Month: January 2016

In Poor Province, Chinese Communists Spend Over $400,000 Building Giant Golden Statue of Mao, Starver of Millions of the Proletariat

(p. B1) ZHUSHIGANG, China — Just two days after images of a giant gold-colored statue of Mao in the bare fields of Henan Province spread across the Internet, the statue was gone — torn down apparently on the orders of embarrassed local officials.
Villagers said demolition teams arrived on Thursday morning [January 7, 2016], and by Friday morning [January 8, 2016], only a pile of rubble remained.
The 120-foot-tall statue, which local media reports said cost $465,000, had been under construction for months and was nearing completion when it began to attract attention.
Some commenters on social media denounced the extravagance of the colossus in a poor, rural part of China, where the money might have been better spent on education or health care.
. . .
Others pointed out the historical irony of erecting the statue in one of the provinces worst hit by the famine caused by Mao Zedong’s Great Leap Forward.
. . .
Statues of Mao, the founder of the People’s Republic of China, were once ubiquitous in China, and many survive. President Xi Jinping has often praised Mao as a model for China today, saying Mao’s era was one when officials were selfless and honest.
But some of his policies were disastrous, including the forced agricultural collectivization and industrialization of the Great Leap Forward, which historians blame for a famine in which tens of millions of people died.

For the full story, see:
DIDI KIRSTEN TATLOW. “An Outcry Helps Topple a Mao Statue 120 Feet Tall.” The New York Times (Sat., JAN. 9, 2016): A4.
(Note: ellipses, and bracketed dates, added.)
(Note: the online version of the story has the date JAN. 8, 2016, and has the title “Golden Mao Statue in China, Nearly Finished, Is Brought Down by Criticism.”)

Private Start-Ups Pursue Fusion Approaches Ignored by Government

(p. B5) Fusion reactions release no carbon dioxide. Their fuel, derived from water, is abundant. Compared with contemporary nuclear reactors, which produce energy by splitting atoms apart, a fusion plant would produce little radioactive waste.
The possibilities have attracted Jeffrey P. Bezos, founder of Amazon.com. He has invested in General Fusion, a start-up in British Columbia, through Bezos Expeditions, the firm that manages his venture capital investments. Paul Allen, a co-founder of Microsoft, is betting on another fusion company, Tri Alpha Energy, based in Foothill Ranch, Calif., an hour south of Los Angeles, through his venture arm, Vulcan Capital.
Peter Thiel — the co-founder of PayPal, who once lamented the superficiality of the technology sector by saying, “We were promised flying cars and we got 140 characters” — has invested in a third fusion start-up, Helion Energy, based near Seattle, through Mithril Capital Management.
Government money fueled a surge in fusion research in the 1970s, but the fusion budget was cut nearly in half over the next decade. Federal research narrowed on what scientists saw as the most promising prototype — a machine called a tokamak, which uses magnets to contain and fuse a spinning, doughnut-shape cloud of hydrogen.
Today’s start-ups are trying to perfect some of the ideas that the government left by the wayside.
After earning his doctorate from the University of California, Irvine, in the mid-1990s, Michl Binderbauer had trouble securing federal funds to research an alternative approach to fusion that the American government briefly explored — one that adds the element boron into the hydrogen fuel. The advantage of the mixture is that the reaction does not fling off neutrons that, like shrapnel, can wear down machine parts and make them radioactive.
Mr. Binderbauer, along with his Ph.D. adviser, Norman Rostoker, founded Tri Alpha Energy, eventually raising money from the venture capital arms of Mr. Allen and the Rockefeller family. The company has raised over $200 million.

For the full story, see:
DINO GRANDONI. “Start-Ups Take on Challenge of Fusion.” The New York Times (Mon., OCT. 26, 2015): B1 & B5.
(Note: the online version of the story has the date OCT. 25, 2015, and has the title “Start-Ups Take On Challenge of Nuclear Fusion.”)

Madison Revised Notes to Aid Jefferson’s Attack on Hamilton

C-SPAN Book TV today played an extended interview with Mary Sarah Bilder about her book on James Madison’s notes on the constitutional convention. Madison revised his notes to share with Jefferson, who had not been present during the convention. Chernow, in his biography of Hamilton, reports how Jefferson criticized Hamilton for aristocratic tendencies. What is most surprising about Bilder’s comments is that Madison had made comments at the convention similar to Hamilton’s discussing whether there might be merits to monarchy. But in his revision of the notes, he deleted those comments before passing the notes to Jefferson, presumably as part of his desire to ally himself more closely with Jefferson and to join in Jefferson’s vilification of Hamilton.
This is not an earth-shattering finding, but it adds support to Chernow’s defense of Hamilton. Jefferson was the slave-holding aristocrat in practice, while Hamilton opposed slavery, and Hamilton’s intellectual speculations on the best form of government were not notably monarchist within the context of the time.

