Friday, May 31, 2013

She bought the night flight, but not the bill of goods

One might think it would be good riddance to Allende-ism, but Chile is flirting with disaster once again;
Former President Michelle Bachelet gained more support in this year’s presidential elections after the Communist Party (PC) officially endorsed her campaign Saturday.
The agreement came after weeks of negotiations between Bachelet’s Socialist Party (PS) and the PC. In return, the Communists hope to influence the Concertación coalition’s agenda in key areas such as education and labor reform, and may even land a ministerial position in a future Bachelet government.
Bachelet must be pretty desperate to align herself with the Communists who are only about 5% of Chile's electorate.  She also must be counting on Chileans having very short memories. Though her opponents won't let them forget the horrors of the recent past;
Both Pablo Longueira and Andrés Allamand, Bachelet’s conservative opponents in the Nov. 17 election, quickly pounced on the pact. 
Longueira, of the right-wing Independent Democratic Union (UDI), called it a “step backward” for the country, likening the PC to its “chavista” counterpart in Venezuela. National Renewal (RN) candidate Allamand, keen to position himself as a centrist candidate, lamented that the Concertación had distanced itself from the coalition that led Chile out of dictatorship. 
And the election laws have been changed since 1970, when Salvador Allende Gossens took the Presidency in a three way race, with a mere 37% of the vote.  Today that result would mean a run-off between the top two candidates, and to win you need a majority. If we were in Chile, we'd round up a few copies of Georgie Anne Geyer's 1983 Buying the Night Flight for distribution in the country.  At least the chapters that deal with Geyer's experiences with Allende, Castro and Che Guevara.

Geyer first met Salvador Allende in 1964, the day he lost the Presidential election to Eduardo Frei.  Six years later, with Frei unable to run again under Chile's law, Allende had a better chance.  In fact, he was so sure he'd win that Geyer, at that time, asked him, 'If you are elected, will there be elections again?'

His response, according to her notes, was, 'You must understand...that by the next elections [in 1976] everything will have changed.' Then he continued, 'We have different groups with us. Large groups of priests have clearly delineated a Christian-Marxist point of view. A large group feels that if you respect our belief, there is no problem. In '64, all the church was for the Christian Democrats [Frei's party]'

Geyer says he continued, 'We are going to win within the electoral system, but we'll build new institutions, make a new constitution. We are not going to live under the capitalist system. If we nationalize all this...mess of American companies, if we control imports and exports and carry through a real agrarian reform, what other things can you do?'

Unfortunately for Chile, when no one got a majority of the vote that year, the election was thrown to the Chilean legislature.  There not enough members took Allende's talk seriously, and voted to give him the Presidency since he'd won a plurality of the vote. It's hard to imagine that Chile will make such a mistake again.

In the years between the '64 and '70 elections, Geyer often visited Chile and got to know Allende and several other politicians well.  She not only interviewed them, but socialized with them; 'It was a refined conversation with them, and they agreed on the rules of the game: then.'

But there was something else going on back then in Latin America; Liberation Theology.  Geyer knew some of its adherents.  Of one, she wrote, '...impatient and driven by whatever devils or saints inhabited him (his friends insist there were quite enough of both), he joined the Marxist guerrillas. On February 15, 1966, the government announced that Father Camilo Torres had been killed in an encounter with Columbian troops.

Finally, in 1970 Chile gets an actual Marxist President, and Geyer writes, 'Now the legendary free air of Chile hung with new fears. Now the two sides no longer sat and drank and laughed and loved together, for one side no longer respected the rules of the game.  Whereas before I had always been on the friendliest of terms with Allende, now he refused to see most American journalists. The minute he became president, he was a different man; now he was in public the true Marxist the had always been inside himself.  Worse, it was the same with Augusto Olivares [Allende's closest adviser, and once, she thought,  a personal friend of hers].'

She has to admit that Chile was now different, and she was the enemy.

[to be continued]

With amigos like this...

Chile is still haunted by its Marxist past (short though it was);
Police arrested Luis Ríos, a member of a small political organization called the Committee of Friends of Salvador Allende, for throwing an egg at [Pablo] Longueira as the presidential candidate [Independent Democratic Union] attempted to flee from demonstrators.
Although not a fisherman, Ríos has a history of political activity. Running unsuccessfully as a mayoral candidate in 2012, he went on to lead protests after claims that votes in his favor had been lost or were dismissed by authorities.
Throwing eggs is certainly an improvement over what Allende's friends used to do to people they didn't like. From a story in the Seattle Times in June of 1971--Allende's first year as President:
Three men with submachine guns killed an outspoken anti-leftist politician today....
The killing ...was the second assassination in Chile since Salvador Allende was elected....
Turns out that one of the assassins had been recently pardoned, and set free on the streets, by...Salvador Allende. The man was a member of the Organized Vanguard of the People.  Just another of Jamie Galbraith's poets, we presume.

Also in the Seattle Times in June of that same year, there was a three part series by Richard K. Pryne detailing the actions of President Salvador Allende (who got all of 36.5% of Chile's vote).  From which, about his land reform; fearing their lands will be taken are investing little or nothing in the future.  New construction is avoided, quick-cash crops are favored over rotation, wise management policies for long-term use of lands are discarded in favor of immediate returns.
All these negative factors are running counter to President Salvador Allende's government's determination to increase agricultural production....
The amount of land plowed...was less....
The sale of pesticides had dropped 25 per cent.
Fertilizer sales were down 15 per cent.
The sale of pesticides had dropped 10 per cent.
No farmer really knows if his land will be expropriated....
The Allende government has said it will expropriate 1,000 farms per year for three years; that would be all of Chile's large or moderately large farms. Few farmers are making long term plans.
That's known to economists--one of whom Jamie Galbraith claims to be--as getting the incentives wrong. Which wasn't the worst of it, as Allende also secretly set mobs (turbas) on farmers in Southern Chile for some entrepreneurial expropriations.  These were carried out at night, violently, by the Movimiento Izquierda Revolucionario (MRI).  Pryne described how it worked in one particularly sad case;
...such an incident...caused [Rolando] Matus death.  Matus, the owner of a 70-acre farm...went to the assistance of a neighbor, Otto Gruner, whose 200-acre farm had come under attack by night riders. Shots were exchanged and Matus and five others were wounded. Matus died two days later.
....He was an orphan who had begun with nothing and by hard work supported his aged adoptive grandparents.
Pryne wrote from the funeral of Matus;
Otto Gruner was not there. He was in jail, charged with illegal use of firearms.
.... And the next night, another group of invaders had taken over Gruner's farm. 
Allende, back in Santiago, denied having anything to do with these armed groups, 'I can't control the MIR.' But Georgie Anne Geyer, working on her own, found out that was untrue.  Which we will see in a later post.

