Category: Books

Case Study of Effects of Closing a Factory

(p. B1) Perhaps the most illuminating business book of the year, for me, is Amy Goldstein’s “Janesville: An American Story.” If you really want to understand what’s going on in today’s real economy — beyond the headlines about new stock-market highs, tax policy or the latest list of billionaires — spend some time with this true tale of what happened in the middle-class town of Janesville, Wis., after General Motors closed a factory there.
Ms. Goldstein admirably shows all sides of this story, capturing in microcosm all of the issues that so many communities across the United States are facing. You will probably be left doing some hard thinking about what is driving the politics of the moment, although Ms. Goldstein brilliantly, and respectfully, paints the book’s characters with such nuance that readers from across the ideological spectrum are likely to arrive at different conclusions about heroes and villains.
In crafting this deeply reported and riveting read, Ms. Goldstein spent considerable time in Janesville. As a result, you get a palpable sense of what life is like there; of the financial and psychological impact that a major plant closing has; and of the knock-on effects such an event has on other businesses and institutions. She paints vivid portraits of characters who include laid-off workers seeking retraining, union officials and local politicians, Speaker Paul D. Ryan among them. If you liked “Hillbilly Elegy: A Memoir of a Family and Culture in Crisis,” J. D. Vance’s best-seller about growing up in Ohio and the decline of the industrial Midwest, I think you’ll find that “Janesville” makes these issues real in a new and compelling way.

For the full commentary, see:
Sorkin, Andrew Ross. “DEALBOOK For a Year Filled With News, A List of Books Worth a Look.” The New York Times (Tuesday, DEC. 26, 2017): B1 & B3.
(Note: the online version of the commentary has the date DEC. 25, 2017, and has the title “DEALBOOK; In a Year of Nonstop News, a Batch of Business Books Worth Reading.”)

The Goldstein book mentioned above, is:
Goldstein, Amy. Janesville: An American Story. New York: Simon & Schuster, 2017.

Mackenzie Was Wrong in Thinking He Was a Failure, but Was Right About the Northwest Passage

(p. 10) In the summer of 1789, a young fur trader named Alexander Mackenzie led an expedition in search of a Northwest Passage. He and his voyageurs and Chipewyan guides were attempting, 14 years before Lewis and Clark, to cross North America, paddling birch bark canoes down a river they hoped would pierce the Rocky Mountains. Mackenzie was a businessman who wanted to speed the pace of trade by connecting New York and China via an interior passage through the continent. He did find such a route, without knowing it. Mackenzie died thinking he was a failure, when he was really just 200 years early.
Some ideas are fantastically ahead of their time. In 1636, René Descartes created contact lenses, using glass tubes filled with water; unfortunately, the wearer was unable to blink. Charles Babbage invented digital “difference engines” — essentially modern programmable computers but powered by steam — in the 1820s. And Kodak developed digital cameras in 1974 but discarded the product idea because it thought no one wanted to look at photos on televisions.
In a particularly ill-timed episode, Giovanni Caselli invented the fax machine in 1856. Letter writers could scribble a message onto electrically charged foil, and the portions covered by ink would block the flow of current. The stylus of Caselli’s device then scanned each line of text, transmitting the signal via telegraph lines to a second machine, which would scrawl out a “fac simile” of the letter.
To be practical, the system required a coordinated investment throughout a region, and Napoleon III had plans to modernize all of France with Caselli’s pantelegraph, more than a decade before Alexander Graham Bell’s telephone. But before it could be installed, Napoleon III lost the Franco-Prussian War, his government fell, and Paris descended into the brutal anarchy of the Commune. Caselli faded into obscurity, and his technology was forgotten for a century.
Like the fax machine and computer, Alexander Mackenzie’s Northwest Passage was too forward-looking to be practical or useful. Today the melting Northwest Passage — along the North Slope of Alaska, through the maze of Canadian Arctic islands, then back down along Greenland’s west coast, to the Atlantic — is regularly in the news. A holy grail for generations of explorers is now finally open, because of climate change. Giant cargo and oil tankers regularly ply those seas, and even the Crystal Serenity cruise ship, with 1,700 people onboard (many in black tie), has made the journey the past two summers.
. . .
Ideas do not exist only on their own merits. Timing matters.

