Entrepreneur Venter Advances Toward Useful Control of Cells

 

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

 

Scientists at the institute directed by J. Craig Venter, a pioneer in sequencing the human genome, are reporting that they have successfully transplanted the genome of one species of bacteria into another, an achievement they see as a major step toward creating synthetic forms of life.

Other scientists who did not participate in the research praised the achievement, published yesterday on the Web site of the journal Science. But some expressed skepticism that it was as significant as Dr. Venter said.

His goal is to make cells that might take carbon dioxide out of the atmosphere and produce methane, used as a feedstock for other fuels. Such an achievement might reduce dependency on fossil fuels and strike a blow at global warming.

“We look forward to having the first fuels from synthetic biology certainly within the decade and possibly in half that time,” he said.

Richard Ebright, a molecular biologist at Rutgers University, said the transplantation technique, which leads to the transferred genome’s taking over the host cell, was “a landmark accomplishment.”

“It represents the complete reprogramming of an organism using only a chemical entity,” Dr. Ebright said.

Leroy Hood, a pioneer of the closely related field of systems biology, said Dr. Venter’s report was “a really marvelous kind of technical feat” but just one of a long series of steps required before synthetic chromosomes could be put to use in living cells.

 

For the full story, see: 

NICHOLAS WADE. "Pursuing Synthetic Life, Scientists Transplant Genome of Bacteria."  The New York Times   (Fri., June 29, 2007):  A1 & A18.

 

VenterCraig.jpg   J. Craig Venter.  Source of photo:  online version of the NYT article quoted and cited above.

 

Process Innovations Are Neglected, But Important

 

In discussing the process of creative destruction, Schumpeter mentioned both product and process innovations.  By far the greater attention has been given to product innovations.  But maybe process innovations deserve more attention than they have received:

 

Snazzy products are the stuff of legends, romanticized by “early adopters” and skewered by neo-Luddites. Yet while these products bring glory to companies, novel processes are often more important in keeping the cash registers ringing.

. . .

Consider the question of Google’s greatest business secret. Is it the algorithms behind its search tools? Or is it the way it organizes vast clusters of computers around the globe to answer queries so quickly? Perhaps predictably, Google won’t disclose the number of computers deployed in its vast information network (though outsiders speculate that the network has at least 450,000 computers).

I believe that the physical network is Google’s “secret sauce,” its premier competitive advantage. While a brilliant lone wolf can conceive of a dazzling algorithm, only a superwealthy and well-managed organization can run what is arguably the most valuable computer network on the planet. Without the computer network, Google is nothing.

Eric E. Schmidt, Google’s chief executive, appears to agree. Last year he declared, “We believe we get tremendous competitive advantage by essentially building our own infrastructures.”

Process innovations like Google’s computer network are often invisible to the public, and impossible to duplicate by rivals. Yet successful companies realize that maintaining competitive advantage depends heavily on sustaining process innovations.

 

For the full commentary, see: 

G. PASCAL ZACHARY. "PING; The Unsung Heroes Who Move Products Forward." The New York Times, SundayBusiness Section (Sun., September 30, 2007): 3.

(Note:  ellipsis added.)

 

Study Finds Much Smaller Increase in Income Volatility than Hacker Claims

 

    Source of graphs:  online version of the WSJ article cited below.

 

WASHINGTON — Weighing in on an intensifying debate on income insecurity, three economists — including two from the Federal Reserve — have found that American families today are more likely to experience big drops in their income than three decades ago.

Their analysis, however, finds far less volatility in family income than some recent studies.

The authors of the new study, Douglas Elmendorf of the Brookings Institution and senior Fed economists Karen Dynan and Daniel Sichel, caution against interpreting their findings as evidence that families face more risk of hardship than before. They note that financial innovation has given Americans more ways to maintain their spending when their incomes fall. (Read the full study.)

The study found that the volatility of household income rose 23% between the early 1970s and early 2000s. While small changes in family income are no more frequent, large changes in income — more than 50% — are.

