Category: Entrepreneurship

U.S. Chips+ Act Rewards Intel for Being Less Innovative Than TSMC


(p. A15) Intel, with huge profit margins on its Pentium microprocessors, could spend more than its competitors on state-of-the-art fabs, but innovation eventually was pushed aside for predictability. Intel would get one fab working and then “copy exactly” new cookie-cutter fabs. For smaller feature sizes, Intel looked at the new Extreme Ultraviolet technology from Dutch equipment company ASML and thought it too expensive and risky to use. TSMC embraced ExtremeUV and won, especially for lower-power chips for mobile devices. TSMC can now spend more than anyone else on fabs.

With the Chips+ Act chock full of $52 billion in subsidies and tax credits for chip makers, Congress is saying that real countries have fabs. The act also authorizes $1 billion for carbon removal—weird, because chips are made from silicon. Worse, the U.S. is rewarding Intel, which just announced a disastrous quarter, for coming in third place behind TSMC and Samsung.

Nothing is free. Even Commerce Secretary Gina Raimondo admitted “there’s a lot of strings attached” in the 1,054-page law. National Economic Council director Brian Deese endorsed command-and-control industrial policy: “The question should move from ‘Why should we pursue an industrial strategy?’ to ‘How do we pursue one successfully?’ ” This is as wrong as Soviet or Chinese five-year plans. Industrial policy eventually leads to disaster. Japan’s Ministry of International Trade and Industry micromanaged the country’s domestic semiconductor industry and ended up presiding over its decline. Today no Japanese semiconductor company sits in the global top 10. Because China doesn’t have access to ASML ExtremeUV equipment, it has made little progress in advanced chips.

Yes, we need domestic supplies of advanced chips in case China invades Taiwan. But subsidies are the wrong approach.

. . .

Instead, the U.S. could enable suppliers to place large orders for chips for the military, intelligence agencies, whatever. They could even prepay. Silicon Valley was originally built on orders for transistors for intercontinental missiles and the space program.

For the full commentary, see:

Andy Kessler. “INSIDE VIEW; The Semiconductor Boondoggle.” The Wall Street Journal (Monday, Aug. 15, 2022): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date August 14, 2022, and has the same title as the print version.)

Steve Case’s “Heroic Push” to Encourage Entrepreneurship Outside Silicon Valley, in “Surprising Places”

(p. C12) This is why one of the most energizing books I read this year was Steve Case’s “The Rise of the Rest.” It chronicles Steve’s journey to nurture tech startups in what some might consider “surprising” places. Think: Milwaukee vs. Silicon Valley.

. . .

Steve’s book is a heroic push encouraging us to widen the aperture. With the right investments and visibility, we can change the American landscape for the better, leveling the playing field and creating a more inclusive economy for years to come.

For the full review, see:

Asutosh Padhi. “12 Months of Reading; Asutosh Padhi.” The Wall Street Journal (Saturday, Dec. 10, 2021): C12.

(Note: ellipses added.)

(Note: the online version of the review has the date December 8, 2022, and has the title “Who Read What in 2022: Political and Business Leaders.”)

The book praised by Asutosh Padhi is:

Case, Steve. The Rise of the Rest: How Entrepreneurs in Surprising Places Are Building the New American Dream. New York: Avid Reader Press, 2022.

So-Called “Inflation Reduction Act” Reduces Incentive for Pharma Firms to Seek Approval for New Uses of Drugs


(p. A17) It may take years before we can fully appreciate the impact of the Inflation Reduction Act on the pharmaceutical industry, but we’re already getting signs of the damage. While Democrats boast that they’ve given Medicare the power to “negotiate” drug prices, the effect has been to saddle manufacturers with a complex and ill-conceived price-setting scheme. In response, many have canceled drug-development programs, resulting in an unfortunate but predictable loss for patients nationwide.