For the full commentary, see:
Brian Castner. “The Northwest Passage That Might Have Been.” The New York Times, SundayReview Section (Sunday, March 11, 2018): 10.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date March 10, 2018.)

Castner’s commentary is related to his book:
Castner, Brian. Disappointment River: Finding and Losing the Northwest Passage. New York: Doubleday, 2018.

Chinese Economy “on the Brink of a Precipitous Downturn?”

(p. A15) Reporters in China often run up against Potemkin projects–gleaming science parks sitting half empty, new districts with eerily few residents, solar-powered cities where most of the panels are disconnected. These wasteful investments, designed to fulfill local-government ambitions to boost construction and drive short-term growth, can be a nuisance when researching stories about innovation or environmental foresight. But what if such projects are not a distraction but the story itself? What if China’s economy is, in fact, on the brink of a precipitous downturn? That is the question Dinny McMahon asks in “China’s Great Wall of Debt.”
Mr. McMahon, a former Beijing-based correspondent for this newspaper, suggests that China has powered ahead for as long as it has not because it is immune to crises but because its government has so far managed to intervene to stave them off. When China’s stock market plunged in 2015, the central government directed fund managers to buy instead of sell and pressured journalists to write only optimistic reports. One reporter who strayed from the official line was trotted out on state television to apologize.
Such intervention has created a false sense of confidence, Mr. McMahon argues, which in turn has led to a bad case of economic bloating.

For the full review, see:
Mara Hvistendahl. “”BOOKSHELF; The Chinese Growth Charade; Ghost cities, shadow banks, white-elephant state projects: The country’s pursuit of growth at all costs may come at a high price.” The Wall Street Journal (Wednesday, March 14, 2018): A15.
(Note: the online version of the review has the date March 13, 2018, and has the title “BOOKSHELF; ‘China’s Great Wall of Debt’ Review: The Chinese Growth Charade; Ghost cities, shadow banks, white-elephant state projects: The country’s pursuit of growth at all costs may come at a high price.”)

The book under review, is:
McMahon, Dinny. China’s Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans and the End of the Chinese Miracle. New York: Houghton Mifflin Harcourt, 2018.

Early Industrial Workers’ Living Standards Improved Over Their Lifetimes

(p. C6) Historians have long debated whether the Industrial Revolution was a net benefit to those who labored in the mills. The first generation of workers generally enjoyed higher wages and liberation from the confines of rural life. Yes, there was child labor, but one girl who entered a New England mill at age 11 recalled: “It was paradise here because you got your money, and you did whatever you wanted to with it.” In her book “Liberty’s Dawn” (2013), Emma Griffin studied those early industrial workers longitudinally and found that their living standards improved markedly over a lifetime.
. . .
William Blake’s “dark Satanic Mills” are now brightly lit in China, but are they still infernal? Today, Mr. Freeman reports, Foxconn offers “a library, bookstores, a variety of cafeterias and restaurants, supermarkets, . . . swimming pools, basketball courts, soccer fields, and a stadium, a movie theater, electronic game rooms, cybercafés, a wedding-dress shop, banks, ATMs, two hospitals, a fire station, a post office, and huge LED screens that show announcements and cartoons.” But Chinese worker dormitories impose a positively Victorian regime of moral supervision: no drinking, gambling or visiting the opposite sex. Work rules are draconian. And surveillance cameras are everywhere (though, come to think of it, we have plenty of those in the West).
Ultimately, Mr. Freeman can’t decide whether industrialism represents progress or dystopia, and that ambivalence reflects his clear eyes and fair-mindedness. He often lets workers speak for themselves, and they don’t always agree. Xu Lizhi, one of those Foxconn employees who killed himself, was also a poet: “They’ve trained me to become docile / Don’t know how to shout or rebel / How to complain or denounce / Only how to silently suffer exhaustion.” But another worker from a small Hunan village was amazed by his company dormitory: “I had never lived in a multi-story building, so it felt exciting to climb stairs and be upstairs.” Mr. Freeman reminds us that, benevolent or tyrannical, the factory was an exponential leap in the human experience.

