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August 31, 2007

Let There Be Light


 

  One of Mark Bent's solar flashlights stuck in a wall to illuminate a classroom in Africa.  Source of the photo:   http://bogolight.com/images/success6.jpg

 

What Africa most needs, to grow and prosper, is to eject kleptocratic war-lord governments, and to embrace property rights and the free market.  But in the meantime, maybe handing out some solar powered flashlights can make some modest improvements in how some people live.

The story excerpted below is an example of private, entrepreneur-donor-involved, give-while-you-live philanthropy that holds a greater promise of actually doing some good in the world, than other sorts of philanthropy, or than government foreign aid. 

 

FUGNIDO, Ethiopia — At 10 p.m. in a sweltering refugee camp here in western Ethiopia, a group of foreigners was making its way past thatch-roofed huts when a tall, rail-thin man approached a silver-haired American and took hold of his hands. 

The man, a Sudanese refugee, announced that his wife had just given birth, and the boy would be honored with the visitor’s name. After several awkward translation attempts of “Mark Bent,” it was settled. “Mar,” he said, will grow up hearing stories of his namesake, the man who handed out flashlights powered by the sun.

Since August 2005, when visits to an Eritrean village prompted him to research global access to artificial light, Mr. Bent, 49, a former foreign service officer and Houston oilman, has spent $250,000 to develop and manufacture a solar-powered flashlight.

His invention gives up to seven hours of light on a daily solar recharge and can last nearly three years between replacements of three AA batteries costing 80 cents.

Over the last year, he said, he and corporate benefactors like Exxon Mobil have donated 10,500 flashlights to United Nations refugee camps and African aid charities.

Another 10,000 have been provided through a sales program, and 10,000 more have just arrived in Houston awaiting distribution by his company, SunNight Solar.

“I find it hard sometimes to explain the scope of the problems in these camps with no light,” Mr. Bent said. “If you’re an environmentalist you think about it in terms of discarded batteries and coal and wood burning and kerosene smoke; if you’re a feminist you think of it in terms of security for women and preventing sexual abuse and violence; if you’re an educator you think about it in terms of helping children and adults study at night.”

Here at Fugnido, at one of six camps housing more than 21,000 refugees 550 miles west of Addis Ababa, the Ethiopian capital, Peter Gatkuoth, a Sudanese refugee, wrote on “the importance of Solor.”

“In case of thief, we open our solor and the thief ran away,” he wrote. “If there is a sick person at night we will took him with the solor to health center.”

A shurta, or guard, who called himself just John, said, “I used the light to scare away wild animals.” Others said lights were hung above school desks for children and adults to study after the day’s work.

 

For the full story, see:


Will Connors and Ralph Blumenthal.  "Letting Africa’s Sun Deliver the Luxury of Light to the Poor."  The New York Times, Section 1  (Sun., May 20, 2007):  8.

(Note:  the title of the article on line was:  "Solar Flashlight Lets Africa’s Sun Deliver the Luxury of Light to the Poorest Villages.")

 

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

 




August 30, 2007

The Liberal Attack on Free Speech at Antioch


 

THIS is an obituary for a great American institution whose death was announced this week. After 155 years, Antioch College is closing.

. . .

With a grant from the Rockefeller Foundation, the college increased African-American enrollment to 25 percent in 1968, from virtually nil in previous years. The new students were recruited from the inner city. At around the same time, Antioch created coeducational residence halls, with no adult supervision. Sex, drugs and rock 'n' roll became the rule, as you might imagine, and there was enormous peer pressure to be involved in all of them. No member of the faculty or administration, and certainly none of the students, could guess what these sudden changes would mean. They were simply embraced in the spirit of the time.

I moved into this sociological petri dish from a well-to-do suburb. Within my first week I twice had guns drawn on me, once in fun and once in a state of drunken for real by a couple of ex-cons whom one of my classmates, in the interest of breaking down class barriers, had invited to live with her.

My roommate began the tortured process of coming out of the closet, first by pursuing women relentlessly and then accepting the truth and allowing himself to be pursued by men. He needed to talk all this out with himself when he came in each morning at 4 a.m., and in the face of his personal crisis, there was little I could do to assert my right to sleep.

. . .

Antioch College became a rump where the most illiberal trends in education became entrenched. Since it is always easier to impose a conformist ethos on a small group than a large one, as the student body dwindled, free expression and freedom of thought were crushed under the weight of ultraliberal orthodoxy. By the 1990s the breadth of challenging ideas a student might encounter at Antioch had narrowed, and the college became a place not for education, but for indoctrination. Everyone was on the same page, a little to the left of The Nation in worldview.

 

For the full commentary, see: 

Michael Goldfarb.  "Where the Arts Were Too Liberal."  The New York Times, Section 4  (Sun., June 17, 2007):  13.

(Note:  ellipses added.)

 




August 29, 2007

"Total Freedom"


 

   On Monday, May 28th, protesters at the G8 meeting in Hamburg, Germany protested for "Total Freedom" and against globalization.  Source of this version of the banner picture:  http://www.infoshop.org/inews/article.php?story=20070528131819740

 

A photo fairly similar to the one above was run in the print version of the NYT on Tuesday, May 29, 2007, but was not included in the online version.  It appeared by itself, without an attached article.  But, referring to the "Total Freedom" banner, it had the following wonderfully ironic caption:

 

Except, Perhaps, When It Comes to Trade

Thousands of protesters marched against globalization on Monday in Hamburg, Germany, where the Group of Eight industrialized nations will meet next week.  After the largely peaceful rally, some protesters clashed with police and 21 were arrested.  The rest, however, were totally free.

 

Source of the NYT version of the banner picture, and of the caption:

The New York Times  (Tues., May 29, 2007):  A3. 

(Note:  caption title was in bold, and in larger font than the body of the caption, in the original.)

 




August 28, 2007

Bill Gates Does Not Owe Society Anything


 

Bill Gates is the richest man in the world, helped create a revolutionary computer software company, and earlier this month collected an honorary degree from Harvard University. But he may not understand the vital role wealth creation plays in society.

In collecting his degree, Mr. Gates delivered a commencement address that focused not on the information age, the rise of personal computers or the relentless efficiency his software has brought to nearly every industry. Instead, he focused on his own personal philanthropy. His implicit theme was that so far what he has accomplished may have been good for him and Microsoft shareholders, but it has been no great contribution to society. He suggested that with a personal fortune of about $90 billion (including what he has transferred to his foundation) it is time for him to give something back.

I find this perspective hard to understand. By any reasonable calculation Microsoft has been a boon for society and the value of its software greatly exceeds the likely value of Mr. Gates's philanthropic efforts.

. . .

Ironically, Mr. Gates's inspiration to "give back" apparently comes from the world's second richest person, Warren Buffett, who recently promised to donate much of his fortune to the Gates Foundation.

I say ironic because one can make a much better philosophical case for a give-back of Mr. Buffett's $52 billion than for Mr. Gates's $90 billion. Mr. Buffett's money came mostly from being a good stock picker. Whether his fortune is the product of luck or skill, the social benefits are hard to pin down. These benefits have to derive from improving company management practices or investment decisions.

Of course, Mr. Gates is free to do what he wishes with his $90 billion. But I think he is kidding himself if he believes that the efforts of the Gates Foundation are likely to provide society anything like the past and future accomplishments of Microsoft.

 

For the full commentary, see: 

ROBERT BARRO.  "COMMENTARY; Bill Gates's Charitable Vistas." The Wall Street Journal  (Tues., June 19, 2007):  A17.

(Note:  ellipsis added.)

 




August 27, 2007

Creating Incentives for Quality Health Care


 

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

 

The experiment described in the article excerpted below sounds promising. Such experiments would be easier, and more common, if health care were not so highly regulated, and if the government did not create such large barriers to entry in the practice of medicine.

