Category: Economics

“To Be Profitable, You Have to Have a Purpose”

(p. F2) When a group of the nation’s largest companies said last month that they had changed their mission strictly from making profits to also include benefiting “customers, employees, suppliers, communities and shareholders,” it was generally applauded as an important step in the right direction.

. . .

Treasury Secretary Steven Mnuchin in his first public comment on the topic, flatly told me: “I wouldn’t have signed it,” stunning a room of policymakers and business leaders in Washington at last week’s DealBook DC Strategy Forum.

His explanation was nuanced: “To be profitable, you have to have a purpose. I think it’s not as simple as saying we either have a purpose or we have profits. I think the problem with creating a simple answer is it doesn’t fully explore the issues.”

He added: “I do think companies should be long-term oriented. I don’t think companies need to necessarily be focused on quarterly profits and hitting Street earnings numbers. But I think, ultimately, a business’s job is to deploy the capital correctly and to make profits.”

Stephen A. Schwarzman, the co-founder and chairman of Blackstone Group and one of only a handful of members of the Business Roundtable who declined to sign the document, also went public with his explanation in a conversation with me earlier this week: “I know why we’re in business: because people give us money to manage. They want us to earn a lot of money to give them back or else they would give us nothing.”

He said “the idea that business should be concerned” with employees, customers, suppliers and the community should be a given. But, he said, he objected to the idea in the Business Roundtable statement that profits should be listed as simply equal to the other four issues.

“I have trouble managing when I don’t know what I’m supposed to be doing,” he said, suggesting the statement gives managers too many masters. “I know what I’m supposed to be doing, which is making good investments, safely, and making a great contribution to these pension funds and regular people.”

For the full commentary, see:

Andrew Ross Sorkin. “Profits or Public Interest?” The New York Times (Thursday, September 19, 2019): F2.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Sept. 18, 2019, and has the title “Profits or the Public Interest: The Debate Continues.”)

Pilots of Delivery Robots Benefit from Video Game Skills

(p. B4) Michael Niedermayer used to fly drones for the U.S. Army and the Central Intelligence Agency, gathering real-time, life-and-death intelligence on battlefields in Iraq. Now he pilots delivery robots for a San Francisco Bay Area startup that wants to disrupt burrito delivery.

Postmates, which in mid-August received a permit to operate its Serve delivery robot in San Francisco and is already testing it for food delivery in Los Angeles, employs a growing team of “pilots” to remotely oversee, and at times steer, these four-wheeled food ferries.

“We will probably see a drastic increase in our workforce over the next five years,” says Postmates Chief Executive Bastian Lehmann.

Disrupting “last-mile” delivery—historically the domain of box trucks, bike couriers and personal vehicles—“felt like a great fit for my military background,” says Mr. Niedermayer.

His story is hardly unique. Across industries, engineers are building atop work done a generation ago by designers of military drones. Whether it’s terrestrial delivery robots, flying delivery drones, office-patrolling security robots, inventory-checking robots in grocery stores or remotely piloted cars and trucks, the machines that were supposed to revolutionize everything by operating autonomously turn out to require, at the very least, humans minding them from afar.

Until the techno-utopian dream of full automation comes into effect—and frankly, there’s no guarantee that will ever happen—there will be plenty of jobs for humans, just not ones their parents would recognize. Whether the humans in charge are in the same city or thousands of miles away, the proliferation of not-yet-autonomous technologies is driving a tiny but rapidly growing workforce.

. . .

When Postmates managers interview potential delivery-robot pilots like Diana Villalobos, they ask whether or not they played videogames in their youth.

“When I was a kid, my parents always said, ‘Stop playing videogames!’ But it came in handy,” she says.

For the full commentary, see:

Christopher Mims. “KEYWORDS; Behind ‘Autonomous’ Tech, a Person Playing Robot.” The Wall Street Journal (Saturday, Aug. 31, 2019): B4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the same date as the print version, and has the title “KEYWORDS; The Next Hot Job: Pretending to Be a Robot.”)

