Author: Art Diamond

China’s “Double Whammy for Prospective Entrepreneurs”

(p. B12) China’s past attempts to stoke indigenous innovation have a checkered history. A flood of cheap capital and high, state-set solar power rates in the mid-2000s secured China’s place as the world’s number one solar cell manufacturer. But it also led to enormous overcapacity, which sank prices and pushed debt burdens higher, making investment in real R&D more difficult. For investors, China’s solar champions have been a losing proposition–American depositary receipts of top firms such as JinkoSolar are worth less than half of their peak in 2010. Robotics, a key element of Beijing’s “Made in China 2025” plan to dominate high-tech manufacturing, is exhibiting similar tendencies.
The state-centric nature of China’s financial system–and its weak intellectual property protection–represents a double whammy for prospective entrepreneurs. Small private-sector firms often only have access to capital through expensive shadow banking channels, and face the risk that some better connected, state-backed firm will make off with their designs–with very little recourse.

For the full story, see:
Nour Malas and Paul Overberg. “‘Chinese Innovation Won’t Come Easily Without U.S. Tech.” The Wall Street Journal (Tuesday, March 23, 2018): B12.
(Note: the online version of the story has the date March 22, 2018, and has the title “Can China’s Red Capital Really Innovate?”)

The Diversity That Matters Most Is Diversity of Thought

(p. A15) If you want anyone to pay attention to you in meetings, don’t ever preface your opposition to a proposal by saying: “Just to play devil’s advocate . . .” If you disagree with something, just say it and hold your ground until you’re convinced otherwise. There are many such useful ideas in Charlan Nemeth’s “In Defense of Troublemakers,” her study of dissent in life and the workplace. But if this one alone takes hold, it could transform millions of meetings, doing away with all those mushy, consensus-driven hours wasted by people too scared of disagreement or power to speak truth to gibberish. Not only would better decisions get made, but the process of making them would vastly improve.
. . .
In the latter part of her book, Ms. Nemeth explores in more detail how dissent improves the way in which groups think. She is ruthless toward conventional “brainstorming,” which tends toward the uncritical accumulation of bad ideas rather than the argumentative heat that forges better ideas. It’s only through criticism that concepts receive proper scrutiny. “Repeatedly we find that dissent has value, even when it is wrong, even when we don’t like the dissenter, and even when we are not convinced of his position,” she writes. “Dissent . . . enables us to think more independently” and “also stimulates thought that is open, divergent, flexible, and original.”
. . .
Ms. Nemeth’s punchy book also has an invaluable section on diversity in groups. All too often, she writes, in pursuit of diversity we focus on everything but the way people think. We look at a group’s gender, color or experience, and once the palette looks right declare it diverse. But you can have all of that and still have a group that thinks the same and reinforces a wrong-headed consensus.
By contrast, you can have a group that is demographically homogeneous yet violently heterogeneous in the way it thinks. The kind of diversity that leads to well-informed decisions is not necessarily the kind of diversity that gives the appearance of social justice. That will be a hard message for many organizations to swallow. But as with many of the arguments that Ms. Nemeth makes in her book, it is one that she gamely delivers and that all managers interested in the quality and integrity of their decision-making would do well to heed.

For the full review, see:
Philip Delves Broughton. “BOOKSHELF; Rocking The Boat.” The Wall Street Journal (Thursday, May 9, 2018): A15.
(Note: ellipsis internal to a paragraph, in original; ellipses between paragraphs, added.)
(Note: the online version of the review has the date May 10, 2018, and has the title “BOOKSHELF; ‘In Defense of Troublemakers’ Review: Rocking the Boat.”)

The book under review, is:
Nemeth, Charlan. In Defense of Troublemakers: The Power of Dissent in Life and Business. New York: Basic Books, 2018.

San Francisco Suffers Net Loss of People as Tech Booms

(p. A3) San Francisco is such a boomtown that people are leaving in droves.
In 2016 and 2017, more people moved out of the San Francisco-Oakland-Hayward metropolitan area–an urban core of 4.7 million people in a broader region known as the Bay Area–than moved into it from other parts of California or the U.S., according to U.S. census data.
In the year that ended July 1, the region showed a net loss of nearly 24,000 residents to the rest of the country, roughly double the loss of the previous year and a sharp reversal from net annual gains of about 15,000 as recently as 2013-14.
Economists said the outflow is being driven by the high cost of housing in the area, where the average home value in several counties surpasses $1 million.

For the full story, see:
Nour Malas and Paul Overberg. “‘San Francisco’s Boom Leads to an Exodus.” The Wall Street Journal (Friday, March 23, 2018): A3.
(Note: the online version of the story has the date March 22, 2018, and has the title “San Francisco Has a People Problem.”)

