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August 31, 2011

The Victimless Crime of Selling Rice Wine




IllegalRiceWine2011-08-07.jpg "Illegal rice wine for sale in Chinatown. The wine is popular among immigrants from Fujian Province." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A22) The restaurant looks like so many others in the roiling heart of Chinatown, in Lower Manhattan: a garish sign in Chinese and English, slapdash photos of featured dishes taped to the windows, and extended Chinese families crowding around tables, digging into communal plates of steamed fish, fried tofu and sautéed watercress.

But ask a waitress the right question and she will disappear into the back, returning with shot glasses and something not on the menu: a suspiciously unmarked plastic container containing a reddish liquid.

It is homemade rice wine -- "Chinatown's best," the restaurant owner asserts. It is also illegal.

In the city's Chinese enclaves, there is a booming black market for homemade rice wine, representing one of the more curious outbreaks of bootlegging in the city since Prohibition. The growth reflects a stark change in the longstanding pattern of immigration from China.

In recent years, as immigration from the coastal province of Fujian has surged, the Fujianese population has come to dominate the Chinatowns of Lower Manhattan and Sunset Park, Brooklyn, and has increased rapidly in other Chinese enclaves like the one in Flushing, Queens.

These newcomers have brought with them a robust tradition of making -- and hawking -- homemade rice wine. In these Fujianese neighborhoods, right under the noses of the authorities, restaurateurs brew rice wine in their kitchens and sell it proudly to customers. Vendors openly sell it on street corners, and quart-size containers of it are stacked in plain view in grocery store refrigerators, alongside other delicacies like jellyfish and duck eggs.

The sale of homemade rice wine -- which is typically between 10 and 18 percent alcohol, about the same as wine from grapes -- violates a host of local, state and federal laws that govern the commercial production and sale of alcohol, but the authorities have apparently not cracked down on it.



For the full story, see:

KIRK SEMPLE and JEFFREY E. SINGER. "Illegal Sale of Rice Wine Thrives in Chinese Enclaves." The New York Times (Weds., July 20, 2011): A22-A23.

(Note: the online version of the story is dated July 19, 2011.)






August 30, 2011

Bill Bryson Slams Thomas Edison Based on Brief Comments in Linda Simon Book





In the passage quoted below, Bill Bryson is strongly critical of Thomas Edison. It's been many years since I last read a full biography of Edison, but my impression is that Bryson is not being fair to Edison.

I like Bryson and I like Edison, so I was bothered enough to dig out the online "Notes" that Bryson posted to go with his book. On the passage critical of Edison, he cites p. 83 of Linda Simon's Dark Light book.

It turns out that Simon is a literature professor whose book is mainly about the early fears that superstitious people had about electricity. Many of her sources are literary. The book is a long way from a focused, balanced biography of Edison.

On page 83, she makes a casual and unjustifiedly snide comment on Morgan, Vanderbilt, and especially Gould, and then criticizes Edison by associating him with them. She also criticizes Edison because others sometimes challenged his patents. (Just because lawsuits were brought against Edison, does not imply his patent claims were unsound---anyone can file a lawsuit who is willing to hire a lawyer.)

The "bribe" is apparently that Edison gave some reporters stock, or "suppers or songfests" who had reported favorably. To judge such claims, we would like more evidence and more context. (Today, many institutions hire former reporters to do public relations work. Universities often provide free meals to those whose favor they seek; even book publishers send out free books in the hope that they will be reviewed favorably. Do we count all of these as "bribes"? Are all "rewards" ipso facto "bribes"?)

My view is that if we are going to strongly malign the character of one who brought us so much good (Edison), we should do so based on stronger evidence than the brief casual opinions of Linda Simon.

On my "to do" list is to read a biography or two on Edison. When I do so, I will comment again on this issue.


(p. 130) By 1877, when he started his quest to make a commercially successful light, Edison was already well on his way to becoming known as 'the Wizard of Menlo Park'. Edison was not a wholly attractive human being. He didn't scruple to cheat or lie, and was prepared to steal patents or bribe journalists for favourable coverage. In the words of one of his contemporaries, he had 'a vacuum where his conscience ought to be'. But he was enterprising and hard-working and a peerless organizer.


Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.





August 29, 2011

In 1880s Prices Fell Because of Technological Progress




RecentEconomicChangesBK.jpg
















Source of book image: http://covers.openlibrary.org/b/id/5764338-L.jpg







Michael Perelman has strongly suggested that I read David Well's book. It is on my "to do" list.



(p. C10) The dull title of "Recent Economic Changes" does no justice to David A. Wells's fascinating contemporary account of a deflationary miasma that settled over the world's advanced economies in the 1880s. His cheery conclusion: Prices were falling because technology was progressing. What had pushed the price of a bushel of wheat down to 67 cents in 1887 from $1.10 in 1882 was nothing more sinister than the opening up of new regions to cultivation (Australia, the Dakotas) and astounding improvements in agricultural machinery.


For the full review, see:

JAMES GRANT. "FIVE BEST; Little-Known Gold From the Gilded Age." The Wall Street Journal (Sat., AUGUST 6, 2011): C10.


Source of book under review:

Wells, David A. Recent Economic Changes and Their Effect on Production and Distribution of Wealth and Well-Being of Society. New York: D. Appleton and Co., 1889.