 

(p. A1)  What if medical care came with a 90-day warranty? 

That is what a hospital group in central Pennsylvania is trying to learn in an experiment that some experts say is a radically new way to encourage hospitals and doctors to provide high-quality care that can avoid costly mistakes.

The group, Geisinger Health System, has overhauled its approach to surgery. And taking a cue from the makers of television sets, washing machines and consumer products, Geisinger essentially guarantees its workmanship, charging a flat fee that includes 90 days of follow-up treatment.

Even if a patient suffers complications or has to come back to the hospital, Geisinger promises not to send the insurer another bill.

Geisinger is by no means the only hospital system currently rethinking ways to better deliver care that might also reduce costs. But Geisinger’s effort is noteworthy as a distinct departure from the typical medical reimbursement system in this country, under which doctors and hospitals are paid mainly for delivering more care — not necessarily better care. 

. . .

Under the typical system, missing an antibiotic or giving poor instructions when a patient is released from the hospital results in a perverse reward: the chance to bill the patient again if more treatment is necessary. As a result, doctors and hospi-(p. C4)tals have little incentive to ensure they consistently provide the treatments that medical research has shown to produce the best results.

Researchers estimate that roughly half of American patients never get the most basic recommended treatments — like an aspirin after a heart attack, for example, or antibiotics before hip surgery.

The wide variation in treatments can translate to big differences in death rates and surgical complications. In Pennsylvania alone, the mortality rate during a hospital stay for heart surgery varies from zero in the best-performing hospitals to nearly 10 percent at the worst performer, according to the Pennsylvania Health Care Cost Containment Council, a state agency.

 

For the full story, see: 

REED ABELSON.  "In Bid for Better Care, Surgery With a Warranty."  The New York Times  (Thurs., May 17, 2007):  A1 & C4.

 

    Providing a warranty provides the hospital to provide higher quality care, as evidenced, for example, in this nurse counting sponges to make sure that none have been left behind in the patient.  Source of photo:  online version of the NYT article quoted and cited above.

 




August 26, 2007

Firms Install Internal Betting Markets for Better Forecasting


 

Charles Plott, of Cal Tech, co-authored a nifty study several years ago in which he installed a betting market inside of Hewlett Packard to do internal forecasting.  The nifty part was that the forecasts produced by the betting market were generally more accurate than the official forecasts that HP's official forecasters were producing. 

The likely reason is not that the official forecasters were stupid or incompetent, but that they were under considerable pressure by corporate higher-ups to spin the forecasts in a favorable way.  In contrast, the participants in the internal betting market remained anonymous, and received higher payoffs, the more accurate their forecasts turned out to have been.

The result was not surprising, once you think it through.  But what I did find surprising was that HP didn't keep the betting market going, after the Plott study was finished.  (From a long-run perspective, top management should benefit more from accurate forecasts, than from consistently optimistic forecasts.) 

In any case, the excerpt from the commentary below indicates that some other companies have gotten the point:

 

(p. C1)  Over the last few years, Intrade -- with headquarters in Dublin, where the gambling laws are loose -- has become the biggest success story among a new crop of prediction markets. The world's largest steel maker, Arcelor Mittal, now runs an internal market allowing its executives to predict the price of steel. Best Buy (p. C6) has started a market for employees to guess which DVDs and video game consoles, among other products, will be popular. Google and Eli Lilly have similar markets. The idea is to let a company's decision-makers benefit from the collective, if often hidden, knowledge of their employees.

But there's a broader point here, too. For a couple of centuries now, long before Intrade or even the Internet existed, financial markets have been making it easier to bet on what the future will bring.

In the mid-1800s, contracts tied to the future price of wheat, pigs and other commodities began to change hands. In 1972, the Chicago Mercantile Exchange introduced futures for foreign exchange rates. Treasury bonds tied to the future rate of inflation came along in the 1990s, and last year, the Merc began selling contracts based on the direction of house prices in 10 big metropolitan areas.

In every case, the market price reflects the sum of the traders' knowledge -- about the extent of the housing bubble in Los Angeles, for instance, or the likely size of next year's wheat crop.  . . .

N. Gregory Mankiw, a former adviser to President Bush, who has written about Intrade on his blog, explains it this way: ''Everybody has information from their own little corner of the universe, and they'd like to know the information from every other corner of the universe. What these markets do is provide a vehicle that reflects all that information.''

 

For the full commentary, see: 

DAVID LEONHARDT.  "ECONOMIX; Odds Are, They'll Know '08 Winner."  The New York Times  (Weds., February 14, 2007):  C1 & C8.

(Note:  ellipsis added.)

 




August 25, 2007

Must-Visit London Attraction "Was Entirely Commercially Funded"



 

The most elegant big wheel in the world, standing 443 feet high, . . .

Unlike old-style Ferris wheels, where the cars hang inside the structure as it rotates, here the pods are on the outside so as to obtain the best view. Their rotation is not dependent on gravity, but on electric motors synchronized by computerized radio signals sent from the hub. Finally, the whole wheel is hung from one side only, so as to hover over the river. This meant some nifty foundation work. Two separate forests of concrete piles -- one taking the Eye's weight, the other stopping it from toppling over sideways -- plunge 108 feet into the ground.  . . .  

As with all the best engineering structures, building it became a public spectacle. It was floated up the Thames in segments on giant barges, complete with the world's largest floating cranes in attendance. It was then assembled flat on pontoons in the river, its giant central spindle was attached to the perimeter by a skein of steel cables -- the suspension-bridge variety, but acting like bicycle spokes -- and then came an unforgettable week as the whole wheel, weighing 1,780 tons without its 32 capsules (each a further 10 tons), was hauled slowly from the horizontal to an acute angle. Where it stayed, leaning alarmingly, for several days while the final work was done to bring it to its vertical position.

. . .  

Even more remarkably at a time when ambitious architectural projects funded by a national lottery were being built all over Britain, the London Eye -- costing £85 million, or about $150 million at the time -- was entirely commercially funded. Today it is a must-visit attraction in the British capital, carrying an average of 10,000 visitors a day. Each trip is one 30-minute revolution.

It opened in late 2000 and immediately became exactly the iconic object that the Millennium Dome downstream had tried and failed to be. That was perhaps unfair -- the Dome was also a prodigious feat of engineering and architecture -- but in the end what decides these things is the public response.

And the public has always responded to a buccaneering spirit in engineering, the idea that enormous risks are being taken, that enormous reward is the prize, but that total disaster is a looming possibility. That, in short, is the achievement of Mr. Marks and Ms. Barfield's London Eye: The process of making it was every bit as compelling as the ride on the finished product. They are diffident people -- the way they tell it, it was just a matter of A following B -- but they surely fall into the category of designer as hero (and heroine). In this sense they are in the tradition of the great 19th-century British engineer Isambard Kingdom Brunel, who with his extraordinarily ambitious railways and steamships overcame obstacles with flair and style.  . . .

 

For the full commentary, see: 

HUGH PEARMAN.  "MASTERPIECE; Anatomy of a Classic; Reinventing the Wheel; The London Eye is an engineering marvel with tourist appeal."  The Wall Street Journal  (Sat., May 26, 2007):  P14.

(Note: ellipses added.)

 




August 24, 2007

FDA Irrationally Bans Drugs that Would Help Patients Suffering from Deadly Disease


 

The most welcome news a cancer patient can hear from their doctor is: "Your tumor is regressing." Sadly, the message that the Food and Drug Administration is now delivering to cancer patients is that the fight against tumors is regressing.

