Economics – Page 190 – artdiamondblog.com

Few Jobs from Billions Feds Spent on Green Stimulus

“County Commissioner Rosaura Tijerina supported tax breaks for the Cedro Hill wind farm, but it brought few new jobs.” Source of caption and photo: online version of the WSJ review quoted and cited below.

(p. A1) Alfredo Garcia was among the residents of Webb County, Texas, banking on a windfall from federal stimulus money.

Mr. Garcia expanded his Mexican restaurant from 80 to 120 seats, anticipating a rush of new patrons springing from the nearby Cedro Hill wind farm, a project built with the help of $108 million from U.S. taxpayers.
When construction ended, Cedro Hill had just three employees and Mr. Garcia’s restaurant, Aimee’s, filed for bankruptcy protection. “Nobody came,” said Mr. Garcia, a county judge who closed Aimee’s last year, putting 18 people out of work.
Companies have received more than $10 billion to create jobs and renewable energy by building wind farms, solar projects and other alternatives to oil and natural gas under section 1603 of the American Recovery and Reinvestment Act of 2009. The program expired in December, and President Barack Obama proposed last week that Congress revive it in the 2013 budget.
On federal applications, companies said they created more than 100,000 direct jobs at 1603-funded projects. But a Wall Street Journal investigation found evidence of far fewer. Some plants laid off workers. Others closed.
The discrepancies highlight broader challenges calculating the economic benefits of stimulus spending. Jobs have been an important measure influencing distribution of more than $800 billion in stimulus money, which also has included tax breaks and spending on roads, sewers, schools, health and public assis-(p. A10)tance. Yet the number of jobs created or saved is largely based on formulas, mathematical models and reports by recipients, rather than actual tallies.

For the full story, see:
IANTHE JEANNE DUGAN and JUSTIN SCHECK. “Cost of $10 Billion Stimulus Easier to Tally Than New Jobs.” The Wall Street Journal (Fri., FEBRUARY 24, 2012): A1 & A10.

Source of graphic: online version of the WSJ story quoted and cited above.

Amateurs Can Advance Science

(p. C4) The more specialized and sophisticated scientific research becomes, the farther it recedes from everyday experience. The clergymen-amateurs who made 19th-century scientific breakthroughs are a distant memory. Or are they? Paradoxically, in an increasing variety of fields, computers are coming to the rescue of the amateur, through crowd-sourced science.
Last month, computer gamers working from home redesigned an enzyme. Last year, a gene-testing company used its customers to find mutations that increase or decrease the risk of Parkinson’s disease. Astronomers are drawing amateurs into searching for galaxies and signs of extraterrestrial intelligence. The modern equivalent of the Victorian scientific vicar is an ordinary person who volunteers his or her time to solving a small piece of a big scientific puzzle.
Crowd-sourced science is not a recent invention. In the U.S., tens of thousands of people record the number and species of birds that they see during the Christmas season, a practice that dates back more than a century. What’s new is having amateurs contribute in highly technical areas.

For the full commentary, see:
MATT RIDLEY. “MIND & MATTER; Following the Crowd to Citizen Science.” The Wall Street Journal (Sat., FEBRUARY 11, 2012): C4.

The Impact of Cheap Smart Phones on Africa

Jimbo Wales

Source of photo: online version of the NYT article quoted and cited below.

(p. 2) PHONING: A friend of mine bought me an Ideos phone on the street in Kenya for about $80. This is an Android phone that’s a bit smaller than an iPhone, but a lot cheaper. This is really exciting because at that price point, hundreds of thousands and soon millions of smartphones are going to be sold across Africa. The impact for people’s access to knowledge in some very difficult places is enormous.

For the full interview, see:
Jimmy Wales as interviewed by KATE MURPHY. “DOWNLOAD; Jimmy Wales.” The New York Times, SundayReview (Sun., February 12, 2012): 2.
(Note: the online version of the interview is dated February 11, 2012.)