One poorly crafted provision is driving companies away from research into treating rare diseases. In its Oct. 27 earnings statement, Alnylam announced it is suspending development of a treatment for Stargardt disease, a rare eye disorder, because of the company’s need “to evaluate impact of the Inflation Reduction Act.” Alnylam’s decision turns on a provision in the Democrats’ bill that exempts from price-setting negotiations drugs that treat only one rare disease. The company’s drug is currently marketed as treating only amyloidosis, and thus is exempt from Medicare’s price setting. If Alnylam proceeded with research into treating Stargardt, it would lose its exemption.

That disincentive might be most pronounced in cancer treatments. On Tuesday [Nov. 1, 2022], Eli Lilly announced it is canceling work on a drug that had been undergoing studies for certain blood cancers. “In light of the Inflation Reduction Act,” the company wrote to Endpoints News, “this program no longer met our threshold for continued investment.”

. . .

Nearly 60% of oncology medications approved a decade ago received additional approvals in later years. The new law eliminates the incentive to conduct additional research, because its price-setting mechanisms kick in after nine years for small-molecule drugs and 13 years for biologics, regardless of how much research companies conduct after the drug’s initial approval.

For the full commentary, see:

Joe Grogan. “The Inflation Reduction Act Is Already Killing Potential Cures.” The Wall Street Journal (Saturday, Nov. 4, 2022): A17.

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

(Note: the online version of the commentary has the date November 3, 2022, and has the same title as the print version.)

Auto Experts Are Skeptical of EVs, but Are Afraid “So They Can’t Speak Out Loudly”

(p. A1) “People involved in the auto industry are largely a silent majority,” Mr. Toyoda said to reporters during a visit to Thailand. “That silent majority is wondering whether EVs are really OK to have as a single option. But they think it’s the trend so they can’t speak out loudly.”

. . .

(p. A6) The world’s biggest auto maker has said it sees hybrids, a technology it invented with the debut of the Toyota Prius in the 1990s, as an important option when EVs remain expensive and charging infrastructure is still being built out in many parts of the world. It is also developing zero-emission vehicles powered by hydrogen.

“Because the right answer is still unclear, we shouldn’t limit ourselves to just one option,” Mr. Toyoda said. Over the past few years, Mr. Toyoda said, he has tried to convey this point to industry stakeholders, including government officials—an effort he described as tiring at times.

Global car companies have made a sharp pivot to electric vehicles within the last few years, driven in part by the success of EV-only maker Tesla Inc.

. . .

At the same time, the legacy auto makers have a much broader base of customers, including many living in rural areas and developing economies with unreliable electricity supplies.

And their gas-engine businesses are still driving the bulk of profits needed to fund the costly shift to electric vehicles, which not only requires the development of new models but also construction of new facilities and battery plants.

The infrastructure to charge electric vehicles is meanwhile still lacking in the U.S. and many other parts of the world, making owning an EV still a challenge for many types of consumers.

. . .

Ryan Gremore, an Illinois-based dealer, who owns several brand franchises, said he gets a lot of customers inquiring about EVs, in part because of limited supplies.

That might give the impression of robust demand, but it is unclear how it will materialize when inventory levels at dealerships normalize, he added. “Is there interest in electric vehicles? Yes. Is it more than 10% to 15% of our customer base? No way,” Mr. Gremore said.

Mr. Toyoda’s long-held skepticism about a fully electric future has been shared by others in the Japanese car industry, as well.

Mazda Motor Corp. executives once cautioned that whether EVs were cleaner depends largely on where the electricity is produced. They also worried that EV batteries were too big and expensive to replace gas-powered models and better suited to the types of smaller vehicles that Americans didn’t want.

For the full story, see:

River Davis and Sean McLain. “Toyota Skeptical of Going All-EV.” The Wall Street Journal (Monday, Dec. 19, 2022 ): A1 & A6.

(Note: ellipses added.)

(Note: the online version of the story was updated Dec. 18, 2022, and has the title “Toyota Chief Says ‘Silent Majority’ Has Doubts About Pursuing Only EVs.”)

Dogs Can Accurately Know by Smell When a Human Is Stressed


(p. C4) Dogs are champion sniffers, equipped with 100 to 300 million olfactory receptors in their noses—compared with a mere 6 million in our own—and an olfactory cortex 40 times as large as ours. They can be trained to detect disease in human beings, including cancer cells, a latent epileptic seizure, or a Covid infection, just by sniffing—no blood samples, biopsies, MRIs, antigen or PCR tests required.

