Public Choice – Page 12 – artdiamondblog.com

Over-Regulated Tech Entrepreneurs Seek Their Own Country

The embed above is provided by YouTube where the video clip is posted under the title “Balaji Srinivasan at Startup School 2013.”

(p. B4) At a startup conference in the San Francisco Bay area last month, a brash and brilliant young entrepreneur named Balaji Srinivasan took the stage to lay out a case for Silicon Valley’s independence.

According to Mr. Srinivasan, who co-founded a successful genetics startup and is now a popular lecturer at Stanford University, the tech industry is under siege from Wall Street, Washington and Hollywood, which he says he believes are harboring resentment toward Silicon Valley’s efforts to usurp their cultural and economic power.
On its surface, Mr. Srinivasan’s talk,called “Silicon Valley’s Ultimate Exit,”sounded like a battle cry of the libertarian, anti-regulatory sensibility long espoused by some of the tech industry’s leading thinkers. After arguing that the rest of the country wants to put a stop to the Valley’s rise, Mr. Srinivasan floated a plan for techies to build an “opt-in society, outside the U.S., run by technology.”
His idea seemed a more expansive version of Google Chief Executive Larry Page’s call for setting aside “a piece of the world” to try out controversial new technologies, and investor Peter Thiel’s “Seastead” movement, which aims to launch tech-utopian island nations.

For the full commentary, see:
FARHAD MANJOO. “HIGH DEFINITION; The Valley’s Ugly Complex.” The Wall Street Journal (Mon., Nov. 4, 2013): B4.
(Note: the online version of the commentary has the date Nov. 3, 2013, and has the title “HIGH DEFINITION; Silicon Valley Has an Arrogance Problem.”)

Wind Power Increases Government Corruption

“Kathy Laclair of Churubusco, N.Y., dislikes the noise from the wind turbine blades and says their shadows give her vertigo.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) Lured by state subsidies and buoyed by high oil prices, the wind industry has arrived in force in upstate New York, promising to bring jobs, tax revenue and cutting-edge energy to the long-struggling region. But in town after town, some residents say, the companies have delivered something else: an epidemic of corruption and intimidation, as they rush to acquire enough land to make the wind farms a reality.

“It really is renewable energy gone wrong,” said the Franklin County district attorney, Derek P. Champagne, who began a criminal inquiry into the Burke Town Board last spring and was quickly inundated with complaints from all over the state about the (p. A16) wind companies.
. . .
. . . corruption is a major concern. In at least 12 counties, Mr. Champagne said, evidence has surfaced about possible conflicts of interest or improper influence.
In Prattsburgh, N.Y., a Finger Lakes community, the town supervisor cast the deciding vote allowing private land to be condemned to make way for a wind farm there, even after acknowledging that he had accepted real estate commissions on at least one land deal involving the farm’s developer.
A town official in Bellmont, near Burke, took a job with a wind company after helping shepherd through a zoning law to permit and regulate the towers, according to local residents. And in Brandon, N.Y., nearby, the town supervisor told Mr. Champagne that after a meeting during which he proposed a moratorium on wind towers, he had been invited to pick up a gift from the back seat of a wind company representative’s car.
When the supervisor, Michael R. Lawrence, looked inside, according to his complaint to Mr. Champagne, he saw two company polo shirts and a leather pouch that he suspected contained cash.
When Mr. Lawrence asked whether the pouch was part of the gift, the representative replied, “That’s up to you,” according to the complaint.

For the full story, see:
NICHOLAS CONFESSORE. “In Rural New York, Windmills Can Bring Whiff of Corruption.” The New York Times (Mon., August 18, 2008): A1 & A16.
(Note: ellipses added.)
(Note: the online version of the article has the date August 17, 2008.)

“To some upstate towns, wind power promises prosperity. Others fear noise, spoiled views and the corrupting of local officials.” Source of caption and photo: online version of the NYT article quoted and cited above.

Former Botswana President Won Prize for Ceding Power

“Festus G. Mogae, trained as an economist, was Botswana’s president for two terms.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A10) JOHANNESBURG — A foundation dedicated to celebrating and encouraging good government in Africa awarded its annual prize on Monday to Botswana’s former president, Festus G. Mogae. He was honored for consolidating his nation’s democracy, ensuring that its diamond wealth enriched its people and providing bold leadership during the AIDS pandemic.

Mr. Mogae, 69, a man with a modest style, will receive $5 million over the next 10 years and $200,000 per year thereafter for the rest of his life. Over the coming decade, the foundation may also grant another $200,000 a year to causes of Mr. Mogae’s choice.
The award, the Mo Ibrahim Prize for Achievement in African Leadership, is bestowed by the Mo Ibrahim Foundation, named after its founder, a Sudanese billionaire.

For the full story, see:
CELIA W. DUGGER. “Botswana’s Ex-President Wins Leadership Prize.” The New York Times (Tues., October 21, 2008): A10.
(Note: the online version of the story has the date October 20, 2008.)

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.

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.

Fed-Mandated High Sugar Prices Drive Candy Jobs Abroad

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

(p. A1) On Friday, [Oct. 18, 2013] the U.S. sugar contract in the futures market settled at 22.28 cents a pound, or 14% higher than the benchmark global price.

