Category: Economics

Members of the Elite Exempt Themselves from Rules They Impose on the Hoi Polloi

(p. 12) SAN FRANCISCO — It was an intimate meal in a wood-paneled, private dining room in one of California’s most exclusive restaurants. No one around the table wore masks, not the lobbyists, not even the governor.

Photos that surfaced this week of a dinner at the French Laundry, a temple of haute cuisine in Napa Valley where some prix fixe meals go for $450 per person, have sparked outrage in a state where Democratic leaders have repeatedly admonished residents to be extra vigilant amid the biggest spike in infections since the pandemic began.

. . .

The photos of the gathering, taken by a diner at a nearby table and shared with a local television station, also showed the chief executive for the California Medical Association and the organization’s top lobbyist.

. . .

In a 2019 review of the French Laundry and two other Napa restaurants, the New York Times critic Tejal Rao described being “overwhelmed by the opulence” and feeling as if transported onto a “spaceship for the 1 percent, now orbiting a burning planet.” Mr. Newsom said in October that his children, who attend private school, returned to in-person classes even as most of the state struggles with remote learning.

“Newsom and the first partner eschewed state public health guidelines to dine with friends at a time when the governor has asked families to scale back Thanksgiving plans,” wrote the Sacramento Bee editorial board on Friday. It added, “If the governor can eat out with friends — and if his children can attend their expensive school — why must everyone else sacrifice?”

For the full story, see:

Thomas Fuller. “Officials’ Lavish Meal Out Spurs Outrage Among Californians.” The New York Times, First Section (Sunday, November 22, 2020): 12.

(Note: ellipses added.)

(Note: the online version of the story has the date Nov. 18, 2020, and has the title “For California Governor the Coronavirus Message Is Do as I Say, Not as I Dine.” The online version says that the title of the New York print version was “California Governor Calls” and appeared on Thursday, Nov. 19, 2020. The title of my National print version was “Officials’ Lavish Meal Out Spurs Outrage Among Californians” and appeared on Sunday, November 22, 2020.)

Tariffs Create Incentive to Drink Higher Alcohol Wine

(p. A1) Washington put 25% tariffs on wine from France, Spain, Germany and the U.K. in October 2019 in retaliation for subsidies they made to European aircraft man-(p. A9)ufacturer Airbus SE, arguing they hurt Boeing Co. But it applied only to wine with alcohol content of 14% or less.

What followed was a textbook lesson in tariff economics. Before, America imported about $150 million a year in European wine that exceeded 14% alcohol, Commerce Department data show. In the 12 months since the tariff took effect, that rose to $434 million.

For the full story, see:

Josh Zumbrun. “America Taxed Your Favorite Bordeaux? Try One With More Alcohol.” The Wall Street Journal (Friday, Nov 20, 2020): A1 & A9.

(Note: the online version of the story has the date November 19, 2020, and has the title “The Tale Behind StubHub’s Sale: How Eric Baker Bought Back the Ticket Seller.”)

Many Start-Ups Compete to Make and Sell Chocolates

(p. D10) In India, few foreign confections have been more eagerly embraced than chocolate — and no brand defines this affinity more than Cadbury.

. . .

This brand loyalty endures even among members of the Indian diaspora, like Rajani Konkipudi, 47, who grew up in Visakhapatnam, in Andhra Pradesh, and now lives in the Detroit area.   . . .

In 2005, she visited Cadbury’s factory in Birmingham to make, as she called it, the “holy pilgrimage.”

A decade later, she is one of several smaller competitors seeking to challenge the dominance of Cadbury, and of milk chocolate in general, among Indians.

Ms. Konkipudi’s business, Dwaar Chocolate, in West Bloomfield Township, Mich., sells small-batch chocolate that is a far cry from her corporate rival’s. Her cacao beans come from family-run farms in Ecuador and India, and wind up in cardamom- and pistachio-speckled bars meant to mimic the taste of pistachio kulfi, or truffles inspired by paan, a crunchy, sharply flavored after-dinner snack in which she replaces betel nuts with cocoa nibs.

