Author: Art Diamond

Covid-19 May Make New York City “Cheaper, Messier, More Diverse”

(p. B1) Cities are remarkably resilient. They have risen from the ashes after being carpet-bombed and hit with nuclear weapons. “If you think about pandemics in the past,” noted the Princeton economist Esteban Rossi-Hansberg, “they didn’t destroy cities.”

. . .

So even as the Covid-19 death toll rises in the nation’s most dense urban cores, economists still mostly expect them to bounce back, once there is a vaccine, a treatment or a successful strategy to contain the virus’s spread. “I end up being optimistic,” said the Harvard economist Edward Glaeser. “Because the downside of a nonurban world is so terrible that we are going to spend whatever it takes to prevent that.”

. . .

(p. B5) Mr. Glaeser and colleagues from Harvard and the University of Illinois studied surveys tracking companies that allowed their employees to work from home at least part of the time since March. Over one-half of large businesses and over one-third of small ones didn’t detect any productivity loss. More than one in four reported a productivity increase.

Moreover, the researchers found that about four in 10 companies expect that 40 percent of their employees who switched to remote work during the pandemic will keep doing so after the crisis, at least in part. That’s 16 percent of the work force. Most of these workers are among the more highly educated and well paid.

. . .

“Everybody agrees on what are the key forces,” said Gilles Duranton, an economist at the Wharton School of the University of Pennsylvania. “The question is which will play out, and where are the tipping points?” One of the big remaining questions is whether remote work will prove sustainable. The productivity increases captured in the surveys examined by Mr. Glaeser’s team might prove fleeting.

. . .

Consider life in a reconfigured New York City. Rents are lower, after the departure of many of its bankers and lawyers. There are fewer fancy restaurants, but probably still many cheaper ones. People with lower incomes, including the young, can again afford to live in town. City services may be reduced, but if a fifth or more of workers aren’t going to the office on any given day it will be easier to get around.

Mr. Duranton argues that the cities that will be devastated by Covid-19 are the ones that have been falling for a long time: the Rochesters and the Binghamtons, which lost their sustenance once the manufacturing industries that supported them through much of the 20th century folded or moved away.

But for a city like New York, he said, Covid-19 offers an opportunity for redemption. “New York was running into a dead end, turning into a paradise for the rich,” he said. “Culturally dead.” Moving back to a cheaper, messier, more diverse equilibrium may carry a silver lining.

For the full story, see:

Eduardo Porter. “If Workers Opt Out, Star Cities May Dim.” The New York Times (Tuesday, July 21, 2020): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the story has the same date as the print version,s and has the title “Coronavirus Threatens the Luster of Superstar Cities.”)

The study co-authored by Glaeser and mentioned above is:

Bartik, Alexander W., Zoe Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton. “What Jobs Are Being Done at Home During the Covid-19 Crisis? Evidence from Firm-Level Surveys.” Harvard Business School Division of Research Working Paper #20-138, (July 2020).

China’s “Great Firewall” Is the New Symbol of a New Cold War

(p. A11) At the United Nations Humans Rights Council in Geneva, 53 nations — from Belarus to Zimbabwe — signed a statement supporting China’s new security law for Hong Kong. Only 27 nations on the council criticized it, most of them European democracies, along with Japan, Australia and New Zealand. Such blocs would not have been unfamiliar at the height of the Cold War.

China has also wielded its vast economic power as a tool of political coercion, cutting off imports of beef and barley from Australia because its government called for an international investigation into the origins of the pandemic. On Tuesday [July 14, 2020], Beijing said it would sanction the American aerospace manufacturer Lockheed Martin over recent weapons sales to Taiwan.

. . .

A backlash against Beijing appears to be growing. The tensions are particularly clear in tech, where China has sought to compete with the world in cutting-edge technologies like artificial intelligence and microchips, while harshly restricting what people can read, watch or listen to inside the country.

If the Berlin Wall was the physical symbol of the first Cold War, the Great Firewall could well be the virtual symbol of the new one.

What began as a divide in cyberspace to insulate Chinese citizens from views not authorized by the Communist Party has now proved to be a prescient indicator of the deeper fissures between China and much of the Western world.

For the full story, see:

Steven Lee Myers and Paul Mozur. “Caught in ‘Ideological Spiral,’ U.S. and China Drift Toward a New Cold War.” The New York Times (Wednesday, July 15, 2020): A11.

(Note: ellipsis added.)

