November 2016 – Page 2 – artdiamondblog.com

Regulations Cause Sluggish Economy by Slowing Startup Creation

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

(p. A2) The U.S. economy is inching along, productivity is flagging and millions of Americans appear locked out of the labor market.
One key factor intertwined with this loss of dynamism: The U.S. is creating startup businesses at historically low rates.
. . .
The share of private firms less than a year old has dropped from more than 12% during much of the 1980s to only about 8% since 2010. In 2014, the most recent year of data, the startup rate was the second-lowest on record, after 2010, according to Census Bureau figures released last month, so there’s little sign of a postrecession rebound.
. . .
Rules and regulations also could be at play. Goldman Sachs economists in part blame the cumulative effect of regulations enacted since the Great Recession for reducing the availability of credit and raising the cost of doing business for small firms, making them less competitive.
. . .
There is some disagreement on whether tech firms have fallen into the same doldrums as other startups like mom-and-pop shops. Mr. Haltiwanger and colleagues at the Federal Reserve and Census Bureau find evidence they have, with significant detriment to the economy.
“It may be that we are designing things here in the U.S. as rapidly as ever,” Mr. Haltiwanger said. “We’re just not producing here. That’s not good news for U.S. productivity.”
Researchers at the Massachusetts Institute of Technology delved into state business licensing information and found somewhat different but also discouraging results. That is, tech entrepreneurs are generating good ideas and founding companies at a healthy pace, but those ventures aren’t breaking out into successful big companies.
“The system for translating good, high-quality foundings into a growth firm, that system seems to have broken,” said Scott Stern, an MIT professor and co-author of the study on startups.

For the full commentary, see:
Sparshott, Jeffrey. “THE OUTLOOK; Sputtering Startups Weigh Down Growth.” The Wall Street Journal (Mon., Oct. 24, 2016): A2.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Oct. 23, 2016 title “THE OUTLOOK; Sputtering Startups Weigh on U.S. Economic Growth.” The passages quoted above include a couple of sentences that appeared in the online, but not the print, version of the article.)

Land Use Regulations Increase Income Inequality

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

(p. A3) In this year’s election, candidates have focused blame for rising income inequality on broad economic forces, from globalization to the decline of the American manufacturing base. But a growing body of research suggests a more ordinary factor: the price of the average single-family home for sale, from Fairfield, Conn., to Portland, Ore.

According to research by Daniel Shoag, an associate professor of public policy at Harvard University, and Peter Ganong, a postdoctoral fellow at the National Bureau of Economic Research, a decadeslong trend in which the income gap between the poorest and richest states steadily closed has been upended by growth in land-use regulations.
Moving to a wealthier area in search of job opportunities has historically been a way to promote economic equality, allowing workers to pursue higher-paying jobs elsewhere. But those wage gains lose their appeal if they are eaten up by higher housing costs. The result: More people stay put and lose out on potential higher incomes.
. . .
Messrs. Shoag and Ganong looked at mentions of “land-use” in appeals-court cases and found the number of references began rising sharply around 1970, with some states seeing a much larger increase than others. For example, the share of cases mentioning land use for New York rose 265% between 1950 and 2010 and 644% in California during the same period. By contrast, it increased by only 80% in Alabama.

For the full story, see:
LAURA KUSISTO. “Land Use Rules Under Fire.” The Wall Street Journal (Weds., Oct. 19, 2016): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date Oct. 18, 2016, and has the title “As Land-Use Rules Rise, Economic Mobility Slows, Research Says.” A few extra words appear in the online version quoted above, that were left out of the print version.)

The research by Ganong and Shoag, mentioned above, is:

Ganong, Peter, and Daniel Shoag. “Why Has Regional Income Convergence in the U.S. Declined?” Harvard University, John F. Kennedy School of Government, Working Paper Series, Jan. 2015.

Let Individual Indians Own Land on Reservations

Mortgaging homes is a common way for entrepreneurs to provide initial funds for their startups. So our keeping individual Indians from owning land on reservations, cuts off their access to funds for entrepreneurship.
The commentary quoted below is related to a book edited by Anderson and contributed to by Regan.

(p. A13) . . . , Native Americans showed a remarkable ability to adapt to new goods and technology. Italian trade beads became an integral part of American Indian decoration and art. The Spanish horse transformed Plains Indian hunting and warfare.

