Economics – Page 145 – artdiamondblog.com

Obama Delays Biotech Innovation

Source of graph: scanned from the print version of the WSJ article quoted and cited below.

(p. A8) The crop-biotechnology industry, growing frustrated as it watches the approval time for new seeds almost double under the Obama administration, is pressuring Washington to clear inventions more quickly.

The logjam at the U.S. Department of Agriculture, which must clear genetically modified seeds, is slowing the launch of products that could give farmers more alternatives to seeds from crop biotech giant Monsanto Co.
Also, some biotech-industry executives worry the delays signal that the Obama administration, which has painted itself as pro-biotech, is gearing up for a far tougher analysis of the potential environmental impact of these crops, which could make it harder for inventions to reach the marketplace.
On average, a genetically modified seed takes 1,188 days to pass federal scrutiny, almost twice as long as in 2008, the last year of the Bush administration, according to the Biotechnology Industry Organization, a Washington, D.C., trade group.
“There is concern we might see other countries move ahead of the U.S.,” said Sharon Bomer Lauritsen, executive vice president of food and agriculture at BIO, who added that the delays “might stifle investment in what has been a very dynamic part of the U.S. economy.” BIO’s members include hundreds of companies such as DuPont Co., Syngenta AG and Monsanto, as well as academic institutions.

For the full story, see:
SCOTT KILMAN. “Biotech Firms Seek Speedier Reviews of Seeds; Approval Time for Genetically Modified Crops Doubles under Obama as Some Fear Tougher Stance; Feds Blame Logjam.” The Wall Street Journal (Weds., April 28, 2010): A8.

Electronics Projects Were Wozniak’s “Passion” and “Pastime” and “Reward”

(p. 127) I think most people with day jobs like to do something totally different when they get home. Some people like to come home and watch TV. But my thing was electronics projects. It was my passion and it was my pastime.

Working on projects was something I did on my own time to reward myself, even though I wasn’t getting rewarded on the outside, with money or other visible signs of success.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

Farmers in India Like Wal-Mart

“Mohammad Haneef, [above], a farmer in Haider Nagar, said that Wal-Mart is better than his previous clients. “You have to establish trust,” he said in Hindi. “Wal-Mart has been paying on time. We would just like them to buy more.”” Source of caption and photo: online version of the NYT article quoted and cited below. (Note: bracketed word added.)

(p. B1) HAIDER NAGAR, India — At first glance, the vegetable patches in this north Indian village look no different from the many small, spare farms that dot the country.

But up close, visitors can see some curious experiments: insect traps made with reusable plastic bags; bamboo poles helping bitter gourd grow bigger and straighter; and seedlings germinating from plastic trays under a fine net.
These are low-tech innovations, to be sure. But they are crucial to the goals of the benefactor — Wal-Mart — that supplied them.
Two years after Wal-Mart came to India, it is trying to do to agriculture here what it has done to industries around the world: change business models by using its hyper-efficient practices to improve productivity and speed the flow of goods.
. . .
(p. B3) Here in Haider Nagar, in the bread basket state of Punjab, farmers who supply vegetables to Wal-Mart say they like working with the company. It typically pays them 5 to 7 percent more than they earn from local wholesale markets, they said. And they do not have to pay to transport produce because Wal-Mart picks it up from their fields.
Abdul Majid, who sells cucumbers to Wal-Mart, says his yields have risen about 25 percent since he started following farming advice about when to apply fertilizers and which kinds — more zinc, less potash — from the company and its partner, Bayer CropScience.
Mohammad Haneef, a farmer in a nearby village, said he had sold to two other companies before Wal-Mart, but one shut down and the other cheated him and paid him late. Wal-Mart is much better, he said, but its buyers are picky, taking the best vegetables and leaving him with inferior ones that he still must truck to wholesale markets.
“You have to establish trust,” he said in Hindi. “Wal-Mart has been paying on time. We would just like them to buy more.”

For the full story, see:
VIKAS BAJAJ. “Cultivating a Market in India; Wal-Mart Nurtures Suppliers as It Lays Plans for Expansion.” The New York Times (Tues., April 13, 2010): B1 & B3.
(Note: ellipsis added.)
(Note: the online version of the review is dated April 12, 2010 and has the title “In India, Wal-Mart Goes to the Farm.”)

Economics Is More Like Biology than Physics

(p. A13) If economics is a science, it is more like biology than physics. Biologists try to understand the relationships in a complex system. That’s hard enough. But they can’t tell you what will happen with any precision to the population of a particular species of frog if rainfall goes up this year in a particular rain forest. They might not even be able to count the number of frogs right now with any exactness.

We have the same problems in economics. The economy is a complex system, our data are imperfect and our models inevitably fail to account for all the interactions.
The bottom line is that we should expect less of economists. Economics is a powerful tool, a lens for organizing one’s thinking about the complexity of the world around us. That should be enough. We should be honest about what we know, what we don’t know and what we may never know. Admitting that publicly is the first step toward respectability.

