Who are the most influential businessmen in history?
Joel Mokyr offers his list:
Matthew Boulton (1728-1809) †¢ Powered Industrial Revolution (Marginal Revolution’s first post was on Boulton and his friends.)
Andrew Carnegie (1835-1919) †¢ Carnegie’s Steel Built America
Walt Disney (1901-1966) †¢ Mega Media Blueprint
Henry Ford (1863-1947) †¢ Democratized Transportation
Edward H. Harriman (1848-1909) †¢ Proto-turn-around artist
Henry J. Kaiser (1882-1967) †¢ Fathered the HMO
Ray Kroc (1902-1984) †¢ Founding Father Of the Fast-Food Nation
William Lever (1851-1925) †¢ Invented “The Brand”
Henry Luce (1898-1967) †¢ Mass Media Pioneer
J. P. Morgan (1837-1913) †¢ Saved Wall Street
Alfred Nobel (1833-1896) †¢ Invented Dynamite, Holding Company
John D. Rockefeller (1839-1937) †¢ Spawned Global Energy Industry
Meyer Amschel Rothschild (1744-1812) †¢ International Financier Pioneer
Alfred P. Sloan (1875-1966) †¢ The Perfect Organization Man
Gerard Swope (1872-1957) †¢ Wove Capitalism’s Safety Net
Sakichi Toyoda (1867-1930) †¢ Smarter Machines Sage
Sam Walton (1918-1992) †¢ Perfected Mass Retailing
Aaron Montgomery Ward (1843-1913) †¢ “No Store” Retailer
Thomas J. Watson Jr. (1914-1993) †¢ Wired Corporate America
Josiah Wedgwood (1730-1795) †¢ Invented Celebrity Endorsements
A good list, but it fails to reflect just how much business has transformed our society. How about Zukor, Laemmle, Fox, or Cohn, some of the early founders of Hollywood? You could add the Medici, the unknown father of double-entry bookkeeping, or how about Gutenberg for that matter?
Here is the complete article. Thanks to Lynne Kiesling for the pointer.
My whereabouts
Tomorrow I will be back at UNESCO, attending another meeting on cultural diversity. Several countries, most notably France, would like UNESCO to have the power to overturn the free trade commitments made through the WTO and the EU for that matter. Did you know that Brussels has told France that it must allow books to be advertised on television, something previously forbidden?
France and others would like to cement the principle of the “cultural exception” through as many international organizations as possible, UNESCO included. Of course the exceptions would not stop at culture, nor would the rubric of culture remain modest. Along other lines, some of the African experts at the meeting have come out for “enforceable sanctions” against countries that do not do “everything possible” to protect their native and indigenous cultures. I think this means us. I wonder if all of these people also favored sanctions against Saddam Hussein’s Iraq. In addition to his better-known crimes, Saddam went to great efforts to destroy the culture of the so-called marsh Arabs, draining the marsh was only part of his nefarious agenda. In these meetings I am arguing for…well, if you don’t know…you haven’t been reading this blog for long enough.
The timing for this visit is less propitious than my last trip. Then the Parisians were talking up cultural diversity while banning headscarves in the schools. Now U.S. officials are squawking because the WTO is telling us we cannot ban on-line gambling. Here is Republican Congressman Bob Goodlatte, sounding like a Frenchman: “It’s appalling…It cannot be allowed to stand that another nation can impose its values on the U.S. and make it a trade issue.” The Bush administration is planning to appeal the ruling.
So I will be busy. My personal posts will continue, but at a lower level than usual. Alex and our excellent guest bloggers will be active, and I will be back in full force upon my return.
We welcome the fools
The Motley Fool investment site wrote a nice article on MR. Thanks! We welcome all our new readers!
“Curing” Obesity
Researchers claim to have discovered one of the key causes of obese America. The AP reports:
Researchers say they’ve found more evidence of a link between a rapid rise in obesity and a corn product used to sweeten soft drinks and food since the 1970s.
The researchers examined consumption records from the U.S. Department of Agriculture for 1967-2000 and combined it with previous research and their own analyses.
The data showed an increase in the use of high-fructose corn sweeteners in the late 1970s and 1980s “coincidental with the epidemic of obesity,” said one of the researchers, Dr. George A. Bray, a longtime obesity scientist with Louisiana State University System’s Pennington Biomedical Research Center. He noted the research didn’t prove a definitive link.
