July 2008 – Page 2 – artdiamondblog.com

Free Trade Defended By Democratic Leadership Council Founder

(p. A15) Where are the pro-trade Democrats? America won’t increase middle-class incomes and create jobs without them.
. . .
History proves that expanding trade and productivity help create growth. We learned that the hard way when the Smoot-Hawley tariff helped crush trade and exacerbate the Great Depression. Conversely, we have seen trade drive the economy during the great expansions of the 1960s and 1990s.
. . .
Trade gives poor people around the globe the opportunity to build a brighter future. During the Clinton administration, new trade programs like the African Growth and Opportunity Act helped key regions in the world succeed, while American workers stood to gain.
I helped found the Democratic Leadership Council in the wake of Walter Mondale’s 49-state defeat in 1984, and we have always supported expanded trade. We still have a ways to go to win that argument in the Democratic Party. But the record is clear. Over the past 20 years, our party has grown stronger when we’ve been willing to do the right thing on the toughest issues, from putting the nation’s fiscal house in order to overhauling a broken welfare system that trapped millions in poverty.

For the full commentary, see:
AL FROM. “Confessions of a Pro-Trade Democrat.” The Wall Street Journal
(Mon., June 9, 2008): A15.
(Note: ellipses added.)

More Europeans Leading Stagnant, Stunted Lives

“Gianluca Pompei, Francesca Di Pietro and son, Mario, 2, shopping in Rome. They have cut spending on entertainment.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. C1) LES ULIS, France — When their local bakery in this town south of Paris raised the price of a baguette for the third time in six months, Anne-Laure Renard and Guy Talpot bought a bread maker. When gasoline became their biggest single expense, they sold one of their two cars.
Their combined annual income of 40,000 euros, about $62,500, lands Ms. Renard, a teacher, and Mr. Talpot, a postal worker, smack in the middle of France’s middle class. And over the last year, prices in France have risen four times as fast as their salaries.
At the end of every month, they blow past their bank account’s $900 overdraft limit, plunging themselves deeper into a spiral of greater resourcefulness and regret.
“In France, when you can’t afford a baguette anymore, you know you’re in trouble,” Ms. Renard said one recent evening in her kitchen, as her partner measured powdered milk for their 13-month-old son, Vincent. “The French Revolution started with bread riots.”
The European dream is under assault, as the wave of inflation sweeping the globe mixes with this continent’s long-stagnant wages. Families that once enjoyed Europe’s vaunted quality of life are pinching pennies to buy necessities, and cutting back on extras like movies and vacations abroad.
Potentially more disturbing — especially to the political and social order — are the millions across the continent grappling with the realization that they may have lives worse, not better, than their parents.

For the full story, see:
CARTER DOUGHERTY and KATRIN BENNHOLD. “Squeezed in Europe; For Middle-Class, Stagnant Wages and a Stunted Lifestyle.” The New York Times (Thurs., May 1, 2008): C1 & C8.
(Note: the online version of the title is “For Europe’s Middle-Class, Stagnant Wages Stunt Lifestyle.” )

“Anne-Laure Renard, a teacher, and Guy Talpot, a postal worker, sold one car and bought a bread maker to cut expenses. Prices have risen four times as fast as salaries in France in the last year.” Source of caption and photo: online version of the NYT article quoted and cited above.

Chavez Nationalizes Cement in Venezuela

(p. A13) Venezuela said it will take majority stakes in the local units of Cemex SAB, Lafarge SA and Holcim Ltd. as it divulges the first details of a nationalization plan that will affect the world’s biggest cement producers.
The nationalization, announced last week, is designed to deflect criticism that the socialist government of Hugo Chávez isn’t delivering on its promises of new housing and other infrastructure projects, experts said.
“The Venezuelan state will take control of these companies. We told them all three will be subject to this [nationalization] measure,” Oil Minister Rafael Ramirez said on state television.
. . .
Mr. Chávez’s nationalizations have resulted in efficiency declines in the past. For instance, Venezuelan oil production has fallen since major foreign oil-field operators were nationalized.

For the full story, see:
JOEL MILLMAN, RAUL GALLEGOS and DARCY CROWE. “Venezuela Will Take Control of Top Cement Producers.” The Wall Street Journal (Tues., April 8, 2008): A13.
(Note: ellipsis added.)
(Note: the title of the online version is “Venezuela Will Take Control of Top Cement Producers.”)

Global Warming Alarmists “Want Us to Sacrifice Liberty”

President of the Czech Republic, Vaclav Klaus. Source of photo: online version of the WSJ article quoted and cited below.

In addition to his insights into global warming, Vaclav Klaus is an advocate of the work of Joseph Schumpeter.

