Category: Economics

Piketty Stands Up to Chinese Communist Censorship

(p. A11) PARIS — With his in-depth critique of Western capitalism, detailed in a 700-page book that enjoyed record sales in 2014, France’s rock-star economist Thomas Piketty was well regarded by Chinese leaders.

That was until he turned his attention to China.

Mr. Piketty said Monday that his follow-up book, “Capital and Ideology,” which broadens his study of the rise of economic inequality to non-Western countries such as China and India, is unlikely to be published in mainland China because he refused requests from Chinese publishers to cut parts of it.

“For the time being, there will be no book in China,” said Mr. Piketty, one of the most high-profile academics to stand up to China, calling the requests “ridiculous” and equating them with censorship.

“They shouldn’t be afraid of a book like that, it’s a sign of weakness,” Mr. Piketty said in a phone interview.

. . .

The requested cuts include parts that point out the “extremely rapid rise of inequality” in China, to levels comparable to those seen in the United States. Others highlight issues like China’s lack of an inheritance tax, which Mr. Piketty says results in a significant concentration of wealth.

“It is truly paradoxical that a country led by a Communist Party, which proclaims its adherence to ‘socialism with Chinese characteristics,’ could make such a choice,” Mr. Piketty wrote in a paragraph that he said Citic Press asked to be cut.

. . .

Among the requested cuts were sections critical of the Chinese government, which Mr. Piketty wrote, “has yet to demonstrate its superiority over Western electoral democracy.”

The appearance of Mr. Piketty’s book comes as China has been confronted with an unprecedented economic slowdown. A trade war with the United States and the effects of the coronavirus crisis have brought China’s nearly half-century-long run of growth to an end.

Mr. Piketty said that censoring his book “seems to illustrate the growing nervousness of the Chinese regime and their refusal of an open debate on the different economic and political systems.”

. . .

“If they’re afraid of a book like this, what are they going to do with the demonstrators in Hong Kong or one day in Beijing or Shanghai, as it will eventually happen?” Mr. Piketty asked.

For the full story, see:

Constant Méheut. “Rejecting Censorship of His Book, French Economist Stands Up to China.” The New York Times (Tuesday, September 1, 2020): A11.

(Note: ellipses added.)

(Note: the online version of the story has the date August 31, 2020, and has the title “Rejecting Censorship of His Book, a French Star Economist Stands Up to China.”)

The book Thomas Piketty is defending against communist Chinese censorship is:

Piketty, Thomas. Capital and Ideology. Translated by Arthur Goldhammer. Cambridge, MA: Belknap Press, 2020.

Epidemic Showed Limits of China’s “Government-Driven, Top-Down Solutions”

(p. B1) WULONGQIAO, China — A devastating disease spreading from China has wiped out roughly one-quarter of the world’s pigs, reshaping farming and hitting the diets and pocketbooks of consumers around the globe.

China’s unsuccessful efforts to stop the disease may have hastened the spread — creating problems that could bedevil Beijing and global agriculture for years to come.

. . .

The epidemic shows the limits of China’s emphasis on government-driven, top-down solutions to major problems, sometimes at the expense of the practical. It has also laid bare the struggle of a (p. B6) country of 1.4 billion people to feed itself.

. . .

When the swine fever began to spread 16 months ago, the Ministry of Agriculture told the country’s local governments to cull all pigs in herds if there was even one sick animal, and to compensate the farmers. The ministry authorized local governments to pay up to $115 for the largest pigs, a cap later raised to $170. Before the epidemic, however, many pigs sold for $250 or more apiece, particularly breeding sows, according to government data. With the epidemic, the price has soared to $600 or more.

To get that partial reimbursement, many farmers had to deal with tightfisted local officials. The ministry said it would reimburse local governments only for between 40 percent and 80 percent of their costs. Local governments also had to provide proof, often including laboratory tests, that pigs died of African swine fever and not some other ailment.

