268 (8 June 2016)

Welcome to week 268!  The articles below caught my attention this week.  Please note that what are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********).  The links to articles preceded by [SR] require a subscription to be read in their entirety, although complete articles may frequently be found by an Internet title search.

(1 June 2016): “America’s Workforce Runs On Narcotic Stimulants” (http://daily.jstor.org/americas-workforce-narcotic-stimulants/)

——–“Over the past five years, reports of a growing amphetamine epidemic in the United States have surfaced in unlikely places: From gym rats to Hollywood actresses to fearful college kids and stressed writers, there’s been no lack of exposes and personal interviews on the country’s prescription amphetamine and methamphetamine users.  Yet of all the reports, some of the most disturbing have been those chronicling the use of ADHD drugs to keep up in the workplace.  Abuse by young professionals is distressingly common—Wall Street traders, software engineers, dentists, nurses, and lawyers, all cracked out of their minds trying to keep up with the competition.”

********Or, one might add, to get an edge on the competition.  This JSTOR Daily article takes a look at both the present and past of the use of narcotic stimulants and some other psychoactive drugs, and provides many relevant references.  It was interesting to read that W.H. Auden and Ayn Rand “couldn’t work without their daily doses of amphetamines.”  Evidently, completion of The Fountainhead was facilitated by Rand’s use of Benzedrine (http://www.slate.com/articles/arts/culturebox/features/2013/daily_rituals/auden_sartre_graham_greene_ayn_rand_they_loved_amphetamines.html).

********I have been wondering about my interest in reading about drugs and I have come to the conclusion that they provide a ready context for exploring the invisible forces: the invisible hand (economic forces), the invisible foot (legal and political forces), and the invisible handshake (social and historical forces).  For example, the invisible foot defines the domains of legal and “black” markets, where the invisible hand is at work, although in different ways.  I’ll share some additional thoughts about this system of forces at a later time.  My current reading—Narco-Nomics: How to Run a Drug Cartel (http://www.amazon.com/Narconomics-How-Run-Drug-Cartel/dp/1610395832/), by Tom Wainwright—has contributed to my thoughts about this.

(3 June 2016): “Environmental Crimes May Cost World Economy $258 Billion: Study” (http://www.bloomberg.com/news/articles/2016-06-03/environmental-crimes-may-cost-world-economy-258-billion-study)

——–On the eve of World Environment Day, the United Nations Environment Program and Interpol released a report indicating that “Environmental crimes are rising due to weak laws and enforcement, costing the global economy as much as a record $258 billion, about a quarter more than previously estimated.”  The report also said that “proceeds from crimes ranging from illegal logging to the trafficking of hazardous waste and illicit gold mining are funding rebel groups and criminal syndicates.”

********You can learn more about the report, including access to a downloadable full report, at: http://www.unep.org/NewsCentre/default.aspx?DocumentID=27076&ArticleID=36202.

(4 June 2016): “My Transgender Transition: When Donald Became Deirdre” (http://www.wsj.com/articles/transgender-when-donald-became-deirdre-1464967229)

********Deirdre McCloskey is “distinguished emerita of economics, history, English and communication at the University of Illinois at Chicago.”  In a long and prolific career, she has written widely and well, most recently Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World (http://www.amazon.com/Bourgeois-Equality-Capital-Institutions-Enriched/dp/022633399X/).  She relates her gender transition in Crossing: A Memoir (http://www.amazon.com/Crossing-Memoir-Deirdre-N-McCloskey/dp/0226556697/), which was published in 1999.  McCloskey was educated, both undergraduate and Ph.D., at Harvard and earned tenure at the University of Chicago in 1975.  Her Curriculum Vitae is online at: http://www.deirdremccloskey.com/main/vita.php.  Deirdre McCloskey brings a human face and a sense of humor to contemporary issues about who should use what bathroom.

