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Chamber of Commerce President Tom Donohoe. Source of caricature: online version of the WSJ article quoted and cited below.

(p. A13) The White House's war on the Chamber has come just as the group is launching a new $100 million campaign promoting free enterprise.

"We want to encourage and promote and educate and get a bunch of enthusiasm behind . . . the free enterprise system with free capital markets and free trade and the ability to fail and fall right on your ass and get up and do it again!" he says.

The belief in that system, Mr. Donohue says, has been eroded by the recession and subsequent criticism of the free market. "The purpose of this is to get out of the doldrums! Quit sulking and worrying." He hopes the campaign will remind Americans that "We created 20 million jobs in the '90s, we can do it again. We don't have to do it exactly like that--Adam Smith didn't have a BlackBerry--but we ought to pay attention to what made it work."

For the full interview, see:

KIMBERLEY A. STRASSEL. "OPINION: THE WEEKEND INTERVIEW with Tom Donohue; Business Fights Back; His organization under attack by the White House, the president of the Chamber of Commerce stands by his defense of free enterprise." The Wall Street Journal (Sat., October 24, 2009): A13.

(Note: the online version of the article has the date October 23, 2009.)

(Note: ellipsis in original.)

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"A member of the National Guard stands guard during a inspection of prices at a store in La Guaira outside Caracas Jan. 12." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A8) CARACAS -- President Hugo Chávez's decision to devalue Venezuela's currency in order to shore up government finances could backfire on the populist leader if the move leads to substantially higher prices and extends an economic downturn.

Just days after Mr. Chávez cut the value of the "strong bolivar" currency, some businesses were marking up prices. Shoppers jammed stores to stock up on goods before the increases took hold.

Amelia Soto, a 52-year-old housewife waited in line at a Caracas drugstore to buy 23 tubes of toothpaste. "Everywhere I hear that prices are going to skyrocket so I want to buy as much as I can now," she said.

Airlines have doubled fares; government officials said they were looking into reports that large retail chains were also increasing prices.

. . .

The price increases are setting the stage for confrontations with authorities following Mr. Chávez's orders to shut down retailers that raise prices.

. . .

The higher prices for consumer goods represent a huge liability for a country facing 27% inflation, one of the highest levels in the world.

For the full story, see:

DARCY CROWE and DAN MOLINSKI. "Prices in Venezuela Surge After Devaluation." The Wall Street Journal (Weds., JANUARY 13, 2010): A8.

(Note: the online version of the article has the title "Venezuelans Rush to Shop as Stores Increase Prices.")

(Note: ellipses added.)

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Source of the table: online version of the NYT article quoted and cited below.

(p. B1) Call it the mystery of the European sugar triangle.

It began when Belgian customs officials examined shipping records for dozens of giant tanker trucks that outlined an odd, triangular journey across Europe. The trucks, each carrying 22 tons of liquid sugar, swung through eight nations and covered a driving distance of roughly 2,500 miles from a Belgian sugar refinery to Croatia and back -- instead of taking the most direct, 900-mile route.

Along the way the trucks made a brief stop in Kaliningrad, a grim and bustling Russian border checkpoint on the Baltic Sea.

Suddenly the sugar triangle made sense to them. Because Russia, and not Croatia, was listed as the intended destination, the shipments qualified for valuable special payments known as export rebates from the European Union's farm subsidy program.

Some 200 shipments roared along this route over a three-year-period, investigators say, earning 3 million euros in refunds (about $4.5 million) for the Belgian sugar maker Beneo-Orafti. In the spring, dozens of Belgian and European investigators raided the company's offices, freezing half of its refunds and initiating an investigation that could cost the company the remaining 1.5 million euros, and possibly more.

In the sprawling European subsidy program -- which lavishes more than 50 billion euros ($75 billion at current exchange rates) a year in agricultural aid -- no commodity is more susceptible to fraud, chicanery and rule-bending, experts say, than simple household sugar.

(p. B4) Across Europe there are some 2.5 million acres of beet fields that will produce 16.7 million metric tons of sugar this year for an industry worth 7 billion euros. Last year the European Union spent 475 million euros in price supports for sugar, including export subsidies. Then it spent another 1.3 billion euros on restructuring aid to reform a subsidy regime so lavish that it even prompted cold-weather Finland to start producing more sugar.

Sugar producers across the Continent cashed in -- from Italy, where Italia Zuccheri collected more than 139 million euros, to France, where a handful of sugar producers received 128.5 million.

With this much money at stake, critics and some analysts say, the sugar subsidy system is like a cookie jar waiting to be pilfered.

. . .

"There's a whole world of commercial fraud, which goes under the radar for most people," said James Byrne, a law professor at the George Mason University School of Law in Virginia who has studied the global sugar trade. "It is a parallel universe that mimics the real world of commerce and finance."

For the full story, see:

STEPHEN CASTLE and DOREEN CARVAJAL. "Subsidies Spur Fraud In European Sugar." The New York Times (Tues., October 27, 2009): B1 & B4.

(Note: the online version of the article has the title "Fraud Plagues Sugar Subsidy System in Europe" and has the date October 26, 2009. The online version reverses the order of the authors' names, and differs significantly in the first several paragraphs, mainly stylistically, but also somewhat in substance. The version quoted here is the online version.)

(Note: ellipsis added.)

Source of both the map and the table: online version of the NYT article quoted and cited above.

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

(p. A17) The United States is losing ground to its major competitors in the global marketplace, according to the 2010 Index of Economic Freedom released today by the Heritage Foundation and The Wall Street Journal. This year, of the world's 20 largest economies, the U.S. suffered the largest drop in overall economic freedom. Its score declined to 78 from 80.7 on the 0 to 100 Index scale.

The U.S. lost ground on many fronts. Scores declined in seven of the 10 categories of economic freedom. Losses were particularly significant in the areas of financial and monetary freedom and property rights. Driving it all were the federal government's interventionist responses to the financial and economic crises of the last two years, which have included politically influenced regulatory changes, protectionist trade restrictions, massive stimulus spending and bailouts of financial and automotive firms deemed "too big to fail." These policies have resulted in job losses, discouraged entrepreneurship, and saddled America with unprecedented government deficits.

. . .

The abiding lesson of the last few years is that the battle for liberty requires perpetual vigilance. President Obama professes desire to foster prosperity, environmental protection, poverty reduction and better health care. How ironic, then, that his economic proposals so consistently ignore or even undermine the one system--free enterprise capitalism--that has proven best able to achieve those goals.

Now America's once high-flying economy is barely crawling forward. Americans deserve better, and they can do better--as soon as they reverse course and start regaining the economic freedom that made America the most prosperous country in the world.

For the full story, see:

TERRY MILLER. "The U.S. Isn't as Free as It Used to Be; Canada now boasts North America's freest economy." The Wall Street Journal (Weds., JANUARY 20, 2010): A17.

(Note: the online version of the article is dated JANUARY 19, 2010.)

(Note: ellipsis added.)

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"In Venezuela, which faces power shortages, blackouts have spurred protests like this demonstration in Caracas." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A11) CARACAS -- Venezuela, a country with vast reserves of oil and natural gas, as well as massive rushing waterways that cut through its immense rain forests, strangely finds itself teetering on the verge of an energy crisis.

. . .

The government has forced draconian electricity rationing on certain sectors, which could make matters worse for an economy already racked by recession. Critics say the socialist government is trying to snuff out capitalist-driven sectors with the rationing, while allowing government-favored industries in good standing to continue with business as usual.

Shopping malls, which analysts say use less than 1% of the power consumed in Venezuela, have nonetheless been a main focus for the government.

Malls have been told most stores can only be open between 11 a.m. and 9 p.m.

"In a certain way, Chávez is attacking capitalism with the orders on shopping malls," said Emilio Grateron, mayor of Caracas's Chacao municipality, a bastion of those opposed to Mr. Chávez. "By limiting the hours we can go to malls, he is trying to slowly take away liberties, to create absolute control over things such as shopping."

In Venezuela, whose capital Caracas is consistently ranked among the world's most dangerous cities, residents see shopping malls as one of few havens in the country.

The government's rationing efforts are also hitting metal producers. Their production has already been cut as much as 40%. Mr. Rodriguez, the electricity minister, said they may have to be completely closed to save more electricity.

For the full story, see:

DAN MOLINSKI. "Energy-Rich Venezuela Faces Power Crisis." The Wall Street Journal (Fri., JANUARY 8, 2009): A11.

(Note: ellipsis added.)

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"In this Nov. 25, 1989, file photo a Czech demonstrator overcome by emotion after hearing about the resignation of the Central Committee of the Communist Party in Prague." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A16) . . . Mirek Kodym, 56, a ponytailed former security guard who published illegal political and literary tracts before 1989 and marched on Tuesday as he had 20 years ago, said the Velvet Revolution had been a seminal moment in which a beleaguered nation had finally tasted freedom.

"Today you can be what you want to be and do what you want to do, and no one will interfere," he said. "The nostalgia for the past is a stupid thing."

For the full story, see:

DAN BILEFSKY. "Celebrating Revolution With Roots in a Rumor." The New York Times (Weds., November 18, 2009): A16.

(Note: the online version of the article is dated November 17, 2009.)

(Note: ellipsis added.)

"The former Czech Republic's president Vaclav Havel, background center, with a red scarf, placed a candle at a commemoration of the so-called Velvet Revolution, in Prague on Tuesday." Source of caption and photo: online version of the NYT article quoted and cited above.

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"Josef Janicek, 61, was on the keyboard for a concert in Prague last week by the band Plastic People of the Universe." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A10) PRAGUE -- It has been called the Velvet Revolution, a revolution so velvety that not a single bullet was fired.

But the largely peaceful overthrow of four decades of Communism in Czechoslovakia that kicked off on Nov. 17, 1989, can also be linked decades earlier to a Velvet Underground-inspired rock band called the Plastic People of the Universe. Band members donned satin togas, painted their faces with lurid colors and wrote wild, sometimes angry, incendiary songs.

It was their refusal to cut their long, dank hair; their willingness to brave prison cells rather than alter their darkly subversive lyrics ("peace, peace, peace, just like toilet paper!"); and their talent for tapping into a generation's collective despair that helped change the future direction of a nation.

"We were unwilling heroes who just wanted to play rock 'n' roll," said Josef Janicek, 61, the band's doughy-faced keyboard player, who bears a striking resemblance to John Lennon and still sports the grungy look that once helped get him arrested. "The Bolsheviks understood that culture and music has a strong influence on people, and our refusal to compromise drove them insane."

. . .

In 1970, the Communist government revoked the license for the Plastics to perform in public, forcing the band to go underground. In February 1976, the Plastic People organized a music festival in the small town of Bojanovice -- dubbed "Magor's Wedding" -- featuring 13 other bands. One month later, the police set out to silence the musical rebels, arresting dozens. Mr. Janicek was jailed for six months; Mr. Jirous and other band members got longer sentences.

Mr. Havel, already a leading dissident, was irate. The trial of the Plastic People that soon followed became a cause célèbre.

Looking back on the Velvet Revolution they helped inspire, however indirectly, Mr. Janicek recalled that on Nov. 17, 1989, the day of mass demonstrations, he was in a pub nursing a beer. He argued that the revolution had been an evolution, fomented by the loosening of Communism's grip under Mikhail Gorbachev and the overwhelming frustration of ordinary people with their grim, everyday lives. "The Bolsheviks knew the game was up," he said, "when the sons of the Communists themselves wanted to become capitalists and entrepreneurs."

For the full story, see:

DAN BILEFSKY. "Czechs' Velvet Revolution Paved by Plastic People." The New York Times (Mon., November 16, 2009): A10.

(Note: the online version of the article is dated November 15, 2009.)

(Note: ellipsis added.)

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"Tests of jars found in the ruins of Chaco Canyon in New Mexico confirmed the presence of theobromine, a cacao marker." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A14) ALBUQUERQUE -- For years Patricia Crown puzzled over the cylindrical clay jars found in the ruins at Chaco Canyon, the great complex of multistory masonry dwellings set amid the arid mesas of northwestern New Mexico. They were utterly unlike other pots and pitchers she had seen.

Some scholars believed that Chaco's inhabitants, ancestors of the modern Pueblo people of the Southwest, had stretched skins across the cylinders and used them for drums, while others thought they held sacred objects.

But the answer is simpler, though no less intriguing, Ms. Crown asserts in a paper published Tuesday in The Proceedings of the National Academy of Sciences: the jars were used for drinking liquid chocolate. Her findings offer the first proof of chocolate use in North America north of the Mexican border.

How did the ancient Pueblos come to have cacao beans in the desert, more than 1,200 miles from the nearest cacao trees? Ms. Crown, a University of New Mexico anthropologist, noted that maize, beans and corn spread to the Southwest after being domesticated in southern Mexico. Earlier excavations at Pueblo Bonito, the largest structure in the Chaco complex, had found scarlet macaws and other imported items.

For the full story, see:

MICHAEL HAEDERLE. "Mystery of Ancient Pueblo Jars Is Solved." The New York Times (Weds., February 4, 2009): A14.

(Note: the online version is dated Tues., Feb. 3rd.)

"Researchers believe ancient Pueblos used the jars to drink chocolate." Source of caption and photo: online version of the NYT article quoted and cited above.

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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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"Wu Jinglian helped to create China's market economy, and now he is defending it against conservative hardliners in the Communist Party." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) AT 79, Wu Jinglian is considered China's most famous economist.

In the 1980s and '90s, he was an adviser to China's leaders, including Deng Xiaoping. He helped push through some of this country's earliest market reforms, paving the way for China's spectacular rise and earning him the nickname "Market Wu."

Last year, China's state-controlled media slapped him with a new moniker: spy.

Mr. Wu has not been interrogated, charged or imprisoned. But the fact that a state newspaper, The People's Daily, among others, was allowed to publish Internet rumors alleging that he had been detained on suspicions of being a spy for the United States hints that he is annoying some very important people in the government.

He denied the allegations, and soon after they were published, China's cabinet denied that an investigation was under way.

But in a country that often jails critics, Mr. Wu seems to be testing the limits of what Beijing deems permissible. While many economists argue that China's growth model is flawed, rarely does a prominent Chinese figure, in the government or out, speak with such candor about flaws he sees in China's leadership.

Mr. Wu -- who still holds a research post at an institute affiliated with the State Council, China's cabinet -- has white hair and an amiable face, and he appears frail. But his assessments are often harsh. In books, speeches, interviews and television appearances, he warns that conservative hardliners in the Communist Party have gained influence in the government and are trying to dismantle the market reforms he helped formulate.

He complains that business tycoons and corrupt officials have hijacked the economy and manipulated it for their own ends, a system he calls crony capitalism. He has even called on Beijing to establish a British-style democracy, arguing that political reform is inevitable.

Provocative statements have made him a kind of dissident economist here, and revealed the sharp debates behind the scenes, at the highest levels of the Communist Party, about the direction of China's half-market, half-socialist economy.

In many ways, it is a continuation of the debate that has been raging for three decades: What role should the government play in China's hybrid economy?

Mr. Wu says the spy rumors were "dirty tricks" employed by his critics to discredit him.

"I have two enemies," he said in a recent interview. "The crony capitalists and the Maoists. They will use any means to attack me."

. . .

(p. 7) In interviews, Mr. Wu says he feels compelled to speak out because conservatives and "old-style Maoists" have been gaining influence in the government since 2004. These groups, he said, are pressing for a return to central planning and placing blame for corruption and social inequality on the very market reforms he championed.

At the same time, Mr. Wu says, corrupt bureaucrats are pushing for the state to take a larger economic role so they can cash in on their positions through payoffs and bribes, as well as by steering business to allies.

"I'm not optimistic about the future," Mr. Wu said. "The Maoists want to go back to central planning and the cronies want to get richer."

For the full story, see:

DAVID BARBOZA. "China's Mr. Wu Keeps Talking." The New York Times, SundayBusiness Section (Sun., September 26, 2009): 1 & 7.

(Note: ellipsis added.)

Source of timeline graphic: online version of the NYT article quoted and cited above.

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"A man walks past a tire store in Beijing on Sunday. A new U.S. tariff on Chinese tires could lead to shortages in the lower-cost-tire market segment as retailers scramble to find alternative sources in other countries." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A3) Consumers who buy low-price Chinese tires -- the bulk of the tires China exports to the U.S. -- will be hit hardest by the new tariff, as shortages in this market segment cause retailers to scramble to find alternative sources in other countries.

The tariffs, which apply to all Chinese tires, will cut off much of the flow of the more than 46 million Chinese tires that came to the U.S. last year, nearly 17% of all tires sold in the country.

The low end of the market will feel the impact of the tariff most, as U.S. manufacturers, who joined the Chinese in opposing the tariffs, have said it isn't profitable to produce inexpensive tires in domestic plants.

"I think within the next 60 days you'll see some pretty significant price increases," said Jim Mayfield, president of Del-Nat Tire Corp. of Memphis, Tenn., a large importer and distributor of Chinese tires. He estimates prices for "entry-level" tires could increase 20% to 30%.

For the full story, see:

TIMOTHY AEPPEL. "Tariff on Tires to Cost Consumers; Higher Prices Expected at Market's Low End, Where China Focuses Its Exports." The Wall Street Journal (Mon., SEPTEMBER 14, 2009): A3.

(Note: the online version of the article has the date Tues., Sept. 15.)

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The small dark blue squares indicate the "number of nations that have imposed protectionist measures on each country" and the light blue squares indicate the "number of measures imposed on each category of goods." Source of quotations in caption and of graph: online version of the WSJ article quoted and cited below.

(p. A5) BRUSSELS -- This weekend's U.S.-China trade skirmish is just the tip of a coming protectionist iceberg, according to a report released Monday by Global Trade Alert, a team of trade analysts backed by independent think tanks, the World Bank and the U.K. government.

A report by the World Trade Organization, backed by its 153 members and also released Monday, found "slippage" in promises to abstain from protectionism, but drew less dramatic conclusions.

Governments have planned 130 protectionist measures that have yet to be implemented, according to the GTA's research. These include state aid funds, higher tariffs, immigration restrictions and export subsidies.

. . .

According to the GTA report, the number of discriminatory trade laws outnumbers liberalizing trade laws by six to one. Governments are applying protectionist measures at the rate of 60 per quarter. More than 90% of goods traded in the world have been affected by some sort of protectionist measure.

For the full story, see:

JOHN W. MILLER. "Protectionist Measures Expected to Rise, Report Warns." The Wall Street Journal (Tues., SEPTEMBER 15, 2009): A5.

(Note: ellipsis added.)

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(p. A19) In "A Journey to the Western Islands of Scotland," an account of his travels with James Boswell through the Hebrides in 1773, Johnson vividly described the desolation of a feudal land, untouched by commercial exuberance. He was struck by the utter hopelessness in a country where money was largely unknown, and the lack of basic material improvements--the windows, he noticed, did not operate on hinges, but had to be held up by hand, making the houses unbearably stuffy.

He was even more struck by the contrast between places where markets thrived and those where they didn't. In Old Aberdeen, where "commerce was yet unstudied," Johnson found nothing but decay, whereas New Aberdeen, which "has all the bustle of prosperous trade," was beautiful, opulent, and promised to be "very lasting."

Johnson also understood that what Smith would later call the division of labor was instrumental for human happiness and progress. "The Adventurer 67," which he wrote in 1753 at the height of a commercial boom (and 23 years before Smith published "The Wealth of Nations"), delights in the sheer number of occupations available in a commercial capital like London.

For the full commentary, see:

ELIZA GRAY. "Samuel Johnson and the Virtue of Capitalism; The great 18th century writer on commerce and human happiness." The Wall Street Journal (Fri., Sept. 11, 2009): A19.

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"Print of New Amsterdam by Joost Hartgers, 1626." Source of caption and image: online version of the WSJ article quoted and cited below.

(p. A15) The financial collapse of 2008 and the Great Recession have had, not surprisingly, a major adverse impact on the economy of the country's financial center, New York City. There have been over 40,000 job losses in the financial community alone and both city and state budgets are deeply dependent on tax revenues from this one industry. There has been much talk that New York might take years to recover--if, indeed, it ever can.

But if one looks at the history of New York there is reason for much optimism. The city's whole raison d'être since its earliest days explains why.

The Puritans in New England, the Quakers in Pennsylvania, and the Catholics in Maryland first and foremost came to what would be the United States to find the freedom to worship God as they saw fit. The Dutch--who invented many aspects of modern capitalism and became immensely rich in the process--came to Manhattan to make money. And they didn't much care who else came to do the same. Indeed, they were so busy trading beaver pelts they didn't even get around to building a church for 17 years.

Twenty years after the Dutch arrived, the settlement at the end of Manhattan had only about a thousand inhabitants. But it was already so cosmopolitan that a French priest heard no fewer than 18 languages being spoken on its streets.

. . .

Deep within the heart of this vast metropolis--like the child within the adult--there is still to be found that little hustly-bustly, live-and-let-live, let's-make-a-deal Dutch village. And the creation of wealth is still the city's dearest love.

For the full commentary, see:

JOHN STEELE GORDON. "Opinion; Don't Bet Against New York; The financial crisis has been devastating, but the city has reinvented itself many times before.." The Wall Street Journal (Sat., Sept. 19, 2009): A15.

(Note: ellipsis added.)

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(p. 45) The most compelling evidence that freedom promotes happiness comes from the fact that migration is almost always toward more freedom.

Source:

Lee, Dwight R. "Happiness and Liberty." Intercollegiate Review 42, no. 2 (Fall 2007): 41-48.

(Note: italics in original.)

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"A nurse practitioner with a patient at a retail clinic in Wilmington, Del." Source of caption and photo: online version of the WSJ article quoted and cited below.

Clayton Christensen, in a chapter of Seeing What's Next, and at greater length in The Innovator's Prescription, has persuasively advocated the evolution of nurse practitioners and retail health clinics as disruptive innovations that have the potential to improve the quality and reduce the costs of health care.

An obstacle to the realization of Christensen's vision would be government regulation demanded by health care incumbents who would rather not have to compete with nurse practitioners and retail health clinics. See below for more:

(p. B1) Retail health clinics are adding treatments for chronic diseases such as asthma to their repertoire, hoping to find steadier revenue, but putting the clinics into greater competition with doctors' groups and hospitals.

Walgreen Co.'s Take Care retail clinic recently started a pilot program in Tampa and Orlando offering injected and infused drugs for asthma and osteoporosis to Medicare patients. At some MinuteClinics run by CVS Caremark Corp., nurse practitioners now counsel teenagers about acne, recommend over-the-counter products and sometimes prescribe antibiotics.

. . .

As part of their efforts to halt losses at the clinics, the chains are lobbying for more insurance coverage, and angling for a place in pending health-care reform legislation, while trying to temper calls for regulations.

. . .

(p. B2) But such moves are raising the ire of physicians' groups that see the in-store clinics as inappropriate venues for treating complex illnesses. In May, the Massachusetts Medical Society urged its members to press insurance companies on co-payments to eliminate any financial incentive to use retail clinics.

. . .

The clinics are helping alter the practice of medicine. Doctors are expanding office hours to evenings and weekends. Hospitals are opening more urgent-care centers to treat relatively minor health problems.

For the full story, see:

AMY MERRICK. "Retail Health Clinics Move to Treat Complex Illnesses, Rankling Doctors." The Wall Street Journal (Thurs., SEPTEMBER 10, 2009): B1-B2.

(Note: ellipses added.)

A brief commentary by Christensen (and Hwang) on these issues, can be found at:

CLAYTON CHRISTENSEN and JASON HWANG. "How CEOs Can Help Fix Health Care." The New York Times (Tues., July 28, 2009).

For the full account, see:

Christensen, Clayton M., Jerome H. Grossman, and Jason Hwang. The Innovator's Prescription: A Disruptive Solution for Health Care. New York: NY: McGraw-Hill, 2008.

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

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As an economics graduate student at Harvard, David Rockefeller was a student of Joseph Schumpeter.

After Schumpeter died, his wife spent the last few years of her life working to pull together the disorganized, but nearly completed, manuscript of Schumpeter's magnificent History of Economic Analysis. In her preface, Mrs. Schumpeter writes: "It seems appropriate at this point to acknowledge gratefully a gift from David Rockefeller and a grant from the Rockefeller Foundation which made possible much of the secretarial and editorial assistance outlined above." (p. x)

Below I quote a few passages from David Rockefeller's reaction to Obama's imposition of tariffs on Chinese automobile tires:

(p. A21) AS if he needed another policy concern to distract him from the health care debate, President Obama now finds himself embroiled in a quarrel with China over his imposition of a steep tariff on automobile tires from that country that is to take effect this week. The Chinese have responded by threatening to impose higher tariffs on American chicken. This may seem like a petty dispute, but the controversy could endanger the global economic recovery if the underlying issue -- the rise in protectionism --is not resolved quickly and forcefully. Perhaps Washington has justification for increasing tariffs in this particular case, but in general it sets a bad precedent.

President Obama should resist the desire to accommodate the forces of protectionism from unions, environmentalists and cable television pundits alike. Giving in to their demands may be politically astute, but it would send the wrong message to our trading partners and, more important, inflict damage on the already weakened American economy. Despite the recent rally in the stock market, the next two or three years could still be very painful.

I lived through the stock market crash of 1929 and the Great Depression that followed it, and I saw that there was no direct cause and effect relationship. Rather, there were specific governmental actions and equally important failures to act, often driven by political expediency, that brought on the Depression and determined its severity and longevity.

One critical mistake was America's retreat from international trade. This not only helped to turn the 1929 stock market decline into a depression, it also chipped away at trust between nations, paving the way for World War II.

For the full commentary, see:

DAVID ROCKEFELLER. "Present at the Trade Wars." The New York Times (Mon., September 21, 2009): A21.

(Note: the online version of the commentary is dated Sun., Sept. 20.)

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Baron Karl-Theodor Maria Nikolaus Johann Jakob Philipp Franz Joseph Sylvester Freiherr von und zu Guttenberg. Source of name and photo: online version of the NYT article quoted and cited below.

(p. A7) BERLIN -- Could the heir apparent to Chancellor Angela Merkel be a wealthy, handsome 37-year-old baron who loves rock 'n' roll?

The baron, Karl-Theodor zu Guttenberg, vaulted to prominence this year when he took over the often dull job of economics minister in the midst of the financial crisis. His independent stand on a thorny economic matter earned him the respect of voters.

. . .

It was his independent streak that earned him the respect of voters, rather than just their curiosity. Mr. Guttenberg broke ranks with Mrs. Merkel over how to handle the troubled German automaker Opel. Mrs. Merkel supported a consortium led by Magna International, a Canadian auto parts maker, and Sberbank, a Russian bank. Mr. Guttenberg favored bankruptcy, and even offered to resign just months into his tenure.

