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October 31, 2013

After 25 Years of Government Harassment, A&P Was Finally Allowed to Lower Prices for Consumers





The two main types of creative destruction are: 1.) new products and 2.) process innovations. Much has been written about the new product type; much less about the process innovation type. Marc Levinson has written two very useful books on process innovations that are important exceptions. The first is The Box and the second is The Great A&P.


(p. A13) A prosecutor in Franklin Roosevelt's administration called it a "giant blood sucker." A federal judge in Woodrow Wilson's day deemed it a "monopolist," and another, during Harry Truman's presidency, convicted it of violating antitrust law. The federal government investigated it almost continuously for a quarter-century, and more than half the states tried to tax it out of business. For its strategy of selling groceries cheaply, the Great Atlantic & Pacific Tea Company paid a very heavy price.


. . .


A&P was Wal-Mart long before there was Wal-Mart. Founded around the start of the Civil War, it upset the tradition-encrusted tea trade by selling teas at discount prices by mail and developing the first brand-name tea. A few years later, its tea shops began to stock spices, baking powder and canned goods, making A&P one of the first chain grocers.

Then, in 1912, John A. Hartford, one of the two brothers who had taken over the company from their father, had one of those inspirations that change the course of business. He proposed that the company test a bare-bones format at a tiny store in Jersey City, offering short hours, limited selection and no home delivery, and that it use the cost savings to lower prices. The A&P Economy Store was an instant success. The Great A&P was soon opening one and then two and then three stores per day. By 1920, it had become the largest retailer in the world.


. . .


While shoppers flocked to A&P's 16,000 stores, small grocers and grocery wholesalers didn't share their enthusiasm. The anti-chain-store movement dates back at least to 1913, when the American Fair-Trade League pushed for laws against retail price-cutting.


. . .


Thanks in good part to the Hartfords' tenacity, the restraints on discount retailing began to fade away in the 1950s. Chain-store taxes were gradually repealed, and state laws limiting price competition to protect mom and pop were taken off the books. By 1962, when Wal-Mart, Target, Kmart, and other modern discount formats were born, the pendulum had swung in consumers' favor.



For the full commentary, see:

MARC LEVINSON. "When Creative Destruction Visited the Mom-and-Pops; The A&P grocery company may be nearing its sell-by date, but a century ago it was a fresh, revolutionary business." The Wall Street Journal (Sat., Oct. 12, 2013): A13.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Oct. 11, 2013, and had the title "Marc Levinson: When Creative Destruction Visited the Mom-and-Pops; The A&P grocery company may be nearing its sell-by date, but a century ago it was a fresh, revolutionary business.")


Levinson's book on A&P is:

Levinson, Marc. The Great A&P and the Struggle for Small Business in America. New York: Hill and Wang, 2011.






October 30, 2013

Fed-Mandated High Sugar Prices Drive Candy Jobs Abroad




CandyJobsLostGraph2013-10-23.jpg











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




(p. A1) On Friday, [Oct. 18, 2013] the U.S. sugar contract in the futures market settled at 22.28 cents a pound, or 14% higher than the benchmark global price.

U.S. prices can't fall much lower because of a federal government program that guarantees sugar processors a minimum price. The rest of the world also has a surfeit of sugar, but fewer price restrictions, and big growers like Brazil are expecting a record crop for the current season.

The squeeze explains why Atkinson Candy Co. has moved 80% of its peppermint-candy production to a factory in Guatemala that opened in 2010. That means it can sell bite-size Mint Twists to retailers for 10% to 20% less.

"It wasn't like we did it for (p. A14) profit reasons. We did it for survival reasons," said Eric Atkinson, president of the family-owned candy maker, based in Lufkin, Texas. "These are 60 jobs down there...that could be in the U.S.," he added. "It's a damn shame."

Jelly Belly Candy Co. is finishing its second expansion of a factory in Thailand that was opened by the Fairfield, Calif., company in 2007. The sixth-generation family-owned firm sells about 20% of its jelly beans, made in flavors from buttered popcorn to very cherry, outside the U.S.

Sugar makes up about half of the ingredients and cost of a typical jelly bean, said Bob Simpson, Jelly Belly's president and chief operating officer. Thailand is the world's fourth-largest sugar producer and gives Jelly Belly access to cheaper sugar, labor and other raw materials than the candy maker has in the U.S.

"You can't compete shipping finished U.S. goods" anymore, Mr. Simpson said. In the U.S., Jelly Belly has had to raise prices "several times" in the past 10 years due to high sugar prices.


. . .


Three candy-making jobs are lost for each sugar-growing and processing job saved by higher sugar prices, according to a Commerce Department report in 2006.

In a sign that candy makers are taking advantage of lower sugar prices elsewhere, the amount of sugar contained in imported products surged 33% from 2002 to 2012, according to the Agriculture Department.



For the full story, see:

Wexler, Alexandra. "Cheaper Sugar Sends Candy Makers Abroad." The Wall Street Journal (Mon., Oct. 21, 2013): A1 & A14.

(Note: ellipsis, and bracketed date, added.)

(Note: the online version of the story has the date Oct. 20, 2013.)



JellyBellyCaliforniaFactory2013-10-23.jpg









"Jelly Belly, whose facility in Fairfield, Calif., is shown above, is expanding its factory in Thailand." Source of caption and photo: online version of the WSJ article quoted and cited above.






October 29, 2013

Google Had the Most "Massive Parallelized Redundant Computer Network" in the World




(p. 198) . . . by perfecting its software, owning its own fiber, and innovating in conservation techniques, Google was able to run its computers spending only a third of what its competitors paid. "Our true advantage was actually the fact that we had this massive parallelized redundant computer network, probably more than anyone in the world, including governments," says Jim Reese. "And we realized that maybe it's not in our best interests to let our competitors know."


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added.)






October 28, 2013

Goldman I.P.O. Led to Pressure to Grow




WhatHappenedToGoldmanSachsBK2013-10-22.jpg











Source of book image: http://s.wsj.net/public/resources/images/OB-ZF094_bkrvgo_GV_20131008133334.jpg







(p. B8) Steven G. Mandis, a Ph.D. candidate in sociology at Columbia University, takes a measured, academic approach to the question in a new book, "What Happened to Goldman Sachs," an examination of the bank's evolution from an elite private partnership to a vast public corporation -- and the effects of that transformation on its culture.


. . .


Mr. Mandis said that the two popular explanations for what might have caused a shift in Goldman's culture -- its 1999 initial public offering and subsequent focus on proprietary trading -- were only part of the explanation. Instead, Mr. Mandis deploys a sociological theory called "organizational drift" to explain the company's evolution.

The essence of his argument is that Goldman came under a variety of pressures that resulted in slow, incremental changes to the firm's culture and business practices, resulting in the place being much different from what it was in 1979, when the bank's former co-head, John Whitehead, wrote its much-vaunted business principles.

