artdiamondblog.com – Page 558 – Art Diamond's web log

Rent Control as a Form of “Hatred of the Bourgeois”

New York City is one of the few remaining cities that has rent control laws (aka “rent stabilization”). Economists view such laws as a version of price ceilings, and they generally argue that such laws reduce the incentives to build and maintain housing.
Libertarian philosophers would add that the laws also violate fundamental rights of property.

(p. 25) At its core, the fight involves a law allowing landlords to displace rent-stabilized tenants if the landlords will use the space as their primary residence. The Economakis family has prevailed, thus far, on the principle that the law applies even to a building this large. But the tenants continue to press the notion that given the scope of the proposed home — which calls for seven bathrooms, a gym and a library — the owners are just trying to clear them out so they can sell the building off to become so many market-rate condos.

Mr. Economakis insists his family would never have subjected itself to years of argument — and tens of thousands in legal bills — if they did not want to live there. He acknowledged that it is a lot of space, but said that having the place to themselves is also a matter of privacy. He said that the family long ago offered, as a halfway measure, to let the tenants in the five rear apartments stay, along with a couple on the first floor, and said he would happily sign a promise to turn over the profits to the existing tenants if he sold within 20 years.
“We really believe that, as owners, we have a right to live in the building,” he said.
. . .
Last year, the tenants staged a rally outside the building and some 400 people showed up. Mostly, they lodge their silent protest daily on their doors. Mr. Pultz has his evil eye, while his first-floor neighbor, Laura Zambrano, has one poster giving the dictionary definition of the word hubris and another quoting Flaubert:
“Two things sustain me. Love of literature and hatred of the bourgeois.”

For the full story, see:

MARC SANTORA. “Landlord’s Dream Confronts Rent-Stabilized Lives.” The New York Times, Section 1 (Sun., June 15, 2008): 25.
(Note: ellipsis added.)

Perhaps the most eloquent critique of rent control was penned in the only paper that Chicago Nobel Prize winners Milton Friedman and George Stigler ever wrote together (published as a pamphlet):
Friedman, Milton, and George J. Stigler. “Roofs or Ceilings? The Current Housing Problem.” Irvington-on-Hudson, New York: Foundation for Economic Education, 1946.

“Schumpeter Has Courage”

McCraw quoting the diary of Schumpeter’s former professor, Friedrich von Wieser:

(p. 101) “He is not misled by prevalent sentiment,” the professor wrote in his diary. “Schumpeter has courage, an asset which cannot be over-praised.”

Source:
McCraw, Thomas K. Prophet of Innovation: Joseph Schumpeter and Creative Destruction. Cambridge, Mass.: Belknap Press, 2007.

Higher Prices to Operate Cars, Increases Demand for Segways

Using a Segway to deliver pizza. Source of photo: online version of the WSJ article quoted and cited below.

(p. B2) With gasoline prices and global warming on their minds, more Americans are getting out of their cars and riding to work — and riding on the job — on the once-maligned Segway.

Scott Hervey of Yorba Linda, Calif., bought one of the electric scooters on June 7 and has put 150 miles on it commuting to his custodian’s job at Disneyland, about 12 miles away. He had considered buying a Segway for four years, and gasoline prices finally drove him to do it. Now he “glides,” as Segway enthusiasts say, to work. “I like passing gas stations,” says the 54-year-old.
The two-wheeled Segway, a self-balancing vehicle that runs on a rechargeable battery, debuted amid massive hype in 2001. Tech icons like Steve Jobs, Apple Inc.’s chief executive officer, and Amazon.com Inc. CEO Jeff Bezos predicted it would change the way people lived. But critics panned the high-tech scooter for its $5,000 price tag and portrayed it as a toy for geeks and the rich. Some cities banned it from sidewalks because of safety concerns.
Today, the Segway is gaining converts. It plugs into a standard electrical outlet and can get up to 25 miles per charge.
Sales at the scooter’s maker, Segway Inc., have risen to an all-time high, says CEO Jim Norrod. The closely held Manchester, N.H., company doesn’t release detailed numbers. (A September 2006 recall showed the company had sold 23,500 Segways.) But Mr. Norrod says he expects sales this quarter to jump 50% from a year earlier, versus a 25% year-over-year increase in the first quarter.

