Capitalism – Page 14 – artdiamondblog.com

Entrepreneurial Innovation Comes from Diverse Outsiders Rather than Establishments

(p. 113) Firms that win by the curve of mind often abandon it when they establish themselves in the world of matter. They fight to preserve the value of their material investments in plant and equipment that embody the ideas and experience of their early years of success. They begin to exalt expertise and old knowledge, rights and reputation, over the constant learning and experience of innovative capitalism. They get fat.

A fat cat drifting off the curve, however, is a sitting duck for new nations and companies getting on it. The curve of mind thus tends to favor outsiders over establishments of all kinds. At the capitalist ball, the blood is seldom blue or the money rarely seasoned. Microcosmic technologies are no exception. Capitalism’s most lavish display, the microcosm, is no respecter of persons.
The United States did not enter the microcosm through the portals of the Ivy League, with Brooks Brothers suits, gentleman Cs, and warbling society wives. Few people who think they are in already can summon the energies to break in. From immigrants and outcasts, street toughs and science wonks, nerds and boffins, the bearded and the beer-bellied, the tacky and uptight, and sometimes weird, the born again and born yesterday, with Adam’s apples bobbing, psyches (p. 114) throbbing, and acne galore, the fraternity of the pizza breakfast, the Ferrari dream, the silicon truth, the midnight modem, and the seventy-hour week, from dirt farms and redneck shanties, trailer parks and Levittowns, in a rainbow parade of all colors and wavelengths, of the hyperneat and the sty high, the crewcut and khaki, the pony-tailed and punk, accented from Britain and Madras, from Israel and Malaya, from Paris and Parris Island, from Iowa and Havana, from Brooklyn and Boise and Belgrade and Vienna and Vietnam, from the coarse fanaticism and desperation, ambition and hunger, genius and sweat of the outsider, the downtrodden, the banished, and the bullied come most of the progress in the world and in Silicon Valley.

Source:

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

“When the Sons of the Communists Themselves Wanted to Become Capitalists and Entrepreneurs”

“Josef Janicek, 61, was on the keyboard for a concert in Prague last week by the band Plastic People of the Universe.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A10) PRAGUE — It has been called the Velvet Revolution, a revolution so velvety that not a single bullet was fired.

But the largely peaceful overthrow of four decades of Communism in Czechoslovakia that kicked off on Nov. 17, 1989, can also be linked decades earlier to a Velvet Underground-inspired rock band called the Plastic People of the Universe. Band members donned satin togas, painted their faces with lurid colors and wrote wild, sometimes angry, incendiary songs.
It was their refusal to cut their long, dank hair; their willingness to brave prison cells rather than alter their darkly subversive lyrics (“peace, peace, peace, just like toilet paper!”); and their talent for tapping into a generation’s collective despair that helped change the future direction of a nation.
“We were unwilling heroes who just wanted to play rock ‘n’ roll,” said Josef Janicek, 61, the band’s doughy-faced keyboard player, who bears a striking resemblance to John Lennon and still sports the grungy look that once helped get him arrested. “The Bolsheviks understood that culture and music has a strong influence on people, and our refusal to compromise drove them insane.”
. . .
In 1970, the Communist government revoked the license for the Plastics to perform in public, forcing the band to go underground. In February 1976, the Plastic People organized a music festival in the small town of Bojanovice — dubbed “Magor’s Wedding” — featuring 13 other bands. One month later, the police set out to silence the musical rebels, arresting dozens. Mr. Janicek was jailed for six months; Mr. Jirous and other band members got longer sentences.
Mr. Havel, already a leading dissident, was irate. The trial of the Plastic People that soon followed became a cause célèbre.
Looking back on the Velvet Revolution they helped inspire, however indirectly, Mr. Janicek recalled that on Nov. 17, 1989, the day of mass demonstrations, he was in a pub nursing a beer. He argued that the revolution had been an evolution, fomented by the loosening of Communism’s grip under Mikhail Gorbachev and the overwhelming frustration of ordinary people with their grim, everyday lives. “The Bolsheviks knew the game was up,” he said, “when the sons of the Communists themselves wanted to become capitalists and entrepreneurs.”

