Economics – Page 88 – artdiamondblog.com

If Lack of Focus and Poverty Go Together, Which Is the Cause and Which the Effect?

Source of book image: http://www.scientificamerican.com/sciam/cache/file/BF860CC7-371A-46BB-8ACCECD4289565A8.jpg

Are the poor poor partly because they concentrate less, or do they concentrate less partly because they are poor? Samantha Power discusses one of her favorite books of 2013:

(p. C11) In “Scarcity,” Sendhil Mullainathan and Eldar Shafir offer groundbreaking insights into, among other themes, the effects of poverty on (p. C12) cognition and our ability to make choices about our lives. The authors persuasively show that the mental space–or “bandwidth”–of the poor is so consumed with making ends meet that they may be more likely to lose concentration while on a job or less likely to take medication on time.

For the full article, see:
“12 Months of Reading; We asked 50 of our friends–from April Bloomfield to Mike Tyson–to name their favorite books of 2013.” The Wall Street Journal (Sat., Dec. 14, 2013): C6 & C9-C12.
(Note: the online version of the article has the date Dec. 13, 2013.)

The book that Power praises is:
Mullainathan, Sendhil, and Eldar Shafir. Scarcity: Why Having Too Little Means So Much. New York: Times Books, 2013.

Paul Ryan Warns that the Safety Net Can Be a Hammock

(p. A21) . . . Mr. Ryan said two years ago: “We don’t want to turn the safety net into a hammock that lulls able-bodied people to lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives.”

For the full commentary, see:
Krugman, Paul. “The Hammock Fallacy.” The New York Times (Fri., MARCH 7, 2014): A21.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date MARCH 6, 2014.)

The original source of the Paul Ryan quote appears to be:
“Paul Ryan Wants ‘Welfare Reform Round 2’.” The Huffington Post (posted 03/20/2012).

Ryan made similar comments in his January 25th official Republican response to the State of the Union speech:

We are at a moment, where if government’s growth is left unchecked and unchallenged, America’s best century will be considered our past century. This is a future in which we will transform our social safety net into a hammock, which lulls able-bodied people into lives of complacency and dependency.

Depending on bureaucracy to foster innovation, competitiveness, and wise consumer choices has never worked — and it won’t work now.

Source:
NPR transcript of Paul Ryan response, January 25, 2011.

Disabled Workers Are More Likely to Be Free Agent Entrepreneurs

“Kevin Hartford, right, and a colleague at his factory. He started his business after employers failed to hire him.” Source of caption and photo: online version of the NYT article quoted and cited below.

HR departments have incentives to avoid hiring risky employees. But a determined high-risk employee can hire themselves by becoming a free agent entrepreneur. If we want to truly help the disabled, we should remove obstacles to entrepreneurship, such as burdensome regulations and high taxation.

(p. B4) Mr. Hartford, the father of two sons, thrived as a business consultant in his 20s and 30s. He was used to flying first class, staying at swank hotels and advising CEOs. Then the consulting firm unraveled in the mid-1990s. When he began looking for a new job, a stuttering problem–something he had always considered manageable–put off potential employers.

“I applied for job after job after job,” says Mr. Hartford, now 58. “I was one of two finalists; I was one of three finalists. But I never got the job.”
In the end, Mr. Hartford concluded that his only shot at a satisfying job was to create a company. He is now president and co-owner of Alle-Kiski Industries, which makes parts, such as exhaust pipes for train locomotives and prototype truck wheels, for larger manufacturers, including Alcoa Inc. and General Electric Co.
Like many before him, Mr. Hartford discovered that one option for people who don’t fit into large organizations is to start a small one. That is particularly true for people with disabilities. About 11% of disabled workers are self-employed, compared with 6.5% of those with no disabilities, according to Labor Department data.
. . .
The business has grown to 38 employees from a dozen when Messrs. Hartford and Newell started in 2005. They own more than $2 million of equipment used to drill, groove and otherwise shape metal, arrayed in a 27,000-square-foot factory with an American flag hanging from one of the beams. Last year’s sales of $6 million were the highest yet, Mr. Hartford says, and the company is building a 4,000-square-foot addition to house more equipment.

For the full story, see:
JAMES R. HAGERTY. “Entrepreneur Let No Impediment Stop Him; Out-of-Work Consultant Started His Own Company After Discovering His Stutter Put Off Employers.” The Wall Street Journal (Thurs., Jan. 16, 2014): B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date Jan. 15, 2014.)

As Venezuelan Economy Collapses, Socialists Urge Citizens to Hit the Beach and Party

“Antigovernment protesters blocking a street in San Cristóbal, in western Venezuela, decorated their barrier like a beach scene.” Source of caption and photo: online version of WILLIAM NEUMAN. “Slum Dwellers in Caracas Ask, What Protests?” The New York Times (Sat., March 1, 2014): A1 & A8.

(p. A6) CARACAS, Venezuela–President Nicolás Maduro declared an extended Carnival holiday season, betting that sun, sand and rum will help calm the worst civil unrest to sweep the oil-rich nation in more than a decade.