Thursday, May 30, 2013

Football rules

In New Jersey, the NFL says they're the deciders and have filed a suit against the developers of a shopping mall, because shoppers will cause congestion and inconvenience football fans a few times a year;
“The teams have been left with no choice but to ask the Court to enforce our long-standing contractual rights in order to protect the interests of our fans,” said the owners of the [Jets and Giants football teams] in a statement. “We were surprised by the [New Jersey Sports Authority]’s sudden approval of the American Dream project without regard for the serious concerns that have been raised by the Teams.”
Alan Marcus, a spokesman for the developers, said that more than enough concessions have been made for the  two professional football teams.“We are disappointed,” Mr. Marcus said in a statement. “Clearly, the project has broad public support, is in the best economic interests of New Jersey and the region and we have every expectation of moving forward on an aggressive schedule.”
Sounds like an interference penalty is in order.

Una historia verdadera

Accepting Cicero's challenge (via Paul David), and to counter a decidedly untrue story from Jamie Galbraith (via Anthony Lewis of the NY Times) we visit an old PBS interview with Arnold Harberger for some facts about Chile and the Chicago Boys;
[The story of the University of Chicago Economics Dept's involvement with Latin American students] began with Theodore W. Schultz, who was a very great economist, won the Nobel Prize, was president of the American Association and so on, and he, in the early '50s...
I.e., long before either Salvador Allende or Augusto Pinochet had any power in Chile.
...he had a major project entitled Technical Assistance to Latin America.... On a visit to Santiago, he had dinner with the then-AID [Agency for International Developlment] director, Albion Patterson...and when Patterson heard Schultz talk, he said, "This is the kind of idea that Chile needs," Patterson got the idea of a university-to-university link between a Chilean university and the University of Chicago....we trained under that program itself around 30 Chileans, many who became later ministers and Central Bank presidents and things like that. But that set in motion a whole tradition of Chilean students coming to Chicago.... Meantime, we had a similar program started by the same Albion Patterson in Argentina. ...afterwards we had a continuing flow of Argentines, and by this time Mexicans, Brazilians, and so on were mingling in so that Chicago, in its heyday, had 40 to 50 Latin American graduate students out of a total stock of, say, 150 to 180, so they made up a very important part of the program. ... Now Latin American students can get in almost anywhere because they have shown how good they are, but in those days, they were viewed with such suspicion that it was lucky if you could find three or four at Harvard at any one time or five or six in MIT, when you could find 40 or 50 in Chicago. That is what gave Chicago such importance in the Latin American scene. 
Gee, the name Milton Friedman hasn't even come up yet.  So let's skip to the entrance from stage left of the Castro-dolator Salvador Allende;
INTERVIEWER: Tell me a bit about Chile.... Allende gets elected....
AL HARBERGER: Well, a politician of the Socialist Party, and he ran as the candidate of a left-wing coalition. Many people were surprised at the degree to which his policies, once in power, were policies that might have been explainable if he'd had a 65 percent majority, but [not when he only got a little over a third of the vote in a three way contest]....
That's how 'democratic' Allende's election was.  The Chilean people split the majority of their vote nearly equally between two non-socialist parties, and the socialist (actually Castroite Communist) snuck in to office.
 What happened [after Allende was in office] was a huge move toward socialization of the economy. There were many actual expropriations of enterprises, including the major mines, but in addition to that, there was a thing that they call intervention, which is a little bit like what we have as receivership for a bankrupt firm [where] the court appoints a person to run the firm and it isn't the owner. Well, in the Allende system, you could do that on any firm, whether it was bankrupt or not. (laughs) And by the time the Allende period was halfway through, about 90 to 95 percent of the main Chilean industrial sector had been either nationalized or intervened.
I.e., Allende expropriated the property of ordinary Chileans and, though Harberger doesn't say this, when he couldn't legally accomplish the abolition of private property he encouraged mobs to rampage throughout Chile to intimidate landowners into abandoning their property (source; Georgie Anne Geyer's Buying the Night Flight).
INTERVIEWER: ... And what was happening to the huge inflation?
AL HARBERGER: All the things got way out of hand. I don't know how things would have been if the Allende government had had decent economic advice, but they did kind of silly things. They put controls on all the prices while mounting a monetary policy that led to enormous inflationary forces. There was a point in time when there were 13, I believe, official exchange rates to the dollar. The cheapest dollar was 25 escudos, and the most expensive official dollar was 1,300 escudos, but the black market was like 1,800 at that time. You see, it was just a crazy world. The black-market prices of goods, which are usually quoted about a 20 percent premium or a 10 percent premium over the official price, they never talked that way, six times the official price, seven times, 10 times, five times. That's how it worked, and so the market was just out of function, you see. It was not working at all.
INTERVIEWER: So one other question: The CIA intervened, particularly with the [strikes].... Would you say that the economy was sabotaged by the U.S.?
AL HARBERGER: The U.S. was on that side, [and] I don't think there can be any doubt that the majority of Chileans were on that side at that moment in time.
Which means that Augusto Pinochet came to the rescue of the majority of Chileans--and after being invited to do so by Chile's Chamber of Deputies. But we're still not finding Milton Friedman playing any role here, so let's skip ahead;
INTERVIEWER: Tell me about that time Milton Friedman made his famous visit to Chile?
AL HARBERGER: Oh, Milton Friedman's visit took place in March, I believe, of 1975, and his judgment about the economy was not in any sense unique. I mean, it was what any good economist, looking at the Chilean economy at that time and seeing that kind of a mess, would say. But I think that Milton's presence probably helped to maybe stiffen the spine of people who were trying to insist on better economic policies. Maybe his remarks convinced some people that would otherwise not be convinced that this kind of change was needed.
Pinochet's coup deposing Allende took place in September 1973. So, the needed change Harberger is talking about is away from the policies of the Pinochet military government. Harberger's description of the status quo at that time being;
...inflation...was like 400 percent in 1974-'75, and it got down under 100 percent, I think for the first time, by '78 or '79, and it got down to 10 percent only in '81.....
INTERVIEWER: Of course Milton Friedman especially then became a kind of a kind of hated figure, didn't he? ....Why do you think people [hated] him?
AL HARBERGER: Well, it's a hard story there. The left wing of the world loved Allende. Allende was the first socialist elected in a Latin American country as I remember, that actually took office anyway, and he was the darling more of the European left than the American left, but we always in the United States had what we call radical student groups like SDS [Students for a Democratic Society] who took their cues from the European left, so these are the people for whom Milton Friedman then became a figure of hate. They organized demonstrations against him wherever he went, and this went on for a period of years, and I see nothing that he did to deserve that. (laughs) And he [faced it] with such courage and such strength of character, I marvel to this day at the way he took that.
Again, Harberger doesn't mention this (he may not be aware of it) but most of the demonstrations against Friedman were instigated by Yuri Andropov's KGB; it was disinformation swallowed, hook, line and sinker, by the likes of Anthony Lewis and Jack Anderson back then (and still, now, by Jamie Galbraith).
INTERVIEWER: But going back to those demonstrators, still [there's a sort of] question on Milton Friedman, because of this association. I'm not saying that it's right or wrong, but just why do you think their people are so horrified?
AL HARBERGER: Well, as I say, I think that the whole response picture to Chile has to be linked to somebody loving Allende and somebody being terribly disappointed when Allende was put out of office. Now I think if you look at human rights violations or political violations, you will find them in any Asian country almost at that time, in multiples of whatever was happening in Chile and in Latin America. You would find many other countries in which the same sort of thing was happening and was not getting that treatment, so my question, and the reason for my answer in connection with Allende, is... Allende is what distinguishes the Chilean case from all these others. I mean, Milton Friedman went to Chile for one week. You can take the top 100 economists in the country of that time, and probably 85 of them had been working seriously in places like Korea, Taiwan, Pakistan, Bolivia, Paraguay -- you name it -- and were not getting any demonstrations.
INTERVIEWER: One of the points Friedman was making was that these kind of free-market policies ultimately lead to a freer political system. In other words, was he sort of suggesting that the free-market policies would ultimately undermine Pinochet's [regime]?
AL HARBERGER: Oh, I think he always said that. He said that that you cannot have a repressive government for long within a genuinely free economic system and that the freedom is going to have to pass over to the political side, and that of course, is exactly what did happen in Chile. The evolution took quite a number of years to make, but it happened, and in that sense, Chile is an example of a peaceful transition from [authoritarianism] to a civilian democratic government.
So, the only role Friedman played with regard to Chile was to first briefly advise the government (about a year and a half after it took power) how to control a virulent inflation, and to argue that Chile needed freedom and democracy. Chile should put up a statue of Friedman in their most prominent plaza.

