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“Working Families in France Want to Be Richer”

(p. 1) In proposing a tax-cut law last week, Finance Minister Christine Lagarde bluntly advised the French people to abandon their “old national habit.”

“France is a country that thinks,” she told the National Assembly. “There is hardly an ideology that we haven’t turned into a theory. We have in our libraries enough to talk about for centuries to come. This is why I would like to tell you: Enough thinking, already. Roll up your sleeves.”

Citing Alexis de Tocqueville’s “Democracy in America,” she said the French should work harder, earn more and be rewarded with lower taxes if they get rich.

. . .

(p. 9) The government’s call to work is crucial to its ambitious campaign to revitalize the French economy by increasing both employment and consumer buying power. Somehow Mr. Sarkozy and his team hope to persuade the French that it is in their interest to abandon what some commentators call a nationwide “laziness” and to work longer and harder, and maybe even get rich.

France’s legally mandated 35-hour work week gives workers a lot of leisure time but not necessarily the means to enjoy it. Taxes on high-wage earners are so burdensome that hordes have fled abroad. (Mr. Sarkozy cites the case of one of his stepdaughters, who works in an investment-banking firm in London.)

In her National Assembly speech, Ms. Lagarde said that there should be no shame in personal wealth and that the country needed tax breaks to lure the rich back.

. . .

“We are seeing an important cultural change,” said Eric Chaney, chief economist for Europe for Morgan Stanley. “Working families in France want to be richer. Wealth is no longer a taboo. There’s a strong sentiment in France that people think prices are too high and need more money. It’s not a question of thinking or not thinking.”

For the full story, see:

ELAINE SCIOLINO. "New Leaders Say Pensive French Think Too Much." The New York Times, Section 1 (Sun., July 22, 2007): 1 & 9.

(Note: ellipses added.)

I used to have a photo at the top of Sarokozy running; in contrast to this picture of Mitterrand walking. Source of photo: online version of the NYT article cited above.

Young Serial Entrepreneurs Seek New Challenges

"NAME Max Levchin. AGE 32. NET WORTH Roughly $100 million." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) SAN FRANCISCO — Max Levchin is not easily distracted from his work.

A few years ago, Mr. Levchin, one of the young princes of Silicon Valley, bought his first home, a 12-room Edwardian high atop a hill here, for $3.4 million. But Mr. Levchin, who made a fortune at age 27 selling PayPal, the online payment service he helped start in 1998, never moved in. He sold it two years later without having slept there for even one night.

. . .

Mr. Levchin, who is now 32, is typical of a new generation of junior titans in Silicon Valley who might be called the prematurely rich — techies worth tens of millions of dollars, sometimes more, at an age when many others are just starting to figure out what to do with their lives.

The Internet, a low-overhead medium with a global reach, has greatly accelerated the wealth creation phenomenon, producing a larger breed of multimillionaires even younger and richer than in the past.

They are happy to be wealthy, of course, but many of these baby-faced technology tycoons often seem indifferent to the buying power of their money, at least at this stage of their lives. Instead, nearly all of them have chosen to throw themselves back into a start-up, not so much because they want a spectacular new home or a personal jet — though many of them do — but be-(p. 16)cause they are in a competition with themselves and one another.

“For most of us, doing it again means surpassing what we’ve done previously,” said Peter A. Thiel, Mr. Levchin’s partner at PayPal, who also has started a new business, a hedge fund called Clarium Capital. “And that can be a really high bar.”

. . .

Maximillian Rafael Levchin was born and raised in Kiev, Ukraine, a Jew living under Soviet rule for 16 years. As the Soviet Union was crumbling, the family moved to the United States and settled in Chicago. But the worst year of his life, he said, was not when he was growing up but after eBay bought PayPal.

He thought he would spend the time after the sale “exploring my inner self.” Instead, he spent the better part of 12 months “feeling worthless and stupid” and baffled by what he might do with the remainder of his life. He felt too young to retire or downshift a gear or two — and too restless to become a philanthropist.

“I enjoy sitting on nice beaches and hanging out with my girlfriend and playing with my dog, but that’s three hours a day,” Mr. Levchin said. “What about the remaining 18 hours I’m awake?”

