Category: Economics

Entrepreneurial Apple Finds Uses for “Defective” Chips “That Might Otherwise Be Thrown Out”

I am currently revising my “Innovative Entrepreneurs Replace Despair with Hope” paper in which I argue that if we unbind entrepreneurs from regulations they will be free to find new uses for labor that is currently unemployed or underemployed. In the paper I present as proof-of-concept, examples where entrepreneurs found uses for the previously useless, such as the startup that uses milkweed floss as insulation in parkas. I just ran across another example, in the passages quoted below, in which Apple has found uses for defective processor chips that previously would have been thrown out.

(p. A1) Apple, long revered for its premium-priced products, has managed to develop a booming business selling cheaper devices when most gadget makers are being hammered by rising costs.

One of its secrets: using chips with slight defects that might otherwise be thrown out.

The strategy is apparent in the technical minutiae of the newly released $599 MacBook Neo, which early data suggest is a hit with customers.

The chip powering the Neo is Apple’s A18 Pro, the same chip first used inside the iPhone 16 Pro two years ago, but with one key difference. The Neo version of the chip has a “5-core” graphics processor, one less than the version inside the 2024 iPhones, indicating that Apple was able to save some of the A18 Pro chips with a defective core for future use.

Defective cores can be disabled, leaving a chip that still functions perfectly well to power different, often cheaper devices—in this case an entry-level laptop instead of a top-of-the-line iPhone.

. . .

(p. A5) “If you can take the stuff that doesn’t meet highest level specs and still use it, you can save money, scrap and time,” says Tim Culpan, a supply-chain analyst who has written about Apple’s Neo chip orders. “Also you can reach a lot more customers you might not otherwise be able to sell to.”

Apple has used its flexibility with its own silicon to develop lower-priced iPhones and computers, many of which have sold well. The Neo is so popular that Apple is running low on leftover chips and has been forced to order new ones, according to people familiar with its supply chain.

. . .

Using chips in the Neo that might otherwise be tossed is one way Apple was able to deliver its first entry-level laptop.

For the full story, see:

Rolfe Winkler and Yang Jie. “Imperfect Chips Power Apple Products, Profits.” The Wall Street Journal (Tues., May 19, 2026): A1 & A5.

(Note: ellipses added.)

(Note: the online version of the story has the date May 17, 2026, and has the title “Apple Is Making Hit Products and High Profits From Imperfect Chips.”)

A working draft of the paper I refer to in my opening comments is:

Diamond, Arthur M., “Innovative Entrepreneurs Replace Despair with Hope” (March 13, 2026). Available at SSRN: https://ssrn.com/abstract=6412238 or http://dx.doi.org/10.2139/ssrn.6412238

Entrepreneurial Innovation Celebrated on Good Morning America!

Sunday morning, June 6, I was shocked to be impressed by a replay of a June 3 report on ABC’s Good Morning America, celebrating entrepreneurial perseverance and optimism. It appears that electric planes will receive regulatory approval to start operations in early fall. Maybe Trump’s deregulation push is allowing faster innovation; innovation that is starting to payoff?

The GMA report is:

“On board the 1st electric plane” https://goodmorningamerica.com/video/133545986 via @GMA

Chicago City Council Ends Increases in Restaurant Worker Minimum Wage

The members of the Chicago city council Democrat “machine” might have ended their support for minimum wage increases because they had enrolled en masse in price theory classes at the University of Chicago. But they did not–they likely still are not able to distinguish a supply curve from a demand curve. But apparently a sufficient number of them are able to open their eyes and admit their mistake when their constituents suffer the negative job consequences of an increasing minimum wage.

(p. A15) Chicago’s distressed dining scene—recently described as “on the brink of collapse”—was bolstered by good news last week, as the City Council voted to halt future increases in the minimum wage for servers and bartenders.

. . .

In the first year after the mayor’s minimum wage hike, new restaurant and tavern licenses—a key indicator of industry health—dropped by more than 8%. The Illinois Restaurant Association reported that nearly 500 restaurants closed in the first half of 2025, and 70% of the restaurants that responded to the association’s poll reported cutting staff or reducing employee hours since the wage hike took effect.

. . . Alderwoman Samantha Nugent, who introduced a proposal to stop further increases in the wage, said her constituents were suffering from the mayor’s good intentions: “I’ve had several restaurants close down,” she said. “I’ve heard from servers, when the tip credit changed in Chicago, their hours were cut.”

