Main


August 31, 2014

John Jacob Astor on Why His Son Gave More to Charity



John Jacob Astor . . . enjoyed making fun of his own foibles, including his carefully restrained charitable instincts. One day when a man dropped by his office to solicit a contribution to some worthy cause, Astor grumpily wrote out a check. Looking at the paltry amount from the richest man in the country in some dismay, the man said that Astor's son, William, had already given twice as much.

"Ah, well," replied Astor, "but then William has a rich man for a father."



Source:

Klepper, Michael, and Robert Gunther. "The American Heritage 40." American Heritage 49, no. 6 (Oct. 1998): 56-66.

(Note: ellipsis added.)






June 26, 2014

Edison Thought His Money Did More Good by Funding Inventions than by Funding Philanthropy



(p. 263) When asked in 1911 to donate to a building drive for a YMCA in Port Huron, a boyhood home, Edison responded with a small pledge and provided an explanation of why he would not provide more: "I can use surplus money to greater advantage for all the people in conducting experiments."


Source:

Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.






May 1, 2014

Edison's Goal Was Not Philanthropy, But to Make Useful Inventions that Sold



(p. 163) . . . , Edison had declared publicly that his inventions should be judged only on the basis of commercial success. This had come about when a reporter for the New York World had asked him a battery of questions that threw him off balance: "What is your object in life? What are you living for? (p. 164) What do you want?" Edison reacted as if he'd been punched in the stomach, or so the writer described the effect with exaggerated drama. First, Edison scanned the ceiling of the room for answers, then looked out the window through the rain. Finally, he said he had never thought of these questions "just that way." He paused again, then said he could not give an exact answer other than this: "I guess all I want now is to have a big laboratory" for making useful inventions. "There isn't a bit of philanthropy in it," he explained. "Anything that won't sell I don't want to invent, because anything that won't sell hasn't reached the acme of success. Its sale is proof of its utility, and utility is success."

He had been put on the spot by the reporter, and had reflexively given the marketplace the power to define the meaning of his own life.



Source:

Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

(Note: ellipsis added; italics in original.)






March 18, 2014

Nasaw Claims Carnegie Believed in Importance of Basic Scientific Research




But notice that the two main examples of what Carnegie himself chose to fund (the Wilson Observatory and the yacht to collect geophysical data), were empirically oriented, not theoretically oriented.


(p. 480) Carnegie was, as Harvard President James Bryant Conant would comment in 1935 on the centenary of his birth, "more than a generation ahead of most business men of this country [in understanding] the importance of science to industry." He recognized far better than his peers how vital basic scientific research was to the applied research that industry fed off. George Ellery Hale, an astronomer and astrophysicist, later to be the chief architect of the National Research Council, was astounded when he learned of Carnegie's commitment to pure research. "The provision of a large endowment solely for scientific research seemed almost too good to be true.... Knowing as I did the difficulties of obtaining money for this purpose and (p. 481) devoted as I was to research rather than teaching, I could appreciate some of the possibilities of such an endowment." Hale applied for funds to build an observatory on Mount Wilson in California, and got what he asked for. It would take until 1909 to build and install a 60-inch reflecting telescope in the observatory; in 1917, a second 100-inch telescope, the largest in the world, was added.

The Mount Wilson Observatory-- and the work of its astronomers and astrophysicists-- was only one of the projects funded in the early years of the new institution. Another, of which Carnegie was equally proud, was the outfitting of the Carnegie, an oceangoing yacht with auxiliary engine, built of wood and bronze so that it could collect geophysical data without the errors inflicted on compass readings by iron and steel. The ship was launched in 1909; by 1911, Carnegie could claim that the scientists on board had already been able to correct several significant errors on navigational maps.



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

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

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






February 14, 2014

Louise Carnegie Expressed Pompous Sanctimony While Leaving the Drudgery to Others





Andrew Carnegie's fiancée Louise:



(p. 294) "I certainly feel more in harmony with all the world after having been in communion with you, my Prince of Peace. I say this reverently, dear, for truly that is what you are to me, and I am so glad the world knows you as the Great Peacemaker." "What ideal lives we shall lead, giving all our best efforts to high and noble ends, while the drudgery of life is attended to by others. Without high ideals, it would be enervating and sinful. With them, it is glorious, and you are my prince among men, my own love."


Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: underline in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






February 10, 2014

Carnegie Said "Socialism Is the Grandest Theory Ever Presented"




More on why Andrew Carnegie is not my favorite innovative entrepreneur:


(p. 257) "But are you a Socialist?" the reporter asked.

Carnegie did not answer directly. "I believe socialism is the grandest theory ever presented, and I am sure some day it will rule the world. Then we will have obtained the millennium.... That is the state we are drifting into. Then men will be content to work for the general welfare and share their riches with their neighbors."

"'Are you prepared now to divide your wealth' [he] was asked, and Mr. Carnegie smiled. 'No, not at present, but I do not spend much on myself. I give away every year seven or eight times as much as I spend for personal comforts and pleasures."



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: ellipsis, and bracketed pronoun, in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






December 28, 2013

Carnegie Objected to $2 a Year Fee to Use Private Library



(p. 44) The story of Andy Carnegie defeating the villainous adults played well in his Autobiography and the biographies that drew from it, but there is another side to the tale which we should not neglect. The Anderson Library was not a free public library, funded by the city, but a subscription library, which relied in great part on the support of its patrons.* Although "working boys" should, as he had argued, have been allowed to borrow books without paying the two-dollar subscription fee, Andy Carnegie, six months from his eighteenth birthday, was hardly a "working boy." He held a man's job and received a man's pay of twenty-five dollars a month. Was it unreasonable for the librarians to ask him to contribute a two-dollar annual subscription fee to keep the library from having to close its doors for the third time in its young history?

Andy thought so. With a talent for cloaking self-interest in larger humanitarian concerns, he made a premature case for free public libraries.



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: italics in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






December 24, 2013

Carnegie's Uncle Aitkin Expected to Make a Good Profit Starting a Private Lending Library




Shortly after arriving in Allegheny City (near Pittsburgh) Andrew Carnegie's Uncle Aitkin had complained in a letter:


(p. 42) "There is no possibility of getting papers or periodicals to read here for a small sum--most of the people being in the habit of purchasing them for their own use. This has been to me a great deprivation. I really find that books here are as dear as in the old country everything considered."

Uncle Aitkin hoped to remedy this flaw in American cultural life--and make a profit at it--by starting up his own lending library. "I am now convinced that for any one to keep a library and to give works out at a cheaper rate would pay very well & I think I will be engaged in this business in a short time,--after I make a little money by lecturing etc." Regrettably--for Uncle Aitkin and for Allegheny City's starved readers--he never got around to setting up his business.



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






October 7, 2013

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



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

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

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


. . .


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

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

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


. . .


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



For the full story, see:

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

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

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






September 17, 2013

For Innovator It Is Better to Use Wealth to Innovate than to Donate



JobsSteve2013-09-02.jpg
"Steve Jobs, a founder of Apple, has focused on his work to improve the lives of millions of people through technology." Source of caption and photo: online version of the NYT article quoted and cited below.





The column quoted below, written before Steve Jobs' death, asks an important question: should an innovative entrepreneur be a prominent philanthropist? I believe that innovative entrepreneurs can often do the most good by using their wealth to innovate rather than to donate.



(p. B1) Steve Jobs is a genius. He is an innovator. A visionary. He is perhaps the most beloved billionaire in the world.

Surprisingly, there is one thing that Mr. Jobs is not, at least not yet: a prominent philanthropist.

Despite accumulating an estimated $8.3 billion fortune through his holdings in Apple and a 7.4 percent stake in Disney (through the sale of Pixar), there is no public record of Mr. Jobs giving money to charity. He is not a member of the Giving Pledge, the organization founded by Warren E. Buffett and Bill Gates to persuade the nation's wealthiest families to pledge to give away at least half their fortunes. (He declined to participate, according to people briefed on the matter.) Nor is there a hospital wing or an academic building with his name on it.

None of this is meant to judge Mr. Jobs. I have long been a huge admirer of Mr. Jobs and consider him the da Vinci of our time.


. . .


(p. B4) . . . Mr. Jobs has always been upfront about where he has chosen to focus. In an interview with The Wall Street Journal in 1993 , he said, "Going to bed at night saying we've done something wonderful ... that's what matters to me."



For the full commentary, see:

ANDREW ROSS SORKIN. "DEALBOOK COLUMN; The Mystery of Steve Jobs's Public Giving." The New York Times (Tues., AUGUST 30, 2011): B1 & B4.

(Note: ellipsis between paragraphs added; ellipsis within last paragraph, in original.)

(Note: the online version of the commentary has the date AUGUST 29, 2011.)







March 14, 2013

Foreign Aid Is Not Effective



BeyondGoodIntentionsBK.JPG
















Source of book image: http://img1.imagesbn.com/p/9781580054348_p0_v1_s260x420.JPG



(p. C8) In 2002, Tori Hogan was a 20-year-old intern for the international nonprofit Save the Children, helping write a report on the effect of humanitarian aid on children. In a dusty refugee-camp high school in Kenya a teenage student told her: "A lot of aid workers come and go, but nothing changes. If the aid projects were effective, we wouldn't still be living like this after all these years." That remark ended Tori Hogan's "dreams of 'saving Africa,' " she writes in "Beyond Good Intentions," a book that bypasses sweeping condemnations of the aid industry to reach sometimes less satisfying zones of nuance.


. . .


The most savage writing on this topic comes from authors who have devoted chunks of their lives to conflict zones. In "The Crisis Caravan" (2010), Dutch journalist Linda Polman quotes, to devastating effect, Sierra Leone rebels who claim that they launched mass amputations in 1999 to compete with Congo and Kosovo for international attention and development aid. Michael Maren, the author of "Road to Hell" (2010), lost his child to the aid effort in Somalia.



The book under review is:

Hogan, Tori. Beyond Good Intentions: A Journey into the Realities of International Aid. pb (appears there was no hb edition) ed. Berkeley, CA: Seal Press, 2012.

(Note: ellipsis added.)



The Polman book mentioned above, is:

Polman, Linda. The Crisis Caravan: What's Wrong with Humanitarian Aid? New York: Metropolitan Books, 2010.


The Maren book mentioned above, is:

Maren, Michael. The Road to Hell: The Ravaging Effects of Foreign Aid and International Charity. New York: The Free Press, 1997.






January 23, 2013

David Koch Institute for Integrative Cancer Research



LangerRobertResearchLab2013-01-12.jpg "Dr. Robert Langer's research lab is at the forefront of moving academic discoveries into the marketplace." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 1) HOW do you take particles in a test tube, or components in a tiny chip, and turn them into a $100 million company?

Dr. Robert Langer, 64, knows how. Since the 1980s, his Langer Lab at the Massachusetts Institute of Technology has spun out companies whose products treat cancer, diabetes, heart disease and schizophrenia, among other diseases, and even thicken hair.

The Langer Lab is on the front lines of turning discoveries made in the lab into a range of drugs and drug delivery systems. Without this kind of technology transfer, the thinking goes, scientific discoveries might well sit on the shelf, stifling innovation.

A chemical engineer by training, Dr. Langer has helped start 25 companies and has 811 patents, issued or pending, to his name. More than 250 companies have licensed or sublicensed Langer Lab patents.

Polaris Venture Partners, a Boston venture capital firm, has invested $220 million in 18 Langer Lab-inspired businesses. Combined, these businesses have improved the health of many millions of people, says Terry McGuire, co-founder of Polaris.


. . .


(p. 7) Operating from the sixth floor of the David H. Koch Institute for Integrative Cancer Research on the M.I.T. campus in Cambridge, Mass., Dr. Langer's lab has a research budget of more than $10 million for 2012, coming mostly from federal sources.


. . .


David H. Koch, executive vice president of Koch Industries, the conglomerate based in Wichita, Kan., wrote in an e-mail that "innovation and education have long fueled the world's most powerful economies, so I can't think of a better or more natural synergy than the one between academia and industry." Mr. Koch endowed Dr. Langer's professorship at M.I.T. and is a graduate of the university.



For the full story, see:

HANNAH SELIGSON. "Hatching Ideas, and Companies, by the Dozens at M.I.T." The New York Times, SundayBusiness Section (Sun., November 25, 2012): 1 & 7.

(Note: ellipses added.)

(Note: the online version of the story has the date November 24, 2012.)






July 4, 2012

93% of Donated Eyeglasses Are Not Usable



(p. D6) Giving used eyeglasses to poor countries may please the donors, but it is not worth the high delivery costs, a new study has concluded, and a $10 donation would do more good.

The study, led by Australian scientists and published in March in Optometry and Vision Science, found that only 7 percent of a test sample of 275 donated spectacles were usable. That raised the delivery cost to over $20 per usable pair. A simple eye exam and a set of ready-made glasses from China can be provided for just $10, the authors said.