Wednesday, May 29, 2013

Is Jamie Galbraith Humane

Of all the economists behaving badly at the Milton Friedman symposium at Econ Journal Watch, surely none exceeds the poor form of the one who titles his contribution Mistah Friedman? He Dead.

Whatever would possess anyone with scholarly pretensions to begin that way--implying Friedman was a slave master?--when discussing the man who is arguably the greatest economist of the 20th century can't be admirable. Then to recycle an easily refuted slander is even worse;
We may surmise that Friedman’s affinity for first principles were behind his support for the Chilean dictator Augusto Pinochet, a man who granted freedom—and life itself—only to those who dared not oppose him. Here was a grisly contradiction between “economic freedom” and the real thing. My impression is that Friedman did his best to ignore Pinochet’s crimes, and then made up excuses when he had to. This is perhaps harsh. But it’s a more generous view than the alternative, which is to believe that he thought the socialists, communists, poets and musicians in the National Stadium got what they had coming.
First, Friedman was not in any way a supporter of Augusto Pinochet.  The charge of him being so is made up  almost out of whole cloth. Friedman, while in Chile for a speech at Catholic University in Santiago which was not sponsored, nor even associated with the Chilean government, agreed to meet with the General to discuss with him, for approximately forty minutes, the options he had for controlling the virulent inflation in his country.

Inflation (running to around 700% per year in mid 1974) bequeathed to Chile by the man Pinochet deposed, Salvador Allende Gossens.  By taking Friedman's advice Chile's economists managed to cut that to 10% in about a year three years. Truly a good deed done for the citizens of that country. This history is easily ascertainable; it's related in the Friedmans' memoir, Two Lucky People, including a copy of the letter Friedman wrote to Pinochet as a follow up to his meeting with him.  So Galbraith has no excuse whatsoever for his claims.

Nor should we excuse Galbraith's attempt to pretend that Pinochet didn't have real (and deadly serious) enemies; socialists, communists, poets and musicians. That phrasing is designed to obscure that the people who had been in power before Pinochet's coup were attempting to transform Chile from a republic into a Castroite dictatorship. They weren't really making much of an attempt to hide what they were doing, so Galbraith should know that fact as well.

If he doesn't, he could find out by reading the chapters in Georgie Anne Geyer's Buying the Night Flight, that concern her dealings with both Castro and Allende when she lived in Cuba. He'd see that when asked by Geyer if, when after he was in office there would be any more elections (as there weren't after Castro took power in Cuba) Allende told her;  'You don't understand. Everything will be different then.'

Which brings us to the real reason Galbraith probably feels the need to slander Friedman; it can be found in the essay Is Capitalism Humane, written in 1978 and included in Bright Promises, Dismal Performance: An Economist's Protest:
When you hear people objecting to the market or to capitalism and you examine their objections, you will find that most of those objections are objections to freedom itself.  What most people are objecting to is that the market gives people what the people want instead of what the person talking thinks the people ought to want.  That is true whether you are talking of the objections of a Galbraith to the market, whether you are talking of the objections of a Nader to the market, whether you are talking of the objections of a Marx or an Engels or a Lenin to the market.
The Galbraith referred to in the above being Jamie's more famous father J. Kenneth.  But the apple didn't fall far from the tree.  It's the same arrogance that allows him to ignore what the common people of Chile were suffering under Salvador Allende, because Allende was a socialist, a communist, maybe even a poet or musician.  The Galbraiths' kind of people.  There are never too many excuses to be made in the name of class solidarity. As for the riff raff, they should just suffer what they had coming.