As a result, culling has been slow. Official data show only 1.2 million pigs, or less than 0.3 percent of the country’s herds, have been culled. It is not clear where the rest of the country’s vanished herds went, but food experts say many were likely butchered and turned into food. That would worsen the spread, because the disease can lurk in meat for months.

For the full story, see:

Keith Bradsher and Ailin Tang. “China Flubs Effort to Halt Lethal Turn of Pig Illness.” The New York Times (Thursday, December 26, 2019): B1 & B6.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 17, 2019, and has the title “China Responds Slowly, and a Pig Disease Becomes a Lethal Epidemic.”)

With Race-Based College Admissions “Everyone Is at Each Other’s Throat”

(p. A3) Richard Alvarez, a senior of Mexican heritage, is waiting to hear from the University of Chicago. He said his school has spent years educating students about race, but now that the college crunch has arrived that sensitivity training “has gone out the window.”

“Everyone is at each other’s throat,” he said. “White students have this thing that brown and black students unfairly get into schools over them.”

For the full story, see:

Douglas Belkin. “Identity Box Vexes College Applicants.” The Wall Street Journal (Tuesday, December 24, 2019): A3.

(Note: the online version of the story has the date December 23, 2019, and has the title “The Most Agonizing Question on a College Application: What’s Your Race?”)

For California Electricity Regulator: “Safety Is Not a Glamorous Thing”

(p. A1) PG&E’s collapse has exposed the California Public Utilities Commission’s failure to hold the utility accountable on safety. The CPUC (p. A12) for years focused attention elsewhere, on setting rates and pushing for cleaner power.

Now, the agency tasked with regulating utility safety is struggling to refocus on the issue while also grappling with its failure to prevent the state’s second electricity crisis in two decades.

. . .

From the early 2000s, the commission’s focus was on setting rates and implementing Sacramento’s renewable-energy goals. Starting in 2002, three consecutive governors, two Democrats and a Republican, signed bills ratcheting up the percentage of wind and solar power utilities had to buy.

These mandates required investor-owned utilities such as PG&E to change their mix of generation, effectively phasing out burning coal and lowering reliance on natural gas while signing contracts to buy electricity from new solar and wind farms. The CPUC oversaw these deals, as well as figuring out how to integrate thousands of new rooftop solar installations.

“Was there a considerable amount of resources placed on policy? Yeah, there was,” says Timothy Alan Simon, a commissioner between 2007 and 2012 and now a utilities consultant. “It’s a challenge to balance between the safety aspects and the need for policy deliberation.”

Michael Peevey, a former Southern California Edison president, and CPUC president between 2002 and 2014, was a vocal champion of renewable-energy policies. Now retired, he says the regulator was large enough to focus on safety and renewables simultaneously but that it was tough to get Sacramento lawmakers excited about funding safety.

When compared with eliminating coal and adding solar energy, he says, “Safety is not a glamorous thing.”

For the full story, see:

Ruth Simon. “PG&E Regulators Failed to Stop Crisis.” The Wall Street Journal (Saturday, December 9, 2019): A1 & A12.

(Note: ellipsis added.)

(Note: the online version of the story has the date December 8, 2019, and has the title “‘Safety Is Not a Glamorous Thing’: How PG&E Regulators Failed to Stop Wildfire Crisis.”)

“Publicly Held Companies Will Play the Political Game”

(p. A11) Mr. Chitester was probably the only PBS or NPR station manager who didn’t believe public radio and television should receive subsidies from American taxpayers. But he had a skill in short supply among the pro-capitalist intellectual class: He knew how to popularize free-market ideas, which many thought couldn’t be done on television.

He confesses that he isn’t sure he’d even heard of Friedman when Wallis put the two in touch. But Mr. Chitester says he devoured Friedman’s 1962 book, “Capitalism and Freedom,” and went to meet Milton and his wife, fellow economist and collaborator, Rose, at their San Francisco apartment.

An hour into the conversation, Mr. Chitester brought up a section in the book where Friedman talks about the responsibility of business—also the theme of Friedman’s famous 1970 New York Times essay, “The Social Responsibility of Business Is to Increase Its Profits.” Mr. Chitester described his dilemma: “I said to Milton, based on your philosophy, I shouldn’t be asking companies for money, and if they take your advice, they’re not going to give me any.”

