Elon Musk Likes Government the Referee, Not Government the Subsidizer

Here are some especially important passages from the Wall Street Journal transcript of the Elon Musk interview:

Joanna Stern

Well, I want to come back to autonomous vehicles, but wanted to just stay a little bit more on the role of government. You said at this conference, actually, a year ago, that you think the government should really just be hands off when it comes to innovation. Though with this bill, there is a lot of support for EVs and it could be the biggest change that we’ve seen throughout the country in terms of the infrastructure of EVs. And it helps Tesla. What do you think the role of government should be?

Elon Musk

I think the role of government should be that of, like, a referee. But not a player on the field. So generally, government should just try to get out of the way and not impede progress. I think there’s a general problem, not just in the U.S., but in most countries, where the rules and regulations keep increasing every year.

Rules and regulations are immortal. They don’t die. Occasionally you see a law with a sunset provision, but really, otherwise, the vast majority of rules and regulations live forever. And so if more rules and regulations are applied every year and it just keeps growing and growing, eventually it just takes longer and longer and it’s harder to do things.

And there’s not really an effective garbage collection system for removing rules and regulations. And so gradually this hardens the arteries of civilization, where you’re able to do less and less over time. So I think governments should be really trying hard to get rid of rules and regulations that perhaps had some merit at some point but don’t have merit currently. But there’s very little effort in this direction. This is a big problem. Continue reading “Elon Musk Likes Government the Referee, Not Government the Subsidizer”

Return of New York City Oysters Are a Hopeful “Symbol of Resilience”

(p. A10) The restoration of New York Harbor has reached a new milestone as 2021 draws to a close: 11.2 million juvenile oysters have been added in the past six months to a section of the Hudson River off the coast of Lower Manhattan, where they are helping to filter the water and creating habitats for other marine life.

. . .

. . ., in addition to the ones being introduced, wild ones are being found on the bottoms of piers off the West Side of Manhattan and in the Bronx.

. . .

. . . the oysters are a symbol of resilience, and a rare hopeful sign amid ominous news about New York waterways in the age of rapid climate change.

If they grow big enough, the oyster reefs can even play a role in dissipating wave energy, helping to protect the city’s shorelines from storm surges and flooding in extreme weather.

. . .

The researchers at the River Project will track the oysters and their effect on the water. They run a small, free aquarium at Pier 40 that is designed expressly to educate the public about the abundant marine life in the area.

One very special oyster, named Big, lives under the pier. At 8.6 inches and 1.9 pounds, it was believed to be the biggest oyster found in New York Harbor in a century when it was discovered in 2018.

For the full story, see:

Karen Zraick. “11 Million New Oysters. Want to Eat One? Maybe in 100 Years.” The New York Times (Saturday, December 11, 2021): A10.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 10, 2021, and has the title “11 Million New Oysters in New York Harbor (but None for You to Eat).”)

Open Source Log4j Software Bug “Poses a Severe Risk”

In Openness to Creative Destruction, I argue that open source software has severe drawbacks, compared to a system where firms receive higher profits for selling better software. The severe Log4j bug, discussed in the quoted passages below, is an example that strongly supports my argument.

(p. B1) The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency issued an urgent alert about the vulnerability and urged companies to take action. CISA Director Jen Easterly said on Saturday, “To be clear, this vulnerability poses a severe risk.”  . . .  Germany’s cybersecurity organization over the weekend issued a “red alert” about the bug. Australia called the issue “critical.”

Security experts warned that it could take weeks or more to assess the extent of the damage and that hackers exploiting the vulnerability could access sensitive data on networks and install back doors they could use to maintain access to servers even after the flawed software has been patched.

“It is one of the most significant vulnerabilities that I’ve seen in a long time,” said Aaron Portnoy, principal scientist with the security firm Randori.

. . .

(p. B2) The software flaw was reported late last month to the Log4j development team, a group of volunteer coders who distribute their software free-of-charge as part of the Apache Software Foundation, according to Ralph Goers, a volunteer with the project. The foundation, a nonprofit group that helps oversee the development of many open-source programs, alerted its user community about the vulnerability on Dec. 9 [2021].