As some opposition leaders called to cancel the celebrations to mourn those who died in recent weeks during protests, Mr. Maduro’s ministers publicly encouraged Venezuelans to hit the beach for the pre-Lent festivities.
. . .
Among those officials most visible to the public these days has been Tourism Minister Andres Izarra, who has been hitting tourist hot spots with a campaign called “Carnival 2014–The Coolest Holiday.”
He said that officials were opening 180 tourist information centers for the long holiday weekend and increasing maintenance and trash pickup at beaches that are often covered with empty alcohol containers. Meanwhile, the transportation minister, Haiman El Troudi, said new bus routes would be added to get Venezuelans to the beach.

For the full story, see:
KEJAL VYAS and JUAN FORERO. “Venezuela Leader Fights Unrest With Fiesta; President Maduro Extends Carnival Celebration After Opposition Call For Mourning, More Protests.” The Wall Street Journal (Fri., FEB. 28, 2014): A6.
(Note: ellipsis added.)
(Note: the online version of the story has the date Feb. 27, 2014.)

“PARTY LINE: Venezuela President Nicolás Maduro, reeling from weeks of protests, called for Carnival season to begin early, and his ministers urged Venezuelans to hit the beach. But the crumbling economy and food shortages created scenes such as the lines at a supermarket.” Source of caption and photo: online version of the WSJ article quoted and cited above.

“Opposition demonstrators wearing Carnival masks take part in a women’s rally against Nicolás Maduro’s government in Caracas on Wednesday.” Source of caption and photo: online version of the WSJ article quoted and cited above.

Nasaw Claims Carnegie Believed in Importance of Basic Scientific Research

But notice that the two main examples of what Carnegie himself chose to fund (the Wilson Observatory and the yacht to collect geophysical data), were empirically oriented, not theoretically oriented.

(p. 480) Carnegie was, as Harvard President James Bryant Conant would comment in 1935 on the centenary of his birth, “more than a generation ahead of most business men of this country [in understanding] the importance of science to industry.” He recognized far better than his peers how vital basic scientific research was to the applied research that industry fed off. George Ellery Hale, an astronomer and astrophysicist, later to be the chief architect of the National Research Council, was astounded when he learned of Carnegie’s commitment to pure research. “The provision of a large endowment solely for scientific research seemed almost too good to be true…. Knowing as I did the difficulties of obtaining money for this purpose and (p. 481) devoted as I was to research rather than teaching, I could appreciate some of the possibilities of such an endowment.” Hale applied for funds to build an observatory on Mount Wilson in California, and got what he asked for. It would take until 1909 to build and install a 60-inch reflecting telescope in the observatory; in 1917, a second 100-inch telescope, the largest in the world, was added.

The Mount Wilson Observatory– and the work of its astronomers and astrophysicists– was only one of the projects funded in the early years of the new institution. Another, of which Carnegie was equally proud, was the outfitting of the Carnegie, an oceangoing yacht with auxiliary engine, built of wood and bronze so that it could collect geophysical data without the errors inflicted on compass readings by iron and steel. The ship was launched in 1909; by 1911, Carnegie could claim that the scientists on board had already been able to correct several significant errors on navigational maps.

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: ellipsis, and italics, in original.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

How the Brain May Be Able to Control Robots

Michio Kaku. Source of photo: online version of the NYT article quoted and cited below.

(p. 2) Michio Kaku is a theoretical physicist and professor at City College of New York. When not trying to complete Einstein’s theory of everything, he writes books that explain physics and how developments in the field will shape the future.
. . .
One of the most intriguing things I’ve read lately was by Miguel Nicolelis, called “Beyond Boundaries: The New Neuroscience of Connecting Brains With Machines,” in which he describes hooking up the brain directly to a computer, which allows you to mentally control a robot or exoskeleton on the other side of the earth.

For the full interview, see:
KATE MURPHY, interviewer. “Download; Michio Kaku.” The New York Times, SundayReview Section (Sun., FEB. 9, 2014): 2.
(Note: ellipsis added.)
(Note: the first paragraph is an introduction by Kate Murphy; the next paragraph is part of a response by Michio Kaku.)
(Note: the online version of the interview has the date FEB. 8, 2014.)

The book mentioned above is:
Nicolelis, Miguel. Beyond Boundaries: The New Neuroscience of Connecting Brains with Machines—and How It Will Change Our Lives. New York: Times Books, 2011.

