Worn Down by Growing Regulations, American Entrepreneurs Leave China

(p. A1) SHANGHAI–Fifteen years ago in California, a tall technology geek named Steve Mushero started writing a book that predicted the American dream might soon “be found only in China.” Before long, Mr. Mushero moved himself to Shanghai and launched a firm that Amazon.com Inc. and Alibaba Group Holding Ltd. certified as a partner to serve the world’s biggest internet market.
These days, the tech pioneer has hit a wall. He’s heading back to Silicon Valley where he sees deeper demand for his know-how in cloud computing. “The future’s not here,” said the 52-year-old.
For years, American entrepreneurs saw a place in which they would start tech businesses, build restaurant chains and manage factories, making potentially vast sums in an exciting, newly dynamic economy. Many mastered Mandarin, hired and trained thousands in China, bought houses, met their spouses and raised bilingual children.
Now disillusion has set in, fed by soaring costs, creeping taxation, tightening political control and capricious regulation that makes it ever tougher to maneuver the market and fend off new domestic competitors. All these signal to expat business owners their best days were in the past.
The Trump administration is making a hard-nosed challenge to China using trade tariffs, in-(p. A12)vestment controls and prosecution of technology thieves, and many in American business are cheering, if silently, having soured on the market after years of trying.
. . .
From Silicon Valley in 2003, Mr. Mushero felt China’s rumblings and started writing his book, “Off-Shoring the Middle Class.” He saw U.S. companies save money by shifting accounting, X-ray evaluations and other technical jobs overseas. China, he thought, was becoming globalization’s “one-stop-shop” for manufacturing, basic tech work and advanced research.
He predicted a broad shift to China of not only factory work, but U.S. white collar jobs, too.
. . .
At a Starbucks in mid-2008, he sketched out “a napkin business plan” for a new company called ChinaNetCloud (Shanghai) Co. with Mr. Eron. China was overtaking the U.S. as the biggest internet market, and the partners would trail-blaze into cloud services by managing the online operations of local businesses.
. . .
Tougher regulations and competition deterred foreign players. China’s reputation for technology theft kept many out of the market, which reduced the number of Mr. Mushero’s potential clients. In 2013, the American Chamber of Commerce said only 10% of its members trusted data security enough to consider cloud services in China.
Walt Disney Co. tapped ChinaNetCloud to manage the computers hosting some interactive games in 2012, including one based on its hit movie “Frozen.” Mr. Mushero looked forward to more work with the U.S. entertainment giant, but Disney scrubbed the gaming push in mid-2014. Disney declined to comment. Online gaming in China is dominated by big domestic tech companies; it is derided by regulators as chaotic and harmful and hit regularly with new rules.
. . .
On a recent drizzly afternoon, flanked by framed commendations from Amazon and Microsoft for his firm’s achievements in China, Mr. Mushero said that after New Year’s he will head back to California, where he sees burgeoning demand for corporate online services, to market the company’s cloud-management tools.

For the full story, see:
James T. Areddy. “American Entrepreneurs in China Are Heading Home, Disillusioned.” The Wall Street Journal (Saturday, Dec. 8, 2018): A1 & A12.
(Note: ellipses added.)
(Note: the online version of the story has the date Dec. 7, 2018, and has the title “American Entrepreneurs Who Flocked to China Are Heading Home, Disillusioned.”)

Kansas City Government Pours Bleach on Food for the Homeless

(p. A17) KANSAS CITY, Mo. — They unfurled colorful blankets on a grassy slope, and unloaded steaming trays of corn dogs, baked beans and vegetable beef soup. Every week for the past three years, the volunteers have gone to a park just outside downtown Kansas City with home-cooked meals for the homeless. They call it a picnic with friends.
But on a cloudy afternoon earlier this month, an inspector from the Kansas City Health Department showed up and called it something else: an illegal food establishment.
She ordered most of the food put into black garbage bags, bundled them on the grass and, in a move that stunned the gathered group, doused the pile with bleach.
Allen Andrews, who has been living on the streets for the past year, said he watched silently as the bleach was poured, thinking back to when he had a home. He remembered how he had sometimes poured bleach on trash he put out for collection, to deter rodents from getting into it.
“They treat us like animals,” Mr. Andrews, 46, said.

For the full story, see:
John Eligon. “‘Where Feeding the Needy Requires Both a Heart and a Permit.” The New York Times (Thursday, Nov. 22, 2018): A17.
(Note: the online version of the story has the date Nov. 21, 2018, and has the title “You Want to Feed the Hungry? Lovely. Let’s See Your Permit.” The online version says that the article appeared on p. A13 of the New York edition. It appeared on p. A17 of the National edition that I subscribe to.)

