Category: Economics

Will Humans Flourish if Easements Restrict How Inherited Property Is Used?

My mentor at Wabash College, Ben Rogge, was a friend of Pierre Goodrich, the founder of Liberty Fund. They both were great admirers of Adam Smith. Adam Smith believed that inherited property should not be encumbered with restrictions on how future generations used the property. The practice is sometimes called ‘ruling with a dead hand.’ When Liberty Fund was proposed, Rogge suggested that it be set up so that all of the funds would be exhausted at some pre-established time after Goodrich’s death. On this one proposal, Rogge failed to convince Goodrich of the wisdom of Adam Smith’s advice.

Rogge was a supporter of Schumpeter’s idea that we flourish through creative destruction. Progress through creative destruction is harder to accomplish if inherited property is encumbered by ‘ruling with a dead hand.’ Rogge feared that as the decades passed, the inheritors of Liberty Fund would eventually, and substantially, diverge from Goodrich’s original values and hopes. Liberty Fund money helped Rogge make a movie on Adam Smith. Rogge sadly joked that eventually the inheritors of Liberty Fund would probably support making a movie on a famous socialist.

(I can’t remember the name of the socialist who Rogge jokingly mentioned, but I vaguely, vaguely think it might have been Ethel Rosenberg.)

(I base the lines above on my memories of comments by Ben Rogge in conversations and lectures.)

(p. M1) “After me, there won’t be any others,” says Roland Reisley, absorbing what it means to be the last original occupant of a Frank Lloyd Wright house. Reisley is sitting in his hexagonal living room on a rocky hill near Pleasantville, N.Y.

. . .

(p. M4) Despite the house’s pristine condition, the one thing he can’t do is turn it into a museum. It is part of a Westchester County neighborhood laid out by Wright himself in the late 1940s. The community, which Wright named Usonia, never achieved its founders’ ambitions—to become a kind of exurban co-op where everything was owned in common—but it is still a tightly knit community of 47 homes with shared amenities such as a pool and tennis courts. “The residents would not agree to a museum,” Reisley says.

. . .

But if he can’t turn it into a museum, he can execute a preservation easement, a legal document that will prevent future owners from making changes to the house.

. . .

Asked why he hasn’t executed an easement yet, after talking about doing so for years, Reisley says he is “trying to find language that protects what’s important but allows for some reasonable changes to be made. I am going to do it,” Reisley says. “I just haven’t gotten around to doing it. I’m a procrastinator.”

Then, too, his only living child has expressed concerns. Robert Reisley, a 65-year-old entrepreneur and private-equity investor in Philadelphia, says, “I don’t have an issue with a preservation easement on the exterior of the house.” But he says it’s possible he and his wife, or one of their adult children, might want to live in the house. “We might need to make a few necessary changes to the interior. And we might not be able to get permission. That’s my hesitation.”

For example, he says, “The hallway to the bedrooms is very dark. Wright was practical. If we’d asked him, he would have said, ‘Put a skylight there.’ But Wright’s not around, and the conservancy might not allow it.”

. . .

In Minneapolis, the Olfelt house was on the market for two years before a local couple with grown children bought it for $1.2 million in the Spring of 2018. Several months later, they filed plans with the city to add a 1,500-square-foot, $2 million wing to the original 2,600-square-foot house and alter some of the original interiors.

. . .

The Juneks created a website, olfelthouse.info, to explain their intentions. “The impetus for the addition and the minimal interior renovations,” they wrote, “is to address the meager space allocated to the master bedroom, to expand the kitchen to accommodate a large multi-generation family, and to ensure that the home be comfortable, accessible, and safe for aging in place.” The renovation was designed by the New York architecture firm Thread Collective. Photos on the firm’s website show a dining room in a space that used to contain Wright’s tiny galley kitchen, and a spacious new kitchen in what used to be two children’s bedrooms. The addition, which contains a master-bedroom suite over a new garage, is visible mainly from the back of the house. “We have now been living in the house for three years, are very happy with the results of the project,” John Junek wrote in an email.