So Low

The quality of this analysis is--from a Nobel laureate!--that we can't ignore a suspicion of covetousness of his neighbor's professional reputation;
I’m glad there is no Milton Friedman anywhere on the political-economy spectrum today. I think that Milton Friedmans are bad for economics and bad for society. Fruitless debates with talented (near-)extremists waste a lot of everyone’s time that could have been spent more constructively, either in research or in arguing about policy issues in a more pragmatic way.
We guess Prof. Solow doesn't thing it pragmatic that millions of American teen-agers aren't subject to their lives being disrupted by the Selective Service.  That a 25 year long Great Moderation with a mere two, short, mild recessions (1982-2007) and virtually unnoticed inflation was just pie-in-the-sky?  That Americans not having had to wait for hours to buy a few gallons of gas for their autos since January 1981, isn't an improvement in their lives?

It's not a positive development that the tax shelter industry is a thing of the past?  That some children of low income families living in inner cities have an opportunity to escape horrible public schools? That Americans being free to choose their own telephone networks and internet service providers at competitive prices, rather than take what a government enforced monopoly thinks is good for them, to fly on airlines that offer lower prices, shop at stores that have lower prices thanks to free movement of goods on non-price-regulated trucks, to exchange American dollars for whatever foreign currency one needs to travel at the best exchange rate possible...all that is fruitless?

Remind us again, what are Bob Solow's great contributions to humanity?

Axis of Envy

David Henderson recently linked to a symposium on Milton Friedman that had some very curious contributions.  From Richard Posner;
Friedman’s mature work, which can be said to have begun with his book Capitalism and Freedom (1962), largely overlapped economic and associated political developments that provided support for Friedman’s economic philosophy. His timing was perfect!
Not to mention his predictive accuracy, Dick.
The combination of slow economic growth and high inflation in the 1970s, coupled with growing evidence of excessive regulation of the transportation, telecommunications, broadcasting, electrical power, and other major industries, gave rise both to a deregulation movement at the end of that decade and to increased receptivity to Friedman’s emphasis on the economic virtues of free markets. 
Note the chronology; in 1962 Friedman, in a best selling book, promotes the virtues of free markets and the problems with centralized regulation of industry, as well as military conscription, price controls, fixed exchange rates, anti-trust law, occupational licensure.... In the 1970s, in a happy accident of timing, the nation adopts many of Friedman's prescriptions!
His economic doctrines were eagerly embraced by both President Reagan and Prime Minister Thatcher...
Actually, they were embraced by private citizens Reagan and Thatcher back in the 1960s.  Reagan used to carry a copy of Capitalism and Freedom in his suit pocket, and read from it whenever he had a free moment.
 ... and by the governments of the newly free nations of central and eastern Europe when Soviet control of the region suddenly collapsed at the end of the 1980s. That collapse, moreover, seemed an empirical vindication of free-market
Yet Friedman’s influence on public policy, like that of Hayek in Europe, asdistinct from the celebrity generated by the congeniality of his ideas to government leaders, probably was small. If one asks oneself whether Reagan and Thatcher needed Friedman to see the economic libertarian light, the answer is likely to be no. 
Of course, we don't have to speculate, since both Reagan and Thatcher DID see the light thanks, at least in large part, to Friedman. Posner seems to be in denial.  We can thank Friedman for the end to the military draft--here he influenced Richard Nixon--the replacement of the fixed exchange rates linked to gold of Bretton Woods, the end to the stagflation of the 1970s thanks to Paul Volcker accepting Friedman's dictum that inflation is always and everywhere a monetary phenomenon. And a few minor improvements such as the experiments with school vouchers that have provided some less advantaged kids a chance at an education.

The Age of Friedman really began with Volcker's monetary--followed in 1987 by Alan Greenspan's--reforms that ushered in a quarter century of unprecedented prosperity.  From the end of 1982 through the end of 2007 there were only two--short and mild--recessions.  In the preceding 25 years there were six.

Why do we have the suspicion that had Friedman not died in 2006, the unpleasantness of 2008, might have been moderated by his intellectual firepower?

More to come on this, as there are even worse slanders than Posner's that need mentioning.

Send in the Mimes

If the Laws of Supply and Demand aren't going to be allowed to allocate scarce road resources, at least keep everyone entertained;
No crosswalk at an intersection? No problem: Peatónito travels with a can of white paint and a few official-looking stencils, ready to paint the crosshatches where they might be needed. It is a pity he can't be everywhere at once.
"Peatónito is the favorite wrestler of pedestrians, wrestling for their rights," he said recently. "The pedestrian is king."
....There is no one more neglected than Mexico City's walkers, says Peatónito. 
Okay, so logic isn't his strong suit.  He's just following in the Latin American tradition of useless street theater, after Superbarrio Gómez, who helped displaced Mexico City dwellers find housing after the 1985 earthquake. He wore a red suit. Or, Fray Tormenta ("Friar Storm"), a Mexican Catholic priest who opened an orphanage and celebrated Mass in his outfit. He became the loose inspiration for the 2006 Hollywood movie "Nacho Libre."

Who is that masked hombre? A 26 year old political science student and consultant to the Mexico City government, who is emulating a former mayor of Bogota, Columbia Antanas Mockus, a math professor who resigned from his university job after mooning a group of students—also used to dress up as a masked vigilante to urge better public behavior. His own efforts to curb traffic involved firing the city's traffic cops and turning enforcement over to a troupe of 400 mimes.

Tuesday, May 28, 2013

Sus malas vidas después

Hugo lies molderin' in the grave, but his economics still haunts Venezuela;
The Catholic Church in Venezuela has said it is running out of wine to celebrate Mass because of nationwide shortages of basic supplies.
It said the scarcity of some products had forced the country's "only wine maker" to stop selling to the Church.
Critics blame the shortages on tight state control of the economy and inadequate domestic production.
But the government insists that an opposition-led conspiracy and price speculations are the problem.
Of course it couldn't be the fault of Marxist ideas.  Where have they ever failed before?

