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July 31, 2007

Why Coke Cost a Nickel for 60 Years


The excerpt below is from a WSJ summary of a May 11, 2007 Slate article.


A serving of Coca-Cola cost a nickel for 60 years -- an example that illustrates the disadvantages of price stability, Tim Harford writes. 

. . .   Prices won't accurately reflect a product's demand and the cost of producing it.  If, for example, the relative price of a car "can't fall when demand does, sales will collapse."  If wages can't fall in a recession, unemployment will rise.

The case of Coke, Mr. Harford says, is an example of the main reason companies choose to keep prices constant in the face of dramatic rises and falls in costs: the hassle of changing a product's price can be very high.  Coke kept its price constant from 1886 through the mid-1940s, even as the price of sugar tripled after World War I and then fell slightly, and after the product went from being taxed as a medicine to taxed as a soft drink.  Part of Coke's problem was that it sold many of its bottles in vending machines that accepted only nickels.  A price increase would have meant either building new vending machines or doubling the price of Coke, neither of which made financial sense.


For the full summary, see: 

"Informed Reader; ECONOMICS; The Cost of Raising Prices Can Prove Too High to Pay."  The Wall Street Journal  (Mon., May 14, 2007):  B7.


July 30, 2007

"I Fly with Leslie"


FlyWithLesliePoster.jpg  A poster that is displayed in some Wall Street Journal offices in solidarity with a Bancroft family member who has openly expressed doubts about Rupert Murdoch's proposed purchase of the Journal.  Source of the image:  online version of the NYT article cited below.


A lot of the news media imitate each other in viewpoint and content.  The Wall Street Journal is fresh and innovative, and frequently gives us important news that is new.

And there have been times throughout recent decades when the editorial page of the Journal was one of the few voices for truth, justice and freedom.  It would be a great loss for that voice to be silenced.

On the other hand, I have noted in an earlier entry, that the business side of the Journal is in need of improvement. 

I do not know if in the end, the Murdoch bid is the best chance for the long-run survival of what is good about the Journal.  But I do wish the Journal, and the Journal's journalists, well. 


(p. C1)  On May 14, more than 100 reporters, editors and executives clustered in The Wall Street Journal’s main newsroom to mark the retirement of Peter R. Kann, the longtime leader of their corporate parent, Dow Jones & Company.

Mr. Kann, in rolled-up shirtsleeves, was typically self-effacing about his own contributions to the company. But the celebration of the past was muted by worry about The Journal’s future. A few weeks earlier, Rupert Murdoch’s News Corporation had offered $5 billion to buy Dow Jones. The Bancroft family, owners of a controlling stake in the company, rebuffed the offer at first, but there were signs that some of them were wavering.

Mr. Kann, who had been advising the family against selling, expressed hope that Mr. Murdoch would not prevail, using an image of The Journal as a citadel trying to repel an invasion by tabloid barbarians.

“The drawbridge is up,” Mr. Kann told the group. “So far, so good.”

For employees at Dow Jones, the 11 weeks since they learned of the Murdoch offer have been a wrenching time, raising the prospect of fundamental changes at an organization that had already had its fill of big changes in the last couple of years — with Mr. Kann being replaced by Richard F. Zannino as chief executive, with Marcus W. Brauchli taking over from Paul E. Steiger as top editor; and with a shift of its mission, by adding a Saturday paper and more lifestyle articles to appeal to new advertisers, and investing heavily in its digital properties.

. . .  

(p. C12)  The anti-Murdoch forces enjoyed one of their brief lifts on June 29 when The Journal reported that Leslie Hill, a Bancroft family member, had grave reservations about selling to Mr. Murdoch. Someone enlarged The Journal’s dot drawing of Ms. Hill, a retired airline pilot, adding the words “I Fly with Leslie” above her face. Copies of the makeshift poster appeared in Journal offices around the country.

. . .  

As the chances of an alternative have appeared to wane, more reporters and editors have polished their résumés and approached rival publications about jobs. Some have even talked of starting their own business news Web site.

Many voiced disappointment in the Bancrofts, the family that has owned the company for more than a century and taken great pride in it, for not playing a leading role in running it for more than 70 years.

“We understand that for the Bancrofts this is a choice between getting much richer, and holding onto something because they believe in it,” a reporter said. “What they may not realize is that many of us in the newsroom have made the same choice. There are a lot of people here who could be traders or lawyers, people with M.B.A.’s, who could be making a lot more money. To us, this is not an abstract choice.” 


For the full story, see: 

RICHARD PÉREZ-PEÑA. "At The Gates; Murdoch’s Arrival Worries Journal Employees." The New York Times  (Thurs., July 19, 2007):  C1 & C12. 


MurdochRupert.jpg Rupert Murdoch.  Note that the image is a tribute, or humorous small jab at, the hallmark image style of the Wall Street Journal, in which photographs are re-done by artists into an example of something like pointillism.  (True also of the poster image above.)  Source of the image:  online version of the NYT article cited above.


July 29, 2007

A Public Choice Theory of "Taxonomic Inflation"


The excerpt below is from a WSJ summary of an article that appeared in The Economist on May 19, 2007.


Scientists have taken to upgrading animals once thought to be subspecies into full-fledged species, in what the Economist says is an overzealous attempt to boost conservation of seemingly rare animals.

Sometimes, the reclassification of animals into their own species category is warranted, as new research reveals once-obscured markers that differentiate certain beasts. But lately, the weekly says, primatologists have been suffering from "taxonomic inflation."

. . .

. . .   One reason is that by fragmenting animal groups, the number of rare species increases, boosting animal-conservation claims.  At the same time, having a greater number of species boosts the chances that a habitat can pursue a legal designation as a protected area.


For the full summary, see: 

"Informed Reader; NATURE; Species Inflation May Infect Over-Eager Conservationists."  The Wall Street Journal  (Sat., May 19, 2007):  A6.

(Note:  ellipsis added.)


July 28, 2007

We Should Not Be Forced to Fluoresce


Source of lighting table:  online version of the WSJ article cited below.


I've been using some of the compact fluorescent light bulbs for a few years.  They're very slightly slower to turn on, and I don't like the quality of light quite as well, but the money I figure I save is enough, for me, to outweigh the minor disadvantages.  But I can easily imagine a rational person viewing the trade-offs differently.  So it galls me that some environmentalists want to force us to fluoresce. 

If enough people are willing to pay the higher energy costs of incandescent light, then we should let private enterprise build more nuclear power plants to provide consumers what they should be free to buy.


(p. A1)  WASHINGTON -- Manufacturers and environmentalists are hammering out a nationwide energy-saving lighting standard that, if enacted by Congress, would effectively phase out the common household light bulb in about 10 years. That in turn could produce major cuts in the nation's electricity costs and greenhouse-gas emissions.

The new standard is expected to compel a huge shift by American consumers and businesses away from incandescent bulbs to more efficient -- but also more expensive -- fluorescent models, by requiring more light per energy unit than is yielded by most incandescents in use. The winner, at least in the near term, likely would be the compact fluorescent light bulb, or CFL.


