Author: Art Diamond

“Solitude Serves as a Refreshing Balm”

The WSJ summarizes an April 2007 Psychology Today article.  The study that is discussed sounds relevant to the one-sided push for more collaboration and team production in business, and co-authorship in academics.  The benefits of collaboration should not blind us to the costs.

 

Amanda Guyer, a psychologist at the U.S. National Institutes of Health in Bethesda, Md., has found that individuals who withdraw from other people’s company are more sensitive than extroverts to a wide range of positive emotional cues. Situations rife with emotional triggers, such as parties, can be wearying for such people, while solitude serves as a refreshing balm.

 

For the full story, see:

"Informed Reader; PSYCHOLOGY; Loners May Not Fear Others, They Just Need Some Solitude."  The Wall Street Journal  (Thurs., March 1, 2007):  B7.

 

Castro’s Legacy of “Death, Tears and Blood”

Like thousands of other Cubans, I was arrested in the middle of the night. Fidel Castro’s police raided my parents’ home, stuck a machine gun in my face and took me away. It was 1960 and I was 22 years old.

The news that the Cuban dictator is gravely ill floods my mind with memories of my years spent in captivity. I believe that those of us who were political prisoners know his legacy better than anyone. For 22 years, I was an inmate in his vast prison system, mostly confined to an island gulag, for crimes I did not commit.

. . .

The legacy of Castro for Cuba will be much like that of Stalin in Russia, Pol Pot and Ieng Sari in Cambodia and Hitler in Germany. It will be the memories of the unknown numbers of victims, of concentration camps, torture, murder, exile, families torn apart, death, tears and blood. Castro will go down in history as one of the cruelest of all dictators — a man who tormented his own people.

But his poisonous legacy will also include the double standard by foreign governments, intellectuals and journalists who fought ferociously against the unspeakable violations of human rights by right-wing dictatorships, yet applauded Castro. To this day many of these intellectuals serve as apologists and accomplices in the subjugation of the Cuban people. Rafael Correa, the recently inaugurated president of Ecuador, has declared that in Cuba there is no dictatorship. Evo Morales, president of Bolivia, considers Castro his mentor and has already shown that he is willing to silence his own critics at the point of a gun. Venezuela, once a democracy, is the new Cuba, replete with a growing population of political prisoners.

 

For the full commentary, see: 

ARMANDO VALLADARES.  "Castro’s Gulag." The Wall Street Journal  (Mon., March 5, 2007):  A16.

 

Obama Should Support School Vouchers Experiment

 

There’s something about our nation’s capital that converts many leading Democrats to school choice. Perhaps it’s the glimpse that Washington, D.C. affords into inner-city public schools.

But in most cases this appreciation of school choice extends only to their own children — and not to the millions of children in failing public schools. Indeed, a nearly perfect correlation exists among Democratic presidential candidates who have exercised school choice for their own children and those who would deny such choices to the parents of other children.

. . .

The mystery man is Sen. Barack Obama, who sends his child to a private school in Chicago yet once referred to school vouchers as "social Darwinism." Still, he says that on education reform, "I think a good place to start would be for both Democrats and Republicans to say . . . we are willing to experiment and invest in anything that works."

Well, school choice works. Every study that compares children who applied for school choice scholarships and received them with those who applied but did not shows improved academic performance. More important, every study that has examined the effect of school choice competition has found significantly improved performance by public schools.

Given their track records it is doubtful how many candidates will agree with Sen. Obama’s professed openness to experiment. But as he might say, we can always have the audacity to hope.

 

For the full commentary, see:

CLINT BOLICK.  "Selective School Choice."  The Wall Street Journal  (Fri., March 2, 2007):  A11.

(Note:  ellipsis between paragraphs was added; ellipsis within Obama quote was in the original.)

 

 

Advice from Charles Koch: A Successful Business Schumpeterian

   Source of book image:  http://media.wiley.com/product_data/coverImage300/89/04701398/0470139889.jpg

 

When Charles Koch became the chief executive of Rock Island Oil & Refining after the death of his father in 1967, the company was a moderately successful enterprise based in Wichita, Kan. He renamed it Koch Industries in honor of his father — and over the next 40 years proceeded to transform Fred Koch’s legacy into the world’s largest private company. Koch Industries — now a commodity and financial conglomerate that includes brands such as Stainmaster, Lycra and Dixie cups — has 80,000 employees in 60 countries. Its revenue last year was $90 billion. In one generation, the book value of Koch Industries has increased 2,000-fold. That’s an 18% compounded annual return — comparable with the long-term track record of Warren Buffett’s Berkshire Hathaway.

. . .

At age 71, Mr. Koch clearly feels that the time has come to pass along the business formula that has served him so well. In "The Science of Success," he describes a technique, called Market-Based Management (MBM), that he says evolved from his reading, early in his career, in history, political science, economics and other disciplines. He arrived at an understanding of what allows a free society to prosper, Mr. Koch says, and decided to apply those principles to business.

. . .

. . .   He is especially fond of the "Austrian school" of economists, such as Ludwig von Mises and Joseph Schumpeter, who emphasized production processes, technology and the dynamic competitive models of "creative destruction." 

 

For the full review, see: 

MARK SKOUSEN.  "BOOKS; A Short Course in Long-Term Value."   The Wall Street Journal  (Weds., March 7, 2007):  D8. 