For the full commentary, see:

Michael Saltsman. “Chicago’s Minimum-Wage Retreat.” The Wall Street Journal (Mon., March 23, 2026): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date March 22, 2026, and has the same title as the print title.)

To Preserve the Status Quo the Wealthy Elite Gives the Poor “Little Gifts” from Their “Largess”

What Barton Swaim (quoted below) says was true of the “predemocratic, precapitalist European noble” is today usually true of an allegedly progressive and allegedly empathetic member of the wealthy elite who pities the poor and gives them “little gifts from his largess” mostly as a form of virtue signaling; but who then also usually supports government regulations that preserve his own wealth and elite status by blocking the poor from themselves becoming wealthy.

(p. A11) The socialist outlook—. . .—may inspire struggle in the immediate present, but the practical goal is tranquility, . . . : an attitude not so different from that of a predemocratic, precapitalist European noble hoping to keep his subjects more or less content with little gifts from his largess.

For the full interview/essay see:

Barton Swaim. “What’s the Matter With Scotland?” The Wall Street Journal (Sat., Dec. 6, 2025): A11.

(Note: ellipses added.)

(Note: the online version of the interview/essay has the date December 5, 2025, and has the same title as the print version.)

Technology Was Democratized When Standardization of Parts Enabled Simplification of Manufacture and Maintenance

There’s a lot to like about Steward Brand. His Whole Earth Catalog was quirky unpretentious fun. His How Buildings Learn, has a wonderful chapter on the ramshackle, unnamed, disrespected building on the MIT campus where quirky innovators were given space to create. His essay on Xerox Parc explained how the technology being developed there could liberate individual creativity. When Steve Jobs at Stanford delivered what is widely believed to be the best commencement address in history, he ended by quoting Stewart Brand’s final message in the 1974 Whole Earth Catalog: “Stay hungry, stay foolish.”

In the review quoted below, highlights that the simplification of production enabled by standardization of parts promoted the democratization of technology maintenance (and we might add, helped to democratize innovation too). Major simplification goes against the Theory of the Adjacent Possible which claims that technology develops toward greater and greater complexity.

(p. C7) Read front to back, “Maintenance” tells a coherent story of civilizational progress. Prior to the Industrial Revolution, most machines were one-off creations, built by artisans to their own quirky specifications. But the technological age increasingly demanded standardization. Weapons led the way. If a cannonball jammed in an imprecisely bored barrel, the cannon might explode, killing its crew. On the other hand, if the parts of a flintlock rifle were interchangeable, a soldier could repair his weapon without the need for a gunsmith.

The manufacturing techniques that enabled this kind of precision gradually spread to other technologies. The same tools developed to bore cannon barrels were then used to improve steam engines. But standardization had its enemies, Mr. Brand notes, especially among gunsmiths and other artisans. During the French Revolution, the sansculottes rebelled against the new industrial techniques. “Craft was extolled; uniformity was deplored,” Mr. Brand writes. France’s technical progress was set back 50 years.

A century later, the early automobile industry faced a similar split. The original Rolls-Royce Silver Ghost, Mr. Brand writes, “was manufactured as a bespoke, unique vehicle, meticulously crafted by a dedicated team.” Henry Ford’s Model T, by contrast, was a crude but ingeniously simple machine. Ford made sure each part was manufactured to unvarying specifications, “perfect enough” that it could be installed by a moderately skilled worker on a moving assembly line. No fine-tuning needed.

Ford’s embrace of standardization allowed his Model T to be built quickly and inexpensively. But standardization had another, paradoxical effect: It allowed nonexperts to repair their own vehicles and other equipment. A farmer who owned a Model T didn’t need a forge or metal lathe to fix his engine; he could simply order a replacement part—or cannibalize one from a wrecked car in a junkyard.

The French revolutionaries feared industrialization would depersonalize society by marginalizing skilled artisans. Mr. Brand shows that, instead, standardization democratized access to technology. With a few tools and a little gumption, anyone could learn to maintain and repair the machinery of daily life.

For the full review see:

James B. Meigs. “Fixing the Future.” The Wall Street Journal (Sat., Dec. 6, 2025): C7.

(Note: the online version of the review has the date December 5, 2025, and has the title “‘Maintenance: Of Everything, Part One’: Making the Future.”)

The book under review is:

Brand, Stewart. Maintenance of Everything: Part One. South San Francisco, CA: Stripe Press, 2026.

An earlier Brand book that I praised in my opening comments is:

Brand, Stewart. How Buildings Learn: What Happens after They’re Built. New York: Viking Adult, 1994.

