Government – Page 107 – artdiamondblog.com

Italy’s Dynastic Capitalism “Is Built Around Loyalty, Not Performance”

“Carlo Altomonte, an economist, says that “Italy’s problem isn’t that we have a lot of debt. It’s that we don’t grow.”” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) “I know that in the States, all Mediterranean countries get lumped together,” says Carlo Altomonte, an economist with Bocconi University in Milan. “But Italy’s problem isn’t that we have a lot of debt. It’s that we don’t grow.”
. . .
“There is no sense of what a market economy is in this country,” says Professor Altomonte. “What you see here is an incredible fear of competition.”
. . .
FIVE years ago, Francesco Giavazzi needed a taxi. Cabs are relatively scarce in Milan, especially at 5 a.m., when he wanted to head to the airport, so he called a company at 4:30 to schedule a pickup. But when he climbed into the cab half an hour later, he discovered that the meter had been running for more than 20 minutes, because the taxi driver had arrived soon after the call and started charging for (p. 7) his time. Allowed by the rules, but to Mr. Giavazzi, utterly unfair.
“So it was 20 euros before we started the trip to the airport,” recalls Mr. Giavazzi, who is an economics professor at Bocconi University. “I said, ‘This is impossible.’ ”
Professor Giavazzi later wrote an op-ed article denouncing this episode as another example of the toll exacted by Italy’s innumerable guilds, known by several names here, including “associazioni di categoria.” (These are different from unions, another force here, in that guilds are made up of independent players in a trade or profession who have joined to keep outsiders out and maintain standards, as opposed to representing employees in negotiations with management, as a union might.) Even baby sitters have associations in Italy.
The op-ed did not endear Professor Giavazzi to the city’s cab drivers. They pinned leaflets with his name and address at taxi stands around Milan and for the next five nights, cabs drove around his home, honking their horns.
“This is a country with a lot of rents,” says Professor Giavazzi, sitting in his office one recent afternoon, . . . “You need a notary public, it’s like 1,000 euros before you even open your mouth. If you’re a notary public in this country, you live like a king.”
For Mr. Barbera, as is true with every entrepreneur here, the prevalence and power of Italy’s guilds explains much of what is driving up costs. He says he must overspend for accountants, lawyers, truckers and other members of guilds on a list that goes on and on: “Everything has a tariff, and you have to pay.”
. . .
Italians, notes Professor Altomonte, are among the world’s heaviest consumers of bottled water. “Do you know why? Because the water in the tap comes from the government.”
The suspicion of Italians when it comes to extra-familial institutions explains why many here care more about protecting what they have than enhancing their wealth. Most Italians live less than a mile or two from their parents and stay there, often for financial benefits like cash and in-kind services like day care. It’s an insularity that runs all the way up to the corporate suites. The first goal of many entrepreneurs here isn’t growth, so much as keeping the business in the family. For a company to really expand, it needs capital, but that means giving up at least some control. So thousands of companies here remain stubbornly small — all of which means Italy is a haven for artisans but is in a lousy position to play the global domination game.
“The prevailing management style in this country is built around loyalty, not performance,” says Tito Boeri, scientific director at Fondazione Rodolfo Debenedetti, who has written about Italy’s dynastic capitalism.

For the full story, see:
DAVID SEGAL. “Is Italy Too Italian?” The New York Times (Sun., August 1, 2010): 1 & 6-7.
(Note: ellipses added.)
(Note: the online version of the article is dated July 31, 2010.)

“The clothier Luciano Barbera in his family’s “spa for yarn,” where crates of thread rest for months. Economists fear that such small-scale artisanship cannot sustain Italy’s economy forever.” Source of caption and photo: online version of the NYT article quoted and cited above.

Socialism Is “Morally Corrupting”

On balance, Stephen Pollard believes that Claire Berlinski’s book on Thatcher is poorly written. But he does believe that Berlinski got one important point right:

(p. 22) She is quite right, . . . , to stress that Thatcher’s crusade against socialism was not merely about economic efficiency and prosperity but that above all, “it was that socialism itself — in all its incarnations, wherever and however it was applied — was morally corrupting.”