“Bob, don’t worry about it,” Friedman reassured him. “Businessmen don’t like me anyway.” The economist elaborated. “He said private owners—those who own their own companies—they will be sympathetic. But corporations and publicly held companies will play the political game.” In other word, they’d be shy about supporting such a project lest it hurt them when seeking government funding.

. . .

. . . [Chitester] offers two suggestions for those dreaming about doing what he did.

“First,” he says, “you have to be a storyteller. Think of the people that have had meteoric rises to celebrity. They’ve been excellent storytellers. Free-market preachers if you will.”

. . .

. . . [second] to hopefully get people to think at least initially that I’m a nice person,” he says. “Because if they don’t think I’m a nice person, there’s nothing on the face of the earth I can do that will likely persuade them to listen to what I have to say.”

For the full interview, see:

William McGurn, interviewer. “THE WEEKEND INTERVIEW; The Man Who Made Milton Friedman a Star.” The Wall Street Journal (Saturday, Oct 31, 2020): A11.

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

(Note: the online version of the interview has the date Oct. 30, 2020, and has the same title as the print version.)

The Friedman book mentioned in the passage quoted above is:

Friedman, Milton. Capitalism and Freedom. Chicago: The University of Chicago Press, 1962.

Workers with Criminal Records Pay for Their Second Chance with Greater Loyalty and Harder Work

(p. B1) CINCINNATI—While some companies try to attract and keep employees with yoga classes and lavish cafeterias, Nehemiah Manufacturing Co.’s perks include a social-service team and an attorney.

When two consumer-product veterans started Nehemiah a decade ago, their idea was to create more opportunities in a struggling part of Cincinnati. Increasingly, that meant hiring people who had a particularly hard time finding jobs: those with criminal backgrounds.

Now, workers with criminal records make up around 80% of the company’s about 180 employees—and Nehemiah has learned that offering a job to people trying to turn their lives around is just half the battle.

“We are investing in our employees in order to retain them,” said Richard Palmer, president of Nehemiah, whose brands include Boogie Wipes, Saline Soothers and other consumer products. “It’s no different than tech companies bringing in lunch and a foosball table.”

In one of the tightest labor markets in decades, more employers are willing to give ex-convicts a chance, trying to marry business needs and good intentions. Even large American companies are rethinking whether their responsibilities extend beyond their shareholders. JPMorgan Chase & Co. Chief Executive James Dimon said in October [1999] that the bank would step up efforts to recruit people with criminal backgrounds.

Hiring people with a criminal past can pay big dividends for companies, such as closer community ties and a loyal workforce. But keeping them on the job can be a struggle.

. . .

(p. B6) Since its first days, Nehemiah has become more deliberate about identifying candidates who are likely to be good, reliable employees and has developed a more formal system for providing them with support.

Today, Nehemiah’s annual turnover stands at roughly 15%, well below the 38.5% average for consumer-products companies, as reported by Mercer’s 2019 U.S. Turnover Survey. Nehemiah says it had operating income of $5.7 million on sales of $59.4 million in 2018.

. . .

“We found that the population we were hiring who had criminal backgrounds were our most loyal people,” said Mr. Palmer. “When we were looking for people to work overtime, come in on Saturday or go that extra mile, it was the second-chance population that was saying, ‘I’m in.’”

. . .

At Nehemiah, having a criminal past carries less of a stigma because so many workers have been incarcerated.

. . .

. . ., Nehemiah’s approach . . . means it can spot potential other employers might overlook. When Rayshun Holt came to Nehemiah roughly two years ago, Ms. Merida said he immediately stood out as someone the company wanted.

Mr. Holt, 40, spent two decades in prison after fatally shooting a friend when he was 15 during what he describes as a scuffle over a gun. While in prison, Mr. Holt reconnected to his faith, started taking classes and began coaching other prisoners on how to turn their lives around.

