Tariffs Evaded by Misclassification and Transshipment

(p. A1) One day in June [2018] , seven months after the U.S. imposed stiff tariffs on plywood from China, a wood importer in Oregon got a call from a supplier asking if he would like to get some Chinese plywood tariff-free.
How would that work, asked importer David Visse. The products carry an identification code that is checked by U.S. Customs agents.
“Don’t worry about it,” Mr. Visse says the supplier told him. The plywood would be stripped of its Chinese markings, and “we’ll ship it under some other code.”
Every product imported into the U.S. carries a 10-digit designation called an HTS code, of which there are 18,927 in all. Like a taxonomic version of Noah’s Ark, the code provides a common language to bridge disparate markets and identify products in all their variety.
In a world of increasing tariffs, the code has another function: evading those levies. The business of code-fudging is expanding in step with tariff increases, undermining U.S. efforts to shield American business from foreign competition, according to importers, customs officials, trade attorneys and shipping brokers.
As trade conflict grows between the two largest economies, these professionals say, code misclassification is starting to compete (p. A10) with transshipment–the rerouting of goods through third countries–as a way to duck tariffs.

For the full story, see:
Chuin-Wei Yap. “Trade Fight Spurs Tariff Dodges, With 18,927 Options.” The Wall Street Journal (Tuesday, Oct. 9, 2018): A1 & A10.
(Note: bracketed year added.)
(Note: the online version of the story has the date Oct. 8, 2018, and has the title “The U.S.-China Trade Battle Spawns a New Era of Tariff Dodges.”)

PNAS Article Argues Renewable Energy Cannot Fully Replace Traditional Energy by 2050

(p. B1) Democrats in both the United States Senate and in the California Assembly have proposed legislation this year calling for a full transition to renewable energy sources.
They are relying on what looks like a watertight scholarly analysis to support their call: the work of a prominent energy systems engineer from Stanford University, Mark Z. Jacobson. With three co-authors, he published a widely heralded article two years ago asserting that it would be eminently feasible to power the American economy by midcentury almost entirely with energy from the wind, the sun and water. What’s more, it would be cheaper than running it on fossil fuels.
And yet the proposition is hardly as solid as Professor Jacobson asserts.
In a long-awaited article published this week in The Proceedings of the National Academy of Sciences — the same journal in which Professor Jacobson’s manifesto appeared — a group of 21 prominent scholars, including physicists and engineers, climate scientists and sociologists, took a fine comb to the Jacobson paper and dismantled its conclusions bit by bit.
. . .
(p. B5) The conclusion of the critique is damning: Professor Jacobson relied on “invalid modeling tools,” committed “modeling errors” and made “implausible and inadequately supported assumptions,” the scholars wrote. “Our paper is pretty devastating,” said Varun Sivaram from the Council on Foreign Relations, a co-author of the new critique.
. . .
The weakness of energy systems powered by the sun and the wind is their intermittency. Where will the energy come from when the sun isn’t shining and the wind isn’t blowing? Professor Jacobson addresses this in two ways, vastly increasing the nation’s peak hydroelectricity capacity and deploying energy storage at a vast scale.
“To repower the world, we need to expand a lot of things to a large scale,” Professor Jacobson told me. “But there is no reason we can’t scale up.”
Actually, there are reasons. The main energy storage technologies he proposes — hydrogen and heat stored in rocks buried underground — have never been put in place at anywhere near the scale required to power a nation, or even a large city.
His system requires storing seven weeks’ worth of energy consumption. Today, the 10 biggest storage systems in the United States combined store some 43 minutes. Hydrogen production would have to be scaled up by a factor of 100,000 or more to meet the requirements in Professor Jacobson’s analysis, according to his critics.

For the full commentary, see:
Eduardo Porter. “ECONOMIC SCENE; Traditional Sources of Energy Have Role in Renewable Future.” The New York Times (Tuesday, June 21, 2017): B1.
(Note: ellipses added.)
(Note: the online version of the commentary has the date June 20, 2017, and has the title “ECONOMIC SCENE; Fisticuffs Over the Route to a Clean-Energy Future.”)

The PNAS “devastating” critique of a total switch to renewable energy, is:
Clack, Christopher T. M., Staffan A. Qvist, Jay Apt, Morgan Bazilian, Adam R. Brandt, Ken Caldeira, Steven J. Davis, Victor Diakov, Mark A. Handschy, Paul D. H. Hines, Paulina Jaramillo, Daniel M. Kammen, Jane C. S. Long, M. Granger Morgan, Adam Reed, Varun Sivaram, James Sweeney, George R. Tynan, David G. Victor, John P. Weyant, and Jay F. Whitacre. “Evaluation of a Proposal for Reliable Low-Cost Grid Power with 100% Wind, Water, and Solar.” Proceedings of the National Academy of Sciences 114, no. 26 (June 27, 2017): 6722-27.

