Free Markets – Page 31 – artdiamondblog.com

“Total Freedom”

On Monday, May 28th, protesters at the G8 meeting in Hamburg, Germany protested for "Total Freedom" and against globalization. Source of this version of the banner picture: http://www.infoshop.org/inews/article.php?story=20070528131819740

A photo fairly similar to the one above was run in the print version of the NYT on Tuesday, May 29, 2007, but was not included in the online version. It appeared by itself, without an attached article. But, referring to the "Total Freedom" banner, it had the following wonderfully ironic caption:

Except, Perhaps, When It Comes to Trade

Thousands of protesters marched against globalization on Monday in Hamburg, Germany, where the Group of Eight industrialized nations will meet next week. After the largely peaceful rally, some protesters clashed with police and 21 were arrested. The rest, however, were totally free.

Source of the NYT version of the banner picture, and of the caption:

The New York Times (Tues., May 29, 2007): A3.

(Note: caption title was in bold, and in larger font than the body of the caption, in the original.)

Must-Visit London Attraction “Was Entirely Commercially Funded”

The most elegant big wheel in the world, standing 443 feet high, . . .

Unlike old-style Ferris wheels, where the cars hang inside the structure as it rotates, here the pods are on the outside so as to obtain the best view. Their rotation is not dependent on gravity, but on electric motors synchronized by computerized radio signals sent from the hub. Finally, the whole wheel is hung from one side only, so as to hover over the river. This meant some nifty foundation work. Two separate forests of concrete piles — one taking the Eye’s weight, the other stopping it from toppling over sideways — plunge 108 feet into the ground. . . .

As with all the best engineering structures, building it became a public spectacle. It was floated up the Thames in segments on giant barges, complete with the world’s largest floating cranes in attendance. It was then assembled flat on pontoons in the river, its giant central spindle was attached to the perimeter by a skein of steel cables — the suspension-bridge variety, but acting like bicycle spokes — and then came an unforgettable week as the whole wheel, weighing 1,780 tons without its 32 capsules (each a further 10 tons), was hauled slowly from the horizontal to an acute angle. Where it stayed, leaning alarmingly, for several days while the final work was done to bring it to its vertical position.

. . .

Even more remarkably at a time when ambitious architectural projects funded by a national lottery were being built all over Britain, the London Eye — costing £85 million, or about $150 million at the time — was entirely commercially funded. Today it is a must-visit attraction in the British capital, carrying an average of 10,000 visitors a day. Each trip is one 30-minute revolution.

It opened in late 2000 and immediately became exactly the iconic object that the Millennium Dome downstream had tried and failed to be. That was perhaps unfair — the Dome was also a prodigious feat of engineering and architecture — but in the end what decides these things is the public response.

And the public has always responded to a buccaneering spirit in engineering, the idea that enormous risks are being taken, that enormous reward is the prize, but that total disaster is a looming possibility. That, in short, is the achievement of Mr. Marks and Ms. Barfield’s London Eye: The process of making it was every bit as compelling as the ride on the finished product. They are diffident people — the way they tell it, it was just a matter of A following B — but they surely fall into the category of designer as hero (and heroine). In this sense they are in the tradition of the great 19th-century British engineer Isambard Kingdom Brunel, who with his extraordinarily ambitious railways and steamships overcame obstacles with flair and style. . . .

For the full commentary, see:

HUGH PEARMAN. "MASTERPIECE; Anatomy of a Classic; Reinventing the Wheel; The London Eye is an engineering marvel with tourist appeal." The Wall Street Journal (Sat., May 26, 2007): P14.

(Note: ellipses added.)

Private Companies Beat Government in Accessible and Affordable Health Care

A CVS pharmacy MinuteClinic. Source of photo: online version of the WSJ article cited below.

It’s Friday evening and you suspect that your child might have strep throat or a worsening ear infection. Do you bundle him up and wait half the night in an emergency room? Or do you suffer through the weekend and hope that you can get an appointment with your pediatrician on Monday — taking time off your job to drive across town for another wait in the doctor’s office?

Every parent has faced this dilemma. But now there are new options, courtesy of the competitive marketplace. You might instead be able to take a quick trip on Friday night to a RediClinic in the nearby Wal-Mart or a MinuteClinic at CVS, where you will be seen by a nurse practitioner within 15 minutes, most likely getting a prescription that you can have filled right there. Cost of the visit? Generally between $40 and $60.

These new retail health clinics are opening in big box stores and local pharmacies around the country to treat common maladies at prices lower than a typical doctor’s visit and much lower than the emergency room. No appointment necessary. Open daytime, evenings and weekends. Most take insurance.

