Government – Page 48 – artdiamondblog.com

Foreign Aid Frees Despots from Having to Seek the Consent of the Governed

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

(p. 4) IN his new book, Angus Deaton, an expert’s expert on global poverty and foreign aid, puts his considerable reputation on the line and declares that foreign aid does more harm than good. It corrupts governments and rarely reaches the poor, he argues, and it is high time for the paternalistic West to step away and allow the developing world to solve its own problems.

It is a provocative and cogently argued claim. The only odd part is how it is made. It is tacked on as the concluding section of “The Great Escape: Health, Wealth, and the Origins of Inequality” (Princeton University Press, 360 pages), an illuminating and inspiring history of how mankind’s longevity and prosperity have soared to breathtaking heights in modern times.
. . .
THE author has found no credible evidence that foreign aid promotes economic growth; indeed, he says, signs show that the relationship is negative. Regretfully, he identifies a “central dilemma”: When the conditions for development are present, aid is not required. When they do not exist, aid is not useful and probably damaging.
Professor Deaton makes the case that foreign aid is antidemocratic because it frees local leaders from having to obtain the consent of the governed. “Western-led population control, often with the assistance of nondemocratic or well-rewarded recipient governments, is the most egregious example of antidemocratic and oppressive aid,” he writes. In its day, it seemed like a no-brainer. Yet the global population grew by four billion in half a century, and the vast majority of the seven billion people now on the planet live longer and more prosperous lives than their parents did.

For the full review, see:
FRED ANDREWS. “OFF THE SHELF; A Surprising Case Against Foreign Aid.” The New York Times, SundayBusiness Section (Sun., October 13, 2013): 4.
(Note: ellipsis added.)
(Note: the online version of the review has the date October 12, 2013.)

The book reviewed is:
Deaton, Angus. The Great Escape: Health, Wealth, and the Origins of Inequality. Princeton, N.J.: Princeton University Press, 2013.

How Adding Bike Lanes Increases Air Pollution

(p. A1) SAN FRANCISCO — New York is wooing cyclists with chartreuse bike lanes. Chicago is spending nearly $1 million for double-decker bicycle parking.
San Francisco can’t even install new bike racks.
Blame Rob Anderson. At a time when most other cities are encouraging biking as green transport, the 65-year-old local gadfly has stymied cycling-support efforts here by arguing that urban bicycle boosting could actually be bad for the environment. That’s put the brakes on everything from new bike lanes to bike racks while the city works on an environmental-impact report.
. . .
Cars always will vastly outnumber (p. A15) bikes, . . . [Mr. Anderson] reasons, so allotting more street space to cyclists could cause more traffic jams, more idling and more pollution. Mr. Anderson says the city has been blinded by political correctness. It’s an “attempt by the anti-car fanatics to screw up our traffic on behalf of the bicycle fantasy,” he wrote in his blog this month.

For the full story, see:
PHRED DVORAK. “San Francisco Ponders: Could Bike Lanes Cause Pollution?; City Backpedals on a Cycling Plan After Mr. Anderson Goes to Court.” The Wall Street Journal (Weds., Aug. 20, 2008): A1 & A15.
(Note: ellipses, and bracketed name, added.)

Creating Parking Spaces by Variable Meter Pricing Saves Time and Reduces Air Pollution and Double-Parking

“San Francisco is a city chronically plagued with a shortage of street parking. On a recent night in the North Beach neighborhood, the slow chase for a parking space was well under way.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) SAN FRANCISCO — The maddening quest for street parking is not just a tribulation for drivers, but a trial for cities. As much as a third of the traffic in some areas has been attributed to drivers circling as they hunt for spaces. The wearying tradition takes a toll in lost time, polluted air and, when drivers despair, double-parked cars that clog traffic even more.

But San Francisco is trying to shorten the hunt with an ambitious experiment that aims to make sure that there is always at least one empty parking spot available on every block that has meters. The program, which uses new technology and the law of supply and demand, raises the price of parking on the city’s most crowded blocks and lowers it on its emptiest blocks. While the new prices are still being phased in — the most expensive spots have risen to $4.50 an hour, but could reach $6 — preliminary data suggests that the change may be having a positive effect in some areas.

For the full commentary, see:
MICHAEL COOPER and JO CRAVEN McGINTY. “A Meter So Expensive, It Creates Parking Spots.” The New York Times (Fri., March 16, 2012): A1 & A3.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date March 15, 2012.)

“San Francisco has installed sensors and new meters on some blocks to track where cars are parked and set prices accordingly.” Source of caption and photo: online version of the NYT article quoted and cited above.

If Feds Stalled Skype Deal, Google Would Have Been “Stuck with a Piece of Shit”

Even just the plausible possibility of a government veto of an acquisition, can stop the acquisition from happening. The feds thereby kill efficiency and innovation enhancing reconfigurations of assets and business units.

