December 2013 – Page 2 – artdiamondblog.com

After First “Debilitating” Federal Funding, Morse Funded Telegraph Privately

(p. 37) The first telegraph line had been completed . . . , in 1844, when Samuel F. B. Morse, with $30,000 in federal funding, connected Washington to Baltimore. Morse and his partners had expected to get funding to build additional lines from the federal government, but their experience securing their first $30,000 had been so debilitating that they gave up entirely on the public sector and turned to private capital to fund their new telegraph lines. Henry O’Rielly secured the franchise and agreed to raise the capital to string telegraph poles from east to west. His plan was to extend one line from Buffalo to Chicago, the other across the Alleghenies from Philadelphia through Pittsburgh, to St. Louis, and then north to Chicago, and south to New Orleans.
Although customers were scarce and the first telegraph lines were continually breaking (or being broken by bands of boys who took great joy in throwing stones at the glass insulators that glistened in the sunlight), O’Rielly and the handful of entrepreneurs who believed in the future of telegraphy raised sufficient capital to extend their lines mile by mile. By late 1846, they had also connected Boston to Washington, via New York City and Philadelphia; New York City to Buffalo, through Albany; and in late December, Philadelphia to Pittsburgh, via Lancaster and Harrisburg.

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: ellipsis added.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Regulators Harass Saucy and Irreverent Buckyball Entrepreneur

“Craig Zucker, former head of Maxfield & Oberton, which made Buckyballs, sells Liberty Balls to raise a legal-defense fund against an unusual action by federal regulators.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) Over the last three weeks, more than 2,200 people have placed orders for $10-to-$40 sets of magnetic stacking balls, rising to the call of a saucy and irreverent social media campaign against a government regulatory agency.
. . .
It involves an effort by the federal Consumer Product Safety Commission to recall Buckyballs, sets of tiny, powerfully magnetic stacking balls that the magazines Rolling Stone and People once ranked on their hot products lists.
Last year, the commission declared the balls a swallowing hazard to young children and filed an administrative action against the company that made the product, demanding it recall all Buckyballs, and a related product called Buckycubes, and refund consumers their money. The company, Maxfield & Oberton Holdings, challenged the action, saying labels on the packaging clearly warned that the product was unsafe for children.
But the fuss now has less to do with safety. After Maxfield & Oberton went out of business last December, citing the financial toll of the recall battle, lawyers for the product safety agency took the highly unusual step of adding the chief executive of the dissolved firm, Craig Zucker, as a respondent in the recall action, arguing that he con-
(p. B6)trolled the company’s activities. Mr. Zucker and his lawyers say the move could ultimately make him personally responsible for the estimated recall costs of $57 million.
While the “responsible corporate officer” doctrine (also known as the Park doctrine) has been used frequently in criminal cases, allowing for prosecutions of individual company officers in cases asserting corporate wrongdoing, experts say its use is virtually unheard-of in an administrative action where no violations of law or regulations are claimed.
. . .
Three well-known business organizations — the National Association of Manufacturers, the National Retail Federation and the Retail Industry Leaders Association — banded together this summer to file a brief urging the administrative law judge reviewing the recall case to drop Mr. Zucker as a respondent.
The groups argue that holding an individual responsible for a widespread, expensive recall sets a disturbing example and runs counter to the business desire for limited liability. They contend that such risk would have a detrimental effect on entrepreneurism and openness in dealing with regulatory bodies.
. . .
Conservative legal groups like Cause of Action, a nonprofit that targets what it considers governmental overreach, have been watching the proceedings with interest and weighing taking some action.
“This really punishes entrepreneurship and establishes a bad precedent for businesses working to create products for consumers,” said Daniel Z. Epstein, the group’s executive director. “It undermines the business community’s ability to rely upon the corporate form.”

For the full story, see:
HILARY STOUT. “In Regulators’ Sights; Magnetic-Toy Recall Gives Rise to Wider Legal Campaign.” The New York Times (Fri., November 1, 2013): B1 & B6.
(Note: ellipses added.)
(Note: the online version of the article has the date October 31, 2013, and has the title “Buckyball Recall Stirs a Wider Legal Campaign.”)

