Category: Entrepreneurship

75% “of All Wealth Is Created Anew in Each Generation”

(p. A17) Despite the liberal background of the author, however, “A Century of Wealth in America” offers comfort and support to those who favor less wealth taxation. A core element of Mr. Piketty’s indictment of contemporary wealth inequality was his claim that inheritance is the major source of wealth; he estimated that, given the slower economic growth that most economists anticipate in the future, inherited wealth would soon constitute 90% of wealth in economies such as that of the United States. But Mr. Wolff finds that, for modern America, wealth inheritance explains a much more modest share of private wealth: In 1989-2013, it was 23% on average. In other words, more than three-quarters of all wealth is created anew in each generation in the U.S. . . .

Even more surprising, inherited wealth is much more important in the lives of those who have relatively little wealth than it is in the lives of the super rich. For the top 1% of wealth holders from 1989 to 2013, inherited wealth accounted for only 17% of their assets. (The 1%, in this analysis, is an overwhelmingly self-made group.) By contrast, for those with assets of just $25,000-$50,000, inherited wealth accounted for 52% of their worth.

As a bizarre consequence of this pattern, African-Americans, who have low levels of net worth on average, are the social group for which inherited wealth represents the largest share of their net worth. Another odd implication is that inheritances tend to make overall wealth-holding more equal. Were inherited wealth to be completely abolished, the wealth of the poor would decline more than that of the rich. Inherited wealth is the great equalizer. Who knew?

. . .

. . . , Mr. Wolff calculates that the rich are not systematically generating higher returns on their assets than more modest wealth holders. The top 1% had a real return on net worth of around 3% over the 30 years from 1983 to 2013—the same return as the average wealth holder.

For the full review, see:

Gregory Clark. “BOOKSHELF; How the Richest Got That Way; In the U.S. more than three-quarters of all wealth is created anew in each generation, and the ‘1%’ is an overwhelmingly self-made group.” The Wall Street Journal (Tuesday, December 12, 2017): A17.

(Note: ellipses added.)

(Note: the online version of the review has the date Dec. 11, 2017, and has the title “BOOKSHELF; Review: How the Richest Got That Way; In the U.S. more than three-quarters of all wealth is created anew in each generation, and the ‘1%’ is an overwhelmingly self-made group.”)

The book under review is:

Wolff, Edward N. A Century of Wealth in America. Cambridge, MA: Belknap Press, 2017.

Manic Energy from Bipolar Disorder May Enable “Heights of Success”

(p. A17) Dr. Ronald R. Fieve, who was a pioneer in the prescription of lithium to treat mania and other mood disorders — while avowing that some gifted individuals, like Abraham Lincoln, Theodore Roosevelt and Winston Churchill, might have benefited from being bipolar — died on Jan. 2 [2018] at his home in Palm Beach, Fla.

. . .

He cited estimates that as many as one in 15 people experienced a manic episode during their lifetimes, and that bipolar disorder — characterized by swings from elation, hyperactivity and a decreased need for sleep to incapacitating depression — was often misclassified as schizophrenia or other illnesses, or undiagnosed altogether.

He cautioned, however, that some highly creative, exuberant and energetic people have derived benefits from the condition because they have what he called “a hypomanic edge.”

“I have found that some of the most gifted individuals in our society suffer from this condition — including many outstanding writers, politicians, business executives and scientists — where tremendous amounts of manic energy have enabled them to achieve their heights of success,” Dr. Fieve told a symposium in 1973.

But without proper treatment, he said, those individuals afflicted with manic depression “more often than not either go too ‘high’ or suddenly crash into a devastating depression that we only hear about after a successful suicide.”

In contrast to antidepressant drugs or electroshock treatments, he said, regular doses of lithium carbonate appeared to stabilize mood swings without cramping creativity, memory or personality.

. . .

Before it was approved to treat depression, lithium was found in the late 1940s to be potentially unsafe as a salt substitute. But Dr. Fieve pointed out that lithium had been found in natural mineral waters prescribed by Greek and Roman physicians 1,500 years earlier to treat what were then called manic insanity and melancholia.

For the full obituary, see:

Sam Roberts. “Dr. Ronald Fieve, Pioneer In Lithium, Is Dead at 87.” The New York Times (Wednesday, Jan. 17, 2018): A17.

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

(Note: the online version of the obituary has the date Jan. 12, 2018, and has the title “Dr. Ronald Fieve, 87, Dies; Pioneered Lithium to Treat Mood Swings.”)

