Economics – Page 169 – artdiamondblog.com

“We Just Begged and Borrowed” for Equipment

(p. 32) Google was handling as many as 10,000 queries a day. At times it was consuming half of Stanford’s Internet capacity. Its appetite for equipment and bandwidth was voracious. “We just begged and borrowed,” says Page. “There were tons of computers around, and we managed to get some.” Page’s dorm room was essentially Google’s operations center, with a motley assortment of computers from various manufacturers stuffed into a homemade version of a server rack– a storage cabinet made of Legos. Larry and Sergey would hang around the loading dock to see who on campus was getting computers– companies like Intel and Sun gave lots of free machines to Stanford to curry favor with employees of the future– (p. 33) and then the pair would ask the recipients if they could share some of the bounty.
That still wasn’t enough. To store the millions of pages they had crawled, the pair had to buy their own high-capacity disk drives. Page, who had a talent for squeezing the most out of a buck, found a place that sold refurbished disks at prices so low– a tenth of the original cost– that something was clearly wrong with them. “I did the research and figured out that they were okay as long as you replaced the [disk] operating system,” he says. “We got 120 drives, about nine gigs each. So it was about a terabyte of space.” It was an approach that Google would later adopt in building infrastructure at low cost.
Larry and Sergey would be sitting by the monitor, watching the queries– at peak times, there would be a new one every second– and it would be clear that they’d need even more equipment. What next? they’d ask themselves. Maybe this is real.

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.
(Note: italics in original.)

In Greece, Votes Are Traded for Government Jobs

(p. A4) Some members of Parliament have lobbied for fishing licenses for the owners of pleasure boats in the Aegean islands. Others have asked for government jobs for award-winning athletes or members of dismantled state agencies. One sought to exempt theaters and cinemas from a controversial property tax. Another to reduce fines for the owners of illegally built homes in parts of northern Greece. The list goes on.
In all, more than 90 such budget-busting proposals have been floated as lawmakers scramble to push through last-minute amendments to bills otherwise intended to meet the demands of creditors who want Greece to liberalize its job market, cut red tape and shrink state payrolls.
. . .
But the proliferation of items threatens to delay that step, as lawmakers go to the trough one last time. Greece’s practice of trading favors — often government jobs — for political support is as old as its 400 years of Ottoman rule, when the system evolved. The word for it, “rousfeti,” which means favor, has its roots in the Turkish word for bribe.
. . .
“In Greece, the cross is sold in exchange for a government job,” said one of them, Theodoros Pangalos, the outspoken deputy prime minister and seasoned Socialist, referring to the X that voters make on the ballot.
“No one has dared touch this system to date,” Mr. Pangalos, who will not seek re-election, said this month in an interview with the French-German television channel Arte. “But it is time for it to change.”

For the full story, see:
NIKI KITSANTONIS. “Despite Warning, Old Handouts Die Hard for Greek Politicians Facing Voters Soon.” The New York Times (Tues., April 10, 2012): A4.
(Note: ellipses added.)
(Note: the online version of the article has the date April 9, 2012.)

For Hubbard and Kane “Institutions Explain Innovation”

Source of book image: online version of the WSJ review quoted and cited below.

(p. A11) Messrs. Hubbard and Kane argue, as do others, that certain policies and core principles are the key: property rights, flexible work rules, open markets. For the authors, such matters explain economic growth entirely.

To those who would cite the primacy of technological breakthroughs, Messrs. Hubbard and Kane assert that inventions only spark growth if there are systems in place (such as intellectual-property rights) that enable inventions to flourish and their value to spread. “The wheel and the windmill were invented many times,” they write, “then forgotten, until finally one society had the institutional framework to implement them widely and pass them on permanently.” In short, “institutions explain innovation.”

For the full review, see:
Matthew Rees. “BOOKSHELF; How the Mighty Fall; The Roman empire eventually lost its economic vitality thanks to price controls, heavy taxes and state-sponsored debt relief..” The Wall Street Journal (Fri., June 21, 2013): A11.
(Note: the online version of the review has the date June 20, 2013.)