Monday, May 27, 2013

The Unbearable Whiteness of Being QWERTY

A Harvard Law School grad with an idea he hasn't bothered to think through (from 2004):
In this Essay I demonstrate that a network economic analysis of race provides an important and intuitive explanation of racial inequality. In short, Microsoft’s Windows operating system, or the QWERTY keyboard, or the standard (non-metric) measurement system,and it is difficult to dislodge for many of the same reasons. ....
This insight casts new light on mainstream explanations of racial inequality, supporting the critique that (1) current racial inequality is not the result of unequal “merit,” but is the legacy of history, and (2) no racist intent or conspiracy is required for this inequality to continue. Rather, specific intent and determination is required to dislodge it.
'Dislodge' whiteness?  Wouldn't that require 'racist intent or conspiracy'?

Brant T. Lee of the University of Akron School of Law, further explains his understanding of what he has dubbed network economics effects;
...because of various forms of positive feedback, network markets tend to “lock in” to the dominant standard, which proves “sticky,” or difficult to change or penetrate. I describe in Part II how various complementary goods and services support Whiteness and further strengthen its dominance. In addition, a collective action problem makes it costly for a firm or individual to switch standards unless everyone else does at essentially the same time. Thus Whiteness tends to persist as a racial standard. I argue that displacing Whiteness would require personal and institutional retraining.
Third, the establishment of dominant standards in network markets is“path-dependent,” that is, it is contingent on small events and historical circumstance rather than optimal intrinsic features, utility, or merit. In Part III I argue that the dominance of Whiteness in the economy is primarily due to the history of the social and legal construction of Whiteness, rather than to superior merit and open competition. 
Left to our imaginations is why the Chinese, with a head start of thousands of years of civilization didn't lock-in their dominance, but were displaced by the inferior white guys coming along later.  Nor, why, say, English wasn't precluded from displacing French as the dominant language of European trade and diplomacy.  Among other puzzles.
The ability to speak English is virtually useless unless there are others who speak the same language. The more people there are who speak English, the more valuable that ability is. English speakers share a common technical communication standard—here, a set of words,definitions, grammatical rules, and idioms—that allows them to communicate with a great number of people. Thus one might expect that a dominant language standard would develop. Indeed, some claim that despite intense cultural and nationalist opposition, English is becoming the de facto worldwide language standard, especially for business, scientific,and tourism purposes.
That fact has implications for his theory which seem not to have penetrated.

Google Up

While governments are attempting to force electric cars on an unwilling public, it's business as usual for business; i.e. providing useful products to consumers. Which, for people who were scared to death of Microsoft two decades ago, ought to be at least as traumatic.  Amir Efrati, in the Wall Street Journal details Google's plans to take over the world;
Google Inc. is deep into a multipronged effort to build and help run wireless networks in emerging markets as part of a plan to connect a billion or more new people to the Internet.
These wireless networks would serve areas such as sub-Saharan Africa and Southeast Asia to dwellers outside of major cities where wired Internet connections aren't available, said people familiar with the strategy.
The networks also could be used to improve Internet speeds in urban centers, these people said.
Since that eventually will threaten the world as major corporations like AT&T, Verizon and cable television systems know it, it should only be a matter of time before the hysteria begins.  Where would we be if corporations were left alone to improve the standards of living of the world? Surely this will make someone indignant;
Google and Microsoft Corp...normally archrivals, have cooperated to bring government leaders and wireless-industry entrepreneurs together to consider ways to open up the broadcast airwaves for public use. Next week, the companies are hosting a two-day conference in Dakar, Senegal, to discuss the issue with regulators from numerous countries.
Google has also funded and conducted several small-scale trials, many of them public, involving wireless networks that use TV broadcast airwaves in the U.S. and beyond. Microsoft, which has its own Web services such as Bing search and Skype video chat, also is conducting such trials in Africa.

Es ist elektrisch

And they have ways of making you motor für das Vaterland, like it or not;
In efforts to promote environment-friendly mobility, the German government is seeking to boost the number of electric cars to one million by 2020. But the cars' shortcomings keep Germans from driving automotive change.
Out of about 43 million passenger cars currently registered in Germany, not more than 7,000 are electrically driven. Nevertheless, the country's environment minister Peter Altmaier still clings to the government's ambitious goal of one million electric cars to be registered by 2020.
"We need to promote the use of e-cars as company cars," he told an inauguration ceremony for an e-mobility project run by German mail and logistics firm Deutsche Post. By the end of the year, the former state-owned company aims to establish a fleet of 79 electric delivery trucks.
79! A start, we guess. A German government clinging to an unrealistic goal, though...problem;
For ordinary German drivers, electrically driven automobiles were still riddled with problems, ranging from the limited mileage achieved by the cars to a lack of re-charging points and insufficient home infrastructure for re-charging.
In addition, e-cars cost about 50 percent more than conventional vehicles, [Stefan] Bratzel [director of the Center for Automotive Management - a research think tank] said, which hardly anyone was willing to pay. He urged manufacturers to close the price gap within the next few years. 
If they know what's good for them?

Saturday, May 25, 2013

No va

Mad Men mystery solved!  By the Visible Measures blog; the top secret, designed by a computer, super car of 1968 that Don Draper and friends have won the right to advertise, is...the Chevy Vega.  And they gave away Jaguar to get it.

Talk about your pyrrhic victory. The Vega--though initially it sold well--is by consensus one of the worst cars ever made in the USA. Having Chevrolet for a client in the early 1970s was also nearly lethal for its real life ad agency;
In September 1970, GM was crippled by a United Auto Workers strike. It led to the company suspending its advertising, according to Ad Age. As a result Campbell Ewald, Chevrolet's agency at the time, had to cut salaries twice and furlough many of its employees. If Mad Men sticks close to the GM's history, as they often do, it may mean tough times ahead for the [Draper, et al.] agency.
GM recovered from that strike, but there was a bigger problem on the horizon, the 1973 Arab oil embargo that made small, fuel efficient cars suddenly desirable, even for Americans.  But GM was stuck with its turkey--and Ford with its, the Pinto--which gave the perfect opportunity for the Japanese to market their higher quality Datsuns, Hondas and Toyotas.

