Art Diamond – Page 459 – artdiamondblog.com

Unintended Consequences of “Protecting” Rare Woodpecker

Red-cockaded woodpecker. Source of image: http://www.fws.gov/athens/images/Red-cockaded%20woodpecker%20120%20KB%205×7.jpg

BOILING SPRING LAKES, N.C., Sept. 23 (AP) — Over the past six months, landowners here have been clear-cutting thousands of trees to keep them from becoming homes for the endangered red-cockaded woodpecker.

The chain saws started in February, when the federal Fish and Wildlife Service put Boiling Spring Lakes on notice that rapid development threatened to squeeze out the woodpecker.

The agency issued a map marking 15 active woodpecker “clusters,” and announced it was working on a new one that could potentially designate whole neighborhoods of this town in southeastern North Carolina as protected habitat, subject to more-stringent building restrictions.

Hoping to beat the mapmakers, landowners swarmed City Hall to apply for lot-clearing permits. Treeless land, after all, would not need to be set aside for woodpeckers. Since February, the city has issued 368 logging permits, a vast majority without accompanying building permits.

The results can be seen all over town. Along the roadsides, scattered brown bark is all that is left of pine stands. Mayor Joan Kinney has watched with dismay as waterfront lots across from her home on Big Lake have been stripped down to sandy wasteland.

. . .

Like the woodpeckers, humans are also looking to defend their nest eggs.

Bonner Stiller has been holding on to two wooded half-acre lakefront lots for 23 years. He stripped both lots of longleaf pines before the government could issue its new map.

“They have finally developed a value,” said Mr. Stiller, a Republican member of the state General Assembly. “And then to have that taken away from you?”

For the full story, see:

"Rare Woodpecker Sends a Town Running for Its Chain Saws." The New York Times, Section 1 (Sun., September 24, 2006): 20.

Reforms Make it Easier to Start and Run a Business in Africa

(p. A12) Authors of the report, ”Doing Business,” by the World Bank and the International Finance Corporation, the bank’s private sector arm, say they hope simplifying and easing the rules of the capitalist game will entice more businesses above ground.

A team of 30 researchers found that African countries had made many incremental changes.

”The most surprising thing for me was to see the pickup of reform in Africa,” said Simeon Djankov, a World Bank economist who four years ago developed the rankings on the ease of doing business. ”Something has happened this year. At least two-thirds of Africa’s countries have at least one positive reform.”

Tanzania computerized its business and tax registries and reduced delays in customs inspections and the courts.

Ghana has cut the corporate tax rate to 25 percent, from 32.5 percent, and made it easier to export goods.

Rwanda scrapped a law adopted during Belgian colonial rule that had given one official a monopoly on notarizing documents for the entire country.

Ivory Coast slashed the time to register property to a month from more than a year by eliminating a requirement that the urban minister give his consent.

Wealthy donors like the World Bank, the United States and Britain, which focus on spurring economic growth and job creation, are putting heavier emphasis on such changes in deciding where to provide aid.

The Millennium Challenge Account, President Bush’s aid program, explicitly uses the bank report’s measure of days to start a business as one criterion for deciding who qualifies for large grants.

For the full story, see:

CELIA W. DUGGER. "Africa Moves Up the Ladder of Business-Friendly Regions." The New York Times (Weds., September 6, 2006): A12.

(Note: the online version of the article had this, slightly different, title: "In Africa, a More Business-Friendly Approach.")

Sprint to Risk Billions on New Infrastructure

Source of graphic: online version of the WSJ article cited below.

If Sprint bets on WiFi, they’re betting with their money; if the government bets on WiFi, they’re betting with your money. If Sprint succeeds, thereby benefiting the consumer, at no risk to the consumer, the consumer should not object to their earning huge profits.

Note also, that this is a plausble candidate for a firm trying to follow Clayton Christensen’s advice to try to disrupt itself. (And see the comment at the end, for someone who hasn’t read Christensen, or doesn’t believe what he has read.)

