Category: Economics

“The System Is Totally Crazy”

(p. D1) Mr. Ahmed, 46, is in the business of chicken and rice. He immigrated from Bangladesh 23 years ago, and is now one of two partners in a halal food cart that sets up on Greenwich Street close to the World Trade Center, all year long, rain or shine. He is also one of more than 10,000 people, most of them immigrants, who make a living selling food on the city’s sidewalks: pork tamales, hot dogs, rolled rice noodles, jerk chicken.
These vendors are a fixture of New York’s streets and New Yorkers’ routines, vital to the culture of the city. But day to day, they struggle to do business against a host of challenges: byzantine city codes and regulations on street vending, exorbitant fines for small violations (like setting up an inch too close to the curb) and the occasional rage of brick-and-mortar businesses or residents.
. . .
(p. D6) Mr. Ahmed ties on his apron and pushes a few boxes underneath the cart so he can squeeze inside and get to work. Any boxes peeking out beyond the cart’s footprint could result in a fine (penalties can run up to $1,000), as could parking his cart closer than six inches to the curb, or 20 feet to the building entrance. Mr. Ahmed knows all the rules by heart.
. . .
He applied for a food vendor’s license, took a required health and safety class, bought a used cart and took it for an inspection by city officials. (The health department inspects carts at least once a year, and more frequently if a violation is reported.)
Mr. Ahmed still needed a food-vending permit, though, and because of a cap on permits imposed in the 1980s, only 4,000 or so circulate. He acquired his from a permit owner who has charged him and his partner $25,000 for two-year leases (for a permit that cost the owner just $200), which they are still paying off.
A day ago, Mr. Ahmed received a text message: 100 vendors were protesting the cap. Organized by the Street Vendor Project, a nonprofit group that is part of the Urban Justice Center and offers legal representation to city vendors, they hoped to pressure the City Council to pass legislation introduced last fall that would double the number of food-vending permits, gradually, over the next seven years. Mr. Ahmed, who believes the costs for those starting out should be more manageable, wanted to join them, but like many vendors, he couldn’t get away from work.
“The system is totally crazy,” Mr. Ahmed says. “Whoever has a license, give them a permit. It’s good for all of us.”

For the full story, see:
TEJAL RAO. “A Day in the Lunch Box.” The New York Times (Weds., APRIL 19, 2017): D1 & D6.
(Note: ellipses added.)
(Note: the online version of the story has the date APRIL 18, 2017, and has the title “A Day in the Life of a Food Vendor.”)

Self-Driving Cars Would Help Older Adults Continue to Live at Home

(p. B4) Single, childless and 68, Steven Gold has begun to think about future mobility and independence. Although in good health, he can foresee a time when he won’t be a confident driver, if he can drive at all. While he hopes to continue to live in his suburban Detroit home, he wonders how he will be able to get to places like his doctor’s office and the supermarket if his driving becomes impaired.
For Mr. Gold and other older adults, self-driving cars might be a solution.
The number of United States residents age 70 and older is projected to increase to 53.7 million in 2030, from 30.9 million in 2014, according to the Institute for Highway Safety. Nearly 16 million people 65 and older live in communities where public transportation is poor or nonexistent. That number is expected to grow rapidly as baby boomers remain outside of cities.
“The aging of the population converging with autonomous vehicles might close the coming mobility gap for an aging society,” said Joseph Coughlin, the director of the Massachusetts Institute for Technology AgeLab in Cambridge.
He said that 70 percent of those over age 50 live in the suburbs, a figure he expects to remain steady despite a recent rise in moves to urban centers. Further, 92 percent of older people want to age in place, he said.

For the full story, see:
MARY M. CHAPMAN. “Wheels; For the Aged, Self-Driving Cars Could Bridge a Mobility Gap.” The New York Times (Fri., March 24, 2017): B4.
(Note: the online version of the story has the date March 23, 2017, and has the title “Wheels; Self-Driving Cars Could Be Boon for Aged, After Initial Hurdles.”)

Lower Ivory Prices Reduce Incentives to Poach Elephants

(p. A9) NAIROBI, Kenya — Finally, there’s some good news for elephants.
The price of ivory in China, the world’s biggest market for elephant tusks, has fallen sharply, which may spell a reprieve from the intense poaching of the past decade.
According to a report released on Wednesday [March 29, 2017] by Save the Elephants, a respected wildlife group in Kenya, the price of ivory is less than half of what it was just three years ago, showing that demand is plummeting.

