Dr. John Rutledge “Tuesday Lunch Series” 2-14-12 from CGU School of Politics & Economics on Vimeo.

 

I did a spot on CNBC Squawk Box this morning to discuss the impact of the recent unrest in China. Much of the news surrounds stories about migrant worker protests. As I wrote yesterday, the drivers for the protests making the news is not ideology–it is practical life issues like pay, jobs, work practices, discrimination, and corrupt local government officials. Wen Jiabao recently said that corrupt officials is China’s greatest crisis. Last year more than 146,000 corrupt officials were arrested in China; 97% of them were at the county, city, or village level.

Our discussion this morning turned on the impact on the US. The biggest US risk is supply chain interruptions, much like the Japanese earthquake. Just under half the manufacturing capacity in the world is in China. Much of it is in southern China, especially Guangdong, where the factories are operated by migrant workers from Sichuan, Hunan, and Xinjiang. Recent job losses in Guangdong caused by “hollowing out,” (businesses moving to cheaper locations in Vietnam and other Asian countries) are a real problem. Migrant workers are often the only source of income for their families in poor villages in western provinces. Rising food prices has also put the squeeze on migrant worker incomes, even though the incomes are rising at 10% per year.

All this is interesting, but what I care about are the people. It is easy to lump groups of people together and call them “migrant workers” if you have never met them. Not so easy when you know their names.

I thought I would just take a minute to inject a little humanity into the story by posting a few pictures of the kids I work with in the migrant worker schools in China. For several years, my partner Fred and I have organized teams of university students to work in primary schools in poor villages, often migrant worker schools. We have done projects in Tibet, Yunnan, northern China, and tried to do one in North Korea that failed to happen. In each case, we supply the students with books and materials to build libraries and kitchens, plant gardens, pay student fees, and give the children pencils and paper. The students spend a month or more in the schools teaching and working with the children.

Here are a few pictures from one of our recent projects in a migrant worker school in northern China.

The photo above is our team for a migrant worker school project. Fred (white t-shirt just in front of me) is my partner in all the projects we do. Ethan (black Rutledge capital shirt in front of me) was team leader for this project. The other team members are students at China Agriculture University.

Below are a few of the children, including an unforgettable kindergarten student showing me her very beautiful graduation dress.

This is a migrant worker school classroom. The classrooms have no doors and no heat in the winter–the students weal heavy coats in class to stay warm.

Finally, the picture below is a very special one for me. We were able to arrange for 15 of the students graduating from the migrant worker school to go to the official public school nearby, which will allow them to later go to university. They needed clothes, school supplies, and the like to fir into the new school. This is a picture we took on their first day of class. I keep this photo on my desk.

I hope you get to meet some of these wonderful children one day for yourself.

JR

Ran across an interesting research paper tonight in the Business and Politics journal. The paper, “Corporate Lobbying Revisited”, by Jin-Hyuk Kim of Cornell University,  attempts to measure the return on corporate spending on lobbyist services. You can see the paper by clicking here.

Kim’s conclusion, is that money spent on lobbying Congress appears to have a return higher than the firm’s cost of capital. Doubling expenditures on lobbying increases the firm’s equity returns by 2.5 percent unadjusted, 2.4 percent relative to the market, and 1.3 percent relative to the industry. While the results do not appear to be very robust (the estimates move around when he changes the specification of the model) this is an important question that merits more work.

JR

A New Type of Chemical Bond Takes Hold

By Adrian Cho
ScienceNOW Daily News
23 April 2009

For decades, scientists have known of three ways for two atoms to bind and form a molecule. Now, researchers have discovered a fourth. Most likely, the advance won’t lead to new materials or technologies: The molecules last for about 1/100,000 of a second and can be made only at temperatures a few millionths of a degree above absolute zero. However, their mere existence confirms a surprising prediction and stretches the conceptual boundaries of chemistry.Binding two atoms into a molecule is like conceiving a child: There aren’t that many ways to do it. In the first two strategies, two atoms bind when their orbitals–the cloudlike distributions of electrons that hover above the atomic nucleus–overlap and merge so that the atoms share one or more electrons. If the atoms are of the same element, they will share an electron equally, producing a so-called covalent bond. If the atoms are of different elements–say sodium and chlorine–then one may hog the shared electron in what’s called an ionic bond. In a third type of bond, called a van der Waals bond, the atoms don’t actually share their electrons; instead, tiny fluctuations make one atom momentarily more positively charged on one side than on the other. This fleeting “polarization” induces similar fluctuations in the other atom, pulling the two atoms together.