A Tale of Two Bookstores: New York City Subsidizes Amazon and Regulates the Strand

(p. A22) Since it opened in 1927, the Strand bookstore has managed to survive by beating back the many challenges — soaring rents, book superstores, Amazon, e-books — that have doomed scores of independent bookshops in Manhattan.
With its “18 Miles of Books” slogan, film appearances and celebrity customers, the bibliophile’s haven has become a cultural landmark.
Now New York City wants to make it official by declaring the Strand’s building, at the corner of Broadway and 12th Street in Greenwich Village, a city landmark.
There’s only one problem: The Strand does not want the designation.
Nancy Bass Wyden, who owns the Strand and its building at 826 Broadway, said landmarking could deal a death blow to the business her family has owned for 91 years, one of the largest book stores in the world.
So at a public hearing on Tuesday before the city’s Landmarks Preservation Commission, her plea will be simple, she said: “Do not destroy the Strand.”
Like many building owners in New York, Ms. Wyden argues that the increased restrictions and regulations required of landmarked buildings can be cumbersome and drive up renovation and maintenance costs.
“By landmarking the Strand, you can also destroy a piece of New York history,” she said. “We’re operating on very thin margins here, and this would just cost us a lot more, with this landmarking, and be a lot more hassle.”
. . .
Another rich twist, Ms. Wyden said, was that the move coincides with the announcement that Amazon — not exactly beloved by brick-and-mortar booksellers — plans to open a headquarters in Queens, after city and state leaders offered upwards of $2 billion in incentives to Amazon and its multibillionaire chief executive, Jeff Bezos.
“The richest man in America, who’s a direct competitor, has just been handed $3 billion in subsidies. I’m not asking for money or a tax rebate,” Ms. Wyden said. “Just leave me alone.”
. . .
Owners of buildings with landmark status are in many cases barred from using plans, materials and even paint colors that vary from the original design without the commission’s approval.
. . .
Ms. Wyden — who is married to Senator Ron Wyden of Oregon, whom she met at the similarly renowned Powell’s book store in Portland — is a third-generation owner of the Strand, which stocks roughly 2.5 million used, rare and new books and employs 230 people.
. . .
While she would not divulge the bookstore’s finances, she said that she could make more money renting out the Strand’s five floors, but she loves the family business too much.
She accused city officials of trying to hurry the landmarking process, leaving her little time to prepare a defense, especially during the holiday rush.
“It’s our busiest time of year, and we should be focused on customers and Christmas, which is where we make our most money,” Ms. Wyden said. “But they have no sympathy for that.”

For the full story, see:
Corey Kilgannon. “‘Declaring Strand Bookstore a Landmark Would Kill It, Says Strand.” The New York Times (Tuesday, Dec. 4, 2018): A22.
(Note: ellipses added.)
(Note: the online version of the story has the date Dec. 3, 2018, and has the title “Declare the Strand Bookstore a City Landmark? No Thanks, the Strand Says.” The online version says that the New York print edition appeared on p. A20 and had the title: “A Bid to Preserve Strand Bookstore Would Destroy It, Owner Says.” The page and title in the citation I give further above, is from the National print edition that I receive.)

Bill Gates Says Regulations Keep Innovative Nuclear Technology Out of U.S.

(p. B3) Add Bill Gates to the list of executives whose businesses have been ensnared by the Trump administration’s battle with China over technology and trade.
The tech tycoon and philanthropist said in an essay posted late last week that a nuclear-energy project in China by a company he co-founded called TerraPower LLC is now unlikely to proceed because of recent changes in U.S. policy toward China. That leaves TerraPower, which had been working on the China project for more than three years, scrambling for a new partner and uncertain where it might be able to run a pilot of the nuclear reactor it has been developing, according to company officials.
. . .
Mr. Gates, in a year-end essay posted on his personal website on Saturday [December 29, 2018], said TerraPower might be able to build its nuclear-reactor pilot project in the U.S., but only if there are changes to regulation. The Microsoft Corp. co-founder said he intends to advocate for those changes in 2019 because he sees nuclear power as “the only carbon-free, scalable energy source that’s available 24 hours a day.”
“The world needs to be working on lots of solutions to stop climate change,” he wrote. “Advanced nuclear is one, and I hope to persuade U.S. leaders to get into the game.”