With Work Ethic, but Not Much Education, “You Can Come Out Here and Still Make Six Figures”

(p. B1) When Mike Wilkinson moved to Midland, Tex., in 2017, he hoped the world’s largest oil field would change his life. His marriage was in tatters. He owed tens of thousands in credit card debt. His morale was broken.

He soon began working as a “hot shot” truck driver, carrying loads for drillers who need pipes or drums in a hurry. The United States is the world’s largest producer of oil, surpassing Saudi Arabia and Russia, and demand for “hot shots” has soared.

The epicenter of the oil boom is the Permian Basin in Texas and New Mexico, a massive layer cake of shale that’s cracked open with a blasting technique known as fracking. The country’s growing energy dominance has created tens of thousands of jobs in this part of the Southwest in recent years, many for people like Wilkinson looking for fresh starts.

. . .

(p. B4) There are now 55,000 people now work in the Permian. Mr. Wilkinson says he’s found a certain camaraderie with other transplants: “They are either escaping debt or family issues or poverty.

. . .

“I have to make money, and this is the best way I can make money,” he said. “If you’re not educated and have a good work ethic, you can come out here and still make six figures.”

For the full story, see:

Clifford Krauss. “Boom Times and Fresh Starts.” The New York Times (Thursday, Sept. 19, 2019): B1 & B4.

(Note: ellipses added.)

(Note: the online version of the story has the date Sept. 10, 2019, and has the title “‘This Is the Most Lonesome Job’: Ride With a ‘Hot Shot’ Trucker in Oil-Rich Texas.” The online version highlights photographs by Tamir Kalifa. The online and print versions have significant differences in wording and ordering. Where there are differences, the passages quoted above, follow the print version.)

45 Is Average Age of Gazelle Founders

(p. B7) It took an entrepreneur to reimagine the mundane home thermostat as an object of beauty — and then to make a fortune based on that vision.

The entrepreneur was Tony Fadell, who had that thermostat epiphany after decades in the tech industry, including at companies like Apple. Mr. Fadell embodied his idea in a new company, Nest, which he started with the help of a colleague from Apple in 2010, at age 41.

The Nest thermostat had a sleek and intuitive design, smartphone connectivity and the ability to learn its owner’s temperature-setting habits. The product was a big hit, and within a few years Google acquired Nest for $3.2 billion.

Mr. Fadell’s deep experience and relatively mature age when he started Nest are typical of superstar entrepreneurs, who are rarely fresh out of college — or freshly dropped out of college. That’s what a team of economists discovered when they analyzed high-growth companies in the United States. Their study is being published in the journal American Economic Review: Insights.

The researchers looked at start-ups established between 2007 and 2014 and analyzed the top 0.1 percent — defined as those with the fastest growth in employment and sales. The average age of those companies’ founders was 45.

For the full commentary, see:

Seema Jayachandran. “ECONOMIC VIEW; High-Flying Tech Has a Touch of Gray.” The New York Times, SundayBusiness Section (Sunday, September 1, 2019): B7.

(Note: the online version of the commentary has the date Aug. 29, 2019, and has the title “ECONOMIC VIEW; Founders of Successful Tech Companies Are Mostly Middle-Aged.”)

The forthcoming article mentioned above, is:

Azoulay, Pierre, Benjamin Jones, J. Daniel Kim, and Javier Miranda. “Age and High-Growth Entrepreneurship.” American Economic Review: Insights (forthcoming).

Medical Paperwork Wastes Resources and Burns Out Physicians

(p. A23) Consider the use of medical scribes, who complete doctors’ electronic paperwork in real time during patient visits. The American College of Medical Scribe Specialists reported that 20,000 scribes were working in 2014, and expects that number to climb to 100,000 in 2020.

I have heard doctors say they need a scribe to keep up with electronic medical records, the mounting demand of which is driving a burnout epidemic among physicians. Scribes allow doctors to talk with and examine patients without having a computer come between them, but at base they are a workaround for the well-known design flaws of electronic medical records.

As a nurse, when I first learned about scribes, I was outraged. On the job, nurses hear repeatedly how health care companies can’t afford to have more nurses or aides to work with patients on hospital floors — and yet, money is available to pay people to manage medical records. Doctors who use scribes tend to see their productivity and work satisfaction increase, but the trade-off is still there: Scribes demonstrate the extent to which paperwork has become more important than patients in American health care.