. . .

Growing up in Ahmedabad, Gujarat, Alak Vasa, who owns Elements Truffles in Union City, N.J., used to make frequent trips to the store with her grandfather to buy Cadbury chocolate. She founded Elements in 2015 with her husband, Kushal Choksi, seeking to emphasize the health benefits of dark chocolate and make sweets free of refined sugar, as a wholesome alternative to mass-market brands.

. . .

Madhu Chocolate, started by Elliott Curelop and Harshit Gupta in 2018 in Austin, Texas, has adopted a similar strategy; its most popular offering is a masala chai dark-chocolate bar whose mild sweetness is tempered with heady ginger and clove. “When we talk about masala chai, people are like, ‘This is how my mom makes chai,’” Mr. Gupta said.

. . .

The wide consumption of dried fruits and nuts in India — as well as the cult popularity of Cadbury’s fruit-and-nut bar — informs Zeinorin Stephen’s offerings at Hill Wild, a chocolate company she founded in 2017 with her husband, Leiyolan Vashum, in Ukhrul, Manipur. She channels those flavors by incorporating locally harvested sesame and perilla seeds, plum and wild apple in her bars.

. . .

Surbhi Sahni, 45, who owns Tagmo Treats, in Yonkers, N.Y., draws a similarly young, savvy crowd for her chocolate-coated besan ladoos and kaju katli. About 40 to 50 percent of her annual sales occur during Diwali.

. . .

In India, Hill Wild and Kocoatrait have been joined by a growing number of independent chocolate businesses, including Soklet and Mason & Company, that offer dark chocolate and heavily tout their sustainable-farming methods.

For the full story, see:

Priya Krishna. “Was There Ever a Battle So Sweet?” The New York Times (Wednesday, November 11, 2020): D10.

(Note: ellipses added.)

(Note: the online version of the story was updated Nov. 17, 2020, and has the title “Indians Love Cadbury Chocolate. These Rivals Would Love to Woo Them Away.”)

Dictator Rawlings Transformed Ghana from Dictatorship to Democracy

I heard a plausible plenary lecture a few years ago at an APEE meeting where the African speaker argued that African autocrats would never voluntarily give up power, because doing so would mean they would trade personal riches for personal poverty. It was a sad but plausible argument, though one that makes Jerry Rawlings’s life especially intriguing.

(p. A22) Jerry Rawlings, a former Ghanaian Air Force officer who led two military coups before steering his country toward democracy with an authoritarian hand, died on Thursday in the nation’s capital, Accra.

. . .

By the time he left office voluntarily 22 years later, he had served two presidential terms brought about by free elections and had established Ghana as a rare democratic example on the continent. Today, peaceful handovers of power are routine in the country, hardly the case with the country’s neighbors.

Mr. Rawlings’ contradictory legacy — brutal beginnings, uncompromising military rule, then free elections — underscores the difficult path to democratic governance still faced by many African nations. But in Ghana at least, where Mr. Rawlings is regarded as something of a founding father after the country’s difficult first steps, democracy is an assumption.

Given Ghana’s first experiences of him, that outcome would not have been predicted. He appeared at first to have all the makings of one of the continent’s classic military autocrats.

For the full obituary, see:

Adam Nossiter. “Jerry Rawlings, Strongman Turned Statesman Who Steered Ghana to Democracy, Dies at 73.” The New York Times (Friday, November 13, 2020): A22.

(Note: ellipsis added.)

(Note: the online version of the obituary has the date Nov. 12, 2020, and has the title “Jerry Rawlings, From Coup-Plotter to Ghanaian Statesman, Dies at 73.”)

