Category: Capitalism

“Two Self-Made Mill Owners” in Golden Age of Capitalism Collected and Preserved “Literary Treasures”

(p. C6) A consortium of British libraries and museums has announced that it successfully raised more than $20 million to buy a “lost” library containing rare manuscripts by Robert Burns, Walter Scott and the Brontës, heading off an auction and preserving the collection intact.

. . .

“A collection of literary treasures of this importance comes around only once in a generation,” Richard Ovenden, the head of the Bodleian Libraries at Oxford, said in a news release earlier this month announcing the deal.

. . .

Alfred and William Law, two self-made mill owners who grew up less than 20 miles from the Brontë home in Haworth (which is now the Brontë Parsonage Museum), began collecting what became the Honresfield Library in the 1890s.

. . .

In the announcement, Gabriel Heaton, the Sotheby’s specialist who organized the planned sale, called it “a collection like no other that has come to market in recent decades.”

For the full story, see:

Jennifer Schuessler. “$20 Million Raised to Preserve a ‘Lost Library’.” The New York Times (Saturday, December 25, 2021): C6.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 24, 2021, and has the title “Group Raises $20 Million to Preserve ‘Lost’ Brontë Library.”)

“People Come to This Country to Build Amazing Businesses”

(p. 1) WASHINGTON — ADW Capital Partners would appear to be the kind of hedge fund that Democrats on the Senate Finance Committee would like to tax more heavily: small but growing fast, with $330 million in assets, an incorporation in Delaware but doing business in Florida, and an offshore “feeder” corporation shielding some of its clients from U.S. taxation.

No wonder, then, that its owner, Adam Wyden, has come out as a vocal and vociferous critic of the tax increases being pushed by the committee’s chairman, Senator Ron Wyden of Oregon — his father.

. . .

(p. 25) “The issue is bigger than my father. I’m not interested in discussing anything personal,” he said in a brief phone call before declining to go further. He said he was “not a Trumper” and “not an Ocasio” — referring to Representative Alexandria Ocasio-Cortez of New York, an icon of the Democratic left. He is a libertarian, he said, raised in Washington, D.C., who moved to Florida “to get away from the food fight.”

But he has gone public with his grievances against his father’s proposals, in an appearance last month on CNBC that he recommended for viewing, and in a tweet responding to the elder Mr. Wyden’s assertion that Elon Musk and other billionaires should not get to decide whether to pay taxes based on a Twitter poll.

“Why does he hate us / the American dream so much?!?!?!?!” Adam Wyden said in the Twitter post last month. “Reality is: most legislators have never built anything … so I guess it’s easier to mindlessly and haphazardly try and tear stuff down.”

. . .

“Thankfully, I think I can compound” investment gains “faster than my dad and his cronies can confiscate it,” Adam Wyden wrote.

Lauded on CNBC’s “Squawk Box,” he elaborated on air. “Amazon, Netflix, Google, Tesla: I mean, we are the envy of the rest of the world,” he said. “People come to this country to build amazing businesses, and I want that to continue.”

Without referring to his son, the elder Mr. Wyden suggested a possible reason for his stance: “Many millionaires perhaps may consider themselves tomorrow’s billionaires.”

For the full story, see:

Jonathan Weisman. “Rift Between Senator and Son Shows Challenge of Taxing the Ultrarich.” The New York Times, First Section (Sunday, December 12, 2021): 1 & 25.

(Note: ellipses added.)

(Note: the online version of the story was updated Dec. 11, 2021, and has the title “Rift Between Senator and Son Shows the Challenge of Taxing the Ultrarich.” The online version says that the article appeared on p. 24 of the New York edition of the print version.)

Communist China Pays World Bank for Higher Ranking in “Doing Business” Report

(p. A1) The World Bank canceled a prominent report rating the business environment of the world’s countries after an investigation concluded that senior bank management pressured staff to alter data affecting the ranking of China and other nations.

