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January 31, 2013

Dr. William House "Faced Stern Opposition" to Bring Cochlear Implants to the Deaf




HouseAndHustedFirstCochlearImplant2013-01-12.jpg "Dr. William F. House in 1981 with Tracy Husted, the first pre-school-age child to get a cochlear implant." Source of caption and photo: online version of the NYT obituary quoted and cited below.


(p. 34) Dr. William F. House, a medical researcher who braved skepticism to invent the cochlear implant, an electronic device considered to be the first to restore a human sense, died on Dec. 7 at his home in Aurora, Ore. He was 89.

. . .


Dr. House pushed against conventional thinking throughout his career. Over the objections of some, he introduced the surgical microscope to ear surgery. Tackling a form of vertigo that doctors had believed was psychosomatic, he developed a surgical procedure that enabled the first American in space to travel to the moon. Peering at the bones of the inner ear, he found enrapturing beauty.


. . .


More than a decade would pass before the Food and Drug Administration approved the cochlear implant, but when it did, in 1984, Mark Novitch, the agency's deputy commissioner, said, "For the first time a device can, to a degree, replace an organ of the human senses."

One of Dr. House's early implant patients, from an experimental trial, wrote to him in 1981 saying, "I no longer live in a world of soundless movement and voiceless faces."

But for 27 years, Dr. House had faced stern opposition while he was developing the device. Doctors and scientists said it would not work, or not work very well, calling it a cruel hoax on people desperate to hear. Some said he was motivated by the prospect of financial gain. Some criticized him for experimenting on human subjects. Some advocates for the deaf said the device deprived its users of the dignity of their deafness without fully integrating them into the hearing world.


. . .


When his brother returned from West Germany with a surgical microscope, Dr. House saw its potential and adopted it for ear surgery; he is credited with introducing the device to the field. But again there was resistance. As Dr. House wrote in his memoir, "The Struggles of a Medical Innovator: Cochlear Implants and Other Ear Surgeries" (2011), some eye doctors initially criticized his use of a microscope in surgery as reckless and unnecessary for a surgeon with good eyesight.



For the full obituary, see:

DOUGLAS MARTIN. "Dr. William F. House, Inventor of Pioneering Ear-Implant Device, Dies at 89." The New York Times, First Section (Sun., December 16, 2012): 34.

(Note: ellipses added.)

(Note: the online version of the obituary has the date December 15, 2012.)



Dr. House's memoir is:

House, William F. The Struggles of a Medical Innovator: Cochlear Implants and Other Ear Surgeries. CreateSpace Independent Publishing Platform, 2011.

(Note: the copyright page of the book gives neither city nor name of publisher; the publisher in the reference is as given by Amazon.com.)



HouseWilliamInventorOfCochlearImplant2013-01-12.jpg













"Dr. William F. House sitting at an operating microscope." Source of caption and photo: online version of the NYT obituary quoted and cited above.








January 30, 2013

Rupert Murdoch and Steve Jobs "Hit It Off Well"




(p. 508) Murdoch and Jobs hit it off well enough that Murdoch went to his Palo Alto house for dinner twice more during the next year. Jobs joked that he had to hide the dinner knives on such occasions, because he was afraid that his liberal wife was going to eviscerate Murdoch when (p. 509) he walked in. For his part, Murdoch was reported to have uttered a great line about the organic vegan dishes typically served: "Eating dinner at Steve's is a great experience, as long as you get out before the local restaurants close." Alas, when I asked Murdoch if he had ever said that, he didn't recall it.


Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.






January 29, 2013

Fragile Governments Cling to Failed Foreign Aid




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Source of book image: http://si.wsj.net/public/resources/images/OB-VL312_bkrvta_DV_20121122124330.jpg







(p. C12) Nassim Nicholas Taleb's "Antifragile" argues that some people, organizations and systems are resilient in the face of stress because they are able to alter themselves by adapting and learning. The converse is fragility, embodied in entities that are immovable even when faced with shocks or adversity. To my mind, an obvious example is how numerous governments and international agencies have clung to foreign aid as a tool to combat poverty even though aid has failed to deliver sustainable growth and meaningfully reduce indigence. And nation-states, which rest on one unifying vision of the nation, tend to be fragile, while city-states that adjust, adapt and constantly evolve tend to be antifragile. Mr. Taleb's lesson: Embrace, rather than try to avoid, the shocks.


For the full review essay, see:

Dambisa Moyo (author of passage quoted above, one of 50 contributors to whole article). "Twelve Months of Reading; We asked 50 of our friends to tell us what books they enjoyed in 2012--from Judd Apatow's big plans to Bruce Wagner's addictions. See pages C10 and C11 for the Journal's own Top Ten lists." The Wall Street Journal (Sat., December 15, 2012): passim (Moyo's contribution is on p. C12).

(Note: the online version of the review essay has the date December 14, 2012.)



The book under review, is:

Taleb, Nassim Nicholas. Antifragile: Things That Gain from Disorder. New York: Random House, 2012.






January 28, 2013

Governments Use "Financial Repression" to Lower Their Interest Payments on Debt




(p. 229) Carmen M. Reinhart, Jacob F. Kirkegaard, and M. Belen Sbrancia make a case for "Financial Repression Redux: Governments Are Once Again Finding Ways to Manipulate Markets to Hold Down the Cost of Financing Debt." "Financial repression occurs when governments implement policies to channel to themselves funds that in a deregulated market environment would go elsewhere. . . . One of the main goals of financial repression is to keep nominal interest rates lower than they would be in more competitive markets. Other things equal, this reduces the government's interest expenses for a given stock of debt and contributes to deficit reduction. (p. 230) However, when financial repression produces negative real interest rates (nominal rates below the inflation rate), it reduces or liquidates existing debts and becomes the equivalent of a tax--a transfer from creditors (savers) to borrowers, including the government . . ." "Financial repression contributed to rapid debt reduction following World War II. . . . It seems probable that policymakers for some time to come will be preoccupied with debt reduction, debt management, and efforts to keep debt servicing costs at a reasonable level. In this setting, financial repression, with its dual aims of keeping interest rates low and creating or maintaining captive domestic audiences, will continue to find renewed favor, and the measures and developments we have described and discussed are likely to be only the tip of a very large iceberg."


Reinhart et al as quoted in:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 25, no. 4 (Fall 2011): 223-30.

(Note: ellipses added by Taylor.)