The probability that a family will experience a decline in annual income of 50% or more, compared with their average income in the previous three years, rose to 1.8% in 1995 from 0.6% in 1973. After 1995, the probability dipped, and has risen back to 1.7%.

"The increase in volatility we document is not trivial," Mr. Elmendorf said in an interview. "Our work is quite consistent with being concerned about the level and increase in volatility of household income."

That said, "I don’t think our results support the view that the world is dramatically more adverse for households," he added.

. . .

Yet research into the assumption that income volatility has increased has reached differing conclusions. Yale University political scientist and author Jacob Hacker, in a 2006 book titled "The Great Risk Shift," documents a fivefold increase in household-income volatility between the early 1970s and early 1990s. Mr. Hacker, who described himself as "thunderstruck" by the result, has written widely and testified to Congress on the subject. He couldn’t be reached for comment.

By contrast, the Congressional Budget Office, using a different set of data, found that earnings volatility for individuals — as opposed to households — has changed little since the early 1980s.

But the authors argue that bigger swings in income need not force households to slash their spending. They cite preliminary findings from other research they have conducted that show financial innovation, such as easier borrowing against the value of a home, has helped to insulate family spending patterns from fluctuations in income.

 

For the full story, see: 

GREG IP.  "Incomes Suffer More Volatility Amid Heightening Risks, Families Find Ways to Cushion Blows."  The Wall Street Journal   (Fri., June 22, 2007):  A4.

(Note:  ellipsis added.)

 

New Nuclear Design Reduces Already-Low Risks, and Increases Efficiency

 

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

 

(p. C1)  WASHINGTON, Sept. 24 — In a bid to take the lead in the race to revive the nuclear power industry, an energy company will ask the federal Nuclear Regulatory Commission on Tuesday for permission to build two reactors in Texas.

It is the first time since the 1970s and the accident at Three Mile Island that an American power company has sought permission to start work on a new reactor to add to the existing array of operable reactors, which now number 104.

. . .

(p. C11)  NRG is planning to build the Advanced Boiling Water Reactor, which represents a relatively low-risk choice in an industry where few American companies have current experience with building a plant.  . . .

. . .

The new design has several innovations that are aimed at sharply reducing the risk of meltdown, a risk that is described by the industry and by regulators as very low in any case. Other innovations are supposed to reduce the time and cost of construction.

 

MATTHEW L. WALD.  "Approval Is Sought For Reactors."  The New York Times  (Tues., September 25, 2007):  C1 & C11.

(Note:  ellipses added.)

 

Not All World Views Can Be Accommodated

 

   1935 photos of painted Caduveo women from Claude Lévi-Strauss Structural Anthropology.  Source of photos:  online version of the NYT article cited below.

 

I remember in a philosophy class back in the 1970s, the philosopher Stephen Toulmin mentioning that he had once attended a conference with the famed anthropologist Claude Lévi-Strauss.  For a long while Lévi-Strauss sat in silence.  Finally he stirred himself to speak, and Toulmin wondered what wisdom the great man would pronounce. 

His comment was something like:  "It is hot in here.  Will someone open a window?" 

 

News of the death of the philosopher Richard Rorty on June 8 came as I was reading about a small Brazilian tribe that the French anthropologist Claude Lévi-Strauss studied in the 1930s. A strange accident, a haphazard juxtaposition — but for a moment this pragmatist philosopher and a fading tribal culture glanced against each other, revealing something unusual about the contemporary scene.

. . .

For Mr. Rorty, the importance of democracy is that it creates a liberal society in which rival truth claims can compete and accommodate each other. His pragmatism was postmodern, tolerant to a fault, its moral and progressive conclusions never appealing to a higher authority.

. . .

The Caduveo founding myth recounts that, lacking other gifts at the moment of creation, the tribe was given the divine right to exploit and dominate others.

. . .

