September 2006 – Page 3 – artdiamondblog.com

Against Malaria “DDT Works in Weeks or Months”

Recently I highlighted hedge fund philanthropist Lance Laifer’s efforts to fight malaria in Africa. Here is a letter-to-the-editor of the Wall Street Journal, in which a distinguished physician strongly endorses Laifer’s advocacy of the use of DDT against malaria:

Impoverished Africans should be grateful to philanthropist Lance Laifer for his effective outreach to reduce the tragic, needless toll of malaria in sub-Saharan Africa ("Malaria’s Toll" by Jason Riley, editorial page, Aug. 21). For his attempt to focus complacent Americans, Mr. Riley also deserves thanks — such clarity is obviously desperately needed, as even with all the publicity accorded to the ravages of malaria, someone as educated and intelligent as Mr. Laifer remained blithely unaware of this scourge until last year.

Both Mr. Laifer and Mr. Riley note the lack of attention given by official organizations to the more widespread use of DDT as a malaria control method, despite its long and honorable history for this use. Even with his money and other resources, Mr. Laifer has been unable to persuade Africans to utilize DDT. African exporters legitimately fear economic repercussions from wealthy Western trading partners, who continue to demonize this lifesaving insecticide despite the lack of evidence of DDT’s adverse health effects in humans.

And where is the Gates Foundation’s massive resources in this ongoing struggle to save a half-billion from sickness and millions from death? This organization asserts its devotion to reducing the toll of TB, AIDS and malaria — yet none of its funding is aimed toward the cheapest and most effective way to deal with malaria: increased indoor spraying with DDT. Maybe Warren Buffett can persuade his friends Bill and Melinda to target their contributions where they will do the most good, in the shortest time, for the most people. Malaria vaccines are many years away — DDT works in weeks or months.

Gilbert Ross M.D.
Executive and Medical Director
American Council on Science and Health
New York

For the source of the letter, and for other letters, see:

"Malaria Kills Millions — We Have the Cure." Wall Street Journal (Mon., August 28, 2006): A13.

Feds Slowed DSL by Forcing “Open Access”

Here is the background. From the earliest days of broadband service, controversy raged over whether the physical networks used to transport data should be allowed to control content. Thus open access rules, which forced telcos to allow broadband company rivals to use their networks at regulated rates. Cable TV systems, meanwhile, also provided Internet connections via cable modems, but without any obligation to share their facilities. If an independent Internet Service Provider (ISP) like Covad or Earthlink wanted to connect customers via Comcast’s lines, they could negotiate a deal but had no legal club — as they did under open access.

There was a vigorous campaign to mandate open access on cable similar to DSL; regulators under both Presidents Clinton and Bush refused. The inevitable litigation ensued; but the Supreme Court set the matter to rest in FCC v. Brand X (2005). Its 6-3 decision upheld the FCC’s classification of cable broadband as an "information service," placing it beyond the scope of common carrier regulation.

For a number of years, therefore, DSL service was subject to open access while cable was not. Unsurprisingly, DSL providers were blown away early in the race for market share. By the end of 2002, cable-modem subscribers numbered 11 million and DSL just 6.1 million, according to Leichtman Research.

Then DSL began its deregulatory trek. The first critical reform was a surprise FCC decision in February 2003 to end "line sharing" rules. This dramatically raised the prices which ISPs would have to pay to use phone company facilities to provide retail DSL service, dealing a severe blow to companies like Covad. Echoing conventional wisdom, the New York Times news story forecast a consumer defeat: "High-Speed Service May Cost More."

It hasn’t. Average DSL rates, according to Kagan Research, dropped from $39.51 per month in 2002 to $34.72 in 2003. Telcos also expanded the scope, capacity and quality of advanced networks, even improving its endemic customer relations problems.

Consumers responded. DSL, holding just 35% market share in 2002, pulled even with cable among new subscribers in 2004. Leichtman Research reports that "DSL providers have added more broadband subscribers than cable providers in each of the last six quarters," and that overall, "the first quarter of 2006 was the best ever for both DSL and cable broadband providers." Unleashed from open access, DSL is attracting customers like never before — and the overall growth of broadband subscribers (DSL and cable) is notably higher.

