October 2012 – artdiamondblog.com

Thiel Fellows Avoid Formal Education to Pursue Entrepreneurial Projects

“Eden Full, 20, tested her rotating solar panel in Kenya in 2010.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p.1) EDEN FULL should be back at Princeton by now. She should be hustling to class, hitting the books, acing tests. In short, she should be climbing that old-school ladder toward a coveted spot among America’s future elite.

She isn’t doing any of that. Instead, Ms. Full, as bright and poised and ambitious as the next Ivy Leaguer, has done something extraordinary for a Princetonian: she has dropped out.
It wasn’t the exorbitant cost of college. (Princeton, all told, runs nearly $55,000 a year.) She says she simply received a better offer — and, perhaps, a shot at a better education.
Ms. Full, 20, is part of one of the most unusual experiments in higher education today. It rewards smart young people for not going to college and, instead, diving into the real world of science, technology and business.
The idea isn’t nuts. After all, Bill Gates and Steve Jobs dropped out, and they did O.K.
Of course, their kind of success is rare, degree or no degree. Mr. Gates and Mr. Jobs changed the world. Ms. Full wants to, as well, and she’s in a hurry. She has built a low-cost solar panel and is starting to test it in Africa.
“I was antsy to get out into the world and execute on my ideas,” she says.
At a time when the value of a college degree is being called into question, and when job prospects for many new graduates are grimmer than they’ve been in years, perhaps it’s no surprise to see a not-back-to-school movement spring up. What is surprising is where it’s springing up, and who’s behind it.
The push, which is luring a handful of select students away from the likes of Princeton, Harvard and M.I.T., is the brainchild of Peter A. Thiel, 44, a billionaire and freethinker with a remarkable record in Sil-(p. 7)icon Valley. Back in 1998, during the dot-com boom, Mr. Thiel gambled on a company that eventually became PayPal, the giant of online payments. More recently, he got in early on a little start-up called Facebook.
Since 2010, he has been bankrolling people under the age of 20 who want to find the next big thing — provided that they don’t look for it in a college classroom. His offer is this: $50,000 a year for two years, few questions asked. Just no college, unless a class is helpful for their Thiel projects.
. . .
Ms. Full is friends with another Thiel fellow, Laura Deming, 18. Ms. Deming is clearly brilliant. When she was 12, her family moved to San Francisco from New Zealand so she could work with Cynthia Kenyon, a molecular biologist who studies aging. When Ms. Deming was 14, the family moved again, this time to the Boston area, so she could study at M.I.T.
“Families of Olympic-caliber athletes make these kinds of sacrifices all the time,” says Tabitha Deming, Laura’s mother. “When we lived nearby in Boston, we were lucky to see her once a month. She never came home for weekends.”
John Deming, Laura’s father, graduated from Brandeis University at the age of 35 but says he disdains formal education at every level. His daughter was home-schooled.
“I can’t think of a worse environment than school if you want your kids to learn how to make decisions, manage risk and take responsibility for their choices,” Mr. Deming, an investor, wrote in an e-mail. “Rather than sending them to school, turn your kids loose on the world. Introduce them to the rigors of reality, the most important of which is earning your own way.” He added, “I detest American so-called ‘education.’ ”
His daughter’s quest to slow aging was spurred by her maternal grandmother, Bertie Deming, 85, who began having neuromuscular problems a decade ago. Laura, a first-year fellow, now spends her days combing medical journals, seeking a handful of researchers worth venture capital funding, which is a continuation of her earlier work.
“I’m looking for therapies that target aging damage and slow or reverse it,” she says. “I’ve already spent six years on this stuff. So far I’ve found only a few companies, two or three I’m really bullish on.”

For the full story, see:
CAITLIN KELLY. “Drop Out, Dive In, Start Up..” The New York Times, SundayBusiness (Sun., September 16, 2012): 1 & 7.
(Note: ellipsis added.)
(Note: the online version of the article is dated September 15, 2012, and had he title “Forgoing College to Pursue Dreams.”)

