Month: April 2017

Privatized Airports Are Better Managed

(p. A15) The highest-ranked American airport on the list of the world’s top 100, as determined by the Passengers Choice Awards, is Denver–at 28. Atlanta comes in at 43, Dallas at 58, Los Angeles at 91.
Why do American passengers pay so much to get so little? Because their airports, by global standards, are terribly managed.
Cities from London to Buenos Aires have sold or leased their airports to private companies. To make a profit, these firms must hold down costs while enticing customers with lots of flights, competitive fares and appealing terminals. The firm that manages London’s Heathrow, currently eighth in the international ranking, was so intent on attracting passengers that it built a nonstop express train to the city’s center. It’s also seeking to add another runway, as is the rival firm running Gatwick Airport.
American airports are typically run by politicians in conjunction with the dominant airlines, which help finance the terminals in return for long-term leases on gates and facilities. The airlines use their control to keep out competitors; the politicians use their share of the revenue to reward unionized airport workers. No one puts the passenger first.

For the full commentary, see:
JOHN TIERNEY. “‘Third World’ U.S. Airports? That Insults the Third World; Private managers make terminals sparkle and hum the world over. Here we’re stuck with LaGuardia.” The Wall Street Journal (Sat., Jan. 21, 2017): A15.
(Note: the online version of the commentary has the date Jan. 23 [sic], 2017.)

We Want Meaningful Work

(p. 1) HOW satisfied are we with our jobs?
Gallup regularly polls workers around the world to find out. Its survey last year found that almost 90 percent of workers were either “not engaged” with or “actively disengaged” from their jobs. Think about that: Nine out of 10 workers spend half their waking lives doing things they don’t really want to do in places they don’t particularly want to be.
Why? One possibility is that it’s just human nature to dislike work. This was the view of Adam Smith, the father of industrial capitalism, who felt that people were naturally lazy and would work only for pay. “It is the interest of every man,” he wrote in 1776 in “The Wealth of Nations,” “to live as much at his ease as he can.”
This idea has been enormously influential. About a century later, it helped shape the scientific management movement, which created systems of manufacture that minimized the need for skill and close attention — things that lazy, pay-driven workers could not be expected to have.
Today, in factories, offices and other workplaces, the details may be different but the overall situation is the same: Work is structured on the assumption that we do it only because we have to. The call center employee is monitored to ensure that he ends each call quickly. The office worker’s keystrokes are overseen to guarantee productivity.
. . .
(p. 4) To start with, I don’t think most people recognize themselves in Adam Smith’s description of wage-driven idlers. Of course, we care about our wages, and we wouldn’t work without them. But we care about more than money. We want work that is challenging and engaging, that enables us to exercise some discretion and control over what we do, and that provides us opportunities to learn and grow. We want to work with colleagues we respect and with supervisors who respect us. Most of all, we want work that is meaningful — that makes a difference to other people and thus ennobles us in at least some small way.
. . .
You enter an occupation with a variety of aspirations aside from receiving your pay. But then you discover that your work is structured so that most of those aspirations will be unmet. Maybe you’re a call center employee who wants to help customers solve their problems — but you find out that all that matters is how quickly you terminate each call. Or you’re a teacher who wants to educate kids — but you discover that only their test scores matter. Or you’re a corporate lawyer who wants to serve his client with care and professionalism — but you learn that racking up billable hours is all that really counts.
Pretty soon, you lose your lofty aspirations. And over time, later generations don’t even develop the lofty aspirations in the first place. Compensation becomes the measure of all that is possible from work. When employees negotiate, they negotiate for improved compensation, since nothing else is on the table. And when this goes on long enough, we become just the kind of creatures that Adam Smith thought we always were.

For the full commentary, see:

BARRY SCHWARTZ. “Rethinking Work.” The New York Times, SundayReview Section (Sun., AUG. 30, 2015): 1 & 4.
(Note: ellipses added.)
(Note: the online version of the commentary has the date AUG. 28, 2015,)

The commentary is related to Schwartz’s book:
Schwartz, Barry. Why We Work, Ted Books. New York: Simon & Schuster, 2015.