Much like the response to Hurricane Katrina, private companies are far ahead of the government in answering Americans’ needs, this time for more accessible and more affordable health care. Political leaders across the country seeking to expand government’s role in health care should take note.

For the full commentary, see:

GRACE-MARIE TURNER. "Customer Health Care." The Wall Street Journal (Mon., May 14, 2007): A17.

Free Trade with China Benefits Both U.S. and China

The image above is from a full-page ad that is scheduled to run in today’s eastern edition of the Wall Street Journal. I am one of the 1,028 economists who agreed to have their names attached to the petition.

Here is the petition:

PETITION
Concerning Protectionist Policies Against China

We, the undersigned, have serious concerns about the recent protectionist sentiments coming from Congress, especially with regards to China.

By the end of this year, China will most likely be the United States’ second largest trading partner. Over the past six years, total trade between the two countries has soared, growing from $116 billion in 2000 to almost $343 billion in 2006. That’s an average growth rate of almost 20% a year.

This marvelous growth has led to more affordable goods; higher productivity; strong job growth; and a higher standard of living for both countries. These economic benefits were made possible in large part because both China and the United States embraced freer trade.

As economists, we understand the vital and beneficial role that free trade plays in the world economy. Conversely, we believe that barriers to free trade destroy wealth and benefit no one in the long run. Because of these fundamental economic principles, we sign this letter to advise Congress against imposing retaliatory trade measures against China.

There is no foundation in economics that supports punitive tariffs. China currently supplies American consumers with inexpensive goods and low-interest rate loans. Retaliatory tariffs on China are tantamount to taxing ourselves as a punishment. Worse, such a move will likely encourage China to impose its own tariffs, increasing the possibility of a futile and harmful trade war. American consumers and businesses would pay the price for this senseless war through higher prices, worse jobs, and reduced economic growth.

We urge Congress to discard any plans for increased protectionism, and instead urge lawmakers to work towards fostering stronger global economic ties through free trade.

“I Fly with Leslie”

A poster that is displayed in some Wall Street Journal offices in solidarity with a Bancroft family member who has openly expressed doubts about Rupert Murdoch’s proposed purchase of the Journal. Source of the image: online version of the NYT article cited below.

A lot of the news media imitate each other in viewpoint and content. The Wall Street Journal is fresh and innovative, and frequently gives us important news that is new.

And there have been times throughout recent decades when the editorial page of the Journal was one of the few voices for truth, justice and freedom. It would be a great loss for that voice to be silenced.

On the other hand, I have noted in an earlier entry, that the business side of the Journal is in need of improvement.

I do not know if in the end, the Murdoch bid is the best chance for the long-run survival of what is good about the Journal. But I do wish the Journal, and the Journal‘s journalists, well.

(p. C1) On May 14, more than 100 reporters, editors and executives clustered in The Wall Street Journal’s main newsroom to mark the retirement of Peter R. Kann, the longtime leader of their corporate parent, Dow Jones & Company.

Mr. Kann, in rolled-up shirtsleeves, was typically self-effacing about his own contributions to the company. But the celebration of the past was muted by worry about The Journal’s future. A few weeks earlier, Rupert Murdoch’s News Corporation had offered $5 billion to buy Dow Jones. The Bancroft family, owners of a controlling stake in the company, rebuffed the offer at first, but there were signs that some of them were wavering.

Mr. Kann, who had been advising the family against selling, expressed hope that Mr. Murdoch would not prevail, using an image of The Journal as a citadel trying to repel an invasion by tabloid barbarians.

“The drawbridge is up,” Mr. Kann told the group. “So far, so good.”

For employees at Dow Jones, the 11 weeks since they learned of the Murdoch offer have been a wrenching time, raising the prospect of fundamental changes at an organization that had already had its fill of big changes in the last couple of years — with Mr. Kann being replaced by Richard F. Zannino as chief executive, with Marcus W. Brauchli taking over from Paul E. Steiger as top editor; and with a shift of its mission, by adding a Saturday paper and more lifestyle articles to appeal to new advertisers, and investing heavily in its digital properties.

. . .

(p. C12) The anti-Murdoch forces enjoyed one of their brief lifts on June 29 when The Journal reported that Leslie Hill, a Bancroft family member, had grave reservations about selling to Mr. Murdoch. Someone enlarged The Journal’s dot drawing of Ms. Hill, a retired airline pilot, adding the words “I Fly with Leslie” above her face. Copies of the makeshift poster appeared in Journal offices around the country.

. . .

As the chances of an alternative have appeared to wane, more reporters and editors have polished their résumés and approached rival publications about jobs. Some have even talked of starting their own business news Web site.

