Growth Slow Due to Policies Impeding Start-Ups

(p. A11) The most recent period of rapid productivity growth in the U.S.–and rapid economic growth–was in the 1980s and ’90s and reflected the remarkable success of new businesses in information and communications technologies, including Microsoft, Apple, Amazon, Intel and Google. These new companies not only created millions of jobs but transformed modern society, changing how much of the world produces, distributes and markets goods and services.
Rising living standards in the future will depend on the continued success of these businesses but also on the next generation of success stories. Getting the U.S. economy back on track will require a much higher annual rate of new business startups. Sadly, the annual rate of new business creation is about 28% lower today than it was in the 1980s, according to our analysis of the U.S. Census Bureau’s Business Dynamics Statistics annual data series.
Why is the startup rate so low? The answer lies in Washington and the policies implemented in the wake of the 2008 financial crisis that were, ironically, intended to grow and stabilize the economy.    . . .
This explosion in federal regulation, intervention and subsidies has retarded productivity growth by protecting incumbents at the expense of more efficient producers, including startups. The number of pages in the Federal Code of Regulations peaked at nearly 175,000 in 2012, an increase of more than 7% in President Obama’s first three years.

For the full commentary, see:
EDWARD C. PRESCOTT and LEE E. OHANIAN. “U.S. Productivity Growth Has Taken a Dive; It has averaged about 1.1% since 2011, less than half the historical rate since 1948. Here’s how to increase it.” The Wall Street Journal (Tues., Feb. 4, 2014): A11.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Feb. 3, 2014.)

Fired Dissident Xia Yeliang Warns that Chinese Universities Do Not Value Academic Freedom

XiaYeliangFiredPekingEconomist2014-02-21.jpg “Xia Yeliang in New Jersey. Professor Xia, whose firing by Peking University provoked an outcry, is joining the Cato Institute.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A10) A Chinese dissident, dismissed from his job as an economics professor at Peking University after clashes with his government over liberalization, will become a visiting fellow at the Cato Institute on Monday, he said.

In an interview on Friday, the dissident, Xia Yeliang, warned that American universities should be careful about partnerships with Chinese universities. “They use the reputations of Western universities to cover their own scandals,” he said.
“Perhaps Western universities do not realize that Chinese universities do not have the basic value of academic freedom, and try to use Western universities to cover their bad side,” Professor Xia added.

For the full story, see:
TAMAR LEWIN. “Chinese Dissident Lands at Institute With a Caution to Colleges.” The New York Times (Mon., FEB. 10, 2014): A10.
(Note: the online version of the story has the date FEB. 9, 2014, and has the title “Chinese Dissident Lands at Cato Institute With a Caution to Colleges.”)

Carnegie’s Not-Fully-Grown-Infant-Industry Argument for Steel Tariffs

(p. 375) The steel industry was doubly dependent on state and national governments for the generous loans and subsidies that fueled railway expansion and rail purchases and the protective tariffs that enabled the manufacturers to keep their prices–and profits–higher than would have been possible had they been compelled to compete with European steelmakers. If, in the beginning, as Carnegie had argued, the tariff had been needed to nurture an infant steel industry, by the mid-1880s that infant had become a strapping, abrasive youth, who kept on growing. Why then, one might inconveniently ask, was there need for a protective tariff? Because, as Carnegie argued in the North American Review in July 1890, the steel industry was not yet fully grown and would have to be protected until it was.
On the issue of the tariff–as on few others–Pittsburgh’s workingmen were in agreement with Carnegie. They voted Republican in large numbers because the Republicans were the guardians of the protective tariff, and the tariff, they believed, protected their wage rates.
The argument linking the tariff and wages in the manufacturing sector was a compelling one in the industrial states, but nowhere else. As the Democrats took great delight in pointing out, high tariffs led to high prices for all consumers.

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.)

Catmull’s Pixar Had Technology Serve Story

StorytellingAnimalBK2014-02-23.jpg

Source of book image: http://rorotoko.com/images/uploads/gottschall_storytelling_animal.jpg

Ed Catmull, one of the creators of Pixar, discusses a favorite book of 2013. Catmull’s appreciation of the importance of storytelling may help explain why the early Pixar movies were so wonderful:

(p. C6) I am constantly struck by how many people think of stories solely as entertainment–edifying or time-wasting but still: entertainment. “The Storytelling Animal” by Jonathan Gottschall shows that the storytelling part of our brain is deeper and more complex than that, wired into the way we think and learn. This struck me as a powerful idea, that our brain is structured for and shaped by stories whose value goes beyond entertainment and socialization.

