Category: Economics

Long Waits for Italian Cabs Due to Regulations Limiting More Cabs and Ride-Sharing

(p. A4) Returning to Rome from Naples one Monday afternoon in June [2023], a train trip that takes just over an hour, Daniele Renzoni said that he and his wife waited for more than an hour and a half at Termini station for a cab under a blazing sun.

“Just image a long line of grumbling, frustrated people, complaining, cursing. Hot day, angry tourists, there’s not much else to say,” said Mr. Renzoni, who is retired. “Taxi drivers will tell you there’s too much traffic, too many requests, too much everything, but the fact is, the customer pays.”

The situation is “a disgrace to Italy,” said Furio Truzzi, president of the consumer rights group Assoutenti, one of several associations that protested the shortage.

. . .

Thanks to the taxi lobby, ride-sharing services are almost nonexistent in Italy, where Uber is the only platform in use, with many restrictions.

The government lost an opportunity for real change, said Andrea Giuricin, a transportation economist at a research center at the University of Milan Bicocca. He said the best way to meet consumer needs would be to increase the number of licenses for Italy’s chauffeur services, known as N.C.C., which work with Uber.

“It’s very difficult in Italy” because “there isn’t a culture of liberalization in general,” creating little opportunity for competition, said Professor Giuricin. Taxis “are a small but powerful lobby” that easily influences politics, “which is very weak” in Italy, he said.

Angela Stefania Bergantino, a professor of transportation economics at the University of Bari, pointed out that previous governments had tried to open up the taxi market. But they failed.

“The problem is that taxis are regulated by municipal governments, which can find themselves captive in the sense that it is difficult for City Hall to implement policies that the cab lobby doesn’t like,” she said. “These are lobbies that have effective strike tools,” like wildcat strikes or traffic blockages that can paralyze entire cities, she said.

. . .

Above all, though licenses are issued by the city, they can then be sold by the drivers, for sums that can reach 250,000 euros, or about $276,000, depending on the city — a retirement nest egg for many. With an influx of new licenses, the value of an existing license would depreciate.

City administrators fear cabbies could revolt and strike if the status quo changes. “If I decide to issue new licenses,” said Eugenio Patanè, Rome’s city councilor in charge of transportation, “I’m going to find 1,000 taxis blocking traffic in Piazza Venezia,” the downtown Rome square that taxi drivers habitually clog while protesting.

For the full story, see:

Elisabetta Povoledo. “Getting a Cab in Italy Is Hard. But Remedying That Isn’t Easy.” The New York Times (Friday, August 11, 2023): A4.

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

(Note: the online version of the story has the date Aug. 10, 2023, and has the title “Getting a Taxi in Italy Is Too Hard. Fixing That Is Not Easy.”)

“Persistent Plucky Outsiders” Innovate a Better Way to Stop Bleeding

(p. 20) Charles Barber’s “In the Blood” treats a consequential topic, and contains moments of real insight, drama and humor.

. . .

Though hemorrhage is a leading cause of death in both war and peacetime, we learn, the techniques for stopping it haven’t improved significantly for millenniums. Barber explores the mysteries of the “coagulation cascade” — during which diverse proteins activate in intricately choreographed sequence to facilitate clotting — as well as the “lethal triad” of hypothermia, acidosis and coagulopathy (impaired clotting) that can send the body into shock.

We watch a surgeon at a Navy hospital in Bethesda slit the femoral arteries of a herd of 700-pound pigs, then apply different hemostatic agents to the spurting wounds, to see which substance stops the bleeding best. Most products, backed by biotech and medical companies, fail: The poor beasts bleed out. But zeolite, a simple mineral with hitherto unknown hemostatic properties, saves their bacon every time.

Barber’s earlier books feature persistent, plucky outsiders who strive to change the world, and he finds two more likely subjects in the men who brought zeolite’s lifesaving properties to light. Frank Hursey is the brilliant, nerdy engineer who discovers that this cheap, highly porous mineral, used by industry to absorb radiation, chemicals and bad odors, also happens to accelerate clotting, by mopping up water in the blood and thereby concentrating its coagulation agents. (Later Hursey finds that another inexpensive mineral, kaolin, works even better.)

Barely anyone pays attention to Hursey’s discovery until he partners with Bart Gullong, a down-on-his-luck salesman who rebrands Hursey’s invention “QuikClot” and persuades a military scientist to try it out on people. Hursey and Gullong are soon befriended by iconoclasts within the armed forces medical establishment, more of Barber’s appealing, quirky, determined Davids, who together take on two of the biggest Goliaths around: the military-industrial complex and Big Pharma.

