Category: Economics of Technology

Open-Source Volunteers “May Not Have Sufficient Resources to Prioritize Security”

(p. A15) The recent discovery of a vulnerability in Apache log4j, a widely used open-source software tool, has exposed a significant security issue with our digital world.

. . .

We’ve had security issues with open-source software occur every couple of years, including the Heartbleed Bug in 2014 and the npm Left-Pad Vulnerability in 2016. According to the Cybersecurity and Infrastructure Security Agency, in 2020, two of the most routinely exploited information-technology vulnerabilities were related to open source.

One of the primary reasons for these vulnerabilities is that popular open-source software such as log4j is often maintained by volunteers who may not have sufficient resources to prioritize security. But these volunteers aren’t to blame. What appears to be an esoteric technical problem is actually one of funding and the sustainability of the entire digital ecosystem. While some open-source projects are supported by companies and nonprofit organizations, other pieces of code are maintained and released by people who struggle to monetize their work. The open-source security problem is, at its core, a tragedy of the commons. When the underlying health of our digital infrastructure is unsound, the whole system suffers.

For the full commentary, see:

Eric Schmidt and Frank Long. “Protect Open-Source Software.” The Wall Street Journal (Friday, January 28, 2022): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date January 27, 2022, and has the same title as the print version.)

IBM Sells Failed Watson Artificial Intelligence Health Unit

(p. B3) International Business Machines Corp. agreed to sell the data and analytics assets from its Watson Health business to investment firm Francisco Partners, the companies said Friday [January 21, 2022].

. . .

The Watson Health business uses artificial intelligence to analyze diagnostic tests and other health data and to manage care.

IBM had big aspirations for its Watson artificial intelligence to help in medical research and improve patient outcomes, but the technology’s impact has fallen short of early hopes. Partners and clients have moved away from projects that were built around Watson technology in recent years, although IBM had spent billions of dollars making acquisitions to bolster the business.

“IBM took a risk of becoming a disrupter in the complex health care industry but was only able to garner limited success,” UBS analyst David Vogt said in a note Friday.

For the full story, see:

Matt Grossman. “IBM Sells Its Watson Health Assets To Investment Firm as It Refocuses.” The Wall Street Journal (Saturday, January 22, 2022): B3.

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

(Note: the online version of the story was updated Jan. 21, 2022, and has the title “IBM Sells Watson Health Assets to Investment Firm.”)

Feds Impede Consumer Choice by Going Back to Incandescent Ban

(p. A16) In 2019, the Trump administration blocked a rule designed to phase out older incandescent bulbs, calling it unnecessary and an impediment to consumer choice.

With the move, the administration heeded to both industry demands as well as free market proponents who have long railed against tougher efficiency regulations for consumer appliances and goods, like energy-saving bulbs or water-saving dishwashers, as governmental overreach.

“The new bulb is many times more expensive, and I hate to say it, it doesn’t make you look as good,” Donald J. Trump, the former president, quipped at a White House meeting in 2019, referring to an early common complaint that LEDs emit a harsher light, though recent LED lights come in warmer hues. “We’re bringing back the old light bulb,” he later told a rally in Michigan.

The Biden administration has moved to reinstate the standards. But in a letter to the Department of Energy last year, NEMA, the industry group, urged federal rules to allow companies to manufacture and import inefficient bulbs for at least another year, followed by another year or more to sell out stockpiled inventory.

For the full story, see:

Hiroko Tabuchi. “Obsolete Bulbs Fill the Shelves At Dollar Stores.” The New York Times (Monday, January 24, 2022): A1 & A16.

(Note: the online version of the story has the date January 23, 2022, and has the title “Old-Fashioned, Inefficient Light Bulbs Live On at the Nation’s Dollar Stores.”)

Instead of Centralizing With C.D.C., the Need for Speed Requires “Clinical and Commercial Labs to Create and Deploy Tests”

(p. A22) The faulty coronavirus testing kits developed by the Centers for Disease Control and Prevention in the early weeks of the pandemic were not only contaminated but had a basic design flaw, according to an internal review by the agency.

Health officials had already acknowledged that the test kits were contaminated, but the internal report, whose findings were published in PLOS ONE on Wednesday, also documented a design error that caused false positives.

