July 2007 – Page 2 – artdiamondblog.com

Invention as a Form of Criticism

The toughest part of inventing isn’t solving problems. It’s figuring out which problems are worth the effort.

"A few years ago, an inventor patented a device that caused an electric motor to rock a chair," wrote Raymond F. Yates in 1942. "Now imagine, if you will, the sad spectacle of anybody too lazy to rock his own chair! No wonder he could not make money. If he had expended the same effort on something that was actually needed, he might be wealthy today instead of being sadder but wiser."

Mr. Yates, a self-taught engineer, inventor and technical writer, tried to nudge other inventors in the right direction with his book, "2100 Needed Inventions." Published by Wilfred Funk Inc., Mr. Yates’s book was a list of ways people could alleviate certain nuisances and defects of life and get rich for their trouble.

. . .

"Invention is really a systematic form of criticism," Mr. Yates wrote, and people tend to criticize the things that annoy them in their daily lives. Mr. Yates, for example, seems to have found most commonplace devices excessively noisy.

For the full story, see:

CYNTHIA CROSSEN. "DEJA VU; An Inventor in 1940s Gave Tips on Going From Smart to Rich." The Wall Street Journal (Mon., May 21, 2007): B1.

Kirkcaldy’s Current Native-Son Would Do Well to Remember Kirkcaldy’s 18th Century Native Son

In Kirckcaldy, Gordon Brown, the man on the right, tries to persuade the natives to vote for the Labor Party. Source of the photo: online version of the NYT article cited below.

Many years ago, we took the train from Edinburgh to spend a few hours in Kirkcaldy, the birthplace of Adam Smith. I was surprised at how little there was to honor Smith in the town where he was born and raised. There was a small cafe/theatre named after Smith. A small crystal shop sold some shot glasses with Smith’s image engraved on them. And there was a small plaque, above a no-parking sign, on the main street, at the spot where Smith’s family home had been.

I remember asking a very polite young father with two or three small children in tow, why there was so little of Smith in Kirckaldy? With a twinge of something like regret, he said that everyone in that part of Scotland supported Labor, and they saw Smith as supporting capitalism, and so did not like him much.

It was a crowded Saturday shopping day when Jeanette took my picture in front of the small plaque. Incredulous passers-by turned and glanced in my direction, probably wondering why the crazy American wanted his picture taken next to a no-parking sign.

For the sake of Kirkcaldy, and Britain, let us hope that Gordon Brown has read a bit of the work of his fellow Kirkcaldy native son:

(p. A10) KIRKCALDY, Scotland, April 30 — Gordon Brown, Britain’s presumed prime minister-to-be, is usually associated with a somewhat dour manner and a mastery of statistics. But here, he displays other skills — a bolt-on smile and a ready handshake to work sparse crowds between the discount stores on the High Street, asking parents with strollers whether their new babies are keeping them awake at night, and inquiring whether the men support the local Raith Rovers soccer team.

. . .

“This is a big choice on Thursday, between those who want to break up Britain and those who want to build up Scotland,” Mr. Brown, currently Britain’s chancellor of the exchequer, told students at Adam Smith College, named for the 18th-century economist who was born here.

. . .

Mr. Brown, who is not standing in these elections, came to town, alongside the choppy waters of the Firth of Forth, to support the Scottish Labor campaign and resist the nationalists.

“I do not think the Scottish people want to see the breakup of the union” that makes up Britain, he said here in Kirkcaldy (pronounced kerr-CUDDY).

But advocates of independence say it would propel Scotland to a bright future, as viable as any other small European state.

For the full story, see:

ALAN COWELL. "Elections in Britain Reveal a Scottish Line in the Sand." The New York Times (Weds., May 2, 2007): A10.

(Note: ellipses added.)

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

Art Diamond in Kirkcaldy in 1994 at location (I think on High Street) where Adam Smith’s boyhood home used to be. (Photo by Jeanette Diamond.)

Sturm und Drang Schumpeterianism

I am conflicted about how to evaluate Zachary’s Schumpeterian article in a recent Sunday New York Times. On the one hand he says much that is true and useful about Schumpeter and capitalism. On the other hand he seems to relish the destructive side of creative destruction, extending it beyond what Schumpeter intended, to include disasters such as war and environmental crises.

