Category: Economics

Lower Ivory Prices Reduce Incentives to Poach Elephants

(p. A9) NAIROBI, Kenya — Finally, there’s some good news for elephants.
The price of ivory in China, the world’s biggest market for elephant tusks, has fallen sharply, which may spell a reprieve from the intense poaching of the past decade.
According to a report released on Wednesday [March 29, 2017] by Save the Elephants, a respected wildlife group in Kenya, the price of ivory is less than half of what it was just three years ago, showing that demand is plummeting.

For the full commentary, see:
JEFFREY GETTLEMAN. “Ivory Prices May Mean a Reprieve for Elephants.” The New York Times (Thurs., March 30, 2017): A9.
(Note: bracketed date added.)
(Note: the online version of the commentary has the date March 29, 2017, and has the title “Elephants Get a Reprieve as Price of Ivory Falls.”)

Banks Often Less Transparent and Less Flexible than Bank Alternatives

I saw a C-Span interview on their weekend Book TV today (3/16/17), with Professor Lisa Servon. She pointed out that many of the highly regulated, and much-criticized, alternative banking services, offer a more transparent, more flexible, and more friendly service environment than the incumbent banking industry. She even argues that for those with low-incomes, and low-education, the alternative services are often less expensive. This happens because those with low-incomes and low education are often those who by mistake or by difficult circumstance, incur high fees at banks.
She points out that many who are bankless, previously made use of bank services, but decided to go with the alternatives. She suggested that in a free market environment, some of the alternatives might creatively destroy the incumbent banks.
Servon is clearly no libertarian, but much of what she says is thought-provoking.

Servon’s book is:
Servon, Lisa. The Unbanking of America: How the New Middle Class Survives. New York: Houghton Mifflin Harcourt Publishing Co., 2017.

DARPA’s $66 Million Fails to Develop Tech to Match Dog Noses

(p. A2) “What’s cool about dogs is when they do come into contact with an odor, they can track it to its source,” said L. Paul Waggoner, co-director of the Canine Performance Sciences Program at Auburn University. “There is not an instrument out there that replicates a dog’s nose.”
That’s not for lack of effort.
The Defense Advanced Research Projects Agency of the U.S. Department of Defense spent $66 million between 1997 and 2010 drawing on the expertise of at least 35 different research institutions to develop sensors that could detect explosives as ably as a dog and identify other chemicals.
They couldn’t do it.
. . .
Surprisingly, pigs and ferrets outperformed German shepherds and Labrador retrievers, breeds often chosen for odor detection.
But overall, dogs won out because of their combination of qualities: Not only do they have strong noses, they are compatible with people, they respond to training, and–for now–they beat technology paws down.

For the full commentary, see:
Jo Craven McGinty. “THE NUMBERS; Dogs Still Beat Technology in the Smell Test.” The Wall Street Journal (Sat., March 25, 2017): A2.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date March 24, 2017, and has the title”THE NUMBERS; Making Sense of a Dog’s Olfactory Powers.”)

Mainstream Economist William Baumol Celebrated Innovative Entrepreneurs

William J. Baumol is a key source in my book project on Innovation Unbound. I had hoped he would be able to read, and comment on, the current draft, but that is not to be. He was one of the heroes of the economics of entrepreneurship.

(p. A13) The disease that bears William J. Baumol’s name is not what led to his death on May 4 [2017] at age 95, but it is what cemented his legacy as one of the pre-eminent economists of the 20th century.
. . .
Professor Baumol was “one of the great economists of his generation,” Joseph Stiglitz, a Nobel Prize-winning economist at Columbia University, said in an interview, adding, “The series of insights he had about managerial economics, the role of innovation — a whole series of innovational breakthroughs over a long period of time — had a profound effect on economics.”
. . .
“Nobody ever explained to him the difference between work and play,” Daniel Baumol said of his father. “During a long trip, he would sit in the back of the car, oblivious to the world, and as we pulled in, he would announce, ‘I just finished that article.'”
Patrick Bolton, a professor of economics at Columbia, described Professor Baumol as “someone who could come to a big problem and bring an extremely simple analysis that really shaped the way people would think about it.”

For the full obituary, see:
PATRICIA COHEN. “William J. Baumol, 95, Leading Thinker in Economics.” The New York Times (Fri., May 12, 2017): B14.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the obituary has the date May 10, 2017 and has the title “William J. Baumol, 95, ‘One of the Great Economists of His Generation,’ Dies.”)

My favorite Baumol paper, is:
Baumol, William J. “Education for Innovation: Entrepreneurial Breakthroughs Versus Corporate Incremental Improvements.” In Innovation Policy and the Economy, edited by Adam B. Jaffe, Josh Lerner and Scott Stern. Cambridge, Mass.: MIT Press, 2005, pp. 33-56.