The book discussed on C-SPAN, was:
Bilder, Mary Sarah. Madison’s Hand: Revising the Constitutional Convention. Cambridge, MA: Harvard University Press, 2015.

The Chernow book I mention above, is:
Chernow, Ron. Alexander Hamilton. New York: The Penguin Press, 2004.

A More Dynamic Labor Market May Be the Answer to Italy’s “Quo Vado?”

(p. A19) ROME — A balding government clerk in his late 30s has one true love: “il posto fisso,” a job for life. He doesn’t want to compete in the labor market; he has no urge to move on. He doesn’t even want to earn more. Give him a desk, a chair and a 9-to-5 job in the “pubblica amministrazione,” and he’s happy. Clocking in late, chatting with colleagues, accepting small bribes from taxpayers (most favored: quail), a regular salary — that’s life!
And, of course, there are rubber stamps. The clerk loves them. Slam! Slam! Slam! When his boss, who wants to get rid of him, asks angrily: “What have you contributed to this department?” he shows her his stamping prowess, and almost demolishes her glass table.
This is, more or less, the story of “Quo Vado?” a new comedy that has smashed Italian box office records. It had its premiere on Jan. 1, and in its first week made $39 million; “Star Wars: The Force Awakens,” in three weeks, reached just $23 million. According to The Hollywood Reporter, “Quo Vado?” — or “Where Am I Going?” a modern spin on the Latin question “Quo vadis?” (“Where are you going?”) — is on course to beat the box-office record for an Italian film in the country, currently at $56 million, set by 2013’s “Sole a catinelle.”
. . .
Italians aren’t afraid of a more dynamic labor market. There is still the dream of making it in the private sector, even if it is less secure than the public-sector jobs that have long been the backbone of the Italian work force. Two out of three workers, according to a recent survey in the Turin newspaper La Stampa, wouldn’t mind taking a risk, as long as it meant the prospect of career advancement.
To foster this more proactive mood, Prime Minister Matteo Renzi — who has seen “Quo Vado?” with his family — last year introduced labor-market legislation known as the Jobs Act (in English, mysteriously). It makes hiring and firing easier, but only in the private sector. For state jobs, like Checco’s, things stay the same. Once you’re in, you’re in.

For the full commentary, see:
Severgnini, Beppe. “More Popular than ‘Star Wars’.” The New York Times (Sat., JAN. 16, 2016): A19.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date JAN. 14, 2016, and has the title “The Secret Behind Italy’s Favorite New Film.” Where there are minor differences between the print and online versions, the version above follows the online version.)

Parents Set Up For-Profit Companies for Quicker Cures

(p. B1) Karen Aiach was working as a management consultant when she learned that her first daughter, Ornella, had Sanfilippo syndrome, a rare disease in which a missing enzyme causes toxic substances to build up in the body.