Analysts say building a nationwide WiMax network could cost Sprint between $1 billion and $4 billion, a hefty sum for a company that is already struggling to meet Wall Street’s expectations. Sprint said it expects to invest $1 billion on the project in 2007 and between $1.5 billion and $2 billion in 2008.

Sprint’s decision carries considerable risks: Investors have hammered telecom companies that have made large capital investments in new technologies, banking on future markets to emerge. For example, among other things, Verizon Communications Inc.’s stock has been under fire as the company is rolling out a costly new fiber optic network that it says will position the company to deliver a bundled TV, Internet, and phone service. Also, WiMax technology is still untested on a large scale.

Sprint is making a huge bet that consumer demand for wireless Internet access and services such as cellphone downloads of music and video will continue to grow in the coming years. Consumers already can get access to wireless Internet service at Wi-Fi "hotspots" in airports and coffee shops, and some cities, like Anaheim, Calif., are blanketing their terrain with Wi-Fi connections.

. . .

. . . , some analysts and industry experts question why the company is gearing up for such a major capital investment when it is already even or ahead the other top U.S. carriers, Verizon and Cingular Wireless, when it comes to data services. "Why compete against yourself? It doesn’t make a lot of sense at this point," said Mike Thelander, principal analyst at Signals Research Group who predicted several weeks ago that Sprint would choose WiMax.

For the full story, see:

AMOL SHARMA and DON CLARK. "Sprint Bets on New Wireless ‘WiMax’." Wall Street Journal (Tues., August 8, 2006): B1-B2.

(Note: the above passages are from the online version, which was later, and less tentative about Sprint’s intentions, than the print version.)

(Note: ellipses added.)

Tech Bubble Caused Much of 1990s Inequality Increase

Source of graphic: online version of the NYT article cited below.

It is widely recognized that income inequality increased in the 1990’s, but nobody knows quite why. Despite the lack of hard evidence, there are plenty of theories.

. . .

Two University of Texas researchers, James K. Galbraith and Travis Hale, added an interesting twist to this debate in a paper, “Income Distribution and the Information Technology Bubble” (utip.gov.utexas.edu/abstract.html#UTIP27).

According to Mr. Galbraith and Mr. Hale, much of the increase in income inequality in the late 1990’s resulted from large income changes in just a handful of locations around the country — precisely those areas that were heavily involved in the information technology boom.

. . .

A big advantage of looking at county data is that it is possible to identify counties that contributed the most to the increase in income inequality from 1994 to 2000. It turns out that the five biggest winners in this period were New York; King County, Wash. (with both Seattle and Redmond); and Santa Clara, San Mateo and San Francisco, Calif., the counties that make up Silicon Valley. The five biggest losers were Los Angeles; Queens; Honolulu; Broward, Fla.; and Cuyahoga, Ohio.

What do the counties in the first list have in common? Their economies were all heavily driven by information technology in the late 90’s. This is true for the rest of the list of winners as well. Harris, Tex. (home to Houston and Enron); Middlesex, Mass. (home to Harvard and M.I.T.); Fairfield, Conn.; Alameda, Calif.; and Westchester, N.Y., were also among the top 10 income gainers in this period.

The authors point out that half the 80 American companies in the CNET Tech Index are in those top 10 counties. Furthermore, when income inequality decreased after 2000, the income drop in the high-tech counties contributed most to the decline.

For the full commentary, see:

HAL R. VARIAN. "ECONOMIC SCENE; Many Theories on Income Inequality, but One Answer Lies in Just a Few Places." The New York Times (Thurs., September 21, 2006): C3.

Markets, Not Courts, Should Decide Intel Market Share

Intel executives, coming up on a pre-trial conference in a case that could decide their company’s fate, should be looking with envy and admiration at Tiger Woods, and wondering how to make their business more like his.