For the full story, see:
DAN BILEFSKY. “Czechs’ Velvet Revolution Paved by Plastic People.” The New York Times (Mon., November 16, 2009): A10.
(Note: the online version of the article is dated November 15, 2009.)
(Note: ellipsis added.)

“Market Wu” Annoys Maoists and Corrupt Bureaucrats

“Wu Jinglian helped to create China’s market economy, and now he is defending it against conservative hardliners in the Communist Party.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) AT 79, Wu Jinglian is considered China’s most famous economist.

In the 1980s and ’90s, he was an adviser to China’s leaders, including Deng Xiaoping. He helped push through some of this country’s earliest market reforms, paving the way for China’s spectacular rise and earning him the nickname “Market Wu.”
Last year, China’s state-controlled media slapped him with a new moniker: spy.
Mr. Wu has not been interrogated, charged or imprisoned. But the fact that a state newspaper, The People’s Daily, among others, was allowed to publish Internet rumors alleging that he had been detained on suspicions of being a spy for the United States hints that he is annoying some very important people in the government.
He denied the allegations, and soon after they were published, China’s cabinet denied that an investigation was under way.
But in a country that often jails critics, Mr. Wu seems to be testing the limits of what Beijing deems permissible. While many economists argue that China’s growth model is flawed, rarely does a prominent Chinese figure, in the government or out, speak with such candor about flaws he sees in China’s leadership.
Mr. Wu — who still holds a research post at an institute affiliated with the State Council, China’s cabinet — has white hair and an amiable face, and he appears frail. But his assessments are often harsh. In books, speeches, interviews and television appearances, he warns that conservative hardliners in the Communist Party have gained influence in the government and are trying to dismantle the market reforms he helped formulate.
He complains that business tycoons and corrupt officials have hijacked the economy and manipulated it for their own ends, a system he calls crony capitalism. He has even called on Beijing to establish a British-style democracy, arguing that political reform is inevitable.
Provocative statements have made him a kind of dissident economist here, and revealed the sharp debates behind the scenes, at the highest levels of the Communist Party, about the direction of China’s half-market, half-socialist economy.
In many ways, it is a continuation of the debate that has been raging for three decades: What role should the government play in China’s hybrid economy?
Mr. Wu says the spy rumors were “dirty tricks” employed by his critics to discredit him.
“I have two enemies,” he said in a recent interview. “The crony capitalists and the Maoists. They will use any means to attack me.”
. . .
(p. 7) In interviews, Mr. Wu says he feels compelled to speak out because conservatives and “old-style Maoists” have been gaining influence in the government since 2004. These groups, he said, are pressing for a return to central planning and placing blame for corruption and social inequality on the very market reforms he championed.
At the same time, Mr. Wu says, corrupt bureaucrats are pushing for the state to take a larger economic role so they can cash in on their positions through payoffs and bribes, as well as by steering business to allies.
“I’m not optimistic about the future,” Mr. Wu said. “The Maoists want to go back to central planning and the cronies want to get richer.”

For the full story, see:
DAVID BARBOZA. “China’s Mr. Wu Keeps Talking.” The New York Times, SundayBusiness Section (Sun., September 26, 2009): 1 & 7.
(Note: ellipsis added.)

Source of timeline graphic: online version of the NYT article quoted and cited above.

Nationalizing Health Care: Communists Seized Pharmacy Owned By Ayn Rand’s Father

Source of book images: online version of the NYT review quoted and cited below.