Many voiced disappointment in the Bancrofts, the family that has owned the company for more than a century and taken great pride in it, for not playing a leading role in running it for more than 70 years.

“We understand that for the Bancrofts this is a choice between getting much richer, and holding onto something because they believe in it,” a reporter said. “What they may not realize is that many of us in the newsroom have made the same choice. There are a lot of people here who could be traders or lawyers, people with M.B.A.’s, who could be making a lot more money. To us, this is not an abstract choice.”

For the full story, see:

RICHARD PÉREZ-PEÑA. "At The Gates; Murdoch’s Arrival Worries Journal Employees." The New York Times (Thurs., July 19, 2007): C1 & C12.

Rupert Murdoch. Note that the image is a tribute, or humorous small jab at, the hallmark image style of the Wall Street Journal, in which photographs are re-done by artists into an example of something like pointillism. (True also of the poster image above.) Source of the image: online version of the NYT article cited above.

FDA Rejects Long-Lasting Disappearance of Disease as a “Theoretical Construct”

Consider the FDA’s handling of Genasense, a new drug for melanoma and chronic lymphocytic leukemia (CLL), two often terminal forms of cancer. The drug is being developed by Genta, a small, innovative company with only one approved drug and limited financial resources. Despite compelling evidence that Genasense is making progress in fighting both diseases, the FDA appears determined to kill the drug.

In the case of the melanoma application, instead of reviewing the clinical-trial data in accordance with usual methods (which showed positive results), the FDA chose a nonstandard statistical approach aimed at discrediting the results. The agency used this analysis in its briefing to its advisory committee, claiming that the drug might not be effective. The committee then relied on that information to vote against approval.

. . .

The FDA’s inane answer to the CLL experts was that the long-lasting disappearance of disease in patients taking Genasense was a "theoretical construct" and not grounds for approval.

The experts explained to the FDA that complete responses in advanced CLL patients are the medical equivalent of the Holy Grail. The FDA finally agreed, but was unimpressed with emerging data showing responders to Genasense living longer than responders in the control group.

The experts were unanimous in advising that Genasense should be approved, but the FDA was unmoved. The agency’s Dr. Pazdur suggested that Genta could make the drug available as an unapproved treatment through an expanded access program — this from a regulator fond of stating that the best way to get a drug to patients in need is through approval! In this case the agency was saying to Genta: We are not going to approve your drug, but any patient who needs it can have it so long as you give it away.

. . .

The FDA’s handling of Genasense lays bare the all too common, aggressive incompetence of the FDA’s cancer-drug division and should lead to an immediate examination of its policies and leadership, followed by swift corrective action.

As for the FDA’s belief that their power to control us and even deny us the pursuit of life itself is unlimited under the Constitution, we can only hope the appeals court disagrees. An agency that blocks progress against deadly diseases — while arguing that its power to do so is above challenge — is in dire need of a court supervised review.

For the full commentary, see:

STEVEN WALKER. "Drug Czars." The Wall Street Journal (Fri., May 4, 2007): A15.

(Note: ellipses added.)

Kirkcaldy’s Current Native-Son Would Do Well to Remember Kirkcaldy’s 18th Century Native Son

In Kirckcaldy, Gordon Brown, the man on the right, tries to persuade the natives to vote for the Labor Party. Source of the photo: online version of the NYT article cited below.

Many years ago, we took the train from Edinburgh to spend a few hours in Kirkcaldy, the birthplace of Adam Smith. I was surprised at how little there was to honor Smith in the town where he was born and raised. There was a small cafe/theatre named after Smith. A small crystal shop sold some shot glasses with Smith’s image engraved on them. And there was a small plaque, above a no-parking sign, on the main street, at the spot where Smith’s family home had been.

I remember asking a very polite young father with two or three small children in tow, why there was so little of Smith in Kirckaldy? With a twinge of something like regret, he said that everyone in that part of Scotland supported Labor, and they saw Smith as supporting capitalism, and so did not like him much.

It was a crowded Saturday shopping day when Jeanette took my picture in front of the small plaque. Incredulous passers-by turned and glanced in my direction, probably wondering why the crazy American wanted his picture taken next to a no-parking sign.

For the sake of Kirkcaldy, and Britain, let us hope that Gordon Brown has read a bit of the work of his fellow Kirkcaldy native son:

(p. A10) KIRKCALDY, Scotland, April 30 — Gordon Brown, Britain’s presumed prime minister-to-be, is usually associated with a somewhat dour manner and a mastery of statistics. But here, he displays other skills — a bolt-on smile and a ready handshake to work sparse crowds between the discount stores on the High Street, asking parents with strollers whether their new babies are keeping them awake at night, and inquiring whether the men support the local Raith Rovers soccer team.

