Category: Entrepreneurship

Creativity Was Permissionless on the Internet Before Obama Made It a Regulated Utility

(p. A15) Critics of President Obama’s “net neutrality” plan call it ObamaCare for the Internet.
That’s unfair to ObamaCare.
Both ObamaCare and “Obamanet” submit huge industries to complex regulations. Their supporters say the new rules had to be passed before anyone could read them. But at least ObamaCare claimed it would solve long-standing problems. Obamanet promises to fix an Internet that isn’t broken.
. . .
Utility regulation was designed to maintain the status quo, and it succeeds. This is why the railroads, Ma Bell and the local water monopoly were never known for innovation. The Internet was different because its technologies, business models and creativity were permissionless.
This week Mr. Obama’s bureaucrats will give him the regulated Internet he demands. Unless Congress or the courts block Obamanet, it will be the end of the Internet as we know it.

For the full commentary, see:
L. GORDON CROVITZ. “INFORMATION AGE; From Internet to Obamanet; BlackBerry and AT&T are already making moves that could exploit new ‘utility’ regulations.” The Wall Street Journal (Mon., Feb. 23, 2015): A15.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Feb. 22, 2015,)

Successful Billionaire Mathematician Would Have Lost Math Contests, But Was Good at Slow Pondering

(p. D1) James H. Simons likes to play against type. He is a billionaire star of mathematics and private investment who often wins praise for his financial gifts to scientific research and programs to get children hooked on math.
But in his Manhattan office, high atop a Fifth Avenue building in the Flatiron district, he’s quick to tell of his career failings.
He was forgetful. He was demoted. He found out the hard way that he was terrible at programming computers. “I’d keep forgetting the notation,” Dr. Simons said. “I couldn’t write programs to save my life.”
After that, he was fired.
His message is clearly aimed at young people: If I can do it, so can you.
. . .
(p. D2) “I wasn’t the fastest guy in the world,” Dr. Simons said of his youthful math enthusiasms. “I wouldn’t have done well in an Olympiad or a math contest. But I like to ponder. And pondering things, just sort of thinking about it and thinking about it, turns out to be a pretty good approach.”

For the full story, see:
WILLIAM J. BROAD. “Seeker, Doer, Giver, Ponderer; A Billionaire Mathematician’s Life of Ferocious Curiosity.” The New York Times (Tues., JULY 8, 2014): D3.
(Note: ellipsis added.)
(Note: the online version of the story has the date JULY 7, 2014.)

Italian Traditional Family Stunts Individual Enterprise

(p. 15) Hooper’s book, both sweeping in scope and generous with detail, makes persuasive arguments for how geography, history and tradition have shaped Italy and its citizens, for better and sometimes for worse. Roman Catholicism, for example, has indelibly conditioned Italian society, even as the Vatican’s restrictions are widely ignored. Catholicism’s great allowance for human frailty has translated into a great propensity for forgiveness, as evinced in the Italian justice system, but also resistance to the notion of accountability. It’s a word, Hooper adds, that has no counterpart in the Italian language.
. . .
There’s . . . mammismo, the propensity of young Italians to remain too closely tied to the maternal apron strings. But while “the traditional family has been at the root of much of what Italy has achieved,” Hooper writes, dependence on the family can infantilize, and lack of individual enterprise has held the country back. Indeed, various sections of Hooper’s book return to Italy’s economic decline and its underlying causes.
He notes that the paperwork and formalities of Italy’s cumbersome bureaucracy rob the average Italian of 20 days a year. And he wonders what other country could ever have had a Minister for Simplification to deal with its plethora of often conflicting laws and regulations.
Circumventing some of that bureaucracy partly answers another common question: Why is Italy so prone to corruption? After all, Italians are masters at sidestepping regulations, or, as the saying goes, “Fatta la legge, trovato l’inganno” (“Make the law, then find a way around it”). It’s no wonder foreign investment in Italy is so low.

For the full review, see:
LISABETTA POVOLEDO. “Under the Italian Sun.” The New York Times Book Review (Sun., March 1, 2015): 15.
(Note: ellipses added; italics in original.)
(Note: the online version of the review has the date FEB. 27, 2015, and has the title “‘The Italians,’ by John Hooper.”)

The book under review is:
Hooper, John. The Italians. New York: Viking, 2015.

