Category: Economics

“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.

World Child Mortality Cut in Half

(p. A1) Two decades ago, nearly 10 million children did not live to see a 5th birthday.

By 2017, that number — about 1 in every 16 children — was nearly cut in half, even as the world’s population increased by more than a billion people.

. . .

From 2000 to 2017, all but one of the 97 low-to-middle-income countries that account for the vast majority of deaths of young children lowered their child mortality rates, according to a report released Tuesday [Sept. 17, 2019] by the Bill and Melinda Gates Foundation, along with a research team at the Institute for Health Metrics and Evaluation at the University of Washington, led by Stephen Lim, the institute’s senior director of science and engineering.

For the full story, see:

Alicia Parlapiano, Josh Katz, and Margot Sanger-Katz. “Fewer of the World’s Children Are Dying, but Many Remain at Risk.” The New York Times (Wednesday, Sept. 18, 2019): A1 & A12.

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

(Note: the online version of the story has the date Sept. 17, 2019, and has the title “Almost Everywhere,Fewer Children Are Dying.” In the last paragraph quoted above, the wording follows the online version, and not the print version. The order of the authors’ names in the online version is: Josh Katz, Alicia Parlapiano and Margot Sanger-Katz.)

Cocoa Beach Thrives During Private Space Race

(p. B6) Jeff Bezos and Elon Musk are racing to send people into outer space and eventually to the moon and Mars. They are already improving the fortunes of a coastal Florida city that is home to their budding space ambitions.

Cocoa Beach, which sits south of Cape Canaveral on the Atlantic coast, was hit hard by the 2009 recession and the subsequent end to the National Aeronautics and Space Administration’s space shuttle program. The economic downturn and space program’s demise led to large-scale layoffs and a reduction in tourism.

Now the city of 11,000 is in the middle of a resurgence as the private space industry’s rocket launches bring jobs and visitors back. Blue Origin LLC has built a rocket factory north of Cocoa Beach. The company—founded by Mr. Bezos, the chief executive of Amazon.com Inc. —plans to launch its New Glenn rocket from Cape Canaveral in 2021. Blue Origin hopes one day to bring people to the moon.

Space Exploration Technologies Corp., known as SpaceX, is holding test launches on the cape and is expected to shoot a rocket with 60 satellites into space this week—and, at some point, send people on a mission to Mars. SpaceX was founded by Mr. Musk, who is also a founder of Tesla Inc.

For the full story, see:

Konrad Putzier. “Florida City Buoyed by Space Race.” The Wall Street Journal (Wednesday, May 22, 2019): B6.

(Note: the online version of the story has the date May 21, 2019, and has the title “Space Rockets Spark Property Boom on Florida Coast.”)

“Bureaucratic Madness Is Choking Growth”

(p. A21) Jean Tirole, who won the Nobel Prize in economics in 2014, says that the study of economics is “simultaneously demanding and accessible.”

. . .

“Economics for the Common Good” offers an ambitious yet accessible summary of his ideas on the proper role of economists and the value of their ideas in informing government, business and social life.

. . .

One of the best chapters in the book deals with the issue of employment law in France. Successive governments have tried to micromanage the agreements between companies and employees to ensure fair treatment and low unemployment. But France’s unemployment rate has remained high, entrepreneurship has been stifled, and companies have become loath to hire people because of the prohibitive costs of firing them. Even if an employee proves useless, it’s nearly impossible to sack him.

On the employee’s side, even if you want to resign, it is more lucrative to wait to be fired, since you get both severance pay and unemployment insurance. To resolve the stand-off between workers who want to quit and companies that want to cut staff, employers and employees now collude through a legal formula called “termination by mutual consent.” The employee resigns and receives unemployment benefits as if he has been dismissed, and the company is spared the legal ramifications and costs of dismissal. In Mr. Tirole’s view, such bureaucratic madness is choking growth.

. . .

Mr. Tirole has a patient, explanatory style. But when riled, he lashes out. The French education system, he writes, purports to be non-selective but favors the affluent and well-educated. It “is a vast insider-trading crime.”

For the full review, see:

Philip Delves Broughton. “BOOKSHELF; What Good Is An Economist?” The Wall Street Journal (Tuesday, December 19, 2017): A21.

(Note: ellipses added.)