For the full story, see:
Greene, Jay. “Bill Gates Project Hit by Trade Fight.” The Wall Street Journal (Wednesday, Jan. 2, 2019): B3.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date Jan. 1, 2019, and has the title “Trump’s Tech Battle With China Roils Bill Gates Nuclear Venture.”)

Iowa Regulations Require Cosmetologists Get 16 Times the Training of Medics

(p. 6) The amount of time Ms. Lozano spent learning to give haircuts, manicures and facials was enormous, but the requirement was set by the state, and she didn’t much question it. She was determined to earn enough money to move out of her mother’s house. Only a few weeks after getting her cosmetology license in 2005, she was hired at a local Great Clips.
The job, though, paid just $9 an hour, which meant that her days double-shifting at Pizza Hut weren’t over. Even with tips, Ms. Lozano didn’t earn more than $25,000 in any of her first few years as a cosmetologist. For years, she relied on food stamps and health insurance from the state. She couldn’t cover living expenses and keep chipping away at her loan payments. Thirteen years after graduating, she still owes more than $8,000.
. . .
Each state sets its own standards. Most require 1,500 hours, and some, like New York and Massachusetts, require only 1,000. Iowa requires 2,100 — that’s a full year’s worth of 40-hour workweeks, plus an extra 20. By comparison, you can become an emergency medical technician in the state after 132 hours at a community college. Put another way: An Iowa cosmetologist who has a heart attack can have her life saved by a medic with one-sixteenth her training.
There’s little evidence that spending more hours in school leads to higher wages. Nor is there proof that extra hours result in improved public safety. But one relationship is clear: The more hours that students are forced to be in school, the more debt they accrue. Among cosmetology programs across the nation, Iowa’s had the fourth-highest median student debt in 2014, according to federal data.
. . .
(p. 7) Iowa, with its 2,100-hour standard, remains “an embarrassment,” said Dawn Pettengill, a Republican state representative who will retire next month. Hoping to lower the profession’s barrier to entry, Ms. Pettengill this year introduced legislation that would drop the hours to 1,500. Republicans in the Senate proposed a similar bill.
Schools and their lobbyists mounted a fierce pushback. The schools “were livid,” said State Senator Jason Schultz, a Republican subcommittee chairman. “I didn’t expect the amount of opposition.”
The school association’s political action committee had given more than $20,000 to Iowa candidates since 2014. It also had three lobbyists registered with the state; for the last session, the organization paid the lobbyists’ company $12,500.
While the dollar amounts weren’t huge, a little goes a long way in Des Moines. Hearings weren’t publicized, or even required, giving an advantage to the well-organized group.

For the full story, see:
Meredith Kolodner and Sarah Butrymowicz. “For-Profit Cosmetology Schools Can Entangle Students in Debt That $10-an-Hour Jobs Barely Dent.” The New York Times, SundayBusiness Section (Sunday, Dec. 30, 2018): 6-7.
(Note: ellipses added.)
(Note: the online version of the story has the date Dec. 26, 2018, and has the title “A $21,000 Cosmetology School Debt, and a $9-an-Hour Job.”)

Regulations to Keep Herds Small May Destroy Reindeer Herding

(p. A6) Jovsset Ante Sara, a boyish-looking 26-year-old, knows his section of the tundra as if it were a city grid, every hill and valley familiar, the land acquired over generations through the meticulous work of his ancestors.
He can tell his reindeer from any others by their unique earmark. And he and his family need them to live and preserve their claim to the land as well as their traditions.
That’s why, Mr. Sara says, he has refused to abide by Norwegian laws, passed more than a decade ago, that limit the size of reindeer herds. The measure was taken, the government says, to prevent overgrazing.
Mr. Sara’s herd was capped at 75. So every year, if the herd grows, he must pare it down. At least, those are the rules. He has refused to cull his 350 to 400 reindeer, and took the government to court.
. . .
For decades, the Norwegian government has designated reindeer herding as an exclusively Sami activity, providing herding licenses tied to ancestral lands.
The regulations limiting herd sizes were passed in 2007, forcing Sami to eliminate 30 percent of their reindeer at the time.
Mr. Sara said the limits have been devastating. If he obeyed the limit, he said, he would make only $4,700 to $6,000 a year.
“Clearly it’s not possible to make a living as the job has become quite expensive, requiring snowmobiles and all the equipment that goes along with that,” he said.
The law also states that any herders who are no longer profitable can lose their license. But that is not all Mr. Sara said he would lose.
“I would lose everything my ancestors worked their entire lives to create for us today,” he said. “I will lose the land.”