Chinese Communists Crush Innovative Entrepreneurs by Banning Open Internet

(p. A1) BEIJING — Jing Yuechen, the founder of an Internet start-up here in the Chinese capital, has no interest in overthrowing the Communist Party. But these days she finds herself cursing the nation’s smothering cyberpolice as she tries — and fails — to browse photo-sharing websites like Flickr and struggles to stay in touch with the Facebook friends she has made during trips to France, India and Singapore.
Gmail has become almost impossible to use here, and in recent weeks the authorities have gummed up Astrill, the software Ms. Jing and countless others depended on to circumvent the Internet restrictions that Western security analysts refer to as the Great Firewall.
By interfering with Astrill and several other popular virtual private networks, or V.P.N.s, the government has complicated the lives of Chinese astronomers seeking the latest scientific data from abroad, graphic designers shopping for clip art on Shutterstock and students submitting online applications to American universities.
If it was legal to protest and throw rotten eggs on the street, I’d definitely be up for that,” Ms. Jing, 25, said.
China has long had some of the world’s most onerous Internet restrictions. But until now, the authorities had effectively tolerated the proliferation of V.P.N.s as a lifeline for millions of people, from archaeologists to foreign investors, who rely heavily on less-fettered access to the Internet.
But earlier this week, after a number of V.P.N. companies, including StrongVPN and Golden Frog, complained that the Chi-(p. A6)nese government had disrupted their services with unprecedented sophistication, a senior official for the first time acknowledged its hand in the attacks and implicitly promised more of the same.
The move to disable some of the most widely used V.P.N.s has provoked a torrent of outrage among video artists, entrepreneurs and professors who complain that in its quest for so-called cybersovereignty — Beijing’s euphemism for online filtering — the Communist Party is stifling the innovation and productivity needed to revive the Chinese economy at a time of slowing growth.
“I need to stay tuned into the rest of the world,” said Henry Yang, 25, the international news editor of a state-owned media company who uses Facebook to follow American broadcasters. “I feel like we’re like frogs being slowly boiled in a pot.”
. . .
The vast majority of Chinese Internet users, especially those not fluent in English and other foreign languages, have little interest in vaulting the digital firewall. But those who require access to an unfiltered Internet are the very people Beijing has been counting on to transform the nation’s low-end manufacturing economy into one fueled by entrepreneurial innovation.
. . .
Avery Goldstein, a professor of contemporary Chinese studies at the University of Pennsylvania, said the growing online constraints would not only dissuade expatriates from relocating here, but could also compel ambitious young Chinese studying abroad to look elsewhere for jobs.
“If they aren’t able to get the information to do their jobs, the best of the best might simply decide not to go home,” he said.
For those who have already returned to China and who crave membership in an increasingly globalized world, the prospect of making do with a circumscribed Internet is dispiriting. Coupled with the unrelenting air pollution and the crackdown on political dissent, a number of Chinese said the blocking of V.P.N.s could push them over the edge.
“It’s as if we’re shutting down half our brains,” said Chin-Chin Wu, an artist who spent almost a decade in Paris and who promotes her work online. “I think that the day that information from the outside world becomes completely inaccessible in China, a lot of people will choose to leave.”

For the full story, see:
ANDREW JACOBS. “China Further Tightens Grip on the Internet.” The New York Times (Fri., JAN. 30, 2015): A1 & A12.
(Note: ellipses added.)
(Note: the online version of the story has the date JAN. 29, 2015.)

Brin: Regulatory Burden Discourages Health Entrepreneurs

(p. A13) Earlier this month, at a private conference for the CEOs of his portfolio companies, venture capitalist Vinod Khosla interviewed Google co-founders Sergey Brin and Larry Page, asking them if the company might jump into health care. “It’s just a painful business to be in,” Mr. Brin replied, later noting that “the regulatory burden in the U.S. is so high that I think it would dissuade a lot of entrepreneurs.”
Mr. Brin is right. As a neurosurgeon-scientist and entrepreneur who co-founded a bioelectronic medicine company that deploys implantable technology to supplant drugs, I wish he were wrong.
. . .
. . . entrepreneurs should be allowed to carve out their own turf and let patients choose their own level of risk.
Consider the case of Goran Ostovich, a burly, 47-year-old truck driver from Mostar, Bosnia. Mr. Ostovich has suffered from long-standing rheumatoid arthritis and needed near-permanent bed rest. With his hands and wrists swollen and aching, he could no longer hold on to a wheel or even play with his small children. He tried a variety of medications. None worked.
When I met Goran at his doctor’s office in 2012, however, he didn’t seem at all afflicted with the disease. That’s because, one year earlier, he had been offered the opportunity to be the first participant in a clinical trial of a new therapy based on my invention. He received a bioelectronic implant and rapidly improved.
. . .
Since news of this clinical trial’s success became public, people from all over the U.S. stricken with rheumatoid arthritis have emailed, called and sent letters pressing for their shot at potentially effective–but not yet FDA-approved–treatments.
. . .
Some patients are very willing to take a calculated risk, . . .

