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Source of book image on the left:                    
http://images.barnesandnoble.com/images/25780000/25788683.jpg
Source of book image on the right: http://www.churchillsociety.org/Churchill%20Book%20Discussion%20Group.htm

Several recent books support a common conclusion that freedom is fragile, and its preservation can sometimes depend on the courage of a few individuals. I recently heard discussions on C-SPAN of a couple of books (images above) on WW2 that emphasize this point. Hitler might very well have succeeded in the long-term conquest of continental Europe, and even Great Britain, if Churchill and a few others had not taken a stand.

Earlier, also on C-SPAN, I heard John Ferling make a similar point with regard to the American Revolution. (See the images of his two relevant books below.) Were it not for the actions of George Washington, and a few others, the revolution very well might have failed.

One can view this as a bad news, good news, story. In earlier entries on the blog, I have quoted articles suggesting that the French are especially bothered by how "precarious" life can be. Well, the bad news is, that on this, the French may be right.

But, on the other hand, the stories of Churchill, and Washington, also tell us that with some courage and determination and wisdom, individuals can sometimes make a big difference in how stories end. That is the good news.

(And yes, Nassim, luck matters too.)

Books referred to:

Ferling, John. Almost a Miracle: The American Victory in the War of Independence. New York: Oxford University Press, USA, 2007.

Ferling, John. A Leap in the Dark: The Struggle to Create the American Republic. 1st ed. New York: Oxford University Press, USA, 2003.

Lukacs, John R. Blood, Toil, Tears and Sweat: The Dire Warning: Churchill's First Speech as Prime Minister. New York: Basic Books, 2008.

Olson, Lynne. Troublesome Young Men: The Rebels Who Brought Churchill to Power and Helped Save England. 1st ed. New York: Farrar, Straus and Giroux, 2007.

Source of book image on the left:                     http://images.barnesandnoble.com/images/7790000/7793679.jpg
Source of book image on the right: http://images.barnesandnoble.com/images/13420000/13429252.JPG

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Source of book image: http://www.bookswim.com/images_books/large/The_Worst_Hard_Time_The_Untold_Story_of_Those_Who_Survived_the_Great_American_Dust_Bowl-119185970830588.jpg

Timothy Egan's book presents an engrossing picture of what life was like in a particular time and place in U.S. history. The time is the 1920s and 1930s, and the place is the lower "high" plains, mainly of Oklahoma and Texas. Egan is a master of telling us meaningful stories about the goals and struggles of particular people, so that we care when the land blows away from them, and they suffer.

You will need, however, to look elsewhere for a deep understanding of the causes of what happened. Egan mainly aims at describing, not explaining. And when he explains, he mainly rounds up the usual suspects one would expect a New York Times reporter to round up (e.g., Herbert Hoover).

(For deeper and more illuminating explanations of what was going on during the worst of the period, you'd do better by consulting Amity Shlaes's The Forgotten Man.)

References to books mentioned above:

Egan, Timothy. The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl. Boston: Houghton Mifflin, 2006.

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

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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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New York City is one of the few remaining cities that has rent control laws (aka "rent stabilization"). Economists view such laws as a version of price ceilings, and they generally argue that such laws reduce the incentives to build and maintain housing.

Libertarian philosophers would add that the laws also violate fundamental rights of property.

(p. 25) At its core, the fight involves a law allowing landlords to displace rent-stabilized tenants if the landlords will use the space as their primary residence. The Economakis family has prevailed, thus far, on the principle that the law applies even to a building this large. But the tenants continue to press the notion that given the scope of the proposed home -- which calls for seven bathrooms, a gym and a library -- the owners are just trying to clear them out so they can sell the building off to become so many market-rate condos.

Mr. Economakis insists his family would never have subjected itself to years of argument -- and tens of thousands in legal bills -- if they did not want to live there. He acknowledged that it is a lot of space, but said that having the place to themselves is also a matter of privacy. He said that the family long ago offered, as a halfway measure, to let the tenants in the five rear apartments stay, along with a couple on the first floor, and said he would happily sign a promise to turn over the profits to the existing tenants if he sold within 20 years.

"We really believe that, as owners, we have a right to live in the building," he said.

. . .