For the full story, see:

JOHN J. FIALKA and KATHRYN KRANHOLD.  "Households Would Need New Bulbs To Meet Lighting-Efficiency Rule."  The Wall Street Journal  (Sat., May 5, 2007):  A1 & A5. 


 FluorescentBulb.gif   The bulb I like, but don't want to be forced to use.  Source of image:  online version of the WSJ article cited above.


July 27, 2007

A Salute to Underappreciated Amateur Historians


On a bright Saturday afternoon earlier this month, 30 or so of us gathered to give James O. Hall the send-off he deserved. Appropriately enough, the memorial service was held in the James O. Hall Research Center of the Surratt House museum, in Clinton, Md., 12 miles south of Washington. Mr. Hall died in February at the age of 95, leaving no immediate survivors. The 30 who showed up were instead neighbors, friends, a pair of nieces and random hangers-on who, like me, had known him only slightly but who honored him as a giant in a long and noble and underappreciated line.

I don't think there's a good word for what Mr. Hall did: "researcher" is too dry, "historical investigator" carries hints of melodrama, and "archivist" suggests a dutiful drudge, which Mr. Hall was not. "Amateur historian" probably fits best, though it sounds vaguely derivative and second-tier. Following a career with the Labor Department -- he retired in the early 1970s -- Mr. Hall turned himself into the world's foremost authority on the assassination of Abraham Lincoln. Historians, pros and amateurs alike, sought him out for his knowledge and access to his exhaustive files. As one of them put it, James O. Hall knew more about Lincoln's murder than anyone who ever lived, including John Wilkes Booth.

. . .

"I had to teach myself genealogy," he said. "Not because I liked genealogy, but because it's how you find things that have been lost." Over the years, he tried to trace the descendants of everyone even remotely tied to the assassination. When he found a new great-granddaughter or the grandson of a nephew, he politely peppered that person with letters and phone calls, asking the descendant to rummage through attics -- or offering, even better, to do it himself. His industry never flagged, and it led him to some of his greatest discoveries. In a dusty cubby in a forgotten archive, Mr. Hall made one of the major Lincoln finds of the past 50 years: a letter of self-justification Booth wrote the morning of the murder.

Typically, in 1977, Mr. Hall chose to publish this astonishing find in the Lincoln Log, a newsletter for buffs. Its circulation was minuscule compared with the slick magazines -- National Geographic or American Heritage -- that would have loved to showcase such a find and maybe make its discoverer famous. But Mr. Hall was without professional vanity; that's what it means to be an amateur, after all.

At the end of his life, Mr. Hall treated his vast archives with the same modesty and discretion. At least two well-endowed universities made a play for the contents of his file cabinets. Instead, he gave them to the small, homespun Surratt House museum, once the country home of the Lincoln conspirator Mary Surratt and a favorite gathering place for buffs. With a single stroke, he transformed the museum into the Alexandrian library of assassination studies. It was a gesture of confidence and fellow feeling, made to all amateur historians from the best of their kind.


For the full commentary, see: 

ANDREW FERGUSON.  "TASTE; A History Hobby."  The Wall Street Journal  (Fri., May 25, 2007):  W13.

(Note:  ellipsis added.)


July 26, 2007

Hispanic Immigrants May Help Rejuvinate Aging Workforce


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


The article excerpted below sketches one solution to the "problem" of the aging boomer workforce.  Michael Milken has suggested that the problem itself may be bogus, because aging, healthy, boomers will just keep on trucking a lot longer and stronger than is usually believed. 


The quality of life for some 80 million graying baby boomers in the U.S. may depend in large part on the fortunes of another high-profile demographic group: millions of mostly Hispanic immigrants and their children.

With a major part of the nation's population entering its retirement years and birth rates falling domestically, the shortfall in the work force will be filled by immigrants and their offspring, experts say. How that group fares economically in the years ahead could have a big impact on everything from the kind of medical services baby boomers receive to the prices they can get for their homes.

Immigrants and baby boomers are two groups whose destinies are converging in the next 20 years," says Dowell Myers, a demographer at the University of Southern California. "Baby boomers will surrender their economic role to this generation of immigrants and their children," who will evolve into a critical pool of laborers and taxpayers, he says.

Prof. Myers, author of the recent book "Immigrants and Boomers: Forging a New Social Contract for the Future of America," is among a crop of academics studying the link between the giant generation born between 1946 and 1964 and newcomers to the U.S., mainly Latin American immigrants.


For the full commentary, see: 

MIRIAM JORDAN. "Boomers' Good Life Tied To Better Life for Immigrants." The Wall Street Journal (Mon., May 7, 2007):  A2.


July 25, 2007

FDA Rejects Long-Lasting Disappearance of Disease as a "Theoretical Construct"


Consider the FDA's handling of Genasense, a new drug for melanoma and chronic lymphocytic leukemia (CLL), two often terminal forms of cancer. The drug is being developed by Genta, a small, innovative company with only one approved drug and limited financial resources. Despite compelling evidence that Genasense is making progress in fighting both diseases, the FDA appears determined to kill the drug.

In the case of the melanoma application, instead of reviewing the clinical-trial data in accordance with usual methods (which showed positive results), the FDA chose a nonstandard statistical approach aimed at discrediting the results. The agency used this analysis in its briefing to its advisory committee, claiming that the drug might not be effective. The committee then relied on that information to vote against approval.

. . .

The FDA's inane answer to the CLL experts was that the long-lasting disappearance of disease in patients taking Genasense was a "theoretical construct" and not grounds for approval.

The experts explained to the FDA that complete responses in advanced CLL patients are the medical equivalent of the Holy Grail. The FDA finally agreed, but was unimpressed with emerging data showing responders to Genasense living longer than responders in the control group.

The experts were unanimous in advising that Genasense should be approved, but the FDA was unmoved. The agency's Dr. Pazdur suggested that Genta could make the drug available as an unapproved treatment through an expanded access program -- this from a regulator fond of stating that the best way to get a drug to patients in need is through approval! In this case the agency was saying to Genta: We are not going to approve your drug, but any patient who needs it can have it so long as you give it away.

. . .

The FDA's handling of Genasense lays bare the all too common, aggressive incompetence of the FDA's cancer-drug division and should lead to an immediate examination of its policies and leadership, followed by swift corrective action.

As for the FDA's belief that their power to control us and even deny us the pursuit of life itself is unlimited under the Constitution, we can only hope the appeals court disagrees. An agency that blocks progress against deadly diseases -- while arguing that its power to do so is above challenge -- is in dire need of a court supervised review.


For the full commentary, see: 

STEVEN WALKER.  "Drug Czars."  The Wall Street Journal  (Fri., May 4, 2007):  A15.

(Note:  ellipses added.)


July 24, 2007

Incentives Matter in Medicine, But Profit is Not the Problem

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


In the article excerpted below, the profit motive in medicine is painted as the villain of the piece.  But the problem is not the profit motive.  The problem is that government occupational licensing and regulation in medicine raises barriers to entry for low-cost competitors to enter, innovate, and compete. 


(p. A1)  Two of the world’s largest drug companies are paying hundreds of millions of dollars to doctors every year in return for giving their patients anemia medicines, which regulators now say may be unsafe at commonly used doses.