G.D.P. May Understate Growth by 2% or More

(p. B1) As the economy has shifted from one that primarily produced things — refrigerators and cars, guns and shoes — to one that now deals largely in services and information, economists have grown more and more skeptical that the traditional measure of gross domestic product — the nation’s total output — is accurately capturing much of the economy’s innovation and improvements.
“I think the official data on real growth substantially underestimates the rate of growth,” said Martin Feldstein, an economist at Harvard.
. . .
(p. B2) Mr. Feldstein likes to illustrate his argument about G.D.P. by referring to the widespread use of statins, the cholesterol drugs that have reduced deaths from heart attacks. Between 2000 and 2007, he noted, the death rate from heart disease among those over 65 fell by one-third.
“This was a remarkable contribution to the public’s well-being over a relatively short number of years, and yet this part of the contribution of the new product is not reflected in real output or real growth of G.D.P.,” he said. He estimates — without hard evidence, he is careful to point out — that growth is understated by 2 percent or more a year.
. . .
For Mr. Feldstein, it is misleading measurements that are contributing to a public perception that real incomes — particularly for the middle class — aren’t rising very much. That, he said, “reduces people’s faith in the political and economic system.”
“I think it creates pessimism and a distrust of government,” leading Americans to worry that “their children are going to be stuck and won’t be able to enjoy upward mobility,” he said. “I think it’s important to understand this.”

For the full story, see:
PATRICIA COHEN. “Is the Slogging Economy Blazing? Growth Our Old Gauge Can’t See.” The New York Times (Tues., FEB. 7, 2017): B1-B2.
(Note: ellipses added.)
(Note: the online version of the article has the date FEB. 6, 2017, and has the title “The Economic Growth That Experts Can’t Count.”)

Steady Increase in Federal Regulations

RegulationsRiseGraph2017-02-03.jpgSource of graph: online version of the WSJ article quoted and cited below.

(p. A2) In a high-profile attack on growth-killing red tape, President Donald Trump this week ordered that any agency issuing a new rule find two to repeal.

He will likely discover that the only thing harder than getting something done in Washington is getting it undone.
Vast swaths of rules are untouchable because Congress ordered them to be written or the president himself demanded them..

For the full story, see
Ip, Greg. “CAPITAL ACCOUNT; Trump May Find Leviathan Hard to Tame.” The Wall Street Journal (Thurs., Feb. 2, 2017): A2.
(Note: the online version of the story has the date Feb. 1, 2017, and has the title “CAPITAL ACCOUNT; Donald Trump May Find Leviathan Hard to Tame.”)

“More Women in Their 60s and 70s” Work in Fulfilling Jobs

(p. 1) Kay Abramowitz has been working, with a few breaks, since she was 14. Now 76, she is a partner in a law firm in Portland, Ore. — with no intention of stopping anytime soon. “Retirement or death is always on the horizon, but I have no plans,” she said. “I’m actually having way too much fun.”
The arc of women’s working lives is changing — reaching higher levels when they’re younger and stretching out much longer — according to two new analyses of census, earnings and retirement data that provide the most comprehensive look yet at women’s career paths.
. . .
Most striking, women have become significantly more likely to work into their 60s and even 70s, often full time, according to the analyses. And many of these women report that they do it because they enjoy it.
. . .
Nearly 30 percent of women 65 to 69 are working, up from 15 percent in the late 1980s, one of the analyses, by the Harvard economists Claudia Goldin and Lawrence Katz, found. Eighteen per-(p. 4)cent of women 70 to 74 work, up from 8 percent.
. . .
Of those still working, Ms. Goldin said, “They’re in occupations in which they really have an identity.” She added, “Women have more education, they’re in jobs that are more fulfilling, and they stay with them.” (Ms. Goldin happens to be an example of the phenomenon, as a 70-year-old professor and researcher.)

For the full story, see:
Claire Cain Miller. “With More Women Fulfilled by Work, Retirement Has to Wait.” The New York Times, First Section (Sun., FEB. 12, 2017): 1 & 4.
(Note: ellipses added.)
(Note: the online version of the article has the date FEB. 11, 2017, and has the title “More Women in Their 60s and 70s Are Having ‘Way Too Much Fun’ to Retire.”)