Buffett’s Berkshire Buys More of Dubious DaVita

A case has been made on CNN that DaVita has committed Medicare fraud costing taxpayers many millions of dollars. DaVita has been discussed in previous blog entries on November 30, 2012, May 18, 2013, and June 11, 2013.

(p. 3D) Omaha investor Warren Buffett’s company bought nearly 3.7 million more shares of DaVita Inc. after the dialysis provider reported its earnings . . . [in the first week of November 2013].

Berkshire Hathaway Inc. said in documents filed with the Securities and Exchange Commission on Friday that it owns 35.1 million shares of DaVita.

For the full story, see:
THE ASSOCIATED PRESS. “Berkshire buys 3.7 million more shares of DaVita after report.” Omaha World-Herald (Mon., November 11, 2013): 3D.
(Note: ellipsis and bracketed words added.)

Stem Cells Used to Create Tiny, Simple Human Livers

“Researchers from Japan used human stem cells to create “liver buds,” rudimentary livers that, when transplanted into mice, grew and functioned.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A3) Researchers in Japan have used human stem cells to create tiny human livers like those that arise early in fetal life. When the scientists transplanted the rudimentary livers into mice, the little organs grew, made human liver proteins, and metabolized drugs as human livers do.

They and others caution that these are early days and this is still very much basic research. The liver buds, as they are called, did not turn into complete livers, and the method would have to be scaled up enormously to make enough replacement liver buds to treat a patient. Even then, the investigators say, they expect to replace only 30 percent of a patient’s liver. What they are making is more like a patch than a full liver.
But the promise, in a field that has seen a great deal of dashed hopes, is immense, medical experts said.
“This is a major breakthrough of monumental significance,” said Dr. Hillel Tobias, director of transplantation at the New York University School of Medicine. Dr. Tobias is chairman of the American Liver Foundation’s national medical advisory committee.

For the full story, see:
GINA KOLATA. “Scientists Fabricate Rudimentary Human Livers.” The New York Times (Thurs., July 4, 2013): A3.
(Note: the online version of the story has the date July 3, 2013.)

The research article is:
Takebe, Takanori, Keisuke Sekine, Masahiro Enomura, Hiroyuki Koike, Masaki Kimura, Takunori Ogaeri, Ran-Ran Zhang, Yasuharu Ueno, Yun-Wen Zheng, Naoto Koike, Shinsuke Aoyama, Yasuhisa Adachi, and Hideki Taniguchi. “Vascularized and Functional Human Liver from an iPSC-Derived Organ Bud Transplant.” Nature (July 3, 2013) DOI: 10.1038/nature12271.

Carnegies Liked Pittsburgh Area’s Growing Economy and Flexible Labor Market

(p. 32) For all its Old World charms, Dunfermline too had had its epidemics, its scavenging rodents, muddy streets, and clean water shortages. The reason why the Hogans and the Aitkins and the Carnegies and thousands like them had come to the United States in general, and the Pittsburgh area in particular, had less to do with health, hygiene, or the physical environment than with an abundance of well-paid jobs. In this respect, Pittsburgh and Allegheny City were everything that Dunfermline was not: their markets for manufactured goods were expanding rapidly, their economies were diversified, and there were no craft restrictions on the employment of skilled artisans.

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Amazon’s User Reviews Increase Rationality of Consumer Choices

Source of book image: http://2.bp.blogspot.com/-dNUZ_u-GWSk/UpqE0zmFQQI/AAAAAAAAAko/Z8uisfEjgRc/s1600/Absolute+Value+cover.png

(p. 3) You are no longer the sucker you used to be.

