Slow-Healing Scars: The Pandemic’s Legacy

By Sonali Das and Philippe Wingender Recessions wreak havoc and the damage is often long-lived. Businesses shut down, investment spending is cut, and people out of work can lose skills and motivation as the months stretch on. But the recession brought on by the COVID-19 pandemic is no ordinary recession. Compared to previous global crises, […]

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Rising Market Power—A Threat to the Recovery?

By Kristalina Georgieva, Federico J. Díez, Romain Duval, and Daniel Schwarz The crisis has hit small and medium enterprises especially hard, causing massive job losses and other economic scars. Among these—less noticeable, but also serious—is rising market power among dominant firms as they emerge even stronger while smaller rivals fall away. We know from experience […]

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The Haves and Have-nots Of the Digital Age

By Gita Bhatt Accelerated by the pandemic, the digital future is coming at us faster than ever before, and maybe faster than we can imagine. In this issue, we explore the possible consequences—the good, the bad, and the gray. For millions, technology has been a lifeline, changing the way we work, learn, shop, and entertain […]

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Lessons on Management and Entrepreneurship from Jeff Bezos

Jeff Bezos stepping down from being CEO of Amazon (or stepping up, as he remains President) has been the object of many articles. I have particularly enjoyed this piece from the Wall Street Journal, by Lauren Weber.

Weber highlights a few fascinating points in Bezos’ management style.

Mr. Bezos says he goes to bed early, rises early and schedules “high IQ” meetings before lunch, all in the service of making a few clear, smart decisions each day, he told an audience at the Economic Club of Washington in 2018. “If I have three good decisions a day, that’s enough,” he said. “They should just be as high quality as I can make them.”

Mr. Bezos frequently attributes Amazon’s success to the company’s obsession with giving customers what they want. From Amazon’s early days, he would place an empty chair in meetings to prod executives into thinking about how their decisions would affect customers, he recounted in the Economic Club of Washington interview. And when Mr. Bezos considered expanding the business beyond books and music, he emailed a random group of 1,000 customers, asking what they wanted to buy on the site. From their responses, he concluded he could sell just about anything on the internet—which is exactly what he’s done.

… The company abandons patent applications at a higher rate than others, a sign of its commitment to move past obsolete technology. Mr. Bezos himself is named on dozens of Amazon patents.

“If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive,” Mr. Bezos wrote to employees on Tuesday, referring to Amazon innovations such as customer reviews, Alexa and one-click shopping.

… Mr. Bezos is well-known for his insistence that meetings be productive. To facilitate that, he requires presenters to write a memo, no longer than six pages, that is circulated and silently read at the start of a meeting by everyone present. … Employees have said they spend weeks perfecting their memos, a process that sharpens ideas and improves decision-making and discussion.

This is not a comprehensive analysis of Bezos’ management genius, but these are still interesting bits that make you think. In any organization, it is very easy to become complacent and let inertia run things. Bezos knew that and confronted it, at a variety of levels. I am sure his success has been imperfect. Still, I can see his story and tips like this inspiring entrepreneurs all around the world.


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Rain, Rain, Go Away. Come Again Another Day?

According to that nursery rhyme we all grew up with: “Rain, rain, go away. Come again another day.”

This goes in spades for hurricanes, which have devastated the economy, and tens of thousands of lives. But our complaints about the weather do not end there.

Sometimes, on the day of an annual parade, we just don’t want it to rain. We’re not against a little precipitation; oh no. We would just like it to pour down when we want it to, not when “it” decides to do so.

Who does “it” think he is anyway? He has a lot of nerve. Raining when he wants it to, not when we want him to?

Not as much as with hurricanes, of course, but, still, a lot of economic welfare hangs in the balance. If we can rearrange the timing, then outdoor concerts cannot get rained out, nor can baseball games, nor can any of the marathon races held be ruined. These only sometimes get cancelled due to unwanted showers, but even when not cancelled, they can get pretty yucky. There are plenty of statistics about the economic harm from flooding. Badly timed deluges are undoubtedly a fraction of that (anyone remember Katrina?), but, still, not to be underestimated.

And not only do we want it to rain, or not, on certain days, this goes for hours of the day or night, too. If we had our druthers, it could rain every night if “it” felt like so doing, provided this occurred, only, say, between four and five AM.

