Dubai’s Economic Future Depends on Its Institutions

DubaiViewFromTallestBuilding2010-01-25.jpg “A man took in the view of Dubai from the 124th floor of the newly opened, $1.5 billion Burj Khalifa, a rocket-shaped building that soars 2,717 feet.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A7) CAIRO — In the heady days of the Dubai gold rush, when real estate sold and resold even before a shovel hit the ground, the ambitious emirate was hailed as the model of Middle Eastern modernity, a boomtown that built an effective, efficient and accessible form of government.

Then the crash came and revealed how paper-thin that image was, political and financial analysts said. That realization, not just in Dubai but also in Abu Dhabi, the oil-rich capital of the United Arab Emirates, has cast a harsh light on an opaque, top-down decision-making process, not just in business but in matters of crime and punishment as well, political and financial analysts said.
The financial crisis and now two criminal cases that have generated critical headlines in other countries have demonstrated that the emirates remain an absolute monarchy, where institutions are far less important than royalty and where the law is particularly capricious — applied differently based on social standing, religion and nationality, political experts and human rights advocates said.
“I think what we learned here the last four months is that the government, at least on a political level, is still very undeveloped,” said a financial analyst based in Dubai who asked not to be identified to avoid compromising his ability to work in the emirates. “It’s very difficult to read or interpret or understand what is going on. The institutions have not shaped up to people’s expectations.”

For the full story, see:
MICHAEL SLACKMAN. “Dubai Memo; Entrenched Monarchy Thwarts Aspirations for Modernity.” The New York Times (Fri., January 22, 2010): A7.
(Note: the online version of the article is dated January 21, 2010.)
(Note: ellipsis added.)

DubaiOfficesForRentSign2010-01-25.jpg “Workers repaired a phone line next to an office building in Dubai’s Internet City. Even after a bailout, Dubai remains heavily burdened by debt.” Source of caption and photo: online version of the NYT article quoted and cited above.

Chinese Subsidies Create Unprofitable Overcapacity and Risk of Crisis

(p. 5) . . . subsidies, . . . , have spurred excess capacity and created a dangerous political dynamic in which these investments have to be propped up at all cost.

China has been building factories and production capacity in virtually every sector of its economy, but it’s not clear that the latest round of investments will be profitable anytime soon. Automobiles, steel, semiconductors, cement, aluminum and real estate all show signs of too much capacity. In Shanghai, the central business district appears to have high vacancy rates, yet building continues.
. . .
Over all, there is a lack of transparency. China’s statistics on its gross domestic product are based more on recorded production activity than on what is actually sold. Chinese fiscal and credit policies are geared toward jobs and political stability, and thus the authorities shy away from revealing which projects are most troubled or should be canceled.
Put all of this together and there is a very real possibility of trouble.

For the full commentary, see:
TYLER COWEN. “Economic View; Dangers of an Overheated China.” The New York Times, SundayBusiness Section (Sun., November 29, 2009 ): 5.
(Note: the online version of the commentary has the date November 28, 2009.)
(Note: ellipsis added.)

“How Am I Going to Live without Google?”

GoogleChinaFlowers2010-01-25.jpg “A woman examined bouquets and messages left by Google users on Wednesday outside the Internet search company’s headquarters in Beijing.” Source of caption and photo: online version of the NYT article cited way below (after the citation to the quoted article, which is a different article).

David Smick in The World as Curved, has suggested that restrictions on the internet in China, limit entrepreneurship, and ultimately economic growth.

(p. 5) BEIJING — At the elite Tsinghua University here, some students were joking Friday that they had better download all the Internet information they wanted now in case Google left the country.

But to many of the young, well-educated Chinese who are Google’s loyal users here, the company’s threat to leave is in fact no laughing matter. Interviews in Beijing’s downtown and university district indicated that many viewed the possible loss of Google’s maps, translation service, sketching software, access to scholarly papers and search function with real distress.
“How am I going to live without Google?” asked Wang Yuanyuan, a 29-year-old businessman, as he left a convenience store in Beijing’s business district.
. . .
Li An, a Tsinghua University senior, said she used to download episodes of “Desperate Housewives” and “Grey’s Anatomy” from sites run by BT China that are now closed. “I love American television series,” she said with frustration during a pause from studying Japanese at a university fast-food restaurant on Friday.
The loss of Google would hit her much harder, she said, because she relies on Google Scholar to download academic papers for her classes in polymer science. “For me, this is terrible,” Ms. Li said.
Some students contend that even after Google pulls out, Internet space will continue to shrink. Until now, Google has shielded Baidu by manning the front line in the censorship battle, said a 20-year-old computer science major at Tsinghua.
“Without Google, Baidu will be very easy to manipulate,” he said. “I don’t want to see this trend.”
A 21-year old civil engineering student predicted a strong reaction against the government. “If Google really leaves, people will feel the government has gone too far,” he insisted over lunch in the university cafe.
But asked whether that reaction would influence the government to soften its policies, he concentrated on his French fries. “I really don’t know,” he said.