Current FDA policies are discouraging the development of groundbreaking treatments for cancer and other killer diseases, turning the clock back on hard-won regulations put in place in response to the AIDS crisis that allow patients faster access to new drugs. Case in point: This week, facing rejection by the Agency, GPC Biotech withdrew its New Drug Application (NDA) for Satraplatin, a drug to treat prostate cancer -- despite data from a large controlled clinical trial showing the drug delayed tumor growth in patients where the disease is widespread.

Most of the patients in this study had exhausted all known therapies; many required powerful medication to control bone pain. Time is running out for them, yet results from this statistically significant study were not sufficient for the FDA. Although GPC Biotech's application for Satraplatin was under consideration for accelerated approval, the Agency indicated it would need to wait for full survival data from this trial, which will delay approval at least one year.

Sadly, far from being an aberration, Satraplatin is the fifth promising cancer treatment set back by the FDA this year.

. . .

For patients with life-threatening diseases and their families, the implications of the FDA's recent regressive trend are devastating. It may be acceptable for regulators to be risk-averse when considering drugs for routine or nonserious diseases where alternative therapies exist. But this mindset is simply irrational when it comes to drugs intended to treat patients suffering from deadly diseases -- people who often have only weeks or months to live.

 

For the full commentary, see: 

RICHARD MILLER.  "Cancer Regression."  The Wall Street Journal  (Weds., August 1, 2007):  A15.

 




August 23, 2007

"I Couldn't Write a Prescription for Antiobiotics, Because There Were None"


 

    "THE DOCTOR MIGHT BE IN Cubans young and old at a Havana clinic in 2004."  Source of caption and photo:  online version of the NYT article cited below. 

 

CUBA works hard to jam American TV signals and keep out decadent Hollywood films. But it’s a good bet that Fidel Castro’s government will turn a blind eye to bootleg copies of “Sicko,” Michael Moore’s newest movie, if they show up on the streets of Havana.

“Sicko,” the talk of the Cannes Film Festival last week, savages the American health care system — and along the way extols Cuba’s system as the neatest thing since the white linen guayabera.

Mr. Moore transports a handful of sick Americans to Cuba for treatment in the course of the film, . . .

. . .

Universal health care has long given the Cuban regime bragging rights, though there is growing concern about the future. In the decades that Cuba drew financial and military support from the Soviet Union, Mr. Castro poured resources into medical education, creating the largest medical school in Latin America and turning out thousands of doctors to practice around the world.

But that changed after the collapse of the Soviets, according to Cuban defectors like Dr. Leonel Cordova. By the time Dr. Cordova started practicing in 1992, equipment and drugs were already becoming scarce. He said he was assigned to a four-block neighborhood in Havana Province where he was supposed to care for about 600 people.

“But even if I diagnosed something simple like bronchitis,” he said, “I couldn’t write a prescription for antibiotics, because there were none.”

He defected in 2000 while on a medical mission in Zimbabwe and made his way to the United States. He is now an urgent-care physician at Baptist Hospital in Miami.

Having practiced medicine in both Cuba and the United States, Dr. Cordova has an unusual perspective for comparison.

“Actually there are three systems,” Dr. Cordova said, because Cuba has two: one is for party officials and foreigners like those Mr. Moore brought to Havana. “It is as good as this one here, with all the resources, the best doctors, the best medicines, and nobody pays a cent,” he said.

But for the 11 million ordinary Cubans, hospitals are often ill equipped and patients “have to bring their own food, soap, sheets — they have to bring everything.”  . . .

. . .

Until he had to have emergency surgery last year, Fidel Castro — who turned 80 this year — was considered a model of vibrant long life in Cuba. But it was only last week that he acknowledged in an open letter that his initial surgery by Cuban doctors had been botched. He did not confirm, however, that a specialist had been flown in from Spain last December to help set things right. 

 

For the full commentary, see: 

ANTHONY DePALMA.  "‘Sicko,’ Castro and the ‘120 Years Club’."  The New York Times, Section 4  (Sun., May 27, 2007):   3. 

(Note:  ellipses added.)

 




August 22, 2007

Why New York City Needs Wal-Mart


 

(p. 7)  . . .  an enduring mystery of the retail economic world: why don't people in New York City want a Wal-Mart in Midtown?


Manhattan is the most underserved market I have ever seen for retail customers. There really is nowhere for bargains on ordinary household goods and groceries in the whole borough. Yes, I know unions hate Wal-Mart. But not every New Yorker is in a union, and every New Yorker needs food and paper towels. (I, by the way, am a member of three unions: the Screen Actors Guild, the American Federation of Television and Radio Artists, and the Writers Guild of America, West. How many unions is Mayor Michael Bloomberg in?)


Don't the consumers deserve a break, too? I know Wal-Mart is not hip, slick and cool. It's for people who have to live within a budget, not for people who see movies with subtitles and have houses on Martha's Vineyard (or would like to). But don't working-class people deserve bargains on their daily bread?


To keep Wal-Mart out of New York -- or my home, Los Angeles -- is simply to inflict a snobby class prejudice on working people. Why they and their representatives put up with this classist, ''let them eat Whole Foods'' nonsense is yet another mystery, and one that could be solved if politicians really cared about consumers.

 

For the full commentary, see: 

BEN STEIN.  "EVERYBODY'S BUSINESS; Assorted Mysteries of Economic Life."  The New York Times, Section 3  (Sun., May 13, 2007):  7.

(Note: ellipsis added.)

 




August 21, 2007

Total Retirement Assets Will Increase, Even as Baby Boomers Retire


 

RetirementAssetsGraph.jpg   Source of graph:  online version of the NYT article cited below.

 

WILL stocks suffer a multidecade bear market as the baby-boom generation sells its shares to support its retirement? Some have predicted such an outcome, but a new study — which projects huge growth in 401(k) assets in future decades — paints a far more sanguine picture.

The study, “New Estimates of the Future Path of 401(k) Assets,” has been circulating since earlier this month as a working paper from the National Bureau of Economic Research. Its authors are James M. Poterba, chairman of the economics department at the Massachusetts Institute of Technology; Steven F. Venti, an economics professor at Dartmouth; and David A. Wise, a professor of political economy at Harvard. A version is at www.nber.org/papers/w13083.

Despite the baby boomers’ liquidation of retirement assets in coming decades, the study estimates that the total size of 401(k) plans will nevertheless grow markedly. That forecast may come as a surprise to some people, the professors concede, because 401(k)’s now represent only a modest fraction of a typical retiree’s total wealth. But the professors point out that 401(k) plans have existed only since the early 1980s; by the time that today’s younger workers retire, they will have had many more years to contribute to their 401(k)’s than current retirees have had.

 

For the full commentary, see: 

MARK HULBERT.  "STRATEGIES; Baby Boomers Are Cashing In.  So What?"  The New York Times, Section 3  (Sun., May 27, 2007):  5.

 




August 20, 2007

Professors Have Lost the Skills to Write Lively Prose and Choose Interesting Topics


 

The excerpt below is from a WSJ summary of an article by Maureen Ogle in the March-April 2007 issue of HISTORICALLY SPEAKING.

 

History professors, writes Ms. Ogle in the History Society's bimonthly bulletin, don't make enough effort to connect with students who view the world through a lens shaped by iPods and instant messaging. Worse, professors have lost the skills needed to engage a general audience like writing lively prose or choosing interesting topics. Their careers depend on getting articles into tiny journals on abstruse topics, not conveying the importance of that research to the public.  . . .

. . .

She resigned from her university post in 1999 and began a mission to provide nonacademic readers with "well-researched, well-documented, well-reasoned history." On the way, she discovered the perils, and pleasures, of writing for an audience "larger than six."

 

For the full summary, see: 

"Informed Reader; ACADEMIA; Historians Belong on the Street, Not in the Tower."  The Wall Street Journal  (Thurs., May 31, 2007):  B6.