“It’s a very critical issue,” Mr. Goers said. “People need to upgrade to get the fix,” he said. Log4j is used on servers to keep records of users’ activities so they can be reviewed later on by security or software development teams.

Because Log4j is distributed free, it is unclear how many servers are affected by the bug, but the logging software has been downloaded millions of times, Mr. Goers said.

For the full story, see:

Robert McMillan. “Software Flaw Spurs Race to Patch Bug.” The Wall Street Journal (Monday, December 13, 2021): B1-B2.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story was updated Dec. 12, 2021, and has the title “Software Flaw Sparks Global Race to Patch Bug.”)

My book, mentioned above, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

“Americans Think the Economy Is in Rough Shape Because the Economy Is in Rough Shape”

(p. A12) Offices remain eerily empty. Airlines have canceled thousands of flights. Subways and buses are running less often. Schools sometimes call off entire days of class. Consumers waste time waiting in store lines. Annual inflation has reached its highest level in three decades.

Does this sound like a healthy economy to you?

In recent weeks, economists and pundits have been asking why Americans feel grouchy about the economy when many indicators — like G.D.P. growth, stock prices and the unemployment rate — look strong.

But I think the answer to this supposed paradox is that it’s not really a paradox: Americans think the economy is in rough shape because the economy is in rough shape.

Sure, some major statistics look good, and they reflect true economic strengths, including the state of families’ finances. But the economy is more than a household balance sheet; it is the combined experience of working, shopping and interacting in society. Americans evidently understand the distinction: In an Associated Press poll, 64 percent describe their personal finances as good — and only 35 percent describe the national economy as good.

There are plenty of reasons. Many services don’t function as well as they used to, largely because of supply-chain problems and labor shortages. Rising prices are cutting into paychecks, especially for working-class households. People spend less time socializing. The unending nature of the pandemic — the masks, Covid tests, Zoom meetings and anxiety-producing runny noses — is wearying.

For the full commentary, see:

David Leonhardt. “The Economy Looks Healthy, but Americans Know It’s Rough Out There.” The New York Times (Saturday, December 11, 2021): A12.

(Note: the online version of the commentary has the date Dec. 10, 2021, and has the title “Covid Malaise.”)

When Sri Lanka Government Banned Chemical Fertilizers, Yields Tanked and Prices “Shot Up”

(p. A4) RATNAPURA, Sri Lanka — This year’s crop worries M.D. Somadasa. For four decades, he has sold carrots, beans and tomatoes grown by local farmers using foreign-made chemical fertilizers and pesticides, which helped them reap bigger and richer crops from the verdant hills that ring his hometown.

Then came Sri Lanka’s sudden, and disastrous, turn toward organic farming. The government campaign, ostensibly driven by health concerns, lasted only seven months. But farmers and agriculture experts blame the policy for a sharp drop in crop yields and spiraling prices that are worsening the country’s growing economic woes and leading to fears of food shortages.

Prices for some foodstuffs, like rice, have risen by nearly one-third compared with a year ago, according to Sri Lanka’s central bank. The prices of vegetables like tomatoes and carrots have risen to five times their year-ago levels.

“I haven’t seen times that were as bad as these,” said Mr. Somadasa, a 63-year-old father of two who sells vegetables in the small town of Horana, just outside the island nation’s capital, Colombo. “We can’t find enough vegetables. And with the price hikes, people find it hard to buy the vegetables.”

. . .

President Gotabaya Rajapaksa cited health concerns when his government banned the importation of chemical fertilizers in April [2021], a pledge he had initially made during his 2019 election campaign.

. . .

The push for organic farming didn’t start with Mr. Rajapaksa’s current government, nor when another brother, Mahinda Rajapaksa, currently the prime minister, was president from 2005 to 2015. Some farmers and agriculture industry officials say they are warming to the idea of reducing dependence on chemicals in farming. But the shift was too sudden for farmers who didn’t know how to work organically, said Nishan de Mel, director of Verité Research, a Colombo-based analysis firm.