He lost the battle, but gained credibility with voters -- an important commodity with a disenchanted electorate that has largely ignored the coming vote. At the big kickoff campaign rally in Düsseldorf for Mrs. Merkel's conservative Christian Democratic Union, Mr. Guttenberg was the only politician to receive a spontaneous ovation from the crowd of 9,000.

For the full story, see:

NICHOLAS KULISH and JUDY DEMPSEY. "Aristocrat's Rise Shakes German Doldrums." The New York Times (Weds., September 22, 2009): A7.

(Note: ellipsis added.)

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(p. A13) How do we get to a competitive market? The tax deduction for employer-provided group insurance, which has nearly destroyed the individual insurance market, is a central culprit. If we don't have the will to remove it, the deduction could be structured to enhance competition and the right to future insurance. We could restrict the tax deduction to individual, portable, long-term insurance and to the high-deductible plans that people choose with their own money.

More importantly, health care and insurance are overly protected and regulated businesses. We need to allow the same innovation, entry, and competition that has slashed costs elsewhere in our economy. For example, we need to remove regulations such as the ban on cross-state insurance. Think about it. What else aren't we allowed to purchase in another state?

For the full commentary, see:

JOHN H. COCHRANE . "What to Do About Pre-existing Conditions; Most Americans worry about health coverage if they lose their job and get sick. There is a market solution." The Wall Street Journal (Fri., AUGUST 14, 2009): A13.

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"Leonard Ligon, a farmer near Traverse City, Mich., stands in mounds of tart cherries that he had to dump because of a price-stabilization program. Mr. Ligon says he discarded 72,000 pounds of the crop." Source of photo and caption: online version of the WSJ article quoted and cited below.

(p. A5) Farmers in Michigan and six other states are harvesting a bumper crop of tart cherries. But the bounty is turning out to be the pits for farmers whose fruit is rotting in orchards instead of bubbling in cherry pies.

Under a Depression-era federal program designed to keep prices from plummeting, tart-cherry farmers are being told by fruit processors to leave up to 40% of their crop unharvested.

"It's kind of heartbreaking," said Rob Manigold, a tart-cherry farmer near Traverse City, Mich. Michigan grows about 75% of all the tart cherries in the U.S.

. . .

The tart-cherry industry operates under a government-sanctioned plan called a federal marketing order that dates to 1933. It allows farmers and processors to legally regulate supply to keep prices stable. Other commodities that operate under similar programs include some types of dates, olives and kiwifruit.

. . .

This year, the industry board, a 18-member panel of growers and processors, determined that there were more than enough cherries in the fields to satisfy demand and to replenish the reserves. So the board limited how much processors can put on the market in the U.S. That leaves farmers with cherries they can't sell and are left to rot.

Bern Kroupa, a 61-year-old fruit farmer outside Traverse City in Michigan's northern lower peninsula, said this year he is going to let about a quarter of his crop -- about 500,000 pounds -- rot.

. . .

Leonard Ligon, another tart-cherry grower near Traverse City, Mich., generated a lot of local press last week when he dumped 72,000 pounds of cherries alongside a country road on his farm. "I wanted to make the public aware of the plight of the tart-cherry farmer," he said. "I could call it a mulch pile."

For the full story, see:

LAUREN ETTER. "Bumper Cherry Crop Turns Sour; Tons of Unharvested Fruit Rots Under Government Program to Keep Prices Stable." The Wall Street Journal (Sat., AUGUST 22, 2009): A5.

(Note: ellipses added.)

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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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(p. 6) Founded in 1948 during the grim postwar era, the National Health Service is essential to Britain's identity. But Britons grouse about it, almost as a national sport. Among their complaints: it rations treatment; it forces people to wait for care; it favors the young over the old; its dental service is rudimentary at best; its hospitals are crawling with drug-resistant superbugs.

All these things are true, sometimes, up to a point.

. . .

Told my husband needed a sophisticated blood test from a particular doctor, I telephoned her office, only to be told there was a four-month wait.

"But I'm a private patient," I said.

"Then we can see you tomorrow," the secretary said.

And so it went. When it came time for my husband to undergo physical rehabilitation, I went to look at the facility offered by the N.H.S. The treatment was first rate, I was told, but the building was dismal: grim, dusty, hot, understaffed, housing 8 to 10 elderly men per ward. The food was inedible. The place reeked of desperation and despair.

Then I toured the other option, a private rehabilitation hospital with air-conditioned rooms, private bathrooms and cable televisions, a state-of-the-art gym, passably tasty food and cheery nurses who made a cup of cocoa for my husband every night before bed.

For the full commentary, see:

SARAH LYALL. "An Expat Goes for a Checkup." The New York Times, Week in Review Section (Sun., August 8, 2009): 1 & 6.

(Note: the online title is "Health Care in Britain: Expat Goes for a Checkup.")

(Note: ellipsis added.)

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(p. A6) The next program to test the effect of government funds comes this fall. Consumers who buy high-efficiency appliances such as refrigerators, washing machines and dishwasher can receive rebates of up to $200 on certain products; no trade-ins would be required. The $300 million program was included in the $787 billion stimulus law.

As with the clunkers program, it's unclear whether the rebate program will offer anything more than a short-term economic boost.

"The people who will most like likely respond to this are the people who need appliances, and they were probably going to buy appliances anyway," said Erik Hurst, an economist at the University of Chicago's Booth School of Business. "If all you've done is move that from tomorrow to today, then the economy is going to lag even more tomorrow."

For the full story, see:

SUDEEP REDDY. "Dealers Get More Time to File for Clunker Rebates." The Wall Street Journal (Weds., AUGUST 25, 2009): A6.

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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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Daniela Earnest at her lemonade stand (left) and in court (right). Source of photo: http://3.bp.blogspot.com/_GGAmzDRA_BY/SnvDbYoMpzI/AAAAAAAAHEg/W1BI2XK8DH4/s400/daniela%2Bearnest.jpg

(p. 5A) THE FRESNO BEE

TULARE, Calif. -- Eight­-year- old Daniela Earnest made lemonade out of lemons in more ways than one last week.

Hoping to raise money for a family trip to Disneyland, the Tulare girl opened a lemonade stand Monday. But she didn't have a business license, so the city shut it down that day.

. . .

Tulare officials said they could not recall ever shutting down a lemonade stand before, though such action is not uncommon. Authorities across the nation have done it.

. . .

Daniela found the situation "pretty weird" but said it hadn't soured her on reopening the lemonade stand.

For the full story, see:

The Fresno Bee. "City puts squeeze on pint-size purveyor of lemonade." Omaha World-Herald (Sun., Aug. 9, 2009): 5A.

(Note: ellipses added.)

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"John A. Allison IV, chairman of the banking company BB&T, is a devoted follower of Ayn Rand's antigovernment views." Source of photo and caption: online version of the NYT article quoted and cited below.

(p. 1) OVER much of the last four decades, John A. Allison IV built BB&T from a local bank in North Carolina into a regional powerhouse that has weathered the economic crisis far better than many of its troubled rivals -- largely by avoiding financial gimmickry.

And in his spare time, Mr. Allison travels the country making speeches about his bank's distinctive philosophy.

Speaking at a recent convention in Boston to a group of like-minded business people and students, Mr. Allison tells a story: A boy is playing in a sandbox, only to have his truck taken by another child. A fight ensues, and the boy's mother tells him to stop being selfish and to share.

"You learned in that sandbox at some really deep level that it's bad to be selfish," says Mr. Allison, adding that the mother has taught a horrible lesson. "To say man is bad because he is selfish is to say it's bad because he's alive."

If Mr. Allison's speech sounds vaguely familiar, it's because it's based on the philosophy of Ayn Rand, who celebrated the virtues of reason, self-interest and laissez-faire capitalism while maintaining that altruism is a destructive force. In Ms. Rand's world, nothing is more heroic -- and sexy -- than a hard-working businessman free to pursue his wealth. And nothing is worse than a pesky bureaucrat trying to restrict business and redistribute wealth.

Or, as Mr. Allison explained, "put balls and chains on good people, and bad things happen."

Ms. Rand, who died in 1982, has all sorts of admirers on Wall Street, in corporate boardrooms and in the entertainment industry, including the hedge fund manager Clifford Asness, the former baseball great Cal Ripken Jr. and the Whole Foods chief executive, John Mackey.

But Mr. Allison, who remains BB&T's chairman after retiring as chief executive in December, has emerged as perhaps the most vocal proponent of Ms. Rand's ideas and of the dangers of government meddling in the markets. For a dedicated Randian like him, the government's headlong rush to try to rescue and fix the economy is a horrifying re-(p. 6)alization of his worst fears.

For the full story, see:

ANDREW MARTIN. "Give Him Liberty, but Not a Bailout." The New York Times, SundayBusiness Section (Sun., August 2, 2009): 1 & 6.

(Note: the online title is the slightly different: "Give BB&T Liberty, but Not a Bailout.")

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Uncreative destruction. "Jose Luis Garcia pours sodium silicate into a junkyard car engine to render it inoperable at a lot in Sun Valley, Calif., on Tuesday. The process destroys the car's engine in a matter of minutes." Source of photo and part of caption: online version of the WSJ article quoted and cited below.

(p. A4) WASHINGTON -- Who doesn't like the government's "cash for clunkers" program? Your mechanic, for one.

Owners of automotive repair shops say the program to help invigorate sales of new cars is succeeding at their expense.

Bill Wiygul, whose family owns four repair shops in Virginia, said he has already had five or six customers decide against repairs. A man who sits on the board of Mr. Wiygul's bank traded in his car rather than repair it. "He'd been a customer at our Reston store since it opened," Mr. Wiygul said.

The clunkers program, formally known as the Car Allowance Rebate System, offers subsidies of as much as $4,500 to consumers who trade in older vehicles and buy new, more fuel-efficient models. The program was initially given $1 billion. That money was spent in one week.

The Senate reached a deal to extend the clunkers program Wednesday night, agreeing to vote on a measure Thursday that would add $2 billion to the program, the Associated Press reported.

The House approve a $2 billion extension last week.

For Mr. Wiygul and other mechanics, until now the recession has brought them more customers as people fixed cars rather than go into debt for new ones. He has hired five people and is expanding one of the shops.

Auto dealers who offer the rebates on new cars in exchange for clunkers must agree to "kill" the old models by disabling the engines and shipping the dead vehicle to a junkyard.

The loss of such potential work -- as many as 250,000 vehicles will be destroyed in the program's first round -- prompted Mr. Wiygul to question the federal program's focus on dealers and big business at the expense of the little guy.

"How do we get on the special interests, special treatment bandwagon? How much is it going to cost me and to whom shall I send the check?" he said. "Who picks the winners in this game 'cause obviously the game is fixed."

For the full commentary, see:

GARY FIELDS. "Clunkers Plan Deflates Mechanics." The Wall Street Journal (Thurs., AUGUST 6, 2009): A4.

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Thomas Szaz has been defending liberty for many decades. It is good to see him still eloquently at it:

(p. A13) If we persevere in our quixotic quest for a fetishized medical equality we will sacrifice personal freedom as its price. We will become the voluntary slaves of a "compassionate" government that will provide the same low quality health care to everyone.

For the full commentary, see:

THOMAS SZASZ. "Universal Health Care Isn't Worth Our Freedom." Wall Street Journal (Weds., JULY 15, 2009): A13.

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"After a state crackdown forbidding the sale of homemade pies, members of St. Cecilia Catholic Church in Rochester, Pa., proceeded with their annual Lenten fish fries anyway. The pie flap helped draw healthy crowds." Source of photos and caption: online version of the WSJ article quoted and cited below.

(p. A1) ROCHESTER, Pa. -- On the first Friday of Lent, an elderly female parishioner of St. Cecilia Catholic Church began unwrapping pies at the church. That's when the trouble started.

A state inspector, there for an annual checkup on the church's kitchen, spied the desserts. After it was determined that the pies were home-baked, the inspector decreed they couldn't be sold.

"Everyone was devastated," says Josie Reed, a 69-year-old former teacher known for her pumpkin and berry pies.

. . .

The disappearance of Mary Pratte's coconut-cream pie, Louise Humbert's raisin pie and (p. A10) Marge Murtha's "farm apple" pie from the fish-fry fund-raisers sparked an uproar that spread far beyond the small parish.

. . .

(p. A10) The ruckus at St. Cecilia's could lead to changes in Pennsylvania state law. State Sen. Elder Vogel Jr. has drafted legislation aimed at allowing nonprofits, including churches, to serve food prepared at home. That would cover fish fries held during Lent. "Once again, you've got the heavy hand of government coming in," he says. "These ladies bake pies, out of the goodness of their hearts."

Sen. Vogel, who sits on the state legislature's agriculture committee, says state officials seem willing to change the law. "They have more work on their hands than going after little old ladies baking pies."

The inspector's warning to St. Cecilia's carried no fine. But the inspector has raised some hackles by telling the women that the state would allow them to bake pies for sale in their own kitchens, if they paid $35 to have them inspected as well.

"Well, that's just ridiculous," says Ms. Humbert, 73, one of the parish bakers. She has been bringing raisin pies to the church for more than a decade and says she thought the women's kitchens "are probably a lot cleaner than some restaurants," but might not meet "nitpicky" requirements.

Ms. Pratte, 88, has been attending St. Cecilia's since she was a girl. She missed a step and spent two and a half weeks in the hospital earlier this year. She said it would be "kind of hard" to get to the church to do any baking. "I'd rather just make them at home," she says of her coconut-cream pies. Others say it's difficult to bake good pies in a strange oven.

Thanks to the publicity caused by the crackdown, the St. Cecilia's fish fries attracted more visitors than ever before.

For the full story, see:

KRIS MAHER. "Pennsylvania Pie Fight: State Cracks Down on Baked Goods; Inspector Nabs Homemade Desserts At St. Cecilia Church's Lenten Fish Fry." The Wall Street Journal (Fri., APRIL 10, 2009): A1 & A10.

(Note: ellipses added.)

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Gerald Gunderson. Source of photo: http://www.yorktownuniversity.com/faculty/gunderson.html

Gerald Gunderson, highlighted in the story quoted below, gave me some useful comments on my book project Openness to Creative Destruction at the April 2009 meetings of the Association of Private Enterprise Education.

Battles such as the one described below are easier to forgo than to fight. Gunderson has guts.

(p. A1) In one previously undisclosed fight, Trinity College in Connecticut is facing government scrutiny for its plan to spend part of a $9 million endowment from Wall Street investing legend Shelby Cullom Davis.

Trinity's Davis professor of business, Gerald Gunderson, says he believed the plan, which would have funded scholarships for international students, violated the wishes of the late Mr. Davis. He alerted the Connecticut attorney general's office. Then, Mr. Gunderson said in notes submitted to the agency, Trinity's president summoned him to the school's cavernous Gothic conference room, where he called the professor a "scoundrel" and threatened not to reappoint him.

Trinity said some of Mr. Davis's family approved of the plan but it is now coming up with a new one, and declined to discuss the meeting.

. . .

(p. A14) The clash over the Davis gift has simmered on Trinity's quiet campus of 2,200 students. Founded in 1823, the liberal-arts college has Episcopalian roots and Gothic architecture patterned after British universities.

In 1976, the school accepted a $750,000 gift from Mr. Davis, founder of a New York money-management firm who made a $900 million fortune investing in insurance stocks. Mr. Davis was a major benefactor to Wellesley College, Columbia University, Tufts University and his own alma mater, Princeton. But he had a personal connection to Trinity: His son-in-law was a graduate of the school and its campus overlooks downtown Hartford, an insurance hub.

In 1981, Trinity President Theodore D. Lockwood wrote to Mr. Davis that the fund, by then $1.6 million, was big enough to be tapped to create a Shelby Cullom Davis Professorship of American Business and Economic Enterprise. The letter listed several related activities, such as campus visits from business leaders. Mr. Lockwood also sought flexibility to use the money as the school saw fit "as conditions evolved and opportunities arose."

In a return letter, Mr. Davis approved the professorship and activities Mr. Lockwood specified. But he rejected any other leeway. "It is my wish that the funds and income from the Endowment be used for the various purposes you have described...and for no other purposes."

Trinity tapped Mr. Gunderson, an economic historian who shared Mr. Davis's conservative political philosophy, to be the Davis professor.

The Davis fund grew beyond the needs of meeting Mr. Gunderson's $155,000-a-year salary. By 2007, it reached $13.5 million, or 3% of Trinity's total endowment, and generated more than $500,000 a year in income. After recent market declines, the fund is now estimated at $9 million.

Mr. Gunderson, 68 years old, says he complained for years that the school was starving the program and had rejected his frequent requests to add another full-time professor and a business-executive-in-residence program. The letter from Mr. Lockwood provides for the creation of a single professorship, but it doesn't explicitly rule out adding another.

Mr. Gunderson says he suspects that liberal academics at Trinity have blocked these plans and have little interest in Mr. Davis's vision. Mr. Gunderson, who is treasurer of the free-market nonprofit Yankee Institute, says some professors opposed his position in the 1970s in an economics department whose courses often stressed the downside of capitalism.

. . .

Last April, Trinity's current president, James F. Jones Jr., sent Mr. Gunderson an email saying he had been looking for ways to use the "enormous" Davis fund to "benefit the College in ways different from merely watching the endowment continue to balloon because of the original strictures." Mr. Jones said he had approached some Davis family members about using the money for financial aid for foreign students through another program the family had helped fund.

Mr. Gunderson replied that the college had entered into a binding contract with Shelby Cullom Davis, not his family. "Simply wishing things were different or saying that someone thinks it is a good idea is not sufficient and will not stand a legal challenge," he wrote.

Following that exchange, Kathryn W. Davis, the donor's 102-year-old widow, signed a document endorsing the use of her husband's gift for the scholarships. But in an interview, she said the school hadn't explained the restrictions her husband had outlined in his 1981 letter to the school, and said the endowment "should be used as my husband wished."

The couple's son, Shelby M.C. Davis, and grandson, Christopher C. Davis, both successful money managers, signed off on the fund's use for scholarships.

Diana Davis Spencer, the donor's daughter, says she only recently heard about the plan from Mr. Gunderson and is angry that Trinity didn't contact her. Ms. Spencer, whose own philanthropy focuses on entrepreneurship, says her father would have opposed any change to the endowment's mission. The university is "morally incorrect" and its plan "undermines donors' confidence," she says.

Trinity's Mr. Joyce says the school believed key members of the family had been briefed.

After the April email exchange, Mr. Gunderson's lawyer contacted the Connecticut attorney general's office, which began its review. In the fall, Mr. Gunderson looked through financial data that the school had filed with the attorney general and noticed that about $200,000 of endowment money had been used to fund an internship program for college students over the past five years.

Mr. Gunderson says he was concerned in part because the school, facing a budget crunch, had tapped other restricted endowment money in 2004 but returned it after a faculty revolt. Trinity confirms this episode.

Mr. Joyce said Trinity this month reimbursed the Davis endowment for $191,337 spent on the internship program, though he said the original agreement still permits the school to spend a small amount annually on the initiative.

On Oct. 20, Mr. Jones, Trinity's president, called Mr. Gunderson to the conference-room meeting. According to the professor's notes, submitted to the attorney general, Mr. Jones called him "a liar and a bully," threatened not to reappoint him and told him not speak to any other administrators. The notes said the president insisted on approving future spending from the Davis fund "down to a box of paperclips."

Mr. Joyce, who said Mr. Jones wouldn't be available for comment, declined to discuss the meeting. Mr. Joyce says he would be "very surprised" if Mr. Gunderson's contract weren't renewed when it comes up in July 2010.

In a February letter, the attorney general's office told Trinity it could find no evidence that Mr. Davis intended the college or his family to have discretion to direct income from the endowment to purposes "other than the study and promotion of the economic theories of the free enterprise system."

Mr. Joyce says Trinity scuttled its scholarship plan. The school intends to submit a new proposal to the attorney general and the Davis family on how it would spend excess Davis funds.

The attorney general, Richard Blumenthal, says he will consider the proposal. But he cautioned that colleges, despite financial pressures, can't stray from donors' intent: "There's a vastly increasing temptation for schools to fill gaps or even launch new initiatives using money that was meant for another purpose."

For the full story, see:

JOHN HECHINGER. "New Unrest on Campus as Donors Rebel." Wall Street Journal (Thurs., April 23, 2009): A1 & A14.

(Note: ellipses added.)

Among Professor Gunderson's publications is:

Gunderson, Gerald A. Wealth Creators: An Entrepreneurial History of the United States. 1st ed. New York: E.P. Dutton, 1989.

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After Amazon's rebellion, summarized in the quote below, the Governor of Hawaii vetoed the tax, and Amazon has now invited its former affiliates to rejoin the program.

Lesson: sometimes entrepreneurial enterprise can fight the government, and win.

(p. B7) Amazon.com Inc. has informed its marketing affiliates in Hawaii that it is ending its business with them to avoid collecting sales tax in the state.

Lawmakers in Hawaii, following in the footsteps of North Carolina and Rhode Island, have passed legislation that would require companies to collect sales tax if they have marketing affiliates in the state. Affiliate marketers run blogs or Web sites and get a sales commission by featuring links to outside e-commerce sites.

For the full story, see:

GEOFFREY A. FOWLER. "Amazon Cuts Ties to Affiliates in Hawaii." Wall Street Journal (Weds., JULY 1, 2009): B7.

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

(p. A9) "What can we do that would be beneficial? [One thing] is lower corporate taxes and businesses taxes and maybe taxes in general. Particularly, you want to lower the tax on capital so you raise the after-tax return to investing and get more investing going on."

. . .

What Mr. Becker has seen over a career spanning more than five decades is that free markets are good for human progress. And at a time when increasing government intervention in the economy is all the rage, he insists that economic liberals must not withdraw from the debate simply because their cause, for now, appears quixotic.

As a young academic in 1956, Mr. Becker wrote an important paper against conscription. He was discouraged from publishing it because, at the time, the popular view was that the military draft could never be abolished. Of course it was, and looking back, he says, "that taught me a lesson." Today as Washington appears unstoppable in its quest for more power and lovers of liberty are accused of tilting at windmills, he says it is no time to concede.

For the full interview, see:

MARY ANASTASIA O'GRADY. "OPINION: THE WEEKEND INTERVIEW; Now Is No Time to Give Up on Markets." The Wall Street Journal (Sat., MARCH 21, 2009): A9.

(Note: ellipsis added.)

Gary Becker. Source of photo: http://larryevansphotography.com/Gary%20Becker_2.jpg

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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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"Milton Friedman, proud father of global prosperity." Source of photo and caption: online version of the WSJ commentary quoted and cited below.

(p. W13) With each passing week that the assault against global capitalism continues in Washington, I become more nostalgic for one missing voice: Milton Friedman's. No one could slice and dice the sophistry of government market interventions better than Milton, who died at the age of 94 in 2006. Imagine what the great economist would have to say about the U.S. Treasury owning and operating several car brands or managing the health-care industry. "Why not?" I can almost hear him ask cheerfully. "After all, they've done such a wonderful job delivering the mail."

. . .

I've been thinking a lot lately of one of my last conversations with Milton, who warned that "even though socialism is a discredited economic model and capitalism is raising living standards to new heights, the left intellectuals continue to push for bigger government everywhere I look." He predicted that people would be seduced by collectivist ideas again.

. . .

A few scholars are now properly celebrating the Friedman legacy. Andrei Shleifer, a Harvard economics professor, has just published a tribute to Friedman in the Journal of Economic Literature. He describes the period 1980-2005 as "The Age of Milton Friedman," an era that "witnessed remarkable progress of mankind. As the world embraced free market policies, living standards rose sharply while life expectancy, educational attainment, and democracy improved and absolute poverty declined."

For the full commentary, see:

Moore, Stephen. "Missing Milton: Who Will Speak for Free Markets?" The Wall Street Journal (Sat., May 29, 2009): W13.

(Note: ellipses added.)

The full reference to the article by Shleifer, is:

Shleifer, Andrei. "The Age of Milton Friedman." Journal of Economic Literature 47, no. 1 (March 2009): 123-35.

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Intel CEO Craig Barrett. Source of caricature: online version of the WSJ article quoted and cited below.

(p. A9) Craig Barrett is spending the last days of his tenure as Intel chairman the same way he spent his previous 35 years at the corporation: moving at a superhuman pace that leaves exhausted subordinates in his wake.

Mr. Barrett has maintained this lifestyle since he replaced Andrew Grove as CEO of Intel in 1998. "Was it hard to follow a legend?" he asks himself in his typical blunt way, adding, "What do you think?" Mr. Barrett barely broke pace when he became chairman in 2005, and shows no sign of slowing even now, at age 69, as he faces retirement.

. . .

The latest thing that has him animated is the record $1.45 billion antitrust fine levied against Intel by the European Union this week. Mr. Barrett shakes his head and says, "The antitrust rules and regulations seem designed for a different era. When you look at high-tech companies, with the high R&D budgets, specialization and market creation they need to hold their big market shares, it's so very different from the old world of oil companies and auto makers that the antitrust regulations were designed for. They are out of sync with reality.

"And how do you reconcile European regulators, who don't believe that any company should have more than 50% market share -- even a market that company created -- with the way we operate here? Of course, now it seems as if our Justice Department is preparing to march in lock-step behind Europe. In the end, all they are going to do is create barriers to companies growing, entering into new markets, and bringing new technologies into those markets. And when we stop being the land of opportunity, all of those smart immigrant kids getting their Ph.D.s here are going to start heading home after they graduate. Then watch what happens to our competitiveness."

For the full story, see:

MICHAEL S. MALONE. "OPINION: THE WEEKEND INTERVIEW with Craig Barrett; From Moore's Law to Barrett's Rules; Intel's chairman on antitrust silliness and the secrets of high-tech success." Wall Street Journal (Sat., MARCH 16, 2009): A9.

(Note: ellipsis added.)

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Source of photo: http://images.quickblogcast.com/82086-71861/pedicurex_large.jpg

(p. A1) Until Mr. Ho brought his skin-eating fish here from China last year, no salon in the U.S. had been publicly known to employ a live animal in the exfoliation of feet. The novelty factor was such that Mr. Ho became a minor celebrity. On "Good Morning America" in July, Diane Sawyer placed her feet in a tank supplied by Mr. Ho and compared the fish nibbles to "tiny little delicate kisses."

Since then, cosmetology regulators have taken a less flattering view, insisting fish pedicures are unsanitary. At least 14 states, including Texas and Florida, have outlawed them. Virginia doesn't see a problem. Ohio permitted fish pedicures after a review, and other states haven't yet made up their minds. The world of foot care, meanwhile, has been plunged into a piscine uproar. Salon owners who (p. A12) bought fish and tanks before the bans were imposed in their states are fuming.

