Innovative Entrepreneurs Bring Prosperity to the Poor

(p. A17) As the economist Joseph Schumpeter observed: “The capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.”
For Schumpeter, entrepreneurs and the companies they found are the engines of wealth creation. This is what distinguishes capitalism from all previous forms of economic society and turned Marxism on its head, the parasitic capitalist becoming the innovative and beneficent entrepreneur. Since the 2008 crash, Schumpeter’s lessons have been overshadowed by Keynesian macroeconomics, in which the entrepreneurial function is reduced to a ghostly presence. As Schumpeter commented on John Maynard Keynes’s “General Theory” (1936), change–the outstanding feature of capitalism–was, in Keynes’s analysis, “assumed away.”
Progressive, ameliorative change is what poor people in poor countries need most of all. In “The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty,” Harvard Business School’s Clayton Christensen and co-authors Efosa Ojomo and Karen Dillon return the entrepreneur and innovation to the center stage of economic development and prosperity. The authors overturn the current foreign-aid development paradigm of externally imposed, predominantly government funded capital- and institution-building programs and replace it with a model of entrepreneur-led innovation. “It may sound counterintuitive,” the authors write, but “enduring prosperity for many countries will not come from fixing poverty. It will come from investing in innovations that create new markets within these countries.” This is the paradox of the book’s title.
. . .
One example that the authors cite is Tolaram Group, a Singapore-based conglomerate that created the instant-noodle market in Nigeria, pushing out 4.5 billion packets annually and generating revenue of almost $1 billion a year. Sourcing, manufacturing, distributing and selling its Indomie-branded noodles required that Tolaram invest in a broad and deep logistics and distribution chain; create a retail network; develop specialized training; acquire its own electricity generation; build a water and sewage-treatment plant; and construct a deep-water port in the city of Lekki. Had Tolaram waited for the Nigerian government to address these infrastructure and institutional challenges before investing in the country, the company would still be waiting. Other examples include British businessman Mo Ibrahim’s pan-African Celtel, which built a cellphone network across 13 African countries and gained 5.2 million customers in six years, and India’s Narayana Health, which has brought the cost of open-heart surgery down to $1,000.
. . .
Instead of a book of glib answers, they present something much more powerful–a work of creative destruction for today’s failed development-policy paradigm.

For the full review, see:
Rupert Darwall. “BOOKSHELF; A Better Way to Fight Poverty; The current foreign-development paradigm of government-funded programs should be replaced by an entrepreneurial model.” The Wall Street Journal (Thursday, January 31, 2019): A17.
(Note: ellipses added.)
(Note: the online version of the review has the date Jan. 30, 2019, and has the title “BOOKSHELF; ‘The Prosperity Paradox’ Review: A Better Way to Fight Poverty; The current foreign-development paradigm of government-funded programs should be replaced by an entrepreneurial model.”)

The book under review, is:
Christensen, Clayton M., Efosa Ojomo, and Karen Dillon. The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty. New York: HarperBusiness Press, 2019.

Small Spanish Firms Less Likely to Hire with Higher Minimum Wage

(p. B1) MADRID — As Spain grapples with a turbulent political crisis, one of Europe’s last Socialist governments may soon fall amid the rise of a new nationalism in the country. But whatever the outcome, Prime Minister Pedro Sánchez is leaving behind a signature legacy: a record increase in the minimum wage.
The 22 percent rise that took effect in January, to 1,050 euros (about $1,200) a month, is the largest in Spain in 40 years. Yet the move has ignited a debate over whether requiring employers to pay more of a living wage is a social watershed, or a risky attempt at economic engineering.
. . .
(p. B4) Over 95 percent of businesses in Spain are small and medium-size firms, many of which operate with thin margins, according to Celia Ferrero, the vice president of the National Federation of Self-Employed Workers.
“You won’t find people disputing that higher wages are needed,” said Ms. Ferrero, whose organization represents many smaller businesses. “The question is whether firms can afford it. Higher wages and social security taxes simply make it more expensive for employers to hire or maintain staffers.”
“It’s not that they don’t want to pay; they literally can’t,” she added.
Lucio Montero, the owner of General Events, which makes booths and backdrops for firms displaying wares at big conventions, employs eight workers on the outskirts of Madrid. He pays each €1,400 a month.
The higher minimum wage and increased social security charges will put upward pressure on his labor bill and already thin margins, he said. It is a cost that he can ill afford.
“I would need to think twice about hiring more people,” said Mr. Montero, walking around his tiny, sawdust-covered factory floor.