For the full Reinhart et al paper, see:

Reinhart, Carmen M., Jacob F. Kirkegaard, and M. Belen Sbrancia. "Financial Repression Redux." Finance and Development 48, no. 2 (June 2011): 22-26.






January 27, 2013

Is Economics Major Nuts to Have Left Investment Banking?




BravermanJeffreyAndFatherUncleCousinNutBusiness2013-01-12.jpg "Jeffrey Braverman, right, stepped away from Wall Street to join his father, uncle and cousin in the family's New Jersey nut business." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. B8) Ten years ago, Jeffrey Braverman was living the dream of many business school graduates. With a freshly minted bachelor's degree in economics, he landed a job in 2002 at the Blackstone Group, a Wall Street firm specializing in private equity and investment banking.

Less than a year later, however, Mr. Braverman stepped away from Wall Street and returned to his family's New Jersey nut business, the Newark Nut Company. It struck some as an odd choice: the family-owned company, which had been started by Mr. Braverman's grandfather, Sol Braverman (known as Poppy), and had once employed 30 people, was down to two employees and two family members, Mr. Braverman's father and his uncle.

Located in an indoor mall in a desolate part of Newark, the nut shop's retail sales were fading and its wholesale business was, at best, stagnant. But Mr. Braverman harbored entrepreneurial ambitions.

At the beginning, he agreed to work with his father and uncle for a salary tied directly to how much new business he attracted. He focused on Internet sales and before long, they began to dwarf the existing business.

Now based in Cranford, N.J., the company has grown to more than 80 employees with more than $20 million in revenue, 95 percent of it online. The following is a condensed version of a recent conversation.

Q. Who leaves investment banking to work at a struggling family nut company?

A. Only someone nuts, right? My dad and my uncle both thought I was crazy. I was making more than they were at the time.

Q. Then why?

A. Have you ever read the book "Monkey Business"? It's a fairly accurate profile of what it's like to be in investment banking, at least at a junior level. You know, there's this economic concept called deadweight loss, and I think a lot of investment banking is like that: it doesn't really add anything to the world, to the economy. I just wanted to do more.

Q. I assume your father and uncle made you take a pay cut.

A. The one thing I did was, I didn't want to take anything away from them. I structured it so that my compensation was 100 percent based on incremental profit improvement. So from their perspective, there wasn't very much risk. I also got a small piece of the business. But at the time the business was worth nothing, book value. No one would have bought it.

Q. Did you have any experience in Internet sales?

A. In 1999, I was a freshman in college and I started our Web site, Nutsonline.com. I spent my second semester of freshman year working on that thing four or five hours a day. It kind of just trickled along. In 1999, very few people were buying from Amazon, so they certainly weren't going to buy from Nutsonline. In 2000, I remember I set a goal: I wanted to do 10 orders a day.



For the full version of the condensed conversation, see:

IAN MOUNT. "Forsaking Investment Banking to Turn Around a Family Business." The New York Times (Thurs., April 19, 2012): B8.

(Note: bold in original.)

(Note: the online version of the conversation has the date April 18, 2012.)



BravermanSolNutBusinessEarly1930s2013-01-12.jpg "Sol Braverman, Jeffrey's grandfather, in the early 1930s." Source of caption and photo: online version of the NYT article quoted and cited above.






January 26, 2013

The Project Entrepreneur: Never Say Die




(p. 485) . . . [Jobs] chafed at not being in control, and he sometimes hallucinated or be-(p. 486)came angry. Even when he was barely conscious, his strong personality came through. At one point the pulmonologist tried to put a mask over his face when he was deeply sedated. Jobs ripped it off and mumbled that he hated the design and refused to wear it. Though barely able to speak, he ordered them to bring five different options for the mask and he would pick a design he liked. The doctors looked at Powell, puzzled. She was finally able to distract him so they could put on the mask. He also hated the oxygen monitor they put on his finger. He told them it was ugly and too complex. He suggested ways it could be designed more simply. "He was very attuned to every nuance of the environment and objects around him, and that drained him," Powell recalled.


Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: ellipsis and bracketed "Jobs" added.)






January 25, 2013

ExxonMobil's "Honorable If Rigid Corporate Culture"




PrivateEmpireBK2013-01-11.jpg












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






(p. C12) From Indiana to Indonesia, ExxonMobil is the multinational corporation that people love to hate. John D. Rockefeller's creation is famed and feared for its discipline, its disregard for public opinion and its ability, year after year, to pump out the largest profits of any corporation on the planet. In "Private Empire," Steve Coll provides a rare exploration of what makes a modern corporate giant tick and shows why the world looks different to the executives in the "God Pod" at ExxonMobil's Texas headquarters than it might to you or me.


For the full review essay, see:

Marc Levinson. "Boardroom Reading of 2012." The Wall Street Journal (Sat., December 15, 2012): C12.

(Note: the online version of the review essay has the date December 14, 2012.)



From another review of the same book:


"Private Empire" is meticulous, multi-angled and valuable. It is also, perhaps surprisingly, despite all the dark facts I have dumped above, impartial. Mr. Coll and his phlegmatic research assistants have interviewed more than 400 people, including Exxon Mobil's longtime chief executive Lee R. Raymond, a legendarily hard character.

It's among this book's achievements that it attempts to view a dysfunctional energy world, as often as not, through Exxon Mobil's eyes. The company is portrayed here, some egregious missteps aside, as possessing an honorable if rigid corporate culture that seeks to supply a product (unlike tobacco companies, to which it is often compared) that a functioning society actually must have.



For this full review, see:

DWIGHT GARNER. "Oil's Dark Heart Pumps Strong." The New York Times (Sat., April 27, 2012): C25 & C32(?).

(Note: the online version of the review essay has the date April 26, 2012 and has the title "BOOKS OF THE TIMES; Oil's Dark Heart Pumps Strong; 'Private Empire,' Steve Coll's Book on Exxon Mobil.")



The book under review, is:

Coll, Steve. Private Empire: ExxonMobil and American Power. New York: The Penguin Press, 2012.






January 24, 2013

Economics Should Be in "Broad-Exploration Mode"




(p. 85) What does concern me about my discipline, . . . , is that its current core--by which I mainly mean the so-called dynamic stochastic general equilibrium approach--has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one. This is dangerous for both methodological and policy reasons. On the methodology front, macroeconomic research has been in "fine-tuning" mode within the local-maximum of the dynamic stochastic general equilibrium world, when we should be in "broad-exploration" mode. We are too far (p. 86) from absolute truth to be so specialized and to make the kind of confident quantitative claims that often emerge from the core. On the policy front, this confused precision creates the illusion that a minor adjustment in the standard policy framework will prevent future crises, and by doing so it leaves us overly exposed to the new and unexpected.