For the full review, see:

Tom Mueller. “The Home Front.” The New York Times (Sunday, Aug. 20, 2023): 20.

(Note: ellipsis added.)

(Note: the online version of the review has the date July 26, 2023, and has the title “A Fight to Save Soldiers, From the Lab to the Battlefield.”)

The book under review is:

Barber, Charles. In the Blood: How Two Outsiders Solved a Centuries-Old Medical Mystery and Took on the Us Army. New York: Grand Central Publishing, 2023.

“FDR’s Policies Laid the Foundations for Generations of Hardship” for Black Americans

(p. A13) Just past the midway point of “Black Americans, Civil Rights, and the Roosevelts”—a powerful and powerfully disturbing exhibition at the Franklin D. Roosevelt Presidential Library and Museum—you can pick up a headset and listen to parts of a secretly recorded White House meeting on Sept. 27, 1940 (a transcript is also provided).

. . .

. . ., FDR nonchalantly settles into condescension and caricature. He emphasizes his appreciation of black servicemen, recalling “my colored messenger in the Navy Department”: “I gave him to Louis Howe, who was terribly fond of him.” And he promises to support opportunities for Negroes. In the Navy, he suggests, they could play in bands: “There’s no reason why we shouldn’t have a colored band on some of these ships, because they’re darn good at it.”

It is a shock to come upon these words. They even raise a question of just how much the administration’s sluggishness in dealing with racial issues was due to the power of Southern Democrats.

. . .

. . . the exhibition argues . . . that FDR’s policies laid the foundations for generations of hardship. The Social Security Act of 1935, for example, is criticized for not including “farm and domestic workers, who were disproportionately Black. This kept nearly two-thirds of Black workers out of the program”—in part, the text suggests, because of Southern Democrats’ racist influence. The exhibition also argues that the “redlining” of neighborhoods by Roosevelt’s Home Owners’ Loan Corporation, which mapped out areas with the highest probability of mortgage defaults, harmed the very neighborhoods where most blacks lived, with an effect lasting generations.

Racism, of course, should not be dismissed as a factor, but these are complicated issues, and much literature challenges any sweeping assertions. Did racism play an important role in excluding farm workers and domestics from Social Security, as the exhibition ends up suggesting? A 2010 Social Security Administration paper argues otherwise, noting that 74% of all excluded workers in those categories were white. Moreover, the act also excluded the self-employed, crews of ships, and employees of nonprofit religious and educational institutions. A 1997 paper in Political Science Quarterly argued that such initial exclusions were likely due to difficulties in how taxes and payrolls were handled, adding too many challenges to the administration of a new social program. Studies of redlining have also led to questions about its racial origins and effects. Redlined areas housed large proportions of a city’s black residents, but about three-quarters of the inhabitants were white. And as a 2021 paper from the National Bureau of Economic Research suggests, the maps were reflections of economic conditions, not racial demarcations, and “had little effect” on the distribution of federal mortgage activity.

For the full exhibition review, see:

Edward Rothstein. “Black Americans and the New Deal.” The Wall Street Journal (Thursday, Aug. 24, 2023): A13.

(Note: ellipses added.)

(Note: the online version of the exhibition review has the date August 23, 2023, and has the title “Black Americans, Civil Rights, and the Roosevelts’ Review: A New Look at the New Deal Era.”)

The 2021 National Bureau of Economic Research (NBER) paper mentioned above was published online in 2022 (in advance of print publication):

Fishback, Price, Jonathan Rose, Ken Snowden, and Thomas Storrs. “New Evidence on Redlining by Federal Housing Programs in the 1930s.” Journal of Urban Economics (online on May 11, 2022).

To Charge EV on Road Required Downloading an App, Which Required Non-Dodgy Cell Service

(p. B5) The adoption of electric vehicles represents the biggest shift in our energy and transportation systems in more than a century—but it’s also the biggest shift in consumer electronics since the debut of the iPhone. On both counts, progress is accelerating in the U.S. And on both counts, we are far from where we need to be.

A recent 1,000 mile road-trip in the longest-range electric vehicle you can buy brought this home for me. That journey was as worrisome as it was thrilling, and it clarified how much more needs to be done for drivers to have a consistent and satisfying experience on par with buying a gasoline vehicle.

. . .

On my trip, there was one moment in particular when the future felt like a big step backward.