(4 June 2016): “The Rise and Fall of Iridium” [SR](http://www.wsj.com/articles/the-fall-and-rise-of-iridium-1464980784)

——–[This is a review of Eccentric Orbits: The Iridium Story, by John Bloom.]  “Unless you happen to be a sailor, scientist or survivalist, there’s probably only a middling chance that the name Iridium rings a bell.  But a decade and a half ago it was front-page news—an ill-fated satellite-phone company whose failure represented one of the largest bankruptcies in American history.  Launched in 1998 . . . the Iridium system was ballyhooed as a technological marvel, which indeed it was: Dozens of interlinked satellites, launched into a low-earth elliptical orbit, would offer coverage anywhere on the globe to anyone who owned a satellite-compatible handset.  At a time when cell phone usage stood at only 300 million (the number is 7 billion today), Iridium promised to revolutionize mobile communications forever.”  That didn’t happen, in part because of a flawed marketing plan.  “We tend to forget that one of the big innovations of the early cellular-phone era was not the technology itself but the pricing plans . . . These make expensive phones affordable to almost anyone and helped the networks expands quickly.”  In contrast, the Iridium handsets were “extremely costly, at around $3,000, but the pricing plans often left users with bills well in excess of $3 per minute.  Even worse, . . . Iridium couldn’t really reduce its prices, because [parent-company] Motorola had structured the business so as to ensure that large mandatory payments . . . would go directly from Iridium to Motorola. . . . And it meant that Iridium was in financial straits before it even connected its first caller.”

********You can learn more about the book at: https://www.amazon.com/Eccentric-Orbits-Iridium-John-Bloom/dp/0802121683/.  The reviewer of Eccentric Orbits is Jon Gertner, the author of the well-regarded The Idea Factory: Bell Labs and the Great Age of American Innovation (https://www.amazon.com/Idea-Factory-Great-American-Innovation/dp/0143122797/).  Eventually, a new CEO for Iridium—Dan Colussy—was able to create a new business model and secure investors to create a viable business.  Supporters of the new direction were “a group of government technocrats and Pentagon” who became convinced that the system was “too valuable to destroy.”  In essence, “The Iridium market was any place in the world where your phone was the only phone.”  Over the ensuing decades “Mr. Colussy begins to demonstrate . . . that the company didn’t get the technology wrong.  It got the market wrong.”  The review is a reminder of how mechanically, perhaps even magically, pricing decisions tend to dealt with in economic textbooks.  An exception to this is Microeconomics, by Goolsbee, Levitt, and Syverson, all of the University of Chicago, which is now available in a second edition.  You can learn more about the book at: https://www.amazon.com/Microeconomics-Austan-Goolsbee/dp/1464187029/.

********While we are on the subject of prices, it is perhaps worth noting that the same market structures that enable firms to exercise their creativity in constructing prices also provide an opportunity for governments to exercise creativity in setting prices.  I have two examples in mind.  One is the recent advocacy of a $500 per semester tuition at certain universities in the University of North Carolina system (http://www.newsobserver.com/news/local/education/article81232307.html) and another is minimum-unit pricing on alcohol in Scotland [SR](http://www.wsj.com/articles/alcohol-makers-await-scottish-vote-1465119010).  Evidently, wherever there is an opportunity to exercise market power by firms, there is also an opportunity to exercise political power by governments.  The invisible foot, then, has a role to play in enabling and controlling the exercise of power by firms and governments.

