July 25, 2016

Tesla and Google Bet on Different Paths to Driverless Cars

(p. B1) SAN FRANCISCO -- In Silicon Valley, where companies big and small are at work on self-driving cars, there have been a variety of approaches, and even some false starts.

The most divergent paths may be the ones taken by Tesla, which is already selling cars that have some rudimentary self-driving functions, and Google, which is still very much in experimental mode.

Google's initial efforts in 2010 focused on cars that would drive themselves, but with a person behind the wheel to take over at the first sign of trouble and a second technician monitoring the navigational computer.

As a general concept, Google was trying to achieve the same goal as Tesla is claiming with the Autopilot feature it has promoted with the Model S, which has hands-free technology that has come under scrutiny after a fatal accident on a Florida highway.

But Google decided to play down the vigilant-human approach after an experiment in 2013, when the company let some of its employees sit behind the wheel of the self-driving cars on their daily commutes.

Engineers using onboard video cameras to remotely monitor the results were alarmed by what (p. B5) they observed -- a range of distracted-driving behavior that included falling asleep.

"We saw stuff that made us a little nervous," Christopher Urmson, a former Carnegie Mellon University roboticist who directs the car project at Google, said at the time.

The experiment convinced the engineers that it might not be possible to have a human driver quickly snap back to "situational awareness," the reflexive response required for a person to handle a split-second crisis.

So Google engineers chose another route, taking the human driver completely out of the loop. They created a fleet of cars without brake pedals, accelerators or steering wheels, and designed to travel no faster than 25 miles an hour.

For good measure they added a heavy layer of foam to the front of their cars and a plastic windshield, should the car make a mistake. While not suitable for high-speed interstate road trips, such cars might one day be able to function as, say, robotic taxis in stop-and-go urban settings.

For the full story, see:

JOHN MARKOFF. "Tesla and Google Take Two Roads to Driverless Car." The New York Times (Tues., JULY 5, 2016): B1 & B5.

(Note: the online version of the commentary has the date JULY 4, 2016, and has the title "Tesla and Google Take Different Roads to Self-Driving Car.")

July 20, 2016

The Lucky Success of the Half-Blind "Becomes the Inevitable Coup of the Assured Visionary"

(p. B1) The most fun business book I have read this year? "Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley," by a former Facebook executive, Antonio García Martinez. I was sent a galley copy several months ago and picked it up with no intention of reading more than the first couple of pages. I don't think I looked up until about three hours later.

This is a tell-all of Mr. Martinez's experience in venture capital and later at Facebook, filled with insights about Silicon Valley -- what he calls "the tech whorehouse" -- mixed with score-settling anecdotes that will occasionally make you laugh out loud. Clearly there will be people who hate this book -- which is probably one of the things that makes it such a great read.

The dedication page includes this gem: "To all my enemies: I could not have done it without you." Mr. Martinez is particularly incisive when it comes to illustrating how failed ideas that happen to work are often spun into great successes: "What was an improbable bonanza at the hands of the flailing half-blind becomes the inevitable coup of the assured visionary," he writes. "The world crowns you a genius, and you start acting like one."

For the full commentary, see:

Sorkin, Andrew Ross. "DEALBOOK; Tell-Alls, Strategic Plans and Cautionary Tales." The New York Times (Tues., JULY 5, 2016): B1 & B4.

(Note: the online version of the commentary has the date JULY 4, 2016, and has the title "DEALBOOK; A Reading List of Tell-Alls, Strategic Plans and Cautionary Tales in Finance.")

The book praised by Sorkin in the passage quoted above, is:

Martinez, Antonio Garcia. Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley. New York: Harper, 2016.

July 13, 2016

Computers and Humans as Complements Rather than Substitutes

(p. B1) "A lot of companies pushed hard on the idea that technology will solve every problem, and that we shouldn't use humans," said Paul English, the co-founder of a new online company called Lola Travel. (p. B10) "We think humans add value, so we're trying to design technology to facilitate the human-to-human connection."

. . .

"I tried to create the best travel website on the market," he said. "But as good as we thought our tech was, there were many times where I thought I did a better job for people on the phone than our site could do."

You've most likely experienced the headaches Mr. English is talking about. Think back to the last time you booked anything beyond a routine trip online. There's a good chance you spent a lot more time and energy than you would have with a human. Sure, the Internet has obligingly stepped in to help; there are review sites, travel blogs, discussion forums and the hordes on social media to answer every possible travel question. But these resources only exacerbate the problem. They often turn what should be a fun activity into an hourslong research project.

. . .

In many cases, yes, but there remain vast realms of commerce in which guidance from a human expert works much better than a machine. Other than travel, consider the process of finding a handyman or plumber. The Internet has given us a wealth of data about these services. You could spend all day on Craigslist, Yelp or Angie's List finding the best person for your job, which is precisely the problem.

"It's going to be a long time until a computer can replace the estimating power of an experienced handyman," said Doug Ludlow, the founder of the Happy Home Company, a one-year-old start-up that uses human experts to find the right person for your job. The company, which operates in the San Francisco Bay Area but plans to expand nationally, has contracts with a network of trusted service professionals in your area. To get some work done, you simply text your Happy Home manager with a description of the problem and maybe a few pictures.

"A quick glance from our handyman gives us an idea of who to send to your job, and what it will cost," Mr. Ludlow said. The company handles payment processing, scheduling and any complaints if something goes wrong.

I recently used Happy Home to get a few home theater cables concealed in a wall. The experience was liberating -- I found a handyman and a drywall specialist to do my job with little more than few texts, and no time spent scouring through web reviews.

It isn't feasible to get humans involved in all of our purchases. Humans are costly and they're limited in capacity. The great advantage of computers is that they "scale" -- software can serve evermore customers for ever-lower prices.

But one of the ironies of the digital revolution is that it has also helped human expertise scale. Thanks to texting, human customer service agents can now serve multiple customers at a time. They can also access reams of data about your preferences, allowing them to quickly find answers for your questions.

As a result, for certain purchases, the cost of adding human expertise can be a trivial part of the overall transaction. Happy Home takes a cut of each service it sets up, but because it can squeeze out certain efficiencies from operating a network of service professionals, its prices match what you'd find looking for a handyman on your own. That's true of human travel agencies, too -- the commissions on travel are so good that Lola can afford to throw in human expertise almost as a kind of bonus.

The rise of computers is often portrayed as a great threat to all of our jobs. But these services sketch out a more optimistic scenario: That humans and machines will work together, and we, as customers, will be allowed, once more, to lazily beg for help.

For the full commentary, see:

Manjoo, Farhad. "State of the Art; The Machines Rose, but Now Start-Ups Add Human Touch." The New York Times (Thurs., DEC. 17, 2015): B1 & B10.

(Note: ellipses added.)

(Note: the online version of the commentary has the date DEC. 16, 2015, and has the title "State of the Art; In a Self-Serve World, Start-Ups Find Value in Human Helpers.")

July 9, 2016

German Car Makers in No Rush to Catch Up to Tesla

(p. A7) When Elon Musk rolled out the new Tesla Model X at the end of September [2015], some grumbled that the Silicon Valley car maker's all-electric luxury crossover was coming to market two years too late. It depends on who you ask. The Big Three German auto makers only wish they could catch the tail of Mr. Musk's rocket.

I'm not talking about units sold, though Tesla's target of 50,000 cars in 2015 is a respectable chunk of the global luxury-sedan market. But Tesla has taken more hide off German prestige and sense of technical primacy. I mean, the Model X was just rubbing their noses in it with those "falcon" doors, right? In executive interviews at the Frankfurt Auto Show any praise of Tesla was guaranteed to land on the table like a paternity suit.

. . .

I wonder if any traditional auto maker whose existence does not hang in the balance can ever have enough belly for the EV long game?

Even if the Germans had market-bound EVs in mass quantities, there is the concurrent problem of charging. As the estimable John Voelcker of Green Car Reports notes, the luxury incumbents have no plans to challenge Tesla on charging availability. Tesla has hundreds of charging stations in the U.S. and Europe and plans for hundreds more--all free to owners.

. . .

I am struck by the lag time. This isn't about profit and loss but industry leadership. The Germans are headed where Tesla already is and, taking Frankfurt as the measure, they are in no great hurry to get there.

For the full commentary, see:

Dan Neil. "RUMBLE SEAT; How Tesla Leaves its Rivals Playing Catch Up." The Wall Street Journal (Sat., Oct. 10, 2015): D11.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the commentary has the date Oct. 8, 2015.)

July 1, 2016

"Robots Take Away Subhuman Jobs"

(p. A21) Joseph F. Engelberger, a visionary engineer and entrepreneur who was at the forefront of the robotics revolution, building robots for use on assembly lines and fostering another, named Seymour, to handle chores in hospitals, died on Tuesday [December 1, 2015] in Newtown, Conn. . . .

. . .

Mr. Engelberger was a force in robotics from its early days, in the 1960s, when his company, Unimation, in Danbury, Conn., developed the Unimate, a robotic arm that would greatly accelerate industrial production lines.

. . .

Labor unions and some corporate managers resisted robotics at first, worrying, as Mr. Engelberger later put it, "that the robots can take all the jobs away."

He disagreed with that notion.

"It's unjustified," he told The New York Times in 1997. "The robots take away subhuman jobs which we assign to people."

Unimate proved to be more precise than the human hand in completing some repetitive and dangerous tasks. Automobile makers employed the arm to weld and move vehicle parts, apply adhesives to windshields and spray-paint car bodies -- jobs that had posed chemical hazards to workers.

For the full obituary, see:

JEREMY PEARCE. "Joseph F. Engelberger, a Leader of the Robot Revolution, Dies at 90." The New York Times (Thurs., DEC. 3, 2015): A33.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the obituary has the date DEC. 2, 2015, and has the title "Joseph F. Engelberger, a Leader of the Robot Revolution, Dies at 90.")

June 29, 2016

Perfect Reliability Is Not Worth the Cost

(p. B4) Say what you will about Plain Old Telephone Service, but it worked. The functionality of POTS, as it was known, was limited to making calls, and they were expensive. But many traditional phone companies offered 99.999% reliability, which allowed for about five minutes of downtime a year.

Today's networks are far less expensive, infinitely more capable and nowhere near as reliable as the wired-to-the-wall phone, . . .

. . .

To some extent, contemporary networks suffer from inattention. The old phone system worked so well because regulators in certain countries like the U.S. said it had to, and enough money was set aside to fund an army of technicians and engineers to oversee it. That generally isn't the case with modern, digital networks and IT infrastructure, and companies often neglect this nuts-and-bolts technology.

. . .

Underneath it all, the economics of falling prices carry a trade-off. Consumers get more for their money in the mobile, digital era, but that often leaves margin-stretched companies with fewer resources to invest in robustness and maintenance. Reliability is as much a function of business and risk management as it is about tech.

"I don't know if people are sweating that detail as much as they used to," said Mr. Bayer, previously CIO of the Securities and Exchange Commission.

. . .

Former NYSE Euronext Chief Operating Officer Lawrence Leibowitz told the Journal in 2013 the public shouldn't expect market technology to function perfectly, a goal that would be too expensive to implement even if it were technically feasible.

For the full story, see:

STEVE ROSENBUSH and STEVEN NORTON. "Network Reliability, a Relic of Business?" The Wall Street Journal (Fri., July 10, 2015): B4.

(Note: ellipses added.)

(Note: the online version of the story has the date July 9, 2015 and has the title "What We Learned From the NYSE, United Airlines Tech Outages.")

June 6, 2016

Plastic Buttons Replaced Seashell Buttons, but Technology Can Be Restored

In What Technology Wants, Kevin Kelly has made the point that most obsolete technologies remain available to satisfy nostalgia, or for more practical uses, if the need arises. Below is another example.

(p. C27) In a tan outbuilding overlooking a pond in northeastern Connecticut, equipment for turning seashells into buttons has lain fallow for nearly eight decades. The building's owner, Mark Masinda, a retired university administrator, is working to transform the site into a tourist attraction.

In the early 1900s, his grandfather William Masinda, a Czech immigrant, supervised a dozen button makers in the building, which is on a rural road in Willington. They cut, drilled and polished bits of shells imported from Africa and Australia to make "ocean pearl buttons" with two or four holes. The area's half-dozen button factories supplemented the incomes of families struggling to farm on rocky terrain.

The Masinda operation closed in 1938, as plastic flooded the market. "The equipment he had just couldn't make the transition," Mr. Masinda said.

. . .

Mr. Masinda is planning to reactivate the equipment and open the site for tours by . . . spring [2016].

For the full story, see:

EVE M. KAHN. "Antiques; Restoring a Button Factory." The New York Times (Thurs., DEC. 3, 2015): C27.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the date DEC. 3, 2015, and has the title "Antiques; Yale Buys Collection of Scattered Medieval Pages; Restoring a Button Factory.")

The Kelly book mentioned above, is:

Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

May 26, 2016

Tesla Direct Sales Thwarted by Laws that Protect Dealers Instead of Consumers

(p. B3) Tesla Motors Inc. hopes to capture mainstream auto buyers with its Model 3, an electric car it plans to unveil this week at a price about the same as the average gasoline-powered vehicle, but it may need a federal court ruling to succeed.

The Palo Alto, Calif., auto maker's direct-to-consumer sales are prohibited by law in six states that represent about 18% of the U.S. new-car market. Barring a change of heart by those states, Tesla is preparing to make a federal case out of the direct-sales bans.

The auto maker's legal staff has been studying a 2013 federal appeals court ruling in New Orleans that determined St. Joseph Abbey could sell monk-made coffins to customers without having a funeral director's license. The case emerged amid a casket shortage after Hurricane Katrina. The abbey had tried to sell coffins, only to find state laws restricted such sales to those licensed by the Louisiana Board of Funeral Directors.

For now, Tesla is banking on a combination of new legislation, pending dealer applications and other factors to open doors to selling directly in Arizona, Michigan, Texas, Connecticut, Utah and West Virginia. But the company said it is ready to argue in federal court using the coffin case if necessary.

"It is widely accepted that laws that have a protectionist motivation or effect are not proper," Todd Maron, the auto maker's chief counsel, said in an interview. "Tesla is committed to not being foreclosed from operating in the states it desires to operate in, and all options are on the table."

. . .

"There is no legitimate competitive interest in having consumers purchase cars through an independent dealership," Greg Reed, an attorney with Washington D.C.-based Institute for Justice, a libertarian-leaning law firm, said. He calls Michigan's laws "anti-competitive protectionism."

For the full story, see:

MIKE RAMSEY. "Tesla Weighs Legal Fight." The Wall Street Journal (Tues., March 29, 2016): B3.

(Note: ellipsis added.)

(Note: the online version of the story has the date March 28, 2016, and has the title "Tesla Weighs New Challenge to State Direct-Sales Bans.")

April 29, 2016

Tesla Model 3 Excites Venturesome Consumers

America's venturesome consumers are hungry for products exciting enough to justify enthusiasm. They are desperate for evidence that the future can continue to look bright.

(p. B2) DETROIT -- Despite a steady stream of new models from a number of automakers, sales this year of electric and hybrid vehicles have failed to keep pace with the growth in the overall American market.

But if the market for electrified cars was slumbering, Tesla Motors woke it up with a jolt Thursday [March 31, 2016] with the unveiling of its coming Model 3 lineup of affordable, zero-emission vehicles.

Given that electric and hybrid vehicles account for only about 2 percent of last year's record-setting sales in the United States, the extraordinary reaction to Tesla's first mass-market model was a vivid demonstration of the potential demand in the segment.

"It shows that the future of electric vehicles is not necessarily bleak," said Alec Gutierrez, an analyst with the research firm Kelley Blue Book. "Maybe we've been waiting for the right products that resonate with consumers."

Tesla said on Friday that it had booked reservations -- at $1,000 each -- from nearly 200,000 people for the first Model 3 sedans, which will not be available until next year.

With a starting price of $35,000 and a battery range of 215 miles, the new Tesla is a big leap in the company's expansion beyond expensive luxury models.

"The final step in the master plan is a mass-market, affordable car," Elon Musk, Tesla's chief executive, said at the lavish introduction of the Model 3 held at the company's design studios in Hawthorne, Calif.

For the full story, see:

BILL VLASIC "In Clamor for new Tesla, Signs of an Electric Future." The New York Times (Sat., APRIL 2, 2016): B2.

(Note: bracketed date added.)

(Note: the online version of the story has the date APRIL 1, 2016, and has the title "Tesla's New Model 3 Jump-Starts Demand for Electric Cars.")

April 20, 2016

Tech Replaces Labor When Government Raises Labor Costs

(p. A11) In late 2013, Chili's and Applebee's announced that they were installing more than 100,000 tableside tablets at their restaurants across the country, allowing customers to order and pay their bill without ever talking to a waiter. The companies were soon followed by Buffalo Wild Wings, Panera Bread, Olive Garden and dozens of others. This means fewer servers covering more tables. Quick-service restaurant chains are also testing touch-screen ordering.

. . .

So why the increased use of technology? The major reason is consumer preference. Research shows that many appreciate the speed, order accuracy, and convenience of touch screens. This is particularly so among millennials who already do so much on smartphones and tablets. I've watched people--young and old--waiting in line to use the touch screens while employees stand idle at the counter.

The other reason is costs. While the technology is becoming much cheaper, government mandates have been making labor much more expensive.

In 2015, 14 cities and states approved $15 minimum wages--double the current federal minimum. Additionally, four states, 20 cities and one county now have mandatory paid-sick-leave laws generally requiring a paid week of time off each year per covered employee. And then there's the Affordable Care Act, which further raises employer costs.

For the full commentary, see:

ANDY PUZDER. "Why Restaurant Automation Is on the Menu; Forget about robot waiters, but technology helps cut government-imposed costs. And consumers like it." The Wall Street Journal (Fri., March 25, 2016): A11.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date March 24, 2016.)

April 1, 2016

Obama Says Stimulus Worked at Battery Plant Where CEO Remains "Frustrated" at Losses

(p. A12) JACKSONVILLE, Fla. -- President Obama on Friday [February 26, 2016] used a visit to a high-technology battery plant in Florida to argue that the hundreds of billions of dollars in federal subsidies he signed into law during his first days in office had bolstered the economy, transformed the nation's energy sector, and positioned the United States for a strong rebound.

But Mr. Obama's trip to the Saft America factory here, opened in 2011 with a $95.5 million investment from the Department of Energy, also highlighted the challenges that have tempered the economic recovery and the difficulty that the president has had in claiming credit for it.

. . .

After touring the facility and watching a large robot named Wall-E assembling one of the batteries, the president called the factory "tangible evidence" that his stimulus package had worked and said that the economy was better off for it. "We took an empty swamp and turned it into an engine of innovation," he said.

That engine, though, has sputtered as it has struggled to start here. Saft, based in Paris, announced last week that it was reducing the factory's value because it had still not gained profitability in the competitive lithium-ion battery market. Saying he was "frustrated," the company's chief executive projected the plant might not be profitable for a few more years.

For the full story, see:

JULIE HIRSCHFELD DAVIS. "Obama Praises Stimulus at Battery Plant." The New York Times (Sat., FEB. 27, 2016): A12.

(Note: ellipsis, and bracketed date, added.)

(Note: the online version of the story has the date FEB. 26, 2016, and has the title "Obama Points to Florida Factory as Evidence That Stimulus Worked.")

March 18, 2016

"Ordinary People Should Have a Go"

(p. A11) The classical archaeologist and now big-picture historian Ian Morris, whose last book argued that war is good for you, now explains why coal is too. In "Foragers, Farmers, and Fossil Fuels," Mr. Morris puts "energy capture" at the center of human values since the Ice Age, through three eras: the Foragers to begin with; the Farmers after about 8,000 B.C.; and, in the past few centuries, the Fossil Fuelers.

. . .

A culture favorable to liberty and dignity for commoners came out of the Reformation and 16th-century Holland, spread to Britain and Britain's colonies in the 18th century, and resulted after 1800 in an explosion of ingenuity.

This Great Enrichment, which Mr. Morris acknowledges but does not explain, increased income per head not by the 100% or 200% of earlier efflorescences but by anything from 2,000% to 10,000%. Routine materialism of Mr. Morris's sort can't explain the most important secular event in human history. He wants to pin it all on energy capture. The correct story is one of ideas of human equality changing, starting with a conviction novel in the 17th century in northwestern Europe that ordinary people should have a go. This led to massive innovation, among which was energy capture. We do not have a fossil-fuel civilization. We have a free and ingenious one.

For the full review, see:

DEIRDRE MCCLOSKEY. "BOOKSHELF; Oil on Troubled Waters; In this telling, progress is explained by the rising use of fossil fuels. Yet the Industrial Revolution was powered by water, not coal.."The Wall Street Journal (Mon., July 6, 2015): A11.

(Note: ellipsis added.)

(Note: the online version of the review has the date July 5, 2015.)

The book under review, is:

Morris, Ian. Foragers, Farmers, and Fossil Fuels: How Human Values Evolve, The University Center for Human Values Series. Princeton, NJ: Princeton University Press, 2015.

March 5, 2016

New Middle-Skill Jobs Combine Technical and Social Skills

DemingGraphOnMathSocialSkillJobs2015-10-18.jpgSource of graph: online version of the NYT article quoted and cited below, based on Deming paper cited further below.

(p. 4) For all the jobs that machines can now do -- whether performing surgery, driving cars or serving food -- they still lack one distinctly human trait. They have no social skills.

Yet skills like cooperation, empathy and flexibility have become increasingly vital in modern-day work. Occupations that require strong social skills have grown much more than others since 1980, according to new research. And the only occupations that have shown consistent wage growth since 2000 require both cognitive and social skills.

The findings help explain a mystery that has been puzzling economists: the slowdown in the growth even of high-skill jobs. The jobs hit hardest seem to be those that don't require social skills, throughout the wage spectrum.

"As I'm speaking with you, I need to think about what's going on in your head -- 'Is she bored? Am I giving her too much information?' -- and I have to adjust my behavior all the time," said David Deming, associate professor of education and economics at Harvard University and author of a new study. "That's a really hard thing to program, so it's growing as a share of jobs."

. . .

"If it's just technical skill, there's a reasonable chance it can be automated, and if it's just being empathetic or flexible, there's an infinite supply of people, so a job won't be well paid," said David Autor, an economist at the Massachusetts Institute of Technology. "It's the interaction of both that is virtuous."

Mr. Deming's conclusions are supported by previous research, including that of Mr. Autor. Mr. Autor has written that traditional middle-skill jobs, like clerical or factory work, have been hollowed out by technology. The new middle-skill jobs combine technical and interpersonal expertise, like physical therapy or general contracting.

James Heckman, a Nobel Prize-winning economist, did groundbreaking work concluding that noncognitive skills like character, dependability and perseverance are as important as cognitive achievement. They can be taught, he said, yet American schools don't necessarily do so.

For the full commentary, see:

Claire Cain Miller. "The Upshot; The Best Jobs Require Social Skills." The New York Times, SundayReview Section (Sun., OCT. 18, 2015): 4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date OCT. 16, 2015, and has the title "The Upshot; Why What You Learned in Preschool Is Crucial at Work.")

The Deming paper referred to above, is:

Deming, David J. "The Growing Importance of Social Skills in the Labor Market." National Bureau of Economic Research, Inc., NBER Working Paper # 21473, Aug. 2015.

The Autor paper referred to above, is:

Autor, David. "Polanyi's Paradox and the Shape of Employment Growth." National Bureau of Economic Research, Inc., NBER Working Paper # 20485, Sept. 2014.

The Heckman paper referred to above, is:

Heckman, James J., Jora Stixrud, and Sergio Urzua. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior." Journal of Labor Economics 24, no. 3 (July 2006): 411-82.

March 4, 2016

Technology Extends Capabilities of Older Japanese

(p. A1) TOKYO--At an office-building construction site in the center of Japan's capital, 67-year-old Kenichi Saito effortlessly stacks 44-pound boards with the ease of a man half his age.

His secret: a bendable exoskeleton hugging his waist and thighs, with sensors attached to his skin. The sensors detect when Mr. Saito's muscles start to move and direct the machine to support his motion, cutting his load's effective weight by 18 pounds.

"I can carry as much as I did 10 years ago," says the hard-hatted Mr. Saito.

Mr. Saito is part of an experiment by Obayashi Corp. , the construction giant handling the building project, to confront one of the biggest problems facing the company and the country: a chronic labor shortage resulting from a rapidly aging population. The exoskeleton has allowed Mr. Saito to extend his working life--and Obayashi to keep building.

. . .

(p. A14) The Fujisawa Aikoen nursing home about an hour outside Tokyo started leasing the "hybrid assistive limb," or HAL, exoskeletons from maker Cyberdyne Inc. in June.

In Hokkaido, 60-year-old potato-pickers use rubber "smart suits" making it easier to bend over. Baggage handlers at Tokyo's Haneda airport employ similar assistance.

In cases where older people simply can't do the job or aren't available, Japanese manufacturers are turning to robots, which help them keep costs down and continue growing.

Bank of Tokyo Mitsubishi UFJ, Japan's largest bank, employs a small robot speaking 19 languages to greet customers, while a Nagasaki hotel staffed mainly by robots opened in July. Komatsu Ltd. is developing self-driving vehicles for construction sites, while industrial robot maker Fanuc Corp. is designing machines that repair each other.

Toyota Motor Corp. is testing in homes its "human support robot," a videophone/remote-controlled android that allows family and friends to perform tasks for distant elderly people as if they were in the same home. In one demonstration, a young man uses a tablet to look around a bed-bound older man's room, then directs the robot to open the curtains and bring the older man a drink.

SoftBank Group Corp. earlier this year drew global attention when it put on sale in Japan an automaton called Pepper, which it called the world's first robot capable of understanding emotions. One of the earliest uses for the 4-foot-tall white humanoid is as a nursing helper.

In a Kanagawa Prefecture test, Pepper entertained a room of 30 80- to 90-year-olds for 40 minutes. He led them in light exercises and tested their ability to recognize colors and letters. Women patted his head like a grandchild.

Showing a video of Pepper with a dementia patient on another occasion, Shunji Iyama, one of the developers, says the robot may sometimes work better than people. "That man keeps repeating himself over and over again," Mr. Iyama said. "If Pepper were human, he'd get fed up, but he just repeats the same reaction and doesn't get tired."

For the full story, see:

Jacob M. Schlesinger and Alexander Martin. "Graying Japan Tries to Embrace the Golden Years." The Wall Street Journal (Mon., Nov. 30, 2015): A1 & A14.

(Note: ellipsis added.)

(Note: the online version of the story has the date Nov. 29, 2015, and has the title "Graying Japan Tries to Embrace the Golden Years.")

March 3, 2016

To Get the High-Hanging Fruit, Grow Shorter Trees

Dr. Gennaro Fazio, a plant breeder and geneticist with the USDA's Agricultural Resource Service tells us . . . :

"In taller apple trees, the fruit that is high up, exposed to the sun, ripens the fastest. Low-hanging fruit doesn't get much sun, and it's not as ripe -- not so delectable, you could say -- as the higher fruit. You want to pick the low-hanging fruit last, so it has more time to develop."

But according to Fazio none of this ultimately matters: the idiom "low-hanging fruit" has been rendered totally and utterly irrelevant by the changing nature of apple tree genetics.

When "low-hanging fruit" became a metaphor in the late 1960s, the majority of apple trees in the U.S. were 25- to 30-foot tall goliaths--and the only fruits within reach were those that lingered on lower branches. Today, however, the majority of apple trees are what arborists refer to as "dwarfs."

. . .

Once hesitant that the smaller trees wouldn't produce as much fruit, apple growers realized dwarf trees were actually far more profitable. "Farmers get a higher yield per acre," says Heather Faubert, of the Rhode Island Fruit Growers Association. "With the taller trees, you could only plant about 20 trees per acre; now, you can get as many as 2,000 in the same space."

The result of these smaller trees is that the lowest-hanging fruits are actually no longer the easiest to pick. In fact, picking them requires repeatedly bending over to knee-level, a maneuver that can prove incredibly straining on the lower back.

"The ergonomics of picking apples have completely changed," says Fazio. "It really no longer makes sense to go for the low-hanging fruit. The phrase is irrelevant."

For the full story, see:, "Should You Literally Pick the Low-Hanging Fruit?," Feb. 5, 2016, URL:

(Note: ellipses added.)

The web page was excerpted in:

"Notable & Quotable: 'Low-Hanging Fruit'." The Wall Street Journal (Weds., Feb. 10, 2016): A11.

(Note: the online version of the article has the date Feb. 9, 2016.)

February 12, 2016

Innovators Need Time for Tedious Tasks

(p. 3) Innovation isn't all about eureka moments. In fact, the road to creative breakthroughs is paved with mundane, workaday tasks. That's the message of a recent study that might as well be titled "In Praise of Tedium."

In the study, researchers sought to examine how extended periods of free time affect innovation. To do this, they analyzed activity on Kickstarter, the crowdfunding website, in nearly 6,000 American cities.

. . .

Over a period of about nine months, the researchers found a sharp increase in the number of new projects posted during the first few days of school break periods. The spike, they suggest, is tied to people having more time to perform the administrative aspects of Kickstarter projects -- working on a manufacturing plan, say, or setting up a rewards schedule. While people may be using some stretches of free time to nurture those much lauded light bulb moments, the process of innovation also appears to require time to carry out execution-oriented tasks that are not particularly creative but still necessary to transform an idea into a product, the study indicates.

For the full story, see:

PHYLLIS KORKKI. "Applied Science; Good Ideas Need Time for Tedious Legwork." The New York Times, SundayBusiness Section (Sun., AUG. 16, 2015): 3.

(Note: ellipsis added.)

(Note: the online version of the story has the date AUG. 15, 2015, and has the title "Applied Science; Looking for a Breakthrough? Study Says to Make Time for Tedium.")

The academic paper summarized in the passages quoted above, is:

Agrawal, Ajay, Christian Catalini, and Avi Goldfarb. "Slack Time and Innovation." Rotman School of Management Working Paper #2599004, April 25, 2015.

February 10, 2016

Serendipitous Fix for Colorblindness

(p. 3) The eyeglass lenses that Don McPherson invented were meant for surgeons. But through serendipity he found an entirely different use for them: as a possible treatment for colorblindness.

Mr. McPherson is a glass scientist and an avid Ultimate Frisbee player. He discovered that the lenses he had invented, which protect surgeons' eyes from lasers and help them differentiate human tissue, caused the world at large to look candy-colored -- including the Frisbee field.

At a tournament in Santa Cruz, Calif., in 2002, while standing on a grassy field dotted with orange goal-line cones, he lent a pair of glasses with the lenses to a friend who happened to be colorblind. "He said something to the effect of, 'Dude, these are amazing,' " Mr. McPherson says. "He's like, 'I see orange cones. I've never seen them before.' "

Mr. McPherson was intrigued. He said he did not know the first thing about colorblindness, but felt compelled to figure out why the lenses were having this effect. Mr. McPherson had been inserting the lenses into glasses that he bought at stores, then selling them through Bay Glass Research, his company at the time.

Mr. McPherson went on to study colorblindness, fine-tune the lens technology and start a company called EnChroma that now sells glasses for people who are colorblind. His is among a range of companies that have brought inadvertent or accidental inventions to market. Such inventions have included products as varied as Play-Doh, which started as a wallpaper cleaner, and the pacemaker, discovered through a study of hypothermia.

. . .

EnChroma was still struggling to solve its marketing conundrum when another serendipitous event occurred: A paint company wanted to finance an ad campaign featuring the glasses. The idea was to introduce color to the colorblind. To that end, videos were made of EnChroma users wearing the glasses for the first time while looking at things like sunsets, colorful artwork and, of course, paint samples.

The ad campaign increased EnChroma's sales and spurred a trend: New EnChroma customers began filming and sharing their experiences online. The company placed inserts in its eyeglass boxes encouraging customers to participate.

Prompted by the insert, Bob Balcom, a 60-year-old retired high school science teacher and labor relations specialist in Chatham, N.Y., uploaded his first YouTube video in March. Shot by his wife, it shows Mr. Balcom putting the glasses over his own eyeglasses and staring up at the sky quietly for several seconds. "The blue sky is deeper than I've ever seen," he says. "It reminds me of Colorado. And the pine trees, they're just so green." Tears stream down his cheeks and into his gray beard.

For the full story, see:

CLAIRE MARTIN. "Finding a Niche for the Accidental Spectacles." The New York Times, SundayBusiness Section (Sun., AUG. 16, 2015): 3.

(Note: ellipsis, and bracketed dates, added.)

(Note: the online version of the story has the date AUG. 15, 2015, and has the title "EnChroma's Accidental Spectacles Find Niche Among the Colorblind." )

January 19, 2016

Private Start-Ups Pursue Fusion Approaches Ignored by Government

(p. B5) Fusion reactions release no carbon dioxide. Their fuel, derived from water, is abundant. Compared with contemporary nuclear reactors, which produce energy by splitting atoms apart, a fusion plant would produce little radioactive waste.

The possibilities have attracted Jeffrey P. Bezos, founder of He has invested in General Fusion, a start-up in British Columbia, through Bezos Expeditions, the firm that manages his venture capital investments. Paul Allen, a co-founder of Microsoft, is betting on another fusion company, Tri Alpha Energy, based in Foothill Ranch, Calif., an hour south of Los Angeles, through his venture arm, Vulcan Capital.

Peter Thiel -- the co-founder of PayPal, who once lamented the superficiality of the technology sector by saying, "We were promised flying cars and we got 140 characters" -- has invested in a third fusion start-up, Helion Energy, based near Seattle, through Mithril Capital Management.

Government money fueled a surge in fusion research in the 1970s, but the fusion budget was cut nearly in half over the next decade. Federal research narrowed on what scientists saw as the most promising prototype -- a machine called a tokamak, which uses magnets to contain and fuse a spinning, doughnut-shape cloud of hydrogen.

Today's start-ups are trying to perfect some of the ideas that the government left by the wayside.

After earning his doctorate from the University of California, Irvine, in the mid-1990s, Michl Binderbauer had trouble securing federal funds to research an alternative approach to fusion that the American government briefly explored -- one that adds the element boron into the hydrogen fuel. The advantage of the mixture is that the reaction does not fling off neutrons that, like shrapnel, can wear down machine parts and make them radioactive.

Mr. Binderbauer, along with his Ph.D. adviser, Norman Rostoker, founded Tri Alpha Energy, eventually raising money from the venture capital arms of Mr. Allen and the Rockefeller family. The company has raised over $200 million.

For the full story, see:

DINO GRANDONI. "Start-Ups Take on Challenge of Fusion." The New York Times (Mon., OCT. 26, 2015): B1 & B5.

(Note: the online version of the story has the date OCT. 25, 2015, and has the title "Start-Ups Take On Challenge of Nuclear Fusion.")

January 12, 2016

North Dakota Plans a Drone Silicon Valley

For many years state governments and universities have been trying to plan the creation of new Silicon Valleys in their own backyards. Success has been elusive. Now North Dakota is tying to create a drone Silicon Valley. My take: Silicon Valleys cannot be planned, though they can be encouraged by low taxes and limited regulations.

(p. A1) FARGO, N.D. -- "California and New York want what we've got," said Shawn Muehler, a 30-year-old Fargo resident, gazing at a horizon of empty fields, silos, windbreak trees and hardly any people. A winged craft traces the air, mapping a field with pinpoint accuracy for his start-up, a drone software company called Botlink. "They like drones, but they've got a steep learning curve ahead."

For years, entrepreneurs have come here to farm and to drill for oil and natural gas. Now a new, tech-savvy generation is grabbing a piece of the growing market for drone technology and officials want to help them do it here, where there is plenty of open space and -- unlike in other sparsely populated states -- lots of expertise already in place.

Silicon Valley has the big money and know-how, Mr. Muehler and others say, but North Dakota can take unmanned aerial vehicles, as the officials prefer to call drones, from a fast-growing hobby to an industry. And just as Silicon Valley got its start with military contracts, entrepreneurs and cooperative universities, they believe they can do the same with drones.

"The potential up here is tremendous," said Jack Dalrymple, the state's governor. "It's not about supporting a company or two; it's creating the leading edge of an industry."

North Dakota has spent about (p. B7) $34 million fostering the state's unmanned aerial vehicle business, most notably with a civilian industrial park for drones near Grand Forks Air Force Base. The base, a former Cold War installation, now flies nothing but robot aircraft for the United States military and Customs and Border Protection.

For the full story, see:

QUENTIN HARDY. "A Silicon Valley for Drone Craft in Great Plains." The New York Times (Sat., DEC. 26, 2015): A1 & B7.

(Note: the online version of the story has the date DEC. 25, 2015, and has the title "A Silicon Valley for Drones, in North Dakota.")

January 8, 2016

How to Monopolize a Dead Technology

(p. C3) LOS ANGELES -- When Quentin Tarantino's "The Hateful Eight" is released in a special roadshow version (with overture, intermission and additional footage) on Dec. 25, it will represent a feat worthy of the heist in the director's "Jackie Brown."

The film is scheduled to open on 96 screens in the United States and four in Canada, all in 70-millimeter projection, a premium format associated with extravaganzas of the 1950s and 1960s.

Yet from a theatrical standpoint, the technology is nearly obsolete. Last year, "Interstellar" opened in 70 millimeter at only 11 comparable locations. There were only 16 in 2012 for "The Master," which renewed interested in the format. No film has opened with 100 70-millimeter prints since 1992. According to the National Association of Theater Owners, 97 percent of the 40,000 screens in the United States now use digital projection.

. . .

"We looked around for anybody who was selling them," said Erik Lomis, Weinstein's president of theatrical distribution and home entertainment. "We tried to keep it as quiet as possible as to why. Eventually word leaked out why we were looking for them, and then the price went up."

. . .

"We've been accused of actually cornering the market on 70-millimeter projectors," Mr. Cutler said. "It's probably pretty true. There probably aren't too many out there that we didn't find." Most of them were destroyed, he added, during the conversion to digital projection.

. . .

Ultra Panavision also produces subtle aesthetic effects, unusual even to viewers familiar with 70 millimeter. The lens "for lack of a better word is a softer lens," Mr. Sasaki said. During a screening of test footage for the film, he pointed out the impressionistic qualities of the focus and explained how the image catered to our eyes' natural depth cues.

With projectors found and lenses made, the next hurdle is labor: Most theaters no longer have projectionists with a working knowledge of these machines. Mr. Cutler's company will provide training for each site. "One way or the other, we will fulfill this need," he said. "It will be a combination of house staff that we can train, professional projectionists that we can bring in, projectionists that we can find locally, and potentially some technical staff that we'll bring in." Every theater showing the film will get a spare set of belts, fuses and light bulbs, and instructions. Mr. Cutler's staff will also be standing by for calls.

For the full story, see:

BEN KENIGSBERG. "In a World Gone Digital, Room for a Lost Format." The New York Times (Thurs., NOV. 12, 2015): C3.

(Note: ellipses added.)

(Note: the online version of the story has the date NOV. 11, 2015, and has the title "Tarantino's 'The Hateful Eight' Resurrects Nearly Obsolete Technology.")

December 30, 2015

Hungry Suffer Due to G.M.O. Bans by Europe's "Coalition of the Ignorant"

(p. 6) CALL it the "Coalition of the Ignorant." By the first week of October [2015], 17 European countries -- including Austria, Denmark, France, Germany, Greece, Hungary, Italy, the Netherlands and Poland -- had used new European Union rules to announce bans on the cultivation of genetically modified crops.

. . .

I have spent time with malnourished children in Tanzania whose families were going hungry because cassava crops were wiped out by brown-streak disease. That was particularly painful because in neighboring Uganda I had recently visited trial plots of genetically modified cassava that demonstrated complete resistance to the virus. The faces of the hungry children come to mind every time I hear European politicians boast about their country's G.M.O. ban and demand that the rest of the world follow suit -- as Scotland's minister did in August.

Thanks to Europe's Coalition of the Ignorant, we are witnessing a historic injustice perpetrated by the well fed on the food insecure. Europe's stance, if taken up internationally, risks marginalizing a critically important technology that we must surely employ if humanity is to feed itself sustainably in an increasingly difficult and challenging future. I can only hope that the Continent's policy makers come to their senses before it is too late.

For the full commentary, see:

MARK LYNAS. "With G.M.O. Policies, Europe Turns Against Science." The New York Times, SundayReview Section (Sun., OCT. 25, 2015): 6.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the commentary was updated on OCT. 24, 2015, and has the title "With G.M.O. Policies, Europe Turns Against Science.")

December 29, 2015

FDA Forces Child to Go to London to Get Drug to Fight His Cancer

(p. A15) How far would you go to get a drug that could save your child's life? Across an ocean? That is exactly what the federal government is forcing some American families with dying children to do.

In 2012, when Diego Morris was 11 years old, he was diagnosed with a deadly cancer in his leg called osteosarcoma. Doctors at St. Jude Children's Research Hospital in Memphis, Tenn., removed the tumor, but the prognosis was poor. There was a significant risk that even extensive chemotherapy after surgery would not prevent the cancer from returning.

Fortunately, a team of doctors at MD Anderson Cancer Center in Houston and Memorial Sloan Kettering Cancer Center in New York City had developed a revolutionary new drug, mifamurtide (MTP), that can prevent osteosarcoma from coming back. A study by Dr. Eugenie Kleinerman of MD Anderson and Dr. Paul Meyers of Sloan Kettering showed the drug resulted in a 30% reduction in the osteosarcoma mortality rate at eight years after diagnosis.

The drug was approved in 2009 by the European Medicines Agency and is currently the standard of care in Europe, Israel and many other countries. In 2012 it received the prestigious Prix Galien Award, the gold medal for pharmaceutical research and development in the United Kingdom.

MPT was exactly what Diego needed. But there was one problem: The drug was not available in America because the Food and Drug Administration had rejected it, demanding additional studies. That meant that Diego had to travel from Phoenix to London to get the drug he needed to save his life--a drug that was available in almost every industrialized nation and should have been available in the U.S.

For the full commentary, see:

DARCY OLSEN. "Winning the Right to Save Your Own Life; As the FDA dawdles, 24 states pass 'right-to-try' laws giving terminally ill patients access to drugs." The Wall Street Journal (Fri., Nov. 27, 2015): A15.

(Note: the online version of the commentary has the date Nov. 26, 2015.)

Olsen's commentary is related to her book:

Olsen, Darcy. The Right to Try: How the Federal Government Prevents Americans from Getting the Lifesaving Treatments They Need. New York: HarperCollins Publishers, 2015.

December 16, 2015

Those Who Try Japanese Toilets, Praise Them with "Cultish Devotion"

(p. D12) Last year, Bennett Friedman, who owns a plumbing showroom in Manhattan called AF New York, took a business trip to Milan. On the morning of his return he faced a choice: stop in the bathroom there or wait until he got home. The flight was nine hours. He waited.

The move seems almost masochistic. But in his home and office bathrooms, Mr. Friedman had installed a Toto washlet. To sit upon a standard commode, he said, would be like "going back to the Stone Age."

"It feels very uncivilized," he said.

For those who own Japanese toilets, there is a cultish devotion. They boast heated seats, a bidet function for a rear cleanse and an air-purifying system that deodorizes during use. The need for toilet paper is virtually eliminated (there is an air dryer) and "you left the lid up" squabbles need never take place (the seat lifts and closes automatically in many models).

. . .

Most washlet owners, then, are converted after trying one out in the world. At a boutique hotel, say, or on a trip to Asia.

Such was the case with Robert Aboulache. Before he and his family went on a vacation to Japan, he said, friends who had visited the country told him he would love the toilets. "I thought, 'How great can the toilets be?'" Mr. Aboulache said. "They were amazing. Some have noisemakers to cover up the sound. You can pivot that little sprayer. The water can be heated or not. We got home, and I thought, 'This is not the same.'"

Three days later, Mr. Aboulache went online and bought a Toto washlet, which he installed in the shared upstairs bathroom of his home in Los Angeles as a surprise for his wife and son.

"We've been delighted," he said. "It's our favorite toilet."

. . .

Mr. Friedman, too, is an enthusiastic proselytizer for washlets, in his showroom and out in social situations, something you gather he would do even if he didn't sell them.

Whenever he talks about their virtues, he said, "I feel like one of the Apostles passing the word of God."

For the full story, see:

STEVEN KURUTZ. "For Its Devotees, the Seat of Luxury." The New York Times (Thurs., NOV. 19, 2015): D12.

(Note: ellipses added.)

(Note: the online version of the story has the date NOV. 18, 2015, and has the title "The Cult of the Toto Toilet.")

December 8, 2015

Climate Change Likely to Be Slower and Less Harmful than Feared

(p. A11) . . . , we are often told by journalists that the science is "settled" and there is no debate. But scientists disagree: They say there is great uncertainty, and they reflected this uncertainty in their fifth and latest assessment for the United Nations Intergovernmental Panel on Climate Change (IPCC). It projects that temperatures are likely to be anything from 1.5 to 4.5 degrees Celsius (2.7 to 8.1 degrees Fahrenheit) warmer by the latter part of the century--that is, anything from mildly beneficial to significantly harmful.

As for the impact of that future warming, a new study by a leading climate economist, Richard Tol of the University of Sussex, concludes that warming may well bring gains, because carbon dioxide causes crops and wild ecosystems to grow greener and more drought-resistant. In the long run, the negatives may outweigh these benefits, says Mr. Tol, but "the impact of climate change does not significantly deviate from zero until 3.5°C warming."

Mr. Tol's study summarizes the effect we are to expect during this century: "The welfare change caused by climate change is equivalent to the welfare change caused by an income change of a few percent. That is, a century of climate change is about as good/bad for welfare as a year of economic growth. Statements that climate change is the biggest problem of humankind are unfounded: We can readily think of bigger problems." No justification for prioritizing climate change over terrorism there.

. . .

To put it bluntly, climate change and its likely impact are proving slower and less harmful than we feared, while decarbonization of the economy is proving more painful and costly than we hoped. The mood in Paris will be one of furious pessimism among the well-funded NGOs that will attend the summit in large numbers: Decarbonization, on which they have set their hearts, is not happening, and they dare not mention the reassuring news from science lest it threaten their budgets.

Casting around for somebody to blame, they have fastened on foot-dragging fossil-fuel companies and those who make skeptical observations, however well-founded, about the likelihood of dangerous climate change. Scientific skeptics are now routinely censored, or threatened with prosecution. One recent survey by Rasmussen Reports shows that 27% of Democrats in the U.S. are in favor of prosecuting climate skeptics. This is the mentality of religious fanaticism, not scientific debate.

For the full commentary, see:

MATT RIDLEY And BENNY PEISER. "Your Complete Guide to the Climate Debate; At the Paris conference, expect an agreement that is sufficiently vague and noncommittal for all countries to claim victory." The Wall Street Journal (Sat., Nov. 28, 2015): A11.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Nov. 27, 2015.)

The Tol working paper mentioned above, is:

Tol, Richard S. J. "Economic Impacts of Climate Change." University of Sussex Economics Working Paper No. 75-2015.

November 29, 2015

For Movies, Film Option Survives Digital Advance

(p. B1) Faced with the possible extinction of the material that made Hollywood famous, a coalition of studios is close to a deal to keep Eastman Kodak Co. in the business of producing movie film.

The negotiations--secret until now--are expected to result in an arrangement where studios promise to buy a set quantity of film for the next several years, even though most movies and television shows these days are shot on digital video.

Kodak's new chief executive, Jeff Clarke, said the pact will allow his company to forestall the closure of its Rochester, N.Y., film manufacturing plant, a move that had been under serious consideration. Kodak's motion-picture film sales have plummeted 96% since 2006, from 12.4 billion linear feet to an estimated 449 million this year. With the exit of competitor Fujifilm Corp. last year, Kodak is the only major company left producing motion-picture film.

. . .

Film and digital video both "are valid choices, but it would be a tragedy if suddenly directors didn't have the opportunity to shoot on film," said Mr. Apatow. director of comedies including "Knocked Up" and "The 40 Year-Old Virgin," speaking from the New York set of his coming movie "Trainwreck," which he is shooting on film. "There's a magic to the grain and the color quality that you get with film."

For the full story, see:

BEN FRITZ. "Movie Film, at Death's Door, Gets a Reprieve." The Wall Street Journal (Weds., July 30, 2014): B1 & B8.

(Note: ellipsis added.)

(Note: the online version of the article was dated July 29, 2014.)

November 22, 2015

Skills Gap Is Bigger Labor Market Problem than Technology Progress

(p. A17) Technology disrupting the workforce is not a new phenomenon and it has never proved a lasting impediment for those eager to work. The invention of, say, the internal-combustion engine put buggy-whip makers and carriage assemblers out of business, but it created many more jobs in the manufacture, advertising, sales and maintenance of automobiles. Other technologies, from the cotton gin to the airplane, expanded job opportunities and created goods and services that made the hard work worthwhile.

What is unique about today's digital revolution is the suspicion, fanned by progressives, that for the first time technology threatens to make obsolete not only some jobs--as assembly-line robotics has, for instance--but human labor itself.

. . .

That poor schooling, and not some intrinsic human limitation, is the real barrier to full employment seems to be borne out by what economists call the "skills gap." More than nine million Americans are currently looking for work, but 5.4 million job openings continue to sit unfilled, according to the Bureau of Labor Statistics. Most of the largest increases have been in health care or professional and business services.

In a recent study by the large U.S. online job site, CareerBuilder, more than half the employers surveyed had positions for which they could not find qualified candidates: 71% had trouble finding information-technology specialists, 70% engineers, 66% managers, 56% health-care and other specialists, and 52% financial operations personnel. Nearly half of small and medium-size employers say they can find few or no "qualified applicants" for recent vacancies, according to the latest survey by the National Federation of Independent Businesses.

With the Labor Department conceding that help-wanted postings have "remained at a historically high level," this is the time not to rail against technology but to use it to make education more effective: gearing coursework to the learning styles of individual students, identifying and remedying disabilities early on, and providing online access to the best classes in the world.

For the full commentary, see:

LEWIS M. ANDREWS. "Robots Don't Mean the End of Human Labor; The left frets about the impact of technology, but new jobs will be created. The real problem is bad schools." The Wall Street Journal (Mon., Aug. 24, 2015): A13.

(Note: ellipsis added.)

(Note: the online version of the commentary was updated on Aug. 23, 2015.)

November 12, 2015

The Cure for Technology Problems Is Better Technology

(p. D2) The real lesson in VW's scandal -- in which the automaker installed "defeat devices" that showed the cars emitting lower emissions in lab tests than they actually did -- is not that our cars are stuffed with too much technology. Instead, the lesson is that there isn't enough tech in vehicles.

In fact, the faster we upgrade our roads and autos with better capabilities to detect and analyze what's going on in the transportation system, the better we'll be able to find hackers, cheaters and others looking to create havoc on (p. B11) the highways.

. . .

"What happened at Volkswagen had to do with embedded software that's buried deep in the car, and only the supplier knows what's in it -- and it's a black box for everybody else," said Stefan Heck, the founder of Nauto, a new start-up that is introducing a windshield-mounted camera that monitors road conditions for commercial fleets and consumers. The camera uses artificial intelligence to track traffic conditions; over time, as more vehicles use it, it could provide users with traffic and safety information plus data about mileage and other automotive functions.

The end goal for intelligent-car systems, said Dr. Heck, is to create an on-road network with data that is constantly being analyzed to get a sharper picture of what's happening on the road. Sure, companies might still be able to cheat. But with enough independent data sources coming from different places on the road, it would become much more difficult.

He said there really isn't any going back -- software in cars is responsible not just for driver comforts like in-dash navigation, but also for critical safety and performance systems, many of which improve the car's environmental footprint.

For the full commentary, see:

Farhad Manjoo. "STATE OF THE ART; Our Cars Need More Technology." The New York Times (Thurs., Oct. 1, 2015): B1 & B11.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date SEPT. 30, 2015, and the title "STATE OF THE ART; VW Scandal Shows a Need for More Tech, Not Less." )

November 10, 2015

Steve Jobs as Demanding Consumer: Jerk or Benefactor?

(p. D2) Mr. Jobs said he wanted freshly squeezed orange juice.

After a few minutes, the waitress returned with a large glass of juice. Mr. Jobs took a tiny sip and told her tersely that the drink was not freshly squeezed. He sent the beverage back, demanding another.

A few minutes later, the waitress returned with another large glass of juice, this time freshly squeezed. When he took a sip he told her in an aggressive tone that the drink had pulp along the top. He sent that one back, too.

My friend said he looked at Mr. Jobs and asked, "Steve, why are you being such a jerk?"

Mr. Jobs replied that if the woman had chosen waitressing as her vocation, "then she should be the best."

. . .

. . . it wasn't until my mother found out that she had terminal cancer in mid-March and was given a prognosis of only two weeks to live that I learned even if a job is just a job, you can still have a profound impact on someone else's life. You just may not know it.

. . .

. . . one evening my mother became incredibly lucid and called for me. She was craving shrimp, she said. "I'm on it," I told her as I ran down to the kitchen. "Shrimp coming right up!"

. . .

The restaurant was bustling. In the open kitchen in the back I could see a dozen men and women frantically slaving over the hot stoves and dishwashers, with busboys and waiters rushing in and out.

While I stood waiting for my mother's shrimp, I watched all these people toiling away and I thought about what Mr. Jobs had said about the waitress from a few years earlier. Though his rudeness may have been uncalled-for, there was something to be said for the idea that we should do our best at whatever job we take on.

This should be the case, not because someone else expects it. Rather, as I want to teach my son, we should do it because our jobs, no matter how seemingly small, can have a profound effect on someone else's life; we just don't often get to see how we're touching them.

Certainly, the men and women who worked at that little Thai restaurant in northern England didn't know that when they went into work that evening, they would have the privilege of cooking someone's last meal.

It was a meal that I would unwrap from the takeout packaging in my mother's kitchen, carefully plucking four shrimp from the box and meticulously laying them out on one of her ornate china plates before taking it to her room. It was a meal that would end with my mother smiling for the last time before slipping away from consciousness and, in her posh British accent, saying, "Oh, that was just lovely."

For the full commentary, see:

NICK BILTON. "Rites of Passage; Life Lessons from Steve Jobs." The New York Times, SundayReview Section (Fri., AUG. 7, 2015): D2.

(Note: ellipses added.)

(Note: the online version of the commentary has the title "Rites of Passage; What Steve Jobs Taught Me About Being a Son and a Father.")

October 30, 2015

Exponential Entrepreneurs Get Rich by Innovating (and Fleecing?)

The reviewer's concern about technology platforms fleecing the masses is shared by Jaron Lanier who describes, and tries to solve it, in a thought-provoking book called Who Owns the Future? (Hint: his solution involves an extension of property rights.)

(p. A9) The exponential entrepreneurs are "paving the way for a new world of abundance" by finding big problems and exploiting the "Six D's": digitalization, deception, disruption, demonetization, dematerialization, democratization.

Take the case of Kodak and photography. First came the technology that allowed photographs to be taken and stored digitally rather than on film--digitization. But it seemed too trivial for a giant like Kodak to worry about--an act of self-deception. Then came disruption, when digital photography grew from a tiny niche into a big business and then surpassed print photography. People no longer needed to pay to store or share their photographs because free digital services had sprung up. Kodak found itself demonetized. Then photography was dematerialized, as cameras were built into phones and the physical materials of the darkroom were replaced by digital tools. Finally, the entire process was democratized, since anyone with a phone can (at no additional cost) take pictures, edit them and share them.

In 1996 Kodak employed 140,000 people and had a market value of $28 billion. In January 2012 it filed for bankruptcy. Instagram was founded in October 2010 and was bought by Facebook in April 2012 for $1 billion. It had 13 employees at the time. Instagram was the definition of an exponential organization, one "whose impact (or output)--because of its use of networks or automation and/or its leveraging of the crowd--is disproportionally large compared to its number of employees." The Six D's, the authors make clear, are leaving the poor executives who think in linear rather than exponential fashion in a state of three D's: "distraught, depressed and departed."

. . .

The great lie about so much technology is that it has enabled a more sharing, more democratic age. But too much of the "sharing" that happens online seems to involve people abandoning their livelihoods to the owners of "platforms"--letting the masses be demonetized and dematerialized for the enrichment of a few. Too much of the "democracy" feels like voyeurism or surveillance. The crowd is not just sourcing and funding this new economy; it's also getting fleeced.

For the full review, see:

PHILIP DELVES BROUGHTON. "BOOKSHELF; Go Big Or Go Home." The Wall Street Journal (Tues., Feb. 17, 2015): A9.

(Note: ellipsis added.)

(Note: the online version of the review has the date Feb. 16, 2015.)

The book discussed in the review is:

Diamandis, Peter H., and Steven Kotler. Bold: How to Go Big, Create Wealth and Impact the World. New York: Simon & Schuster, 2015.

The book mentioned by Lanier is:

Lanier, Jaron. Who Owns the Future? pb ed. New York: Simon & Schuster, 2013.

October 27, 2015

Those Who Use "Consensus" Argument on Global Warming, Should Endorse Genetically Modified Food

(p. B3) NAIROBI, Kenya -- Mohammed Rahman doesn't know it yet, but his small farm in central Bangladesh is globally significant. Mr. Rahman, a smallholder farmer in Krishnapur, about 60 miles northwest of the capital, Dhaka, grows eggplant on his meager acre of waterlogged land.