These changes included the shift to a public company structure, a move that limited Goldman executives' personal exposure to risk and shifted it to shareholders. The I.P.O. also put pressure on the bank to grow, causing trading to become a more dominant focus. And Goldman's rapid growth led to more potential for conflicts of interest and not putting clients' interests first, Mr. Mandis says.



For the full review, see:

PETER LATTMAN. "An Ex-Trader, Now a Sociologist, Looks at the Changes in Goldman." The New York Times (Tues., October 1, 2013): B8.

(Note: ellipsis added.)

(Note: the online version of the review has the date SEPTEMBER 30, 2013.)


The book under review is:

Mandis, Steven G. What Happened to Goldman Sachs: An Insider's Story of Organizational Drift and Its Unintended Consequences. Boston, MA: Harvard Business School Publishing, 2013.


MandisStevenAuthorGoldmanBook2013-10-22.jpg












"Steven G. Mandis is the author of "What Happened to Goldman Sachs."" Source of caption and photo: online version of the NYT article quoted and cited above.







October 27, 2013

Silicon Valley Is Open to Creative Destruction, But Tired of Taxes




(p. A15) Rancho Palos Verdes, Calif.

When the howls of creative destruction blew through the auto and steel industries, their executives lobbied Washington for bailouts and tariffs. For now, Silicon Valley remains optimistic enough that its executives don't mind having their own businesses creatively destroyed by newer technologies and smarter innovations. That's an encouraging lesson from this newspaper's recent All Things Digital conference, which each year attracts hundreds of technology leaders and investors.


. . .


In a 90-minute grilling by the Journal's Walt Mossberg and Kara Swisher, Apple Chief Executive Tim Cook assured the audience that his company has "some incredible plans that we've been working on for a while."

Mr. Cook's sunny outlook was clouded only by his dealings with Washington. He was recently the main witness at hearings called by Sen. Carl Levin, a Michigan Democrat, who accused Apple of violating tax laws. In fact, Apple's use of foreign subsidiaries is entirely legal--and Apple is the largest taxpayer in the U.S., contributing $6 billion a year to the government's coffers.

Mr. Cook put on a brave face about the hearings, saying, "I thought it was very important to go tell our side of the story and to view that as an opportunity instead of a pain in the [expletive]." Mr. Cook's foul language was understandable. "Just gut the [tax] code," he told the conference. "It's 7,500 pages long. . . . Apple's tax return is two feet high. It's crazy."

When the audience applauded, Ms. Swisher quipped, "All right, Rand Paul." A woman shouted: "No, I'm a Democrat!" One reason the technology industry remains the center of innovation may be that many technologists of all parties view trips to Washington as a pain.



For the full commentary, see:

L. GORDON CROVITZ. "INFORMATION AGE; Techies Cheer Creative Destruction." The Wall Street Journal (Mon., June 3, 2013): A15.

(Note: ellipsis between paragraphs added; italics in original; ellipsis, and bracketed words, within next-to-last paragraph, in original.)

(Note: the online version of the commentary has the date June 2, 2013.)






October 26, 2013

Under Humble Austerity Policy China Builds $11.4 Million Giant Brass Puffer Fish




PufferFishStatueYangshong2013-10-22.jpg "A puffer fish statue in Yangzhong has raised ire in view of a government pledge to end spending on vanity projects." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. 6) HONG KONG -- Chinese Communist Party leaders' vows of a new era of humble austerity in government may have met their most exotic adversary yet: an $11 million, 2,300-ton, 295-foot-long puffer fish.

The brass-clad statue, which shimmers golden in the sunlight and switches into a garish light show at night, was built by the city of Yangzhong, in Jiangsu Province in eastern China, . . .


. . .


Chinese news outlets said the brass and steel for the fish cost about $1.7 million, raising questions about where the rest of the money went. Construction of the fish tower began on a previously isolated and undeveloped river island in March, four months after Mr. Xi was appointed party leader.


. . .


. . . China is speckled with outlandish works of official art that vie with even a giant, glow-in-the-dark puffer fish for attention and outrage.

Critics berated a county in Guizhou Province for building "the world's biggest teapot," a 243-foot-high teapot-shaped tower, complete with spout, that was part of a $13 million project.

In Henan Province, in central China, a government-backed charity has been accused of corruption in spending about $19.6 million on a vast, unsightly sculpture of Song Qingling, the widow of Sun Yat-sen, a revered founder of modern China. Zhengzhou, the capital of Henan Province, is also home to a sculpture of two pigs in a frolicking embrace. From certain angles, the pigs might appear to be mating.



For the full story, see:

CHRIS BUCKLEY. "As China Vows Austerity, Giant Brass Fish Devours $11 Million." The New York Times, First Section (Sun., October 13, 2013): 6.

(Note: ellipses added.)

(Note: the online version of the review has the date October 12, 2013.)



SongQinglingSculpture2013-10-23.jpg









"A sculpture of Song Qingling, the widow of Sun Yat-sen, a founder of modern China." Source of caption and photo: online version of the NYT article quoted and cited above.







October 25, 2013

Larry Page: "At His Core He Cares about Latency"




(p. 184) Speed had always been an obsession at Google, especially for Larry Page. It was almost instinctual for him. "He's always measuring everything," says early Googler Megan Smith. "At his core he cares about latency." More accurately, he despises latency and is always trying to remove it, like Lady Macbeth washing guilt from her hands. Once Smith was walking down the street with him in Morocco and he suddenly dragged her into a random Internet café with maybe three machines. Immediately, he began timing how long it took web pages to load into a browser there.

Whether due to pathological impatience or a dead-on conviction that speed is chronically underestimated as a factor in successful products, Page had been insisting on faster delivery for everything Google from the beginning. The minimalism of Google's home page, allowing for lightning-quick (p. 185) loading, was the classic example. But early Google also innovated by storing cached versions of web pages on its own servers, for redundancy and speed.

"Speed is a feature," says Urs Hölzle. "Speed can drive usage as much as having bells and whistles on your product. People really underappreciate it. Larry is very much on that line."




Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






October 24, 2013

Puritan Slavery




ForAdamsSakeBK2013-10-22.jpg












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






We are taught in elementary school that the roots of America lie in the religious Puritans and Pilgrims. But I believe that there is something to Russell Shorto's argument that we under-appreciate the contribution of the secular libertarian Dutch of New Amsterdam. In this continuing debate, it is useful to have an accurate history of all sides.



(p. A11) The great Puritan divine John Winthrop, founder of the Massachusetts Bay Colony, probably wouldn't make it through Allegra di Bonaventura's book without suffering a cardiac episode. Set principally in the seaport town of New London, Conn., "For Adam's Sake" provides an astonishing worm's-eye view of Winthrop's beloved Bible Commonwealth in the throes of its ghastly unraveling, even as it narrates an intimate history of racial slavery in early New England through the entwined lives of five families (the Winthrops among them).