For the full commentary, see:

RUSS ROBERTS. “Is the Dismal Science Really a Science? Some macroeconomists say if we just study the numbers long enough we’ll be able to design better policy. That’s like the sign in the bar: Free Beer Tomorrow.” The Wall Street Journal (Thurs., FEBRUARY 26, 2010): A13.

Mob Museum Financed from Local, State and Federal Tax Dollars

“The $42 million museum has been financed through a series of state, federal and local grants. It is set to open next March.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 4) The idea for the Las Vegas Museum of Organized Crime and Law Enforcement was seeded when the city bought the 1933 federal courthouse and post office from the federal government for $1 in 2002, with the strict understanding that the building — one of the oldest in Southern Nevada — be used for cultural purposes.

For much of the middle of the last century, organized crime ruled the Strip, developing and managing an array of casinos, skimming their way to success. Federal prosecutors put an end to their reign in the 1980s. The city determined its historical relationship to organized crime — and the role the courthouse played in it — made the site a perfect fit.
. . .
The $42 million project has been financed through a series of state, federal and local grants, and the work has progressed a bit glacially as money has trickled in.
The project, once listed as one that could stimulate this city’s embattled economy, was attacked by Senator Mitch McConnell, the Republican leader, when city officials suggested that it might qualify for federal stimulus money.

For the full story, see:
JENNIFER STEINHAUER. “‘2 Mob Museums in Las Vegas, Ready to Go to the Mattresses.” The New York Times, First Section (Sun., April 25, 2010): 1 & 4.
(Note: ellipsis added.)
(Note: the online version of the article is dated April 24, 2010 and has the title “Vegas Mob Museums, Set to Go to the Mattresses.”)

Companies Make Big Bets to Get Us What We Need

“The Molycorp Minerals rare earth mine in Mountain Pass, Calif.” Source of caption and photo: online version of the NYT article quoted and cited below.

If the government does not interfere with the price system, then the prospect of higher prices will provide private companies and entrepreneurs the incentive to take risks to provide us with what we need. In the article quoted below, the example is rare earth minerals that are used in high technology products.

(p. B1) On a high plateau where burros and jackrabbits wander an hour’s drive southwest of Las Vegas, a 400-foot-deep chasm hewn from volcanic rock sits at the center of an international policy debate.

The chasm, in Mountain Pass, Calif., used to be the world’s main mine for rare earth elements — minerals crucial to military hardware and the latest wind turbines and hybrid gasoline-electric cars. Molycorp Minerals, which owns the mine, announced on Monday that it had registered with the Securities and Exchange Commission for an initial public offering to help raise the nearly $500 million needed to reopen and expand the mine.
Molycorp is making a big bet that its mine — once the world leader in production of rare earth elements, but now a rusting relic — can be made competitive again. Global demand is surging for the minerals. And customers, particularly the American military, are seeking alternatives to China, which now mines 97 percent of the world’s rare earth elements.
As part of reopening the mine, Molycorp plans to increase its capacity to mine and refine neodymium for rare earth magnets, which are extremely lightweight and are used in many high-tech applications. It will also resume bulk production of lower-value rare earth elements like cerium, used in industrial processes like polishing glass and water filtration.

For the full story, see:
KEITH BRADSHER. “A Mine Owner’s Risky Bet on Rare Minerals.” The New York Times (Thur., April 22, 2010): B1 & B4.
(Note: italics in original; ellipses added.)
(Note: the online version of the review is dated April 21, 2010 and has the title “Challenging China in Rare Earth Mining.”)

Fannie Mae and Freddie Mac Are Still a “Burgeoning Money Pit” for Taxpayers

(p. 1) If you blinked, you might have missed the ugly first-quarter report . . . from Freddie Mac, the mortgage finance giant that, along with its sister Fannie Mae, soldiers on as one of the financial world’s biggest wards of the state.

Freddie — already propped up with $52 billion in taxpayer funds used to rescue the company from its own mistakes — recorded a loss of $6.7 billion and said it would require an additional $10.6 billion from taxpayers to shore up its financial position.
The news caused nary a ripple in the placid Washington scene. Perhaps that’s because many lawmakers, especially those who once assured us that Fannie and Freddie would never cost taxpayers a dime, hope that their constituents don’t notice the burgeoning money pit these mortgage monsters represent. Some $130 billion in federal money had already been larded on both companies before Freddie’s latest request.
But taxpayers should examine Freddie’s first-quarter numbers not only because the losses are our responsibility. Since they also include details on Freddie’s delinquent mortgages, the company’s sales of foreclosed properties and losses on those sales, the results provide a telling snapshot of the current state of the housing market.
That picture isn’t pretty. Serious delinquencies in Freddie’s single-family conventional loan portfolio — those more than 90 days late — came in at 4.13 percent, up from 2.41 percent for the period a year earlier. Delinquencies in the company’s Alt-A book, one step up from subprime loans, totaled 12.84 percent, while delinquencies on interest-only mortgages were 18.5 percent. Delinquencies on its small portfolio of op-(p. 2)tion-adjustable rate loans totaled 19.8 percent.
The company’s inventory of foreclosed properties rose from 29,145 units at the end of March 2009 to almost 54,000 units this year. Perhaps most troubling, Freddie’s nonperforming assets almost doubled, rising to $115 billion from $62 billion.