Last year, the tenants staged a rally outside the building and some 400 people showed up. Mostly, they lodge their silent protest daily on their doors. Mr. Pultz has his evil eye, while his first-floor neighbor, Laura Zambrano, has one poster giving the dictionary definition of the word hubris and another quoting Flaubert:

"Two things sustain me. Love of literature and hatred of the bourgeois."

For the full story, see:

MARC SANTORA. "Landlord's Dream Confronts Rent-Stabilized Lives." The New York Times, Section 1 (Sun., June 15, 2008): 25.

(Note: ellipsis added.)

Perhaps the most eloquent critique of rent control was penned in the only paper that Chicago Nobel Prize winners Milton Friedman and George Stigler ever wrote together (published as a pamphlet):

Friedman, Milton, and George J. Stigler. "Roofs or Ceilings? The Current Housing Problem." Irvington-on-Hudson, New York: Foundation for Economic Education, 1946.

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"Barack Obama at Harvard, where he was the first black president of The Harvard Law Review." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) Mr. Obama, a Democrat, has continued to support race-based affirmative action, calling it "absolutely necessary" when he was a state senator in Illinois and criticizing the Supreme Court for curtailing it in his time in the United States Senate. But in his presidential campaign, he has unsettled some black supporters by focusing increasingly on class and suggesting that poor whites should at times be given preference over more privileged blacks.

His ruminations about shifting the balance between race and class in some affirmative action programs raise the possibility that, if elected in November, he might foster a deeper national (p. 16) conversation about an issue that has been fiercely debated for decades. He declined to comment for this article.

"We have to think about affirmative action and craft it in such a way where some of our children who are advantaged aren't getting more favorable treatment than a poor white kid who has struggled more," Mr. Obama said last week in a question-and-answer session at a convention of minority journalists in Chicago.

During a presidential debate in April, Mr. Obama said his two daughters, Malia, 10, and Sasha, 7, "who have had a pretty good deal" in life, should not benefit from affirmative action when they apply to college, particularly if they were competing for admission with poor white students.

. . .

Ward Connerly, a crusader against affirmative action, said he believed that Mr. Obama's remarks would buoy support for his ballot initiatives in Arizona, Colorado and Nebraska in November that would ban preferential treatment on the basis of race, ethnicity and sex in government hiring and public education.

Last week, Mr. Obama's Republican rival, Senator John McCain, announced his support for those measures. . . .

Mr. Obama opposes the ballot initiatives, saying they would derail efforts to break down barriers for women and members of minorities. But Mr. Connerly said Mr. Obama had already helped the cause. "He's advanced the debate," Mr. Connerly said. "He's brought it to a new level."

. . .

A federal judge once asked a friend of Mr. Obama's whether he had been "elected on the merits" as law review president, Mr. Obama told The Journal of Blacks in Higher Education in 2001. He said the question came up again when he applied for a job as a professor at the University of Chicago Law School.

Mr. Obama has not described how he felt then. But as a state senator, he spoke with empathy about accomplished minority students at elite universities who sometimes lived "under a cloud they could not erase."

Over the past few years, Mr. Obama has also voiced sympathy for whites who feel resentful of race-based affirmative action and questioned how long such programs need to continue.

Even as he argued that timetables for minority hiring may be necessary where there is evidence of systemic discrimination, he also warned in his second book, "The Audacity of Hope," that "white guilt has largely exhausted itself in America."

It was 2006 then, and Mr. Obama was a wealthy senator considering a bid for the presidency. He worried that race-based preferences, while necessary, might undermine efforts at building cross-racial coalitions.

Presaging his recent focus on class, Mr. Obama argued that whites were more likely to join blacks in supporting programs that were not racially based.

"An emphasis on universal, as opposed to race-specific programs isn't just good policy," Mr. Obama said in his book. "It's good politics."

For the full story, see:

RACHEL L. SWARNS. "Obama's Path on Preferences, Race and Class ." The New York Times, Section 1 (Sun., August 3, 2008): 1 & 16.

(Note: ellipses added.)

(Note: the online version has minor differences with the print version; the online version is quoted here, except for the article title. The online article title was: "If Elected ... Delicate Obama Path on Class and Race Preferences." The ellipisis in the online title was in the original.)

