June 2008 – artdiamondblog.com

The Inefficiency of a Labor Safety Net

“Government milk is sold mostly through curbside milk stalls. Some customers don’t find the milk stands appealing since they can be dingy and the milk sometimes bad.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) MUMBAI — Every workday morning, milkman D.T. Walkar faithfully comes to Worli Dairy to not deliver milk.
Most days, he and his fellow drivers at the government dairy sign in, then move to the rest area. While others read the paper, nap or play rummy, Mr. Walkar likes to do the Sudoku puzzle in the Maharashtra Times, unless someone else has gotten to it first. He then wanders around the complex and talks to friends. The last delivery trucks were sold last year. “The trucks are all gone so we just sit around and talk,” says Mr. Walkar, 50 years old. “We are bored.”
Once respected civil servants, Mr. Walkar and his 300-odd fellow drivers have been left in a strange limbo. Milk sales at their dairy have plummeted as the state government lost its monopoly on milk and consumer tastes changed. But because Indian work rules strictly protect government workers from layoffs, the delivery men show up for work each morning for eight-hour shifts, as they always did, then proceed to do nothing all day. They rarely, if ever, leave the plant.
. . .
(p. A5) In 2001, the Indian government started opening the dairy market in Maharashtra to competition. Private carriers with higher quality milk swiftly won customers by delivering milk to doorsteps. The government milkmen have always been restricted to delivering mostly to curbside milk stalls so they could cover a greater area.
Customers swiftly deserted. Many switched to heat-treated milk in sealed packages that resist spoiling. Some ditched the government’s former best sellers of sweet Pineapple milk and spicy Masala milk for Coca-Cola and Sprite as Indian tastes westernized. Others never found the milk stands appealing — they can be dingy and the milk sometimes bad.

For the full story, see:
ERIC BELLMAN. “Out to Pasture: India’s Milkmen Bide Their Time; No Work, Secure Job Put Them in Limbo; Where’s the Sudoku?” The Wall Street Journal (Sat., March 29, 2008): A1 & A5.
(Note: ellipsis added.)

“Because Indian work rules protect government workers from layoffs, 300-odd former milk truck drivers show up at the Worli Dairy for work each morning just as they always did, then do nothing all day. To pass the time, the men do puzzles, yoga or just sleep off the hours. Once, they tried planting a garden.” Source of caption and photo: online version of the WSJ article quoted and cited above.

Higher Oil Prices Are an Incentive for More Oil Drilling

(p. B5) Even natural-gas companies can’t resist the draw of $100 oil. Though prices for both natural gas and oil have risen steeply, oil fetches nearly twice the price of gas per unit of energy and brings fatter profits.
That is prompting even the most natural-gas-focused companies to step up their oil drilling in the U.S. With the biggest, easiest-to-get deposits of domestic crude oil drained long ago, U.S. energy companies in recent years have concentrated most of their domestic production efforts on natural gas. Some companies, such as Chesapeake Energy Corp. and EOG Resources Inc. devoted nearly their entire production to natural gas.
EOG recently announced it had begun drilling for oil in Colorado and Texas, including in the Barnett Shale, a vast hydrocarbon reserve that had previously been known for gas, not oil. With prices rising faster for oil than natural gas, “you’re probably better off searching for oil,” said EOG Chief Executive Mark Papa.

For the full story, see:
BEN CASSELMAN. “Prices Prompt Natural-Gas Firms To Drill for Oil in U.S.” The Wall Street Journal (Mon., April 7, 2008): B5.

Raúl Castro Decrees that Cubans May Now Buy DVD Players, Computers, and Cell Phones

“Cubans in Havana recently bought DVD players, among newly available appliances.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) HAVANA — Can a rice maker possibly be revolutionary?
There they were, piled up one atop another, Chinese-made rice makers selling for $70 each. Beside them, sleek DVD players. Across the well-stocked electronics store were computers and televisions and other household appliances that President Raúl Castro recently decreed ought to be made available to average Cubans, or at least those who could afford them.
Since finally succeeding his ailing 81-year-old brother, Fidel, in February, Mr. Castro, 76, who appeared before hundreds of thousands of Cubans at a May Day rally on Thursday here in the capital, has been busy with a flurry of changes. In the last eight weeks he has also opened access to cellphones, lifted the ban on Cubans using tourist hotels and granted farmers the right to manage unused land for profit.
More is on the horizon, government officials say, like easing restrictions on traveling abroad and the possibility of allowing Cubans to buy and sell their own cars, and perhaps even their homes. Each of these changes may be microscopic in contrast to the outsize problems facing Cuba. But taken together, they are shaking up this stoic, time-warped place.

