Category: Economics

Steve Case Sees “Local Knowledge” as a Plus for Entrepreneurs Outside of Silicon Valley

(p. A15) Steve Case, a co-founder of AOL, was one of the early internet pioneers. But he is not a creature of Silicon Valley. AOL, he points out in “The Rise of the Rest: How Entrepreneurs in Surprising Places Are Building the New American Dream,” was based in the Washington, D.C., area, and many of the early tech firms, like Dell, were not started in Silicon Valley. Hence his conviction that successful entrepreneurship can happen anywhere.

. . .

Mr. Case reckons that we are entering a new phase of tech innovation. Success now requires not only software ingenuity but also industry expertise. If true, we could be due for a wave of local entrepreneurs because these are the people who are aware of the problems their communities face. Now that tech workers can work anywhere, local knowledge and expertise will be at a premium.

. . .

. . . [A] firm that Mr. Case discusses is Catalyte, a software company based in Baltimore. Founder Michael Rosenbaum was convinced that “potential talent was being overlooked by a system that valued pedigree over innate ability” and devised a hiring approach that would ignore traditional résumé points and instead match employees “according to their abilities and potential, which would be determined through carefully calibrated metrics and AI design.” To that end, Mr. Rosenbaum decided to launch his startup in Baltimore, “a postindustrial city . . . with a large, dislocated population of workers who were not connected to the future job opportunities.” His methods paid off, resulting in a diverse workforce and one that produced “off the charts” performance results.

According to Mr. Case, spurring regional entrepreneurship requires leaning on universities and building more “innovation districts.” But these zones, which contain startups, business incubators and investment funds that support one another, have a mixed record. He sees government involvement as crucial but doesn’t contend with its past failures . . .

For the full review, see:

Allison Schrager. “BOOKSHELF; Startups Across America.” The Wall Street Journal (Monday, Sept. 12, 2022): A15.

(Note: ellipses between paragraphs, and at the start or end of a paragraph, added; ellipsis within paragraph, in original. Bracketed word also added.)

(Note: the online version of the review has the date September 11, 2022, and has the title “BOOKSHELF; ‘The Rise of the Rest’ Review: Startups Across America.”)

The book under review is:

Case, Steve. The Rise of the Rest: How Entrepreneurs in Surprising Places Are Building the New American Dream. New York: Avid Reader Press, 2022.

To Avoid “Misconduct” Starbucks Asks “That All Future Elections Be Conducted Fully in Person”

(p. B5) As the union drive at Starbucks stores accelerates, Starbucks has ratcheted up its efforts to push back on the campaign, asking on Monday [Sept. 15, 2022] that the National Labor Relations Board investigate allegations of misconduct during a union vote in the Kansas City area.

Starbucks, in a letter to the labor board, asked that the agency investigate reports by an N.L.R.B. employee that there was unfair coordination between the agency and the union, specifically that several employees were given special voting arrangements and that the N.L.R.B. provided confidential real-time election results to the union. The company asked that the agency suspend all elections until the allegations could be investigated. In addition, Starbucks asked that all future elections be conducted fully in person.

For the full story, see:

Emma Goldberg. “Citing Misconduct Claims, Starbucks Asks to Halt Union Elections.” The New York Times (Tuesday, August 16, 2022): B5.

(Note: bracketed date added.)

(Note: the online version has the date Aug. 15, 2022, and has the title “Starbucks Asks for a Suspension of Union Elections.”)

After Defending Nuclear Power, Green German Energy Minister Is Popular in Polls

(p. A8) BERLIN — Germany will keep two of its three remaining nuclear power plants operational as an emergency reserve for its electricity supply, its energy minister announced on Monday [Sept. 5, 2022], delaying the country’s plans to become the first industrial power to go nuclear-free for its energy.

. . .

. . . the decision to extend the life of it nuclear reactors is one of the most symbolic, if not consequential, the government has taken, breaking a political taboo as it tries to show that it is doing all it can to alleviate the crisis. The government said it made the decision based on a series of stress tests playing out worst-case energy scenarios.

. . .

. . . even as he has led his party into sacrificing nearly all of its sacred cows, Mr. Habeck has become one of the most popular politicians in Germany. In polls, he now regularly receives higher ratings than the chancellor.

“We are doing everything that is necessary,” said Mr. Habeck said.

For the full story, see:

Erika Solomon and Melissa Eddy. “As Energy Crisis Worsens, Germany Extends Life of Two Nuclear Reactors.” The New York Times (Tuesday, September 6, 2022): A8.