The leaders implicated include then World Bank Chief Executive Kristalina Georgieva, now managing director of the International Monetary Fund, and then World Bank President Jim Yong Kim.

The episode is a reputational hit for Ms. Georgieva, who disagreed with the investigators’ conclusions. As leader of the IMF, the lender of last resort to struggling countries around the world, she is in part responsible for managing political pressure from nations seeking to advance their own interests. It was also the latest example of the Chinese government seeking myriad ways to burnish its global standing.

(p. A10) The Doing Business report has been the subject of an external probe into the integrity of the report’s data.

. . .

The World Bank was in the middle of difficult international negotiations to receive a $13 billion capital increase. Despite being the world’s second largest economy, China is the No. 3 shareholder at the World Bank, following the U.S. and Japan, and Beijing was eager to see its power increased as part of a deal for more funding.

In October 2017, Ms. Georgieva convened a meeting of the World Bank’s country director for China, as well as the staff economists that compile Doing Business. She criticized “mismanaging the Bank’s relationship with China and failing to appreciate the importance of the Doing Business report to the country,” according to the investigative report’s summary of the meeting.

. . .

Ultimately, the team identified three data points that could be altered to raise China’s score, the investigative report said. For example, China had passed a law related to secured transactions, such as when someone makes a loan with collateral. The World Bank staff determined it could give China a significant improvement to its score for legal rights, citing the law as the reason.

World Bank employees knew the changes were inappropriate but “a majority of the Doing Business employees with whom we spoke expressed a fear of retaliation,” the investigative report said.

Although the data-gathering process for the 2018 report was finished, the World Bank’s economists reopened the data tables and altered China’s data, the investigative report said. Instead of ranking 85th among the world’s countries, China climbed to 78th due to the alterations.

For the full story, see:

Josh Zumbrun. “World Bank Cancels Report After Investigation.” The Wall Street Journal (Friday, Sept. 17, 2021): A1 & A10.

(Note: the online version of the story has the date September 16, 2021, and has the title “World Bank Cancels Flagship Report After Investigation.”)

Ray Dalio Lacks Principles in His Kowtowing to Chinese Communism

Ray Dalio has authored a book called Principles, but that does not imply that he has any. See the story below.

(p. B1) This year has been unsettling for Chinese business. The ruling Communist Party has gone after the private sector industry by industry. The stock markets have taken a huge hit. The country’s biggest property developer is on the verge of collapse.

But for some of the biggest names on Wall Street, China’s economic prospects look rosier than ever.

BlackRock, the world’s biggest asset manager, urged investors to increase their exposure to China by as much as three times.

“Is China investable?” asked J.P. Morgan, before answering, “We think so.” Goldman Sachs says “yes,” too.

Their bullishness in the face of growing uncertainty has puzzled China experts and drawn criticism from a wide political spectrum, from George Soros, the progressive investor, to congressional Republicans. Mr. Soros has called BlackRock’s stance a “tragic mistake” that’s “likely to lose money” for its clients and would “damage the national security interests of the U.S. and other democracies.”

. . .

(p. B5) Ray Dalio, founder of the hedge fund Bridgewater, wrote in late July [2021] that people in the West should not interpret Beijing’s crackdowns as “the Communist Party leaders showing their true anticapitalist stripes.” Instead, he wrote, the party believed those moves were “better for the country even if the shareholders don’t like it.”

The relationship has been good to Bridgewater so far. Mr. Dalio’s firm has raised billions of dollars from Chinese clients such as the China Investment Corporation, the sovereign wealth fund, and State Administration of Foreign Exchange, which manages the country’s currency reserves. (Bridgewater declined to comment.)

This is a balance that business has played with China for a long time: Say nice things to Beijing, lobby back home on China’s behalf, then ask for access to markets and capital.

Goldman Sachs became the first foreign bank to seek full ownership of a securities business in China in December. BlackRock, which describes China as an “undiscovered” market, hired a former regulator to head its China business. So many global financial firms are expanding in the country that there’s a talent war.

. . .