Michael Perelman argues that in Recent Economic Changes, David Wells anticipates the substance, although not the wording, of Schumpeter's "creative destruction":

Perelman, Michael. "Schumpeter, David Wells, and Creative Destruction." The Journal of Economic Perspectives 9, no. 3 (Summer 1995): 189-97.





August 28, 2011

Strong Economic Growth Benefits Workers




(p. A13) Workers do well only when the economy grows at a healthy and consistent pace. The biggest threat to long-term economic growth is government growth of the magnitude that characterized the past two years and that is forecast for our future.

Our current problems are not a result of acts of nature. They stem from policy choices that dramatically increased the size of the government. In the past two years, the federal budget has grown by a whopping 16%.


. . .


. . . , the price of the stimulus is what appears to be a permanent increase in the size of government that will continue to slow economic growth. Most economists believe that high debt and high taxes each contributes to slow economic growth, which hurts workers both in the short and long run.



For the full commentary, see:

EDWARD P. LAZEAR. "OPINION; How Big Government Hurts the Average Joe; Job growth is very closely linked to GDP growth. If the economy is not growing, then jobs aren't being added." The Wall Street Journal (Fri., August 5, 2011): A13.

(Note: ellipses added.)






August 27, 2011

"A Passion for the Ambition of Walt"




FavreauJon2011-08-06.jpg





Jon Favreau. Source of photo: online version of the NYT article quoted and cited below.







(p. 11) You've announced you won't be doing the third "Iron Man" movie, in order to make "Magic Kingdom," which is a Disney movie about a family that gets caught inside Disneyland. A movie produced by Disney about a Disney theme park? It sounds a little cynical.

That's my Rubik's Cube that I have to solve on this one. I found a writing partner in the novelist Michael Chabon, who shares a passion for the ambition of Walt.







For the full interview, see:

ANDREW GOLDMAN. "TALK; Jon Favreau, From Swingers to Aliens." The New York Times Magazine (Sun., July 31, 2011): 11.

(Note: bold in original, indicating comments/questions by interviewer Andrew Goldman.)

(Note: the online version of the interview is dated July 29 (sic), 2011.)





August 26, 2011

"Only One Person in History Thought Hermann Sprengel Deserved to Be Better Known: Hermann Sprengel"





(p. 130) . . . in the early 1870s Hermann Sprengel, a German chemist working in London, invented a device that came to be called the Sprengel mercury pump. This was the crucial invention that actually made household illumination possible. Unfortunately, only one person in history thought Hermann Sprengel deserved to be better known: Hermann Sprengel. Sprengel's pump could reduce the amount of air in a glass chamber to one-millionth of its normal volume, which would enable a filament to glow for hundreds of hours. All that was necessary now was to find a suitable material for the filament.


Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

(Note: ellipsis added.)





August 25, 2011

Drug from David Sinclair's Sirtris Start-Up Lengthens Life of Obese Mice




MiceLiveLonger2011-08-19.jpg"An obese mouse given the drug SRT-1720, center, and one not given the drug, right." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. A1) Sustaining the flickering hope that human aging might somehow be decelerated, researchers have found they can substantially extend the average life span of obese mice with a specially designed drug.

The drug, SRT-1720, protects the mice from the usual diseases of obesity by reducing the amount of fat in the liver and increasing sensitivity to insulin. These and other positive health effects enable the obese mice to live 44 percent longer, on average, than obese mice that did not receive the drug, according to a team of researchers led by Rafael de Cabo, a gerontologist at the National Institute on Aging.

Drugs closely related to SRT-1720 are now undergoing clinical trials in humans.

The findings "demonstrate for the first time the feasibility of designing novel molecules that are safe and effective in promoting longevity and preventing multiple age-related diseases in mammals," Dr. de Cabo and colleagues write in Thursday's issue of the new journal Scientific Reports. Their conclusion supports claims that had been thrown in doubt by an earlier study that was critical of SRT-1720.

A drug that makes it cost-free to be obese may seem more a moral hazard than an incentive to good health. But the rationale behind the research is somewhat different: the researchers are trying to capture the benefits that allow mice on very low-calorie diets to live longer. It just so happens that such benefits are much easier to demonstrate in mice under physiological stress like obesity than in normal mice.


. . .


. . . , a small pharmaceutical concern in Cambridge, Mass., designed SRT-1720 and a set of similar drugs to mimic resveratrol -- the trace ingredient of red wine that is thought to activate protective proteins called sirtuins.

The sirtuins help bring about the 30 percent extension of life span enjoyed by mice and rats that are kept on very low-calorie diets.



For the full story, see:

NICHOLAS WADE. "Longer Lives for Obese Mice, With Hope for Humans of All Sizes." The New York Times (Fri., August 19, 2011): A1 & A3.

(Note: ellipses added.)

(Note: the online version of the story was dated August 18, 2011.)







August 24, 2011

Krugman Says Economic Policy of Past Two Years "Isn't Working"




(p. A21) . . . we already know what isn't working: the economic policy of the past two years -- and the millions of Americans who should have jobs, but don't.


For the full commentary, see:

PAUL KRUGMAN. "The Wrong Worries." The New York Times (Fri., August 5, 2011): A19.

(Note: ellipsis added.)

(Note: the online version of the commentary is dated August 4, 2011.)