(Note:  ellipsis added.)

 




August 19, 2007

Fred Thompson Skewers Michael Moore with Wit and Wisdom


Mr. Moore was back from Cuba, where he made a documentary on the superiority of Castro's health-care system. Mr. Thompson suggested Mr. Moore is just another lefty who loves dictators. Mr. Moore challenged Mr. Thompson to a health-care debate and accused him of smoking embargoed cigars. Within hours Mr. Thompson and his supposedly nonexistent staff had produced a spirited video response that flew through YouTube and the conservative blogosphere. Sitting at a desk and puffing on a fat cigar, Mr. Thompson announces to Mr. Moore he can't fit him into his schedule. Then: "The next time you're down in Cuba . . . you might ask them about another documentary maker. His name was Nicolás Guillén. He did something Castro didn't like, and they put him in a mental institution for several years, giving him devastating electroshock treatments. A mental institution, Michael. Might be something you ought to think about."

You couldn't quite tell if Mr. Thompson was telling Mr. Moore he ought to think more about Cuba, or might himself benefit from psychiatric treatment. It seemed almost . . . deliberately unclear.

 

PEGGY NOONAN.  "DECLARATIONS; The Man Who Wasn't There."  The Wall Street Journal  (Sat., May 19, 2007): P14.

(Note:  ellipsis in original.)

 

See Fred Thompson's response to Michael Moore on YouTube at:

http://www.youtube.com/watch?v=Ds_GhRxivOI  

 

    Source:  screen capture from Fred Thompson's response to Michael Moore at http://www.youtube.com/watch?v=Ds_GhRxivOI

 




August 18, 2007

Better Measures of Worker Output, Increase Income Inequality


 

Many of us would say that income inequality is not bad, if it reflects differences in worker productivity.  One argument in the article excerpted below, is that information technology has allowed better measurement of worker productivity, and hence is partly responsible for the increase in income inequality.

 

. . . as companies and compensation consultants began using information technology to determine more accurately the contributions of individual employees, employers began to discriminate among employees based on performance. In a working paper, Professor MacLeod, along with Thomas Lemieux of the University of British Columbia and Daniel Parent of McGill University, mined census data and found that the proportion of jobs with a performance-pay component rose to 40 percent in the 1990s from 30 percent in the late 1970s.

''Since companies are better able to measure precisely what an employee contributes, we've seen a greater range of incomes among people doing roughly the same jobs,'' Professor MacLeod said.

The fact that more Americans are paid less on the basis of a job title and more on their individual output inexorably leads to greater inequality. The authors' conclusion is that the rise of performance-based pay has accounted for 25 percent of the growth in wage inequality among male workers from 1976 to 1993.

''All the bits of evidence we have tend to say that this trend is continuing,'' Professor Lemieux said. In 2003, the authors note, 44.5 percent of workers at Fortune 1000 companies received some form of performance-based pay, up from 34.7 percent in 1996. And think of the growing legions of self-employed -- people selling items on eBay, mortgage brokers and real estate brokers, freelance journalists and consultants of all types -- for whom all pay is performance-based. Among these growing cadres, the dispersion of incomes is rather large.

''When you look at the self-employed and contractors,'' Professor Lemieux said, ''inequality is much higher.''

 

For the full commentary, see: 

DANIEL GROSS.  "ECONOMIC VIEW; Income Inequality, Writ Larger."  The New York Times, Section 3  (Sun., June 10, 2007):  7.

(Note:  ellipsis added.)

 




August 17, 2007

Why CEOs Are Paid So Much More than Other Near-Top Execs


 

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

 

(p. A1)  Like most companies, Office Depot has long made sure that its chief executive was the highest-paid employee. Ten years ago, the $2.2 million pay package of its chief was more than double that of his No. 2. The fifth-ranked executive received less than one-third.

But the incentive for reaching the very top of the company is now far greater. Steve Odland, who runs Office Depot today, made almost $12 million last year, more than four times the compensation of the second-highest-paid executive and over six times that of the fifth-ranking executive in the current hierarchy.

As executive pay has surged in most American companies, attention has focused on the growing gap between the earnings of top executives and the average wage of workers in cubicles or on the shop floor. Little noticed, though, is how much the gap has also widened between the summit and the next few echelons down.

. . .

The pay of chief executives, analysts say, is being driven by superstar dynamics similar to those that determine the inordinate rewards for pop stars and athletes — a phenomenon first explained by Sherwin Rosen of the University of Chicago in (p. C7) 1981 and underlined more than a decade ago by the economists Robert H. Frank and Philip J. Cook in their book “The Winner-Take-All Society” (Free Press, 1995).

As American companies, American hedge funds — and even American lawsuits — have grown in size, it has become ever more valuable to get the “best” chief executive or fund manager or litigator. This has fueled a fierce competition for talent at the top, which has pushed economic rewards farther up the ladder of success, concentrating the richest pay levels even more.

“There is an interaction between technology and scale which is true in all these businesses,” said Steven N. Kaplan, a finance professor at the Graduate School of Business of the University of Chicago. “One person can oversee more assets, and this translates into more money.”

. . .

As companies grow and expand globally, the value of the top executive can grow exponentially. In a study last year, two economists, Xavier Gabaix of the Massachusetts Institute of Technology and Augustin Landier of New York University, argued that the fast rise in pay of corporate C.E.O.’s mostly reflected the growing size of American corporations.

Processing reams of data, the economists estimated that hiring the most effective chief executive in the country would, statistically, increase the stock value of a company by only 0.016 percent, compared with hiring the 250th chief executive. But at a company like General Electric, which is worth about $380 billion, that tiny difference would amount to $60 million.

This, the economists argued, helps explain why that top chief executive earned five times as much as the 250th. “Substantial firm size leads to the economics of superstars, translating small differences in ability to very large deviations in pay,” the economists wrote.

 

For the full story, see: 

EDUARDO PORTER.  "More Than Ever, It Pays to Be the Top Executive."  The New York Times  (Fri., May 25, 2007):  A1 & C7.

(Note:  ellipses added.)

 




August 16, 2007

"The Engine of Prosperity is Technological Progress"


 

Steve sometimes writes clever, entertaining essays on issues of little policy importance (like whether a rational person should stand still, or move forward, on escalators).  But in the piece excerpted below, he does a great job of discussing the biggest policy issue of them all:  what drives economic progress?

 

Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened. Well, not quite nothing. There were wars, political intrigue, the invention of agriculture -- but none of that stuff had much effect on the quality of people's lives. Almost everyone lived on the modern equivalent of $400 to $600 a year, just above the subsistence level. True, there were always tiny aristocracies who lived far better, but numerically they were quite insignificant.

Then -- just a couple of hundred years ago, maybe 10 generations -- people started getting richer. And richer and richer still. Per capita income, at least in the West, began to grow at the unprecedented rate of about three quarters of a percent per year. A couple of decades later, the same thing was happening around the world.

Then it got even better. By the 20th century, per capita real incomes, that is, incomes adjusted for inflation, were growing at 1.5% per year, on average, and for the past half century they've been growing at about 2.3%. If you're earning a modest middle-class income of $50,000 a year, and if you expect your children, 25 years from now, to occupy that same modest rung on the economic ladder, then with a 2.3% growth rate, they'll be earning the inflation-adjusted equivalent of $89,000 a year. Their children, another 25 years down the line, will earn $158,000 a year.

Against a backdrop like that, the temporary ups and downs of the business cycle seem fantastically minor. In the 1930s, we had a Great Depression, when income levels fell back to where they had been 20 years earlier. For a few years, people had to live the way their parents had always lived, and they found it almost intolerable. The underlying expectation -- that the present is supposed to be better than the past -- is a new phenomenon in history. No 18th-century politician would have asked "Are you better off than you were four years ago?" because it never would have occurred to anyone that they ought to be better off than they were four years ago.

