Category: Economics

“Milestone of Dubious Distinction:” Venezuela Joins North Korea and Cuba in Food Rationing

(p. A15) MARACAIBO, Venezuela–Amid worsening shortages, Venezuela recently reached a milestone of dubious distinction: It has joined the ranks of North Korea and Cuba in rationing food for its citizens.
On a recent, muggy morning, Maria Varge stood in line outside a Centro 99 grocery store, ready to scour the shelves for scarce items like cooking oil and milk. But before entering, Ms. Varge had to scan her fingerprint to ensure she wouldn’t buy more than her share.
Despite its technological twist on the old allotment booklet, Venezuela’s new program of rationing is infuriating consumers who say it creates tiresome waits, doesn’t relieve shortages and overlooks the far-reaching economic overhauls the country needs to resolve the problem.
“These machines make longer lines,” said Ms. Varge, 50, as she was jostled by people in line, “but you get inside, and they still don’t have what you want.”

For the full story, see:
SARA SCHAEFER MUÑOZ. “WORLD NEWS; Despite Riches, Venezuela Starts Food Rationing; Government Rolls Out Fingerprint Scanners to Limit Purchases of Basic Goods; ‘How Is it Possible We’ve Gotten to This Extreme’.” The Wall Street Journal (Thurs., Oct. 23, 2014): A15.
(Note: the online version of the story has the date Oct. 22, 2014.)

How “the Credentials Arms-Race” Now “Defines Young Adulthood”

(p. A11) . . . “Excellent Sheep” is a cri de coeur against the credentials arms-race that now defines young adulthood–and even childhood–for many Americans. But you don’t have to take his word for it: The book features interviews and correspondence with students and recent graduates of elite institutions. Beyond their glowing transcripts and the fact that they have become “accomplished adult-wranglers,” these students are anxious, depressed and searching for some deeper meaning in their lives. “For many students, rising to the absolute top means being consumed by the system. I’ve seen my peers sacrifice health, relationships, exploration, activities that can’t be quantified and are essential for developing souls and hearts, for grades and resume building,” one Stanford student told the author. A Yalie put it more succinctly: “I might be miserable, but were I not miserable, I wouldn’t be at Yale.”

For the full review, see:
EMILY ESFAHANI SMITH. “BOOKSHELF; The Credentials Arms-Race; Students sacrifice all to grades and resume building–‘I might be miserable,’ a Yalie noted, ‘but were I not miserable, I wouldn’t be at Yale.’.” The Wall Street Journal (Thurs., Aug. 21, 2014): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date Aug. 20, 2014, and has the title “BOOKSHELF; Book Review: ‘Excellent Sheep: The Miseducation of the American Elite’ by William Deresiewicz; Students sacrifice all to grades and resume building–‘I might be miserable,’ a Yalie noted, ‘but were I not miserable, I wouldn’t be at Yale.’.”)

The book under review is:
Deresiewicz, William. Excellent Sheep: The Miseducation of the American Elite and the Way to a Meaningful Life. New York, NY: Free Press, 2014.

U.S. Patents and Start-Ups Fall When We Exclude Tech Immigrants

(p. A19) The process of bringing skilled immigrants to the U.S. via H-1B visas and putting them on the path to eventual citizenship has been a political football for at least a decade. It has long been bad news for those immigrants trapped in this callous process. Now the U.S. economy is beginning to suffer, too.
Every year, tens of thousands of disappointed tech workers and other professionals give up while waiting for a resident visa or green card, and go home–having learned enough to start companies that compete with their former U.S. employers. The recent historic success of China’s Alibaba IPO is a reminder that a new breed of companies is being founded, and important innovation taking place, in other parts of the world. More than a quarter of all patents filed today in the U.S. bear the name of at least one foreign national residing here.
The U.S. no longer has a monopoly on great startups. In the past, the best and brightest people would come to the U.S., but now they are staying home. In Silicon Valley, according to a 2012 survey by Duke and Stanford Universities and the University of California at Berkeley, the percentage of new companies started by foreign-born entrepreneurs has begun to slide for the first time–down to 43.9% during 2006-12, from 52.4% during 1995-2005.

For the full commentary, see:
MICHAEL S. MALONE. “OPINION; The Self-Inflicted U.S. Brain Drain; Up to 1.5 million skilled workers are stuck in immigration limbo. Many give up and go home.” The Wall Street Journal (Thurs., OCT. 16, 2014): A19.
(Note: the online version of the commentary has the date OCT. 15, 2014.)

The 2012 survey is discussed further in:
Wadhwa, Vivek, AnnaLee Saxenian, and F. Daniel Siciliano. “Then and Now: America’s New Immigrant Entrepreneurs, Part VII.” Ewing Marion Kauffman Foundation, October 2012.

An in-depth discussion of the issues raised by Malone can be found in:
Wadhwa, Vivek. The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent. pb ed. Philadelphia, PA: Wharton Digital Press, 2012.