For the full review, see:
STEPHEN POLLARD. “Thatcher’s Legacy.” The New York Times Book Review (Sun., January 18, 2009): 22.
(Note: ellipsis added.)
(Norte: the online version of the review has the date January 16, 2009.)

Book reviewed:
Berlinski, Claire. There Is No Alternative: Why Margaret Thatcher Matters. New York: Basic Books, 2008.

Father of Cornhusker Kickback Is Named “2010 Porker of the Year”

(p. 6A) Sen. Ben Nelson can’t shake the “Cornhusker Kickback.”
This week, a government watchdog group named the Nebraska Democrat its “2010 Porker of the Year,” based on an online poll.
Citizens Against Government Waste included Nelson in the poll, citing his role negotiating a provision of the federal health care bill that would have exempted Nebraska from paying the added costs of the law’s expanded Medicaid coverage. That provision was later dropped in favor of relief for all states, which Nelson has said was his goal all along.
Nelson cast the decisive 60th vote for the bill in late 2009.
. . .
Mark Fahleson, chairman of the Nebraska Republican Party, said Nelson was trying to rewrite history. “The fact is he’s the father of the Cornhusker Kickback,” he said.

For the full story, see:
MICHAEL O’CONNOR. “Nelson rejects group’s ‘Porker of Year’ label.” Omaha World-Herald (Fri., March 4, 2011): 6A.
(Note: ellipsis added.)

Autos Give Us Autonomy

The open road. Source of photo: online version of the NYT article quoted and cited below.

(p. 60) I’ve been converted by a renegade school of thinkers you might call the autonomists, because they extol the autonomy made possible by automobiles. Their school includes engineers and philosophers, political scientists like James Q. Wilson and number-crunching economists like Randal O’Toole, the author of the 540-page manifesto ”The Vanishing Automobile and Other Urban Myths.” These thinkers acknowledge the social and environmental problems caused by the car but argue that these would not be solved — in fact, would be mostly made worse — by the proposals coming from the car’s critics. They call smart growth a dumb idea, the result not of rational planning but of class snobbery and intellectual arrogance. They prefer to promote smart driving, which means more tolls, more roads and, yes, more cars.
. . .
(p. 65) . . . Macaulay . . . observed in the 19th century that ”every improvement of the means of locomotion benefits mankind morally and intellectually, as well as materially.”
. . .
In an essay called ”Autonomy and Automobility,” Loren E. Lomasky, a professor of political philosophy at the University of Virginia, invokes Aristotle’s concept of the ”self-mover” to argue that the ability to move about and see the world is the crucial distinction between higher and lower forms of life and is ultimately the source of what Kant would later call humans’ moral autonomy. ”The automobile is, arguably, rivaled only by the printing press (and perhaps within a few more years by the microchip) as an autonomy-enhancing contrivance of technology,” he writes. The planners determined to tame sprawl, Lomasky argues, are the intellectual heirs of Plato and his concept of the philosopher-king who would impose order on the unenlightened masses.

For the full commentary, see:
Tierney, John. “The Autonomist Manifesto (or, How I Learned to Stop Worrying and Love the Road).” The New York Times Magazine (Sun., September 26, 2004): 57-65.
(Note: ellipsis added.)

The Lomasky essay is:

Lomasky, Loren E. “Autonomy and Automobility.” The Independent Review
2, no. 1 (Summer 1997): 5-28.

The Macaulay quote is from:
Macaulay, Thomas Babington. “Chap. 3, State of England in 1685.” The History of England from the Accession of James II. 1848.

The O’Toole book is:
O’Toole, Randal (sic). The Vanishing Automobile and Other Urban Myths: How Smart Growth Will Harm American Cities. Camp Sherman, Oregon: The Thoreau Institute, 2000.

The Wilson essay is:
Wilson, James Q. “Cars and Their Enemies.” Commentary 104, no. 1 (July 1997): 17-23.