For the full story, see:
MARC LACEY. “Stores Hint at Change Under New Castro.” The New York Times (Fri., May 2, 2008): A1 & A8.

The Role of the Irish Potato Famine in the Repeal of the Corn Laws

In one of his more famous, and outrageous, essays, George Stigler argued that economists do not matter, because changes in policy do not arise from changes in ideas, but from changing circumstances and special interests.
One of the cases that he briefly mentions is the repeal of the English Corn Laws that had restricted the importation of wheat (in England “corn” is what we call “wheat) into Britain. The usual account is that the free market arguments of Cobden and Bright made the difference.
The account quoted below, might be taken as support for Stigler’s position. But it might also be evidence for the more optimistic position of Stigler’s buddy, Milton Friedman. Friedman held that on major issues, economists’ policy proposals go ignored until some crisis occurs that sends the politicians looking for policy alternatives. (Friedman thought that this is what occurred in the case of his own proposal for floating exchange rates.)

(p. A23) THE feast of Ireland’s patron saint has always been an occasion for saluting the beautiful land “where the praties grow,” but it’s also a time to look again at the disaster that established around the world the Irish communities that today celebrate St. Patrick’s Day: the Great Potato Famine of 1845-6. In its wake, the Irish left the old country, with more than half a million settling in United States. The famine and the migrations changed Irish and American history, of course, but they drastically changed Britain too.
. . .
The first intimations of Ireland’s looming calamity reached the British government in August 1845. Although Britain was responsible for the social and economic iniquities which had made Ireland so susceptible, the government of the day deserves some credit for its efforts to avert mass starvation. There were political as well as logistical difficulties.
. . .
To Peel it was obvious that the Corn Laws would have to go, but his electorate of large landowners was vehemently opposed to their abolition. The Duke of Wellington, leader of the House of Lords, complained that Ireland’s “rotten potatoes have done it all — they put Peel in his damned fright.” Peel drew heavily on the news from Ireland as he urged Parliament to vote for abolition:
“Are you to hesitate in averting famine which may come, because it possibly may not come? Are you to look to and depend upon chance in such an extremity? Or, good God! are you to sit in cabinet, and consider and calculate how much diarrhea, and bloody flux, and dysentery, a people can bear before it becomes necessary for you to provide them with food?”
The bill abolishing the Corn Laws was passed in May 1846 in the House of Commons, with two-thirds of Peel’s party voting against it and the entire opposition voting in favor. A month later, Peel was out of office.
. . .
. . . Ireland’s famine, by ending the Corn Laws, prompted the beginning of the free trade that established the success of Britain’s industrial economy.

For the full commentary, see the article referenced immediately below, or see his forthcoming book Propitious Esculent: The Potato in World History:

JOHN READER. “The Fungus That Conquered Europe.” The New York Times (Mon., March 17, 2008): A23.
(Note: ellipses added.)

The Stigler essay mentioned above is:
Stigler, George J. “Do Economists Matter?” Southern Economic Journal 42, no. 3 (1976): 347-54.
(I will try to dig out a reference for the Friedman position when I have more time.)

Pollution from Refinery Producing “Earth-Friendly Fuel”

“Nelson Brooke, the executive director of Black Warrior Riverkeeper, walked along an area of the river near Moundville, Ala.” Source of the caption and photo: online version of the NYT article quoted and cited below.

(p. A12) MOUNDVILLE, Ala. — After residents of the Riverbend Farms subdivision noticed that an oily, fetid substance had begun fouling the Black Warrior River, which runs through their backyards, Mark Storey, a retired petroleum plant worker, hopped into his boat to follow it upstream to its source.
It turned out to be an old chemical factory that had been converted into Alabama’s first biodiesel plant, a refinery that intended to turn soybean oil into earth-friendly fuel.
“I’m all for the plant,” Mr. Storey said. “But I was really amazed that a plant like that would produce anything that could get into the river without taking the necessary precautions.”
But the oily sheen on the water returned again and again, and a laboratory analysis of a sample taken in March 2007 revealed that the ribbon of oil and grease being released by the plant — it resembled Italian salad dressing — was 450 times higher than permit levels typically allow, and that it had drifted at least two miles downstream.
The spills, at the Alabama Biodiesel Corporation plant outside this city about 17 miles from Tuscaloosa, are similar to others that have come from biofuel plants in the Midwest. The discharges, which can be hazardous to birds and fish, have many people scratching their heads over the seeming incongruity of pollution from an industry that sells products with the promise of blue skies and clear streams.
. . .
“They’re environmental Jimmy Swaggarts, in my opinion,” said Representative Brian P. Bilbray, Republican of California, who spoke out against the $18 billion energy package recently passed by Congress that provides tax credits for biofuels.