“The Often-Unsung Adaptability of Organic Intelligence”

(p. A13) . . ., as the journalist Jonathan Waldman chronicles in “SAM,” the quest for a bricklaying robot has been bumpier than the work of a mason with vertigo.

. . .

Several themes run through the book. First is the often-unsung adaptability of organic intelligence.

. . .

The minute adjustments a human makes when manipulating objects, especially in messy environments like construction sites, result from billions of years of evolution. We make it look easy, until you give instructions to a robot and watch it fumble around or freeze up when it gets a little dirt on its face. Yann LeCun, Facebook’s chief A.I. scientist, once told me, “I would declare victory if in my professional lifetime we could make machines that are as intelligent as a rat.”

Mr. Peters has laudable motivations. “By creating a bricklaying robot,” Mr. Waldman writes, “he aimed to eliminate lifting and bending and repetitive-motion injuries in humans; to improve the quality of walls; to finish jobs faster and safer and cheaper; and to ease project scheduling and estimation. Basically: to modernize the world’s second oldest and most primitive trade.”

. . .

Within this physically and culturally harsh environment, Construction Robotics had to invent and reinvent their business model on the fly. Should they license their innovations? Sell the robots? Rent them? Provide robots and technicians as a service? Create a full-service masonry shop? Pivot from bricks to cement blocks? Take money from venture capitalists, court Google or a Dubai investment fund? Mr. Peters follows the philosophy of the book “The Lean Startup” and aims for an MVP—minimum viable product—to gain exposure and experience, knowing the risks in the construction industry. Word of a robot that builds crummy walls will travel fast, and demolished reputations are hard to rebuild.

The business finally finds its footing in the epilogue, around 2018. Construction Robotics gets SAM to lay more than 3,000 bricks a day (versus 300 to 1,000 for a human mason), and they create another machine that helps workers lift and place concrete blocks, quickly selling dozens. The company now looks to be solvent, though it’s unclear how much the construction landscape is poised to change.

For the full review, see:

Hutson, Matthew. “BOOKSHELF; Building a Better Bricklayer.” The Wall Street Journal (Tuesday, Jan 14, 2020): A13.

(Note: ellipses added.)

(Note: the online version of the review has the date January 13, 2020, and has the title “BOOKSHELF; ‘SAM’ Review: Building a Better Bricklayer.”)

The book under review is:

Waldman, Jonathan. SAM: One Robot, a Dozen Engineers, and the Race to Revolutionize the Way We Build. New York: Simon & Schuster, 2020.

Federal Sugar Quotas Increase Demand for Corn Syrup, Increasing Suffering from Gout

Corn syrup is a substitute for sugar. Federal sugar import quotas increase the price of sugar. As a result, the demand for corn syrup increases. The result, as affirmed in the article quoted below, is an increase in Americans suffering from gout.

(p. 32) As the British and American historians Roy Porter and George Sebastian Rousseau write in “Gout: The Patrician Malady” (1998), the disease, cast by some as “a quasi-deity born of the union of Bacchus and Venus,” appeared to reach epidemic proportions in 18th-century England as more people attained affluence.

. . .

The disease has not been banished to the past, nor is it any longer the exclusive insignia of rich white men (if it ever really was). From the 1960s to the 1990s, the number of sufferers more than doubled in the United States, and that’s continued to rise.

. . .

According to data collected by the National Health and Nutrition Examination Survey (NHANES), as of 2016, around 9.2 million American adults, 5.9 million men and 3.3 million women, were living with the disease, making up 3.9 percent of the adult population, and another 32.5 million (14.6 percent) exhibited hyperuricemia, elevated levels of uric acid, putting them at risk.

. . .

Some scientists point (p. 34) to the dramatic rise in rates of obesity — from 13.4 percent of adults in 1980 to 42.4 percent in 2017-18, again per the NHANES — since excess weight depresses kidney efficiency, and to the likely not unrelated introduction, in 1967, of high-fructose corn syrup, which can cause the body to produce higher levels of uric acid, and its wholesale embrace in the early 1980s by the American food industry and then the world.

