artdiamondblog.com – Page 517 – Art Diamond's web log

Calderón’s Decision Is Bigger than Reagan’s Firing of Air Traffic Controllers

“The Mexican Union of Electricians protests the government’s decision to liquidate the state-owned electricity company in Mexico City.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A19) Eight days ago, just after midnight on a Sunday morning, Mexican President Felipe Calderón instructed federal police to take over the operations of the state-owned electricity monopoly, Luz y Fuerza del Centro (LyFC), which serves Mexico City and parts of surrounding states. The company’s assets will stay in the hands of the government but will now be run by the Federal Electricity Commission (CFE), a national state-owned utility and the major supplier of LyFC’s energy.

The net effect of the move is to dethrone 42,000 members of the Mexican Union of Electricians, which had won benefits over the decades to make Big Three auto workers in Detroit blush. When the liquidation is complete, it is expected that the company will employ about 8,000. To appreciate the magnitude of Mr. Calderón’s decision, think of Ronald Reagan’s firing of the air traffic controllers–only bigger. As one internationally renowned Mexican economist remarked on Sunday, it is “the most important act of government in 20 years.”

For the full commentary, see:
MARY ANASTASIA O’GRADY. “Mexico’s Calderón Takes on Big Labor; Its state-owned electricity company was bleeding the national treasury dry.” The Wall Street Journal (Mon., October 19, 2009): A19.

Walt Disney: Motive Was “Fun” (Not “Money”)

(p. 291) Said Bob Gurr, a member of the WED staff: “One big thrust behind our design work for the World’s Fair was the fact that we were going to own all the equipment. In other words, somebody else would build the pavilion, on somebody else’s property, but the show equipment that went in there was Disney’s, and he had a ready-made location waiting for it. The fact that the Fair was going to run two years meant he could build more expensively, and Disney priced these projects in a way that the sponsors were paying for everything for a two-year use.”

Disney approached the fair with a certain skepticism, even so. “You don’t like to do those things unless you have fun doing ’em,” he said in 1961, when work on the exhibits was just getting under way “You don’t do ’em for money.” Robert Moses, the imperious road builder who was in command of the fair, “wanted us to develop the amusement area and we looked at it,” Disney said, ‘but it just wasn’t for us. I wouldn’t want to try to do anything in New York. I’m not close enough. . . . On top of that, I mean I don’t know whether I want to do any outside of Disneyland because you don’t want to spread yourself thin.”

Source:
Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.
(Note: ellipsis in original.)

Despite Importance of Economic Historians, History Departments Hire Fewer Economic Historians

Source of graph: online version of the NYT article quoted and cited below.

(p. C7) Over the last three decades the number of history faculty members at four-year institutions has more than doubled to 20,000-plus, said Robert B. Townsend, assistant director for research at the American Historical Association. Yet the growth has been predominantly in the newer specializations, spurring those in diplomatic, military, legal and economic history to complain they are being squeezed out.

In 1975, for example, three-quarters of college history departments employed at least one diplomatic historian; in 2005 fewer than half did. The number of departments with an economic historian fell to 31.7 percent from 54.7 percent. By contrast the biggest gains were in women’s history, which now has a representative in four out of five history departments.

For the full story, see:
PATRICIA COHEN. “Great Caesar’s Ghost! Are Traditional History Courses Vanishing?” The New York Times (Thurs., June 11, 2009): C1 & C7.
(Note: the online version is dated Weds., June 10.)

Angel Investors Face High Risk and Negative Returns

Some of the difficulties in angel investing are highlighted below. These difficulties support the view that self-financing is likely to remain a crucial mode of initial financing for many high-level entrepreneurs.

(p. B1) An angel investor is anyone who privately provides capital to a promising business, often a start-up, that isn’t run by a friend or family member. Scott Shane, an economist at Case Western Reserve University in Cleveland, estimates that the U.S. has at least 140,000 active angels who collectively invest some $20 billion a year in new businesses.

. . .