It happened when I arrived at a street charging station in Montreal, and discovered that I’d have to download an app and prepay for the electricity I wanted to use. Cell service was dodgy, and I had to find a better signal to download the app. Had I been unable to find a decent signal, I would have been out of luck. (Even once I downloaded the app, the first station I connected to didn’t work—another issue that sometimes comes up at charging stations.)

Unfortunately, having to download an app is common practice for proprietary networks.

For the full commentary, see:

Christopher Mims. “Why America Isn’t Ready for the EV Takeover.” The Wall Street Journal (Saturday, June 10, 2023): B5.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date June 9, 2023, and has the same title as the print version.)

Crisis in Wind Industry Due to Inflation, Regulatory, and Grid Connection Hurdles

(p. B5) The wind business, viewed by governments as key to meeting climate targets and boosting electricity supplies, is facing a dangerous market squall.

After months of warnings about rising prices and logistical hiccups, developers and would-be buyers of wind power are scrapping contracts, putting off projects and postponing investment decisions. The setbacks are piling up for both onshore and offshore projects, but the latter’s problems are more acute.

In recent weeks, at least 10 offshore projects totaling around $33 billion in planned spending have been delayed or otherwise hit the doldrums across the U.S. and Europe.

“At the moment, we are seeing the industry’s first crisis,” said Anders Opedal, chief executive of Equinor, in an interview.

. . .

The holdup of projects that could generate 11.7 gigawatts—enough to power roughly all Texas households and then some—likely pushes 2030 offshore wind targets out of reach for the Biden administration and European governments.

. . .

(p. B11) The list of woes is long: inflation, supply-chain backlogs, rising interest rates, long permit and grid connection timelines. The increasing pace of the energy transition has created a loop of escalating costs.

For the full story, see:

Mari Novik and Jennifer Hiller. “Wind Power Stumbles as Problems Mount.” The Wall Street Journal (Tuesday, Aug. 8, 2023): B5 & B11.

(Note: ellipses added.)

(Note: the online version of the story was updated Aug. 7, 2023, and has the title “Wind Industry in Crisis as Problems Mount. The online version says that the title of the print version is “Wind Power Stumbles as Cost, Logistical Problems Mount.” But my print version of the national edition had the shorter title “Wind Power Stumbles as Problems Mount.”)

Foundations with an End Date May Honor the Donor’s Intent

(p. C6) This year, the William E. Simon Foundation is closing its doors, or “sunsetting,” in the parlance of modern philanthropy. Since it was founded in 1967 by former Treasury Secretary William E. Simon and his wife Carol, the foundation has given away almost $300 million to the causes that mattered to them—faith, family and education.

. . .

Traditionally, sunsetting a foundation has appealed to more conservative donors. Bill Simon, Jr., who manages the Simon Foundation along with his six siblings, says that his late father set a closing date because he had seen “foundations that seemed to veer off of their donor’s intent.” Simon recalls: “Dad trusted his own seven children to know where he would have put his money…But as much as he loved his grandchildren, he did not know them.”

Indeed, Henry Ford II resigned from the Ford Foundation’s board in 1977, writing that its hostility to capitalism had thrown it off course: “Perhaps it is time for the trustees and staff to examine the question of our obligations to our economic system and to consider how the foundation, as one of the system’s most prominent offspring, might act most wisely to strengthen and improve its progenitor.”

For the full commentary, see:

Naomi Schaefer Riley. “Philanthropists Discover the Value of ‘Sunsetting’.” The Wall Street Journal (Saturday, Aug. 5, 2023): C6.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date August 3, 2023, and has the same title as the print version.)

Improved AI Models Do Worse at Identifying Prime Numbers

(p. A2) . . . new research released this week reveals a fundamental challenge of developing artificial intelligence: ChatGPT has become worse at performing certain basic math operations.

The researchers at Stanford University and the University of California, Berkeley said the deterioration is an example of a phenomenon known to AI developers as drift, where attempts to improve one part of the enormously complex AI models make other parts of the models perform worse.

“Changing it in one direction can worsen it in other directions,” said James Zou, a Stanford professor who is affiliated with the school’s AI lab and is one of the authors of the new research. “It makes it very challenging to consistently improve.”

. . .

The goal of the team of researchers, consisting of Lingjiao Chen, a computer-science Ph.D. student at Stanford, along with Zou and Berkeley’s Matei Zaharia, is to systematically and repeatedly see how the models perform over time at a range of tasks.

