Consumers May Help Save the Day

Bhide makes thought-provoking comments about the role of the entrepreneurial or "venturesome" consumer in the process of innovation. The point is the mirror image on one made by Schumpeter in Capitalism, Socialism and Democracy when he emphasized that consumer resistance to innovation is one of the obstacles that entrepreneurs in earlier periods had to overcome. (The decline of such consumer resistance was one of the reasons that Schumpeter speculated that the entrepreneurial might become obsolete.)

I would like to see Bhidé's evidence on his claim that technology rapidly advanced during the Great Depression. The claim seems at odds with Amity Shlaes' claim that New Deal policies often discouraged entrepreneurship.

(p. A15) Consumers get no respect -- we value thrift and deplore the spending that supposedly undermines the investment necessary for our long-run prosperity. In fact, the venturesomeness of consumers has nourished unimaginable advances in our standard of living and created invaluable human capital that is often ignored.

Economists regard the innovations that sustain long-run prosperity as a gift to consumers. Stanford University and Hoover Institution economist Paul Romer wrote in the "Concise Encyclopedia of Economics" in 2007: "In 1985, I paid a thousand dollars per million transistors for memory in my computer. In 2005, I paid less than ten dollars per million, and yet I did nothing to deserve or help pay for this windfall."

In fact, Mr. Romer and innumerable consumers of transistor-based products such as personal computers have played a critical, "venturesome" role in generating their windfalls.

. . .

History suggests that Americans don't shirk from venturesome consumption in hard times. The personal computer took off in the dark days of the early 1980s. I paid more than a fourth of my annual income to buy an IBM XT then -- as did millions of others. Similarly, in spite of the Great Depression, the rapid increase in the use of new technologies made the 1930s a period of exceptional productivity growth. Today, sales of Apple's iPhone continue to expand at double-digit rates. Low-income groups (in the $25,000 to $49,999 income segment) are showing the most rapid growth, with resourceful buyers using the latest models as their primary device for accessing the Internet.

Recessions will come and go, but unless we completely mess things up, we can count on our venturesome consumers to keep prosperity on its long, upward arc.

For the full commentary, see:

Amar Bhidé. "Consumers Can Still Spot Value in a Crisis." Wall Street Journal (Thurs., MARCH 11, 2009): A15.

(Note: ellipsis added.)

Bailouts Reduce Resources Left for Entrepreneurs

Columbia University Professor Amar Bhidé has authored two important books on entrepreneurship. Some of his thoughts on the current economic crisis follow:

(p. A15) Our ignorance of what causes economic ailments -- and how to treat them -- is profound. Downturns and financial crises are not regular occurrences, and because economies are always evolving, they tend to be idiosyncratic, singular events.

After decades of diligent research, scholars still argue about what caused the Great Depression -- excessive consumption, investment, stock-market speculation and borrowing in the Roaring '20s, Smoot-Hawley protectionism, or excessively tight monetary policy? Nor do we know how we got out of it: Some credit the New Deal while others say that that FDR's policies prolonged the Depression.

. . .

Large increases in public spending usurp precious resources from supporting the innovations necessary for our long-term prosperity. Everyone isn't a pessimist in hard times: The optimism of many entrepreneurs and consumers fueled the takeoff of personal computers during the deep recession of the early 1980s. Amazon has just launched the Kindle 2; its (equally pricey) predecessor sold out last November amid the Wall Street meltdown. But competing with expanded public spending makes it harder for innovations like the personal computer and the Kindle to secure the resources they need.

Hastily enacted programs jeopardize crucial beliefs in the value of productive enterprise. Americans are unusually idealistic and optimistic. We believe that we can all get ahead through innovations because the game isn't stacked in favor of the powerful. This belief encourages the pursuit of initiatives that contribute to the common good rather than the pursuit of favors and rents. It also discourages the politics of envy. We are less prone to begrudge our neighbors' fortune if we think it was fairly earned and that it has not come at our expense -- indeed, that we too have derived some benefit.

To sustain these beliefs, Americans must see their government play the role of an even-handed referee rather than be a dispenser of rewards or even a judge of economic merit or contribution. The panicky response to the financial crisis, where openness and due process have been sacrificed to speed, has unfortunately undermined our faith. Bailing out AIG while letting Lehman fail -- behind closed doors -- has raised suspicions of cronyism. The Fed has refused to reveal to whom it has lent trillions. Outrage at the perceived use of TARP funds to pay bonuses is widespread.

For the full commentary, see:


Amar Bhidé. "Don't Believe the Stimulus Scaremongers." Wall Street Journal (Tues., FEBRUARY 17, 2009): A15.

(Note: ellipsis added.)


Bhidé's two books on entrepreneurship are:

Bhidé, Amar. The Origin and Evolution of New Business. Oxford and New York: Oxford University Press, 2000.

