Category: Books

Many Charities and Nonprofits Do Not Change the World

(p. A15) Opinion polls showing that present-day Democrats look more favorably on socialism than capitalism have prompted Tyler Cowen, an economics professor at George Mason University, to write what he calls a “love letter” to big business. His thesis: Corporations may lack heroic attributes, but they deserve more respect than they get.

. . .

Alongside the vilification of corporate capitalism has been a rise in the social status of nonprofits, as if the nonprofit label, by itself, signals both value and virtue. Mr. Cowen isn’t having it: He asserts that fraud is more prevalent in nonprofit organizations than in profit-making ones. What is more, “plenty of charities and nonprofits don’t actually change or improve the world or deliver any useful product at all, but rather simply continue as lost causes with no impact.”

Americans have a big stake in profits, as Mr. Cowen reminds us. “As of 2015, 55 percent of Americans had money invested in stocks . . . ,” he writes. “Even if you do not personally own many or any equities, there is a good chance your retirement fund or pension fund does.”

For the full review, see:

George Melloan. “BOOKSHELF; What Socialism Gets Wrong.” The Wall Street Journal (Tuesday, ): A15.

 

(Note: ellipsis between paragraphs, added; ellipsis internal to last paragraph, in original.)

(Note: the online version of the review has the date , and has the title “BOOKSHELF;‘Big Business’ Review: What Socialism Gets Wrong.”)

The book under review, is:

Cowen, Tyler. Big Business: A Love Letter to an American Anti-Hero. New York: St. Martin’s Press, 2019.

Efficiency Skills Are “Profoundly Different from” Innovation Skills

(p. A15) How do you deliver performance now while developing the products you’ll need in the future? The skills required to support established franchises, he argues, are profoundly different from those required to develop new ones. Management techniques such as Six Sigma, focused on efficiency and execution, tend to be bad for innovation, which is intrinsically messy and inefficient. Companies need a different approach to nurture the radically original projects, or “loonshots,” that are essential for long-term success.
. . .
In Mr. Bahcall’s view, the principal obstacle to innovation isn’t that there are too few creative ideas–indeed, there are plenty of artists, he says. The problem is that original proposals are both discomfiting and imperfect, hence reflexively rejected before they can develop enough to prove themselves in the field.
. . .
Organizations can miss innovation opportunities by accepting the conventional wisdom, Mr. Bahcall observes, a problem he describes as “false fails.” Consider the Facebook predecessor Friendster. Mr. Bahcall explains that while most investors decided that the failure of Friendster was evidence that social-network efforts weren’t sticky enough to retain customers, Peter Thiel’s investment team wasn’t so sure. They dug into the data and were “stunned by how long users stayed with the site,” despite the irritating crashes that dogged the platform. Hence Mr. Thiel’s fund was an early investor in Facebook, confident that, with appropriate attention to the underlying technology, the platform could succeed. Eight years later, he sold most of his Facebook stake and pocketed roughly $1 billion.

For the full review, see:
David A. Shaywitz. “BOOKSHELF; In Praise of Wild Ideas; Innovative proposals can be both imperfect and discomfiting–and are often rejected before they can develop enough to prove themselves viable.” The Wall Street Journal (Tuesday, March 19, 2019): A15.
(Note: ellipses added.)
(Note: the online version of the review has the date March 18, 2019, and has the title “BOOKSHELF; ‘Loonshots’ Review: In Praise of Wild Ideas; Innovative proposals can be both imperfect and discomfiting–and are often rejected before they can develop enough to prove themselves viable.”)

The book under review, is:
Bahcall, Safi. Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries. New York: St. Martin’s Press, 2019.

“If You Write a Best-Selling Book, You Can Be a Millionaire, Too”

(p. A14) WASHINGTON — Senator Bernie Sanders, whose $18 million fund-raising haul has solidified his status as a front-runner for the Democratic presidential nomination, said Tuesday [April 9, 2019] that he would release 10 years of tax returns by Tax Day on Monday and acknowledged that he has joined the ranks of the millionaires he has denounced for years.

