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January 31, 2012

Is "The Replicator" the Personal Fabricator of Gershenfeld's Dreams?




Replicator3Dprinter2012-01-28.jpgThe Replicator 3-D printer. Source of photo: online version of the NYT article quoted and cited below.



Back in 2005 technology "visionary" Neil Gershenfeld predicted the soon to be seen day when personal fabricators would follow the path of computers which progressed from mainframes costing millions to mini-computers costing hundreds of thousands to personal computers costing a couple of thousand. Well apparently that day is here.

Now we will see if the implications are as far-reaching as Gershenfeld predicted.



(p. B7) By now you may have heard about the Replicator, a $1,750 3-D printer made by the Brooklyn start-up MakerBot, due next month. If not, the significance of the Replicator is that it is the first 3-D printer to break the $2,000 barrier. Here's more about what the Replicator can and can't do.

Q. What does a 3-D printer use?
A: Spools of coiled A.B.S. (acrylonitrile butadiene styrene) plastic that costs about $45 each per kilogram. This is the same materials that is used to make Lego blocks. It is strong, safe and comes in many colors. One spool can make about 176 chess pieces.



For the full story, see:

WARREN BUCKLEITNER. "Gadgetwise; A 3-D Printer for Under $2,000: What Can It Do?" The New York Times (Thurs., January 26, 2012): B7.

(Note: bold in original.)

(Note: the online version of the article was dated January 23, 2012, and had the title "3-D Printing for the Masses: MakerBot's Replicator." The online version differs in several places from the print version. Where they differ, I quote the print version.)



The Gershenfeld book discussed above is:

Gershenfeld, Neil. Fab: The Coming Revolution on Your Desktop--from Personal Computers to Personal Fabrication. New York: Basic Books, 2005.






January 30, 2012

Creative Destruction Creates as Many New Jobs as It Destroys




(p. 113) It was Joseph Schumpeter who pointed out that the competition which keeps a businessman awake at night is not that from his rivals cutting prices, but that of entrepreneurs making (p. 114) his product obsolete. As Kodak and Fuji slugged it out for dominance in the 35mm film industry in the 1990s, digital photography began to extinguish the entire market for analogue film - as analogue records and analogue video cassettes had gone before. Creative destruction, Schumpeter called it. His point was that there is just as much creation going on as destruction - that the growth of digital photography would create as many jobs in the long run as were lost in analogue, or that the savings pocketed by a Wal-Mart customer are soon spent on other things, leading to the opening of new stores to service those new demands. In America, roughly 15 per cent of jobs are destroyed every year; and roughly 15 per cent created.


Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.





January 29, 2012

First Human Tools 1.76 Million Years Ago




ToolsOldestYet2012-01-21.jpg














"A study dates human tools like this ax to 1.76 million years ago."






(p. A8) A new geological study, being reported Thursday in the journal Nature, showed that tools from a site near Lake Turkana in Kenya were made about 1.76 million years ago, the earliest of their ilk found so far. Previous dates were estimates ranging from 1.4 million to 1.6 million years ago.

Although no erectus fossils were found with the Turkana tools, a skull of that species was excavated last year in the same sediment level across the lake. This suggests that Homo erectus was responsible for these particular tools, which were made with what scientists refer to as Acheulean technology. The term connotes the type of oval and pear-shaped hand axes and other implements that were a specialty of early humans.



For the full story, see:

JOHN NOBLE WILFORD. "Earliest Signs of Advanced Tools Found." The New York Times (Thurs., September 1, 2011): A8.

(Note: ellipsis added.)

(Note: the online version of the article was dated August 31, 2011.)





January 28, 2012

More Options Can Result in Focus on Quality Instead of Choice Paralysis




(p. C4) Much of the research on decision-making focuses on the "choice paralysis" commonly thought to result from having too many options. But new research suggests that instead of being a debilitating factor, having many options actually sharpens our focus on quality.


For the full summary, see:

DAVID DISALVO. "Commerce; Choosing the Very Best." The Wall Street Journal (Sat., August 20, 2011): C4.


The paper summarized is:

Bertini, Marco, Luc Wathieu, and Sheena S. Sethi-Iyengar. "The Discriminating Consumer: Product Proliferation and Willingness to Pay for Quality." SSRN eLibrary (2010).





January 27, 2012

Intuit Aimed to End Hassle and Was Mainly Self-Financed at Start




CookScottIntuitCoFounder2012-01-21.jpg














"Scott Cook." Source of caption and photo: online version of the WSJ article quoted and cited below.





(p. B4) WSJ: Before building Intuit, you worked at large firms like Procter & Gamble Co. and Bain & Co. What prompted you to leave Corporate America and start your own business?

Mr. Cook: My wife complained about doing the bills. It was a hassle. I had been trained at P&G to find a problem that everybody has and that you could solve with technology. And this struck me as a classic entrepreneurial opportunity. Nobody likes to pay bills. There were about 20-plus personal-finance software products already on the market.


. . .


WSJ: How much start-up capital did have to work with?

Mr. Cook: We raised between $500,000 and $600,000. It came from my savings and my retirement plan that I cashed out. I also borrowed money from my parents. Lines of credit were another big source of capital. The banks were lending to me and my wife as a couple, not the business. We tried venture capital and that failed. We talked to about two dozen venture-capital firms and they all shut us down. We did get two angels to invest, but they put in only $151,000, total.



For the full interview, see:

SARAH E. NEEDLEMAN. "HOW I BUILT IT; For Intuit Co-Founder, the Numbers Add Up" The Wall Street Journal (Thurs., AUGUST 18, 2011): B4.

(Note: ellipsis added.)





January 26, 2012

Paleolithic Homo Sapiens Engaged in Long Distance Trade




(p. 71) At Mezherich, in what is now Ukraine, 18,000 years ago, jewellery made of shells from the Black Sea and amber from the Baltic implied trade over hundreds of miles.

This is in striking contrast to the Neanderthals, whose stone tools were virtually always made from raw material available within an hour's walk of where the tool was used.



Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.





January 25, 2012

Vaclav Havel Fought for Freedom




HavelVaclavMourningWenceslasSquare2012-01-21.jpg"Mourning; Thousands gathered on Sunday in Wenceslas Square in Prague, some under a Czech national flag, to marke the death of Vaclav Havel." Source of caption: print version of the NYT obituary quoted and cited below. Source of photo: http://4.bp.blogspot.com/-PGUPpCvWzRQ/Tu9C59lXdJI/AAAAAAAAAEQ/0lcI7EfO8P4/s1600/Vaclav%2BHavel%2B3.jpg [The photo appeared on p. A10 of the print version of the obituary, but was not included with the online version.]


(p. A1) Vaclav Havel, the Czech writer and dissident whose eloquent dissections of Communist rule helped to destroy it in revolutions that brought down the Berlin Wall and swept Mr. Havel himself into power, died on Sunday. He was 75.


. . .


A shy yet resilient, unfailingly polite but dogged man who articulated the power of the powerless, Mr. Havel spent five years in and out of Communist prisons, lived for two decades under close secret-police surveillance and endured the suppression of his plays and essays. He served 14 years as president, wrote 19 plays, inspired a film and a rap song and remained one of his generation's most seductively nonconformist writers.