Many readers will be surprised to learn that slavery flourished in colonial New England--albeit on a smaller scale than on the plantations of the antebellum South. And they might be forgiven their incredulity: "New Englanders in the nineteenth century," Ms. di Bonaventura writes, "studiously erased and omitted inconvenient and unsavory aspects of their region's collective past in favor of a more heroic and wholesome narrative of their own history." Such acts of moral cleansing all but obscured the lives of enslaved New Englanders well into our own time.



For the full review, see:

KIRK DAVIS SWINEHART. "BOOKSHELF; Not Your Parents' Puritans; Slavery flourished in colonial New England. Yet the Puritans' erasure of its signs have obscured their crimes well into our own time." The Wall Street Journal (Mon., Aug. 5, 2013): A11.

(Note: the online version of the review has the date Aug. 4, 2013.)


The book under review is:

di Bonaventura, Allegra. For Adam's Sake: A Family Saga in Colonial New England. New York: Liveright Publishing Corporation, 2013.


The relevant book by Russell Shorto is:

Shorto, Russell. The Island at the Center of the World: The Epic Story of Dutch Manhattan and the Forgotten Colony That Shaped America. New York: Doubleday, 2004.






October 23, 2013

Push the Flywheel, in Business and Life





Jim Collins makes wonderful use of the flywheel analogy in his Good to Great book. His point is that many achievements in business require long, gradual work to build to a major achievement that finally gets noticed by the business press and the general public. The business press often assumes that the success is overnight, when it is in fact long-building.


(p. C14) Flywheels - weighted wheels used for absorbing, storing and releasing energy - get used in everything from pottery wheels to car engines. Lately, they have showed up in corporate spin.

"Our more than 19,000 store global footprint, our fast-growing CPG presence and our best-in-class digital, card, loyalty and mobile capabilities are creating a 'flywheel' effect elevating the relevancy of all things Starbucks, and driving profitability," CEO Howard Schultz said in a statement accompanying quarterly earnings last month.

"So we have the flywheel spinning in the right direction because it is spinning one way and letting us generate these margins, contribution margins," said Overstock.com CEO Patrick Byrne last month. "And so now we can give some of that back and that makes it easier to get it spinning faster."

"We are at the one-mile market (sic) in a marathon," commented Symantec CEO Steve Bennett in an earnings call with analysts last week, "and the flywheel is just starting to spin."



For the full story, see:

JUSTIN LAHART. "Overheard." The Wall Street Journal (Weds., Aug 6, 2013): C14.

(Note: the online version of the story has the date Aug 6, 2013, and had the title "Ride a Painted Pony, Let the Spinning Wheel Fly." The print version did not identify an author. The versions were slightly different in two or three places--when different, the version quoted above follows the print version.)


The Collins book, mentioned above, is:

Collins, Jim. Good to Great: Why Some Companies Make the Leap... And Others Don't. New York: HarperCollins Publishers, Inc., 2001.






October 22, 2013

Dohrmann and Quevedo Survive Creative Destruction of Inacom




DohrmannHokampQuevedoCosentry2013-10-07.jpg "Cosentry, an Omaha-based provider of data center storage and managed technology services, has a new CEO, Brad Hokamp, center. With him at the Cosentry data center in Papillion are company founders Kevin Dohrmann, left, and Manny Quevedo." Source of caption and photo: online version of the Omaha World-Herald article quoted and cited below.


Innovation through creative destruction brings us the new products and processes that make our lives longer, richer and more satisfying. The major downside of creative destruction is the job loss of those working for firms that are creatively destroyed. Sometimes, in class, I use Omaha's Inacom as a concrete example. Inacom was a value-added retailer of computer equipment. They would buy PCs from IBM, Compaq and the like, then add software and hardware, and re-sell and install for firms, at a mark-up. They were creatively destroyed by Dell's process innovation of customizing and selling direct, at much lower prices than Inacom charged. When I arrived in Omaha, Inacom was one of a handful of Fortune 500 firms. Now Inacom is gone. But just because a firm is creatively destroyed does not imply that all those who worked for the firm are creatively destroyed. Dohrmann and Quevedo were executives at Inacom. They had the skills, knowledge, resilience and work ethic to create their own entrepreneurial startup that has thrived. Not everyone can do what Dohrmann and Quevedo did. But everyone should be able to improve their skills, knowledge, resilience, and work ethic, so that if creative destruction destroys the firm that employs them, they will still survive and possibly thrive.


(p. 1D) Cosentry's regional data center footprint has grown far from its "humble beginnings" 12 years ago of just 4,000 square feet in the old Southroads Mall in Bellevue.

"Everyone saw it as a mall that was in deterioration, and I walked in and saw the most beautiful building in Omaha," co-founder Manny Quevedo said, (p. 3D) remembering solid walls and below-grade space for computer systems.

Investments from Omaha firms Waitt Co. and McCarthy Capital along the way helped the firm grow; it was sold in 2011 to Boston private equity firm TA Associates but still has its headquarters at 127th Street and West Dodge Road.


. . .


The company's workforce has approximately doubled in the last five years to nearly 200, more than half of them in Nebraska, and will continue to grow gradually with the expansion as Cosentry hires more engineers and technicians, Quevedo said.

Today the company has six data centers, including two each in the Kansas City and Sioux Falls, S.D., metropolitan areas. If you use utilities or health care services or do any shopping or banking in the region, there's a chance some of your information has been stored or processed through Cosentry's servers.

Cosentry started with what Quevedo said was a handful of clients and grew to hundreds within its first five years.


. . .


(p. 3D) Cosentry Timeline

2001: With investment from Waitt Co., Cosentry is started by Manny Quevedo and Kevin Dohrmann, former employees of InaCom, the former Omaha Fortune 500 computer dealer that began as a division of Valmont Industries but merged with VanStar of Atlanta in 2000 and later declared bankruptcy. Cosentry creates a data center in Bellevue.

2005: Cosentry, also called IPR Inc., sold its IP Revolution division to a Kansas firm, Choice Solutions. IP Revolution sold voice and data communications services and systems. Cosentry doubles the size of its Bellevue data center and expands to the Kansas City and Sioux Falls, S.D., markets.

2008: Omaha investment firm McCarthy Capital invests in the firm. At the time, Cosentry had 95 employees.

2010: Cosentry cuts the ribbon on the $26 million Midlands Data Center in Papillion, a joint project with Alegent Health, which uses the center to store electronic medical records.

2011: Boston investment firm TA Associates buys Cosentry for an undisclosed amount from McCarthy and Waitt. The local management team continues to operate and have an ownership stake in Cosentry. The firm expands with second data centers in both the Sioux Falls and Kansas City markets.

2013: Cosentry refinances its credit facilities to provide up to $100 million to enable expansion, including the expansion of the Midlands Data Center. Today, Cosentry has nearly 200 employees and six data centers in three metropolitan areas.



For the full story, see:

Barbara Soderlin. "A Growing Tech Footprint: As Businesses' Data Storage Needs Expand, Cosentry Adds to Its Papillion Center." Omaha World-Herald (MONDAY, AUGUST 26, 2013): 1D & 3D.