Released in 2016 with $96 in his pocket, he said, “I was filled with hope and overwhelmed by fear.” His first job was in a fast-food restaurant specializing in chicken fingers. “I was the oldest person there and the most enthusiastic. It was the first time in my life I was earning an honest check,” he said.

But he struggled to find steady work with decent pay. Nehemiah hired him as a second-shift supervisor at $19 an hour.

Ms. Merida said she was impressed by Mr. Holt’s passion, humility and sincerity when he told his life story, how he knew the streets but had already taken steps to turn his life around. “I knew this was a born leader who could really have a profound impact on our employees,” said Ms. Merida. “He could show them that no matter how bad it is, your life isn’t over.”

Mr. Holt now works as the company’s commercialization coordinator, responsible for taking new products and product improvements from concept to market.

For the full story, see:

Ruth Simon. “The Company of Second Chances.” The Wall Street Journal (Saturday, January 25, 2020): B1 & B6.

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

(Note: the online version of the story has the same date and title as the print version.)

Why Did McPizza Fail?

Why do some products succeed and others fail? The answers may hold lessons for which future projects should be pursued and, if pursued, how to pursue them. Successes are sometimes researched; failures much less often. The passages quoted below are from an unusually deep dive into the story of McDonalds’s failed McPizza.

(p. 1) Maybe you are too young to remember. Perhaps you forgot. Or there’s a chance you’ve blocked it. But the home of the Big Mac began selling pizza in the mid-1980s, hoping to grab market share from national pie chains. McDonald’s gave up a few years later. Nobody seemed to lament the passing of McPizza, and nobody was urging its return. Which, to Mr. Thompson in the fall of 2016, made the topic all the more appealing.

. . .

(p. 8) One trick to keeping this enterprise alive and entertaining is Mr. Thompson’s refusal to accept answers to the show’s titular question, which he had learned by Episode 5. McPizza failed for reasons that should have seemed evident before it was rolled out: It’s way, way off brand, and it didn’t bake fast enough to keep pace with the rest of the menu.

. . .

Early on, Mr. Thompson learned that a McDonald’s in Pomeroy, Ohio, was the last franchise in the country still serving the pizza, and he raised money through Indiegogo to fly there and try it. (He described it as “at least as good as Little Caesars.”)

He wondered how the place kept selling an item that others in the chain didn’t offer. Once again, definitive answers were elusive because the franchise owner would not speak to him.  . . .

Several months after Mr. Thompson’s visit, the Pomeroy McDonald’s stopped selling McPizza. The podcast depicted this as retaliation against the show, a shameless effort to curtail old-fashioned muckraking. This makes sense only in the mind of “Brian Thompson,” whose baseline assumption is that McDonald’s ought to again sell pizza because people love it and because the company is in business to make money. Hence, any rationale for the product’s demise is under suspicion.

To Mr. Thompson’s delight, he keeps unearthing new rationales for the product’s cancellation. At one point, he heard about a McDonald’s in Adak, Alaska, a largely deserted island in the middle of the Bering Sea. For years, Adak was a Cold War outpost for Army and Navy barracks, but it was decommissioned in the early 1990s, and the McDonald’s there was abandoned. Last year, Mr. Thompson raised money online to travel the 3,100 miles there, hoping that the husk of a restaurant would contain his Holy Grail: a McDonald’s pizza oven.

He flew to Anchorage, then took a once-a-week, three-hour flight to Adak. After landing, he went straight to the McDonald’s and was disappointed to see it had been boarded up — there was no way inside. The trip seemed a grand bust. But as Mr. Thompson prepared to leave the island, his Airbnb host suggested he call a guy named Larry, who, it turned out, had once found a pizza oven in a derelict bowling alley. Evidently, it had been hauled out of the defunct McDonald’s. Larry determined it had been manufactured for McDonald’s by Garland Commercial Industries, a company in Freeland, Pa.

To “Brian Thompson,” this was a breakthrough on a par with the formulation of the laws of thermodynamics. He called Garland, and a representative put him in touch with a service tech in Cleveland who had once repaired McDonald’s ovens. Unlike the corporate P.R. department, this guy was chatty.