All the while, Mr. Havel came to personify the soul of the Czech nation.

His moral authority and his moving use of the Czech language cast him as the dominant figure during Prague street demonstrations in 1989 and as the chief behind-the-scenes negotiator who brought about the end of more than 40 years of Communist rule and the peaceful transfer of power known as the Velvet Revolution, a revolt so smooth that it took just weeks to complete, (p. A10) without a single shot fired.


. . .


He never stopped preaching that the fight for political freedom needed to outlive the end of the cold war. He praised the American invasion of Iraq for deposing a dictator, Saddam Hussein.

He continued to worry about what he called "the old European disease" -- "the tendency to make compromises with evil, to close one's eyes to dictatorship, to practice a politics of appeasement."



For the full obituary, see:

DAN BILEFSKY and JANE PERLEZ. "VACLAV HAVEL, 1936-2011; Czechs' Dissident Conscience, Turned President." The New York Times (Mon., December 19, 2011): A1 & A10.

(Note: ellipses added.)

(Note: the online version of the obituary is dated December 18, 2011, and had the title "VACLAV HAVEL, 1936-2011; Vaclav Havel, Former Czech President, Dies at 75.")





January 24, 2012

Personal Risk Lovers Make Better CEOs?




(p. C4) Chief executives with a penchant for personal risk-taking are also corporate risk-takers who take on more debt, aggressively pursue mergers and acquisitions, and make bold equity plays. But, in general, they are also more effective leaders who create more value in their organizations than their less risk-loving counterparts. And they do so, the researchers add, without additional incentives; they imprint their risk-loving natures on their companies because it's simply who they are.


For the full summary, see:

DAVID DISALVO. "Management; For Effective CEOs, Look Up." The Wall Street Journal (Sat., August 20, 2011): C4.



The article summarized is:

Cain, Matthew D., and Stephen B. McKeon. "Cleared for Takeoff? CEO Personal Risk-Taking and Corporate Policies." SSRN eLibrary (2011).





January 23, 2012

California Vegan Defends Freedom to Choose McDonald's




WarehamEllsworthVegan2012-01-21.jpg "Ellsworth Wareham, 97, in Loma Linda, Calif. Mr. Wareham was a heart surgeon who stopped working only two years ago. He is a vegan, but says choice is part of the "great American system."" Source of caption and photo: online version of the NYT article quoted and cited below.



(p. A15) . . . last week, when the City Council approved Loma Linda's first McDonald's restaurant, many residents bemoaned the decision, worrying that the officials were jeopardizing the city's reputation as a paragon of healthy lifestyles.


. . .


. . . , Dr. Rigsby [said] . . . he would support having a citywide vote on whether fast-food outlets should be banned entirely from the city. "If this is something that people are really opposed to, that's how we should deal with it."

What would happen during such a vote is anyone's guess. Ellsworth Wareham, who stopped working as a heart surgeon only two years ago, at 95, is often used as an example of someone with more energy than someone half his age. Dr. Wareham attributes his health at least partly to the fact that he has been a vegan for the last 30 or 40 years (he does not remember precisely).

Eating at home, he said, is the best way to ensure that one is eating healthy food. He is certainly not about to let the impending arrival of McDonald's raise his blood pressure.

"I don't subscribe to the menu that these dear people put out, but let's face it, the average eating place serves food that is, let us say, a little bit of a higher quality, but the end result is the same -- it's unhealthy," he said.

"They can put it right next to the church as far as I am concerned," Dr. Wareham added. "If they choose to eat that way, I'm not going to stop them. That's the great American system."



For the full story, see:

JENNIFER MEDINA. "LOMA LINDA JOURNAL; Fast-Food Outlet Stirs Concerns in a Mecca of Healthy Living." The New York Times (Mon., December 19, 2011): A15.

(Note: ellipses added.)

(Note: the online version of the article is dated December 18, 2011.)






January 22, 2012

Hunter-Gatherers Suffered Violence, Famine and Disease--No Idyllic Golden Age




(p. 44) The warfare death rate of 0.5 per cent of the population per year that was typical of many hunter-gatherer societies would equate to two billion people dying during the twentieth century (instead of 100 million). At a cemetery uncovered at Jebel Sahaba, in Egypt, dating from 14,000 years ago, twenty-four of the fifty-nine bodies had died from unhealed wounds caused by spears, darts and arrows. Forty of these bodies were women or children. Women and children generally do not take part in warfare - but they are (p. 45) frequently the object of the fighting. To be abducted as a sexual prize and see your children killed was almost certainly not a rare female fate in hunter-gatherer society. After Jebel Sahaba, forget the Garden of Eden; think Mad Max.

It was not just warfare that limited population growth. Hunter-gatherers are often vulnerable to famines. Even when food is abundant, it might take so much travelling and trouble to collect enough food that women would not maintain a sufficient surplus to keep themselves fully fertile for more than a few prime years. Infanticide was a common resort in bad times. Nor was disease ever far away: gangrene, tetanus and many kinds of parasite would have been big killers. Did I mention slavery? Common in the Pacific north-west. Wife beating? Routine in Tierra del Fuego. The lack of soap, hot water, bread, books, films, metal, paper, cloth? When you meet one of those people who go so far as to say they would rather have lived in some supposedly more delightful past age, just remind them of the toilet facilities of the Pleistocene, the transport options of Roman emperors or the lice of Versailles.



Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.





January 21, 2012

"Just What Ailments Are Pylos Tablets Supposed to Alleviate?"




LinearBscript2012-01-14.jpg










"Professor Bennett's work opened a window to deciphering tablets written in Linear B, a Bronze Age Aegean script." Source of caption and photo: online version of the NYT obituary quoted and cited below.



(p. 22) Deciphering an ancient script is like cracking a secret code from the past, and the unraveling of Linear B is widely considered one of the most challenging archaeological decipherments of all time, if not the most challenging.


. . .


Linear B recorded the administrative workings of Mycenaean palatial centers on Crete and the Greek mainland 3,000 years ago: accounts of crops harvested, flocks tended, goods manufactured (including furniture, chariots and perfume), preparations for religious feasts and preparations for war.

It was deciphered at last in 1952, not by a scholar but by an obsessed amateur, a young English architect named Michael Ventris. The decipherment made him world famous before his death in an automobile accident in 1956.

As Mr. Ventris had acknowledged, he was deeply guided by Professor Bennett's work, which helped impose much-needed order on the roiling mass of strange, ancient symbols.

In his seminal monograph "The Pylos Tablets" (1951), Professor Bennett published the first definitive list of the signs of Linear B. Compiling such a list is the essential first step in deciphering any unknown script, and it is no mean feat.


. . .


"We know how much Ventris admired Bennett, because he immediately adopted Bennett's sign list of Linear B for his own work before the decipherment," said Mr. Robinson, whose book "The Man Who Deciphered Linear B" (2002) is a biography of Mr. Ventris. "He openly said, 'This is a wonderful piece of work.' "


. . .