. . .


(p. 100) Going back to our macroeconomic models, we need to spend much more effort in understanding the topology of interactions in real economies. The financial sector and its recent struggles have made this need vividly clear, but this issue is certainly not exclusive to this sector.

The challenges are big, but macroeconomists can no longer continue playing internal games. The alternative of leaving all the important stuff to the "policy"-types (p. 101) and informal commentators cannot be the right approach. I do not have the answer. But I suspect that whatever the solution ultimately is, we will accelerate our convergence to it, and reduce the damage we do along the transition, if we focus on reducing the extent of our pretense-of-knowledge syndrome.



Source:

Caballero, Ricardo J. "Macroeconomics after the Crisis: Time to Deal with the Pretense-of-Knowledge Syndrome." Journal of Economic Perspectives 24, no. 4 (Fall 2010): 85-102.

(Note: ellipses added.)






January 23, 2013

David Koch Institute for Integrative Cancer Research




LangerRobertResearchLab2013-01-12.jpg "Dr. Robert Langer's research lab is at the forefront of moving academic discoveries into the marketplace." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 1) HOW do you take particles in a test tube, or components in a tiny chip, and turn them into a $100 million company?

Dr. Robert Langer, 64, knows how. Since the 1980s, his Langer Lab at the Massachusetts Institute of Technology has spun out companies whose products treat cancer, diabetes, heart disease and schizophrenia, among other diseases, and even thicken hair.

The Langer Lab is on the front lines of turning discoveries made in the lab into a range of drugs and drug delivery systems. Without this kind of technology transfer, the thinking goes, scientific discoveries might well sit on the shelf, stifling innovation.

A chemical engineer by training, Dr. Langer has helped start 25 companies and has 811 patents, issued or pending, to his name. More than 250 companies have licensed or sublicensed Langer Lab patents.

Polaris Venture Partners, a Boston venture capital firm, has invested $220 million in 18 Langer Lab-inspired businesses. Combined, these businesses have improved the health of many millions of people, says Terry McGuire, co-founder of Polaris.


. . .


(p. 7) Operating from the sixth floor of the David H. Koch Institute for Integrative Cancer Research on the M.I.T. campus in Cambridge, Mass., Dr. Langer's lab has a research budget of more than $10 million for 2012, coming mostly from federal sources.


. . .


David H. Koch, executive vice president of Koch Industries, the conglomerate based in Wichita, Kan., wrote in an e-mail that "innovation and education have long fueled the world's most powerful economies, so I can't think of a better or more natural synergy than the one between academia and industry." Mr. Koch endowed Dr. Langer's professorship at M.I.T. and is a graduate of the university.



For the full story, see:

HANNAH SELIGSON. "Hatching Ideas, and Companies, by the Dozens at M.I.T." The New York Times, SundayBusiness Section (Sun., November 25, 2012): 1 & 7.

(Note: ellipses added.)

(Note: the online version of the story has the date November 24, 2012.)






January 22, 2013

Apple's iTunes for Windows Gave "a Glass of Ice Water to Somebody in Hell"




(p. 463) Mossberg wanted the evening joint appearance to be a cordial discussion, not a debate, but that seemed less likely when Jobs unleashed a swipe at Microsoft during a solo interview earlier that day. Asked about the fact that Apple's iTunes software for Windows computers was extremely popular, Jobs joked, "It's like giving a glass of ice water to somebody in hell."

So when it was time for Gates and Jobs to meet in the green room before their joint session that evening, Mossberg was worried. Gates got there first, with his aide Larry Cohen, who had briefed him about Jobs's remark earlier that day. When Jobs ambled in a few minutes later, he grabbed a bottle of water from the ice bucket and sat down. After a moment or two of silence, Gates said, "So I guess I'm the representative from hell." He wasn't smiling. Jobs paused, gave him one of his impish grins, and handed him the ice water. Gates relaxed, and the tension dissipated.



Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.






January 21, 2013

The Creation of Consistent, Predictable Dyes and Paints




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Source of book image: http://www.kristenlovesdesign.com/wp-content/uploads/2012/09/The-Color-Revolution-by-Regina-Lee-Blaszczyk.png




(p. C12) Few things seem as eternal as color. Yet as Regina Lee Blaszczyk argues, color has a history, a history largely created by business. In "The Color Revolution," Ms. Blaszczyk shows how the invention of synthetic organic chemistry in the 1850s allowed chemists to create consistent, predictable colors in dyes and paints. Once a chemical company's magenta was reliable, manufacturers could select it from a color card, order it by mail, and use it to produce dresses and dishware in exactly the promised hue.


For the full review essay, see:

Marc Levinson. "Boardroom Reading of 2012." The Wall Street Journal (Sat., December 15, 2012): C12.

(Note: the online version of the review essay has the date December 14, 2012.)



The book under review, is:

Blaszczyk, Regina Lee. The Color Revolution, Lemelson Center Studies in Invention and Innovation. Cambridge, MA: The MIT Press, 2012.






January 20, 2013

Socialism Failed in Jamestown




(p. 226) Stephen Slivinski discusses "Economic History: The Lessons of Jamestown." In the years after the Jamestown settlement of 1607, the settlers often lacked food. "The company sent Sir Thomas Dale, a British naval commander, to take over the office of colony governor in 1611. Yet, upon arrival in May--a time when the farmers should have been tending to their fields--Dale found virtually no planting activity. Instead, the workers were devoted mainly to leisure and 'playing bowls.' . . . All land was owned by the company and farmed collectively. . . . The workers would not hope to reap more compensation from a productive farming of the land any more than the farmers would be motivated by an interest in making their farming operations more efficient and, hence, more profitable. Seeing this, Dale decided to change the labor arrangements: When the seven-year contracts of most of the original surviving settlers were about to expire in 1614, he assigned private allotments of land to them. Each got three acres, 12 acres if he had a family. The only obligation was that they needed to provide two and a half barrels of corn annually to the company so it could be distributed to the newcomers to tide them over during their first year. Dale left Jamestown for good in 1616. By then, however, the new land grants had unleashed a vast increase in agricultural productivity. In fact, upon returning to England with Dale, John Rolfe--one of the colony's former leaders--reported to the Virginia Company that the Powhatans were now asking the colonists to give them corn instead of vice versa."


