Category: Economics

California Elite Regulates to Reduce Affordable Housing

(p. A11) In Silicon Valley the median home costs $1.2 million, about 2.5 times as much as in Seattle. Houses are less expensive inland–about $350,000 in Riverside and Sacramento–but living there often means a long commute. The weather also isn’t much better than in Phoenix or Dallas, so why not move to another state? A net 800,000 people did just that between 2005 and 2015, and many of them earned less than $30,000.
. . .
The state Legislative Analyst Office notes that in California’s coastal metros more than two-thirds of cities and counties have policies explicitly aimed at restricting housing growth, such as limits on density. When a developer wants to break ground, local governments impose multilayered reviews that can mean getting approval from the municipal building department, health department, fire department and planning commission as well as elected officials.
Neighbors can delay or block projects using the state’s 1970 Environmental Quality Act. It isn’t coincidental that California’s housing prices soared during the 1970s. Getting a building permit in San Francisco takes about three times as long as in the typical American metro.
There are more-direct costs, too: Local governments tack on hefty development fees, which run about three to four times as high in California as in the rest of the country. Politicians often attach conditions to projects requiring developers to pay workers “prevailing wages,” determined by local unions. This is one reason the cost of construction labor in California is about 20% higher than nationwide. Stringent building codes and energy-efficiency standards can add tens of thousands to the price of a house–even though low-flow appliances often cause people to use more water.
All told, it costs between $50,000 and $75,000 more to build a home in California than in the rest of the country. Building a low-income housing unit costs $332,000–about $80,000 more than the median home in Dallas or Phoenix.
. . .
Zoning is generally the biggest obstacle to development in coastal areas.
. . .
California’s housing policies are intrinsically regressive. Limiting the supply drives up home values in well-to-do coastal communities, while pricing everyone else out of the market.

For the full commentary, see:
Allysia Finley. “Why Housing Is Unaffordable in California; What could really help is deregulation, but residents aren’t likely to get it from Democratic lawmakers.” The Wall Street Journal (Sat., Sept. 30, 2017): A11.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Sept. 29, 2017.)

“Vinyl Rose from the Ashes”

(p. A10) LODENICE, Czech Republic — He was a businessman, not a clairvoyant. Zdenek Pelc did not really foresee, a generation ago, that vinyl records would one day make a return from near extinction.
But he was smart enough to keep a vinyl record factory here, a relic of the Communist era, through all those years when albums gave way to CDs and then to iTunes and streaming, and to be ready when vinyl suddenly got hot again.
And that is why this village of 1,800, nestled in a lush furl of the Bohemian hills, improbably finds itself a world leader in the production of vinyl albums.
“I realized when I came to the company 33 years ago that vinyl would be finished one day,” said Mr. Pelc, 64, who now owns GZ Media and serves as president. “But I wanted our company to be the last one to stop making them.”
The trajectory of the company — and the village it once dominated — traces the Czech Republic’s transition to quirky capitalist colt from cranky Communist nag, all played to the kind of rock soundtrack that accompanies many modern Czech tales.
Instead of getting rid of the old equipment and moving CD-making machines into their space — as most music production companies around the world did in the late 1980s and early ’90s — Mr. Pelc kept only enough machines running to meet the dwindling demand, moving the rest into storage and cannibalizing their parts as needed.
“Frankly, if someone had told me back then that vinyl would return, I wouldn’t have believed it,” he said.
. . .
“Vinyl rose from the ashes,” Mr. Pelc said happily.
. . .
“From around 2005, the demand for vinyl grew steadily,” said Michael Sterba, GZ Media’s chief executive. “Then, it really took off in the last two or three years, like, whoosh.”
. . .
“Only an idiot thinks this can go on forever,” Mr. Sterba said. “Maybe making vinyl is a fashion that will disappear in a few years. Who knows? No one predicted this.”

For the full story, see:
RICK LYMAN. “LODENICE JOURNAL; Long-Playing Czech Company Rides a Resurgence to the Top.” The New York Times (Fri., AUG. 7, 2015): A10.
(Note: ellipses added.)
(Note: the online version of the story has the date AUG. 6, 2015, and has the title “LODENICE JOURNAL; Czech Company, Pressing Hits for Years on Vinyl, Finds It Has Become One.”)