. . .

Reminded that he is a millionaire, he did not shirk from the description.

“I wrote a best-selling book,” he declared. “If you write a best-selling book, you can be a millionaire, too.”

For the full story, see:

Sheryl Gay Stolberg.  “Sanders Says He’ll Release Tax Returns.”  The New York Times (Wednesday, April 10, 2019):  A14.

(Note:  ellipsis, and bracketed date, added.)

(Note:  the online version of the story has the date April 9, 2019, and has the title “Bernie Sanders, Now a Millionaire, Pledges to Release Tax Returns by Monday.”)

Innovative Entrepreneurs Bring Prosperity to the Poor

(p. A17) As the economist Joseph Schumpeter observed: “The capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.”

For Schumpeter, entrepreneurs and the companies they found are the engines of wealth creation. This is what distinguishes capitalism from all previous forms of economic society and turned Marxism on its head, the parasitic capitalist becoming the innovative and beneficent entrepreneur. Since the 2008 crash, Schumpeter’s lessons have been overshadowed by Keynesian macroeconomics, in which the entrepreneurial function is reduced to a ghostly presence. As Schumpeter commented on John Maynard Keynes’s “General Theory” (1936), change–the outstanding feature of capitalism–was, in Keynes’s analysis, “assumed away.”

Progressive, ameliorative change is what poor people in poor countries need most of all. In “The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty,” Harvard Business School’s Clayton Christensen and co-authors Efosa Ojomo and Karen Dillon return the entrepreneur and innovation to the center stage of economic development and prosperity. The authors overturn the current foreign-aid development paradigm of externally imposed, predominantly government funded capital- and institution-building programs and replace it with a model of entrepreneur-led innovation. “It may sound counterintuitive,” the authors write, but “enduring prosperity for many countries will not come from fixing poverty. It will come from investing in innovations that create new markets within these countries.” This is the paradox of the book’s title.

Continue reading “Innovative Entrepreneurs Bring Prosperity to the Poor”

Big Firms Can Benefit Consumers

(p. A15) Mr. Wu writes with elegance, conviction, knowledge–and certitude. But he goes over the top in his effort to slay the dragon of the so-called Chicago School of antitrust analysis, which finds its clearest expression in the late Robert Bork’s influential 1978 book, “The Antitrust Paradox.” Bork and the Chicago School insist that “consumer welfare” should be the sole standard for antitrust law. Nothing else matters.
. . .
The deeper source of philosophical disagreement, however, lies in Mr. Wu’s self-proclaimed “neo-Brandeisian” attack on Bork’s underlying worldview. First, Mr. Wu claims that Bork’s consumer-welfare theory shows too little solicitude toward the small businessman, who can be steamrolled by larger businesses with greater economic power. Second, Mr. Wu claims that Bork’s thesis ignores the perverse influence that dominant firms exercise on the overall political system.
Against both challenges, Bork’s position holds up reasonably well. As to the first, the protection of the small businessman comes at a high price. It forces consumers to do business with small firms that may well have a local geographical monopoly, which would be undercut by a larger firm offering better goods at lower prices.
. . .
Similarly, both Brandeis and Mr. Wu have an oversimplified vision of political markets, for economic dominance need not translate into political dominance. Companies like Google and Facebook today enjoy dominant positions with their search engines or social-media platforms, but they face massive political opposition, not only from regulatory authorities but also from skilled political operatives–activist groups, litigation centers, unions, trade associations–who can make their lives a public-relations nightmare.
. . .
Finally, Mr. Wu’s Brandeis fixation blinds him to the distinctive features of modern antitrust litigation, which must contend with often complicated economic arrangements and effects. When American Express tried to prevent its merchants from steering their customers to credit-card companies that charge lower fees to retailers, it was hit with an antitrust lawsuit. But the Supreme Court this year upheld the policy, claiming that it didn’t result in an abuse of market power but was pro-competitive because of indirect effects that improved the benefits to Amex card holders. With his over-concern with bigness per se, Brandeis had nothing to say about these novel issues, and neither, alas, does Mr. Wu.