The payments are legal, but very few people outside of the doctors who receive them are aware of their size. Critics, including prominent cancer and kidney doctors, say the payments give physicians an incentive to prescribe the medicines at levels that might increase patients’ risks of heart attacks or strokes.

Industry analysts estimate that such payments — to cancer doctors and the other big users of the drugs, kidney dialysis centers — total hundreds of millions of dollars a year and are an important source of profit for doctors and the centers.


For the full story, see: 

ALEX BERENSON and ANDREW POLLACK.  "Doctors Reap Millions for Anemia Drugs."  The New York Times  (Weds., May 9, 2007):  A1 & C4. 


   Bernice Wilson's kidney dialysis treatment includes the anti-anemia drug Epogen.  Source of photo:  online version of the NYT article quoted and cited above.

July 23, 2007

Biodiversity Can Survive Rain Forest Logging


The passage below is excerpted from a WSJ summary of a New Scientist article dated May 12, 2007.


While rain forests are being burned and cut down by loggers and farmers at a rapid rate, the damage is far from irreversible, say Helene Muller-Landau of the University of Minnesota in Minneapolis-St. Paul and Joseph Wright of the Smithsonian Tropical Research Institute in Panama. Many tropical species can survive in isolated patches of forest after a mass clearing and then flourish once trees regrow. What's more, they say, as people continue to abandon rural areas and migrate to cities, forests are likely to regrow in their wake.

They predict that extinction threatens less than 20% of the tropical Americas' forest species, 21% to 24% of Asia's and 16% to 35% of Africa's, far below the 80% figure predicted by other studies.


For the full summary, see: 

"Informed Reader; ENVIRONMENT; If Trees Fall in Rain Forest, Biodiversity Can Survive."  The Wall Street Journal  (Fri., May 11, 2007):  B5.


July 22, 2007

Sweden's Welfare State Destroys Work Ethic


SicknessBenefitsGraph.gif   Source of graphic:  online version of the WSJ article cited below.


(p. A1)  LULEA, Sweden -- Lotta Landström is allergic to electricity -- so says her doctor. Along with hundreds of other Swedes diagnosed with the condition in recent years, she came to rely on state-funded sick pay.

But last year, Sweden's famously generous welfare system cut off Ms. Landström, a 35-year-old former teacher. Electro-hypersensitivity isn't widely recognized elsewhere in the world as a medical diagnosis. The decision to end her two years of benefits was part of a broad effort to crack down on sickness and disability benefits, according to Swedish welfare officials.

Swedes are among the healthiest people in the world according to the World Health Organization. And yet 13% of working-age Swedes live on some type of disability benefit -- the highest proportion on the globe. To explain this, many Swedish policy makers, doctors and economists blame a welfare system that is too lax and does little to verify individual claims.

At a time when low-cost competition from Asia is clobbering Europe's markets and straining its generous welfare states, governments from Finland to Portugal are trying to cut back and get more people to work. Sweden's bloated sick bay, which includes (p. A15) roughly 744,000 people on extended leave, has caused soul-searching about whether the system coddles Swedes and encourages them to feel sick.

"If we don't look out, we will end up with only two-thirds [of the labor force] in work, and one-third out, living on different kinds of subsidies," said Sweden's new prime minister, Fredrik Reinfeldt, in an interview earlier this year.

At a time when low-cost competition from Asia is clobbering Europe's markets and straining its generous welfare states, governments from Finland to Portugal are trying to cut back and get more people to work. Sweden's bloated sick bay, which includes roughly 744,000 people on extended leave, has caused soul-searching about whether the system coddles Swedes and encourages them to feel sick.

"If we don't look out, we will end up with only two-thirds [of the labor force] in work, and one-third out, living on different kinds of subsidies," said Sweden's new prime minister, Fredrik Reinfeldt, in an interview earlier this year.

. . .

Most of Sweden's boom in sickness absenteeism since the late 1990s is about more than simple fraud. Sick leave for psychological conditions such as depression, burnout or panic attacks has rocketed. Over 20% of the population complain of anxiety syndromes. "We are actually the safest country in the world," says David Eberhard, chief psychiatrist at St. Göran's hospital in Stockholm. But "people are feeling psychologically worse and worse."

Assar Lindbeck, one of Sweden's best-known economists, says the lenient welfare state has changed the country over the past generation. In place of the old Protestant work ethic, it has become acceptable to feel unable to work and to live on benefits, he says. "I would not call it cheating," Prof. Lindbeck says. "I would call it a drift in attitudes and social norms."

By being so accommodating, the Swedish system has encouraged Swedes to treat life's tribulations as clinical issues requiring sick leave, posits Anna Hedborg, a former Social Democrat cabinet minister: "As time has passed, we have medicalized all sorts of problems."


For the full story, see:

MARCUS WALKER.  "Rx FOR CHANGE; Sweden Clamps Down On Sick and Disability Pay; Once Freely Dispensed, Benefits Face Scrutiny; Ms. Lanström Is Cut Off."  The Wall Street Journal  (Weds., May 9, 2007):  A1 & A15.  

(Note:  ellipsis added.)


LandstromLottaElectricityAllergy.gif  A former Swedish teacher who had been receiving government disability payments for being allergic to electricity.   Source of photo:  online version of the WSJ article cited above.


July 21, 2007

Invention as a Form of Criticism


The toughest part of inventing isn't solving problems. It's figuring out which problems are worth the effort.

"A few years ago, an inventor patented a device that caused an electric motor to rock a chair," wrote Raymond F. Yates in 1942. "Now imagine, if you will, the sad spectacle of anybody too lazy to rock his own chair! No wonder he could not make money. If he had expended the same effort on something that was actually needed, he might be wealthy today instead of being sadder but wiser."

Mr. Yates, a self-taught engineer, inventor and technical writer, tried to nudge other inventors in the right direction with his book, "2100 Needed Inventions." Published by Wilfred Funk Inc., Mr. Yates's book was a list of ways people could alleviate certain nuisances and defects of life and get rich for their trouble.

. . .

"Invention is really a systematic form of criticism," Mr. Yates wrote, and people tend to criticize the things that annoy them in their daily lives. Mr. Yates, for example, seems to have found most commonplace devices excessively noisy.


For the full story, see: 

CYNTHIA CROSSEN.  "DEJA VU; An Inventor in 1940s Gave Tips on Going From Smart to Rich."  The Wall Street Journal  (Mon., May 21, 2007):  B1.  


July 20, 2007

Kirkcaldy's Current Native-Son Would Do Well to Remember Kirkcaldy's 18th Century Native Son


In Kirckcaldy, Gordon Brown, the man on the right, tries to persuade the natives to vote for the Labor Party.  Source of the photo:  online version of the NYT article cited below.


Many years ago, we took the train from Edinburgh to spend a few hours in Kirkcaldy, the birthplace of Adam Smith.  I was surprised at how little there was to honor Smith in the town where he was born and raised.  There was a small cafe/theatre named after Smith.  A small crystal shop sold some shot glasses with Smith's image engraved on them.  And there was a small plaque, above a no-parking sign, on the main street, at the spot where Smith's family home had been. 