. . .

The source of this wealth -- the engine of prosperity -- is technological progress. And the engine of technological progress is ideas -- not just the ideas from engineering laboratories, but also ideas like new methods of crop rotation, or just-in-time inventory management.

 

For the full commentary, see: 

STEVEN LANDSBURG.  "A Brief History of Economic Time."   The Wall Street Journal  (Sat., June 9, 2007):  A8. 

(Note:  ellipsis added.)

 




August 15, 2007

Japanese Engineers Taking Bigger Risks and Getting Bigger Rewards


 

   In front is engineer Kazumitsu Nakamura, retired from Japan's Hitachi, and now working for a Hitachi subsidiary in Taiwan.  Source of photo:  online version of the NYT article cited below.

 

(p. C1)  HSINCHU, Taiwan — One of the hottest exports from Japan these days isn’t video games or eco-friendly cars.

It is engineers.

. . .

. . . , the recent export of job seek-(p. C5)ers is a sign of just how much Japan has changed during a decade of increased competition, corporate belt-tightening and the end of lifetime job guarantees. This harsher new world has forced Japan’s famously conservative salarymen to become more aggressive in their job choices, and to view their careers as something for their own benefit and not simply their companies’, employment experts say.

This shift in mindset also underscores how Japan’s long-closed economy is finally integrating with that of its neighbors. China has already replaced the United States as Japan’s biggest trading partner, and many Japanese now see their nation’s and their own personal future as linked to Asia’s red-hot economies.

“Salarymen are taking bigger risks,” said Mitsuhide Shiraki, a professor of economics at Waseda University in Tokyo. “They’re making a logical decision to work in Asia, where they are being better rewarded than in Japan.”   . . .

. . .

There has also been a growing number of retired engineers wanting to go to less-developed economies where their skills are still highly valued, allowing them to pursue second careers late in life.

“In Asia, we can keep contributing to society,” said Kazumitsu Nakamura, 64, a former engineer for Hitachi who quit to go to Taiwan, and was recently hired by a Hitachi subsidiary to train Taiwanese employees. “In Japan, we would just be collecting pensions.”

. . .

. . .   For Tatsuo Okamoto, a 51-year-old semiconductor engineer, the biggest change was the speed in decision-making at the Taiwanese company, Winbond Electronics, which hired him away from the Tokyo-based chip maker Renesas Technology two years ago.

Dr. Okamoto recalled one instance when a 15-minute chat in the hallway with Winbond’s president was enough to win immediate approval to purchase millions of dollars worth of factory equipment. The same decision in Japan would have taken days of committee meetings, he said.

Dr. Okamoto said the experience opened his eyes to the problems that were hobbling the competitiveness of Japan’s electronics industry.

“Joining a Taiwanese company was a high-risk, high-return decision,” Mr. Okamoto said. “But staying in Japan had become a high-risk, low-return proposition.”

 

For the full story, see: 

MARTIN FACKLER.  "A Japanese Export: Talent  Company; Technologists See Brighter Prospects in Other Parts of Asia." The New York Times  (Thurs., May 24, 2007):  C1 & C5.

(Note:  ellipses added.)

 

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

 




August 14, 2007

NASA Leader Attacked for Good Sense on Global Warming


 

How much of global warming is due to human activity is far from clear.  And if the current, modest, gradual warming continues, there will be winners and losers, and plenty of time to adjust.  Winners will include, for instance, those pursuing agriculture in northern regions, and shippers seeking a feasible 'Northwest Passage.'

Economic forecasting is highly inaccurate beyond a few months out, for most variables, So who can honestly claim to know that the long-term losses of the losers will be larger than the long-term gains of the winners?

And if I am right, then what Michael Griffin said below, makes sense, and did not deserve the contempt and vitriol he received from the global warming environmentalists.

 

(p. A21) “I have no doubt that global — that a trend of global warming exists,” the administrator of NASA, Michael Griffin, said in a taped interview that was broadcast Thursday on National Public Radio. “I am not sure that it is fair to say that is a problem we must wrestle with.”

“I would ask which human beings, where and when, are to be accorded the privilege of deciding that this particular climate that we have right here today, right now, is the best climate for all other human beings,” he said. “I think that’s a rather arrogant position for people to take.”

. . .

Jerry Mahlman, a scientist at the National Center for Atmospheric Research, said Mr. Griffin’s remarks showed he was either “totally clueless” or “a deep antiglobal warming ideologue.”

James Hansen, a top NASA climate scientist and lead author of the research paper, said the comments showed “arrogance and ignorance” because millions of people will probably be harmed by global warming.

 

For the full story, see: 

"NASA Leader: Who Says Warming Is a Problem?"  The New York Times  (Fri., June 1, 2007):  A21.

(Note: ellipsis added.)

 




August 13, 2007

Ethanol Subsidies Reduce Incentives to Build New Oil Refineries



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

 

(p. A1)  “If the national policy of the country is to push for dramatic increases in the biofuels industry, this is a disincentive for those making investment decisions on expanding capacity in oil products and refining,” said John D. Hofmeister, the president of the Shell Oil Company. “Industrywide, this will have an impact.”

The concerns were echoed in a recent report by Barclays Capital, which said the uncertainty about the ethanol growth “will do little to accelerate desperately needed investment in complex United States refining units.”

“Indeed, it is likely to deter and further delay investment, if not rule out many refinery investments completely.”

. . .

(p. A15)  As a result of the push for biofuels, and encouraged by federal subsidies and grants, dozens of ethanol distilleries are being planned. These investments should double the annual production of ethanol from corn to 15 billion gallons by 2012 from about 6 billion gallons today.

But given farmland constraints and the need to use corn for food, that is as much ethanol as can possibly be produced from corn, according to the ethanol industry’s own calculations. Ethanol producers recognize that it is not clear how an additional 20 billion gallons of ethanol — President Bush has called for 35 billion gallons of biofuels by 2017 — would be produced from cellulose or biomass.

“The current thinking is that based on today’s technology, we suspect corn-based ethanol will generate at least 15 billion gallons,” said Brian Jennings, the executive vice president of the American Coalition for Ethanol, an association of ethanol and corn producers. “Beyond that, it’s uncertain. The marketplace will make that determination on where it will come from.”

Yet some members of Congress would like to make the president’s goal for biofuels a mandatory target — the equivalent of 2.3 million barrels a day that would, in effect, create an ethanol industry roughly the size of world-class oil producers like Kuwait or Nigeria.

The economics of cellulosic ethanol, made from nonfood crops and agricultural waste, are also unclear. Since cellulosic ethanol, still at an experimental stage, is twice as expensive as corn-based ethanol, there are currently no commercial-scale cellulosic plants.

Lawrence Goldstein, an energy analyst at the Energy Policy Research Foundation, an industry-financed group, has been warning for nearly a year that the government’s twin goals of encouraging refiners to increase production and promoting increased supplies of biofuels work against each other.

“These two policies are not complementary,” Mr. Goldstein said. “These policies are in conflict.”

In addition, Mr. Goldstein said, an emphasis on ethanol might lead to increased volatility in fuel prices.

“If we get a bad corn crop, we will end up paying for it at the pump and on the food shelves,” he said. “We are not buying security. We are increasing volatility.”

 

For the full story, see: 

JAD MOUAWAD.  "Oil Industry Says Biofuel Push May Hurt at Pump."  The New York Times  (Thurs., May 24, 2007):  A1 & A15.

(Note:  ellipsis added.)

 

    A trucker getting ready to fill his tanker at a Mississippi refinery.  Source of photo:  online version of the NYT article quoted and cited above.