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

(Note: the online version has the date Sept. 5, 2022, and has the title “Breaking Taboo, Germany Extends Life of 2 Nuclear Reactors.” The online version of the article says that the print version of the article had the title “Germany Extends Life of Two Reactors” but my national print edition of the NYT had the longer title “As Energy Crisis Worsens, Germany Extends Life of Two Nuclear Reactors.”)

“The Car Emancipated the Masses”

(p. 11) Ear-shredding noise, toxic air, interminable traffic jams, chaos and death — all the result of untrammeled population expansion. Is this a description of a contemporary urban nightmare? Not quite: We’re talking about 19th-century London, although the situation in Paris and other major cities wasn’t much better. And the cause of all this misery was … the horse.

As recounted by Bryan Appleyard in his compelling new book, “The Car,” by 1900 the 50,000 horses required to meet London’s transportation needs deposited 500 tons of excrement daily. Hooves and carriage wheels threw up curtains of fetid muck. Accidents caused by mechanical failures and spooked animals were often fatal to passengers, drivers and the horses themselves. New York City employed 130,000 horses and predictions were made that by 1930 that city’s streets would be piled three stories high with dung. Yet another dire prophecy fallen victim to the continuity fallacy — the belief that a current trend will endure forever.

Things change because when problems arise, people work at solving them, and sometimes they arrive at solutions. The answer to the psychosocial and physical degradation brought on by too many people employing too many horses in the burgeoning Industrial Age was, of course, the development of the motor vehicle. Specifically, one powered by the internal combustion engine.

. . .

For all the carping and finger-pointing leveled at traditional automobiles — much of which Appleyard acknowledges as valid — he is unabashed about his appreciation for the most important machine in human history. As he points out, “The car emancipated the masses far more effectively than any political ideology; that it did so at a cost should not obliterate the importance of that freedom.”

Well said. Vroom.

For the full review, see:

Jonathan Kellerman. “Auto Erotica.” The New York Times Book Review (Sunday, September 25, 2022): 11.

(Note: ellipsis added.)

(Note: the online version of the review was updated Sept. 23, 2022, and has the title “How the Car Created the Modern World.”)

The book under review is:

Appleyard, Bryan. The Car: The Rise and Fall of the Machine That Made the Modern World. New York: Pegasus Books, 2022.

Covid-19 Health Effects Will Keep Reducing Labor Force

(p. A1) As the United States emerges from the pandemic, employers have been desperate to hire. But while demand for goods and services has rebounded, the supply of labor has fallen short, holding back the economy.

. . .

(p. A20) Morning Consult found in August [2022] that prime-age adults who aren’t working cited a variety of often overlapping reasons for not wanting jobs. In a monthly poll of 2,200 people, 40 percent said they believed that they wouldn’t be able to find a job with enough flexibility, while 38 percent were limited by family situations and personal obligations. But the biggest category, at 43 percent, was medical conditions.

Other data suggest some of that is due to long-term complications from Covid-19, although estimates of how many people have been knocked out of the work force by Covid range tremendously.

Katie Bach, a Brookings Institution fellow, put the impact at two million to four million full-time workers, based on her interpretation of the Census Bureau’s Household Pulse Survey and other research. (The total affected may be larger, with many who suffer from long Covid reducing their hours rather than stopping work.) A Federal Reserve economist didn’t specify a number, but observed that even as Covid-related hospitalizations and deaths receded, the share of people saying they were not able to work because of illness or disability had remained elevated in Labor Department data after spiking in early 2021.

Another analysis, in a paper published by the National Bureau of Economic Research, found that people who’d taken a week off for health-related reasons in 2020 and 2021 were 7 percent less likely to be in the labor force a year later — which equates to about 500,000 workers.

Whatever the magnitude, the effects are likely to be significant and long-lasting. Vaccines provide imperfect protection against getting long Covid, studies suggest, and other post-viral diseases have proven difficult to recover from. “I certainly don’t think the worst is behind us,” Ms. Bach said.

For the full story, see:

Lydia DePillis. “Pool of Labor In U.S. Stays Bafflingly Low.” The New York Times (Saturday, September 13, 2022): A1 & A20.

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

(Note: the online version has the date Sept. 12, 2022, and has the title “Who Are America’s Missing Workers?”)

The NBER paper mentioned above is:

Goda, Gopi Shah, and Evan J. Soltas. “The Impacts of Covid-19 Illnesses on Workers.” National Bureau of Economic Research Working Paper No. 30435, Sept. 2022.

NU President Carter May Earn $1.5 Million Per Year by 2023

(p. B1) LINCOLN — The University of Nebraska Board of Regents extended President Ted Carter’s contract by three years on Thursday, potentially keeping the university’s top leader in Nebraska through 2027.

