Source of graphic: scanned from p. B1 of NYT article cited below.
Leonard Read in his classic "I, Pencil" told the story of how the various compenents of a mere pencil came from different suppliers the world over. People who did not know each other, and might not like each other if they met, but who were brought together in productive co-operation through the power of the market. Milton Friedman frequently presented his own verison of this story. The cover of my 1980 edition of Free to Choose has a picture of Friedman holding a pencil as if in the middle of this story. And there is a short video-clip of Friedman telling the story.
A similar story could be told with many other products, and several sources have presented the raw materials in print to tell the story for laptop computers. (By "raw materials" I mean that they list the diversity of sources of the inputs; but usually without drawing all the lessons that Reed and Friedman drew.) One source is a chapter in Thomas Friedman’s The World is Flat.
Two other sources are articles that appeared within a few days of each other in The New York Times and The Wall Street Journal.
The reference to The New York Times article is:
DAVID BARBOZA. "An Unknown Giant Flexes Its Muscles; Amid Talk of Deal With I.B.M., Lenovo of China Sheds Some Obscurity." The New York Times (Sat., December 4, 2004): B1 & B3.
The reference to The Wall Street Journal article is:
Jason Dean and Pui-Wing Tam. "The Laptop Trail; The Modern PC Is a Model Of Hyperefficient Production And Geopolitical Sensitivities." The Wall Street Journal (Thurs., June 9, 2005): B1 & B8.
Source of graphic: scanned from p. B1 of WSJ article cited above.
Source of the book image: http://ec1.images-amazon.com/images/P/1400082137.01._SS500_SCLZZZZZZZ_V52133117_.jpg
Economists have debated whether patents mainly provide incentives, or obstacles, to innovation. In the story of the development of sulfa, the first powerful antibiotic, the desire for profit, through patents, was one motive that drove an important part of the development process; this, even though, in the end, sulfa turned out not to be patentable:
(p. P9) Mr. Hager follows a group of doctors into postwar German industry — specifically into the dye conglomerate IG Farben. These men, having witnessed horrible deaths by infection on the battlefield, picked up on Ehrlich’s hypothesis by trying to synthesize a dye that specifically stained and killed bacteria. Led by the physician-scientist Gerhard Domagk, they brought German know-how, regimentation and industry to the enterprise.
Year after year the team infected mice with streptococci, the bacteria responsible for so many deadly infections in humans. The researchers then treated the mice with various dyes but had to watch as thousands upon thousands of them died despite such treatment. Nothing seemed to work. The 1920s turned into the ’30s, and still Domagk and his team held to Ehrlich’s idea. There was simply no better idea around.
Then one of the old hands at IG Farben mentioned that he could get dyes to stick to wool and to fade less by attaching molecular side-chains containing sulfur to them. Maybe what worked for wool would work for bacteria by making the dye adhere to the bacteria long enough to kill it.
. . .
The IG Farben conglomerate expected huge profits from Prontosil. But then French scientists at the Pasteur Institute in Paris dashed these dreams. The German scientists — all of them Ehrlich disciples — thought that the power to cure infection rested in the dye, with the sulfa side-chain merely holding the killer dye to the bacteria. The scientists at the Pasteur Institute, though, showed that the sulfa side-chain alone worked against infection just as well as the Prontosil compound. In fact, the dye fraction of the compound was useless. You could have Ehrlich’s magic bullet without Ehrlich’s big idea! This bombshell rendered the German patents worthless. The life-saver "drug" turned out to be a simple, unpatentable chemical available in bulk everywhere.
For the full review, see:
PAUL MCHUGH. "BOOKS; Medicine’s First Miracle Drug." The Wall Street Journal (Sat., September 30, 2006): P9.
(Note: ellipsis added.)
The reference for the book is:
Thomas Hager. The Demon Under The Microscope. Harmony, 340 pages, $24.95
Source of book image: http://www.mactime.ru/Environ/WebObjects/mactime.woa/2/wa/Main?textid=6114&level1=mactimes&wosid=b2qk07iEkIh6GoutH7IbVg
Many scholars interpret Schumpeter as believing that large firms would increasingly become the main source of innovation. Scherer, Christensen, and many others, have provided plenty of reason to doubt this belief. Here is another reason, from one of the innovators who helpted bring us the personal computer:
What emerges in "iWoz" is a chatty memoir full of surprises. Yes, Mr. Wozniak cherishes workbench minutiae, such as his tips for connecting circuitry wires. But he also sees this book as a chance to cut through cliché and explain himself to a larger audience. He reveals a technology pioneer who is more charming and annoying — and whose life is more poignant — than we expected.