Being an angel is hellishly risky. To be sure, one recent study found that 7% of the angel investments with final outcomes went up at least tenfold. And many fledgling angels are driven by the dream of finding the next Google while it still is in the cradle.
But roughly half of all new businesses fail within their first five years, according to the Small Business Administration. Not surprisingly then, researchers have estimated that at least half of all angel investments lose money and 48% of investments with final outcomes result in a 100% loss.
Worse, those returns were earned by “accredited” angels, individual investors with at least $200,000 in annual income and $1 million or more in net worth. The vast majority of the profits from angel investing appear to be earned by the top 10% of angels, who tend to be rich, well-connected veterans of high-growth industries. Unaccredited angels, with less capital to offer and weaker links to expert advice, are likely to see fewer deals with potential for high returns.
Furthermore, these private businesses are illiquid, so angels can’t dump their holdings at will, the way mortals do every day in the stock or bond market. Thus, being an angel takes enormous patience. “Your losers die faster than your winners win,” said Robert Wiltbank, a business professor at Willamette University in Salem, Ore.
. . .

So why would anyone want to be an angel, and who should consider it? “You get to play God a little,” said Paul Kedrosky, an active angel investor and a senior fellow at the Kauffman Foundation, which studies entrepreneurship. “You get the charge of helping to create something exciting, without having too many annoying partners.”

For the full commentary, see:
JASON ZWEIG. “THE INTELLIGENT INVESTOR; Can Angel Investors Earn Heavenly Returns?” The Wall Street Journal (Sat., OCTOBER 31, 2009): B1.
(Note: ellipses added.)

Obama Tire Tariff Hurts Poor

“A man walks past a tire store in Beijing on Sunday. A new U.S. tariff on Chinese tires could lead to shortages in the lower-cost-tire market segment as retailers scramble to find alternative sources in other countries.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A3) Consumers who buy low-price Chinese tires — the bulk of the tires China exports to the U.S. — will be hit hardest by the new tariff, as shortages in this market segment cause retailers to scramble to find alternative sources in other countries.

The tariffs, which apply to all Chinese tires, will cut off much of the flow of the more than 46 million Chinese tires that came to the U.S. last year, nearly 17% of all tires sold in the country.
The low end of the market will feel the impact of the tariff most, as U.S. manufacturers, who joined the Chinese in opposing the tariffs, have said it isn’t profitable to produce inexpensive tires in domestic plants.
“I think within the next 60 days you’ll see some pretty significant price increases,” said Jim Mayfield, president of Del-Nat Tire Corp. of Memphis, Tenn., a large importer and distributor of Chinese tires. He estimates prices for “entry-level” tires could increase 20% to 30%.

For the full story, see:
TIMOTHY AEPPEL. “Tariff on Tires to Cost Consumers; Higher Prices Expected at Market’s Low End, Where China Focuses Its Exports.” The Wall Street Journal (Mon., SEPTEMBER 14, 2009): A3.
(Note: the online version of the article has the date Tues., Sept. 15.)

Walt Disney: “I Don’t Care About Critics”

(p. 286) “He is shy with reporters.” Edith Efron wrote for TV Guide in 1965. “His eyes are dull and preoccupied, his affability mechanical and heavy-handed. He gabs away slowly and randomly in inarticulate, Midwestern speech that would be appropriate to a rural general store. His shirt is open, his tie crooked. One almost expects to see over-all straps on his shoulders and wisps of hay in his hair. . . . If one has the patience to persist, however, tossing questions like yellow flares into the folksy fog, the fog lifts, a remote twinkle appears in the preoccupied eves, and the man emerges.”

Here again, as in other interviews from the 1960s, Disney permitted himself to sound bitter and resentful when he said anything of substance: “These avant-garde artists are adolescents. It’s only a little noisy element that’s going that way, that’s creating this sick art. . . . There is no cynicism in me and there is none allowed in our work. . . . I don’t like snobs. You find some of intelligentsia, they become snobs. They think they’re above everybody else. They’re not. More education doesn’t mean more common sense. These ideas they have about art are crazy. . . . I don’t care about critics. Critics take themselves too seriously. They think the only way to be noticed and to be the smart guy is to pick and find fault with things. It’s the public I’m making pictures for.”

Source:
Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.
(Note: ellipses and italics in original.)

Nationalizing Health Care: Communists Seized Pharmacy Owned By Ayn Rand’s Father

Source of book images: online version of the NYT review quoted and cited below.