For the full commentary, see:

THOMAS W. HAZLETT. "RULE OF LAW; Broadbandits." Wall Street Journal (Sat., August 12, 2006): A9.

Vinod Gupta: the Democrat’s Ken Lay?

Much has been made of the good will between the Bushes and the late Enron CEO Ken Lay. But not all of those who fall short of sainthood are friends of Republicans. During the Clinton administration, Vinod Gupta slept at the White House. He is a major donor to Democrats, and has been a delegate to the Democratic National Convention. Yet Gretchen Morgenson of the New York Times suggests that Gupta may not be an exemplar of sound management practices:

(p. 1) ANYONE who says that the Midwest is dull and monochromatic has obviously never been to Omaha. The city of Warren E. Buffett, the investing great who has generated huge gains for his shareholders over the years, is also home to Vinod Gupta, the colorful chief executive of infoUSA, who has destroyed enormous value for outside shareholders in recent years. Now that’s diversity.

Unfortunately for the shareholders of infoUSA, a database marketing concern, much of its story is a throwback to the pre-Enron days of cozy boards and entitled executives. Mr. Gupta, who founded infoUSA in 1972 and owns 38 percent of its shares, doesn’t seem to recognize that he is running a public company and needs to look out for his non-Gupta shareholders. His board has done little to help him see the light.

InfoUSA shares hit a 52-week low Friday, closing at $7.98. They are down 27 percent for the period.

Mr. Gupta is, shall we say, a piece of work. He often prevents large shareholders from asking questions on conference calls. He has received compensation that was not earned under the terms of the company’s executive compensation program, according to a lawsuit that Cardinal Value Equity Partners, infoUSA’s largest outside holder, filed against the company. And, the suit alleges, his board has given him free rein to dispense stock options to whomever he likes.

Related-party transactions are also routine at infoUSA. The Cardinal lawsuit contends that infoUSA paid a company owned by Mr. Gupta about $608,000 in 2003 to buy his interest in a skybox at the University of Nebraska’s Memorial Stadium. The university is Mr. Gupta’s alma mater and home of the Cornhuskers football team. In June 2005, the suit says, infoUSA paid $2.2 million for a long-term lease of his yacht. The yacht, named American Princess, is 80 feet long and has an all-female crew, according to a report in The Triton, a monthly publication for boat captains and crews.

Leases on an H2 Hummer, a gold Honda Odys-(p. 8)sey, a Glacier Bay Catamaran, a Mini Cooper, a Lexus 330, a Mercedes SL500 — all used by the Gupta clan — as well as rent on a Gupta family condominium on Maui have also been financed by infoUSA shareholders, the suit said.

Shareholders also paid a company owned by Mr. Gupta’s wife $64,200 for consulting services in 2003 and 2004. Shareholders have also covered the Gupta family’s personal use of a corporate jet — leased by infoUSA from a company owned by the family — to have fun in the sun in Hawaii and the Bahamas. Mr. Gupta apparently wasn’t in a mood to return the favor: during a four-year period ending in 2004, infoUSA paid $13.5 million to Mr. Gupta’s private company for use of the aircraft.

What to make of all of this? The Cardinal lawsuit contends that the carnivalesque spending amounts to unregulated perquisites and evidence of a somnambulant board. Sleepy, perhaps, but always on the move. Some 15 directors have spun through infoUSA’s boardroom door over the last decade; five of them stayed less than a year.

For the full story, see:

Gretchen Morgenson. "That Other Guy From Omaha." The New York Times, Section 3 (Sun., August 27, 2006): 1 & 8.

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

Needed to Save New Orleans: Less Local Government Corruption and More Local Capitalism

Source of graphic: online version of the WSJ editorial cited below.

New Orleans’ plight is not the result of federal underspending. Uncle Sam has spent some five times more on Katrina relief than any other natural disaster in the past 50 years. Both parties in Congress and the White House opted for the status quo by relying on federal bureaucracies to oversee the rebuilding effort. If Uncle Sam were deliberately trying to waste these funds, it is hard to imagine a better way than to funnel the money through the Department of Housing and Urban Development, the Small Business Administration and the Federal Emergency Management Agency. Both HUD and the SBA have been on the chopping block back to the early Reagan years.

