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(p. 113) It was Joseph Schumpeter who pointed out that the competition which keeps a businessman awake at night is not that from his rivals cutting prices, but that of entrepreneurs making (p. 114) his product obsolete. As Kodak and Fuji slugged it out for dominance in the 35mm film industry in the 1990s, digital photography began to extinguish the entire market for analogue film - as analogue records and analogue video cassettes had gone before. Creative destruction, Schumpeter called it. His point was that there is just as much creation going on as destruction - that the growth of digital photography would create as many jobs in the long run as were lost in analogue, or that the savings pocketed by a Wal-Mart customer are soon spent on other things, leading to the opening of new stores to service those new demands. In America, roughly 15 per cent of jobs are destroyed every year; and roughly 15 per cent created.

Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

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(p. 36) The Sun King had dinner each night alone. He chose from forty dishes, served on gold and silver plate. It took a staggering 498 people to prepare each meal. He was rich because he consumed the work of other people, mainly in the form of their services. He was rich because other people did things for him. At that time, the average French family would have prepared and consumed its own meals as well as paid tax to support his servants in the palace. So it is not hard to conclude that Louis XIV was rich because others were poor.

But what about today? Consider that you are an average person, say a woman of 35, living in, for the sake of argument, Paris and earning the median wage, with a working husband and two children. You are far from poor, but in relative terms, you are immeasurably poorer than Louis was. Where he was the richest of the rich in the world's richest city, you have no servants, no palace, no carriage, no kingdom. As you toil home from work on the crowded Metro, stopping at the shop on the way to buy a ready meal for four, you might be thinking that Louis XIV's dining arrangements were way beyond your reach. And yet consider this. The cornucopia that greets you as you enter the supermarket dwarfs anything that Louis XIV ever experienced (and it is probably less likely to contain salmonella). You can buy a fresh, frozen, tinned, smoked or pre-prepared meal made with beef, chicken, pork, lamb, fish, prawns, scallops, eggs, potatoes, beans, carrots, cabbage, aubergine, kumquats, celeriac, okra, seven kinds of lettuce, cooked in olive, walnut, sunflower or peanut oil and flavoured with cilantro, turmeric, basil or rosemary . . . You may have no chefs, but you can decide (p. 37) on a whim to choose between scores of nearby bistros, or Italian, Chinese, Japanese or Indian restaurants, in each of which a team of skilled chefs is waiting to serve your family at less than an hour's notice. Think of this: never before this generation has the average person been able to afford to have somebody else prepare his meals.

You employ no tailor, but you can browse the internet and instantly order from an almost infinite range of excellent, affordable clothes of cotton, silk, linen, wool and nylon made up for you in factories all over Asia. You have no carriage, but you can buy a ticket which will summon the services of a skilled pilot of a budget airline to fly you to one of hundreds of destinations that Louis never dreamed of seeing. You have no woodcutters to bring you logs for the fire, but the operators of gas rigs in Russia are clamouring to bring you clean central heating. You have no wick-trimming footman, but your light switch gives you the instant and brilliant produce of hardworking people at a grid of distant nuclear power stations. You have no runner to send messages, but even now a repairman is climbing a mobile-phone mast somewhere in the world to make sure it is working properly just in case you need to call that cell. You have no private apothecary, but your local pharmacy supplies you with the handiwork of many thousands of chemists, engineers and logistics experts. You have no government ministers, but diligent reporters are even now standing ready to tell you about a film star's divorce if you will only switch to their channel or log on to their blogs.

My point is that you have far, far more than 498 servants at your immediate beck and call. Of course, unlike the Sun King's servants, these people work for many other people too, but from your perspective what is the difference? That is the magic that exchange and specialisation have wrought for the human species.

Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

(Note: ellipsis in original.)

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"Partho Nag, a childhood friend of Shubhrangshu Roy's who lives in the same New Delhi suburb. Mr. Nag, who runs an IT service company out of his home, joined Mr. Roy and other friends as they volunteered at the Hazare protests. "We've been told since our childhoods, 'Politics is bad, don't get into politics,'" Mr. Nag said. "But the point is that somebody has to clean it up. We can't just scold people."" Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) DWARKA, India -- Shubhrangshu Barman Roy and his childhood friends are among the winners in India's economic rise. They have earned graduate degrees, started small companies and settled into India's expanding middle class. They sometimes take vacations together and meet for dinners or parties, maybe to celebrate a new baby or a new business deal.

Yet in August, Mr. Roy and his friends donned white Gandhi caps, boarded a Metro train in this fast-growing suburb of the Indian capital and rode into New Delhi like a band of revolutionaries to join the large anticorruption demonstrations led by the rural activist Anna Hazare. They waved Indian flags, distributed water to the crowds and vented their outrage at India's political status quo.

"I could feel that people really wanted change," Mr. Roy, 36, recalled proudly.

It may seem unlikely that middle-class Indians would crave change. They mostly live in rapidly growing cities and can afford cars, appliances and other conveniences that remain beyond the reach of most Indians. Theirs is the fastest growing demographic group in the country, and their buying power is expected to triple in the next 15 years, making India one of the most important consumer markets in the world.

But buying power is not political power, at least not yet in India. The wealthier India has become, the more politically disillusioned many of the beneficiaries have grown -- an Indian paradox. The middle class has vast economic clout yet often remains politically marginalized in a huge democracy where the rural masses still dominate the outcome of elections and the tycoon class has the ear of politicians.

. . .

(p. 10) "This middle class is less about 'what the state can do for me' than 'the state is preventing me from doing what I want to do,' " said Devesh Kapur, director of the Center for the Advanced Study of India at the University of Pennsylvania.

The Hazare movement rattled India's political establishment because it offered a glimpse of what could happen if the middle class was mobilized across the country. Professionals and college students provided the organizational spine, and money, that brought hundreds of thousands of people of all backgrounds onto the streets in what many described as a political awakening.

. . .

Mr. Roy and his friends, including Mr. Nag, had grown up in New Delhi in the same government housing development. They were all the sons of government bureaucrats who would later offer similar advice: Get a government job.

"He always insisted," Mr. Nag recalled of his father's prodding. "But we had an idea that a government job was too lousy."

They were teenagers in the early 1990s when Indian leaders embarked on the reforms that began dismantling the stifling licensing regulations that had choked the economy. Private enterprise, large and small, would steadily emerge as the engine of Indian growth and the delivery vehicle of growing aspirations. Mr. Nag would open a small IT service firm. Two other friends would start a textile trading company. Mr. Roy would earn graduate degrees and start a consulting firm.

. . .

On a recent afternoon, Mr. Roy pointed to a crude asphalt scar in the road where workers had installed an underground water connection. The scar extended along the road toward Mr. Roy's house, only to abruptly turn left in the direction of another building.

"You see this?" he asked, angrily. "This is a connection that comes here, but it is illegal."

For Mr. Roy, the scar in the street marks the corruption and collusion and the failure of the state to deliver on its end of India's social contract. His family is supposed to get water from a legal connection for $4 a month. Except that water is unusable. For years, his father had paid a fee to fill large jugs from a private water tanker -- until his father slipped while carrying one of them.

Mr. Roy then spent about $1,000 to build an underground water storage tank beside his home. Now, every week a tanker delivers a $30 shipment of water into the tank, while Mr. Roy also buys bottled water for drinking, bringing his monthly bill to about $160. Mr. Roy suspects that local officials, rather than correcting the situation, allow it to continue in exchange for kickbacks from the owners of the private water tankers. In the end, though, he pays.

These tales of petty graft proliferate across India, but especially in cities, analysts say, for the simple reason that cities now have more money.

McKinsey Global Institute, a consulting group, has estimated that India's middle class could grow to nearly 600 million people by 2030. Today, nearly three-quarters of India's gross domestic product comes from cities, where less than a third of India's population lives, an imbalance that correlates with the divide between middle-class economic and political power.

"For politicians, the city has primarily become a site of extraction, and the countryside is predominantly a site of legitimacy and power," Ashutosh Varshney, an India specialist at Brown University, wrote recently. "The countryside is where the vote is; the city is where the money is. Villages do have corruption, but the scale of corruption is vastly greater in cities."

For the full story, see:

JIM YARDLEY. "INDIA'S WAY; Protests Help Awaken a Goliath in India." The New York Times, First Section (Sun., October 30, 2011): 1 & 10.

(Note: ellipses added.)

(Note: the online version of the article is dated October 29, 2011 and has the title "INDIA'S WAY; Protests Awaken a Goliath in India.")

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"M. Kenneth Oshman" Source of caption and photo: online version of the NYT obituary quoted and cited below.

(p. 19) M. Kenneth Oshman, who helped create one of the early successful technology start-up firms in Silicon Valley, one that embodied the informal management style that came to set the Valley apart from corporate America, died on Saturday in Palo Alto, Calif. He was 71.

. . .

In the 1970s and '80s, Rolm was the best example of an emerging Silicon Valley management style that effectively broke down the barrier between work and play. Setting out to recruit the most talented technical minds, Rolm became known as a great place to work, so much so that it was nicknamed "G.P.W."

Early on as chief executive, Mr. Oshman took funds normally used for company Christmas parties and used them to help construct a company recreational center, consisting of swimming pools, racquetball courts, exercise rooms and other amenities to attract new employees and underline the image that Rolm was a fun place to work.

But there was a tradeoff, said Keith Raffel, who left a staff position on Capitol Hill to become an assistant to Mr. Oshman at Rolm before starting his own company.

"The quid pro quo was you would be driven and work really hard," he said.

With a gentle, understated style, Mr. Oshman stood apart from other well-known leaders in Silicon Valley, many of whom were seen as capricious and even tyrannical. He was a mentor to a generation of Silicon Valley technologists and able to inspire a kind of loyalty in his employees not frequently seen in high-tech industries.

For the full obituary, see:

JOHN MARKOFF. "M. Kenneth Oshman, Silicon Valley Mentor, Dies at 71." The New York Times, First Section (Sun., August 10, 2011): A10.

(Note: ellipsis added.)

(Note: the online version of the obituary is dated August 10, 2011 and has the title "M. Kenneth Oshman, Who Brought Fun to Silicon Valley, Dies at 71.")

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(p. 27) Getting richer is not the only or even the best way of getting happier. Social and political liberation is far more effective, says the political scientist Ronald Ingleheart: the big gains in happiness come from living in a society that frees you to make choices about your lifestyle - about where to live, who to marry, how to express your sexuality and so on. It is the increase in free (p. 28) choice since 1981 that has been responsible for the increase in happiness recorded since then in forty-five out of fifty-two countries. Ruut Veenhoven finds that 'the more individualized the nation, the more citizens enjoy their life.'

Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

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(p. F2) . . . solar power, which makes extensive use of robots in fabricating the cells, and has no moving parts to service once it is up and running, may be an odd choice for job creation.

"It's just not that labor-intensive," said Howard Axelrod, an engineer and economist. And as for the jobs it creates, there may be a price elsewhere, Dr. Axelrod said.

. . .

Build enough solar plants and some coal plants will shut down; that would amount to firing Peter to hire Paul.

. . .

And, economists point out, some of the work that renewable energy creates goes to people who already have jobs -- roofers who install the panels or truck drivers who move them around, or steel workers who make towers for new wind machines.

Some of the jobs could eventually go elsewhere. Two years ago, Evergreen Solar, which got $58 million in aid from Massachusetts for a factory in Devens, said it would shift production to China instead.

. . .

The debate is part of a larger discussion of what constitutes a "green" job. In October 2009, Congress gave the Bureau of Labor Statistics a special appropriation to count them.

. . .

"Driving a bus is driving a bus, right?" said Connie Mack, Republican of Florida. Hilda Solis, the secretary of labor, said they were "green buses." But aides later clarified that the bureau counted any bus driving job as green because it preserved natural resources.

None of this suggests that green is bad, just that it is not particularly job-heavy. In December 2010, Susan Combs, the comptroller of Texas, reported that school districts in her state were giving tax abatements to lure new jobs, but had to give $1.6 million for every wind energy job. Manufacturing jobs could be created for $166,000 each.

For the full story, see:

MATTHEW L. WALD. "Solar Power Industry Falls Short of Hopes in Job Creation." The New York Times (Weds., October 26, 2011): F2.

(Note: ellipses added.)

(Note: the online version of the article has the date October 25, 2011.)

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"At Citrix Systems, Berkley Reynolds, left, uses his Alienware laptop, and Alan Meridian, his MacBook Pro, paid for with stipends." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) SAN FRANCISCO -- Throughout the information age, the corporate I.T. department has stood at the chokepoint of office technology with a firm hand on what equipment and software employees use in the workplace.

They are now in retreat. Employees are bringing in the technology they use at home and demanding the I.T. department accommodate them. The I.T. department often complies.

Some companies have even surrendered to what is being called the consumerization of I.T. At Kraft Foods, the I.T. department's involvement in choosing technology for employees is limited to handing out a stipend. Employees use the money to buy whatever laptop they want from Best Buy, Amazon.com or the local Apple store.

"We heard from people saying, 'How come I have better equipment at home?' " said Mike Cunningham, chief technology officer for Kraft Foods. "We said, hey, we can address that."

Encouraging employees to buy their own laptops, or bring their mobile phones and iPads from home, is gaining traction in the workplace. A survey published on Thursday by Forrester Research found that 48 percent of information workers buy smartphones for work without considering what their I.T. department supports. By being more flexible, companies are hoping that workers will be more comfortable with their devices and therefore more productive.

"Bring your own device" policies, as they are called, are also shifting the balance of power among electronics makers. Manufacturers good at selling to consumers are increasingly gaining the upper hand, while those focused on bulk corporate sales are slipping.

. . .

(p. B6) Letting workers bring their iPhones and iPads to work can . . . save companies money. In some cases, employees pay for equipment themselves and seek tech help from store staff rather than their company's I.T. department. "You can basically outsource your I.T. department to Apple," said Ben Reitzes, an analyst with Barclays Capital.

A similar B.Y.O.D. program at Citrix Systems, a software maker that also helps its clients implement such programs, saves the company about 20 percent on each laptop over three years. Of the 1,000 or so employees in Citrix's program, 46 percent have bought Mac computers, according to Paul Martine, Citrix's chief information officer. "That was a little bit of a surprise."

For the full story, see:

VERNE G. KOPYTOFF. "More Offices Let Workers Choose Their Own Devices." The New York Times (Fri., September 23, 2011): B1 & B6.

(Note: ellipses added.)

(Note: the online version of the article is dated September 22, 2011.)

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(p. C4) Fantasizing about achieving goals can make people less likely to achieve them, by sapping the energy required to do the necessary work, a study finds.

. . .

The researchers concluded: "Positive fantasies will sap job-seekers of the energy to pound the pavement, and drain the lovelorn of the energy to approach the one they like."

For the full story, see:

Christopher Shea. "Week in Ideas; Psychology; Lost in Fantasy." The Wall Street Journal (Sat., JUNE 4, 2011): C4.

(Note: ellipsis added.)

The article summarized is:

Kappes, Heather Barry, and Gabriele Oettingen. "Positive Fantasies About Idealized Futures Sap Energy." Journal of Experimental Social Psychology 47 (2011): 719-29.

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(p. A2) A recent study called into question whether size should matter at all when comparing businesses and their contribution to job creation.

The paper--co-authored by University of Maryland economist John Haltiwanger and two Census Bureau economists--confirmed that small businesses create more net new jobs, per employee, than do bigger businesses.

But the effect vanishes once each company's age is taken into account. It is young businesses that outperform old ones, according to the paper. Size isn't the important factor.

If you control for age, "you wipe out that effect" of small businesses creating a disproportionate share of net new jobs, says Prof. Haltiwanger. "There's no systematic relationship. If anything it goes the opposite way of conventional wisdom."

For the full commentary, see:

CARL BIALIK. "THE NUMBERS GUY; Sizing Up the Small-Business Jobs Machine." The Wall Street Journal (Sat., OCTOBER 15, 2011): A2.

The Haltiwanger paper referred to in the passage above is:

Haltiwanger, John C., Ron S. Jarmin, and Javier Miranda. "Who Creates Jobs? Small Vs. Large Vs. Young." NBER Working Paper #16300, August 2010.

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"Avid knitter Shelby Stofle, gathering wool from sheep in Vacaville Calif., hopes to set up a business making scarves and selling them at craft fairs." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A5) Shelby Stofle graduated in December from the University of California at Berkeley with $10,250 in student-loan debt--and no job offers from a dozen applications.

The 24-year-old had hoped to work in environmental conservation or sustainable agriculture but struck out even at a grocery store near her rural hometown of Suisun City, Calif.

. . .

With many employment options exhausted, she said she feels her best shot is to set up her own business, selling her hand-made scarves at craft fairs and farmers' markets.

For the full story, see:

VAUHINI VARA. "As Jobs Vanish, Sticking to Knitting." The Wall Street Journal (Mon., OCTOBER 31, 2011): A5.

(Note: ellipsis added.)

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(p. 156) In fact, the upper strata of society are like hotels which are indeed always full of people, but people who are forever changing.

Source:

Schumpeter, Joseph A. The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. Translated by Redvers Opie. translation of 2nd German edition that appeared in 1926; translation first published by Harvard in 1934 ed. New Brunswick, NJ: Transaction Publishers, 1983.

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Yesterday (10/31/11) the Kauffman Foundation issued a press release reporting the results of their fourth-quarter survey of "top economics bloggers." The URL for the press release is:

http://www.kauffman.org/newsroom/only-half-of-economics-bloggers-expect-employment-growth-in-the-next-three-years.aspx

The last few lines of the press release are summarized below:

In their fourth-quarter survey of "top economics bloggers" the Kauffman Foundation asked the panel of bloggers "to describe the U.S. economy in haiku. Nearly 20 haiku were submitted and subsequently voted on by more than 500 public readers. The most popular was by Professor Art Diamond (http://artdiamondblog.com):"

jobs and Jobs are gone
need more Jobs to get more jobs
innovate to grow

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

My Jobs haiku has received some discussion in the blogosphere.

It is reproduced, along with haikus submitted by other economics bloggers, in an entry of the blog of the Economist magazine:

http://www.economist.com/blogs/freeexchange/2011/10/poetry?fsrc=scn/tw/te/bl/theeconomyinhaiku

I especially like a comment to the Economist blog entry:

CaitP

Oct 26th 2011 7:59 GMT

What a creative way to describe the economy. It is so interesting to see how everyone interprets the economy through poem. I personally like the "jobs and Jobs" one. I think it describes our economy, and gives a snapshot of a major moment in our history.

kbuch5

Nov 2nd 2011 1:41 GMT

It is interesting to see people's opinions about the economy being put into haikus. My favorite out of these is the haiku that refers to the fact that we have lost Steve Jobs and many jobs for US citizens. And in order to regain these jobs we are going to need more people to contribute in ways Steve Jobs has.

(Note: I added kbuch5's comment on 11/7/11.)

CNBC correspondent Jane Wells describes my haiku as "poetic" on her blog:

http://www.cnbc.com/id/45078738

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

(p. B1) Start-ups fuel job growth disproportionately since by definition they are starting and growing, adding employees, says the Kauffman Foundation, which researches and advocates for entrepreneurship.

Though there was start-up activity during and after the recession, driven partly by unemployed individuals putting out a shingle, Bureau of Labor Statistics data show the total number of "births" of new businesses declined sharply from previous years. What's more, the number of people employed by new businesses that are less than a year old--a common definition of a start-up--also declined. That trend started a decade ago.

In a recent report on entrepreneurship, the BLS said the number of new businesses less than a year old that existed in the year ending March 2010 "was lower than any other year" since its research began in 1994. The downdraft started with the recession.

"More people who were self-employed failed and left self-employment than people who entered," says Scott Shane, an economics professor at Case Western Reserve University who wrote a study on entrepreneurship and the recession for the Cleveland Fed. "The net effect is negative, not positive, largely because downturns hurt those in business and those thinking of entering business."

For the full story, see:

JOHN BUSSEY. "THE BUSINESS; Shrinking in a Bad Economy: America's Entrepreneur Class." The Wall Street Journal (Fri., AUGUST 12, 2011): B1 & B2.

(Note: ellipsis added.)

The BLS report mentioned above can be found at: http://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm

The Scott Shane commentary mentioned above can be found at:
http://www.clevelandfed.org/research/commentary/2011/2011-04.cfm

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

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

jobs and Jobs are gone
need more Jobs to get more jobs
innovate to grow

Arthur Diamond

In his Q4 survey of influential economics bloggers, Tim Kane of the Kauffman Foundation whimsically requested that we create a haiku that speaks to the state of the economy. I sent him my haiku, above, on Sunday, October 16, 2011.

(Do not worry---I have no plans to retire and devote myself to writing poetry.)

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The Max Planck view expressed in the quote below, has been called "Planck's Principle" and has been empirically tested in three papers cited at the end of the entry.

(p. 12) How's this for a cynical view of science? "A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it."

Scientific truth, according to this view, is established less by the noble use of reason than by the stubborn exertion of will. One hopes that the Nobel Prize-winning physicist Max Planck, the author of the quotation above, was writing in an unusually dark moment.

And yet a large body of psychological data supports Planck's view: we humans quickly develop an irrational loyalty to our beliefs, and work hard to find evidence that supports those opinions and to discredit, discount or avoid information that does not.

For the full commentary, see:

CORDELIA FINE. "GRAY MATTER; Biased but Brilliant." The New York Times, SundayReview Section (Sun., July 31, 2011): 12.

(Note: ellipses added.)

(Note: the online version of the article is dated July 30, 2011.)

