Precariousness: In France it is Sought and it is Feared

Coombs and VanderHam on the April 3, 2006 extreme ski run, in which they both died.  Source of caption information, and of photo:  online version of the first NYT article cited below.

 

Some seem to seek risk:

(p. A1)  ”La Grave goes from tranquil to frightening and mad, and it’s so exhilarating to be in those moods,” Mrs. Coombs said in a telephone interview last week.  Her husband, she said, ”never found anything more perfect.”

Last month, Mr. Coombs slipped off a cliff and fell 490 feet to his death.  He was 48. He was trying to rescue Chad VanderHam, his 31-year-old protégé and skiing partner from the United States.  Mr. VanderHam had gone over the same cliff moments earlier.  He also died.

Their accident, during a recreational outing, has focused attention on extreme skiing and on this remote destination, high in the Alps about 50 miles east of Grenoble.

For the full story, see:

NATHANIEL VINTON.  "Skiing Beyond Safety’s Edge Once Too Often."  The New York Times (Wednesday, May 17, 2006):   A1 & C23.

 

Others seem to fear risk:

PARIS, April 8 – Standing amid the chaos of the protests here this week, Omar Sylla, 22, tried to explain why the French are so angry about what seems to many people like such a small thing: the French government’s attempt to loosen labor laws a bit by allowing employers the right to fire young workers without cause during a trial period on the job.

Even after President Jacques Chirac promised to shorten the period to one year from two, the protests continued, and French students and unions have vowed to keep demonstrating until the law is repealed.

”We need less precariousness, not more,” said Mr. Sylla, the son of immigrants from Ivory Coast, who still lives with his parents in a government-subsidized apartment in a working-class suburb of Paris.

Mr. Sylla said he had searched for years for a job before finding work about a month ago as a baggage handler at Charles de Gaulle International Airport.  Even then, he said, he only got the job because his sister works at the airport and pulled strings on his behalf.

For the full story, see:

CRAIG S. SMITH. "French Unrest Reflects Old Faith in Quasi-Socialist Ideals." The New York Times, Section 1  (Sunday, April 9, 2006):   8.

 

Economists have long puzzled at how the same person can both buy insurance and gamble in a casino.  The first seems an act of risk-aversion, and the second of risk-seeking.  (Milton Friedman, and others, have tried to explain the paradox.)

But I am puzzled by something else.  When risks are taken, why are they so often taken in arenas such as rioting in the streets, or extreme skiing, where they achieve no noble purpose?  Whatever risks one is going to take, why not take them in the arena of innovation and entrepreneurship, where the potential benefits to the innovator and to human progress, are huge?

 

Container Ships Revolutionized Shipment of Goods

Source of book image:  http://www.pupress.princeton.edu/titles/8131.html

 

Virginia Postrel’s periodic column in the New York Times over the past six years, was a beacon of optimism, clarity and fresh insights on how the economy works.  The excerpt below is from her last column.  Presumably she is moving on to other worthy challenges, but her column in the Times will be missed.

 

”Low transport costs help make it economically sensible for a factory in China to produce Barbie dolls with Japanese hair, Taiwanese plastics and American colorants, and ship them off to eager girls all over the world,” writes Marc Levinson in the new book ”The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger” (Princeton University Press).

For consumers, this results in lower prices and more variety.  ”People now just take it for granted that they have access to an enormous selection of goods from all over the world,” Mr. Levinson said in an interview.  That selection, he said, ”was made possible by this technological change.”

. . .  

The idea of containerization was simple:  to move trailer-size loads of goods seamlessly among trucks, trains and ships, without breaking bulk.  But turning that idea into real-life business practice required many additional innovations.

New equipment, from dockside cranes to the containers themselves, had to be developed.  Carriers and shippers had to settle on standard container sizes.  Ports had to strengthen their wharves, create connections to rail lines and highways, build places to store containers and strike new deals with their unions.

Along the way, even the most foresighted people made mistakes and lost millions.  Malcom McLean himself bought fast fuel-guzzling ships right before the 1973 oil crisis and slow, economical ships just as fuel prices turned down.  ”Almost everybody who was concerned with containerization in any way at some point got the story wrong,” Mr. Levinson said.

It is a classic tale of trial and error, and of creative destruction.

 

For the full commentary, see: 

Virginia Postrel.  "ECONOMIC SCENE; The Container That Changed the World."  The New York Times  (Thursday, March 23, 2006):  C3.

 

The full reference to Levinson’s book is:

Levinson, Marc.  The Box:  How the Shipping Container Made the World Smaller and the World Economy Bigger.  Princeton University Press, 2006.

 

R. Glenn Hubbard Coins a Phrase: “Nondestructive Creation”

 

In much of the press speculation right before Bush named the replacement for Alan Greenspan as head of the Fed, three names were usually mentioned as frontrunners:  Ben Bernanke, Martin Feldstein, and R. Glenn Hubbard.  Based on various speeches and writings, I had reason to believe that Feldstein and Hubbard understood and appreciated the importance of Schumpeter’s process of creative detruction.  So I hoped that Bush would pick either Feldstein or Hubbard.  Alas, I have found no evidence that Bernanke has ever mentioned creative destruction (but maybe I just haven’t dug hard enough). 