For the full review, see:
Richard A. Epstein. “BOOKSHELF; Revisiting the Gilded Age; Are Google, Facebook, Apple and Amazon akin to the dominant “trusts” of the late 19th century–and thus deserving of antitrust action?” The Wall Street Journal (Monday, Dec. 3, 2018): A15.
(Note: ellipses added.)
(Note: the online version of the review has the date Dec. 2, 2018, and has the title “BOOKSHELF; ‘The Curse of Bigness’ Review: Revisiting the Gilded Age; Are Google, Facebook, Apple and Amazon akin to the dominant “trusts” of the late 19th century–and thus deserving of antitrust action?”)

The book under review, is:
Wu, Tim. The Curse of Bigness: Antitrust in the New Gilded Age. New York: Columbia Global Reports, 2018.

The Bork book mentioned in the review, is:
Bork, Robert H. The Antitrust Paradox: A Policy at War with Itself. New York: The Free Press, 1993 [first published 1978].

Chernobyl Discredited Communism, Not Nuclear Power

(p. C2) In his chilling new book, “Midnight in Chernobyl,” the journalist Adam Higginbotham shows how an almost fanatical compulsion for secrecy among the Soviet Union’s governing elite was part of what made the accident not just cataclysmic but so likely in the first place. Interviewing eyewitnesses and consulting declassified archives — an official record that was frustratingly meager when it came to certain details and, Higginbotham says, couldn’t always be trusted — he reconstructs the disaster from the ground up, recounting the prelude to it as well as its aftermath. The result is superb, enthralling and necessarily terrifying.
. . .
Higginbotham describes young workers who were promoted swiftly to positions of terrific responsibility. In an especially glaring example of entrenched cronyism, the Communist Party elevated an ideologically copacetic electrical engineer to the position of deputy plant director at Chernobyl: To make up for a total lack of experience with atomic energy, he took a correspondence course in nuclear physics.
Even more egregious than some personnel decisions were the structural problems built into the plant itself. Most fateful for Chernobyl was the baffling design of a crucial safety feature: control rods that could be lowered into the reactor core to slow down the process of nuclear fission. The rods contained boron carbide, which hampered reactivity, but the Soviets decided to tip them in graphite, which facilitated reactivity; it was a bid to save energy, and therefore money, by lessening the rods’ moderating effect. Higginbotham calls it “an absurd and chilling inversion in the role of a safety device,” likening it to wiring a car so that slamming the brakes would make it accelerate.
. . .
. . . Chernobyl exposed the untenable fissures in the Soviet system and hastened its collapse; the accident also encouraged Mikhail Gorbachev to pursue drastic reforms with even more zeal.
Higginbotham observes that the plant was run like the Soviet state writ large — with individuals expected to carry out commands from on high with an automaton’s acquiescence. At the same time, when it came time to assess responsibility for the disaster, any collectivist fellow feeling evaporated, as the ensuing show trials insistently scapegoated a few individuals (some of them already dead) in a desperate attempt to keep a crumbling system intact.
The accident also decimated international confidence in nuclear power, and a number of countries halted their own programs — for a time, that is. Global warming has made the awesome potential of the atom a source of hope again and, according to some advocates, an urgent necessity; besides, as Higginbotham points out, nuclear power, from a statistical standpoint, is safer than the competing alternatives, including wind.

For the full review, see:
Jennifer Szalai. “BOOKS OF THE TIMES; Nuclear Disaster In Chilling Detail.” The New York Times (Thursday, Feb. 7, 2019): C2.
(Note: ellipses added.)
(Note: the online version of the review has the date Feb. 6, 2019, and has the title “BOOKS OF THE TIMES; An Enthralling and Terrifying History of the Nuclear Meltdown at Chernobyl.”)