For the full story, see:
STU WOO. “Segway Glides as Gasoline Jumps; Maligned Scooter Winning New Fans; $5,000 Price Tag.” The Wall Street Journal (Mon., June 16, 2008): B2.

Montezuma Tried Appeasement with Cortes

Source of book image: http://images.barnesandnoble.com/images/26910000/26912572.jpg

(p. A 13) Cortés was a man of deep contradictions. A devout Catholic, he was horrified by the sights and sounds of Aztec worship: its human sacrifices and cannibalism, its skull racks, its idols draped with human body parts, its priests with their blood-clotted hair. But he was not above massacring his enemies or burning them at the stake. He was genuinely dazzled by his first sight of the Aztec capital, Tenochtitlán, with its tidy fields and gleaming stone causeways, a city of nearly a quarter-million people that was, he wrote in a letter to the Spanish king, more beautiful than any in Europe. Even so, he was ready to destroy it all to feed his desire for gold and to bend the Aztecs to his will.

If Cortés was a man of contradictions, Montezuma was not. Studious and conscientious, he had been trained for Aztec priesthood before becoming emperor in 1503 — the same year that Cortes set out from Spain for America. Montezuma believed in the rightness of his own convictions but also, it appears, in the importance of an open mind. As Mr. Levy shows, he always looked for ways to dispel a crisis by placating the feelings of all concerned. He would have made a fine college president. From his first meeting with Cortés in November 1519, though, he was desperately overmatched.
Montezuma hoped that, by giving Cortés magnificent gifts of gold and silver, he could make him go away. He made him want to stay instead. The Aztec ruler never quite shook off the suspicion that Cortés might be the Aztec god Quetzelcoatl returning home according to ancient prophesy — a suspicion that led Montezuma to want to treat the intrusive Spaniards as guests rather than a threat.
Cortés exploited Montezuma’s weakness without scruple, squeezing one concession after another out of him until, though outnumbered by more than 1,000-to-1, Cortés made him a hostage. When Montezuma had lost all credibility with his people and was no longer useful, Cortés cast him aside. Montezuma died a broken man — although probably not, Mr. Levy argues, at Cortes’s order. It is more likely that Montezuma died from wounds inflicted by his own subjects. When they saw him appear in chains and appeal for calm, they had bombarded him with stones and arrows. His weakness, they understood, had betrayed them to the Spanish.

For the full review, see:
ARTHUR HERMAN. “Bookshelf; Spain Says Hello.” The Wall Street Journal (Thurs., July 10, 2008): A13.

The reference for the book, is:
Levy, Buddy. Conquistador. New York: Bantam Books, 2008.

More on Dyslexia and Entrepreneurship

For the full story, see:

JEFFREY A. TRACHTENBERG. “Running the Show; Me, Me, Me; So many entrepreneurs are writing books about how they made it. Their books, though, aren’t nearly as successful.” The Wall Street Journal (Mon., June 16, 2008): R7.
(Note: ellipses added.)

Source of book image: http://www.paulorfalea.com/downloads/CopyThis_1.jpg

(p. R7) Some entrepreneurial titles are written — and resonate with readers — for more personal reasons.

Paul Orfalea, the founder of Kinko’s, says he wrote his book, “Copy This!: Lessons from a Hyperactive Dyslexic Who Turned a Bright Idea Into One of America’s Best Companies,” because he wanted parents of kids with dyslexia to know that their children could succeed in life.
Workman Publishing, an independent publisher based in New York, initially printed 35,000 copies in 2005. Today, after two additional printings, there are 50,000 hardcovers in print. A paperback edition was published in March 2007, with a reworked title.

Among Academic Economists Interest in Entrepreneurship is “A Quick Ticket Out of a Job”

From McCraw’s discussion of Schumpeter’s “legacy”:

(p. 500) In the new world of academic economics, neither the Schumpeterian entrepreneur as an individual nor entrepreneurship as a phenomenon attracts much attention. For professors in economics departments at most major universities, particularly in the United States and Britain, a focus on these favorite issues of Schumpeter’s has become a quick ticket out of a job. This development arose from a self-generated isolation of academic economics from history, sociology, and the other social sciences. It represented a trend that Schumpeter himself had glimpsed and lamented but that accelerated rapidly during the two generations after his death.