Verité found in a July [2021] survey that three-quarters of Sri Lanka’s farmers relied heavily on chemical fertilizers, while just about 10 percent cultivated without them. Almost all major crops grown in the country depend on the chemicals. For crops crucial to the economy like rice, rubber and tea, the dependence reaches 90 percent or more.

The April ban went into effect just before what is known as the Yala planting season, which lasts from May to August, and was felt almost immediately. The Verité survey showed that 85 percent of farmers expected a reduction in their harvest because of the fertilizer ban. Half of them feared that their crop yield could fall by as much as 40 percent.

Food prices shot up in September [2021], . . .

For the full story, see:

Aanya Wipulasena and Mujib Mashal. “A Plunge Into Organic Farming Brings Disaster to Sri Lanka.” The New York Times (Wednesday, December 8, 2021): A4.

(Note: ellipses, and bracketed years, added.)

(Note: the online version of the story has the date Dec. 7, 2021, and has the title “Sri Lanka’s Plunge Into Organic Farming Brings Disaster.”)

Of 176 Countries, 171 Are More Democratic Than Communist China

(p. A12) . . . the University of Würzburg in Germany, . . . ranks countries based on variables like independence of the judiciary, freedom of the press and integrity of elections. The most recent put China near the bottom among 176 countries. Only Saudi Arabia, Yemen, North Korea and Eritrea rank lower. Denmark is first; the United States 36th.

In China, the Communist Party controls the courts and heavily censors the media. It has suppressed Tibetan culture and language, restricted religious freedom and carried out a vast detention campaign in Xinjiang.

What’s more, China’s vigorous defense of its system in recent months has done nothing to moderate its prosecution of dissent.

Two of China’s most prominent human rights lawyers, Xu Zhiyong and Ding Jiaxi, are expected to face trial at the end of this year on charges that they called for more civil liberties, according to Jerome Cohen, a law professor specializing in China at New York University. A Chinese employee of Bloomberg News in Beijing has remained in detention for a year, as of Tuesday, with almost no word about the accusations against her.

Under Mr. Xi’s rule, intellectuals are now warier of speaking their minds in China than at practically any time since Mao Zedong died in 1976.

“This is an extraordinary time in the Chinese experience,” Mr. Cohen said. “I really think that the totalitarianism definition applies.”

For the full story, see:

Keith Bradsher and Steven Lee Myers. “Beijing Claims China Uses Its Own Variety Of Democracy to Govern.” The New York Times (Wednesday, December 8, 2021): A6.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 7, 2021, and has the title “Ahead of Biden’s Democracy Summit, China Says: We’re Also a Democracy.”)

The most recent (2020) University of Würzburg ranking can be found at:

https://www.democracymatrix.com/ranking

“Unanticipated Tragedies Are Unpreventable, No Matter How Many Regulations”

(p. A15) Dr. Offit acknowledges the limits of regulatory fixes, noting that, while regulatory guidelines are important, “unanticipated tragedies are unpreventable, no matter how many regulations, training programs, fines, and penalties are put in place.” He contrasts the tragic death in 1999 of 18-year-old Jesse Gelsinger in an early gene-therapy study—aimed at remediating a rare enzyme deficiency—with the triumphant experience of Emily Whitehead, a girl with leukemia treated 11 years later at the same university with genetically manipulated T-cells. Gelsinger’s death has been ascribed to protocol deficiencies, conflicts of interest and inadequate regulation, but “a closer look,” Dr. Offit writes, “shows that the only difference between the outcomes of Emily Whitehead and Jesse Gelsinger were luck and timing.” The specific supportive approach used by Whitehead’s doctors to address a life-threatening complication of her T-cell infusion stemmed directly from the lessons learned during Gelsinger’s ordeal. We recognize successes, Dr. Offit laments, but “never the failures that made those successes possible.”

