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Source of book image:
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Biologically modern humans have inhabited the world for at least 50,000 years, and maybe for 100,000 years or more.

Only in the last 200 years, and especially the last 100 years, has humanity made substantial progress in the quality and quantity of life.

Usually the most recent 200 years are compared with the previous few thousand, because conditions in the previous few thousand years are much better known than those in the tens of thousands of years further in the past.

But comparisons further back are of interest, and Brian Fagan's book Cro-Magnon is a source of some information that allows us to do so to some extent.

In the next few weeks, I will occasionally be quoting a few passages from Fagan that I believe are suggestive.

The reference for the Fagan book is:

Fagan, Brian. Cro-Magnon: How the Ice Age Gave Birth to the First Modern Humans. New York: Bloomsbury Press, 2010.

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(p. 299) If you're as lucky as I've been, then you'll get to live in a time when you're young just as a revolution is about to take off. Just like Henry Ford was there for the automotive industry, I was there to see and build the first personal computers.

Back in the mid-1990s when I was teaching school, I thought one time to myself, Wow, I wish I could be twelve now, look at the things I could do with what's out there now.

(p. 300) But then I realized I was lucky. I got to see the before, the during, and the after of some of those changes in life. I got to be one of those few people who could effect some of those changes.

Excellence came to me from not having much money, and also from having good building skills but not having done these products before.

I hope you'll be as lucky as I am. The world needs inventors--great ones. You can be one. If you love what you do and are willing to do what it takes, it's within your reach. And it'll be worth every minute you spend alone at night, thinking and thinking about what it is you want to design or build. It'll be worth it, I promise.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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"Ernest Gellner in his office at the London School of Economics in 1979." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. W8) 'I am sorry, I have written another," Ernest Gellner used to say in his later years before publishing a new book. "I just couldn't help it." Not even his death in 1995 stopped the flow. The last of his posthumous works, "Language and Solitude," appeared in the late 1990s. Now Gellner has been brought back to life--alongside his combative ideas and his maverick approach to intellectual combat--in a sympathetic but by no means reverential biography by his former pupil John A. Hall.

. . .

Many of the problems that Gellner addressed during his long intellectual career--such as the roots of nationalism and the role of contemporary Islam--are obviously of direct relevance today. But the most pertinent part of his legacy lies in his fearless endorsement of Western modernity at a time when it was becoming increasingly embattled in the academy and elsewhere.

As Mr. Hall demonstrates, Gellner believed that there really was a clash between "liberty and pluralism," on the one hand, and "authoritarianism and oppressiveness" on the other. In a passionate riposte to Noam Chomsky, who had accused him of ignoring Western crimes, Gellner charged that his critic had "obscured" the fact that "the survival of freedom and accountable, limited government is an enormously important value even when some of its defenders are occasionally tarnished."

This was the authentic voice of Ernest Gellner: honest, cool and reasonable. Mr. Hall is to be congratulated for reminding us of how much we miss it today.

For the full review, see:

BRENDAN SIMMS. "A Combatant in the Battle of Ideas; A defender of the West when it was most embattled, a defender of reason at a time of dangerous irrationality." The Wall Street Journal (Fri., JULY 23, 2010): W8.

(Note: the online version of the article is dated July 30 (sic), 2010.)

(Note: ellipsis added.)

The book under review, is:

Hall, John A. Ernest Gellner: An Intellectual Biography. London, UK: Verso, 2010.

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

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(p. 293) But there was one exception. Right around 1980, Steve and a bunch of us from Apple got to tour the Xerox Palo Alto Research Center (PARC) facility, which is one of Xerox's research and development labs.

Inside, for the first time ever, we saw real video displays--computer monitors--and they were showing something entirely new They were showing the first graphical user interface (GUI)--art interface that lets you interact with icons and menus to control a program.

(p. 294) Up to this point, everything had been text-based. That's going to sound odd to all the people who don't remember it, but that's how everything worked back then. A computer user had to actually type in text commands--long, complicated ones--to make something happen.

But this experimental Xerox computer had windows popping up all over the place. And they were using this funny-looking device everyone now knows as a mouse, clicking on words and small pictures, the icons, to make things happen.

The minute I saw this interface, I knew it was the future. There wasn't a doubt in my mind. It was like a one-way door to the future--and once you went through it, you could never turn back. It was such a huge improvement in using computers. The GUI meant you could get a computer to do the same things it could normally do, but with much less physical and mental effort. It meant that nontechnical people could do some pretty powerful things with computers without having to sit there and learn how to type in long commands. Also, it let several different programs run in separate windows at the same time. That was powerful!

A few years later, Apple designed the Lisa computer, and later the Macintosh, around this concept. And Microsoft did it a couple years after that with Microsoft Windows. And now, more than twenty-five years after we saw that experimental computer in the Xerox PARC lab, all computers work like this.

It's so rare to be able to see the future like that. I can't promise it'll happen to you. But when you see it, you know it. If this ever happens to you, leap at the chance to get involved. Trust your instincts. It isn't often that the future lets you in like that.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 293) If you could easily predict the future, inventing things would be a lot easier! Predicting the future is difficult even if you're involved with products that are guiding computers, the way we were at Apple.

When I was at Apple in the l970s and 1980s, we would always try to look ahead and see where things were going. It was actually easy to see a year or two ahead, because we were the ones building the products and had all these contacts at other companies. But beyond that, it was tough to see. The only thing we could absolutely rely upon had to do with Moore's Law--the now-famous rule in electronics (named for Intel founder Gordon Moore) that says that every eighteen months you can pack twice the number of transistors on a chip.

That meant computers could keep getting smaller and cheaper. We saw that. But we had a hard time imagining what kinds of applications could take advantage of all this power. We didn't expect high-speed modems. We didn't expect computers to have large amounts of hard-disk storage built in. We didn't see the Internet growing out of the ARPANET and becoming accessible to everyone. Or digital cameras. We didn't see any of that. We really could only see what was right in front of us, a year or two out, max.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 291) If you're that rare engineer who's an inventor and also an artist, I'm going to give you some advice that might be hard to take. That advice is: Work alone.

When you're working for a large, structured company, there's much less leeway to turn clever ideas into revolutionary new products or product features by yourself. Money is, unfortunately, a god in our society, and those who finance your efforts are businesspeople with lots of experience at organizing contracts that define who owns what and what you can do on your own.

But you probably have little business experience, know-how, or acumen, and it'll be hard to protect your work or deal with all that corporate nonsense. I mean, those who provide the funding and tools and environment are often perceived as taking the credit for inventions. If you're a young inventor who wants to change the world, a corporate environment is the wrong place for you.

(p. 292) You're going to be best able to design revolutionary products and features if you're working on your own. Not on a committee. Not on a team. That means you're probably going to have to do what I did. Do your projects as moonlighting, with limited money and limited resources. But man, it'll be worth it in the end. It'll be worth it if this is really, truly what you want to do--invent things. If you want to invent things that can change the world, and not just work at a corporation working on other people's inventions, you're going to have to work on your own projects.

When you're working as your own boss, making decisions about what you're going to build and how you're going to go about it, making trade-offs as to features and qualities, it becomes a part of you. Like a child you love and want to support. You have huge motivation to create the best possible inventions--and you care about them with a passion you could never feel about an invention someone else ordered you to come up with.

And if you don't enjoy working on stuff for yourself--with your own money and your own resources, after work if you have to-- then you definitely shouldn't be doing it!

. . .

It's so easy to doubt yourself, and it's especially easy to doubt yourself when what you're working on is at odds with everyone else in the world who thinks they know the right way to do things. Sometimes you can't prove whether you're right or wrong. Only time can tell that. But if you believe in your own power to objectively reason, that's a key to happiness. And a key to confidence. Another key I found to happiness was to realize that I didn't have to disagree with someone and let it get all intense. If you believe in your own power to reason, you can just relax. You don't have to feel the pressure to set out and convince anyone. So don't sweat it! You have to trust your own designs, your own intuition, and your own understanding of what your invention needs to be.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

(Note: Italics and centered ellipsis in original.)

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"Kenneth Rogoff and Carmen Reinhart at Ms. Reinhart's Washington home. They started their book around 2003, years before the economy began to crumble." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) Like a pair of financial sleuths, Ms. Reinhart and her collaborator from Harvard, Kenneth S. Rogoff, have spent years investigating wreckage scattered across documents from nearly a millennium of economic crises and collapses. They have wandered the basements of rare-book libraries, riffled through monks' yellowed journals and begged central banks worldwide for centuries-old debt records. And they have manually entered their findings, digit by digit, into one of the biggest spreadsheets you've ever seen.

Their handiwork is contained in their recent best seller, "This Time Is Different," a quantitative reconstruction of hundreds of historical episodes in which perfectly smart people made perfectly disastrous decisions. It is a panoramic opus, both geographically and temporally, covering crises from 66 countries over the last 800 years.

The book, and Ms. Reinhart's and Mr. Rogoff's own professional journeys as economists, zero in on some of the broader shortcomings of their trade -- thrown into harsh relief by economists' widespread failure to anticipate or address the financial crisis that began in 2007.

"The mainstream of academic research in macroeconomics puts theoretical coherence and elegance first, and investigating the data second," says Mr. Rogoff. For that reason, he says, much of the profession's celebrated work "was not terribly useful in either predicting the financial crisis, or in assessing how it would it play out once it happened."

"People almost pride themselves on not paying attention to current events," he says.

. . .

(p. 6) Although their book is studiously nonideological, and is more focused on patterns than on policy recommendations, it has become fodder for the highly charged debate over the recent growth in government debt.

To bolster their calls for tightened government spending, budget hawks have cited the book's warnings about the perils of escalating public and private debt. Left-leaning analysts have been quick to take issue with that argument, saying that fiscal austerity perpetuates joblessness, and have been attacking economists associated with it.

. . .

The economics profession generally began turning away from empirical work in the early 1970s. Around that time, economists fell in love with theoretical constructs, a shift that has no single explanation. Some analysts say it may reflect economists' desire to be seen as scientists who describe and discover universal laws of nature.

"Economists have physics envy," says Richard Sylla, a financial historian at the Stern School of Business at New York University. He argues that Paul Samuelson, the Nobel laureate whom many credit with endowing economists with a mathematical tool kit, "showed that a lot of physical theories and concepts had economic analogs."

Since that time, he says, "economists like to think that there is some physical, stable state of the world if they get the model right." But, he adds, "there is really no such thing as a stable state for the economy."

Others suggest that incentives for young economists to publish in journals and gain tenure predispose them to pursue technical wizardry over deep empirical research and to choose narrow slices of topics. Historians, on the other hand, are more likely to focus on more comprehensive subjects -- that is, the material for books -- that reflect a deeply experienced, broadly informed sense of judgment.

"They say historians peak in their 50s, once they've accumulated enough knowledge and wisdom to know what to look for," says Mr. Rogoff. "By contrast, economists seem to peak much earlier. It's hard to find an important paper written by an economist after 40."

For the full story, see:

CATHERINE RAMPELL. "They Did Their Homework (800 Years of It)." The New York Times, SundayBusiness Section (Sun., July 4, 2010): 1 & 6.

(Note: the online version of the article is dated July 2, 2010.)

(Note: ellipses added.)

The reference for the book is:

Reinhart, Carmen M., and Kenneth Rogoff. This Time Is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press, 2009.

Source of book image: http://www.paschaldonohoe.ie/wp-content/uploads/2010/02/This-time-is-different.jpg

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In February, I heard a wonderful presentation by Emily Chamlee-Wright on the recovery process from Hurricane Katrina. One of my favorite parts of her presentation was an account of how the federal bureaucracy hindered those whose entrepreneurship was needed for recovery. The account is included in her book The Cultural and Political Economy of Recovery, that documents her research on Katrina:

(p. 142) . . . , the bureaucratic structure governing disaster relief can stifle, or at the very least frustrate local leadership driving community redevelopment. Doris Voitier's efforts to re-open the public school system in St. Bernard Parish illustrate this point. Voitier had initially assumed that FEMA's newly created task force on education would lend the support and expertise she needed. But she quickly learned that FEMA's role was not so much to lend support as it was to regulate the decisions coming out of her office.

VOITIER: [W]e had our kickoff meeting in September. We didn't even know what a kickoff meeting was nor did we know we were in one until after it was over . . . . In their little book, which I read later, they tell them, "meet in the person's home territory," basically. Now . . . we were operating out of Baton Rouge, and so were all of the people who attended this meeting. We all got rental cars and drove down [to St. Bernard Parish] and met on the third floor of the building over by Chalmette Refining at 2 o'clock in the afternoon in 100 degree heat with no air conditioning or anything. [M]y assistant superintendent and I walk into this meeting and there were 27 people in this meeting are sitting around this table . . . and we were going through the introductions. And the first two people said, "We're so and so. We are the FEMA historical restoration team" I said, okay, tell me what you do. "Well, we make sure any buildings that are 40 years old or more, they're designated a historical building, we make sure all of the rules and regulations are followed for that or if there are any historical documents, paintings, or whatever, that they're preserved properly, and that you do (p. 143) everything you're supposed to do . . . ." Now here we are just trying to, you know, trying to recover, not worrying too much about that sort of stuff, but . . . thank you very much. So the next two introduced themselves and I said, "Well who are you?" "We are the FEMA environmental protection team." I said, "Tell me what you do." Well, same thing. "We make sure all of the environmental laws are followed, that if there are any endangered species that they're protected," you know, yadda, yadda, yadda. Okay. The next two, "We are the FEMA 404 mitigation team." I'm looking at them and I'm thinking, what in the heck is 404 mitigation? Because the next two were the FEMA 406 . . . . So I'm looking at them, I'm thinking, I don't know what 404 was and I certainly don't know what 406 is . . . . And you know. . . [I'm thinking] can't somebody help me get a school started and clean my schools . . . ?

Source:

Chamlee-Wright, Emily. The Cultural and Political Economy of Recovery: Social Learning in a Post-Disaster Environment, Routledge Advances in Heterodox Economics. London: Routledge, 2010.

(Note: first ellipsis added; other ellipses in original.)

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(p. 288) . . . , my advice has to do with what you do when you find yours elf sitting there with ideas in your head and a desire to build them. But you're young. You have no money. All you have is the stuff in your brain. And you think it's good stuff, those ideas you have in your brain. Those ideas are what drive you, they're all you think about.

(p. 289) But there's a big difference between just thinking about inventing something and doing it. So how do you do it? How do you actually set about changing the world?

. . .

Well, first you need to believe in yourself. Don't waver. There will be people--and I'm talking about the vast majority of people, practically everybody you'll ever meet--who just think in black-and-white terms. Most people see things the way the media sees them or the way their friends see them, and they think if they're right, everyone else is wrong. So a new idea--a revolutionary new product or product feature--won't be understandable to most people because they see things so black and white. Maybe they don't get it because they can't imagine it, or maybe they don't get it because someone else has already told them what's useful or good, and what they heard doesn't include your idea.

Don't let these people bring you down. Remember that they're just taking the point of view that matches whatever the popular cultural view of the moment is. They only know what they're exposed to. It's a type of prejudice, actually, a type of prejudice that is absolutely against the spirit of invention.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

(Note: Italics and centered ellipsis in original; initial ellipsis added.)

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(p. 247) In a way, that happened to me. The US Festival was exactly the opposite of the Apple experience for me. It didn't come easily. It involved having plans to get certain groups, and having those groups cancel. It involved having plans for sites, and having those sites cancel. It involved having plans for equipment, and having the equipment not come through. It was a costly battle to do all the right things, but we did them anyway.

I'd written a check. I had confidence in my people. I'd already taken a stand, and when you take a stand, you don't back away from it. Sometimes this has been a big problem in my life--especially marriage-wise--but if I'm in, I'm in. I don't back out. And by the time I could see this was a disaster, I had this guy, Pete Ellis, and all the people he'd hired, counting on me. I couldn't just (p. 248) all of a sudden pull the rug out. And we'd already planned the date: the first US Festival would be the Labor Day weekend of 1982, right after my first year back at school.

. . .

(p. 255) I loved that first US Festival concert, and I knew I'd made so many people happy doing it. We thought from press reports that enough people--nearly half a million--had shown up. So we thought that would make us money. But we lost money, nearly $12 million, because it turned out we didn't sell as many tickets as there were people.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. A15) When Barack Obama came to prominence as a presidential candidate, his Chicago background--in particular, his efforts as a "community organizer"--reignited an interest in Saul Alinsky (1909-72), the hard-charging activist whose 1971 book, "Rules for Radicals," was said to have had a formative influence on Mr. Obama's thinking.

. . .

Hardscrabble though his youth had been, Alinsky managed to get into the University of Chicago, where his major was archaeology. When the Depression dried up money for digs, he wangled a fellowship to study criminology and began hanging out with gangsters as part of his study, including Al Capone's "enforcer," Frank Nitti.

Mr. von Hoffman tells us that one of Alinsky's favorite stories involved a meeting between Nitti and Anton Cermak just after Cermak had been elected Chicago's mayor in 1931. The meeting's purpose was to negotiate the money that Capone would pay the city to keep its speakeasies stocked with beer and liquor: "As Saul told the story," Mr. von Hoffman writes, "Cermak explained to Nitti, 'You know I was elected as a reform candidate.' To which Nitti replied, 'What the hell does that mean, Tony?' and waited for an answer. 'It means,' the mayor said after a suitable pause, 'that the price is double.' "

The anecdote nicely illustrates the cynicism that informed Alinsky's ideas about the way the world works.

For the full review, see:

CHRISTOPHER WILLCOX. "A Chicago-Style Peace Disturber; 'Community organizer' Saul Alinsky lumped politicians in with gangsters.." The Wall Street Journal (Thurs., July 15, 2010): A15.

(Note: ellipsis added.)

The book under review is:

von Hoffman, Nicholas. Radical: A Portrait of Saul Alinsky. New York: Nation Books, 2010.

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Wozniak writes of pre-1983 management troubles at Apple, in the passage quoted below. The passage highlights that large companies usually lose flexibility in hiring and firing. Good managers who have tacit (or just insufficiently documented) judgment about who the best employees are, have limited ability to act on that knowledge.

I wonder if this is a necessary disadvantage of size, or a disadvantage that is due to our laws, customs and institutions?

(p. 231) By this time, I should point out, Mike Scott--our president who took us public and the guy who took us through the phenomenally successful IPO--was gone. During the time the Apple III was being developed, he thought we'd grown a bit too large. There were good engineers, sure, but there were also a lot of lousy engineers floating around. That happens in any big company.

It's not necessarily the lousy engineer's fault, by the way. There's always going to be some mismatch between an engineer's interests and the job he's doing.

Anyway, Scotty had told Tom Whitney, our engineering manager, to take a vacation for a week. And meanwhile he did some research. He went around and talked to every engineer in the company and found out who was doing what and who was working and who wasn't doing much of anything.

Then he fired a whole bunch of people. That was called Bloody Monday. Or, at least, that's what it ended up being called in the Apple history books. I thought that, pretty much, he fired all the right ones. The laggards, I mean.

And then Mike Scott himself was fired. The board was just very pissed that he'd done this without a lot of backing and enough due process, the kind of procedure you're supposed to follow at a big company.

Also, Mike Markulla told me Mike Scott had been making a lot of rash decisions and decisions that just weren't right. Mike thought Scotty wasn't really capable of handling the company given the point and size it had gotten to.

I did not like this one bit. I liked Scotty very, very much as a person. I liked his way of thinking. I liked his way of being able to joke and be serious. With Scotty, I didn't see many things fall (p. 232) through the cracks. And I felt that he respected the good work that I did--the engineering work. He came from engineering.

And as I said, Scotty had been our president, our leader from day one of incorporation until we'd gone public in one of the biggest IPOs in U.S. history. And now, all of a sudden, he was just pushed aside and forgotten.

I think it's sad that none of the books today even seem to recall him. Nobody knows his name. Yet Mike Scott was the president that took us through the earliest days.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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"Nicolas Hayek was asked to help shut the troubled Swiss watch industry, but instead he revived it by introducing the Swatch." Source of caption and photo: online version of the NYT article quoted and cited below.

Richard Langlois has used the story of Nicolas Hayek to illustrate why Schumpeter was wrong when he worried that the entrepreneur might become obsolete.

(p. A23) Nicolas Hayek, a Lebanese-born business consultant who is widely credited with having saved the Swiss watch industry with the introduction of the Swatch, the inexpensive, plastic -- and, as it transpired, highly collectible -- wristwatch that made its debut in 1983, died Monday in Biel, Switzerland. He was 82.

Mr. Hayek, a founder and the chairman of the Swatch Group, died of heart failure while working at the company's headquarters, according to an announcement on the company Web site.

The formation of the Swatch Group, which in addition to Swatch today comprises high-end watch brands like Breguet, Omega, Longines, Tissot, Calvin Klein and Mido, made Mr. Hayek one of Switzerland's wealthiest men. The exquisite irony is that the company came about after Mr. Hayek was brought in to help shut the foundering Swiss watch industry altogether.

A flamboyant figure with a roguish sense of humor, Mr. Hayek was "a rare phenomenon in Europe -- a genuine business celebrity," as The Harvard Business Review described him in 1993.

For the full story, see:

MARGALIT FOX. "Nicolas Hayek Dies at 82; His Swatch Saved an Industry." The New York Times (Tues., June 29, 2010): A23.

(Note: the online version of the article is dated June 28, 2010.)

Nicolas Hayek's entrepreneurship is nicely summarized and analyzed on pp. 59-65 of:

Langlois, Richard N. The Dynamics of Industrial Capitalism: Schumpeter, Chandler and the New Economy. London: Routledge, 2006.

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(p. 226) So why did the Apple Ill have so many problems, despite the fact that all of our other products had worked so great? I can answer that. It's because the Apple III was not developed by a single engineer or a couple of engineers working together. It was developed by committee, by the marketing department. These (p. 227) were executives in the company who could take a lot of their power and decide to put all their money and resources in the direction of their own ideas. Their own ideas as to what a computer should be.

Marketing saw that the business community would be the bigger market. They saw that the typical small businessman went into a computer store, bought an Apple II, a printer, the VisiCalc spreadsheet program, and two plug-in cards. One was a memory card, which allowed them to run larger spreadsheets. And the other was an eighty-column card, which allowed them to present eighty columns of characters across the video display, instead of the normal forty. Forty columns was the limit of American TVs.

So they came up with the idea that this should all be built into a single machine: the Apple III. And it was built.

Initially there was virtually no software designed for the Apple III. Yet there were hundreds of software programs you could buy for the Apple II. So to have a lot of software right away, Apple built the Apple III as a dual computer--there was a switch that let you select whether the computer started up as an Apple II or as an Apple III. (The Apple III hardware was designed to be extremely compatible with the Apple II, which was hard to improve on.) It couldn't be both at. once.

And it was here they did something very wrong. They wanted to set the public perception of the Apple III as a business computer and position the Apple II as the so-called home hobby machine. The little brother of the family. But get this. Marketing had us add chips--and therefore expense and complexity--to the Apple III in order to disable the extra memory and eighty column triodes if you booted it up as an Apple II.

This is what killed the Apple Ill's chances from the get-go. Here's why. A businessman buying an Apple II for his work could easily say, "I'll buy an Apple III, and use it in the Apple II mode since I'm used to it, but I'll still have the more modern machine." (p. 228) But Apple killed the product that businessman would want by disabling the very Apple II features (extra memory and eighty- column mode) he was buying the computer for.

Out of the chute, the Apple Ill got a lot of publicity, but there was almost nothing you could run on it. As I said, it wasn't reliable. And in Apple II mode, it was crippled.

To this day, it boggles my mind. It's just not the way an engineer--or any rational person, for that matter--would think. It disillusioned me that big companies could work this way.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 196) After Commodore turned us down, we went over to Al Alcorn's house. He was one of the founders of Atari with Nolan Bushnell, and he was the one who'd hired Steve to do video games there two years before.

Now, I knew Al knew me. He knew I had designed Breakout, the one-player version of Pong. I remember that when we went to his house I was so impressed because he had one of the earliest color projection TVs. Man, in 1976, he would have been among the first people to have one. That was cool.

But he told us later that Atari was too busy with the video game market to do a computer project.

A few days after that, venture capitalists Steve had contacted started to come by. One of them was Don Valentine at Sequoia. He kind of pooh-poohed the way we talked about it.

He said, "What's the market?"

"About a million," I told him.

"How do you know?"

I told him the ham radio market had one million users, and this could be at least that big.

Well, he turned us down, but he did get us in touch with a guy named Mike Markkula. He was only thirty, he told us, but already retired from Intel. He was into gadgets, he told us. Maybe Mike would know what to do with us.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 193) But I went to talk to the project manager, Kent Stockwell. Although I had done all these computer things with the Apple I and Apple II, I wanted to work on a computer at HP so bad I would have done anything. I would even be a measely printer interface engineer. Something tiny.

I told him, "My whole interest in life has been computers. Not calculators."

(p. 194) After a few days, I was turned down again.

I still believe HP made a huge mistake by not letting me go to its computer project. I was so loyal to HP. I wanted to work there for life. When you have an employee who says he's tired of calculators and is really productive in computers, you should put him where he's productive. Where he's happy. The only thing I can figure is there were managers and submanagers on this computer project who felt threatened. I had already done a whole computer. Maybe they bypassed me because I had done this single-handedly. I don't know what they were thinking.

But they should've said to themselves, "How do we get Steve Wozniak on board? Just make him a little printer interface engineer." I would've been so happy, but they didn't bother to put me where I would've been happiest.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 184) After we started selling the boards to Paul Terrell--working day and night to get them to him on time--we had profits like I never imagined. Suddenly our little business was making more than I was making at HP. That wasn't very much, admittedly. But still, it was a lot. We were building the boxes for $220 and selling them wholesale to Paul Terrell for $500.

And, of course, we didn't need a ton of money to operate. I had a day job, so I looked at it as, Hey, cool. Extra money for pizza! As for Steve, he was living at home. I was twenty-five and he was only twenty-one at the time, so what expenses could we have, really? Apple didn't have to make that much to sustain itself and be ongoing. We weren't paying ourselves salaries or paying rent, after all. We didn't have any patents to pay for. Or lawyers. It was a small-time business, and we weren't worried that much about anything.

My dad, watching this, pointed out that we weren't actually making money because we weren't paying ourselves anything. But we didn't care, we were having too much fun.

But note, only several pages later:

(p. 194) Like I said before, we needed money. Steve knew it and I knew it.

So by that summer of 1976, we started talking to potential money people about Apple, showing them the Apple II working in color in Steve's garage.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 172) Frankly, I couldn't see how we would earn our money back. I figured we'd have to invest about. $1,000 to get a computer company to print the boards. To get. that money back, we'd have to sell the board for $40 to fifty people. And I didn't think there were fifty people at Homebrew who'd buy the board. After all, there were only about five hundred members at this point, and most of them were Altair enthusiasts.