(p. 234) . . . , an opportunity arose that Google’s leaders felt compelled to consider: Skype was available. It was a onetime chance to grab hundreds of millions of Internet voice customers, merging them with Google Voice to create an instant powerhouse. Wesley Chan believed that this was a bad move. Skype relied on a technology called peer to peer, which moved information cheaply and quickly through a decentralized network that emerged through the connections of users. But Google didn’t need that system because it had its own efficient infrastruc-(p. 235)ture. In addition, there was a question whether eBay, the owner of Skype, had claim to all the patents to the underlying technology, so it was unclear what rights Google would have as it tried to embellish and improve the peer-to-peer protocols. Finally, before Google could take possession, the U.S. government might stall the deal for months, maybe even two years, before approving it. “We would have paid all this money, but the value would go away and then we’d be stuck with a piece of shit,” says Chan.

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.
(Note: ellipsis added.)

Entrepreneurial Spirit Values “Voyaging into the Unknown”

“Edmund Phelps, winner of the 2006 Nobel Prize for economics.” Source of caption and photo: online version of the WSJ review quoted and cited below.

(p. C7) Edmund Phelps’s “Mass Flourishing” could easily be retitled “Contra-Corporatism,” for at its heart this fine book is an attack on that increasingly common “third way” between capitalism and socialism. Mr. Phelps cogently argues that America’s current economic woes reflect a reduction in the innovative dynamism that generates economic success and personal satisfaction. He places little hope in the Democratic Party, which “voices a new corporatism well beyond Franklin Roosevelt’s New Deal or Lyndon Johnson’s Great Society,” or in Republicans in the thrall of “traditional values,” who see “the good economy as mercantile capitalism plus social protection and social insurance.” He instead yearns for legislative solons who “could usefully ask of every bill and regulatory directive: How would it impact the dynamism of our economy?”
. . .
The book eloquently discusses the culture of innovation, which can refer to both an entrepreneurial mind-set and the cultural achievements during an age of change. He sees modern capitalism as profoundly humanist, imbued with “a spirit that views the prospect of unanticipated consequences that may come with voyaging into the unknown as a valued part of experience and not a drawback.”
. . .
In . . . [the] new corporatism, the state protects both organized labor and politically connected companies. and the state has acquired a “panoply of new roles,” from regulations “aimed at shielding companies or workforces from competition” to lawsuits that “add to the diversion of income from earners to those receiving compensation or indemnification.” It is as if “every person in a society is a signatory to an implicit contract” in which “no person may be harmed by others without receiving compensation.” But protection against all conceivable harm also means protection against almost all change–and this is the death knell of dynamism and innovation.
. . .
But what is to be done? The author wants governments that are “aware of the importance of the role played by dynamism in a modern-capitalist economy,” and he disparages both current political camps. He has a number of thoughtful ideas about financial-sector reform. He is no libertarian and even proposes a “national bank specializing in extending credit or equity capital to start-up firms”–not my favorite idea.

For the full review, see:
EDWARD GLAESER. “How to Unleash the Economy.” The Wall Street Journal (Sat., Oct. 19, 2013): C7.
(Note: ellipses, and bracketed word, added.)
(Note: the online version of the review has the date Oct. 18, 2013, and has the title “BOOKSHELF; Book Review: ‘Mass Flourishing’ by Edmund Phelps; Innovative dynamism is the key to economic success and personal satisfaction, a Nobel-winner argues.”)

The book under review is:
Phelps, Edmund S. Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change. Princeton, New Jersey: Princeton University Press, 2013.

Source of book image: http://blogs.reuters.com/great-debate/files/2013/08/Mass-Flourishing-cover.jpg

After 25 Years of Government Harassment, A&P Was Finally Allowed to Lower Prices for Consumers

The two main types of creative destruction are: 1.) new products and 2.) process innovations. Much has been written about the new product type; much less about the process innovation type. Marc Levinson has written two very useful books on process innovations that are important exceptions. The first is The Box and the second is The Great A&P.