“Laura Deming, left, at age 6 with her grandmother, whose neuromuscular problems have now inspired Laura to work on anti-aging technology.” Source of caption and photo: online version of the NYT article quoted and cited above.

Preindustrial Icelanders Adapted to Adverse Global Cooling

(p. 254) We investigate the effect of climate on population levels in preindustrial Iceland. We find that short-term temperature changes affect the population growth rate. In particular, a 1ºC decrease in temperature causes about 0.57 percent decrease in the population growth rate for the two subsequent years, for a total effect of 1.14 percent. This effect appears to attenuate as the growth rate returns to trend in subsequent years. We also quantify the extent to which eighteenth- and nineteenth-century Icelanders adapt to long-run climate change. In particular, the data suggest that long-run adaptation to climate takes about 20 years and reduces the effect of cold shocks by about 60 percent. Our results also allow us to approximate the effect of permanent climate change on steady-state population levels. This approximation suggests that steady state population levels decrease by 10 percent to 26 percent for each 1ºC of sustained adverse temperature change.
(p. 255) . . .
If contemporary poor agricultural populations behave like their eighteenth- and nineteenth century Icelandic counterparts, then our results suggest that adverse climate change (which now refers to warming, not cooling) will have three effects. First, in the short run it will lead to a significant decrease in population growth rates. Second, over the course of a generation, adaptation will offset about 60 percent of the short run effects. Finally, in the long run, we expect a decrease in steady-state populations.

For the full article, from which the above conclusion is quoted, see:
Turner, Matthew A., Jeffrey S. Rosenthal, Jian Chen, and Chunyan Hao. “Adaptation to Climate Change in Preindustrial Iceland.” American Economic Review 102, no. 3 (May 2012): 250-55.
(Note: underlining added; the underlined words appeared on p. 254 of the print issue, and on p. 255 of the online issue, of the article.)

China’s State-Owned Enterprises Lose Money and Slow Growth

Source of book image: http://s.wsj.net/public/resources/images/OB-UU147_mcgreg_DV_20121001022644.jpg

In the passages quoted below “SOE” means “state-owned enterprise.”

(p. B1) If the U.S. needs another wake-up call, it will get one this week with the publication of a bracing account of the danger that China’s state capitalism poses to global business–and to China itself. James McGregor’s new book, “No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism,” dissects the complex policies and state structures that produced China’s novel system. And it describes the limited recourse the U.S. and other nations have. (Full disclosure: Mr. McGregor is a friend and former colleague at the Journal.)

“The Communist Party of China has two unwavering objectives: Make China rich and powerful and guarantee the Party’s political monopoly,” Mr. McGregor writes. “At the center of this are behemoth state-owned enterprises that dominate all key sectors and have been instrumental to the country’s current success.
“As China’s global reach expands, this one-of-a-kind system is challenging the rules and organizations that govern global trade as well as the business plans and strategies of multinationals around the globe. At the same time, the limits of authoritarian capital-(p.B2)ism are increasingly evident at home, where corruption is endemic, the SOEs are consuming the fruits of reform, and the economic engine is running out of gas.”
Born in the 1950s when 10,000 Soviet advisers helped China organize central planning, the state-owned enterprises quickly became bloated extensions of the Party’s patronage and power.
. . .
The enterprises themselves, meanwhile, crowded out private competition. SOEs account for about 96% of China’s telecom industry, 92% of power and 74% of autos. The combined profit of China Petroleum & Chemical and China Mobile in 2009 alone was greater than all the profit of China’s 500 largest private firms, Mr. McGregor writes.
An independent Chinese study, he adds, says that if you subtract government subsidies from the biggest SOEs they actually lose money.
Mr. McGregor believes pressures are building within China for change–the result of SOEs that don’t innovate enough, slowing growth, an angry private sector, and a pending leadership change, among other factors. Even some top leaders say reform is needed.