That even though they faced the positive network effects of the Big Three, for whose cars parts and service were readily available. Turns out that America wasn't path dependent on GM, Ford and Chrysler at all.

Btw, 'vega' in Spanish means valley, or low point.  That calls to mind GM's other naming debacle, the Nova, which was wildly successful north of the Rio Grande, but not much of a seller in Mexico and South America. Probably because 'no va' means, 'it doesn't go' in Spanish.

Friday, May 24, 2013

Qubit or not qubit

John Naughton, in The Observer, points out that some of the very businesses who are the targets of the Dept. of Justice's anti-trust division, are quietly working to drastically increase computer speeds;
 The bits that conventional computers use are implemented by transistors that can either be on (1) or off (0). Qubits, in contrast, can be both on and off at the same time, which implies that they could be used to carry out two or more calculations simultaneously. In principle, therefore, quantum computers should run much faster than conventional, silicon-based ones, at least in calculations where parallel processing is helpful.
And it's a little more than just 'in principle', it's happening;
 ...a Canadian company called D-Wave — whose backers include Amazon boss Jeff Bezos and the “investment arm” of the CIA (I am not making this up) — was quietly getting on with building and marketing a quantum computer. In 2011, D-Wave sold its first machine — a 128-qubit computer — to military contractor Lockheed Martin. And last week it was announced that D-Wave had sold a more powerful machine to a consortium led by Google and NASA and a number of leading universities in the United States. 
We're sure Paul David is suitably appalled that a government agency hasn't stepped in to put a halt to these impatient entrepreneurs who might put us on the wrong path.

Don't Mention It

The BBC's Digital Media Initiative, because it was a complete waste of nearly  one hundred million Pounds;
The DMI, which was dubbed Don’t Mention It by BBC staff because of repeated delays and failed attempts to rescue the scheme, was designed to do away with videotapes and record all footage on digital media to allow staff to access and edit it from their computers.
The BBC said that the total amount wasted on the project would be £98.4m.
....The project was approved by the BBC Trust in 2008 but proved so unreliable that old-fashioned tape editing machines had to be installed recently at the corporation’s Broadcasting House headquarters.
And now a Beeb spokesman admits it can simply buy the needed digital technology on the open market;
.... creating the system had proved “far more challenging than expected” and there were now alternatives available on the market.
 He added: “The pace of technological and digital change has been rapid; business and production requirements changed within the BBC; and the industry has developed standardised off-the-shelf digital production tools that did not exist five years ago.”
Keep a stiff upper lip.

Thursday, May 23, 2013

The Third Degree

Economists Klaus Desmet and Stephen L. Parente say that's what it took to rid Europe of innovation blockers;
...we argue that two conditions were necessary for specialised workers to form a guild: first, switching to a new technology must be profitable for a would-be adopter, and second, profits should be insufficient to cover the cost of overcoming workers' resistance. For small markets where competition is weak, firms have no desire to change their production process as profits from technology adoption are negative. Hence workers have no incentive to organise into guilds. For intermediate-sized markets with modest competition, technology adoption is profitable in the sense of covering any fixed research-and-development cost, but not sufficiently so to be able to break the resistance of workers. Hence, guilds appear and block the introduction of cost-saving technologies in their industries. For large markets with intense competition, profits from technology adoption are sufficiently large to give firms enough firepower to either defeat guilds on their own or influence government policy in their favour. Consequently, guilds disappeared and more productive technology diffuses throughout the economy.
Yes, where there are profits to be had adopting a new technology, it happens.  And the world is still looking for an instance of where such a technology was known to exist but the opportunity wasn't seized.  As Paul Krugman once said, If there is a really crummy technology out there that we have locked into, then it will be worth it for someone to pay the cost involved in getting people to switch.

Wednesday, May 22, 2013

Hey, a girl's gotta make a living

Even if she's the daughter of a former POTUS and Sec'y of State, it doesn't mean she doesn't need a trade;
At the tender age of 33, the former first daughter [Chelsea Clinton] has racked up an extensive resume: Management consultant, hedge-funder, broadcast journalist, education activist, doctoral student — now co-founder of a multicultural center at NYU, where she worked as an assistant vice provost.
Maybe she's responsible for the stubbornly high unemployment rate in America.  But, in case she stumbles, she has a safety net.  Her husband--himself the son of a former congressperson--is a millionaire investment banker himself; Two months ago, the couple traded their $4 million starter apartment for a $10.5 million condo in Manhattan, according to several media reports. 

The rich are different from you and me, wrote Scott Fitzgerald, for those who got their money by trading on their parents' political clout, undoubtedly true.

La résistance est feudal

The Académie Française has spoken, and spoken, never moves on...and doesn't want you to either, Frenchmen;
Few countries guard their linguistic heritage as jealously as France, and defend it so vigorously from foreign threats - such as the growing worldwide influence of English. Though, interestingly, the institution was originally founded by Cardinal Richelieu [in 1635] to fight off the invasion of Italian in the French language. Today, there are as many Italian as there are English originated words in the French language.
Which story has some implications for our old friend path dependence. Remember that Stanford economist Paul David favors Richelieuian measures for products with network effects, and language certainly has that. But aren't the French now locked-in to an inferior path thanks to just what David thinks is the solution to (admittedly a non-existent) problem.

French is histoire. The left-wing daily newspaper (oh so appropriately named) Liberation; 
...represents a growing fringe of the French population - young, urban, trendy, the kind which, in the last 20 years, has adopted franglais in their daily life.
For them, the work of the Academie Francaise - which offers grammatical advice and alternatives to new foreign words - now feels irrelevant and obsolete. They like nothing more than adding English sounding suffixes to French words, or combining English words into new terms such as "fooding" (made out of "food" and "feeling").
Because the world has moved on. Today there are over one billion speakers of Mandarin Chinese, almost 800 million English speakers, over 460 million Spanish, but only a little more than 200 million who use French.  On the internet even Russian is used more frequently than français.

And French had something of a first mover advantage on English, as it once was the language of diplomacy and international business, but now that's evolved to English.  Freely chosen, because the language of Shakespeare works better. Davidianism--authoritarianism--wants to deny a better way to over forty million Frenchmen.

