Some Economics of Blockbusting

Blockbusting was made illegal in 1968. For a couple of decades before that, it worked like this: A real estate company would pick out a predominantly white neighborhood in a city. It would start advertising through the neighborhood that it was “changing,” to use a gentle term, or it would be more explicit that blacks were buying houses in the neighborhood. Some of the white residents would sell their houses and relocate. The real estate firm would sell these houses to blacks, often at a considerable mark-up. White residents in these neighborhoods were apparently unwilling or unable to sell to blacks directly, and thus accepted a lower prices for their houses. The process unspooled from there, with the real estate firm increasingly able to play on white bigotry to buy houses cheaply and then to play on limited real estate options for blacks to sell to them at higher prices.

To be clear, “blockbusting” doesn’t just mean that a neighborhood shifted in its racial composition. It’s about how the shift happened. Katherine Bennett, Daniel Hartley, and Jonathan Rose provide some background in “How common was blockbusting in the postwar U.S.?” (Chicago Fed Letter, Federal Reserve Bank of Chicago, July 2022). They searched across “scholarly histories, accounts in the news media, official reviews, and other materials” during the 1950s and 1960s. Remember, blockbusting was not yet illegal for most of this time, so it was often discussed openly. They write: “Ultimately, we have identified 950 specific census tracts across 39 cities that were the sites of purported blockbusting. These tracts represent about 8% of all the census tracts that were not already majority Black by 1950 in these
cities. Given the somewhat limited availability of historical records on the subject, this figure
could represent an underestimate of the true extent of blockbusting in major U.S. cities during this time period.”

For a concrete example, they focus on the Edmondson Village neighborhood in Baltimore:

In Baltimore, the neighborhood of Edmondson Village, depicted in figure 2, is the site of one of the most notorious instances of blockbusting in American history. Using property-level data, we analyze all of the housing transactions on 2,600 properties in this neighborhood from January 1954 through December 1975. We find that realty companies [more likely to be blockbusters than individual buyers] purchased about two-thirds of all properties, mostly over the period 1955–65. Most of the remaining properties also changed hands, but without involving blockbusters. As a result, comparing the 1950 U.S. Census with the 1970 U.S. Census reveals a stunning amount of population turnover among the original 20,000 residents of this neighborhood, with the Black population share of this neighborhood up from almost 0% to 96%.

Based on the prices of property transactions in this data set, we calculate that when reselling these properties to incoming Black homebuyers, blockbusters charged an average markup of around 45% on home prices—a markup labeled by community groups at the time as the “Black tax.” This markup also reflected the relatively low prices at which the blockbusters purchased the residential properties, possibly due to panic by existing residents. …

To complete these home transactions, blockbusters in Baltimore would often engage in aggressive and sometimes fraudulent practices, many of which became illegal after the passage of the Fair Housing Act of 1968. As an example of an aggressive practice, blockbusters were known to blanket neighborhoods with advertising suggesting that the neighborhood was undergoing a racial transition. … Another set of aggressive practices involved installment contracts, which blockbusters often used to finance the sale of homes, especially for homeowners who could not otherwise obtain mortgage credit. Unlike mortgages, installment contracts allowed a blockbuster to legally retain ownership of the home until a series of payments had been completed by the buyer. Until they paid off their debt, these homebuyers essentially functioned as renters, leaving them vulnerable to the loss of their equity without the protections of mortgage law. As for fraud, two blockbusters were given prison sentences after being convicted of defrauding the Veterans Administration by arranging for false attestations on credit applications by buyers. One result of the financial structure created by blockbusters was a high rate of foreclosure for the new homeowners.

Pandemic Policy: Support Jobs or Workers?

The pandemic recession from March to April 2020 was a different creature from the previous post World-War II recessions: different in cause, length, depth, and the kinds of social and economic changes that happened. The appropriate economic policy response was also different. Instead of the standard anti-recession policy of stimulating the entire economy, it is more useful to think of pandemic recession policy as a form of social insurance. One key question is whether this social insurance should operated primarily by supporting the unemployed or by supporting jobs.