. . .

The C.D.C.’s test was designed to detect three distinct regions, or target sequences, of the virus’s genetic material. The test kits contain a set of what are known as primers, which bind to and make copies of the target sequences, and probes, which produce a fluorescent signal when these copies are made, indicating that genetic material from the virus is present.

The primers and probes need to be carefully designed so that they bind to the target sequences and not to each other. In this case, that did not happen. One of the probes in the kit sometimes bound to one of the primers, producing the fluorescent signal and generating a false positive.

“It’s something that should have been caught in the design phase,” said Susan Butler-Wu, a clinical microbiologist at the Keck School of Medicine of the University of Southern California. “That’s one thing that you check for.”

. . .

The bigger lesson, Dr. Butler-Wu said, is that the responsibility for developing diagnostic tests should be distributed more widely during a public health emergency. Rather than relying on the C.D.C. to be the sole test developer, officials could also enlist clinical and commercial labs to create and deploy tests.

“It’s great that there’s all these additional checks in place, but what are you going to do when there’s a new emerging pathogen and we need to respond quickly?” she said. “I don’t think that’s a viable model for responding to a pandemic.”

For the full story, see:

Emily Anthes. “C.D.C. Finds Design Error In Testing Kits It Distributed.” The New York Times Thursday, December 16, 2021): A22.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 15, 2021, and has the title “C.D.C. Virus Tests Were Contaminated and Poorly Designed, Agency Says.”)

The PLOS ONE article mentioned above is:

Lee, Justin S., Jason M. Goldstein, Jonathan L. Moon, Owen Herzegh, Dennis A. Bagarozzi, Jr., M. Steven Oberste, Heather Hughes, Kanwar Bedi, Dorothie Gerard, Brenique Cameron, Christopher Benton, Asiya Chida, Ausaf Ahmad, David J. Petway, Jr., Xiaoling Tang, Nicky Sulaiman, Dawit Teklu, Dhwani Batra, Dakota Howard, Mili Sheth, Wendi Kuhnert, Stephanie R. Bialek, Christina L. Hutson, Jan Pohl, and Darin S. Carroll. “Analysis of the Initial Lot of the CDC 2019-Novel Coronavirus (2019-nCoV) Real-Time RT-PCR Diagnostic Panel.” PLOS ONE 16, no. 12 (Dec. 15, 2021). DOI: 10.1371/journal.pone.0260487.

Technology Behind the Telephone Was Originally Intended to Aid Transcribing Telegraph Messages

(p. C5) Thomas Alva Edison’s self-proclaimed greatest invention, the phonograph, won him overnight fame.  . . .

In February 1877, the same month that saw Edison turn 30 and show his first streaks of silver hair, he and his fellow inventor Charles Batchelor began a new series of experiments on what they called, variously, the “telephonic telegraph,” the “speaking telegraph” and the “talking telephone.” This confusion of names would last as long as Americans took to adjust to the startling notion that an electrically transmitted message did not necessarily have to be transcribed.

It was beyond even Alexander Graham Bell’s imagination that people might one day use the telephone just to chat. As far as Edison was concerned, Bell’s invention was a device to speed up the process of turning words into pulsations of current, then turning the pulsations back into words at the other end—words intended to be heard only by a receiving operator, who would then (as Edison had done thousands of times as a youth) copy out the message for delivery. Hence the telephone really was, for all its crackly noise, telegraphic in function.

. . .

“Kruesi—make this,” Edison recalled saying to John Kruesi, his Swiss-born master machinist, giving him a drawing of a mounted, foil-wrapped cylinder, with a handle on one side to turn it, and a vibrant mouthpiece projecting a stylus that just touched the surface of the wrap. “I told him I was going to record talking, and then have the machine talk back,” Edison wrote. “He thought it absurd. However, it was finished, the foil was put on; I then shouted Mary had a little lamb, etc. I adjusted the reproducer, and the machine reproduced it perfectly….I never was so taken aback in my life.”