Carter’s new contract, approved unanimously, also raises his base salary by 3% this year and adds a second deferred compensation package to incentivize the president to stay at NU.

In all, Carter’s total compensation could top $1.5 million beginning in 2023.

. . .

Regents also awarded Carter, a former superintendent of the U.S. Naval Academy, a $105,000 performance bonus for the (p. B1) 2021-22 academic year.

That amount is less than the $140,000 he was eligible to receive; Carter hit 89% of the benchmarks set for him by the board last year after first- to second-year retention numbers fell at several NU campuses.

For the full story, see:

CHRIS DUNKER, Lincoln Journal Star. “NU President Given Raise, Extension.” The Omaha World-Herald (Friday, August 12, 2022): B1-B2.

(Note: the online version of the story was updated Sept. 18, 2022, and has the title “Regents approve contract extension, pay raise for NU president.”)

Minorities, Disabled, Less-Educated, and Felons Are First Laid Off in a Recession

(p. A1) Black Americans have been hired much more rapidly in the wake of the pandemic shutdowns than after previous recessions. But as the Federal Reserve tries to soften the labor market in a bid to tame inflation, economists worry that Black workers will bear the brunt of a slowdown — and that without federal aid to cushion the blow, the impact could be severe.

Some 3.5 million Black workers lost or left their jobs in March and April 2020. In weeks, the unemployment rate for Black workers soared to 16.8 percent, the same as the peak after the 2008 financial crisis, while the rate for white workers topped out at 14.1 percent.

Since then, the U.S. economy has experienced one of its fastest rebounds ever, one that has extended to workers of all races. The Black unemployment rate was 6 percent last month, just above the record low of late 2019. And in government data collected since the 1990s, wages for Black workers are rising at their fastest pace ever.

Now policymakers at the Fed and in the White House face the challenge of fighting inflation without inducing a recession that would erode or reverse those workplace gains.

Decades of research has found that workers from racial and ethnic minorities — along with those with other barriers to employment, such as disabilities, criminal records or low levels of education — are among the first laid off during a downturn and the last hired during a recovery.

For the full story, see:

Talmon Joseph Smith and Ben Casselman. “Job Gains for Black Workers Could Reverse in a Downturn.” The New York Times (Wednesday, August 24, 2022): A1 & A14.

(Note: the online version of the story has the same date as the print version and has the title “What Will Happen to Black Workers’ Gains if There’s a Recession?”)

Deep-Sea Nodules Are a New Source of Scarce Metals

(p. B11) Companies could start mining the ocean floor for metals used to make electric-vehicle batteries within the next year, a development that could occur despite broad concerns about the environmental impact of deep-sea mining.

The International Seabed Authority, a United Nations observer organization that regulates deep-sea mining in international waters, is drawing up a final regulatory framework for deep-sea mining that all 168 members would need to agree to within the next 12 months. The U.S. isn’t a member of the ISA. With or without the finalized rules, the ISA will permit seabed mining by July 2023, according to people familiar with the matter.

The intent of deep-sea mining is to scrape the ocean floor for polymetallic nodules—tennis-ball-size pieces of rock that contain iron and manganese oxide layers. A seabed in the Pacific Ocean called the Clarion Clipperton Zone, which cover 1.7 million square miles between Mexico and Hawaii, contains a high volume of nodules made of battery metals, such as cobalt, manganese and lithium. The International Seabed Authority in 2010 estimated the zone had roughly 30 billion metric tons of nodules. Cobalt and other metals used in making rechargeable batteries that power products from phones to electric vehicles are in high demand, setting off a race to find and procure them. Prices of these metals are soaring as mining for them comes under scrutiny, curtailing supply.

For the full story see:

Yusuf Khan. “Deep-Sea Mining Nears Reality.” The Wall Street Journal (Tuesday, Aug. 23, 2022): B11.

(Note: as of Sept. 9, 2022, the article was not available online.)

Current Labor Market Seems Robustly Redundant

In Openness to Creative Destruction, I argue for the possibility and desirability of a “robustly redundant labor market” in which workers can usually quickly find an equally good or better job when they lose their current job.

(p. A6) . . . one characteristic of today’s economy is that job cuts at small startups and large companies have yet to dent the overall labor market. Labor demand is still historically strong, offering only faint signs of cooling. There are nearly two job openings for every unemployed person seeking work. That means many workers who are losing their jobs are quickly landing jobs. Some are even weighing multiple offers and accepting positions that pay more and better align with their skills.

. . .

Employers had 10.7 million unfilled jobs in June [2022], down from a record of 11.9 million in March, but still well above the 7 million job openings in February 2020 ahead of the pandemic, when the labor market was also booming.

