather than a strategic game of chess.

Bhidé, Amar. The Origin and Evolution of New Businesses. Oxford and New York: Oxford University Press, 2000.
[Note to self: the search phrase “jumping rock stream” seems most productive of relevant images]

Chris_and_Andrea_Jumping_from_Rock_to_Rock_Up_a_Stream.JPG“Chris and Andrea Jumping from Rock to Rock Up a Stream.” Source of caption and photo: http://picasaweb.google.com/lh/photo/Q-FvMT8GFG7kZdvUm8d_Jw


“Girl (10-12) jumping on rocks in river.” Source of caption and photo: http://cache4.asset-cache.net/xc/200447463-001.jpg?v=1&c=NewsMaker&k=2&d=B3B7071D257FC0393BFC8E309AE4811E35B7CE0CF91BE8709437A3EAE6A5D3E800123AA3B5A18ED0