If golf followed the same path as other businesses, Tiger could expect to face a lawsuit contending that his dominance of professional golf is based on unfair competition. And in fact, a few years back Sergio Garcia whined that Tiger got better practice times, favorable treatment around the course, more protection against distracting fans — little things that could, Mr. Garcia intimated, explain Tiger’s edge. Sportswriters responded swiftly, deriding Mr. Garcia for looking to blame others for his being outcompeted. They understood that sports contests belong on the field, not in the media or the courts.

The same should be true of business. Market-based economies thrive on competition. The competitive economy doesn’t yield an infinite number of equally successful firms producing indistinguishable products, but lets winners and losers emerge from marketplace competition. The (inevitably) temporary dominance of one product or one firm spurs others to compete harder. Today, however, many businesses — especially American ones — find it easier to restrain a dominant competitor through the courts than to beat it in the market.

Take the case of Advanced Micro Devices and Intel, the dominant chipmaker for PCs and servers. AMD for years played the role of Phil Mickelson to Intel Corporation’s Tiger Woods — the talented rival who keeps coming up short in head-to-head competition. Last year, it decided to model Mr. Garcia rather than Mr. Mickelson, filing an antitrust action against Intel, charging it with a variety of unlawful actions.

. . .

AMD finds fault in Intel’s continued market dominance: Because Intel has had 80% or more of the x86 chip processor market for many years it must be doing something illegal to keep rivals out. Yet, George Stigler, among others, long ago debunked the significance of market share as a measure of competition. Duopoly markets, like the market for large commercial aircraft, can be fiercely competitive. Ask anyone working at Boeing or Airbus.

Moreover, markets can change rapidly, especially high-tech markets, often in ways unanticipated by antitrust suits. Witness the changes in computing that caused the government’s antitrust case against IBM to implode.

For the full commentary, see:

RON CASS. "RULE OF LAW; Tigers by the Tail." Wall Street Journal (Sat., September 23, 2006): A7.

On Turning 60, Michael Milken Asks “Why Retire?”

More baby boomers are asking themselves, Why retire? It’s a cliché to say that 60 is the new 40, but it has some biological and psychological validity. Advanced biomedical research is leading to continued progress against cancer, heart disease, arthritis, dementia and other conditions that forced people out of the workforce before they wanted to quit. In the future, aging workers will be healthier and will use broadband technology to live and work from anywhere at the increasing proportion of jobs that involve knowledge rather than physical labor. They’ll spend more years earning income, often in multiple careers, instead of selling assets.

Fewer people will retire in their 60s simply because they know that average life expectancy at birth is increasing at an astounding rate. Americans, who could expect to live an average of 47 years in 1900, now enjoy life spans approaching 80 years. (It already exceeds 80 for women.) An American who makes it to age 65 can look forward to living almost two decades more. Worldwide, the increase has been even more dramatic. In a single century — despite wars, AIDS and other scourges — the global average more than doubled to 66 years. Nobel laureate Robert Fogel believes it will exceed 100 years within this century.

More than just the length of life, the number of healthy years will also increase. When people are vibrant into their 80s and 90s, 65 will evolve from the traditional retirement age to a mid-career milestone for those who choose to keep working. Who wants to retire when you have fulfilling work, when you earn a good income, and when you feel great? According to a Yahoo! poll, 70% of people over 55 say it’s never too late to start a new business.

For the full commentary, see:

MICHAEL MILKEN. "The Boom Generation Seventh Decade." Wall Street Journal (Tues., September 19, 2006): A20.

“An Image Was Worth a 1,000 Statistical Tables”

Artistic vision of germ-laden hand. (This is not the photographic image mentioned below, and used as a hospital screen-saver.) Source of image: online version of the NYT article cited below.

(p. 22) Leon Bender noticed something interesting: passengers who went ashore weren’t allowed to reboard the ship until they had some Purell squirted on their hands. The crew even dispensed Purell to passengers lined up at the buffet tables. Was it possible, Bender wondered, that a cruise ship was more diligent about killing germs than his own hospital?

