Author: Art Diamond

French “regard the open economy with horror”

The French still regard the open economy with horror. A recent poll suggests that, while two-thirds of the population accepted that reform was necessary, they also wanted to keep the advantages of the present system — a short working week, early retirement for many, and almost invincible job protection. After years of assiduous propaganda, they believe that anything else will lead directly to the horrors of the United States: uninsured people dying of untreated diseases in the streets and, above all, riots.
The case of the state monopoly, EDF (Electricité de France) is instructive, and explains why any reform is so politically difficult. Employees of this vast organization work 32 hours per week; their meals are subsidized to the tune of 50%, their electricity and gas bills by 90%; they can retire at 55; they have the right to holidays at a fifth of their market value, and on average work the equivalent of eight months per year; and when their mother-in-law dies, they can take three days’ paid leave to celebrate. These are not all their privileges, only some; so it is hardly surprising that when the government proposed the privatization of EDF, they went on strike. (The government caved in.) They did so in the name of “the defense of public service” — and the French call the Anglo-Saxons hypocrites!
When a certain critical mass of such subsidy and special privilege for important sectors of the economy is reached, reform becomes impossible without explosion. The government has created an economic monster that it cannot tame, and that is now its master. In any case, periodic explosion has long been the means by which French society has undertaken major political and economic change. In the meantime, repression will become more necessary. For the moment, the banlieues are quiet: That is to say, only 100 cars a night are burned, and life elsewhere continues in its very pleasant way. But there is an underlying anxiety (the French take more tranquillizers than any other nation). No one believes that we have heard the last of les jeunes and of profound economic troubles. The last episode was but a very minor eruption of the social volcano. Every Frenchman believes that the question of a major eruption is not if, but when.

For the full commentary, see:
THEODORE DALRYMPLE. “An Update From France . . . (Remember Those Riots?).” The Wall Street Journal (Sat., February 11, 2006): A8.

Hayek Was Right: Free Speech is Fragile, When Property Can be Seized


For those who doubt the central message of Hayek’s The Road to Serfdom, something to ponder:

 

(p. 351) The Sandinistas called coffee farmers who cooperated with them "patriotic producers." Anyone who questioned their politics or policies was labeled a capitalist parasite. Throughout most of the 1980s, any farms that did not produce sufficiently, or whose owners were too vocal, were confiscated by the government.

 

Source: 

Pendergrast, Mark. Uncommon Grounds: The History of Coffee and How It Transformed Our World. New York: Basic Books, 2000.


“Growing Recognition of Economic Costs” of Koyoto Protocol

Commentary on the Kyoto Protocol:

(p. 3) . . . the current stalemate is not just because of the inadequacies of the protocol. It is also a response to the world’s ballooning energy appetite, which, largely because of economic growth in China, has exceeded almost everyone’s expectations. And there are still no viable alternatives to fossil fuels, the main source of greenhouse gases.

Then, too, there is a growing recognition of the economic costs incurred by signing on to the Kyoto Protocol.

As Prime Minister Tony Blair of Britain, a proponent of emissions targets, said in a statement on Nov. 1: ”The blunt truth about the politics of climate change is that no country will want to sacrifice its economy in order to meet this challenge.”

This is as true, in different ways, in developed nations with high unemployment, like Germany and France, as it is in Russia, which said last week that it may have spot energy shortages this winter.
. . .
The only real answer at the moment is still far out on the horizon: nonpolluting energy sources. But the amount of money being devoted to research and develop such technologies, much less install them, is nowhere near the scale of the problem, many experts on energy technology said.

Enormous investments in basic research have to be made promptly, even with the knowledge that most of the research is likely to fail, if there is to be any chance of creating options for the world’s vastly increased energy thirst in a few decades, said Richard G. Richels, an economist at the Electric Power Research Institute, a nonprofit center for energy and environment research.

