Steady Increase in Federal Regulations

RegulationsRiseGraph2017-02-03.jpgSource of graph: online version of the WSJ article quoted and cited below.

(p. A2) In a high-profile attack on growth-killing red tape, President Donald Trump this week ordered that any agency issuing a new rule find two to repeal.

He will likely discover that the only thing harder than getting something done in Washington is getting it undone.
Vast swaths of rules are untouchable because Congress ordered them to be written or the president himself demanded them..

For the full story, see
Ip, Greg. “CAPITAL ACCOUNT; Trump May Find Leviathan Hard to Tame.” The Wall Street Journal (Thurs., Feb. 2, 2017): A2.
(Note: the online version of the story has the date Feb. 1, 2017, and has the title “CAPITAL ACCOUNT; Donald Trump May Find Leviathan Hard to Tame.”)

“More Women in Their 60s and 70s” Work in Fulfilling Jobs

(p. 1) Kay Abramowitz has been working, with a few breaks, since she was 14. Now 76, she is a partner in a law firm in Portland, Ore. — with no intention of stopping anytime soon. “Retirement or death is always on the horizon, but I have no plans,” she said. “I’m actually having way too much fun.”
The arc of women’s working lives is changing — reaching higher levels when they’re younger and stretching out much longer — according to two new analyses of census, earnings and retirement data that provide the most comprehensive look yet at women’s career paths.
. . .
Most striking, women have become significantly more likely to work into their 60s and even 70s, often full time, according to the analyses. And many of these women report that they do it because they enjoy it.
. . .
Nearly 30 percent of women 65 to 69 are working, up from 15 percent in the late 1980s, one of the analyses, by the Harvard economists Claudia Goldin and Lawrence Katz, found. Eighteen per-(p. 4)cent of women 70 to 74 work, up from 8 percent.
. . .
Of those still working, Ms. Goldin said, “They’re in occupations in which they really have an identity.” She added, “Women have more education, they’re in jobs that are more fulfilling, and they stay with them.” (Ms. Goldin happens to be an example of the phenomenon, as a 70-year-old professor and researcher.)

For the full story, see:
Claire Cain Miller. “With More Women Fulfilled by Work, Retirement Has to Wait.” The New York Times, First Section (Sun., FEB. 12, 2017): 1 & 4.
(Note: ellipses added.)
(Note: the online version of the article has the date FEB. 11, 2017, and has the title “More Women in Their 60s and 70s Are Having ‘Way Too Much Fun’ to Retire.”)

The paper by Goldin and Katz, mentioned above, is:
Goldin, Claudia, and Lawrence F. Katz. “Women Working Longer: Facts and Some Explanations.” NBER Working Paper #22607. National Bureau of Economic Research, Inc., Sept. 2016.

Israelis Are Tenacious, Informal, Question Authority, and Tolerate Failure

(p. A15) Israel is a country of eight million people that at its narrowest point is 9 miles wide. It is surrounded on all sides by enemies who would like to see it wiped off the map: Hezbollah to the north, Hamas to the south, plus Bashar al-Assad’s regime, Islamic State and Iran to the east. It wouldn’t take a particularly pessimistic person to bet against this besieged slice of desert. Yet this tiny nation has also built an air force, anti-missile defense system and intelligence apparatus that is revered around the world–and relied on by the U.S. military, among many others. And it’s done it with a minuscule fraction of the budget available to larger nations.
How has Israel pulled it off? In “The Weapon Wizards” Yaakov Katz and Amir Bohbot tell the story of how the Jewish state’s military and defense sector became one of the most cutting-edge in the world. In chapters focused on particular technologies and weapons, such as drones, satellites and cyber warfare, the authors make the case that the same factors that have made Israel a tech giant have also allowed it to become a “high-tech military superpower.” The country’s military, its schools and its extracurricular institutions inculcate in its young people tenacity, insatiable questioning of authority, determined informality, cross-disciplinary creativity and tolerance of failure.
. . .
While “The Weapon Wizards” can be a bit technical for the lay reader, the authors have skillfully conveyed a key component of the dynamic innovation culture that has made the Jewish state one of the most important entrepreneurial and technology-driven economies in the world. Not bad for a country 9 miles wide.

