Musk Fights for Right of Individuals in Sweden to Enter into Contracts

(p. A15) Sweden is the West’s most corporatist society. Powerful interest groups, often described as “social partners,” use collective bargaining to set rents for apartments and wages earned in labor markets.

This model is being challenged by Tesla CEO Elon Musk, who is refusing to enter into collective wage agreements with Swedish trade unions. The unions have responded with strikes and blockades on Tesla operations in the country.

. . .

Liberal democracy presupposes fundamental rights and freedoms. Some of these, such as the freedoms of opinion, press and expression, are enshrined in the Swedish constitution. But the right of the individual to enter into contracts isn’t similarly guaranteed.

. . .

Liberal democracy is being threatened globally by growing populist and illiberal movements. The government in Stockholm should counteract this threat by strengthening people’s individual rights and freedoms in the Swedish constitution. If this happens, Mr. Musk will have given Sweden a great gift.

For the full commentary, see:

Lars Jonung. “Musk Fights Sweden’s Unions.” The Wall Street Journal (Wednesday, February 14, 2024): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date February 13, 2024, and has the same title as the print version.)

The Applause at Davos for Milei’s Defense of Free Market Capitalism “Was More Than Polite”

(p. A17) There were no marches for Adam Smith or posters of Milton Friedman at Davos this year, but the applause for the combative defense of free markets by Argentina’s new libertarian President Javier Milei was more than polite. Citing the contrast between ages of stagnation and the miracle of accelerating progress in the modern era, Mr. Milei reminded his audience that “far from being the cause of our problems, free-trade capitalism as an economic system is the only instrument we have to end hunger, poverty and extreme poverty across our planet.”

His words resonated because, as one heard in panel after panel, the empirical foundations of the fashionable statist view appear to be crumbling. For now at least, the China miracle seems to be over. Beijing isn’t only suffering one economic shock after another. Its worst problems—demographic decline, a property bubble, overinvestment in manufacturing, and fear of arbitrary state actions against both foreign and domestic businesses—are the result of government planning gone wrong. As China doubles down on repression, its economic problems get worse.

Fifteen years after the financial crisis, meanwhile, tightly regulated Europe has fallen behind the U.S. Using chained 2015 dollars to minimize the effect of currency fluctuations, total European Union gross domestic product in 2008 was 81% that of the U.S. In 2022 it was 73%, hardly an argument for the European way.

For the full commentary, see:

Walter Russell Mead. “GLOBAL VIEW; Davos Turns Gently to the Right.” The Wall Street Journal (Tuesday, Jan. 23, 2024): A17.

(Note: the online version of the commentary has the date January 22, 2024, and has the same title as the print version.)

Milton Friedman Made the Case for Freedom to 15 Million Viewers

New York Times reviewer Szalai says that watching Milton Friedman’s “Free to Choose” documentary today is a surreal experience. To the contrary, I say that watching Milton Friedman’s documentary today is an exhilarating experience and watching the the evening news today is a surreal experience. (As a graduate student at the University of Chicago, I was in the audience for a couple of the episodes of Milton Friedman’s “Free to Choose” documentary.)

(p. C1) The documentary series “Free to Choose,” which aired on public television in 1980 and was hosted by the libertarian economist Milton Friedman, makes for surreal watching nowadays. Even if Ronald Reagan would go on to win the presidential election later that year, it was still a time when capitalism’s most enthusiastic supporters evidently felt the need to win the public over to a vision of free markets and minimal government.  . . .

They had an enormous audience: The 15 million viewers who watched the first episode saw an avuncular Friedman (diminutive and smiling), leaning casually against a chair in a Chinatown sweatshop (noisy and crowded), surrounded by women pushing fabric through clattering sewing machines. “They are like my mother,” Friedman said, gesturing at the Asian women in the room. She had worked in a factory too, after immigrating as a 14-year-old from Austria-Hungary in the late 19th century. Friedman explained that these low-wage garment workers weren’t being exploited; they were gaining a foothold in the American land of plenty. The camera then cut to a tray of juicy steaks.