I remember asking a very polite young father with two or three small children in tow, why there was so little of Smith in Kirckaldy?  With a twinge of something like regret, he said that everyone in that part of Scotland supported Labor, and they saw Smith as supporting capitalism, and so did not like him much.

It was a crowded Saturday shopping day when Jeanette took my picture in front of the small plaque.  Incredulous passers-by turned and glanced in my direction, probably wondering why the crazy American wanted his picture taken next to a no-parking sign.  

For the sake of Kirkcaldy, and Britain, let us hope that Gordon Brown has read a bit of the work of his fellow Kirkcaldy native son:


(p. A10) KIRKCALDY, Scotland, April 30 — Gordon Brown, Britain’s presumed prime minister-to-be, is usually associated with a somewhat dour manner and a mastery of statistics. But here, he displays other skills — a bolt-on smile and a ready handshake to work sparse crowds between the discount stores on the High Street, asking parents with strollers whether their new babies are keeping them awake at night, and inquiring whether the men support the local Raith Rovers soccer team.

. . .

“This is a big choice on Thursday, between those who want to break up Britain and those who want to build up Scotland,” Mr. Brown, currently Britain’s chancellor of the exchequer, told students at Adam Smith College, named for the 18th-century economist who was born here.

. . .

Mr. Brown, who is not standing in these elections, came to town, alongside the choppy waters of the Firth of Forth, to support the Scottish Labor campaign and resist the nationalists.

“I do not think the Scottish people want to see the breakup of the union” that makes up Britain, he said here in Kirkcaldy (pronounced kerr-CUDDY).

But advocates of independence say it would propel Scotland to a bright future, as viable as any other small European state.


For the full story, see: 

ALAN COWELL.  "Elections in Britain Reveal a Scottish Line in the Sand."  The New York Times  (Weds., May 2, 2007):  A10.

(Note:  ellipses  added.)


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


   Art Diamond in Kirkcaldy in 1994 at location (I think on High Street) where  Adam Smith's boyhood home used to be.  (Photo by Jeanette Diamond.)


July 19, 2007

Sturm und Drang Schumpeterianism


I am conflicted about how to evaluate Zachary's Schumpeterian article in a recent Sunday New York Times.  On the one hand he says much that is true and useful about Schumpeter and capitalism.  On the other hand he seems to relish the destructive side of creative destruction, extending it beyond what Schumpeter intended, to include disasters such as war and environmental crises.

My view, on the other hand, is that the destructive side is usually over-estimated, can be reduced further, and is an unfortunate cost of innovation and progress.

Here is a part of the Zachary op-ed piece that I like:


An Austrian economist who taught at Harvard, Mr. Schumpeter in 1942 coined the term ''creative destruction'' to describe what he viewed as the engine of capitalism: how new products and processes constantly overtake existing ones. In his classic work, ''Capitalism, Socialism and Democracy,'' he described how unexpected innovations destroyed markets and gave rise to new fortunes.

The historian Thomas K. McCraw writes in his new biography of Schumpeter, ''Prophet of Innovation'' (Belknap Press): ''Schumpeter's signature legacy is his insight that innovation in the form of creative destruction is the driving force not only of capitalism but of material progress in general. Almost all businesses, no matter how strong they seem to be at a given moment, ultimately fail and almost always because they failed to innovate.''

Mr. Schumpeter's concept of creative destruction is justly celebrated. The economics writer David Warsh calls it the most memorable economic phrase since Adam Smith's ''invisible hand.'' Peter Drucker, the late business guru, went so far as to declare Mr. Schumpeter the most influential economist of the last century.

Clearly, any quick survey of technological change validates Mr. Schumpeter's essential insight. The DVD destroyed the videotape (and the businesses around it). The computer obliterated the typewriter. The automobile turned the horse and buggy into an anachronism.

Today, the Web is destroying many businesses even as it gives rise to others. Though the compact disc still lives, downloadable music is threatening to make the record album history.

''Schumpeter's central idea is just as important now as ever,'' says Louis Galambos, a business historian at Johns Hopkins University. ''The heart of capitalism and its claim as an efficient economic system over the long term is the role that innovation plays.''


For the full commentary, see:

G. PASCAL ZACHARY.  "PING; The Silver Lining to Impending Doom."  The New York Times, Section 3  (Sun., May 6, 2007):   3.


July 18, 2007

Global Warming Allows Growing Subtropical Plants Further North


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


(p. A1)  Forget the jokes about beachfront property. If global warming has any upside, it would seem to be for gardeners, who make up three-quarters of the population and spend $34 billion a year, according to the National Gardening Association. Many experts agree that climate change, which by some estimates has already nudged up large swaths of the country by one or more plant-hardiness zones, has meant a longer growing season and a more robust selection. There are palm trees in Knoxville and subtropical camellias in Pennsylvania.


For the full story, see: 

SHAILA DEWANSHAILA DEWAN.  "Feeling Warmth, Subtropical Plants Move North."  The New York Times  (Thurs., May 3, 2007):  A1 & A20.


July 17, 2007

Nonprofits Often Fund Risky, but Useful, Research that is Shunned by Government


The following excerpt from a summary of a May 17th Nature article, has a message that complements what I found in a paper published a couple of years ago (see the reference at the bottom of this entry).


Do charities like the Bill & Melinda Gates Foundation produce better medical research than institutions supported by the government?

. . .

. . . , some scientists believe philanthropies make better use of that $5 billion than corporations or governments, says Nature's Meredith Wadman. Many researchers have stories about nonprofits who rescued risky but useful projects that had been shunned by government-backed institutions. Charities can make decisions more quickly and can take bigger risks. Philanthropists also tend to closely monitor their investments and want the satisfaction of a mission accomplished.


For the full summary, see: 

"Informed Reader; PHILANTHROPY; Do Charities Outdo Research By Federal-Backed Agencies?"  The Wall Street Journal  (May 18, 2007):  B6. 

(Note:  ellipses added.)

The reference to the Nature article is: 

Meredith Wadman.  "Biomedical philanthropy: State of the donation."  Nature  447, (May 17, 2007):  248 - 250. 


My related paper is:

Diamond, Arthur M., Jr.  "The Relative Success of Private Funders and Government Funders in Funding Important Science."  The European Journal of Law and Economics 21, no. 2 (April 2006): 149-61.


July 16, 2007

Atlanta Police Killed Innocent Elderly Woman Who Attempted to Defend Her Home


JohnstonKathrynShotAtlanta.jpg  "The victim, Kathryn Johnson, was described as either 88 or 92."  Source of caption and photo:  online version of the NYT article cited below. 


In my 11/23/06 blog entry on Kathryn Johnston's death at the hands of the Atlanta police, I thought that she was an innocent by-stander in a legal drug bust (though I criticized the drug laws).  But it turns out that the situation was even worse than I thought. 

In the article excerpted below, it appears that the police lied to get a no-knock warrant, and when no drugs were found anywhere in the home, they planted marijuana that they had obtained from a previous drug bust.

(One more bit of evidence that Milton Friedman was right that we need a serious policy discussion on the economics and ethics of the War on Drugs.)  