One anxiety suffusing every page of “You Bet Your Life” is what to make of the Covid-19 vaccines. Dr. Offit, a member of the FDA’s vaccine advisory committee, has been described in The Wall Street Journal as “an outspoken advocate of the science and value of vaccinations,” including the Covid-19 vaccine. He has described its clinical-trial data as “enormously reassuring” and has seen little evidence of “a very rare, serious side effect that would be something that would cause a long term problem.” Yet his review of the history of vaccination and of its complexities evokes surprising empathy for the vaccine-hesitant. He recounts the early days of the Salk polio vaccine, which saved lives yet also tragically transmitted the disease to some patients when the product was inadequately prepared by one of its manufacturers. He notes that “the first vaccines aren’t always the best, safest, and last” and regrets the “disturbing show of hubris” by the Covid vaccine developers.

Ultimately, Dr. Offit emphasizes, we need to come to terms with the fact that all medical technologies carry risk—as does the decision not to avail oneself of them. “A choice not to get a vaccine is not a risk-free choice,” Dr. Offit notes. Either way, he says, “you’re gambling”—so “choose the lesser risk.”

For the full review, see:

David A. Shaywitz. “BOOKSHELF; The Dangers Of Finding a Cure.” The Wall Street Journal (Tuesday, Nov. 09, 2021): A15.

(Note: the online version of the review has the date November 8, 2021, and has the title “BOOKSHELF; ‘You Bet Your Life’ Review: The Dangers of Finding a Cure.”)

The book under review is:

Offit, Paul A. You Bet Your Life: From Blood Transfusions to Mass Vaccination, the Long and Risky History of Medical Innovation. New York: Basic Books, 2021.

MIT Cancels Chicago Professor for Saying Merit Matters

(p. A13) I am a professor at the University of Chicago. I was recently invited to give an honorary lecture at the Massachusetts Institute of Technology. The lecture was canceled because I have openly advocated moral and philosophical views that are unpopular on university campuses.

Here are those views:

I believe that every human being should be treated as an individual worthy of dignity and respect. In an academic context, that means evaluating people for positions based on their individual qualities, not on membership in favored or disfavored groups. It also means allowing them to present their ideas and perspectives freely, even when we disagree with them.

I care for all of my students equally. None of them are overrepresented or underrepresented to me: They represent themselves. Their grades are based on a process that I define at the beginning of the quarter. That process treats each student fairly and equally. I hold office hours for students who would like extra help so that everyone has the opportunity to improve his or her grade through hard work and discipline.

Similarly, I believe that admissions and faculty hiring at universities are best focused on academic merit, with the goal of producing intellectual excellence. We should not penalize hard-working students and faculty applicants simply because they have been classified as belonging to the wrong group. It is true that not everyone has had the same educational opportunities. The solution is improving K-12 education, not introducing discrimination at late stages.

. . .

. . ., the university has a duty to encourage students and faculty to offer their opinions and insight on the widest possible range of topics.

. . .

. . . hurt feelings are no reason to ban certain topics. We are all responsible for our own feelings. We cannot control things that are external to us, such as the comments of others, but we can control how we respond to them.

For the full commentary, see:

Dorian Abbot. “The Views That Made Me Persona Non Grata at MIT.” The Wall Street Journal (Saturday, Oct. 30, 2021): A13.

(Note: ellipses added.)

(Note: the online version of the commentary was updated Oct. 29, 2021, and has the same title as the print version.)

Firm Founders May Be More Innovative Than Professional Managers

(p. B11) In tech, there is often a visionary premium and it is at least somewhat justified. Tracking public companies’ performance over 25 years, Bain & Co. found the companies that best maintained profitable growth over the long term were disproportionately those at which the founder was still running the business, was still involved or where the founders’ operational focus was still in place. Based on an analysis of S&P 500 companies done in 2014, Bain found that founder-led companies generated over three times the indexed total shareholder return of other companies in the preceding 15 years. One wonders how much the study is affected by survivorship bias, though—those who flopped early aren’t in the sample.