In Greece It Is Illegal for Brewers to Produce Tea

“Demetri Politopoulos at his microbrewery in northern Greece. He says Greek leaders need to do more to make the country an easier place to do business.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) DEMETRI POLITOPOULOS says he has suffered countless indignities in his 12-year battle to build a microbrewery and wrest a sliver of the Greek beer market from the Dutch colossus, Heineken.

His tires have been slashed and his products vandalized by unknown parties, he says, and his brewery has received threatening phone calls. And he says he has had to endure regular taunts — you left Manhattan to start up a beer factory in northern Greece? — not to mention the pain of losing 5.3 million euros.
Bad as all that has been, nothing prepared him for this reality: He would be breaking the law if he tried to fulfill his latest — and, he thinks, greatest — entrepreneurial dream. It is to have his brewery produce and export bottles of a Snapple-like beverage made from herbal tea, which he is cultivating in the mountains that surround this lush pocket of the country.
An obscure edict requires that brewers in Greece produce beer — and nothing else. Mr. Politopoulos has spent the better part of the last year trying fruitlessly to persuade the Greek government to strike it. “It’s probably a law that goes back to King Otto,” said Mr. Politopoulos with a grim chuckle, referring to the Bavarian-born king of Greece who introduced beer to the country around 1850.
Sitting in his office, Mr. Politopoulos took a long pull from a glass of his premium Vergina wheat beer and said it was absurd that he had to lobby Greek politicians to repeal a 19th-century law so that he could deliver the exports that Greece urgently needed. And, he said, his predicament was even worse than that: it was emblematic of the web of restrictions, monopolies and other distortions that have made many Greek companies uncompetitive, and pushed the country close to bankruptcy.

For the full story, see:
LANDON THOMAS Jr. “What’s Broken in Greece? Ask an Entrepreneur.” The New York Times, SundayBusiness Section (Sun., January 30, 2011): 1 & 5.
(Note: the online version of the article is dated January 29, 2011.)

State Universities Are “Byzantine Mazes, Sometimes with No Obvious Exit”

(p. A20) . . . in Wisconsin, Gov. Scott Walker proposed on Tuesday to separate the main Madison campus from the rest of the state university system, and make it a public authority. Last week, Madison’s chancellor, Carolyn A. Martin, told the Wisconsin Board of Regents that she was hamstrung by state control.

“The accumulated layers of bureaucracy and the control of our mission from a distance make our institutions byzantine mazes, sometimes with no obvious exit,” she said. “It’s hard to be more responsible or more responsive if we spend all our time trying to comprehend and then follow 25 steps to get approval for one purchase.”

For the full story, see:
TAMAR LEWIN. “Public Universities Seek More Autonomy as Financing From States Shrinks.” The New York Times (Thurs., March 3, 2011): A20.
(Note: ellipsis added.)
(Note: the online version of the article is dated March 2, 2011.)

Scots Fear London May Delay the Dawn

“Inverness, Scotland, at 8 a.m. Thursday. A change to year-round daylight time in Britain would make winter sunrise as late as 10 a.m. in the north.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A7) INVERNESS, Scotland — The question was time, and whether to support legislative efforts in London to move it around in order to bring more light to the afternoons. The answer was no, said Jean Kaka, 67, a resident of this city far to the north.
. . .
“They’re trying to tamper with our time,” she said. “England is a different country than we are, and they’re imposing this on us.”
. . .
The problem is that while a clock change might bring afternoon joy to London, it would condemn Inverness in the far reaches of Scotland — in relative terms, about 700 miles north of Montreal — to long, dark winter mornings with sunrises as late as 10 a.m.
Even worse, many Scots feel, it would mean giving in to English politicians. Though the devolution of British politics has given Scotland its own legislature and responsibility for many of its own affairs, the clock is still controlled by Parliament in London.
“Certainly the people in London don’t have any real concept of the effects further north,” said Anthony Billington, 64, who was strolling through town recently. “I’m much more of a morning person, anyway.”
. . .
Robin MacDonald, 63, who owns a television store in downtown Inverness, said that while Parliament’s efforts to jump time ahead hardly mean that time is literally being stolen from him, he could do without having to set and reset his clocks twice a year.
When he was a child in the rural north, he said, he traveled to and from school in conditions “as dark as the inside of your hat.” So he doesn’t care what time legislators decide it is, as long as they decide something.
“They should make up their mind,” Mr. MacDonald said, “and then they should leave it alone.”