(Note: the online version of the story was updated July 23 [sic], 2020, and has the title “Caught in ‘Ideological Spiral,’ U.S. and China Drift Toward Cold War.”)

Increase in Remote Work May Increase Quality and Diversity of Hires, Increasing Firm Innovation

(p. B1) A few years ago, Mr. Laermer let the employees of RLM Public Relations work from home on Fridays. This small step toward telecommuting proved a disaster, he said. He often couldn’t find people when he needed them. Projects languished.

“Every weekend became a three-day holiday,” he said. “I found that people work so much better when they’re all in the same physical space.”

IBM came to a similar decision. In 2009, 40 percent of its 386,000 employees in 173 countries worked remotely. But in 2017, with revenue slumping, management called thousands of them back to the office.

. . .

As long ago as 1985, the mainstream media was using phrases like “the growing telecommuting movement.” Peter Drucker, the management guru, declared in 1989 that “commuting to office work is obsolete.”

. . .

(p. B4) Apart from IBM, companies that publicly pulled back on telecommuting over the past decade include Aetna, Best Buy, Bank of America, Yahoo, AT&T and Reddit. Remote employees often felt marginalized, which made them less loyal. Creativity, innovation and serendipity seemed to suffer.

Marissa Mayer, the chief executive of Yahoo, created a furor when she forced employees back into offices in 2013. “Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people and impromptu team meetings,” a company memo explained.

. . .

At the beginning of the year, the unemployment rate was low and workers had some leverage. All that has been lost, at least for the next year or two. Widespread remote work could consolidate that shift.

“When people are in turmoil, you take advantage of them,” said John Sullivan, a professor of management at San Francisco State University.

“The data over the last three months is so powerful,” he said. “People are shocked. No one found a drop in productivity. Most found an increase. People have been going to work for a thousand years, but it’s going to stop and it’s going to change everyone’s life.”

Innovation, Dr. Sullivan added, might even catch up eventually.

“When you hire remotely, you can get the best talent around and not just the best talent that wants to live in California or New York,” he said. “You get true diversity. And it turns out that affects innovation.”

For the full story, see:

David Streitfeld. “Working From Home Has a Checkered Past.” The New York Times (Tuesday, June 30, 2020): B1 & B4.

(Note: ellipses added.)

(Note: the online version of the story has the date June 29, 2020, and has the title “The Long, Unhappy History of Working From Home.”)

Book Advice from Ayaan Hirsi Ali: Hayek’s Constitution of Liberty

(p. 6) Do you and your wife, the activist and writer Ayaan Hirsi Ali, share similar taste in books? What books has she recommended to you, and vice versa?

Very similar, so books frequently cross the bedroom from one nightstand to the other. A good example was Hayek’s “The Constitution of Liberty,” her favorite work of political philosophy, which she urged me to read.

. . .

Which books do you think capture the current social and political moment in America?

I shared the widespread enthusiasm for J. D. Vance’s “Hillbilly Elegy” last year, but the must-read book for Trump’s election and presidency remains Charles Murray’s astonishingly prescient “Coming Apart.” I wish the contemptible “students” who disrupted his lecture at Middlebury College earlier this year — not one of whom I’ll bet had ever read a word of his — would read “Coming Apart” and then look in the mirror and realize: “Oh God, I’m a member of that loathsome coastal cognitive elite that is completely out of touch with middle America.”

. . .

Disappointing, overrated, just not good: What book did you feel as if you were supposed to like, and didn’t? Do you remember the last book you put down without finishing?

. . . To give an example of a book I found overrated, Thomas Piketty’s “Capital in the Twenty-First Century” was both conceptually unsound and tediously executed.

For the full interview, see:

“BY THE BOOK; Niall Ferguson.” The New York Times Book Review (Sunday, January 14, 2018): 6.

(Note: ellipses added, bold in original. Bold questions are by the anonymous NYT interviewer. Unbold answers are by Niall Ferguson.)

(Note: the online version of the interview has the date Jan. 11, 2018, and has the same title as the print version. The last question and answer quoted above, appeared in the online, but not in the print, version. Neither version gives the name of the interviewer.)

Ayann Hirsi Ali’s favorite political philosophy book, mentioned above, is:

Hayek, Friedrich A. The Constitution of Liberty. Reprint ed. Chicago: University of Chicago Press, 2011 (1st ed. 1960).

