Month: August 2016

Brazilians See Government as a Father Who Should Hand Out Subsidies to His Favorites

(p. 9) . . . “Brazillionaires” offers more than a flat collection of billionaire tales. Cuadros shrewdly presents his collage of immense wealth against an underlying background of corruption. There are kickbacks for government contracts. There are gigantic taxpayer subsidies: In 2009 alone, the state-run development bank, BNDES, lent out $76 billion, “more than the World Bank lent out in the entire world.” And of course there are lavish campaign contributions, attached to the inevitable quid pro quos. JBS, which leveraged government loans to become the largest meatpacking company in the world, spent $180 million on the 2014 elections alone. “If every politician who had received JBS money formed a party,” Cuadros writes, “it would be the largest in Congress.”
In his telling, Brazilians seem to embrace the cozy relationship between business and government as a source of pride rather than a risk for conflicts of interest. In one passage, Cuadros underscores the contrast between Adam Smith and the 19th-century Brazilian thinker José da Silva Lisboa, viscount of Cairu. Lisboa’s “Principios de Economía Politica” was meant to be an adaptation of Smith’s “Wealth of Nations.” But rather than present a paean to the invisible hand of the market, the viscount offered a rather paternalistic view of economic progress.
“The sovereign of each nation must be considered the chief or head of a vast family,” he wrote, “and thus care for all those therein like his children, cooperating for the greater good.” Swap “government” for “sovereign” and the passage still serves as an accurate guide to the Brazilian development strategy. It’s just that some children — the Marinhos, the Camargos — are cared for better than ­others.
. . .
It would be wrong, . . . , to understand Brazil’s plutocracy as the product of some unique outcrop of corruption. The hold on political power by the rich is hardly an exclusive feature of Brazil. ­Latin America has suffered for generations from the collusion between government and business. Where I grew up, in Mexico, it is the norm.

For the full review, see:
EDUARDO PORTER. “Real Rich.” The New York Times Book Review (Sun., JULY 24, 2016): 9.
(Note: ellipses added.)
(Note: the online version of the review has the date JULY 22, 2016, and has the title “Watching Brazil’s Rich: A Full-Time Job.”)

The book under review, is:
Cuadros, Alex. Brazillionaires: Wealth, Power, Decadence, and Hope in an American Country. New York: Spiegel & Grau, 2016.

Iowa State Students Go Bananas to Save (or Harm?) African Children

(p. A11) Student activists at Iowa State University are up in arms after researchers offered to pay them almost a thousand bucks to eat some genetically modified banana. The bananas, created by an Australian scientist, contain high levels of beta carotene, which converts to vitamin A when eaten.
. . .
“Those students are acting out of ignorance,” Jerome Kubiriba, the head of the National Banana Research Program in Uganda, tells me. “It’s one thing to read about malnutrition; it’s another to have a child who is constantly falling sick yet, due to limited resources, the child cannot get immediate and constant medical care. If they knew the truth about the need for vitamin A and other nutrients for children in Uganda and Africa, they’d get a change of heart.”

For the full commentary, see:
JULIE KELLY. “Anti-GMO Students Bruise a Superbanana.” The Wall Street Journal (Tues., March 15, 2016): A11.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date March 14, 2016.)

“Draconian” Regulations Reduce Consumer Choice

(p. B1) The Consumer Financial Protection Bureau, the watchdog agency set up after the last financial crisis, is poised to adopt strict new national rules that will curtail payday lending.
. . .
(p. B6) A sweeping study of bans on payday lending, scheduled to be published soon in The Journal of Law and Economics, found similar patterns in other states. When short-term loans disappear, the need that drives demand for them does not; many customers simply shift to other expensive forms of credit like pawn shops, or pay late fees on overdue bills, the study’s authors concluded.
Mr. Munn, who works as a site geologist on oil wells, first borrowed from Advance America eight months ago when his car broke down. He had some money saved, but he needed a few hundred more to pay the $1,200 repair bill. Then his employer, reacting to falling oil prices, cut wages 30 percent. Mr. Munn became a regular at the loan shop.
He likes the store’s neighborhood vibe and friendly staff, and he views payday loans as a way to avoid debt traps he considers more insidious.
“I don’t like credit cards,” said Mr. Munn, who is wary of the high balances that they make it too easy to run up. “I could borrow from my I.R.A., but the penalties are huge.”
At Advance America, he said, “I come in here, pay back what I’ve taken, and get a little bit more for rent and bills. I keep the funds to an extent that I can pay back with the next check. I don’t want to get into more trouble or debt.”
. . .
The rules would radically reshape, and in some places eliminate, payday borrowing in the 36 states where lenders still operate, according to Richard P. Hackett, a former assistant director at the Consumer Financial Protection Bureau.
. . .
“It’s a draconian scenario,” said Jamie Fulmer, an Advance America spokesman.