The post-Katrina spend-fest in Louisiana will be remembered as one of the greatest taxpayer wastes in U.S. history. First came the FEMA $2,000 debit-cards fiasco intended to pay for necessities that were used for things like flat-panel TVs and tattoos. Then came the purchase of thousands of mobile homes that cost as much as $400,000 per family housed; the $200 million for renting the Carnival Cruise Ship millions more in payments that went for season football tickets, luxury vacation resorts, even divorce lawyers. Federal flood insurance policies surely will encourage many to rebuild in the same flood plains and at the same height as before.

. . .

After the hurricane, newspapers around the world showed photos of New Orleans under headlines that shouted: "America’s shame." In truth, New Orleans was America’s shame long before Katrina. In large part the residents of the Big Easy were victims of the predatory behavior of their own politicians. Louisiana already ranked among the bottom five of all the states in crime, poverty, health care and school performance; the murder rate in New Orleans today is 10 times the national average.

For all the finger-pointing this week, Congress hasn’t spent much more than a dime to clear away the debris of corruption, patronage, welfare dependency, high taxes and racial division of decimated neighborhoods. What is still lacking in the life of New Orleans is the vital architecture of local capitalism.

For the full editorial, see:

"The Tragedy of New Orleans." The Wall Street Journal (Tues., August 29, 2006): A14.

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.

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

Chilean Socialist Praises American Melting Pot

Michelle Bachelet. Souce of photo: online version of the NYT article cited below.

SANTIAGO, Chile, June 7 — Michelle Bachelet has lived in the United States twice, first as a child and then as a single mother studying military affairs at the Inter-American Defense Board in Washington. On Thursday, she will return to the capital, but this time on her first official visit as president of Chile.

Elected with a comfortable majority in January, Ms. Bachelet, 54, is her country’s first female president, a pediatrician and, like her predecessor Ricardo Lagos, a Socialist. . . .

. . .

Ms. Bachelet also plans to visit the middle school she attended while living in Bethesda, Md., in 1962 and 1963, when her father was a military attaché at the Chilean Embassy in Washington. That was the first time she had been outside Chile, and the exposure to American society helped mold her intellectually, she said.

"It was a lovely experience, because I found a society with a democratic history, a rich diversity of thought, and which offered opportunities to its citizens," she said. "The idea of the melting pot was the biggest novelty to me, and I would say that all of that allowed me to acquire a political and cultural foundation that has been quite positive to my political performance."

LARRY ROHTER. "Visit to U.S. Not a First for Chile’s First Female President." The New York Times (Thurs., June 8, 2006): A3.

Chinese Learn “a Way of Life” from U.S. TV Shows

Shanghai friends watch downloaded, subtitled, episode of "Friends." Source of photo: online version of the NYT article cited below.

SHANGHAI, Aug. 8 — For the past year and a half, said Ding Chengtai, a recent university graduate, friends have wondered why he seems to have disappeared.

Mr. Ding, 23, an Internet technology expert for a large Chinese bank, chuckled at the thought. He has kept himself in virtual seclusion during his off hours, consumed with American television programs like “Lost,” “C.S.I.” and “Close to Home.”

He is no ordinary fan, though; none of the shows he watches can be seen on Chinese television. Instead, he spends night after night creating Chinese subtitles for American sitcoms and dramas for a mushrooming audience of Chinese viewers who download them from the Internet free through services like BitTorrent.

. . .

To a person, the adapters say they are willing to devote long hours to this effort out of a love for American popular culture. Many, including Mr. Ding, say they learned English by obsessively watching American movies and television programs.

Others say they pick up useful knowledge about everything from changing fashion and mores to medical science.

“It provides cultural background relating to every aspect of our lives: politics, history and human culture,” Mr. Ding said. “These are the things that make American TV special. When I first started watching ‘Friends,’ I found the show was full of information about American history and showed how America had rapidly developed. It’s more interesting than textbooks or other ways of learning.”

On an Internet forum about the downloaded television shows, a poster who used the name Plum Blossom put it another way.

“After watching these shows for some time, I felt the attitudes of some of the characters were beginning to influence me,” the poster wrote. “It’s hard to describe, but I think I learned a way of life from some of them. They are good at simplifying complex problems, which I think has something to do with American culture.”