August 23, 2011

"A Colossal Investment Project, Born of the State, Steeped in Corruption"




CandlesChinaHighSpeedTrainCrash2011-08-06.jpg"Online critics have scornfully contrasted the difference between government rhetoric about the promise of high-speed rail and the reality of the troubled network. Local residents mourned victims of the train crash in Wenzhou on July 26." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. C1) China's high-speed rail system is an apt metaphor for the country's hurtling economy over the past decade: a colossal investment project, born of the state, steeped in corruption, built for maximum velocity, and imposed paternalistically on a public that is at once amazed and skeptical. The rail system has married foreign technology with national ambition in a network billed as the biggest and most advanced in the world, in a country whose per capita income ranks below that of Jamaica.


For the full commentary, see:

JASON DEAN And JEREMY PAGE. "Trouble on the China Express; The wreck of a high-speed train has enraged the Chinese public and focused attention on the corruption and corner-cutting behind the country's breakneck economic growth." The Wall Street Journal (Sat., JULY 30, 2011): C1-C2.






August 22, 2011

Gas Lighting Did Not Appeal to Those Who Had Servants to Light Their Candles





(p. 123) Gas was particularly popular in America and Britain. By 1850 it was available in most large cities in both countries. Gas remained, however, a (p. 124) middle-class indulgence. The poor couldn't afford it and the rich tended to disdain it, partly because of the cost and disruption of installing it and partly because of the damage it did to paintings and precious fabrics, and partly because when you have servants to do everything for you already there isn't the same urgency to invest in further conveniences. The ironic upshot, as Mark Girouard has noted, is that not only middle-class homes but institutions like lunatic asylums and prisons tended to be better lit - and, come to that, better warmed - long before England's stateliest homes were.



Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.





August 21, 2011

Jon Stewart Skewers Media Bias Against Libertarian Ron Paul








The hilarious (but also seriously sad) clip above is embedded from the Mon., August 15, 2011 "The Daily Show with Jon Stewart."

(Note: I thank Deirdre McCloskey for letting me know about the clip.)





August 20, 2011

Cougar Dies in Connecticut Three Months AFTER Government Declares It Extinct




(p. A19) Boulder, Colo.

You have to admit, the cat had moxie.

The 140-pound cougar that was spotted last month among the estates of Greenwich -- and was later struck and killed on the Wilbur Cross Parkway -- has been the talk of southern Connecticut. New England, along with most of the Eastern United States, hasn't been cougar country since the 19th century, when the animals were exterminated by a killing campaign that started in colonial times. So where had this cougar come from?

Now we know the answer, and it couldn't be more astonishing. Wildlife officials, who at first assumed the cat was a captive animal that had escaped its owners, examined its DNA and concluded that it was a wild cougar from the Black Hills of South Dakota. It had wandered at least 1,500 miles before meeting its end at the front of an S.U.V. in Connecticut. That is one impressive walkabout.

You have to appreciate this cat's sense of irony, too. The cougar showed up in the East just three months after the Fish and Wildlife Service declared the eastern cougar extinct, a move that would exempt the officially nonexistent subspecies of the big cat from federal protection. Perhaps this red-state cougar traveled east to send a message to Washington: the federal government can make pronouncements about where cougars are not supposed to be found, but a cat's going to go where a cat wants to go.



For the full commentary, see:

DAVID BARON "The Cougar Behind Your Trash Can." The New York Times (Fri., July 29, 2011): A19.

(Note: the online version of the commentary is dated July 28, 2011.)






August 19, 2011

"A Brilliant and Exhilarating and Profoundly Eccentric Book"




DeutschDavid2011-08-14.jpg







"David Deutsch." Source of caption and photo: online version of the NYT review quoted and cited below.




(p. 16) David Deutsch's "Beginning of Infinity" is a brilliant and exhilarating and profoundly eccentric book. It's about everything: art, science, philosophy, history, politics, evil, death, the future, infinity, bugs, thumbs, what have you. And the business of giving it anything like the attention it deserves, in the small space allotted here, is out of the question. But I will do what I can.


. . .


The thought to which Deutsch's conversation most often returns is that the European Enlightenment of the 17th and 18th centuries, or something like it, may turn out to have been the pivotal event not merely of the history of the West, or of human beings, or of the earth, but (literally, physically) of the universe as a whole.


. . .


(p. 17) Deutsch's enthusiasm for the scientific and technological transformation of the totality of existence naturally brings with it a radical impatience with the pieties of environmentalism, and cultural relativism, and even procedural democracy -- and this is sometimes exhilarating and sometimes creepy. He attacks these pieties, with spectacular clarity and intelligence, as small-­minded and cowardly and boring. The metaphor of the earth as a spaceship or life-­support system, he writes, "is quite perverse. . . . To the extent that we are on a 'spaceship,' we have never merely been its passengers, nor (as is often said) its stewards, nor even its maintenance crew: we are its designers and builders. Before the designs created by humans, it was not a vehicle, but only a heap of dangerous raw materials." But it's hard to get to the end of this book without feeling that Deutsch is too little moved by actual contemporary human suffering. What moves him is the grand Darwinian competition among ideas. What he adores, what he is convinced contains the salvation of the world, is, in every sense of the word, The Market.



For the full review, see:

DAVID ALBERT. "Explaining it All: David Deutsch Offers Views on Everything from Subatomic Particles to the Shaping of the Universe Itself." The New York Times Book Review (Sun., August 14, 2011): 16-17.

