A Drop-Out from One Venue Drops in on Another

PUEBLA CITY, Mexico – The Fourth Annual IberoAmerican Seminar on Science, Technology and Innovation Journalism unspooled here last week. Puebla, if you don’t know (I didn’t), is the fourth-largest city in Mexico, capital of one of its thirty-two states, situated eighty miles southeast of Mexico City on the colonial road from Vera Cruz, Mexico’s Atlantic port, and home to a university with  prominent school of journalism.   Conference headliners were prize-winning journalists from El Pais, El Mundo, Le Monde, Nature, and the BBC. My presence owed to a ten-year-old book. The invitation arrived just as word began to leak out about Paul Romer’s impending appointment as chief economist of the World Bank.

Romer was the central figure in my Knowledge and the Wealth of Nations: A Story of Economic Discovery (Norton, 2006).  When my turn came, I sought, none too successfully, to explain the significance of the distinction Romer introduced in 1990, between two familiar categories — rival goods (those that can be possessed by only one person at a time) and public goods (those that may be enjoyed by one person without reducing their availability to others) — and a third category, nonrival, partially-excludible goods, meaning recipe knowledge of all sorts, acquired by effort and design, everything from software and other sorts of recordings to industrial processes and organizational procedures. Romer’s mathematical paper “Endogenous Technological Change,” published in the Journal of Political Economy, put science and technology, research and development, secrets and intellectual property, at the heart of the differences in the wealth of nations.

At one point, to illustrate the story of what Romer had persuasively shown, I told the story of Russell Marker. Born in 1902, Marker was a chemist who left the University of Maryland without completing his PhD and in his early twenties developed the octane-rating system and various refining practices for Ethyl Corp. When the Rockefeller Institute, which had hired him for his organo-synthesis skills, declined to permit him work on hormones (in the tradition German research universities, a senior scientist had dibs on the topic), Marker quit, in 1934, and joined Pennsylvania State University, with a lab funded by Detroit pharmaceutical manufacturer Parke-Davis Inc. It was in State College, Pa., that Marker discovered how to synthesize the hormone progesterone from diosgenin, a compound obtained from the sarsaparilla root, a process previously deemed chemically impossible by high authority, including his Rockefeller boss.

Though abundant, sarsaparilla was too slender a root to make attractive its cultivation as a feedstock. Marker began seeking a better diosgenin source. The hunt ultimately led to Mexico, where in 1942 – with war looming and anti-American feelings running high — Marker located a couple of huge yams of an otherwise-unprized species nicknamed cabeza de negro (blackamoor head) growing in rural state of Vera Cruz, and successfully smuggled one back to Detroit. There he demonstrated his synthesis and sought to persuade Parke-Davis to commercialize his process in Mexico – he had developed a fondness for the place. The company chairman refused – he had formed an ill opinion of Mexicans during an Acapulco vacation – and Marker ultimately concluded he had no option but “to do it myself.” He withdrew half his savings, returned to Mexico in the fall of 1942, collected ten tons of the yams, boiled them down to a syrup, sent the liquid to a friend’s lab in New York for processing, and wound up with three mason jars of progesterone.  The hormone, useful in treating human pregnancy disorders, had to that point been obtained by boiling down thousands of gallons of the urine of pregnant mares. It was selling for $80 a gram.

Marker began looking for Mexican partners. He found two, quit Penn State and Parke-Davis  (which neglected to prepare claims to a patent for Marker’s signature) in 1943, and the next year formed a company chartered as Syntex, S.A.  When that collaboration ended in disagreement, Marker decamped, taking his knowledge with him, and formed a new company, Botanica-Mac.  Syntex was forced to hire George Rosenkranz, a Swiss chemist working in Cuba, to reverse engineer the process. Rozenkranz succeeded, began manufacturing testosterone as well (so had Marker) and started a powerful research program. Marker, meanwhile, run out of business by unspecified threats in 1946, joined a third firm, Hormonosynth.   Then after 1949, he stopped publishing in chemical journals and to all intents disappeared.  Rumors were that he had died or become insane.

He had done neither. For the next twenty years Marker lived quietly in Mexico City and State College, supervising the reproduction of various art works for sale to collectors, especially the work of three important eighteenth-century silversmiths. He re-entered public life after 1969, to be honored by the Mexican government, and, in due course, awarded an honorary PhD by the University of Maryland.  The story was carefully written up as an International Historic Landmark by the American Chemical Society, and an extensive interview recorded by the Chemical Heritage Society.

A larger story began at Syntex after Marker left. By 1949, a team led by Carl Djerassi, one of the young chemists Rozenkranz hired, had synthesized cortisone, inexpensively producing a widely-useful anti-inflammatory medicine previously obtained only from ox bile. Two years later, the real revolution began, when Upjohn Co. hired Syntex to produce ten tons of progesterone at 48 cents a gram for its new birth control pill. Less noted has been the role that Syntex played in establishing the Insituto de Química, an organic chemistry research program for Latin American chemists. The ACS Chemical Landmark booklet notes, “In 1951, Fortune magazine headlined, ‘Syntex make the biggest technological boom ever heard south of the border.’  Considering the impact the Mexican steroid industry would have on world health and culture, Fortune greatly underestimated the power of the explosion.”  Today, of course, the impact of its vibrant pharmaceutical industry on Mexican living standards – all Mexican living standards –is obvious as well.

