Economics – Page 171 – artdiamondblog.com

Property Rights, Flexible Work Rules, Open Markets Are Keys to Economic Growth

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: ellipses added.)
(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.

iPhone: “A Gleaming World of Innovation and Opportunity, of Capitalism Behaving Well”

“The theft of electronic devices like iPhones has fueled a rise in subway crime this year, the police say. In the past, New Yorkers were mugged, sometimes killed, for bomber jackets, Cazal glasses and Air Jordan sneakers.” Source of caption: print version of the NYT article quoted and cited below. Source of photo: online version of the NYT article quoted and cited below.

(p.24) The current spate of iPhone thefts feels, if anything, more poignant than disruptive. Apple products have always read as cooler than their rivals’ because their design suggests a gleaming world of innovation and opportunity, of capitalism behaving well — a world that seems ever diminishing, ever less accessible to the struggling and young.

Unlike the sneakers and glasses that caused such a fury in the ’80s and ’90s, iPhones didn’t originate in the celebrity system. They come with a democratic ethos (if not the analogous price tag); BlackBerrys are for suits, but even a child can work an iPhone. Wasn’t everyone supposed to have a shot?

For the full story, see:
GINIA BELLAFANTE. “BIG CITY; Easy to Use and Easy to Steal, a Status Object Inches Out of Reach.” The New York Times, First Section (Sun., October 30, 2011): 24.
(Note: the first paragraph quoted above is from the print version, rather than from the somewhat different online version. The second quoted paragraph is the same in both versions.)
(Note: the online version of the story has the date October 28, 2011, and has the slightly different title “BIG CITY; Easy to Use, or Steal, but Inching Out of Reach.”)

Discrete Caution Is Not Always Prudent in Corrupt China

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

(p. A13) When economic reform and the seductive breeze of political liberalization come to China in the 1980s, the author’s cautious father tells his children that if they want to succeed they should be discreet. He urges his son, who is at Shanghai’s Fudan University, not to waste his time on useless foreign books. When the son first reads Shakespeare, he thinks that the expression “to be or not to be” is taken from Confucius. His father tells him that asking for too much freedom can land you in jail. “If you are not careful the government could crush you like a bug.” Not long after this warning, the student democracy movement was smashed apart at Tiananmen Square, though Mr. Huang’s father did not live to see it.

In the end, it is the father who suffers as his world collapses. Toward the end of his life he was told by the Party that he was to be rewarded for devising a money-saving program at his state factory with promotion and a better wage. Instead the promotion went to the girlfriend of the local Party secretary, and the firm’s bosses split his wage rise among themselves. Embittered and exhausted, he died of a heart attack in 1988, ahead of his mother.

For the full review, see:
MICHAEL FATHERS. “BOOKSHELF; Coming of Age In Mao’s China; Death cannot be controlled by the party, but disposing of a body can. So the author’s father built a coffin in secret at his mother’s request..” The Wall Street Journal (Mon., April 30, 2012): C4.
(Note: ellipsis added.)
(Note: the online version of the article has the date April 29, 2012.)

The book under review, is:
Huang, Wenguang. The Little Red Guard: A Family Memoir. New York: Riverhead Books, 2012..

$30 Million First National Bank Regulatory Costs Due to Dodd-Frank Replacing Clear Rules with Regulator “Wild Card” Leeway

(p. 1D) The president of First National of Nebraska, the nation’s largest privately held banking firm, said new federal regulatory and compliance efforts stand to cost the company as much as $30 million this year.
“It is a big uncertainty in the banking world,” said Dan O’Neill, speaking Wednesday at the company’s annual meeting in Omaha. “They are not operating off of concrete rules. A lot of it is their interpretation.”
The federal Consumer Financial Protection Bureau was formed as a result of the federal Dodd-Frank laws passed in 2010 after widespread bank failures and bailouts using taxpayer money. . . .
. . .
The bureau, he said, worries banks because there is not a “clear body of rules” from which the regulator is operating in evaluating the fairness of a bank’s business practices. He said the agency’s regulators have a lot of leeway in deciding what to do af-(p. 2D)ter examining a bank; penalties for running afoul include fines.
“So it is a bit of a wild card,” he said.

For the full story, see:
Russell Hubbard. “First National Chief Says Regulatory Costs Mounting.” Omaha World-Herald (THURSDAY, JUNE 20, 2013): 1D-2D.
(Note: ellipses added.)