. . .

Robert and Mary Walton chose not to burden their six children with a preservation easement, the same choice made by Gerte Shavin, Bette Pappas, and the Olfelts. All of them died knowing they had no control over the future of their houses. “Its fate is entirely in the hands of the next owner,” Paul Olfelt told me in a phone message after vacating his house in 2017. Sounding emotional, he added, “I think we were good stewards of the house, and we assume that anyone who buys it will be the same.”

Reisley still has a chance to execute an easement. Will he? The easement would operate in perpetuity, and perpetuity, the 99-year-old homeowner says, “is a very long time.”

For the full story, see:

Fred A. Bernstein. “The Last Original Owner of a Frank Lloyd Wright House.” The Wall Street Journal (Wednesday, June 30, 2023): M1 & M4.

(Note: ellipses added.)

(Note: the online version of the story was updated June 27, 2023, and has the title “Frank Lloyd Wright Built 120 Homes Near the End of His Life. Just One Original Owner Remains.”)

Unsound Trucking Firm “Blew Through” $700 Million of Federal Covid “Bailout” Loan

(p. A4) The Treasury Department erred in giving a loan to a troubled trucking company as part of a 2020 Covid-19 rescue package and should refrain from similar sector-specific loan programs in the future, according to a new congressional report.

Yellow, a trucking company, received a $700 million loan from the Treasury Department as part of an aid program for private industries included in bipartisan legislation known as the Cares Act enacted early in the pandemic.

But Treasury had to skirt the program’s rules to make the loan, the report said. The agency designated Yellow—then known as YRC Worldwide—as critical to national security even though the company didn’t meet the standard for that designation, the report said.

. . .

In exchange for the loan, Treasury received a roughly 30% stake in the company.

. . .

At the time of the loan the company was rated noninvestment grade by Moody’s Investors Service and was at risk of bankruptcy, according to the report.

. . .

In recent months, Yellow has again suffered from the broader freight slowdown.

. . .

Teamsters President Sean O’Brien said the union is abiding by the terms of its contract with the company.

“After decades of gross mismanagement, Yellow blew through a $700 million bailout from the federal government, and now it wants workers to foot the bill,” O’Brien said in a statement.

For the full story, see:

David Harrison. “Treasury Faulted for Loan to Troubled Trucking Firm.” The Wall Street Journal (Wednesday, June 28, 2023): A4.

(Note: ellipses added.)

(Note: the online version of the story was updated June 27, 2023, and has the title “Treasury Shouldn’t Have Given Pandemic Aid to Trucking Company, Report Finds.”)

Portland Feels “Unsafe” and “There’s Trash Everywhere”

(p. A3) PORTLAND, Ore.—Mark Rogers has made a list of things he misses about Portland—its vegan restaurants, Powell’s bookstore, public transit—and the things he doesn’t—having his things stolen, stepping in human excrement, extreme politics.

The 44-year-old artist moved across the country to Fort Wayne, Ind., last year.

“I don’t want to talk trash about my home city even though there’s trash everywhere,” Rogers said.

. . .

Andrea Lamprecht, 50, a cardiac nurse, said she was chased by a homeless man while out on a jog in her Alameda neighborhood on the east side of Portland, where the median home price hovers around $1 million.

She and her husband, Derek Lamprecht, an orthopedic surgeon, had raised their children in Portland. The chasing incident contributed to the couple’s decision to move to a quiet rural area about 10 miles outside the city in 2021. “It never felt unsafe before,” said Derek Lamprecht. “The character of the city changed.”

For the full story, see:

Zusha Elinson. “Disenchanted Portland Residents Leave the City.” The Wall Street Journal (Thursday, June 29, 2023): A3.

(Note: ellipsis added.)

(Note: the online version of the story has the date June 28, 2023, and has the title “Portland Is Losing Its Residents.”)