Entrepreneurs Pooled Savings to Found Garmin

(p. B16) Gary Burrell, who with a fellow engineer founded Garmin, the navigational device company whose products can direct pilots in fog, prevent hikers from getting lost and help insomniacs track their sleep, died on June 12 [2019] at his home in Spring Hill, Kan.

. . .

Mr. Burrell (pronounced burr-ELL) was vice president of engineering for King Radio, an avionics company that made navigational devices, when he recruited Dr. Min H. Kao from Magnavox, another defense contractor. Dr. Kao had been instrumental in developing a GPS receiver for aircraft.

At the time, the government was opening up its Global Positioning System for civilian use, and the two men saw possibilities. Continue reading “Entrepreneurs Pooled Savings to Found Garmin”

High Palladium Prices Incentivize More Mining and Search for Substitutes

(p. B13) Palladium prices are at their highest level in nearly two decades, as investors bet that rising global growth will buoy automobile production and stoke demand for the rare metal.

. . .

Longer term, the auto industry may consider switching to platinum in gasoline engines if the price of palladium continues to climb, some market participants said.

Shree Kargutkar, portfolio manager at Sprott Asset Management, said he thinks platinum provides a better long-term value alternative to palladium given palladium’s sharp rise.

Still, changes in the automotive industry don’t pose an immediate threat to the rally, he said. Those shifts and mining companies’ efforts to bring more areas of supply on line to capitalize on higher prices are likely to take years.

“We’re not at a point where the palladium bulls have something to worry about,” he said.

For the full story, see:

Ira Iosebashvili and Amrith Ramkumar. “Palladium Soars on Hopes for Growth.” The Wall Street Journal (Tuesday, Oct. 24, 2017): B13.

(Note: ellipsis added.)

(Note: the online version of the story has the date Oct. 23, 2017, and the title “Palladium Prices Soar in Sign of Global Growth and Auto Demand.” Where there are minor differences in wording, the passages quoted above follow the online version.)

Amazon Will Fund Employees to Quit and Found Delivery Startups

(p. B6) First, Amazon made two-day shipping the norm. Now, as it aims to cut that to a single day, the company is encouraging its employees to quit and start their own delivery businesses.

Under a new incentive program, announced on Monday, Amazon said that it would fund up to $10,000 in start-up costs and provide three months of pay to any employee who decides to make the jump.

The new incentives build on a program the company started last June to encourage anyone, employee or not, to get into the competitive business of last-mile package delivery.

“We’ve heard from associates that they want to participate in the program but struggled with the transition,” Dave Clark, senior vice president for worldwide operations, said in a statement. “Now we have a path.”

For the full story, see:

Niraj Chokshi. “Amazon Has A Novel Idea For Delivery.” The New York Times (Tuesday, MAY 14, 2019): B6.

(Note: the online version of the story has the date MAY 13, 2019, and has the title “Amazon Will Pay Workers to Quit and Start Their Own Delivery Businesses.”)

Spectrum Property Rights Allowed Wireless to Flourish

(p. A15) Economic activity is increasingly conducted wirelessly, under a regulatory regime developed nearly a century ago—one that favors well-heeled incumbents and does little to encourage efficient use of the spectrum. The difficulty that new entrants face in securing spectrum, along with a system that locks in existing technology, chills investment in next-generation infrastructure.

Given the exciting promise of today’s technology, how did we end up hamstrung by such a backward regulatory regime?

. . .

Mr. Hazlett cites as an example the 1930s-era drama surrounding FM radio. From the start, FM had much better sound fidelity than AM—and so threatened existing AM networks operated by NBC, CBS and AT&T’s wired long-distance telephone network. These companies used the Federal Communications Commission to hamper the development of FM and succeeded in having it moved to a different band after World War II. This rendered all existing FM equipment—purchased by consumers at no small expense—useless and limited stations’ transmission power such that their audiences became too small to sustain a competitive business. So distressing was the episode that the father of FM radio, Edwin Howard Armstrong, ended his own life in 1954. The sad saga was merely an early example of the FCC exhibiting the “capture theory” of regulation, according to which regulators and legislators enact rules nominally in the public interest but in fact designed to enrich specific interest groups.

. . .