For the full story, see:

DONALD G. McNEIL Jr. "GLOBAL UPDATE; Donations for Eyeglasses in Poor Nations Are Better Than Recycling Used Pairs." The New York Times (Tues., April 24, 2012): D6.

(Note: the online version of the article has the date April 23, 2012.)


(Note: a more extended analysis of this example appears in an online article by Virginia Postrel. I am grateful for Dale Eesley for sending me a link to Postrel's article.)






June 1, 2012

Lucasfilm Will Build Somewhere "That Sees Us as a Creative Asset, Not as an Evil Empire"



LucasValleyMarinCounty2012-05-30.jpg "Lucas Valley in Marin County, Calif., where residents' objections led George Lucas to abandon a bid to expand operations at a new site near Skywalker Ranch." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. A13) SAN RAFAEL, Calif. -- In 1978, a year after "Star Wars" was released, George Lucas began building his movie production company far from Hollywood, in the quiet hills and valley of Marin County here just north of San Francisco. Starting with Skywalker Ranch, the various pieces of Lucasfilm came together over the decades behind the large trees on his 6,100-acre property, invisible from the single two-lane road that snakes through the area.

And even as his fame grew, Mr. Lucas earned his neighbors' respect through his discretion. Marin, one of America's richest counties, liked it that way.

But after spending years and millions of dollars, Mr. Lucas abruptly canceled plans recently for the third, and most likely last, major expansion, citing community opposition. An emotional statement posted online said Lucasfilm would build instead in a place "that sees us as a creative asset, not as an evil empire."

If the announcement took Marin by surprise, it was nothing compared with what came next. Mr. Lucas said he would sell the land to a developer to bring "low income housing" here.


. . .


Whatever Mr. Lucas's intentions, his announcement has unsettled a county whose famously liberal politics often sits uncomfortably with the issue of low-cost housing and where battles have been fought over such construction before. His proposal has pitted neighbor against neighbor, who, after failed peacemaking efforts over local artisanal cheese and wine, traded accusations in the local newspaper.

The staunchest opponents of Lucasfilm's expansion are now being accused of driving away the filmmaker and opening the door to a low-income housing development. That has created an atmosphere that one opponent, who asked not to be identified, saying she feared for her safety, described as "sheer terror" and likened to "Syria."

Carl Fricke, a board member of the Lucas Valley Estates Homeowners Association, which represents houses nearest to the Lucas property, said: "We got letters saying, 'You guys are going to get what you deserve. You're going to bring drug dealers, all this crime and lowlife in here.' "



For the full story, see:

NORIMITSU ONISHI. "A Pyrrhic Victory for Foes of a New Lucasfilm Project; In Lieu of digital Studio, Plan for Low-Income Homes." The New York Times (Tues., May 22, 2012): A13 & A19.

(Note: ellipsis added.)

(Note: the online version of the story is dated May 21, 2012 and has the title "Lucas and Rich Neighbors Agree to Disagree: Part II.")



LucasGeorge2012-05-30.jpg "Mr. Lucas said Marin needs affordable housing. A resident called his plan "class warfare."" Source of caption and photo: online version of the NYT article quoted and cited above.






April 26, 2012

NGO Workers Are More Concerned with Following Plan than Achieving Mission



BazaarPoliticsBK2012-04-08.jpg













Source of book image: http://www.bibliovault.org/thumbs/978-0-8047-7672-1-frontcover.jpg






In the quote below, "NGO" means "Non-Government Organization," for instance, a philanthropy.


(p. 17) As for the state's representatives, their authority was what Coburn calls a "useful fiction." The district governor wielded his connections to Kabul as best he could, but did not possess great influence, in part because -- in keeping with the most sophisticated state-building methods -- government aid was mainly distributed by locally elected committees. Istalif's police were seen as hapless at best, predatory at worst; Coburn found that villagers were eager to protect him from a local officer. The French soldiers who periodically showed up in the bazaar had little impact, though their presence did become an excuse for keeping women out of the area. But Coburn observed that "no group was less effective at accumulating influence" than the NGO community. The best development experts accomplished little: their turnover was high, and they frequently bestowed their largess on deserving locals -- women, refugees who'd returned from abroad with some education, victims of wartime injuries -- who didn't have the connections or ability to capitalize on their good fortune. NGO workers seemed less concerned with achieving a valuable outcome than with demonstrating to their backers that they had followed a mission plan to the letter.


For the full review, see:

ALEXANDER STAR. "Applied Anthropology." The New York Times Book Review (Sun., November 20, 2011): 16-17.

(Note: the online version of the commentary is dated November 18, 2011, and has the title "Afghanistan: What the Anthropologists Say.")


The book being discussed is:

Coburn, Noah. Bazaar Politics: Power and Pottery in an Afghan Market Town. Stanford Studies in Middle Eastern and Islamic Societies and Cultures. Stanford, CA: Stanford University Press, 2011.





March 19, 2012

"No Street Protester Has Yet Endowed a University Department"



AmericanEgyptologistBK2012-03-08.jpg











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







(p. A13) Over the next three decades, Breasted would excavate a series of sites in Egypt, the Sudan and the Near East. He would also develop an important ability to identify rich and influential benefactors and to gain their confidence without resorting to sycophancy. . . . Notable among the Maecenas figures he cultivated was John D. Rockefeller.

Rockefeller had been an early patron of the University of Chicago; he might have done something for Near Eastern studies in any case, but it is clear that without Breasted's energy and enthusiasm, Rockefeller's scholarly philanthropy would never have taken the course it did. Eventually, he provided the funding for an entire Oriental Institute in 1931. (The OI, as it is affectionately known, had existed from 1919 but essentially as a concept between academic committees.) Together with its Egyptian offshoot, Chicago House, the OI is perhaps the leading center of Egyptology and Assyriology in the world. At the moment, on both sides of the Atlantic, we are hearing a lot about the evils of bankers and capitalism, but as far as I know no street protester has yet endowed a university department.



For the full review, see:

JOHN RAY. "BOOKSHELF; From Illinois To Mesopotamia; Excavating sites in Egypt and the Near East, writing groundbreaking books and developing a talent for courting wealthy donors." The Wall Street Journal (Thurs., February 23, 2012): A13.

(Note: ellipsis added.)


Book under review:

Abt, Jeffrey. American Egyptologist: The Life of James Henry Breasted and the Creation of His Oriental Institute. Chicago: University of Chicago Press, 2012.






March 12, 2012

CalArts Was One of Walt Disney's Last Projects




It is a nice minor coda to Walt Disney's life that the CalArts school that he founded provided a starting point for many of the next generation of great innovative animators, including John Lasseter.


(p. 47) CalArts was Walt Disney's brainchild; he had started the planning of the school in the late 1950s and provided generously for it in his will. Walt and his brother Roy formed it in 1961 through a merger of two struggling Los Angeles institutions, the Los Angeles Conservatory of Music and the Chouinard Art Institute. The doors opened at the school's consolidated campus in Valencia in 1971, five years after Walt's death.


. . .


(p. 48) The storms of the 1960s had mostly receded by the time Lasseter arrived. At CalArts, he found his own kind of liberation: Here, he no longer needed to conceal his passion for cartoons. His twenty classmates from across the country were animation geeks like him. Others had been corresponding with the Disney studio just as he had, and even making their own short films. Many would go on from CalArts to perform significant work at Disney or elsewhere; among them were future stars John Musker (co-director of Aladdin, Hercules, and The Little Mermaid) and Brad Bird.

First-year classes took place in room A113, a windowless space with white walls, floor, and ceiling, and buzzing fluorescent lights. The teachers made up tor the setting, however: Almost all of them were longtime Disney artists with awe-inspiring animation credits. Kendall O'Connor, an art director on Snow White and the Seven Dwarfs, taught layout; Elmer Plummer, a character designer on Dumbo, taught life drawing; T. Hee, a sequence director on Pinocchio, taught caricature. The program was rigorous and the hours long; the fact that the campus was in the middle of nowhere made it easier to focus on work. Tim Burton, who entered the program the following year, remembered the experience: . . .



Source:

Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.

(Note: ellipsis added; italics in original.)

(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)





October 30, 2011

Innovative Entrepreneurs Finance Basic Research in Mariana Trench



OceanDepthGraphic2011-08-10.jpgSource of graphic: online version of the NYT article quoted and cited below.


(p. D1) A new generation of daredevils is seeking to plunge through nearly seven miles of seawater to the bottom of a rocky chasm in the western Pacific that is veiled in perpetual darkness. It is the ocean's deepest spot. The forbidding place, known as the Challenger Deep, is so far removed from the warming rays of the sun that its temperature hovers near freezing.

"When I was a kid, I loved not only amazing ocean exploration but space, too," James Cameron, the director of "Avatar," "Titanic" and "The Abyss," said in an interview. "I can think of no greater fantasy than to be an explorer and see what no human eye has seen before."

The would-be explorers can afford to live their dreams because of their extraordinarily deep pockets. Significantly, their ambitions far exceed those of the world's seafaring nations, which have no plans to send people so deep.

The billionaires and millionaires include Mr. Cameron, the airline mogul Richard Branson and the Internet guru Eric E. Schmidt. Each is building, planning to build or financing the construction of minisubmarines meant to transport them, their friends and scientists into the depths. Entrepreneurs talk of taking tourists down as well.

The vehicles, meant to hold one to three people, are estimated to cost anywhere from $7 million to $40 million.



For the full story, see:

WILLIAM J. BROAD. "Ambitions as Deep as Their Pockets." The New York Times (Tues., August 2, 2011): D1 & D4.

(Note: the online version of the article is dated August 1, 2011.)






December 16, 2010

Ridley Debunks Gates' Aid to Africa; Gates Responds; Ridley Responds to the Response



GatesRiidleyArmWrestling2010-12-15.jpgBill Gates and Matt Ridley arm wrestle. Source of image: online version of the Gates WSJ commentary cited below.



In a few weeks I will comment at length on Matt Ridley's wonderful recent book The Rational Optimist. It delightfully debunks much that deserves debunking, although I think it wrong on its central claim that no rewards are needed for innovation.

Part of what Ridley debunks is the case for aid to Africa. As one of the aid givers, Bill Gates is not fond of being debunked.


Gates responds in:

BILL GATES. "Africa Needs Aid, Not Flawed Theories." The Wall Street Journal (Sat., NOVEMBER 27, 2010): C1-C2.

(Note: the online version of the Gates commentary is dated NOVEMBER 26, 2010.)


Ridley responds to Gates' response in:

MATT RIDLEY. "Africa Needs Growth, Not Pity and Big Plans." The Wall Street Journal (Sat., NOVEMBER 27, 2010): C1-C2.

(Note: the online version of the Ridley commentary has the same date as the print version.)


Ridley's book is:

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





December 12, 2010

Rockefeller Is Vilified Despite His Entrepreneurial Genius and His Philanthropic Generosity



AmericasMedicisBK2010-12-08.jpg















Source of book image: http://ecx.images-amazon.com/images/I/512M5Z648JL.jpg




(p. C7) . . . as Suzanne Loebl rightly emphasizes in "America's Medicis," the Rockefellers' patronage has been notable not only for its generosity but also for its deliberativeness. By founding such diverse institutions as MoMA, Colonial Williamsburg, the Cloisters, Riverside Church and the Asia Society--as well as by commissioning the distinguished artworks that enliven the office complex at Rockefeller Center--various members of the family have been guided by a perception that a moral responsibility comes with the possession of great wealth.

John D. Rockefeller, Sr. (1839-1937), the founder and chairman of Standard Oil, was routinely vilified in the press as a ruthless monopolist who crushed competition the way a giant might crush a bug.     . . .     . . . yet he was not the cold-hearted miser that some supposed. A devout Baptist, he donated substantial sums every year to one or more of the congregations he attended, as well as to associated causes, such as the American Baptist Education Society, which founded the University of Chicago with his support in 1890.


. . .


Unfortunately, not everyone behaved well in the face of Rockefeller munificence. The Mexican painter Diego Rivera, commissioned to create a sprawling mural for the lobby of Rockefeller Center, chose to deviate from his preparatory drawings and place an enormous portrait of Lenin at the center of the finished composition. Refusing to amend this egregious provocation, Rivera was paid in full for his work, which was then duly destroyed. A predictable uproar ensued, garnering the artist abundant publicity, which may have been his objective all along.


. . .


Ms. Loebl's account is well grounded both in the existing literature and in original archival research. She has striven to be comprehensive and done a good job of incorporating lesser-known Rockefeller projects, for example the charming Wendell Gilley Museum of carved birds, in Maine, funded by Nelson's son Steven. But several worthy undertakings, such as Junior's restoration of the châteaux of Versailles and Fontainebleau, receive scant attention--as do Laurance Rockefeller's extensive gifts for the purpose of creating and expanding our national parks.



For the full review, see:

JONATHAN LOPEZ. "BOOKSHELF; The Splendid Spoils of Standard Oil; The Rockefeller family's vast cultural legacy resulted from a sense of civic duty and a love of beautiful things." The Wall Street Journal (Sat., NOVEMBER 20, 2010): C7.