”The train is not leaving the station, and it needs to leave the station,” Mr. Richels said. ”If we don’t have the technologies available at that time, it’s going to be a mess.”

For the full commentary, see:
ANDREW C. REVKIN. “THE WORLD; On Climate Change, a Change of Thinking.” The New York Times, Section 4 (Sun., December 4, 2005): 3.
(Note: ellipsis added.)

Coffee Cartel Quotas: “someone always cheated”

In his comprehensive history of coffee, Mark Pendergrast discusses efforts of the coffee-producing nations to raise the price of coffee in 1977:

 

(p. 332) Quota restrictions without consumer country participation never worked in the past, since someone always cheated.

 

Source:

Pendergrast, Mark. Uncommon Grounds: The History of Coffee and How It Transformed Our World. New York: Basic Books, 2000.

 

A Censored Google is Better than No Google at All


Surfing the web at a Shanghai internet cafe. Source of image: the NYT article cited below.
At lunch a couple of weeks ago some of us in the department discussed Google’s agreeing to China’s desire to censor some searches. Some view this as Google violating its corporate motto: “don’t be evil.”
But I suspect that Chinese citizens with a hobbled Google, have more freedom than Chinese citizens with no Google at all.
There are many alternative ways to search for “freedom.” No government is clever enough to block them all.

SHANGHAI, Feb. 7 — For months now, the news about the news in China has been awful. Carrying out its vow to tighten controls over what it calls “propaganda,” the government of President Hu Jintao has busied itself closing publications, firing editorial staffs and jailing reporters.
More noticeably, the government has clamped down on the Internet, closing blogger sites, filtering Web sites and e-mail messages for banned words and tightening controls on text messages. Last year, Yahoo was criticized for revealing the identity of an Internet journalist, Shi Tao, who was subsequently jailed. [On Wednesday, the Committee to Protect Journalists said court documents posted on a Chinese Web site showed that Yahoo had done the same in 2003, resulting in the jailing of another writer, Li Zhi.]
Against this grim backdrop, the news that Google had agreed to apply censors’ blacklists to its new Chinese search engine might have seemed like the ultimate nail in the coffin for freedom of information in this country. Chinese Internet mavens were outraged at Google for collaborating in the government’s censorship effort. “For most people, access to more diversified resources has been broken,” said Isaac Mao, a popular Chinese blogger, in a typical sentiment. “The majority of users, the new users, will only see a compressed version of Google, and can’t know what they don’t know. This is like taking a 30-year-old’s brain and setting him back to the mind of a 15-year-old.”
Some threatened that Internet companies that toed the government line would regret it someday. “Doing the bidding of the Chinese government like this is like doing the bidding of Stalin or Hitler,” said Yu Jie, a well-known dissident writer. “The actions of companies that did the bidding of Stalin and Hitler have been remembered by history, and the Chinese people won’t forget these kinds of actions, either.”
Whether Chinese will hold a long-term grudge is arguable. But Web specialists are far more confident that the government will fail in its efforts to reverse a trend toward increasingly free expression that has been reshaping this society with ever more powerful effects for more than two decades.
Last year, China ranked 159th out of 167 countries in a survey of press freedom, Reporters Without Borders, the Paris-based international rights group, said. But rankings like this do not reflect the rapid change afoot here, more and more of which is escaping the government’s control.
A case in point is the Chinese government’s recent effort to rein in bloggers who tread too often into delicate territory, criticizing state policy or detailing official corruption. In December, the government ordered Microsoft and its MSN service to close the site of Michael Anti, one of China’s most popular bloggers.
Although Mr. Anti — who is also an employee of the Beijing bureau of The New York Times — had his site closed, any Chinese Web surfer can choose from scores of other online commentators who are equally provocative, and more are coming online all the time.
Microsoft alone carries an estimated 3.3 million blogs in China. Add to that the estimated 10 million blogs on other Internet services, and it becomes clear what a censor’s nightmare China has become. What is more, not a single blog existed in China a little more than three years ago, and thousands upon thousands are being born every day — some run by people whose previous blogs had been banned and merely change their name or switch Internet providers. New technologies, like podcasts, are making things even harder to control.
“The Internet is open technology, based on packet switching and open systems, and it is totally different from traditional media, like radio or TV or newspapers,” said Guo Liang, an Internet specialist at the Chinese Academy of Social Sciences. “At first, people might have thought it would be as easy to control as traditional media, but now they realize that’s not the case.”
. . .
“Symbolically, the government may have scored a victory with Google, but Web users are becoming a lot more savvy and sophisticated, and the censors’ life is not getting easier,” said Xiao Qiang, leader of the Internet project at the University of California, Berkeley. “The flow of information is getting steadily freer, in fact. If I was in the State Councils information office, I certainly wouldn’t think we had any reason to celebrate.”