. . .

In Silicon Valley, said Robert I. Sutton, a professor of management science and engineering at Stanford and co-founder of the Stanford Technology Ventures Program, remaining relevant, if not also admired and respected, requires that an entrepreneur continue to speed along in the fast lane.

“In other parts of the country, things like a great estate are the symbols people most respect,” Mr. Sutton said. “But here, the greatest status symbol is a person’s ability,” he added, to “still bring out hot new companies” and show that you are “working on the hot new technologies.”

For the full story, see:

GARY RIVLIN. "Age of Riches; After Succeeding, Young Tycoons Try, Try Again." The New York Times, First Section (Sun., October 28, 2007): 1 & 16.

(Note: ellipses added.)

"TAKING FIVE. Max Levchin spends a moment with his dog, Uma, but usually he works 15 to 18 hours a day at his start-up company, Slide.com." Source of caption and photo: online version of the NYT article quoted and cited above.

Without Subsidies, New Zealand Farming is More Efficient, and “More Enjoyable”

"Mr. Lumsden reviews maps of the paddocks on his family farm. The map is used to decide which paddocks the herds will graze and to help monitor the routes the cows will take to and from the milking shed." Source of photo: online version of the NYT article cited below.

(p. C1) OHINEWAI, New Zealand — Watching grass grow is supposed to be dull. But watching it grow with a dairy farmer like Malcolm Lumsden is anything but.

Cows turn grass into milk, and while dairy farmers in the United States and Europe rely much more on grain to feed cows, here in New Zealand grass is pretty much all they get. The richer and more abundant the grass, the richer and more abundant the milk.

So like mechanics tuning a race car engine, Mr. Lumsden and his fellow dairy farmers keep close track of the weight of the grass in their pastures, precisely measure its protein and sugar content, and produce computer charts tracking how much they have left to feed their cows through winter.

“It’s a science,” Mr. Lumsden mused as he watched a group of his black-and-white Friesians munching dark grass on a wet winter day. “It’s a real science.”

Dairy farming in New Zealand was not always this sophisticated. But ever since a liberal but free-market government swept to power in 1984 and essentially canceled handouts to farmers — something that just about every other government in an advanced industrial nation has considered both politically and economically impossible — agriculture here has never been the same.

The farming community was devastated — but not for long. Today, agriculture remains the lifeblood of New Zealand’s econ-(p. C5)omy. There are still more sheep and cows here than people, their meat, milk and wool providing the country with its biggest source of export earnings. Most farms are still owned by families, but their incomes have recovered and output has soared.

“Farming in New Zealand is now a cold, hard business,” said Mr. Lumsden, who at the time of the farming revolution was president of Federated Farmers in the Waikato region, the heart of New Zealand’s dairy country. “I think we have benefited hugely.”

New Zealand’s farmers are not the only ones convinced that eliminating subsidies, or at least sharply cutting them, is a good idea. As negotiators struggle to revive the failing global trade talks and Congress moves ahead on a new farm bill in the United States, New Zealand and Australia — which also cut subsidies but not as drastically — are being extolled by economists and advocates for poor countries as models for Americans and Europeans to follow.

“They went cold turkey and in the process it was very rough on their farming economy,” said Ray Goldberg, a retired professor of agriculture and business at Harvard Business School. “But they came out healthier and stronger. They proved it could be done.”

Traditional subsidies, economists contend, generally encourage inefficient farmers to grow unprofitable crops far beyond what consumers actually need, secure in the knowledge that the government will help protect them from loss. And they make it much harder for farmers in poor countries to compete on a level playing field against coddled farmers in the West. Removing subsidies, the argument goes, liberates the best farmers anywhere in the world to produce what people really want.

“When you’re not going to get paid for what the market doesn’t want, you have to get off your backside and find out what they want,” said Charlie Pedersen, who, when he is not raising sheep and beef cattle on his farm north of the capital, Wellington, is president of Federated Farmers of New Zealand.

. . .