As meticulous as Professor Bennett's work was, it once engendered great confusion. In 1951, after he sent Mr. Ventris a copy of his monograph, a grateful Ventris went to the post office to pick it up. As Mr. Robinson's biography recounts, a suspicious official, eyeing the package, asked him: "I see the contents are listed as Pylos Tablets. Now, just what ailments are pylos tablets supposed to alleviate?"



For the full obituary, see:

MARGALIT FOX. "Emmett L. Bennett Jr., Ancient Script Expert, Dies at 93." The New York Times, First Section (Sun., January 1, 2012,): 22.

(Note: ellipses added.)

(Note: the online version of the obituary is dated December 31, 2011, and has the title: "Emmett L. Bennett Jr., Expert on Ancient Script, Dies at 93.")


The book on the amateur, uncredentialed Ventris is:

Robinson, Andrew. The Man Who Deciphered Linear B: The Story of Michael Ventris. London, UK: Thames & Hudson, 2002.



BennettEmmettJr2012-01-14.jpg













"Emmett L. Bennett Jr." Source of caption and photo: online version of the NYT obituary quoted and cited above.







January 20, 2012

Gary Becker Says "Economics Trumps Culture"




At the Chicago American Economic Association (AEA) meetings, I attended an 8 AM session on Sun., Jan. 8, 2012 in honor of the 30 anniversary of Gary Becker's Treatise on the Family. At the end of the session, Becker discussed five issues related to the book.

One of these was the question of whether the features of the family are best understood on the basis of economic issues or cultural issues. He mentioned two examples: the Irish family and the Asian family. In the past it had been claimed that the Irish family would have enduring features due to religion and culture, features such as many children and women who stayed at home. Today, Becker noted, the Irish family looks much like other European families. He then paraphrased Singapore's former ruler Lee Kuan Yew as having claimed in the past that the Asian family is superior to the Western family in its cohesiveness and loyalty. Today, Becker noted, Asian families look much more like Western families. Becker concluded that in the short run cultural factors may dominate, but that in the long run economic factors dominate. He said "Economics trumps culture."

Becker's discussion has broader relevance. One of the issues that I am grappling with in my research and teaching is the extent to which success at entrepreneurial innovation depends on cultural differences and the extent to which it depends on differences in constraints and policies.

If policies matter more, then it is easier to see a clear path toward progress, than if murkier cultural issues matter more.





January 19, 2012

Branson Advises Entrepreneurs: "Think of What Frustrates You"




BransonRichardCaricature2012-01-13.jpg















Source of caricature: online version of the WSJ interview quoted and cited below.





(p. A13) Governments have long dominated space, starting with the Soviet Union's 1957 launch of Sputnik 1. The U.S. soon followed. "If they'd used just a small fraction of that money as prize money and given it to the best commercial companies, that money would've been far better spent," Mr. Branson muses. "The $10 million [Ansari] X Prize very much sparked our move into space travel," he notes, referring to the competition organized by entrepreneur Peter Diamandis and launched in 1996.

Mr. Branson had dreamed of exploring the final frontier for decades. "I think it just simply goes back to watching the moon landing on blurry black-and-white television when I was a teenager and thinking, one day I would go to the moon--and then realizing that governments are not interested in us individuals and creating products that enable us to go into space," he says. In 1995, after making billions of dollars in the music and airline businesses, Mr. Branson registered a new company, Virgin Galactic (the name "sounded good"), at London's Companies House. Then the company started searching for rocket scientists and the right technology.

Several years later, in July 2002, Virgin's team traveled to California to check on American aerospace designer Burt Rutan's progress on the Virgin Atlantic Global Flyer, a plane built "to circumnavigate the globe non-stop on a single tank of fuel," according to Virgin's website. Virgin discovered that Mr. Rutan intended to compete for the X Prize with SpaceShip One, the world's first privately developed spacecraft, financed by Microsoft co-founder Paul Allen.

Mr. Branson quickly struck a deal: Virgin would license Mr. Rutan's SpaceShip One technology from Mr. Allen if he won the competition. In 2004, Mr. Rutan did just that, and Virgin Galactic was off to the races.


. . .


So what advice does Mr. Branson have for aspiring entrepreneurs? "Think of what frustrates you--and if you're frustrated by something and you feel 'Dammit, if only people could do this better,' then go try to do it better yourself. It can start off in a really small way . . . and you'll be surprised: If you're doing it better yourself, in whatever field it is, you'll be filling a gap and you suddenly might start creating a business."



For the full interview, see:

MARY KISSEL. "THE WEEKEND INTERVIEW with Richard Branson; Space: The Next Business Frontier; By next Christmas the airline mogul could be ferrying paying customers outside the atmosphere--and, later, to the bottom of the ocean." The Wall Street Journal (Sat., December 17, 2011): A13.

(Note: ellipsis added.)





January 18, 2012

You Have More Servants than the Sun King




(p. 36) The Sun King had dinner each night alone. He chose from forty dishes, served on gold and silver plate. It took a staggering 498 people to prepare each meal. He was rich because he consumed the work of other people, mainly in the form of their services. He was rich because other people did things for him. At that time, the average French family would have prepared and consumed its own meals as well as paid tax to support his servants in the palace. So it is not hard to conclude that Louis XIV was rich because others were poor.

But what about today? Consider that you are an average person, say a woman of 35, living in, for the sake of argument, Paris and earning the median wage, with a working husband and two children. You are far from poor, but in relative terms, you are immeasurably poorer than Louis was. Where he was the richest of the rich in the world's richest city, you have no servants, no palace, no carriage, no kingdom. As you toil home from work on the crowded Metro, stopping at the shop on the way to buy a ready meal for four, you might be thinking that Louis XIV's dining arrangements were way beyond your reach. And yet consider this. The cornucopia that greets you as you enter the supermarket dwarfs anything that Louis XIV ever experienced (and it is probably less likely to contain salmonella). You can buy a fresh, frozen, tinned, smoked or pre-prepared meal made with beef, chicken, pork, lamb, fish, prawns, scallops, eggs, potatoes, beans, carrots, cabbage, aubergine, kumquats, celeriac, okra, seven kinds of lettuce, cooked in olive, walnut, sunflower or peanut oil and flavoured with cilantro, turmeric, basil or rosemary . . . You may have no chefs, but you can decide (p. 37) on a whim to choose between scores of nearby bistros, or Italian, Chinese, Japanese or Indian restaurants, in each of which a team of skilled chefs is waiting to serve your family at less than an hour's notice. Think of this: never before this generation has the average person been able to afford to have somebody else prepare his meals.

You employ no tailor, but you can browse the internet and instantly order from an almost infinite range of excellent, affordable clothes of cotton, silk, linen, wool and nylon made up for you in factories all over Asia. You have no carriage, but you can buy a ticket which will summon the services of a skilled pilot of a budget airline to fly you to one of hundreds of destinations that Louis never dreamed of seeing. You have no woodcutters to bring you logs for the fire, but the operators of gas rigs in Russia are clamouring to bring you clean central heating. You have no wick-trimming footman, but your light switch gives you the instant and brilliant produce of hardworking people at a grid of distant nuclear power stations. You have no runner to send messages, but even now a repairman is climbing a mobile-phone mast somewhere in the world to make sure it is working properly just in case you need to call that cell. You have no private apothecary, but your local pharmacy supplies you with the handiwork of many thousands of chemists, engineers and logistics experts. You have no government ministers, but diligent reporters are even now standing ready to tell you about a film star's divorce if you will only switch to their channel or log on to their blogs.