(Note: ellipses between paragraphs added; ellipsis in Deutsch quote in original.)

(Note: the online version of the review is dated August 12, 2011 and has the title "Explaining it All: How We Became the Center of the Universe.")


Book under review:

Deutsch, David. The Beginning of Infinity: Explanations That Transform the World. New York: Viking Adult, 2011.





August 18, 2011

"How Painfully Dim the World Was before Electricity"





(p. 112) We forget just how painfully dim the world was before electricity. A candle - a good candle - provides barely a hundredth of the illumination of a single 100-watt light bulb. Open your refrigerator door and you summon forth more light than the total amount enjoyed by most households in the eighteenth century. The world at night for much of history was a very dark place indeed.


Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.





August 17, 2011

A Case for Epistemic and Technological Optimism




BeginningOfInfinityBK2011-08-07.jpg
















Source of book image: http://us.penguingroup.com/static/covers/all/5/5/9780670022755H.jpg



Horgan is well-known for writing a pessimistic book about the future of science. For him to write such a positive review of a book that reaches the opposite conclusion, is impressive (both about him and the book he is reviewing).

From Horgan's review and the reviews on Amazon as of 8/7/11, I view the Deutsch book as potentially important and profound. (I will write more when I have read it.)




(p. 17) . . . Mr. Deutsch knocks my 1996 book, "The End of Science," for proposing that the glory days of science--especially pure science, the effort to map out and understand reality--may be over. Mr. Deutsch equates my thesis with "dogmatism, stagnation and tyranny," all of which, for the record, I oppose. But he makes the case for infinite progress with such passion, imagination and quirky brilliance that I couldn't help enjoying his argument. More often than not I found myself agreeing with him--or at least hoping that he is right.


. . .


If we acknowledge our imperfections, Mr. Deutsch observes, then, paradoxically, there is no problem that we cannot tackle. Death, for instance. Or the apparent incompatibility between the two pillars of modern physics, quantum theory and general relativity. Or global warming, which Mr. Deutsch believes we can overcome through innovation rather than drastic cutbacks in consumption. He gores the sacred cow of "sustainability": Societies are healthiest, he declares, not when they achieve equilibrium but when they are rapidly evolving.



For the full review, see:

JOHN HORGAN. "BOOKSHELF; To Err Is Progress; How to foster the growth of scientific knowledge: accept that it is limited no matter how definitive it may seem." The Wall Street Journal (Weds., JULY 20, 2011): A17.

(Note: ellipses added.)


Source information on book under review:

Deutsch, David. The Beginning of Infinity: Explanations That Transform the World. New York: Viking Adult, 2011.






August 16, 2011

Chinese Government High-Speed Trains Are Financial "Black Holes"




(p. A11) BEIJING-A high-speed train from Beijing is scheduled to glide into Shanghai's Hongqiao railway station on Thursday after its inaugural run, an event meant to showcase China's technological prowess but one that lately has become part of a national debate about the pitfalls of megainvestment projects.


. . .


Detractors focus on corruption and safety problems that have lately tarnished the project's image. Pricey tickets, they say, underscore China's already huge rich-poor gap--and doom the trains to run half-empty, straining the national budget for years to come.


. . .


"Physically, they are good assets," says Ding Yuan, an accounting professor at China Europe International Business School in Shanghai. "Financially, they are all black holes."

More broadly, the high-speed rail problems underscore the shortcomings of a growth strategy that depends ever more heavily on investment in projects whose economic payoffs are uncertain.


. . .


Railways Minister Liu Zhijun proselytized for high-speed rail, telling leaders from Hubei province in January that they needed to "seize the rare opportunity to accelerate the development of the railway," according to a Railways Ministry report.


. . .


Government spending on rail projects ballooned from 155 billion yuan in 2006 ($24 billion) to a budgeted 745 billion yuan ($115 billion) in 2011, according to state-run Xinhua news agency. The ministry's debt ballooned to about 5% of GDP in the first quarter of 2011 from about 2% in 2007.

The project's flaws became painfully clear in February, when Mr. Liu was fired amid allegations that he embezzled around $30 million. Although government investigators didn't cite criticisms of the railway project, Mr. Liu's successor, Sheng Guangzu, has scaled back plans to focus on projects already under construction, rather than expansion. Railway consultants say work has been suspended on new lines, including Hubei projects the fired minister was pushing.



For the full story, see:

BRIAN SPEGELE and BOB DAVIS. "High-Speed Train Links Beijing, Shanghai; Cornerstone of China's Rail Expansion Illustrates Megaprojects' Speed Bumps." The Wall Street Journal (Weds., JUNE 29, 2011): A11.

(Note: ellipses added.)





August 15, 2011

Krugman's Ultimate Keynesian Solution to Economic Crisis: Pretend Space Aliens Are Invading










I was watching economists Kenneth Rogoff and Paul Krugman being interviewed by Fareed Xakaria on the CNN show "Fareed Zakaria GPS" in the late morning on Sunday, August 14, 2011. I started laughing when I heard Krugman suggest that a perfectly acceptable Keynesian solution to the economic crisis would be for scientists to pretend that space aliens were invading earth. (We then would pull together and get everyone employed.)