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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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(p. A9) A total of 24 states allow voters to change laws on their own by collecting signatures and putting initiatives on the ballot. It's healthy that the entrenched political class should face some real legislative competition from initiative-toting citizens. Unfortunately, some special interests have declared war on the initiative process, using tactics ranging from restrictive laws to outright thuggery.

The initiative is a reform born out of the Progressive Era, when there was general agreement that powerful interests had too much influence over legislators. It was adopted by most states in the Midwest and West, including Ohio and California. It was largely rejected by Eastern states, which were dominated by political machines, and in the South, where Jim Crow legislators feared giving more power to ordinary people.

But more power to ordinary people remains unpopular in some quarters, and nothing illustrates the war on the initiative more than the reaction to Ward Connerly's measures to ban racial quotas and preferences. The former University of California regent has convinced three liberal states -- California, Washington and Michigan -- to approve race-neutral government policies in public hiring, contracting and university admissions. He also prodded Florida lawmakers into passing such a law. This year his American Civil Rights Institute (ACRI) aimed to make the ballot in five more states. But thanks to strong-arm tactics, the initiative has only made the ballot in Arizona, Colorado and Nebraska.

"The key to defeating the initiative is to keep it off the ballot in the first place," says Donna Stern, Midwest director for the Detroit-based By Any Means Necessary (BAMN). "That's the only way we're going to win." Her group's name certainly describes the tactics that are being used to thwart Mr. Connerly.

Aggressive legal challenges have bordered on the absurd, going so far as to claim that a blank line on one petition was a "duplicate" of another blank line on another petition and thus evidence of fraud. In Missouri, Secretary of State Robin Carnahan completely rewrote the initiative's ballot summary to portray it in a negative light. By the time courts ruled she had overstepped her authority, there wasn't enough time to collect sufficient signatures.

Those who did circulate petitions faced bizarre obstacles. In Kansas City, a petitioner was arrested for collecting signatures outside of a public library. Officials finally allowed petitioners a table inside the library but forbade them to talk. In Nebraska, a group in favor of racial preferences ran a radio ad that warned that those who signed the "deceptive" petition "could be at risk for identity theft, robbery, and much worse."

Mr. Connerly says that it's ironic that those who claim to believe in "people power" want to keep people from voting on his proposal: "Their tactics challenge the legitimacy of our system."

For the full commentary, see:

JOHN FUND. "The Far Left's War on Direct Democracy." The Wall Street Journal (Sat., July 26, 2008): A9.

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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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"Campaigning Monday in Fresno, Calif., Senator John McCain said, if elected, he would offer $300 million to anyone who could build a more efficient car battery." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A15) FRESNO, Calif. -- In the 18th century the British offered a £20,000 prize to anyone who figured out how to calculate longitude. More recently, Netflix offered a million dollars for improving movie recommendations on its Web site. Now Senator John McCain is suggesting a new national prize: He said here Monday that if elected president he would offer $300 million to anyone who could build a better car battery.

. . .

"I further propose we inspire the ingenuity and resolve of the American people," Mr. McCain said, "by offering a $300 million prize for the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars."

He said the winner should deliver power at 30 percent of current costs. "That's one dollar, one dollar, for every man, woman and child in the U.S. -- a small price to pay for helping to break the back of our oil dependency," he said.

For the full story, see:

MICHAEL COOPER. "McCain Proposes a $300 Million Prize for a Next-Generation Car Battery." The New York Times (Tues., June 24, 2008): A15 & A20.

(Note: ellipsis added.)

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"Neelie Kroes, the European Union's competition commissioner, has been an opponent of Microsoft's dominance for years." Source of caption and photo: online version of the NYT article quoted and cited below.

If open standards are always "a smart business decision" why do business managers need government bureaucrats to force that decision on them (through fining firms, like Microsoft, that sometimes favor proprietary standards)?

In fact, there are circumstances in which open standards are better for customers, and there are also circumstances in which proprietary standards are better.

To better understand these issues consult Shapiro and Varian's Information Rules and Christensen and Raynor's The Innovator's Solution.

(p. C8) BRUSSELS -- The European Union's competition commissioner, Neelie Kroes, delivered an unusually blunt rebuke to Microsoft on Tuesday by recommending that businesses and governments use software based on open standards.