For the full review, see:

Jennifer Szalai. “Sounding an Alarm Over America’s Values.” The New York Times (Saturday, February 18, 2023): C1 & C4.

(Note: ellipsis added.)

(Note: the online version of the review was updated Feb. 17, 2023, and has the title “Is the Marriage Between Democracy and Capitalism on the Rocks?”)

The book based on Milton Friedman’s documentary is:

Friedman, Milton, and Rose D. Friedman. Free to Choose: A Personal Statement. New York: Harcourt Brace Jovanovich, Inc., 1980.

Long Waits for Italian Cabs Due to Regulations Limiting More Cabs and Ride-Sharing

(p. A4) Returning to Rome from Naples one Monday afternoon in June [2023], a train trip that takes just over an hour, Daniele Renzoni said that he and his wife waited for more than an hour and a half at Termini station for a cab under a blazing sun.

“Just image a long line of grumbling, frustrated people, complaining, cursing. Hot day, angry tourists, there’s not much else to say,” said Mr. Renzoni, who is retired. “Taxi drivers will tell you there’s too much traffic, too many requests, too much everything, but the fact is, the customer pays.”

The situation is “a disgrace to Italy,” said Furio Truzzi, president of the consumer rights group Assoutenti, one of several associations that protested the shortage.

. . .

Thanks to the taxi lobby, ride-sharing services are almost nonexistent in Italy, where Uber is the only platform in use, with many restrictions.

The government lost an opportunity for real change, said Andrea Giuricin, a transportation economist at a research center at the University of Milan Bicocca. He said the best way to meet consumer needs would be to increase the number of licenses for Italy’s chauffeur services, known as N.C.C., which work with Uber.

“It’s very difficult in Italy” because “there isn’t a culture of liberalization in general,” creating little opportunity for competition, said Professor Giuricin. Taxis “are a small but powerful lobby” that easily influences politics, “which is very weak” in Italy, he said.

Angela Stefania Bergantino, a professor of transportation economics at the University of Bari, pointed out that previous governments had tried to open up the taxi market. But they failed.

“The problem is that taxis are regulated by municipal governments, which can find themselves captive in the sense that it is difficult for City Hall to implement policies that the cab lobby doesn’t like,” she said. “These are lobbies that have effective strike tools,” like wildcat strikes or traffic blockages that can paralyze entire cities, she said.

. . .

Above all, though licenses are issued by the city, they can then be sold by the drivers, for sums that can reach 250,000 euros, or about $276,000, depending on the city — a retirement nest egg for many. With an influx of new licenses, the value of an existing license would depreciate.

City administrators fear cabbies could revolt and strike if the status quo changes. “If I decide to issue new licenses,” said Eugenio Patanè, Rome’s city councilor in charge of transportation, “I’m going to find 1,000 taxis blocking traffic in Piazza Venezia,” the downtown Rome square that taxi drivers habitually clog while protesting.

For the full story, see:

Elisabetta Povoledo. “Getting a Cab in Italy Is Hard. But Remedying That Isn’t Easy.” The New York Times (Friday, August 11, 2023): A4.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the date Aug. 10, 2023, and has the title “Getting a Taxi in Italy Is Too Hard. Fixing That Is Not Easy.”)

Milton Friedman’s “Unflinching Defense” of Libertarianism

(p. A3) . . . [Milton] Friedman was highly influential. In academia, he did pioneering work on consumer behavior, monetary history and the unstable relation between inflation and unemployment. Outside the ivory tower, he is remembered for his unflinching defense of classical liberalism—a position that today is often called libertarianism. “Capitalism and Freedom” is the best entry into Friedman’s lucid mind. You will enjoy reading it even if you disagree with most of his judgments. A socialist student at Harvard once told me it was one of his favorite books. “Why?” I asked. “Because it clearly explains the point of view I have to argue against.”