The Wall Street firms are apparently betting that China’s past successes will continue. They have a long track record on their side, but they would do well to remember what they constantly tell their customers: Past performance isn’t necessarily indicative of future results.

For the full commentary, see:

Li Yuan. “Uncertainty Is Rocking China. Why Is Wall Street Bullish?” The New York Times (Saturday, October 7, 2021): B1 & B5.

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

(Note: the online version of the commentary has the date Oct. 6, 2021, and has the title “China is Rocked by Uncertainty. Why is Wall Street Bullish?”)

Rogge and Friedman on Bread and Freedom

At the start and end of the movie above, you can hear the voice and thoughts of my Wabash College mentor Ben Rogge. His interview of Milton Friedman at the end is especially wonderful if you are a libertarian fan of Rogge and Friedman. I believe Rogge had an important hand in the production of this movie, as he did in a couple of movies from Liberty Fund. I think he also advised Milton Friedman on his famous “Free to Choose” television series. Rogge was a libertarian intellectual entrepreneur, who encouraged and enabled many now-more-famous libertarians to think, write, and speak. Whether he is remembered or forgotten, Rogge made a difference.

The movie is based on the book of the same title:

Brown, Susan Love, Karl Keating, David Mellinger, Patrea Post, Stuart Smith, and Catriona Tudor. The Incredible Bread Machine. San Diego: World Research, Inc., 1975.

(Note: the book is based on a poem by R.W. Grant that had the title “Tom Smith and His Incredible Bread Machine.” I believe, but have not confirmed my memory, that a version of Grant’s poem appears in the book by Love et al.)

“Old Pittsburgh Industrial Fortune” Sustained “Anti-Materialist Conceit of Auroville”

(p. C7) Utopias are not, by definition, found on this side of paradise. Yet that truth hasn’t stopped visionaries and seekers—not to mention knaves and fools—from trying to build communities on lofty principles and quixotic aspirations. One such wonderland is Auroville, a commune in India’s Tamil south whose heady origins can be traced to the incense-and-raga days of the 1960s. Akash Kapur’s “Better to Have Gone” is a haunting and elegant account of this attempt at utopia and of his family’s deep connections to it.

. . .

Mr. Kapur and his wife, Auralice—a name given to her by the Mother, who asserted the right to name all children born to her flock—both grew up in Auroville. Auralice was born in 1972, Mr. Kapur two years later. Auralice’s mother, Diane Maes, was a woman from rural Flanders who’d arrived at Auroville as an 18-year-old. Headstrong and flirtatious, she soon separated from the biological father of her daughter and took up with another Auroville man named John Walker, in many ways the book’s most compelling (and infuriating) character.

. . .

Unlike the bucolic Maes, Walker was born into privilege, his father the heir to an old Pittsburgh industrial fortune.

. . .

It’s easy to be irritated, even incensed at times, by Walker’s blithe aura of entitlement. The hardship of the early days at Auroville—when there was no running water or electricity—is mitigated in Walker’s case by his renting an air-conditioned room at a comfortable hotel in nearby Pondicherry. Whenever funds ran low, he wrote to his father for more.

Much of this money helped sustain the anti-materialist conceit of Auroville. The community depended on the bounty of rich residents like Walker, who placed their trust funds at the disposal of the Mother. Walker’s money paid for the drilling of wells, the building of roads and houses, the salaries of laborers, even Auroville’s bakery. He did not, of course, begrudge this parasitic relationship with utopia. Why would he? All he had to do was holler for dad.

For the full review, see:

Tunku Varadarajan. “Dawn of a New Humanity.” The Wall Street Journal (Saturday, July 24, 2021): C7.

(Note: ellipses added.)

(Note: the online version of the review has the date July 23, 2021, and has the title “‘Better to Have Gone’ Review: Dawn of a New Humanity.”)

The book under review is:

Kapur, Akash. Better to Have Gone: Love, Death, and the Quest for Utopia in Auroville. New York: Scribner, 2021.