For the full story, see:
Liz Alderman. “Spain’s Minimum Wage Has Surged. So Has Debate.” The New York Times (Friday, March 8, 2019): B1 & B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date March 7, 2019, and has the title “Spain’s Minimum Wage Just Jumped. The Debate Is Continuing.”)

Hickenlooper Should Be Proud He Worked Hard to Build a Business Under Capitalism

(p. A21) John Hickenlooper ought to be a poster child for American capitalism. After being laid off from his job as a geologist during the oil bust of the 1980s, he and his business partners turned an empty warehouse into a thriving brewery.
. . .
Yet there he was on MSNBC’s “Morning Joe,” squirming in his seat as Joe Scarborough asked if he would call himself “a proud capitalist.” Hickenlooper protested the divisiveness of labels. He refused to reject the term “socialism.” He tried, like a vegetarian who still wants his bacon, to have it both ways: “There are parts of socialism, parts of capitalism, in everything.”
But Hickenlooper did allow this: “We worked 70, 80, 90 hours a week to build the business; and we worked with the other business owners in [Lower Downtown Denver] to help them build their business. Is that capitalism? I guess.”
He guessed right.
. . .
An economy in which private property is protected, private enterprise is rewarded, markets set prices and profits provide incentives will, over time, generate more wealth, innovation and charity — and distribute each far more widely — than any form of central planning.
. . .
To the extent that Sanders’s concept of democratic socialism has gained traction, it’s not because capitalism has failed the masses. It’s because Sanders, beyond any of his peers, has consistent convictions and an authentic persona.
To prevail, a moderate Democrat will need to behave likewise. The message can go like this: Capitalism has worked for millions of Americans. It worked for me. We need to reform it so it can work for everyone.

For the full commentary, see:
Stephens, Bret. “Capitalism and the Democrats; The most successful economic system shouldn’t be a dirty word.” The New York Times (Saturday, March 9, 2019): A21.
(Note: ellipses added; italics in original.)
(Note: the online version of the commentary has the date March 8, 2019, and has the title “Capitalism and the Democratic Party; The most successful economic system shouldn’t be a dirty word.”)

Central Planning Elitism Leads to Rule by the Corrupt or the Incompetent

(p. A23) . . . the underlying faith of the Green New Deal is a faith in the guiding wisdom of the political elite. The authors of the Green New Deal assume that technocratic planners can master the movements of 328 million Americans and design a transportation system so that “air travel stops becoming necessary.” (This is from people who couldn’t even organize the successful release of their own background document.)
They assume that congressional leaders have the ability to direct what in effect would be gigantic energy firms and gigantic investment houses without giving sweetheart deals to vested interests, without getting corrupted by this newfound power, without letting the whole thing get swallowed up by incompetence. (This is a Congress that can’t pass a budget.)
. . .
The impulse to create a highly centralized superstate recurs throughout American history. There were people writing such grand master plans in the 1880s, the 1910s, the 1930s. They never work out. As Richard Weaver once put it, the problem with the next generation is that it hasn’t read the minutes of the last meeting.

For the full commentary, see:
Brooks, David. “How the Left Embraced Elitism; The progressives’ Green New Deal centralizes power.” The New York Times (Tuesday, Feb. 12, 2019): A23.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Feb. 11, 2019.)

“Eventually You Run Out of Other People’s Money”

(p. A19) Conspicuous by its absence in much of the mainstream news coverage of Venezuela’s political crisis is the word “socialism.” Yes, every sensible observer agrees that Latin America’s once-richest country, sitting atop the world’s largest proven oil reserves, is an economic basket case, a humanitarian disaster, and a dictatorship whose demise cannot come soon enough.
But … socialist? Perish the thought.
Or so goes a line of argument that insists socialism’s good name shouldn’t be tarred by the results of experience.
. . .
Government overspending created catastrophic deficits when oil prices plummeted. Worker co-ops wound up in the hands of incompetent and corrupt political cronies. The government responded to its budgetary problems by printing money, leading to inflation. Inflation led to price controls, leading to shortages. Shortages led to protests, leading to repression and the destruction of democracy. Thence to widespread starvation, critical medical shortages, an explosion in crime, and a refugee crisis to rival Syria’s.
All of this used to be obvious enough, but in the age of Alexandria Ocasio-Cortez it has to be explained all over again. Why does socialism never work? Because, as Margaret Thatcher explained, “eventually you run out of other people’s money.”
. . .
. . . , the larger lesson of Venezuela’s catastrophe should be learned. Twenty years of socialism, cheered by Corbyn, Klein, Chomsky and Co., led to the ruin of a nation. They may not be much embarrassed, much less personally harmed, by what they helped do. It’s for the rest of us to take care that it never be done to us.

For the full commentary, see:
Stephens, Bret. “Yes, Venezuela Is a Socialist Catastrophe; In the age of A.O.C., the lesson must be learned again.” The New York Times (Saturday, Jan. 26, 2019): A19.
(Note: ellipsis internal to a sentence, in original; other ellipses, added.)
(Note: the online version of the commentary has the date Jan. 25, 2019.)

Chernobyl Was Due to “Bureaucratic Incompetence,” Not Due to Technology

(p. C6) Dr. Medvedev’s study of Lysenko was not approved for official publication in the Soviet Union, but samizdat, or clandestine, copies circulated among the intelligentsia. In 1969, the book was translated into English and published as “The Rise and Fall of T.D. Lysenko.”
Dr. Medvedev was fired from his job at an agricultural research laboratory, and within a few months was summoned to a meeting with a psychiatrist, on the pretext of discussing the behavior of his teenage son. Instead, Dr. Medvedev was taken to a holding cell, where he managed to pick the lock and walk away.
Soon afterward, on May 29, 1970, as Dr. Medvedev recounted in his book “A Question of Madness,” he was confronted at his home by two psychiatrists accompanied by several police officers.
“‘If you refuse to talk to us,’ one of the psychiatrists told Dr. Medvedev, ‘then we will be obliged to draw the appropriate conclusions . . . And how do you feel yourself, Zhores Aleksandrovich?’
“I answered that I felt marvelous.
“‘But if you feel so marvelous, then why do you think we have turned up here today?’
“‘Obviously, you must answer that question yourself,’ I replied. “A police major arrived. “‘ And who on earth might you be?’ Dr. Medvedev asked. ‘I didn’t invite you here.’ ”
“He protested, to no avail, that the homes of Soviet citizens were considered private and inviolable to the forces of the state.
“‘Get to your feet!” the police major ordered Dr. Medvedev. ‘I order you to get to your feet!’ ”
Two lower-ranking officers, twisted Dr. Medvedev’s arms behind his back, forced him out of his house and into an ambulance. He was driven to a psychiatric hospital.
The preliminary diagnosis was “severe mental illness dangerous to the public,” and Dr. Medvedev was repeatedly warned to stop his “publicist activities.”
Meanwhile, his brother, Sakharov and other activists for greater openness in the Soviet system sent telegrams and published open letters calling for Dr. Medvedev’s release. One of his friends, the novelist Alexander Solzhenitsyn, then still living in the Soviet Union, condemned Dr. Medvedev’s detention with a bold and blistering statement.
“The incarceration of freethinking healthy people in madhouses is spiritual murder,” he said. “It is a fiendish and prolonged torture . . . These crimes will never be forgotten, and all those who take part in them will be condemned endlessly, while they live and after they’re dead.
“It is shortsighted to think that you can live constantly relying on force alone, constantly scorning the objections of conscience.”
Solzhenitsyn received the Nobel Prize for Literature later that year.
. . .
In 1990, Dr. Medvedev wrote an account of the 1986 nuclear disaster at Chernobyl, which he considered inevitable, with the Soviet Union’s history of scientific and bureaucratic incompetence.
“In the end, I was surprised at how poorly designed the reactor actually was,” he told the New York Times in 1990. “I wanted to write this book not only to show the real scale of this particular catastrophe, but also to demolish a few more secrets and deliberate misconceptions.”

For the full obituary, see:
SCHUDEL, Matt. “‘Scientist exposed agricultural fraud and Soviet incompetence.” The Washington Post (Sunday, Sept. 6, 2018): C6.
(Note: ellipses between paragraphs, added; ellipses internal to paragraphs, in original.)
(Note: the online version of the obituary has the date Sept. 4, 2018, and has the title “‘James Mirrlees, Whose Tax Model Earned a Nobel, Dies at 82.”)

The books by Zhores Medvedev that were mentioned above, are:
Medvedev, Zhores A. The Rise and Fall of T. D. Lysenko. New York: Columbia University Press, 1969.
Medvedev, Zhores A., and Roy A. Medvedev. A Question of Madness: Repression by Psychiatry in the Soviet Union. London: Mcmillan London Ltd., 1971.
Medvedev, Zhores A. The Legacy of Chernobyl. New York: W. W. Norton & Company, 1990.

Alibaba’s Jack Ma Retires Early as Chinese Communists Intervene in Ventures

(p. B1) HONG KONG — Alibaba’s co-founder and executive chairman, Jack Ma, said he planned to step down from the Chinese e-commerce giant on Monday to pursue philanthropy in education, a changing of the guard for the $420 billion internet company.
A former English teacher, Mr. Ma started Alibaba in 1999 and built it into one of the world’s most consequential e-commerce and digital payments companies, transforming how Chinese people shop and pay for things. That fueled his net worth to more than $40 billion, making him China’s richest man. He is revered by many Chinese, some of whom have put his portrait in their homes to worship in the same way that they worship the God of Wealth.
Mr. Ma is retiring as China’s business environment has soured, with Beijing and state-owned enterprises increasingly playing more interventionist roles with companies. Under President Xi Jinping, China’s internet industry has grown and become more important, prompting the government to tighten its leash. The Chinese economy is also facing slowing growth and increasing debt, and the country is embroiled in an escalating trade war with the United States.
“He’s a symbol of the health of China’s private sector and how high they can fly whether he likes it or not,” Duncan Clark, author of the book “Alibaba: The House Jack Ma Built,” said of Mr. Ma. “His retirement will be interpreted as frustration or concern whether he likes it or not.”
In an interview, Mr. Ma said his retirement is not the end of an era but “the beginning of an era.” He said he would be spending more of his time and fortune focused on education. “I love education,” he said.
Mr. Ma will remain on Alibaba’s board of directors and continue to mentor the company’s management. Mr. Ma turns 54 on Monday, which is also a holiday in China known as Teacher’s Day.
The retirement makes Mr. Ma one of the first founders among a generation of prominent Chinese internet entrepreneurs to step down from their companies. Firms including Alibaba, Tencent, Baidu and have flourished in recent years, growing to nearly rival American internet behemoths like Amazon and Google in their size, scope and ambition. For Chinese tycoons to step aside in their 50s is rare; they usually remain at the top of their organizations for many years.

For the full story, see:

Li Yuan. “Founder Sees A ‘Beginning’ As He Retires From Alibaba.” The New York Times (Saturday, Sept. 8, 2018): B1 & B3.

(Note: the online version of the story has the date Sept. 7, 2018, and has the title “Alibaba’s Jack Ma, China’s Richest Man, to Retire From Company He Co-Founded.”)

The book by Duncan Clark, that is mentioned above, is:
Clark, Duncan. Alibaba: The House That Jack Ma Built. New York: Harper-Collins Publishers, 2016.

Lenin “Sought to Destroy” Russian Peasants

(p. B14) A forceful, stylish writer with a sweeping view of history, Professor Pipes covered nearly 600 years of the Russian past in “Russia Under the Old Regime,” abandoning chronology and treating his subject by themes, such as the peasantry, the church, the machinery of state and the intelligentsia.
One of his most original contributions was to locate many of Russia’s woes in its failure to evolve beyond its status as a patrimonial state, a term he borrowed from the German sociologist Max Weber to characterize Russian absolutism, in which the czar not only ruled but also owned his domain and its inhabitants, nullifying the concepts of private property and individual freedom.
With “The Russian Revolution” (1990), Professor Pipes mounted a frontal assault on many of the premises and long-held convictions of mainstream Western specialists on the Bolshevik seizure of power. That book, which began with the simple Russian epigraph “To the victims,” took a prosecutorial stance toward the Bolsheviks and their leader, Vladimir Lenin, who still commanded a certain respect and sympathy among Western historians.
Professor Pipes, a moralist shaped by his experiences as a Jew who had fled the Nazi occupation of Poland, would have none of it. He presented the Bolshevik Party as a conspiratorial, deeply unpopular clique rather than the spearhead of a mass movement. He shed new and harsh light on the Bolshevik campaign against the peasantry, which, he argued, Lenin had sought to destroy as a reactionary class. He also accused Lenin of laying the foundation of the terrorist state that his successor, Joseph Stalin, perfected.
“I felt and feel to this day that I have been spared not to waste my life on self-indulgence and self-aggrandizement but to spread a moral message by showing, using examples from history, how evil ideas lead to evil consequences,” Professor Pipes wrote in a memoir. “Since scholars have written enough on the Holocaust, I thought it my mission to demonstrate this truth using the example of communism.”
. . .
In “The Russian Revolution,” he wrote:
“The Russian Revolution was made neither by the forces of nature nor by anonymous masses but by identifiable men pursuing their own advantages. Although it has spontaneous aspects, in the main it was the result of deliberate action. As such it is very properly subject to value judgment.”

For the full obituary, see:
William Grimes. “Richard Pipes, Historian Of Russia and Adviser To Reagan, Dies at 94.” The New York Times (Friday, May 18, 2018): B14.
(Note: ellipsis added.)
(Note: the online version of the obituary has the date May 17, 2018, and has the title “Richard Pipes, Historian of Russia and Reagan Aide, Dies at 94.”)

The early Pipes book, mentioned above, is:
Pipes, Richard. Russia under the Old Regime. revised 2nd ed. London, England: Penguin Books, 1997 [1st ed. 1974].

The later Pipes book, mentioned above, is:
Pipes, Richard. The Russian Revolution. revised 2nd ed. New York: Knopf, 1990.

Ecosocialism: The “Green-and-Red Agenda” to Eradicate Capitalism

Not all environmentalists are motivated by a desire to destroy capitalism. But some are. See below.

(p. 26) Joel Kovel, a former Freudian psychiatrist who evolved into an apostle of what he called ecosocialism, a so-called green-and-red agenda against the environmental evils of globalization and in favor of the nonviolent eradication of capitalism, died on Monday [April 30, 2018] in Manhattan.
. . .
Whenever he launched an ideological crusade, he did so zealously — even if, as in the case of ecosocialism, its very definition and the collateral demand for an appealing alternative to capitalism were not self-evident.
Under ecosocialist theory, income would be guaranteed, most property and means of production would be commonly owned, and the abolition of capitalism, globalism and imperialism would unleash environmentalists to vastly curtail industrialization and development whose pollution would otherwise cause catastrophic global warming.
“Capitalist production, in its endless search for profit, seeks to turn everything into a commodity,” Dr. Kovel wrote in 2007 on the socialist website Climate and Capitalism. “It is plain that production will have to shift from being dominated by exchange — the path of the commodity — to that which is for use, that is for the direct meeting of human needs.”

For the full obituary, see:
Sam Roberts. “Dr. Joel Kovel, a Founder of Ecosocialism, Is Dead at 81.” The New York Times, First Section (Sunday, May 6, 2018): 26.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the obituary has the date May 4, 2018, and has the title “Dr. Joel Kovel, a Founder of Ecosocialism, Is Dead at 81.”)

Socialized Medicine “Mummifies Its Doctors in Spools of Red Tape”

(p. A17) One of the reasons patients find condescension from doctors especially loathsome is that it diminishes them — if you’re gravely ill, the last thing you need is further diminishment. But the desires of patients, Marsh notes, are often paradoxical. They also pine for supreme confidence in their physicians, surgeons especially, because they’ve left their futures — the very possibility of one at all, in some cases — in their doctors’ custody. “So we quickly learn to deceive,” Marsh writes, “to pretend to a greater level of competence and knowledge than we know to be the case, and try to shield our patients a little from the frightening reality they often face.”
Over time, Marsh writes, many doctors start to internalize the stories they tell themselves about their superior judgment and skill. But the best, he adds, unlearn their self-deceptions, and come to accept their fallibility and learn from their mistakes. “We always learn more from failure than from success,” he writes. “Success teaches us nothing.”
This was a prominent theme in Marsh’s last book, and readers may have a sense of déjà vu while reading this one. Like “Do No Harm,” “Admissions” is wandering and ruminative, an overland trek through the doctor’s anxieties and private shames. Once again, he recounts his miscalculations and surgical catastrophes, citing the French doctor René Leriche’s observation that all surgeons carry cemeteries within themselves of the patients whose lives they’ve lost. Once again, he rails against the constraints of an increasingly depersonalized British health care system, which mummifies its doctors in spools of red tape. Once again, he describes his operating theater in all of its Grand Guignol splendor, with brains swelling beyond their skulls and suction devices “slurping obscenely” as tumors evade his reach.

For the full review, see:
JENNIFER SENIOR. “Books of The Times; Surgical Catastrophes, Private Shames.” The New York Times (Sat., Oct. 7, 2017): A17.
(Note: the online version of the review has the date Oct. 5, 2017, and has the title “Books of The Times; A Surgeon Not Afraid to Face His Mistakes, In and Out of the Operating Room.)

The book under review, is:
Marsh, Henry. Admissions: Life as a Brain Surgeon. New York: Thomas Dunne Books/St. Martin’s Press, 2017.