. . .

(p. 35) The disease remains mysterious in its onset. Beyond genetic factors, high-fructose corn syrup poses a greater danger than a lobe of foie gras, cutting across class lines.

For the full story, see:

Ligaya Mishan. “The Disease of Kings.” The New York Times Style Magazine (Sunday, November 15, 2020): 32 & 34-35.

(Note: ellipses added.)

(Note: the online version of the story was updated Nov. 14, 2020, and has the title “Once the Disease of Gluttonous Aristocrats, Gout Is Now Tormenting the Masses.”)

Build a Better Chalk and a South Korean Will Beat a Path to Your Door

A cliché usually credited to Emerson says that ‘if you build a better mousetrap, the world will beat a path to your door.’ Many, including Peter Thiel in his co-authored Zero to One, argue that the inventor of the better mousetrap needs some marketing to let the world know that her mousetrap is better. I think Thiel is mainly right, but the story quoted below suggests that sometimes the cliché may be true.

(p. A12) The bright-white sticks drop one by one into the whir and clatter of a weatherworn piece of machinery, where they are stamped with the most celebrated name in chalk: Hagoromo.

. . .

Of the thick grayish mass that emerges, four ingredients are known: calcium carbonate, clay, glue and oyster shells. The other three are a secret. In a video posted to YouTube about the chalk, an American fan offers a guess as to one of them: angel tears.

Hagoromo chalk is a cult favorite of elite academics, artists and others around the world who praise it for its silky feel, vibrant colors, scant dust and nearly unbreakable quality. Mathematicians in particular are prone to waxing poetic about it, and buying it in bulk. The YouTube video, produced by Great Big Story, has been viewed more than 18 million times.

Despite its renown, Hagoromo is still produced on a relatively small scale, using custom-made equipment, much of it run by two laborers who are identical twins — a throwback in a high-tech era where interactive displays are replacing chalkboards.

. . .

In 2014, Takayasu Watanabe, the grandson of the company’s founder, announced that Hagoromo would halt production, partly because of the industry’s declining fortunes and partly because of his own ill health.  . . .

As Mr. Watanabe was preparing to shut it down, he received a visit from Shin Hyeong-seok, who had been importing the chalk to South Korea for nearly 10 years. Mr. Shin sold the chalk through the company he started, Sejong Mall, named after King Sejong the Great, who in the 15th century created Hangeul, the Korean writing system.

Mr. Shin had discovered the chalk years before in Japan while investigating the workings of cram schools.   . . .

“I went into the teachers’ lounge and remember being mesmerized by the fluorescent-colored chalks,” he said. “And when I started writing with one, I could not put it down.”

On his trip to see Mr. Watanabe, Mr. Shin presented what he called a “crazy idea.” He, a teacher and importer with no manufacturing experience, would take over production of the chalk in South Korea. Mr. Watanabe laughed.

But Mr. Shin kept pressing. “My pitch to him was that there are many things in the world that will disappear one day, but the best-quality item should be the last to do so,” Mr. Shin said.

. . .

Takako Iwata, the second of Mr. Watanabe’s three daughters, who served as interpreter for Mr. Shin and her father, . . . said she wasn’t exactly sure how Hagoromo had become so beloved outside Japan. “I guess people who came to Japan just kept on bringing the chalk back to their home countries,” she said. “When my father was still running the company, he did not know about this huge following.”

That changed a bit, though, in his company’s final months, when he received a flood of orders, including from American professors who hoped to buy supplies large enough to last 10 years or more.

David Eisenbud, the director of the Mathematical Sciences Research Institute at the University of California, Berkeley, said he had bought enough to last the rest of his life.

Dr. Eisenbud is a key figure in the chalk’s popularization in the United States. He was first introduced to it years ago during a visit to the University of Tokyo. “Everything about the chalk was exquisite,” he said. “I thought, ‘Chalk is chalk,’ but I was wrong.”