Three of my papers that present evidence on Planck's Principle, are:

"Age and the Acceptance of Cliometrics." The Journal of Economic History 40, no. 4 (December 1980): 838-841.

"Planck's Principle: Do Younger Scientists Accept New Scientific Ideas with Greater Alacrity than Older Scientists?" Science 202 (November 17, 1978): 717-723 (with David L. Hull and Peter D. Tessner).

"The Polywater Episode and the Appraisal of Theories." In A. Donovan, L. Laudan and R. Laudan, eds., Scrutinizing Science: Empirical Studies of Scientific Change. Dordrecht, Holland: Kluwer Academic Publishers, 1988, 181-198.

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"Wayne Gravot, right, and Jeff Sparwasser at the new plant in North Charleston, S.C." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) NORTH CHARLESTON, S.C. -- Boeing's gigantic new $750 million airplane factory here is the pride of South Carolina, the biggest single investment ever made in a state that is far more associated with old-line textile mills than state-of-the-art manufacturing. In just a few weeks, 1,000 workers will begin assembling the first of what they hope will be hundreds of 787 Dreamliners.

That is, unless the federal government takes it all away.

In a case that has enraged South Carolinians and become a cause célèbre among Republican lawmakers and presidential hopefuls, the National Labor Relations Board has accused Boeing of illegally setting up shop in South Carolina because of past strikes by the unionized workers at its main manufacturing base in the Seattle area. The board is asking a judge to order Boeing to move the Dreamliner production -- and the associated jobs -- to Washington State.

For the full story, see:

STEVEN GREENHOUSE. "Boeing Labor Dispute Is Making New Factory a Political Football." The New York Times (Fri., July 1, 2011): A10.

(Note: ellipsis added.)

(Note: the online version of the story is dated June 30, 2011.)

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(p. A15) Only one in 20 workers needed the government's permission to pursue their chosen occupation in the 1950s, notes University of Minnesota Prof. Morris Kleiner. Today that figure is nearly one in three.

. . .

The breadth of jobs is remarkable. Travel and tourist guides, funeral attendants, home-entertainment installers, florists, makeup artists, even interpreters for the deaf are all regulated by various states. Want to work as an alarm installer? In 35 states, you will need to earn the government's permission. Are you skilled in handling animals? You will need more than that skill in the 20 states that require a license for animal training.

There's usually more to these licenses than filling out some paperwork and paying a small fee. Most come with government-dictated educational requirements, examinations, minimum age and grade levels, and other hurdles.

. . .

Instead of looking to the federal government to create jobs, state legislatures could have a real and immediate effect on unemployment in their states by showing how less truly is more. They can remove the barriers to job creation that their predecessors erected and enjoy the job-generating drive of their states' aspiring entrepreneurs.

For the full commentary, see:

CHIP MELLOR And DICK CARPENTER. "Want Jobs? Cut Local Regulations." The Wall Street Journal (Thurs., July 28, 2011): A15.

(Note: ellipses added.)

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(p. A13) Workers do well only when the economy grows at a healthy and consistent pace. The biggest threat to long-term economic growth is government growth of the magnitude that characterized the past two years and that is forecast for our future.

Our current problems are not a result of acts of nature. They stem from policy choices that dramatically increased the size of the government. In the past two years, the federal budget has grown by a whopping 16%.

. . .

. . . , the price of the stimulus is what appears to be a permanent increase in the size of government that will continue to slow economic growth. Most economists believe that high debt and high taxes each contributes to slow economic growth, which hurts workers both in the short and long run.

For the full commentary, see:

EDWARD P. LAZEAR. "OPINION; How Big Government Hurts the Average Joe; Job growth is very closely linked to GDP growth. If the economy is not growing, then jobs aren't being added." The Wall Street Journal (Fri., August 5, 2011): A13.

(Note: ellipses added.)

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(p. A21) . . . we already know what isn't working: the economic policy of the past two years -- and the millions of Americans who should have jobs, but don't.

For the full commentary, see:

PAUL KRUGMAN. "The Wrong Worries." The New York Times (Fri., August 5, 2011): A19.

(Note: ellipsis added.)

(Note: the online version of the commentary is dated August 4, 2011.)

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

Income inequality is widely derided. But inequality in consumption is more meaningful than inequality in income. The wonderful graph above, and the commentary quoted below, show that consumption per person is much more equal than the usually-used income per household.

(Click on the graph to pop up a larger version that is easier to read.)

(p. 14) It's true that the share of national income going to the richest 20 percent of households rose from 43.6 percent in 1975 to 49.6 percent in 2006, the most recent year for which the Bureau of Labor Statistics has complete data. Meanwhile, families in the lowest fifth saw their piece of the pie fall from 4.3 percent to 3.3 percent.

Income statistics, however, don't tell the whole story of Americans' living standards. Looking at a far more direct measure of American families' economic status -- household consumption -- indicates that the gap between rich and poor is far less than most assume, and that the abstract, income-based way in which we measure the so-called poverty rate no longer applies to our society.

For the full commentary, see:

Cox, W. Michael, and Richard Alm. "You Are What You Spend." The New York Times, Week in Review (Sun., February 10, 2008): 14.

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(p. 1A) While the nation's job growth has limped along since the economic recovery began two years ago, the Lone Star State is enlarging payrolls in Texas-size fashion.

From June 2009 to June 2011 the state added 262,000 jobs, or half the USA's 524,000 payroll gains, according to the Federal Reserve Bank of Dallas and the Bureau of Labor Statistics. Even by a more conservative estimate that omits states with net job losses, Texas' advances make up 30% of the 1 million additions in the 34 states with net growth.

For the full story, see:

Paul Davidson. "Need a Job? Move to Texas." USA Today (Tues., JULY 20, 2011): 1A.

(Note: the online version of the article has the title "Texas bucks national unemployment trend.")

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"ADP" in the quote below, stands for Automatic Data Processing Inc. which is a large payroll processing firm that provides job growth data that are an alternative to the official Bureau of Labor Statistics numbers. Recent research by Haltiwanger and others, has indicated that startups may have an under-appreciated large role in job growth.

(p. C1) It has been dubbed "Another Dumb Payroll" report and a "random number generator." But the ADP employment report doesn't entirely deserve its bad rap.

. . .

ADP may better capture . . . new business formation than Labor Department estimates. BofA Merrill Lynch economist Michelle Meyer notes that new firms show up in ADP data after two months of existence; the government doesn't have complete records until much later. Indeed, more than half the 187,000 new jobs ADP reported last month came from businesses with fewer than 50 employees.

For the full story, see:

KELLY EVANS. "AHEAD OF THE TAPE; Respect for ADP: Jobs Picture Is Brighter." The Wall Street Journal (Tues., FEBRUARY 4, 2011): C1.

(Note: ellipses added.)

(Note: the online version of the story has the title "AHEAD OF THE TAPE; Respect for ADP: Jobs Picture Is Brighter Than Thought.")

For some of the work showing the importance of startups in job creation, see:

Haltiwanger, John C., Ron S. Jarmin, and Javier Jarmin. "Who Creates Jobs? Small Vs. Large Vs. Young." NBER Working Paper # 16300, August 2010.

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(p. A13) BEIJING--Young people calling themselves the "ant tribe" and living in Beijing's outskirts have prompted a national discussion about the tough job market for college graduates in China.

The term "ants"--referring to the graduates' industriousness as well as their crowded, modest living conditions--was coined in a book by Lian Si, a professor at the University of International Business and Economics in Beijing, who in a 2007-09 survey of 600 Beijing-area college graduates found their average monthly income was the equivalent of $300.

The book touched a nerve in China, inspiring both admiration for the young people's striving and indignation at their living conditions. Earlier this year, several members of the Chinese People's Political Consultative Conference, an advisory body to the government, said they were moved to tears on a visit to the village of Tangjialing when they heard two young men who shared a 50-square-foot room sing a song they composed about their tough lives.

. . .

The "Song of the Ants" is a favorite. Its refrain: "Though we have nothing, we are tough in spirit; though we have nothing, we are still dreaming; though we have nothing, we still have power; though we have nothing, we are not afraid of being deserted."

For the full story, see:

Sue Feng and Ian Johnson. "Job Squeeze in China Sends 'Ants' to Fringes; Millions of College Graduates Stack Up, Seek Cheap Living on Beijing Outskirts." The Wall Street Journal (Tues., May 4, 2010): A13.

(Note: ellipsis added.)

(Note: the online version of the story is dated May 3, 2010 and has the title "China Job Squeeze Sends 'Ants' to Fringes; Millions of College Graduates Stack Up, Seek Cheap Living on Beijing Outskirts.")

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(p. A1) BEIJING -- Liu Yang, a coal miner's daughter, arrived in the capital this past summer with a freshly printed diploma from Datong University, $140 in her wallet and an air of invincibility.

Her first taste of reality came later the same day, as she lugged her bags through a ramshackle neighborhood, not far from the Olympic Village, where tens of thousands of other young strivers cram four to a room.

Unable to find a bed and unimpressed by the rabbit warren of slapdash buildings, Ms. Liu scowled as the smell of trash wafted up around her. "Beijing isn't like this in the movies," she said.

Often the first from their families to finish even high school, ambitious graduates like Ms. Liu are part of an unprecedented wave of young people all around China who were supposed to move the country's labor-dependent economy toward a white-collar future. In 1998, when Jiang Zemin, then the president, announced plans to bolster higher education, Chinese universities and colleges produced (p. A12) 830,000 graduates a year. Last May, that number was more than six million and rising.

It is a remarkable achievement, yet for a government fixated on stability such figures are also a cause for concern. The economy, despite its robust growth, does not generate enough good professional jobs to absorb the influx of highly educated young adults. And many of them bear the inflated expectations of their parents, who emptied their bank accounts to buy them the good life that a higher education is presumed to guarantee.

"College essentially provided them with nothing," said Zhang Ming, a political scientist and vocal critic of China's education system. "For many young graduates, it's all about survival. If there was ever an economic crisis, they could be a source of instability."

. . .

Chinese sociologists have come up with a new term for educated young people who move in search of work like Ms. Liu: the ant tribe. It is a reference to their immense numbers -- at least 100,000 in Beijing alone -- and to the fact that they often settle into crowded neighborhoods, toiling for wages that would give even low-paid factory workers pause.

"Like ants, they gather in colonies, sometimes underground in basements, and work long and hard," said Zhou Xiaozheng, a sociology professor at Renmin University in Beijing.

. . .

A fellow Datong University graduate, Yuan Lei, threw the first wet blanket over the exuberance of Ms. Liu, Mr. Li and three friends not long after their July arrival in Beijing. Mr. Yuan had arrived several months earlier for an internship but was still jobless.

"If you're not the son of an official or you don't come from money, life is going to be bitter," he told them over bowls of 90-cent noodles, their first meal in the capital.

. . .

In the end, Mr. Li and his friends settled for sales jobs with an instant noodle company. The starting salary, a low $180 a month, turned out to be partly contingent on meeting ambitious sales figures. Wearing purple golf shirts with the words "Lao Yun Pickled Vegetable Beef Noodles," they worked 12-hour days, returning home after dark to a meal of instant noodles.

. . .

Mr. Li worried aloud whether he would be able to marry his high school sweetheart, who had accompanied him here, if he could not earn enough money to buy a home. Such concerns are rampant among young Chinese men, who have been squeezed by skyrocketing real estate prices and a culture that demands that a groom provide an apartment for his bride. "I'm giving myself two years," he said, his voice trailing off.

By November, the pressure had taken its toll on two of the others, including the irrepressible Liu Yang. After quitting the noodle company and finding no other job, she gave up and returned home.

For the full story, see:

ANDREW JACOBS. "China's Army of Graduates Is Struggling." The New York Times, First Section (Sun., December 12, 2010): A1 & A12.

(Note: ellipses added.)

(Note: the online version of the story is dated December 11, 2010 and has the title "China's Army of Graduates Struggles for Jobs.")

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"Lorelei Stathopoulos is concerned Salem will lose its "quaint reputation."" Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A11) SALEM, Mass. -- Like any good psychic, Barbara Szafranski claims she foresaw the problems coming.

Her prophecy came in 2007, as the City Council was easing its restrictions on the number of psychics allowed to practice in this seaside city, where self-proclaimed witches, angels, clairvoyants and healers still flock 319 years after the notorious Salem witch trials. Some hoped for added revenues from extra licenses and tourists. Others just wanted to bring underground psychics into the light.

Just as Ms. Szafranski predicted, the number of psychic licenses has drastically increased, to 75 today, up from a mere handful in 2007. And now Ms. Szafranski, some fellow psychics and city officials worry the city is on psychic overload.

. . .

"Many of them are not trained," she said of her rivals. "They don't understand that when you do a reading you hold a person's life in your hands."

Christian Day, a warlock who calls himself the "Kathy Griffin of witchcraft," thinks the competition is good for Salem.

"I want Salem to be the Las Vegas of psychics," said Mr. Day, who used to work in advertising and helped draft the 2007 regulations. Since they went into effect, he has opened two stores, Hex and Omen.

. . .

Now, talk has started about new regulations that would include a cap on the number of psychic businesses, but the grumbling has in no way reached the level of viciousness that occurred in 2007, when someone left the mutilated body of a raccoon outside Ms. Szafranski's shop and Mr. Day and Ms. Stathopoulos got into a fight.

For the full story, see:

KATIE ZEZIMA. "Witchy Town's Worry: Do Too Many Psychics Spoil the Brew?" The New York Times (Fri., May 27, 2011): A11.

(Note: ellipses added.)

(Note: the online version of the story is dated May 26, 2011.)

"Christian Day, who owns two shops, thinks competition is a good thing." Source of caption and photo: online version of the NYT article quoted and cited above.

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"Peter Thiel." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B4) Parents, do you hope that your children have the chance to become like Peter Thiel, the PayPal co-founder, Facebook investor and hedge fund manager? If so, Mr. Thiel suggests that you encourage them to drop out of school. In fact, he will help by paying them to do it.

On Wednesday, the Thiel Foundation, funded by Mr. Thiel, announced the first group of Thiel Fellows, 24 people under 20 who have agreed to drop out of school in exchange for a $100,000 grant and mentorship to start a tech company.

More than 400 people applied. The winners include Laura Deming, 17, who is developing antiaging therapies; Faheem Zaman, 18, who is building mobile payment systems for developing countries; and John Burnham, 18, who is working on extracting minerals from asteroids and comets.

. . .

Mr. Thiel, a contrarian investor and libertarian known for his controversial views, knows that suggesting that education is not always worth it strikes at the core of many Americans' beliefs. But that is exactly why is he doing it.

"We're not saying that everybody should drop out of college," he said. The fellows agree to stop getting a formal education for two years but can always go back to school. The problem, he said, is that "in our society the default assumption is that everybody has to go to college."

"I believe you have a bubble whenever you have something that's overvalued and intensely believed," Mr. Thiel said. "In education, you have this clear price escalation without incredible improvement in the product. At the same time you have this incredible intensity of belief that this is what people have to do. In that way it seems very similar in some ways to the housing bubble and the tech bubble."

. . .

"What I really liked about this program is it's giving a lot of people who maybe wouldn't get into Harvard an opportunity to participate in something just as selective and just as valuable and just as educational," Mr. Burnham said. "It's giving them that opportunity even though their personalities and characters don't quite fit the academic mold."

His father, Stephen Burnham, said the decision for his son to skip college, at least for now, was uncontroversial.

"There's a lot of other stuff that you get in college and I would say that would be useful for John," he said. "But I would say in four years there's a big opportunity cost there if you could be out starting your career doing something that could change the world."

For the full story, see:

CLAIRE CAIN MILLER. "Changing the World by Dropping Out." The New York Times (Mon., May 30, 2011): B4.

(Note: ellipses added.)

(Note: the online version of the story is dated May 25 (sic), 2011, has the title "Want Success in Silicon Valley? Drop Out of School," and is longer than the published version. Most of what is quoted above appears in both the published and online versions, but some (most notably the paragraph on the education bubble and the quotes from Stephen Burnham) appear only in the online verison.)

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(p. C12) In the early 1980s, Paul Sackett, a psychologist at the University of Minnesota, began measuring the speed of cashiers at supermarkets. Workers were told to scan a few dozen items as quickly as possible while a scientist timed them. Not surprisingly, some cashiers were much faster than others.

But Mr. Sackett realized that this assessment, which lasted just a few minutes, wasn't the only way to measure cashier performance. Electronic scanners, then new in supermarkets, could automatically record the pace of cashiers for long stretches of time. After analyzing this data, it once again became clear that levels of productivity varied greatly.

Mr. Sackett had assumed that these separate measurements would generate similar rankings. Those cashiers who were fastest in the short test should also be the fastest over the long term. But instead he found a surprisingly weak correlation between the rankings, leading him to distinguish between two types of personal assessment. One measures "maximum performance": People who know they're being tested are highly motivated and focused, just like those cashiers scanning a few items while being timed.

The other type measures "typical performance"--measured over long periods of time, as when Mr. Sackett recorded the speed of cashiers who didn't know they were being watched. In this sort of test, character traits that have nothing to do with maximum performance begin to influence the outcome. Cashiers with speedy hands won't have fast overall times if they take lots of breaks.

. . .

The problem, of course, is that students don't reveal their levels of grit while taking a brief test. Grit can only be assessed by tracking typical performance for an extended period. Do people persevere, even in the face of difficulty? How do they act when no one else is watching? Such traits often matter more than raw talent. We hear about them in letters of recommendation, but hard numbers take priority.

The larger lesson is that we've built our society around tests of performance that fail to predict what really matters: what happens once the test is over.

For the full commentary, see:

JONAH LEHRER. "Measurements That Mislead; From the SAT to the NFL, the problem with short-term tests." The Wall Street Journal (Sat., APRIL 2, 2011): C12.

(Note: ellipsis added.)

The classic article correlating maximum and typical performance, is:

Sackett, Paul R., Sheldon Zedeck, and Larry Fogli. "Relationships between Measures of Typical and Maximum Performance." Journal of Applied Psychology 73 (1988): 482-86.

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(p. A19) If the royal family were to utilize Kate's background to help encourage and spread this culture of entrepreneurship, the effects in Britain--and possibly much of the world--could be incredible. The people of the United Kingdom would be much richer, and not just in material terms. "Earned success gives people a sense of meaning about their lives," writes the social scientist Arthur Brooks, who is president of the American Enterprise Institute think tank.

Indeed, studies show that in both the U.S. and U.K., many blue- and white-collar workers prefer to have the opportunity to advance, even if this means a less equal income distribution. A study of thousands of British employees by Andrew Clark, associate chair of the Paris School of Economics, found that measures of these workers' happiness actually rose as their demographic group's average income increased relative to their own.

These findings suggests that as people see members of their peer group gain wealth--even surpassing them--it gives them hope that they can improve their lot as well. As Mr. Clark put it in his study of British workers, "income inequality . . . need not be harmful for economic growth" if it "contains an aspect of opportunity."

For the full story, see:

JOHN BERLAU. "The Entrepreneurs' Princess; For centuries in Britain, commercial activities were looked down upon by the aristocracy, whose wealth lay in landownership." Wall Street Journal (Thurs., APRIL 28, 2011): A17.

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

(p. A1) The federal Department of Education would categorize Michelle López-Mullins -- a university student who is of Peruvian, Chinese, Irish, Shawnee and Cherokee descent -- as "Hispanic." But the National Center for Health Statistics, the government agency that tracks data on births and deaths, would pronounce her "Asian" and "Hispanic." And what does Ms. López-Mullins's birth certificate from the State of Maryland say? It doesn't mention her race.

Ms. López-Mullins, 20, usually marks "other" on surveys these days, but when she filled out a census form last year, she chose Asian, Hispanic, Native American and white.

The chameleon-like quality of Ms. López-Mullins's racial and ethnic identification might seem trivial except that statistics on ethnicity and race are used for many important purposes. These include assessing disparities in health, education, employment and housing, enforcing civil rights protections, and deciding who might qualify for special consideration as members of underrepresented minority groups.

But when it comes to keeping racial statistics, the nation is in transition, moving, often without uniformity, from the old "mark one (p. A17) box" limit to allowing citizens to check as many boxes as their backgrounds demand. Changes in how Americans are counted by race and ethnicity are meant to improve the precision with which the nation's growing diversity is gauged: the number of mixed-race Americans, for example, is rising rapidly, largely because of increases in immigration and intermarriage in the past two decades. (One in seven new marriages is now interracial or interethnic.)

In the process, however, a measurement problem has emerged. Despite the federal government's setting standards more than a decade ago, data on race and ethnicity are being collected and aggregated in an assortment of ways. The lack of uniformity is making comparison and analysis extremely difficult across fields and across time.

For the full story, see:

SUSAN SAULNY. "Race Remixed; In Multiracial Nation, Many Ways to Tally Can Throw Off Some Numbers." The New York Times, First Section (Thurs., February 10, 2011): A1 & A17.

(Note: the online version of the story is dated February 9, 2011 and has the title "Race Remixed; Counting by Race Can Throw Off Some Numbers.")

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"Gordon M. Bethune, chief executive of Continental Airlines from 1994 to 2004, says that "being good at your job is predicated pretty much on how the people working for you feel."" Source of caption and photo: online version of the NYT article quoted and cited below.

Gordon Bethune is usually given credit for introducing marginal cost pricing to the airline industry, and thereby bringing Continental Airlines back from bankruptcy.

His views on how to hire and manage employees are worth serious consideration:

(p. 2) Q. How do you hire people?

A. The really good people want autonomy -- you let me do it, and I'll do it. So I told the people I recruited: "You come in here and you've got to keep me informed, but you're the guy, and you'll make these decisions. It won't be me second-guessing you. But everybody's going to win together. We're part of a team, but you're going to run your part." That's all they want. They want a chance to do it.

