December 2010 – Page 2 – artdiamondblog.com

Government “Gave People the Crazy Juice”

“Peter J. Boettke of George Mason University is the emerging standardbearer for a revived Austrian school of economics.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) Peter J. Boettke, shuffling around in a maroon velour track suit or faux-leather rubber shoes he calls “dress Crocs,” hardly seems like the type to lead a revolution.

But the 50-year-old professor of economics at George Mason University in Virginia is emerging as the intellectual standard-bearer for the Austrian school of economics that opposes government intervention in markets and decries federal spending to prop up demand during times of crisis. Mr. Boettke, whose latest research explores people’s ability to self-regulate, also is minting a new generation of disciples who are spreading the Austrian approach throughout academia, where it had long been left for dead.
To these free-market economists, government intrusion ultimately sows the seeds of the next crisis. It hampers what one famous Austrian, Joseph Schumpeter, called the process of “creative destruction.”
. . .
(p. B3) It wasn’t a lack of government oversight that led to the crisis, as some economists argue, but too much of it, Mr. Boettke says. Specifically, low interest rates and policies that subsidized homeownership “gave people the crazy juice,” he says.

For the full story, see:
KELLY EVANS. “Spreading Hayek, Spurning Keynes; Professor Leads an Austrian Revival.” The Wall Street Journal (Sat., AUGUST 28, 2010): B1 & B3.
(Note: ellipsis added.)

Chinese Centralized Autocracy Prevents Sustained Innovation

Zheng He’s voyages of exploration were mentioned in a previous blog entry.

(p. C12) The real problem with contemporary China’s version of the Zheng He story is that it omits the ending. In the century after Zheng’s death in 1433, emperors cut back on shipbuilding and exploration. When private merchants replaced the old tribute trade, the central authorities banned those ships as well. Building a ship with more than two masts became a crime punishable by death. Going to sea in a multimasted ship, even to trade, was also forbidden. Zheng’s logs were hidden or destroyed, lest they encourage future expeditions. To the Confucians who controlled the court, writes Ms. Levathes, “a desire for contact with the outside world meant that China itself needed something from abroad and was therefore not strong and self-sufficient.”

Today’s globalized China has apparently abandoned that insular ideology. But it still clings to the centralized autocracy that could produce Zheng’s voyages in one generation only to destroy the technology and ambition they embodied in the next. It still officially celebrates “harmony” against the unruliness and competition that create sustained innovation. Its past would be more usable if it offered models of diversity and dissent or, at the very least, sanctuary from the all-or-nothing decisions of absolutist rule.

For the full commentary, see:
VIRGINIA POSTREL. “COMMERCE & CULTURE; Recovering China’s Past on Kenya’s Coast.” The Wall Street Journal (Sat., DECEMBER 4, 2010): C12.

Google Releases Intriguing New Bibliometric Tool

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

(p. A1) With little fanfare, Google has made a mammoth database culled from nearly 5.2 million digitized books available to the public for free downloads and online searches, opening a new landscape of possibilities for research and education in the humanities.

The digital storehouse, which comprises words and short phrases as well as a year-by-year count of how often they appear, represents the first time a data set of this magnitude and searching tools are at the disposal of Ph.D.’s, middle school students and anyone else who likes to spend time in front of a small screen. It consists of the 500 billion words contained in books published between 1500 and 2008 in English, French, Spanish, German, Chinese and Russian.
. . .
“The goal is to give an 8-year-old the ability to browse cultural trends throughout history, as recorded in books,” said Erez Lieberman Aiden, a junior fellow at the Society of Fellows at Harvard. Mr. Lieberman Aiden and Jean-Baptiste Michel, a postdoctoral fellow at Harvard, assembled the data set with Google and spearheaded a research project to demonstrate how vast digital databases can transform our understanding of language, culture and the flow of ideas.
Their study, to be published in (p. A3) the journal Science on Friday, offers a tantalizing taste of the rich buffet of research opportunities now open to literature, history and other liberal arts professors who may have previously avoided quantitative analysis. Science is taking the unusual step of making the paper available online to nonsubscribers.
“We wanted to show what becomes possible when you apply very high-turbo data analysis to questions in the humanities,” said Mr. Lieberman Aiden, whose expertise is in applied mathematics and genomics. He called the method “culturomics.”
. . .
Looking at inventions, they found technological advances took, on average, 66 years to be adopted by the larger culture in the early 1800s and only 27 years between 1880 and 1920.

For the full story, see:
PATRICIA COHEN. “In 500 Billion Words, New Window on Culture.” The New York Times (Fri., December 17, 2010): A1 & A3.
(Note: ellipses added.)
(Note: the online version of the article is dated December 16, 2010.)