For the full story, see:
STACY COWLEY. “To Curb Abuse, Loan Rules May Cut a Lifeline.” The New York Times (Sat., JULY 23, 2016): B1 & B6.
(Note: ellipses added.)
(Note: the online version of the story has the date JULY 22, 2016, and has the title “Payday Loan Limits May Cut Abuse but Leave Some Borrowers Looking.”)

Androgen Lengthens Telomeres

(p. A3) Androgens, a kind of sex hormone, have been used to treat certain genetic blood disorders for decades. But doctors haven’t been able to pinpoint exactly why they seem to help some patients. A small study puts forth a theory behind androgens’ disease-fighting mechanism: They help stabilize and even rebuild telomeres, which increasingly diminish in certain conditions and aging.
. . .
The authors of the study, published Wednesday [May 18, 2016] in the New England Journal of Medicine, treated telomere-disease patients who had a variety of conditions with a high dose of a synthetic androgen called danazol. The goal was to test whether the treatment would help keep telomeres intact longer. Instead, they saw them lengthen.
. . .
Experts, including the study’s authors, . . . warned against concluding danazol is a fountain of youth for the healthy, based on research that suggests that shrinking telomeres may be involved in aging.
“That,” said Dr. Agarwal, “would be purely in the realm of speculation.”

For the full story, see:
DANIELA HERNANDEZ. “How Sex Hormones Might Treat Some Diseases.” The Wall Street Journal (Thurs., May 19, 2016): A3.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the date May 18, 2016, and has the title “How Sex Hormones Might Treat Certain Diseases.” The print version starts with a one-sentence summary paragraph that is absent in the online version. The second paragraph in the print version differs slightly from the first paragraph in the online version. The version quoted as the first paragraph above, is the first paragraph of the online version.)

The academic article mentioned above (though the date given by the NYT above appears to be a day too early), is:
Townsley, Danielle M., Bogdan Dumitriu, Delong Liu, Angélique Biancotto, Barbara Weinstein, Christina Chen, Nathan Hardy, Andrew D. Mihalek, Shilpa Lingala, Yun Ju Kim, Jianhua Yao, Elizabeth Jones, Bernadette R. Gochuico, Theo Heller, Colin O. Wu, Rodrigo T. Calado, Phillip Scheinberg, and Neal S. Young. “Danazol Treatment for Telomere Diseases.” New England Journal of Medicine 374, no. 20 (May 19, 2016): 1922-31.

Creativity Is Correlated with “Openness to Experience”

(p. D3) “Insightful problem solving can’t be boiled down to any single way of thinking,” the authors say. Creative people have messy processes, and often messy minds, full of contradictions.
Contrary to the well-worn notion that creativity resides in the right side of the brain, research shows that creativity is a product of the whole brain, relying especially on what the authors call the “imagination network” — circuits devoted to tasks like making personal meaning, creating mental simulations and taking perspective.
While creative people run the gamut of personalities, Dr. Kaufman’s research has shown that openness to experience is more highly correlated to creative output than I.Q., divergent thinking or any other personality trait. This openness often yields a drive for exploration, which “may be the single most important personal factor predicting creative achievement,” the authors write.
These are people energized and motivated by the possibility of discovering new information: “It’s the thrill of the knowledge chase that most excites them.”
Once the idea is found, alas, the creative process begins to resemble something more like grinding execution. It’s still creative, but it requires more focus and less daydreaming — one reason highly creative people tend to exhibit mindfulness and mental wandering.
“Creativity is a process that reflects our fundamentally chaotic and multifaceted nature,” the authors write. “It is both deliberate and uncontrollable, mindful and mindless, work and play.”

