Category: Economics

Tough Advice from Experienced Advisers Helps Us Acquire Skills

(p. R6) Recent studies suggest that people tend to favor advisers who are positive, cheerleader-types over tough talkers and voices of experience. But such preferences, the researchers also say, often lead to detrimental results, a finding with wide-ranging implications for companies and managers.

A paper published in March [2020] in the Journal of Experimental Psychology: General summarized the findings of six connected studies. Subjects of inquiry included: what characteristics people predict they will use when selecting an adviser; those people’s actual adviser selections; and the potential consequences of these decisions.

. . .

And when researchers looked at the outcomes of these decisions, they noted a disturbing pattern. Those who relied primarily on cheerleader-types generally underperformed those who were guided more by expertise.

Catherine Shea, an assistant professor at Carnegie Mellon’s Tepper School of Business who focuses on organizational behavior and theory, says that choosing an experienced mentor who may be rough around the edges can be like taking cough medicine.

“It tastes awful, but it works,” she says. “Sometimes you really do need the skill set, and sometimes the nice person is not going to give it to you.”

For the full story, see:

Cheryl Winokur Munk. “People Want Mentors Who Are Their Cheerleaders. That May Not Be Wise.” The Wall Street Journal (Monday, June 15, 2020): R6.

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

(Note: the online version of the story has the date June 14, 2020, and has the title “People Like Their Mentors to Be Cheerleaders. That May Be a Mistake.”)

The March 2020 paper mentioned above is:

Hur, Julia D., Rachel L. Ruttan, and Catherine T. Shea. “The Unexpected Power of Positivity: Predictions Versus Decisions About Advisor Selection.” Journal of Experimental Psychology: General (published online in advance of print on March 16, 2020).

Oppenheim Recommends Diamond’s “Well-Researched,” “Well-Written,” and “Fascinating” Openness to Creative Destruction

Charles Oppenheim is an Information Science expert whose recent focus has been intellectual property. He is currently a visiting professor at Robert Gordon University in Aberdeen, Scotland. (I do not remember ever meeting him.) Oppenheim has written a gracious, though mixed, review of my book Openness to Creative Destruction: Sustaining Innovative Dynamism. Although mixed, what he likes outweighs what he dislikes. Below I quote his first and his final paragraphs.

(p. 82) The author is a well-known professor of economics in the United States. In this book, well researched and supported by numerous references, his philosophy of life is made clear – and a rather worrying philosophy it is, as we shall see. The book addresses the question of how to encourage innovation and entrepreneurship in an advanced economy such as that of the United States.

. . .

(p. 83) This is a well-written book with an easy style that will appeal to economists, students and perhaps the general public. It is supported by a large number of references, as well as figures and tables. It has an exemplary index. Diamond covers interesting ground and provides some fascinating histories of the development of many of the inventions we now take for granted. Such a pity that Diamond’s argument is so one-sided, and that he fails to take into account moral, ethical and environmental concerns in his optimistic vision of how innovation can make economies thrive. The book is recommended, but treat its contents with caution.

For the full review, see:

Oppenheim, Charles. “Openness to Creative Destruction, Arthur M. Diamond Jr. (2019), Oxford University Press.” Prometheus: Critical Studies in Innovation 36, no. 1 (March 2020): 82-83.

(Note: ellipsis added.)

My book, reviewed by Oppenheim, is:

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

Disney Will Only Re-Open a Park When It Can “Cover Its Variable Costs”

(p. B14) Disney Chief Executive Officer Bob Chapek has maintained that the company wouldn’t reopen a park without at least the ability to cover its variable costs, but analysts expect more will be needed to get parks fully back into the black. Bernstein analyst Todd Juenger estimates Disney’s parks would need to be at 60% of their “normal run-rate attendance” to reach break-even on a pretax basis.

. . .

On Thursday, [June 25, 2020] UBS reported results of a survey of 2,000 U.S. consumers conducted earlier this month. In that survey, among the respondents who had cited worries about social distancing as keeping them from visiting, nearly two-thirds said they would only consider attending a Disney park once a vaccine is available.

For the full story, see:

Dan Gallagher. “The Magic Kingdom Is Losing Its Spell.” The Wall Street Journal (Saturday, June 27, 2020): B14.

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

(Note: the online version of the story has the date June 26, 2020, and has the title “Disney’s Parks Need a Cure.”)

Reduce Spread of COVID-19 “With Plenty of Fresh Air” in Buildings

(p. B5) One way to reduce the spread of coronavirus is to maintain ventilation .

. . .

Modifications from equipment manufacturers such as Trane Technologies PLC, Carrier Global Corp. and Johnson Controls International PLC include filtering indoor air more thoroughly, drawing more outdoor air into buildings and deploying ultraviolet light against the virus inside ventilation systems.

“More fresh air and cleaner air are the direction that customers are going. This is top-of-mind for building owners and contractors,” said Jeff Williams, president of global products for Johnson Controls, maker of York-brand heating and air-conditioning equipment.

. . .