(p. C6) Ayn Rand poses theatrically in her signature cape and gold dollar-sign pin on the cover of a groundbreaking new biography. Rand also poses theatrically in this same Halloween-ready costume (Rand impersonators have been known to wear it) on the cover of another groundbreaking new biography. The two books are being published a week apart. And both have gray covers that make them look even more interchangeable. Yet Rand, whose Objectivist philosophy is enjoying one of its periodic resurgences, loathed the very idea of grayness. She preferred dichotomies that were strictly black and white.
. . .
Ms. Heller’s book is worth its $35 price, which is not the kind of detail that Rand herself would have been shy about trumpeting. When Russian Bolshevik soldiers commandeered and closed the St. Petersburg pharmacy run by Zinovy Rosenbaum, they made a lifelong capitalist of his 12-year-old daughter, Alissa, who would wind up fusing the subversive power of the Russian political novel with glittering Hollywood-fueled visions of the American dream.
. . .
Crucially, both authors understand the reasons that Rand’s popularity has endured, not only among college students dazzled (and thronged into packs) by her triumphant individualism but also by entrepreneurs. From the young Ted Turner, who rented billboards to promote the “Who is John Galt?” slogan from “Atlas Shrugged,” to the founders of Craigslist and Wikipedia, who have found self-contradictory new ways to mix populism with individual enterprise, it is clear that (in Ms. Burns’s words) “reports of Ayn Rand’s death are greatly exaggerated.”

For the full review, see:
JANET MASLIN. “Books of The Times; Twin Biographies of a Singular Woman, Ayn Rand.” The New York Times (Thurs., October 21, 2009): C6.
(Note: ellipses added.)

Legitimacy of Capitalism Rests on Rich Earning their Wealth

Luigi Zingales, Robert C. McCormack Professor of Entrepreneurship and Finance at the University of Chicago. Source of photo and information in caption: http://faculty.chicagobooth.edu/luigi.zingales/research/date.html.

(p. A21) Luigi Zingales points out that the legitimacy of American capitalism has rested on the fact that many people, like Warren Buffett and Bill Gates, got rich on the basis of what they did, not on the basis of government connections. But over the years, business and government have become more intertwined. The results have been bad for both capitalism and government. The banks’ growing political clout led to the rule changes that helped create the financial crisis.

For the full commentary, see:
DAVID BROOKS. “The Bloody Crossroads.” The New York Times (Tues., September 8, 2009): A21.
(Note: the online version of the commentary is dated Sept. 7.)

The reference for the Zingales article is:
Zingales, Luigi. “Capitalism after the Crisis.” National Affairs, no. 1 (Fall 2009): 22-35.

John Mackey: “I Believe in the Dynamic Creativity of Capitalism”

Whole Foods CEO John Mackey. Source of the caricature: online version of the WSJ interview quoted and cited below.