For the full story, see:
HOWARD W. FRENCH. “Letter From China; Despite Web Crackdown, Prevailing Winds Are Free.” The New York Times (Thurs., February 9, 2006): A4.

‘Purpose Brands’ Built by Understanding Jobs Customers Need to Do

. . . , the marketer’s fundamental task is not so much to understand the customer as it is to understand what jobs customers need to do — and build products that serve those specific purposes.
Marketers who do this well can build what we call “purpose brands” — ones that become so tightly associated with the job they perform that they become inextricably linked to it. Most of today’s most successful brands — Crest, Starbucks, Kleenex, eBay and Kodak, to name a few — started out as purpose brands.
. . .
Federal Express illustrates how successful purpose brands are built. A job had existed practically forever: the “I need to send this from here to there — as fast as possible with perfect certainty” job. Some U.S. customers hired the Postal Service’s airmail; a few desperate souls paid couriers to sit on airplanes. But because nobody had yet designed a service to do this job well, the brands of the unsatisfactory alternative services became tarnished when they were hired for this purpose. But after Federal Express specifically designed its service to do that exact job, and did it wonderfully again and again, the FedEx brand began popping into people’s minds.
This was not built through advertising. It was built as people hired the service and found that it got the job done. FedEx became a purpose brand — in fact, it became a verb in the international language of business that is inextricably linked with that specific job.
Purpose brands create enormous opportunities for differentiation, premium pricing and growth. But reckless management can erode the equity of these brands. There are only two ways to extend brands without destroying them: Marketers can apply the brand to different products that address the same job. Or they can apply the brand to endorse the quality of products that do other jobs and create new purpose brands that benefit from the endorser quality of the original brand.
Marriott followed this strategy in leveraging its brand across the jobs for which hotels might be hired. It built its hotel brand around full-service facilities that were good to hire for large meetings. When it extended its brand to other jobs for which hotels were hired, it adopted a two-word brand architecture, appending to the Marriott endorsement a purpose brand for the different jobs its new hotel chains were intended to do. Hence, individual business travelers who need to hire a quiet place to get work done can hire Courtyard by Marriott — the hotel designed by business travelers for business travelers. Longer-term travelers can hire Residence Inn by Marriott, and so on. Even though these disruptive hotels were not constructed and decorated to the same standard as full-service Marriott hotels, the new chains actually reinforce the endorser qualities of the Marriott brand because they do the jobs well that they are hired to do.

For the full article, see:
CLAYTON M. CHRISTENSEN, SCOTT COOK and TADDY HALL. “MANAGER’S JOURNAL; It’s the Purpose Brand, Stupid.” The Wall Street Journal (Tues., November 29, 2005): B2.