(Note: ellipses added; bold in original print version of article.)

(Note: the online version of the article has the title "As Businesses' Data Storage Needs Expand, Cosentry Adds to Its Papillion Center.")




CosentryScottCappsAtPapillionDataCenterCoolingSystem2013-10-07.jpg






"Scott Capps of Cosentry's Papillion data center with the cooling system that helped Cosentry earn an Energy Star certification, which is given by the Environmental Protection Agency based on energy efficiency and lower emissions. It's the only data center in Nebraska with the certification." Source of caption and photo: the archive online version of the Omaha World-Herald article quoted and cited above.






October 21, 2013

Google's Redundant, Fault-Tolerant System Worked with Cheap, Low-Quality, Failure-Prone Equipment




(p. 183) Google was a tough client for Exodus; no company had ever jammed so many servers into so small an area. The typical practice was to put between five and ten servers on a rack; Google managed to get eighty servers on each of its racks. The racks were so closely arranged that it was difficult for a human being to squeeze into the aisle between them. To get an extra rack in, Google had to get Exodus to temporarily remove the side wall of the cage. "The data centers had never worried about how much power and AC went into each cage, because it was never close to being maxed out," says Reese. "Well, we completely maxed out. It was on an order of magnitude of a small suburban neighborhood," Reese says. Exodus had to scramble to install heavier circuitry. Its air-conditioning was also overwhelmed, and the colo bought a portable AC truck. They drove the eighteen-wheeler up to the colo, punched three holes in the wall, and pumped cold air into Google's cage through PVC pipes.


. . .


The key to Google's efficiency was buying low-quality equipment dirt cheap and applying brainpower to work around the inevitably high failure rate. It was an outgrowth of Google's earliest days, when Page and Brin had built a server housed by Lego blocks. "Larry and Sergey proposed that we design and build our own servers as cheaply as we can-- massive numbers of servers connected to a high-speed network," says Reese. The conventional wisdom was that an equipment failure should be regarded as, well, a failure. Generally the server failure rate was between 4 and 10 percent. To keep the failures at the lower end of the range, technology companies paid for high-end equipment from Sun Microsystems or EMC. "Our idea was completely opposite," says Reese. "We're going to build hundreds and thousands of cheap servers knowing from the get-go that a certain percentage, maybe 10 percent, are going to fail," says Reese. Google's first CIO, Douglas Merrill, once noted that the disk drives Google purchased were "poorer quality than you would put into your kid's computer at home."

(p. 184) But Google designed around the flaws. "We built capabilities into the software, the hardware, and the network--network-- the way we hook them up, the load balancing, and so on-- to build in redundancy, to make the system fault-tolerant," says Reese. The Google File System, written by Jeff Dean and Sanjay Ghemawat, was invaluable in this process: it was designed to manage failure by "sharding" data, distributing it to multiple servers. If Google search called for certain information at one server and didn't get a reply after a couple of milliseconds, there were two other Google servers that could fulfill the request.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added.)






October 20, 2013

Hubel and Wiesel Are an Example that 'Luck Favors the Prepared Mind'




WieselTorstenAndHubelDavidNobelPrizeWinners2013-10-06.jpg





"Dr. David Hubel, right, celebrating with his longtime collaborator, Dr. Torsten Wiesel, after they won the Nobel Prize in 1981." Source of caption and photo: online version of the NYT obituary quoted and cited below.




(p. A25) Dr. Hubel and Dr. Wiesel liked to recall that their initial discovery about how vision works resulted from luck. Working in a tiny basement laboratory at Johns Hopkins, the pair struggled for days to coax brain cells in cats to respond to images of dark and light spots. Becoming increasingly frustrated, they waved their arms, jumped around, and, in a moment of levity, displayed images of glamorous women from magazines.

Then, as they shifted a slide in the opthalmoscope, a cell in the cat's visual cortex suddenly started to fire. The edge of the slide had cast a straight, dark line on the animal's retina. "It was what the cell wanted, and it wanted it, moreover, in just one narrow range of orientations," Dr. Hubel said in his Nobel lecture.

They studied the cell for nine hours, and then, Dr. Wiesel recalled, ran down the hall screaming with joy.



For the full obituary, see:

DENISE GELLENE. "David Hubel, Nobel-Winning Scientist, Dies at 87." The New York Times (Weds., September 25, 2013): A4.

(Note: the online version of the obituary has the date September 24, 2013.)






October 19, 2013

Samuelson Disputed Nephew Summers' Praise for Milton Friedman




(p. A4) [Uncle Paul Samuelson and nephew Larry Summers] clashed over the fate of struggling mortgage giants Fannie Mae and Freddie Mac, which were bolstered by a government backstop in July 2008 and later taken over completely by the U.S. Treasury.

Mr. Samuelson found "strange and harmful" his nephew's skepticism about the government backstop for the firms. Mr. Summers, a longtime critic of the two firms, wrote back that shareholders and management of Fannie and Freddie didn't deserve taxpayer support.

Friction had emerged earlier in 2006, when Mr. Summers praised the late Mr. Friedman in a New York Times column. Friedman was "the most influential economist" of the second half of the 20th century, Mr. Summers said.

"For your eyes only," Mr. Samuelson wrote to his nephew of Mr. Friedman, "I had to grade him low as a macro economist" and "stubbornly old fashioned."



For the full story, see:

JON HILSENRATH. "A Close Bond and a Shared Love for 'Dismal Science'; Correspondence Between Famously Brash Summers and His Uncle, a Nobel Economist, Reveals Flashes of Humility and Tenderness." The Wall Street Journal (Sat., September 14, 2013): A4.

(Note: bracketed words added.)

(Note: the online version of the story was updated on September 15, 2013 and has the title "Letters Show Little-Known Side of Summers; Correspondence With Uncle, a Nobel Economist, Reveals Flashes of Humility and Tenderness.")






October 18, 2013

Covey Was Amazon's Entrepreneurial CFO




CoveyJoyAndSonTyler2013-09-25.jpg












Joy Covey and son Tyler. Source of photo: was posted on Joy Covey's Google+ page: https://lh6.googleusercontent.com/-3CNdHv-7W3A/Thx9kuMHEPI/AAAAAAAABKs/lX9H2JlJ_lg/w763-h762-no/J+%2526+T+snowbird.jpg



(p. D8) As Amazon's first chief financial officer, Ms. Covey helped take the company public and was an independent-minded advocate for Amazon's plans to ignore Wall Street and invest for the future. That notion, radical in its day, was the foundation for Amazon's growth into a $61 billion retailing and entertainment behemoth.

In its early days, Amazon prided itself on its unconventional hires, telling staffing agencies to "send us your freaks." Ms. Covey did not have a traditional background. She dropped out of high school at 15 and worked as a grocery clerk. She attended Cal State Fresno and later Harvard Law School, where, she said, she did not fit in.