New 98% Reflective White Paint Can End Global Warming

(p. A1) In 2020, Dr. Ruan and his team unveiled their creation: a type of white paint that can act as a reflector, bouncing 95 percent of the sun’s rays away from the Earth’s surface, up through the atmosphere and into deep space. A few months later, they announced an even more potent formulation that increased sunlight reflection to 98 percent.

The paint’s properties are almost superheroic. It can make surfaces as much as eight degrees Fahrenheit cooler than ambient air temperatures at midday, and up to 19 degrees cooler at night, reducing temperatures inside build-(p. A12)ings and decreasing air-conditioning needs by as much as 40 percent. It is cool to the touch, even under a blazing sun, Dr. Ruan said. Unlike air-conditioners, the paint doesn’t need any energy to work, and it doesn’t warm the outside air.

. . .

. . ., scientists have been urgently working to develop reflective materials, including different types of coatings and films, that could passively cool the Earth. The materials rely on principles of physics that allow thermal energy to travel from Earth along specific wavelengths through what’s known as the transparency or sky window in the atmosphere, and out into deep space.

Jeremy Munday, a professor of electrical and computer engineering at the University of California, Davis, who researches clean technology, said this redirection would barely affect space. The sun already emits more than a billion times more heat than the Earth, he said, and this method merely reflects heat already generated by the sun. “It’d be like pouring a cup of regular water into the ocean,” Dr. Munday said.

He calculated that if materials such as Purdue’s ultra-white paint were to coat between 1 percent and 2 percent of the Earth’s surface, slightly more than half the size of the Sahara, the planet would no longer absorb more heat than it was emitting, and global temperatures would stop rising.

. . .

While humans in such hot and picturesque places as Santorini and the aptly named Casablanca have long used white paint to cool dwellings, and municipalities are increasingly looking to paint rooftops white, Dr. Ruan said commercial white paints generally reflect 80 percent to 90 percent of sunlight. This means they still absorb 10 percent to 20 percent of the heat, which in turn warms surfaces and the ambient air. The Purdue paint, by comparison, absorbs so much less solar heat and radiates so much more heat into deep space that it cools surfaces to below-ambient temperatures.

For the full story, see:

Cara Buckley. “A Coat of Paint May Hold a Key To a Cool Planet.” The New York Times (Thursday, July 13, 2023): A1 & A12.

(Note: ellipses added.)

(Note: the online version of the story has the date July 12, 2023, and has the title “To Help Cool a Hot Planet, the Whitest of White Coats.”)

Dem Celebrities and Politicians Cultivated Crony Ties to FTX Fraudster Bankman-Fried

(p. B1) About 10 months before he was arrested on fraud charges, the cryptocurrency mogul Sam Bankman-Fried posed for a photograph at the 2022 Super Bowl in Inglewood, Calif.

On one side of him were Orlando Bloom and Katy Perry, the celebrity couple. On the other was the actress Kate Hudson. Standing in the center, with his arm slung over Mr. Bankman-Fried’s shoulder, was a lesser-known figure: Michael Kives.

Mr. Kives, a Hollywood agent turned investor, played an unusual role in Mr. Bankman-Fried’s business empire: super connector. He and his business partner, Bryan Baum, helped the young founder cultivate relationships with Mr. Bloom, Ms. Perry and former President Bill Clinton, and offered introductions to a who’s who of celebrities and business leaders, from Leonardo DiCaprio to the governor of Saudi Arabia’s Public Investment Fund.

The relationship was mutually beneficial. Mr. Bankman-Fried invested $700 million in Mr. Kives’s venture-capital firm, court records show, an extraordinary level of support for a fund with a short track record of start-up investments. Mr. Kives, the founder and face of the firm, and Mr. Baum each received $125 million as part of the deal.

For the full story, see:

David Yaffe-Bellany and Erin Griffith. “The Celebrity Super Connector Who Brought Big Names to FTX.” The New York Times (Saturday, June 24, 2023): B1 & B4.