Job-openings rates across industries are much higher than before the pandemic hit, suggesting companies still need workers even in sectors where company layoffs have been pronounced, such as technology, real estate, finance and insurance.

Longer periods of unemployment can allow job seekers more time to search for roles that match their skill sets, some economists say. But with job opportunities so abundant, many unemployed workers are finding jobs that suit them within a matter of weeks or even days.

For the full story see:

Sarah Chaney Cambon. “Laid-Off Employees Quickly Find New Jobs.” The Wall Street Journal (Thursday, Aug. 25, 2022): A1 & A6.

(Note: ellipses and bracketed year added.)

(Note: the online version of the story has the date August 24, 2022, and has the title “The Surprise in a Faltering Economy: Laid-Off Workers Are Quickly Finding Jobs.”)

My book mentioned above is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Trang Almost Did Not Perform Simple Experiment Because “People Would Have Known This Already”

(p. D3) A team of scientists has found a cheap, effective way to destroy so-called forever chemicals, a group of compounds that pose a global threat to human health.

The chemicals — known as PFAS, or per- and polyfluoroalkyl substances — are found in a spectrum of products and contaminate water and soil around the world. Left on their own, they are remarkably durable, remaining dangerous for generations.

Scientists have been searching for ways to destroy them for years. In a study, published Thursday [Aug. 18, 2022] in the journal Science, a team of researchers rendered PFAS molecules harmless by mixing them with two inexpensive compounds at a low boil. In a matter of hours, the PFAS molecules fell apart.

. . .

At the end of a PFAS molecule’s carbon-fluorine chain, it is capped by a cluster of other atoms. Many types of PFAS molecules have heads made of a carbon atom connected to a pair of oxygen atoms, for example.

Dr. Dichtel came across a study in which chemists at the University of Alberta found an easy way to pry carbon-oxygen heads off other chains. He suggested to his graduate student, Brittany Trang, that she give it a try on PFAS molecules.

Dr. Trang was skeptical. She had tried to pry off carbon-oxygen heads from PFAS molecules for months without any luck. According to the Alberta recipe, all she’d need to do was mix PFAS with a common solvent called dimethyl sulfoxide, or DMSO, and bring it to a boil.

“I didn’t want to try it initially because I thought it was too simple,” Dr. Trang said. “If this happens, people would have known this already.”

An older grad student advised her to give it a shot. To her surprise, the carbon-oxygen head fell off.

It appears that DMSO makes the head fragile by altering the electric field around the PFAS molecule, and without the head, the bonds between the carbon atoms and the fluorine atoms become weak as well. “This oddly simple method worked,” said Dr. Trang, who finished her Ph.D. last month and is now a journalist.

For the full commentary see:

Carl Zimmer. “MATTER; Fighting Forever Chemicals With Chemicals.” The New York Times (Tuesday, Aug. 23, 2022): D3.

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

(Note: the online version of the commentary has the date August 18, 2022, and has the title “MATTER; Forever Chemicals No More? PFAS Are Destroyed With New Technique.”)

The research summarized in the passages quoted above was published in:

Trang, Brittany, Yuli Li, Xiao-Song Xue, Mohamed Ateia, K. N. Houk, and William R. Dichtel. “Low-Temperature Mineralization of Perfluorocarboxylic Acids.” Science 377, no. 6608 (Aug. 18, 2022): 839-45.

“No One Wants to Take Mass Transit”

(p. A16) Across almost seven hours Thursday night [Aug. 25, 2022], the speeches grew in volume and intensity — a cacophony of New Yorkers brought together over Zoom to either praise or denounce one of the city’s most contentious transportation projects.

Transit officials held the virtual hearing to collect input on a tolling program to reduce traffic in Manhattan. But the meeting also provided the chance to swing at a favorite New York City punching bag: the Metropolitan Transportation Authority, which runs the subway and bus network and would benefit from the proposal.

. . .

“No one wants to take mass transit. It’s not safe. Jumping turnstiles, shooting, looting, fighting, the list goes on,” Brendan Peo, a schoolteacher who lives in New Jersey, said during the hearing on Thursday. “The suggestion that more people will use mass transit instead of driving when conditions are like this in the subway is asinine.”

For the full story see:

Ana Ley. “Critics Abound at First Hearing on Tolls for Driving Into Manhattan.” The New York Times (Saturday, Aug. 27, 2022): A16.

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

(Note: the online version of the story has the date August 26, 2022, and has the title “At M.T.A.’s First Congestion Pricing Hearing, Critics Abound.”)