For the full review, see:
Rose, Jonathan. “The Very Symbol of Modern Times; Workers’ paradise or soul-deadening dystopia? Why society remains of two minds about the factory.” The Wall Street Journal (Saturday, Feb. 24, 2018): C6.
(Note: ellipsis between paragraphs, added; ellipsis within paragraph, in original.)
(Note: the online version of the review has the date Feb. 23, 2018, and has the title “Review: The Very Symbol of Modern Times; Workers’ paradise or soul-deadening dystopia? Why society remains of two minds about the factory.”)

The book under review, is:
Freeman, Joshua B. Behemoth: A History of the Factory and the Making of the Modern World. New York: W. W. Norton & Company, 2018.

The book by Emma Griffin, mentioned above, is:
Griffin, Emma. Liberty’s Dawn: A People’s History of the Industrial Revolution. New Haven, CT: Yale University Press, 2013.

Upward Mobility from Moving to the Robust Redundant Labor Markets of Open Boomtowns

(p. B3) Chicago in 1850 was a muddy frontier town of barely 30,000 people. Within two decades, it was 10 times that size. Within another two decades, that number had tripled. By 1910, Chicago — hog butcher for the world, headquarters of Montgomery Ward, the nerve center of the nation’s rail network — had more than two million residents.
“You see these numbers, and they just look fake,” said David Schleicher, a law professor at Yale who writes on urban development and land use. Chicago heading into the 20th century was the fastest-growing city America has ever seen. It was a classic metropolitan magnet, attracting anyone in need of a job or a raise.
But while other cities have played this role through history — enabling people who were geographically mobile to become economically mobile, too — migration patterns like the one that fed Chicago have broken down in today’s America. Interstate mobility nationwide has slowed over the last 30 years. But, more specifically and of greater concern, migration has stalled in the very places with the most opportunity.
As Mr. Schleicher puts it, local economic booms no longer create boomtowns in America.
. . .
Some people aren’t moving into wealthy regions because they’re stuck in struggling ones. They have houses they can’t sell or government benefits they don’t want to lose. But the larger problem is that they’re blocked from moving to prosperous places by the shortage and cost of housing there. And that’s a deliberate decision these wealthy regions have made in opposing more housing construction, a prerequisite to make room for more people.
Compare that with most of American history. The country’s economic growth has long “gone hand in hand with enormous reallocation of population,” write the economists Kyle Herkenhoff, Lee Ohanian and Edward Prescott in a recent study of what’s hobbling similar population flows now.
. . .
Were it not for all the restrictions on housing in the most productive places — if workers were able to more freely migrate to them — Mr. Herkenhoff and his co-authors and the economists Enrico Moretti and Chang-Tai Hsieh have estimated that the nation’s G.D.P. would be substantially higher. By their calculations, there are millions of workers missing from the Bay Area and metropolitan New York today.
The population growth that is occurring in these metro areas is fueled almost entirely by immigration, as Ryan Avent points out in “The Gated City,” where he makes a similar argument to Mr. Schleicher. If we consider only domestic moves, about 900,000 more people have moved away from New York than to it since 2010. On net, about 47,000 have left both San Jose and Washington, D.C., while Boston has lost a net 36,000.

For the full commentary, see:
Emily Badger. “Why New York and the Bay Area Are Missing Millions of Workers.” The New York Times (Friday, Dec. 8, 2017): B3.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 6, 2017, and has the title “What Happened to the American Boomtown?”)

The Herkenhoff et al. paper mentioned above, is:
Herkenhoff, Kyle F., Lee E. Ohanian, and Edward C. Prescott. “Tarnishing the Golden and Empire States: Land-Use Restrictions and the U.S. Economic Slowdown.” Journal of Monetary Economics 93 (Jan. 2018): 89-109.

The Moretti and Hsieh paper mentioned above, is:
Hsieh, Chang-Tai, and Enrico Moretti. “Housing Constraints and Spatial Misallocation.” Working paper, May 18, 2017.

The book by Ryan Avent, mentioned above, is:
Avent, Ryan. The Gated City. Amazon Digital Services LLC, 2011.