Research released this spring by the Department of Homeland Security found that coronavirus particles decay faster at a room temperature of 78 degrees Fahrenheit with a relative humidity of 50% than at lower temperatures and humidity. Add in a strong dose of ultraviolet light, and the virus decays by 90% in less than seven minutes, according to the department. Humans’ immune systems also are more effective against viruses in warmer, more humid conditions, according to a Yale University study published in May 2019.

“We can minimize the spread of the virus in the summer when there is plenty of sunlight and higher humidity. They’re actually effective in a defined space,” said Luke Leung, epidemic task force leader for the American Society of Heating, Refrigerating and Air-Conditioning Engineers, a trade association.

. . .

Recirculated air should include about 20% outdoor air to effectively dilute coronavirus particles, the Atlanta-based engineers’ society says. Many buildings’ air handlers were set up to draw less outdoor air, to maximize energy efficiency.

“The past few years there was a lot of emphasis on energy saving and there was less outside air in buildings,” said Seth Ferriell, chief executive of SSC Services for Education, a Tennessee-based company that manages ventilation systems for schools and universities. The firm has a contract to upgrade air handlers at Texas A&M University.

Mr. Ferriell estimated that increasing the amount of outdoor air in a building by 50% would drive up natural gas or electricity costs by as much as 15% a year because that additional air has to be cooled or heated to match the desired interior temperature.

For the full story, see:

Bob Tita. “Virus Spurs Ventilation Boost.” The Wall Street Journal (Thursday, July 9, 2020): B5.

(Note: ellipses added.)

(Note: the online version of the story has the date July 8, 2020, and has the title “Offices Try to Combat Coronavirus With More Fresh Air.” The last couple of paragraphs quoted above, appeared in the online, but not the print, version of the article.)

Jim Pethokoukis Asks Art Diamond How to Increase Innovative Dynamism

Jim Pethokoukis recently posted an abbreviated transcript of our conversation on his Political Economy podcast about my Openness to Creative Destruction: Sustaining Innovative Dynamism book.

Posted by Arthur Diamond on Thursday, August 6, 2020

Transcript of Political Economy Podcast Interview with Arthur Diamond on Openness to Creative Destruction

The lightly edited transcript was posted on July 30, 2020 on the American Enterprise Institute web site.

Yesterday Jim Pethokoukis posted a lightly edited transcript of my conversation with him on his American Enterprise…

Posted by Arthur Diamond on Friday, July 31, 2020

“The Ever-Evolving Standards of Wokeness”

(p. A6) . . . I was pleased this month when “Hamilton” became available to watch on the streaming service Disney+. But now the show is being criticized for its portrayal of the American Founding by many of the same people who once gushed about it. Is it a coincidence that affluent people loved “Hamilton” when tickets were prohibitively expensive, but they disparage it now that ordinary people can see it?

. . .

The upper classes are driven to distinguish themselves from the little people even beyond art. This explains the ever-evolving standards of wokeness. To become acculturated into the elite requires knowing the habits, customs and manners of the upper class. Ideological purity tests now exist to indicate social class and block upward social mobility. Your opinion about social issues is the new powdered wig. In universities and in professional jobs, political correctness is a weapon used by white-collar professionals to weed out those who didn’t marinate in elite mores.

. . .

To understand the neologisms and practices of social justice, you need a bachelor’s degree from an expensive college. A common refrain to those who are not fully up to date on the latest fashions is “Educate yourself.” This is a way of keeping down people who work multiple jobs, have children to care for, and don’t have the time or means to read the latest woke bestseller.

For the full commentary, see:

Rob Henderson. “‘Hamilton’ Loses Its Snob Appeal.” The Wall Street Journal (Weds., July 15, 2020): A19.

(Note: ellipses added.)

(Note: the online version of the commentary has the date June 14, 2020, and has the same title as the print version.)

Blacks in Detroit Have Public Transit to Die For

(p. A1) DETROIT — Paris Banks sprayed the seat with Lysol before sliding into the last row on the right. Rochell Brown put out her cigarette, tucked herself behind the steering wheel and slapped the doors shut.

It was 8:37 a.m., and the No. 17 bus began chugging westward across Detroit.

. . .

This hardscrabble city, where nearly 80 percent of residents are black, has become a national hot spot with more than 7,000 infections and more than 400 deaths. One reason for the rapid spread, experts say, is that the city has a large working-class population that does not have the luxury of living in isolation. Their jobs cannot be performed from a laptop in a living room. They do not have vehicles to safely get them to the grocery store.

(p. A12) And so they end up on a bus. Just like the No. 17 — a reluctant yet essential gathering place, and also a potential accelerant for a pandemic that has engulfed Detroit.

For the full story, see:

John Eligon. “No Choice but Shoulder to Shoulder on the Bus.” The New York Times (Thursday, April 16, 2020): A1 & A12-A13.

(Note: ellipsis added.)

(Note: the online version of the story was updated April 16, 2020, and has the title “Rolling Through the Pandemic.”)