Inventor’s Semiconductor Background Was Source of New, Safer Lithium Battery

(p. B1) SAN FRANCISCO — Mike Zimmerman likes to shock his guests by using a hammer to drive a nail through a solid polymer lithium metal battery.
Nothing happens — and that’s a good thing.
Mr. Zimmerman’s battery is a new spin on lithium-ion batteries, which are widely used in products from smartphones to cars. Today’s lithium-ion batteries, as anyone who has followed Samsung’s recent problems with flammable smartphones may know, can be ticking time bombs. The liquids in them can burst into flames if there is a short circuit of some sort. And driving a nail into one of them is definitely not recommended.
With that in mind, Mr. Zimmerman’s demonstration commands attention.
His Woburn, Mass., start-up, Ionic Materials, is at the cutting edge of an effort to design safer batteries. The company is working on “solid” lithium polymer batteries that greatly reduce their combustible nature.
A solid lithium polymer metal battery — when it arrives commercially — will also allow electronics designers to be more creative, because they will be able to use a plasticlike material (the polymer) that allows smaller and more flexible packaging and requires fewer complex safety mechanisms.
“My dream is to create the holy grail of solid batteries,” Mr. Zimmerman said.
After four years of development, he believes he is nearly there and hopes to begin manufacturing within the next two years. Ionic Materials is one of a new wave of academic and commercial research ef-(p. B4)forts in the United States, Europe and Asia to find safer battery technologies as consumers demand more performance from phones and cars.
. . .
Mr. Zimmerman’s background is in the world of semiconductors; he worked at Bell Labs and then a company called Quantum Leap Packaging. Several university researchers who have worked with the company believe that has lead him to a technology that will be more manufacturable than competing polymer and ceramic battery technologies now being explored.
“What is so intriguing about Mike and his folks is they are using known production techniques borrowed from the semiconductor packaging industry,” said Jay Whitacre, a Carnegie Mellon University physicist who was involved with Ionic Materials when it first started and who now is chief scientist at Aquion Energy, a maker of home storage and industrial batteries based in Mt. Pleasant, Pa.
The new progress has led a number of technologists in the field to believe that batteries may finally be getting out of their rut.
“We’re in a golden age of new chemistry development which probably hasn’t been seen in thirty or 40 years, since the last energy crisis,” said Paul Albertus, a program manager at the Department of Energy’s Advanced Research Projects Agency-Energy. “It’s a pretty exciting time to be developing energy storage technology.

For the full story, see:
JOHN MARKOFF. “Creating a Safer Phone Battery (This One Won’t Catch Fire).” The New York Times (Mon., DEC. 12, 2016): B1 & B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date DEC. 11, 2016, and has the title “Designing a Safer Battery for Smartphones (That Won’t Catch Fire).”)

Costs Rise in Single-Payer Health Countries

(p. A25) As Democrats and other policy makers debate the merits of Senator Sanders’s proposal, here are a few important observations about international systems that they ought to consider.
First, a vanishingly small number of countries actually have single-payer systems. . . .
. . .
Some of the highest-rated international systems rely on private health insurers for most health care coverage — Germany’s, for example, is something like Obamacare exchanges for everyone, but significantly simpler and truly universal. The Netherlands and Switzerland have both moved recently to add more competition and flexibility to systems that were already built on the use of private insurers.
Second, single-payer countries have also failed to control rising health care costs. This is important, given that Mr. Sanders’s proposal was released without a cost estimate or financing plan. For historical reasons, many other countries started with lower levels of health care spending than we did. Several analyses have shown that this has almost nothing to do with higher administrative costs or corporate profits in the United States and almost everything to do with the higher cost of health care services and the higher salaries of providers here.
Although they started at a lower base — with, for example, doctors and nurses receiving lower salaries — countries around the world have all struggled with rising costs. From 1990 to 2012, the United States’ rate of health care cost growth was below that of many countries, including Japan and Britain. In 2015, the Organization for Economic Cooperation and Development warned that rising health care costs across all countries were unsustainable.behavior, more hotel rooms are available to individuals and families who need them most.”
Third, it is simply untrue that single-payer systems produce a better quality of care across the board.

For the full commentary, see:
LANHEE J. CHEN and MICAH WEINBERG. “‘Medicare for All’ Is No Miracle Cure.” The New York Times (Tues., Sept. 19, 2017): A25.
(Note: ellipses added.)
(Note: the online version of the commentary has the title “The Sanders Single-Payer Plan Is No Miracle Cure.”)