My view, on the other hand, is that the destructive side is usually over-estimated, can be reduced further, and is an unfortunate cost of innovation and progress.

Here is a part of the Zachary op-ed piece that I like:

An Austrian economist who taught at Harvard, Mr. Schumpeter in 1942 coined the term ”creative destruction” to describe what he viewed as the engine of capitalism: how new products and processes constantly overtake existing ones. In his classic work, ”Capitalism, Socialism and Democracy,” he described how unexpected innovations destroyed markets and gave rise to new fortunes.

The historian Thomas K. McCraw writes in his new biography of Schumpeter, ”Prophet of Innovation” (Belknap Press): ”Schumpeter’s signature legacy is his insight that innovation in the form of creative destruction is the driving force not only of capitalism but of material progress in general. Almost all businesses, no matter how strong they seem to be at a given moment, ultimately fail and almost always because they failed to innovate.”

Mr. Schumpeter’s concept of creative destruction is justly celebrated. The economics writer David Warsh calls it the most memorable economic phrase since Adam Smith’s ”invisible hand.” Peter Drucker, the late business guru, went so far as to declare Mr. Schumpeter the most influential economist of the last century.

Clearly, any quick survey of technological change validates Mr. Schumpeter’s essential insight. The DVD destroyed the videotape (and the businesses around it). The computer obliterated the typewriter. The automobile turned the horse and buggy into an anachronism.

Today, the Web is destroying many businesses even as it gives rise to others. Though the compact disc still lives, downloadable music is threatening to make the record album history.

”Schumpeter’s central idea is just as important now as ever,” says Louis Galambos, a business historian at Johns Hopkins University. ”The heart of capitalism and its claim as an efficient economic system over the long term is the role that innovation plays.”

For the full commentary, see:

G. PASCAL ZACHARY. "PING; The Silver Lining to Impending Doom." The New York Times, Section 3 (Sun., May 6, 2007): 3.

Global Warming Allows Growing Subtropical Plants Further North

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

(p. A1) Forget the jokes about beachfront property. If global warming has any upside, it would seem to be for gardeners, who make up three-quarters of the population and spend $34 billion a year, according to the National Gardening Association. Many experts agree that climate change, which by some estimates has already nudged up large swaths of the country by one or more plant-hardiness zones, has meant a longer growing season and a more robust selection. There are palm trees in Knoxville and subtropical camellias in Pennsylvania.

For the full story, see:

SHAILA DEWANSHAILA DEWAN. "Feeling Warmth, Subtropical Plants Move North." The New York Times (Thurs., May 3, 2007): A1 & A20.

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.

Atlanta Police Killed Innocent Elderly Woman Who Attempted to Defend Her Home

"The victim, Kathryn Johnson, was described as either 88 or 92." Source of caption and photo: online version of the NYT article cited below.

In my 11/23/06 blog entry on Kathryn Johnston’s death at the hands of the Atlanta police, I thought that she was an innocent by-stander in a legal drug bust (though I criticized the drug laws). But it turns out that the situation was even worse than I thought.

In the article excerpted below, it appears that the police lied to get a no-knock warrant, and when no drugs were found anywhere in the home, they planted marijuana that they had obtained from a previous drug bust.

(One more bit of evidence that Milton Friedman was right that we need a serious policy discussion on the economics and ethics of the War on Drugs.)

ATLANTA, April 26 — After the fatal police shooting of an elderly woman in a botched drug raid, the United States attorney here said Thursday that prosecutors were investigating a “culture of misconduct” in the Atlanta Police Department.

In court documents, prosecutors said Atlanta police officers regularly lied to obtain search warrants and fabricated documentation of drug purchases, as they had when they raided the home of the woman, Kathryn Johnston, in November, killing her in a hail of bullets.

Narcotics officers have admitted to planting marijuana in Ms. Johnston’s home after her death and submitting as evidence cocaine they falsely claimed had been bought at her house, according to the court filings.