Not only when, but where, too! Some cities, truth to tell, sometimes get quite a bit too much of it, on any day of the week or hour of the day. They would be quite happy to send some of it to our brothers and sisters in Arizona, Nevada, New Mexico or the parched parts of Texas and California.

Why am I blithering on about this? Isn’t this sort of thing totally out of human control? Am I advocating a return of the rain dances, which shaman and medicine men overseeing? No. I’m talking about cloud seeding.


It is one thing to advocate that government give up the hundred and one ways it wastes money, and instead allocate some resources to this nagging problem. A greater challenge would be to figure out how private enterprise could do so.

Here is one possibility, at least for the time when the costs of this technology fall below the benefits of such weather control. A consortium of hotels, restaurants, shopping malls, supermarkets, universities throughout the city, those who put on or benefit from parades, outdoor concerts, marathons, and other such gigantic events (hey, the COVID pandemic will end one of these months, hopefully; let’s look ahead), would put up the funds necessary to do the job. This would overcome what some economists think of as the market failure of external economies. (We would all benefit from weather control outlined herein; each potential donor would have an incentive to hold back on supporting each, but to reap the benefit thereof). But contributions would be publicized. Any group or organization that didn’t shoulder a reasonable proportion of the effort would be humiliated. It would suffer negative customer repercussions. In the extreme it would be forced into bankruptcy, as a “free rider.” This includes civic organizations, churches, wealthy individuals, etc.

Is this speculation too far-fetched to consider? Ok, it will not be on the agenda for the next week, month or year. However, we want not only bread, but roses too. If we cannot look past the woes that now betide us, we are not the people I think we are.

Then, there is the issue of confronting the more serious weather issues: the storms, hurricanes, typhoons, cyclones, lightening, etc. According to some studies they are becoming more and more destructive. These are not mere inconveniences, coupled, only with economic losses. We must add to the debit side actual loss of human life, and in serious numbers, reaching into the tens of thousands.

If we as a human race do not blow ourselves up by then, we may reasonably expect that in 500 years, there will be smooth sailing in this regard. No inclement weather will dare cross our bows. But what about in two centuries in the future, or even one? Can we hasten the solution to a matter of decades? It is unlikely that all of these threats to humanity will end in one fell swoop. Probably, we will take these on one at a time, and, as intermediate steps, gradually reduce their severity. All the reason to put this challenge on the agenda, and at least begin some more serious research on them. Yes, we’ve got to wrestle the corona virus down the mat and pin it, and space exploration too, beckons us. But let’s not forget about this threat to humanity.

Walter E. Block is Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans


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Time, Technology, and Textiles

A Review of The Fabric of Civilization: How Textiles Made the World, by Virginia Postrel, Basic Books, 2020


In 1998, Virginia Postrel closed her now classic book The Future and its Enemies with the observation that “We live in an enchanted world, a world suffused with intelligence, a world of our making. In such plenitude, too, lies an adventurous future.” Though I suppose some might see her books written since then–The Substance of Style and The Power of Glamouras somehow “artsy” and disconnected from the more traditional political and economic arguments of The Future and its Enemies, they seem to me to be deeper explorations into that enchanted world and the intelligence that suffuses it.


Postrel’s newest book, The Fabric of Civilization: How Textiles Made the World (out this month from Basic Books) applies this same sense of wonder and wealth to the subject of textiles. The book is an ideal example of the value added to a subject by Postrel’s wonder-filled approach. As an avid knitter and embroiderer, an occasional crocheter, quilter, and constructor of clothing, I know a good bit about textiles. Nearly everything that I hoped would be mentioned in the book was in there–a discussion about the sea snails that provide the blue dye for tallit fringes? An exploration of the coal-tar dyes that provided D.H. Lawrence with one of his best images for beauty coming from unexpected places? The complex sexual politics of women and spinning? They’re all in there. (I did hope for a discussion of green arsenic dye, but that is a story that has been widely covered in other discussions of tragedies of the Industrial Revolution.) 