(Note:  ellipses added.)

 

Another Effort to Explore the Black-Box of Innovation

 

(p. 210)  Schumpeter argues that innovation can happen endogenously and that its main source is the creative entrepreneur.  Schumpeterian innovation is still black-boxed, however, because it is the product of the ingenuity of entrepreneurs and cannot be reproduced systematically.

. . .

The reconstructionist view takes off where the new growth theory left off.  Building on the new growth theory, the reconstructionist view suggests how knowledge and ideas are deployed in the process of creation to produce endogenous growth for the firm.  In particular, it proposes that such a process of creation can occur in any organization at any time by the cognitive reconstruction of existing data and market elements in a fundamentally new way.

 

Source:

Kim, W. Chan, and Renée Mauborgne. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Boston: Harvard Business School Press, 2005.

 

Anti-Wal-Mart is Anti-Free-Choice

     Source of logo/header:  http://www.muddycup.com/mudlane/img/header.jpg

 

The article excerpted below reveals the soul of much of the anti-Wal-Mart movement.  It is not anti-big; it is anti-competition and anti-free-choice.

 

How in the world did a guy who started his first coffee shop on Staten Island six years ago and now runs five others in far-flung Hudson Valley towns become the moral equivalent of Wal-Mart and Starbucks? “Well, it’s now official,” he announced last month on the Web site that promotes his Muddy Cup coffeehouses. “I am now head of the evil empire.”

. . .

And now the talk of New Paltz has to do with something far more important than mere marriage — coffee. More specifically it’s whether Mr. Svetz is plotting an act of entrepreneurial imperialism by presuming to open one of his Muddy Cup coffeehouses next door to the ultimate green icon in town, the funky 60 Main coffee shop operated in conjunction with the nonprofit New Paltz Cultural Collective.

. . .

Little did he know. As word filtered out he began receiving a blizzard of e-mail messages from 60 Main proponents, reacting to an urgent appeal from the collective. The messages threatened a boycott and told him to stay home. “If we can stop Wal-Mart we can stop you,” said one.

“We do not want to become yet another small town taken over by huge corporations,” read another.

. . .

Mr. Svetz is still stunned by the whole thing, particularly his sudden status as a giant corporation. He says that just as lots of bars coexist in town, several coffee shops can too. Maybe he’s right. Maybe he’s not. He’s not Wal-Mart, but maybe it’s fair to ask how many artist-friendly coffeehouses the village can support. But it’s hard to argue when he says that even in New Paltz, businesses generally have to compete to survive, not find a way to build a Berlin Wall around town.

“When a community starts building walls and saying you don’t belong here or you don’t think like we do, that can’t be a good thing,” he said.

 

For the full story, see: 

PETER APPLEBOME.  "Coffee Puts Laid-Back Town on Edge."  The New York Times, Section 1  (Sun., March 4, 2007):  21. 

(Note:  ellipses added.)

 

Leapfrog the Elevator Competition into a Blue Ocean

 

(p. 178)  They wanted to cut waste, freeing people to produce higher-quality elevators faster at lower cost to leapfrog the competition.  But plant employees could not have known that.

 

Source: 

Kim, W. Chan, and Renée Mauborgne. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Boston: Harvard Business School Press, 2005.

 

More on Creative Destruction in Science Fiction

On April 11, 2007 I posted an entry noting a new science fiction book with the title Creative Destruction.  Not having read the book, I wondered aloud whether the book contained any reference to Schumpeter.

Yesterday (4/13/07), I was delighted to receive an email from the author of the book, answering my question.  With his permission, I reproduce his email below:

 

Dr. Diamond,

I noticed your blog entry about Creative Destruction, my computer-themed SF collection.  You asked:  Does Schumpeter get a mention?

Absolutely.  Here are the opening lines of the foreword:

     If the Internet bubble had a patron saint, he was an obscure economist named Joseph Schumpeter.

     Schumpeter owes his posthumous celebrity to two words: creative destruction.  In 1942, he wrote of the "… Process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.

     "Creative destruction," he said, "is the essential fact about capitalism."  Every dotcom, of course, claimed its new technology would sweep out the old in a frenzy of creative destruction. Occasionally — think Yahoo! and Amazon — they were even correct.

The stories in the collection are most definitely science fiction — I have degrees in physics and computer science — but I also have an MBA from the University of Chicago.

Best regards,

– Ed Lerner

 

(Note:  I have changed the format of the email, a little.  The ellipsis was in the original.)

 

Give People Something Better than What They Say They Want

(p. 205)  The picture palaces were a commercial success.  Between 1914 and 1922, four thousand new Palace Theaters opened in the United States.  Movie-going became an increasingly important entertainment event for Americans of all economic levels.  As Roxy pointed out, "Giving the people what they want is fundamentally and disastrously wrong.  The people don’t know what they want . . . [Give] them something better."  Palace Theaters effectively combined the viewing environment of opera houses with the viewing contents of nickelodeons—films—to unlock a new blue ocean in the cinema industry and attract a whole new mass of moviegoers:  the upper and middle classes. 

 

Source: 

Kim, W. Chan, and Renée Mauborgne. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Boston: Harvard Business School Press, 2005.