Two of the three officers indicted in the shooting, Gregg Junnier and Jason R. Smith, pleaded guilty on Thursday to state charges including involuntary manslaughter and federal charges of conspiracy to violate Ms. Johnston’s civil rights.

. . .

The day she was killed, narcotics officers said, they arrested a drug dealer who said he could tell them where to recover a kilogram of cocaine, and pointed out Ms. Johnston’s modest green-trimmed house at 933 Neal Street.

Instead of hiring an informant to try to buy drugs at the house, the officers filed for a search warrant, claiming that drugs had been bought there from a man named Sam. Because they falsely claimed that the house was equipped with surveillance equipment, they got a no-knock warrant that allowed them to break down the front door.

First, according to court papers, they pried off the burglar bars and began to ram open the door. Ms. Johnston, who lived alone, fired a single shot from a .38-caliber revolver through the front door and the officers fired back, killing her.

After the shooting, they handcuffed her and searched the house, finding no drugs.

“She was without question an innocent civilian who was caught in the worst circumstance imaginable,” Mr. Howard, the district attorney, said at a news conference on Thursday. “When we learned of her death, all of us imagined our own mothers and our own grandmothers in her place, and the thought made us shudder.”

When no drugs were found, the cover-up began in earnest, according to court papers.

Officer Smith planted three bags of marijuana, which had been recovered earlier in the day in an unrelated search, in the basement. He called a confidential informant and instructed him to pretend he had made the drug buy described in the affidavit for the search warrant.

For the full story, see:

SHAILA DEWAN and BRENDA GOODMAN. "Officials Investigate Broad Corruption in Atlanta Police Dept." The New York Times (Fri., April 27, 2007): A16.

(Note: ellipsis added. The online title of the article was: "Prosecutors Say Corruption in Atlanta Police Dept. Is Widespread.")

Today artdiamondblog.com is Two Years Old

The bars for "July" only include data through July 13th. Although the best-known metric is "hits" (in green), a more meaningful metric, for many purposes, is "visits" (in yellow). The source of this graph is the Webalizer program as maintained by the Living Dot service that houses my blog. (The graph above was produced in the evening of July 14, 2007.)

The first entry in artdiamondblog.com appeared on July 15, 2005. In the two years since, the blog remains true to its modest and vague founding motives, but has evolved in some small ways. I think pictures and graphs help communicate many important stories, and make them more memorable. So the blog in recent months generally includes such elements in about half the entries. Even better are dynamic accounts of stories, so I have gradually increased the links to video clips that illustrate important stories.

Also, more often than at the beginning, I offer my own somewhat extended commentary on some person, issue, event, book or article. As time permits, I have also tried to include an occasional entry that records some reminiscence of some important scholar or telling experience that I have had, that I hope might be of value to someone in the future. (One example of this sort of entry, in the past year, was my entry on Milton Friedman on the occasion of his death.)

I believe that the web log is useful in my teaching and research, and also hope that it provides easier access to some useful material for others who share my interests and goals.

Of course, every activity has its opportunity costs. I try to limit the costs by disciplining myself to only post one new entry a day. And I try to take advantage of blogging economies of scale, by composing several entries at a time, and pre-scheduling them into the future.

The benefits are hard to access. I know that in June (the most recent full month for which data is available), the average daily number of "visits" to my blog was recorded as 1,132. But I do not know very much about how useful the visitors found the blog, or if useful, how often the use is the kind of use I originally had in mind.

On the other hand, I believe that the process writing and publishing refereed journal articles has its drawbacks. It is slow, and the refereeing is uneven, and often actually makes an article worse. When the article is finally published, it is often in a form easily accessible only to a few, and as a result often has negligible impact on knowledge or on the broader world of action.

So I think it is time to take some risks with some experimentation in other forms of knowledge production and communication. Wikipedia is one promising experiment. Blogs represent another.

Mugabe Prints More Money and Beats Up Shopkeepers, as Inflation Soars: More on Why Africa is Poor

"Inflation made food cost a fortune in Harare this week. The government imposed controls that required vendors to sell some items below cost." Source of caption and photo: online version of the NYT article cited below.