The issue: cosmetology regulations generally mandate that tools need to be discarded or sanitized after each use. But epidermis-eating fish are too expensive to throw away. "And there's no way to sanitize them unless you bake them for 20 minutes at 350 degrees," says Lynda Elliott, an official with the New Hampshire Board of Barbering, Cosmetology and Esthetics. The board outlawed fish pedicures in November.

In Ohio, ophthalmologist Marilyn Huheey, who sits on the Ohio State Board of Cosmetology, decided to try it out for herself in a Columbus salon last fall. After watching the fish lazily munch on her skin, she recommended approval to the board. "It seemed to me it was very sanitary, not sterile of course," Dr. Huheey says. "Sanitation is what we've got to live with in this world, not sterility."

. . .

State bans have disrupted Mr. Ho's plans to build a nationwide franchise network. Currently, he has four active franchises, in Virginia, Delaware, Maryland and Missouri. But others have terminated franchise agreements. In Calhoun, Ga., Tran Lam, owner of Sky Nails, says she paid Mr. Ho $17,500 in exchange for fish and custom-made pedicure tanks. A few weeks later, in October, the Georgia Board of Cosmetology deemed fish pedicures illegal. "I'm very mad," says Ms. Lam. "I lost a lot of money and the economy is so bad."

For the full story, see:

JOHN SCHWARTZ. "Ban on Feet-Nibbling Fish Leaves Nail Salons on the Hook; Mr. Ho's Import From China Caught On, But Some State Pedicure Inspectors Object." Wall Street Journal (Mon., MARCH 23, 2009): A1 & A12.

(Note: ellipsis added.)

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(p. A11) I think there are two major but not fully formed or fully articulated fears among thinking Americans right now, and the deliberate obscurity of official language only intensifies those fears.

The first is that Mr. Obama's government, in all its flurry of activism, may kill the goose that laid the golden egg. This is as dreadful and obvious a cliché as they come, but too bad, it's what people fear. They see the spending plans and tax plans, the regulation and reform hunger, the energy proposals and health-care ambitions, and they--we--wonder if the men and women doing all this, working in their separate and discrete areas, are being overseen by anyone saying, "By the way, don't kill the goose."

The goose of course is the big, messy, spirited, inspiring, and sometimes in some respects damaging but on the whole brilliant and productive wealth-generator known as the free-market capitalist system. People do want things cleaned up and needed regulations instituted, and they don't mind at all if the very wealthy are more heavily taxed, but they greatly fear a goose killing. Economic freedom in all its chaos and disorder has kept us rich for 200 years, and allowed us as a nation to be generous and strong at home and in the world. But the goose can be killed--by carelessness, hostility, incrementalism, paralysis, and by no one saying, "Don't kill the goose."

For the full commentary, see:

PEGGY NOONAN. "What's Elevated, Health-Care Provider? Economy of language would be good for the economy." Wall Street Journal (Sat., MAY 15, 2009): A11.

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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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Source of graphic: online version of the NYT article quoted and cited below.

(p. A8) Taiwan, where for years the government encouraged information technology companies with tax breaks, cheap land, loans and more, is probably the most endangered of the small Asian economies. The result of that government largess is an economy extremely dependent on a single industrial sector that has been devastated by plunging worldwide sales of electronics. "Half of the industries just got a bad cold, they probably can recover quickly -- the other 50 percent, they've got, not cancer, but close," said Preston W. Chen, a chemicals tycoon who is also the chairman of Taiwan's Chinese National Federation of Industries.

For the full article, see:

KEITH BRADSHER. "Memo From Singapore - East Asia's Small Edens of Trade Wilt as Need for Exports Dries Up." The New York Times (Thurs., March 5, 2009): A8.

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John Steele Gordon, the author of the sagacious commentary below, has also written a wonderful book called A Thread Across the Atlantic, which tells the story of how entrepreneur Cyrus Field persevered in his attempts to lay telegraphic cable across the Atlantic Ocean.

(p. A17) The Obama administration is bent on becoming a major player in -- if not taking over entirely -- America's health-care, automobile and banking industries. Before that happens, it might be a good idea to look at the government's track record in running economic enterprises. It is terrible.

In 1913, for instance, thinking it was being overcharged by the steel companies for armor plate for warships, the federal government decided to build its own plant. It estimated that a plant with a 10,000-ton annual capacity could produce armor plate for only 70% of what the steel companies charged.

When the plant was finally finished, however -- three years after World War I had ended -- it was millions over budget and able to produce armor plate only at twice what the steel companies charged. It produced one batch and then shut down, never to reopen.

Or take Medicare. Other than the source of its premiums, Medicare is no different, economically, than a regular health-insurance company. But unlike, say, UnitedHealthcare, it is a bureaucracy-beclotted nightmare, riven with waste and fraud. Last year the Government Accountability Office estimated that no less than one-third of all Medicare disbursements for durable medical equipment, such as wheelchairs and hospital beds, were improper or fraudulent. Medicare was so lax in its oversight that it was approving orthopedic shoes for amputees.

. . .

It is government's job to make and enforce the rules that allow a civilized society to flourish. But it has a dismal record of regulating itself. Imagine, for instance, if a corporation, seeking to make its bottom line look better, transferred employee contributions from the company pension fund to its own accounts, replaced the money with general obligation corporate bonds, and called the money it expropriated income. We all know what would happen: The company accountants would refuse to certify the books and management would likely -- and rightly -- end up in jail.

But that is exactly what the federal government (which, unlike corporations, decides how to keep its own books) does with Social Security. In the late 1990s, the government was running what it -- and a largely unquestioning Washington press corps -- called budget "surpluses." But the national debt still increased in every single one of those years because the government was borrowing money to create the "surpluses."

Capitalism isn't perfect. Indeed, to paraphrase Winston Churchill's famous description of democracy, it's the worst economic system except for all the others. But the inescapable fact is that only the profit motive and competition keep enterprises lean, efficient, innovative and customer-oriented.

For the full commentary, see:

JOHN STEELE GORDON. "Why Government Can't Run a Business; Politicians need headlines. Executives need profits." Wall Street Journal (Weds., MAY 21, 2009): A17.

(Note: ellipsis added.)

The wonderful book, I mentioned, is:

Gordon, John Steele. A Thread across the Ocean: The Heroic Story of the Transatlantic Cable. New York: Walker & Co., 2002.

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Source of image of graph: http://www.econ.canterbury.ac.nz/personal_pages/bob_reed/econ3003/book/chap26a.gif (Original source of graph: Viscusi, W. Kip, John M. Vernon, and Joseph E. Harrington, Jr. Economics of Regulation and Antitrust. 2nd ed. Lexington, MA: D.C. Heath and Company, 1992, page 714.)

The graph above, from a leading textbook on the economics of regulation, strikingly shows that OSHA had no discernible effect on reducing workplace accidents.

(Note: I am grateful to Susan Dudley who mentioned this graph in one of the Association of Private Enterprise Education sessions in Guatemala City, and who graciously elaborated the source in conversation afterwards.)

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Source of image: http://divisionoflabour.com/archives/EFWposter.JPG

I heard a useful presentation by John Morton on the Fraser Institute's Economic Freedom Map at the April 2009 Association of Private Enterprise Education meetings in Guatemala City. Using data developed by Jim Gwartney, Robert Lawson, and their associates, the map provides striking visual evidence of the relationship between economic freedom and economic growth.

For additional information, and to purchase a copy of the map, visit: http://www.freetheworld.com/ef_map.html

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"Dante Hesse, . . . , of Milk Thistle Farm, thinks Greenmarket rules are too hard on dairies." Source of caption and photo: online version of the NYT article quoted and cited below. (Note: ellipsis in caption added.)

(p. D4) The basic aim of the producer-only rules is to ensure that all foods sold at market originate entirely or mostly on family farms within a half day's drive from New York City. The 10-page document detailing these rules, however, is anything but clear.

"Cumbersome, confusing and contradictory," was the assessment of Michael Hurwitz, the director of Greenmarket, which operates 45 markets in the five boroughs.

Pickle makers can sell preserved foods such as peppers in vinegar, but not processed foods such as hot sauce. Farmers, on the other hand, can sell processed hot sauce if it is made with their peppers. Dairies may purchase a higher percentage of their milk for cheese if the cheese is made from one type of milk rather than two milks, such as cow and sheep. Cider makers can buy 40 percent of the apples they press from local farmers, whereas wheatgrass juice sellers must grow all their wheatgrass.

For the full story, see:

INDRANI SEN. "Greenmarket Sellers Debate Maze of Producer-Only Rules." The New York Times (Weds., August 6, 2008): D4.

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George Gilder emphasizes that the importance of entrepreneurship to economic growth has been missed by many economists, in part because of the difficulty of measuring both the inputs of entrepreneurship (e.g., courage, persistence, creativity, etc.) and the outputs of entrepreneurship (e.g., happiness from more challenging work, greater variety of products, etc.).

Unfortunately this is not just an academic problem, because economists' policy advice is based on their models, and their models focus on what they can measure. If they can't measure entrepreneurship, then policies to encourage entrepreneurship are neglected.

Now the Frazer Institute, is seeking proposals to improve the measurement of important poorly measured policy-relevant variables. This initiative is in the spirit of the good work that the Frazer Institute has done in correlating measures of economic freedom with measures of economic growth.

I have been asked to publicize this initiative, and am pleased to do so:

Dear Art Diamond,

The Fraser Institute is launching a new contest to identify economic and public policy issues which still require proper measurement in order to facilitate meaningful analysis and public discourse. We hope you can help promote this contest by posting it on your weblog, artdiamondblog.

The Essay Contest for Excellence in the Pursuit of Measurement is an opportunity for the public to comment on an economic or public policy issue that they feel is important and deserves to be properly measured.

A top prize of $1,000 and other cash prizes can be won by identifying a vital issue that is either not being measured, or is being measured inappropriately. Acceptable entry formats include a short 500-600 word essay, or a short one-minute video essay.

Complete details and a promotional flyer are available at: http://www.fraserinstitute.org/programsandinitiatives/measurement_center.htm.

Entry deadline is Friday, May 15th, 2009.

Sponsored by the R.J. Addington Center for the Study of Measurement.

Enquiries may be directed to:

Courtenay Vermeulen
Education Programs Assistant
The Fraser Institute
Direct: 604.714.4533
courtenay.vermeulen@fraserinstitute.org



The Fraser Institute is an independent international research and educational organization with offices in Canada and the United States and active research ties with similar independent organizations in more than 70 countries around the world. Our vision is a free and prosperous world where individuals benefit from greater choice, competitive markets, and personal responsibility. Our mission is to measure, study, and communicate the impact of competitive markets and government interventions on the welfare of individuals.

An important source of Gilder's views, obliquely referred to in my comments above, is:

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

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"Charles Wolf with laptop and Archie, in his house near Denver last spring." Source of the caption and the photo: online version of the WSJ article quoted and cited below.

(p. C5) He was irked when a cancer recurrence last year required him to resume morning radiation treatments, partly because that took him away from the market. "What kills me more than anything else is that I'm not there for the market open," he said.

For the full obituary, see:

E.S. BROWNING. "Wolf Loses Battle With Cancer; Disease Didn't Affect His Investing Success; Model Patient." The Wall Street Journal (Thurs., JANUARY 29, 2009): C5.

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"The chief inspection official, Charles Miraglia, works on the side for at least one private elevator company." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A27) More than a dozen members of the New York Housing Authority's elevator staff -- including the official who directs all safety inspections -- also work second jobs for private companies in the elevator industry, according to interviews and city records.

The employees, including three managers and nearly half the inspection staff, say their second jobs do not conflict with their duties maintaining the 3,300 elevators in the authority's 2,600 buildings. Tenant complaints and inspection records indicate that the authority's elevators are among the worst maintained in the city.

All of the elevator staff members with second jobs, including the chief inspection official, Charles Miraglia, have received a waiver from the city's Conflicts of Interest Board, which ruled the second jobs did not present an ethical conflict. Each waiver was granted, the board said, based on the endorsement of the Housing Authority chairman, Tino Hernandez, and an assurance from the employee that the job would not interfere with his authority duties.

. . .

Criticism of the way the authority, the nation's largest public housing landlord, maintains its elevators intensified recently, after a 5-year-old boy died trying to escape a stalled elevator in an authority-owned building in Williamsburg, Brooklyn, on Aug. 19. The Brooklyn district attorney's office continues to investigate that accident.

. . .

Some of those who received waivers to work a second job said in interviews that they worked only part time, and always after hours or on weekends.

Scott T. Hayes, a longtime elevator consultant and inspector for building owners in the city, said 99 percent of all commercial and residential inspections take place during normal business hours, and almost never on weekends. "If a building super works till 4:30 or 5 o'clock and then they're off, and you show up at 6 o'clock and say I want to inspect the elevator, he'll throw you out of the building," Mr. Hayes said. "So I don't know what kind of work they could be doing. It doesn't make sense."

Mr. Miraglia earns $104,000 a year in his authority post and received his waiver to work outside jobs in August 2007, at a time when the authority's difficulties in inspecting elevators were already apparent.

For the full story, see:

RAY RIVERA. "Fixing Elevators: For the City, and on the Side." The New York Times (Tues., September 30, 2008): B1.

(Note: ellipses added.)

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"Jim Benson" Source of caption and photo: online version of the WSJ obituary quoted and cited below.

(p. A10) "A number of people had told me they wanted to start space businesses," Mr. Huntress says, "but they always wanted government money. Jim said he didn't want any government money. He just wanted the opportunity to compete. That got my attention."

Mr. Benson, who died Oct. 10 at age 63 of a brain tumor, put it directly: "If we're going to space to stay, space has to pay."

He thought he'd found a business model. "We offer FedEx-like package delivery rides," he proclaimed in 1999. He imagined getting customers like NASA itself and the armed forces, as well as scientists and industry. Always looking for an angle, he also envisioned a more terrestrial use for his rockets: sending a package from San Jose, Calif., to Taipei in 20 minutes.

With organizational ability he developed at software start-ups in the 1980s, Mr. Benson assembled a team of mostly young engineers plus some NASA veterans and set to work. To avoid high development costs, he used off-the-shelf technologies and designs. He quickly landed several contracts, including one from the University of California at Berkeley for ChipSat, a small satellite built for carrying scientific instruments to study interstellar gas. It cost $7 million to build -- peanuts in space bucks -- and has continued to function since its 2003 launch.

For the full obituary, see:

STEPHEN MILLER. "REMEMBRANCES; Jim Benson (1945 - 2008); Rocket Man Ran a Proper Business, But Loftiest Plans Were Ill-Starred." The Wall Street Journal (Sat., OCTOBER 18, 2008): A10.

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(p. A7) Ayn Rand died more than a quarter of a century ago, yet her name appears regularly in discussions of our current economic turmoil. Pundits including Rush Limbaugh and Rick Santelli urge listeners to read her books, and her magnum opus, "Atlas Shrugged," is selling at a faster rate today than at any time during its 51-year history.

. . .

Rand . . . noted that only an ethic of rational selfishness can justify the pursuit of profit that is the basis of capitalism -- and that so long as self-interest is tainted by moral suspicion, the profit motive will continue to take the rap for every imaginable (or imagined) social ill and economic disaster. Just look how our present crisis has been attributed to the free market instead of government intervention -- and how proposed solutions inevitably involve yet more government intervention to rein in the pursuit of self-interest.

Rand offered us a way out -- to fight for a morality of rational self-interest, and for capitalism, the system which is its expression. And that is the source of her relevance today.

For the full commentary, see:

YARON BROOK. "Is Rand Relevant?" Wall Street Journal (Sat., MARCH 14, 2009): A7.

(Note: ellipses added.)

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"One aviation expert said the Midway deal was a way to overcome inefficiencies of public airports." Source of caption and photo: online version of the NYT article quoted and cited.

(p. A16) CHICAGO -- Midway Airport is poised to become the first large privately run hub airport in the country, officials said Tuesday, after an investment group bid $2.52 billion to win rights to a long-term lease.

. . .

An aviation expert at the Brookings Institution, Clifford Winston, said he saw the deal's attractiveness as helping to overcome "the vast inefficiencies of public sector airports."

"The Midway experiment is important," Mr. Winston said, "but it's only a tiny step."

For the full story, see:

SUSAN SAULNY. "In Chicago, Private Firm Is to Run Midway Airport." The New York Times (Weds., October 1, 2008): A16.

(Note: ellipsis added.)

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"President Vaclav Klaus of the Czech Republic is known for his economic liberalism." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A6) To supporters, Mr. Klaus is a brave, lone crusader, a defender of liberty, the only European leader in the mold of the formidable Margaret Thatcher. (Aides say Mr. Klaus has a photo of the former British prime minister in his office near his desk.)

. . .

As a former finance minister and prime minister, he is credited with presiding over the peaceful 1993 split of Czechoslovakia into two states and helping to transform the Czech Republic into one of the former Soviet bloc's most successful economies.

But his ideas about governance are out of step with many of the European Union nations that his country will lead starting Jan. 1.

While even many of the world's most ardent free marketeers acknowledged the need for the recent coordinated bailout of European banks, Mr. Klaus lambasted it as irresponsible protectionism. He blamed too much -- rather than too little -- regulation for the crisis.

A fervent critic of the environmental movement, he has called global warming a dangerous "myth," arguing that the fight against climate change threatens economic growth.

. . .

Those who know Mr. Klaus say his economic liberalism is an outgrowth of his upbringing. Born in 1941, he obtained an economics degree in 1963 and was deeply influenced by free market economists like Milton Friedman.

Mr. Klaus's son and namesake, Vaclav, recalled in an interview that when he was 13, his father told him to read Aleksandr Solzhenitsyn to better understand Communism's oppressiveness.

"If you lived under communism, then you are very sensitive to forces that try to control or limit human liberty," he said in an interview.

For the full story, see:

DAN BILEFSKY. "A Fiery Czech Is Poised to Be the Face of Europe." The New York Times (Tues., November 25, 2008): A6.

(Note: ellipses added.)

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The comments of Maart Laar, former prime minister of Estonia, are worth considering:

(p.A13) It is said that the only thing that people learn from history is that people learn nothing from history. Looking at how the world is handling the current economic crisis, this aphorism appears sadly true.

World leaders have forgotten how the collapse of Wall Street in 1929 developed into a world-wide depression. It happened not thanks to market failures but as a result of mistakes made by governments which tried to protect their national economies and markets. The market was not allowed to make its corrections. Government interventions only prolonged the crisis.

We may hope that, even as we see several bad signs of neo-interventionist attitude, all the mistakes of the 1930s will not be repeated. But it is clear that the tide has turned again. Capitalism has been declared dead, Marx is honored, and the invisible hand of the market is blamed for all failures. This is not fair. Actually it is not markets that have failed but governments, which did not fulfill their role of the "visible hand" -- creating and guaranteeing market rules. Weak regulation of the banking sector and extensive lending, encouraged by governments, are examples of this failure.

For the full commentary, see:

MART LAAR. "Economic Freedom Is Still the Best Policy." Wall Street Journal (Fri., FEBRUARY 13, 2009): A13.

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"Orthodox Jews have been at the center of Antwerp's diamond trade since the late 19th century, when they fled Eastern Europe." Source of the caption and photo: online version of the NYT article quoted and cited below.

Markets will work better when a critical mass of participants hold certain core values, including those of tolerance and honesty.

(p. A11) ANTWERP, Belgium -- Teetering on their bicycles or strolling amiably while chattering into cellphones in Yiddish, Dutch, French, Hebrew or English, the Orthodox Jews of this Belgian port city have set the tone of its lively diamond market for more than a century.

Hoveniersstraat, or Gardener's Street, is the backbone of the market, where four-fifths of the world's uncut diamonds are traded. It winds past the L & A Jewelry Factory and the office of Brinks, the armored car company, and on to the World Diamond Center just opposite the little Sephardic synagogue. On any given day but Friday, it is sprinkled liberally with Orthodox Jewish diamond traders, many of them Hasidim.

. . .

Ari Epstein, 33, is the son of a diamond trader, whose father emigrated from a village in Romania in the 1960s. "It's a typical shtetl environment," he said, wearing the yarmulke with a business suit. "It's live and let live. Most important is to do business together and to be honorable."

For the full story, see:

JOHN TAGLIABUE. "Antwerp Journal; Belgian Market's Luster Dims, but Legacy Stays." The New York Times (Tues., January 6, 2009): A11.

(Note: ellipsis added.)

"The market employs about 7,000 and creates work indirectly for another 26,000." Source of the caption and photo: online version of the NYT article quoted and cited above.

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Source of the graphic: screen capture from the online version of the WSJ article quoted and cited below.

(p. A1) Much of the world may be struggling with the economic downturn, but life has been getting better in Columbus, Ind., Kingsport, Tenn., and Waterloo, Iowa.

These out-of-the-way places have become trade hot spots as U.S. exports, fueled by the dollar's fall, continue to provide a rare spark in an otherwise gloomy economy.

While many economists expect a recent snapback in the value of the dollar and a spreading global slowdown to soften that growth, exports have become a key to greater local prosperity more than at any time in decades.

. . .

(p. A16) Export-driven growth marks a dramatic shift in an economy that has relied heavily on consumer spending. That has slowed in recent months as Americans, nervous about job losses, teetering banks, falling home values, and rising gasoline and food prices, have tightened spending. Against that background, exports have emerged as a powerful motor.

Over the past year, real-goods exports have risen $115 billion, or 12%, and are up across every major category. They now make up nearly 13.5% of gross domestic product, the highest percentage since World War II. Critics often grumble that the U.S. exports masses of scrap steel and other waste materials to recyclers in China and elsewhere, which is true, but exports of manufactured goods, commodities and services are also growing. Consumer products, from sporting goods to art supplies, have risen 12%, and even autos, which are languishing on showroom floors in the U.S., saw a 4% bump up in exports.

Service exports -- which include media, entertainment, financial services, computer software and foreign tourism in the U.S. -- have grown strongly right along with the larger goods side of the trade ledger. Through the second quarter of 2008, real-service exports are up nearly 10% over the past year.

It's a badly needed tonic for the beleaguered U.S. economy.

For the full story, see:

TIMOTHY AEPPEL. "Exports Bolster Local Economies." The Wall Street Journal (Thurs., SEPTEMBER 11, 2008): A1 & A16.

(Note: the title of the article on the web is: "Exports Prop Up Local Economies.")

(Note: ellipsis added.)

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

(p. A17) For 15 years, The Wall Street Journal and The Heritage Foundation have been measuring countries' commitment to free-market capitalism in the "Index of Economic Freedom." The 2009 Index, published this week, provides strong evidence that the countries that maintain the freest economies do the best job of promoting prosperity for all citizens.

The positive correlation between economic freedom and national income is confirmed yet again by this year's data. The freest countries enjoy per capita incomes over 10 times higher than those in countries ranked as "repressed." This year, for the first time, the Index also correlates economic freedom with important societal values like poverty reduction, human development, political freedom and environmental protection. The linkages are robust, with economically freer countries performing significantly better on every indicator of well-being.

. . .

In a special chapter in this year's Index, the Journal's Stephen Moore chronicles the critical role that tax cuts, particularly cuts in corporate taxes, have played in economic growth in Eastern European countries and others like Ireland. The citizens of those countries lived for decades with state-directed economic planning and regulation, which many now advocate for the U.S. and other advanced economies. They remember the clumsiness of socialism and the government missteps that fostered economic disaster. To switch dance partners now that they have adapted to the quick step of capitalism and are enjoying its many benefits would be a tragic mistake.

It would be ironic indeed if the world's advanced economies, in seeking to address current woes, abandoned the system that has brought them and others around the world the amazing levels of prosperity experienced over the last half century. The "Index of Economic Freedom" provides a record of that progress. It charts the path to economic advancement and proves that the best way forward is to hang onto our partner and step to the music of the market.

For the full commentary, see:

TERRY MILLER. "Freedom Is Still the Winning Formula." The Wall Street Journal (Tues., January 13, 2009): A17.

(Note: ellipsis added.)

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"Millions of pounds of government-owned milk powder stored in a warehouse in Fowler, Calif." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) FOWLER, Calif. -- The long economic boom, fueled by easy credit that allowed people to spend money they did not have, led to a huge oversupply of cars, houses and shopping malls, as recent months have made clear. Now, add one more item to the list: an oversupply of cows.

And it turns out that shutting down the milk supply is not as easy as closing an automobile assembly line.

As a breakneck expansion in the global dairy industry turns to bust, Roger Van Groningen must deal with the consequences. In a warehouse that his company runs here, 8 to 20 trucks pull up every day to unload milk powder. Bags of the stuff -- surplus that nobody will buy, at least not at a price the dairy industry regards as acceptable -- are unloaded and stacked into towering rows that nearly fill the warehouse.

Mr. Van Groningen's company does not own the surplus milk powder, but merely stores it for the new owners: the taxpayers of the United States. To date, the government has agreed to buy about $91 million worth of milk powder.

. . .

(p. B5) Government price supports provide a price floor for agricultural products as a way of keeping farmers afloat during hard times and ensuring an adequate food supply.

The Agriculture Department has committed to buying 111.6 million pounds of milk powder at 80 cents a pound, for roughly $91 million, which includes some handling fees. . . .

. . .

. . . the agency has not decided what to do with the cache of milk powder in California.

Some critics of farm subsidies argue that price support programs are antiquated and allow farmers to continue producing even when the economics make no sense, as taxpayers will always buy up the excess production.

"They don't want to downsize or respond to the market signal. They want to keep producing," said Kenneth Cook, president of the Environmental Working Group, a Washington research organization that has long been critical of the government's farm policy. "Once you get in a jam like this, it becomes our collective problem."

For the full story, see:

ANDREW MARTIN. "Awash in Milk and Headaches; Cows Keep Producing Despite Drop in Demand." The New York Times (Fri., January 1, 2009): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the article is dated January 1, 2009, and is entitled "As Recession Deepens, So Does Milk Surplus.")

"Arthur Machado, a dairy farmer in Fresno, Calif., has to keep feeding his herd of more than 300 cows. He plans to sell them and take up a more stable commodity." Source of caption and photo: online version of the NYT article quoted and cited above.

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(p. A29) Not so long ago, corporate giants with names like PanAm, ITT and Montgomery Ward roamed the earth. They faded and were replaced by new companies with names like Microsoft, Southwest Airlines and Target. The U.S. became famous for this pattern of decay and new growth. Over time, American government built a bigger safety net so workers could survive the vicissitudes of this creative destruction -- with unemployment insurance and soon, one hopes, health care security. But the government has generally not interfered in the dynamic process itself, which is the source of the country's prosperity.

But this, apparently, is about to change. Democrats from Barack Obama to Nancy Pelosi want to grant immortality to General Motors, Chrysler and Ford. They have decided to follow an earlier $25 billion loan with a $50 billion bailout, which would inevitably be followed by more billions later, because if these companies are not permitted to go bankrupt now, they never will be.