“There’s No Wolf Warrior Coming to” Rescue the “Little Pinks”

(p. B1) When China came under attack online, Mr. Liu was one of the legions of Chinese students studying abroad who posted in its defense. He condemned the pro-democracy protests in Hong Kong, which he saw as an effort to split a uniting China. After President Trump called the coronavirus the “Chinese virus,” Mr. Liu turned to Twitter to correct those who used the term.

“I was a real little pink,” he said, using a somewhat derogatory term for the young, Communist-red Chinese nationalists who use the internet as a patriotic battleground to fight those who disparage China.

Then Mr. Liu, 21, discovered that the country he had long defended didn’t want him back.

. . .

Mr. Liu and many other countless Chinese people stranded overseas are, for the first time, running afoul of one of their country’s bedrock political prin-(p. B5)ciples: National interests come before an individual’s needs.

. . .

“Can you imagine what it was like when one day someone told you what you believed firmly wasn’t actually true?” Mr. Liu said.

. . .

“In the real world, there’s no wolf warrior coming to my rescue,” a Chinese student in Japan posted on Weibo.

. . .

While the students were outspoken in their anonymous social media comments, they were more reserved in interviews. Mr. Liu, for example, focused his frustration on China’s aviation regulator, which recently backed down after U.S. officials challenged its limits on foreign airlines. Ms. Leng, of Troy University, said she understood the regulator’s motivations.

But some admitted to what might be a new feeling: fear. The student from Japan who invoked “Wolf Warrior 2” said she feared retribution by the Chinese government if she spoke to me.

Then she invited me into a WeChat group of nearly 500 Chinese students exchanging information about flights, visas, schools and frustrations. They told one another not to give news interviews, not even to the Chinese media, for fear of government punishment.

When they sometimes couldn’t help curse the government or the policy, someone would quickly warn that they had better shut up or risk losing their WeChat accounts or even being invited for a chat once they’re back in China.

One student, after being warned, posted an emoticon of the 12 core socialist values that every Chinese citizen is supposed to live by, posting it five times in a row, as if pledging his loyalty to the surveillance state.

“I grew up under the red flag and received the red education,” Mr. Liu said to me. “But what can I say now?”

For the full story, see:

Li Yuan. “THE NEW NEW WORLD; Little Pinks’ Rethink China After Being Trapped Abroad.” The New York Times (Tuesday, June 30, 2020): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the story has the date June 24, 2020, and has the title “THE NEW NEW WORLD; Trapped Abroad, China’s ‘Little Pinks’ Rethink Their Country.”)

Musk Pivots Tesla to Be Less Automated and to Do More In-House

(p. B2) Mr. Musk became deeply interested in improving and automating the car-building process after painful struggles to increase production of the company’s first SUV, the Model X, in 2016.

In a rare public acknowledgment of error, Mr. Musk conceded in 2018 that he went overboard with his automation attempts for the Model 3. That mistake snarled the company’s efforts to ramp up production in 2017 and 2018—a dark period that shook investor confidence in his ability to execute on his vision for Tesla to evolve from a niche luxury brand into a mainstream electric-car company.

. . .

The factory expansion is a further acknowledgment by Tesla that some of its founding assumptions were off. The original business plan for the company, founded in 2003, was to create a car company resembling more of a personal technology company, rather than a traditional auto maker, by outsourcing vehicle assembly much like how gadgets were made.

But that effort was eventually abandoned as Mr. Musk began to realize the importance of controlling more of a company filled with complex logistics and manufacturing nuances.

He has since brought in-house more of his supply chain than is normal for a car maker, including seat manufacturing, and developed greater expertise in battery cell manufacturing.

For the full story, see:

Tim Higgins. “Tesla Races To Boost Vehicle Production.” The Wall Street Journal (Friday, July 24, 2020): B1-B2.

(Note: ellipsis added.)

(Note: the online version of the story has the date July 23, 2020, and has the title “Tesla Prepares for Hiring Boom as Elon Musk Targets Manufacturing Expansion.”)

Blacks Most Hurt by Creeping Credentialism

(p. A15) Nonessential degree requirements aren’t race-neutral. They embed into the labor market the legacy of black exclusion from the U.S. education system—namely, the antiliteracy laws that made it illegal for blacks to learn to read, the separate and unequal schools that kept them from catching up, and the limited progress since then on policies designed to remedy racial discrimination.

This spring, we and six other colleagues wrote a National Bureau of Economic Research working paper that questioned the fundamental assumption undergirding the proliferation of degree requirements: that workers without four-year degrees who earn low wages are low-skilled.

