Category: Economics

Michael C. Munger Offers Advance Praise for Openness to Creative Destruction

Creative destruction is the mainspring that animates growth and prosperity. Few people fully understand creative destruction; fewer still can explain it. In this remarkable book, Diamond uses compelling stories and plain English to construct the case for creative destruction, extending Schumpeter’s deep insights into the 21st century.

Michael C. Munger, Professor of Political Science, and Director, PPE Program, Duke University. Author of Tomorrow 3.0: Transaction Costs and the Sharing Economy, and other works.

Munger’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.

Regulations to Keep Herds Small May Destroy Reindeer Herding

(p. A6) Jovsset Ante Sara, a boyish-looking 26-year-old, knows his section of the tundra as if it were a city grid, every hill and valley familiar, the land acquired over generations through the meticulous work of his ancestors.
He can tell his reindeer from any others by their unique earmark. And he and his family need them to live and preserve their claim to the land as well as their traditions.
That’s why, Mr. Sara says, he has refused to abide by Norwegian laws, passed more than a decade ago, that limit the size of reindeer herds. The measure was taken, the government says, to prevent overgrazing.
Mr. Sara’s herd was capped at 75. So every year, if the herd grows, he must pare it down. At least, those are the rules. He has refused to cull his 350 to 400 reindeer, and took the government to court.
. . .
For decades, the Norwegian government has designated reindeer herding as an exclusively Sami activity, providing herding licenses tied to ancestral lands.
The regulations limiting herd sizes were passed in 2007, forcing Sami to eliminate 30 percent of their reindeer at the time.
Mr. Sara said the limits have been devastating. If he obeyed the limit, he said, he would make only $4,700 to $6,000 a year.
“Clearly it’s not possible to make a living as the job has become quite expensive, requiring snowmobiles and all the equipment that goes along with that,” he said.
The law also states that any herders who are no longer profitable can lose their license. But that is not all Mr. Sara said he would lose.
“I would lose everything my ancestors worked their entire lives to create for us today,” he said. “I will lose the land.”

For the full story, see:
Nadia Shira Cohen. “The Hinterlands Where Reindeer Are a Way of Life.” The New York Times (Monday, Dec. 17, 2018): A6.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date Dec. 16, 2018, and has the title “NORWAY DISPATCH; Where Reindeer Are a Way of Life.”)

U.S. Population Growth Rate Is Slowest in 80 Years

(p. A13) The population of the United States grew at its slowest pace in more than eight decades, the Census Bureau said Wednesday [December 19, 2018], as the number of deaths increased and the number of births declined.
Not since 1937, when the country was in the grips of the Great Depression and birthrates were down substantially, has it grown so slowly, with just a 0.62 percent gain between July 2017 and July 2018. With Americans getting older, fewer babies are being born and more people are dying, demographers said.
The past year saw a particularly high number of deaths — 2.81 million — and relatively few births, 3.86 million.

For the full story, see:
Sabrina Tavernise. “Growth Rate In Population Is at Lowest Since 1937.” The New York Times (Thursday, Dec. 20, 2018): A13.
(Note: bracketed date added.)
(Note: the online version of the story has the date Dec. 19, 2018, and has the title “Fewer Births, More Deaths Result in Lowest U.S. Growth Rate in Generations.”)

Berezin Saw Entrepreneurship as Path for Women to Advance in “Male-Dominated Field”

(p. A5) By the time she reached her early 40s, Ms. Berezin was a veteran computer designer who had created an automated reservation system for United Air Lines. Even so, as an extremely rare woman in a male-dominated field, she saw little chance of reaching senior management.
Her only route to the top, Ms. Berezin concluded, was to start a company. In 1969, with two colleagues, she founded Redactron Corp. to design and make computerized typewriters, a category that became known as word processors before being subsumed into today’s more versatile desktop computers.
Ms. Berezin, who died Dec. 8 [2018] at the age of 93, served as president of Redactron, whose sales pitch was “Free the secretary,” suggesting an escape from drudgery into more challenging work. Initially lacking screens, the devices featured IBM Selectric typewriters hooked up to boxy computers allowing texts to be edited, stored and printed.
Based in Hauppauge, N.Y., the company sold machines as far afield as Australia and had more than 500 employees by 1975. A recession and high interest rates created a financial crisis that forced Ms. Berezin to sell Redactron to Burroughs Corp. in January 1976.
Once Burroughs acquired Redactron, she lost control of product development and watched as others made decisions that she said doomed her word processor.

