Finnish Universal Basic Income Did Not Increase Labor Supply

(p. A8) A much-watched experiment in Finland failed to provide evidence that offering people a guaranteed income is the answer to some of the insecurities caused by potentially profound changes in the jobs market.

Early results from a pilot program suggest that providing unemployed people with a minimum income doesn’t encourage them to find work, . . .

. . .

“The Finnish government hoped that UBI would increase labor supply and employment, but it did not,” said Christopher Pissarides, a professor of economics at the London School of Economics and a Nobel Prize winner.

For the full story, see:

Paul Hannon. “Basic Income Experiment Didn’t Boost Employment.” The Wall Street Journal (Saturday, Feb. 9, 2019): A8.

(Note: ellipses added.)

(Note: the online version of the story has the date Feb. 8, 2019, and has the title “Experiment in Finland With Guaranteed Income Creates Less Stress but No Jobs.”)

Absence of For-Profit Hospitals Hurts New York State

(p. A17) House Democrats’ new Medicare for All bill asserts “a moral imperative . . . to eliminate profit from the provision of health care.”
. . .
The Empire State’s hospital industry has been 100% nonprofit or government-owned for more than a decade. It’s a byproduct of longstanding, unusually restrictive ownership laws that squeeze for-profit general hospitals. The last one in the state closed its doors in 2008.
A report last year from the Albany-based Empire Center shows the unhappy results. The state health-care industry’s financial condition is chronically weak, with the second-worst operating margins and highest debt loads in the country. And there’s no evidence that expunging profit has reduced costs. New York’s per capita hospital spending is 18% higher than the national average.
The overall quality of New York’s hospitals, even factoring in Manhattan’s flagship institutions, is poor. Their average score on the federal government’s Hospital Compare report card was 2.18 stars out of five–last out of 50 states. Their collective safety grades from the Leapfrog Group and Consumer Reports magazine have also been dismal.
The state’s nonprofit hospitals also fall short on accessibility for the uninsured. On average they devoted 1.9% of revenues to charity care in 2015, a third less than privately owned hospitals nationwide.
Finally, New York’s antiprofit policy doesn’t even prevent people from getting rich. Seven-figure salaries are common among the state’s hospital executives. If banning profit is an effective way to improve health-care, there’s no evidence to be found in New York.

For the full commentary, see:
.Bill Hammond. “Banishing Profit Is Bad for Your Health; The Medicare for All proposal from House Democrats follows New York state’s bad example.” The Wall Street Journal (Tuesday, March 19, 2019): A17.
(Note: ellipsis internal to first paragraph, in original; ellipsis between paragraphs, added.)
(Note: the online version of the commentary has the date March 18, 2019.)

Small Spanish Firms Less Likely to Hire with Higher Minimum Wage

(p. B1) MADRID — As Spain grapples with a turbulent political crisis, one of Europe’s last Socialist governments may soon fall amid the rise of a new nationalism in the country. But whatever the outcome, Prime Minister Pedro Sánchez is leaving behind a signature legacy: a record increase in the minimum wage.
The 22 percent rise that took effect in January, to 1,050 euros (about $1,200) a month, is the largest in Spain in 40 years. Yet the move has ignited a debate over whether requiring employers to pay more of a living wage is a social watershed, or a risky attempt at economic engineering.
. . .
(p. B4) Over 95 percent of businesses in Spain are small and medium-size firms, many of which operate with thin margins, according to Celia Ferrero, the vice president of the National Federation of Self-Employed Workers.
“You won’t find people disputing that higher wages are needed,” said Ms. Ferrero, whose organization represents many smaller businesses. “The question is whether firms can afford it. Higher wages and social security taxes simply make it more expensive for employers to hire or maintain staffers.”
“It’s not that they don’t want to pay; they literally can’t,” she added.
Lucio Montero, the owner of General Events, which makes booths and backdrops for firms displaying wares at big conventions, employs eight workers on the outskirts of Madrid. He pays each €1,400 a month.
The higher minimum wage and increased social security charges will put upward pressure on his labor bill and already thin margins, he said. It is a cost that he can ill afford.
“I would need to think twice about hiring more people,” said Mr. Montero, walking around his tiny, sawdust-covered factory floor.

For the full story, see:
Liz Alderman. “Spain’s Minimum Wage Has Surged. So Has Debate.” The New York Times (Friday, March 8, 2019): B1 & B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date March 7, 2019, and has the title “Spain’s Minimum Wage Just Jumped. The Debate Is Continuing.”)

Distorted Incentives Can Lead to Short-Termism or to Long-Termism

(p. B1) Capitalism is often accused of fostering short-termism, making companies chase quarterly profit numbers to satisfy shareholders.
A better criticism is that the targets corporate executives aim for are grossly simplified, thanks to the twisting line of responsibility from corner office to fund manager to pension fund and ultimately to the savers who own the company.
These distorted incentives sometimes lead to short-termism; at other times, shareholder enthusiasm pushes executives to focus far too much on the long run, as in the wild mining boom that turned to bust in 2011, or the dot-com bubble.

For the full commentary, see:
James Mackintosh. “STREETWISE; Fixing Capitalism, One Disclosure at a Time.” The Wall Street Journal (Wednesday, Nov. 28, 2018): B1 & B12.
(Note: the online version of the commentary has the date Nov. 27, 2018.)