ATLANTA, April 26 — After the fatal police shooting of an elderly woman in a botched drug raid, the United States attorney here said Thursday that prosecutors were investigating a “culture of misconduct” in the Atlanta Police Department.

In court documents, prosecutors said Atlanta police officers regularly lied to obtain search warrants and fabricated documentation of drug purchases, as they had when they raided the home of the woman, Kathryn Johnston, in November, killing her in a hail of bullets.

Narcotics officers have admitted to planting marijuana in Ms. Johnston’s home after her death and submitting as evidence cocaine they falsely claimed had been bought at her house, according to the court filings.

Two of the three officers indicted in the shooting, Gregg Junnier and Jason R. Smith, pleaded guilty on Thursday to state charges including involuntary manslaughter and federal charges of conspiracy to violate Ms. Johnston’s civil rights.

. . .

The day she was killed, narcotics officers said, they arrested a drug dealer who said he could tell them where to recover a kilogram of cocaine, and pointed out Ms. Johnston’s modest green-trimmed house at 933 Neal Street.

Instead of hiring an informant to try to buy drugs at the house, the officers filed for a search warrant, claiming that drugs had been bought there from a man named Sam. Because they falsely claimed that the house was equipped with surveillance equipment, they got a no-knock warrant that allowed them to break down the front door.

First, according to court papers, they pried off the burglar bars and began to ram open the door. Ms. Johnston, who lived alone, fired a single shot from a .38-caliber revolver through the front door and the officers fired back, killing her.

After the shooting, they handcuffed her and searched the house, finding no drugs.

“She was without question an innocent civilian who was caught in the worst circumstance imaginable,” Mr. Howard, the district attorney, said at a news conference on Thursday. “When we learned of her death, all of us imagined our own mothers and our own grandmothers in her place, and the thought made us shudder.”

When no drugs were found, the cover-up began in earnest, according to court papers.

Officer Smith planted three bags of marijuana, which had been recovered earlier in the day in an unrelated search, in the basement. He called a confidential informant and instructed him to pretend he had made the drug buy described in the affidavit for the search warrant.


For the full story, see: 

SHAILA DEWAN and BRENDA GOODMAN.  "Officials Investigate Broad Corruption in Atlanta Police Dept."  The New York Times  (Fri., April 27, 2007):  A16.

(Note: ellipsis added.  The online title of the article was: "Prosecutors Say Corruption in Atlanta Police Dept. Is Widespread.")


July 15, 2007

Today artdiamondblog.com is Two Years Old


    The bars for "July" only include data through July 13th.  Although the best-known metric is "hits" (in green), a more meaningful metric, for many purposes, is "visits" (in yellow).  The source of this graph is the Webalizer program as maintained by the Living Dot service that houses my blog.  (The graph above was produced in the evening of July 14, 2007.) 


The first entry in artdiamondblog.com appeared on July 15, 2005.  In the two years since, the blog remains true to its modest and vague founding motives, but has evolved in some small ways.  I think pictures and graphs help communicate many important stories, and make them more memorable.  So the blog in recent months generally includes such elements in about half the entries.  Even better are dynamic accounts of stories, so I have gradually increased the links to video clips that illustrate important stories.

Also, more often than at the beginning, I offer my own somewhat extended commentary on some person, issue, event, book or article.  As time permits, I have also tried to include an occasional entry that records some reminiscence of some important scholar or telling experience that I have had, that I hope might be of value to someone in the future.  (One example of this sort of entry, in the past year, was my entry on Milton Friedman on the occasion of his death.)

I believe that the web log is useful in my teaching and research, and also hope that it provides easier access to some useful material for others who share my interests and goals. 

Of course, every activity has its opportunity costs.  I try to limit the costs by disciplining myself to only post one new entry a day.  And I try to take advantage of blogging economies of scale, by composing several entries at a time, and pre-scheduling them into the future. 

The benefits are hard to access.  I know that in June (the most recent full month for which data is available), the average daily number of "visits" to my blog was recorded as 1,132.  But I do not know very much about how useful the visitors found the blog, or if useful, how often the use is the kind of use I originally had in mind.

On the other hand, I believe that the process writing and publishing refereed journal articles has its drawbacks.  It is slow, and the refereeing is uneven, and often actually makes an article worse.  When the article is finally published, it is often in a form easily accessible only to a few, and as a result often has negligible impact on knowledge or on the broader world of action.

So I think it is time to take some risks with some experimentation in other forms of knowledge production and communication.  Wikipedia is one promising experiment.  Blogs represent another.


July 14, 2007

Mugabe Prints More Money and Beats Up Shopkeepers, as Inflation Soars: More on Why Africa is Poor


     "Inflation made food cost a fortune in Harare this week.  The government imposed controls that required vendors to sell some items below cost."  Source of caption and photo:  online version of the NYT article cited below. 


JOHANNESBURG, July 3 — Zimbabwe’s week-old campaign to quell its rampant inflation by forcing merchants to lower prices is edging the nation close to chaos, some economists and merchants say.

As the police and a pro-government youth militia swept into shops and factories, threatening arrest and worse unless prices were rolled back, staple foods vanished from store shelves and some merchants reported huge losses. News reports said that some shopkeepers who had refused to lower prices had been beaten by the youth militia, known as the Green Bombers for the color of their fatigues.

In interviews, merchants said that crowds of people were following the police and militia from shop to shop to buy goods at the government-ordered prices.

“People are losing millions and millions and millions of dollars,” said one merchant in Bulawayo, referring to the Zimbabwean currency, which is becoming worthless given the nation’s inflation, the world’s highest. “Everyone is now running out of stock, and not being able to replace it.”

. . .

Gasoline was reported to be vanishing from stations as the going price, about 180,000 dollars per liter, was slashed by the government to something closer to the officially approved price of 450 dollars per liter. Mr. Mugabe’s government intends to cope with the shortages by subsidizing producers of basic goods. One of the few newspapers not under government control, The Zimbabwe Independent, reported last week that flour, which is controlled entirely by the state, will be sold to bakers for 10 million dollars a ton, half the market price. Similarly, many suppliers of basic goods have been told by the government that they will be allowed to buy gasoline at one tenth the going price, the newspaper reported. The government apparently plans to make up those losses by printing more money. Zimbabwe’s dollar has lost more than half its value in recent weeks because the government has constantly issued new bills to pay its mounting debts.


For the full story, see: 

MICHAEL WINES.  "Anti-Inflation Curbs on Prices Create Havoc for Zimbabwe."  The New York Times  (Weds., July 4, 2007):  A8. 

(Note:  ellipsis added.)


CNN on 7/10/07 broadcast a great clip from ITN, that had been courageously recorded undercover by Martin Geissler.  See  "Desperation in Zimbabwe":


(Note:  ITN is sometimes also called ITV.  "ITN" stands for the International Television Network.)


Postscript:  According to an entry on the ITV web site entitled "Mugabe Battles Economic Crises," Mugabe "has warned he will not be restrained by "bookish economics"."  (He makes a great case for cracking open the books, doesn't he?  Or at least for opening the window and looking at what is happening outside?)