For the full commentary, see:
KEVIN J. TRACEY. “Let Patients Decide How Much Risk They’ll Take; Take a tip from Sergey Brin: The health-care regulatory burden stops entrepreneurs from getting into the game.” The Wall Street Journal (Mon., July 28, 2014): A13.
(Note: ellipses added.)
(Note: the online version of the commentary has the date July 27, 2014, and has the title “Let Patients Decide How Much Risk They’ll Take; Take a tip from Sergey Brin: The health-care regulatory burden stops entrepreneurs from getting into the game.”)

Recovery Slows When Start-Ups Are Taxed to Pay for Bailouts of Failed Firms

Vernon Smith, whose views are quoted below, won the Nobel Prize in economics in 2002.

(p. A11) The rescue of incumbent investors in the government bailout of the largest U.S. banks in the autumn of 2008 has been widely viewed as unfair, as indeed it was in applying different rules to different players. . . .
. . .
The rescue, . . . , had a hidden cost for the economy that is difficult to quantify but can be crippling. New economic activity is hobbled if it is not freed from the burden of sharing its return with investors who bore risks that failed. The demand for new economic activity is enlarged when its return does not have to be shared with former claimants protected from the consequences of their risk-taking. This is the function of bankruptcy in an economic system organized on loss as well as profit principles of motivation.
. . .
Growth in both employment and output depends vitally on new and young companies. Unfortunately, U.S. firms face exceptionally high corporate income-tax rates, the highest in the developed world at 35%, which hobbles growth and investment. Now the Obama administration is going after firms that reincorporate overseas for tax purposes. Last week Treasury Secretary Jack Lew wrote a letter to the chairman of the House Ways and Means Committee urging Congress to “enact legislation immediately . . . to shut down this abuse of our tax system.”
This is precisely the opposite of what U.S. policy makers should be doing. To encourage investment, the U.S. needs to lower its corporate rates by at least 10 percentage points and reduce the incentive to escape the out-of-line and unreasonably high corporate tax rate. Ideally, since young firms generally reinvest their profits in production and jobs, such taxes should fall only on business income after it is paid out to individuals. As long as business income is being reinvested it is growing new income for all.
There are no quick fixes. What we can do is reduce bureaucratic and tax barriers to the emergence and growth of new economic enterprises, which hold the keys to a real economic recovery.

For the full commentary, see:
VERNON L. SMITH. “The Lingering, Hidden Costs of the Bank Bailout; Why is growth so anemic? New economic activity has been discouraged. Here are some ways to change that.” The Wall Street Journal (Thurs., July 24, 2014): A11.
(Note: last ellipsis in original, other ellipses added.)
(Note: the online version of the commentary has the date July 23, 2014.)

“If You Want to Find Something New, Look for Something New!”

(p. D8) Yves Chauvin, who shared the 2005 Nobel Prize in Chemistry for deciphering a “green chemistry” reaction now used to make pharmaceuticals and plastics more efficiently while generating less hazardous waste, died on Tuesday [January 27, 2015] in Tours, France.
. . .
He confessed that he was not a brilliant student, even in chemistry. “I chose chemistry rather by chance,” he wrote, “because I firmly believed (and still do) that you can become passionately involved in your work, whatever it is.”
Mr. Chauvin graduated from the Lyon School of Industrial Chemistry in 1954. Military service and other circumstances prevented him from pursuing a doctoral degree, which he said he regretted. “I had no training in research as such and as a consequence I am in a sense self-taught,” he wrote in his Nobel Prize lecture.
He worked in industry for a few years before quitting, frustrated by an inability to pursue new ideas. “My motto is more, ‘If you want to find something new, look for something new!’ ” Mr. Chauvin wrote. “There is a certain amount of risk in this attitude, as even the slightest failure tends to be resounding, but you are so happy when you succeed that it is worth taking the risk.”
He found the freedom to choose his research when he joined the French Petroleum Institute in 1960, and it led to his breakthrough on metathesis.
“Like all sciences, chemistry is marked by magic moments,” Mr. Chauvin wrote. “For someone fortunate enough to live such a moment, it is an instant of intense emotion: an immense field of investigation suddenly opens up before you.”

For the full obituary, see:

KENNETH CHANG. “Yves Chauvin, Chemist Sharing Nobel Prize, Dies at 84.” The New York Times (Sat., JAN. 31, 2015): D8.

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

(Note: the online version of the obituary has the date JAN. 30, 2015.)