In the passage below, Hubbard suggests that much job creation, occurs through nondestructive creation, rather than through creative desruction.  An interesting claim, that may be true.  But I doubt it.  Some evidence would be nice.

 

Much of the current policy discussion of the ups and downs of the labor market harkens back to entrepreneurship as "creative destruction."  This conception has fueled policy anxiety over job loss and global competition.  But so much of productivity-enhancing entrepreneurship is really about "nondestructive creation," in which new products and ideas generate growth.

There are policy lessons, too, in the observation that it is not simply opportunity (e.g., IT) but the seizing of opportunity (e.g., new types of firms or business practices) that enhances productivity.  Competition can promote entrepreneurial innovation in a way that raises productivity growth:  Foreign competition has long been a source of productivity-enhancing innovation.  In the domestic economy, policy can enhance or limit competition by its stance toward new business formation and employment. The U.S. has enviably low regulatory costs of business formation, while, by contrast, entry restrictions limit business formation in a number of other competitor countries. Labor market policy matters, too:  Recent OECD research finds a strong negative correlation between a country’s technology growth-rate and the strength of its employment protection laws.

. . .

Over the past quarter-century, average U.S. labor productivity has risen by two-thirds.  This enormous increase in workers’ ability to produce has not come at the expense of jobs.  The 40 million new jobs created over the same period reveal the secret of an entrepreneurial economy:  Successfully seizing business opportunities can raise living standards and employment.  For this reason, entrepreneurship–the motor that drives the labor market–must be a focus of study in business education and policy making.

 

For the full commentary, see:

R. Glenn Hubbard.  "’Nondestructive Creation’."  The Wall Street Journal  (Wednesday, September 7, 2005):  A16.

 

P.S.  Mark Wohar alerted me to an amusing music video, satarizing Hubbard’s possible ambitions to become chair of the Fed.  I later saw the video receive publicity on CNBC’s Power Lunch program, where the video’s student-creators at the Columbia Business School were feted.  The video may be found at:  http://www0.gsb.columbia.edu/everybreath/

 

Leapfrog Competition in Video Game Machines

  Source of book image: http://www.amazon.com/gp/product/customer-reviews/0385479492/ref=cm_cr_dp_2_1/104-0758544-2447945?%5Fencoding=UTF8&customer-reviews.sort%5Fby=-SubmissionDate&n=283155

 

Co-opetition is a readable book with some plausible discussion of interesting cases.  The central message is that business is not always a zero-sum game (in contrast, say, to competitive sports).  One implication is that the firm’s complementary relationships with other firms, may deserve as much attention as its competitive relationships. 

One qualitfication:  I think the book too much emphasizes game theory as the sine qua non source of the book’s insights.  About the only game theory you really need to understand 99% of the book’s analysis is the concept of the "zero-sum game."

In a couple of places, the book discusses "leapfrog" competiton in the video game industry:

 

(p. 102)   By mid-1995 the price of the 3DO machine was down to $400 (with $150 worth of software thrown in).  Cumulative sales passed half a million.  Progress, surely, but as of early 1996, 3DO’s future remains uncertain. It no longer has the 32-bit game to itself.  Sega is shipping its 32-bit Saturn machine at $400.  Sony has launched its 32-bit PlayStation at $300.  Looking to leapfrog them all is Nintendo, whose 64-bit Ultra machine is due out in April 1996 at a price under $250.  

(p. 114)  Could a challenger hope to breach Nintendo’s virtuous circle?  Not once the circle had got rolling.  Forget about alternatives–TV,  books, sports.  From a kid’s perspective, there were no good alternatives to a video game.  The only real threat came from alternative video game systems.  Here, software was key, as always.  With a huge library of Nintendo titles to choose from, why would anyone buy another machine?  Perhaps a challenger could take successful Nintendo games over to its platform and then offer its own library.  But the exclusivity clause killed that option.  No game could be taken to another platform for a two-year period, by which time the game was passe.  A challenger would have had to start from scratch.  While large profits and shortages normally invite entry, the virtuous circle made competing in Nintendo’s game hopeless.  The only hope was to leapfrog Nintendo with a new technology; that’s what Sega ultimately did, as we’ll see in the Scope chapter.

 

Source: 

Brandenburger, Adam M., and Barry J. Nalebuff.  Co-Opetition;  a Revolution Mindset That Combines Competition and Cooperation; the Game Theory Strategy That’s Changing the Game of Business,  1st ed.  Currency, 1996.

 

 

Hunter-Gatherers Prefer Civilization

Source of photo:  online version of NYT article cited below.

 

(p. A13) The newly arrived Nukak do not provide much detail about why they left.  They just say that "the Green Nukak," a possible reference to Marxist guerrillas, who wear camouflage, told them to leave.

"The Green Nukak said we could not keep walking in the jungle, or else there would be problems," explained Va-di, another Nukak man, whose words were translated from Nukak by Belisario.  "The Green Nukak told us to go where it is safe."