(p. A11) “I honestly don’t know why the article became such a lightning rod,” says John Mackey, CEO and founder of Whole Foods Market Inc., as he tries to explain the firestorm caused by his August op-ed on these pages opposing government-run health care.
. . .
. . . his now famous op-ed incited a boycott of Whole Foods by some of his left-wing customers. His piece advised that “the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us closer to a complete government takeover of our health-care system.” Free-market groups retaliated with a “buy-cott,” encouraging people to purchase more groceries at Whole Foods.
. . .
What Mr. Mackey is proposing is more or less what he has already implemented at his company–a plan that would allow more health savings accounts (HSAs), more low-premium, high-deductible plans, more incentives for wellness, and medical malpractice reform. None of these initiatives are in any of the Democratic bills winding their way through Congress. In fact, the Democrats want to kill HSAs and high-deductible plans and mandate coverage options that would inflate health insurance costs.
. . .
Mr. Mackey’s latest crusade involves traveling to college campuses across the country, trying to persuade young people that business, profits and capitalism aren’t forces of evil. He calls his concept “conscious capitalism.”
What is that? “It means that business has the potential to have a deeper purpose. I mean, Whole Foods has a deeper purpose,” he says, now sounding very much like a philosopher. “Most of the companies I most admire in the world I think have a deeper purpose.” He continues, “I’ve met a lot of successful entrepreneurs. They all started their businesses not to maximize shareholder value or money but because they were pursuing a dream.”
Mr. Mackey tells me he is trying to save capitalism: “I think that business has a noble purpose. It’s not that there’s anything wrong with making money. It’s one of the important things that business contributes to society. But it’s not the sole reason that businesses exist.”
What does he mean by a “noble purpose”? “It means that just like every other profession, business serves society. They produce goods and services that make people’s lives better. Doctors heal the sick. Teachers educate people. Architects design buildings. Lawyers promote justice. Whole Foods puts food on people’s tables and we improve people’s health.”
Then he adds: “And we provide jobs. And we provide capital through profits that spur improvements in the world.
. . .
“I don’t think anybody’s too big to fail,” he says. “If a business fails, what happens is, there are still assets, and those assets get reorganized. Either new management comes in or it’s sold off to another business or it’s bid on and the good assets are retained and the bad assets are eliminated. I believe in the dynamic creativity of capitalism, and it’s self-correcting, if you just allow it to self-correct.”
That’s something Washington won’t let happen these days, which helps explain why Mr. Mackey felt compelled to write that the Whole Foods health-insurance program is smarter and cheaper than the latest government proposals.

For the full interview, see:
STEPHEN MOORE. “The Conscience of a Capitalist; The Whole Foods founder talks about his Journal health-care op-ed that spawned a boycott, how he deals with unions, and why he thinks CEOs are overpaid.” The Wall Street Journal (Sat., OCTOBER 3, 2009): A11.
(Note: ellipses added.)

Samuel Johnson Saw Benefits of Free Markets

(p. A19) In “A Journey to the Western Islands of Scotland,” an account of his travels with James Boswell through the Hebrides in 1773, Johnson vividly described the desolation of a feudal land, untouched by commercial exuberance. He was struck by the utter hopelessness in a country where money was largely unknown, and the lack of basic material improvements–the windows, he noticed, did not operate on hinges, but had to be held up by hand, making the houses unbearably stuffy.

He was even more struck by the contrast between places where markets thrived and those where they didn’t. In Old Aberdeen, where “commerce was yet unstudied,” Johnson found nothing but decay, whereas New Aberdeen, which “has all the bustle of prosperous trade,” was beautiful, opulent, and promised to be “very lasting.”
Johnson also understood that what Smith would later call the division of labor was instrumental for human happiness and progress. “The Adventurer 67,” which he wrote in 1753 at the height of a commercial boom (and 23 years before Smith published “The Wealth of Nations”), delights in the sheer number of occupations available in a commercial capital like London.

For the full commentary, see:
ELIZA GRAY. “Samuel Johnson and the Virtue of Capitalism; The great 18th century writer on commerce and human happiness.” The Wall Street Journal (Fri., Sept. 11, 2009): A19.

America’s “Wealth Culture” is Democratic, Diverse, and Resilient

Source of book image: online version of the WSJ review quoted and cited below.

(p. W6) . . . “Rich” contains an interesting argument, if only one can find it. Mr. Samuel contends that the 20th century has seen the creation of a distinctly American “wealth culture” that is more democratic and more diverse than anything the world has seen before, and consequently more resilient.
. . .
The Reagan revolution, thanks to its lowered taxes and deregulated economy, produced a flood of new millionaires; it also removed some of the guilt that had come to cling to wealth. (President Reagan said that he wanted America to remain a country in which people could dare to be rich.) More than the Reaganauts, though, it was the computer geeks of Silicon Valley who both stimulated and legitimized wealth- creation. They not only pioneered a productivity miracle, they also embodied the “American” values of meritocracy and democracy, earning big rewards for big innovations and scattering stock options among their employees. America Online, Mr. Samuel observes, created 2,000 millionaires during the 1990s.
The road from the top-hatted John D. Rockefeller to the be-chinoed Bill Gates is undoubtedly a long one, and yet, remarkably, much of the landscape of American wealth remains the same. The U.S. has a genius for producing entrepreneurs who can turn the latest technology into piles of gold. Less than 10% of today’s rich inherited their wealth, for example, and many are ”instapreneurs,” transformed in an instant from penury to prosperity.