. . .

In a study published in September in the journal PLoS One, Ms. Wilson and colleagues tested whether dogs can read and respond to our emotional states, without the benefit of facial expression, tone of voice, or social context. The researchers trained four dogs to detect and react to the smell of human stress, depending on their sense of smell alone to distinguish between a person’s baseline scent and the unique cocktail of volatile organic compounds (VOCs) in their sweat and breath when they’re feeling stressed out.

. . .

The results offered overwhelming confirmation that dogs can smell psychological states as well as physical ones. On average, the four dogs picked out the stress sample 94% of the time, with individual dogs ranging between 90% and 97% accuracy. “There’s a smell to stress,” Ms. Wilson concludes. “If we can add it to the dog’s repertoire, we can use it to identify anxiety and panic attacks before they occur.”

For the full commentary, see:

Susan Pinker. “MIND AND MATTER; Dogs Can Sniff Out When a Human Is Stressed.” The Wall Street Journal (Saturday, Oct. 22, 2022): C4.

(Note: ellipses added.)

(Note: the online version of the commentary has the date October 20, 2022, and has the title “MIND AND MATTER; Dogs Can Sniff Out Human Stress.”)

How to Resist the Heat Death Implied by the Second Law of Thermodynamics

When I was a young philosophy student I sometimes worried that the Second Law of Thermodynamics ultimately made meaningless all human perseverance toward progress. Physics Nobel laureate Frank Wilczek gives young philosophers reasons for hope.

(p. C4) The capstone of thermodynamics is its so-called Second Law, . . ., which states that entropy, a measure of disorder, increases over time—distinctive structure erodes. Featureless equilibrium is the state of maximum entropy, toward which the Second Law drives us.

The inexorable logic of the Second Law leads, in the long run, to a bland universe wherein nothing changes—that is, heat death.

. . .

There are several ways that our distant descendants, or other embodiments of mind in the universe, might resist heat death. Here are some ideas that occurred to me . . .:

First, it is probably possible to burn matter further than stars do. Stars rearrange protons and neutrons but do not change their overall number. Burning those particles would give access to hundreds of times more energy. Another (barely) conceivable form of fuel is “dark matter.” At present, nobody knows what it is, but there’s lots of it in the universe.

Second, future engineers also might be able to arrange controlled collisions of planets or dead stars, to tap into the energy the crashes liberate.

Third, future minds themselves might be able to run on very limited power. Recent theoretical work on reversible and quantum computers, and on time crystals, has shown that there’s no lower limit to how little energy they need to keep making progress, or at least to keep moving.

Fourth, since we don’t really understand what triggered the Big Bang, it’s conceivable that someday we’ll be able to engineer something similar, and thereby rejuvenate the universe.

For the full commentary, see:

Frank Wilczek. “WILCZEK’S UNIVERSE; Delaying the Heat Death of The Universe.” The Wall Street Journal (Saturday, Sept. 3, 2022): C4.

(Note: ellipses added.)

(Note: the online version of the commentary has the date September 1, 2022, and has the same title as the print version.)

New Technology Creates More Jobs Than It Destroys

(p. 3) The pessimist’s basic mistake is to focus too much on what is lost to competition and technology, and too little on what is gained. Over the past 25 years, as McKinsey & Company, the consulting firm, has pointed out, about a third of the new jobs created in the United States were types that did not exist or barely existed 25 years ago.

. . .

In New York City the car replaced the horse carriage within the first 15 years of the 20th century, killing off the carriage trade and giving birth to the taxi trade — as well as to highly paid auto mechanics. Uber threatens the taxi trade, and the self-driving car threatens the Uber driver. But it has also brought multimillion-dollar signing bonuses for self-driving-car engineers and created new opportunities for mechanics. People tend to find a way to work with and profit from new technology.

. . .

In most cases, an industry without enough workers to meet customer demand would simply hire more, or at least raise wages to attract them.