(p. C6) Ayn Rand poses theatrically in her signature cape and gold dollar-sign pin on the cover of a groundbreaking new biography. Rand also poses theatrically in this same Halloween-ready costume (Rand impersonators have been known to wear it) on the cover of another groundbreaking new biography. The two books are being published a week apart. And both have gray covers that make them look even more interchangeable. Yet Rand, whose Objectivist philosophy is enjoying one of its periodic resurgences, loathed the very idea of grayness. She preferred dichotomies that were strictly black and white.
. . .
Ms. Heller’s book is worth its $35 price, which is not the kind of detail that Rand herself would have been shy about trumpeting. When Russian Bolshevik soldiers commandeered and closed the St. Petersburg pharmacy run by Zinovy Rosenbaum, they made a lifelong capitalist of his 12-year-old daughter, Alissa, who would wind up fusing the subversive power of the Russian political novel with glittering Hollywood-fueled visions of the American dream.
. . .
Crucially, both authors understand the reasons that Rand’s popularity has endured, not only among college students dazzled (and thronged into packs) by her triumphant individualism but also by entrepreneurs. From the young Ted Turner, who rented billboards to promote the “Who is John Galt?” slogan from “Atlas Shrugged,” to the founders of Craigslist and Wikipedia, who have found self-contradictory new ways to mix populism with individual enterprise, it is clear that (in Ms. Burns’s words) “reports of Ayn Rand’s death are greatly exaggerated.”

For the full review, see:
JANET MASLIN. “Books of The Times; Twin Biographies of a Singular Woman, Ayn Rand.” The New York Times (Thurs., October 21, 2009): C6.
(Note: ellipses added.)

Incandescent Bulb Defended by Light Expert Who Relit Statue of Liberty

(p. A13) The Energy Independence and Security Act of 2007 will effectively phase out incandescent light bulbs by 2012-2014 in favor of compact fluorescent lamps, or CFLs. Other countries around the world have passed similar legislation to ban most incandescents.

Will some energy be saved? Probably. The problem is this benefit will be more than offset by rampant dissatisfaction with lighting. We are not talking about giving up a small luxury for the greater good. We are talking about compromising light. Light is fundamental. And light is obviously for people, not buildings. The primary objective in the design of any space is to make it comfortable and habitable. This is most critical in homes, where this law will impact our lives the most. And yet while energy conservation, a worthy cause, has strong advocacy in public policy, good lighting has very little.
. . .
As a lighting designer with more than 50 years of experience, having designed more than 2,500 projects including the relighting of the Statue of Liberty, I encourage people who care about their lighting to contact their elected officials and urge them to re-evaluate our nation’s energy legislation so that it serves people, not an energy-saving agenda.

For the full commentary, see:
HOWARD M. BRANDSTON. “Save the Light Bulb!; Compact fluorescents don’t produce good quality light.” The Wall Street Journal (Mon., AUGUST 31, 2009): A13.
(Note: ellipsis added.)
(Note: the online version of the article is dated Sun., Aug. 30.)

Vicente Locay, Rest in Peace

My friend Luis called yesterday (11/24/09) to tell me that his father, Vicente Locay had passed away.
Vicente was not a tall man, but he stood tall at key moments in his life.
Over the years, Luis told many stories about what Vicente said and did in Cuba. One of my favorites was that Vicente, not being particularly religious, had no plans to have Luis christened. But when Castro outlawed public displays of Catholicism, Vicente changed his mind, and made sure that Luis had the benefits of a public christening.
When it became increasingly clear what was in store for Cuba under Castro’s dictatorship, Vicente managed to get his family on a rickety plane, and escape.
In Cuba, Vicente had owned several small businesses. In the U.S., he started over, without ever mastering English. He worked hard remodeling houses to support his family.
For many years, I had hoped that Vicente would outlast Fidel, and would return in triumph to a post-Fidel Havana.
It’s too late for that to happen. The best we can do is to acknowledge and salute a man of courage and strength, who chose freedom.

Disney Learned Quickly (Despite Lack of Formal Education), and Impatiently Expected Others to Learn Quickly Too

The story below is very reminiscent of a story that Michael Lewis tells in The New, New Thing about how entrepreneur Jim Clark learned to fly.
Possible lesson: impatience and quick learning may not be traits of all high level entrepreneurs, but they appear to have been traits of at least two.