Lest this distinction sound like a word game, consider this real world difference. In the pandemic, most European countries responded with programs of “short-time work.” The idea the employer doesn’t need to fire or lay-off workers. Instead, it cuts their hours substantially, and the government makes up the difference. It’s a kind of partial unemployment, except that when the worst of short, sharp pandemic hit to the economy passed by, the workers were still employed at their previous jobs and employers could ramp up their hours again. In contrast, the US approach emphasized larger and longer unemployment payment aimed at those who were without jobs. US employers (with the exception of some small state-level programs) did not have option of switching to short-time work.

Giulia Giupponi, Camille Landais, and Alice Lapeyre discuss the tradeoffs between tehse two approaches in “Should We Insure Workers or Jobs during Recessions?” (Spring 2022, Journal of Economic Perspectives, 36:2, 29-54). Here’s one of their figures. The solid lines show the share of population receiving unemployment insurance, with the blue line showing the US and the red line showing a weighted average for Germany, France, Italy, and the United Kingdom. Notice that the share of workers getting unemployment insurance in the pandemic spikes up in the US (solid blue line) but barely budges in the European countries (solid red line). Conversely, the share of workers on short-time work spikes up in the European countries (dashed red line) but barely budgets in the US (dashed blue line).

The bottom panel of the figure shows the different in the share of the “nonemployed” adult population, which spikes in the US, but doesn’t move much in the European economies–because short-time workers still have jobs.

Giupponi, Landais, and Lapeyre work through the tradeoffs in some detail. I’ll try to offer a quick summary here. The unemployment-insurance-based approach provided a higher level of assistance to people (indeed, the US response to the pandemic in some cases involved unemployment insurance payments that were higher than previous wages). However, the incentive for firms to lay off workers and for workers to become unemployed was much lower in the short-time work system.

The great benefit of the short-time work approach is that it preserves the previous job match between employer and employee, which preserves the knowledge and job skills that are contained in the particular relationship between a certain employer and a certain worker, and also avoids costs of firing and re-hiring. On the other side, given that the pandemic recession (like all recessions) involves a reallocation of workers from one sector to another, short-time work tends to inhibit this reallocation more than an unemployment-insurance-based approach.

Finally, workers in general benefit from “tightness” in the labor market, meaning that there are a relatively small number of job openings for the available workers. In a US context, the aftermath of the pandemic recession has been historically unusual in this way, with unemployment rates having rapidly fallen back to very low levels and the US economy in a situation where job openings exceed jobs. It seems plausible that the high US unemployment insurance payments, by encouraging some workers to leave their jobs, have contributed to these tight US labor markets–thus benefiting other workers.

The authors are also quick to point out that a society need not make a binary choice between these approaches. For example, it might be that short-time work is best for a short, sharp negative shock that has a high probability of reversing itself, while unemployment insurance is better for a shock that seems likely to last longer and less likely to reverse itself. One can imagine that one approach would work better for workers in some industries than for others.

But there is another dimension to this choice: When an unexpected shock like a pandemic recession hits and a rapid policy response is needed, what is the government already geared up to do? The administrative policy apparatus of the US government was not set up to use short-time work, even if it had been desirable to do so. A group of coauthors–David Autor, David, David Cho, Leland D. Crane, Mita Goldar, Byron Lutz, Joshua Montes, William B. Peterman, David Ratner, Daniel Villar, and Ahu Yildirmaz– export this question in “The $800 Billion Paycheck Protection Program: Where Did the Money Go and Why Did It Go There?” (Spring 2022, Journal of Economic Perspectives, 36:2, pp. 55-80).

These authors point out that when the pandemic hit in March 2020, getting financial assistance out there to the economy seemed more important than taking the time to set up a carefully designed and targeted program. Moreover, the US government lacked the pre-existing administrative capacity to ramp up an immediate program of short-time work. Thus, along with the higher unemployment benefit and the stimulus checks, the US government enacted the $800 billion Paycheck Protection Plan, with the idea of providing funds to smaller-sized businesses. The funds were provided by guaranteeing loans from banks: in effect, any firm with up to 500 employees could get a loan of up to $10 million, which would then be forgiven if the firm kept employment and wages at roughly the same levels for 2-6 months.