(Note: the online version of the story has the date June 23, 2023, and has the title “The Super Connector Who Built Sam Bankman-Fried’s Celebrity World.”)

With No New Transmission Lines, 80 Percent of Planned Biden Emissions Reduction May Not Happen

(p. A12) . . ., compare today’s renewable energy and transmission system to one estimate of what it would take to reach the Biden administration’s goal of 100 percent clean electricity generation by 2035. Transmission capacity would need to more than double in just over a decade.

There are enormous challenges to building that much transmission, including convoluted permitting processes and potential opposition from local communities.

. . .

The climate stakes are high. Last year, Congress approved hundreds of billions of dollars for solar panels, wind turbines, electric vehicles and other technologies to tackle global warming. But if the United States can’t build new transmission at a faster pace, roughly 80 percent of the emissions reductions expected from that bill might not happen, researchers at the Princeton-led REPEAT Project found.

Already, a lack of transmission capacity means that thousands of proposed wind and solar projects are facing multiyear delays and rising costs to connect to the grid. In many parts of the country, existing power lines are often so clogged that they can’t deliver electricity from wind and solar projects to where it is needed most and demand is often met by more expensive fossil fuel plants closer to homes and businesses. This problem, known as congestion, costs the country billions of dollars per year and has been getting worse.

. . .

Utilities are sometimes wary of long-distance transmission lines that might undercut their local monopolies.

For the full story, see:

Nadja Popovich and Brad Plumer. “Why America Is Not Ready for the Energy Transition.” The New York Times (Friday, June 16, 2023): A12.

(Note: ellipses added.)

(Note: the online version of the story has the date June 12, 2023, and has the title “Why the U.S. Electric Grid Isn’t Ready for the Energy Transition.”)

Engerman, with Fogel, Courageously Asked Politically Incorrect Questions about Slavery

(p. D8) Stanley Engerman, one of the authors of a deeply researched book that, wading into the fraught history of American slavery, argued that it was a rational, viable economic system and that enslaved Black people were more efficient workers than free white people in the North, died on May 11 [2023] in Watertown, Mass.

. . .

In their two-volume “Time on the Cross: The Economics of American Negro Slavery” (1974), Professor Engerman and Prof. Robert W. Fogel used data analysis to challenge what they called common characterizations of slavery, including that it was unprofitable, inefficient and pervasively abusive.

They said they were not defending slavery. “If any aspect of the American past evokes a sense of shame,” they wrote, it’s the system of slavery.” But much of the accepted wisdom about it, they said, was distorted, or just plain wrong.

“Slave agriculture was not inefficient compared with free agriculture,” they wrote. “Economies of large-scale operation, effective management and intensive utilization of labor made Southern slave agriculture 35 percent more efficient than the Northern system of family farming.”

They insisted that the typical slave “was not lazy, inept and unproductive” but rather “was harder working and more efficient than his white counterpart.” They contended that the destruction of the Black family through slave breeding and sexual exploitation was a myth, and that it was in the economic interest of plantation owners to encourage the stability of enslaved families.

They also wrote that some slaves received positive incentives, such as being elevated to overseers of work gangs, to increase their productivity.

The book attracted a lot of attention, including a rave review by the economist Peter Passell in The New York Times. “If a more important book about American history has been published in the last decade, I don’t know about it,” he wrote. He described the work as a corrective, “a jarring attack on the methods and conclusions of traditional scholarship” on slavery.

. . .

. . . the Marxist historian Eugene D. Genovese, whose own book about slavery, “Roll, Jordan Roll: The World the Slave Made,” was also published in 1974, called “Time on the Cross” an “important work” that had “broken open a lot of questions about issues that were swept under the rug before.”

For the full obituary, see:

Richard Sandomir. “Stanley Engerman, 87, Scholar Who Disputed Views on Slavery, Dies.” The New York Times (Monday, May 29, 2023): D8.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the commentary was updated May 30, 2023, and has the title “Stanley Engerman, Revisionist Scholar of Slavery, Dies at 87.”)