My point is that you have far, far more than 498 servants at your immediate beck and call. Of course, unlike the Sun King's servants, these people work for many other people too, but from your perspective what is the difference? That is the magic that exchange and specialisation have wrought for the human species.



Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

(Note: ellipsis in original.)





January 17, 2012

Krim Saw Use for Noisy CK722 Transistors




KrimNorman2012-01-13.jpg








Norman Krim holding some early transistors. He first put transistors into hearing aids. Source of caption and photo: online version of the NYT obituary quoted and cited below.




(p. B11) Mr. Krim, who made several breakthroughs in a long career with the Raytheon Company and who had an early hand in the growth of the RadioShack chain, did not invent the transistor. (Three scientists did, in 1947, at Bell Laboratories.)

But he saw the device's potential and persuaded his company to begin manufacturing it on a mass scale, particularly for use in miniaturized hearing aids that he had designed. Like the old tube, a transistor amplifies audio signals.

As Time magazine wrote in 1953: "This little device, a single speck of germanium, is smaller than a paper clip and works perfectly at one-tenth the power needed by the smallest vacuum tube. Today, much of Raytheon's transistor output goes to America's hearing aid industry." (Germanium, a relatively rare metal, was the predecessor to silicon in transistors.)


. . .


Thousands of hearing-disabled people benefited from Mr. Krim's initial use of the transistor in compact hearing aids. But not every transistor Raytheon made was suitable for them, he found.

"When transistors were first being manufactured by Raytheon on a commercial scale, there was a batch called CK722s that were too noisy for use in hearing aids," said Harry Goldstein, an editor at IEEE Spectrum, the magazine of the Institute of Electrical and Electronics Engineers.

So Mr. Krim contacted editors at magazines like Popular Science and Radio Electronics and began marketing the CK722s to hobbyists.

"The result was that a whole generation of aspiring engineers -- kids, really, working in their garages and basements -- got to make all kinds of electronic projects," Mr. Goldstein said, among them transistor radios, guitar amplifiers, code oscillators, Geiger counters and metal detectors. "A lot of them went on to become engineers."

Mr. Ward called Mr. Krim "the father of the CK722."



For the full obituary, see:

DENNIS HEVESI. "Norman Krim, 98, Dies; Championed the Transistor." The New York Times (Weds, December 21, 2011): B11.

(Note: ellipsis added.)

(Note: the online version of the article is dated December 20, 2011 and has the title "Norman Krim, Who Championed the Transistor, Dies at 98.")





January 16, 2012

What We Eat Affects Our Feelings and Choices?





But since we choose what we eat, we have the power to control how food affects our feelings and choices?


(p. C12) As the neuroscientist Antonio Damasio writes, "The mind is embodied, not just embrained."

The latest evidence comes from a new study of probiotic bacteria, the microorganisms typically found in yogurt and dairy products. While most investigations of probiotics have focused on their gastrointestinal benefits--the bacteria reduce the symptoms of diarrhea and irritable bowel syndrome--this new research explored the effect of probiotics on the brain.

The experiment, led by Javier Bravo at University College Cork in Ireland, was straightforward. First, he fed normal lab mice a diet full of probiotics. Then, Mr. Bravo's team tested for behavioral changes, which were significant: When probiotic-fed animals were put in stressful conditions, such as being dropped into a pool of water, they were less anxious and released less stress hormone.

How did the food induce these changes? The answer involves GABA, a neurotransmitter that reduces the activity of neurons. When Mr. Bravo looked at the brains of the mice, he found that those fed probiotics had more GABA receptors in areas associated with memory and the regulation of emotions. (This change mimics the effects of popular antianxiety medications in humans.)



For the full summary/commentary, see:

JONAH LEHRER. "HEAD CASE; The Yogurt Made Me Do It; There's nothing metaphorical about 'gut feelings'--bacteria influence our minds." The Wall Street Journal (Sat., SEPTEMBER 17, 2011): C12.




The paper summarized is:

Bravo, Javier A., Paul Forsythe, Marianne V. Chew, Emily Escaravage, Hélène M. Savignac, Timothy G. Dinan, John Bienenstock, and John F. Cryan. "Ingestion of Lactobacillus Strain Regulates Emotional Behavior and Central GABA Receptor Expression in a Mouse Via the Vagus Nerve." Proceedings of the National Academy of Sciences (2011).







January 15, 2012

In Supporting Bailouts Buffett Was More Bootlegger than Baptist




ThrowThemAllOutBK.jpg














Source of book image: online version of the Omaha World-Herald review quoted and cited below.




(p. 9A) Peter Schweizer's new book, "Throw Them All Out" (Houghton Mifflin Harcourt, 211 pages, $26) mostly goes after members of Congress for profiting from inside information and making investments that are legal for them but would be illegal for almost anyone else.

But Chapter 6 is titled, "Warren Buffett: Baptist and Bootlegger."

Buffett is neither an actual Baptist nor a bootlegger, of course. Schweizer's reference is to the alliance of churchgoers and illegal marketers of liquor who both favored laws to limit the legal sale of alcohol, although for different reasons.

Schweizer wrote that during the 2008-09 financial crisis, Buffett pushed for government action and called attention to the problems, looking like a noble Baptist, but profited from the bailouts, like a bootlegger, through investments in Goldman Sachs, General Electric, Wells Fargo and other financial companies.

"Buffett needed the bailout," Schweizer wrote. "He began immediately to campaign for the $700 billion TARP rescue plan that was being hammered together in Washington." Several senators, including Ben Nelson, D-Neb., are Berkshire shareholders, Schweizer wrote, "and they had to know that passing the bailout bill would bring big returns for their Berkshire stock."

"There were many legitimate reasons to support the bill, and it can hardly be said that Buffett's support was the deciding factor," Schweizer wrote. "But his Baptist-bootlegger position was noteworthy for its strength in both directions: a lot of people followed his advice, and he and they made (p. 10A) a lot of money by pushing for the bailout. . . .

"Warren Buffett is a financial genius. But even more important for his portfolio, he's a political genius."



For the full story, see:

Steve Jordon. "Warren Watch: Author Says Buffett Is a 'Political Genius'." Omaha World-Herald (Sunday, November 20, 2011): 9A -10A.

(Note: ellipsis in original.)

(Note: the online version of the article has the title "Warren Watch: A 'Political Genius'.")


Steve Jordan is discussing the book:

Schweizer, Peter. Throw Them All Out. New York: Houghton Mifflin Harcourt Trade, 2011.


Bruce Yandle is the former President of APEE and the author of the classic article on how bootleggers and Baptists often become allies in calling for government action:

Yandle, Buce. "Bootleggers and Baptists: The Education of a Regulatory Economist." Regulation 7, no. 3 (1983): 12-16.