“They were only in McDonald’s for roughly two to three years because of the difficulty to program them,” the tech said on Episode 143. “I don’t even think there’s program manuals for it.”

And thus, to Mr. Thompson’s delight, three years into the show, he’d added another reason that McDonald’s killed pizza — the ovens were a fiasco.

For the full story, see:

David Segal. “Answering a Fast-Food Question, if You Care.” The New York Times, SundayBusiness Section (Sunday, November 1, 2020): 1 & 8.

(Note: ellipses added.)

(Note: the online version of the story has the date Oct. 28, 2020, and has the title “A Podcast Answers a Fast-Food Question That Nobody Is Asking.”)

Starkweather Went Over Head of Boss to Champion Laser Printers at Xerox

(p. A10) While working for Xerox Corp. in the late 1960s, Gary Starkweather proposed to build a laser printer, able to reproduce any image created on a computer. His boss told him it was a terrible idea.

Mr. Starkweather’s persistence—and finesse in maneuvering around that boss—led to the introduction in 1977 of the Xerox 9700. It became one of the company’s top-selling products, generating more than $1 billion of annual revenue.

. . .

After the boss nixed his idea in 1969, Mr. Starkweather recalled in an oral history produced by the Computer History Museum, “I couldn’t get this thing out of my head. I thought, ‘He’s wrong. This is so good that it’s got to work.’ ”

Mr. Starkweather reached higher in the organization, sold his vision and obtained a transfer to Xerox’s Palo Alto Research Center, where he began working on prototypes.

. . .

To avoid blurry prints, Mr. Starkweather had to find ways to direct laser pulses precisely. He devised a cluster of revolving mirrors and a lens to guide the light. One of his breakthrough ideas came while he was mowing the lawn; he turned off the mower and drove to the lab to test it out.

. . .

An only child, Gary spent much of his youth taking apart and reassembling whatever mechanical and electrical equipment he could scavenge. “We had a basement, and as long as I didn’t blow up the house I was allowed to do whatever I wanted down there,” he said.

. . .

The resistance he met from some Xerox executives reflected a lack of imagination, preventing them from seeing the possibilities of solving technical problems and bringing down costs, Mr. Starkweather said.

For the full obituary, see:

James R. Hagerty. “Inventor Dreamed Up Better Way to Print.” The Wall Street Journal (Saturday, January 18, 2020): A10.

(Note: ellipses added.)

(Note: the online version of the obituary has the date January 14, 2020, and has the title “Gary Starkweather Invented a Laser Printer at Xerox.”)

Apple Will Make Its Own Mac Processor Chips

In similar stories told in books by Grove and by Christensen and Raynor, technology firms work better when large, if components require careful design to work well together. When components become standardized and interchangeable, technology firms work better when smaller, buying components from specialized component suppliers. Deciding what is best at any moment requires uncertain judgement, and can change over time. In the passages quoted below, it appears that Apple thinks better performance can be achieved by integrating a key component back within the firm.

(p. B4) Apple Inc. built its gadget empire by outsourcing production to a vast ecosystem of chip makers and other component specialists. Under Chief Executive Tim Cook, it is taking a lot of that business back.

The company, which released its first iPhone processor in 2010, said Monday [June 22, 2020] it plans to ship Macs later this year with custom chips, a move that ends a 15-year technology partnership with Intel Corp. Apple said the custom-designed chips are more efficient and offer higher-performance graphics.

. . .

The strategy springs from Apple’s philosophy—fostered by its late co-founder Steve Jobs—that owning core technologies provides a competitive edge. Customized chips and sensors can help its iPhone, iPads and Macs leapfrog rivals in battery performance and features. It also can protect Apple from Chinese rivals that buy universally available parts.

. . .

The initiative—called insourcing by some suppliers and analysts—can give Apple a two-year jump on competitors in device performance because Apple can plan how multiple chips work together to limit power consumption and free up space inside iPhones and iPads for other components, analysts said.

