Chávez Supporters Feared Losing Government Jobs

ChavezSupporter2012-12-18.jpg “A Chávez supporter. The president runs a well-oiled patronage system, a Tammany Hall-like operation but on a national scale. Government workers are frequently required to attend pro-Chávez rallies, and they come under pressure to vote for him.” Source of caption and photo: online version of the NYT article quoted and cited below.

After the story quoted below was published, Chávez (alas) was re-elected.

(p. A1) Many Venezuelans who are eager to send Mr. Chávez packing, fed up with the country’s lackluster economy and rampant crime, are nonetheless anxious that voting against the president could mean being fired from a government job, losing a government-built home or being cut off from social welfare benefits.

“I work for the government, and it scares me,” said Luisa Arismendi, 33, a schoolteacher who cheered on a recent morning as Mr. Chávez’s challenger, Henrique Capriles Radonski, drove by in this northeastern city, waving from the back of a pickup truck. Until this year, she always voted for Mr. Chávez, and she hesitated before giving her name, worried about what would happen if her supervisors found out she was switching sides. “If Chávez wins,” she said, “I could be fired.”
. . .
(p. A6) The fear has deep roots. Venezuelans bitterly recall how the names of millions of voters were made public after they signed a petition for an unsuccessful 2004 recall referendum to force Mr. Chávez out of office. Many government workers whose names were on the list lost their jobs.
Mr. Chávez runs a well-oiled patronage system, a Tammany Hall-like operation but on a national scale. Government workers are frequently required to attend pro-Chávez rallies, and they come under other pressures.
“They tell me that I have to vote for Chávez,” said Diodimar Salazar, 37, who works at a government-run day care center in a rural area southeast of Cumaná. “They always threaten you that you will get fired.”
Ms. Salazar said that her pro-Chávez co-workers insisted that the government would know how she voted. But experience has taught her otherwise. She simply casts her vote for the opposition and then tells her co-workers that she voted for Mr. Chávez.
“I’m not going to take the risk,” said Fabiana Osteicoechea, 22, a law student in Caracas who said she would vote for Mr. Chávez even though she was an enthusiastic supporter of Mr. Capriles. She said she was certain that Mr. Chávez would win and was afraid that the government career she hoped to have as a prosecutor could be blocked if she voted the wrong way.
“After the election, he’s going to have more power than now, lots more, and I think he will have a way of knowing who voted for whom,” she said. “I want to get a job with the government so, obviously I have to vote for Chávez.”

For the full story, see:
WILLIAM NEUMAN. “Fear of Losing Benefits Affects Venezuela Vote.” The New York Times (Sat., October 6, 2012): A1 & A6.
(Note: ellipsis added.)
(Note: the online version of the article has the date October 5, 2012, and has the title “Fears Persist Among Venezuelan Voters Ahead of Election.”)

‘Buy Local’ Implies ‘Sell Local’

In the spirit of the great Bastiat:

(p. 1117) Buy local (BL) campaigns are gaining ground in many towns, cities, counties, and states throughout the United States. These commendable efforts are based on intuitive principles that: local production reduces energy usage and therefore mitigates against climate change; the rapid approach of peak oil will lead to potentially disastrous dislocations that will erode society’s ability to provide adequate food supplies and medical care; and face-to-face economic relationships between producer and consumer, such as in a farmers’ market setting, provide a superior form of economic organization relative to the impersonal nature of our current industrial modes of production.

It is in this spirit that we, the members of Sustainability in Transportation, Utilities, Production, the Environment, and Development (STUPED), urge our local governments to take the next logical step: requirements for selling local.
. . .
This is also clearly a fairer way to approach the problem of non-local production. There exists the temptation for a given locality to urge its community members to BL, but to also simultaneously promote selling to other localities in the name of “increased local employment.” Of course, this kind of thinking totally ignores the fact that by selling goods to another region, those of us in a local production area cause harm to workers in that distant region who, as a result of our incursion into their local economies, reduce that distant region’s abilities to provide for itself.
Given the foregoing, it is evident that selllocal requirements are virtually required for the sustainability of our local economies. Buy Local publicity campaigns may make us feel better, but a well-enforced set of sell-local regulations eliminates the thorniest problem of a free-market approach–the tendency of consumers to buy whatever they darn well please. STUPED urges our local governments to adopt such a set of regulations.