January 14, 2012

Diversity of Sources of What We Consume in a Free Market





Matt Ridley's wonderful riff below reminds one of Leonard Read's classic essay "I, Pencil," made even more famous by Milton Friedman's rendition of it.


(p. 35) As I write this, it is nine o'clock in the morning. In the two hours since I got out of bed I have showered in water heated by North Sea gas, shaved using an American razor running on electricity made from British coal, eaten a slice of bread made from French wheat, spread with New Zealand butter and Spanish marmalade, then brewed a cup of tea using leaves grown in Sri Lanka, dressed myself in clothes of Indian cotton and Australian wool, with shoes of Chinese leather and Malaysian rubber, and read a newspaper made from Finnish wood pulp and Chinese ink. I am now sitting at a desk typing on a Thai plastic keyboard (which perhaps began life in an Arab oil well) in order to move electrons through a Korean silicon chip and some wires of Chilean copper to display text on a computer designed and manufactured by an American firm. I have consumed goods and services from dozens of countries already this morning. Actually, I am guessing at the nationalities of some of these items, because it is almost impossible to define some of them as coming from any country, so diverse are their sources.


Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.





January 13, 2012

Indian Middle Class: "The State Is Preventing Me from Doing What I Want to Do"




NagParthoIndianEntrepreneur2011-11-14.jpg"Partho Nag, a childhood friend of Shubhrangshu Roy's who lives in the same New Delhi suburb. Mr. Nag, who runs an IT service company out of his home, joined Mr. Roy and other friends as they volunteered at the Hazare protests. "We've been told since our childhoods, 'Politics is bad, don't get into politics,'" Mr. Nag said. "But the point is that somebody has to clean it up. We can't just scold people."" Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 1) DWARKA, India -- Shubhrangshu Barman Roy and his childhood friends are among the winners in India's economic rise. They have earned graduate degrees, started small companies and settled into India's expanding middle class. They sometimes take vacations together and meet for dinners or parties, maybe to celebrate a new baby or a new business deal.

Yet in August, Mr. Roy and his friends donned white Gandhi caps, boarded a Metro train in this fast-growing suburb of the Indian capital and rode into New Delhi like a band of revolutionaries to join the large anticorruption demonstrations led by the rural activist Anna Hazare. They waved Indian flags, distributed water to the crowds and vented their outrage at India's political status quo.

"I could feel that people really wanted change," Mr. Roy, 36, recalled proudly.

It may seem unlikely that middle-class Indians would crave change. They mostly live in rapidly growing cities and can afford cars, appliances and other conveniences that remain beyond the reach of most Indians. Theirs is the fastest growing demographic group in the country, and their buying power is expected to triple in the next 15 years, making India one of the most important consumer markets in the world.

But buying power is not political power, at least not yet in India. The wealthier India has become, the more politically disillusioned many of the beneficiaries have grown -- an Indian paradox. The middle class has vast economic clout yet often remains politically marginalized in a huge democracy where the rural masses still dominate the outcome of elections and the tycoon class has the ear of politicians.


. . .


(p. 10) "This middle class is less about 'what the state can do for me' than 'the state is preventing me from doing what I want to do,' " said Devesh Kapur, director of the Center for the Advanced Study of India at the University of Pennsylvania.

The Hazare movement rattled India's political establishment because it offered a glimpse of what could happen if the middle class was mobilized across the country. Professionals and college students provided the organizational spine, and money, that brought hundreds of thousands of people of all backgrounds onto the streets in what many described as a political awakening.


. . .


Mr. Roy and his friends, including Mr. Nag, had grown up in New Delhi in the same government housing development. They were all the sons of government bureaucrats who would later offer similar advice: Get a government job.

"He always insisted," Mr. Nag recalled of his father's prodding. "But we had an idea that a government job was too lousy."

They were teenagers in the early 1990s when Indian leaders embarked on the reforms that began dismantling the stifling licensing regulations that had choked the economy. Private enterprise, large and small, would steadily emerge as the engine of Indian growth and the delivery vehicle of growing aspirations. Mr. Nag would open a small IT service firm. Two other friends would start a textile trading company. Mr. Roy would earn graduate degrees and start a consulting firm.


. . .


On a recent afternoon, Mr. Roy pointed to a crude asphalt scar in the road where workers had installed an underground water connection. The scar extended along the road toward Mr. Roy's house, only to abruptly turn left in the direction of another building.

"You see this?" he asked, angrily. "This is a connection that comes here, but it is illegal."

For Mr. Roy, the scar in the street marks the corruption and collusion and the failure of the state to deliver on its end of India's social contract. His family is supposed to get water from a legal connection for $4 a month. Except that water is unusable. For years, his father had paid a fee to fill large jugs from a private water tanker -- until his father slipped while carrying one of them.

Mr. Roy then spent about $1,000 to build an underground water storage tank beside his home. Now, every week a tanker delivers a $30 shipment of water into the tank, while Mr. Roy also buys bottled water for drinking, bringing his monthly bill to about $160. Mr. Roy suspects that local officials, rather than correcting the situation, allow it to continue in exchange for kickbacks from the owners of the private water tankers. In the end, though, he pays.

These tales of petty graft proliferate across India, but especially in cities, analysts say, for the simple reason that cities now have more money.

McKinsey Global Institute, a consulting group, has estimated that India's middle class could grow to nearly 600 million people by 2030. Today, nearly three-quarters of India's gross domestic product comes from cities, where less than a third of India's population lives, an imbalance that correlates with the divide between middle-class economic and political power.

"For politicians, the city has primarily become a site of extraction, and the countryside is predominantly a site of legitimacy and power," Ashutosh Varshney, an India specialist at Brown University, wrote recently. "The countryside is where the vote is; the city is where the money is. Villages do have corruption, but the scale of corruption is vastly greater in cities."



For the full story, see:

JIM YARDLEY. "INDIA'S WAY; Protests Help Awaken a Goliath in India." The New York Times, First Section (Sun., October 30, 2011): 1 & 10.

(Note: ellipses added.)

(Note: the online version of the article is dated October 29, 2011 and has the title "INDIA'S WAY; Protests Awaken a Goliath in India.")





January 12, 2012

AFA Scholars Predict Sovereign Defaults




At the Chicago American Finance Association (AFA) meetings (held in conjunction with the AEA meetings), I attended a panel discussion on Fri., Jan. 6, 2012 on "Sovereign Default." The session was chaired by Simon Johnson, and included Kenneth Singleton and Carmen Reinhart (who has co-authored a much-discussed book on the history of economic crises). (Martin Feldstein was supposed to participate but did not, and I did not catch the name of the scholar who replaced him on the panel).

When asked if they expected multiple countries in Europe to default in the near to medium term, all panel members agreed that such default would happen. (The consensus was that Greece, and at least a couple of other countries, would eventually default---the Euros needed to bail them out were too large, even if the Germans and the ECB changed course and wanted to try.) Before seeing the panel, I was not aware that expert academic opinion was so agreed on this prediction.

There was less certainty about whether this would necessarily lead to the end of the Euro. Reinhart pointed out that even in Greece, where austerity is severe and unpopular, there is currently little popular support for abandoning the Euro.

