artdiamondblog.com – Page 421 – Art Diamond's web log

“Richly Researched” Study of “Ironies of Antitrust Policy” in Retailing

(p. 819) Levinson’s book opens up a crucial discussion on the role of integrated retailer-distributors in shaping the twentieth-century U.S. economy. As he rightly notes in the book’s conclusion, A&P was in many ways the Walmart of its day: it used its buying power to squeeze inefficiencies out of supply chains, it was widely reviled for upending small-town business patterns and bitterly fighting union organizers, and yet it drew waves of customers who appreciated its low prices. While we have many business histories of mass-production industries, we have only a handful of richly researched studies of the mass retailers that have, in the words of historian Nelson Lichtenstein (2009), “become the key players in the worldwide marketplace of our time.” Levinson has produced a valuable book for business and economic historians interested in retailing, supply chains, and the ironies of antitrust policy. As a former editor for The Economist, furthermore, Levinson is particularly effective at translating challenging economic concepts into language that lay audiences and undergraduate students can grasp.

For the full review, see:
Hamilton, Shane. “The Great A&P and the Struggle for Small Business in America.” Journal of Economic Literature 50, no. 3 (Sept. 2012): 818-19.
(Note: italics in original.)

The book under review is:
Levinson, Marc. The Great A&P and the Struggle for Small Business in America. New York: Hill and Wang, 2011.

The Lichtenstein book mentioned is:
Lichtenstein, Nelson. The Retail Revolution: How Wal-Mart Created a Brave New World of Business. hb ed. New York: Metropolitan Books, 2009.

A Rising Tax Gathers No Rolling Stone

Source of book image: http://1.bp.blogspot.com/-Nhhn-YcP9IY/TjkQHfGGEeI/AAAAAAAAAVA/_jKMGRBm9Ac/s1600/life-keith-richards.jpg

(p. 289) The tax rate in the early ’70s on the highest earners was 83 percent, and that went up to 98 percent for investments and so-called unearned income. So that’s the same as being told to leave the country. … The last thing I think the powers that be expected when they hit us with the super-super tax is that we’d say, fine, we’ll leave. We’ll be another one not paying tax to you. They just didn’t factor that in. It made us bigger than ever, and it produced Exile on Main St., which was maybe the best thing we did. They didn’t believe we’d be able to continue as we were if we didn’t live in England. And in all honesty, we were very doubtful too. We didn’t know if we would make it, but if we didn’t try, what would we do? Sit in England and they’d give us a penny out of every pound we earned? We had no desire to be closed down. And so we upped and went to France.

Source:
Richards, Keith. Life. New York: Little, Brown and Company, 2010.
(Note: I first saw the quote on the back cover of: Journal of Political Economy 119, no. 1 (Feb. 2011).)
(Note: ellipsis added.)

FDA and ACS Wrongly Endorsed Sunscreen with Retinyl Palmitate

Some consumers let their guard down on medical issues, assuming that the government Food and Drug Administration (FDA), and large incumbent bureaucratic non-profits, like the American Cancer Society (ACS), will protect them—it ain’t necessarily so. Caveat emptor should remain the rule for consumers.

(p. 39) Of note, one of the reasons for the lack of updating the rules and acknowledging UVA rays has been heavy pressure from sunscreen manufacturers, which include Johnson and Johnson (Neutrogena), Merck-Schering Plough (Coppertone), Proctor and Gamble (Olay), and L’Oreal. Interestingly, in Europe products that provide solid UVA protection have been available for years. The concerns run even deeper because many of the products (41 percent in the United States) contain a form of vitamin A known as retinyl palmitate, which has been associated with increased likelihood of skin cancer. There are, however, no randomized studies, but biological plausibility and the observational findings of a rising incidence of basal cell (p. 40) carcinoma and melanoma, despite the widespread use of sunscreens. In mid-2011, the FDA finally unveiled some new rules about sunscreen claims.

This issue really hit home when my wife brought out a tube of Neutrogena Ultra Sheer Dry-Tough SPF 30 Sunblock. It claims “Broad Spectrum UVNUVB Protection” despite repeatedly failing UVA tests. But the real eye-opener is to find the American Cancer Society logo on the front of the tube with the message “Help Block Out Skin Cancer.” Now what is the American Cancer Society logo doing on the tube of Neutrogena? The fine print on the bottom reads: “The American Cancer Society (ACS) and Neutrogena, working together to help prevent skin cancer, support the use of sunscreen. The ACS does not endorse any specific product. Neutrogena pays a royalty to the ACS for the use of its logo.”