Over centuries, however, these adaptations and innovations have been replaced by subjugation by the U.S. government. In 1831, Chief Justice John Marshall declared the Cherokees to be a “domestic dependent nation” and characterized the relationship of tribes to the U.S. as resembling “that of a ward to his guardian.” Marshall’s words were entrenched when Congress became trustee of all Indian lands and resources under the Dawes Act of 1887.
In recent decades, the government has paid lip service to “tribal sovereignty,” but in practice Native Americans have little autonomy. Tribes and individual Indians still cannot own their land on reservations. This means Native Americans cannot mortgage their assets for loans like other Americans, thus allowing them little or no access to credit. This makes it incredibly difficult to start a business in Indian Country. Even when tribes try to engage in economic activity, the feds impose mountains of regulations, all in the name of looking after Indian affairs.

For the full commentary, see:
TERRY L. ANDERSON and SHAWN REGAN. “It’s Time for the Feds to Get Out of Indian Country; A permit to develop energy resources requires 49 steps on tribal lands and just four steps off reservations.” The Wall Street Journal (Sat., Oct. 8, 2016): A13.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Oct. 7, 2016.)

The book mentioned at the top of this entry, is:
Anderson, Terry L., ed. Unlocking the Wealth of Indian Nations. Lanham, Maryland: Lexington Books, 2016.

FCC Regulations Motivated by Cronyism, Not Economics

(p. A13) . . . , this burgeoning competition between fixed and mobile has always been predictable and yet has figured not at all in the Federal Communications Commission’s regulatory efforts, which paint the country as descending into an uncompetitive broadband hell.
A new study by economists Gerald Faulhaber and Hal Singer details how an agency that once prized economic analysis increasingly ignores or disregards economics in its regulatory findings. Why? Because if it acknowledged the increasing competitiveness of the market, there would be nothing to regulate, no favor-factory opportunities for its political sponsors to milk.

For the full commentary, see:
HOLMAN W. JENKINS, JR. “BUSINESS WORLD; Big Cable and Mobile Are Ready to Rumble; Technology is about to upend Washington’s dire prescriptions for a broadband monopoly.” The Wall Street Journal (Sat., Oct. 8, 2016): A13.
(Note: ellipsis added.)

The working paper mentioned above, is:
Faulhaber, Gerald, and Hal Singer. “The Curious Absence of Economic Analysis at the Federal Communications Commission: An Agency in Search of a Mission.” 2016.

Oxford Ranked as Best University in World

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

(p. A3) The University of Oxford, the oldest in the English-speaking world, took the top spot in the latest World University Rankings, released annually by Times Higher Education. The English university dating to 1096 dethroned the California Institute of Technology, a small, private school in Pasadena that had ranked No. 1 for five-straight years, according to Times Higher Education, a London magazine that tracks higher education.

This is the first time a university outside the U.S. is No. 1 in the list’s 13-year history.

For the full story, see:
BECKIE STRUM. “U.S. Loses Top School Ranking to U.K.’s Oxford.” The Wall Street Journal (Thurs., Sept. 22, 2016): A3.
(Note: the online version of the story has the title “Oxford Tops List of World’s Best Universities.”)

In Africa Lions “Are Objects of Terror”

(p. A17) Winston-Salem, N.C. — MY mind was absorbed by the biochemistry of gene editing when the text messages and Facebook posts distracted me.
So sorry about Cecil.
Did Cecil live near your place in Zimbabwe?
Cecil who? I wondered. When I turned on the news and discovered that the messages were about a lion killed by an American dentist, the village boy inside me instinctively cheered: One lion fewer to menace families like mine.
My excitement was doused when I realized that the lion killer was being painted as the villain. I faced the starkest cultural contradiction I’d experienced during my five years studying in the United States.
Did all those Americans signing petitions understand that lions actually kill people? That all the talk about Cecil being “beloved” or a “local favorite” was media hype? Did Jimmy Kimmel choke up because Cecil was murdered or because he confused him with Simba from “The Lion King”?
In my village in Zimbabwe, surrounded by wildlife conservation areas, no lion has ever been beloved, or granted an affectionate nickname. They are objects of terror.
. . .
We Zimbabweans are left shaking our heads, wondering why Americans care more about African animals than about African people.
. . .
. . . please, don’t offer me condolences about Cecil unless you’re also willing to offer me condolences for villagers killed or left hungry by his brethren, by political violence, or by hunger.

