Author: Art Diamond

Regulations Support Car Incumbents and Undermine Tesla Profitability

(p. A13) . . . governments everywhere have decided, perversely, that electric cars will not be profitable. In every major market–the U.S., Europe, China–the same political dispensation now applies: Established auto makers effectively will be required to make and sell electric cars at a loss in order to continue profiting from gas-powered vehicles.
This has rapidly become the institutional structure of the electric-car industry world-wide, for the benefit of the incumbents, whether GM in the U.S. or Daimler in Germany. Let’s face it, the political class always had a bigger investment in these incumbents than it ever did in Tesla.
Tesla has a great brand, great technology and great vehicles. To survive, it also needs to mate itself to a nonelectric pickup truck business. . . .
We’ll save for another day the relating of this phenomenon to Mr. Musk’s recently erratic behavior and pronouncements. . . . Keep your eye on the bigger picture–the bigger picture is the global regulatory capture of the electric car moment by the status quo. And note the irony that Tesla’s home state of California was the original pioneer of this insiders’ regulatory bargain with its so-called zero-emissions-vehicle mandate.
Electric cars were going to remain a niche in any case, but public policy is quickly ruling out the possibility (which Tesla needed) of them at least being a profitable niche.

For the full commentary, see:
Holman W. Jenkins, Jr. “BUSINESS WORLD; A Tesla Crackup Foretold; The real problem is that governments everywhere have ordained that electric cars will be sold at a loss.” The Wall Street Journal (Saturday, June 23, 2018): A13.
(Note: ellipses added.)
(Note: the online version of the commentary has the date June 22, 2018.)

In a Robustly Redundant Labor Market Most “Will Find New Jobs Quickly”

(p. A1) Tesla Inc. on Tuesday [June 12, 2018] said it will cut about 9% of its workforce in an effort to deliver its first profit during a make-or-break period of building a mass-market electric car.
The layoffs of about 3,500 employees come as Chief Executive Elon Musk reorganizes Tesla’s management structure to make it flatter, and as the company tries to ramp up production of the all-electric Model 3 compact sedan.
In a memo to employees, Mr. Musk said the job cuts are mostly aimed at salaried staff and won’t affect production workers assembling the company’s vehicles. “This will not affect our ability to reach Model 3 production targets in the coming months,” he wrote.
. . .
(p. A8) “What drives us is our mission to accelerate the world’s transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable,” Mr. Musk wrote in the email to employees Tuesday. “That is a valid and fair criticism of Tesla’s history to date.”
. . .
On Twitter, Mr. Musk acknowledged that he was losing good people. “I think they will find new jobs quickly,” he said.

For the full story, see:
Higgins, Tim. “Tesla to Cut Workforce by 9%, In Bid for Sustainable Profit.” The Wall Street Journal (Wednesday, June 13, 2018): A1 & A8.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the date June 12, 2018, and has the title “Tesla Cutting About 9% of Global Workforce.”)

Libertarian Peter Thiel Predicts Communist China’s Tech Success (What?)

(p. B1) The Trump administration gave ZTE, which employs 75,000 people and is the world’s No. 4 maker of telecom gear, a stay of execution on Thursday. ZTE, which had violated American sanctions, agreed to pay a $1 billion fine and to allow monitors to set up shop in its headquarters. In return, the company — once a symbol of China’s progress and engineering know-how — will be allowed to buy the American-made microchips, software and other tools it needs to survive.
China’s technology boom, it turns out, has been largely built on top of Western technology.
The ZTE incident, as it is called in China, may be the country’s Sputnik moment. Like the United States in 1957, watching helplessly as the Soviet Union launched the first human-made satellite, many people in China now see how far the country still has to go.
“We realized,” said Dong Jielin, an adjunct professor at the Research Center for Technological Innovation at Tsinghua University in Beijing, “that China’s prosperity was built on sand.”
. . .
(p. B3) . . . many in China — and many cheerleaders of the Chinese tech scene — . . . found themselves in a feedback loop of their own making. The powerful propaganda machine flooded out rational voices, said Ms. Dong of Tsinghua University. The tech boom fits perfectly into Beijing’s grand narrative of a national rejuvenation. Innovation and entrepreneurship are top national policies, with enormous financial backing from the government. Even now, some articles critical of China’s lagging semiconductor industry have disappeared from the internet there.
And it wasn’t just Chinese people. Michael Moritz, the American venture capital investor, warned that China “is leaving Donald Trump’s America behind.” Peter Thiel, a PayPal co-founder, wondered how long it would take for China to overtake the United States. Three to four years, he concluded.
The boom kept many from asking hard questions. They promoted China’s surge in patent filings without looking at whether the patents were any good. They didn’t ask why China still imports 90 percent of its semiconductor components even though the industry became a national priority in 2000.