Ornella was 6 months old, and the prognosis was grim: She would develop mentally and physically to between ages 2 and 4, plateau and then lose whatever she had learned. She would become extremely hyperactive and develop sleeping disorders. Most likely she would not live past 15.
Within two years of the diagnosis, Ms. Aiach, who lives in a Paris suburb, had quit her consulting job to learn everything she could about the disease. She hired a neurobiologist to guide her in the world of medical research. And when she learned that few treatments were in the works, she founded a company called Lysogene to focus on genetic therapy.
Instead of raising money and awareness by setting up a nonprofit foundation, a more typical route, she opted to start a for-profit company to seek treatments, if not a cure. Far from common, what Ms. Aiach and other parents like her are trying is to leverage their wealth, contacts and the hope of sophisticated investors to jump-start research into rare diseases.
. . .
(p. B4) . . . with some rare diseases, where minimal research has been done, a little effort goes a long way.
Nicole Boice, who founded Global Genes, one of the leading rare-disease patient advocacy organizations, said even small investments can have meaningful impacts.
“You can start moving the needle with $3,500,” she said. “That leads you to the next $25,000, and then to innovation grants and funding at $100,000. That starts the interest from biotech.”
Gradually, parents like Matt Wilsey, a technology entrepreneur, have made headway. First, his family spent the better part of four years trying to figure out what afflicted his daughter, Grace, now 6. Even after her genome was sequenced, the first diagnosis turned out to be wrong. Grace, it finally was determined, was the second person in the world known to have a deficiency in the gene known as NGLY1.
“We went around the country,” Mr. Wilsey said. “We were just trying to find one doctor who had seen another patient with these symptoms.” After years of efforts, several dozen children have been found to have the same deficiency.
“Our goal is to find a cure,” said Mr. Wilsey, who lives in the San Francisco area.
“A lot of people in science dismiss that because cures are rare. But when I say cures, they’re not going to be astronauts. They’re going to be leading some sort of independent life. They’re going to be able to eat without choking. They’re going to be able to take a bath without drowning. They’re going to be able to communicate, whether with some assistive device or not.”
These parents also had a successful model to follow. In 1998, John Crowley left his job at Bristol-Myers Squibb to start a biotechnology company to search for a treatment for Pompe disease, a neuromuscular disorder that two of his children had. Within four years, the company, Novazyme Pharmaceuticals, had devised a treatment that he credits with saving their lives. His story was immortalized in the 2010 film “Extraordinary Measures,” starring Harrison Ford. And his company was bought by the pharmaceutical giant Genzyme for $137.5 million in 2001.

For the full story, see:
PAUL SULLIVAN. “Wealth Matters; Parents of Children With Rare Diseases Find Hope in For-Profit Companies.” The New York Times (Sat., DEC. 26, 2015): B1 & B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date DEC. 25, 2015, and has the title “Wealth Matters; Building a Company to Treat a Rare Disease.”)

The Bet in Alphabet Is that Autonomy Will Work

(p. B4) To see how Google Inc. Chief Executive Larry Page hopes to turbocharge a growing fleet of speculative projects under a new holding company, look at Nest Labs.
After Google acquired the maker of connected-home devices for $3.2 billion in 2014, Nest kept its own recruiters and its own system for vetting job candidates, skirting Google’s famously deliberate hiring process. Nest still rents computer servers from Amazon.com Inc., rather than use Google’s data centers. Nest co-founder and CEO Tony Fadell also curbed some Google perks, such as free food, to maintain Nest’s scrappy vibe.
Mr. Fadell and co-founder Matt Rogers negotiated unusual autonomy for Nest. Now, as Google reorganizes and creates a new parent company, Alphabet Inc., it is using Nest as a model for running its other startup operations–the “bets” in Alphabet–according to people familiar with the plan.
The restructuring separates Google’s core businesses–including Internet search, the Android operating system and YouTube–from newer unrelated businesses such as Nest, Google Life Sciences and Fiber, the fast Internet service. Mr. Page will remain CEO of the Alphabet holding company, but step back from running Google’s core to oversee the other units, which will operate more independently.
. . .
“If Google can deliver more broadly what it gave Nest, that predicts success for the rest of the Alphabet projects,” said Max Levchin, a co-founder of PayPal Holdings Inc. who spent more than a year at Google after it bought his social startup Slide in 2010.

For the full story, see:
ALISTAIR BARR. “At Google, Breathing Room for New Ideas.” The Wall Street Journal (Fri., Oct. 2, 2015): B4.
(Note: ellipsis added.)
(Note: the online version of the article has the date Oct. 1, 2015, and has the title “At Google, Breathing Room for New Ideas.”)

Koch Employees Motivated by the Fulfillment of Meaningful Work

(p. A11) . . . , Mr. Koch defines “principled entrepreneurship” as the effort to maximize profit by “creating superior value,” as well as by “acting lawfully and with integrity.” What is good for business, he says, is good for society–another aspect of good profit.
The culture of a company is formed, Mr. Koch observes, when employees internalize such principles and practices. Although employees should be urged, he says, to be agents of change, to think critically and, when necessary, to challenge the decisions of their bosses, they will find that their most significant motivation is a sense of accomplishment and fulfillment. “We cannot ignite a passion for creating the greatest value,” Mr. Koch writes, “if there is no meaning in our work.”

For the full review, see:
JOSEPH MACIARIELLO. “BOOKSHELF; The Company He Keeps; Respect means treating people on their merits–not according to the rigid categories of identity politics. Merit will always create value.” The Wall Street Journal (Fri., Oct. 23, 2015): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date Oct. 22, 2015.)

