Economics – Page 206 – artdiamondblog.com

Some Hispanics Support Arizona Immigration Law

“Shayne Sotelo opposes Arizona’s new immigration law, while her husband, Efrain, supports it.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 28) PHOENIX — Arizona’s immigration law, which politicians have debated in the Legislature, lawyers have sparred over in the courtroom and advocates have shouted about on the street, has found its way up a driveway in central Phoenix, through the front door and right onto the Sotelo family’s kitchen table.
. . .
That such a divisive social issue would divide some families is not surprising. But what makes the Sotelos stand out is that they are both Latinos, he a Mexican immigrant who was born in the northern state of Chihuahua and she a descendant of Spanish immigrants who grew up in Colorado.
While polls show that a vast majority of Latinos nationwide side with Mrs. Sotelo in opposing Arizona’s law, that opposition is not uniform. “All Latinos are not opposed to this law — that’s too simplistic,” said Cecilia Menjivar, an Arizona State University sociologist. There are other Mr. Sotelos out there, including an Arizona state legislator, Representative Steve B. Montenegro, a Republican who immigrated from El Salvador and became the only Latino lawmaker to vote in favor of the bill.
. . .
[Mr. Sotelo] thinks his adopted state has been unfairly maligned since the law passed. “I’m a Hispanic, and I don’t have any issues walking the streets,” he said. “They make it seem like the police or sheriff are out there checking everyone’s papers, and that’s not so.”

For the full story, see:
MARC LACEY. “One Family’s Debate Shows Arizona Law Divides Latinos, Too.” The New York Times, First Section (Sun., October 31, 2010): 28.
(Note: ellipses added; bracketed name added to replace “He.”)
(Note: the online version of the article is dated October 30, 2010 and has the title “Arizona Immigration Law Divides Latinos, Too.”)

“The Roiling World of Opera More Appealingly Straightforward than the Roiling World of Academe”

At left, Richard Gill as Harvard economist. At right, Richard “Gill as Frère Laurent, one of his numerous singing roles he preformed at the Met.” Source of part of caption, and of photos: online version of the NYT obituary quoted and cited below.

(p. B19) Richard T. Gill, in all statistical probability the only Harvard economist to sing 86 performances with the Metropolitan Opera, died on Monday in Providence, R.I. He was 82.
. . .
Mr. Gill, a longtime Harvard faculty member who wrote many widely used economics textbooks, did not undertake serious vocal training (which he began as an anti-smoking regimen) until he was nearly 40. At the time, he had seen perhaps 10 operas and rarely listened to classical music.
. . .
In some respects, he later said, Mr. Gill found the roiling world of opera more appealingly straightforward than the roiling world of academe.
“Performing is a great reality test,” he told Newsweek in 1975. “There’s no tenure in it and the feedback is much less complicated than you get in academia. When you go out on that stage, you put your life on the line.”

For the full obituary, see:
MARGALIT FOX. “Richard T. Gill, Economist and Opera Singer, Dies at 82.” The New York Times (Thurs., October 28, 2010): B19.
(Note: ellipses added.)

Steven Johnson Ignores Role of Market in Enabling Innovation

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

Steven Johnson’s The Ghost Map is one of my favorite books. I also enjoyed his The Invention of Air. I have not yet read his Where Good Ideas Come From. Based on the review quoted below, I do not expect to be as enthused about the new book.
I have read elsewhere that Johnson criticizes patents. If all would-be innovators were independently wealthy then innovation without patents might work. But William Rosen in The Most Powerful Idea in the World has recently shown that patents financed a key group of craftsmen who otherwise would not have been able to create the steam engines that powered the industrial revolution.
The issues are difficult and important—I will write more in a month or two after I have had a chance to read Johnson’s book.

(p. A21) Mr. Johnson thinks that the adjacent possible explains why cities foster much more innovation than small towns: Cities abound with serendipitous connections. Industries, he says, may tend to cluster for the same reason. A lone company in the middle of nowhere has only the mental resources of its employees to fall back on. When there are hundreds of companies around, with workers more likely to change jobs, ideas can cross-fertilize.

The author outlines other factors that make innovation work: the tolerance of failure, as in Thomas Edison’s inexorable process-of-elimination approach to finding a workable light-bulb filament; the way that ideas from one field can be transformed in another; and the power of information platforms to connect disparate data and research. “Where Good Ideas Come From” is filled with fascinating, if sometimes tangential, anecdotes from the history of entrepreneurship and scientific discovery. The result is that the book often seems less a grand theory of innovation than a collection of stories and theories about creativity that Steven Johnson happens to find interesting.
It turns out that Mr. Johnson himself has a big idea, but it’s not a particularly incisive one: He proposes that competition and market forces are less important to innovation than openness and inspiration. The book includes a list of history’s most important innovations and divides them along two axes: whether the inventor was working alone or in a network; and whether he was working for a market reward or for some other reason. Market-led innovations, it turns out, are in the minority.