Thus far, they have tested two versions of ChatGPT: version 3.5, available free online to anyone, and version 4.0, available via a premium subscription.

The results aren’t entirely promising. They gave the chatbot a basic task: identify whether a particular number is a prime number. This is the sort of math problem that is complicated for people but simple for computers.

Is 17,077 prime? Is 17,947 prime? Unless you are a savant you can’t work this out in your head, but it is easy for computers to evaluate. A computer can just brute force the problem—try dividing by two, three, five, etc., and see if anything works.

To track performance, the researchers fed ChatGPT 1,000 different numbers. In March, the premium GPT-4, correctly identified whether 84% of the numbers were prime or not. (Pretty mediocre performance for a computer, frankly.) By June its success rate had dropped to 51%.

. . .

The phenomenon of unpredictable drift is known to researchers who study machine learning and AI, Zou said. “We had the suspicion it could happen here, but we were very surprised at how fast the drift is happening.”

For the full commentary, see:

Josh Zumbrun. “THE NUMBERS; AI Surprise: It’s Unlearning Basic Math.” The Wall Street Journal (Saturday, Aug. 5, 2023): A2.

(Note: ellipses added.)

(Note: the online version of the commentary has the date August 4, 2023, and has the title “THE NUMBERS; Why ChatGPT Is Getting Dumber at Basic Math.”)

The Elite Are Politically Progressive as a Way to Reduce Their Guilt for Rejecting the Uneducated

David Brooks, the author of The New York Times column quoted below, views himself as an anti-Trump member of America’s elite educated class.

(p. A18) Donald Trump seems to get indicted on a weekly basis. Yet he is utterly dominating his Republican rivals in the polls, and he is tied with Joe Biden in the general election surveys. Trump’s poll numbers are stronger against Biden now than at any time in 2020.

What’s going on here? Why is this guy still politically viable, after all he’s done?

. . .

This story begins in the 1960s, when high school grads had to go off to fight in Vietnam but the children of the educated class got college deferments. It continues in the 1970s, when the authorities imposed busing on working-class areas in Boston but not on the upscale communities like Wellesley where they themselves lived.

The ideal that we’re all in this together was replaced with the reality that the educated class lives in a world up here and everybody else is forced into a world down there. Members of our class are always publicly speaking out for the marginalized, but somehow we always end up building systems that serve ourselves.

The most important of those systems is the modern meritocracy. We built an entire social order that sorts and excludes people on the basis of the quality that we possess most: academic achievement. Highly educated parents go to elite schools, marry each other, work at high-paying professional jobs and pour enormous resources into our children, who get into the same elite schools, marry each other and pass their exclusive class privileges down from generation to generation.

Daniel Markovits summarized years of research in his book “The Meritocracy Trap”: “Today, middle-class children lose out to the rich children at school, and middle-class adults lose out to elite graduates at work. Meritocracy blocks the middle class from opportunity. Then it blames those who lose a competition for income and status that, even when everyone plays by the rules, only the rich can win.”

. . .

Members of our class also segregate ourselves into a few booming metro areas: San Francisco, D.C., Austin and so on. In 2020, Biden won only 500 or so counties, but together they are responsible for 71 percent of the American economy. Trump won over 2,500 counties, responsible for only 29 percent. Once we find our cliques, we don’t get out much. In the book “Social Class in the 21st Century,” the sociologist Mike Savage and his co-researchers found that the members of the highly educated class tend to be the most insular, measured by how often we have contact with those who have jobs unlike our own.

. . .

Elite institutions have become so politically progressive in part because the people in them want to feel good about themselves as they take part in systems that exclude and reject.

For the full commentary, see:

David Brooks. “What if We’re the Bad Guys Here?” The New York Times (Friday, August 4, 2023): A18.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Aug. 2, 2023, and has the same title as the print version.)

The books cited by Brooks in the passages quoted above are:

Markovits, Daniel. The Meritocracy Trap: How America’s Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite. New York: Penguin Press, 2019.

Savage, Mike. Social Class in the 21st Century. London: Pelican Books, 2015.

“An Inalienable Right to Sit In AC”

(p. C4) “Let’s sit in AC.” An American friend of mine, recently living in Mumbai, was wildly amused to hear this said in that steamy megalopolis, as if retreating to the tantalizing cool of an air-conditioned room were an activity in itself.