The book under review is:
Hubbard, Glenn, and Tim Kane. Balance: The Economics of Great Powers from Ancient Rome to Modern America. New York: Simon & Schuster, 2013.

If Terry Were from Texas, He Might Oppose Federal Ethanol Mandates

(p. 1A) WASHINGTON — The ethanol industry is again under fire from critics who want to eliminate the federal mandate that oil companies blend biofuels into the gasoline supply.
The House Energy and Commerce Committee is holding hearings on the Renewable Fuel Standard [RFS], which called for 15 billion gallons of biofuels to be used in 2012. The requirements reach 36 billion gallons by 2022.
. . .
(p. 2A) Rep. Lee Terry, R-Neb., a member of the Energy and Commerce Committee, said it’s clear that members from Texas and Louisiana will be targeting the usage requirements.
. . .
Terry has been a champion of the Keystone XL pipeline, making him an ally of Gulf Coast lawmakers and the oil industry on that issue.
Their split over the ethanol issue causes some awkward moments, he said.
“I say, ‘You do realize I’m from the Cornhusker State,'” Terry said. “If I was from Dallas, you know, who knows? I’d have a different view on the RFS.”

For the full story, see:
Joseph Morton. “Big Oil Revs Up Efforts to Repeal Rules Forcing Ethonal in the Mix.” Omaha World-Herald (MONDAY, JULY 8, 2013): 1A-2A.
(Note: ellipses and bracketed abbreviation added.)
(Note: the online version of the article has the title “RENEWABLE FUEL STANDARD; Ethanol Critics Rev Up Efforts to Repeal Biofuel Rules on Gas.”)

Less Credentialed Hazlitt Got More Right than Keynes and White

Source of book image:
http://s.s-bol.com/imgbase0/imagebase/large/FC/7/0/6/9/9200000009899607.jpg

(p. C5) One of the many merits of “The Battle of Bretton Woods,” a superb history of mid-20th-century monetary affairs, is the timing of its publication. Today, as never before, central banks are printing money, suppressing interest rates and manipulating markets. You wonder where it will all end.
. . .
(p. C6) According to Mr. Steil, the recondite Bretton Woods debates failed to engage the American public as a political issue. If so, it was no fault of Henry Hazlitt’s. An editorial writer for the New York Times, Hazlitt directed persistent, withering fire against White’s and Keynes’s brainchild. (His collected editorials, titled “From Bretton Woods to World Inflation,” were published in 1984.) The conference had it all wrong, Hazlitt thundered in the Times. The IMF would subsidize unsound policies. What was wanted were sound ones.
“The broad principles should not be difficult to formulate,” the readers of the Times were reminded on the eve of the gathering in New Hampshire. Governments should balance their budgets, forswear 1930s-style impediments to free trade (quotas, exchange restrictions) and refrain from “currency and credit inflation.” And the currency itself? It should be “redeemable in something that is itself fixed and definite: for all practical purposes this means a return to the historic gold standard.”
. . .
White was a Harvard Ph.D. Keynes was, at least according to Mr. Steil, “the most innovative and iconoclastic economist of his age, if not of all time.” Hazlitt was no trained economist at all. But it was he, not the two acclaimed experts, who turned out to be right.

For the full review, see:
James Grant. “A Fateful Meeting That Shaped the World.” The Wall Street Journal (Sat., March 16, 2013): C5-C6.
(Note: ellipses added.)
(Note: the online version of the review has the date March 15, 2013.)

The book under review is:
Steil, Benn. The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order Princeton, NJ: Princeton University Press, 2013.