Regulations Reduce Health Care Quality and Increase Health Care Cost

(p. A15) There are two million home health aides in the U.S. They spend more time with the elderly and disabled than anyone else, and their skills are essential to their clients’ quality of life. Yet these aides are poorly trained, and their national median wage is only a smidgen more than $10 an hour.
The reason? State regulations–in particular, Nurse Practice Acts–require registered nurses to perform even routine home-care tasks like administering eyedrops. That duty might not require a nursing degree, but defenders of the current system say aides lack the proper training. “What if they put in the cat’s eyedrops instead?” a health-care consultant asked me. In another conversation, the CEO of a managed-care insurance company wrote off home-care aides as “minimum wage people.”
But aides could do more. With less regulation and better training, they could become as integral to health-care teams as doctors and nurses. That could improve the quality of care while saving buckets of money for everyone involved.
. . .
. . . the potential cost savings are considerable. There are 2.3 million Medicaid patients receiving long-term care at home. Imagine if even half of them replaced one hourlong nurse’s visit a month with a stop by a trained aide. Assuming the nurse makes $35 an hour and the aide $15, that’s an immediate savings of roughly $275 million a year.

For the full commentary, see:
Paul Osterman. “Why Home Care Costs Too Much; Regulations often require that nurses do simple tasks like administer eyedrops.” The Wall Street Journal (Weds., Sept. 13, 2017): A15.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Sept. 12, 2017.)

The commentary, quoted above, is related to the author’s book:
Osterman, Paul. Who Will Care for Us? Long-Term Care and the Long-Term Workforce. New York: Russell Sage Foundation, 2017.

The “Grit” of the Successful Consists of “Passion and Perseverance”

(p. A11) Most people would think of John Irving as a gifted wordsmith. He is the author of best-selling novels celebrated for their Dickensian plots, including “The Cider House Rules” and “The World According to Garp.” But Mr. Irving has severe dyslexia, was a C-minus English student in high school and scored 475 out of 800 on the SAT verbal test. How, then, did he have such a remarkably successful career as a writer?
Angela Duckworth argues that the answer is “grit,” which she defines as a combination of passion and perseverance in the pursuit of a long-term goal. The author, a psychology professor at the University of Pennsylvania, has spent the past decade studying why some people have extraordinary success and others do not. “Grit” is a fascinating tour of the psychological research on success and also tells the stories of many gritty exemplars, . . .
. . .
Ms. Duckworth first realized the importance of grit as a teacher. Before she became an academic, she worked as a seventh-grade math teacher at a public school in New York. Some of her students were more inherently gifted with numbers than others. But not all of these capable students, to her surprise, got the best grades. Those who did weren’t always “math people”: For the most part, they were those who consistently invested more time and effort in their work.
Ms. Duckworth decided to become a research psychologist to figure out what explained their success. One of her first studies was of West Point cadets. Every year, West Point enrolls more than 1,000 students, but 20% of cadets drop out before graduation. Many quit in their first two months, during an intense training program known as Beast Barracks, or Beast. The most important factor in West Point admissions is the Whole Candidate Score, a composite measure of test scores, high-school rank, leadership potential and physical fitness. But Ms. Duckworth found that this score, which is essentially a measure of innate ability, did not predict who dropped out during Beast. She created her own “Grit Scale,” scored using cadets’ responses to statements like “I finish whatever I begin” or “New ideas and projects sometimes distract me from previous ones.” Those who scored highest on the Grit Scale were the most likely to make it to the end of Beast.
. . .
Grit may be defined by strenuous effort, but what drives that work, Ms. Duckworth finds, is passion, and a great service of Ms. Duckworth’s book is her down-to-earth definition of passion. To be gritty, an individual doesn’t need to have an obsessive infatuation with a goal. Rather, he needs to show “consistency over time.” The grittiest people have developed long-term goals and are constantly working toward them. “Enthusiasm is common,” she writes. “Endurance is rare.”

For the full review, see:

Emily Esfahani Smith. “BOOKSHELF; The Virtue of Hard Things; A study of Ivy League undergraduates showed that the smarter the students were, as measured by SAT scores, the less they persevered.” The Wall Street Journal (Weds., May 4, 2016): A11.
(Note: ellipses added.)
(Note: the online version of the review has the date May 3, 2016.)