Cedars-Sinai Medical Center, where Bender has been practicing for 37 years, is in fact an excellent hospital. But even excellent hospitals often pass along bacterial infections, thereby sickening or even killing the very people they aim to heal. In its 2000 report “To Err Is Human,” the Institute of Medicine estimated that anywhere from 44,000 to 98,000 Americans die each year because of hospital errors — more deaths than from either motor-vehicle crashes or breast cancer — and that one of the leading errors was the spread of bacterial infections.

. . .

. . . the hospital needed to devise some kind of incentive scheme that would increase compliance without alienating its doctors. In the beginning, the administrators gently cajoled the doctors with e-mail, (p. 23) faxes and posters. But none of that seemed to work. (The hospital had enlisted a crew of nurses to surreptitiously report on the staff’s hand-washing.) “Then we started a campaign that really took the word to the physicians where they live, which is on the wards,” Silka recalls. “And, most importantly, in the physicians’ parking lot, which in L.A. is a big deal.”

For the next six weeks, Silka and roughly a dozen other senior personnel manned the parking-lot entrance, handing out bottles of Purell to the arriving doctors. They started a Hand Hygiene Safety Posse that roamed the wards and let it be known that this posse preferred using carrots to sticks: rather than searching for doctors who weren’t compliant, they’d try to “catch” a doctor who was washing up, giving him a $10 Starbucks card as reward. You might think that the highest earners in a hospital wouldn’t much care about a $10 incentive — “but none of them turned down the card,” Silka says.

When the nurse spies reported back the latest data, it was clear that the hospital’s efforts were working — but not nearly enough. Compliance had risen to about 80 percent from 65 percent, but the Joint Commission required 90 percent compliance.

These results were delivered to the hospital’s leadership by Rekha Murthy, the hospital’s epidemiologist, during a meeting of the Chief of Staff Advisory Committee. The committee’s roughly 20 members, mostly top doctors, were openly discouraged by Murthy’s report. Then, after they finished their lunch, Murthy handed each of them an agar plate — a sterile petri dish loaded with a spongy layer of agar. “I would love to culture your hand,” she told them.

They pressed their palms into the plates, and Murthy sent them to the lab to be cultured and photographed. The resulting images, Silka says, “were disgusting and striking, with gobs of colonies of bacteria.”

The administration then decided to harness the power of such a disgusting image. One photograph was made into a screen saver that haunted every computer in Cedars-Sinai. Whatever reasons the doctors may have had for not complying in the past, they vanished in the face of such vivid evidence. “With people who have been in practice 25 or 30 or 40 years, it’s hard to change their behavior,” Leon Bender says. “But when you present them with good data, they change their behavior very rapidly.” Some forms of data, of course, are more compelling than others, and in this case an image was worth 1,000 statistical tables. Hand-hygiene compliance shot up to nearly 100 percent and, according to the hospital, it has pretty much remained there ever since.

For the full commentary, see:

STEPHEN J. DUBNER and STEVEN D. LEVITT. "FREAKONOMICS; Selling Soap." The New York Times Magazine (Section 6) (Sunday, September 24, 2006): 22-23.

(Note: ellipses added.)

The screen-saver at Cedars Sinai Hospital. Source of image: http://freakonomics.com/pdf/CedarsSinaiScreenSaver.jpg

Turkey Farmer Ben Nelson Avoids Taxes

Source of image: screen capture from the campaign ad cited below.

Early in the 2006 senate campaign, the supporters of Democrat Ben Nelson made fun of Republican candidate Pete Ricketts for challenging the property assessment on his house. (They ran newspaper ads with ridiculing poetry, written in the manner of Dr. Seuss, and wore hats associated with the cat in Seuss’s famous Cat in the Hat book.)

Well, they say what goes around, comes around. Nelson was himself getting a significant tax break on vacation land he owned, based on its being classified as being used primarily for agricultural purposes ("green-belt" status). The only agricultural use that could be found was that each year, a few turkeys were released on the land.

Now the Rickett’s campaign has released a funny video ad satirizing "Farmer Nelson."

