Economics – Page 204 – artdiamondblog.com

London’s Albion Mills Was “Likely” Destroyed By Millers’ Arson

(p. 187) The Albion Mills, as it would be called, was built on a scale hitherto unimagined. The largest flour mill in London in 1783 used The Albion Mills, as it would be called, was built on a scale hitherto unimagined. The largest flour mill in London in 1783 used four pairs of grinding stones; Albion was to have thirty, driven by three steam engines, each with a 34-inch cylinder. Within months after its completion, in 1786, those engines were driving mills that produced six thousand bushels of flour every week–which both fed a lot of Londoners and angered a lot of millers.

The Albion Mills was London’s first factory, and its first great symbol of industrialization; its construction inaugurated not only great age of steam-driven factories, but also the doomed though poignant resistance to them. That resistance took the shape of direct action–no one knows how the fire that destroyed the Albion Mills in 1791 began, but arson by millers threatened by its success seems likely– . . .

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: ellipsis added.)

U.S. Sets Capital Requirement Too High for Entrepreneurs’ Visas

“Brian Wong, above at his company’s office in San Francisco, is a Canadian citizen hoping for a rule change that would ease U.S. visa restrictions.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B7) San Francisco entrepreneur Brian Wong has already hired two employees and secured $300,000 in funding for his start-up, and hopes to have a staff of 40 or more full-time workers by this time next year.

But there’s at least one red flag in his business plan: Mr. Wong isn’t American; he’s Canadian.
. . .
. . . foreign entrepreneurs have long played an outsized role in the U.S. start-up sector, especially in the tech industry. Immigrants are nearly 30% more likely to start a business than nonimmigrants, the Small Business Administration says. University of California researchers estimate about a third of Silicon Valley technology firms were started by Indian or Chinese entrepreneurs, while a joint study with Duke University found at least one immigrant founder in over a quarter of all engineering and technology firms launched in the U.S. since the mid 1990s, together generating nearly 450,000 jobs by 2005. Google Inc., Intel Corp., Yahoo Inc. and eBay Inc. all had at least one immigrant founder.
Yet many of these companies were also started on a shoestring, leading some tech industry insiders to say the bill’s capital requirements are far too high.
. . .
. . . , the start-up visa’s high capital requirement is certain to filter out sole-proprietorships, while ensuring it attracts innovative, mostly tech-savvy entrepreneurs, says Bob Litan, a researcher at the Kauffman Foundation. The downside, he says, is that only a handful of immigrant entrepreneurs will qualify.
“Hardly any businesses get venture capital in a given year,” Mr. Litan says. “This isn’t going to have much of an impact on the U.S. economy and I suspect that’s why so few people are opposed to it.”
. . .
Without a visa, Mr. Wong says he’ll be forced to launch his start-up back in Canada, taking the new jobs with him.

For the full story, see:
ANGUS LOTEN. “New Pitch for Start-Up Visas; Senate Bill Would Make for Smoother U.S. Entry for Foreign Entrepreneurs .” The Wall Street Journal (Thurs., December 16, 2010): B7.
(Note: ellipses added.)

Trade Stats Count iPhone as Chinese Export, Despite Only 3.6% of iPhone Costs from China

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

(p. B1) . . . two academic researchers estimate that Apple Inc.’s iPhone–one of the best-selling U.S. technology products–actually added $1.9 billion to the U.S. trade deficit with China last year.

How is this possible? The researchers say traditional ways of measuring global trade produce the number but fail to reflect the complexities of global commerce where the design, manufacturing and assembly of products often involve several countries.
“A distorted picture” is the result, they say, one that exaggerates trade imbalances between nations.
Trade statistics in both countries consider the iPhone a Chinese export to the U.S., even though it is entirely designed and owned by a U.S. company, and is made largely of parts produced in several Asian and European countries. China’s contribution is the last step–assembling and shipping the phones.
So the entire $178.96 estimated wholesale cost of the shipped phone is credited to China, even though the value of the work performed by the Chinese workers at Hon Hai Precision Industry Co. accounts for just 3.6%, or $6.50, of the total, the researchers calculated in a report published this month.