For the full interview Adam Bryant conducted with Gordon Bethune, see:

Gordon M. Bethune. "Corner Office; Remember to Share the Stage." The New York Times, SundayBusiness Section (Sun., January 3, 2010): 2.

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

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

We all know that correlation is not the same as causation. The main cause of Egypt's slow growth is its lack of institutions and policies supporting entrepreneurial capitalism, and not the decline of Egyptian cities. (But the decline of Egyptian cities does not help.)

(p. B1) Since then, the cities of Asia have expanded rapidly, drawing in millions of peasant farmers looking for a better life -- and, more often than not, finding it. Almost 50 percent of East Asians now live in cities. And Egypt? It is the only large country to have become less urban in the last 30 years, according to the World Bank. About 43 percent of Egyptians are city dwellers today.

This urban stagnation helps explain Egypt's broader stagnation. As tough as city life in poor countries can be, it's also fertile ground for economic growth. Nearly everything can be done more efficiently in a well-run city, be it plumbing, transportation or the generation of new ideas and businesses. "Being around other people," says Paul Romer, the economist and growth expert, "helps make us smarter."

Edward Glaeser, a Harvard economist (and weekly contributor to the Times's Economix blog), has just published a book, "The Triumph of the City, making the case that cities are humanity's greatest invention. Countries that become more urban tend to become far more productive, Mr. Glaeser writes. The effect is even bigger for poor countries than rich ones.

. . .

Three researchers -- Michael Clemens, Lant Pritchett and Claudio Montenegro -- recently found a novel way to measure how well various countries use the workers they have. The three compared the wages of immigrants to the United States with the wages of similar workers from the same country who remained home.

A 35-year-old urban Egyptian man with a high school education who moves to the United States can expect an incredible eightfold increase in living standards, the researchers found. Immigrants from only two countries, Yemen and Nigeria, receive a larger boost. In effect, these are the countries with the biggest gap between what their workers can produce in a different environment and what they are actually producing at home.

No wonder 19 percent of Egyptians told Gallup (well before the protests) that they would move to another country if they could. Mr. Clemens says that for every green card the United States awarded in a recent immigration lottery, 146 Egyptians had applied.

For the full commentary, see:

DAVID LEONHARDT. "Economic Scene; For Egypt, a Fresh Start, With Cities." The New York Times (Weds., February 16, 2011): B1 & B11.

(Note: ellipsis added.)

(Note: the online version of the article was dated February 15, 2011.)

The scholarly article summarized is:

Clemens, Michael, Claudio Montenegro, and Lant Pritchett. "The Place Premium: Wage Differences for Identical Workers across the Us Border." HKS Faculty Research Working Paper Series # RWP09-004, January 2009.

The Glaeser book is:

Glaeser, Edward L. Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. New York: Penguin Press, 2011.

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

(p. A1) . . . economists--and workers shut out of fields by educational requirements or difficult exams--say licensing mostly serves as a form of protectionism, allowing veterans of the trade to box out competitors who might undercut them on price or offer new services.

"Occupations prefer to be li-(p. A16)censed because they can restrict competition and obtain higher wages," said Morris Kleiner, a labor professor at the University of Minnesota. "If you go to any statehouse, you'll see a line of occupations out the door wanting to be licensed."

While some states have long required licensing for workers who handle food or touch others--caterers and hair stylists, for example--economists say such regulation is spreading to more states for more industries. The most recent study, from 2008, found 23% of U.S. workers were required to obtain state licenses, up from just 5% in 1950, according to data from Mr. Kleiner. In the mid-1980s, about 800 professions were licensed in at least one state. Today, at least 1,100 are, according to the Council on Licensure, Enforcement and Regulation, a trade group for regulatory bodies. Among the professions licensed by one or more states: florists, interior designers, private detectives, hearing-aid fitters, conveyor-belt operators and retailers of frozen desserts.

. . .

Mr. Kleiner, of the University of Minnesota, looked at census data covering several occupations that are regulated in some states but not others, including librarians, nutritionists and respiratory therapists. He found that employment growth in those professions was about 20% greater, on average, in the unregulated states between 1990 and 2000.

Licensing can also drive up costs to consumers. Licensed workers earn, on average, 15% more than their unlicensed counterparts in other states--a premium that may be reflected in their prices, according to a study published by the National Bureau of Economic Research and conducted by Mr. Kleiner and Alan Krueger, an economist at Princeton University.

Mr. Kleiner estimates that across the U.S. economy, occupational licensing adds at least $116 billion a year to the cost of services, which amounts to about 1% of total consumer spending. In a look at dentistry, Mr. Kleiner found that the average price of dental services rose 11% when a state made it more difficult to get a dental license.

For the full story, see:

STEPHANIE SIMON. "A License to Shampoo: Jobs Needing State Approval Rise." The Wall Street Journal (Mon., February 7, 2011): A1 & A16.

(Note: ellipses added.)

"Some of the jobs that require licensing in one or more states." Source of caption and table: online version of the WSJ article quoted and cited above.

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(p. 243) The stockingers began in the town of Arnold, where weaving frames were being used to make cut-ups and, even worse, were being operated by weavers who had not yet completed the seven-year apprenticeship that the law required. They moved next to Nottingham and the weaver-heavy villages surrounding it, attacking virtually every night for weeks, a few dozen men carrying torches and using prybars and hammers to turn wooden frames--and any doors, walls, or windows that surrounded them--into kindling. None of the perpetrators were arrested, much less convicted and punished.

The attacks continued throughout the spring of' 1811, and after a brief summertime lull started up again in the fall, by which time nearly one thousand weaving frames had been destroyed (out of the 25.000 to 29,000 then in Nottingham, Leicestershire, and Derbyshire), resulting in damages of between £6,000 and £10.000. That November, a commander using the nom de sabotage of Ned Ludd (sometimes Lud)--the name was supposedly derived from an apprentice to a Leicester stockinger named Ned Ludham whose reaction to a reprimand was to hammer the nearest stocking frame to splinters--led a series of increasingly daring attacks throughout the Midlands. On November 13, a letter to the Home Office demanded action against the "2000 men, many of them armed, [who] were riotously traversing the County of Nottingham."

By December 1811, rioters appeared in the cotton manufacturing capital of Manchester, where Luddites smashed both weaving and spinning machinery. Because Manchester was further down the path to industrialization, and therefore housed such machines in large factories as opposed to small shops, the destruction demanded larger, and better organized, mobs.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: italics and bracketed word in original.)

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(p. 239) Cartwright constructed twenty looms using his design and put them to work in a weaving "shed" in Doncaster. He further agreed to license the design to a cotton manufacturer named Robert Grimshaw, who started building five hundred Cartwright looms at a new mill in Manchester in the spring of 1792. By summertime, only a few dozen had been built and installed, but that was enough to provoke Manchester's weavers, who accurately saw the threat they represented. Whether their anger flamed hot enough to burn down Grimshaw's mill remains unknown, but something certainly did: In March 1792, after a series of anonymous threats, the mill was destroyed.

Cartwright's power looms were not the first textile machines to be attacked, and they would not be the last.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

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"Gid Pool performing at the Buford Variety Theater . . . " Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. R1) It's easy, these days, to think about later life and retirement as limiting. And with good reason: The economy remains fragile; nest eggs are smaller than they should be; and Social Security and Medicare are looking pale. Millions of people are delaying retirement and scaling back plans for the future.

And then there's Gid Pool.

Almost five years ago, on something of a lark, he enrolled in a class near his home in North Port, Fla., that taught stand-up comedy. He was 61 years old. Today, he performs in clubs, theaters, colleges and corporate settings throughout much of the South, playing at times to hundreds of people and clearing as much as $1,000 an evening. For good measure, he spends, on average, a week each month on cruise ships, where he teaches comedy classes.

. . .

"I was thinking last night about how lucky I am, at this stage in my life, to have something that really gets me up in the morning," he says. "I saw my grandfather, an engineer on the Illinois Central Railroad, turn my age with a body beaten down by his daily job. My father was a pilot in World War II and suffered all his adult life from an injury in a plane crash.

"Today I'm part of a generation that has literally been given a second chance to live a first life. People say you don't get a do-over in life. I beg to differ."

For the full story, see:

GLENN RUFFENACH. "Did You Hear the One About the Retired Real-Estate Agent? He became a stand-up comedian. And he has never been happier." The Wall Street Journal (Mon., December 20, 2010): R1 & R9.

(Note: ellipsis added.)

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Source of image: screen capture from YouTube clip referenced below.

What motivates employees? Economists have emphasized pay as the primary incentive, while recognizing that there may be "compensating differentials" for aspects of the work that are pleasant or unpleasant.

In recent years many non-economists, such as Daniel Pink in Drive, have emphasized non-pecuniary incentives.

Joe Paterno entered the debate at age 83, after he became the first major college coach to win 400 games on November 6, 2010.

Right after the victory, he was interviewed on the field by "Heather" of ESPN. Starting at 1:33 seconds into the clip referenced below, here is the key dialogue:

Heather: "Coach Paterno, what has motivated you to get to this point?"

Paterno: "Oh geez, I don't know---gettin' paid."

Source: YouTube clip at http://www.youtube.com/watch?v=jQzdVeYtm5w

(Note: the clip was posted on 11/6/10 by shellymic and has the title "Joe Pa FIRST to 400 Wins!")

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(p. 223) Kay's flying shuttle made it possible for weavers to produce a wider product, which they called "broadloom," but doing so was demanding. Weaving requires that the weft threads be under constant tension in order to make certain that each one is precisely the same length as its predecessor; slack is the enemy of a properly woven cloth. Using a flying shuttle to carry weft threads through the warp made it possible to weave a far wider bolt of cloth, but the required momentum introduced the possibility of a rebound, and thereby a slack thread. Kay's invention still needed a skilled artisan to catch the shuttle and so avoid even the slightest bit of bounce when it was thrown across the loom.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

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(p.6) This is the Mark Twain people love to quote ("Clothes make the man. Naked people have little or no influence in society." "A man who carries a cat by the tail learns something he can learn in no other way"), and whenever he hits his stride in the "Autobiography," you feel happy for him -- e.g., writing about Virginia City, Nev., in 1863:

"I secured a place in a nearby quartz (p. 7) mill to screen sand with a long-handled shovel. I hate a long-handled shovel. I never could learn to swing it properly. As often as any other way the sand didn't reach the screen at all, but went over my head and down my back, inside of my clothes. It was the most detestable work I have ever engaged in, but it paid ten dollars a week and board -- and the board was worthwhile, because it consisted not only of bacon, beans, coffee, bread and molasses, but we had stewed dried apples every day in the week just the same as if it were Sunday. But this palatial life, this gross and luxurious life, had to come to an end, and there were two sufficient reasons for it. On my side, I could not endure the heavy labor; and on the Company's side, they did not feel justified in paying me to shovel sand down my back; so I was discharged just at the moment that I was going to resign."

For the full review, see:

GARRISON KEILLOR. "Riverboat Rambler." The New York Times Book Review (Sun., December 19, 2010): 1, 6-7.

(Note: the online version of the review has the date December 16, 2010, and had the title "Mark Twain's Riverboat Ramblings." )

The book under review, is:

Smith, Harriet Elinor, ed. Autobiography of Mark Twain, Vol. 1. Berkeley: University of California Press, 2010.

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(p. 187) The Albion Mills, as it would be called, was built on a scale hitherto unimagined. The largest flour mill in London in 1783 used The Albion Mills, as it would be called, was built on a scale hitherto unimagined. The largest flour mill in London in 1783 used four pairs of grinding stones; Albion was to have thirty, driven by three steam engines, each with a 34-inch cylinder. Within months after its completion, in 1786, those engines were driving mills that produced six thousand bushels of flour every week--which both fed a lot of Londoners and angered a lot of millers.

The Albion Mills was London's first factory, and its first great symbol of industrialization; its construction inaugurated not only great age of steam-driven factories, but also the doomed though poignant resistance to them. That resistance took the shape of direct action--no one knows how the fire that destroyed the Albion Mills in 1791 began, but arson by millers threatened by its success seems likely-- . . .

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: ellipsis added.)

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"Brian Wong, above at his company's office in San Francisco, is a Canadian citizen hoping for a rule change that would ease U.S. visa restrictions." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B7) San Francisco entrepreneur Brian Wong has already hired two employees and secured $300,000 in funding for his start-up, and hopes to have a staff of 40 or more full-time workers by this time next year.

But there's at least one red flag in his business plan: Mr. Wong isn't American; he's Canadian.

. . .

. . . foreign entrepreneurs have long played an outsized role in the U.S. start-up sector, especially in the tech industry. Immigrants are nearly 30% more likely to start a business than nonimmigrants, the Small Business Administration says. University of California researchers estimate about a third of Silicon Valley technology firms were started by Indian or Chinese entrepreneurs, while a joint study with Duke University found at least one immigrant founder in over a quarter of all engineering and technology firms launched in the U.S. since the mid 1990s, together generating nearly 450,000 jobs by 2005. Google Inc., Intel Corp., Yahoo Inc. and eBay Inc. all had at least one immigrant founder.

Yet many of these companies were also started on a shoestring, leading some tech industry insiders to say the bill's capital requirements are far too high.

. . .

. . . , the start-up visa's high capital requirement is certain to filter out sole-proprietorships, while ensuring it attracts innovative, mostly tech-savvy entrepreneurs, says Bob Litan, a researcher at the Kauffman Foundation. The downside, he says, is that only a handful of immigrant entrepreneurs will qualify.

"Hardly any businesses get venture capital in a given year," Mr. Litan says. "This isn't going to have much of an impact on the U.S. economy and I suspect that's why so few people are opposed to it."

. . .

Without a visa, Mr. Wong says he'll be forced to launch his start-up back in Canada, taking the new jobs with him.

For the full story, see:

ANGUS LOTEN. "New Pitch for Start-Up Visas; Senate Bill Would Make for Smoother U.S. Entry for Foreign Entrepreneurs ." The Wall Street Journal (Thurs., December 16, 2010): B7.

(Note: ellipses added.)

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(p. 180) Anyone who has ever supervised a talented subordinate with a tendency to set his own priorities will find Watt's letters familiar: "I wish William could be brought to do as we do, to mind the business in hand, and let such as Symington [William Symington, the builder of the Charlotte Dundas, one of the world's first steam-engine boats] and Sadler [James Sadler, balloonist and inventor of a table steam engine] throw away their time and money, hunting shadows."

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: italics and bracketed words in original.)

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(p. 21) Like many educational theorists, Bronson Alcott found his own children hard to manage. And, again like many visionaries, he also found it hard to hold down a job. As a result, the family moved 29 times in as many years. In 1843 Bronson helped found Fruitlands, a utopian community 15 miles west of Boston. Members of the commune, which numbered 13 people at its height, advocated abolitionism, environmentalism, feminism and anarchism, forswearing meat, alcohol, neckcloths, haircuts, cotton (because it was grown by slaves) and leather (because it was harvested from animals). Their rejection of one more animal product, manure, helps explain why Fruitlands failed after only eight months: this new Eden remained barren in the absence of fertilizer.

In "Transcendental Wild Oats," a satiric memoir Louisa based on the diary she kept at Fruitlands, one character asks "Are there any beasts of burden on the place?" and is answered, "Only one woman!" In real life, the expulsion of the lone female convert, probably for helping herself to some fish on the sly, left Louisa's mother, Abigail, to do all the women's work and much of the men's -- especially since Bronson and his sidekick, Charles Lane, made a habit of disappearing on recruiting trips at the very moment farm labor was required.

For the full review, see:

LEAH PRICE. "American Girl." The New York Times Book Review (Sun., December 12, 2010): 21.

(Note: the online version of the review is dated December 10, 2010.)

The books under review are:

Cheever, Susan. Louisa May Alcott: A Personal Biography. New York: Simon & Schuster, 2010.

Francis, Richard. Fruitlands: The Alcott Family and Their Search for Utopia. New Haven, CT: Yale University Press, 2010.

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"Will Corcoran pumps gas at Tim's Westview in Ridgefield Park. Pumping your own gas has been illegal in New Jersey for 61 years." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) RIDGEFIELD PARK, N.J.--People in New Jersey pick their own strawberries. They chop down their own Christmas trees. They check themselves in at airports and check themselves out at supermarkets. Lately, a few New Jerseyans have been wondering whether it isn't about time they were allowed to pump their own gas.

Pumping your own gas is illegal in New Jersey. It has been for 61 years. It's also illegal in Oregon, and in the New York town of Huntington, on Long Island. Just about everywhere else, self-serving Americans do it themselves. As paying at the pump gets easier, the gas station attendant is fast going the way of the elevator operator.

Don't tell Will Corcoran. When you pull into Tim's Westview, a Gulf station across from the train tracks in this north Jersey town, you'll sit in your car while he fills your tank.

Under a cold rain one weekday, he stood at the driver's window of a Chevy, bent over, yakking. He wore blue. His cap had Gulf Oil's orange disk on it. After his customer signed the credit slip (Tim's pumps don't process cards), Mr. Corcoran, 42 years old, shook hands and saluted like a gas jockey in an old commercial.

For the full story, see:

BARRY NEWMAN. "Self-Service Nation Ends at Garden State Gas Pumps; Changing Law May or May Not Lower Prices; 'New Jersey Is Heaven!'." The Wall Street Journal (Sat., NOVEMBER 27, 2010): A1 & A14.

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"Shayne Sotelo opposes Arizona's new immigration law, while her husband, Efrain, supports it." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 28) PHOENIX -- Arizona's immigration law, which politicians have debated in the Legislature, lawyers have sparred over in the courtroom and advocates have shouted about on the street, has found its way up a driveway in central Phoenix, through the front door and right onto the Sotelo family's kitchen table.

. . .

That such a divisive social issue would divide some families is not surprising. But what makes the Sotelos stand out is that they are both Latinos, he a Mexican immigrant who was born in the northern state of Chihuahua and she a descendant of Spanish immigrants who grew up in Colorado.

While polls show that a vast majority of Latinos nationwide side with Mrs. Sotelo in opposing Arizona's law, that opposition is not uniform. "All Latinos are not opposed to this law -- that's too simplistic," said Cecilia Menjivar, an Arizona State University sociologist. There are other Mr. Sotelos out there, including an Arizona state legislator, Representative Steve B. Montenegro, a Republican who immigrated from El Salvador and became the only Latino lawmaker to vote in favor of the bill.

. . .

[Mr. Sotelo] thinks his adopted state has been unfairly maligned since the law passed. "I'm a Hispanic, and I don't have any issues walking the streets," he said. "They make it seem like the police or sheriff are out there checking everyone's papers, and that's not so."

For the full story, see:

MARC LACEY. "One Family's Debate Shows Arizona Law Divides Latinos, Too." The New York Times, First Section (Sun., October 31, 2010): 28.

(Note: ellipses added; bracketed name added to replace "He.")

(Note: the online version of the article is dated October 30, 2010 and has the title "Arizona Immigration Law Divides Latinos, Too.")

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At left, Richard Gill as Harvard economist. At right, Richard "Gill as Frère Laurent, one of his numerous singing roles he preformed at the Met." Source of part of caption, and of photos: online version of the NYT obituary quoted and cited below.

(p. B19) Richard T. Gill, in all statistical probability the only Harvard economist to sing 86 performances with the Metropolitan Opera, died on Monday in Providence, R.I. He was 82.

. . .

Mr. Gill, a longtime Harvard faculty member who wrote many widely used economics textbooks, did not undertake serious vocal training (which he began as an anti-smoking regimen) until he was nearly 40. At the time, he had seen perhaps 10 operas and rarely listened to classical music.

. . .

In some respects, he later said, Mr. Gill found the roiling world of opera more appealingly straightforward than the roiling world of academe.

"Performing is a great reality test," he told Newsweek in 1975. "There's no tenure in it and the feedback is much less complicated than you get in academia. When you go out on that stage, you put your life on the line."

For the full obituary, see:

MARGALIT FOX. "Richard T. Gill, Economist and Opera Singer, Dies at 82." The New York Times (Thurs., October 28, 2010): B19.

(Note: ellipses added.)

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(p. B1) White Americans don't report being any more satisfied with their lives than they did in the 1970s, various surveys show. Black Americans do, and significantly so.

Betsey Stevenson and Justin Wolfers, the University of Pennsylvania economists who did the study, point out that self-reported measures of happiness usually shift at a glacial pace. The share of whites, for example, telling pollsters in recent years that they are ''not too happy'' -- as opposed to ''pretty happy'' or ''very happy'' -- has been about 10 percent. It was also 10 percent in the 1970s.

Yet the share of blacks saying they are not too happy has dropped noticeably, to about 20 (p. B12) percent in surveys over the last decade, from 24 percent in the 1970s. All in all, Mr. Wolfers calls the changes to blacks' answers, ''one of the most dramatic gains in the happiness data that you'll see.''

For the full commentary, see:

DAVID LEONHARDT. "ECONOMIC SCENE; For Blacks, Progress In Happiness." The New York Times (Weds., September 15, 2010): B1 & B12.

The working paper referred to in the commentary is:

Stevenson, Betsey, and Justin Wolfers. "Subjective and Objective Indicators of Racial Progress." May 12, 2010.

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(p. A9) . . . Alf Svensson [is a] former leader of the center-right Christian Democrats.

. . .

Sweden's paternalistic welfare state is partly to blame for some immigrants' marginal status in the economy, said Mr. Svensson. "We had...a system which was 'taking care' of immigrants, which didn't give them a chance to flex their own wings and show what they could do, and this has made integation worse," he said.