Source:
Thompson, Philip, and Hart Hodges. “Sell Local! The Next Logical Step.” Economic Inquiry 49, no. 4 (October 2011): 1117-17.
(Note: italics in original; ellipsis added.)

Ellison and Jobs on Money

(p. 299) . . . Jobs and his family went to Hawaii for Christmas vacation. Larry Ellison was also there, as he had been the year (p. 300) before. “You know, Larry, I think I’ve found a way for me to get back into Apple and get control of it without you having to buy it,” Jobs said as they walked along the shore. Ellison recalled, “He explained his strategy, which was getting Apple to buy NeXT, then he would go on the board and be one step away from being CEO.” Ellison thought that Jobs was missing a key point. “But Steve, there’s one thing I don’t understand,” he said. “If we don’t buy the company, how can we make any money?” It was a reminder of how different their desires were. Jobs put his hand on Ellison’s left shoulder, pulled him so close that their noses almost touched, and said, “Larry, this is why it’s really important that I’m your friend. You don’t need any more money.”
Ellison recalled that his own answer was almost a whine: “Well, I may not need the money, but why should some fund manager at Fidelity get the money? Why should someone else get it? Why shouldn’t it be us?”
“I think if I went back to Apple, and I didn’t own any of Apple, and you didn’t own any of Apple, I’d have the moral high ground,” Jobs replied.
“Steve, that’s really expensive real estate, this moral high ground,” said Ellison. “Look, Steve, you’re my best friend, and Apple is your company. I’ll do whatever you want.”

Source:
Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.
(Note: ellipsis added.)

“The Only Benefit of War Rationing”

(p. 538) The only benefit of war rationing, of which I am aware, is that an alert entrepreneur invented the bikini so as to conserve on the textiles that were then hard to come by for civilian use.

Source:
Shughart II, William F. “The New Deal and Modern Memory.” Southern Economic Journal 77, no. 3 (Jan. 2011): 515-42.

Poor People Want Washing Machines

The wonderful clip above is from Hans Rosling’s TED talk entitled “The Magic Washing Machine.”
He clearly and strongly presents his central message that the washing machine has made life better.

What was the greatest invention of the industrial revolution? Hans Rosling makes the case for the washing machine. With newly designed graphics from Gapminder, Rosling shows us the magic that pops up when economic growth and electricity turn a boring wash day into an intellectual day of reading.

Source of video clip summary:
http://www.ted.com/talks/hans_rosling_and_the_magic_washing_machine.html

The version of the clip above is embedded from YouTube, where it was posted by TED: http://youtu.be/BZoKfap4g4w

It can also be viewed at the TED web site at:
http://www.ted.com/talks/hans_rosling_and_the_magic_washing_machine.html

(Note: I am grateful to Robin Kratina for telling me about Rosling’s TED talk,)
(Note: I do not agree with Rosling’s acceptance of the politically correct consensus view that the response to global warning should mainly be mitigation and green energy—to the extent that a response turns out to be necessary, I mainly support adaptation, as suggested in many previous entries on this blog.)

Why Health Care Costs So Much in McAllen

(p. 235) Atul Gawande lays out “The Cost Conundrum: What a Texas town can teach us about health care.” “It is spring in McAllen, Texas. The morning sun is warm. The streets are lined with palm trees and pickup trucks. McAllen is in Hidalgo County, which has the lowest household income in the country, but it’s a border town, and a thriving foreign-trade zone has kept the unemployment rate below ten per cent. McAllen calls itself the Square Dance Capital of the World. ‘Lonesome Dove’ was set around here. McAllen has another distinction, too: it is one of the most expensive health-care markets in the country. Only Miami–which has much higher labor and living costs–spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.”

Gawande as quoted in:
Taylor, Timothy. “Recommendations for Further Reading.” Journal of Economic Perspectives 24, no. 2 (Fall 2009): 231-38.