Chinese Communists Subsidize Ghost Town Construction

(p. C3) In China’s Inner Mongolia province, in the middle of the Gobi desert, row upon row of largely vacant apartment towers line the streets of Kangbashi, a new district of the city of Ordos. Earlier this month, Xu Yongfen and his family moved into one 28-story building. In the hallways there are a few signs of life–tricycles, slippers and pink children’s shoes in front of some doors. But most apartments remain unoccupied, their doors still covered in plastic wrap, and at street level, barren storefronts are visible in all directions. “This area is nearly totally empty,” Mr. Xu says, tapping a cigarette into a bowl of ashes at his dining room table.
The city has spent 14 years planning, erecting and maintaining Kangbashi, which has the distinction of being one of China’s best-known “ghost towns”–gleaming but sparsely populated new urban centers adjacent to older metropolises. Built by the dozen across the country, the new areas reflect–and were meant to accelerate–China’s economic boom. As the country’s growth has slowed, many of them have become serious liabilities, deep in debt, with little prospect of full occupancy anytime soon.
. . .
Many of China’s other ghost towns have yet to figure out how to jumpstart their economies without slipping back into the old pattern of borrowing and building. To become economically viable, some may take 20 or 30 years, or “maybe even forever,” said Zhou Jiangping, a professor of urban planning at the University of Hong Kong. In some cases, Mr. Zhou said, local officials encouraged ambitious plans to advance their own careers: “You see all these empty towns, these areas at the edge of cities. They may symbolize the power of some officials.” Because many of them then move on to other jobs, he said, they didn’t think about ensuring long-term growth.
. . .
Ordos City Investment Real Estate Development Co. recently resumed work on two housing projects that it had set aside five years ago, including Mr. Xu’s complex. “Kangbashi’s real-estate sales improved, so our company decided to restart construction,” said Wang Tianyong, a branch manager, noting that the government’s subsidy program favors new projects.

For the full story, see:
Dominique Fong. “China’s Ghost Towns Haunt Its Economy.” The Wall Street Journal (Saturday, June 16, 2018): C3.
(Note: ellipses added.)
(Note: the online version of the story has the date June 15, 2018.)

It No Longer Pays to Recycle

(p. B1) Oregon is serious about recycling. Its residents are accustomed to dutifully separating milk cartons, yogurt containers, cereal boxes and kombucha bottles from their trash to divert them from the landfill. But this year, because of a far-reaching rule change in China, some of the recyclables are ending up in the local dump anyway.
In recent months, in fact, thousands of tons of material left curbside for recycling in dozens of American cities and towns — including several in Oregon — have gone to landfills.
. . .
(p. B5) Recycling companies “used to get paid” by selling off recyclable materials, said Peter Spendelow, a policy analyst for the Department of Environmental Quality in Oregon. “Now they’re paying to have someone take it away.”
In some places, including parts of Idaho, Maine and Pennsylvania, waste managers are continuing to recycle but are passing higher costs on to customers, or are considering doing so.
“There are some states and some markets where mixed paper is at a negative value,” said Brent Bell, vice president of recycling at Waste Management, which handles 10 million tons of recycling per year. “We’ll let our customers make that decision, if they’d like to pay more and continue to recycle or to pay less and have it go to landfill.”
Mr. Spendelow said companies in rural areas, which tend to have higher expenses to get their materials to market, were being hit particularly hard. “They’re literally taking trucks straight to the landfill,” he said.

For the full story, see:
Livia Albeck-Ripka. “Your Recycling Gets Recycled, Right? Maybe, or Maybe Not?” The New York Times (Thursday, May 31, 2018): B1 & B5.
(Note: ellipsis added.)
(Note: the online version of the story has the date May 29, 2018.)

Stornetta and Nakamoto Invented Bitcoin

(p. C18) In 1990, the physicist Scott Stornetta had a eureka moment while getting ice cream with his family at a Friendly’s restaurant in Morristown, N.J. He and his cryptographer colleague, Stuart Haber, had been thinking about the proliferation of digital files that accompanied the rise of personal computing and the ease with which files could be altered. They wondered how we might know for certain what was true about the past. What would prevent tampering with the historical record–and would it be possible to protect such information for future generations?
The sticking point was the need to trust a central authority. But at Friendly’s, an answer came to Dr. Stornetta: He realized that instead of a central record-keeper, the system could have many dispersed but interconnected copies of a shared ledger. The truth could never be typed over if there were too many linked ledgers to alter.
Drs. Haber and Stornetta were working at the time at Bellcore, a research center descended from the legendary Bell Labs. The pair set out to build a cryptographically secure archive–a way to verify records without revealing their contents.
. . .
. . . there is no mistaking their crucial contribution. When the founding document of bitcoin was published in 2008 under the name ” Satoshi Nakamoto “–a pseudonym for one or more scientists–it had just eight citations of previous works. Three of them were papers co-authored by Drs. Haber and Stornetta.
, , ,
The Nakamoto paper revolutionized the foundational work of Drs. Stornetta and Haber by adding the concept of “mining” cryptocurrencies. It created financial incentives for participation in retaining and verifying parts of the blockchain ledger.

For the full commentary, see:
Amy Whitaker. “The Eureka Moment That Made Bitcoin Possible; A key insight for the technology came to a physicist almost three decades ago at a Friendly’s restaurant in New Jersey.” The Wall Street Journal (Saturday, May 26, 2018): C18.
(Note: ellipses added.)
(Note: the online version of the commentary has the date May 25, 2018.)