The book under review, is:
Koch, Charles G. Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies. New York: Crown Business, 2015.

Focused Investing by Entrepreneurs Can Create Illiquid Wealth that Is Large But Precarious

The implications of the point made in the passages quoted below, were boldly drawn out by George Gilder in his article “The Enigma of Entrepreneurial Wealth.”

(p. B4) Wealth-X found that from July 2014 to July 2015, 45 percent of the ultrawealthy in the United States lost some part of their wealth; 11 percent lost more than half of it.

The reasons for the drop in wealth differed. But why so many ultra-wealthy people — defined as those with more than $30 million — lost so much of their wealth so quickly offers lessons in financial management, no matter how much money you have.
Sure, this group still has a lot of money. But those who lost a lot of money made similar mistakes: Too much of their money was tied up in one investment and too little of their money was in cash or some other liquid investment. And too often, they didn’t think enough about the likelihood that something could go wrong.
. . .
“A lot of people have this view that wealth is inherited,” said Mykolas Rambus, chief executive of Wealth-X. “That’s very much not the case.” Most are successful entrepreneurs who built fortunes, he said, “And most of their money is in privately held companies, not your Googles and Facebooks.”
He said 75 percent of the world’s wealth, when real estate is included, was privately held.
In the period examined by Wealth-X, overconcentration and illiquidity were big factors when someone lost a fortune.
Curtis James Jackson III, better known as the rapper 50 Cent, was worth $240 million in May 2014 and about $50 million last month, according to Wealth-X. The precipitous drop was caused almost entirely by the falling values of four of his companies, with interests ranging from clothing to film production. They declined to $7.2 million from $150 million in 12 months, according to Wealth-X’s research.
The same could be said for Mr. Charney, who was ousted from his company American Apparel, which later filed for bankruptcy protection. His share of the company was estimated at over $65 million in May 2014 and is now virtually worthless. At American Apparel’s height, in 2007, Forbes put Mr. Charney’s stake at $550 million.
“Every financial adviser in the United States says you’ve got to diversify,” Mr. Rambus said. “There is a lesson here about volatility and concentration. Rewind to the dot-com crash. There were plenty of folks who were seriously overexposed to tech and lost their shirts.”
But there’s a paradox here. Generally, it was overconcentration in one, illiquid company — whose value rose exponentially — that made people ultrawealthy in the first place.

For the full story, see:
PAUL SULLIVAN . “Wealth Matters; Reversal of Fortunes for Some Superrich.” The New York Times (Sat., DEC. 12, 2015): B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date DEC. 11, 2015, and has the title “Wealth Matters; The Bad Fortune of Some Ultrawealthy People.”)

The Gilder article praised above, is:
Gilder, George. “The Enigma of Entrepreneurial Wealth.” Inc. 14, no. 10 (Oct. 1992): 161-64, 66 & 68.

North Dakota Plans a Drone Silicon Valley

For many years state governments and universities have been trying to plan the creation of new Silicon Valleys in their own backyards. Success has been elusive. Now North Dakota is tying to create a drone Silicon Valley. My take: Silicon Valleys cannot be planned, though they can be encouraged by low taxes and limited regulations.

(p. A1) FARGO, N.D. — “California and New York want what we’ve got,” said Shawn Muehler, a 30-year-old Fargo resident, gazing at a horizon of empty fields, silos, windbreak trees and hardly any people. A winged craft traces the air, mapping a field with pinpoint accuracy for his start-up, a drone software company called Botlink. “They like drones, but they’ve got a steep learning curve ahead.”

For years, entrepreneurs have come here to farm and to drill for oil and natural gas. Now a new, tech-savvy generation is grabbing a piece of the growing market for drone technology and officials want to help them do it here, where there is plenty of open space and — unlike in other sparsely populated states — lots of expertise already in place.
Silicon Valley has the big money and know-how, Mr. Muehler and others say, but North Dakota can take unmanned aerial vehicles, as the officials prefer to call drones, from a fast-growing hobby to an industry. And just as Silicon Valley got its start with military contracts, entrepreneurs and cooperative universities, they believe they can do the same with drones.
“The potential up here is tremendous,” said Jack Dalrymple, the state’s governor. “It’s not about supporting a company or two; it’s creating the leading edge of an industry.”
North Dakota has spent about (p. B7) $34 million fostering the state’s unmanned aerial vehicle business, most notably with a civilian industrial park for drones near Grand Forks Air Force Base. The base, a former Cold War installation, now flies nothing but robot aircraft for the United States military and Customs and Border Protection.