JOHANNESBURG, July 3 — Zimbabwe’s week-old campaign to quell its rampant inflation by forcing merchants to lower prices is edging the nation close to chaos, some economists and merchants say.

As the police and a pro-government youth militia swept into shops and factories, threatening arrest and worse unless prices were rolled back, staple foods vanished from store shelves and some merchants reported huge losses. News reports said that some shopkeepers who had refused to lower prices had been beaten by the youth militia, known as the Green Bombers for the color of their fatigues.

In interviews, merchants said that crowds of people were following the police and militia from shop to shop to buy goods at the government-ordered prices.

“People are losing millions and millions and millions of dollars,” said one merchant in Bulawayo, referring to the Zimbabwean currency, which is becoming worthless given the nation’s inflation, the world’s highest. “Everyone is now running out of stock, and not being able to replace it.”

. . .

Gasoline was reported to be vanishing from stations as the going price, about 180,000 dollars per liter, was slashed by the government to something closer to the officially approved price of 450 dollars per liter. Mr. Mugabe’s government intends to cope with the shortages by subsidizing producers of basic goods. One of the few newspapers not under government control, The Zimbabwe Independent, reported last week that flour, which is controlled entirely by the state, will be sold to bakers for 10 million dollars a ton, half the market price. Similarly, many suppliers of basic goods have been told by the government that they will be allowed to buy gasoline at one tenth the going price, the newspaper reported. The government apparently plans to make up those losses by printing more money. Zimbabwe’s dollar has lost more than half its value in recent weeks because the government has constantly issued new bills to pay its mounting debts.

For the full story, see:

MICHAEL WINES. "Anti-Inflation Curbs on Prices Create Havoc for Zimbabwe." The New York Times (Weds., July 4, 2007): A8.

(Note: ellipsis added.)

CNN on 7/10/07 broadcast a great clip from ITN, that had been courageously recorded undercover by Martin Geissler. See "Desperation in Zimbabwe":

http://www.cnn.com/video/#/video/offbeat/2007/06/23/vo.mi.ugly.dogs.ap?DPFPR=true

(Note: ITN is sometimes also called ITV. "ITN" stands for the International Television Network.)

Postscript: According to an entry on the ITV web site entitled "Mugabe Battles Economic Crises," Mugabe "has warned he will not be restrained by "bookish economics"." (He makes a great case for cracking open the books, doesn’t he? Or at least for opening the window and looking at what is happening outside?)

For the Mugabe quote on bookish economics, see:

http://itn.co.uk/news/a1d7763de3c4778b619a72cbeab24d6d.html

“The Companies Are Leapfrogging One Another”

. . . More than 17 million travel insurance policies are sold each year, according to the United States Travel Insurance Association, whose members have seen a surge in interest since Sept. 11, 2001. Policies typically cost between 4 percent and 7 percent of the price of the trip, with fees based on the traveler’s age and on the cost and length of the trip.

As the market matures, “the companies are leapfrogging one another” to expand coverage, said Chris Harvey, chief executive of Squaremouth.com, an online travel insurance agency. “One will come out with $50,000 medical, the next $100,000.”

More traditional travel insurance policies reimburse travelers who are forced to cancel because of weather, airline strikes, acts of terrorism that affect their destinations, serious illness or the death of the traveler or a close family member. Typical policies also provide coverage for medical emergencies, lost or damaged luggage, and major travel delays. But until recently travelers weren’t reimbursed if they simply changed their minds and decided not to go. AIG Travel Guard’s new Cancel for Any Reason add-on coverage, offered on two different package plans, reimburses 75 percent of the trip expenses if a traveler cancels a covered trip up to two days before departure — no questions asked. It follows a similar policy introduced by TravelSafe Insurance in 2005.

This flexibility comes at a price — 30 percent to 40 percent more than for standard coverage. But the option may be worth considering if you want the flexibility of changing your travel plans at any time without losing the bulk of what you paid.

For the full story, see:

MICHELLE HIGGINS. "PRACTICAL TRAVELER | TRIP INSURANCE; Protecting Against the Dread ‘What If?’" The New York Times, Section 5 (Sun., May 6, 2007): 6.

(Note: the ellipsis and the bold were added.)