Fewer Entrepreneurial Startups Leads to Fewer New Jobs


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

(p. B1) Start-ups fuel job growth disproportionately since by definition they are starting and growing, adding employees, says the Kauffman Foundation, which researches and advocates for entrepreneurship.
Though there was start-up activity during and after the recession, driven partly by unemployed individuals putting out a shingle, Bureau of Labor Statistics data show the total number of “births” of new businesses declined sharply from previous years. What’s more, the number of people employed by new businesses that are less than a year old–a common definition of a start-up–also declined. That trend started a decade ago.
In a recent report on entrepreneurship, the BLS said the number of new businesses less than a year old that existed in the year ending March 2010 “was lower than any other year” since its research began in 1994. The downdraft started with the recession.
“More people who were self-employed failed and left self-employment than people who entered,” says Scott Shane, an economics professor at Case Western Reserve University who wrote a study on entrepreneurship and the recession for the Cleveland Fed. “The net effect is negative, not positive, largely because downturns hurt those in business and those thinking of entering business.”

For the full story, see:
JOHN BUSSEY. “THE BUSINESS; Shrinking in a Bad Economy: America’s Entrepreneur Class.” The Wall Street Journal (Fri., AUGUST 12, 2011): B1 & B2.
(Note: ellipsis added.)

The BLS report mentioned above can be found at: http://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm

The Scott Shane commentary mentioned above can be found at:


Source of graph: online version of the WSJ article quoted and cited above.

Jobs Haiku

jobs and Jobs are gone
need more Jobs to get more jobs
innovate to grow

Arthur Diamond

In his Q4 survey of influential economics bloggers, Tim Kane of the Kauffman Foundation whimsically requested that we create a haiku that speaks to the state of the economy. I sent him my haiku, above, on Sunday, October 16, 2011.
(Do not worry—I have no plans to retire and devote myself to writing poetry.)

“It’s Our Right to Choose What We Want to Put in Our Bodies”

FoodSovereigntySign2011-08-06.jpg “Protesters outside the Los Angeles Courthouse on Thursday denounced the police’s moves against Rawesome, which offers raw milk products.” Source of caption and photo: online version of the NYT article quoted and cited below.

LOS ANGELES — Raw food enthusiasts fit right in here, in the earthy, health-conscious beach communities of Venice and Santa Monica, along with the farmers’ markets, health food stores and vegan restaurants.

But this week, the police cleared the shelves of Rawesome, an establishment in Venice Beach, loading $70,000 of raw, organic produce and dairy products on the back of a flatbed truck.
And then, on Thursday, James Stewart, the proprietor, was arraigned on charges of illegally making, improperly labeling and illegally selling raw milk products, as well as other charges related to Rawesome’s operations. Two farmers who work with Rawesome were also named in the district attorney’s complaint.
. . .
The raid on Rawesome has riled people here who say that unpasteurized milk is safer and healthier. About 150 raw food advocates gathered at the Los Angeles County Courthouse on Thursday to oppose the crackdown.
“It’s our right to choose what we want to put in our bodies,” Ms. Buttery said. “When members filled out an application, they were saying they wanted natural bacteria in their systems. We don’t want labeling. We don’t want animals full of antibiotics.”

For the full story, see:
IAN LOVETT. “Raw Food Co-op Is Raided in California.” The New York Times (Fri., August 5, 2011): A11.
(Note: ellipsis added.)
(Note: the online version of the story is dated August 4, 2011.)

The Lancet Accused Snow of Being “in the Pocket of Business Interests”

(p. 365) It is hard now to appreciate just how radical and unwelcome Snow’s views were. Many authorities actively detested him for them. The Lancet concluded that he was in the pocket of business interests which wished to continue to fill the air with ‘pestilent vapours, miasms and loathsome abominations of every kind’ and make themselves rich by poisoning their neighbours. ‘After careful enquiry,’ the parliamentary inquiry concluded, ‘we see no reason to adopt this belief.’

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.
(Note: italics in original.)