When Marker walked off the job in chemistry, it didn’t matter; the processes of research, investment and education had already begun.  When Paul Romer did something of the same in economics, I told the audience in Puebla, it mattered more. Like Marker, Romer has been his own man every step of the way.  He was able to leave the Massachusetts Institute of Technology in 1979 after two years of graduate study for the University of Chicago, with a year at Ontario’s Queens University in between, thanks to his National Science Foundation fellowship. Chicago hired him from the University of Rochester as a full professor in 1988, but he left after a year and a half for what turned out, after a year at the Center for Advanced Study in the Behavior Sciences in Stanford, to be a job at the University of California at Berkeley, returning five years later to the Graduate School of Business at Stanford.

Romer began a research program in socioeconomics after moving to California, but ended it after 2000.  In 2001 he founded an educational software company, Aplia, and sold it in 2007 for a tidy sum. The same year he quit Stanford and economics altogether. He left a younger generation of talented economists working on growth, notably Charles I. Jones, who replaced him at GSB Stanford; a residue of rancorous but seemingly trivial priority claims by rivals; and, at the uppermost level of work on the problems he had raised, a conspicuous void.

Romer reappeared publicly in 2009, this time with a foundation and a TED talk in which he proposed an institution he called “charter cities,” special manufacturing zones in developing countries in which local governments would be administered by foreign nations willing to undertake the task. Romer explained that he had been inspired by the example of the island nation of Mauritius,  where foreign capital  poured into garment manufacturing during the 1980s after government moved to protect  investors; inspired, too, by the failure of turn-key cities built by Chinese contractors in  Indonesia  when the Indonesian government foreclosed investment opportunities at the last moment. Charter cities would copy Hong Kong, where British courts fostered Chinese development over the course of a hundred years.  Fledgling attempts failed in Madagascar and Honduras.

In 2011 Romer returned to teaching, at New York University, this time as director of a policy-oriented Urbanization Project. In 2012 he was a presenter at a Nobel Symposium designed to assess recent work in growth and development.  With the award last year to Angus Deaton, of Princeton University, the symposium produced the first of what eventually may be several Nobel prizes. And last summer he agreed to take the job at the World Bank.

It was at the meetings of the American Economic Association in Boston, in January 2015, in a session devoted to the New Growth Economics after Twenty-Five Years that Romer truly walked off the job. He eschewed his program topic, “Nonrival Goods,” in favor of a stinging attack on his University of Chicago mentor, Robert Lucas, sitting on the dais beside him, for the sin of what he labeled “mathiness” – imprecise mathematics employed to cloak the maintenance of preferred assumptions, in this case the caricature of economic life known as perfect competition. The borrowing from television’s Stephen Colbert – “mathiness” is a version of Colbert’s “truthiness,” something which resembles the truth but isn’t – did little to clarify the issue, since “truth” is a term seldom heard among serious economists. “Persuasive” (or not) is as far as the boldest will go.  Since then Romer has moved on to relatively frequent blogging, culminating in “The Trouble with Macroeconomics,” posted last month, an essay version of an earlier lecture that begins,

Lee Smolin begins The Trouble with Physics (Houghton Mifflin, 2006) by noting that his career spanned the only quarter-century in the history of physics when the field made no progress on its core problems. The trouble with macroeconomics is worse. I have observed more than three decades of intellectual regress.

Such broadsides rarely, if ever, influence professional opinion, where the dictum that only a better candidate beats a bad one is an article of faith. This one revealed all too clearly that Romer didn’t have one. — that he hadn’t so much as a clue to offer.  One result is that he is today all but shunned by many of his former close associates.  “Thanks for the lecture, Paul,” bellowed a leading figure of the next generation after Romer finished a lengthy discussion of another’s paper. Another is that the journalism-grade arguments I wanted to make in Puebla about the effects of specialization on scale and vice versa are not ready to hand – propositions about why big firms get ahead and stay there; why inequalities often persist and grow; why the rate of change of technology and education may be a race and not a waltz; why, after a couple of hundred years, the rate of global growth may be slowing down. The Swedes bear some responsibility, too, for the slow reception of  “new” growth theory. Big changes in the dogma make hard prizes.

On his blog, Romer has resumed updating changes in his original thinking. But after nearly twenty-five years, “The Origins of Endogenous Growth,” from the Journal of Economic Perspectives in 1994, remains his last attempt to explain the work he began in the ’80s but never finished.  He is not Russell Marker, disappearing from the frontier of important science to reproduce treasures made long ago, but neither has he participated in what the profession considers serious research for nearly twenty years.

In the course of a few years in the late ’80s, Romer changed one major wing of economic theory, permanently; he wasn’t able to do it again, to another. The rest of the discipline, macroeconomics in particular, hasn’t kept up. I wished, as I flew home from Puebla, that he was still a working economist, instead of the public intellectual he has become. Ruefulness greets him now when he encounters old friends. But he has rolled up his sleeves and taken up policy matters. He retains the same winning manner, the same deep intelligence, an uncommon feeling for development strategies, and a lively interest in refugee problems. I wished he would forget about the two-front war, leave the reconstruction of macro to its serious students, and concentrate on the task at hand.

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