"We'd go to lunch and people would talk about their favorite 17th-century poets, and I'd be thinking, 'Could I even name five poets? From any century?' "

But after joining Amazon in late 1996, when its annual revenue was less than $20 million, she thrived. She sold Wall Street the debt that the company needed to expand. The company went public on May 14, 1997, with an initial offering price of $18. Shares this week were selling for more than $312. Her own wealth is estimated at more than $200 million.



For the full obituary, see:

DAVID STREITFELD. "Joy Covey, 50, Top Executive in Amazon.com's Early Days." The New York Times (Sat., September 21, 2013): D8.

(Note: the online version of the obituary has the date September 19, 2013, and has the title "Joy Covey, Top Executive in Amazon.com's Early Days, Dies at 50.")






October 17, 2013

Gates Did Not See that Gmail's 2-Gig Storage Would Beat Hotmail




(p. 179) About six months after Gmail came out, Bill Gates visited me at Newsweek's New York headquarters to talk about spam. (His message was that within a year it would no longer be a problem. Not exactly a Nostradamus moment.) We met in my editor's office. The question came up whether free email accounts should be supported by advertising. Gates felt that users were more negative than positive on the issue, but if people wanted it, Microsoft would offer it.

"Have you played with Gmail?" I asked him.

"Oh sure, I play with everything," he replied. "I play with A-Mail, B-Mail, C-Mail, I play with all of them."

My editor and I explained that the IT department at Newsweek gave us barely enough storage to hold a few days' mail, and we both forwarded everything to Gmail so we wouldn't have to spend our time deciding what to delete. Only a few months after starting this, both of us had consumed more than half of Gmail's 2-gigabyte free storage space. (Google had already doubled the storage from one gig to two.)

Gates looked stunned, as if this offended him. "How could you need more than a gig?" he asked. "What've you got in there? Movies? PowerPoint presentations?"

No, just lots of mail.

He began firing questions. "How many messages are there?" he demanded. "Seriously, I'm trying to understand whether it's the number of messages or the size of messages." After doing the math in his head, he came to the conclusion that Google was doing something wrong.

The episode is telling. Gates's implicit criticism of Gmail was that it was wasteful in its means of storing each email. Despite his currency with cutting-edge technologies, his mentality was anchored in the old paradigm of storage being a commodity that must be conserved. He had written his first programs under a brutal imperative for brevity. And Microsoft's web-based email service reflected that parsimony.

The young people at Google had no such mental barriers. From the moment their company started, they were thinking in terms of huge numbers. Remember, they named their company after a 100-digit number! Moore's Law was as much a fact as air for them, so they understood that the expense of the seemingly astounding 2 gigabytes they gave away in 2004 would be negligible only months later. It would take some months for Gates's minions to catch up and for Microsoft's Hotmail to dramatically increase storage. (Yahoo Mail also followed suit.)

"That was part of my justification for doing Gmail," says Paul Buchheit of its ability to make use of Google's capacious servers for its storage. "When people said that it should be canceled, I told them it's really the foundation for a lot of other products. It just seemed obvious that the way things were going, all information was going to be online."



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: italics in original.)






October 16, 2013

"Burning Bush" Depicts Communists' Diabolical Harassment of Jan Palach's Family




PauhofovaTatianaInBurningBushMovie2013-10-06.jpg "BURNING BUSH; Tatiana Pauhofova in Agnieszka Holland's story of Prague under Communism." Source of caption and photo: online version of the NYT review quoted and cited below.


(p. C6) The Polish director Agnieszka Holland's magnificent docudrama, "Burning Bush," is a three-part mini-series made for HBO Europe that remembers the Soviet crackdown in Czechoslovakia following the Prague Spring. It begins with the death in 1969 of Jan Palach, a Czech student who set himself on fire as a political protest, and follows the diabolical attempts of the Soviet occupiers to blacken his name by portraying him as a fraud and right-wing tool. The film's depiction of the Communist regime's relentless harassment of his family and its sowing of paranoia within the student resistance recalls the 2007 film "The Lives of Others," about the Stasi's operations in East Berlin. In the sophisticated worldview of "Burning Bush," oppression may win in the short term, but the spark that ignites freedom movements, once lighted, can't be extinguished.


For the full review, see:

STEPHEN HOLDEN. "CRITIC'S NOTEBOOK; Still Meaty, Film Festival Lightens Up." The New York Times (Mon., September 30, 2013): C1 & C6.

(Note: the online version of the review has the date September 29, 2013.)






October 15, 2013

Prius Drivers Endanger Pedestrians and Cut in Front of Other Drivers




(p. B2) Jokes about BMW drivers being, on average, somewhat less than courteous are fairly common. They often run along the lines of, "Despite its good brakes, a BMW will usually stop with a jerk." Sometimes the language is more colorful.


. . .


Paul K. Piff, a researcher at the Institute of Personality and Social Research at the University of California, Berkeley, has conducted a study linking bad driving habits with wealth.


. . .


In California, where the study was conducted, state law requires motorists to stop at crosswalks when pedestrians are present, allowing them to cross the road. Mr. Piff said his team selected a specific crosswalk to observe, then had a pedestrian appear on the edge of the curb as a car approached. As the pedestrian stepped into the road, a researcher marked down the driver's reaction to the pedestrian. This was done with 152 drivers.

The team also watched a four-way-stop intersection over a week, noting how likely drivers were to cut in front of others when it was not their turn to go. In their observation of 274 cars, the researchers found that the more expensive ones were more likely to jump their turns in the four-way rotation, Mr. Piff said.


. . .


In the San Francisco Bay Area, where the hybrid gas-and-electric-powered Toyota Prius is considered a status symbol among the environmentally conscious, the researchers classified it as a premium model.

"In our higher-status vehicle category, Prius drivers had a higher tendency to commit infractions than most," Mr. Piff said.



For the full story, see:

BENJAMIN PRESTON. "The Rich Drive Differently, a Study Suggests." The New York Times (Tues., August 13, 2013): B2.

(Note: ellipses added.)

(Note: the online version of the story has the date August 12, 2013.)


The study discussed above is:

Piffa, Paul K., Daniel M. Stancatoa, Stéphane Côtéb, Rodolfo Mendoza-Dentona, and Dacher Keltnera. "Higher Social Class Predicts Increased Unethical Behavior." Proceedings of the National Academy of Sciences (PNAS) 109, no. 11 (March 13, 2012): 4086-91.






October 14, 2013

Brazilian Entrepreneur Inspired by "The Men Who Built America"




HangLucianoArrivesAtFlagshipHavanStoreInBrusque2013-09-29.jpgThe co-founder of the Havan chain, Luciano Hang, arrives at the chain's flagship store, which is in Brusque, Brazil. Source of photo: online version of the NYT article quoted and cited below.


(p. 6) "My philosophy is pro-capitalism, so of course the best symbols for this come from the United States," said Mr. Hang, who flies around Brazil on a Learjet to visit the nearly 60 stores in his chain, called Havan. "I tell people that we're about freedom: the freedom to stay open when we choose, the freedom to work for us and the freedom to shop," he added. "I know this can be controversial, but I think those who disagree with my approach are few and far between."