Biofuels Like Ethanol Raise Food Costs About 30%

(p. 5) Until January [2008], Keith Collins was the longtime and widely respected chief economist for the Department of Agriculture. In that position, he was a frequent booster of government policies that encouraged biofuel production.
In the months after his departure, he was hired by Kraft Foods Global to analyze the impact of biofuels on food prices. He delivered a stunning, and unexpected, roundhouse to his former employers.
The Bush administration had said biofuels were a minor factor in rising food costs. In a May 1 [2008] press conference, Edward P. Lazear, chairman of the White House Council of Economic Advisers, said, “The bottom line is that we think that ethanol accounts for somewhere between 2 and 3 percent of the overall increase in global food prices.”
A month later, in Rome at a United Nations conference on the food crisis, the agriculture secretary, Ed Schafer, echoed Mr. Lazear’s analysis in defending American biofuels policy.
But Mr. Collins pointed out that the administration’s analysis was more like a back-of-the-envelope calculation, and that it hadn’t accounted for the impact of biofuels on crops other than corn. The push for ethanol has led farmers to grow more corn and less of other food crops, one factor in rising prices for commodities like wheat.
Based on his own analysis, Mr. Collins maintains that biofuels have caused 23 to 35 percent of the increases in food costs.

For the full commentary, see:
ANDREW MARTIN. “THE FEED; The Man Who Dared to Question Ethanol.” The New York Times, SundayBusiness Section (Sun., July 13, 2008): 5.
(Note: bracketed years added.)

Steel Bankruptcies Led to Better Steel Industry Processes

(p. 3) A few years ago, an industry whose history and mythology were indelible parts of the American identity was dying. The great steel mills of Pennsylvania and the Midwest had literally built this country, but the twin burdens of competition and self-inflicted wounds had brought them to the edge of extinction.
. . .
Yet steel’s savior was not the government bailouts it ardently sought but exactly what it so long tried to avoid: bankruptcy. Only when the companies failed were they successfully slimmed down and retooled into smaller but profitable ventures.
. . .
Bethlehem Steel, whose steel was used in the Hoover Dam, the Chrysler building and the George Washington Bridge, filed for bankruptcy in October 2001. It was followed by National Steel, Weirton Steel, Georgetown Steel and many others. The pain was great.
And necessary, some say. “If the steel companies had gotten all they wanted in terms of loan guarantees and import quotas, they would never have gotten better,” said Richard Fruehan, director of the Sloan Study on Competitiveness in the Steel Industry. “The bankruptcies forced their hand.”

For the full commentary, see:
DAVID STREITFELD. “THE NATION; Is Steel’s Revival a Model for Detroit?” The New York Times, Week in Review Section (Sun., November 23, 2008): 3.
(Note: ellipses added.)
(Note: the online version of the commentary is dated November 22, 2008.)

Wittgenstein Heirs Lost Family Wealth and “Found Little Happiness”

Source of book image: online version of the WSJ review quoted and cited below.

(p. W10) As he lay dying during Christmas 1912 — from a gruesome throat cancer — the Viennese industrialist Karl Wittgenstein no doubt took some comfort in the fact that he was leaving to his heirs one of the largest fortunes in Europe. He had acquired his wealth in just 30 years, the period during which Wittgenstein, an engineer, transformed a small steel mill into Europe’s largest steel cartel through a combination of hard work, luck and ruthlessness. As der österreichische Eisenkönig (the “Austrian iron king”), he was the chief executive, principal shareholder or director of dozens of industrial companies and banks that provided the ore, manufacturing and financing for most of the steel products of the Habsburg Empire.

In his spare time, Wittgenstein acquired a spectacular house in Vienna, grandly styled as the family’s Palais Wittgenstein.
. . .
Today, though, the Wittgenstein millions are gone and the Palais replaced by a hideous concrete apartment block. “Riches,” Adam Smith wrote, “. . . very seldom remain long in the same family.” Alexander Waugh’s grimly amusing “The House of Wittgenstein” shows how the family fortune was lost and how the family members themselves, despite instances of prodigious talent and accomplishment, found little happiness in their own lives or pleasure in their sibling relations.

For the full review, see:
JAMES F. PENROSE. “BOOKS; A Viennese Blend: Riches and Rancor; Blessed by Musical and Intellectual Gifts, and Lots of Money, a Family Still Struggled to Find Harmony.” The Wall Street Journal (Sat., March 1, 2009): W10.
(Note: ellipsis added; italics in original.)
(Note: the online version of the review has the date February 28, 2009.)