The book under review, is:
Higginbotham, Adam. Midnight in Chernobyl: The Untold Story of the World’s Greatest Nuclear Disaster. New York: Simon & Schuster, 2019.

Chief Justice Marshall Held That Corporations Were Citizens

(p. C4) How did corporations come to possess some of the most fundamental rights of individuals? They never marched on Washington. Instead, they have fought to win their rights in the Supreme Court–and in the process have been unexpected innovators in constitutional law.
The first Supreme Court case on the rights of business corporations was decided in 1809–nearly a half-century before the first case on the rights of African-Americans. Far from an oppressed minority, the Bank of the United States, which brought the case, was among the richest and most powerful corporations in the new nation.
After opponents in Georgia imposed a tax on the Savannah branch, the bank claimed a constitutional right to challenge the tax in federal court. Article III of the Constitution, however, guaranteed the right to sue in federal court only to “citizens.” In one of the neglected landmarks of American law, the legendary chief justice John Marshall held that the Constitution must be read expansively to include corporations.

For the full essay, see:
Adam Winkler. “What Rights Should Corporations Have?; The business world’s ‘artificial persons’ have long fought to win the same constitutional protections as citizens.” The Wall Street Journal (Saturday, March 3, 2018): C4.
(Note: the online version of the essay has the date March 1, 2018.)

The essay is based on the author’s book:
Winkler, Adam. We the Corporations: How American Businesses Won Their Civil Rights. New York: Liveright Publishing Corp., 2018.

Good Luck Comes to Optimists Who Do Not Give Up

(p. C3) Luck occurs at the intersection of random chance, talent and hard work. There may not be much you can do about the first part of that equation, but there’s a lot you can do about the other two. People who have a talent for making luck for themselves grab the unexpected opportunities that come along.
The good news is that there’s plenty of luck to go around if you know how to look for it.
. . .
Think yourself lucky. Psychologist Martin Seligman of the University of Pennsylvania told us that if he were looking for a lucky person, “the number one ingredient that I’d select for would be optimism.” Early in his career, Dr. Seligman did groundbreaking experiments on learned helplessness, showing that animals put in stressful situations beyond their control eventually stop trying to escape. People also have a tendency to give up and complain when they think they’re victims of bad luck.
“Believing that you have some control over what happens fuels trying,” Dr. Seligman said. “If there’s a potentially good event for me, am I going to seize the opportunity and follow up, or am I going to be passive?”

For the full essay, see:
Janice Kaplan and Barnaby Marsh. “Make Your Own Luck.” The Wall Street Journal (Saturday, March 3, 2018): C3.
(Note: ellipsis added; bold in original.)
(Note: the online version of the essay has the date March 1, 2018, and has the title “To Be Successful, Make Your Own Luck.”)

The essay is based on the authors’ book:
Kaplan, Janice, and Barnaby Marsh. How Luck Happens: Using the Science of Luck to Transform Work, Love, and Life. New York: Dutton, 2018.

Early Medical “Leaps of Ingenuity”

(p. A17) Using a panoply of colorful examples, the author artfully illustrates the frustrations, uncertainty, poorly founded confidence and frequent futility of medical practice in the prescientific age. Employing a consistently light and humorous touch, he effortlessly navigates a cornucopia of fascinating, esoteric and obscure patient histories.
The carefully selected vignettes demonstrate the befuddled mindset of the well-intentioned physicians who were forced to contend with the vagaries of damaged and failing human flesh without the benefit of anesthesia, and armed with little more than the fanciful theories of Galen (a second-century Greek who attributed disease to imbalances of the four “humors”: blood, phlegm, and yellow and black bile) and an elementary knowledge of human anatomy.
Yet despite their lack of mechanistic understanding, these individuals showed leaps of ingenuity no less startling than those of today’s physicians and genome rewriters. To avoid subjecting himself to the dangers of 18th-century surgery to remove a bladder stone, Mr. Morris tells us, the French-born surgeon Claude Martin fashioned an instrument out of a knitting needle and a whalebone handle, which he then inserted through his urethra and used to manually file away the stone.