What we actually need is less government deception and less government intervention, so that entrepreneurs can go back to creating new products, new businesses, and new jobs.

Here is a transcript of the relevant part of the interview:



Ken Rogoff: Infrastructure spending, if it were well-spent, that's great. I'm all for that. I'd borrow for that, assuming we're not paying Boston Big Dig kind of prices for the infrastructure.

Fareed Zakaria: But even if you were, wouldn't John Maynard Keynes say that if you could employ people to dig a ditch and then fill it up again, that's fine, they're being productively employed, they'll pay taxes, so maybe Boston's Big Dig was just fine after all.

Paul Krugman: Think about World War II, right? That was actually negative social product spending, and yet it brought us out.

I mean, probably because you want to put these things together, if we say, "Look, we could use some inflation." Ken and I are both saying that, which is, of course, anathema to a lot of people in Washington but is, in fact, what basic logic says.

It's very hard to get inflation in a depressed economy. But if you had a program of government spending plus an expansionary policy by the Fed, you could get that. So, if you think about using all of these things together, you could accomplish a great deal.

If we discovered that space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better -

Ken Rogoff: And we need Orson Welles, is what you're saying.

Paul Krugman: No, there was a Twilight Zone episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time...we need it in order to get some fiscal stimulus.




Source of embedded clip and transcipt: "GPS this Sunday: Krugman calls for space aliens to fix U.S. economy?" posted August 12, 2011, 2:09 PM; aired Sunday, August 14, 2011. URL: http://globalpublicsquare.blogs.cnn.com/2011/08/12/gps-this-sunday-krugman-calls-for-space-aliens-to-fix-u-s-economy/




(Note: bold in original; the ellipsis in the final paragraph is in the original CNN transcript. Here is a transcipt of the final paragraph without the ellipsis: "KRUGMAN: No, there was a "Twilight Zone" episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time, we don't need it, we need it in order to get some fiscal stimulus." The source of this transcript is the News Busters blog at:
http://www.newsbusters.org/blogs/noel-sheppard/2011/08/14/paul-krugman-calls-space-aliens-attack-earth-requiring-massive-defens#ixzz1V1xydNu6 )

(Note: Commenting on the CNN blog entry, "Wild Bill" suggested that the source for Krugman's policy advice was not an episode in the "Twilight Zone" series, as Krugman had said, but the "Architects of Fear" episode that aired in 1963 on the "Outer Limits" series. In spite of this error, "Wild Bill" maintains that the "dude is still a flippin' genius.")





August 14, 2011

Inventor of Mason Jar Died Poor, Alone and Forgotten





(p. 74) In 1859 an American named John Landis Mason solved the challenge that the Frenchman François (or Nicolas) Appert had not quite mastered the better part of a century before. Mason patented the threaded glass jar with a metal screw-on lid. This provided a perfect seal and made it possible to preserve all kinds of foods that would previously spoil. The Mason jar became a huge hit everywhere, though Mason himself scarcely benefited from it. He sold the rights in it for a modest sum, then turned his attention to other inventions - a folding life raft, a case for keeping cigars fresh, a selfdraining soap dish - that he assumed would make him rich, but his other inventions not only weren't successful, they weren't even very good. As one after another failed, Mason withdrew into a semidemented poverty. He died alone and forgotten in a New York City tenement house in 1902.


Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.





August 13, 2011

Consumption Is More Equal Than Income




HowAmericansSpendTheirMoneyChart2011-08-03.gifSource of graph: online version of the NYT commentary quoted and cited below.




Income inequality is widely derided. But inequality in consumption is more meaningful than inequality in income. The wonderful graph above, and the commentary quoted below, show that consumption per person is much more equal than the usually-used income per household.

(Click on the graph to pop up a larger version that is easier to read.)


(p. 14) It's true that the share of national income going to the richest 20 percent of households rose from 43.6 percent in 1975 to 49.6 percent in 2006, the most recent year for which the Bureau of Labor Statistics has complete data. Meanwhile, families in the lowest fifth saw their piece of the pie fall from 4.3 percent to 3.3 percent.

Income statistics, however, don't tell the whole story of Americans' living standards. Looking at a far more direct measure of American families' economic status -- household consumption -- indicates that the gap between rich and poor is far less than most assume, and that the abstract, income-based way in which we measure the so-called poverty rate no longer applies to our society.



For the full commentary, see:

Cox, W. Michael, and Richard Alm. "You Are What You Spend." The New York Times, Week in Review (Sun., February 10, 2008): 14.





August 12, 2011

Chinese Local Governments Hold Bad Infrastructure Debt




(p. C14) There is no such thing as a free stimulus.

At first sight, China's response to the financial crisis looked cheap. A fiscal deficit totaling 3.1% of gross domestic product in 2009 and 2.6% in 2010 compares with 12.7% and 10.6% in the U.S. The reality is that it was considerably more expensive than that.

China's response to the crisis came primarily from bank loans rather than central government debt. With many of those loans now threatening to turn bad, the cost may still end up on the government's balance sheet.

The heart of the problem is debt taken on by local government financing vehicles in the course of two years of huge infrastructure investment. These are entities created and backed by local governments to get around legal constraints on their borrowing. No one knows how much debt they have.



For the full story, see:

TOM ORLIK. "Post-Stimulus: Who Pays for China's Bad Loans?" The Wall Street Journal (Thurs., June 23, 2011): C14.