For the full story, see:

MARCUS WALKER And CHARLES DUXBURY. "Far-Right Party Wins Seats in Sweden." The Wall Street Journal (Mon., SEPTEMBER 20, 2010): A9.

(Note: bracketed words and first two ellipses added; last ellipsis in original.)

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

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"A Cuban State worker (center) sweeps the streets in Havana." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) Cuba will lay off more than half a million state workers and try to create hundreds of thousands of private-sector jobs, a dramatic attempt by the hemisphere's only Communist country to shift its nearly bankrupt economy toward a more market-oriented system.

The mass layoffs will take place between now and the end of March, according to a statement issued Monday by the Cuban Workers Federation, the island nation's only official labor union. Workers will be encouraged to find jobs in Cuba's tiny private sector instead.

"Our state can't keep maintaining...bloated payrolls," the union's statement said. More than 85% of Cuba's 5.5 million workers are employed by the state.

. . .

(p. A15) Cubans who decide to go into business for themselves will find a series of obstacles, including very high taxes, lack of access to credit and foreign exchange, bans on advertising, limits on the number of people they can hire, and a litany of small-print government regulations, experts say.

Cuba's government has a list of 124 "authorized" activities for people who want to employ themselves. Among them: Toy repairman, music teacher, piñata salesman and carpenter. Carpenters are allowed only to "repair existing furniture or make new furniture upon the direct request of a customer." They cannot make "furniture to sell to the general public."

For the full story, see:

José de Córdoba and Nicholas Casey. "Cuba Unveils Huge Layoffs in Tilt Toward Free Market." The Wall Street Journal (Tues., SEPTEMBER 14, 2010): A1 & A15.

(Note: ellipsis added between paragraphs; ellipsis internal to paragraph was in original.)

(Note: the online version of the article has the title "Cuba to Cut State Jobs in Tilt Toward Free Market.")

This particular piñata model is expected to be a hot seller for the new piñata salesmen. Source of photo: http://cdn.smosh.com/smosh-pit/4/pinata-7.jpg

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(p. A2) Cornell University economists Francine D. Blau and Lawrence M. Kahn found that after adjusting for factors such as education, experience, occupation and industry, the remaining, "unexplained" gender gap in 1998 was nine percentage points. Women also are likely to interrupt their careers, often to start a family, and such breaks can derail promotions and raises.

"When you first see the numbers, you would say there is a glass ceiling," says Harvard University economist Claudia Goldin. "And yet when you scrutinize the data, you find lots of evidence of people making rational choices."

For the full commentary, see:

CARL BIALIK. "THE NUMBERS GUY; Not All Differences in Earnings Are Created Equal." The Wall Street Journal (Sat., APRIL 10, 2010): A2.

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(p. A19) You can't read models, but you do talk to entrepreneurs in Racine and Yakima. Higher deficits will make them more insecure and more risk-averse, not less. They're afraid of a fiscal crisis. They're afraid of future tax increases. They don't believe government-stimulated growth is real and lasting. Maybe they are wrong to feel this way, but they do. And they are the ones who invest and hire, not the theorists.

The Demand Siders are brilliant, but they write as if changing fiscal policy were as easy as adjusting the knob on your stove. In fact, it's very hard to get money out the door and impossible to do it quickly. It's hard to find worthwhile programs to pour money into. Once programs exist, it's nearly impossible to kill them. Spending now creates debt forever and ever.

Moreover, public spending seems to have odd knock-off effects. Professors Lauren Cohen, Joshua Coval and Christopher Malloy of Harvard surveyed 42 years of government spending increases in certain Congressional districts. They found that federal spending increases dampened corporate hiring and investment in those districts.

For the full commentary, see:

DAVID BROOKS. "A Little Economic Realism." The New York Times (Tues., July 6, 2010): A19.

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

The research referenced is:

Cohen, Lauren, Joshua D. Coval, and Christopher J. Malloy. "Do Powerful Politicians Cause Corporate Downsizing?" NBER Working Paper No.15839, March 2010.

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Some West Virginia miners may have faced unemployment due to technological progress. But what they needed to improve their situation was economic growth from private enterprise, rather than Senator Robert Byrd's federal pork.

(p. A11) . . . mining companies developed more efficient techniques for extracting coal and natural gas, which eliminated the need for many blue collar jobs. Laid-off workers lacked the skills to attract other types of businesses and college students couldn't find jobs after graduation, so they left. Such dramatic changes would be serious obstacles for any politician.

. . .

By contrast, Byrd's solution was to steer federal largess to his state.

. . .

Take Route 50. Thirty years ago, the federal government extended the route from two lanes to four with the hopes of spurring development. But hit the open road today and you'll notice it's just that--open. "You won't see another car for two hours," says Russell Sobel, a professor of economics at West Virginia University. "You can't just build roads and expect that things will happen. People who want to transport goods and services need to be there."

. . .

"We've created this culture of dependency," warns Mr. Sobel, "Our human capital is not good at competing in the marketplace; it's good at securing federal grants."

Federal funding is a shaky foundation for an economy because no one can replace Big Daddy. In their recently released paper "Do Powerful Politicians Cause Corporate Downsizing?" Harvard professors Lauren Cohen, Joshua Coval and Christopher Malloy found that states that lose chairmanships on important congressional committees lose 20% to 30% in earmarks.

Even worse, they found that pork actually pushes private investment out of a state. When the federal government intrudes, it raises demand for the state's workers and real estate, jacking up prices. Often, companies can't compete, so they flee.

For the full commentary, see:

BRIAN BOLDUC. "CROSS COUNTRY; Robert Byrd's Highways to Nowhere; Government pork hasn't made West Virginia prosperous." The Wall Street Journal (Sat., JULY 10, 2010): A11.

(Note: ellipses added.)

The research referenced is:

Cohen, Lauren, Joshua D. Coval, and Christopher J. Malloy. "Do Powerful Politicians Cause Corporate Downsizing?" NBER Working Paper No.15839, March 2010.

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

(p. A15) The number of nonfarm private jobs has been growing steadily since the 1950s. That number reached a peak at the end of 2007. Between 1958 and 2007, the number of U.S. jobs grew to 115.4 million from 43.5 million--about 2% per year on average. The steady upward trend reflects the long-run growth of the economy and increased participation in the labor force.

The nearby chart compares employment and that trend. It shows the percentage difference between employment and the trend line generated from monthly employment figures over the past 50 years (July 1960 through June 2010).

What we see is astounding. For almost 25 years--between 1984 and late 2008--the level of employment never fell to more than 3% below the trend line. Over that period, total employment grew by more than 36 million.

Employment fell briefly to about 6% below the trend during two previous recessions: in 1975 and again in 1982-1983. During those periods, the unemployment-rate peaks were 9% (in 1974) and 10.8% (in 1982). The unemployment rate in 2009 peaked at 10.1%.

By 2010, however, employment had fallen to about 10% below the trend, far below any previous level in the last half-century.

For the full commentary, see:

PAUL GODEK. "Jobless Numbers Are Worse Than You Think; The situation is much more dire now than it was during the 1980s." The Wall Street Journal (Fri., JULY 23, 2010): A15.

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

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

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

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

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

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

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

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

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

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

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

Source:

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

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

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

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

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

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

Source:

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

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(p. A1) As unlikely as it would seem against this backdrop, manufacturers who want to expand find that hiring is not always easy. During the recession, domestic manufacturers appear to have accelerated the long-term move (p. A3) toward greater automation, laying off more of their lowest-skilled workers and replacing them with cheaper labor abroad.

Now they are looking to hire people who can operate sophisticated computerized machinery, follow complex blueprints and demonstrate higher math proficiency than was previously required of the typical assembly line worker.

Makers of innovative products like advanced medical devices and wind turbines are among those growing quickly and looking to hire, and they too need higher skills.

. . .

Manufacturers who profess to being shorthanded say they have retooled the way they make products, calling for higher-skilled employees. "It's not just what is being made," said David Autor, an economist at the Massachusetts Institute of Technology, "but to the degree that you make it at all, you make it differently."

In a survey last year of 779 industrial companies by the National Association of Manufacturers, the Manufacturing Institute and Deloitte, the accounting and consulting firm, 32 percent of companies reported "moderate to serious" skills shortages. Sixty-three percent of life science companies, and 45 percent of energy firms cited such shortages.

For the full story, see:

MOTOKO RICH. "Jobs Go Begging as Gap is Exposed in Worker Skills." The New York Times (Fri., July 1, 2010): A1 & A3.

(Note: ellipsis added.)

(Note: the online version of the article is dated July 1, 2010 and has the title "Factory Jobs Return, but Employers Find Skills Shortage.")

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"Supporters of a proposed Wal-Mart store in Chicago demonstrated at a City Coumcil zoning panel hearing Thursday." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B4) "We need jobs for our neighborhood, and Wal-Mart is willing to come, and they're willing to provide the jobs," said the Rev. Dr. D. Darrell Griffin, the pastor at Oakdale Covenant Church.

Politicians who supported the Wal-Mart store said they did so in part because of employment and revenue for the city.

"There are major corporations willing to invest significant money within our communities, which has not been done, really, since the '60s, when a lot of the corporations left the communities after the riots," said Howard B. Brookins Jr., a member of the council. "This is huge for us."

. . .

On Thursday, the zoning committee meeting was filled with about 200 onlookers wearing T-shirts with the Wal-Mart logo and slogans like, "Our neighborhood. Our jobs. Our decision."

Before he asked for a simple yes or no vote, Daniel Solis, chairman of the zoning committee, told the crowd, "We are now the model in this country."

After the unanimous vote -- which sends the proposal to the full City Council, where it is expected to pass next week -- the audience stood and cheered.

"It's going to bring jobs and help the community," Shawn Polk, 20, a college student who lives near the proposed store, said afterward.

For the full story, see:

STEPHANIE CLIFFORD. "Wal-Mart Gains in Its Wooing of Chicago." The New York Times (Fri., June 25, 2010): B1 & B4.

(Note: the online version of the article is dated June 24, 2010.)

(Note: ellipsis added.)

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

(p. A16) "The euro was supposed to achieve higher productivity and growth by bringing about a deeper integration between economies," says Simon Tilford, chief economist at the Centre for European Reform, a London think tank. "Instead, integration is slowing. The lack of flexibility in labor and product markets raises serious questions about the likelihood of the euro delivering on its potential."

Structural changes are the last great hope in part because euro zone members have few other levers for lifting their economies. Individual members can't tweak interest rates to encourage lending, because those policies are set by the zone's central bank. The shared euro means countries don't have a sovereign currency to devalue, a move that would make exports cheaper and boost receipts abroad.

The remaining prescription, many economists say: chip away at the cherished "social model." That means limiting pensions and benefits to those who really need them, ensuring the able-bodied are working rather than living off the state, and eliminating business and labor laws that deter entrepreneurship and job creation.

That path suits Carlos Bock. The business-studies graduate from Bavaria spent months navigating Germany's dense bureaucracy in order to open a computer store and Internet café in 2004. Before he could offer a Web-surfing customer a mug of filter coffee, he said, he had to obtain a license to run a "gastronomic enterprise." One of its 38 requirements compelled Mr. Bock to attend a course on the hygienic handling of mincemeat.

Mr. Bock closed his store in 2008. Germany's strict regulations and social protections favor established businesses and workers over young ones, he said. He also struggled against German consumers' reluctance to spend, a problem economists blame in part on steep payroll taxes that cut into workers' takehome pay, and on high savings rates among Germans who are worried the country's pension system is unsustainable.

"If markets were freer, there might be chaos to begin with," Mr. Bock said. "But over time we'd reach a better economic level."

Even in France, some erstwhile opponents of reforms are changing their tune. Julie Coudry became a French household name four years ago when she helped organize huge student protests against a law introducing short-term contracts for young workers, a move the government believed would put unemployed youths to work.

With her blonde locks and signature beret, Ms. Coudry gave fiery speeches on television, arguing that young people deserved the cradle-to-grave contracts that older employees enjoy at most French companies. Critics in France and abroad saw the protests as a shocking sign that twentysomethings were among the strongest opponents of efforts to modernize the European economy. The measure was eventually repealed.

Today, the now 31-year-old Ms. Coudry runs a nonprofit organization that encourages French corporations to hire more university graduates. Ms. Coudry, while not repudiating her activism, says she realizes that past job protections are untenable.

"The state has huge debt, 25% of young people are jobless, and so I am part of a new generation that has decided to take matters into our own hands," she says. "We've decided that we can't expect everything from the state."

For the full story, see:

MARCUS WALKER And ALESSANDRA GALLONI. "Europe's Choice: Growth or Safety Net." The Wall Street Journal (Thurs., MARCH 25, 2010): A1 & A16.

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(p. A22) Smarter computing technology, experts say, ought to make the most skilled workers -- in science, the arts and business -- even more productive and prosperous by freeing them from routine tasks. Their prosperity translates to spending that creates jobs in stores, schools, gyms, construction and elsewhere.

Artificial intelligence, experts say, should also generate new jobs even as it displaces others. The smart machines of the future will need programming, servicing and upgrading -- work done, perhaps, by a new class of digital technicians. The intelligent machines, experts add, will be specialists in a field, like the medical assistant project at Microsoft. They must be tailored with specialized software, perhaps igniting a new industry for artificial intelligence applications.

Of course, no one really knows just what artificial intelligence will mean for jobs and the economy, but the technology is marching ahead. "Its potential is far greater than simply substituting technology for human labor," said Erik Brynjolfsson, an economist at the M.I.T Sloan School of Management.

For the full story, see:

STEVE LOHR. "Jobs Created and Displaced." The New York Times (Fri., June 25, 2010): A22.

(Note: the date of the online version of the article was June 24, 2010.)

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"Carbonless paper comes off a coating machine at Appleton Papers in March. Mexican tariffs have hit sales." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A5) APPLETON, Wis.--Congress's vote last year to keep Mexican truck drivers south of the border was good news for DuWayne Marshall.

Mr. Marshall, 49 years old, owns a truck and hauls loads all over the U.S. from his home in Wisconsin. "Why should I have to compete against Third World drivers within my own borders?" Mr. Marshall asked during a break on a run to San Diego. "By closing down the borders, we are saving American jobs."

Elizabeth Villagomez, 38, isn't so sure. A single mother of two teens, she has worked at a paper plant in this community near Green Bay for 15 years. After the Mexican government retaliated against the trucking ban by slapping $2 billion in tariffs on U.S. paper, produce and other goods, orders plunged and managers began slashing shifts and overtime for the unionized work force.

"The company has done all it can to cut costs," Ms. Villagomez said. "I'm at the bottom of the list if they have layoffs. It's kind of scary, not knowing if you're going to have a job."

. . .

At Appleton Papers Inc., the fight over who can drive a truck across a border 1,600 miles away has translated into falling wages and rising anxiety.

Rick Bahr, head of the United Steelworkers union local that represents more than 500 employees at the Appleton plant, said six shifts have already been cut, cutting down on overtime.

"The battle ends up union versus union, truckers versus the paper workers," Mr. Bahr said. The national steelworkers' union has been supporting the Teamsters on the issue of Mexican trucks in the U.S.

Nearly half the company's revenue, about $420 million last year, comes from carbonless paper sales. Its largest foreign customer is Mexico. After Mexico put a 10% tariff on carbonless paper, revenue from Mexico fell to $37 million in 2009 from $46 million in 2008.

Now, more Mexican customers say they will look for alternative suppliers to avoid having to bear part of the tariff costs. Just last month a major customer told Appleton it was going to get its carbonless paper from a European producer.

Even before the tariffs were imposed, the company had seen business hit by the economic slowdown and had cut its work force in 2008 and stopped other benefits, such as reimbursing tuition and matching workers' contributions to their 401K retirement plans. Company officials said it was hard to quantify what part of the business downturn could be blamed directly on the tariffs, but they noted that Appleton sold 18% fewer tons of carbonless paper in the U.S. last year, compared with 2008. The number of tons sold to Mexican customers was down 24%.

Inside the plant, the machine that coats 4,000-pound rolls of paper to make it carbonless was idle one recent afternoon. Once run 24 hours a day, it is now used only half that time.

Kevin Bunnow, 50, a 33-year veteran of the plant, said the reduction in shifts had meant a wage cut of several thousand dollars last year.

"When elephants fight, the grass loses," he said. "It didn't take me long to realize, we're the grass."

For the full story, see:

GARY FIELDS. "Trade Dispute Divides Workers; It's 'Union vs. Union' as Ban on Mexican Trucks Cheers Drivers, Triggers Cut in Hours at Paper Plant." The Wall Street Journal (Tues., April 6, 2010): A5.

(Note: ellipsis added.)

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(p. 116) Roosevelt's social security plan created an array of problems. First, it retarded recovery from the Great Depression by contributing to unemployment. From 1937 to 1940. employers and employees were docked for social security, and that money was out of private hands and lying fallow in the treasury. Lloyd Peck of the Laundryowners National Association concluded, "The burden of this proposal for employers to carry, through a payroll tax, will act as a definite curb on business expansion, and will likely eliminate many businesses now on the verge of bankruptcy."

. . .

(p. 117) When an accountant quizzed Roosevelt about the economic problems with social security, especially its tendency to create unemployment, he responded, "I guess you're right on the economics, but those taxes were never a problem of economics. They are politics all the way through." Roosevelt explained that "with those taxes in there, no damn politician can ever scrap my social security program. That's why, as Roosevelt admitted, it's "politics all the way through." Most politicians, following Roosevelt's lead, have taken delight in raising social security payouts and using that gift to plead for votes from the elderly at election time.

Source:

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

(Note: ellipsis added.)

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The size and structure of the "safety net" is a subject of hot debate. Hayek in The Road to Serfdom suggested that higher benefits would lead to slower labor market adjustments.

There may have been multiple causes for the high unemployment rate in the U.K. in the 1920s and 1930s. But it is highly plausible that higher unemployment benefits would have made the unemployed more selective in which jobs they would accept, and hence would have contributed to higher rates of unemployment and higher average duration of unemployment.

(p. 7B) The ultimate evidence . . . is from the 1920s, when the Labour Party came to power in the U.K. for the first time. As scholars Daniel K. Benjamin and Levis Kochin pointed out in a Journal of Political Economy paper, the moment was one in which "unemployment benefits were on a more generous scale relative to wages than ever before or since."

The result was the mother of all jobless recoveries. For almost two decades, from 1921 to 1938, U.K. unemployment averaged 14 percent and never got below 9.5 percent.

For the full story, see:

Amity Shlaes. "Help can hurt job hunters." Omaha World-Herald (Friday April 16, 2010): 7B.

(Note: ellipsis added.)

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(p. A19) Mr. Obama and his advisers need to grasp this essential fact: Entrepreneurs are not just a cute little subsector of the American economy. They are the whole game. They will give us tomorrow's Apples and the multiplier effect of small businesses and exciting new jobs that go with them. Entrepreneurs are necessary to keep our large multinationals on their toes. It's no coincidence that the entrepreneurial flowering of the 1970s forced a managerial revolution in large companies during the 1980s and 1990s. Without Steve Jobs, there would have been no Lou Gerstner to reinvent IBM in the '90s. Entrepreneurs like Steve Jobs make everyone better.

For the full story, see:

RICH KARLGAARD. "Apple to the Rescue?" The Wall Street Journal (Thurs., JANUARY 28, 2010): A19.

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

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

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

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

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

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

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

. . .

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

For the full review, see:

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

(Note: ellipses added.)

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

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(p. A19) . . . , there is one way to create a lot more jobs without spending federal money. Let's import them. More precisely, let's import the people who create them: entrepreneurs.

A bipartisan bill that would begin to do just that was introduced on Feb. 24 by Sens. John Kerry (D., Mass.) and Richard Lugar (R., Ind.). Their "Startup Visa Act" would create a new, two-year visa for immigrant entrepreneurs whose firms attract at least $250,000 in financing from American angel investors or venture capital firms.

. . .

Here's a way to improve on the Kerry-Lugar plan. Create a true "job creator's visa," one tied directly and only to job creation by new immigrant entrepreneurs. The visa could be a temporary one for immigrants already here on another visa who establish a business. It could then be extended if the firm hires at least one American non-family resident. The visa should become permanent once the enterprise crosses a certain job threshold (such as five or 10 workers). But it would not be tied to financing.

. . .

Google was founded by Sergey Brin, a Russian immigrant, and American Larry Page by borrowing funds from their own credit cards. Why on earth would we want to create an entrepreneurs' visa that couldn't let in the future Sergey Brin?

For the full commentary, see:

ROBERT E. LITAN. "Visas for the Next Sergey Brin; To create more jobs, let's import more employers." The Wall Street Journal (Mon., MARCH 8, 2010): A19.

(Note: ellipses added.)

(Note: the online version of the article is dated MARCH 7, 2010.)

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(p. A3) Organized labor lost 10% of its members in the private sector last year, the largest decline in more than 25 years. The drop is on par with the fall in total employment but threatens to significantly limit labor's ability to influence elections and legislation.

On Friday, the Labor Department reported private-sector unions lost 834,000 members, bringing membership down to 7.2% of the private-sector work force, from 7.6% the year before. The broader drop in U.S. employment and a small gain by public-sector unions helped keep the total share of union membership flat at 12.3% in 2009. In the early 1980s, unions represented 20% of workers.

For the full story, see:

KRIS MAHER. "Union Membership Declines by 10%." The Wall Street Journal (Sat., January 23, 2010): A3.

(Note: the online version of the article has the slightly different title "Union Membership Drops 10%.")