The full Gawande article can be viewed online at:
Gawande, Atul. “Annals of Medicine; the Cost Conundrum; What a Texas Town Can Teach Us About Health Care.” The New Yorker 85, no. 16 (June 2009): 36-44.

A later Gawande article, that asks why the health care system cannot be run as well as The Cheesecake Factory, can be viewed online at the link below. (Spoiler alert: I haven’t read this article yet, but I’m guessing it has something to do with the feedback and incentives provided by the free market.)
Gawande, Atul. “Annals of Health Care; Big Med; Restaurant Chains Have Managed to Combine Quality Control, Cost Control, and Innovation. Can Health Care?” The New Yorker 88, no. 24 (August 2012): 52-63.

“Did Alexander Graham Bell Do Any Market Research Before He Invented the Telephone?”

(p. 170) After the Macintosh team returned to Bandley 3 that afternoon, a truck pulled into the parking lot and Jobs had them all gather next to it. Inside were a hundred new Macintosh computers, each personalized with a plaque. “Steve presented them one at a time to each team member, with a handshake and a smile, as the rest of us stood around cheering,” Hertzfeld recalled. It had been a grueling ride, and many egos had been bruised by Jobs’s obnoxious and rough management style. But neither Raskin nor Wozniak nor Sculley nor anyone else at the company could have pulled off the creation of the Macintosh. Nor would it likely have emerged from focus groups and committees. On the day he unveiled the Macintosh, a reporter from Popular Science asked Jobs what type of market research he had done. Jobs responded by scoffing, “Did Alexander Graham Bell do any market research before he invented the telephone?”

Source:
Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.
(Note: italics in original.)

Health Care Costs Can Be Lowered by Less Waste and More Cost-Reducing Innovation

(p. 234) Melinda Beeuwkes Buntin and David Cutler discuss “The Two Trillion Dollar Solution: Saving Money by Modernizing the Health Care System.” “Two sorts of savings are possible in health care. The first is eliminating waste and inefficiency. The most commonly cited estimate is that 30 percent of the money spent on medical care does not buy care worth its cost. Medicare costs per capita in Minneapolis, for example, are about half those in Miami, yet Miami does not have better health outcomes. International comparisons yield the same conclusion. . . . Second, reform might stimulate cost-reducing innovation instead of the continuous cost increases that accompany current innovation. For nearly 20 years, scholars have argued that generous reimbursement policies for medical care have led to innovations that almost always increase health care costs. Changing that dynamic by investing in research about what works and rewarding health care providers who choose efficient treatments could have a dramatic effect on cost growth. . . . Reducing costs by 30 percent will take time and effort, but it is not inconceivable over the long term. Experience in the health care sector and other industries suggests that cost reductions on the order of 1.5-to-2.0 percentage points per year are within reach.”

Buntin and Cutler as quoted in:
Taylor, Timothy. “Recommendations for Further Reading.” Journal of Economic Perspectives 24, no. 2 (Fall 2009): 231-38.
(Note: ellipses in original.)

The Buntin and Cutler report is:
Buntin, Melinda Beeuwkes, and David Cutler. “The Two Trillion Dollar Solution: Saving Money by Modernizing the Health Care System.” Washington, D.C.: Center for American Progress, 2009.

With Scorned Ideas, and Without College, Inventor and Entrepreneur “Ovshinsky Prevailed”

OvshinskyStanfordAndiris2012-12-01.jpg

“Stanford R. Ovshinsky and Iris M. Ovshinsky founded Energy Conversion Laboratories in 1960.” Source of caption and photo: online version of the NYT obituary quoted and cited below.