For the full review, see:
DAN SENOR. “BOOKSHELF; Drafting Up Innovation.” The Wall Street Journal (Thurs., Feb. 2, 2017): A15.
(Note: ellipsis added.)
(Note: the online version of the review has the date Feb. 3 [sic], 2017.)

The book under review, is:
Katz, Yaakov, and Amir Bohbot. The Weapon Wizards: How Israel Became a High-Tech Military Superpower. New York: St. Martin’s Press, 2017.

Fitness Can Improve Even After Age 100

(p. D4) At the age of 105, the French amateur cyclist and world-record holder Robert Marchand is more aerobically fit than most 50-year-olds — and appears to be getting even fitter as he ages, according to a revelatory new study of his physiology.
The study, which appeared in December in The Journal of Applied Physiology, may help to rewrite scientific expectations of how our bodies age and what is possible for any of us athletically, no matter how old we are.
. . .
Conventional wisdom in exercise science suggests that it is very difficult to significantly add to aerobic fitness after middle age. In general, VO2 max, a measure of how well our bodies can use oxygen and the most widely accepted scientific indicator of fitness, begins to decline after about age 50, even if we frequently exercise.
But Dr. Billat had found that if older athletes exercised intensely, they could increase their VO2 max. She had never tested this method on a centenarian, however.
. . .
These data strongly suggest that “we can improve VO2 max and performance at every age,” Dr. Billat says.

For the full story, see:
GRETCHEN REYNOLDS. “Phys Ed; Lessons from a 105-Year-Old.” The New York Times (Tues., FEB. 14, 2017): D4.
(Note: ellipses added.)
(Note: the online version of the article has the date FEB. 8, 2017, and has the title “Phys Ed; Lessons on Aging Well, From a 105-Year-Old Cyclist.”)

The academic article mentioned in the passages quoted above, is:
Billat, Véronique, Gilles Dhonneur, Laurence Mille-Hamard, Laurence Le Moyec, Iman Momken, Thierry Launay, Jean Pierre Koralsztein, and Sophie Besse. “Case Studies in Physiology: Maximal Oxygen Consumption and Performance in a Centenarian Cyclist.” Journal of Applied Physiology 122 (2017): 430-34.

Creating a Fair and Efficient Market for Photos

(p. B4) The arresting images on Stocksy.com are far from the standard fare found on many stock photography sites. Colorful portraits, unexpected compositions and playful shots greet visitors.
The most distinguishing feature, however, may be the structure of the site’s owner, Stocksy United: It is a cooperative, owned and governed by the photographers who contribute their work. Every Stocksy photographer owns a share of the company, with voting rights. And most of the money from sales of their work goes into their pockets rather than toward the billion-dollar valuations pursued by many venture-backed start-ups.
Stocksy was founded in 2013 by Bruce Livingstone and Brianna Wettlaufer, the core team behind iStockphoto, which in 2000 pioneered the idea of selling stock photos online in exchange for small fees. (Mr. Livingstone was the founder and Ms. Wettlaufer, the vice president of development and employee No. 4). IStock — which billed itself as “by creatives, for creatives” — caught the attention of Getty Images, which acquired it in 2006 for $50 million.
Mr. Livingstone and Ms. Wettlaufer grew dismayed as the community spirit they had cultivated and the royalties photographers received began to erode under the new ownership. Like many artists in the digital age, their photographer friends grumbled that they were being underpaid and exploited by online sites.
“Everyone had the same story,” Ms. Wettlaufer said. “They were feeling disenfranchised. They weren’t creatively inspired anymore. The magic was gone.”
So using money from the sale of iStock to Getty, she and Mr. Livingstone set out to create Stocksy, paying photographers 50 to 75 percent of sales. That is well above the going rate of 15 to 45 percent that is typical in the stock photography field. The company also distributes 90 percent of its profit at the end of each year among its photographers.
“We realized we could do it differently this time,” said Ms. Wettlaufer, who took over the chief executive role in 2014. “We could enter the market with a model that ensured artists were treated fairly and ethically.”