August 12, 2007

Ethanol Costs Increasingly Obvious


 

Corn ethanol seemed unstoppable, but a remarkable thing happened on the road from Des Moines. Just as the smart people warned, the government's decision to play energy market God and forcibly divert huge amounts of corn stocks into ethanol has played havoc with key sectors of the economy. Corn prices have nearly doubled, which means livestock owners can't afford to feed their animals, and food and drink manufacturers are struggling to buy corn and corn syrup. Environmentalists are sour over new stresses on farmland; international aid groups are moaning that the U.S. is cutting back its charitable food giving, and many of these folks are taking out their anger on Congress.

. . .

Turns out there are huge economic consequences to Congress micromanaging energy policy, and all to aid its campaign donors in agribusiness. A lesson the U.S. is now learning the hard way.

 

For the full commentary, see: 

KIMBERLEY STRASSEL.  "POTOMAC WATCH; Ethanol's Bitter Taste."  The Wall Street Journal  (Fri., May 18, 2007):  A16.

(Note:  ellipsis added.)

 




August 11, 2007

Easily Available Capital and Technology Lower Barriers to Entry in Oil Industry


 

CobaltOilDataAnalysis.jpg   "Cobalt scientists analyze data to help pinpoint oil deposits."  Source of caption and photo:  online version of the NYT article cited below.

 

(p. 1)  HOUSTON.  JOSEPH H. BRYANT, still boyish-looking at 51, jostles with glee among tens of thousands of people here at the Offshore Technology Conference, one of the energy industry’s biggest trade fairs. He is surrounded by newfangled technologies occupying more than half a million square feet of display space: drills stuffed with electronic sensors, underwater wells shaped like Christmas trees, mini-submarines and pipes, pumps, tubes, gauges, valves and gadgets galore.

“There is every little gizmo you need to make this business work,” Mr. Bryant says, joyously. He stops at a plastic model of an offshore oil rig, an exact replica of a huge platform he commissioned while running BP’s business in Angola a few years ago. “I love this stuff.”

Like the pieces of a giant puzzle, the parts showcased here could fit together and build an oil company — and that’s exactly what Mr. Bryant set out to do two years ago after a 30-year career directing energy projects for the likes of Amoco, Unocal and BP. With a team composed largely of retired energy executives, he wants to hunt for oil in the deep waters of the Gulf of Mexico or offshore West Africa, challenging Big Oil in its own backyard.

The American oil patch, once left to languish during an extended period of low oil prices, is on the rebound. Wildcatters like Mr. Bryant are ready to pounce. With oil prices now hovering around $60 a barrel — three times higher than they were throughout the 1990s — the industry is expanding at a pace last seen decades ago.

“The oil industry has changed dramatically in the last 20 years,” Mr. Bryant says. “Barriers to entry have dropped significantly. It doesn’t matter if you’ve been in the business 100 years or 100 days.”

Easily available capital and technology, once the preserve of traditional oil companies, are reordering the business. Investors are lining up to finance energy projects while leaps in computing power, imaging tech-(p. 7)nology and collaborative online networks now allow the smallest entities to compete on an equal footing with the biggest players.

“There’s a lot of money out there looking for opportunities,” said John Schaeffer, the head of the oil and gas unit at GE Energy Financial Services. “It seems like everyone wants to own an oil well now.”

Still, oil exploration remains a costly business fraught with peril. While the odds have improved, success is elusive; three-quarters of all exploration wells come up dry, either because there is no oil or because geologists miss its exact location. All of which means that Mr. Bryant’s start-up, Cobalt International Energy, which plans to begin drilling next year, faces formidable hurdles.

“There’s no sugar-coating this — at the end of the day, it’s a high risk venture,” Mr. Bryant says. “Financially, we’re definitely wildcatting. It’s either all or nothing.”

 

For the full story, see: 

JAD MOUAWADA.  "Wildcatter Pounces; Oil Riches Lure the Entrepreneurs."  The New York Times, Section 3  (Sun., May 20, 2007):  1 & 7.

 

 BryantJosephOilWildcatter.jpg   Wildcatter entrepreneur "Joseph H. Bryant started Cobalt."  Source of caption and photo:  online version of the NYT article cited above.

 




August 10, 2007

The Courage of Milton Friedman


 

The following two paragraphs are from a paper I am currently working on.

 

Milton Friedman wrote a Newsweek column many years ago that caused a firestorm of anger among his colleagues in the economics profession. Friedman’s argument was that, in general, the government is not going to do a good job of identifying the best and most productively innovative economists. In particular, he argued that economics funding by the National Science Foundation (NSF) had made the economics profession more mathematical than was appropriate.

Even his ‘Chicago’ colleagues, who were otherwise inclined to be sympathetic to his work, were appalled: Robert Lucas wrote against Friedman in the New York Times, and Zvi Griliches spoke against him before Congress. 

 

Not too long after Friedman’s article came out, I praised it during one of the sessions of a Liberty Fund colloquium held in California.  After the session, a very distinguished economist came up to me, and started talking about the Friedman article in a very irritated and animated manner.  He said that what Friedman wrote in the article, might be true, but he shouldn’t have written it in a public forum.[i]  He said that within the NSF, the physicists have always been opposed to funding economics, and that Friedman’s article gave the physicists just the ammunition they needed.  I remember distinctly that after this conversation, the distinguished economist got into his very large and very expensive car and drove off.  To the cynical, it may also be worth mentioning that this economist had received very substantial funding from the NSF.

I also remember mentioning to George Stigler my disappointment that Lucas had written contra Friedman, and Stigler gave me his cynical smile, and said that I should have expected that Lucas, and the rest of the profession, would defend NSF funding.


[i] Most of the conversation I remember in broad terms, but specifically, I remember he said something very close to:  ‘Friedman shouldn’t air the profession’s dirty laundry in public.’

 

The reference for the Friedman article, is: 

Friedman, Milton.  "An Open Letter on Grants."  Newsweek, May 18 1981, 99.




August 9, 2007

Private Companies Beat Government in Accessible and Affordable Health Care


 

MinuteClinic.jpg    A CVS pharmacy MinuteClinic.  Source of photo:  online version of the WSJ article cited below. 

 

It's Friday evening and you suspect that your child might have strep throat or a worsening ear infection. Do you bundle him up and wait half the night in an emergency room? Or do you suffer through the weekend and hope that you can get an appointment with your pediatrician on Monday -- taking time off your job to drive across town for another wait in the doctor's office?

Every parent has faced this dilemma. But now there are new options, courtesy of the competitive marketplace. You might instead be able to take a quick trip on Friday night to a RediClinic in the nearby Wal-Mart or a MinuteClinic at CVS, where you will be seen by a nurse practitioner within 15 minutes, most likely getting a prescription that you can have filled right there. Cost of the visit? Generally between $40 and $60.

These new retail health clinics are opening in big box stores and local pharmacies around the country to treat common maladies at prices lower than a typical doctor's visit and much lower than the emergency room. No appointment necessary. Open daytime, evenings and weekends. Most take insurance.

Much like the response to Hurricane Katrina, private companies are far ahead of the government in answering Americans' needs, this time for more accessible and more affordable health care. Political leaders across the country seeking to expand government's role in health care should take note. 

 

For the full commentary, see:

GRACE-MARIE TURNER.  "Customer Health Care."  The Wall Street Journal  (Mon., May 14, 2007):   A17.

 




August 8, 2007

Dinner with Hayek


 

Recently (6/10/07) at dinner with a group of foreign graduate students at George Mason University, I learned that one of the students was from Venezuela, and so I mentioned to her that one of my friends during my graduate student days at the University of Chicago had been from Venezuela, and that he had been responsible for bring F.A. Hayek to speak at the University.  When I said his name was “Cartea,” she said that she had had a professor named Cartea who was an admirer of Hayek, but who had unfortunately died in an accident a few years ago.