For the full obituary, see:
James R. Hagerty. “Butting Heads With Men Suited Computer Pioneer.” The Wall Street Journal (Saturday, Dec. 15, 2018): A5.
(Note: bracketed year added.)
(Note: the online version of the obituary has the date Dec. 14, 2018, and has the title “Evelyn Berezin Pioneered Word Processors and Butted Heads With Men.”)

Mitch Daniels Views Higher Education as a “Racket” (Health Care Too)

(p. A11) Mr. Daniels, 69, is the most innovative university president in America.
. . .
Mr. Daniels kicks off our conversation with a morality tale: “I’ll speak to an audience of businesspeople and say: Here’s the racket that you should have gone into. You’re selling something, a college diploma, that’s deemed a necessity. And you have total pricing power.” Better than that: “When you raise your prices, you not only don’t lose customers, you may actually attract new ones.”
For lack of objective measures, “people associate the sticker price with quality: ‘If school A costs more than B, I guess it’s a better school.’ ” A third-party payer, the government, funds it all, so that “the customer–that is, the student and the family–feels insulated against the cost. A perfect formula for complacency.” The parallels with health care, he observes, are “smack on.”

For the full interview, see:
Tunku Varadarajan, interviewer. “THE WEEKEND INTERVIEW: College Bloat Meets ‘The Blade’.” The Wall Street Journal (Saturday, Dec. 15, 2018): A11.
(Note: ellipsis added.)
(Note: the online version of the interview has the date Dec. 14, 2018.)

James Gwartney Offers Advance Praise for Openness to Creative Destruction

Discovery, innovation, and dynamic change are vastly underappreciated by both economists and the general public. Professor Diamond explains how discovery and development of new products and lower cost production methods of the past 250 years have transformed our lives and promoted human progress beyond even the dreams of our ancestors. Further, these dynamic improvements are continuing today at an even more rapid rate. This book brings the what, why, and how of human progress alive, and it does so in an understandable and entertaining manner. It is a must read for both the scholar and interested layperson.

James Gwartney, Professor of Economics, Florida State University. Co-author of Economics: Private and Public Choice, Economic Freedom of the World, and other works.

Gwartney’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.

Idyllic Golden-Age Hunter-Gatherers

(p. A8) Before he was killed by an isolated tribe on a remote Indian Ocean island, John Allen Chau, a young American on a self-propelled mission to spread Christianity, revealed two things: that he was willing to die, and that he was scared.
. . .
He tried to give gifts. A boy shot an arrow at him. He expressed fear, fatalism, frustration and some humor.
The people Mr. Chau chose for his mission are among the most impenetrable communities in the world, known for their intense hostility to outsiders. They have killed or tried to kill many outsiders who attempted to step on their rugged island 700 miles off India’s mainland, where they are one of the last undiluted hunter and gatherer societies.
. . .
Mr. Chau was trying to accomplish the impossible. The people on North Sentinel have not accepted anyone outside their society. Anthropologists, filmmakers and government officials have tried to approach them. Just about all have been driven back by bows and arrows.
. . .
The fishermen said he had told them to give the letter to a friend, in case he did not come back.
In one passage, he asked God if North Sentinel was “Satan’s last stronghold.” In another: “What makes them become this defensive and hostile?”
“It’s weird — actually no, it’s natural: I’m scared,” Mr. Chau wrote. “There, I said it. Also frustrated and uncertain — is it worth me going a foot to meet them?”
He added, “I don’t want to die!”
Still, he went back.
On the afternoon of Nov. 16, the fishermen told police officers, Mr. Chau reassured them that he would be fine staying on the island overnight and that the fishermen could go. They motored out, leaving Mr. Chau alone for the first time.
When they passed by the island the next morning, they saw the islanders dragging his body on the beach with a rope.
No one knows what exactly happened. Police officials said the islanders most likely killed him with bows and arrows.
Mr. Chau’s body is still on the island, but several police officers said they were worried about retrieving it, lest the same thing happen to them.