For the full review, see:
MEGAN MCARDLE. “Serendipitous Connections; Innovation occurs when ideas from different people bang against each other.” The Wall Street Journal (Tues., OCTOBER 5, 2010): A21.

Increase in Equality of Happiness Between Blacks and Whites

(p. B1) White Americans don’t report being any more satisfied with their lives than they did in the 1970s, various surveys show. Black Americans do, and significantly so.

Betsey Stevenson and Justin Wolfers, the University of Pennsylvania economists who did the study, point out that self-reported measures of happiness usually shift at a glacial pace. The share of whites, for example, telling pollsters in recent years that they are ”not too happy” — as opposed to ”pretty happy” or ”very happy” — has been about 10 percent. It was also 10 percent in the 1970s.
Yet the share of blacks saying they are not too happy has dropped noticeably, to about 20 (p. B12) percent in surveys over the last decade, from 24 percent in the 1970s. All in all, Mr. Wolfers calls the changes to blacks’ answers, ”one of the most dramatic gains in the happiness data that you’ll see.”

For the full commentary, see:
DAVID LEONHARDT. “ECONOMIC SCENE; For Blacks, Progress In Happiness.” The New York Times (Weds., September 15, 2010): B1 & B12.

The working paper referred to in the commentary is:
Stevenson, Betsey, and Justin Wolfers. “Subjective and Objective Indicators of Racial Progress.” May 12, 2010.

If You Think Life Was Better in the Past, “Say One Single Word: Dentistry”

(p. 2) In general, life is better than it ever has been, and if you think that, in the past, there was some golden age of pleasure and plenty to which you would, if you were able, transport yourself, let me say one single word: “dentistry.”

Source:
O’Rourke, P. J. All the Trouble in the World: The Lighter Side of Overpopulation, Famine, Ecological Disaster, Ethnic Hatred, Plague, and Poverty. paperback ed. New York: Atlantic Monthly Press, 1994.

Chinese Government Fines BYD and Seizes BYD Factory Site

“BYD Chairman Wang Chuanfu, left, at a celebration last month in Shenzhen city with Berkshire Hathaway’s Charles Munger, center, and Warren Buffett.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B3) BEIJING–China’s central government ordered BYD Co. to surrender land in a zoning dispute, a decision that is likely to slow the Chinese battery and auto maker’s push to expand in the nation’s growing auto market.

China’s Ministry of Land and Resources also hit BYD with a 2.95 million yuan ($442,000) fine, the ministry said on its website Wednesday. The ministry confiscated 121 acres of land in the central Chinese city of Xian, where BYD executives said the company has been building a car assembly plant. BYD had hoped to start production at the complex as early as next year.
The ministry said zoning for the land was “illegally adjusted” to industrial use from agricultural use but didn’t elaborate. The decision comes as some government officials have shown concern about excess capacity in the auto industry.
. . .
Mid American Energy Holdings Co., a unit of Warren Buffett’s Berkshire Hathaway Inc., owns 10% of BYD.

For the full story, see:
NORIHIKO SHIROUZU. “China Deals a Setback to BYD.” The Wall Street Journal (Thurs., OCTOBER 14, 2010): B3.
(Note: ellipsis added.)
(Note: the online version of the article has the title “Beijing Halts Construction of BYD Auto Plant.”)

William Rosen’s “The Most Powerful Idea in the World”

Source of book image: http://ffbsccn.files.wordpress.com/2010/07/the-most-powerful-idea-in-the-world.jpg

The range of William Rosen’s fascinating and useful book is very broad indeed. He is interested in THE question: why did the singular improvement in living standards known as the industrial revolution happen where and when it did?
The question is not just of historical interest—if we can figure out what caused the improvement then and there, we have a better shot at continuing to improve in the here and now.
I especially enjoyed and learned from William Rosen’s discussion, examples and quotations on the difficult issue of whether patents are on balance a good or bad institution.
Deirdre McCloskey taught me that the most important part of a sentence is the last word, and the most important part of a paragraph is the last sentence, and the most important part of a chapter is the last paragraph.
Here are the last couple of sentences of Rosen’s book:

(p. 324) Incised in the stone over the Herbert C. Hoover Building’s north entrance is the legend that, with Lincoln’s characteristic brevity, sums up the single most important idea in the world:

THE PATENT SYSTEM ADDED

THE FUEL OF INTEREST

TO THE FIRE OF GENIUS

In the next few weeks I will occasionally quote a few of the more illuminating passages from Rosen’s well-written account.