 . . .

In Aguabonita, the scene on a recent day was full of commotion and laughter.  Naked children tugged at the shirts of two foreign journalists, offering big smiles and hugs.  The men quickly welcomed the visitors into a makeshift shelter, where they laughed at some of the questions and, it seemed, wholly innocently at their own odd predicament.

Are they sad?  "No!" cried a Nukak named Pia-pe, to howls of laughter.  In fact, the Nukak said they could not be happier.  Used to long marches in search of food, they are amazed that strangers would bring them sustenance — free.

What do they like most?  "Pots, pants, shoes, caps," said Mau-ro, a young man who went to a shelter to speak to two visitors.

Ma-be added, "Rice, sugar, oil, flour."  Others said they loved skillets.  Also high on the list were eggs and onions, matches and soap and certain other of life’s necessities.

"I like the women very much," Pia-pe said, to raucous laughs.

One young Nukak mother, Bachanede, breast-feeding her infant as she talked, said she was happy just to stay still.  "When you walk in the jungle," she said, "your feet hurt a lot."

The men still go into the jungle, searching for monkeys, a delicacy the Nukak cannot seem to live without.  Monkeys are grilled, dismembered and boiled, then eaten piece by piece.  The women still spend their time carefully weaving intricate wristbands and hammocks, using threads from palm leaves.

All live in shelters now, enjoy constant medical attention and, on weekends, stroll into town to take in the sights.  "Nukak life is hard in the jungle," Dr. Maldonado said.  "You wake up thinking about food and you go hunt, you go search for nuts.  So when they see us they think their food problems are over."

That is not to say the Nukak do not have plans.

Ma-be explained that the idea is to grow plantains and yucca and take the crops to town.  "We can exchange it for money," he said, "and exchange the money for other things."  But first they need to learn how to cultivate crops.  The Nukak say they would like their children to go to school.  They also say they do not want to lose traditions, like hunting or speaking their language.  "We do want to join the white family," Pia-pe said, speaking of Colombian society, "but we do not want to forget words of the Nukak."

 

For the full story, see:

JUAN FORERO.  "Leaving the Wild, and Rather Liking the Change."  The New York Times (Thurs., May 11, 2006):  A1 & A13.

(Note: ellipsis added.)

Will Google Leapfrog Microsoft?

 

Microsoft co-founder Bill Gates and Google CEO Eric Schmidt.  Source of photo:  online version of NYT article quoted and cited below.

 

The Microsoft-Google rivalry is shaping up as a titanic corporate clash for the ages.

It may not turn out that way.  Markets and corporate fortunes routinely defy prediction.  But it sure looks as if the two companies are on a collision course, as the realms of desktop computing and Internet services and software overlap more and more.

Microsoft, of course, is the reigning powerhouse of computing and Google is the muscular Internet challenger.  On each side, the battalions are arrayed: executives, engineers, marketers, lawyers and lobbyists. The spending and competition are escalating daily.  For each, it seems, the other passes what Andrew S. Grove, a founder and former chairman of Intel, calls the "silver bullet test" of strategic competition.  "If you had one bullet, who would you shoot with it?"

How the Microsoft-Google confrontation plays out could shape the future of competition in computing and how people use information technology.

Do the pitched corporate battles of the past shed any light on how this one might turn out?

Business historians and management experts say the experience in two of the defining industries of the 20th century, mass-market retailing and automobiles, may well be instructive.  The winners certainly scored higher in the generic virtues of business management:  innovation, execution and leadership.

But perhaps even more significant, those who came out on top, judging from history, had two more specific attributes.  They were the companies, according to business historians, that proved able to adapt to change instead of being prisoners of past success.  And in their glory days, these corporate champions were magnets for the best and brightest people.

 

For the full story, see:

STEVE LOHR.  "And in This Corner . . . Microsoft and Google Grapple for Supremacy as Stakes Escalate."  The New York Times  (Weds., May 10, 2006):  C1 & C14.

  Source of graphic:  online version of NYT article quoted and cited above.

Static Versus Dynamic Pictures

Schumpeter distinguished the static picture of capitalism in the textbook model, with the dynamic reality captured in the process of creative destruction.   Apparently Ronald Reagan also understood that a dynamic view is better than a static snapshot.   Michael Deaver recounts:

(p. 75) . . . I told him that I noticed his aversion to sitting for photo shoots.  He looked at me surprised.  "That’s funny, in all these years, nobody’s ever noticed that."   I asked him to elaborate.  "Well, you can never recover from a still shot."

Reagan was most comfortable with moving film, he went on to say.  He truly believed the television camera was a friend, a device that would separate the real from the phony.  Still cameras could always be used to make a candidate look like a fool.  When he explained this to me in the (p. 76) late 1960s, he said, "You know how I sometimes touch my nose before I make a point?  Well, a still shot would show me picking my nose, while a live shot would show me making my point."

 

Source:

Deaver, Michael K.   A Different Drummer:   My Thirty Years with Ronald Reagan.  Reprint ed.  Harper Paperbacks, 2003.