The panelists seemed to believe that sovereign defaults might lead to slow growth, high taxes and inflation, but might not lead to catastrophe.

Reinhart suggested that Europe, and maybe also the United States and the rest of the world, might just muddle along for an extended period.





January 11, 2012

Gentle Oshman Inspired Loyalty as He Made Work Fun in Silicon Valley




OshmanMKennethSiliconValleyMentor2011-11-14.jpg














"M. Kenneth Oshman" Source of caption and photo: online version of the NYT obituary quoted and cited below.




(p. 19) M. Kenneth Oshman, who helped create one of the early successful technology start-up firms in Silicon Valley, one that embodied the informal management style that came to set the Valley apart from corporate America, died on Saturday in Palo Alto, Calif. He was 71.


. . .


In the 1970s and '80s, Rolm was the best example of an emerging Silicon Valley management style that effectively broke down the barrier between work and play. Setting out to recruit the most talented technical minds, Rolm became known as a great place to work, so much so that it was nicknamed "G.P.W."

Early on as chief executive, Mr. Oshman took funds normally used for company Christmas parties and used them to help construct a company recreational center, consisting of swimming pools, racquetball courts, exercise rooms and other amenities to attract new employees and underline the image that Rolm was a fun place to work.

But there was a tradeoff, said Keith Raffel, who left a staff position on Capitol Hill to become an assistant to Mr. Oshman at Rolm before starting his own company.

"The quid pro quo was you would be driven and work really hard," he said.

With a gentle, understated style, Mr. Oshman stood apart from other well-known leaders in Silicon Valley, many of whom were seen as capricious and even tyrannical. He was a mentor to a generation of Silicon Valley technologists and able to inspire a kind of loyalty in his employees not frequently seen in high-tech industries.



For the full obituary, see:

JOHN MARKOFF. "M. Kenneth Oshman, Silicon Valley Mentor, Dies at 71." The New York Times, First Section (Sun., August 10, 2011): A10.

(Note: ellipsis added.)

(Note: the online version of the obituary is dated August 10, 2011 and has the title "M. Kenneth Oshman, Who Brought Fun to Silicon Valley, Dies at 71.")





January 10, 2012

Happiness Depends Most on Being Free to Choose




(p. 27) Getting richer is not the only or even the best way of getting happier. Social and political liberation is far more effective, says the political scientist Ronald Ingleheart: the big gains in happiness come from living in a society that frees you to make choices about your lifestyle - about where to live, who to marry, how to express your sexuality and so on. It is the increase in free (p. 28) choice since 1981 that has been responsible for the increase in happiness recorded since then in forty-five out of fifty-two countries. Ruut Veenhoven finds that 'the more individualized the nation, the more citizens enjoy their life.'


Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.





January 9, 2012

Pedro de Verona Rodrigues Pires Wins Ibrahim Prize for Achievement in African Leadership




PiresPedroDeVeronaRodrigues2011-11-14.jpg














"Pedro de Verona Rodrigues Pires" Source of caption and photo: online version of the NYT article quoted and cited below.



(p. A10) MONROVIA, Liberia -- Pedro de Verona Rodrigues Pires, the former president of Cape Verde, the desertlike archipelago about 300 miles off the coast of West Africa, has won one of the world's major prizes, the $5 million Ibrahim Prize for Achievement in African Leadership.

The record of governing in Africa has been poor enough lately that the Mo Ibrahim Foundation decided not to award the prize for the past two years. In many African countries, leaders have refused to leave office after losing elections, tried to alter constitutions to ensure their continued tenure or gone back on pledges not to run for re-election.


. . .


Mr. Pires served two terms -- 10 years -- as president until stepping down last month. During that period, the foundation noted, Cape Verde became only the second African nation to move up from the United Nations' "least developed" category. The foundation says the prize is given only to a democratically elected president who has stayed "within the limits set by the country's constitution, has left office in the last three years and has demonstrated excellence in office."



For the full story, see:

ADAM NOSSITER. "Ex-President of Cape Verde Wins Good-Government Prize." The New York Times (Tues., October 11, 2011): A10.

(Note: ellipsis added.)

(Note: the online version of the article is dated October 10, 2011.)





January 8, 2012

Mackay Warned about Delusions, then Was Deluded by Bubble




(p. B1) Can you spot a bubble?

Ever since 1841, when a Scottish journalist named Charles Mackay published the book known today as "Extraordinary Popular Delusions and the Madness of Crowds," the answer has seemed clear. If you watch carefully for signs of euphoria, you can sidestep the damage when markets go mad.

But bubble spotting isn't as simple as Mackay made it sound--even, it turns out, for Mackay himself. Investors should always guard against the glib assertions of pundits who claim they can detect bubbles before they burst.


. . .


But new research tells the untold tale of Mackay's own behavior in the face of a bubble--and it is a shocker. A mathematician and former cryptographer at Bell Labs named Andrew Odlyzko has spent much of the past decade researching a forgotten stock mania. One of its biggest boosters was none other than Charles Mackay.

A bubble in British railroad stocks began in 1844, only three years after Mackay published his book, and it didn't start to collapse until late 1845. Even with the history of market folly fresh in his mind, Mackay urged British investors to pile into railway stocks, whose extravagant prices were based on absurdly unrealistic projections of future growth.

The most famous critic of bubbles who ever lived fell like a chump for a craze that was unfolding before his very eyes. On Oct. 2, 1845, Mackay wrote that "those who sound the alarm of an approaching railway crisis have somewhat exaggerated the danger."

He went on to ridicule anyone who argued that "the Railway mania of the present day" was similar to the devastating bubbles he had described in his own book. "There is no reason whatever to fear" a crash, he concluded.

He couldn't have been more wrong. From 1845 to the bottom in 1850, railway stocks fell by two-thirds--the equivalent of roughly $1 trillion of losses in today's money. Mackay never fessed up to his own extraordinary delusion.



For the full commentary, see:

JASON ZWEIG. "THE INTELLIGENT INVESTOR; The Extraordinary Popular Delusion of Bubble Spotting." The Wall Street Journal (Sat., NOVEMBER 5, 2011): B1.

(Note: ellipsis added.)






January 7, 2012

Few Banks Give S.B.A. Loans, They Take Two Years, and Have "Absolutely No Flexibility"




BlumenthalNeilEntrepreneur2011-11-14.jpg"Neil Blumenthal, one of the founders of Warby Parker, an online eyewear company, was invited to Washington in an initiative to encourage companies owned by members of the millennial generation." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. B7) Mr. Blumenthal, 31, one of the founders of Warby Parker, an online eyewear company that sells designer frames for less than $100, was among 150 young chief executives invited to Washington by Our Time, a youth advocacy group, . . .


. . .


The following is a condensed version of a recent conversation in which Mr. Blumenthal spoke, among other things, about what politicians don't understand about business, . . .


. . .


Q. What was it like trying to get an S.B.A. loan?

A. Finding a bank that did S.B.A.-term loans was a challenge. We were surprised that they needed two years and that banks had absolutely no flexibility. Many of the loan officers said we had a reputable business that was cash-flow positive and we had the most sophisticated business plan they'd ever seen, but they can't provide loans to people who don't have two years of tax returns.