For the full review, see:

ADRIAN WOOLDRIDGE. “Review; The Evolution of Wealth; Discerning a distinctly American style of affluence.” The Wall Street Journal (Fri., July 31, 2009): W6.
(Note: ellipses added.)

Reference to the reviewed book:
Samuel, Larry. Rich: The Rise and Fall of American Wealth Culture. New York: AMACOM, 2009.

“Don’t Kill the Goose”

(p. A11) I think there are two major but not fully formed or fully articulated fears among thinking Americans right now, and the deliberate obscurity of official language only intensifies those fears.

The first is that Mr. Obama’s government, in all its flurry of activism, may kill the goose that laid the golden egg. This is as dreadful and obvious a cliché as they come, but too bad, it’s what people fear. They see the spending plans and tax plans, the regulation and reform hunger, the energy proposals and health-care ambitions, and they–we–wonder if the men and women doing all this, working in their separate and discrete areas, are being overseen by anyone saying, “By the way, don’t kill the goose.”
The goose of course is the big, messy, spirited, inspiring, and sometimes in some respects damaging but on the whole brilliant and productive wealth-generator known as the free-market capitalist system. People do want things cleaned up and needed regulations instituted, and they don’t mind at all if the very wealthy are more heavily taxed, but they greatly fear a goose killing. Economic freedom in all its chaos and disorder has kept us rich for 200 years, and allowed us as a nation to be generous and strong at home and in the world. But the goose can be killed–by carelessness, hostility, incrementalism, paralysis, and by no one saying, “Don’t kill the goose.”

For the full commentary, see:
PEGGY NOONAN. “What’s Elevated, Health-Care Provider? Economy of language would be good for the economy.” Wall Street Journal (Sat., MAY 15, 2009): A11.

Environmentalists Lay Guilt on Rafael for His New Set of Legos

“David Batker with his son Rafael de la Torre Batker, 9, who worried it might hurt the environment if he bought a new set of Legos.” Source of photo and caption: online version of the NYT article quoted and cited below.

(p. A1) The thick-lined drawings of the Earth, a factory and a house, meant to convey the cycle of human consumption, are straightforward and child-friendly. So are the pictures of dark puffs of factory smoke and an outlined skull and crossbones, representing polluting chemicals floating in the air.

Which is one reason “The Story of Stuff,” a 20-minute video about the effects of human consumption, has become a sleeper hit in classrooms across the nation.
. . .
. . . many children who watch it take it to heart: riding in the car one day with his parents in Tacoma, Wash., Rafael de la Torre Batker, 9, was worried about whether it would be bad for the planet if he got a new set of Legos.
“When driving by a big-box store, you could see he was struggling with it,” his father, David Batker, said. But then Rafael said, “It’s O.K. if I have Legos because I’m going to keep them for a very long time,” Mr. Batker recalled.
. . .
(p. A12) “There was not one positive thing about capitalism in the whole thing,” Mr. Zuber said.
Corporations, for example, are portrayed as a bloated person sporting a top hat and with a dollar sign etched on its front.

For the full story, see:
LESLIE KAUFMAN. ” In Schools, a Cautionary Video About America and Its ‘Stuff’.” The New York Times (Mon., May 11, 2009): A1 & A12.
(Note: ellipses added; the online version of the title is: “A Cautionary Video About America’s ‘Stuff’.”)

“A section of the video on toxic chemicals and production.” Source of image and caption: online version of the NYT article quoted and cited above.