For the full story, see:
ANDREW BATSON. “Not Really ‘Made in China’; The iPhone’s Complex Supply Chain Highlights Problems With Trade Statistics.” The Wall Street Journal (Thurs., December 16, 2010): B1 & B2.
(Note: ellipsis added.)
(Note: the online version of the article is dated DECEMBER 15, 2010nd that were not in the print version.)

The research report breaking down iPhone costs by country is:

Xing, Yuqing, and Neal Detert. “How the Iphone Widens the United States Trade Deficit with the People’s Republic of China.” ADBI Working Paper Series, no. 257, December 2010.

Supervising a Talented Inventor

(p. 180) Anyone who has ever supervised a talented subordinate with a tendency to set his own priorities will find Watt’s letters familiar: “I wish William could be brought to do as we do, to mind the business in hand, and let such as Symington [William Symington, the builder of the Charlotte Dundas, one of the world’s first steam-engine boats] and Sadler [James Sadler, balloonist and inventor of a table steam engine] throw away their time and money, hunting shadows.”

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: italics and bracketed words in original.)

Bronson Alcott’s Environmentalist Utopia Failed from Too Much Verbal Manure and Too Little Real Manure

(p. 21) Like many educational theorists, Bronson Alcott found his own children hard to manage. And, again like many visionaries, he also found it hard to hold down a job. As a result, the family moved 29 times in as many years. In 1843 Bronson helped found Fruitlands, a utopian community 15 miles west of Boston. Members of the commune, which numbered 13 people at its height, advocated abolitionism, environmentalism, feminism and anarchism, forswearing meat, alcohol, neckcloths, haircuts, cotton (because it was grown by slaves) and leather (because it was harvested from animals). Their rejection of one more animal product, manure, helps explain why Fruitlands failed after only eight months: this new Eden remained barren in the absence of fertilizer.

In “Transcendental Wild Oats,” a satiric memoir Louisa based on the diary she kept at Fruitlands, one character asks “Are there any beasts of burden on the place?” and is answered, “Only one woman!” In real life, the expulsion of the lone female convert, probably for helping herself to some fish on the sly, left Louisa’s mother, Abigail, to do all the women’s work and much of the men’s — especially since Bronson and his sidekick, Charles Lane, made a habit of disappearing on recruiting trips at the very moment farm labor was required.

For the full review, see:
LEAH PRICE. “American Girl.” The New York Times Book Review (Sun., December 12, 2010): 21.
(Note: the online version of the review is dated December 10, 2010.)

The books under review are:
Cheever, Susan. Louisa May Alcott: A Personal Biography. New York: Simon & Schuster, 2010.
Francis, Richard. Fruitlands: The Alcott Family and Their Search for Utopia. New Haven, CT: Yale University Press, 2010.

Not Long on Dong—Vietnam’s Proletariat Use American Dollar Instead

“A black-market money exchange in Hanoi trades dong for dollars.” Source of caption and photo: online version of the WSJ article quoted and cited below.

They say that for children, ‘a spoonful of sugar helps the medicine go down.’ Maybe for adults, a spoonful of irony helps the zeitgeist go down?
America lost the war in Vietnam to the Communist Vietcong. Now, the Vietnam government, consisting of the linear descendants of the Communist Vietcong, has so run their currency (the dong) into the ground, that Vietnam’s proletariat are choosing to use the American dollar instead of the Vietnamese dong.