Financial Gain an Important Motive for Invention

(p. 121) In 1930, Joseph Rossman, who had served for decades as an examiner in the U.S. Patent Office, polled more than seven hundred patentees. producing a remarkable picture of the mind of the inventor. Some of the results were predictable; the three biggest motivators were “love of inventing,” “desire to improve.” and “financial gain,” the ranking for each of which was statistically identical. and each at least twice as important as those appearing (p. 122) down the list, such as “desire to achieve,” “prestige,” or “altruism” (and certainly not the old saw, “laziness,” which was named roughly one-thirtieth as frequently as “financial gain”). A century after Rocket, the world of technology had changed immensely: electric power, automobiles, telephones. But the motivations of individual inventors were indistinguishable from those inaugurated by the Industrial Revolution.
. . .
In the same vein, Rossman’s survey revealed that the greatest obstacle perceived by his patentee universe was not lack of knowledge, legal difficulties, lack of time, or even prejudice against the innovation under consideration. Overwhelmingly, the largest obstacle faced by early twentieth-century inventors (and, almost certainly, their ancestors in the eighteenth century) was “lack of capital.” Inventors need investors.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: ellipsis added.)

Ridley Debunks Gates’ Aid to Africa; Gates Responds; Ridley Responds to the Response

Bill Gates and Matt Ridley arm wrestle. Source of image: online version of the Gates WSJ commentary cited below.

In a few weeks I will comment at length on Matt Ridley’s wonderful recent book The Rational Optimist. It delightfully debunks much that deserves debunking, although I think it wrong on its central claim that no rewards are needed for innovation.
Part of what Ridley debunks is the case for aid to Africa. As one of the aid givers, Bill Gates is not fond of being debunked.

Gates responds in:
BILL GATES. “Africa Needs Aid, Not Flawed Theories.” The Wall Street Journal (Sat., NOVEMBER 27, 2010): C1-C2.
(Note: the online version of the Gates commentary is dated NOVEMBER 26, 2010.)

Ridley responds to Gates’ response in:
MATT RIDLEY. “Africa Needs Growth, Not Pity and Big Plans.” The Wall Street Journal (Sat., NOVEMBER 27, 2010): C1-C2.
(Note: the online version of the Ridley commentary has the same date as the print version.)

Ridley’s book is:
Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

“We Need to Know What Works”

(p. A12) WASHINGTON–World Bank President Robert Zoellick challenged economists to take on tougher challenges in development economics and to consult a wider range of professionals in developing countries, opening a debate about how effectively economists have attacked problems in global poverty.

“Too often research economists seem not to start with the key knowledge gaps facing development practitioners, but rather search for questions they can answer with the industry’s currently favorite tools,” Mr. Zoellick said at Georgetown University.
. . .
“We need to know what works: we need a research agenda that focuses on results,” he said.
Nobel Prize-winning economist Michael Spence, who led a commission on economic growth, said Mr. Zoellick’s comments are “generally not only in the right direction, but very useful.” Harvard economist Dani Rodrik, who favors a stronger government hand in development, also praised the World Bank president. “The speech hits all the right notes: the need for economists to demonstrate humility, eschew blueprints…and focus on evaluation but not at the expense of the big questions,” Mr. Rodrik said.

For the full story, see:
BOB DAVIS. “World Bank Chief Ignites a Debate.” The Wall Street Journal (Thurs., SEPTEMBER 30, 2010): A12.
(Note: first two ellipses added; ellipsis in last quoted paragraph is in original.)

“Pumping Your Own Gas Is Illegal in New Jersey” and Oregon

“Will Corcoran pumps gas at Tim’s Westview in Ridgefield Park. Pumping your own gas has been illegal in New Jersey for 61 years.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) RIDGEFIELD PARK, N.J.–People in New Jersey pick their own strawberries. They chop down their own Christmas trees. They check themselves in at airports and check themselves out at supermarkets. Lately, a few New Jerseyans have been wondering whether it isn’t about time they were allowed to pump their own gas.

Pumping your own gas is illegal in New Jersey. It has been for 61 years. It’s also illegal in Oregon, and in the New York town of Huntington, on Long Island. Just about everywhere else, self-serving Americans do it themselves. As paying at the pump gets easier, the gas station attendant is fast going the way of the elevator operator.
Don’t tell Will Corcoran. When you pull into Tim’s Westview, a Gulf station across from the train tracks in this north Jersey town, you’ll sit in your car while he fills your tank.
Under a cold rain one weekday, he stood at the driver’s window of a Chevy, bent over, yakking. He wore blue. His cap had Gulf Oil’s orange disk on it. After his customer signed the credit slip (Tim’s pumps don’t process cards), Mr. Corcoran, 42 years old, shook hands and saluted like a gas jockey in an old commercial.

For the full story, see:

BARRY NEWMAN. “Self-Service Nation Ends at Garden State Gas Pumps; Changing Law May or May Not Lower Prices; ‘New Jersey Is Heaven!’.” The Wall Street Journal (Sat., NOVEMBER 27, 2010): A1 & A14.