Regulations Reduce Biotech Innovation

(p. A15) Modern genetic engineering, also called genetic modification or GM, has been around since the 1970s. Yet with the notable exception of biopharmaceuticals–beginning with the marketing of human insulin in 1982 and now accounting for more than 20% of U.S. drug expenditures–genetic engineering has failed to realize anything approaching its potential for vertical progress.
The reason is plain: In the non-pharmaceutical sectors, federal regulators for years seemingly have done everything they can to prevent U.S. researchers and companies from employing genetic engineering to create the “next big thing.”
. . .
Regulatory disincentives are potent. It costs about $136 million to bring a genetically engineered crop plant to market. This is the primary reason more than 99% of such crop plants are those that are grown at huge scale: . . .
. . .
“Biopharming”–the once-promising biotechnology area that uses genetic engineering techniques to induce crops such as corn, tomatoes and tobacco to produce high concentrations of high-value pharmaceuticals (one of which is the Ebola drug, ZMapp)–is moribund because of the Agriculture Department’s extraordinary regulatory burdens. Thanks to EPA’s policies, which discriminate against organisms modified with the most precise and predictable techniques, the high hopes for genetically engineered “biorational” microbial pesticides and microorganisms to clean up toxic wastes have evaporated.

For the full commentary, see:
HENRY I. MILLER. “Regulators Put the Brakes On Biotech; Thanks to EPA, hopes have evaporated for genetically engineered microorganisms to clean up toxic wastes.” The Wall Street Journal (Weds., Jan. 14, 2015): A15.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Jan. 13, 2015.)

Serendipitous Discovery that Titanium Fuses with Bone, Leads to Implants

(p. 24) Implants have been a major advance in dentistry, liberating millions of elderly people from painful, ill-fitting dentures, a diet of soft foods and the ignominy of a sneeze that sends false teeth flying out of the mouth. But addressing those problems was not Dr. Branemark’s initial intent.
At the start of his career, he was studying how blood flow affects bone healing.
In 1952, he and his team put optical devices encased in titanium into the lower legs of rabbits in order to study the healing process. When the research period ended and they went to remove the devices, they discovered to their surprise that the titanium had fused into the bone and could not be removed.
Dr. Branemark called the process “osseointegration,” and his research took a whole new direction as he realized that if the body could tolerate the long-term presence of titanium, the metal could be used to create an anchor for artificial teeth.
. . .
. . . , Dr. Branemark’s innovation was poorly received. After Dr. Branemark gave a lecture on his work in 1969, Dr. Albrektsson recalled, one of the senior academics of Swedish dentistry rose and referred to an article in Reader’s Digest describing Dr. Branemark’s research, adding, “This may prove to be a popular article, but I simply do not trust people who publish themselves in Reader’s Digest.”
As it happened, that senior academic was well known to the Swedish public for recommending a particular brand of toothpick. So Dr. Branemark immediately rose and struck back, saying, “And I don’t trust people who advertise themselves on the back of boxes of toothpicks.”

For the full story, see:
TAMAR LEWIN. “Per-Ingvar Branemark, Dental Innovator, Dies at 85.” The New York Times, First Section (Sun., DEC. 28, 2014): 24.
(Note: ellipses are added.)
(Note: the online version of the story has the date JAN. 27, 2015.)

George Washington’s “Entrepreneurial Bent”

(p. 87) Washington proved an excellent businessman, first as a canny speculator in western lands, then as lord of Mount Vernon. Sometimes buying human cargo directly from the holds of slave ships, he came to own more than one hundred slaves by the Revolution and expanded his estate until it encompassed thirteen square miles. An innovative farmer, he invented a plough and presided over a small industrial village at Mount Vernon that included a flour mill and a shop for manufacturing cloth, an entrepreneurial bent that appealed to Hamilton.

Source:
Chernow, Ron. Alexander Hamilton. New York: The Penguin Press, 2004.

Progress Depends on Removing Barriers to Innovation

In the quotation below, Bill Gates is referring to the late, and way-under-appreciated, economist Julian Simon.

(p. A3) “. . . Simon’s view was that humans would have to change to innovate,” Mr. Gates said. Innovation, in other words, is not preordained. Indeed, it’s happened much more in some societies than in others. And it has happened, Mr. Gates was arguing, because people and institutions took steps to remove the barriers to progress.
. . .
. . . , much of the world is enjoying one of history’s most rapid increases in prosperity. Life expectancy has risen more than six years just since 1990. The world, to quote the title of a book by the economist Charles Kenny, is “Getting Better.” As Mr. Gates says: “The world is actually improving a lot. We’re trying to deliver both the good news on the progress and the possibility to do more.”

For the full commentary, see:
David Leonhardt. “Africa’s Economy Is Rising, and Focus Turns to Food.” The New York Times (Thurs., JAN. 22, 2015): A3.
(Note: ellipses added.)
(Note: the online version of the commentary has the title “Africa’s Economy Is Rising. Now What Happens to Its Food?”)

The book mentioned by Charles Kenny is:
Kenny, Charles. Getting Better: Why Global Development Is Succeeding–and How We Can Improve the World Even More. Philadelphia, PA: Basic Books, 2011.

One of the great books by Julian Simon is:
Moore, Stephen, and Julian L. Simon. It’s Getting Better All the Time: 100 Greatest Trends of the Last 100 Years. Washington, D.C.: Cato Institute, 2000.