. . .


The son of textile factory workers, descended from German and Italian immigrants, Mr. Hang said he admired European culture but preferred the United States. He said he was inspired by a show on the History Channel, "The Men Who Built America," about industrial titans like John D. Rockefeller and Cornelius Vanderbilt.

"I couldn't sleep after I saw that program," he said.

His business model is partly based on Walmart, whose small-town origins he admires, as well as its method of turning economies of scale into low prices.



For the full story, see:

SIMON ROMERO. "Reshaping Brazil's Retail Scene, Inspired by Vegas and Vanderbilt." The New York Times, First Section (Sun., September 15, 2013): 6.

(Note: ellipsis added.)

(Note: the online version of the story has the date September 14, 2013.)






October 13, 2013

Larry Page's Very Tough Love: "I'd Rather Be Doused with Gasoline and Set on Fire than Use Your Product"




(p. 171) Caribou took forever to develop. Part of the problem was that Larry and Sergey were so invested in the project. They adopted it as their primary email system and would often drop by to give criticisms and suggestions. Buchheit would often take a working prototype to the weekly Google product strategy meeting, where product managers submit their products to a human wind tunnel of executive criticism. Products have been known to die at GPSs; there are stories of teams entering the conference room, exhausted and hopeful after long hours of getting a demo just right, and Page saying, "You're wasting our time" and ordering the project dismantled. Larry and Sergey liked Caribou too much to kill it but dished out very tough love. At one point Page told the group, "I'd rather be doused with gasoline and set on fire than use your product."


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: italics in original.)






October 12, 2013

"Professors Have Lost the Courage of Their Own Passions, Depriving Their Students of the Fire of Inspiration"




WhyTeachBK2013-10-04.jpg











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




(p. C4) Mr. Edmundson loves to teach, but he hates the conditions under which much teaching takes place today, even at an elite university like Virginia.


. . .


He knows the studies showing that students spend less time than ever on their classwork, and he writes of an implicit pact between undergraduates and professors in which teachers give high grades and thin assignments, and students reward them with positive evaluations. After all, given all the other amenities available through the university, the idea that "the courses you take should be the primary objective of going to college is tacitly considered absurd."


. . .


Mr. Edmundson worries that too many professors have lost the courage of their own passions, depriving their students of the fire of inspiration.



For the full review, see:

MICHAEL S. ROTH. "BOOKS OF THE TIMES; How Four Years Can (and Should) Transform You." The New York Times (Weds., August 21, 2013): C4.

(Note: ellipses added.)

(Note: the online version of the review has the date August 20, 2013.)


The book under review is:

Edmundson, Mark. Why Teach?: In Defense of a Real Education. New York: Bloomsbury USA, 2013.






October 11, 2013

Innovative Entrepreneurs More Likely to Have Engaged in Illicit Activities as Teens




(p. C4) What does it take to be a successful entrepreneur? The signs are obvious in future moguls' teenage years: brains, confidence--and illicit activities.

Those are the surprising findings of a new working paper by economists at the University of California at Berkeley and the London School of Economics. The researchers argue that merely being self-employed isn't a particularly good indicator of entrepreneurship, in the sense of taking big risks and mobilizing capital to create new goods and services.


. . .


. . . the professors sorted the self-employed into those who were incorporated and those who were not, with the researchers regarding the former as the genuine entrepreneurs.


. . .


Despite . . . dubious youthful pursuits, the incorporated tended to come from stable, well-educated families with high incomes in 1979. These entrepreneurs were much more likely to be white, male and well-educated than were salaried workers or the unincorporated self-employed.



For the full story, see:

DANIEL AKST. "The Bad-Boy Entrepreneur." The Wall Street Journal (Sat., August 17, 2013): C4.

(Note: ellipses added.)

(Note: the online version of the review has the date August 16, 2013.)


The working paper discussed is:

Levine, Ross, and Yona Rubinstein. "Smart and Illicit: Who Becomes an Entrepreneur and Does It Pay?" NBER Working Paper # 19276, August 2013.






October 10, 2013

Gene-Altered Mice Live 20% Longer




MouseGeneAltertedLivesLonger2013-09-27.jpg "NIH researchers found that lowering the expression of a single gene helped extend the life of mice by about 20%. A mouse with a manipulated gene on the right and an unchanged mouse on the left." Source of caption and photo: online version of the WSJ article quoted and cited below.



(p. A3) By reducing the activity of one type of gene, scientists said they increased the average life span of mice by about 20%, a feat that in human terms is akin to extending life by about 15 years.

Moreover, the researchers at the National Institutes of Health found that memory, cognition and some other important traits were better preserved in the mice as they aged, compared with a control group of mice that had normal levels of a protein put out by the gene.

The findings, published Thursday [August 29, 2013] in the journal Cell Reports, strengthen the case that the gene, called mTOR, is a major regulator of the aging process.


. . .


The results . . . build on a growing body of research challenging the belief that aging is an intractable biological process, prompting scientists to think of slowing aging as a possible way to prevent disease.

"What we need right now is for scientists and the public to wake up to the concept that you can slow aging," said Brian Kennedy, president of the Buck Institute for Aging Research in Novato, Calif., who wasn't involved in the new study. "If you do, you prevent many of the diseases that we're so scared of and that are associated with aging." They include cardiovascular disease, cancer and Alzheimer's disease.



For the full story, see:

RON WINSLOW. "Altered Gene Points Toward Longer Life Spans; Successful Experiment With Mice May One Day Play Role in Slowing Human Aging; Side Effects Could Be Problematic." The Wall Street Journal (Fri, August 30, 2013): A3.

(Note: ellipsis, and bracketed date, added.)

(Note: the online version of the story has the date August 29, 2013, and has the title "Genetic Manipulation Extends Life of Mice 20%; But Translating Findings to Humans Faces Many Hurdles.")


The scientific article being discussed above, is:

Wu, J.  Julie, Jie Liu, Edmund B Chen, Jennifer J Wang, Liu Cao, Nisha Narayan, Marie M Fergusson, Ilsa I Rovira, Michele Allen, Danielle A Springer, Cory U Lago, Shuling Zhang, Wendy DuBois, Theresa Ward, Rafael deCabo, Oksana Gavrilova, Beverly Mock, and Toren Finkel. "Increased Mammalian Lifespan and a Segmental and Tissue-Specific Slowing of Aging after Genetic Reduction of mTor Expression." Cell Reports 4, no. 5 (Aug. 29, 2013): 913-20.






October 9, 2013

Rising Google Stock Prices Led Googlers to Be Wary of Innovation




(p. 156) . . . Googlers were affected by stock ownership. (They were, after all, human.) Bo Cowgill, a Google statistician, did a series of studies of his colleagues' behavior, based on their participation in a "prediction market," a setup that allowed them to make bets on the success of internal projects. He discovered that "daily stock price movements affect the mood, effort level and decision-making of employees." As you'd expect, increases in stock performance made people happier and more optimistic-- but they also led them to regard innovative ideas more warily, indicating that as Googlers became richer, they became more conservative. That was exactly the downside of the IPO that the founders had dreaded.


