Category: Entrepreneurship

Italian Bureaucracy Leaves Innovative Restaurateur Feeling “Psychologically Violated”

(p. A7) ROME–The campaign leading up to Italy’s national elections on March 4 [2018] has featured populist promises of largess but neglected what economists have long said is the real Italian disease: The country has forgotten how to grow.
Take Gianni Angelilli’s pizzeria in downtown Rome. He uses an innovative dough mix and flexible cooking methods, drawing long lines and rave reviews. But Italy is too bureaucratic, the locals have no money and his ambition isn’t what it used to be, Mr. Angelilli said. If he opens more outlets, they will be abroad.
“Now, foreigners have more desire to eat well than Italians,” he said. “Italy is dead. Italy is finito.”
. . .
Italian politics have become measurably more chaotic since the country’s old party system–largely frozen during the Cold War–collapsed amid corruption scandals in the early 1990s. Data collected by Einaudi economist Luigi Guiso and others show that since 1992, coalitions have become more likely to crumble, lawmakers to defect and governments to need confidence votes in parliament. Politicians jostling for attention push more frequent, longer and more-complicated legislation.
“An excess has cluttered the bureaucratic machine,” says Mr. Guiso. “The country has become cumbersome.”
Yet the weakness of transient politicians has paradoxically made the public administration more powerful, at the same time as constant legal changes immobilize it, he says.
Mr. Guiso has practical experience. He is helping to set up a government-supported program to send young Italians to learn about entrepreneurship in Silicon Valley and at U.S. business schools, and he said Italian civil servants decided a tender offer inviting U.S. organizations to participate could be published in Italian only. After much persuasion, the civil servants agreed to publish the tender in English too–but insisted all applications must be in Italian, said Mr. Guiso. He said political friends apologized, saying there was nothing they could do.
Mr. Angelilli said his encounters with Italian bureaucracy while running his Pinsere pizzeria have left him feeling “psychologically violated.” He said he had to pay a fine recently because his oven’s air extraction, made to comply with European, national and regional laws, ran afoul of new city rules.

For the full story, see:
Marcus Walker and Giovanni Legorano. “The Real Italian Job: Rev Up Productivity.” The Wall Street Journal (Wednesday, Feb. 28, 2018): A7.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the article has the date Feb. 27, 2018, and has the title “Italy: The Country That Forgot How to Grow.”)

Decline in Startups Reduces Labor Market Dynamism

DynamismDeclineGraph2018-03-02.pngSource of graphs: online version of the NYT commentary quoted and cited below.

(p. B1) . . . a broad sweep of statistics reveals a peculiar weariness spreading through the economy. Belying breathless headlines about the fabulous opportunities that technology is about to bestow on society, it suggests that many rich market democracies have lost much of their dynamism. Their companies are getting old, and their labor markets are getting stuck. Productivity growth has slumped. And many workers in their prime are peeling off from the labor force.
. . .
(p. B4) . . . , the economy’s ability to generate and support new businesses — agents of creative destruction that bring new products and methods into the marketplace — appears to be faltering across the world. In the United States, the rate of company formation is half what it was four decades ago. And it is slowing in many industrialized countries.
. . .
In a study published on Tuesday [February 6, 2018] by the Hamilton Project at the Brookings Institution, Jay Shambaugh, Ryan Nunn and Patrick Liu explore what economists have figured out about the American economy’s inertia and the fallout for wages and living standards.
The evidence paints a distinct picture of decline: Fewer start-ups mean fewer new ideas and fewer young, productive businesses to replace older, less productive ones. Researchers have found that the decline in companies entering the market since 1980 has trimmed productivity growth by about 3.1 percent.
The dearth of new businesses is also cutting off one of the main paths to workers’ advancement: the outside job offer. Changing jobs allows workers to shift to positions in which they are more productive, and better paid. But labor market fluidity — job switching, creation and destruction — has been declining since the 1980s.
Clear though the pattern may be, the researchers acknowledge that we haven’t yet figured out what is holding the economy’s dynamism back. “This is one of those big, economywide trends,” Mr. Shambaugh told me. “There is room for a lot of stories.”