For the full review, see:

N. Gregory Mankiw. “Five Best: Economics Primers.” The Wall Street Journal (Saturday, Aug. 18, 2023): A3.

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

(Note: the online version of the review has the date June 2, 2023, and has the title “Five Best: Economics Primers.”)

Friedman’s best popular book, developed from lectures first presented at Wabash College that were co-organized by my mentor Ben Rogge, is:

Friedman, Milton. Capitalism and Freedom. Chicago: The University of Chicago Press, 1962.

The Enemies of Horatio Alger “Are Out to Get the American Dream”

(p. A13) Of all the institutions for investigative journalists to put under the microscope, the Horatio Alger Association of Distinguished Americans sure is a strange target.

The charity says it has awarded more than $245 million in college scholarships to 35,000 students since 1984. Its 300 or so members cross the political, cultural and business-success spectrum and include Michael Bloomberg and Oprah Winfrey.

So what explains the recent onslaught of critical press coverage? The New York Times has put eight reporters on the case and devoted two 4,000-word Sunday front-page pieces in the past two months to the Horatio Alger Association and its members. ProPublica, which styles itself “an independent, nonprofit newsroom that produces investigative journalism with moral force,” produced a 5,000-word article that credited four reporters.

The journalists and the advocates they quote say it’s a matter of judicial ethics, highlighting Justice Clarence Thomas’s role as an honorary board member of the Horatio Alger Association and his friendships with the association’s members, some of whom are prosperous.

. . .

The venom directed at the Horatio Alger Association, though, isn’t only about Justice Thomas and the court. The association’s critics are out to get the American dream.

The association’s website explains that its mission is to “educate all youth about the limitless possibilities that are available through the American free-enterprise system.” The group was founded to dispel the myth “that the American dream was no longer attainable.” Its members are “role models whose experiences exemplify that opportunities for a successful life are available to all individuals who are dedicated to the principles of integrity, hard work, perseverance and compassion for others.”

For the full commentary, see:

Ira Stoll. “Why the Left Hates Horatio Alger.” The Wall Street Journal (Saturday, Aug. 12, 2023): A13.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date August 11, 2023, and has the same title as the print version.)

The Talented, Wealthy, Ambitious, and Hardworking Vote with Their Feet Against Communist China

(p. B12) Is China reopening to the world or turning inward again?

Many would argue the latter, but in one important way, the country is still going global: Residents appear to be leaving at a faster clip than they have in years, including a significant number of the wealthy and well-educated the nation needs to keep modernizing and investing.

. . .

Rebounding emigration is also striking in the context of a declining overall birthrate, and suggests that Beijing must do far more to convince talent, both domestic and foreign, that China is a good place to put down roots if it wants to avoid a steeper growth slowdown in the years ahead.

. . .

Rising net emigration also mirrors much smaller influxes of foreign talent in recent years—another trend that threatens to slow China’s climb up the technological ladder. Foreign residents of Shanghai and Beijing numbered just 163,954 and 62,812 in 2020, according to official data, down 21% and 42%, respectively, since 2010. The pandemic is clearly a major factor. But given the well-publicized rising tensions between China and the West, slowing growth and the rising risks of detention and investigation for what used to be considered routine business by foreigners in China, a portion of that decrease seems very likely to persist.

For much of the new millennium, China has been a place where the ambitious, hardworking and lucky could often get ahead. But in today’s China—more focused on security and control, less on growth—it is no longer clear how true that really is.

Some people, at least, seem to be voting with their feet.

For the full commentary, see:

Nathaniel Taplin. “HEARD ON THE STREET; China’s Brain Drain Threatens Its Future.” The Wall Street Journal (Thursday, July 6, 2023): B12.

(Note: ellipses added.)

(Note: the online version of the commentary has the date July 5, 2023, and has the same title as the print version.)