Vera Bendkowsky, Tilman Pfau, and colleagues at the University of Stuttgart in Germany have demonstrated a fourth way to bind two atoms. The researchers started out with a gas of ultracold rubidium atoms. Using a carefully tuned laser, they then “excited” an electron in some of the atoms to a very high-energy orbital. That orbital is so large that the electron hovers as much as 100 nanometers from the nucleus, which is about 400 times the radius of a normal rubidium atom. If another, unexcited rubidium atom happens to be about that close, it can bind to the excited one, settling into the outer reaches of the electron cloud to make a gigantic two-atom molecule that’s bigger than some viruses.

 

http://sciencenow.sciencemag.org/cgi/content/full/2009/423/4?etoc

I met an interesting man yesterday at my Berkeley lecture. He has taken the energy transformation framework from my new book and designed a framework for restructuring companies to accelerate innovation and entrepreneurial activity.

JR

My good friend Bret Swanson, a senior scholar at the Progress and Freedom Foundation, has posted  Deep Insights, on Economics . . . and Life, a very kind review of my book Lessons from a Road Warrior, on the PFF blog. I hope the book can help people understand how network failures happen, like the credit crisis we are now experiencing, and what we can to to make the economy less vulnerable to future episodes.

JR

I interrupt our normally serious blog posts with this breaking story, based upon the principal that if you cannot at least laugh in the middle of a crisis you need to get a life.

The lead article in the current issue of the New England Journal of Medicine is titled “Management of Skin and Soft-Tissue Infection — Polling Results.” The article reports the results of a poll taken among readers who are medical professionals (i.e., they didn’t include me) about the best way to treat the case of a college athlete with a skin and soft-tissue infection.  The patient was a healthy 20-year-old college basketball player who presented with a tender erythematous area on the right buttock (a pain in the butt). He reported that there was no direct trauma to the area. (Oh good, I was really worried.) He noted having subjective low-grade fevers the night before presentation and had a temperature of 37.7°C at presentation. The area of erythema was 5 by 3 cm and had a firm central area 2 cm in diameter. Although he reported that he does not like taking medications, he also expressed concern about being ready to play in his next basketball game in 1 week. (He is all about the team.)

There is a nifty graphic showing the votes cast by continent and country. Note that North America is the ONLY place where a majority of voters chose the MRSA therapy. MRSA is the deadly disease you catch in hospitals where the professionals do not follow strict hygiene protocols.

Of the three management options proposed, the most popular — receiving 4585 votes (41% of the 11,205 votes cast) — was incision and drainage plus an oral antimicrobial agent active against methicillin-resistant Staphylococcus aureus (MRSA). The second-most popular option, incision and drainage alone, received 3508 votes (31% of the votes cast). A close third, with 3112 votes (28% of the votes cast), was incision and drainage plus an oral antimicrobial agent active against methicillin-susceptible S. aureus (MSSA).

And there you have it.

JR

My friend Sonia Arrison, host of Digital Dialog and Senior Fellow of Technology Studies at the Pacific Research Institute, has written an article in TechNewsWorld,  Network Theory Can Explain US Credit Crunch, which discusses the chapter in my new book on using network and information theory to understand bubbles and market collapses.

Sonia’s has a deep understanding of communications and tech issues. Her technology columns are collected in Digital Dialogue: Technology, Capitalism, and the Pursuit of Freedom.

JR

We have a winner. Our daughter’s Blue Heron Inn has just been awarded a spot on Coastal Living Magazine’s top 22 hotels and inns in America. And well deserved. Manda and her husband Chris have created an absolutely wonderful place where people can escape from the real world and enjoy themselves. Here is what Coastal Living had to say about the inn.

The Blue Heron Inn, in Solomons Island, Maryland, offers four especially large guest rooms, but the most beguiling spaces are the smallest: window seats tucked into dormers. Both top-floor rooms have a pair, one each facing the Patuxent River and the sailboat-filled harbor. Just add a good book and a glass of Chardonnay from the “honor bar” for a blissfully lazy afternoon. Amanda Rutledge Comer, a trained chef who operates the inn with husband Chris, prepares wonderful breakfasts and will cook dinner on request. Guests also have access to bicycles, a kayak, the inn’s dock, and first- and second-floor balconies that overlook the harbor. Rates range from $165 to $235; 410/326-2707 or blueheronbandb.com.

Congratulations to Manda and Chris. Hope to see you at the breakfast table.

JR

This morning I was riding in a taxi through the Beijing traffic on my way to Tsinghua University to host a Roundtable discussion with a dozen of China’s leading economists and a host of graduate students. My host for the Roundtable, Professor He Weiwen, overheard 2 interesting stories on the driver’s drive-time news radio broadcast: 

1) Congress and the White House were approaching agreement on key aspects of the proposed financial rescue package. (Does this tell you how much China is interested in our financial markets?)

2) A poll in that morning’s Global Times newspaper showed that more than 50% of Chinese people believe the US is becoming a more socialist country.

Good for our brand image? I don’t think so.

JR