As quoted in:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 24, no. 4 (Fall 2010): 219-26.

(Note: ellipses added by Taylor.)


The Slivinski article is:

Slivinski, Stephen. "The Lessons of Jamestown." Region Focus 14, no. 1 (First Quarter 2010): 27-29.






January 19, 2013

Capitalism Would Bring Economic Growth to Bitouga, and Thereby Save the Elephants




BurningIvoryInGabon2013-01-12.jpg "SEIZED AND DESTROYED; Gabon burned 10,000 pounds of ivory in June to show its commitment against poaching, but elephants are still being slaughtered." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A5) But as the price of ivory keeps going up, hitting levels too high for many people to resist, Gabon's elephants are getting slaughtered by poachers from across the borders and within the rain forests, proof that just about nowhere in Africa are elephants safe.

In the past several years, 10,000 elephants in Gabon have been wiped out, some picked off by impoverished hunters creeping around the jungle with rusty shotguns and willing to be paid in sacks of salt, others mowed down en masse by criminal gangs that slice off the dead elephants' faces with chain saws. Gabon's jails are filling up with small-time poachers and ivory traffickers, destitute men and women like Therese Medza, a village hairdresser arrested a few months ago for selling 45 pounds of tusks.

"I had no idea it was illegal," Ms. Medza said, almost convincingly, from the central jail here in Oyem, in the north. "I was told the tusks were found in the forest."

She netted about $700, far more than she usually makes in a month, and the reason she did it was simple, she said. "I got seven kids."

It seems that Gabon's elephants are getting squeezed in a deadly vise between a seemingly insatiable lust for ivory in Asia, where some people pay as much as $1,000 a pound, and desperate hunters and traffickers in central Africa.


. . .


In June, Gabon's president, Ali Bongo, defiantly lighted a pyramid of 10,000 pounds of ivory on fire to make the point that the ivory trade was reprehensible, a public display of resolve that Kenya has put on in years past. It took three days for all the ivory to burn, and even after the last tusks were reduced to glowing embers, policemen vigilantly guarded the ashes. Ivory powder is valued in Asia for its purported medicinal powers, and the officers were worried someone might try to sweep up the ashes and sell them.

Some African countries, like Zimbabwe and Tanzania, are sitting on million-dollar stockpiles of ivory (usually from law enforcement seizures or elephants that died naturally) that someday may be legal to sell.


. . .


(p. A10) The growing resentment of the government is undermining conservation efforts, too, with villagers grumbling about not seeing a trace of the oil money and saying Mr. Bongo should not lecture them about poaching for a living.


. . .

The children here eat thumb-size caterpillars, cooked in enormous vats, because there is little else to eat. Many men have bloodshot eyes and spend their mornings sitting on the ground, staring into space, reeking of sour, fermented home-brew.


. . .


International law enforcement officials say the illicit ivory trade is dominated by Mafia-like gangs that buy off local officials and organize huge, secretive shipments to move tusks from the farthest reaches of Africa to workshops in Beijing, Bangkok and Manila, where they are carved into bookmarks, earrings and figurines.

But often the first link in that chain is a threadbare hunter, someone like Mannick Emane, a young man in Bitouga. Adept in the forest, he was trained nearly from birth to follow tracks and stalk game, and was puffing idly on a cigarette he had just lighted with a burning log.

He conceded he would kill elephants, "for the right price."

"Life is tough," he said. "So if someone is going to give us an opportunity for big money, we're going to take it."

Big money, he said, was about $50.

His friend Vincent Biyogo, also a hunter, nodded in agreement.

"When I was born," he said, "I dreamed of a better life, I dreamed of driving a car, going to school, living like a normal human being."

"Not this," he added quietly, staring at a pot of boiling caterpillars. "Not this."



For the full story, see:

JEFFREY GETTLEMAN. "In Gabon, Lure of Ivory Is Hard for Many to Resist." The New York Times (Thurs., December 27, 2012): A5 & A10.

(Note: ellipses added.)

(Note: the online version of the story has the date December 26, 2012.)



BitougaManResentsGovernment2013-01-12b.jpg "A man in Bitouga, where people live in extreme poverty and say they resent the government's telling them not to poach." Source of caption and photo: online version of the NYT story quoted and cited above.






January 18, 2013

Steve Jobs Was Deeply Influenced by Clayton Christensen's "The Innovator's Dilemma"




(p. 408) Microsoft was willing to license its Windows Media software and digital rights format to other companies, just as it had licensed out its operating system in the 1980s. Jobs, on the other hand, would not license out Apple's FairPlay to other device makers; it worked only on an iPod. Nor would he allow other online stores to sell songs for use on iPods. A variety of experts said this would eventually cause Apple to lose market share, as it did in the computer wars of the 1980s. "If Apple continues to rely on a proprietary architecture," the Harvard Business School professor Clayton Christensen told Wired, "the iPod will likely become a niche product." (Other than in this case, Christensen was one of the world's most insightful business analysts, and Jobs was deeply (p. 409) influenced by his book The Innovator's Dilemma.) Bill Gates made the same argument. "There's nothing unique about music," he said. "This story has played out on the PC."


Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.






January 17, 2013

A Well-Researched Case Study on How Mulally Saved Ford




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Source of book image: http://graphics8.nytimes.com/images/2012/04/01/business/01-SHELF/01-SHELF-articleInline.jpg



(p. C12) Tomes by management gurus telling you how to remake your company are a dime a dozen. Well-researched case studies are much rarer. In "American Icon," Bryce G. Hoffman takes a careful look at how Alan Mulally, recruited from Boeing in 2006, restructured Ford Motor Co. in the midst of the steepest economic downturn since the 1930s. An engineer with no automotive background, Mr. Mulally came into a company on the verge of collapse and brought it back with insistent demands for accountability, information-sharing and tough decisions. Mr. Hoffman, who wrote this book with the company's cooperation, provides a fascinating and detailed examination of how a dynamic leader brought about change. He makes clear that much of the credit goes to others, not least Don Leclair, then the chief financial officer, who, even before Mr. Mulally's arrival, was arranging to mortgage everything up to Ford's blue-oval trademark to amass the $23.6 billion in cash that enabled the company to survive the recession.