Minimum Wage Advocates Forget That When the Price of Labor Rises, the Quantity Demanded Falls

George Stigler and many others point out that no law in economics is as certain as the Law of Demand: if the price rises, the quantity demanded falls. That applies to goods and labor too. In principles classes I would illustrate the law in several ways, including applying it to the effects of increasing the minimum wage. Much of the empirical work on minimum wages has been done by David Neumark. In December 2025 he posted a revision of his co-authored paper “Minimum Wages and Race Disparities.” Below is the paper abstract:

We provide a comprehensive analysis of the effects of minimum wages on blacks, and on the relative impacts on blacks vs. whites. We study not only teenagers – the focus of much of the minimum wage-employment literature – but also broader low-skill groups. We find evidence that job loss effects from higher minimum wages are more evident for blacks – and more so for black men. In contrast, they are not very detectable for whites. Moreover, the effects of minimum wages are often large enough to generate adverse effects on earnings (and relative earnings) of blacks. Given strong residential segregation by race in the United States, the race difference in the effects of minimum wages implies that the adverse impacts fall on areas with a high black population share. We also find evidence that minimum wage effects are more adverse in black areas, regardless of individual race, which accentuates the concentration of the adverse effects of minimum wages in areas where blacks are a very high share of the population.

Neumark’s co-authored paper is:

Neumark, David, and Jyotsana Kala. “Minimum Wages and Race Disparities.” National Bureau of Economic Research Working Paper #33167, Dec. 2025.

We Do Not See the Benefits That Regulations Block

We owe to Henry Hazlitt the insight that we do not see what wonders would be, if the government was less active. We see the bridge that the government builds with our tax money. But we do not see the refrigerators, televisions and vacations that the taxpayers would have had if they had not been taxed to build the bridge. The same insight applies to government regulation.

The CEO of Oura, an increasingly popular ring that collects health data, has penned a brief op-ed, telling us a couple of features that Oura would now have if they were regulated less:

With a reformed regulatory structure, Oura customers could already be benefiting from a range of advanced features, including screening for high blood pressure. Hypertension is one of the most significant risk factors for heart disease and stroke, while high blood pressure in pregnancy can signal pre-eclampsia, a complication that endangers mother and baby. Another primed capability, sleep-apnea detection, would give users an early-warning tool for a condition that often goes undiagnosed and can lead to serious complications.

The CEO of Oura’s op-ed is:

Tom Hale. “With Less Regulation, Your Oura Ring Could Do More.” The Wall Street Journal (Sat., December 20, 2025): A11.

(Note: the online version of the op-ed has the date Dec. 19, 2025, and has the same title as the print version.)

Henry Hazlitt’s great little book, mentioned in my comments, is:

Hazlitt, Henry. Economics in One Lesson. Irvington-on-Hudson, NY: The Foundation for Economic Education, Inc., 1952.

New Hampshire Unbinds Electric Entrepreneurs

The energy sector of the economy is both heavily regulated and much in need of innovation and expansion. Unfortunately the heavy regulation often blocks the innovation and expansion. Travis Fisher and Glen Lyons describe New Hampshire’s solution–a new law that greatly reduces regulations for electricity suppliers who do not connect to the broad “public” grid. Unbinding energy entrepreneurs should bring more innovation and greater competition–more electricity at lower prices.

Fisher and Lyons’s commentary is:

Travis Fisher and Glen Lyons. “New Hampshire Sparks a Revolution in Electricity Supply.” The Wall Street Journal (Sat., Sept. 27, 2025): A11.

(Note: the online version of the commentary has the date September 26, 2025, and has the same title as the print version.)

Large Randomized Controlled Trial Finds Little Benefit in Free Money to Poor, Undermining Case for Universal Basic Income (UBI)

A variety of arguments have been made in support of a Universal Basic Income (UBI). I am most interested in the argument that says that technology will destroy the jobs of the worst off, and so for them to survive society would be justified in giving them a basic income. I do not believe that in a free society technological progress will on balance destroy the jobs of the worst off. If innovative entrepreneurs are free to innovate, especially in labor markets, they will find ways to employ the worst off.

Others have argued that giving a basic income to the worst off will make them better parents, measurable by better child outcomes in terms of language skills and better behavior and cognition. Several years ago these advocates setup a big, expensive randomized controlled trial to test their argument. The results? None of their hypotheses were supported. The passages quoted below are from a front page New York Times article in which they express their surprise, and for some, their incredulity.

(p. A1) If the government wants poor children to thrive, it should give their parents money. That simple idea has propelled an avid movement to send low-income families regular payments with no strings attached.