Yet, according to the Bureau of Labor Statistics, neither of those things happened last year. The number of pharmacists employed in the United States dropped about 1 percent from 2020 to 2021. On balance, employers did not raise wages — in fact, median pay fell slightly, even without adjusting for inflation.

. . .

. . . there is no evidence so far to support forecasts of a nearly jobless future. If robots threatened human labor, human joblessness would be growing. But it’s not. In fact, since 2008, job growth has been strongest in countries like Germany and Japan, which deploy the most robots.

For the full commentary, see:

Ruchir Sharma. “No, That Robot Will Not Steal Your Job.” The New York Times, SundayReview Section (Sunday, October 8, 2017): 3.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Oct. 7, 2017, and has the same title as the print version.)

Improvisational Ingenuity of Ukrainians “In Stark Contrast to the Slow, Plodding, Doctrinal” Russian Invaders

(p. A1) From the sinking of the Moskva, Russia’s Black Sea flagship, in April [2022] to the attack on a Russian air base in Crimea this month, Ukrainian troops have used American and other weapons in ways few expected, the experts and Defense Department officials say.

By mounting missiles onto trucks, for instance, Ukrainian forces have moved them more quickly into firing range. By putting rocket systems on speedboats, they have increased their naval warfare ability. And to the astonishment of weapons experts, Ukraine has continued to destroy Russian targets with slow-moving Turkish-made Bayraktar attack drones and inexpensive, plastic aircraft modified to drop grenades and other munitions.

“People are using the MacGyver metaphor,” said Frederick B. Hodges, a former top U.S. Army commander in Europe, in a reference to the 1980s TV show in which the title character uses simple, improvised contraptions to get himself out of sticky situations.

. . .

(p. A10) . . ., the engineering ingenuity of the Ukrainians lies in stark contrast to the slow, plodding, doctrinal nature of the Russian advance.

In the attack on the Moskva, for example, the Ukrainians developed their own anti-ship missile, called the Neptune, which they based on the design of an old Soviet anti-ship missile, but with substantially improved range and electronics. They appear to have mounted the Neptune missiles onto one or more trucks, according to one senior American official, and moved them within range of the ship, which was around 75 miles from Odesa. The striking of the Moskva was, in essence, the Neptune’s proof of concept; it was the first time the new Ukrainian weapon was used in an actual war, and it took down Russia’s flagship in the Black Sea.

“With the Moskva, they MacGyvered a very effective anti-ship system that they put on the back of a truck to make it mobile and move it around,” General Hodges, who is now a senior adviser at Human Rights First, said in an interview.

. . .

A senior Pentagon official said Ukrainian forces had put American-supplied HARM anti-radiation missiles on Soviet-designed MiG-29 fighter jets — something that no air force had ever done. The American HARM missile, designed to seek and destroy Russian air defense radar, is not usually compatible with the MiG-29 or the other fighter jets in Ukraine’s arsenal.

Ukraine managed to rejigger targeting sensors to allow pilots to fire the American missile from their Soviet-era aircraft. “They have actually successfully integrated it,” the senior official told reporters during a Pentagon briefing. He spoke on the condition of anonymity per Biden administration rules.

. . .

. . . Ukraine conducted the first of the recent strikes in Crimea — a series of blasts at the Saki military airfield on Aug. 9 [2022] — without notifying American and other Western allies in advance, officials said.

“It’s all homegrown,” the official said, . . .

For the full story, see:

Helene Cooper and Eric Schmitt. “Ukraine Forces ‘MacGyvering’ Their Arsenal.” The New York Times (Monday, August 29, 2022): A1 & A10.

(Note: ellipses, and bracketed years, added.)

(Note: the online version of the story has the date Aug. 28, 2022, and has the title “The ‘MacGyvered’ Weapons in Ukraine’s Arsenal.”)

During December 2022, Kindle Version of McCloskey’s Bourgeois Equality Is Only $2.99

The long, but wonderful, third volume of Deirdre’ McClokey’s Bourgeois trilogy, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, is on offer from Amazon during the month of December 2022 in eText Kindle version for only $2.99.