Mr. Hazlett devotes a substantial portion of his book to arguments for reforms, the most promising of which rest on the Nobel Prize-winning work of British economist Ronald Coase. Coase showed that, absent transaction costs, well-defined assets will wind up in the hands of the entities that value them most. By assigning property rights to frequencies—thereby turning them into assets and enabling the pricing mechanism—immense value can be created from the more efficient employment of bandwidth. For years, the concept of treating bandwidth like property and distributing it through competitive auctions seemed like a pipe dream. In the 1970s, two FCC commissioners said that the odds that this approach would be adopted “were equal to ‘those on the Easter Bunny in the Preakness.’ ” Well, the Easter Bunny won, and in 1994 the FCC started auctioning wireless licenses.

. . .

. . . for consumers and the public, “The Political Spectrum” is a good reminder of how far we have come. Today few economists question the benefits of well-defined rights, flexible use and auctions. That we are debating how to implement these ideas, rather than whether to do so, is reason for cautious optimism about our wireless future.

For the full review, see:

Gregory L. Rosston. “BOOKSHELF; Unlocking the Airwaves; In regulating radio, the FCC enacted rules nominally in the public interest, but which actually enriched specific interest groups.” The Wall Street Journal (Monday, July 17, 2017): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date July 16, 2017, and has the same title as the print version.)

The book under review is:

Hazlett, Thomas W. The Political Spectrum: The Tumultuous Liberation of Wireless Technology, from Herbert Hoover to the Smartphone. New Haven, CT: Yale University Press, 2017.

A.I. Researchers’ Joke: Whenever You Ask, Real A.I. Is 30 Years in Future

On February 1, 2019, at a conference at Texas A&M, I saw a demonstration of prototypes of A.I. driverless car technology. One of the lead researchers told us that it would be 30 years before we saw real driverless cars on the road.

(p. B3) While the A.C.L.U. is ringing alarm bells about the use of video analytics now, it’s anyone’s guess how quickly the technology will advance.

“The joke in A.I. is that you ask a bunch of A.I. researchers, ‘When are we going to achieve A.I.?’ and the answer always has been, ‘In 30 years,’” Mr. Vondrick said.

For the full story, see:

Niraj Chokshi. “Intelligent ‘Robot Surveillance’ Poses Threats, A.C.L.U. Warns.” The New York Times (Friday, July 14, 2019): B3.

(Note: the online version of the story has the date July 13, 2019, and has the title “How Surveillance Cameras Could Be Weaponized With A.I.”)

“If You Do No Harm, Then You Do No Harm to the Cancer, Either”

(p. B16) James F. Holland, a founding father of chemotherapy who helped pioneer a lifesaving drug treatment for pediatric leukemia patients, died on Thursday [March 22, 2018] at his home in Scarsdale, N.Y.

. . .

“Patients have to be subsidiaries of the trial,” he told The New York Times in 1986. “I’m not interested in holding patients’ hands. I’m interested in curing cancer.”

He acknowledged that some patients become guinea pigs, and that they sometimes suffer discomfort in the effort to eradicate tumors, but he said that even those who die provide lessons for others who will survive.

“If you do no harm,” Dr. Holland said, “then you do no harm to the cancer, either.”

. . .

Dr. Holland acknowledged that while experimenting with drug treatment sometimes amounts to trial and error, the primary killer is typically the disease itself.

“The thing to remember,” he said, “is that the deadliest thing about cancer chemotherapy is not the chemotherapy.” Continue reading ““If You Do No Harm, Then You Do No Harm to the Cancer, Either””

“If You Lower the Hurdles to Innovation . . . , You’ll Get More of It”

(p. A2) You’d think from the debate raging in Washington that taxes are the key to economic growth. They aren’t. In the long run, innovation matters way more, and that depends on inspiration, experimentation and luck, not tax-law changes.

Yet presidents matter for promoting innovation even if it’s less glamorous than taxes. Their support often takes the form of directing money toward basic research or favored industries such as defense or renewable energy.

Under President Donald Trump the place to look is the regulators. Two of his appointees in particular, Food and Drug Administration Commissioner Scott Gottlieb and Federal Communications Commission Chairman Ajit Pai, have prioritized reducing regulatory hurdles to private investment as a way of boosting innovation. It’s too early to gauge their success, but the efforts merit more attention at a time when the growth debate is focused on steep, deficit-financed tax cuts.

. . .

At the FCC, Mr. Pai has targeted the “digital divide,” the gap in broadband access between some communities, especially in rural areas, and others. The share of U.S. households with a fixed broadband connection has stalled at roughly a third in recent years. Mr. Pai thinks the solution is “setting rules that maximize private investment in high-speed networks.”

Controversially, that includes a proposed rollback of his predecessor’s imposition of utility-like regulation so that internet service providers (ISPs) adhere to “net neutrality”—charging all content providers the same to access their networks. Without those limitations, he reckons ISPs will have more incentive to expand capacity and thus access; critics worry this will favor rich, established content providers over innovative newcomers.