(4 June 2016): “A Guaranteed Income for Every American” (http://www.wsj.com/articles/a-guaranteed-income-for-every-american-1464969586)

********This seemed to be the week for important news outlets to discuss the idea of Universal Basic Income (UBI).  This article, “The Saturday Essay,” is by Charles Murray, “the W.H. Brady Scholar at the American Enterprise Institute.”  He first advanced the idea in 2006 in the book In Our Hands: A Plan to Replace the Welfare State.  It has now been revised and updated for 2016.  You can learn more about it at: https://www.amazon.com/Our-Hands-Replace-Welfare-State/dp/1442260718/.  Another reason for the UBI to be “in the news” is the vote that took place last weekend in Switzerland regarding the possible adoption of a UBI, which was soundly defeated (http://www.pbs.org/newshour/making-sense/why-universal-basic-income-isnt-going-away-any-time-soon/).  The Economist discussed the UBI this week in one of its leaders (http://www.economist.com/news/leaders/21699907-proponents-basic-income-underestimate-how-disruptive-it-would-be-basically-flawed) and at length in a Briefing (http://www.economist.com/news/briefing/21699910-arguments-state-stipend-payable-all-citizens-are-being-heard-more-widely-sighing).

********The UBI idea has been around for a long time, with Milton Friedman’s negative income tax (https://en.wikipedia.org/wiki/Negative_income_tax) being a direct forerunner, as Charles Murray notes.  An essential element of Murray’s advocacy of a UBI is the elimination of virtually all existing welfare programs, an approach that makes the budgetary cost less than it would otherwise be.  In my search for relevant materials, I ran across the website of the Basic Income Earth Network (http://www.basicincome.org/), an organization that “was founded in 1986 to serve as a link between individuals and groups committed to or interested in basic and income.”  It is an intriguing site and shows that UBI is being discussed in many venues across the world, even in the U.S.  Murray argues that the changing nature of work brought on by the ongoing digital revolution is making consideration of such plans necessary.

(7 June 2016): “Putin Is Growing Organic Power One T-34 Tank-Tomato at a Time” (http://www.bloomberg.com/news/features/2016-06-07/putin-is-growing-organic-power-one-t-34-tank-tomato-at-a-time)

——–“Stung by oil’s collapse, the ruble’s plunge, financial sanctions over Ukraine and the longest recession of his 16-year rule, [Vladimir] Putin, 63, is seeking to minimize Russia’s reliance on markets he can’t control.  Counter-sanctions imposed on food imports and an unprecedented raft of subsidies have made many areas of farming more profitable than even crude, which Putin once called Russia’s ‘golden goose.’”  Contributing to recent success in food production has been grain.  “Russia overtook the U.S. this year to become the biggest exporter of wheat—a milestone that followed bumper yields of corn, rice, soybeans and buckwheat.  These strong harvests and Putin’s financial incentives have set off a land rush in the fabled Black Earth belt of central Russia and other fertile regions.”

********As the article notes, turning “the world’s largest country into a food colossus is a goal with a long history that faces an equally lengthy list of challenges.  Soviet leaders from Lenin to Khrushchev all sought to impose sweeping changes on the industry, often with tragic results.”   Contributing to those failures, of course, were the flawed biological ideas of Lysenko (https://en.wikipedia.org/wiki/Trofim_Lysenko), who endorsed Lamarck’s (https://en.wikipedia.org/wiki/Jean-Baptiste_Lamarck) notion that “acquired characteristics are inherited.”  Ideas, both true and untrue, affect agricultural output.

(8 June 2016): “Neighbors Clash in Silicon Valley” [SR](http://www.wsj.com/articles/neighbors-clash-in-silicon-valley-1465291802)

——–Cities in Silicon Valley are generating more jobs than housing.  This is leading to conflict between the relatively small Santa Clara (120,000) and the relatively large San Jose (roughly 1 million) as Santa Clara seeks projects a development that “would add 49,000 jobs but just 16,000 housing units citywide by 2035.”  San Jose “has taken the rare step of publicly opposing the project, saying it would add far too many jobs, exacerbating the region’s housing shortage.”

********A problem, I suspect, that many cities would like to have, although it still not easy to address.  Given the challenges of affordable housing in places like Asheville, North Carolina (http://www.citizen-times.com/story/news/local/2015/04/25/ashevilles-plans-address-lack-affordable-housing/26378639/), it is clear that current approaches to urban housing need work.

May you have a good week!

Bruce

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