This was surprising and distressing news.

Cartea had charisma, and was not afraid to use it.  He was not always a model of responsible behavior, but he had such child-like enthusiasm, that it was hard to be mad at him for long.  One of his main weaknesses is that he loved books.  Often he would bring me his latest purchase from the Seminary Co-op Bookstore, hold it up, and say in his inimitable accent and cadence:  “Pure Gold!”    

In Chicago, I had a car, and Cartea did not.  He asked if I would drive him to pick up Hayek and Hayek’s wife at the airport.  When we got to the airport, Cartea was hungry and wanted to stop and get a hamburger.  I thought it was not prudent to take the time to do this, but Cartea was insistent, and we stopped. 

We ended up getting to the gate just barely by the time of the Hayeks’ scheduled arrival (these were the innocent pre-terrorism days when you could actually meet guests at their gate).  But to our dismay, we learned that the flight at arrived early, and apparently Hayek had grabbed a cab to the University.

So we drove to the Center for Continuing Education where the Hayeks were staying.  There we learned that they had headed to the then-best restaurant in Hyde Park, called something like the “Courtyard.” 

At some point along the way, while still in the airport I think, Cartea purchased a single rose.  We walked into the restaurant, and found the Hayeks.  And then, with a charm that I could admire, but not imitate, he flamboyantly presented the rose to Mrs. Hayek, to her obvious delight.  (I do not remember what he said, or how he explained-away our absence from at the airport---I do remember that the word “hamburger” did not pass his lips.

The pleased Hayek invited us to join them for dinner.  We did.  It was just me, Cartea, and the Hayeks, and it stuns me to think that of the four, only I am still alive.

I would like to be able to report that some deep issues of classical liberal political theory were discussed, but if they were, I have no memory of that.  My memory is that the discussion was mainly of a personal, small-talk variety.  For example, one or both of the Hayeks had long wanted to view a solar eclipse, so they had recently flown to somewhere in the world where such an eclipse had occurred.

And I remember Hayek teasing Mrs. Hayek for delaying their being together by marrying someone else before Hayek, and I remember her teasing him back that he should have made his intentions clear earlier.  (This was the second Mrs. Hayek; at some point I learned that he had divorced the first Mrs. Hayek.)

I only have a couple of other memories of this visit of Hayek to Chicago.  One was when (the next day?) Cartea had me drive Hayek to a press conference downtown.  Hayek thought I was going the wrong way, and was annoyed.  I was pretty sure I was going the right way (and it turned out I was right), but it was stressful for a graduate student to be disagreeing with an insistent, and highly admired, Nobel-prize-winner.

Another disjointed memory is that sometime during the visit I asked him to sign my copy of the first volume of Law, Legislation, and Liberty.  This he did with a disdainful frown, seeming to be annoyed that I would bother him with such a foolish request.

 

(Note one:  I do not remember when the dinner described above occurred, although it could be learned; I bet David Theroux of the Independent Institute would remember.  I was at the University of Chicago from the fall of 1974 through the spring of 1981; and I think the Hayek visit occurred sometime during the latter half of this period.)

(Note two:  this was not the first time I had encountered Hayek.  I drove down to St. Louis with Joe Cobb and another libertarian Chicago student whose name I regrettably cannot remember.  I believe that it was on this occasion that I had a good talk with Phylis Schlafly’s son, who made an articulate economic argument against patents; I think he even gave me an article by someone to bolster his case.  Ben Rogge introduced Hayek.  What I remember about the introduction was that in part of it, Rogge made a polite, but strong, swipe at Ayn Rand, saying I think, that Hayek’s thinking was a much sounder grounding for a libertarian philosophy.  Rogge knew I was a strong Rand enthusiast, so I imagined that he was making the comment mainly for my benefit.  Before the introduction, Rogge offered to take me over to introduce me to Murray Weidenbaum, who was at the event.  I regret that out of some temporary shyness, I declined the offer.  Anyway, on the way back from St. Louis, the discussion was so intense and interesting that I neglected to attend to the gasoline indicator, and we ran out of gas in some small town in Illinois.  I managed to get us to the town gas station, but it was closed because the owner, and all employees, were attending some local social function.  We ended up having to stay overnight in this God-forsaken berg.  Joe was very mad at me.)

(Note three:  the blog entry above was written on 6/11/07.)

 




August 7, 2007

Liberal Actor Paul Newman Endorses Nuclear Power


 

   Paul Newman.  Source of photo: http://www.philly.com/dailynews/columnists/howard_gensler/7660986.html

 

WASHINGTON: Venerable actor Paul Newman, known for his movies, his auto racing and his organic salad dressings, weighed in Wednesday on a nuclear power plant in New York's suburbs that some fear is a terrorist magnet.

The Indian Point plant is safer than military bases he has visited, Newman said.

Newman, the star of such films as "Cool Hand Luke," "Hud" and "Butch Cassidy and the Sundance Kid," visited the facility in Buchanan, New York, on Monday, according to Jim Steets, a spokesman for Entergy Nuclear, the company that owns Indian Point.

The veteran actor, restaurateur and organic-food producer praised the nuclear power facility as an important part of the region's energy future because it does not produce greenhouse gases, which contribute to global warming.

 

For the full story, see: 

"Renaissance man Paul Newman endorses nuclear power plant some consider a risk to New York."   International Herald Tribune  (Weds., May 23, 2007).

 




August 6, 2007

Brookings Harsh Critics of Bush Iraq Policies, Surprised to See Military Progress in Iraq


 

Please note that the commentary excerpted below was published on the Op-Ed page of the New York Times, and was written by two policy experts at the Brookings Institute, the leading think-tank of the Democratic party.

 

Washington.  VIEWED from Iraq, where we just spent eight days meeting with American and Iraqi military and civilian personnel, the political debate in Washington is surreal. The Bush administration has over four years lost essentially all credibility. Yet now the administration’s critics, in part as a result, seem unaware of the significant changes taking place.

Here is the most important thing Americans need to understand: We are finally getting somewhere in Iraq, at least in military terms. As two analysts who have harshly criticized the Bush administration’s miserable handling of Iraq, we were surprised by the gains we saw and the potential to produce not necessarily “victory” but a sustainable stability that both we and the Iraqis could live with.

After the furnace-like heat, the first thing you notice when you land in Baghdad is the morale of our troops. In previous trips to Iraq we often found American troops angry and frustrated — many sensed they had the wrong strategy, were using the wrong tactics and were risking their lives in pursuit of an approach that could not work.

Today, morale is high. The soldiers and marines told us they feel that they now have a superb commander in Gen. David Petraeus; they are confident in his strategy, they see real results, and they feel now they have the numbers needed to make a real difference.

Everywhere, Army and Marine units were focused on securing the Iraqi population, working with Iraqi security units, creating new political and economic arrangements at the local level and providing basic services — electricity, fuel, clean water and sanitation — to the people. Yet in each place, operations had been appropriately tailored to the specific needs of the community. As a result, civilian fatality rates are down roughly a third since the surge began — though they remain very high, underscoring how much more still needs to be done.

. . .

In war, sometimes it’s important to pick the right adversary, and in Iraq we seem to have done so. A major factor in the sudden change in American fortunes has been the outpouring of popular animus against Al Qaeda and other Salafist groups, as well as (to a lesser extent) against Moktada al-Sadr’s Mahdi Army.