“The Most Important Invention of the Industrial Revolution Was Invention Itself”

(p. 103) Alfred North Whitehead famously wrote that the most important invention of the Industrial Revolution was invention itself.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

Rockefeller Is Vilified Despite His Entrepreneurial Genius and His Philanthropic Generosity

Source of book image: http://ecx.images-amazon.com/images/I/512M5Z648JL.jpg

(p. C7) . . . as Suzanne Loebl rightly emphasizes in “America’s Medicis,” the Rockefellers’ patronage has been notable not only for its generosity but also for its deliberativeness. By founding such diverse institutions as MoMA, Colonial Williamsburg, the Cloisters, Riverside Church and the Asia Society–as well as by commissioning the distinguished artworks that enliven the office complex at Rockefeller Center–various members of the family have been guided by a perception that a moral responsibility comes with the possession of great wealth.

John D. Rockefeller, Sr. (1839-1937), the founder and chairman of Standard Oil, was routinely vilified in the press as a ruthless monopolist who crushed competition the way a giant might crush a bug. . . . . . . yet he was not the cold-hearted miser that some supposed. A devout Baptist, he donated substantial sums every year to one or more of the congregations he attended, as well as to associated causes, such as the American Baptist Education Society, which founded the University of Chicago with his support in 1890.
. . .
Unfortunately, not everyone behaved well in the face of Rockefeller munificence. The Mexican painter Diego Rivera, commissioned to create a sprawling mural for the lobby of Rockefeller Center, chose to deviate from his preparatory drawings and place an enormous portrait of Lenin at the center of the finished composition. Refusing to amend this egregious provocation, Rivera was paid in full for his work, which was then duly destroyed. A predictable uproar ensued, garnering the artist abundant publicity, which may have been his objective all along.
. . .
Ms. Loebl’s account is well grounded both in the existing literature and in original archival research. She has striven to be comprehensive and done a good job of incorporating lesser-known Rockefeller projects, for example the charming Wendell Gilley Museum of carved birds, in Maine, funded by Nelson’s son Steven. But several worthy undertakings, such as Junior’s restoration of the châteaux of Versailles and Fontainebleau, receive scant attention–as do Laurance Rockefeller’s extensive gifts for the purpose of creating and expanding our national parks.

For the full review, see:
JONATHAN LOPEZ. “BOOKSHELF; The Splendid Spoils of Standard Oil; The Rockefeller family’s vast cultural legacy resulted from a sense of civic duty and a love of beautiful things.” The Wall Street Journal (Sat., NOVEMBER 20, 2010): C7.
(Note: ellipses added.)

The book being reviewed, is:
Loebl, Suzanne. America’s Medicis: The Rockefellers and Their Astonishing Cultural Legacy. New York: HarperCollins, 2010.

The Psychology of How Power Corrupts

(p. B1) Being in a position of power . . . may make people feel that they can do no wrong. In recent experiments, Dana Carney, a psychologist at Columbia University’s business school, has found that acquiring power makes people more comfortable committing acts they might otherwise be reluctant to commit, like lying or cheating. As people rise to a position of power, she has shown, their bodies generate more testosterone, a hormone associated with aggression and risk-taking, and less cortisol, a chemical that the body generates in response to stress.

“Having power changes you physiologically, reducing your body’s internal feedback that tells you which actions are good or bad,” says Prof. Carney. “Power temporarily intoxicates you.”

For the full commentary, see:
JASON ZWEIG. “THE INTELLIGENT INVESTOR; What Conflict of Interest? How Power Blinds Us to Our Flaws.” The Wall Street Journal (Sat., OCTOBER 16, 2010): B1.
(Note: ellipsis added.)

Measuring Inflation by Internet Prices

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

(p. A5) Economists Roberto Rigobon and Alberto Cavallo at the Massachusetts Institute of Technology’s Sloan School of Management have come up with a method to scour the Internet for online prices on millions of items and then use them to calculate inflation statistics for a dozen countries on a daily basis. The two have been collecting data for the project for more than three years, but only made their results public this week.
. . .
In countries where the apparatus for collecting prices is limited, or where officials have manipulated inflation data, the economists’ indexes might give a clearer view. In Argentina, for example, the government has been widely accused of massaging price figures to let it pay less interest to holders of inflation-indexed bonds. President Cristina Fernández has defended the government data. For September, the government’s measure of prices rose 11.1% from a year earlier. The economists’ measure in that period: up 19.7%.

For the full story, see:
JUSTIN LAHART. “A Way, Day by Day, of Gauging Prices.” The Wall Street Journal (Thurs., NOVEMBER 11, 2010): A5.
(Note: ellipsis added.)
(Note: the online version of the article is dated NOVEMBER 10, 2010.)