But Steve had a good argument. We were in his car and he said--and I can remember him saying this like it was yesterday: "Well, even if we lose our money, we'll have a company. For once in our lives, we'll have a company."

For once in our lives, we'd have a company. That convinced me. And I was excited to think about us like that. To be two best friends starting a company. Wow. I knew right then that I'd do it. How could I not?

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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

I believe that a case can be made that Grover Cleveland is an under-appreciated President. (I like his comment on the Statue of Liberty quoted below.)

(p. W9) The cold rains of Oct. 28, 1886, did little to dampen the ardor of the tens of thousands of giddy New Yorkers who crowded onto the southern tip of Manhattan that afternoon to watch the festivities on Bedloe's Island, a patch of land in New York Harbor. On cue, an enormous veil dropped, and the spectators gazed for the first time at the face of the massive statue that, until then, had been the subject not only of curiosity but also of skepticism.

Whatever doubts Americans might have had about this unsolicited, and rather costly, gift from the French seemed at once to vanish. A "thunderous cacophony of salutes from steamer whistles, brass bands, and booming guns, together with clouds of smoke from the cannonade, engulfed the statue for the next half hour," Yasmin Sabina Khan writes in "Enlightening the World," her account of how the Statue of Liberty came to be.

The crowd roared, then various speakers held forth, welcoming the 225-ton, 151-foot-tall Lady Liberty, as she would soon be known. President Grover Cleveland, in his remarks, tried to distinguish this colossus from others of its kind throughout human history. Where the statue-symbols of other nations might depict "a fierce and warlike god, filled with wrath and vengeance," this one exhibited only "our own peaceful deity keeping watch before the open gates of America."

President Cleveland's interpretation of the statue turned out to be but one of many over the years. To Ms. Khan the Statue of Liberty's symbolic significance is not a complicated matter and never was. The statue celebrates the "friendship" of the people of France and those of the U.S.; it represents "liberty" and "liberty" alone.

For the full review, see:

ALAN PELL CRAWFORD. "BOOKS; Lady Liberty's Path to America." The Wall Street Journal (Sat., MAY 8, 2010): W9.

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(p. 160) My style with projects has always been to spend a lot of time getting ready to build it. Now that I saw my own computer could be a reality, I started collecting information on all the components and chips that might apply to a computer design.

I would drive to work in the morning--sometimes as early as 6:30 a.m.--and there, alone in the early morning, I would quickly read over engineering magazines and chip manuals. I'd study the specifications and timing diagrams of the chips I was interested in, like the $40 Motorola 6800 Myron had told me about. All the while, I'd be preparing the design in my head.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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"Osthammar is competing for the right to host a storage site for radioactive waste." Source of caption and photo: online version of the NYT article quoted and cited below.

After reading Petr Beckmann's The Health Hazards of NOT Going Nuclear, a few decades ago, I became convinced that nuclear power was being rejected in the United States due to irrational fears based on a failure to make reasonable estimates of the costs and the benefits.

Isn't it ironic that the irrational fear of nuclear power is at long last being overcome mainly by the irrational fear of global warming?

(p. A10) . . . , in Osthammar, . . . as many as 80 percent of the 21,000 inhabitants are in favor of the nuclear waste dump. The town is now one of two finalists among the communities in Sweden that vied for the right to host the dump.

Sweden, which swore off nuclear power after less than 20 percent of Swedes approved of it in a referendum in the 1980s, would seem an unlikely place for such a competition. But it has reversed course recently and plans to begin building new nuclear reactors, adding to the 10 it already operates.

But legislation requires that before any new plants can be built, the Swedish Nuclear Fuel and Waste Management Company, better known by the initials SKB, must first create permanent storage space for the radioactive waste the reactors produce.

In most countries, of course, people would sooner allow a factory hog farm or garbage incinerator in their backyards than a nuclear waste dump. But in Sweden, SKB found 18 of 20 possible towns near proposed sites intrigued by their proposition. Then it had to whittle the list down to two, Osthammar and Oskarshamn, both already the site of nuclear plants.

SKB recently said it would ask the Swedish government later this year for permission to build the storage depot in Osthammar. If the government gives the green light to Osthammar over Oskarshamn, construction could begin some time after 2015, officials said.

Claes Thegerstrom, a nuclear physicist who is the chief executive of SKB, attributed the new attitude of Swedes toward nuclear energy to fears of global warming. "In the 1980s nobody was mentioning CO2," or carbon dioxide, considered the major cause of global warming, he said. "Now, it's on the top of the list of environmental issues." Since they burn no fossil fuels, nuclear power plants do not produce carbon dioxide.

For the full story, see:

JOHN TAGLIABUE. "Osthammar Journal; A Town Says 'Yes, in Our Backyard' to Nuclear Site." The New York Times (Tues., April 6, 2010): A10.

(Note: ellipses added.)

(Note: the online version of the article is dated April 5, 2010.)

Beckmann's wonderful book was:

Beckmann, Petr. The Health Hazards of NOT Going Nuclear. Golem Press, 1976.

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(p. 155) It was as if my whole life had been leading up to this point. I'd done my minicomputer redesigns. I'd done data on--screen with Pong and Breakout., and I'd already done a TV terminal. From the Cream Soda Computer and others, I knew how to connect memory and make a working system. I realized that all I needed was this Canadian processor or another processor like it and (p. 156) some memory chips. Then I'd have the computer I'd always wanted!

Oh my god. I could build my own computer, a computer I could own and design to do any neat things I wanted to do with it for the rest of my life.

I didn't need to spend $400 to get an Altair--which really was just a glorified bunch of chips with a metal frame around it and some lights. That was the same as my take-home salary, I mean, come on. And to make the Altair do anything interesting, I'd have to spend way, way more than that. Probably hundreds, even thousands of dollars. And besides, I'd already been there with the Cream Soda Computer. I was bored with it then. You never go back. You go forward. And now, the Cream Soda Computer could be my jumping-off point.

No way was I going to do that. I decided then and there I had the opportunity to build the complete computer I'd always wanted. I just needed any microprocessor, and I could build an extremely small computer I could write programs on. Programs like games, and the simulation programs I wrote at work. The possibilities went on and on. And I wouldn't have to buy an Altair to do it. I would design it. all by myself.

That night, the night of that first meeting, this whole vision of a kind of personal computer just popped into my head. All at once. Just like that.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 147) The whole thing used forty-five chips, and Steve paid me half the seven hundred bucks he said they paid him for it. (They were paying us based on how few chips I could do it. in.) Later I found out he got paid a bit (p. 148) more for it--like a few thousand dollars--than he said at the time, but we were kids, you know. He got paid one amount, and told me he got paid another. He wasn't honest with me, and I was hurt. But I didn't make a big deal about it or anything.

Ethics always mattered to me, and I still don't really understand why he would've gotten paid one thing and told me he'd gotten paid another. But, you know, people are different. And in no way do I regret the experience at Atari with Steve Jobs. He was my best friend and I still feel extremely linked with him. I wish him well. And it was a great project that was so fun. Anyway, in the long run of money--Steve and I ended up getting very comfortable money-wise from our work founding Apple just a few years later--it certainly didn't add up to much.

Steve and I were the best of friends for a very, very long time. We had the same goals for a while. They jelled perfectly at forming Apple. But we were always different people, different people right from the start.

You know, it's strange, hut right around the time I started working on what later became the Apple I board, this idea popped into my mind about two guys who die on the same day. One guy is really successful, and he's spending all his time running companies, managing them, making sure they are profitable, and making sales goals all the time. And the other guy, all he does is lounge around, doesn't have much money, really likes to tell jokes and follow gadgets and technology and other things he finds interesting in the world, and he just spends his life laughing.

In my head, the guy who'd rather laugh than control things is going to be the one who has the happier life. That's just my opinion. I figure happiness is the most important thing in life, just how much you laugh. The guy whose head kind of floats, he's so happy. That's who I am, who I want to be and have always wanted to be.

(p. 149) And that's why I never let stuff like what happened with Breakout bother me. Though you can disagree--you can even split from a relationship--you don't have to hold it against the other. You're just different. That's the best way to live life and be happy

And I figured this all out even before Steve and I started Apple.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 127) I think most people with day jobs like to do something totally different when they get home. Some people like to come home and watch TV. But my thing was electronics projects. It was my passion and it was my pastime.

Working on projects was something I did on my own time to reward myself, even though I wasn't getting rewarded on the outside, with money or other visible signs of success.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 120) I'd been a slide rule whiz in high school, so when I saw the calculator, it was just amazing. A slide rule was kind of like a ruler-- you had to look at it precisely to read the values. The most accurate number you could get was only three digits long, however, and even that result was always questionable. With a calculator, you could punch in precisely the digits you wanted. You didn't have to line up a slider. You could type in your numbers exactly, hit a button, and get an answer immediately. You could get that number all the way out to ten digits. For example, the real answer might be 3.158723623. An answer like that was much more precise than anything engineers had ever gotten before.

Well, the HP 35 was the first scientific calculator, and It was the first in history that you could actually hold in your hand. It could calculate sines and cosines and tangents, all the trigonometric and exponential/logarithmic functions engineers use to calculate and to do their jobs. This was 1973, and back then cal-(p. 121)culators--especially handheld calculators--were a very, very big deal.

. . .

There was no doubt in my mind that calculators were going to put slide rules out of business. (In fact, two years later you couldn't even buy a slide rule. It was extinct.) And now all of a sudden I'd gotten a job helping to design the next generation of these scientific calculators. It was like getting to be a part of history.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

(Note: ellipsis added.)

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Wozniak went on to invent the personal computer.

This example would probably fit with some of what Malcolm Gladwell claims in his bestseller Outliers.

(p. 15) I have to point out here that at no time did my dad make a big deal about my progress in electronics. He taught me stuff, sure, but he always acted as if it was just normal for me. By the sixth grade, I was really advanced in math and science, everyone knew it, and I'd been tested for IQ and they told us it was 200-plus. But my dad never acted like this was something he should push me along with. He pulled out a blackboard from time to time, a tiny little blackboard we had in our house on Edmonton Avenue, and when I asked, he would answer anything and make diagrams for it. I remember how he showed me what happened if you put a plus voltage into a transistor and got a minus voltage out the other end of the transistor. There must have been an inverter, a type of logic gate. And he even physically taught me how to make an AND gate and an OR gate out of parts he got--parts called diodes and resistors. And he showed me how they needed a transistor in between to amplify the signal and connect the output of one gate to the input of the other.

(p. 16) To this very moment, that is the way every single digital device on the planet works at its most basic level.

He took the time--a lot of time--to show me those few little things. They were little things to him, even though Fairchild and Texas Instruments had just developed the transistor only a decade earlier.

It's amazing, really, to think that my dad taught me about transistors back when almost no one saw anything but vacuum tubes. So he was at the top of the state of the art, probably because his secret job put him in touch with such advanced technology. So I ended up being at the state of the art, too.

The way my dad taught me, though, was not to rote-memorize how parts are connected to form a gate, but to learn where the electrons flowed to make the gate do its job. To truly internalize and understand what is going on, not just read stuff off some blueprint or out of some book.

Those lessons he taught me still drive my intelligence and my methods for all the computer designs I do today.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

The reference to the Gladwell book is:

Gladwell, Malcolm. Outliers: The Story of Success. New York, NY: Little, Brown, and Co., 2008.

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(p. 12) . . . my dad taught me . . . a lot about electronics. Boy, do I owe a lot to him for this. He first started telling me things and explaining things about electronics when I was really, really young--before I was even four years old. This is before he had that top secret job at Lockheed, when he worked at Electronic Data Systems in the Los Angeles area. One of my first memories is his taking me to his workplace on a weekend and showing me a few electronic parts, putting them on a table with me so I got to play with them and look at them. I can still picture him standing there working on some kind of equipment. I don't know if he was soldering or what, but I do remember him hooking something up to something else that looked like a little TV set. I now know it was an oscilloscope. And he told me he was trying to get something done, trying to get the picture on the screen with a line (it was a waveform) stable-looking so he could show his boss that his design worked.

And I remember sitting there and being so little, and thinking: Wow, what a great, great world he's living in. I mean, that's all I (p. 13) thought: Wow. For people who know how to do this stuff--how to take these little parts and make them work together to do something--well, these people must be the smartest people hi the world. That was really what went through my head, way back then.

Now, I was, of course, too young at that point to decide that I wanted to be an engineer. That came a few years later. I hadn't even been exposed to science fiction or books about inventors yet, but just then, at that moment, I could see right before my eyes that whatever my dad was doing, whatever it was, it was important and good.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

(Note: ellipses added.)

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

(p. A15) So you want to build a wind farm? OK, Mr. Bryce says, to start you'll need 45 times the land mass of a nuclear power station to produce a comparable amount of power; and because you are in the middle of nowhere you'll also need hundreds of miles of high-voltage lines to get the energy to your customers. This "energy sprawl" of giant turbines and pylons will require far greater amounts of concrete and steel than conventional power plants--figure on anywhere from 870 to 956 cubic feet of concrete per megawatt of electricity and 460 tons of steel (32 times more concrete and 139 times as much steel as a gas-fired plant).

Once you've carpeted your tract of wilderness with turbines and gotten over any guilt you might feel about the thousands of birds you're about to kill, prepare to be underwhelmed and underpowered. Look at Texas, Mr. Bryce says: It ranks sixth in the world in total wind-power production capacity, and it has been hailed as a model for renewable energy and green jobs by Republicans and Democrats alike. And yet, according to the Electric Reliability Council of Texas, which runs the state's electricity grid, just "8.7 percent of the installed wind capability can be counted on as dependable capacity during the peak demand period." The wind may blow in Texas, but, sadly, it doesn't blow much when it is most needed--in summer. The net result is that just 1% of the state's reliable energy needs comes from wind.

For the full review, see

TREVOR BUTTERWORTH. "BOOKSHELF; The Wrong Way To Get to Green; Once you've carpeted the wilderness with wind-farm turbines, and crushed any guilt about the birds you're about to kill, prepare to be underwhelmed and underpowered." The Wall Street Journal (Tues., APRIL 27, 2010): A15.

(Note: the online version of the article is dated APRIL 30, 2010.)

The book under review is:

Bryce, Robert. Power Hungry; the Myths of "Green" Energy and the Real Fuels of the Future. New York: PublicAffairs, 2010.

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Source of book image: http://1.bp.blogspot.com/_TwOg8fVl5Og/SkXmn7MyaxI/AAAAAAAAAug/G-klN-KQHis/s1600/iWoz.jpg

iWoz is a fun read, with wild fluctuations in the significance of what is written. When Wozniak writes about the ingredients of inventiveness, it is significant. When he talks about his pranks, or his obsessions with certain number combinations, it is strange. (Maybe I just haven't figured out the significance of Wozniak's quirks---I once heard George Stigler say that even the mistakes of a great mind were worth pondering.)

In the next few weeks I'll be quoting a few of the more significant passages.

An over-riding lesson from the book, is the extent to which both Wozniak and Jobs were necessary for the Apple achievement. Wozniak was a genius inventor, but he did not have the drive or the skills, or the judgment of the entrepreneur.

Schumpeter famously distinguished invention from innovation. Wozniak was the inventor, and Jobs was the innovator (aka, the entrepreneur).

Book discussed:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 51) The situation of the rural town of Marney was one of the most delightful easily to be imagined. In a spreading dale, contiguous to the margin of a dear and lively stream, surrounded by meadows and gardens, and backed by lofty hills, undulating and richly wooded, the traveller (sic) on the opposite heights of the dale would often stop to admire the merry prospect that recalled to him the traditional epithet of his country.

Beautiful illusion! For behind that laughing landscape, penury and disease fed upon the vitals of a miserable population.

The contrast between the interior of the town and its external aspect was as striking as it was full of pain. With the exception of the dull high street, which had the usual characteristics of a small agricultural market town, some sombre mansions, a dingy inn, and a petty bourse, Marney mainly consisted of a variety of narrow and crowded lanes formed by cottages built of rubble, or unhewn stones without cement, (p. 52) and, from age or badness of the material, looking as if they could scarcely hold together. The gaping chinks admitted every blast; the leaning chimneys had lost half their original height; the rotten rafters were evidently misplaced; while in many instances the thatch, yawning in some parts to admit the wind and wet, and in all utterly unfit for its original purpose of giving protection from the weather, looked more like the top of a dunghill than a cottage. Before the doors of these dwellings, and often surrounding them, ran open drains full of animal and vegetable refuse, decomposing into disease, or sometimes in their imperfect course filling foul pits or spreading into stagnant pools, while a concentrated solution of every species of dissolving filth was allowed to soak through, and thoroughly impregnate, the walls and ground adjoining.

These wretched tenements seldom consisted of more than two rooms, in one of which the whole family, however numerous, were obliged to sleep, without distinction of age, or sex, or suffering. With the water streaming down the walls, the light distinguished through the roof, with no hearth even in winter, the virtuous mother in the sacred pangs of childbirth gives forth another victim to our thoughtless civilisation (sic); surrounded by three generations whose inevitable presence is more painful than her suffering in that hour of travail; while the father of her coming child, in another corner of the sordid chamber, lies stricken by that typhus which his contaminating dwelling has breathed into his veins, and for whose next prey is perhaps destined his new-horn child. These swarming walls had neither windows nor doors sufficient to keep out the weather, or admit the sun, or supply the means of ventilation; the humid and putrid roof of thatch exhaling malaria like all other decaying vegetable matter. The dwelling-rooms were neither boarded nor paved; and whether it were that some were situate in low and damp places, occasionally flooded by the river, and usually much below the level of the road; or that the springs, as was often the case, would burst through the mud floor; the ground was at no time better than so much clay, while sometimes you might see little channels cut from the centre under the doorways to carry off the water, the door itself removed from its hinges; a resting-place for infancy in its deluged home. These hovels were in many instances not (p. 53) provided with the commonest conveniences of the rudest police; contiguous to every door might be observed the dungheap on which every kind of filth was accumulated, for the purpose of being disposed of for manure, so that, when the poor man opened his narrow habitation in the hope of refreshing it with the breeze of summer, he was met with a mixture of gases from reeking dunghills.

Source:

Disraeli, Benjamin. Sybil. paperback ed, Oxford World's Classics. Oxford, UK: Oxford University Press, 2009 [1845].

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The unsavory political practice known as "logrolling" is discussed in one of the public choice chapters of the Gwartney et al text that I use in my micro principles courses. Here is an apt example:

(p. 193) . . . , McCarran was more than ever determined to (p. 194) fight the Court-packing plan, even if he lost all of his federal patronage.

Roosevelt had some success charming more malleable politicians such as young Florida senator Claude Pepper. Roosevelt invited the wavering Pepper into the Oval Office and turned on the charm. It helped even more when he turned on the spigot. "The president," Pepper recalled, "was not above a little logrolling, promising to help me win re-election in 1938 and, in my presence, notifying the army that he wanted to see some favorable action on a Florida canal project that I had been pushing." Pepper ended up backing Roosevelt.

Source:

Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.

(Note: ellipsis added.)

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(p. 91) . . . Thomas Gore, . . . was first elected to the Senate in 1907, the year Oklahoma became a state. Gore had a populist streak in him, but he always recognized the protections to individual liberty that came from limited government. In the 1930s, therefore, he strongly opposed the federal government going into the relief business. Interestingly, Gore was made totally blind by two childhood accidents. He still managed to become a lawyer, and as a senator, he had to have family members or staff assistants read bills, books, and newspapers to him. Yet he claimed to see clearly through the political chicanery that would occur if the federal government entered the relief business. No depression, Gore argued, "can be ended by gifts, gratuities, doles, and alms handed out by the Federal Treasury and extorted from taxpayers that are bleeding at every pore." On the issue of relief, especially, Gore argued that state and city officials "have immediate contact" with hardship cases and can best "superintend the dispensation of charity." Soon after the ERA brought federal relief into existence, Gore said, "The day on which we began to make these loans by the Federal Government to States, counties, and cities was a more evil day in the history of the Republic than the day on which the Confederacy fired upon Fort Sumter."

In 1935, Gore helped lead the charge in Congress against funding the WPA with $4.8 billion. After he spoke against the bill, thousands of people in southeast Oklahoma held a mass meeting to denounce Gore. They sent him a telegram demanding that he cast his vote for the WPA and, by implication, start bringing more fed-(p. 92)eral dollars into Oklahoma. Gore responded with a telegram of his own. Your action, he wrote, "shows how the dole spoils the soul. Your telegram intimates that your votes are for sale. Much as I value votes I am not in the market. I cannot consent to buy votes with the people's money. I owe a debt to the taxpayer as well as to the unemployed." Shortly after dictating these words, the blind Senator was led to the Senate floor to cast a lonely vote against the WPA.

Source:

Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.

(Note: ellipses added.)

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(p. 87) According to Lyle Dorsett, who has studied the Hague machine in detail, "Concrete evidence shows that from the outset of the New Deal, Frank Hague was in complete control of all patronage in the state." And Roosevelt poured patronage into New Jersey in the form of massive public works (Hague owned a construction company), which included almost 100,000 WPA jobs annually during the 1930s and the highest rate of pay in the nation for these skilled jobs. One minor drawback to the high pay was that WPA workers in New Jersey had to "tithe" 3 percent of their salaries to the Democrat Party at election time. One WPA director in New Jersey--a corrupt but candid man--answered his office phone, "Democratic headquarters!"

Hopkins received mail regularly from people all over the nation who were denied federal jobs, or fired from them, because of their (p. 88) political views. Many of these letters are available in files for each state and housed in the National Archives. The title of these files is "WPA--Political Coercion." The hefty New Jersey file is very illuminating. One WPA worker complained about a mass-mailed postcard he received that stated, "You are either on the WPA or employed in some government department and by virtue thereof you owe a duty to the [Democrat] Party to do your part in making the canvass. Failure to do your active share will be reported to our county chairman, and you may find your position in jeopardy."

Source:

Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.

(Note: italics in original; ellipsis added.)

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(p. 75) . . . when Roosevelt was spending his own money, he was sometimes very stingy. For example, when Roosevelt traveled by train from Washington to Hyde Park, he always wanted a private car for himself and his staff: Servicing this private car, which might include providing dozens of meals, newspapers, and various amenities for the president and his staff would require great diligence and attention to detail. But for round-trip service on Roosevelt's private car, he tipped the porter a mere five dollars. The reporters. on their car nearby, combined to tip eight to ten times more than the president did. Walter Trohan of the Chicago Tribune observed the unhappiness this created:

FDR wasn't a heavy tipper at any time, but was less so aboard trains. He gave five dollars to the porter on his car for the round trip from Washington to Hyde Park, which included payment for what guests he might have in his car. In the press car we each gave two dollars for the trip, but there were about twenty of us all told. Sam [Mitchell, the porter] soon begged off the private car; the honor of serving the President faded for a man raising a family and sending a boy to college as well as paying for a home, when he could count on forty dollars in the press car as against five dollars in the private car.

Source:

Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.

(Note: italics in original; ellipsis added.)

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"Lance Orton, center, who sells T-shirts, said that as a veteran he was proud of his actions. But he spurned most questions." Source of caption and photo: online version of the NYT article quoted and cited below.

Hernando de Soto has shown that entrepreneurial street-vending is an important path for the very poor to constructively improve their lives. And yet governments around the world, including ours, consistently make it hard for street vendors to ply their trade.

Yet, on balance, street vendors make our lives better, not only through their products and services, but also through their alert eyes that make our city streets safer. Jane Jacobs made the point that the presence of good people observing the streets is a key ingredient of urban safety, one that was too-often removed by well-intentioned, but ill-conceived city-planners' urban-renewal projects.

The incident recounted below also adds one more case to the well-documented conclusions of Amanda Ripley, who showed us that our safety in avoiding and being rescued from disasters rests in the alertness, preparation, level-headedness and good will of ordinary citizens on the scene.

There may be professionals who are better trained, but outcomes often depend on what is done quickly, and usually only those who are on the scene are able to act quickly.

And although the politically correct will glower at you for mentioning it, there are obvious implications for the issue of gun control.

(p. A19) Even in Times Square, where little seems unusual, the Nissan Pathfinder parked just off Broadway on the south side of 45th Street -- engine running, hazard lights flashing, driver nowhere to be found -- looked suspicious to the sidewalk vendors who regularly work this area.

And it was the keen eyes of at least two of them -- both disabled Vietnam War veterans who say they are accustomed to alerting local police officers to pickpockets and hustlers -- that helped point the authorities to the Pathfinder, illegally and unusually parked next to their merchandise of inexpensive handbags and $2.99 "I Love NY" T-shirts.

Shortly before 6:30 p.m. on Saturday, the vendors -- Lance Orton and Duane Jackson, who both served during the Vietnam War and now rely on special sidewalk vending privileges for disabled veterans -- said they told nearby officers about the Pathfinder, which had begun filling with smoke and then emitted sparks and popping sounds.

. . .

But in a city hungry for heroes, the spotlight first turned to the vendors. Mr. Orton, a purveyor of T-shirts, ran from the limelight early Sunday morning as he spurned reporters' questions while gathering his merchandise on a table near where the Pathfinder was parked.

When asked if he was proud of his actions, Mr. Orton, who said he had been selling on the street for about 20 years, replied: "Of course, man. I'm a veteran. What do you think?"

Mr. Jackson, on the other hand, embraced his newfound celebrity, receiving an endless line of people congratulating him while he sold cheap handbags, watches and pashmina scarves all day Sunday.

. . .

As for Mr. Orton, he rested on Sunday at a relative's house, leaving others to talk on his behalf. "When he was in Vietnam, he said they had to make decisions and judgments from their gut, from their own feelings," said Miriam Cintron, the mother of Mr. Orton's son. "His instinct was telling him something's not right. I guess he was right."

She said Mr. Orton would mediate disputes between the police and other vendors, and when something did not look right, he would alert the police. "He always said, 'Downtown is where they're going to come to, and I'm going to be right there,' " Ms. Cintron said.

When Mr. Orton left Times Square about 7 a.m. on Sunday, he did so to a hero's reception. As he walked down the street, employees from Junior's restaurant stood outside applauding him. He briefly entered the restaurant before heading toward 44th Street.

Using a cane and wearing a white fedora, Mr. Orton limped away and hopped a cab home to the Bronx, but not before repeating a terror-watch mantra: "See something, say something."

For the full story, see:

COREY KILGANNON and MICHAEL S. SCHMIDT. "Vendors Who Alerted Police Called Heroes." The New York Times (Mon., May 3, 2010): A19.

(Note: ellipses added.)