But there was also something else about this tribe that drew Mr. Lévi-Strauss’s attention: “It was a society remarkably adverse to feelings that we consider as being natural.” Its members disliked having children. Abortion and infanticide were so common that the only way the tribe itself could continue was by adoption, and adoption — more properly called abduction — was traditionally implemented through warfare. The tribal disdain for nature extended into its active denigration of hair, agriculture, childbirth and even, perhaps, representational art.

. . .

In reasoning one’s way into pragmatism, in minimizing the importance of natural constraints and in dismissing the notion of some larger truth, the tendency is to assume that as different as we all are, we are at least prepared to accommodate ourselves to one another. But this is not something the Caduveo would necessarily have gone along with. Mr. Rorty’s outline of what he called “the utopian possibilities of the future” doesn’t leave much room for the kind of threat the Caduveo might pose, let alone other threats, still active in the world.

One tendency of pragmatism might be to so focus on the ways in which one’s own worldview is flawed that trauma is more readily attributed to internal failure than to external challenges. In one of his last interviews Mr. Rorty recalled the events of 9/11: “When I heard the news about the twin towers, my first thought was: ‘Oh, God. Bush will use this the way Hitler used the Reichstag fire.’ ”

If that really was his first thought, it reflects a certain amount of reluctance to comprehend forces lying beyond the boundaries of his familiar world, an inability fully to imagine what confrontations over truth might look like, possibly even a resistance to stepping outside of one’s skin or mental habits.

But in this too the Caduveo example may be suggestive. As Mr. Lévi-Strauss points out, neighboring Brazilian tribes were as hierarchical as the Caduveo but lacked the tribe’s sweeping “fanaticism” in rejecting the natural world. They reached differing forms of accommodation with their surroundings. The Caduveo, refusing even to procreate, didn’t have a chance. They survive now as sedentary farmers. Such a fate of denatured inconsequence may eventually be shared by absolutist postmodernism. The Caduveo’s ideas weren’t useful, perhaps. Some weren’t even true.

 

For the full commentary, see: 

EDWARD ROTHSTEIN.  "CONNECTIONS; Postmodern Thoughts, Illuminated by the Practices of a Premodern Tribe."  The New York Times   (Mon., June 18, 2007):  B3.

(Note:  ellipses added.)

 

 RortyRichard.jpg Levi-StraussClaude.jpg   Rorty on left; Lévi-Strauss on right.  Source of photos:  online version of the NYT article cited above.

 

Michael Powell Provides Support for the Capture Theory of Regulatory Agencies

 

The following brief story would seem highly compatible with the "Capture Theory of Regulatory Agencies" that is associated with the names of economist George Stigler, and historian Gabriel Kolko.  That theory suggests that regulatory agencies are frequently captured by the industries that they are intended to regulate.

One kind of evidence for the theory is that members of regulatory agency boards often are recruited from the industry, and often return to working for the industry after their terms are over.

 

The efforts of federal regulators to curtail cronyism on corporate boards have led to some odd outcomes. The case of Michael K. Powell, a new director of Cisco Systems, is a prime example. 

Mr. Powell, the former chairman of the Federal Communications Commission, happens to be a son of Colin Powell, the former secretary of state. Cisco happens to have paid the senior Mr. Powell more than $100,000 to deliver two speeches in 2005.

Under guidelines established by the Nasdaq stock market, that connection disqualifies the younger Mr. Powell as an independent director, so he cannot sit on the company’s audit, compensation or governance committees. But by the same definition, Richard M. Kovacevich, the chairman of Wells Fargo, is an independent director of Cisco, even though his company has promised to lend Cisco $120 million.

The difference is that Cisco’s line of credit is deemed too small a part of Wells Fargo’s overall business to present a conflict of interest, while the payments to the senior Mr. Powell exceeded the allowable annual limit of $100,000 to any family member of an independent director.

 

Source of story: 

PATRICK McGEEHAN.  "$100,000? Too High. $120 Million? Fine."  The New York Times, SundayBusiness Section (Sun., September 30, 2007):  2.

 

The key Kolko book is: 

Kolko, Gabriel. Railroads and Regulation, 1877-1916.  W. W. Norton & Company, 1970.