For the full review essay, see:

Marc Levinson. "Boardroom Reading of 2012." The Wall Street Journal (Sat., December 15, 2012): C12.

(Note: the online version of the review essay has the date December 14, 2012.)



The book under review, is:

Hoffman, Bryce G. American Icon: Alan Mulally and the Fight to Save Ford Motor Company. New York: Crown Business, 2012.






January 16, 2013

Descartes Saw that a Great City Is "an Inventory of the Possible"




(p. 226) Joel Kotkin writes about "The Broken Ladder: The Threat to Upward Mobility in the Global City." "A great city, wrote Rene Descartes in the 17th Century, represented 'an inventory of the possible,' a place where people could create their own futures and lift up their families. In the 21st Century--the first in which the majority of people will live in cities--this unique link between urbanism and upward mobility will become ever more critical."


Source:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 24, no. 4 (Fall 2010): 219-26.






January 15, 2013

"Modern Cognitive Capacity Emerged at the Same Time as Modern Anatomy"




SpearTipsPinnaclePointSouthAfrica2012-01-11.jpg

"ARTIFACTS; The excavations have uncovered caches of advanced stone hunting tools, including spear tips and other small blades, or microliths, which suggest that modern Homo sapiens in Africa had a grasp of complex technologies. The research team's report challenges a Eurocentric theory of modern human development." [This photo shows spear tips; another photo included with the article showed three small blades (aka microliths).] Source of quoted part of caption and of photo: online version of the NYT article quoted and cited below.





(p. D3) At a rock shelter on a coastal cliff in South Africa, scientists have found an abundance of advanced stone hunting tools with a tale to tell of the evolving mind of early modern humans at least 71,000 years ago.


. . .


"Ninety percent of scientists are comfortable that fully modern humans and human cognition developed in Africa," Dr. Marean said. "Now they have moved on. The questions are, how much earlier than 71,000 years did these behaviors emerge? Was it an accretionary process, or was it an abrupt event? Did these people have language by this time?"

Like many other archaeologists, Dr. Marean and his team have concentrated their investigations in the caves and rock shelters overlooking the Indian Ocean. In a global ice age beginning 72,000 years ago, many Africans fled the continent's arid interior, heading for the more benign southern shore. Access to seafood and more plentiful plant and animal resources may have increased populations and encouraged technological advances, Dr. Marean said.

The well-preserved artifacts at Pinnacle Point, collected over a recent 18-month period, led the researchers to conclude that the advanced technologies in Africa "were early and enduring." Other archaeologists who reached different conclusions may have been misled by the "small sample of excavated sites," they said.

Richard G. Klein, a paleoanthropologist at Stanford University who has favored a more sudden and recent origin of modern behavior, about 50,000 years ago, questioned the reliability of the dating method for the tools, noting that "there is another team that has already argued for a much longer" time period for the toolmaking culture.


. . .


The hypothesis of earlier African origins of modern human behavior and cognition has been gaining strength over the last decade or two. Two archaeologists, Alison S. Brooks of George Washington University and Sally McBrearty of the University of Connecticut, led the charge with publications of their analysis of increasing evidence of African art and ornamentations expressing a modern cognitive capacity and symbolic thinking.

In a commentary accompanying the Nature report, Dr. McBrearty, who was not involved in the research, wrote that she believed that "modern cognitive capacity emerged at the same time as modern anatomy, and that various aspects of human culture arose gradually" over the course of subsequent millenniums.



For the full story, see:

JOHN NOBLE WILFORD. "Stone Tools Point to Creative Work by Early Humans in Africa." The New York Times (Tues., November 13, 2012): D3.

(Note: ellipses added.)

(Note: the online version of the story has the date November 12, 2012.)



The research discussed in the passages quoted above, appeared in Nature:

Brown, Kyle S., Curtis W. Marean, Zenobia Jacobs, Benjamin J. Schoville, Simen Oestmo, Erich C. Fisher, Jocelyn Bernatchez, Panagiotis Karkanas, and Thalassa Matthews. "An Early and Enduring Advanced Technology Originating 71,000 Years Ago in South Africa." Nature 491, no. 7425 (22 November 2012): 590-93.






January 14, 2013

With iTunes, Apple Leapfrogged CD Burners (a Boat Apple Had Missed)





Is the example sketched below, and in a previous entry, a case of a first mover disadvantage? Or is it simply a case of a lucky or wise bounce-back from a genuine mistake?


(p. 382) . . . [Job's] angry insistence that the iMac get rid of its tray disk drive and use instead a more elegant slot drive meant that it could not include the first CD burners, which were initially made for the tray format. "We kind of missed the boat on that," he recalled. "So we needed to catch up real fast." The mark of an innovative company is not only that it comes up with new ideas first, but also that it knows how to leapfrog when it finds itself behind.


Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: ellipsis and bracketed "Job's" added.)






January 13, 2013

Harvard University Press Dropped Watson's "The Double Helix" as Too Controversial




WatsonAndCrick2013-01-11.jpg



"Partners; James D. Watson, left, with Francis Crick and their model of part of a DNA molecule in 1953. Crick did not like Dr. Watson's book at first." Source of caption: print version of the NYT article quoted and cited below. Source of photo: online version of the NYT article quoted and cited below.





(p. D2) Anyone seeking to understand modern biology and genomics could do much worse than start with the discovery of the structure of DNA, on which almost everything else is based. The classic account of the discovery, "The Double Helix," by James D. Watson, was first published in 1968 and has now been reissued in an annotated and illustrated edition.


. . .


An appendix makes it clear how close "The Double Helix" came to being suppressed. Dr. Watson sent the manuscript to many of the central players, inviting their comments on its accuracy. Harvard University Press had accepted it for publication, but the Harvard authorities came to feel it was too hot a potato and dropped it.

Atheneum Publishers, which picked it up, requested a blander title -- previous versions had included "Honest Jim" and "Base Pairs." The latter -- referring to the paired sets of chemical bases that form the steps in the double helix, and by extension to the two discoverers -- gave particular offense to Crick, who failed to see why he should be considered base. Atheneum's lawyers then tried to make the text inoffensive to the many possible litigants.

But Dr. Watson was able to resist many changes. He had cannily persuaded Bragg to write a foreword, and this endorsement from an establishment figure provided sufficient protection for the book to be published. It proceeded to sell more than a million copies.