(p. A23) Stanford R. Ovshinsky, an iconoclastic, largely self-taught and commercially successful scientist who invented the nickel-metal hydride battery and contributed to the development of a host of devices, including solar energy panels, flat-panel displays and rewritable compact discs, died on Wednesday [October 17, 2012] at his home in Bloomfield Hills, Mich. He was 89.
. . .
His ideas drew only scorn and skepticism at first. He was an unknown inventor with unconventional ideas, a man without a college education who made his living designing automation equipment for the automobile industry in Detroit, far from the hotbeds of electronics research like Silicon Valley and Boston.
But Mr. Ovshinsky prevailed. Industry eventually credited him for the principle that small quantities or thin films of amorphous materials exposed to a charge can instantly reorganize their structures into semicrystalline forms capable of carrying significant current.
. . .
In 1960, he and his second wife, the former Iris L. Miroy, founded Energy Conversion Laboratories in Rochester Hills, Mich., to develop practical products from the discovery. It was renamed Energy Conversion Devices four years later.
Energy Conversion Devices and its subsidiaries, spinoff companies and licensees began translating Mr. Ovshinsky’s insights into mechanical, electronic and energy devices, among them solar-powered calculators. His nickel-metal battery is used to power hybrid cars and portable electronics, among other things.
He holds patents relating to rewritable optical discs, flat-panel displays and electronic-memory technology. His thin-film solar cells are produced in sheets “by the mile,” as he once put it.
. . .
“His incredible curiosity and unbelievable ability to learn sets him apart,” Hellmut T. Fritzsche, a longtime friend and consultant, said in an interview in 2005.

For the full obituary, see:
BARNABY J. FEDER. “Stanford R. Ovshinsky Dies at 89, a Self-Taught Maverick in Electronics.” The New York Times (Fri., October 19, 2012): A23.
(Note: ellipses and bracketed date added.)
(Note: the online version of the article was dated October 18, 2012.)
(Note: in the first sentence of the print version, “hybrid” was used instead of the correct “hydride.”)

Early Retirement Reduces Cognitive Ability

(p. 136) Early retirement appears to have a significant negative impact on the cognitive ability of people in their early 60s that is both quantitatively important and causal. We obtain this finding using cross-nationally comparable survey data from the United States, England, and Europe that allow us to relate cognition and labor force status. We argue that the effect is causal by making use of a substantial body of research showing that variation in pension, tax, and disability policies explain most variation across countries in average retirement rates.

Further exploration of existing data and new data being collected would allow a considerably deeper exploration of the roles of work and leisure in determining the pace of cognitive aging. For example, the HRS contains considerable information on how respondents use their leisure time that would allow both cross-sectional and longitudinal analysis of changes in cognitive exercise that are associated with (p. 137) retirement. In addition, detailed occupation and industry data could be used to understand differences in the pace of technical change to which workers must adjust during the latter part of their careers. Also, in the 2010 wave, the HRS will be adding measures of other components of fluid intelligence. Future work in this area should be able to separate the effects of the “unengaged lifestyle hypothesis” (that early retirees suffer cognitive declines because the work environment they have left is more cognitively stimulating than the full-time leisure environment they have entered) from the “on-the-job retirement hypothesis” (which holds that incentives to invest among older workers are significantly reduced when they expect to retire at an early age).

During the past decade, older Americans seem to have reversed a century-long trend toward early retirement and have been increasing their labor force participation rates, especially beyond age 65. This is good news for the standard of living of elderly Americans, as well as for the fiscal balance of the Social Security and Medicare systems. Our paper suggests that it may also be good news for the cognitive capacities of our aging nation.

Source:
Rohwedder, Susann, and Robert J. Willis. “Mental Retirement.” Journal of Economic Perspectives 24, no. 1 (Winter 2010): 119-38.

Progress of Economic Science on Central Banking

The passage below is a comment by former head of the Fed, Paul Volcker.

(p. 25) . . . I recently commented to some of my economist friends that I’m not aware of any large contribution that economic science has made to central banking in the last 50 years or so.

Our ability to forecast is still very limited. The old issues of the relative role of fiscal and monetary policies are still debated. Markets are certainly more complex, and some of the old approaches toward monetary control seem less relevant. Recent events have certainly illustrated limitations in our understanding of the economy.
The advent of floating exchange rates, which partly reflects a shift in academic thinking, has certainly been important, but the underlying problems of policy seem familiar.

Stern, Gary H., interviewer. “Paul A.Volcker in Conversation with Gary H. Stern.” The Region (September 2009): 18-29.
(Note: ellipsis added.)