Larry Page Makes an O.K. Decision Now, Rather than a Perfect Decision Later

“Larry Page has pushed for quicker decision-making and jettisoned more than 25 projects that were not up to snuff.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) MOUNTAIN VIEW, Calif. — Larry Page, Google’s chief executive, so hates wasting time at meetings that he once dumped his secretary to avoid being scheduled for them. He does not much like e-mail either — even his own Gmail — saying the tedious back-and-forth takes too long to solve problems.
. . .
(p. A3) Borrowing from the playbooks of executives like Steven P. Jobs and Mayor Michael R. Bloomberg, he has put his personal imprint on the corporate culture, from discouraging excessive use of e-mail to embracing quick, unilateral decision-making — by him, if need be.
“Ever since taking over as C.E.O., I have focused much of my energy on increasing Google’s velocity and execution, and we’re beginning to see results,” Mr. Page, 38, told analysts recently.
. . .
Despite the many external pressures on Google, it is dominant in its business and highly profitable. But, when asked at a recent conference about the biggest threat to his company, Mr. Page answered in one word, “Google.”
The problem was that the company had ballooned so quickly — it now has more than 31,000 employees and $27.3 billion in revenue so far this year — that it had become sclerotic. A triumvirate of Mr. Page, his co-founder, Sergey Brin, and Eric E. Schmidt, Google’s former chief and current chairman, had to agree before anything could be done. The unwieldy management and glacial pace of decision-making were particularly noticeable in the Valley, where start-ups overtake behemoths in months.
It is different now.
“It’s much more of a style like Steve Jobs than the three-headed monster that Google was,” said a former Google executive who has spoken with current executives about the changes and spoke anonymously to preserve business relationships. “When Eric was there, you’d walk into a product meeting or a senior staff meeting, and everyone got to weigh in on every decision. Larry is much more willing to make an O.K. decision and make it now, rather than a perfect decision later.”

For the full story, see:
CLAIRE CAIN MILLER. “Google’s Chief Works to Trim a Bloated Ship.” The New York Times (Thurs., November 10, 2011): A1 & A3.
(Note: ellipses added.)
(Note: the online version of the story has the date November 9, 2011.)

Remedial Ed Does Not Remediate

(p. C4) Two economists looked at the achievements of 453,000 students who took a basic-skills test upon entering both two- and four-year public colleges in Texas in the 1990s. . . .
. . . the authors focused on the 93,000 students who either barely passed or barely failed the test. Those students, with nearly identical skills, got treated very differently: Most who barely failed took remedial courses; most who barely passed took college-level courses.
But there was no difference in subsequent achievement between those two groups. In fact, students who got remedial help were slightly less likely to finish one year of college. The study found no effects of remediation on income seven years after starting college.

For the full story, see:
CHRISTOPHER SHEA. “Week in Ideas; Education; Remedial Ed Needs Help.” The Wall Street Journal (Sat., February 5, 2011): C4.
(Note: ellipses added.)

The article summarized in the passages quoted above, is:
Martorell, Paco, and Isaac McFarlin, Jr. “Help or Hindrance? The Effects of College Remediation on Academic and Labor Market Outcomes.” Review of Economics and Statistics 93, no. 2 (May 2011): 436-54.

Cuban Government Employees “Are Known for Surly Service, Inefficiency, Absenteeism and Pilfering”

(p. A10) However small, . . . , the private sector is changing the work culture on an island where state employees earn meager salaries and are known for surly service, inefficiency, absenteeism and pilfering.
Sergio Alba Marín, who for years managed the restaurants of a state-owned hotel and now owns a popular fast-food restaurant, said he was very strict with his employees and would not employ workers trained by the state.
“They have too many vices — stealing, for one,” said Mr. Alba, who was marching with his 25 employees and two large banners emblazoned with the name of his restaurant, La Pachanga. “You can’t change that mentality.”
“Even if you could, I don’t have time,” he added. “I have a business to run.”

For the full story, see:
VICTORIA BURNETT. “HAVANA JOURNAL; Amid Fealty to Socialism, a Nod to Capitalism.” The New York Times (Thurs., May 2, 2013): A6 & A10.
(Note: ellipsis added.)
(Note: the online version of the story has the date May 1, 2013.)

Patents Turned Steam from Toy to Engine

Source of book image: http://img2.imagesbn.com/p/9781400067053_p0_v1_s260x420.JPG

(p. 20) The obvious audience for Rosen’s book consists of those who hunger to know what it took to go from Heron of Alexandria’s toy engine, created in the first century A.D., to practical and brawny beasts like George and Robert Stephenson’s Rocket, which kicked off the age of steam locomotion in 1829. But Rosen is aiming for more than a fan club of steam geeks. The “most powerful idea” of his title is not an early locomotive: “The Industrial Revolution was, first and foremost, a revolution in invention,” he writes, “a radical transformation in the process of invention itself.” The road to Rocket was built with hundreds of innovations large and small that helped drain the mines, run the mills, and move coal and then people over rails.
. . .
Underlying it all, Rosen argues, was the recognition that ideas themselves have economic value, which is to say, this book isn’t just gearhead wonkery, it’s legal wonkery too. Abraham Lincoln, wondering why Heron’s steam engine languished, claimed that the patent system “added the fuel of interest to the fire of genius.” Rosen agrees, offering a forceful argument in the debate, which has gone on for centuries, over whether patents promote innovation or retard it.
Those who believe passionately, as Thomas Jefferson did, that inventions “cannot, in nature, be a subject of property,” are unlikely to be convinced. Those who agree with the inventors James Watt and Richard Arkwright, who wrote in a manuscript that “an engineer’s life without patent is not worthwhile,” will cheer. Either way, Rosen’s presentation of this highly intellectual debate will reward even those readers who never wondered how the up-and-down chugging of a piston is converted into consistent rotary motion.