Remember, while some economic sectors were hit very hard by the pandemic recession, others were hit less hard or recovered more quickly. For those firms, the PPP was essentially free money. Unsurprisingly, 94% of the eligible firms signed up at a cost to the government of $800 billion. The authors summarize:

The Paycheck Protection Program had measurable impacts. It meaningfully blunted pandemic job losses, preserving somewhere between 1.98 and 3.0 million job-years of employment during and after the pandemic at a substantial cost of $169,000 to $258,000 per job-year saved. PPP also reduced the rate of temporary closures among small firms, though it is less clear whether it reduced permanent closures. The majority of PPP loan dollars issued in 2020—66 to 77 percent—did not go to paychecks, however, but instead accrued to business owners and shareholders. And because business ownership and share-holding are concentrated among high-income households, the incidence of the program across the household income distribution was highly regressive. We estimate that about three-quarters of PPP benefits accrued to the top quintile of household income. By comparison, the incidence of federal pandemic unemployment insurance and household stimulus payments was far more equally distributed.

However, the authors are reluctant to just the PPP with the luxury of hindsight. As they point out:

The PPP’s regressive distributional incidence and its limited efficacy as economic stimulus stem from the program’s absence of targeting. This absence, in turn, reflected necessity. Given the time constraints and, more profoundly, the lack of existing administrative infrastructure for overseeing targeted federal support to the entire population of US small businesses at the onset of the pandemic, we strongly suspect that Congress could not have better targeted the Paycheck Protection Program without substantially slowing its delivery. We thus concur with Bartik et al. (2021) that policymakers made a defensible trade-off between speed and targeting in the PPP’s design.

Of course, the underlying lesson here is that if the US wants to have the option of using short-time work in response to a future recession, the administrative infrastructure needs to be set up in advance. But one of the major frustrations of current policy-making is that there seems to be so little focus on learning policy lessons from the pandemic–not just concerning issues of employment, but also across issues of regulation and public health–about what institutions, arrangements, and priorities need to be set up now, before the moment when they are urgently needed.

My 76 Theses on Patriotism

I published this essay in the (Minnesota) Star Tribune newspaper yesterday, July 3.

76 Theses on American patriotism

It might be time for a reminder on what makes a patriot. 

By Timothy Taylor

1. Patriotism is love for one’s country.

2. To describe patriotism, one can adapt St. Paul’s comments about “love” in 1 Corinthians: “Patriotism is patient, patriotism is kind. Patriotism is not jealous, it is not pompous, it is not inflated, it is not rude, it does not seek its own interests, it is not quick-tempered, it does not brood over injury … .”

3. A good person can certainly be a patriot. But that doesn’t imply that all good people are patriots, or that the better the person, the more patriotic — or that all patriots are good people.

4. It’s quite possible for a bad person to be a patriot. But that doesn’t imply that all bad people are patriots, or that a lousier person is more patriotic, or that all patriots are bad people.

5. Patriotism is analog, not binary. Some Americans will be 100% patriots, while others will be mid-level or mild patriots, or not patriotic at all. And that’s just fine.

6. Patriotism has multiple dimensions, including feelings about the central political understandings and shared history of a country, the physical landscape of the country, and fellow-citizens of the country.

7. For Americans, patriotism includes allegiance to the bedrock principles of freedom and equality as embodied in the Declaration of Independence and the U.S. Constitution.

8. American patriots can be glad that the Constitution has been amended in the past, and can also hope to see it amended in the future.

9. If you support a fundamentally different system of government than described in the U.S. Constitution, you are not an American patriot.

10. Patriotism includes love of the physical country. When American patriots picture “from the redwood forest, to the Gulf Stream waters,” their hearts are moved.

11. Patriots like to visit other parts of their country, if circumstances allow. If you have no desire to engage outside your city or state or region, you are not patriotic.

12. Patriotism means loving the entire country. A generalized dislike of certain areas — say, southern states, the Boston-D.C. corridor, California, inner cities or rural areas — is unpatriotic.

13. Patriots experience a twang of emotion when crossing their national border. Sir Walter Scott wrote: “Breathes there the man, with soul so dead,/ Who never to himself hath said,/ This is my own, my native land!/ Whose heart hath ne’er within him burn’d,/ As home his footsteps he hath turn’d/ From wandering on a foreign strand!”

14. If you become a citizen of another country, or even seriously consider it, you are not an American patriot.

15. Expressing a desire to leave the country if your preferred candidate does not win an election is not patriotic.

16. Wishing that your state or region would secede from the rest of the country, or that the United States should be divided into multiple countries, is not patriotic.

17. Sometimes patriots will be so exasperated with their country that they say or do things that do not reflect their deeper feelings. If rare and regretted, such outbursts should be readily forgiven.