What awed Edison beyond any other thought was that the moment did not have to be a moment; it could be a century, if the foil and the stylus were preserved; and then in 1977, if some unborn person turned this same handle, the voice of a man long dead would speak to him. No wonder that Kruesi, listening with incredulity to the thing he had made talking with Edison’s voice, exclaimed, “Mein Gott im Himmel!” (My God in heaven).

All those who heard the miraculous machine in the ensuing months, from the president of the U.S. on down, reacted with equal disbelief. Since the dawn of humanity, religions had asserted that the human soul would live on after the body rotted away. The human voice was a thing almost as insubstantial as the soul, but it was a product of the body and therefore must die too—in fact, did die, evaporating like breath the moment each word, each phoneme was sounded. Even the notes of inanimate things—the tree falling in the wood, thunder rumbling, ice cracking—sounded once only, except if they were duplicated in echoes that themselves rapidly faded.

But here now were echoes made hard, resounding as often as anyone wanted to hear them again.

For the full essay, see:

Edmund Morris. “The Making of Thomas Edison’s Miraculous Machine.” The Wall Street Journal (Saturday, October 19, 2019): C5.

(Note: ellipses at the end or in between paragraphs, added; ellipsis internal to a paragraph, in original.)

(Note: the online version of the essay has the date October 17, 2019, and has the same title as the print version.)

The essay quoted above is adapted from Morris’s book:

Morris, Edmund. Edison. New York: Random House, 2019.

Economic Growth Reduces the Harms from Global Warming

(p. C3) Long-term economic growth is associated with both rising per capita energy consumption and slower population growth. For this reason, as the world continues to get richer, higher per capita energy consumption is likely to be offset by a lower population.

A richer world will also likely be more technologically advanced, which means that energy consumption should be less carbon-intensive than it would be in a poorer, less technologically advanced future. In fact, a number of the high-emissions scenarios produced by the United Nations Intergovernmental Panel on Climate Change involve futures in which the world is relatively poor and populous and less technologically advanced.

Affluent, developed societies are also much better equipped to respond to climate extremes and natural disasters. That’s why natural disasters kill and displace many more people in poor societies than in rich ones. It’s not just seawalls and flood channels that make us resilient; it’s air conditioning and refrigeration, modern transportation and communications networks, early warning systems, first responders and public health bureaucracies.

New research published in the journal Global Environmental Change finds that global economic growth over the last decade has reduced climate mortality by a factor of five, with the greatest benefits documented in the poorest nations. In low-lying Bangladesh, 300,000 people died in Cyclone Bhola in 1970, when 80% of the population lived in extreme poverty. In 2019, with less than 20% of the population living in extreme poverty, Cyclone Fani killed just five people.

Poor nations are most vulnerable to a changing climate. The fastest way to reduce that vulnerability is through economic development.

So while it is true that poor nations are most vulnerable to a changing climate, it is also true that the fastest way to reduce that vulnerability is through economic development, which requires infrastructure and industrialization. Those activities, in turn, require cement, steel, process heat and chemical inputs, all of which are impossible to produce today without fossil fuels.

For the full commentary, see:

Ted Nordhaus. “Ignore the Fake Climate Debate.” The Wall Street Journal (Saturday, January 25, 2020): C3.

(Note: the online version of the commentary has the date Jan. 23, 2020, and has the same title as the print version.)

Nordhaus’s commentary is related to the manifesto that he co-authored with many others:

Asafu-Adjaye, John, Linus Blomqvist, Stewart Brand, Barry Brook, Ruth DeFries, Erle Ellis, Christopher Foreman, David Keith, Martin Lewis, Mark Lynas, Ted Nordhaus, Roger Pielke Jr., Rachel Pritzker, Joyashree Roy, Mark Sagoff, Michael Shellenberger, Robert Stone, and Peter Teague. “An Ecomodernist Manifesto.” April 2015.

Technological Progress Helped Create Cosmopolitan Europe

(p. C7) Cultural history is frequently written as if circumscribed by national borders, with each country laying claim to a discrete social and intellectual way of life. Dismayed at this tendency, Orlando Figes, a noted historian of Russia, found himself wondering whether the forces of transnational integration weren’t at least as decisive as those that would drive cultures apart. In his new study “The Europeans” he aims “to approach Europe as a space of cultural transfers, translations and exchanges crossing national boundaries, out of which a ‘European culture’—an international synthesis of artistic forms, ideas and styles—would come into existence and distinguish Europe from the broader world.