For the full story, see:
Nadia Shira Cohen. “The Hinterlands Where Reindeer Are a Way of Life.” The New York Times (Monday, Dec. 17, 2018): A6.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date Dec. 16, 2018, and has the title “NORWAY DISPATCH; Where Reindeer Are a Way of Life.”)

Chinese Entrepreneurs Anxious Over Growing Government Control of Private Enterprise

(p. A15) HONG KONG — The comments were couched in careful language, but the warning about China’s direction was clear.
China grew to prosperity in part by embracing market forces, said Wu Jinglian, the 88-year-old dean of pro-market Chinese economists, at a forum last month. Then he turned to the top politician in the room, Liu He, China’s economic czar, and said “unharmonious voices” were now condemning private enterprise.
“The phenomenon,” Mr. Wu said, “is worth noting.”
Mr. Wu gave rare official voice to a growing worry among Chinese entrepreneurs, economists and even some government officials: China may be stepping back from the free-market, pro-business policies that transformed it into the world’s No. 2 economy. For 40 years, China has swung between authoritarian Communist control and a freewheeling capitalism where almost anything could happen — and some see the pendulum swinging back toward the government.
. . .
China’s leadership turned to entrepreneurs in the late 1970s, after the government had led the economy to the brink of collapse. Officials gave them special economic zones where they could open factories with fewer government rules and attract foreign investors. The experiment was an unparalleled success. When extended to the rest of the country, it created a growth machine that helped make China second only to the United States in terms of economic heft.
Today, the private sector contributes nearly two-thirds of the country’s growth and nine-tenths of new jobs, according to the All-China Federation of Industry and Commerce, an official business group. So pressures on private businesses could create serious ripples.
“The private sector is experiencing great difficulties right now,” wrote Mr. Hu, the retired minister, who as the son of a former top Communist Party leader is often a voice for reform in China, in an essay posted online last Thursday. “We should try our best not to replicate the nationalization of private enterprise in the 1950s and the state capitalism.”
. . .
Private entrepreneurs are loath to speak out for fear of attracting official condemnation. But signs of distress aren’t hard to find.
Last month, Chen Shouhong, the founder of an investment research firm, asked a group of executive M.B.A. students — many of whom already owned publicly listed companies — to choose between panic and anxiety to describe how they feel about the economy. An overwhelming majority chose panic, according to a transcript. Mr. Chen declined to be interviewed.
. . .
Xiao Han, an associate law professor in Beijing, cited one of Aesop’s fables, of a man trying and failing to stop a donkey from going over a cliff.
“Before long,” Mr. Xiao said, “we’ll probably find a body of a China donkey under the cliff.”

For the full story, see:
Li Yuan. “China Muscles In on Its Free-Market Prosperity.”The New York Times (Thursday, Oct. 4, 2018): A1 & A12.
(Note: ellipses added.)
(Note: the online version of the story has the date Oct. 3, 2018, and has the title “Private Businesses Built Modern China. Now the Government Is Pushing Back.”)

Sam Peltzman Offers Advance Praise for Openness to Creative Destruction

We are told that robots are about to make us superfluous and that the giants of Silicon Valley will swallow the economy. Art Diamond’s “openness to creative destruction” provides a healthy antidote to all this gloom and doom. He gives us the necessary historical perspective: we owe our comfort and even our lives to generations of disruptive innovation. Yet each disruption bred apocalyptic portents like those we hear today. These did not come to pass because of new disruptions down the road. Diamond ably documents this process of “creative destruction” and its enormous historical benefit. He also provides a timely warning against heeding the pessimists of the moment by imposing legal and regulatory shackles on the innovators. “Openness to Creative Destruction” is a most valuable addition to the public discussion of innovation.

Sam Peltzman, Professor Emeritus of Economics, University of Chicago; Director Emeritus of the George J. Stigler Center for the Study of the Economy and the State. Author of Political Participation and Government Regulation, and other works.

Peltzman’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.