For the full commentary, see:
Porter, Eduardo. “ECONOMIC SCENE; What to Worry About: Decrease in Start-Ups Is a Sign of Stagnation.” The New York Times (Wednesday, February 7, 2018): B1 & B4.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the commentary has the date FEB. 6, 2018, and has the title “ECONOMIC SCENE; Where Are the Start-Ups? Loss of Dynamism Is Impeding Growth.”)

The paper by Shambaugh, Nunn, and Liu, that is mentioned above, is:
Shambaugh, Jay, Ryan Nunn, and Patrick Liu. “How Declining Dynamism Affects Wages.” In Revitalizing Wage Growth Policies to Get American Workers a Raise, edited by Jay Shambaugh and Ryan Nunn, Washington, D.C.: Brookings, 2018, pp. 11-23.

Blockchain May Bring Property Rights to the Poor

(p. A15) The great economic divide in the world today is between the 2.5 billion people who can register property rights and the five billion who are impoverished, in part because they can’t. Consider what happens without a formal system of property rights: Values are reduced for privately owned assets; wages are devalued for workers using these assets; owners are denied the ability to use their assets as collateral to obtain credit or as a credential to claim public services; and society loses the benefits that accrue when assets are employed for their highest and best purpose.
. . .
Fortunately there is a new technology that could make a global property-rights registration system feasible. Patrick Byrne, an e-commerce pioneer and the CEO of Overstock.com, has committed a professional staff and significant resources to modernizing the collection and maintenance of property-rights records on a global scale. Blockchain is an especially promising technology because of its record-keeping capacity, its ability to provide access to millions of users, and the fact that it can be constantly updated as property ownership changes hands.
If Blockchain technology can empower public and private efforts to register property rights on a single computer platform, we can share the blessings of private-property registration with the whole world. Instead of destroying private property to promote a Marxist equality in poverty, perhaps we can bring property rights to all mankind. Where property rights are ensured, so are the prosperity, freedom and ownership of wealth that brings real stability and peace.

For the full commentary, see:
Phil Gramm and Hernando de Soto. “How Blockchain Can End Poverty; Two-thirds of the world’s population lacks access to a formal system of property rights.” The Wall Street Journal (Friday, Jan. 26, 2018): A15.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Jan. 25, 2018.)

Rival Retailers Failed in Effort to Cut Off Ikea’s Supplies

(p. B5) Ingvar Kamprad, born on a farm in the rock-strewn Swedish region of Småland, got his start as a merchant at around age 5 by buying matches in bulk and reselling them to neighbors.
He went on to pull off a rare feat: Creating a global retailing powerhouse, the furniture chain IKEA, with over 400 stores, in a business that generally has defied globalization. IKEA’s furniture has delighted bargain seekers for decades and made millions of dorm rooms and first apartments habitable, despite maddening the many customers who found the assembly instructions baffling.
. . .
One of his most successful notions was that furniture could be shipped and warehoused much more cheaply in disassembled form.
. . .
Rival retailers in Sweden, shocked by IKEA’s low prices, pressured furniture makers to cut off supplies to Mr. Kamprad’s company. That served only to make IKEA stronger as Mr. Kamprad found he could buy furniture much more cheaply from Polish plants. The search for foreign suppliers also helped IKEA turn itself into an international company.
. . .
Mr. Kamprad remained a penny-pincher, flying economy class and lecturing his employees that waste was sinful, according to “Leading by Design,” a 1999 biography by Bertil Torekull.

For the full obituary, see:
James R. Hagerty and Saabira Chaudhuri. “IKEA’s Founder Dies at 91.” The Wall Street Journal (Monday, January 29, 2018): B5.
(Note: ellipses added.)
(Note: the online version of the obituary has the date Jan. 28, 2018, and has the title “Ingvar Kamprad Built Global IKEA Chain From a Single Furniture Store in Sweden.”)

The autobiography of Kamprad, mentioned above, is:
Kamprad, Ingvar, and Bertil Torekull. Leading by Design: The Ikea Story New York: HarperCollins, 1999.