For the full commentary, see:
Li Yuan. “China’s Sputnik Moment.” The New York Times (Monday, June 11, 2018): B1 & B3.
(Note: ellipses added.)
(Note: the online version of the commentary has the date June 10, 2018, and has the title “THE NEW NEW WORLD; ZTE’s Near-Collapse May Be China’s Sputnik Moment.”)

Public Housing Segregated Blacks and Created Disincentives for Marriage and Work

(p. 21) Public housing in America was a New Deal innovation, intended not for the poor, but rather for working-class families, those who could afford to pay modest rent if the government provided them with the homes that private builders didn’t during the Depression. The Public Works Administration then built separate projects for white and black tenants.
. . .
With public housing racially isolated, other policies — some misguided but well intentioned, others indefensible — exacerbated the dysfunction. Austen notes that long waiting lists for relatively few units left poor applicants without other options for safe lodging. Compassionate officials addressed the predicament by lowering the income cutoff to qualify for public housing. The Chicago Housing Authority then made space for the poor by evicting working-class families for whom the projects were initially designed. The authority’s executive director told them, “Be proud to move out, so that a lower-income family can have the advantage that you have had.” Public housing’s opponents also demanded the evictions, insisting that those able to afford private accommodations should be barred from public support.
As Austen observes, the policy created a disincentive to marry, because a husband’s wages might render a family ineligible to remain in its home. The result was the segregation of projects by race and by income, concentrating fatherless young men who not only had little access to legitimate employment but lacked working-class role models who knew how to search for it. In the early 1950s, the median income of Chicago’s public housing residents was nearly two-thirds of the citywide average. By 1970, it was barely one-third.
Initially, Cabrini-Green hired residents as maintenance workers. But perversely, when income cutoffs were lowered, holding such jobs made tenants ineligible to remain. With residents themselves no longer responsible for maintenance, projects deteriorated. And with projects now filled with the politically powerless, and with revenue from rent payments falling, government slashed maintenance budgets and turned high rises into slums. In 1977, Cabrini-Green had 19 maintenance workers; two years later, there were six. Nearly half its units were unoccupied because of insufficient staff. Yet for most who remained in the projects, conditions were still superior to those in the overcrowded dwellings from which they had come.
. . .
In an otherwise nuanced book, Austen labels the social workers and officials who vowed to clear slums and house the poor as “do-gooders.” Implicit in his scorn is a hindsight appreciation that, for the poor to thrive, their communities must include working- and even middle-class families. The urbanist Jane Jacobs knew as much, but her “The Death and Life of Great American Cities” was published in 1961, after evictions of working-class public housing residents were already well underway. Until the sociologist William Julius Wilson published “The Truly Disadvantaged,” in 1987, few comprehended the terrible consequences of cleansing urban neighborhoods of the stably employed. In 2018, Ben Austen has illustrated these repercussions; we can now better consider remedies by contemplating the lessons “High-Risers” offers.

For the full review, see:
Richard Rothstein. “Bleak Housing.” The New York Times Book Review (Sunday, April 15, 2018): 21.
(Note: ellipses added.)
(Note: the online version of the review has the date April 13, 2018, and has the title “A New Look at the New Deal’s Legacy of Public Housing.”)

The book under review, is:
Austen, Ben. High-Risers: Cabrini-Green and the Fate of American Public Housing. New York: Harper, 2018.

A.I. Assists, but Does Not Replace, Humans

(p. B4) Some Phoenix-area residents have been hailing rides in minivans with no drivers and no human safety operators inside. But that doesn’t mean they’re on their own if trouble arises.
From a command center, employees at Alphabet Inc.’s Waymo driverless-car unit monitor the test vehicles on computer screens, able to wirelessly peer in through the minivan’s cameras. If the robot brain maneuvering the vehicle gets confused by a situation–say, a car unexpectedly stalled in front of it or closed lanes of traffic–it will stop the vehicle and ask the command center to verify what it is seeing. If the human confirms the situation, the robot will calculate how it should navigate around the hazard.

For the full story, see:
Tim Higgins. “Driverless Autos Get Help From Humans Watching Remotely.” The Wall Street Journal (Monday, June 7, 2018): B4.
(Note: the online version of the story has the date June 5, 2018, and has the title “Driverless Cars Still Handled by Humans–From Afar.”)