Ms. Kroes has fought bitterly with Microsoft over the last four years, accusing the company of defying her orders and fining it nearly 1.7 billion euros, or $2.7 billion, on the grounds of violating European competition rules. But her comments were the strongest recommendation yet by Ms. Kroes to jettison Microsoft products, which are based on proprietary standards, and to use rival operating systems to run computers.

"I know a smart business decision when I see one -- choosing open standards is a very smart business decision indeed," Ms. Kroes told a conference in Brussels. "No citizen or company should be forced or encouraged to choose a closed technology over an open one."

For the full story, see:

JAMES KANTER. "Harsh Words for Microsoft Technology." The New York Times (Weds., June 11, 2008): C8.

References mentioned:

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

Shapiro, Carl, and Hal R. Varian. Information Rules: A Strategic Guide to the Network Economy. Boston, MA: Harvard Business School Press, 1999.

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Source of book image: http://press.princeton.edu/images/k8618.gif

(p. A13) The space shuttle Discovery arrived safely home over the weekend, and I suppose we are all rather relieved - that is, those of us who were aware that the shuttle had blasted off a couple of weeks ago on yet another mission. Space exploration is attracting a lot of excitement these days, but the excitement seems to have less to do with the shuttle and more to do with private space ventures, like Richard Branson's Virgin Galactic or Robert Bigelow's plans for space hotels or Space Adventures Ltd., whose latest customer for a private space trip is Google co-founder Sergey Brin. He bought a ticket only last week.

Robert Zimmerman's "The Universe in the Mirror" serves to remind us that NASA, too, can do exciting things in space. Yet the career of the Hubble Space Telescope has been both triumphant and troubled, bringing into focus the strengths and the weaknesses of doing things the NASA way.

. . .

In addition to telling a thrilling tale, Mr. Zimmerman provides a number of lessons. One, he says, is the importance of having human beings in space: Had Hubble not been designed for servicing by astronauts, it would have been an epic failure and a disaster for a generation of astronomers and astrophysicists. Though robots have their uses, he notes, "humans can fix things, something no unmanned probe can do." . . .

But the biggest lesson of "The Universe in a Mirror" comes from the utterly dysfunctional funding and management system that Mr. Zimmerman portrays. Hubble was a triumph, but a system that requires people to sacrifice careers and personal lives, and to engage in "courageous and illegal" acts, in order to see it succeed is a system that is badly in need of repair. Alas, fixing Hubble turned out to be easier than fixing the system that lay behind its problems.

For the full review, see:

GLENN HARLAN REYNOLDS. "Bookshelf; We Can See Clearly Now." The Wall Street Journal (Mon., June 16, 2008): A13.

(Note: ellipses added.)

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(p. 435) . . . , the British civil service, which Schumpeter had admired ever since his youth in Vienna, had become enamored of their new role in economic planning, encouraged by the Labour government. Civil servants had drifted into "downright bureau-sadism" in their attitude toward business.

Source:

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

(Note: ellipsis added.)

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From McCraw's summary of a brief Schumpeter essay published in 1943 in Seymour Harris' Postwar Economic Problems:

(p. 424) Schumpeter went on to argue that both in the United States and in capitalist countries abroad, a high rate of public spending during the postwar period would likely evolve into total government control of investment.   . . .    Some industries might be nationalized, and if the government "should try to run the nationalized industries according to the principles of business rationality, Guided Capitalism would shade off into State Capitalism, . . . "

. . .

The overall result would likely be "an amphibial state for the calculable future." The amphibial state might well generate frictions among business, labor, and government and would not benefit from the "motive power" of either capitalism or socialism.

Source:

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

(Note: ellipses added.)

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"State Senator Karen S. Johnson of Arizona is the sponsor of a bill permitting firearms on campuses." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A10) PHOENIX -- Horrified by recent campus shootings, a state lawmaker here has come up with a proposal in keeping with the Taurus .22-caliber pistol tucked in her purse: Get more guns on campus.

The lawmaker, State Senator Karen S. Johnson, has sponsored a bill, which the Senate Judiciary Committee approved last week, that would allow people with a concealed weapons permit -- limited to those 21 and older here -- to carry their firearms at public colleges and universities. Concealed weapons are generally not permitted at most public establishments, including colleges.