Gig Work Thrives Because Workers Value Flexibility to Pursue Balance or Fulfilment

(p. B1) American workers are experiencing, by many measures, one of the best job markets ever. The unemployment rate has matched a 53-year low. Job listings per available worker are at historic highs. Wages, while not quite keeping up with inflation, are rising at their fastest pace in decades.

So why would people keep doing gig work, a notoriously difficult and insecure way to make a living?

. . .

Picking up shifts offers something that traditional permanent employment still generally doesn’t: the ability to work when and as much as you want, demand permitting, which is often essential to balance life obligations like school or child care.

. . .

(p. B5) “We were seeing this move towards multiple income streams, because that work was picked up as a stopgap and then continued,” Dr. Gervis said.

Take Denae Bettis, a 23-year-old Steady user living in Severn, Md. After dropping out of college, she got a job at UPS, and after a few years rose to become a safety supervisor, usually starting at 4 a.m. During the pandemic, she took on more responsibilities.

“The job got really stressful, and I felt like I had no way out,” Ms. Bettis said. So in June 2020, she started a side gig through Instacart, shopping for people holed up at home. The next month, she quit her job, making it easier for her to pursue her passion: working as a personal makeup artist, which often requires taking early-morning appointments.

Surviving on income from gigs — which for Ms. Bettis now include DoorDash as well as Instacart — isn’t easy. But Ms. Bettis thinks she can save enough money to open her own storefront.

“We just went through a period where millions died, so are you going to spend your time at your job if it doesn’t fulfill you?” Ms. Bettis said, summing up gig work’s appeal. “Everybody loves stability, but if the flexibility isn’t there, I don’t think a lot of people are going to go back.”

For the full story, see:

Lydia DePillis. “Why Gig Work Is Thriving.” The New York Times (Tuesday, August 16, 2022): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the story was updated Aug. 17, 2022, and has the title “If the Job Market Is So Good, Why Is Gig Work Thriving?.”)

Initially Socialist Israeli Kibbutzim Gradually Embraced Entrepreneurial Capitalism

(p. C4) Today, in a break with . . . [its] communal past, Ms. Barnea’s kibbutz is farming for profit, and its main cash crop is medical marijuana. She recently retired from managing the greenhouse that grows the drug.

The shift at Kibbutz Beit HaEmek is just the latest sign of how much Israel’s kibbutzim are changing, as both Israel and the kibbutz movement move away from their socialist roots to become more entrepreneurial and profit-driven.

“We have to survive,” said Ms. Barnea, now 64, walking around the greenhouse as the smell of marijuana wafted past.

. . .

Facing a bleak financial future, young people abandoned the kibbutzim in the 1990s. Meanwhile, Israel’s vibrant technology sector took off, providing an additional pull away from the communes.

To reverse the exodus, Israel’s kibbutzim dismantled much of their socialist model. In 1995, Kibbutz Merom HaGolan became the first to go through a so-called privatization process, paying members salaries on a scale.

Today, most kibbutzim have undergone some form of privatization. Many members now earn salaries outside the kibbutz but pay taxes for the community’s upkeep. New members can take out mortgages with banks and buy land on the kibbutz for their homes.

. . .

Only about 40 kibbutzim still share resources and give equal allowances as envisioned in the original model. Most of these communities had created successful businesses that helped them maintain the communal way of living.

One such community is Kibbutz Sdot Yam, on Israel’s central coast between Tel Aviv and Haifa. In the 1980s, the kibbutz opened a factory that constructed quartz surfaces for tables and floors. Despite that venture’s success, the kibbutz is now considering whether to allow members—most of whom work outside the community—to earn their own salaries, rather than sharing them with the commune, said Doron Stansill, a 47-year-old member.

For the full essay, see:

Rory Jones. “The Kibbutz in a Capitalist Israel.” The Wall Street Journal (Saturday, Oct. 14, 2017 ): C4.

(Note: ellipses added.)

(Note: the online version of the essay has the date Oct. 13, 2017 , and has the title “The Kibbutz Movement Adapts to a Capitalist Israel.”)