“We do free speech here”

COPENHAGEN – When Flemming Rose, the cultural editor at Denmark’s leading newspaper, published cartoons of the prophet Muhammad late last September, he got an angry telephone call from a local Muslim news vendor who said he had removed the paper from his shelves in protest.
The complaint didn’t cause much alarm. “We get calls every day from people complaining about something,” recalls Mr. Rose. Anger over the cartoons, he figured, would flare out in “two or three days.”
Today, the 47-year-old editor has a security-service escort when he appears in public. He has received death threats and gets insulted by strangers on the street. His newspaper, Jyllands-Posten, evacuated its offices twice last week after anonymous bomb threats.
Across the Muslim world, Denmark, a nation of just 5.4 million, has been hit by a tsunami of rage. Protesters rally daily from Iraq to Indonesia. Mobs over the weekend stormed its diplomatic missions in Syria and Lebanon. Demonstrators yesterday attacked its embassy in Iran, and security forces in Afghanistan opened fire on demonstrators, killing at least four. A boycott of Danish products has hammered some of Denmark’s biggest companies.

For the full story, see:
ANDREW HIGGINS. “How Muslim Clerics Stirred Arab World Against Denmark; Newspaper Cartoons Unite Religious, Secular Forces; Dossier Fans the Flames.” THE WALL STREET JOURNAL (Tues., February 7, 2006): A1 & A25.
And now for something completely different:

Listen, I watched the funeral of Coretta Scott King for six hours Tuesday, from the pre-service commentary to the very last speech, and it was wonderful — spirited and moving, rousing and respectful, pugnacious and loving. The old lions of the great American civil rights movement of the 20th century were there, and standing tall. The old lionesses, too. There was preaching and speechifying and at the end I thought: This is how democracy ought to be, ought to look every day — full of the joy of argument, and marked by the moral certainty that here you can say what you think.
There was nothing prissy, nothing sissy about it. A former president, a softly gray-haired and chronically dyspeptic gentleman who seems to have judged the world to be just barely deserving of his presence, pointedly insulted a sitting president who was, in fact, sitting right behind him. The Clintons unveiled their 2008 campaign. A rhyming preacher, one of the old lions, a man of warmth and stature, freely used the occasion to verbally bop the sitting president on the head.
So what? This was the authentic sound of a vibrant democracy doing its thing. It was the exact opposite of the frightened and prissy attitude that if you draw a picture I don’t like, I’ll have to kill you.
It was: We do free speech here.

For the full commentary, see:
PEGGY NOONAN. “Four Presidents and a Funeral.” The Wall Street Journal (Fri., February 10, 2006): A18.

Solzhenitsyn Endures: The Return of “The First Circle”

    Source of book image:   Amazon.com.

I remember Ben Rogge recommending The First Circle, decades ago when it first appeared in English. It is a powerful, courageous, wise work, bearing many lessons. As you read the book, you keep hoping you can find someone to blame for the evil that is happening. But as Solzhenitsyn works his way up the bureaucracy, each bureaucrat has a plausible motive for his part in evil; one motive, for example, is the protection of the bureaucrat’s family. Only when you reach Stalin, do you find someone who you can really despise. But he seems borderline crazy, so even he is not a totally satisfying villian.

The book can be seen as illustrating a point that Rogge often made: socialism is not bad because it is run by bad people; it is bad because it provides ordinary people incentives to do bad things. (These are not his words, but I believe they capture his point.)


Alexandr Solzhenitsyn. Source of image: online version of the NYT article quoted and cited below.

(p. A1) MOSCOW, Feb. 8 — A grandfatherly figure, his bearded face wrinkled into a smile, peers down from billboards around town.

It is surprise enough that the man is Aleksandr I. Solzhenitsyn, the once-exiled writer, Nobel Prize winner and, of late, octogenarian scold. It is even more so that the billboards advertise his adaptation — broadcast on state television, no less — of one of his fiercely anti-Soviet novels, “The First Circle.”

Solzhenitsyn has been called the conscience of the nation, but his reputation has risen and fallen as tumultuously as Russia itself since the collapse of the Soviet Union. “First Circle” has once again placed him on the national stage, reaching an audience that would have been inconceivable to him four decades ago, when he smuggled the book out of the Soviet Union.