For the full article, see:
“12 Months of Reading; We asked 50 of our friends–from April Bloomfield to Mike Tyson–to name their favorite books of 2013.” The Wall Street Journal (Sat., Dec. 14, 2013): C6 & C9-C12.
(Note: the online version of the article has the date Dec. 13, 2013.)

The book that Catmull praises is:
Gottschall, Jonathan. The Storytelling Animal: How Stories Make Us Human. New York: Houghton Mifflin Harcourt, 2012.

Terrorist Threat to Electric Grid Is Overblown

(p. A13) On April 16, 2013, TV stations in Northern California reported a rifle attack on the Metcalf substation near San Jose along with the cutting of a nearby fiber-optic line.
. . .
One expert suggested if the assault were widely replicated around the country, it could take down the grid. Well, yes, but it would require an army. Every substation is different and would have to be scouted separately. And wouldn’t such an army be keen not to give away its presence? And why, if a terrorist had dozens of trained and disciplined fighters to deploy inside the U.S., would their target be utility substations?
. . .
One agency that wasn’t overselling the terrorist threat was the FBI, perhaps because the FBI investigates so many such attacks. Until the Metcalf incident is solved, any motive anyone cares to suggest will be plausible. PG&E has been a hate target of paranoiacs who believe smart meters cause cancer. The substation serves Silicon Valley, which lately has been accruing class enemies from San Francisco “progressives.” Eco-radicals have been quoting Ted Kaczynski for years on the need to attack the vital systems of industrial society. And, yes, the odd al Qaeda enthusiast exists in our midst. So do 15-year-old males with a surfeit of testosterone.

For the full story, see:
HOLMAN W. JENKINS, JR. “Bull’s-Eye on the Electric Grid; There’s nothing new about people shooting out the lights.” The Wall Street Journal (Weds., Feb. 12, 2014): A13.
(Note: ellipses added.)
(Note: the online version of the story has the date Feb. 11, 2014, and the title “Bull’s-Eye on the Utility System; There’s nothing new about people shooting out the lights.”)

Salt Encapsulates Nuclear Waste for “Millions of Years”

DesertSaltMinesNuclearWaste2014-02-21.jpg“Half a mile beneath the desert surface, in thick salt beds left behind by seas that dried up hundreds of millions of years ago, the Department of Energy is carving out rooms as long as football fields and cramming them floor to ceiling with barrels and boxes of nuclear waste. Metal walls are installed once a “panel” is filled with waste containers and backfilled with salt, shown during a tour of the mines at the Waste Isolation Pilot Plant in Carlsbad, New Mexico.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A9) CARLSBAD, N.M. — Half a mile beneath the desert surface, in thick salt beds left behind by seas that dried up hundreds of millions of years ago, the Department of Energy is carving out rooms as long as football fields and cramming them floor to ceiling with barrels and boxes of nuclear waste.

The salt beds, which have the consistency of crumbly rock so far down in the earth, are what the federal government sees as a natural sealant for the radioactive material left over from making nuclear weapons.
The process is deceptively simple: Plutonium waste from Los Alamos National Laboratory and a variety of defense projects is packed into holes bored into the walls of rooms carved from salt. At a rate of six inches a year, the salt closes in on the waste and encapsulates it for what engineers say will be millions of years.
. . .
Some people despair of finding a place for what officials call a high-level nuclear “repository” — they shy away from “dump” — but Allison M. Macfarlane, a geologist who is chairwoman of the Nuclear Regulatory Commission and who served on a presidential study commission established after the Yucca plan was canceled, said WIPP proves it can be done.
“The main lesson from WIPP is that we have already developed a geologic repository for nuclear waste in this country, so we can in the future,” she said.

For the full story, see:
MATTHEW L. WALD. “Nuclear Waste Solution Seen in Desert Salt Beds.” The New York Times (Mon., FEB. 10, 2014): A9-A10.
(Note: ellipsis added.)
(Note: the online version of the story has the date FEB. 9, 2014.)

Jay Gould Said Railroad Rates Should Be Set by “the Laws of Supply and Demand”

(p. 344) Jay Gould, asked in 1885 by a Senate investigating committee if he believed a “general national law” was needed to regulate railroad rates, responded that they were already regulated by “the laws of supply and demand, production, and consumption.”

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.)