As we squatted in the muddy field, examining the lush green foliage and shiny purple fruits, he explained how, for the first time this season, he had been able to stop using pesticides. This was thanks to a new pest-resistant variety of eggplant supplied by the government-run Bangladesh Agricultural Research Institute.

Despite a recent hailstorm, the weather had been kind, and the new crop flourished. Productivity nearly doubled. Mr. Rahman had already harvested the small plot 10 times, he said, and sold the brinjal (eggplant's name in the region) labeled "insecticide free" at a small premium in the local market. Now, with increased profits, he looked forward to being able to lift his family further out of poverty. I could see why this was so urgent: Half a dozen shirtless kids gathered around, clamoring for attention. They all looked stunted by malnutrition.

. . .

I, . . . , was once in [the] . . . activist camp. A lifelong environmentalist, I opposed genetically modified foods in the past. Fifteen years ago, I even participated in vandalizing field trials in Britain. Then I changed my mind.

After writing two books on the science of climate change, I decided I could no longer continue taking a pro-science position on global warming and an anti-science position on G.M.O.s.

There is an equivalent level of scientific consensus on both issues, I realized, that climate change is real and genetically modified foods are safe. I could not defend the expert consensus on one issue while opposing it on the other.

For the full commentary, see:

MARK LYNAS. "How I Got Converted to G.M.O. Food." The New York Times, SundayReview Section (Sun., APRIL 26, 2015): 5.

(Note: ellipses, and bracketed word, added.)

(Note: the online version of the commentary has the date APRIL 24, 2015.)

October 22, 2015

"Bring Prosperity to Billions of People"

(p. B1) If you're feeling down about the world, the book, "Resource Revolution: How to Capture the Biggest Business Opportunity in a Century," is an antidote. Mr. Rogers and Mr. Heck outline how emerging advances -- among them 3-D printing, autonomous vehicles, modular construction systems and home automation -- might in time alter some of the world's largest industries and (p. B7) bring prosperity to billions of people.

They put forward a rigorous argument bolstered by mountains of data and recent case studies. And once you start looking at Silicon Valley their way, your mind reels at the far-reaching potential of the innovations now spreading through society.

For the full commentary, see:

Farhad Manjoo. "STATE OF THE ART; The Future Could Work, if We Let It." The New York Times (Thurs., AUG. 28, 2014): B1 & B7.

(Note: the online version of the commentary has the date AUG. 27, 2014.)

The book praised in the commentary is:

Heck, Stefan, and Matt Rogers. Resource Revolution: How to Capture the Biggest Business Opportunity in a Century. New York: Melcher Media, 2014.

October 16, 2015

"We Embrace New Technology"

(p. 2D) . . . , the first digital images created by the earliest digital cameras "were terrible," Rockbrook's Chuck Fortina said. "These were real chunky images made by big, clunky cameras."

Viewing those results, some retailers dismissed the new digital technology and clung doggedly to film. But Rockbrook Camera began stocking digital cameras alongside models that used film, Fortina said.

"Film sales were great, but we just knew digital was going to take over," Fortina said. As those cameras and their images improved, the retailer saw a huge opportunity. ''Instead of thinking this is going to kill our business, we were thinking people are going to have to buy all new gear," Fortina said of the switch from analog to digital.

"By 2000, film was over," he said. Companies that didn't refocus their business found themselves struggling or forced to close their doors.

Today, Rockbrook Camera is constantly scouring the Internet, attending trade shows and quizzing customers and employees in search of new technologies, Fortina said. "We embrace new technology," he said.

For the full story, see:

Janice Podsada. "More Ready than Not for Tech Shifts; How 3 Omaha-area businesses altered course and thrived amid technological changes." Omaha World-Herald (SUNDAY, SEPTEMBER 27, 2015 ): 1D-2D.

(Note: ellipsis added.)

(Note: the online version of the story has the title "How 3 Omaha-area businesses altered course and thrived amid technological changes.")

October 12, 2015

French Billionaire Entrepreneur Starts Small and Cuts Costs

On Mon., October 13, 2014, Iliad dropped its bid for T-Mobile, after lack of interest from some of the T-Mobile board and from the majority owner, Deutsche Telekom AG.

(p. B1) Iliad wants to improve T-Mobile US's cost structure by applying its own ultraslim cost base, under which it has kept costs to a minimum in everything from IT services to back office to equipment purchases. Iliad estimates it will be able to save about $2 billion annually by cutting out costs such as sending paper bills, and savings on equipment and IT systems, Mr. Niel said.

. . .

(p. B4) . . . before Mr. Niel can execute his American dream, Iliad has to win over T-Mobile US's board, which could prove a formidable challenge.

. . .

He says he is sticking to the same principle that has guided his ascent from a teenage computer programmer in a working class Paris suburb to one of France's richest men.

"I always follow the same idea: Start small and disrupt to create something big," he said.

For the full story, see:

RUTH BENDER. "Will This Billionaire Bring $3-a-Month Phone Plans to U.S.?" The Wall Street Journal (Sat., Aug. 2, 2014): B1 & B4.

(Note: ellipses added.)

(Note: the online version of the story says it was updated on Aug. 4, 2014.)

October 8, 2015

Bicycles Emancipated Women


"A portrait from the 1890s at the Smithsonian Institution's National Museum of American History. Susan B. Anthony said cycling did more to emancipate women than anything else in the world." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D1) . . . , Twain promoted the new sport of cycling with characteristic rhubarb tartness. "Get a bicycle," he urged readers. "You will not regret it, if you live."

. . .

The full-bore bicycle fever was brief, and by the early 20th century it had given way to fascination with the automobile. Yet, as a new exhibit at the Smithsonian Institution's National Museum of American History makes clear, the impact of the bicycle on the nation's industrial, cultural, emotional and even moral landscape has been deep and long lasting.

In addition to air-filled rubber tires, we can thank the bicycle for essential technologies like ball bearings, originally devised to reduce friction in the bicycle's axle and steering column; for wire spokes and wire spinning generally; for differential gears that allow connected wheels to spin at different speeds.

And where would our airplanes, tent poles and lawn furniture be without the metal tubing developed to serve as the bicycle frame? "The hollow steel tube is a great form," said Jim Papadopoulos, an assistant teaching professor of mechanical and industrial engineering at Northeastern University in Boston. "It's tremendously structurally efficient, light and strong, and it came into being for the bicycle."

. . .

(p. D4) Bicycles also gave birth to our national highway system, as cyclists outside major cities grew weary of rutted mud paths and began lobbying for the construction of paved roads. The car connection goes further still: Many of the bicycle repair shops that sprang up to service the wheeling masses were later converted to automobile filling stations, and a number of pioneers in the auto industry, including Henry Ford and Charles Duryea, started out as bicycle mechanics. So, too, did the Wright brothers.

"The pre-story is so important," said Eric S. Hintz, a historian with the Smithsonian's Lemelson Center for the Study of Invention and Innovation. "You don't get automobiles unless you first have bikes."

. . .

By the mid-1890s, some 300 American companies were churning out well over a million bicycles a year, making the safety bike one of the first mass-produced items in history. Among the most exuberant customers were women, who discovered in the bicycle a sense of freedom they had rarely experienced before.

. . .

Bicycles allowed young men and women to tool around the countryside unsupervised, and relationships between the sexes grew more casual and spontaneous. With a bicycle at her disposal, a young woman could also venture forth in search of work.

Small wonder that Susan B. Anthony said of cycling, "I think it has done more to emancipate women than any one thing in the world."

For the full story, see:

NATALIE ANGIER. "Basics; A Ride to Freedom." The New York Times (Tues., JULY 14, 2015): D1 & D4.

(Note: ellipses added.)

(Note: the online version of the story has the date JULY 13, 2015, and has the title "Basics; The Bicycle and the Ride to Modern America.")

September 26, 2015

112 Years of Spectacular Progress Started With Wilbur Wright

"New close-up images of a region near Pluto's equator reveal a giant surprise: a range of youthful mountains." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) LAUREL, Md. -- The first close-up image of Pluto has revealed mountains as tall as the Rockies, and an absence of craters -- discoveries that, to their delight, baffled scientists working on NASA's New Horizons mission and provided punctuation for a journey nine and a half years in the making.

Only 112 years after the Wright Brothers were barely able to get their airplane off the ground, a machine from Earth has crossed the solar system to a small, icy world three billion miles away. The flyby on Tuesday, when New Horizons buzzed within 7,800 miles of the former ninth planet, came 50 years to the day after NASA's Mariner 4 spacecraft made a similar first pass by Mars.

For the full story, see:

KENNETH CHANG. "Pluto's Portrait From New Horizons: Ice Mountains and No Craters." The New York Times (Thurs., JULY 16, 2015): A1 & A17.

(Note: the online version of the article has the date JULY 15, 2015.)

September 25, 2015

"If You Get Too Cold, I'll Tax the Heat"

(p. A11) George Harrison knew what he was talking about when he wrote the song "Taxman" for the Beatles: "If you get too cold, I'll tax the heat / If you take a walk, I'll tax your feet." Had the Internet been around in 1966, they might have added: "If you use the Web, I'll tax your tweet."

For the full commentary, see:

OHN THUNE and AJIT PAI. "Taxman, Won't You Please Spare The Internet?; A moratorium on taxing online access has been an unqualified success. Let's make it permanent." The Wall Street Journal (Fri., July 18, 2014): A11.

(Note: the online version of the commentary has the date July 17, 2014.)

September 15, 2015

More Danger from Existing Artificial Stupidity than from Fictional Artificial Intelligence

(p. B6) In the kind of artificial intelligence, or A.I., that most people seem to worry about, computers decide people are a bad idea, so they kill them. That is undeniably bad for the human race, but it is a potentially smart move by the computers.

But the real worry, specialists in the field say, is a computer program rapidly overdoing a single task, with no context. A machine that makes paper clips proceeds unfettered, one example goes, and becomes so proficient that overnight we are drowning in paper clips.

In other words, something really dumb happens, at a global scale. As for those "Terminator" robots you tend to see on scary news stories about an A.I. apocalypse, forget it.

"What you should fear is a computer that is competent in one very narrow area, to a bad degree," said Max Tegmark, a professor of physics at the Massachusetts Institute of Technology and the president of the Future of Life Institute, a group dedicated to limiting the risks from A.I.

In late June, when a worker in Germany was killed by an assembly line robot, Mr. Tegmark said, "it was an example of a machine being stupid, not doing something mean but treating a person like a piece of metal."

. . .

"These doomsday scenarios confuse the science with remote philosophical problems about the mind and consciousness," Oren Etzioni, chief executive of the Allen Institute for Artificial Intelligence, a nonprofit that explores artificial intelligence, said. "If more people learned how to write software, they'd see how literal-minded these overgrown pencils we call computers actually are."

What accounts for the confusion? One big reason is the way computer scientists work. "The term 'A.I.' came about in the 1950s, when people thought machines that think were around the corner," Mr. Etzioni said. "Now we're stuck with it."

It is still a hallmark of the business. Google's advanced A.I. work is at a company it acquired called DeepMind. A pioneering company in the field was called Thinking Machines. Researchers are pursuing something called Deep Learning, another suggestion that we are birthing intelligence.

. . .

DeepMind made a program that mastered simple video games, but it never took the learning from one game into another. The 22 rungs of a neural net it climbs to figure out what is in a picture do not operate much like human image recognition and are still easily defeated.

For the full story, see:

QUENTIN HARDY. "The Real Threat Computers Pose: Artificial Stupidity, Not Intelligence." The New York Times (Mon., JULY 13, 2015): B6.

(Note: ellipses added.)

(Note: the online version of the story has the date JULY 11, 2015, and has the title "The Real Threat Posed by Powerful Computers.")

August 31, 2015

Marie Curie Opposed Patents Because Women Could Not Own Property in France

(p. C6) Ms. Wirtén, a professor at Linköping University in Sweden, pays special attention to the decision not to patent and how it was treated in the founding texts of the Curie legend: Curie's 1923 biography of her husband, "Pierre Curie," and their daughter Eve's 1937 biography of her mother, "Madame Curie." The books each recount a conversation in which husband and wife agree that patenting their radium method would be contrary to the spirit of science.

It is not quite that simple. As Ms. Wirtén points out, the Curies derived a significant portion of their income from Pierre's patents on instruments. Various factors besides beneficence could have affected their decision not to extend this approach to their radium process. Intriguingly, the author suggests that the ineligibility of women to own property under French law might have shaped Curie's perspective. "Because the law excluded her from the status of person upon which these intellectual property rights depend," Ms. Wirtén writes, "the 'property' road was closed to Marie Curie. The persona road was not."

For the full review, see:

EVAN HEPLER-SMITH. "Scientific Saint; After scandals in France, Curie was embraced by American women as an intellectual icon." The Wall Street Journal (Sat., March 21, 2015): C6.

(Note: the online version of the review has the date March 20, 2015.)

The book under review, is:

Wirtén, Eva Hemmungs. Making Marie Curie: Intellectual Property and Celebrity Culture in an Age of Information. Chicago: University of Chicago Press, 2015.

August 26, 2015

Pentagon Seeks Innovation from Private Start-Ups Since "They've Realized that the Old Model Wasn't Working Anymore"

(p. A3) SAN FRANCISCO -- A small group of high-ranking Pentagon officials made a quiet visit to Silicon Valley in December to solicit national security ideas from start-up firms with little or no history of working with the military.

The visit was made as part of an effort to find new ways to maintain a military advantage in an increasingly uncertain world.

In announcing its Defense Innovation Initiative in a speech in California in November, Chuck Hagel, then the defense secretary, mentioned examples of technologies like robotics, unmanned systems, miniaturization and 3-D printing as places to look for "game changing" technologies that would maintain military superiority.

"They've realized that the old model wasn't working anymore," said James Lewis, director of the Strategic Technologies Program at the Center for Strategic and International Studies in Washington. "They're really worried about America's capacity to innovate."

There is a precedent for the initiative. Startled by the Soviet launch of the Sputnik satellite in 1957, President Dwight D. Eisenhower created the Advanced Research Projects Agency, or ARPA, at the Pentagon to ensure that the United States would not be blindsided by technological advances.

Now, the Pentagon has decided that the nation needs more than ARPA, renamed the Defense Advanced Research Projects Agency, or Darpa, if it is to find new technologies to maintain American military superiority.

. . .

The Pentagon focused on smaller companies during its December visit; it did not, for example, visit Google. Mr. Welby acknowledged that Silicon Valley start-ups were not likely to be focused on the Pentagon as a customer. The military has captive suppliers and a long and complex sales cycle, and it is perceived as being a small market compared with the hundreds of millions of customers for consumer electronics products.

Mr. Welby has worked for three different Darpa directors, but he said that Pentagon officials now believed they had to look beyond their own advanced technology offices.

"The Darpa culture is about trying to understand high-risk technology," he said. "It's about big leaps." Today, however, the Pentagon needs to break out of what can be seen as a "not invented here" culture, he said.

"We're thinking about what the world is going to look like in 2030 and what tools the department will need in 20 or 30 years," he added.

For the full story, see:

JOHN MARKOFF. "Pentagon Shops in Silicon Valley for Game Changers." The New York Times (Fri., FEB. 27, 2015): A3.

(Note: ellipsis added.)

(Note: the online version of the story has the date FEB. 26, 2015.)

August 21, 2015

More Tech Stars Skip College, at Least for a While

(p. B1) The college dropout-turned-entrepreneur is a staple of Silicon Valley mythology. Steve Jobs, Bill Gates and Mark Zuckerberg all left college.

In their day, those founders were very unusual. But a lot has changed since 2005, when Mr. Zuckerberg left Harvard. The new crop of dropouts has grown up with the Internet and smartphones. The tools to create new technology are more accessible. The cost to start a company has plunged, while the options for raising money have multiplied.

Moreover, the path isn't as lonely.

. . .

Not long ago, dropping out of school to start a company was considered risky. For this generation, it is a badge of honor, evidence of ambition and focus. Very few dropouts become tycoons, but "failure" today often means going back to school or taking a six-figure job at a big tech company.

. . .

(p. B5) There are no hard numbers on the dropout trend, but applicants for the Thiel Fellowship tripled in the most recent year; the fellowship won't disclose numbers.

. . .

It has tapped 82 fellows in the past five years.

"I don't think college is always bad, but our society seems to think college is always good, for everyone, at any cost--and that is what we have to question," says Mr. Thiel, a co-founder of PayPal and an early investor in Facebook.

Of the 43 fellows in the initial classes of 2011 and 2012, 26 didn't return to school and continued to work on startups or independent projects. Five went to work for large tech firms, including a few through acquisitions. The remaining 12 went back to school.

Mr. Thiel says companies started by the fellows have raised $73 million, a record that he says has attracted additional applicants. He says fellows "learned far more than they would have in college."

For the full story, see:

DAISUKE WAKABAYASHI. "College Dropouts Thrive in Tech." The Wall Street Journal (Thurs., June 4, 2015): B1 & B10.

(Note: ellipses added. The phrase "the fellowship won't disclose numbers" was in the online, but not the print, version of the article.)

(Note: the online version of the article has the date June 3, 2015, and has the title "College Dropouts Thrive in Tech.")

August 20, 2015

The Complementarity of Humans and Robots in Education

(p. 6) Computers and robots are already replacing many workers. What can young people learn now that won't be superseded within their lifetimes by these devices and that will secure them good jobs and solid income over the next 20, 30 or 50 years? In the universities, we are struggling to answer that question.

. . .

Some scholars are trying to discern what kinds of learning have survived technological replacement better than others. Richard J. Murnane and Frank Levy in their book "The New Division of Labor" (Princeton, 2004) studied occupations that expanded during the information revolution of the recent past. They included jobs like service manager at an auto dealership, as opposed to jobs that have declined, like telephone operator.

The successful occupations, by this measure, shared certain characteristics: People who practiced them needed complex communication skills and expert knowledge. Such skills included an ability to convey "not just information but a particular interpretation of information." They said that expert knowledge was broad, deep and practical, allowing the solution of "uncharted problems."

. . .

When I arrived at Yale in 1982, there were no undergraduate courses in finance. I started one in the fall of 1985, and it continues today. Increasingly, I've tried to connect mathematical theory to actual applications in finance.

Since its beginnings, the course has gradually become more robotic: It resembles a real, dynamic, teaching experience, but in execution, much of it is prerecorded, and exercises and examinations are computerized. Students can take it without need of my physical presence. Yale made my course available to the broader public on free online sites: AllLearn in 2002, Open Yale in 2008 and 2011, and now on Coursera.

The process of tweaking and improving the course to fit better in a digital framework has given me time to reflect about what I am doing for my students. I could just retire now and let them watch my lectures and use the rest of the digitized material. But I find myself thinking that I should be doing something more for them.

So I continue to update the course, thinking about how I can integrate its lessons into an "art of living in the world." I have tried to enhance my students' sense that finance should be the art of financing important human activities, of getting people (and robots someday) working together to accomplish things that we really want done.

For the full commentary, see:

ROBERT J. SHILLER. "Economic View; What to Learn in College to Stay One Step Ahead of Computers." The New York Times, SundayBusiness Section (Sun., MAY 24, 2015): 6.

(Note: ellipses added.)

(Note: the online version of the commentary has the date MAY 22, 2015, and has the title "Economic View; What to Learn in College to Stay One Step Ahead of Computers.")

The Levy and Murnane book mentioned above, is:

Levy, Frank, and Richard J. Murnane. The New Division of Labor: How Computers Are Creating the Next Job Market. Princeton, NJ: Princeton University Press, 2004.

Some of the core of the Levy and Murnane book can be found in:

Levy, Frank, and Richard Murnane. "Book Excerpt: The New Division of Labor." Milken Institute Review 6, no. 4 (Dec. 2004): 61-82.

August 15, 2015

Spread of Robots Creates New and Better Human Jobs

(p. A11) The issues at the heart of "Learning by Doing" come into sharp relief when James Bessen visits a retail distribution center near Boston that was featured on "60 Minutes" two years ago. The TV segment, titled "Are Robots Hurting Job Growth?," combined gotcha reporting with vintage movie clips--scary-looking Hollywood robots--to tell a chilling tale of human displacement and runaway job loss.

Mr. Bessen isn't buying it. Although robots at the distribution center have eliminated some jobs, he says, they have created others--for production workers, technicians and managers. The problem at automated workplaces isn't the robots. It's the lack of qualified workers. New jobs "require specialized skills," Mr. Bessen writes, but workers with these skills "are in short supply."

It is a deeply contrarian view. The conventional wisdom about robots and other new workplace technology is that they do more harm than good, destroying jobs and hollowing out the middle class. MIT economists Erik Brynjolfsson and Andrew McAfee made the case in their best-selling 2014 book, "The Second Machine Age." They describe a future in which software-driven machines will take over not just routine jobs--replacing clerks, cashiers and warehouse workers--but also tasks done by nurses, doctors, lawyers and stock traders. Mr. Bessen sets out to refute the arguments of such techno-pessimists, relying on economic analysis and on a fresh reading of history.

For the full review, see:

TAMAR JACOBY. "BOOKSHELF; Technology Isn't a Job Killer; Many predicted ATMs would eliminate bank tellers, but the number of tellers in the U.S. has risen since the machines were introduced." The Wall Street Journal (Thurs., May 21, 2015): A11.

(Note: the online version of the review has the date May 20, 2015.)

The book under review, is:

Bessen, James. Learning by Doing: The Real Connection between Innovation, Wages, and Wealth. New Haven, CT: Yale University Press, 2015.

August 14, 2015

Computer Programs "Lack the Flexibility of Human Thinking"

(p. A11) . . . let's not panic. "Superintelligent" machines won't be arriving soon. Computers today are good at narrow tasks carefully engineered by programmers, like balancing checkbooks and landing airplanes, but after five decades of research, they are still weak at anything that looks remotely like genuine human intelligence.

. . .

Even the best computer programs out there lack the flexibility of human thinking. A teenager can pick up a new videogame in an hour; your average computer program still can only do just the single task for which it was designed. (Some new technologies do slightly better, but they still struggle with any task that requires long-term planning.)

For the full commentary, see:

GARY MARCUS. "Artificial Intelligence Isn't a Threat--Yet; Superintelligent machines are still a long way off, but we need to prepare for their future rise." The Wall Street Journal (Sat., Dec. 13, 2014): A11.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Dec. 11, 2014.)

August 13, 2015

Cultural and Institutional Differences Between Europe and U.S. Keep Europe from Having a Silicon Valley

(p. B7) "They all want a Silicon Valley," Jacob Kirkegaard, a Danish economist and senior fellow at the Peterson Institute for International Economics, told me this week. "But none of them can match the scale and focus on the new and truly innovative technologies you have in the United States. Europe and the rest of the world are playing catch-up, to the great frustration of policy makers there."

Petra Moser, assistant professor of economics at Stanford and its Europe Center, who was born in Germany, agreed that "Europeans are worried."

"They're trying to recreate Silicon Valley in places like Munich, so far with little success," she said. "The institutional and cultural differences are still too great."

. . .

There is . . . little or no stigma in Silicon Valley to being fired; Steve Jobs himself was forced out of Apple. "American companies allow their employees to leave and try something else," Professor Moser said. "Then, if it works, great, the mother company acquires the start-up. If it doesn't, they hire them back. It's a great system. It allows people to experiment and try things. In Germany, you can't do that. People would hold it against you. They'd see it as disloyal. It's a very different ethic."

Europeans are also much less receptive to the kind of truly disruptive innovation represented by a Google or a Facebook, Mr. Kirkegaard said.

He cited the example of Uber, the ride-hailing service that despite its German-sounding name is a thoroughly American upstart. Uber has been greeted in Europe like the arrival of a virus, and its reception says a lot about the power of incumbent taxi operators.

"But it goes deeper than that," Mr. Kirkegaard said. "New Yorkers don't get all nostalgic about yellow cabs. In London, the black cab is seen as something that makes London what it is. People like it that way. Americans tend to act in a more rational and less emotional way about the goods and services they consume, because it's not tied up with their national and regional identities."

. . .

With its emphasis on early testing and sorting, the educational system in Europe tends to be very rigid. "If you don't do well at age 18, you're out," Professor Moser said. "That cuts out a lot of people who could do better but never get the chance. The person who does best at a test of rote memorization at age 17 may not be innovative at 23." She added that many of Europe's most enterprising students go to the United States to study and end up staying.

She is currently doing research into creativity. "The American education system is much more forgiving," Professor Moser said. "Students can catch up and go on to excel."

Even the vaunted European child-rearing, she believes, is too prescriptive. While she concedes there is as yet no hard scientific evidence to support her thesis, "European children may be better behaved, but American children may end up being more free to explore new things."

For the full story, see:

JAMES B. STEWART. "Common Sense; A Fearless Culture Fuels Tech." The New York Times (Fri., JUNE 19, 2015): B1 & B7.

(Note: ellipses added.)

(Note: the online version of the story has the date JUNE 18, 2015, and has the title "Common Sense; A Fearless Culture Fuels U.S. Tech Giants.")

August 7, 2015

Steven Johnson Is Advocate of Collaboration in Innovation

(p. A13) Theories of innovation and entrepreneurship have always yo-yoed between two basic ideas. First, that it's all about the single brilliant individual and his eureka moment that changes the world. Second, that it's about networks, collaboration and context. The truth, as in all such philosophical dogfights, is somewhere in between. But that does not stop the bickering. This controversy blew up in a political context during the 2012 presidential election, when President Obama used an ill-chosen set of words ("you didn't build that") to suggest that government and society had a role in creating the setting for entrepreneurs to flourish, and Republicans berated him for denigrating the rugged individualists of American enterprise.

Through a series of elegant books about the history of technological innovation, Steven Johnson has become one of the most persuasive advocates for the role of collaboration in innovation. His latest, "How We Got to Now," accompanies a PBS series on what he calls the "six innovations that made the modern world." The six are detailed in chapters titled "Glass," "Cold," "Sound," "Clean," "Time" and "Light." Mr. Johnson's method is to start with a single innovation and then hopscotch through history to illuminate its vast and often unintended consequences.

For the full review, see:

PHILIP DELVES BROUGHTON. "BOOKSHELF; Unintended Consequences; Gutenberg's printing press sparked a revolution in lens-making, which led to eyeglasses, microscopes and, yes, the selfie." The Wall Street Journal (Tues., Sept. 30, 2014): A13.

(Note: ellipses added.)

(Note: the online version of the review has the date Sept. 29, 2014, and has the title "BOOKSHELF; Book Review: 'How We Got to Now' by Steven Johnson; Gutenberg's printing press sparked a revolution in lens-making, which led to eyeglasses, microscopes and, yes, the selfie." )

The book under review, is:

Johnson, Steven. How We Got to Now: Six Innovations That Made the Modern World. New York: Riverhead Books, 2014.

August 3, 2015

Tesla Cars Are Built on Government Subsidies

(p. A13) Nowhere in Mr. Vance's book, . . . , does the figure $7,500 appear--the direct taxpayer rebate to each U.S. buyer of Mr. Musk's car. You wouldn't know that 10% of all Model S cars have been sold in Norway--though Tesla's own 10-K lists the possible loss of generous Norwegian tax benefits as a substantial risk to the company.

Barely developed in passing is that Tesla likely might not exist without a former State Department official whom Mr. Musk hired to explore "what types of tax credits and rebates Tesla might be able to drum up around its electric vehicles," which eventually would include a $465 million government-backed loan.

And how Tesla came by its ex-Toyota factory in California "for free," via a "string of fortunate turns" that allowed Tesla to float its IPO a few weeks later, is just a thing that happens in Mr. Vance's book, not the full-bore political intrigue it actually was.

The fact is, Mr. Musk has yet to show that Tesla's stock market value (currently $32 billion) is anything but a modest fraction of the discounted value of its expected future subsidies. In 2017, he plans to introduce his Model 3, a $35,000 car for the middle class. He expects to sell hundreds of thousands a year. Somehow we doubt he intends to make it easy for politicians to whip away the $7,500 tax credit just when somebody besides the rich can benefit from it--in which case the annual gift from taxpayers will quickly mount to several billion dollars each year.

Mother Jones, in a long piece about what Mr. Musk owes the taxpayer, suggested the wunderkind could be a "bit more grateful, a bit more humble." Unmentioned was the shaky underpinning of this largess. Even today's politicized climate modeling allows the possibility that climate sensitivity to carbon dioxide is far less than would justify incurring major expense to change the energy infrastructure of the world (and you certainly wouldn't begin with luxury cars). Were this understanding to become widespread, the subliminal hum of government favoritism could overnight become Tesla's biggest liability.

For the full commentary, see:

HOLMAN W. JENKINS, JR. "BUSINESS WORLD; The Savior Elon Musk; Tesla's impresario is right about one thing: Humanity's preservation is a legitimate government interest." The Wall Street Journal (Sat., May 30, 2015): A13.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date May 29, 2015.)

The book discussed in the commentary is:

Vance, Ashlee. Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future. New York: Ecco, 2015.

The Mother Jones article discussing government subsidies for Musk's Tesla, is:

Harkinson, Josh. "Free Ride." Mother Jones 38, no. 5 (Sept./Oct. 2013): 20-25.

July 26, 2015

"Nimble" Account of the Creative Destruction of the Music Industry

(p. C1) Stephen Witt's nimble new book, "How Music Got Free," is the richest explanation to date about how the arrival of the MP3 upended almost everything about how music is distributed, consumed and stored. It's a story you may think you know, but Mr. Witt brings fresh reporting to bear, and complicates things in terrific ways.

He pushes past Napster (Sean Fanning, dorm room, lawsuits) and goes deep on the German audio engineers who, drawing on decades of research into how the ear works, spent years developing the MP3 only to almost see it nearly become the Betamax to another group's VHS.

. . .

(p. C6) Even better, he has found the man -- a manager at a CD factory in small-town North Carolina -- who over eight years leaked nearly 2,000 albums before their release, including some of the best-known rap albums of all time. He smuggled most of them out behind an oversized belt buckle before ripping them and putting them online.

Mr. Witt refers to this winsome if somewhat hapless manager, Dell Glover, as "the most fearsome digital pirate of them all."

. . .

Into these two narratives Mr. Witt inserts a third, the story of Doug Morris, who ran the Universal Music Group from 1995 to 2011. At some points you wonder if Mr. Morris has been introduced just so the author can have sick fun with him.

The German inventors and Mr. Glover operate as if they unwittingly have voodoo dolls of this man. Every time they make an advance, and prick the music industry, there's a jump to Mr. Morris for a reaction shot, screaming in his corner office.

. . .

Mr. Witt covers a lot of terrain in "How Music Got Free" without ever becoming bogged down in one place for long. He is knowledgeable about intellectual property issues. In finding his reporting threads, he doesn't miss the big picture: He gives us a loge seat to the entire digital music revolution.

He is especially good on the arrival of iTunes and the iPod.

For the full review, see:

DWIGHT GARNER. "Books of The Times; That Download Has a Back Story." The New York Times (Tues., JUNE 16, 2015): C1 & C6.

(Note: ellipses added.)

(Note: the online version of the review has the date JUNE 15, 2015, and has the title "Books of The Times; Review: In 'How Music Got Free,' Stephen Witt Details an Industry Sea Change.")

The book under review is:

Witt, Stephen. How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy. New York: Viking, 2015.

July 25, 2015

Computers Lack Intuition about How to Handle Novel Situations

(p. 11) It seems obvious: The best way to get rid of human error is to get rid of humans.

But that assumption, however fashionable, is itself erroneous. Our desire to liberate ourselves from ourselves is founded on a fallacy. We exaggerate the abilities of computers even as we give our own talents short shrift.

. . .

Human skill has no such constraints. Think of how Capt. Chesley B. Sullenberger III landed that Airbus A320 in the Hudson River after it hit a flock of geese and its engines lost power. Born of deep experience in the real world, such intuition lies beyond calculation. If computers had the ability to be amazed, they'd be amazed by us.

. . .

Computers break down. They have bugs. They get hacked. And when let loose in the world, they face situations that their programmers didn't prepare them for. They work perfectly until they don't.

. . .

We should view computers as our partners, with complementary abilities, not as our replacements.

For the full commentary, see:

NICHOLAS CARR. "Why Robots Will Always Need Us." The New York Times (Weds., MAY 20, 2015): 11.

(Note: ellipses added.)

July 8, 2015

Not Clear If Net Neutrality Is Good for Consumers

(p. B2) Of course, government antitrust and communications policy is supposed to benefit consumers, not any individual company or group of companies. "It's fair to say Netflix has gotten something of a free pass," said Scott Hemphill, visiting professor of antitrust and intellectual property at New York University School of Law. "This open Internet principle that's in ascendance is certainly good for Netflix. It's harder to say it's good for consumers."

. . .

Despite Netflix's arguments that it shouldn't have to pay fees to a broadband provider, that proposition is hardly self-evident. The fees Netflix so fiercely opposes are analogous to those found in many industries, such as credit cards, where both consumers and merchants pay the credit card companies. "It's hard to say if these fees are good or bad for consumers," Professor Hemphill said.

For the full story, see:

JAMES B. STEWART. "Common Sense; Netflix's Invisible Hand In Policy and Mergers." The New York Times (Fri., MAY 29, 2015): B2-B3.

(Note: ellipsis added.)

(Note: the date of the online version of the story is MAY 28, 2015, and has the title "Her Majesty's Jihadists" which was also the title used on the cover, but not at the start of the actual article on p. 42, which has the title "Common Sense; How Netflix Keeps Finding Itself on the Same Side as Regulators.")

June 6, 2015

Science Fiction Creates "False Sense of Conflict between Humans and Machines"

(p. R4) "I think the development of full artificial intelligence could spell the end of the human race," astrophysicist Stephen Hawking told the BBC. Tesla founder Elon Musk called AI "our biggest existential threat." Former Microsoft Chief Executive Bill Gates has voiced his agreement.

. . .

Taking part in the discussion [is] . . .; Guruduth S. Banavar, vice president of cognitive computing at IBM's Thomas J. Watson Research Center; . . .

. . .

WSJ: Does AI pose a threat to humanity?

MR. BANAVAR: Fueled by science-fiction novels and movies, popular treatment of this topic far too often has created a false sense of conflict between humans and machines. "Intelligent machines" tend to be great at tasks that humans are not so good at, such as sifting through vast data. Conversely, machines are pretty bad at things that humans are excellent at, such as common-sense reasoning, asking brilliant questions and thinking out of the box. The combination of human and machine, which we consider the foundation of cognitive computing, is truly revolutionizing how we solve complex problems in every field.

. . .

(p. R5) WSJ: Some experts believe that AI is already taking jobs away from people. Do you agree?

. . .

MR. BANAVAR: From time immemorial, we have built tools to help us do things we can't do. Each generation of tools has made us rethink the nature and types of jobs. Productivity goes up, professions are redefined, new professions are created and some professions become obsolete. Cognitive systems, which can enhance and scale the capabilities of our minds, have the potential to be even more transformative.

The key question will be how to build institutions to quickly train professionals to exploit cognitive systems as their assistants. Once learned, these skills will make every individual a better professional, and this will set a new bar for the nature of expertise.

For the full interview, see:

TED GREENWALD, interviewer. "Does Artificial Intelligence Pose a Threat?" The Wall Street Journal (Mon., May 11, 2015): R4-R5.

(Note: ellipses, and bracketed word, added; bold in original online version.)

(Note: the online version of the interview has the date May 10, 2015.)

May 29, 2015

Studebaker Competed with "Unique Designs and Powerful Engines"


"Greg Lange, 53, with his two-tone 1955 Studebaker President, near his home in Edmonds, Wash." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. D4) I've always rooted for underdogs.

. . .

Studebaker wasn't a big Detroit corporation. It was a smaller company out of South Bend, Ind., and had to be highly imaginative to compete with Ford and General Motors. This resulted in unique designs and powerful engines. The one in my President is called a Passmaster (a 259 cubic inch V8); the meaning is obvious.

For the full interview, see:

Greg Lange as told to interviewer A.J. BAIME. "Studebaker: President Still in Office." The Wall Street Journal (Weds., April 8, 2015): D4.

(Note: ellipsis added.)

(Note: the online version of the interview has the date April 7, 2015, and has the title "Studebaker: Still Stands Out After 60 Years." Where the online version differs from the print version, the quoted passage follows the online version.)

May 14, 2015

Automation Anxieties Unjustified

(p. 5B) In 1964, technology anxieties caused President Lyndon Johnson to create a national commission on automation. When it reported in 1966, the unemployment rate had dropped to 3.8 percent.

"Technological shocks have been happening for decades, and ... the U.S. economy has been adapting to them," writes economist Timothy Taylor (whose website recounts the 1960s episode).

. . .

Human contact is wanted or needed in places where it seems obsolete. Logically, ATMs should have decimated bank tellers. In reality, the number of tellers (about 600,000) is slightly above its 1990 level, notes Taylor, citing a study by James Bessen of Boston University law school.

For the full commentary, see:

ROBERT J. SAMUELSON. "Must we fear robots in workplace?" Omaha World-Herald (Mon., March 23, 2015): 5B.

(Note: ellipsis internal to quote, in original; ellipsis between paragraphs, added.)

The article by Bessen mentioned above, is:

Bessen, James. "Toil and Technology." Finance and Development 94, no. 1 (March 2015): 16-19.

April 30, 2015

Hamilton Fostered the Preconditions for Capitalism

(p. 345) In a nation of self-made people, Hamilton became an emblematic figure because he believed that government ought to promote self-fulfillment, self-improvement, and self-reliance. His own life offered an extraordinary object lesson in social mobility, and his unstinting energy illustrated his devout belief in the salutary power of work to develop people's minds and bodies. As treasury secretary, he wanted to make room for entrepreneurs, whom he regarded as the motive force of the economy. Like Franklin, he intuited America's special genius for business: "As to whatever may depend on enterprise, we need not fear to be outdone by any people on earth. It may almost be said that enterprise is our element."

Hamilton did not create America's market economy so much as foster the cultural and legal setting in which it flourished. A capitalist society requires certain preconditions. Among other things, it must establish a rule of law through enforceable contracts; respect private property; create a trustworthy bureaucracy to arbitrate legal disputes; and offer patents and other protections to promote invention. The abysmal failure of the Articles of Confederation to provide such an atmosphere was one of Hamilton's principal motives for promoting the Constitution. "It is known," he wrote, "that the relaxed conduct of the state governments in regard to property and credit was one of the most serious diseases under which the body politic laboured prior to the adoption of our present constitution and was a material cause of that state of public opinion which led to its adoption." He converted the new Constitution into a flexible instrument for creating the legal framework necessary for economic growth. He did this by activating three still amorphous clauses--the necessary-and-proper clause, the general-welfare clause, and the commerce clause--making them the basis for government activism in economics.


Chernow, Ron. Alexander Hamilton. New York: The Penguin Press, 2004.

April 28, 2015

Creativity Was Permissionless on the Internet Before Obama Made It a Regulated Utility

(p. A15) Critics of President Obama's "net neutrality" plan call it ObamaCare for the Internet.

That's unfair to ObamaCare.

Both ObamaCare and "Obamanet" submit huge industries to complex regulations. Their supporters say the new rules had to be passed before anyone could read them. But at least ObamaCare claimed it would solve long-standing problems. Obamanet promises to fix an Internet that isn't broken.

. . .

Utility regulation was designed to maintain the status quo, and it succeeds. This is why the railroads, Ma Bell and the local water monopoly were never known for innovation. The Internet was different because its technologies, business models and creativity were permissionless.

This week Mr. Obama's bureaucrats will give him the regulated Internet he demands. Unless Congress or the courts block Obamanet, it will be the end of the Internet as we know it.

For the full commentary, see:

L. GORDON CROVITZ. "INFORMATION AGE; From Internet to Obamanet; BlackBerry and AT&T are already making moves that could exploit new 'utility' regulations." The Wall Street Journal (Mon., Feb. 23, 2015): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Feb. 22, 2015,)

April 24, 2015

Remaining Airline Regulations Increase Fares and Reduce Services

(p. 256) Kenneth Button makes the case for "Really Opening Up the American Skies." "The deregulation of the 1970s, by removing entry quantitative controls, led to a considerable increase in services. It also increased the capability of individuals to access a wider range of destinations from their homes via the hub-and-spoke system of routings that emerged. This pattern has been reversed since 2007. The largest 29 airports in the United States lost 8.8 percent of their scheduled flights between 2007 and 2012, but medium-sized airports lost 26 percent and small airports lost 21.3 percent. . . . In sum, the 1978 Airline Deregulation Act only partially liberalized the U.S. domestic airline market. One important restriction that remains is the lack of domestic competition from foreign carriers. The U.S. air traveler benefited from the country being the first mover in deregulation, and this provided lower fares and consumer-driven service attributes some 15-20 years before they were enjoyed in other markets; the analogous reforms in Europe only fully materialized after 1997. But the world has changed, and so have the demands of consumers and the business models adopted by the airlines. . . . But remaining regulations still limit the amount of competition in the market and, with this, the ability of travelers to enjoy even lower fares and a wider range of services." Regulation, Spring 2014, pp. 40-45


Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 28, no. 3 (Summer 2014): 249-56.

(Note: ellipses in original.)

The article quoted by Taylor is:

Button, Kenneth. "Really Opening up the American Skies." Regulation 37, no. 1 (Spring 2014): 40-45.

April 15, 2015

New Evidence on the Antikythera Mechanism

The Antikythera Mechanism was recovered in about 1901 and is believed to date from about 200 BC. Its complicated gear mechanism is believed to have been used to generate calendars or predict astronomical events. The technology never spread to benefit ordinary people. It was forgotten and mechanical gears had to be re-invented.

The Antikythera Mechanism raises a question: how is it that technologies with the potential to benefit humankind can fail to be adopted? This issue of the causes of technology adoption is an important issue for economic growth.

(p. D3) A riddle for the ages may be a small step closer to a solution: Who made the famed Antikythera Mechanism, the astronomical calculator that was raised from an ancient shipwreck near Crete in 1901?

. . .

. . . a new analysis of the dial used to predict eclipses, which is set on the back of the mechanism, provides . . . another clue to one of history's most intriguing puzzles. Christián C. Carman, a science historian at the National University of Quilmes in Argentina, and James Evans, a physicist at the University of Puget Sound in Washington, suggest that the calendar of the mysterious device began in 205 B.C., just seven years after Archimedes died.

. . .

Starting with the ways the device's eclipse patterns fit Babylonian eclipse records, the two scientists used a process of elimination to reach a conclusion that the "epoch date," or starting point, of the Antikythera Mechanism's calendar was 50 years to a century earlier than had been generally believed.

. . .

. . . Archimedes was killed by a Roman soldier in 212 B.C., while the commercial grain ship carrying the mechanism is believed to have sunk sometime between 85 and 60 B.C. The new finding suggests the device may have been old at the time of the shipwreck, but the connection to Archimedes now seems even less likely.

An inscription on a small dial used to date the Olympic Games refers to an athletic competition that was held in Rhodes, according to research by Paul Iversen, a Greek scholar at Case Western Reserve University.

"If we were all taking bets about where it was made, I think I would bet what most people would bet, in Rhodes," said Alexander Jones, a specialist in the history of ancient mathematical sciences at New York University.

For the full story, see:

JOHN MARKOFF. "On the Trail of an Ancient Mystery." The New York Times (Tues., NOV. 25, 2014): D3.

(Note: ellipses added.)

(Note: the online version of the story has the date NOV. 24, 2014.)

April 5, 2015

Railroad Regulation Helped Kill Passenger Service

(p. 1179) By 1970, passenger service was a not only losing money, but had deteriorated to such an extent that it was no more the elegant transportation mode as it once was. No more were the Hollywood stars long distance rail passengers. No more movies like "North by Northwest," which featured the New York Central's Twentieth Century Limited service from New York to Chicago. The book highlights the factors causing the decline of private rail passenger service and the creation of AMTRAK. The authors cite ICC regulation, the growth in alternative modes, which were heavily subsidized, the mix of freight and passenger service on the same lines, and public policy, which favored the airline industry.

. . .

One public policy that government got right is deregulation. This started with the 3R Act, then the 4R Act and then the Staggers Rail Act of 1980, which had a massive impact on the industry. Deregulation culminated in the ICC Elimination Act, in which the ICC was replaced by the Surface Transportation Board--or STB--with substantially diminished regulatory power. Gallamore worked in government when much of this legislation was passed and gives a firsthand account of the debates that took place in Congressional (p. 1180) hearings and the discussions in and out of government on the merits of deregulation.

In the concluding chapter of the over 500-page book, entitled "Decline and Renaissance of American Railroads in the Twentieth Century" the authors provide a summary of the history of the railroads and the lessons for public policy in the future. This chapter is such a great summary, that the reader may be best off starting with it, before reading the book. But don't forget the afterword, which provides the authors' recommendations for future U.S. policies for the railroads. It is a very insightful chapter.

. . .

American Railroads should be on the reading list of economists interested in transportation and logistics, economic historians, government officials, and rail fans who would like to know more about the history of the railroads in the twentieth century, and are interested in understanding the economics of the industry and the problems of government regulation. Gallamore and Meyer, at the end of the book, sum up why it should be read:

This book's authors love railroads because they have a great history, fascinating operations, intriguing technology and untold opportunity for the future, but we also love them because no other enterprises illustrate elegant economic principles quite so well (p. 435).

For the full review, see:

Pagano, Anthony M. "American Railroads: Decline and Renaissance in the Twentieth Century." Journal of Economic Literature 52, no. 4 (Dec. 2014): 1178-80.

(Note: ellipses added.)

The book under review is:

Gallamore, Robert E., and John R. Meyer. American Railroads: Decline and Renaissance in the Twentieth Century. Cambridge, MA: Harvard University Press, 2014.

April 3, 2015

Chinese Communists Crush Innovative Entrepreneurs by Banning Open Internet

(p. A1) BEIJING -- Jing Yuechen, the founder of an Internet start-up here in the Chinese capital, has no interest in overthrowing the Communist Party. But these days she finds herself cursing the nation's smothering cyberpolice as she tries -- and fails -- to browse photo-sharing websites like Flickr and struggles to stay in touch with the Facebook friends she has made during trips to France, India and Singapore.

Gmail has become almost impossible to use here, and in recent weeks the authorities have gummed up Astrill, the software Ms. Jing and countless others depended on to circumvent the Internet restrictions that Western security analysts refer to as the Great Firewall.

By interfering with Astrill and several other popular virtual private networks, or V.P.N.s, the government has complicated the lives of Chinese astronomers seeking the latest scientific data from abroad, graphic designers shopping for clip art on Shutterstock and students submitting online applications to American universities.

If it was legal to protest and throw rotten eggs on the street, I'd definitely be up for that," Ms. Jing, 25, said.

China has long had some of the world's most onerous Internet restrictions. But until now, the authorities had effectively tolerated the proliferation of V.P.N.s as a lifeline for millions of people, from archaeologists to foreign investors, who rely heavily on less-fettered access to the Internet.

But earlier this week, after a number of V.P.N. companies, including StrongVPN and Golden Frog, complained that the Chi-(p. A6)nese government had disrupted their services with unprecedented sophistication, a senior official for the first time acknowledged its hand in the attacks and implicitly promised more of the same.

The move to disable some of the most widely used V.P.N.s has provoked a torrent of outrage among video artists, entrepreneurs and professors who complain that in its quest for so-called cybersovereignty -- Beijing's euphemism for online filtering -- the Communist Party is stifling the innovation and productivity needed to revive the Chinese economy at a time of slowing growth.

"I need to stay tuned into the rest of the world," said Henry Yang, 25, the international news editor of a state-owned media company who uses Facebook to follow American broadcasters. "I feel like we're like frogs being slowly boiled in a pot."

. . .

The vast majority of Chinese Internet users, especially those not fluent in English and other foreign languages, have little interest in vaulting the digital firewall. But those who require access to an unfiltered Internet are the very people Beijing has been counting on to transform the nation's low-end manufacturing economy into one fueled by entrepreneurial innovation.

. . .

Avery Goldstein, a professor of contemporary Chinese studies at the University of Pennsylvania, said the growing online constraints would not only dissuade expatriates from relocating here, but could also compel ambitious young Chinese studying abroad to look elsewhere for jobs.

"If they aren't able to get the information to do their jobs, the best of the best might simply decide not to go home," he said.

For those who have already returned to China and who crave membership in an increasingly globalized world, the prospect of making do with a circumscribed Internet is dispiriting. Coupled with the unrelenting air pollution and the crackdown on political dissent, a number of Chinese said the blocking of V.P.N.s could push them over the edge.

"It's as if we're shutting down half our brains," said Chin-Chin Wu, an artist who spent almost a decade in Paris and who promotes her work online. "I think that the day that information from the outside world becomes completely inaccessible in China, a lot of people will choose to leave."

For the full story, see:

ANDREW JACOBS. "China Further Tightens Grip on the Internet." The New York Times (Fri., JAN. 30, 2015): A1 & A12.

(Note: ellipses added.)

(Note: the online version of the story has the date JAN. 29, 2015.)

April 1, 2015

Is There "a Fortune to Be Made" in Selling to the Poor?

(p. B1) For years, multinational companies had little interest in lower-end consumers, figuring no money was to be made. Now, they are increasingly attractive to all types of industries, from consumer product makers to technology businesses. Google just announced plans to sell a stripped-down, cheaper version of its Android phone in India.

A decade ago, C. K. Prahalad, a University of Michigan business professor, in his book "The Fortune at the Bottom of the Pyramid," detailed the potential, contending that such households were every bit as discriminating and aspirational as their counterparts at the other end of the income spectrum.

Mr. Prahalad, now dead, estimated there were four billion such consumers in a market worth $13 trillion. "People were saying, 'There's a fortune to be made. Let's go,' " said Mark B. Milstein, director of the Cen-(p. B6)ter for Sustainable Global Enterprise at Cornell University.

But many of the first efforts failed. "There was not much thinking about what those consumers needed or wanted or how they might be different from consumers with more disposable income," Mr. Milstein said.

For the full story, see:

STEPHANIE STROM. "Billions of Buyers." The New York Times (Thurs., Sept. 18, 2014): B1 & B6.

(Note: the online version of the story has the date SEPT. 17, 2014, and has the title "Multinational Companies Court Lower-Income Consumers.")

The book highlighted in the passage quoted is:

Prahalad, C. K. Fortune at the Bottom of the Pyramid Eradicating Poverty through Profits. Revised ed. Philadelphia, PA: Wharton School Publishing, 2009.

March 19, 2015

Over-Regulation Could Stifle Drones' Potential to Revolutionize Our Lives

(p. A15) In the early days of the automobile, Vermont enacted a law requiring someone to walk one-eighth of a mile in front of every car and wave a red flag to warn pedestrians. Iowa directed all motorists to call ahead to warn each town on their route that they were coming. Some jurisdictions set speed limits so low that drivers who obeyed them risked having their engines stall.

Those laws seem humorously quaint, but if they had been widely adopted and enforced, the automobile revolution might have been shut down and its manifold benefits denied to millions. Today over-regulation could stifle the development of drones, which have the potential to revolutionize many parts of the economy and our everyday lives.

To cite a few examples: Amazon hopes to launch Prime Air, which would use drones to deliver packages in less than 30 minutes after an order is placed. Texas Equusearch, which organizes missing-person recovery efforts, can replace the labor of 100 volunteers with one drone. Clayco Inc., a construction firm, intends to use drones for aerial imaging of construction projects--replacing either helicopters, which burn fossil fuels and can be dangerous to those below, or construction workers, who risk serious injury through falls when they must climb to reach high, hard-to-reach places to take photos.

For the full commentary, see:

JOSEPH R. PALMORE and CHRISTOPHER J. CARR. "Overregulated Drones Struggle for Take-Off; The FAA has been slow and stuck in the past--precisely what the technology is not." The Wall Street Journal (Mon., Feb. 23, 2015): A15.

(Note: the online version of the commentary has the date Feb. 22, 2015,)

March 18, 2015

Technology Getting Bum Rap for Job Woes

The job market has been anemic in a variety of ways, for several years. Some, as below, want to pin this on the advance of technology. I argue, to the contrary, that it is mainly due to our discouraging start-ups by bad policies (such as over-regulating and over-taxing). Start-ups, as Haltiwanger and his colleagues have been showing, are the main source of new jobs.

(p. A1) Lawrence H. Summers, the former Treasury secretary, recently said that he no longer believed that automation would always create new jobs. "This isn't some hypothetical future possibility," he said. "This is something that's emerging before us right now."

Erik Brynjolfsson, an economist at M.I.T., said, "This is the biggest challenge of our society for the next decade."

Mr. Brynjolfsson and other experts say they believe that society has a chance to meet the challenge in ways that will allow technology to be mostly a positive force. In addition to making some jobs obsolete, new technologies have also long complemented people's skills and enabled them (p. A3) to be more productive -- as the Internet and word processing have for office workers or robotic surgery has for surgeons.

More productive workers, in turn, earn more money and produce goods and services that improve lives.

"It is literally the story of the economic development of the world over the last 200 years," said Marc Andreessen, a venture capitalist and an inventor of the web browser. "Just as most of us today have jobs that weren't even invented 100 years ago, the same will be true 100 years from now."

. . .

There are certain human skills machines will probably never replicate, like common sense, adaptability and creativity, said David Autor, an economist at M.I.T. Even jobs that become automated often require human involvement, like doctors on standby to assist the automated anesthesiologist, called Sedasys.

. . .

Whether experts lean toward the more pessimistic view of new technology or the most optimistic one, many agree that the uncertainty is vast. Not even the people who spend their days making and studying new technology say they understand the economic and societal effects of the new digital revolution.

When the University of Chicago asked a panel of leading economists about automation, 76 percent agreed that it had not historically decreased employment. But when asked about the more recent past, they were less sanguine. About 33 percent said technology was a central reason that median wages had been stagnant over the past decade, 20 percent said it was not and 29 percent were unsure.

Perhaps the most worrisome development is how poorly the job market is already functioning for many workers. More than 16 percent of men between the ages of 25 and 54 are not working, up from 5 percent in the late 1960s; 30 percent of women in this age group are not working, up from 25 percent in the late 1990s. For those who are working, wage growth has been weak, while corporate profits have surged.

For the full story, see:

Claire Cain Miller. "Rise of Robot Work Force Stokes Human Fears." The New York Times (Tues., DEC. 16, 2014): A1 & A3.

(Note: ellipses are added.)

(Note: the online version of the story has the date DEC. 15, 2014, and has the title "As Robots Grow Smarter, American Workers Struggle to Keep Up.")

A relevant Haltiwanger paper is:

Haltiwanger, John C., Ron S. Jarmin, and Javier Miranda. "Who Creates Jobs? Small Vs. Large Vs. Young." Review of Economics and Statistics 95, no. 2 (May 2013): 347-61.

March 8, 2015

Progress Depends on Removing Barriers to Innovation

In the quotation below, Bill Gates is referring to the late, and way-under-appreciated, economist Julian Simon.

(p. A3) ". . . Simon's view was that humans would have to change to innovate," Mr. Gates said. Innovation, in other words, is not preordained. Indeed, it's happened much more in some societies than in others. And it has happened, Mr. Gates was arguing, because people and institutions took steps to remove the barriers to progress.

. . .

. . . , much of the world is enjoying one of history's most rapid increases in prosperity. Life expectancy has risen more than six years just since 1990. The world, to quote the title of a book by the economist Charles Kenny, is "Getting Better." As Mr. Gates says: "The world is actually improving a lot. We're trying to deliver both the good news on the progress and the possibility to do more."

For the full commentary, see:

David Leonhardt. "Africa's Economy Is Rising, and Focus Turns to Food." The New York Times (Thurs., JAN. 22, 2015): A3.

(Note: ellipses added.)

(Note: the online version of the commentary has the title "Africa's Economy Is Rising. Now What Happens to Its Food?")

The book mentioned by Charles Kenny is:

Kenny, Charles. Getting Better: Why Global Development Is Succeeding--and How We Can Improve the World Even More. Philadelphia, PA: Basic Books, 2011.

One of the great books by Julian Simon is:

Moore, Stephen, and Julian L. Simon. It's Getting Better All the Time: 100 Greatest Trends of the Last 100 Years. Washington, D.C.: Cato Institute, 2000.

February 17, 2015

Congress Appropriates Funds to Test Concussion Theory of Rain

(p. 190) the first century A.D., when the Greek moralist Plutarch came up with the notion that rain followed military battles. Napoleon believed as much and fired cannons and guns at the sky to muddy up the ground between him and his attackers. Civil War veterans who wallowed in cold slop believed that ceaseless, close-range artillery fire had opened up the skies. In the late 1890s, as the first nesters started to dig their toeholds on the dry side of the one hundredth meridian, Congress had appropriated money to test the concussion theory in Texas. The tests were done by a man named Dyrenforth. He tried mightily, with government auditors looking over (p. 191) his shoulder, but Dyrenforth could not force a drop from the hot skies of Texas. From then on, he was called "Dry-Henceforth."

Government-sponsored failure didn't stop others from trying. A man who called himself "the moisture accelerator," Charles M. Hatfield, roamed the plains around the turn of the century. A Colonel Sanders of rainmaking, Hatfield had a secret mixture of ingredients that could be sent to the sky by machine. In the age before the widespread use of the telephone, it was hard to catch up with the moisture accelerator after he had fleeced a town and moved on.


Egan, Timothy. The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl. Boston: Houghton Mifflin, 2006.

February 16, 2015

Smart Phones Bring Power to the Patient

(p. A11) We instinctively reach for our smartphones when we need to take pictures, get directions, deposit checks or reserve a table. Eric Topol, a cardiologist and digital pioneer, thinks that they are ready to perform at least one more task: revolutionize health care. In "The Patient Will See You Now," he argues that smartphones will democratize medicine by bringing data and control directly to the people.

The power of doctors, says Dr. Topol, "can be likened to that of religious leaders and nobility" in centuries past, when knowledge and authority belonged to a small elite. He notes that we've never seen "a discrete challenge to the medical profession" akin to Luther 's challenge to the Roman Catholic Church or democracy's challenge to monarchy and despotism. "But we've not had the platform or landscape for that to be accomplished. Until now." Smartphones, he says, enable a range of medical applications to move from the hospital to the home, and they shift medicine's locus of control from doctor to patient.

For the full review, see:

DAVID A. SHAYWITZ. "BOOKSHELF; Doctor Android; In the same way that Luther challenged the Catholic Church, smartphones are poised to upend the medical profession." The Wall Street Journal (Tues., Jan. 13, 2015): A11.

(Note: the online version of the review has the date Jan. 12, 2015.)

The book under review is:

Topol, Eric. The Patient Will See You Now: The Future of Medicine Is in Your Hands. New York: Basic Books, 2015.

February 11, 2015

Ways Technology May Decrease Inequality

(p. 7) As the previous generation retires from the work force, many more people will have grown up with intimate knowledge of computers. And over time, it may become easier to work with computers just by talking to them. As computer-human interfaces become simpler and easier to manage, that may raise the relative return to less-skilled labor.

The future may also extend a growing category of employment, namely workers who team up with smart robots that require human assistance. Perhaps a smart robot will perform some of the current functions of a factory worker, while the human companion will do what the robot cannot, such as deal with a system breakdown or call a supervisor. Such jobs would require versatility and flexible reasoning, a bit like some of the old manufacturing jobs, but not necessarily a lot of high-powered technical training, again because of the greater ease of the human-computer interface. That too could raise the returns to many relatively unskilled workers.

For the full commentary, see:

TYLER COWEN "TheUpshot; Economic View; The Technological Fix to Inequality." The New York Times, SundayBusiness Section (Sun., DEC. 7, 2014): 7.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the commentary has the date DEC. 6, 2014, and has the title "TheUpshot; Economic View; How Technology Could Help Fight Income Inequality." )

February 9, 2015

The "Miracle Machines" of Farming

(p. 75) Nobody had washing machines, vacuum cleaners, or incandescent light bulbs. But the farmers did have their miracle machines. In fifteen years, the Lucas family had gone from a walking plow pulled along behind a mule, to a riding plow, in which horses carried the blade through the soil, to a fine-tuned internal combustion plow.

"Machinery is the new Messiah," said Henry Ford, and though that sounded blasphemous to a devout sodbuster, there was something to it. Every ten seconds a new car came off Ford's factory line, and some of them were now parked next to dugouts in No Man's Land.


Egan, Timothy. The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl. Boston: Houghton Mifflin, 2006.

January 22, 2015

As with Airplanes, Lives Must Be Risked to Achieve Routine Safety in Spaceships

(p. A21) SEATTLE -- ONE clear winter day in 1909, in Hampshire, England, a young man named Geoffrey de Havilland took off in a twin-propeller motorized flying machine of his own design, built of wood, piano wire and stiff linen hand-stitched by his wife. The launch was flawless, and soon he had an exhilarating sensation of climbing almost straight upward toward the brilliant blue sky. But he soon realized he was in terrible trouble.

The angle of ascent was unsustainable, and moments later de Havilland's experimental plane crashed, breaking apart into a tangled mass of shards, splinters and torn fabric, lethal detritus that could easily have killed him even if the impact of smashing into the ground did not. Somehow, he survived and Sir Geoffrey -- he was ultimately knighted as one of the world's great aviation pioneers -- went on to build an astonishing array of military and civilian aircraft, including the world's first jet airliner, the de Havilland Comet.

I thought immediately of de Havilland on Friday when I heard that Virgin Galactic's SpaceShipTwo, a rocket-powered vehicle designed to take well-heeled tourists to the edge of space, had crashed on a flight over the Mojave Desert, killing one test pilot and seriously injuring the other.

. . .

Certainly the Wright brothers and others like de Havilland were involved in what we now view as an epic quest, but many experts of the day were certain that flight, however interesting, was destined to be not much more than a rich man's hobby with no practical value.

"The public has greatly over-estimated the possibilities of the aeroplane, imagining that in another generation they will be able to fly over to London in a day," said a Harvard expert in 1908. "This is manifestly impossible." Two other professors patiently explained that while laymen might think that "because a machine will carry two people another may be constructed that will carry a dozen," in fact "those who make this contention do not understand the theory of weight sustentation in the air."

. . .

There will be tragedies like the crash of SpaceShipTwo and nonlethal setbacks such as the fiery explosion, also last week, of a remote-controlled rocket intended for a resupply mission to the International Space Station. There will be debates about how to improve regulation without stifling innovation. Some will say private industry can't do the job -- though it's not as if the NASA-sponsored Apollo or space shuttle missions went off without a hitch (far from it, sadly).

But at the heart of the enterprise there will always be obsessives like Sir Geoffrey, who forged ahead with his life's work of building airplanes despite his own crash and, incredibly, the deaths of two of his three sons while piloting de Havilland aircraft, one in an attempt to break the sound barrier. Getting to routine safety aloft claimed many lives along the way, and a hundred years from now people will agree that in that regard, at least, spaceships are no different from airplanes.

For the full commentary, see:

SAM HOWE VERHOVEK. "Not a Flight of Fancy." The New York Times (Tues., NOV. 4, 2014): A21.

(Note: ellipses added.)

(Note: the online version of the commentary has the date NOV. 3, 2014.)

January 19, 2015

Leading Computability Expert Says Humans Can Do What Computers Cannot

(p. B4) What does Turing's research tell us?

"There is some scientific basis for the view that humans are doing something that a machine isn't doing--and that we don't even want our machine to do," says S. Barry Cooper, a mathematician at Leeds and the foremost scholar of Turing's work.

The math behind this is deep, but here's the short version: Humans seem to be able to decide the validity of statements that should stump us, were we strictly computers as Turing described them. And since all modern computers are of the sort Turing described, well, it seems that we've won the race against the machines before it's even begun.

. . .

The future of technology isn't about replacing humans with machines, says Prof. Cooper--it's about figuring out the most productive way for the two to collaborate. In a real and inescapable way, our machines need us just as much as we need them.

For the full commentary, see:

Mims, Christopher. "KEYWORDS; Why Humans Needn't Fear the Machines All Around Us; Turing's Heirs Realize a Basic Truth: The Machines We Create Are Not, Indeed Cannot Be, Replacements for Humans." The Wall Street Journal (Tues., DEC. 1, 2014): B4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Nov. 30, 2014, and has the title "KEYWORDS; Why We Needn't Fear the Machines; A Basic Truth: Computers Can't Be Replacements for Humans.")

One of the major books by the Turing and computability expert quoted in the passages above, is:

Cooper, S. Barry. Computability Theory, Chapman Hall/CRC Mathematics Series. Boca Raton, Florida: Chapman and Hall/CRC Mathematics, 2003.

January 14, 2015

Bezos Devices Aim to Create a Virtuous Cycle 'Flywheel'

(p. B1) Amazon now makes four different kinds of devices. There are dedicated e-readers, multipurpose tablets and, starting this year, a TV streaming device and a smartphone, the Fire Phone. Just this week, Amazon introduced another streaming machine, the Fire TV Stick, a $39 gadget that is the size of a USB stick and promises to turn your television into an Amazon-powered video service.

. . .

(p. B9) What is Amazon's endgame with all these devices? Mr. Bezos has always said that his mission, with hardware, is to delight users with devices that are priced fairly. The devices also contribute to Mr. Bezos's famous "flywheel," the virtuous cycle by which greater customer satisfaction leads to more sellers in his store, which leads to more products, greater efficiencies, lower prices and, in turn, more customers.

"Everything is about getting that flywheel spinning, and it isn't necessarily about building a big and successful tablet business of their own," said Benedict Evans, an analyst who works at the investment firm Andreessen Horowitz and has studied Amazon closely. "Whether they actually drive meaningful commerce isn't entirely clear, but Amazon is rigorously focused on data, so if they're doing it, you can trust that there must be data that justifies it."

And if this year's devices don't take off, you can bet that Mr. Bezos will try a slightly different tack next year.

For the full commentary, see:

Farhad Manjoo. "STATE OF THE ART; Amazon's Grand Design for Devices." The New York Times (Thurs., OCT. 30, 2014): B1 & B9.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date OCT. 29, 2014, and has the title "STATE OF THE ART; Amazon's Grand Design in Devices.")

Bezos's enthusiasm for Jim Collins's "flywheel" idea is discussed in:

Stone, Brad. The Everything Store: Jeff Bezos and the Age of Amazon. New York: Little, Brown and Company, 2013.

January 7, 2015

Pentagon Bureaucracy "Hindered Progress" on Drones

(p. A13) Compared with, say, a B-2 Bomber, drones are simple things. An empty B-2 weighs 158,000 pounds. The largest version of the Predator--the unmanned aerial vehicle now playing a critical role in every theater where the American military is engaged--weighs just under 5,000. Yet these small aircraft are revolutionizing warfare. Given the simplicity of drones, why did it take so long to put them into operation?

. . .

The most alarming take-away from Mr. Whittle's history is the persistent opposition of officials in the Pentagon who, for bureaucratic reasons, hindered progress at every step of the way.

A case in point: Two months after 9/11, the Predator was employed to incinerate one of al Qaeda's senior operatives, Mohammed Atef. The same blast also incinerated--metaphorically--a study released two weeks earlier by the Pentagon's office of operational testing and evaluation. The study had declared Predator "not operationally effective or suitable" for combat. If one seeks to understand why the drone revolution was late in coming--too late to help avert 9/11--the hidebound mentality behind that Pentagon document is one place to start.

For the full review, see:

Gabriel Schoenfeld. "BOOKSHELF; Building Birds of Prey; Red tape at the Pentagon prevented the development of a drone that could have helped avert the attacks of Sept. 11, 2001." The Wall Street Journal (Tues., Sept. 16, 2014): A13.

(Note: ellipsis added.)

(Note: the online version of the review has the date Sept. 15, 2014, and has the title "BOOKSHELF; Book Review: 'Predator' by Richard Whittle; Red tape at the Pentagon prevented the development of a drone that could have helped avert the attacks of Sept. 11, 2001.")

The book under review is:

Whittle, Richard. Predator: The Secret Origins of the Drone Revolution. New York, NY: Henry Holt and Co., 2014.

January 6, 2015

Netflix Proved TV Programs Can Be Delivered on Web

(p. B1) Netflix pointed a way forward by not only establishing that programming could be reliably delivered over the web, but showing that consumers were more than ready to make the leap. The reaction of the incumbents has been fascinating to behold.

As a reporter, I watched as newspapers, books and music all got hammered after refusing to acknowledge new competition and new consumption habits. They fortified their defenses, doubled down on legacy approaches and covered their eyes, hoping the barbarians would recede. That didn't end up being a good idea.

Television, partly because its files are so much larger and tougher to download, was insulated for a time, and had the benefit of having seen what happens when you sit still -- you get run over.

. . .

For any legacy business under threat of disruption, the challenge is to get from one room -- the one with the tried and true profitable approach -- to another, (p. B5) where consumers are headed and innovators are setting up shop. To get there, you have to enter a long, dark hallway, a scary place.

For the full commentary, see:

David Carr. "The Stream Finally Cracks the Dam of Cable TV." The New York Times (Mon., OCT. 20, 2014): B1 & B5.

(Note: bolded words, and last ellipsis, in original; other ellipses, and bracketed date, added.)

(Note: the online version of the commentary has the date OCT. 19, 2014.)

January 2, 2015

Somewhere in a Garage Is the Next Google

(p. B6) . . . Monday [Oct. 13, 2014] Eric Schmidt, Google's executive chairman used a speech in Berlin to talk about Amazon's success in search, how Facebook crushed Google on social networking and his conviction that somewhere in the world there is a garage-based company that will take out Google.

. . .

Here are some excerpts from Mr. Schmidt's speech:

. . .

THE NEXT GOOGLE: "But more important, someone, somewhere in a garage is gunning for us. I know, because not long ago we were in that garage. ... The next Google won't do what Google does, just as Google didn't do what AOL did."

For the full story, see:

CONOR DOUGHERTY. "Google Chairman on Competition." The New York Times (Mon., OCT. 20, 2014): B6.

(Note: bolded words, and last ellipsis, in original; other ellipses, and bracketed date, added.)

(Note: the online version of the story has the date OCT. 14, 2014, and has the title "Google Executive Chairman: Amazon Is a Lovely Place to Shop and Search." There are minor differences between the print and online versions. In the passages quoted above, where the two differ, I follow the print version.)

January 1, 2015

FAA Requires Drones to Carry Onboard Manuals

(p. B1) BERLIN--In four years, GmbH has emerged as a promising player here in the rapidly expanding commercial-drone industry. The 20-employee startup has sold more than 400 unmanned aircraft to private-sector companies and now is pitching its fourth-generation device.

Over the same period, Seattle-based Applewhite Aero has struggled to get permission from the Federal Aviation Administration just to fly its drones, which are designed for crop monitoring. The company, founded the same year as Service-drone, has test-flown only one of its four aircraft, and is now moving some operations to Canada, where getting flight clearance is easier.

"We had to petition the FAA to not carry the aircraft manual onboard," said Applewhite founder Paul Applewhite. "I mean, who's supposed to read it?" Mr. Applewhite, like many of his U.S. peers, fears the drone industry "is moving past the U.S., and we're just getting left behind."

For the full story, see:

JACK NICAS. "U.S. Rules Clips Drone Makers' Wings." The Wall Street Journal (Mon., Oct. 6, 2014): B1 & B4.

(Note: the online version of the story has the date Oct. 5, 2014, and has the title "Regulation Clips Wings of U.S. Drone Makers.")

December 25, 2014

U.S. Patents and Start-Ups Fall When We Exclude Tech Immigrants

(p. A19) The process of bringing skilled immigrants to the U.S. via H-1B visas and putting them on the path to eventual citizenship has been a political football for at least a decade. It has long been bad news for those immigrants trapped in this callous process. Now the U.S. economy is beginning to suffer, too.

Every year, tens of thousands of disappointed tech workers and other professionals give up while waiting for a resident visa or green card, and go home--having learned enough to start companies that compete with their former U.S. employers. The recent historic success of China's Alibaba IPO is a reminder that a new breed of companies is being founded, and important innovation taking place, in other parts of the world. More than a quarter of all patents filed today in the U.S. bear the name of at least one foreign national residing here.

The U.S. no longer has a monopoly on great startups. In the past, the best and brightest people would come to the U.S., but now they are staying home. In Silicon Valley, according to a 2012 survey by Duke and Stanford Universities and the University of California at Berkeley, the percentage of new companies started by foreign-born entrepreneurs has begun to slide for the first time--down to 43.9% during 2006-12, from 52.4% during 1995-2005.

For the full commentary, see:

MICHAEL S. MALONE. "OPINION; The Self-Inflicted U.S. Brain Drain; Up to 1.5 million skilled workers are stuck in immigration limbo. Many give up and go home." The Wall Street Journal (Thurs., OCT. 16, 2014): A19.

(Note: the online version of the commentary has the date OCT. 15, 2014.)

The 2012 survey is discussed further in:

Wadhwa, Vivek, AnnaLee Saxenian, and F. Daniel Siciliano. "Then and Now: America's New Immigrant Entrepreneurs, Part VII." Ewing Marion Kauffman Foundation, October 2012.

An in-depth discussion of the issues raised by Malone can be found in:

Wadhwa, Vivek. The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent. pb ed. Philadelphia, PA: Wharton Digital Press, 2012.

December 24, 2014

How Creative Destruction Reuses Capital

(p. B1) The Internet is moving to a shopping center near you.

In Fort Wayne, Ind., a vacated Target store is about to be home to rows of computer servers, network routers and Ethernet cables courtesy of a local data-center operator. In Jackson, Miss., a former McRae's department store will get the same treatment next year. And one quadrant of the Marley Station Mall south of Baltimore is already occupied by a data-center company that last year offered to buy out the rest of the building.

As America's retailers struggle to keep up with online shopping, the Internet is starting to settle into some of the very spaces where brick-and-mortar customers used to shop.

For the full story, see:

DREW FITZGERALD and PAUL ZIOBRO. "This Used to Be a Shopping Mall." The Wall Street Journal (Tues., NOV. 4, 2014): B1 & B6.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the date NOV. 3, 2014, and has the title "Malls Fill Vacant Stores With Server Rooms.")

December 22, 2014

Charismatic Prophets of Technological and Organizational Innovation

(p. C7) Walter Isaacson's last book was the best-selling biography of Steve Jobs --the charismatic business genius of Apple Computer and one of the beatified icons of modern technology and entrepreneurship. Mr. Isaacson's fine new book, "The Innovators," is a serial biography of the large number of ingenious scientists and engineers who, you might say, led up to Jobs and his Apple co-founder Steve Wozniak --"forerunners" who, over the past century or so, produced the transistor, the microchip and microprocessor, the programmable computer and its software, the personal computer, and the graphic interface.

. . .

Mr. Isaacson's heart is with the engineers: the wizards of coding, the artists in electrons, silicon, copper, networks and mice. But "The Innovators" also gives space to the revolutionary work done with men as well as mice: experiments in the organizational forms in which creativity might be encouraged and expressed; in the aesthetic design of personal computers, phones and graphical fonts; in predicting and creating what consumers did not yet know they wanted; and in the advertising and marketing campaigns that make them want those things. Not the least of the revolutionaries' inventions was their own role as our culture's charismatic prophets, uniquely positioned to pronounce on which way history was going and then to assemble the capital, the motivated workers and the cheering audiences that helped them make it go that way.

For the full review, see:

ALEXANDRA KIMBALL. "The Best Way to Predict the Future." The Wall Street Journal (Sat., Oct. 4, 2014): C9.

(Note: ellipsis added. The first word of the title in the print version was "They." Above, I have corrected the typo.)

(Note: the online version of the review has the date Oct. 3, 2014, and has the title "Book Review: 'The Innovators' by Walter Isaacson.")

The book under review is:

Isaacson, Walter. The Innovators: How a Group of Inventors, Hackers, Geniuses, and Geeks Created the Digital Revolution. New York: Simon & Schuster, 2014.

December 18, 2014

The Washing Machine Is a Great Bulwark of Women's Liberation

(p. C9) If the past is foreign country because they do things differently there, we're lucky to have such a knowledgeable cicerone as Ruth Goodman.

. . .

"I like to put time and effort into studying the objects and tools that people made and used, and I like to try methods and approaches out for myself," she writes in "How to Be a Victorian." This sounds straightforward enough but hardly hints at the leaps of imaginative empathy the author is so good at: When she visits a museum to examine a Victorian farm worker's wool coat, for example, she sees both the husband "who sweated and left stains on his clothes, who physically felt the cold" and the wife who "spent hours carefully and neatly sewing up the tear."

Ms. Goodman observes that the wife's technique for repair matches one taught in working-class textbooks, a fact that raises questions in her mind. "How widespread was such needlework education, and was it likely to have been women who carried out such repairs?" she wonders. "If it takes me over an hour to do the work, would my Victorian forebears have been quicker? When would they have fitted such a chore into their day?" That little rip in the man's coat, it turns out, is like a tiny window into "the great sweeps of political and economic life" that in turn "bring us back to the personal." Trade disruptions in textiles during the American Civil War, for instance, "pushed up the price of the labourer's coat, making that repair more necessary."

. . .

Many, many things about daily life are far better now: "My own historical laundry experiences have led me to see the powered washing machine as one of the great bulwarks of women's liberation, an invention that can sit alongside contraception and the vote."

For the full review, see:

ALEXANDRA KIMBALL. "Living Like a Queen; You might get used to using soot to brush your teeth. But steel corsets? Never." The Wall Street Journal (Sat., Oct. 4, 2014): C9.

(Note: ellipses added.)

(Note: the online version of the review has the date Oct. 3, 2014, and has the title "Book Review: 'How to Be a Victorian" by Ruth Goodman; You might get used to using soot to brush your teeth. But steel corsets? Never.")

The book under review is:

Goodman, Ruth. How to Be a Victorian: A Dawn-to-Dusk Guide to Victorian Life. New York: Liveright Publishing Corporation, 2014.

December 17, 2014

Most Venture Capital Firms Do Not Back "Ambitious, Long-Shot Projects"

(p. B4) Successful venture capitalism is about managing risk, so partners at most VC firms invest in businesses they think will become viable, or at least worthy of an acquisition, in the shortest time possible.

That doesn't leave much appetite among VCs for startups working on ambitious, long-shot projects, the sort that require basic research, and that's a shame.

For the full commentary, see:

CHRISTOPHER MIMS. "KEYWORDS; Our Last Great Hope: Venture Capital." The Wall Street Journal (Tues., Oct. 21, 2014): B1 & B4.

(Note: italics in original.)

(Note: the online version of the commentary has the date Oct. 20, 2014, and the title "KEYWORDS; Humanity's Last Great Hope: Venture Capitalists.")

December 14, 2014

"What Valuable Company Is Nobody Building?"

(p. A15) Peter Thiel is larger than life even for a Silicon Valley billionaire. He co-founded PayPal, was the first investor in Facebook , and funded LinkedIn, Spotify, SpaceX and Airbnb. Now he has written a much-needed explanation of the information economy, masquerading as a breezy how-to book for entrepreneurs. "Zero to One: Notes on Startups, or How to Build the Future" is based on lectures Mr. Thiel gave at Stanford.

He hopes more entrepreneurs will focus on big ideas for health, energy and transportation; his venture firm's tag line is "They promised us flying cars and all we got was 140 characters," a reference to Twitter. His explanation of innovation is also a primer on how free markets work. He encourages entrepreneurs to ask: "What valuable company is nobody building?"

For the full commentary, see:

L. GORDON CROVITZ. "INFORMATION AGE; Three Cheers for 'Creative Monopolies'." The Wall Street Journal (Mon., Oct. 13, 2014): A15.

(Note: the online version of the commentary has the date Oct. 12, 2014.)

The book praised in the passage quoted above is:

Thiel, Peter, and Blake Masters. Zero to One: Notes on Startups, or How to Build the Future. New York: Crown Business, 2014.

December 1, 2014

Serendipitous Discovery of CorningWare

(p. A15) S. Donald Stookey, a scientist with Corning Glass Works who in the 1950s accidentally discovered a remarkably strong material that could be used not just to make the nose cone of a missile but also to contain a casserole in both a refrigerator and hot oven -- its durable culinary incarnation was called CorningWare -- died on Tuesday [November 4, 2014] in Rochester.

. . .

Dr. Stookey had not planned to invent it. Experimenting at Corning one day in 1953, he put photosensitive glass into a furnace, intending to heat it to 600 degrees.

"When I came back, the temperature gauge was stuck on 900 degrees, and I thought I had ruined the furnace," he said in an interview several years ago. "When I opened the door to the furnace, I saw the glass was intact and had turned a milky white. I grabbed some tongs to get it out as fast as I could, but the glass slipped out of the tongs and fell to the floor. The thing bounced and didn't break. It sounded like steel hitting the floor."

For the full obituary, see:

WILLIAM YARDLEY. "S. Donald Stookey, Scientist, Dies at 99; Among His Inventions Was CorningWare." The New York Times (Sat., NOV. 8, 2014): A15.

(Note: ellipsis, and bracketed date, added.)

(Note: the online version of the obituary has the date NOV. 6, 2014.)

November 30, 2014

Esther Dyson Sees a Lot of Silicon Valley as Just Motivated to Make Money

(p. C11) The U.S. Commerce Department recently said that it plans to relinquish its oversight of Icann, handing that task to an international body of some kind. The details are still being worked out, but Ms. Dyson hopes that governments won't be the new regulators. . . .

For now, she thinks there are many Silicon Valley Internet companies with inflated market values. "There is the desire to make money that motivates a lot of that in Silicon Valley, and yes, I think it's totally a bubble," she says. "It's not like the last bubble in that there are a lot of real companies there [now], but there are a lot of unreal companies and...many of them will disappear." She thinks too many people are starting similar companies. "You have people being CEOs of teeny little things who would be much better as marketing managers of someone else's company," she says.

And though her work often takes her to California, she's happy to stay in New York. These days, she finds Silicon Valley "very fashionable," she says, "and I don't really like fashion."

For the full interview, see:

ALEXANDRA WOLFE, interviewer. "WEEKEND CONFIDENTIAL; Esther Dyson's Healthy Investments; The investor is hoping to produce better health through technology with a new nonprofit." The Wall Street Journal (Sat., May 3, 2014): C11.

(Note: first ellipsis added; second ellipsis in original.)

(Note: the online version of the interview has the date May 2, 2014, and has the title "WEEKEND CONFIDENTIAL; Esther Dyson's Healthy Investments; The investor is hoping to produce better health through technology with a new nonprofit.")

November 26, 2014

Robotic Milkers Are Less Costly, Easier to Manage and More Humane to Cows

(p. A1) EASTON, N.Y. -- Something strange is happening at farms in upstate New York. The cows are milking themselves.

Desperate for reliable labor and buoyed by soaring prices, dairy operations across the state are charging into a brave new world of udder care: robotic milkers, which feed and milk cow after cow without the help of a single farmhand.

Scores of the machines have popped up across New York's dairy belt and in other states in recent years, changing age-old patterns of daily farm life and reinvigorating the allure of agriculture for a younger, tech-savvy -- and manure-averse -- generation.

. . .

The cows seem to like it, too.

Robots allow the cows to set their own hours, lining up for automated milking five or six times a day -- turning the predawn and late-afternoon sessions (p. A19) around which dairy farmers long built their lives into a thing of the past.

With transponders around their necks, the cows get individualized service. Lasers scan and map their underbellies, and a computer charts each animal's "milking speed," a critical factor in a 24-hour-a-day operation.

. . .

The Bordens and other farmers say a major force is cutting labor costs -- health insurance, room and board, overtime, and workers' compensation insurance -- particularly when immigration reform is stalled in Washington and dependable help is hard to procure.

The machines also never complain about getting up early, working late or being kicked.

"It's tough to find people to do it well and show up on time," said Tim Kurtz, who installed four robotic milkers last year at his farm in Berks County, Pa. "And you don't have to worry about that with a robot."

The Bordens say the machines allow them to do more of what they love: caring for animals.

"I'd rather be a cow manager," Tom Borden said, "than a people manager."

For the full story, see:

JESSE McKINLEY. "With Farm Robotics, the Cows Decide When It's Milking Time." The New York Times (Weds., APRIL 23, 2014): A1 & A19.

(Note: ellipses added.)

(Note: the online version of the story has the date APRIL 22, 2014.)

November 18, 2014

Japanese Try to Sell the iPhone of Toilets in United States

(p. B8) TOKYO--Yoshiaki Fujimori wants to be the Steve Jobs of toilets.

Like iPhones, app-packed commodes are objects of desire in Mr. Fujimori's Japan. The lids lift automatically. The seats heat up. Built-in bidets make cleanup a breeze. Some of them even sync with users' smartphones via Bluetooth so that they can program their preferences and play their favorite music through speakers built into the bowl.

Three-quarters of Japanese homes contain such toilets, most of them made by one of two companies: Toto Ltd., Japan's largest maker of so-called sanitary ware, or Lixil Corp., where Mr. Fujimori is the chief executive.

Now Mr. Fujimori is leading a push to bring them to the great unwashed. In May, Lixil plans to add toilets with "integrated bidets" to the lineup of American Standard Brands, which Lixil acquired last year for $542 million, including debt.

. . .

Few people realized they needed smartphones until Apple's iPhone came along. So it will be in the U.S. with American Standard's new toilets, Mr. Fujimori said.

"Industry presents iPhone--industry presents shower toilet," Mr. Fujimori said in an interview at Lixil's headquarters in Tokyo. "We can create the same type of pattern."

. . .

Mr. Fujimori maintained that once American consumers try such toilets, they won't go back.

"This improves your standard of living," he said. "It doesn't hurt you. People like comfort, they like ease, they like automatic. And people like clean."

For the full story, see:

ERIC PFANNER and ATSUKO FUKASE. "Smart Toilets Arrive in U.S." The Wall Street Journal (Tues., May 27, 2014): B8.

(Note: ellipses added.)

(Note: the online version of the story has the date May 26, 2014.)

November 14, 2014

High Skill Foreign Workers Raise Wages for Native Workers

WageGrowthRelatedToChangesInForeignSTEMworkersGraph2014-10-08.jpgSource of graph: online version of the WSJ article quoted and cited below.

(p. A6) "A lot of people have the idea there is a fixed number of jobs," said . . . , Giovanni Peri of the University of California, Davis. "It's completely turned around."

Immigrants can boost the productivity of the overall economy, he said, "because then the pie grows and there are more jobs for other people as well and there's not a zero-sum trade-off between natives and immigrants."

Mr. Peri, along with co-authors Kevin Shih at UC Davis, and Chad Sparber at Colgate University, studied how wages for college- and noncollege-educated native workers shifted along with immigration. They found that a one-percentage-point increase in the share of workers in STEM fields raised wages for college-educated natives by seven to eight percentage points and wages of the noncollege-educated natives by three to four percentage points.

Mr. Peri said the research bolsters the case for raising, or even removing, the caps on H-1B visas, the program that regulates how many high-skilled foreign workers employers can bring into the country.

For the full story, see:

JOSH ZUMBRUN and MATT STILES. "Study: Skilled Foreign Workers a Boon to Pay." The Wall Street Journal (Fri., May 23, 2014): A6.

(Note: ellipsis added.)

(Note: the online version of the story has the date May 22, 2014, and has the title "Skilled Foreign Workers a Boon to Pay, Study Finds.")

The paper discussed in the passage quoted above, is:

Peri, Giovanni, Kevin Shih, and Chad Sparber. "Foreign Stem Workers and Native Wages and Employment in U.S. Cities." National Bureau of Economic Research, Inc, NBER Working Paper Number 20093, May 2014.

October 23, 2014

The Invention of the Vacuum Tube as a Revolutionary Event

(p. A11) Mr. Bryce's engrossing survey has two purposes. The first is to refute pessimists who claim that technology-driven economic growth will burn through the planet's resources and lead to catastrophe. "We are living in a world equipped with physical-science capabilities that stagger the imagination," he writes. "If we want to bring more people out of poverty, we must embrace [technological innovation], not reject it." The book's other purpose is to persuade climate-change fundamentalists that they are standing on the wrong side of history. Instead of saving the planet by going backward to Don Quixote's windmills, they need to take a progressive approach to technology itself, he says, striving to make nuclear power safer, for instance, and using the hydrocarbon revolution sparked by fracking and deep-offshore exploration to bridge the way to the future.

. . .

Mr. Bryce focuses in particular on the vacuum tube, designed in 1906 by Lee de Forest, the man also credited with inventing the radio.

The discovery of the vacuum tube, Mr. Bryce says, was a revolutionary event. By trapping the energy generated from the free flow of electrons and directing it to boost a small AC current into a much larger one, de Forest created electric amplification--which the transistor and integrated circuit would multiply exponentially.

For the full review, see:

ARTHUR HERMAN. "BOOKSHELF; How to Defuse the Power Elite; To compel the switch from fossil fuels to wind and solar power is to consign billions of people to a life of poverty and darkness." The Wall Street Journal (Thurs., May 22, 2014): A11.

(Note: ellipsis added.)

(Note: the online version of the review has the date May 21, 2014, and has the title "BOOKSHELF; Book Review: 'Smaller Faster Lighter Denser Cheaper' by Robert Bryce; To compel the switch from fossil fuels to wind and solar power is to consign billions of people to a life of poverty and darkness.")

The book being reviewed is:

Bryce, Robert. Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong. New York: PublicAffairs, 2014.

October 22, 2014

Nevada Government Lets Tesla Sell Directly to Consumers

(p. A13) . . . in addition to rubber-stamping the agreement that waived Tesla's property, sales and business taxes for a decade or more--while throwing in discount power rates--the Nevada legislature also approved a bill last week that would exempt the auto maker from franchising regulations outlawing the company's retail approach. The state's auto dealers, who only weeks ago threatened to sue over the matter, shifted gears and endorsed the legislation.

"My car dealers want to assist in any way they can," John Sande of the Nevada Franchise Auto Dealers Association told the Reno Gazette Journal. "Nevada law does not allow Tesla to come in and sell directly to the consumer, so we are going to have to come in and change it so they can sell directly to the consumer."

No doubt the dealers balanced the pros and cons of agitating for their own self-interest against overwhelming political support for the deal and the spending potential of thousands of new, well-paid workers who may prefer a Ford or Chevy pickup over a $70,000 Tesla Model S. But the fact that Nevada legislators so quickly jettisoned a key provision of the state's dealership-franchise provisions speaks volumes about how essential these statutes really are to the well-being of their constituents.

There is no rational reason Tesla--or any other automobile manufacturer--should be restricted from selling new cars directly to those who seek to buy them.

For the full commentary, see:

JOHN KERR. "OPINION; Tesla Breaks the Auto Dealer Cartel; Nevada lets the electric car maker sell directly to consumers. Too bad everyone else still can't." The Wall Street Journal (Weds., Sept. 17, 2014): A13.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Sept. 16, 2014.)

October 9, 2014

Feds Allow Hollywood to Use Drones

(p. B1) LOS ANGELES -- The commercial use of drones in American skies took a leap forward on Thursday [Sept. 25, 2014] with the help of Hollywood.

The Federal Aviation Administration, responding to applications from seven filmmaking companies and pressure from the Motion Picture Association of America, said six of those companies could use camera-equipped drones on certain movie and television sets. Until now, the F.A.A. has not permitted commercial drone use except for extremely limited circumstances in wilderness areas of Alaska.

Put bluntly, this is the first time that companies in the United States will be able to legally use drones to fly over people.

The decision has implications for a broad range of industries including agriculture, energy, real estate, the news media and online retailing. "While the approval for Hollywood is very limited in scope, it's a message to everyone that this ball is rolling," said Greg Cirillo, chairman of the aviation practice at Wiley Rein, a law firm in Washington.

Michael P. Huerta, the administrator of the F.A.A., said at least 40 similar applications were pending from companies beyond Hollywood. One is Amazon, which wants permission to move forward with a drone-delivery service. Google has acknowledged "self-flying vehicle" tests in the Australian outback.

"Today's announcement is a significant milestone in broadening commercial use," Anthony R. Foxx, secretary of transportation, told reporters in a conference call.

For the full story, see:

BROOKS BARNES. "Drone Exemptions for Hollywood Pave the Way for Widespread Use." The New York Times (Fri., SEPT. 26, 2014): B1 & B7.

(Note: bracketed date added.)

(Note: the online version of the story has the date SEPT. 25, 2014.)

October 6, 2014

Shellshock Bug Shows Low Quality of Open Source Software

(p. B1) Long before the commercial success of the Internet, Brian J. Fox invented one of its most widely used tools.

In 1987, Mr. Fox, then a young programmer, wrote Bash, short for Bourne-Again Shell, a free piece of software that is now built into more than 70 percent of the machines that connect to the Internet. That includes servers, computers, routers, some mobile phones and even everyday items like refrigerators and cameras.

On Thursday [Sept. 25, 2014], security experts warned that Bash contained a particularly alarming software bug that could be used to take control of hundreds of millions of machines around the world, potentially including Macintosh computers and smartphones that use the Android operating system.

The bug, named "Shellshock," drew comparisons to the Heartbleed bug that was discovered in a crucial piece of software last spring.

But Shellshock could be a bigger threat. While Heartbleed could be used to do things like steal passwords from a server, Shellshock can be used to take over the entire machine. And Heartbleed went unnoticed for two years and affected an estimated 500,000 machines, but Shellshock was not discovered for 22 years.

. . .

Mr. Fox maintained Bash -- which serves as a sort of software interpreter for different commands from a user -- for five years before handing over the reins to Chet Ramey, a 49-year-old programmer who, for the last 22 years, has maintained the software as an unpaid hobby. That is, when he is not working at his day job as a senior technology architect at Case Western Reserve University in Ohio.

. . .

(p. 2) The mantra of open source was perhaps best articulated by Eric S. Raymond, one of the elders of the open-source movement, who wrote in 1997 that "given enough eyeballs, all bugs are shallow." But, in this case, Steven M. Bellovin, a computer science professor at Columbia University, said, those eyeballs are more consumed with new features than quality. "Quality takes work, design, review and testing and those are not nearly as much fun as coding," Mr. Bellovin said. "If the open-source community does not develop those skills, it's going to fall further behind in the quality race."

For the full story, see:

NICOLE PERLROTH. "Flaw in Code Puts Millions At Big Risk." The New York Times (Fri., SEPT. 26, 2014): B1-B2.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the date SEPT. 25, 2014, and has the title "Security Experts Expect 'Shellshock' Software Bug in Bash to Be Significant.")

September 17, 2014

Bill Gates on Xerox's Inventions and Mistakes

(p. C3) Not long after I first met Warren Buffett back in 1991, I asked him to recommend his favorite book about business. He didn't miss a beat: "It's 'Business Adventures,' by John Brooks, " he said. "I'll send you my copy." I was intrigued: I had never heard of "Business Adventures" or John Brooks.

Today, more than two decades after Warren lent it to me--and more than four decades after it was first published--"Business Adventures" remains the best business book I've ever read. John Brooks is still my favorite business writer. (And Warren, if you're reading this, I still have your copy.)

. . .

One of Brooks's most instructive stories is "Xerox Xerox Xerox Xerox." (The headline alone belongs in the Journalism Hall of Fame.) The example of Xerox is one that everyone in the tech industry should study. Starting in the early '70s, Xerox funded a huge amount of R&D that wasn't directly related to copiers, including research that led to Ethernet networks and the first graphical user interface (the look you know today as Windows or OS X).

But because Xerox executives didn't think these ideas fit their core business, they chose not to turn them into marketable products. Others stepped in and went to market with products based on the research that Xerox had done. Both Apple and Microsoft, for example, drew on Xerox's work on graphical user interfaces.

I know I'm not alone in seeing this decision as a mistake on Xerox's part. I was certainly determined to avoid it at Microsoft. I pushed hard to make sure that we kept thinking big about the opportunities created by our research in areas like computer vision and speech recognition. Many other journalists have written about Xerox, but Brooks's article tells an important part of the company's early story. He shows how it was built on original, outside-the-box thinking, which makes it all the more surprising that as Xerox matured, it would miss out on unconventional ideas developed by its own researchers. (To download a free e-book of "Xerox Xerox Xerox Xerox," go to

For the full review, see:

BILL GATES. "My Favorite Business Book." The Wall Street Journal (Sat., July 12, 2014): C3.

(Note: ellipsis added.)

(Note: the last quoted sentence is in the location, and has the wording, of the printer version, not the online version.)

(Note: the online version of the review has the date July 11, 2014, and has the title "Bill Gates's Favorite Business Book.")

The book being reviewed is:

Brooks, John. Business Adventures: Twelve Classic Tales from the World of Wall Street. pb ed. New York: Open Road Integrated Media, Inc., 2014.

September 5, 2014

"Malthus Was Wrong"

(p. 20) The biggest problem with Malthusiasm, as Mayhew addresses at length, is that Malthus was wrong. He thought England was nearing the limits of its ability to provide for its growing population. But as that population continued to grow in the 19th century, the country proved more than able to feed itself by increasing agricultural productivity and importing food that it could easily pay for with its industrial wealth. And toward the end of the century, birthrates began falling and population growth slowed.

. . .

There is evidence enough in this book for a pretty withering attack on Malthusianism, if not on Malthus. Mayhew, however, prefers the role of calm and evenhanded guide. At the end he's even hinting that today's Malthusian prophets of environmental doom are on to something. They may be: Just because Malthus was wrong about nature's limits in 1798 doesn't prove we won't ever hit those limits. Past performance is no guarantee of future results. Still, you'd think it would put more of a damper on people's Malthusiasm.

For the full review, see:

JUSTIN FOX. "Head Count." The New York Times Book Review (Sun., Aug. 3, 2014): 20.

(Note: ellipsis added.)

(Note: the online version of the review has the date Aug. 1, 2014. )

The book being reviewed is:

Mayhew, Robert J. Malthus: The Life and Legacies of an Untimely Prophet. Cambridge, MA: Belknap Press, 2014.

September 3, 2014

Predictors of Technological Doom Have "All Been Wrong"

GrowingAndDecliningJobsGraph2014.jpgSource of graph: online version of the NYT article quoted and cited below.

(p. 4) JUST over 50 years ago, the cover of Life magazine breathlessly declared the "point of no return for everybody." Above that stark warning, a smaller headline proclaimed, "Automation's really here; jobs go scarce."

As events unfolded, it was Life that was nearing the point of no return -- the magazine suspended weekly publication in 1972. For the rest of America, jobs boomed; in the following decade, 21 million Americans were added to the employment rolls.

Throughout history, aspiring Cassandras have regularly proclaimed that new waves of technological innovation would render huge numbers of workers idle, leading to all manner of economic, social and political disruption.

As early as 1589, Queen Elizabeth I refused a patent on a knitting machine for fear it would put "my poor subjects" out of work.

In the 1930s, the great John Maynard Keynes predicted widespread job losses "due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour."

So far, of course, they've all been wrong. But that has not prevented a cascade of shrill new proclamations that -- notwithstanding centuries of history -- "this time is different": . . .

For the full commentary, see:

Steven Rattner. "Fear Not the Coming of the Robots." The New York Times, SundayReview Section (Sun., JUNE 22, 2014): 4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date June 21, 2014.)

September 1, 2014

"The Metric System Can Be Our Operating System Without Being Our Interface"

(p. C6) The outcome was perhaps foreshadowed, as Mr. Marciano points out, when President Ford, using a customary unit, noted that American industries were "miles ahead" when it came to adopting the metric system.

Mr. Marciano tells his story more or less without editorializing, until the end. Surveying the centuries of fights over measurement, he finishes on a rather intriguing point: Standardization no longer matters that much.

. . .

. . . , with the computerization of life, we don't have to worry about converting from one measurement to another; our software does this for us. We can still speak in pounds or feet, even if everything in the world of manufacturing and technology is really, at bottom, done in the metric system. In the evocative terminology of Mr. Marciano, "the metric system can be our operating system without being our interface."

For the full review, see:

SAMUEL ARBESMAN. "Liters and Followers; Gerald Ford once proudly declared the country was 'miles ahead' in converting to the metric system." The Wall Street Journal (Sat., Aug. 2, 2014): C6.

(Note: ellipses added.)

(Note: the online version of the review has the date Aug. 1, 2014, and has the title "Book Review: 'Whatever Happened to the Metric System?' by John Bemelmans Marciano; Gerald Ford once proudly declared the country was 'miles ahead' in converting to the metric system." )

The book being reviewed is:

Marciano, John Bemelmans. Whatever Happened to the Metric System?: How America Kept Its Feet. New York: Bloomsbury USA, 2014.

August 28, 2014

"A Few Really Good Artisanal Cheese Shops Is No Substitute for a Strong School System"

(p. 836) Moretti's writing on the "creative class" takes issue with policies associated with Richard Florida, who has exerted a considerable influence on local policymakers worldwide. Moretti uses the example of Berlin, which is a cool place full of creative types but still isn't much of an economic powerhouse, to make the case against Florida's recommendations.

. . .

A problem exists if city governments start thinking that their main job is to be hip rather than competent. Having a few really good artisanal cheese shops is no substitute for a strong school system. Local leaders would do well to remember that an externality-creating skilled resident is as likely to be a forty-two-year-old mother who works in (p. 837) a lab as a twenty-five-year-old looking for a good time. The forty-two-year-old's tastes in local amenities are likely to be quite different from those of the twenty-five-year-old. If Moretti's caution against creative class policies achieves that end, then it will have done something quite positive.

For the full review, see:

Glaeser, Edward. "A Review of Enrico Moretti's the New Geography of Jobs." Journal of Economic Literature 51, no. 3 (Sept. 2013): 825-37.

(Note: ellipsis added.)

The book under review is:

Moretti, Enrico. The New Geography of Jobs. New York: Houghton Mifflin Harcourt Publishing Co., 2012.

August 27, 2014

Big Increase in Costs of Adhering to Moore's Law

(p. 219) Harald Bauer, Jan Veira, and Florian Weig consider "Moore's Law: Repeal or Renewal?" "Moore's law states that the number of transistors on integrated circuits doubles every two years, and for the past four decades it has set the pace for progress in the semiconductor industry. . . . Adherence to Moore's law has led to continuously falling semiconductor prices. Per-bit prices of dynamic random-access memory chips, for example, have fallen by as much as 30 to 35 percent a year for several decades. . . . Some estimates ascribe up to 40 percent of the global productivity growth achieved during the last two decades to the expansion of information and communication technologies made possible by semiconductor performance and cost improvements." But this continued technological progress comes at an ever-higher price. "A McKinsey analysis shows that moving from 32nm (p. 220) to 22nm nodes on 300-millimeter (mm) wafers causes typical fabrication costs to grow by roughly 40 percent. It also boosts the costs associated with process development by about 45 percent and with chip design by up to 50 percent. These dramatic increases will lead to process-development costs that exceed $1 billion for nodes below 20nm. In addition, the state-of-the art fabs needed to produce them will likely cost $10 billion or more. As a result, the number of companies capable of financing next-generation nodes and fabs will likely dwindle." McKinsey Global Institute, December 2013,


Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 28, no. 2 (Spring 2014): 213-20.

(Note: ellipses in original.)

August 16, 2014

Process Innovations, Allowed by Deregulation, Creatively Destroyed Railroads

(p. A11) In "American Railroads: Decline and Renaissance in the Twentieth Century," transportation economists Robert E. Gallamore and John R. Meyer provide a comprehensive account of both the decline and the revival.   . . .    They point to excessive government regulation of railroad rates and services as the catalyst for the industry's decay.

. . .

. . . deregulation, Mr. Gallamore and Meyer demonstrate, was a process of creative destruction. Conrail was created by the government in 1976 in a risky, last-ditch attempt to rescue Penn Central and other bankrupt Eastern railroads. It was quickly losing $1 million a day, and its plight helped make the case for the major revamp of railroad regulation that came in 1980. A wave of mergers followed, and the new companies slashed routes and employees on the way to profitability. The shrinking of the national rail system helped, too, as freight companies consolidated traffic on a smaller (and therefore cheaper) network. Freight-train crews were cut to two or three people from four or five. Cabooses were replaced by electronic gear at the end of freight trains.

For the full review, see:

DANIEL MACHALABA. "BOOKSHELF; Long Train Runnin'; Track conditions got so bad in the 1970s that stationary freight cars were falling off the rails thanks to rotting crossties." The Wall Street Journal (Weds., July 9, 2014): A11.

(Note: ellipses added.)

(Note: the online version of the review has the date July 8, 2014, and has the title "BOOKSHELF; Book Review: 'American Railroads' by Robert E. Gallamore and John R. Meyer; Track conditions got so bad in the 1970s that stationary freight cars were falling off the rails thanks to rotting crossties.")

The book under review is:

Gallamore, Robert E., and John R. Meyer. American Railroads: Decline and Renaissance in the Twentieth Century. Cambridge, MA: Harvard University Press, 2014.

August 11, 2014

Lynas Apologizes for Organizing Anti-GM (Genetic Modification) Movement

(p. 115) More than a decade and a half since the commercialization of first-generation agricultural biotechnology, concerns about transgenic crop impacts on human and environmental health remain, even though the experience across a cumulative 1.25 billion hectares suggests the relative safety of first-generation genetically engineered seed. The risks posed by agricultural biotechnology warrant continued attention, and new transgenic crops may pose different and bigger risks. Weighing against uncertain risks are benefits from increased food production, reduced insecticide use, and avoided health risks to food consumers and farm workers. At the same time, adoption is shown to increase herbicide use while reducing herbicide toxicity, save land by boosting yields while also making previously unfarmed lands profitable. Adoption benefits food consumers and farmers but also enriches seed companies that enjoy property right protections over new seed varieties. The (p. 116) balance of scientific knowledge weighs in favor of continued adoption of genetically engineered seed, which may explain why some longtime critics have reversed course. For example, Lord Melchett, who was the head of Greenpeace, has been advising biotechnology companies on overcoming constraints to the technology (St. Clair and Frank forthcoming). Mark Lynas, a journalist and organizer of the anti-GM (genetic modification) movement, publicly apologized for helping start the movement in his "Lecture to Oxford Farming Conference" (2013).

Agricultural biotechnology remains regulated by regimes developed at the introduction of the technology. Whereas precaution may have been appropriate before the relative magnitudes of risks and benefits could be empirically observed, accumulated knowledge suggests overregulation is inhibiting the introduction of new transgenic varieties. Regulation also discourages developing-country applications, where benefits are likely greatest. In the future, new genetic traits may promise greater benefits while also posing novel risks of greater magnitudes than existing traits. Efficient innovation and technology adoption will require different and, perhaps, more stringent regulation in the future, as well as continued insights from researchers, including economists, in order to assess evolving costs and benefits.


Barrows, Geoffrey, Steven Sexton, and David Zilberman. "Agricultural Biotechnology: The Promise and Prospects of Genetically Modified Crops." Journal of Economic Perspectives 28, no. 1 (Winter 2014): 99-120.

August 4, 2014

Did Intel Succeed in Spite of, or Because of, Tension Between Noyce and Grove?

(p. C5) . . . , much more so than in earlier books on Intel and its principals, the embedded thread of "The Intel Trinity" is the dirty little secret few people outside of Intel knew: Andy Grove really didn't like Bob Noyce.

. . .

(p. C6) . . . there's the argument that one thing a startup needs is an inspiring, swashbuckling boss who lights up a room when he enters it and has the confidence to make anything he's selling seem much bigger and more important than it actually is. And Mr. Malone makes a compelling case that Noyce was the right man for the job in this phase of the company. "Bob Noyce's greatest gift, even more than his talent as a technical visionary," Mr. Malone writes, "was his ability to inspire people to believe in his dreams, in their own abilities, and to follow him on the greatest adventure of their professional lives."

. . .

Noyce hid from Mr. Grove, who was in charge of operations, the fact that Intel had a secret skunk works developing a microprocessor, a single general-purpose chip that would perform multiple functions--logic, calculation, memory and power control. Noyce had the man who was running it report directly to him rather than to Mr. Grove, even though Mr. Grove was his boss on the organizational chart. When Mr. Grove learned what was going on, he became furious, but like the good soldier he was, he snapped to attention and helped recruit a young engineer from Fairchild to be in charge of the project, which ultimately redefined the company.

. . .

Remarkably, none of this discord seemed to have much effect on the company's day-to-day operations. Mr. Malone even suggests that the dysfunction empowered Intel's take-no-prisoners warrior culture.

. . .

So while the humble, self-effacing Mr. Moore, who had his own time in the CEO's chair from 1975 to 1987, played out his role as Intel's big thinker, the brilliant visionary "who could see into the technological future better than anyone alive," Mr. Grove was the kick-ass enforcer. No excuses. For anything.

For the full review, see:

STEWART PINKERTON. "Made in America; A Born Leader, a Frustrated Martinet Built One of Silicon Valley's Giants." The Wall Street Journal (Sat., July 19, 2014): C5-C6.

(Note: ellipses added.)

(Note: the online version of the review has the date July 18, 2014, and has the title "Book Review: 'The Intel Trinity' by Michael S. Malone; A born leader, an ethereal genius and a tough taskmaster built the most important company on the planet.")

The book under review is:

Malone, Michael S. The Intel Trinity: How Robert Noyce, Gordon Moore, and Andy Grove Built the World's Most Important Company. New York: HarperCollins Publishers, 2014.

July 28, 2014

Entrepreneur Gutenberg's Press Creatively Destroyed the Jobs of Scribes

(p. 32) Poggio possessed . . . [a] gift that set him apart from virtually all the other book-hunting humanists. He was a superbly well-trained scribe, with exceptionally fine handwriting, great powers of concentration, and a high degree of accuracy. It is difficult for us, at this distance, to take in the significance of such qualities: our technologies for producing transcriptions, facsimiles, and copies have almost entirely erased what was once an important personal achievement. That importance began to decline, though not at all precipitously, even in Poggio's own lifetime, for by the 1430s a German entrepreneur, Johann Gutenberg, began experimenting with a new invention, movable type, which would revolutionize the reproduction and transmission of texts. By the century's end printers, especially the great Aldus in Venice, would print Latin texts in a typeface whose clarity and elegance remain unrivalled after five centuries. That typeface was based on the beautiful handwriting of Poggio and his humanist friends. What Poggio did by hand to produce a single copy would soon be done mechanically to produce hundreds.


Greenblatt, Stephen. The Swerve: How the World Became Modern. New York: W. W. Norton & Company, 2011.

(Note: ellipsis, and bracketed word, added.)

July 23, 2014

How Sega Came Out of Nowhere to Leapfrog Near-Monopolist Nintendo


Source of book image:

(p. C10) "Console Wars" tells how Sega, an unremarkable Japanese manufacturer of games played in arcades, came out of nowhere to challenge Nintendo for dominance of the videogame world in the first half of the 1990s. Nintendo, which had revived the stagnant home videogame category a few years earlier, had something close to a monopoly in 1990 and behaved accordingly, dictating terms to game developers and treating retailers as peons. Sega, in Mr. Harris's telling, was a disruptive force in a highly concentrated market, introducing more advanced gaming technology, toppling Nintendo from its perch and becoming the largest seller of home videogame hardware in the U.S. by late 1993.

Mr. Harris's hero is a former Mattel executive named Tom Kalinske, who became president of Sega of America, then a small subsidiary, in 1990. Mr. Kalinske assembled a team of crack marketers who would not have gone near Sega but for his reputation and persuasiveness. Within a year and a half, according to Mr. Harris, Mr. Kalinske's leadership, along with a new gaming system called Genesis and a marketing assist from a mascot named Sonic the Hedgehog, made Sega the U.S. market leader in videogames.

And then, after only three years at the top, Sega fell from its pedestal. Sega's management in Japan, suffering mightily from not-invented-here syndrome, rejected Mr. Kalinske's proposals to collaborate with Sony and Silicon Graphics on new gaming systems. Instead, over his objections, Sega pushed out its ill-conceived Saturn game console in 1995. While Saturn flopped, Sony struck gold with its PlayStation; Silicon Graphics sold its chip with amazing graphics capabilities to Nintendo; and the game, so to speak, was over.

. . .

The author admits he has taken liberties: "I have re-created the scenes in this book using the information uncovered from my interviews, facts gathered from supporting documents, and my best judgment as to what version most closely fits the historical record," he writes. The result is more a 558-page screenplay than a credible work of nonfiction.

For the full review, see:

MARC LEVINSON. "Sonic Boom; How a no-name company took on Nintendo, tied its fate to a hyperactive hedgehog, and--briefly--won." The Wall Street Journal (Sat., May 24, 2014): C10.

(Note: ellipsis added.)

(Note: the online version of the review has the date May 23, 2014, an has the title "Book Review: 'Console Wars' by Blake J. Harris; How a no-name company took on Nintendo, tied its fate to a hyperactive hedgehog, and--briefly--won.")

The book under review is:

J., Harris Blake. Console Wars: Sega, Nintendo, and the Battle That Defined a Generation. New York: HarperCollins Publishers, 2014.

July 17, 2014

Open Source Guru Admits to "Mismatched Incentives" and "Serious Trouble Down the Road"

RaymondEricOpenSourceElder2014-06-02.jpg "Eric S. Raymond said that the code-checking system had failed in the case of Heartbleed." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) SAN FRANCISCO -- The Heartbleed bug that made news last week drew attention to one of the least understood elements of the Internet: Much of the invisible backbone of websites from Google to Amazon to the Federal Bureau of Investigation was built by volunteer programmers in what is known as the open-source community.

Heartbleed originated in this community, in which these volunteers, connected over the Internet, work together to build free software, to maintain and improve it and to look for bugs. Ideally, they check one another's work in a peer review system similar to that found in science, or at least on the nonprofit Wikipedia, where motivated volunteers regularly add new information and fix others' mistakes.

This process, advocates say, ensures trustworthy computer code.

But since the Heartbleed flaw got through, causing fears -- as yet unproved -- of widespread damage, members of that world are questioning whether the system is working the way it should.

"This bug was introduced two years ago, and yet nobody took the time to notice it," said Steven M. Bellovin, a computer science professor at Columbia University. "Everybody's job is not anybody's job."

. . .

(p. B2) Unlike proprietary software, which is built and maintained by only a few employees, open-source code like OpenSSL can be vetted by programmers the world over, advocates say.

"Given enough eyeballs, all bugs are shallow" is how Eric S. Raymond, one of the elders of the open-source movement, put it in his 1997 book, "The Cathedral & the Bazaar," a kind of manifesto for open-source philosophy.

In the case of Heartbleed, though, "there weren't any eyeballs," Mr. Raymond said in an interview this week.

. . .

The problem, Mr. Raymond and other open-source advocates say, boils down to mismatched incentives. Mr. Raymond said firms don't maintain OpenSSL code because they don't profit directly from it, even though it is integrated into their products, and governments don't feel political pain when the code has problems.

With OpenSSL, by contrast, "for those that do work on this, there's no financial support, no salaries, no health insurance," Mr. Raymond said. "They either have to live like monks or work nights and weekends. That is a recipe for serious trouble down the road."

For the full story, see:

Perlroth, Nicole. "A Contradiction at the Heart of the Web." The New York Times (Sat., April 19, 2014): B1 & B2.

(Note: ellipses added.)

(Note: the online version of the story was updated APRIL 18, 2014, and has the title "Heartbleed Highlights a Contradiction in the Web.")

Raymond's open source manifesto is:

Raymond, Eric S. The Cathedral & the Bazaar: Musings on Linux and Open Source by an Accidental Revolutionary. Sebastopol, CA: O'Reilly Media, Inc., 1999.

July 14, 2014

Forecasts of Mass Unemployment from Robots Were Wrong

(p. 215) Frank Levy and Richard J. Murnane consider the interaction between workers and machinery in "Dancing with Robots: Human Skills for Computerized Work." "On March 22, 1964, President Lyndon Johnson received a short, alarming memorandum from the Ad Hoc Committee on the Triple Revolution. The memo warned the president of threats to the nation beginning with the likelihood that computers would soon create mass unemployment: 'A new era of production has begun. Its principles of organization are as different from those of the industrial era as those of the industrial era were different from the agricultural. The cybernation revolution has been brought about by the combination of the computer and the automated self-regulating machine. This results in a system of almost unlimited productive capacity which requires progressively less human labor. Cybernation is already reorganizing the economic and social system to meet its own needs.' The memo was signed by luminaries including Nobel Prize winning chemist Linus Pauling, Scientific American publisher Gerard Piel, and economist Gunnar Myrdal (a future Nobel Prize winner). Nonetheless, its warning was only half right. There was no mass unemployment--since 1964 the economy has added 74 million jobs. But computers have changed the jobs that are available, the skills those jobs require, and the wages the jobs pay. For the foreseeable future, the challenge of "cybernation" is not mass unemployment but the need to educate many more young people for the jobs computers cannot do." Third Way, 2013, /publications/714/Dancing-With-Robots.pdf.


Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 27, no. 4 (Fall 2013): 211-18.

(Note: italics in original.)

July 12, 2014

They Begged for a Chance to Help Edison Create the Future

(p. 289) He, and anyone working for him, were perceived as standing at the very outer edge of the present, where it abuts the future. When a young John Lawson sought a position at Edison's lab and wrote in 1879 that he was "willing to do anything, dirty work--become anything, almost a slave, only give me a chance," he spoke with a fervency familiar to applicants knocking today on the door of the hot tech company du jour. In the age of the computer, different companies at different times--for example, Apple in the early 1980s, Microsoft in the early 1990s, Google in the first decade of the twenty-first century--inherited the temporary aura that once hovered over Edison's Menlo Park laboratory, attracting young talents who applied in impossibly large numbers, all seeking a role in the creation of the zeitgeist (and, like John Ott, at the same time open to a chance to become wealthy). The lucky ones got inside (Lawson got a position and worked on electric light).


Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

July 9, 2014

French Protest Amazon, but Buy There for Low Prices

(p. B1) LONDON -- On weekends, Guillaume Rosquin browses the shelves of local bookstores in Lyon, France. He enjoys peppering the staff with questions about what he should be reading next. But his visits, he says, are also a protest against the growing power of Amazon. He is bothered by the way the American online retailer treats its warehouse employees.

Still, as with millions of other Europeans, there is a limit to how much he will protest.

"It depends on the price," said Mr. Rosquin, 49, who acknowledged that he was planning to buy a $400 BlackBerry smartphone on Amazon because the handset was not yet available on rival French websites. "If you can get something for half-price at Amazon, you may put your issues with their working conditions aside."

For the full story, see:

MARK SCOTT. "Principles Are No Match for Europe's Love of U.S. Web Titans." The New York Times (Mon., JULY 7, 2014): B1 & B3.

(Note: the online version of the story has the date JULY 6, 2014.)

July 1, 2014

Natural Resources Increase through Innovation

SolarPanelsDunhuangChina2014-05-31.jpg "A worker inspects solar panels in Dunhuang, China. We have an estimated supply of one million years of tellurium, a rare element used in some panels." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. C1) How many times have you heard that we humans are "using up" the world's resources, "running out" of oil, "reaching the limits" of the atmosphere's capacity to cope with pollution or "approaching the carrying capacity" of the land's ability to support a greater population? The assumption behind all such statements is that there is a fixed amount of stuff--metals, oil, clean air, land--and that we risk exhausting it through our consumption.

. . .

But here's a peculiar feature of human history: We burst through such limits again and again. After all, as a Saudi oil minister once said, the Stone Age didn't end for lack of stone.

. . .

Economists call the same phenomenon innovation. What frustrates them about ecologists is the latter's tendency to think in terms of static limits. Ecologists can't seem to see that when whale oil starts to run out, petroleum is discovered, or that when farm yields flatten, fertilizer comes along, or that when glass fiber is invented, demand for copper falls.

. . .

(p. C2) . . ., Mr. Ausubel, together with his colleagues Iddo Wernick and Paul Waggoner, came to the startling conclusion that, even with generous assumptions about population growth and growing affluence leading to greater demand for meat and other luxuries, and with ungenerous assumptions about future global yield improvements, we will need less farmland in 2050 than we needed in 2000. (So long, that is, as we don't grow more biofuels on land that could be growing food.)

. . .

The economist and metals dealer Tim Worstall gives the example of tellurium, a key ingredient of some kinds of solar panels. Tellurium is one of the rarest elements in the Earth's crust--one atom per billion. Will it soon run out? Mr. Worstall estimates that there are 120 million tons of it, or a million years' supply altogether.

. . .

Part of the problem is that the word "consumption" means different things to the two tribes. Ecologists use it to mean "the act of using up a resource"; economists mean "the purchase of goods and services by the public" (both definitions taken from the Oxford dictionary).

But in what sense is water, tellurium or phosphorus "used up" when products made with them are bought by the public? They still exist in the objects themselves or in the environment. Water returns to the environment through sewage and can be reused. Phosphorus gets recycled through compost. Tellurium is in solar panels, which can be recycled. As the economist Thomas Sowell wrote in his 1980 book "Knowledge and Decisions," "Although we speak loosely of 'production,' man neither creates nor destroys matter, but only transforms it."

. . .

If I could have one wish for the Earth's environment, it would be to bring together the two tribes--to convene a grand powwow of ecologists and economists. I would pose them this simple question and not let them leave the room until they had answered it: How can innovation improve the environment?

For the full commentary, see:

MATT RIDLEY. "The Scarcity Fallacy; Ecologists worry that the world's resources come in fixed amounts that will run out, but we have broken through such limits again and again." The Wall Street Journal (Sat., April 26, 2014): C1-C2.

(Note: ellipses added.)

(Note: the online version of the commentary has the date April 25, 2014, and has the title "The World's Resources Aren't Running Out; Ecologists worry that the world's resources come in fixed amounts that will run out, but we have broken through such limits again and again.")

June 27, 2014

Instead of 50 Silicon Valleys, Andreessen Sees 50 Kinds of Silicon Valley

AndreessenMarcCofounderNetscape2014-05-31.jpg "Marc Andreessen, co-founder of the first major web browser, Netscape, has a record for knowing what's coming next with technology." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B8) Mr. Andreessen said new valleys will eventually emerge. But they won't be Silicon Valley copycats.

Over the past couple of years, venture firms have invested in start-ups in Los Angeles, New York, Chicago and all over China. Los Angeles, for example, is home to Snapchat, Tinder, Whisper, Oculus VR and Beats, some of the big tech stories of the year. Mr. Andreessen said another hot place is Atlanta, the home of Georgia Tech.

But he offers a caveat.

"My personal view is that Silicon Valley will continue to take a disproportionate share of the No. 1 positions in great new markets, and I think that's just a reflection that the fact that the valley works as well as it does," Mr. Andreessen said.

There is a caveat to his caveat.

In Mr. Andreessen's view, there shouldn't be 50 Silicon Valleys. Instead, there should be 50 different kinds of Silicon Valley. For example, there could be Biotech Valley, a Stem Cell Valley, a 3-D Printing Valley or a Drone Valley. As he noted, there are huge regulatory hurdles in many of these fields. If a city wanted to spur innovation around drones, for instance, it might have to remove any local legal barriers to flying unmanned aircraft.

For the full interview, see:

NICK BILTON. "DISRUPTIONS; Forecasting the Next Big Moves in Tech." The New York Times (Mon., MAY 19, 2014): B8.

(Note: the online version of the interview has the date MAY 18, 2014, and has the title "DISRUPTIONS; Marc Andreessen on the Future of Silicon Valley(s), and the Next Big Technology." )

June 15, 2014

"Apple Bonds Are Giffen Goods"

AppleCampus2014-05-31.jpg "New bonds sold by Apple have been called "Giffen goods," after Sir Robert Giffen, a Scottish economist who noted that the prices of some goods can defy the laws of supply and demand." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) . . . Hans Mikkelsen, a credit strategist at Bank of America Merrill Lynch, promptly proclaimed that "Apple bonds are Giffen goods."

Giffen goods, named after Sir Robert Giffen, a 19th-century Scottish statistician and economist who discovered they could exist, defy the normal law of supply and demand. Raise the price, and people will buy more.

They are extremely rare.

The classic example -- and the only one I had heard of before Apple sold its new bonds -- was potatoes at a time when they were the chief source of nourishment for Irish peasants. If potato prices fell, the peasants could afford more meat and would therefore eat fewer potatoes. When potato prices rose, they could no longer afford meat and would consume more potatoes.

For the full story, see:

RAPHAEL MINDER. "Tempting Europe With Ugly Fruit." The New YorkTimes, First Section (Sun., MAY 25, 2014): 6 & 8.

(Note: ellipsis added.)

(Note: the online version of the story has the date MAY 24, 2014. )


"Sir Robert Giffen was a Scottish economist." Source of caption and photo: online version of the NYT article quoted and cited above.

June 10, 2014

Phonograph Allowed Middle Class to Bring the Show to Their "Castle," Like Kings Already Could

(p. 218) Once Edison's marketers squarely addressed the urban middle class, they devised advertising that made prospective customers feel as entitled to enjoy the pleasures of recorded music as anyone. "When the (p. 219) King of England wants to see a show, they bring the show to the castle and he hears it alone in his private theater." So said an advertisement in 1906 for the Edison phonograph. It continued: "If you are a king, why don't you exercise your kingly privilege and have a show of your own in your own house."


Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

June 6, 2014

Edison Sold General Electric Shares to Keep His Lab and Mine Open

(p. 193) In 1902, at a time when General Electric shares were trading at a historic high and well after Edison had sold his, Mallory happened to be traveling with him and saw in the newspaper the eye-popping closing price. Edison asked what his stake would have been worth had he held on to it. Mallory quickly worked out the number: over $4 million. Hearing this, Edison remained silent, keeping a serious expression for about fifteen seconds. Then his face lit up and he said, "Well, it's all gone, but we had a good time spending it."

(p. 194) The story would be retold by Edison's hagiographers many times. The evidence suggests that Edison did have a jolly time, which, to him, was well worth the $4 million.


Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

June 3, 2014

Public Cannot Go into Space Because of Government Run Space Programs

BransonRichard2014-04-25.jpg "'You don't have to be a rocket scientist to be able to run a spaceship company,' says Richard Branson." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. C11) Richard Branson, founder of the Virgin Group, is just months away from launching what he considers "the biggest Virgin company we've ever built." At 63, he's already founded multiple businesses worth billions, including a record label and a mobile company. But it's his foray into outer space with Virgin Galactic that has Mr. Branson excited.

. . .

Safety has been one of the biggest challenges in building Virgin Galactic. In 2007, two workers died after a tank explosion during a rocket test, and three were seriously wounded. The accident, which occurred at a partner company's facility, delayed the program for an estimated 18 months.

Risk factors weigh on the minds of potential customers as well, especially after NASA's 1986 Challenger disaster, in which seven crew members, including a schoolteacher, died. Mr. Branson thinks that today most people would want to go into space if they could be guaranteed a safe return trip. "Sadly, I think because the space program was run by governments, there was never any real interest in enabling members of the public to go to space after they tried once" with the Challenger, he explains. "After that, they decided not to take any risks whatsoever." He adds, "I would say 90% of people my age thought they would go to space because they saw the moon landing."

For the full story, see:

ALEXANDRA WOLFE. "WEEKEND CONFIDENTIAL; Richard Branson; The Virgin Group founder on his out-of-this world venture: space travel." The Wall Street Journal (Sat., Nov. 2, 2013): C11.

(Note: ellipsis added.)

(Note: the online version of the story has the date Nov. 1, 2013, and has the title "WEEKEND CONFIDENTIAL; Richard Branson on Space Travel; The Virgin Group founder on his latest out-of-this world venture, Virgin Galactic'.")

June 2, 2014

Edison Failed to Stop Film Projectors from Disrupting His Kinetoscope

Edison tried to kill film projection because he thought the whole country would only need 10 projectors, while they could sell a great many of the single-view kinetoscopes. But the wonderful twist to the story is that it DID NOT WORK because Edison could not stop the Lathams and others from coming forward and disrupting the kinetoscope.

(p. 205) The Lathams were not the only exhibitors frustrated with Edison's kinetoscope, and the others urged Edison to introduce a projection machine. Edison was adamant: no. He reasoned that the peephole machines (p. 206) were selling well and at a good profit. The problem with projection was that it would work all too well--if he replaced the inefficient kinetoscope with projection systems that could serve up the show to everyone, "there will be a use for maybe about ten of them in the whole United States." He concluded, "Let's not kill the goose that lays the golden egg."

At Edison's lab in Orange, without his boss's approval, W. K. L. Dickson carried out research on film projection on his own and shared his findings with a friend who was a keen listener: Otway Latham. And when Dickson accepted an invitation to try a projection experiment in a physics laboratory at Columbia, who should show up but Otway's father, Professor Latham. The Lathams made an offer to Dickson--come join us and we'll give you a quarter-share interest in the business--but Dickson was unwilling to make the leap. When Edison got word of his fraternizing with the Lathams, however, and failed to reassure Dickson that he believed Dickson's dealings had been perfectly honorable, Dickson felt he had no choice but to resign. The exact chronology of what he did and what he knew at various points preceding his resignation would be the subject of much litigation that followed. But regardless of intellectual-property issues, Edison lost the one person on his staff who would have been most valuable to him in developing a projection system.

The Lathams and Dickson had discovered that sending a bright light through a moving strip of film did not project satisfactorily because any given image did not absorb enough light before it sped on. The Lathams came up with a partial solution, which was to make the film wider, providing more area for the light to catch as each image went by. The projected images were about the size of a window and good enough to unveil publicly. Professor Latham gave a demonstration of his newly christened Pantoptikon to reporters in April 1895.


Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

May 31, 2014

When Labor Markets Are Flexible, Workers Need Not Fear New Technology

(p. 6) Driverless vehicles and drone aircraft are no longer science fiction, and over time, they may eliminate millions of transportation jobs. Many other examples of automatable jobs are discussed in "The Second Machine Age," a book by Erik Brynjolfsson and Andrew McAfee, and in my own book, "Average Is Over." The upshot is that machines are often filling in for our smarts, not just for our brawn -- and this trend is likely to grow.

How afraid should workers be of these new technologies? There is reason to be skeptical of the assumption that machines will leave humanity without jobs. After all, history has seen many waves of innovation and automation, and yet as recently as 2000, the rate of unemployment was a mere 4 percent. There are unlimited human wants, so there is always more work to be done. The economic theory of comparative advantage suggests that even unskilled workers can gain from selling their services, thereby liberating the more skilled workers for more productive tasks.

. . .

Labor markets just aren't as flexible these days for workers, especially for men at the bottom end of the skills distribution.

. . .

Across the economy, a college degree is often demanded where a high school degree used to suffice.

. . .

The law is yet another source of labor market inflexibility: The number of jobs covered by occupational licensing continues to rise and is almost one-third of the work force. We don't need such laws for, say, barbers or interior designers, although they are commonly on the books.

. . .

Many . . . labor market problems were brought on by the financial crisis and the collapse of market demand. But it would be a mistake to place all the blame on the business cycle. Before the crisis, for example, business executives and owners didn't always know who their worst workers were, or didn't want to engage in the disruptive act of rooting out and firing them. So long as sales were brisk, it was easier to let matters lie. But when money ran out, many businesses had to make the tough decisions -- and the axes fell. The financial crisis thus accelerated what would have been a much slower process.

Subsequently, some would-be employers seem to have discriminated against workers who were laid off in the crash. These judgments weren't always fair, but that stigma isn't easily overcome, because a lot of employers in fact had reason to identify and fire their less productive workers.

For the full commentary, see:

TYLER COWEN. "Economic View; Automation Alone Isn't Killing Jobs." The New York Times, SundayBusiness Section (Sun., APRIL 6, 2014): 6.

(Note: ellipses added.)

(Note: the online version of the commentary has the date APRIL 5, 2014.)

The Brynjolfsson and McAfee book mentioned is:

Brynjolfsson, Erik, and Andrew McAfee. The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. New York: W. W. Norton & Company, 2014.

The Cowen book that Cowen mentions is:

Cowen, Tyler. Average Is Over: Powering America Beyond the Age of the Great Stagnation. New York: Dutton Adult, 2013.

May 25, 2014

Entrepreneurial Consumer J.P. Morgan "Handled Setbacks with Equanimity"

Schumpeter wrote that the entrepreneur is the one who overcomes obstacles to get the job done (1950, p. 132). Obstacles come in many forms. One of them is consumer resistance to change. So one key contributor to the technological progress is the "entrepreneurial consumer" who is willing to invest in new, buggy, possibly dangerous technologies at an early stage. (Paul Nodskov, a student in my spring 2014 Economics of Technology seminar suggested using the phrase "entrepreneurial consumer.")

Alexis de Tocqueville observed that in contrast to Europeans, Americans were "restless in the midst of their prosperity" (2000 [first published 1835], Ch. 13). Perhaps even that early, America had more entrepreneurial consumers?

(p. 131) Morgan prized being ahead of everyone else, and the next year was concerned that his plant was already less than state of the art, a suspicion that was confirmed when he persuaded Edison to send Edward Johnson to the house for an evaluation. Johnson was instructed to upgrade the equipment and also to devise a way to provide an electric light that would sit on Morgan's desk in his library. At a time when the very concept of an electrical outlet and detachable electrical appliances had yet to appear, this posed a significant challenge. Johnson's solution was to run wires beneath the floor to metal plates that were installed in different places beneath the rugs. One of the legs of the desk was equipped with sharp metal prongs, designed to make contact with one of the plates when moved about the room.

In conception, it was clever; in implementation, it fell short of ideal. On the first evening when the light was turned on, there was a flash, followed by a fire that quickly engulfed the desk and spread across the rug before being put out. When Johnson was summoned to the house the next morning, he was shown into the library, where charred debris was piled in a heap. He expected that when Morgan appeared, he would angrily announce that the services of Edison Electric were no longer needed.

(p. 132) "Well?" Morgan stood in the doorway, with Mrs. Morgan standing behind him, signaling Johnson with a finger across her lips not to launch into elaborate explanations. Johnson cast a doleful eye at the disaster in the room and remained silent.

"Well, what are you going to do about it?" Morgan asked. Johnson said the fault was his own and that he would personally reinstall everything, ensuring that it would be done properly.

"All right. See that you do." Morgan turned and left. The eager purchaser of first-generation technology handled setbacks with equanimity. "I hope that the Edison Company appreciates the value of my house as an experimental station," he would later say. A new installation with second-generation equipment worked well, and Morgan held a reception for four hundred guests to show off his electric lights. The event led some guests to place their own orders for similar installations. Morgan also donated entire systems to St. George's Church and to a private school, dispatching Johnson to oversee the installation as a surprise to the headmistress. The family biographer compared Morgan's gifts of electrical power plants to his sending friends baskets of choice fruit.


Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

Schumpeter's book is:

Schumpeter, Joseph A. Capitalism, Socialism and Democracy. 3rd ed. New York: Harper and Row, 1950.

The other book I mention, is:

de Tocqueville, Alexis. Democracy in America. Chicago: University of Chicago Press, 2000 [first published in two volumes in 1835 and 1840].

May 19, 2014

Open Source Heartbleed Bug Sends Internet "into a Panic"

Opponents of patents often point to the open source movement as an alternative. The Heartbleed bug illustrates a big downside to open source:

(p. B1) The encryption flaw that punctured the heart of the Internet this week underscores a weakness in Internet security: A good chunk of it is managed by four European coders and a former military consultant in Maryland.

Most of the 11-member team are volunteers; only one works full time. Their budget is less than $1 million a year. The Heartbleed bug, revealed Monday, was the product of a fluke introduced by a young German researcher.

. . .

The OpenSSL Project was founded in 1998 to create a free set of encryption tools that has since been adopted by two-thirds of Web servers. Websites, network-equipment companies and governments use OpenSSL tools to protect personal and other sensitive information online.

So when researchers at Google Inc. and Codenomicon on Monday stated that Heartbleed could allow hackers to steal such data, the Internet went into a panic.

. . .

(p. B3) Earlier in the day, a German volunteer coder admitted that he had unintentionally introduced the bug on New Year's Eve 2011 while working on bug fixes for OpenSSL. . . .

Errors in complex code are inevitable--Microsoft Corp., Apple Inc. and Google announce flaws monthly. But people close to OpenSSL, which relies in part on donations, say a lack of funding and manpower exacerbated the problem and allowed it to go unnoticed for two years.

. . .

The OpenSSL Project counts a sole full-time developer: Stephen Henson, a 46-year-old British cryptographer with a Ph.D. in mathematics. Two other U.K. residents and a developer in Germany fill out the project's management team.

Associates describe Mr. Henson as brilliant but standoffish and overloaded with work.

. . .

Geoffrey Thorpe, an OpenSSL volunteer on the development team, said he has little time to spend on the project because of his day job at a hardware technology company.

For the full story, see:

DANNY YADRON. "Internet Security Relies on Very Few." The Wall Street Journal (Sat., April 12, 2014): B1 & B3.

(Note: ellipses added.)

(Note: the online version of the story was updated April 11, 2014, and has the title "TECHNOLOGY; Heartbleed Bug's 'Voluntary' Origins; Internet Security Relies on a Small Team of Coders, Most of Them Volunteers; Flaw Was a Fluke.")

May 16, 2014

"The Experts Keep Getting It Wrong and the Oddballs Keep Getting It Right"

HydraulicFracturingOperationInColorado2014-04-25.jpg "A worker at a hydraulic fracturing and extraction operation in western Colorado on March 29[, 2014]." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. C3) The experts keep getting it wrong. And the oddballs keep getting it right.

Over the past five years of business history, two events have shocked and transformed the nation. In 2007 and 2008, the housing market crumbled and the financial system collapsed, causing trillions of dollars of losses. Around the same time, a few little-known wildcatters began pumping meaningful amounts of oil and gas from U.S. shale formations. A country that once was running out of energy now is on track to become the world's leading producer.

What's most surprising about both events is how few experts saw them coming--and that a group of unlikely outsiders somehow did.

. . .

Less well known, but no less dramatic, is the story of America's energy transformation, which took the industry's giants almost completely by surprise. In the early 1990s, an ambitious Chevron executive named Ray Galvin started a group to drill compressed, challenging formations of shale in the U.S. His team was mocked and undermined by dubious colleagues. Eventually, Chevron pulled the plug on the effort and shifted its resources abroad.

Exxon Mobil also failed to focus on this rock--even though its corporate headquarters in Irving, Texas, were directly above a huge shale formation that eventually would flow with gas. Later, it would pay $31 billion to buy a smaller shale pioneer.

"I would be less than honest if I were to say to you [that] we saw it all coming, because we did not, quite frankly," Rex Tillerson, Exxon Mobil's chairman and CEO said last year in an interview at the Council on Foreign Relations.

. . .

The resurgence in U.S. energy came from a group of brash wildcatters who discovered techniques to hydraulically fracture--or frack--and horizontally drill shale and other rock. Many of these men operated on the fringes of the oil industry, some without college degrees or much background in drilling, geology or engineering.

For the full commentary, see:

GREGORY ZUCKERMAN. "ESSAY; The Little Guys Who Saw Our Economic Future; Corporate Caution and Complacency Come at a Cost." The Wall Street Journal (Sat., Nov. 2, 2013): C3.

(Note: ellipsis, and bracketed year in caption, added.)

(Note: the online version of the commentary was updated Nov. 3, 2013, and has the title "ESSAY; The Outsiders Who Saw Our Economic Future; In both America's energy transformation and the financial crisis, it took a group of amateurs to see what was coming." )

Zuckerman's commentary, quoted above, is partly based on his book:

Zuckerman, Gregory. The Frackers: The Outrageous inside Story of the New Billionaire Wildcatters. New York: Portfolio/Penguin, 2013.

May 10, 2014

Television Improved Test Scores

GentzkowMatthewChicagoBatesClark2014-04-26.jpg "Economist Matthew Gentzkow found media slant to be a function of audience preference." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A2) An economist known for pioneering work on slanted coverage in the news media won the John Bates Clark Medal, one of the profession's most prestigious honors.

Matthew Gentzkow, a professor at the University of Chicago's Booth School of Business, on Thursday was awarded the Clark medal by the American Economic Association, which every year honors the nation's most promising economist under age 40.

. . .

A big theme in Mr. Gentzkow's work is finding innovative ways to tackle questions that expand economists' tool kits.

. . . , in 2008, he and Mr. Shapiro examined the fact that different parts of the U.S. got access to television at different times to gauge TV's effects on high-school students in the 1960s.

The economists found that children who lived in cities that gave them more exposure to TV in early childhood performed better on tests than those with less exposure. The work also suggested TV helped American children in non-English-speaking households do better in school.

For the full story, see:

NEIL SHAH. "Economist Honored for Work on Media Slant." The Wall Street Journal (Fri., April 18, 2014): 12.

(Note: ellipses added.)

(Note: the online version of the story has the date April 17, 2014.)

The Gentzkow and Shapiro paper on the effects of television, is:

Gentzkow, Matthew, and Jesse M. Shapiro. "Preschool Television Viewing and Adolescent Test Scores: Historical Evidence from the Coleman Study." Quarterly Journal of Economics 123, no. 1 (Feb. 2008): 279-323.

May 4, 2014

Gilder's Information Theory of Capitalism Will Boost Morale of Innovative Entrepreneurs


Source of book image: online version of the WSJ review quoted and cited below.

(p. A13) Individuals like Ford and Jobs are key figures in the economic paradigm that George Gilder lays out in "Knowledge and Power." He calls for an "information theory of capitalism" in which the economy is driven by a dynamic marketplace, with information widely (and freely) distributed. The most important feature of such an economy, Mr. Gilder writes, is the overthrow of "equilibrium," and the most important actors are inventors and entrepreneurs whose breakthrough ideas are responsible for "everything useful or interesting" in commercial life.

. . .

Aspiring owners shouldn't look to "Knowledge and Power" for practical advice on starting a company, but Mr. Gilder's case for the central role of entrepreneurship might boost their morale. Certainly his argument could not be more timely. Census Bureau data show that startups were responsible for nearly all new job creation from 1996 to 2009. Yet entrepreneurship itself (as measured by new business formation) has been stagnant for about two decades. Thus the important question for America's future may well be, as Mr. Gilder says, "how we treat our entrepreneurs." He persuasively shows that creating a more supportive climate for entrepreneurs--by clearing away burdensome regulations and freeing information from its current imprisonment--will result in a more prosperous and vigorous society, creating not only more jobs but more Jobs.

For the full review, see:

MATTHEW REES. "BOOKSHELF; The Real Market-Maters; Economists as far back as Adam Smith have undervalued entrepreneurs--the restless, inventive, job-creating engines of the economy." The Wall Street Journal (Tues., March 18, 2014): A13.

(Note: ellipsis added.)

(Note: the online version of the review has the date March 17, 2014, and has the title "BOOKSHELF; Book Review: 'Knowledge and Power' by George Gilder
Economists as far back as Adam Smith have undervalued entrepreneurs--the restless, inventive, job-creating engines of the economy.")

The book under review is:

Gilder, George. Knowledge and Power: The Information Theory of Capitalism and How It Is Revolutionizing Our World. Washington, D.C.: Regnery Publishing, Inc., 2013.

April 27, 2014

Government Wire Inspectors Only Showed Up to Get Their Pay

(p. 121) Edison had originally planned to offer service to the entirety of south Manhattan, south of Canal Street and north of Wall Street, but engineering considerations forced him to carve out a smaller district, bounded by Wall, Nassau, Spruce, and Ferry Streets. Still, his company had to place underground some eighty thousand linear feet of electrical wire. This had never been attempted before, so it should not have been a surprise when H. O. Thompson, the city's commissioner of public works, summoned Edison to his office to explain that the city would have to be assured that the lines were installed safely. Thompson was assigning five inspectors to oversee the work, whose cost would be covered by an assessment of $5 per day, per inspector, payable (p. 122) each week. When Edison left Thompson's office, he was crestfallen, anticipating the harassment and delays ahead that would be caused by the inspectors' interference. On the day that work began, however, the inspectors failed to appear. Their first appearance was on Saturday afternoon, to draw their pay. This set the pattern that the inspectors followed as the work proceeded through 1881 and into 1882.


Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

April 15, 2014

Arc Lights Leapfrogged Gas Lights Before Incandescents Leapfrogged Them Both

(p. 85) The gas interests had been dealt a number of recent setbacks even before Edison's announcement of a newly successful variant of electric light. An "enormous abandonment of gas" by retail stores in cities, who now could use less expensive kerosene, was noticed. The shift was attributed not to stores' preference for kerosene but as a means of escaping "the arrogance of the gas companies." Arc lights had now become a newly competitive threat, too. The previous month, Charles Brush had set up his lights in an exhibition hall in New York and then added a display in Boston. Sales to stores followed in several cities; then, as word spread, other establishments sought to obtain the cachet bestowed by the latest technology. William Sharon, a U.S. senator for and energetic booster of California, retrofitted the public spaces of his Palace Hotel in San Francisco with arc lights that replaced 1,085 gas jets.


Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

April 11, 2014

Edison, Not Antitrust, Reduced Power of Hated Gas Monopolies

Counterbalancing the angst of those hurt by the death of an old technology is sometimes the triumph creative destruction provides to those who were less well-served by the old technology. Some look to governments to restrain a dominant technology; but sometimes a more effective way is to replace the old technology through creative destruction's leapfrog competition.

(p. 84) Gaslight monopolies had few friends outside of the ranks of shareholders. At the beginning of the nineteenth century, gaslight had been viewed as pure and clean; seventy years later, its shortcomings had become all too familiar: it was dirty, soiled interior furnishings, and emit-(p. 85)ted unhygienic fumes. It was also expensive, affordable for indoor lighting only in the homes of the wealthy, department stores, or government buildings. The New York Times almost spat out the following description of how gas companies conducted business: "They practically made the bills what they pleased, for although they read off the quantity by the meter, that instrument was their own, and they could be made to tell a lie of any magnitude.... Everybody has always hated them with a righteous hatred."

Edison credited the gas monopoly for providing his original motivation to experiment with electric light years before in his Newark laboratory. Recalling in October 1878 his unpleasant dealings years earlier with the local gas utility, which had threatened to tear out their meter and cut off the gas, Edison said, "When I remember how the gas companies used to treat me, I must say that it gives me great pleasure to get square with them." The Brooklyn Daily Eagle printed an editorial titled "Revenge Is Sweet" in which it observed that the general public greatly enjoyed the discomfort of the gas companies, too: "To see them squirm and writhe is a public satisfaction that lifts Edison to a higher plane than that of the wonderful inventor and causes him to be regarded as a benefactor of the human race, the leading deity of popular idolatry."


Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

(Note: ellipsis in original.)

April 9, 2014

Patent Trial and Appeal Board May Be Invalidating Low Quality Patents

One of the common complaints about the U.S. patent system for the past couple of decades is that the Patent and Trademark Office (PTO) has been approving too many low quality patents, that are then used by patent holders to extort licensing fees or out-or-court settlements from alleged infringers. One way in which the America Invents Act, signed in September 2011, tried to respond to the complaint was to strengthen the post-approval re-examination process for patents. The article quoted below suggests that the strengthened process may be having the intended effect.

(p. B4) The Patent Trial and Appeal Board is a little known but powerful authority that often allows a company embroiled in a lawsuit to skip the question of whether it infringed a patent--and challenge whether the patent should have been issued in the first place.

The board was launched in September 2012 as part of the massive patent overhaul passed by Congress the previous year and is currently staffed by 181 judges, many of whom have deep experience in intellectual property or technical fields like chemical and electrical engineering. Through last Thursday it had received 1,056 requests to challenge patents, far more than were received by any federal court over the same time period.

The board is part of the Patent and Trademark Office. But so far, it hasn't shied away from upending the office's decisions to issue certain patents. As of last week, the board had issued 25 written decisions concerning patent challenges, and upheld parts of challenged patents in only a few of them.

. . .

In recent months, Randall Rader, the chief judge of the Federal Circuit, has been one of the board's most outspoken critics. At a conference of intellectual-property lawyers last fall, the judge called the board's panels "death squads...killing property rights."

In an interview with The Wall Street Journal, Mr. Rader said the board is too quick to toss out patents that demonstrate only modest innovation. "The board needs to incentivize human progress--and understand that it often happens one small step at a time," he said.

But many company lawyers think the board is doing exactly as it should--taking a skeptical look at patents that have added little to the world.

For the full story, see:

ASHBY JONES. "New Weapon in Intellectual Property Wars; Panel Can Upend Patent Decisions, but Some Say It Goes Too Far; 'Like Getting CAT-Scanned, MRI-ed, and X-Rayed'." The Wall Street Journal (Tues., March 11, 2014): B4.

(Note: ellipsis between paragraphs, added; ellipsis inside paragraph, in original.)

(Note: the online version of the story has the date March 10, 2014, and has the title "A New Weapon in Corporate Patent Wars; Patent Trial and Appeal Board Can Upend PTO Decisions, but Some Say It Goes Too Far.")

April 8, 2014

Government Regulations Slow U.S. Use of Drones

DronesThreeSophisticatedCommerical2014-04-03.jpgThree sophisticated drones. From top to bottom, the Insitu ScanEagle, the Yamaha RMAX, and the Trimble UX5. Source and photo: online version of the WSJ article quoted and cited below.

(p. B1) After Greek land surveyor George Papastamos bought his first drones a year ago, he let go most of his workers. Now, instead of a team of 12, he shows up to work sites with just a drone and an assistant.

"I could see this was the future," said Mr. Papastamos, a second-generation surveyor from Athens. The drones have improved his maps and lowered his costs, enabling him to win more business. "It is much, much more profitable," he said.

As U.S. regulators and courts grapple with when and how to allow the use of drones for commercial purposes, flying robots already are starting to change the way companies do business in countries from Australia to Japan to the U.K. They are showing the potential to provide cheaper and more effective alternatives to manned aircraft--and human workers--in industries like mining, construction and filmmaking.

The U.S. is "the world leader in producing drones," but "the reality is the rest of the world has moved further ahead of us in terms of commercial applications," said drone researcher Missy Cummings, director of the Humans and Autonomy Lab at Duke University.

For the full story, see:

JACK NICAS. "From Farms to Films, Drones Find Commercial Uses." The Wall Street Journal (Tues., March 11, 2014): B1 & B6.

(Note: the online version of the story has the date March 10, 2014, and has the title "Drones Find Fans Among Farmers, Filmmakers; FAA Still Debating Rules but Drones are Spraying 40% of Japan's Rice Fields.")

April 7, 2014

William Vanderbilt Helped Disrupt His Gas Holdings by Investing in Edison's Electricity

(p. 84) But even the minimal ongoing work on the phonograph would be pushed aside by the launch of frenzied efforts to find a way to fulfill Edison's premature public claim that his electric light was working. A couple of months later, when asked in an interview about the state of his phonograph, Edison replied tartly, "Comatose for the time being." He changed metaphors and continued, catching hold of an image that would be quoted many times by later biographers: "It is a child and will grow to be a man yet; but I have a bigger thing in hand and must finish it to the temporary neglect of all phones and graphs."

Financial considerations played a part in allocation of time and resources, too. Commissions from the phonograph that brought in hundreds of dollars were hardly worth accounting for, not when William Vanderbilt and his friends were about to advance Edison $50,000 for the electric light. Edison wrote a correspondent that he regarded the financier's interest especially satisfying as Vanderbilt was "the largest gas stock owner in America."


Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

(Note: ellipses, and capitals, in original.)

April 4, 2014

Gary Becker's Grandson Ponders Opportunity Cost of College


"Louis Harboe with his parents, Frederik Harboe and Catherine Becker. Louis, now 18, got his first freelance tech job at age 12. Last year, he attended the Apple Worldwide Developers Conference in San Francisco." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) Ryan was headed to South by Southwest Interactive, the technology conference in Austin. There, he planned to talk up an app that he and a friend had built. Called Finish, it aimed to help people stop procrastinating, and was just off its high in the No. 1 spot in the productivity category in the Apple App store.

. . .

Ryan is now 17, a senior at Boulder High. He is among the many entrepreneurially minded, technologically skilled teenagers who are striving to do serious business. Their work is enabled by low-cost or free tools to make apps or to design games, and they are encouraged by tech companies and grown-ups in the field who urge them, sometimes with financial support, to accelerate their transition into "the real world." This surge in youthful innovation and entrepreneurship looks "unprecedented," said Gary Becker, a University of Chicago economist and a Nobel laureate.

Dr. Becker is assessing this subject from a particularly intimate vantage point. His grandson, Louis Harboe, 18, is a friend of (p. 6) Ryan's, a technological teenager who makes Ryan look like a late bloomer. Louis, pronounced Louie, got his first freelance gig at the age of 12, designing the interface for an iPhone game. At 16, Louis, who lives with his parents in Chicago, took a summer design internship at Square, an online and mobile payment company in San Francisco, earning $1,000 a week plus a $1,000 housing stipend.

Ryan and Louis, who met online in the informal network of young developers, are hanging out this weekend in Austin at South by Southwest. They are also waiting to hear from the colleges to which they applied last fall -- part of the parallel universe they also live in, the traditional one with grades and SATs and teenage responsibilities. But unlike their peers for whom college is the singular focus, they have pondered whether to go at all. It's a good kind of problem, the kind faced by great high-school athletes or child actors who can try going pro, along with all the risk that entails.

Dr. Becker, who studies microeconomics and education, has been telling his grandson: "Go to college. Go to college." College, he says, is the clear step to economic success. "The evidence is overwhelming."

But the "do it now" idea, evangelized on a digital pulpit, can feel more immediate than academic empiricism. "College is not a prerequisite," said Jess Teutonico, who runs TEDxTeen, a version of the TED talks and conferences for youth, where Ryan spoke a few weeks ago. "These kids are motivated to take over the world," she said. "They need it fast. They need it now."

For the full story, see:

MATT RICHTEL. "The Youngest Technorati." The New York Times, SundayBusiness Section (Fri., MARCH 9, 2014): 1 & 6.

(Note: ellipsis added.)

(Note: the online version of the story has the date MARCH 8, 2014.)

April 3, 2014

As a Young Inventor, Edison Patented Fast

Edison filed patent applications as fast as the ideas arrived.


Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

March 30, 2014

Edison Sold Half-Interest in Some Patents, to Fund His Inventing

Stross discusses Edison's inventing at age 21:

(p. 8) Edison soon sought investors who would provide funds in exchange for half-interest in resulting patents.


Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

March 18, 2014

Nasaw Claims Carnegie Believed in Importance of Basic Scientific Research

But notice that the two main examples of what Carnegie himself chose to fund (the Wilson Observatory and the yacht to collect geophysical data), were empirically oriented, not theoretically oriented.

(p. 480) Carnegie was, as Harvard President James Bryant Conant would comment in 1935 on the centenary of his birth, "more than a generation ahead of most business men of this country [in understanding] the importance of science to industry." He recognized far better than his peers how vital basic scientific research was to the applied research that industry fed off. George Ellery Hale, an astronomer and astrophysicist, later to be the chief architect of the National Research Council, was astounded when he learned of Carnegie's commitment to pure research. "The provision of a large endowment solely for scientific research seemed almost too good to be true.... Knowing as I did the difficulties of obtaining money for this purpose and (p. 481) devoted as I was to research rather than teaching, I could appreciate some of the possibilities of such an endowment." Hale applied for funds to build an observatory on Mount Wilson in California, and got what he asked for. It would take until 1909 to build and install a 60-inch reflecting telescope in the observatory; in 1917, a second 100-inch telescope, the largest in the world, was added.

The Mount Wilson Observatory-- and the work of its astronomers and astrophysicists-- was only one of the projects funded in the early years of the new institution. Another, of which Carnegie was equally proud, was the outfitting of the Carnegie, an oceangoing yacht with auxiliary engine, built of wood and bronze so that it could collect geophysical data without the errors inflicted on compass readings by iron and steel. The ship was launched in 1909; by 1911, Carnegie could claim that the scientists on board had already been able to correct several significant errors on navigational maps.


Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: ellipsis, and italics, in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)

February 26, 2014

Carnegie's Not-Fully-Grown-Infant-Industry Argument for Steel Tariffs

(p. 375) The steel industry was doubly dependent on state and national governments for the generous loans and subsidies that fueled railway expansion and rail purchases and the protective tariffs that enabled the manufacturers to keep their prices--and profits--higher than would have been possible had they been compelled to compete with European steelmakers. If, in the beginning, as Carnegie had argued, the tariff had been needed to nurture an infant steel industry, by the mid-1880s that infant had become a strapping, abrasive youth, who kept on growing. Why then, one might inconveniently ask, was there need for a protective tariff? Because, as Carnegie argued in the North American Review in July 1890, the steel industry was not yet fully grown and would have to be protected until it was.

On the issue of the tariff--as on few others--Pittsburgh's workingmen were in agreement with Carnegie. They voted Republican in large numbers because the Republicans were the guardians of the protective tariff, and the tariff, they believed, protected their wage rates.

The argument linking the tariff and wages in the manufacturing sector was a compelling one in the industrial states, but nowhere else. As the Democrats took great delight in pointing out, high tariffs led to high prices for all consumers.


Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: italics in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)

February 21, 2014

Hero Rebels Against the Bureau of Technology Control


Source of book image: online version of the WSJ review quoted and cited below.

(p. D8) In "Influx," . . . , a sinister Bureau of Technology Control kidnaps scientists that have developed breakthrough technologies (the cure to cancer, immortality, true artificial intelligence), and is withholding their discoveries from humanity, out of concern over the massive social disruption they would cause. "We don't have a perfect record--Steve Jobs was a tricky one--but we've managed to catch most of the big disrupters before they've brought about uncontrolled social change," says the head of the bureau, the book's villain. The hero has developed a "gravity mirror" but refuses to cooperate, despite the best efforts of Alexa, who has been genetically engineered by the Bureau to be both impossibly sexy and brilliant.

In the publishing world, there is a growing sense that "Influx," Mr. Suarez's fourth novel, may be his breakout book and propel him into the void left by the deaths of Tom Clancy and Michael Crichton. "Influx' has Mr. Suarez's largest initial print run, 50,000 copies, and Twentieth Century Fox bought the movie rights last month.

An English major at the University of Delaware with a knack for computers, Mr. Suarez started a consulting firm in 1997, working with companies like Nestlé on complex production and logistics-planning issues. "You only want to move 100 million pounds of sugar once," says Mr. Suarez, 49 years old.

He began writing in his free-time. Rejected by 48 literary agents--(a database expert, he kept careful track)--he began self-publishing in 2006 under the name Leinad Zeraus, his named spelled backward. His sophisticated tech knowledge quickly attracted a cult following in Silicon Valley, Redmond, Wash., and Cambridge, Mass. The MIT bookstore was the first bookstore to stock his self-published books in 2007.

For the full review, see:

EBEN SHAPIRO. "Daniel Suarez Sees Into the Future." The Wall Street Journal (Fri., Feb. 7, 2014): D8.

(Note: ellipsis added.)

(Note: the online version of the review has the date Feb. 5, 2014, and the title "Daniel Suarez Sees Into the Future.")

The book under review, is:

Suarez, Daniel. Influx. New York: Dutton, 2014.


Author of Influx, Daniel Suarez. Source of photo: online version of the WSJ article quoted and cited above.

February 20, 2014

The Young, with Managerial Experience, Are Most Likely to Become Entrepreneurs

(p. A13) In a current study analyzing the most recent Global Entrepreneurship Monitor (GEM) survey, my colleagues James Liang, Jackie Wang and I found that there is a strong correlation between youth and entrepreneurship. The GEM survey is an annual assessment of the "entrepreneurial activity, aspirations and attitudes" of thousands of individuals across 65 countries.

In our study of GEM data, which will be issued early next year, we found that young societies tend to generate more new businesses than older societies. Young people are more energetic and have many innovative ideas. But starting a successful business requires more than ideas. Business acumen is essential to the entrepreneur. Previous positions of responsibility in companies provide the skills needed to successfully start businesses, and young workers often do not hold those positions in aging societies, where managerial slots are clogged with older workers.

In earlier work (published in the Journal of Labor Economics, 2005), I found that Stanford MBAs who became entrepreneurs typically worked for others for five to 10 years before starting their own businesses. The GEM data reveal that in the U.S. the entrepreneurship rate peaks for individuals in their late 20s and stays high throughout the 30s. Those in their early 20s have new business ownership rates that are only two-thirds of peak rates. Those in their 50s start businesses at about half the rate of 30-year-olds.

Silicon Valley provides a case in point. Especially during the dot-com era, the Valley was filled with young people who had senior positions in startups. Some of the firms succeeded, but even those that failed provided their managers with valuable business lessons.

My co-author on the GEM study, James Liang, is an example. After spending his early years as a manager at the young and rapidly growing Oracle, he moved back to China to start Ctrip, one of the country's largest Internet travel sites.

For the full commentary, see:

EDWARD P. LAZEAR. "The Young, the Restless and Economic Growth; Countries with a younger population have far higher rates of entrepreneurship." The Wall Street Journal (Mon., Dec. 23, 2013): A13.

(Note: the online version of the commentary has the date Dec. 22, 2013.)

The Lazear paper mentioned above, is:

Lazear, Edward P. "Entrepreneurship." Journal of Labor Economics 23, no. 4 (October 2005): 649-80.

February 16, 2014


(p. A11) When I am asked if I want a Compact Fluorescent Light, the only thought I have is that I don't want my light to be compact, nor do I wish it to be florescent. I want a light that will incandesce across my room, filling it with a familiar yellow surf, and remind me that it was not with wax or kerosene, but with incandescent bulbs that man conquered the night.

. . .

I imagine what will happen when the filaments in my final incandescent bulbs grow weak, and I can hardly read my notes before me. Will I no longer be able to write at night? Or worse, will living with CFLs and LEDs make every day feel like I have just spent nine hours plastered before a computer screen? One day, soon, I will turn on my light and hear for the last time the signature, explosive death rattle of an incandescent bulb, and I'll hold a vigil for the light that shaped and witnessed more than a century of human history. Tender is the light, Keats might say.

In my lightless room, I'll sit for a moment and wonder how many more times in my life I'll watch a bulb go out again. As I look to my dead bulb, I'll think of the poet again and whisper: Darkling, you were not a piece of technology born for death.

For the full commentary, see:

ALEXANDER ACIMAN. "Tender Is the Light of My Incandescents; Bracing myself for life once the filaments in my beloved bulbs grow weak." The Wall Street Journal (Fri., Jan. 31, 2014): A11.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Jan. 30, 2014.)

February 12, 2014

It Does Not Take a Government to Raise a Railroad

(p. A17) . . . , All Aboard Florida (the train will get a new name this year), is not designed to push political buttons. It won't go to Tampa. It will zip past several aggrieved towns on Florida's Treasure Coast without stopping.

Nor will the train qualify as "high speed," except on a stretch where it will hit 125 miles an hour. Instead of running on a dedicated line, the new service will mostly share existing track with slower freight trains operated by its sister company, the Florida East Coast Railway.

But the sponsoring companies, all owned by the private-equity outfit Fortress Investment Group, appear to have done their sums. By minimizing stops, the line will be competitive with road and air in connecting the beaches, casinos and resorts of Miami and Fort Lauderdale with the big airport and theme-park destination of Orlando. Capturing a small percentage of the 50 million people who travel between these fleshpots, especially European visitors accustomed to intercity rail at home, would let the train cover its costs and then some.

But Fortress has a bigger fish in the pan. Its local operation, Florida East Coast Industries, is a lineal progeny of Henry Flagler, the 1890s entrepreneur who created modern Florida when he built a rail line to support his resort developments. Flagler's heirs are adopting the same model. A Grand Central-like complex will rise on the site of Miami's old train station. A similar but smaller edifice is planned for Fort Lauderdale.

The project is a vivid illustration of the factors that have to fall in place to make passenger rail viable nowadays. If the Florida venture succeeds, it would be the only intercity rail service anywhere in the world not dependent on government operating subsidies. It would be the first privately run intercity service in America since the birth of Amtrak in 1971.

For the full commentary, see:

HOLMAN W. JENKINS, JR. "BUSINESS WORLD; A Private Railroad Is Born; All Aboard Florida isn't looking for government operating subsidies." The Wall Street Journal (Weds., Jan. 15, 2014): A17.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Jan. 14, 2014.)

February 1, 2014

Twitter Founders Were Outsiders and Unafraid of Risk


Source of the book image:

(p. 20) . . . "Hatching Twitter," a fast-paced and perceptive new book by Nick Bilton, a columnist and reporter for The New York Times, establishes that uncertainty and dissension about its true purpose has characterized Twitter from its inception.

. . .

The company was financed by Williams, who made a bundle selling Blogger to Google and was intent on proving he wasn't a one-hit wonder. It rose from the ashes of a failed podcasting enterprise, Odeo, which Williams had bankrolled as a favor to his friend Noah Glass. Bilton sketches the founders' backgrounds and personalities in quick, skillful strokes that will serve the eventual screenwriter, director and storyboard artist well; these are characters made for the big screen.

None came from money. Ev Williams was a shy Nebraska farm boy whose parents never really understood their socially awkward, computer-obsessed son.

. . .

Having known hardship, none of the four founders were afraid of risk. To join the ill-fated Odeo, Stone walked away from a job at Google, leaving more than $2 million in unvested stock options on the table.

Twitter began with a conversation. Dorsey and Glass sat talking in a car one night in 2006 when Odeo was on the verge of collapse. Dorsey mentioned his "status concept," which was inspired by AOL's Instant Messenger "away messages" and LiveJournal status updates that people were using to mention where they were and what they were doing. Glass warmed to the idea, seeing it as a "technology that would erase a feeling that an entire generation felt while staring into their computer screens": loneliness.

For the full review, see:

MAUD NEWTON. "Four Characters." The New York Times Book Review (Sun., November 3, 2013): 20.

(Note: ellipses added.)

(Note: the online version of the review has the date November 1, 2013.)

Book under review:

Bilton, Nick. Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal. New York: Portfolio, 2013.

January 31, 2014

70 Percent of Current Jobs May Soon Be Done by Robots

Kelly may be right, but it does not imply that we will all be unemployed. What will happen is that new and better jobs, and entrepreneurial opportunities, will be created for humans.

Robots will do the boring, the dangerous, and the physically exhausting. We will do the creative and the analytic, and the social or emotional

(p. A21) Kevin Kelly set off a big debate with a piece in Wired called "Better Than Human: Why Robots Will -- And Must -- Take Our Jobs." He asserted that robots will soon be performing 70 percent of existing human jobs. They will do the driving, evaluate CAT scans, even write newspaper articles. We will all have our personal bot to get coffee. There's already an existing robot named Baxter, who is deliciously easy to train: "To train the bot you simply grab its arms and guide them in the correct motions and sequence. It's a kind of 'watch me do this' routine. Baxter learns the procedure and then repeats it. Any worker is capable of this show-and-tell."

For the full commentary, see:

DAVID BROOKS. "The Sidney Awards, Part 2." The New York Times (Tues., December 31, 2013): A21. [National Edition]

(Note: the online version of the commentary has the date December 30, 2013.)

The article praised by Brooks is:

Kelly, Kevin. "Better Than Human: Why Robots Will -- and Must -- Take Our Jobs." Wired (Jan. 2013).

January 24, 2014

Artificial Intelligence Is a Complement to Human Intelligence, Not a Substitute for It


Source of book image:

(p. 11) Clive Thompson, a Brooklyn-based technology journalist, uses this tale to open "Smarter Than You Think," his judicious and insightful book on human and machine intelligence. But he takes it to a more interesting level. The year after his defeat by Deep Blue, Kasparov set out to see what would happen if he paired a machine and a human chess player in a collaboration. Like a centaur, the hybrid would have the strength of each of its components: the processing power of a large logic circuit and the intuition of a human brain's wetware. The result: human-machine teams, even when they didn't include the best grandmasters or most powerful computers, consistently beat teams composed solely of human grandmasters or superfast machines.

Thompson's point is that "artificial intelligence" -- defined as machines that can think on their own just like or better than humans -- is not yet (and may never be) as powerful as "intelligence amplification," the symbiotic smarts that occur when human cognition is augmented by a close interaction with computers.

For the full review, see:

WALTER ISAACSON. "Brain Gain." The New York Times Book Review (Sun., November 3, 2013): 11.

(Note: the online version of the review has the date November 1, 2013.)

Book under review:

Thompson, Clive. Smarter Than You Think: How Technology Is Changing Our Minds for the Better. New York: Penguin Press, 2013.

January 21, 2014

Carnegie Created "Plausible Fictions" on the Future Demand for Minor Railroads

Economists and historians continue to debate the importance or unimportance of railroads in the economic growth of the United States. This is a debate that I need to explore more.

(p. 129) It is doubtful that either [Scott or Carnegie] . . . truly believed that the new railroads, when built, would carry enough traffic to earn back their construction costs. A great number of them were along lightly traveled routes, which, like the Gilman, Springfield & Clinton Railroad in Illinois, connected small cities that did little business with one another. The roads were being built because money could be made building them. Carnegie profited from the commissions on the bond sales; Scott from diverting funds earmarked for construction into the hands of the select number of investors, himself included, who were directors of both the railroad and the improvement companies.

To raise money for roads not yet built and probably not really needed, Carnegie and Scott trafficked in what Richard White refers to as "the utilitarian fictions of capitalism." Together, they constructed "plausible fictions" about the railroads, the passengers and freight that would ride them, the tolls that would be collected, the villages that would grow into towns and the towns into cities, creating new populations, products, and commerce.

Carnegie, a consummate optimist, took naturally to the task.


Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: bracketed words and ellipsis added.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)

January 18, 2014

Patent Allows Mechanic to Profit from Invention to Ease Births

OdonDeviceEasesBirth2014-01-16.jpg "With Jorge Odón's device, a plastic bag inflated around a baby's head is used to pull it out of the birth canal." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) The idea came to Jorge Odón as he slept. Somehow, he said, his unconscious made the leap from a YouTube video he had just seen on extracting a lost cork from a wine bottle to the realization that the same parlor trick could save a baby stuck in the birth canal.

Mr. Odón, 59, an Argentine car mechanic, built his first prototype in his kitchen, using a glass jar for a womb, his daughter's doll for the trapped baby, and a fabric bag and sleeve sewn by his wife as his lifesaving device.

. . .

(p. A4) In a telephone interview from Argentina, Mr. Odón described the origins of his idea.

He tinkers at his garage, but his previous inventions were car parts. Seven years ago, he said, employees were imitating a video showing that a cork pushed into an empty bottle can be retrieved by inserting a plastic grocery bag, blowing until it surrounds the cork, and drawing it out.

. . .

With the help of a cousin, Mr. Odón met the chief of obstetrics at a major hospital in Buenos Aires. The chief had a friend at the W.H.O., who knew Dr. Merialdi, who, at a 2008 medical conference in Argentina, granted Mr. Odón 10 minutes during a coffee break.

The meeting instead lasted two hours. At the end, Dr. Merialdi declared the idea "fantastic" and arranged for testing at the Des Moines University simulation lab, which has mannequins more true-to-life than a doll and a jar.

Since then, Mr. Odón has continued to refine the device, patenting each change so he will eventually earn royalties on it.

. . .

Dr. Merialdi said he endorsed a modest profit motive because he had seen other lifesaving ideas languish for lack of it. He cited magnesium sulfate injections, which can prevent fatal eclampsia, and corticosteroids, which speed lung development in premature infants.

"But first, this problem needed someone like Jorge," he said. "An obstetrician would have tried to improve the forceps or the vacuum extractor, but obstructed labor needed a mechanic. And 10 years ago, this would not have been possible. Without YouTube, he never would have seen the video."

For the full story, see:

DONALD G. McNEIL Jr. "Promising Tool in Difficult Births: A Plastic Bag." The New York Times (Thurs., November 14, 2013): A1 & A4. [National Edition]

(Note: ellipses added.)

(Note: the online version of the story has the date November 13, 2013, and has the title "Car Mechanic Dreams Up a Tool to Ease Births.")

January 17, 2014

Carnegie Failed Twice Before Bessemer Success

(p. 101) [Carnegie] . . . organized his own company to secure the rights to the Dodd process for strengthening iron rails by coating them with steel facings. Thomson agreed to appropriate $20,000 of Pennsylvania Railroad funds to test the new technology.

On March 12, 1867, Thomson wrote to tell Carnegie that his Dodd-processed rails had failed their first test: "treatment under the hammer.... You may as well abandon the Patent--It will not do if this Rail is a sample." Three days later, Thomson wrote Carnegie again, this time marking his letter with a handwritten "Private" in the top left-hand corner and "a word to the wise" penned in just below. Carnegie had apparently asked Thomson for more time--and/or money--to continue his experiments. Thomson replied that the experiments his engineers had made had so "impaired my confidence in this process that I don't feel at liberty to increase our order for these Rails."

Instead of giving up, Carnegie pushed forward, hawking his new steel-faced iron rails to other railroad presidents, attempting to get a new contract with Thomson, and reorganizing the Freedom Iron Company in Lewistown, Pennsylvania, in which he was a major investor, into Freedom Iron and Steel. In the spring of 1867, he succeeded, despite Thomson's misgivings, in getting the approval to manufacture and deliver a second 500-ton batch of steel-faced rails. The new rails fared as poorly as the old ones. There would be no further contracts forthcoming from the Pennsylvania Railroad or any other railroad.

Carnegie tried to bluff his way through. When his contacts in England recommended that he purchase the American rights to a better process for facing iron rails with steel, this one invented by a Mr. Webb, Carnegie retooled his mill for the new process. He was fooled a second time. Not only was the Webb process as impractical as the Dodd, but there was, as there (p. 102) had been with the Dodd process, confusion as to who held the American patent rights. Within a year, the company Carnegie had organized to produce the new steel-faced rails was out of business.

. . .

These early failures did not deter him from investing in other start-up companies and technologies, but he would in future be a bit more careful before committing his capital. In March 1869, Tom Scott solicited his advice about investing in the rights to a new "Chrome Steel process." Carnegie replied that his "advice (which don't cost anything if of no value) would be to have nothing to do with this or any other great change in the manufacture of steel or iron.... I know at least six inventors who have the secret all are so anxiously awaiting.... That there is to be a great change in the manufacture of iron and steel some of these years is probable, but exactly what form it is to take no one knows. I would advise you to steer clear of the whole thing. One will win, but many lose and you and I not being practical men would very likely be among the more numerous class. At least we would wager at very long odds. There are many enterprises where we can go in even."


Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: bracketed name, ellipsis near start, and ellipsis between paragraphs added; ellipsis internal to other paragraphs, in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)

January 13, 2014

"Despising to Bury in the Ground Any of the Talents . . . Which Might Reach His Coffers"

(p. 97) . . . , Carnegie was concerned that he was overextended. From Dresden, in mid-November, he half jokingly apologized to his brother for placing his--and the family's--finances in jeopardy. "Your finances are reputed far from healthy," he had written Tom. "But how can they ever be otherwise? It was never intended. One of the firm, at least, was made to be forever head and ears in debt and to crowd full sail, despising to bury in the ground any of the talents (silver talents, I mean) which might reach his coffers, or to lie long under the suspicion of having at the bank even a moderate balance upon the right side of the ledger." Carnegie had fantasized that "a whole year's absence from opening up new enterprises... while the funds remained in charge of a super man, might possibly afford him, upon his return, a new sensation," that of being solvent. But that was not going to happen.


Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: ellipsis in title and at start added; ellipsis in Carnegie quote near end, in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)

January 12, 2014

In 20th Century, Inventions Had Cultural Impact Twice as Fast as in 19th Century

NgramGraphTechnologies2013-12-08.png I used Google's Ngram tool to generate the Ngram above, using the same technologies used in the Ngram that appeared in the print (but not the online) version of the article quoted and cited below. The blue line is "railroad"; the red line is "radio"; the green line is "television"; the orange line is "internet." The search was case-insensitive. The print (but not the online) version of the article quoted and cited below, includes a caption that describes the Ngram tool: "A Google tool, the Ngram Viewer, allows anyone to chart the use of words and phrases in millions of books back to the year 1500. By measuring historical shifts in language, the tool offers a quantitative approach to understanding human history."

(p. 3) Today, the Ngram Viewer contains words taken from about 7.5 million books, representing an estimated 6 percent of all books ever published. Academic researchers can tap into the data to conduct rigorous studies of linguistic shifts across decades or centuries. . . .

The system can also conduct quantitative checks on popular perceptions.

Consider our current notion that we live in a time when technology is evolving faster than ever. Mr. Aiden and Mr. Michel tested this belief by comparing the dates of invention of 147 technologies with the rates at which those innovations spread through English texts. They found that early 19th-century inventions, for instance, took 65 years to begin making a cultural impact, while turn-of-the-20th-century innovations took only 26 years. Their conclusion: the time it takes for society to learn about an invention has been shrinking by about 2.5 years every decade.

"You see it very quantitatively, going back centuries, the increasing speed with which technology is adopted," Mr. Aiden says.

Still, they caution armchair linguists that the Ngram Viewer is a scientific tool whose results can be misinterpreted.

Witness a simple two-gram query for "fax machine." Their book describes how the fax seems to pop up, "almost instantaneously, in the 1980s, soaring immediately to peak popularity." But the machine was actually invented in the 1840s, the book reports. Back then it was called the "telefax."

Certain concepts may persevere, even as the names for technologies change to suit the lexicon of their time.

For the full story, see:

NATASHA SINGER. "TECHNOPHORIA; In a Scoreboard of Words, a Cultural Guide." The New York Times, SundayBusiness Section (Sun., December 8, 2013): 3.

(Note: ellipsis added; bold in original.)

(Note: the online version of the article has the date December 7, 2013.)

January 9, 2014

Early Carnegie Profits "Were Quickly Reinvested in Other Projects"

(p. 78) The tens of thousands of dollars Carnegie earned in the four years he held the Columbia Oil stock were quickly reinvested in other projects.


Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)

January 1, 2014

"Carnegie Watched, Listened, Learned" from Scott's Process Innovations

(p. 65) Later in life, Scott would be better known for his political skills, but he was, like his mentor Thomson, a master of cost accounting. Together, the two men steadily cut unit costs and increased revenues by investing in capital improvements--new and larger locomotives, better braking systems, improved tracks, new bridges. Instead of running several smaller trains along the same route, they ran fewer but longer trains with larger locomotives and freight cars. To minimize delays--a major factor in escalating costs--they erected their own telegraph lines, built a second track and extended sidings alongside the first one, and kept roadways, tunnels, bridges, and crossings in good repair.

Carnegie watched, listened, learned. Nothing was lost on the young man. With an exceptional memory and a head for figures, he made the most of his apprenticeship and within a brief time was acting more as Scott's deputy than his assistant. Tom Scott had proven to be so good at his job that when Pennsylvania Railroad vice president William Foster died unexpectedly of an infected carbuncle, Scott was named his successor.


Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)

December 31, 2013

"Western Union Bullied the Makers of Public Policy into Serving Private Capital"


Source of book image: online version of the WSJ review quoted and cited below.

(p. A13) Until now there has been no full-scale, modern company history. Joshua D. Wolff's "Western Union and the Creation of the American Corporate Order, 1845-1893" ably fills the bill, offering an exhaustive and yet fascinating account.

. . .

If people today remember anything about Western Union, it is that its coast-to-coast line put the Pony Express out of business and that its leaders didn't see the telephone coming. Mr. Wolff tells us that neither claim is exactly true. It was Hiram Sibley, Western Union's first president, who went out on his own, when his board balked, to form a separate company and build the transcontinental telegraph in 1861; he made his fortune by eventually selling it to Western Union. And the company was very aware of Alexander Graham Bell's invention, patented in 1876, but history had supposedly shown that it wasn't necessary to control a patent to win the technology war. The company's third president, William Orton, was sure that Bell and his "toy" would not get the better of Western Union: "We would come along and take it away from him." They didn't.

. . .

Mr. Wolff contends that the company's practices set the template for today's "corporate triumphalism," not least in the way Western Union bullied the makers of public policy into serving private capital. Perhaps, but telecom competition today is so ferocious and differently arranged from that of the late 19th century that a "triumphant" company today may be toast tomorrow--think of BlackBerry--and can't purchase help with anything like Western's Union's brazenness and scope. Western Union had friends in Congress, the regulatory bureaucracy and the press. Members of the company's board of directors chaired both the 1872 Republican and Democratic national conventions. It seemed that, whatever the battles in business, politics, technology or the courts, the company's shareholders won.

For the full review, see:

STUART FERGUSON. "Bookshelf; The Octopus of the Wires." The Wall Street Journal (Mon., Dec. 23, 2013): A13.

(Note: ellipses added.)

(Note: the online version of the review has the date Dec. 22, 2013, and has the title "BOOKSHELF; Book Review: 'Western Union and the Creation of the American Corporate Order, 1845-1893,' by Joshua D. Wolff.")

Book under review:

Wolff, Joshua D. Western Union and the Creation of the American Corporate Order, 1845-1893. New York: Cambridge University Press, 2013.

December 23, 2013

Over-Regulated Tech Entrepreneurs Seek Their Own Country

The embed above is provided by YouTube where the video clip is posted under the title "Balaji Srinivasan at Startup School 2013."

(p. B4) At a startup conference in the San Francisco Bay area last month, a brash and brilliant young entrepreneur named Balaji Srinivasan took the stage to lay out a case for Silicon Valley's independence.

According to Mr. Srinivasan, who co-founded a successful genetics startup and is now a popular lecturer at Stanford University, the tech industry is under siege from Wall Street, Washington and Hollywood, which he says he believes are harboring resentment toward Silicon Valley's efforts to usurp their cultural and economic power.

On its surface, Mr. Srinivasan's talk,—called "Silicon Valley's Ultimate Exit,"—sounded like a battle cry of the libertarian, anti-regulatory sensibility long espoused by some of the tech industry's leading thinkers. After arguing that the rest of the country wants to put a stop to the Valley's rise, Mr. Srinivasan floated a plan for techies to build an "opt-in society, outside the U.S., run by technology."

His idea seemed a more expansive version of Google Chief Executive Larry Page's call for setting aside "a piece of the world" to try out controversial new technologies, and investor Peter Thiel's "Seastead" movement, which aims to launch tech-utopian island nations.

For the full commentary, see:

FARHAD MANJOO. "HIGH DEFINITION; The Valley's Ugly Complex." The Wall Street Journal (Mon., Nov. 4, 2013): B4.

(Note: the online version of the commentary has the date Nov. 3, 2013, and has the title "HIGH DEFINITION; Silicon Valley Has an Arrogance Problem.")

December 20, 2013

After First "Debilitating" Federal Funding, Morse Funded Telegraph Privately

(p. 37) The first telegraph line had been completed . . . , in 1844, when Samuel F. B. Morse, with $30,000 in federal funding, connected Washington to Baltimore. Morse and his partners had expected to get funding to build additional lines from the federal government, but their experience securing their first $30,000 had been so debilitating that they gave up entirely on the public sector and turned to private capital to fund their new telegraph lines. Henry O'Rielly secured the franchise and agreed to raise the capital to string telegraph poles from east to west. His plan was to extend one line from Buffalo to Chicago, the other across the Alleghenies from Philadelphia through Pittsburgh, to St. Louis, and then north to Chicago, and south to New Orleans.

Although customers were scarce and the first telegraph lines were continually breaking (or being broken by bands of boys who took great joy in throwing stones at the glass insulators that glistened in the sunlight), O'Rielly and the handful of entrepreneurs who believed in the future of telegraphy raised sufficient capital to extend their lines mile by mile. By late 1846, they had also connected Boston to Washington, via New York City and Philadelphia; New York City to Buffalo, through Albany; and in late December, Philadelphia to Pittsburgh, via Lancaster and Harrisburg.


Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: ellipsis added.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)

December 5, 2013

Wind Power Increases Government Corruption

LaclairKathyDislikesWindTurbines2013-10-27.jpg "Kathy Laclair of Churubusco, N.Y., dislikes the noise from the wind turbine blades and says their shadows give her vertigo." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) Lured by state subsidies and buoyed by high oil prices, the wind industry has arrived in force in upstate New York, promising to bring jobs, tax revenue and cutting-edge energy to the long-struggling region. But in town after town, some residents say, the companies have delivered something else: an epidemic of corruption and intimidation, as they rush to acquire enough land to make the wind farms a reality.

"It really is renewable energy gone wrong," said the Franklin County district attorney, Derek P. Champagne, who began a criminal inquiry into the Burke Town Board last spring and was quickly inundated with complaints from all over the state about the (p. A16) wind companies.

. . .

. . . corruption is a major concern. In at least 12 counties, Mr. Champagne said, evidence has surfaced about possible conflicts of interest or improper influence.

In Prattsburgh, N.Y., a Finger Lakes community, the town supervisor cast the deciding vote allowing private land to be condemned to make way for a wind farm there, even after acknowledging that he had accepted real estate commissions on at least one land deal involving the farm's developer.

A town official in Bellmont, near Burke, took a job with a wind company after helping shepherd through a zoning law to permit and regulate the towers, according to local residents. And in Brandon, N.Y., nearby, the town supervisor told Mr. Champagne that after a meeting during which he proposed a moratorium on wind towers, he had been invited to pick up a gift from the back seat of a wind company representative's car.

When the supervisor, Michael R. Lawrence, looked inside, according to his complaint to Mr. Champagne, he saw two company polo shirts and a leather pouch that he suspected contained cash.

When Mr. Lawrence asked whether the pouch was part of the gift, the representative replied, "That's up to you," according to the complaint.

For the full story, see:

NICHOLAS CONFESSORE. "In Rural New York, Windmills Can Bring Whiff of Corruption." The New York Times (Mon., August 18, 2008): A1 & A16.

(Note: ellipses added.)

(Note: the online version of the article has the date August 17, 2008.)


"To some upstate towns, wind power promises prosperity. Others fear noise, spoiled views and the corrupting of local officials." Source of caption and photo: online version of the NYT article quoted and cited above.

December 3, 2013

Amazon's Story of the Evolution and Revolution of Disruptive Innovation


Source of book image:

(p. C5) Mr. Stone, a senior writer for Bloomberg Businessweek and a former reporter for The New York Times, tells this story of disruptive innovation with authority and verve, and lots of well-informed reporting. Although "The Everything Store" retraces early ground covered by Robert Spector's 2000 book, " Get Big Fast," Mr. Stone has conducted more than 300 interviews with current and former Amazon executives and employees, including conversations, over the years, with Mr. Bezos, who "in the end was supportive of this project even though he judged that it was 'too early' for a reflective look" at the company.

"The Everything Store" does not examine in detail the fallout that Amazon's rise has had on book publishing and on independent bookstores, but Mr. Stone does a nimble job of situating the company's evolution within the wider retail landscape and within the technological revolution that was remaking the world at the turn of the millennium.

For the full review, see:

MICHIKO KAKUTANI. "BOOKS OF THE TIMES; Selling as Hard as He Can." The New York Times (Tues., October 29, 2013.): C1 & C5.

(Note: the online version of the review has the date October 28, 2013.)

The book under review is:

Stone, Brad. The Everything Store: Jeff Bezos and the Age of Amazon. New York: Little, Brown and Company, 2013.


"Brad Stone" Source of caption and photo: online version of the NYT review quoted and cited above.

December 1, 2013

Kits Let Model T Owners Transform Them into Tractors, Snowmobiles, Roadsters and Trucks

ModelTtractorConversion2013-10-25.jpg "OFF ROAD; Kits to take the Model T places Henry Ford never intended included tractor conversions, . . . " Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) WHEN Henry Ford started to manufacture his groundbreaking Model T on Sept. 27, 1908, he probably never imagined that the spindly little car would remain in production for 19 years. Nor could Ford have foreseen that his company would eventually build more than 15 million Tin Lizzies, making him a billionaire while putting the world on wheels.

But nearly as significant as the Model T's ubiquity was its knack for performing tasks far beyond basic transportation. As quickly as customers left the dealers' lot, they began transforming their Ts to suit their specialized needs, assisted by scores of new companies that sprang up to cater exclusively to the world's most popular car.

Following the Model T's skyrocketing success came mail-order catalogs and magazine advertisements filled with parts and kits to turn the humble Fords into farm tractors, mobile sawmills, snowmobiles, racy roadsters and even semi-trucks. Indeed, historians credit the Model T -- which Ford first advertised as The Universal Car -- with launching today's multibillion-dollar automotive aftermarket industry.

For the full story, see:

LINDSAY BROOKE. "Mr. Ford's T: Mobility With Versatility." The New York Times, Automobiles Section (Sun., July 20, 2008): 1 & 14.

(Note: the online version of the story has the title "Mr. Ford's T: Versatile Mobility.")

November 29, 2013

Kerosene Creatively Destroyed Whale Oil

WhaleOilLamps2013-10-25.jpg "The whale-oil lamps at the Sag Harbor Whaling and Historical Museum are obsolete, though at one time, whale oil lighted much of the Western world." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 20) Like oil, particularly in its early days, whaling spawned dazzling fortunes, depending on the brute labor of tens of thousands of men doing dirty, sweaty, dangerous work. Like oil, it began with the prizes closest to home and then found itself exploring every corner of the globe. And like oil, whaling at its peak seemed impregnable, its product so far superior to its trifling rivals, like smelly lard oil or volatile camphene, that whaling interests mocked their competitors.

"Great noise is made by many of the newspapers and thousands of the traders in the country about lard oil, chemical oil, camphene oil, and a half-dozen other luminous humbugs," The Nantucket Inquirer snorted derisively in 1843. It went on: "But let not our envious and -- in view of the lard oil mania -- we had well nigh said, hog-gish opponents, indulge themselves in any such dreams."

But, in fact, whaling was already just about done, said Eric Jay Dolin, who . . . is the author of "Leviathan: The History of Whaling in America." Whales near North America were becoming scarce, and the birth of the American petroleum industry in 1859 in Titusville, Pa., allowed kerosene to supplant whale oil before the electric light replaced both of them and oil found other uses.

. . .

Mr. Dolin said the message for today was that one era's irreplaceable energy source could be the next one's relic. Like whaling, he said, big oil is ripe to be replaced by something newer, cleaner, more appropriate for its moment.

For the full story, see:

PETER APPLEBOME. "OUR TOWNS; Once They Thought Whale Oil Was Indispensable, Too." The New York Times, First Section (Sun., August 3, 2008): 20.

(Note: ellipses added.)

(Note: the online version of the story has the title, "OUR TOWNS; They Used to Say Whale Oil Was Indispensable, Too.")

Dolin's book is:

Dolin, Eric Jay. Leviathan: The History of Whaling in America. New York: W. W. Norton & Company, Inc., 2007.

November 20, 2013

Companies Do Less R&D in Countries that Steal Intellectual Property

The conclusions of Gupta and Wang, quoted below, are consistent with research done many years ago by economist Edwin Mansfield.

(p. A15) China's indigenous innovation program, launched in 2006, has alarmed the world's technology giants more than any other policy measure since the start of economic reforms in 1978. A recent report from the U.S. Chamber of Commerce even went so far as to call this program "a blueprint for technology theft on a scale the world has not seen before."

. . .

A comparison with India is illustrative. India has no equivalent to indigenous innovation rules. The government also is content to allow companies to set up R&D facilities without any rules about sharing technology with local partners or the like.

These policy differences appear to have a significant influence on corporate behavior. Consider the top 10 U.S.-based technology giants that received the most patents from the U.S. Patent and Trademark Office (USPTO) between 2006 and 2010: IBM, Microsoft, Intel, Hewlett-Packard, Micron, GE, Cisco, Texas Instruments, Broadcom and Honeywell.

Half of these companies appear not to be doing any significant R&D work in China. Between 2006 and 2010, the U.S. PTO did not award a single patent to any China-based units of five out of the 10 companies. In contrast, only one of the 10 did not receive a patent for an innovation developed in India.

For the full commentary, see:

Anil K. Gupta and Haiyan Wang. "How Beijing Is Stifling Chinese Innovation." The Wall Street Journal (Thurs., September 1, 2011): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the title "Beijing Is Stifling Chinese Innovation.")

Mansfield's relevant paper is:

Mansfield, Edwin. "Unauthorized Use of Intellectual Property: Effects on Investment, Technology Transfer, and Innovation." In Global Dimensions of Intellectual Property Rights in Science and Technology, edited by M. E. Mogee M. B. Wallerstein, and R. A. Schoen. Washington, D.C.: National Academy Press, 1993, pp. 107-45.

Mansfield's research on this issue is discussed on pp. 1611-1612 of:

Diamond, Arthur M., Jr. "Edwin Mansfield's Contributions to the Economics of Technology." Research Policy 32, no. 9 (Oct. 2003): 1607-17.

November 10, 2013

If Feds Stalled Skype Deal, Google Would Have Been "Stuck with a Piece of Shit"

Even just the plausible possibility of a government veto of an acquisition, can stop the acquisition from happening. The feds thereby kill efficiency and innovation enhancing reconfigurations of assets and business units.

(p. 234) . . . , an opportunity arose that Google's leaders felt compelled to consider: Skype was available. It was a onetime chance to grab hundreds of millions of Internet voice customers, merging them with Google Voice to create an instant powerhouse. Wesley Chan believed that this was a bad move. Skype relied on a technology called peer to peer, which moved information cheaply and quickly through a decentralized network that emerged through the connections of users. But Google didn't need that system because it had its own efficient infrastruc-(p. 235)ture. In addition, there was a question whether eBay, the owner of Skype, had claim to all the patents to the underlying technology, so it was unclear what rights Google would have as it tried to embellish and improve the peer-to-peer protocols. Finally, before Google could take possession, the U.S. government might stall the deal for months, maybe even two years, before approving it. "We would have paid all this money, but the value would go away and then we'd be stuck with a piece of shit," says Chan.


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added.)

November 4, 2013

Better Batteries Would Be a General Purpose Technology (GPT)

Economists of technology have been thinking about General Purpose Technologies (GPT) for the last 10 years or so. As the name implies, a GPT is one where there are broad applications, and new applications are invented as the price of the GPT declines. My plausible guess is that a breakthrough in battery technology would be a very important GPT. The progress sketched below is probably not a breakthrough, but progress is good.

(p. C4) People take batteries for granted, but they shouldn't. All kinds of technological advances hinge on developing smaller and more powerful mobile energy sources.

Researchers at Harvard University and the University of Illinois are reporting just such a creation, one that happens to be no bigger than a grain of sand. These tiny but powerful lithium-ion batteries raise the prospect of a new generation of medical and other devices that can go where traditional hulking batteries can't.

. . .

Jennifer Lewis, a materials scientist at Harvard, says these batteries can store more energy because 3-D printing enables the stacking of electrodes in greater volume than the thin-film methods now used to make microbatteries.

For the full story, see:

DANIEL AKST. "R AND D: Batteries on the Head of a Pin." The Wall Street Journal (Sat., June 22, 2013): C4.

(Note: ellipsis added.)

(Note: the online version of the interview has the date June 21, 2013.)

November 2, 2013

Google Used Auction Model to Allocate Internal Resources

(p. 202) Google's chief economist, Hal Varian, would later explain how it worked when new data centers open: "We'll build a nice new data center and say, 'Hey, Google Docs, would you move your machines over here?' And they say, 'Sure, next month.' Because nobody wants to go through the disruption of shifting. So I suggested we run an auction similar to what airlines do when they oversell a plane-- they keep offering bigger vouchers until enough customers are willing to give up their seats. In our case, we offer more machines in exchange for moving. One group might do it for fifty new ones, another for a hundred, and another won't move unless we give them three hundred. So we give them to the lowest bidder-- they get their extra capacity, and we get computation shifted to the new data center."

Google eventually devised an elaborate auction model for divvying up existing resources. In a paper entitled "Using a Market Economy to Provision Computer Resources Across Planet-wide Clusters," a group of Google engineers, along with a Stanford professor of management science and engineering, reported a project that essentially made Google's
computational resources into a silicon Wall Street. Supply and demand worked here not to fix stock prices but to place a value on resources. The system not only allowed projects at Google to get fair access to storage and computational cycles but identified shortages in computers, storage, and bandwidth. Instead of the Vickery auction used by AdWords, the system used an "ascending clock auction." At the beginning, the current price of each resource would be displayed, and Google engineers in competing projects could claim them at that price. The ideal outcome would ensure sufficient resources for everyone, in which case the auction stopped. Otherwise, the automated auctioneer would raise the prices for the next "time slot," and (p. 203) remaining competitors for those resources had to decide whether to bid higher. And so on, until the engineers not willing to stake their budgets on the most contested resources dropped out. "Hence," write the paper's authors, "the auction allows users to 'discover' prices in which all users pay/ receive payment in proportion to uniform resource prices."


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

October 29, 2013

Google Had the Most "Massive Parallelized Redundant Computer Network" in the World

(p. 198) . . . by perfecting its software, owning its own fiber, and innovating in conservation techniques, Google was able to run its computers spending only a third of what its competitors paid. "Our true advantage was actually the fact that we had this massive parallelized redundant computer network, probably more than anyone in the world, including governments," says Jim Reese. "And we realized that maybe it's not in our best interests to let our competitors know."


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added.)

October 27, 2013

Silicon Valley Is Open to Creative Destruction, But Tired of Taxes

(p. A15) Rancho Palos Verdes, Calif.

When the howls of creative destruction blew through the auto and steel industries, their executives lobbied Washington for bailouts and tariffs. For now, Silicon Valley remains optimistic enough that its executives don't mind having their own businesses creatively destroyed by newer technologies and smarter innovations. That's an encouraging lesson from this newspaper's recent All Things Digital conference, which each year attracts hundreds of technology leaders and investors.

. . .

In a 90-minute grilling by the Journal's Walt Mossberg and Kara Swisher, Apple Chief Executive Tim Cook assured the audience that his company has "some incredible plans that we've been working on for a while."

Mr. Cook's sunny outlook was clouded only by his dealings with Washington. He was recently the main witness at hearings called by Sen. Carl Levin, a Michigan Democrat, who accused Apple of violating tax laws. In fact, Apple's use of foreign subsidiaries is entirely legal--and Apple is the largest taxpayer in the U.S., contributing $6 billion a year to the government's coffers.

Mr. Cook put on a brave face about the hearings, saying, "I thought it was very important to go tell our side of the story and to view that as an opportunity instead of a pain in the [expletive]." Mr. Cook's foul language was understandable. "Just gut the [tax] code," he told the conference. "It's 7,500 pages long. . . . Apple's tax return is two feet high. It's crazy."

When the audience applauded, Ms. Swisher quipped, "All right, Rand Paul." A woman shouted: "No, I'm a Democrat!" One reason the technology industry remains the center of innovation may be that many technologists of all parties view trips to Washington as a pain.

For the full commentary, see:

L. GORDON CROVITZ. "INFORMATION AGE; Techies Cheer Creative Destruction." The Wall Street Journal (Mon., June 3, 2013): A15.

(Note: ellipsis between paragraphs added; italics in original; ellipsis, and bracketed words, within next-to-last paragraph, in original.)

(Note: the online version of the commentary has the date June 2, 2013.)

October 25, 2013

Larry Page: "At His Core He Cares about Latency"

(p. 184) Speed had always been an obsession at Google, especially for Larry Page. It was almost instinctual for him. "He's always measuring everything," says early Googler Megan Smith. "At his core he cares about latency." More accurately, he despises latency and is always trying to remove it, like Lady Macbeth washing guilt from her hands. Once Smith was walking down the street with him in Morocco and he suddenly dragged her into a random Internet café with maybe three machines. Immediately, he began timing how long it took web pages to load into a browser there.

Whether due to pathological impatience or a dead-on conviction that speed is chronically underestimated as a factor in successful products, Page had been insisting on faster delivery for everything Google from the beginning. The minimalism of Google's home page, allowing for lightning-quick (p. 185) loading, was the classic example. But early Google also innovated by storing cached versions of web pages on its own servers, for redundancy and speed.

"Speed is a feature," says Urs Hölzle. "Speed can drive usage as much as having bells and whistles on your product. People really underappreciate it. Larry is very much on that line."


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

October 22, 2013

Dohrmann and Quevedo Survive Creative Destruction of Inacom

DohrmannHokampQuevedoCosentry2013-10-07.jpg "Cosentry, an Omaha-based provider of data center storage and managed technology services, has a new CEO, Brad Hokamp, center. With him at the Cosentry data center in Papillion are company founders Kevin Dohrmann, left, and Manny Quevedo." Source of caption and photo: online version of the Omaha World-Herald article quoted and cited below.

Innovation through creative destruction brings us the new products and processes that make our lives longer, richer and more satisfying. The major downside of creative destruction is the job loss of those working for firms that are creatively destroyed. Sometimes, in class, I use Omaha's Inacom as a concrete example. Inacom was a value-added retailer of computer equipment. They would buy PCs from IBM, Compaq and the like, then add software and hardware, and re-sell and install for firms, at a mark-up. They were creatively destroyed by Dell's process innovation of customizing and selling direct, at much lower prices than Inacom charged. When I arrived in Omaha, Inacom was one of a handful of Fortune 500 firms. Now Inacom is gone. But just because a firm is creatively destroyed does not imply that all those who worked for the firm are creatively destroyed. Dohrmann and Quevedo were executives at Inacom. They had the skills, knowledge, resilience and work ethic to create their own entrepreneurial startup that has thrived. Not everyone can do what Dohrmann and Quevedo did. But everyone should be able to improve their skills, knowledge, resilience, and work ethic, so that if creative destruction destroys the firm that employs them, they will still survive and possibly thrive.

(p. 1D) Cosentry's regional data center footprint has grown far from its "humble beginnings" 12 years ago of just 4,000 square feet in the old Southroads Mall in Bellevue.

"Everyone saw it as a mall that was in deterioration, and I walked in and saw the most beautiful building in Omaha," co-founder Manny Quevedo said, (p. 3D) remembering solid walls and below-grade space for computer systems.

Investments from Omaha firms Waitt Co. and McCarthy Capital along the way helped the firm grow; it was sold in 2011 to Boston private equity firm TA Associates but still has its headquarters at 127th Street and West Dodge Road.

. . .

The company's workforce has approximately doubled in the last five years to nearly 200, more than half of them in Nebraska, and will continue to grow gradually with the expansion as Cosentry hires more engineers and technicians, Quevedo said.

Today the company has six data centers, including two each in the Kansas City and Sioux Falls, S.D., metropolitan areas. If you use utilities or health care services or do any shopping or banking in the region, there's a chance some of your information has been stored or processed through Cosentry's servers.

Cosentry started with what Quevedo said was a handful of clients and grew to hundreds within its first five years.

. . .

(p. 3D) Cosentry Timeline

2001: With investment from Waitt Co., Cosentry is started by Manny Quevedo and Kevin Dohrmann, former employees of InaCom, the former Omaha Fortune 500 computer dealer that began as a division of Valmont Industries but merged with VanStar of Atlanta in 2000 and later declared bankruptcy. Cosentry creates a data center in Bellevue.

2005: Cosentry, also called IPR Inc., sold its IP Revolution division to a Kansas firm, Choice Solutions. IP Revolution sold voice and data communications services and systems. Cosentry doubles the size of its Bellevue data center and expands to the Kansas City and Sioux Falls, S.D., markets.

2008: Omaha investment firm McCarthy Capital invests in the firm. At the time, Cosentry had 95 employees.

2010: Cosentry cuts the ribbon on the $26 million Midlands Data Center in Papillion, a joint project with Alegent Health, which uses the center to store electronic medical records.

2011: Boston investment firm TA Associates buys Cosentry for an undisclosed amount from McCarthy and Waitt. The local management team continues to operate and have an ownership stake in Cosentry. The firm expands with second data centers in both the Sioux Falls and Kansas City markets.

2013: Cosentry refinances its credit facilities to provide up to $100 million to enable expansion, including the expansion of the Midlands Data Center. Today, Cosentry has nearly 200 employees and six data centers in three metropolitan areas.

For the full story, see:

Barbara Soderlin. "A Growing Tech Footprint: As Businesses' Data Storage Needs Expand, Cosentry Adds to Its Papillion Center." Omaha World-Herald (MONDAY, AUGUST 26, 2013): 1D & 3D.

(Note: ellipses added; bold in original print version of article.)

(Note: the online version of the article has the title "As Businesses' Data Storage Needs Expand, Cosentry Adds to Its Papillion Center.")


"Scott Capps of Cosentry's Papillion data center with the cooling system that helped Cosentry earn an Energy Star certification, which is given by the Environmental Protection Agency based on energy efficiency and lower emissions. It's the only data center in Nebraska with the certification." Source of caption and photo: the archive online version of the Omaha World-Herald article quoted and cited above.

October 21, 2013

Google's Redundant, Fault-Tolerant System Worked with Cheap, Low-Quality, Failure-Prone Equipment

(p. 183) Google was a tough client for Exodus; no company had ever jammed so many servers into so small an area. The typical practice was to put between five and ten servers on a rack; Google managed to get eighty servers on each of its racks. The racks were so closely arranged that it was difficult for a human being to squeeze into the aisle between them. To get an extra rack in, Google had to get Exodus to temporarily remove the side wall of the cage. "The data centers had never worried about how much power and AC went into each cage, because it was never close to being maxed out," says Reese. "Well, we completely maxed out. It was on an order of magnitude of a small suburban neighborhood," Reese says. Exodus had to scramble to install heavier circuitry. Its air-conditioning was also overwhelmed, and the colo bought a portable AC truck. They drove the eighteen-wheeler up to the colo, punched three holes in the wall, and pumped cold air into Google's cage through PVC pipes.

. . .

The key to Google's efficiency was buying low-quality equipment dirt cheap and applying brainpower to work around the inevitably high failure rate. It was an outgrowth of Google's earliest days, when Page and Brin had built a server housed by Lego blocks. "Larry and Sergey proposed that we design and build our own servers as cheaply as we can-- massive numbers of servers connected to a high-speed network," says Reese. The conventional wisdom was that an equipment failure should be regarded as, well, a failure. Generally the server failure rate was between 4 and 10 percent. To keep the failures at the lower end of the range, technology companies paid for high-end equipment from Sun Microsystems or EMC. "Our idea was completely opposite," says Reese. "We're going to build hundreds and thousands of cheap servers knowing from the get-go that a certain percentage, maybe 10 percent, are going to fail," says Reese. Google's first CIO, Douglas Merrill, once noted that the disk drives Google purchased were "poorer quality than you would put into your kid's computer at home."

(p. 184) But Google designed around the flaws. "We built capabilities into the software, the hardware, and the network--network-- the way we hook them up, the load balancing, and so on-- to build in redundancy, to make the system fault-tolerant," says Reese. The Google File System, written by Jeff Dean and Sanjay Ghemawat, was invaluable in this process: it was designed to manage failure by "sharding" data, distributing it to multiple servers. If Google search called for certain information at one server and didn't get a reply after a couple of milliseconds, there were two other Google servers that could fulfill the request.


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added.)

October 17, 2013

Gates Did Not See that Gmail's 2-Gig Storage Would Beat Hotmail

(p. 179) About six months after Gmail came out, Bill Gates visited me at Newsweek's New York headquarters to talk about spam. (His message was that within a year it would no longer be a problem. Not exactly a Nostradamus moment.) We met in my editor's office. The question came up whether free email accounts should be supported by advertising. Gates felt that users were more negative than positive on the issue, but if people wanted it, Microsoft would offer it.

"Have you played with Gmail?" I asked him.

"Oh sure, I play with everything," he replied. "I play with A-Mail, B-Mail, C-Mail, I play with all of them."

My editor and I explained that the IT department at Newsweek gave us barely enough storage to hold a few days' mail, and we both forwarded everything to Gmail so we wouldn't have to spend our time deciding what to delete. Only a few months after starting this, both of us had consumed more than half of Gmail's 2-gigabyte free storage space. (Google had already doubled the storage from one gig to two.)

Gates looked stunned, as if this offended him. "How could you need more than a gig?" he asked. "What've you got in there? Movies? PowerPoint presentations?"

No, just lots of mail.

He began firing questions. "How many messages are there?" he demanded. "Seriously, I'm trying to understand whether it's the number of messages or the size of messages." After doing the math in his head, he came to the conclusion that Google was doing something wrong.

The episode is telling. Gates's implicit criticism of Gmail was that it was wasteful in its means of storing each email. Despite his currency with cutting-edge technologies, his mentality was anchored in the old paradigm of storage being a commodity that must be conserved. He had written his first programs under a brutal imperative for brevity. And Microsoft's web-based email service reflected that parsimony.

The young people at Google had no such mental barriers. From the moment their company started, they were thinking in terms of huge numbers. Remember, they named their company after a 100-digit number! Moore's Law was as much a fact as air for them, so they understood that the expense of the seemingly astounding 2 gigabytes they gave away in 2004 would be negligible only months later. It would take some months for Gates's minions to catch up and for Microsoft's Hotmail to dramatically increase storage. (Yahoo Mail also followed suit.)

"That was part of my justification for doing Gmail," says Paul Buchheit of its ability to make use of Google's capacious servers for its storage. "When people said that it should be canceled, I told them it's really the foundation for a lot of other products. It just seemed obvious that the way things were going, all information was going to be online."


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: italics in original.)

October 9, 2013

Rising Google Stock Prices Led Googlers to Be Wary of Innovation

(p. 156) . . . Googlers were affected by stock ownership. (They were, after all, human.) Bo Cowgill, a Google statistician, did a series of studies of his colleagues' behavior, based on their participation in a "prediction market," a setup that allowed them to make bets on the success of internal projects. He discovered that "daily stock price movements affect the mood, effort level and decision-making of employees." As you'd expect, increases in stock performance made people happier and more optimistic-- but they also led them to regard innovative ideas more warily, indicating that as Googlers became richer, they became more conservative. That was exactly the downside of the IPO that the founders had dreaded.


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added; italics in original.)

October 5, 2013

"SEC Rules Demanded Complexity"

(p. 152) Google had considerable experience with pleasing users, but in the case of the auction, it could not create a simple interface. SEC rules demanded complexity. So the Google auction was a lot more complicated than buying Pokémon cards on eBay. People had to qualify financially as bidders. Bids had to be placed by a brokerage. If you made an error in reg-(p. 153)istering, you could not correct it but had to reregister. All those problems led to a few postponements of the start of the bidding period.

But the deeper problem was the uncertainty of Google's prospects. As the press accounts accumulated--with reporters informed by Wall Streeters eager to sabotage the process-- the perception grew that Google was a company with an unfamiliar business model run by weird people. A typical Wall Street insider analysis was reflected by columnist Scott Reeves, who concluded that Google's target price, at the time pegged to the range between $ 108 and $ 135 a share, was excessive. "Only those who were dropped on their head at birth [will] plunk down that kind of cash for an IPO," Reeves wrote.


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

September 24, 2013

Nanny Feds Take Revenge on Zucker for Trying to "Save Our Balls"


Craig Zucker. Source of caricature: online version of the WSJ article quoted and cited below.

(p. A11) Mr. Zucker is the former CEO of Maxfield & Oberton, the small company behind Buckyballs, an office toy that became an Internet sensation in 2009 and went on to sell millions of units before it was banned by the feds last year.

A self-described "serial entrepreneur," Mr. Zucker looks the part with tussled black hair, a scraggly beard and hipster jeans. Yet his casual-Friday outfit does little to subdue his air of ambition and hustle.

Nowadays Mr. Zucker spends most of his waking hours fighting off a vindictive U.S. Consumer Product Safety Commission that has set out to punish him for having challenged its regulatory overreach. The outcome of the battle has ramifications far beyond a magnetic toy designed for bored office workers. It implicates bedrock American notions of consumer choice, personal responsibility and limited liability.

. . .

In August 2009, Maxfield & Oberton demonstrated Buckyballs at the New York Gift Show; 600 stores signed up to sell the product. By 2010, the company had built a distribution network of 1,500 stores, including major retailers like Urban Outfitters and Brookstone. People magazine in 2011 named Buckyballs one of the five hottest trends of the year, and in 2012 it made the cover of Brookstone's catalog.

Maxfield & Oberton now had 10 employees, 150 sales representatives and a distribution network of 5,000 stores. Sales had reached $10 million a year. "Then," says Mr. Zucker, "we crashed."

On July 10, 2012, the Consumer Product Safety Commission instructed Maxfield & Oberton to file a "corrective-action plan" within two weeks or face an administrative suit related to Buckyballs' alleged safety defects. Around the same time--and before Maxfield & Oberton had a chance to tell its side of the story--the commission sent letters to some of Maxfield & Oberton's retail partners, including Brookstone, warning of the "severity of the risk of injury and death possibly posed by" Buckyballs and requesting them to "voluntarily stop selling" the product.

It was an underhanded move, as Maxfield & Oberton and its lawyers saw it. "Very, very quickly those 5,000 retailers became zero," says Mr. Zucker. The preliminary letters, and others sent after the complaint, made it clear that selling Buckyballs was still considered lawful pending adjudication. "But if you're a store like Brookstone or Urban Outfitters . . . you're bullied into it. You don't want problems."

. . .

Maxfield & Oberton resolved to take to the public square.On July 27, just two days after the commission filed suit, the company launched a publicity campaign to rally customers and spotlight the commission's nanny-state excesses. The campaign's tagline? "Save Our Balls."

Online ads pointed out how, under the commission's reasoning, everything from coconuts ("tasty fruit or deadly sky ballistic?") to stairways ("are they really worth the risk?") to hot dogs ("delicious but deadly") could be banned.

. . .

. . . in February [2013] the Buckyballs saga took a chilling turn: The commission filed a motion requesting that Mr. Zucker be held personally liable for the costs of the recall, which it estimated at $57 million, if the product was ultimately determined to be defective.

This was an astounding departure from the principle of limited liability at the heart of U.S. corporate law.

. . .

Given the fact that Buckyballs have now long been off the market, the attempt to go after Mr. Zucker personally raises the question of retaliation for his public campaign against the commission. Mr. Zucker won't speculate about the commission's motives. "It's very selective and very aggressive," he says.

For the full interview, see:

SOHRAB AHMARI, interviewer. "THE WEEKEND INTERVIEW with Craig Zucker; What Happens When a Man Takes on the Feds; Buckyballs was the hottest office game on the market. Then regulators banned it. Now the government wants to ruin the CEO who fought back." The Wall Street Journal (Sat., August 31, 2013): A11.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the interview has the date August 30, 2013, and has the title "THE WEEKEND INTERVIEW; Craig Zucker: What Happens When a Man Takes on the Feds. Buckyballs was the hottest office game on the market. Then regulators banned it. Now the government wants to ruin the CEO who fought back.")

September 15, 2013

When Google Earned a Profit, Sergey Brin "Felt Like We Had Built a Real Business"

(p. 94) . . . , Google was reaping rewards, and 2002 was its first profitable year. "That's really satisfying," Brin said at the time. "Honestly, when we were still in the dot-com boom days, I felt like a schmuck. I had an Internet start-up-- so did everybody else. It was unprofitable, like everybody else's, and how hard is that? But when we became profitable, I felt like we had built a real business."


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added.)

September 7, 2013

Yahoo Valued "Marketing Gimmicks" More than Search Speed

(p. 44) Google had struck a deal to handle all the search traffic of Yahoo, one of the biggest portals on the web.

The deal--announced on June 26, 2000--was a frustrating development to the head of Yahoo's search team, Udi Manber. He had been arguing that Yahoo should develop its own search product (at the time, it was licensing technology from Inktomi), but his bosses weren't interested. Yahoo's executives, led by a VC-approved CEO named Timothy Koogle (described in a BusinessWeek cover story as "The Grown-up Voice of Reason at Yahoo"), instead were devoting their attention to branding--marketing gimmicks such as putting the purple corporate logo on the Zamboni machine that swept the ice between periods of San Jose Sharks hockey games. "I had six people working on my search team," Manber said. "I couldn't get the seventh. This was a company that had thousands of people. I could not get the seventh." Since Yahoo wasn't going to develop its own search, Manber had the task of finding the best one to license.


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: italics in original.)

September 3, 2013

Redundancy Allowed Google to Function with Cheap and Failure-Prone Hard Drives

(p. 42) . . . as the web kept growing, Google added more machines--by the end of 1999, there were eighty machines involved in the crawl (out of a total of almost three thousand Google computers at that time)--and the likelihood that something would break increased dramatically. Especially since Google made a point of buying what its engineers referred to as "el cheapo" equipment. Instead of commercial units that carefully processed and checked information, Google would buy discounted consumer models without built-in processes to protect the integrity of data.

As a stopgap measure, the engineers had implemented a scheme where the indexing data was stored on different hard drives. If a machine went bad, everyone's pager would start buzzing, even if it was the middle of the night, and they'd barrel into the office immediately to stop the crawl, copy the data, and change the configuration files. "This happened every few days, and it basically stopped everything and was very painful," says Sanjay Ghemawat, one of the DEC research wizards who had joined Google.

. . .

(p. 43) The experience led to an ambitious revamp of the way the entire Google infrastructure dealt with files. "I always had wanted to build a file system, and it was pretty clear that this was something we were going to have to do," says Ghemawat, who led the team. Though there had previously been systems that handled information distributed over multiple files, Google's could handle bigger data loads and was more nimble at running full speed in the face of disk crashes-- which it had to be because, with Google's philosophy of buying supercheap components, failure was the norm. "The main idea was that we wanted the file system to automate dealing with failures, and to do that, the file system would keep multiple copies and it would make new copies when some copy failed," says Ghemawat.


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipses added.)

August 22, 2013

"We Just Begged and Borrowed" for Equipment

(p. 32) Google was handling as many as 10,000 queries a day. At times it was consuming half of Stanford's Internet capacity. Its appetite for equipment and bandwidth was voracious. "We just begged and borrowed," says Page. "There were tons of computers around, and we managed to get some." Page's dorm room was essentially Google's operations center, with a motley assortment of computers from various manufacturers stuffed into a homemade version of a server rack-- a storage cabinet made of Legos. Larry and Sergey would hang around the loading dock to see who on campus was getting computers-- companies like Intel and Sun gave lots of free machines to Stanford to curry favor with employees of the future-- (p. 33) and then the pair would ask the recipients if they could share some of the bounty.

That still wasn't enough. To store the millions of pages they had crawled, the pair had to buy their own high-capacity disk drives. Page, who had a talent for squeezing the most out of a buck, found a place that sold refurbished disks at prices so low-- a tenth of the original cost-- that something was clearly wrong with them. "I did the research and figured out that they were okay as long as you replaced the [disk] operating system," he says. "We got 120 drives, about nine gigs each. So it was about a terabyte of space." It was an approach that Google would later adopt in building infrastructure at low cost.

Larry and Sergey would be sitting by the monitor, watching the queries-- at peak times, there would be a new one every second-- and it would be clear that they'd need even more equipment. What next? they'd ask themselves. Maybe this is real.


Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: italics in original.)

July 31, 2013

Falling Computer Prices Cured the "Digital Divide"

(p. 304) The more evident the power of the internet as an uplifting force became, the more evident the divide between the digital haves and have-nots. One sociological study concluded that there were "two Americas" emerging. The citizens of one America were poor people who could not afford a computer, and of the other, wealthy individuals equipped with PCs who reaped all the benefits. During the 1990s, when technology boosters like me were promoting the advent of the internet, we were often asked: What are we going to do about the digital divide? My an-(p. 305)swer was simple: nothing. We didn't have to do anything, because the natural history of a technology such as the internet was self-fulfilling. The have-nots were a temporary imbalance that would be cured (and more) by technological forces. There was so much profit to be made connecting up the rest of the world, and the unconnected were so eager to join, that they were already paying higher telecom rates (when they could get such service) than the haves. Furthermore, the costs of both computers and connectivity were dropping by the month. At that time most poor in America owned televisions and had monthly cable bills. Owning a computer and having internet access was no more expensive and would soon be cheaper than TV. In a decade, the necessary outlay would become just a $100 laptop. Within the lifetimes of all born in the last decade, computers of some sort (connectors, really) will cost $5.


Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

July 28, 2013

Children of Chinese Entrepreneurs Want to Work for Government


"Engineering student Xie Chaobo has yet to land a job." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) BEIJING--Xie Chaobo figures he has the credentials to land a job at one of China's big state-owned firms. He is a graduate student at Tsinghua University, one of China's best. His field of study is environmental engineering, one of China's priorities. And he is experimenting with new techniques for identifying water pollutants, which should make him a valuable catch.

But he has applied to 30 companies so far and scored just four interviews, none of which has led to a job.

Although Mr. Xie's parents are entrepreneurs who have built companies that make glasses, shoes and now water pumps, he has no interest in working at a private startup. Chinese students "have been told since we were children to focus on stability instead of risk," the 24-year-old engineering student says.

Over the past decade, the number of new graduates from Chinese universities has increased sixfold to more than six million a year, creating an epic glut that is depressing wages, (p. A10) leaving many recent college graduates without jobs and making students fearful about their future. Two-thirds of Chinese graduates say they want to work either in the government or big state-owned firms, which are seen as recession-proof, rather than at the private companies that have powered China's remarkable economic climb, surveys indicate. Few college students today, according to the surveys, are ready to leave the safe shores of government work and "jump into the sea," as the Chinese expression goes, to join startups or go into business for themselves, although many of their parents did just that in the 1990s.

For the full story, see:

MIKE RAMSEY and VALERIE BAUERLEIN. "Tesla Clashes With Car Dealers; Electric-Vehicle Maker Wants to Sell Directly to Consumers; Critics Say Plan Violates Franchise Laws." The Wall Street Journal (Tues., June 18, 2013): B1-B2.

ChineseStudentAfterGraduationPlans2013-07-23.jpgSource of table: online version of the WSJ article quoted and cited above.

July 24, 2013

Laws to Protect Car Dealers, Keep Car Prices High

TeslaGalleryVirginia2013-07-23.jpg "Tesla 'galleries' such as this one in McLean, Va., can show but not sell cars." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) RALEIGH, N.C.--Elon Musk made a fortune disrupting the status quo in online shopping and renewable energy. Now he's up against his toughest challenge yet: local car dealers.

Mr. Musk, the billionaire behind PayPal and now Tesla Motors Inc., wants to sell his $70,000 Tesla electric luxury vehicles directly to consumers, bypassing franchised automobile dealers. Dealers are flexing their considerable muscle in states including Texas and Virginia to stop him.

The latest battleground is North Carolina, where the Republican-controlled state Senate last month unanimously approved a measure that would block Tesla from selling online, its only sales outlet here. Tesla has staged whiz-bang test drives for legislators in front of the State House and hired one of the state's most influential lobbyists to stave off a similar vote in the House before the legislative session ends in early July.

The focus of the power struggle between Mr. Musk and auto dealers is a thicket of state franchise laws, many of which go back to the auto industry's earliest days when industry pioneer Henry Ford began turning to eager entrepreneurs to help sell his Model T.

Dealers say laws passed over the decades to prevent car makers from selling directly to consumers are justified because without them auto makers could use their economic clout to sell vehicles for less than their independent franchisees.

For the full story, see:

MIKE RAMSEY and VALERIE BAUERLEIN. "Tesla Clashes With Car Dealers; Electric-Vehicle Maker Wants to Sell Directly to Consumers; Critics Say Plan Violates Franchise Laws." The Wall Street Journal (Tues., June 18, 2013): B1-B2.

July 14, 2013

Record Companies Refused to See Efficiency of Napster Distribution System


Source of book image: online version of the WSJ review quoted and cited below.

(p. A15) . . . the central character in "Appetite for Self-Destruction" is technological change.

. . .

Record labels scrambled to negotiate with Napster and develop a legal version of the service with multiple revenue streams. The attempts all failed. In Mr. Knopper's telling, there were unreasonable demands on all sides. But he faults music executives for "cling[ing] to the old, suddenly inefficient model of making CDs and distributing them to record stores. . . . In this world, the labels controlled -- and profited from -- everything." In the new world being ushered in by Napster, he writes, control was shifting "to a snot-nosed punk and his crazy uncle."

The labels' inability to reach an agreement with Napster destroyed "the last chance for the record industry as we know it to stave off certain ruin," Mr. Knopper writes in a typically overheated passage. Had a deal been consummated, he suggests, a legal version of Napster might have generated revenues of $16 billion in 2002 and saved the industry. Whether or not the author's estimate is accurate, his larger point remains: The music industry's big mistake was trying to protect a business model that no longer worked. Litigation would not keep music consumers offline.

For the full review, see:

JEREMY PHILIPS. "BUSINESS BOOKSHELF; Spinning Out of Control; How the record industry missed out on a chance to compete in a new digital world." The Wall Street Journal (Weds., February 11, 2009): A15.

(Note: first two ellipses added; third ellipsis in original.)

The book under review is:

Knopper, Steve. Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age. New York: Free Press, 2009.

July 8, 2013

Project Entrepreneur Would Rather Change the World than Buy a Luxury Car

HoffmanReidGreylockPartners2013-06-28.jpg"Reid Hoffman at Greylock Partners foresees a tectonic shift coming in the Web, with data and its many uses as the new linchpin, replacing identity and relationships." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 5) As an executive vice president, it was up to Mr. Hoffman to manage external relations. "He was the firefighter in chief at PayPal," Mr. Thiel says. "Though that diminishes his role because there were many, many fires."

Mr. Hoffman emerged as a connector and high-level strategist. He packed his schedule with meetings, charmed credit card companies and soothed the regulators.

PayPal survived, and when the company went public, in 2002, Mr. Hoffman and many of his colleagues became multimillionaires.

Mr. Thiel splurged on a Ferrari. Mr. Hoffman wanted to buy an Audi but instead invested his newfound riches in one of the first solar panel companies to come out of Silicon Valley, Nanosolar, and bought an Acura instead.

"I started to think about the value of money," he says. "I thought if I only had $75,000, would I rather invest in a luxury car or make a play in changing the world?"

Nanosolar became a multibillion-dollar enterprise.

For the full story, see:

EVELYN M. RUSLI. "A King of Connections; How Reid Hoffman of LinkedIn Became Tech's Go-To Guy." The New York Times, SundayBusiness Section (Sun., November 6, 2011): 1 & 5.

(Note: ellipsis added.)

(Note: the online version of the article has the date November 5, 2011, and has the title "A King of Connections Is Tech's Go-To Guy.")

July 4, 2013

Walker Says Those Who Call Him "Patent Troll" Want His Property Without Paying


Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) Jay Walker turned his idea for "name your own price" Internet auctions into a fortune by starting Inc. Now the entrepreneur is trying to cash in on his ideas by suing other companies.

Since it was founded in 1994 as a research lab, Walker Digital LLC has made much of its money by spinning out its inventions, like online travel agent Priceline and vending-machine firm Vendmore Systems LLC, as independent businesses.

. . .

Mr. Walker defends his newly aggressive tactics, which some critics compare to those of "patent trolls," a derogatory term for firms that opportunistically enforce patents. Without the lawsuits, he said, his patents could expire while other companies exploit them. Patents have a 20-year lifespan.

"Not only are we not a troll, but the people who want to label me are often the same ones that want to use our property and not pay," Mr. Walker said in an interview.

For the full story, see:

JOHN LETZING. "Founder of Priceline Spoiling for a Fight Over Tech Patents." The Wall Street Journal (Mon., August 22, 2011): B1 & B10.

(Note: ellipsis added.)

July 2, 2013

Property Rights, Flexible Work Rules, Open Markets Are Keys to Economic Growth


Source of book image: online version of the WSJ review quoted and cited below.

(p. A11) Messrs. Hubbard and Kane argue, as do others, that certain policies and core principles are the key: property rights, flexible work rules, open markets. For the authors, such matters explain economic growth entirely.

To those who would cite the primacy of technological breakthroughs, Messrs. Hubbard and Kane assert that inventions only spark growth if there are systems in place (such as intellectual-property rights) that enable inventions to flourish and their value to spread. "The wheel and the windmill were invented many times," they write, "then forgotten, until finally one society had the institutional framework to implement them widely and pass them on permanently." In short, "institutions explain innovation."

For the full review, see:

Matthew Rees. "BOOKSHELF; How the Mighty Fall; The Roman empire eventually lost its economic vitality thanks to price controls, heavy taxes and state-sponsored debt relief." The Wall Street Journal (Fri., June 21, 2013): A11.

(Note: ellipses added.)

(Note: the online version of the review has the date June 20, 2013.)

The book under review, is:

Hubbard, Glenn, and Tim Kane. Balance: The Economics of Great Powers from Ancient Rome to Modern America. New York: Simon & Schuster, 2013.

June 30, 2013

iPhone: "A Gleaming World of Innovation and Opportunity, of Capitalism Behaving Well"

SubwayIphoneUse2013-06-21.jpg "The theft of electronic devices like iPhones has fueled a rise in subway crime this year, the police say. In the past, New Yorkers were mugged, sometimes killed, for bomber jackets, Cazal glasses and Air Jordan sneakers." Source of caption: print version of the NYT article quoted and cited below. Source of photo: online version of the NYT article quoted and cited below.

(p.24) The current spate of iPhone thefts feels, if anything, more poignant than disruptive. Apple products have always read as cooler than their rivals' because their design suggests a gleaming world of innovation and opportunity, of capitalism behaving well -- a world that seems ever diminishing, ever less accessible to the struggling and young.

Unlike the sneakers and glasses that caused such a fury in the '80s and '90s, iPhones didn't originate in the celebrity system. They come with a democratic ethos (if not the analogous price tag); BlackBerrys are for suits, but even a child can work an iPhone. Wasn't everyone supposed to have a shot?

For the full story, see:

GINIA BELLAFANTE. "BIG CITY; Easy to Use and Easy to Steal, a Status Object Inches Out of Reach." The New York Times, First Section (Sun., October 30, 2011): 24.

(Note: the first paragraph quoted above is from the print version, rather than from the somewhat different online version. The second quoted paragraph is the same in both versions.)

(Note: the online version of the story has the date October 28, 2011, and has the slightly different title "BIG CITY; Easy to Use, or Steal, but Inching Out of Reach.")

June 26, 2013

Larry Page Makes an O.K. Decision Now, Rather than a Perfect Decision Later

PageLarryGoogleCEO2013-06-21.jpg "Larry Page has pushed for quicker decision-making and jettisoned more than 25 projects that were not up to snuff." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) MOUNTAIN VIEW, Calif. -- Larry Page, Google's chief executive, so hates wasting time at meetings that he once dumped his secretary to avoid being scheduled for them. He does not much like e-mail either -- even his own Gmail -- saying the tedious back-and-forth takes too long to solve problems.

. . .

(p. A3) Borrowing from the playbooks of executives like Steven P. Jobs and Mayor Michael R. Bloomberg, he has put his personal imprint on the corporate culture, from discouraging excessive use of e-mail to embracing quick, unilateral decision-making -- by him, if need be.

"Ever since taking over as C.E.O., I have focused much of my energy on increasing Google's velocity and execution, and we're beginning to see results," Mr. Page, 38, told analysts recently.

. . .

Despite the many external pressures on Google, it is dominant in its business and highly profitable. But, when asked at a recent conference about the biggest threat to his company, Mr. Page answered in one word, "Google."

The problem was that the company had ballooned so quickly -- it now has more than 31,000 employees and $27.3 billion in revenue so far this year -- that it had become sclerotic. A triumvirate of Mr. Page, his co-founder, Sergey Brin, and Eric E. Schmidt, Google's former chief and current chairman, had to agree before anything could be done. The unwieldy management and glacial pace of decision-making were particularly noticeable in the Valley, where start-ups overtake behemoths in months.

It is different now.

"It's much more of a style like Steve Jobs than the three-headed monster that Google was," said a former Google executive who has spoken with current executives about the changes and spoke anonymously to preserve business relationships. "When Eric was there, you'd walk into a product meeting or a senior staff meeting, and everyone got to weigh in on every decision. Larry is much more willing to make an O.K. decision and make it now, rather than a perfect decision later."

For the full story, see:

CLAIRE CAIN MILLER. "Google's Chief Works to Trim a Bloated Ship." The New York Times (Thurs., November 10, 2011): A1 & A3.

(Note: ellipses added.)

(Note: the online version of the story has the date November 9, 2011.)

June 12, 2013

Patents Turned Steam from Toy to Engine


Source of book image:

(p. 20) The obvious audience for Rosen's book consists of those who hunger to know what it took to go from Heron of Alexandria's toy engine, created in the first century A.D., to practical and brawny beasts like George and Robert Stephenson's Rocket, which kicked off the age of steam locomotion in 1829. But Rosen is aiming for more than a fan club of steam geeks. The "most powerful idea" of his title is not an early locomotive: "The Industrial Revolution was, first and foremost, a revolution in invention," he writes, "a radical transformation in the process of invention itself." The road to Rocket was built with hundreds of innovations large and small that helped drain the mines, run the mills, and move coal and then people over rails.

. . .

Underlying it all, Rosen argues, was the recognition that ideas themselves have economic value, which is to say, this book isn't just gearhead wonkery, it's legal wonkery too. Abraham Lincoln, wondering why Heron's steam engine languished, claimed that the patent system "added the fuel of interest to the fire of genius." Rosen agrees, offering a forceful argument in the debate, which has gone on for centuries, over whether patents promote innovation or retard it.

Those who believe passionately, as Thomas Jefferson did, that inventions "cannot, in nature, be a subject of property," are unlikely to be convinced. Those who agree with the inventors James Watt and Richard Arkwright, who wrote in a manuscript that "an engineer's life without patent is not worthwhile," will cheer. Either way, Rosen's presentation of this highly intellectual debate will reward even those readers who never wondered how the up-and-down chugging of a piston is converted into consistent rotary motion.

For the full review, see:

JOHN SCHWARTZ. "Steam-Driven Dreams." The New York Times (Sun., August 29, 2010): 20.

(Note: ellipsis added; italicized words in original.)

(Note: the online version of the review has the date August 26, 2010.)

The book under review, is:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

June 9, 2013

Moore's Law: Inevitable or Intel?

I believe that Moore's Law remained true for a long time, not because it was inevitable, but because an exemplary company worked very hard and effectively to make it true.

(p. 159) In brief, Moore's Law predicts that computing chips will shrink by half in size and cost every 18 to 24 months. For the past 50 years it has been astoundingly correct.

It has been steady and true, but does Moore's Law reveal an imperative in the technium? In other words is Moore's Law in some way inevitable? The answer is pivotal for civilization for several reasons. First, Moore's Law represents the acceleration in computer technology, which is accelerating everything else. Faster jet engines don't lead to higher corn yields, nor do better lasers lead to faster drug discoveries, but faster computer chips lead to all of these. These days all technology follows computer technology. Second, finding inevitability in one key area of technology suggests invariance and directionality may be found in the
rest of the technium.


Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

May 12, 2013

Knowledge Economy Migrating to Intangible Goods and Services

(p. 67) Our present economic migration from a material-based industry to a knowledge economy of intangible goods (such as software, design, and media products) is just the latest in a steady move toward the immaterial. (Not that material processing has let up, just that intangible processing is now more economically valuable.) Richard Fisher, president of the Federal Reserve Bank of Dallas, says, "Data from nearly all parts of the world show us that consumers tend to spend relatively less on goods and more on services as their incomes rise. . . . Once people have met their basic needs, they tend to want medical care, transportation and communication, information, recreation, entertainment, financial and legal advice, and the like." The disembodiment of value (more value, less mass) is a steady trend in the technium. In six years the average weight per dollar of U.S. exports (the most valuable things the U.S. produces) (p. 68) dropped by half. Today, 40 percent of U.S. exports are services (intangibles) rather than manufactured goods (atoms). We are steadily substituting intangible design, flexibility, innovation, and smartness for rigid, heavy atoms. In a very real sense our entry into a service- and idea-based economy is a continuation of a trend that began at the big bang.


Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

(Note: ellipsis in original; a graph is omitted that appears in the middle of the paragraph quoted above.)

April 19, 2013

New Technology Allows Maple Syrup Farms to Adapt and Thrive with Global Warming

MapleSyrupTubingVermont2013-04-06.jpg "Tom Morse, left, and his father, Burr, at work on their maple farm in Vermont." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 11) Scientists say the tapping season -- the narrow window of freezing nights and daytime temperatures over 40 degrees needed to convert starch to sugar and get sap flowing -- is on average five days shorter than it was 50 years ago. But technology developed over the past decade and improved in recent years offers maple farmers like Mr. Morse a way to offset the effects of climate change with high-tech tactics that are far from natural.

Today, five miles of pressurized blue tubing spider webs down the hillside at Morse Farm, pulling sap from thousands of trees and spitting it into tubs like an immense, inverse IV machine. Modern vacuum pumps are powerful enough to suck the air out of a stainless steel dairy tank and implode it, and they help producers pull in twice as much sap as before.

"You can make it run when nature wouldn't have it run," Mr. Morse said.

His greatest secret weapon is a reverse-osmosis machine that concentrates the sap by pulling it through sensitive membranes, greatly increasing the sugar content before it even hits the boiler. The $8,000 instrument with buttons and dials looks like it belongs in a Jetsons-era laboratory more than in a Vermont sugarhouse. But it saves more fuel and money than every other innovation combined. With it Mr. Morse can process sap into syrup in 30 minutes, something that used to take two hours.

. . .

The biggest United States maple farmers have expanded their production acreage and are tapping more trees than ever before: the total was 5.5 million taps last year, compared with slightly over 4 million taps 10 years earlier.

As a result, United States maple syrup production hit a new high in 2011. In Vermont, the top-producing state, sap yield per tap has risen over the past decade.

For the full story, see:

JULIA SCOTT. "Maple Syrup: Old-Fashioned Product, Newfangled Means of Production." The New York Times, First Section (Sun., March 31, 2013): 11.

(Note: ellipsis added.)

(Note: the online version of the story has the date March 30, 2013, and has the title "High-Tech Means of Production Belies Nostalgic Image of Maple Syrup.")

April 1, 2013

Kevin Kelly Explains and Criticizes Amish Attitude toward Technology


Source of book image:

Kevin Kelly's book has received a lot of attention, sometimes in conjunction with Steven Johnson's Where Good Ideas Come From, with which it shares some themes. I found the Kelly book valuable, but frustrating.

The valuable part includes the discussion of the benefits of technology, and the chapter detailing Amish attitudes and practices related to technology. On the latter, for instance, I learned that the Amish do not categorically reject new technology, but believe that it should be adopted more slowly, after long community deliberation.

What frustrated me most about the book is that it argues that technology has a life of its own and that technological progress is predetermined and inevitable. (I believe that technological progress depends on enlightened government policies and active entrepreneurial initiative, neither of which is inevitable.)

In the next several weeks, I will be quoting some of the more important or thought-provoking passages in the book.

The reference for Kelly's book, is:

Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

The Johnson book mentioned above, is:

Johnson, Steven. Where Good Ideas Come From: The Natural History of Innovation. New York: Riverhead Books, 2010.

March 28, 2013

Driving to MobileIron Job Interview in $100,000 Car, Tells CEO Tinker You Are Not Hungry Enough

TinkerRobertMobileIronCEO2013-03-09.jpg "Above, Robert Tinker, the chief executive of MobileIron, at its offices in Mountain View, Calif." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B2) "There are disruptions everywhere," said Robert Tinker, the chief executive of MobileIron, which makes software for companies to manage smartphones and tablets. "Mobile disrupts personal computers, a market worth billions. Cloud disrupts computer servers and data storage, billions of dollars more. Social may be one of those rare things that is totally new."

Relative to the size of the markets that mobile devices, cloud computing and social media are toppling, he says, the valuations are reasonable.

But most of these chief executives are also veterans of the Internet bubble of the late '90s, and confess to worries that maybe things are not so different this time. Mr. Tinker, 43, drives a 1995 Ford Explorer that has logged 265,000 miles.

"If somebody comes to a job interview here in a $100,000 car, I know he's not hungry," he said. "The reality is, I've taken $94 million in investors' money, and we haven't gone public yet. I feel that responsibility every day."

For the full story, see:

QUENTIN HARDY. "A Billion-Dollar Club, and Not So Exclusive." The New York Times (Weds., February 5, 2013): B1 & B2.

(Note: the online version of the story has the date February 4, 2013.)

March 24, 2013

Many Corporations Refused to Finance Semiconductors

FairlchildSemiconductorEightFounders2013-03-08.jpg "Shown in 1960, the eight engineers who founded Fairchild Semiconductor and revolutionized world technology in "Silicon Valley," an "American Experience" documentary, . . . ." Source of caption and photo: online version of the NYT review quoted and cited below.

(p. C4) "Silicon Valley" is a deceptively grand title for the new "American Experience" documentary Tuesday night on PBS. "Fairchild Semiconductor" would be more accurate.

. . .

One startling image shows a handwritten list of the many corporations that declined to bankroll the eight pioneers before Fairchild Camera and Instrument said yes. If any of them had possessed more foresight, the silicon chip might have belonged to National Cash Register, Motorola, Philco, BorgWarner, Chrysler, General Mills or United Shoe.

For the full review, see:

MIKE HALE. "Men Who Took Silicon to Silicon Valley." The New York Times (Tues., February 5, 2013): C4.

(Note: ellipses in caption, and in quoted passage, added.)

(Note: the online version of the review has the date February 4, 2013.)

The "Silicon Valley" program first aired on PBS on 2/5/13 and can be viewed at:

March 20, 2013

Many New Tech Entrepreneurs Shun "Fast Cars and Fancy Parties"


"Phil Libin, chief of Evernote, at its headquarters in Redwood City, Calif." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) SAN FRANCISCO -- The number of privately held Silicon Valley start-ups that are worth more than $1 billion shocks even the executives running those companies.

"I thought we were special," said Phil Libin, chief executive of Evernote, an online consumer service for storing clippings, photos and bits of information as he counted his $1 billion-plus peers.

He started Evernote in 2008 on the eve of the recession and built it methodically. "A lot of us didn't set out to have a big valuation, we're just trying to build something that lasts," Mr. Libin said. "There is no safe industry anymore, even here."

. . .

(p. B2) Silicon Valley entrepreneurs contend that the price spiral is not a sign of another tech bubble. The high prices are reasonable, they say, because innovations like smartphones and cloud computing will remake a technology industry that is already worth hundreds of billions of dollars.

. . .

The founders of the highly valued companies are old enough to remember past busts, and many shun the bubble lifestyle of fast cars and fancy parties.

Mr. Libin, who said he grew up on food stamps as the son of Russian immigrants in the Bronx, became a millionaire when he sold his first company, Engine5, to Vignette in 2000.

"The company I sold to, there were purple Lamborghinis in the garage. I got into watches," he said. "Maybe a half-dozen, nothing over $10,000, but I needed this glass and leather watch winder."

Evernote started as the financial crisis hit. "One night I was almost busted again," he said, "and there was that watch winder on the shelf, mocking me."

"Every job out there is insecure now," he said. "People sell 10 percent of their stock, and they have an incentive to make the other 90 percent worth more. They are still working, but not worrying about what will happen to their home or their kids."

For the full story, see:

QUENTIN HARDY. "A Billion-Dollar Club, and Not So Exclusive." The New York Times (Weds., February 5, 2013): B1 & B2.

(Note: the online version of the story has the date February 4, 2013.)

March 11, 2013

Open Systems Limit the Integrated Vision that Creates Great Products

The following passage is Steve Jobs speaking, as quoted by Walter Isaacson.

(p. 568) People pay us to integrate things for them, because they don't have the time to think about this stuff 24/7. If you have an extreme passion for producing great products, it pushes you to be integrated, to connect your hardware and your software and content management. You want to break new ground, so you have to do it yourself. If you want to allow your products to be open to other hardware or software, you have to give up some of your vision.


Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

March 7, 2013

Steve Jobs: "Never Rely on Market Research"

The following passage is Steve Jobs speaking, as quoted by Walter Isaacson.

(p. 567) Some people say, "Give the customers what they want." But that's not my approach. Our job is to figure out what they're going to want before they do. I think Henry Ford once said, "If I'd asked customers what they wanted, they would have told me, 'A faster horse!'" People don't know what they want until you show it to them. That's why I never rely on market research. Our task is to read things that are not yet on the page.


Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

March 1, 2013

Google's Eric Schmidt Saw that "Regulation Prohibits Real Innovation"

(p. A13) Eric Schmidt, executive chairman of Google, gave a remarkable interview this month to The Washington Post. So remarkable that Post editors preceded the transcript with this disclosure: "He had just come from the dentist. And he had a toothache."

Perhaps it was the Novocain talking, but Mr. Schmidt has done us a service. He said in public what most technologists will say only in private. Whatever caused him to speak forthrightly about the disconnects between Silicon Valley and Washington, his comments deserve wider attention.

Mr. Schmidt had just given his first congressional testimony. He was called before the Senate Judiciary Antitrust Subcommittee to answer allegations that Google is a monopolist, a charge the Federal Trade Commission is also investigating.

"So we get hauled in front of the Congress for developing a product that's free, that serves a billion people. OK? I mean, I don't know how to say it any clearer," Mr. Schmidt told the Post. "It's not like we raised prices. We could lower prices from free to . . . lower than free? You see what I'm saying?"

. . .

"Regulation prohibits real innovation, because the regulation essentially defines a path to follow," Mr. Schmidt said. This "by definition has a bias to the current outcome, because it's a path for the current outcome."

. . .

Washington is always slow to recognize technological change, which is why in their time IBM and Microsoft were also investigated after competing technologies had emerged.

Mr. Schmidt recounted a dinner in 1995 featuring a talk by Andy Grove, a founder of Intel: "He says, 'This is easy to understand. High tech runs three times faster than normal businesses. And the government runs three times slower than normal businesses. So we have a nine-times gap.' All of my experiences are consistent with Andy Grove's observation."

Mr. Schmidt explained there was only one way to deal with this nine-times gap, which this column hereby christens "Grove's Law of Government." That is "to make sure that the government does not get in the way and slow things down."

Mr. Schmidt recounted that when Silicon Valley first started playing a large role in the economy in the 1990s, "all of a sudden the politicians showed up. We thought the politicians showed up because they loved us. It's fair to say they loved us for our money."

He contrasted innovation in Silicon Valley with innovation in Washington. "Now there are startups in Washington," he said, "founded by people who were policy makers. . . . They're very clever people, and they've figured out a way in regulation to discriminate, to find a new satellite spectrum or a new frequency or whatever. They immediately hired a whole bunch of lobbyists. They raised some money to do that. And they're trying to innovate through regulation. So that's what passes for innovation in Washington."

For the full commentary, see:

L. GORDON CROVITZ. "INFORMATION AGE; Google Speaks Truth to Power; About the growing regulatory state, even Google's Eric Schmidt--a big supporter of the Obama administration--now feels the need to tell it like it is." The Wall Street Journal (Mon., October 24, 2011): A13.

(Note: ellipses between paragraphs added; ellipsis internal to Schmidt quote, in original WSJ commentary.)

The original Eric Schmidt interview with the Washington Post, can be read at:

February 17, 2013

Higher Taxes Would Slow Creation of Entrepreneur Bronfein's Time-Saving Medical Robotic Systems

(p. A11) . . . in Baltimore, . . . a local entrepreneur, following the logic of need, invested seven years and $30 million developing a robotic system for packaging prescription drugs for long-term patients in nursing homes and hospitals.

In a conversation last year, inventor Michael Bronfein told me if he'd known what it would cost him in time and money, he might never have started. How many entrepreneurs say the same? Probably all of them. But Mr. Bronfein saw a need and the power of technology to meet it, and the result was the Paxit automated medication dispensing system.

He saw workers spending hours under the old system sticking pills in monthly blister packs known as "bingo cards," a process expensive and error-prone. He saw nurses on the receiving end then spending time to pluck the pills out of blister packs and into paper cups, to create the proper daily drug regimen for each patient.

. . .

He followed the economic logic that indicated that all the people involved in the old system were becoming too valuable to have their time wasted by the old system. Backed by his company, Remedi SeniorCare, Paxit--in which a robot packages, labels and dispatches a daily round of medicines for each patient--is spreading across the mid-Atlantic and Midwest and winning plaudits from medical-care providers.

. . .

We need to preserve the incentive for investors to bring us the robots that will make the future bearable, rather than burying entrepreneurs in taxes in a vain attempt to seize the returns of investments before those investments are made.

For the full commentary, see:

Jenkins, HOLMAN W., JR. "BUSINESS WORLD; Robots to the Rescue? The flip side of an entitlements crisis is a labor shortage." The Wall Street Journal (Weds., January 9, 2013): A11.

(Note: ellipses added.)

(Note: the online version of the review has the date January 8, 2013.)

February 11, 2013

Apple's Corporate Culture Under Jobs: "Accountability Is Strictly Enforced"

(p. 531) In theory, you could go to your iPhone or any computer and access all aspects of your digital life. There was, however, a big problem: The service, to use Jobs's terminology, sucked. It was complex, devices didn't sync well, and email and other data got lost randomly in the ether. "Apple's MobileMe Is Far Too Flawed to Be Reliable," was the headline on Walt Mossberg's review in the Wall Street Journal.

Jobs was furious. He gathered the MobileMe team in the auditorium on the Apple campus, stood onstage, and asked, "Can anyone tell me what MobileMe is supposed to do?" After the team members offered their answers, Jobs shot back: "So why the fuck doesn't it do that?" Over the next half hour he continued to berate them. "You've tarnished Apple's reputation," he said. You should hate each other for having let each other down. Mossberg, our friend, is no longer writing good things about us." In front of the whole audience, he got rid of the leader of the MobileMe team and replaced him with Eddy Cue, who oversaw all Internet content at Apple. As Fortune's Adam Lashinsky reported in a dissection of the Apple corporate culture, "Accountability is strictly enforced."


Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

January 23, 2013

David Koch Institute for Integrative Cancer Research

LangerRobertResearchLab2013-01-12.jpg "Dr. Robert Langer's research lab is at the forefront of moving academic discoveries into the marketplace." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) HOW do you take particles in a test tube, or components in a tiny chip, and turn them into a $100 million company?

Dr. Robert Langer, 64, knows how. Since the 1980s, his Langer Lab at the Massachusetts Institute of Technology has spun out companies whose products treat cancer, diabetes, heart disease and schizophrenia, among other diseases, and even thicken hair.

The Langer Lab is on the front lines of turning discoveries made in the lab into a range of drugs and drug delivery systems. Without this kind of technology transfer, the thinking goes, scientific discoveries might well sit on the shelf, stifling innovation.

A chemical engineer by training, Dr. Langer has helped start 25 companies and has 811 patents, issued or pending, to his name. More than 250 companies have licensed or sublicensed Langer Lab patents.

Polaris Venture Partners, a Boston venture capital firm, has invested $220 million in 18 Langer Lab-inspired businesses. Combined, these businesses have improved the health of many millions of people, says Terry McGuire, co-founder of Polaris.

. . .

(p. 7) Operating from the sixth floor of the David H. Koch Institute for Integrative Cancer Research on the M.I.T. campus in Cambridge, Mass., Dr. Langer's lab has a research budget of more than $10 million for 2012, coming mostly from federal sources.

. . .

David H. Koch, executive vice president of Koch Industries, the conglomerate based in Wichita, Kan., wrote in an e-mail that "innovation and education have long fueled the world's most powerful economies, so I can't think of a better or more natural synergy than the one between academia and industry." Mr. Koch endowed Dr. Langer's professorship at M.I.T. and is a graduate of the university.

For the full story, see:

HANNAH SELIGSON. "Hatching Ideas, and Companies, by the Dozens at M.I.T." The New York Times, SundayBusiness Section (Sun., November 25, 2012): 1 & 7.

(Note: ellipses added.)

(Note: the online version of the story has the date November 24, 2012.)

January 18, 2013

Steve Jobs Was Deeply Influenced by Clayton Christensen's "The Innovator's Dilemma"

(p. 408) Microsoft was willing to license its Windows Media software and digital rights format to other companies, just as it had licensed out its operating system in the 1980s. Jobs, on the other hand, would not license out Apple's FairPlay to other device makers; it worked only on an iPod. Nor would he allow other online stores to sell songs for use on iPods. A variety of experts said this would eventually cause Apple to lose market share, as it did in the computer wars of the 1980s. "If Apple continues to rely on a proprietary architecture," the Harvard Business School professor Clayton Christensen told Wired, "the iPod will likely become a niche product." (Other than in this case, Christensen was one of the world's most insightful business analysts, and Jobs was deeply (p. 409) influenced by his book The Innovator's Dilemma.) Bill Gates made the same argument. "There's nothing unique about music," he said. "This story has played out on the PC."


Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

January 14, 2013

With iTunes, Apple Leapfrogged CD Burners (a Boat Apple Had Missed)

Is the example sketched below, and in a previous entry, a case of a first mover disadvantage? Or is it simply a case of a lucky or wise bounce-back from a genuine mistake?

(p. 382) . . . [Job's] angry insistence that the iMac get rid of its tray disk drive and use instead a more elegant slot drive meant that it could not include the first CD burners, which were initially made for the tray format. "We kind of missed the boat on that," he recalled. "So we needed to catch up real fast." The mark of an innovative company is not only that it comes up with new ideas first, but also that it knows how to leapfrog when it finds itself behind.


Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: ellipsis and bracketed "Job's" added.)

January 10, 2013

Apple "Finding a Way to Leapfrog Over Its Competitors"

Isaacson says Jobs wanted two refinements in the iMac. One was new colors. The other is discussed below.

I am not sure what to make of this episode. Is Isaacson suggesting that it was good for Apple that Jobs made a mistake on the type of CD hardware to put in the iMac? That this added constraint "would then force Apple to be imaginative and bold"?

Or is the moral that good people who make a lot of quick decisions, make mistakes, sometimes big mistakes, and that Jobs found a way to bounce back from this one?

(p. 356) There was one other important refinement that Jobs wanted for the iMac: getting rid of that detested CD tray. "I'd seen a slot-load drive on a very high-end Sony stereo," he said, "so I went to the drive manufacturers and got them to do a slot-load drive for us for the version of the iMac we did nine months later." Rubinstein tried to argue him out of the change. He predicted that new drives would come along that could burn music onto CDs rather than merely play them, and they would be available in tray form before they were made to work in slots. "If you go to slots, you will always be behind on the technology," Rubinstein argued.

"I don't care, that's what I want," Jobs snapped back. They were having lunch at a sushi bar in San Francisco, and Jobs insisted that they continue the conversation over a walk. "I want you to do the slot-load drive for me as a personal favor," Jobs asked. Rubinstein agreed, of course, but he turned out to be right. Panasonic came out with a CD drive that could rip and burn music, and it was available first for computers that had old-fashioned tray loaders. The effects of this (p. 357) would ripple over the next few years: It would cause Apple to be slow in catering to users who wanted to rip and burn their own music, but that would then force
Apple to be imaginative and bold in finding a way to leapfrog over its competitors when Jobs finally realized that he had to get into the music market.


Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

January 6, 2013

"Think Profit"

(p. 339) At the January 1998 San Francisco Macworld, Jobs took the stage where Amelio had bombed a year earlier. He sported a full beard and a leather jacket as he touted the new product strategy. And for the first time he ended the presentation with a phrase that he would make his signature coda: "Oh, and one more thing . . ." This time the "one more thing" was "Think Profit." When he said those words, the crowd erupted in applause. After two years of staggering losses, Apple had enjoyed a profitable quarter, making $45 million. For the full fiscal year of 1998, it would turn in a $309 million profit. Jobs was back, and so was Apple.


Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: ellipsis in original.)

January 3, 2013

"People Said He Was a Fraud, But He Turned Out to Be Right"


"Willis Whitfield with a mobile clean room in the 1960s." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B16) Half a century ago, as a rapidly changing world sought increasingly smaller mechanical and electrical components and more sanitary hospital conditions, one of the biggest obstacles to progress was air, and the dust and germs it contains.

. . .

Then, in 1962, Willis Whitfield invented the clean room.

"People said he was a fraud," recalled Gilbert V. Herrera, the director of microsystems science and technology at Sandia National Laboratories in Albuquerque. "But he turned out to be right."

. . .

His clean rooms blew air in from the ceiling and sucked it out from the floor. Filters scrubbed the air before it entered the room. Gravity helped particles exit. It might not seem like a complicated concept, but no one had tried it before. The process could completely replace the air in the room 10 times a minute.

Particle detectors in Mr. Whitfield's clean rooms started showing numbers so low -- a thousand times lower than other methods -- that some people did not believe the readings, or Mr. Whitfield. He was questioned so much that he began understating the efficiency of his method to keep from shocking people.

"I think Whitfield's wrong," a scientist from Bell Labs finally said at a conference where Mr. Whitfield spoke. "It's actually 10 times better than he's saying."

For the full obituary, see:

WILLIAM YARDLEY. "W. Whitfield, 92, Dies; Built Clean Room." The New York Times (Weds., December 5, 2012): B16.

(Note: ellipses added.)

(Note: the online version of the obituary has the date December 4, 2012, and has the title "Willis Whitfield, Inventor of Clean Room That Purges Tiny Particles, Dies at 92.")

January 2, 2013

Jobs Laid Off 3,000 from Apple to Save It from Bankruptcy

(p. 339) In his first year back, Jobs laid off more than three thousand people, which salvaged the company's balance sheet. For the fiscal year that ended when Jobs became interim CEO in September 1997, Apple lost $1.04 billion. "We were less than ninety days from being insolvent," he recalled.


Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

January 1, 2013

Internet Allows Pricing Experiments

PricesVaryByLocationGraphic2012-12-29.jpgSource of graphic: online version of the WSJ article quoted and cited below.

(p. A10) This year, researchers in Spain studied more than 200 online retailers and found a handful of examples of price differences--including at Staples within Massachusetts--that appeared to be based on location and other factors. Those findings suggest that Staples' price adjustments have been present at least since this summer.

It is difficult for online shoppers to know why, or even if, they are being offered different deals from other people. Many sites switch prices at lightning speed in response to competitors' offerings and other factors, a practice known as "dynamic pricing." Other sites test different prices but do so without regard to the buyer's characteristics.

To find differences that weren't purely the result of dynamic pricing or randomized tests, the Journal conducted preliminary scans by simulating visits from different computers to a variety of e-commerce sites. If a website showed different prices or offers, the Journal then analyzed the site's computer code and conducted follow-up testing.

The Journal's tests, which were conducted in phases between August and December, indicated that some big-name retailers are experimenting with offering different prices and products to different users.

Some sites, for example, gave discounts based on whether or not a person was using a mobile device. A person searching for hotels from the Web browser of an iPhone or Android phone on travel sites Orbitz and CheapTickets would see discounts of as much as 50% off the list price, Orbitz said.

. . .

At home-improvement site Lowe's Cos., . . . prices depend on location. For example, a refrigerator in the Journal's tests cost $449 in Chicago, Los Angeles and Ashburn, Va., but $499 in seven other test cities. Lowe's said online shoppers receive the lower of the online store price or the price at their local Lowe's store as indicated by their ZIP Code.

Home Depot's website offered price variations that appeared to be based on the nearest brick-and-mortar store as well. A 250-foot spool of electrical wiring fell into six pricing groups, including $70.80 in Ashtabula, Ohio; $72.45 in Erie, Pa.; $75.98 in Olean, N.Y and $77.87 in Monticello, N.Y.

. . .

The differences found on the Staples website presented a complex pricing scheme. The Journal simulated visits to from all of the more than 42,000 U.S. ZIP Codes, testing the price of a Swingline stapler 20 times in each. In addition, the Journal tested more than 1,000 different products in 10 selected ZIP Codes, 10 times in each location.

The Journal saw as many as three different prices for individual items. How frequently a simulated visitor saw low and high prices appeared to be tied to the person's ZIP Code. Testing suggested that Staples tries to deduce people's ZIP Codes by looking at their computer's IP address. This can be accurate, but isn't foolproof.

In the Journal's tests, ZIP Codes whose center was farther than 20 miles from a Staples competitor saw higher prices 67% of the time. By contrast, ZIP Codes within 20 miles of a rival saw the high price least often, only 12% of the time.

For the full story, see:

JENNIFER VALENTINO-DEVRIES, JEREMY SINGER-VINE and ASHKAN SOLTANI. "Websites Vary Prices, Deals Based on Users' Information." The Wall Street Journal (Mon., December 24, 2012): A1 & A10.

(Note: ellipses added.)

December 30, 2012

"The Arpanet Was Not an Internet"

XeroxParcSign2012-12-18.jpg "Xerox PARC headquarters." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A11) A telling moment in the presidential race came recently when Barack Obama said: "If you've got a business, you didn't build that. Somebody else made that happen." He justified elevating bureaucrats over entrepreneurs by referring to bridges and roads, adding: "The Internet didn't get invented on its own. Government research created the Internet so that all companies could make money off the Internet."

. . .

Robert Taylor, who ran the ARPA program in the 1960s, sent an email to fellow technologists in 2004 setting the record straight: "The creation of the Arpanet was not motivated by considerations of war. The Arpanet was not an Internet. An Internet is a connection between two or more computer networks."

If the government didn't invent the Internet, who did? Vinton Cerf developed the TCP/IP protocol, the Internet's backbone, and Tim Berners-Lee gets credit for hyperlinks.

But full credit goes to the company where Mr. Taylor worked after leaving ARPA: Xerox. It was at the Xerox PARC labs in Silicon Valley in the 1970s that the Ethernet was developed to link different computer networks. Researchers there also developed the first personal computer (the Xerox Alto) and the graphical user interface that still drives computer usage today.

According to a book about Xerox PARC, "Dealers of Lightning" (by Michael Hiltzik), its top researchers realized they couldn't wait for the government to connect different networks, so would have to do it themselves. "We have a more immediate problem than they do," Robert Metcalfe told his colleague John Shoch in 1973. "We have more networks than they do." Mr. Shoch later recalled that ARPA staffers "were working under government funding and university contracts. They had contract administrators . . . and all that slow, lugubrious behavior to contend with."

For the full commentary, see:

Gordon Crovitz. "INFORMATION AGE; Who Really Invented the Internet?" The Wall Street Journal (Mon., July 23, 2012): A11.

(Note: ellipsis between paragraphs was added; ellipsis internal to last paragraph was in original.)

(Note: the online version of the commentary has the date July 22, 2012.)

I read the Hiltzik book several years ago, and my memory of it is not sharp, but I remember thinking that it was a useful book:

Hiltzik, Michael A. Dealers of Lightning: Xerox PARC and the Dawn of the Computer Age. New York: HarperBusiness, 1999.

December 21, 2012

Ellison and Jobs on Money

(p. 299) . . . Jobs and his family went to Hawaii for Christmas vacation. Larry Ellison was also there, as he had been the year (p. 300) before. "You know, Larry, I think I've found a way for me to get back into Apple and get control of it without you having to buy it," Jobs said as they walked along the shore. Ellison recalled, "He explained his strategy, which was getting Apple to buy NeXT, then he would go on the board and be one step away from being CEO." Ellison thought that Jobs was missing a key point. "But Steve, there's one thing I don't understand," he said. "If we don't buy the company, how can we make any money?" It was a reminder of how different their desires were. Jobs put his hand on Ellison's left shoulder, pulled him so close that their noses almost touched, and said, "Larry, this is why it's really important that I'm your friend. You don't need any more money."

Ellison recalled that his own answer was almost a whine: "Well, I may not need the money, but why should some fund manager at Fidelity get the money? Why should someone else get it? Why shouldn't it be us?"

"I think if I went back to Apple, and I didn't own any of Apple, and you didn't own any of Apple, I'd have the moral high ground," Jobs replied.

"Steve, that's really expensive real estate, this moral high ground," said Ellison. "Look, Steve, you're my best friend, and Apple is your company. I'll do whatever you want."


Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: ellipsis added.)

December 18, 2012

Poor People Want Washing Machines

The wonderful clip above is from Hans Rosling's TED talk entitled "The Magic Washing Machine."

He clearly and strongly presents his central message that the washing machine has made life better.

What was the greatest invention of the industrial revolution? Hans Rosling makes the case for the washing machine. With newly designed graphics from Gapminder, Rosling shows us the magic that pops up when economic growth and electricity turn a boring wash day into an intellectual day of reading.

Source of video clip summary:

The version of the clip above is embedded from YouTube, where it was posted by TED:

It can also be viewed at the TED web site at:

(Note: I am grateful to Robin Kratina for telling me about Rosling's TED talk,)

(Note: I do not agree with Rosling's acceptance of the politically correct consensus view that the response to global warning should mainly be mitigation and green energy---to the extent that a response turns out to be necessary, I mainly support adaptation, as suggested in many previous entries on this blog.)

December 13, 2012

"Did Alexander Graham Bell Do Any Market Research Before He Invented the Telephone?"

(p. 170) After the Macintosh team returned to Bandley 3 that afternoon, a truck pulled into the parking lot and Jobs had them all gather next to it. Inside were a hundred new Macintosh computers, each personalized with a plaque. "Steve presented them one at a time to each team member, with a handshake and a smile, as the rest of us stood around cheering," Hertzfeld recalled. It had been a grueling ride, and many egos had been bruised by Jobs's obnoxious and rough management style. But neither Raskin nor Wozniak nor Sculley nor anyone else at the company could have pulled off the creation of the Macintosh. Nor would it likely have emerged from focus groups and committees. On the day he unveiled the Macintosh, a reporter from Popular Science asked Jobs what type of market research he had done. Jobs responded by scoffing, "Did Alexander Graham Bell do any market research before he invented the telephone?"


Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: italics in original.)

December 11, 2012

Health Care Costs Can Be Lowered by Less Waste and More Cost-Reducing Innovation

(p. 234) Melinda Beeuwkes Buntin and David Cutler discuss "The Two Trillion Dollar Solution: Saving Money by Modernizing the Health Care System." "Two sorts of savings are possible in health care. The first is eliminating waste and inefficiency. The most commonly cited estimate is that 30 percent of the money spent on medical care does not buy care worth its cost. Medicare costs per capita in Minneapolis, for example, are about half those in Miami, yet Miami does not have better health outcomes. International comparisons yield the same conclusion. . . . Second, reform might stimulate cost-reducing innovation instead of the continuous cost increases that accompany current innovation. For nearly 20 years, scholars have argued that generous reimbursement policies for medical care have led to innovations that almost always increase health care costs. Changing that dynamic by investing in research about what works and rewarding health care providers who choose efficient treatments could have a dramatic effect on cost growth. . . . Reducing costs by 30 percent will take time and effort, but it is not inconceivable over the long term. Experience in the health care sector and other industries suggests that cost reductions on the order of 1.5-to-2.0 percentage points per year are within reach."

Buntin and Cutler as quoted in:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 24, no. 2 (Fall 2009): 231-38.

(Note: ellipses in original.)

The Buntin and Cutler report is:

Buntin, Melinda Beeuwkes, and David Cutler. "The Two Trillion Dollar Solution: Saving Money by Modernizing the Health Care System." Washington, D.C.: Center for American Progress, 2009.

December 10, 2012

With Scorned Ideas, and Without College, Inventor and Entrepreneur "Ovshinsky Prevailed"


"Stanford R. Ovshinsky and Iris M. Ovshinsky founded Energy Conversion Laboratories in 1960." Source of caption and photo: online version of the NYT obituary quoted and cited below.

(p. A23) Stanford R. Ovshinsky, an iconoclastic, largely self-taught and commercially successful scientist who invented the nickel-metal hydride battery and contributed to the development of a host of devices, including solar energy panels, flat-panel displays and rewritable compact discs, died on Wednesday [October 17, 2012] at his home in Bloomfield Hills, Mich. He was 89.

. . .

His ideas drew only scorn and skepticism at first. He was an unknown inventor with unconventional ideas, a man without a college education who made his living designing automation equipment for the automobile industry in Detroit, far from the hotbeds of electronics research like Silicon Valley and Boston.

But Mr. Ovshinsky prevailed. Industry eventually credited him for the principle that small quantities or thin films of amorphous materials exposed to a charge can instantly reorganize their structures into semicrystalline forms capable of carrying significant current.

. . .

In 1960, he and his second wife, the former Iris L. Miroy, founded Energy Conversion Laboratories in Rochester Hills, Mich., to develop practical products from the discovery. It was renamed Energy Conversion Devices four years later.

Energy Conversion Devices and its subsidiaries, spinoff companies and licensees began translating Mr. Ovshinsky's insights into mechanical, electronic and energy devices, among them solar-powered calculators. His nickel-metal battery is used to power hybrid cars and portable electronics, among other things.

He holds patents relating to rewritable optical discs, flat-panel displays and electronic-memory technology. His thin-film solar cells are produced in sheets "by the mile," as he once put it.

. . .

"His incredible curiosity and unbelievable ability to learn sets him apart," Hellmut T. Fritzsche, a longtime friend and consultant, said in an interview in 2005.

For the full obituary, see:

BARNABY J. FEDER. "Stanford R. Ovshinsky Dies at 89, a Self-Taught Maverick in Electronics." The New York Times (Fri., October 19, 2012): A23.

(Note: ellipses and bracketed date added.)

(Note: the online version of the article was dated October 18, 2012.)

(Note: in the first sentence of the print version, "hybrid" was used instead of the correct "hydride.")

December 4, 2012

Isaacson's "Steve Jobs" Tells Us Much About the Innovative Project Entrepreneur


Source of book image:

Steve Jobs is one of my favorite examples of what I call the "project entrepreneur." Walter Isaacson has written a fascinating biography of Jobs, full of memorable examples for any student of the innovative entrepreneur.

During the next few weeks, I will occasionally add entries that quote some of the more important or thought-provoking passages.

The book under review is:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

December 1, 2012

Online Employers Treat Workers More Honestly and Fairly than In-person Employers

(p. 233) John J. Horton surveys "The Condition of the Turking Class: Are Online Employers Fair and Honest?" Amazon Mechanical Turk is a "marketplace for work," as explained at <>. Employers post "Human Intelligence Tasks," which can be tasks like writing keywords that accompany photos or writing bogus product reviews, and workers anywhere in the world can sign up to do them. Horton used Mechanical Turk to survey 200 respondents, who were paid 12 cents apiece for responding to a survey. Of the respondents, 111 were Americans, 58 from India, and the others from other countries. When asked what percentage of employers in their home country treat workers honestly and fairly, the average answer was 64 percent; in comparison, when asked what percentage of Mechanical Turk Requestors treated them (p. 234) fairly, the median answer was 69 percent.


Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 24, no. 2 (Spring 2010): 227-34.

(Note: ellipses in original.)

The published version of the article summarized by Taylor is:

Horton, John J. "The Condition of the Turking Class: Are Online Employers Fair and Honest?" Economics Letters 111, no. 1 (April 2011): 10-12.

November 26, 2012

American Innovators Created Synergies and Interchangeable Parts


Source of book image: online version of the WSJ review quoted and cited below.

(p. A13) . . . the post-Civil War industrialization had an important and largely overlooked predecessor in the first decades of the 19th century, when, as Charles Morris writes in "The Dawn of Innovation," "the American penchant for mechanized, large-scale production spread throughout industry, presaging the world's first mass-consumption economy." It is a story well worth telling, and Mr. Morris tells it well.

. . .

Whole industries sprang up as the country's population boomed and spilled over into the Middle West. The rich agricultural lands there produced huge surpluses of grain and meat, especially pork. The city of Cincinnati--whose population grew to 160,000 in 1860, from 2,500 in 1810--became known as "Porkopolis" because of the number of hogs its slaughterhouses processed annually.

Mr. Morris does a particularly good job of explaining the crucial importance of synergy in economic development, how one development leads to another and to increased growth. The lard (or pig fat) from the slaughterhouses, he notes, served as the basis for the country's first chemical industry. Lard had always been used for more than pie crust and frying. It was a principal ingredient in soap, which farm wives made themselves, a disagreeable and even dangerous task thanks to the lye used in the process.

But when lard processing was industrialized to make soap, it led to an array of byproducts such as glycerin, used in tanning and in pharmaceuticals. Stearine, another byproduct, made superior candles. Just in the decade from the mid-1840s to the mid-1850s, Cincinnati soap exports increased 20-fold, as did the export of other lard-based products. Procter & Gamble, founded in Cincinnati in 1837 by an Irish soap maker and an English candle maker who had married sisters, grew into a giant company as the fast-rising middle class sought gentility.

Mr. Morris goes into great detail on the development of interchangeable parts--the system of making the components of a manufactured product so nearly identical that they can be easily substituted and replaced.

For the full review, see:

John Steele Gordon. "BOOKSHELF; The Days Of Porkopolis." The Wall Street Journal (Tues., November 20, 2012): A13.

(Note: ellipses added.)

(Note: the online version of the article was updated November 19, 2012.)

The book under review, is:

Morris, Charles R. The Dawn of Innovation: The First American Industrial Revolution. Philadelphia, PA: PublicAffairs, 2012.

November 12, 2012

Edison Foresaw Phonograph Music Potential

EdisonWangemannGroupPhoto2012-11-11.jpg "EUROPEAN JOURNEY; Thomas Edison, seated center, sent Adelbert Theodor Edward Wangemann, standing behind him, to France in 1889. From there Wangemann traveled to Germany to record recitations and performances." Source of caption and photo: online version of the NYT article quoted and cited below.

Edison is often ridiculed for failing to foresee that playing music would be a major use for his phonograph invention. (Nye 1991, p. 142 approvingly references Hughes 1986, p. 201 on this point.) But if Edison failed to foresee, then why did he assign Wangemann to make the phonograph "a marketable device for listening to music"?

(p. D3) Tucked away for decades in a cabinet in Thomas Edison's laboratory, just behind the cot in which the great inventor napped, a trove of wax cylinder phonograph records has been brought back to life after more than a century of silence.

The cylinders, from 1889 and 1890, include the only known recording of the voice of the powerful chancellor Otto von Bismarck. . . . Other records found in the collection hold musical treasures -- lieder and rhapsodies performed by German and Hungarian singers and pianists at the apex of the Romantic era, including what is thought to be the first recording of a work by Chopin.

. . .

The lid of the box held an important clue. It had been scratched with the words "Wangemann. Edison."

The first name refers to Adelbert Theodor Edward Wangemann, who joined the laboratory in 1888, assigned to transform Edison's newly perfected wax cylinder phonograph into a marketable device for listening to music. Wangemann became expert in such strategies as positioning musicians around the recording horn in a way to maximize sound quality.

In June 1889, Edison sent Wangemann to Europe, initially to ensure that the phonograph at the Paris World's Fair remained in working order. After Paris, Wangemann toured his native Germany, recording musical artists and often visiting the homes of prominent members of society who were fascinated with the talking machine.

Until now, the only available recording from Wangemann's European trip has been a well-known and well-worn cylinder of Brahms playing an excerpt from his first Hungarian Dance. That recording is so damaged "that many listeners can scarcely discern the sound of a piano, which has in turn tarnished the reputations of both Wangemann and the Edison phonograph of the late 1880s," Dr. Feaster said. "These newly unearthed examples vindicate both."

For the full story, see:

RON COWEN. "Restored Edison Records Revive Giants of 19th-Century Germany." The New York Times (Tues., January 31, 2012): D3.

(Note: ellipses added.)

(Note: the online version of the article is dated January 30, 2012.)

EdisonPhonograph2012-11-11.jpg "Adelbert Theodor Edward Wangemann used a phonograph to record the voice of Otto von Bismarck." Source of caption and photo: online version of the NYT article quoted and cited above.

November 7, 2012

Health Inefficiencies Free-Ride on "Home Run Innovations"

The article quoted below is a useful antidote to those economists who sometimes seem to argue that health gains fully justify the rise in health costs.

(p. 645) In the United States, health care technology has contributed to rising survival rates, yet health care spending relative to GDP has also grown more rapidly than in any other country. We develop a model of patient demand and supplier behavior to explain these parallel trends in technology growth and cost growth. We show that health care productivity depends on the heterogeneity of treatment effects across patients, the shape of the health production function, and the cost structure of procedures such as MRIs with high fixed costs and low marginal costs. The model implies a typology of medical technology productivity: (I) highly cost-effective "home run" innovations with little chance of overuse, such as anti-retroviral therapy for HIV, (II) treatments highly effective for some but not for all (e.g., stents), and (III) "gray area" treatments with uncertain clinical value such as ICU days among chronically ill patients. Not surprisingly, countries adopting Category I and effective Category II treatments gain the greatest health improvements, while countries adopting ineffective Category II and Category III treatments experience the most rapid cost growth. Ultimately, economic and political resistance in the United States to ever-rising tax rates will likely slow cost growth, with uncertain effects on technology growth.

Source of abstract:

Chandra, Amitabh, and Jonathan Skinner. "Technology Growth and Expenditure Growth in Health Care." Journal of Economic Literature 50, no. 3 (Sept. 2012): 645-80.

October 31, 2012

Thiel Fellows Avoid Formal Education to Pursue Entrepreneurial Projects

FullEdenTh ielFellowSolarPanel2012-10-12.jpg

"Eden Full, 20, tested her rotating solar panel in Kenya in 2010." Source of caption and photo: online version of the NYT article quoted and cited below.

(p.1) EDEN FULL should be back at Princeton by now. She should be hustling to class, hitting the books, acing tests. In short, she should be climbing that old-school ladder toward a coveted spot among America's future elite.

She isn't doing any of that. Instead, Ms. Full, as bright and poised and ambitious as the next Ivy Leaguer, has done something extraordinary for a Princetonian: she has dropped out.

It wasn't the exorbitant cost of college. (Princeton, all told, runs nearly $55,000 a year.) She says she simply received a better offer -- and, perhaps, a shot at a better education.

Ms. Full, 20, is part of one of the most unusual experiments in higher education today. It rewards smart young people for not going to college and, instead, diving into the real world of science, technology and business.

The idea isn't nuts. After all, Bill Gates and Steve Jobs dropped out, and they did O.K.

Of course, their kind of success is rare, degree or no degree. Mr. Gates and Mr. Jobs changed the world. Ms. Full wants to, as well, and she's in a hurry. She has built a low-cost solar panel and is starting to test it in Africa.

"I was antsy to get out into the world and execute on my ideas," she says.

At a time when the value of a college degree is being called into question, and when job prospects for many new graduates are grimmer than they've been in years, perhaps it's no surprise to see a not-back-to-school movement spring up. What is surprising is where it's springing up, and who's behind it.

The push, which is luring a handful of select students away from the likes of Princeton, Harvard and M.I.T., is the brainchild of Peter A. Thiel, 44, a billionaire and freethinker with a remarkable record in Sil-(p. 7)icon Valley. Back in 1998, during the dot-com boom, Mr. Thiel gambled on a company that eventually became PayPal, the giant of online payments. More recently, he got in early on a little start-up called Facebook.

Since 2010, he has been bankrolling people under the age of 20 who want to find the next big thing -- provided that they don't look for it in a college classroom. His offer is this: $50,000 a year for two years, few questions asked. Just no college, unless a class is helpful for their Thiel projects.

. . .

Ms. Full is friends with another Thiel fellow, Laura Deming, 18. Ms. Deming is clearly brilliant. When she was 12, her family moved to San Francisco from New Zealand so she could work with Cynthia Kenyon, a molecular biologist who studies aging. When Ms. Deming was 14, the family moved again, this time to the Boston area, so she could study at M.I.T.

"Families of Olympic-caliber athletes make these kinds of sacrifices all the time," says Tabitha Deming, Laura's mother. "When we lived nearby in Boston, we were lucky to see her once a month. She never came home for weekends."

John Deming, Laura's father, graduated from Brandeis University at the age of 35 but says he disdains formal education at every level. His daughter was home-schooled.

"I can't think of a worse environment than school if you want your kids to learn how to make decisions, manage risk and take responsibility for their choices," Mr. Deming, an investor, wrote in an e-mail. "Rather than sending them to school, turn your kids loose on the world. Introduce them to the rigors of reality, the most important of which is earning your own way." He added, "I detest American so-called 'education.' "

His daughter's quest to slow aging was spurred by her maternal grandmother, Bertie Deming, 85, who began having neuromuscular problems a decade ago. Laura, a first-year fellow, now spends her days combing medical journals, seeking a handful of researchers worth venture capital funding, which is a continuation of her earlier work.

"I'm looking for therapies that target aging damage and slow or reverse it," she says. "I've already spent six years on this stuff. So far I've found only a few companies, two or three I'm really bullish on."

For the full story, see:

CAITLIN KELLY. "Drop Out, Dive In, Start Up.." The New York Times, SundayBusiness (Sun., September 16, 2012): 1 & 7.

(Note: ellipsis added.)

(Note: the online version of the article is dated September 15, 2012, and had he title "Forgoing College to Pursue Dreams.")

DemingLauraThielFellow2012-10-12.jpg "Laura Deming, left, at age 6 with her grandmother, whose neuromuscular problems have now inspired Laura to work on anti-aging technology." Source of caption and photo: online version of the NYT article quoted and cited above.

October 20, 2012

Much Innovation Has "Nothing to Do with Science--It's Just Creative Mankind Chipping Away at Things"

(p. 122) VANE and MULHEARN: The prize rewards specific discoveries, achievements, or breakthroughs in economic science. Your pioneering contributions have opened up a rich seam of research for others to mine. Does academic knowledge largely progress through the lead taken by a small number of creative innovators?
PHELPS: That's such a good question. It resonates with a subject in the area of innovation theory. The old guys like Arthur Spiethoff thought that progress was due to the great discoveries of the scientists and navigators. Schumpeter (1934) (p. 123) didn't depart altogether from that, he simply said, well, that's right but you've got to have some entrepreneur to actually implement it. But don't think there's much creativity there--everybody knows what's in the air. And it's very rare that anything new really gets created in the course of this development work. But now we don't think about innovation in that way so much. We recognize that once in a while there is a big leap which creates the ground for a surge of innovations to follow. Nowadays we realize that an awful lot of innovation just comes from business people operating at the grass roots having ideas on the basis of what they see around them. Nothing to do with science--it's just creative mankind chipping away at things. I know that the Sens and the Mundells and the Lucases are towering figures, but they couldn't have become so if they hadn't read a lot of papers by, well, pretty average people who are just doing a good job of exploring a question and giving inspiration. I guess the towering figures are people with just a little more drive, a little more imagination, just a little cleverer in putting some things together. In other words, I don't know the answer to the question [laughter].

For the full interview, from which the above is quoted, see:

Vane, Howard R., and Chris Mulhearn, interviewers. "Interview with Edmund S. Phelps." Journal of Economic Perspectives 23, no. 3 (Summer 2009): 109-24.

October 4, 2012

Skilled Immigrants Increase U.S. Patents

(p. 31) We measure the extent to which skilled immigrants increase innovation in the United States. The 2003 National Survey of College Graduates shows that immigrants patent at double the native rate, due to their disproportionately holding science and engineering degrees. Using a 1940-2000 state panel, we show that a 1 percentage point increase in immigrant college graduates' population share increases patents per capita by 9-18 percent. Our instrument for the change in the skilled immigrant share is based on the 1940 distribution across states of immigrants from various source regions and the subsequent national increase in skilled immigration from these regions.

For the full article, from which the above abstract is quoted, see:

Hunt, Jennifer, and Marjolaine Gauthier-Loiselle. "How Much Does Immigration Boost Innovation?" American Economic Journal: Macroeconomics 2, no. 2 (April 2010): 31-56.

August 27, 2012

Overly Optimistic Entrepreneurs Seek Government Support for Projects that Will Usually Fail

People have a right to be overly-optimistic when they invest their own money in entrepreneurial projects. But governments should be prudent caretakers of the money they have taken from taxpayers. The overly-optimistic bias of subsidy-seeking entrepreneurs weakens the case for government support of entrepreneurial projects.

(p. 259) The optimistic risk taking of entrepreneurs surely contributes to the economic dynamism of a capitalistic society, even if most risk takers end up disappointed. However, Marta Coelho of the London School of Economics has pointed out the difficult policy issues that arise when founders of small businesses ask the government to support them in decisions that are most likely to end badly. Should the government provide loans to would-be entrepreneurs who probably will bankrupt themselves in a few years? Many behavioral economists are comfortable with the "libertarian paternalistic" procedures that help people increase their savings rate beyond what they would do on their own. The question of whether and how government should support small business does not have an equally satisfying answer.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

August 26, 2012

Decouple Learning from Credentialing


"JOHN HENNESSY: 'There's a tsunami coming.' [At left] . . . , John Hennessy & Salman Khan." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. R8) Is there anything to be done about the rising price of higher education? That was the question posed to John Hennessy, president of Stanford University, and Salman Khan, founder of Khan Academy, a nonprofit online-learning organization. They sat down with The Wall Street Journal's Walt Mossberg to discuss how technology might be part of the solution.

Here are edited excerpts of their conversation.

. . .

MR. MOSSBERG: You have a lot of money at Stanford. I've been, until recently, a trustee of Brandeis University. It's a very good university. It charges about what you do. But it doesn't have your money, and there are a lot of colleges like that.

MR. HENNESSY: Agreed, and if you look at the vast majority of colleges in the U.S., there are way too many that are [dependent on tuition to fund their budgets]. That is not sustainable. We have to do something to bend the cost curve, and this is where technology comes in.

MR. KHAN: On the sustainability question, I agree. I think the elites will probably do just fine, but for the bulk of universities, nothing can grow 5% faster than inflation forever. It will just take over the world, and that's what's happening now.

There is a fundamental disconnect happening between the providers of education and the consumers of education. If you ask universities what they are charging the $60,000 for, they'll say, "Look at our research facilities. Look at our faculty. Look at the labs and everything else." And then if you ask the parents and the students why they are taking on $60,000 of debt, they'll say, "Well, I need the credential. I need a job."

So one party thinks they're selling a very kind of an enriching experience, and the other one thinks that they're buying a credential. And if you ask the universities what percentages of your costs are "credentialing," they say oh, maybe 5% to 10%. And so I think there's an opportunity if we could decouple those things--if the credentialing part could happen for significantly less.

MR. MOSSBERG: What do you mean by the credentialing part?

MR. KHAN: If you think about what education is, it's a combination. There's a learning part. You learn accounting, you learn to write better, to think, whatever. Then there is a credentialing part, where I'm going to hand you something that you can go take into the market and signal to people that you know what you're doing.

Right now they're very muddled, but this whole online debate or what's happening now is actually starting to clarify things. At Khan Academy we're 100% focused on the learning side of things. And I think it would be interesting [if credentials could be earned based on what you know and not on where you acquired that knowledge].

For the full interview, see:

Walt Mossberg, interviewer. "Changing the Economics of Education; John Hennessy and Salman Khan on how technology can make the college numbers add up." The Wall Street Journal (Mon., June 4, 2012): R8.

(Note: bracketed words in caption, and ellipses, added; bold and italics in original.)

August 13, 2012

Revolutionary Entrepreneurs Need "Unbridled Confidence and Arrogance"

(p. B1) Will there be another?

It's a bit absurd to try to identify "the next Steve Jobs." Two decades ago, Mr. Jobs himself wouldn't even have qualified. Exiled from Apple Inc., . . . Mr. Jobs was then hoping to revive his struggling computer maker, NeXT Inc. . . .

But just as Mr. Jobs followed Henry Ford and Thomas Edison, there will some day be another innovator with the vision, drive and disdain of the status quo to spark, and then direct, big changes in how we live.

. . .

"You have to try the unreasonable," says Vinod Khosla, a co-founder of Sun Microsystems Inc., who, as a longtime venture capitalist, has seen thousands of would-be revolutionaries. Two key characteristics, Mr. Khosla says: "unbridled confidence and arrogance."

For the full story, see:

SCOTT THURM and STU WOO. "Who Will Be the 'Next Steve Jobs'?" The Wall Street Journal (Sat., October 8, 2011): B1 & B3.

(Note: ellipses added.)

July 31, 2012

Richard Posner Seeks to Limit and Reform the Patent System


"Judge Richard Posner." Source of caption and photo: online version of the WSJ article quoted and cited below.

I am deeply conflicted about patents. On the one hand, property rights are important, both ethically and in terms of economic incentives. On the other hand, patents seem to restrict innovation.

The views of Posner are worth serious consideration. My own current view is that the patent rules need to be reformed and their implementation made more efficient. But I do not think the patent system should be abolished.

(p. B1) While technology companies continue to fight over smartphone patents, one judge has fought his way into the ring.

He is 73-year-old Richard Posner, among the most potent forces on the federal bench and an outspoken critic of the patent system.

Presiding over a lawsuit between Apple Inc. . . . and Google Inc.'s . . . Motorola Mobility in June, he dropped a bombshell, scrapping the entire case and preventing the companies from refiling their claims. The ruling startled the litigants in the case and fueled a national discussion about whether the patent system (p. B5) is broken.

. . .

In the June ruling, explaining why he wouldn't ban Motorola products from the shelves, Judge Posner said: "An injunction that imposes greater costs on the defendant than it confers benefits on the plaintiff reduces net social welfare."

Judge Posner, who declined to be interviewed for this article, has continued to press the issue.

This month, he wrote an essay in the Atlantic headlined, "Why There Are Too Many Patents In America." He said "most industries could get along fine without patent protection" and that the U.S. Patent and Trademark Office has done a woeful job, calling it "understaffed," and "many patent examinations...perfunctory."

He saved ammunition for juries and fellow jurists. "Judges have difficulty understanding modern technology and jurors have even greater difficulty," he wrote. He suggested several reforms to the patent system, including shortening the patent term for inventors in some industries and expanding the authority of the Patent and Trademark Office to try patents cases.

. . .

Judge Posner's intellectual curiosity is well-known and "people assume he has no political ax to grind because he's not trying to advance the fortunes of any particular segment of the economy," said Arthur D. Hellman, a law professor at University of Pittsburgh who studies the judiciary.

Yet his ruling poses a difficult question for the Federal Circuit Court of Appeals, the specialized one that handles intellectual property cases, about whether infringement matters without damages.

Peter Menell, a law professor at UC Berkeley, likened it to the old thought experiment that begins "If a tree falls in the woods." He said: "If there are no damages, do you need to have a trial?"

Juge Posner also rejected Google's bid to block the sale of iPhones that allegedly infringed a so-called "standards-essential patent" owned by Google. Standards-essential patents protect innovations used in technologies that industries collectively agree to use, like Wi-Fi or 3G. A company that holds one of these patents stands to profit enormously, because its competitors have to pay it for licenses to use the technology.

But Judge Posner ruled that holders of such patents aren't entitled to injunctions. Michael Carrier, a law professor at Rutgers University, Camden, said the opinion on standards-essential patents came amid a groundswell of opposition to injunctions for such patents and could put an end to the practice among U.S. federal judges.

For the full story, see:

JOE PALAZZOLO and ASHBY JONES. "Also on Trial: A Judge's Worldview." The Wall Street Journal (Tues., July 24, 2012): B1 & B5.

(Note: all ellipses were added except for the one internal to the quote from Judge Posner's Atlantic blog posting.)

(Note: the online version of the article has the date July 23, 2012 and has the title "Apple and Samsung Patent Suit Puts Judge Posner's Worldview on Trial." The print version of the title could be interpreted as a sub-title of the main title to the accompanying adjacent article. The title of the main article was "Apple v. Samsung; In Silicon Valley, Patents Go on Trial." The last two paragraphs above appear only in the online, but not in the print, version of the article.)

The Atlantic blog posting by Posner can be found at:

Posner, Richard A. "Why There Are Too Many Patents in America." In The Atlantic blog, posted on July 12, 2012 at:

(Note: the WSJ article above implies that the Posner essay was published in the print version of The Atlantic, but I can only find it in Posner's blog on The Atlantic web site.)

July 27, 2012

Edison Was Great Inventor; "Jobs Was the Far Shrewder Businessman"

EdisonThomasAlva2012-06-22.jpg "Thomas Alva Edison." Source of caption and photo: online version of the NYT article quoted and cited below.

I have not read Stross' books on Jobs and Edison. According to some of the Amazon reviews of the Jobs book, back in 1993 Stross was much more critical of Jobs than he is in the piece below:

(p. 4) I wrote a book about Mr. Jobs in 1993.

. . .

Years later, I wrote a biography of Edison, a person whom Mr. Jobs admired. When you compare the two personalities and their careers, a few similarities emerge immediately. Both had less formal schooling than most of their respective peers. Both possessed the ability to visualize projects on a grand scale. Both followed an inner voice when making decisions. And both had terrific tempers that could make their employees quake.

. . .

Mr. Jobs was the far shrewder businessman, even if he never talked about wealth as a matter of personal interest. When Edison died, he left behind an estate valued at about $12 million, or about $180 million in today's dollars. His friend Henry Ford had once joked that Edison was "the world's greatest inventor and the world's worst businessman." Mr. Jobs was worth a commanding $6.5 billion.

Mr. Jobs was perhaps the most beloved billionaire the world has ever known. Richard Branson's tribute captures the way people felt they could identify with Mr. Jobs's life narrative: "So many people drew courage from Steve and related to his life story: adoptees, college dropouts, struggling entrepreneurs, ousted business leaders figuring out how to make a difference in the world, and people fighting debilitating illness. We have all been there in some way and can see a bit of ourselves in his personal and professional successes and struggles."

For the full commentary, see:

RANDALL STROSS. "The Power of Taking the Big Chance." The New York Times, SundayBusiness Section (Sun., October 9, 2011): 4.

(Note: online version of the commentary is dated October 8, 2011, and has the title "The Wizard and the Mortal: Two Sides of Genius.")

(Note: in the print version, the same title, on the same page, was used as heading for two different articles on Steve Jobs--Lohr's on the left side, and Stross' on the right side.)

Stross' books on Jobs and Edison are:

Stross, Randall E. Steve Jobs & the Next Big Thing. New York: Scribner Publishers, 1993.

Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

July 23, 2012

Alexander Field Claims 1930s Were "Technologically Progressive"


Source of book image:

(p. 1) UNDERNEATH the misery of the Great Depression, the United States economy was quietly making enormous strides during the 1930s. Television and nylon stockings were invented. Refrigerators and washing machines turned into mass-market products. Railroads became faster and roads smoother and wider. As the economic historian Alexander J. Field has said, the 1930s constituted "the most technologically progressive decade of the century."

. . .

(p. 6) The closest thing to a unified explanation for these problems is a mirror image of what made the 1930s so important. Then, the United States was vastly increasing its productive capacity, as Mr. Field argued in his recent book, "A Great Leap Forward." Partly because the Depression was eliminating inefficiencies but mostly because of the emergence of new technologies, the economy was adding muscle and shedding fat. Those changes, combined with the vast industrialization for World War II, made possible the postwar boom.

In recent years, on the other hand, the economy has not done an especially good job of building its productive capacity. Yes, innovations like the iPad and Twitter have altered daily life. And, yes, companies have figured out how to produce just as many goods and services with fewer workers. But the country has not developed any major new industries that employ large and growing numbers of workers.

For the full commentary, see:

DAVID LEONHARDT. "The Depression: If Only Things Were That Good." The New York Times, SundayReview Section (Sun., October 9, 2011): 1 & 6.

(Note: ellipsis added.)

(Note: online version of the commentary is dated October 8, 2011.)

Book discussed:

Field, Alexander J. A Great Leap Forward: 1930s Depression and U.S. Economic Growth, Yale Series in Economic and Financial History. New Haven, CT: Yale University Press, 2011.

July 21, 2012

Technology Allows Start-Ups to Launch with Fewer Employees

HarelAndShilonOfBiteHunter2012-06-22.jpg "Start-up BiteHunter launched with three employees. Above, co-founders Gil Harel, left, and Ido Shilon." Source of caption and photo: online version of the WSJ article quoted and cited below.

Lower costs to entry means more start-ups and that means more innovation, ceteris paribus. All good. For the labor market, there will be fewer initial jobs per start-up. But there will be more start-ups, and more opportunity for erstwhile laborers to themselves become entrepreneurs. So maybe still all good.

(p. B5) New businesses are getting off the ground with nearly half as many workers as they did a decade ago, as the spread of online tools and other resources enables start-ups to do more with less.

The change, which began before the recession, may be permanent, according to some analysts.

. . .

Rather than purchasing the tools and manpower needed to run their companies, more small firms are renting, sharing or outsourcing resources, typically through online services, according to Steve King, a partner at Emergent Research, a research and consulting firm for small businesses.

. . .

Last year, Gil Harel launched BiteHunter, a search engine for restaurant discounts, with just three employees. Based in New York, the site used shared screens and other communications tools to work with developers in Russia, Uruguay and Israel.

"Just to build the infrastructure to get a business off the ground used to take a lot of money and people. But things that you couldn't do in the past, you can now do on your own," Mr. Harel says.

For the full story, see:

ANGUS LOTEN. "With New Technology, Start-Ups Go Lean; Web-Based Services Mean Fewer Workers Needed." The Wall Street Journal (Thurs., September 15, 2011): B5.

(Note: ellipses added.)

July 20, 2012

Innovation Depends Less on R&D Spending and More on "Talent, Process, Execution and Strategy"

(p. B1) In the world of R&D spending, more doesn't necessarily mean better. And R&D may not describe all the innovation that matters.

"I think the numbers are pretty useless," says Michael Schrage, a research fellow at MIT's Sloan School who has studied the subject. "What matters more is the kind of innovator you are. If it were really true that the people who spent the most on R&D were the most successful, we wouldn't be subsidizing General Motors ."

"There's no statistically significant relationship between how much a company spends on R&D and how they perform over time," adds Barry Jaruzelski of Booz & Co. "There's a set of people who just consistently seem to skin the cat better."

. . .

(p. B2) Booz & Co. in 2007 listed the biggest global corporate spenders of R&D. The top 10 were Toyota, Pfizer, Ford, Johnson & Johnson, DaimlerChrysler, General Motors, Microsoft, GlaxoSmithKline, Siemens and IBM.

Then it drew up a second list, a group of companies it called "high-leverage innovators" that returned the best financial performance for every dollar spent on R&D. Booz screened for companies that, over the five previous years, outperformed industry peers across seven measures--including profit, sales growth, and shareholder return--while also spending less on R&D as a percentage of sales than the median in their industries.

No company from the first list made the second list. (Winners included Adidas, Apple, Exxon, Google, Kobe Steel, Samsung and Tenneco.)

That disconnect essentially hasn't changed, says Mr. Jaruzelski. Winning at innovation "is all about talent, process, execution and strategy," he says. "That's given the U.S. a pretty strong advantage over time."

"Technology," he adds, "is not equal to innovation."

For the full commentary, see:

JOHN BUSSEY. "THE BUSINESS; Myths of the Big R&D Budget." The Wall Street Journal (Fri., June 15, 2012): B1-B2.

(Note: ellipsis added.)

July 19, 2012

Larry Page on Tesla, Commerce, and Changing the World

Funding is a key constraint for the innovative project entrepreneur. By "project entrepreneur" I mean the innovator who views money as a means to achieving the project, and not as an end in itself. In this brief clip from Page's 2007 AAAS talk, he discusses how as a 12 year-old reading Tesla's autobiography he almost cried at how Tesla's failure to commercialize his ideas limited his ability to change the world.

The Tesla autobiography is:

Tesla, Nikola. My Inventions: The Autobiography of Nikola Tesla. SoHo Books, 2012.

July 17, 2012

Web Expedites Labor Market for Small Projects

LangerAndBurksChore2012-06-22.jpg "Liz Langer helped John Burks retrieve his keys." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) A new crop of websites and smartphone applications are allowing people to farm out chores to a growing army of temporary personal assistants. These micro-employees are taking the division of labor to once-unthinkable extremes.

. . .

(p. A14) Some investors see dollar signs. Zaarly Inc., an online marketplace for micro-labor and goods based in San Francisco, recently raised $14.1 million from Google Inc. GOOG -2.18% investor and venture-capital firm Kleiner Perkins Caufield & Byers. Actor Ashton Kutcher and clothing designer Marc Ecko have also put in money. In October, Hewlett-Packard Chief Executive Meg Whitman joined the company's board.

After launching six months ago, Zaarly is processing more than 1,000 transactions a week for jobs that cost around $50 a pop. Chief Executive and cofounder Bo Fishback, 33, says about half the requests involve tangible goods, and the rest involve some sort of service. One of his favorites: a person who hired someone to buy a Michael Jackson-themed dog costume for a puppy.

Sometimes the situation can be dire. John Burks, a 30-year-old actor who also runs an arts organization in Chicago, accidentally dropped his keys in a sewer during a rainstorm over the summer. To replace all the keys--including ones to his home, office and Mercedes--could cost well over $100.

After Googling "lost keys down sewer" to see what tactics others had used, Mr. Burks thought he could recover his keys with a fishing rod and a magnet, but had neither. His girlfriend at the time knew someone who worked at Zaarly, so he posted the job on its site. Liz Langer, a 27-year-old neuroscience graduate student and top Zaarly "fulfiller," spotted the job and within an hour arrived with the needed tools. Fifteen minutes later, they fished the keys out of the sewer. (Price: $80.)

"It's like stranger than fiction," Mr. Burks says. "I thought there was a very small chance that anything like that can happen."

For the full story, see:

EMILY GLAZER. "Serfing the Web: Sites Let People Farm Out Their Chores; Workers Choose Jobs, Negotiate Wages; Mr. Kutcher, Anonymously, Asks for Coffee." The Wall Street Journal (Mon., November 28, 2011): A1 & A14.

(Note: ellipsis added.)

July 16, 2012

"Why Would I Ever Need 10 Floppy Disks?"

Steven Johnson's early The Ghost Map is a wondrous story of a courageous medical entrepreneur who fairly single-handedly changes accepted wisdom on a hugely important issue (what causes disease). Steven Johnson's recent Where Ideas Come From provides a mechanical account that attributes new ideas to the inevitable exploration of "the adjacent possible," leaving little room for the great innovative entrepreneur.

It takes guts to contradict one's most recent book, and to contradict it so eloquently. So please join me in welcoming back the Steven Johnson of The Ghost Map:

(p. C3) In the fall of 1986, during the first week of my freshman year of college, my cousin took me to the university computer store to help me buy my first Macintosh. The Mac platform was two years old at that point, and Apple had just released a new machine called the Mac Plus that featured a then-staggering 1 megabyte of RAM. (In today's mileage, that would be just enough memory to store the first few verses of a Katy Perry song.) But the Mac did not yet offer a hard drive, and so my more tech-savvy cousin told me to buy a 10-pack of floppy disks as well.

I looked at him with astonishment. I was an art kid, not a techie. I needed a computer to write plays and short stories and term papers. The computer was just a tool, nothing more. "Why would I ever need 10 floppy disks?" I asked. "I just need one disk for my Microsoft Word files." My cousin smiled, knowing full well where I was headed. "Just buy the disks. Trust me."

He was right, of course, and to this day whenever I call him up to tell him about my latest computer purchase, with its terabytes of storage and gigabytes of memory, he laughs and says, "Just one disk. That's all I need."

. . .

The genius of famous innovators and CEOs is often exaggerated: Most fortunes are built on good fortune as much as sheer brilliance, and invention is a collaborative art. But there is no contesting the fact of Steve Jobs's genius--just a debate about its defining qualities.

I worry that we miss something in hailing him as either a master salesman or a master designer, though he is clearly both. His real gift, from an early age, has been the ability to see that these two worlds could, and should, productively collide. It isn't just that he made computers cool or put them in pretty boxes. It's that he put those computers in new conceptual boxes. A machine originally designed for processing equations and building bombs turned out to have a wonderful hidden potential: for song, laughter, poetry, community, family.

. . .

When I heard the news that he was stepping down from Apple, the image that flashed in my head was of a kid in a computer store trying to save a few bucks by skimping on floppy disks. I suspect my own story is not so unusual. There is, on the one hand, the simple, factual accounting of it: Steve Jobs persuaded me to buy a lot more than 10 disks over the years. But the other hand is so much more interesting: all the wonderful, unexpected things that he got me to put on those disks.

For the full commentary, see:

STEVEN JOHNSON. "THE GENIUS OF JOBS; Marrying Tech and Art; Steven Johnson on the magic of his first Mac--and how it changed his life." The Wall Street Journal (Sat., August 27, 2011): C3.

(Note: ellipses added.)

July 5, 2012

Steve Jobs Showed that Art and Commerce Could Be "Happy Bedfellows"


Gary Oldman. Source of photo: online version of the NYT article quoted and cited below.

(p. 2) Gary Oldman is an English actor . . . widely known for his roles as Sirius Black in the "Harry Potter" film series and Jim Gordon in the Batman movies.

. . .

READING Right now I'm reading the Steve Jobs biography by Walter Isaacson. I love when people have a singleness of purpose and don't get dissuaded. I can connect with that. I can recognize it. I think a lot of artists have that. Art and commerce are not particularly happy bedfellows, but he was the exception.

I read quite a lot of biographies. I like nonfiction. The other book I'm carrying around with me at the moment is "River of Shadows: Eadweard Muybridge and the Technological Wild West" by Rebecca Solnit. It deals with the 19th century and the arrival of speed with the coming of the industrial age. We were very much governed by nature before; we were at the mercy of our own speed and horses and the like. It's interesting to think of living at that pace.

For the full interview, see:

KATE MURPHY. "DOWNLOAD; Gary Oldman." The New York Times, SundayReview Section (Sun., February 5, 2012): 2.

(Note: ellipses added; bold in original.)

(Note: online version of the interview is dated February 4, 2012.)

July 3, 2012

Our Cups Will Runneth Over If We Choose Entrepreneurship, Imagination, Will and Optimism


Source of book image:

(p. 18) in Silicon Valley, where the locals tend to be too busy starting companies to wallow in gloom, Peter Diamandis has stood out as one of the more striking optimists. Several years ago, Diamandis founded the X Prize Foundation, which rewards entrepreneurs with cash for achieving difficult goals, like putting a reusable spaceship into flight on a limited budget. More recently he helped start Singularity University, an academic program that convenes several weeks a year in the Valley and educates business leaders about the "disruptive" -- i.e., phenomenally innovative -- technological changes Diamandis is anticipating. To be sure, Diamandis is both very bright (he studied molecular biology and aerospace engineering at M.I.T. before getting an M.D. at Harvard) and well informed. Moreover, he's not the kind of optimist who will merely see the glass as half full. He'll give you dozens of reasons, some highly technical, why it's half full. Then he'll explain that your cognitive biases are tricking you into seeing the glass of water in a negative light, and cart out the research of acclaimed psychologists like Daniel Kahne­man to prove his point. Finally he may suggest you stop fretting: new technologies will soon fill the glass up anyway. Indeed, they are likely to overfill it.

. . .

(p. 19) Throughout the book Diamandis . . . offers small groups of driven entrepreneurs as a kind of Leatherman solution to the world's problems. It's true that plenty of insurgents are doing impressive things out there -- Elon Musk's Tesla Motors, which helped jump-start the world's electric car industry, is a good example.

. . .

. . . , there's a significant idea embedded within "Abundance": We should remain aware, as writers like Jared Diamond have likewise told us, that societies can choose their own future, and thus their own fate. In that spirit Diamandis and Kotler put forth a range of possible goals we may achieve if we have the imagination and the will. A little optimism wouldn't hurt, either.

For the full review, see:

JON GERTNER. "Plenty to Go Around." The New York Times Book Review (Sun., April 1, 2012): 18 & 19.

(Note: ellipses added.)

(Note: the online version of the review has the date March 30, 2012.)

The book under review is:

Diamandis, Peter H., and Steven Kotler. Abundance: The Future Is Better Than You Think. New York: Free Press, 2012.

July 2, 2012

Even with Subsidies and High Gas Prices, Electric Cars Cost More

(p. 12) The Ford Focus Electric has a base price of $39,995 -- minus a $7,500 federal tax credit and a $2,500 rebate in California. That puts its tab at $30,000, some $7,000 above the upscale Focus Titanium. I can hear the electric naysayers exclaiming "Aha! You won't make back the savings at the pumps." That's despite $4 gasoline, and the Focus Electric's 110 m.p.g. equivalent rating.

But when buying any new car, especially an innovative model of any kind, emotions, aesthetics and externalities eclipse economics.

For the full story, see:

BRADLEY BERMAN. "BEHIND THE WHEEL; 2012 FORD FOCUS ELECTRIC; The Battery-Driven Car Just Got a Lot More Normal." The New York Times, SportsSunday (Sun., May 6, 2012): 12.

(Note: online version of the story is dated May 4, 2012.)

June 28, 2012

Feds Subsidize First Solar's Losing Technology

(p. B2) First Solar's solar-panel business, which is focused on large solar installations that feed electricity to power companies, is dependent on government subsidies awarded to such developments.

. . .

But some worry that First Solar isn't well positioned for industry trends. The global solar-power market is moving toward rooftop solar-power systems, rather than the large-scale utility power plants where First Solar's products are most effective, said Jesse Pichel, an analyst at Jefferies Group Inc.

"This was a market leader, but its technology is being usurped or surpassed by the Chinese," said Mr. Pichel. "Their product is not competitive in the most economic and sustainable solar market, which is rooftop."

For the full story, see:

CASSANDRA SWEET And RUSSELL GOLD. "First Solar Cuts 2,000 Jobs; Panel Maker Laying Off 30% of Workers, Slashing Production Amid Supply Glut." The Wall Street Journal (Weds., April 18, 2012): B2.

(Note: ellipsis added.)

(Note: online version of the story is dated April 17, 2012.)

June 21, 2012

"A123 Systems" Battery Company Is Another Example of Failed Industrial Policy

The YouTube video embedded above was from a CBS Evening News broadcast in June 2012. It illustrates the difficulty of the government successfully selecting the technologies, and companies, that will eventually prove successful. (The doctrine that government can and should do such selection is often called "industrial policy.")

The Obama administration has bet billions of tax dollars on lithium ion batteries for electric vehicles that A123 Systems won $249 million of. But as Sharyl Attkisson reports, expensive recalls and other setbacks have put substantial doubt in the company's ability to continue.

The text above, and the embedded video clip were published on YouTube on Jun 17, 2012 by CBSNewsOnline at

June 20, 2012

Electric Car "Hype is Gone" and Challenges Remain

(p. 7) . . . is this what an emergent technology looks like before it crosses the valley of death?

"Face it, this is not an easy task," said Brett Smith, assistant research director at the Center for Automotive Research in Ann Arbor, Mich. "You still have an energy storage device that's not ready for prime time. You still have the chicken and egg problem with the charging infrastructure. That's not to say it's not viable over the long run. But the hype is gone and the challenges are still there."

The market for all-electric and plug-in electric cars in the United States is tiny, amounting to fewer than 20,000 sales last year out of total light-vehicle sales of 12.8 million. Even in optimistic forecasts, plug-in vehicles will account for less than 5 percent of the global market by 2025.

For the full commentary, see:

JOHN BRODER. "NEWS ANALYSIS; The Electric Car, Unplugged." The New York Times, SundayReview Section (Sun., March 25, 2012): A8.

(Note: ellipsis added.)

(Note: online version of the commentary is dated March 24, 2012.)

June 2, 2012

In Antitrust, as in Medicine, First Do No Harm

(p. 94) Western Union's lawyers carne up with a dusty old New York Stale law, dated 1905, that said no one could buy more than 10 percent of a telegraph company chartered in that state without the approval of Albany lawmakers. Hard to believe, but it was right there in black and white and there was no possibility of getting the New York State legislature to understand why it was vital to build digital highways.

Talk about unintended consequences!

(p. 95) Originally, the law was written to stop Western Union from monopolizing the telegram business, but the law backfired and was used by the monopolist for its own protection.


Wyly, Sam. 1,000 Dollars and an Idea: Entrepreneur to Billionaire. New York: Newmarket Press, 2008.

May 28, 2012

Proof of Concept: "A Determined Entrepreneur Can Start a Rocket Company from Scratch"

Falcon9RocketLiftoff2012-05-27.jpg 'The Falcon 9 rocket seen in a time-exposure photograph during liftoff." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A13) CAPE CANAVERAL, Fla. -- He does not have the name recognition of some other space entrepreneurs, people like Richard Branson, the founder of the Virgin empire, or Paul Allen of Microsoft fame, or Jeff Bezos, the billionaire.

That will probably change if things keep going his way. Elon Musk, a computer prodigy and serial entrepreneur whose ambitions include solving the world's energy needs and colonizing the solar system, was the man of the hour -- or of 3:44 a.m. Tuesday, Eastern time -- when the rocket ship built by his company, SpaceX, lifted off gracefully in a nighttime launching and arced off in a streak of light amid loud applause.

. . .

If all goes as planned, his unmanned Dragon capsule, lifted into orbit by his Falcon 9 rocket, will berth at the International Space Station on Friday bearing a modest cargo: 162 meal packets (45 of them low-sodium), a laptop computer, a change of clothes for the station astronauts and 15 student experiments.

Far more important than the supplies is the proof of concept. Mr. Musk is trying to show the world that a determined entrepreneur can start a rocket company from scratch and, a decade later, end up doing a job that has until now been the exclusive province of federal governments.

. . .

Just four years ago, SpaceX went through a near-death experience. The first three launchings of the company's small Falcon 1 rocket failed. One more failure, Mr. Musk said, and he would have run out of money. As he went through a divorce from his first wife, with whom he has five sons, he had to borrow money from friends.

The fourth launching succeeded. Late in 2008, NASA awarded SpaceX the cargo contract. The first two Falcon 9 launchings, in 2010, also succeeded.

Early Tuesday morning, the success streak continued. As the countdown clock hit zero, the engines remained ignited. Less than 10 minutes later, the Dragon was in orbit. It then aced several other early tasks like the deployment of solar arrays and navigational sensors and the testing of GPS equipment.

"Anything could have gone wrong," Mr. Musk said. "And everything went right, fortunately."

For the full story, see:

KENNETH CHANG. "Big Day for Entrepreneur Who Promises More." The New York Times (Weds., May 23, 2012): A13.

(Note: ellipses added.)

(Note: the online version of the story is dated May 22, 2012, and has the title "Big Day for a Space Entrepreneur Promising More.")


"Elon Musk." Source of caption and photo: online version of the NYT article quoted and cited above.

May 23, 2012

First Principle for Trustbusters Should Be "Do No Harm"

(p. A2) In essence, Justice says that, beginning in 2008, several plankton, in the form of five publishers, conspired against a whale, Amazon, whose monopoly clout had imposed a $9.99 retail price for e-books.

The deal the publishers eventually reached with Apple unfixed the price of e-books by linking their prices to the cover price of the print version. More importantly, publishers could begin to reclaim the right to set e-book retail prices generally.

. . .

Apple, with 15% of the e-book market, is no monopolist. The five publishers, though Justice insists they dominate trade publishing, account for only about half of e-book sales. Crucially for antitrust, the barriers to entry are zilch: Amazon, with 60% market share, could create its own e-book imprint tomorrow and begin bidding for the most popular authors.

. . .

Let's go back to "per se" vs. "rule of reason." Because the 1890 Sherman Act is so sweeping and almost any business arrangement could be read as prohibited, courts understandably evolved a "rule of reason" to distinguish the permissible from the impermissible. Unfortunately, the result has been antitrust as we know it: wild and fluctuating discretion masquerading as law. Retail price maintenance alone has been embraced and dumped so many times by the courts that it must feel like Jennifer Aniston.

"Do no harm" would be a better principle for trustbusters.

For the full commentary, see:

HOLMAN W. JENKINS, JR. "BUSINESS WORLD; Washington vs. Books; What about piracy, low barriers to entry and the fact that literature isn't chopped liver?" The Wall Street Journal (Sat., April 14, 2012): A15.

(Note: the online version of the commentary is dated April 13, 2012.)

May 18, 2012

Asteroid-Mining Start-Up Hopes to Launch First Spacecraft within Two Years


"A computer image shows a rendering of a spacecraft preparing to capture a water-rich, near-Earth asteroid." Source of caption: print version of the WSJ article quoted and cited below. Source of photo: online version of the WSJ article quoted and cited below.

(p. B3) SEATTLE--A start-up with high-profile backers on Tuesday unveiled its plan to send robotic spacecraft to remotely mine asteroids, a highly ambitious effort aimed at opening up a new frontier in space exploration.

At an event at the Seattle Museum of Flight, a group that included former National Aeronautics and Space Administration officials unveiled Planetary Resources Inc. and said it is developing a "low-cost" series of spacecraft to prospect and mine "near-Earth" asteroids for water and metals, and thus bring "the natural resources of space within humanity's economic sphere of influence."

The solar system is "full of resources, and we can bring that back to humanity," said Planetary Resources co-founder Peter Diamandis, who helped start the X-Prize competition to spur nongovernmental space flight.

The company said it expects to launch its first spacecraft to low-Earth orbit--between 100 and 1,000 miles above the Earth's surface--within two years, in what would be a prelude to sending spacecraft to prospect and mine asteroids.

The company, which was founded three years ago but remained secret until last week, said it could take a decade to finish prospecting, or identifying the best candidates for mining.

For the full story, see:

AMIR EFRATI. "Asteroid-Mining Strategy Is Outlined by a Start-Up." The Wall Street Journal (Weds., April 25, 2012): B3.

(Note: the online version of the story is dated April 24, 2012, and has the title "Start-Up Outlines Asteroid-Mining Strategy.")

May 9, 2012

Capitalism More about Creating New Markets than about Competing to Dominate Old Ones

(p. A21) As a young man, Peter Thiel competed to get into Stanford. Then he competed to get into Stanford Law School. Then he competed to become a clerk for a federal judge. Thiel won all those competitions. But then he competed to get a Supreme Court clerkship.

Thiel lost that one. So instead of being a clerk, he went out and founded PayPal. Then he became an early investor in Facebook and many other celebrated technology firms. Somebody later asked him. "So, aren't you glad you didn't get that Supreme Court clerkship?"

The question got Thiel thinking. His thoughts are now incorporated into a course he is teaching in the Stanford Computer Science Department. (A student named Blake Masters posted outstanding notes online, and Thiel has confirmed their accuracy.)

One of his core points is that we tend to confuse capitalism with competition. We tend to think that whoever competes best comes out ahead. In the race to be more competitive, we sometimes confuse what is hard with what is valuable. The intensity of competition becomes a proxy for value.

In fact, Thiel argues, we often shouldn't seek to be really good competitors. We should seek to be really good monopolists. Instead of being slightly better than everybody else in a crowded and established field, it's often more valuable to create a new market and totally dominate it. The profit margins are much bigger, and the value to society is often bigger, too.

Now to be clear: When Thiel is talking about a "monopoly," he isn't talking about the illegal eliminate-your-rivals kind. He's talking about doing something so creative that you establish a distinct market, niche and identity. You've established a creative monopoly and everybody has to come to you if they want that service, at least for a time.

For the full commentary, see:

DAVID BROOKS. "The Creative Monopoly." The Wall Street Journal (Tues., April 24, 2012): A21.

(Note: the online version of the article is dated April 23, 2012.)

The online Peter Thiel notes are at:

May 6, 2012

Entrepreneurs Will Mine Asteroids to "Help Ensure Humanity's Prosperity"

CameronJames2012-04-30.jpg "Space mining has captivated Hollywood. Director James Cameron is a backer of the new venture." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) A new company backed by two Google Inc. billionaires, film director James Cameron and other space exploration proponents is aiming high in the hunt for natural resources--with mining asteroids the possible target.

The venture, called Planetary Resources Inc., revealed little in a press release this week except to say that it would "overlay two critical sectors--space exploration and natural resources--to add trillions of dollars to the global GDP" and "help ensure humanity's prosperity." The company is formally unveiling its plans at an event . . . in Seattle.

. . .

[The] . . . event is being hosted by Peter H. Diamandis and Eric Anderson, known for their efforts to develop commercial space exploration, and two former NASA officials.

Mr. Diamandis, a driving force behind the Ansari X-Prize competition to spur non-governmental space flight, has long discussed his goal to become an asteroid miner. He contends that such work by space pioneers would lead to a "land rush" by companies to develop lower-cost technology to travel to and extract resources from asteroids.

For the full story, see:

AMIR EFRATI. "A Quixotic Quest to Mine Asteroids." The Wall Street Journal (Sat., April 21, 2012,): B1 & B4.

(Note: ellipses and bracketed word added.)

(Note: the online "updated" version of the article is dated April 23, 2012.)

May 4, 2012

Innovation Took "Three Years Working through the Bureaucratic Snags"

FlyingCar2012-04-30.jpg "FULL FLEDGED; The production prototype of the Terrafugia Transition, with its wings folded and road-ready." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 13) THE promise of an airplane parked in every driveway, for decades a fantasy of suburban commuters and a staple of men's magazines, resurfaced this month in Manhattan. On display at the New York auto show was the Terrafugia Transition, an airplane with folding wings and a drive system that enabled it to be used on the road.

. . .

But there can be many delays along the road from concept to certification. For instance, government officials and the designers have had to determine which regulations -- aircraft or automotive -- take precedence when the vehicle in question is both.

. . .

In 2010, the $94,000 Maverick, a rudimentary buggy that takes to the air under a powered parachute, earned certification as a light-sport aircraft. Troy Townsend, design manager and chief test pilot for the company, based in Dunnellon, Fla., said he spent spent nearly all of his time over the course of three years working through the bureaucratic snags.

"There was a lot of red tape," Mr. Townsend said. "The certification process went all the way to Oklahoma and Washington, D.C."

For the full story, see:

CHRISTINE NEGRONI. "Before Flying Car Can Take Off, There's a Checklist." The New York Times, SportsSunday Section (Sun., April 29, 2012): 13.

(Note: ellipses added.)

(Note: the online version of the story is dated April 27, 2012.)

FederalRegsFlyingTable.pngSource of table: online version of the NYT article quoted and cited above.

April 29, 2012

"In a Garage Pursuing a Dream"

(p. 257) The increase in computer-animated films . . . marked the dawning of a democratic moment in artistic expression and entrepreneurship. Just as technological developments in digital production were (p. 258) opening the door more widely in live-action filmmaking, technology was making computer animation more accessible every year.

Computer animation was still an art form that required talent and intense Commitment; it wasn't within reach of Everyman. The accessibility of its tools, however, brought new possibilities. Where Pixar's early years had required a succession of wealthy patrons--Alexander Schure, George Lucas, and Steve Jobs--an enterprising artist of the early twenty-first century was not so dependent. The hardware and software of an animator's workstation, once the province of major studios and effects houses, could now be had for the cost of a good used car. As Pixar started its new life as a crown jewel of the Walt Disney Co., it was plausible that it would sooner or later have to jockey release dates with a new kind of rival. Or, rather, it would have to face a rival that looked much the way Pixar itself did thirty years earlier, as a group of men and women in a garage pursuing a dream.


Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.

(Note: ellipsis added.)

(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

April 25, 2012

Intellectual Property Rights as Refined in Case Law

The questions and answers in court illustrate how case law would approach the issue of refining and reforming intellectual property issues based on concepts of justice, but also on practical issues. (This is from Disney and Pixar lawyer Steve Marenberg questioning Dick Cook in testimony before Judge Clarence Brimmer, Jr. on November 1, 2001, the day before Monsters, Inc. was scheduled to be released.)

(p. 193) Q : So obviously the delay of the film by injunction or otherwise would affect the first weekend and the ability to gain all of the benefits you've gotten by virtue of the tact that November second is the first weekend?

A : It would be a disaster.

Q : And that would affect, then, not only the theatrical performance of the film, but what other markets in the United Sates?

A : Well, it would completely be a snowball effect in a reverse way in that it would certainly put a damper on all of the home video activities, all the DVD activities; in fact, would influence international because international is greatly influenced on how well it does in the United States, and by taking that away, it would definitely, definitely, have a big, big impact on the success of the film.

And furthermore, going further, is that it would take away any of the other ancillary things that happen, you (p. 194) know, whether it would become a television series, whether or not it becomes a piece of an attraction at the parks, whether it becomes a land at the parks, or any of those kinds of things.


Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.

(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

(Note: on p. 190 of the book, Price misspells Marenberg's name as "Marenburg.")

April 19, 2012

"Dematerialization" Means More Goods from Fewer Resources

(p. C4) Economic growth is a form of deflation. If the cost of, say, computing power goes down, then the users of computing power acquire more of it for less--and thus attain a higher standard of living. One thing that makes such deflation possible is dematerialization, the reduction in the quantity of stuff needed to produce a product. An iPhone, for example, weighs 1/100th and costs 1/10th as much as an Osborne Executive computer did in 1982, but it has 150 times the processing speed and 100,000 times the memory.

Dematerialization is occurring with all sorts of products. Banking has shrunk to a handful of electrons moving on a cellphone, as have maps, encyclopedias, cameras, books, card games, music, records and letters--none of which now need to occupy physical space of their own. And it's happening to food, too. In recent decades, wheat straw has shrunk as grain production has grown, because breeders have persuaded the plant to devote more of its energy to making the thing that we value most. Future dematerialization includes the possibility of synthetic meat--produced in a lab without brains, legs or guts.

Dematerialization is one of the reasons that Peter Diamandis and Steven Kotler give for the future's being "better than you think" in their new book, "Abundance."

For the full commentary, see:

MATT RIDLEY. "MIND & MATTER; The Future Is So Bright, it's Dematerializing." The Wall Street Journal (Sat., February 25, 2012): C4.

The book mentioned by Ridley is:

Diamandis, Peter H., and Steven Kotler. Abundance: The Future Is Better Than You Think. New York: Free Press, 2012.

April 12, 2012

Benefits of Driverless Cars Justify Changing Liability Laws

DriverlessCar2012-03-26.jpg "The car is driven by a computer that steers, starts and stops itself. A 360 degrees laser scanner on top of the car, a GPS system and other sensors monitor the surrounding traffic." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p A13) Expect innovations that change the nature of driving more than anything since the end of the hand-crank engine--so long as the legal and regulatory systems don't strangle new digital technologies before they can roll off the assembly line.

. . .

Mr. Ford outlined a future of what the auto industry calls "semiautonomous driving technology," meaning increasingly self-driving cars. Over the next few years, cars will automatically be able to maintain safe distances, using networks of sensors, V-to-V (vehicle-to-vehicle) communications and real-time tracking of driving conditions fed into each car's navigation system.

This will limit the human error that accounts for 90% of accidents. Radar-based cruise control will stop cars from hitting each other, with cars by 2025 driving themselves in tight formations Mr. Ford describes as "platoons," cutting congestion as the space between cars is reduced safely.

. . .

Over the next decade, cars could finally become true automobiles. Our laws will have to be updated for a new relationship between people and cars, but the benefits will be significant: fewer traffic accidents and fewer gridlocked roads--and, perhaps best of all, young people will be in self-driving cars, not teenager-driven cars.

For the full commentary, see:

L. GORDON CROVITZ. "INFORMATION AGE; The Car of the Future Will Drive You; A truly auto-mobile is coming if liability laws don't stop it." The Wall Street Journal (Mon., March 5, 2012): A13.

(Note: ellipses added.)

March 31, 2012

Quantum Computers May Revolutionize Nanotechnology and Drug Design


"Scott Aaronson." Source of caption and photo: online version of the NYT commentary quoted and cited below.

(p. D5) When people hear that I work on quantum computing -- one of the most radical proposals for the future of computation -- their first question is usually, "So when can I expect a working quantum computer on my desk?" Often they bring up breathless news reports about commercial quantum computers right around the corner. After I explain the strained relationship between those reports and reality, they ask: "Then when? In 10 years? Twenty?"

Unfortunately, this is sort of like asking Charles Babbage, who drew up the first blueprints for a general-purpose computer in the 1830s, whether his contraption would be hitting store shelves by the 1840s or the 1850s. Could Babbage have foreseen the specific technologies -- the vacuum tube and transistor -- that would make his vision a reality more than a century later? Today's quantum computing researchers are in a similar bind. They have a compelling blueprint for a new type of computer, one that could, in seconds, solve certain problems that would probably take eons for today's fastest supercomputers. But some of the required construction materials don't yet exist.

. . .

While code-breaking understandably grabs the headlines, it's the more humdrum application of quantum computers -- simulating quantum physics and chemistry -- that has the potential to revolutionize fields from nanotechnology to drug design.

. . .

Like fusion power, practical quantum computers are a tantalizing possibility that the 21st century may or may not bring -- depending on the jagged course not only of science and technology, but of politics and economics.

For the full commentary, see:

SCOTT AARONSON. "ESSAY; Quantum Computing Promises New Insights, Not Just Supermachines." The New York Times (Tues., December 6, 2011): D5.

(Note: ellipses added.)

(Note: the online version of the commentary is dated December 5, 2011.)

March 17, 2012

Internet Companies Respect the Value of Your Time

JainArvindGoogleEngineer2012-03-08.jpg "Arvind Jain, a Google engineer, pointed out the loading speed of individual elements of a website on a test application used to check efficiency, at Google offices in Mountain View, Calif." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) Wait a second.

No, that's too long.

Remember when you were willing to wait a few seconds for a computer to respond to a click on a Web site or a tap on a keyboard? These days, even 400 milliseconds -- literally the blink of an eye -- is too long, as Google engineers have discovered. That barely perceptible delay causes people to search less.

"Subconsciously, you don't like to wait," said Arvind Jain, a Google engineer who is the company's resident speed maestro. "Every millisecond matters."

Google and other tech companies are on a new quest for speed, challenging the likes of Mr. Jain to make fast go faster. The reason is that data-hungry smartphones and tablets are creating frustrating digital traffic jams, as people download maps, video clips of sports highlights, news updates or recommendations for nearby restaurants. The competition to be the quickest is fierce.

People will visit a Web site less often if it is slower than a close competitor by more than 250 milliseconds (a millisecond is a thousandth of a second).

"Two hundred fifty milliseconds, either slower or faster, is close to the magic number now for competitive advantage on the Web," said Harry Shum, a computer scientist and speed specialist at Microsoft.

. . .

(p. A3) The need for speed itself seems to be accelerating. In the early 1960s, the two professors at Dartmouth College who invented the BASIC programming language, John Kemeny and Thomas Kurtz, set up a network in which many students could tap into a single, large computer from keyboard terminals.

"We found," they observed, "that any response time that averages more than 10 seconds destroys the illusion of having one's own computer."

In 2009, a study by Forrester Research found that online shoppers expected pages to load in two seconds or fewer -- and at three seconds, a large share abandon the site. Only three years earlier a similar Forrester study found the average expectations for page load times were four seconds or fewer.

The two-second rule is still often cited as a standard for Web commerce sites. Yet experts in human-computer interaction say that rule is outdated. "The old two-second guideline has long been surpassed on the racetrack of Web expectations," said Eric Horvitz, a scientist at Microsoft's research labs.

For the full story, see:

STEVE LOHR. "For Impatient Web Users, an Eye Blink Is Just Too Long to Wait." The New York Times (Thurs., March 1, 2012): A1 & A3.

(Note: ellipsis added.)

(Note: the online version of the article is dated February 29, 2012.)

WebSpeedGraphic2012-03-08.jpgSource of graph: online version of the NYT article quoted and cited above.

March 1, 2012

The Impact of Cheap Smart Phones on Africa


Jimbo Wales

Source of photo: online version of the NYT article quoted and cited below.

(p. 2) PHONING: A friend of mine bought me an Ideos phone on the street in Kenya for about $80. This is an Android phone that's a bit smaller than an iPhone, but a lot cheaper. This is really exciting because at that price point, hundreds of thousands and soon millions of smartphones are going to be sold across Africa. The impact for people's access to knowledge in some very difficult places is enormous.

For the full interview, see:

Jimmy Wales as interviewed by KATE MURPHY. "DOWNLOAD; Jimmy Wales." The New York Times, SundayReview (Sun., February 12, 2012): 2.

(Note: the online version of the interview is dated February 11, 2012.)

February 18, 2012

Paul Allen Uses Microsoft Profits for Bold Private Space Project

StratolaunchSpacePlane2012-02-05.jpgSource of graphic: online version of the WSJ article quoted and cited below.

(p. B1) Microsoft Corp. co-founder Paul Allen indicated he is prepared to commit $200 million or more of his wealth to build the world's largest airplane as a mobile platform for launching satellites at low cost, which he believes could transform the space industry.

Announced Tuesday, the novel, high-risk project conceived by renowned aerospace designer Burt Rutan seeks to combine engines, landing gears and other parts removed from old Boeing 747 jets with a newly created composite craft from Mr. Rutan and a powerful rocket to be built by a company run by Internet billionaire and commercial-space pioneer Elon Musk.

Dubbed Stratolaunch and funded by one of Mr. Allen's closely held entities, the venture seeks to meld decades-old airplane technology with cutting-edge booster-rocket designs in an unprecedented way to assemble a hybrid that would offer the first totally privately funded space transportation system.

For the full story, see:

ANDY PASZTOR And DIONNE SEARCEY. "Paul Allen, Supersizing Space Flight; Billionaire's Novel Vision Has Wingspan Wider Than a Football Field, Weighs 1.2 Million Pounds." The Wall Street Journal (Weds., December 5, 2011): B1 & B5.

February 17, 2012

"What Success Had Brought Him, . . . , Was Freedom"

(p. 5) The success of Pixar's films had brought him something exceedingly rare in Hollywood: not the house with the obligatory pool in the backyard and the Oscar statuettes on the fireplace mantel, or the country estate, or the vintage Jaguar roadster--although he had all of those things, too. It wasn't that he could afford to indulge his affinity for model railroads by acquiring a full-size 1901 steam locomotive, with plans to run it on the future site of his twenty-thousand-square-foot mansion in Sonoma Valley wine country. (Even Walt Dìsney's backyard train had been a mere one-eighth-scale replica.)

None of these was the truly important fruit of Lasseter's achievements. What success had brought him, most meaningfully, was freedom. Having created a new genre of film with his colleagues at Pixar, he had been able to make the films he wanted to make, and he was coming back to Disney on his own terms.


Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.

(Note: ellipsis in title was added.)

(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

February 12, 2012

Pixar as a Case Study on Innovative Entrepreneurship


Source of book image:

Toy Story and Finding Nemo are among my all-time-favorite animated movies. How Pixar developed the technology and the story-telling sense, to make these movies is an enjoyable and edifying read.

Along the way, I learned something about entrepreneurship, creative destruction, and the economics of technology. In the next couple of months I occasionally will quote passages that are memorable examples of broader points or that raise thought-provoking questions about how innovation happens.

Book discussed:

Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.

February 7, 2012

The Tasmanian Technological Regress: "Slow Strangulation of the Mind"

(p. 78) The most striking case of technological regress is Tasmania. Isolated on an island at the end of the world, a population of less than 5,000 hunter-gatherers divided into nine tribes did not just stagnate, or fail to progress. They fell steadily and gradually back into a simpler toolkit and lifestyle, purely because they lacked the numbers to sustain their existing technology. Human beings reached Tasmania at least 35,000 years ago while it was still connected to Australia. It remained connected - on and off - until about 10,000 years ago, when the rising seas filled the Bass Strait. Thereafter the Tasmanians were isolated. By the time Europeans first encountered Tasmanian natives, they found them not only to lack many of the skills and tools of their mainland cousins, but to lack many technologies that their own ancestors had once possessed. They had no bone tools of any kind, such as needles and awls, no cold-weather clothing, no fish hooks, no hafted tools, no barbed spears, no fish traps, no spear throwers, no boomerangs. A few of these had been invented on the mainland after the Tasmanians had been isolated from it - the boomerang, for instance - but most had been made and used by the very first Tasmanians. Steadily and inexorably, so the archaeological history tells, these tools and tricks were abandoned. Bone tools, for example, grew simpler and simpler until they were dropped altogether about 3,800 years ago. Without bone tools it became impossible to sew skins into clothes, so even in the bitter winter, the Tasmanians went nearly naked but for seal-fat grease smeared on their skin and wallaby pelts over their shoulders. The first Tasmanians caught and ate plenty of fish, but by the time of Western contact they not only ate no fish (p. 79) and had eaten none for 3,000 years, but they were disgusted to be offered it (though they happily ate shellfish).

The story is not quite that simple, because the Tasmanians did invent a few new things during their isolation. Around 4,000 years ago they came up with a horribly unreliable form of canoe-raft, made of bundles of rushes and either paddled by men or pushed by swimming women (!), which enabled them to reach offshore islets to harvest birds and seals. The raft would become waterlogged and disintegrate or sink after a few hours, so it was no good for re-establishing contact with the mainland. As far as innovation goes, it was so unsatisfactory that it almost counts as an exception to prove the rule. The women also learnt to dive up to twelve feet below the water to prise clams off the rocks with wooden wedges and to grab lobsters. This was dangerous and exhausting work, which they were very skilled at: the men did not take part. So it was not that there was no innovation; it was that regress overwhelmed progress.

The archaeologist who first described the Tasmanian regress, Rhys Jones, called it a case of the 'slow strangulation of the mind', which perhaps understandably enraged some of his academic colleagues. There was nothing wrong with individual Tasmanian brains; there was something wrong with their collective brains. Isolation - self-sufficiency - caused the shrivelling of their technology. Earlier I wrote that division of labour was made possible by technology. But it is more interesting than that. Technology was made possible by division of labour: market exchange calls forth innovation.


Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

January 30, 2012

Creative Destruction Creates as Many New Jobs as It Destroys

(p. 113) It was Joseph Schumpeter who pointed out that the competition which keeps a businessman awake at night is not that from his rivals cutting prices, but that of entrepreneurs making (p. 114) his product obsolete. As Kodak and Fuji slugged it out for dominance in the 35mm film industry in the 1990s, digital photography began to extinguish the entire market for analogue film - as analogue records and analogue video cassettes had gone before. Creative destruction, Schumpeter called it. His point was that there is just as much creation going on as destruction - that the growth of digital photography would create as many jobs in the long run as were lost in analogue, or that the savings pocketed by a Wal-Mart customer are soon spent on other things, leading to the opening of new stores to service those new demands. In America, roughly 15 per cent of jobs are destroyed every year; and roughly 15 per cent created.


Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

January 17, 2012

Krim Saw Use for Noisy CK722 Transistors


Norman Krim holding some early transistors. He first put transistors into hearing aids. Source of caption and photo: online version of the NYT obituary quoted and cited below.

(p. B11) Mr. Krim, who made several breakthroughs in a long career with the Raytheon Company and who had an early hand in the growth of the RadioShack chain, did not invent the transistor. (Three scientists did, in 1947, at Bell Laboratories.)

But he saw the device's potential and persuaded his company to begin manufacturing it on a mass scale, particularly for use in miniaturized hearing aids that he had designed. Like the old tube, a transistor amplifies audio signals.

As Time magazine wrote in 1953: "This little device, a single speck of germanium, is smaller than a paper clip and works perfectly at one-tenth the power needed by the smallest vacuum tube. Today, much of Raytheon's transistor output goes to America's hearing aid industry." (Germanium, a relatively rare metal, was the predecessor to silicon in transistors.)

. . .

Thousands of hearing-disabled people benefited from Mr. Krim's initial use of the transistor in compact hearing aids. But not every transistor Raytheon made was suitable for them, he found.

"When transistors were first being manufactured by Raytheon on a commercial scale, there was a batch called CK722s that were too noisy for use in hearing aids," said Harry Goldstein, an editor at IEEE Spectrum, the magazine of the Institute of Electrical and Electronics Engineers.

So Mr. Krim contacted editors at magazines like Popular Science and Radio Electronics and began marketing the CK722s to hobbyists.

"The result was that a whole generation of aspiring engineers -- kids, really, working in their garages and basements -- got to make all kinds of electronic projects," Mr. Goldstein said, among them transistor radios, guitar amplifiers, code oscillators, Geiger counters and metal detectors. "A lot of them went on to become engineers."

Mr. Ward called Mr. Krim "the father of the CK722."

For the full obituary, see:

DENNIS HEVESI. "Norman Krim, 98, Dies; Championed the Transistor." The New York Times (Weds, December 21, 2011): B11.

(Note: ellipsis added.)

(Note: the online version of the article is dated December 20, 2011 and has the title "Norman Krim, Who Championed the Transistor, Dies at 98.")

January 1, 2012

Ridley Argues that Our Future Can Be Bright


Source of book image:

Ridley's book is very well-written, well-argued and well-documented. He takes on all the main arguments against a happy future for humans. I agree with most of what he writes. (One exception is that I think he underestimates the importance of patents in enabling a broader group of inventors to continue inventing.)

In the coming weeks, I will be quoting some of the more memorable, thought-provoking, or useful passages.

Book discussed:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

December 31, 2011

Federal Subsidies Create Few Green Jobs

(p. F2) . . . solar power, which makes extensive use of robots in fabricating the cells, and has no moving parts to service once it is up and running, may be an odd choice for job creation.

"It's just not that labor-intensive," said Howard Axelrod, an engineer and economist. And as for the jobs it creates, there may be a price elsewhere, Dr. Axelrod said.

. . .

Build enough solar plants and some coal plants will shut down; that would amount to firing Peter to hire Paul.

. . .

And, economists point out, some of the work that renewable energy creates goes to people who already have jobs -- roofers who install the panels or truck drivers who move them around, or steel workers who make towers for new wind machines.

Some of the jobs could eventually go elsewhere. Two years ago, Evergreen Solar, which got $58 million in aid from Massachusetts for a factory in Devens, said it would shift production to China instead.

. . .

The debate is part of a larger discussion of what constitutes a "green" job. In October 2009, Congress gave the Bureau of Labor Statistics a special appropriation to count them.

. . .

"Driving a bus is driving a bus, right?" said Connie Mack, Republican of Florida. Hilda Solis, the secretary of labor, said they were "green buses." But aides later clarified that the bureau counted any bus driving job as green because it preserved natural resources.

None of this suggests that green is bad, just that it is not particularly job-heavy. In December 2010, Susan Combs, the comptroller of Texas, reported that school districts in her state were giving tax abatements to lure new jobs, but had to give $1.6 million for every wind energy job. Manufacturing jobs could be created for $166,000 each.

For the full story, see:

MATTHEW L. WALD. "Solar Power Industry Falls Short of Hopes in Job Creation." The New York Times (Weds., October 26, 2011): F2.

(Note: ellipses added.)

(Note: the online version of the article has the date October 25, 2011.)

December 30, 2011

More Firms Adopt 'Bring Your Own Device' (BYOD) Policies to Empower Workers and Cut Costs

CitrixSystemsWorkersPickOwnLaptops2011-11-10.jpg"At Citrix Systems, Berkley Reynolds, left, uses his Alienware laptop, and Alan Meridian, his MacBook Pro, paid for with stipends." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) SAN FRANCISCO -- Throughout the information age, the corporate I.T. department has stood at the chokepoint of office technology with a firm hand on what equipment and software employees use in the workplace.

They are now in retreat. Employees are bringing in the technology they use at home and demanding the I.T. department accommodate them. The I.T. department often complies.

Some companies have even surrendered to what is being called the consumerization of I.T. At Kraft Foods, the I.T. department's involvement in choosing technology for employees is limited to handing out a stipend. Employees use the money to buy whatever laptop they want from Best Buy, or the local Apple store.

"We heard from people saying, 'How come I have better equipment at home?' " said Mike Cunningham, chief technology officer for Kraft Foods. "We said, hey, we can address that."

Encouraging employees to buy their own laptops, or bring their mobile phones and iPads from home, is gaining traction in the workplace. A survey published on Thursday by Forrester Research found that 48 percent of information workers buy smartphones for work without considering what their I.T. department supports. By being more flexible, companies are hoping that workers will be more comfortable with their devices and therefore more productive.

"Bring your own device" policies, as they are called, are also shifting the balance of power among electronics makers. Manufacturers good at selling to consumers are increasingly gaining the upper hand, while those focused on bulk corporate sales are slipping.

. . .

(p. B6) Letting workers bring their iPhones and iPads to work can . . . save companies money. In some cases, employees pay for equipment themselves and seek tech help from store staff rather than their company's I.T. department. "You can basically outsource your I.T. department to Apple," said Ben Reitzes, an analyst with Barclays Capital.

A similar B.Y.O.D. program at Citrix Systems, a software maker that also helps its clients implement such programs, saves the company about 20 percent on each laptop over three years. Of the 1,000 or so employees in Citrix's program, 46 percent have bought Mac computers, according to Paul Martine, Citrix's chief information officer. "That was a little bit of a surprise."

For the full story, see:

VERNE G. KOPYTOFF. "More Offices Let Workers Choose Their Own Devices." The New York Times (Fri., September 23, 2011): B1 & B6.

(Note: ellipses added.)

(Note: the online version of the article is dated September 22, 2011.)

December 24, 2011

Innovation Not Highly Correlated with R&D Spending


Source of graph: online version of the WSJ article quoted and cited below.

(p. B9) Many companies say innovation is a top priority, but even those who spend the most on research and development can have little to show for it, a new study says.

A report expected to be released Monday by consulting firm Booz & Co., says that few of the biggest R&D spenders crack the top 10 in terms of being considered "innovative" by their peers.

Booz identified 1,000 companies with the biggest 2010 research-and-development budgets and invited 600 executives from those companies to rate which ones they deemed most innovative. The most frequent pick was Apple Inc.--the 70th biggest research-and-development spender--followed by Google Inc. and 3M Co., also not among the top-20 spenders.

For the full story, see:

MELISSA KORN. "Top 'Innovators' Rank Low in R&D Spending." The Wall Street Journal (Mon., OCTOBER 24, 2011): B9.

December 14, 2011

Entrepreneur Julius Blank's Greatest Pleasure Came from "Building Something from Nothing"

FairchildSemiconductorFoundersIn1988.jpg"Fairchild Semiconductor's founders in 1988. Victor Grinich (left), Jay Last, Jean Hoerni, Julius Blank, Eugene Kleiner, Sheldon Roberts, Robert N. Noyce (seated, left,) and Gordon E. Moore." Source of caption and photo: online version of the NYT obituary quoted and cited below.

(p. B14) Julius Blank, a mechanical engineer who helped start a computer chip company in the 1950s that became a prototype for high-tech start-ups and a training ground for a generation of Silicon Valley entrepreneurs, died on Saturday in Palo Alto, Calif.. He was 86.

. . .

Mr. Blank and his partners -- who included Robert N. Noyce and Gordon E. Moore, the future founders of the Intel Corporation -- began their venture as scientist-entrepreneurs in the wake of a mutiny of sorts against their common previous employer, the Nobel Prize-winning physicist William B. Shockley.

Dr. Shockley, . . . , had recruited the eight scientists from around the country in 1956 to work in his own semiconductor lab in nearby Mountain View, Calif.

The group left en masse the next year because of what its members described as Dr. Shockley's authoritarian management style and their differences with him over his scientific approach. Dr. Shockley called it a betrayal.

Fairchild's founders came to be branded in the lore of Silicon Valley as the "Traitorous Eight." How that happened remains something of a mystery.

. . .

When he left Fairchild in 1969 -- he was the last of the eight founding partners to depart -- Mr. Blank became an investor and consultant to start-up companies and helped found the technology firm Xicor, which was sold in 2004 for $529 million to Intersil.

His former partners, in addition to founding Intel, had started Advanced Micro Devices and National Semiconductor. Mr. Kleiner had founded a venture capital firm that became an early investor in hundreds of technology companies, including, Google and AOL. Still, the greatest pleasure of his working life, Mr. Blank said in a 2008 interview for the archives of the Computer History Museum, a project in Silicon Valley, came with the uncertainty and camaraderie of "the early years, building something from nothing."

Mr. Blank described a moment in the first days of Fairchild, just before production began in its factory built from nothing, when the ducts and plumbing and air-conditioning were set, and the new crystal growers and one-of-a-kind chip making machines were ready to be installed.

"I remember the day we finally got the floor tile laid," he said. "And that night, Noyce and the rest of the guys came out and got barefoot and rolled their pants up and were swabbing the floors. I wish I had a picture of that."

For the full obituary, see:

PAUL VITELLO. "Julius Blank, 86, Dies; Built First Chip Maker." The New York Times (Fri., September 23, 2011): B14.

(Note: ellipses added.)

(Note: the online version of the obituary is dated September 22, 2011 and had the title "Julius Blank, Who Built First Chip Maker, Dies at 86.")


May 2011 photo of Julius Blank. Source of photo: online version of the NYT obituary quoted and cited above.

November 15, 2011

Patent on Cotton Gin Not Enough for Whitney to Get Rich

(p. 395) Whitney patented his 'gin' (a shortened form of 'engine') and prepared to become stupendously wealthy.

. . .

(p. 396) . . . , the gin truly was a marvel. Whitney and Miller formed a partnership with every expectation of getting rich, but they were disastrous businessmen. For the use of their machine, they demanded a one-third share of any harvest - a proportion that plantation owners and southern legislators alike saw as frankly rapacious. That Whitney and Miller were both Yankees didn't help sentiment either. Stubbornly they refused to modify their demands, convinced that southern growers could not hold out in the face of such a transforming piece of technology. They were right about the irresistibility, but failed to note that the gin was also easily pirated. Any halfway decent carpenter could knock one out in a couple of hours. Soon plantation owners across the south were harvesting cotton with home-made gins. Whitney and Miller filed sixty suits in Georgia and many others elsewhere, but found little sympathy in southern courts. By 1800 - just seven years after the gin's invention - Miller and Catharine Greene were in such desperate straits that they had to sell the plantation.


Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

(Note: ellipses added.)

November 5, 2011

Art Diamond Defended Air Conditioning in WPR Debate with Stan Cox

From archive of the Joy Cardin show:

Wednesday 6/8/2011 7:00 AM

Joy Cardin - 110608B After seven, Joy Cardin asks her guests a weather-related Big Question: "Do we rely too much on air-conditioning?"

- Stan Cox, Senior Scientist, The Land Institute. Author, "Losing Our Cool: Uncomfortable Truths About Our Air Conditioned World" Author's blog:
- Arthur Diamond, Professor of Economics, University of Nebraska at Omaha. Author, conference paper, "Keeping Our Cool: In Defense of Air Conditioning" (

Link to streaming version of debate between Art Diamond and Stan Cox (author Losing Our Cool) on whether air conditioning is good (Diamond) or bad (Cox). Broadcast on Joy Cardin Show on the Wisconsin Public Radio network on Weds., June 8, 2011, from about 7:00 - 7:50 AM:

October 23, 2011

Obama Regulations Are "Choking Off Innovation"

From 2007 to 2010 Nina V. Fedoroff was the science and technology adviser to Secretary of State Hilary Clinton in the Obama administration. Fedoroff is currently a Professor of Biology at Penn State. The passages quoted below are from her courageous commentary in The New York Times op-ed section:

(p. A21) . . . even as the Obama administration says it wants to stimulate innovation by eliminating unnecessary regulations, the Environmental Protection Agency wants to require even more data on genetically modified crops, which have been improved using technology with great promise and a track record of safety. The process for approving these crops has become so costly and burdensome that it is choking off innovation.

Civilization depends on our expanding ability to produce food efficiently, which has markedly accelerated thanks to science and technology. The use of chemicals for fertilization and for pest and disease control, the induction of beneficial mutations in plants with chemicals or radiation to improve yields, and the mechanization of agriculture have all increased the amount of food that can be grown on each acre of land by as much as 10 times in the last 100 years.

These extraordinary increases must be doubled by 2050 if we are to continue to feed an expanding population. . . .

. . .

Myths about the dire effects of genetically modified foods on health and the environment abound, but they have not held up to scientific scrutiny. And, although many concerns have been expressed about the potential for unexpected consequences, the unexpected effects that have been observed so far have been benign. Contamination by carcinogenic fungal toxins, for example, is as much as 90 percent lower in insect-resistant genetically modified corn than in nonmodified corn. This is because the fungi that make the toxins follow insects boring into the plants. No insect holes, no fungi, no toxins.

. . .

Only big companies can muster the money necessary to navigate the regulatory thicket woven by the government's three oversight agencies: the E.P.A., the Department of Agriculture and the Food and Drug Administration.

. . .

. . . the evidence is in. These crop modification methods are not dangerous. The European Union has spent more than $425 million studying the safety of genetically modified crops over the past 25 years. Its recent, lengthy report on the matter can be summarized in one sentence: Crop modification by molecular methods is no more dangerous than crop modification by other methods. Serious scientific bodies that have analyzed the issue, including the National Academy of Sciences and the British Royal Society, have come to the same conclusion.

For the full commentary, see:

NINA V. FEDOROFF. "Engineering Food for All." The New York Times (Fri., August 19, 2011): A21.

(Note: ellipses added.)

(Note: the online version of the commentary was dated August 18, 2011.)

October 6, 2011

"Insanely Great" Entrepreneur Steve Jobs Wanted "a Chance to Change the World"

Steve Jobs died yesterday (Weds., October 5, 2011).

Jobs was an innovator of my favorite kind, what I call a "project entrepreneur." He showed us what excitement and progress is possible if we preserve the institutions that allow entrepreneurial capitalism to exist.

When he was recruiting John Sculley to leave Pepsi and join Apple, Jobs asked him: "Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?" (p. 90).

Steve Jobs wanted to change the world. He got the job done.

Source of quote of Jobs' question to Sculley:

Sculley, John, and John A. Byrne. Odyssey: Pepsi to Apple. paperback ed. New York: HarperCollins, 1988.

September 26, 2011

Solyndra Debacle Illustrates Why Feds Should Not Pick Tech Winners

The clip above is embedded from the Jon Stewart "The Daily Show" episode that was aired on Thurs., September 15, 2011.

Government "industrial policy" is likely to fail for many reasons. One is that the government decision makers are unlikely to know which future technologies will turn out to be the best ones. Another reason is that even if they know, government decision makers often decide based on what is politically expedient or what is beneficial to their friends.

Solyndra is a case in point, as Jon Stewart hilariously reveals.

September 22, 2011

Deregulation Revived Railroads


"ALL ABOARD: The Wasp magazine in 1881 lampooned railroad moguls as having regulators in the palms of their hands." Source of caricature: online version of the WSJ article quoted and cited below.

(p. C8) Mr. Klein has written thoroughly researched and scrupulously objective biographies of the previously much maligned Jay Gould and E.H. Harriman, remaking their public images by presenting them in full. Now he has published the third and final volume of his magisterial history of the Union Pacific railroad, taking the company from 1969 to the present day.

Union Pacific--the only one of the transcontinentals to remain in business under its original name--is now a flourishing business. Thanks to a series of mergers, it is one of the largest railroads in the world, with more than 37,000 miles of track across most of the American West. Thanks to its investment in new technology, it is also among the most efficient.

In 1969, though, the future of American railroading was in doubt as the industry struggled against competition from airplanes, automobiles and trucks--all of which were in effect heavily subsidized through the government's support for airports and the Interstate Highway System.

Another major factor in the decline of the railroads had been the stultifying hand of the Interstate Commerce Commission. The ICC had come into existence in the late 19th century to limit the often high-handed ways of the railroads as they wrestled with the difficult economics of an industry that has very high fixed costs. ( . . . .) But the ICC soon evolved into a cartel mechanism that discouraged innovation and wrapped the railroad industry in a cocoon of stultifying rules.

Mr. Klein notes that in 1975 he wrote a gloomy article about the sad state of an industry with a colorful past: "Unlike many other historical romances," he wrote back then, "the ending did not promise to be a happy one."

Fortunately, a deregulation movement that began under the Carter administration--yes, the Carter administration--limited the power of the ICC and then abolished it altogether. As Mr. Klein shows in the well-written "Union Pacific," the reduction of government interference left capitalism to work its magic and produce--with the help of dedicated and skillful management--the modern, efficient and profitable railroad that is the Union Pacific.

For the full review, see:

JOHN STEELE GORDON. "Tracks Across America." The Wall Street Journal (Sat., JUNE 11, 2011): C8.

(Note: ellipsis added.)

Book reviewed in the part of the review quoted above:

Klein, Maury. Union Pacific: The Reconfiguration: America's Greatest Railroad from 1969 to the Present. New York: Oxford University Press, USA, 2011.

September 20, 2011

"Mystified by an American Disdain for Its Own Business Culture"

HollandAndDavisProducersSomethingVentured2011-05-17.jpg "Paul Holland and Molly Davis, producers of a new documentary, "Something Ventured," that gives an admiring look at innovators and investors from the past." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B3) The film, "Something Ventured," is a frankly admiring look at those who went out on a limb to back upstarts like Atari, Cisco Systems, Genentech and Apple.

. . .

But the film's beating heart is captured by Tom Perkins, whose Kleiner Perkins Caufield & Byers company backed the gene-splicing technology of Genentech, among other things. "It's great if you can make money and change the world for the better at the same time," said Mr. Perkins, . . .

Other stars of "Something Ventured" include Nolan Bushnell of Atari; Sandy Lerner of Cisco; Jimmy Treybig of Tandem Computers; and a string of venture capitalists, among them Don Valentine, Dick Kramlich, and Arthur Rock.

Many who appear joined dozens of other business people to finance the picture's roughly $700,000 cost with contributions of a few thousand dollars each, Mr. Holland said.

In becoming involved, several participants said they wanted to rekindle an entrepreneurial spirit that had either waned or changed since the rough-and-tumble years when, by the film's telling, Atari was started with $250 but needed capital to push Pong, and Mr. Bushnell passed up a chance to own a third of Apple, started by his employee Steve Jobs, for $50,000.

. . .

Mr. Valentine, . . . , said entrepreneurship had not ended -- his company was a force behind Google -- but it is less often coming from those born in the United States.

"You don't understand what you have here" is a constant refrain, he said, from Southeast Asian and Indian innovators who are sometimes mystified by an American disdain for its own business culture.

For the full story, see:

MICHAEL CIEPLY . "A Film About Capitalism, and (Surprise) It's a Love Story." The New York Times, Week in Review Section (Sun., March 8, 2011): 8.

(Note: ellipses added.)

(Note: the online version of the story is dated March 7, 2011.)

September 16, 2011

Art Diamond Describes Honors Colloquium on Creative Destruction

The clip above is embedded from You Tube. It was recorded on July 6, 2011 in Mammel Hall, the location of the College of Business at the University of Nebraska at Omaha (UNO). I am grateful to Charley Reed of UNO University Relations for doing a great job of shooting and editing the clip.

September 12, 2011

From Inventor to Entrepreneur When No Company Would Distribute Weed Eater

BallasGeorgeWeedEaterInventer2011-08-08.jpg "George Ballas showed off in 1975 the original Weed Eater, a popcorn can rigged up with some wires." Source of caption and photo: online version of the WSJ obituary quoted and cited below.

(p. A5) George Ballas got his big idea after a poisonous snake bit a worker who was trimming his lawn with shears. The idea turned an old popcorn can, some wires and an edger into the Weed Eater.

Mr. Ballas, who died Saturday at age 85, was a dance instructor, developer, inventor and marketer who built hotels, patented an adjustable table and marketed an early portable phone.

. . .

Mr. Ballas said the idea for the Weed Eater came to him while he was in a car wash, contemplating the big rotating bristles that cleaned hard-to-reach corners yet somehow didn't scratch the finish.

Drawing from that inspiration, he rigged up an old popcorn can with some wires and hooked it to a rotating edger, and the first string trimmer was born.

. . .

He hired an engineer to design new models that substituted monofilament fishing line for wire and ran on electricity and gas. He dubbed it "Weed Eater" and held several patents on it.

When Mr. Ballas failed to find a company interested in distributing the device, he decided to sell it himself.

. . .

Mr. Ballas also taught entrepreneurship at Rice University in Houston. He continued to tinker with new inventions, and at one point marketed a football-helmet-sized portable phone that found few takers.

"A Weed Eater," Mr. Ballas told the Houston Chronicle in 1993, "comes along once in a lifetime."

For the full obituary, see:

STEPHEN MILLER. "REMEMBRANCES; Dance Studio Owner Invented Weed Eater." The Wall Street Journal (Thurs., JUNE 30, 2011): A5.

(Note: ellipses added.)

August 29, 2011

In 1880s Prices Fell Because of Technological Progress


Source of book image:

Michael Perelman has strongly suggested that I read David Well's book. It is on my "to do" list.

(p. C10) The dull title of "Recent Economic Changes" does no justice to David A. Wells's fascinating contemporary account of a deflationary miasma that settled over the world's advanced economies in the 1880s. His cheery conclusion: Prices were falling because technology was progressing. What had pushed the price of a bushel of wheat down to 67 cents in 1887 from $1.10 in 1882 was nothing more sinister than the opening up of new regions to cultivation (Australia, the Dakotas) and astounding improvements in agricultural machinery.

For the full review, see:

JAMES GRANT. "FIVE BEST; Little-Known Gold From the Gilded Age." The Wall Street Journal (Sat., AUGUST 6, 2011): C10.

Source of book under review:

Wells, David A. Recent Economic Changes and Their Effect on Production and Distribution of Wealth and Well-Being of Society. New York: D. Appleton and Co., 1889.

Michael Perelman argues that in Recent Economic Changes, David Wells anticipates the substance, although not the wording, of Schumpeter's "creative destruction":

Perelman, Michael. "Schumpeter, David Wells, and Creative Destruction." The Journal of Economic Perspectives 9, no. 3 (Summer 1995): 189-97.

August 22, 2011

Gas Lighting Did Not Appeal to Those Who Had Servants to Light Their Candles

(p. 123) Gas was particularly popular in America and Britain. By 1850 it was available in most large cities in both countries. Gas remained, however, a (p. 124) middle-class indulgence. The poor couldn't afford it and the rich tended to disdain it, partly because of the cost and disruption of installing it and partly because of the damage it did to paintings and precious fabrics, and partly because when you have servants to do everything for you already there isn't the same urgency to invest in further conveniences. The ironic upshot, as Mark Girouard has noted, is that not only middle-class homes but institutions like lunatic asylums and prisons tended to be better lit - and, come to that, better warmed - long before England's stateliest homes were.


Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

August 18, 2011

"How Painfully Dim the World Was before Electricity"

(p. 112) We forget just how painfully dim the world was before electricity. A candle - a good candle - provides barely a hundredth of the illumination of a single 100-watt light bulb. Open your refrigerator door and you summon forth more light than the total amount enjoyed by most households in the eighteenth century. The world at night for much of history was a very dark place indeed.


Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

July 18, 2011

"If We Can't Win on Quality, We Shouldn't Win at All"


Source of book image: online version of the WSJ review quoted and cited below.

(p. A13) At the tail end of the 1990s dot-com boom, Douglas Edwards took a gamble: He left his marketing job at an old-media company, taking a $25,000 salary cut to start work at a small, little-known Internet concern in its second year of operation. That his new employer was losing money and burning through venture capital went without saying. But unlike the footloose 20-somethings who usually populated Silicon Valley start-ups, Mr. Edwards had little margin to bet wrong; he was 41, with a mortgage, three children and a worried wife. He hoped he could get his old job back if the company ran out of money.

. . .

Mr. Edwards came to his job as a subscriber to the conventional wisdom. In an early presentation to cofounder Larry Page and others, Mr. Edwards unwisely declared that only marketing, not technology, could set Google apart. "In a world where all search engines are equal," he asserted, "we'll need to rely on branding to differentiate us from our competitors."

The room became quiet. Then Mr. Page spoke up. "If we can't win on quality," he said, "we shouldn't win at all."

For the full review, see:

DAVID A. PRICE. "BOOKSHELF; How Google Got Going; Branding, shmanding, a marketer was told. 'If we can't win on quality,' Larry Page said, 'we shouldn't win at all.'" The Wall Street Journal (Tues., July 12, 2011): A13.

(Note: ellipsis added.)

Book being reviewed:

Edwards, Douglas. I'm Feeling Lucky: The Confessions of Google Employee Number 59. New York: Houghton Mifflin Harcourt Publishing Co., 2011.

June 17, 2011

"Big Money Is Dumb Money"

"Other People's Money" is a short story that appears in Cory Doctorow's short story collection With a Little Help.

(p. C7) Venture capitalists? Forget them, says "Other People's Money." Big money is dumb money. Much easier, says one old-lady manufacturer to a smart young gigafund manager, for her to make and market her own product, and keep the money (just like Mr. Doctorow), than for him to find and fund a hundred products and take a rake-off. He only deals in six-figure multiples, and that's no good: not nimble enough. And he has to get a return on all those billions, poor outdated soul.

For the full review, see:

TOM SHIPPEY. "The Author as Agent of Change; Cory Doctorow has big ideas about the future of technology--and how it can empower writers." The New York Times (Sat., MAY 21, 2011): C7.

The book of short stories is:

Doctorow, Cory. With a Little Help.

June 12, 2011

To Burst Higher Ed Bubble, Peter Thiel Pays Students to Drop Out


"Peter Thiel." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B4) Parents, do you hope that your children have the chance to become like Peter Thiel, the PayPal co-founder, Facebook investor and hedge fund manager? If so, Mr. Thiel suggests that you encourage them to drop out of school. In fact, he will help by paying them to do it.

On Wednesday, the Thiel Foundation, funded by Mr. Thiel, announced the first group of Thiel Fellows, 24 people under 20 who have agreed to drop out of school in exchange for a $100,000 grant and mentorship to start a tech company.

More than 400 people applied. The winners include Laura Deming, 17, who is developing antiaging therapies; Faheem Zaman, 18, who is building mobile payment systems for developing countries; and John Burnham, 18, who is working on extracting minerals from asteroids and comets.

. . .

Mr. Thiel, a contrarian investor and libertarian known for his controversial views, knows that suggesting that education is not always worth it strikes at the core of many Americans' beliefs. But that is exactly why is he doing it.

"We're not saying that everybody should drop out of college," he said. The fellows agree to stop getting a formal education for two years but can always go back to school. The problem, he said, is that "in our society the default assumption is that everybody has to go to college."

"I believe you have a bubble whenever you have something that's overvalued and intensely believed," Mr. Thiel said. "In education, you have this clear price escalation without incredible improvement in the product. At the same time you have this incredible intensity of belief that this is what people have to do. In that way it seems very similar in some ways to the housing bubble and the tech bubble."

. . .

"What I really liked about this program is it's giving a lot of people who maybe wouldn't get into Harvard an opportunity to participate in something just as selective and just as valuable and just as educational," Mr. Burnham said. "It's giving them that opportunity even though their personalities and characters don't quite fit the academic mold."

His father, Stephen Burnham, said the decision for his son to skip college, at least for now, was uncontroversial.

"There's a lot of other stuff that you get in college and I would say that would be useful for John," he said. "But I would say in four years there's a big opportunity cost there if you could be out starting your career doing something that could change the world."

For the full story, see:

CLAIRE CAIN MILLER. "Changing the World by Dropping Out." The New York Times (Mon., May 30, 2011): B4.

(Note: ellipses added.)

(Note: the online version of the story is dated May 25 (sic), 2011, has the title "Want Success in Silicon Valley? Drop Out of School," and is longer than the published version. Most of what is quoted above appears in both the published and online versions, but some (most notably the paragraph on the education bubble and the quotes from Stephen Burnham) appear only in the online verison.)

June 9, 2011

"Progress Depended on the Empirical Habit of Thought"

In the passage below from 1984 Orwell presents an underground rebel's account of why the authoritarian socialist dystopia cannot advance in science and technology.

(p. 155) The world of today is a bare, hungry, dilapidated place compared with the world that existed before 1914, and still more so if compared with the imaginary future to which the people of that period looked forward. In the early twentieth century, the vision of a future society unbelievably rich, leisured, orderly, and efficient--a glittering (p. 156) antiseptic world of glass and steel and snow-white concrete--was part of the consciousness of nearly every literate person. Science and technology were developing at a prodigious speed, and it seemed natural to assume that they would go on developing. This failed to happen, partly because of the impoverishment caused by a long series of wars and revolutions, partly because scientific and technical progress depended on the empirical habit of thought, which could not survive in a strictly regimented society.


Orwell, George. Nineteen Eighty-Four. New York: The New American Library, 1961 [1949].

By Canadian law, 1984 is no longer under copyright. The text has been posted on the following Canadian web site:

June 8, 2011

Home Decorators Are Stockpiling Incandescent Bulbs to Thwart Feds' Edict


"David Brooks, of Just Bulbs in Manhattan, has a customer who is secretly ordering thousands of incandescent bulbs. "She doesn't want her husband to know," he said." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D1) BUNNY WILLIAMS, the no-nonsense decorator known for her lush English-style rooms, is laying in light bulbs like canned goods. Incandescent bulbs, that is -- 60 and 75 watters -- because she likes a double-cluster lamp with a high- and a low-watt bulb, one for reading, one for mood.

"Every time I go to Costco, I buy more wattage," Ms. Williams said the other day. She is as green as anybody, she added, but she can't abide the sickly hue of a twisty compact fluorescent bulb, though she's tried warming it up with shade liners in creams and pinks. Nor does she care for the cool blue of an LED.

It should be noted that, like most decorators, Ms. Williams is extremely precise about light. The other day, she reported, she spent six hours fine-tuning the lighting plan of a project, tweaking the mix of ambient, directional and overhead light she had designed, and returning to the house after dusk to add wattage and switch out lamps like a chef adjusting the flavors in a complicated bouillabaisse.

She is aware that there is legislation that is going to affect the manufacture of incandescent bulbs, but she's not clear on the details, and she wants to make sure she has what she needs when she needs it.

. . .

(p. D7) Other hoarders are hiding their behavior. David Brooks, who owns Just Bulbs on East 60th Street, said he has a customer in Tennessee who is buying up 60- and 100-watt soft-pink incandescent bulbs from G.E. and Sylvania for her three houses. Initially, she ordered 432 bulbs for each house, he said. Then she ordered another 1,000.

Mr. Brooks said the customer doesn't want her husband to find out, and wouldn't agree to speak to this reporter. The last order is destined, he said, "for a friend's house that she is helping to redecorate in Alabama. She doesn't want anyone to know her source."

For the full story, see:

PENELOPE GREEN. "Light Bulb Saving Time." The New York Times (Thurs., May 26, 2011): D1 & D7.

(Note: ellipsis added.)

(Note: the online version of the story is dated May 25, 2011.)

May 19, 2011

Entrepreneur Ken Olsen Was First Lionized and Then Chastised

OlsenKenObit2011-05-16.jpg"Ken Olsen, the pioneering founder of DEC, in 1996." Source of caption and photo: online version of the NYT article quoted and cited below.

I believe in The Road Ahead, Bill Gates describes Ken Olsen as one of his boyhood heroes for having created a computer that could compete with the IBM mainframe. His hero failed to prosper when the next big thing came along, the PC. Gates was determined that he would avoid his hero's fate, and so he threw his efforts toward the internet when the internet became the next big thing.

Christensen sometimes uses the fall of minicomputers, like Olsen's Dec, to PCs as a prime example of disruptive innovation, e.g., in his lectures on disruptive innovation available online through Harvard. A nice intro lecture is viewable (but only using Internet Explorer) at:

(p. A22) Ken Olsen, who helped reshape the computer industry as a founder of the Digital Equipment Corporation, at one time the world's second-largest computer company, died on Sunday. He was 84.

. . .

Mr. Olsen, who was proclaimed "America's most successful entrepreneur" by Fortune magazine in 1986, built Digital on $70,000 in seed money, founding it with a partner in 1957 in the small Boston suburb of Maynard, Mass. With Mr. Olsen as its chief executive, it grew to employ more than 120,000 people at operations in more than 95 countries, surpassed in size only by I.B.M.

At its peak, in the late 1980s, Digital had $14 billion in sales and ranked among the most profitable companies in the nation.

But its fortunes soon declined after Digital began missing out on some critical market shifts, particularly toward the personal computer. Mr. Olsen was criticized as autocratic and resistant to new trends. "The personal computer will fall flat on its face in business," he said at one point. And in July 1992, the company's board forced him to resign.

For the full obituary, see:

GLENN RIFKIN. "Ken Olsen, Founder of the Digital Equipment Corporation, Dies at 84." The New York Times (Tues., February 8, 2011): A22.

(Note: ellipsis added.)

(Note: the online version of the story is dated February 7, 2011 and has the title "Ken Olsen, Who Built DEC Into a Power, Dies at 84.")

Gates writes in autobiographical mode in the first few chapters of:

Gates, Bill. The Road Ahead. New York: Viking Penguin, 1995.

Christensen's mature account of disruptive innovation is best elaborated in:

Christensen, Clayton M., and Michael E. Raynor. The Innovator's Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

May 18, 2011

"For the First 40 Years of Indian Independence, Entrepreneurs . . . Were Looked Down Upon"

(p. 8) Saurabh Srivastava, co-founder of the National Association of Software and Service Companies in India, explained that for the first 40 years of Indian independence, entrepreneurs here were looked down upon. India had lost confidence in its ability to compete, so it opted for protectionism. But when the '90s rolled around, and India's government was almost bankrupt, India's technology industry was able to get the government to open up the economy, in part by citing the example of America and Silicon Valley. India has flourished ever since.

"America," said Srivastava, "was the one who said to us: 'You have to go for meritocracy. You don't have to produce everything yourselves. Go for free trade and open markets.' This has been the American national anthem, and we pushed our government to tune in to it. And just when they're beginning to learn how to hum it, you're changing the anthem. ... Our industry was the one pushing our government to open our markets for American imports, 100 percent foreign ownership of companies and tough copyright laws when it wasn't fashionable."

If America turns away from these values, he added, the socialist/protectionists among India's bureaucrats will use it to slow down any further opening of the Indian markets to U.S. exporters.

For the full commentary, see:

THOMAS L. FRIEDMAN. "It's Morning in India." The New York Times, Week in Review Section (Sun., October 31, 2010): 8.

(Note: the online version of the story is dated October 30, 2010.)

April 14, 2011

U.S. Citizens Choose Cars for 99% of Trips

(p. 92) America is a car culture and has been for almost a century, the phrase "traffic jam" dating to 1910, meaning we're stuck with car culture for the time being. In the United States, the number of trips taken on public transportation has since 1998 been rising more rapidly than trips taken in cars. But public transportation nevertheless cannot be a cure-all for traffic congestion, since only a total of 1 percent of all U.S. trips occur on public transit. Double the share, which would require notable effort and capital expense, and it's still only 2 percent. A car culture with a rising population and rising prosperity has little choice but to keep investing in roads and parking.


Easterbrook, Gregg. The Progress Paradox: How Life Gets Better While People Feel Worse. Paperback ed. New York: Random House, 2004.

March 20, 2011

"The Adventurous, Pioneering Spirit"


Source of book image:

(p. 30) "Jet Age" is ostensibly about the race between two companies and nations to commercialize a military technology and define a new era of air travel. There's Boeing with its back to the wall and its military contracts drying up, betting everything on passenger jets, pitted against de Havilland and the government-subsidized project meant to reclaim some of Britain's lost glory. . . .

. . .

But the book is really about the risk-taking essential for making any extreme endeavor common­place. "Jet Age" celebrates the managers, pilots, engineers, flight attendants and, yes, even passengers (for without passengers there is no business) who gambled everything so that we might cross oceans and continents in hours rather than days.

It is easy to forget, in this time of overcrowded flights, demoralizing security checks, embattled flight attendants and dwindling service, that risk was once embraced as a necessary, even desirable, part of flying. Quoted in the book, the celebrated aviator Lord Brabazon summed it up in post-accident testimony: "You know, and I know, the cause of this accident. It is due to the adventurous, pioneering spirit of our race. It has been like that in the past, it is like that in the present, and I hope it will be in the future."

For the full review, see:

MICHAEL BELFIORE. "Fatal Flaws." The New York Times Book Review (Sun., February 6, 2011): 30.

(Note: ellipses added.)

(Note: the online version of the article is dated February 4, 2011.)

The book under review is:

Verhovek, Sam Howe. Jet Age: The Comet, the 707, and the Race to Shrink the World. New York: Avery, 2010.

March 7, 2011

Better Rails Were Needed Before Train Would "Work"

(p. 300) The other weight problem was the one that licked Trevithick at Penydarren: The tracks on which the locomotive ran were just not able to survive the tonnage traveling over them. Driving a five-ton steam locomotive over rails designed for horse-drawn carts was only slightly more sensible than driving a school bus over a bridge made of wet ice cubes. In both cases, it's a close call whether the vehicle will skid before or after the surface collapses.

. . .

(p. 301) Two years later, Stephenson, in collaboration with the ironmonger William Losh of Newcastle, produced, and in September 1816 jointly patented, a series of' improvements in wheels, suspension, and--most important--the method by which the rails and "chairs" connected one piece of track to another. Stephenson's rails seem mundane next to better-known eureka moments, but as much as any other innovation of the day they underline the importance of such micro-inventions in the making of a revolution. For it was the rails that finally made the entire network of devices--engine, linkage, wheel, and track--work.


Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: ellipsis added.)

March 3, 2011

France Lacked Good Patent Laws; Great French Inventors "Died Penniless"

(p. 367) If one secret to sustaining an inventive culture was making inventors into national heroes, it was a secret that didn't translate well into French. Between 1740 and 1780, the French inclination to reward inventors not by enforcing a natural right but by the grant of pensions and prizes resulted in the award of nearly 7 million livres--approximately $600 million today--to inventors of largely forgot-(p. 268)ten devices, but Claude-François Jouffroy d'Abbans (inventor of one of the first working steamboats), Barthélemy Thimonnier (creator of the first sewing machine), and Airné Argand (a partner of Boulton and friend of Watt whose oil lamp became the world's standard) all died penniless.


Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

February 28, 2011

Kappos Says Private Company Would Have Run Patent Office Better

KapposDavidPatent2011-02-27.jpg "David Kappos of the Patent Office, with an Edison bulb." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) "There is no company I know of that would have permitted its information technology to get into the state we're in," David J. Kappos, who 18 months ago became director of the Patent and Trademark Office and undersecretary of commerce for intellectual property, said in a recent interview. "If it had, the C.E.O. would have been fired, the board would have been thrown out, and you would have had shareholder lawsuits."

Once patent applications are in the system, they sit -- for years. The patent office's pipeline is so clogged it takes two years for an inventor to get an initial ruling, and an additional year or more before a patent is finally issued.

The delays and inefficiencies are more than a nuisance for inventors. Patentable ideas are the basis for many start-up companies and small businesses. Venture capitalists often require start-ups to have a patent before offering financing. That means that patent delays cost jobs, slow the economy and threaten the ability of American companies to compete with foreign businesses.

For the full story, see:

EDWARD WYATT. "U.S. Sets 21st-Century Goal: Building a Better Patent Office." The New York Times (Mon., February 21, 2011): A1 & A3.

(Note: the online version of the article is dated February 20, 2011.)

February 27, 2011

Patent Importance Survives the Results of Moser's Worlds Fairs Data Analysis

(p. 264) Petra Moser, now a professor at MIT's Sloan School of Management, spent four years examining more than 15,000 different inventions exhibited at nineteenth-century worlds fairs, and their equivalents, and discovered a fact that seems at first glance to discredit the idea that patent protection was essential for innovation: Nations without patent laws were in many cases just as inventive as those with them. Or even more inventive; some of the nations best represented at those industrial fairs actively discouraged the patenting of inventions.

The reason seems to be that whether or not they enforced a patent law, smaller nations or domains, such as the Netherlands and Switzerland, were vulnerable to the theft of their innovations by competitors in larger nations. The bargain of patent protection runs two ways: The state, in return for making an idea public, offers legal recourse to its creator should someone within the state steal the idea. Since making one's invention public in a nation with patent protection offered protection against theft only up to its own borders, only a large nation offered a large enough market to make the deal a good one, and (in Moser's words) the small nations "would have been silly to patent [their] innovations."

This logic inhibited investment in entire categories of innovation. Those nations that relied on secrecy rather than patent tended to specialize in the sort of inventions that cannot be easily reverse--engineered, such as chemicals or dyes.


Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: italics and bracketed word in original.)

February 23, 2011

Chinese Encyclopedia Was Burned to Protect Monopolies Granted by Emperor

(p. 262) As with Tudor England, government monopoly of patronage meant control. Virtually all copies of the seventeenth--century Chinese encyclopedia, the T'ien Kung K'ai-wu or Exploitation of the Works of Nature, which included illustrations of everything from hydraulics to metallurgy, were destroyed because, according to Joseph Needham, much of the material touched on industries that had been granted monopoly status by the Qing emperors: "The absence of political competition did not mean that technological progress could not take place, but it did mean that one decision-(p. 263)maker [i.e. the Emperor] could deal it a mortal blow." It is therefore no surprise that a high percentage of both the inventions and inventors we associate with China from the time of the Han Dynasty to the Qings were government sponsored and employed.

Another liability of a strong central government is that it is, well, strong. Europe's fragmented system of sovereign states made it possible for innovative minds such as Paracelsus, Leibniz. Rousseau, and Voltaire to "shop" for more congenial places whenever they skated too close to heretical or otherwise challenging notions; in China, one had to travel a thousand miles to a place where the empire's writ ran not.


Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: italics and bracketed words in original.)

February 20, 2011

Did Bell, or Gray, Invent the Telephone?


Source of book image:

A great and important debate is occurring about the desirability of the patent system. Should it be abolished, or reformed? If The Telephone Gambit book is right, one of the spectacular failures of the system is in the awarding of a patent to Bell for the telephone.

That's a big "if": some of the reviewers on Amazon give reasons for doubting Shulman's story.

I hope to have time to look into this further.

(p. D10) It was a brilliant concept. But was it Bell's? What had happened during his trip to Washington that allowed Bell to abandon the blind alleys he had been exploring and to suddenly, not incrementally, find the technological solution?

The answer to that question is a tale involving high-powered Washington lawyers, political influence, a patent clerk with a booze problem, and improper access to Elisha Gray's patent filing, where Bell found the secret to making the telephone work. Mr. Shulman lays out the evidence -- documentary, scientific, chronological and psychological -- piece by damning piece. He shows most impressively how Bell's subsequent behavior and actions are entirely in keeping with those of a decent and honorable man having to live most of his long life (Bell died in 1924) with the knowledge that behind his fortune and his fame lay a single instance of brazen dishonesty, of intellectual theft.

"The Telephone Gambit" is solid history, and Seth Shulman makes it as much fun to read as an Agatha Christie whodunit by using the techniques of historiography the way Hercule Poirot used his "little gray cells." That's no small accomplishment.

For the full review, see:

JOHN STEELE GORDON. "False Claim, Future Fortune." The Wall Street Journal (Fri., JANUARY 16, 2008): D10.

(Note: ellipsis added.)

The book being reviewed, is:

Shulman, Seth. The Telephone Gambit: Chasing Alexander Graham Bell's Secret. hardback ed. New York: W. W. Norton & Company, 2008.

February 13, 2011

Internet Enabled Creative Destruction

(p. R4) To understand the challenges that faced businesses the past 10 years, consider the household names that didn't make it through the decade: Anheuser-Busch, Compaq, Gillette, Enron, Lehman Brothers, Merrill Lynch, WorldCom.

. . .

As the decade rolled on, the Internet came to be known for destroying businesses. It upended decades-old business models in fields such as media, advertising, travel and entertainment, as consumers and advertisers migrated to the digital world.

But that same shift created opportunity. No one epitomized that better than Google Inc. A mere 15 months old at the beginning of the decade, it morphed from a startup technology company into an advertising and media powerhouse and is now plotting a move into communications. There, it will clash with Apple Inc., which was reborn following the return of co-founder Steve Jobs in 1997. Apple's iPod and iTunes reshaped the music industry; its iPhone revolutionized communications by opening itself to independent innovators.

"This is what [Austrian economist Joseph] Schumpeter had in mind with his term 'creative destruction,'" says Paul David, an economic historian at Stanford University. Industrial collapse is a "messy, messy process," Mr. David says. "It's a great drama, and watching it play out in this decade has been very interesting."

For the full story, see:

SCOTT THURM. "Creativity, Meet Destruction; The Decade Rewrote the Corporate Handbook, Thanks to the Web, Globalization and the Collapse of Two Bubbles." The Wall Street Journal (Mon., DECEMBER 21, 2009): R4.

(Note: ellipsis added.)

(Note: the online version of the article is dated DECEMBER 22, 2009.)

January 29, 2011

"It Isn't the Consumers' Job to Know What They Want"

iPadChild2011-01-21.jpg "Steven P. Jobs has played a significant role in a string of successful products at Apple, including the iPad, shown above, which was introduced last year." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) Shortly before the iPad tablet went on sale last year, Steven P. Jobs showed off Apple's latest creation to a small group of journalists. One asked what consumer and market research Apple had done to guide the development of the new product.

"None," Mr. Jobs replied. "It isn't the consumers' job to know what they want."

For years, and across a career, knowing what consumers want has been the self-appointed task of Mr. Jobs, Apple's charismatic co-founder. Though he has not always been right, his string of successes at Apple is uncanny. His biggest user-pleasing hits include the Macintosh, the iMac, iBook, iPod, iPhone and iPad.

But as he takes a medical leave of absence, announced on Monday, the question is: Without him at the helm, can Apple continue its streak of innovation, particularly in an industry where rapid-fire product cycles can make today's leader tomorrow's laggard?

. . .

(p. B4) With the iPad tablet, Apple jump-started a product category. But with the iPod (a music and media player) and iPhone (smartphone), Apple moved into markets with many millions of users using rival products, but he gave consumers a much improved experience.

"These are seeing-around-the-corner innovations," said John Kao, an innovation consultant to corporations and governments. "Steve Jobs is totally tuned into what consumers want. But these are not the kind of breakthroughs that market research, where you are asking people's opinions, really help you make."

Regis McKenna, a Silicon Valley investor and marketing consultant, said employees at Apple stores provide the company with a powerful window into user habits and needs, even if it is not conventional market research.

"Steve visits the Apple store in Palo Alto frequently," said Mr. McKenna, a former consultant to Apple.

. . .

In a conversation years ago, Mr. Jobs said he was disturbed when he heard young entrepreneurs in Silicon Valley use the term "exit strategy" -- a quick, lucrative sale of a start-up. It was a small ambition, Mr. Jobs said, instead of trying to build companies that last for decades, if not a century or more.

That was a sentiment, Mr. Jobs said, that he shared with his sometime luncheon companion, Andrew S. Grove, then the chief executive of Intel.

"There are builders and traders," Mr. Grove said on Tuesday. "Steve Jobs is a builder."

For the full story, see:

STEVE LOHR. "The Missing Tastemaker?" The New York Times (Weds., JANUARY 19, 2011): B1 & B4.

(Note: ellipses added.)

(Note: the online version of the article is dated January 18, 2011 and has the title "Can Apple Find More Hits Without Its Tastemaker?.")

January 26, 2011

REVISE THIS ONE: Patents Needed to Provide Money for "the Many Fruitless Experiments"

(p. 234) . . . ; together, Watt and Arkwright wrote a manuscript entitled "Heads of a Bill to explain and amend the laws relative to Letters Patent and grants of privileges for new inventions," essentially a reworking of Coke's Statute of 1623 that had created England's first patent law. In addition to its policy prescriptions, which were largely an unsuccessful argument against the requirement that patent applications be (p. 235) as specific as possible, the manuscript offered a remarkable insight into Watt's perspective on the life of the inventor, who should, in Watt's own (perhaps inadvertently revealing) words, "be considered an Infant, who cannot guard his own Rights":

An engineer's life without patent is not worthwhile . . . few men of ingenuity make fortunes without suffering to think seriously whether the article he manufactures might, or might not, be Improved. The man of ingenuity in order to succeed must seclude himself from Society, he must devote the whole powers of his mind to that one object, he must persevere in spite of the many fruitless experiments he makes, and he must apply money to the expenses of these experiments, which strict Prudence would dedicate to other purposes. By seclusion from the world he becomes ignorant of its manners, and unable to grapple with the more artful tradesman, who has applied the powers of his mind, not to the improvement of the commodity he deals in, but to the means of buying cheap and selling dear, or to the still less laudable purpose of oppressing such ingenious workmen as their ill fate may have thrown into his power.


Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: the second ellipsis and the italics in original; the first ellipsis added.)

January 24, 2011

Fluorescent Bulbs Burn Out Much Faster than Utility Predicted

(p. A5) When it set up its bulb program in 2006, PG&E Corp. thought its customers would buy 53 million compact fluorescent bulbs by 2008. It allotted $92 million for rebates, the most of any utility in the state. Researchers hired by the California Public Utilities Commission concluded earlier this year that fewer bulbs were sold, fewer were screwed in, and they saved less energy than PG&E anticipated.

As a result of these and other adjustments, energy savings attributed to PG&E were pegged at 451.6 million kilowatt hours by regulators, or 73% less than the 1.7 billion kilowatt hours projected by PG&E for the 2006-2008 program.

One hitch was the compact-fluorescent burnout rate. When PG&E began its 2006-2008 program, it figured the useful life of each bulb would be 9.4 years. Now, with experience, it has cut the estimate to 6.3 years, which limits the energy savings. Field tests show higher burnout rates in certain locations, such as bathrooms and in recessed lighting. Turning them on and off a lot also appears to impair longevity.

For the full story, see:

REBECCA SMITH. "The New Light Bulbs Lose a Little Shine; Compact Fluorescent Lamps Burn Out Faster Than Expected, Limiting Energy Savings in California's Efficiency Program." The Wall Street Journal (Weds., JANUARY 19, 2011): A5.

January 22, 2011

When Yarn Was Scarce There Was Less Incentive to Develop Power Looms

(p. 223) Though power looms had existed, at least in concept, for centuries (under his sketch for one, Leonardo himself wrote, "This is second only to the printing press in importance; no less useful in its practical application; a lucrative, beautiful, and subtle invention"), there was little interest in them so long as virtually all the available yarn could be turned into cloth in cottages. This fact reinforced the weaver's independence; but it also encouraged another group of innovative types who were getting ready to put spinning itself on an industrial footing.


Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

January 18, 2011

Artisan's Skills Were Still Required for Kay's Flying Shuttle

(p. 223) Kay's flying shuttle made it possible for weavers to produce a wider product, which they called "broadloom," but doing so was demanding. Weaving requires that the weft threads be under constant tension in order to make certain that each one is precisely the same length as its predecessor; slack is the enemy of a properly woven cloth. Using a flying shuttle to carry weft threads through the warp made it possible to weave a far wider bolt of cloth, but the required momentum introduced the possibility of a rebound, and thereby a slack thread. Kay's invention still needed a skilled artisan to catch the shuttle and so avoid even the slightest bit of bounce when it was thrown across the loom.


Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

January 16, 2011

Cornucopians Win Another Bet with Malthusians

(p. D1) Five years ago, Matthew R. Simmons and I bet $5,000. It was a wager about the future of energy supplies -- a Malthusian pessimist versus a Cornucopian optimist -- and now the day of reckoning is nigh: Jan. 1, 2011.

The bet was occasioned by a cover article in August 2005 in The New York Times Magazine titled "The Breaking Point." It featured predictions of soaring oil prices from Mr. Simmons, who was a member of the Council on Foreign Relations, the head of a Houston investment bank specializing in the energy industry, and the author of "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy."

I called Mr. Simmons to discuss a bet. To his credit -- and unlike some other Malthusians -- he was eager to back his predictions with cash. He expected the price of oil, then about $65 a barrel, to more than triple in the next five years, even after adjusting for inflation. He offered to bet $5,000 that the average price of oil over the course of 2010 would be at least $200 a barrel in 2005 dollars.

I took him up on it, not because I knew much about Saudi oil production or the other "peak oil" arguments that global production was headed downward. I was just following a rule learned from a mentor and a friend, the economist Julian L. Simon.

As the leader of the Cornucopians, the optimists who believed there would always be abundant supplies of energy and other resources, Julian figured that betting was the best way to make his argument. Optimism, he found, didn't make for cover stories and front-page headlines.

. . .

(p. D3) When I found a new bettor in 2005, the first person I told was Julian's widow, Rita Simon, a public affairs professor at American University. She was so happy to see Julian's tradition continue that she wanted to share the bet with me, so we each ended up each putting $2,500 against Mr. Simmons's $5,000.

. . .

The past year the price has rebounded, but the average for 2010 has been just under $80, which is the equivalent of about $71 in 2005 dollars -- a little higher than the $65 at the time of our bet, but far below the $200 threshold set by Mr. Simmons.

What lesson do we draw from this? I'd hoped to let Mr. Simmons give his view, but I'm very sorry to report that he died in August, at the age of 67. The colleagues handling his affairs reviewed the numbers last week and declared that Mr. Simmons's $5,000 should be awarded to me and to Rita Simon on Jan. 1, . . .

For the full commentary, see:

JOHN TIERNEY. "Findings; Economic Optimism? Yes, I'll Take That Bet." The New York Times (Tues., December 28, 2010): D1 & D3.

(Note: ellipses added.)

(Note: the online version of the article is dated December 27, 2010.)

January 10, 2011

London's Albion Mills Was "Likely" Destroyed By Millers' Arson

(p. 187) The Albion Mills, as it would be called, was built on a scale hitherto unimagined. The largest flour mill in London in 1783 used The Albion Mills, as it would be called, was built on a scale hitherto unimagined. The largest flour mill in London in 1783 used four pairs of grinding stones; Albion was to have thirty, driven by three steam engines, each with a 34-inch cylinder. Within months after its completion, in 1786, those engines were driving mills that produced six thousand bushels of flour every week--which both fed a lot of Londoners and angered a lot of millers.

The Albion Mills was London's first factory, and its first great symbol of industrialization; its construction inaugurated not only great age of steam-driven factories, but also the doomed though poignant resistance to them. That resistance took the shape of direct action--no one knows how the fire that destroyed the Albion Mills in 1791 began, but arson by millers threatened by its success seems likely-- . . .


Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: ellipsis added.)

January 7, 2011

Trade Stats Count iPhone as Chinese Export, Despite Only 3.6% of iPhone Costs from China

iPhoneGlobalTradeGraph2011-01-02.jpgSource of graph: online version of the WSJ article quoted and cited below.

(p. B1) . . . two academic researchers estimate that Apple Inc.'s iPhone--one of the best-selling U.S. technology products--actually added $1.9 billion to the U.S. trade deficit with China last year.

How is this possible? The researchers say traditional ways of measuring global trade produce the number but fail to reflect the complexities of global commerce where the design, manufacturing and assembly of products often involve several countries.

"A distorted picture" is the result, they say, one that exaggerates trade imbalances between nations.

Trade statistics in both countries consider the iPhone a Chinese export to the U.S., even though it is entirely designed and owned by a U.S. company, and is made largely of parts produced in several Asian and European countries. China's contribution is the last step--assembling and shipping the phones.

So the entire $178.96 estimated wholesale cost of the shipped phone is credited to China, even though the value of the work performed by the Chinese workers at Hon Hai Precision Industry Co. accounts for just 3.6%, or $6.50, of the total, the researchers calculated in a report published this month.

For the full story, see:

ANDREW BATSON. "Not Really 'Made in China'; The iPhone's Complex Supply Chain Highlights Problems With Trade Statistics." The Wall Street Journal (Thurs., December 16, 2010): B1 & B2.

(Note: ellipsis added.)

(Note: the online version of the article is dated DECEMBER 15, 2010nd that were not in the print version.)

The research report breaking down iPhone costs by country is:

Xing, Yuqing, and Neal Detert. "How the Iphone Widens the United States Trade Deficit with the People's Republic of China." ADBI Working Paper Series, no. 257, December 2010.

December 22, 2010

Under Health Care 'Reform' the Total Cost of Health Care Will "Go through the Roof!"


"Jonathan Bush, nephew of one former president and cousin of another, built a small medical practice into a national enterprise with nearly 1,200 employees." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B10) In the world of health care innovation, the founder and chief executive of Athenahealth has an outsize name. In part, that's because his name is Jonathan Bush, and he is the nephew of one former president and the cousin of another. But it's also because his company has mastered the intricacies of the doctor-insurer relationship and become a player in the emerging medical records industry.

Based in Watertown, Mass., Athenahealth offers a suite of administrative services for medical practices. It collects payments from insurers and patients, and it manages electronic health records and patient communication systems. All of this is done remotely through the Internet -- or "in the cloud," as Mr. Bush puts it. Doctors don't have to install or manage software or pay licensing fees; instead, Athenahealth keeps a percentage of the revenue.

. . .

Q. What's going on in the health care industry to deliver that kind of growth to you?

A. We are a disruptive technology. We are the only cloud-based service in an industry segment full of sclerotic, enormous, personality-free corporations that have been in business making 90 percent margins doing nothing for decades and decades.

Q. What keeps other companies from building cloud-based systems?

A. For software companies, the biggest barrier to entry is that they give up their business model. Those companies would get hammered on Wall Street if they started selling a service that they have to deliver at a loss for five years. In terms of new entrants, there are two things that we've done that would take a good decade to replicate. One, we've built out the health care Internet. We've been building connections into insurance companies and laboratories and hospital medical records for years and years and years.

And the other barrier to entry is that rules engine. Every time a doctor anywhere in the country gets a claim denied, we have analysts ask the Five Whys. When we get to root cause, we write a new rule into Athenanet and from that day on, no other doctor gets that particular denial from that particular insurance company ever again. We now know of 40 million ways that a doctor can have a claim denied in the United States. The average practice has to rework about 35 percent of their claims, and we only have to rework about 5 percent of ours.

Q. What's the prognosis for bill collecting under health care reform?

A. Well, there's going to be new connectors and a whole series of new insurance products that will be managed by the states' health insurance commissioners. And the law provides for every state to do all of these its own way, so they will have their own rules and regulations, and each state will do it differently. That sounds like springtime in Complexity Land.

Q. What do you think will happen to the total cost of health care under reform?

A. Oh, it's going to go through the roof! It's widely accepted that this is not a cost-reform bill -- it's an access bill. It's in fact a cost-expansion bill.

For the full story, see:

ROBB MANDELBAUM. "Views of Health Care Economics From a C.E.O. Named Bush." The New York Times (Thurs., September 9, 2010): B10.

(Note: ellipsis added.)

(Note: the online version of the article has the date September 8, 2010.)

December 21, 2010

The Hungry Innovate Because They Have Less to Lose

(p. 124) . . . , the eighteenth-century Swiss mathematician Daniel Bernoulli,'' who coined the term "human capital," explained why innovation has always been a more attractive occupation to have-nots than to haves: not only do small successes seem larger, but they have considerably less to lose.


Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: ellipsis added.)

December 17, 2010

Financial Gain an Important Motive for Invention

(p. 121) In 1930, Joseph Rossman, who had served for decades as an examiner in the U.S. Patent Office, polled more than seven hundred patentees. producing a remarkable picture of the mind of the inventor. Some of the results were predictable; the three biggest motivators were "love of inventing," "desire to improve." and "financial gain," the ranking for each of which was statistically identical. and each at least twice as important as those appearing (p. 122) down the list, such as "desire to achieve," "prestige," or "altruism" (and certainly not the old saw, "laziness," which was named roughly one-thirtieth as frequently as "financial gain"). A century after Rocket, the world of technology had changed immensely: electric power, automobiles, telephones. But the motivations of individual inventors were indistinguishable from those inaugurated by the Industrial Revolution.

. . .

In the same vein, Rossman's survey revealed that the greatest obstacle perceived by his patentee universe was not lack of knowledge, legal difficulties, lack of time, or even prejudice against the innovation under consideration. Overwhelmingly, the largest obstacle faced by early twentieth-century inventors (and, almost certainly, their ancestors in the eighteenth century) was "lack of capital." Inventors need investors.


Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: ellipsis added.)

December 3, 2010

If the Feds Want an Effective Stimulus, They Should Spend to Reduce the Patent Backlog

In my seminar on the Economics of Technology on Tuesday night (11/30/10), Gauri presented some interesting information on intellectual property. At one point she summarized that the lag in processing patents is about three years, but it takes, on average, only about 18 hours to process a patent once the processing has begun.

Later in the seminar, we talked about a brief article by Amar Bhidé on whether large economic stimulus programs have worked in the past, and will work in the present. Bhidé was skeptical, and I am too.

But it occurred to me that one modest economic stimulus expenditure might help. Why not make the highest stimulus spending priority to hire and train enough patent examiners to reduce the patent lag from three years to, say, three weeks?

The Bhidé article mentioned above is:

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

November 28, 2010

Whittle "Struggled for Years to Get Funding and Time to Pursue His Idea"

DeHavilandComet2010-11-14.jpg"When Britain Ruled The Skies: A De Havilland Comet under construction in Belfast in 1954." Source of caption and photo: online version of the WSJ review quoted and cited below.

(p. C8) Frank Whittle, the brilliant British military pilot and engineer who began patenting jet designs in 1930, struggled for years to get funding and time to pursue his idea. Even after World War II, when a competing Nazi design showed what fighter jets could achieve in battle, U.S. airlines were slow to see jets' potential for passenger travel.

It took another Brit, airplane designer Geoffrey de Havilland, to awaken postwar America's aviation behemoths. While Lockheed and Douglas were still churning out rumbling, low-flying propeller planes, De Havilland's jet-powered Comet began breaking records in 1952. Only after seeing Comets scorch the stratosphere at 500 miles an hour did Howard Hughes want jetliners for TWA and Juan Trippe get interested for Pan Am.

Among American plane makers, it was a military contractor that had struggled in the prewar passenger-plane market--Boeing--that first took up the jetliner challenge. In retrospect, the outcome seems obvious. The Boeing 707 inspired the t