Fewer Regulations Allow Faster Chinese Cancer Innovation

(p. A1) HANGZHOU, China–In a hospital west of Shanghai, Wu Shixiu since March has been trying to treat cancer patients using a promising new gene-editing tool.
U.S. scientists helped devise the tool, known as Crispr-Cas9, which has captured global attention since a 2012 report said it can be used to edit DNA. Doctors haven’t been allowed to use it in human trials in America. That isn’t the case for Dr. Wu and others in China.
In a quirk of the globalized technology arena, Dr. Wu can forge ahead with the tool because he faces few regulatory hurdles to testing it on humans. His hospital’s review board took just an afternoon to sign off on his trial. He didn’t need national regulators’ approval and has few reporting requirements.
Dr. Wu’s team at Hangzhou Cancer Hospital has been drawing blood from esophageal-cancer patients, shipping it by high-speed rail to a lab that modifies disease-fighting cells using Crispr-Cas9 by deleting a gene that interferes with the immune system’s ability to fight cancer. His team then infuses the cells (p. A10) back into the patients, hoping the reprogrammed DNA will destroy the disease.
In contrast, what’s expected to be the first human Crispr trial outside China has yet to begin. The University of Pennsylvania has spent nearly two years addressing federal and other requirements, including numerous safety checks designed to minimize risks to patients. While Penn hasn’t received final federal clearance to proceed, “we hope to get clearance soon,” a Penn spokeswoman said.
“China shouldn’t have been the first one to do it,” says Dr. Wu, 53, an oncologist and president of Hangzhou Cancer Hospital. “But there are fewer restrictions.”

For the full story, see:
Rana, Preetika, Amy Dockser Marcus and Wenxin Fan. “China Races Ahead In Gene Editing.” The Wall Street Journal (Monday, January 22, 2018): A1 & A10.
(Note: the online version of the story has the date Jan. 21, 2018, and has the title “China, Unhampered by Rules, Races Ahead in Gene-Editing Trials.”)

Canada’s Single-Payer System Causes “Suffering and Deaths of People on Wait Lists”

(p. A17) Canada’s single-payer health-care system, known as Medicare, is notoriously sluggish. But private clinics like Cambie are prohibited from charging most patients for operations that public hospitals provide free. Dr. Day is challenging that prohibition before the provincial Supreme Court.
. . .
People stuck on Medicare waiting lists can only dream of timely care. Last year, the median wait between referral from a general practitioner and treatment from a specialist was 21.2 weeks, or about five months–more than double the wait a quarter-century ago. Worse, the provincial governments lie about the extent of the problem. The official clock starts only when a surgeon books the patient, not when a general practitioner makes the referral. That adds months and sometimes much longer. In November [2017] an Ontario woman learned she’d have to wait 4½ years to see a neurologist.
. . .
Dr. Day’s lawsuit aims to overturn these provisions. It alleges that the government’s legal restrictions on private care are to blame for the needless “suffering and deaths of people on wait lists.” Dr. Day argues that the current system violates citizens’ rights to “life, liberty, and security of the person,” as guaranteed by the Canadian Charter of Rights and Freedoms, the equivalent of the U.S. Bill of Rights.

For the full commentary, see:
Sally C. Pipes. “Single-Payer Health Care Isn’t Worth Waiting For; An orthopedic surgeon challenges Canada’s ban on most privately funded procedures.” The Wall Street Journal (Monday, January 22, 2018): A17.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the commentary has the date Jan. 21, 2018.)

“NASA as a Bloated and Unimaginative Bureaucracy”

(p. 10) “The Space Barons,” by Christian Davenport, a Washington Post reporter, is an exciting narrative filled with colorful reporting and sharp insights. The book sparkles because of Davenport’s access to the main players and his talent for crisp storytelling.
. . .
One of the first private pioneers was Burt Rutan, a mutton-chopped aircraft designer who regarded NASA as a bloated and unimaginative bureaucracy and in 1982 founded a company called Scaled Composites that designed aircraft so innovative that, as Davenport writes, “it was as if his inspiration came not just from the laws of aerodynamics but from Picasso.” One of his ideas was for a manned aircraft that could reach the edge of space and then fold its wings upward to act as a feather allowing the craft to re-enter the earth’s atmosphere, land on a runway, and be reused. It would become his entry in the Ansari X Prize, which offered $10 million for the first private company that could launch a reusable vehicle to space twice within two weeks.
Rutan attracted two billionaire partners. The first was the Microsoft co-founder Paul Allen, who as a schoolboy in Seattle yearned to become an astronaut but, being nearsighted, realized that was impossible so spent his time coding in the school’s computer room with his friend Bill Gates. Rutan’s second partner was the toothy goldilocked Richard Branson, a thrill-addicted serial adventurer and entrepreneur who was as enthusiastic about publicity as Allen was averse to it. Branson’s personal motto for his company, Virgin, was “Screw it, let’s do it,” which was no longer a guiding principle at NASA, and he created Virgin Galactic with the goal of taking tourists into space. “Paul, isn’t this better than the best sex you ever had?” Branson asked Allen during one test flight as the spaceship climbed higher.
In 2004, Rutan’s craft (with a Virgin logo on its tail) flew twice to space and back to win the X Prize. At the celebration, Rutan took a shot at NASA. “I was thinking a little bit about that other space agency, the big guys,” he said. “I think they’re looking at each other now and saying, ‘We’re screwed.'”
. . .
At the end of 2015, within a month of each other, Musk and Bezos both launched rockets that returned safely to earth and were reusable. For the moment, Musk the hare had darted ahead: His powerful Falcon 9 rocket had lifted a payload into orbit, whereas Bezos’ smaller New Shepard craft had merely gone up into the edge of space and returned. But as happens with scrappy entrepreneurial business competitors, in contrast to government bureaucracies, Bezos and Musk were goading each other on. And unlike the race between the tortoise and the hare, they can both triumph — as can, one hopes, Richard Branson and others.