(Note: ellipses added.)


The book being reviewed, is:

Loebl, Suzanne. America's Medicis: The Rockefellers and Their Astonishing Cultural Legacy. New York: HarperCollins, 2010.





November 26, 2010

First Writing Grew from Commerce



CunneiformSumerianClayTablet3200BC.jpg













"A Sumerian clay tablet from around 3200 B.C. is inscribed in wedgelike cuneiform with a list of professions." Source of caption and photo: online version of the NYT article quoted and cited below.




(p. C5) CHICAGO -- One of the stars of the Oriental Institute's new show, "Visible Language: Inventions of Writing in the Ancient Middle East and Beyond," is a clay tablet that dates from around 3200 B.C. On it, written in cuneiform, the script language of ancient Sumer in Mesopotamia, is a list of professions, described in small, repetitive impressed characters that look more like wedge-shape footprints than what we recognize as writing.

In fact "it is among the earliest examples of writings that we know of so far," according to the institute's director, Gil J. Stein, and it provides insights into the life of one of the world's oldest cultures.

The new exhibition by the institute, part of the University of Chicago, is the first in the United States in 26 years to focus on comparative writing. It relies on advances in archaeologists' knowledge to shed new light on the invention of scripted language and its subsequent evolution.

The show demonstrates that, contrary to the long-held belief that writing spread from east to west, Sumerian cuneiform and its derivatives and Egyptian hieroglyphics evolved separately from each another. And those writing systems were but two of the ancient forms of writing that evolved independently. Over a span of two millenniums, two other powerful civilizations -- the Chinese and Mayans -- also identified and met a need for written communication. Writing came to China as early as around 1200 B.C. and to the Maya in Mesoamerica long before A.D. 500.


. . .


The Oriental Institute, which opened in 1919, was heavily financed by John D. Rockefeller Jr., who had been greatly influenced by James Henry Breasted, a passionate archaeologist.


. . .


Experts are still struggling to understand just how writing evolved, but one theory, laid out at the Oriental Institute's exhibition, places the final prewriting stage at 3400 B.C., when the Sumerians first began using small clay envelopes like the ones in the show. Some of the envelopes had tiny clay balls sealed within. Archaeologists theorize that they were sent along with goods being delivered; recipients would open them and ensure that the number of receivables matched the number of clay tokens. The tokens, examples of which are also are in the show , transmitted information, a key function of writing.



For the full story, see:

GERALDINE FABRIKANT. "Hunting for the Dawn of Writing, When Prehistory Became History." The New York Times (Weds., October 20, 2010): C5.

(Note: ellipses added.)

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





October 18, 2010

Charlie Munger: Capitalist Ventures Do Good, While Philanthropies Are a Source of "So Much Folly and Stupidity"




We'd all be better off if Warren Buffett listened a little more to his old friend Charlie Munger, and a little less to his new friend, Bill Gates.


(p. 6A) Charlie Munger, the business partner of billionaire philanthropist Warren Buffett, said private investment may advance society more than charity.

"I believe Costco does more for civilization than the Rockefeller Foundation," Munger, 86, told students in a discussion at the University of Michigan on Tuesday, according to a video posted on the Internet. "I think it's a better place. You get a bunch of very intelligent people sitting around trying to do good, I immediately get kind of suspicious and squirm in my seat."

Munger is a director at Costco Wholesale Corp., the largest U.S. warehouse-club chain, and has served as vice chairman of Buffett's Berkshire Hathaway Inc. for more than three decades. Munger's stake in Omaha-based Berkshire's Class A shares is valued at more than $1.6 billion.


. . .


"I've seen so much folly and stupidity on the part of our major philanthropic groups, including the World Bank," Munger said. "I really have more confidence in building up the more capitalistic ventures like Costco."




For the full story, see:

Bloomberg News. "Costco beats charity, Munger Says." Omaha World-Herald (Sat., September 16, 2010): 6A-7A.

(Note: ellipsis added.)

(Note: the online version of the article has the title "Munger: Costco beats charity.")

Munger's comments can be viewed online at: http://rossmedia.bus.umich.edu/rossmedia/SilverlightPlayer/Default.aspx?peid=4d215177cbe44b1e8e94d0dd68f5058f





September 24, 2010

Successful Entrepreneurs Do Not Need to Give Back to Society---They Already Gave at the Office



(p. A15) Successful entrepreneurs-turned-philanthropists typically say they feel a responsibility to "give back" to society. But "giving back" implies they have taken something. What, exactly, have they taken? Yes, they have amassed great sums of wealth. But that wealth is the reward they have earned for investing their time and talent in creating products and services that others value. They haven't taken from society, but rather enriched us in ways that were previously unimaginable.


. . .


Let's hope the philanthropy of those who . . . sign the Giving Pledge achieves great things. But let's not fool ourselves into thinking that businessmen are likely to achieve more by giving their money away than they have by making it in the first place.



For the full commentary, see:

Kimberly O. Dennis. "Gates and Buffett Take the Pledge; Wealthy businessmen often feel obligated to 'give back.' Who says they've taken anything?" The Wall Street Journal (Fri., AUGUST 20, 2010): A15.

(Note: ellipses added.)






September 11, 2009

Aid Dependency "Kills Entrepreneurship"



MoyoDambisa2009-09-03.jpg

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








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

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





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


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


What do you think has held back Africans?


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


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


Microfinance. Give people jobs.



For the full interview, see:

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



DeadAidBK.jpg
















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





August 14, 2009

Trinity College Tries to Renege on Deal with Donor



Gunderson_Gerald.jpg









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



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

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


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

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

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


. . .


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

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

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

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

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

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

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

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


. . .


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

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

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

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

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

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

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

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

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

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

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

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

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

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



For the full story, see:

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

(Note: ellipses added.)


Among Professor Gunderson's publications is:

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





July 23, 2009

Increase in Prizes to Advance Innovation



SciencePrizes2009-06-20.jpgSource of graphic on past prizes: online version of the WSJ article quoted and cited below.


(p. A9) Are we impatient with NASA? Google offers $30 million in prizes for a better lunar lander. Do we like solving practical puzzles? InnoCentive Inc. has posted hundreds of lucrative research contests, offering cash prizes up to $1 million for problems in industrial chemistry, remote sensing, plant genetics and dozens of other technical disciplines. Perhaps we crave guilt-free fried chicken. The People for the Ethical Treatment of Animals offers a $1 million prize for the first to create test-tube poultry tissue that can be safely served for dinner.

Call it crowd-sourcing; call it open innovation; call it behavioral economics and applied psychology; it's a prescription for progress that is transforming philanthropy. In fields from manned spaceflight to the genetics of aging, prizes may soon rival traditional research grants as a spur to innovation. "We see a renaissance in the use of prizes to solve problems," says Tony Goland, a partner at McKinsey & Co. which recently analyzed trends in prize philanthropy.

. . .


Since 2000, private foundations and corporations have launched more than 60 major prizes, totaling $250 million in new award money, most of it focused on science, medicine, environment and technology, the McKinsey study found.


. . .


In growing numbers, corporate sponsors are embracing the prize challenge as a safe, inexpensive way to farm out product research, at a time when tight credit and business cutbacks have slowed innovation. Venture-capital investments have dropped by almost half since last year, reaching the lowest level since 1997, the National Venture Capital Association recently reported. "Here is a mechanism for off-balance-sheet risk-taking," says Peter Diamandis, founder of the X Prize Foundation. "A corporation can put up a prize that is bold and audacious with very little downside. You only pay the winner. It is a fixed-price innovation."



For the full article, see:

ROBERT LEE HOTZ. "SCIENCE JOURNAL; The Science Prize: Innovation or Stealth Advertising? Rewards for Advancing Knowledge Have Blossomed Recently, but Some Say They Don't Help Solve Big Problems." Wall Street Journal (Tues., May 8, 2009): A9.

(Note: ellipses added.)


The McKinsey study mentioned in the quotes above, was funded by the Templeton Foundation, and can be downloaded from:

McKinsey&Company. ""And the Winner Is ..." Capturing the Promise of Philanthropic Prizes." McKinsey & Company, 2009.

(Note: ellipsis in study title is in the original.)





May 10, 2009

Philanthro-Capitalism Is Inefficient, and Betrays Shareholders



CreativeCapitalismBK.jpg













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




(p. A13) One of the more interesting ideas found in this somewhat rambling book contends that "philanthropic" business activity is in fact at odds with what is best about capitalism itself and thus counterproductive.

Lawrence Summers, the former Harvard president and former Treasury secretary, states the difficulty succinctly: "It is hard in this world to do well. It is hard to do good. When I hear a claim that an institution is going to do both, I reach for my wallet. You should too." He offers as an example Fannie Mae and Freddie Mac, government-created corporations that were supposed to achieve a social goal -- affordable housing -- while operating as businesses. They did neither well, eventually leaving their catastrophic debts for taxpayers to pay.

U.S. Circuit Court Judge Richard Posner, along with other contributors, notes that companies often suffer losses when they set out to address a social problem. If they could really make a profit by doing good works, the argument goes, they would no doubt already be hard at it. But if they do good works at the expense of profit, they will become less efficient, making themselves more vulnerable to competitors. Economist Steven Landsburg suggests that companies sacrificing profit to accomplish philanthropic goals end up betraying their shareholders, who rightly expect the best return on investment. Sometimes acting philanthropically will result in an indirect business benefit, such as improving worker skills. In that case, philanthro-capitalism might be in a company's interest -- but Judge Posner and others of like mind suspect that such instances are rare.

Their skepticism echoes Milton Friedman's objections to "corporate social responsibility," expressed in a 1970 article that is usefully reprinted in the book's appendix.



For the full review, see:

LESLIE LENKOWSKY. "Bookshelf; The Do-Good Marketplace; Reducing poverty, improving lives - maybe 'philanthro-capitalism' is just another name for capitalism." Wall Street Journal (Fri., JANUARY 2, 2009): A13.



The book under review is:

Kinsley, Michael, and Conor Clarke, eds. Creative Capitalism. New York: Simon & Schuster, 2008.





April 15, 2009

Schramm Sees the Donor as the Only Real Stakeholder of a Foundation




SchrammCarl2009-04-10.jpg










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



(p. A9) . . . who are the real stakeholders in foundations? Mr. Schramm can think of only one: the donor. "At Kauffman I think the trustees and I are very, very clear: We work for Mr. Kauffman," says Mr. Schramm, acknowledging that his boss passed away in 1993. Kauffman not only left extensive writings but also videotape of himself describing how he wanted the foundation to operate. Mr. Schramm says that one board member told him he was hired because he was the only candidate who had read Kauffman's book.


. . .


. . . within a year of taking over, Mr. Schramm began a serious overhaul of the foundation. He laid off about half of its 150-person staff and cut off funding to some of its biggest grantees, many in Kansas City. There was a public outcry from local nonprofits and from some former members of the board. One told the New York Times that "Carl doesn't seem to understand that there isn't an 'I' in team." It reached the point where Missouri's then attorney general, Jeremiah Nixon, launched an extensive investigation. He determined that Mr. Schramm had not led the foundation astray. What ultimately saved his job, says Mr. Schramm, were the detailed writings that Kauffman left before his death.

"What happened was not atypical in foundations. Often around 10 years after the death of the donor there's a moment of truth." People who were close to the donor will say, "Yes, he said that but he didn't mean that." Mr. Schramm concludes: "If there was one piece of advice I'd give to someone who was starting a foundation it is this: Think very, very hard of the long term and write down what you want your foundation to look like in 30 years or 40 years."

Despite the fact that the foundation's endowment has fallen by $722 million since the end of 2007, Mr. Schramm sees this as Kauffman's "moment." While "no one hopes for a recession," it's during economic crises that entrepreneurs "challenge companies that have gotten big and lazy." The downturn, he says, will even challenge Kauffman to "think about how we can do our work better, like every business." In fact, Mr. Schramm adds, "The only people immune from thinking hard in moments like this are in government."




For the full interview, see:


NAOMI SCHAEFER RILEY. "Opinion; THE WEEKEND INTERVIEW with Carl Schramm; Giving Capitalism Its Due." Wall Street Journal (Sat., APRIL 4, 2009): A9.

(Note: ellipses added.)





July 22, 2008

Business Model More Effective than Charity at Helping Poor


YunusMuhammadSubprimeLender.jpg






Nobel-Peace-Prize-winning economist Muhammad Yunus. Source of image: online version of the WSJ article quoted and cited below.

(p. A9) In his new book, "Creating a World Without Poverty," Mr. Yunus . . . defines social business as "cause-driven" rather than profit-driven. And yet, it is not a charity: Its owners are entitled to recoup their investments, and the social business must recover its full costs, or more, even as it concentrates on creating products or services that provide a social good. It does this by charging a fee for its products and services. (One example: a business that manufactures and sells low-priced, nutritious food products to underfed children. Grameen America is also a social business.)

Mr. Yunus freely acknowledges that the free market has done a great deal for the poor. "I didn't say that what is there is wrong. I said the structure was not complete. One piece was missing. We couldn't express within the business world all the things we want to do for others."