These groups have tried to impose Shariah law, brutalized average Iraqis to keep them in line, killed important local leaders and seized young women to marry off to their loyalists. The result has been that in the last six months Iraqis have begun to turn on the extremists and turn to the Americans for security and help. The most important and best-known example of this is in Anbar Province, which in less than six months has gone from the worst part of Iraq to the best (outside the Kurdish areas). Today the Sunni sheiks there are close to crippling Al Qaeda and its Salafist allies. Just a few months ago, American marines were fighting for every yard of Ramadi; last week we strolled down its streets without body armor.

 

For the full commentary, see: 

MICHAEL E. O’ HANLON and KENNETH M. POLLACK.  "A War We Just Might Win."  The New York Times  (Mon., July 30, 2007):  A19.

(Note:  ellipses added.)

 




August 5, 2007

"Just Because George Bush Said It Doesn't Mean It's Wrong"


 

KerreyBobSenator.jpg   Former Nebraska Senator and Governor Bob Kerrey.  Source of photo:  online version of the Omaha World-Herald article cited below.

 

WASHINGTON - Raising a lonely voice in the Democratic Party, former Sen. Bob Kerrey of Nebraska says he strongly opposes any dramatic U.S. troop withdrawal from Iraq.

Such a retreat, Kerrey says, would hand radical Islamic terrorists a substantial victory and enable them to destroy the fledgling democracy in Iraq.

In an article published Tuesday and in an interview, Kerrey said terrorists would gain safe haven from which to launch further attacks on American citizens like those of Sept. 11, 2001.

Kerrey said that if the United States shows weakness in Iraq, it will "pay a terrible price."

"The forces of al-Qaida have demonstrated a tremendous capacity, and they'll use that capacity if we withdraw from the playing field," said Kerrey, a former two-term U.S. senator.

In the interview, Kerrey also had a message for fellow Democrats: "Just because George Bush said it doesn't mean it's wrong."

 

For the full story, see:

JAKE THOMPSON.  "Kerrey says U.S. mustn't look weak in Iraq."  Omaha World-Herald  (Wednesday, May 23, 2007):  1A & 2A.

 

The link to Kerrey's opinion piece in the Wall Street Journal is:

BOB KERREY.  "The Left's Iraq Muddle."  The Wall Street Journal  (Tues., May 22, 2007):  A15. 

 




August 4, 2007

Amazon's Jeff Bezos Attended Montessori Preschool


 

As a preschooler, Jeffrey P. Bezos displayed an unmatched single-mindedness.  By his mother's account, the young Bezos got so engrossed in the details of activities at his Montessori school that teachers had to pick him up in his chair to move him to new tasks.

 

For the full story, see: 

"THE GREAT INNOVATORS; Jeff Bezos: The Wizard Of Web Retailing Amazon.com's founder made online shopping faster and more personal than a trip to the local store."  BusinessWeek  (DECEMBER 20, 2004).

The above is a reprint.  The original story appeared as: 

Robert D. Hof.  "THE TORRENT OF ENERGY BEHIND AMAZON."  BusinessWeek  (Dec. 14, 1998):  119.

 




August 3, 2007

Beebe's "Colleagues Reacted Coolly"


 

    Photos of strange deep sea creatures.  Source of photos:  online version of the NYT article cited below.

 

When, more than 70 years ago, William Beebe became the first scientist to descend into the abyss, he described a world of twinkling lights, silvery eels, throbbing jellyfish, living strings as “lovely as the finest lace” and lanky monsters with needlelike teeth.

“It was stranger than any imagination could have conceived,” he wrote in “Half Mile Down” (Harcourt Brace, 1934). “I would focus on some one creature and just as its outlines began to be distinct on my retina, some brilliant, animated comet or constellation would rush across the small arc of my submarine heaven and every sense would be distracted, and my eyes would involuntarily shift to this new wonder.”

Beebe sketched some of the creatures, because no camera of the day was able to withstand the rigors of the deep and record the nuances of this cornucopia of astonishments.

Colleagues reacted coolly. Some accused Beebe of exaggeration. One reviewer suggested that his heavy breathing had fogged the window of the submarine vessel, distorting the undersea views.

Today, the revolution in lights, cameras, electronics and digital photography is revealing a world that is even stranger than the one that Beebe struggled to describe.

The images arrayed here come from “The Deep: The Extraordinary Creatures of the Abyss” (University of Chicago Press, 2007), by Claire Nouvian, a French journalist and film director.

. . .

Beebe, who ran the tropical research department at the New York Zoological Society, surely had intimations of what lay beyond the oceanic door he had opened. “The Deep” brings much of that dark landscape to light, even while noting that a vast majority of the planet’s largest habitat remains unexamined, awaiting a new generation of explorers. 

 

For the full story, see: 

WILLIAM J. BROAD.  "Mysteries to Behold in the Dark Down Deep: Seadevils and Species Unknown."  The New York Times  (Tues.,  May 22, 2007):  D3.

(Note:  ellipsis added.)

 

    "A Ping-Pong tree sponge."  Source of caption and photo:  online version of the NYT article cited above.

 




August 2, 2007

Unintended Consequences: Hydrogen Produced with Coal


 

The excerpt below is from a WSJ summary of an article in the April issue of MIT's Technology Review.  If the article is correct, then hydrogen may provide one more example of why the government should stop trying to determine which technologies are best.

 

Hydrogen fuel is widely seen as a potentially environmentally clean alternative to fossil fuels for use in cars, but technology writer David Talbot says the perception is wrong -- powering automobiles with hydrogen could actually be more polluting than gasoline.

. . .

With . . .  scarce renewable energy resources, hydrogen power might wind up being produced with coal, which generates more carbon dioxide than any other energy source. That would defeat the environmental inspiration behind vehicles like the Hydrogen 7, Mr. Talbot concludes in a review of "Hell and High Water," a book by Joseph Romm, an MIT-trained physicist. A more efficient route for car makers would be to focus on high-mileage gasoline-powered vehicles. They are simpler and less sexy than hydrogen cars, Mr. Talbot says, but for now they stack up as the cleaner option.

 

For the full summary, see: 

"Informed Reader; ENERGY; Hydrogen May Not Be Greenest Route for Cars."  The Wall Street Journal  (Tues., April 24, 2007):  B7.

(Note:  ellipses added.)

 




August 1, 2007

Free Trade with China Benefits Both U.S. and China


 

 

The image above is from a full-page ad that is scheduled to run in today's eastern edition of the Wall Street Journal.  I am one of the 1,028 economists who agreed to have their names attached to the petition.

Here is the petition: 

 

PETITION
Concerning Protectionist Policies Against China

We, the undersigned, have serious concerns about the recent protectionist sentiments coming from Congress, especially with regards to China.

By the end of this year, China will most likely be the United States’ second largest trading partner.  Over the past six years, total trade between the two countries has soared, growing from $116 billion in 2000 to almost $343 billion in 2006.  That’s an average growth rate of almost 20% a year.

This marvelous growth has led to more affordable goods; higher productivity; strong job growth; and a higher standard of living for both countries.  These economic benefits were made possible in large part because both China and the United States embraced freer trade.

As economists, we understand the vital and beneficial role that free trade plays in the world economy.  Conversely, we believe that barriers to free trade destroy wealth and benefit no one in the long run.  Because of these fundamental economic principles, we sign this letter to advise Congress against imposing retaliatory trade measures against China.

There is no foundation in economics that supports punitive tariffs.  China currently supplies American consumers with inexpensive goods and low-interest rate loans.  Retaliatory tariffs on China are tantamount to taxing ourselves as a punishment.  Worse, such a move will likely encourage China to impose its own tariffs, increasing the possibility of a futile and harmful trade war.  American consumers and businesses would pay the price for this senseless war through higher prices, worse jobs, and reduced economic growth.

We urge Congress to discard any plans for increased protectionism, and instead urge lawmakers to work towards fostering stronger global economic ties through free trade.


 




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