Despite Global Trading Routes, in Year 1000 Most Ordinary People Rejected the Unfamiliar

(p. C8) Valerie Hansen’s “The Year 1000: When Explorers Connected the World—and Globalization Began” is a gripping account of exploration and ingenuity, sweeping across the economic alliances and great networks of trade that connected disparate regions around the globe. By touching down in different parts of the world at that precise moment, Ms. Hansen reveals the social and economic changes that linked individuals and societies in astonishing ways.

. . .

People navigated along the trading routes from China to the Persian Gulf and East Africa, and from Scandinavia to North America and the Caspian Sea, long before da Gama, Magellan and Columbus. But for most ordinary people life was still circumscribed. Globalization in 1000 may have opened the world to rulers—and busy ports and cities like Quanzhou and Bukhara may have hosted culturally and religiously diverse populations—but there was little sense of a wider, cosmopolitan embrace of a common humanity. “The most important lesson we can learn from our forebears is how best to react to the unfamiliar,” Ms. Hansen writes. “Those who remained open to the unfamiliar did much better than those who rejected anything new.”

For the full review, see:

Karin Altenberg. “Setting The Globe Spinning.” The Wall Street Journal (Saturday, May 23, 2020): C8.

(Note: ellipsis added.)

(Note: the online version of the review has the date May 22, 2020, and has the title “The Year 1000’ Review: Setting the Globe Spinning.”)

The book under review is:

Hansen, Valerie. The Year 1000: When Explorers Connected the World—and Globalization Began. New York: Scribner, 2020.

More Blacks Die of Covid-19 Partly Due to Greater Use of Public Transit

(p. A7) African-Americans may be dying at higher rates than white people from Covid-19, the disease caused by the novel coronavirus, in part because of black people’s heavier reliance on public transportation for commuting, two new studies by economists suggest.

One of the studies, by University of Virginia economist John McLaren, found that the racial discrepancy remained even after controlling for income or insurance rates. Instead, Mr. McLaren found the gap was due in part to the fact that black workers are more likely to get to work via public transit, including subways and buses.

About 10.4% of black commuters take public transit, versus 3.4% of white commuters, according to the Census. After controlling for the use of public transit, Mr. McLaren finds the racial disparity in Covid-19 deaths is less pronounced.

. . .

The other study, by Christopher Knittel and Bora Ozaltun, both of the Massachusetts Institute of Technology, found that a 10% increase in the share of a county’s residents who use public transit versus those who telecommute raised Covid-19 death rates by 1.21 per 1,000 people when looking at counties around the U.S.—or by 0.48 per 1,000 people when focusing only on counties within individual states. In their analysis, the researchers controlled for race, income, age, climate and other characteristics.

For the full story, see:

David Harrison. “Virus Deaths Linked to Transit.” The Wall Street Journal (Monday, June 29, 2020): A7.

(Note: ellipsis added.)

(Note: the online version of the story has the date June 28, 2020, and has the title “Public Transit Use Is Associated With Higher Coronavirus Death Rates, Researchers Find.”)

The first academic study mentioned above, is:

McLaren, John. “Racial Disparity in Covid-19 Deaths: Seeking Economic Roots with Census Data.” National Bureau of Economic Research, NBER Working Paper #27407, June 2020.

The second academic study mentioned above, is:

Knittel, Christopher R., and Bora Ozaltun. “What Does and Does Not Correlate with Covid-19 Death Rates.” National Bureau of Economic Research, NBER Working Paper #27391, June 2020.

Covid-19 Caused Mass Transit Use to “Plummet by 80%” or More

(p. D1) Fears of being exposed to germs in cramped underground spaces have reportedly caused mass transit ridership to plummet by 80% in urban centers such as Milan and San Francisco—and by up to 96% in hot spots including New York, Washington, D.C., and Paris. When they head back to their corner offices, car-shunning members of the C-suite set might be more likely to commute in prudent solitude on electric bikes than to trudge up subway steps.

“No one wants to be in a dirty cab. We don’t want to be on a bus or subway. People want their own mode of transportation that they control,” said Michael Burtov, author of “The Evergreen Startup.” Mr. Burtov, who works with entrepreneurs as part of MIT’s Enterprise Forum, also noted a severe dip in usage of shared bikes and scooters; who yearns to spend an afternoon wiping down handlebars or riding in gloves? “For individualized modes of transportation, which are affordable and really efficient, it’s a renaissance.”

To wit, Seattle’s Rad Power Bikes recently announced that sales had leapt nearly 300% this April compared with the same period in 2019. Its Dutch competitor VanMoof claimed a similar growth of 264% for the first half of 2020 compared with the same six months last year.

For the full story, see:

Matthew Kitchen. “Wanted: A Safer Commute.” The Wall Street Journal (Saturday, June 27, 2020): D1.

(Note: the online version of the story has the same date as the print version, and has the title “Wary of Subways? 6 Electric Options for a Solo Work Commute.”)

The book by Burtov, mentioned above, is:

Burtov, Michael. The Evergreen Startup: The Entrepreneur’s Playbook for Everything from Venture Capital to Equity Crowdfunding. Hypercritical Publishing, 2020.