The book praised in the obituary quoted above is:

Fogel, Robert William, and Stanley L. Engerman. Time on the Cross: The Economics of American Negro Slavery. Boston: Little, Brown and Company, 1974.

“Range Anxiety” Leads Chinese to Prefer Hybrids Over EVs

(p. B12) Don’t write off hybrid electric vehicles.

After Tesla, the most highly valued U.S.-listed EV company isn’t homegrown Rivian or Lucid but Li Auto, a Chinese manufacturer that went public in 2020 by listing American depositary receipts.

. . .

What is surprising is that Li has overtaken NIO to lead the new generation of Chinese startups. Li doesn’t make the purely electric vehicles that were popularized by Tesla and that have become the technological focus of other startups and most old-school car manufacturers. Instead, it specializes in extended-range EVs, which use a generator to power up the battery with gasoline if it runs out of juice.

. . .

The popularity of what is essentially a plug-in hybrid, albeit a cutting-edge one, is notable in the Chinese market, which has in many ways led the transition to EVs.

. . .

But Chinese charging infrastructure is patchy, leading to range anxiety. Brokerage Bernstein expects 65% growth in plug-in hybrid sales in China this year, versus 25% growth for pure EVs.

For the full commentary, see:

Stephen Wilmot. “Move Over EVs, Hybrids Are Hot in China.” The Wall Street Journal (Tuesday, Feb. 28, 2023): B12.

(Note: ellipses added.)

(Note: the online version of the commentary was updated February 27, 2023, and has the same title as the print version.)

“Evaluate an Argument on Its Own Merits, Not on the Race of the Person Making It”

(p. A22) In 1991, Stephen L. Carter, a professor at Yale Law School, began his book “Reflections of an Affirmative Action Baby” with a discomfiting anecdote. A fellow professor had criticized one of Carter’s papers because it “showed a lack of sensitivity to the experience of Black people in America.” When the professor, who was white, learned that Carter was Black, he withdrew the remark rather than defend his claim. It was a reminder to Carter that many people, especially among his fellow establishment elites, had certain expectations of him as a Black man.

“I live in a box,” he wrote, one bearing all kinds of labels, including “Careful: Discuss Civil Rights Law or Law and Race Only” and “Warning! Affirmative Action Baby! Do Not Assume That This Individual Is Qualified!”

This was a book that refused to dance around its subject.

Weaving personal narrative with a broader discussion of affirmative action’s successes and limitations, “Reflections of an Affirmative Action Baby” offered a nuanced assessment. A graduate of Stanford and Yale Law, Carter was a proud beneficiary of affirmative action. Yet he acknowledged the personal toll it took (“a decidedly mixed blessing”) as well as affirmative action’s sometimes troubling effects on Black people as the programs evolved.

. . .

An early critic of groupthink, Carter warned against “the idea that Black people who gain positions of authority or influence are vested a special responsibility to articulate the presumed views of other people who are Black — in effect, to think and act and speak in a particular way, the Black way — and that there is something peculiar about Black people who insist on doing anything else.”

In the past, such ideas might have been seen as “frankly racist,” Carter noted. “Now, however, they are almost a gospel for people who want to show their commitment to equality.” This belies the reality that Black people, he said, “fairly sparkle with diversity of outlook.”

. . .

At the same time, Carter bristled at the judgment of many of his Black peers, describing several situations in which he found himself accused of being “inauthentically” Black, as if people of a particular race were a monolith and that those who deviated from it were somehow shirking their duty. He said he didn’t want to be limited in what he was allowed to say by “an old and vicious form of silencing.”

In an interview with The Times in 1991, Carter emphasized this point: “No weight is added to a position because somebody is Black. One has to evaluate an argument on its own merits, not on the race of the person making it.”

For the full commentary, see:

Pamela Paul. “A 1991 Book Was Stunningly Prescient About Affirmative Action.” The New York Times (Friday, May 26, 2023): A22.