“What’s happened since the reforms is that you have a new type of farm emerging — a business farm,” Mr. Lumsden said. Giving up subsidies made farming harder, he conceded, but introduced the pride that comes of entrepreneurship. “It made it more enjoyable,” he said.

For the full story, see:

WAYNE ARNOLD. "Surviving Without Subsidies." The New York Times (Thurs., August 2, 2007): C1 & C5.

(Note: ellipsis added.)

Source of map: online version of the NYT article cited above.

How to Wrangle Tax Breaks from Rangel

"Charles B. Rangel, House Ways and Means chairman." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A23) The chairman of the House Ways and Means Committee has proposed legislation that would effectively halt some current tax audits of people who get a tax break for living and operating a business in the United States Virgin Islands.

Many beneficiaries of the tax break are campaign contributors to the lawmaker, Representative Charles B. Rangel, Democrat of New York, according to data collected by CQ MoneyLine, which tracks political contributions.

At least one of them, Richard G. Vento, is currently under audit, according to court filings. Mr. Vento gave $4,400 last year to the Baucus-Rangel Leadership Fund, which supports Mr. Rangel and Senator Max Baucus, the Montana Democrat who heads the Senate Finance Committee.

Beneficiaries of the tax break including Michael W. Masters and Richard H. Driehaus, money managers, accounted for more than half the $51,900 that individuals in the Virgin Islands gave last year to Rangel for Congress, the chairman’s campaign organization. Mr. Rangel raised almost three times as much from such donors last year as in any other year in the MoneyLine database.

For the full story, see:

STEPHANIE STROM. "Tax Proposal From Rangel Could Benefit His Donors." The New York Times (Thurs., November 8, 2007): A23.

“Not Even an Unchallenged Autocrat Can Repeal the Laws of Supply and Demand”

"Essentials like bread, sugar and cornmeal have all but vanished in Zimbabwe after the government commanded merchants nationwide to counter 10,000-percent-a-year hyperinflation by slashing prices in half and more. The shelves at this grocery store are mostly bare." Source of the caption and the photo: online version of the NYT article cited below.

(p. A1) BULAWAYO, Zimbabwe, July 28 — Robert G. Mugabe has ruled over this battered nation, his every wish endorsed by Parliament and enforced by the police and soldiers, for more than 27 years. It appears, however, that not even an unchallenged autocrat can repeal the laws of supply and demand.

One month after Mr. Mugabe decreed just that, commanding merchants nationwide to counter 10,000-percent-a-year hyperinflation by slashing prices in half and more, Zimbabwe’s economy is at a halt.

Bread, sugar and cornmeal, staples of every Zimbabwean’s diet, have vanished, seized by mobs who denuded stores like locusts in wheat fields. Meat is virtually nonexistent, even for members of the middle class who have money to buy it on the black market. Gasoline is nearly unobtainable. Hospital patients are dying for lack of basic medical supplies. Power blackouts and water cutoffs are endemic.

Manufacturing has slowed to a crawl because few businesses can produce goods for less than their government-imposed sale prices. Raw materials are drying up because suppliers are being forced to sell to factories at a loss. Businesses are laying off workers or reducing their hours.

The chaos, however, seems to have done little to undermine Mr. Mugabe’s authority. To the contrary, the government is moving steadily toward a takeover of major sectors of the economy that have not already been nationalized.

. . .

(p. A8) . . . Most of the goods on store shelves this week were those people did not need or could not afford — dog biscuits; ketchup; toilet paper, which has become a luxury here; gin; cookies.

At various locations of TM, a major supermarket chain, aisles of meat coolers were empty save a few plastic bags of scrap meat for dogs. Flour, sugar, cooking oil, cornmeal and other basics were not to be found. A long line hugged the rear of one store, waiting for a delivery of the few loaves of bread that a baker provided to stay in compliance with the price directive.

The government’s takeover of slaughterhouses seems ineffectual: this week, butchers killed and dressed 32 cows for the entire city. Farmers are unwilling to sell their cows at a loss.

The empty grocery shelves may be the starkest sign of penury, but there are others equally worrisome. Doctors say that at most, there is a six-week supply of insulin and blood-pressure medications. Less vital drugs like aspirin are rarities.