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

Thiel Fellows Avoid Formal Education to Pursue Entrepreneurial Projects

“Eden Full, 20, tested her rotating solar panel in Kenya in 2010.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p.1) EDEN FULL should be back at Princeton by now. She should be hustling to class, hitting the books, acing tests. In short, she should be climbing that old-school ladder toward a coveted spot among America’s future elite.

She isn’t doing any of that. Instead, Ms. Full, as bright and poised and ambitious as the next Ivy Leaguer, has done something extraordinary for a Princetonian: she has dropped out.
It wasn’t the exorbitant cost of college. (Princeton, all told, runs nearly $55,000 a year.) She says she simply received a better offer — and, perhaps, a shot at a better education.
Ms. Full, 20, is part of one of the most unusual experiments in higher education today. It rewards smart young people for not going to college and, instead, diving into the real world of science, technology and business.
The idea isn’t nuts. After all, Bill Gates and Steve Jobs dropped out, and they did O.K.
Of course, their kind of success is rare, degree or no degree. Mr. Gates and Mr. Jobs changed the world. Ms. Full wants to, as well, and she’s in a hurry. She has built a low-cost solar panel and is starting to test it in Africa.
“I was antsy to get out into the world and execute on my ideas,” she says.
At a time when the value of a college degree is being called into question, and when job prospects for many new graduates are grimmer than they’ve been in years, perhaps it’s no surprise to see a not-back-to-school movement spring up. What is surprising is where it’s springing up, and who’s behind it.
The push, which is luring a handful of select students away from the likes of Princeton, Harvard and M.I.T., is the brainchild of Peter A. Thiel, 44, a billionaire and freethinker with a remarkable record in Sil-(p. 7)icon Valley. Back in 1998, during the dot-com boom, Mr. Thiel gambled on a company that eventually became PayPal, the giant of online payments. More recently, he got in early on a little start-up called Facebook.
Since 2010, he has been bankrolling people under the age of 20 who want to find the next big thing — provided that they don’t look for it in a college classroom. His offer is this: $50,000 a year for two years, few questions asked. Just no college, unless a class is helpful for their Thiel projects.
. . .
Ms. Full is friends with another Thiel fellow, Laura Deming, 18. Ms. Deming is clearly brilliant. When she was 12, her family moved to San Francisco from New Zealand so she could work with Cynthia Kenyon, a molecular biologist who studies aging. When Ms. Deming was 14, the family moved again, this time to the Boston area, so she could study at M.I.T.
“Families of Olympic-caliber athletes make these kinds of sacrifices all the time,” says Tabitha Deming, Laura’s mother. “When we lived nearby in Boston, we were lucky to see her once a month. She never came home for weekends.”
John Deming, Laura’s father, graduated from Brandeis University at the age of 35 but says he disdains formal education at every level. His daughter was home-schooled.
“I can’t think of a worse environment than school if you want your kids to learn how to make decisions, manage risk and take responsibility for their choices,” Mr. Deming, an investor, wrote in an e-mail. “Rather than sending them to school, turn your kids loose on the world. Introduce them to the rigors of reality, the most important of which is earning your own way.” He added, “I detest American so-called ‘education.’ ”
His daughter’s quest to slow aging was spurred by her maternal grandmother, Bertie Deming, 85, who began having neuromuscular problems a decade ago. Laura, a first-year fellow, now spends her days combing medical journals, seeking a handful of researchers worth venture capital funding, which is a continuation of her earlier work.
“I’m looking for therapies that target aging damage and slow or reverse it,” she says. “I’ve already spent six years on this stuff. So far I’ve found only a few companies, two or three I’m really bullish on.”

For the full story, see:
CAITLIN KELLY. “Drop Out, Dive In, Start Up..” The New York Times, SundayBusiness (Sun., September 16, 2012): 1 & 7.
(Note: ellipsis added.)
(Note: the online version of the article is dated September 15, 2012, and had he title “Forgoing College to Pursue Dreams.”)

“Laura Deming, left, at age 6 with her grandmother, whose neuromuscular problems have now inspired Laura to work on anti-aging technology.” Source of caption and photo: online version of the NYT article quoted and cited above.