I like the hedging–the link isn’t “definitive.” No, I guess it wouldn’t be. Obesity is surely also “linked” to the Iran hostage crisis and the stagflation of the late ’70s and early 80s. Maybe I shouldn’t be so skeptical. The study may be a little more scientific than merely looking at correlation rather than causation. But if the research is right, it will be easy to make America thin again. Just ban those high fructose sweeteners. One problem with this will be explaining why the advent of low calories sweeteners didn’t stem the tide of fat that allegedly threatens to overwhelm us.
My theory is that we’re fat because we enjoy it. We like food. It gives us pleasure. We’re wealthy and food’s cheap so we’re taking on a few pounds. Alex points out that the entire increase in weight over the past several decades can be explained by an extra Three Oreo Cookies a day! Here is a paper by Glaeser, Cutler and Shapiro that takes the economists’ approach to weight gain.
Here’s my take on the claim that we should tax fatty foods because of the externalities.
Why are gas prices so high?
Today gas prices hit another high, at least in nominal terms. Why? It suffices to turn the floor over to Lynne Kiesling. Here is a related post of hers as well.
You get what you pay for
Smart women who were shut out of the professions used to become teachers. That was bad for the women but good for their students.
The best female students – those whose test scores put them in the top 10 percent of their high school classes – are much less likely to become teachers today.
“Whereas close to 20 percent of females in the top decile in 1964 chose teaching as a profession,” making it their top choice, the economists write, “only 3.7 percent of top decile females were teaching in 1992,” making teachers about as common as lawyers in this group.
So the chances of getting a really smart teacher have gone down substantially. In 1964, more than one out of five young female teachers came from the top 10 percent of their high school classes. By 2000, that number had dropped to just over one in 10.
Women who do become teachers, however, are better educated today than in earlier years so rather than a total dumbing down there has been a trend towards mediocrity.
Merit pay would lead to better teachers but it is opposed by unions.
This is from the ever-wise Virginia Postrel, NYT password required. Here is a link to the original research. Caroline Hoxby argues that wage compression, often brought on by unionization, is responsible for three-quarters of the decline in the aptitude of female teachers.
The pledge of allegiance
Yesterday at the Supreme Court, Michael Newdow argued his own case against the phrase “under God” in the pledge of allegiance and apparently he did very well – managing to elicit a rare round of applause from the audience and ending gracefully on time and on point. Personally, although I am not religious, the phrase “under God” doesn’t raise my hackles. It’s the rest of the pledge that I hate.
Cato’s Gene Healy says it well:
From its inception, in 1892, the Pledge has been a slavish ritual of devotion to the state, wholly inappropriate for a free people. It was written by Francis Bellamy, a Christian Socialist pushed out of his post as a Baptist minister for delivering pulpit-pounding sermons on such topics as “Jesus the Socialist.” Bellamy was devoted to the ideas of his more-famous cousin Edward Bellamy, author of the 1888 utopian novel Looking Backward. Looking Backward describes the future United States as a regimented worker’s paradise where everyone has equal incomes, and men are drafted into the country’s “industrial army” at the age of 21, serving in the jobs assigned them by the state…Bellamy’s book inspired a movement of “Nationalist Clubs,” whose members campaigned for a government takeover of the economy. A few years before he wrote the Pledge of Allegiance, Francis Bellamy became a founding member of Boston’s first Nationalist Club….
Bellamy’s ritual for honoring the flag was right in step with those other National Socialists. Here’s a picture, dug up by Bob Wallace, illustrating the recommended salute (which later was to became politically incorrect).
The salute may be gone but the message remains.
Addendum: Hat tip to Walter in Denver who links to these even creepier photos of kids pledging allegiance.
Water on Mars
Maybe there was once water on Mars. Maybe not. Reuters reports:
“We think Opportunity is now parked on what was once the shoreline of a salty sea on Mars,” said Steve Squyres, principal investigator for the science payload on Opportunity and its twin Mars exploration Rover, Spirit.
On March 2, astronomers announced that the Red Planet was “drenched with water” at some point. But the rovers’ analysis of Mars rocks has now produced the first concrete evidence that liquid water might actually have flowed on planet’s surface.
“If you have an interest in searching for fossils on Mars, this is the first place to go,” said Ed Weiler, NASA’s associate administrator for space science.
Love that alliteration–the shoreline of a salty sea. It conjures up images of beachcombers and cottages or at least seashells and seaweed with terns turning in the sunlight. Seems like a bit of a stretch. NASA thinks they’ve found not just moisture, not just a few molecules of H2O but a sea with rocks drenched with salty spray, rocks lovingly shaped by streaming water. Pardon my skepticism, but it seems that NASA has just a bit of interest in stretching the results. Notice that even Reuters uses the word “might.”