. . .

His monumental work is the product of thorough and extensive research, largely in archival sources and in several languages. The author has a remarkable capacity to keep a huge quantity of factual material present in mind, and to bind it moreover into a coherent story. Woven through the biographical narrative is a detailed account of the transformations in technology, mores and law that created the new cosmopolitanism.

Chief among these was the rapid construction of railways, such that in France alone, for example, well more than 8,000 miles of track were laid down between 1850 and 1870. Railway travel gave people the time and comfort to read newspapers and fiction, which they could procure in the dozens of station bookstalls set up by merchants like W.H. Smith. “The train,” Mr. Figes notes, “was smoother than a horse-drawn carriage on a bumpy road, enabling passengers to read a book more easily.” Literacy had increased dramatically, and the rotary press, invented in 1843, facilitated the production of a vast quantity of printed matter, distribution of which deep into the provinces was in turn driven by the ramifying network of trains.

. . .

The spread of gas lighting, invented in the 1790s, made it possible for people to read comfortably in the evening. It also enabled them to play the piano at home, and of course piano technology had kept pace: The instruments became easier to play, and cheaper as well. In 1845, by the author’s estimation, 100,000 people in Paris were playing the piano, of which there were 60,000 in a city of about one million people.

For the full review, see:

Dan Hofstadter. “Engines of Progress.” The Wall Street Journal (Saturday, October 19, 2019): C7 & C9.

(Note: ellipses added.)

(Note: the online version of the review has the date October 18, 2019, and has the title “‘The Europeans’ Review: Engines of Progress.”)

The book under review in the passages quoted above is:

Figes, Orlando. The Europeans: Three Lives and the Making of a Cosmopolitan Culture. New York: Metropolitan Books, 2019.

Could Amateur Investors Return the Walt Disney Company to the Principles of Walt Disney?

I wonder what amateur investors could do if they had more serious motives than hatred of elite short-sellers? What if they had the motive, for example, of returning the Walt Disney Company to the principles of Walt Disney? I do not endorse the ambiguity (how much fictional and how much nonfictional) of the book reviewed below. But the GameStop and AMC episodes are intriguing proofs-of-concept.

(p. A15) Until late last year, GameStop was a typical and not very successful corporation. The company sold videogames through a chain of retail outlets and lost money on every sale. But its stock caught the interest of small investors who traded on Robinhood, a mobile trading app, and the stock began to levitate.

From single digits in October 2020 the stock price doubled to 20 late last year. Then, over a few manic days in January, it vaulted “like a lid flying off a pot,” as Ben Mezrich puts it in “The Antisocial Network.” It went up to 77, then 148, then 348 and then an intraday high of 483—at which point GameStop was worth more than $30 billion. Briefly, it was the most heavily traded issue on the stock market.

The source of the mayhem was, to borrow from the book’s subtitle, “a ragtag group of amateur traders.” Few of the devotees who flocked to GameStop thought of themselves as even armchair security analysts. They were infected by crowd psychology and, in some cases, driven by the hope that the high price would punish well-to-do short sellers.

. . .

Even when the price hit the stratosphere, retail buyers professed not to be worried. They would “never” sell; they weren’t concerned with the possibility of losing money. “Oh im [sic] fully aware that I may end up a bagholder,” went one post. “But it’s worth being a bagholder to stick it to those Wall Street f—s who’ve gamed the system for so long at our expense.”

To Mr. Mezrich, such fulminations suggest that a revolution is a-coming. His thesis is vented in excited metaphors. The “pillars” of Wall Street are shaking; Melvin Capital faces an “existential moment” (which, actually, it survived); angry traders constitute a “millennial version of the French Revolution.”

A little of this gas comes from investors; most of it is supplied by Mr. Mezrich. “The Antisocial Network” is built on scenes that the author has re-created; quotation marks, in the main, are conveniently absent. He writes of one novice but gung-ho investor, who worked in a hair salon: “She believed something deeper was happening.” Did she say that? Is it a paraphrase? Is it what Mr. Mezrich thinks she believed?