Founders certainly are bolder. A 2016 study out of the Krannert School of Management at Purdue University found that founder CEOs are more likely to take their companies in a new technological direction, providing evidence that innovations of founder CEO-managed firms create more financial value than the innovations of professional CEO-managed firms.

Apple, which languished as a computer company in the years after its co-founder Steve Jobs was ousted, offers a twist on this phenomenon. Mr. Jobs returned as a savior. Among other things, he changed the company’s name from Apple Computer Inc. to Apple Inc., signaling an expansion of focus to a legacy that now includes the likes of the iPod, iPhone, Apple TV and more.

. . .

Mr. Dorsey’s major shortcoming at Twitter actually was a lack of such bold innovation. Activist investors who began calling for his departure years before it came have long pushed for faster product development and bigger revenue and user targets. They also took issue with the fact that Mr. Dorsey split his time as the chief of two publicly traded companies. When questioned at a shareholder meeting about his split time, Mr. Dorsey responded that it wasn’t a function of time, but of prioritization. During his second stint as chief executive over the course of more than six years, Twitter’s stock rose just one-fifth as much as the S&P 500.

Perhaps he prioritized his payments company, which is around 20 times as valuable today than it was in late 2015 when it went public. There are many current examples of tech companies still excelling with a founder or co-founder at the top. Nvidia and Shopify, which have returned more than 80,000% and nearly 6,000% to shareholders, respectively, since their public debuts, come to mind.

For the full commentary, see:

Laura Forman. “HEARD ON THE STREET; Many Tech Founders Can’t Stay Too Long.” The Wall Street Journal (Tuesday, December 7, 2021): B11.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Dec. 6, 2021, and has the title “HEARD ON THE STREET; Should Investors Ride Tech Founders to the Moon?”)

I cannot find evidence that the Krannert School of Management paper mentioned above has been published. An abstract appeared as:

Lee, Joon Mahn, Jongsoo Jays Kim, and Bae Joonhyung. “Are Founder CEOs Better Innovators? Evidence from S&P 500 Firms.” Academy of Management Annual Meeting Proceedings 2016.

Demand for Oil and Gas “Will Remain Robust for Years to Come”

(p. B1) The leaders of the world’s largest oil companies said Monday [Dec. 6, 2021] that demand for the products they make will remain robust for years to come even as the world attempts to transition to lower-carbon energy sources.

The chief executives of Exxon Mobil Corp., Chevron Corp. and Saudi Arabian Oil Co., speaking at the World Petroleum Congress in Houston, said that while the world needs to address the risks posed by climate change, global economies cannot function without fossil fuels.

“Oil and gas continue to play a central role in meeting the world’s energy needs, and we play an essential role in delivering them in a lower carbon way,” Chevron CEO Mike Wirth said Monday. “Our products make the world run.”

. . .

(p. B2) Jeff Miller, chief executive of Halliburton Co., said Monday that the world’s underinvestment in oil and gas since 2014—years in which international spending was 50% below historical norms—is leading global markets to an era of scarcity.

. . .

Just a few weeks ago, some market observers had predicted crude prices could soon hit $100 a barrel for the first time in seven years, on the back of a strengthening demand recovery and sluggish growth in oil supplies.

For the full story, see:

Collin Eaton and Christopher M. Matthews. “Demand for Fossil Fuels Seen Lasting for Years.” The Wall Street Journal (Tuesday, December 7, 2021): B1-B2.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story was updated Dec. 6, 2021, and has the title “Demand for Oil, Gas to Remain Robust for Years, Energy Leaders Say.”)

Solve Future Crises by Allowing the Nimble to Innovate

Donald Boudreaux, on his Café Hayek blog, quotes a passage from my Openness book, saying that the best way to prepare for unknown future crises is to sustain a society where nimble innovators are allowed to nimbly innovate. Donald posted the quote on Mon., Dec. 6, 2021.

My book is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.