Small Business Will Fire Workers When Minimum Wage Is Raised

(p. B4) . . . , Charlene Conway is watching her numbers. For 22 years, Ms. Conway and her husband have run Carousel Family Fun Centers in Fairhaven and Whitman, Mass. The business has annual revenue of less than $500,000 and depends exclusively on part-time minimum-wage earners, mostly teenagers, to handle tasks like running the snack bar and maintaining the games.
This year, Massachusetts is considering raising its minimum to $9 an hour, from $8. Should that happen, Ms. Conway said, she will probably need to reduce her staff of 20. Her employees currently make an average of $9 an hour, with managers earning from $10 to $15. Like Ms. Riley, Ms. Conway said that an increase in the minimum would force her to raise pay across the board.
And she, too, is reluctant to raise prices again. In 2011 and 2012, she increased her admission fees by a dollar — they generally run from $5 to $10 now, based on age and time of day. Another increase, she said, would just make things worse: “We will price ourselves out of business.”
In the past, when Massachusetts increased the state’s minimum, Ms. Conway responded by increasing the minimum age of her workers to 16 from 14. “I’m not going to pay a 14-year-old $9 an hour with no experience, maturity or work ethic,” she said. More recently, she has been hiring 18-year-olds with college experience. “What this does,” she said, “is eliminate the opportunity for young people to get started in the work force.”
Should minimum wage reach $10 an hour, Ms. Conway said she would reduce her staff to 10 employees and double up on work tasks. “This is a slippery slope that could absolutely cause me to shut down and force me into bankruptcy,” she said.

For the full commentary, see:
STACY PERMAN. “SMALL BUSINESS; As Minimum Wages Rise, Businesses Grapple With Consequences.” The New York Times (Thurs., Feb. 6, 2014): B4.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date FEB. 5, 2014.)

In Traditional Societies People Try to Kill Strangers

Jared Diamond. Source of photo: online version of the NYT article quoted and cited below.

(p. 12) Your latest book, “The World Until Yesterday,” is about traditional societies and your research in New Guinea. Why is the acronym Weird central to the book? In Weird — Western, Educated, Industrialized, Rich and Democratic — societies we take these things for granted that just didn’t exist anywhere in the world until a few thousand years ago. We encounter strangers, and it’s normal, and we don’t freak out and try to kill them. We eat food that somebody else grew for us. We have a government with police and lawyers to settle disputes.

. . .
. . . , the book has been criticized for saying traditional societies are very violent. Some people take a view of traditional society as being peaceful and gentle. But the proportional rate of violent death is much higher in traditional societies than in state-level societies, where governments assert a monopoly on force. During World War II, until Aug. 14, 1945, American soldiers who killed Japanese got medals. On Aug. 16, American soldiers who killed Japanese were guilty of murder. A state can end war, but a traditional society cannot.
People have called the book racist, saying it suggests third-world poverty is caused by environmental factors instead of imperialism and conquests. It’s clearly nonsense. It’s not as if people in certain parts of the world were rich until Europeans came along and they suddenly became poor. Before that, there were big differences in technology, military power and the development of centralized government around the world. That’s a fact.

For the full interview, see:
AMY CHOZICK, interviewer. “Talk; ‘New Guinean Kids Are Not Brats’; Jared Diamond on What We Can Learn from Traditional Societies.” The New York Times Magazine (Sun., JAN. 12, 2014): A12.
(Note: bold in original; ellipses added.)
(Note: the online version of the interview has the date JAN. 10, 2014, and has the title “Jared Diamond: ‘New Guinean Kids Are Not Brats’.”)

The book under discussion above is:
Diamond, Jared. The World until Yesterday: What Can We Learn from Traditional Societies? New York: Viking Penguin, 2012.

Carnegie Liked Partnership More than Incorporation

(p. 480) “Don’t want anything to do with a corporation as long as I am in business–Partnership is the only thing–no one man can manage well–every one needs the companionships of equals in business to contradict and differ from him–one advises the other… I who write you thus have grown gray in the service and speak the words of soberness and wisdom.”

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: ellipsis in original.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Angus Maddison Saw that Life Improved During the “Capitalist Epoch”

Source of graph: online version of the WSJ article quoted and cited below.

(p. A13) Angus Maddison, the late and eminent economist for the OECD, produced a famous chart in 1995, depicted nearby. For the longest time–basically from after the Garden of Eden until the 19th century–economic benefit for the average person in the West or Japan was flat as toast. The Mona Lisa aside, there was a reason someone back then said life was nasty, brutish and short. Then suddenly, new wealth spread broadly.

Maddison describes 1820 till 1950 as the “capitalist epoch.” He means that admiringly. The tools of capitalism unlocked the knowledge created until then. What came to be called “economic growth” gave more people jobs that lifted them and their families from the muck of joblessness and poverty. Maddison also noted that much of the world did not participate in the capitalist epoch. No wonder they revolt now.
This history is worth restating because the importance of strong economic growth, and the unavoidable necessity of a U.S. that leads that growth, may be disappearing down the memory hole of public policy, on the left and even among some on the right. Both share the grim view that the U.S. economy is flatlining, and the grim fight is over how to divide what’s left.

For the full commentary, see:
Henninger, DANIEL. “WONDER LAND; The Growth Revolutions Erupt; Ukrainians want what we’ve got: The benefits of real economic growth.” The Wall Street Journal (Thurs., Feb. 27, 2014): A13.
(Note: the online version of the commentary has the date Feb. 26, 2014.)

One of Maddison’s last important books was:
Maddison, Angus. Contours of the World Economy, 1-2030 AD: Essays in Macro-Economic History. Oxford and New York: Oxford University Press, 2007.