For the full review, see:

Roger Lowenstein. “BOOKSHELF; Let Them Eat Shorts.” The Wall Street Journal (Tuesday, Sept. 07, 2021): A15.

(Note: ellipsis added.)

(Note: the online version of the review has the date September 6, 2021, and has the title “BOOKSHELF; ‘The Antisocial Network’ Review: Let Them Eat Shorts.”)

The book under review is:

Mezrich, Ben. The Antisocial Network: The GameStop Short Squeeze and the Ragtag Group of Amateur Traders That Brought Wall Street to Its Knees. New York: Grand Central Publishing, 2021.

Humans Still Matter in Chess

(p. A14) Magnus Carlsen, of Norway, steamrolled Russia’s Ian Nepomniachtchi 7.5-3.5 in the best-of-14 series, capturing a decisive victory that solidified his legacy as the greatest in the history of the sport. He has been the world champion since 2013—this was his fifth win—and is the highest-rated player of all time.

What even his rivals marvel at is how Carlsen, 31, has weaponized the computer revolution against them. He does it not by overpowering opponents with calculation, but by harnessing that digital knowledge to turn games into more human battles.

“Magnus is proud of saying that he’s probably the top player who works the least with the computer and is the least influenced by the computer,” said Carlsen’s coach, Peter Heine Nielsen. “He wants to trust his own evaluation, his human touch and to keep that.”

. . .

. . . here’s the twist: the most lethal use of computer-based analysis isn’t to find something that only the machine can see. It’s figuring out what it sees and dismisses that might still be useful. The dream of any computer-savvy chess player is to discover a string of moves that an engine doesn’t necessarily favor, yet taps into a line that their opponent hasn’t prepared.

“That’s the Holy Grail,” said grandmaster Cristian Chirila, who assisted world No. 4 Fabiano Caruana when he faced Carlsen for the world championship in 2018. “If you can get there, that’s a huge advantage.”

In any given situation, the engines might recommend any number of moves and suggest that they are all relatively equal. Those are the obvious ones to study. But by playing a more obscure move—perhaps even one that the computers suggest is disadvantageous—Carlsen thrives by throwing his opponents into that unfamiliar territory.

For the full story, see:

Joshua Robinson and Andrew Beaton. “Computers Revolutionized Chess. Magnus Carlsen Wins by Being Human.” The Wall Street Journal (Friday, December 10, 2021): A14.

(Note: ellipses added.)

(Note: the online version of the story was updated Dec. 10, 2021, and has the same title as the print version.)

Tesla Could Switch Chips By Internally Modifying Software Code that Other Car Companies Had Outsourced

(p. 1) For much of last year, established automakers like General Motors and Ford Motor operated in a different reality from Tesla, the electric car company.

G.M. and Ford closed one factory after another — sometimes for months on end — because of a shortage of computer chips, leaving dealer lots bare and sending car prices zooming. Yet Tesla racked up record sales quarter after quarter and ended the year having sold nearly twice as many vehicles as it did in 2020 unhindered by an industrywide crisis.

Tesla’s ability to conjure up critical components has a greater significance than one year’s car sales. It suggests that the company, and possibly other young electric car businesses, could threaten the dominance of giants like Volkswagen and G.M. sooner and more forcefully than most industry executives and policymakers realize. . . .

Tesla and its enigmatic chief executive, Elon Musk, have said little about how the carmaker ran circles around the rest of the auto industry. Now it’s becoming clear that the company simply had a superior command of technology and its own supply chain. Tesla appeared to better forecast demand than businesses that produce many more cars than it does. Other automakers were surprised by how quickly the car market recovered from a steep drop early in the pandemic and had simply not ordered enough chips and parts (p. 12) fast enough.

When Tesla couldn’t get the chips it had counted on, it took the ones that were available and rewrote the software that operated them to suit its needs. Larger auto companies couldn’t do that because they relied on outside suppliers for much of their software and computing expertise. In many cases, automakers also relied on these suppliers to deal with chip manufacturers. When the crisis hit, the automakers lacked bargaining clout.