. . .

“This is a big choice on Thursday, between those who want to break up Britain and those who want to build up Scotland,” Mr. Brown, currently Britain’s chancellor of the exchequer, told students at Adam Smith College, named for the 18th-century economist who was born here.

. . .

Mr. Brown, who is not standing in these elections, came to town, alongside the choppy waters of the Firth of Forth, to support the Scottish Labor campaign and resist the nationalists.

“I do not think the Scottish people want to see the breakup of the union” that makes up Britain, he said here in Kirkcaldy (pronounced kerr-CUDDY).

But advocates of independence say it would propel Scotland to a bright future, as viable as any other small European state.

For the full story, see:

ALAN COWELL. "Elections in Britain Reveal a Scottish Line in the Sand." The New York Times (Weds., May 2, 2007): A10.

(Note: ellipses added.)

Source of the map: online version of the NYT article cited above.

Art Diamond in Kirkcaldy in 1994 at location (I think on High Street) where Adam Smith’s boyhood home used to be. (Photo by Jeanette Diamond.)

Mugabe Prints More Money and Beats Up Shopkeepers, as Inflation Soars: More on Why Africa is Poor

"Inflation made food cost a fortune in Harare this week. The government imposed controls that required vendors to sell some items below cost." Source of caption and photo: online version of the NYT article cited below.

JOHANNESBURG, July 3 — Zimbabwe’s week-old campaign to quell its rampant inflation by forcing merchants to lower prices is edging the nation close to chaos, some economists and merchants say.

As the police and a pro-government youth militia swept into shops and factories, threatening arrest and worse unless prices were rolled back, staple foods vanished from store shelves and some merchants reported huge losses. News reports said that some shopkeepers who had refused to lower prices had been beaten by the youth militia, known as the Green Bombers for the color of their fatigues.

In interviews, merchants said that crowds of people were following the police and militia from shop to shop to buy goods at the government-ordered prices.

“People are losing millions and millions and millions of dollars,” said one merchant in Bulawayo, referring to the Zimbabwean currency, which is becoming worthless given the nation’s inflation, the world’s highest. “Everyone is now running out of stock, and not being able to replace it.”

. . .

Gasoline was reported to be vanishing from stations as the going price, about 180,000 dollars per liter, was slashed by the government to something closer to the officially approved price of 450 dollars per liter. Mr. Mugabe’s government intends to cope with the shortages by subsidizing producers of basic goods. One of the few newspapers not under government control, The Zimbabwe Independent, reported last week that flour, which is controlled entirely by the state, will be sold to bakers for 10 million dollars a ton, half the market price. Similarly, many suppliers of basic goods have been told by the government that they will be allowed to buy gasoline at one tenth the going price, the newspaper reported. The government apparently plans to make up those losses by printing more money. Zimbabwe’s dollar has lost more than half its value in recent weeks because the government has constantly issued new bills to pay its mounting debts.

For the full story, see:

MICHAEL WINES. "Anti-Inflation Curbs on Prices Create Havoc for Zimbabwe." The New York Times (Weds., July 4, 2007): A8.

(Note: ellipsis added.)

CNN on 7/10/07 broadcast a great clip from ITN, that had been courageously recorded undercover by Martin Geissler. See "Desperation in Zimbabwe":

http://www.cnn.com/video/#/video/offbeat/2007/06/23/vo.mi.ugly.dogs.ap?DPFPR=true

(Note: ITN is sometimes also called ITV. "ITN" stands for the International Television Network.)

Postscript: According to an entry on the ITV web site entitled "Mugabe Battles Economic Crises," Mugabe "has warned he will not be restrained by "bookish economics"." (He makes a great case for cracking open the books, doesn’t he? Or at least for opening the window and looking at what is happening outside?)

For the Mugabe quote on bookish economics, see:

http://itn.co.uk/news/a1d7763de3c4778b619a72cbeab24d6d.html

Dubai Is “Turbo-Charged Free-Market Capitalism”

Dubai skyline. Source of photo: online version of the WSJ commentary quoted and cited below.

(p. A9) Dubai, which is part of the United Arab Emirates, represents turbo-charged free-market capitalism at its purest — sometimes crass, often over-the-top, and always in motion. Home to more than 1.2 million people, more than 80% of whom are resident aliens, Dubai is as much a multicultural melting pot as New York City was in its late 19th century heyday. And like New York then, Dubai teems with winners and losers, the rich and not-so-rich, and immigrants who often find that life in the glittering metropolis is cold, hard and unfair. But the government maintains order, spends billions on infrastructure and is dedicated to establishing the city-state as a global capital of, well, capital.