(Note: the online version of the review has the date Dec. 18, 2017, and has the title “BOOKSHELF; Review: What Good Is an Economist?; A French Nobel laureate and public intellectual discusses the proper role of the dismal science in government, business and the life of the mind.”)

The book under review is:

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

Low-Skilled Workers Benefit from Economic Growth

(p. A2) For years, falling wages and high unemployment seemed proof that low-wage workers needed an entirely new set of skills to succeed in an economy shaped by technological change and globalization.

It turns out what they needed most was time. As the economic expansion reaches a record age and unemployment remains near generation lows, the fortunes of low-skilled workers have turned up markedly. What looked like a permanent setback may be mostly cyclical. Continue reading “Low-Skilled Workers Benefit from Economic Growth”

100 Million Africans Use Mobile Money

(p. B6) Hyperinflation and economic isolation have pushed this poor, breakaway republic closer to a virtual milestone than most other countries in the world: a cashless economy.

Mobile-money services have taken off over the past decade in Africa; 1 in 10 adults across the continent—about 100 million people—use them. In Kenya, Vodacom Group Ltd.’s groundbreaking service M-Pesa, broadly considered the first major and most successful mobile-money technology platform, counts 26 million users, roughly half the population. More than half of the world’s 282 mobile-money platforms are in sub-Saharan Africa, research by McKinsey & Co. shows.

The continent, home to many of the world’s frontier economies, has come closest to skipping, or “leapfrogging” as it’s often called, traditional brick-and-mortar banks and going straight to heavily using phones as wallets.

And nowhere are the benefits of mobile money more apparent than in Somaliland, where the extreme economic and financial conditions have allowed Zaad, a service from the main local telecom, Telesom, to catalyze commerce in one of the most isolated parts of the world.

“I have my salary paid on Zaad, so I only use cash when I can’t use Zaad,” said Qassim Ali, a supermarket salesman here in the country’s capital. “I prefer it. I have less cash on me, so I am less vulnerable if I am robbed.”

. . .

The reasons for mobile money’s success in Somaliland are on full display on Hargeisa’s busy, bumpy streets, where rows of money changers lounge in front of 3-foot-tall towers of cash, some held together by nets, others in sacks. To get the shillings to a customer’s car, most money exchanges employ assistants armed with wheelbarrows to lug the heavy bags.

Once a week, Abdulahi Abdirahman hauls two bulky, heavy sacks of shillings from his gas station across Hargeisa to the money-exchange area downtown and, several hours later, returns with just a few dollar notes in his back pocket and his Zaad wallet loaded up.

For the full story, see:

Matina Stevis-Gridneff. “An Unlikely Leader in the Mobile-Money Race.” The Wall Street Journal (Thursday, July 7, 2018): B6.

(Note: ellipsis added.)

(Note: the online version of the story has the date July 6, 2018, and has the title “An Isolated Country Runs on Mobile Money.”)

Sand from Greenland’s Global Warming Can Help World Make Concrete

(p. A8) A few miles up the Sermilik Fjord in southwestern Greenland, the water has abruptly turned milky, a sign that it is loaded with suspended silt, sand and other sediment.

It is this material — carried here in a constant plume of meltwater from the Sermeq glacier at the head of the fjord — that Mette Bendixen, a Danish scientist at the University of Colorado, has come to see. As their research boat moves farther into the murky water, she and several colleagues climb into a rubber dinghy to take samples.

Dr. Bendixen, a geomorphologist, is here to investigate an idea, one that she initially ran by colleagues to make sure it wasn’t crazy: Could this island, population 57,000, become a provider of sand to billions of people?

Sand for eroded beaches, potentially from the Rockaways to the Riviera. Sand to be used as bedding for pipes, cables and other underground infrastructure. Mostly, though, sand for concrete, to build the houses, highways and harbors of a growing world.

The world makes a lot of concrete, more than 10 billion tons a year, and is poised to make much more for a population that is forecast to grow by more than 25 percent by 2050. That makes sand, which is about 40 percent of concrete by weight, one of the most-used commodities in the world, and one that is becoming harder to come by in some regions.

But because of the erosive power of ice, there is a lot of sand in Greenland. And with climate change accelerating the melting of Greenland’s mile-thick ice sheet — a recent study found that melting has increased sixfold since the 1980s — there is going to be a lot more.

“It’s not rocket science,” Dr. Bendixen said. “One part of the world has something that other parts of the world are lacking.”