This is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.

Granting immortality to Detroit's Big Three does not enhance creative destruction. It retards it. . . .

. . .

But the larger principle is over the nature of America's political system. Is this country going to slide into progressive corporatism, a merger of corporate and federal power that will inevitably stifle competition, empower corporate and federal bureaucrats and protect entrenched interests? Or is the U.S. going to stick with its historic model: Helping workers weather the storms of a dynamic economy, but preserving the dynamism that is the core of the country's success.

For the full commentary, see:

DAVID BROOKS. "Bailout to Nowhere." The New York Times (Fri., November 18, 2008): A29.

(Note: ellipses added.)

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The Palace of Discovery (aka Palais de la Decouverte) in Paris. Source of photo: http://www.flickr.com/photos/paris2e/2524827592/

Near the beginning of World War II, the 1937 Palace of Discovery in Paris, was a popular source of hope for the future:

(p. 206) An unexpectedly popular draw at the exposition was a relatively small hall hidden away behind the Grand Palais. The Palace of Discovery, as it was called, attracted more than 2 million visitors, five times the number that visited the modern art exhibit. They came for wonder and hope. The wonder was provided by exhibits including a huge electrostatic generator, like something from Dr. Frankenstein's lab, two enormous metal spheres thirteen feet apart, across which a 5-million-volt current threw a hissing, crackling bolt of electricity. The hope came from the very nature of science itself. Designed by a group of liberal French researchers, the Palace of Discovery was intended to be more a "people's university" than a stuffy museum, a place to hear inspiring lectures on the latest wonders of science, messages abut technological confidence and progress for the peoples of the world.

Source:

Hager, Thomas. The Demon under the Microscope: From Battlefield Hospitals to Nazi Labs, One Doctor's Heroic Search for the World's First Miracle Drug. New York: Three Rivers Press, 2007.

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"This terra-cotta vessel, from the Hittite site in Turkey, looks strikingly modern." Source of photo and caption: online version of the WSJ article quoted and cited below.

(p. D7) The show whisks us along on complementary interlocking narratives that take the visitor down a spaghetti junction of cultural confluences. We learn that in the 1950s a prominent Turkish archaeologist excavated a site known locally as Kultepe. It yielded a vast hoard of cuneiform tablets that record in detail the town's trade in copper and numerous aspects of its domestic life, including letters home -- many of which are on display. As a result, we know that Assyrian merchants in the copper trade moved en masse to Central Anatolia and founded the town, and many like it, to feed the burgeoning trade in what Ms. Aruz calls "the luxury goods of the time." She adds that "potentates competed to possess artifacts like these -- the more distant and exotic their origins, the more desirable because their possession denoted power and prestige."

Visitors should, in particular, feast their eyes on the smoothly burnished terra-cotta spouted vessels from Kultepe and Hittite sites in Turkey. Outlandishly geometric and eerily modern, futuristic even, they alone are worth the price of admission.

In following the visual motif of bull-leaping acrobats from Crete to Anatolia to Egypt on everything from Minoan vases to cylinder seals and carved boxes, the show makes the point that commerce in goods brought with it commerce in entertainment, music, ideas, gods and cults. Suddenly images of Sphinxes and Gryphons pop up all over the 15th-century B.C. geosphere, as do toys and board games and educational institutions.

For the full story, see:

SARAH E. NEEDLEMAN. "Doing the Math to Find the Good Jobs; Mathematicians Land Top Spot in New Ranking of Best and Worst Occupations in the U.S." The Wall Street Journal (Tues., Jan. 6, 2008): D2.

For the case for the complementarity between capitalism and culture, see:

Cowen, Tyler. Creative Destruction: How Globalization Is Changing the World's Cultures. Princeton, NJ: Princeton University Press, 2002.

"The cuneiform inscription . . . is the earliest-known written appearance of the word "freedom" (amagi), or "liberty." It is taken from a clay document written about 2300 B.C. in the Sumerian city-state of Lagash." Source of the cuneiform and the caption: http://www.libertyfund.org/aboutlogo.htm

(Note: ellipsis added.)

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"A ban on the sale of some misshapen produce will be dropped." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A6) BRUSSELS -- Misshapen fruit and vegetables won a reprieve on Wednesday from the European Union as it scrapped rules banning overly curved, extra knobbly or oddly shaped produce from supermarket shelves.

Ending regulations on the size and shape of 26 types of fruit and vegetables, the European authorities killed off restrictions that had become synonymous with bureaucratic meddling.

The rising cost of commodities also persuaded the European Commission that there was no point in throwing away food just because it looked strange.

As of July, when the changes go into force, these standards for the 26 products, as varied as peas and plums, will disappear. European shoppers will then be able to choose their produce whatever its appearance.

For the full story, see:

STEPHEN CASTLE. "Europe Relaxes Rules on Sale of Ugly Fruits and Vegetables." The New York Times (Thurs., November 13, 2008): A6.

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"As Florida buys U.S. Sugar, company land could go on the block. The Fanjul family, with sugar operations like this one in Palm Beach County, is waiting." Source of caption and photo: online version of the NYT article quoted and cited below.

Many years ago, CBS's "Sixty Minutes" program ran a wonderful Steve Kroft piece (called, I think, "A Sweet Deal") exposing how protectionist federal government sugar import quotas, benefit the extraordinarily wealthy and powerful Fanjul family, at the expense of ordinary consumers.

Nothing has changed:

(p. 1) IN June, Gov. Charlie Crist announced that Florida would buy one of the state's two big sugar enterprises, the United States Sugar Corporation. He billed the purchase as a "jump-start" in the environmental restoration of the Everglades, which cane growers are accused of polluting with fertilizer runoff.

But in the end, the $1.7 billion buyout, scheduled to be completed in early 2009, may also prove to be a financial boon to the state's remaining sugar superpower, Florida Crystals.

One of the country's wealthiest families, the Fanjuls of Palm Beach, controls Florida Crystals and today touches virtually every aspect of the sugar trade in the United States.

. . .

"This is going to be a really good deal for the Fanjuls," says Dexter Lehtinen, a former federal prosecutor whose 1988 lawsuit against the state led to a settlement instituting tough clean water standards. "The state embarked on a nonachievable goal, and now in desperation to wrap up some package, they're going to have to give access to Florida Crystals on favorable terms."

Others, like makers of candy and cereal, say the (p. 9) Fanjuls already control too much of the sugar trade. They want to buy sugar cheap and say the Fanjuls have long charmed Congress into legislating price supports that keep it expensive.

Free-trade advocates also complain, saying that a private business has used the shelter of the federal sugar program, created in the Depression to nurture struggling farmers, to increase its corporate hammerlock.

"These people have been absolutely extorting consumers for decades, and the only reason they're existing in the first place is, they were able to get sweet deals from governments that were propping them up," says Sallie James, a trade policy analyst with the libertarian Cato Institute, referring to Florida Crystals and U.S. Sugar.

For the full story, see:

MARY WILLIAMS WALSH. "Florida Deal for Everglades May Help Big Sugar." The New York Times, SundayBusiness Section (Sun., September 14, 2008): 1 & 9.

(Note: ellipsis added.)

"Three leaders of the Fanjul family: Pepe Jr., left; J. Pepe, center; and Alfonso Jr., called Alfy. After Fidel Castro chased the family from Cuba, it rebuilt its sugar empire in the United States." Source of caption and photo: online version of the NYT article quoted and cited above.

Source of graphic: online version of the NYT article quoted and cited above.

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"Investors renovated a terminal at Domodedovo and oversaw construction of a train line to Moscow." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B9) MOSCOW -- A heated battle for passengers between the Russian capital's main airports offers an unlikely model of competition for the aviation industry.

In most cities, airports are monopolies. Even in cities that have more than one, including New York, Paris and Tokyo, airports are usually owned by the same operator. That means airlines can rarely make the kind of choices passengers take for granted, such as choosing an airport for its efficiency, shopping or lounges.

Not so in Moscow, where two international airports, Domodedovo and Sheremetyevo, owned by rival organizations, battle for business. The result is lower fees, better service and fast-improving facilities all around.

Domodedovo Airport, for example, recently convinced several top airlines to make it their Russian base, thanks to a major modernization that added more than 20 new restaurants, jewelry boutiques and a shop where passengers can rent DVDs to watch in booths.

Sheremetyevo Airport responded by building a fast rail link to Moscow, complete with a Starbucks at the airport station.

Moscow's airport rivalry highlights a paradox of the global aviation industry: Airlines compete fiercely with each other for customers, but they face many monopolist suppliers, such as air-traffic control systems, fuel distributors and airports. Resulting costs and poor services get passed on to travelers.

. . .

During Russia's privatization drive of the 1990s, local investors bought Domodedovo, which was previously Moscow's airport serving Soviet Central Asia. The investors, grouped into an upstart charter-airline operator, East Line Group, renovated a terminal at Domodedovo and oversaw construction of a train line to Moscow.

East Line charged airlines landing and operating fees that undercut Sheremetyevo by around 30%. For passengers, Domodedovo's rail link guaranteed a 40-minute trip to downtown Moscow. Private Russian carriers, largely frozen out of Aeroflot's base at Sheremetyevo, expanded quickly at the spacious Domodedovo.

East Line's big break came in 2003, when British Airways announced it would switch from Sheremetyevo to Domodedovo.

"The authorities were shocked that a major airline would leave the government airport," recalls Daniel Burkard, BA's former country manager for Russia.

For the full story, see:

DANIEL MICHAELS. "Moscow Points the Way With Airport Competition; While Most Nations Sport Monopolies, Rivalry Between Two Russian Gateways Ushers in Improvements for Carriers, Travelers." The Wall Street Journal (Mon., DECEMBER 1, 2008): B9.

(Note: ellipsis added.)

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

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A cartoon of the cartoonist who calls himself Gregorius Nekschot. Source of the photo: online version of the WSJ article quoted and cited below.

(p. W1) Amsterdam

On a sunny May morning, six plainclothes police officers, two uniformed policemen and a trio of functionaries from the state prosecutor's office closed in on a small apartment in Amsterdam. Their quarry: a skinny Dutch cartoonist with a rude sense of humor. Informed that he was suspected of sketching offensive drawings of Muslims and other minorities, the Dutchman surrendered without a struggle.

"I never expected the Spanish Inquisition," recalls the cartoonist, who goes by the nom de plume Gregorius Nekschot, quoting the British comedy team Monty Python. A fan of ribald gags, he's a caustic foe of religion, particularly Islam. The Quran, crucifixion, sexual organs and goats are among his favorite motifs.

Mr. Nekschot, whose cartoons had appeared mainly on his own Web site, spent the night in a jail cell. Police grabbed his computer, a hard drive and sketch pads. He's been summoned for further questioning later this month by prosecutors. He hasn't been charged with a crime, but the prosecutor's office says he's been under investigation for three years on suspicion that he violated a Dutch law that forbids discrimination on the basis of race, religion or sexual orientation.

The cartoon affair has come as a shock to a country that sees itself as a bastion of tolerance, a tradition forged by grim memories of bloody conflict between Catholics and Protestants. The Netherlands sheltered Jews and other refugees from the Spanish Inquisition, and Calvinists fleeing persecution in France. Its thinkers helped nurture the 18th-century Enlightenment. Prostitutes, marijuana and pornography have been legal for decades.

"This is serious. It is about freedom of speech," says Mark Rutte, the leader of a center-right opposition party. Some of Mr. Nekschot's oeuvre is "really disgusting," he says, "but that is free speech."

. . .

Mr. Nekschot, who calls the investigation "surreal," says, "Not even Monty Python could have come up with this." (His pen name, Gregorius Nekschot, is a mocking tribute to Gregory IX, a 13th-century pope who set up a Vatican department to hunt down and execute heretics. Nekschot means "shot in the neck" in Dutch.) Some Muslim groups have voiced dismay at his arrest as well. The head of an organization of Moroccan preachers in Holland said authorities seemed "more afraid" of offending Islam than Muslims.

. . .

The cartoonist blames his woes on what he calls Holland's "political correctness industry," a network of often state-funded organizations set up to protect Muslims and other minority groups. One of these, an Internet monitoring group known as MDI, says it received dozens of complaints about the cartoonist's mockery of Islam and first reported him to the prosecutor's office in 2005.

"We're not sure what he does is illegal, but there is a possibility that it is not legal," says the group's head, Niels van Tamelen. Many of the complaints, he says, came from followers of a controversial Muslim convert called Abdul-Jabbar van de Ven.

Mr. Van de Ven caused an uproar after the 2004 murder of Mr. Van Gogh, when he seemed to welcome the killing on national TV. He said Mr. Wilders, the anti-immigrant legislator, also deserved to die, preferably from cancer. Mr. Nekschot, appalled by the outburst, caricatured the convert as a fatwa-spewing fanatic.

For the full story, see:

ANDREW HIGGINS. "Why Islam Is Unfunny for a Cartoonist; The arrest of a controversial Dutch cartoonist has set off a wave of protests. The case is raising questions for a changing Europe about free speech, religion and art." The Wall Street Journal (Sat., JULY 12, 2008): W1 & W6.

(Note: ellipses added.)

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"On Dec. 5, 1933, crowds on Broadway in New York mark the end of Prohibition." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. ??) "Prohibition went into effect on January 16, 1920, and blew up at last on December 5, 1933 -- an elapsed time of twelve years, ten months and nineteen days," H.L. Mencken wrote shortly after ratification of the 21st Amendment to the Constitution eliminated the 18th Amendment. "It seemed almost a geologic epoch while it was going on, and the human suffering that it entailed must have been a fair match for that of the Black Death or the Thirty Years War."

The demise of Prohibition, 75 years ago . . . , is something of a cause for celebration, and it will be treated as such with Repeal Day parties in Washington, Chicago, New Orleans, San Francisco, New York and elsewhere. . . .

. . .

Temperance advocates had argued Prohibition would usher in an era of sober moral rectitude. When it didn't quite work out that way, public opinion began to turn against the drys. They joined those who opposed Prohibition because it had handed new and oppressive powers to the federal government. Charles Lindbergh's father-in-law, Dwight Whitney Morrow, won a Senate seat from New Jersey in 1930 running as a Republican against Prohibition. He argued that it had caused Americans to "conceive of the Federal Government as an alien and even a hostile Power."

And yet, it was finance that finally did Prohibition in. As the nation sank into the Depression, tax revenues dwindled. The prospect of capturing all the liquor excise taxes that had for a decade been missing (and, in effect, had gone into the pockets of bootlegging mobs) was alluring to Democrats and Republicans alike. Pierre du Pont lobbied his fellow plutocrats to support repeal in the vain hope that liquor taxes would replace income taxes. But the New Dealers saw repeal as creating a vast pile of money with which to fund expansive new government programs. Not only did Prohibition and its enforcement increase the size and scope of the federal government, but so did Prohibition's repeal.

For the full story, see:

ERIC FELTEN. "HOW'S YOUR DRINK; Celebrating Cinco de Drinko." The Wall Street Journal (Fri., NOVEMBER 28, 2008): ??.

(Note: ellipses added.)

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

(p. B1) McMoRan Exploration Co. is leading a renewed effort to find natural gas in a site known as one of the world's deepest dry holes.

Exxon Mobil Corp. walked away from the legendary Blackbeard prospect in the Gulf of Mexico in 2006 after drilling to more than 30,000 feet without a payoff. But high energy prices have emboldened the industry, stirring wildcatter passions and prompting companies to look anew at previously abandoned projects.

. . .

(p. B2) If industry reports, unconfirmed by Exxon, are correct, the company spent more than $200 million on the well, making it one of the most expensive dry holes ever drilled.

The industry is littered with expensive failures, but Blackbeard proved too tempting to let go, especially in today's record-price environment, where any reasonably promising prospect is worth a try. Indeed, there are more drilling rigs at work in the U.S. today than at any point since 1985, according to Baker Hughes Inc.

Mr. Moffett, the 69-year-old founder of McMoRan Exploration, is a geologist and inveterate risk taker. He discovered the giant Grasberg copper and gold mine in Indonesia, parlaying it into global mining giant Freeport-McMoRan Copper & Gold Inc. The oil-and-gas exploration company was spun off from the mining assets in 1994.

Last August, McMoRan paid $1.1 billion for a package of shallow Gulf of Mexico assets, including Blackbeard, from Newfield Exploration Co., Exxon's former partner on the well. Studying the geology, Mr. Moffett found it similar to successful wells drilled by other companies in the deeper parts of the Gulf.

He now says that if McMoRan decides to keep drilling to 35,000 feet, it will cost about $75 million.

For the full story, see:

RUSSELL GOLD "A Famed Dry Hole Gets a Second Shot." The Wall Street Journal (Mon., July 21, 2008): B1-B2.

(Note: ellipsis added.)

Photo on left is "GorillaIV, the rig drilling Blackbeard." Image on right is the Co-Chairman of McMoRan. Source of photo, image, and caption on left photo: online version of the WSJ article quoted and cited above.

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"Colonel Moelmann, a retired Air Force officer, sold seats for $50, but had to spend almost $120,000 of his own to perform." Source of caption and photo: online version of the NYT article quoted and cited below.

I do not share Colonel Moelmann's particular dream, but I do salute him for paying for his dream himself, rather than trying to force taxpayers to finance it, as so many do in pursuit of their dreams.

(p. A18) Col. Jack Moelmann, a retired Air Force officer from O'Fallon, Ill., blew $118,182.44 on a one-night stand in New York on Saturday. It was everything he had dreamed of, and more: three hours with the mightiest of the mighty Wurlitzers, the legendary pipe organ at Radio City Music Hall.

The experience left him sweaty and exhausted -- having your way with a mechanical marvel that contains more than a million parts is hard work -- and it reduced his net worth to "the mid-five figures," he said. But Colonel Moelmann had no regrets. He soldiered through tune after tune, from "The Trolley Song" from "Meet Me in St. Louis" to patriotic songs like "America the Beautiful," "My Country 'Tis of Thee" and "The Star-Spangled Banner."

Which, as he pointed out before he climbed onto the bench of the giant ebony console at the left-hand edge of the Rockettes' high-kicking home, guaranteed him a standing ovation.

. . .

"Not many people get their name on the marquee," he said.

Not many people spend a large chunk of their life savings to buy their way in, either.

The idea for a Radio City concert began with the president of the year-old Theater Organ Society International, the Rev. Gus L. Franklin, and Mr. Page, a member. "We turned our pockets inside out and said, 'It's not going to happen,' " Mr. Page said.

Colonel Moelmann, the society's secretary, decided to make it happen -- "I looked in the mirror and said: 'Jack, you have a dream. Go for it.' "-- even though, he said, it was a foregone conclusion that "we're going to lose money big time."

He and the organ society put the price of the tickets at $50 a seat, but the show was far from a sellout. Even with the three balconies closed, the orchestra level was about a third full.

Some in the audience were Moelmann fans from way back. Susan Conrad Wells, a law librarian from Granby, Mass., said she had met Colonel Moelmann through an organ club in 1967, when he was stationed in Massachusetts.

Colonel Moelmann said that playing at Radio City presented its own challenges. "You can't listen to what you're playing," he said. "If you listen note by note, once you've hit the note and you hear it, it's too late to say, 'Oops, I hit the wrong note.' "

In the end, he got his standing ovation.

For the full story, see:

JAMES BARRON. "Organist Rents Radio City to Play, Fulfilling Wish." The New York Times (Mon., August 11, 2008): A18. (B4 in NY edition)

(Note: ellipsis added.)

"Jack Moelmann always wanted to play Radio City's pipe organ, above, even after playing at Westminster Abbey and the Pantheon." Source of caption and photo: online version of the NYT article quoted and cited above.

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"Andrus Ansip, leader of Estonia, an ex-Soviet Republic." Source of caption and photo: online version of the NYT article quoted and cited below.

An earlier entry suggested that Estonian Prime Minister Andrus Ansip's support for Steve Forbes' flat tax, had helped Estonia achieve a high rate of growth.

Apparently there is some sentiment in Estonia to stay the course:

(p. B6) TALLINN, Estonia -- For nearly two decades, Estonia embraced capitalism with such gusto that it seemed to be channeling the laissez-faire philosophy of Milton Friedman. From its policies meant to attract foreign investors to its flat tax and freewheeling business culture, it stood out as the former Soviet republic most adept at turning post-Communist chaos into a thriving market economy.

Now Estonians, and some of their Baltic neighbors, are slogging through their first serious economic downturn since liberation from the Soviet grip in the early 1990s.

. . .

Whatever happens, government officials say there will be no betrayal of Friedman's philosophy. "We will stay a laissez-faire economy," said Juhan Parts, Estonia's minister of the economy.

. . .

"I'm an optimist," said Marje Josing, director of the Estonian Institute for Economic Research. "Fifteen years ago things looked bad, but they managed. A little real-life pressure won't hurt."

Indeed, so far the downturn has done little to discourage Estonia's ambitious entrepreneurs. If anything, it has made them look more avidly elsewhere for growth.

"Estonia may be a small country," Tarmo Prikk, chief executive of Thulema, an office furniture maker, said with a laugh. "But my ego is bigger."

For the full story, see:

CARTER DOUGHERTY. "Estonia's Let-It-Be Economy Is Rattled by Worldwide Distress." The New York Times (Fri., October 10, 2008): B6.

(Note: ellipses added.)

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

(p. A19) Much of the resentment felt by citizens toward the massive investment companies . . . stems from the perception that capitalism is rigged toward the most powerful. When the owner of a small retail outlet or medium-sized service firm gets into financial trouble -- who steps in to help? Why are the rules to start a business so onerous, why is the bureaucratic process so lengthy, why are the requirements for hiring employees so burdensome? When does the entrepreneur receive the respect and cooperation he deserves for making a genuine contribution to the productive capacity of the economy? Equal access to credit is sacrificed to the overwhelming appetite of big business -- especially when government skews the terms in favor of its friends. It is time to pay deference to the real economic heroes of capitalism: the self-made entrepreneurs who have the courage to start a business from scratch, the fidelity to pay their taxes, and the dedication to provide real goods and services to their fellow man.

. . .

Who would have guessed that it would take a Frenchman to remind us that hope is the limitless source of power that drives the human spirit to create, to improve, to achieve its dreams; it is the greatest civilizing influence in our culture. Yet it was Mr. Sarkozy, speaking before Congress last November, who offered the most profound assessment of our nation's gift to the world. "What made America great was her ability to transform her own dream into hope for all mankind," he said. "America did not tell the millions of men and women who came from every country in the world and who -- with their hands, their intelligence and their heart -- built the greatest nation in the world: 'Come, and everything will be given to you.' She said: 'Come, and the only limits to what you'll be able to achieve will be your own courage and your own talent.'"

For the full commentary, see:

JUDY SHELTON. "A Capitalist Manifesto; Markets remain our best hope for a better future." The Wall Street Journal (Mon., OCTOBER 13, 2008): A19.

(Note: ellipses added.)

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

(p. A9) Tomorrow, tens of thousands of people who lost their homes in Hurricane Katrina and are still living in federally owned trailers will be forced to find a new place to live. After nearly three years, the federal government's temporary housing is coming to an end.

These folks are not going to have an easy time of it, because affordable housing in the Gulf Coast region is scarce. The problem has persisted despite billions in government aid - and the efforts of large private developers - because of a shortage of skilled laborers and sky-high insurance rates.

Yet now there is hope, in the person of John Sawyer. Not only does this 64-year-old Bostonian believe he can build houses people can afford to buy and insure; he says they will withstand the next big storm. And, by the way, he intends to makes a tidy profit.

. . .

The dwellings will arrive in the form of kits that can be assembled in as little as 14 days. With walls of reinforced concrete, there isn't much wood, and so mold won't pose a major problem if the houses are ever flooded. They can "take a bath" as the locals say. Everhouses also cost $68 a square foot, less than half the going rate for affordable housing in New Orleans.

The upshot of the house's durability and cost is that it's easy to insure.

For the full commentary, see:

JAKE HALPERN. "A Market Solution to Hurricane Risk." The Wall Street Journal (Sat., May 31, 2008): A9.

(Note: ellipsis added.)

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A few people have asked me for my views on the current financial turmoil. Below, is an email that I sent this morning (10/1/08) to my brother Eric.

Hi Eric,

I'm with Abby in the 'stewing' department. I'm way conflicted.

On the one hand I believe that the least government is usually the best. On the other hand, I've read a couple of books recently about the Great Depression, and I'd rather keep that title in the "history" folder than in the "personal experience" folder.

I'm mad about the irresponsible home loans taken on by irresponsible consumers, and encouraged by irresponsible, and sometimes dishonest, mortgage pushers, and government and quasi-governmental agencies (aka Fannie Mae and Freddie Mac).

I'm also mad at investment bankers who created totally nontransparent securities based on these mortgages, garnering huge bonuses for themselves, without creating any value for consumers.

And I'm most mad that the fallout from this will almost certainly result in more government, and more taxes, that will reduce innovation, economic progress, and freedom.

In the long-run, I think we need to get the government out of the business of encouraging, and selling mortgage loans. And investment banks need to change the incentive structure for their high flyers, to make surer that they're rewarding good judgment, rather than rewarding opacity and unjustified risk-taking.

But the short-run gives me trouble. I have no sympathy for the investment banks. They deserve to go down.

The problem is the claim that the investment banks are an integral part of the financial infrastructure of the country. If that is true, then letting them totally fail, will take down many firms and taxpayers, who had no responsibility for the problems.

One crucial question is whether in fact, letting the investment banks fail would result in systemic collapse of the financial infrastructure. And I do not know the answer. This is a difficult question, outside my area of specialization.

But in the Great Depression, something sort of like that happened. And historians/economists have blamed Mellon/Hoover for adopting a position something akin to what the rebel house Republicans are adopting.

I have never met Ben Bernanke, and have never read any of his articles. But my impression is that he is a conscientious, serious scholar, who is generally friendly to free markets, and whose main research focus was the economics of the Great Depression. So when he looks worried, and says that something major needs to be done, I give that credibility.

I don't like growing the government in this way. But if we don't act, and if the collapse comes, then the proposed growth in government in the Paulson proposal will look petty ante, compared to what will follow.

I believe the government should provide national defense, police and courts. On infrastructure I've always been conflicted. I think a lot of infrastructure can be usefully privatized, and when it can, I favor it (although when I'm talking to Mom, I try not to mention my admiration for Mitch Daniels ;).

On the other hand I usually don't lose much sleep about government infrastructure like the Omaha streets and FDIC insurance.

It's a stretch, but maybe you can kind of think of what they are proposing as an emergency extension of infrastructure?

I didn't mean to write a long message. But I couldn't think of a good short one.

Cheers,

Art

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"At the Reeve plant near Garden City, Kan., grain is made into ethanol, and the byproducts are fed to cattle in the adjacent feedlot." Source of caption and photo: online version of the NYT article quoted and cited below.