Just a few years ago, analysts saw Mr. Musk’s insistence on having Tesla do more things on its own as one of the main reasons the company was struggling to increase production. Now, his strategy appears to have been vindicated.

. . .

“Tesla, born in Silicon Valley, never outsourced their software — they write their own code,” said Morris Cohen, a professor emeritus at the Wharton School of the University of Pennsylvania who specializes in manufacturing and logistics. “They rewrote the software so they could replace chips in short supply with chips not in short supply. The other carmakers were not able to do that.”

“Tesla controlled its destiny,” Professor Cohen added.

. . .

Doing more on its own also helps explain why Tesla avoided shortages of batteries, which have limited companies like Ford and G.M. from selling lots of electric cars. In 2014, when most carmakers were still debating whether electric vehicles would ever amount to anything, Tesla broke ground on what it called a gigafactory outside Reno, Nev., to produce batteries with its partner, Panasonic. Now, that factory helps ensure a reliable supply.

“It was a big risk,” said Ryan Melsert, a former Tesla executive who was involved in construction of the Nevada plant. “But because they have made decisions early on to bring things in house, they have much more control over their own fate.”

As Professor Cohen of Wharton pointed out, Tesla’s approach is in many ways a throwback to the early days of the automobile, when Ford owned its own steel plants and rubber plantations. In recent decades, the conventional auto wisdom had it that manufacturers should concentrate on design and final assembly and farm out the rest to suppliers. That strategy helped reduce how much money big players tied up in factories, but left them vulnerable to supply chain turmoil.

For the full story, see:

Jack Ewing. “Tesla’s Edge in Pandemic: Superior Command of Supply Chain.” The New York Times, First Section (Sunday, January 9, 2022): 1 & 12.

(Note: ellipses added.)

(Note: the online version of the story has the date Jan. 8, 2022, and has the title “Why Tesla Soared as Other Automakers Struggled to Make Cars.”

Infrastructure Can Be Privately Provided

(p. B5) In less than a decade, four tech giants— Microsoft, Google parent Alphabet, Meta (formerly Facebook ) and Amazon —have become by far the dominant users of undersea-cable capacity. Before 2012, the share of the world’s undersea fiber-optic capacity being used by those companies was less than 10%. Today, that figure is about 66%.

And these four are just getting started, say analysts, submarine cable engineers and the companies themselves. In the next three years, they are on track to become primary financiers and owners of the web of undersea internet cables connecting the richest and most bandwidth-hungry countries on the shores of both the Atlantic and the Pacific, according to subsea cable analysis firm TeleGeography.

By 2024, the four are projected to collectively have an ownership stake in more than 30 long-distance undersea cables, each up to thousands of miles long, connecting every continent on the globe save Antarctica.

. . .

Undersea cables can cost hundreds of millions of dollars each. Installing and maintaining them requires a small fleet of ships, from surveying vessels to specialized cable-laying ships that deploy all manner of rugged undersea technology to bury cables beneath the seabed. At times they must lay the relatively fragile cable—at some points as thin as a garden hose—at depths of up to 4 miles.

All of this must be done while maintaining the right amount of tension in the cables, and avoiding hazards as varied as undersea mountains, oil-and-gas pipelines, high-voltage transmission lines for offshore wind farms, and even shipwrecks and unexploded bombs, says Howard Kidorf, a managing partner at Pioneer Consulting, which helps companies engineer and build undersea fiber optic cable systems.

In the past, trans-oceanic cable-laying often required the resources of governments and their national telecom companies. That’s all but pocket change to today’s tech titans. Combined, Microsoft, Alphabet, Meta and Amazon poured more than $90 billion into capital expenditures in 2020 alone.

The four say they’re laying all this cable in order to increase bandwidth across the most developed parts of the world and to bring better connectivity to under-served regions like Africa and Southeast Asia.

For the full commentary, see:

Christopher Mims. “KEYWORDS: Tech Giants Weave a Web Of Power Under the Sea.” The Wall Street Journal (Saturday, January 15, 2022): B5.

(Note: ellipsis added.)

(Note: the online version of the commentary has the same date as the print version, and has the title “KEYWORDS: Google, Amazon, Meta and Microsoft Weave a Fiber-Optic Web of Power.”)