Bhidé, Amar. The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World. Princeton, NJ: Princeton University Press, 2008.

Where Human Beings Cease to Be Human...

Well, sadness hits hard as news continues to spread of the two homicide incidents in Alabama and the German City of Stuttgart. Here as a link to the Alabama case, and the one in Stuttgart. It is such horrible news, both that such evil people exist and that 25 people were killed by their hands. 25 individuals who had family and friends. 25 people who had aspirations to do something in this life, dreams to become fathers or mothers, grandparents to grandchildren. It is vivid example of utter sadness and evil.


While I'm at it, allow me a moment to quickly explain something that irritates me, hopefully without detracting from the seriousness of these recent massacres. When 9/11 occurred, I was driving to a psychology seminar in southern California. I remember driving past the John Wayne Airport, and how eerie it felt to see all our planes grounded. When I got to class, the professor didn't say much about the events. I don't think at that moment the word "terrorist" was even discussed yet. In fact, nothing was discussed in our large classroom of roughly 250 students. The professor proclaimed that we have a moment of silence. We sat in what I personally felt was a moment of awkwardness and uselessness. I never appreciated or understood "moments of silence." Would it not be more useful to take a moment of clarification, or gratitude, or appreciation, and explain to despondent students that we live in a world where evil abounds and a world where suffering occurs. And yet, the world is a glorious and beautiful place where a two-fold joy can be experienced for every downtrodden and sad event in our lives. Why sit in silence? There are wonderful learning opportunities, powerful chances to express remorse for the loved ones of the fallen, and to express gratitude for life itself. If I lose my life or the life of a loved one (God forbid a hundred times) by some heinous act of another, I would rather a professor make one powerful sentence that could forever influence the lives of the living, than 5 minutes of useless silence.

Given the recent events, I predict a brief revival of the discussion on guns and our access to them. There may also be discussion concerning why God would create a world where such things can exist, or how horrible of actions humans are capable of. I recently watched the movie "The Invasion", with Nicole Kidman and Daniel Craig. It is basically a rehash of the Body Snatchers. As some of you may already know, I thoroughly enjoyed the movie, and thought it achieved great success in being a suspenseful thriller. And I'm not a big Nicole Kidman fan. Honest! I think this was one of her best, along with Far and Away. Daniel Craig was great, but his part in the film was much too small.
The shuttle crash as a means to introduce the virus was clever enough, though not elaborated upon. The use of "House"-like pictures of what was going on in the body was also very good and thoroughly entertaining. Think "The Andromeda Strain" meets "I am Legend". The ending of the film was also a little unsatisfactory.

The philosophical underpinnings of this film were also worth contemplating. Do we have a world without violence by all becoming dittoheads, or do we have conflict and remain human? Some may opt for Stepford, but I kinda like having differences.
One of the alien races makes a profound statement after most the population have lost their free will and become benign zombies:

"Have you seen the television, have you read the newspapers, seen whats happening here? What we're offering? A world without war, without poverty, without murder, without rape...a world without suffering. because in our world no one can hurt each other or exploit each other or try to destroy each other because in our world...there is no other. Fighting us is fighting for all the wrong things. Our world is a better world."

Interesting, but incorrect thought.

The movie ends with the complaint that it would be nice to "imagine a world where every newspaper is not full of war and violence." Daniel Craig sits at the table, reading a newspaper, and complains about how horrible the world is. Then the camera zooms out from Nicole Kidman's face, a look of wonder and confusion on her face, as if maybe the zombie world would have been better.

Life is rough sometimes, but really? Either come out and say it: this world is horrible and it isn't worth having free will. Or teach the viewers a notable lesson: evil exists in the world, but that is the consequence of free will, and that same consequence brings some wonderful experiences in this life.
As a Mormon I agree with one conclusion in the movie: in order to accomplish a world with no pain or evil acts human beings would have to cease to be human. Our nature is quite contrary to COMPLETE harmonious lives together. Indeed, a change in human nature would have to occur in order to live with free will and live without evil inclinations.

A True Hammering...

A response to James Marcy, LDS 'Hammering'

Let’s spare ourselves the mundane and over-worked discussion of separation of church and state and get right to the point of Jimmy Marcy’s pet peeve and legal misconception. What are the facts? About 60 percent of the state’s residents belong to the LDS Church and between 80 and 90 percent of Utah’s legislators also belong to the LDS Church. Utah is also officially known as the beehive state, an obvious LDS reference to the Book of Mormon Deseret, or honeybee.