For the full story, see:
BRENDA GOODMAN. “Pollution Is Called a Byproduct of a ‘Clean’ Fuel.” The New York Times (Tues., March 11, 2008): A12.
(Note: ellipses added.)
(Note: At one point, the online version of the article, as quoted above, was very slightly different (and clearer) than the print version.)
“Oil and grease from a biodiesel plant had been released.” Source of the caption and photo: online version of the NYT article quoted and cited above.

Robust Dialogue Fosters Creativity and Innovation

Omaha culture puts a huge emphasis on surface politeness. (When I first arrived here, I was sometimes thought to be from New York, a thought that I took as a complement, although that was not how it was intended.)
Bossidy and Charan emphasize that harmony is an over-rated virtue–that what they call “robust dialogue” is important for getting things done.

(p. 102) You cannot have an execution culture without robust dialogue—one that brings reality to the surface through openness, candor, and informality. Robust dialogue makes an organization effective in gathering information, understanding the information, and reshaping it to produce decisions. It fosters creativity—most innovations and inventions are incubated through robust dialogue. Ultimately, it creates more competitive advantage and shareholder value.
. . .
(p. 103) . . ., harmony—sought by many leaders who wish to offend no one—can be the enemy of truth.

Source:
Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.
(Note: ellipses added.)

Private Athenaeum Libraries Where Members Are “Proprietors”

“TRADITION; Redwood Library and Athenaeum, Newport, R.I., dates back to 1747.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D1) A GROUP of first-time visitors to the Providence Athenaeum climbed the steep stones steps to the imposing front door. One pried open the door tentatively, peered inside and exclaimed, “Oh, this is what a library is supposed to look like!”
This scene was observed by Alison Maxell, executive director of the athenaeum, who said that time and again, she has seen this same reaction: curiosity followed by wonderment.
. . .
(p. D4) THE New England athenaeums I visited on a recent trip maintain not only active memberships, but also some peculiar terminology. Members are commonly called proprietors; some athenaeums distinguish share-holding proprietors from a second tier of members, called subscribers. At the Portsmouth Athenaeum, the director is called the keeper.
Many athenaeums maintain lists of rules that spell out consequences for offenses like writing in books. Some prohibit pens and provide pencils for notation, as well as cotton gloves for handling aged materials. Large or old books often must be rested on wedge-shaped foam cradles to protect brittle spines.
Surprisingly, the Boston Athenaeum permits dogs — those that behave, a staff member was quick to add.
These athenaeums also provide, in those areas where talking aloud is encouraged, lively opportunities for exchanging ideas with other devotees of literature, arts and sciences.
“In addition to having access to our book stock, members find intellectual stimulation in our exhibitions and by being part of discussion groups,” said Richard Wendorf, director and librarian of the Boston Athenaeum and the editor of “America’s Membership Libraries” (Oak Knoll Press, 2007), which details histories of 16 of the largest membership libraries.

For the full story, see:
ROGER MUMMERT. “Where Greek Ideals Meet New England Charm.” The New York Times (Fri., March 7, 2008): D1 & D4-D5.
(Note: ellipsis added.)

“While roaming through stacks of the Boston Athenaeum, one encounters books from completely different eras, making for random discoveries.” Source of caption and photo: online version of the NYT article quoted and cited above.

Resveratrol May Extend Life, Even at Lower Doses

(p. A1) Red wine may be much more potent than was thought in extending human lifespan, researchers say in a new report that is likely to give impetus to the rapidly growing search for longevity drugs.