Ecosocialism: The “Green-and-Red Agenda” to Eradicate Capitalism

Not all environmentalists are motivated by a desire to destroy capitalism. But some are. See below.

(p. 26) Joel Kovel, a former Freudian psychiatrist who evolved into an apostle of what he called ecosocialism, a so-called green-and-red agenda against the environmental evils of globalization and in favor of the nonviolent eradication of capitalism, died on Monday [April 30, 2018] in Manhattan.
. . .
Whenever he launched an ideological crusade, he did so zealously — even if, as in the case of ecosocialism, its very definition and the collateral demand for an appealing alternative to capitalism were not self-evident.
Under ecosocialist theory, income would be guaranteed, most property and means of production would be commonly owned, and the abolition of capitalism, globalism and imperialism would unleash environmentalists to vastly curtail industrialization and development whose pollution would otherwise cause catastrophic global warming.
“Capitalist production, in its endless search for profit, seeks to turn everything into a commodity,” Dr. Kovel wrote in 2007 on the socialist website Climate and Capitalism. “It is plain that production will have to shift from being dominated by exchange — the path of the commodity — to that which is for use, that is for the direct meeting of human needs.”

For the full obituary, see:
Sam Roberts. “Dr. Joel Kovel, a Founder of Ecosocialism, Is Dead at 81.” The New York Times, First Section (Sunday, May 6, 2018): 26.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the obituary has the date May 4, 2018, and has the title “Dr. Joel Kovel, a Founder of Ecosocialism, Is Dead at 81.”)

More Firms Educate In-House

(p. B5) . . . Atlanta-based aluminum-products maker Novelis started a school within the company to impart lessons pulled from the factory floor with a faculty and nine “deans” to oversee it.
Federal policy for decades has pushed more people to go to four-year colleges, promoting a college-preparatory high-school curriculum and easing access to student loans. But technology is changing faster than colleges can keep up and employers say too many schools aren’t teaching students the skills they need–or even basic critical thinking.
With the labor market the tightest it has been in a generation, this misalignment is causing big–and expensive–headaches for employers. So companies are increasingly taking matters into their own hands. Major employers like CVS Health Corp., Novelis, International Business Machines Corp., Aon PLC and JPMorgan Chase & Co. are hiring workers because of what they can do, or what the company believes they can teach them, instead of the degrees they hold.

For the full story, see:
Douglas Belkin. “‘Education Is Moving to the Factory Floor.” The Wall Street Journal (Friday, March 23, 2018): B5.
(Note: ellipsis added.)
(Note: the online version of the story has the date March 22, 2018.)

“Wilson’s Betrayal of Black Americans”

(p. C6) Instead of “The Moralist: Woodrow Wilson and the World He Made,” Patricia O’Toole could have titled her new book “The Hypocrite.”
After all, as she herself points out, to lay claim to the moral high ground as often and as fervently as President Wilson did during his eight years in the White House was to court charges that he failed to live up to his own principles. He called for an end to secret treaties while negotiating secretly with the Allies in World War I. He declared himself unwilling to compromise with belligerents abroad while showing himself very willing to compromise with segregationists at home. He pursued a progressive economic agenda while approving a regressive racial one. He spoke of national self-determination in the loftiest terms while initiating the American occupation of Haiti and the Dominican Republic.
. . .
“The Moralist” suggests that Wilson’s betrayal of black Americans was born from simple expedience — that he allowed the segregation of the Civil Service because he desperately needed the votes of Southern congressmen in order to pass his progressive economic agenda, including the introduction of a federal income tax.
“He knew the segregation was morally indefensible, but ending it would have cost him the votes of every Southerner in Congress,” O’Toole writes.
The second part of her sentence is largely correct, but how can she be so sure about the first? As evidence she cites Wilson’s own pleas to his critics. “I am in a cruel position,” he told the chairman of the N.A.A.C.P., insisting he was “at heart working for these people.” The testy exchange apparently left Wilson so rattled he took to his bed for a week.
But as O’Toole herself shows, his cries of political constraints were later followed by his claims that politics were irrelevant to racism anyway. In 1914, Wilson told the African-American editor William Monroe Trotter that eliminating segregation wouldn’t do anything for racial animus, which he called “a human problem, not a political problem.” (Wilson took to his bed after that “bruising quarrel” with Trotter, too.).

For the full review, see:
Jennifer Szalai. “BOOKS OF THE TIMES; Woodrow Wilson’s Flawed Idealism.” The New York Times (Wednesday, May 2, 2018): C6.
(Note: ellipsis added.)
(Note: the online version of the review has the date May 1, 2018, and has the title “BOOKS OF THE TIMES; In ‘The Moralist,’ Woodrow Wilson and the Hazards of Idealism.”)

The book under review, is:
O’Toole, Patricia. The Moralist: Woodrow Wilson and the World He Made. New York: Simon & Schuster, 2018.