For the Mugabe quote on bookish economics, see:



July 13, 2007

"The Companies Are Leapfrogging One Another"


. . .  More than 17 million travel insurance policies are sold each year, according to the United States Travel Insurance Association, whose members have seen a surge in interest since Sept. 11, 2001. Policies typically cost between 4 percent and 7 percent of the price of the trip, with fees based on the traveler’s age and on the cost and length of the trip.

As the market matures, “the companies are leapfrogging one another” to expand coverage, said Chris Harvey, chief executive of Squaremouth.com, an online travel insurance agency. “One will come out with $50,000 medical, the next $100,000.”

More traditional travel insurance policies reimburse travelers who are forced to cancel because of weather, airline strikes, acts of terrorism that affect their destinations, serious illness or the death of the traveler or a close family member. Typical policies also provide coverage for medical emergencies, lost or damaged luggage, and major travel delays. But until recently travelers weren’t reimbursed if they simply changed their minds and decided not to go. AIG Travel Guard’s new Cancel for Any Reason add-on coverage, offered on two different package plans, reimburses 75 percent of the trip expenses if a traveler cancels a covered trip up to two days before departure — no questions asked. It follows a similar policy introduced by TravelSafe Insurance in 2005.

This flexibility comes at a price — 30 percent to 40 percent more than for standard coverage. But the option may be worth considering if you want the flexibility of changing your travel plans at any time without losing the bulk of what you paid.


For the full story, see: 

MICHELLE HIGGINS.  "PRACTICAL TRAVELER | TRIP INSURANCE; Protecting Against the Dread ‘What If?’"  The New York Times, Section 5  (Sun., May 6, 2007):  6. 

(Note:  the ellipsis and the bold were added.)


July 12, 2007

Argentine Evidence on Global Warming


   Source:  screen capture from the Reuters video clip mentioned below.


On July 10, 2007, Reuters and other news sources (including CNN) reported that Buenos Aires had experienced its first snowfall in 80 years.

To see Reuters' brief video clip on the snow, visit: 



ArgentineSnowCoveredTrucks.jpg   "A truck driver makes his way through snow-covered trucks Tuesday in Punta de Vacas, Argentina."  Source of the truck caption and photo:   

"Snow leaves trucks stranded on Argentina-Chile border."  CNN.com POSTED: 3:06 p.m. EDT, June 13, 2007.


July 11, 2007

Nuclear Expensive "Because of Exaggerated Popular Fears"


In his public testimony Mr. Gore seemed to be convoluting several things, suggesting somehow that nuclear plants are too expensive and take too long to build because they only come "extra-large." This is not true.

Nuclear plants take more time to build and are more expensive than comparative coal plants, but they are not prohibitively expensive. The Japanese are now building reactors in five years at competitive prices. Higher construction costs are more than compensated by lower fuel costs and higher capacity ratings. America's existing nuclear plants are now operating so profitably that Connecticut Attorney General Richard Blumenthal recently proposed a windfall profits tax because the state's reactors were making too much money.

. . .

The reason building nuclear plants has been expensive and time-consuming is because of exaggerated popular fears of the technology. The public is now coming around. Seventy percent now consider nuclear plants acceptable, meaning new plants will probably not become bogged down in endless court delays.


For the full commentary, see: 

WILLIAM TUCKER.  "Our Atomic Future."  The Wall Street Journal  (Weds., March 28, 2007):  A16.

(Note:  ellipsis added.)


July 10, 2007

The Legacy of Rachel Carson


GoreDreamingRachelCarson.gif   Al Gore dreams of Rachel Carson.  Source of image:  online version of the WSJ article cited below.


. . .   The World Health Organization now estimates that there are between 300 and 500 million cases of malaria annually, causing approximately one million deaths. About 80% of those are young children, millions of whom could have been saved over the years with the regular application of DDT to their environments.

Carson cannot be blamed directly for these deaths. She didn't urge total bans in "Silent Spring." Instead, on the single page obliquely acknowledging DDT as an anti-malarial agent, she writes, "Practical advice should be 'Spray as little as you possibly can' rather than 'Spray to the limit of your capacity.'"

In the National Archives exhibit, Carson is described as "a passionate voice for protecting the environment and human health." Her concerns about the effects of insect death on bird populations were well-founded. But threats to human health were central to her argument, and Carson was wrong about those. Despite massive exposure in many populations over several decades, there is no decisive evidence that DDT causes cancer in people, and it is unforgivable that she overlooked the enormous boon of DDT for malaria control in her own time.

. . .

. . .   DDT remains the cheapest and most powerful tool for stopping malaria. When sprayed on interior walls, it has virtually zero interaction with wild ecosystems. Yet when the topic of relaxing restrictions in order to save millions of lives comes up, someone inevitably brandishes a copy of "Silent Spring" and opposition is silenced so completely that you could hear a mosquito buzzing in the next room. 


For the full commentary, see: 

KATHERINE MANGU-WARD.  "Suffering in Silence."   The Wall Street Journal  (Fri., April 20, 2007):   W13.

(Note:  ellipses added.)


July 9, 2007

Most New Jobs Created in Opportunistic Newcomer Cities


Over the past 15 years, it has been opportunistic newcomers -- Houston, Charlotte, Las Vegas, Phoenix, Dallas, Riverside -- that have created the most new jobs and gained the most net domestic migration. In contrast there has been virtually negligible long-term net growth in jobs or positive domestic migration to places like New York, Los Angeles, Boston or the San Francisco Bay Area.

. . .

Fortunately the jobs are headed in the same direction. After all, companies depend not only on elite MBAs but upon on the collective skills of middle managers, technicians and skilled laborers. Most companies also tend to be more mindful of basic costs, taxes and regulations than the average hedge-fund manager or trustafarian.

This perhaps explains why the largest companies -- with the notable exception of Silicon Valley -- have continued to move toward the more opportunistic cities. New York and its environs, for example, had 140 such firms in 1960; in 2006 the number had dropped to less than half that, some of those running with only skeleton top management. Houston, in contrast, had only one Fortune 500 company in 1960; today it is home to over 20. Houston companies tend to staff heavily locally; this is one reason the city was able to replace New York and other high-cost locales as the nation's unchallenged energy capital. Another example of this trend is Charlotte's rise as the nation's second-ranked banking center in terms of assets, surpassing San Francisco, Chicago and Los Angeles, indeed all superstar cities except New York.


For the full commentary, see: 

JOEL KOTKIN.  "The Myth of 'Superstar Cities'."  The Wall Street Journal  (Tues., February 13, 2007):  A25.

(Note:  ellipsis added.)


July 8, 2007

Dubai Is "Turbo-Charged Free-Market Capitalism"


DubaiCamel.jpg   Dubai skyline.  Source of photo:  online version of the WSJ commentary quoted and cited below.


(p. A9) Dubai, which is part of the United Arab Emirates, represents turbo-charged free-market capitalism at its purest -- sometimes crass, often over-the-top, and always in motion. Home to more than 1.2 million people, more than 80% of whom are resident aliens, Dubai is as much a multicultural melting pot as New York City was in its late 19th century heyday. And like New York then, Dubai teems with winners and losers, the rich and not-so-rich, and immigrants who often find that life in the glittering metropolis is cold, hard and unfair. But the government maintains order, spends billions on infrastructure and is dedicated to establishing the city-state as a global capital of, well, capital.