This hasn’t dampened any of the enthusiasm. Here’s one analysis headlined “Mars water discoveries loom huge” that compares the finding to Galileo’s discoveries.
…the sheer disclosure of the presence of water on a planet other than our own is monumental. It ranks with the moment, nearly 400 years ago, when Galileo Galilei peered through his telescope and discovered spots on the sun, mountains on the moon and four tiny bodies circling Jupiter.
Those revelations, which today are taken for granted, also were monumental in their day. Prior to their disclosure, people confidently — even fervently — believed Earth was the immovable center of the universe, surrounded by all the heavenly bodies, each of which was a perfect, featureless sphere. Galileo’s announcement was considered so shocking at the time he was charged with heresy by the Roman Catholic Church.
Opportunity’s findings have been treated more matter of factly, with NASA officials holding a news conference and bubbling over with enthusiasm at the images Opportunity has transmitted, and members of the media duly reporting the information and displaying the rover’s images.
Yet the importance of this finding cannot be overstated.
Until now, we have known for sure of only one planet on which liquid water has flowed — and water is absolutely essential for supporting life as we know it. There are no chemical processes that will permit the formation of the long, complex organic molecules composing living organisms other than in the presence of water.
It is an extremely simple rule: No water, no life. As long as Earth was the only planetary body containing liquid water — and, more particularly, seawater — then it was the only place in the universe where life was possible.
Now, suddenly, there are two.
Is this a huge discovery? Huge for NASA, certainly, eager to send people to Mars in search of fossils or at least an abandoned sailboat.
I’m in the middle of Simon Morris’s Life’s Solutions: Inevitable Humans in a Lonely Universe. I suspect Morris is unimpressed with the latest Martian chronicle. He argues that it is very likely that we’re alone in the universe. The first part of the book that makes this claim is fascinating with quirky writing and lots of good information. The rest of the book argues for the inevitability of humanity evolving. The writing and narrative of the second half is less spritely and slower going but the first part of the book is very much worth a look.
Can they read us in China?
Glutter.com reports:
All typepad.com and blogs.com hosted sites are banned in China starting this morning, a week after China has agreed to amend its constitution to respect human rights. This is another move by the Central government to curb free speech and freedom of information on the Internet. This is the first time in two years that China has blocked access to foreign servers that host personal sites.
Please write me from China and tell me this is wrong.
By the way:
81% of all cyber dissidents in the world are held in China: 59 out of 72 logged by Reporters Without Borders compared to 38 out of 48 in November 2003.
The afore-mentioned news is tragic, but if true it is a measure of how influential the blogsophere has become. Thanks to Scott Cunningham for the pointer, check out his blog, which covers a good deal of economics.
Russ Roberts, Guest Blogger!
We are delighted to have our colleague, Russ Roberts, blogging with us over the next 10 days or so. Russ is the world’s only economist who has written a fable and a romance and a number of papers in top academic journals like the Journal of Political Economy.
What’s an economist doing writing a romance? Well, economics is a romantic science. Don’t believe me? Here is a description of Russ’s book The Invisible Heart.
Sam lives and breathes capitalism. He thinks that most government regulation is unnecessary or even harmful. He believes that success in business is a virtue. He believes that our humanity flourishes under economic freedom. Laura prefers Wordsworth to the Wall Street Journal. Where Sam sees victors, she sees victims. She wants the government to protect consumers and workers from the excesses of Sam’s beloved marketplace. While Sam and Laura argue about how to make the world a better place, a parallel story unfolds across town. Erica Baldwin, the crusading head of a government watchdog agency, tries to bring Charles Krauss, a ruthless CEO, to justice. How are these two dramas connected? Why is Sam under threat of dismissal? Will Erica Baldwin find the evidence she needs? Can Laura love a man with an Adam Smith poster on his wall?
Doesn’t it just make you want to tune in tomorrow?
Stadium Construction and Broken Windows
USA Today reports on a study by University of Dayton economists Marc Poitras and Larry Hadley: privately financed sports stadiums pay for themselves. Tax dollars aren’t necessary to make them viable. Somehow I doubt that the study will slow the pace of publicly financed sports stadiums. While it may make it more embarrassing for franchise owners to ask for public handouts, what’s a little stigma among friends? The success of the begging strategy is mainly due to the threat of exit–owners demand public financing as a way of extracting money from cities fearful that teams will leave. There isn’t free entry into sports leagues–leagues tightly control new entrants–so cities are always vulnerable to the threat of a team leaving.