By Many Metrics, Life Is Better Than Ever

(p. A15) . . . , Mr. Easterbrook argues, “at no juncture in American history were people better off than they were in 2016: living standards, per-capita income, buying power, health, safety, liberty, and longevity were at their highest.”
A potent counter to today’s unwarranted pessimism, the author claims, is not just the evidence that can be seen (rising employment, wages, wealth, health, lifespans and so on) but what has not been seen. Granaries, for instance, are not empty: The many predictions made since the 1960s that billions would die of starvation have not come true. “Instead, by 2015, the United Nations reported global malnutrition had declined to the lowest level in history. Nearly all malnutrition that persists is caused by distribution failures or by government corruption, not by lack of supply.” In fact, obesity is rapidly becoming a global problem.
Similarly, even though there are occasional panics, “resources have not been depleted despite the incredible proliferation of people, vehicles, aircraft, and construction.” Instead of oil and gas running out by the year 2000, as some in the 1970s predicted, both “are in worldwide oversupply” along with minerals and ores.
. . .
Data supporting this author’s optimistic observations are presented throughout “It’s Better Than It Looks.” Similar catalogues can be found in books like Steven Pinker’s “Enlightenment Now” (2018), Johan Norberg’s “Progress” (2016), Peter Diamandis and Steven Kotler’s “Abundance” (2012) and Matt Ridley’s “The Rational Optimist” (2010). I even touched on some of the same points in my own “The Moral Arc” (2015). Apparently, though, this chorus is not loud enough, since pessimism remains as prominent as it ever was.

For the full review, see:
Michael Shermer. “BOOKSHELF; Why Things Are Looking Up; Though declinists in both parties may bemoan our miserable lives, Americans are healthier, wealthier, safer and living longer than ever.” The Wall Street Journal (Wednesday, Feb. 28, 2018): A15.
(Note: ellipses added.)
(Note: the online version of the review has the date Feb. 27, 2018, and has the title “BOOKSHELF; ‘It’s Better Than It Looks’ Review: Why Things Are Looking Up; Though declinists in both parties may bemoan our miserable lives, Americans are healthier, wealthier, safer and living longer than ever.”)

The book under review, is:
Easterbrook, Gregg. It’s Better Than It Looks: Reasons for Optimism in an Age of Fear. New York: PublicAffairs, 2018.

Independent Snapchat Entrepreneurs Turned Down Facebook’s Three Billion Dollars

(p. A17) Snap Inc. provides a remarkable story, not only because it has accumulated so many users so rapidly but also because it has remained an independent company in the shadow of Facebook, which in 2012 acquired Instagram, also photo-centered, for $1 billion. A year later, noticing Snapchat’s power to attract young users, Facebook offered Snap’s founders $3 billion for the company, a figure that the book’s publisher has rounded down for the title. Mr. Spiegel, the chief executive, said “no,” and Snap’s current market capitalization, around $23 billion, would seem to be sweet vindication. But Snap has yet to figure out how to convert its many users into net profits, and Instagram has shown no compunction about copying Snapchat features and has grown even faster.
. . .
In Mr. Spiegel’s view, sharing snaps–of anything–was enjoyable because the images were ephemeral and didn’t have to be composed for posterity. “It seems odd that at the beginning of the internet everyone decided everything should stick around forever,” he said.

For the full review, see:
Randall Stross. “BOOKSHELF; A Startup in Focus; Snapchat was born when casual photos replaced text messages among Stanford students. It now boasts 187 million daily users.” The Wall Street Journal (Monday, Feb. 12, 2018): A17.
(Note: ellipsis added.)
(Note: the online version of the review has the date Feb. 11, 2018, and has the title “BOOKSHELF; Review: A Startup in Focus; Snapchat was born when casual photos replaced text messages among Stanford students. It now boasts 187 million daily users.”)

The book under review, is:
Gallagher, Billy. How to Turn Down a Billion Dollars: The Snapchat Story. New York: St. Martin’s Press, 2018.