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

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

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

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

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

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

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

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

Source:

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

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

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

Boeing's latest BHAG is the 787 Dreamliner.

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

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

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

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

For the full story, see:

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

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

The reference for the Collins and Porras book is:

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

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"Amelia Frank-Vitale, a former union organizer, said the practice of pink sheeting sent her into therapy." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) After six years working in the laundry of a Miami hotel, Julia Rivera was thrilled when her union tapped her to become a full-time union organizer.

But her excitement soon turned to outrage.

Ms. Rivera said her supervisors at Unite Here, the hotel and restaurant workers' union, repeatedly pressed her to reveal highly personal information, getting her to divulge that her father had sexually abused her.

Later, she said, her supervisors ordered her to recount her tale of abuse again and again to workers they were trying to unionize at Tampa International Airport, convinced that Ms. Rivera's story would move them, making them more likely to join the union.

"I was scared not to do what they said," said Ms. Rivera, adding that she resented being pressured to disclose intimate information and then speak about it in public. "To me, it was sick. It was horrible."

Ms. Rivera and other current and former Unite Here organizers are speaking out against what they say is a longstanding practice in which Unite Here officials pressured subordinates to disclose sensitive personal information -- for example, that their mother was an alcoholic or that they were fighting with their spouse.

More than a dozen organizers said in interviews that they had often been pressured to detail such personal anguish -- sometimes under the threat of dismissal from their union positions -- and that their supervisors later used the information to press them to comply with their orders.

"It's extremely cultlike and extremely manipulative," said Amelia Frank-Vitale, a Yale graduate and former hotel union organizer who said these practices drove her to see a therapist.

Several organizers grew incensed when they discovered that details of their history had been put into the union's database so that supervisors could use that information to manipulate them.

"This information is extremely personal," said Matthew Edwards, an organizer who had disclosed that he was from a broken home and was overweight when young. "It is catalogued and shared throughout the whole organizing department."

. . .

(p. B5) Several organizers likened pink sheeting to a practice that Cesar Chavez, former president of the United Farm Workers, used when he embraced a mind-control practice developed by Synanon, a drug rehabilitation center founded in Santa Monica, Calif. Union staff members were systematically subjected to intense, prolonged verbal abuse in an effort to break them down and assure loyalty.

. . .

Ms. Frank-Vitale, now a graduate student at American University, says she is still haunted by memories of pink sheeting.

"One night my supervisor pushed me and pushed me, and I started talking about being an overweight woman in America, what that was like in high school, that it was very difficult for me," she said. "I felt kind of violated."

For the full story, see:

STEVEN GREENHOUSE. "Some Organizers Protest Their Union's Tactics." The New York Times (Thurs., November 19, 2009): B1 & B5.

(Note: the online version of the article is dated November 18, 2009.)

(Note: ellipses added.)

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

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

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

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

Microsoft had the right idea.

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

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

. . .

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

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

For the full story, see:

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

(Note: ellipsis added.)

The Levy and Murnane book mentioned above, is:

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

The Thielen book is:

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

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

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

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

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

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

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

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

. . .

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

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

For the full story, see:

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

(Note: ellipsis added.)

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(p. A25) While a slight improvement over last month's numbers, today's employment update from the Bureau of Labor Statistics presents a dismal picture for American workers. As policy makers search for the best remedies to strengthen our economic performance, they can't afford to overlook new firms and young firms.

Unfortunately, in troubled economic times the language of recovery is too often tilted toward large, established companies or to "small businesses," a broad term that traditionally applies to businesses with fewer than 500 employees. The conventional wisdom is that such businesses account for half of the labor force and are therefore the engine of future job creation.

That's not quite the case. The more precise factor is not the size of businesses, but rather their age. According to the Census Bureau, nearly all net job creation in the U.S. since 1980 occurred in firms less than five years old. A Kauffman Foundation report released yesterday shows that as recently as 2007, two-thirds of the jobs created were in such firms. Put more starkly, without new businesses, job creation in the American economy would have been negative for many years.

. . .

Entrepreneurs have a proven track record of job creation, especially in the early years of their firms. Eliminating or lowering the economic and regulatory hurdles that stand in the way of their success will pave the way for sustained expansion after the government's current stimulus measures come to their inevitable end.

For the full commentary, see:

CARL SCHRAMM, ROBERT LITAN AND DANE STANGLER. "New Business, Not Small Business, Is What Creates Jobs; Nearly all net job creation since 1980 occurred in firms less than five years old." The Wall Street Journal (Fri., NOVEMBER 6, 2009): A25.

(Note: ellipsis added.)

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(p. A19) After reporting GDP, the government released new numbers claiming that the stimulus programs have "created or saved" over a million jobs. These data were collected from responses by government agencies that received federal funds under the American Recovery and Reinvestment Act of 2009. Agencies were required to report "an estimate of the number of jobs created and the number of jobs retained by the project or activity." This report is required of all recipients (generally private contractors) of agency funds.

Unfortunately, these data are not reliable indicators of job creation nor of the even vaguer notion of job retention. There are two major problems. The first and most obvious is reporting bias. Recipients have strong incentives to inflate their reported numbers. In a race for federal dollars, contractors may assume that the programs that show the most job creation may be favored by the government when it allocates additional stimulus funds.

No dishonesty on the part of recipients is implied or required. But when a hire conceivably can be classified as resulting from the stimulus money, recipients have every incentive to classify the hire as such. Classification as stimulus-induced is even more likely if a respondent must only say that, except for the money, an employee would have been fired. In this case, no hiring need occur at all.

. . .

Net labor market figures do exist. Administrations have always been held to the time-tested and well-understood monthly job numbers put out by the Bureau of Labor Statistics, which reports the unemployment rate and the net job gain or loss for the economy as a whole. It is important to use reliable, accurate and well-understood numbers to determine the true causes of recovery. The unemployment rate, now at 9.8%, has continued to rise, and job losses have remained at high levels throughout the stimulus period. Few will be comforted by the good-news-only claim that the stimulus "created or saved" over one million jobs.

For the full commentary, see:

EDWARD P. LAZEAR. "Stimulus and the Jobless Recovery; Jobs 'created or saved' is meaningless. What matters is net job gain or loss, and that means the unemployment rate." The Wall Street Journal (Mon., NOVEMBER 2, 2009): A19.

(Note: ellipsis added.)

(Note: the online version of the article was dated Nov. 1st.)

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"The Mexican Union of Electricians protests the government's decision to liquidate the state-owned electricity company in Mexico City." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A19) Eight days ago, just after midnight on a Sunday morning, Mexican President Felipe Calderón instructed federal police to take over the operations of the state-owned electricity monopoly, Luz y Fuerza del Centro (LyFC), which serves Mexico City and parts of surrounding states. The company's assets will stay in the hands of the government but will now be run by the Federal Electricity Commission (CFE), a national state-owned utility and the major supplier of LyFC's energy.

The net effect of the move is to dethrone 42,000 members of the Mexican Union of Electricians, which had won benefits over the decades to make Big Three auto workers in Detroit blush. When the liquidation is complete, it is expected that the company will employ about 8,000. To appreciate the magnitude of Mr. Calderón's decision, think of Ronald Reagan's firing of the air traffic controllers--only bigger. As one internationally renowned Mexican economist remarked on Sunday, it is "the most important act of government in 20 years."

For the full commentary, see:

MARY ANASTASIA O'GRADY. "Mexico's Calderón Takes on Big Labor; Its state-owned electricity company was bleeding the national treasury dry." The Wall Street Journal (Mon., October 19, 2009): A19.

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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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"'Roger the Plumber' owns his own business and is excited to go to work every day." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. D1) By economic yardsticks, Roger the Plumber should be feeling pretty low. Roger Peugeot, owner of the 14-employee Overland Park, Kan., plumbing company that bears his name, is part of a sector hit hard by shrunken credit and slumping sales. He has been forced to reduce staff and is battling new competition from other plumbers fleeing the construction industry.

So why is Mr. Peugeot so happy? He genuinely likes fixing plumbing messes, for one thing, and despite the worst recession he has seen, "I'm still excited to get up and go to work every day," he says. He relishes running into people at the local hardware store whom he has helped in the past. And in hard times, he says, his fate is in his own hands, rather than those of a manager. "Even when things get tough, I'm still in control," he says.

In the broadest, most-comprehensive survey yet of how occupation affects happiness, business owners outrank 10 other occupational groups in overall well-being, based on the landmark survey of 100,826 working adults set for release today. Defined as self-employed store or factory owners, plumbers and so on, business owners surpassed 10 other occupational groups on a composite measure of six criteria of contentment, including emotional and physical health, job satisfaction, healthy behavior, access to basic needs and self-reports of overall life quality.

This puts Roger the Plumber well ahead of movers and shakers typically regarded as the top of the heap in society--professionals such as doctors or lawyers, who ranked second, and executives and managers in corporations or government, who came in third--according to the Gallup-Healthways Well-Being Index, a collaboration between Gallup and Healthways, a Franklin, Tenn., health-management concern. This is despite business owners ranking below those more-prestigious occupations in physical health and access to basic needs, such as health care.

. . .

"Despite the recession, it still pays to be your own boss," says Frank Newport, editor in chief of the Gallup Poll. The survey, adds John Howard, director of the National Institute for Occupational Safety and Health, "reaffirms my view that the more control you have over your work, the happier you are."

For the full story, see:

SUE SHELLENBARGER. "Plumbing for Joy? Be Your Own Boss." The Wall Street Journal (Weds., SEPTEMBER 15, 2009): D1-D2.

(Note: ellipsis added.)

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(p. A15) . . . , a compassionate judge would tend to base his or her decisions on sympathy for the unfortunate; an empathetic judge on how the people directly affected by the decision would think and feel. What could be wrong with that?

Frederic Bastiat answered that question in his famous 1850 essay, "What is Seen and What is Not Seen." There the economist and member of the French parliament pointed out that law "produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them." Bastiat further noted that "[t]here is only one difference between a bad economist and a good one: The bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen."

This observation is just as true for judges as it is for economists. As important as compassion and empathy are, one can have these feelings only for people that exist and that one knows about -- that is, for those who are "seen."

One can have compassion for workers who lose their jobs when a plant closes. They can be seen. One cannot have compassion for unknown persons in other industries who do not receive job offers when a compassionate government subsidizes an unprofitable plant. The potential employees not hired are unseen.

For the full commentary, see:

JOHN HASNAS. "The 'Unseen' Deserve Empathy, Too." The Wall Street Journal (Fri., MAY 29, 2009): A15.

(Note: ellipsis added.)

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

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

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

Fortunately, L. Frank Baum kept trying:

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

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

For the full review, see:

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

The book being reviewed, is:

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

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(p. 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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For a long time, I've been meaning to post a pithy comment on immigration policy from the Cato Institutes's Bill Niskanen.

The comment was related to the proposal to erect a wall between the United States and Mexico, in order to reduce illegal immigration. Some libertarians favor open immigration. Others believe that so long as we have a large welfare state, open immigration would impose high costs on the taxpayer, and thereby reduce economic growth. (I believe that I read Milton Friedman supporting this latter position, in the year or two before he died in 2006.)

In this context, Niskanen's pithy comment has appeal:

"Build a wall around the welfare state, not around the country."

Source:

William A. Niskanen on 11/19/07 at the meetings of the Southern Economic Association in New Orleans.

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

(p. W13) Sociologists have been studying how Americans spend their time for decades. One camp favors a simple approach: if you want to know how many hours someone works, sleeps or vacuums, you ask him. Another camp sees a flaw in this method: People lie. We may not do so maliciously, but it's tough to remember our exact workweek or average time spent dishwashing, and in the absence of concrete memories, we're prone to lie in ways that don't disappear into the randomness of thousands of answers. They actually skew results.

That's the theory behind the American Time Use Survey, conducted annually by the Bureau of Labor Statistics. The ATUS, like a handful of previous academic surveys, is a "time diary" study. For these studies, researchers either walk respondents through the previous day, asking them what they did next and reminding them of the realities of time and physics, or in some cases giving them a diary to record the next day or week.

Time-diary studies are laborious, but in general they are more accurate. Aggregated, they paint a different picture of life than the quick-response surveys featured in the bulk of America's press releases. For instance, the National Sleep Foundation claims that Americans sleep 6.7 hours (weekdays) to 7.1 hours (weekends) per night. The ATUS puts the average at 8.6 hours. The first number suggests rampant sleep deprivation. The latter? Happy campers.

The numbers are equally striking with work. Back in the 1990s, using 1985 data, researchers John Robinson and his colleagues compared people's estimated workweeks with time-diary hours. They found that, on average, people claiming to work 40 to 44 hours per week were working 36.2 hours -- not far off. But then, as estimated work hours rose, reality and perception diverged more sharply. You can guess in which direction. Those claiming to work 60- to 64-hour weeks actually averaged 44.2 hours. Those claiming 65- to 74-hour workweeks logged 52.8 hours, and those claiming workweeks of 75 hours or more worked, on average, 54.9 hours. I contacted Prof. Robinson recently to ask for an update. His 2006-07 comparisons were tighter -- but, still, people claiming to work 60 to 69 hours per week clocked, on average, 52.6 hours, while those claiming 70-, 80-hour or greater weeks logged 58.8. As Mr. Robinson and co-author Geoffrey Godbey wrote in their 1997 book "Time for Life," "only rare individuals put in more than a 55-60 hour workweek."

For the full commentary, see:

LAURA VANDERKAM. "Overestimating Our Overworking." Wall Street Journal (Sat., May 29, 2009): W13.

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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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(p. 298) David L. Birch and his associates at MIT gained a glimpse of this topsy-turvy domain during the late 1970s when they themselves entered the statistical skunkworks of the economy by conducting the most comprehensive and detailed analysis ever performed on the facts of American small business. Using records from a Dun & Bradstreet sample of 5.6 million firms, the Birch team reached the highly publicized conclusion that companies with fewer than 100 employees created 80 percent of the net new jobs in the U.S. economy during the 1970s. Data from the early 1980s confirmed these findings. In launching jobs, the last were manifestly first in U.S. capitalism.

Source:

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

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My hypothesis is not that the French are lazier than others, but that their labor policies give them less incentive to work.

(p. A8) PARIS -- When he won the presidential election two years ago, Nicolas Sarkozy urged the French to get up early and work more to earn more.

A study released Monday suggests they missed the wake-up call.

France is the industrialized country where people spend the longest periods sleeping, according to a series of surveys on social habits conducted by the Paris-based Organization for Economic Cooperation & Development.

The French sleep a daily average of 530 minutes, compared with 518 for Americans and 469 for Koreans -- the OECD's "most awake" nation, according to the study.

For the full story, see:

DAVID GAUTHIER-VILLARS. "France Wrests Title of Sleeping Giant." Wall Street Journal (Tues., MAY 5, 2009): A8.

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(p. 149) When Borgenicht came home at night to his children, he may have been tired and poor and overwhelmed, but he was alive. He was his own boss. He was responsible for his own decisions and direction. His work was complex: it engaged his mind and imagination. And in his work, there was a relationship between effort and reward: the longer he and Regina stayed up at night sewing aprons, the more money they made the next day on the streets.

Those three things -- autonomy, complexity, and a connection between effort and reward--are, most people agree, the three qualities that work has to have if it is to be satisfying. It is not how much money we make (p. 150) that ultimately makes us happy between nine and five. It's whether our work fulfills us. If I offered you a choice between being an architect for $75,000 a year and working in a tollbooth every day for the rest of your life for $100,000 a year, which would you take? I'm guessing the former, because there is complexity, autonomy, and a relationship between effort and reward in doing creative work, and that's worth more to most of us than money.

Work that fulfills those three criteria is meaningful. Being a teacher is meaningful. Being a physician is meaningful. So is being an entrepreneur, and the miracle of the garment industry--as cutthroat and grim as it was--was that it allowed people like the Borgenichts, just off the boat, to find something meaningful to do as well."" When Louis Borgenicht came home after first seeing that child's apron, he danced a jig. He hadn't sold anything yet. He was still penniless and desperate, and he knew that to make something of his idea was going to require years of backbreaking
labor. But he was ecstatic, because the prospect of those endless years of hard labor did not seem like a burden to him. Bill Gates had that same feeling when he first sat down at the keyboard at Lakeside. And the Beatles didn't recoil in horror when they were told they had to play eight hours a night, seven days a week. They jumped at the chance. Hard work is a prison sentence only if it does not have meaning. Once it does, it becomes the kind of thing that makes you grab your wife around the waist and dance a jig.

Source:

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

(Note: italics in original.)

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"ROYAL SUBJECTS; Donna Farmer, with her children, applauds Disney's efforts." Source of photo and caption: online version of the NYT article quoted and cited below.

In Gary Becker's initially controversial doctoral dissertation, he argued that those who discriminate in the labor market pay a price for their prejudice: they end up paying higher wages, than do those employers are not prejudiced.

The bottom line is that the free market provides incentives for the encouragement of diversity and tolerance.

Similarly, Donna Farmer argues, in the passages below, that the marketplace provides the Disney company with incentives to have "The Princess and the Frog" appeal to black audiences.

(p. 1) "THE Princess and the Frog" does not open nationwide until December, but the buzz is already breathless: For the first time in Walt Disney animation history, the fairest of them all is black.

. . .

After viewing some photographs of merchandise tied to the movie, which is still unfinished, Black Voices, a Web site on AOL dedicated to African-American culture, faulted the prince's relatively light skin color. Prince Naveen hails from the fictional land of Maldonia and is voiced by a Brazilian actor; Disney says that he is not white.

"Disney obviously doesn't think a black man is worthy of the title of prince," Angela Bronner Helm wrote March 19 on the site. "His hair and features are decidedly non-black. This has left many in the community shaking (p. 8) their head in befuddlement and even rage."

Others see insensitivity in the locale.

"Disney should be ashamed," William Blackburn, a former columnist at The Charlotte Observer, told London's Daily Telegraph. "This princess story is set in New Orleans, the setting of one of the most devastating tragedies to beset a black community."

ALSO under scrutiny is Ray the firefly, performed by Jim Cummings (the voice of Winnie the Pooh and Yosemite Sam). Some people think Ray sounds too much like the stereotype of an uneducated Southerner in an early trailer.

Of course, armchair critics have also been complaining about the princess. Disney originally called her Maddy (short for Madeleine). Too much like Mammy and thus racist. A rumor surfaced on the Internet that an early script called for her to be a chambermaid to a white woman, a historically correct profession. Too much like slavery.

And wait: We finally get a black princess and she spends the majority of her time on screen as a frog?

. . .

Donna Farmer, a Los Angeles Web designer who is African-American and has two children, applauded Disney's efforts to add diversity.

"I don't know how important having a black princess is to little girls -- my daughter loves Ariel and I see nothing wrong with that -- but I think it's important to moms," she said.

"Who knows if Disney will get it right," she added. "They haven't always in the past, but the idea that Disney is not bending over backward to be sensitive is laughable. It wants to sell a whole lot of Tiana dolls and some Tiana paper plates and make people line up to see Tiana at Disney World."

For the full article, see:

BROOKS BARNES. "Her Prince Has Come. Critics, Too." The New York Times, SundayStyles Section (Sun., May 31, 2009): 1, 8-9.

(Note: ellipses added.)

The published version of Becker's doctoral dissertation is:

Becker, Gary S. The Economics of Discrimination. 2nd Rev ed, Economic Research Studies. Chicago: University of Chicago Press, 1971.

Movie still of Princess Tiana from Disney's "The Princess and the Frog" to be released in December 2009. Source of movie still: online version of the NYT article quoted and cited above.

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(p. 146) This was the second great advantage of the garment
industry. It wasn't just that it was growing by leaps and bounds. It was also explicitly entrepreneurial. Clothes weren't made in a single big factory. Instead, a number of established firms designed patterns and prepared the fabric, and then the complicated stitching and pressing and button attaching were all sent out to small contractors. And if a contractor got big enough, or ambitious enough, he started designing his own patterns and preparing his own fabric. By 1913, there were approximately (p. 147) sixteen thousand separate companies in New York City's garment business, many just like the Borgenichts' shop on Sheriff Street.

"The threshold for getting involved in the business was very low. It's basically a business built on the sewing machine, and sewing machines don't cost that much," says Daniel Soyer, a historian who has written widely on the garment industry. "So you didn't need a lot of capital. At the turn of the twentieth century, it was probably fifty dollars to buy a machine or two. All you had to do to be a contractor was to have a couple sewing machines, some irons, and a couple of workers. The profit margins were very low but you could make some money."

Source:

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

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(p. 145) "There is no doubt that those Jewish immigrants
arrived at the perfect time, with the perfect skills," says
the sociologist Stephen Steinberg. "To exploit that opportunity,
you had to have certain virtues, and those immigrants
worked hard. They sacrificed. They scrimped and
saved and invested wisely. But still, you have to remember
that the garment industry in those years was growing
by leaps and bounds. The economy was desperate for the
skills that they possessed."

Source:

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

(Note: italics in original.)

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(p. 141) "To me the greatest wonder in this was not the mere
quantity of garments--although that was a miracle in
itself--" Borgenicht would write years later, after he
became a prosperous manufacturer of women's and children's
clothing, "but the fact that in America even poor
people could save all the dreary, time-consuming labor of
making their own clothes simply by going into a store and
walking out with what they needed. There was a field to
go into, a field to thrill to."

Borgenicht took out a small notebook. Everywhere he
went, he wrote down what people were wearing and what
was for sale--mens wear, women's wear, children's wear. He
wanted to find a "novel" item, something that people would
wear that was not being sold in the stores. For four more
days he walked the streets. On the evening of the final day
as he walked toward home, he saw a half dozen girls playing
hopscotch. One of the girls was wearing a tiny embroidered
apron over her dress, cut low in the front with a tie in the
back, and it struck him, suddenly, that in his previous days
of relentlessly inventorying the clothing shops of the Lower
East Side, he had never seen one of those aprons for sale.