He argues that in today's world, people whose main ambition is to help those in need tend to be pushed into philanthropy, which isn't always the most efficient way to bring about change. In philanthropy, he says, the "dollar has only one life, you can use it once . . . social business dollar has endless life, it recycles. And you build institutions." He continues, "when it's an institution you bring creativity into it. You bring innovations into it. You bring continuity into it."

Mr. Yunus argues that it's extremely difficult to bring efficiency to charity. But "the moment you bring in a business model, immediately you become concerned about the cost, about the revenue, the sustainability, the surplus generation, how to bring more efficiency, how to bring new technology, how to redesign, each year you review the whole thing . . . charity doesn't have that package."



For the full article, see:

EMILY PARKER. "THE WEEKEND INTERVIEW with Muhammad Yunus; Subprime Lender." The Wall Street Journal (Sat., March 1, 2008): A9.

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




April 14, 2008

Gates Should Apply His Entrepreneurial Skills to His Philanthropy


From a cogent letter to the editor by Fred Smith:

(p. A13) The tragedy of Gates-style philanthropy is less that it will do little good but, rather, that he has abandoned the entrepreneurial skills used so creatively in his truly significant wealth-creation work at Microsoft. Had he employed similar skills in dealing with the problems of Africa, he would not -- as Mr. Barro notes he is largely doing -- simply replicate the tried and failed policies of traditional paternalistic aid. Rather, he would be examining the barriers -- political, cultural, tribal -- that block entrepreneurial activity throughout Africa and explore ways to remove them. Could we, for instance, out-compete the oligarchs and tyrants by creating prizes that would bypass the bureaucracy and achieve success in health- and wealth-creation, in reducing corruption?

For the full letter, see:

Fred L. Smith Jr. "Do Something for Other People by Getting Very, Very Rich." Wall Street Journal (Fri., Jun 29, 2007): A13.




February 29, 2008

"The No. 1 Need that Poor People Have is a Way to Make More Cash"

 

  Moving water is easier with the 20-gallon rolling drum.  Source of photo:  online version of the NYT article quoted and cited below.

 

(p. D3)  . . . , the Cooper-Hewitt National Design Museum, . . . , is honoring inventors dedicated to “the other 90 percent,” particularly the billions of people living on less than $2 a day.

Their creations, on display in the museum garden until Sept. 23, have a sort of forehead-thumping “Why didn’t someone think of that before?” quality.

. . .

Interestingly, most of the designers who spoke at the opening of the exhibition spurned the idea of charity.

“The No. 1 need that poor people have is a way to make more cash,” said Martin Fisher, an engineer who founded KickStart, an organization that says it has helped 230,000 people escape poverty.  It sells human-powered pumps costing $35 to $95.

Pumping water can help a farmer grow grain in the dry season, when it fetches triple the normal price.  Dr. Fisher described customers who had skipped meals for weeks to buy a pump and then earned $1,000 the next year selling vegetables.

 

For the full story, see: 

DONALD G. McNEIL Jr.  "Design That Solves Problems for the World's Poor."  The New York Times  (Tues., May 29, 2007):  D3.

(Note:  ellipses added.)

 

FilterForDrinkingWater.jpg TechnologiesForPoor.jpg   The photo on the left shows a woman safely drinking bacteria-laden water through a filter.  The photo on the right shows a "pot-in-pot cooler" that evaporates water from wet sand between the pots, in order to cool what is in the inner pot.  Source of photos:  online version of the NYT article quoted and cited above.

 




"The No. 1 Need that Poor People Have is a Way to Make More Cash"

 

  Moving water is easier with the 20-gallon rolling drum.  Source of photo:  online version of the NYT article quoted and cited below.

 

(p. D3)  . . . , the Cooper-Hewitt National Design Museum, . . . , is honoring inventors dedicated to “the other 90 percent,” particularly the billions of people living on less than $2 a day.

Their creations, on display in the museum garden until Sept. 23, have a sort of forehead-thumping “Why didn’t someone think of that before?” quality.

. . .

Interestingly, most of the designers who spoke at the opening of the exhibition spurned the idea of charity.

“The No. 1 need that poor people have is a way to make more cash,” said Martin Fisher, an engineer who founded KickStart, an organization that says it has helped 230,000 people escape poverty.  It sells human-powered pumps costing $35 to $95.

Pumping water can help a farmer grow grain in the dry season, when it fetches triple the normal price.  Dr. Fisher described customers who had skipped meals for weeks to buy a pump and then earned $1,000 the next year selling vegetables.

 

For the full story, see: 

DONALD G. McNEIL Jr.  "Design That Solves Problems for the World's Poor."  The New York Times  (Tues., May 29, 2007):  D3.

(Note:  ellipses added.)

 

FilterForDrinkingWater.jpg TechnologiesForPoor.jpg   The photo on the left shows a woman safely drinking bacteria-laden water through a filter.  The photo on the right shows a "pot-in-pot cooler" that evaporates water from wet sand between the pots, in order to cool what is in the inner pot.  Source of photos:  online version of the NYT article quoted and cited above.

 




February 21, 2008

Fraternal Odd Fellows Helped Each Other Without Depending on the Government

 

   The officers' banquet of the annual convention of the Sovereign Grand Lodge of the Independent Order of Odd Fellows.  Source of the photo:  online version of the NYT article quoted and cited below.

 

Before the New Deal and the Great Society, voluntary mutual assistance organizations provided insurance and help in the face of life's setbacks.  One such fraternal orgainization was the Odd Fellows. 

 

(p. 12)  Since his installation as top Odd Fellow, Mr. Robbins has warned that this order, dedicated to caring for the widowed, the orphaned and the needy, is in a “state of crisis.” Members are dying by the thousands, local lodges are closing by the dozens, and actual participation among the 289,000 members is dropping. If the people sitting before him do not heed his call to replenish the ranks, they will be the Odd Men and Women Out — defunct, extinct, done.

“Unless we can do something to turn the membership losses into significant gains in the next couple of years,” he says later, “we may be at a point where we can’t recover.”

Once we were a nation of joiners, and so many joined the Odd Fellows, a fraternal organization whose name stems from an English journalist’s observation in 1745. He found it “odd” to see “fellows,” rather than the aristocracy, helping widows, orphans and one another. The name stuck, oddly.

In many communities, you can still find an old I.O.O.F. building, a place of some mystery, where the rituals would include acting out the story of the Good Samaritan. Members were to apply that story to real life by aiding their brothers and sisters, chipping in to pay burial costs, for example. You merely had to express belief in one Creator to be eligible; atheists and pantheists need not apply.

Odd Fellows tended to frown on alcohol, loved bestowing medals on one another, and reveled in seeing their sword-carrying, uniformed brothers, the chevaliers of the Patriarchs Militant, march in Main Street parades. In their small worlds, Odd Fellows mattered.

Then came social changes to dull the appeal of fraternal organizations. Tighter government regulations forced the Odd Fellows out of their signature cause, orphanages, while baby boomers found all the pomp and secrecy to be, um, silly.

. . .

A toast then, to all national leaders of the world, as is Odd Fellows custom. Another toast, to all fraternal leaders of the world. Dinner, remarks, benediction, recessional to the strains of the “Battle Hymn of the Republic.” Odd Fellows and Rebekahs everywhere, good night.

 

For the full story, see: 

DAN BARRY.  "A Grand Gathering, but One With a Solemn Note."   The New York Times, Main Section  (Sunday, August 26, 2007):  12.

(Note:  ellipsis added.)

 

OddFellows2.jpg    "The Independent Order of Odd Fellows, dedicated to caring for the widowed, the orphaned and the needy, is in a “state of crisis.”"  Source of the photo:  online version of the NYT article quoted and cited above.

 




February 17, 2008

Puzzle: Entrepreneurial Silicon Valley Donates Mainly to Democrats

 

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


Entrepreneurship thrives when government is small, so it puzzles me when the entrepreneurs in Silicon Valley embrace the Democrats, who generally advocate bigger government.

Of course, my Wabash professor Ben Rogge used to point out that there are always cross-currents that go in a different direction from the mainstream. And among the Democrats, there are what used to be called "new Democrats" who appreciate Schumpeter, and entrepreneurship, and dynamism.

Plus, some Democrats are more respectful of personal, lifestyle choices, and in Silicon Valley, that may be what is given the most weight.

Or, more cynically, maybe there's a public choice explanation---that Silicon Valley donates to Democrats as a form of 'insurance,' in the hope that if the Democrats are elected, they will refrain from over-regulating and over-taxing Silicon Valley. (Even more cynically, compare the case of Florida's sugar-subsidy-rich Fanjul brothers, one of whom donated huge bucks to the first Bush, while another donated huge bucks to Bill Clinton.)

(Another factor is that, alas, entrepreneurs often do not pay much attention to what conditions encourage entrepreneurship.)


(p. C4)  In a flip from the primary season for the 2000 presidential election, 60 percent of the contributions so far from people in the technology field here are going to Democrats. The Democratic candidates raised $1.4 million from the industry in the first half of this year, while Republican candidates raised $890,000. That total is up from $1.2 million in the first six months of each of the last two presidential primary races.

 

For the full story, see: 

LAURIE J. FLYNN.  "In Primary, Tech's Home Is a Magnet." The New York Times  (Fri., August 24, 2007):  C1 & C4.

 




August 31, 2007

Let There Be Light

 

  One of Mark Bent's solar flashlights stuck in a wall to illuminate a classroom in Africa.  Source of the photo:   http://bogolight.com/images/success6.jpg

 

What Africa most needs, to grow and prosper, is to eject kleptocratic war-lord governments, and to embrace property rights and the free market.  But in the meantime, maybe handing out some solar powered flashlights can make some modest improvements in how some people live.

The story excerpted below is an example of private, entrepreneur-donor-involved, give-while-you-live philanthropy that holds a greater promise of actually doing some good in the world, than other sorts of philanthropy, or than government foreign aid. 

 

FUGNIDO, Ethiopia — At 10 p.m. in a sweltering refugee camp here in western Ethiopia, a group of foreigners was making its way past thatch-roofed huts when a tall, rail-thin man approached a silver-haired American and took hold of his hands. 

The man, a Sudanese refugee, announced that his wife had just given birth, and the boy would be honored with the visitor’s name. After several awkward translation attempts of “Mark Bent,” it was settled. “Mar,” he said, will grow up hearing stories of his namesake, the man who handed out flashlights powered by the sun.

Since August 2005, when visits to an Eritrean village prompted him to research global access to artificial light, Mr. Bent, 49, a former foreign service officer and Houston oilman, has spent $250,000 to develop and manufacture a solar-powered flashlight.

His invention gives up to seven hours of light on a daily solar recharge and can last nearly three years between replacements of three AA batteries costing 80 cents.

Over the last year, he said, he and corporate benefactors like Exxon Mobil have donated 10,500 flashlights to United Nations refugee camps and African aid charities.

Another 10,000 have been provided through a sales program, and 10,000 more have just arrived in Houston awaiting distribution by his company, SunNight Solar.

“I find it hard sometimes to explain the scope of the problems in these camps with no light,” Mr. Bent said. “If you’re an environmentalist you think about it in terms of discarded batteries and coal and wood burning and kerosene smoke; if you’re a feminist you think of it in terms of security for women and preventing sexual abuse and violence; if you’re an educator you think about it in terms of helping children and adults study at night.”

Here at Fugnido, at one of six camps housing more than 21,000 refugees 550 miles west of Addis Ababa, the Ethiopian capital, Peter Gatkuoth, a Sudanese refugee, wrote on “the importance of Solor.”

“In case of thief, we open our solor and the thief ran away,” he wrote. “If there is a sick person at night we will took him with the solor to health center.”

A shurta, or guard, who called himself just John, said, “I used the light to scare away wild animals.” Others said lights were hung above school desks for children and adults to study after the day’s work.

 

For the full story, see:


Will Connors and Ralph Blumenthal.  "Letting Africa’s Sun Deliver the Luxury of Light to the Poor."  The New York Times, Section 1  (Sun., May 20, 2007):  8.

(Note:  the title of the article on line was:  "Solar Flashlight Lets Africa’s Sun Deliver the Luxury of Light to the Poorest Villages.")

 

 EthiopiaMap.gif   Source of map:  online version of the NYT article cited above.

 




August 28, 2007

Bill Gates Does Not Owe Society Anything

 

Bill Gates is the richest man in the world, helped create a revolutionary computer software company, and earlier this month collected an honorary degree from Harvard University. But he may not understand the vital role wealth creation plays in society.

In collecting his degree, Mr. Gates delivered a commencement address that focused not on the information age, the rise of personal computers or the relentless efficiency his software has brought to nearly every industry. Instead, he focused on his own personal philanthropy. His implicit theme was that so far what he has accomplished may have been good for him and Microsoft shareholders, but it has been no great contribution to society. He suggested that with a personal fortune of about $90 billion (including what he has transferred to his foundation) it is time for him to give something back.