For the full article, see:

STEVEN LEE MYERS “Toast of the TV in Russian Eyes: It’s Solzhenitsyn.” The New York Times (Thurs., February 9, 2006): A1 & A3.


A scene from the Russian mini-series version of The First Circle. Source of image: online version of the NYT article quoted and cited above.

Trickle-Down in India

BANGALORE, India, July 4 – It has been a little more than a year since the government of Prime Minister Manmohan Singh came into power promising to embrace those excluded from the country’s new economic prosperity.
While the impact of his government’s efforts to help the poor — like increasing credit to the country’s many farmers and pumping in money for infrastructure, especially in rural areas — will not show for another few years, experts say, the bounty from the expansion in manufacturing and services that has been putting money in the hands of millions of Indians is now noticeably trickling down.
”What is happening is amazing,” said Joe Paul, the founder and chairman of the Uthsaha Society, a networking group that encourages slum dwellers in Bangalore to become financially independent. ”It is a ripple effect.”
. . .
. . . , where the new prosperity is percolating, it spans a broad spectrum and reflects much more than an occasional, isolated success story. A big catalyst is the construction boom in high-tech cities like Bangalore and Madras. Besides the demand for construction workers, workers at factories supplying the building materials, and drivers to transport those products, there is a demand for housekeepers, cooks and drivers to cater to the double-income families who live in the new residential complexes and high-rises. Caterers are needed to supply food to the office workers. Security guards are also in demand. Trained nurses are needed to tend to aging parents of workers traveling overseas or living in other cities.
”The last few years of strong growth has facilitated poverty reduction, even though the fruits of growth were not distributed evenly,” said Ping Chew, a sovereign credit analyst at Standard & Poor’s in Singapore. ”The middle-income group continues to be the biggest beneficiary and this will ensure that the benefits continue to pass on to the lower-income class.”

For the full story, see:
SARITHA RAI. “In India, Economic Prosperity Is Spreading Slowly.” The New York Times (Tuesday, July 5, 2005): C3.

The Open Road

A strong argument could be made that the automobile is one of the two most liberating inventions of the past century, ranking only behind the microchip. The car allowed even the common working man total freedom of mobility — the means to go anywhere, anytime, for any reason. In many ways, the automobile is the most egalitarian invention in history, dramatically bridging the quality-of-life gap between rich and poor. The car stands for individualism; mass transit for collectivism. Philosopher Waldemar Hanasz, who grew up in communist Poland, noted in his 1999 essay “Engines of Liberty” that Soviet leaders in the 1940s showed the movie “The Grapes of Wrath” all over the country as propaganda against the evils of U.S. capitalism and the oppression of farmers. The scheme backfired because “far from being appalled, the Soviet viewers were envious; in America, it seemed, even the poorest had cars and trucks.”
. . .
The simplistic notion taught to our second-graders, that the car is an environmental doomsday machine, reveals an ignorance of history. When Henry Ford first started rolling his Black Model Ts off the assembly line at the start of the 20th century, the auto was hailed as one of the greatest environmental inventions of all time. That’s because the horse, which it replaced, was a prodigious polluter, dropping 40 pounds of waste a day. Imagine what a city like St. Louis smelled like on a steamy summer afternoon when the streets were congested with horses and piled with manure.
. . .
There’s a perfectly good reason that the roads are crammed with tens of millions of cars and that Americans drive eight billion miles a year while spurning buses, trains, bicycles and subways. Americans are rugged individualists who don’t want to cram aboard buses and subways. We want more open roads and highways, and we want energy policies that will make gas cheaper, not more expensive. We want to travel down the road from serfdom and the car is what will take us there.

For the full commentary, see:
Moore, Stephen. “Supply Side; The War Against the Car.” The Wall Street Journal (Fri., November 11, 2005): A10.