For the full review, see:
CHRISTIE ASCHWANDEN. “Books; The Blessed Mess of Creativity.” The New York Times (Tues., FEB. 9, 2016): D3.
(Note: the online version of the review has the date FEB. 8, 2016, and has the title “Books; Review: ‘Wired to Create’ Shows the Science of a Messy Process.”)

The book under review, is:
Kaufman, Scott Barry, and Carolyn Gregoire. Wired to Create: Unraveling the Mysteries of the Creative Mind. New York: TarcherPerigee, 2015.

Certificate-of-Need Regulations Protect Incumbents and Hurt Consumers

(p. A11) An important but overlooked debate is unfolding in several states: When governments restrict market forces in health care, who benefits? Legislative majorities in 36 states believe that consumers benefit, because restrictions help control health-care costs. But new research confirms what should be common sense: Preventing qualified health-care providers from freely plying their trade results in less access to care.
Most states enforce market restrictions through certificate-of-need programs, which mandate a lengthy, expensive application process before a health-care provider can open or expand a facility. The story goes: If hospitals or physicians could choose what services to provide, competition for patients would force providers to overinvest in equipment such as MRI machines–and the cost could be passed on to patients through higher medical bills.
. . .
These restrictions have largely failed to reduce costs, but they certainly reduce services. A 2011 study in the Journal of Health Care Finance found that certificate-of-need laws resulted in 48% fewer hospitals and 12% fewer hospital beds.

For the full commentary, see:
THOMAS STRATMANN and MATTHEW BAKER. “Certifiably Needless Health-Care Meddling.” The Wall Street Journal (Tues., Jan. 12, 2016): A11.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Jan. 11, 2016.)

The “new research” mentioned by Stratman in the passage quoted above, is:
Stratmann, Thomas, and Matthew C. Baker. “Are Certificate-of-Need Laws Barriers to Entry?: How They Affect Access to MRI, CT, and Pet Scans.” Mercatus Working Paper, Jan. 2016.

“Hong Kongers Will Not Bow Down to Brute Force”

(p. A1) HONG KONG — Blindfolded and handcuffed, the bookseller was abducted from Hong Kong’s border with mainland China and taken to a cell, where he would spend five months in solitary confinement, watched 24 hours a day by a battery of Chinese guards.
Even the simple act of brushing his teeth was monitored by minders, who tied a string to his toothbrush for fear he might try to use it to harm himself. They wanted him to identify anonymous authors and turn over data on customers.
“I couldn’t call my family,” the man, Lam Wing-kee, said on Thursday. “I could only look up to the sky, all alone.”
Months after he and four other booksellers disappeared from Hong Kong and Thailand, prompting international concern over what critics called a brazen act of extralegal abduction, Mr. Lam stood before a bank of television cameras in Hong Kong and revealed the harrowing details of his time in detention.
“It can happen to you, too,” said Mr. Lam, 61, who was the manager of Causeway Bay Books, a store that sold juicy potboilers about the mainland’s Communist Party leadership. “I want to tell the whole world: Hong Kongers will not bow down to brute force.”
. . .
(p. A14) In the months since Mr. Lam and his colleagues disappeared, the industry has fallen on hard times. Causeway Bay Books has closed, and many Hong Kong bookstores have pulled titles about Chinese politics from their shelves.
The disappearances shocked people in Hong Kong and reverberated internationally. Many saw the episode as an expansion of China’s authoritarian legal system beyond its borders, in clear violation of the “one country, two systems” framework that allows Hong Kong to maintain a high degree of autonomy from Beijing.
Thousands of people took to the streets of Hong Kong to demand the booksellers’ release. Diplomats from Britain, the European Union and the United States also registered concern.

For the full story, see:
ALAN WONG, MICHAEL FORSYTHE and ANDREW JACOBS. “Defying China, Hong Kong Bookseller Describes Detention.” The New York Times (Fri., JUNE 17, 2016): A1 & A14.
(Note: ellipsis added.)
(Note: the online version of the story has the date JUNE 16, 2016, and has the title “Defying China, Hong Kong Bookseller Describes Detention.”)