The LDS Church is headquartered in Utah, and has been for a long while, and any dramatic legislative changes that occur will inevitably effect the image of the Church. All that being said, Senate President Michael Waddoups, R-Taylorsville has assured us all, including Jimmy Marcy, that “they [the LDS Church] are not the Legislature and they do not legislate policy." In fact, he even gave us an order of influence: “Legislature first and Mothers Against Drunk Driving second, followed by the restaurant and hospitality associations.” Yes, many legislators are members, but the LDS Church leaders fall into last place behind all other influencing factors regarding this reform.

Mr. Marcy, you have nothing to fear. If you’re going to be mad about an organization getting its nose into politics, visit MADD.org and speak with the mothers against drunk driving. How dare they dictate their moral standards to us! Indeed, the LDS Church is discussing nothing about faith or God or religion in regard to this issue, but merely offering persuasive advice from a moral standpoint. Treat the Church as an interested business partner. Should I go into the statistics of land and business ownership of the Church within Utah state lines?

Let me put this bluntly: given the LDS Church’s local history, local wealth, power, influence, and unique connection to the state (unlike any other in the nation), they most certainly have a special spot in the discussion of what many politicians are calling “the most significant legislation of the decade.”

Perhaps you need to spend less time in Utah and more time in Washington so you can get a feel for the true “hammerings” that occur from all sorts of organizations, politicians, and lobbyists when passing various legislature. The Mormon Church has done nothing illegal or even ill-advised. This man's commentary is just one more example of Mormon bashing by people with nothing better to do. If you feel something was illegal, email me and I'll make a special post explaining it to you in complex legal terms.

This is from Bruce L. Olsen of the LDS Public Affairs:

"The Church makes no apology for making its views known on issues that it considers essential to the well-being of Utah society. It does so as part of our democratic process, through formal lobbying of members of the legislature in the same way that other interest groups seek to explain their views."

Mr. Marcy needs to stop fearing a repeat of the Spanish Inquisition, or the religious massacres of Vlad the Impaler, or pious conquests of Saladin and Richard Lionheart. Wrong era, wrong country, wrong church. Let us all hope that his “enough is enough” statement implies immediate relocation, though perhaps this new legislation will find him the means to get himself hammered and drink away his vacuous fears of LDS command and conquer.

That’s me in the corner…

Remember that REM song with the oh so catchy tune and seemingly controversial title “Losing My Religion”? I say seemingly because the truth is that the title refers to Southern slang meaning to be “fed up” or “at the end of your rope,” at least according to Michael Stipe. Originally Warner Bros. execs didn’t want to release a record with religious symbolism but finally gave in after the lyrical explanation. Good thing too: it was a top 5 single that won a Grammy in 1992.

Why bring it up? Because everyone loves pop-up music commentary and a lot of people are having the same misconception about a national study that suggests a larger percent of Americans are rejecting…what? Organized religion.

The report, organized by the Program on Public Values at Trinity College in Hartford Conn., surveyed 54,000 adults. Among the results, the survery found that 15 percent of respondents said they had no religion, compared to 8.2 percent in 1990. Members of Christianity also plummeted from 86% to 76%.

Now what’s the problem here? Or is there a problem? I’ve already heard all sorts of arguments that this is a persisting problem that involves not properly relating to a new generation – sharing the gospel in a way that connects to the current generation.

I think that is bogus.

What are you suppose to do, deliver the message of God with an electric guitar or maybe pay Hannah Montana to deliver the message? A lot of news channels are reporting this under some title like: “Americans are Becoming Less Religious”, or something along those lines. Last time I checked, 92% of Americans believed in God and considered themselves “religious”. The Merriam Webster dictionary defines “religious” as relating to or manifesting faithful devotion to an acknowledged ultimate reality or deity.

Believing in God and being truly “religious” has nothing to do with going to church. In fact, I’ve been to quite a few churches of different religions and I can understand why many people desire to be unaffiliated with them. Additionally, it is difficult to attend church weekly or even monthly! I can fully understand when people convince themselves that they can be saved without attending a sermon or participate in highly committed social organizations. It’s difficult, but most certainly doesn’t tell us the religious inner workings of our fellow citizens.

What’s the point? This study isn’t bad news at all. Many Americans still believe in some kind of creator and some sort of after-life contingent upon our actions in this life (85% in fact). Indeed, this is wonderful news for people of my faith, the LDS Church. Although the survey shows marginal Mormon population increase in the last 7 years, no decline is certainly good news, and with a decrease in most other church attendance, this gives an opportunity for conversions.

The bad part about this study is that one may find it more difficult to believe in God without the association with other believers that many church organizations offer. This study doesn’t currently show anything, but if this 10% never join any church, it might definitely lead to an atheistic approach to life, and possibly anarchy. There is strength in numbers, but lets not assume that 10% of our nation are no longer religious, at least for a while. They're certainly not losing their religiosity, but are simply "fed up" with some of the church systems and organizations that they've belonged to.