(p. A13) A prosecutor in Franklin Roosevelt’s administration called it a “giant blood sucker.” A federal judge in Woodrow Wilson’s day deemed it a “monopolist,” and another, during Harry Truman’s presidency, convicted it of violating antitrust law. The federal government investigated it almost continuously for a quarter-century, and more than half the states tried to tax it out of business. For its strategy of selling groceries cheaply, the Great Atlantic & Pacific Tea Company paid a very heavy price.
. . .
A&P was Wal-Mart long before there was Wal-Mart. Founded around the start of the Civil War, it upset the tradition-encrusted tea trade by selling teas at discount prices by mail and developing the first brand-name tea. A few years later, its tea shops began to stock spices, baking powder and canned goods, making A&P one of the first chain grocers.
Then, in 1912, John A. Hartford, one of the two brothers who had taken over the company from their father, had one of those inspirations that change the course of business. He proposed that the company test a bare-bones format at a tiny store in Jersey City, offering short hours, limited selection and no home delivery, and that it use the cost savings to lower prices. The A&P Economy Store was an instant success. The Great A&P was soon opening one and then two and then three stores per day. By 1920, it had become the largest retailer in the world.
. . .
While shoppers flocked to A&P’s 16,000 stores, small grocers and grocery wholesalers didn’t share their enthusiasm. The anti-chain-store movement dates back at least to 1913, when the American Fair-Trade League pushed for laws against retail price-cutting.
. . .
Thanks in good part to the Hartfords’ tenacity, the restraints on discount retailing began to fade away in the 1950s. Chain-store taxes were gradually repealed, and state laws limiting price competition to protect mom and pop were taken off the books. By 1962, when Wal-Mart, Target, Kmart, and other modern discount formats were born, the pendulum had swung in consumers’ favor.

For the full commentary, see:
MARC LEVINSON. “When Creative Destruction Visited the Mom-and-Pops; The A&P grocery company may be nearing its sell-by date, but a century ago it was a fresh, revolutionary business.” The Wall Street Journal (Sat., Oct. 12, 2013): A13.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Oct. 11, 2013, and had the title “Marc Levinson: When Creative Destruction Visited the Mom-and-Pops; The A&P grocery company may be nearing its sell-by date, but a century ago it was a fresh, revolutionary business.”)

Levinson’s book on A&P is:
Levinson, Marc. The Great A&P and the Struggle for Small Business in America. New York: Hill and Wang, 2011.

Under Humble Austerity Policy China Builds $11.4 Million Giant Brass Puffer Fish

“A puffer fish statue in Yangzhong has raised ire in view of a government pledge to end spending on vanity projects.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) HONG KONG — Chinese Communist Party leaders’ vows of a new era of humble austerity in government may have met their most exotic adversary yet: an $11 million, 2,300-ton, 295-foot-long puffer fish.

The brass-clad statue, which shimmers golden in the sunlight and switches into a garish light show at night, was built by the city of Yangzhong, in Jiangsu Province in eastern China, . . .
. . .
Chinese news outlets said the brass and steel for the fish cost about $1.7 million, raising questions about where the rest of the money went. Construction of the fish tower began on a previously isolated and undeveloped river island in March, four months after Mr. Xi was appointed party leader.
. . .
. . . China is speckled with outlandish works of official art that vie with even a giant, glow-in-the-dark puffer fish for attention and outrage.
Critics berated a county in Guizhou Province for building “the world’s biggest teapot,” a 243-foot-high teapot-shaped tower, complete with spout, that was part of a $13 million project.
In Henan Province, in central China, a government-backed charity has been accused of corruption in spending about $19.6 million on a vast, unsightly sculpture of Song Qingling, the widow of Sun Yat-sen, a revered founder of modern China. Zhengzhou, the capital of Henan Province, is also home to a sculpture of two pigs in a frolicking embrace. From certain angles, the pigs might appear to be mating.

For the full story, see:
CHRIS BUCKLEY. “As China Vows Austerity, Giant Brass Fish Devours $11 Million.” The New York Times, First Section (Sun., October 13, 2013): 6.
(Note: ellipses added.)
(Note: the online version of the review has the date October 12, 2013.)

“A sculpture of Song Qingling, the widow of Sun Yat-sen, a founder of modern China.” Source of caption and photo: online version of the NYT article quoted and cited above.

“SEC Rules Demanded Complexity”

(p. 152) Google had considerable experience with pleasing users, but in the case of the auction, it could not create a simple interface. SEC rules demanded complexity. So the Google auction was a lot more complicated than buying Pokémon cards on eBay. People had to qualify financially as bidders. Bids had to be placed by a brokerage. If you made an error in reg-(p. 153)istering, you could not correct it but had to reregister. All those problems led to a few postponements of the start of the bidding period.
But the deeper problem was the uncertainty of Google’s prospects. As the press accounts accumulated–with reporters informed by Wall Streeters eager to sabotage the process– the perception grew that Google was a company with an unfamiliar business model run by weird people. A typical Wall Street insider analysis was reflected by Forbes.com columnist Scott Reeves, who concluded that Google’s target price, at the time pegged to the range between $ 108 and $ 135 a share, was excessive. “Only those who were dropped on their head at birth [will] plunk down that kind of cash for an IPO,” Reeves wrote.