Tech Entrepreneurs Know Innovation Thrives in Flexible Labor Markets

(p. B1) A politically awakened Silicon Valley, buttressed by the tech industry’s growing economic power, could potentially alter politics long after President Trump has left the scene. But if the tech industry becomes a political force, what sort of policies will it push?
(p. B6) A new survey by political scientists at Stanford University suggests a mostly straightforward answer — with one glaring twist. The study is the first comprehensive look at the political attitudes of wealthy technologists, whose views have long been misunderstood to the point of caricature by many outside the industry.
. . .
Over all, the study showed that tech entrepreneurs are very liberal — among some of the most left-leaning Democrats you can find. They are overwhelmingly in favor of economic policies that redistribute wealth, including higher taxes on rich people and lots of social services for the poor, including universal health care.
. . .
Now for the twist. The study found one area where tech entrepreneurs strongly deviate from Democratic orthodoxy and are closer to most Republicans: They are deeply suspicious of the government’s efforts to regulate business, especially when it comes to labor. They said that it was too difficult for companies to fire people, and that the government should make it easier to do so. They also hope to see the influence of both private and public-sector unions decline.
. . .
. . . if they’re not libertarians, what accounts for techies’ opposition to regulation? One idea might be that it’s driven by self-interest. A large fraction said they opposed regulating car-sharing services as if they were taxis, for instance; to the extent that the tech elite have a lot of money riding on the sharing economy, they may worry that regulation of such companies could hurt their wallets.
. . .
To tease out whether self-interest was at play in their views on regulation, surveyors asked a question about Uber’s surge-pricing policy, which increases prices during periods of peak demand. But the researchers disguised it with a business unrelated to tech: “On a holiday, when there is a great demand for flowers, sellers usually increase their prices. Do you think it is fair for them to raise their prices like this?”
A majority of Democrats and Republicans said it would be unfair for a florist to do that. But 96 percent of the tech elite thought it would be fair.
“My guess is there’s an underlying principle to their views,” Dr. Broockman said. “They see an entrepreneur trying to do what they want in the marketplace, and they see nothing unfair about that.”

For the full commentary, see:
Farhad Manjoo. “Tech’s Giants Skew Liberal.” The New York Times (Thursday, Sept. 7, 2017): B1 & B6.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Sept. 6, 2017, and has the title “STATE OF THE ART; Silicon Valley’s Politics: Liberal, With One Big Exception.”)

The Stanford study, discussed above, has been published online in advance of print publication:
Broockman, David E., Gregory Ferenstein, and Neil Malhotra. “Predispositions and the Political Behavior of American Economic Elites: Evidence from Technology Entrepreneurs.” American Journal of Political Science published online on Nov. 19, 2018, https://doi.org/10.1111/ajps.12408.

Jack Ma Worries that Heavier Chinese Government Regulations Risk “Destroying Innovation”

(p. B3) SHANGHAI–Chinese e-commerce tycoon Jack Ma used a government-sponsored forum to suggest regulators take a lighter touch in dealing with technology companies, saying the market should be allowed to decide how new industries such as artificial intelligence develop.
“I personally think that the government has to do what the government should do, and the companies do what companies should do,” Mr. Ma said at the World Artificial Intelligence Conference in Shanghai on Monday, recalling a conversation he said he had last year with U.S. Secretary of Transportation Elaine Chao about self-driving cars.
“Protecting the backward forces who are crying out loud will be the most important factor in destroying innovation,” Mr. Ma said.

For the full story, see:
Yoko Kubota. “Jack Ma Urges Beijing to Ease Up.” The Wall Street Journal (Tuesday, September 18, 2018): B3.
(Note: the online version of the story has the date Sept. 17, 2018, and has the title “Alibaba’s Jack Ma Says Government Should Stick to Governing.”)

“Outsider Status” of Surgeons “Permitted Greater Risks and Leaps of Faith”

(p. A19) . . . as Arnold van de Laar reminds us in “Under the Knife: A History of Surgery in 28 Remarkable Operations,” a collection of hypervivid anecdotes and oddities, it was only recently that surgeons were considered the equals of what we would now call internists–doctors who diagnose, prescribe medicine and prognosticate.
. . .
. . . , it has been both the bane and the secret glory of surgery as a vocation that it was relegated for so long to the margins of “decent” intellectual or professional life. Its dodgy, outsider status perhaps permitted greater risks and leaps of faith than were available to nonsurgical physicians, who still found themselves making inchworm progress from the dictates of Hippocrates and Galen. Surgeons worked fast to beat pain and gangrene (so fast that in one case, Scottish surgeon Robert Liston cut off a man’s testicles in a rush to amputate his leg). They used whatever materials seemed to make sense–in some cases gold thread, costly but long-lasting; in other cases branding irons.

For the full review, see:
Laura Kolbe. “The Kindest Cuts.” The Wall Street Journal (Saturday, November 15, 2018): A19.
(Note: ellipses added.)
(Note: the online version of the review has the date Nov. 14, 2018, and has the title “BOOKSHELF; ‘Under the Knife’ Review: The Kindest Cuts.”)

The book under review, is:
van de Laar, Arnold. Under the Knife: A History of Surgery in 28 Remarkable Operations. New York: St. Martin’s Press, 2018.