California Regulation Adds $9,500 to Average Home Cost

(p. A1) The California Energy Commission voted 5-0 to approve a mandate that residential buildings up to three stories high, including single-family homes and condos, be built with solar installations starting in 2020.
The commission estimates that the move, along with other (p. A2) energy-efficiency requirements, would add $9,500 to the average cost of building a home in California. The state is already one of the most expensive housing markets in the country, with a median price of nearly $565,000 for a single-family home, according to the California Association of Realtors.

For the full story, see:
Erin Ailworth. “Solar Panel Mandate Jolts Housing Industry.” The Wall Street Journal (Thursday, May 10, 2018): A1-A2.

(Note: the online version of the story was updated May 9, 2018, and has the title “California Takes Big Step to Require Solar on New Homes.”)

Hundreds of Years of CO2 Emissions Could Be Stored Forever in Oman’s Rocks

(p. A10) IBRA, Oman — In the arid vastness of this corner of the Arabian Peninsula, out where goats and the occasional camel roam, rocks form the backdrop practically every way you look.
But the stark outcrops and craggy ridges are more than just scenery. Some of these rocks are hard at work, naturally reacting with carbon dioxide from the atmosphere and turning it into stone.
Veins of white carbonate minerals run through slabs of dark rock like fat marbling a steak. Carbonate surrounds pebbles and cobbles, turning ordinary gravel into natural mosaics.
Even pooled spring water that has bubbled up through the rocks reacts with CO2 to produce an ice-like crust of carbonate that, if broken, re-forms within days.
Scientists say that if this natural process, called carbon mineralization, could be harnessed, accelerated and applied inexpensively on a huge scale — admittedly some very big “ifs” — it could help fight climate change. Rocks could remove some of the billions of tons of heat-trapping carbon dioxide that humans have pumped into the air since the beginning of the Industrial Age.
And by turning that CO2 into stone, the rocks in Oman — or in a number of other places around the world that have similar geological formations — would ensure that the gas stayed out of the atmosphere forever.
“Solid carbonate minerals aren’t going anyplace,” said Peter B. Kelemen, a geologist at Columbia University’s Lamont-Doherty Earth Observatory who has been studying the rocks here for more than two decades.
Capturing and storing carbon dioxide is drawing increased interest. The Intergovernmental Panel on Climate Change says that deploying such technology is essential to efforts to rein in global warming.
. . .
The rocks are so extensive, Dr. Kelemen said, that if it was somehow possible to fully use them they could store hundreds of years of CO2 emissions. More realistically, he said, Oman could store at least a billion tons of CO2 annually. (Current yearly worldwide emissions are close to 40 billion tons.)

For the full story, see:

Henry Fountain. “How Oman’s Rocks Could Help Save the Planet.” The New York Times (Saturday, APRIL 28, 2018: A10-A11.
(Note: ellipsis added.)
(Note: the online version of the story has the date APRIL 26, 2018.)

Ancient Skeletons Harbor a Common Cause of Liver Cancer

(p. A9) Scientists reported on Wednesday [May 9, 2018] that they have recovered DNA from the oldest viruses known to have infected humans — and have succeeded in resurrecting some of them in the laboratory.
The viruses were all strains of hepatitis B. Two teams of researchers independently discovered its DNA in 15 ancient skeletons, the oldest a farmer who lived 7,000 years ago in what is now Germany.
Until now, the oldest viral DNA ever recovered from human remains was just 450 years old.
The research may provide clues to the continuing evolution of hepatitis B, a plague that infects an estimated 257 million people worldwide and contributes to an epidemic of liver cancer.
. . .
Chronic infections can lead to liver cancer. Each year, the World Health Organization estimates, hepatitis B kills 887,000 people. Researchers have long wondered how it became a worldwide menace.
. . .
. . . the skeletons in which the Cambridge geneticists found hepatitis range from 820 to 4,500 years old. The research, published in the journal Nature, demonstrates that hepatitis B existed across Europe and Asia as early as the Bronze Age.
. . .
Johannes Krause and his colleagues examined DNA extracted from the teeth of 53 ancient people in what is now Germany. Three of them were infected with hepatitis B, it turned out: one who lived about 1,000 years ago, a second person who lived 5,300 years ago and a third who lived 7,000 years ago.
. . .
Dr. Krause and his colleagues found that their Stone Age viruses were most closely related to strains of hepatitis B found today only in chimpanzees and gorillas.
He speculated that the virus jumped from apes to humans early in the history of our species in Africa. “It’s more likely this is really an old pathogen in humans for the last hundred thousand years or more,” he said.

For the full story, see:
Zimmer, Carl. “In Ancient Skeletons, Scientists Discover a Modern Foe: Hepatitis B.” The New York Times (Thursday, May 10, 2018): A9.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the date MAY 9, 2018. The print version cited above is the National Edition.)