U.S. prices can’t fall much lower because of a federal government program that guarantees sugar processors a minimum price. The rest of the world also has a surfeit of sugar, but fewer price restrictions, and big growers like Brazil are expecting a record crop for the current season.
The squeeze explains why Atkinson Candy Co. has moved 80% of its peppermint-candy production to a factory in Guatemala that opened in 2010. That means it can sell bite-size Mint Twists to retailers for 10% to 20% less.
“It wasn’t like we did it for (p. A14) profit reasons. We did it for survival reasons,” said Eric Atkinson, president of the family-owned candy maker, based in Lufkin, Texas. “These are 60 jobs down there…that could be in the U.S.,” he added. “It’s a damn shame.”
Jelly Belly Candy Co. is finishing its second expansion of a factory in Thailand that was opened by the Fairfield, Calif., company in 2007. The sixth-generation family-owned firm sells about 20% of its jelly beans, made in flavors from buttered popcorn to very cherry, outside the U.S.
Sugar makes up about half of the ingredients and cost of a typical jelly bean, said Bob Simpson, Jelly Belly’s president and chief operating officer. Thailand is the world’s fourth-largest sugar producer and gives Jelly Belly access to cheaper sugar, labor and other raw materials than the candy maker has in the U.S.
“You can’t compete shipping finished U.S. goods” anymore, Mr. Simpson said. In the U.S., Jelly Belly has had to raise prices “several times” in the past 10 years due to high sugar prices.
. . .
Three candy-making jobs are lost for each sugar-growing and processing job saved by higher sugar prices, according to a Commerce Department report in 2006.
In a sign that candy makers are taking advantage of lower sugar prices elsewhere, the amount of sugar contained in imported products surged 33% from 2002 to 2012, according to the Agriculture Department.

For the full story, see:
Wexler, Alexandra. “Cheaper Sugar Sends Candy Makers Abroad.” The Wall Street Journal (Mon., Oct. 21, 2013): A1 & A14.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date Oct. 20, 2013.)

“Jelly Belly, whose facility in Fairfield, Calif., is shown above, is expanding its factory in Thailand.” Source of caption and photo: online version of the WSJ article quoted and cited above.

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.

Brazil’s Cardozo Envies England’s Rule of Law

“Michael Palin.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. C11) For his most recent project in Brazil, which will go on to become a PBS series, Mr. Palin interviewed former Brazilian President Fernando Cardoso, who is often credited with the country’s economic turnaround. Whereas he says most political leaders are hesitant to say anything controversial, Mr. Cardoso was refreshingly straightforward. “I asked him, ‘Brazil has so many good things going for it–the people are friendly and relaxed, the economy is booming. Is there anything you envy about us in England?’ ” He was surprised by Mr. Cardoso’s answer. “He said straight out, ‘The rule of law.’ He said, ‘Our problem here is we have endemic corruption,’ ” says Mr. Palin. “I just thought it was incredibly honest for a world leader.”

For the full story, see:
ALEXANDRA WOLFE. “WEEKEND CONFIDENTIAL; Michael Palin Takes on the World; The former Monty Python performer is turning his global adventures into comic tales.” The Wall Street Journal (Sat., August 31, 2013): C11.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date August 30, 2013.)

In Greece, Votes Are Traded for Government Jobs

(p. A4) Some members of Parliament have lobbied for fishing licenses for the owners of pleasure boats in the Aegean islands. Others have asked for government jobs for award-winning athletes or members of dismantled state agencies. One sought to exempt theaters and cinemas from a controversial property tax. Another to reduce fines for the owners of illegally built homes in parts of northern Greece. The list goes on.
In all, more than 90 such budget-busting proposals have been floated as lawmakers scramble to push through last-minute amendments to bills otherwise intended to meet the demands of creditors who want Greece to liberalize its job market, cut red tape and shrink state payrolls.
. . .
But the proliferation of items threatens to delay that step, as lawmakers go to the trough one last time. Greece’s practice of trading favors — often government jobs — for political support is as old as its 400 years of Ottoman rule, when the system evolved. The word for it, “rousfeti,” which means favor, has its roots in the Turkish word for bribe.
. . .
“In Greece, the cross is sold in exchange for a government job,” said one of them, Theodoros Pangalos, the outspoken deputy prime minister and seasoned Socialist, referring to the X that voters make on the ballot.
“No one has dared touch this system to date,” Mr. Pangalos, who will not seek re-election, said this month in an interview with the French-German television channel Arte. “But it is time for it to change.”

For the full story, see:
NIKI KITSANTONIS. “Despite Warning, Old Handouts Die Hard for Greek Politicians Facing Voters Soon.” The New York Times (Tues., April 10, 2012): A4.
(Note: ellipses added.)
(Note: the online version of the article has the date April 9, 2012.)

If Terry Were from Texas, He Might Oppose Federal Ethanol Mandates

(p. 1A) WASHINGTON — The ethanol industry is again under fire from critics who want to eliminate the federal mandate that oil companies blend biofuels into the gasoline supply.
The House Energy and Commerce Committee is holding hearings on the Renewable Fuel Standard [RFS], which called for 15 billion gallons of biofuels to be used in 2012. The requirements reach 36 billion gallons by 2022.
. . .
(p. 2A) Rep. Lee Terry, R-Neb., a member of the Energy and Commerce Committee, said it’s clear that members from Texas and Louisiana will be targeting the usage requirements.
. . .
Terry has been a champion of the Keystone XL pipeline, making him an ally of Gulf Coast lawmakers and the oil industry on that issue.
Their split over the ethanol issue causes some awkward moments, he said.
“I say, ‘You do realize I’m from the Cornhusker State,'” Terry said. “If I was from Dallas, you know, who knows? I’d have a different view on the RFS.”

For the full story, see:
Joseph Morton. “Big Oil Revs Up Efforts to Repeal Rules Forcing Ethonal in the Mix.” Omaha World-Herald (MONDAY, JULY 8, 2013): 1A-2A.
(Note: ellipses and bracketed abbreviation added.)
(Note: the online version of the article has the title “RENEWABLE FUEL STANDARD; Ethanol Critics Rev Up Efforts to Repeal Biofuel Rules on Gas.”)