For the full story, see:

HOWARD W. FRENCH. "Chinese Tech Buffs Slake Thirst for U.S. TV Shows." The New York Times (Weds., August 9, 2006): A6.

“If Ethanol Made Economic Sense, It Wouldn’t Need a Subsidy”

Source of graphics: online version of the World-Herald article cited below.

(p. 1D) LINCOLN – David Pimentel, a Cornell University researcher, has been criticized repeatedly since he questioned the energy value of ethanol in 1980.

In a government-funded report, he suggested that ethanol provides less energy than is used to produce it. Even though that report has been disputed and rejected by other analysts, Pimentel has not backed down.

He said last week that rural developers, farmers and investors will rue the day they put their money, hopes and dreams into the corn-based alternative fuel.

"It is too bad," he said in an interview, "because it would be a tremendous asset to agriculture if this were a true winner."

Pimentel is among the public critics who raise red flags as momentum gathers for dramatic increases in production, especially in the nation’s top two ethanol-producing states: Iowa and Nebraska.

While Pimentel is perhaps the expert most often quoted – in part because he presented his analysis more than 25 years ago – others also raise questions about the energy value of ethanol and its economic benefits and environmental effects.

Ethanol backers defend the fuel as a viable way to help stabilize the nation’s fuel supply. But they haven’t convinced Jerry Taylor, an energy policy specialist for the Cato Institute, a conservative think tank in Washington, D.C.

"If ethanol made economic sense, it wouldn’t need a subsidy," Taylor said.

For the full story, see:

BILL HORD. "High-octane Clash." Omaha World-Herald (Sunday, August 6, 2006): 1D-2D.

Source of graphics: online version of the World-Herald article cited above.

Entrepreneur’s $100 Million Rocket Destroyed

Lesson one: entreprepreneurship is risky, and often fails. Lesson two: when an entreprepreneur’s rocket is destroyed, his $100 million goes up in smoke; when NASA’s rocket is destroyed, your $100 million goes up in smoke.

Government and industry efforts to develop innovative, less costly rockets suffered a high-profile setback Friday, when the initial flight of a satellite launcher bankrolled by outspoken entrepreneur Elon Musk ended in failure.

After Mr. Musk spent nearly four years and well over $100 million of his personal fortune to create a rocket company from scratch, his Falcon project became the best-known and most aggressive entrant in the fledgling small-rocket segment. But according to preliminary assessments, a fuel leak and resulting fire during last week’s inaugural launch shut down the main engines less than 30 seconds after blastoff from a Pacific atoll. The rocket and a research satellite built by Air Force Academy students were destroyed.

For the full story, see:

Pasztor, Andy. "Entrepreneur’s Rocket Suffers Setback During Maiden Launch." Wall Street Journal (Monday, March 27, 2006): A14.

Internet Reduces Elite Universities’ Competitive Edge

With professors spending so much time blogging for no payment, universities might wonder whether this detracts from their value. Although there is no evidence of a direct link between blogging and publishing productivity, a new study* by E. Han Kim and Adair Morse, of the University of Michigan, and Luigi Zingales, of the University of Chicago, shows that the internet’s ability to spread knowledge beyond university classrooms has diminished the competitive edge that elite schools once held.

Top universities once benefited from having clusters of star professors. The study showed that during the 1970s, an economics professor from a random university, outside the top 25 programmes, would double his research productivity by moving to Harvard. The strong relationship between individual output and that of one’s colleagues weakened in the 1980s, and vanished by the end of the 1990s.

The faster flow of information and the waning importance of location—which blogs exemplify—have made it easier for economists from any university to have access to the best brains in their field. That anyone with an internet connection can sit in on a virtual lecture from Mr DeLong means that his ideas move freely beyond the boundaries of Berkeley, creating a welfare gain for professors and the public.

For the full story, see:

"FINANCE & ECONOMICS: Economists’ blogs; The invisible hand on the keyboard; Why do economists spend valuable time blogging?" The Economist 380, no. 8489 (Aug. 3, 2006): 67.

The full reference to the paper by Kim et al, is:

* “Are Elite Universities Losing Their Competitive Edge?” by E. Han Kim, Adair Morse and Luigi Zingales. NBER working paper 12245, May 2006.

(Thanks to Carolyn Diamond for giving me a copy of the article from The Economist.)