August 11, 2011

"The Government Wants to Decide What We Eat"




PuddingBannedDenmark2011-07-19.jpg "A rule against selling food with added vitamins and minerals, like canned pudding, prompted the removal of several popular products from Abigail's, a shop in Copenhagen." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A6) COPENHAGEN -- For the last seven years, Marianne Orum has owned a narrow store in a charming street in the heart of this Danish capital.

A sign advertises "British and South African Food and Drink."

The shelves are lined with products familiar to most Americans, like Betty Crocker Pancake Mix, but also more exotic items, like Heinz's Taste of Home Delightful Spotted Dick Pudding in cans, and bottles of Harviestoun Old Engine Oil porter.

But in January Ms. Orum got a phone call from government food inspectors. Tipped off by a competitor, they told her she was selling products that were fortified with vitamins or minerals, and such products require government approval, which she did not have, so she would have to take them off the shelves.

The culprits were Ovaltine; a shredded wheat cereal called Shreddies; a malt drink called Horlicks; and Marmite, the curiously popular yeast byproduct that functions in England as a sandwich spread, snack or base for a soup (just add boiling water), and is sometimes known as tar-in-the-jar.

"That's four products in one go," said Ms. Orum, clearly angered. "That's a lot for a small company."

Application for approval, she said, costs almost $1,700 per product, and time for approval can run up to six months or more; the fee is not refunded if the product is rejected.

"It's a strange thing, this attitude in Denmark," she said, in a tone of exasperation. "The government wants to decide what we eat and not."



For the full story, see:

JOHN TAGLIABUE. "COPENHAGEN JOURNAL; Extra Vitamins? A Great Idea, Except in Denmark." The New York Times (Fri., June 17, 2011): A6.

(Note: the online version of the story was dated June 16, 2011.)






August 10, 2011

In Britain Ice Is Often Dispensed "as if It Were on Prescription"





(p. 73) In England, Wenham ice was more talked about than used. A few businesses took regular deliveries, but hardly any households (other than the royal one) did. By the 1850s not only was most ice sold in Britain not from Wenham, it wasn't from America at all. The Norwegians - not a people one normally associates with sharp practices - changed the name of Lake Oppegaard, near Oslo, to Lake Wenham so that they could tap into the lucrative market. By the 1850s most ice sold in Britain was in fact Norwegian, though it has to be said that ice never really caught on with the British. Even now, it is still often dispensed there as if it were on prescription. The real market, it turned out, was in America itself.


Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.





August 9, 2011

Fannie Mae Execs "Resorted to Ad Hominem Attacks" When They Vilified the "Economic Pencil Brains"




RecklessEndangermentBK.jpg













Source of book image: online version of the NYT review quoted and cited below.






(p. C6) Although the financial crisis of 2008 has left a long trail of casualties, one group has benefited from the cataclysm: financial journalists. Several have already published books shedding light on the unprecedented events that caused investment banks to fail, global stock markets to plummet and borrowers to lose their homes. "Reckless Endangerment," by Gretchen Morgenson, assistant business and financial editor and a columnist at The New York Times, and the financial analyst Joshua Rosner, is a worthy addition to the genre.


. . .


The book begins in 1994 with President Bill Clinton's kicking off a public-private partnership to extend homeownership to more Americans. . . .


. . .


. . . the institution to which the authors devote the most ink is Fannie Mae, the government-supported enterprise created in 1938 to make home loans more accessible. And the person they hold most accountable is someone whose role in the "mortgage maelstrom" has until now "escaped scrutiny": James A. Johnson, Fannie Mae's chief executive from 1991 to 1998. Mr. Johnson was the "anonymous architect of the public-private homeownership drive that almost destroyed the economy in 2008," the authors assert. "He was especially adept at manipulating lawmakers, eviscerating regulators and leaving taxpayers with the bill."

The description of Mr. Johnson's role is damning -- and although the account lacks his perspective, it is thoroughly supported through scores of interviews with academics, government officials and industry executives, some of whom are granted anonymity. While Mr. Johnson didn't respond to interview requests over five months, according to the authors, they overcome this obstacle with impressive use of public records and secondary sources, carefully attributed in the text or described in a two-page "Notes on Sources."


. . .


A particular strength of this book is the number of doubters the authors unearthed: the unsung government analysts, public lawyers and private researchers who dared to question policy decisions and stand up to the formidable "housers," as the true believers in government subsidies for home ownership are called.

The reader has a sickening sense of missed opportunity as these prophets are ignored or, worse, vilified, by those in a position to halt the mania. When a Congressional Budget Office researcher in 1995 reveals the multibillion-dollar extent of the government's subsidy to Fannie Mae and its brother institution, Freddie Mac (and that one-third of these benefits never reached borrowers), he suggests that "Congress may want to revisit the special relationship." Unable to assail the merits of his analysis, outraged Fannie Mae executives resorted to ad hominem attacks, calling budget office officials "digit-heads" and "economic pencil brains."



For the full review, see:

PAM LUECKE. "BOOKS OF THE TIMES; Nation Goes on Its Merry Way to Ruin." The New York Times (Tues., June 28, 2011): C6.

(Note: the online version of the review was dated June 27, 2011.)

(Note: ellipses added.)


Book being reviewed:

Morgenson, Gretchen, and Joshua Rosner. Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon. New York: Times Books, 2011.