For the full story, see:
QUENTIN HARDY. “A Silicon Valley for Drone Craft in Great Plains.” The New York Times (Sat., DEC. 26, 2015): A1 & B7.
(Note: the online version of the story has the date DEC. 25, 2015, and has the title “A Silicon Valley for Drones, in North Dakota.”)

Entrepreneurs Who Pay Taxes “Expect Services–Like Justice”

(p. B3) ATHENS — Demetri Politopoulos, the founder of a midsize beer producer in northern Greece, says he nearly fainted when he heard the news late one night in October.
The Greek Parliament was planning to pass a law that would increase the tax he paid for each hectoliter of beer he sold by 50 percent.
Just like that, the microbrewery he started 17 years ago would go under, as his new tax bill of 1.6 million euros would wipe out his expected 1.45 million euros in profit for the year.
. . .
He started his business in 1998, but even as demand for his Vergina beer grew, his share of the market stayed in the low single-digits as the market leader did all in its power to prevent shops and restaurants from selling his product.
. . .
In 2005, Mr. Politopoulos took his case to the Hellenic Republic Competition Commission, citing numerous examples of what he said were unfair business practices by Heineken, from persuading retailers to not stock Vergina to more serious examples of bullying and intimidation.
But as is often the case in Greece, his petition went nowhere.
With Greece under unremitting pressure to find new revenue sources, the idea to close the gap between the way small and large brewers are taxed may have seemed a good idea.
That is, until Mr. Politopoulos took the floor in Parliament on Nov. 2.
“We are proud to pay taxes in Greece, but this is going to put us out of business,” he said. “And when we do pay our taxes, we expect services — like justice. Without justice in a society, there is nothing.”
His 10-minute declamation hit a cord. A video of the speech went viral and parliamentary members rallied to his cause.
Indeed, concerns are growing here that in a rush to raise much-needed revenue, Greece and its creditors are placing an unfair burden on an already decimated private sector.

For the full story, see:
LANDON THOMAS Jr. “A Greek Dvid Lands Some Big Punches.” The New York Times (Sat., DEC. 12, 2015): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date DEC. 11, 2015, and has the title “In Greece, Brewer’s Woes Reflect Struggle of Business Owners.”)

The Filth, Slaughter and Disease, That Was Rome

McCloskey’s “Great Fact” says that life was very bad for tens of thousands of years until the capitalist industrial revolution started to make it better. The tens of thousands of years can be thought of as a horizontal hockey stick handle, with the capitalist industrial revolution represented by a sharply ascending blade. Rome was a bump on the hockey stick handle, but as the last paragraph quoted below suggests, not too much of a bump.

(p. C4) . . . Ms. Beard is competent and charming company. In “SPQR” she pulls off the difficult feat of deliberating at length on the largest intellectual and moral issues her subject presents (liberty, beauty, citizenship, power) while maintaining an intimate tone.

“In some ways, to explore ancient Rome from the 21st century is rather like walking on a tightrope, a very careful balancing act,” she writes. “If you look down on one side, everything seems reassuringly familiar: there are conversations going on that we almost join, about the nature of freedom or the problems of sex; there are buildings and monuments we recognize and family life lived out in ways we understand, with all their troublesome adolescents; and there are jokes that we ‘get.'”
“On the other side, it seems completely alien territory. That means not just the slavery, the filth (there was hardly any such thing as refuse collection in ancient Rome), the human slaughter in the arena and the death from illnesses whose cure we now take for granted; but also the newborn babies thrown away on rubbish heaps, the child brides and the flamboyant eunuch priests.”

For the full review, see:
DWIGHT GARNER. “Early Rome: Its Warts and Wonders.” The New York Times (Weds., Nov. 18, 2015): C1 & C4.
(Note: ellipsis added.)
(Note: the online version of the review has the date Nov. 17, 2015, and has the title “Review: In ‘SPQR: A History of Ancient Rome,’ Mary Beard Tackles Myths and More.”)

The book under review, is:
Beard, Mary. SPQR: A History of Ancient Rome. New York: Liveright Publishing Corp., 2015.

On the hockey stick, see:
Diamond, Arthur M., Jr. “McCloskey’s Great Fact; Review of: McCloskey, Deirdre N. Bourgeois Dignity: Why Economics Can’t Explain the Modern World.” Journal of Entrepreneurship and Public Policy 1, no. 2 (2012): 200-05.