For the full commentary, see:
JEFFREY GETTLEMAN. “Ivory Prices May Mean a Reprieve for Elephants.” The New York Times (Thurs., March 30, 2017): A9.
(Note: bracketed date added.)
(Note: the online version of the commentary has the date March 29, 2017, and has the title “Elephants Get a Reprieve as Price of Ivory Falls.”)

Banks Often Less Transparent and Less Flexible than Bank Alternatives

I saw a C-Span interview on their weekend Book TV today (3/16/17), with Professor Lisa Servon. She pointed out that many of the highly regulated, and much-criticized, alternative banking services, offer a more transparent, more flexible, and more friendly service environment than the incumbent banking industry. She even argues that for those with low-incomes, and low-education, the alternative services are often less expensive. This happens because those with low-incomes and low education are often those who by mistake or by difficult circumstance, incur high fees at banks.
She points out that many who are bankless, previously made use of bank services, but decided to go with the alternatives. She suggested that in a free market environment, some of the alternatives might creatively destroy the incumbent banks.
Servon is clearly no libertarian, but much of what she says is thought-provoking.

Servon’s book is:
Servon, Lisa. The Unbanking of America: How the New Middle Class Survives. New York: Houghton Mifflin Harcourt Publishing Co., 2017.

DARPA’s $66 Million Fails to Develop Tech to Match Dog Noses

(p. A2) “What’s cool about dogs is when they do come into contact with an odor, they can track it to its source,” said L. Paul Waggoner, co-director of the Canine Performance Sciences Program at Auburn University. “There is not an instrument out there that replicates a dog’s nose.”
That’s not for lack of effort.
The Defense Advanced Research Projects Agency of the U.S. Department of Defense spent $66 million between 1997 and 2010 drawing on the expertise of at least 35 different research institutions to develop sensors that could detect explosives as ably as a dog and identify other chemicals.
They couldn’t do it.
. . .
Surprisingly, pigs and ferrets outperformed German shepherds and Labrador retrievers, breeds often chosen for odor detection.
But overall, dogs won out because of their combination of qualities: Not only do they have strong noses, they are compatible with people, they respond to training, and–for now–they beat technology paws down.

For the full commentary, see:
Jo Craven McGinty. “THE NUMBERS; Dogs Still Beat Technology in the Smell Test.” The Wall Street Journal (Sat., March 25, 2017): A2.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date March 24, 2017, and has the title”THE NUMBERS; Making Sense of a Dog’s Olfactory Powers.”)

Mainstream Economist William Baumol Celebrated Innovative Entrepreneurs

William J. Baumol is a key source in my book project on Innovation Unbound. I had hoped he would be able to read, and comment on, the current draft, but that is not to be. He was one of the heroes of the economics of entrepreneurship.

(p. A13) The disease that bears William J. Baumol’s name is not what led to his death on May 4 [2017] at age 95, but it is what cemented his legacy as one of the pre-eminent economists of the 20th century.
. . .
Professor Baumol was “one of the great economists of his generation,” Joseph Stiglitz, a Nobel Prize-winning economist at Columbia University, said in an interview, adding, “The series of insights he had about managerial economics, the role of innovation — a whole series of innovational breakthroughs over a long period of time — had a profound effect on economics.”
. . .
“Nobody ever explained to him the difference between work and play,” Daniel Baumol said of his father. “During a long trip, he would sit in the back of the car, oblivious to the world, and as we pulled in, he would announce, ‘I just finished that article.'”
Patrick Bolton, a professor of economics at Columbia, described Professor Baumol as “someone who could come to a big problem and bring an extremely simple analysis that really shaped the way people would think about it.”

For the full obituary, see:
PATRICIA COHEN. “William J. Baumol, 95, Leading Thinker in Economics.” The New York Times (Fri., May 12, 2017): B14.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the obituary has the date May 10, 2017 and has the title “William J. Baumol, 95, ‘One of the Great Economists of His Generation,’ Dies.”)

My favorite Baumol paper, is:
Baumol, William J. “Education for Innovation: Entrepreneurial Breakthroughs Versus Corporate Incremental Improvements.” In Innovation Policy and the Economy, edited by Adam B. Jaffe, Josh Lerner and Scott Stern. Cambridge, Mass.: MIT Press, 2005, pp. 33-56.