. . .
As Apple roared ahead, going public in 1980 and then becoming one of the 500 largest U.S. companies, Mr. Wozniak’s golden moment came to an end. New products weren’t developed anymore by a brilliant prankster working with barely any sleep. There were now teams, committees and market studies.
Mr. Wozniak by his own account didn’t like these changes, and he didn’t want to rise into senior management. He hung on at Apple as a lone engineer — and he says he still collects a tiny paycheck from the company — but from the mid-1980s onward turned his attention to other things.
. . .
Fortunately, Mr. Wozniak finishes strong. In his final chapter, he offers a bit of advice to gifted engineers: "Work alone." Big companies tend to stifle innovation, he explains. It’s lonely and risky to work solo. No matter. "Man, it will be worth it in the end," he writes. His life bears out the truth of that simple claim.
For the full review, see:
GEORGE ANDERS. "BOOKS; Technostalgia; Steve Wozniak looks back on the computer revolution and his role as Apple’s co-founder." Wall Street Journal (Sat., September 30, 2006): P8.
(Note: ellipses added.)
The reference to the book by Wozniak:
Steve Wozniak, with Gina Smith. iWoz Norton, 2006. 313 pages, $25.95.
Steve Jobs at left, and Steve Wozniak at right, in San Francisco in 1977. Source of photo: online version of the WSJ article cited above.
Source of book image: http://www.etedeschi.ndirect.co.uk/homecompbiblio.htm
Crystal Fire is a well-written book which highlights many important aspects of the birth of computers. Not a perfect book—I could have done with a few less details about personal information, like who liked to play bridge and poker, and whose mother was a frustrated artist, and the like.
On the good side, they note how transistors were originally designed to replace vacuum tubes. The eventual main applications, as memory and processor chips in computers, only came later. (Another application of Fubini’s Law.)
They have a nice discussion of how American science was applied, versus the pure theory of the Germans. (E.g., to the Germans, some key phenomena leading to transistors, were dismissed as "dirt effects" (pp. 74 & 78).) The whole episode is a good example of the claim (see Terence Kealey) that very good science can come out of ‘industrial’ labs.
They also have a good example of serendipity, in the discussion of the strange chunk of silicon with unusual conductivity properties (circa p. 95). Reading this episode, it occurred to me that one key enabler of serendipitous discoveries is a scientist or engineer who is carrying around a problem, to which the serendipitous discovery is a solution. Buddhists need not apply—to carry around problems, you need to be dissatisfied–a milder version of what Tom Peters describes as ‘innovation coming from pissed-off people’ (see his Re-Imagine!)
Citation to the book:
Riordan, Michael, and Lillian Hoddeson. Crystal Fire: The Birth of the Information Age, Sloan Technology Series: W. W. Norton & Company, 1997.
Source of book image: http://search.barnesandnoble.com/booksearch/imageviewer.asp?ean=9780156334600
If, like Mr. Laar, you are only going to read one book in economics, Milton Friedman’s Free to Choose, is not too bad a choice:
(p. A23) Philippe Benoit du Rey is not one of those gloomy Frenchmen who frets about the threat to Gallic civilization from McDonald’s and Microsoft. He thinks international competition is good for his countrymen. He’s confident France will flourish in a global economy — eventually.
But for now, he has left the Loire Valley for Tallinn, the capital of Estonia and the economic model for New Europe. It’s a boomtown with a beautifully preserved medieval quarter along with new skyscrapers, gleaming malls and sprawling housing developments: Prague meets Houston, except that Houston’s economy is cool by comparison.
Economists call Estonia the Baltic tiger, the sequel to the Celtic tiger as Europe’s success story, and its policies are more radical than Ireland’s. On this year’s State of World Liberty Index, a ranking of countries by their economic and political freedom, Estonia is in first place, just ahead of Ireland and seven places ahead of the U.S. (North Korea comes in last at 159th.)