How to Avoid Bureaucratic Time-Wasting Lines

(p. 9) London — ITALIAN bureaucracy is legendary for a reason. Italians spend so much of their lives waiting in line — an estimated 400 hours a year per person — that some are now willing to pay freelancers to wait on their behalf. The rich can pay a “codista,” a neologism for a trained line sitter, to maunder at the post office or bank while they get on with something more important.
. . .
Brazil has its “despachantes,” meaning dispatchers. Venezuela has its “coleros,” which, oddly, can translate to “top hats”; and Spain its “gestores” or agents. Meanwhile, in South Africa there is a company called Q4U that takes care specifically of the irksome business of applying for a British passport.
In New York City, the cash-rich and time-poor use the service Same Ole Line Dudes, which describes itself as “New York’s only professional line sitting team.” The Dudes will charge you $25 for the first hour, plus $10 for each additional 30 minutes, to put in the necessary time to obtain coveted concert tickets or rare new sneakers. Their slogan is, “We wait for your wants.” I am told that they will even wait at the Department of Motor Vehicles for you.

For the full commentary, see:
TOM HODGKINSON. “How to Get Paid to Do Nothing.” The New York Times, SundayReview Section (Sun., July 10, 2016): 9.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date July 9, 2016.)

Technology Platforms Will Create Decades of Gales of Creative Destruction

(p. A11) For traditional businesses, economies of scale are the key to competitive advantage: Larger firms have lower average costs. In the digital economy, network effects matter most. In “Matchmakers” (Harvard Business Review, 260 pages, $35), David S. Evans (a consultant) and Richard Schmalensee (a professor of management) highlight two particular forms.
Direct network effects occur when additional users make a service more valuable for everyone. If one’s colleagues are all on, say, LinkedIn, it will be hard for another professional network to exert a strong appeal. Without the critical mass of LinkedIn, the alternative will have less utility even if its features are better. Indirect network effects arise from positive feedback loops between opposing sides of a market. The value of Rightmove, for instance, the leading online real-estate site in Britain, comes from a matching function: Since each home is unique, buyers prefer the site with the most properties, and real-estate agents favor the site with the most buyers. This virtuous cycle magnifies Rightmove’s advantage even though participants on each side of the market compete with one another: More buyers increase competition for the same homes, and agents compete for buyers.
. . .
“Matchmakers” is . . . measured and analytical . . . . The authors fairly conclude that, while the telegraph was “a far more important multisided platform” than anything produced so far by the Internet, platforms are “behind the gales of creative destruction that . . . will sweep industries for decades to come.”

For the full review, see:

JEREMY G. PHILIPS. “Why Facebook’s Imitators Failed; If one’s coworkers are all on the same platform, any alternative will have less utility–even if its features are better.” The Wall Street Journal (Thurs., May 19, 2016): A11.
(Note: the ellipsis between paragraphs, and the first two in the final quoted paragraph, are added; the third ellipsis in the final paragraph is in the original.)
(Note: the online version of the review has the date May 18, 2016.)

The book under review, is:
Evans, David S., and Richard Schmalensee. Matchmakers: The New Economics of Multisided Platforms. Boston: Harvard Business Review Press, 2016.

Taylor Swift Defends Intellectual Property Rights

(p. A11) In battles against tech titans, Chinese e-commerce swindlers and others, Ms. Swift has repeatedly insisted on being paid for her music and brand–and in the process has taught some valuable lessons in basic economics.
. . .
Last year she picked a fight with Apple after the company announced plans to launch its Apple Music streaming service with a three-month trial period during which users wouldn’t pay subscription fees and Apple wouldn’t pay royalties for the songs streamed.
. . .
Ms. Swift had less luck trying to get the Spotify streaming service to restrict her songs to paying customers, so in 2014 she pulled her catalog from the platform entirely. Her manager said Spotify’s royalty payments are miserly compared with regular album revenues: “Don’t forget this is for the most successful artist in music today. What about the rest of the artists out there struggling to make a career?”
Ms. Swift’s most ambitious crusade may be in China, where she has launched branded clothing lines with special antipiracy mechanisms to combat rampant counterfeiting on e-commerce sites like Alibaba’s Taobao. Said one of the branding executives leading the effort: “It’s time for Chinese companies to say, ‘We don’t want to be known for piracy anymore.’ ” Good luck with that.

For the full commentary, see:

DAVID FEITH. “In Support of Taylor Swift, Economist.” The Wall Street Journal (Thurs., July 21, 2016): A11.
(Note: ellipses added.)
(Note: the online version of the commentary has the date July 20, 2016.)