He later persuaded an acquaintance to import the chalk into the United States. (Mr. Shin now sells it to American buyers through Amazon.)

Yujiro Kawamata, a Japanese mathematician who introduced Hagoromo to Dr. Eisenbud, marveled at the turn of events.

“I happened to tell Eisenbud about the chalk, which was just a tool that was a part of my everyday life, and now the whole world knows about it,” Dr. Kawamata said.

For the full story, see:

Hikari Hida and Jean Chung. “How a Beloved Chalk Bridged a Bitter Divide to Survive.” The New York Times (Wednesday, November 18, 2020): A12.

(Note: ellipses added.)

(Note: the online version of the story has the date Nov. 17, 2020, and has the title “A Ride on the Assembly Line With the World’s Most Famous Chalk.”)

PayPal entrepreneur Peter Thiel’s co-authored book mentioned above is:

Thiel, Peter, and Blake Masters. Zero to One: Notes on Startups, or How to Build the Future. New York: Crown Business, 2014.

A.I. Lacks Common Sense: “A Broad and Often Unspoken Understanding of How the World Works”

(p. A15) Journalists like to punctuate stories about the risks of artificial intelligence—particularly long-term, humanity-threatening risks—with images of the Terminator. The idea is that unchecked robots will rise up and kill us all.

. . .

Melanie Mitchell, a computer scientist at Portland State University, is in the too-soon-to-worry camp. “My own opinion is that too much attention has been given to the risks from superintelligent AI,” she writes in “Artificial Intelligence,” “and far too little to deep learning’s lack of reliability and transparency and its vulnerability to attacks.”

. . .

Object-recognition software, for instance, can track pedestrians, detect tumors and sort photo libraries. But it doesn’t understand the content the way we do. Its obtuseness becomes sharply apparent in so-called adversarial attacks, in which only minimal changes to an image (or a sound or text file) can fool an AI into misidentifying it. Such attacks even transfer to the real world. A stop sign with a few innocuous stickers becomes a speed-limit sign.

The researchers first elucidating such vulnerabilities in neural networks—machine-learning programs inspired by the brain’s wiring—called them an “intriguing property.” Ms. Mitchell writes, “Calling this an ‘intriguing property’ of neural networks is a little like calling a hole in the hull of a fancy cruise liner a ‘thought-provoking facet’ of the ship.”

Ultimately, these systems lack common sense, a broad and often unspoken understanding of how the world works. Common sense, in turn, might require embodied experience in the world, plus the ability to abstract from it and form analogies. Much of Ms. Mitchell’s academic work concerns helping AI form analogies. It hasn’t progressed far. (No fault of hers.)

For the full review, see:

Matthew Hutson. “BOOKSHELF; Learn Like a Machine.” The Wall Street Journal (Wednesday, November 20, 2019): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date November 19, 2019, and has the title “BOOKSHELF; ‘Human Compatible’ and ‘Artificial Intelligence’ Review: Learn Like a Machine.”)

The book under review is:

Mitchell, Melanie. Artificial Intelligence: A Guide for Thinking Humans. New York: Farrar, Straus, and Giroux, 2019.

“When I Knew More Thank Hayek” AIER YouTube Video

The American Institute for Economic Research (AIER) premiered on Mon., Jan. 4, 2020, a neat YouTube video they created based on a shortened version of my article “When I Knew More Than Hayek.” [Hayek, Covid & The Use of Knowledge in Society | Kate Wand via @youtube] #Hayek #localknowledge

To Force Gaffney to Retire at Age 65, They Only Let Him Teach Intro Courses; So He Taught Intro Courses Until Age 89

(p. B11) Professor Gaffney died at 96 on July 16 at Loma Linda University Medical Center, not far from the University of California, Riverside, where he taught economics for 37 years.  . . .