The study is based on dosing mice with resveratrol, an ingredient of some red wines. Some scientists are already taking resveratrol in capsule form, but others believe it is far too early to take the drug, especially using wine as its source, until there is better data on its safety and effectiveness.
The report is part of a new wave of interest in drugs that may enhance longevity. On Monday, Sirtris, a startup founded in 2004 to develop drugs with the same effects as resveratrol, completed its sale to GlaxoSmithKline for $720 million.
. . .
(p. A16) Separately from Sirtris’s investigations, a research team led by Tomas A. Prolla and Richard Weindruch, of the University of Wisconsin, reports in the journal PLoS One on Wednesday that resveratrol may be effective in mice and people in much lower doses than previously thought necessary. In earlier studies, like Dr. Auwerx’s of mice on treadmills, the animals were fed such large amounts of resveratrol that to gain equivalent dosages people would have to drink more than 100 bottles of red wine a day.
The Wisconsin scientists used a dose on mice equivalent to just 35 bottles a day. But red wine contains many other resveratrol-like compounds that may also be beneficial. Taking these into account, as well as mice’s higher metabolic rate, a mere four, five-ounce glasses of wine “starts getting close” to the amount of resveratrol they found effective, Dr. Weindruch said.
Resveratrol can also be obtained in the form of capsules marketed by several companies. Those made by one company, Longevinex, include extracts of red wine and of a Chinese plant called giant knotweed. The Wisconsin researchers conclude that resveratrol can mimic many of the effects of a caloric-restricted diet “at doses that can readily be achieved in humans.”

For the full story, see:
NICHOLAS WADE. “New Hints Seen That Red Wine May Slow Aging.” The New York Times (Weds., June 4, 2008): A1 & A16.
(Note: ellipsis added.)

Reducing the Cost of Hotels: Prefab Rooms from China

“The Travelodge chain in Britain is building two hotels from stackable metal containers imported from China. One of the hotels, in Uxbridge in West London, is shown under construction at right and in a rendering at left.” Source of the caption and photo: online version of the NYT article quoted and cited below.

(p. 23) TRAVELODGE, one of the largest budget hotel chains in Britain, is a company in a hurry.
. . .
Once the company finds a location, it turns to a construction partner with equally aggressive plans: Verbus Systems, a London-based company that builds rooms in metal containers in factories near Shenzhen, China, and delivers them ready to be stacked into buildings up to 16 stories tall.
Verbus Systems’ commercial director, Paul Rollett, said his company “can build a 300-room hotel anywhere on the planet in 20 weeks.”
. . .
When they arrive at Heathrow, the containers will be hoisted into place by crane. The containers, which are as large as 12 by 47 feet, will support one another just as they do when they are crossing the ocean by ship, Mr. Rollett said. No additional structure is necessary.
. . .
DON CARLSON, the editor and publisher of Automated Builder, a trade magazine based in Ventura, Calif., said that in hotels, “modular is definitely the wave of the future.” Modular buildings, he said, are stronger, and more soundproof, because stacking units — each a fully enclosed room — “gives you double walls, double floors, double everything.”
Mr. Rollett agreed, saying that with the steel shipping container approach, “You could have a party in your room, and people in the next room wouldn’t hear a thing.”
. . .
He is working with his British clients, which, he said, include a Travelodge competitor, Premier Inn, to make the best possible use of the assembly-line method. “We’re increasing the degree of modularity,” he said, noting that the latest units come with fully fitted bathrooms and “even the paint on the walls.”
The only thing they don’t have, he said, “is the girl to put a chocolate on your pillow.”

For the full article, see:
FRED A. BERNSTEIN. “CHECKING IN; Arriving in London: Hotels Made in China.” The New York Times, SundayBusiness Section (Sun., May 11, 2008): 23.
(Note: ellipses added.)

“The Nature of Freedom of Choice”

Former Senator George McGovern was the Democratic candidate for president in 1972. In the commentary below, he defends our freedom of choice:

(p. A15) Economic paternalism takes its newest form with the campaign against short-term small loans, commonly known as “payday lending.”
With payday lending, people in need of immediate money can borrow against their future paychecks, allowing emergency purchases or bill payments they could not otherwise make. The service comes at the cost of a significant fee — usually $15 for every $100 borrowed for two weeks. But the cost seems reasonable when all your other options, such as bounced checks or skipped credit-card payments, are obviously more expensive and play havoc with your credit rating.
Anguished at the fact that payday lending isn’t perfect, some people would outlaw the service entirely, or cap fees at such low levels that no lender will provide the service. Anyone who’s familiar with the law of unintended consequences should be able to guess what happens next.
Researchers from the Federal Reserve Bank of New York went one step further and laid the data out: Payday lending bans simply push low-income borrowers into less pleasant options, including increased rates of bankruptcy. Net result: After a lending ban, the consumer has the same amount of debt but fewer ways to manage it.
Since leaving office I’ve written about public policy from a new perspective: outside looking in. I’ve come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society.
. . .
The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.

For the full commentary, see:
GEORGE MCGOVERN. “Freedom Means Responsibility.” The Wall Street Journal (Fri., March 7, 2008): A15.
(Note: ellipsis added.)