Langlois’s Entrepreneurs Allowed the Masses to Flourish in Spite of Chandler’s Corporatism

(p. D7)Students of business have long argued about why managerial capitalism arose and what led to its demise. At the heart of this debate is an age-old conundrum: What should the boundaries of a corporation be? What goods and services should it produce and which should it buy from others? Executives stake careers on such questions, but economists, historians and social critics have tried to answer them as well.

It is in such a context that Richard Langlois offers “The Corporation and the Twentieth Century,” a monumental history of American business during the eventful decades when managers ruled. Among much else, he makes the argument that firms embraced managerial capitalism in response to the century’s cataclysmic events and the heavy-handed government intercessions they prompted. When the crises and related policies finally fell away, we saw the resurgence of the focused, entrepreneurial enterprise that predominates today.

Mr. Langlois, an economics professor at the University of Connecticut, pushes back in particular against the explanation laid out by Alfred Chandler, the father of American business history, in his great work, “The Visible Hand” (1977).

. . .

Once established, managerial capitalism took on a life of its own. “The hierarchy itself,” Chandler wrote, “became a source of permanence, power, and continued growth.”

But Mr. Langlois tells a different story, contending that managerial capitalism didn’t truly flourish until later. He notes that, despite a wave of mergers, most large firms in the early 20th century were still controlled by their owners, thanks to the extensive shareholdings of financiers such as John D. Rockefeller or investment banks such as J.P. Morgan—owners not especially known as silent partners. The real heyday of the managers was yet to come.

Enter the reform-minded Progressive movement, which aimed to curtail the excesses of just such tycoons. Easily distinguished from today’s progressives by their capital letter and lack of stated pronouns, the Progressives held that scientific techniques had solved the problems of industrial management and would do likewise for those of government administration, which was to be entrusted to “experts.”

These Progressives brought with them a hubristic “managerial model of the world” that called forth a managerial form of capitalism, one designed to clasp the meddlesome hand of government. The ensuing era of federal regulation offered big business relief from haphazard and potentially more radical state regulation, but it also shifted power over firms toward Washington and the federal judiciary.

The ground was thus laid for managerial capitalism to be turbocharged by “the great catastrophes” of World War I, the Depression and World War II.

. . .

(p. D8) Mr. Langlois recognizes that the deregulating spirit of the 1970s was part of a change in the Zeitgeist. He describes, for example, how the Bay Area’s hippie ethos intersected with the rise of the personal computer. The resulting digital revolution upended corporate hierarchies and changed much of America’s output from the physical to the intangible. Ascendant tech firms ushered in a new entrepreneurial paradigm. The center of business gravity shifted from Manhattan boardrooms and Midwestern factories to the freewheeling West Coast.

Vietnam and inflation, meanwhile, sapped faith in government as well as in the dollar, and a series of countries (lately China) would soon replace the U.S. as the world’s factory. The unbundling of corporations was accelerated by low-cost overseas manufacturing and by the new “barbarians at the gate” from Wall Street.

. . .

The questions at the heart of “The Corporation and the Twentieth Century” . . . serve as the engine of a remarkable alternative history of what Henry Luce famously called the American Century. It’s a work propelled by vast learning, a focus on business and a consistent point of view in favor of free markets.

For the full review see:

Daniel Akst. “BOOKSHELF; The Rise and Fall of Managers.” The Wall Street Journal (Saturday, July 1, 2023): C7-C8.

(Note: ellipses added.)

(Note: the online version of the review has the date June 30, 2023, and has the title “BOOKSHELF; ‘The Corporation and the Twentieth Century’ Review: The Rise and Fall of Managers.”)

The book under review is:

Langlois, Richard N. The Corporation and the Twentieth Century: The History of American Business Enterprise. Princeton: Princeton University Press, 2023.

See also:

Diamond, Arthur M., Jr. “Review of Richard N. Langlois, the Dynamics of Industrial Capitalism: Schumpeter, Chandler and the New Economy.” EH.Net Economic History Services (2009).

Opponents of Geoengineering View Global Warming as Nature’s Just Punishment of Us for Our Indulging in Technology and Capitalism

(p. A13) Make no mistake—Mr. Myhrvold is concerned about climate change.  . . .