For the full story, see:
SHARON LaFRANIERE. “Google Users in China, Mostly Young and Educated, Fear Losing Important Tool.” The New York Times, First Section (Sun., January 17, 2010): 5.
(Note: the online version of the article has the title “China at Odds With Future in Internet Fight” and is dated January 16, 2010.)
(Note: ellipsis added.)

The source of the photo at the top is the online version of:
KEITH BRADSHER and DAVID BARBOZA. “Google Is Not Alone in Discontent, But Its Threat Stands Out.” The New York Times (Thurs., January 13, 2010): B1 & B4.
(Note: the online version of the article has the slightly different title “Google Is Not Alone in Discontent, But Its Threat to Leave Stands Out” and is dated January 14, 2010.)

The reference to the Smick book is:
Smick, David M. The World Is Curved: Hidden Dangers to the Global Economy. New York: Portfolio Hardcover, 2008.

Socialist Chavez’s Thugs Destroy Venezuelans’ Economic Freedom

VenezuelanNationalGuardPriceInspection2010-01-24.jpg “A member of the National Guard stands guard during a inspection of prices at a store in La Guaira outside Caracas Jan. 12.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A8) CARACAS — President Hugo Chávez’s decision to devalue Venezuela’s currency in order to shore up government finances could backfire on the populist leader if the move leads to substantially higher prices and extends an economic downturn.

Just days after Mr. Chávez cut the value of the “strong bolivar” currency, some businesses were marking up prices. Shoppers jammed stores to stock up on goods before the increases took hold.
Amelia Soto, a 52-year-old housewife waited in line at a Caracas drugstore to buy 23 tubes of toothpaste. “Everywhere I hear that prices are going to skyrocket so I want to buy as much as I can now,” she said.
Airlines have doubled fares; government officials said they were looking into reports that large retail chains were also increasing prices.
. . .
The price increases are setting the stage for confrontations with authorities following Mr. Chávez’s orders to shut down retailers that raise prices.
. . .
The higher prices for consumer goods represent a huge liability for a country facing 27% inflation, one of the highest levels in the world.

For the full story, see:
DARCY CROWE and DAN MOLINSKI. “Prices in Venezuela Surge After Devaluation.” The Wall Street Journal (Weds., JANUARY 13, 2010): A8.
(Note: the online version of the article has the title “Venezuelans Rush to Shop as Stores Increase Prices.”)
(Note: ellipses added.)

Socialist Chávez Quashes Free Speech in Venezuela

Here is evidence of the continuing relevance of Hayek’s The Road to Serfdom:

(p. A5) CARACAS, Venezuela (AP) — A cable television channel that has been critical of President Hugo Chávez was taken off the air on Sunday after defying new government regulations requiring it to televise some of Mr. Chávez’s speeches.

Venezuelan cable and satellite television providers stopped transmitting the channel, Radio Caracas Television, after it did not broadcast a speech by Mr. Chávez on Saturday at a rally of political supporters.
. . .
. . . the cable channel, known as RCTV, said the telecommunications agency “doesn’t have any authority to give the cable service providers this order.” It said in a statement, “The government is inappropriately pressuring them to make decisions beyond their responsibilities.”
The channel switched to cable in 2007 after the government refused to renew its license to broadcast on the regular airwaves.

For the full story, see:
THE ASSOCIATED PRESS. “Cable TV Station Critical of Chávez Is Shut Down.” The New York Times (Mon., January 25, 2010): A5.
(Note: the online version of the article has the date January 24, 2010.)
(Note: ellipses added.)

Reference for Hayek book:
Hayek, Friedrich A. Von. The Road to Serfdom. Chicago: Univ of Chicago Press, 1944.

When the Green Pedalers Went Home, the Grid Powered the Christmas Tree

CopenhagenPedalPoweredXmasTree2010-01-23.jpg

“The pedal-powered Christmas tree at City Hall Square.” Source of caption: the print version of the WSJ article quoted and cited below. Source of photo (which appeared in the print, but not the online, version of the WSJ article quoted and cited below): http://www.chriskeam.com/blog/uploaded_images/Copenhagen-Xmas-tree-792971.jpg

(p. A16) Copenhagen has splashed out on every kind of green widget to shore up its environmental credentials as host of the world’s biggest climate change conference in years. Most of the emissions-free wizardry is familiar, such as electric cars. Here’s one you may not have seen yet: An extra “green” Christmas tree.