Occupational Licensing Hurts Military Spouses

(p. A15) Heather Kokesch Del Castillo launched a dietary advice business in Monterey, Calif., in 2014. The business grew and Ms. Del Castillo eventually established a nationwide client base as a “health coach.” But when her husband, who is in the Air Force, was transferred to a base in Florida, her business hit a roadblock. A Florida Department of Health investigator showed up at the door of their new home with a cease-and-desist letter and a $750 fine.
After nearly two years of operating her business in Florida, Ms. Del Castillo learned that she had run afoul of a law requiring any person offering dietary advice to possess a state-issued license. Qualifying for that permit requires a bachelor’s degree in dietetics, a 900-hour internship, a passing grade on an exam administered by the state Commission on Dietetic Registration, and a $355 fee. A licensed dietitian had tipped off the Health Department that Ms. Del Castillo was giving unauthorized advice. She retained the Institute for Justice, a public-interest law firm, to fight the law that stripped her of her livelihood.
State licensing laws pose a particular burden on military spouses like Ms. Del Castillo. About 1 in 4 Americans need licenses to perform their occupations. In some states, florists, taxidermists and even fortune-tellers need licenses to operate. Far too often, these licenses serve less as safeguards of public health and safety than as barriers to entry. In many cases, the state-appointed boards that issue licenses are stocked with industry insiders seeking to restrict competition.
. . .
Military spouses were 10 times as likely to have moved to a new state in the past year than the average American, according to a combined 2012 study by the Treasury and Defense departments. Surveys suggest that anywhere from 35% to 50% of military spouses work in professions that require licensure, and nearly 75% of them would need to be relicensed upon transferring to a new state. Perhaps as a result, the unemployment rate for military spouses is 16%, while the national unemployment rate is only 4.1%

For the full commentary, see:
Shoshana Weissmann and C. Jarrett Dieterle. “Why Do You Need a College Degree to Give Diet Advice?; State licensing laws overly burden military spouses, who move frequently only to find they can’t work.” The Wall Street Journal (Thursday, February 1, 2018): A15.
(Note: ellipsis added.)
(Note: the online version of the obituary has the date Jan. 31, 2018.)

Virtual Reality Was Intended as a Complement to Physical Reality, Not as a Substitute

(p. A17) The illusion of presence is what drove Mr. Lanier from the start. He envisioned VR not as an alternative to physical reality but as an enhancement–a way to more fully appreciate the wonder of existence. More conventional individuals, their senses dulled by the day-to-day, may be drawn to virtual reality because it seems realer than real; he considered it a new form of communication. “I longed to see what was inside the heads of other people,” he writes. “I wanted to show them what I explored in dreams. I imagined virtual worlds that would never grow stale because people would bring surprises to each other. I felt trapped without this tool. Why, why wasn’t it around already?”
“Dawn of the New Everything” is full of such self-revelatory moments. The author grew up an only child in odd corners of the Southwest, first on the Texas-Mexico border, then in the desert near White Sands Missile Range. When he was nine, his mother, a Holocaust survivor, was killed in a car crash on the way home from getting her driver’s license. The tract house they’d bought burned down the day after construction was completed. The insurance money never came, so Jaron and his father lived in tents in the desert until they could afford to build a real home–which turned out to be a mad concoction of geodesic domes of Jaron’s own design. They called it Earth Station Lanier.
. . .
Lacking a degree from high school, never mind college, he nonetheless parlayed his virtual-reality obsession into a company, VPL Research, that for a few years in the late ’80s made VR seem real, if only in a lab setting. Then came board fights and bankruptcy, and VR disappeared from public view for more than 20 years.
What went wrong at VPL? Unfortunately, you won’t find out here. Mr. Lanier warns us he isn’t going to deliver a blow-by-blow; instead we get a disjointed sequence of half-remembered anecdotes. What does come through is his ambivalence about going into business at all, and his even deeper ambivalence toward writing about it.