For the 71 million U.S. workers who have a high-school diploma but not a four-year degree, we used the skill profile of their current jobs as a proxy for their employability for higher-wage work. Their job experience suggests they are skilled through alternative routes, so we call them by the acronym STARs. They make up 60% of the active U.S. workforce.

Our research found that 16 million STARs have the skills for high-wage work, defined as earning more than twice the national median. Yet 11 million of them are currently employed in low-wage or middle-wage work. This suggests an extraordinary market failure: U.S. companies are systematically overlooking talent.

. . .

Our research suggests there are changes companies can make to address this problem:

• Hire for skills and work experience, not degrees. Rather than using the degree requirement as a default, employers should examine the skills that their jobs require and then use skill requirements for job postings, screenings and assessments. IBM adopted this type of skills-based approach with its New Collar initiative, launched in 2017.

. . .

Black workers face extraordinary barriers to economic mobility. By valuing skills over degrees, companies can improve the way the labor market functions for black STARs—a necessary step to ensure that the economy works for all.

For the full commentary, see:

Peter Q. Blair and Shad Ahmed. “The Disparate Racial Impact of Requiring a College Degree.” The Wall Street Journal (Monday, June 29, 2020): A15.

(Note: ellipses added; bullet point and italics in original.)

(Note: the online version of the commentary has the date June 28, 2020, and has the title “A Coronavirus Vaccine: Faster, Please.”)

The NBER working paper mentioned above is:

Blair, Peter Q., Tomas G. Castagnino, Erica L. Groshen, Papia Debroy, Byron Auguste, Shad Ahmed, Fernando Garcia Diaz, and Cristian Bonavida. “Searching for Stars: Work Experience as a Job Market Signal for Workers without Bachelor’s Degrees.” In NBER Working Papers: National Bureau of Economic Research, Inc., March 2020.

Leo Szilard Was “Ever-Resourceful”

I remember Milton Friedman, in an aside during his price theory class at Chicago, telling us that Leo Szilard used to walk up to him as he walked across campus, and articulately raise some issue in economics. Friedman was clearly impressed with the range of Szilard’s mind. My thought was ‘what’s the big deal about this guy Leo Szilard?’ Since then I have learned that he indeed was a big deal, at least for fans of the survival of Western civilization.

(p. 12) Fatefully, the Fermis sailed from Italy the same week that two Berlin radiochemists discovered nuclear fission.

That discovery was totally unexpected. In spring 1939, working at Columbia with the Hungarian physicist Leo Szilard, Fermi set out to answer a crucial question about it. Uranium atoms release a burst of energy when they fission, enough per atom to make a grain of sand visibly jump. But what then? Was there a way to combine those individual fissions, to turn a small burst into a mighty roar?

Szilard, ever-resourceful, acquired hundreds of pounds of black, greasy uranium-oxide powder from a Canadian mining corporation. Fermi and his students packed the powder into pipe-like tin cans and arranged them equally spaced in a circle within a large tank of water mixed with powdered manganese. At the center of the arrangement they placed a neutron source.

Neutrons from the source, slowed down by the water, would penetrate the uranium atoms in the cans and induce fissions. If the fissioning atoms released more neutrons, those “secondary” neutrons would irradiate the manganese. Measuring the radioactivity induced in the manganese would tell Fermi if the fissions were multiplying. If so, then a chain reaction might be possible, one bombarding neutron splitting a uranium atom and releasing two neutrons, those two splitting two other uranium atoms and releasing four, the four releasing eight, and so on in a geometric progression that could potentially produce vast amounts of energy for power — or for an atomic bomb. The experiment worked.

For the full review, see:

Richard Rhodes. “Quantifying the World.” The New York Times Book Review (Sunday, January 28, 2018): 12.

(Note: italics in original.)

(Note: the online version of the review has the date Jan. 24, 2018, and has the title “A Remarkable Man Among Remarkable Men and Women.”)

The book under review is:

Schwartz, David N. The Last Man Who Knew Everything: The Life and Times of Enrico Fermi, Father of the Nuclear Age. New York: Basic Books, 2017.

Our Government Sends 19-Year-Olds to War but Does Not Allow Them to Try High-Risk, High-Reward Covid-19 Drugs and Vaccines

(p. A11) “Many drug programs are suspended or not pursued at all—not because of flaws in the science but because of commercial and strategic reasons,” Mr. Milken says. Researchers screen those programs, and he calls in his partners either to fund the ideas or promote their development at other companies if the inventors make them available.