The paper by Goldin and Katz, mentioned above, is:
Goldin, Claudia, and Lawrence F. Katz. “Women Working Longer: Facts and Some Explanations.” NBER Working Paper #22607. National Bureau of Economic Research, Inc., Sept. 2016.

Israelis Are Tenacious, Informal, Question Authority, and Tolerate Failure

(p. A15) Israel is a country of eight million people that at its narrowest point is 9 miles wide. It is surrounded on all sides by enemies who would like to see it wiped off the map: Hezbollah to the north, Hamas to the south, plus Bashar al-Assad’s regime, Islamic State and Iran to the east. It wouldn’t take a particularly pessimistic person to bet against this besieged slice of desert. Yet this tiny nation has also built an air force, anti-missile defense system and intelligence apparatus that is revered around the world–and relied on by the U.S. military, among many others. And it’s done it with a minuscule fraction of the budget available to larger nations.
How has Israel pulled it off? In “The Weapon Wizards” Yaakov Katz and Amir Bohbot tell the story of how the Jewish state’s military and defense sector became one of the most cutting-edge in the world. In chapters focused on particular technologies and weapons, such as drones, satellites and cyber warfare, the authors make the case that the same factors that have made Israel a tech giant have also allowed it to become a “high-tech military superpower.” The country’s military, its schools and its extracurricular institutions inculcate in its young people tenacity, insatiable questioning of authority, determined informality, cross-disciplinary creativity and tolerance of failure.
. . .
While “The Weapon Wizards” can be a bit technical for the lay reader, the authors have skillfully conveyed a key component of the dynamic innovation culture that has made the Jewish state one of the most important entrepreneurial and technology-driven economies in the world. Not bad for a country 9 miles wide.

For the full review, see:
DAN SENOR. “BOOKSHELF; Drafting Up Innovation.” The Wall Street Journal (Thurs., Feb. 2, 2017): A15.
(Note: ellipsis added.)
(Note: the online version of the review has the date Feb. 3 [sic], 2017.)

The book under review, is:
Katz, Yaakov, and Amir Bohbot. The Weapon Wizards: How Israel Became a High-Tech Military Superpower. New York: St. Martin’s Press, 2017.

Fitness Can Improve Even After Age 100

(p. D4) At the age of 105, the French amateur cyclist and world-record holder Robert Marchand is more aerobically fit than most 50-year-olds — and appears to be getting even fitter as he ages, according to a revelatory new study of his physiology.
The study, which appeared in December in The Journal of Applied Physiology, may help to rewrite scientific expectations of how our bodies age and what is possible for any of us athletically, no matter how old we are.
. . .
Conventional wisdom in exercise science suggests that it is very difficult to significantly add to aerobic fitness after middle age. In general, VO2 max, a measure of how well our bodies can use oxygen and the most widely accepted scientific indicator of fitness, begins to decline after about age 50, even if we frequently exercise.
But Dr. Billat had found that if older athletes exercised intensely, they could increase their VO2 max. She had never tested this method on a centenarian, however.
. . .
These data strongly suggest that “we can improve VO2 max and performance at every age,” Dr. Billat says.

For the full story, see:
GRETCHEN REYNOLDS. “Phys Ed; Lessons from a 105-Year-Old.” The New York Times (Tues., FEB. 14, 2017): D4.
(Note: ellipses added.)
(Note: the online version of the article has the date FEB. 8, 2017, and has the title “Phys Ed; Lessons on Aging Well, From a 105-Year-Old Cyclist.”)

The academic article mentioned in the passages quoted above, is:
Billat, Véronique, Gilles Dhonneur, Laurence Mille-Hamard, Laurence Le Moyec, Iman Momken, Thierry Launay, Jean Pierre Koralsztein, and Sophie Besse. “Case Studies in Physiology: Maximal Oxygen Consumption and Performance in a Centenarian Cyclist.” Journal of Applied Physiology 122 (2017): 430-34.