(p. A9) Mr. Klaus is . . . interested in the politics of global warming. He has written a book, tentatively titled “Blue, Not Green Planet,” published in Czech last year and due out in English translation in the U.S. this May. The main question of the book is in its subtitle: “What is in danger: climate or freedom?”
He likens global-warming alarmism to communism, which he experienced first-hand in Cold War Czechoslovakia, then a Soviet satellite. While the communists argued that we must all sacrifice some freedom in pursuit of “equality,” the “warmists,” as Mr. Klaus calls them, want us to sacrifice liberty — especially economic liberty — to prevent a change in climate. In both cases, in Mr. Klaus’s view, the costs of achieving the goal, and the impossibility of truly doing so, argue strongly against paying a price of freedom.
. . .
In Europe, Mr. Klaus has the reputation of a firebrand, if not a loose cannon. This is a president, after all, who calls global warming “alarmism” a “radical political project” based in a form of “Malthusianism” that is itself grounded on a “cynical approach [by] those who themselves are sufficiently well-off.”
“It is not about climatology,” he insists. “It is about freedom.”

For the full article, see:
BRIAN M. CARNEY. “The Weekend Interview with Vaclav Klaus; The Contrarian of Prague.” The Wall Street Journal (Sat., March 8, 2008): A9.
(Note: ellipsis added.)

Starbucks Hypocritically Censors Its Customers

(p. A12) Laissez-faire. It’s a policy that made Starbucks vastly successful. But don’t try to put that phrase on a customized Starbucks Card.
The cards are supposed be personalized to reflect customers’ tastes and uniqueness. They are available in a range of colors, often given as gifts and used by regular customers who prefer to prepay for their java.
But when my friend Roger Ream, president of the Fund for American Studies, received a Starbucks gift card for Christmas, he found there was a limit to how personalized a card could be. His card required him to customize it on the company’s Web site. So he went to the site and requested that the phrase “Laissez Faire” be printed on his card. A few days later he was informed that the company couldn’t issue such a card because the wording violated company policy.
. . .
Maybe Starbucks considers the phrase inappropriate because it’s “overtly political commentary”? Certainly my friend regards it as a firm statement of political philosophy.
And so, at my suggestion, my friend went back to the Web site and asked that his card be issued with the phrase “People Not Profits.” Bingo! Starbucks had no problem with that phrase, and the card arrived in a few days.
I wondered just what the company’s standards were. If “laissez-faire” is unacceptably political, how could the socialist slogan “people not profits” be acceptable?
. . .
Starbucks has prospered mightily in a free economy. For the most recent fiscal year, the company earned $672.6 million on revenue of $9.4 billion, a very healthy profit. And these days, in the wake of a California Superior Court judge’s order that the company repay $100 million in back tips that were shared by shift supervisors, Starbucks honchos just might like a little less government intervention in their affairs and a little more laissez-faire.

For the full commentary, see:
DAVID BOAZ. “Starbucks and ‘Laissez Faire’.” The Wall Street Journal
(Mon., April 7, 2008): A12.
(Note: ellipses added.)

Argentine Taxes “Killing Their Incentives”

“Marcelo Marchetti, president of Cigra group.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) WENCESLAO ESCALANTE, Argentina — When the government decided in March to raise taxes on farmers’ profits, it set off a rural revolt in Argentina. For three weeks enraged farmers blocked roads nationwide, paralyzing grain and meat sales and causing food shortages.
. . .
The farmers say they are concerned not only about profits, though the steeper taxes have cut into them. They also say Mrs. Kirchner’s policies are threatening to reverse one of the great agricultural booms in Argentina’s history and to snuff out a technological and entrepreneurial revolution that has made the country a leading food source in a world racked by hunger and rising food prices.
“We have an enormous historic opportunity to grow as a country, but the government wants to punish a sector that should continue to be an engine of growth,” said Marcelo Marchetti, 39. “The world has opened its doors to us, and here we are fighting among ourselves.”
. . .
An emergency law passed in 2002, in the midst of an economic crisis, has allowed the Kirchner government to create export taxes and keep the revenues away from governors and mayors. The Kirchners have used the doling out of those revenues to maintain political control over the provinces, which were critical to Mrs. Kirchner’s election.
. . .
In Wenceslao Escalante, the Marchetti brothers, who both studied accounting in college, said the government’s policies were killing their incentives to produce more. A decade ago they formed their company, Cigra, investing in the latest seed technology and farm equipment, and later buying $400,000 grain harvesters with global positioning systems.
Seven years ago the brothers expanded north into Chaco and Santiago del Estero, provinces where the land was thought to be too dry to support corn and soybeans. Today, with more advanced seeds and better crop rotation, it is considered the frontier for Argentine agriculture. But production there is threatened by declining profitability.
As the government has taken more from the farmers, international prices for the supplies to produce their crops, including fertilizers and seeds, have been rising faster than the prices of the commodities, Marcelo Marchetti said. The price of phosphorus, for example, has nearly tripled since last year, he said.
Suddenly the future seems cloudier. The brothers have decided not to make any investments over the next year.
“Everything is on hold,” Mr. Marchetti said.