Ms. Johnson, a Republican from Mesa, said she believed that the recent carnage at Northern Illinois University could have been prevented or limited if an armed student or professor had intercepted the gunman. The police, she said, respond too slowly to such incidents and, besides, who better than the people staring down the barrel to take action?

For the full story, see:

RANDAL C. ARCHIBOLD. "Arizona Weighs Bill to Allow Guns on Campuses." The New York Times (Weds., March 5, 2008): A10.

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"A General Motors Corp. Chevrolet Uplander flexible fuel vehicle customized for the U.S. Postal Service (USPS) is shown in this handout photo taken on April 22, 2008. The USPS bought more than 30,000 ethanol-capable trucks and minivans from 1999 to 2005, making it the biggest American buyer of alternative-fuel vehicles." Source of caption and photo: Bloomberg.com article quoted and cited below.

I saw a great CNN video clip on 8/11/08 showing some of the specially designed Post Office vehicles that were expensive, but that were mainly running on regular gasoline because it was too difficult to fill them with the high-ethanol blend that they were converted to use.

Before I finally found the clip on CNNMoney.com, by searching for it using the TRUVEO video search engine, I discovered that a version of the story had run back in May on Bloomberg.com. I quote from the story below.

May 21 (Bloomberg) -- The U.S. Postal Service purchased more than 30,000 ethanol-capable trucks and minivans from 1999 to 2005, making it the biggest American buyer of alternative-fuel vehicles. Gasoline consumption jumped by more than 1.5 million gallons as a result.

The trucks, derived from Ford Motor Co.'s Explorer sport- utility vehicle, had bigger engines than Jeeps from the former Chrysler Corp. they replaced. A Postal Service study found the new vehicles got as much as 29 percent fewer miles to the gallon. Mail carriers used the corn-based fuel in just 1,000 of them because there weren't enough places to buy it.

For the full story, see:

Peter Robison, Alan Ohnsman and Alan Bjerga. "Ethanol Vehicles for Post Office Burn More Gas, Get Fewer Miles." Last Updated: May 21, 2008 00:01 EDT Downloaded on August 8, 2008 from:
http://www.bloomberg.com/apps/news?pid=20601072&refer=energy&sid=aj.h0coJSkpw

On the CNN Money video clip:

Jason Carroll was the reporter on the CNN Money clip that was added to CNNMoney.com on August 12, 2008, under the title "Snail Mail by Ethanol," and is viewable at http://money.cnn.com/video/#/video/news/2008/08/12/news.usps.081108.cnnmoney

Reporter Jason Carroll talks with mail carrier Richard Malik, who says he has never used ethanol in his expensive mail truck that had been specially designed to use ethanol. Source of photo: screen capture from the CNN Money video clip discussed above.

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(p. 257) Entrenched interests fought tenaciously against mechanization and the factory system. Unlike the Prussian inventor of a ribbon-weaving loom, who was put to death in 1579 by order of the Danzig Municipal authority, "Entrepreneurs were not necessarily strangled," but "they were not infrequently in danger of their lives."

Source:

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

(Note: the phrases in quotation marks are quotations from Schumpeter's Business Cycles book.)

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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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I agree with the Karl Rove's analysis below, that John McCain does not exhibit much understanding of Schumpeter's process of creative destruction. On the other hand, I have seen no evidence that Barack Obama has any such understanding either. (Nor have I seen any evidence that Rove's former boss, George W. Bush, has any such understanding, for that matter.)

And, in general, I am still of the belief that, overall, between the two of them, McCain will put fewer obstacles in the path of innovation than will Obama.

(p. A13) This past Thursday, Mr. McCain came close to advocating a form of industrial policy, saying, "I'm very angry, frankly, at the oil companies not only because of the obscene profits they've made, but their failure to invest in alternate energy."

But oil and gas companies report that they have invested heavily in alternative energy. Out of the $46 billion spent researching alternative energy in North America from 2000 to 2005, $12 billion came from oil and gas companies, making the industry one of the nation's largest backers of wind and solar power, biofuels, lithium-ion batteries and fuel-cell technology.