For the full commentary, see:

Theresa Brown. “Our Jury-Rigged Health Care.” The New York Times (Friday, September 6, 2019): A23.

(Note: the online version of the commentary has the date September 5, 2019, and has the title “The American Medical System Is One Giant Workaround.”)

Median Income Rising More Under Trump Than Under Bush and Obama

Source of graph: online version of the WSJ article quoted and cited below.

(p. A17) President Trump’s critics can’t deny that the economy is doing well, so instead they insist all the benefits have gone to the rich and large corporations. “America’s middle class is under attack,” Sen. Elizabeth Warren asserted in her presidential campaign announcement last December.

The latest data from the Census Bureau monthly surveys tell a different story. Real median household income—the amount earned by those in the very middle—hit $65,084 (in 2019 dollars) for the 12 months ending in July. That’s the highest level ever and a gain of $4,144, or 6.8%, since Mr. Trump took office. By comparison, during 7½ years under President Obama—starting from the end of the recession in June 2009 through January 2017—the median household income rose by only about $1,000.

These statistics were published by two former census income-research specialists with 50 years experience who now run Sentier Research, a nonpartisan research group.

For the full commentary, see:

Stephen Moore. “Trump’s Middle-Class Economic Progress.” The Wall Street Journal (Monday, Sept. 30, 2019): A17.

(Note: the online version of the commentary has the date Sept. 29, 2019, and has the same title as the print version.)

Environmentalist Greta Thunberg’s Sailboat Crew Flew to and from New York by Airplane

(p. B4) A year ago, a 15-year-old in leopard-print tights sat down outside the Swedish Parliament building with a purple backpack and a sign announcing she was on strike over climate change.

This week, Greta Thunberg arrived by solar-powered sailboat in New York, now as the 16-year-old poster child for younger generations’ climate angst. Also making its way to the New World, as evidenced in the coverage of her carbon-neutral trip, was a concept that in just a few years has swept Europe: flight shame, often hashtagged in the original Swedish, #flygskam.

. . .

As Greta . . . hopped ashore in southern Manhattan on Wednesday after 13 days at sea, loud cheers rose from the hundreds in the crowd there to greet her.  . . .

Amanda LaValle, a mother of three from Kingston, N.Y., brought her two eldest daughters to be part of the crowd. “I’m encouraging them to be involved. I have already blown my own climate credentials by having three kids,” she said, half in jest.

She acknowledged how difficult it can be to put her principles into practice. Earlier in August, when she needed to travel to Minneapolis for a three-day training sponsored by Al Gore’s Climate Reality Project, she briefly considered taking the train. But, she said, “It would have taken two days and I couldn’t see taking more time away from my family.”

Greta’s voyage has had its own critics, who have pointed out that some members of the sailing crew will return by plane, while others fly in to sail the boat back to Europe.

Boris Herrmann, captain of the sailboat, Malizia II, said that the criticism was expected but that Greta shouldn’t be held responsible for the flights by crew members. “We are kind of the ferry to bring her over. We’re a professional sailing team and sometimes we need to fly. We used this voyage also to train,” he said, adding that the team offsets its flights by funding sustainability projects, including mangrove planting in Indonesia. “The trip is an example of how difficult it is to have zero carbon impact.”

For the full story, see:

Sofia McFarland. “‘Flight Shame’ Comes to U.S.—Via Sailboat.” The Wall Street Journal (Saturday, Aug. 31, 2019): B4.

(Note: ellipses added.)

(Note: the online version of the story was last updated on Aug. 30, 2019, and has the title “‘Flight Shame’ Comes to the U.S.—Via Greta Thunberg’s Sailboat.” Where the online and print versions differ, the passages quoted above follow the more detailed online version.)

A.I. Needs People to Set the Objectives

(p. A2) Although Deep Mind’s Alpha Zero can beat a grand master at computer chess, it would still bomb at Attie Chess—the version of the game played by my 3-year-old grandson Atticus. In Attie Chess, you throw all of the pieces into the wastebasket, pick each one up, try to put them on the board and then throw them all in the wastebasket again. This apparently simple physical task is remarkably challenging even for the most sophisticated robots.