The book under review, is:
Duckworth, Angela. Grit: The Power of Passion and Perseverance. New York: Scribner, 2016.

Venezuelan Communist Economy Continues to Collapse

EmptyShelvesVenezuela2017-09-11.jpg“Empty cases and shelves in a grocery store in Cumaná, Venezuela, last year.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) CARACAS, Venezuela — Food shortages were already common in Venezuela, so Tabata Soler knew painfully well how to navigate the country’s black market stalls to get basics like eggs and sugar.

But then came a shortage she couldn’t fix: Suddenly, there was no propane gas for sale to do the cooking.
And so for several nights this summer, Ms. Soler prepared dinner above a makeshift fire of broken wooden crates set ablaze with kerosene to feed her extended family of 12.
“There was no other option,” said Ms. Soler, a 37-year-old nurse, while scouting again for gas for her stove. “We went back to the past where we cooked soup with firewood.”
Five months of political turmoil in Venezuela have brought waves of protesters into the streets, left more than 120 people dead and a set off a wide crackdown against dissent by the government, which many nations now consider a dictatorship.
An all-powerful assembly of loyalists of President Nicolás Maduro rules the country with few limits on its authority, vowing to pursue political opponents as traitors while it rewrites the Constitution in the government’s favor.
But as the government tries to stifle the opposition and regain a firm grip on the nation, the country’s economic collapse, nearing its fourth year, continues to gain steam, leaving the president, his loyalists and the country in an increasingly precarious position.
. . .
In one nine-day stretch in late July and early August, the price of the bolívar, the national currency, fell by half against the dollar on the black market, cutting earnings for people who make the minimum wage to the equivalent of just $5 per month.
. . .
“Bolívars are like ice cubes now,” said Daniel Lansberg-Rodriguez, who leads the Latin America practice at Greenmantle, a macroeconomic advising firm, and teaches at Northwestern’s Kellogg School of Management. “If you’re going to go to the fridge and take one, it’s something you have to use right now, because soon it’s going to be gone.”

For the full story, see:
ANA VANESSA HERRERO and NICHOLAS CASEY. “In Venezuela, That Empty Feeling.” The New York Times, First Section (Sun., SEPT. 3, 2017): 6.
(Note: ellipses added.)
(Note: the online version of the story has the date SEPT. 2, 2017, and has the title “In Venezuela, Cooking With Firewood as Currency Collapses.”)

Simple App Takes Entrepreneur from Rags to Riches

(p. B1) When Facebook bought WhatsApp for more than $19 billion in 2014, Jan Koum, a founder of the messaging company, arranged to sign a part of the deal outside the suburban social services center where he had once waited in line to collect food stamps.
Mr. Koum, like many in the tech industry, is an immigrant. He was a teenager when he and his mother moved to the San Francisco Bay Area in the early 1990s, in part to escape the anti-Semitic tide then sweeping his native Ukraine. As Mr. Koum later told Forbes, his mother worked as a babysitter and swept floors at a grocery store to survive in the new country; when she was found to have cancer, the family lived off her disability payments.
Tales of immigrant woe are not unusual in Silicon Valley. But Mr. Koum’s story carries greater resonance because his app has quietly become a mainstay of immigrant life. More than a billion people regularly use WhatsApp, which lets users send text messages and make phone calls free over the internet. The app is particularly popular in India, where it has more than 160 million users, as well as in Europe, South America and Africa.
. . .
(p. B7) One of the secrets to WhatsApp’s growth has been a focus on simplicity. The app is purposefully unflashy, and it does just a few things — texts, voice calls and video calls. As a result, it is supremely easy to use even for people who are neophytes to digital technology. This is one reason immigrants find it so powerful; it has given them access to a wider set of relatives who might have shunned the social networks that came before.
Adoption of WhatsApp often follows a curious pattern — older relatives often suggest it to younger ones, rather than the other way around.
“My aunt, who’s in her late 70s, was the one who really pushed me to get on it,” Ms. Reef said. Now, she said, she uses it nearly every day; lately she’s even gotten her children to use it.

For the full commentary, see:
Manjoo, Farhad. “STATE OF THE ART; A Shared Lifeline for Millions of Migrants.” The New York Times (Thurs., DEC. 22, 2016): B1 & B7.
(Note: eilipsis added.)
(Note: the online version of the commentary has the date DEC. 21, 2016, and has the title “STATE OF THE ART; For Millions of Immigrants, a Common Language: WhatsApp.”)