18. American patriots believe in civil liberties and constitutional protections for all residents, not just for the patriotic.

19. American patriotism includes a general affection for other Americans. An affection that excludes groups as defined by religion, race/ethnicity, or geography is unpatriotic.

20. Patriots will respect and even cherish dissent from other patriots, knowing that it arises within a shared love of country.

21. Still, dissent is not the highest form of patriotism, any more than criticizing your spouse is the highest expression of a loving marriage.

22. When patriots communicate with others outside their country, they will feel some internal pressure to counter even justified criticisms of their country.

23. American patriotism includes a respect for religious belief, although patriots need not be religious.

24. A patriot loves the actual and existing United States. A love that depends on the beloved being without flaw is no love at all.

25. Patriotism doesn’t spare one’s own country from criticism, but it also doesn’t single it out for exceptional criticism.

26. Patriots from different countries respect each other’s loyalties.

27. If you view yourself as a “citizen of the world,” you are not an American patriot.

28. Patriots have some interest in U.S. history. When you love something, you also like knowing its back story.

29. Patriotism need not proclaim itself at every moment. But patriotism will not hide, nor be ashamed.

30. Those who are perpetually unwilling to express affection for their country are not acting patriotically.

31. Patriotism trumps political partisanship. Indeed, American patriotism rejoices in a range of opposing views.

32. Challenging the patriotism of others based on routine political disagreements is unpatriotic.

33. Patriotic symbols can be overemphasized: We all know couples for whom the wedding ceremony seemed more important than the marriage.

34. Patriots often find it suspicious when others speak boastfully in affirmation of their patriotism.

35. A patriot can deeply disagree with American political leadership; most patriots sometimes will.

36. A claim of patriotism can be a cover for iniquity. George Washington warned in his 1796 Farewell Address “to guard against the impostures of pretended patriotism.”

37. A claim of patriotism can be a cover for misbehaviors and crimes. Thomas Boswell famously quoted Samuel Johnson as saying: “Patriotism is the last refuge of the scoundrel.” For some scoundrels, it’s a first refuge.

38. “Nationalism is not to be confused with patriotism,” as George Orwell wrote: “By ‘patriotism’ I mean devotion to a particular place and a particular way of life, which one believes to be the best in the world but has no wish to force on other people. Patriotism is of its nature defensive, both militarily and culturally. Nationalism, on the other hand, is inseparable from the desire for power. The abiding purpose of every nationalist is to secure more power and more prestige, not for himself but for the nation or other unit in which he has chosen to sink his own individuality.”

39. A claim of patriotism has been used as an excuse for in-groups to denigrate others.

40. A claim of patriotism can sometimes be little more than a cloying and bathetic sentimentality.

41. Some are queasy about being identified as patriotic because they fear being grouped with those who make misguided claims of patriotism. This reaction cedes the name of patriotism to those who do not deserve it.

42. Patriotism cannot reasonably be blamed for all the actions taken in its name, any more than love, democracy, equality or freedom can be blamed for all the actions taken in their names.

43. Despite the ways in which patriotism can be misused, those who sneer at patriotism are acting unpatriotically.

44. Carl Schurz was an emigrant from Germany who became a Union general during the Civil War, a senator from Missouri and a secretary of the interior. He was once challenged for criticizing his adopted country. He replied, “My country, right or wrong: if right, to be kept right; if wrong, to be set right.”

45. Some people will react to grave injustice by losing their patriotism. For patriots, this outcome is sad, but can be understandable. But there is no reverse jujitsu by which those who lose their patriotism should be judged as extra-patriotic.

46. People who have been mistreated by their country often still display a deep patriotism. When the boxer Joe Louis was asked how he could volunteer for the U.S. Army during World War II as a Black man who had experienced racial prejudice, he replied: “Might be a lot wrong with America but nothing Hitler can fix.”

47. Deploying patriotic symbols doesn’t prove one is a patriot.

48. Refusing to display or acknowledge patriotic symbols doesn’t prove that one is not a patriot. But an open discomfort with the symbols of patriotism will raise reasonable doubts about patriotism.

49. Those who deface patriotic symbols like the American flag may have a righteous cause, but they act unpatriotically in doing so.