“You can boil willow bark, just as Galen did,” one physician quipped.

For the full story, see:

MICHAEL WINES. "Caps on Prices Only Deepen Zimbabweans’ Misery." The New York Times (Thurs., August 2, 2007): A1 & A8.

(Note: ellipses added.)

"Women in Esigodini, Zimbabwe, cook melons into mash. Meat has been so scrace that melons have been their main source of nutrition." Source of caption: print version of the NYT article cited above. Source of photo: online version of the NYT article cited above.

Huge Health Gains from Vaccines

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

I hypothesize that most of the health gains from modern medicine come from a few advances, with vaccines being a very prominent example. (My hypothesis implies that many health care procedures do relatively little to increase health and longevity.)

(p. A18) Death rates for 13 diseases that can be prevented by childhood vaccinations are at all-time lows in the United States, according to a study released yesterday.

The study, by the Centers for Disease Control and Prevention in Atlanta, and published in The Journal of the American Medical Association, is the first time that the agency has searched historical records going back to 1900 to compile estimates of cases, hospitalizations and deaths for all the diseases children are routinely vaccinated against.

In nine of the diseases, rates of death or hospitalization declined more than 90 percent since vaccines against them were approved, and in the cases of smallpox, diphtheria and polio, by 100 percent.

In only four diseases — hepatitis A and B, invasive pneumococcal diseases and varicella (the cause of chickenpox and shingles) — did deaths and hospitalizations fall less than 90 percent. Those vaccines are all relatively new — the one for chickenpox, for example, was adopted nationally only in 1995. Also, some diseases like hepatitis typically strike adults, who are less likely to be immunized.

The results “are a testament to the fact that vaccines can drive diseases down to near nil,” said Dr. Gregory A. Poland, chief of the vaccine research group at the Mayo Clinic.

For the full story, see:

DONALD G. McNEIL Jr. "Sharp Drop Seen in Deaths From Ills Fought by Vaccine." The New York Times (Thurs., November 14, 2007): A23.

Schumer Defends Rich Hedge Fund Democratic Donors, While Criticizing Selfish Republican “Plutocrats”

Hedge fund defender, and recipient of hedge fund donations, Democratic Senator Charles E. Schumer. Source of photo: online version of the NYT article quoted and cited below.

The story quoted below, reminds me of a story I told earlier about the famous democratic economist John Kenneth Galbraith ridiculing the wealth of Republicans.

Schumer’s behavior exemplifies the "public choice" theory of economics that suggests that the motives of politicians will generally be similar to the motives of the rest of us. In other words, incentives often matter.

(p. A1) WASHINGTON, July 29 — June was a busy month for Senator Charles E. Schumer. On the phone, at large parties and small gatherings around the nation, he raised more than $1 million from the booming private equity and hedge fund industries for the Democratic Senatorial Campaign Committee, of which he is chairman.

But there is another way Mr. Schumer has been busy with hedge fund and private equity managers, an important part of his constituency in New York. He has been reassuring them that he will resist an effort led by members of his own party to single out the industry with a plan that would more than double the taxes on the enormous profits reaped by its executives.

Mr. Schumer has considerable say on the issue. In addition to being the third-ranking Democrat in the Senate leadership, he is the only Democrat serving on both of the major committees, Banking and Finance, that have jurisdiction in the matter.

He has long been a pro-business Democrat and a fund-raising machine for the party, as well as a vociferous supporter of Wall Street issues in Washington, much the way Michigan lawmakers defend the auto industry and Iowa politicians work on behalf of corn farmers.

But in the case of the tax proposals, the strategy behind Mr. Schumer’s efforts is putting to the test another set of principles he is known for. He has regularly portrayed himself as a progressive politician who identifies with the struggles of the middle class and is sharply critical of the selfish “plutocrats” who he says control the Republican Party.

For the full story, see:

RAYMOND HERNANDEZ and STEPHEN LABATON. "In Opposing Tax Plan, Schumer Breaks With Party." The New York Times (Mon., July 30, 2007 ): A1 & A14.