It transformed itself from an isolated, impoverished part of the Soviet Union thanks to a former prime minister, Mart Laar, a history teacher who took office not long after Estonia was liberated. He was 32 years old and had read just one book on economics: ”Free to Choose,” by Milton Friedman, which he liked especially because he knew Friedman was despised by the Soviets.
Laar was politically naïve enough to put the theories into practice. Instead of worrying about winning trade wars, he unilaterally disarmed by abolishing almost all tariffs. He welcomed foreign investors and privatized most government functions (with the help of a privatization czar who had formerly been the manager of the Swedish pop group Abba). He drastically cut taxes on businesses and individuals, instituting a simple flat income tax of 26 percent.
For the full commentary, see:
JOHN TIERNEY. "New Europe’s Boomtown." The New York Times (Tues., September 5, 2006): A23.
Source of the book image: http://search.barnesandnoble.com/booksearch/isbnInquiry.asp?z=y&EAN=9781930754904&itm=1
Who won the Nobel Peace Prize in 1970? You may be forgiven for not remembering, given some of the prize’s dubious recipients over the years (e.g., Yasser Arafat). Well, then: Who has saved perhaps more lives than anyone else in history? The answer to both questions is, of course, Norman Borlaug.
Who? Norman Borlaug, 92, is the father of the "Green Revolution," the dramatic improvement in agricultural productivity that swept the globe in the 1960s. He is now the subject of an admiring biography by Leon Hesser, a former State Department official who first met Mr. Borlaug 40 years ago in Pakistan, where they worked together to boost that country’s grain production. "The Man Who Fed the World" describes, in a workmanlike way, how a poor Iowa farm boy trained in forestry and plant pathology came to be one of humanity’s greatest benefactors.
. . .
Mr. Borlaug is still tirelessly working to keep hunger at bay. He remains a consultant to the International Maize and Wheat Improvement Center in Mexico and president of a private Japanese foundation working to spread the Green Revolution to sub-Saharan Africa. He believes that biotechnology will be crucial to boosting world food supplies in the coming decades and decries the underfunding of the world’s network of nonprofit agricultural research centers.
He also laments the unnecessary suspicion with which biotech is treated these days. "Activists have resisted research," he notes, "and governments have overregulated it." They both miss the point. "Responsible biotechnology is not the enemy: starvation is."
For the full review, see:
RONALD BAILEY. "Bookshelf; Going With the Grain." Wall Street Journal (Tues., September 5, 2006): D8.
The reference to the book is:
Hesser, Leon. The Man Who Fed the World: Nobel Peace Prize Laureate Norman Borlaug and His Battle to End World Hunger (Durban House Publishing: Dallas, 2006) ISBN: 1-930754-90-6; Hardback $24.95
Source of book image: http://www.aei.org/books/bookID.497,filter.all/book_detail.asp
Ben Wattenberg had already been predicting a world population decline for years, when he published The Birth Dearth in 1987. Back then, scepticism was widespread. Governments and philanthropists spent billions promoting birth control to restrain population growth. Many were still convinced of the wisdom of Isaac Ehrlich, darling of the environmentalist enemies of economic growth, who had predicted disaster in his Population Bomb.
(Note that the plausibility of many environmentalist disaster scenerios is based on the assumption of continuous population growth.)
The current decline in birth rates is not a total puzzle. Nobel-prize winner Gary Becker long-ago claimed that quality of children is what economists call a ‘normal’ good, which means that families invest more in quality as their incomes rise. As families invest more in quality, they invest less in quantity.
Whatever the reasons, the evidence continues to accumulate that Wattenberg was right:
After a long decline, birthrates in European countries have reached a historic low, as potential parents increasingly opt for few or no children. European women, better educated and integrated into the labor market than ever before, say there is no time for motherhood and that children are too expensive anyway.
The result is a continent of lopsided societies where the number of elderly increasingly exceeds the number of young — a demographic pattern that is straining pension plans and depleting the work force in many countries.
For the full story, see:
ELISABETH ROSENTHAL. "European Union’s Plunging Birthrates Spread Eastward." The New York Times (Mon., September 4, 2006): A3.
Source of graphic: online version of the NYT article cited above.