For the full story, see:
AMY CORTESE. “A New Wrinkle in the Gig Economy: Workers Get Most of the Money.” The New York Times (Thurs., July 21, 2016): B4.
(Note: the online version of the article has the date JULY 20, 2016.)

Hong Kong Is No Longer a Libertarian Dream Come True

(p. 5) HONG KONG — For the 23rd year running, Hong Kong is, in the opinion of the conservative Heritage Foundation, the freest economy in the world. With low taxes, an efficient government and private businesses running the city buses and its spotless subways, this place is a libertarian dream come true.
So the story goes.
Many people who live in Hong Kong beg to differ. This has long been a city of tycoons, with a few families holding sway over the supermarkets, drugstores and real estate market, limiting competition and keeping prices high. And in the past few weeks, four words have further shaken the story line that this former British colony is a free-market nirvana.
Food Truck Pilot Scheme.
. . .
In Hong Kong, the government agency that devised the Food Truck Pilot Scheme had a new, bold and innovative idea: stationary food trucks that don’t park on the street. A spokesman for the city’s Tourism Commission explained why in an email:
“Since the urban area of Hong Kong is already saturated with traffic, it would not be desirable from the traffic management and road safety angles to allow food trucks to park and operate on public roads. Moreover, as many locations in Hong Kong have already got a number of food establishments, it would thus be desirable to introduce food trucks away from those areas.”
It’s all explained in a raft of guidelines. There are seven annexes in all, including licensing requirements (Annex D), special government loan programs (Annex B) and fixed venues (Annex F).
Then there is Annex C — “Mandatory Requirements for a Food Truck” — that lists in painstaking detail what each truck must have. Some examples: The kitchen floor space must be at least 65 square feet. Each truck must have a potable water tank with a capacity of about 32 gallons, and a wastewater tank at least one and a half times that size. The sink must be at least a foot and a half in length. And so on.
To meet all of those regulations, Hong Kong food trucks must be custom vehicles, bearing little resemblance to the decades-old trucks that congregate near the National Mall in Washington, the capital of a country that has only the 17th freest economy in the world.
All these rules and regulations have Liu Chun-ho, the owner of Ma Ma’s Dumpling, very worried. To meet the stringent requirements, he paid about one million Hong Kong dollars ($129,000) for his new Isuzu truck.
. . .
The workers at Book Brothers hope that their next location, closer to the city’s central business district, will be busier. And if they can’t sell their pork buns, they could always try something else, right? After all, that’s what capitalism is all about.
Not so fast. Please refer to Answer No. 8 of the government’s “Frequently Asked Questions: Application of the Food Truck Pilot Scheme (Pilot Scheme).”
“No alteration of the signature dish proposed by the applicant in the application form will be allowed after the submission of Application and throughout the Scheme,” it declares. “If the operator wishes to change dishes other than the signature dish, he should obtain prior written approval from the Venues and the Food and Environmental Hygiene Department.”

For the full story, see:
MICHAEL FORSYTHE. “Food Truck Rules Outnumber Patrons in Hong Kong.” The New York Times, First Section (Sun., FEB. 19, 2017): 5.
(Note: ellipses added.)
(Note: the online version of the article has the date FEB. 18, 2017, and has the title “The Economy Is Free in Hong Kong. Running a Food Truck Isn’t (See Annex C).”)

Founder-Led Firms Do Better

(p. A19) A study out earlier this year from Bain & Company, where we work, shows that over the past 15 years founder-led companies delivered shareholder returns that are three times higher than those of other S&P 500 companies.
. . .
Great founders imbue their companies with three measurable traits that make up what we dubbed “the founder’s mentality.”
The first is insurgency: The founding team declares war on its industry on behalf of underserved customers.
. . .
The second trait is an obsession with how customers are treated–an attention to detail that borders on compulsive.
. . .
Third, these companies are steeped in an owner’s mind-set. Too often in business, the founder’s vision becomes distorted.
Bain’s research found that the best companies–the top 20% of performers, founder-led or not–exhibit the three traits we’ve described four or five times as often as the bottom performers. The bad news: Only about 7% of companies, founder-led or not, manage to maintain these traits as they grow to scale. Yet those that do create more than 50% of the net value in the stock market in any given year.