For the full commentary, see:
GOODWELL NZOU. “In Zimbabwe, We Don’t Cry for Lions.” The New York Times (Weds., AUG. 5, 2015): A17.
(Note: ellipses added.)
(Note: the online version of the commentary has the date AUG. 4, 2015,)

Once Great A.&P. Was “Going Out of Business for a Long Time”

(p. 17) Linda Fisch stopped at the A.&P. on Riverdale Avenue in the Bronx on Thursday and bought eight prepackaged containers of cottage cheese and fruit. She did not realize the store had become a footnote to history.
That A.&P. is the last in New York City, where the once-mighty chain was born just before the Civil War. Now the company has filed for bankruptcy protection for the second time in five years. Once its plan for liquidating is approved, the store’s A.&P. signs will come down. And the A.&P. name will vanish from New York.
. . .
Once, A.&P. had no competition. It all but invented the grocery store in the 19th century, and in the 20th century, it reinvented itself as a low-price, cash-and-carry chain. Its thousands of stores were “so devoid of frills that they are simply machines for selling food,” according to “The Great Merchants,” a history of retailers and retailing published in 1974.
But it had been fading for years. In the mid-1980s, a former A.&P. executive published a book “The Rise and Decline of the Great Atlantic & Pacific Tea Company” even as A.&P. continued to expand, buying Waldbaum’s and the Food Emporium chain in New York City and the Farmer Jack chain in the Midwest. A.&P. acquired Pathmark in 2007 for $679 million in a deal that involved significant debt. It also operated Super Fresh and Food Basics stores.
. . .
It began as a sideline for a hide and leather importer, George H. Gilman. “At some point around 1859 or 1860, there’s no precise date, he started selling tea,” said Marc Levinson, a historian and the author of “The Great A.&P. and the Struggle for Small Business in America.” “In 1860 or 1861, he gave up on the leather business, gave it to his brother, and decided to go into business as a tea wholesaler. He leased a property on Front Street. It’s the area where most of the ships carrying tea would come in.”
Mr. Levinson said a Gilman employee, George Huntington Hartford, became involved in the new business. Some accounts say it was Hartford who proposed eliminating middlemen — and cutting prices to consumers. From its earliest years, the little tea company promised in advertisements, it would “do away with various profits and brokerages, cartages, storages, cooperage and waste, with the exception of a small commission paid for purchasing to our correspondents in Japan and China.”
. . .
“I grew up on Long Island and the A.&P. was the only supermarket in the town I grew up in, which was Lynbrook,” said Ms. Fisch, 71. “Of course that’s where we shopped. It was bright and it was clean, which is totally different from the one in Riverdale. It’s like it’s been going out of business for a long time.”

For the full story, see:
JAMES BARRON. “A.& P. Bankruptcy Means New York, Chain’s Birthplace, Will Lose Last Store.” The New York Times, First Section (Sun., AUG. 2, 2015): 17.
(Note: ellipses added.)
(Note: the online version of the story has the date AUG. 1, 2015.)

The first book mentioned above, is:
Mahoney, Tom, and Leonard Sloane. The Great Merchants: America’s Foremost Retail Institutions and the People Who Made Them Great. Updated and Enlarged ed. New York: Harper & Row, 1974.

The second book mentioned above, is:
Walsh, William I. The Rise and Decline of the Great Atlantic & Pacific Tea Company. Secaucas, N.J.: Lyle Stuart, 1986.

Levinson’s great book, mentioned above, is:
Levinson, Marc. The Great A&P and the Struggle for Small Business in America. New York: Hill and Wang, 2011.

Medal-Winning Official Steals Concrete from Public Road and Sells to Cronies

(p. A4) MOSCOW — Corruption in Russia sometimes amounts to highway robbery, literally.
A senior prison official has been accused of stealing the pavement from a 30-mile stretch of public highway in the Komi Republic, a thinly populated, heavily forested region in northern Russia, the daily newspaper Kommersant reported on its website on Wednesday [January 13, 2016].
. . .
While he was in Komi, Mr. Protopopov won a medal for fostering “spiritual unity,” the Kommersant report said, without specifying whether the unity was with the crews doing the illicit road work.

For the full story, see:
NEIL MacFARQUHAR. “Don’t Blame Snow for Missing Road in Russia’s North.” The New York Times (Thurs., JAN. 14, 2016): A4.
(Note: ellipsis, and bracketed date, added.)
(Note: online version of the story has the date JAN. 13, 2016, and has the title “Missing a Road in Russia? This May Be Why.”)