So suggests continuing research from the Stanford Graduate School of Business into the challenges marketers face in reaching consumers in the digital age. As you might suspect, the research shows that a wealth of online product information and user reviews is causing a fundamental shift in how consumers make decisions.
As consumers rely more on one another, the power of marketers is being undermined, said Itamar Simonson, a Stanford marketing professor and the lead researcher.
. . .
To get the full impact of the findings, you first have to know the conclusions of a similar experiment decades ago by Dr. Simonson, . . . . . . .
The researchers found that when study subjects had only two choices, most chose the less expensive camera with fewer features. But when given three choices, most chose the middle one. Dr. Simonson called it “the compromise effect” — the idea that consumers will gravitate to the middle of the options presented to them.
. . .
Flash forward to the new experiment. It was similar to the first, except that consumers could have a glimpse at Amazon. That made a huge difference. When given three camera options, consumers didn’t gravitate en masse to the midprice version. Rather, the least expensive one kept its share and the middle one lost more to the most expensive one.
“The compromise effect was gone,” said Dr. Simonson, or, rather, he nearly exclaimed the absence of the effect, underscoring his surprise at the findings. They are to be published next month in “Absolute Value,” a book by Dr. Simonson and Emanuel Rosen.
Today, products are being evaluated more on their “absolute value, their quality,” Dr. Simonson said. Brand names mean less.

For the full story, see:
MATT RICHTEL. “APPLIED SCIENCE; There’s Power in All Those User Reviews.” The New York Times, SundayBusiness Section (Sun., December 8, 2013): 3.
(Note: ellipses added.)
(Note: the online version of the article has the date December 7, 2013.)

The new research is reported in:
Simonson, Itamar, and Emanuel Rosen. Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information. New York: HarperBusiness, 2014.

In Britain Right and Left Support “Libertarian Paternalism”

(p. 4) In 2010, Mr. Cameron set up the Behavioral Insights Team — or nudge unit, as it’s often called. Three years later, the team has doubled in size and is about to announce a joint venture with an external partner to expand the program.
The unit has been nudging people to pay taxes on time, insulate their attics, sign up for organ donation, stop smoking during pregnancy and give to charity — and has saved taxpayers tens of millions of pounds in the process, said David Halpern, its director.
. . .
Creating Commitment
One morning in late May 2008, 10 copies of a little red book arrived for Rohan Silva in Norman Shaw South, the Westminster wing where the leader of the political opposition — at the time, the Conservatives — is traditionally housed.
The book was “Nudge,” and Mr. Silva, then 27 and David Cameron’s youngest adviser, piled them up on his desk. He had read the book as soon as it came out, a few weeks before. In fact, he had read deeply on behavioral economics and social psychology and met many of the American academics who specialized in the field. He was eager to spread the message in his country. “We used to joke about Ro being on commission for Thaler and Sunstein,” said Steve Hilton, Mr. Cameron’s former director of strategy and now a visiting scholar at Stanford.
. . .
Libertarian Paternalism
. . .
. . . , the question in Britain no longer seems to be whether, but how, to nudge. In their book, Professor Thaler and Mr. Sunstein defined their approach as steering people toward decisions deemed superior by the government but leaving them free to choose. “Libertarian paternalism,” they called it, and while that term is not used much in Britain, there is broad agreement on the subject among the left and the right.
Mr. Halpern used to be policy chief for Tony Blair, the former Labour prime minister, and later wrote a report on behavioral policy-making commissioned by Mr. Blair’s Labour Party successor, Gordon Brown. In one small way, the 2010 election campaign was also a race to decide which party would carry out an idea that had been percolating in the intellectual ranks of both for some years.

Wider Horizons
One of Mr. Thaler’s favorite nudges is something that Schiphol Airport near Amsterdam adopted in public bathrooms: a small sticker of a fly in the center of a urinal has been shown to improve aim. It saves the airport cleaning costs.
During a recent visit to Downing Street, Mr. Thaler ran into Mr. Cameron in the men’s room. There were no fly stickers.
“What’s the deal?” he joked.

For the full story, see:
KATRIN BENNHOLD. “The Ministry of Nudges.” The New York Times, SundayBusiness Section (Sun., December 8, 2013): 1 & 4.
(Note: ellipses added; bold in original.)
(Note: the online version of the article has the date December 7, 2013, and has the title “Britain’s Ministry of Nudges.”)

The Nudge book is:
Thaler, Richard H., and Cass R. Sunstein. Nudge: Improving Decisions About Health, Wealth, and Happiness. Revised & Expanded (pb) ed: Penguin Books, 2009.