Such investments, however, are not as important as money spent on technologies that help find and extract more oil. Because oil companies invested in innovation and technology, they are now tapping reserves that were formerly thought to be unrecoverable. Maybe we are all better off when oil companies invest in what they know, not what they don't.

And do we really want the government deciding how profits should be invested? If so, should Microsoft be forced to invest in Linux-based software or McDonald's in weight-loss research?

Mr. McCain's angry statement shows a lack of understanding of the insights of Joseph Schumpeter, the 20th century economist who explained that capitalism is inherently unstable because a "perennial gale of creative destruction" is brought on by entrepreneurs who create new goods, markets and processes. The entrepreneur is "the pivot on which everything turns," Schumpeter argued, and "proceeds by competitively destroying old businesses."

Most dramatic change comes from new businesses, not old ones. Buggy whip makers did not create the auto industry. Railroads didn't create the airplane. Even when established industries help create new ones, old-line firms are often not as nimble as new ones. IBM helped give rise to personal computers, but didn't see the importance of software and ceded that part of the business to young upstarts who founded Microsoft.

So why should Mr. McCain expect oil and gas companies to lead the way in developing alternative energy? As with past technological change, new enterprises will likely be the drivers of alternative energy innovation.

For the full story, see:

KARL ROVE. "Obama and McCain Spout Economic Nonsense." The Wall Street Journal (Thurs., June 19, 2008): A13.

(Note: I thank John Pagin and Dagny Diamond for alerting me to Rove's discussion of Schumpeter.)

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

(p. C1) Acting quickly after securing his party's presidential nomination, Barack Obama picked a well-known representative of Bill Clinton's economic policies as his economic policy director and signaled this week that the major players from the Clinton economics team were now in his camp -- starting with Robert E. Rubin.

Senator Obama, Democrat of Illinois, hired Jason Furman, a Harvard-trained economist closely associated with Mr. Rubin, a Wall Street insider who served as President Clinton's Treasury secretary. Labor union leaders criticized the move, and said that ''Rubinomics'' focused too much on corporate America and not enough on workers.

. . .

(p. C4) Mr. Furman, who served for a while as a special economic adviser in the Clinton administration, has taken some controversial positions. He argued in 2005, for example, that Wal-Mart, despite its conflicts with organized labor over pay and health insurance, was a good business model.

More recently, he argued that while the typical worker suffers from inadequate income, that worker's living standards, broadly measured, are higher today than those of their counterparts 30 years ago -- an argument in dispute among economists.

. . .

Until now, Austan Goolsbee, an economist at the University of Chicago, had been Mr. Obama's chief economic adviser. He remains an unpaid adviser. He said he was not a candidate for Mr. Furman's full-time job because of his university duties.

For the full story, see:

LOUIS UCHITELLE. "Union Critical of Obama's Top Economics Aide." The New York Times (Thurs., June 12, 2008): C1 & C4.

(Note: ellipses added.)

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

In her eye-opening The Forgotten Man, Amity Shlaes shows that Herbert Hoover, while not the hero of the Great Depression, was hardly the consummate villain that politically correct legend has made him out to be.

The hapless, hated Hoover, after his electoral defeat by the real villain, FDR, drove the countryside seeking tranquility and direction. At one point, in the middle of a hot summer night, Hoover, with his son Allan, sped toward the cooler Palo Alto:

(p. 221) Hurtling down the highway, Hoover looked in the rearview mirror and saw a flashing red light gaining on him. Soon he could hear a siren. Dutifully, he pulled off the highway and fumbled for his license, handing it to the stern police officer. The patrolman looked at the license, then examined it more closely in the illumination of a headlight. Returning to the car window, he placed a foot on the running board and asked Hoover, "Tell me are you that guy?" The ex-president, with a slight grin, said, "Yes, I guess I'm that guy." The policeman then asked, "Well, does it make you feel any better to drive sixty miles an hour down this Valley Pike in the middle of the night?" Hoover reflected for a moment and replied, "Well, under the circumstances I think it does." The highway patrolman stepped back from the running board, looked Hoover in the eye, and with a wave of his arm said, "Drive on, brother."

Source:

Wert, Hal Elliott. Hoover the Fishing President: Portrait of the Private Man and His Life Outdoors. Mechanicsburg, PA: Stackpole Books, 2005.