. . .

Seeing Dubai as an economic model for other parts of the Arab world is admittedly a challenge: Like Singapore, it has the virtues of a small ruling class, a tiny population and not much territory, and that is not something Egypt or Syria could emulate. But as a cultural model, or an attitude, it does offer an alternate vision of the future, one with its own excesses and vices for sure, but still free of the divisiveness and religious conflict that has become the assumed status quo in other parts of the Middle East.

Dubai should not be written off as little more than an Arab Las Vegas. It deeply challenges the assumption that Muslims, Christians and Jews cannot find common ground and work together to construct a shared future. Dubai is proof, not perfect, but real, that they can.


For the full commentary, see: 

ZACHARY KARABELL. "City of Dreams." The Wall Street Journal  (Sat., March 17, 2007):  A9.

(Note:  ellipsis added.)


July 7, 2007

FDA Should Not Restrict Drugs the Terminally Ill Choose to Use


On March 1, a federal appeals court will hear oral arguments in the case of the Abigail Alliance organization's lawsuit to change systems at the Food and Drug Administration to allow terminally ill patients access to promising drugs that have successfully completed initial stages of human safety testing. Because of my former role in the oncology division at the FDA, and in my eight-year experience as a cancer patient advocate on behalf of my son, I may be able to shed some light on the regulatory policy, medical drug development and patient rights issues surrounding this landmark case.

. . .  

Patients have valid arguments in demanding greater access to promising agents under development. Public servants should respect citizens who advocate that they be allowed to have a say in methods of their treatment when terminally ill, and government officials should have very compelling reasons for denying such access. New drug development will not suffer if a small minority of patients fighting for their lives, with no other options and in concert with their physician, gain access to a potentially beneficial agent with an established basic safety profile.


For the full commentary, see: 

MARK THORNTON.  "The Clinical Trial."  The Wall Street Journal  (Mon., February 12, 2007):  A14.

(Note:  ellipsis added.)


According to the online version of USA Today, the court did hear oral arguments on March 1st, and ". . .  isn't likely to rule for several months, . . . "

Source:  http://www.usatoday.com/news/nation/2007-04-02-unapproved-drugs_N.htm


July 6, 2007

Schumer Surprised at No Increase in Job Volatility


JobLossAnxietyGraph.gif   Source of graph:  online version of the NYT article cited below.


(p. C1)  Last week, the Congressional Budget Office released a study that was arguably the fullest picture of (p. C12) economic volatility anyone has yet put together. Although some academics have taken a crack at the topic in recent years, they have had to rely on surveys in which people are asked how much money they make. The study by the C.B.O., as the budget office is known, used Social Security Administration records, which cover many more people than the surveys and are more reliable.

If you read the C.B.O. report, you can tell that its authors knew they were dealing with a delicate subject. The summary starts by noting that a “significant number of workers experience substantial variability in their total wage earnings,” which is certainly true. Only later do you come to the surprising part: there is the same amount of variability now that there was in the 1980s and 1990s. In journalism, this is known as burying the lead.

“Intuitively, you would think volatility is increasing,” said Senator Charles E. Schumer, Democrat of New York, who along with Senator Jim Webb of Virginia requested that the study be done. “But it isn’t, which I guess shows that the American economy has always been very flexible.”

Mr. Schumer’s point about intuition is an important one. We can all tick off reasons that the economy feels so volatile. Hardly a week goes by without another big corporation — the Tribune Company, Citigroup, DaimlerChrysler — announcing a big job cut. The number of temporary jobs, meanwhile, has mushroomed. Globalization and technological innovation are causing many of these changes, and labor unions are too weak to prevent them.

But there is also a whole set of other forces, harder to see and pushing in the other direction. Manufacturing, where furloughs and layoffs have always been the norm, accounts for a much smaller part of the work force than it used to, while more stable industries, like health care, have grown. This is one reason that recessions, and the job cuts they bring, haven’t happened as often as they once did.

. . .

In fact, research by Henry S. Farber, an economist at Princeton, has found that job loss rates have followed a cyclical pattern since the early ’80s, peaking around the same highs during recessions and falling to similar lows during expansions. (The rate has risen for workers who went to college and fallen a bit who those who didn’t.)

Americans, looking at their own jobs, realize that there hasn’t been a big change: in a recent Gallup Poll, 12 percent of respondents said it was very or fairly likely they would be laid off in the coming year. In the 1970s, ’80s and ’90s, at similar points in the business cycle, the percentage was virtually identical.


For the full commentary, see: 

DAVID LEONHARDT.  "ECONOMIX; What’s Really Squeezing the Middle Class?"  The New York Times  (Weds., April 25, 2007):  C1 & C12.

(Note:  ellipses added.)


July 5, 2007

"The Individual Dominates the Story of American Innovation and Is Insufficiently Honored"


When an innovator is overlooked or an innovation misrepresented it is not simply a question of equity; it distorts our perception of the essence of innovation and the essential qualities of an innovator. It clouds our perception of what it takes to survive in global competition.

The individual dominates the story of American innovation and is insufficiently honored in our histories -- to say nothing of the abysmal history courses in schools and colleges. Only recently did Columbia University honor Armstrong with a plaque in his laboratory, and Rutgers University is still short of funds to catalog properly the immeasurable riches of Thomas Edison's papers -- all five million pages of them.

The research departments of major corporations have not been unproductive -- one thinks of the Bell Labs for the transistor and today Monsanto in biotechnology -- but can anyone have had more impact on our world than the 23-year-old trucker who got frustrated at the day he spent on the noisy pier in Hoboken, N.J., waiting to have his cotton bales unloaded from his truck, loaded onto the cargo ship, and then unloaded and loaded again at the other end?

For nearly 20 years, Malcom McLean did nothing about his inspiration that it would have saved everyone a lot of time and trouble if he had just been able to drive his truck on to the ship. Why didn't anybody facilitate that before he organized the sailing of the Ideal X from Port Newark, N.J., on April 26, 1956? Might as well ask why it took us so long to put wheels on luggage.


For the full commentary, see: 

HAROLD EVANS.  "The American Way."  The Wall Street Journal  (Sat., February 17, 2007):  A9.  


Evans is the author of a huge, very interesting book:

Evans, Harold. They Made America: Two Centuries of Innovators from the Steam Engine to the Search Engine. New York: Little, Brown and Co., 2004.


July 4, 2007

"The Least Hospitable Environment on Earth"


   Source of the book image:  http://images.usatoday.com/money/_photos/2007/03/26/cubicle-bookx-large.jpg


Office humor is an oxymoron. At least that was the prevailing view until Scott Adams's "Dilbert" comic strip and, more recently, British television import "The Office" opened up this fertile ground for mainstream ridicule. The latest entry in the growing corpus of workplace-whacking is "The Cubicle Survival Guide: Keeping Your Cool in the Least Hospitable Environment on Earth," by first-time author and Web-site production coordinator James F. Thompson.