He came home and told Regina. She had an ancient
sewing machine that they had bought upon their arrival in
America. The next morning, he went to a dry-goods store
on Hester Street and bought a hundred yards of gingham
and fifty yards of white crossbar. He came back to their
tiny apartment and laid the goods out on the dining room
table. Regina began to cut the gingham--small sizes for
toddlers, larger for small children--until she had forty (p. 142)
aprons. She began to sew. At midnight, she went to bed
and Louis took up where she had left off. At dawn, she rose
and began cutting buttonholes and adding buttons. By ten
in the morning, the aprons were finished. Louis gathered
them up over his arm and ventured out onto Hester Street.

"Children's aprons! Little girls' aprons! Colored ones,
ten cents. White ones, fifteen cents! Little girls' aprons!"

By one o'clock, all forty were gone.

"Ma, we've got our business," he shouted out to Regina,
after running all the way home from Hester Street.

He grabbed her by the waist and began swinging her
around and around.

"You've got to help me," he cried out. "We'll work
together! Ma, this is our business."

Source:

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

(Note: italics in original.)

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

(p. A17) . . . the evidence that we discovered in our new study for the American Legislative Exchange Council, "Rich States, Poor States," published in March, shows that Americans are more sensitive to high taxes than ever before. The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.

Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.

Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair? No. Dozens of academic studies -- old and new -- have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.

. . .

. . . , Barry W. Poulson of the University of Colorado last year examined many factors that explain why some states grew richer than others from 1964 to 2004 and found "a significant negative impact of higher marginal tax rates on state economic growth." In other words, soaking the rich doesn't work. To the contrary, middle-class workers end up taking the hit.

For the full commentary, see:

ARTHUR LAFFER and STEPHEN MOORE. "Soak the Rich, Lose the Rich Americans know how to use the moving van to escape high taxes." Wall Street Journal (Mon., MAY 18, 2009): A17.

(Note: ellipses added.)

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Source of book image: http://bharatkhetan.com/akanksha/?p=19

Malcolm Gladwell is on a roll. His three recent books have been best-sellers: The Tipping Point, Blink, and now Outliers. All three books are well-written, and deal with important issues.

I suspect that sometimes Gladwell over-simplifies and over-generalizes. But he often makes plausible, thought-provoking claims, and he presents academic research in a clear, painless way.

In the Outliers book, I enjoyed his examples: the NHL hockey players who are overwhelmingly born in the same three months, the entrepreneurial immigrant Jews entering the clothing business, silicon valley superstars having access to computers at an early age.

To Gladwell, the main point of the book is that over-achievers owe their success to lucky circumstances. But to me, the main point was a different one: in case after case, the successful put in a huge number of hours (about 10,000) of practice to achieve the mastery of their activities.

To use the memorable analogy from Collins' Good to Great: hour after hour, day after day, year after year, they all kept "pushing the flywheel" to reach the threshold of excellence.

The reference for Outliers is:

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

The reference for Collins' book is:

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

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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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(p. xxii) To me this is the first principle of life, the foundational principle, and a lesson you can't learn at the feet of any wise man: Get up! The art of living is simply getting up after you've been knocked down. It's a lesson taught by example and learned in the doing. I got that lesson every day while growing up in a nondescript split-level house in the suburbs of Wilmington, Delaware. My dad, Joseph Robinette Biden Sr., was a man of few words. What I learned from him. I learned from watching. He'd been knocked down hard as a young man, lost something he knew he could never get back. But he never stopped trying. He was the first one up in our house every morning, clean-shaven, elegantly dressed, putting on the coffee, getting ready to go to the car dealership, to a job he never really liked. My brother Jim said most mornings he could hear our dad singing in the kitchen. My dad had grace. He never, ever gave up, and he never complained. The world doesn't owe you a living, Joey," he used to say, but without rancor. He had no time for self-pity. He didn't judge a man by how many times he got knocked down but by how fast he got up.

Get up! That was his phrase, and it has echoed through my life. The world dropped you on your head? My dad would say, Get up! You're lying in bed feeling sorry for yourself? Get up! You got knocked on your ass on the football field? Get up! Bad grade? Get up! The girl's parents won't let her go out with a Catholic boy? Get up!

Source:

Biden, Joe. Promises to Keep: On Life and Politics. New York: Random House, 2007.

(Note: the italics in the quoted passage are in the original.)

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"Thomas Lee, one of the men featured in the documentary "A Father's Promise," watching a video of himself from 1996." Source of caption and photo: online version of the NYT review quoted and cited below.

(p. C11) The program, with Al Roker as host, follows up a "Dateline NBC" report from 1996 that recorded several births among black women at a Newark hospital and interviewed the unmarried fathers of the children as they earnestly vowed to be there as their babies grew up. The piece was an attempt to look at the alarming rate of fatherless households among blacks.

It is, of course, a problem that has not gone away since 1996, and Mr. Roker's program tracks down three of those newborns and the fathers who promised to stand by them. That none did -- jail, joblessness, depression and general irresponsibility intervened -- somehow isn't surprising.

. . .

. . . the Rev. Eugene F. Rivers of Azusa Community Church in Boston explains in very personal terms why he discounts the easy economic explanations that so often get the blame for fatherless households.

"I had a child out of wedlock," he says. "That was a bad decision. I can't say capitalism did it to me."

For the full review, see:

NEIL GENZLINGER. "Television Review; 'A Father's Promise'; Old Pledges Are Broken, Young Hope Stays Intact." The New York Times (Sat., February 7, 2009): C11.

(Note: ellipses added.)

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(p. 164) The reason the system of capitalism without capitalists is failing throughout most of Europe is that it misconceives the essential nature of growth. Poring over huge aggregations of economic data, economists see the rise to wealth as a slow upward climb achieved through the marginal productivity gains of millions of workers, through the slow accumulation of plant and machinery, and through the continued improvement of "human capital" by advances in education, training, and health. But, in fact, all these sources of growth are dwarfed by the role of entrepreneurs launching new companies based on new concepts or technologies. These gains generate the wealth that finances the welfare state, that makes possible the long-term investments in human capital that are often seen as the primary source of growth.

Source:

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

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"Michelle Rhee, second from left, with faculty and staff members of Washington schools last month at an awards ceremony." Source of the caption and photo: online version of the NYT article quoted and cited below.

(p. A1) WASHINGTON -- Michelle Rhee, the hard-charging chancellor of the Washington public schools, thinks teacher tenure may be great for adults, those who go into teaching to get summer vacations and great health insurance, for instance. But it hurts children, she says, by making incompetent instructors harder to fire.

So Ms. Rhee has proposed spectacular raises of as much as $40,000, financed by private foundations, for teachers willing to give up tenure.

Policy makers and educators nationwide are watching to see what happens to Ms. Rhee's bold proposal. The 4,000-member Washington Teachers' Union has divided over whether to embrace it, with many union members calling tenure a crucial protection against arbitrary firing.

. . .

Ms. Rhee has not proposed abolishing tenure outright. Under her proposal, each teacher would choose between two compensation plans, one called green and the other red. Pay for teachers in the green plan would rise spectacularly, nearly doubling by 2010. But they would need to give up tenure for a year, after which they would need a principal's recommendation or face dismissal.

For the full story, see:

SAM DILLON. "A School Chief Takes On Tenure, Stirring a Fight." The New York Times (Thurs., November 13, 2008): A1 & A19.

(Note: ellipsis added.)

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"French Caterpillar executive Nicolas Polutnik, center, with workers after his release Wednesday." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) PARIS -- Of the 22,000 workers Caterpillar Inc. plans to lay off this year, the French ones have perhaps the most radical tactic for negotiating their severance deals.

In an aggressive, and peculiarly French, negotiating strategy, they held their managers hostage. The workers detained the director of their plant and four other managers for about 24 hours this week. Workers released them only after the company agreed to resume talks with unions and a government mediator on how to improve compensation for workers who are being laid off.

. . .

Jérôme Pélisse, a sociologist, surveyed 3,000 companies in 2004 and found that 18 of them had experienced an executive detention in the prior three years.

For the full story, see:

DAVID GAUTHIER-VILLARS and LEILA ABBOUD. "In France, the Bosses Can Become Hostages." Wall Street Journal (Fri., APRIL 3, 2009): B1 & B5.

(Note: ellipsis added.)

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

(p. A23) The turn-of-the-20th-century war of capital and labor is not even half-remembered now. But the glum slab of the Los Angeles Times building will remind anyone who cares to look. The antiunion rallying cry of "True Industrial Freedom" is carved deeply into its façade. Completed in 1935, the building is a cenotaph for the 21 nonunion pressmen and linotype operators who were blown up on an early October morning in 1910 and died in a storm of fire and collapsing masonry.

The dynamiting of the Los Angeles Times was, for Howard Blum in "American Lightning," the war's decisive engagement. After it, a national campaign of union-led terrorism was exposed; labor sympathizers who defended the bombers were proved to be gullible (if not dishonest); and the political force of American socialism was wrecked. Reputations were wrecked, too, principally that of Clarence Darrow, who was then a renowned labor lawyer.

. . .

In 1910, Los Angeles was a young boomtown aching for water and respectability. To the owner of the Los Angeles Times, Harrison Gray Otis, respectability included making sure that the city was uninfested by union labor. It was an era of deep enmity and suspicion between business and labor, when it was not uncommon for strikes to end in riots and death. Otis and the Times preached the open shop with such vehemence that it was almost inevitable that they would become targets of prounion wrath.

The dynamite conspiracy unraveled when a second, unexploded bomb in Los Angeles was found to match another bomb discovered a month earlier by a Burns operative in a rail yard in Peoria, Ill. Burns tied the evidence to a campaign of terror against the National Erectors Association, a union-busting alliance of builders. The target of the association's animus was the union shop in general and the Structural Iron Workers Union in particular. John McNamara was the union's secretary-treasurer. His brother James was a union agent. Their weapons against the association and its allies were nitroglycerine and dynamite.

For the full review, see:

D.J. WALDIE. "Bookshelf; Dynamite and Deadlines." The Wall Street Journal (Tues., SEPTEMBER 16, 2008): A23.

(Note: ellipsis added.)

The reference to the book under review, is:

Blum, Howard. American Lightning. New York: Crown Publishers, 2008.

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(p. A15) It's important to acknowledge that dynamic product markets create dynamic labor markets as well. In recent years, government statistics show that about 25,000 jobs are destroyed and created every hour that America is open for business. All this economic change is essential, but it presents very real challenges to workers.

For the full commentary, see:

MARTIN NEIL BAILY and MATTHEW J. SLAUGHTER. "What's Behind the Recent Productivity Slowdown." The Wall Street Journal (Sat., DECEMBER 13, 2008): A15.

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In the Clinton administration, Martin Neil Baily was the Chair of the Council of Economic Advisers. He is one of those Democratic economists, along with Brad DeLong and Larry Summers, who appreciates the importance of innovation through the process of creative destruction, in making our lives better.

(p. A15) The economic attention of U.S. government and business leaders is fixed squarely on the downturn and financial crisis. Whether or not bailouts are proper short-term medicine, economists agree that the long-run solution for restoring economic growth lies in raising productivity.

The single best measure of a country's average standard of living is productivity: the value of output of goods and services a country produces per worker. The more workers produce, the more income they receive, and the more they can consume. Higher productivity results in higher standards of living.

So how has U.S. productivity grown recently? Unfortunately, very slowly. After averaging 2.7% productivity growth from 1995 through 2002, annual growth of productivity in the nonfarming business sector has slowed dramatically -- to just 1.7% in 2005, 1.0% in 2006, and 1.4% in 2007. At this new average rate of under 1.4%, it would take nearly 52 years for average U.S. living standards to double -- versus just 26 years at the earlier average. Signs of this slowdown are apparent, particularly in the waning competitiveness of U.S. sectors like automobiles, financial services and information technology.

On Monday, we are issuing a new report that details a set of policies the government could implement to boost U.S. productivity growth. Time is of the essence in addressing this challenge because the economy-wide impacts of structural policies tend to appear only gradually, in part because of many-year corporate planning horizons. It is also because faster productivity growth will ease the burden of massive U.S. fiscal deficits now projected for the coming years.

A central theme of this report is the critical role that competitive product markets play in spurring productivity growth and boosting standards of living. One of the great U.S. policy successes of recent decades has been the bipartisan removal of regulations that stifle competition and innovation in product markets. U.S. industries that face strong competitive intensity are more productive than highly regulated or otherwise sheltered industries. This competition, in turn, yields higher incomes and greater choices for consumers.

Maintaining the productivity benefits of product market competition requires sound choices in areas including trade and investment, regulation and infrastructure.

For the full commentary, see:

MARTIN NEIL BAILY and MATTHEW J. SLAUGHTER. "What's Behind the Recent Productivity Slowdown." The Wall Street Journal (Sat., DECEMBER 13, 2008): A15.

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

Labor is usually viewed as a victim of the process of creative destruction, because some old jobs are destroyed when a new technology replaces an old one. But part of the process is the creation of new jobs, and on average, the new jobs are created have better characteristics than the old jobs that are destroyed.

The article quoted below, discusses some of the characteristics that make a job better or worse.

(p. D2) Nineteen years ago, Jennifer Courter set out on a career path that has since provided her with a steady stream of lucrative, low-stress jobs. Now, her occupation -- mathematician -- has landed at the top spot on a new study ranking the best and worst jobs in the U.S.

"It's a lot more than just some boring subject that everybody has to take in school," says Ms. Courter, a research mathematician at mental images Inc., a maker of 3D-visualization software in San Francisco. "It's the science of problem-solving."

The study, released Tuesday from CareerCast.com, a new job site, evaluates 200 professions to determine the best and worst according to five criteria inherent to every job: environment, income, employment outlook, physical demands and stress. (CareerCast.com is published by Adicio Inc., in which Wall Street Journal owner News Corp. holds a minority stake.)

The findings were compiled by Les Krantz, author of "Jobs Rated Almanac," and are based on data from the U.S. Bureau of Labor Statistics and the Census Bureau, as well as studies from trade associations and Mr. Krantz's own expertise.

According to the study, mathematicians fared best in part because they typically work in favorable conditions -- indoors and in places free of toxic fumes or noise -- unlike those toward the bottom of the list like sewage-plant operator, painter and bricklayer. They also aren't expected to do any heavy lifting, crawling or crouching -- attributes associated with occupations such as firefighter, auto mechanic and plumber.

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 ranking of 200 jobs, and the components that went into the ranking, see:

http://www.careercast.com/jobs/content/JobsRated_Top200Jobs

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Mark Casson has argued that the more original the entrepreneur's innovation, the more likely he will need to finance all, or a large part, of it himself. To the extent that this is true, it represents an important argument for allowing the accumulation of wealth (and thereby an argument against substantial personal income, and inheritance, taxes.)

Here is an example, consistent with Casson's argument, of a self-financed entrepreneur:

(p. 36) The idea of loading film into a camera, snapping the picture and then sending the film to a store to be processed was the brainchild of an American from Rochester, New York, called George Eastman. One day in 1879, at the bank where he had worked since leaving school at the age of fourteen, he didn't get the promotion he was expecting. So he left and used his savings to set himself up as a "Maker and Dealer in Photographic Supplies." At this time, picture taking was a messy, cumbersome and expensive business, involving glass-late negatives, buckets of chemicals an monster wooden cameras. When Eastman had finished his experiments with the process, his slogan promised, "You press the button. We do the rest."

Source:

Burke, James. The Pinball Effect: How Renaissance Water Gardens Made the Carburetor Possible - and Other Journeys. Boston: Back Bay Books, 1997.

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(p. 156) Because it proceeds by competitively destroying old businesses and hence the existences dependent upon them, there always corresponds to it a process of decline, of loss of caste, of elimination. This fate also threatens the entrepreneur whose powers are declining, or his heirs who have inherited his wealth without his ability. This is not only because all individual profits dry up, the competitive mechanism tolerating no permanent surplus values, but rather annihilating them by means of just this stimulus of the striving for profits which is the mechanism's driving force; but also because in the normal case things so happen that entrepreneurial success embodies itself in the ownership of a business; and this business is usually carried on further by the heirs on what soon become traditional lines until new entrepreneurs supplant it. An American adage expresses it: three generations from overalls to overalls. And so it may be. Exceptions are rare, and are more than compensated for by cases in which the descent is still faster. Because there are always entrepreneurs and relatives and heirs of entrepreneurs, public opinion and also the phraseology of the social struggle readily overlook these facts. They constitute "the rich" a class of inheritors who are removed from life's battle. In fact, the upper strata of society are like hotels which are indeed always full of people, but people who are forever changing.

Source:

Schumpeter, Joseph A. The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. Translated by Redvers Opie. translation of 2nd German edition that appeared in 1926; translation first published by Harvard in 1934 ed. London: Oxford University Press, 1961.

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James Burke, writing of the ninth-century AD (the century of Charlemagne's death in 814 AD):

(p. 32) It was at this time too that anti-Semitism, previously rare, began to increase. Money-lending, which was forbidden by the Christian Church, was permitted under Jewish law, and the Jews, prevented from owning land, turned to the new business currency. Many of them grew rich and were resented.

Source:

Burke, James. The Day the Universe Changed: How Galileo's Telescope Changed the Truth and Other Events in History That Dramatically Altered Our Understanding of the World. Back Bay Books, 1995.

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"Dave Ratner, owner of four pet stores in Western Massachusetts, is worried about being able to pay into a state health benefits plan." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A16) AGAWAM, Mass. -- Dave Ratner, owner of Dave's Soda and Pet City, is pretty sure he is about to get "whacked" by the new state law that requires employers to contribute to health care benefits for their workers or pay a $295-per-employee penalty. In order to avoid thousands of dollars in fines, Mr. Ratner is considering not adding part-time workers at his four pet supply stores in Western Massachusetts.

But the penalty in Massachusetts is picayune compared with what some health experts believe Senator Barack Obama, the Democratic presidential nominee, might impose as part of his plan to provide affordable coverage for the uninsured. Though Mr. Obama has not released details, economists believe he might require large and medium companies to contribute as much as 6 percent of their payrolls.

That, Mr. Ratner said, would be catastrophic to a low-margin business like his, which has 90 employees, 29 of them full-time workers who are offered health benefits.

"To all of a sudden whack 6 to 7 percent of payroll costs, forget it," he said. "If they do that, prices go up and employment goes down because nobody can absorb that."

For the full story, see:

KEVIN SACK. "Businesses Wary of Details in Obama Health Plan." The New York Times (Mon., October 27, 2008): A16.

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   Source of the graph:  online version of the NYT article cited below.

(p. A1)  Young women in New York and several of the nation’s other largest cities who work full time have forged ahead of men in wages, according to an analysis of recent census data.

The shift has occurred in New York since 2000 and even earlier in Los Angeles, Dallas and a few other cities.

Economists consider it striking because the wage gap between men and women nationally has narrowed more slowly and has even widened in recent years among one part of that group: college-educated women in their 20s. But in New York, young college-educated women’s wages as a percentage of men’s rose slightly between 2000 and 2005.

The analysis was prepared by Andrew A. Beveridge, a demographer at Queens College, who first reported his findings in Gotham Gazette, published online by the Citizens Union Foundation. It shows that women of all educational levels from 21 to 30 living in New York City and working full time made 117 percent of men’s wages, and even more in Dallas, 120 percent. Nationwide, that group of women made much less: 89 percent of the average full-time pay for men.

Just why young women at all educational levels in New York and other big cities have fared better than their peers elsewhere is a matter of some debate. But a major reason, experts say, is that women have been graduating from college in larger numbers than men, and that many of those women seem to be gravitating toward major urban areas.

For the full story, see: 

SAM ROBERTS.  "For Young Earners in Big City, a Gap in Women’s Favor."  The New York Times (Fri., August 3, 2007):  A1 & A16.

   Source of the graph:  online version of the NYT article cited above.

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From McCraw's summary of an article entitled "The Function of Entrepreneurs and the Interest of the Worker" that Schumpeter published in 1927 in a labor magazine :

(p. 178) Schumpeter's key point here is one he hammered home many times: it is the insatiable pursuit of success, and of the towering premium it pays, that drives entrepreneurs and their investors to put so much of their time, effort, and money into some new project whose future is completely uncertain. High entrepreneurial returns are essential to generate gains not only for individuals but also for society, through the creation of new jobs.

Source:

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

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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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Source of book image: http://www.arthurbrooks.net/images/book-2.gif

(p. A13) In "Gross National Happiness," Mr. Brooks has assembled an array of statistics to measure the mood of America's citizens and to discover the reasons they feel as they do. Most often he cites polls that ask for self-described happiness levels, matching up the answers with various beliefs, habits, life choices or experiences.

And what exactly is happiness? Who knows? The term might refer joy or contentment or moral self-approval or material well-being or appetitive pleasure - or some combination of them all. Mr. Brooks is aware of the problem. He says that Potter Stewart, the Supreme Court justice, could have been describing happiness when he said, of pornography, "I know it when I see it."

. . .

He challenges those partial to tales about long-suffering Wal-Mart workers and surly burger flippers to rethink their victimology creed. The woe is not nearly as widespread as rumored: 89% of Americans who work more than 10 hours a week are very satisfied or somewhat satisfied with their jobs while only 11% are not very satisfied or not at all satisfied. Most surprisingly, Mr. Brooks writes, there "is no difference at all in job satisfaction between those with below-average and above-average incomes."