Q. Isn't that a reasonable request when you're talking about using taxpayer dollars to guarantee a loan to a private company?

A. I understand where the banks are coming from. It probably was necessary to implement hard and fast rules to stop the bleeding when the crisis hit, but they should be looking at the policies and thinking: Does this make sense now?

Q. Was the application process difficult?

A. We had to sign so many documents that my hand hurt after I was done. I had to pledge not to open a zoo, swimming pool or aquarium. It struck me as strange. Yes, it's the bank's duty to do due diligence, but this was just a silly restriction.

Q. But there was a happy ending, right?

A. Yes, after being turned down by 15 banks, it was a personal relationship that introduced us to a regional bank in New Jersey that gave us a $200,000 loan.

Q. What reasons did the 15 banks give for turning you down?

A. They didn't have the authority to bypass the rule that you have to have two years of tax returns.

Q. Was your company profitable at the time?

A. Yes, we were profitable and we had a ton of traction. We had higher customer satisfaction scores than Zappos or Apple. A rational bank should have wanted to support us, even though we were a more risky bet than a company that had been around longer.

Q. What did the bank that lent you money do differently? Did it demand collateral?

A. We came through a personal relationship at a very high level at a regional bank in New Jersey that didn't have the draconian guidelines because their management was empowered to make decisions. For the $200,000 S.B.A.-backed loan that we got, the bank wanted $100,000 in collateral in either cash or marketable products. The reason they wanted so much collateral was that if we default, the regional bank is not going to go through the process of getting the money from the S.B.A. because it's so onerous.


. . .


Q. Are you involved in the political process?

A. We have never met with politicians. I don't know the first thing about how to get heard. My suspicion is that it's to donate a lot of money.


. . .


Q. What do you make of the economic turmoil we've been experiencing?

A. It highlights that it might be too much to ask Washington to help with entrepreneurship when they can't even get the basics right, like maintaining a decent credit rating.



For more of the conversation, see:

HANNAH SELIGSON. "SMALL BUSINESS; Young Entrepreneur Sees Little Help In Washington." The Wall Street Journal (Thurs., August 18, 2011): C12.

(Note: ellipses added.)

(Note: the online version of the article is dated August 17, 2011.)





January 6, 2012

In 1800 the Life of a Peasant Was Not Pleasant




(p. 12) There are people today who think life was better in the past. They argue that there was not only a simplicity, tranquility, sociability and spirituality about life in the distant past that has been lost, but a virtue too. This rose-tinted nostalgia, please note, is generally confined to the wealthy. It is easier to wax elegiac for the life of a peasant when you do not have to use a long-drop toilet. Imagine that it is 1800, somewhere in Western Europe or eastern North America. The family is gathering around the hearth in the (p. 13) simple timber-framed house. Father reads aloud from the Bible while mother prepares to dish out a stew of beef and onions. The baby boy is being comforted by one of his sisters and the eldest lad is pouring water from a pitcher into the earthenware mugs on the table. His elder sister is feeding the horse in the stable. Outside there is no noise of traffic, there are no drug dealers and neither dioxins nor radioactive fall-out have been found in the cow's milk. All is tranquil; a bird sings outside the window.

Oh please! Though this is one of the better-off families in the village, father's Scripture reading is interrupted by a bronchitic cough that presages the pneumonia that will kill him at 53 - not helped by the wood smoke of the fire. (He is lucky: life expectancy even in England was less than 40 in 1800.) The baby will die of the smallpox that is now causing him to cry; his sister will soon be the chattel of a drunken husband. The water the son is pouring tastes of the cows that drink from the brook. Toothache tortures the mother. The neighbour's lodger is getting the other girl pregnant in the hayshed even now and her child will be sent to an orphanage. The stew is grey and gristly yet meat is a rare change from gruel; there is no fruit or salad at this season. It is eaten with a wooden spoon from a wooden bowl. Candles cost too much, so firelight is all there is to see by. Nobody in the family has ever seen a play, painted a picture or heard a piano. School is a few years of dull Latin taught by a bigoted martinet at the vicarage. Father visited the city once, but the travel cost him a week's wages and the others have never travelled more than fifteen miles from home. Each daughter owns two wool dresses, two linen shirts and one pair of shoes. Father's jacket cost him a month's wages but is now infested with lice. The children sleep two to a bed on straw mattresses on the floor. As for the bird outside the window, tomorrow it will be trapped and eaten by the boy.



Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.






January 5, 2012

Newly Found Fossils Indicate Life Evolved Soon After the Late Heavy Bombardment




TubularMicrofossilsOldestLife2011-11-11.jpg






"A collection of tubular microfossils found in 3.4-billion-year-old sandstone from Western Australia." Source of caption and photo: online version of the NYT article quoted and cited below.




(p. A1) A team of Australian and British geologists have discovered fossilized, single-cell organisms that are 3.4 billion years old and that the scientists say are the oldest known fossils on earth.

Their assertion, if sustained, confirms the view that life evolved on earth surprisingly soon after the Late Heavy Bombardment, a reign of destruction in which waves of asteroids slammed into the primitive planet, heating the surface to molten rock and boiling the oceans into an incandescent mist. The bombardment, which ended around 3.85 billion years ago, would have sterilized the earth's surface of any incipient life.

The claim is also a new volley in a long-running conflict over who has found the oldest fossil.

The new microfossils are described in Sunday's issue of Nature Geoscience by a team led by David Wacey of the University of Western Australia and Martin D. Brasier of the University of Oxford. The fossils were found in sandstone at the base of the Strelley Pool rock formation in Western Australia.

The sandstone, 3.4 billion years ago, was a beach on one of the few islands that had started to (p. A3) appear above the ocean's surface. Conditions were very different from those of today. The moon orbited far closer to earth, raising huge tides. The atmosphere was full of methane, since plants had not yet evolved to provide oxygen, and greenhouse warming from the methane had heated the oceans to the temperature of a hot bath.

It was in these conditions, the geologists believe, that organisms resembling today's bacteria lived in the crevices between the pebbles on the beach. Examining thin slices of rock under the microscope, they have found structures that look like living cells, some in clusters that seem to show cell division.

Cell-like structures in ancient rocks can be deceiving -- many have turned out to be artifacts formed by nonbiological processes. In this case, the geologists have gathered considerable circumstantial evidence that the structures they see are biological. With an advanced new technique, they have analyzed the composition of very small spots within the cell-like structures. "We can see carbon, sulfur, nitrogen and phosphorus, all within the cell walls," Dr. Brasier said.



For the full story, see:

NICHOLAS WADE. "Team Claims It Has Found Oldest Fossils." The New York Times (Mon., August 22, 2011): A1 & A3.

(Note: the online version of the article has the date August 21, 2011.)





January 4, 2012

Colleges Not Good at Producing Innovative Start-Up Entrepreneurs




(p. 5) I typed these words on a computer designed by Apple, co-founded by the college dropout Steve Jobs. The program I used to write it was created by Microsoft, started by the college dropouts Bill Gates and Paul Allen.