I find this perspective hard to understand. By any reasonable calculation Microsoft has been a boon for society and the value of its software greatly exceeds the likely value of Mr. Gates's philanthropic efforts.

. . .

Ironically, Mr. Gates's inspiration to "give back" apparently comes from the world's second richest person, Warren Buffett, who recently promised to donate much of his fortune to the Gates Foundation.

I say ironic because one can make a much better philosophical case for a give-back of Mr. Buffett's $52 billion than for Mr. Gates's $90 billion. Mr. Buffett's money came mostly from being a good stock picker. Whether his fortune is the product of luck or skill, the social benefits are hard to pin down. These benefits have to derive from improving company management practices or investment decisions.

Of course, Mr. Gates is free to do what he wishes with his $90 billion. But I think he is kidding himself if he believes that the efforts of the Gates Foundation are likely to provide society anything like the past and future accomplishments of Microsoft.

 

For the full commentary, see: 

ROBERT BARRO.  "COMMENTARY; Bill Gates's Charitable Vistas." The Wall Street Journal  (Tues., June 19, 2007):  A17.

(Note:  ellipsis added.)

 




July 17, 2007

Nonprofits Often Fund Risky, but Useful, Research that is Shunned by Government

 

The following excerpt from a summary of a May 17th Nature article, has a message that complements what I found in a paper published a couple of years ago (see the reference at the bottom of this entry).

 

Do charities like the Bill & Melinda Gates Foundation produce better medical research than institutions supported by the government?

. . .

. . . , some scientists believe philanthropies make better use of that $5 billion than corporations or governments, says Nature's Meredith Wadman. Many researchers have stories about nonprofits who rescued risky but useful projects that had been shunned by government-backed institutions. Charities can make decisions more quickly and can take bigger risks. Philanthropists also tend to closely monitor their investments and want the satisfaction of a mission accomplished.

 

For the full summary, see: 

"Informed Reader; PHILANTHROPY; Do Charities Outdo Research By Federal-Backed Agencies?"  The Wall Street Journal  (May 18, 2007):  B6. 

(Note:  ellipses added.)

The reference to the Nature article is: 

Meredith Wadman.  "Biomedical philanthropy: State of the donation."  Nature  447, (May 17, 2007):  248 - 250. 

 

My related paper is:

Diamond, Arthur M., Jr.  "The Relative Success of Private Funders and Government Funders in Funding Important Science."  The European Journal of Law and Economics 21, no. 2 (April 2006): 149-61.

 




April 10, 2007

Rockefeller Clan's "Tradition of Philanthropy"

   Swan Lake is part of the Rockefeller State Park Preserve created and donated by the Rockefellers.  Source of photo:  online version of the NYT article cited below.

 

(p. D1)  THE tranquil hamlet of Pocantico Hills, N.Y., has been bound up with the Rockefellers for more than a century. The family’s imprint is everywhere: In the thousands of acres of nearby pastures, woodlands and lakes that John D. Rockefeller Sr. began acquiring as he created his family’s estate in the 1890s. In the august stone walls enclosing a collection of even more august mansions. And in the stunning stained-glass windows by Matisse and Chagall that grace a simple stone church.

The Rockefellers are still an active presence — David Rockefeller, who at 91 is the last of the “brothers” from the illustrious third generation, spends weekends at his farm, Hudson Pines, and still rides in his horse-drawn carriage over the graceful carriage roads designed by his father and grandfather. A number of other Rockefellers — including Happy, the widow of David’s brother Nelson, the former governor and vice president — have houses on the family land as well.

Much of the Rockefeller family’s business and pleasure in and around Pocantico Hills is, not surprisingly, out of view. But the tradition of philanthropy that has defined the clan as much as its vast fortune also operates there. The result is a sense of shared bounty.

The public has long been allowed to enjoy the Rockefellers’ 55 miles of carriage roads, which also function as hiking trails, and the opportunity to experience Rockefeller country grew with the creation of the Rockefeller State Park Preserve. Its 1,384 acres are used for hiking, horseback riding and carriage driving.   . . . 

. . .

(p. D5)  A visitor can hike quiet trails evoking the family’s legacy, with names like Peggy’s Way and Brothers’ Path, and then have lunch in a smartly rustic cafe at Stone Barns — or an elegant dinner at Blue Hill. And while tours of Union Church of Pocantico Hills, with its Chagall and Matisse windows, will not resume until early April, anyone can attend Sunday morning services at 9 and 11. (But be discreet: the pastor, the Rev. Dr. F. Paul DeHoff, noted on the phone that services were for worship, not window viewing.)

. . .

The rose window over the altar was dedicated on Mother’s Day 1956 in memory of Abby Aldrich Rockefeller, John D. Jr.’s wife. Mrs. Rockefeller, a co-founder of the Museum of Modern Art, collected contemporary art, including works by Matisse. The head of the museum at the time suggested Matisse, then in his 80s, for the memorial window, and approached the artist on the family’s behalf.

Matisse accepted the commission, which turned out to be his last. The paper cutouts he used to design the blue, green and yellow window were in his bedroom when he died.

A much larger window at the rear of the church, by Marc Chagall, celebrates the life of John D. Rockefeller Jr., who died in 1960. The window tells the biblical story of the good Samaritan in brilliant blues and greens, echoing Matisse’s window.

Unlike Matisse, Chagall traveled to Pocantico Hills to see the church. At the dedication, Chagall broached the subject of the lackluster nave windows. He received a commission to redo all eight, including one in memory of Nelson Rockefeller’s son, Michael, who died in New Guinea in 1961.

If the memorial windows represent an extraordinary gift of culture in an unlikely nook of Westchester, the family’s present of the state park preserve was equally significant — a chunk of green space one and a half times the size of Central Park.

A good winter hike in the preserve is along Eagle Hill Trail, a steep ascent that offers panoramic views of the Hudson, farmland and Kykuit. Another scenic walk is on Brothers’ Path, which runs next to Swan Lake near the visitors’ center. Brothers’ Path connects to Brook Trail, which crosses a half-frozen stream: water bubbles beneath thin sheets of ice and the dazzling snow frames dark pools of water.

 

For the full story, see: 

LISA W. FODERARO. "Spending a Day at the Rockefellers’."  The New York Times  (Fri., February 23, 2007):  D1 & D6.

(Note:  ellipses added.)

 

RockefellerCountryRoad.jpg ChagallUnionChurch.jpg   RockefellerCountryMap.jpg  Upper left is a carriage road in Rockefeller country; upper right is a Marck Chagall window in Union Church; lower left is a map of Rockefeller country.  Source of photos and map:  online version of the NYT article cited above.

 




February 3, 2007

To Help Poor: "Allow Entrepreneurs to Flourish"

 

Of the three "views" discussed in Wessel's original commentary, the following excerpt just includes the one that I share:

 

With the billions of dollars they are spending, Bill Gates, Warren Buffett, Bill Clinton and Bono are likely to make progress in their quest to prevent treatable diseases from killing millions of people.  Nearly all of these people live or will live in poor countries.

That worries economist Simon Johnson.  He doesn't doubt the moral imperative to fight disease.  Still, he wonders:  "Do we really know how to help the poor people -- the increasing number of poor people?  Do we really know how to help them out of poverty?"

Such questions haunt academics, governments, international institutions and global do-gooders.  They are impressed with China's rapid modernization, though puzzled that it has done so well without following standard precepts.  They are disappointed and puzzled that Latin America nations haven't done better, especially because so many did take the advice of the experts.  They are depressed and puzzled by the continued widespread misery in Africa.

With intellectual humility, Mr. Johnson, a professor at Massachusetts Institute of Technology's Sloan School of Management, faced a roomful of peers at the annual meeting of the American Economics Association last weekend and said, "Public health had the germ theory of disease.  Economics has made great progress, but it's still waiting for its 'germ theory of disease.'"  That probably overstates the challenges remaining to public-health warriors -- avian flu, AIDS/HIV, malaria and all -- but not the shortcomings of economic understanding of what poor countries should do to achieve sustained growth.

. . .

A third view is that earlier economists focused on the wrong thing.  Mr. Johnson, among others, argues that what really matters is having solid political, legal and economic institutions -- courts, central banks, honest bureaucrats, private-property rights -- that allow entrepreneurs to flourish.  Imposing what seem to be sound economic policies on corrupt, incompetent or myopic governments is doomed.  Building strong institutions is a necessary prerequisite.  In this camp, there is a running side argument about which comes first:  the institutions or the educated people who create them.  Was the Constitution key to U.S. success, or was it Jefferson, Madison and Hamilton?

 

For the full commentary, see:

DAVID WESSEL.  "CAPITAL; Why Economists Are Still Grasping For Cure to Global Poverty."  The Wall Streeet Journal  (Thurs.,  January 11, 2007):  A7.

 




January 7, 2007

Gates Foundation Will Not "Rule With a Dead Hand"

MelindaAndBillGates.gif  Source of image:  online version of WSJ article cited below. 

 

When he was discussing with Pierre Goodrich the rules for Goodrich's Liberty Fund, my late-lamented mentor Ben Rogge tried to convince Goodrich to set some date by which the foundation would be required to spend all of its funds.  Rogge would quote Smith against the practice sometimes called 'ruling with a dead hand' by which the dead try to put restrictions on the living.  Rogge thought the dead had a right to restrict the future use of their money; its just that he thought it would become increasingly hard for them to do so effectively, the further out into the future you go.

There were at least a couple of reasons.  One of them was that as you go out into the future, it is increasingly hard to make sure that those supervising the money will remain true to the donor's intent.  Another reason was that as you go further out, and conditions change, it becomes increasingly hard to know what the donor would have wanted done.  (Rogge used to jest that probably, evenually Liberty Fund would end up spending libertarian Goodrich's money on making films promoting the beliefs of communist Anna Rosenberg.)

On this issue, it appears that Bill and Melinda find Adam Smith more persuasive, than did Pierre:

 

The Bill & Melinda Gates Foundation said it will spend all its assets within 50 years of the death of its last trustee, a decisive move in a continuing debate in philanthropy about whether such groups should live on forever.

. . .

The decision is expected to influence other charities to consider following suit.  . . .

. . .

The Gates decision will add fuel to a debate about whether foundations should live in perpetuity, a longtime model used by the Ford and Rockefeller foundations and Carnegie Corp.

 

For the full story, see: 

SALLY BEATTY.  "Gates Foundation Sets Its Lifespan; All Assets Are to Be Spent Within 50 Years of Death of the Remaining Trustee."  Wall Street Journal  (Fri., December 1, 2006):  A10.

 




December 2, 2006

Microsoft's VX-6000 LifeCam Really Stinks

  Microsoft's VX-6000 LifeCam.  Source of image:  http://www.microsoft.com/presspass/images/gallery/hardware/WC6_Angle_Silver_lg.jpg

 

I posted this to Amazon.com, late on Thurs., Nov. 30, 2006:

I have spent a frustrating afternoon and evening trying to install the VX-6000 on a fully updated MS XP pro system. The install took forever, because every couple of minutes the install program couldn't find a needed file (if they need it, why not put it on the install CD?). So I had to browse my system and point them to where the file was (why couldn't they design the install program to search for the file instead of making me do it?). Finally I got a successful install, and then I was informed there was an updated version, and I needed to install that. So I went through the whole time-consuming process all over again, including the schtick about searching for the location of several files. Finally it again said I had installed the program successfully. So I rebooted my PC, and clicked on the Microsoft LifeCam icon. After cranking for awhile I get "initialization error". I try rebooting again---same error. So I type in "initialization error" in the search bar of the "help" section, and I get back "no topics found." So they sell me an expensive camera, run me ragged installing it, send me a repeated error message, and provide me no clue on what to do about it. (I guess now that Bill Gates is saving the world through philanthropy, nobody's left minding the shop?)

 

The final comment is probably a bit too snide or harsh.  Microsoft has always had the deserved reputation of letting some products out the door before they are ready.  E.g., the first couple of versions of Windows paled in comparison to the graphical-user-interface operating system that Apple was offering at the time.  And the CD that accompanied Bill Gates' The Road Ahead would not work on what was then Microsoft's premier operating system:  Windows NT.

Maybe these kind of glitches result from a conscious operating strategy that gives employees a lot of freedom to make their own decisions.  The upside can be speedy decisions, and creativity.  The downside can be glitches such as the VX-6000 LifeCam.  Taking the broad, professorial view, maybe overall, the upside justifies the downside.  Tom Peters endorses companies accepting this trade-off rather than adopting layered, rule-bound, slow, bureaucratic decision-making.  (See his:  Re-imagine!)

(But did I mention that the VX-6000 LifeCam really stinks?) 

 

The reference to the Peters book is:

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

 




November 9, 2006

African Entrepreneur Funds Prize for African Leaders Who Resist Kleptocracy

IbrahimMo.jpg  Billionaire entrepreneur Mo Ibrahim.  Source of photo:  online version of the NYT article cited below. 