What really makes Americans hate their jobs is a perception that advancement is impossible. And while Mr. Brooks agrees that the nation's income gap is growing, the national happiness level is steady. Just under one-third of American adults say that they are "very happy"; up to 15% are not too happy; and everyone else is somewhere in the middle. Those numbers have been roughly true since the early 1970s. More government spending doesn't seem to raise happiness levels, though direct government assistance may diminish it. Charitable giving, Mr. Brooks adds, generally lifts the spirits; Americans do a lot of it.

For the full review, see:

DAVE SHIFLETT. "Bookshelf; How to Be of Good Cheer." The Wall Street Journal (Mon., May 12, 2008): A13.

(Note: ellipsis added.)

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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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Source of image: http://mjperry.blogspot.com/2008/02/blog-post_2174.html



Stephen Moore is right when he calls Drew Carey's "Living Large" video "wonderful."

It would be even more wonderful, if it gave a bit more emphasis, a la Schumpeter, to the positive effects of new products, in addition to its emphasis on declining prices of already existing products.

(p. W11) A few weeks ago I gave a talk on the state of the economy to a group of college students -- almost all Barack Obama enthusiasts -- who were griping about how downright awful things are in America today. As they sipped their Starbucks lattes and adjusted their designer sunglasses, they recited their grievances: The country is awash in debt "that we will have to pay off"; the middle class in shrinking; the polar ice caps are melting; and college is too expensive.

I've been speaking to groups like this one for more than 20 years, but I have never confronted such universal pessimism from a young audience. Its members acted as if the hardships of modern life are making it nearly impossible for them to get out of bed in the morning. So I conducted a survey of these grim youngsters. How many of you, I asked, own a laptop? A cellphone? An iPod, a DVD player, a flat-screen digital TV? To every question somewhere between two-thirds and all of the hands in the room rose. But they didn't even get my point. "Well, duh," one of them scoffed, "who doesn't have an iPod these days?" I was way too embarrassed to tell them that I, for one, don't. They thought that living without these products would be like going back to prehistoric times.

They seemed clueless that as recently as the early 1980s only the richest people in the world had cellphones and the quality of these products left much to be desired. Watch a movie from 20 years ago and you will laugh out loud seeing big clunky black machines that weighed as much as a brick, gave crackly service and cost $4,200. Now cellphones are practically free -- even disposable. And the cost of making calls has dropped dramatically too.

. . .

There's a wonderful new video on Reason.tv called "Living Large." In it, comedian Drew Carey goes to a lake in California where people are relaxing on $80,000 27-foot boats and goofing around on $25,000 jet skis that they have hitched to their $40,000 SUVs. Mr. Carey asks these boat owners what they do for a living. As it turns out, they aren't hedge-fund managers. One is a gardener, another a truck driver, another an auto mechanic and another a cop.

. . .

After my lecture, one young woman walked up to me on her way out and huffed: "What I favor is a radical redistribution of wealth in America." I tried to tell her that America's greatness is a result of our focus on creating wealth, not redistributing it. But it was too late -- she was already tuning in to her iPod.

For the full commentary, see:

STEPHEN MOORE. "DE GUSTIBUS; The Bare Necessities: A Generation Tries to Imagine Life Without iPods." The Wall Street Journal (Fri., March 14, 2008): W11.

(Note: ellipses added.)

The video is:

Carey, Drew. "Living Large: The Middle Class." reason.tv Posted February 8, 2008.

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(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.)

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

(p. A23) . . . the impact of our technological innovation has helped lift untold numbers out of poverty.

This technology has created massive amounts of change. Like the Industrial Revolution before it, the current transformation is anything but pain-free. It's what Joseph Schumpeter called creative destruction. Google, Craigslist and Microsoft have been prospering. General Motors, United Airlines and the New York Times have not. In the midst of layoffs in the newsroom, it's hard to see anything good happening in the rest of the economy.

For the full commentary, see

BRIAN WESBURY. "Change We Can Believe In Is All Around Us." The Wall Street Journal (Weds., June 11, 2008): A23.

(Note: ellipsis added.)

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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.")

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"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.

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Empirical comparisons between capitalism and socialism are in some ways unfair to capitalism, because many capitalism managers act as though they believed in socialist ideas. The difference in productivity and economic growth would be even greater, if capitalist managers consistently acted as though they believed in capitalism. Consider the following, from a portion of Execution written by Larry Bossidy:

(p. 73) Larry: When I see companies that don't execute, the chances are that they don't measure, don't reward, and don't promote people who know how to get things done. Salary increases in terms of percentage are too close between top performers and those who are not. There's not enough differentiation in bonus, or in stock options, or in stock grants. Leaders need the confidence to explain to a direct report why he got a lower than expected reward.

A good leader ensures that the organization makes these distinctions and that they become a way of life, down throughout the organization. Otherwise people think they're involved in socialism. That isn't what you want when you strive for a culture of execution. You have to make it clear to everybody that rewards and respect are based on performance.

Source:

Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.

(Note: in the book, the quotation is presented as being Bossidy's.)

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Levy and Murnane show that the computer has, on average, benefitted the situation of labor. After I presented a similar example at the Summer Institute in 2007, Dave Mitch asked me if this was in general true of advances in technology, or if it might be an exceptional case.

If computers represent one example of creative destruction, another example, in the process variety, would be the advent of factory production. In the following passage, Rosenberg and Birdzell suggest that factories also benefitted the situation of labor:

The low wages, long hours, and oppressive discipline of the early factories are shocking in that the willingness of the inarticulate poor to work on such terms bespeaks, more forcefully than the most eloquent words, the even more abysmal character of the alternatives they had endured in the past. But this was not the way the romantics of the nineteenth century read the message of the factories. (R & B 1986, p. 173)

In the above passage, Rosenberg and Birdzell suggest that the abysmal alternatives to factory work, that the poor faced, may partly have been the result of the enclosure movement having worsened the situation of the lowest agricultural workers, by denying them access to the fallow lands for animal grazing. But, in the passage below, they also imply that to some extent it may just have been due to the secularly persistent suffering that had long characterized much rural life.

Neither the entrepreneurs who built the factories nor anyone else supposed that they were engaged in a work of charity or an exercise of social conscience. But whatever the moral quality of their intentions, their actions advanced the interests of a down-trodden subproletariat---a subproletariat in part, perhaps, characteristic of pre-industrial societies and, in part, drawn from an agricultural work force hard pressed by the enclosure movement and a high rate of growth in agricultural productivity. (R & B 1986, p. 174)

They further point out that, although everyone was supposed to be compensated for losses from enclosure, the interests of the poorest were not well-represented in the decision-making bodies:

In theory, the acts compensated the cottagers for the loss of their common rights by giving them some of the enclosed land. But the cottagers were not effectively represented in Parliament, and there is much reason to believe that the compensation was in practice inadequate. (R & B 1986, p. 171)

DeLong and Summers note enclosure as one of the major institutional/policy actions that enabled a past episode of creative destruction to create a past 'new economy.' But the fact (if it is a fact) that a majority of farm labor was hurt by the enclosure, does not imply that this had to have been the case. It may in fact illustrate one of the major pints of DeLong and Summers, namely that it is extremely important to try to get institutions and policies right.

Sources mentioned above:

DeLong, J. Bradford, and Lawrence H. Summers. "The "New Economy": Background, Questions and Speculations." Federal Reserve Bank of Kansas City Economic Review (2001): 29-59.

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

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

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(p. 435) . . . , the inexorable growth in the proportion of our GDP that is conceptual, especially technological, has increased the value of intellectual power relative to the value of human brawn many times over many generations. I am old enough to remember when physical prowess on the job was the source of legend and reverence. A large statue of Paul Bunyan, the mythical logger, still oversees the northern Minnesota lake country. Stevedores of a century ago were extolled for their brute strength. Today, the activities once carried out by stevedores are often run by young women at a computer console.

Source:

Greenspan, Alan. The Age of Turbulence: Adventures in a New World Economic Flexibility. New York: Penguin Press, 2007.

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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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The passages below are from a WSJ summary of an October 12, 2007 article in The Chronicle of Higher Education:

(p. A7) After feeling increasingly alienated by college celebrations of black heritage, English Prof. Jerald Walker opted to redefine his role on campus.

. . .

Prof. Walker decided he had had enough during a commencement ceremony for black students. He had misgivings over the concept itself: "After so recently celebrating our country's staunchest promoter of integration, I was being asked to celebrate segregation."

Afterward, he made the decision that he would no longer participate in events simply because of the color of his skin. "I intend to be visible," he says, "but only in ways I wish to be seen."

For the full summary, see:

"The Informed Reader; Universities; Black Professor Rebels Against Expected Campus Role." Wall Street Journal (Oct. 13, 2007): A7.

(Note: ellipsis added.)

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"Sarla Deepak Ire sells guavas on the Pushpak Express, from Lucknow to Mumbai, earning less than $3 a day." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 3) ABOARD THE PUSHPAK EXPRESS, India -- The man with neatly parted hair stood in the doorway of the hurtling train. And then, at the perfect moment, he jumped.

This was not about suicide, however. It was about tea.

Having popped out of the door, he clung to the knobs and rods of the train's exterior with one hand. His other hand gripped a vat of scalding tea tied to his belt.

He glided like a rock climber across the train's epidermis, from one foothold to the next. He reached the steel beam that connected the cars and walked it like a tightrope. Then, arriving at the next car, he hopped onto more footholds and, at last, ducked inside to utter his sales pitch: "Tea! Tea! Get your hot tea!"

Such acrobatics are not required on most of the world's trains, nor in this train's first- and second-class cars, which are connected with inside passageways. But this was third class on the Pushpak Express, a $6, 24-hour ride ferrying migrants from India's bleak heartland to the thriving coastal megalopolis of Mumbai, formerly Bombay. And in an echo of the ancient caste system, these passengers are physically sealed off from the compartments of the luckier born.

These passengers are also part of a great migration that is changing the world. Goldman Sachs, which has published projections about the Indian economy, predicts that 31 villagers will continue to show up in an Indian city every minute over the next 43 years -- 700 million people in all. This exodus, with a similar one in China, helped push the world over a historic threshold this year: the planet, for the first time, is more urban than rural.

. . .

Sonu Gupta, 15, was one of what the veterans call "new men." With his wiry frame, he looked more like 10. He was traveling with a friend from his village. If he can find work in Mumbai, Mr. Gupta will become his family's breadwinner. "I'm happy," he said, "and I'm scared."

For the full story, see:

ANAND GIRIDHARADAS. "Rumbling Across India Toward a New Life in the City." The New York Times, First Section (Sun., November 25, 2007): 3.

(Note: ellipsis added.)

The quotes below from a WSJ summary of a Nov. 16, 2007 The Chronicle of Higher Education article, suggests that we do not need to worry about the sometimes-alleged "shortage" of scientists and engineers:

(p. B14) The federal dollars pumped into university science departments has created more scientists and engineers than the market wants, said Michael S. Teitelbaum, vice president of Alfred P. Sloan Foundation, which sponsors research, at a hearing in Congress last week. Mr. Teitelbaum said the federal government should find a way to adjust how it funds university research so that university departments don't end up using the extra money to add graduate students and postdoctoral fellows

For the full summary, see:

"The Informed Reader; Science; U.S. Faces a Glut (Really) of Scientists, Engineers." The Wall Street Journal (Tues., November 13, 2007): B14.

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"Web entrepreneur Alex Hillman got together with a group of work-at-home businesspeople to create a hip space to work in Philadelphia." Souce of caption and photo: online version of the Omaha World-Herald article quoted and cited below.

(p. 1D) "I always felt an obligation to the coffee shop. I was taking up precious space," Hillman said. "I was definitely drinking more coffee than I should have, so I wasn't sleeping."

 Even before he left his job, he had begun to learn about co-working, not to be confused with job-sharing, where two people take turns in the same stall in the cube farm.

Instead, think of co-working as an entrepreneurial version of parallel play, with owners of their own small businesses working side by side in a drop-in place that looks like a coffee cafe, minus the barista, with all the accoutrements of what's hip: high ceilings, beer fridge, pool table and Internet access.

Paying as little as $175 a month, they mostly work on their own. But they also trade ideas, help solve problems, and move in and out of loose collaborations.

Today's technology -- wireless access, cell phones, BlackBerries and laptops -- makes a mobile work force possible.

"I think when people work at home they have to come up with new ways to interact with people," said Daniel H. Pink, one of the first authors to write about independent contractors in his 2001 book "Free Agent Nation."

For the full story, see: 

THE PHILADELPHIA INQUIRER.  "Workplace; A step up from working in pj's."   Omaha World-Herald   (Monday, September 17, 2007):  1D & 2D.

The refererence to the Pink book is:

 Pink, Daniel H. Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

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

(p. A1)  . . .  slight improvements in household income and a drop in the poverty rate came during a period of job growth, particularly toward the end of 2006, and declining inflation as a result of falling oil prices.  .  . .

Some Republicans seized on the new data as evidence that Bush administration policies had been good for people's pocketbooks. In a statement, President Bush said the news was a sign that Congress should not raise taxes. The data, he said, confirmed "that more of our citizens are doing better in this economy, with continued rising incomes (p. A14) and more Americans pulling themselves out of poverty."

. . .

Over all, the nation's median household income rose to $48,201 in 2006, from $47,845 in 2005. It was the second consecutive year in which income rose slightly faster than inflation, after five years of decline.

Douglas J. Besharov, a resident scholar at the American Enterprise Institute, a conservative research group, said that while the year-to-year increase in household income was small, the broader picture over the last few decades was more promising and more important.

"Over all," Mr. Besharov said, "a lot of groups have done better over the last 40 years."

For the full story, see: 

ABBY GOODNOUGH.  "Census Presents Mixed View of the Economy."  The New York Times  (Weds., August 29, 2007):  A1 & A14.

(Note:  the online version of the article had the title:   "Census Shows a Modest Rise in U.S. Income.")

(Note:  ellipses added.)

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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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   "Luis H. Rodriguez, an I.B.M. executive, with his children, Alec, 5, and Evia, 2, often works from his home or on the road."  Source of photo:  online version of the NYT article quoted and cited below.

Daniel Pink in his Free Agent Nation argued that a growing number of American workers would want the control, challenge and freedom of working for themselves as entrepreneurs, or "free agents."  To attract workers who have the option of being free agents, it is plausible that employers increasingly will have to offer jobs that provide workers with greater autonomy.  The article quoted below, suggests that this may in fact be happening, at least in information technology firms. 

(p. A1)  SOMERS, N.Y. -- It's every worker's dream: take as much vacation time as you want, on short notice, and don't worry about your boss calling you on it. Cut out early, make it a long weekend, string two weeks together -- as you like. No need to call in sick on a Friday so you can disappear for a fishing trip. Just go; nobody's keeping track. 

That is essentially what goes on at I.B.M., one of the cornerstones of corporate America, where each of the 355,000 workers is entitled to three or more weeks of vacation. The company does not keep track of who takes how much time or when, does not dole out choice vacation times by seniority and does not let people carry days off from year to year.

Instead, for the past few years, employees at all levels have made informal arrangements with their direct supervisors, guided mainly by their ability to get their work done on time. Many people post their vacation plans on electronic calendars that colleagues can view online, and they leave word about how they can be reached in a pinch.

"It's like when you went to college and you didn't have high school teachers nagging you anymore," said Mark L. Hanny, I.B.M.'s vice president of independent software vendor alliances. "Employees like that we put more accountability on them."

. . .

(p. 18)   Aided by broadband connections, cellphones and video conferencing software, 40 percent of I.B.M.'s employees have no dedicated offices, working instead at home, at a client's site, or at one of the company's hundreds of "e-mobility centers" around the world, where workers drop in to use phones, Internet connections and other resources.

. . .

Luis H. Rodriguez, the director of market management in I.B.M.'s software group, said he visits his office here in Somers about once a week, working the rest of the time on the road or at his home in Ridgefield, Conn., where he sat one recent afternoon at the kitchen table with his laptop open.

He said that in six years at I.B.M. he can recall only one time when he asked a co-worker not to take a long weekend off -- when their group was about to buy another company -- and that calling colleagues or checking e-mail while visiting relatives in Texas or Illinois is a fair trade for being able to work from home so he can spend more time with his children, Alec, 5, and Evia, 2.

. . .

"If you look at the organizations that have done more radical things, they tend to be technology companies with salaried people," where flexibility in job performance "is embedded into the culture of the place," noted Max Caldwell, a managing principal in the work force effectiveness area at Towers Perrin, a human resources consultant.

Indeed, I.B.M.'s Mr. Calo said that the flexibility has helped the company compete with the more freewheeling atmosphere at start-up rivals in the technology world that have lured away some of its talent over the years.

For the full story, see:

KEN BELSON.  "At I.B.M., a Vacation Anytime, Or Maybe No Vacation at All."   The New York Times  (Fri., August 31, 2007):  A1 & A18.

(Note:  ellipses added.)

The reference for the Pink book, is:

Pink, Daniel H.  Free Agent Nation:  How America's New Independent Workers Are Transforming the Way We Live.  New York: Warner Business Books, 2001.

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

(p. 14) To understand why consumption is a better guideline of economic prosperity than income, it helps to consider how our lives have changed. Nearly all American families now have refrigerators, stoves, color TVs, telephones and radios. Air-conditioners, cars, VCRs or DVD players, microwave ovens, washing machines, clothes dryers and cellphones have reached more than 80 percent of households.

As the second chart, on the spread of consumption, shows, this wasn't always so. The conveniences we take for granted today usually began as niche products only a few wealthy families could afford. In time, ownership spread through the levels of income distribution as rising wages and falling prices made them affordable in the currency that matters most -- the amount of time one had to put in at work to gain the necessary purchasing power.

At the average wage, a VCR fell from 365 hours in 1972 to a mere two hours today. A cellphone dropped from 456 hours in 1984 to four hours. A personal computer, jazzed up with thousands of times the computing power of the 1984 I.B.M., declined from 435 hours to 25 hours. Even cars are taking a smaller toll on our bank accounts: in the past decade, the work-time price of a mid-size Ford sedan declined by 6 percent.

For the full commentary, see:

W. MICHAEL COX and RICHARD ALM. "You Are What You Spend." The New York Times Company, Week in Review section (Sun., February 10, 2008): 14.

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

 

(p. B3)  What are the traits that chief executives of successful companies share? A new study suggests that hard-nosed personal virtues such as persistence and efficiency count for more than "softer" strengths like teamwork or flexibility.

The findings are sure to intensify debate about how much toughness is appropriate in a CEO. Some famously hard-charging bosses of big companies have retired or been shunted aside in recent years. Successors at companies such as General Electric Co., International Business Machines Corp. and Hewlett-Packard Co. are seen as quieter, less strident team-builders.

But the new study, by three University of Chicago business-school professors, draws on detailed personal assessments of 313 CEO candidates to present a starker view of good leadership's ingredients. Of these candidates, 225 were hired. Their subsequent performance fuels most of the study's conclusions.

"We found that 'hard' skills, which are all about getting things done, were paramount," says lead author Steven Kaplan, a professor of finance and entrepreneurship. "Soft skills centering on teamwork weren't as pivotal. That was a bit of a surprise to us."

Prof. Kaplan and colleagues Mark Klebanov and Morten Sorensen didn't size up the CEOs themselves. Instead, they tapped into a consultant's database long coveted by academic researchers. It contains assessments of individuals' strengths and weaknesses compiled by ghSmart Inc. The Chicago management-assessment company evaluates CEO candidates on behalf of corporate clients.

For the full story, see:

GEORGE ANDERS. "THEORY & PRACTICE; Tough CEOs Often Most Successful, A Study Finds."  The Wall Street Journal  (Mon., November 19, 2007):  B3.

Included with the WSJ article was an interesting summary table:

LEADING PROFILE

Here are five CEO traits that correlate most closely with business success at buyout companies -- and five that score lowest, according to University of Chicago researchers.

Traits that matter...

• Persistence
• Attention to detail
• Efficiency
• Analytical skills
• Setting high standards

...and not so much

• Strong oral communication
• Teamwork
• Flexibility/adaptability
• Enthusiasm
• Listening skills

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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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Stephanie and Bill Faunce moved their marketing company from Los Angeles to Steamboat Springs, Colorado.  Source of photo:  online version of the NYT article quoted and cited below.

Information technology is making life better by providing greater choice on where to live.  There is still a lively debate about which regions and cities will prosper.

One popular take on this issue is Richard Florida's The Rise of the Creative Class.  

(p. A1)  As technology enables people to live and work wherever they want, increasingly they are clustering in resort playgrounds like Steamboat Springs (pop. 9,315) that have natural amenities, good weather — and, now, lots of people like themselves.

In places like Nantucket, the Upper Peninsula of Michigan and Teton County, Idaho, the migrants are creating hybrid communities, implanting urban incomes, tastes, careers, ambitions, restaurants, cultural activities and networking opportunities into small towns that un-(p. A15)til recently could support none of these, and for which there has been little planning and still no consensus.

“You are seeing a transformation of rural communities,” said Jonathan Schechter, executive director of the Charture Institute in Jackson, Wyo., a nonprofit organization that studies small recreational towns.

Into quiet resort spots the migrants have come, laptops on their knees: fund managers from New York, software developers from California, consultants, proofreaders, engineers, inventors. “The same processes that led to the suburbanization of the United States after World War II,” Mr. Schechter said, “are now producing a virtual suburbanization in places like Jackson or Steamboat Springs.”