(Note: ellipses added.)

(Note: the online version of the commentary has the date May 25, 2023, and has the title “This 1991 Book Was Stunningly Prescient About Affirmative Action.”)

The book praised in the commentary quoted above is:

Carter, Stephen L. Reflections of an Affirmative Action Baby. New York: Basic Books, 1991.

In “Hashing Things Out” to Save Lives Bateman “Could Be a Pit Bull”

(p. 20) Don Bateman, an engineer who invented a cockpit device that warns airplane pilots with colorful screen displays and dire audible alerts like “Caution Terrain!” and “Pull Up!” when they are in danger of crashing into mountains, buildings or water — an innovation that has likely saved thousands of lives — died on May 21 [2023] at his home in Bellevue, Wash.

. . .

Bob Champion, a former scientist at Honeywell who worked with Mr. Bateman, said in a telephone interview: “Don had a true passion for saving lives. He was a peach, but behind closed doors, when we were hashing things out, he could be a pit bull.”

. . .

“He never lost his childlike wonder about flying,” Ms. McCaslin said by phone. “He did a lot of his great work from his 40s on.”

. . .

Mr. Bateman told the National Science and Technology Medals Foundation in 2011 that in the late 1960s there were fatal accidents nearly every month, during which a pilot would “fly into something, like a mountain, or go in short on the runway.”

. . .

Determined to do something, Mr. Bateman developed — and in 1974 patented — his first ground proximity warning system: a small box that integrated data from within the aircraft, including the radar altimeter and airspeed indicator, and gave the pilot a 15-second warning of an approaching hazardous condition.

. . .

In the 1990s, the system improved exponentially. Engineers working with Mr. Bateman added GPS and critical terrain data, including topographical maps of Eastern Europe and China that had been charted by the Soviet Union as far back as the 1920s; they had been acquired in Russia at Mr. Bateman’s request.

“We knew, as engineers, that if we could get the terrain data, we could do an awful lot,” he told The Seattle Times.

For the full obituary, see:

Richard Sandomir. “Don Bateman, 91, Engineer And Pioneer Who Invented A Cockpit Warning System.” The New York Times, First Section (Sunday, June 4, 2023): 20.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the obituary was updated June 8, 2023, and has the title “Don Bateman, Who Kept Airplanes From Crashing, Dies at 91.”)

Government Infrastructure Serves Elite More Than Ordinary Citizens

(p. A1) In a country where major industry and political fortunes alike are often tied to a vast, interwoven rail system, India has lavished public resources on new trains, but its purse strings have been much tighter when it comes to ensuring the safety of those already racing along its tracks.

Those decisions loomed large on Sunday [June 4, 2023] in the aftermath of a devastating train wreck that killed at least 275 people in eastern India.

. . .

Over the past years, India has been polishing its long-ramshackle infrastructure as never before, and its railways, which are at the heart of the world’s fifth-largest economy, have been a prime beneficiary. The government spent almost $30 billion on the rail system during the past fiscal year, up 15 percent from the year before.

But the amount spent on basic track maintenance and other safety measures has been falling. A report last year by India’s auditor general, an independent office, found that less money was being allocated for track renewal work and that officials had not even spent the full (p. A11) amount set aside.

. . .

. . . most of Mr. Modi’s initiatives have been aimed not at the basic steps needed to get trains from Point A to Point B without mishap, but at improving speed and comfort. He regularly extols higher-fare new electric Vande Bharat trains connecting bigger cities and has made an early priority of a Japanese-style bullet train, though it can do nothing to improve the lives of the country’s ordinary passengers.

For the full commentary, see:

Alex Travelli. “Rail Funding In India Put Upkeep Last.” The New York Times (Monday, June 5, 2023): A1 & A11.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the commentary has the date April 18, 2023, and has the title “Money for Show Horses, Not Work Horses, on India’s Rails.”)