Preindustrial Icelanders Adapted to Adverse Global Cooling

(p. 254) We investigate the effect of climate on population levels in preindustrial Iceland. We find that short-term temperature changes affect the population growth rate. In particular, a 1ºC decrease in temperature causes about 0.57 percent decrease in the population growth rate for the two subsequent years, for a total effect of 1.14 percent. This effect appears to attenuate as the growth rate returns to trend in subsequent years. We also quantify the extent to which eighteenth- and nineteenth-century Icelanders adapt to long-run climate change. In particular, the data suggest that long-run adaptation to climate takes about 20 years and reduces the effect of cold shocks by about 60 percent. Our results also allow us to approximate the effect of permanent climate change on steady-state population levels. This approximation suggests that steady state population levels decrease by 10 percent to 26 percent for each 1ºC of sustained adverse temperature change.
(p. 255) . . .
If contemporary poor agricultural populations behave like their eighteenth- and nineteenth century Icelandic counterparts, then our results suggest that adverse climate change (which now refers to warming, not cooling) will have three effects. First, in the short run it will lead to a significant decrease in population growth rates. Second, over the course of a generation, adaptation will offset about 60 percent of the short run effects. Finally, in the long run, we expect a decrease in steady-state populations.

For the full article, from which the above conclusion is quoted, see:
Turner, Matthew A., Jeffrey S. Rosenthal, Jian Chen, and Chunyan Hao. “Adaptation to Climate Change in Preindustrial Iceland.” American Economic Review 102, no. 3 (May 2012): 250-55.
(Note: underlining added; the underlined words appeared on p. 254 of the print issue, and on p. 255 of the online issue, of the article.)

China’s State-Owned Enterprises Lose Money and Slow Growth

Source of book image: http://s.wsj.net/public/resources/images/OB-UU147_mcgreg_DV_20121001022644.jpg

In the passages quoted below “SOE” means “state-owned enterprise.”

(p. B1) If the U.S. needs another wake-up call, it will get one this week with the publication of a bracing account of the danger that China’s state capitalism poses to global business–and to China itself. James McGregor’s new book, “No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism,” dissects the complex policies and state structures that produced China’s novel system. And it describes the limited recourse the U.S. and other nations have. (Full disclosure: Mr. McGregor is a friend and former colleague at the Journal.)

“The Communist Party of China has two unwavering objectives: Make China rich and powerful and guarantee the Party’s political monopoly,” Mr. McGregor writes. “At the center of this are behemoth state-owned enterprises that dominate all key sectors and have been instrumental to the country’s current success.
“As China’s global reach expands, this one-of-a-kind system is challenging the rules and organizations that govern global trade as well as the business plans and strategies of multinationals around the globe. At the same time, the limits of authoritarian capital-(p.B2)ism are increasingly evident at home, where corruption is endemic, the SOEs are consuming the fruits of reform, and the economic engine is running out of gas.”
Born in the 1950s when 10,000 Soviet advisers helped China organize central planning, the state-owned enterprises quickly became bloated extensions of the Party’s patronage and power.
. . .
The enterprises themselves, meanwhile, crowded out private competition. SOEs account for about 96% of China’s telecom industry, 92% of power and 74% of autos. The combined profit of China Petroleum & Chemical and China Mobile in 2009 alone was greater than all the profit of China’s 500 largest private firms, Mr. McGregor writes.
An independent Chinese study, he adds, says that if you subtract government subsidies from the biggest SOEs they actually lose money.
Mr. McGregor believes pressures are building within China for change–the result of SOEs that don’t innovate enough, slowing growth, an angry private sector, and a pending leadership change, among other factors. Even some top leaders say reform is needed.

For the full commentary, see:
JOHN BUSSEY. “THE BUSINESS; Tackling the Many Dangers of China’s State Capitalism.” The New York Times (Fri., September 28, 2012): B1 & B2.
(Note: ellipsis added.)
(Note: the online version of the article has the date September 27, 2012.)

Book under discussion:
McGregor, James. No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism. Westport, CT: Prospecta Press, 2012.

The Kairos of Creative Destruction in Medicine

Wikipedia tells us that “Kairos” “is an ancient Greek word meaning the right or opportune moment (the supreme moment).”

(p. x) With a medical profession that is particularly incapable of making a transition to practicing individualized medicine, despite a new array of powerful tools, isn’t it time for consumers to drive this capability? The median of human beings is not the message. The revolution in technology that is based on the primacy of individuals mandates a revolution by consumers in order for new medicine to take hold.

Now you’ve probably thought “creative destruction” is a pretty harsh term to apply to medicine. But we desperately need medicine to he Schumpetered, to be radically transformed. We need the digital world to invade (p. xi) the medical cocoon and to exploit the newfound and exciting technological capabilities of digitizing human beings. Some will consider this to be a unique, opportune moment in medicine, a veritable once-in-a-lifetime Kairos.
This book is intended to arm consumers to move us forward.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.
(Note: italics in original.)

Instead of Fixing “Inadequate Schools,” Adderall Is Prescribed to “Struggling” Students

“Amanda Rocafort and her son Quintn in Woodstock, Ga. Quintn takes the medication Risperdal.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) CANTON, Ga. — When Dr. Michael Anderson hears about his low-income patients struggling in elementary school, he usually gives them a taste of some powerful medicine: Adderall.