For the full story, see:

Henry Fountain. “Melting Greenland Is Awash in Sand.” The New York Times (Thursday, July 4, 2019): A8.

(Note: the online version of the story has the date July 1, 2019, and has the same title as the print version.)

Intense Scaringe Self-Funded Start of Audacious Rivian

(p. B1) NORMAL, Ill. — By definition, the time of the world’s richest man is pretty valuable. But early last fall, Jeff Bezos sought out a 36-year old entrepreneur named R.J. Scaringe and spent the better part of a day in Plymouth, Mich., at the company he founded, Rivian.

Mr. Bezos got a preview of Rivian’s electric pickup truck and sport utility vehicle and liked what he saw. Not long after his visit, Amazon led a $700 million investment in Rivian. Two months later, in April, Ford Motor invested $500 million. All told, Rivian has raised $1.7 billion without selling a single truck or S.U.V.

. . .

(p. B6) Rivian is promising to do for trucks what Tesla did for luxury cars.

That’s where the similarities between the two electric automobile makers end. Even as Tesla and its brash chief executive, Elon Musk, made headlines by setting and falling short of some audacious goals, Mr. Scaringe and Rivian have spent a decade fine-tuning their designs.

. . .

Mr. Scaringe founded Mainstream Motors, the business that would later become Rivian, in 2009 after completing a doctorate in mechanical engineering at the Massachusetts Institute of Technology.

His timing was odd to say the least — the financial crisis had made investors skittish, and the bankruptcies of General Motors and Chrysler did not bode well for an automotive start-up.

Family and friends provided the initial funding, and Mr. Scaringe and his father both took out second mortgages to raise money. Continue reading “Intense Scaringe Self-Funded Start of Audacious Rivian”

Higher Education Is a Lumbering “Dinosaur”

(p. A15) We are at the end of an era in American higher education. It is an era that began in the decades after the Civil War, when colleges and universities gradually stopped being preparatory schools for ministers and lawyers and embraced the ideals of research and academic professionalism. It reached full bloom after World War II, when the spigots of public funding were opened in full, and eventually became an overpriced caricature of itself, bloated by a mix of irrelevance and complacency and facing declining enrollments and a contracting market. No one has better explained the economics of this decline—and its broad cultural effects—than Richard Vedder.

. . .

“Restoring the Promise: Higher Education in America” is a summary of the arguments he has been making since then as the Cassandra of American colleges and universities.

. . .

At Mr. Vedder’s alma mater, Northwestern, tuition rose from 16% of median family income in 1958 to almost 70% in 2016. Over time, armies of administrators wrested the direction of their institutions away from the hands of faculties and trustees.

. . .

Though Mr. Vedder’s critique concentrates on the economic mire into which higher education has tumbled, he is not alone in his more general criticism. Over the past 20 years, analysts as diverse as Derek Bok, Alan Kors, Richard Arum and Josipa Roksa, Jeffrey Selingo, and Benjamin Ginsberg have warned that higher education, in its current form, is a dinosaur—an over-built, under-achieving creature whose chances of survival are increasingly dim. But on it lumbers. . . .

What may, . . ., bring about some kind of change is the dramatic fall-off in American birth rates since the Great Recession of 2008, as highlighted in Nathan Grawe’s “Demographics and the Demand for Higher Education” (2018). No amount of federal student loans, or tuition increases, will do colleges and universities any good when, over the next decade, the pool of age-eligible students shrinks by 13% (by Mr. Grawe’s estimate). Inventing online alternatives and attracting full-tuition students from abroad is one way of paying the bills, but colleges have been trying both strategies for the past two decades, so the yield may not increase by much.

For the full review, see:

Allen C. Guelzo. “BOOKSHELF; High Cost, Low Yield; A college degree is ever more common these days, but it comes with ever heavier loan burdens and, in many cases, only limited job prospects.” The Wall Street Journal (Tuesday, June 25, 2019): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date June 24, 2019, and has the title “BOOKSHELF; ‘Restoring the Promise’ Review: High Cost, Low Yield; A college degree is ever more common these days, but it comes with ever heavier loan burdens and, in many cases, only limited job prospects.”)

The book under review is:

Vedder, Richard. Restoring the Promise: Higher Education in America. Oakland, CA: Independent Institute, 2019.