(Note: the online version of the story is dated May 2, 2010 and has the title "Vendors Who Alerted Police Called Heroes.")

The most relevant Hernando de Soto book is:

Soto, Hernando de. The Other Path: The Invisible Revolution in the Third World. New York: Basic Books, 1989.

The most relevant Jane Jacobs book is:

Jacobs, Jane. The Death and Life of Great American Cities. New York: Random House, 1961.

The Amanda Ripley book mentioned is:

Ripley, Amanda. The Unthinkable: Who Survives When Disaster Strikes - and Why. New York: Crown Publishers, 2008.

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(p. B6) If Steven D. Levitt and Stephen J. Dubner, the authors of "Freakonomics," were to examine the movie business, they might ask: Why do documentary filmmakers keep doing it?

It can't be the money, because the world is awash in documentaries that make little at the box office or are not distributed at all. Occasionally, though, a documentary makes a buck for those involved -- and the new documentary based on "Freakonomics" could do just that.

Magnolia Pictures is expected to announce on Monday that it has acquired domestic distribution rights to the film, which was produced by the Green Film Company and directed, in parts, by a series of well-known documentarians. Those include Alex Gibney ("Taxi to the Dark Side"), Rachel Grady and Heidi Ewing ("Jesus Camp"), Morgan Spurlock ("Super Size Me"), Eugene Jarecki ("Why We Fight") and Seth Gordon ("The King of Kong").

"Freakonomics," the film, got started when Chad Troutwine, a producer who worked on an earlier multidirector movie, "Paris, Je T'aime," became interested in the best-selling book, which looks into matters like the socioeconomic implications of baby naming.

For the full story, see:

MICHAEL CIEPLY. "'Freakonomics' Documentary May Be a Rarity: Profitable." The New York Times (Mon., April 5, 2010): B6.

(Note: the online version of the story is dated April 4, 2010.)

The source information on the revised edition of the Freakonomics book is:

Levitt, Steven D., and Stephen J. Dubner. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. Revised and Expanded ed. New York: William Morrow, 2006.

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Angus Maddison. Source of photo: http://www.ggdc.net/maddison/

I neither met Angus Maddison, nor ever heard him speak, but I have often seen his work praised by those whom I respect.

One example is the praise given to Maddison by Brad DeLong in his wonderful "Cornucopia" essay that documents the benefits from the process of creative destruction.

(p. B10) Professor Maddison, a British-born economic historian with a compulsion for quantification, spent many of his 83 years calculating the size of economies over the last three millenniums. In one study he estimated the size of the world economy in A.D. 1 as about one five-hundredth of what it was in 2008.

He died on April 24 at a hospital in Paris after a long illness, his daughter, Elizabeth Maddison, said.

. . .

In his research, he tried to reconstruct thousands of years' worth of economic data, most notably in his 2007 book "Contours of the World Economy 1-2030 A.D.." He argued that per capita income around the globe had remained largely stagnant from about 1000 to 1820, after which the world became exponentially richer and life expectancies surged.

. . .

In his archaeological excavation of the economies of other eras, he was "trying to explain why some countries achieved faster growth or higher income levels than others," he wrote in an autobiographical essay, "Confessions of a Chiffrephile" published in 1994. He wanted to know what some countries did right and what others did wrong, and to figure out how growth influenced culture, and was influenced by it.

Professor Maddison often referred to himself as a "chiffrephile," or lover of numbers, a term he invented to characterize economists and economic historians like himself who were prone to quantifying the world.

While macroeconomic research in the last few decades was dominated by elegant mathematical models and technical wizardry, his focus on meat-and-potatoes data and cross-country historical comparisons has come back into vogue in recent years, especially in the wake of the financial crisis.

For the full obituary, see:

CATHERINE RAMPELL. "Angus Maddison, 83, Who Quantified Ancient Economies." The New York Times (Mon., May 3, 2010): B10.

(Note: ellipses added.)

(Note: the online version of the obituary is dated April 30, 2010 and has the title "Angus Maddison, Economic Historian, Dies at 83.")

The Maddison book mentioned in the obituary is:

Maddison, Angus. Contours of the World Economy, 1-2030 Ad: Essays in Macro-Economic History. Oxford and New York: Oxford University Press, 2007.

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(p. 50) Among those damaged was Carl Pharis, the general manager of Pharis Tire and Rubber Company in Newark, Ohio. Pharis employed over one thousand people, mainly in the Newark area. His company grew because, in Pharis's words, "we would make the best possible rubber tire and sell it at the lowest price consistent with a modest but safe profit." He and his employees had survived the grim Great Depression years because they had lower prices, a good tire, and solid support in central Ohio from buyers who knew the company because it was local and because it priced its tires lower than the larger firms. As Pharis said, "It is obvious that they cannot make as good a tire as we make and sell it at the price at which we can sell at a profit:"

Then came the NRA with its high fixed prices for tires. As Pharis said, "Since the industry began to formulate a Code under the N. R. A., in June, 1933, we have at all times opposed any form of price-fixing. We believe it to be illegal and we know it to be oppressive." He added, "We quite understand that, if we were compelled to sell our tires at exactly the same price as they sell their tires, their great national consumer acceptance would soon capture our purchasers and ruin us. Since we have so little of this consumer publicity when compared with them, our only hope is in our ability (p. 51) to make as good or a better tire than they make and to sell it at a less[er] price. . . . "

Since Pharis and other small companies were no longer allowed to sell tires at discounted rates, Goodyear and Firestone "could go out just as they have gone out," Pharis noted, "and say to prospective customers that, since they had to pay the same price, it would be wiser if they bought the nationally advertised lines."

In a nutshell, Pharis put it this way: "The Government deliberately raised our prices up towards the prices at which the big companies wanted to sell, at which they could make a profit, . . . where more easily, with much less loss, they could come down and 'get us' and where, bound by N. R. A. decrees, we could not use lower prices, although we could have lowered them and still made a decent profit."

Pharis was on the verge of closing down and having to lay off all of his one thousand employees. His company, with its low prices and quality tires, could weather the Great Depression, but not the NRA. "If we were asking favors from the Government," Pharis concluded, "there would be little justice in our complaints. . . . And so, if the big fellows, with their too-heavy investments and high costs of manufacturing and selling, cannot successfully compete with us little fellows without Government aid, they should quit."

Source:

Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.

(Note: ellipses in original.)

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Source of book image: http://mises.org/misesreview_detail.aspx?control=347

FDR has never been one of my heroes. But in the last few years, I have read two books that have revealed him to have been much worse than I expected. In earlier posts, I have praised Amity Shlaes' The Forgotten Man.

Here I praise Burt Folsom's New Deal or Raw Deal?

Folsom documents how the economic policies of Roosevelt lengthened and deepened the Great Depression.

But what I think I will remember most about the book, is the example after example of how FDR lied to both friend and foe; and the example after example of how FDR used government spending programs to buy votes.

I found this book very unpleasant. Rather than listen to another chapter in the car, I sometimes found myself playing music.

But we need to read this book. We need to know what really happened, so we can guard against it happening again.

In the next few weeks, I will quote a few of the more memorable and significant passages in Folsom's book.

Book discussed:

Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.

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(p. 79) While oxygen is the third most common element in the universe, we know that free oxygen was exceedingly rare in the Earth's initial atmosphere, until roughly two billion years ago, when an ancestor of modern cyanobacteria hit upon a photosynthetic process that used the energy from the sun to extract hydrogen from the abundant supply of water on the planet. That metabolic strategy was spectacularly successful--the organism quickly covered the surface of the planet--but it had a pollution problem: it expelled free oxygen as a waste product. During this period, now known as the Proterozoic, the oxygen content of the atmosphere exploded from 0.0001 percent to 3 percent, beginning its long march to the current levels of 21 percent. (Even today, Earth's atmosphere is actually dominated by nitrogen, which makes up 78 percent of its overall volume: other gases. like argon and carbon dioxide, constitute less than a single percent.) The massive increase of oxygen in the atmosphere triggered what has been called "by far the greatest pollution crisis the earth has ever endured," destroying countless microbes for whom the cocktail of sunlight and oxygen was deadly.

In time, though, organisms evolved that thrived in an oxygen-heavy environment. We are their descendants.

Source:

Johnson, Steven. The Invention of Air: A Story of Science, Faith, Revolution, and the Birth of America. New York: Riverhead Books, 2008.

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(p. 209) Britannica had already launched a project called WebShare in April 2008, which was described as "A special program for web publishers, including bloggers, webmasters, and anyone who writes for the Internet. You get complimentary access to the Encyclopaedia Britannica online and, if you like, an easy way to give your readers background on the topics you write about with links to complete Britannica articles." This was a rather radical move, obviously trying to vie with Wikipedia's emergence as one of the most linked-to resources on the Internet.

But the latest initiative was something quite astonishing, as Britannica was now inviting users to be part of the team of content creators:

To elicit their participation in our new online community of scholars, we will provide our contributors with a reward system and a rich online home that will enable them to promote themselves, their work, and their services. . . . Encyclopaedia Britannica will allow those visitors to suggest changes and additions to that content.

Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

(Note: ellipsis in original.)

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Source of book image: http://seekingalpha.com/article/188632-the-quants-review-when-the-money-grid-went-dark

(p. 7) The virtually exclusive use of mathematical models, Mr. Patterson says, was what separated the younger cohorts of quants from their Wall Street forebears. Unlike Warren Buffett or Peter Lynch, the quants did not focus on so-called market fundamentals like what goods or services a particular company actually produced. Seldom if ever did they act on old-fashioned gut instinct. Instead, they focused on factors like how cheap a stock was relative to the rest of the market or how quickly its price had risen or fallen.

Therein was the quants' flaw, according to Mr. Patterson. Pioneers like Mr. Thorp understood that while the math world and the financial world have much in common, they aren't always in sync. The quant traders' model emphasized the most likely moves a stock or bond price could make. It largely ignored the possibility of big jolts caused by human factors, especially investor panics.

"The model soon became so ubiquitous that, hall-of-mirrors-like, it became difficult to tell the difference between the model and the market itself," Mr. Patterson declares.

Move ahead to August 2007 and beyond, when markets swooned on doubts about subprime mortgages. Stocks that the model predicted were bound to go up went sharply down, and vice versa. Events that were supposed to happen only once in 10,000 years happened three days in a row.

For the full review, see:

HARRY HURT III. "Off the Shelf; In Practice, Stock Formulas Weren't Perfect." The New York Times, SundayBusiness Section (Sun., February 21, 2010): 7.

(Note: the online version of the article is dated February 20, 2010.)

The reference to Patterson's book, is:

Patterson, Scott. The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It. New York: Crown Business, 2010.

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(p. 176) As an homage to Wales's sticking with a low-key style, the community adopted the saying "The GodKing (sic) drives a Hyundai," making fun of his humble Korean-made car, a brand known more for frugality than flash.

Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

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(p. 108) Noted Yale law professor Yochai Benkler has a theory. In a widely circulated and famous essay on the Internet called "Coase's Penguin," he offered his thinking on why people participate in efforts such as Linux and other "free" projects. There was already a culture, before Wikipedia, of folks donating their time, effort, and skills to the collective good for no monetary gain or immediate compensation. Benkler observed this part of the hacker ethos and was curious to know what the common thread was.

He dubbed it "commons-based peer production." It's a fancy moniker for the phenomenon of people working together toward the same end--creating computer code or content that is free to be copied, distributed, used, and modified by others.

Benkler believes the Internet and the "free culture" movement have allowed individuals to connect and combine their efforts in ways unprecedented in history. The legal academic is not shy to combine scholarship outside his area of training by drawing on economics, sociology, and technology to form his theory.

According to Benkler, if monetary rewards and the creation of corporate firms have been the accepted driving force for human innovation and progress, there has to be something else driving volunteers in Linux, Wikipedia, and other "free" projects that have become so pervasive and monumental in the digital age.

He asserts the motivation comes from two main things other than money: the "socio-psychological" reward of interacting with others, and the "hedonic" personal gratification of the task.

Wikipedia's magic occurs when these two things come together. One person's personal affection and indulgence---mapmaking, grammar checking, baseball statistics, history of stamps---easily finds a home in Wikipedia's amalgam of topics, where it also feeds into and inspires activities by others.

Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

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

Daniel Pink's Free Agent Nation was a provocative account of how the entrepreneur benefits from being an entrepreneur. I enjoyed the book, and reference it frequently.

I have not had a chance to read Pink's recent Drive, but hope to do so soon.

(p. A17) Science, Mr. Pink says, has shown that we are motivated as much intrinsically, by the sheer joy and purpose of certain activities, as extrinsically, by rewards like pay raises and promotions.

The science that Mr. Pink is referring to rests largely on the work of Edward Deci and Richard Ryan at the University of Rochester and Mihaly Csikszentmihalyi at Claremont Graduate University. These three researchers have found that we do our best work when motivated from within, when we have control over our time and decisions and when we feel a deep sense of purpose. Under such conditions, we can achieve real mastery over whatever it is that we do.

The modern workplace, Mr. Pink laments, is too often set up to deny us this opportunity. Firms that hope to optimize efficiency by making their employees clock in and out, attend compulsory meetings, and receive pay for performance are de-motivating through excessive control. What they should be doing, he argues, is giving workers the chance to do their best work by granting them more autonomy and helping them to achieve the mastery that may come with it.

Mr. Pink cites an Australian software firm, Atlassian, that allows its programmers 20% of their time to work on any software problem they like, provided it is not part of their regular job. The programmers turn out to be much more efficient with that 20% of their time than they are with their regular work hours. Atlassian credits the 20% with many of its innovations and its high staff retention. Companies as large as Google and 3M have similar programs that have produced everything from Google News to the Post-It note.

. . .

. . . : Beyond serving our basic needs, money doesn't buy happiness. We need a greater purpose in our lives. Our most precious resource is time. We respond badly to conditions of servitude, whether the lash of the galley master or the more subtle enslavement of monthly paychecks, quarterly performance targets and the fear of losing health insurance. Work that allows us to feel in control of our lives is better than work that does not.     . . . , these lessons are worth repeating, and if more companies feel emboldened to follow Mr. Pink's advice, then so much the better.

For the full review, see:

PHILIP DELVES BROUGHTON. "More Than a Paycheck; Workers are more efficient, loyal and creative when they feel a sense of purpose--when work has meaning." The Wall Street Journal (Tues., Feb. 2, 2010): A17.

(Note: ellipses added.)

(Note: the online version of the review is dated Feb. 5, 2010.)

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(p. A4) PARIS -- For the debut of his latest weighty title, "On War in Philosophy," the French philosopher Bernard-Henri Lévy made the glossy spreads of French magazines with his trademark panache: crisp, unbuttoned white Charvet shirts, golden tan and a windswept silvery mane of hair.

But this glamorous literary campaign was suddenly marred by an absolute philosophical truth: Mr. Lévy backed up the book's theories by citing the thought of a fake philosopher. In fact, the sham philosopher has never been a secret, and even has his own Wikipedia entry.

In the uproar that followed over the rigors of his research, Mr. Lévy on Tuesday summed up his situation with one e-mailed sentence: "My source of information is books, not Wikipedia."

For the full story, see:

DOREEN CARVAJAL. "Philosopher Left to Muse on Ridicule Over a Hoax." The New York Times (Weds., February 10, 2010): A4.

(Note: the online version of the article is dated February 9, 2010.)

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(p. 71) The acknowledgment, by name, of volunteers in the preface sections of the OED is akin to Wikipedia's edit history, where one can inspect who contributed to each article. Some Oxford contributors were professors, some royalty, but most were ordinary folks who answered the call. Winchester, in The Professor and the Madman: A Tale of Murder, Insanity, and the Making of the Oxford English Dictionary, tells the story of the "madman" William Chester Minor, a U.S. Civil War survivor whose "strange and erratic behavior" resulted in him shooting an "innocent working man" to death in the street in Lambeth. He was sent to Broadmoor asylum for criminal lunatics. He discovered the OED as a project around 1881, when he saw the "Appeal for Readers" in the library, and worked for the next twenty-one years contributing to the project, receiving notoriety as a contributor "second only to the contributions of Dr. Fitzedward Hall in enhancing our illustration of the literary history of individual words, phrases and constructions." Minor did something unusual in not just sending submissions, but having his own cataloging system such that the dictionary editors could send a postcard and "out the details flowed, in abundance and always with unerring accuracy." Until Minor and Murray met in January 1891, no one working with (p. 72) the OED knew their prolific contributor was a madman and murderer housed at Broadmoor.

As we will see in later chapters, a common question of the wiki method is whether one can trust information created by strangers and people of dubious background. But the example of the OED shows that using contributors rather than original expert scholarship is not a new phenomenon, and that projects built as a compendium of primary sources are well suited for harnessing the power of distributed volunteers.

Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

(Note: italics in original.)

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"James J. Hill (center) built a great railroad on his own dime." Source of caption and photo: online version of the WSJ commentary quoted and cited below.

(p. A17) Let's bring back the robber barons.

"Robber baron" became a term of derision to generations of American students after many earnest teachers made them read Matthew Josephson's long tome of the same name about the men whose enterprise drove the American industrial age from 1861 to 1901.

Josephson's cast of pillaging villains was comprehensive: Rockefeller, Carnegie, Vanderbilt, Morgan, Astor, Jay Gould, James J. Hill. His table of contents alone shaped impressions of those times: "Carnegie as 'business pirate'.'' "Henry Frick, baron of coke." "Terrorism in Oil." "The sack of California."

I say, bring 'em back, and the sooner the better. What we need, a lot more than a $1,000 tax credit, are industries no one has thought of before. We need vision, vitality and commercial moxie. This government is draining it away.

The antidote to Josephson's book is a small classic by Hillsdale College historian Burton W. Folsom called "The Myth of the Robber Barons: A New Look at the Rise of Big Business in America" (Young America's Foundation). Prof. Folsom's core insight is to divide the men of that age into market entrepreneurs and political entrepreneurs.

Market entrepreneurs like Rockefeller, Vanderbilt and Hill built businesses on product and price. Hill was the railroad magnate who finished his transcontinental line without a public land grant. Rockefeller took on and beat the world's dominant oil power at the time, Russia. Rockefeller innovated his way to energy primacy for the U.S.

Political entrepreneurs, by contrast, made money back then by gaming the political system. Steamship builder Robert Fulton acquired a 30-year monopoly on Hudson River steamship traffic from, no surprise, the New York legislature. Cornelius Vanderbilt, with the slogan "New Jersey must be free," broke Fulton's government-granted monopoly.

For the full commentary, see:

DANIEL HENNINGER. "Bring Back the Robber Barons." The Wall Street Journal (Mon., MARCH 4, 2010): A17.

(Note: the online version of the article is dated MARCH 3, 2010.)

The full reference for Folsom's book is:

Folsom, Burton W. The Myth of the Robber Barons. 4th ed: Young America's Foundation, 2003.

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(p. 70) The venerable Oxford English Dictionary (OED), the history of which is masterfully documented by Simon Winchester in The Meaning of Everything and The Professor and the Madman, was in fact possible only through the soliciting of contributions, and the receipt of thousands of "slips" of paper, each with words and definitions found by readers and volunteers.

The OED didn't start out with such a grand title, and was first a project of the Philological Society in Great Britian (sic), as a response to what they saw as the popular dictionaries of Noah Webster and Samuel Johnson not doing the "English language justice." In 1857, it was started as the Unregistered Words Committee, and the job was to comb through all forms of media of the era (printed matter, song, spoken word) leading to the inventorying and cataloging of English words. The three founders, Chenevix Trench, Herbert Coleridge, and Frederick Furnivall, sent out a notice in November of that year: "AN APPEAL TO THE ENGLISH-SPEAKING AND ENGLISH-READING PUBLIC TO READ BOOKS AND MAKE EXTRACTS FOR THE PHILOLOGICAL SOCIETY'S NEW ENGLISH DICTIONARY." Specifically, it described the project thusly:

Accordingly, in January 1859. the Society issued their Proposal for the publication of a New English Dictionary, in which the characteristics of the proposed work were explained, and an appeal made to the English and American public to assist in collecting the raw materials for the work, these materials consisting of quotations illustrating the use of English words by all writers of all ages and in all senses, each quotation being made on a uniform plan on a half-sheet of notepaper that they might in due course be arranged and classified alphabetically and significantly. This Appeal met with generous response: some hundreds of volunteers began to read books, make quotations and send in their slips to "sub-editors who volunteered each to take charge of a letter or part of one, and by whom the slips were in turn further arranged, classified, and (p. 71) to some extent used as the basis of definitions and skeleton schemes of the meanings of words in preparation for the Dictionary.

The notice was sent to "bookshops and libraries across the English-speaking world" and, under the direction of Scottish lexicographer James Murray, saw its growth blossom. In 1879, Oxford University Press formally agreed to be publisher and employed Murray to take on the editorship. Slips sent in to the effort were filed away in pigeonholes at the Scriptorium, a corrugated metal building Mill Hill School erected specifically for the effort of sorting and housing the staff to work on the dictionary.

Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

(Note: italics and caps in original.)

The block quote within the Lih block quote is from p. 108 of:

Winchester, Simon. The Meaning of Everything: The Story of the Oxford English Dictionary. paperback ed. New York: Oxford University Press, USA, 2003.

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(p. 67) Adams did something unexpected for the academic community, but common in open source culture--release early and release often. Within weeks of its launch, one of the biggest annoyances of Wikipedia was resolved directly by the software's author. It was not because of monetary compensation or any formal request, but simply because the author was interested in solving it on his own time, and sharing it with others. It was the hacker ethos, and it had crossed from the domain of tech programmers into the world of encyclopedias.

Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

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(p. 22) By 1998, the business was good enough that Wales wanted to leave not just the world of Chicago Options Associates but the city of Chicago too. As a trader, he had made enough money to live comfortably for a while, or as he would say, "I made out OK" and earned "enough." With no incentive to stay in the Windy City, and with the warmer weather of California calling, Wales and Shell decided they could relocate to San Diego and run the business from there. Wales and his wife, Christine, made the move in 1998.

Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

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(p. 20) Jimmy walked into the offices of Chicago Options Associates in 1994 and met the CEO Michael Davis for a job interview. Davis had looked over Wales's academic publication about options pricing.

"It was impressive looking," says Wales wryly about the paper. "It was a very theoretical paper but it wasn't very practical." But Davis was sufficiently intrigued, as he wanted someone like Wales to pore over the firm's financial models and help improve them. So he took on young Wales, who seemed to be sharp and had acumen for numbers. Little did either of them know they would have a long road ahead together, with Wikipedia in the future.

Wales's first job was to go over the firm's current pricing models. "What was really fascinating was that it was truly a step beyond what I'd seen in academia," he recalls. "It was very practical, and didn't have a real theoretical foundation." Wales was intrigued that the firm traded on principles that worked in practice, not in theory. (This is something he would say about his future endeavor Wikipedia.) "Basically they just knew in the marketplace that the existing models were wrong."

Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

(Note: italics in original.)

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(p. 299) Innovation Source No. 1 is Pissed-Off People.

Irritation. Anger. That's the number one source of serious innovation. Which must, of course, be coupled with spine--a willingness to take on the powers that be. And risk it all.

Source:

Peters, Tom. Re-Imagine! London: DK, 2003.

(Note: italics, bold, and larger size font, in original.)

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Source of book image: http://kellylowenstein.files.wordpress.com/2009/04/wikipedia-revolution1.jpg

Wikipedia is a very unexpected and disruptive institution. Amateurs have produced an encyclopedia that is bigger, deeper, more up-to-date, and arguably of at least equal accuracy, with the best professional encyclopedias, such as Britannica.

I learned a lot from Lih's book. For instance I did not know that the founders of Wikipedia were admirers of Ayn Rand. And I did not know that the Oxford English Dictionary was constructed mainly by volunteer amateurs.

I also did not know anything about the information technology precursors and the back-history of the institutions that helped Wikipedia to work.

I learned much about the background, values, and choices of Wikipedia entrepreneur "Jimbo" Wales. (Jimbo Wales seems not to be perfect, but on balance to be one of the 'good guys' in the world---one of those entrepreneurs who can be admired for something beyond their particular entrepreneurial innovation.)

Lih's book also does a good job of sketching the problems and tensions within Wikipedia.

I believe that Wikipedia is a key step in the development of faster and better institutions of knowledge generation and communication. I also believe that substantial further improvements can and will be made.

Most importantly, I think that you can only go so far with volunteers--ways must be found to reward and compensate.

In the meantime, much can be learned from Lih. In the next few weeks, I will be quoting a few passages that I found especially illuminating.

Book discussed:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

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(p. 32) "I was in search of a one-armed economist, so that the guy could never make a statement and then say: "on the other hand.""

Source:

Harry S. Truman as quoted in: Keyes, Ralph. The Wit & Wisdom of Harry S. Truman. New York: Gramercy Books, 1999.

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(p. 132) . . . the function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on. Railroad construction in its earlier stages, electrical power production before the First World War, steam and steel, the motorcar, colonial ventures afford spectacular instances of a large genus which comprises innumerable humbler ones--down to such things as making a success of a particular kind of sausage or toothbrush. This kind of activity is primarily responsible for the recurrent "prosperities" that revolutionize the economic organism and the recurrent "recessions" that are due to the disequilibrating impact of the new products or methods. To undertake such new things is difficult and constitutes a distinct economic function, first, because they lie outside of the routine tasks which everybody understands and, secondly, because the environment resists in many ways that vary, according to social conditions, from simple refusal either to finance or to buy a new thing, to physical attack on the man who tries to produce it. To act with confidence beyond the range of familiar beacons and to overcome that resistance requires aptitudes that are present in only a small fraction of the population and that define the entrepreneurial type as well as the entrepreneurial function. This function does not essentially consist in either inventing anything or otherwise creating the conditions which the enterprise exploits. It consists in getting things done.

Source:

Schumpeter, Joseph A. Capitalism, Socialism and Democracy. 3rd ed. New York: Harper and Row, 1950.

(Note: ellipsis added.)

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(p. 189) McDonald's is a real melting pot.

The key element in these individual success stories and of McDonald's itself, is not knack or education, it's determination. This is expressed very well in my favorite homily:

"Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education alone will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent."

Source:

Kroc, Ray. Grinding It Out: The Making of McDonald's. Chicago: Henry Regnary Company, 1977.

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(p. 163) Some of my detractors, and I've acquired a few over the years, say that my penchant for experimenting with new menu items is a foolish indulgence. They contend that it stems from my never having outgrown my drummer's desire to have something new to sell. "McDonald's is in the hamburger business," they say. "How can Kroc even consider serving chicken?" Or, "Why change a winning combination?"