For the full review, see:

NICHOLAS WADE. "BOOKS ON SCIENCE; Twists in the Tale of the Great DNA Discovery." The New York Times (Tues., November 13, 2012): D2.

(Note: ellipsis added.)

(Note: the online version of the review has the date November 12, 2012.)



The annotated version of the Watson book is:

Watson, James D. The Annotated and Illustrated Double Helix. New York: Simon & Schuster, 2012.






January 12, 2013

Solow Testifies on Irrelevance of DSGE Macro Models





In Nobel-prize-winner Robert Solow's congressional testimony, quoted below, "DSGE" is an abbreviation for "dynamic stochastic general equilibrium."


(p. 221) Solow argues: "It may be unusual for the Committee to focus on so abstract a question, but it is certainly natural and urgent. Here we are, still near the bottom of a deep and prolonged recession, with the immediate future uncertain, desperately short of jobs, and the approach to macroeconomics that dominates serious thinking, certainly in our elite universities and in many central banks and other influential policy circles, seems to have absolutely nothing to say about the problem. Not only does it (p. 222) offer no guidance or insight, it really seems to have nothing useful to say. . . . Especially when it comes to matters as important as macroeconomics, a mainstream economist like me insists that every proposition must pass the smell test: does this really make sense? I do not think that the currently popular DSGE models pass the smell test."


Source:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 24, no. 4 (Fall 2010): 219-26.

(Note: ellipsis in original.)






January 11, 2013

Humans Used Stone-Tipped Spears as Early as a Half Million Years Ago




StonePointForHuntingHalfMillionYearsAgo2012-01-10.jpg









"Views of a stone point used for hunting 500,000 years ago." Source of caption: print version of the NYT article quoted and cited below. Source of photo: online version of the NYT article quoted and cited below.




(p. D3) Human ancestors were using stone-tipped spears to hunt 500,000 years ago, 200,000 years earlier than previously thought.

A new study reports that the stone tips, found in South Africa, were probably once attached to wooden spears and then hurled at animals by hominins of the species Homo heidelbergensis.

Homo heidelbergensis was the last common ancestor of modern humans and Neanderthals, said Jayne Wilkins, an anthropologist at the University of Toronto and the study's first author. The spears "suggest that the behavioral complexity of these early humans was greater than expected," she said. Creating a stone-tipped spear would have required attaching stone to wood, handling multiple types of material at once, planning and goal-oriented behavior.



For the full story, see:

SINDYA N. BHANOO. "OBSERVATORY; When Stone Met Stick to Ease Hunters' Work." The New York Times (Tues., November 20, 2012): D3.

(Note: the online version of the story has the date November 19, 2012.)



The original Science article is:

Wilkins,  Jayne,  Benjamin J. Schoville,  Kyle S. Brown, and  Michael Chazan. "Evidence for Early Hafted Hunting Technology." Science 338, no. 6109 (16 November 2012): 942-46.






January 10, 2013

Apple "Finding a Way to Leapfrog Over Its Competitors"





Isaacson says Jobs wanted two refinements in the iMac. One was new colors. The other is discussed below.

I am not sure what to make of this episode. Is Isaacson suggesting that it was good for Apple that Jobs made a mistake on the type of CD hardware to put in the iMac? That this added constraint "would then force Apple to be imaginative and bold"?

Or is the moral that good people who make a lot of quick decisions, make mistakes, sometimes big mistakes, and that Jobs found a way to bounce back from this one?


(p. 356) There was one other important refinement that Jobs wanted for the iMac: getting rid of that detested CD tray. "I'd seen a slot-load drive on a very high-end Sony stereo," he said, "so I went to the drive manufacturers and got them to do a slot-load drive for us for the version of the iMac we did nine months later." Rubinstein tried to argue him out of the change. He predicted that new drives would come along that could burn music onto CDs rather than merely play them, and they would be available in tray form before they were made to work in slots. "If you go to slots, you will always be behind on the technology," Rubinstein argued.

"I don't care, that's what I want," Jobs snapped back. They were having lunch at a sushi bar in San Francisco, and Jobs insisted that they continue the conversation over a walk. "I want you to do the slot-load drive for me as a personal favor," Jobs asked. Rubinstein agreed, of course, but he turned out to be right. Panasonic came out with a CD drive that could rip and burn music, and it was available first for computers that had old-fashioned tray loaders. The effects of this (p. 357) would ripple over the next few years: It would cause Apple to be slow in catering to users who wanted to rip and burn their own music, but that would then force
Apple to be imaginative and bold in finding a way to leapfrog over its competitors when Jobs finally realized that he had to get into the music market.



Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.






January 9, 2013

UnCollege Seeks "to Open People's Minds to a Different Set of Opportunities"




StephensDaleUnCollegeFounder2013-01-01.jpg











"Dale J. Stephens, who founded UnCollege." Source of caption and photo: online version of the WSJ article quoted and cited below.




(p. 1) BENJAMIN GOERING does not look like Facebook's Mark Zuckerberg, talk like him or inspire the same controversy. But he does apparently think like him.

Two years ago, Mr. Goering was a sophomore at the University of Kansas, studying computer science and philosophy and feeling frustrated in crowded lecture halls where the professors did not even know his name.

"I wanted to make Web experiences," said Mr. Goering, now 22, and create "tools that make the lives of others better."

So in the spring of 2010, Mr. Goering took the same leap as Mr. Zuckerberg: he dropped out of college and moved to San Francisco to make his mark. He got a job as a software engineer at a social-software company, Livefyre, run by a college dropout, where the chief technology officer at the time and a lead engineer were also dropouts. None were sheepish about their lack of a diploma. Rather, they were proud of their real-life lessons on the job.

"Education isn't a four-year program," Mr. Goering said. "It's a mind-set."

The idea that a college diploma is an all-but-mandatory ticket to a successful career is showing fissures. Feeling squeezed by a sagging job market and mounting student debt, a groundswell of university-age heretics are pledging allegiance to new groups like UnCollege, dedicated (p. 16) to "hacking" higher education. Inspired by billionaire role models, and empowered by online college courses, they consider themselves a D.I.Y. vanguard, committed to changing the perception of dropping out from a personal failure to a sensible option, at least for a certain breed of risk-embracing maverick.

Risky? Perhaps. But it worked for the founders of Twitter, Tumblr and a little company known as Apple.