To download, or watch, the ad, go to: http://www.petericketts.com/comm_092506.asp

A Tale of Two Churches: Russia Has an Entrepreneurial Tradition Too

Two old and exotic churches, St. Basil’s in Moscow and Kizhi in the Russian north, survived the Soviet era and are invariably depicted in brochures and books to suggest the distinctiveness of Russian culture. Both feature the tent roofs and onion domes that dominated the skyline of medieval Russia. But each bears mute witness to a very different tradition: one, imperial centralism; the other, entrepreneurial regionalism. Both are embedded in Russia’s history; the conflict between them may well determine Russia’s destiny.

St. Basil’s, looming over Red Square, is an enduring symbol of theatrical autocracy; the Kizhi church, of frontier inventiveness. Authoritarian centralism has been growing recently under President Putin. But he also is fond of Kizhi and brought its new priest with him on his last trip to New York.

. . .

Tolerance was implicit in the northern tradition of dvoeveria: the simultaneous belief in both the old pagan spirits and the new Christian God. Medieval petroglyphs of the Kizhi region freely intermixed symbols of both. Peasants in the region were not enserfed. The northern region lost much of its independent power when Moscow sacked and subdued Novgorod.

. . .

Many more people have seen St. Basil’s on Red Square than Kizhi on an island in Lake Onega — and most see Russian history in terms of autocratic power in Moscow rather than creativity amid adversity in the regions. Kizhi is the supreme monument to this forgotten tradition that continued to unfold as the vast Russian domain spread north to the Arctic Ocean and across the Pacific to Alaska in the 17th and 18th centuries.

No one knows who was the architect of either monument. But Russian popular folklore suggests that the creator of St. Basil’s was forcefully either blinded or drowned to assure that it could never be duplicated. In contrast, the creator of Kizhi is said to have simply thrown his ax into the lake and lived on peacefully as a holy man in the northern forests.

During that time, Moscow autocrats looked out from the closed front porch of St. Basil’s to see the enemies of central power drawn and quartered publicly in Red Square. By contrast, the Kizhi church was wider and open to the sky — and where local people gathered to solve practical problems, facing a vista of lakes and forests.

Much of the renewed vitality in Russia today is coming from young people in the regions. Their hopes for a more participatory and accountable political and economic future depend on the kind of open community that created Kizhi — not the closed circles that cling to St. Basil’s.

For the full commentary, see:

JAMES H. BILLINGTON. "MASTERPIECE; Two Churches, Two Russias; One born of authoritarian centralism, the other of entrepreneurial regionalism." Wall Street Journal (Sat., September 16, 2006): P18.

“Crystal Fire” Gives Insights on Birth of the Transistor

Source of book image: http://www.etedeschi.ndirect.co.uk/homecompbiblio.htm

Crystal Fire is a well-written book which highlights many important aspects of the birth of computers. Not a perfect book—I could have done with a few less details about personal information, like who liked to play bridge and poker, and whose mother was a frustrated artist, and the like.

On the good side, they note how transistors were originally designed to replace vacuum tubes. The eventual main applications, as memory and processor chips in computers, only came later. (Another application of Fubini’s Law.)

They have a nice discussion of how American science was applied, versus the pure theory of the Germans. (E.g., to the Germans, some key phenomena leading to transistors, were dismissed as "dirt effects" (pp. 74 & 78).) The whole episode is a good example of the claim (see Terence Kealey) that very good science can come out of ‘industrial’ labs.

They also have a good example of serendipity, in the discussion of the strange chunk of silicon with unusual conductivity properties (circa p. 95). Reading this episode, it occurred to me that one key enabler of serendipitous discoveries is a scientist or engineer who is carrying around a problem, to which the serendipitous discovery is a solution. Buddhists need not apply—to carry around problems, you need to be dissatisfied–a milder version of what Tom Peters describes as ‘innovation coming from pissed-off people’ (see his Re-Imagine!)

Citation to the book:

Riordan, Michael, and Lillian Hoddeson. Crystal Fire: The Birth of the Information Age, Sloan Technology Series: W. W. Norton & Company, 1997.