50. Patriots at many times throughout history have been social, economic and political critics.

51. It is logically incoherent to believe that a patriot must be either unaware of the flaws in one’s society or else must be a supporter of those flaws.

52. Mark Twain wrote: “[T]he true patriotism, the only rational patriotism, is loyalty to the Nation ALL the time, loyalty to the Government when it deserves it.”

53. Political liberals can be patriotic even when they believe that the government has failed millions of citizens — for example, with a lack of economic security and low quality education and health care.

54. Political conservatives can be patriotic even when they believe that social and political values of deep importance are eroding and government is overstepping its bounds.

55. Libertarians can be patriotic even when they believe that many laws (say, drug prohibitions) are fundamentally unjust.

56. Anti-tax protesters can be patriotic even when they believe that the government practices theft by taking their money.

57. Pro-lifers can be patriotic even though they believe unborn children have been murdered through legal abortion. Pro-choicers can be patriotic even though they believe America offers insufficient support for the rights of women to control their own bodies.

58. Some patriots oppose all wars for reasons of conscience. Such patriots will not hesitate to serve their country in other ways during times of war and peace.

59. Patriots will wince at E.M. Forster’s famous comment: “If I had to choose between betraying my country and betraying my friend, I hope I should have the guts to betray my country.” A patriot may question whether treason must be morally preferable to breaking faith with a friend. But when two great loves come into conflict, it can be the stuff of tragedy.

60. It’s possible to hope that your country withdraws from a war being fought abroad, and still to be a patriot. U.S. patriots were not obliged to support the wars in Vietnam or Iraq.

61. An American patriot who opposes an American war will nonetheless not give aid and comfort to the enemy, nor rejoice in military defeats.

62. Those who damn their country most loudly, or who spell America with a swastika or as AmeriKKKa, are not those who love it the most.

63. When voting, it’s legitimate to give some preference to a political candidate who reveals a deeper sense of patriotism.

64. There is no reason to believe that politicians or those who work for a government paycheck are more patriotic than non-politicians and those who do not work for the government.

65. Those who view the ideal human being as detached from emotional ties to places, people, or institutions are not patriotic.

66. Patriotism is not jealous of other loyalties, but reinforces ties to family, culture, religion, hometowns and regions.

67. Patriotism includes a belief in the uniqueness and exceptional character of the United States: You can’t love something without feeling it is distinct.

68. If you love something, you also believe that it contains the seeds of good.

69. Patriots will find it hard to comprehend those who deny any patriotic attachment. David Hume wrote: “When a man denies the sincerity of all public spirit or affection to a country and community, I am at a loss what to think of him. … Your children are loved only because they are yours: Your friend for a like reason: And your country engages you only so far as it has a connection with yourself … .”

70. Patriots have a visceral feeling of relationship with other patriots, living and dead, extending to those who are just becoming U.S. citizens.

71. Some people fear that patriotism means surrendering their individual judgment, either to political authorities or to national loyalties. This is a misapprehension of American patriotism.

72. A patriot will respond to those who mock patriotism with clear disagreement and cold dismissal, flavored with sadness. But those who mock deeply held beliefs like family, religion or patriotism have little reason for surprise if the response is more energetic.

73. American patriots will not prefer a one-size-fits all centralized model of governance. They appreciate that fellow-citizens in other localities and states should have some flexibility in their self-governance.

74. Patriotism is a social glue. Political scientist William Galston wrote, “If the human species best organizes and governs itself in multiple communities, and if each community requires devoted citizens to survive and thrive, then patriotism is … a permanent requirement … .”

75. The Declaration of Independence declares that governments derive their just powers “from the consent of the governed.” A broadly shared patriotism is a form of ongoing consent that makes democratic governance possible in a sprawling and diverse country.

76. My wife and I note each anniversary of our first date — although our shift from friendship to dating was not clear-cut at the time. Similarly, the Continental Congress declared independence on July 2, 1776; the delegates didn’t actually sign the Declaration of Independence until a formal copy was made in August; and the U.S. Constitution was not ratified until June 21, 1788.

But in matters of close affection, annual commemoration matters more than historical details. In that spirit, patriots will feel the tremors of their endearment every July 4.

Timothy Taylor is managing editor of the Journal of Economic Perspectives, based at Macalester College in St. Paul.