Taxing land is less intrusive than taxing income or estates, Professor Gaffney taught, drawing on Henry George’s influential 1879 book, “Progress and Poverty: An Inquiry Into the Cause of Industrial Depressions and of Increase of Want With Increase of Wealth: The Remedy,” reportedly the best-selling popular book in America in the 1890s.

. . .

The idea that land creates a natural economic surplus that can be taxed with minimal economic damage has drawn supporters from across the political spectrum.

Winston Churchill declared in 1910 that the “land monopoly is not the only monopoly, but it is by far the greatest of monopolies — it is a perpetual monopoly, and it is the mother of all other forms of monopoly.”

The economist Milton Friedman, another conservative, called the land-value tax “the least bad tax.”

And Tony Blair, the former British prime minister and Labour Party leader, urged a land-only tax as a “fairer and more rational system of property taxation.”

The idea has never been widely embraced by lawmakers, though. Only about 20 communities in Pennsylvania impose a version of the land-value tax concept. It has also been applied in parts of Australia and Taiwan.

. . .

Mason Gaffney enrolled at Harvard University in 1941. Drafted in 1944, he was commissioned a lieutenant in the Army Air Forces and served in radio communications in New Guinea and the Philippines until 1946.

Returning to civilian life, he transferred to Reed College in Oregon to complete his bachelor’s degree, unhappy that his professors at Harvard knew little of Henry George’s work. He then moved to the University of California, Berkeley, to get his doctorate.

. . .

He started teaching at the University of California, Riverside, in 1976. He once said in an interview that as he was about to turn 65 he was pressured to retire. He refused, he said, and was told he had to teach Econ 101.

“I was delighted,” he said. “I got a chance to indoctrinate students about economic theories so they weren’t stunted by the standard neoclassical texts.”

He retired in 2013, at 89.

For the full obituary, see:

David Cay Johnston. “Mason Gaffney, 96, Economics Professor Who Argued for Taxing Only Land, Not Buildings.” The New York Times (Thursday, July 30, 2020): B11.

(Note: ellipses added.)

(Note: the online version of the obituary has the date July 26, and has the title “Mason Gaffney, Who Argued for Taxing Only Land, Dies at 96.”)

The influential book by Henry George mentioned above is:

George, Henry. Progress and Poverty. 5th ed. New York: D. Appleton and Company, 1881.

U.A.W. Spends $60,000 on Leaders’ Cigar Expenses

(p. B1) On a single day in December 2015, Gary Jones, who resigned last month as president of the United Automobile Workers, spent more than $13,000 of the union’s money at a cigar store in Arizona. His purchases included a dozen $268 boxes of Ashton Double Magnums and a dozen boxes of Ashton Monarchs at $274.50 each. “Hi Gary, Thank you & Happy New Year,” read a handwritten note from the store.

The purchases, documented by a federal complaint filed against a union leader in September, were part of more than $60,000 in cigars and cigar paraphernalia that Mr. Jones and other U.A.W. officials expensed to the union between 2014 and 2018. And the cigar purchases were in turn just a small portion of the roughly $1 million in union money that court filings say U.A.W. officials spent on golf outings, four-figure din-(p. B2)ners and monthslong villa rentals during regular retreats in Palm Springs, Calif., and elsewhere.

The scandal comes on top of an investigation into company and union officials’ improper use of millions of dollars from a joint Fiat Chrysler-U.A.W. training center. Mr. Jones’s predecessor as president, Dennis Williams, is accused of encouraging the use of Fiat Chrysler funds meant for worker education as a way to pay for the extravagant spending in Palm Springs and other places.

For the full story, see:

Noam Scheiber and Neal E. Boudette. “Living the High Life On the Workers’ Dime.” The New York Times (Thursday, December 26, 2019): B1-B2.

(Note: the online version of the story has the same date as the print version, and has the title “Behind a U.A.W. Crisis: Lavish Meals and Luxury Villas.”)