. . .

. . . , Mr. Gottlieb’s and Mr. Pai’s theory is that if you lower the hurdles to innovation in specific sectors, you’ll get more of it. It offers a potentially more tangible payoff than fiddling with the tax code.

For the full commentary, see:

Greg Ip. “CAPITAL ACCOUNT; Why Innovation Tops Tax Cuts.” The Wall Street Journal (Thursday, October 26, 2017): A2.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Oct. 25, 2017, and the title “CAPITAL ACCOUNT; Trump’s Regulators Aim to Boost Growth by Lowering Hurdles to Innovation.”)

To Be Dangerous with Crispr Takes a Lot of Genetics Knowledge

(p. A11) “I frankly have been flabbergasted at the pace of the field,” says Jennifer Doudna, a Crispr pioneer who runs a lab at the University of California, Berkeley. “We’re barely five years out, and it’s already in early clinical trials for cancer. It’s unbelievable.”

. . .

Scientists have fiddled with genes for decades, but in clumsy ways.

. . .

Crispr is much more precise, as Ms. Doudna explains in her new book, “A Crack in Creation.” It works like this: An enzyme called Cas9 can be programmed to latch onto any 20-letter sequence of DNA. Once there, the enzyme cuts the double helix, splitting the DNA strand in two. Scientists supply a snippet of genetic material they want to insert, making sure its ends match up with the cut strands. When the cell’s repair mechanism kicks in to fix the cut, it pastes in the new DNA.

. . .

A . . . Crispr worry is that it makes DNA editing so easy anybody can do it. Simple hobby kits sell online for $150, and a community biotech lab in Brooklyn offers a class for $400. Jennifer Lopez is reportedly working on a TV drama called “C.R.I.S.P.R.” that, according to the Hollywood Reporter, “explores the next generation of terror: DNA hacking.”

Ms. Doudna provides a bit of assurance. “Genetics is complicated. You have to have quite a bit of knowledge, I think, to be able to do anything that’s truly dangerous,” she says. “There’s been a little bit of hype, in my opinion, about DIY kits and are we going to have rogue scientists—or even nonscientists—randomly doing crazy stuff. I think that’s not too likely.”

For the full interview, see:

Peterson, Kyle, interviewer. “THE WEEKEND INTERVIEW; The Gene Editors Are Only Getting Started; Would you eradicate malaria-carrying insects? Change your baby’s DNA? Scientists soon may have the power to do both.” The Wall Street Journal (Saturday, July 8, 2017): A11.

(Note: ellipses added.)

(Note: the online version of the interview has the date July 7, 2017, and the same title as the print versio.)

Doudna’s book, mentioned above, is:

Doudna, Jennifer A., and Samuel H. Sternberg. A Crack in Creation: Gene Editing and the Unthinkable Power to Control Evolution. New York: Houghton Mifflin Harcourt, 2017.

Clayton Christensen Wrongly Predicted Bombardier Would Disrupt Boeing

Clayton Christensen and co-authors predicted in Seeing What’s Next that Bombardier was well-positioned to use disruptive innovation to leapfrog Boeing and Airbus.

(p. B8) Mitsubishi Heavy Industries Ltd. said it would acquire Bombardier Inc.’s regional-jet business for $550 million in a transaction that puts the companies on different paths in the aviation sector.

The deal unveiled Tuesday [June 25, 2019] marks the Canadian company’s exit from the commercial passenger-aircraft business following failed bets that it could compete with Airbus SE and Boeing Co. in the 100-seat single-aisle plane category.

Bombardier has restructured its aviation division over the past two years, highlighted by its joint venture with Airbus that put the European plane maker in charge of the production and sales of the 110- to 130-seat planes that the Montreal company had originally conceived as the CSeries. Those jets are now rebranded as the Airbus A220.

For the full story, see:

Vieira, Paul. “Bombardier to Sell Jet Unit.” The Wall Street Journal (Wednesday, June 26, 2019): B8.

(Note: bracketed date added.)

(Note: the online version of the story has the same date June 25, 2019, and has the title “Mitsubishi to Acquire Bombardier’s Regional Jet Unit for $550 Million.”)

The Christensen book mentioned above, is:

Christensen, Clayton M., Scott D. Anthony, and Erik A. Roth. Seeing What’s Next: Using Theories of Innovation to Predict Industry Change. Boston, MA: Harvard Business School Press, 2004.