Big Data Opportunity for Economics and Business

(p. 7) Data is not only becoming more available but also more understandable to computers. Most of the Big Data surge is data in the wild — unruly stuff like words, images and video on the Web and those streams of sensor data. It is called unstructured data and is not typically grist for traditional databases.
But the computer tools for gleaning knowledge and insights from the Internet era’s vast trove of unstructured data are fast gaining ground. At the forefront are the rapidly advancing techniques of artificial intelligence like natural-language processing, pattern recognition and machine learning.
Those artificial-intelligence technologies can be applied in many fields. For example, Google’s search and ad business and its experimental robot cars, which have navigated thousands of miles of California roads, both use a bundle of artificial-intelligence tricks. Both are daunting Big Data challenges, parsing vast quantities of data and making decisions instantaneously.
. . .
To grasp the potential impact of Big Data, look to the microscope, says Erik Brynjolfsson, an economist at Massachusetts Institute of Technology’s Sloan School of Management. The microscope, invented four centuries ago, allowed people to see and measure things as never before — at the cellular level. It was a revolution in measurement.
Data measurement, Professor Brynjolfsson explains, is the modern equivalent of the microscope. Google searches, Facebook posts and Twitter messages, for example, make it possible to measure behavior and sentiment in fine detail and as it happens.
In business, economics and other fields, Professor Brynjolfsson says, decisions will increasingly be based on data and analysis rather than on experience and intuition. “We can start being a lot more scientific,” he observes.
. . .
Research by Professor Brynjolfsson and two other colleagues, published last year, suggests that data-guided management is spreading across corporate America and starting to pay off. They studied 179 large companies and found that those adopting “data-driven decision making” achieved productivity gains that were 5 percent to 6 percent higher than other factors could explain.
The predictive power of Big Data is being explored — and shows promise — in fields like public health, economic development and economic forecasting. Researchers have found a spike in Google search requests for terms like “flu symptoms” and “flu treatments” a couple of weeks before there is an increase in flu patients coming to hospital emergency rooms in a region (and emergency room reports usually lag behind visits by two weeks or so).
. . .
In economic forecasting, research has shown that trends in increasing or decreasing volumes of housing-related search queries in Google are a more accurate predictor of house sales in the next quarter than the forecasts of real estate economists. The Federal Reserve, among others, has taken notice. In July, the National Bureau of Economic Research is holding a workshop on “Opportunities in Big Data” and its implications for the economics profession.

For the full story, see:

STEVE LOHR. “NEWS ANALYSIS; The Age of Big Data.” The New York Times, SundayReview (Sun., February 12, 2012): 1 & 7.
(Note: ellipses added.)
(Note: the online version of the article is dated February 11, 2012.)

In China the Rich and Creative Prepare to Vote with Their Feet

“Shi Kang, a millionaire writer living in Beijing, started thinking about emigrating after a long road trip last year around the U.S.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) BEIJING–This time last year, Shi Kang considered himself a happy man.

Writing 15 novels had made him a millionaire. He owned a luxury apartment and a new silver Mercedes. He was so content with his carefree life in Beijing that he never even traveled overseas.
Today, a year later, Mr. Shi is considering emigrating to the U.S.–one of a growing number of rich Chinese either contemplating leaving their homeland or already arranging to do it.
. . .
(p. A12) A survey published in November found that 60% of about 960,000 Chinese people with assets over 10 million yuan ($1.6 million) were either thinking about emigrating or taking steps to do so. The U.S. was the top destination, followed by Canada, Singapore and Europe, according to the survey by the state-run Bank of China and Hurun Report, which analyzes trends among China’s wealthy.
. . .
Mr. Su was no dissident, though. Like many of his generation, he turned his attention to getting rich. Today, at 46, Mr. Su runs his own aerospace technology company and estimates his own net worth, including the various properties he owns, at around 80 million yuan, or close to $13 million.
His main reason for leaving, he says, is the business environment. “The government has too much power,” he says. “Regulations here mean that businessmen have to do a lot of illegal things. That gives people a real sense of insecurity.” He said four of his distributors have also applied for investment immigration to Canada.
. . .
“The problem is that government power is too great,” Mr. Su says. “When the economy is going up, they think that everything they are doing is right.” If they don’t change, he worries, “another revolution will come soon.”
. . .
The current migrant wave is different in that they are escaping neither poverty nor political unrest–and many say they are leaving for good. The Hurun survey showed that the average respondent had 60 million yuan in assets and was 42, old enough to remember the 1989 Tiananmen crackdown, but young enough to have learned how to prosper in a market economy.
Deng Jie fits the profile. Twenty-seven years ago, in the fledgling years of China’s market reforms, he began his career in a state-run ceramics factory in Beijing, sharing a cramped dormitory with colleagues and earning 50 yuan a month (about $13 in those days).
Today, at 48, he runs his own chemical pigments business and lives with his wife and daughter in one of the three luxury apartments he owns. In dollar terms, he is a millionaire several times over. His properties alone have appreciated by 800% in a decade.
Yet the hope he felt for his country in the 1980s, he says, has “been doused with bucket after bucket of cold water.” He cited a host of concerns, including rampant corruption among the officials he deals with, and new labor regulations that he says have made his work force too costly and demanding.
“I’m representing a lot of other people like me,” he says. “We used to want to contribute to the nation. But now we just feel so disappointed. China cannot continue like this. It has to change.”