Mr. Thompson's target: the cubicle, or "cube," as it is not so fondly known. It's surprising to learn that this ubiquitous steel-and-fabric prison was not invented until the 1960s, the dubious brainstorm of a Colorado fine-arts professor named Bob Probst. His goal, according to Mr. Thompson, was to encourage co-workers to "freely exchange ideas and inspiration" -- and not, as commonly believed, to breed a legion of the undead who feel they are somehow unworthy of, say, a door.


For the full review, see: 

MARTIN KIHN.  "BOOKS; The Best Way to Labor Away in Our Little Boxes." The Wall Street Journal  (Weds., March 14, 2007):  D9. 


The reference to the book, is: 

James F. Thompson.  THE CUBICLE SURVIVAL GUIDE.  (Villard, 216 pages, $12.95)


July 3, 2007

Neglect of the Important Issues, Is the Opportunity Cost of Pursuing the Cutely Clever


The Wall Street Journal summarizes an April 2, 2007 article by Noam Scheiber in The New Republic:


A new generation of economists has become so addicted to cleverness that dull but genuinely useful research is under threat.

"Freakonomics," the 2005 best seller that sought to explain the mysteries of everyday life through economics, is only partly to blame, writes Noam Scheiber. The deeper roots lie in a 1980s crisis of faith over economists' ability to reliably crunch numbers. Influential economist H. Gregg Lewis kicked it off by demonstrating that a host of broad, worthwhile empirical surveys of unions' impact on wages came to opposite conclusions, mostly thanks to the differing original assumptions by the studies' authors.

As a result, some economists retrenched, opting to focus on finding "solid answers to modest questions."


For the full summary, see:

"Informed Reader; Economics; How 'Freakonomics' Quashes Real Debates." The Wall Street Journal (Weds., March 28, 2007):  B11.


July 2, 2007

Obama Advised By Economists Cutler, Liebman, and Goolsbee


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


In a previous entry, I expressed guarded optimism in response to an article that identified Austan Goolsbee as an advisor to Obama.  The article excerpted below, casts Goolsbee in a less central role, thus giving reason to guard the optimism even more.


While Mr. Obama's economic platform is still in its formative stages, interviews with his aides and a review of his congressional record and speeches suggest that Obamanomics may place him somewhat to the left of New York Sen. Hillary Rodham Clinton, but to the right of former North Carolina Sen. John Edwards, another rival for the 2008 nomination. Mrs. Clinton seems to be cultivating the centrist mantle her husband won during his presidency, while Mr. Edwards is courting the party's labor and grassroots activist base.

. . .

As Mr. Obama prepares for his first series of domestic-policy speeches in the coming weeks, he appears to be still shopping for a place on the political spectrum.

One top economic adviser is Jeffrey Liebman, a Harvard economist and former adviser to President Clinton who is focused heavily on the earned income tax credit and its role in moving people from welfare to work.

The candidate is also consulting with University of Chicago economics professor Austan Goolsbee, a taxation expert and centrist Democrat who has advised Mr. Obama since his 2004 Senate campaign.

David Cutler, a Harvard economist specializing in health policy who served in the Clinton administration, is also among Mr. Obama's advisers.


For the full story, see: 

DEBORAH SOLOMON.  "Seeking Clues to Obamanomics; Democratic Candidate Is Just Beginning To Fill In the Blanks."   The Wall Street Journal  (Tues., April 24, 2007):  A4. 

(Note:  ellipsis added.)


July 1, 2007

Environmental "Horror-Movie Scenarios Are Looking Less and Less Plausible"


(p. D2)  . . . most of the horror-movie scenarios are looking less and less plausible. Climate change will probably occur not with a bang but with a long, slow whimper, as you can see in the new report from the Intergovernmental Panel on Climate Change.

The report concludes that it's ''very likely'' that humans are now the main factor warming the climate. But even as the panel's scientists are becoming surer of the problem, and warning of grim consequences this century and beyond, they're eschewing crowd-thrilling catastrophes. Since the last I.P.C.C. report, six years ago, they haven't raised the estimates of future temperatures and sea levels.

While Mr. Gore's movie shows coastlines flooded by a 20-foot rise in sea level, the report's projections for the rise this century range from 7 inches to 23 inches. The panel says Greenland's ice sheet will shrink and might eventually disappear, but the process could take ''millennia.'' The Antarctic ice sheet is projected to grow, not shrink, because of increased snowfall.

The scientists acknowledge uncertainties and worrisome new signs, like the sudden acceleration in the flow of Greenland's glaciers several years ago. But the panel, unlike Mr. Gore, didn't extrapolate a short-term trend into a disaster, and its caution is vindicated by a report in the current issue of Science that the flow of two of the largest glaciers abruptly decelerated last year to near the old rate.

The panel does consider it ''likely'' that future typhoons and hurricanes will be stronger than today's. But it also expects fewer of these storms (albeit with ''less confidence'' in that projection).

As for the Gulf Stream, it is ''very unlikely'' to undergo ''a large abrupt transition during the 21st century,'' according to the new report. The current is expected to slow slightly, meaning a little less heat from the tropics would reach the North Atlantic, which could be good news for Europe and North America, since that would temper some of the impact of global warming in the north.

Whatever happens, you can stop fretting about the Gulf Stream scenario in Mr. Gore's movie and that full-fledged Hollywood disaster film ''The Day After Tomorrow.'' Mr. Gore's companion book has a fold-out diagram of the Gulf Stream and warns that ''some scientists are now seriously worried'' about it shutting down and sending Europe into an ice age, but he must have been talking to the wrong scientists.

There wouldn't be glaciers in the English shires even if the Gulf Stream did shut down. To understand why, you need to disregard not only the horror movies but also what you learned in grade school: that the Gulf Stream is responsible for keeping London so much warmer than New York even though England is farther north than Newfoundland.

This theory, originated by a 19th-century oceanographer, is ''the earth-science equivalent of an urban legend,'' in the words of Richard Seager, a climate modeler at the Lamont-Doherty Earth Observatory of Columbia University. He and other researchers have calculated that the Gulf Stream's influence typically raises land temperatures in the north by only five degrees Fahrenheit, hardly enough to explain England's mild winters, much less its lack of glaciers.

Moreover, as the Gulf Stream meanders northward, it delivers just about as much heat to the eastern United States and Canada as to Europe, so it can't account for the difference between New York and London. Dr. Seager gives the credit to the prevailing westerly winds -- and the Rocky Mountains.

When these winds out of the west hit the Rockies, they're diverted south, bringing air from the Arctic down on New York (as in last week's cold spell). After their southern detour, the westerlies swing back north, carrying subtropical heat toward London. This Rocky Mountain detour accounts for about half the difference between New York and London weather, according to Dr. Seager.

The other half is caused by to the simple fact that London sits on the east side of an ocean -- just like Seattle, which has a much milder climate than Siberia, the parallel land across the Pacific. Since ocean water doesn't cool as quickly as land in winter, or heat up as much in summer, the westerly winds blowing over the ocean moderate the winter and summer temperatures in both Seattle and London.  


For the full story, see: 

John Tierney. "FINDINGS; A Cool $25 Million For a Climate Backup Plan."  The New York Times (Tues., February 13, 2007):  D1-D2.

(Note:  ellipsis added.)



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