And there is so much else I didn’t know. The radical nature of the first published weaving patterns. The sumptuary battle over–of all things–calico, which we moderns think of as a hopelessly out of date and “countrified” fabric.The complex interplay among weavers, dyers, and traders of different nations that resulted in kente cloth. Readers will pause throughout the book to examine the clothing they are wearing and the textiles that fill their home as Postrel points out what makes each of them remarkable.


And each of Postrel’s detailed explanations is fascinating. I was particularly entranced by her chapter on the gross and beautiful explorations of dying. The long history of revolting ingredients and smells that produce objects of great beauty sums up, for me, something central to the human condition–our endless hunger for the sublime, and our inability to achieve it without lowly tools and methods. But it also, in Postrel’s hands, becomes a reminder of that “world suffused with intelligence” that is so central to her understanding of how humans operate.


The best example I can give of this is her observation that: “Nowadays we call [indigo] that plant-derived coloring ‘natural’ to distinguish it from dyes formulated in chemical labs, including chemically identical synthetic indigo. But producing indigo takes far more artifice and effort than the word natural implies. Its source may grow in the wild, but turning leaves into dyestuffs for making blue cloth requires considerable technological prowess.” We have had that prowess for at least 6000 years, and in five concise and enormously readable pages, Postrel takes us through the development of that technology in ancient times, the later refinement of it into a portable technology that could be traded, and her own attempts to replicate the techniques for dying with indigo at home. Never once do we lose her sense that each step in the process of this technique is a leap for human intellect and a step into the future.


The political and economic are not absent in The Fabric of Civilization, either. Regular readers of Econlog and economic historians will find much to think about here, and textile historians will find new economic and political insights into their subject. 


Though Postrel is happy to tell readers all about the different looms used to weave different kinds of fabrics, she is equally detailed in her discussion of the reasons behind different rates of pay for different kinds of textile workers in different times and places. She also reminds us that the history of textiles is the history of trade–not just in the existence of the Silk Road, or in the birth of banking from the textile merchants of the early Renaissance, but also in the use of different textiles as money, the development of arithmetic and double-entry bookkeeping as offshoots of textile trading, and on and on. She reminds us, as well, that in contrast to the too-frequent reliance on a narrative that focuses on colonialist oppressors appropriating the culture and art of the colonies, that artistic trade went both ways. Artists and consumers on both sides of these exchanges influenced and were influenced by trading partners. That’s a more complicated, more interesting, and richer story than the one we think we know.


It would be easy for a book on textiles to focus exclusively on the pleasures of home crafting, small producers, and vintage, even antique, technologies. But Postrel, a dynamist since before she coined the term, is as fascinated by the engineer and the chemistry lab as she is by the dye pot and the loom. Her discussion of the Swisstex company’s work on “creating colorful textile with minimal side effects” is a fitting close to her chapter on dying. Their chemistry experiments and engineering innovations lead the way to a modern dye process that allows us to leave behind the stench and the dangerous by-products of ancient methods and early industrial improvements to them. You don’t get those, notes Postrel, “by thinking like a nature child. You get it by thinking like a Swiss engineer.” 


Her final chapter, “Innovation” explores the already existing improvements in textiles made by companies like Under Armour, and the technologies that soon might overturn everything we think we know about fabric. Smart fabric that charges your phone when you put it in your pocket? Fabric that only needs to be brushed clean, not washed? Clothes that make us cooler instead of warmer? Friends of the future may want to start the book here, and then travel backward to see how far we have come.


There are plenty of books about textiles for those of us who are interested in them. But there is only one by Virginia Postrel. You should read it.


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One of Civilization’s Greatest Accomplishments

One of the secrets of a good book is a curious author. Consider this from Matt Ridley:

“I walk a lot in London, and a few months ago I set myself a goal: somewhere in the vast city, while walking down a street, to catch the smell of sewage. I have yet to achieve this goal. Close to ten millions defecations occur in London every day, presumably, for most people it is daily occurrence. I hazard that I am rarely more than 100 feet from somebody actively at work on this task … Yet you never smell it. Why not? This is a new phenomenon, an innovation”.


How many people ever think about such things? The fact that a city as big as London doesn’t smell of sewage is now taken for granted, in spite of the fact the opposite was true for quite a long time. This is “one of the finest achievements of our civilization”, writes Ridley, and he is not joking.