For the full story, see:
Jeffrey Gettleman, Hari Kumar and Kai Schultz. “American’s Last Letter Before Being Killed by Tribe on a Remote Indian Island.” The New York Times (Saturday, Nov. 24, 2018): A8.
(Note: ellipses added.)
(Note: the online version of the story has the date Nov. 23, 2018, and has the title “A Man’s Last Letter Before Being Killed on a Forbidden Island.”)

Humans Turn Raw Data into Fuel for A.I.

(p. B1) Some of the most critical work in advancing China’s technology goals takes place in a former cement factory in the middle of the country’s heartland, far from the aspiring Silicon Valleys of Beijing and Shenzhen. An idled concrete mixer still stands in the middle of the courtyard. Boxes of melamine dinnerware are stacked in a warehouse next door.
Inside, Hou Xiameng runs a company that helps artificial intelligence make sense of the world. Two dozen young people go through photos and videos, labeling just about everything they see. That’s a car. That’s a traffic light. That’s bread, that’s milk, that’s chocolate. That’s what it looks like when a person walks.
“I used to think the machines are geniuses,” Ms. Hou, 24, said. “Now I know we’re the reason for their genius.”
In China, long the world’s factory floor, a new generation of low-wage workers is assembling the foundations of the future. Start-ups in smaller, cheaper cities have sprung up to apply labels to China’s huge trove of images and surveillance footage. If China is the Saudi Arabia of data, as one expert says, these businesses are the refineries, turning raw data into the fuel that can power China’s A.I. ambitions.

For the full story, see:
Li Yuan. “THE NEW NEW WORLD; Doing Time on the A.I. Assembly Line.”) The New York Times (Monday, Nov. 26 2018): B1 & B3.
(Note: the online version of the story has the date Nov. 25, 2018, and has the title “THE NEW NEW WORLD; How Cheap Labor Drives China’s A.I. Ambitions.”)

Obsessive Compulsive Disorder Can Enhance Memory

(p. C1) Sharon remembers the first day it happened, in 1952. She was 5 years old and blindfolded while her friends ran around her, laughing, trying not to be caught in a game of blindman’s bluff. But when she whipped off the scarf, panic set in. The house, the street, even the mountains were in the wrong place. She was totally disoriented.
. . .
She eventually learned she had an unusual condition called developmental topographical disorientation disorder, or DTD.
. . .
(p. C2) Not all brain disorders are as detrimental as DTD. Bob, a TV producer from Los Angeles, remembers every day of his life as if it happened yesterday. His perfect memory is a gift, he says: “I don’t have to mourn people after they’ve passed away because my memory of them is so clear.”
The condition was discovered by James McGaugh at the University of California, Irvine, in 2001, after he received a peculiar email from a woman named Jill. “Since I was 11 I have had this unbelievable ability to recall my past,” she said. “When I see a date…I go back to that day and remember where I was, what I was doing, what day it fell on and on and on.”
. . .
A decade later, Dr. McGaugh had a group of around 50 people with HSAM. By scanning their brains while they carried out memory tasks, he discovered that they had an enlarged caudate nucleus and putamen–two areas implicated in obsessive compulsive disorder. Dr. McGaugh concluded that their extraordinary powers of memory are rooted not in their ability to form memories, but in an unconscious rehearsal of their past. They accidentally strengthen their memories by habitually recalling and reflecting upon them–“a unique form of OCD,” he says.

For the full essay, see:
Helen Thomson. “‘Lessons From STRANGE BRAINS.” The Wall Street Journal (Saturday, June 30, 2018): C1-C2.
(Note: ellipses between quoted passages, added; ellipsis internal to a paragraph, in original.)
(Note: the online version of the essay has the date June 29, 2018, and has the title “Strange Stories of Extraordinary Brains–and What We Can Learn From Them.”)

Thomson’s essay is closely related to her book:
Thomson, Helen. Unthinkable: An Extraordinary Journey through the World’s Strangest Brains. New York: Ecco, 2018.