Of course, it's not difficult to demonstrate how much our menu has changed over the years, and nobody could argue wish the success of additions such as the Filet-O-Fish, the Big Mac, Hot Apple Pie, and Egg McMuffin. The most interesting thing to me about these items is that each evolved from an idea of one of our operators. So the company has benefited from the ingenuity of its small businessmen while they were being helped by the system's image and our cooperative advertising muscle. This, to my way of thinking, is the perfect example of capitalism in action. Competition was the catalyst for each of the new items. Lou Groen came up with Filet-O-Fish to help him in his battle against the Big Boy chain in the Catholic parishes of Cincinnati. The Big Mac resulted from our need for a larger sandwich to compete against Burger King and a variety of specialty shop concoctions. The idea (p. 164) for Big Mac was originated by Jim Delligatti in Pittsburgh.

Harold Rosen, our operator in Enfield Connecticut, invented our special St. Patrick's Day drink, The Shamrock Shake. "It takes a guy with a name like Rosen to think up an Irish drink," Harold told me. He wasn't kidding. "You may be right," I said. "It takes a guy with a name like Kroc to come up with a Hawaiian sandwich . . . Hulaburger." He didn't say anything. He didn't know whether I was kidding or not. Operators aren't the only ones who come up with creative ideas for our menu. My old friend Dave Wallerstein, who was head of the Balaban & Katz movie chain and has a great flair for merchandising--he's the man who put the original snack bars in Disneyland for Walt Disney--is an outside director of McDonald's, and he's the one who came up with the idea for our large size order of french fries. He said he loved the fries, but the small bag wasn't enough and he didn't want to buy two. So we kicked it around and he finally talked us into testing the larger size in a store near his home in Chicago. They have a window in that store that they now call "The Wallerstein Window," because every time the manager or a crew person would look up, there would be Dave peering in to see how the large size fries were selling. He needn't have worried. The large order took off like a rocket, and it's now one of our best-selling items. Dave really puts his heart into his job as a director, now that he's retired and has plenty of time. There's nothing he likes more than traveling with me to check out stores.

Our Hot Apple Pie came after a long search for a McDonald's kind of dessert. I felt we had to have a dessert to round out our menu. But finding a dessert item that would fit readily into our production system and gain wide acceptance was a problem. I thought I had the answer in a strawberry shortcake. But it sold well for only a short time and then slowed to nothing. I had high hopes for pound cake, too, but it lacked glamor. We needed something we could romance in advertising. I was ready to give up when Litton Cochran suggested we try fried pie, which he said is an old southern favorite. The rest, of course, is fast-food history. Hot Apple Pie, and later Hot Cherry Pie, has that special quality, that classiness in a finger food, that made it perfect for McDonald's. The pies added significantly to our sales and (p. 165) revenues. They also created a whole new industry for producing the filled, frozen shells and supplying them to our stores.

During the Christmas holidays in 1972, I happened to be visiting in Santa Barbara, and I got a call from Herb Peterson, our operator there, who said he had something to show me. He wouldn't give me a clue as to what it was. He didn't want me to reject it out of hand, which I might have done, because it was a crazy idea--a breakfast sandwich. It consisted of an egg that had been formed in a Teflon circle, with the yolk broken, and was dressed with a slice of cheese and a slice of grilled Canadian bacon. This was served open-face on a toasted and buttered English muffin. I boggled a bit at the presentation. But then I tasted it, and I was sold. Wow! I wanted to put this item into all of our stores immediately. Realistically, of course, that was impossible. It took us nearly three years to get the egg sandwich fully integrated into our system. Fred Turner's wife, Patty, came up with the name that helped make it an immediate hit--Egg McMuffin.

Source:

Kroc, Ray. Grinding It Out: The Making of McDonald's. Chicago: Henry Regnary Company, 1977.

(Note: ellipsis and italics in original.)

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Rita Gunther McGrath is a member of the faculty of the Columbia Business School. Source of photo: online version of the WSJ article quoted and cited below.

(p. R2) BUSINESS INSIGHT: You and Prof. Ian C. MacMillan of the Wharton School of the University of Pennsylvania wrote a book called "Discovery-Driven Growth." What is discovery-driven growth?

DR. MCGRATH: Discovery-driven growth is a way of planning to grow that doesn't require a lot of analytical information at the outset. It recognizes that many of the data that you need to make decisions don't exist at the time that you have to make the decisions. It's a plan to learn.

I think we all live with a conceptual overhang from an industrial era when things were more predictable. You had big production runs. At least if you were an American company, you had a lot of markets with very little competition, and what competition there was was more or less predictable. In many businesses you could use the past as an adequate guide to what the future held for you.

In more and more industries, those conditions no longer apply. You're seeing temporary advantages, very rapid swings in who's on top competitively, new technologies that make older ones irrelevant at an ever-faster clip--the usual litany of things people moan about today. But I think one of the things that has not yet quite been fully recognized is that these have an impact on our management processes--or should.

For the full interview, see:

Martha E. Mangelsdorf. "Executive Briefing; Learning From Corporate Flops; When starting new ventures, companies should revisit their assumptions early and often." The Wall Street Jounal (Mon., OCTOBER 26, 2009): R2.

(Note: italics in original.)

Source of book image: http://events.roundtable.com/iguru/DiscoveryDrivenGrowth.gif.

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Entrepreneurs may develop a good sense of people, even though they cannot articulate their judgment. Yet their firms, and our economy, might be more efficient and productive if they were allowed to follow their judgments, rather than follow Human Resource Department credentialism and paper trails.

The entrepreneurs might make mistakes, but in an open economy they would pay a price for their mistakes in profits foregone, and hance would have an incentive to correct the mistakes. And there would be plenty of alternative jobs for anyone mistakenly fired.

(p. 91) I've been wrong in my judgments about men, I suppose, but not very often. Bob Frost, one of our key executives on the West Coast, will remember the time he and I were checking out stores, and I got a very unfavorable impression of one of his young managers. As we drove away from the store I said to Bob, "I think you'd better fire that man." "Oh, Ray, come on!" he exclaimed. "Give the kid a break. He's young, he has a good attitude, and I think he will come along."

"You could be right, Bob," I said, "but I don't think so. He has no potential."

Later in the day, as we were driving back to Los Angeles, that conversation was still bugging me. Finally I turned to Bob and yelled, "Listen goddammit I want you to fire that man!"

One thing that makes Bob Frost a good executive is that he has the courage of his convictions. He also sticks up for his people. He's a retired Navy man, and he knows how to keep his head under fire. He simply pursed his lips and nodded solemnly and said, "If you are ordering me to do it, Ray, I will. But I would like to give him another six months and see how he works out."

I agreed, reluctantly. What happened after that was the kind of (p. 92) personnel hocus-pocus that government is famous for but should never be permitted in business, least of all in McDonald's. The man hung on. He was on the verge of being fired several times in the following years, but he was transferred or got a new supervisor each time. He was a decent guy, so each new boss would struggle to reform him. Many years later he was fired. The assessment of the executive who finally swung the ax was that "this man has no potential."

Bob Frost now admits he was wrong. I had the guy pegged accurately from the outset. But that's not the point. Our expenditure of time and effort on that fellow was wasted and, worst of all, he spent several years of his life in what turned out to be a blind alley. It would have been far better for his career if he'd been severed early and forced to find work more suited to his talents. It was an unfortunate episode for both parties, but it serves to show that an astute judgment can seem arbitrary to everyone but the man who makes it.

Source:

Kroc, Ray. Grinding It Out: The Making of McDonald's. Chicago: Henry Regnary Company, 1977.

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"A woman examined bouquets and messages left by Google users on Wednesday outside the Internet search company's headquarters in Beijing." Source of caption and photo: online version of the NYT article cited way below (after the citation to the quoted article, which is a different article).

David Smick in The World as Curved, has suggested that restrictions on the internet in China, limit entrepreneurship, and ultimately economic growth.

(p. 5) BEIJING -- At the elite Tsinghua University here, some students were joking Friday that they had better download all the Internet information they wanted now in case Google left the country.

But to many of the young, well-educated Chinese who are Google's loyal users here, the company's threat to leave is in fact no laughing matter. Interviews in Beijing's downtown and university district indicated that many viewed the possible loss of Google's maps, translation service, sketching software, access to scholarly papers and search function with real distress.

"How am I going to live without Google?" asked Wang Yuanyuan, a 29-year-old businessman, as he left a convenience store in Beijing's business district.

. . .

Li An, a Tsinghua University senior, said she used to download episodes of "Desperate Housewives" and "Grey's Anatomy" from sites run by BT China that are now closed. "I love American television series," she said with frustration during a pause from studying Japanese at a university fast-food restaurant on Friday.

The loss of Google would hit her much harder, she said, because she relies on Google Scholar to download academic papers for her classes in polymer science. "For me, this is terrible," Ms. Li said.

Some students contend that even after Google pulls out, Internet space will continue to shrink. Until now, Google has shielded Baidu by manning the front line in the censorship battle, said a 20-year-old computer science major at Tsinghua.

"Without Google, Baidu will be very easy to manipulate," he said. "I don't want to see this trend."

A 21-year old civil engineering student predicted a strong reaction against the government. "If Google really leaves, people will feel the government has gone too far," he insisted over lunch in the university cafe.

But asked whether that reaction would influence the government to soften its policies, he concentrated on his French fries. "I really don't know," he said.

For the full story, see:

SHARON LaFRANIERE. "Google Users in China, Mostly Young and Educated, Fear Losing Important Tool." The New York Times, First Section (Sun., January 17, 2010): 5.

(Note: the online version of the article has the title "China at Odds With Future in Internet Fight" and is dated January 16, 2010.)

(Note: ellipsis added.)

The source of the photo at the top is the online version of:

KEITH BRADSHER and DAVID BARBOZA. "Google Is Not Alone in Discontent, But Its Threat Stands Out." The New York Times (Thurs., January 13, 2010): B1 & B4.

(Note: the online version of the article has the slightly different title "Google Is Not Alone in Discontent, But Its Threat to Leave Stands Out" and is dated January 14, 2010.)

The reference to the Smick book is:

Smick, David M. The World Is Curved: Hidden Dangers to the Global Economy. New York: Portfolio Hardcover, 2008.

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(p. 74) The income from Multimixer paid the rent and all salaries while I was slaving away to get McDonald's started.

Source:

Kroc, Ray. Grinding It Out: The Making of McDonald's. Chicago: Henry Regnary Company, 1977.

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Here is evidence of the continuing relevance of Hayek's The Road to Serfdom:

(p. A5) CARACAS, Venezuela (AP) -- A cable television channel that has been critical of President Hugo Chávez was taken off the air on Sunday after defying new government regulations requiring it to televise some of Mr. Chávez's speeches.

Venezuelan cable and satellite television providers stopped transmitting the channel, Radio Caracas Television, after it did not broadcast a speech by Mr. Chávez on Saturday at a rally of political supporters.

. . .

. . . the cable channel, known as RCTV, said the telecommunications agency "doesn't have any authority to give the cable service providers this order." It said in a statement, "The government is inappropriately pressuring them to make decisions beyond their responsibilities."

The channel switched to cable in 2007 after the government refused to renew its license to broadcast on the regular airwaves.

For the full story, see:

THE ASSOCIATED PRESS. "Cable TV Station Critical of Chávez Is Shut Down." The New York Times (Mon., January 25, 2010): A5.

(Note: the online version of the article has the date January 24, 2010.)

(Note: ellipses added.)

Reference for Hayek book:

Hayek, Friedrich A. Von. The Road to Serfdom. Chicago: Univ of Chicago Press, 1944.

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One recurring puzzle is the role, if any, for science in innovative entrepreneurship. The episode chronicled below provides one piece of evidence:

(p. 71) I had explained to Ed MacLuckie with great (p. 72) pride the McDonald's secret for making french fries. I showed him how to peel the potatoes, leaving just a bit of the skin to add flavor. Then I cut them into shoestring strips and dumped them into a sink of cold water. The ritual captivated me. I rolled my sleeves to the elbows and, after scrubbing down in proper hospital fashion, I immersed my arms and gently stirred the potatoes until the water went white with starch. Then I rinsed them thoroughly and put them into a basket for deep frying in fresh oil. The result was a perfectly fine looking, golden brown potato that snuggled up against the palate with a taste like . . . well, like mush. I was aghast. What the hell could I have done wrong? I went back over the steps in my mind, trying to determine whether I had left something out. I hadn't. I had memorized the procedure when I watched the McDonald's operation in San Bernardino, and I had done it exactly the same way. I went through the whole thing once more. The result was the same--bland, mushy french fries. They were as good, actually, as the french fries you could buy at other places. But that was not what I wanted. They were not the wonderful french fries I had discovered in California. I got on the telephone and talked it over with the McDonald brothers. They couldn't figure it out either.

This was a tremendously frustrating situation. My whole idea depended on carrying out the McDonald's standard of taste and quality in hundreds of stores, and here I couldn't even do it in the first one!

I contacted the experts at the Potato & Onion Association and explained my problem to them. They were baffled too, at first, but then one of their laboratory men asked me to describe the McDonald's San Bernardino procedure step-by-step from the time they bought the potatoes from the grower up in Idaho. I detailed it all, and when I got to the point where they stored them in the shaded chicken-wire bins, he said, "That's it!" He went on to explain that when potatoes are dug, they are mostly water. They improve in taste as they dry out and the sugars change to starch. The McDonald brothers had, without knowing it, a natural curing process in their open bins, which allowed the desert breeze to blow over the potatoes.

With the help of the potato people, I devised a curing system of my own.

Source:

Kroc, Ray. Grinding It Out: The Making of McDonald's. Chicago: Henry Regnary Company, 1977.

(Note: ellipsis in original.)

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(p. C27) People are hard-wired to be fearful of large carnivores. What's more, it's hard for the poor to see the economic advantage of rewilding. Humans don't like conservationists telling them what they can and can't do with the land that surrounds them. As one conservationist counterintuitively points out to Ms. Fraser: "Conservation is about managing people. It's not about managing wildlife."

For the full review, see:

DWIGHT GARNER. "Books of The Times; Conservation as a Matter of Managing People." The New York Times (Fri., January 22, 2010): C1 & C27.

(Note: the online version of the article is dated January 21, 2010.)

The book under review, is:

Fraser, Caroline. Rewilding the World: Dispatches from the Conservation Revolution. New York: Metropolitan Books, 2009.

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Ray Kroc was the founder of the McDonald's chain, who wrote an autobiography called Grinding It Out. Back on August 12, 2009, I made a few comments on the book, and said that in some future entries, I would be quoting a few passages that I thought were worth remembering.

Well, the future has finally arrived.

Kroc's first entrepreneurial venture was Multimixer, a machine that efficiently made milkshakes. Kroc had sold a controlling interest, and wanted control back:

(p. 56) "All right," I said, "how much?"

I don't know how he kept from choking on his own bile as he mouthed the figure: "Sixty-eight thousand dollars."

That's all I remember of our conversation. I'm sure I said something. But I was so benumbed by his outrageous demand that I couldn't think straight. To add acid to the irony, he wanted the whole thing in cash. Of course, I didn't have that kind of (p. 57) money. So what we worked out was the culmination of the devilish deal he had tied me to. I had to agree to pay him $12,000 cash. The balance was to be paid off over five years, plus interest. My salary had to remain at the same level and my expenses in the same range. So, in fact, what I was doing was paying him the profits of my company.

I didn't know where in the hell I was going to raise the money, but I had made up my mind to do it. In the end, most of the cash came from my new home in Arlington Heights. I managed to get an increase in the mortgage, much to Ethel's dismay. Her apprehensions about my becoming Mr. Multimixer had been laid to rest at this point, and I don't think she ever got over the shock of discovering that we were nearly $100,000 in debt. She couldn't seem to handle it.

For me, this was the first phase of grinding it out--- building my personal monument to capitalism. I paid tribute, in the feudal sense, for many years before I was able to rise with McDonald's on the foundation I had laid.

Source:

Kroc, Ray. Grinding It Out: The Making of McDonald's. Chicago: Henry Regnary Company, 1977.

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(p. 265) On the snowy morning of January 13, 1976, . . . , there was unusual traffic on Rogers Street. Outside the gray one-story buildings with their clouded tilt-out windows, vans from various television channels maneuvered to park. A man from the National Federation of the Blind struggled over a snow bank onto the sidewalk and began tapping earnestly to get his bearings. A dark-haired young man set our on a three-block trek to the nearest vendor of coffee and donuts for the gathering media. In the room at number 68, two engineers poked at a gray box that looked like a mimeograph machine sprouting wires to a Digital Equipment Corporation computer. Several intense young men in their early twenties debated when to begin a demonstration of the device. The short, curly-haired leader of the group, twenty-seven-year-old Raymond Kurzweil, refused to start until the arrival of a reporter from The New York Times.

The event was a press conference announcing the first breakthrough product in the field of artificial intelligence: a reader for the blind. Described as an "omnifont character recognition device" linked to a synthetic voice, the machine could read nearly any kind of book or document laid face down on its glass lens. With a learning faculty that improved the device's performance as it proceeded through blurred, faded, or otherwise illegible print, the machine solved problems of pattern recognition and synthesis that had long confounded IBM, Xerox, and the Japanese conglomerates, as well as thousands of university researchers.

. . .

(p. 266) Stevie Wonder, the great blind musician, called. He had heard about the device after its appearance on the "Today Show" and it seemed a lifelong dream come true. He headed up to Cambridge to meet with Kurzweil.

. . .

As Kurzweil remembers, "He was very excited about it and wanted (p. 267) one right away, so we actually turned the factory upside down and produced a unit that day. We showed him how to hook it up himself. He left with it practically under his arm. I understand he took it straight to his hotel room, set it up. and read all night." As Wonder said, the technology has been "a brother and a friend . . . . without question, another sunshine of my life." Wonder stayed in touch with Kurzweil over the years and would play a key role in conceiving and launching a second major Kurzweil product.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: italics in original; all ellipses added except the ellipsis internal to the last paragraph, which was in the original.)

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At a key juncture, Gordon Campbell's self-financing was essential to the survival of his Chips & Technology firm. Chips & Technology produced the chip technology that was the foundation of the clones of the IBM AT (286) PCs. And Chips & Technology turned out to be profitable after one year.

(p. 228) Campbell remembered the words of Nolan Bushnell: "You are not a real entrepreneur until you've got to meet a payroll from your own bank account." There was truth in those words. There was a sense in which Gordon Campbell was still real a real entrepreneur.

If you are a real entrepreneurial hero, you do not get your start by rolling out of bed one morning in rumpled pajamas to answer the telephone at Oakmead Plaza and find that it's the man from Kleiner-Perkins announcing you've won the lottery (for spinning out of Intel with Dr. Salsbury and the rest). Real entrepreneurs do not usually become paper millionaires and Ferrari corsairs in a public offering without ever experiencing the warm sensation of a profitable year. Raphael Klein had put up his house to save Xicor; he was an entrepreneur. In the desperate silicon panic of the summer of 1985, Gordy Campbell too was going to join the club.

The venture capitalists were all waiting for Campbell to fail. He had no chance of money from them. But other sources would also be difficult. Campbell had been careful to buy no real assets and channel all his money into intellectual capital. Morris Jones's Amdahl 470--a powerful mainframe that ran the company's CAE programs---was a second-hand machine, leased by the month. The rest of their CAD and CAE equipment was either designed by Jones and his team. including two defectors from Silicon Compilers, or it consisted of various IBM workstations. The company's most valuable asset, beyond its ideas, was a compaction algorithm that Jones had developed from a Bell Labs model. It allowed the scaling down of CMOS technology into difficult non-linear volt warps near 1-micron geometries. Couldn't mortgage that at a bank.

Campbell could scarcely believe what was happening to him. There was nothing to do but use his own personal money to keep the company afloat. But if the truth be known, his personal funds were running a bit low. It was out of the question, of course, to sell the Ferrari. He could hardly putter forth onto Route 280 and down toward Sand Hill Road like a beggar with some tin cup from Toyota. Campbell's other wealth, though, was mostly in SEEQ stock that was then selling at $2 per share and going down.

Campbell would have to sell at the very bottom of the market and use his own last personal wealth to finance a company with no revenues and a burn rate of some $4,000 a day. He gasped and did it. He went through a couple of cliff-hanging months, with shortened fin-(p. 229)gernails. But the act of personal sacrifice was catalytic. Within a few weeks, several of the employees and other friends also put up some money, including $200,000 from his financial officer, Gary Martin. Before the year was our he had raised another indispensable $1.5 million from a number of companies in Japan, including Kyocera, Mitsui, Yamaha, and Ascii, Kay Nishi's PC software firm that represented Chips in Asia. By July, the IBM graphics enhancement chip set was finished and Chips & Technologies was a company almost fully owned and controlled by its employees.

By July 1986, when the chip set for the IBM AT computer was finished, most of the world had decided that the AT would be the next major personal computer standard. In the United States, Tandy, PC's Limited (now Dell), and several other then unknown manufacturers bought the Chips & Technologies set. Tandy became the leading AT compatible producer, assembling the computers in a factory in Fort Worth manned by immigrants from twenty countries led by an immigrant from Japan. Among the purchasers of the Chips set in Europe were Olivetti, Apricot, Siemens, and Bull. Nishi signed up NEC, Sony, Epson, and Mitsubishi in Japan; Goldstar, Samsung, Daewoo, and Hyundai in Korea; a number of companies in Taiwan; and the Great Wall Computer Company of China. Most of these firms --plus Compaq and a slew of producers of IBM add-in graphics gear--also were buying the graphics enhancement chip set.

At the outset. Campbell had boldly predicted profitability in a year and a half: In fact, the firm was profitable by the last quarter of the first year.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

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(p. 224) Campbell's idea for a company was to use a silicon compiler to put those boards into custom silicon and to provide a means by which scores of companies could produce AT clones faster, cheaper, better, and more reliable than IBM's.

Campbell drew up his business plan and brought it to some fifty venture capitalists. A moneyed yawn issued from Sand Hill Road, echoed down the canyons of San Francisco's financial district, and reechoed through downtown Manhattan. A jaded group that had funded some forty very hard disk projects and some fifty rather floppy computer firms within the previous two years, venture capitalists eyed Campbell's boyish manner and lightweight look and they contemplated his business plan (a personal computer chip project during a PC and semiconductor depression), and they identified the heart of his overall strategy (compete with IBM). They rolled the firm's proposed name over their tongues: Chips & Technologies. Wouldn't Microtech be better? Then they laughed nervously. Not this time, Gordy.

Finally, Campbell found a friend: Bill Marocco, who had built the SEEQ headquarters, and had once offered to support a future project. Marocco put up $1 million, and Chips & Technologies was off the ground.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

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"Members of the public watched the first test flight of the Boeing 787 on Tuesday in Everett, Wash." Source of caption and photo: online version of the NYT article quoted and cited below.

In their stimulating business best-seller Built to Last Collins and Porrus have a chapter in which they argue that one way to attract and retain the best employees is to give them a difficult but important project to work on. They call such projects "BHAGs," which stands for Big Hairy Audacious Goals. Among their main examples (e.g., p. 104) of BHAGs were Boeing's development of the 707 and 747.

Boeing's latest BHAG is the 787 Dreamliner.

(p. A25) EVERETT, Wash. -- The new Boeing 787 Dreamliner lifted into the gray skies here for the first time on Tuesday morning, more than two years behind schedule and burdened with restoring Boeing's pre-eminence in global commercial aviation.

"Engines, engines, engines, engines!" shouted April Seixeiro, 37, when the glossy twin-engine plane began warming up across from where spectators had informally gathered at Paine Field. Ms. Seixeiro was among scores of local residents and self-described "aviation geeks" who came to watch the first flight.

Moments after the plane took off at 10:27 a.m., Mrs. Seixeiro was wiping tears from her eyes. A friend, Katie Bailey, 34, cried, too.

"That was so beautiful," Ms. Bailey said.

For the full story, see:

WILLIAM YARDLEY. "As 787 Takes Flight, Seattle Wonders About Boeing's Future." The New York Times (Weds., December 16, 2009): A25.

(Note: the online version of the article has the title "A Takeoff, and Hope, for Boeing Dreamliner" and is dated December 15, 2009.)

The reference for the Collins and Porras book is:

Collins, James C., and Jerry I. Porras. Built to Last: Successful Habits of Visionary Companies. New York: HarperBusiness, 1994.

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(p. 222) Among the entrepreneurs of the microcosm, none were nimbler than Gordon Campbell, the former founder and president of SEEQ. Taking Phillip Salsbury and other non-volatile memory stars out of (p. 223) Intel in 1981, Campbell had begun meteorically. But after a few years, SEEQ's E-square technology had slipped against Xicor and the industry went into its mid-eighties slump. While many experts bogged down in the problems of transition, however, Campbell seized the opportunities. In a new firm, he would demonstrate beyond cavil the new balance of power in electronics.

He left SEEQ in 1984 and at once steered his Ferrari back into the semiconductor fray. But few observers favored his prospects. If the truth be known, many semiconductor people thought they had already seen plenty of Gordon Campbell, company president.

Campbell is a complex man, with a rich fund of ego and a boyish look that belies his shrewd sense of strategy and technology. To a strong-minded venture capitalist such as Frank Caulfield of Kleiner, Perkins, Caulfield, & Byers--or even to a smooth operator such as John Doerr---Campbell appeared to be a pushover. A man with no money, no social ivy, no advanced professional degrees, no obvious scientific mastery, he was a disposable tool: some kid who had snuck into the E-square huddle at Intel and popped our into the end zone just in time to make a miracle catch of several million dollars in venture capital.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

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The failure of Xerox to take advantage of the innovations developed at Xerox PARC, is a legendary example of management failure. A couple of books have been written on the subject that I hope to read sometime.

(p. 194) Beyond his efforts in VLSI design, Bert Sutherland had supported the work at Xerox PARC that led to the "windows" and the "mouse" on nearly every workstation and many personal computers, from Apple and Atari to Apollo and Sun. He formed the research department that made Ethernet the dominant small computer network and that conceived the "notebook" lap computer. Xerox's lead in IC design gave the company the tools--if the firm had only understood them--to lend new special features to every copier and printer and even to create the kind of electronic "personal copiers" later pioneered by Canon.

Bert Sutherland was the hero of Xerox PARC: that is history. But that was not life. In real life, Xerox fired him in 1979. While he worked day and night on the novel projects in Palo Alto that were to give Xerox an indelible role in the history of computer technology, jealous rivals conspired against him at headquarters. They said that his research, which would fuel the industry for a decade, was irrelevant to the needs of the company. In corning years, the research leadership that replaced him would make the company nearly irrelevant to the needs of the world.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

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Not Microsoft. "Mark Clemente, a Steinreich Communications vice president, in the firm's smaller Hackensack, N.J., office." Source of caption and photo: online version of the WSJ article quoted and cited below.