Prominent Transplant Surgeon Endorses Market for Kidneys

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

(p. A1) Amid a severe kidney-donor shortage, an idea long considered anathema in the medical community is gaining new currency: payments for people willing to give up a kidney.

One of the most outspoken voices on the topic isn’t a free-market libertarian, but a prominent transplant surgeon named Arthur Matas.

Dr. Matas, 59 years old, is a Canadian-born physician best known for his research at the University of Minnesota. Lately, he’s been traveling the country trying to make the case that barring kidney sales is tantamount to sentencing some patients to death.

"There’s one clear argument for sales," Dr. Matas told a gathering of surgeons earlier this year. The practice, currently illegal in the U.S., "would increase the supply of kidneys, save lives and improve the quality of life for those with end-stage renal disease."

The doctor supports a regulated market only for kidneys, since live donors can give one up and survive without excessive health risks. (Transplants of other organs, such as livers and lungs, pose greater complications to a living donor.) And Dr. Matas doesn’t rule out financial incentives for the families of deceased donors.

For the full story, see:

LAURA MECKLER. "Kidney Shortage Inspires A Radical Idea: Organ Sales As Waiting List Grows, Some Seek to Lift Ban; Exploiting the Poor?" The Wall Street Journal (Tues., November 13, 2007): A1 & A22.

Source of image: online version of the WSJ article quoted and cited above.

Only Two Living Americans Are Among 30 All-Time Wealthiest

Source: screen capture of a flash animated graphic that appears in the online version of the NYT article quoted and cited below. The flash animated graphic allows you to move your cursor along the circles representing wealth, and at the top of the graphic appears the picture and a brief bio of the person who owned that amount of wealth (such as Rockefeller in the screen capture above).

(p. 18) Mr. Weill’s beginnings were . . . inauspicious. A son of immigrants from Poland, raised in Brooklyn, a so-so college student, he landed on Wall Street in a low-level job in the 1950s. Harnessing entrepreneurial energy, deftness as a deal maker and an appetite for risk, with a rising stock market pulling him along, he built a financial empire that, in his view, successfully broke through the stultifying constraints that flowed from the New Deal. They were constraints not just on what business could or could not do, but on every high earner’s take-home pay.

“I once thought how lucky the Carnegies and the Rockefellers were because they made their money before there was an income tax,” Mr. Weill said, never believing in his younger days that deregulation and tax cuts, starting in the late 1970s, would bring back many of the easier conditions of the Gilded Age. “I felt that everything of any great consequence was really all made in the past,” he said. “That turned out not to be true and it is not true today.”

The Question of Talent

Other very wealthy men in the new Gilded Age talk of themselves as having a flair for business not unlike Derek Jeter’s “unique talent” for baseball, as Leo J. Hindery Jr. put it. “I think there are people, including myself at certain times in my career,” Mr. Hindery said, “who because of their uniqueness warrant whatever the market will bear.”

He counts himself as a talented entrepreneur, having assembled from scratch a cable television sports network, the YES Network. “Jeter makes an unbelievable amount of money,” said Mr. Hindery, who now manages a private equity fund, “but you look at him and you say, ‘Wow, I cannot find another ballplayer with that same set of skills.’ ”

. . .

The New Tycoons

The new Gilded Age has created only one fortune as large as those of the Rockefellers, the Carnegies and the Vanderbilts — that of Bill Gates, according to various compilations. His net worth, measured as a share of the economy’s output, ranks him fifth among the 30 all-time wealthiest American families, just ahead of Carnegie. Only one other living billionaire makes the cut: Warren E. Buffett, in 16th place.

. . .

“I don’t think it is unreasonable,” he said, “for the C.E.O. of a company to realize 3 to 5 percent of the wealth accumulation that shareholders realize.”

That strikes Robert C. Pozen as a reasonable standard. He made a name for himself — and a fortune — overseeing the investment department at Fidelity.

Mr. Weill makes a similar point. Escorting a visitor down his hall of tributes, he lingers at framed charts with multicolored lines tracking Citigroup’s stock price. Two of the lines compare the price in the five years of Mr. Weill’s active management with that of Mr. Buffett’s Berkshire Hathaway during the same period. Citigroup went up at six times the pace of Berkshire.