But . . . there’s a more profound way in which human intelligence is different from artificial intelligence, and there’s another reason why Attie Chess may be important.

. . .

The basic technique is to give the computer millions of examples of games, images or previous judgments and to provide feedback. Which moves led to a high score? Which pictures did people label as dogs?

. . .

But people also can decide to change their objectives. A great judge can argue that slavery should be outlawed or that homosexuality should no longer be illegal. A great curator can make the case for an unprecedented new kind of art, like Cubism or Abstract Expressionism, that is very different from anything in the past. We invent brand new games and play them in new ways.

. . .

Indeed, the point of each new generation is to create new objectives—new games, new categories and new judgments. And yet, somehow, in a way that we don’t understand at all, we don’t merely slide into relativism. We can decide what is worth doing in a way that AI can’t.

. . .

. . . , we are the only creatures who can decide not only what we want but whether we should want it.

For the full commentary, see:

Alison Gopnik. “MIND & MATTER; What A.I. Is Still Far From Figuring Out.” The Wall Street Journal (Saturday, March 23, 2019): A2.

(Note: ellipses added.)

(Note: the online version of the commentary has the date March 20, 2019, and has the same title as the print version.)

Alison Gopnik’s comments, that are quoted above, are related to her paper:

Gopnik, Alison. “AIs Versus Four-Year-Olds.” In Possible Minds: Twenty-Five Ways of Looking at AI, edited by John Brockman. New York: Penguin Press, 2019, pp. 219-30.

“Tech Entrepreneurs Are Just as Mission Driven as People in Nonprofits”

(p. 2) The first rule of Silicon Valley venture capital is never insult a start-up. Founders are always killing it, disrupting the world.

If a start-up is fizzling, shuttering or caught scamming? The socially acceptable response is total silence.

Everyone knows that. Except Jason Palmer.

The start-up in question was AltSchool, a Mark Zuckerberg-backed project to turn school into a start-up experience. It had just announced it was pivoting out of existence after raising $174 million.

Mr. Palmer is in this field: He is a venture capitalist in Washington, D.C., focused on education technology. On June 29, he tweeted that AltSchool was always a bad idea, and he was glad that his firm hadn’t invested in it.

That single jab at a failed company sent the investor elite into conniptions.

. . .

So, two months after the tweet, how is Mr. Palmer feeling? The outrage that came both in public and private did not, in the end, oust him from the industry. He continues to invest.

For him, it was “a reminder,” he said, that tech entrepreneurs truly believe they are saving the world. He wanted to be clear now that he truly believes this, too. They were right. His tweet was very bad. He has been chastened.

“Tech entrepreneurs are just as mission driven as people in nonprofits,” Mr. Palmer said. “They believe they are helping the world just as much as nonprofit founders.”

But of course most start-ups fail, he added, a little quieter, and the tech world ought to learn how to talk about failure.

“In fact, most high-risk start-ups are nonprofits,” he said. “Effectively nonprofits.”

For the full story, see:

Nellie Bowles. “In Silicon Valley, Skin Is Thin.” The New York Times, SundayStyles Section (Sunday, Sept. 22, 2019): 2.

(Note: ellipsis added.)

(Note: the online version of the story has the date Sept. 20, 2019, and has the title “Want to Do Business in Silicon Valley? Better Act Nice.” (Where there is a slight difference in wording between the online and print versions, the passages quoted above follow the print version.)

Some Workers Willingly Forego Higher Pay for Greater Flexibility

(p. 11) In a survey of 11,000 workers and 6,500 business leaders by Harvard Business School and Boston Consulting Group, the vast majority said that among the new developments most urgently affecting their businesses were employees’ expectations for flexible, autonomous work; better work-life balance; and remote working. (Just 30 percent, though, said their businesses were prepared.)

Technology is a big reason for the change. The youngest people entering the work force don’t remember a time when people weren’t always reachable, so they don’t see why they would need to sit in an office to work. (They also say they are more practiced than older colleagues at setting boundaries on how much they use their phones, so it doesn’t become overbearing.)