When Mr. Goering was wrestling with his decision, he woke up every morning to a ringtone mash-up that blended electronic tones with snippets of Steve Jobs's 2005 commencement address at Stanford University, in which he advised, "love what you do," "don't settle." Mr. Goering took that as a sign.

"It's inspiring that his dropping out basically had no effect, positive or negative, on the work and company and values he could create," he said of the late Apple co-founder.

In that oft-quoted address, Mr. Jobs called his decision to drop out of Reed College "one of the best decisions I ever made." Mr. Jobs's "think different" approach to education (backpacking through India, dining with Hare Krishnas) is portrayed in countless hagiographies as evidence of his iconoclastic genius.


. . .


. . . Dale J. Stephens, [is] the founder of a group called UnCollege that champions "more meaningful" alternatives to college. . . .


. . .


UnCollege advocates a D.I.Y. approach to higher education and spreads the message through informational "hackademic camps." "Hacking," in the group's parlance, can involve any manner of self-directed learning: travel, volunteer work, organizing collaborative learning groups with friends. Students who want to avoid $200,000 in student-loan debt might consider enrolling in a technology boot camp, where you can learn to write code in 8 to 10 weeks for about $10,000, Mr. Stephens said.

THEY can also nourish their minds from a growing menu of Internet classrooms, including the massive open online courses, or MOOCs, which stream classes from elite universities like Princeton. This guerrilla approach hits home with young people who came of age seeking out valuable content free on Napster and BitTorrent.

Mr. Stephens, a dropout from Hendrix College in Arkansas (he later earned a Thiel Fellowship), started UnCollege less than two years ago, and already its Web site attracts 20,000 unique visitors a month. "I get on scale of 10 to 15 e-mails a day from people who say something along lines of, 'I thought I was the only one out there who thought about education like this, I don't feel crazy anymore,' " he said.


. . .


The goal is not to foment for a mass exodus from the ivy halls, Mr. Stephens said, but to open people's minds to a different set of opportunities.



For the full story, see:

ALEX WILLIAMS. "The Old College Try? No Way." The New York Times (Sun., December 2, 2012): 1 & 16.

(Note: ellipses and bracketed "is" were added.)

(Note: the online version of the story has the date November 30, 2012, and has the title "Saying No to College.")






January 8, 2013

When Professors "Are Fearful, Hesitant, and Foolish" and When They "Screech, Snarl, and Spit"




(p. 243) "It is hardly possible to take very seriously any of the professoriate all of the time or most of them most of the time. They commonly are fearful, hesitant, and foolish when confronted by complex real issues and aggressive enemies, but they tend to screech, snarl, and spit when they perceive their territory, reputation, and perquisites to be threatened. They can pose as being valiant and principled, but they are inclined to disperse and camouflage themselves upon hearing the first volleys of significant battle."


Source:

Distinguished UCLA economist William R. Allen from an interview with Daniel B. Klein as quoted in:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 25, no. 1 (Winter 2011): 239-46.


For the full article/interview, see:

Allen, William R. "A Life among the Econ, Particularly at UCLA." Econ Journal Watch 7, no. 3 (September 2010): 205-34.






January 7, 2013

"A Fairy Tale About a Lonely Candle that Wants to Be Lighted"




TallowCandleManuscript2013-01-01.jpeg "A newly found manuscript of a fairy tale by Hans Christian Andersen, which has been located in Odense, is pictured in the State Archives in Copenhagen, Denmark, Wednesday, Dec. 12, 2012. The story of 'The Tallow Candle' might have been written about 1823, when he was 18 year old." Source of caption and photo: http://www.ctvnews.ca/entertainment/new-found-tale-of-a-lonely-candle-could-be-early-work-of-hc-andersen-1.1077533#ixzz2GmTQNcFvhttp://www.ctvnews.ca/polopoly_fs/1.1077539!/



(p. C2) A fairy tale about a lonely candle that wants to be lighted had been languishing in a box in Denmark's National Archives for many years. In October it was discovered by a retired historian, who now believes it is one of the first fairy tales ever written by Hans Christian Andersen.


. . .


The six-page manuscript, called "Tallow Candle," is dedicated to a vicar's widow named Bunkeflod who lived across the street from Andersen's home. Ejnar Stig Askgaard, a Hans Christian Andersen expert, said the work was probably one of Andersen's earliest.



For the full story, see:

CAROL VOGEL. "Discovery of Story Is Like a Fairy Tale." The Wall Street Journal (Fri., December 14, 2012): C2.

(Note: ellipsis and underline added; bold in original.)

(Note: the online version of the story has the date December 13, 2012, and has the title "Like a Fairy Tale: Hans Christian Andersen Story Is Found in a Box.")

(Note: the words underlined by me above, were in the online, but not the print, version of the article.)






January 6, 2013

"Think Profit"




(p. 339) At the January 1998 San Francisco Macworld, Jobs took the stage where Amelio had bombed a year earlier. He sported a full beard and a leather jacket as he touted the new product strategy. And for the first time he ended the presentation with a phrase that he would make his signature coda: "Oh, and one more thing . . ." This time the "one more thing" was "Think Profit." When he said those words, the crowd erupted in applause. After two years of staggering losses, Apple had enjoyed a profitable quarter, making $45 million. For the full fiscal year of 1998, it would turn in a $309 million profit. Jobs was back, and so was Apple.


Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: ellipsis in original.)






January 5, 2013

Government Job Protection Regulations Reduce Youth Jobs




EuropeYouthUnemploymentGraph2013-01-01.jpg










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




(p. A7) Socialist President François Hollande has come up with a plan to ease the problem: give €4,000 ($5,276) a year for three years to small companies that hire a young person on a permanent contract while committing to keep an employee age 57 or over.


. . .


The French government hopes as many as half a million youths will find permanent jobs over the next five years due to the measure, which could cost the government about €1 billion a year when it is in place.

Economists say the number of real new jobs is likely to be much lower because the government will be subsidizing jobs that would have been created anyway. Only around 100,000 new jobs will be created, according to OFCE, an economic-research think tank in Paris.

French companies say they are reluctant to hire young people on permanent contracts because it gives employees a level of protection the companies say they can't afford to grant--even if they get the subsidy proposed by Mr. Hollande.

"It's great to have €4,000, but if the new recruit isn't good, we don't know how long we'll be stuck with them," said Philippe Lehmann, who runs Lehmann Sarl, a mechanical-parts factory in Molsheim, eastern France that employs seven people.