And as soon as it is published, I will share it with my friends via Twitter, co-founded by the college dropouts Jack Dorsey and Evan Williams and Biz Stone, and Facebook -- invented, among others, by the college dropouts Mark Zuckerberg and Dustin Moskovitz, and nurtured by the degreeless Sean Parker.

American academia is good at producing writers, literary critics and historians. It is also good at producing professionals with degrees. But we don't have a shortage of lawyers and professors. America has a shortage of job creators. And the people who create jobs aren't traditional professionals, but start-up entrepreneurs.

In a recent speech promoting a jobs bill, President Obama told Congress, "Everyone here knows that small businesses are where most new jobs begin."

Close, but not quite. In a detailed analysis, the National Bureau of Economic Research found that nearly all net job creation in America comes from start-up businesses, not small businesses per se. (Since most start-ups start small, we tend to conflate two variables -- the size of a business and its age -- and incorrectly assume the former was the relevant one, when in fact the latter is.)

If start-up activity is the true engine of job creation in America, one thing is clear: our current educational system is acting as the brakes. Simply put, from kindergarten through undergraduate and grad school, you learn very few skills or attitudes that would ever help you start a business. Skills like sales, networking, creativity and comfort with failure.


. . .


If I were betting on the engines of future job creation, I wouldn't put my money on college students cramming for tests and writing papers with properly formatted M.L.A.-style citations in order to bolster their résumés for careers in traditional professions and middle-management jobs in large corporate and government bureaucracies.

I'd put my money on the kids who are dropping out of college to start new businesses. If we want to get out of the jobs mess we're in, we should hope that more will follow in their footsteps.



For the full commentary, see:

MICHAEL ELLSBERG. "Will Dropouts Save America?." The New York Times, SundayReview Section (Sun., October 23, 2011): 5.

(Note: ellipsis added.)

(Note: the online version of the article has the date October 22, 2011.)


The commentary above is in a spirit similar to Ellsberg's book:

Ellsberg, Michael. The Education of Millionaires: It's Not What You Think and It's Not Too Late. New York: Portfolio Hardcover, 2011.






January 3, 2012

In State of Nature 15% of People Died Violently




MurderDeclineGraph2011-11-11.jpgSource of graph: online version of the WSJ article quoted and cited below.



(p. C1) For centuries, social theorists like Hobbes and Rousseau speculated from their armchairs about what life was like in a "state of nature." Nowadays we can do better. Forensic archeology--a kind of "CSI: Paleolithic"--can estimate rates of violence from the proportion of skeletons in ancient sites with bashed-in skulls, decapitations or arrowheads embedded in bones. And ethnographers can tally the causes of death in tribal peoples that have recently lived outside of state control.

These investigations show that, on average, about 15% of people in prestate eras died violently, compared to about 3% of the citizens of the earliest states. Tribal violence commonly subsides when a state or empire imposes control over a territory, leading to the various "paxes" (Romana, Islamica, Brittanica and so on) that are familiar to readers of history.

It's not that the first kings had a benevolent interest in the welfare of their citizens. Just as a farmer tries to prevent his livestock from killing one another, so a ruler will try to keep his subjects from cycles of raiding and feuding. From his point of view, such squabbling is a dead loss--forgone opportunities to extract taxes, tributes, soldiers and slaves.


. . .


(p. C2) We see evidence of the pacifying effects of government in the way that rates of killing declined following the expansion and consolidation of states in tribal societies and in medieval Europe. And we can watch the movie in reverse when violence erupts in zones of anarchy, such as the Wild West, failed states and neighborhoods controlled by mafias and street gangs, who can't call 911 or file a lawsuit to resolve their disputes but have to administer their own rough justice.

Another pacifying force has been commerce, a game in which everybody can win. As technological progress allows the exchange of goods and ideas over longer distances and among larger groups of trading partners, other people become more valuable alive than dead. They switch from being targets of demonization and dehumanization to potential partners in reciprocal altruism.

For example, though the relationship today between America and China is far from warm, we are unlikely to declare war on them or vice versa. Morality aside, they make too much of our stuff, and we owe them too much money.

A third peacemaker has been cosmopolitanism--the expansion of people's parochial little worlds through literacy, mobility, education, science, history, journalism and mass media. These forms of virtual reality can prompt people to take the perspective of people unlike themselves and to expand their circle of sympathy to embrace them.



For the full essay, see:

STEVEN PINKER. "Violence Vanquished; We believe our world is riddled with terror and war, but we may be living in the most peaceable era in human existence. Why brutality is declining and empathy is on the rise." The New York Times (Weds., SEPTEMBER 24, 2011): C1-C2.

(Note: ellipsis added.)


The article quoted was adapted by Pinker from his book:

Pinker, Steven. The Better Angels of Our Nature: Why Violence Has Declined. New York: Viking Press, 2011.



WaningWarGraph2011-11-11.jpgSource of graph: online version of the WSJ article quoted and cited above.





January 2, 2012

The Kauffman Foundation's Startup Act Would Encourage Entrepreneurs





The WSJ tells us the credentials of the authors of the following advice: "Mr. Muller is CEO of GenOn Energy. Mr. Zimpleman is president and CEO of the Principal Financial Group."



(p. A15) In our view, there is no hope of giving consumers renewed confidence in America unless governments at all levels mount a vigorous effort to get rid of rules that discourage entrepreneurs from launching and growing new businesses.

The Kauffman Foundation recently proposed a way to do that with a set of ideas aptly called the Startup Act. Those ideas, which would cost the government virtually nothing, include:

• Letting in immigrant entrepreneurs who hire American workers.

• Reducing the cost of capital through capital gains tax relief for early stage investments.

• Reducing barriers to IPOs by allowing shareholders to opt out of Sarbanes-Oxley.

• Charging higher fees for patent applicants who want quick decisions to remove the backlog of applications at the Patent Office.

• Giving licensing freedom to academic entrepreneurs at universities to accelerate the commercialization of their ideas.

• Having the government provide data to permit rankings of startup friendliness of states and localities.

• Regular sunsets for regulations and a consistent policy of putting new ones in place only if their benefits exceed their costs.



For the full commentary, see:

EDWARD R. MULLER and LARRY ZIMPLEMAN. "OPINION; An Entrepreneurial Fix for the U.S. Economy; Several reforms can make it faster and easier for new business startups.." The Wall Street Journal (Mon., AUGUST 29, 2011): A15.






January 1, 2012

Ridley Argues that Our Future Can Be Bright





RationalOptimistBK.jpg

















Source of book image: http://1.bp.blogspot.com/_cheRMv1X2oI/TAOvTFTnoeI/AAAAAAAAAgU/WAp7q0I_5mw/s1600/Ridley+Rational+Optimist.jpg




Ridley's book is very well-written, well-argued and well-documented. He takes on all the main arguments against a happy future for humans. I agree with most of what he writes. (One exception is that I think he underestimates the importance of patents in enabling a broader group of inventors to continue inventing.)

In the coming weeks, I will be quoting some of the more memorable, thought-provoking, or useful passages.



Book discussed:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.






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