The claim that sports teams and new stadiums are good for the economy is a classic case of the “broken window fallacy” of Bastiat. The benefits are seen–the jobs building the stadium, the fans who spend money at the restaurants near the stadium. Unseen are the jobs lost elsewhere and the restaurants on the other side of town that lose business. Roger Noll and Andrew Zimbalist found that the net benefit of public stadiums is basically zero–there’s no stimulus to the local economy worth talking about. Their conclusion:
In our forthcoming Brookings book, Sports, Jobs, and Taxes, we and 15 collaborators examine the local economic development argument from all angles: case studies of the effect of specific facilities, as well as comparisons among cities and even neighborhoods that have and have not sunk hundreds of millions of dollars into sports development. In every case, the conclusions are the same. A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment. No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus.
The U of Dayton study is here.
You can find the entire Noll and Zimbalist book online here.
The IRS’s chosen people?
According to this NYTimes article, a secret 1993 agreement between the IRS and the Church of Scientology lets Scientologists deduct the cost of a religious education as a charitable gift. The secret ruling appeared to come to light when the Sklar’s, who are Jewish, attempted to take a deduction for the religious portion of their children’s education at a Hebrew school. The IRS wrote them back asking for receipts from the Church of Scientology! The Sklar’s provided receipts from the Hebrew school and the IRS denied the deduction. The Sklar’s are now suing on the basis that all religions, or none, should be offered the deduction.
The secret agreement seems to have been leaked but no one knows for sure since the both the IRS and the Scientologists are fighting the subpoena demanding its release.
The world is always more bizarre than I imagine.
Is Russia a normal country?
Conventional wisdom in the West says that post-Cold War Russia has been a disastrous failure. The facts say otherwise. Aspects of Russia’s performance over the last decade may have been disappointing, but the notion that the country has gone through an economic cataclysm and political relapse is wrong–more a comment on overblown expectations than on Russia’s actual experience. Compared to other countries at a similar level of economic and political development, Russia looks more the norm than the exception.
That’s the take of Andrei Shleifer and Daniel Treisman. Here is the full article. Here is a longer unpublished version.
Here is their view on economic performance:
The best estimate is that Russia’s genuine output decline between 1990 and 2001 was small and that it was completely reversed by 2003, following two additional years of rapid growth. Considering the distorted demand, inflated accounting, and uselessness of much of the pre-reform output, it is likely that Russians today are on average better off than they were in 1990.
My take: Mostly I agree. Remember how The New York Times speculated about mass famine, civil war in the streets, or attempted reconquests of the Soviet empire? None of those dire events have come to pass. Parts of the Shleifer piece might be interpreted as Putin apologetics, but put that question aside. For the most part the former Soviet Union has made unexpected progress. If you don’t believe me, read my post from yesterday.
And so it begins
Scarlet Letters (and Numbers)
In Ohio, drivers convicted of drunk driving will be issued special red on yellow license plates. From an economic point of view, fines are the best punishment because they benefit the punisher as they punish the violator and imprisonment is the worst punishment since it punishes the punisher as well as the violator.
Many people don’t like fines, however, because they seem to allow the rich to get away with anything so long as they pay the price (see Tyler on progressive fines). But in theory, if the fine is set equal to the expected cost of the crime, everyone should face the same fine irrespective of wealth and if the benefit of violating the law exceeds the fine then paying the fine and violating the law is the efficient solution. Economists think this argument is obviously correct but it leaves most people cold.
Fines do have another disadvantage if you don’t trust the government (i.e. take this disadvantage seriously). Precisely because the fine is a revenue to the government it encourages them to fine more. And precisely because imprisonment is costly we expect government to be more restrained in its use.
Social sanctions punish the violator, and are perhaps a better signal to others about the costs of crime than are fines, but have neither benefits nor costs to the punisher – thus they lie in-between fines and imprisonment. If fines are thought unfair or too dangerous and imprisonment is too expensive then social sanctions seem ideal. It’s surprising that we don’t see this form of punishment more often.
Addendum: Thanks to early reader William Sjostrom in Ireland (read his Atlantic Blog) and Stephen Laniel at Unspecified Bunker for reminding me about the disadvantages of fines and the signaling quality of social sanctions.