The pills boost focus and impulse control in children with attention deficit hyperactivity disorder. Although A.D.H.D is the diagnosis Dr. Anderson makes, he calls the disorder “made up” and “an excuse” to prescribe the pills to treat what he considers the children’s true ill — poor academic performance in inadequate schools.

For the full story, see:
ALAN SCHWARZ. “Attention Disorder or Not, Pills to Help in School.” The New York Times (Tues., October 9, 2012): A1 & A18.

Government Disaster Relief Crowds Out Private Self-Protection

(p. 242) This paper has investigated the role of natural disaster shocks in determining gross migration flows, controlling for other place-based features. Using two micro datasets, we documented that in the 1920s and 1930s population was repelled from tornado-prone areas, with a larger effect on potential in-migrants than on existing residents, while flood events were associated with net inmigration. The differential migration responses by disaster type raises the question of whether public efforts at disaster mitigation counteract individual migration decisions. The nascent investment in rebuilding and protecting flood-prone areas could provide one example of public investment crowding out private self-protection (i.e., migration).
(p. 243) In future work, we plan to explore the role of New Deal disaster management more directly by exploiting variation across SEAs in federal expenditures and representation on key congressional committees. We predict that residents of areas that received federal largesse after a disaster in the 1930s will be less likely to move out and that new arrivals may be more likely to move in, while residents of areas that benefited less from New Deal spending will continue to use migration as a means of self-protection.

For the full article, from which the above conclusion is quoted, see:
Boustan, Leah Platt, Matthew E. Kahn, and Paul W. Rhode. “Moving to Higher Ground: Migration Response to Natural Disasters in the Early Twentieth Century.” American Economic Review 102, no. 3 (May 2012): 238-44.

Reality Is Not Always “Elegant”

Source of book image: http://images.betterworldbooks.com/067/Ordinary-Geniuses-Segre-Gino-9780670022762.jpg

(p. C9) In the summer of 1953, while visiting Berkeley, Gamow was shown a copy of the article in Nature where Watson and Crick spelled out some of the genetic implications of their discovery that DNA is structured as a double helix. He immediately realized what was missing. Each helix is a linear sequence of four molecules known as bases. The sequence contains all the information that guides the manufacture of the proteins from which living things are made. Proteins are assembled from 20 different amino acids. What is the code that takes you from the string of bases to the amino acids? Gamow seems to have been the first to look at the problem in quite this way.

But he made a physicist’s mistake: He thought that the code would be “elegant”–that each amino acid would be specified by only one string of bases. (These strings were dubbed “codons.”) He produced a wonderfully clever code in which each codon consisted of three bases. That was the only part that was right. In the actual code sometimes three different codons correspond to the same amino acid, while some codons do not code for an amino acid at all. These irregularities are the results of evolutionary stops and starts, and no amount of cleverness could predict them.

For the full review, see:
JEREMY BERNSTEIN. “The Inelegant Universe.” The Wall Street Journal (Sat., August 13, 2011): C9.

The book under review is:
Segrè, Gino. Ordinary Geniuses: Max Delbruck, George Gamow, and the Origins of Genomics and Big Bang Cosmology. New York: Viking, 2011.

“Our World Has Been “Schumpetered””

“Schumpeter” is now a verb!

(p. v) In the mid-twentieth century Joseph Schumpeter, the noted Austrian economist, popularized the term “creative destruction” to denote transformation that accompanies radical innovation. In recent years, our world has been “Schumpetered.” By virtue of the intensive infiltration of digital devices into our daily lives, we have radically altered how we communicate with one another and with our entire social network at once. We can rapidly turn to our prosthetic brain, the search engine, at any moment to find information or compensate for a senior moment. Everywhere we go we take pictures and videos with our cell phone, the one precious object that never leaves our side. Can we even remember the old days of getting film developed? No longer is there such a thing as a record album that we buy as a whole–instead we just pick the song or songs we want and download them anytime and anywhere. Forget about going to a video store to rent a movie and finding out it is not in stock. Just download it at home and watch it on television, a computer monitor, a tablet, or even your phone. If we’re not interested in getting a newspaper delivered and accumulating enormous loads of paper to recycle, or having our hands smudged by newsprint, we can simply click to pick the stories that interest us. Even clicking is starting to get old, since we can just tap a tablet or cell phone in virtual silence. The Web lets us sample nearly all books in print without even making a purchase and efficiently download the whole book in a flash. We have both a digital, virtual identity and a real one. This profile just scratches the surface of the way our lives have been radically transformed through digital innovation. Radically transformed. Creatively destroyed.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.