Source:
McCraw, Thomas K. Prophet of Innovation: Joseph Schumpeter and Creative Destruction. Cambridge, Mass.: Belknap Press, 2007.

Hospitals Lack Hospitality

Source of book image: http://www.simplenomics.com/wp-images/settingthetable-1.jpg

(p. R7) Most successful entrepreneurs like rattling on about how they did it.

The bookshelves have never been more crowded with such exploits from consultants, real-estate moguls and retailers. And publishers say there are more on the way. With layoffs and cutbacks dominating the headlines, demand for advice books based on true-life stories is peaking.
. . .
So what does it take to succeed?
“Pragmatic advice, [a book written by] somebody with a fairly high public profile, and a person who can hit the lecture circuit after the first rush of publicity and keep the book selling,” says Grand Central’s Mr. Wolff.
Those factors have contributed to the staying power of restaurateur Danny Meyer’s book, “Setting the Table: The Transforming Power of Hospitality in Business.”
News Corp.’s HarperCollins Publishers first published 30,000 copies in October 2006. (News Corp. also publishes The Wall Street Journal.) Mr. Meyer’s work, chatty personal anecdotes wrapped around a core message that emphasizes hospitality as the key to creating satisfied customers, proved a hit.
. . .
“The most surprising thing was the interest from the hospital community,” Mr. Meyer says. “That’s an industry in turmoil based on the absence of hospitality. They over-focus on the metrics of stays and cure rates rather than how they make people feel.”

Obama Has Doubts About Justice of Current ‘Affirmative Action’ Laws

“Barack Obama at Harvard, where he was the first black president of The Harvard Law Review.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) Mr. Obama, a Democrat, has continued to support race-based affirmative action, calling it “absolutely necessary” when he was a state senator in Illinois and criticizing the Supreme Court for curtailing it in his time in the United States Senate. But in his presidential campaign, he has unsettled some black supporters by focusing increasingly on class and suggesting that poor whites should at times be given preference over more privileged blacks.

His ruminations about shifting the balance between race and class in some affirmative action programs raise the possibility that, if elected in November, he might foster a deeper national (p. 16) conversation about an issue that has been fiercely debated for decades. He declined to comment for this article.
“We have to think about affirmative action and craft it in such a way where some of our children who are advantaged aren’t getting more favorable treatment than a poor white kid who has struggled more,” Mr. Obama said last week in a question-and-answer session at a convention of minority journalists in Chicago.
During a presidential debate in April, Mr. Obama said his two daughters, Malia, 10, and Sasha, 7, “who have had a pretty good deal” in life, should not benefit from affirmative action when they apply to college, particularly if they were competing for admission with poor white students.
. . .
Ward Connerly, a crusader against affirmative action, said he believed that Mr. Obama’s remarks would buoy support for his ballot initiatives in Arizona, Colorado and Nebraska in November that would ban preferential treatment on the basis of race, ethnicity and sex in government hiring and public education.
Last week, Mr. Obama’s Republican rival, Senator John McCain, announced his support for those measures. . . .
Mr. Obama opposes the ballot initiatives, saying they would derail efforts to break down barriers for women and members of minorities. But Mr. Connerly said Mr. Obama had already helped the cause. “He’s advanced the debate,” Mr. Connerly said. “He’s brought it to a new level.”
. . .
A federal judge once asked a friend of Mr. Obama’s whether he had been “elected on the merits” as law review president, Mr. Obama told The Journal of Blacks in Higher Education in 2001. He said the question came up again when he applied for a job as a professor at the University of Chicago Law School.
Mr. Obama has not described how he felt then. But as a state senator, he spoke with empathy about accomplished minority students at elite universities who sometimes lived “under a cloud they could not erase.”
Over the past few years, Mr. Obama has also voiced sympathy for whites who feel resentful of race-based affirmative action and questioned how long such programs need to continue.
Even as he argued that timetables for minority hiring may be necessary where there is evidence of systemic discrimination, he also warned in his second book, “The Audacity of Hope,” that “white guilt has largely exhausted itself in America.”
It was 2006 then, and Mr. Obama was a wealthy senator considering a bid for the presidency. He worried that race-based preferences, while necessary, might undermine efforts at building cross-racial coalitions.
Presaging his recent focus on class, Mr. Obama argued that whites were more likely to join blacks in supporting programs that were not racially based.
“An emphasis on universal, as opposed to race-specific programs isn’t just good policy,” Mr. Obama said in his book. “It’s good politics.”