 

Pulling Teeth Slowly

 

   Source of book image:  http://mitpress.mit.edu/images/products/books/0262113023-f30.jpg

 

Many years ago, I read János Kornai’s The Road to the Free Market, which gave Kornai’s advice on how Eastern Europe could best make the transition from communism to the free market.  What I remember most from the book, is his discussion of whether it is more humane for the transition to be quick or gradual.  He answers the question by asking another:  if you need to have a tooth pulled, is it more humane for it to be pulled quickly or gradually?

 

(p. B15) . . .,  Mr. Kornai’s books and lectures in Europe, North America and Asia established him as one of the leading scholars of socialist economics and an expert on the difficult transitions that many countries face when they move from socialism to a more democratic and capitalist system.   . . .

At one point in 1974, under the more relaxed rule of János Kádár, when Hungary was the "most cheerful barrack in the camp," Mr. Kornai and his wife decided to build their own home. Over the course of several months, they personally confronted the corruption, endemic shortages and shoddy construction materials that were so common in Eastern Europe. A year later, on a trip to India, Mr. Kornai was faced by idealistic young Maoists whose concern for the desperately poor reinforced their support for socialism. Mr. Kornai responded to them by arguing, as he puts it here, that "rationing systems that spread misery equally may assuage feelings of injustice for a while, but they will not solve anything."

 

For the full review, see:

JOSHUA RUBENSTEIN.  "BOOKS; Critic Behind the Curtain."  The Wall Street Journal  (Tues., January 30, 2007):  B15.

(Note: ellipses added.)

 

The book reviewed, is: 

János Kornai.  By Force of Thought.  (MIT Press, 461 pages, $40)

 

The earlier book by Kornai, that I read and liked, is:

Kornai, Janos. The Road to a Free Economy: Shifting from a Socialist System, the Example of Hungary. New York: W.W. Norton, 1990.

 

Testing Incentives

 

When W. became president, he had two major education initiatives:  vouchers, and "no child left behind."  It is unfortunate that in the face of formidable Democratic opposition, he abandoned vouchers, and stuck with "no child left behind."  The latter policy’s intent is noble, but some of its unintended consequences are perverse. 

Mandatory testing results in educational inefficiency:  teachers teach to the tests, and as the commentary quoted below reports, tests get jiggered to show good results.

The main harm though, is that some of the most important results of good education, like resilience, self-discipline, and creativity, are not readily measured in standardized multiple choice tests.  So programs, such as Montessori, that encourage such results, end up under-appreciated and under-rewarded.

What we most need is for parents to be free to choose in education.  That would result in far greater innovation and improvement in education than the current "no child left behind" standardized testing.

 

(p. A31) If teachers, administrators, politicians and others have a stake in raising the test scores of students — as opposed to improving student learning, which is not the same thing — there are all kinds of incentives to raise those scores by any means necessary.

. . .

A study released last week by the Thomas B. Fordham Institute and the Northwest Evaluation Association found that “improvements in passing rates on state tests can largely be explained by declines in the difficulty of those tests.”

The people in charge of most school districts would rather jump from the roof of a tall building than allow an unfettered study of their test practices. But that kind of analysis is exactly what’s needed if we’re to get any real sense of how well students are doing.

 

For the full commentary, see: 

BOB HERBERT.    " High-Stakes Flimflam."  The New York Times   (Tues.,  October 9, 2007):  A31.

 

 HerbertBob.jpg  Columnist Bob Herbert.  Source of photo:  online version of the NYT column quoted and cited above.

 

United States Cotton Subsidies Hurt Poor African Farmers

 

Dan Sumner did his dissertation many years ago under T.W. Schultz, a great economist, and a great human being.  (Dan was a friend of mine in grad school–we were members of a club that gathered once a month to discuss the works of Bertrand Russell.) 

 

Eliminating billions of dollars in federal subsidies to American cotton growers each year would reduce American cotton production and exports, raise world prices by about 10 percent and modestly improve the incomes of millions of poor cotton farmers in Africa, according to a new study by Oxfam, the aid group.