Victorian Britain Was “the Most Innovative, Advanced, Sophisticated and Prosperous Economy on the Planet”

(p. A19) Britain rose to global power over a long 18th century that began in 1688 with the Glorious Revolution and closed at Waterloo in 1815. Decline marked the 20th century, especially with the loss of both empire and commercial dynamism under the strain of two world wars. David Cannadine’s “Victorious Century” charts the period between–one in which Britain could be seen as the most innovative, advanced, sophisticated and prosperous economy on the planet.
. . .
Mr. Cannadine presents the liberal spirit of progress as the hero of his tale. It guided Britain through conflicts, social disparities and political transitions while pointing toward a better society.

For the full review, see:
William Anthony Hay. “BOOKSHELF; The Spirit of Progress; Britain managed to balance change and continuity as turmoil and revolution overtook the Continent. Still, the change proved decisive.” The Wall Street Journal (Tuesday, Feb. 20, 2018): A19.
(Note: ellipsis added.)
(Note: the online version of the review has the date Feb. 19, 2018, and has the title “BOOKSHELF; Review: The U.K.’s ‘Victorious Century’; Britain managed to balance change and continuity as turmoil and revolution overtook the Continent. Still, the change proved decisive.”)

The book under review, is:
Cannadine, David. Victorious Century: The United Kingdom, 1800-1906, The Penguin History of Britain. New York: Viking, 2017.

Rival Retailers Failed in Effort to Cut Off Ikea’s Supplies

(p. B5) Ingvar Kamprad, born on a farm in the rock-strewn Swedish region of Småland, got his start as a merchant at around age 5 by buying matches in bulk and reselling them to neighbors.
He went on to pull off a rare feat: Creating a global retailing powerhouse, the furniture chain IKEA, with over 400 stores, in a business that generally has defied globalization. IKEA’s furniture has delighted bargain seekers for decades and made millions of dorm rooms and first apartments habitable, despite maddening the many customers who found the assembly instructions baffling.
. . .
One of his most successful notions was that furniture could be shipped and warehoused much more cheaply in disassembled form.
. . .
Rival retailers in Sweden, shocked by IKEA’s low prices, pressured furniture makers to cut off supplies to Mr. Kamprad’s company. That served only to make IKEA stronger as Mr. Kamprad found he could buy furniture much more cheaply from Polish plants. The search for foreign suppliers also helped IKEA turn itself into an international company.
. . .
Mr. Kamprad remained a penny-pincher, flying economy class and lecturing his employees that waste was sinful, according to “Leading by Design,” a 1999 biography by Bertil Torekull.

For the full obituary, see:
James R. Hagerty and Saabira Chaudhuri. “IKEA’s Founder Dies at 91.” The Wall Street Journal (Monday, January 29, 2018): B5.
(Note: ellipses added.)
(Note: the online version of the obituary has the date Jan. 28, 2018, and has the title “Ingvar Kamprad Built Global IKEA Chain From a Single Furniture Store in Sweden.”)

The autobiography of Kamprad, mentioned above, is:
Kamprad, Ingvar, and Bertil Torekull. Leading by Design: The Ikea Story New York: HarperCollins, 1999.

Virtual Reality Was Intended as a Complement to Physical Reality, Not as a Substitute

(p. A17) The illusion of presence is what drove Mr. Lanier from the start. He envisioned VR not as an alternative to physical reality but as an enhancement–a way to more fully appreciate the wonder of existence. More conventional individuals, their senses dulled by the day-to-day, may be drawn to virtual reality because it seems realer than real; he considered it a new form of communication. “I longed to see what was inside the heads of other people,” he writes. “I wanted to show them what I explored in dreams. I imagined virtual worlds that would never grow stale because people would bring surprises to each other. I felt trapped without this tool. Why, why wasn’t it around already?”
“Dawn of the New Everything” is full of such self-revelatory moments. The author grew up an only child in odd corners of the Southwest, first on the Texas-Mexico border, then in the desert near White Sands Missile Range. When he was nine, his mother, a Holocaust survivor, was killed in a car crash on the way home from getting her driver’s license. The tract house they’d bought burned down the day after construction was completed. The insurance money never came, so Jaron and his father lived in tents in the desert until they could afford to build a real home–which turned out to be a mad concoction of geodesic domes of Jaron’s own design. They called it Earth Station Lanier.
. . .
Lacking a degree from high school, never mind college, he nonetheless parlayed his virtual-reality obsession into a company, VPL Research, that for a few years in the late ’80s made VR seem real, if only in a lab setting. Then came board fights and bankruptcy, and VR disappeared from public view for more than 20 years.
What went wrong at VPL? Unfortunately, you won’t find out here. Mr. Lanier warns us he isn’t going to deliver a blow-by-blow; instead we get a disjointed sequence of half-remembered anecdotes. What does come through is his ambivalence about going into business at all, and his even deeper ambivalence toward writing about it.