Tuesday, May 21, 2013

Tale of two mails

In the United States the Postal Service's business of moving pieces of paper (and small parcels) is, even though a legally protected monopoly, a losing proposition; The U.S. Postal System lost $1.9 billion in the second quarter of its fiscal year, which ended on March 31. 

But its Brit cousins are so successful at the same thing they're going public;
Royal Mail unveiled a big jump in profits to £440 million as it took another step towards a possible stock market flotation later this year.
....The performance is expected to encourage the Government to cash in on the turnaround by pressing ahead with a privatisation this year, despite opposition from unions representing postal workers and managers.
Business Secretary Vince Cable insisted there was ''no alternative'' to privatising the Royal Mail and said the organisation still faces a ''fundamental threat'' from email that meant it must be reformed in order to survive.
Why didn't we think of that.

But not for me

In Paul David's utopian vision, as we've seen, others should have their ideas scrutinized by the authorities;
One thing that public policy could do is to try to delay the market from committing to the future inextricably, before enough information has been obtained about the likely technical or organizational and legal implications, of an early, precedent-setting decision. 
So much for ye.  But, reading a little further down in this amazing proposal, we see that David doesn't think his own ideas should be treated with any such delay;

Once the concept and the ideas surrounding path dependence are properly understood, there can be no reason to construe them as necessarily corrupting the discipline of economics, or to fear that once admitted they would be subversive of all laissez-faire policies. There simply are no good grounds to go on actively resisting these ideas.... Nor is there even a sound precautionary case for seeking to contain their spread until it can be determined what would become of the grand edifice of economic analysis as we know it....
After all, he's a scholar...disinterested...wanting only the best for mankind. Time's a wastin'.

Branch Davidianism

After some embarrassing, and rather obvious, criticisms of his theory of path dependence in the 1990s, Paul David responded as he does best. He unleashed an avalanche of words and hoped that no one would notice just exactly what it was that he believed in.  Buried in all this obfuscatory double talk was;

One thing that public policy could do is to try to delay the market from committing to the future inextricably, before enough information has been obtained about the likely technical or organizational and legal implications, of an early, precedent-setting decision. 
In other words, preserving open options for a longer period than impatient market agents would wish is the generic wisdom that history has to offer to public policy makers....
That is, some government agency should have veto power over the kind of entrepreneurial efforts that have given us our own computers, near unlimited access to information that previously was only available to graduate students enrolled in university programs, and a host of devices that we can hold in our hands that were probably undreamed of by David when he wrote the above. Things like iPads, iPhones and Android devices, social networks like Facebook and Linked-in and whatever else is now on the drawing boards.

Mussolini's desires seem almost quaint in comparison; Everything within the state. Nothing outside the state. Nothing against the state. David was asking for a form of totalitarian control of innovation, to control the future.  Though to be fair, he showed no understanding of what the implications of his ideas would be.

But, he's at least partially getting what he wished for.  As the latest developments carried out in the name of anti-trust law make clear;
EU antitrust regulators have given some of Google's rivals more time to study its proposals to settle anti-competitive complaints, which could provide more leverage to pry further concessions from the Internet search giant.
The European Commission last month told interested parties they had until May 26 to say if they are satisfied with the offer by the world's most popular search engine to mark out its services from rival products in Internet search results.
The EU antitrust authority has given some rivals until June 27 to complete their technical analysis of Google's proposals, said one person familiar with the matter.
Merely trying to delay the market from committing to the future inextricably, that's all they're doing.  It'll all be in the public interest, of course.

Balfour Declaration

Not the one from the Foreign Minister that committed World War I era Britain to establishing a Jewish state in Palestine, but the one that ought to be better known, 'History doesn't repeat itself.  Historians repeat each other.'

As we've been recently documenting, so do economists, some of them with Nobel prizes (Paul Krugman, Ken Arrow). Then, often through journalism, those repeated stories, even when demonstrated to be factually inaccurate, get into the public consciousness and are exceptionally hard to dislodge--locked-in, ha ha. H.L Mencken exposed the process in his famous Bathtub Hoax back in 1917, when he admitted that he'd made up a history of the bathtub;
 Pretty soon I began to encounter my preposterous "facts" in the writings of other men. They began to be used by chiropractors and other such quacks as evidence of the stupidity of medical men. They began to be cited by medical men as proof of the progress of public hygiene. They got into learned journals. They were alluded to on the floor of congress. They crossed the ocean, and were discussed solemnly in England and on the continent. Finally, I began to find them in standard works of reference. Today, I believe, they are accepted as gospel everywhere on earth. To question them becomes as hazardous as to question the Norman invasion.
The most recent example at hand from the Telegraph of London by Harry Wallop just last month;
Qwerty has survived for the simple reason that it got there first and provided a machine for a world that craved standardisation. This was the era when a nut produced in Manchester would not fit a bolt manufactured in London.
As Professor Doron Swade, a computer historian, says: “The big lesson of Qwerty was the fact that it was standard; it wasn’t the most efficient or the most ergonomically sound.” 
Just to show we're not picking on the Telegraph, this is from the BBC in 2010;

"Imagine you're on the maiden flight of that new ultra-modern aircraft, the Dreamliner. And you notice it's being towed to the runway by donkeys. Better still, camels," explains comedian Stephen Fry, the presenter of a new series on BBC Radio 4 that kicks off with a look at the origins of Qwerty.
"In exactly the same way, the Qwerty keyboard is an ancient system attached to our most modern devices. And like the metaphorical camel, it was designed by way of a series of compromises."
....the Qwerty keyboard and its inventor could be accused of "conspiracy to pervert the course of language and to limit the speed of creativity and language input, endangering billions with repetitive strain injury".Start QuoteQwerty can be seen, he argues, as "a deliberate spanner in the works of language, metaphorically and technologically".
Qwerty is "not ergonomic", agrees Professor Koichi Yasuoka of Kyoto University, a world expert on the development of the keyboard. 
And that man has a doctorate!  As did the instigator of this hoax--though he went to his grave without admitting that was what it was--Professor August Dvorak.