The article quoted below documents the trend in business toward small, and more open offices. I believe that this trend is largely a mistake.

Another trend in business (see Levy and Murnane 2004) is for more jobs to involve thinking and creativity. Thinking and creativity are harder in an environment of noise and frequent and unpredictable interruptions.

David Thielen's book on the secrets of Microsoft's success that said that Microsoft emphasized hiring really good people, and then respected them enough to give them an office with a door, so they could have the space and privacy to think and create (e.g., pp. 17-35 & 147-150).

Microsoft had the right idea.

(p. B7) The office cubicle is shrinking, along with workers' sense of privacy.

Many employers are trimming the space allotted for each worker. The trend has accelerated during the recession as employers seek to cut costs and boost productivity.

. . .

Tighter quarters and open floor plans also can present challenges. David Lewis, president of OperationsInc LLC, a Stamford, Conn., provider of human-resources services to more than 300 U.S. companies, says open floor plans and low cubicle walls can create discord and lead to increased turnover.

"Now everybody knows everybody else's business," he says. "It actually starts to create a level of tension in an office that never existed before. People can't focus on work because they're on top of each other."

For the full story, see:

SARAH E. NEEDLEMAN. "THEORY & PRACTICE; Office Personal Space Is Crowded Out; Workstations Become Smaller to Save Costs, Taking a Toll on Employee Privacy." The Wall Street Journal (Mon., DECEMBER 7, 2009): B7.

(Note: ellipsis added.)

The Levy and Murnane book mentioned above, is:

Levy, Frank, and Richard J. Murnane. The New Division of Labor: How Computers Are Creating the Next Job Market. Princeton, NJ: Princeton University Press, 2004.

The Thielen book is:

Thielen, David. The 12 Simple Secrets of Microsoft Management: How to Think and Act Like a Microsoft Manager and Take Your Company to the Top. New York: McGraw-Hill, 1999.

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(p. 188) For the next two years, Conway coordinated her efforts under Sutherland at PARC with Mead's ongoing work at Caltech. But she was frustrated with the pace of progress. There was no shortage of innovative design ideas; computerized design tools had advanced dramatically since Mead's first efforts several years before. Yet the industry as a whole continued in the old rut. As Conway put it later, the problem was "How can you take methods that are new, methods that are not in common use and therefore perhaps considered unsound methods, and turn them into sound methods?" [Conway's italics].

She saw the challenge in the terms described in Thomas Kuhn's popular book The Structure of Scientific Revolutions. it was the problem that took Boltzmann to his grave. It was the problem of innovation depicted by economist Joseph Schumpeter in his essays on entrepreneurship: new systems lay waste to the systems of the past. Creativity is a solution for the creator and the new ventures he launches. But it wreaks dissolution--"creative destruction," in Schumpeter's words-- for the defenders of old methods. In fact, no matter how persuasive the advocates of change, it is very rare that an entrenched establishment will reform its ways. Establishments die or retire or fall in revolution; they only rarely transform themselves.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: italics in original.)

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British historian Paul Johnson. Source of caricature: online version of the WSJ conversation quoted and cited below.

(p. D6) Now, at 81 and after years of producing enormous, compulsively readable history books, Mr. Johnson has just written what, at 192 pages, is probably the shortest biography of Winston Churchill ever published.

. . .

He gives credit to his success as a historian to his simultaneous and successful career in journalism. "You learn all sorts of tools as a journalist that come in extremely useful when you're writing history," he tells me as we sit in the drawing room of the West London house he shares with his wife, Marigold, "and one is the ability to condense quite complicated events into a few short sentences without being either inaccurate or boring. And of course a lot of the best historians were also journalists."

. . .

The book includes refutations of many of the negative myths that have grown up around Churchill. For instance, that he was drunk for much of World War II. "He appeared to drink much more than he did," Mr. Johnson insists. "He used to sip his drinks very, very slowly, and he always watered his whisky and brandy."

Mr. Johnson certainly does not agree with the often-echoed criticism made by Prime Minister Stanley Baldwin that Churchill had every gift except judgment: "He made occasional errors of judgment because he made so many judgments--some of them were bound to be wrong! . . . On the whole, his judgment was proved to be right. He was right before the First World War in backing a more decent civilized society when he and Lloyd George created the elements of old-age pensions and things like that. He was right about the need to face up to Hitler and he was right about the Cold War that the Russians had to be resisted and we had to rearm."

He is convinced that "Churchill was more than half American . . . all of his real qualities generally come from his mother's side." And despite Mr. Johnson's own Oxford education (he was there with Margaret Thatcher), he believes that Churchill benefited from never having gone to college: "He never learned any of the bad intellectual habits you can pick up at university, and it explains the extraordinary freshness with which he came to all sorts of things, especially English literature."

For the full conversation, see:

JONATHAN FOREMAN. "A Cultural Conversation with Paul Johnson; Winston Churchill, Distilled." The Wall Street Journal (Thurs., DECEMBER 10, 2009): D6.

(Note: the online version of the interview is dated DECEMBER 11, 2009.)

(Note: ellipses within paragraphs were in the original; ellipses between paragraphs were added.)

The reference to Johnson's biography of Churchill, is:

Johnson, Paul M. Churchill. New York: Viking Adult, 2009.

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(p. 182) . . . , Poincaré's elegant math prevailed over Boltzrnann's practical findings. For some thirty years, Boltzmann struggled to get his ideas across. But he failed. He had the word, but he could not find a way to gain its acceptance in the world. For long decades, the establishment held firm.

So in the year 1906, Poincaré became president of the French (p. 183) Académie des Sciences and Boltzmann committed suicide. As Mead debatably puts it, "Boltzmann died because of Poincaré." At least, as Boltzmann's friends attest, this pioneer of the modem era killed himself in an apparent fit of despair, deepened by the widespread official resistance to his views.

He died, however, at the very historic moment when all over Europe physicists were preparing to vindicate the Boltzmann vision. He died just before the findings of Max Planck, largely derived from Boltzmann's probability concepts, finally gained widespread acceptance. He died several months after an obscure twenty-one-year-old student in Geneva named Albert Einstein used his theories in proving the existence of the atom and demonstrating the particle nature of light. In retrospect, Boltzmann can be seen as a near-tragic protagonist in the greatest intellectual drama of the twentieth century: the overthrow of matter.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: ellipsis added.)

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(p. 137) No one will deny that Japan's triumph in semiconductors depended on American inventions. But many analysts rush on to a further theory that the Japanese remained far behind the United States until the mid- 1970s and caught up only through a massive government program of industrial targeting of American inventions by MITI.

Perhaps the leading expert on the subject is Makoto Kikuchi, a twenty-six-year veteran of MITI laboratories, now director of the Sony Research Center. The creator of the first transistor made in Japan, he readily acknowledges the key role of American successes in fueling the advances in his own country: "Replicating someone else's experiment, no matter how much painful effort it might take, is nothing compared with the sweat and anguish of the men who first made the discovery."

Kikuchi explains: "No matter how many failures I had, I knew that somewhere in the world people had already succeeded in making a transistor. The first discoverers . . . had to continue their work, their long succession of failures, face-to-face with the despairing possibility that in the end they might never succeed. . . . As I fought my own battle with the transistor, I felt this lesson in my very bones." Working at MITI's labs, Kikuchi was deeply grateful for the technological targets offered by American inventors.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: ellipses in original.)

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(p. 113) Firms that win by the curve of mind often abandon it when they establish themselves in the world of matter. They fight to preserve the value of their material investments in plant and equipment that embody the ideas and experience of their early years of success. They begin to exalt expertise and old knowledge, rights and reputation, over the constant learning and experience of innovative capitalism. They get fat.

A fat cat drifting off the curve, however, is a sitting duck for new nations and companies getting on it. The curve of mind thus tends to favor outsiders over establishments of all kinds. At the capitalist ball, the blood is seldom blue or the money rarely seasoned. Microcosmic technologies are no exception. Capitalism's most lavish display, the microcosm, is no respecter of persons.

The United States did not enter the microcosm through the portals of the Ivy League, with Brooks Brothers suits, gentleman Cs, and warbling society wives. Few people who think they are in already can summon the energies to break in. From immigrants and outcasts, street toughs and science wonks, nerds and boffins, the bearded and the beer-bellied, the tacky and uptight, and sometimes weird, the born again and born yesterday, with Adam's apples bobbing, psyches (p. 114) throbbing, and acne galore, the fraternity of the pizza breakfast, the Ferrari dream, the silicon truth, the midnight modem, and the seventy-hour week, from dirt farms and redneck shanties, trailer parks and Levittowns, in a rainbow parade of all colors and wavelengths, of the hyperneat and the sty high, the crewcut and khaki, the pony-tailed and punk, accented from Britain and Madras, from Israel and Malaya, from Paris and Parris Island, from Iowa and Havana, from Brooklyn and Boise and Belgrade and Vienna and Vietnam, from the coarse fanaticism and desperation, ambition and hunger, genius and sweat of the outsider, the downtrodden, the banished, and the bullied come most of the progress in the world and in Silicon Valley.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

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Source of book image:
http://farm3.static.flickr.com/2575/4095461227_09463c5680.jpg

(p. C1) The plethora of dictators, despots and revolutionaries-turned-authoritarians south of the border has spawned a genre of literature that might be called the Latin American Strongman Novel -- a genre that includes harrowing novels based on real historical figures, like Mario Vargas Llosa's dazzling "Feast of the Goat" (which depicted Rafael Trujillo's devastating rule over the Dominican Republic) and more mythic creations, like Gabriel García Márquez's "Autumn of the Patriarch," that have employed the sorcery of magical realism to conjure larger-than-life fictional tyrants in a panoply of ruthlessness, audacity and corruption.

The latest in this tradition of books is Norberto Fuentes's fascinating new novel, "The Autobiography of Fidel Castro," which purports to tell the longtime Cuban leader's story in his own words. The "self-portrait" that emerges from these pages is that of a Machiavellian survivor: an egomaniac who identifies himself with the revolution but who is loyal not to a cause, not to an ideology, not to his compatriots, but only to his own ambition.

This Fidel is narcissistically longwinded, like his real-life counterpart. He is also a self-mythologizing change agent who succeeds in making himself "the neurological center of an entire nation" -- a wily Nietzschean operator who believes in the force of his own will, while sensing that "the chameleon is going to last longer under his rock than the lion, despite its roaring and lean muscles." He is a cynical master of manipulation and strategic maneuvering, a skilled practitioner of the black arts of propaganda and gamesmanship who always wants "to keep people guessing."

A journalist and Hemingway (p. C7) scholar, Mr. Fuentes was once a cheerleader of the revolution and part of Mr. Castro's inner circle himself. He grew disillusioned with the Cuban leader, however, after two army officers were executed in 1989 on what many believe were trumped-up charges. Mr. Fuentes fell out of favor, came under government surveillance and was detained after a failed attempt to flee Cuba by boat. After a hunger strike and the intervention of Mr. García Márquez, he was allowed to leave the country in 1994, and has since denounced Mr. Castro for his "absolute personal dictatorship" and willingness "to do anything necessary to stay in power."

For the full story, see:

MICHIKO KAKUTANI. "Books of The Times; Fiction Trying for Truth in Novel's View of Dictator." The New York Times (Tues., December 15, 2009): C1 & C7.

(Note: the online version of the article is dated Mon., December 14, 2009.)

"Norberto Fuentes" Source of caption and photo: online version of the NYT article quoted and cited above.

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(p. 111) By launching the computer-on-a-chip, Intel gave America an enduring advantage in this key product in information technology--an edge no less significant because it was achieved largely by immigrants from Hungary, Italy, Israel, and Japan. Intel's three innovations of 1971--plus the silicon gate process that made them the smallest, fastest, and best-selling devices in the industry--nearly twenty years later remain in newer versions the most powerful force in electronics.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

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Source of book image: http://www.globalnerdy.com/wordpress/wp-content/uploads/2009/11/makers.jpg

Awhile back I mentioned a science fiction book that made use of the process of creative destruction. Here's a discussion of another one---called Makers, it apparently adopts the unlikely premise that a world of creative destruction would have a 20% unemployment rate. (I say "unlikely" because the evidence is that in a world of creative destruction, as many new jobs are created as old ones are destroyed.)

(p. A19) Consider the world of "Makers," the latest by best-selling writer Cory Doctorow. This novel is set in a not-too distant future, when the creative destruction of technological change has created an economy so efficient, with profit margins so thin, that traditional companies can hardly stay in business.

The inventor-heroes of "Makers" take technology to its conclusion: They figure out a way to use three-dimensional printers to produce copies of machines and most anything else at close to no cost. This sparks "New Work," with geeky investment bankers scouring the country to fund promising artisans who use the technology to build things cheaply. The heroes also run a series of entertainment rides across the country in abandoned Wal-Marts, until Disney unleashes its lawyers on them.

Mr. Doctorow, a Canadian living in London, has a keen eye for the pressures on contemporary business. In the novel, an M.B.A. brought in to work with the inventors explains, "The system makes it hard to sell anything above the marginal cost of goods, unless you have a really innovative idea, which can't stay innovative for long, so you need continuous invention and reinvention, too."

. . .

In the world of "Makers," and perhaps in our own world, "we're approaching a kind of pure and perfect state now, with competition and invention getting easier and easier--it's producing a kind of superabundance."

Mr. Doctorow paints a bleak picture of the process of getting there, even if many of us take a more benign view of increasingly efficient capitalism. "Makers" features widespread unemployment, with 20% of workers relocating to look for jobs. Even with scientific advances--obesity is solved, for example--life is brutal. There are squatter neighborhoods alongside abandoned strip malls.

For the full story, see:

L. GORDON CROVITZ. "Technology Is Stranger Than Fiction; Best-selling writer Cory Doctorow on change and its discontents." The Wall Street Journal (Mon., NOVEMBER 23, 2009): A19.

(Note: ellipsis added.)

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The incident recounted below is from the story of the development of the 4004 microprocessor (which was the first commercially available microprocessor). Hoff and Shima played important roles in the development of the chip.

I am not sure that the main "lesson" from the incident is about the importance of details. (After all, many entrepreneurs, including Simplot, embark on big projects without a clear idea of how to accomplish the details.) A bigger and sounder lesson may be the usefulness of resilience for successful inventors and entrepreneurs.

(p. 104) Hoff's counterpart at Busicom was a young Japanese named Masatoshi Shima who also had been thinking about problems of computer architecture. An equally formidable intellect, Shima came to the project through a series of accidents, beginning with a misbegotten effort to launch a small rocket using gunpowder he made by hand in his high school chemistry laboratory. As he carefully followed the formula, he claims to have had the mixture exactly right, except for some details that he overlooked. The mixture exploded, and as he pulled away his right hand, it seemed a bloody stump. At the local hospital (p. 105) a doctor with wide experience treating combat wounds felt lucky to save the boy's thumb alone,

This ordeal taught the teen-aged Shima that "details are very important." In the future he should "pay attention to all the details." But the loss of his fingers convinced his parents--and later several key Japanese companies--that the boy should not become a chemical engineer, even though he had won his degree in chemical engineering. Thus Shima ended up at Busicom chiefly because it was run by a friend of one of his professors.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

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

(p. A19) Suppose for a minute--. . . --that global warming poses an imminent threat to the survival of our species. Suppose, too, that the best solution involves a helium balloon, several miles of garden hose and a harmless stream of sulfur dioxide being pumped into the upper atmosphere, all at a cost of a single F-22 fighter jet.

. . .

The hose-in-the-sky approach to global warming is the brainchild of Intellectual Ventures, a Bellevue, Wash.-based firm founded by former Microsoft Chief Technology Officer Nathan Myhrvold. The basic idea is to engineer effects similar to those of the 1991 mega-eruption of Mt. Pinatubo in the Philippines, which spewed so much sulfuric ash into the stratosphere that it cooled the earth by about one degree Fahrenheit for a couple of years.

Could it work? Mr. Myhrvold and his associates think it might, and they're a smart bunch. Also smart are University of Chicago economist Steven Levitt and writer Stephen Dubner, whose delightful "SuperFreakonomics"--the sequel to their runaway 2005 bestseller "Freakonomics"--gives Myhrvold and Co. pride of place in their lengthy chapter on global warming. Not surprisingly, global warming fanatics are experiencing a Pinatubo-like eruption of their own.

. . .

. . . , Messrs. Levitt and Dubner show every sign of being careful researchers, going so far as to send chapter drafts to their interviewees for comment prior to publication. Nor are they global warming "deniers," insofar as they acknowledge that temperatures have risen by 1.3 degrees Fahrenheit over the past century.

But when it comes to the religion of global warming--the First Commandment of which is Thou Shalt Not Call It A Religion--Messrs. Levitt and Dubner are grievous sinners. They point out that belching, flatulent cows are adding more greenhouse gases to the atmosphere than all SUVs combined. They note that sea levels will probably not rise much more than 18 inches by 2100, "less than the twice-daily tidal variation in most coastal locations." They observe that "not only is carbon plainly not poisonous, but changes in carbon-dioxide levels don't necessarily mirror human activity." They quote Mr. Myhrvold as saying that Mr. Gore's doomsday scenarios "don't have any basis in physical reality in any reasonable time frame."

More subversively, they suggest that climatologists, like everyone else, respond to incentives in a way that shapes their conclusions. "The economic reality of research funding, rather than a disinterested and uncoordinated scientific consensus, leads the [climate] models to approximately match one another." In other words, the herd-of-independent-minds phenomenon happens to scientists too and isn't the sole province of painters, politicians and news anchors

For the full commentary, see:

BRET STEPHENS. "Freaked Out Over SuperFreakonomics; Global warming might be solved with a helium balloon and a few miles of garden hose." The Wall Street Journal (Tues., OCTOBER 27, 2009): A19.

(Note: ellipsis added.)

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The steering wheel of the 1954 Packard Panther. Source of photo: online version of the NYT article quoted and cited below.

(p. 11) The company may have started on a dare, according to "Packard: A History of the Motor Car and the Company," edited by Beverly Rae Kimes (Automobile Quarterly Publications, 2002).

After graduating from Lehigh University's engineering school and returning home to Warren, Ohio, James Ward Packard considered buying his first car, a Winton. When Packard asked for some special features, he got this response from Alexander Winton: "The Winton waggon (sic) as it stands is the ripened and perfected product of many years of lofty thought ... and could not be improved in any detail. If Mr. Packard wants any of his own cats and dogs worked into a waggon, he had better build it himself."

Despite the rude reply, Packard bought the car, but it broke down often. Commiserating over dinner with George Weiss, a friend (and Winton stockholder), Packard decided to take Winton's words seriously. It must have been an especially satisfying day for Packard on June 17, 1899, when Weiss sold his Winton stock and invested in Packard's new business, soon to be named the Ohio Automobile Company.

Although its first cars looked conventional, they had some unusual features. It was one of a few cars with an accelerator pedal, and its H-gate gearshift pattern, a Packard patent, was widely used in later years.

Packard's reputation for reliability and durability was established with its model A and B cars, but the company did not stop development there, even taking the lessons of early mishaps to improve subsequent vehicles.

During the summer of 1900, a model B swerved into a ditch after hitting a pothole -- a hazard on cars with tiller steering, as the impact could jerk the steering lever from the driver's grasp -- injuring the passenger and damaging the car. Packard started work on a solution; when the model C was introduced later that year, it featured the industry's first steering wheel.

. . .

After flirting with Nash in the early 1950s, Packard purchased Studebaker in 1954 (which explains why the Packard Predictor resides in the Studebaker Museum). Studebaker was larger but struggling. The merger hastened the end of both makes.

Still, Packard left its mark on the American auto industry.

For the full story, see:

ROBB MANDELBAUM. "Collecting; Packard's Visions of the Future, When It Still Had One ." The New York Times, SportsSunday Section (Sun., September 10, 2009): 11.

(Note: ellipsis added.)

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Clayton Christensen has shown how good management, following respected practices, can fail in the face of disruptive technologies. It would be interesting to investigate whether Fairchild was an example of what Christensen is talking about, or whether it just did not have good management.

(p. 89) Andrew Grove . . . had played a central role in bringing Fairchild to the threshold of a new era. But Fairchild would not enjoy the fruits of his work. Following the path of venture capital pioneer Peter Sprague were scores of other venture capitalists seeking to exploit the new opportunities he had shown them. Collectively, they accelerated the pace of entrepreneurial change--splits and spinoffs, startups and staff shifts--to a level that might be termed California Business Time ("What do you mean, I left Motorola quickly?" asked Gordon Campbell with sincere indignation. "I was there eight months!").

The venture capitalist focused on Fairchild: that extraordinary pool of electronic talent assembled by Noyce and Moore, but left essentially unattended, undervalued, and little understood by the executives of the company back in Syosset, New York. Fairchild leaders John Carter and Sherman Fairchild commanded the microcosm: the most important technology in the history of the human race. Noyce, Moore, Hoerni, Grove, Sporck, design genius Robert Widlar, and marketeer Jerry Sanders represented possibly the most potent management and technical team ever assembled in the history of world business. But, hey, you guys, don't forget to report back to Syosset. Don't forget who's boss. Don't give out any bonuses without clearing them through the folks at Camera and Instrument. You might upset some light-meter manager in Philadelphia.

They even made Charles Sporck, the manufacturing titan, feel like "a little kid pissing in his pants." Good work, Sherman, don't let the big lug put on airs, don't let him feel important. He only controls 80 percent of the company's growth. Widlar is leaving? Great, he never fit in with the corporate culture anyway. Sporck has gone off with Peter Sprague? There are plenty more where he came from.

"It was weird," said Grove, "they had no idea about what the company or the industry was like, nor did they seem to care. . . . Fairchild was just crumbling. If you wish, the semiconductor division management consisted of twenty significant players: eight went to National, eight went into Intel, and four of them went to Alcoholics Anonymous or something." Actually there were more than twenty and they went into startups all over the Valley; some twenty-six new semiconductor firms sprouted up between 1967 and 1970. "It got to the point," recalled one man quoted in Dirk Hanson's The New Alchemists, "where people were practically driving trucks over to Fairchild and loading up with employees."

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: the first ellipsis was added; the others were in the original. The italics were also in the original.)

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Source of book image: http://www.renegadebook.com/Man%20Up!.jpg

I have seen Steve Perry interviewed on education issues a couple of times on CNN, and have been impressed. He makes a credible case for vouchers.

I have not read either of the books pictured in this entry, but have put them on my "to read" list.

The books are:

Perry, Steve. Man Up! Nobody Is Coming to Save Us. Renegade Books, 2006.

Perry, Steve. Raggedy Schools: The Untold Truth. Renegade Books, 2009.

Source of book image: http://www.raggedyschools.com/images/bookstore_photo.jpg

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(p. 54) . . . in 1950, Shockley published his book Electrons and Holes in Semiconductors, which stood for many years as the definitive work in the field and confirmed his credentials for the Nobel Prize that he shared with Brattain and Bardeen in 1956. The fact was that for his theory of the field effect transistor that later dominated the industry and for the junction transistor that was dominating it at the time, Shockley deserved the prize alone. He had at last made his point.

Yet Shockley was not satisfied. "Every physicist," he said at the time, "wants two things: glory and money. I have won the glory. Now I want the money."

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: ellipsis added.)

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Source of book image: http://images.indiebound.com/923/705/9780671705923.jpg

Many years ago Telecosm was the first George Gilder book that I read; I enjoyed it for its over-the-top verbal exuberance in detailing, praising and predicting the progress of the then-new broadband technologies. I bought his earlier Microcosm at about the same time, but didn't get around to reading it because I assumed it would be a dated read, dealing in a similar manner with the earlier personal computer (PC) technology.

In the last year or so I have read Gilder's Wealth and Poverty and Recapturing the Spirit of Enterprise. There is some interesting material in Gilder's famous Wealth and Poverty, which has sometimes been described as one of the main intellectual manifestos of the Reagan administration. But Recapturing the Spirit of Enterprise has become my favorite Gilder book (so far).

In each chapter, the main modus operandi of that book is to present a case study of a recent entrepreneur, with plenty of interpretation of the lessons to be learned about why entrepreneurship is important to the economy, what sort of personal characteristics are common in entrepreneurs, and what government policies encourage or discourage entrepreneurs.

In that book I read that the original plan had been to include several chapters on the entrepreneurs who had built the personal computer revolution. But the original manuscript grew to unwieldy size, and so the personal computer chapters became the basis of the book Microcosm.

So Microcosm moved to the top of my "to-read" list, and turned out to be a much less-dated book than I had expected.

Microcosm does for the personal computer entrepreneurs what Recapturing the Spirit of Enterprise did for a broader set of entrepreneurs.

In the next few weeks, I will occasionally quote a few especially important examples or thought-provoking observations from Microcosm.




Reference to Gilder's MIcrocosm:

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

Other Gilder books mentioned:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992. (The first edition was called simply The Spirit of Enterprise, and appeared in 1984.)

Gilder, George. Telecosm: The World after Bandwidth Abundance. Paperback ed. New York: Touchstone, 2002.

Gilder, George. Wealth and Poverty. 3rd ed. New York: ICS Press, 1993.

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(p. 325) The real Disney may yet elude his most fervent admirers' and detractors' suffocating grasp. When he was young, he was a sort of human Brer Rabbit, constantly wriggling out of the snares set for him by the likes of Charles Mintz and Pat Powers (not to mention Laugh-O-gram's creditors). He emerged finally, and unexpectedly, as the creator of a new art form, one whose potential has still scarcely been tapped, by him or anyone else. It is hard to imagine that man--the passionate young artist, the intense "coordinator," the man who scrutinized every frame of Snow White and the Seven Dwarfs with a lover's zeal--trapped forever in anyone's briar patch.

Source:

Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.

(Note: italics in original.)

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(p. 324) Disney seems no more real in the growing body of academic critiques of the man and the company that bears his name. Many of these critiques are vaguely if not specifically Marxist in their methodology, and they display the usual Marxist tendency to bulldoze the complexities of human behavior in the pursuit of an all--embracing interpretation of Disney's life and work. What fatally cripples most academic writing about Walt Disney is simple failure to examine its supposed subject. Disney scholarship, like many other kinds of scholarship in today's academy, feeds on itself. The common tendency is for scholars to rush past the facts of Disney's life and career, frequently getting a lot of them wrong, in order to write about what really interests them, which is what other scholars have already written. It is this incestuous quality, even more than such commonly cited sins as a reliance on jargon, that makes so much academic writing, on Disney as on other subjects, claustrophobically difficult to read.