Unfortunately, the EPA rejected Gov. Paley's request, discussed in the article quoted below:

(p. C1) The ethanol industry, until recently a golden child that got favorable treatment from Washington, is facing a critical decision on its future.

Gov. Rick Perry of Texas is asking the Environmental Protection Agency to temporarily waive regulations requiring the oil industry to blend ever-increasing amounts of ethanol into gasoline. A decision is expected in the next few weeks.

Mr. Perry says the billions of bushels of corn being used to produce all that mandated ethanol would be better suited as livestock feed than as fuel.

Feed prices have soared in the last two years as fuel has begun competing with food for cropland.

"When you find yourself in a hole, you have to quit digging," Mr. Perry said in an interview. "And we are in a hole."

His request for an emergency waiver cutting the ethanol mandate to 4.5 billion gallons, from the 9 billion gallons required this year and the 10.5 billion required in 2009, is backed by a coalition of food, livestock and environmental groups.

Farmers and ethanol and other biofuel producers are lobbying to keep the existing mandates.

For the full story, see:

DAVID STREITFELD. "Uprising Against the Ethanol Mandate." The New York Times (Weds., July 23, 2008): C1 & C5.

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Source of table: online version of the NYT article quoted and cited below.

(p. C1) On Wal-Mart's Web site, you can buy a walker for $59.92. It is called the Carex Explorer, and it's a typical walker: a few feet high, with four metal poles extending to the ground. The Explorer is one of the walkers covered by Medicare.

But Medicare and its beneficiaries aren't paying $59.92 for the Explorer or any similar walker. In fact, they're not paying anything close to it. They are paying about $110.

. . .

(p. C5) In the abstract, fixing the health care system sounds perfectly unobjectionable: it's about reducing costs (and then being able to cover the uninsured) by getting rid of inefficiency and waste. In reality, though, almost every bit of waste benefits someone.

Doctors who perform spinal fusion surgeries, despite decidedly mixed evidence that they're effective, are making a nice living. Hospitals that order $1,000 diagnostic tests, even when a cheaper one would work just as well, are helping their bottom line. Medical equipment makers selling walkers for $110, while Wal-Mart sells them for $60, are fattening their profits.

The current fight to protect those profits is a microcosm of what you can expect to see if a larger effort to rein in health costs ever gets going. The defenders of the status quo won't say that they are protecting themselves. Instead, they'll use the same arguments that the medical equipment makers are using -- that a change will destroy jobs, bankrupt small businesses and, above all, harm patients.

. . .

But this is a case in which the market can clearly do a better job than a government-mandated fee schedule. Just look at Wal-Mart's Web site or, for that matter, the bids that Medicare has already received.

By standing in the way of this competition, Congress is really standing up for higher health care costs.

For the full commentary, see:

DAVID LEONHARDT. "ECONOMIC SCENE; High Medicare Costs, Courtesy of Congress." The New York Times (Weds., June 25, 2008): C1 & C5.

(Note: ellipses added.)

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"Cubans used a cellphone to take photos in Havana recently after Cuba's government lifted some restrictions on consumer items." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A16) MEXICO CITY -- A rare study conducted surreptitiously in Cuba found that more than half of those interviewed considered their economic woes to be their chief concern while less than 10 percent listed lack of political freedom as the main problem facing the country.

"Almost every poll you ever see, even those in the U.S., goes to bread-and-butter issues," said Alex Sutton, director of Latin American and Caribbean programs at the International Republican Institute, which conducted the study. "Everybody everywhere is interested in their purchasing power."

The results showed deep anxiety about the state of the country, with 35 percent of respondents saying things were "so-so" and 47 percent saying they were going "badly" or "very badly." As for the government's ability to turn things around, Cubans were skeptical, with 70 percent of those interviewed saying they did not believe that the authorities would resolve the country's biggest problem in the next few years.

The study, to be released on Thursday, was conducted from March 14 to April 12, after Raúl Castro officially took over the presidency.

For the full story, see:

MARC LACEY. "In Rare Study, Cubans Put Money Worries First." The New York Times (Thurs., June 5, 2008): A16.

(Note: the order of some of the article content differed in the print and online versions; the version above is consistent with the print version.)

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Source of book image:
http://www.tbpcontrol.co.uk/TWS/CoverImages_0/074/757/0747579857.jpg

(p. B7) As Mr. Kynaston sets his scene, what immediately becomes clear is that the recent past is not so recent. "Britain in 1945. No supermarkets, no motorways, no teabags, no sliced bread, no frozen food. ... No launderettes, no automatic washing machines, wash day every Monday, clothes boiled in a tub, scrubbed on the draining board. ...Abortion illegal, homosexual relationships illegal, suicide illegal, capital punishment legal. White faces everywhere." And with all those white faces was the single overwhelming, blanketing fact of deprivation, a bare-bones existence. Britain had just prevailed in a struggle for its very survival, but victory never looked so grim.

. . .

The Labor Party won the 1945 election in a landslide on a promise of national planning. The debate now was how far to take socialism, with the Laborites divided between the hell-bent nationalizers and the more market-oriented Keynesians. In 1946 Keynes himself admitted (though privately) that "I find myself more and more relying for a solution of our problems on the invisible hand" of the market, "which I tried to eject from economic thinking 20 years ago."

. . .

Almost invisible in Mr. Kynaston's sparkling panorama is a sign of what was to come. One Conservative politician was out of step not only with Labor's policies but even with the prevailing views of her own party. Margaret Roberts was just about alone in condemning the welfare state as "pernicious," destructive of the national character. In 1951, a year after Labor's second postwar electoral victory, she got married. Her husband's name was Thatcher.

For the full review, see:

Barry Gewen. "Books of The Times - In Postwar Britain, the Grim Face of Victory." The New York Times (Thurs., June 12, 2008): B7.

(Note: ellipses within the Kynaston quote are in the original; ellipses between paragraphs are added.)

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From McCraw writing about Schumpeter:

(pp. 318-319) The New Deal struck him as still another prelude to authoritarianism. He became convinced that Roosevelt's program represented a step toward either fascism or socialism, and in either case potential dictatorship. He wrote a friend that Roosevelt was like a child mindlessly breaking a machine because he didn't understand its design. The president "is going to turn me into a fan of [Ludwig von] Mises," his classmate at the University of Vienna who had become a free-market fundamentalist and an opponent of almost all government intervention.

Source:

McCraw, Thomas K. Prophet of Innovation: Joseph Schumpeter and Creative Destruction. Cambridge, Mass.: Belknap Press, 2007.

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In 2008 dollars, a basic Brooks Brothers suit cost $788 in 1998 and costs $598 in 2008. Source of photo: online version of the NYT article quoted and cited below.

(p. E1) As luxury fashion has become more expensive, mainstream apparel has become markedly less so. Today, shoppers pay the same price for a basic Brooks Brothers men's suit, $598, as they did in 1998. The suggested retail price of a pair of Levi's 501 jeans, $46, is about $4 less than it was a decade ago. A three-pack of Calvin Klein men's briefs costs $21.50, only $3.50 more than in 1998. Which is the better buy?

Factoring for inflation, each of these examples is actually less expensive today. In current dollars, the 1998 suit would cost $788, the jeans would be $66 and the underwear would be nearly $24.

. . .

(p. E9) Anyone who has spent time walking along 34th Street in Manhattan recently, from Kmart to Macy's to Forever 21 and H&M, would think that the economic outlook is rosy. Shoppers there are still laden with bags from Payless and Victoria's Secret, and several said they perceived fashion to be a better buy, with more variety and style at lower prices, than a decade ago.

"You can buy a lot more with your money today than before," said Joanna Eliza, a recent graduate from the Fashion Institute of Technology, shopping on 34th Street on Tuesday. "Stores like H&M and Forever 21 make it more affordable for people who want to be fashionable, and that makes me feel really good."

Over all, apparel prices have gone down primarily because of two factors: the overwhelming movement of manufacturing to countries with cheaper labor, where the clothes are made, and increased competition between traditional retailers and discounters, where the clothes are sold.

In some cases, the low prices today seem almost ridiculous. Steve & Barry's sells celebrity-branded shoes and dresses for $8.98 or less. Target offers a silk faille ball gown from Isaac Mizrahi on sale for $129.99. Wal-Mart, the nation's largest retailer, promotes an Op T-shirt for 97 cents.

For the full story, see:

ERIC WILSON. "Dress for Less and Less." The New York Times (Thurs., May 29, 2008): E1 & E9.

(Note: ellipsis added.)

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Source of book image:
http://ecx.images-amazon.com/images/I/61cDbDl665L._SS500_.jpg

(p. D1) SOME people would just as soon ignore the culinary potential of the Carolina flying squirrel or the Waldoboro green neck rutabaga. To them, the creamy Hutterite soup bean is too obscure and the Tennessee fainting goat, which keels over when startled, sounds more like a sideshow act than the centerpiece of a barbecue.

But not Gary Paul Nabhan. He has spent most of the past four years compiling a list of endangered plants and animals that were once fairly commonplace in American kitchens but are now threatened, endangered or essentially extinct in the marketplace. He has set out to save them, which often involves urging people to eat them.

Mr. Nabhan's list, 1,080 items and growing, forms the basis of his new book, an engaging journey through the nooks and crannies of American culinary history titled "Renewing America's Food Traditions: Saving and Savoring the Continent's Most Endangered Foods" (Chelsea Green Publishing, $35).

. . .

(p. C5) Some of the items on the list, like Ojai pixie tangerines and Sonoma County Gravenstein apples, were well on their way back before Mr. Nabhan came along. But other foods are enjoying a renaissance largely as a result of the coalition's work.

The Makah ozette potato, a nutty fingerling with such a rich, creamy texture that it needs only a whisper of oil, is one of the success stories. It is named after the Makah Indians, who live at the northwest tip of Washington state and have been growing the potatoes for more than 200 years.

The Seattle chapters of Slow Food and the Chefs Collaborative adopted the rare potato. In 2006, Slow Food passed out seed potatoes to a handful of local farmers and gardeners, and chefs like Seth Caswell at the Stumbling Goat Bistro in Seattle began putting them on the menu.

Mr. Caswell says they are delicious roasted with a little hazelnut oil for salads or cut into wedges to go with burgers made with wagyu beef and Washington State black truffle oil.

There have been other revivals, the moon and stars watermelon and the tepary bean among them. The effort to reintroduce heritage turkeys to the American table was a precursor to the work of Mr. Nabhan and his collaborators.

The meaty Buckeye chicken, with its long legs suitable for ranging around, is considered one of five most endangered chicken breeds. Last year over 1,000 chicks were hatched and delivered to breeders, Mr. Nabhan said.

Justin Pitts, whose family has raised Pineywoods cattle in southern Mississippi for generations, credits the coalition with saving those animals. The small, lean cattle that provide milk, meat and labor spent centuries adapting to the pine barrens of the deep south, raised by families who can trace their herds back as far as anyone can remember. There are less than a dozen of those families left, and at one point the number of pure Pineywoods breeding animals fell to under 200. In the past few years, it has grown to nearly 1,000.

Mr. Pitts, who has "90 head if I can find them all," sells New York strips and other cuts at the New Orleans farmers' market and to chefs.

"I can't raise cattle fast as they eat them," he said.

He supports the notion that you've got to eat something to save it.

"If you're keeping them for a museum piece," he said, "you've just signed their death warrant."

For the full story, see:

KIM SEVERSON. "An Unlikely Way to Save a Species: Serve It for Dinner." The New York Times (Weds., April 30, 2008): D1 & D5.

(Note: ellipses added.)

Reference to book:

Nabhan, Gary Paul. Renewing America's Food Traditions: Saving and Savoring the Continent's Most Endangered Foods. White River Junction, VT: Chelsea Green Publishing Company, 2008.

Moon and stars watermelon. Source of image: http://bp0.blogger.com/_Tyq14YRMHCI/SBlWLE9tynI/AAAAAAAAAD8/gphhc3wgK-4/s1600/purplewatermelon266.jpg

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(p. C3) The United States may be synonymous with the high-tech revolution, but it is in danger of losing its high-tech edge, according to Cybercities 2008, a report released Tuesday by AeA, a technology industry trade association.

Because the federal government does not issue a sufficient number of green cards or work visas to talented foreign students studying here, there are a "tremendous number of unfilled jobs," said Christopher Hansen, AeA's chief executive.

"We educate them and then tell them to go home. This is absurd," said Mr. Hansen, whose group has lobbied to increase the number of visas for foreign technology industry workers.

For the full story, see:

ERIC A. TAUB. "U.S. High Tech Said to Slip." The New York Times (Weds., June 25, 2008): C3.

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"Sam Houston." Source of caption and photo: online version of the WSJ commentary quoted and cited below.

(p. A9) When Sam Houston was still hanging his hat in Tennessee in the 1830s, it wasn't uncommon for fellow Tennesseans who were packing up and moving south and west to hang a sign on their cabins that read "GTT" - Gone to Texas.

Today obstetricians, surgeons and other doctors might consider reviving the practice. Over the past three years, some 7,000 M.D.s have flooded into Texas, many from Tennessee.

Why? Two words: Tort reform.

In 2003 and in 2005, Texas enacted a series of reforms to the state's civil justice system. They are stunning in their success. Texas Medical Liability Trust, one of the largest malpractice insurance companies in the state, has slashed its premiums by 35%, saving doctors some $217 million over four years. There is also a competitive malpractice insurance industry in Texas, with over 30 companies competing for business. This is driving rates down.

The result is an influx of doctors so great that recently the State Board of Medical Examiners couldn't process all the new medical-license applications quickly enough. The board faced a backlog of 3,000 applications. To handle the extra workload, the legislature rushed through an emergency appropriation last year.

For the full commentary, see:

JOSEPH NIXON. "CROSS COUNTRY; Why Doctors Are Heading for Texas." The Wall Street Journal (Sat., May 17, 2008): A9.

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

(p. A18) The American playwright David Mamet wrote a piece for the Village Voice last week titled, "Why I Am No Longer a 'Brain-Dead Liberal.'" Mr. Mamet, whose characters famously use the f-word as a rhythmic device (I think of it now as the "Mamet-word"), didn't himself mince words on his transition. He was riding with his wife one day, listening to National Public Radio: "I felt my facial muscles tightening, and the words beginning to form in my mind: 'Shut the [Mamet-word] up.'" Been known to happen.

Toward the end of the essay, he names names: "I began reading not only the economics of Thomas Sowell (our greatest contemporary philosopher) but Milton Friedman, Paul Johnson, and Shelby Steele, and a host of conservative writers, and found that I agreed with them: a free-market understanding of the world meshes more perfectly with my experience than that idealistic vision I called liberalism."

For the full commentary, see:

DANIEL HENNINGER. "WONDER LAND; David Mamet's Revision." The Wall Street Journal (Thurs., March 20, 2008): A18.

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(p. A14) ARSI NEGELE, Ethiopia -- Babou Galgo, a 61-year-old farmer, proudly showed off his prized harvest from last season: two shiny gold medals from the regional and federal government and a slick certificate praising his "outstanding performance in increasing agriculture production and productivity."

What he had done was boost his corn yields on his small farm in southern Ethiopia an eye-popping sevenfold over the past several years. Even more impressive, he had boosted the well-being of his family as well: With the added income, they moved out of a traditional mud-brick tukul and into a brick and concrete house furnished with a refrigerator, television and DVD player, rare luxuries for a farmer in one of the world's poorest countries.

Indeed, not long ago, Mr. Galgo would have had no need for a refrigerator as meager yields had him struggling to feed his family. "It's the seeds," he says, noting the reason for his reversal of fortunes. "Hybrids."

Africa's nascent push to finally feed itself is turning the clock back to the early part of 20th-century America. It was in the 1930s and '40s when Iowa-based Pioneer Hi-Bred International popularized hybrid seeds in the U.S., swelling corn yields throughout the Midwest. Seven decades later, African farmers and U.S. companies are trying to recreate the same boom that turned America into the world's breadbasket, only this time in the harsh climate -- environmental and political -- of Ethiopia and greater Africa.

. . .

Farmer Galgo is ready for another upgrade. Sitting in his comfortable living room, beneath wall murals of Jesus and a peace dove, he tells Mr. Admassu, "I want to expand my land and buy a tractor. A big tractor, with a lot of power."

For the full story, see:

ROGER THUROW. "Agriculture's Last Frontier; African Farmers, U.S. Companies Try to Create Another Breadbasket With Hybrids." The Wall Street Journal (Tues., May 27, 2008): A14.

(Note: ellipsis added.)

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(p. A15) Where are the pro-trade Democrats? America won't increase middle-class incomes and create jobs without them.

. . .

History proves that expanding trade and productivity help create growth. We learned that the hard way when the Smoot-Hawley tariff helped crush trade and exacerbate the Great Depression. Conversely, we have seen trade drive the economy during the great expansions of the 1960s and 1990s.

. . .

Trade gives poor people around the globe the opportunity to build a brighter future. During the Clinton administration, new trade programs like the African Growth and Opportunity Act helped key regions in the world succeed, while American workers stood to gain.

I helped found the Democratic Leadership Council in the wake of Walter Mondale's 49-state defeat in 1984, and we have always supported expanded trade. We still have a ways to go to win that argument in the Democratic Party. But the record is clear. Over the past 20 years, our party has grown stronger when we've been willing to do the right thing on the toughest issues, from putting the nation's fiscal house in order to overhauling a broken welfare system that trapped millions in poverty.

For the full commentary, see:

AL FROM. "Confessions of a Pro-Trade Democrat." The Wall Street Journal
(Mon., June 9, 2008): A15.

(Note: ellipses added.)

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(p. A12) Laissez-faire. It's a policy that made Starbucks vastly successful. But don't try to put that phrase on a customized Starbucks Card.

The cards are supposed be personalized to reflect customers' tastes and uniqueness. They are available in a range of colors, often given as gifts and used by regular customers who prefer to prepay for their java.

But when my friend Roger Ream, president of the Fund for American Studies, received a Starbucks gift card for Christmas, he found there was a limit to how personalized a card could be. His card required him to customize it on the company's Web site. So he went to the site and requested that the phrase "Laissez Faire" be printed on his card. A few days later he was informed that the company couldn't issue such a card because the wording violated company policy.

. . .

Maybe Starbucks considers the phrase inappropriate because it's "overtly political commentary"? Certainly my friend regards it as a firm statement of political philosophy.

And so, at my suggestion, my friend went back to the Web site and asked that his card be issued with the phrase "People Not Profits." Bingo! Starbucks had no problem with that phrase, and the card arrived in a few days.

I wondered just what the company's standards were. If "laissez-faire" is unacceptably political, how could the socialist slogan "people not profits" be acceptable?

. . .

Starbucks has prospered mightily in a free economy. For the most recent fiscal year, the company earned $672.6 million on revenue of $9.4 billion, a very healthy profit. And these days, in the wake of a California Superior Court judge's order that the company repay $100 million in back tips that were shared by shift supervisors, Starbucks honchos just might like a little less government intervention in their affairs and a little more laissez-faire.

For the full commentary, see:

DAVID BOAZ. "Starbucks and 'Laissez Faire'." The Wall Street Journal
(Mon., April 7, 2008): A12.

(Note: ellipses added.)

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"Marcelo Marchetti, president of Cigra group." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) WENCESLAO ESCALANTE, Argentina -- When the government decided in March to raise taxes on farmers' profits, it set off a rural revolt in Argentina. For three weeks enraged farmers blocked roads nationwide, paralyzing grain and meat sales and causing food shortages.

. . .

The farmers say they are concerned not only about profits, though the steeper taxes have cut into them. They also say Mrs. Kirchner's policies are threatening to reverse one of the great agricultural booms in Argentina's history and to snuff out a technological and entrepreneurial revolution that has made the country a leading food source in a world racked by hunger and rising food prices.

"We have an enormous historic opportunity to grow as a country, but the government wants to punish a sector that should continue to be an engine of growth," said Marcelo Marchetti, 39. "The world has opened its doors to us, and here we are fighting among ourselves."

. . .

An emergency law passed in 2002, in the midst of an economic crisis, has allowed the Kirchner government to create export taxes and keep the revenues away from governors and mayors. The Kirchners have used the doling out of those revenues to maintain political control over the provinces, which were critical to Mrs. Kirchner's election.

. . .

In Wenceslao Escalante, the Marchetti brothers, who both studied accounting in college, said the government's policies were killing their incentives to produce more. A decade ago they formed their company, Cigra, investing in the latest seed technology and farm equipment, and later buying $400,000 grain harvesters with global positioning systems.

Seven years ago the brothers expanded north into Chaco and Santiago del Estero, provinces where the land was thought to be too dry to support corn and soybeans. Today, with more advanced seeds and better crop rotation, it is considered the frontier for Argentine agriculture. But production there is threatened by declining profitability.

As the government has taken more from the farmers, international prices for the supplies to produce their crops, including fertilizers and seeds, have been rising faster than the prices of the commodities, Marcelo Marchetti said. The price of phosphorus, for example, has nearly tripled since last year, he said.

Suddenly the future seems cloudier. The brothers have decided not to make any investments over the next year.

"Everything is on hold," Mr. Marchetti said.

For the full story, see:

ALEXEI BARRIONUEVO. "In Argentina's Grain Belt, Farmers Revolt Over Taxes." The New York Times, Section 1 (Sun., April 27, 2008): 6.

(Note: ellipses added.)

"At a butcher shop in Buenos Aires, supplies were down during strikes by farmers in rural towns like Wenceslao Escalante." Source of caption and photo: online version of the NYT article quoted and cited above.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

I agreed to have my name added to the "Economist's Statement" below, which was released to the press on Mon., July 7th. My general view is that free markets encourage morality, free choice, efficiency, and innovation; and that John McCain is much more likely to adopt free market policies than is Barack Obama.

Economists' Statement:

We enthusiastically support John McCain's economic plan. It is a comprehensive, pro-growth, reform agenda. The reform focuses on the real economic problems Americans face today and will face in the future. And it builds on the core economic principles that have made America great.

His plan would control government spending by vetoing every bill with earmarks, implementing a constitutionally valid line-item veto, pausing non-military discretionary government spending programs for one year to stop their explosive growth and place accountability on federal government agencies.

His plan would keep taxes from rising, because higher tax rates are exactly the wrong policy to restore economic growth, especially at this time.

His plan would reduce tax rates by cutting the tax that corporations pay to 25 percent in line with other countries, by completely phasing out the alternative minimum tax, by increasing the exemption for dependents, by permitting the first-year expensing of new equipment and technology, and by making permanent a reformed tax credit for R&D.

His plan would also create a new and much simpler tax system and give Americans a free choice of whether to pay taxes under that simple system or the current complex and burdensome income tax.

His plan would open new markets for American goods and services and thereby create additional jobs for Americans by supporting good free trade agreements, such as the one with Colombia, and working with leaders around the world to avoid isolationism and protectionism. His plan would also reform education, retraining, and other assistance programs so they better help those displaced by trade and other changes in the economy. His plan addresses problems in the financial markets and housing markets by calling for increased transparency and accountability, by targeted assistance to deserving homeowners to refinance their mortgages, and by opposing so-called reform plans which would raise the costs of home-ownership in the future.

The above actions, as well as plans to address entitlement programs -- especially Social Security, Medicare and other government health care programs -- and his regulatory reforms -- especially in the area of health care -- constitute a broad and powerful economic agenda. Because of John McCain's experience working with the American people in all walks of life, with members of Congress on both sides of the aisle, and with leaders around the world, we are optimistic that these plans will become a reality and will create jobs and restore confidence and strong economic growth.