(p. C1) HO CHI MINH CITY, Vietnam–At a time when many emerging markets are trying to stem a destabilizing rise in their local currencies against the dollar, up-and-coming Vietnam is grappling with a rather different problem: Residents can’t get enough of the U.S. greenback, as their own currency, the dong, threatens to spiral lower.
. . .
. . . the Communist-run government’s determination to hit persistently high growth targets, coupled with state-directed lending growth of more than 30% annually in recent years, have flooded Vietnam’s economy with money and created a raft of problems for the local currency. The excess capital has triggered a sharper uptick in inflation than has been seen in other emerging markets, stripping confidence in the dong as residents doubt their government can manage rising costs in the months ahead.
. . .
. . . , the government is projecting an inflation rate of at least 7% a year for the next five years, far higher than its neighbors, in a sign that it intends to pursue its target-driven, growth-at-all-costs policies.
“This isn’t a sustainable way to run an economy,” says Nguyen Quang A, an economist who ran Vietnam’s only independent economic think tank until its founders opted to close it amid tightening government censorship.

For the full story, see:
JAMES HOOKWAY. “Vietnam Battles Dark Side of Boom.” The Wall Street Journal (Thurs., DECEMBER 16, 2010): C1-C2.
(Note: ellipses added.)
(Note: the online version of the article is dated DECEMBER 15, 2010; the last couple of sentences (starting with “the government”) appear in the online, but not in the print, version of the article.)

Environmentalist Antiglobalization “Vandals” Destroy Giorgio’s Corn

“Last week, Giorgio Fidenato, who had planted genetically modified corn, stood amid stalks that had been trampled by antiglobalization activists.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A4) VIVARO, Italy — Giorgio Fidenato declared war on the Italian government and environmental groups in April with a news conference and a YouTube video, which showed him poking six genetically modified corn seeds into Italian soil.

In fact, said Mr. Fidenato, 49, an agronomist, he planted two fields of genetically modified corn. But since “corn looks like corn,” as he put it, it took his opponents weeks to find his crop.
The seeds, known as MON810, are modified so that the corn produces a chemical that kills the larvae of the corn borer, a devastating pest. Yet while European Union rules allow this particular seed to be planted, Italy requires farmers to get special permission for any genetically modified, or G.M., crop — and the Agriculture Ministry never said yes.
“We had no choice but to engage in civil disobedience — these seeds are legal in Europe,” said Mr. Fidenato, who has repeatedly applied for permission, adding that he drew more inspiration from Ron Paul than Gandhi.
. . .
After Mr. Fidenato’s provocation, investigators did genetic testing to identify the locations of the offending stalks in the sea of cornfields that surround this tiny town. Officials seized two suspect fields — about 12 acres — and declared the plantings illegal. Greenpeace activists surreptitiously snipped off the stalks’ tassels in the hope of preventing pollen from being disseminated.
On Aug. 9, 100 machete-wielding environmental activists from an antiglobalization group called Ya Basta descended on Vivaro and trampled the field before local police officers could intervene. They left behind placards with a skull and crossbones reading: “Danger — Contaminated — G.M.O.”
Giancarlo Galan, who became agriculture minister in April, called the protesters “vandals,” although he did not say he would allow genetically modified crops. But Luca Zaia, the previous agriculture minister and president of the nearby Veneto region, applauded the rampage, saying: “There is a need to show multinationals that they can’t introduce Frankenstein crops into our country without authorization.”
Over the past decade, genetically modified crops have been a major (p. A8) source of trade friction between Europe and the United States.
Both the United States Food and Drug Administration and the European Food Safety Agency say that there is no scientific evidence that eating MON810 corn is dangerous.
. . .
. . . it is not clear that the battle of Vivaro will have a quick victor. Jail time or at least fines are expected for Mr. Fidenato (illegal planting) and Mr. Tornatore (trespassing and destroying private property).

For the full story, see:
ELISABETH ROSENTHAL. “In the Fields of Italy, a Conflict Over Corn.” The New York Times (Tues., August 24, 2010): A4 & A8.
(Note: ellipses added.)
(Note: the online version of the review has the date August 23, 2010.)

“An ear of corn infested with corn borers. A modified variety is meant to counteract the pest.” Source of caption and photo: online version of the NYT article quoted and cited above.