Apple Funds Corning’s Glass Innovation

(p. B6) SAN FRANCISCO — Apple is seeding the next generation of American-made glass for its iPhones and iPads, and its investments may have the side benefit of helping the company win favor in Washington.
Apple announced Friday [May 12, 2017] that it was giving $200 million to Corning, which makes the tough, scratch-resistant face for every iPhone and iPad, to support the glass maker’s efforts to develop and build more sophisticated products at its factory in Harrodsburg, Ky.
Corning has made the glass for every iPhone since the original 10 years ago. Apple’s investment, the first from the technology giant’s $1 billion fund to promote advanced manufacturing in the United States, will help Corning develop thinner, more versatile glass for iPhones as well as other product lines that Apple is exploring, such as screens for self-driving cars and augmented reality glasses.
The move goes beyond Apple’s traditional practice of subsidizing suppliers, said Tim Bajarin, president of the technology consulting firm Creative Strategies.
“I would see this more as an Apple-Corning partnership to flesh out what other kinds of things you would use glass for,” he said. “They are literally thinking about stuff you and I aren’t thinking about yet.”

For the full story, see:
VINDU GOEL. “Apple Gives $200 Million to Advance Phone Glass.” The New York Times (Sat., MAY 13, 2017): B6.
(Note: bracketed date added.)
(Note: the online version of the story has the date MAY 12, 2017, and has the title “Apple Gives Corning $200 Million to Invent Better Phone Glass.”)

Silicon Valley Funding Big Dings in the Universe

When Steve Jobs was trying to recruit Pepsi’s John Sculley to become Apple CEO, Jobs asked him something like: ‘do you want to spend the rest of your life selling sugar water, or do you want a chance to make a ding in the universe.’

(p. B1) One persistent criticism of Silicon Valley is that it no longer works on big, world-changing ideas. Every few months, a dumb start-up will make the news — most recently the one selling a $700 juicer — and folks outside the tech industry will begin singing I-told-you-sos.

But don’t be fooled by expensive juice. The idea that Silicon Valley no longer funds big things isn’t just wrong, but also obtuse and fairly dangerous. Look at the cars, the rockets, the internet-beaming balloons and gliders, the voice assistants, drones, augmented and virtual reality devices, and every permutation of artificial intelligence you’ve ever encountered in sci-fi. Technology companies aren’t just funding big things — they are funding the biggest, most world-changing things. They are spending on ideas that, years from now, we may come to see as having altered life for much of the planet.

For the full commentary, see:
Manjoo, Farhad. “STATE OF THE ART; These Days, Moon Shots Are Domain of the Valley.” The New York Times (Thurs., MAY 17, 2017): B1 & B6.
(Note: the online version of the commentary has the date MAY 17, 2017, and has the title “STATE OF THE ART; Google, Not the Government, Is Building the Future.”)

Going Postal

(p. 19) Over all, Leonard emphasizes a darker side of postal history, from the corruption scandals that periodically erupted after Andrew Jackson politicized the service, creating a gargantuan patronage machine, to oppressive government censorship campaigns. He devotes much of a chapter to Anthony Comstock, the longtime postal inspector and self-styled “weeder in God’s garden,” who banned and prosecuted the mailing of birth control pamphlets, “marriage aids” and “indecent” literary works like Walt Whitman’s poems, lest they pollute public morals. Still another chapter charts the spree of mass killings by overworked, underpaid and aggrieved postal workers in the 1980s and early 1990s.

For the full review, see:
LISA McGIRR. “We Had Mail.” The New York Times Book Review (Sun., JULY 10, 2016): 19.
(Note: the online version of the review has the date JULY 8, 2016, and has the title “Two Books Recount How Our Postal System Created a Communications Revolution.”)

The book under review, is:
Leonard, Devin. Neither Snow nor Rain: A History of the United States Postal Service. New York: Grove Press, 2016.

Lower Quality Restaurants Most Hurt by Minimum Wage Hike

(p. A17) “There’s only so much you can charge for tamales,” the owner of a small eatery said in 2015 to explain one reason he was closing.
For some empirical backup, consider an April [2017] study from Michael Luca at Harvard Business School and Dara Lee Luca at Mathematica Policy Research. They used Bay Area data from the review website Yelp to estimate that a $1 minimum-wage hike leads to a 14% increase in “the likelihood of exit for a 3.5-star restaurant.”
Put differently, San Francisco’s minimum wage experiment may be dangerous for your favorite white-tablecloth restaurant–the kind of place where the food is exquisite and can command a premium–but it’s downright deadly for your local white-apron diner.

For the full commentary, see:

Michael Saltsman. “The Minimum Wage Eats Restaurants; A San Francisco ex-owner says: ‘There’s only so much you can charge for tamales.’.” The Wall Street Journal (Weds., May 9, 2017): A17.
(Note: bracketed year added.)
(Note: the online version of the commentary has the date May 9, 2017,)

The Luca and Luca paper, mentioned above, is:
Luca, Dara Lee and Luca, Michael. “Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit.” (April 2017). Harvard Business School NOM Unit Working Paper No. 17-088.