For the full commentary, see:
CHRIS ZOOK and JAMES ALLEN. The Company Founder’s Special Sauce; No one leads a firm as effectively as the person who started it.” The Wall Street Journal (Mon., Dec. 19, 2016): A19.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 18, 2016.)

The Bain research mentioned above, is:
Chris, Zook. “Founder-Led Companies Outperform the Rest — Here’s Why.” Harvard Business Review Digital Articles (March 24, 2016): 2-5.

The passages quoted above are related to the authors’ book:
Zook, Chris, and James Allen. The Founder’s Mentality: How to Overcome the Predictable Crises of Growth. Boston, MA: Harvard Business Review Press Books, 2016.

Government Threw the Party; Taxpayers Pay the Bill

(p. A1) RIO DE JANEIRO — It is not uncommon for the Olympics to leave behind some unneeded facilities. Rio, however, is experiencing something exceptional: Less than six months after the Summer Games ended, the host city’s Olympic legacy is decaying rapidly.
. . .
“The government put sugar in our mouths and took it out before we could swallow,” Luciana Oliveira Pimentel, a social worker from Deodoro, said as her children played in a plastic pool. “Once the Olympics ended, they turned their backs on us.”
Olympic officials and local organizers often boast about the legacy of the Games — the residual benefits that a city and country will experience long after the competitions end. Those projections are often met with skepticism by the public and by independent economists, who argue that Olympic bids are built on wasted public money. Rio has quickly become the latest, and perhaps the most striking, case of (p. A8) unfulfilled promises and abandonment.
“It’s totally deserted,” said Vera Hickmann, 42, who was at the Olympic Park recently with her family. She lamented that although the area was open to the public, it lacked basic services.
“I had to bring my son over to the plants to go to the bathroom,” she said.
At the athletes’ village, across the street from the park, the 31 towers were supposed to be sold as luxury condominiums after the Games, but fewer than 10 percent of the units have been sold. Across town at Maracanã Stadium, a soccer temple, the field is brown, and the electricity has been shut off.
“The government didn’t have money to throw a party like that, and we’re the ones who have to sacrifice,” Ms. Hickmann said, referring to local taxpayers.

For the full story, see:
ANNA JEAN KAISER. “Legacy of Rio Olympics So Far Is Series of Unkept Promises.” The New York Times (Thurs., FEB. 16, 2017): A1 & A8.
(Note: ellipsis added.)
(Note: the online version of the story has the date FEB. 15, 2017.)

People Root for Billionaires If They Believe They Also Could Become Billionaires

(p. 22) “Billions” manages the feat of making you want the guy who has everything to have even more.
“People still root for billionaires because it reinforces the idea that they can do it too,” Mr. Kirshenbaum said recently. “People don’t want to be in a place where there’s not a lot of magic left in the equation.” Political analysts have long given this explanation for why poor or working-class people vote against tax increases for the wealthy: They want to believe that some day they, too, will have assets to guard.
. . .
Like the TV series, the film “The Big Short” puts you in the position of wanting the investors — or at least the investors depicted on the screen — to win. The movie channels your anger at the banks that came up with the perilous financial instruments that devastated the economy, but it leaves you no room to despise the charmingly eccentric rogue geniuses who made hundreds of millions of dollars shorting the housing market. All that hard work, the culling of documents and the fact-gathering trips to endangered Sun Belt real estate markets — it would be so wrong if they didn’t triumph in the end. Institutions are greedy; people are merely obsessed.

For the full commentary, see:
GINIA BELLAFANTE. “Big City; Rooting for the Robber Barons, at Least Those Onscreen.” The New York Times, First Section (Sun., MARCH 20, 2016): 22.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date MARCH 18, 2016, and has the title “Big City; Rooting for the Robber Barons, at Least on the Screen.”)

Public Policies Choke Off Entrepreneurial Opportunities

George McGovern was the Democratic candidate for President of the United States in 1972. He was a fervent advocate for expansion of the federal government.