Milton Friedman Will Be Vindicated on China

I was lucky to be able to take Milton Friedman’s Price Theory graduate course the last time he taught a full version of it. (I think he taught an abbreviated version a year or two later.) He was, and remains, one of my heroes. He predicted that China’s move to the market would also lead it to more political freedom. I suspect that he will still turn out to be correct, but with a longer delay than he or I thought likely. A dynamic economy depends on innovative entrepreneurship and innovative entrepreneurship depends on freedom of thought and speech. Xi is systematically destroying freedom of thought and speech in China; the house of cards will fall and Milton will be vindicated in the end.

(p. A15) “I predict that China will move increasingly toward political freedom if it continues its successful move to economic freedom.”

So spoke Milton Friedman in 2003. It seemed a good idea at the time, especially after the transformations of the dictatorships in Taiwan and South Korea into messy but functioning democracies.

. . .

Under Mr. Xi, Beijing has carried out genocide against China’s Uyghur minority, threatened Taiwan with invasion, shut down a pro-democracy newspaper in Hong Kong, covered up the origins of Covid-19, and so on. Even so, China’s economy continues to boom—it grew more than 18% in the first quarter from a year earlier—and Friedman now looks to have gotten it colossally wrong about capitalism and freedom.

For the full commentary, see:

William McGurn. “Milton Friedman Wrong About China?” The Wall Street Journal (Tuesday, June 29, 2021): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date June 28, 2021, and has the title “Was Milton Friedman Wrong About China?”)

“Creatively Destructive Innovation” Is Continuous in Book Publishing Industry

(p. A13) In 2000 the RAND Corporation invited a group of historians—including me—to address a newly pressing question: Would digital media revolutionize society as profoundly as Gutenberg and movable type? Two decades later, John Thompson’s answer is yes, but not entirely as predicted. And our forecasts were often wrong because we overlooked key variables: We cannot understand the impact of technologies “without taking account of the complex social processes in which these technologies were embedded and of which they were part.”

Mr. Thompson provides that context in “Book Wars” (Polity, 511 pages, $35), an expert diagnosis of publishers and publishing, robustly illustrated with charts, graphs, tables, statistics and case studies.

. . .

My warning to the RAND corporation was to avoid succumbing to the “Two Big Bangs Theory”—the assumption that there were only two world-changing events in the history of print, in or around 1450 and 2000. With books, change is a constant. In the last two centuries the publishing trade has dealt with one creatively destructive innovation after another—mechanized printing and papermaking, railway bookstalls and distribution networks, linotype and offset printing, photomechanical reproduction, paperbacking and books-of-the-month. The movies opened up vast new possibilities (and revenues) for novelists, who increasingly wrote with the screen in mind, as Ernest Hemingway did when he insisted on casting Gary Cooper in “For Whom the Bell Tolls.” And television supercharged book publicity, climaxing (so far) with Oprah. While Mr. Thompson is entirely right to conclude that the transformation of publishing in the past 20 years has been bewildering, that’s nothing new. In a dynamic capitalist economy, the dust never settles.

For the full review, see:

Jonathan Rose. “BOOKSHELF; Publishing In a Protean Age.” The Wall Street Journal (Monday, August 9, 2021): A13.

(Note: ellipsis added.)

(Note: the online version of the review has the date August 8, 2021, and has the title “BOOKSHELF; ‘Book Wars’ Review: Publishing in a Protean Age.”)

The book under review is:

Thompson, John B. Book Wars: The Digital Revolution in Publishing. Cambridge, UK: Polity Press, 2021.

Capitalist Innovations Made Rapid Covid-19 Vaccines Possible

(p. A15) The Wuhan lab appears to have operated, in part, with U.S. government grant funding, although American scientists had no oversight role. Chinese scientists allegedly pursued gain-of-function research, increasing the virulence and transmissibility of certain viruses. It isn’t unheard of for a virus to escape from a government-funded lab, and the evidence increasingly suggests that’s what happened in Wuhan, even as China dubiously points a finger at the U.S. military.