“Government Takes What It Wants”

“Mike Campbell, 76, challenged Zimbabwe’s land redistribution law. He and his son-in-law, Ben Freeth, 38, were beaten by a gang.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) CHEGUTU, Zimbabwe — Edna Madzongwe, president of the Senate and a powerful member of Zimbabwe’s ruling party, began showing up uninvited at the Etheredges’ farm here last year, at times still dressed up after a day in Parliament.

And she made her intentions clear, the Etheredges say: she wanted their farm and intended to get it through the government’s land redistribution program.
The farm is a beautiful spread, with three roomy farm houses and a lush, 55,000-tree orange orchard that generates $4 million a year in exports. The Etheredges, outraged by what they saw as her attempt to steal the farm, secretly taped their exchanges with her.
“Are you really serious to tell me that I cannot take up residence because of what it does to you?” she asked Richard Etheredge, 72, whose father bought the farm in 1947. “Government takes what it wants.”
He dryly replied, “That we don’t deny,” according to a transcript of the tapes.

For the full story, see:
CELIA W. DUGGER. “White Farmers Confront Mugabe in a Legal Battle.” The New York Times, First Section (Sun., December 28, 2008): 1 & 10.
(Note: the online version of the article has the date December 27, 2008 and has the title “White Farmers Confront Mugabe in a Legal Battle.”)

“Mr. Freeth circulated photographs of his injuries online after the invasion of his farm.” Source of caption and photo: online version of the NYT article quoted and cited above.

Carnegie Attended a Private School Where Teacher Was an Entrepreneur

(p. 15) At the age of eight, Andra had begun attending school. Although he implies in his Autobiography that it had been his decision to put off school until then, eight, in fact, was the age at which most Scottish boys entered the classroom. There were numerous schools in Dunfermline in the early 1840s, thirty-three of them to be exact, almost half endowed or supported by the kirk (church) or the municipality. Andra was sent to one of the “adventure” schools, so called because they were started up and supported “entirely on the teachers’ own adventure.”

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: italics in original.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Portland Government Stops Girl from Selling Mistletoe to Pay for Braces

In Portland, the government is stopping an 11 year old girl from selling mistletoe to raise money for her braces. Here is a link to the KATU local Portland ABC news station video report: http://www.katu.com/news/local/11-year-old-told-not-to-sell-mistletoe-but-begging-is-fine-234014261.html?tab=video&c=y It also has been posted to YouTube at: http://www.youtube.com/watch?v=Vj4caXi0wdw

Use of Floppy Disks Shows Slowness of Government

(p. A14) WASHINGTON — The technology troubles that plagued the HealthCare.gov website rollout may not have come as a shock to people who work for certain agencies of the government — especially those who still use floppy disks, the cutting-edge technology of the 1980s.
Every day, The Federal Register, the daily journal of the United States government, publishes on its website and in a thick booklet around 100 executive orders, proclamations, proposed rule changes and other government notices that federal agencies are mandated to submit for public inspection.
So far, so good.
It turns out, however, that the Federal Register employees who take in the information for publication from across the government still receive some of it on the 3.5-inch plastic storage squares that have become all but obsolete in the United States.
. . .
“You’ve got this antiquated system that still works but is not nearly as efficient as it could be,” said Stan Soloway, chief executive of the Professional Services Council, which represents more than 370 government contractors. “Companies that work with the government, whether longstanding or newcomers, are all hamstrung by the same limitations.”
The use of floppy disks peaked in American homes and offices in the mid-1990s, and modern computers do not even accommodate them anymore. But The Federal Register continues to accept them, in part because legal and security requirements have yet to be updated, but mostly because the wheels of government grind ever slowly.
. . .
. . . , experts say that an administration that prided itself on its technological savvy has a long way to go in updating the computer technology of the federal government. HealthCare.gov and the floppy disks of The Federal Register, they say, are but two recent examples of a government years behind the private sector in digital innovation.

For the full story, see:
JADA F. SMITH. “Slowly They Modernize: A Federal Agency That Still Uses Floppy Disks.” The New York Times (Sat., December 7, 2013): A14.
(Note: ellipses added.)
(Note: the online version of the article has the date December 6, 2013.)