How Creative Destruction Reuses Capital

(p. B1) The Internet is moving to a shopping center near you.
In Fort Wayne, Ind., a vacated Target store is about to be home to rows of computer servers, network routers and Ethernet cables courtesy of a local data-center operator. In Jackson, Miss., a former McRae’s department store will get the same treatment next year. And one quadrant of the Marley Station Mall south of Baltimore is already occupied by a data-center company that last year offered to buy out the rest of the building.
As America’s retailers struggle to keep up with online shopping, the Internet is starting to settle into some of the very spaces where brick-and-mortar customers used to shop.

For the full story, see:
DREW FITZGERALD and PAUL ZIOBRO. “This Used to Be a Shopping Mall.” The Wall Street Journal (Tues., NOV. 4, 2014): B1 & B6.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the story has the date NOV. 3, 2014, and has the title “Malls Fill Vacant Stores With Server Rooms.”)

Charismatic Prophets of Technological and Organizational Innovation

(p. C7) Walter Isaacson’s last book was the best-selling biography of Steve Jobs –the charismatic business genius of Apple Computer and one of the beatified icons of modern technology and entrepreneurship. Mr. Isaacson’s fine new book, “The Innovators,” is a serial biography of the large number of ingenious scientists and engineers who, you might say, led up to Jobs and his Apple co-founder Steve Wozniak –“forerunners” who, over the past century or so, produced the transistor, the microchip and microprocessor, the programmable computer and its software, the personal computer, and the graphic interface.
. . .
Mr. Isaacson’s heart is with the engineers: the wizards of coding, the artists in electrons, silicon, copper, networks and mice. But “The Innovators” also gives space to the revolutionary work done with men as well as mice: experiments in the organizational forms in which creativity might be encouraged and expressed; in the aesthetic design of personal computers, phones and graphical fonts; in predicting and creating what consumers did not yet know they wanted; and in the advertising and marketing campaigns that make them want those things. Not the least of the revolutionaries’ inventions was their own role as our culture’s charismatic prophets, uniquely positioned to pronounce on which way history was going and then to assemble the capital, the motivated workers and the cheering audiences that helped them make it go that way.

For the full review, see:
ALEXANDRA KIMBALL. “The Best Way to Predict the Future.” The Wall Street Journal (Sat., Oct. 4, 2014): C9.
(Note: ellipsis added. The first word of the title in the print version was “They.” Above, I have corrected the typo.)
(Note: the online version of the review has the date Oct. 3, 2014, and has the title “Book Review: ‘The Innovators’ by Walter Isaacson.”)

The book under review is:
Isaacson, Walter. The Innovators: How a Group of Inventors, Hackers, Geniuses, and Geeks Created the Digital Revolution. New York: Simon & Schuster, 2014.

The Washing Machine Is a Great Bulwark of Women’s Liberation

(p. C9) If the past is foreign country because they do things differently there, we’re lucky to have such a knowledgeable cicerone as Ruth Goodman.
. . .
“I like to put time and effort into studying the objects and tools that people made and used, and I like to try methods and approaches out for myself,” she writes in “How to Be a Victorian.” This sounds straightforward enough but hardly hints at the leaps of imaginative empathy the author is so good at: When she visits a museum to examine a Victorian farm worker’s wool coat, for example, she sees both the husband “who sweated and left stains on his clothes, who physically felt the cold” and the wife who “spent hours carefully and neatly sewing up the tear.”
Ms. Goodman observes that the wife’s technique for repair matches one taught in working-class textbooks, a fact that raises questions in her mind. “How widespread was such needlework education, and was it likely to have been women who carried out such repairs?” she wonders. “If it takes me over an hour to do the work, would my Victorian forebears have been quicker? When would they have fitted such a chore into their day?” That little rip in the man’s coat, it turns out, is like a tiny window into “the great sweeps of political and economic life” that in turn “bring us back to the personal.” Trade disruptions in textiles during the American Civil War, for instance, “pushed up the price of the labourer’s coat, making that repair more necessary.”
. . .
Many, many things about daily life are far better now: “My own historical laundry experiences have led me to see the powered washing machine as one of the great bulwarks of women’s liberation, an invention that can sit alongside contraception and the vote.”

For the full review, see:
ALEXANDRA KIMBALL. “Living Like a Queen; You might get used to using soot to brush your teeth. But steel corsets? Never.” The Wall Street Journal (Sat., Oct. 4, 2014): C9.
(Note: ellipses added.)
(Note: the online version of the review has the date Oct. 3, 2014, and has the title “Book Review: ‘How to Be a Victorian” by Ruth Goodman; You might get used to using soot to brush your teeth. But steel corsets? Never.”)

The book under review is:
Goodman, Ruth. How to Be a Victorian: A Dawn-to-Dusk Guide to Victorian Life. New York: Liveright Publishing Corporation, 2014.