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added; italics in original.)






October 8, 2013

Immigration to the U.S. Is the Story of Hope, Achievement, Youth, Freedom and Creation




ToAmericaWithLoveBK2013-10-04.jpg















Source of book image: http://ecx.images-amazon.com/images/I/51VTjY0xVbL.jpg




(p. C6) In his new book, "To America With Love," the British critic A. A. Gill attempts to make up for his fellow Britons' grouchiness, sending the United States a frilly, funny valentine.


. . .


Perhaps the most provocative thing in "To America With Love" is Mr. Gill's European take on our history of immigration. He argues that America over the years has been a magnet, drawing "the young and the strong from Europe; the adventurous, the clever, and the skilled."

In the United States, "immigration is the story of hope and achievement, of youth, of freedom, of creation," he writes. "But all entrances on one stage are exits elsewhere. In Europe it is loss. Every one a farewell, a failure, a sadness, a defeat." Between 1800 and 1914, he says, "more than 30 million Europeans immigrated to the New World: one in four Irishmen, one in five Swedes, three million Germans, five million Poles, four million Italians. There is not a country, a community, a village or household that wasn't affected by the lure of the West."

As Mr. Gill sees it, much of the bitterness that animates trans-Atlantic relationships (Europeans, he says, patronize America "for being a big, dumb, fat, belligerent child") can be traced back to this dynamic. "The belittling, the discounting, the mocking of the States is not about them at all," he writes. "It's about us, back here in the ancient, classical, civilized continent."

Europe's view of America, he contends, "has been formed and deformed by the truth that we are the ones who stayed behind, for all those good, bad and lazy reasons: because of caution, for comfort, for conformity and obligation, but mostly, I suspect, because of habit and fear. We didn't take the risky road."



For the full review, see:

MICHIKO KAKUTANI. "BOOKS OF THE TIMES; A Rebellious Trans-Atlantic Infatuation: Take That, Mrs. Trollope!" The New York Times (Thurs., August 22, 2013): C6.

(Note: ellipsis added.)

(Note: the online version of the review has the date August 21, 2013.)


The book under review is:

Gill, A.A. To America with Love. Reprint ed. New York: Simon & Schuster, 2013.



GillAA2013-10-04.jpg











"A. A. Gill" Source of caption and photo: online version of the NYT review quoted and cited above.







October 7, 2013

Google's Calico Company Seeks to Expand the Human Life Span




(p. B4) Google Inc.is backing a new company to research aging, taking an unusual business swing at the burgeoning science of extending the human life span.

The venture, which is long on goals but short on specifics, is known as Calico, and will operate separately from Google, the online search giant said on Wednesday.

"We believe we can make good progress within reasonable time scales with the right goals and the right people," Google CEO Larry Page said in a blog post. "This is clearly a longer-term bet."


. . .


Google provided scant details about how Calico would operate or how it would tackle its ambitions of improving the health of "millions of lives." But Jay Olshansky, an expert on aging at the University of Illinois of Chicago, said one potentially promising path is to research therapies that target the aging process itself.

While medical research typically focuses on finding treatments and cures for individual ailments such as cardiovascular disease and cancer, "if you're going to have an impact on human health and longevity in the future, the way to go is to go after aging itself," Dr. Olshansky said.

A founder of a consortium called the Longevity Dividend Initiative, Dr. Olshansky said [he gave a talk at conference (sic) in 2010 in which he said that finding a cure for cancer would only extend human life span by about three and one-half years. The reason is, he said, is (sic) it would "expose people who were saved from dying of cancer to all the other diseases and disorders" that are the result of aging.]


. . .


{He said Mr. Brin attended the meeting and asked him questions about the talk. He hasn't discussed Calico with anyone at Google--the first he'd heard of the venture was Wednesday-- though he described the formation of Calico as "great news."}



For the full story, see:

GREG BENSINGER and RON WINSLOW. "Google Backs New Venture to Research Aging." The Wall Street Journal (Thurs., September 19, 2013): B4.

(Note: ellipsis added; square-bracketed words are in the print, but not the online, version of the article; curly-bracketed words are in the online, but not the print, version of the article.)

(Note: the online version of the story has the date September 18, 2013, and has the title "Google Backs Venture to Research Aging.")






October 6, 2013

Former Economics of Entrepreneurship and Economics of Technology Student Luis López Voted Crowd Favorite at Straight Shot Startup Accelerator Demo Day




LopezLuisPitchesCardioSys2013-10-05.jpg "Luis López pitches his startup, CardioSys, to investors during Demo Day at Aksarben Cinema this week. The event was the culmination of a 90-day Straight Shot startup accelerator program that offered new companies networking opportunities, advisers and investment dollars. Seven startups were in the inaugural accelerator class." Source of caption and photo: online version of the Omaha World-Herald article quoted and cited below.


Luis López, the entrepreneur who is featured in the article quoted below, was a student of mine in both my Economics of Entrepreneurship and my Economics of Technology seminars (and before that, in micro principles). I cannot say that I taught him everything he knows, but it appears that I did not do him much harm.


(p. 1D) The same day Luis López and his brother, Danny, were accepted into Omaha's Straight Shot startup accelerator for their new company, corporate America called.

The 25-year-old Central High grad had received a job offer from Gallup. But he turned it down, choosing to take an entrepreneurial risk over a predictable salary and benefits.

"I can always apply for a job in the corporate world," he said, but it's not every day that one's company is accepted into an accelerator program that offers $20,000 in investment, more than 300 mentors and more than $75,000 in in-kind services.

The risk paid off, López said last week as the 90-day program wrapped up. The López brothers' startup, CardioSys -- which uses predictive analytics to calculate a person's risk of developing conditions like heart disease and diabetes based on factors such as age, blood pressure and lipid profiles -- came out of the program with a group of nine advisers.


. . .


(p. 2D) Luis López said CardioSys is hoping to land some investment in the next month or two, and is now looking at applying for a short-term health industry-focused incubator program in California, which the founders were connected with via Straight Shot.

In the long term, however, López said that with its strong community of medical and insurance providers, Omaha is CardioSys' home. At Demo Day, the startup was voted crowd favorite. "I was surprised. It's an honor to have people excited about what we're doing," he said.



For the full story, see:

Paige Yowell. "Straight Shot at Success; Accelerator's First Startups Make Their Pitches." Omaha World-Herald (SATURDAY, OCTOBER 5, 2013): 1D & 2D.

(Note: ellipses added.)

(Note: the online version of the story has the title "Straight Shot Accelerator's First Startups Make Their Pitches.")




LopezLuisCoFounderCardioSys2013-10-05.jpg






"Luis Lopez, who with his brother Danny Lopez, created CardioSys, gives his pitch at Demo Day." Source of caption and photo: online version of the Omaha World-Herald article quoted and cited above.