Disney has attracted other writers whose unsupportable claims and speculations sometimes win approval of scholars all too eager to believe the worst of the man. The persistent accusations of anti-Semitism are only the mildest examples of an array whose cumulative effect is to portray a Disney who was, among other vile things, racist, misogynist, imperialist, sexually warped. a spy for J. Edgar Hoover, desperate to conceal his illegitimate Spanish birth, (p. 325) and so terrified of death that he had his body cryogenically frozen. Pathologies are undoubtedly at work here, none of them Disney's.

Source:

Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.

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(p. 291) Said Bob Gurr, a member of the WED staff: "One big thrust behind our design work for the World's Fair was the fact that we were going to own all the equipment. In other words, somebody else would build the pavilion, on somebody else's property, but the show equipment that went in there was Disney's, and he had a ready-made location waiting for it. The fact that the Fair was going to run two years meant he could build more expensively, and Disney priced these projects in a way that the sponsors were paying for everything for a two-year use."

Disney approached the fair with a certain skepticism, even so. "You don't like to do those things unless you have fun doing 'em," he said in 1961, when work on the exhibits was just getting under way "You don't do 'em for money." Robert Moses, the imperious road builder who was in command of the fair, "wanted us to develop the amusement area and we looked at it," Disney said, 'but it just wasn't for us. I wouldn't want to try to do anything in New York. I'm not close enough. . . . On top of that, I mean I don't know whether I want to do any outside of Disneyland because you don't want to spread yourself thin."

Source:

Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.

(Note: ellipsis in original.)

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

(p. C6) Ayn Rand poses theatrically in her signature cape and gold dollar-sign pin on the cover of a groundbreaking new biography. Rand also poses theatrically in this same Halloween-ready costume (Rand impersonators have been known to wear it) on the cover of another groundbreaking new biography. The two books are being published a week apart. And both have gray covers that make them look even more interchangeable. Yet Rand, whose Objectivist philosophy is enjoying one of its periodic resurgences, loathed the very idea of grayness. She preferred dichotomies that were strictly black and white.

. . .

Ms. Heller's book is worth its $35 price, which is not the kind of detail that Rand herself would have been shy about trumpeting. When Russian Bolshevik soldiers commandeered and closed the St. Petersburg pharmacy run by Zinovy Rosenbaum, they made a lifelong capitalist of his 12-year-old daughter, Alissa, who would wind up fusing the subversive power of the Russian political novel with glittering Hollywood-fueled visions of the American dream.

. . .

Crucially, both authors understand the reasons that Rand's popularity has endured, not only among college students dazzled (and thronged into packs) by her triumphant individualism but also by entrepreneurs. From the young Ted Turner, who rented billboards to promote the "Who is John Galt?" slogan from "Atlas Shrugged," to the founders of Craigslist and Wikipedia, who have found self-contradictory new ways to mix populism with individual enterprise, it is clear that (in Ms. Burns's words) "reports of Ayn Rand's death are greatly exaggerated."

For the full review, see:

JANET MASLIN. "Books of The Times; Twin Biographies of a Singular Woman, Ayn Rand." The New York Times (Thurs., October 21, 2009): C6.

(Note: ellipses added.)

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The story below is very reminiscent of a story that Michael Lewis tells in The New, New Thing about how entrepreneur Jim Clark learned to fly.

Possible lesson: impatience and quick learning may not be traits of all high level entrepreneurs, but they appear to have been traits of at least two.

(p. 213) Seventeen years later, Broggie told Richard Hubler that teaching Disney how to run a lathe and drill press and other machinery was difficult "because he was impatient. So I'd make what we call a set-up in a lathe and turn out a piece and say, 'Well, that's how you do it.' He would see part of it and he was impatient, so he would want to turn the wheels--and then something would happen. A piece might fly out of the chuck and he'd say, 'God-damn it. why didn't you tell me it was going to do this?' Well, you don't tell him, you know? It was a thing of--well--you learn it. He said one day, . . . 'You know, it does me some good sometimes to come down here to find out I don't know all about everything.' . . . How would you sharpen the drill if it was going to drill brass or steel? There's a difference. And he learned it. You only had to show him once and he got the picture."

This was a characteristic that other people in the studio noticed. "He had a terrific memory," Marc Davis said. "He learned very quickly. . . . You only had to explain a thing once to him and he knew how to do it. Other people are not the same. I think this is a problem he had in respect to everybody . . . his tremendous memory and his tremendous capacity for learning. He wasn't book learned but he was the most fantastically well educated man in his own way. . . . He understood the mechanics of everything. . . . Everything was a new toy. And this also made him a very impatient man. He was as impatient as could be with whoever he worked with."

Disney's lack of formal education manifested itself sometimes in jibes at his college-educated employees, but more often in the odd lapses--the mispronounced words, the grammatical slips--that can mark an autodidact. "For a guy who only went to the eighth grade," Ollie Johnston said, "Walt educated himself beautifully. His vocabulary was good. I only heard him get sore (p. 214) about a big word once in a story meeting. Everyone was sitting around talking and Ted Sears said, 'Well, I think that's a little too strident.' Walt said, 'What the hell are you trying to say, Ted?' He hadn't heard that word before.

Source:

Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.

(Note: ellipses in original.)

For a similar story about Jim Clark, see:

Lewis, Michael. The New New Thing: A Silicon Valley Story. New York: W. W. Norton & Company, 2000.

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(p. 212) Before returning to Los Angeles, Disney and Kimball also went to Dearborn, Michigan, outside Detroit, and visited a village of another kind--Henry Ford's Greenfield Village, a collection of old and reconstructed buildings that included the Wright brothers' bicycle shop and a replica of Thomas Edison's laboratory. Greenfield Village, which Ford established in 1929, had a strong autobiographical element: many of its buildings were there because they had been significant in Ford's life, as with the school he attended and the scaled- down replica of his first auto plant. Greenfield was, besides, a make-believe village, a mixture of buildings spanning centuries. There was no pretense, as at Colonial Williamsburg, of re-creating the past.

Disney had visited Greenfield Village at least once before, in April 1940, but this time he returned to Burbank with his imagination stimulated. He was thinking now beyond a miniature train for his own home. He drafted a memorandum on August 31, 1948, in which he set out in detail what might go into a "Mickey Mouse park" on the sixteen acres the studio owned across Riverside Drive. Ford's influence can be felt in Disney's description of an idyllic small town, anchored by a city hall and a railroad station. There would have been a specifically Disney presence in the park only through a toy store that sold Disney toys and books and a shop where Disney artists could sell their own work.

Disney had been talking about a park of' some kind, on the studio lot or adjacent to it, for years, perhaps since the late 1930s, the idea being to have something to entertain visitors to a studio that was otherwise very much a workaday place. For the studio to embark on such a project in 1948 was irnpractical, though, given its financial condition, and Disney's memo had no immediate consequences.

Source:

Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.

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Source of book image: http://press.harvardbusiness.org/on/wp-content/uploads/2009/03/verganti_300dpi.jpg.

(p. W8) In "Design-Driven Innovation" (Harvard Business Press, 272 pages, $35), Roberto Verganti holds that product development should be grounded not in the data of survey-takers or the observations of anthropologists but in the judgment of executives. "We have experienced years of hype about user-centered design," he says. But breakthrough innovations, in Mr. Verganti's view, do not represent what customers knew they wanted. Rather, the most profitable innovations are those that create a radically new meaning for a product.

Nintendo's Wii video-game console and its motion-sensing controllers "transformed what a console meant: from an immersion in a virtual world approachable only by niche experts into an active workout, in the real world, for everyone." The Swatch in 1983 introduced a new meaning to the watch: neither an article of fine jewelry nor a utilitarian timekeeping tool but a fashion accessory. Starbucks, he says, changed the meaning of a coffee shop from a place to buy coffee to a home away from home.

For the full review, see:

DAVID A. PRICE. "The Shape of Things to Come; Design is more than aesthetics and ease of use. It's a way of doing business." The Wall Street Journal (Fri., OCTOBER 9, 2009): W8.

Reference for book under review:

Brown, Tim. Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation. New York: HarperBusiness Publishers, 2009.

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(p. 152) As late as January 1940, Disney still resisted selling stock--"I wanted to build this in a different way," he told sonic of his artists--but by then his need for money was such that going public had become the lesser of evils. Preferred stock in Walt Disney Productions was offered to the public on April 2, 1940. The money raised helped pay for the Burbank studio ($1.6 million) and retired other debts (more than $2 million). The common stock remained in the Disneys' hands. The company took out a $1.5 million insurance policy on Walt's life.

Disney remembered having lunch with Ford Motor Company executives a few days after the stock issue, when he passed through Detroit on his way back from New York. Henry Ford himself joined the group after lunch, and when Disney told the old autocrat about selling preferred stock, Ford said. "If you sell any of it, you should sell it all." That remark, Disney said, "kind of left me thinking and wondering for a while." Ford "wanted that control," Disney said. "That's what he meant by that." Disney shared the sentiment, even in relatively small matters. On July 1, 1940, he told the studio's publicity department: "From now on all publicity going out of this studio must have my O.K. before it is released. There shall be no exceptions to this rule."

Source:

Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.

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Source of book image: http://www.michaelspornanimation.com/splog/wp-content/e/a336.jpg

I have always believed, and recently increasingly believe, that Walt Disney was one of the most important entrepreneurs of our time.

One of the most favorably reviewed biographies of Disney is Michael Barrier's The Animated Man. (At some point in the future, I will briefly discuss an alternative biography of Disney by Gabler.)

I have not thoroughly read The Animated Man, but have thoroughly skimmed it. It appears to be a very useful account of Walt Disney's life.

I did not want to wait until I had fully read it, in order to highlight a few passages that I think may be of special interest. I will do so in the next few weeks.

Reference to the book discussed:

Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.

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Source of book image: http://bobsutton.typepad.com/.a/6a00d83451b75569e20120a5fa1e26970c-800wi.

(p. W8) Mr. Brown argues . . . emphatically for the close observation of users in their natural habitats. Traditional market-research tools--focus groups, surveys--rarely produce breakthrough findings, he claims. IDEO and others follow users around--making video recordings of them as they go about their routines, recording conversations with them--to build an understanding of what they really need. An IDEO employee in the health-care area, for instance, pretended to have a foot injury and checked himself into an emergency room with a hidden video camera to get a better view of the patient experience. This anthropological form of market research, Mr. Brown notes, has been adopted by companies such as Intel and Nokia.

For the full review, see:

DAVID A. PRICE. "The Shape of Things to Come; Design is more than aesthetics and ease of use. It's a way of doing business." The Wall Street Journal (Fri., OCTOBER 9, 2009): W8.

(Note: ellipsis added.)

Reference the book being reviewed:

Brown, Tim. Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation. New York: HarperBusiness Publishers, 2009.

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"A 1950 Studebaker Commander Convertible, with its famous 'bullet-nose' front end." Source of caption and photo: online version of the WSJ article quoted and cited below.

Studebakers were made mainly in South Bend, Indiana, where I was born and raised. (One of our early family cars was a Studebaker Scotsman, but, alas, it did not look much like the Studebaker Commander pictured above.)

By the way, in the musings quoted below, my understanding is that O'Rourke is not entirely right about Henry Ford: I believe Ford bankrupted two auto companies before founding the one that made the Model T pictured below.)

(p. W2) . . . cars didn't shape our existence; cars let us escape with our lives. We're way the heck out here in Valley Bottom Heights and Trout Antler Estates because we were at war with the cities. We fought rotten public schools, idiot municipal bureaucracies, corrupt political machines, rampant criminality and the pointy-headed busybodies. Cars gave us our dragoons and hussars, lent us speed and mobility, let us scout the terrain and probe the enemy's lines. And thanks to our cars, when we lost the cities we weren't forced to surrender, we were able to retreat.

. . .

I don't believe the pointy-heads give a damn about climate change or gas mileage, much less about whether I survive a head-on with one of their tax-sucking mass-transit projects. All they want to is to make me hate my car.

. . .

American cars have been manufactured mostly by romantic fools. David Buick, Ransom E. Olds, Louis Chevrolet, Robert and Louis Hupp of the Hupmobile, the Dodge brothers, the Studebaker brothers, the Packard brothers, the Duesenberg brothers, Charles W. Nash, E. L. Cord, John North Willys, Preston Tucker and William H. Murphy, whose Cadillac cars were designed by the young Henry Ford, all went broke making cars. The man who founded General Motors in 1908, William Crapo (really) Durant, went broke twice. Henry Ford, of course, did not go broke, nor was he a romantic, but judging by his opinions he certainly was a fool.

. . .

There are those of us who have had the good fortune to meet with strength and beauty, with majestic force in which we were willing to trust our lives.

For the full commentary, see:

P.J. O'ROURKE. "The End of the Affair. The fate of Detroit isn't a matter of economics. It's a tragic romance, whose magic was killed by bureaucrats, bad taste and busybodies. P.J. O'Rourke on why Americans fell out of love with the automobile." The Wall Street Journal (Sat., MAY 30, 2009): W1-W2.

(Note: ellipses added.)

(Note: thanks to my mother for refreshing my faulty memory on which model of Studebaker we owned.)

For some interesting brief background on Ford, see:

Nye, John Vincent. "Lucky Fools and Cautious Businessmen: On Entrepreneurship and the Measurement of Entrepreneurial Failure." In The Vital One: Essays in Honour of Jonathan R. T. Hughes, edited by Joel Mokyr. Greenwich, Conn. and London: JAI Press, 1991, pp.131-52.

"Henry Ford and his Model T." Source of caption and photo: online version of the WSJ article quoted and cited above.

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(p. 423) The work was extraordinarily difficult, pushing the limits of the technically possible. Disappointment is my daily bread, he had said. I thrive on it. But he did not thrive. Often he thought of abandoning the work, abandoning all of it. Yet every day he continued to fill nearly every waking hour with thinking about it. Between 1934 and 1941 he published nothing. Nothing. For a scientist to go through such a dry period is more than depressing. It is a refutation of one's abilities, of one's life. But in the midst of that dry spell, Avery told a young researcher there were two types of investigators: most "go around picking up surface nuggets, and whenever they can spot a surface nugget of gold they pick it up and add it to their collection. . . . [The other type] is not really interested in the surface nugget. He is much more interested in digging a deep hole in one place, hoping to hit a vein. And of course if he strikes a vein of gold he makes a tremendous advance."

Source:

Barry, John M. The Great Influenza: The Story of the Deadliest Pandemic in History. Revised ed. New York: Penguin Books, 2005.

(Note: italics, ellipsis, and brackets, all in original.)

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Source of cartoon: online version of the NYT commentary quoted and cited below.

(p. A25) . . . the vast majority of books ever written are not accessible to anyone except the most tenacious researchers at premier academic libraries. Books written after 1923 quickly disappear into a literary black hole. With rare exceptions, one can buy them only for the small number of years they are in print. After that, they are found only in a vanishing number of libraries and used book stores. As the years pass, contracts get lost and forgotten, authors and publishers disappear, the rights holders become impossible to track down.

Inevitably, the few remaining copies of the books are left to deteriorate slowly or are lost to fires, floods and other disasters. While I was at Stanford in 1998, floods damaged or destroyed tens of thousands of books. Unfortunately, such events are not uncommon -- a similar flood happened at Stanford just 20 years prior. You could read about it in The Stanford-Lockheed Meyer Library Flood Report, published in 1980, but this book itself is no longer available.

Because books are such an important part of the world's collective knowledge and cultural heritage, Larry Page, the co-founder of Google, first proposed that we digitize all books a decade ago, when we were a fledgling startup. At the time, it was viewed as so ambitious and challenging a project that we were unable to attract anyone to work on it. But five years later, in 2004, Google Books (then called Google Print) was born, allowing users to search hundreds of thousands of books. Today, they number over 10 million and counting.

. . .

In the Insurance Year Book 1880-1881, which I found on Google Books, Cornelius Walford chronicles the destruction of dozens of libraries and millions of books, in the hope that such a record will "impress the necessity of something being done" to preserve them. The famous library at Alexandria burned three times, in 48 B.C., A.D. 273 and A.D. 640, as did the Library of Congress, where a fire in 1851 destroyed two-thirds of the collection.

I hope such destruction never happens again, but history would suggest otherwise. More important, even if our cultural heritage stays intact in the world's foremost libraries, it is effectively lost if no one can access it easily. Many companies, libraries and organizations will play a role in saving and making available the works of the 20th century. Together, authors, publishers and Google are taking just one step toward this goal, but it's an important step. Let's not miss this opportunity.

For the full commentary, see:

SERGEY BRIN. "A Library to Last Forever." The New York Times (Fri., October 9, 2009): A25.

(Note: ellipses added.)

(Note: the online version is dated October 8th.)

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(p. 421) . . . , in 1928, Fred Griffith in Britain published a striking and puzzling finding. Earlier Griffith had discovered that all known types of pneumococci could exist with or without capsules. Virulent pneumococci had capsules; pneumococci without capsules could be easily destroyed by the immune system. Now he found something much stranger. He killed virulent pneumococci, ones surrounded by capsules, and injected them into mice. Since the bacteria were dead, all the mice survived. He also injected living pneumococci that had no capsules, that were not virulent. Again the mice lived. Their immune systems devoured the unencapsulated pneumococci. But then he injected dead pneumococci surrounded by capsules and living pneumococci without capsules.

The mice died. Somehow the living pneumococci had acquired cap-(p. 422)sules. Somehow they had changed. And, when isolated from the mice, they continued to grow with the capsule--as if they had inherited it.

Griffith's report seemed to make meaningless years of Avery's work-- and life. The immune system was based on specificity. Avery believed that the capsule was key to that specificity. But if the pneumococcus could change, that seemed to undermine everything Avery believed and thought he had proved. For months he dismissed Griffith's work as unsound. But Avery's despair seemed overwhelming. He left the laboratory for six months, suffering from Graves' disease, a disease likely related to stress. By the time he returned, Michael Dawson, a junior colleague he had asked to check Griffith's results, had confirmed them. Avery had to accept them.

His work now turned in a different direction. He had to understand how one kind of pneumococcus was transformed into another. He was now almost sixty years old. Thomas Huxley said, "A man of science past sixty does more harm than good." But now, more than ever, Avery focused on his task.

Source:

Barry, John M. The Great Influenza: The Story of the Deadliest Pandemic in History. Revised ed. New York: Penguin Books, 2005.

(Note: ellipsis added.)

(Note: italics in original.)

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I found the passage quoted below to be especially illuminating on how rapid mutation helps explain why the flu virus is so successful and dangerous. (An additional important factor is that the virus can survive in birds, without killing them.)

It occurs to me that something akin to rapid mutation (e.g., rapid experimentation) has also been advocated as a way to quickly advance science (Karl Popper), or enterprise (George Gilder).

(p. 105) Whenever an organism reproduces, its genes try to make exact copies of themselves. But sometimes mistakes--mutations--occur in this process.

This is true whether the genes belong to people, plants, or viruses. The more advanced the organism, however, the more mechanisms exist to prevent mutations. A person mutates at a much slower rate than bacteria, bacteria mutates at a much slower rate than a virus--and a DNA virus mutates at a much slower rate than an RNA virus.

DNA has a kind of built-in proofreading mechanism to cut down on copying mistakes. RNA has no proofreading mechanism whatsoever, no way to protect against mutation. So viruses that use RNA to carry their genetic information mutate much faster--from 10,000 to 1 million times faster--than any DNA virus.

Different RNA viruses mutate at different rates as well. A few mutate so rapidly that virologists consider them not so much a population of copies of the same virus as what they call a "quasi species" or a "mutant swarm."

These mutant swarms contain trillions and trillions of closely related but different viruses. Even the viruses produced from a single cell will include many different versions of themselves, and the swarm as a whole will routinely contain almost every possible permutation of its genetic code.

Most of these mutations interfere with the functioning of the virus and will either destroy the virus outright or destroy its ability to infect. But other mutations, sometimes in a single base, a single letter, in its genetic code will allow the virus to adapt rapidly to a new situation. It is this adaptability that explains why these quasi species, these mutant swarms, can move rapidly back and forth between different environments and also develop extraordinarily rapid drug resistance. As one investigator has observed, the rapid mutation "confers a certain randomness to the disease processes that accompany RNA [viral] infections."

Influenza is an RNA virus. So is HIV and the coronavirus. And of all RNA viruses, influenza and HIV are among those that mutate the fastest. The influenza virus mutates so fast that 99 percent of the 100,000 to 1 million new viruses that burst out of a cell in the reproduction process (p. 106) are too defective to infect another cell and reproduce again. But that still leaves between 1,000 and 10,000 viruses that can infect another cell.

Both influenza and HIV fit the concept of a quasi species, of a mutant swarm. In both, a drug-resistant mutation can emerge within days. And the influenza virus reproduces rapidly--far faster than HIV. Therefore it adapts rapidly as well, often too rapidly for the immune system to respond.

Source:

Barry, John M. The Great Influenza: The Story of the Deadliest Pandemic in History. Revised ed. New York: Penguin Books, 2005.

(Note: italics in original.)

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Here is the core of John Barry's account of how President Woodrow Wilson, and his administration, turned what might have been an ordinary flu, into what, by some measures, was the worst pandemic in human history:

(p. 396) . . . , whoever held power, whether a city government or some private gathering of the locals, they generally failed to keep the community together. They failed because they lost trust. They lost trust because they lied. (San Francisco was a rare exception; its leaders told the truth, and the city responded heroically.) And they lied for the war effort, for the propaganda machine that Wilson had created.

It is impossible to quantify how many deaths the lies caused. It is impossible to quantify how many young men died because the army refused to follow the advice of its own surgeon general. But while those in authority were reassuring people that this was influenza, only influenza, nothing different from ordinary "la grippe,' at least some people must have believed them, at least some people must have exposed themselves to the virus in ways they would not have otherwise, and at least some of these people must have died who would otherwise have lived. And fear really did kill people. It killed them because those who feared would not care for many of those who needed but could not find care, those who needed only hydration, food, and rest to survive.

Source:

Barry, John M. The Great Influenza: The Story of the Deadliest Pandemic in History. Revised ed. New York: Penguin Books, 2005.

(Note: ellipsis added.)

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Source of book image: http://www.virology.ws/wp-content/uploads/2009/08/great-influenza.jpg

I like John Barry's The Great Influenza very much, although not entirely for the reasons that I had expected to like it. I wanted to learn more of the details of the worst flu pandemic in history, and the book delivers those details.

But I had not expected that there would be substantial discussion of the epistemology of science and medicine, and of the political and global context that preceded and affected the 1918 H1N1 influenza pandemic.

As an added bonus, the book gives substantial coverage to the life and work of one of my heroes, Oswald Avery. As a result of his research related to the pandemic, he discovered that DNA was the genetic material---a huge milestone in the history of medicine. But he never received the Nobel Prize because the Nobel Committee didn't want to be seen endorsing controversial work that had not stood the test of time.

On the other hand, the Nobel Committee had no such compunctions about giving the Nobel Peace Prize to President Woodrow Wilson. Barry's book indicts Wilson for having major responsibility for the severity of the pandemic. His administration drafted huge numbers of young men to fight in WWI, bringing them into close contact in shoddy, incomplete training camps. Some of these young men already had the flu, and they quickly spread it to many of their fellow soldiers. The Wilson administration continued to move these soldiers around the country and to Europe, vastly speeding the spread of the disease.

Barry also documents that the Wilson administration, in the name of patriotism and morale, punished those who told the truth about the severity of the pandemic. The results extended far beyond the trampling of civil liberties. For example, there was a huge parade in Philadelphia to sell war bonds, a parade that could easily have been canceled, but was not---igniting the rapid spread of the disease in that hard-hit city. If the newspapers had been allowed to print the truth about the pandemic, then there probably would have been sufficient outcry to cancel the parade; or at the very least, many better-informed citizens would have avoided the parade, and saved their lives, and the lives of their family members.

There is also a lot in book about the biology of the disease that is of interest, and about the suffering of those who experienced it.

But what I found eye-opening was the extent to which the severity of the disease was due to avoidable actions by Woodrow Wilson and his administration.

Source of book discussed above:

Barry, John M. The Great Influenza: The Story of the Deadliest Pandemic in History. Revised ed: New York: Penguin Books, 2005.

For another eye-opening account about Woodrow Wilson and WWI, see:

Raico, Ralph. The Spanish-American War and World War I, Parts 1 & 2: Knowledge Products, 2006.

For a neat little paper on Oswald Avery, see:

Diamond, Arthur M., Jr. "Avery's 'Neurotic Reluctance'." Perspectives in Biology and Medicine 26, no. 1 (Autumn 1982): 132-36.

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In the last few decades the accepted opinion among most economists was that the profession understood what caused the Great Depression sufficiently so that we could be confident that we know how to avoid another Great Depression in the future.

Now the accepted opinion is becoming less accepted. I quote below the last sentence of Harold Cole's review of a 2007 book that surveys current views of the Great Depression by distinguished economists:

(p. 418) I came away from the book struck by the fragmentary state of the science with respect to the Great Depression and the challenges that we still face in terms of developing a truly satisfactory quantitative theory of what happened.

Source:

Cole, Harold. "Review of Parker's "the Economics of the Great Depression"." Journal of Economic Literature 46, no. 2 (June 2008): 415-18.

The book under review is:

Parker, Randall E. The Economics of the Great Depression: A Twenty-First Century Look Back at the Economics of the Interwar Era. Cheltenham, U.K. and Northampton, Mass.: Elgar, 2007.

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The Friedman Foundation mentioned in the passage below, was founded by Nobel Prize winning economist Milton Friedman who is often credited with creating the idea of education vouchers in his classic book Capitalism and Freedom.

Capitalism and Freedom was based on a series of lectures that Friedman delivered at Wabash College at the invitation of my much-missed mentor Ben Rogge. (Before teaching me economics in Indiana, Rogge was a native Nebraskan who earned his bachelor's degree from Hastings College.)

(p. 4B) A majority of Nebraskans are open to school-choice reforms such as school vouchers and tax­-credit scholarships, according to a survey made public Thurs­day by a national school-choice group.

"It really appears Nebraska is ready to start talking about school-choice reform options," said Paul DiPerna, director of partner services for the Fried­man Foundation for Educational Choice, which commissioned the survey.

The group partnered with the Nebraska Catholic Conference and other state and national groups to conduct the telephone survey of 1,200 likely voters.

Fifty-five percent of those sur­veyed said they favored school vouchers and supported a tax­-credit scholarship system, which would give tax credits to indi­viduals and businesses that con­tribute money to nonprofit orga­nizations that distribute private school scholarships.

For the full story, see:

Dejka, Joe. "Support for school choice tax plan seen; An Indianapolis organization says its survey shows Nebraskans would back a pending bill." Omaha World-Herald (Fri., Sept. 18, 2009): 4B.