The paper by the Cambridge geneticists, mentioned above, is:
Mühlemann, Barbara, Terry C. Jones, Peter de Barros Damgaard, Morten E. Allentoft, Irina Shevnina, Andrey Logvin, Emma Usmanova, Irina P. Panyushkina, Bazartseren Boldgiv, Tsevel Bazartseren, Kadicha Tashbaeva, Victor Merz, Nina Lau, Václav Smrčka, Dmitry Voyakin, Egor Kitov, Andrey Epimakhov, Dalia Pokutta, Magdolna Vicze, T. Douglas Price, Vyacheslav Moiseyev, Anders J. Hansen, Ludovic Orlando, Simon Rasmussen, Martin Sikora, Lasse Vinner, Albert D. M. E. Osterhaus, Derek J. Smith, Dieter Glebe, Ron A. M. Fouchier, Christian Drosten, Karl-Göran Sjögren, Kristian Kristiansen, and Eske Willerslev. “Ancient Hepatitis B Viruses from the Bronze Age to the Medieval Period.” Nature 557, no. 7705 (May 9, 2018): 418-23.

The paper co-authored by Krause, and mentioned above, is:
Krause-Kyora, Ben, Julian Susat, Felix M. Key, Denise Kühnert, Esther Bosse, Alexander Immel, Christoph Rinne, Sabin-Christin Kornell, Diego Yepes, Sören Franzenburg, Henrike O. Heyne, Thomas Meier, Sandra Lösch, Harald Meller, Susanne Friederich, Nicole Nicklisch, Kurt W. Alt, Stefan Schreiber, Andreas Tholey, Alexander Herbig, Almut Nebel, and Johannes Krause. “Neolithic and Medieval Virus Genomes Reveal Complex Evolution of Hepatitis B.” eLife 7 (2018): e36666.

Robots Free Humans for More and Better Jobs

(p. A8) For companies, choosing the appropriate tasks to automate is important. Auto maker BMW AG automated some of the physical labor at the Spartanburg plant in South Carolina while retaining tasks involving judgment and quality control for workers.
Robots fit black, soundproofing rubber tubes to the inner rim of car doors, a task once done entirely by hand, on the more than 5,000 or so car doors that pass through the production line each day. Human workers do final checks on the tube’s placement. The division of labor speeds up the process.
Since BMW introduced this and other automated processes over the past decade, it has more than doubled its annual car production at Spartanburg to more than 400,000. The workforce has risen from 4,200 workers to 10,000, and they handle vastly more complex autos–cars that once had 3,000 parts now have 15,000.
Being spared strenuous activities gives workers the time and energy to tackle more demanding and creative tasks, BMW said in a statement.
James Bessen, an economist who teaches at Boston University School of Law, said automation like that at the Spartanburg plant has enabled a huge increase in the quality and variety of products, which help spur consumer demand. BMW’s share of luxury-car sales in the U.S. has risen sharply, with over 300,000 cars sold last year compared with just over 120,000 in 1997, company figures show.
Tesla Inc., by contrast, has struggled with production of the Model 3 car at its Fremont, Calif., plant after its use of robots got out of balance. Undetected errors in parts built by robots caused bottlenecks in production, meaning it could build only 2,020 cars a week compared with the 5,000 it originally promised, according to the company.
Analysts at investment research firm Bernstein said Tesla automated welding, paint and body work processes, as other manufacturers have done, but also automated final assembly work, in which parts, seats and the engine are installed in the car’s painted shell. Errors in this work caused production bottlenecks. “Automation in final assembly doesn’t work,” said analyst Max Warburton.
“Yes, excessive automation at Tesla was a mistake…Humans are underrated,” wrote Tesla CEO Elon Musk in a tweet last month.
. . .
At an aggregate level, however, the jobs created by automation outnumber those that are being destroyed, according to analysis by the Massachusetts Institute of Technology’s David Autor and Utrecht University’s Anna Salomons.

For the full story, see:
William Wilkes. “Big Companies Fine-Tune The Robot Revolution.” The Wall Street Journal (Tuesday, May 15, 2018): A1 & A8.
(Note: ellipsis between paragraphs, added; ellipsis internal to paragraph, in original.)
(Note: the online version of the story has the date May 14, 2018, and has the title “How the World’s Biggest Companies Are Fine-Tuning the Robot Revolution.”)

More of James Bessen’s views on these issues, can be found in his discussion of ATMs in:
Bessen, James. Learning by Doing: The Real Connection between Innovation, Wages, and Wealth. New Haven, CT: Yale University Press, 2015.

The analysis by Autor and Salomons, mentioned above, appears in:
Autor, David, and Anna Salomons. “Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share.” In Brookings Papers on Economic Activity, Feb. 27, 2018.