Most Venture Capital Firms Do Not Back “Ambitious, Long-Shot Projects”

(p. B4) Successful venture capitalism is about managing risk, so partners at most VC firms invest in businesses they think will become viable, or at least worthy of an acquisition, in the shortest time possible.
That doesn’t leave much appetite among VCs for startups working on ambitious, long-shot projects, the sort that require basic research, and that’s a shame.

For the full commentary, see:
CHRISTOPHER MIMS. “KEYWORDS; Our Last Great Hope: Venture Capital.” The Wall Street Journal (Tues., Oct. 21, 2014): B1 & B4.
(Note: italics in original.)
(Note: the online version of the commentary has the date Oct. 20, 2014, and the title “KEYWORDS; Humanity’s Last Great Hope: Venture Capitalists.”)

“What Valuable Company Is Nobody Building?”

(p. A15) Peter Thiel is larger than life even for a Silicon Valley billionaire. He co-founded PayPal, was the first investor in Facebook , and funded LinkedIn, Spotify, SpaceX and Airbnb. Now he has written a much-needed explanation of the information economy, masquerading as a breezy how-to book for entrepreneurs. “Zero to One: Notes on Startups, or How to Build the Future” is based on lectures Mr. Thiel gave at Stanford.
He hopes more entrepreneurs will focus on big ideas for health, energy and transportation; his venture firm’s tag line is “They promised us flying cars and all we got was 140 characters,” a reference to Twitter. His explanation of innovation is also a primer on how free markets work. He encourages entrepreneurs to ask: “What valuable company is nobody building?”

For the full commentary, see:
L. GORDON CROVITZ. “INFORMATION AGE; Three Cheers for ‘Creative Monopolies’.” The Wall Street Journal (Mon., Oct. 13, 2014): A15.
(Note: the online version of the commentary has the date Oct. 12, 2014.)

The book praised in the passage quoted above is:
Thiel, Peter, and Blake Masters. Zero to One: Notes on Startups, or How to Build the Future. New York: Crown Business, 2014.

Economic Hope Cures Terrorism

(p. C1) As the U.S. moves into a new theater of the war on terror, it will miss its best chance to beat back Islamic State and other radical groups in the Middle East if it doesn’t deploy a crucial but little-used weapon: an aggressive agenda for economic empowerment. Right now, all we hear about are airstrikes and military maneuvers–which is to be expected when facing down thugs bent on mayhem and destruction.
But if the goal is not only to degrade what President Barack Obama rightly calls Islamic State’s “network of death” but to make it impossible for radical leaders to recruit terrorists in the first place, the West must learn a simple lesson: Economic hope is the only way to win the battle for the constituencies on which terrorist groups feed.
I know something about this. A generation ago, much of Latin America was in turmoil. By 1990, a Marxist-Leninist terrorist organization called Sendero Luminoso, or Shining Path, had seized control of most of my home country, Peru, where I served as the president’s principal adviser. Fashionable opinion held that the people rebelling were the impoverished or underemployed wage slaves of Latin America, that capitalism couldn’t work outside the West and that Latin cultures didn’t really understand market economics.
The conventional wisdom proved to be wrong, however. Reforms in Peru gave indigenous entrepreneurs and farmers control over their assets and a new, more accessible legal framework in which to run businesses, make contracts and borrow–spurring an unprecedented rise in living standards.

For the full commentary, see:
HERNANDO DE SOTO. “The Capitalist Cure for Terrorism; Military might alone won’t defeat Islamic State and its ilk. The U.S. needs to promote economic empowerment and entrepreneurship to give the Arab world another path.” The Wall Street Journal (Sat., Oct. 11, 2014): C1-C2.
(Note: italics in original.)
(Note: the online version of the commentary has the date Oct. 10, 2014, and the title “The Capitalist Cure for Terrorism; Military might alone won’t defeat Islamic State and its ilk. The U.S. needs to promote economic empowerment.”)

Soto’s masterpiece is:
Soto, Hernando de. The Other Path: The Invisible Revolution in the Third World. New York: Basic Books, 1989.

Churchill Was More than an Epiphenomenon

(p. C2) It is easy to see why so many historians and historiographers have taken the Tolstoyan line, that the story of humanity isn’t the story of great people and shining deeds. It has been fashionable to say that those so-called great men and women are just epiphenomena, meretricious bubbles on the vast tides of social history. The real story, on this view, is about deep economic forces, technological advances, changes in the price of sorghum, the overwhelming weight of an infinite number of mundane human actions.
The story of Winston Churchill is a pretty withering retort to all that malarkey.

For the full essay, see:
BORIS JOHNSON. “He Still Stands Alone.” The Wall Street Journal (Sat., Nov. 8, 2014): C1-C2.
(Note: the online version of the essay has the date Nov. 7, 2014, and has the title “Churchill Still Stands Alone.”)

The passage quoted above is related to Johnson’s book:
Johnson, Boris. The Churchill Factor: How One Man Made History. New York: Riverhead, 2014.