For the full commentary, see:
JOHN BUSSEY. “THE BUSINESS; Tackling the Many Dangers of China’s State Capitalism.” The New York Times (Fri., September 28, 2012): B1 & B2.
(Note: ellipsis added.)
(Note: the online version of the article has the date September 27, 2012.)

Book under discussion:
McGregor, James. No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism. Westport, CT: Prospecta Press, 2012.

The Kairos of Creative Destruction in Medicine

Wikipedia tells us that “Kairos” “is an ancient Greek word meaning the right or opportune moment (the supreme moment).”

(p. x) With a medical profession that is particularly incapable of making a transition to practicing individualized medicine, despite a new array of powerful tools, isn’t it time for consumers to drive this capability? The median of human beings is not the message. The revolution in technology that is based on the primacy of individuals mandates a revolution by consumers in order for new medicine to take hold.

Now you’ve probably thought “creative destruction” is a pretty harsh term to apply to medicine. But we desperately need medicine to he Schumpetered, to be radically transformed. We need the digital world to invade (p. xi) the medical cocoon and to exploit the newfound and exciting technological capabilities of digitizing human beings. Some will consider this to be a unique, opportune moment in medicine, a veritable once-in-a-lifetime Kairos.
This book is intended to arm consumers to move us forward.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.
(Note: italics in original.)

Instead of Fixing “Inadequate Schools,” Adderall Is Prescribed to “Struggling” Students

“Amanda Rocafort and her son Quintn in Woodstock, Ga. Quintn takes the medication Risperdal.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) CANTON, Ga. — When Dr. Michael Anderson hears about his low-income patients struggling in elementary school, he usually gives them a taste of some powerful medicine: Adderall.

The pills boost focus and impulse control in children with attention deficit hyperactivity disorder. Although A.D.H.D is the diagnosis Dr. Anderson makes, he calls the disorder “made up” and “an excuse” to prescribe the pills to treat what he considers the children’s true ill — poor academic performance in inadequate schools.

For the full story, see:
ALAN SCHWARZ. “Attention Disorder or Not, Pills to Help in School.” The New York Times (Tues., October 9, 2012): A1 & A18.

Government Disaster Relief Crowds Out Private Self-Protection

(p. 242) This paper has investigated the role of natural disaster shocks in determining gross migration flows, controlling for other place-based features. Using two micro datasets, we documented that in the 1920s and 1930s population was repelled from tornado-prone areas, with a larger effect on potential in-migrants than on existing residents, while flood events were associated with net inmigration. The differential migration responses by disaster type raises the question of whether public efforts at disaster mitigation counteract individual migration decisions. The nascent investment in rebuilding and protecting flood-prone areas could provide one example of public investment crowding out private self-protection (i.e., migration).
(p. 243) In future work, we plan to explore the role of New Deal disaster management more directly by exploiting variation across SEAs in federal expenditures and representation on key congressional committees. We predict that residents of areas that received federal largesse after a disaster in the 1930s will be less likely to move out and that new arrivals may be more likely to move in, while residents of areas that benefited less from New Deal spending will continue to use migration as a means of self-protection.

For the full article, from which the above conclusion is quoted, see:
Boustan, Leah Platt, Matthew E. Kahn, and Paul W. Rhode. “Moving to Higher Ground: Migration Response to Natural Disasters in the Early Twentieth Century.” American Economic Review 102, no. 3 (May 2012): 238-44.

Reality Is Not Always “Elegant”

Source of book image: http://images.betterworldbooks.com/067/Ordinary-Geniuses-Segre-Gino-9780670022762.jpg

(p. C9) In the summer of 1953, while visiting Berkeley, Gamow was shown a copy of the article in Nature where Watson and Crick spelled out some of the genetic implications of their discovery that DNA is structured as a double helix. He immediately realized what was missing. Each helix is a linear sequence of four molecules known as bases. The sequence contains all the information that guides the manufacture of the proteins from which living things are made. Proteins are assembled from 20 different amino acids. What is the code that takes you from the string of bases to the amino acids? Gamow seems to have been the first to look at the problem in quite this way.