Economists Who Have Signed The Statement:

Burton Abrams, University of Delaware
James D. Adams, Rensselaer Polytechnic Institute
Douglas K. Adie, Ohio University
Richard Agnello, University of Delaware
William Albrecht, University of Iowa
Constantine Alexandrakis, University of Massachusetts at Dartmouth
William Alpert, University of Connecticut
Wayne Angell, Former Fed Governor
Fernando E. Alvarez, University of Chicago
Geoffrey T. Andron, Austin Community College
George R. Averitt, Purdue University North Central
Charles Baird, California State University, East Bay
Howard Beales, George W ashington University
Stacie E. Beck, University of Delaware
Gary Becker, University of Chicago
Donald Bellante, University of South Florida
Daniel K. Benjamin, Clemson University
John J. Bethune, Barton CollegeSanjai Bhagat, University of Colorado
Andrew G. Biggs, American Enterprise Institute
Robert G. Bise, Orange Coast College
Michael K. Block, University of Arizona
Donald Booth, Chapman University
Karl J. Borden, University of Nebraska
Michael Bordo, Rutgers University
George H. Borts, Brown University
Mich ael Boskin, Stanford University
Daniel P. Brandt III, Washington, D.C.
Ike Brannon, Department of the Treasury
David P. Brown, University of Wisconsin-Madison
Jeff Brown, University of Illinois at Urbana-Champaign
Joseph Brusuelas, Merk Investments
Phillip J. Bryson, Brigham Young University
Andrzej Brzeski, University of California, Davis
James Buchanan, George Mason University
Todd Buchholz, Two Oceans Management
Richard Burdekin, Claremont McKenna College
Richard V. Burkhauser, Cornell University
James B. Burnham, Duquesne University
Andr ew B. Busch, BMO Capital Markets
James L. Butkiewicz, University of Delaware
Mark Calabria, United States Senate
James Carter, Vienna, VA
Don Chance, Louisiana State University
Barry R. Chiswick, University of Illinois at Chicago
Bhagwan Chowdhry, UCLA
Richard Clarida, Columbia University
Candice Clark, Economic consultant
Kenneth W. Clarkson, University of Miami
Warren Coats, IMF, retired
John Cogan, Hoover Institution
Boyd D. Collier, Tarleton State University
Michael Connolly, University of Miami
Kathleen B. Cooper, Southern Methodist University
Joshua Coval, Harvard University
Ted Covey, McLean, Virginia
Nicole Crain, Lafayette College
W. Mark Crain, Lafayette College
Dan Crippen, Former CBO Director
Thomas D. Crocker, University of Wyoming
Robert L. Crouch, University of California, Santa Barbara
Mario J. Crucini, Vanderbilt University
Ward S. Curran, Trinity College
Coldwell Daniel III, The University of Memphis
Antony Davies, Duquesne University
Steven Davis, University of Chicago
Clarence R. Deitsch, Ball State University
Richard DeKaser, National City Corporation
Stephen J. Dempsey, University of Vermont
Christopher DeMuth, American Enterprise Institute
David B.H. Denoon, New York University
William G. Dewald, Ohio State University
Arthur M. Diamond Jr., University of Nebraska at Omaha
John Diamond, Rice University
David L. Dickinson, Appalachian State University
Francis X. Diebold, University of Pennsylvania
Jeffrey H. Dorfman, University of Georgia
Thomas J. Duesterberg, Manufacturers Alliance/MAPI
Parnell Duverger, Broward Community College
Isaac Ehrlich, SUNY at Buffalo
Martin Eichenbaum, Northwestern University
Jeffrey A. Eisenach, Criterion Economics
Michael A. Ellis, Kent State University
Joachim G. Elterich, University of Delaware
Kenneth Elzinga, University of Virginia
Stephen J. Entin, Institute for Research on the Economics of Taxation
T.W. Epps, University of Virginia
Michael G. Erickson, The College of Idaho
Paul Evans, Ohio State University
Dino Falaschetti, Hoover Institution
Frank Falero Jr., California State University
Susan K. Feigenbaum, University of Missouri, St. Louis
Martin Feldstei n, Harvard University
Eric Fisher, California Polytechnic State University
Arthur A "Trey" Fleisher III, Metro State College of Denver
James Forcier, University of San Francisco
William F. Ford, Middle Tenn. State U.
Michele Fratianni, Indiana University
Luke Froeb, Vanderbilt University
Kenneth C. Froewiss, NYU Stern School of Business
Diana Furchtgott-Roth, Hudson Institute
Timothy S. Fuerst, Bowling Green State University
Lowell Gallaway, Ohio University
B Delworth Gardner, Brigham Young University
Dave Garthoff, The University of Akron
Ilhan K. Geckil, Anderson Economic Group
Rick Geddes, Cornell University
Joseph A. Giacalone, St. John's University
Adam Gifford, California State University, Northridge
David Gillette, Truman State University
Micha Gisser, University of New Mexico
Amy Jocelyn Glass, Texas A&M University
Charles J. Goetz, The University of Virginia
Claudio Gonzalez-Vega, The Ohio State University
Lawrence Goodman, Bergen City, NJ
Barry K. Goodwin, North Carolina State University
Eric S. Graber, Independent Economist
Douglas H. Graham, The Ohio State University
J. Edward Graham, University of North Carolina Wilmington
Phil Gramm, Former U.S. Senator
Teresa Beckham Gramm, Rhodes College
Wendy Lee Gramm
William B. Green, Sam Houston State University
Kenneth Greene, Binghamton University
Paul Gregory, University of Houston
Earl Grinols, Baylor University
Gary Hansen, UCLA
Eric Hanushek, Hoover Institution
Stephen Happel, Arizona State University
James E. Hartley, Mount Holyoke College
Kevin Hassett, American Enterprise Institute
Joel W. Hay, University of Southern California
Jared E. Hazleton, Texecon: A Texas Economic Consulting Firm
Charles E. Hegji, Auburn University Montgomery
Robert H. Heidt, Indiana University School of Law
Harold M. Hochman, CUNY Graduate Center and Lafayette College
Robert J. Hodrick, Columbia Business School
Stuart G. Hoffman, The PNC Financial Services Group
Arlene Holen, Washington, D.C.
Mac R. Holmes, Troy University
Douglas Holtz-Eakin, John McCain 2008
C. Thomas Howard, University of Denver
E. Philip Howrey, University of Michigan
Glenn Hubbard, Columbia University
James L. Huffman, Lewis & Clark Law School
J. Christopher Hughen, University of Denver
E. Kingdon Hurlock, Calvert Investment Counsel
Stephen L. Jackstadt, University of Alaska, Anchorage
Joseph M. Jadlow, Oklahoma State University
Sherry L Jarrell, Wake Forest University
Michael C. Jensen, Harvard Business School
Dennis A. Johnson, University of South Dakota
Shane A. Johnson, Texas A&M University
Richard Just, University of Maryland
Tim Kane, Washington, D.C.
Steven Kaplan, University of Chicago Graduate School of Business
Alexander Katkov, Johnson and Wales University
Melissa Kearney, University of Maryland
Joe Kennedy, Arlington, Virginia
Lawrence W. Kenny, University of Florida
Calvin A. Kent, Marshall University
E. Han Kim, University of Michigan
Robert G. King, Boston University
Paul R. Koch, Olivet Nazarene University
Meir Kohn, Dartmouth College
James W. Kolari, Texas A&M University
Roger C. Kormendi, Kormendi/Gardner Partners
Marvin Kosters, American Enterprise Institute
Robert Krol, California State University, Northridge
Anne Krueger, Johns Hopkins University
Deepak Lal, University of Cal ifornia, Los Angeles
Douglas Lamdin, The University of Maryland, Baltimore County
Daniel L Landau, University of Connecticut
Richard La Near, Missouri Southern State University
Nicholas A. Lash, Loyola University
Don R. Leet, California State University, Fresno
Norman B. Lefton, Southern Illinois University at Edwardsville
Tom Lehman, Indiana Wesleyan University
Thomas M. Lenard, Technology Policy Institute
Noreen E. Lephardt, Marquette University
Adam Lerrick, Carnegie Mellon University and the American Enterprise Institute
Philip I. Levy, American Enterprise Institute
W. Cris Lewis, Utah State University
Andrew Light, Liberty University
Jane Lillydahl, University of Colorado at Boulder
Zheng Liu, Emory University
Luis Locay, University of Miami
John R. Lott Jr., University of Maryland
Lawrence W. Lovik, Alabama Policy Institute
Robert Lucas, University of Chicago
John Lunn, Hope College
R. Ashley Lyman, University of Idaho
Paul W. MacAvoy, Yale School of Management
Glenn MacDonald, Washington University in St. Louis
John Makin, American Enterprise Institute
Burton Malkiel, Princeton University
David Malpass, Encima Global LLC
Michael Marlow, California Polytechnic State University
Donald J. Marshall, Consulting Engineer and Economist
Aparna Mathur, American Enterprise Institute
Timothy Matthews, Kennesaw State University
John Matsusaka, University of Southern California
Bennett McCallum, Carnegie Mellon University
Paul W. McCracken, University of Michigan
Martin C. McGuire, University of California-Irvine
W. Douglas McMillin, Louisiana State University
Roger Meiners, University of Texas - Arlington
Will Melick, Kenyon College
Allan Meltzer, Ca rnegie Mellon University
John Merrifield, University of Texas at San Antonio
Paul Merski, Independent Community Bankers of America
Jim Mietus, Great Falls, VA
Todd Milbourn, Washington University in St. Louis
Geoffrey P. Miller, New York University Law School
James Miller, George Mason University and The Hoover Institution
William C. Miller, Pioneer Analytics LLC
David E. Mills, University of Virginia
Velma Montoya, National Council of Hispanic Women
Michael Moore, George Washington University
Charles Britt Moss, University of Florida
Robert Mundell, Columbia University
Tim Muris, George Mason University
David B. Mustard, University of Georgia
Richard F. Muth, Emory University
Anthony N. Negbenebor, Gardner-Webb University
Charles Nelson, University of Washington
Robert J. Newman, Louisiana State University
Michael P. Niemira, International Council of Shopping Centers
Tom O'Brien, University of Connecticut
Lee E. Ohanian, UCLA
June O'Neill, Baruch College, CUNY
Steve Parente, University of Minnesota
Randall Parker, East Carolina University
Douglas Patterson, Virginia Tech
Tim Perri, Appalachian State University
Mark J. Perry, University of Michigan-Flint
Tomas Philipson, University of Chicago
William Poole, University of Delaware
Michael E. Porter, Harvard Business School
Barry Poulson, University of Colorado Boulder
James Prieger, Pepperdine University
R. David Ranson, H. C. Wainwrigth & Co. Economics Inc.
Richard Rawlins, Missouri Southern State University
Martin A. Regalia, Gaithersburg, Maryland
Barrie Richardson, Centenary College
Christine P. Ries, Georgia Institute of Technology
Aldona Robbins, Fiscal Associates
Gary Robbins, Fiscal Associates
Kenneth Rogoff, Harvard University
Richard Roll, UCLA
Harvey Rosen, Princeton University
Larry L. Ross, University of Alaska, Anchorage
Robert Rossana, Wayne State University
Timothy P. Roth, The University of Texas at El Paso
Charles Rowley, George Mason University
Paul H. Rubin, Emory University
Roy Ruffin, University of Houston
Gary J. Santoni, Ball State University
T.R. Saving, Texas A&M University
Mike Schuyler, Institute for Research on the Economics of Taxation
Anna Schwartz, National B ureau of Economic Research
Loren C. Scott, Louisiana State University
Robert Haney Scott, California State University, Chico
Carlos Seiglie, Rutgers University
Richard Selden, University of Virginia
John Semmens, Laissez Faire Institute
Sol S. Shalit, University of Wisconsin
Alan Shapiro, University of Southern California
Judy Shelton
William F. Shughart II, The University of Mississippi
George Shultz, Hoover Institution
Jerome Siebert, University of California, Berkeley
John Silvia, Wachovia
Chuck Skipton, University of Tampa
Scott B. Smart, Indiana University
Amy Smith, Former OMB Chief Economist
James F. Smith, The University of North Carolina
Vernon Smith, Chapman University
Sean M. Snaith, University of Central Florida
Douglas Southgate, Ohio State University
Frank Spreng, McKendree University
Beryl W. Sprinkel, Retired
Stan Spurlock, Mississippi State University
George J. Staller, Cornell University
Craig A. Stephenson, Babson College
Houston Stokes, University of Illinois at Chicago
Courtenay C. Stone, Ball State University
Scott Sumner , Bentley College
James Sweeney, Stanford University
Richard Sweeney, Georgetown University
Robert Tamura, Clemson University
Clifford Tan, Stanford Center for International Development
John A. Tatom, Indiana State University
John Taylor, Stanford University
Paul Taylor, Vienna, VA
Teresa Tharp, Valencia Community College
Clifford F. Thies, Shenandoah University
Henry Thompson, Auburn University
Walter N. Thurman, North Carolina State University
Jerry G. Thursby, Georgia Institute of Technology
Robert D Tollison, Clemson University
William N. Trumbull, West Virginia University
Kamal Upadhyaya, University of New Haven
Charles W. Upton, Kent State University
Peter J Van Blokland, University of Florida
T. Norman Van Cott, Ball State University
Richard Vedder, American Enterprise Institute
George J. Viksnins, Georgetown University
J. Antonio Villamil, The Washington Economics Group
Richard E. Wagner, George Mason University
William B. Walstad, University of Nebraska-Lincoln
Murray Weidenbaum, Washington University in St. Louis
Marc D. Weidenmier, Claremont McKenna College
Finis We lch, Texas A&M University
James B. Whitaker, Centreville, VA
John Wicks, University of Montana
Wayne H. Winegarden, Arduin, Laffer & Moore Econometrics
Gary Wolfram, Hillsdale College
DeVo L. Yoho, Ball State University
Nancy A. Yonge, Smith Center for Private Enterprise
Paul J. Zak, Claremont Graduate University
Mokhlis Y. Zaki, Northern Michigan University
Mark Zandi, Malvern, PA
Arnold Zellner, University of Chicago
Kate Zhou, University of Hawaii
Joseph Zoric, Franciscan University of Steubenville
Benjamin Zycher, Manhattan Institute for Policy Research

* Affiliations are listed for identification purposes only.

The statement may be found online at:

http://www.johnmccain.com/Informing/News/PressReleases/Read.aspx?guid=c90681b9-5dfe-4de4-8057-ceedb30c228d

Posted by Art Diamond at 1:01 AM | Permalink | Comments (3)

"Government milk is sold mostly through curbside milk stalls. Some customers don't find the milk stands appealing since they can be dingy and the milk sometimes bad." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) MUMBAI -- Every workday morning, milkman D.T. Walkar faithfully comes to Worli Dairy to not deliver milk.

Most days, he and his fellow drivers at the government dairy sign in, then move to the rest area. While others read the paper, nap or play rummy, Mr. Walkar likes to do the Sudoku puzzle in the Maharashtra Times, unless someone else has gotten to it first. He then wanders around the complex and talks to friends. The last delivery trucks were sold last year. "The trucks are all gone so we just sit around and talk," says Mr. Walkar, 50 years old. "We are bored."

Once respected civil servants, Mr. Walkar and his 300-odd fellow drivers have been left in a strange limbo. Milk sales at their dairy have plummeted as the state government lost its monopoly on milk and consumer tastes changed. But because Indian work rules strictly protect government workers from layoffs, the delivery men show up for work each morning for eight-hour shifts, as they always did, then proceed to do nothing all day. They rarely, if ever, leave the plant.

. . .

(p. A5) In 2001, the Indian government started opening the dairy market in Maharashtra to competition. Private carriers with higher quality milk swiftly won customers by delivering milk to doorsteps. The government milkmen have always been restricted to delivering mostly to curbside milk stalls so they could cover a greater area.

Customers swiftly deserted. Many switched to heat-treated milk in sealed packages that resist spoiling. Some ditched the government's former best sellers of sweet Pineapple milk and spicy Masala milk for Coca-Cola and Sprite as Indian tastes westernized. Others never found the milk stands appealing -- they can be dingy and the milk sometimes bad.

For the full story, see:

ERIC BELLMAN. "Out to Pasture: India's Milkmen Bide Their Time; No Work, Secure Job Put Them in Limbo; Where's the Sudoku?" The Wall Street Journal (Sat., March 29, 2008): A1 & A5.

(Note: ellipsis added.)

"Because Indian work rules protect government workers from layoffs, 300-odd former milk truck drivers show up at the Worli Dairy for work each morning just as they always did, then do nothing all day. To pass the time, the men do puzzles, yoga or just sleep off the hours. Once, they tried planting a garden." Source of caption and photo: online version of the WSJ article quoted and cited above.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

"Cubans in Havana recently bought DVD players, among newly available appliances." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) HAVANA -- Can a rice maker possibly be revolutionary?

There they were, piled up one atop another, Chinese-made rice makers selling for $70 each. Beside them, sleek DVD players. Across the well-stocked electronics store were computers and televisions and other household appliances that President Raúl Castro recently decreed ought to be made available to average Cubans, or at least those who could afford them.

Since finally succeeding his ailing 81-year-old brother, Fidel, in February, Mr. Castro, 76, who appeared before hundreds of thousands of Cubans at a May Day rally on Thursday here in the capital, has been busy with a flurry of changes. In the last eight weeks he has also opened access to cellphones, lifted the ban on Cubans using tourist hotels and granted farmers the right to manage unused land for profit.

More is on the horizon, government officials say, like easing restrictions on traveling abroad and the possibility of allowing Cubans to buy and sell their own cars, and perhaps even their homes. Each of these changes may be microscopic in contrast to the outsize problems facing Cuba. But taken together, they are shaking up this stoic, time-warped place.

For the full story, see:

MARC LACEY. "Stores Hint at Change Under New Castro." The New York Times (Fri., May 2, 2008): A1 & A8.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (2)

In one of his more famous, and outrageous, essays, George Stigler argued that economists do not matter, because changes in policy do not arise from changes in ideas, but from changing circumstances and special interests.

One of the cases that he briefly mentions is the repeal of the English Corn Laws that had restricted the importation of wheat (in England "corn" is what we call "wheat) into Britain. The usual account is that the free market arguments of Cobden and Bright made the difference.

The account quoted below, might be taken as support for Stigler's position. But it might also be evidence for the more optimistic position of Stigler's buddy, Milton Friedman. Friedman held that on major issues, economists' policy proposals go ignored until some crisis occurs that sends the politicians looking for policy alternatives. (Friedman thought that this is what occurred in the case of his own proposal for floating exchange rates.)

(p. A23) THE feast of Ireland's patron saint has always been an occasion for saluting the beautiful land "where the praties grow," but it's also a time to look again at the disaster that established around the world the Irish communities that today celebrate St. Patrick's Day: the Great Potato Famine of 1845-6. In its wake, the Irish left the old country, with more than half a million settling in United States. The famine and the migrations changed Irish and American history, of course, but they drastically changed Britain too.

. . .

The first intimations of Ireland's looming calamity reached the British government in August 1845. Although Britain was responsible for the social and economic iniquities which had made Ireland so susceptible, the government of the day deserves some credit for its efforts to avert mass starvation. There were political as well as logistical difficulties.

. . .

To Peel it was obvious that the Corn Laws would have to go, but his electorate of large landowners was vehemently opposed to their abolition. The Duke of Wellington, leader of the House of Lords, complained that Ireland's "rotten potatoes have done it all -- they put Peel in his damned fright." Peel drew heavily on the news from Ireland as he urged Parliament to vote for abolition:

"Are you to hesitate in averting famine which may come, because it possibly may not come? Are you to look to and depend upon chance in such an extremity? Or, good God! are you to sit in cabinet, and consider and calculate how much diarrhea, and bloody flux, and dysentery, a people can bear before it becomes necessary for you to provide them with food?"

The bill abolishing the Corn Laws was passed in May 1846 in the House of Commons, with two-thirds of Peel's party voting against it and the entire opposition voting in favor. A month later, Peel was out of office.

. . .

. . . Ireland's famine, by ending the Corn Laws, prompted the beginning of the free trade that established the success of Britain's industrial economy.

For the full commentary, see the article referenced immediately below, or see his forthcoming book Propitious Esculent: The Potato in World History:

JOHN READER. "The Fungus That Conquered Europe." The New York Times (Mon., March 17, 2008): A23.

(Note: ellipses added.)

The Stigler essay mentioned above is:

Stigler, George J. "Do Economists Matter?" Southern Economic Journal 42, no. 3 (1976): 347-54.

(I will try to dig out a reference for the Friedman position when I have more time.)

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

"TRADITION; Redwood Library and Athenaeum, Newport, R.I., dates back to 1747." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D1) A GROUP of first-time visitors to the Providence Athenaeum climbed the steep stones steps to the imposing front door. One pried open the door tentatively, peered inside and exclaimed, "Oh, this is what a library is supposed to look like!"

This scene was observed by Alison Maxell, executive director of the athenaeum, who said that time and again, she has seen this same reaction: curiosity followed by wonderment.

. . .

(p. D4) THE New England athenaeums I visited on a recent trip maintain not only active memberships, but also some peculiar terminology. Members are commonly called proprietors; some athenaeums distinguish share-holding proprietors from a second tier of members, called subscribers. At the Portsmouth Athenaeum, the director is called the keeper.

Many athenaeums maintain lists of rules that spell out consequences for offenses like writing in books. Some prohibit pens and provide pencils for notation, as well as cotton gloves for handling aged materials. Large or old books often must be rested on wedge-shaped foam cradles to protect brittle spines.

Surprisingly, the Boston Athenaeum permits dogs -- those that behave, a staff member was quick to add.

These athenaeums also provide, in those areas where talking aloud is encouraged, lively opportunities for exchanging ideas with other devotees of literature, arts and sciences.

"In addition to having access to our book stock, members find intellectual stimulation in our exhibitions and by being part of discussion groups," said Richard Wendorf, director and librarian of the Boston Athenaeum and the editor of "America's Membership Libraries" (Oak Knoll Press, 2007), which details histories of 16 of the largest membership libraries.

For the full story, see:

ROGER MUMMERT. "Where Greek Ideals Meet New England Charm." The New York Times (Fri., March 7, 2008): D1 & D4-D5.

(Note: ellipsis added.)

"While roaming through stacks of the Boston Athenaeum, one encounters books from completely different eras, making for random discoveries." Source of caption and photo: online version of the NYT article quoted and cited above.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

"The Travelodge chain in Britain is building two hotels from stackable metal containers imported from China. One of the hotels, in Uxbridge in West London, is shown under construction at right and in a rendering at left." Source of the caption and photo: online version of the NYT article quoted and cited below.

(p. 23) TRAVELODGE, one of the largest budget hotel chains in Britain, is a company in a hurry.

. . .

Once the company finds a location, it turns to a construction partner with equally aggressive plans: Verbus Systems, a London-based company that builds rooms in metal containers in factories near Shenzhen, China, and delivers them ready to be stacked into buildings up to 16 stories tall.

Verbus Systems' commercial director, Paul Rollett, said his company "can build a 300-room hotel anywhere on the planet in 20 weeks."

. . .

When they arrive at Heathrow, the containers will be hoisted into place by crane. The containers, which are as large as 12 by 47 feet, will support one another just as they do when they are crossing the ocean by ship, Mr. Rollett said. No additional structure is necessary.

. . .

DON CARLSON, the editor and publisher of Automated Builder, a trade magazine based in Ventura, Calif., said that in hotels, "modular is definitely the wave of the future." Modular buildings, he said, are stronger, and more soundproof, because stacking units -- each a fully enclosed room -- "gives you double walls, double floors, double everything."

Mr. Rollett agreed, saying that with the steel shipping container approach, "You could have a party in your room, and people in the next room wouldn't hear a thing."

. . .

He is working with his British clients, which, he said, include a Travelodge competitor, Premier Inn, to make the best possible use of the assembly-line method. "We're increasing the degree of modularity," he said, noting that the latest units come with fully fitted bathrooms and "even the paint on the walls."

The only thing they don't have, he said, "is the girl to put a chocolate on your pillow."

For the full article, see:

FRED A. BERNSTEIN. "CHECKING IN; Arriving in London: Hotels Made in China." The New York Times, SundayBusiness Section (Sun., May 11, 2008): 23.

(Note: ellipses added.)

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

Former Senator George McGovern was the Democratic candidate for president in 1972. In the commentary below, he defends our freedom of choice:

(p. A15) Economic paternalism takes its newest form with the campaign against short-term small loans, commonly known as "payday lending."

With payday lending, people in need of immediate money can borrow against their future paychecks, allowing emergency purchases or bill payments they could not otherwise make. The service comes at the cost of a significant fee -- usually $15 for every $100 borrowed for two weeks. But the cost seems reasonable when all your other options, such as bounced checks or skipped credit-card payments, are obviously more expensive and play havoc with your credit rating.

Anguished at the fact that payday lending isn't perfect, some people would outlaw the service entirely, or cap fees at such low levels that no lender will provide the service. Anyone who's familiar with the law of unintended consequences should be able to guess what happens next.

Researchers from the Federal Reserve Bank of New York went one step further and laid the data out: Payday lending bans simply push low-income borrowers into less pleasant options, including increased rates of bankruptcy. Net result: After a lending ban, the consumer has the same amount of debt but fewer ways to manage it.

Since leaving office I've written about public policy from a new perspective: outside looking in. I've come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society.

. . .

The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.

For the full commentary, see:

GEORGE MCGOVERN. "Freedom Means Responsibility." The Wall Street Journal (Fri., March 7, 2008): A15.

(Note: ellipsis added.)

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"Jose Martinez parked his Good Humor truck Tuesday at an Upper West Side corner that is said to be Mister Softee territory." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. C13) On Tuesday afternoon, new battle lines were drawn on the Upper West Side at the corner of Columbus Avenue and 83rd Street, where Ceasar Ruiz, 50, the Mister Softee man, said he had been selling ice cream without any competition for more than eight years.

He said his routine was the same every season. He arrives at the corner by about 2:30 each afternoon, mostly to catch the students getting out of Public School 9 and the Anderson School, just a few yards from the corner. He stays for about an hour and a half, then moves to his next location, he said.

But Tuesday afternoon was different. When he arrived, there sat the freshly painted Good Humor truck and Mr. Martinez, decked out in a crisp uniform, ringing his bell.

"I sell Good Humor, too," Mr. Ruiz said. "But his is more cheap. I sell bar for $2. He might sell for $1.50. Not good. Not good."

Over the din of children clamoring for Dora the Explorer ice cream bars and Mega Missile Pops (red, white and blue rocket-shaped popsicles), Mr. Martinez rang his bell louder, openly competing for customers.

"I'm trying to make a dollar just like he is," said Mr. Martinez, his voice rising loud enough for the other driver to hear. "He's telling me I have to go. But he doesn't own this spot."

. . .

About five minutes before 4 o'clock, Mr. Ruiz leaned out of his Mister Softee truck, looking over at Mr. Martinez.

"Tomorrow, I'm going to beat him here," he said. "I'll be the first one here."

For the full story, see:

TRYMAINE LEE. "It's Still Spring, but the Ice Cream Truck War Revs Up." The New York Times (Weds., May 14, 2008): C13.

(Note: ellipsis added.)

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"Haley Barbour, left, with Toyota officials in February 2007 moments after announcing Toyota Motor Corp. will build a $1.3 billion assembly plant in northeast Mississippi." Source of caption and photo: online version of the WSJ commentary quoted and cited below.

(p. A9) Jackson, Miss. Shortly after winning election in 2003 by running on a tort-reform platform, Mr. Barbour stitched together a coalition of doctors, business groups, taxpayers and even unions to roll back the trial lawyer lobby.

"It was not just a battle," recalls Charlie Ross, the Senate sponsor of the reform bill, "it was a five-year war." The law that eventually passed was every trial lawyers' worst nightmare. It capped awards for noneconomic damages, and prevented the popular practice whereby a plaintiff attorney seeking to bring a class-action shops around for a court where he'll be likely to get a favorable ruling or judgment.

Almost overnight, the flow of lawsuits began to dry up and businesses started to trickle in. Federal Express invested $1 billion in a new facility in the state. Toyota chose Mississippi over about a dozen other states for a new $1.2 billion, 2,000-worker auto plant. The auto maker has stipulated that the company would pull up stakes if the tort reforms were overturned by the legislature or activist judges.

That hasn't happened. About 60,000 new jobs have arrived in four years - not a small number in a workforce of about 1.3 million - and a sharp improvement from the 30,000 jobs lost in the four years before Mr. Barbour took office. Since the law took effect, the number of medical malpractice lawsuits has fallen by nearly 90%, which in turn has cut malpractice insurance costs by 30% to 45%, depending on the county.

Another encouraging sign: Fewer Mississippians are heading to law school and more are looking at business school as the best way to get rich. Many in the younger generation are pursuing a career path that will make them wealth creators, not wealth redistributors.

. . .

Thanks to Mr. Barbour, the state's unemployment rate is down to about 6% from nearly 9%. Last year, Mississippi's per capita income growth was 6.7%, third highest of the 50 states and well above the national average of 5.2%. Mississippi tort reform is making the poor richer, and the rich lawyers less fabulously rich. Now that's a good way to close the income gap.

For the full commentary, see:

STEPHEN MOORE. "CROSS COUNTRY; Mississippi's Tort Reform Triumph." The Wall Street Journal (Sat., May 10, 2008): A9.

(Note: ellipsis added.)

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Source of graphic: online version of the NYT column quoted and cited below.

The top graph above usefully summarizes one of the main results of airline deregulation--lower fares. Other results are sketched below in a couple of passages from a Leonhardt column.

(p. C8) Flying is less expensive, as fares have fallen steadily, adjusted for inflation, and there are more flights to more cities. The barrier to entry is lower. Over the last 30 years, more than 150 airlines have sought bankruptcy protection or disappeared, but more keep springing up as investors continue to put hope over experience, said Denis O'Connor, managing director with AlixPartners, a restructuring firm.