Agricultural economists at the University of California, Davis, who conducted the study for Oxfam, found that a typical farm family of 10 in Chad, Benin, Burkina Faso or Mali — Africa’s major cotton producers — that now earns $2,000 a year would have an extra $46 to $114 a year to spend if American subsidies were removed.

“Fifty to a hundred bucks is a lot of money to these people,” said Daniel Sumner, chairman of the Department of Agricultural and Resource Economics at the university. “It’s not right to think that changing U.S. subsidies will turn very poor people into middle-class households by our standards. That’s a generational process. But it’s money in their pocket.”

. . .

Dani Rodrik, an economist at Harvard who is skeptical of the importance of reduced agricultural subsidies, said he found Oxfam’s new estimates credible, but said the gains forecast were relatively small.  . . .

. . .

But the authors of the report said that removing American subsidies would permanently shift the price of cotton upward, with prices subsequently fluctuating around a higher average. 

 

For the full story, see: 

CELIA W. DUGGER.  "Oxfam Suggests Benefit in Africa if U.S. Cuts Cotton Subsidies."  The New York Times  (Thurs., June 21, 2007):  A12.

(Note:  ellipses added.)

 

Johnston Book to Expose More Government Subsidies to Wealthy

 

  Source of book image:  http://ecx.images-amazon.com/images/I/51Zc90x8GDL._SS500_.jpg

 

Several days ago, I ran an entry that quoted a revealing and upsetting article showing how a lot of tax dollars are being used to susidize golf holidays for wealthy businessmen. The author of the article was New York Times Pulitzer Prize-winning reporter David Cay Johnston.

In response to my entry, Johnston emailed me to let me know that he has a forthcoming book that will expand on the subject of his NYT piece.

If Johnston’s article is any guide, his book should be of interest. Clicking on the reference below, will take you to the the Amazon page where the book can be pre-ordered in advance to its expected December 27, 2007 release:

Johnston, David Cay. Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill).  Portfolio, 2007.

 

Most New Jobs Are Good Jobs (High-Skill and High-Pay)

 

Stephen J. Rose, the author of the commentary quoted below, was previously an advisor to Democratic President Clinton’s former Secretary of Labor, Robert Reich.  He is currently a senior economic fellow with the Progressive Policy Institute.  The commentary is based on Rose’s report "The Truth About Middle Class Jobs."

 

Economic change is a messy process. New technologies open up many opportunities for those prepared to take advantage of them. At the same time, old firms and their workers are displaced and forced to start over. In 1900, for example, 40% of the U.S. work force was involved in agriculture. Today, that figure is less than 2%, and no serious observer would argue that we are worse off as a result of this transformation.

Yet many of today’s most prominent politicians and pundits are making an updated version of precisely this argument. They claim that the decline in the number of manufacturing jobs has led to the replacement of good middle-class jobs by low-skill, low-pay "hamburger-flipping" service jobs.

. . .

 Let us look at the distribution of earnings in 1979, compared with the distribution of earnings of the net new jobs created since that year.  . . .

. . .

Here’s the bottom line: For three-quarters of the workforce (women and the top half of male earners), economic growth translated into earnings gains. But for male workers in the bottom half of the earnings distribution, the decline of unionized manufacturing employment has led to the drying up of some middle-class jobs for those with no post-secondary education.

For the clear majority of the workforce, then, the job market has become more welcoming, not less so. But where are these jobs?

Using a framework that I developed in the 1990s, I find that most of the employment gains over the last 30 years have been in business-management activities (administration, sales, finance and business services) as well as in professional services such as health care and education. While the percentage of U.S. jobs derived from manual work in agriculture, mining, timber and manufacturing has declined, the share of jobs related to low-skilled retail and personal/food services has remained steady.

 

For the full commentary, see: 

STEPHEN J. ROSE.  "The Myth of Middle-Class Job Loss."  The Wall Street Journal  (Weds., October 24, 2007):  A21.

(Note:  ellipses added.)