Creating a Fair and Efficient Market for Photos

(p. B4) The arresting images on Stocksy.com are far from the standard fare found on many stock photography sites. Colorful portraits, unexpected compositions and playful shots greet visitors.
The most distinguishing feature, however, may be the structure of the site’s owner, Stocksy United: It is a cooperative, owned and governed by the photographers who contribute their work. Every Stocksy photographer owns a share of the company, with voting rights. And most of the money from sales of their work goes into their pockets rather than toward the billion-dollar valuations pursued by many venture-backed start-ups.
Stocksy was founded in 2013 by Bruce Livingstone and Brianna Wettlaufer, the core team behind iStockphoto, which in 2000 pioneered the idea of selling stock photos online in exchange for small fees. (Mr. Livingstone was the founder and Ms. Wettlaufer, the vice president of development and employee No. 4). IStock — which billed itself as “by creatives, for creatives” — caught the attention of Getty Images, which acquired it in 2006 for $50 million.
Mr. Livingstone and Ms. Wettlaufer grew dismayed as the community spirit they had cultivated and the royalties photographers received began to erode under the new ownership. Like many artists in the digital age, their photographer friends grumbled that they were being underpaid and exploited by online sites.
“Everyone had the same story,” Ms. Wettlaufer said. “They were feeling disenfranchised. They weren’t creatively inspired anymore. The magic was gone.”
So using money from the sale of iStock to Getty, she and Mr. Livingstone set out to create Stocksy, paying photographers 50 to 75 percent of sales. That is well above the going rate of 15 to 45 percent that is typical in the stock photography field. The company also distributes 90 percent of its profit at the end of each year among its photographers.
“We realized we could do it differently this time,” said Ms. Wettlaufer, who took over the chief executive role in 2014. “We could enter the market with a model that ensured artists were treated fairly and ethically.”

For the full story, see:
AMY CORTESE. “A New Wrinkle in the Gig Economy: Workers Get Most of the Money.” The New York Times (Thurs., July 21, 2016): B4.
(Note: the online version of the article has the date JULY 20, 2016.)

Hong Kong Is No Longer a Libertarian Dream Come True

(p. 5) HONG KONG — For the 23rd year running, Hong Kong is, in the opinion of the conservative Heritage Foundation, the freest economy in the world. With low taxes, an efficient government and private businesses running the city buses and its spotless subways, this place is a libertarian dream come true.
So the story goes.
Many people who live in Hong Kong beg to differ. This has long been a city of tycoons, with a few families holding sway over the supermarkets, drugstores and real estate market, limiting competition and keeping prices high. And in the past few weeks, four words have further shaken the story line that this former British colony is a free-market nirvana.
Food Truck Pilot Scheme.
. . .
In Hong Kong, the government agency that devised the Food Truck Pilot Scheme had a new, bold and innovative idea: stationary food trucks that don’t park on the street. A spokesman for the city’s Tourism Commission explained why in an email:
“Since the urban area of Hong Kong is already saturated with traffic, it would not be desirable from the traffic management and road safety angles to allow food trucks to park and operate on public roads. Moreover, as many locations in Hong Kong have already got a number of food establishments, it would thus be desirable to introduce food trucks away from those areas.”
It’s all explained in a raft of guidelines. There are seven annexes in all, including licensing requirements (Annex D), special government loan programs (Annex B) and fixed venues (Annex F).
Then there is Annex C — “Mandatory Requirements for a Food Truck” — that lists in painstaking detail what each truck must have. Some examples: The kitchen floor space must be at least 65 square feet. Each truck must have a potable water tank with a capacity of about 32 gallons, and a wastewater tank at least one and a half times that size. The sink must be at least a foot and a half in length. And so on.
To meet all of those regulations, Hong Kong food trucks must be custom vehicles, bearing little resemblance to the decades-old trucks that congregate near the National Mall in Washington, the capital of a country that has only the 17th freest economy in the world.
All these rules and regulations have Liu Chun-ho, the owner of Ma Ma’s Dumpling, very worried. To meet the stringent requirements, he paid about one million Hong Kong dollars ($129,000) for his new Isuzu truck.
. . .
The workers at Book Brothers hope that their next location, closer to the city’s central business district, will be busier. And if they can’t sell their pork buns, they could always try something else, right? After all, that’s what capitalism is all about.
Not so fast. Please refer to Answer No. 8 of the government’s “Frequently Asked Questions: Application of the Food Truck Pilot Scheme (Pilot Scheme).”
“No alteration of the signature dish proposed by the applicant in the application form will be allowed after the submission of Application and throughout the Scheme,” it declares. “If the operator wishes to change dishes other than the signature dish, he should obtain prior written approval from the Venues and the Food and Environmental Hygiene Department.”