For the full story, see:

SARAH LYALL. “Inverness Journal; Scots Tell London, Hands Off Our Clocks.” The New York Times (Fri., January 21, 2011): A7.
(Note: ellipses added.)
(Note: the online version of the article is dated January 20, 2011.)

“Robin MacDonald would rather not have to reset his clocks twice a year.” Source of caption and photo: online version of the NYT article quoted and cited above.

“Enough Is Enough with the Ineffective Theatrical Security Measures”

(p. B6) “DOES he bite?” the screener at the checkpoint asked warily.
“She doesn’t bite,” I said.
“Because we have to check under the wings,” he said.
“In that case,” I said, “she might bite.”
At issue was our chatty little African Grey parrot, Rosie, who was watching the scene from inside her travel cage at the security checkpoint at the Newark airport. This was last week, a few days after a suspected terrorist tried to blow up an international flight on its descent into Detroit by igniting some explosives hidden in his underwear.
While the explosion fizzled, it threw airport security into a tizzy.
. . .
We were very anxious at the checkpoint. My wife solved the problem, though. One of Rosie’s tricks is to spread her wings and lower her beak if you ask her to imitate an eagle.
“Rosie, do an eagle,” my wife said. Inside her cage with the screener’s face framed in the open door, the bird promptly spread her wings wide.
The screener had his look under the wings and lowered his wand. Merriment ensued all around — but it had to look pretty silly.
. . .
On a more serious note, an airline pilot who did not want his name used, asked, “When will passengers say enough is enough with the ineffective theatrical security measures?”

For the full commentary, see:
JOE SHARKEY. “On the Road; Please Take Off Your Shoes, and Is the Parrot Loaded?” The Wall Street Journal (Tues., January 5, 2010): B6.
(Note: ellipses added.)
(Note: the online version of the article is dated January 4, 2010, and has the title “On the Road; Take Off Your Shoes, and Is the Parrot Loaded?”)

“The Adventurous, Pioneering Spirit”

Source of book image: http://www.jetagebook.com/

(p. 30) “Jet Age” is ostensibly about the race between two companies and nations to commercialize a military technology and define a new era of air travel. There’s Boeing with its back to the wall and its military contracts drying up, betting everything on passenger jets, pitted against de Havilland and the government-subsidized project meant to reclaim some of Britain’s lost glory. . . .
. . .
But the book is really about the risk-taking essential for making any extreme endeavor commonplace. “Jet Age” celebrates the managers, pilots, engineers, flight attendants and, yes, even passengers (for without passengers there is no business) who gambled everything so that we might cross oceans and continents in hours rather than days.
It is easy to forget, in this time of overcrowded flights, demoralizing security checks, embattled flight attendants and dwindling service, that risk was once embraced as a necessary, even desirable, part of flying. Quoted in the book, the celebrated aviator Lord Brabazon summed it up in post-accident testimony: “You know, and I know, the cause of this accident. It is due to the adventurous, pioneering spirit of our race. It has been like that in the past, it is like that in the present, and I hope it will be in the future.”

For the full review, see:
MICHAEL BELFIORE. “Fatal Flaws.” The New York Times Book Review (Sun., February 6, 2011): 30.
(Note: ellipses added.)
(Note: the online version of the article is dated February 4, 2011.)

The book under review is:
Verhovek, Sam Howe. Jet Age: The Comet, the 707, and the Race to Shrink the World. New York: Avery, 2010.