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

Paternalistic Welfare State Discourages Integration of Immigrants

(p. A9) . . . Alf Svensson [is a] former leader of the center-right Christian Democrats.
. . .
Sweden’s paternalistic welfare state is partly to blame for some immigrants’ marginal status in the economy, said Mr. Svensson. “We had…a system which was ‘taking care’ of immigrants, which didn’t give them a chance to flex their own wings and show what they could do, and this has made integation worse,” he said.

For the full story, see:

MARCUS WALKER And CHARLES DUXBURY. “Far-Right Party Wins Seats in Sweden.” The Wall Street Journal (Mon., SEPTEMBER 20, 2010): A9.
(Note: bracketed words and first two ellipses added; last ellipsis in original.)
(Note: the online version of the article is dated SEPTEMBER 19, 2010.)

“Small-Business Marketplace at a Standstill”

“David Wetzel tried for two years to sell his New Jersey hardware store.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) Small-business owners banking on a big payoff when they sell their establishments may have to settle for a lot less than planned.

A combination of tight credit, skittish buyers and business owners unwilling to sell at rock-bottom prices–factors similarly affecting home sellers–has left the small-business marketplace at a standstill.
. . .

(p. B4) “Owners still think their businesses are worth what they used to be,” says Thomas Coffey, a partner in Malvern, Pa., with B2BCFO, a provider of outsourced chief financial officers to small businesses. In reality, many “small companies just aren’t earning what they used to earn,” he says.

For the full story, see:
SARAH E. NEEDLEMAN. “Businesses Put Up for Sale Smack Into Harsh Reality.” The Wall Street Journal (Thurs., OCTOBER 14, 2010): B1 & B4.
(Note: ellipsis added.)

All He “Could See Was Cows and Farms” in “Virginia’s High Tech Corner”

(p. A18) . . . government attempts to rejuvenate regional economies have a mixed track record, in the U.K. and elsewhere.

Stuart S. Rosenthal, an economics professor at Syracuse University, remembers driving through Virginia in 1997 and seeing a sign saying, “You are entering southwest Virginia’s high tech corner.”
“And all I could see was cows and farms,” he said. Recent employment data shows that aside from one pocket, little has changed.

For the full story, see:
ALISTAIR MACDONALD. “U-Turn in the U.K.: Big Spending Cuts.” The Wall Street Journal (Fri., OCTOBER 15, 2010): A18.
(Note: ellipsis added.)
(Note: the online version of the article is dated October 14, 2010.)

Home Depot Co-Founder Asks Obama to Stop Blocking Startups

Below I quote from the comments that Home Depot co-founder Ken Langone addressed to President Obama:

(p. A21) A little more than 30 years ago, Bernie Marcus, Arthur Blank, Pat Farrah and I got together and founded The Home Depot. Our dream was to create (memo to DNC activists: that’s build, not take or coerce) a new kind of home-improvement center catering to do-it-yourselfers. The concept was to have a wide assortment, a high level of service, and the lowest pricing possible.

We opened the front door in 1979, also a time of severe economic slowdown. Yet today, Home Depot is staffed by more than 325,000 dedicated, well-trained, and highly motivated people offering outstanding service and knowledge to millions of consumers.
If we tried to start Home Depot today, under the kind of onerous regulatory controls that you have advocated, it’s a stone cold certainty that our business would never get off the ground, much less thrive. Rules against providing stock options would have prevented us from incentivizing worthy employees in the start-up phase–never mind the incredibly high cost of regulatory compliance overall and mandatory health insurance. Still worse are the ever-rapacious trial lawyers.
Meantime, you seem obsessed with repealing tax cuts for “millionaires and billionaires.” Contrary to what you might assume, I didn’t start with any advantages and neither did most of the successful people I know. I am the grandson of immigrants who came to this country seeking basic economic and personal liberty. My parents worked tirelessly to build on that opportunity. My first job was as a day laborer on the construction of the Long Island Expressway more than 50 years ago. The wealth that was created by my investments wasn’t put into a giant swimming pool as so many elected demagogues seem to imagine. Instead it benefitted our employees, their families and our community at large.

For the full commentary, see:
KEN LANGONE. “Stop Bashing Business, Mr. President; If we tried to start The Home Depot today, it’s a stone cold certainty that it would never have gotten off the ground.” The Wall Street Journal (Fri., OCTOBER 15, 2010): A21.