For the full review, see:
Frank Rose. “BOOKSHELF; The Promise of Virtual Reality; The story of VR, the most immersive communications technology to come along since cinema, as told by two of its pioneers.” The Wall Street Journal (Tuesday, February 6, 2018): A17.
(Note: ellipsis added.)
(Note: the online version of the review has the date Feb. 5, 2018, and has the title “BOOKSHELF; Review: The Promise of Virtual Reality; The story of VR, the most immersive communications technology to come along since cinema, as told by two of its pioneers.”)

The book under review, is:
Lanier, Jaron. Dawn of the New Everything: Encounters with Reality and Virtual Reality. New York: Henry Holt & Company, 2017.

Serial Breakthrough Innovators Have “Almost Maniacal Focus”

(p. C4) It’s 6 a.m., and I’m rushing around my apartment getting ready to fly to California to teach an innovation workshop, when my 10-year-old son looks at me with sad eyes and asks, “Why are you always busy?” My heart pounds, and that familiar knife of guilt and pain twists in my stomach. Then a thought flickers through my head: Does Jeff Bezos go through this?
I recently finished writing a book about innovators who achieved multiple breakthroughs in science and technology over the past two centuries. Of the eight individuals I wrote cases about, only one, Marie Curie, is a woman. I tried to find more, even though I knew in my scientist’s heart that deliberately looking for women would bias my selection process. But I didn’t find other women who met the criteria I had laid out at the beginning of the project.
. . .
The politically correct thing to say at this point is that expanding the roster of future innovators to include more women will require certain obvious changes in how we handle family life: Men and women should have more equal child-care responsibilities, and businesses (or governments) should make affordable, quality child care more accessible. But I don’t think it is as simple as that.
In my own case, I can afford more child care, but I don’t want to relinquish more of my caregiving to others. From the moment I first gave birth, I felt a deep, primal need to hold my children, nurture them and meet their needs. Nature is extremely clever, and she has crafted an intoxicating cocktail of oxytocin and other neurochemicals to rivet the attention of parents on their children.
The research on whether this response is stronger for mothers than for fathers is inconclusive. It is tough to compare the two, because there are strong gender differences in how hormones work. Historically, however, women have taken on a larger share of the caregiving responsibilities for children, and many (myself included) would not have it any other way.
Is such a view hopelessly retrograde, a rejection of hard-won feminist achievements? I don’t think so.
The need to connect with our children does not prevent women from being successful. There are many extremely successful women with very close relationships with their children. But it might get in the way of having the almost maniacal focus that the most famous serial breakthrough innovators exhibit.
I’m no Marie Curie, but I do have obsessive tendencies. If I did not have a family, I would routinely work until 4 a.m. if I had an interesting problem to chase down. But now I have children, and so at 5 p.m., I need to dial it back and try to refocus my attention on things like homework and making dinner. I cannot single-mindedly focus on my work; part of my mind must belong to the children.
This doesn’t mean that mothers cannot be important innovators, but it might mean that their careers play out differently. Their years of intense focus might start later, or they might ebb and surge over time. The more we can do to enable people to have nonlinear career paths, the more we will increase innovation among women–and productivity more generally.

For the full commentary, see:
Melissa Schilling. “Why Women Are Rarely Serial Innovators; A single-minded life of invention is hard to combine with family obligations. One solution: ‘nonlinear’ careers.” The Wall Street Journal (Saturday, Feb. 3, 2018): C4.
(Note: ellipsis added.)
(Note: the online version of the commentary has a date of Feb. 2, 2018.)

Schilling’s commentary is related to his book:
Schilling, Melissa A. Quirky: The Remarkable Story of the Traits, Foibles, and Genius of Breakthrough Innovators Who Changed the World. New York: PublicAffairs, 2018.