At the Danish capital’s City Hall Square, 15 to 20 volunteers can sit on stationary bikes located around a massive, decorated tree and pedal away to keep it light, at least during the day. The bikes are connected to electrical tie-ups that ultimately power hundreds of lights on the tree.
. . .
Late at night, the big tree continues to sparkle–but thanks to traditional power outlets, not pedal power–once the volunteers have gone home.

For the full story, see:
Spencer Swartz. “Copenhagen Dispatches: Pedal Power: Copenhagen Lights Christmas Tree With Bikes.” The Wall Street Journal (Weds., December 16, 2009): A16.
(Note: the title of the online version of the article is “Pedal Power: Copenhagen Lights Christmas Tree With Bikes” and is dated December 15, 2009.)
(Note: ellipsis added.)

Scientist Helped Kroc Learn Secret of McDonald’s French Fries

One recurring puzzle is the role, if any, for science in innovative entrepreneurship. The episode chronicled below provides one piece of evidence:

(p. 71) I had explained to Ed MacLuckie with great (p. 72) pride the McDonald’s secret for making french fries. I showed him how to peel the potatoes, leaving just a bit of the skin to add flavor. Then I cut them into shoestring strips and dumped them into a sink of cold water. The ritual captivated me. I rolled my sleeves to the elbows and, after scrubbing down in proper hospital fashion, I immersed my arms and gently stirred the potatoes until the water went white with starch. Then I rinsed them thoroughly and put them into a basket for deep frying in fresh oil. The result was a perfectly fine looking, golden brown potato that snuggled up against the palate with a taste like . . . well, like mush. I was aghast. What the hell could I have done wrong? I went back over the steps in my mind, trying to determine whether I had left something out. I hadn’t. I had memorized the procedure when I watched the McDonald’s operation in San Bernardino, and I had done it exactly the same way. I went through the whole thing once more. The result was the same–bland, mushy french fries. They were as good, actually, as the french fries you could buy at other places. But that was not what I wanted. They were not the wonderful french fries I had discovered in California. I got on the telephone and talked it over with the McDonald brothers. They couldn’t figure it out either.

This was a tremendously frustrating situation. My whole idea depended on carrying out the McDonald’s standard of taste and quality in hundreds of stores, and here I couldn’t even do it in the first one!
I contacted the experts at the Potato & Onion Association and explained my problem to them. They were baffled too, at first, but then one of their laboratory men asked me to describe the McDonald’s San Bernardino procedure step-by-step from the time they bought the potatoes from the grower up in Idaho. I detailed it all, and when I got to the point where they stored them in the shaded chicken-wire bins, he said, “That’s it!” He went on to explain that when potatoes are dug, they are mostly water. They improve in taste as they dry out and the sugars change to starch. The McDonald brothers had, without knowing it, a natural curing process in their open bins, which allowed the desert breeze to blow over the potatoes.
With the help of the potato people, I devised a curing system of my own.

Source:
Kroc, Ray. Grinding It Out: The Making of McDonald’s. Chicago: Henry Regnary Company, 1977.
(Note: ellipsis in original.)

Senile Mice Benefit from Cellphone Radiation

MouseCellphone2010-01-24.jpg

“Mice seem to reap cognitive benefits from cellphone electromagnetism.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. D4) Alzheimer’s and Cell Phones: Radiation associated with long-term cellphone use appears to protect against and reverse Alzheimer’s-like symptoms in mice, according to a study in the Journal of Alzheimer’s Disease. Mice genetically engineered to develop brain impairments similar to Alzheimer’s in humans were divided into two groups. One group was exposed twice daily to hour-long electromagnetic fields akin to those created during cellphone use. Mice in the other group were not exposed to the radiation. After seven months, young mice in the first group fared significantly better on cognitive tests than their unexposed littermates. Older mice, which had already developed symptoms of Alzheimer’s, exposed to the radiation for eight months in a subsequent experiment also performed better than older nonexposed mice. Mice, younger and older, not engineered to develop Alzheimer’s also appeared to benefit from the radiation. Biopsies suggested such exposure might fight Alzheimer’s by inhibiting the buildup of certain protein plaques in the brain, the researchers said.

For the full story, see:
JEREMY SINGER-VINE. “RESEARCH REPORT; NEW MEDICAL FINDINGS; Cellphone Radiation Aids Sick Mice.” The Wall Street Journal (Tues., JANUARY 12, 2010): D4.