For the full story, see:

WILLIAM HOROBIN. "France Pins Hopes on Youth Jobs Plan." The Wall Street Journal (Mon., December 24, 2012): A7.

(Note: ellipsis added.)

(Note: the online version of the story has the date December 23, 2012.)

(Note: the online version of the last two paragraphs quoted above contains a few extra words of elaboration at the end of each paragraph, as compared to the print version. I have underlined these words in the passages quoted above.)






January 4, 2013

How Chavez Punished Those Who Opposed Him




(p. 196) In 2004, the Hugo Chávez regime in Venezuela distributed the list of several million voters who had attempted to remove him from office throughout the government bureaucracy, allegedly to identify and punish these voters. We match the list of petition signers distributed by the government to household survey respondents to measure the economic effects of being identified as a Chávez political opponent. We find that voters who were identified as Chávez opponents experienced a 5 percent drop in earnings and a 1.3 percentage point drop in employment rates after the voter list was released.


Source:

Hsieh, Chang-Tai, Edward Miguel, Daniel Ortega, and Francisco Rodriguez. "The Price of Political Opposition: Evidence from Venezuela's Maisanta." American Economic Journal: Applied Economics 3, no. 2 (2011): 196-214.







January 3, 2013

"People Said He Was a Fraud, But He Turned Out to Be Right"




WhitfieldWillisCleanRoom2013-01-01.jpg













"Willis Whitfield with a mobile clean room in the 1960s." Source of caption and photo: online version of the NYT article quoted and cited below.





(p. B16) Half a century ago, as a rapidly changing world sought increasingly smaller mechanical and electrical components and more sanitary hospital conditions, one of the biggest obstacles to progress was air, and the dust and germs it contains.


. . .


Then, in 1962, Willis Whitfield invented the clean room.

"People said he was a fraud," recalled Gilbert V. Herrera, the director of microsystems science and technology at Sandia National Laboratories in Albuquerque. "But he turned out to be right."


. . .


His clean rooms blew air in from the ceiling and sucked it out from the floor. Filters scrubbed the air before it entered the room. Gravity helped particles exit. It might not seem like a complicated concept, but no one had tried it before. The process could completely replace the air in the room 10 times a minute.

Particle detectors in Mr. Whitfield's clean rooms started showing numbers so low -- a thousand times lower than other methods -- that some people did not believe the readings, or Mr. Whitfield. He was questioned so much that he began understating the efficiency of his method to keep from shocking people.

"I think Whitfield's wrong," a scientist from Bell Labs finally said at a conference where Mr. Whitfield spoke. "It's actually 10 times better than he's saying."



For the full obituary, see:

WILLIAM YARDLEY. "W. Whitfield, 92, Dies; Built Clean Room." The New York Times (Weds., December 5, 2012): B16.

(Note: ellipses added.)

(Note: the online version of the obituary has the date December 4, 2012, and has the title "Willis Whitfield, Inventor of Clean Room That Purges Tiny Particles, Dies at 92.")






January 2, 2013

Jobs Laid Off 3,000 from Apple to Save It from Bankruptcy




(p. 339) In his first year back, Jobs laid off more than three thousand people, which salvaged the company's balance sheet. For the fiscal year that ended when Jobs became interim CEO in September 1997, Apple lost $1.04 billion. "We were less than ninety days from being insolvent," he recalled.


Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.






January 1, 2013

Internet Allows Pricing Experiments




PricesVaryByLocationGraphic2012-12-29.jpgSource of graphic: online version of the WSJ article quoted and cited below.



(p. A10) This year, researchers in Spain studied more than 200 online retailers and found a handful of examples of price differences--including at Staples within Massachusetts--that appeared to be based on location and other factors. Those findings suggest that Staples' price adjustments have been present at least since this summer.

It is difficult for online shoppers to know why, or even if, they are being offered different deals from other people. Many sites switch prices at lightning speed in response to competitors' offerings and other factors, a practice known as "dynamic pricing." Other sites test different prices but do so without regard to the buyer's characteristics.

To find differences that weren't purely the result of dynamic pricing or randomized tests, the Journal conducted preliminary scans by simulating visits from different computers to a variety of e-commerce sites. If a website showed different prices or offers, the Journal then analyzed the site's computer code and conducted follow-up testing.

The Journal's tests, which were conducted in phases between August and December, indicated that some big-name retailers are experimenting with offering different prices and products to different users.

Some sites, for example, gave discounts based on whether or not a person was using a mobile device. A person searching for hotels from the Web browser of an iPhone or Android phone on travel sites Orbitz and CheapTickets would see discounts of as much as 50% off the list price, Orbitz said.


. . .


At home-improvement site Lowe's Cos., . . . prices depend on location. For example, a refrigerator in the Journal's tests cost $449 in Chicago, Los Angeles and Ashburn, Va., but $499 in seven other test cities. Lowe's said online shoppers receive the lower of the online store price or the price at their local Lowe's store as indicated by their ZIP Code.

Home Depot's website offered price variations that appeared to be based on the nearest brick-and-mortar store as well. A 250-foot spool of electrical wiring fell into six pricing groups, including $70.80 in Ashtabula, Ohio; $72.45 in Erie, Pa.; $75.98 in Olean, N.Y and $77.87 in Monticello, N.Y.


. . .


The differences found on the Staples website presented a complex pricing scheme. The Journal simulated visits to Staples.com from all of the more than 42,000 U.S. ZIP Codes, testing the price of a Swingline stapler 20 times in each. In addition, the Journal tested more than 1,000 different products in 10 selected ZIP Codes, 10 times in each location.

The Journal saw as many as three different prices for individual items. How frequently a simulated visitor saw low and high prices appeared to be tied to the person's ZIP Code. Testing suggested that Staples tries to deduce people's ZIP Codes by looking at their computer's IP address. This can be accurate, but isn't foolproof.

In the Journal's tests, ZIP Codes whose center was farther than 20 miles from a Staples competitor saw higher prices 67% of the time. By contrast, ZIP Codes within 20 miles of a rival saw the high price least often, only 12% of the time.



For the full story, see:

JENNIFER VALENTINO-DEVRIES, JEREMY SINGER-VINE and ASHKAN SOLTANI. "Websites Vary Prices, Deals Based on Users' Information." The Wall Street Journal (Mon., December 24, 2012): A1 & A10.

(Note: ellipses added.)






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