For the full review, see:
Walter Isaacson. “The Right Stuff.” The New York Times Book Review (Sunday, April 29, 2018): 10.
(Note: ellipses added.)
(Note: the online version of the review has the date April 24, 2018, and has the title “In This Space Race, Jeff Bezos and Elon Musk Are Competing to Take You There.”)

The book under review, is:
Davenport, Christian. The Space Barons: Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos. New York: PublicAffairs, 2018.

No Known Maximum Life Span

(p. D3) Since 1900, average life expectancy around the globe has more than doubled, thanks to better public health, sanitation and food supplies. But a new study of long-lived Italians indicates that we have yet to reach the upper bound of human longevity.
“If there’s a fixed biological limit, we are not close to it,” said Elisabetta Barbi, a demographer at the University of Rome. Dr. Barbi and her colleagues published their research Thursday [sic] in the journal Science.
. . .
Dr. Barbi and her colleagues combed through Italy’s records to find every citizen who had reached the age of 105 between 2009 and 2015. To validate their ages, the researchers tracked down their birth certificates.
The team ended up with a database of 3,836 elderly Italians. The researchers tracked down death certificates for those who died in the study period and determined the rate at which various age groups were dying.
It’s long been known that the death rate starts out somewhat high in infancy and falls during the early years of life. It climbs again among people in their thirties, finally skyrocketing among those in their seventies and eighties.
. . .
Among extremely old Italians, they discovered, the death rate stops rising — the curve abruptly flattens into a plateau.
The researchers also found that people who were born in later years have a slightly lower mortality rate when they reach 105.
“The plateau is sinking over time,” said Kenneth W. Wachter, a demographer at the University of California, Berkeley, who co-authored the new study. “Improvements in mortality extend even to these extreme ages.”
“We’re not approaching any maximum life span for humans yet,” he added.

For the full story, see:
Zimmer, Carl. “What Is the Limit of Our Life Span?” The New York Times (Tuesday, July 3, 2018): D3.
(Note: ellipses added.)
(Note: the online version of the story has the date June 28, 2018, and has the title “How Long Can We Live? The Limit Hasn’t Been Reached, Study Finds.” The NYT article says the Science article was published on “Thursday,” but the citation for it that I found says it was published on Fri., June 29, 2018.)

The Science article mentioned above, is:
Barbi, Elisabetta, Francesco Lagona, Marco Marsili, James W. Vaupel, and Kenneth W. Wachter. “The Plateau of Human Mortality: Demography of Longevity Pioneers.” Science 360, no. 6396 (June 29, 2018): 1459-61.

Rats, Mice, and Humans Fail to Ignore Sunk Costs

(p. D6) Suppose that, seeking a fun evening out, you pay $175 for a ticket to a new Broadway musical. Seated in the balcony, you quickly realize that the acting is bad, the sets are ugly and no one, you suspect, will go home humming the melodies.
Do you head out the door at the intermission, or stick it out for the duration?
Studies of human decision-making suggest that most people will stay put, even though money spent in the past logically should have no bearing on the choice.
This “sunk cost fallacy,” as economists call it, is one of many ways that humans allow emotions to affect their choices, sometimes to their own detriment. But the tendency to factor past investments into decision-making is apparently not limited to Homo sapiens.
In a study published on Thursday [July 12, 2018] in the journal Science, investigators at the University of Minnesota reported that mice and rats were just as likely as humans to be influenced by sunk costs.
The more time they invested in waiting for a reward — in the case of the rodents, flavored pellets; in the case of the humans, entertaining videos — the less likely they were to quit the pursuit before the delay ended.
“Whatever is going on in the humans is also going on in the nonhuman animals,” said A. David Redish, a professor of neuroscience at the University of Minnesota and an author of the study.
This cross-species consistency, he and others said, suggested that in some decision-making situations, taking account of how much has already been invested might pay off.

For the full story, see:
Erica Goode. “‘Sunk Cost Fallacy’ Claims More Victims.” The New York Times (Tuesday, July 17, 2018): D6
(Note: bracketed date added.)
(Note: the online version of the story has the date July 12, 2018, and has the title “Mice Don’t Know When to Let It Go, Either.”)