For the full story, see:
MICHAEL FORSYTHE. “Food Truck Rules Outnumber Patrons in Hong Kong.” The New York Times, First Section (Sun., FEB. 19, 2017): 5.
(Note: ellipses added.)
(Note: the online version of the article has the date FEB. 18, 2017, and has the title “The Economy Is Free in Hong Kong. Running a Food Truck Isn’t (See Annex C).”)

Founder-Led Firms Do Better

(p. A19) A study out earlier this year from Bain & Company, where we work, shows that over the past 15 years founder-led companies delivered shareholder returns that are three times higher than those of other S&P 500 companies.
. . .
Great founders imbue their companies with three measurable traits that make up what we dubbed “the founder’s mentality.”
The first is insurgency: The founding team declares war on its industry on behalf of underserved customers.
. . .
The second trait is an obsession with how customers are treated–an attention to detail that borders on compulsive.
. . .
Third, these companies are steeped in an owner’s mind-set. Too often in business, the founder’s vision becomes distorted.
Bain’s research found that the best companies–the top 20% of performers, founder-led or not–exhibit the three traits we’ve described four or five times as often as the bottom performers. The bad news: Only about 7% of companies, founder-led or not, manage to maintain these traits as they grow to scale. Yet those that do create more than 50% of the net value in the stock market in any given year.

For the full commentary, see:
CHRIS ZOOK and JAMES ALLEN. The Company Founder’s Special Sauce; No one leads a firm as effectively as the person who started it.” The Wall Street Journal (Mon., Dec. 19, 2016): A19.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 18, 2016.)

The Bain research mentioned above, is:
Chris, Zook. “Founder-Led Companies Outperform the Rest — Here’s Why.” Harvard Business Review Digital Articles (March 24, 2016): 2-5.

The passages quoted above are related to the authors’ book:
Zook, Chris, and James Allen. The Founder’s Mentality: How to Overcome the Predictable Crises of Growth. Boston, MA: Harvard Business Review Press Books, 2016.

Government Threw the Party; Taxpayers Pay the Bill

(p. A1) RIO DE JANEIRO — It is not uncommon for the Olympics to leave behind some unneeded facilities. Rio, however, is experiencing something exceptional: Less than six months after the Summer Games ended, the host city’s Olympic legacy is decaying rapidly.
. . .
“The government put sugar in our mouths and took it out before we could swallow,” Luciana Oliveira Pimentel, a social worker from Deodoro, said as her children played in a plastic pool. “Once the Olympics ended, they turned their backs on us.”
Olympic officials and local organizers often boast about the legacy of the Games — the residual benefits that a city and country will experience long after the competitions end. Those projections are often met with skepticism by the public and by independent economists, who argue that Olympic bids are built on wasted public money. Rio has quickly become the latest, and perhaps the most striking, case of (p. A8) unfulfilled promises and abandonment.
“It’s totally deserted,” said Vera Hickmann, 42, who was at the Olympic Park recently with her family. She lamented that although the area was open to the public, it lacked basic services.
“I had to bring my son over to the plants to go to the bathroom,” she said.
At the athletes’ village, across the street from the park, the 31 towers were supposed to be sold as luxury condominiums after the Games, but fewer than 10 percent of the units have been sold. Across town at Maracanã Stadium, a soccer temple, the field is brown, and the electricity has been shut off.
“The government didn’t have money to throw a party like that, and we’re the ones who have to sacrifice,” Ms. Hickmann said, referring to local taxpayers.

For the full story, see:
ANNA JEAN KAISER. “Legacy of Rio Olympics So Far Is Series of Unkept Promises.” The New York Times (Thurs., FEB. 16, 2017): A1 & A8.
(Note: ellipsis added.)
(Note: the online version of the story has the date FEB. 15, 2017.)