August 8, 2011

Much of U.S. Job Gains Are in Texas




(p. 1A) While the nation's job growth has limped along since the economic recovery began two years ago, the Lone Star State is enlarging payrolls in Texas-size fashion.

From June 2009 to June 2011 the state added 262,000 jobs, or half the USA's 524,000 payroll gains, according to the Federal Reserve Bank of Dallas and the Bureau of Labor Statistics. Even by a more conservative estimate that omits states with net job losses, Texas' advances make up 30% of the 1 million additions in the 34 states with net growth.



For the full story, see:

Paul Davidson. "Need a Job? Move to Texas." USA Today (Tues., JULY 20, 2011): 1A.

(Note: the online version of the article has the title "Texas bucks national unemployment trend.")





August 7, 2011

Theft of Elderly Woman's Air Conditioner Called "Murder"








Source of the "murder" quote is from:

J.D. Miles, reporter. "Elderly Woman Dies From Heat After A/C Stolen." Dallas, CBS 11 News, August 5, 2011.

(Note: this report is the source of the "murder" quote which was stated by Mrs. Grissom's neighbor Caroline Ware.)

(Note: Another version of the report with the "murder" quote has the title: "Texas Heat Wave." CBS 11 News, August 5, 2011.)




Another report on the incident is:





Source:

Ed Lavandera, reporter. "Woman Dies After Air Conditioner Stolen." CNN American Morning, August 5, 2011.






August 6, 2011

Entrepreneur Frederic Tudor Spent Family Fortune to Make Ice Obsession a Business Success




(p. 71) Lake ice was a marvelous product. It created itself at no cost to the producer, was clean, renewable, and infinite in supply. The only drawbacks were that there was no infrastructure to produce and store it, and no market to sell it to. In order to make the ice industry exist, it was necessary to work out ways to cut and lift ice on a large scale, build storehouses, secure trading rights, and engage a reliable chain of shippers and agents (p. 72) and, above all, create a demand for ice in places where ice had seldom or never been seen, and was most assuredly not something anyone was predisposed to pay for. The man who did all this was a Bostonian of good birth and challenging disposition named Frederic Tudor. Making ice a commercial proposition became his overweening obsession.

The notion of shipping ice from New England to distant ports was considered completely mad - 'the vagary of a disordered brain', in the words of one of his contemporaries. The first shipment of ice to Britain so puzzled customs officials as to how to classify it that all 300 tons of it melted away before it could be moved off the docks. Shipowners were highly reluctant to accept it as cargo. They didn't relish the humiliation of arriving in a port with a holdful of useless water, but they were also wary of the very real danger of tons of shifting ice and sloshing melt-water making their ships unstable. These were men, after all, whose nautical instincts were based entirely on the idea of keeping water outside the ship, so they were loath to take on such an eccentric risk when there wasn't even a certain market at the end of it all.

Tudor was a strange and difficult man - 'imperious, vain, contemptuous of competitors and implacable to enemies', in the estimation of Daniel J. Boorstin. He alienated all his closest friends and betrayed the trust of colleagues, almost as if that were his life's ambition. Nearly all the technological innovations that made the ice trade possible were actually the work of his retiring, compliant, long-suffering associate Nathaniel Wyeth. It cost Tudor years of frustrated endeavour, and all of his family fortune, to get the ice business up and running, but gradually it caught on and eventually it made him and many others rich. For several decades, ice was America's second biggest crop, measured by weight. If securely insulated, ice could last a surprisingly long while. It could even survive the 16,000-mile, 130-day trip from Boston to Bombay - or at least about two-thirds of it could, enough to make the long trip profitable. Ice went to the furthest corners of South America and from New England to California via Cape Horn. Sawdust, a product previously without any value at all, proved to be an excellent insulator, providing useful extra income for Maine lumber mills.



Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.





August 5, 2011

Banker Rhodes Saved Murdoch from Bankruptcy




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Source of book image: online version of the WSJ review quoted and cited below.







(p. A13) In "Banker to the World," Mr. Rhodes tries to distil the "leadership lessons" he has learned from his remarkable career on the "front lines of global finance."


. . .


. . . , Mr. Rhodes does succeed in hammering home three lessons that we need to take to heart if we are to have any chance of navigating the troubled waters that lie ahead. The first is that there is no substitute for the human touch: For all banking's bells and whistles today, it is much the same business it was in Florentine Italy. Consider one of Mr. Rhodes's greatest exploits: coordinating the rescue of Rupert Murdoch's News Corp. from bankruptcy in 1990. Mr. Rhodes was worried that the collapse of Mr. Murdoch's heavily-indebted media empire would tip the world economy back into recession. But he decided to bet on Mr. Murdoch only after the two had sat down for a three-hour heart-to-heart over dinner in New York.



For the full review, see:

ADRIAN WOOLDRIDGE. "BOOKSHELF; A Conspiracy of Hunches; A rare master of both the financial and political realms reports on what a half-century of experience taught him." The Wall Street Journal (Weds., June 8, 2011): A15.

(Note: ellipsis added.)

(Note: online version of article had the date JULY 13, 2011.)


Book being reviewed:

Rhodes, William R. Banker to the World: Leadership Lessons from the Front Lines of Global Finance. New York: McGraw-Hill, 2011.