A Late Bronze Age “Cornucopian Example of Multiculturism”

“Influences from Egypt and Mediterranean Asia appear to merge in this container, from around 1390 to 1352 B.C.” Source of caption and photo: online version of the NYT article quoted and cited below.

The cultural flowering (see above and below) brought about by Late Bronze Age Mediterranean trade, is highly compatible with arguments made in Tyler Cowen’s Creative Destruction, which argues that capitalism promotes the important kind of diversity that within cultures increases creativity and options for individual choice.
It would be interesting and useful to know more about the causes and effects of the dark age mentioned below–the one that started around 1200 BC. An earlier entry mentioned archeological evidence of a small family group near Katilimata on Crete who attempted to hunker down to defend themselves and their property from the invaders from the sea mentioned below.
Sometimes the Phoenicians are given credit for the trade, and Paul Johnson in his recent Heroes book (p. 4), identifies the evil invaders who killed the trade as being the Philistines.

(p. C28) For a truly cornucopian example of multiculturalism, though, nothing matches the contents of the Late Bronze Age merchant ship recovered from the sea off the southern coast of Turkey. Discovered by a sponge diver in 1984 and considered the oldest surviving example of a seagoing ship, it probably sank around 1300 B.C., packed with cargo representing a dozen cultures, from Nubia to the Balkans.

Although the ship’s home port is unknown, it appears to have traveled a circular route through the Mediterranean and Aegean, stopping in Greece, Crete, Turkey, Syria and Egypt, picking up and unloading as it went. Bulk materials included copper ingots, Cypriot pottery, African wood and Near Eastern textiles, all for waiting markets.
Divers also found luxury items, possibly personal possessions of the ship’s crew and passengers. Examples of ivory containers in the form of ducks have parallels with Egyptian prototypes, but were probably made in Mediterranean Asia. The two sources merge in a figure found in a tomb: a nude female swimmer with a chic, Nile-style pageboy who is hitching a ride behind an ivory-headed bird.
More precious and enigmatic is a standing bronze figure of a woman, probably a goddess, her head and face still covered with the sheet gold that may once have encased her whole body in a radiant epidermis. The exhibition catalog suggests that she might be a talismanic charm intended to protect the ship from harm.
Harm came anyway, as it did to much of the Mediterranean world, around 1200 B.C. with the arrival of mysterious, sea-based invaders, who conquered most of the great maritime cities, interrupting trade and easy cultural exchange, and bringing on a dark age, a depression. The depression — or was it severe recession? — didn’t last forever. The passion for acquisition, exchange and accumulation survived it, as it always does.
This passion is, of course, our own. It is one reason that we can, if we try, identify with the diverse people who, thousands of years ago, made the objects in this show. The globalist, all-in-it-together world model they invented is another reason. Their dark age could be one too.

For the full review, see:
HOLLAND COTTER. “Art Review; ‘Beyond Babylon’; Global Exchange, Early Version.” The New York Times (Fri., November 21, 2008): C23 & C28.
(Note: the online version of the review has the date November 20, 2008.)

The Cowen book mentioned in my initial comments, is:
Cowen, Tyler. Creative Destruction: How Globalization Is Changing the World’s Cultures. Princeton, NJ: Princeton University Press, 2002.

The Paul Johnson book mentioned in my initial comments, is:
Johnson, Paul M. Heroes. New York: HarperCollins, 2007.

Under Health Care ‘Reform’ the Total Cost of Health Care Will “Go through the Roof!”

“Jonathan Bush, nephew of one former president and cousin of another, built a small medical practice into a national enterprise with nearly 1,200 employees.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B10) In the world of health care innovation, the founder and chief executive of Athenahealth has an outsize name. In part, that’s because his name is Jonathan Bush, and he is the nephew of one former president and the cousin of another. But it’s also because his company has mastered the intricacies of the doctor-insurer relationship and become a player in the emerging medical records industry.