“Mind-Bending” Automatic Braking Trickles Down to Cheaper Cars

(p. B4) I first experienced radar-assisted cruise control in a $70,000 Mercedes in 2001. Slowing automatically to keep from hitting the car ahead felt like a magic trick. In 2009, I was told to drive a new $50,000 Volvo into the back of a “parked car” (really, an inflatable mock-up). Every fiber of my body wanted to stomp on the brake pedal. Instead, the car did it for me. Automatic braking is mind-bending the first time.
Both of these technologies are standard equipment on 2017 Toyota Corollas, which start at $19,385. So is lane-keeping assist, which nudges the car back between the road stripes if you wander. Automatic high-beam headlamps, too.
Huzzah for technology trickle down!

For the full story, see:
TOM VOELK. “Tech Trickles Down into a Safer Corolla.” The New York Times (Fri., MARCH 17, 2017): B4.
(Note: the online version of the story has the date MARCH 16, 2017, and has the title “Video Review: Not-So-Standard Equipment on the Otherwise Standard Corolla.”)

Employers Less Likely to Hire Older Workers

(p. A3) Using a method of uncovering discrimination well known in economics, David Neumark, an economist at the University of California at Irvine, led a study that sent out 40,000 fake résumés to employers who had posted openings. Mr. Neumark and his co-authors found that résumés suggesting an applicant was 64 to 66 years old got a response 35 percent less often than résumés suggesting that the applicant was 29 to 31.
Labeling it discrimination is another matter, however. “The one thing that people always point out is that acceptability for age stereotyping is extremely high,” Mr. Neumark said. “The number of people who make age-related jokes are way more frequent than people who make race-related jokes. For whatever reason, the social stigma for age discrimination is really weak.”
Aside from fairness, evidence suggests that finding ways to keep older Americans working has benefits to the broader society: Working keeps older Americans happier, healthier and more mentally engaged. And forestalling retirement could relieve some of the pressure a large aging population places on this country’s social safety net.
“Governments all over the world are trying to figure how to get old people to stay at work longer,” Mr. Neumark said. “If we have discriminatory barriers, then all these reforms will be less effective.”

For the full story, see:
Quoctrung Bui. “As More Older People Look for Work, They Are Put Into ‘Old Person Jobs’.” The New York Times (Thurs., AUG. 18, 2016): A3.
(Note: the online version of the article has the title “More Older People Are Finding Work, but What Kind?”)

The Neumark paper mentioned above, is:
Neumark, David, Ian Burn, and Patrick Button. “Experimental Age Discrimination Evidence and the Heckman Critique.” American Economic Review 106, no. 5 (May 2016): 303-08.

Under Communism Inventiveness Did Not Yield Economic Benefits

(p. A17) The Soviet Union may have pioneered in space with Sputnik and Yuri Gagarin, but today Russia has less than 1% of the world commercial market in space telecommunications, the most successful commercial product so far stemming from space exploration. Russians may have won Nobel Prizes for developing the laser, but Russia today is insignificant in the production of lasers for the world market. Russians may have developed the first digital computer in continental Europe, but who today buys a Russian computer? By missing out on the multi-billion-dollar markets for lasers, computers and space-based telecommunications, Russia has suffered a grievous economic loss.
Accompanying this technical and economic failure was a human tragedy. Russian achievements in science and technology occurred in an environment of political terror. The father of the Russian hydrogen bomb, Andrei Sakharov, wrote in his memoirs that the research facility in which he worked was built by political prisoners, and each morning he looked out the window of his office to see them marching under armed guard to their construction sites. The “chief designer” of the Soviet space program, Sergei Korolev, was long a prisoner who worked in a special prison laboratory, or sharashka. The dean of Soviet airplane designers, A.N. Tupolev, also labored for years as a prisoner in a special laboratory. Three of the Soviet Union’s Nobel Prize-winning physicists were arrested for alleged political disloyalty. Probably half of the engineers in the Soviet Union in the late 1920s were eventually arrested. In 1928 alone 648 members of the staff of the Soviet Academy of Sciences were purged.
When one looks at these statistics and at the genuine achievements of Soviet science, one is forced to ask basic questions about the relation of freedom to scientific progress.
. . .
Mr. Ings admirable effort to reach nonspecialized readers sometimes leads him to make exaggerated statements. He claims that we have “good agricultural and climate data for Russia going back over a thousand years” when in fact the data is incomplete and unreliable.
. . .
The claim that the Soviet Union was a scientific state brings Mr. Ings close, in his conclusion, to condemning science itself. He sees science and technology as causing a coming global ecological collapse, and he thinks that in some ways the demise of the Soviet Union was a preview of what we will all soon face. In one of his final sentences he says: “We are all little Stalinists now, convinced of the efficacy of science to bail us out of any and every crisis.” “Stalin and the Scientists” deserves attention, but a very critical form of attention. It is based on an impressive amount of study, and most readers will learn a great deal. It is, however, incomplete and overdrawn.

For the full review, see:
LOREN GRAHAM. “BOOKSHELF; No Good Deed Went Unpunished.” The Wall Street Journal (Tues., Feb. 21, 2017): A17.
(Note: ellipses added.)
(Note: the online version of the review has the date Feb. 20, 2017, and has the title “BOOKSHELF; Science Under Stalin.”)

The book under review, is:
Ings, Simon. Stalin and the Scientists: A History of Triumph and Tragedy, 1905-1953. New York: Atlantic Monthly Press, 2017.