August 4, 2011

Robert Lucas Sees Lower Growth Due to Too Much Regulation and Taxes




(p. A15) Robert Lucas, the 1995 Nobel laureate in economics, has spent his career thinking about why economies grow, and in particular about the effect of policy making on growth. From his office at the University of Chicago, Prof. Lucas has been wondering, like the rest of us, why, if the recession officially ended in the first half of 2009, there hasn't been more growth in the U.S. economy. He's also been wondering why this delayed recovery resembles the long non-recovery years of the 1930s. And he has been thinking about the U.S. and Europe.

In May, Bob Lucas pulled his thoughts together and delivered them as the Milliman Lecture at the University of Washington, an exercise he described to me this week as "intelligent speculation."

Here is the lecture's provocative final thought: "Is it possible that by imitating European policies on labor markets, welfare and taxes, the U.S. has chosen a new, lower GDP trend? If so, it may be that the weak recovery we have had so far is all the recovery we will get."


. . .


"If we're going to move to a European welfare state," says Prof. Lucas, "we're going to have to pay a European price." And that price could be a permanently lower level of GDP per person. The U.S.'s amazing 100-year ride would slow.

Among the many things any such drop in GDP will siphon away is America's relentless productive vitality. "So much new happens in the United States," Prof. Lucas says. But will it still?



For the full commentary, see:

DANIEL HENNINGER. "The Disappearing Recovery; What if the weak recovery is all the recovery we are going to get?" The Wall Street Journal (Thurs., JULY 14, 2011): A15.

(Note: ellipsis added.)

(Note: online version of article had the date JULY 13, 2011.)






August 3, 2011

To Succeed in the Car Business, It Helps if You Care about Cars




CarGuysBK.jpg














Source of book image: online version of the WSJ review quoted and cited below.







(p. B1) . . . , General Motors embarked on a series of initiatives to overcome both the perception and reality of the growing import threat. The 1950s and '60s marked the decline of the "product guy" at GM and the ascendancy of "professional management," often individuals with a strong financial background.

It's not that senior GM management disliked cars. It was more an atmosphere of "benign neglect," a generalized consensus that we were, after all, primarily in the business of making money, and cars were merely a transitory form of money: put a certain quantity in at the front end, transform it into vehicles, and sell them for more money at the other (p. B12) end. The company cared about "the other two ends"--minimizing cost and maximizing revenue--but assumed that customer desire for the product was a given.

Responsibility for creation of the right product was delegated to lower levels in the organization, often to people with little understanding of quality design or great driving characteristics. I maintain that without a passionate focus on great products from the top of the company on down, the "low cost" part will be assured but the "high revenue" part won't happen, just as it didn't at GM for so many years.



For the full excerpt, see:

Bob Lutz. "Japan's Advantage and How the Cadillac Lost Its Shine." The Wall Street Journal (Mon., JUNE 13, 2011): B1 & B12.

(Note: ellipsis added.)


The excerpt is excerpted from:

Lutz, Bob. Car Guys Vs. Bean Counters: The Battle for the Soul of American Business. New York: Portfolio, 2011.





August 2, 2011

Refuting Claims of Bread Adulteration





(p. 67) . . . : The Nature of Bread, Honestly and Dishonestly Made, by Joseph Manning, M.D., . . . reported that it was common for bakers to add bean meal, chalk, white lead, slaked lime, and bone ash to every loaf they made.

These assertions are routinely reported as fact, even though it was demonstrated pretty conclusively over seventy years ago by Frederick A. Filby, in his classic work Food Adulteration (1934), that the claims could not possibly be true. Filby took the interesting and obvious step of baking loaves of bread using the accused adulterants in the manner and proportions described. In every case but one the bread was either as hard as (p. 68) concrete or failed to set at all, and nearly all the loaves smelled or tasted disgusting. Several needed more baking time than conventional loaves and so were actually more expensive to produce. Not one of the adulterated loaves was edible.




Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

(Note: ellipses added; italics in original.)





August 1, 2011

Ralph Nader Blasts Cisco for NOT Maximizing Shareholder Value




(p. C1) Ralph Nader, the scourge of American business and onetime presidential candidate, has found his next corporate demon: Cisco Systems Inc.

Mr. Nader isn't calling for a router recall or claiming the company's networks are unsafe at any speed. Instead, he wants the tech company to pay a bigger dividend to boost its shares.

The consumer advocate's motives are far from altruistic. He is a longtime disgruntled Cisco investor who called the company's share performance "appalling." In a private letter to Cisco Chief Executive John Chambers sent June 13, Mr. Nader blasted the CEO for not doing enough to lift shares of the technology company and said "it is time for a long overdue Cisco shareholder revolt against a management that is oblivious to building or even maintaining shareholder value," according to the letter.


. . .


The 77-year-old Mr. Nader, who rose to fame in the 1960s on his claims that American automobiles were unsafe, admitted the letter is a departure from his typical antibusiness stance. He said he has been an "adversary of corporate capitalism," but he is a believer in capitalism, so long as shareholders have a voice. He wrote the letter to Mr. Chambers, he said, because he objects to the "powerlessness of owner shareholders."



For the full story, see:

SUSAN PULLIAM. "Nader Kindles Fires of Revolt." The Wall Street Journal (Fri., JUNE 24, 2011): C1-C2.

(Note: ellipsis added.)






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