 

At a news conference in London on Thursday, Mo Ibrahim, a 60-year-old Sudanese-born billionaire who made his money in the cellphone business, announced that he was offering a $5 million prize for the sub-Saharan African president who on leaving office has demonstrated the greatest commitment to democracy and good governance.  The money will be spread out over 10 years.

“We must face the reality,” Mr. Ibrahim said, referring to Africa’s leadership record.  “Everything starts by admitting the truth:  we failed.  I’m not proud at all.  I’m ashamed.  We really need to resolve the problem and the problem, in our view, is bad leadership and bad governance.”

. . .

Unlike many projects that aim to help famine-stricken villages or far-flung AIDS clinics, this one is supposed to focus on political leadership — and the post-independence culture of autocrats and kleptocrats that spawned such figures as Mobutu Sese Seko of Zaire or Idi Amin of Uganda.

. . .

Africa’s culture of the Big Man clinging to office was built in part, Mr. Ibrahim said, on a sense among many of its leaders that, if they relinquished power voluntarily, they would face penury and powerlessness and would no longer be the font of patronage or the tenant of what he called “the hilltop palace.”

“We want them to have a life after office,” Mr. Ibrahim said.

“Your leaders here become rich after they leave office,” he said, referring to the directorships, book deals and lecture circuit tours that accrue to Western leaders.  “What life is there for our people after office?  Some of our leaders cannot even afford to rent an apartment” in their own capitals, he said.

 

For the full story, see: 

ALAN COWELL  "Prize to Honor Heroes in African Democracy."  The New York Times  (Fri., October 27, 2006):  A11.

(Note:  ellipses added.)

 




November 6, 2006

More Good Done With Standard Oil Money: Henry Flagler

FlaglerMemorial.jpg  The Flagler Memorial obelisk was erected in on a man-made island in 1920, when Miamians still remembered the accomplishments of Henry Flagler.  Source of image:  http://www.miamibeachfl.gov/newcity/depts/arce/art_public/rw_flagler_monument.asp

 

The Standard Oil "monopoly" is often lambasted as a sorry episode in our economic history.  And yet a strong case can be made that the Standard Oil wealth was created mainly by efficiently providing consumers with a commodity they valued.  In addition, mention is often made of the Rockefeller philanthropic activities.  Less known, is that others who became rich from Standard Oil, also engaged in productive entrepreneurship, and philanthropy, with their wealth.  One of these was Henry Flagler. 

 

In a region that prizes showy monuments to wealth, the lone monument to the man who made it all possible has languished in isolation for decades.

A soaring concrete obelisk dedicated to Henry Flagler, the oil tycoon who hastened South Florida's development by building a railroad all the way to Key West, it sits on a tiny man-made island in Biscayne Bay, reachable only by boat or, more typically, Jet Ski.  Almost everyone here has glimpsed the Flagler Memorial, but few know what it is called, why it exists or how battered it looks up close.

''I'm telling you, it's a beautiful work of art,'' said Paul Orofino, a board member of the Environmental Coalition of Miami Beach, a nonprofit group that occasionally tidies up Monument Island, the memorial's scruffy, overgrown home.  ''It's a tragedy that nobody pays attention to this thing.''

It is not the kind of South Florida tribute one might expect for Flagler, who extended his railroad from St. Augustine to West Palm Beach in 1894, Miami in 1896 and Key West -- a segment that lasted only 23 years until a hurricane demolished it -- in 1912.

Flagler was the state's original megadeveloper, after all, creating its tourism industry by turning swampy pioneer settlements into the world's grandest resorts.  He was also, perhaps, its first huckster, advertising the nascent Miami as ''the most pleasant place south of Bar Harbor to spend the summer.''

His over-the-top winter home in Palm Beach, awash in gold, is now a museum, but most of its visitors come from out of state, said John Blades, the museum's executive director.  Mr. Blades has tried to get a statue of Flagler erected in Palm Beach, which owes its sumptuous existence to the man, but has so far failed.

''Flagler,'' Mr. Blades said, ''is probably the most unappreciated titan of the Gilded Age.''

 

For the rest of the story of the impressive, but deteriorating, Flagler Memorial in Miami, see:

ABBY GOODNOUGH.  "South Florida Journal; Unappreciated, With Memorials to Match."  The New York Times (Fri., October 7, 2005):  A12.

(Note:  the hurricane destroyed the Key West link of the railroad in 1935.)

 

   Henry Flagler.  Source of image:  http://flaglermuseum.us/html/flagler_biography.html




October 13, 2006

Hernando de Soto Creates Buzz in Clinton Hallways

DeSotoClinton.jpg  Hernando de Soto and Bill Clinton at the second annual Clinton Global Initiative.  Source of photo:  online version of the WSJ article cited below.

 

. . . the buzz in the hallways centered on a topic that until recently most philanthropists all but ignored:  registering poor people's property so they could borrow against it to build businesses, pay taxes or for other purposes.  Many citizens of developing countries don't formally have title to their land, and many economists -- including Peruvian economist Hernando de Soto, another conference attendee -- see this as a key source of urban poverty.  According to Mr. de Soto's research, the value of unregistered land in developing countries totals over $9 trillion.  Mr. Clinton told the audience that these assets "cannot be converted into collateral for loans -- wealth locked-up and locked-down -- keeping people in grinding poverty instead of being an asset that can lift them up."  Up to 85% of urban land parcels in the developing world are unregistered, Mr. Clinton said, citing Mr. de Soto's research.

But standing in the way of widespread land-ownership records are insufficient legal frameworks, confusing procedures and corrupt property registries.  And establishing land ownership is all but impossible in communist and socialist countries, where property usually is owned by the state, said John Bryant, chief executive of Operation Hope, a nonprofit in Los Angeles that provides financial services to the poor.

 

For the full article, see: 

SALLY BEATTY. "GIVING BACK; Helping the Poor Register Land." Wall Street Journal (Fri., September 29, 2006): W2.

(Note:  ellipsis added.)




September 15, 2006

Added Evidence for Weidenbaum's 'Birth Dearth'

 

BirthDearthBK.gif Source of book image:  http://www.aei.org/books/bookID.497,filter.all/book_detail.asp

 

Ben Wattenberg had already been predicting a world population decline for years, when he published The Birth Dearth in 1987.  Back then, scepticism was widespread.  Governments and philanthropists spent billions promoting birth control to restrain population growth.  Many were still convinced of the wisdom of Isaac Ehrlich, darling of the environmentalist enemies of economic growth, who had predicted disaster in his Population Bomb.

(Note that the plausibility of many environmentalist disaster scenerios is based on the assumption of continuous population growth.) 

The current decline in birth rates is not a total puzzle.  Nobel-prize winner Gary Becker long-ago claimed that quality of children is what economists call a 'normal' good, which means that families invest more in quality as their incomes rise.  As families invest more in quality, they invest less in quantity.

Whatever the reasons, the evidence continues to accumulate that Wattenberg was right:

 

After a long decline, birthrates in European countries have reached a historic low, as potential parents increasingly opt for few or no children.  European women, better educated and integrated into the labor market than ever before, say there is no time for motherhood and that children are too expensive anyway.

The result is a continent of lopsided societies where the number of elderly increasingly exceeds the number of young -- a demographic pattern that is straining pension plans and depleting the work force in many countries.

 

For the full story, see:

ELISABETH ROSENTHAL.  "European Union's Plunging Birthrates Spread Eastward."  The New York Times   (Mon., September 4, 2006):  A3.

 

 EuropeanBirthratesGraph.gif  Source of graphic:  online version of the NYT article cited above.

 




September 6, 2006

Unintended Consequences of Sending Food: More on Why Africa is Poor

  Millet in bowl.  Source of photo:  online version of the NYT article cited below.

 

NIAMEY, Niger, Sept. 21 - The images coming out of this impoverished, West African nation have been unrelentingly grim:  hungry children with stick-thin arms and swollen bellies, mothers carrying babies hundreds of miles to look for food after a poor harvest and high prices put local staples out of reach.  A few months ago, those images prompted a torrent of food aid from Western donors.

But now, after a season of good rains, Niger's farmers are producing a bumper crop of millet, the national staple.  This should be a cause for rejoicing, yet in one of the twists that mark life in the world's poorest countries, the aid that was intended to save lives could ruin the harvest for many of Niger's farmers by driving down prices.

The newly harvested millet and the donated food will reach market stalls at the same time, and with prices depressed, poor farming families may be forced to sell crops normally set aside for their own use and use the money to pay off debts.  The effect would be a new cycle of hunger and poverty.

 

For the full story, see:

Burley, Natasha C.  "In Place Where the Hungry Are Fed, Farmers May Starve."  The New York Times  (Thurs., September 22, 2005):  A3.

 

NigerMap.jpg  Source of map:  online version of the NYT article cited above.



August 8, 2006

Entrepreneur Found Creative Way to Save Thousands of Babies

(p. 1)  The babies were lined up under heaters and they breathed filtered air.  Few of them weighed more than three pounds.  They shared the Boardwalk there on Coney Island with Violetta the Armless Legless Wonder, Princess WeeWee, Ajax the Sword-Swallower and all the rest.  From 1903 until the early 1940's, premature infants in incubators were part of the carnival.

It cost a quarter to see the babies, and people came again and again, to coo and to gasp and say look how small, look how small.  There were twins, even, George and Norma Johnson, born the day before Independence Day in 1937.  They had four and a half pounds between them, appearing in the world a month too soon because Dorothy Johnson stepped off a curb wrong and went into labor.

All those quarters bought a big house at Sea Gate for Dr. Martin A. Couney, the man who put the Coney Island babies on display.  He died broken and forgotten in 1950 at 80 years old.  The doctor was shunned as an unseemly showman in his time, even as he was credited with popularizing incubators and saving thousands of babies.  History did not know what to do; he was inspired and single-minded, distasteful and heroic, ultimately confounding.



. . .



(p. 31)  He displayed incubators developed by his mentors at the Berlin Exposition of 1896, and though they caught on in Europe, acceptance was slower in the United States.

Using babies from New York hospitals that lacked the facilities to care for them, Dr. Couney mounted a display at Luna Park, a Coney Island amusement park, in 1903, soon adding another at a second Coney Island park, Dreamland.



. . .



At least 8,000 babies passed through the incubators, and the doctor was credited with saving at least 6,500, according to news reports of the time.  The Johnson twins made it off the Boardwalk and grew up strong and tall. George Johnson found work, and a sense of freedom, driving trains up and down the coast for the Pennsylvania Railroad.  Norma Johnson married a man named Coe.  Between the twins there are nine children, 13 grandchildren and one great-grandchild.  George and Norma attended Dr. Couney's induction ceremony yesterday.  "My father didn't have any money, and this doctor says you can use our incubator for free, but you have to put them on display on Coney Island," Mr. Johnson said, sitting next to his sister on the porch at the Sheepshead Bay Yacht Club the other day.  "It was us and a lot of other people, too."

The twins will turn 68 the day before Independence Day, old enough to enjoy the seaside air on an idle weekday morning.

Down the Boardwalk, the beach is open.  Pretty girls and seagulls play their games.  For a few dollars, you can watch a baseball game, shoot paint pellets at a hungry young dude or become a tattooed lady.

The likes of Martin A. Couney nobody has seen in 60 years.

 

For the full story, see: 

MICHAEL BRICK. "And Next to the Bearded Lady, Premature Babies."  The New York Times, Section 1 (Sun., June 12, 2005):  1 & 31.

(Note: ellipses added.)



JohnsonTwins.jpg  The Johnson twins who were displayed, and whose lives were saved, by Dr. Couney.  Source of photo:  online version of NYT article cited above.

 




August 3, 2006

"The More Sweatshops the Better"

JACQUELINE NOVOGRATZ, a veteran of the Rockefeller Foundation and a former consultant to the World Bank, talks enthusiastically about the development of a company in Africa where some 2,000 women earn, on average, $1.80 a day producing antimalarial bed netting.  With the assistance of a $350,000 loan from an American investor, the business started making the nets nearly three years ago and is likely to add 1,000 more jobs within the next year.

''They're in the process of building a real company town there,'' Ms. Novogratz said.

 

Ms. Novogratz is not an outsourcing executive at a multinational company.  Rather, she is the chief executive of the Acumen Fund, a philanthropic start-up based in New York that uses donations to make equity investments and loans in both for-profit and nonprofit companies in impoverished countries.  One of the stars of her small portfolio is the bed-netting maker, A to Z Manufacturing, a family-owned company in Tanzania -- a country where 80 percent of the population makes less than $2 a day.

. . .

''To put it in the baldest possible terms, the more sweatshops the better,'' said William Easterly, professor of economics at New York University and author of ''The White Man's Burden:  Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good.''  Professor Easterly is not advocating the deliberate creation of workplaces with miserable conditions.  ''As you increase the number of factories demanding labor, wages will be driven up,'' he said, and eventually such factories will not be sweatshops.