It took me a moment to see what he found so funny. I had grown up with the deprivations of socialist India in the 1980s. I was hardwired to fetishize air-conditioning. It was not an adjunct to life, sewn seamlessly into our daily routines, as it is in the U.S., where 82.7 million homes have central AC. It was, as the philosopher Immanuel Kant would say, the “thing-in-itself,” and to sit “in” AC was something of a national pastime.

. . .

Our first AC was an unbranded gimcrack contraption, jerry-built by a local electrician, but—my god!—how we loved it.

. . .

India loves to assert the demands of belonging through pacts of mutual suffering, and to be in AC was almost to be a little less Indian, as if you had decamped for the West. Even now that the country is the world’s fastest growing market for air-conditioners—projected by the International Energy Agency to be the biggest by 2050—the first line of attack from your average troll is: “What do you know of the realities of India, sitting in AC?”

. . .

. . . this summer, as newspapers report the hottest temperatures ever recorded on Earth and Amazon blasts me with discounts on their best-selling ACs, I cannot help feeling that our turn has come at a bad time. If nothing is done to make air-conditioning more energy-efficient, India alone is projected to use 30 times more electricity in 2030 than it did in 2010. Globally, air conditioning is projected to account for 40% of the growth in energy consumption in buildings by 2050—the equivalent of all the electricity used today in the U.S. and Germany combined. It’s enough to send a chill down the spine of the most ardent of AC evangelists.

The irony of a world made hotter by our need to be cool strikes some as proof of our rapacity. To me, having grown up in the place where so much of the new demand is coming from, I see it as part of a necessary realignment. As the global south gets richer, it will act as a frontier and laboratory. My hope is that it will achieve a miraculous breakthrough in energy efficiency, even as it asserts an inalienable right to sit in AC.

For the full commentary, see:

Aatish Taseer. “My Love Affair With Air- Conditioning.” The Wall Street Journal (Saturday, July 15, 2023): C4.

(Note: ellipses added.)

(Note: the online version of the commentary has the date July 14, 2023, and has the same title as the print version.)

Blue Cross of California Seeks to End Drug Rebates and Hidden Fees

(p. A3) A major health insurer says it will jettison the complicated system that Americans use to pay for drugs, and create something that aims to be better, with partners including Amazon.com and the entrepreneur Mark Cuban.

Blue Shield of California said it is dropping CVS Health’s Caremark, the pharmacy-benefit manager it currently uses, which negotiates drug prices and wraps in other services such as a mail-order pharmacy.

. . .

Blue Shield said that, working with its partners, it aims to negotiate prices with pharmaceutical makers in a way that is different from the typical approach—with a simple net price structure that is supposed to eliminate rebates and hidden fees.

Blue Shield executives said that with one company handling many aspects of how drugs are procured through the system, it is often hard to track the flow of payments accurately.

“The current pharmacy supply chain is a forest of opacity and profit,” said Paul Markovich, Blue Shield’s chief executive officer, in an interview with The Wall Street Journal. “It is overwhelmingly complex, it is designed to maximize the earnings of the participants.” His company’s new setup, he said, will be “flipping that on its head.”

For the full story, see:

Anna Wilde Mathews. “Health Insurer Revamps Drug Pricing Model.” The Wall Street Journal (Friday, Aug. 18, 2023): A3.

(Note: ellipsis added.)

(Note: the online version of the story was updated Aug. 17, 2023, and has the title “A Big Health Insurer Is Ripping Up the Playbook on Drug Pricing.”)

Milton Friedman’s “Unflinching Defense” of Libertarianism

(p. A3) . . . [Milton] Friedman was highly influential. In academia, he did pioneering work on consumer behavior, monetary history and the unstable relation between inflation and unemployment. Outside the ivory tower, he is remembered for his unflinching defense of classical liberalism—a position that today is often called libertarianism. “Capitalism and Freedom” is the best entry into Friedman’s lucid mind. You will enjoy reading it even if you disagree with most of his judgments. A socialist student at Harvard once told me it was one of his favorite books. “Why?” I asked. “Because it clearly explains the point of view I have to argue against.”

For the full review, see:

N. Gregory Mankiw. “Five Best: Economics Primers.” The Wall Street Journal (Saturday, Aug. 18, 2023): A3.

(Note: ellipsis, and bracketed name, added.)

(Note: the online version of the review has the date June 2, 2023, and has the title “Five Best: Economics Primers.”)

Friedman’s best popular book, developed from lectures first presented at Wabash College that were co-organized by my mentor Ben Rogge, is:

Friedman, Milton. Capitalism and Freedom. Chicago: The University of Chicago Press, 1962.