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

SEC Told Google to Delete “Making the World a Better Place” from Document

(p. 150) . . . , the Securities and Exchange Commission was unimpressed by the charms of Page’s “Owner’s Manual.” “Please revise or delete the statements about providing ‘a great service to the world,’ ‘to do things that matter,’ ‘greater positive impact on the world, don’t be evil’ and ‘making the world a better place,'” they wrote. (Google would not revise the letter.) The commission also had a problem with Page’s description of the lawsuit that Overture (by then owned by Yahoo) had filed against Google as “without merit.” Eventually, to resolve this issue before the IPO date, (p. 151) Google would settle the lawsuit by paying Yahoo 2.7 million shares, at an estimated value of between $ 260 and $ 290 million.
That set a contentious tone that ran through the entire process. The SEC cited Google’s irregularities on a frequent basis, whether it was a failure to properly register employee stock options, inadequate reporting of financial results to stakeholders, or the use of only first names of employees in official documents. It acted toward Google like a junior high school vice principal who’d identified an unruly kid as a bad seed, requiring constant detentions.

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.
(Note: ellipsis added.)

Nanny Feds Take Revenge on Zucker for Trying to “Save Our Balls”

Craig Zucker. Source of caricature: online version of the WSJ article quoted and cited below.

(p. A11) Mr. Zucker is the former CEO of Maxfield & Oberton, the small company behind Buckyballs, an office toy that became an Internet sensation in 2009 and went on to sell millions of units before it was banned by the feds last year.

A self-described “serial entrepreneur,” Mr. Zucker looks the part with tussled black hair, a scraggly beard and hipster jeans. Yet his casual-Friday outfit does little to subdue his air of ambition and hustle.
Nowadays Mr. Zucker spends most of his waking hours fighting off a vindictive U.S. Consumer Product Safety Commission that has set out to punish him for having challenged its regulatory overreach. The outcome of the battle has ramifications far beyond a magnetic toy designed for bored office workers. It implicates bedrock American notions of consumer choice, personal responsibility and limited liability.
. . .
In August 2009, Maxfield & Oberton demonstrated Buckyballs at the New York Gift Show; 600 stores signed up to sell the product. By 2010, the company had built a distribution network of 1,500 stores, including major retailers like Urban Outfitters and Brookstone. People magazine in 2011 named Buckyballs one of the five hottest trends of the year, and in 2012 it made the cover of Brookstone’s catalog.
Maxfield & Oberton now had 10 employees, 150 sales representatives and a distribution network of 5,000 stores. Sales had reached $10 million a year. “Then,” says Mr. Zucker, “we crashed.”
On July 10, 2012, the Consumer Product Safety Commission instructed Maxfield & Oberton to file a “corrective-action plan” within two weeks or face an administrative suit related to Buckyballs’ alleged safety defects. Around the same time–and before Maxfield & Oberton had a chance to tell its side of the story–the commission sent letters to some of Maxfield & Oberton’s retail partners, including Brookstone, warning of the “severity of the risk of injury and death possibly posed by” Buckyballs and requesting them to “voluntarily stop selling” the product.
It was an underhanded move, as Maxfield & Oberton and its lawyers saw it. “Very, very quickly those 5,000 retailers became zero,” says Mr. Zucker. The preliminary letters, and others sent after the complaint, made it clear that selling Buckyballs was still considered lawful pending adjudication. “But if you’re a store like Brookstone or Urban Outfitters . . . you’re bullied into it. You don’t want problems.”
. . .
Maxfield & Oberton resolved to take to the public square.On July 27, just two days after the commission filed suit, the company launched a publicity campaign to rally customers and spotlight the commission’s nanny-state excesses. The campaign’s tagline? “Save Our Balls.”
Online ads pointed out how, under the commission’s reasoning, everything from coconuts (“tasty fruit or deadly sky ballistic?”) to stairways (“are they really worth the risk?”) to hot dogs (“delicious but deadly”) could be banned.
. . .
. . . in February [2013] the Buckyballs saga took a chilling turn: The commission filed a motion requesting that Mr. Zucker be held personally liable for the costs of the recall, which it estimated at $57 million, if the product was ultimately determined to be defective.
This was an astounding departure from the principle of limited liability at the heart of U.S. corporate law.
. . .
Given the fact that Buckyballs have now long been off the market, the attempt to go after Mr. Zucker personally raises the question of retaliation for his public campaign against the commission. Mr. Zucker won’t speculate about the commission’s motives. “It’s very selective and very aggressive,” he says.

For the full interview, see:
SOHRAB AHMARI, interviewer. “THE WEEKEND INTERVIEW with Craig Zucker; What Happens When a Man Takes on the Feds; Buckyballs was the hottest office game on the market. Then regulators banned it. Now the government wants to ruin the CEO who fought back.” The Wall Street Journal (Sat., August 31, 2013): A11.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the interview has the date August 30, 2013, and has the title “THE WEEKEND INTERVIEW; Craig Zucker: What Happens When a Man Takes on the Feds. Buckyballs was the hottest office game on the market. Then regulators banned it. Now the government wants to ruin the CEO who fought back.”)