For the full story, see:

JEREMY PAGE. “Plan B for China’s Wealthy: Moving to the U.S., Europe.” The Wall Street Journal (Thurs., FEBRUARY 22, 2012): A1 & A12.
(Note: ellipses added.)

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

Manifesto for a Rising Standard of Living

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

(p. A13) Mr. Diamandis is the chairman and chief executive of the X Prize Foundation and the founder of more than a dozen high-tech companies. With his journalist co-author, he has produced a manifesto for the future that is grounded in practical solutions addressing the world’s most pressing concerns: overpopulation, food, water, energy, education, health care and freedom. The authors suggest that “humanity is now entering a period of radical transformation where technology has the potential to significantly raise the basic standard of living for every man, woman, and child on the planet.”
. . .
Predictions of a rosy future have a way of sounding as unrealistic as end-is-nigh forecasts. But Messrs. Diamandis and Kotler are not just dreamers. They lay out a plausible road map, discussing, among other things, the benefits of do-it-yourself tinkering–like the work by geneticist J. Craig Venter in beating the U.S. government in the race to sequence the human genome–and the growing willingness of techno-philanthropists like Bill Gates to tackle real-world problems.
The biggest hurdles, however, are not scientific or technological but political. There are still too many corrupt dictators and backward-looking governments keeping millions in penury. But as we have seen lately, the misruled have a way of throwing off despotic governments. With ever more people reaching for freedom, countless millions are tacitly embracing the Diamandis motto: “The best way to predict the future is to create it yourself.”

For the full review, see:
MICHAEL SHERMER. “BOOKSHELF; Defying the Doomsayers; Abundance” argues that growing technologies have the potential not only to spread information but to solve some of humanity’s most vexing problems.” The Wall Street Journal (Thurs., FEBRUARY 22, 2012): A13.
(Note: ellipsis added.)

The book being reviewed is:
Diamandis, Peter H., and Steven Kotler. Abundance: The Future Is Better Than You Think. New York: Free Press, 2012.

Nasar Gives Compelling Portrait of Joseph Schumpeter and His Vienna

Source of book image: http://luxuryreading.com/wp-content/uploads/2011/10/grand-pursuit.jpg

(p. C31) Ms. Nasar gives us Belle Époque Vienna — infatuated with modernity and challenging London in the race to electrify with new telephone service, state-of-the-art factories and power-driven trams — and then a devastating picture of Vienna at the end of World War I: war veterans loitering outside restaurants waiting for scraps, and desperate members of a middle class that saw inflation wipe out all its savings trading a piano for a sack of flour, a gold watch chain for a few sacks of potatoes.
. . .
Among the more compelling portraits in this volume is that of Joseph Alois Schumpeter, the brilliant European economist who argued that the distinctive feature of capitalism was “incessant innovation” — a “perennial gale of creative destruction” — and who identified the entrepreneur as the visionary who could “revolutionize the pattern of production by exploiting an invention” or “an untried technological possibility.”

For the full review, see:
MICHIKO KAKUTANI. “BOOKS OF THE TIMES; The Economist’s Progress: Better Living Through Fiscal Chemistry.” The New York Times (Fri., December 2, 2011): C31.
(Note: ellipsis added.)
(Note: the online version of the article is dated December 1, 2011.)

Paul Allen Uses Microsoft Profits for Bold Private Space Project

Source of graphic: online version of the WSJ article quoted and cited below.

(p. B1) Microsoft Corp. co-founder Paul Allen indicated he is prepared to commit $200 million or more of his wealth to build the world’s largest airplane as a mobile platform for launching satellites at low cost, which he believes could transform the space industry.