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

(A15) In her day, she was a tenacious activist and an ­opponent of powerful interests, courting disfavor in high places. But today everyone loves Jane ­Jacobs, and understandably so. The author of the now-classic "The Death and Life of Great American Cities" (1961) is widely regarded as a common-sense visionary who ­reminded people about what makes ­cities livable.

According to Anthony Flint, the author of ­"Wrestling With Moses," Jacobs's most important ­contribution was the idea that "cities and city ­neighborhoods had an ­organic structure of their own that couldn't be ­produced at the drafting table." Mr. Flint, a former journalist who now works at the ­Lincoln Institute of Land Policy, clearly counts himself as a ­Jacobs fan. His book is a lively and informative ­valentine to her, aimed at showing us especially how she "took on New York's master builder and ­transformed the American city."

The villain of the story is Robert Moses, the ­"master builder" who for four decades--from the 1930s into the 1960s--led several well-funded, quasi-governmental agencies and radically transformed the landscape of New York, ­building roads, bridges, tunnels, parks, ­playgrounds, beaches and ­public housing. Though he never held elective ­office, he was ­powerful indeed, establishing a ­formidable base in the city and state bureaucracies. He might have fallen into obscurity after his death if it were not for Robert Caro, who immortalized ­Moses in "The Power ­Broker" (1974), a massive ­biography that portrays Moses as a despot whose creations helped to destroy the city.

. . .

One roots for Jacobs every step of the way, not least because she rightly condemned the ­arrogance and elitism of urban planners. And Moses was, in fact, a bully who had acquired too much power and disregarded the concerns of local residents. Slum clearance too often targeted functioning working-class neighborhoods, and urban renewal went far beyond what its utopian aims could possibly deliver.

For the full review, see:

VINCENT J. CANNATO. "Not Here, She Said; How Jane Jacobs fought the 'power broker' to save the Village--and a city." The Wall Street Journal (Thurs., July 29, 2009): A15.

(Note: ellipsis added.)

The source of the book being reviewed, is:

Flint, Anthony. Wrestling with Moses: How Jane Jacobs Took on New York's Master Builder and Transformed the American City. New York, NY: Random House, Inc., 2009.

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(p. B1) President Obama has cast himself as a reluctant interventionist in two of the nation's major industries, Wall Street and Detroit. The federal aid, he says, is a financial bridge to a postcrisis future and the hand-holding will be temporary.

Even so, the scale of the government investment and control -- especially by the auto task force now vetting plans at Chrysler and General Motors -- points to an approach that has been shunned by the United States more than other developed nations.

"By any coherent definition, this is industrial policy," said Marcus Noland, a senior fellow at the Peterson Institute for International Economics.

. . .

(p. B7) . . . a more comprehensive, industrial-policylike approach to Detroit carries its own perils, economists say. In trying to manage the industrial shrinkage, they say, there is a fine line between easing the social impact and protecting jobs in ways that inhibit economic change and renewal. In pursuit of new growth, governments risk encouraging overinvestment in areas that prove to be technological dead ends.

In the Japanese experience, economists see evidence of both dangers. Problems, they say, are typically byproducts of what economists call "political capture." That is, an industrial sector earmarked for special government attention builds up its own political constituency, lobbyists and government bureaucrats to serve that industry. They slow the pace of change, and an economy becomes less nimble and efficient as a result.

Economists say the phenomenon is scarcely confined to nations with explicit industrial policies and cite the history of agricultural subsidies in America or military procurement practices.

But going down the path of industrial policy certainly holds that risk. "You have to bear in mind the opportunity costs of these kinds of government interventions, and remember that life is not an economic textbook and that politics can easily override economic rationality," said Mr. Noland, an author, with Howard Pack, of "Industrial Policy in an Era of Globalization: Lessons From Asia."

For the full story, see:

STEVE LOHR. "Highway to the Unknown; Forays in Industrial Policy Bring Risks." The New York Times (Weds., May 19, 2009): B1 & B7.

(Note: the online title is "In U.S., Steps Toward Industrial Policy in Autos.")

(Note: ellipses added.)

The full reference to Noland and Pack's book is:

Noland, Marcus, and Howard Pack. Industrial Policy in an Era of Globalization: Lessons from Asia, Policy Analyses in International Economics. Washington, D.C.: Peterson Institute, 2003.

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The European newspaper publisher Axel Springer, discussed in the story quoted below, appears to be following the advice of Christensen and Raynor in their book The Innovator's Solution. In that book, they suggest that incumbent firms need to be willing to set up units that compete with their older business models, if they hope to survive the introduction of disruptive innovations.

(p. B4) PARIS -- As the death toll in the American newspaper industry mounted this month, the German publisher Axel Springer, which owns Bild, the biggest newspaper in Europe, reported the highest profit in its 62-year history.

. . .

Axel Springer generates 14 percent of its revenue online, more than most American newspapers, even though the markets in which it operates -- primarily Germany and Eastern Europe -- are less digitally developed than the United States.

One reason, Mr. Döpfner said, is that Axel Springer has dared to compete with itself. Instead of trying to protect existing publications, it acquired or created new ones, some of which distribute the same content to different audiences.

At one newsroom in Berlin, for example, journalists produce content for six publications: the national newspaper Die Welt, its Sunday edition and a tabloid version aimed at younger readers; a local paper called Berliner Morgenpost, and two Web sites.

For the full story, see:

ERIC PFANNER. "European Newspapers Find Creative Ways to Thrive in the Internet Age." The New York Times (Mon., March 29, 2009): B4.

(Note: ellipsis added.)

The Christensen and Raynor book mentioned above, is:

Christensen, Clayton M., and Michael E. Raynor. The Innovator's Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

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Dambisa Moyo. Source of photo: online version of the NYT article quoted and cited below.

(p.11) You argue in your book that Western aid to Africa has not only perpetuated poverty but also worsened it, and you are perhaps the first African to request in book form that all development aid be halted within five years.

Think about it this way -- China has 1.3 billion people, only 300 million of whom live like us, if you will, with Western living standards. There are a billion Chinese who are living in substandard conditions. Do you know anybody who feels sorry for China? Nobody.

Maybe that's because they have so much money that we here in the U.S. are begging the Chinese for loans.


Forty years ago, China was poorer than many African countries. Yes, they have money today, but where did that money come from? They built that, they worked very hard to create a situation where they are not dependent on aid.

What do you think has held back Africans?


I believe it's largely aid. You get the corruption -- historically, leaders have stolen the money without penalty -- and you get the dependency, which kills entrepreneurship. You also disenfranchise African citizens, because the government is beholden to foreign donors and not accountable to its people.

If people want to help out, what do you think they should do with their money if not make donations?


Microfinance. Give people jobs.

For the full interview, see:

DEBORAH SOLOMON, interviewer. "Questions for Dambisa Moyo; The Anti-Bono." The New York Times, Magazine (Sun., Feb. 22, 2009): 11.

Source of book image: http://media.us.macmillan.com/jackets/500H/9780374139568.jpg

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(p. A9) This is a good time to recall that the venture-capital industry was born as a reaction to New Deal regulations that stifled capital and prolonged the Depression. The country's first venture-capital firm (other than family-run funds) was American Research and Development, planned in the 1930s and launched after World War II in Boston.

Its leader was longtime Harvard Business School professor Georges Doriot, who is the subject of a fascinating recent biography, "Creative Capital," by Spencer Ante. Mr. Ante, a BusinessWeek editor, tells me that as he researched the topic "one of the most surprising things I learned was how concerned financiers and industrialists had become about the riskless economy in direct response to the New Deal. Even in the 1930s, people understood that small business was the lifeblood of the economy."

American Research and Development backed early-stage companies deemed too risky by banks and investment trusts at the time. The firm was an early investor in Digital Equipment Corp., the Boston-area company that revolutionized computing.

Despite financial success, the history of the firm is a reminder that our regulatory system, by its nature focused on avoiding risk, has a hard time dealing with investment firms whose mission is to take risks. Doriot was a well-known name in commerce and academia from the 1940s through the 1970s. He was the first French graduate of Harvard Business School, a founder of the INSEAD business school and a leading adviser to the U.S. military.

But even as a pillar of Boston's commercial and academic worlds, Doriot had many run-ins with federal regulators. Over the years, regulators dictated compensation for the American Research and Development staff, tried to force disclosure of the performance of its early-stage companies, and second-guessed how it tracked the valuations of its investments.

The Securities and Exchange Commission hounded the company so often that Doriot once wrote a three-page memo saying, "ARD has more knowledge of what is right and wrong than the average person at the SEC." He was prudent enough not to send it. He did mail another memo to the SEC enforcement office in Boston, in 1965: "I rather resent, after 20 years of experience, to have two men come here, spend two days, and tell us that we do not know what we are doing."

. . .

No venture capital firm has asked to be bailed out, and none are too big to fail. As hard as it is for regulators to understand, the nature of venture capital is such that it should not even aspire to be a low-risk enterprise

For the full commentary, see:

L. GORDON CROVITZ. "No Such Thing as Riskless Venture Capital; New regulations could retard the innovation our economy needs." The Wall Street Journal (Weds., AUGUST 9, 2009): A19.

(Note: ellipsis added.)

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

(p. W6) . . . "Rich" contains an interesting argument, if only one can find it. Mr. Samuel contends that the 20th century has seen the creation of a distinctly American "wealth culture" that is more democratic and more diverse than anything the world has seen before, and consequently more resilient.

. . .

The Reagan revolution, thanks to its lowered taxes and deregulated economy, ­produced a flood of new ­millionaires; it also removed some of the guilt that had come to cling to wealth. ­(President ­Reagan said that he wanted America to remain a country in which people could dare to be rich.) More than the ­Reaganauts, though, it was the computer geeks of Silicon ­Valley who both stimulated and legitimized wealth- ­creation. They not only ­pioneered a productivity ­miracle, they also embodied the "American" values of ­meritocracy and democracy, earning big rewards for big ­innovations and scattering stock options among their ­employees. America Online, Mr. Samuel ­observes, created 2,000 ­millionaires during the 1990s.

The road from the top-­hatted John D. Rockefeller to the be-chinoed Bill Gates is undoubtedly a long one, and yet, remarkably, much of the landscape of American wealth remains the same. The U.S. has a genius for producing entrepreneurs who can turn the latest technology into piles of gold. Less than 10% of today's rich inherited their wealth, for example, and many are ­"instapreneurs," transformed in an instant from ­penury to prosperity.

For the full review, see:

ADRIAN WOOLDRIDGE. "Review; The Evolution of Wealth; Discerning a distinctly American style of affluence." The Wall Street Journal (Fri., July 31, 2009): W6.

(Note: ellipses added.)

Reference to the reviewed book:

Samuel, Larry. Rich: The Rise and Fall of American Wealth Culture. New York: AMACOM, 2009.

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(p. 217) At the root and origin of all great empires of industry can usually be found a perspiring entrepreneur, often frustrated and fatigued, struggling over a machine that won't quite work.

Honda, for example, was to become the world's single most brilliant and successful entrepreneur of mechanical engineering since Henry Ford. But only the perspiration of genius was in sight during that period before the war when he embarked on a siege of day-and-night study and experiment in the techniques of casting, in his attempt to make a piston ring. He lived at the factory, turning from a gay blade into a hirsute and harried hermit, stinking of grease and sweat, while his savings ran out, his friends fretted, his parents reminded him of promising opportunities in auto repair, and he pawned his wife's jewelry for funds.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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(p. 67) Through all the centuries of man, there has recurred this same morbid misunderstanding of the nature of wealth and the wealth of nations. Always wealth is seen as something solid and calculable: to be seized and held, clutched and hoarded, measured and inventoried, amassed and monopolized. In the age of imperialism, it was imagined to consist in land and the armies that could acquire it; in the mercantilist era, it was recognized as bullion, gained through a favorable balance of trade; in every period, men have fawned over gems and glitter; in the modern age, fossil fuels and strategic minerals have seemed to be the open sesame, but seekers of wealth still fumble for gold and baubles, and real estate as well.

All bespeak the materialistic fallacy, a fixation of leftists, but a shibboleth also for much of the intelligentsia of capitalism: the idea that wealth is material and collectible, finite and definable, subject to measurement and inventory, to entropy and exhaustion. The way to get rich is to find some precious substance and (p. 68) hold It. Its price will inevitably rise in time as its quantity declines with use. This is the fantasy through which Pierre Trudeau was bankrupting Canada in the early 1980s and the Arab leaders were impoverishing the world and destroying their own future.

Wealth consists not chiefly in things but in thought: in the ideas and applications that confer value to what seems useless to the uninformed. The Arab leaders should learn that they can best enhance the value of oil--and the wealth of oil-producing nations--by lowering its price and enlarging its uses. This is the central rule of riches, understood by every major titan of wealth, from John D. Rockefeller and Henry Ford to the entrepreneurs of modern computers and the industrialists of contemporary Japan. Each gained his fortune not by increasing the price of his product but by drastically dropping it, bringing it within the reach of the creative uses and ideas of millions, and thus vastly enlarging its total value and market.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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(p. 96) While science and enterprise open vast new panoramas of opportunity, our established experts flee in horror to all available caves and cages, like so many primitives, terrified by freedom and change.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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The clip is the famous corporate graveyard scene from Ben Wattenberg's 1977 "In Search of the Real America: A Challenge to the Chorus of Failure and Guilt." The scene appears in the first of 13 episodes, the episode called "There's No Business Like Big Business" which received the Tuck Award for the Advancement of Economic Understanding. The episode was produced and written by Austin Hoyt.

The corporate graveyard scene illustrates that under entrepreneurial capitalism, companies prosper that innovate in better serving the consumer.

URL address for graveyard scene video clip:

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

Wattenberg discussed the "In Search of the Real America" program, and the graveyard scene, in his recent book Fighting Words:

(p. 307) The central point of the program was that if big American corporations didn't compete effectively, they suffer, and many would go out of business.

The producers had the wonderful idea of a visual of a graveyard on a foggy night, with headstones made from papier-mâché and a smoke machine providing the fog. I walked through the mock cemetery in a raincoat and read off the names of corporate tombstones, which included Central Leather (the seventeenth largest company in 1917), International Mercantile Marine (the eleventh largest in 1917), as well as failures like Baldwin Locomotive Works, American Woolen, Packard Motor Car, International Match, Pierce Petroleum, Curtiss-Wright, United Verde Mining, and Consolidation Coal.2 When we showed the Central Leather tombstone, a sound effect mooed; behind International Mercantile Marine's, a steamship horn bellowed (I love shtick).

. . .

2 The program was based on an article by James Michaels, editor of Forbes. For many years, people would come up to me in airports, recalling that one scene and complementing me on the program.

Source:

Wattenberg, Ben J. Fighting Words: A Tale of How Liberals Created Neo-Conservatism. New York: Thomas Dunne Books, 2008.

(Note: ellipsis added.)

(Note: I have corrected a few obvious errors involving the omission and placement of commas in the list of companies in the text of Wattenberg's Fighting book.)

. . . , Mr. Michaels graduated from Harvard in 1943 with a bachelor's degree in economics.

Source:

RICHARD PÉREZ-PEÑA. "James Michaels, Longtime Forbes Editor, Dies at 86." The New York Times (October 4, 2007).

(Note: of course, Joseph Schumpeter was a member of the Harvard faculty in 1943, and published the first edition of Capitalism, Socialism and Democracy in 1942.)

Source of book image: http://media.us.macmillan.com/jackets/500H/9780312382995.jpg

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Source of book image: http://www.amazon.com/Dynamics-Industrial-Cpitalism-Schumpeter-Lectures/dp/0415771676/ref=sr_11_1?ie=UTF8&qid=1204828232&sr=11-1

Schumpeter is sometimes viewed as having predicted the obsolescence of the entrepreneur, although Langlois documents that Schumpeter was always of two minds on this issue.

Langlois discusses Schumpeter's ambivalence and the broader issue of the roles of the entrepreneur and the corporation in his erudite and useful book on The Dynamics of Industrial Capitalism. He concludes that changing economic conditions will always require new industrial structures, and the entrepreneur will always be needed to get these new structures built.

(I have written a brief positive review of the book that has recently appeared online.)

Reference to Langlois' book:

Langlois, Richard N. The Dynamics of Industrial Capitalism: Schumpeter, Chandler and the New Economy. London: Routledge, 2006.

Reference to my review of Langlois' book:

Diamond, Arthur M., Jr. "Review of Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler and the New Economy." EH.Net Economic History Services, Aug 6 2009. URL: http://eh.net/bookreviews/library/1442

Apparently Langlois likes my review:

http://organizationsandmarkets.com/2009/08/07/another-nanosecond-of-fame/

"Richard N. Langlois." Source of photo and caption: http://www.clas.uconn.edu/facultysnapshots/images/langlois.jpg

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In the passage below, Gilder was writing of the 1970s, 1980s and 1990s. But sadly, iatrogenic illness is of more than mere historical interest.

(p. 49) In recent decades, the U.S. economy has suffered from a combination of hypochondria and iatrogenic illness. The hypochondria stems from spurious statistics and deceptive anecdotes and erroneous theories of American decline. It results in a period of fear and anxiety, propagated by the media, measured in public opinion polls, and enhanced by alarmist demagoguery. Iatrogenic illnesses are diseases caused by the doctor--in this instance by hundreds of economic Ph.D.s, government planners, and politicians who have responded to the pangs of hypochondria by inflicting thousands of real cuts on the entrepreneurs who make (p. 50) the economy go, as if, like the physicians of the Middle Ages, the experts believe in bleeding the patient as a way of restoring him to productive health.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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Source of book image: http://media.us.macmillan.com/jackets /500H/9780312929879.jpg (Note: the image is of a more recent edition of the book than the one whose source information is given below. I believe the main body of the editions is the same, but they differ in preface and afterword.)

Ray Kroc was one of the most famous entrepreneurs of the second half of the 20th century, credited with building McDonald's. Kroc is not my favorite entrepreneur, but his story as portrayed in his autobiography does contain some observations that are useful for suggesting, or testing, generalizations about entrepreneurship.

One of them is suggested by the title: the importance of hard work.

Another is that if you have the right attitude, work hard (and have a bit of luck) success can come later in life (he was 52 when he met the McDonald brothers).

In some future entries to the blog, I'll quote a few passages from the book that I found especially interesting.

Reference to book discussed:

Kroc, Ray. Grinding It Out: The Making of McDonald's. Chicago: Henry Regnary Company, 1977.

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(p. 49) As entrepreneurs accelerate the processes of creative destruction that impel all economic advance, the economists measure the destruction, but not the creativity. They see the sinking value of existing capital but neglect the new ideas, hopes, enthusiasms, and plans of entrepreneurs.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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

I remember a conversation with the late labor economist Sherwin Rosen on the substantial decline in research productivity of economists as they age. My memory is that he said the decline usually wasn't because of inability, but because, at some point, the older economists stop trying.

I think there's some truth to that. The belief that it is too late to succeed, can lead people to stop trying, and thereby make the prediction self-fulfilling.

Fortunately, L. Frank Baum kept trying:

(p. A15) If L. Frank Baum had been listed on the stock exchange in 1900, his shares would have been trading near historic lows. The soon-to-be famous author of "The Wonderful Wizard of Oz" had at that point failed at a long series of energetic attempts to find a career. At 44, Baum had already been a chicken farmer, an actor, a seller of machinery lubricants, a purveyor of novelty goods and a newspaper publisher. All his life he'd written lively prose -- plays, ads, columns -- but most of it seemed to go nowhere.

Then, suddenly, it did. The story of a girl named Dorothy who with her little dog, Toto, travels to the wondrous land of Oz burst from Baum's pencil, almost taking him by surprise. "The story really seemed to write itself," he told his publisher. "Then, I couldn't find any regular paper, so I took anything at all, including a bunch of old envelopes." Turned into a proper book with defining illustrations by W.W. Denslow, the story most of us know as "The Wizard of Oz" was an immediate sensation in 1900. In a review, the New York Times commended it, saying that it was "ingeniously woven out of commonplace material." Baum would produce 13 sequels, though none had quite the sparkle of the first.

For the full review, see:

JOHN STEELE GORDON. "Books; Inventing a New World; The men who engineered the astonishing emergence of the modern age." Wall Street Journal (Sat., April 11, 2009): W8.

The book being reviewed, is:

Schwartz, Evan I. Finding Oz: How L. Frank Baum Discovered the Great American Story. Boston, MA: Houghton Mifflin Harcourt, 2009.

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(p. 13) The single most important question for the future of America is how we treat our entrepreneurs. If we smear, harass, overtax, and overregulate them, our liberal politicians will be shocked and horrified to discover how swiftly the physical tokens of the means of production collapse into so much corroded wire, eroding concrete, scrap metal, and jungle rot.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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

(p. W8) There are technologies and then there are technologies. Some are trivial, such as Ziploc plastic bags. They're handy, to be sure, but they don't change the world. Some are extraordinarily simple but profound, such as the stirrup, which came along only after men had been riding horses for well over a thousand years. Nothing more than a ring of metal hung from a leather strap, the stirrup made cavalry the dominant force on the European battlefield and therefore made the mounted knight the dominant force in European society for several hundred years.

As Gavin Weightman's "The Industrial Revolutionaries" reminds us, inventions on the level of the stirrup's importance seemed to come every other month during the late 18th and 19th centuries -- what Mr. Weightman calls "the most remarkable period of practical inventiveness in world history."

When Thomas Hobbes famously wrote in the 17th century that the great majority of the population led lives that were "nasty, brutish and short," he was describing an agrarian society that was, in its essence, unchanged since the advent of agriculture about 10,000 years earlier. Ownership of land was the basis of wealth. Hobbes had no reason to think that the situation would change any time soon. But it did: A rapidly accelerating development of world-transforming technologies, subsumed under the rubric of "the Industrial Revolution," began in Britain and within 100 years had molded the modern world.

. . .

The Industrial Revolution revolutionized more than just the global economy: It transformed politics and society. A world divided between a handful of aristocrats and millions of peasants was transformed into a world dominated by the middle class, where wealth is widely distributed and the franchise universal.

For the full review, see:

JOHN STEELE GORDON. "Books; Inventing a New World; The men who engineered the astonishing emergence of the modern age." Wall Street Journal (Sat., April 11, 2009): W8.

(Note: ellipsis added.)

The book being reviewed, is:

Weightman, Gavin. The Industrial Revolutionaries: The Making of the Modern World 1776-1914. New York: Grove Press, 2009.

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(p. A17) Bertrand de Jouvenel, writing in 1951 about popular attitudes toward income inequality in "The Ethics of Redistribution":

The film-star or the crooner is not grudged the income that is grudged to the oil magnate, because the people appreciate the entertainer's accomplishment and not the entrepreneur's, and because the former's personality is liked and the latter's is not. They feel that consumption of the entertainer's income is itself an entertainment, while the capitalist's is not, and somehow think that what the entertainer enjoys is deliberately given by them while the capitalist's income is somehow filched from them.

Source:

"Notable & Quotable." The Wall Street Journal (Thurs., MARCH 5, 2009): A17.

(Note: italics in original.)

Original source of de Jouvenel quote:

Jouvenel, Bertrand de. The Ethics of Redistribution. Indianapolis, IN: Liberty Fund Inc., 1990 (originally published by Cambridge University Press in 1951).

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Source of book image: http://www.dichosbooks.com/images/33353510.jpg

(p. A13) Roughly 70% of Americans own their own homes, a statistic that goes a long way toward explaining why the Supreme Court's ruling in 2005 in Kelo v. City of New London was so widely reviled. Before Kelo, most Americans probably took it for granted that their home was their castle, protected by the Constitution from arbitrary seizure by government. The Fifth Amendment's takings clause says: " . . . nor shall private property be taken for public use, without just compensation."

In Kelo, a majority of five justices came up with an extremely broad interpretation of "public use." The high court's four liberal members, joined by the ever-changeable Anthony Kennedy, ruled that government has the right to seize a private home for virtually any purpose -- including handing it over to private developers.

. . .

"Little Pink House" is a modern morality tale. It shows how the politically powerful can use eminent domain as an instrument against the weak. Justice Sandra Day O'Connor said it best in her dissent in Kelo: "The fallout from this decision will not be random." She predicted that "the government now has license to transfer property from those with fewer resources to those with more." The beneficiaries, she wrote, are likely to be those citizens "with disproportionate influence and power in the political process."

Owning property is one of Americans' most basic constitutional rights. It's too bad Susette Kelo didn't get to exercise hers.

For the full review, see:

MELANIE KIRKPATRICK. "Bookshelf; Evicted, But Not Without a Fight; The government took her home. The Supreme Court approved." Wall Street Journal (Mon., Jan. 26, 2009): A13.

(Note: ellipsis in first paragraph quote was in original; ellipsis between paragraphs was added.)

The book being reviewed, is:

Benedict, Jeff. Little Pink House. New York: Grand Central Publishing, 2009.

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(p. 5) Far from being greedy, America's leading entrepreneurs-- with some unrepresentative exceptions--display discipline and self-control, hard work and austerity that excel that in any college of social work, Washington think tank, or congregation of bishops. They are a strange riffraff, to be sure, because they are chosen not according to blood, credentials, education, or services rendered to the establishment. They are chosen for performance alone, for service to the people as consumers.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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In conversation at the HES meeting in Denver, Pete Boettke mentioned that the opportunity cost of blogging can be very high.

The passage below is from a draft of a key chapter of a long-awaited book authored by Berkeley economist and world-renowned blogger Brad DeLong. (At least in this case, Boettke is right.)

(p. 3) Could the Emperor Tiberius have eaten fresh grapes in January? Could the Emperor Napoleon have crossed the Atlantic in a night, or gotten from Paris to London in two hours? Could Thomas Aquinas have written a 2000-word letter in two hours--and then dispatched it off to 1,000 recipients with the touch of a key, and begun to receive replies within the hour? Computers, automobiles, airplanes, VCR' s, washing machines, vacuum cleaners, telephones, and other technologies--combined with mass production--give middle-class citizens of the United States today degrees of material wealth--control over commodities, and the ability to consume services--that previous generations could barely imagine.

Source:

DeLong, J. Bradford. "Cornucopia: The Pace of Economic Growth in the Twentieth Century." NBER Working Paper, w7602, 2000.

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

(p. A13) . . . , Mr. Willingham shows how experiments support his claims.

The trendy notion that each person has a unique learning style comes under an especially withering assault. "How should I adjust my teaching for different types of learners?" asks Mr. Willingham's hypothetical teacher. The disillusioning reply: "No one has found consistent evidence supporting a theory describing such a difference. . . . Children are more alike than different in terms of how they think and learn."