For the full story, see:
ALEXEI BARRIONUEVO. “In Argentina’s Grain Belt, Farmers Revolt Over Taxes.” The New York Times, Section 1 (Sun., April 27, 2008): 6.
(Note: ellipses added.)

“At a butcher shop in Buenos Aires, supplies were down during strikes by farmers in rural towns like Wenceslao Escalante.” Source of caption and photo: online version of the NYT article quoted and cited above.

Today artdiamondblog.com is Three Years Old

I have previously discussed my rationales for blogging, in the brief initial entry to my blog, and in the blog entry celebrating the second anniversary of the blog.

Many human activities have multiple motives, and blogging is no exception. Today I want to focus on a secondary, but important motive for maintaining artdiamondblog.com.

A few decades ago, when I was a graduate student at the University of Chicago, I was wise (or fortunate) enough to participate in a voluntary, non-credit, informal seminar offered by Deirdre McCloskey on research and (mainly) writing in economics. The advice expressed in the seminar was eventually expanded and refined in McCloskey’s wonderful essay "On Economical Writing."

One of the bits of advice in McCloskey’s essay is that in the research phase, it is useful to carry around some 4 by 6 cards on which to write quotes, and thoughts, related to the research. Good ideas would not be lost to failed memory, and in the latter stages, the card format lent itself to organization and re-organization.

I embraced this advice with over-the-top enthusiasm, not only purchasing a bunch of 4 by 6 cards, but even purchasing them in several different colors. (I may have already been primed for this advice by my days of carrying boxes of index card evidence around, when I was on the Riley High School debate team.)

Of course all this was before the days of the personal computer. I still carry around little note pads for the times when inspiration hits without closeness to keyboard. But most of the time, a keyboard is handy. There are software programs, such as Microsoft’s useful "OneNote" in which one can add notes, and organize them, in a private fashion. And I often use OneNote. But often it occurs to me that a quote or thought that seems useful to me in my research, might also be useful to someone else in their’s.

The cost of putting such a quote or thought on my blog is only very slightly higher than the cost of putting it down on OneNote, so I often bear the slight cost, with the hope, in the spirit of Albert Jay Nock, that some unknown member of "the remnant" will put the quote or thought to creative good use.

"You do not know and will never know who the Remnant are, or where they are, or how many of them there are, or what they are doing or will do. Two things you know, and no more: first, that they exist; second, that they will find you."

Source:

Nock, Albert Jay. "Isaiah’s Job." Atlantic Monthly, March 1936.

“Innovation Has Helped Lift Untold Numbers Out of Poverty”

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

(p. A23) . . . the impact of our technological innovation has helped lift untold numbers out of poverty.
This technology has created massive amounts of change. Like the Industrial Revolution before it, the current transformation is anything but pain-free. It’s what Joseph Schumpeter called creative destruction. Google, Craigslist and Microsoft have been prospering. General Motors, United Airlines and the New York Times have not. In the midst of layoffs in the newsroom, it’s hard to see anything good happening in the rest of the economy.

For the full commentary, see
BRIAN WESBURY. “Change We Can Believe In Is All Around Us.” The Wall Street Journal (Weds., June 11, 2008): A23.
(Note: ellipsis added.)

“Theory” Said Gene Sequencing Technique Was “Impossible”

In the book The Genome War, the story is told about how the leading theorist proved the impossibility of the gene sequencing technique. It was the Venter group that gave it a try and proved it could work. This story is similar to the one about theory saying that what Marconi was trying, was impossible. (See: Larson, 2006.)
Rosenberg and Birdzell (1986) discuss the case that theory had proven how solid objects fall. But Galileo’s experiments proved them wrong. This established the primacy of experiment and evidence, over theory.
When governments decide, they usually do what is safe, which is to follow current theory (or in rare cases, they pick Lysenko).
The entrepreneurial system, takes advantage of the tacit individual knowledge that is out there, but not yet theoretically defensible, and allows it to percolate to success.

References:
Larson, Erik. Thunderstruck. New York: Crown, 2006.
Rosenberg, Nathan, and L.E. Birdzell, Jr. How the West Grew Rich: The Economic Transformation of the Industrial World. New York: Basic Books, 1986.
Shreeve, James. The Genome War: How Craig Venter Tried to Capture the Code of Life and Save the World. 1st ed. New York: Alfred A. Knopf, 2004.