Venture Capital: Size and Focus

I first started writing and thinking about venture capital back in 1984, when I was working as an editorial writer for the San Jose Mercury News in the heart of Silicon Valley. For a sense of the shape of the industry, then and now, consider two figures. The first is from the 2010 “Yearbook” produced by the National Venture Capital Association, showing total assets under management for the venture capital industry.

If you look at the short little bars for the 1980s and squint a little bit, you can see that at the time, the rate of growth in the industry looked very large. The tiny little bar for 1986, for example, is a multiple of the even tinier little bar for 1982. But there used to be fairly restrictive rules about whether big pools of assets, like pension funds, were allowed to invest in venture capital. Those rules were relaxed, and the “dot-com” boom of the 1990s took off, bringing vastly more money into venture capital.

Here’s a graph from the most recent 2022 NVCA Yearbook, showing total assets under management by VC firms. From the general range of about $220 billion 15 years ago, the total has more than quintupled up to nearly $1 trillion in 2021. With the economic troubles unfolding in 2022, the VC assets under management (which is in part based on stock market values) will probably fall this year. But the overall trend from when I was writing about an industry with, say, $20 billion in assets back in the early 1980s is quite remarkable.

Another way to look at the VC industry is in terms of new investments made in a given year, rather than accumulated assets. The 2022 Yearbook reports: “Any concerns of US VC investment slowing down due to the pandemic were squashed in 2021. 14,411 venture-backed companies received $332 billion in funding, both metrics setting an annual record.” There probably some fluff in that statement “any concerns … were squashed,” but VC deal activity could take a step or two back in 2022 and still be far above the levels of just a few years ago.

I was a supporter of the VC industry and the role it plays in US innovation and start-up firms in 1984, and I’m still a supporter today. But it’s a really industry. You just don’t run a fast-growing $1 trillion industry the same way the $20 billion industry was run four years ago. Thus, it’s useful to have some real thought about what the VC industry does well and doesn’t really do at all. As a starting point, here’s a figure from the 2022 Yearbook:

Notice that from the perspective of the VC industry itself, the industry is not about very early-stage development of firms, or about early product development. Instead, the early stage VC investing happens when the cash-flow is no longer as negative as it had been, and it’s time to roll out the product itself. When the new firm has made the transition to growth and expansion, then it’s time for late-stage venture capital to think about an exit strategy of selling off the small firm to a larger firm, or going through an initial public stock offering.

A couple of years ago,  Josh Lerner and Ramana Nanda discussed their concerns in ”Venture Capital’s Role in Financing Innovation: What We Know and How Much We Still Need to Learn” (Journal of Economic Perspectives, Summer 2020, pp. 237-61). They argued that while the venture capital industry has had some great successes in the past, ”venture capital financing also has real limitations in its ability to advance substantial technological change.” In particular, they wrote:

Three issues are particularly concerning to us: 1) the very narrow band of technological innovations that fit the requirements of institutional venture capital investors; 2) the relatively small number of venture capital investors who hold and shape the direction of a substantial fraction of capital that is deployed into financing radical technological change; and 3) the relaxation in recent years of the intense emphasis on corporate governance by venture capital firms. We believe these phenomena, rather than being short-run anomalies associated with the ebullient equities market from the decade or so up through early 2020, may have ongoing and detrimental effects on the rate and direction of innovation in the broader economy.

In my own words, the VC industry has become enamored with web-based firms, especially those that might be able to make use of network effects to rule over their own little market sector. Such firms can often have relatively low start-up costs–no factories!–and can be evaluated in direct ways over a few years for whether they seem to be taking off. There is a substantial amount of “spray and pray” VC investing, where firms put money into a gaggle of these web-based companies, and then monitor the firms to see what takes off.

Again, you can’t run $1 trillion in assets the same way as you could run $20 billion in assets 40 years ago. It used to be that VC firms backed companies from a considerably wider array of industries, and played a more active role in offering guidance and business connections to the managers who were starting these firms. So while I do think the large and growing VC industry is, by and large, a force for good in the dynamism of the US economy, I also think the current version of the industry works best at a particular stage of the development of businesses in a fairly narrow industry range. From the big-picture perspective of US economic dynamism as a whole, the VC industry is a very particular slice of the pie.

Readers interested in the very current state of the VC industry might want to check out the recent article in the June 30 issue of The Economist, ” Venture capital’s reckoning: Why there won’t be a rerun of the dotcom crash.”