He laments that policy makers largely scorn geoengineering—human interventions in the Earth’s natural systems to thwart or neutralize climate change.

. . .

Geoengineering is about “deliberately trying to reduce climate change.” Excess CO2 traps a little less than 1% of heat from the sun, “so if we could make the sun 1% dimmer, we could shut off climate change.” When Mount Pinatubo, a volcano in the Philippines, erupted in 1991, it lowered world-wide temperatures by 1 degree Celsius for about 18 months. Human-emitted particulate pollution has historically offset about 20% of human-emitted CO2. “Ironically,” he says, “the Clean Air Act made our air better but hurt climate change.”

The simplest solar-radiation management scheme, Mr. Myhrvold says, “is to emit particles in the stratosphere to mimic Mount Pinatubo. We invented a particularly elegant way to do this with balloons and a pipe to the sky.” By “we,” he means Intellectual Ventures, the company Mr. Myhrvold founded in 2000 after leaving Microsoft, where he spent 13 years and rose to the position of chief technology officer. Intellectual Ventures “creates, incubates and commercializes” new inventions.

“Marine cloud brightening” is another solar-related intervention. “The idea is to increase the number and size of low clouds that form over the oceans so that more incoming sunlight bounces back into space instead of heating the ocean.” Scientists have proposed a variety of ways to do this. One, which Mr. Myhrvold’s company has explored, is to outfit ships with equipment to spray seawater into the air as they traverse the ocean. “The salt particles can serve as nuclei for water vapor to condense into droplets, thus forming clouds.”

. . .

“Opponents worry that once you have geoengineering, people won’t make sacrifices to cut emissions. They want a sword of Damocles hanging over humanity as a means to force us to follow their ideology.”

Mr. Myhrvold uses an analogy he describes as “horrible in some ways.” When the AIDS epidemic hit, some people saw it as punishment from God. “Their attitude was, ‘This is what you get if you indulge in the practices we don’t approve of.’ ” In climate change, he says, this moralistic attitude takes the following form: “I don’t like aspects of our society, I don’t like technology, I don’t like capitalism, and this is nature’s retribution. And so we have to change the way we live.” Such beliefs “have become a very powerful disincentive, particularly for academic researchers.”

. . .

“You could imagine a world in which cardiology doesn’t exist because the medical profession said, ‘You fat bastards. You did it to yourselves. We’re not going to help you.’ ”

For the full interview, see:

Tunku Varadarajan, interview. “THE WEEKEND INTERVIEW; Emission Cuts Will Fail. What to Do Then?” The Wall Street Journal (Saturday, Feb. 18, 2023): A13.

(Note: ellipses added.)

(Note: the online version of the interview has the date February 17, 2023, and has the title “THE WEEKEND INTERVIEW; Emission Cuts Will Fail to Stop Climate Change. What to Do Then?”)

William F. Buckley, Sr. Spent $100,000 to Fund His Son’s Entrepreneurial Start-Up: National Review

In my Openness book, I give reasons why risky innovative start-ups at fragile early stages almost always need to be substantially self-funded. When close relatives invest, I include that as self-funding.

(p. A15) . . . “William F. Buckley Sr.: Witness to the Mexican Revolution, 1908-1922,” [is] a fascinating if uneven book by the independent historian John A. Adams Jr.

. . .

The business climate in Mexico was promising for foreigners like the Buckleys, thanks to the pro-development policies of its autocratic president, Porfirio Díaz, who would rule the country for more than three decades.

Buckley’s prominence among the American expatriate community made him a natural conduit between officials in the U.S. and Mexico once the latter country was plunged into chaos following the ouster of Díaz in 1911. Buckley was Zelig-like, cropping up repeatedly at key moments. He visited the U.S. Embassy in February 1913 during the Decena Tragíca (Ten Tragic Days), when Francisco Madero, Díaz’s successor, was overthrown in a coup led by Gen. Victoriano Huerta, instigating a spasm of violence that killed thousands in Mexico City.