Medtronic Founded in Garage

(p. A1) In the mid-1950s, heart pacemakers were bulky devices that had to be wheeled around on carts and plugged into a wall socket. A heart surgeon in Minneapolis asked Earl Bakken if he could make something better. After consulting a back issue of Popular Electronics, Mr. Bakken within a few weeks fashioned a wearable pacemaker powered by a battery.
. . .
Mr. Bakken, who died Oct. 21 [2018] at the age of 94, had no inkling he was creating anything more than a local repair shop when he and a brother-in-law, Palmer Hermundslie, set up Medtronic. “We didn’t analyze or study the market,” he wrote in “One Man’s Full Life,” a 1999 memoir. “We just did it.”
Medtronic’s inventions eventually sustained him physically as well as financially. “I’m on my second pacemaker, and I’m on about my third or fourth insulin pump,” he told the St. Paul Pioneer Press in 2010. “So I’m glad I invented the company, or I wouldn’t be sitting here.”
. . .
Noting his talents, university medical personnel sometimes asked Mr. Bakken to fix their equipment. He noticed that few hospitals had technical staffs to maintain their electrical gear. A chat with his brother-in-law, Mr. Hermundslie, prompted them to fill that niche by setting up a repair shop inside a garage.
. . .
In 1957, a power outage was blamed for the death of a baby dependent on a plug-in pacemaker. A University of Minnesota heart surgeon, Dr. C. Walton Lillehei, asked for alternative technology. Mr. Bakken found a design for an electronic metronome in Popular Electronics and used that as the model for a circuit. He housed the circuitry in a metal box small enough to be taped to a patient’s chest. After a successful test on a dog, Dr. Lillehei began using the device. Articles he wrote about it created a stir, and soon Medtronic was receiving orders from around the world.

For the full obituary, see:
James R. Hagerty. “Founder Started Medtronic as a Local Repair Shop.” The Wall Street Journal (Tuesday, Oct. 27, 2018): A6.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the obituary has the date Oct. 26, 2018, and has the title “Medtronic Founder Earl Bakken Turned a Tiny Repair Shop Into a Giant of Medical Technology.”)

The autobiography mentioned above, is:
Bakken, Earl E. One Man’s Full Life. Fridley, MN: Medtronic, Inc., 1999.

Bureaucratic FDA Delays Approvals for Fear “We’ll Be Toast”

(p. A21) Oct. 30 [2018] marks the 36th anniversary of the FDA’s approval of human insulin synthesized in genetically engineered bacteria, the first product made with “gene splicing” techniques. As the head of the FDA’s evaluation team, I had a front-row seat.
. . .
My team and I were ready to recommend approval after four months’ review. But when I took the packet to my supervisor, he said, “Four months? No way! If anything goes wrong with this product down the road, people will say we rushed it, and we’ll be toast.” That’s the bureaucratic mind-set. I don’t know how long he would have delayed it, but when he went on vacation a month later, I took the packet to his boss, the division director, who signed off.
That anecdote is an example of Milton Friedman’s observation that to understand the motivation of an individual or organization, you need to “follow the self-interest.” A large part of regulators’ self-interest lies in staying out of trouble. One way to do that, my supervisor understood, is not to approve in record time products that might experience unanticipated problems.

For the full commentary, see:
Miller, Henry I. “Follow the FDA’s Self-Interest; While approving a new form of insulin, I saw how regulators protect themselves.” The Wall Street Journal (Monday, Oct. 29, 2018: A21.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the commentary has the date Oct. 28, 2018.)

Top Fourth of Humanities Grads Earn Far More Than Bottom Fourth of Engineering Grads

(p. A3) Graduates of liberal arts areas like philosophy, foreign languages, ethnic and gender studies, history and English all have a better-than-even chance of landing a job that fits their education level.
They may not pay well, with teaching and social services popular destinations, but graduates can expect to fare better in terms of landing credential-appropriate roles than transportation, culinary services, agriculture and public administration majors.
. . .
The report’s findings are bolstered by research from Georgetown University’s Center on Education and the Workforce, which has found that job prospects and earnings vary widely by college major, with some counterintuitive results. For example, the bottom quartile of architecture and engineering majors earn far less than the top quartile of humanities and social science majors.

For the full story, see:
Melissa Korn. “Many Grads Underemployed After College.” The Wall Street Journal (Saturday, Oct. 27, 2018): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date Oct. 26, 2018, and has the title “Some 43% of College Grads Are Underemployed in First Job.”)

P&G Bureaucracy Suffocates New Chapter

(p. A5) Vermonters Paul and Barbi Schulick sold their vitamin business to Procter & Gamble Co. in 2012, hoping P&G ‘s PG’s deep pockets would fund research needed to nurture the small-but-profitable company.
Instead of growing, New Chapter, founded in 1982 by the Schulicks, spiraled downward.
. . .
The Schulicks kept roles at the company training managers and running research and development at its offices in Brattleboro, Vt., but this month they quit. They said excessive bureaucracy hurt New Chapter and that P&G–coming off a fight with activist investor Nelson Peltz–ramped up pressure for profitability and vetoed plans to develop breakthrough products.
M”The patience factor has really worn out” at P&G, Mr. Schulick said in an interview. “There is a lot of pressure to meet targets, and we weren’t responding fast enough.”