Tech Startup Rejects Gig Economy

(p. 1) SEATTLE — When Glenn Kelman became the chief executive of his online real estate start-up, he defied the tech industry’s conventional wisdom about how to grow.
Instead of hiring independent contractors, he brought in full-time employees and put them on the payroll — with benefits. That decision over a decade ago made Mr. Kelman and his company, Redfin, iconoclasts in the technology world.
Many tech start-ups lean on the idea of the “gig economy.” They staff up rapidly with freelancers, who are both cheaper to hire (none of the insurance, 401(k) and other expenses) and more flexible (they can work as much or as little as needed). It’s the model Uber has used to upend the taxi business.
. . .
Mr. Kelman argues that full-time employees allow him to offer better customer service. Redfin gives its agents salaries, health benefits, 401(k) contributions and, for the most productive ones, Redfin stock, none of which is standard for contractors. Redfin currently employs more than 1,000 agents.
Now with his company on a stronger footing, Mr. Kelman says he believes his approach has been vindicated. He has even (p. 5) become an informal counselor to other tech entrepreneurs exploring a shift to employees from contractors.
. . .
A number of technology companies have switched or are in the process of switching their contractors to employees for reasons similar to those of Redfin, including Shyp, a parcel shipping service; Luxe Valet, which offers a valet parking app; and Munchery, a food delivery service. Honor, an on-demand service for home health care professionals, is making the move to improve training.

For the full story, see:
NICK WINGFIELD. “A Start-Up Shies Away from Gig Economy.” The New York Times, SundayBusiness Section (Sun., JULY 10, 2016): 1 & 5.
(Note: ellipses added.)
(Note: the online version of the story has the date JULY 9, 2016, and has the title “Redfin Shies Away From the Typical Start-Up’s Gig Economy.”)

Factory Workers Collaborate with Robots

(p. B1) MARION, Ohio–A new worker is charming the staff at Whirlpool Corp.’s plant here: a robot called Chappy.
Employees at the dryer factory say they have taken a shine to one-armed, programmable robots that have assumed some repetitive tasks, working in concert with their human colleagues. One, nicknamed after a worker whose rote duties it has inherited, snaps photographs to scan for defects.
“If I can get some help doing my job, I’m all for that,” said Karen “Chappy” Beidler, who is now free to focus on checking and fixing wiring connections. “It’s technology helping manpower–you can’t beat it.”

For the full story, see:
Andrew Tangel. “Latest Robots Lend an Arm.” The Wall Street Journal (Weds., Nov. 9, 2016): B1 & B4.
(Note: the online version of the story has the date Nov. 8, 2016, and has the title “Latest Robots Lend a Helping Arm at Factories.”)

47% Believe College Degree Will NOT Lead to Good Job

(p. A3) Americans are losing faith in the value of a college degree, with majorities of young adults, men and rural residents saying college isn’t worth the cost, a new Wall Street Journal/NBC News survey shows.
The findings reflect an increase in public skepticism of higher education from just four years ago and highlight a growing divide in opinion falling along gender, educational, regional and partisan lines.
. . .
Overall, a slim plurality of Americans, 49%, believes earning a four-year degree will lead to a good job and higher lifetime earnings, compared with 47% who don’t, according to the poll of 1,200 people taken Aug. 5-9. That two-point margin narrowed from 13 points when the same question was asked four years earlier.
Big shifts occurred within several groups. While women by a large margin still have faith in a four-year degree, opinion among men swung significantly. Four years ago, men by a 12-point margin saw college as worth the cost. Now, they say it is not worth it, by a 10-point margin.
Likewise, among Americans 18 to 34 years old, skeptics outnumber believers 57% to 39%, almost a mirror image from four years earlier.
Today, Democrats, urban residents and Americans who consider themselves middle- and upper-class generally believe college is worth it; Republicans, rural residents and people who identify themselves as poor or working-class Americans don’t.

For the full story, see:
Josh Mitchell and Douglas Belkin. “Fewer Americans Value a College Degree, Poll Finds.” The Wall Street Journal (Fri., SEPT. 8, 2017): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date SEPT. 7, 2017, and has the title “Americans Losing Faith in College Degrees, Poll Finds.” The order of paragraphs was different in the online and print versions; the passages quoted above are from the online version.)