. . .

Buckley favored Huerta, serving as the regime’s legal counsel in negotiations with the U.S. aimed at preventing hostilities between the two nations. He was thus dismayed by the ascendance of Venustiano Carranza and, later, Álvaro Obregón. Both leaders endorsed the Mexican Constitution of 1917, including Article 27, which asserted national ownership of natural resources while circumscribing the economic power of the church. These provisions horrified Buckley, who was a staunch believer in free-market capitalism as well as a devout Roman Catholic. In the bulletin of the American Association of Mexico, an advocacy group he founded in 1919, Buckley denounced the “dangerous Bolshevist movement” that had taken root in Mexico.

. . .

. . ., Mr. Adams consulted with several Buckley family members, including a descendant based in Mexico City, as well as Judge James L. Buckley, the sole survivor among the 10 children born to Will and his wife, Aloise. Judge Buckley, who recently celebrated his 100th birthday, contributed a foreword acknowledging the importance of Mexico to the family’s understanding of itself, writing that “it had somehow permeated our DNA.”

. . .

As another of his offspring once said, Buckley’s experience in Mexico “deepened his frontier suspicions of autocratic [leaders] (and big government in general), and this attitude dyes all his children strongly.” Surely that was true of Buckley’s favorite son, William F. Buckley Jr., who, after serving a short stint with the CIA in Mexico City (he, too, was fluent in Spanish), founded National Review in 1955, which remains one of the leading voices of the conservative movement. The elder Buckley helped fund his son’s upstart venture with a $100,000 contribution from a fortune that traced its origins to Mexico during the most tumultuous period of that nation’s history.

For the full review, see:

Andrew R. Graybill. “BOOKSHELF; Conservatism’s Mexican Roots.” The Wall Street Journal (Saturday, March 27, 2023): A15.

(Note: ellipses, and bracketed word, added.)

(Note: the online version of the review has the date March 26, 2023, and has the title “BOOKSHELF; ‘William F. Buckley Sr.’ Review: Conservatism’s Mexican Roots.”)

The book under review:

Adams, John A., Jr. William F. Buckley Sr.: Witness to the Mexican Revolution, 1908–1922. Norman, OK: University of Oklahoma Press, 2023.

Regulators Are Bad at Monitoring Unhealthy Banks

(p. A26) Silicon Valley Bank’s failure looks a bit like an S.&L. crisis in miniature. Like its 1980s counterparts, S.V.B. grew extremely rapidly, had many assets parked in fixed, long-term bonds, and was done in when inflation caused the Fed to raise interest rates, raising the cost of keeping deposits.

Like the S.&L.s, Silicon Valley Bank was heavily concentrated. It catered to start-ups for whom an S.V.B. account was a matter of status. One tech savant who had recently changed jobs (aren’t they always switching jobs?) told me that in his experience, roughly two thirds of start-ups banked with S.V.B. (the bank claimed that nearly half the country’s venture capital-backed technology and life science companies were customers).

. . .

The regulators clearly failed to monitor S.V.B.’s unhealthy mismatch of assets and liabilities.

. . .

Once you take risk out of a part of a bank’s operations, it is hard to let market principles govern the rest.

. . .

In past bank failures, uninsured depositors did not lose all — 10 to 15 percent was typical. And in this episode, there wasn’t any systemically bad asset à la mortgages in 2008. Given that the risk was contained, and that the Federal Reserve provides liquidity to banks facing runs (and provided emergency liquidity this week), allowing uninsured depositors of banks that fail to suffer a haircut might have been healthier for the system in the long run.

For the full commentary, see:

Roger Lowenstein. “The Bank Rescues Just Changed Capitalism.” The New York Times (Thursday, March 16, 2023): A26.

(Note: ellipses added.)

(Note: the online version of the commentary has the date March 15, 2023, and has the title “The Silicon Valley Bank Rescue Just Changed Capitalism.”)