. . .

. . . more young people, recruiters say, are asking for flexibility upfront, and some prioritize it over pay or seniority. Recruiters who visit college campuses say new graduates no longer see it as something to negotiate for, said Marcee Harris Schwartz, the national director of diversity and inclusion at BDO, the accounting firm: “It’s just assumed it’s part of the deal.”

“Years ago, the interview was, for lack of a better word, a test,” said Kamaj Bailey, who works in recruiting at Con Edison, the power company. “Now it’s a conversation. Yes, I want to show that I’m a good candidate, but I’m also seeing if I’m going to get what I expect.”

John Paul Graff, 34, is a pathologist, as was his father, who worked in private practice at least 12 hours a day. Dr. Graff decided to work in academic medicine, and the No. 1 reason was for work-life balance. He estimated that he gave up about $100,000 a year but said it’s worth it to work 40 hours a week.

For the full story, see:

Claire Cain Miller and Sanam Yar. “Can I Work When I Want?” The New York Times, SundayStyles Section (Sunday, Sept. 22, 2019): 1 & 10-11.

(Note: ellipses added.)

(Note: the online version of the story has the date Sept. 20, 2019, and has the title “Young People Are Going to Save Us All From Office Life.”)

Broad Knowledge “Prepares Us for the Wickedly Unanticipated”

(p. A13) In his latest book, “Range: Why Generalists Triumph in a Specialized World,” Mr. Epstein makes a well-supported and smoothly written case on behalf of breadth and late starts.

. . .

The book blends anecdotal stories with summaries of academic studies. Many of these studies upend standard-issue advice about finding one’s way in life. We are introduced to the “Dark Horse Project,” based at the Harvard Graduate School of Education, which has collected the oral histories of highly accomplished individuals who took circuitous paths to achievement. The researchers were surprised by how many such individuals, in disparate fields, they were able to find. “What was even more incredible,” said one principal member of the project, “is that they all thought they were the anomaly.”

. . .

Not all of the chapters speak directly to range. In “Learning to Drop Your Familiar Tools,” we learn that many cardiologists are unwilling to forsake their use of stents, despite clear evidence that stents are not only ineffective in preventing cardiac events but also introduce fresh risks of complications. It’s sobering to learn that a 2015 study showed that patients suffering cardiac arrest were less likely to die if they were admitted to a hospital when such cardiologists were unavailable to install the devices.

. . .

The chapter titled “Deliberate Amateurs” is a delight, permitting us to spend time with some exemplars in science and medicine who have stepped outside of their cozy professional nests. One such exemplar is Arturo Casadevall, the chair of the molecular microbiology and immunology program at the Johns Hopkins Bloomberg School of Public Health. A much-cited scientist, Dr. Casadevall has led an overhaul of the curriculum at his school to help broaden the education of specialists. Philosophy, history, logic and ethics are incorporated into interdisciplinary classes. “How Do We Know What Is True?” is one of the course offerings. On the wall in Dr. Casadevall’s office, along with the certificate commemorating his election to the National Academy of Medicine, hangs a community-college degree in pest control, the “practical” expertise his father pressed Dr. Casadevall to acquire.

The advice that Dr. Casadevall dispenses to junior colleagues is “read outside your field, everyday something.” If the world were a kinder learning environment, this would not be needed. But as David Epstein shows us, cultivating range prepares us for the wickedly unanticipated.

For the full review, see:

Randall Stross. “BOOKSHELF; Late Bloomers Bloom Best.” The Wall Street Journal (Wednesday, May 29, 2019): A13.

(Note: ellipses added.)

(Note: the online version of the review has the date May 28, 2019, and has the title “BOOKSHELF; ‘Range’ Review: Late Bloomers Bloom Best; Late specialization demonstrably helped Roger Federer, Vincent van Gogh and Charles Darwin. It can serve the rest of us well, too.”)

The book under review is:

Epstein, David. Range: Why Generalists Triumph in a Specialized World. New York: Riverhead Books, 2019.