Koch Does Not Run with the Antelope

If you were standing amongst a herd of antelope when a dangerous predator arrived, you would not see the antelope defending themselves against the predator. What you would see would be their white rear ends disappearing in the distance.
Last July in Wichita I heard some executives from Koch Industries talking about Market-Based Management. A couple of them mentioned Koch’s stands in defense of the free market. As a result of these efforts, Koch Industries has become the target of many agencies of the government and of groups opposed to the free market. Once or twice I heard an executive say something like: ‘it would have been a lot easier if we had just painted our butts white and run with the antelope.’
Schumpeter thought that those in business would not defend the fortress of capitalism (CSD, p. 142). And the evidence suggests that Schumpeter was mainly right. But we can hope that there are enough exceptions, in unpretentious places like Wichita, to keep the fortress standing.

(p.A15) Years of tremendous overspending by federal, state and local governments have brought us face-to-face with an economic crisis. Federal spending will total at least $3.8 trillion this year–double what it was 10 years ago. And unlike in 2001, when there was a small federal surplus, this year’s projected budget deficit is more than $1.6 trillion.

Several trillions more in debt have been accumulated by state and local governments. States are looking at a combined total of more than $130 billion in budget shortfalls this year. Next year, they will be in even worse shape as most so-called stimulus payments end.
For many years, I, my family and our company have contributed to a variety of intellectual and political causes working to solve these problems. Because of our activism, we’ve been vilified by various groups. Despite this criticism, we’re determined to keep contributing and standing up for those politicians, like Wisconsin Gov. Scott Walker, who are taking these challenges seriously.

For the full commentary, see:
CHARLES G. KOCH. “Why Koch Industries Is Speaking Out; Crony capitalism and bloated government prevent entrepreneurs from producing the products and services that make people’s lives better.” The Wall Street Journal (Tues., MARCH 1, 2011): A15.

Koch’s book is:
Koch, Charles G. The Science of Success: How Market-Based Management Built the World’s Largest Private Company. Hoboken, NJ: Wiley & Sons, Inc., 2007.

Unclear Regulations Reduce Energy Innovation Investment

“Source of graphic: online version of the WSJ article quoted and cited below.

(p. R3) Bill Gates reshaped the computer industry by pumping out new versions of Microsoft Windows software every few years, fixing and fine tuning it as he went along.

He’s now betting that he can reshape the energy industry with a project akin to shipping Windows once and having it work, bug-free, for 50 years.
Thanks to his role funding and guiding a start-up called TerraPower LLC, where he serves as chairman, Mr. Gates has become a player in a field of inventors whose goal is to make nuclear reactors smaller, cheaper and safer than today’s nuclear energy sources. The 30-person company recently completed a basic design for a reactor that theoretically could run untouched for decades on spent nuclear fuel. Now the company is seeking a partner to help build the experimental reactor, and a country willing to host it.
It’s a long-term, risky endeavor for Mr. Gates and his fellow investors. The idea will require years to test, billions of dollars (not all from him) and changes in U.S. nuclear regulations if the reactor is to be built here. Current U.S. rules don’t even cover the type of technology TerraPower hopes to use.
“A cheaper reactor design that can burn waste and doesn’t run into fuel limitations would be a big thing,” Mr. Gates says. He adds that in general “capitalism underinvests in innovation,” particularly in areas with “long time horizons and where government regulations are unclear.”
. . .
The company has made pitches in France and Japan, Mr. Myrhvold says; both have big nuclear-power industries. He’s also made the rounds in Russia, China and India, he says. So far, there have been no takers.
One country he is certain won’t be a customer anytime soon is the U.S., which doesn’t yet have a certification process for reactors like TerraPower’s. It would likely be a decade or more before the reactor could be tested on U.S. soil. “I don’t think the U.S. has the willpower or desire to build new kinds of nuclear reactors,” Mr. Myrhvold says. “Right now there’s a long, drawn-out process.”
. . .
Mr. Myrhvold says he hopes the process will speed up and spark innovation to meet the world’s growing energy demand. “Let’s try 20 ideas,” he says. “Maybe five of them work. That’s the only way to invent our way out of the pickle we’re in.”

For the full story, see:
ROBERT A. GUTH. “A Window Into the Nuclear Future; TerraPower–with the backing of Bill Gates–has a radical vision for the reactors of tomorrow.” The Wall Street Journal (Mon., FEBRUARY 28, 2011): R3.
(Note: ellipses added.)