But he made a physicist’s mistake: He thought that the code would be “elegant”–that each amino acid would be specified by only one string of bases. (These strings were dubbed “codons.”) He produced a wonderfully clever code in which each codon consisted of three bases. That was the only part that was right. In the actual code sometimes three different codons correspond to the same amino acid, while some codons do not code for an amino acid at all. These irregularities are the results of evolutionary stops and starts, and no amount of cleverness could predict them.

For the full review, see:
JEREMY BERNSTEIN. “The Inelegant Universe.” The Wall Street Journal (Sat., August 13, 2011): C9.

The book under review is:
Segrè, Gino. Ordinary Geniuses: Max Delbruck, George Gamow, and the Origins of Genomics and Big Bang Cosmology. New York: Viking, 2011.

“Our World Has Been “Schumpetered””

“Schumpeter” is now a verb!

(p. v) In the mid-twentieth century Joseph Schumpeter, the noted Austrian economist, popularized the term “creative destruction” to denote transformation that accompanies radical innovation. In recent years, our world has been “Schumpetered.” By virtue of the intensive infiltration of digital devices into our daily lives, we have radically altered how we communicate with one another and with our entire social network at once. We can rapidly turn to our prosthetic brain, the search engine, at any moment to find information or compensate for a senior moment. Everywhere we go we take pictures and videos with our cell phone, the one precious object that never leaves our side. Can we even remember the old days of getting film developed? No longer is there such a thing as a record album that we buy as a whole–instead we just pick the song or songs we want and download them anytime and anywhere. Forget about going to a video store to rent a movie and finding out it is not in stock. Just download it at home and watch it on television, a computer monitor, a tablet, or even your phone. If we’re not interested in getting a newspaper delivered and accumulating enormous loads of paper to recycle, or having our hands smudged by newsprint, we can simply click to pick the stories that interest us. Even clicking is starting to get old, since we can just tap a tablet or cell phone in virtual silence. The Web lets us sample nearly all books in print without even making a purchase and efficiently download the whole book in a flash. We have both a digital, virtual identity and a real one. This profile just scratches the surface of the way our lives have been radically transformed through digital innovation. Radically transformed. Creatively destroyed.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

Abigail Fisher “Devastated” by “Holistic Review”

“Abigail Fisher, 22, at the Supreme Court last month. “I probably would have gotten a better job offer had I gone to U.T.,” Ms. Fisher said.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) WASHINGTON — Abigail Fisher is a slight young woman with strawberry blond hair, a smile that needs little prompting, a determined manner and a good academic record. She played soccer in high school, and she is an accomplished cellist.

But the university she had her heart set on, the one her father and sister had attended, rejected her. “I was devastated,” she said, in her first news interview since she was turned down by the University of Texas at Austin four years ago.
Ms. Fisher, 22, who is white and recently graduated from Louisiana State University, says that her race was held against her, and the Supreme Court is to hear her case on Wednesday, bringing new attention to the combustible issue of the constitutionality of racial preferences in admissions decisions by public universities.
“I’m hoping,” she said, “that they’ll completely take race out of the issue in terms of admissions and that everyone will be able to get into any school that they want no matter what race they are but solely based on their merit and if they work hard for it.”
. . .
(p. A17) The majority opinion in the Grutter case, written by Justice Sandra Day O’Connor, rejected the use of racial quotas in admissions decisions but said that race could be used as one factor among many, as part of a “holistic review.” Justice O’Connor retired in 2006, and her replacement by Justice Samuel A. Alito Jr. may open the way for a ruling cutting back on such race-conscious admissions policies, or eliminating them.
. . .
She said she was trying to come to terms with her role in a case that could reshape American higher education. Asked if she found it interesting or exciting or scary, she said, “All of the above.”
But she did not hesitate to say how she would run an admission system. “I don’t think,” she said, “that we even need to have a race box on the application.”