. . .

Seeing Dubai as an economic model for other parts of the Arab world is admittedly a challenge: Like Singapore, it has the virtues of a small ruling class, a tiny population and not much territory, and that is not something Egypt or Syria could emulate. But as a cultural model, or an attitude, it does offer an alternate vision of the future, one with its own excesses and vices for sure, but still free of the divisiveness and religious conflict that has become the assumed status quo in other parts of the Middle East.

Dubai should not be written off as little more than an Arab Las Vegas. It deeply challenges the assumption that Muslims, Christians and Jews cannot find common ground and work together to construct a shared future. Dubai is proof, not perfect, but real, that they can.

For the full commentary, see:

ZACHARY KARABELL. "City of Dreams." The Wall Street Journal (Sat., March 17, 2007): A9.

(Note: ellipsis added.)

Burned Up Over Gas Rationing in Iran

"Protesters burned at least two gas stations in Tehran after the Oil Ministry announced gas rationing would begin Wednesday just after midnight." Source of caption and photo: online version of the NYT article cited below.

TEHRAN, June 27 — Angry drivers set fire to at least two gas stations overnight in Tehran after the government announced that gasoline rationing would begin Wednesday just after midnight.

The state television news said Wednesday that “several gas stations and public places had been attacked by vandals.” While there were some reports that a large number of gas stations had been set on fire, only two fires were confirmed.

. . .

Under the new regulations announced by the Oil Ministry on Tuesday evening, private cars will be able to buy a maximum of 26 gallons of gasoline a month at the subsidized price of 34 cents per gallon. Taxis will be allowed 211 gallons a month. Parliament would have to determine whether individuals would be allowed to buy more at market rates.

There were long lines at gas stations in Tehran on Wednesday, causing traffic jams, and the police moved in to control the lines.

Iran is OPEC’s second-largest exporter of oil. But it needs to import half of its gasoline — at a cost of $5 billion a year — because of high consumption and low refining capabilities.

Inflation in Iran had already been high, as a result of a combination of economic factors and government decisions. The price of dairy products like milk, butter and yogurt increased this week by at least 20 percent.

For the full story, see:

NAZILA FATHI. "2 Iranian Gas Stations Burned Over Rationing." The New York Times (Thurs., June 28, 2007): A8.

(Note: ellipsis added.)

“Unlikely Collection of French Socialists” Liberated Global Capital Flows?

Source of book graphic: http://www.hup.harvard.edu/catalog/ADBCAP.html

Rawi Abdelal, a Harvard Business School professor, has advanced a novel theory in "Capital Rules: The Construction of Global Finance." Drawing on extensive documentary evidence, as well as dozens of interviews with high-level finance officials and midlevel bureaucrats, he tells a fascinating (and largely unknown) tale: how a clutch of French socialists helped to upend economic orthodoxy and lead the charge for lifting restrictions on capital flows within Europe and throughout the world.

. . .

Mr. Abdelal’s story heats up with the election of Francois Mitterrand in 1981. The new president, together with his majority Socialist Party, set out to storm the Bastille of the economy. He announced plans to nationalize the banks and restrict cross-border capital flows to such a degree that French citizens could take the equivalent of only $427 with them for leisure travel outside France (and were prohibited from using credit cards during such travel). Rather than create a socialist Shangri-La, the moves led to economic chaos. The French had to devalue the franc three times in two short years. Mitterrand then made what the French would elegantly refer to as a tournant but we may bluntly call a U-turn.

This painful episode provided a powerful lesson to a number of senior French officials. Said one: "We recognized, at last, that in an age of interdependence capital would find a way to free itself, and we were obliged to liberate the rest." And so in a Nixon-goes-to-China move, an unlikely collection of French socialists set out to liberalize the country’s controls on cross-border capital flows with a determination that gave new meaning to laissez-faire.

. . .

Mr. Abdelal is unequivocal about the value of Europe’s action: "Global financial markets are global primarily because the process of European financial integration became open and uniformly liberal." He also highlights how free capital flows got a boost from the two primary credit-rating agencies, Standard & Poor’s and Moody’s. In the 1990s, both began to give higher ratings to government-backed debt when the country in question had an open capital account.

For the full review, see:

MATTHEW REES. "Business Bookshelf: Why Money Can Now Make Its Way Around the World." The Wall Street Journal (Weds., February 14, 2007): D12.

(Note: ellipses added.)

Boof reference:

Rawi Abdelal. CAPITAL RULES. Harvard University Press, 304 pages, $49.95.