“I think that the results our company had, which is where the great majority of my wealth came from, justified what I got,” Mr. Weill said.

New Technologies

Others among the very rich argue that their wealth helps them develop new technologies that benefit society. Steve Perlman, a Silicon Valley innovator, uses his fortune from breakthrough inventions to help finance his next attempt at a new technology so far out, he says, that even venture capitalists approach with caution. He and his partners, co-founders of WebTV Networks, which developed a way to surf the Web using a television set, sold that still profitable system to Microsoft in 1997 for $503 million.

Mr. Perlman’s share went into the next venture, he says, and the next. One of his goals with his latest enterprise, a private company called Rearden L.L.C., is to develop over several years a technology that will make film animation seem like real-life movies. “There was no one who would invest,” Mr. Perlman said. So he used his own money.

For the full story, see:

LOUIS UCHITELLE. "Age of Riches; The Richest of the Rich, Proud of a New Gilded Age." The New York Times, Section 1 (Sun., July 15, 2007): 1 & 18-19.

(Note: ellipses added.)

Entrepreneur Leo J. Hindery, Jr. Source of photo: online version of the NYT article quoted and cited above.

Major Advance in Processor Chip Technology

Source of graphic: online verion of the WSJ article quoted and cited below.

(p. B7) A fundamental shift in chip-manufacturing technology is bearing its first fruits: a collection of Intel Corp. microprocessors that is getting impressive early reviews.

Intel’s latest chips, being formally announced today at an event in San Francisco, were built with new manufacturing materials. Intel is building key portions of transistors in the chips from a material called hafnium instead of silicon dioxide, an industry mainstay since the 1960s.

"It’s one of the biggest changes in the last 40 years," said David Perlmutter, senior vice president and general manager of Intel’s mobility group.

. . .

It shrinks circuitry dimensions to 45 nanometers, or billionths of a meter, from 65 nanometers. The new materials for making transistors, meanwhile, can increase their switching speeds by more than 20% while reducing their power consumption by about 30%, Intel estimates.

For the full story, see:

DON CLARK. "Intel Shifts From Silicon To Lift Chip Performance." The Wall Street Journal (Mon., November 12, 2007): B7.

(Note: ellipsis added.)

Ted Kennedy Sabotages Wind Farm that Would Be Visible from His Cape Cod Estate

Part of a Greenpeace ad lambasting Senator Edward Kennedy’s opposition to windmills that would effect his view. Source of image of part of ad: online version of the WSJ article quoted and cited below.

(p. W8) Behind much of the modern environmental movement lies the "do as I say, not as I do" sensibility of an aristocracy. It’s not surprising when a bunch of enviro-aristos line up opposition to a new road or a shopping mall or some other development that offends them. But there is something delicious about such obstructionists raising environmental concerns — almost all of them bogus — to try to prevent a wind farm, one of the cleanest sources of electricity we have, from being built in sight of their summer homes.

. . .

Sen. Kennedy presented the spectacle of working hard behind the scenes to sabotage the wind farm while publicly castigating the Bush administration for its alleged failure to push environmental technology.

. . .

The real outrage here is the agonizing delay in gaining approval for Cape Wind — all too typical, alas, of how things work, or don’t, in Massachusetts. A not-in-my-backyard campaign ought to target something at least potentially unpleasant, but the "visual pollution" that so angered Mr. McCullough would be minuscule. From Sen. Kennedy’s compound five miles away, a 417-foot tower appears about as tall as the thumbnail at the end of your outstretched arm. It makes you wonder how Cape Wind’s opponents would react if a developer planned a pharmaceutical factory in, say, Hyannis — civil disobedience, perhaps? Exquisitely catered, of course.

For the full review, see:

GUY DARST. "You’re Blocking My View." The Wall Street Journal (Fril, May 25, 2007): W8.

(Note: ellipses added.)

Source of the book image: http://ec1.images-amazon.com/images/I/51p+cPVSstL._SS500_.jpg