For the full story, see:
Sharon Terlep. “At P&G, Vitamins Maker Loses Energy.” The Wall Street Journal (Friday, July 20, 2018: A5.
(Note: ellipsis added.)
(Note: the online version of the story has the date July 19, 2018, and has the title “They Sold Their Startup to P&G. It Struggled. They Quit.”)

Benjamin Powell Offers Advance Praise for Openness to Creative Destruction

Productive entrepreneurship is not automatic. Art Diamond’s new book brilliantly illustrates how free markets allow entrepreneurs to innovate in ways that disrupt economy activity and, crucially and contrary to popular fears, ultimately reorganize production in ways that allow us to live longer, richer, and more flourishing lives.

Benjamin Powell, Professor of Business Economics, Texas Tech University. Author of Out of Poverty, and other works.

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

Civil-Rights Leaders Argue That Green Policies Saddle the Poor “with Higher Living Costs”

(p. A19) French President Emmanuel Macron stirred popular rage by trying to raise the gasoline tax by about 25 cents a gallon. He argued that higher taxes would reduce fuel use and hence emissions of CO2, helping France meet the lower emissions goals to which it is pledged as a signatory to the United Nations’ Paris Agreement to fight climate change.
Mr. Macron has learned the hard way that voters don’t see climate change as a threat demanding personal sacrifices. The rebellion is global. Green measures that caused energy prices to soar damaged Chancellor Angela Merkel in Germany’s 2017 election. Green energy plans were repudiated by voters in Australia and helped cause a political upheaval in the Canadian province of Ontario.
Voters in Washington state and Arizona rejected November ballot measures aimed at reducing CO2 emissions. The Journal’s William McGurn reported last week that 200 prominent civil-rights leaders have filed suit against the California Air Resources Board. Green policies, they argue, are saddling the poor with higher living costs.

For the full commentary, see:
George Melloan. “The Yellow Jackets Are Right About Green Policies; They have distinguished company in questioning the science behind climate-change dogma.” The Wall Street Journal (Monday, Dec. 17, 2018): A19.
(Note: the online version of the commentary has the date Dec. 16, 2018.)

“Artificial Barriers to Housing Production”

(p. A3) America’s housing shortage is more wide-ranging than cloistered coastal markets, stretching from pricey locales such as California and Massachusetts to more surprising places, such as Arizona and Utah.
Some 22 states and the District of Columbia have built too little housing to keep up with economic growth in the 15 years since 2000, resulting in a total shortage of 7.3 million units, according to research to be released Monday by an advocacy group for loosening building regulations.
California bears half of the blame for the shortage: The state built 3.4 million too few units to keep up with job, population and income growth.
. . .
“The artificial barriers to housing production aren’t constrained just to California,” said Mike Kingsella, executive director of the Up For Growth National Coalition. “As we dug into the numbers behind this, at a local market level, we’re seeing a pronounced affordability challenge in places like even Arizona.”
Arizona and Utah are among the states that have built too little housing in the 15-year period, according to the report.

For the full story, see:
Laura Kusisto. “Shortages in Housing Are Widespread.” The Wall Street Journal (Tuesday, April 17, 2018): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date April 16, 2018, and has the title “Homebuilding Isn’t Keeping Up With Growth, Development Group Says.”)

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.”)

Early Medical “Leaps of Ingenuity”

(p. A17) Using a panoply of colorful examples, the author artfully illustrates the frustrations, uncertainty, poorly founded confidence and frequent futility of medical practice in the prescientific age. Employing a consistently light and humorous touch, he effortlessly navigates a cornucopia of fascinating, esoteric and obscure patient histories.
The carefully selected vignettes demonstrate the befuddled mindset of the well-intentioned physicians who were forced to contend with the vagaries of damaged and failing human flesh without the benefit of anesthesia, and armed with little more than the fanciful theories of Galen (a second-century Greek who attributed disease to imbalances of the four “humors”: blood, phlegm, and yellow and black bile) and an elementary knowledge of human anatomy.
Yet despite their lack of mechanistic understanding, these individuals showed leaps of ingenuity no less startling than those of today’s physicians and genome rewriters. To avoid subjecting himself to the dangers of 18th-century surgery to remove a bladder stone, Mr. Morris tells us, the French-born surgeon Claude Martin fashioned an instrument out of a knitting needle and a whalebone handle, which he then inserted through his urethra and used to manually file away the stone.

For the full review, see:
Adrian Woolfson. “BOOKSHELF; Desperate Remedies; Treatments of old for common health ills included tobacco-smoke enemas, arsenic cigarettes–and the “Pigeon’s-Rump Cure.” The Wall Street Journal (Tuesday, Dec. 13, 2018): A17.
(Note: ellipses added.)
(Note: the online version of the review has the date Dec. 12, 2018, and has the title “BOOKSHELF; ‘The Mystery of the Exploding Teeth’ Review: Desperate Remedies; Treatments of old for common health ills included tobacco-smoke enemas, arsenic cigarettes–and the “Pigeon’s-Rump Cure.”)

The book under review, is:
Morris, Thomas. The Mystery of the Exploding Teeth: And Other Curiosities from the History of Medicine. New York: Dutton, 2018.