"People don't understand how easy it is to start an airline," Mr. O'Connor said, because of a ready supply of pilots and other employees, as well as used airplanes. "Why would you put capital in something if you can't make a go of it? Southwest is an example of why you would."

. . .

. . . Southwest's transformation from a Texas puddle jumper to the biggest airline in terms of domestic traffic (at least until the Delta-Northwest merger is completed) would not have happened without deregulation.

That airline's evolution is what some experts point to as the best proof of why deregulation, for all its troubles, ultimately is better than a regulated environment.

"This is the free market at work, and we're not used to it," said Mo Garfinkle, a lawyer and a longtime airline industry consultant. "The idea of deregulation was to allow entry, whether it was successful or not."

For the full commentary, see:

MICHELINE MAYNARD. "Did Ending Regulation Help Fliers?" The New York Times (Thurs., April 17, 2008): C1 & C8.

(Note: ellipses added.)

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"A rendering of XCOR's Lynx rocket-powered vehicle." Source of the caption and image: online version of the WSJ article quoted and cited below.

(p. B1) A price war already is brewing among companies seeking to sign up would-be space tourists, years before the first privately financed rocketplanes are scheduled to begin flying.

XCOR Aerospace of Mojave, Calif., the latest entrant to the derby to blast thrill-seekers into the upper reaches of the atmosphere, is expected to unveil plans Wednesday for a rocket-powered vehicle that is substantially smaller, slower and less expensive to build than any of those proposed by rivals. With tickets projected at $100,000 a pop, the low-fare carrier to the heavens would hardly be cheap.

Anticipated to cost less than $10 million to build and to be more compact than many propeller planes used by recreational pilots, XCOR's Lynx vehicle is intended to carry a pilot and a single passenger at twice the speed of sound to about 37 miles above the earth. The entire outing, which would begin and end at a conventional airport and include about two minutes of suborbital zero gravity, would take less than half an hour.

That is a significantly shorter trip -- and only about half the ticket price -- envisioned by British billionaire Sir Richard Branson on his Virgin Galactic spaceship. A sleek and more powerful six-passenger craft, it is designed to travel at about four times the speed of sound and zoom completely out of the atmosphere -- reaching true space more than 60 miles above the earth.

For the full story, see:

ANDY PASZTOR. "Economy Fare ( $100,000) Lifts Space-Tourism Race." The Wall Street Journal (Weds., March 26, 2008): B1-B2.

"Virgin Galactic will launch its rocket from a plane." Source of the caption and image: online version of the WSJ article quoted and cited above.

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

In class, we discuss how consumers pay higher prices for candy and soft drinks because the U.S. government limits on how much foregin sugar we can import. Sometimes a student will claim that candy companies would not lower prices if the price of sugar declined. And sometimes that issue leads to a discussion of whether the candy industry is competitive.

The graphic above, and the quotation below, provide some relevant evidence.

(p. B1) The global confectionary industry has long lacked a dominant player. The top 10 manufacturers controlled just 47% of the $141 billion market as of 2006, the most recent available data. . . .

. . .

If the Wrigley acquisition is successful, Mars will become the world's largest confectionary company with about 14.4% of the market, overtaking Cadbury's 10.1%, based on 2006 figures, the latest available, from Euromonitor International.

For the full story, see:

JULIE JARGON and AARON O. PATRICK. "More Sweet Deals in the Candy Aisle?; Cadbury and Hershey in the Spotlight in the Wake of Mars-Wrigley Linkup." The Wall Street Journal (Tues., April 29, 2008): B1-B2.

(Note: ellipses added.)

"A Cadbury factory worker checks the chocolate production line in Birmingham, England." Source of caption and photo: online version of the WSJ article quoted and cited above.

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"Tryn Collins, left, and Mary Hill share small quarters at a loft building in Brooklyn that was transformed from a factory." Source of caption and photo: online version of the NYT article quoted and cited below.

New York City has had rent control in effect for decades. Economists predict that one effect of rent control is that incentives are reduced to build and maintain apartments. As a result, those seeking living space, have fewer options. (For example, the WSJ a few years ago ran a front page article explaining how some enterprising New Yorkers were living in abandoned elevator shafts.)

The article quoted below, provides additional evidence.

(p. A1) One "room" is a cramped cubby that measures, in all, perhaps 25 square feet, just enough for a full-size mattress and whatever can be stashed beneath. The first-floor rooms, in the basement, are musty and windowless, like caves. The second-floor rooms have plywood walls but no doors, only cut-out windows that overlook a kitchen cluttered with day-old dishes, a chore wheel and the odd paintbrush.

One of the residents likens her home to a "giant treehouse." Another says it is like "living in a public bathroom."

"Where the stalls are just superficial sight lines that block the other person, but you can hear everything they do," said Robyn Frank, a 23-year-old artist. She had just moved in to the McKibbin lofts in East Williamsburg, Brooklyn, and sometimes they literally become bathrooms. They are known for their giant, raucous parties; revelers occasionally urinate in the halls.

This is life in what some refer to as the McKibbin "dorms," a landing pad for hundreds of postcollegiate creative types yearning to make it as artists, and live like them too, in today's New York.

Newcomers marvel that such a place exists: two sprawling, almost identical five-story former factories filled with mostly white hip young things, smack in the middle of a neighborhood that has little in common with Williamsburg proper, its cocktail-mixing neighbor to the west.

Perhaps 300 people live in each building, which face each other and sit, respectively, at 248 and 255 McKibbin Street. Between one and eight people live in each loft. Few were born before the mid-1980s. Rents can range from $375 for one person to roughly $800 for a space.

For the full story, see:

CARA BUCKLEY. "Young Artists Find a Private Space, Only Without the Privacy." The New York Times (Weds., May 7, 2008): A1 & A17.

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Source of book image: http://blog.syracuse.com/shelflife/forgotten.jpg

Amity Shlaes's new history of the Great Depression is at once depressing and encouraging. It is depressing in showing how vulnerable human progress is to the threat from a dishonest, slick orator, who has not a clue about how the economy works. It is encouraging in that it shows so clearly that the length and depth of the Great Depression was due to easily avoidable mistakes in policy, rather than due to some fundamental flaw in capitalism, as has occasionally been claimed.

Although the book does not shy away from pointing out the flaws of Coolidge, Hoover and Willke, it mainly shows how F.D.R.'s routine whimsical policy reversals and double-dealings, alienated not only his original opponents, but many of his early friends and allies.

The New Deal policies to seize business profits, reduced business incentives to take risks: if the risks turned out badly, the business would lose the investment, while if the risks turned out well, the profits would be taxed away by the federal government.

In addition, the sheer unpredictability of New Deal policies further led the prudent to delay investments, thereby further impeding recovery.

The book is well-written, and should be equally well-read.

The reference for the book is:

Shlaes, Amity. The Forgotten Man: A New History of the Great Depression. New York: HarperCollins, 2007.

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Source of graphic: the online version of the Omaha World-Herald article quoted and cited below.

(p. 1A) WASHINGTON -- Opponents of federal air travel subsidies make two points: that subsidized airports are relatively close to regular commercial air service and subsidized flights are used by only a few people a day.

Both are true in Nebraska.

For example, U.S. taxpayers spend nearly $1.4 million a year so that fewer than two dozen travelers a day, on average, can fly out of Grand Island rather than drive the 100 miles to Lincoln.

Taxpayers also chip in $748,635 annually to maintain two daily flights from Alliance to Denver, even though only about a half dozen people a day board the planes.

. . .

(p. 2A) Groups such as Taxpayers for Common Sense and Citizens Against Government Waste say that although the subsidies might have made sense 30 years ago, to prevent communities from losing air service overnight, people know what they're getting into today if they choose to live far from a city with regular air service.

It's a matter of prioritizing public spending, said Steve Ellis, vice president of Taxpayers for Common Sense.

"People have the right to food and clean water," Ellis said. "We don't need to make sure it's a chicken in every pot and air service in every community."

For the full story, see:

JOSEPH MORTON. "Rural travel subsidies still up in the air." Omaha World-Herald (Sunday, February 24, 2008): 1A & 2A.

(Note: ellipses added.)

Federal spending on Essential Air Service
--------------------------------------------------------------------------------
Year     # of communities    Total funding for subsidies *

1998   101   $50
1999   100   $50
2000   106   $50
2001   115   $50
2002   123   $113
2003   126   $101.3
2004   140   $101.7
2005   146   $101.6
2006   151   $109.4
2007   145   $109.4
2008   142   $125

*Figures in millions

Source of data: Government Accountability Office; U.S. Department of Transportation

Source of version of table above: very slightly modified from the online version of the Omaha World-Herald article quoted and cited above.

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"Alicia Ledlie, senior director of health business development for Wal-Mart, said walk-in medical clinics would look like the mockup behind her, in a warehouse in Bentonville, Ark." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. C4) Moving to upgrade its walk-in medical clinic business, Wal-Mart is set to announce on Thursday plans for several hundred new clinics at its stores, using a standardized format and jointly branded with hospitals and medical groups.

. . .

Walk-in medical clinics are a growing industry, with numerous competitors that include big-box retailers, drugstores and even grocery chains around the country. Industry executives say 1,500 to 1,800 clinics will be open by the end of the year.

Propelled by the drugstore chains CVS and Walgreens, by far the biggest sponsors of the clinics to date, more than 700 clinics have opened in the last 15 months. But the business model is unproven so far.

Few, if any, clinics are profitable, according to industry analysts, and only a handful have broken even on daily operations. Most have been open a year or less, and executives say it takes up to three years for a clinic to become profitable enough to recover start-up costs.

Medical societies are inclined to be skeptical of the clinics. The American Academy of Pediatrics opposes them, saying they add to fragmentation in the health care system.

Dr. Edward Zissman, a pediatrician in central Florida, said he had qualms about hospitals that hook up with the clinics. "Putting their name on a product that I don't think has the highest quality," he said, "is going to cost them dearly with physicians."

The American Academy of Family Physicians and the American Medical Association have set forth principles for clinics to observe, including sending patients' medical record to their doctors and finding doctors for patients who do not already have them. Most states require varying degrees of physician supervision of the clinic nurses. Clinic operators say they are complying.

Many patients have said they like the convenience of the walk-in clinics' weekend and evening hours, the short waiting times to see a nurse practitioner, and the posted price lists for a limited menu of care like tests and prescriptions for sore throats and ear infections and seasonal flu shots.

. . .

"The clinics are the latest big example of how you could think about consumers and what their needs are, rather than a health care system exclusively designed around the needs of providers," said Margaret Laws, director of an innovations program at the California Health Care Foundation, an independent group that finances health policy research.

For the full story, see:

MILT FREUDENHEIM. "Wal-Mart Will Expand In-Store Medical Clinics." The New York Times (Thurs., February 7, 2008): C4.

(Note: ellipses added.)

"The design of the Wal-Mart medical clinic is intended to look like a doctor's office, complete with the usual medical hardware." Source of caption and photo: online version of the NYT article quoted and cited above.

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"I like an Englishman a thousand times better than an American," Hitler is said to have remarked." Source of caption and photo: online version of the NYT article quoted and cited below.

Here are some musings by Hitler, in which he compares Germany under Hitler's National Socialism, with America. The musings are dated August 1, 1942, and are quoted in the article cited below:

(p. 3) I grant you that our standard of life is lower. But the German Reich has 270 opera houses - a standard of cultural existence of which they over there have no conception. They have clothes, food, cars and a badly constructed house - but with a refrigerator! This sort of thing does not impress us.

For the full story, see:

MARC D. CHARNEY. "Ideas & Trends; Well, at Least He Liked Our Cars." The New York Times, Section 4 (Sun., April 3, 2005): 3.

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The story quoted below tells how outsourcing high-tech jobs to India has bid up the salaries of high-tech Indian engineers, thereby reducing the appeal of further outsourcing. Marvelous how the market works!

Another lesson from the story applies to forecasting: mechanical extrapolation of current trends is inferior to prediction that takes account of predictable changes in prices (in this case, salaries).

(p. A15) Around the century's turn, when U.S. companies first began flooding to India for its cheap labor, pundits warned that the subcontinent could increasingly rob the U.S. of high-end white-collar jobs. Debate was especially sharp in Silicon Valley, then in a slump, because India annually turns out nearly 500,000 engineering graduates.

. . .

Several years on, the forces of globalization are starting to even things out between the U.S. and India, in sophisticated technology work. As more U.S. tech companies poured in, they soaked up the pool of high-end engineers qualified to work at global companies, belying the notion of an unlimited supply of top Indian engineering talent. In a 2005 study, McKinsey & Co. estimated that just a quarter of India's computer engineers had the language proficiency, cultural fit and practical skills to work at multinational companies.

The result is increasing competition for the most skilled Indian computer engineers and a narrowing U.S.-India gap in their compensation. India's software-and-service association puts wage inflation in its industry at 10% to 15% a year. Some tech executives say it's closer to 50%. In the U.S., wage inflation in the software sector is under 3%, according to Moody's Economy.com.

Rafiq Dossani, a scholar at Stanford University's Asia-Pacific Research Center who recently studied the Indian market, found that while most Indian technology workers' wages remain low -- an average $5,000 a year for a new engineer with little experience -- the experienced engineers Silicon Valley companies covet can now cost $60,000 to $100,000 a year. "For the top-level talent, there's an equalization," he says.

For the full story, see:

Pui-Wing Tam and Jackie Range. "Second Thoughts: Some in Silicon Valley Begin to Sour on India; A Few Bring Jobs Back As Pay of Top Engineers In Bangalore Skyrockets." Wall Street Journal (Tues., July 3, 2007): A1 & A15.

(Note: ellipsis added.)

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Burt Rutan's current design for WhiteKnightTwo, carrying the smaller SpaceShipTwo spaceship. Source of image: http://www.techno-science.net/?onglet=news&news=4993

(p. A18) Virgin Galactic, the company that hopes to fly well-heeled tourists to the edge of space by the end of 2009, provided a peek Wednesday at the craft that will take them there.

During a news conference at the American Museum of Natural History in Manhattan, Richard Branson, the British entrepreneur whose Virgin Airways is the parent company of the project, said 2008 would be "the year of the spaceship."

Mr. Branson showed models of two vehicles, both created by the airplane designer Burt Rutan. WhiteKnightTwo, a two-fuselage, four-engine plane, is designed to ferry a smaller spacecraft, SpaceShipTwo, high into the sky and release it. The pilot of SpaceShipTwo will then fire the craft's rocket engine, which burns a combination of nitrous oxide and a rubber-based solid fuel, shooting the vehicle to an altitude of more than 62 miles into the realm of black sky.

For the full story, see:

JOHN SCHWARTZ. "Built to Fly Into Space With the Greatest of Ease (They Hope)." The New York Times (Thurs., January 24, 2008): A18.

Artist's rendering of SpaceShipTwo spaceship. Source of image: http://www.techno-science.net/?onglet=news&news=4993

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The passage below is quoted from a WSJ summary of an article that appeared in the July 9-16, 2007 issue of The New Yorker:

(p. B8) The most successful media prediction market is the Hollywood Stock Exchange. According to a study by Harvard Business School professor Anita Elberse, the markets' forecasts of box-office performance are off by 16% on average. That's astonishing accuracy for an industry which, despite all kinds of attempts to predict what will work, assumes that the vast majority of its product will fail at the box office.

For the full summary, see:

"The Informed Reader; Marketing; What's the Next Big Thing? Prediction Markets Answer." Wall Street Journal (Mon., July 2, 2007): B8.

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(p. A22) When my Labrador retriever became acutely lame, we were able to locate a veterinary orthopedic expert in Atlanta within 48 hours who was able to repair a ruptured tendon within one week. But my prospects of identifying an endocrinologist who can care for my daughter's diabetes when she turns 18 are much less promising.

The limited number of endocrine specialists is a not a consequence of limited demand -- everyone is aware of the epidemic of diabetes we are facing. There are also shortages of generalists and other specialists, and the reason is the absence of market signals -- i.e., market-based prices -- for influencing the supply of physicians in various specialties.

The roots of this problem lay in the use of administrative pricing structures in medicine. The way prices are set in health care already distorts the appropriate allocation of efforts and resources in health care today. Unfortunately, many of the suggested reforms of our health care system -- including the various plans for universal care, or universal insurance, or a single-payer system, that various policy makers and Democratic presidential candidates espouse -- rest on the same unsound foundations, and will produce more of the same.

. . .

One important lesson of the 20th century is that, while markets are far from perfect, more choices are available when people are able to use free markets to interact with each other. Markets may not get the prices exactly correct all the time, but they are capable of self- correction, a capacity that has yet to be demonstrated by administrative pricing.

It tells you something when the supply of and demand for specialist veterinary care is so easily matched when the prices of these services are established on the market -- while shortages and oversupplies are common for human medical care when the prices of these services are set by administrators in the public sector. Will health-care reformers -- and American citizens -- get the message?

For the full commentary, see:

Robert A. Swerlick. "Our Soviet Health System." Wall Street Journal (Tues., Jun 5, 2007): A22.

(Note: ellipsis added.)

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In the passage quoted below, the "commission" refers to China's "National Development and Reform Commission."

(p. A6) The commission estimates China's energy efficiency is about 10% below that of developed countries because of obsolete technology. But many experts say Beijing's policy priorities are a bigger obstacle.

Worries about social unrest and inflation led Beijing to put the brakes on pricing overhauls, at tremendous cost to state refiners PetroChina Co. and China Petroleum & Chemical Corp., known as Sinopec.

"Market prices are a very important and key issue because they send out the right signal to the customer to save energy," said Yang Fuqiang, vice president of the Energy Foundation in Beijing.

For the full story, see:

David Winning. "Why Energy Efficiencies Prove Elusive in China." Wall Street Journal (Tues., Nov. 6, 2007): A6.

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"Henry Schneider found few competent, honest mechanics." Source of caption and photo: online version of the NYT commentary quoted and cited below.

(p. C1) . . . , Mr. Schneider drove home to Connecticut and undertook a devilish little test.

Over the next few months, he took the Subaru to 40 garages, loosening the battery cable and draining some coolant before each visit. He even wrote himself a script and memorized it, to make sure he was telling every garage the same thing. "We bought the car recently, and we should have had it looked at before we bought it, but we didn't," he would say. "It hasn't started a few times. Can you check that out?" He also asked for a thorough inspection.

Mr. Schneider was trying to answer a question that has occurred to pretty much all drivers who have ever been given the unsettling news that a car needs more repairs than they had expected: Does it really? Or is the garage just looking to make some extra money off me?

. . .

At only 27 of the 40 garages did mechanics tell Mr. Schneider that he had a disconnected battery cable, the very problem to which he had pointed them by saying his car didn't always start. Only 11 mentioned the low coolant, a problem that can ruin a car's engine. Ten of the garages, meanwhile, recommended costly repairs that were plainly unnecessary, like replacing the starter motor or the battery. (Tellingly, his results were in line with what the Automobile Protection Association found when it performed its experiments in Canada.)

In all, only about 20 percent of the garages deserved a passing grade. "And that's with a pretty low bar," Mr. Schneider told me. "I'm even allowing them to have missed a blown taillight that should have been caught."

. . .

. . . , Mr. Schneider didn't set out to study cars. His original goal was to examine the health care system. But he couldn't very well give himself a heart murmur and then visit 40 cardiologists.

"It turns out it's hard to get objective measures of people's bodies," as Thomas Hubbard, a Northwestern University professor who has also studied the economics of reputation, put it. "It's a lot easier to get objective measures of people's cars."

. . .

Until some savvy entrepreneur starts a garage-rating business, the best solution may be the oldest one: asking for a recommendation from someone who is knowledgeable enough to distinguish between good service and bad. Just remember that a lot of people don't know quite as much about cars -- or their mechanic -- as they think they do.

For the full commentary, see:

DAVID LEONHARDT. "ECONOMIC SCENE; When Trust In an Expert Is Unwise." The New York Times (Weds., November 7, 2007): C1 & C9.

(Note: ellipses added.)

"Schneider sabotaged his dad's old station wagon to test the honesty of mechanics." Source of caption and photo: online version of the NYT commentary quoted and cited above.

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

(p. A2) Mexico has felt the downside of globalization in recent years as cheaper Asian manufacturers of everything from electronics to auto parts have undercut the advantages provided by looser North American trade barriers.

Now, Mexican officials are turning to another sector they hope will put down deeper roots: The booming North American aerospace industry.

Mexico has moved to make it even easier for foreign companies to do business south of the border. Already, big names in aerospace such as Goodrich Corp. of the U.S. and Bombardier Inc. of Canada have set up facilities there.

The nation offers proximity and easy reach at a time when aerospace giants are under pressure to hit deadlines and deliver new aircraft to customers. Aerospace officials also say they are impressed by Mexico's deep talent pool. And if Mexico successfully bolsters its aerospace industry, it will demonstrate that skills burnished servicing the automotive sector can be transferred to higher-end industries.

. . .

Mexico's biggest advantage may be its location. For years, major aerospace manufacturers such as Boeing Co. have farmed out a growing share of their work to suppliers in Japan, China and elsewhere. But these arrangements can make it a challenge to get finished components back to the companies' main factories for final assembly. The choice often boils down to waiting weeks for delivery by ship or paying for costly space on a cargo jet.

With demand for new jetliners and other aircraft at record levels, however, companies are under greater pressure to cut shipping time and increase production. Many U.S. aerospace companies already have built up considerable capacity in Mexico to feed the industry's production hub in Southern California.

For the full commentary, see:

JOEL MILLMAN and J. LYNN LUNSFORD. "THE OUTLOOK; Mexico Seeks a Lasting Share Of Aerospace Boom." The Wall Street Journal (Mon., November 26, 2007): A2.

(Note: ellipsis added.)

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Source of graphic: online version of the NYT article quoted and cited below.

(p. C1) Southwest Airlines, in danger for much of this year of losing its quirky dominance in the domestic airline industry, could soon be standing, once again, head and shoulders above the competition.

Better service? Happier and more productive workers?

Not this time. The reason for Southwest's rapidly increasing advantage over other big airlines is much simpler: it loaded up years ago on hedges against higher fuel prices. And with oil trading above $90 a barrel, most of the rest of the airline industry is facing a huge run-up in costs, and Southwest is not.

Southwest owns long-term contracts to buy most of its fuel through 2009 for what it would cost if oil were $51 a barrel. The value of those hedges soared as oil raced above $90 a barrel, and they are now worth more than $2 billion. Those gains will mostly be realized over the next two years.

Other major airlines passed on buying all but the shortest-term insurance against high fuel prices, allowing Southwest executives a bit of schadenfreude.

For the full story, see:

JEFF BAILEY. "An Airline Shrugs at Oil Prices." The New York Times (Thurs., November 29, 2007): C1 & C10.

'A Southwest Airlines worker fueled a plane. Southwest's chief said the hedges against rising fuel costs "bought us time to retool our company."" Source of caption and photo: online version of the NYT article quoted and cited above.

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(p. A4) Throughout the 20th century, most of the Brazil nuts consumed around the world came from the jungle surrounding this bustling river market town in the eastern Amazon. But the bitter joke here these days is that the only place you can still find a Brazil nut tree is on the municipal seal.

To the chagrin of Brazilians, exports of the nuts that bear their country's name have fallen precipitously to about 7,000 metric tons in 2003 from nearly 19,000 metric tons in 2000, allowing neighboring Bolivia to become the market leader. Groves of Brazil nut trees are disappearing all over the Brazilian Amazon, and the question of who bears responsibility for that sharp decline and resulting deforestation has become the subject of a heated and growing debate.

Economists, scientists and other scholars tend to point to a single family, based here, that has dominated the industry for three generations and controls hundreds of thousands of acres in this region at the junction of the Araguaia and Tocantins rivers. But members of the influential clan, called Mutran, say they are being unjustly attacked and complain of unfair competition and contraband.

. . .

''At their peak, the Mutrans had a monopoly on everything connected with the Brazil nut industry, from harvesting to transport to exports,'' said Marilia Emmi, a professor at the Nucleus for Amazon Research at the Federal University of Pará. ''Much of their own production occurred on public lands that belonged to the state but were initially leased to them for a pittance as the result of backroom political deals.''

. . .

''Because of their monopoly, the Mutrans paid a price so low that production dropped off the map,'' said Zico Bronzeado, a former Brazil nut harvester who now represents Acre in the lower house of Congress. The low prices drove growers to abandon the business, the critics say, selling their lands to loggers and cattle ranchers in a process that deforested vast stretches of the Amazon and further enriched the Brazilian elite.

For the full story, see:

LARRY ROHTER. "Marabá Journal; Brazil's Problem in a Nutshell: Bolivia Grows Nuts Best." The New York Times (Thurs., August 26, 2004): A4.

(Note: ellipses added.)

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     "Once for communal use, the Kibbutz Yasur swimming pool is now run as a private business."  Source of caption and photo:  online version of the NYT article quoted and cited below.

(p. A1)  KIBBUTZ YASUR, Israel -- For much of Israel's existence, the kibbutz embodied its highest ideals: collective labor, love of the land and a no-frills egalitarianism.

But starting in the 1980s, when socialism was on a global downward spiral and the country was mired in hyperinflation, Israel's 250 or so kibbutzim seemed doomed. Their debt mounted and their group dining halls grew empty as the young moved away.

Now, in a surprising third act, the kibbutzim are again thriving. Only in 2007 they are less about pure socialism than a kind of suburbanized version of it.

On most kibbutzim, food and laundry services are now privatized; on many, houses may be transferred to individual members, and newcomers can buy in. While the major assets of the kibbutzim are still collectively owned, the communities are now largely run by professional managers rather than by popular vote. And, most important, not everyone is paid the same.

. . .

(p. A4) The kibbutzim were once austere communes of pioneers who drained the swamps, shared clothes (and sometimes spouses) and lived according to the Marxist axiom, "From each according to his ability, to each according to his needs."

Today, most are undergoing a process of privatization, though kibbutz officials prefer a more euphemistic term: renewal.

. . .

Mr. Varol was born on a kibbutz in the far north, but he left at 18. He is at peace in his new home, but bitter about the past. "My parents worked all their lives, carrying at least 10 parasites on their backs," he said. "If they'd worked that hard in the city for as many years, I'd have had quite an inheritance coming to me by now."

For the full story, see:

ISABEL KERSHNER.  "The Kibbutz Sheds Socialism And Regains Lost Popularity."  The New York Times  (Mon., August 27, 2007):  A1 & A4. 

(Note:  the online version of the article had the title: "KIBBUTZ YASUR JOURNAL; The Kibbutz Sheds Socialism And Regains Lost Popularity.")

(Note:  ellipses added.)