Chinese Entrepreneurs Anxious Over Growing Government Control of Private Enterprise

(p. A15) HONG KONG — The comments were couched in careful language, but the warning about China’s direction was clear.
China grew to prosperity in part by embracing market forces, said Wu Jinglian, the 88-year-old dean of pro-market Chinese economists, at a forum last month. Then he turned to the top politician in the room, Liu He, China’s economic czar, and said “unharmonious voices” were now condemning private enterprise.
“The phenomenon,” Mr. Wu said, “is worth noting.”
Mr. Wu gave rare official voice to a growing worry among Chinese entrepreneurs, economists and even some government officials: China may be stepping back from the free-market, pro-business policies that transformed it into the world’s No. 2 economy. For 40 years, China has swung between authoritarian Communist control and a freewheeling capitalism where almost anything could happen — and some see the pendulum swinging back toward the government.
. . .
China’s leadership turned to entrepreneurs in the late 1970s, after the government had led the economy to the brink of collapse. Officials gave them special economic zones where they could open factories with fewer government rules and attract foreign investors. The experiment was an unparalleled success. When extended to the rest of the country, it created a growth machine that helped make China second only to the United States in terms of economic heft.
Today, the private sector contributes nearly two-thirds of the country’s growth and nine-tenths of new jobs, according to the All-China Federation of Industry and Commerce, an official business group. So pressures on private businesses could create serious ripples.
“The private sector is experiencing great difficulties right now,” wrote Mr. Hu, the retired minister, who as the son of a former top Communist Party leader is often a voice for reform in China, in an essay posted online last Thursday. “We should try our best not to replicate the nationalization of private enterprise in the 1950s and the state capitalism.”
. . .
Private entrepreneurs are loath to speak out for fear of attracting official condemnation. But signs of distress aren’t hard to find.
Last month, Chen Shouhong, the founder of an investment research firm, asked a group of executive M.B.A. students — many of whom already owned publicly listed companies — to choose between panic and anxiety to describe how they feel about the economy. An overwhelming majority chose panic, according to a transcript. Mr. Chen declined to be interviewed.
. . .
Xiao Han, an associate law professor in Beijing, cited one of Aesop’s fables, of a man trying and failing to stop a donkey from going over a cliff.
“Before long,” Mr. Xiao said, “we’ll probably find a body of a China donkey under the cliff.”

For the full story, see:
Li Yuan. “China Muscles In on Its Free-Market Prosperity.”The New York Times (Thursday, Oct. 4, 2018): A1 & A12.
(Note: ellipses added.)
(Note: the online version of the story has the date Oct. 3, 2018, and has the title “Private Businesses Built Modern China. Now the Government Is Pushing Back.”)

Robots Help Montoya Fulfill His Father’s Wish for Him to Avoid Manual Labor

(p. A15) SALINAS, Calif. — As a boy, Abel Montoya remembers his father arriving home from the lettuce fields each evening, the picture of exhaustion, mud caked knee-high on his trousers. “Dad wanted me to stay away from manual labor. He was keen for me to stick to the books,” Mr. Montoya said. So he did, and went to college.
Yet Mr. Montoya, a 28-year-old immigrant’s son, recently took a job at a lettuce-packing facility, where it is wet, loud, freezing — and much of the work is physically taxing, even mind-numbing.
Now, though, he can delegate some of the worst work to robots.
Mr. Montoya is among a new generation of farmworkers here at Taylor Farms, one of the world’s largest producers and sellers of fresh-cut vegetables, which recently unveiled a fleet of robots designed to replace humans — one of the agriculture industry’s latest answers to a diminishing supply of immigrant labor.
The smart machines can assemble 60 to 80 salad bags a minute, double the output of a worker.
Enlisting robots made sound economic sense, Taylor Farms officials said, for a company seeking to capitalize on Americans’ insatiable appetite for healthy fare at a time when it cannot recruit enough people to work in the fields or the factory.

For the full story, see:
Miriam Jordan. “Farms Turn to Robots as Labor Pool Shrinks.”The New York Times (Saturday, Nov. 24, 2018): A15.
(Note: the online version of the story has the date Nov. 20, 2018, and has the title “As Immigrant Farmworkers Become More Scarce, Robots Replace Humans.”)