It turns out that while education gurus were promoting the uplifting vision of all students being equal in ability but unique in "style," researchers were testing the theory behind it. In one experiment, they presented vocabulary words to students classified as "auditory learners" and "visual learners." Half the words came in sound form, half in print. According to the learning-styles theory, the auditory learners should remember the words presented in sound better than the words presented in print, and vice-versa for the visual learners.

But this is not what happened: Each type of learner did just as well with each type of presentation. Why? Because what is being taught in most of the curriculum -- at all levels of schooling -- is information about meaning, and meaning is independent of form. "Specious," for instance, means "seemingly logical, but actually fallacious" whether you hear it, see it or feel it out in Braille. Mr. Willingham makes a convincing case that the distinction between visual, auditory and kinesthetic learners (who supposedly learn best when body movement is involved) is a specious one. At some point, no amount of dancing will help you learn more algebra.

For the full review, see:

CHRISTOPHER F. CHABRIS. "Bookshelf; How to Wake Up Slumbering Minds
Will the discoveries of neuroscientists help us to think, learn and remember?." Wall Street Journal (Mon., APRIL 27, 2009): A13.

(Note: the initial ellipsis was added; the ellipsis internal to the first full paragraph, was in the original.)

The book being reviewed, is:

Willingham, Daniel T. Why Don't Students Like School?: A Cognitive Scientist Answers Questions About How the Mind Works and What It Means for the Classroom. San Francisco: Jossey-Bass, 2009.

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(p. 8) Because entrepreneurship overthrows establishments rather than undergirds them, the entrepreneurial tycoons mostly begin as rebels and outsiders. Often they live in out-of-the-way places-- like Bentonville, Arkansas; Omaha, Nebraska; or Mission Hills, Kansas--mentioned in New York, if at all, as the punch lines of comedy routines. When these entrepreneurs move into high society, they are usually inheritors on the way down.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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

I think the crucial feature of Wikipedia is in its being quick (what "wiki" means in Hawaiian), rather than in its current open source model. Academic knowledge arises in a slow, vetted process. Publication depends on refereeing and revision. On Wikipedia (and the web more generally) knowledge is posted first, and corrected later.

In the actual fact, Wikipedia's coverage is vast, and its accuracy is high.

I speculate that Wikipedia provides clues to developing new, faster, more efficient knowledge generating institutions.

(Chris Anderson has a nice discussion of Wikipedia in The Long Tail, starting on p. 65.)

(p. A13) Until just a couple of years ago, the largest reference work ever published was something called the Yongle Encyclopedia. A vast project consisting of thousands of volumes, it brought together the knowledge of some 2,000 scholars and was published, in China, in 1408. Roughly 600 years later, Wikipedia surpassed its size and scope with fewer than 25 employees and no official editor.

In "The Wikipedia Revolution," Andrew Lih, a new-media academic and former Wikipedia insider, tells the story of how a free, Web-based encyclopedia -- edited by its user base and overseen by a small group of dedicated volunteers -- came to be so large and so popular, to the point of overshadowing the Encyclopedia Britannica and many other classic reference works. As Mr. Lih makes clear, it wasn't Wikipedia that finished off print encyclopedias; it was the proliferation of the personal computer itself.

. . .

By 2000, both Britannica and Microsoft had subscription-based online encyclopedias. But by then Jimmy Wales, a former options trader in Chicago, was already at work on what he called "Nupedia" -- an "open source, collaborative encyclopedia, using volunteers on the Internet." Mr. Wales hoped that his project, without subscribers, would generate its revenue by selling advertising. Nupedia was not an immediate success. What turned it around was its conversion from a conventionally edited document into a wiki (Hawaiian for "fast") -- that is, a site that allowed anyone browsing it to edit its pages or contribute to its content. Wikipedia was born.

The site grew quickly. By 2003, according to Mr. Lih, "the English edition had more than 100,000 articles, putting it on par with commercial online encyclopedias. It was clear Wikipedia had joined the big leagues." Plans to sell advertising, though, fell through: The user community -- Wikipedia's core constituency -- objected to the whole idea of the site being used for commercial purposes. Thus Wikipedia came to be run as a not-for-profit foundation, funded through donations.

. . .

It is clear by the end of "The Wikipedia Revolution" that the site, for all its faults, stands as an extraordinary demonstration of the power of the open-source content model and of the supremacy of search traffic. Mr. Lih observes that when "dominant encyclopedias" were still hiding behind "paid fire walls" -- and some still are -- Wikipedia was freely available and thus easily crawled by search engines. Not surprisingly, more than half of Wikipedia's traffic comes from Google.

For the full review, see:

JEREMY PHILIPS. "Business Bookshelf; Everybody Knows Everything." Wall Street Journal (Weds., March 18, 2009): A13.

(Note: ellipses added.)

The book being reviewed, is:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

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(p. 23) Mr. J. R. Simplot had entered the food processing business, without any clear notion of how to produce dried onion powder or flakes. Once again he followed his lifelong precept of entrepreneurship: "When the time is right, you got to do it." His rationale is written more elegantly in metal on a small plaque that has stood on Simplot's desk--and has greeted him each time he pulls up his chair--for some twenty-five years: Nothing will ever (p. 24) be attempted if all possible objections must be first overcome. The objections to signing a contract for delivery of 500,000 pounds of dried, powdered, or flaked onions--without drier, pulverizer, or flaker, or any clue of how to build them--seemed altogether prohibitive. But J. R. Simplot struck when the time was right.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

(Note: ellipsis added.)

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

(p. A13) It is one of the great conundrums of the modern age: More than 300 million people living across the continent of Africa are still mired in poverty after decades of effort -- by the World Bank, foreign governments and charitable organizations -- to lift them out if it. While a few African countries have achieved notable rates of economic growth in recent years, per-capita income in Africa as a whole has inched up only slightly since 1960. In that year, the region's gross domestic product was about equal to that of East Asia. By 2005, East Asia's GDP was five times higher. The total aid package to Africa, over the past 50 years, exceeds $1 trillion. There is far too little to show for it.

Dambisa Moyo, a native of Zambia and a former World Bank consultant, believes that it is time to end the charade -- to stop proceeding as if foreign aid does the good that it is supposed to do. The problem, she says in "Dead Aid," is not that foreign money is poorly spent (though much of it is) or that development programs are badly managed (though many of them are). No, the problem is more fundamental: Aid, she writes, is "no longer part of the potential solution, it's part of the problem -- in fact, aid is the problem."

In a tightly argued brief, Ms. Moyo spells out how attempts to help Africa actually hurt it. The aid money pouring into Africa, she says, underwrites brutal and corrupt regimes; it stifles investment; and it leads to higher rates of poverty -- all of which, in turn, creates a demand for yet more aid. Africa, Ms. Moyo notes, seems hopelessly trapped in this spiral, and she wants to see it break free. Over the past 30 years, she says, the most aid-dependent countries in Africa have experienced economic contraction averaging 0.2% a year.

For the full review, see:

MATTHEW REES. "Bookshelf; When Help Does Harm." Wall Street Journal (Tues., Mach 17, 2009): A13.

The reference to the book under review, is:

Moyo, Dambisa. Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa. New York: Farrar, Straus and Giroux, 2009.

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Christensen's theory of disruptive innovation predicts that incumbents will seldom survive a major disruption. So it is interesting that Durant and Studebaker, appear to have been exceptions, since they made the transition from producing carriages to producing cars. (Willie Durant founded General Motors in 1908.)

(p. 189) In 1900, fifty-seven surviving American automobile firms, out of hundreds of contenders, produced some 4,000 cars, three-quarters of which ran on steam or electricity. Companies famous for other products were entering the fray. Among them were the makers of the Pope bicycle, the Pierce birdcage, the Peerless wringer, the Buick bathtub, the White sewing machine, and the Briscoe garbage can. All vied for the market with stationary-engine makers, machine-tool manufacturers, and spinoffs of leading carriage firms, Durant and Studebaker. Among the less promising entrants seemed a lanky young engineer from Edison Illuminating Company named Henry Ford, whose Detroit Automobile Company produced twenty-five cars and failed in 1900.

. . .

(p. 191) Willie Durant, who knew all about production and selling from his carriage business, decided it was time to move into cars after several months of driving a prototype containing David Buick's valve-in-head engine--the most powerful in the world for its size--through rural Michigan in 1904. Within four years, Durant was to parlay his sturdy Buick vehicle into domination of the automobile industry, with a 25 percent share of the market in 1908, the year he founded General Motors.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

(Note: ellipsis added.)

Christensen's theory is most fully expressed in:

Christensen, Clayton M., and Michael E. Raynor. The Innovator's Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

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(p. 305) Entrepreneurs understand the inexorable reality of risk and change. They begin by saving, forgoing consumption, not to create an ersatz security but to gain the wherewithal for a life of productive risks and opportunities. Their chief desire is not money to waste on consumption but the freedom and power to consummate their entrepreneurial ideas.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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(p. 298) David L. Birch and his associates at MIT gained a glimpse of this topsy-turvy domain during the late 1970s when they themselves entered the statistical skunkworks of the economy by conducting the most comprehensive and detailed analysis ever performed on the facts of American small business. Using records from a Dun & Bradstreet sample of 5.6 million firms, the Birch team reached the highly publicized conclusion that companies with fewer than 100 employees created 80 percent of the net new jobs in the U.S. economy during the 1970s. Data from the early 1980s confirmed these findings. In launching jobs, the last were manifestly first in U.S. capitalism.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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(p. 297) Because he started in rebellion against established firms, he bears a natural skepticism toward settled expertise. Because he had to make scores of decisions before all the information was in, he recognizes that enterprise always consists of action in uncertainty. The entrepreneur prevails not by understanding an existing situation in all its complex particulars, but by creating a new situation which others must try to comprehend. The enterprise is an aggressive action, not a reaction. When it is successfully launched, all the rest of society--government, labor, other businesses--will have to react. In a sense, entrepreneurship is the creation of surprises. It entails breaking the looking glass of established ideas--even the gleaming mirrors of executive suites--and stepping into the often greasy and fetid bins of creation.

In the entrepreneur's contrarian domains, he needs most of all a willingness to accept failure, learn from it, and act boldly in the shadows of doubt. He inhabits a realm where the last become (p. 298) first, where supply creates demand, where belief precedes knowledge. It is a world where expertise may be a form of ignorance and the best possibilities spring from a consensus of impossibility.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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Source of book image: http://images.barnesandnoble.com/images/11610000/11613340.jpg

(p. A19) . . . some excellent books for general readers in the past few years, notably Brian Ward- Perkins's "The Fall of Rome and the End of Civilization" (2005), have shown how devastating was the economic and human cost paid between 450 and 900. It is still unfashionable to speak of the Dark Ages (there was continuing cultural life), but these were certainly the Poor Ages, in which protection for the weak and vulnerable, from roaming killers and even from the weather, was much more precarious than it had been under Roman rule.

For the full review, see:

SCOTT PATTERSON. "Bookshelf; The Emperor Left Town." Wall Street Journal (Tues., APRIL 21, 2009): A19.

(Note: ellipsis added.)

(Note: the book mainly under review by Patterson, is NOT the book featured in this blog entry.)

The reference for the Ward-Perkins book, is:

Ward-Perkins, Bryan. The Fall of Rome: And the End of Civilization. Oxford, UK: Oxford University Press, 2005.

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Gilder's rhyme about the classroom is cute, and maybe mainly true. In an important paper, Baumol has more prosaically (in the literal sense) expressed a similar view.

But there are counterexamples. Gilder himself, in his Microcosm, notes how what was taught in some classrooms was crucial to progress in information technology.

(p. 296) Entrepreneurs can be pompous and vain where it doesn't count; but in their own enterprise, the first law is to listen. They must be men meek enough--and shrewd enough--to endure the humbling eclipse of self that comes in the process of profound learning from others. In all the history of enterprise, most of the protagonists of major new products and companies began their education--and (p. 297) discovered the secrets of their later breakthroughs--not in the classroom, where the old ways are taught, but in the factories and labs, where new ways are wrought.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

The important Baumol paper mentioned above, is:

Baumol, William J. "Education for Innovation: Entrepreneurial Breakthroughs Versus Corporate Incremental Improvements." In Innovation Policy and the Economy, edited by Adam B. Jaffe, Josh Lerner and Scott Stern, 33-56. Cambridge, Mass.: MIT Press, 2005.

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"Marjorie Grene in 2003." Source of photo and caption: online version of the NYT obituary quoted and cited below.

The NYT reported, in the obituary quoted below, that philosopher Marjorie Grene died on March 16, 2009, at the age of 93.

Although I studied philosophy at the University of Chicago, my time there did not overlap with Marjorie Grene's and I don't believe that I ever met her, or ever even heard her speak (though I did occasionally walk past her former husband David Grene, on my way to talk to Stephen Toulmin).

I am increasingly appreciating Michael Polanyi's book Personal Knowledge in which he introduced his view of what he called "tacit knowledge." In particular, I am coming to believe that tacit knowledge is very important in understanding the role and importance of the entrepreneur.

So if Marjorie Grene was crucial to Personal Knowledge, as is indicated in the obituary quoted below, then she is deserving of serious consideration, and high regard.

(p. 23) In Chicago, she had met Michael Polanyi, a distinguished physical chemist turned philosopher; she ended up helping him research and develop his important book "Personal Knowledge" (1958). The book proposed a far more nuanced, personal idea of knowledge, and directly addressed approaches to science.

"There is hardly a page that has not benefited from her criticism," Dr. Polanyi wrote in his acknowledgments. "She has a share in anything I may have achieved here."

. . .

Her sense of humor sparkled when she was asked about being the first woman to have an edition of the Library of Living Philosophers devoted to her -- Volume 29 in 2002. Previous honorees included Bertrand Russell and Einstein. "I thought they must be looking desperately for a woman," Dr. Grene said.

For the full obituary, see:

DOUGLAS MARTIN. "Marjorie Grene, a Leading Philosopher of Biology, Is Dead at 98." The New York Times, First Section (Sun., March 29, 2009): 23.

(Note: ellipsis added.)

The reference for the Polanyi book, is:

Polanyi, Michael. Personal Knowledge: Towards a Post-Critical Philosophy. Chicago: University Of Chicago Press, 1958.

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(p. 305) Entrepreneurs seek money chiefly for positive reasons: to perform their central role in economic growth. Just as a sociologist needs free time and access to libraries and research aides, and a scientist needs a laboratory and assistants, and a doctor needs power to prescribe medicine and perform surgery--just as intellectuals need freedom to write and publish--capitalists need economic freedom and access to capital to perform their role in launching and financing enterprise. Entrepreneurs must be allowed to retain the wealth they create because only they, collec- (p. 306) tively, can possibly know who to give it to--how to invest it productively among the millions of existing businesses and the innumerable visions of new enterprise in the world economy.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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(p. 236) What redeemed the life of a rice farmer, however, was the nature of that work. It was a lot like the garment work done by the Jewish immigrants to New York. It was meaningful. First of all, there is a clear relationship in rice farming between effort and reward. The harder you work a rice field, the more it yields. Second, it's complex work. The rice farmer isn't simply planting in the spring and harvesting in the fall. He or she effectively runs a small business, juggling a family workforce, hedging uncertainty through seed selection, building and managing a sophisticated irrigation system, and coordinating the complicated process of harvesting the first crop while simultaneously preparing the second crop.

And, most of all, it's autonomous. The peasants of Europe worked essentially as low-paid slaves of an aristocratic landlord, with little control over their own destinies. But China and Japan never developed that kind of oppressive feudal system, because feudalism simply can't work in a rice economy. Growing rice is too complicated and intricate for a system that requires farmers to be coerced and bullied into going out into the fields each morning. By the fourteenth and fifteenth centuries, landlords in central and Southern China had an almost completely hands-off relationship with their tenants: they would collect a fixed rent and let farmers go about their business.

"The thing about wet-rice farming is, not only do you (p. 237) need phenomenal amounts of labor, but it's very exacting," says the historian Kenneth Pomerantz. "You have to care. It really matters that the field is perfectly leveled before you flood it. Getting it close to level but not quite right makes a big difference in terms of your yield. It really matters that the water is in the fields for just the right amount of time. There's a big difference between lining up the seedlings at exactly the right distance and doing it sloppily. It's not like you put the corn in the ground in mid-March and as long as rain comes by the end of the month, you're okay. You're controlling all the inputs in a very direct way. And when you have something that requires that much care, the overlord has to have a system that gives the actual laborer some set of incentives, where if the harvest comes out well, the farmer gets a bigger share. That's why you get fixed rents, where the landlord says, I get twenty bushels, regardless of the harvest, and if it's really good, you get the extra. It's a crop that doesn't do very well with something like slavery or wage labor. It would just be too easy to leave the gate that controls the irrigation water open a few seconds too long and there goes your field."

Source:

Gladwell, Malcolm. Outliers: The Story of Success. New York, NY: Little, Brown, and Co., 2008.

(Note: italics in original.)

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(p. 149) When Borgenicht came home at night to his children, he may have been tired and poor and overwhelmed, but he was alive. He was his own boss. He was responsible for his own decisions and direction. His work was complex: it engaged his mind and imagination. And in his work, there was a relationship between effort and reward: the longer he and Regina stayed up at night sewing aprons, the more money they made the next day on the streets.

Those three things -- autonomy, complexity, and a connection between effort and reward--are, most people agree, the three qualities that work has to have if it is to be satisfying. It is not how much money we make (p. 150) that ultimately makes us happy between nine and five. It's whether our work fulfills us. If I offered you a choice between being an architect for $75,000 a year and working in a tollbooth every day for the rest of your life for $100,000 a year, which would you take? I'm guessing the former, because there is complexity, autonomy, and a relationship between effort and reward in doing creative work, and that's worth more to most of us than money.

Work that fulfills those three criteria is meaningful. Being a teacher is meaningful. Being a physician is meaningful. So is being an entrepreneur, and the miracle of the garment industry--as cutthroat and grim as it was--was that it allowed people like the Borgenichts, just off the boat, to find something meaningful to do as well."" When Louis Borgenicht came home after first seeing that child's apron, he danced a jig. He hadn't sold anything yet. He was still penniless and desperate, and he knew that to make something of his idea was going to require years of backbreaking
labor. But he was ecstatic, because the prospect of those endless years of hard labor did not seem like a burden to him. Bill Gates had that same feeling when he first sat down at the keyboard at Lakeside. And the Beatles didn't recoil in horror when they were told they had to play eight hours a night, seven days a week. They jumped at the chance. Hard work is a prison sentence only if it does not have meaning. Once it does, it becomes the kind of thing that makes you grab your wife around the waist and dance a jig.

Source:

Gladwell, Malcolm. Outliers: The Story of Success. New York, NY: Little, Brown, and Co., 2008.

(Note: italics in original.)

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I am grateful to Matthew Pianetta for calling my attention to this wonderful quotation from the entrepreneurial Admiral Hyman G. Rickover:

(p. 239) "Efficiency isn't the objective, Dunford, effectiveness is. Don't confuse effectiveness with efficiency. I'm convinced that the only way to be effective, to make a difference in the real world, is to put ten times as much effort into everything as anyone else thinks is reasonable. It doesn't leave any time for golf or cocktails, but it gets things done."

Source:

Rickover as quoted in Rockwell, Theodore. The Rickover Effect: How One Man Made a Difference. Lincoln, NE: iUniverse, Inc., 2002.

(Note: paging of quote seems same in both 1992 and 2002 editions.)

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Schumpeter would have loved the passage quoted below---it is a wonderful example for his argument that capitalism mainly benefits ordinary people of modest means.

(p. 147) Listen to how Borgenicht describes his decision to expand beyond aprons:

From my study of the market I knew that only three men were making children's dresses in 1890. One was an East Side tailor near me, who made only to order, while the other two turned out an expensive product with which I had no desire at all to compete. I wanted to make "popular price" stuff--wash dresses, silks, and woolens. It was my goal to produce dresses that the great mass of the people could afford, dresses that would--from the business angle--sell equally well to both large and small, city and country stores. With Regina's help--she always had excellent taste, and judgment--I made up a line of samples. Displaying them to all my "old" customers and friends, I hammered home every point--my dresses would save mothers endless work, the materials and sewing were as good and probably better than anything that could be done at home, the price was right for quick disposal.

Source:

Gladwell, Malcolm. Outliers: The Story of Success. New York, NY: Little, Brown, and Co., 2008.

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"ROYAL SUBJECTS; Donna Farmer, with her children, applauds Disney's efforts." Source of photo and caption: online version of the NYT article quoted and cited below.

In Gary Becker's initially controversial doctoral dissertation, he argued that those who discriminate in the labor market pay a price for their prejudice: they end up paying higher wages, than do those employers are not prejudiced.

The bottom line is that the free market provides incentives for the encouragement of diversity and tolerance.

Similarly, Donna Farmer argues, in the passages below, that the marketplace provides the Disney company with incentives to have "The Princess and the Frog" appeal to black audiences.

(p. 1) "THE Princess and the Frog" does not open nationwide until December, but the buzz is already breathless: For the first time in Walt Disney animation history, the fairest of them all is black.

. . .

After viewing some photographs of merchandise tied to the movie, which is still unfinished, Black Voices, a Web site on AOL dedicated to African-American culture, faulted the prince's relatively light skin color. Prince Naveen hails from the fictional land of Maldonia and is voiced by a Brazilian actor; Disney says that he is not white.

"Disney obviously doesn't think a black man is worthy of the title of prince," Angela Bronner Helm wrote March 19 on the site. "His hair and features are decidedly non-black. This has left many in the community shaking (p. 8) their head in befuddlement and even rage."

Others see insensitivity in the locale.

"Disney should be ashamed," William Blackburn, a former columnist at The Charlotte Observer, told London's Daily Telegraph. "This princess story is set in New Orleans, the setting of one of the most devastating tragedies to beset a black community."

ALSO under scrutiny is Ray the firefly, performed by Jim Cummings (the voice of Winnie the Pooh and Yosemite Sam). Some people think Ray sounds too much like the stereotype of an uneducated Southerner in an early trailer.

Of course, armchair critics have also been complaining about the princess. Disney originally called her Maddy (short for Madeleine). Too much like Mammy and thus racist. A rumor surfaced on the Internet that an early script called for her to be a chambermaid to a white woman, a historically correct profession. Too much like slavery.

And wait: We finally get a black princess and she spends the majority of her time on screen as a frog?

. . .

Donna Farmer, a Los Angeles Web designer who is African-American and has two children, applauded Disney's efforts to add diversity.

"I don't know how important having a black princess is to little girls -- my daughter loves Ariel and I see nothing wrong with that -- but I think it's important to moms," she said.

"Who knows if Disney will get it right," she added. "They haven't always in the past, but the idea that Disney is not bending over backward to be sensitive is laughable. It wants to sell a whole lot of Tiana dolls and some Tiana paper plates and make people line up to see Tiana at Disney World."

For the full article, see:

BROOKS BARNES. "Her Prince Has Come. Critics, Too." The New York Times, SundayStyles Section (Sun., May 31, 2009): 1, 8-9.

(Note: ellipses added.)

The published version of Becker's doctoral dissertation is:

Becker, Gary S. The Economics of Discrimination. 2nd Rev ed, Economic Research Studies. Chicago: University of Chicago Press, 1971.

Movie still of Princess Tiana from Disney's "The Princess and the Frog" to be released in December 2009. Source of movie still: online version of the NYT article quoted and cited above.

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(p. 146) This was the second great advantage of the garment
industry. It wasn't just that it was growing by leaps and bounds. It was also explicitly entrepreneurial. Clothes weren't made in a single big factory. Instead, a number of established firms designed patterns and prepared the fabric, and then the complicated stitching and pressing and button attaching were all sent out to small contractors. And if a contractor got big enough, or ambitious enough, he started designing his own patterns and preparing his own fabric. By 1913, there were approximately (p. 147) sixteen thousand separate companies in New York City's garment business, many just like the Borgenichts' shop on Sheriff Street.

"The threshold for getting involved in the business was very low. It's basically a business built on the sewing machine, and sewing machines don't cost that much," says Daniel Soyer, a historian who has written widely on the garment industry. "So you didn't need a lot of capital. At the turn of the twentieth century, it was probably fifty dollars to buy a machine or two. All you had to do to be a contractor was to have a couple sewing machines, some irons, and a couple of workers. The profit margins were very low but you could make some money."

Source:

Gladwell, Malcolm. Outliers: The Story of Success. New York, NY: Little, Brown, and Co., 2008.

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(p. 109) Most of today's Fortune 500 were not there fifty years ago. All of the private sector's net new jobs in the United States during the past twenty years were added by companies not on the Fortune 1000 twenty years ago: two thirds of the net new jobs came from companies with fewer than twenty employees twenty years ago. Ten years ago our automobile giants seemed invincible. Today we wonder whether more than one will survive.

In 1960, Theodore Levitt of Harvard wrote an article in the Harvard Business Review, "Marketing Myopia," in which he pointed out that every industry was once a growth industry. Perversely, a vicious cycle sets in. After experiencing continued growth for a while, managers in the industry come to believe that continuing growth is assured. They persuade themselves that there is no competitive substitute for their product, and develop too much faith in (p. 110) the benefits of mass production and the inevitable steady cost reduction that results as output rises. Managements become preoccupied with products that lend themselves to carefully controlled improvement and the benefits of manufacturing cost reduction. All of these forces combine to produce an inevitable stagnation or decline.

In Dynamic Economics, the economist Burton Klein puts forward a carefully researched and very similar view: "Assuming that an industry has already reached the stage of slow history, the advances will seldom come from the major firms in the industry. In fact, of some fifty inventions [fifty key twentieth-century breakthrough innovations that he studied] that resulted in new S-shaped curves [major new growth patterns] in relatively static industries, I could find no case in which the advance in question came from a major firm in the industry." George Gilder elaborates on Klein's work "The very process by which a firm becomes most productive in an industry tends to render it less flexible and inventive."

It appears that evolution is continuously at work in the marketplace; that adaptation is crucial; and that few big businesses, if any, pull it off. Many of our excellent companies most probably will not stay buoyant forever. We would merely argue that they've had a long run--a much longer and more successful run than most--and are coming much closer than the rest to maintaining adaptability and size at the same time.

Source:

Peters, Thomas J., and Robert H. Waterman. In Search of Excellence: Lessons from America's Best-Run Companies. New York: HarperCollins, 2004.

(Note: italics and brackets in original.)

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I believe the following paragraph expresses the central message of Steven Johnson's book The Invention of Air:

(p. 211) In the popular folklore of American History, there is a sense in which the founders' various achievements in natural philosophy---Franklin's electrical experiments, Jefferson's botany---serve as a (p. 212) kind of sanctified extracurricular activity. They were statesmen and political visionaries who just happened to be hobbyists in science, albeit amazingly successful ones. Their great passions were liberty and freedom and democracy; the experiments were a side project. But the Priestley view