For the full review, see:
JOHN SCHWARTZ. “Steam-Driven Dreams.” The New York Times (Sun., August 29, 2010): 20.
(Note: ellipsis added; italicized words in original.)
(Note: the online version of the review has the date August 26, 2010.)

The book under review, is:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

Moore’s Law: Inevitable or Intel?

I believe that Moore’s Law remained true for a long time, not because it was inevitable, but because an exemplary company worked very hard and effectively to make it true.

(p. 159) In brief, Moore’s Law predicts that computing chips will shrink by half in size and cost every 18 to 24 months. For the past 50 years it has been astoundingly correct.

It has been steady and true, but does Moore’s Law reveal an imperative in the technium? In other words is Moore’s Law in some way inevitable? The answer is pivotal for civilization for several reasons. First, Moore’s Law represents the acceleration in computer technology, which is accelerating everything else. Faster jet engines don’t lead to higher corn yields, nor do better lasers lead to faster drug discoveries, but faster computer chips lead to all of these. These days all technology follows computer technology. Second, finding inevitability in one key area of technology suggests invariance and directionality may be found in the
rest of the technium.

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

Faculty Unions Oppose MOOCs that Might Cost Them Their Jobs in Five to Seven Years

“Sebastian Thrun, a research professor at Stanford, is Udacity’s chief executive officer.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) SAN JOSE, Calif. — Dazzled by the potential of free online college classes, educators are now turning to the gritty task of harnessing online materials to meet the toughest challenges in American higher education: giving more students access to college, and helping them graduate on time.
. . .
Here at San Jose State, . . . , two pilot programs weave material from the online classes into the instructional mix and allow students to earn credit for them.
“We’re in Silicon Valley, we (p. A3) breathe that entrepreneurial air, so it makes sense that we are the first university to try this,” said Mohammad Qayoumi, the university’s president. “In academia, people are scared to fail, but we know that innovation always comes with the possibility of failure. And if it doesn’t work the first time, we’ll figure out what went wrong and do better.”
. . .
Dr. Qayoumi favors the blended model for upper-level courses, but fully online courses like Udacity’s for lower-level classes, which could be expanded to serve many more students at low cost. Traditional teaching will be disappearing in five to seven years, he predicts, as more professors come to realize that lectures are not the best route to student engagement, and cash-strapped universities continue to seek cheaper instruction.
“There may still be face-to-face classes, but they would not be in lecture halls,” he said. “And they will have not only course material developed by the instructor, but MOOC materials and labs, and content from public broadcasting or corporate sources. But just as faculty currently decide what textbook to use, they will still have the autonomy to choose what materials to include.”
. . .
Any wholesale online expansion raises the specter of professors being laid off, turned into glorified teaching assistants or relegated to second-tier status, with only academic stars giving the lectures. Indeed, the faculty unions at all three California higher education systems oppose the legislation requiring credit for MOOCs for students shut out of on-campus classes.
. . .
“Our ego always runs ahead of us, making us think we can do it better than anyone else in the world,” Dr. Ghadiri said. “But why should we invent the wheel 10,000 times? This is M.I.T., No. 1 school in the nation — why would we not want to use their material?”
There are, he said, two ways of thinking about what the MOOC revolution portends: “One is me, me, me — me comes first. The other is, we are not in this business for ourselves, we are here to educate students.”

For the full story, see:
TAMAR LEWIN. “Colleges Adapt Online Courses to Ease Burden.” The New York Times (Tues., April 30, 2013): A1 & A3.
(Note: ellipses added.)
(Note: the online version of the story has the date April 29, 2013.)

“Katie Kormanik preparing to record a statistics course at Udacity, an online classroom instruction provider in Mountain View, Calif.” Source of caption and photo: online version of the NYT article quoted and cited above.

World Population Growth Rate “Expected to Hit Zero Around 2070”

(p. C4) In the 1960s, some experts feared an exponentially accelerating population explosion, and in 1969, the State Department envisaged 7.5 billion people by the year 2000. In 1994, the United Nations’ medium estimate expected the seven-billion milestone to arrive around 2009. Compared with most population forecasts made in the past half century, the world keeps undershooting.

The growth rate of world population has halved since the ’60s and is now expected to hit zero around 2070, with population around 10 billion, though some news outlets prefer to focus on the U.N.’s “high” estimate that it “could” reach 15 billion. The truth is, nobody can know, but if it’s below 10 billion in 2100, we will have only increased in numbers by 1.5 times in the 21st century, compared with a fourfold increase in the 20th.

For the full commentary, see:
MATT RIDLEY. “MIND & MATTER; Who’s Afraid of Seven Billion People?” The Wall Street Journal (Sat., October 29, 2011): C4.