Announced Tuesday, the novel, high-risk project conceived by renowned aerospace designer Burt Rutan seeks to combine engines, landing gears and other parts removed from old Boeing 747 jets with a newly created composite craft from Mr. Rutan and a powerful rocket to be built by a company run by Internet billionaire and commercial-space pioneer Elon Musk.
Dubbed Stratolaunch and funded by one of Mr. Allen’s closely held entities, the venture seeks to meld decades-old airplane technology with cutting-edge booster-rocket designs in an unprecedented way to assemble a hybrid that would offer the first totally privately funded space transportation system.

For the full story, see:
ANDY PASZTOR And DIONNE SEARCEY. “Paul Allen, Supersizing Space Flight; Billionaire’s Novel Vision Has Wingspan Wider Than a Football Field, Weighs 1.2 Million Pounds.” The Wall Street Journal (Weds., December 5, 2011): B1 & B5.

“What Success Had Brought Him, . . . , Was Freedom”

(p. 5) The success of Pixar’s films had brought him something exceedingly rare in Hollywood: not the house with the obligatory pool in the backyard and the Oscar statuettes on the fireplace mantel, or the country estate, or the vintage Jaguar roadster–although he had all of those things, too. It wasn’t that he could afford to indulge his affinity for model railroads by acquiring a full-size 1901 steam locomotive, with plans to run it on the future site of his twenty-thousand-square-foot mansion in Sonoma Valley wine country. (Even Walt Dìsney’s backyard train had been a mere one-eighth-scale replica.)
None of these was the truly important fruit of Lasseter’s achievements. What success had brought him, most meaningfully, was freedom. Having created a new genre of film with his colleagues at Pixar, he had been able to make the films he wanted to make, and he was coming back to Disney on his own terms.

Source:
Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.
(Note: ellipsis in title was added.)
(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

Married Batters Paid More than Equally Good Bachelor Batters

(p. C4) Many studies have found that married men earn more than their single peers, but whether they’re actually more productive is harder to answer. To settle the question, researchers looked to baseball.
They took a random sample of nearly 3,500 pro hitters, from 1871 through 2007, comparing their batting averages and other statistics with their salaries (as revealed in MLB archives and other sources). Until 1975, when the market for players became freer, there was no link between marriage, productivity and earnings. After 1975, there was some evidence that hitters who begin their careers in the bottom third of the ability spectrum gained a handful of points in batting average when they married, and a bit of salary, but the evidence was statistically weak.

For the full summary, see:
Christopher Shea. “Marriage Moneyball.” The Wall Street Journal (Sat., NOVEMBER 5, 2011): C4.

The paper summarized is:
Cornaglia, Francesca, and Naomi E. Feldman. “Productivity, Wages, and Marriage: The Case of Major League Baseball.” CEP Discussion Paper # 1081, September 2011.

Even Krugman Worries that China Faces “Economic Crisis”

China’s economy is often touted as an exemplar of the success of government stimulus policies at promoting economic growth. So it is worth noting when a Nobel-Prize-winning international economist and advocate of government stimulus policies worries that in China:

(p. A25) . . . the bubble is bursting — and there are real reasons to fear financial and economic crisis.
. . .
I’ve been reluctant to weigh in on the Chinese situation, in part because it’s so hard to know what’s really happening. All economic statistics are best seen as a peculiarly boring form of science fiction, but China’s numbers are more fictional than most. I’d turn to real China experts for guidance, but no two experts seem to be telling the same story.

Still, even the official data are troubling — and recent news is sufficiently dramatic to ring alarm bells.
. . .
Real estate investment has roughly doubled as a share of G.D.P. since 2000, accounting directly for more than half of the overall rise in investment. And surely much of the rest of the increase was from firms expanding to sell to the burgeoning construction industry.
Do we actually know that real estate was a bubble? It exhibited all the signs: not just rising prices, but also the kind of speculative fever all too familiar from our own experiences just a few years back — think coastal Florida.
. . .
For what it’s worth, statements about economic policy from Chinese officials don’t strike me as being especially clear-headed. In particular, the way China has been lashing out at foreigners — among other things, imposing a punitive tariff on imports of U.S.-made autos that will do nothing to help its economy but will help poison trade relations — does not sound like a mature government that knows what it’s doing.
And anecdotal evidence suggests that while China’s government may not be constrained by rule of law, it is constrained by pervasive corruption, which means that what actually happens at the local level may bear little resemblance to what is ordered in Beijing.

For the full commentary, see:
PAUL KRUGMAN. “Will China Break?” The New York Times (Mon., December 19, 2011): A25.
(Note: ellipses added.)
(Note: the online version of the story is dated December 18, 2011.)