     "The dining room in Kibbutz Nachshon charges members $4 per meal. While kibbutzim once paid all members equally and provided food, today many have adopted a system of varying wages and require payment for many services."  Source of caption and photo:  online version of the NYT article quoted and cited above.

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      "At the Dahon bicycle plant in Shenzhen, China, pay has risen 10 to 15 percent a year, but productivity gains have held down costs."  Source of caption and photo:  online version of the NYT article quoted and cited below.

(p. A1) SHENZHEN, China, Aug. 28 -- At the Dahon bicycle factory here, Zhang Jingming's fingers move quickly and methodically -- grabbing bicycle seats, wrapping them in cardboard and smoothly attaching them to frames.

Working a 45-hour week, Mr. Zhang makes the equivalent of $263 a month; as recently as February, he was making just $197. Some of his higher pay comes from working more efficiently. "When I first started, I wasn't this fast," he said.

But a good portion reflects a raise Mr. Zhang got: to 1.45 cents for each bicycle seat from 1.32 cents. It is a small difference that signifies major change.

Chinese wages are on the rise. No reliable figures for average wages exist; the government's economic data are notably unreliable. But factory owners and experts who monitor the nation's labor market say that businesses are having a hard time finding able-bodied workers and are having to pay the workers they can find more money.

And higher wages in China are likely to lead to higher prices in the United States -- at the mall, at the grocery, even at the gas pump.

Chinese companies are already passing along some of their higher costs to overseas customers. Prices for goods from China, after years of gradual decline, have risen 1.2 percent since February, according to the Labor Department. July's increase was the biggest yet: 0.4 percent compared with June. Chinese companies and contractors are also passing on the cost of the rising value of their currency, the yuan, up 8.8 percent against the dollar in the last two years.

For decades, many labor economists said that China's vast population would supply a nearly bottomless pool of workers. So many people would be seeking jobs at any given time, this rea-(p. A9)soning went, that wages in this country would be stuck just above subsistence levels. As recently as four years ago, some experts estimated that most of the perhaps 150 million underemployed workers in the countryside would be heading to cities.

Instead, sporadic labor shortages started to appear in 2003 at factories in the Pearl River delta of southeastern China. Now those shortages have spread to factories up and down the Chinese coast, specialists say.

. . .

(p. A9) The hardest variable to judge in China's changing labor market is the pace of productivity growth. Since there are few reliable statistics, the best way to assess productivity is to look at individual factories like the Dahon operation here, which produces bicycles that collapse for easy storage.

David T. Hon, chief executive of the privately held Dahon Group, said that while he had been raising wages 10 to 15 percent a year, the average labor cost for each bicycle had actually edged downward. This is possible, he said, because sales are growing 30 percent a year and increasingly large-scale production has brought savings. The cost of engineering a new bicycle design, or handling the accounting and other back-office operations, is spread over more and more bicycles as production rises.

For the full story, see: 

KEITH BRADSHER.  "Wages Are on the Rise in China As Young Workers Grow Scarce."  The New York Times   (Weds., August 29, 2007):  A1 & A9.

(Note: ellipsis added.)

    Source of graph: online version of the NYT article quoted and cited above.

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"Polish women selling sausages at the Borough Market in London. The British have also grown to enjoy Polish food." Source of caption and photo: online version of the International Herald Tribune version of the article quoted and cited below.

(p. C1) LONDON, Oct. 18 -- When Piotr Farbiszewski landed here three years ago, he had enough money in his pocket to live for two weeks.

A successful technology consultant in Warsaw, he and his wife, Ela, a schoolteacher, had come to London to try it on for size; if they liked it, they would stay. To earn money, he worked as a builder while she flipped hamburgers.

They decided that they liked London, and within a year, Mr. Farbiszewski was a senior programmer at a software company. In March, the couple bought a small terraced house outside London, where they plan to raise a family.

"We're very happy here," Mr. Farbiszewski, 31, said. "The quality of life is better, the economy is stronger, there is less bureaucracy, it's a multicultural society and the lady in the supermarket will smile at me. People don't smile at each other in Poland."

The Farbiszewskis are small players in one of Europe's most successful immigration stories. Since Poland joined the European Union in 2004 and Britain, unlike France and most other members, welcomed Polish workers, an estimated 1.1 million Poles, mainly young, have come to Britain. Today, they are the third-largest group of immigrants in the country, behind (p. C5) Irish and Indians.

Britain has benefited. On Tuesday, the Home Office estimated that immigration added £6 billion ($12.3 billion) to the nation's economy last year. According to David Blanchflower of the Bank of England's monetary policy committee, East European immigration has also reduced inflation pressure by increasing the supply of goods and services.

Indeed, Britain may soon face a novel immigration problem. As Poland's economy has improved this year, immigration has slowed, which economists say could cause labor shortages in British industries.

For the full story, see:

JULIA WERDIGIER. "As the Poles Get Richer, Fewer Seek British Jobs." The New York Times (Fri., October 19, 2007): C1 & C5.

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"Holly scares the rodents away at home, a deli in Williamsburg, Brooklyn." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A28) Across the city, delis and bodegas are a familiar and vital part of the streetscape, modest places where customers can pick up necessities, a container of milk, a can of soup, a loaf of bread.

Amid the goods found in the stores, there is one thing that many owners and employees say they cannot do without: their cats. And it goes beyond cuddly companionship. These cats are workers, tireless and enthusiastic hunters of unwanted vermin, and they typically do a far better job than exterminators and poisons.

When a bodega cat is on the prowl, workers say, rats and mice vanish.

. . .

To store owners, the services of cats are indispensable in a city where the rodent problem is serious enough to be documented in a still popular two-minute video clip on YouTube from late February (youtube.com/watch?v=su0U37w2tws) of rats running amok in a KFC/Taco Bell in Greenwich Village. Store-dwelling cats are so common that there is a Web site, workingclasscats.com, dedicated to telling their tales.

But as efficient as the cats may be, their presence in stores can lead to legal trouble. The city's health code and state law forbid animals in places where food or beverages are sold for human consumption. Fines range from $300 for a first offense to $2,000 or higher for subsequent offenses.

. . .

In October, a health inspector fined Mr. Martinez $300 and warned him that if Junior was still there by the time of the next inspection he would be fined $2,000.

"He wants me to get rid of the cat, but the rats will take over if I do," Mr. Martinez said. "I need the cat, and the cat needs a home."

Because stores do not get advance notification of an inspection, Mr. Martinez is trying to keep Junior in his office as much as possible. Many bodega owners reason that a cat is less of a health threat than an army of nibbling rats. "If cats live in homes and apartments where people have food, a cat shouldn't be a threat in a store if it's well maintained," Mr. Fernández said.

For the full story, see:

KATE HAMMER. "To Dismay Of Inspectors, Prowling Cats Keep Rodents On the Run At City Delis The New York Times (Fri., December 21, 2007): A28.

(Note: ellipses added.)

"Oreo roams at a deli in Greenpoint, Brooklyn." Source of caption and photo: online version of the NYT article quoted and cited above.

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     "Delta Air Lines uses G.P.S. technology to reduce the time its planes spend on the runway."  Source of caption and photo:  online version of the NYT article quoted and cited below. 

(p. C1)  WASHINGTON, Sept. 4 — At Hartsfield-Jackson Atlanta International Airport, Delta Air Lines said its jets take off an average of 10 minutes after pushing back from the gate — three minutes faster than in previous years.

Using new technology, planes take off following a narrow route, so that that jets right behind them taking different routes do not have to wait as long. That makes the system move a bit faster.

“The pilots say, ‘Wow, this is kind of neat,’ ” said Joseph C. Kolshak, executive vice president for operations at Delta.

Delta, and also Alaska Airlines and U.P.S., is demonstrating pieces of the possible future of the nation’s air traffic system, hinting at what aviation might be like — if the airlines and the federal government can get the details worked out.

All three airlines use refinements based on the constellation of G.P.S., or global positioning system, satellites. Many of these save at most a few minutes. But in a crowded system plagued by delays, that may be enough to help smooth out bottlenecks.

The carriers’ use of satellite navigation and other tools and techniques represents a step toward replacing a 50-year-old system of radar and radio beacons.

In the process, they are pulling along a slow-moving government agency, the Federal Aviation Administration, that is eager for better air traffic control systems but short on money and the authority to put changes in place.

It is a revolution in technology, but also in politics. Previously, the F.A.A. usually bought new systems on the ground and told airlines to equip themselves to use them; now the airlines are taking the initiative to outfit their planes, with safety regulation from the F.A.A.

Airlines are even developing their own approach patterns for airports, which has almost always been a government job.

U.P.S. Airlines, working with Aviation Communications and Surveillance Systems, based in Phoenix, is developing a landing pattern based on separating planes by time, not distance, so they land at the briefest safe interval.

“We’re going to create the future, because we think we know (p. C5) where it’s going to go,” said Karen Lee, director of operations at U.P.S. This is in contrast to the traditional way of doing business, typified by “the F.A.A. tells us what the roadmap is,” she said, then “we’ll start building the stuff to do it.”

For the full story, see:

MATTHEW L. WALD.  "For Airlines, Hands-On Air Traffic Control."  The New York Times  (Weds., September 5, 2007):  C1 & C5. 

    "A device that U.P.S. installed in the cockpit of one of its cargo planes to display traffic information."  Source of caption and photo:  online version of the NYT article quoted and cited above.

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    Source of graphic:  online version of the NYT article quoted and cited below.

Entrepreneurship thrives when government is small, so it puzzles me when the entrepreneurs in Silicon Valley embrace the Democrats, who generally advocate bigger government.

Of course, my Wabash professor Ben Rogge used to point out that there are always cross-currents that go in a different direction from the mainstream. And among the Democrats, there are what used to be called "new Democrats" who appreciate Schumpeter, and entrepreneurship, and dynamism.

Plus, some Democrats are more respectful of personal, lifestyle choices, and in Silicon Valley, that may be what is given the most weight.

Or, more cynically, maybe there's a public choice explanation---that Silicon Valley donates to Democrats as a form of 'insurance,' in the hope that if the Democrats are elected, they will refrain from over-regulating and over-taxing Silicon Valley. (Even more cynically, compare the case of Florida's sugar-subsidy-rich Fanjul brothers, one of whom donated huge bucks to the first Bush, while another donated huge bucks to Bill Clinton.)

(Another factor is that, alas, entrepreneurs often do not pay much attention to what conditions encourage entrepreneurship.)

(p. C4)  In a flip from the primary season for the 2000 presidential election, 60 percent of the contributions so far from people in the technology field here are going to Democrats. The Democratic candidates raised $1.4 million from the industry in the first half of this year, while Republican candidates raised $890,000. That total is up from $1.2 million in the first six months of each of the last two presidential primary races.

For the full story, see: 

LAURIE J. FLYNN.  "In Primary, Tech's Home Is a Magnet." The New York Times  (Fri., August 24, 2007):  C1 & C4.

     "John McCain, with Google’s chief executive, Eric E. Schmidt, was at the company’s campus in May."  Source of caption and photo:  online version of the NYT article quoted and cited above.

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   "The three major sections of the tunnel system are connected under the building at 919 Milam Street in downtown Houston."  Source of caption and photo:  online version of the NYT article cited below. 

Houston is one of the most vibrant, free-wheeling cities in the United States.  It is the only major city that does not have zoning laws,  (See:   Bernard Siegan's Land Use Without Zoning.)

The tunnels of Houston appear to be another great example of what Hayek called "spontaneous order." 

(p. A14) HOUSTON, Aug. 20 — Where is everybody? 

Seared by triple-digit heat and drenched by tropical storms, midday downtown Houston appears eerily deserted, the nation’s fourth-largest city passing for a ghost town.

On the street, that is.

But below, there are tunnels at the end of the light — nearly seven color-coded miles of them connecting 77 buildings — aswarm with Houstonians lunching, shopping and power-walking in dry, air-chilled comfort.

. . .

It was not centrally planned; it just grew, inspired by Rockefeller Center in New York. But it is not connected to a transit network. And, befitting Texans’ distrust of government, most of it is private; each segment is controlled by the individual building owner who deigns to allow the public access during business hours — and then locks the doors on nights and weekends. Some parts, like those belonging to the former Enron buildings now leased by Chevron, are closed to outsiders altogether.

Few claim mastery of the labyrinth.

“It’s one of Houston’s best-kept secrets,” said Sandra Lord, widely known as the Tunnel Lady, a Yankee transplant who dispels the mysteries for $10 a head and roams the downtown underworld with proprietary aplomb, sometimes stopping strangers to ask, “And you are?” Corporations pay Ms. Lord to orient new employees below ground, and nearly 45,000 natives and visitors have taken her Discover Houston Tours since 1988.

. . .

Ms. Lord, a writer and Houston historian, traced the origins of the tunnels to Ross Sterling, an oilman and governor during the Depression, who, inspired by Rockefeller Center, linked two of his downtown buildings underground in the early 1930s. Soon after, an entertainment entrepreneur, Will Horwitz, connected three of his vaudeville and movie theaters to save on air-conditioning.

And the tunnels grew from there, despite the private expense of digging connections. The oil bust of the 1980s forced many building owners to compete for business with amenities like tunnels.

Many were flooded by Tropical Storm Allison in 2001, prompting installation of submarine-type doors with inflatable rubber insulation for airtight seals.

For the full story, see: 

RALPH BLUMENTHAL.  "It’s Lonesome in This Old Town, Until You Go Underground."  The New York Times  (Tues., August 21, 2007):  A14.

(Note:  ellipses added.)

Top photo shows "Sandra Lord, owner of Discover Houston Tours, leading a tunnel excursion . . . "  Bottom photo shows a map of the tunnels.  Source of caption and photo:  online version of the NYT article cited above. 

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    Source of graph:  online version of the NYT article cited below. 

(p. C1)  In politics, every serious candidate for the White House has a health care plan. So too in business, where the two leading candidates for Web supremacy, Google and Microsoft, are working up their plans to improve the nation’s health care.

. . .

(p. C8)  If the efforts of the two big companies gain momentum over time, that promises to accelerate a shift in power to consumers in health care, just as Internet technology has done in other industries.

Today, about 20 percent of the nation’s patient population have computerized records — rather than paper ones — and the Bush administration has pushed the health care industry to speed up the switch to electronic formats. But these records still tend to be controlled by doctors, hospitals or insurers. A patient moves to another state, for example, but the record usually stays.

The Google and Microsoft initiatives would give much more control to individuals, a trend many health experts see as inevitable. “Patients will ultimately be the stewards of their own information,” said John D. Halamka, a doctor and the chief information officer of the Harvard Medical School.

Already the Web is allowing people to take a more activist approach to health. According to the Harris survey, 58 percent of people who look online for health information discussed what they found with their doctors in the last year.

It is common these days, Dr. Halamka said, for a patient to come in carrying a pile of Web page printouts. “The doctor is becoming a knowledge navigator,” he said. “In the future, health care will be a much more collaborative process between patients and doctors.”

Microsoft and Google are hoping this will lead people to seek more control over their own health records, using tools the companies will provide.

For the full story, see: 

STEVE LOHR.  "Dr. Google and Dr. Microsoft."  The New York Times  (Tues., August 14, 2007):  C1 & C8.

(Note:  ellipsis added.)

  Medical records.  Source of photo:  online version of the NYT article cited above.

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    "A priest passes an abandoned garage covered with graffiti in Milan. Italy's malaise, an economic, political, and social funk, was summed up in a recent poll: Italians report themselves to be the least happy people in Western Europe."  Source of caption and photo:  online verison of the NYT article quoted and cited below. 

(p. A1)  ROME — All the world loves Italy because it is old but still glamorous. Because it eats and drinks well but is rarely fat or drunk.  Because it is the place in a hyper-regulated Europe where people still debate with perfect intelligence what, really, the red in a stoplight might mean.

But these days, for all the outside adoration and all of its innate strengths, Italy seems not to love itself.   The word here is “malessere,” or “malaise”; it implies a collective funk — economic, political and social — summed up in a recent poll: Italians, despite their claim to have mastered the art of living, say they are the least happy people in Western Europe.

“It’s a country that has lost a little of its will for the future,” said Walter Veltroni, the mayor of Rome and a possible future center-left prime minister.  “There is more fear than hope.”

. . .

. . .   In 1987, Italy celebrated its economic parity with Britain.  Now Spain, which joined the European Union only a year earlier, may soon overtake it, and Italy has fallen behind Britain.

Italy’s low-tech way of life may enthrall tourists, but Internet use and commerce here are among the lowest in Europe, as are wages, foreign investment and growth. Pensions, public debt and the cost of government are among the highest.

. . .

(p. A18)  . . .  entrepreneurs complain that they are alone. Politicians offered little help making Italy competitive, and this remains a major impediment to making their gains grow. Businesses want less bureaucracy, more flexible labor laws and large investments in infrastructure to make moving goods around easier.

. . .  

. . .   Many worry . . . that Italy may share the same fate as the Republic of Venice, based in what many say is the most beautiful of cities, but whose domination of trade with the Near East died with no culminating event. Napoleon’s conquest in 1797 only made it official.

Now it is essentially an exquisite corpse, trampled over by millions of tourists.  If Italy does not shed its comforts for change, many say, a similar fate awaits it: blocked by past greatness, with aging tourists the questionable source of life, the Florida of Europe.

. . .  

. . .   “We have reached a point where hoping for some kind of white knight coming in saying, ‘We’ll sort you out,’ is over.”

“We Italians have our destiny in our hands more than ever before,” he said.

For the full story, see: 

IAN FISHER  "In a Funk, Italy Sings an Aria of Disappointment."  The New York Times  (Thurs., December 13, 2007):  A1 & A18.

(Note:  ellipses added.) 

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(p. 8)  At the time of last month's referendum on Mr. Chávez's efforts to remake the Constitution to his liking, I got to know some of the "chamos," as the student activists are known. What struck me was not only how effective they were, but how different their movement was from almost all its many antecedents in the region.

Most important, the Venezuelans are not calling for socialist revolution, but for liberal democracy. Instead of vindicating the statist ideologies of the 20th century or the romantic passions of the 19th, they have embraced classic 18th-century humanism.

. . .

Will they make up a new political party? Can they remain united? Their enemy is formidable, and the chances of a violent or even tragic conclusion are very likely. But against the Chávez slogan, "Socialism or Death," they have their own: "Liberty and Life." In the battle of words they might have the upper hand. Perhaps they can take hope from a line by the Mexican poet-diplomat Octavio Paz: "We must give back transparency to words." 

For the full commentary, see: 

ENRIQUE KRAUZE.  "Humanizing the Revolution."  The New York Times, Week in Review section (Sun., December 30, 2007):  8. 

(Note:  ellipsis added.)

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    Source of book image:  http://palmaddict.typepad.com/photos/uncategorized/big_larsonthunderstruckdrm_1.jpg

Larson's book plays off a murder mystery against Marconi as the innovator who brought us communication through the air. 

I'm most enthused about hte Marconi part.  It shows how he proceeded against the theorists of the day, whose theories told them that what he was trying to do was impossible.  He was more entrepreneur, than scientist.  And it turned out that it was a good thing that the theoretical scientists did not rule, as they might if all decisions about technology were made by the government.

What happened here is an example of what Taleb would call a Black Swan.

Source:

Larson, Erik. Thunderstruck. New York: Crown, 2006.

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    Source of book image:  http://palmaddict.typepad.com/photos/uncategorized/big_larsonthunderstruckdrm_1.jpg

Larson's book plays off a murder mystery against Marconi as the innovator who brought us communication through the air. 

I'm most enthused about hte Marconi part.  It shows how he proceeded against the theorists of the day, whose theories told them that what he was trying to do was impossible.  He was more entrepreneur, than scientist.  And it turned out that it was a good thing that the theoretical scientists did not rule, as they might if all decisions about technology were made by the government.

What happened here is an example of what Taleb would call a Black Swan.

Source:

Larson, Erik. Thunderstruck. New York: Crown, 2006.

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   "Eve Linney, 5, who had an infected finger, went with her family last week to a walk-in clinic at a Duane Reade drugstore on Broadway in Manhattan. Her father, John, is at the counter."  Source of caption and photo:  online version of the NYT article quoted and cited below.  

Clayton Christensen and co-authors in Seeing What's Next, make a plausible case for the improvement of health care through disruptive innovation.  A key aspect of their vision is the increasing role of nurse-practitioners in taking on increasingly routinized tasks, a development they see as generally both effective, and cost-efficient.

The article excerpted below suggests that this trend is promising, if it does not get killed by the government, and by organized medical doctors protecting their turf from competition.

(p. A1)  The concept has been called urgent care “lite”:  Patients who are tired of waiting days to see a doctor for bronchitis, pinkeye or a sprained ankle can instead walk into a nearby drugstore and, at lower cost, with brief waits, see a doctor or a nurse and then fill a prescription on the spot.

With demand for primary care doctors surpassing the supply in many parts of the country, the number of these retail clinics in drugstores has exploded over the past two years, and several companies operating them are now aggressively seeking to open clinics in New York City. 

. . .

More than 700 clinics are operating across the country at chain stores including Wal-Mart, CVS, Walgreens and Duane Reade.

New York State regulators are investigating the business relationships between drugstore companies and medical providers to determine whether the clinics are being used improperly to increase business or steer patients to the pharmacies in which the clinics are located.

And doctors’ groups, whose members stand to lose business from the clinics, are citing concerns about standards of care, safety and hygiene, and they have urged the federal and state governments to step in to more rigorously regulate the new businesses.

. . .

(p. A16)  Patients, however, have flocked to the clinics, according to a new industry group, the Convenient Care Association.

“I think it’s great you don’t have to make an appointment. That could take weeks,” said Ezequiel Strachan, 33, who lives in Manhattan and walked into the clinic at the Duane Reade store at 50th Street and Broadway on a recent morning for treatment of a sore throat. “People here value their time a lot.”

The average waiting time for an exam at such clinics nationwide is 15 to 25 minutes, according to the Convenient Care Association.

The association estimated that 70 percent of clinic patients have health insurance and are using the clinics because of convenience. For them, costs may not be much different from those at doctors’ offices, because the same insurance co-payments apply. But uninsured patients could reap substantial savings.

In New York City, one in five residents lacks a regular doctor and one in six is uninsured, according to a recent survey by the city’s Department of Health and Mental Hygiene, and overcrowded emergency rooms are often their first resort for routine care.

. . .

MinuteClinic officials insisted that there was nothing improper in the relationships between providers and the drugstores and that medical care is not being compromised.

“We are transparent with regulators,” said Michael C. Howe, the chief executive of MinuteClinic, which is based in Minneapolis and operates more than 200 clinics nationwide. using the motto “You’re Sick, We’re Quick.”

Mr. Howe said the concerns of doctors’ groups and other critics “are being raised by voices of people who have not really studied the model.”

Preliminary data from a two-year study of claims from MinuteClinic by a Minnesota health maintenance organization, HealthPartners, which was released to The Minneapolis Star Tribune in July, showed that each visit to the retail clinic cost an average of $18 less than a visit to other primary-care clinics, but that pharmacy costs were $4 higher per patient.

Duane Reade, New York City’s largest drugstore chain, which opened four clinics in Manhattan in May, plans to open as many as 60 more across the city in the next 18 months. A key difference at the Duane Reade clinics is that they use doctors, while nurse practitioners and physician assistants typically provide the care at most retail clinics.

For the full story, see:

SARAH KERSHAW.  "Tired of Waiting for a Doctor?  Try the Drugstore."  The New York Times  (Thurs., . August 23, 2007):  A1 & A16.

(Note:  the title of the online version is "Drugstore Clinics Spread, and Scrutiny Grows."  Ellipses added.)

   "Dr. Maggie Bertisch saw Eve while her mother, Claire, waited."  Source of caption and photo:  online version of the NYT article quoted and cited above.  

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   "A vendor sold bread on Wednesday in a poor section of Cairo, where lines are long and customers pushy."  Source of caption and photo:  online version of the NYT article quoted and cited below. 

(p. A4)  Much of what ails Egypt seems to converge in the story of subsidized bread. It speaks to a state that is in many ways stuck in the past, struggling to pull itself into the future, unable, or unwilling, to conquer corruption or even to persuade people to care about one another.

How do you take a broken system that somehow helps feed 80 million people and fix it without causing social disorder? That is a challenge for Egypt at large, and for this little bakery where Mr. Muhammad ekes out a living, with a cigarette hanging from his lips and an angry crowd demanding his bread.

. . .

“The most corrupt sector in the country is the provisions sector,” said a government inspector who asked not to be identified for fear of punishment. His job is to go to bakeries to ensure they are actually using the cheap government flour to produce cheap bread that is sold at the proper price.

The inspector explained why the system was so open to abuse. The government sells bakeries 25-pound bags of flour for 8 Egyptian pounds, the equivalent of about $1.50. The bakeries are then supposed to sell the flatbread at the subsidized rate, which gives them a profit of about $10 from each sack. Or the baker can simply sell the flour on the black market for $15 a bag.

If the inspector, who said he was paid $42 a month, certifies that after three months the baker has faithfully used the flour to bake bread, the baker gets a refund of about $1 a bag. A baker who goes through 40 sacks a day over the three-month period gets back 18,000 pounds (around $3,300) — a nice sum, this inspector said, which could easily be shared with an underpaid inspector.

. . .

Over the course of an hour one recent day, 14-year-old Mahmoud Ahmed managed four trips to the counter. His job, he said, was to ensure a steady stream of bread for a nearby food vendor, who then resold it in sandwiches. It appeared that the baker let him push his way to the front to get bread before others. Was there a deal going? Mahmoud would not say.

Down the road, five blocks away, a 12-year-old, Muhammad Abdul Nabi, was selling bread, the same kind of bread, from a makeshift table for more than double the price at the bakery. But there were no lines.

For the full story, see: 

MICHAEL SLACKMAN.  "CAIRO MEMO; Egypt’s Problem and Its Challenge: Bread Corrupts."   The New York Times  (Thurs.,  January 17, 2008):  A4.

(Note:  ellipses added.) 

   "Fresh baked for less than a penny, and that's just the start of the complications."  Source of caption and photo:  online version of the NYT article quoted and cited above. 

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    Source of graph:  http://www.heritage.org/Press/ALAChart/images/ALC_017_index_econ_freedom_3col_c.jpg

(p. A13)  . . .  the evidence is piling up that neither government nor multilateral spending on education and infrastructure are key to development. To move out of poverty, countries instead need fast growth; and to get that they need to unleash the animal spirits of entrepreneurs.

Empirical support for this view is presented again this year in The Heritage Foundation/The Wall Street Journal Index of Economic Freedom, released today. In its 14th edition, the annual survey grades countries on a combination of factors including property rights protection, tax rates, government intervention in the economy, monetary, fiscal and trade policy, and business freedom.

The nearby table shows the 2008 rankings but doesn't tell the whole story. The Index also reports that the