Finance and Strategy Should Be More Integrated

ChristensenClayton2011-07-19.jpg“‘God never said that finance and strategy are fundamentally different functions.’ –Clayton Christensen” Source of caption and photo: online version of the WSJ interview quoted and cited below.

MR. MURRAY: We’ve talked about the innovator’s dilemma, but what’s the solution?
MR. CHRISTENSEN: The financial function stands in the way of much of this. God never said that finance and strategy are fundamentally different functions, yet the business schools decided to teach strategy and teach finance. This gets implemented in companies where strategy is the responsibility of this group, and finance this group. And a lot of the things that make sense financially make no sense strategically.
. . .
MR. MURRAY: The United States has led the world in various types of innovation for much of the past century. Is that something that will continue?
MR. CHRISTENSEN: I am very worried about America. I was thinking about this hard over the past year. It turns out that the majority of the entrepreneurs that made Silicon Valley happen weren’t Americans. They were from Israel, China and India. We were a magnet to bring to our shores the best technologists in the world. Now our message to the rest of the world is, “You guys, we don’t want you.” The minute we say that and push those to Singapore and to Britain and elsewhere, I worry.

For the full interview, see:
Alan Murray, interviewer. “The Innovator’s Solution; Clayton Christensen, Glenn Hutchins and Ellen Kullman on being cutting edge–without breaking the bank.” The Wall Street Journal (Weds., June 27, 2011): C9.
(Note: bold and italics in original; ellipsis added.)

Nuclear Energy Much Safer than Previously Thought

(p. A14) ROCKVILLE, Md. — The Nuclear Regulatory Commission is approaching completion of an ambitious study that concludes that a meltdown at a typical American reactor would lead to far fewer deaths than previously assumed.

The conclusion, to be published in April after six years of work, is based largely on a radical revision of projections of how much and how quickly cesium 137, a radioactive material that is created when uranium is split, could escape from a nuclear plant after a core meltdown. In past studies, researchers estimated that 60 percent of a reactor core’s cesium inventory could escape; the new estimate is only 1 to 2 percent.
. . .
Big releases of radioactive material would not be immediate, and people within a 10-mile radius would have enough time to evacuate, the study found. The chance of a death from acute radiation exposure within 10 miles is therefore near zero, the study projects, although some people would receive doses high enough to cause fatal cancers in decades to come.
One person in every 4,348 living within 10 miles would be expected to develop a ”latent cancer” as a result of radiation exposure, compared with one in 167 in previous estimates.
”Accidents progress more slowly, in some cases much more slowly, than previously assumed,” Charles G. Tinkler, a senior adviser for research on severe accidents and one of the study’s authors, said in an interview at a commission office building here. ”Releases are smaller, and in some cases much smaller, of certain key radioactive materials.”

For the full story, see:
MATTHEW L. WALD. “N.R.C. Lowers Estimate of How Many Would Die in Meltdown.” The New York Times (Sat., July 30, 2011): A14.
(Note: ellipsis added.)
(Note: the online version of the article is dated July 29, 2011.)
(Note: I am not sure the whole article appeared on p. A14—only saw the online version.)

Larry Page’s Wonderful Crusade to Save Us Time


Source of book image: http://www.kurzweilai.net/images/intheplex.jpg

On C-SPAN’s book TV I saw the last part of an interesting and entertaining interview with Steven Levy that was originally recorded at the Computer History Museum on April 6, 2011. Levy is the author of of In the Plex which I have not read, but which is now on my to-read list.
At the end of the interview, Levy read a passage from his book about how Larry Page is obsessed with reducing latency, which is a technical term for how long we have to wait for something to happen on a computer.
Isn’t it wonderful that Larry Page is on a crusade to save us from wasted time?

Book discussed above:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.
(Note: “latency” appears on the following pages of Steven Levy’s book: 93, 184, 185, 186, 187, 207, 262, and 398.)