Ms. Novogratz says it can be difficult to tell well-off, philanthropy-minded Westerners that what Africa really needs is more $2-a-day jobs.  But when they understand the alternatives, she said, such concerns tend to melt away.  Before they found work at the netting factory in Tanzania, for example, many of the women were street vendors or domestic workers and earned less than $1 a day.  A to Z's wages place the women in Tanzania's top quartile of earners, Ms. Novogratz said.

 

For the full commentary, see: 

DANIEL GROSS.  "ECONOMIC VIEW; Fighting Poverty With $2-a-Day Jobs."  The New York Times    Section 3, (Sunday, July 16, 2006):  4.




July 18, 2006

Entrepreneurial Archaeology

In the "Dig for a Day" program, participants pay $25.00 to spend three hours helping to excavate a Tel Maresha cave.  Source of the image:  the online version of the NYT article cited below. 

 

While most archaeological excavations require hundreds of thousands of dollars, Mr. Alpert said, this one is unusual because it is self-supporting.  “We have the people working and paying for the work, which has proven itself archaeologically and from a tourism standpoint,” he said.  “That’s why we are able to dig for so long.”  The Maresha excavation is licensed by the Israeli Antiquities Authority, and reports are submitted each year to evaluate its scientific contribution.

“This is the ultimate chutzpah,” said Ian Stern, another of the company’s three owners, who has a doctorate in archaeology and emigrated to Israel from New Jersey (the third owner is Asher Afriat, a historian and native Israeli).  “We are providing the public with an active educational experience, while they do the work.  Their money underwrites the excavation and is used for all the follow-up of putting the pottery together, registering and photographing the finds, and writing the scientific reports.” 

 

For the full story, see:

CAREN OSTEN GERSZBERG.  "Family Journeys; Israel; Amateur Archaeologists Get the Dirt on the Past."  The New York Times, Section 5 (Sun., July 16, 2006):   11.

 

  Amateur archaeologists excavate a cave.  Source of the image:  the online version of the NYT article cited above.

 




July 16, 2006

Entrepreneurial Philanthropy

  Some major donors who want to make a difference during their lives.  Source of graphic:  online version of WSJ article cited below.

 

(p. A1)  "If we give it away now, we're going to do a good job with it, instead of leaving it to future generations of foundation folks," says Herbert M. Sandler, 74 years old.  He and his wife, Marion, intend to donate the $2 billion they expect from the sale of the California savings and loan Golden West Financial Corp. before "we shuffle off this mortal coil."

The Sandlers' plan, like Mr. Buffett's $30 billion gift to the Gates foundation announced last month, exemplifies the changing pattern of U.S. philanthropy -- and the (p. A8) Gates organization's increasing influence over it.  The charitable titans of today are unlike many of the old-school business bluebloods who sought to immortalize their names by setting up foundations that parceled out small gifts forever.  Instead, some of America's wealthiest moguls-turned-philanthropists -- Eli Broad, Charles Bronfman, Lawrence Ellison, Michael Milken and Sanford Weill, among others -- favor spending money faster, while retaining a high degree of control and demanding more accountability from the programs they fund.

. . .

By contrast, some of today's tycoons increasingly limit the time frame, leaving tomorrow's magnates to handle tomorrow's problems.  Mr. Bronfman, an heir to the Canadian liquor fortune, says he plans to exhaust the money in his $120 million foundation by 2020.  He is spending at a $12 million to $14 million a year clip.  "Why should I saddle the next generation with something I'm passionate about?" he says.  "Let them have their own passions and do their own things."  Mr. Bronfman, 75, believes in narrowly targeted goals -- in his case, they include helping pay for young Jews to visit Israel.  So far, his organization has had a hand in sending 112,000 people on such trips.

Mr. Milken, a financier who served two years in jail for securities fraud in the 1990s, funds medical research and K-12 education; he founded the Prostate Cancer Foundation in 1993 after being diagnosed with the disease himself.  He said the six foundations he and his brother Lowell have established  -- which have funds of about $350 million -- spend an average of 15% of their assets each year.  Three of the six have attracted a total of $300 million in gifts from outside donors who, like Mr. Buffett, preferred supporting existing ventures to starting their own.

Mr. Milken said he negotiates with medical centers to make sure gifts go to research and clinical trials rather than overhead.  In return,  his foundations waive patent rights to any discoveries made as a result of their funding.  "You can't just write checks," he said.  "You have to be actively involved.  You have to introduce new management, marketing, other types of activities to empower medical research."

Mr. Sandler and his wife, Marion, have no patience for big foundations that spend 5% annually.  "They are never going to give it [all] away," he says.  Many foundations, he adds, "become bureaucratic."

He and his wife built their Oakland S&L, Golden West, from a small thrift into the nation's second largest savings and loan by emphasizing lean operations and a laser-like focus on home lending.  The couple, who are co-chief executives, recently agreed to sell the company to Wachovia Corp.

The Sandlers have already given heavily to start the Center for Basic Research in Parasitic Diseases at University of California at San Franciso's medical school.  The center focuses on Third World diseases neglected by major drug companies.  Along with malaria, the family's philanthropy has focused on finding treatment for the millions in South America afflicted by Chagas disease, a deadly insect-born ailment.  A donor to the Democratic Party, Mr. Sandler has also backed progressive causes, including Human Rights Watch, the American Civil Liberties Union, and Association of Community Organizations for Reform Now, Acorn.

Mr. Sandler patterns his giving after the Gates foundation.  He admires the Gates foundation's program in Zambia, fighting malaria, and hopes to work together to replicate its methods in other countries.  Like Mr. Gates, Mr. Sandler is looking for "gaps" in giving that he can fill, such as basic scientific research shunned by most big drug companies.  Another interest:  fighting asthma,  which disproportionately afflicts the poor in inner-city America.

Mr. Sandler says he's not afraid to take risks with his money, the same way he did in business.  And he doesn't want a foundation that, after his death, would spend frugally just to stay in business, or support causes far from his heart.  "One prays that when we are going down the tubes, we will be giving that last million dollars," he says.

 

For the full story, see: 

JOHN HECHINGER and DANIEL GOLDEN. "The Great Giveaway; Like Warren Buffett, a new wave of philanthropists are rushing to spend their money before they die." The Wall Street Journal (Sat., July 8, 2006): A1 & A8.

 

  Source of graphic:  online version of the WSJ article cited above.




July 12, 2006

Buffett and Gates Should Strengthen Foundations of Free-Market

If Warren Buffett is as serious about doing good with his wealth, as he was in becoming wealthy, he would ponder the Wall Street Journal's sage editorial page advice:

We can't think of two people less in need of our two cents than Messrs. Buffett and Gates.  But since giving free advice is our business, we'd suggest that they put at least a smidgen of their money back into strengthening the foundations of the free-market system that has allowed them to become so fabulously rich.  There's something to be said for reinvesting in the moral capital of a free society and trying to sustain and export free-enterprise policies.

Capitalism has done very well not just by Mr. Buffett but also by the world's poor, as several hundred million Chinese and Indians might attest.  African nations in particular need property rights and a rule of law as badly as they need vaccines.  On that score we were encouraged by a report this week that the Gateses thanked Mr. Buffett for his gift by presenting him with a book from their personal library:  Adam Smith's "The Wealth of Nations."

 

For the full editorial, see:

"Mr. Buffett's Gift."  The Wall Street Journal  (Weds., June 28, 2006):  A14.




June 27, 2006

Free Market Wealth Funds Archaeology

ReinhartLeonBanker.jpg SaturnoBillArcheologist.jpg Upper left is retired banker Leon Reinhart.  Lower right is Bill Saturno, who's archeology dig is being funded by Reinhart.  Source of photos:  online version of WSJ article cited below.

 

(p. P1)  NORTHERN GUATEMALA -- Aboard a small helicopter crossing a seemingly endless rainforest, Leon Reinhart is describing our destination, the San Bartolo archaeological site.  "We are uncovering the oldest-known Maya murals and the oldest writing anyone has ever found in the Americas," he says.

Mr. Reinhart isn't an archaeologist.  He isn't an academic.  He is a retired banker.

In providing funding for the excavation at San Bartolo, Mr. Reinhart is one of a growing number of bankers, entrepreneurs and philanthropists who are playing a crucial role in archaeology.  They are providing millions of dollars to study and preserve the relics of ancient civilizations from Latin America to Italy and Turkey, giving life to projects that would otherwise die.

. . .

(p. P4)  Among the other members of the new generation of benefactors is Charles Williams II, himself an archaeologist.  He directed the enormous excavation project in Corinth and has supported projects in Sicily and at Gordia in Turkey, where Alexander cut the Gordian knot.  Through his foundation, David Packard, son of the Hewlett-Packard founder, financed the work at Zeugma in southwest Turkey that rescued a large number of mosaics just before they were submerged by a new dam.  And a foundation created by Artemis Joukowsky, the former chancellor of Brown University, is funding conservation work at the Great Temple of Petra in Jordan.

Mr. Reinhart learned about San Bartolo thanks to the efforts of an investment banker, Lewis S. Ranieri, who pioneered the mortgage-securities market at Salomon Brothers in the 1980s and now is chairman of CA, the information-technology concern formerly known as Computer Associates.  Mr. Ranieri created the Foundation for the Advancement of Mesoamerican Studies, or Famsi, devoted to archaeology.

On Famsi's Web site, Mr. Reinhart read an article about San Bartolo written by Bill Saturno, the young archaeologist who literally stumbled across the ruin in 2001.  Entering a tunnel cut by looters, he immediately understood that the paintings were much older than previously discovered Mayan murals with such complicated iconography.

Fascinated by Mr. Saturno's article, Mr. Reinhart sent him an email.  Because the project had received grants from Famsi and the National Geographic Society, Mr. Reinhart assumed it was fully funded; he soon learned that wasn't the case.  Mr. Saturno was borrowing on his personal credit card to keep the work going. Mr. Reinhart agreed to cover most of the needed funds -- a sum that has now crossed the $1 million mark.  (Among this year's expenses: $65,000 for stabilizing the murals and $18,700 in food.)

 

For the full story, see:

G. BRUCE KNECHT.  "Culture; The Rich Dig Deep: Archaeology's New Players; As traditional funds for excavations fall short, wealthy benefactors are bolstering the hunt for antiquities."  The Wall Street Journal  (Sat., May 13, 2006):  P1 & P4.

 

(Note: ellipses added.)





June 26, 2006

Co-Founder of Home Depot, Funds Ambitious Georgia Aquarium

GeorgiaAquariumTube.jpg GeorgiaAquariumRays.jpg Scenes from the Georgia Aquarium.  Source of photos:  online version of the NYT article cited below.

  

(p. B1)  One of its sensations, . . ., is simply its ambition — look what we have gathered and constructed!  The Georgia Aquarium is billed as the world's largest, and one can't escape statistics of size and number: over 100,000 fish are displayed in five galleries and 60 habitats in the more than 500,000 square foot building; there is a 6.2 million gallon pool in which 1.8 million pounds of salt and minerals have been dissolved since last October and in which two whale sharks — the world's largest fish — swim, displaying themselves to visitors through acrylic walls that are two feet thick.  A stainless steel "commissary" behind the scenes holds 20,000 pounds of frozen food at minus 20 degrees Fahrenheit.

This aquarium is also somewhat unusual in its origins: it is not created by a municipality, or a society of subscribers like those that founded the earliest public zoos.  It is almost completely the creation of a single man, Bernard Marcus, co-founder of the Home Depot, as a "gift" to the people of the city in which his company began.  He and his wife, Billi, donated $250 million of the $290 million cost.

. . .

(p. B7) The aquarium has been an overwhelming popular success. Even with admission prices of $22.75 for adults ($17 for children), demand has been so great that the building is often sold out.  Tickets come with timed entrances, and 290,000 annual passes, costing almost $60 for adults, were purchased before their sale was stopped in January.  A million visitors have come since the opening.

 

For the full story, see:

EDWARD ROTHSTEIN.  "Aquarium Review | The Georgia Aquarium A Hundred Thousand Fish, Behind a Pane 2 Feet Thick."  The New York Times (Thurs., March 23, 2006):  B1 & B7.

(Note: ellipses added.)





June 2, 2006

Free Market Philanthropy

KochClharles.gif Charles Koch.  Source of image:  online version of WSJ article cited below.

 

Mr. Koch's latest crusade to spread the ideas of liberty has been his sponsorship of a twice-yearly conference that gathers together many of the most successful American entrepreneurs, from T. Boone Pickens to former Circuit City CEO Rick Sharp.  The objective is to encourage these captains of industry to help fund free-market groups devoted to protecting the fragile infrastructure of liberty.  That task seems especially critical given that so many of the global superrich, like George Soros and Warren Buffett, finance institutions that undermine the very system of capitalism that made their success possible.  Isn't this just the usual rich liberal guilt, I ask.  "No," he says, "I think they simply haven't been sufficiently exposed to the ideas of liberty."

 

For the full commentary, see: 

STEPHEN MOORE.  "THE WEEKEND INTERVIEW with Charles Koch; Private Enterprise."  The Wall Street Journal   (Sat.,  May 6, 2006):  A8.