For the full story, see:
RACHEL L. SWARNS. “Obama’s Path on Preferences, Race and Class .” The New York Times, Section 1 (Sun., August 3, 2008): 1 & 16.
(Note: ellipses added.)
(Note: the online version has minor differences with the print version; the online version is quoted here, except for the article title. The online article title was: “If Elected … Delicate Obama Path on Class and Race Preferences.” The ellipisis in the online title was in the original.)

Medicare Pays $110 for Walker that Wal-Mart Sells for $60

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

(p. C1) On Wal-Mart’s Web site, you can buy a walker for $59.92. It is called the Carex Explorer, and it’s a typical walker: a few feet high, with four metal poles extending to the ground. The Explorer is one of the walkers covered by Medicare.
But Medicare and its beneficiaries aren’t paying $59.92 for the Explorer or any similar walker. In fact, they’re not paying anything close to it. They are paying about $110.
. . .
(p. C5) In the abstract, fixing the health care system sounds perfectly unobjectionable: it’s about reducing costs (and then being able to cover the uninsured) by getting rid of inefficiency and waste. In reality, though, almost every bit of waste benefits someone.
Doctors who perform spinal fusion surgeries, despite decidedly mixed evidence that they’re effective, are making a nice living. Hospitals that order $1,000 diagnostic tests, even when a cheaper one would work just as well, are helping their bottom line. Medical equipment makers selling walkers for $110, while Wal-Mart sells them for $60, are fattening their profits.
The current fight to protect those profits is a microcosm of what you can expect to see if a larger effort to rein in health costs ever gets going. The defenders of the status quo won’t say that they are protecting themselves. Instead, they’ll use the same arguments that the medical equipment makers are using — that a change will destroy jobs, bankrupt small businesses and, above all, harm patients.
. . .
But this is a case in which the market can clearly do a better job than a government-mandated fee schedule. Just look at Wal-Mart’s Web site or, for that matter, the bids that Medicare has already received.
By standing in the way of this competition, Congress is really standing up for higher health care costs.

For the full commentary, see:
DAVID LEONHARDT. “ECONOMIC SCENE; High Medicare Costs, Courtesy of Congress.” The New York Times (Weds., June 25, 2008): C1 & C5.
(Note: ellipses added.)

Schumpeter’s Name Forever Linked to Entrepreneurship

From McCraw’s discussion of Schumpeter’s “legacy”:

(p. 496) Because of the importance of entrepreneurship, and because Schumpeter wrote about it with such insight and verve, his name will be forever linked to the idea.

Source:
McCraw, Thomas K. Prophet of Innovation: Joseph Schumpeter and Creative Destruction. Cambridge, Mass.: Belknap Press, 2007.

When Embracing Science is a Matter of Life and Death

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

(p. C1) The salad days of organic salad are wilting in favor of high-tech tomatoes.

As global food shortages threaten to ignite social and economic instability from Nigeria to India, the popular aversion to genetically modified foods is turning into more of a luxury for the wealthy than a practical option for the masses.
This trend is evident in the share price and earnings growth of Monsanto, the world leader in agricultural biotechnology by market share. Its stock has soared 22% this year, trading at a breathless 37 times estimated 2008 per-share earnings.

For the full story, see:
KAREN RICHARDSON. “AHEAD OF THE TAPE; Food Shortage Recasts Image of ‘Organic’.” The Wall Street Journal (Weds., June 25, 2008): C1.