For the full review, see:
Adrian Woolfson. “BOOKSHELF; Desperate Remedies; Treatments of old for common health ills included tobacco-smoke enemas, arsenic cigarettes–and the “Pigeon’s-Rump Cure.” The Wall Street Journal (Tuesday, Dec. 13, 2018): A17.
(Note: ellipses added.)
(Note: the online version of the review has the date Dec. 12, 2018, and has the title “BOOKSHELF; ‘The Mystery of the Exploding Teeth’ Review: Desperate Remedies; Treatments of old for common health ills included tobacco-smoke enemas, arsenic cigarettes–and the “Pigeon’s-Rump Cure.”)

The book under review, is:
Morris, Thomas. The Mystery of the Exploding Teeth: And Other Curiosities from the History of Medicine. New York: Dutton, 2018.

A Tale of Two Bookstores: New York City Subsidizes Amazon and Regulates the Strand

(p. A22) Since it opened in 1927, the Strand bookstore has managed to survive by beating back the many challenges — soaring rents, book superstores, Amazon, e-books — that have doomed scores of independent bookshops in Manhattan.
With its “18 Miles of Books” slogan, film appearances and celebrity customers, the bibliophile’s haven has become a cultural landmark.
Now New York City wants to make it official by declaring the Strand’s building, at the corner of Broadway and 12th Street in Greenwich Village, a city landmark.
There’s only one problem: The Strand does not want the designation.
Nancy Bass Wyden, who owns the Strand and its building at 826 Broadway, said landmarking could deal a death blow to the business her family has owned for 91 years, one of the largest book stores in the world.
So at a public hearing on Tuesday before the city’s Landmarks Preservation Commission, her plea will be simple, she said: “Do not destroy the Strand.”
Like many building owners in New York, Ms. Wyden argues that the increased restrictions and regulations required of landmarked buildings can be cumbersome and drive up renovation and maintenance costs.
“By landmarking the Strand, you can also destroy a piece of New York history,” she said. “We’re operating on very thin margins here, and this would just cost us a lot more, with this landmarking, and be a lot more hassle.”
. . .
Another rich twist, Ms. Wyden said, was that the move coincides with the announcement that Amazon — not exactly beloved by brick-and-mortar booksellers — plans to open a headquarters in Queens, after city and state leaders offered upwards of $2 billion in incentives to Amazon and its multibillionaire chief executive, Jeff Bezos.
“The richest man in America, who’s a direct competitor, has just been handed $3 billion in subsidies. I’m not asking for money or a tax rebate,” Ms. Wyden said. “Just leave me alone.”
. . .
Owners of buildings with landmark status are in many cases barred from using plans, materials and even paint colors that vary from the original design without the commission’s approval.
. . .
Ms. Wyden — who is married to Senator Ron Wyden of Oregon, whom she met at the similarly renowned Powell’s book store in Portland — is a third-generation owner of the Strand, which stocks roughly 2.5 million used, rare and new books and employs 230 people.
. . .
While she would not divulge the bookstore’s finances, she said that she could make more money renting out the Strand’s five floors, but she loves the family business too much.
She accused city officials of trying to hurry the landmarking process, leaving her little time to prepare a defense, especially during the holiday rush.
“It’s our busiest time of year, and we should be focused on customers and Christmas, which is where we make our most money,” Ms. Wyden said. “But they have no sympathy for that.”

For the full story, see:
Corey Kilgannon. “‘Declaring Strand Bookstore a Landmark Would Kill It, Says Strand.” The New York Times (Tuesday, Dec. 4, 2018): A22.
(Note: ellipses added.)
(Note: the online version of the story has the date Dec. 3, 2018, and has the title “Declare the Strand Bookstore a City Landmark? No Thanks, the Strand Says.” The online version says that the New York print edition appeared on p. A20 and had the title: “A Bid to Preserve Strand Bookstore Would Destroy It, Owner Says.” The page and title in the citation I give further above, is from the National print edition that I receive.)