Regardless of which government, if any, contributed to the emergence of Covid-19, the pandemic was quickly controlled by innovation from the private economy. New vaccines and private protocols, not government mandates, mainly slowed the spread in workplaces and schools. The pandemic originated from government failures that had to be corrected by private actors.

Even if the lab-leak theory proves false, and it turns out that SARS-CoV2 passed directly from animals to humans, one could still argue the Chinese government’s actions created the pandemic. Beijing covered up evidence of the virus’s early spread and allowed international flights from Wuhan during January and February 2020 while locking down domestic travel.

. . .

American capitalism supported decades of innovation that created conditions conducive to the rapid development of the Covid vaccines. About 70% of the returns to medical research and development across the world come from the U.S., where price controls are less prevalent than elsewhere and companies compete to bring new treatments and cures to market. Without the U.S. market, investors would have shied away from funding the cumulative advances that eventually led to successful Covid vaccines. In this sense, the U.S. market-based healthcare economy saved the world from Covid-19. None of it would have happened in a government-run health system.

For the full commentary see:

Casey B. Mulligan and Tomas J. Philipson. “Government Failure Gave the World Covid.” The Wall Street Journal (Tuesday, Aug. 10, 2021): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date August 9, 2021, and has the same title as the print version.)

Jon Stewart’s Solyndra Riff Skewered Industrial Policy

Remember Solyndra? Apparently too few do. Today’s WSJ reports how the U.S. is imitating China’s “industrial policy” of subsidizing favored firms in favored industries such as green energy and semiconductors. To remind us that Larry Summers was right when he wrote that “government is a crappy venture capitalist,” I link above to Jon Stewart’s wise and funny send-up of the Solyndra debacle, first broadcast almost 10 years ago, on September 15, 2011.

The WSJ article mentioned above, is:

Ip, Greg. “West Dusts Off an Old Idea to Compete with China.” The Wall Street Journal (Fri., July 30, 2021): A1 & A7.

India’s Tata “Paid a Harsh Price” for Keeping Distance from Government

(p. A15) Mr. Raianu, a historian at the University of Maryland, is guilty of no hype when he titles his book “Tata: The Global Corporation That Built Indian Capitalism.”

. . .

No other company has dominated the history of its national commerce and industry quite as much as the house of Tata in India, where it is one of the few major businesses still regarded as unstained by overt corruption. Although family-run for most of its existence—the stubborn Indian norm for merchants—the Tata company was from an early date “unusual” among India’s corporate groups (Mr. Raianu says) in employing professional executives and “talented nonrelatives.” The company also “kept its distance from the state” in both colonial and postcolonial times. It gave only lukewarm support to the Indian National Congress, which meant that the Tatas had few political chips to cash when the Congress party came to govern a free India. It paid a harsh price for this aloofness when Air India—the Tatas’ thriving aviation arm—was nationalized by Prime Minister Nehru in 1953.

. . .

The Parsi character of the company has, in many ways, helped it to transcend the mud pit of Indian business. The Parsis are a minuscule community, numbering around 57,000 Indians today. Practitioners of Zoroastrianism, they fled to India in the eighth century when Persia came under the sway of Islam. They embraced Western ways more readily than other Indians and, as a result, thrived under the British. Parsis, writes Mr. Raianu, “typified the religious minority exempt from ritual restrictions of caste and guild systems, much like European Jews.” And so they were more ready to look outward—to foreign opportunities—than the hidebound Indian business castes.

For the full review, see:

Tunku Varadarajan. “BOOKSHELF; From Homestead to Hegemony.” The Wall Street Journal (Wednesday, July 14, 2021): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date July 13, 2021, and has the title “BOOKSHELF; ‘Tata’ Review: From Homestead to Hegemony.”)

The book under review is:

Raianu, Mircea. Tata: The Global Corporation That Built Indian Capitalism. Cambridge, MA: Harvard University Press, 2021.