For the full commentary, see:
Gretchen Morgenson. “Fair Game; Ignoring the Elephant in the Bailout.” The New York Times, SundayBusiness (Sun., May 9, 2010): 1-2.
(Note: ellipsis added.)
(Note: the online version of the article was dated May 7, 2010.)

Class Action Suit Did Little for Class Members, But “Enriched” Attorneys

Many attorneys are good people, including my late father, one of my brothers, and one of my favorite former students.
But a few attorneys must be conscience-challenged; for instance the ones “representing” the class in the case described below.
More importantly, class-action litigation increases the costs and uncertainty of doing business, and thereby increases the prices of the products and services we buy.
In speaking to one of my classes a few years ago, Omaha entrepreneur Joe Ricketts made a strong case for tort reform. it is hard to disagree, unless, like the Democratic Party, you are receiving large contributions from trial lawyers.

(p. B1) . . . , a 2008 settlement of a class action against Ford Motor Co., involving incidents in which Firestone tires exploded on Ford Explorers, offered certain Explorer owners coupons worth $500 toward the purchase of a new Explorer and $300 toward the purchase of any other Ford vehicle.

As of March, only 148 people had redeemed a coupon out of 1,647 people eligible. The plaintiffs’ attorneys who led that litigation collected about $19 million in fees.
“It was rather absurd,” said Julie Hamilton Webber of Glendale, Calif., a class member who has a 1993 Ford Explorer. “The net result was the attorneys were enriched and did nothing for the class.”

For the full story, see:
DIONNE SEARCEY. “Toyota Owners May Reap Little.” The Wall Street Journal (Thurs., MAY 20, 2010): B1-B2.
(Note: ellipsis added.)
(Note: the online version of the article has the slightly different title “Toyota Owners May See Little.”)

Becker Believes the Fight for Liberty Can Be Won

(p. A13) My last question involves a little story. Not long before Milton Friedman’s death in 2006, I tell Mr. Becker, I had a conversation with Friedman. He had just reviewed the growth of spending that was then taking place under the Bush administration, and he was not happy. After a pause during the Reagan years, Friedman had explained, government spending had once again begun to rise. “The challenge for my generation,” Friedman had told me, “was to provide an intellectual defense of liberty.” Then Friedman had looked at me. “The challenge for your generation is to keep it.”

What was the prospect, I asked Mr. Becker, that this generation would indeed keep its liberty? “It could go either way,” he replies. “Milton was right about that.”
Mr. Becker recites some figures. For years, federal spending remained level at about 20% of GDP. Now federal spending has risen to 25% of GDP. On current projections, federal spending would soon rise to 28%. “That concerns me,” Mr. Becker says. “It concerns me a great deal.
“But when Milton was starting out,” he continues, “people really believed a state-run economy was the most efficient way of promoting growth. Today nobody believes that, except maybe in North Korea. You go to China, India, Brazil, Argentina, Mexico, even Western Europe. Most of the economists under 50 have a free-market orientation. Now, there are differences of emphasis and opinion among them. But they’re oriented toward the markets. That’s a very, very important intellectual victory. Will this victory have an effect on policy? Yes. It already has. And in years to come, I believe it will have an even greater impact.”
The sky outside his window has begun to darken. Mr. Becker stands, places some papers into his briefcase, then puts on a tweed jacket and cap. “When I think of my children and grandchildren,” he says, “yes, they’ll have to fight. Liberty can’t be had on the cheap. But it’s not a hopeless fight. It’s not a hopeless fight by any means. I remain basically an optimist.”

For the full interview, see:
PETER ROBINSON. “‘Basically an Optimist’–Still; The Nobel economist says the health-care bill will cause serious damage, but that the American people can be trusted to vote for limited government in November.” The Wall Street Journal (Sat., March 27, 2010): A13.
(Note: the online version of the interview is dated March 26, 2010.)

“The Intellectual Energy is No Longer with the Economists Who Construct Abstract and Elaborate Models”

(p. A23) In The Wall Street Journal, Russ Roberts of George Mason University wondered why economics is even considered a science. Real sciences make progress. But in economics, old thinkers cycle in and out of fashion. In real sciences, evidence solves problems. Roberts asked his colleagues if they could think of any econometric study so well done that it had definitively settled a dispute. Nobody could think of one.

“The bottom line is that we should expect less of economists,” Roberts wrote.
In a column called “A Crisis of Understanding,” Robert J. Shiller of Yale pointed out that the best explanation of the crisis isn’t even a work of economic analysis. It’s a history book — “This Time is Different” by Carmen M. Reinhart and Kenneth S. Rogoff — that is almost entirely devoid of theory.
One gets the sense, at least from the outside, that the intellectual energy is no longer with the economists who construct abstract and elaborate models. Instead, the field seems to be moving in a humanist direction. Many economists are now trying to absorb lessons learned by psychologists, neuroscientists and sociologists.

For the full commentary, see:
DAVID BROOKS. “The Return of History.” The New York Times (Fri., March 26, 2010): A23.
(Note: the online version of the commentary was dated March 25, 2010.”)