October 5, 2013

"SEC Rules Demanded Complexity"




(p. 152) Google had considerable experience with pleasing users, but in the case of the auction, it could not create a simple interface. SEC rules demanded complexity. So the Google auction was a lot more complicated than buying Pokémon cards on eBay. People had to qualify financially as bidders. Bids had to be placed by a brokerage. If you made an error in reg-(p. 153)istering, you could not correct it but had to reregister. All those problems led to a few postponements of the start of the bidding period.

But the deeper problem was the uncertainty of Google's prospects. As the press accounts accumulated--with reporters informed by Wall Streeters eager to sabotage the process-- the perception grew that Google was a company with an unfamiliar business model run by weird people. A typical Wall Street insider analysis was reflected by Forbes.com columnist Scott Reeves, who concluded that Google's target price, at the time pegged to the range between $ 108 and $ 135 a share, was excessive. "Only those who were dropped on their head at birth [will] plunk down that kind of cash for an IPO," Reeves wrote.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






October 4, 2013

Taxpayers Work, Save and Invest More When Taxes Are Low




TheGrowthExperimentBK2013-09-28.jpg












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






(p. 15) The 1980s boom was launched on the simple insight that, by lowering tax rates and regulatory hurdles and juicing the incentives to produce, innovate and take risks, the animal spirits of the American free-enterprise system would revive. Two seminal books hatched the supply-side revolution. The first was Jude Wanniski's "The Way the World Works" (1978); the second, George Gilder's "Wealth and Poverty" (1981).

Almost as influential, coming a few years later, was Lawrence Lindsey's "The Growth Experiment" (1990). Slightly academic in nature, it was the first book to quantify the economic and revenue windfall of the 1981 Reagan across-the-board tax cuts. Mr. Lindsey's conclusion was that Reagan's 1981 tax act quickened the pace of production, which reduced the predicted revenue loss. His research found that although the Reagan tax cuts didn't "pay for themselves," the ones at the highest end of the income spectrum "did produce a revenue gain" because of "changes in taxpayer behavior." He concluded that "the core supply-side tenet--that tax rates powerfully affect the willingness of taxpayers to work, save and invest, and thereby also affect the health of the economy--won as stunning a vindication as has been seen in at least a half-century of economics."

He has now updated his book, taking us through the booms and busts of the past 20 years. It is a valuable project in part because Mr. Lindsey was a front-seat economic adviser to George W. Bush, serving as director of the National Economic Council and as one of the architects of the often-maligned 2001 and 2003 Bush tax cuts.

Mr. Lindsey's central claim is that those tax changes saved the economy from the undertow of the financial meltdown at the end of the Clinton presidency.



For the full review, see:

Stephen Moore. "BOOKSHELF; Book Review: 'The Growth Experiment Revisited' by Lawrence Lindsey; The 25 years after Reagan's tax cuts saw unprecedented wealth creation and progress. America's net worth exploded by $40 trillion." The Wall Street Journal (Tues., September 10, 2013): A15.

(Note: ellipsis added.)

(Note: the online version of the review has the date September 9, 2013, and has the title "BOOKSHELF; Book Review: 'The Growth Experiment Revisited' by Lawrence Lindsey; The 25 years after Reagan's tax cuts saw unprecedented wealth creation and progress. America's net worth exploded by $40 trillion.")


The book under review is:

Lindsey, Lawrence B. The Growth Experiment Revisited: Why Lower, Simpler Taxes Really Are America's Best Hope for Recovery. New York: Basic Books, 2013.






October 3, 2013

Early Funding for Ameritrade Was a Loan Secured by Joe Ricketts' House and Car




(p. 1D) Even the oldest and most established companies were once a back-of-the-envelope glimmer of an idea.

That was the message Wednesday night from First National Bank's Clark Lauritzen, president of the company's FNN Wealth Management.


. . .


TD Ameritrade founder Joe Ricketts, Lauritzen said, started his company in 1975 with a First National loan secured by his car and house; the first office was in the bank's basement. Now, the online stock brokerage employs 2,000 people in Omaha and is an industry leader.

"Joe reinvested his profits in the business year after year," Lauritzen said.



For the full story, see:

Russell Hubbard. "Even Big Businesses Start Small, Says First National's Clark Lauritzen:." Omaha World-Herald (THURSDAY, AUGUST 29, 2013): 1D.

(Note: ellipsis added.)

(Note: the online version of he article has the title "First National's Clark Lauritzen: Even Big Businesses Start Small.")





October 2, 2013

"Global Fertility Will Fall to the Replacement Rate in Less than 15 Years"





WorldPopulationForecastsGraph2013-09-25.jpgSource of graph: online version of the NYT article quoted and cited below.



(p. B3) An analysis of population trends by Sanjeev Sanyal, the global strategist for Deutsche Bank, concludes that population growth is likely to be much slower than the U.N.'s estimate.

"In our view, global fertility will fall to the replacement rate in less than 15 years," Mr. Sanyal wrote. "Population may keep growing for a few more decades from rising longevity but, reproductively speaking, our species will no longer be expanding." He forecasts that world population will peak in around 2055, at 8.7 billion, and decline to 8 billion by the end of the century.

The fertility replacement rate -- the number of children per woman needed to keep the population level over time -- is usually considered to be 2.1. Mr. Sanyal says that in the developing world, it is higher, because of higher infant mortality and maternal death in childbirth. For the world as a whole, he thinks the current replacement rate is about 2.27, a figure that will come down gradually over time.

The spread between the latest U.N. forecast and Deutsche Bank's for 2100 -- 2.8 billion people -- is greater than the entire population of the world in 1955.



For the full story, see:

FLOYD NORRIS. "Population Growth Forecast From the U.N. May Be Too High." The New York Times (Sat., September 21, 2013): B3.

(Note: the online version of the story has the date September 20, 2013.)






October 1, 2013

SEC Told Google to Delete "Making the World a Better Place" from Document




(p. 150) . . . , the Securities and Exchange Commission was unimpressed by the charms of Page's "Owner's Manual." "Please revise or delete the statements about providing 'a great service to the world,' 'to do things that matter,' 'greater positive impact on the world, don't be evil' and 'making the world a better place,'" they wrote. (Google would not revise the letter.) The commission also had a problem with Page's description of the lawsuit that Overture (by then owned by Yahoo) had filed against Google as "without merit." Eventually, to resolve this issue before the IPO date, (p. 151) Google would settle the lawsuit by paying Yahoo 2.7 million shares, at an estimated value of between $ 260 and $ 290 million.

That set a contentious tone that ran through the entire process. The SEC cited Google's irregularities on a frequent basis, whether it was a failure to properly register employee stock options, inadequate reporting of financial results to stakeholders, or the use of only first names of employees in official documents. It acted toward Google like a junior high school vice principal who'd identified an unruly kid as a bad seed, requiring constant detentions.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added.)






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