Significant but indirect evidence has suggested that unconditional cash aid would help children flourish. But now a rigorous experiment, in a more direct test, found that years of monthly payments did nothing to boost children’s well-being, a result that defied researchers’ predictions and could weaken the case for income guarantees.

After four years of payments, children whose parents received $333 a month from the experiment fared no better than similar children without that help, the study found. They were no more likely to develop language skills, avoid behavioral problems or developmental delays, demonstrate executive function or exhibit brain activity associated with cognitive development.

“I was very surprised — we were all very surprised,” said Greg J. Duncan, an economist at the University of California, Irvine and one of six researchers who led the study, called Baby’s First Years. “The money did not (p. A15) make a difference.”

The findings could weaken the case for turning the child tax credit into an income guarantee, as the Democrats did briefly four years ago in a pandemic-era effort to fight child poverty.

. . .

Though an earlier paper showed promising activity on a related neurological measure in the high-cash infants, that trend did not endure. The new study detected “some evidence” of other differences in neurological activity between the two groups of children, but its significance was unclear.

While researchers publicized the earlier, more promising results, the follow-up study was released quietly and has received little attention. Several co-authors declined to comment on the results, saying that it was unclear why the payments had no effect and that the pattern could change as the children age.

For the full story see:

Jason DeParle. “Cash Stipends Did Not Benefit Needy Children.” The New York Times (Weds., July 30, 2025): A1 & A15.

(Note: ellipsis added.)

(Note: the online version of the story has the date July 28, 2025, and has the title “Study May Undercut Idea That Cash Payments to Poor Families Help Child Development.”)

The academic presentation of the research discussed above, can be found in:

Noble, Kimberly, Greg Duncan, Katherine Magnuson, Lisa A. Gennetian, Hirokazu Yoshikawa, Nathan A. Fox, Sarah Halpern-Meekin, Sonya Troller-Renfree, Sangdo Han, Shannon Egan-Dailey, Timothy D. Nelson, Jennifer Mize Nelson, Sarah Black, Michael Georgieff, and Debra Karhson. “The Effect of a Monthly Unconditional Cash Transfer on Children’s Development at Four Years of Age: A Randomized Controlled Trial in the U.S.” National Bureau of Economic Research (NBER) Working Paper 33844, May 2025.

AI Cannot Know What People Think “At the Very Edge of Their Experience”

The passages quoted below mention “the advent of generative A.I.” From previous reading, I had the impression that “generative A.I” meant A.I. that had reached human level cognition. But when I looked up the meaning of the phrase, I found that it means A.I. that can generate new content. Then I smiled. I was at Wabash College as an undergraduate from 1971-1974 (I graduated in three years). Sometime during those years, Wabash acquired its first minicomputer, and I took a course in BASIC computer programming. I distinctly remember programming a template for a brief poem where at key locations I inserted a random word variable. Where the random word variable occurred, the program randomly selected from one of a number of rhyming words. So each time the program was run, a new rhyming poem would be “generated.” That was new content, and sometimes it was even amusing. But it wasn’t any good, and it did not have deep meaning, and if what it generated was true, it was only by accident. So I guess “the advent of generative A.I.” goes back at least to the early 1970s when Art Diamond messed around with a DEC.

This is not the main point of the passages quoted below. The main point is that the frontiers of human thought are not on the internet, and so cannot be part of the training of A.I. So whatever A.I. can do, it can’t think at the human “edge.”

(p. B3) Dan Shipper, the founder of the media start-up Every, says he gets asked a lot whether he thinks robots will replace writers. He swears they won’t, at least not at his company.

. . .

Mr. Shipper argues that the advent of generative A.I. is merely the latest step in a centuries-long technological march that has brought writers closer to their own ideas. Along the way, most typesetters and scriveners have been erased. But the part of writing that most requires humans remains intact: a perspective and taste, and A.I. can help form both even though it doesn’t have either on its own, he said.

“One example of a thing that journalists do that language models cannot is come and have this conversation with me,” Mr. Shipper said. “You’re going out and talking to people every day at the very edge of their experience. That’s always changing. And language models just don’t have access to that, because it’s not on the internet.”

For the full story see:

Benjamin Mullin. “Will Writing Survive A.I.? A Start-Up Is Betting on It.” The New York Times (Mon., May 26, 2025): B3.

(Note: ellipsis added.)

(Note: the online version of the story has the date May 21, 2025, and has the title “Will Writing Survive A.I.? This Media Company Is Betting on It.”)