In an Associated Press article carried by the New York Times, on October 7, 1943, it is reported that an unnamed Navy typist was typing at 180 words per minute, well above the then claimed world speed record of 149 WPM, using; of the Navy’s new typewriters, its keyboard designed by Lieut. Comdr. August Dvorak.  Formerly of the University of Washington and now the department’s top time and motion study expert….
The Navy disclosed that….The Navy said, is an increased output of about 35 per cent.
Which sounds suspiciously like the Navy was Dvorak himself, promoting his patented machine to a gullible reporter. And nearly 70 years later the story is still being repeated.  And not just by English comedians.

Kiwi ERA; Not our problem, but yours

This story from New Zealand ought to be a lesson, but we're not betting on it;
Restaurant owners found to have wrongfully sacked a chef they suspected was stoned at work have been left "disillusioned" by the Employment Relations Authority process.
.... the Employment Relations Authority (ERA) has ruled that Mr Tierney was unjustifiably dismissed because the Pablecheques breached minimum standards of procedural fairness. He has been awarded $6000 in compensation.
"Despite Mr and Mrs Pablecheque's insistence at the investigation meeting that intoxication, with its implication of drunkenness, was relied on it is clear that at the time of deciding to dismiss, Mr and Mrs Pablecheque considered Mr Tierney to have been affected by drug use rather than drunk or hung over," said ERA member Christine Hickey.
Other claims that he had stolen a soft drink from the Lobster Inn's stores and had acted dangerously on the night were not proven.
Today, Mrs Pablecheque told APNZ she was "disillusioned" at the outcome of her first experience with the ERA in 15 years as an employer.
...."We have other staff to consider. We were losing staff because of his actions, so you're caught between a rock and a hard place aren't you."
Mr Tierney, who is now working as a commis chef at Addington Events Centre in Christchurch, was glad that the ERA has cleared his name.
....Mr Tierney says he had never taken drugs, and put his actions that night down to "just being lazy" or "having a slow night".
Naturally he deserves to be compensated to the tune of $6,000.  He was just lazy.

Pazifisten für Soldaten

In Germany, the anti-war mongers worry that we'll be taking work away from the warriors;
So far, drones that act entirely on their own - and could be termed autonomous combat robots - do not yet exist. Human operators decide whether or not to attack. However, there is great concern that "military pressure will finally lead to the introduction of autonomous systems," says Jürgen Altmann. The physicist and peace researcher at Dortmund Technical University in Germany co-founded the International Committee for Robot Arms Control (ICRAC), an NGO that urges an international debate on combat robots, including clear rules to restrict their use.
Considering the record of Germany's Wehrmacht over the recent past, this seems a positive development. Though there is no hint that the authors of this article, nor their interviewees are alert to the irony;
To prevent an arms race, ICRAC and other international NGOs have launched a campaign that demands discouraging the development, production and use of autonomous combat robots: "Stop Killer Robots".
A German Green party politician Agnieszka Brugger even advocates outlawing autonomous weapons systems. "We would be well-advised not to blindly go along with such armament dynamics, but instead to refocus on the risks inherent in the technology," she says. Combat robots cannot discern between enemy combatants and civilians - in a combat operation, they are not able to act according to international law. Agnieszka Brugger and Jürgen Altmann agree: replacing soldiers with machines in combat could also lead to a lowering of military leaders' threshold for violence. 
As compared to how well soldiers discriminated between combatants and civilians in the period 1939-45?

Monday, May 20, 2013

Slow down, you move too fast

If you're Sean Wrona and have won the $2,000 first prize in the 2010 Ultimate Typing Championship at the South by Southwest Interactive Conference, you're Paul David, Brian Arthur and Douglas Puffert's worst nightmare.  That's because Sean typed 163 WPM on the supposedly inferior QWERTY keyboard, besting all other contestants.

[Udate] Mr. Wrona is apparently also inconvenient for the Daily Telegraph's Harry Wallop who seems to now hold the record for most recent repetition of the urban myth that is QWERTYnomics;

...typing using a Qwerty just isn’t very quick. Also, the spacing out of common pairings of letters is responsible for millions of people developing repetitive strain injury.
There are many other machines that allow people to type more swiftly and safely, most notably the Dvoˇrák board (invented by a distant cousin of the Czech composer), developed in the Thirties. Crucially, this version allows your fingers to jump and stretch less and your left hand and right hand are used equally – with a Qwerty, your left hand does well over half the work. The world record for typing on this version is more than 200 words a minute, a speed that would cause snapped fingers with a Qwerty board.

They have words for it

And hope the rest of the world won't notice that they're on the road to oblivion.  How do you say it;
Concessions ensuring the use of English or other foreign languages only accounts for part of the course were still “unacceptable”, critics said.
"It is the cultural heritage which is at stake," said Claudine Kahane, a senior official of Snesup-FSU, one of the main unions in the education sector.
Journalist Bernard Pivot, a leading figure in French cultural circles who long fronted a national dictation contest, said it could kill off "the language of Moliere."
"If we allow English to be introduced into our universities and for teaching science and the modern world, French will be vandalised and become poorer," he said.
"It will turn into a commonplace language, or worse, a dead language."
Only if it doesn't meet people's needs, will it. (One might suggest that the positive network effects of learning French won't repay costs of joining.) We suggest the French intellectuals and unionists take a long le week-end off, and think again.

Niche for art's sake

Punk rockers should thank capitalism, but probably won't, for its help in getting out their...well, whatever it is they do;

The humble cassette tape, a happy memory for many music fans of a certain age, has staged a comeback for one Canadian company.
The first order came in 1989: 10 cassettes. With that began Analogue Media Technologies, a company created to help bands market their music.
Musicians would bring finished master recordings and graphic design templates, and Analogue, now also called, would turn those materials into slickly produced albums, complete with labels, cover art and liner notes, ready for sale or distribution.
It isn't just one Canadian company cashing in, as several in the United States offer the same services too.  But what would entrepreneurs do without academics to study them;
"Small businesses are in a unique position to take advantage of trends because they can move quickly," says Helena Yli-Renko, associate professor of clinical entrepreneurship at the Lloyd Greif Center for Entrepreneurial Studies at the University of Southern California.
They are also better placed to serve a niche market, she says. Small companies such as Analogue can see big profits from filling a niche - profits that might be negligible to a huge conglomerate working with more mainstream customers. 
 'Profits' are what make the world a happy place.  Even for artists.