For the full story, see:
ADAM LIPTAK. “Race and College Admissions, Facing a New Test by Justices.” The New York Times (Tues., October 9, 2012): A1 & A17.
(Note: ellipses added.)
(Note: the online version of the review has the date October 8, 2012.)

Paul Samuelson, in 2009 Interview, Says Economists Should Study Economic History

Clarke Conor interviewed Paul Samuelson in the summer of 2009. Since Samuelson died in October 2009, the interview was one of his last.
Samuelson was a student of Joseph Schumpeter at Harvard, and Schumpeter worked to get Samuelson financial support and a job. Near the end of his life, Schumpeter was ridiculed when he warned National Bureau of Economic Research (NBER) economists that they should not neglect economic history.
It took Paul Samuelson a long time to appreciate Schumpeter’s truth.

Very last thing. What would you say to someone starting graduate study in economics? Where do you think the big developments in modern macro are going to be, or in the micro foundations of modern macro? Where does it go from here and how does the current crisis change it?

Well, I’d say, and this is probably a change from what I would have said when I was younger: Have a very healthy respect for the study of economic history, because that’s the raw material out of which any of your conjectures or testings will come. And I think the recent period has illustrated that. The governor of the Bank of England seems to have forgotten or not known that there was no bank insurance in England, so when Northern Rock got a run, he was surprised. Well, he shouldn’t have been.
But history doesn’t tell its own story. You’ve got to bring to it all the statistical testings that are possible. And we have a lot more information now than we used to.

For the full interview, see:
Clarke, Conor. “An Interview with Paul Samuelson, Part Two.” The Atlantic (2009), http://www.theatlantic.com/politics/archive/2009/06/an-interview-with-paul-samuelson-part-two/19627/.
(Note: bold indicates Conor question, and is bolded in original.)
(Note: the interview was posted on The Atlantic online website, but I do not believe that it ever appeared in the print version of the magazine.)

Chamber Blitz Clip for Tort Reform

“Blitz gasoline cans, at Ace Hardware in Miami, Okla., will soon disappear from stores. The company closed because of the costs of lawsuits contending that the cans were unsafe.” Source of caption and photo: online version of the NYT article quoted and cited below.

The “Mr. Flick” quoted below is Rocky Flick, the former CEO of Blitz.

(p. B1) Crusading against what it considers frivolous lawsuits, the United States Chamber of Commerce has had no shortage of cases to highlight, like the man suing a cruise line after burning his feet on a sunny deck or the mother claiming hearing loss from the screaming at a Justin Bieber concert.

Now, the lobbying group’s Institute for Legal Reform is showing a 30-second commercial that uses Blitz USA, a bankrupt Oklahoma gasoline can manufacturer, to illustrate the consequences of abusive lawsuits. The ad shows tearful workers losing their jobs and the lights going out at the 46-year-old company as a result of steep legal costs from lawsuits targeting the red plastic containers, according to the company and the institute.
The closing of the 117-employee operation this summer became a rallying point for proponents of tort reform. . . .
. . .
(p. B2) Blitz executives note that the company, which was the nation’s leading gas can producer, sold more than 14 million cans a year over the last decade, with fewer than two reported incidents per million cans sold. The company said the most serious incidents usually involved obvious misuse of the cans, like pouring gasoline on an open fire.
. . .
A decade ago, Mr. Flick said, the company would face one or two lawsuits a year. The number grew to six or seven a year, and finally to 25 or so last year when Blitz filed for bankruptcy.

For the full story, see:
CLIFFORD KRAUSS. “Two Sides of Product Liability: A Factory’s Closing Focuses Attention on Tort Reform.” The New York Times (Fri., October 4, 2012): B1.
(Note: ellipses added.)
(Note: the online version of the article is dated October 5, 2012 and has the shorter title “A Factory’s Closing Focuses Attention on Tort Reform.”)

View the Chamber video clip on the Blitz example: