artdiamondblog.com – Page 251 – Art Diamond's web log

Hatfields and McCoys Show that Idleness Begets Violence

Kevin Costner as the patriarch of the Hatfield clan on the HBO miniseries. Source of photo:
http://www.cowboysindians.com/Blog/May-2012/Blasts-From-Our-Past-With-Kevin-Costner/costner-hatfield.jpg

Kevin Costner plausibly suggests that when the productive activities of capitalism and entrepreneurship are not available or sought, people are more likely to let annoyances lead to violence:

(p. 15) Q. What was the root of the feud?

K.C. It’s fair to say that the economics of the time were the provocateurs in this story. I think there was a moment when Hatfield and McCoy would have laid down their guns. But these young guys didn’t have jobs anymore as we moved toward industrialization. They started to have children, and their families doubled in size, and suddenly they had to feed 26. Young men killing young men — it really has a lot to do with the offspring not having enough to do. Look, you’re talking about alcohol and guns, and you’re talking about unemployment, so there’s a reason for the bitterness.

For the full interview, see:
Kathryn Shattuck, interviewer. “Firing Bullets Across a Border And a Bloodline.” The New York Times, Arts&Leisure Section (Sun., May 27, 2012): 15.
(Note: bold in original.)

“Under a Mountain in Omaha”

(p. 170) lnformatics had been run from the top down. Here’s a story typical of the way the company worked. They had a trainer at headquarters who was told to educate the troops at the Federal Systems Division in northern California, which was run by Geno Tolari, a tough-minded football player from Pittsburgh. When the trainer arrived and announced, “I’m here to train your people,” Geno shot back, “You can’t train my people.”
The trainer got haughty. After all, he was from headquarters. “I’m the education department. I train your people.”
But Geno insisted, “You can’t train my people because you don’t know what they do.”
So now the trainer asked, “Okay, what do they do?”
Geno answered, “I don’t know.”
The trainer thought Geno was joking with him, and insisted, “I’m the trainer; I need to know what they do.”
That’s when Geno confessed, “I can’t tell you because I don’t (p. 171) know. They’re under a mountain in Omaha, and it’s a military secret, and the Air Force won’t tell us what they do.”

Source:
Wyly, Sam. 1,000 Dollars and an Idea: Entrepreneur to Billionaire. New York: Newmarket Press, 2008.

Lincoln “Would Abhor” Roosevelt’s “Progressivism”

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

(p. A13) In 1912, . . . , Robert Lincoln uncharacteristically leapt into the arena of national debate to challenge Theodore Roosevelt’s appropriation of his father’s name for TR’s “New Nationalism” agenda. Robert, writing in the Boston Herald, labeled Roosevelt’s progressivism a doctrine that the elder Lincoln “would abhor if living.”

For the full review, see:
RYAN L. COLE. “BOOKSHELF; The Son Also Rises; Prominent lawyer, self-made millionaire, cabinet secretary–Robert Lincoln was more than just his father’s greatest advocate.” The Wall Street Journal (Fri., May 9, 2012): A13.
(Note: ellipsis added.)
(Note: the online version of the review has the date May 9, 2012.)

The book under review is:
Emerson, Jason. Giant in the Shadows: The Life of Robert T. Lincoln. Carbondale, Illinois: Southern Illinois University Press, 2012.

Obama’s World Bank President Opposes Growth, Profits and Globalization

President Obama’s pick for World Bank President, Dr. Jim Yong Kim, is scheduled to take office on July 1, 2012.

(p. A8) Dr. Kim has drawn fire recently for comments in a book he co-edited in 2000, “Dying for Growth.” In a piece he co-authored for it, Dr. Kim co-wrote that “the quest for growth in GDP and corporate profits has in fact worsened the lives of millions of women and men.”
. . .
. . . an economist who has become one of Dr. Kim’s leading critics, New York University’s William Easterly, said the World Bank nominee offered an “amateur” approach to economics through an “antiglobalization point of view” that is critical of corporations.
“His critique was much more radical, that the system itself was responsible for creating poverty,” Mr. Easterly said.

For the full review, see:
SUDEEP REDDY. “WORLD NEWS; Criticism Over U.S.’s World Bank Pick Swells.” The Wall Street Journal (Mon., April 9, 2012): A8.
(Note: ellipses added.)
(Note: online version of the article is dated April 8, 2012.)

William Easterly’s wonderful and courageous book is:
Easterly, William. The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics. Cambridge, MA: The MIT Press, 2002 [1st ed. 2001].

For Federal Regulators “It’s Easier Not to Approve than to Approve”

“Xavier Lauth, a scientist, working with zebra fish in a lab at the Center for Aquaculture Technologies.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) SAN DIEGO — If Americans ever eat genetically engineered fast-growing salmon, it might be because of a Soviet biologist turned oligarch turned government minister turned fish farming entrepreneur.

That man, Kakha Bendukidze, holds the key to either extinction or survival for AquaBounty Technologies, the American company that is hoping for federal approval of a type of salmon that would be the first genetically engineered animal in the human food supply.
But 20 months since the Food and Drug Administration tentatively concluded that the fish would be safe to eat and for the environment, there has been no approval. And AquaBounty is running out of money.
Mr. Bendukidze, the former economics minister of Georgia and AquaBounty’s largest shareholder, says the company can stay afloat a while longer. But he is skeptical that genetically altered salmon will be approved in the United States in an election year, given the resistance from environmental and consumer groups.
“I understand politically that it’s easier not to approve than to approve,” Mr. Bendukidze said during a recent visit to a newly acquired laboratory in San Diego, where jars of tiny zebra fish for use in genetic engineering experiments are stacked on shelves. While many people would be annoyed by the approval, he said, “There will be no one except some scientists who will be annoyed if it is not approved.”
. . .
(p. B6) Mr. Bendukidze, 56, began his career as a molecular biologist in a research institute outside Moscow, working on genetically engineering viruses for vaccine use. He later started a company selling biology supplies. When parts of the Soviet economy were privatized, he earned a reputation as a corporate raider, building through acquisitions and leading United Heavy Machinery, a large maker of equipment for mining, oil drilling and power generation.
In 2004, Mr. Bendukidze returned to his native Georgia as economics minister under Mikheil Saakashvili, the newly elected president. With a free-market philosophy and a penchant for insulting those who disagreed with him, Mr. Bendukidze earned his share of enemies as he moved to deregulate and privatize the economy.
He still lives in Georgia and now spends his time as chairman of the Free University of Tbilisi, which he founded. He also set up Linnaeus Capital Partners to manage his money. It has increasingly focused on aquaculture, with stakes in companies in Greece, Israel and Britain, in addition to AquaBounty.

For the full story, see:
ANDREW POLLACK. “An Entrepreneur Bankrolls a Genetically Engineered Salmon.” The New York Times (Tues., May 22, 2012): B1 & B6.
(Note: ellipsis added.)
(Note: the online version of the article has the date May 21, 2012.)

“Kakha Bendukidze acquired the lab after agreeing to give AquaBounty more cash.” Source of caption and photo: online version of the NYT article quoted and cited above.

If Milken’s Bonds Are “Junk” then Yunis’ Microloans Are “Junk” Too

(p. 167) The world owes a debt of gratitude to Mike Milken and his creative team. Did some people go too far? Yes. Did some of them take advantage of the freer flow of capital and end up doing more damage than good? Sure. But markets are messy. Major shifts in the flow of capital often lead to periods of excess before the pendulum swings back and equilibrium is restored. Mike Milken and his team made a major contribution to today’s market atmosphere of high liquidity, which in turn has also helped lift the world’s poor out of poverty. Today the Grameen Bank in Bangladesh has created microloans for mothers living on $2 a day. And that won Grameen the Nobel Prize. The Nobel Committee didn’t call microloans “junk” debt.

Source:
Wyly, Sam. 1,000 Dollars and an Idea: Entrepreneur to Billionaire. New York: Newmarket Press, 2008.

“Nothing Lasts Forever”

“How will we react when history presents us with uncertainty and risk? A sign on a Stalin bust in Prague in 1989 reads ‘Nothing Lasts Forever.'” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) The psychologist Daniel Kahneman writes that humans naturally “tend to exaggerate our ability to forecast the future, which fosters optimistic overconfidence,” something he terms the “planning fallacy.”
“In terms of its consequences for decisions, the optimistic bias may well be the most significant of the cognitive biases,” he notes. “When forecasting the outcomes of risky projects, executives too easily fall victim to the planning fallacy.”

For the full commentary, see:
JOHN BUSSEY. “THE BUSINESS; The Euro Crisis in Ourselves.” The Wall Street Journal (Fri., June 1, 2012): A13.

Happiness Research Undermines European-Style Labor-Market Regulation

Bryan Caplan persuasively pans the book he is revieiwng. But along the way Caplan makes an intriguing observation of his own:

(p. A11) . . . , happiness research makes a powerful case against European-style labor-market regulation. For most economists, the effect on worker well-being is unclear. On the one hand, regulation boosts wages; on the other, it increases the probability that you will have no wages at all. From the standpoint of a happiness researcher, however, this is a no-brainer. A small increase in wages has but a small and ephemeral effect on happiness. A small increase in unemployment, by contrast, has a massive and–unlike most other factors–durable effect on happiness. Supposedly “humane” regulations to boost workers’ incomes have a dire cost in terms of human happiness.

For the full review, see:
BRYAN CAPLAN. “BOOKSHELF; Lessons From Cloud Nine; Happiness predicts higher job performance and even future health. But what predicts happiness?” The Wall Street Journal (Tues., August 16, 2011): A11.
(Note: ellipsis added.)

Rats, Motivated by Cheese, and Stimulated by Electricity and Chemicals, Grow Neurons and Walk Again

“After several weeks of neurorehabilitation, previously paralyzed rats initiated a walking gait and soon began sprinting, climbing stairs and avoiding obstacles.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A13) Rats with a spinal cord injury that left their hind legs completely paralyzed learned to walk again on their own after an intensive training course that included electrical stimulation of the brain and the spine, scientists reported on Thursday.
. . .
The report, published online on Thursday in the journal Science, provides a striking demonstration of what until recently few scientists thought possible: complete rehabilitation after a disabling blow to the spinal cord. After weeks of training, many of the rats could walk as well as before the injury, and some could run.
. . .
The rats then began a daily regimen. Outfitted with tiny vests, held upright on their back legs but left to bear their full weight, the rats tried to move toward a piece of cheese that beckoned nearby. They lurched forward like furry paratroopers, unsteady on their feet after a hard landing.
The scientists provided stimulation in three places: electrically, in the motor area of the brain and in the spinal cord below the injury, and chemically, infusing the wound area with drugs thought to promote growth.
And growth is what they got. After two to three weeks of 30-minute daily sessions, the rats began to take their first voluntary steps. After six weeks, all of the rats could walk on their own, and some could run and climb stairs.
. . .
In effect, . . . , the training forces the brain to recruit what is left of the neural system to get the job done. Neurons sprout like seedlings on a Chia Pet when they are seeking new connections, and the scientists found increases of 300 percent and more in projections in the brain stem and around the injury — evidence that the nervous system was remapping its connections.

For the full story, see:
BENEDICT CAREY. “In Rat Experiment, New Hope for Spine Injuries.” The New York Times (Fri., June 1, 2012): A13.
(Note: online version of the story is dated May 31, 2012.)

Michael Milken Provided “Access to Capital for Growing Companies”

(p. 163) Although [high yield] . . . bonds eventually became known as a favored tool for leveraged–buyout specialists in the 1980s, Mike’s original goal was different. He wanted to provide access to capital for growing companies that needed financing to expand and create jobs. Most of these companies lacked the investment grade” bond ratings required before the big financial institutions would back them. Mike knew that non-investment-grade (a k a “junk”) companies create virtually all new jobs, and he believed that helping these companies grow strengthened the American economy and created good jobs for American workers.
It was by studying credit history at Berkeley in the 1960s that Mike developed his first great insight. He found that while there could be significant risk in any one high-yield bond, a carefully constructed portfolio of these assets produced a consistently better return over the long run than supposedly “safe” investment-grade debt. This was proved during the two decades of the 1970s and ’80s when returns on high-yield bonds topped all other asset classes. Mike saw a great opportunity when he realized that the perception of default risk far exceeded the reality. In fact, these bonds had a surprisingly low-risk profile when adjusted for the potential returns.
After twenty years of superior gains, the high-yield bond market finally fell in 1990. Actually, it didn’t fall–it was pushed by unwise government regulation that forced institutions to sell their bonds. The dip only lasted a year, however, with the market roaring back 46 percent in 1991.
Mike’s competitors–Goldman Sachs, Morgan Stanley, and Credit Suisse First Boston, the old oligopolies of the syndication (p. 164) business–labeled them “junk bonds” to disparage Mike’s brainchild. He was not a member of their white-shoe club and they were not going to take his act lying down.

Source:
Wyly, Sam. 1,000 Dollars and an Idea: Entrepreneur to Billionaire. New York: Newmarket Press, 2008.
(Note: bracketed words and ellipsis added.)