For the full review, see:
Frank Rose. “BOOKSHELF; The Promise of Virtual Reality; The story of VR, the most immersive communications technology to come along since cinema, as told by two of its pioneers.” The Wall Street Journal (Tuesday, February 6, 2018): A17.
(Note: ellipsis added.)
(Note: the online version of the review has the date Feb. 5, 2018, and has the title “BOOKSHELF; Review: The Promise of Virtual Reality; The story of VR, the most immersive communications technology to come along since cinema, as told by two of its pioneers.”)

The book under review, is:
Lanier, Jaron. Dawn of the New Everything: Encounters with Reality and Virtual Reality. New York: Henry Holt & Company, 2017.

Reporters Celebrate Union Before Losing Jobs

(p. A23) A week ago, reporters and editors in the combined newsroom of DNAinfo and Gothamist, two of New York City’s leading digital purveyors of local news, celebrated victory in their vote to join a union.
On Thursday [November 2, 2018], they lost their jobs, as Joe Ricketts, the billionaire founder of TD Ameritrade who owned the sites, shut them down.

For the full story, see:
ANDY NEWMAN and JOHN LELAND. “DNAinfo and Gothamist Shut Down After Workers Join a Union.” The New York Times (Tuesday, November 3, 2017): A23.
(Note: bracketed date added.)
(Note: the online version of the story has the date NOV. 2, 2017, and has the title “DNAinfo and Gothamist Are Shut Down After Vote to Unionize.” The online version says that the page number of the New York edition was A21. The page number of my edition, probably midwest, was A23.)

Entrepreneur Claims Intel Is Not “Doing What Comes Next”

(p. B3) SAN FRANCISCO — Over 28 years at the giant computer chip maker Intel, Renée James climbed to its No. 2 position, becoming one of Silicon Valley’s prominent female leaders.
Now she is taking aim at Intel’s most lucrative business, one that she helped build.
Ms. James, who announced in 2015 that she would resign from Intel, on Monday revealed a start-up backed by the private equity firm Carlyle Group to sell chips to handle calculations in servers. Those computers run most internet services and corporate back-office operations.
. . .
Ms. James emphasized her respect for her former employer and played down potential competition. She said her new company, Ampere, was designing chips for new, specialized jobs at cloud services that aren’t Intel’s primary focus.
“I think they’re the best in the world at what they do,” Ms. James said of Intel. “I just don’t think they’re doing what comes next.”
. . .
Ms. James learned management skills from Andrew Grove, the acclaimed former Intel chief. Before he died in 2016, she said, Mr. Grove encouraged her to follow her dream of a chip start-up — a plan with parallels to the 1968 founding of Intel as a breakaway from a chip pioneer, Fairchild Semiconductor.
“He said, ‘I just want you to know, this is a really hard job,'” Ms. James recalled. “I said: ‘I know. But it’s so much fun.'”
Her venture is the latest in a series of largely unsuccessful attempts, dating back more than seven years, to shake up the server market with technology licensed by ARM Holdings that is used as a mainstay of smartphones. One selling point is reduced power consumption, a hot topic in data centers.

For the full story, see:
DON CLARK. “Intel’s Former No. 2 Aims At Lucrative Chip Market.” The New York Times (Tuesday, February 6, 2018): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date FEB. 5, 2018, and has the title “She Was No. 2 at Intel. Now She’s Taking Aim at the Chip Maker.”)

Obstacles and Conflicts Were Too Much for Lanier’s “VPL Research” Startup

(p. 11) Lanier’s book is, . . . , intimate and idiosyncratic. He carries us through his quirky and fascinating life story, with periodic nerdy side trips through his early thinking on more technical aspects of virtual reality. If you liked Richard Feynman’s autobiographical “Surely You’re Joking, Mr. Feynman” but thought it was rather self-indulgent, this book will prompt similar reactions. You could almost say that Lanier’s vivid and creative imagination is a distinct character in this book, he discusses it so much. Midway through, Feynman himself makes an appearance, and it seems as if we’re meeting an old friend.
Lanier has been credited with inventing the term “virtual reality,” and he founded one of the original companies to produce it, VPL Research. He goes over the technology’s history in detail, outlining not only the obstacles to getting consistent hardware but some personalities and interpersonal conflicts that ultimately led to his company’s breaking up. He also demonstrates the role personal connections and interactions play in Silicon Valley.

For the full review, see:
CATHY O’NEIL. “Enter the Holodeck.” The New York Times Book Review (Sunday, February 4, 2018): 11.
(Note: ellipsis added.)
(Note: the online version of the review has the date JAN. 30, 2018.)

The book under review, is:
Lanier, Jaron. Dawn of the New Everything: Encounters with Reality and Virtual Reality. New York: Henry Holt & Company, 2017.

“We Have to Entrepreneurialize Society”

Economist Klaus Schwab is the founder and organizer of the annual Davos gatherings of government and corporate insiders.

(p. R15) MR. BAKER: There has been a tremendous growth in industrial concentration, big companies getting bigger. Small companies are essentially being squeezed out. There’s a concern that it’s not just bureaucracies and supernational institutions, but companies themselves, are just too big and too remote. What can be done to address those concerns?
PROF. SCHWAB: We have to entrepreneurialize society. If we look where jobs will come from, they will come mainly from new enterprises, from medium-size enterprises. So companies and countries have to create an ecosystem which allows young people to create their own companies. We have to create new Facebook s, new Googles, and so on. Then we have the necessary dynamic situation which maintains a certain degree of competition in the economy.

For the full interview, see:
Gerard Baker, interviewer. “Nationalism vs. Globalism: A Question of Balance; Klaus Schwab, executive chairman of the World Economic Forum, on how to deal with a fractured world.” The Wall Street Journal (Tuesday, Jan. 23, 2018): R15.
(Note: bold in original.)
(Note: the online version of the interview has a date of Jan. 22, 2018.)

Taboo Geoengineer Outlaws Could Counter Global Warming

(p. D3) A quarter-century ago, Pinatubo, a volcano in the Philippines, blew its top in a big way: It spewed a cubic mile of rock and ash and 20 million tons of sulfur dioxide gas into the atmosphere. The gas spread around the world and combined with water vapor to make aerosols, tiny droplets that reflected some sunlight away from the Earth. As a result, average global temperatures dropped by about one degree Fahrenheit for several years.
Powerful volcanic eruptions like Pinatubo’s in 1991 are one of the biggest natural influences on climate. So NASA researchers and other scientists are planning a rapid-response program to study the next big one.
But the climate impact of a Pinatubo-size eruption is also a natural analog of an idea that has existed on the fringes of science for years: geoengineering, or intervening in the atmosphere to deliberately cool the planet.
One geoengineering approach would use high-flying jets to spray similar chemicals in the stratosphere. So by studying the next big volcanic eruption, scientists would also gain insights into how such a scheme, known as solar radiation management, or S.R.M., might work.
“This is important if we’re ever going to do geoengineering,” said Alan Robock, a Rutgers University researcher who models the effects of eruptions and who has been involved in discussions about the rapid-response project.
. . .
Geoengineering has long had an outlaw image among much of the scientific community, viewed as risky last-resort measures to solve climate problems that would be better dealt with by cutting greenhouse gas emissions. Even discussing geoengineering concepts has long been considered taboo among many scientists.
. . .
But in the past few years, some scientists and policymakers have begun to argue for limited direct research into geoengineering concepts to better understand their potential as well as risks, and be better prepared should global warming reach a point where some kind of emergency action were deemed necessary.
A few scientists have proposed small-scale outdoor experiments to study aspects of solar radiation management, and last month the American Geophysical Union, one of the nation’s largest scientific societies, endorsed the idea of some research into what it called “climate intervention.”

For the full story, see:
Henry Fountain. “A Volcanic Idea for Cooling the Earth.” The New York Times (Tuesday, February 6, 2018): D3.
(Note: ellipses added.)
(Note: the online version of the story has the date FEB. 1, 2018, and has the title “The Next Big Volcano Could Briefly Cool Earth. NASA Wants to Be Ready.”)