It also reduces potential leaks of its product plans.

For the full story, see:

Tripp Mickle. “By Making Its Chips, Apple Gains Control.” The Wall Street Journal (Wednesday, June 24, 2020): B4.

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

(Note: the online version of the story was updated June 24, 2020, and has the title “Apple Is the Newest Chip Giant in Town.”)

The Grove book mentioned above is:

Grove, Andrew S. Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company. New York: Bantam Books, 1999.

The Christensen and Raynor book mentioned above is:

Christensen, Clayton M., and Michael E. Raynor. The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

“Run With the Herd or Be Crushed by It”

The author of the passages quoted below writes poetry and novels in Havana.

(p. 7) Throughout my life, I’ve seen how powerless parents are in matters regarding their own children. Parents have no say over how their children should be raised, whether they will be conscripted or sent away to school in rural areas, and what dangers could befall them being so far from home and such a young age. They have no say over their children’s manners, religious teachings and political ideologies. There are only two choices: Run with the herd or be crushed by it.

As a teenager in the 1980s, I was taught in a “scientific communism” class that family was the heart of society. But from what I could see, that was no longer the case; organizations with mass followings like the Young Communist League had taken its place.

. . .

I was born and raised in a system that exerts control under the guise of paternalism — a system that caresses you as it beats you, that teaches you but also inhibits you, enlightens you and censures you. We are hostages to a government that behaves like an abusive, old-fashioned and sexist father, from whom we must seek consent and forgiveness.

For the full commentary, see:

Wendy Guerra. “Cuban Women Need a Revolution.” The New York Times, SundayReview Section (Sunday, October 13, 2019): 7.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Oct. 12, 2019, and has the title “‘Cuban Women Await Their #MeToo Moment.” The first paragraph quoted above is from the online version and differs in several respects from the equivalent paragraph in the print version.)

Jim Collins Book “Had a Huge Influence” on Reed Hastings’s Creation of Netflix

(p. 6) The Netflix founder and co-chief executive, whose new book is ‘No Rules Rules,’ reads with his mind more than his heart: ‘I generally turn more to television and film for emotional nourishment.’

. . .

What’s your favorite book no one else has heard of?

Probably “Beyond Entrepreneurship,” by Jim Collins and William C. Lazier. It’s not nearly as well known as Collins’s “Good to Great” or “Built to Last” in the pantheon of influential business books. But it came out in the early 1990s, right around the time I was starting my first company, Pure Software. It had a huge influence on how I thought about that business and, later, what I aspired to create at Netflix. Collins and other business authors whose books I benefited from are a big reason I decided to write a book of my own, to try to pay it forward to other entrepreneurs in the same way those other authors have. Years from now, it would be great if someone who found “No Rules Rules” useful today writes their own book improving on it..

. . .

What do you plan to read next?

“Shoe Dog,” the memoir by Phil Knight, who created Nike — and yes, we’re also adapting it for Netflix.

For the full interview, see:

“By the Book; Reed Hastings.” The New York Times Book Review (Sunday, September 27, 2020): 6.

(Note: the online version of the interview has the date Sept. 24, 2020, and has the title “By the Book; Reed Hastings, the Founder of Netflix, Keeps His Library in His Pocket.” The first sentence quoted above, and the questions, are by the New York Times interviewer, who is not identified in either the print or the online versions. The rest is by Reed Hastings. The first sentence quoted above is in the print, but not the online, version.)

Reed Hastings’s book mentioned above is:

Hastings, Reed, and Erin Meyer. No Rules Rules: Netflix and the Culture of Reinvention. New York: Penguin Press, 2020.

Jim Collins’s co-authored book mentioned above is:

Collins, James C., and William C. Lazier. Beyond Entrepreneurship: Turning Your Business into an Enduring Great Company. Paramus, NJ: Prentice Hall, 1992.

Phil Knight’s memoir mentioned above is:

Knight, Phil. Shoe Dog: A Memoir by the Creator of Nike. New York: Scribner, 2016.