If Truman Had Not Used the Bomb, Hundreds of Thousands More American Soldiers Would Have Died


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

(p. A15) . . . , the author reminds us of the hundreds of thousands of Japanese who had died in the conventional bombings of places like Tokyo and Kyoto while Roosevelt was president, but with relatively little opprobrium attaching to FDR. Father Miscamble cites as well the horrific massacre of innocents for which the Japanese were responsible, a savagery still being unleashed in the summer of 1945, and the awful cost of battle in the Pacific, including 6,000 American dead and 20,000 wounded at Iwo Jima and 70,000 casualties suffered while capturing Okinawa. With these precedents, Herbert Hoover warned Truman that an invasion of the Japanese home islands could result in the loss of between half a million and a million American lives. Marshall, Leahy and Gen. Douglas MacArthur each had his own projected figures, none of them wildly different from Hoover’s.

Under these circumstances, it was inconceivable that Truman would not have ordered the use of a potentially war-winning weapon the moment it could be deployed. It is impossible to imagine the depth of the public’s fury if after the war Americans had discovered that their president, out of concern for his own conscience, had not used the weapons but instead condemned hundreds of thousands of American soldiers to certain death on the beaches and in the cities of mainland Japan.

For the full review, see:
ANNE JOLIS. “BOOKSHELF; In Defense Of ‘Little Boy’; Herbert Hoover warned President Truman that invading Japan would cost at least half a million American lives.” The Wall Street Journal (Weds., July 13, 2011): A15.
(Note: ellipsis added.)

Book reviewed:
Miscamble, Wilson D. The Most Controversial Decision: Truman, the Atomic Bombs, and the Defeat of Japan, Cambridge Essential Histories. New York: Cambridge University Press, 2011.

Confirmation Bias (aka “Pigheadedness”) in Science

(p. 12) In a classic psychology experiment, people for and against the death penalty were asked to evaluate the different research designs of two studies of its deterrent effect on crime. One study showed that the death penalty was an effective deterrent; the other showed that it was not. Which of the two research designs the participants deemed the most scientifically valid depended mostly on whether the study supported their views on the death penalty.
In the laboratory, this is labeled confirmation bias; observed in the real world, it’s known as pigheadedness.
Scientists are not immune. In another experiment, psychologists were asked to review a paper submitted for journal publication in their field. They rated the paper’s methodology, data presentation and scientific contribution significantly more favorably when the paper happened to offer results consistent with their own theoretical stance. Identical research methods prompted a very different response in those whose scientific opinion was challenged.

For the full commentary, see:
CORDELIA FINE. “GRAY MATTER; Biased but Brilliant.” The New York Times, SundayReview Section (Sun., July 31, 2011): 12.
(Note: the online version of the article is dated July 30, 2011.)

In Greece “Entrepreneurial Activity Was Denigrated”


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

(p. A15) Athens

If you’ve ever wondered why so many Greeks succeed in shipping, John Coustas has a plausible theory: “Greek shipping has nothing to do with the Greek state.”
His firm, Danaos Corporation, is a case in point. Mr. Coustas took over the company, which owns container ships, from his father in 1987 and has since transformed it from a three-vessel outfit into the third-largest company of its kind in the world, with a fleet of 56 ships. Danaos is incorporated in the Marshall Islands, a popular and stable jurisdiction for the global industry, and handles many of its operations through its German, Ukrainian, Russian and Tanzanian offices.
Nevertheless, Mr. Coustas is deeply concerned with the fate of his country. The government is now on the brink of default after passing its latest round of spending cuts and tax hikes. Yet the biggest risk to Greece, he says, is brain drain, that “all the good people, who really have something to offer, are either leaving or seriously considering it.”
. . .
On top of misguided government spending, Mr. Coustas says entrepreneurial activity was denigrated for many years and profit was regarded as “wrong.” “Anyone who wanted to make an investment here was considered a kind of bloodsucker.”

For the full commentary, see:
ANNE JOLIS. “Greece: Where Profit Is Taboo; A shipping magnate on the fate of his country.” The Wall Street Journal (Weds., July 13, 2011): A15.
(Note: ellipsis added.)