Apple Funds Corning’s Glass Innovation

(p. B6) SAN FRANCISCO — Apple is seeding the next generation of American-made glass for its iPhones and iPads, and its investments may have the side benefit of helping the company win favor in Washington.
Apple announced Friday [May 12, 2017] that it was giving $200 million to Corning, which makes the tough, scratch-resistant face for every iPhone and iPad, to support the glass maker’s efforts to develop and build more sophisticated products at its factory in Harrodsburg, Ky.
Corning has made the glass for every iPhone since the original 10 years ago. Apple’s investment, the first from the technology giant’s $1 billion fund to promote advanced manufacturing in the United States, will help Corning develop thinner, more versatile glass for iPhones as well as other product lines that Apple is exploring, such as screens for self-driving cars and augmented reality glasses.
The move goes beyond Apple’s traditional practice of subsidizing suppliers, said Tim Bajarin, president of the technology consulting firm Creative Strategies.
“I would see this more as an Apple-Corning partnership to flesh out what other kinds of things you would use glass for,” he said. “They are literally thinking about stuff you and I aren’t thinking about yet.”

For the full story, see:
VINDU GOEL. “Apple Gives $200 Million to Advance Phone Glass.” The New York Times (Sat., MAY 13, 2017): B6.
(Note: bracketed date added.)
(Note: the online version of the story has the date MAY 12, 2017, and has the title “Apple Gives Corning $200 Million to Invent Better Phone Glass.”)

Silicon Valley Funding Big Dings in the Universe

When Steve Jobs was trying to recruit Pepsi’s John Sculley to become Apple CEO, Jobs asked him something like: ‘do you want to spend the rest of your life selling sugar water, or do you want a chance to make a ding in the universe.’

(p. B1) One persistent criticism of Silicon Valley is that it no longer works on big, world-changing ideas. Every few months, a dumb start-up will make the news — most recently the one selling a $700 juicer — and folks outside the tech industry will begin singing I-told-you-sos.

But don’t be fooled by expensive juice. The idea that Silicon Valley no longer funds big things isn’t just wrong, but also obtuse and fairly dangerous. Look at the cars, the rockets, the internet-beaming balloons and gliders, the voice assistants, drones, augmented and virtual reality devices, and every permutation of artificial intelligence you’ve ever encountered in sci-fi. Technology companies aren’t just funding big things — they are funding the biggest, most world-changing things. They are spending on ideas that, years from now, we may come to see as having altered life for much of the planet.

For the full commentary, see:
Manjoo, Farhad. “STATE OF THE ART; These Days, Moon Shots Are Domain of the Valley.” The New York Times (Thurs., MAY 17, 2017): B1 & B6.
(Note: the online version of the commentary has the date MAY 17, 2017, and has the title “STATE OF THE ART; Google, Not the Government, Is Building the Future.”)

Going Postal

(p. 19) Over all, Leonard emphasizes a darker side of postal history, from the corruption scandals that periodically erupted after Andrew Jackson politicized the service, creating a gargantuan patronage machine, to oppressive government censorship campaigns. He devotes much of a chapter to Anthony Comstock, the longtime postal inspector and self-styled “weeder in God’s garden,” who banned and prosecuted the mailing of birth control pamphlets, “marriage aids” and “indecent” literary works like Walt Whitman’s poems, lest they pollute public morals. Still another chapter charts the spree of mass killings by overworked, underpaid and aggrieved postal workers in the 1980s and early 1990s.

For the full review, see:
LISA McGIRR. “We Had Mail.” The New York Times Book Review (Sun., JULY 10, 2016): 19.
(Note: the online version of the review has the date JULY 8, 2016, and has the title “Two Books Recount How Our Postal System Created a Communications Revolution.”)

The book under review, is:
Leonard, Devin. Neither Snow nor Rain: A History of the United States Postal Service. New York: Grove Press, 2016.

Lower Quality Restaurants Most Hurt by Minimum Wage Hike

(p. A17) “There’s only so much you can charge for tamales,” the owner of a small eatery said in 2015 to explain one reason he was closing.
For some empirical backup, consider an April [2017] study from Michael Luca at Harvard Business School and Dara Lee Luca at Mathematica Policy Research. They used Bay Area data from the review website Yelp to estimate that a $1 minimum-wage hike leads to a 14% increase in “the likelihood of exit for a 3.5-star restaurant.”
Put differently, San Francisco’s minimum wage experiment may be dangerous for your favorite white-tablecloth restaurant–the kind of place where the food is exquisite and can command a premium–but it’s downright deadly for your local white-apron diner.

For the full commentary, see:

Michael Saltsman. “The Minimum Wage Eats Restaurants; A San Francisco ex-owner says: ‘There’s only so much you can charge for tamales.’.” The Wall Street Journal (Weds., May 9, 2017): A17.
(Note: bracketed year added.)
(Note: the online version of the commentary has the date May 9, 2017,)

The Luca and Luca paper, mentioned above, is:
Luca, Dara Lee and Luca, Michael. “Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit.” (April 2017). Harvard Business School NOM Unit Working Paper No. 17-088.