Based in Watertown, Mass., Athenahealth offers a suite of administrative services for medical practices. It collects payments from insurers and patients, and it manages electronic health records and patient communication systems. All of this is done remotely through the Internet — or “in the cloud,” as Mr. Bush puts it. Doctors don’t have to install or manage software or pay licensing fees; instead, Athenahealth keeps a percentage of the revenue.
. . .
Q. What’s going on in the health care industry to deliver that kind of growth to you?
A. We are a disruptive technology. We are the only cloud-based service in an industry segment full of sclerotic, enormous, personality-free corporations that have been in business making 90 percent margins doing nothing for decades and decades.
Q. What keeps other companies from building cloud-based systems?
A. For software companies, the biggest barrier to entry is that they give up their business model. Those companies would get hammered on Wall Street if they started selling a service that they have to deliver at a loss for five years. In terms of new entrants, there are two things that we’ve done that would take a good decade to replicate. One, we’ve built out the health care Internet. We’ve been building connections into insurance companies and laboratories and hospital medical records for years and years and years.
And the other barrier to entry is that rules engine. Every time a doctor anywhere in the country gets a claim denied, we have analysts ask the Five Whys. When we get to root cause, we write a new rule into Athenanet and from that day on, no other doctor gets that particular denial from that particular insurance company ever again. We now know of 40 million ways that a doctor can have a claim denied in the United States. The average practice has to rework about 35 percent of their claims, and we only have to rework about 5 percent of ours.
Q. What’s the prognosis for bill collecting under health care reform?
A. Well, there’s going to be new connectors and a whole series of new insurance products that will be managed by the states’ health insurance commissioners. And the law provides for every state to do all of these its own way, so they will have their own rules and regulations, and each state will do it differently. That sounds like springtime in Complexity Land.
Q. What do you think will happen to the total cost of health care under reform?
A. Oh, it’s going to go through the roof! It’s widely accepted that this is not a cost-reform bill — it’s an access bill. It’s in fact a cost-expansion bill.

For the full story, see:

ROBB MANDELBAUM. “Views of Health Care Economics From a C.E.O. Named Bush.” The New York Times (Thurs., September 9, 2010): B10.
(Note: ellipsis added.)
(Note: the online version of the article has the date September 8, 2010.)

The Hungry Innovate Because They Have Less to Lose

(p. 124) . . . , the eighteenth-century Swiss mathematician Daniel Bernoulli,” who coined the term “human capital,” explained why innovation has always been a more attractive occupation to have-nots than to haves: not only do small successes seem larger, but they have considerably less to lose.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: ellipsis added.)

Government “Gave People the Crazy Juice”

“Peter J. Boettke of George Mason University is the emerging standardbearer for a revived Austrian school of economics.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) Peter J. Boettke, shuffling around in a maroon velour track suit or faux-leather rubber shoes he calls “dress Crocs,” hardly seems like the type to lead a revolution.

But the 50-year-old professor of economics at George Mason University in Virginia is emerging as the intellectual standard-bearer for the Austrian school of economics that opposes government intervention in markets and decries federal spending to prop up demand during times of crisis. Mr. Boettke, whose latest research explores people’s ability to self-regulate, also is minting a new generation of disciples who are spreading the Austrian approach throughout academia, where it had long been left for dead.
To these free-market economists, government intrusion ultimately sows the seeds of the next crisis. It hampers what one famous Austrian, Joseph Schumpeter, called the process of “creative destruction.”
. . .
(p. B3) It wasn’t a lack of government oversight that led to the crisis, as some economists argue, but too much of it, Mr. Boettke says. Specifically, low interest rates and policies that subsidized homeownership “gave people the crazy juice,” he says.

For the full story, see:
KELLY EVANS. “Spreading Hayek, Spurning Keynes; Professor Leads an Austrian Revival.” The Wall Street Journal (Sat., AUGUST 28, 2010): B1 & B3.
(Note: ellipsis added.)