One of the key elements behind the ingredients was the S-bend in the pipe beneath every toilet, which traps water so as to prevent the smell to come back up. Before it, “flush toilets were expensive and unreliable and they had the huge disadvantage that they took away the sewage but not its smell”. The S-bend, “one of those things that could have been invented at almost any time and by almost anybody”, was actually the product of a “fine mathematical mind at the height of the Enlightenment”, Alexander Cummings.


It may sound strange to recommend a book on innovation because he neatly presents, in only a few pages, the history of the water closet and the modern sewage network – but I think this is not a minor merit of Ridley’s book.


Besides commending Matt’s walking habits, I think it is worth stressing again the logic of the book: “innovation” consists not only of things that are big, visible, and breath-taking (pardon the pun). Innovation is a pervasive phenomenon in a modern economy, all the more relevant in the daily undertakings of life, that are improved, little by little, with most of us not noticing it and happily taking for granted a better status quo than our forerunners ever dreamt possible.


Read the earlier posts in this series here, here, and here.


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The Marvel of Trains

Third in a #ReadWithMe series.*


“For all of human history until the 1820s, nobody went faster than the speed of a galloping horse”. I cannot think of another consideration equally telling, of the tremendous progress we made in a rather short time. The main engine, pardon the pun, of such progress was the locomotive. “The man who did most to make the breakthrough in speed” as a craftsman of humble origin, George Stephenson:

“The year is 1810 and a new coal mine has been sunk at Killingworth in Northumberland, with a brand-new Newcomen engine installed to pump out the water. But it does not work, and for a whole year the pit remains drowned, despite the best efforts of engine-men from all around … the humble brakesman in charge of the winding gear at a neighboring pit, 29-years-old George Stephenson, who has a reputation for being able to mend clocks and shoes, offers to help. His only condition is that he will pick his own workmen to help him. Four days later, having dismantled the engine, reshaped the injection cap and shortened the cylinder, he has the engine working well, and the pit is soon dry. Stephen gets the job of engineman and is soon much called upon as an engine doctor all over the district”.


Using a steam engine to pull wagons was not a new idea, but it was made more interesting by the war, as “the Napoleonic conflict created an insatiable demand for horses and for hay to feed them, driving up the price of both”.

In 1814, Stephenson “built a two-cylinder locomotion at Killingworth” which “proved capable of hauling fourteen wagons carrying 2 tons of coal each at 3 miles an hour [this is _not_ a typo], doing the work of fifteen horses”.

In a few years, in 1822, Stephenson will be busy in the building of the Stockton to Darlington railway. Fast forward to 1832, he will be inaugurating the Liverpool-Manchester one.


In his book, How Innovation Works, Matt Ridley makes a splendid use of these stories, which may remind us of the work of Samuel Smiles. In describing Stephenson’s “moving up” from workman to “engineer” (“he was no less a worker, but only in a different way”), Smiles noted that he had “now many more opportunities for improving himself in mechanics than he had hitherto possessed. His familiar acquaintance with the steam-engine proved of great value to him. The practical study which he had given to it when a workman, and the patient manner in which he had groped his way through all the details of the machine, gave him the power of a master in dealing with it as applied to colliery purposes”.


The 19th century was the era of the inventor, geniuses of unlikely backgrounds who through tinkering accomplished magnificent innovations. In a sense, the steam train is the quintessential example of “ideas having sex”, to use a favorite catchphrase of Ridley’s. The steam engine mated with wagons and rail tracks. This happened not because of grand designs, but of very practical needs: how to save on horses. It happened not because of grandiose theorists, but of very practical men, such as Stephenson.


Here’s a point many tend not to get about innovation: needs are a big part of it. It is not necessarily about grandiose research programs pursued for the sake of mere knowledge (though pursuing knowledge qua knowledge is a great source of meaning and happiness to scholars who write on this subject). More often than not, it comes out of very precise, “local”, needs. Adam Smith observed long ago that “a great part of the machines made use of in those manufactures in which labour is most subdivided, were originally the inventions of common workmen, who, being each of them employed in some very simple operation, naturally turned their thoughts towards finding out easier and readier methods of performing it”. That is not necessarily true today, but when it comes to the beginning of the industrial age, I think Ridley would agree with Smith that common workmen played a central role.



*Read Part 1 here.

*Read Part 2 here.


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