The reference on Amity Shlaes's book, is:

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

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

"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.

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

"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)

In the book The Genome War, the story is told about how the leading theorist proved the impossibility of the gene sequencing technique. It was the Venter group that gave it a try and proved it could work. This story is similar to the one about theory saying that what Marconi was trying, was impossible. (See: Larson, 2006.)

Rosenberg and Birdzell (1986) discuss the case that theory had proven how solid objects fall. But Galileo's experiments proved them wrong. This established the primacy of experiment and evidence, over theory.

When governments decide, they usually do what is safe, which is to follow current theory (or in rare cases, they pick Lysenko).

The entrepreneurial system, takes advantage of the tacit individual knowledge that is out there, but not yet theoretically defensible, and allows it to percolate to success.

References:

Larson, Erik. Thunderstruck. New York: Crown, 2006.

Rosenberg, Nathan, and L.E. Birdzell, Jr. How the West Grew Rich: The Economic Transformation of the Industrial World. New York: Basic Books, 1986.

Shreeve, James. The Genome War: How Craig Venter Tried to Capture the Code of Life and Save the World. 1st ed. New York: Alfred A. Knopf, 2004.

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

Some of us believe that the government should not discriminate on the basis of race, gender, or religion. Unfortunately, governments in the past and present have sometimes mandated or practiced discrimination. Examples from the past would include the Jim Crow laws that mandated racial discrimination against Afro-Americans.

A present example would be the mis-named "affirmative action" laws that mandate racial discrimination against whites.

In the article quoted below, note who has taken a stand on which side of this issue.

Is it appropriate for the University of Nebraska Foundation to be donating $25,000 to support the continuation of racial discrimination?

Note also the opposing positions of two 2006 Republican candidates for Senate: David Kramer is leading the drive to continue racial discrimination, while Pete Ricketts is contributing to ending racial discrimination.

(p. 1A) LINCOLN -- Leaders of the Nebraska Civil Rights Initiative called their anti-affirmative-action push one of the most successful petition drives in recent state history. But it's not yet known whether their proposed ban will go before voters in November.

"The citizens demand the opportunity to vote on the use of race and gender preferences and discrimination in state hiring, state contracts and state education," said Marc Schniederjans, treasurer of the group that said it submitted more than 167,000 signatures Thursday.

. . .

David Kramer, spokesman for the opposition group Nebraskans United, said he wasn't disheartened by the number of petition signatures or over the prospect that petition organizers said they planned to submit more signatures today.

. . .

(p. 2A) Connerly's American Civil Rights Coalition provided $370,750 of the $467,250 raised by the Nebraska petition group as of June 25. According to state records, the next largest donors were Paul Singer, a New York businessman, $50,000; William Grewcock, a former executive with Peter Kiewit Sons Inc., $25,000; and failed GOP U.S. Senate candidate Pete Ricketts, $25,000.

For Nebraskans United, the largest donations toward that group's $308,167 war chest have come from Omaha billionaire Warren Buffett, $50,000; philanthropist Richard Holland, $50,000; Dianne Lozier, Lozier corporate counsel, $50,000; Wallace Weitz, president of an Omaha-based mutual fund management company, $50,000; the Greater Omaha Chamber of Commerce, $36,250; the University of Nebraska Foundation, $25,000; and the Nebraska State Education Association, $25,000.

For the full story, see:

MARTHA STODDARD. "Petitions Turned In; Fight Far from Over." Omaha World-Herald (Fri., July 4, 2008): 1A-2A.

(Note: ellipses added.)

(Note: the online title of the article is "Anti-affirmative-action petitions turned in; verifying to begin.")

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

(p. A9) Washington never learns from its mistakes. In "The Worst Hard Time," Timothy Egan notes how federal price supports encouraged farmers in World War I to plow up millions of acres of dry grasslands and plant wheat. When the price of wheat crashed after the war, the denuded land lay fallow; then it blew away during the droughts of the 1930s, turning a big chunk of America into a Dust Bowl.

For the full commentary, see:

Ernest S. Christian and Gary A. Robbins. "Stupidity and the State." The Wall Street Journal. (Eastern edition). (Sat., June 7, 2008): A9.

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 Univers