From 2000 to 2006, population in the 297 counties rated highest in natural amenities by the United States Department of Agriculture grew by 7.1 percent, 10 times the rate for the 1,090 rural counties with below-average amenities, the department reported.

In towns that once emptied after the ski season or the beach season, these “location-neutral” migrants are complicating the traditional dynamic between tourists and locals. Here as elsewhere, average homes have become unaffordable for teachers, firefighters and others — the people who created the good schools and community closeness that newcomers said drew them. The rate of change “is causing a whiplash,” Mr. Schechter said, “because the towns don’t have the political and economic systems in place to deal with them.”

Routt County, which includes Steamboat Springs, is one of the first places to identify these new émigrés as a source of economic growth and, paradoxically, community stability. A 2005 survey found that as many as 1 in 10 year-round households was involved in a location-neutral business. Unlike retirees and second-home buyers, who are also roosting in vacation towns, they send children to the local schools. “Without kids, you don’t have a community,” said Scott Ford, a counselor at the Small Business Resource Center at Colorado Mountain College.

Cloistered in home offices, isolated from the local economy, location-neutrals are often invisible even to one another, except when they appear on local committees.

Many work as hard as their urban counterparts, often juggling commitments in several time zones, but can step from their offices to a hiking trail or mountain stream.

. . .

For Bill and Stephanie Faunce, who run a marketing company for cable operators, small-town life often means starting work at 7 a.m. and quitting at 11 p.m., but with breaks to hike, ski or be with their two young children. Their goal in coming here was not to slow down but to eliminate urban distractions and pressures.

“There are no stressors here,” said Mr. Faunce, 43. “In L.A., it took 90 minutes to get to the office, so we had a Mercedes and a Land Rover. Now we drive a Suburban. In three years we’ve put 15,000 miles on it.”

For the full story, see:

JOHN LELAND.  "Off to Resorts, and Carrying Their Careers."  The New York Times  (Mon., August 13, 2007):  A1 & A15.

(Note:  ellipsis added.)

The reference for Florida's book, is:

Florida, Richard. The Rise of the Creative Class: And How It's Transforming Work, Leisure, Community and Everyday Life. New York: Basic Books, 2002.

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

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       "Traders in the oil futures pit of the New York Mercantile Exchange on Tuesday" (January 22. 2008).  Source of caption and photo:  online version of the NYT commentary quoted and cited below. 

Raghuram Rajan is mentioned in the article quoted below.  I first ran across him as the co-author of a book that was billed as applying Schumpeterian ideas of creative destruction to issues of economic growth and development. 

Then, at the American Economic Association meetings in New Orleans in early January, I was on my way to a History of Economics Society reception, when I stumbled by chance into a modest reception in which Rajan was giving an informal speech on the subprime mortgage crisis.

It was such an interesting presentation, that I ended up totally missing the History of Economics Society reception.  Rajan argued that the main problem was one of misguided incentives.  Bonuses at top investment firms like Merrrill Lynch and JPMorgan Chase, are supposed to go to those whose investments produce high returns, with modest risks.  The problem with the complicated securities based on the subprime mortgages was that they produced high returns, but the risks were actually also fairly high.  The high-flying investors probably had some knowledge of this, but the public did not.  In most years the investors could invest in the high return, but high risk, securities, and collect huge bonuses.  But now the chickens have come home to roost.

Rajan suggested that the answer would be a change in the way in which the traders are given bonuses.  Instead of handing them out annually, let them become vested only after observing the investment's track record for several years.  If the investment goes south before the bonus is vested, the trader does not get the bonus.  This would provide an incentive and reward for those who accurately accessed the risk of their investments. 

(p. A1)  . . . , Wall Street hasn't yet come clean. Even after last week, when JPMorgan Chase and Wells Fargo announced big losses in their consumer credit businesses, financial service firms have still probably gone public with less than half of their mortgage-related losses, according to Moody's Economy.com. They're not being dishonest; they just haven't untangled all of their complex investments.

"Part of the big uncertainty," Raghuram G. Rajan, former chief economist at the International Monetary Fund, said, "is where the bodies are buried."

As Mr. Rajan pointed out, this situation is more severe than the crisis involving Long Term Capital Management in the late 1990s. That was a case in which a limited set of bad investments, largely at one firm, had the potential to drive down the value of other firms' holdings in the short term. Those firms then might have stopped lending money because they no longer had the capital to do so. But their own balance sheets were largely healthy.

This time, the firms are facing real losses, which will almost certainly curtail lending, and economic growth, this year.

For the full commentary, see: 

DAVID LEONHARDT.  "ECONOMIC SCENE; Worries That the Good Times Were Mostly a Mirage."  The New York Times  (Weds., January 23, 2008):  A1 & A23.

(Note:  ellipsis added.)

The Schumpeterian book co-authored by Rajan, is:

Rajan, Raghuram G., and Luigi Zingales.  Saving Capitalism from the Capitalists:  Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity.  New York:  Crown, 2003.

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

The innovation described in the article excerpted below is credited as arising from a 'skunk works' project.  There's a neat book called Skunk Works that describes how Lockheed set up an autonomous unit to develop the first stealth air force technology.  (Their plant was in a smelly part of town, so it was dubbed the 'Skunk Works.')

Clayton Christensen has recommended that established incumbent companies set up skunk works operations in order to develop disruptive technologies that would not survive if they were developed within the main corporate culture and infrastructure. 

(In the article excerpted below, it is puzzling to read that Alaska Air went to the trouble to take out a patent, even though they apparently have no intention of enforcing it.) 

(p. B1)  ANCHORAGE, Alaska -- When the Ted Stevens Anchorage International Airport was planning a new concourse, prime tenant Alaska Airlines insisted on a counterintuitive design: "The one thing we don't want is a ticket counter," said Ed White, the airline's vice president of corporate real estate.

So the 447,000-square-foot Concourse C, which opened in 2004, has only one small, traditional ticket counter, even though the carrier's 1.2 million Anchorage passengers checked in through that area last year. This unconventional approach -- which uses self-service check-in machines and manned "bag drop" stations in a spacious hall that looks nothing like a typical airport -- has doubled Alaska's capacity here, halved its staffing needs and cut costs, while speeding travelers through the building in far less time.

. . .

(p. B4)  Alaska's design in Anchorage has turned heads in the industry, and in 2006 the airline was awarded a U.S. patent for the check-in process, something it calls the two-step flow-through. Mr. White says his company isn't trying to keep competitors from going down the same path, but pursued the patent more to reward the many employees who helped to bring the idea to fruition.

Other airlines quickly sent scouts up to Anchorage to check out the new concourse, including a team from Delta Air Lines Inc., Mr. White says. A few months ago, Delta completed a $26 million renovation of its check-in hall at Hartsfield-Jackson Atlanta International Airport, and the finished product looks remarkably similar to that of Alaska Airlines. Greg Kennedy, Delta's vice president for customer service there, says the new layout has enabled the airline to process passengers checking in during the peak spring break travel period in 20 to 30 minutes at most, compared with two or three hours three years ago -- and all in the same amount of square footage but 50% more usable space. Mr. Kennedy says he isn't aware of a visit to Anchorage but doesn't dispute it.

. . .  

Alaska, the nation's ninth-largest carrier by traffic, started a "skunk works" lab a decade ago to figure out how to use technology to make air travel less of a hassle for passengers. Out of that effort came the airline's ground-breaking ability to sell tickets on the Internet and allow fliers to check in online, developments other carriers quickly followed.

For the full story, see: 

SUSAN CAREY.  "Case of the Vanishing Airport Lines; Alaska Air Speeds Up Flow Of Passengers by Jettisoning Traditional Ticket Counters."  The Wall Street Journal  (Thurs., August 9, 2007):  B1 & B4.

  Source of graphic:  online version of the WSJ article cited above.

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    "The bolt hole was designed to hide from angry textile workers."  Source of caption and photo:  the BBC article quoted and cited below, and viewable at   http://news.bbc.co.uk/1/hi/england/leicestershire/4791069.stm

A series of secret rooms and a tunnel have been discovered under a building in Loughborough. The secret living quarters belonged to John Heathcote, a man who invited the fury of the Luddites after inventing a lace-making machine in the early 1800s.

 . . .

Keeper of Charnwood Museum Susan Cooke added: "We don't know if (John Heathcote) did actually hide down there because he fled Loughborough and went to Devon."

 . . .

Activists smashed Heathcote's lacemaking machine in Loughborough in 1816.

For the full story, see:

"Workmen discover secret chambers."  BBC News online. Last updated: Tuesday, 15 August 2006.

(Note:  ellipses added.)

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   Source:  screen capture of a flash animated graphic that appears in the online version of the NYT article quoted and cited below.  The flash animated graphic allows you to move your cursor along the circles representing wealth, and at the top of the graphic appears the picture and a brief bio of the person who owned that amount of wealth (such as Rockefeller in the screen capture above).

(p. 18)  Mr. Weill’s beginnings were . . . inauspicious. A son of immigrants from Poland, raised in Brooklyn, a so-so college student, he landed on Wall Street in a low-level job in the 1950s. Harnessing entrepreneurial energy, deftness as a deal maker and an appetite for risk, with a rising stock market pulling him along, he built a financial empire that, in his view, successfully broke through the stultifying constraints that flowed from the New Deal. They were constraints not just on what business could or could not do, but on every high earner’s take-home pay.

“I once thought how lucky the Carnegies and the Rockefellers were because they made their money before there was an income tax,” Mr. Weill said, never believing in his younger days that deregulation and tax cuts, starting in the late 1970s, would bring back many of the easier conditions of the Gilded Age. “I felt that everything of any great consequence was really all made in the past,” he said. “That turned out not to be true and it is not true today.”

 

The Question of Talent

Other very wealthy men in the new Gilded Age talk of themselves as having a flair for business not unlike Derek Jeter’s “unique talent” for baseball, as Leo J. Hindery Jr. put it. “I think there are people, including myself at certain times in my career,” Mr. Hindery said, “who because of their uniqueness warrant whatever the market will bear.”

He counts himself as a talented entrepreneur, having assembled from scratch a cable television sports network, the YES Network. “Jeter makes an unbelievable amount of money,” said Mr. Hindery, who now manages a private equity fund, “but you look at him and you say, ‘Wow, I cannot find another ballplayer with that same set of skills.’ ”

. . .

 

The New Tycoons

The new Gilded Age has created only one fortune as large as those of the Rockefellers, the Carnegies and the Vanderbilts — that of Bill Gates, according to various compilations. His net worth, measured as a share of the economy’s output, ranks him fifth among the 30 all-time wealthiest American families, just ahead of Carnegie. Only one other living billionaire makes the cut: Warren E. Buffett, in 16th place.

. . .

 

“I don’t think it is unreasonable,” he said, “for the C.E.O. of a company to realize 3 to 5 percent of the wealth accumulation that shareholders realize.”

That strikes Robert C. Pozen as a reasonable standard. He made a name for himself — and a fortune — overseeing the investment department at Fidelity.

Mr. Weill makes a similar point. Escorting a visitor down his hall of tributes, he lingers at framed charts with multicolored lines tracking Citigroup’s stock price. Two of the lines compare the price in the five years of Mr. Weill’s active management with that of Mr. Buffett’s Berkshire Hathaway during the same period. Citigroup went up at six times the pace of Berkshire.

“I think that the results our company had, which is where the great majority of my wealth came from, justified what I got,” Mr. Weill said.

 

New Technologies

Others among the very rich argue that their wealth helps them develop new technologies that benefit society. Steve Perlman, a Silicon Valley innovator, uses his fortune from breakthrough inventions to help finance his next attempt at a new technology so far out, he says, that even venture capitalists approach with caution. He and his partners, co-founders of WebTV Networks, which developed a way to surf the Web using a television set, sold that still profitable system to Microsoft in 1997 for $503 million.

Mr. Perlman’s share went into the next venture, he says, and the next. One of his goals with his latest enterprise, a private company called Rearden L.L.C., is to develop over several years a technology that will make film animation seem like real-life movies. “There was no one who would invest,” Mr. Perlman said. So he used his own money.

For the full story, see: 

LOUIS UCHITELLE.  "Age of Riches; The Richest of the Rich, Proud of a New Gilded Age."  The New York Times, Section 1  (Sun., July 15, 2007):  1 & 18-19. 

(Note:  ellipses added.)

   Entrepreneur Leo J. Hindery, Jr.   Source of photo:  online version of the NYT article quoted and cited above.

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"Bonnie Brown joined Google when it had 40 employees."  Source of caption and photo:  online version of the NYT article quoted and cited below. 

(p. A1)  SAN FRANCISCO, Nov. 11 — Bonnie Brown was fresh from a nasty divorce in 1999, living with her sister and uncertain of her future. On a lark, she answered an ad for an in-house masseuse at Google, then a Silicon Valley start-up with 40 employees. She was offered the part-time job, which started out at $450 a week but included a pile of Google stock options that she figured might never be worth a penny.

After five years of kneading engineers’ backs, Ms. Brown retired, cashing in most of her stock options, which were worth millions of dollars. To her delight, the shares she held onto have continued to balloon in value.

“I’m happy I saved enough stock for a rainy day, and lately it’s been pouring,” said Ms. Brown, 52, who now lives in a 3,000-square-foot house in Nevada, gets her own massages at least once a week and has a private Pilates instructor. She has traveled the world to oversee a charitable foundation she started with her Google wealth and has written a book, still unpublished, “Giigle: How I Got Lucky Massaging Google.”

When Google’s stock topped $700 a share last week before dropping back to $664 on Friday, outside shareholders were not the only ones smiling. According to documents filed on Wednesday with the Securities and Exchange Commission, Google employees and former employees are holding options they can cash in worth about $2.1 billion. In addition, current employees are sitting on stock and unvested op-(p. A16)tions, or options they cannot immediately cash in, that together have a value of about $4.1 billion.

Although no one keeps an official count of Google millionaires, it is estimated that 1,000 people each have more than $5 million worth of Google shares from stock grants and stock options.

For the full story, see:

KATIE HAFNER. "Google Options Make Masseuse a Multimillionaire."  The New York Times  (Mon., November 12, 2007): A1 & A16.

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

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   "HOMELAND SECURITY.  Many women in Mexico, like Estela Palacio Calzada, with her granddaughter, rely on money sent back from the U.S. "  Source of caption and photo:  online version of the NYT article quoted and cited below.

Adam Smith argued in The Theory of Moral Sentiments, that altruism is more effective when it is directed toward those we know best--mainly our family, and immediate neighbors.

A policy implication may be that the most effective foreign aid is to have more open immigration policies, that then permit the migrants to send back funds to those in their home country who they know best.

THE money flows in dribs and drabs, crossing borders $200 or $300 at a time. It buys cornmeal and rice and plaid private school skirts and keeps the landlord at bay. Globally, the tally is huge: migrants from poor countries send home about $300 billion a year. That is more than three times the global total in foreign aid, making “remittances” the main source of outside money flowing to the developing world.

Surveys show that 80 percent of the money or more is immediately spent, on food, clothing, housing, education or the occasional beer party or television set. Still, there are tens of billions available for savings or investment, in places where capital is scarce. While remittances have been shown to reduce household poverty, policymakers are looking to increase the effect on economic growth.

Some migrants, for instance, send home money to savings accounts at small bank-like microfinance institutions, which use the resulting capital pool to lend to local entrepreneurs.

For the full story, see:

JASON DePARLE. "Migrant Money Flow: A $300 Billion Current."  The New York Times, Week in Review Section  (Sun., November 18, 2007):  3.

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

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   King Edward's suite is enjoyed by Münster, Germany resident Henriette Heussner.  Source of photo:  online version of the NYT article quoted and cited below.

(p. A4) MARIANSKE LAZNE, Czech Republic — Anybody with a little cash in this quaint and quiet spa town can take a bath fit for a king.

Edward VII of Britain visited this bucolic corner of Bohemia six times during his short reign and each time took a bath in the Royal Cabin, as his private bathroom at the Nove Lazne hotel is still called. For about $45, you can, too.

. . .

King Edward’s Royal Cabin, a spacious Turkish-bath-style suite, is outfitted with a metal alloy tub and a medieval-looking oaken chair that serves as a toilet and a scale.

. . .

The windows are as delicately painted as a church’s stained glass, and the walls richly decorated with a tropical mural, just as they were in Edwardian days. Angels wearing miters look down from the ceiling.

Lying in the bath, staring up at the same blue parrot that King Edward surely contemplated on the opposite wall, one cannot help musing on the sameness of princes and paupers and those who are somewhere in between.

Tiny bubbles like the carbonation on a soda straw collect on the skin, and larger bubbles percolate around the bather, producing a peculiarly pleasant sensation.

An archaic water heater in a corner of the room clanks contentedly, keeping the bath at what the hotel staff call an “optimal” 97 degrees. The smell of the water is sulfuric and slightly metallic.

Much history and many baths have passed since the king bathed here. In the end, everyone grabs the same metal handle that he did to hoist himself up and out of the tub.

For the full story, see: 

CRAIG S. SMITH.  "MARIANSKE LAZNE JOURNAL; This Year at Marienbad, They’re Still Taking the Waters."  The New York Times  (Tues., July 3, 2007):  A4.

(Note:  ellipses added.)

   Source of maps:  online version of the NYT article cited above.

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   "Infosys employs workers in Brno, Czech Republic."   Source of caption and photo:  online version of the NYT article quoted, and cited, below.

(p. A1)  MYSORE, India — Thousands of Indians report to Infosys Technologies’ campus here to learn the finer points of programming. Lately, though, packs of foreigners have been roaming the manicured lawns, too.

Many of them are recent American college graduates, and some have even turned down job offers from coveted employers like Google. Instead, they accepted a novel assignment from Infosys, the Indian technology giant: fly here for six months of training, then return home to work in the company’s American back offices.

India is outsourcing outsourcing.

One of the constants of the global economy has been companies moving their tasks — and jobs — to India. But rising wages and a stronger currency here, demands for workers who speak languages other than English, and competition from countries looking to emulate India’s success as a back office — including China, Morocco and Mexico — are challenging that model.

Many executives here acknowledge that outsourcing, having rained most heavily on India, will increasingly sprinkle tasks around the globe. Or, as Ashok Vemuri, an Infosys senior vice president, put it, the future of outsourcing is “to take the work from any part of the world and do it in any part of the world.”

. . .

(p. A14)  Such is the new outsourcing: A company in the United States pays an Indian vendor 7,000 miles away to supply it with Mexican engineers working 150 miles south of the United States border.

In Europe, too, companies now hire Infosys to manage back offices in their own backyards. When an American manufacturer, for instance, needed a system to handle bills from multiple vendors supplying its factories in different European countries, it turned to the Indian company. The manufacturer’s different locations scan the invoices and send them to an office of Infosys, where each bill is passed to the right language team. The teams verify the orders and send the payment to the suppliers while logged in to the client’s computer system.

More than a dozen languages are spoken at the Infosys office, which is in Brno, Czech Republic.

For the full story, see: 

ANAND GIRIDHARADAS.  "Outsourcing Comes Full Circle As India Starts to Export Jobs."  The New York Times   (Tues., September 25, 2007):  A1 & A14.

(Note:  the somewhat different title of the online version was:  "Outsourcing Works So Well, India Is Sending Jobs Abroad.")

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   Source of graphic:  online verion of the NYT article cited below.

(p. C1)  Jeffrey Taft is a road warrior in the global high-technology services economy, and his work shows why there are limits to the number of skilled jobs that can be shipped abroad in the Internet age.

Each Monday, Mr. Taft awakes before dawn at his home in Canonsburg, Pa., heads for the Pittsburgh airport and flies to Houston for the week.

He is one of dozens of I.B.M. services employees from around the country who are working with a Texas utility, CenterPoint Energy, to install computerized electric meters, sensors and software in a “smart grid” project to improve service and conserve energy.

Mr. Taft, 51, is an engineer fluent in programming languages and experienced in the utility business. Much of his work, he says, involves being a translator between the different vernaculars and cultures of computing and electric power, as he oversees the design and building of software tailored for utilities. “It takes a tremendous amount of face-to-face work,” he said.

What he does, in short, cannot be done overseas. But some of the programming work can be, so I.B.M. employees in India are also on the utility project team.

The trick for companies like I.B.M. is to figure out what work to do where, and, more important, to keep bringing in the kind of higher-end work that needs to be done in this country, competing on the basis of specialized expertise and not on price alone.

The debate continues over how much skilled work in the vast service sector of the American economy can migrate offshore to lower-cost nations like India. Estimates of the number of services jobs potentially at (p. C4) risk, by economists and research organizations, range widely from a few million to more than 40 million, which is about a third of total employment in services.

Jobs in technology services may be particularly vulnerable because computer programming can be described in math-based rules that are then sent over the Internet to anywhere there are skilled workers. Already, a significant amount of basic computer programming work has gone offshore to fast-growing Indian outsourcing companies like Infosys, Wipro and Tata Consultancy Services.

To compete, companies like I.B.M. have to move up the economic ladder to do more complicated work, as do entire Western economies and individual workers. “Once you start moving up the occupational chains, the work is not as rules-based,” said Frank Levy, a labor economist at the Massachusetts Institute of Technology. “People are doing more custom work that varies case by case.”

In the field of technology services, Mr. Levy said, the essential skill is “often a lot more about business knowledge than it is about software technology — and it’s a lot harder to ship that kind of work overseas.”

For the full story, see: 

STEVE LOHR.  "At I.B.M., a Smarter Way to Outsource."  The New York Times   (Thurs., July 5, 2007):  C1 & C4. 

Levy has co-authored a book that is relevant to the example and issues raised in the article.  See:

Levy, Frank, and Richard J. Murna