“Conservation Is About Managing People,” Not Wildlife

(p. C27) People are hard-wired to be fearful of large carnivores. What’s more, it’s hard for the poor to see the economic advantage of rewilding. Humans don’t like conservationists telling them what they can and can’t do with the land that surrounds them. As one conservationist counterintuitively points out to Ms. Fraser: “Conservation is about managing people. It’s not about managing wildlife.”

For the full review, see:
DWIGHT GARNER. “Books of The Times; Conservation as a Matter of Managing People.” The New York Times (Fri., January 22, 2010): C1 & C27.
(Note: the online version of the article is dated January 21, 2010.)

The book under review, is:
Fraser, Caroline. Rewilding the World: Dispatches from the Conservation Revolution. New York: Metropolitan Books, 2009.

“The Bus — La Guagua — Always Comes for Those Who Wait”

HerreraCarmen2010-01-24.JPG “Carmen Herrera in her Manhattan loft, surrounded by her art. She sold her first work in 2004.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) Under a skylight in her tin-ceilinged loft near Union Square in Manhattan, the abstract painter Carmen Herrera, 94, nursed a flute of Champagne last week, sitting regally in the wheelchair she resents.

After six decades of very private painting, Ms. Herrera sold her first artwork five years ago, at 89. Now, at a small ceremony in her honor, she was basking in the realization that her career had finally, undeniably, taken off. As cameras flashed, she extended long, Giacomettiesque fingers to accept an art foundation’s lifetime achievement award from the director of the Walker Art Center in Minneapolis.
Her good friend, the painter Tony Bechara, raised a glass. “We have a saying in Puerto Rico,” he said. “The bus — la guagua — always comes for those who wait.”
And the Cuban-born Ms. Herrera, laughing gustily, responded, “Well, Tony, I’ve been at the bus stop for 94 years!”
Since that first sale in 2004, collectors have avidly pursued Ms. Herrera, and her radiantly ascetic paintings have entered the permanent collections of institutions like the Museum of Modern Art, the Hirshhorn Museum and the Tate Modern. Last year, MoMA included her in a pantheon of Latin American artists on exhibition. And this summer, during a retro-(p. 29)spective show in England, The Observer of London called Ms. Herrera the discovery of the decade, asking, “How can we have missed these beautiful compositions?”
In a word, Ms. Herrera, a nonagenarian homebound painter with arthritis, is hot. In an era when the art world idolizes, and often richly rewards, the young and the new, she embodies a different, much rarer kind of success, that of the artist long overlooked by the market, and by history, who persevered because she had no choice.
“I do it because I have to do it; it’s a compulsion that also gives me pleasure,” she said of painting. “I never in my life had any idea of money and I thought fame was a very vulgar thing. So I just worked and waited. And at the end of my life, I’m getting a lot of recognition, to my amazement and my pleasure, actually.”
. . .
But Ms. Herrera is less expansive about her own art, discussing it with a minimalism redolent of the work. “Paintings speak for themselves,” she said. Geometry and color have been the head and the heart of her work, she added, describing a lifelong quest to pare down her paintings to their essence, like visual haiku.
Asked how she would describe to a student a painting like “Blanco y Verde” (1966) — a canvas of white interrupted by an inverted green triangle — she said, “I wouldn’t have a student.” To a sweet, inquiring child, then? “I’d give him some candy so he’d rot his teeth.”
When pressed about what looks to some like a sensual female shape in the painting, she said: “Look, to me it was white, beautiful white, and then the white was shrieking for the green, and the little triangle created a force field. People see very sexy things — dirty minds! — but to me sex is sex, and triangles are triangles.”
. . .
Ms. Herrera’s late-in-life success has stunned her in many ways. Her larger works now sell for $30,000, and one painting commanded $44,000 — sums unimaginable when she was, say, in her 80s. “I have more money now than I ever had in my life,” she said.
Not that she is succumbing to a life of leisure. At a long table where she peers out over East 19th Street “like a French concierge,” Ms. Herrera, because she must, continues to draw and paint. “Only my love of the straight line keeps me going,” she said.

For the full story, see:
DEBORAH SONTAG. “At 94, She’s the Hot New Thing in Painting, and Enjoying It.” The New York Times, First Section (Sun., January 20, 2010): 1 & 29.
(Note: the online version of the article has the title “At 94, She’s the Hot New Thing in Painting” and is dated January 19, 2010.)

HerreraCarmenBlancoYVerde2010-01-24.JPG
HerreraCarmenRedStar2010-01-24.JPG

Ms. Herrara’s “”Blanco y Verde” (1966-7).”

“Ms. Herrera’s “Red Star” from 1949.”

Source of captions and photos: online version of the NYT article quoted and cited above.