(p. A12) We intuitively know that to create job opportunities we need entrepreneurs who will risk their capital against an expected payoff. Too often, however, public policy does not consider whether we are choking off those opportunities.

My own business perspective has been limited to that small hotel and restaurant in Stratford, Conn., with an especially difficult lease and a severe recession. But my business associates and I also lived with federal, state and local rules that were all passed with the objective of helping employees, protecting the environment, raising tax dollars for schools, protecting our customers from fire hazards, etc. While I never have doubted the worthiness of any of these goals, the concept that most often eludes legislators is: “Can we make consumers pay the higher prices for the increased operating costs that accompany public regulation and government reporting requirements with reams of red tape.” It is a simple concern that is nonetheless often ignored by legislators.
For example, the papers today are filled with stories about businesses dropping health coverage for employees. We provided a substantial package for our staff at the Stratford Inn. However, were we operating today, those costs would exceed $150,000 a year for health care on top of salaries and other benefits. There would have been no reasonable way for us to absorb or pass on these costs.
Some of the escalation in the cost of health care is attributed to patients suing doctors. While one cannot assess the merit of all these claims, I’ve also witnessed firsthand the explosion in blame-shifting and scapegoating for every negative experience in life.
Today, despite bankruptcy, we are still dealing with litigation from individuals who fell in or near our restaurant. Despite these injuries, not every misstep is the fault of someone else. Not every such incident should be viewed as a lawsuit instead of an unfortunate accident. And while the business owner may prevail in the end, the endless exposure to frivolous claims and high legal fees is frightening.

For the full commentary, see:
McGovern, George. “Manager’s Journal: A Politician’s Dream Is a Businessman’s Nightmare.” The Wall Street Journal (Mon., June 1, 1992): A12.

Mokyr Credits the Great Enrichment to a Culture That Values Scientific Inquiry

(p. A13) Life is “solitary, poor, nasty, brutish and short” Thomas Hobbes proclaimed in 1651, and it had been that way ever since humans had inhabited the Earth. At the time Hobbes wrote those words, life expectancy averaged about 30 years old in his native England and income per person typically was around $5 a day (in 2016 dollars). Thanks to the Industrial Revolution and the Great Enrichment that followed, the typical subject of Queen Elizabeth II lives to almost 80 and has an income of over $100 a day. Perhaps more impressively, most people in the world today face the prospect of living at least that well within a generation or two.

What brought about the Great Enrichment? And why did it all start in England? Joel Mokyr, in his fine book, attributes it to the unique and productive culture that evolved there. It was a culture that welcomed change and favored scientific inquiry that spurred radical technological improvements.

. . .

According to Mr. Mokyr, three factors led to the ultimate triumph of the new modern search for scientific truth over the largely inaccurate “science” of the ancients. First, Europe’s fractured political environment was a blessing: Scientists who were banned or ostracized in one political jurisdiction fled to other locales more tolerant of their views. The controversial Franciscan monk, Bernardino Ochino (1487-1564), for example, was often in trouble and moving to evade authorities, leading him to flee from Italy to Switzerland and later, England, Poland and Moravia. Second, the invention of Gutenberg’s printing press around 1440 enormously lowered the cost of widely disseminating knowledge over large areas. Third, an extraordinary intellectual community evolved–Voltaire and others called the Republic of Letters–that made the dissemination of new information (through letters to fellow scientists) obligatory for anyone who wanted to gain respect in the growing international community of scientists.

For the full review, see:

RICHARD VEDDER. “BOOKSHELF; The Genesis of Prosperity; What brought about the Great Enrichment? And why did it start in England? It had a culture that embraced change and scientific inquiry.” The Wall Street Journal (Fri., Nov. 11, 2016): A13.

(Note: ellipsis added.)

(Note: the online version of the review has the date Nov. 10, 2016.)

The book under review, is:

Mokyr, Joel. A Culture of Growth: The Origins of the Modern Economy, Graz Schumpeter Lectures. New Haven, CT: Princeton University Press, 2016.