It’s a niche in the pharmaceutical world that public funding can’t fill. Mr. Milken sustains a model “where a person could just give me a five-page summary and get a meeting. Government isn’t going to fund that, but philanthropy does.” “These little companies,” he adds—“they’re not Johnson & Johnson, they’re not Novartis, they’re not Amgen. They need financial capital.”

. . .

Mr. Milken’s deals not tinged by controversy, such as his 1983 issuance of bonds to finance telecom company MCI’s long-distance network, show the same preference that shapes his philanthropy: high risk for a high reward.

. . .

A perennial struggle for Mr. Milken has been to convince regulators to share that urgency. He says drug trials generally are too rigid: “We send 19-year-olds into war zones knowing that no matter what we do, some number—greater than zero—will lose their lives or their limbs. But we tell a patient who is going to die not to try something because it could be dangerous.”

Nonetheless, the partners he’s made in his search for cures prove that imagination and activity are still scattered through the country. Discussing the coronavirus with biotech founders and Nobel Prize winners, Mr. Milken says he’s been “thrust back into the 1970s and early ’80s, where any time someone had a new idea—a new company, a passion for something—I had set aside time every day to listen.” On the day a vaccine or effective cure for Covid-19 is finally announced, Americans will owe thanks to such risk takers, who Mr. Milken says “invest in where the world is going, not where it is.”

For the full interview, see:

Mene Ukueberuwa, interviewer. “THE WEEKEND INTERVIEW; What Would You Risk for a Faster Cure?” The Wall Street Journal (Saturday, May 2, 2020): A11.

(Note: ellipses added.)

(Note: the online version of the interview has the date May 1, 2020, and has the same title as the print version.)

The Duopoly of Intel and AMD Vigorously Compete

(p. B4) While Intel has struggled to move into mass production of its most advanced chips, rival chip maker Advanced Micro Devices Inc. has been challenging the company’s dominance. AMD’s market share in personal computer CPUs climbed above 17% in the first quarter, more than doubling from five years ago, according to Mercury Research. Intel holds almost all of the remaining market share.

. . .

Intel’s struggles with seven-nanometer chips mirror delays in designing and producing its earlier generation of chips based on a 10-nanometer process, an industry term tied loosely to the size of transistors that chips use to make calculations. Intel executives have told investors in the past that once the company conquered its challenges in 10-nanometer technology, sizing down to seven nanometers and beyond could happen more quickly.

. . .

There aren’t any “fundamental roadblocks” with the design of seven-nanometer chips, Chief Executive Bob Swan told analysts on a conference call, adding that Intel had found the root cause of the issue and was taking steps to avert further delays. He said Intel could turn more to external manufacturers, perhaps in combination with its own factories, to meet customers’ needs—a significant shift for a company that has mostly relied on its own manufacturing muscle.

The seven-nanometer delay could harm Intel’s competitive position because Taiwan Semiconductor Manufacturing Co., the largest contract manufacturer of chips in the world, is expected to be making processors with even smaller, more efficient transistors by the time Intel comes out with its chips.

For the full story, see:

Asa Fitch. “Intel Gets Lift From Work at Home.” The Wall Street Journal (Friday, July 24, 2020): B4.

(Note: ellipses added.)

(Note: the online version of the story was updated July 23, 2020, and has the title “Intel Reports Profit Surge but Warns of Further Delays on Advanced Chips.”)

Former FDA Research Virologist Suggests “Accelerated Approvals” of Covid-19 Vaccines

(p. A15) Covid-19 is a genuine emergency. Drug and biotech companies and academic institutions are doing their part, and regulators need to, as well. Having been a research virologist who spent 15 years at the FDA as the agency’s “biotechnology czar,” I have some suggestions:

. . .

• The FDA should issue “accelerated approvals” after testing in only limited populations. Additional subgroups—children, pregnant women, etc.—can be tested after approval. The accelerated approvals should be granted before the duration of postvaccination immunity has been ascertained. More-comprehensive trials can then confirm safety, efficacy and the length of time that immunity lasts.

• Establish reciprocity of approvals between the FDA and trusted counterparts in certain foreign countries (Australia, Canada, New Zealand, Japan, the Scandinavian countries and the European Medicines Agency), so that if one of them approves a vaccine, it is automatically approved in the other countries.

For the full commentary, see:

Henry I. Miller. “A Covid Vaccine: Faster, Please.” The Wall Street Journal (Thursday, April 23, 2020): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date April 22, 2020, and has the title “A Coronavirus Vaccine: Faster, Please.”)