(p. 213) Seventeen years later, Broggie told Richard Hubler that teaching Disney how to run a lathe and drill press and other machinery was difficult “because he was impatient. So I’d make what we call a set-up in a lathe and turn out a piece and say, ‘Well, that’s how you do it.’ He would see part of it and he was impatient, so he would want to turn the wheels–and then something would happen. A piece might fly out of the chuck and he’d say, ‘God-damn it. why didn’t you tell me it was going to do this?’ Well, you don’t tell him, you know? It was a thing of–well–you learn it. He said one day, . . . ‘You know, it does me some good sometimes to come down here to find out I don’t know all about everything.’ . . . How would you sharpen the drill if it was going to drill brass or steel? There’s a difference. And he learned it. You only had to show him once and he got the picture.”

This was a characteristic that other people in the studio noticed. “He had a terrific memory,” Marc Davis said. “He learned very quickly. . . . You only had to explain a thing once to him and he knew how to do it. Other people are not the same. I think this is a problem he had in respect to everybody . . . his tremendous memory and his tremendous capacity for learning. He wasn’t book learned but he was the most fantastically well educated man in his own way. . . . He understood the mechanics of everything. . . . Everything was a new toy. And this also made him a very impatient man. He was as impatient as could be with whoever he worked with.”
Disney’s lack of formal education manifested itself sometimes in jibes at his college-educated employees, but more often in the odd lapses–the mispronounced words, the grammatical slips–that can mark an autodidact. “For a guy who only went to the eighth grade,” Ollie Johnston said, “Walt educated himself beautifully. His vocabulary was good. I only heard him get sore (p. 214) about a big word once in a story meeting. Everyone was sitting around talking and Ted Sears said, ‘Well, I think that’s a little too strident.’ Walt said, ‘What the hell are you trying to say, Ted?’ He hadn’t heard that word before.

Source:
Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.
(Note: ellipses in original.)

For a similar story about Jim Clark, see:
Lewis, Michael. The New New Thing: A Silicon Valley Story. New York: W. W. Norton & Company, 2000.

Support Grows for School Vouchers in D.C.

“Students from Bridges Academy in Washington, D.C., at a Capitol Hill rally last month in support of the city’s Opportunity Scholarship Program, which gives students from low-income families scholarships for private schools.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A2) The District of Columbia’s embattled school-voucher program, which lawmakers appeared to have killed earlier this year, looks like it could still survive.

Congress voted in March not to fund the program, which provides certificates to pay for recipients’ private-school tuition, after the current school year. But after months of pro-voucher rallies, a television-advertising campaign and statements of support by local political leaders, backers say they are more confident about its prospects. Even some Democrats, many of whom have opposed voucher efforts, have been supportive.
. . .
Many parents whose children receive vouchers say they are satisfied with the private schools they attend. During the 2008-2009 school year, about 61,700 students nationwide received vouchers, up 9% from the previous school year, according to the Alliance for School Choice, a pro-voucher advocacy group.
. . .
Created as a five-year pilot project by a Republican-controlled Congress in early 2004, the Opportunity Scholarship Program is the nation’s only federally funded voucher program. It is open to students who live in the long-struggling Washington school district and whose families have incomes at or below 185% of the federal poverty level — about $40,000 for a family of four. Recipients are chosen by lottery, although preference is given to those attending traditional schools deemed to be in need of improvement under federal law.
Joe Kelley entered his oldest son, Rashawn, in the first Opportunity Scholarship Program lottery in 2004, fearful about violence at the public middle school. Rashawn, now 17, received a voucher, and so have his three sisters. All attend a small, private Christian academy where they have been earning A’s and B’s. “It’s a lot of worry off of me,” said Mr. Kelley, a retired cook and youth counselor.
In an evaluation released in March, researchers found that in reading skills, voucher recipients overall were approximately 3.1 months ahead of eligible students who didn’t receive scholarships. But there was no difference in math skills, and voucher recipients from the worst-performing public schools got no boost in either subject.

For the full story, see:
ROBERT TOMSHO. “D.C. School Vouchers Have a Brighter Outlook in Congress.” The Wall Street Journal (Mon., October 19, 2009): A2.
(Note: ellipses added.)