February 21, 2006

NGOs Throw Money at Poverty, and Then Declare Success

Mark Pendergrast, in his opus on coffee, tells us about Bill Fishbein, a coffee retailer from Rhode Island, who wanted to help small, poor, coffee farmers in Guatemala:

 

(p. 419) . . . , Fishbein wanted to do something to help.  At first, he worked with established nongovernment organizations (NGOs) but soon became disillusioned. Too often, the NGOs simply threw money at communities, then declared projects successful even without long-term improvements.  "It amounts to a network to move money around, to pull the heartstrings of donors," he complains.

 

Source:

Pendergrast, Mark. Uncommon Grounds: The History of Coffee and How It Transformed Our World. New York: Basic Books, 2000.

 




February 4, 2006

"If you're giving while you're living, you're knowing where it's going"

The American Council of Trustees and Alumni has published a short book, "The Intelligent Donor's Guide to College Giving," that lays out some basic ground rules for donating to higher education. These include placing clear restrictions on gifts, working with a particular professor (and, if possible, bypassing the development office) and avoiding endowments in perpetuity. As Sir John Templeton wisely said: "If you're giving while you're living, you're knowing where it's going."

Obviously, this sort of due diligence does require time and effort on the part of the donor, But if even a few more philanthropists were watching where their funds ended up, college officials would surely monitor their programs more carefully. There have been a few celebrated cases in recent years in which donors have asked for their funds to be returned after discovering that they were misused, and these cases have sent a shudder through the academic community.


For the full commentary, see:

JAMES PIERESON. "Only Encouraging Them." The Wall Street Journal (Fri., November 18, 2005): W13.




January 24, 2006

"Sachs Aid Model Has Financed Tyranny": More on Why Aftrica is Poor


Famine in Niger is no surprise -- desert wastes, locusts and decades of Marxist rule keep it second-to-last on the world poverty list. Famine in the fertile climes of southern and eastern Africa, however, seems more shocking. But there's a common thread: centralized state rule -- incompetent at best -- marked by corruption and sustained by aid. These are the shackles that keep Africans poor: It would be nice if EU and U.S. trade barriers were removed at trade talks in Hong Kong this week, but exports are a distant notion to the 75% of Africans who live off the land.

Niger is little-blessed by nature, but it has also spent its postcolonial era trying various forms of failed government, with Marxism reigning longest. A quarter of the population -- 2.5 million people -- faces starvation. Yet more temperate southern and eastern African countries are on the edge of famine, too, with 10 million affected in southern Africa alone. Again, we find the same economic profile: Zimbabwe, Malawi, Zambia, Mozambique, Swaziland and Lesotho all lack economic freedom and property rights; all have economies mismanaged by the state; all depend on aid. All these countries have a history of utopian schemes that failed to produce everlasting manna. State farms, marketing boards, land redistribution, price controls and huge regional tariffs left few incentives or opportunities for subsistence farmers to expand. Despite torrents of aid, these cruel social experiments could not turn sands verdant or prevent the granaries of southern and eastern Africa from rotting.

Ethiopia's Prime Minister Meles Zenawi believes that allowing Ethiopians to own their land would make them sell out to multinationals. He seems to have overlooked a basic market principle: It demands a willing seller and a willing buyer at an agreed price. If that price is worth selling for, the farmer might have some money to reinvest elsewhere; if that price is worth buying for, the purchaser must have plans to make the land profitable. If there is no sale, owners might have an incentive to invest in their own land and future, having, at last, the collateral of the land on which to get a loan. After decades of socialism, Ethiopia's agricultural sector -- the mainstay of the economy -- is less productive per capita than 20 years ago when Band Aid tried to defeat famine. Although 60% of the country is arable, only 10% has been cultivated. Ethiopia is entirely dependent on donations; but instead of grasping reality, Mr. Zenawi, a member of Tony Blair's "Commission for Africa," is forcing resettlement on 2.2 million people.

In Zimbabwe, the murderous kleptocrats of Robert Mugabe's regime deny that land seizure has pushed their rich and fertile country into famine: Some three million people face starvation today.

. . .

African leaders must be pushed to reduce economic intervention, free financial markets, remove bureaucratic obstacles to setting up businesses, establish property rights and enforce contract law. These are the forces that release entrepreneurial energy. But the ruling cliques will do none of these unless forced to do so as a condition of aid. The Sachs aid model has financed tyranny and corruption for 40 years, leaving Africans destitute. The world trade meeting in Hong Kong will hear cries for "Trade Justice" for Africa, representing more protectionism and more state-run, aid-fueled schemes. What we really need is economic freedom and the rule of law at home: We are perfectly capable of improving our own lot if only allowed to do so.


For the full commentary, see:

FRANKLIN CUDJOE. "The Terms of Trade: Africa Needs Freer Markets -- and Fewer Tyrants." The Wall Street Journal (Weds., December 14, 2005): A20.

(Note: ellipses added.)

(Note: The WSJ identifies Mr. Cudjoe as "director of Imani, a policy think tank in Ghana.")




January 15, 2006

Rockefeller's Money Conserved Land

The limestone buttes, granite steppes and near-permanent icecap that make up the urban expanse known as Rockefeller Center constitute the best-known landscape connected to the famous family's name. But those 12 acres in Midtown Manhattan are far from the only vista that owes its existence to Rockefeller philanthropy.

Over the last century, five generations of Rockefellers have used the family wealth to reshape the American horizon, creating a magnificent panorama of open spaces and more than 20 national parks from the rocky coast of Maine to the icecapped mountains of Wyoming.

These natural oases are not always linked to the Rockefeller name, but tonight they will be. As part of the yearlong celebration of its 100th anniversary, the National Audubon Society, one of the nation's largest and oldest conservation organizations, is honoring the family for a record of conservation that matches the society's century-long existence.

''Cumulatively, no other family in America has made the contribution to conservation that the Rockefeller family has made,'' said John Flicker, the society's president.

The towering Palisades that guard the west bank of the Hudson River were preserved with Rockefeller money. So was Colonial Williamsburg. The family created exquisite miniatures like Greenacre Park, tucked between two buildings on East 51st Street in Manhattan, and it donated 35,000 acres to help form Grand Teton National Park in Wyoming. Part of the family's Pocantico estate in Westchester County has become a beloved forest preserve, and an educational center known as the Stone Barns.

The Cloisters, Acadia National Park, Forest Hill Park, Greenpeace, the Nature Conservancy -- the list of the family's efforts to conserve and protect the environment goes on and on.

. . .

Many of the family's most spectacular conservation efforts began with a family camping trip. ''As Father traveled, if he saw things that needed to be done, he took steps and did something about them,'' David Rockefeller said.

He recalls accompanying his father to California in the 1920's to see the giant redwood trees. When the elder Rockefeller found out that the trees were in danger of being clear-cut by a timber company, he helped buy 9,400 acres that he then donated to the state. That grove of ancient redwoods, including one that is more than 2,000 years old, is considered the largest old-growth redwood forest in the world.

. . .

More than 30 members of the Rockefeller family -- ranging in age from 17 to 90 -- will be honored by the Audubon Society at tonight's ceremony, each one involved with the environment. Most times, though, the support is low key and the family tries to shun the spotlight.

''The important part for us is not having our name on it,'' said Gail O'Neill Caulkins, 52, a fifth-generation Rockefeller who is president of the Greenacre Foundation, which assists in the maintenance of city parks and supports dozens of community gardens, ''it's seeing that something gets done.''


For the full story, see:

ANTHONY DEPALMA. "Praising Rockefellers for Land They Saved." The New York Times (Tues., November 15, 2005): A25.

(The online version has a somewhat different title.)




December 14, 2005

Good Eating for Experts: More on Why Africa is Poor

Michael Wines, writing from Malawi in Africa:

It makes one wonder why, with so many experts here to do good, the rest of the country not only isn't thriving, but is slipping backward.

. . .

There is even a hilarious poem demonizing "the development set":

We bring in consultants whose circumlocution
Raises difficulties for every solution
Thus guaranteeing continued good eating
By showing the need for another meeting.

MICHAEL WINES. "Letter From Malawi: Amid Squalor, an Aid Army Marches to No Drum at All." The New York Times (Weds., December 7, 2005): A4.




December 11, 2005

Industrial Giants Succeeded in Philanthropy in the Same Way They Succeeded in Business

(p. 3) . . . the Gateses were not the first to see that money could sometimes move mountains in public health. They are following in the footsteps of the industrial giants of the late-19th century, said Dr. Howard Markel, director of the University of Michigan's Center for the History of Medicine.

These men also brought their fortunes to bear on social problems, and believed that they could succeed in philanthropy in much the way they had succeeded in business.

The donors of the robber-baron years started their philanthropy while still alive - a novel idea then. Andrew Carnegie, for example, gave away hundreds of millions of dollars to build libraries long before his death.

The largest bequest in American history prior to Carnegie's time was from Johns Hopkins, a Baltimore merchant, who left $7 million to found the eponymous university and hospital in 1873 - after he died.

But the closest parallel to the Gates approach to philanthropy is that of John D. Rockefeller, said Dr. Markel and Robert E. Kohler, a medical historian from the University of Pennsylvania.

Rockefeller built Standard Oil. Like Mr. Gates, he was the richest man of his time, and like him he was reviled as a greedy monopolist.

Rockefeller, like Mr. Gates, hired a professional to run his charities. And he, like Mr. Gates, used his money systematically to identify and attack important public health problems.

Rockefeller hired Frederick T. Gates, a former minister (and no relation to the Microsoft co-founder) as his philanthropic executive. Mr. Gates read an 1892 medical textbook that convinced him that diseases had causes, like germs and worms, that could be fought by science - not a universally accepted idea at the time.

The most famous health campaign he started with Rockefeller money was the drive, begun in 1907, to rid the rural American South of hookworm. Called "the germ of laziness" because it caused anemia and made victims lethargic and dull-witted, hookworm afflicted up to a third of Southerners.

The foundation set up clinics that administered purgatives and - because the worm is shed in feces and picked up by bare feet - taught people to dig deep privies and wear shoes. More Rockefeller money underwrote some of the 20th century's great public health drives, many using research done at Rockefeller University. Clinics were built in 50 other countries to eliminate hookworm worldwide. The effort failed because the worm can survive in soil and reinfect people; but the problem diminished, especially in parts of Asia.

In 1915, the foundation declared war on yellow fever; by 1932, scientists had realized that monkeys were also a reservoir for the virus, making eradication impossible, but by then Rockefeller scientists had invented the vaccine still used today.

Patty Stonesifer, chief executive of the Gates foundation, said she and William H. Gates Sr., the father of the software pioneer and co-chair of the foundation, consider the Rockefeller campaigns especially instructive. "We stood on their shoulders," she said.

. . .

As Ms. Stonesifer said admiringly of the Rockefeller campaign against hookworm: "A lot of people would say, 'you've got to reduce poverty to get rid of hookworm.' But the Rockefellers said, 'You don't need a 20-year intervention. You can use shoes.' "



For the full article, see:

DONALD G. McNEIL Jr. "The Rich, Sometimes, Are the Best Medicine." The New York Times, Section 4 (Sun., December 11, 2005): 3.

(Note: ellipses added.)






December 4, 2005

The Right Way to Give Away Money

Why is the foundation closing, 52 years after its founding? John M. Olin, who died in 1982, feared that if it were to exist in perpetuity, it would eventually be captured by hostile forces; the example of Henry Ford II, who quit the board of the Ford Foundation in frustration over its liberal agenda, had especially impressed him.

. . .

The Olin model offers many lessons for foundations that would seek to mimic its success, some of them simply mechanical: restrict the number of trustees to avoid the creation of factions (there will be only six at tomorrow's Olin meeting); hire a staff of smart generalists with diverse backgrounds from outside the foundation world; and make sure that everybody sticks to a set of clearly defined guiding principles.

Other lessons are more strategic in nature. The Olin Foundation's leaders understood that success is often unplanned, and so they focused on creating the conditions for success rather than thrusting a set of detailed agendas and goals upon grant recipients. Nobody, for example, expected that Allan Bloom's "Closing of the American Mind" would become a runaway best seller whose meaning is still debated two decades after it was published; the John M. Olin Foundation merely decided in the early 1980's that Mr. Bloom, a political theorist at the University of Chicago, was a genuine talent who deserved financial backing.

. . .

Finally, the decision to spend itself out of existence may seem bizarre, like an act of philanthropic suicide, yet it magnified the Olin Foundation's influence. Although it never had much more than $100 million in assets, its refusal to hoard its endowment allowed it to spend at the rate of a much larger foundation.

JOHN J. MILLER. "The Very Foundation of Conservatism." The New York Times (Mon., November 28, 2005): A23.




HP3D5006CropSmall.jpg


















The StatCounter number above reports the number of "page loads" since the counter was installed late on 2/26/08. Page loads are defined on the site as "The number of times your page has been visited."


View My Stats