The book under review is:
Waugh, Alexander. The House of Wittgenstein: A Family at War. New York: Doubleday, 2009.

For Right to Rise, French Youth Must Leave France’s “Decrepit, Overcentralized Gerontocracy”

(p. 4) The French aren’t used to the idea that their country, like so many others in Europe, might be one of emigration — that people might actually want to leave. To many French people, it’s a completely foreign notion that, around the world and throughout history, voting with one’s feet has been the most widely available means to vote at all.
. . .
When the journalist Mouloud Achour, the rapper Mokless and I published a column in the French daily Libération last September, arguing that France was a decrepit, overcentralized gerontocracy and that French youths should pack their bags and go find better opportunities elsewhere in the world, it caused an uproar.
. . .
It was a divide between those who have found their place in the system and believe fervently in defending the status quo, and those who are aware that a country that has tolerated a youth unemployment rate of 25 percent for nearly 30 years isn’t a place where the rising generations can expect to rise to much of anything.

For the full commentary, see:
FELIX MARQUARDT. “OPINION; The Best Hope for France’s Young? Get Out.” The New York Times, SundayReview Section (Sun., June 30, 2013): 4.
(Note: ellipses added.)
(Note: the online version of the commentary is dated June 29, 2013.)

Falling Computer Prices Cured the “Digital Divide”

(p. 304) The more evident the power of the internet as an uplifting force became, the more evident the divide between the digital haves and have-nots. One sociological study concluded that there were “two Americas” emerging. The citizens of one America were poor people who could not afford a computer, and of the other, wealthy individuals equipped with PCs who reaped all the benefits. During the 1990s, when technology boosters like me were promoting the advent of the internet, we were often asked: What are we going to do about the digital divide? My an-(p. 305)swer was simple: nothing. We didn’t have to do anything, because the natural history of a technology such as the internet was self-fulfilling. The have-nots were a temporary imbalance that would be cured (and more) by technological forces. There was so much profit to be made connecting up the rest of the world, and the unconnected were so eager to join, that they were already paying higher telecom rates (when they could get such service) than the haves. Furthermore, the costs of both computers and connectivity were dropping by the month. At that time most poor in America owned televisions and had monthly cable bills. Owning a computer and having internet access was no more expensive and would soon be cheaper than TV. In a decade, the necessary outlay would become just a $100 laptop. Within the lifetimes of all born in the last decade, computers of some sort (connectors, really) will cost $5.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

Children of Chinese Entrepreneurs Want to Work for Government

“Engineering student Xie Chaobo has yet to land a job.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) BEIJING–Xie Chaobo figures he has the credentials to land a job at one of China’s big state-owned firms. He is a graduate student at Tsinghua University, one of China’s best. His field of study is environmental engineering, one of China’s priorities. And he is experimenting with new techniques for identifying water pollutants, which should make him a valuable catch.
But he has applied to 30 companies so far and scored just four interviews, none of which has led to a job.
Although Mr. Xie’s parents are entrepreneurs who have built companies that make glasses, shoes and now water pumps, he has no interest in working at a private startup. Chinese students “have been told since we were children to focus on stability instead of risk,” the 24-year-old engineering student says.
Over the past decade, the number of new graduates from Chinese universities has increased sixfold to more than six million a year, creating an epic glut that is depressing wages, (p. A10) leaving many recent college graduates without jobs and making students fearful about their future. Two-thirds of Chinese graduates say they want to work either in the government or big state-owned firms, which are seen as recession-proof, rather than at the private companies that have powered China’s remarkable economic climb, surveys indicate. Few college students today, according to the surveys, are ready to leave the safe shores of government work and “jump into the sea,” as the Chinese expression goes, to join startups or go into business for themselves, although many of their parents did just that in the 1990s.

For the full story, see:
MIKE RAMSEY and VALERIE BAUERLEIN. “Tesla Clashes With Car Dealers; Electric-Vehicle Maker Wants to Sell Directly to Consumers; Critics Say Plan Violates Franchise Laws.” The Wall Street Journal (Tues., June 18, 2013): B1-B2.

Source of table: online version of the WSJ article quoted and cited above.