“Politicized Regulatory State” Cuts Hiring and Slows Innovation

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

(p. A13) Sclerotic growth is America’s overriding economic problem. From 1950 to 2000, the U.S. economy grew at an average rate of 3.5% annually. Since 2000, it has grown at half that rate–1.76%. Even in the years since the bottom of the great recession in 2009, which should have been a time of fast catch-up growth, the economy has only grown at 2%.
. . .
. . . the U.S. economy is simply overrun by an out-of-control and increasingly politicized regulatory state. If it takes years to get the permits to start projects and mountains of paper to hire people, if every step risks a new criminal investigation, people don’t invest, hire or innovate.
. . .
How much more growth is really possible from better policies? To get an idea, see the nearby chart plotting 2014 income per capita for 189 countries against the World Bank’s “Distance to Frontier” ease-of-doing-business measure for the same year. The measure combines individual indicators, including starting a business, dealing with construction permits, protecting minority investors, paying taxes and trading across borders.
. . .
Most of all, the country needs a dramatic legal and regulatory simplification, restoring the rule of law. Middle-aged America is living in a hoarder’s house of a legal system. State and local impediments such as occupational licensing and zoning are also part of the problem.
. . .
There is hope. Washington lawmakers need to bring about a grand bargain, moving the debate from “they’re getting their special deal, I want mine,” to “I’m losing my special deal, so they’d better lose theirs too.”

For the full commentary, see:
JOHN H. COCHRANE. “Ending America’s Slow-Growth Tailspin; The U.S. economy needs a dramatic legal and regulatory simplification.” The Wall Street Journal (Tues., May 3, 2016): A13.
(Note: ellipses added.)
(Note: the online version of the commentary has the date May 2, 2016.)

Department of Motor Vehicles Staffed by Sloths

The video clip above is an authorized “embed” from YouTube.

(p. D3) . . . “since the trailers have been playing everywhere, I can tell you a bit about one of the best things in “Zootopia”–an extended sequence set in a Department of Motor Vehicles office where all the clerks are sloths. That’s a funny notion, to be sure, and the main sloth, a clerk named Flash (Raymond S. Persi) has a deliciously distinctive demeanor. But the sequence’s great distinction is how confidently it is developed. In an era of quick cuts and speedy action, Flash is remarkably…outlandishly….hilariously….and memorably s-l-o-w. Kids will be imitating him for a month of Saturdays.

For the full review, see:
Morgenstern, Joe. “‘Zootopia’: Beauty and the Beasts.” The Wall Street Journal (Fri., March 4, 2016): D3.
(Note: the ellipsis at the start is added; the internal ellipses are in the original.)
(Note: the online version of the review has the date March 3, 2016, and has the title “‘Zootopia’ Review: Beauty and the Beasts.”)

Peter Thiel Asks “What Happened to the Future?”

(p. B4) Mr. Thiel has been an important player in Silicon Valley since the first dot-com boom, but he has recently taken on a much more public role. He was born in Germany and came to the United States as an infant when his father, a chemical engineer, found work here. He was raised in Silicon Valley and went to Stanford, where he developed the views in his first book, “The Diversity Myth,” about the multiculturalism debate on campuses, written with the entrepreneur David O. Sacks.
In 1998, Mr. Thiel helped found the online payments company PayPal, an immediate success. He was the first outside investor in Facebook. Forbes estimates his net worth at $2.7 billion. Last year, he became a part-time partner at Y Combinator, a loosely defined advisory position.
A handful of others in Silicon Valley have similar investing track records. Where Mr. Thiel really separates himself from his peers is his skepticism that Silicon Valley is building a better world for all. His investment firm, Founders Fund, used to begin its online manifesto with the complaint, “We wanted flying cars; instead we got 140 characters,” a reference to Twitter. Now it says simply, “What happened to the future?”
San Francisco, Manhattan and Washington, D.C., are doing well, but the presidential campaign has laid bare the angst of many other places. Feelings of decline are rampant. “Most of the millennials have lower expectations than their baby boomer parents,” Mr. Thiel said. “Where I differ from others in Silicon Valley is in thinking that you can’t fence yourself off. If it continues, it will ultimately be bad for everybody.”

For the full story, see:
DAVID STREITFELD. “Peter Thiel, Contrarian Tech Billionaire, Defends His Support of Trump.” The New York Times (Mon., OCT. 31, 2016): B1 & B4.
(Note: ellipses added.)
(Note: the online version of the story has the date OCT. 29, 2016, and has the title “Peter Thiel Defends His Most Contrarian Move Yet: Supporting Trump.”)

The book mentioned above, that was co-authored by Thiel, is:
Sacks, David O., and Peter A. Thiel. The Diversity Myth: Multiculturalism and the Politics of Intolerance at Stanford. Oakland, CA: The Independent Institute, 1995.