Category: Economics of Technology

Robots Allow Walmart to Better Use “Workers for New Tasks”

(p. B4) Walmart plans to use autonomous robots in more stores by next year to scan shelf inventory to be able to detect products that are out of stock and direct workers and shoppers to precise product locations, Mark Ibbotson, head of central operations for Walmart U.S., said in an interview.

Walmart is also adding automatic conveyor belts to backrooms that sort products to speed the process of unloading the roughly nine trucks that arrive at a typical store each week, executives said at a presentation in June. The conveyor belts cut the number of workers needed to unload trucks by half, from around eight to four, they said.

The changes give Walmart more labor dollars to spend on “pickers,” workers who roam the store to compile online orders that are picked up by customers in store parking lots, said Mr. Ibbotson.

“It’s a savings” that allows Walmart to keep labor costs steady, through attrition and better using workers for new tasks, he said.

For the full story, see:

Sarah Nassauer. “Retailers Bring on Robots.” The Wall Street Journal (Monday, July 2, 2018): B4.

(Note: the online version of the story has the date July 1, 2018, and has the title “Target, Walmart Automate More Store Tasks.”)

F.A.A. Regulations Slow Drone Innovation

(p. B2) Chinese aviation administrators, . . . , have already approved drone deliveries by the e-commerce giant JD.com and delivery giant SF Holding Co. But in the United States, it will depend on whether regulators eventually allow drone companies to have autonomous systems in which multiple aircraft are overseen by one pilot and whether they can fly beyond the vision of that pilot. Current regulations do not permit multiple drones per operator without a waiver. Operators like Wing, the drone-delivery company owned by Google parent Alphabet, have that capability.

. . .

Wing is . . .  one of several companies participating in a pilot program in Virginia. As with its testing in Finland and Australia, Wing will focus on the delivery of consumer goods, including food.

The Virginia site, in Blacksburg, near Virginia Tech, is one of 10 chosen by the Federal Aviation Administration as part of its Unmanned Aircraft Systems Integration Pilot Program.

The 10 were culled from 149 applications from “state, local and tribal governments,” agency spokesman Les Dorr said in an email. Those in the industry didn’t apply directly, but could show their interest, he said, and more than 2,800 companies responded.

. . .

While the F.A.A. has chosen the 10 pilots, the programs still need to apply for agency waivers because they will fly beyond the visual line of sight, fly at night and fly over people, fundamentals not allowed under current law. The agency is seeking comments on expanding permissible uses under current law; it is also testing to evaluate the parameters of regulation.

As a practical matter, this means that some of the pilot programs are not yet operational as they await F.A.A. approval.

That’s O.K., said James Pearce, a spokesman for the North Carolina Department of Transportation, which prefers to ensure that the drones can safely fly and that those on the ground are not exposed to any risks, including those that are self-inflicted. “We need to make sure that people know not to try to grab the drones.”

. . .

While the deliberate pace may seem slow, Mr. Levitt, like others interviewed, remains sanguine. “It’s like the red flag laws when cars began to populate the roads. You had to have someone walking ahead with a flag to warn others. That’s where we are today with drones — not being able to fly beyond the visual line of sight is like not allowing a car to drive faster than a person can walk.”

For the full story, see:

Ellen Rosen.  “No Drones at Your Doorstep, but Don’t Rule Them Out Yet.”  The New York Times (Monday, ):  B2.

(Note:  ellipses added.)

(Note:  the online version of the story has the date March 19, 2019, and has the title “Skies Aren’t Clogged With Drones Yet, but Don’t Rule Them Out.”)

Boeing Tech Kludge Designed to Avoid Cost of Re-Certification Regulations

(p. A18)  . . . , Boeing engineers created the automated anti-stall system, called MCAS, that pushed the jet’s nose down if it was lifting too high. The software was intended to operate in the background so that the Max flew just like its predecessor. Boeing didn’t mention the system in its training materials for the Max.

Boeing also designed the system to rely on a single sensor — a rarity in aviation, where redundancy is common. Several former Boeing engineers who were not directly involved in the system’s design said their colleagues most likely opted for such an approach since relying on two sensors could still create issues. If one of two sensors malfunctioned, the system could struggle to know which was right.

Airbus addressed this potential problem on some of its planes by installing three or more such sensors. Former Max engineers, including one who worked on the sensors, said adding a third sensor to the Max was a nonstarter. Previous 737s, they said, had used two and managers wanted to limit changes.

“They wanted to A, save money and B, to minimize the certification and flight-test costs,” said Mike Renzelmann, an engineer who worked on the Max’s flight controls. “Any changes are going to require recertification.” Mr. Renzelmann was not involved in discussions about the sensors.

For the full story, see:

Jack Nicas and Julie Creswell.  “Boeing’s 737 Max: ’60s Design Meets ’90s Computing Power.”  The New York Times (Tuesday,  2019):  A1 & A18.

(Note:  ellipsis added.)

(Note:  the online version of the story has the date , and has the title “Boeing’s 737 Max: 1960s Design, 1990s Computing Power and Paper Manuals.”)

Turing Award Winners’ Neural Networks “Are Still a Very Long Way from True Intelligence”

(p. B3) On Wednesday [March 27, 2019], the Association for Computing Machinery, the world’s largest society of computing professionals, announced that Drs. Hinton, LeCun and Bengio had won this year’s Turing Award for their work on neural networks. The Turing Award, which was introduced in 1966, is often called the Nobel Prize of computing, and it includes a $1 million prize, which the three scientists will share.

. . .

Though these systems have undeniably accelerated the progress of artificial intelligence, they are still a very long way from true intelligence. But Drs. Hinton, LeCun and Bengio believe that new ideas will come.

“We need fundamental additions to this toolbox we have created to reach machines that operate at the level of true human understanding,” Dr. Bengio said.

For the full story, see:

Cade Metz.  “Pioneers Whose Neural Networks Are Bringing A.I. to Life Win Turing.”  The New York Times (Thursday, , 2019):  B3.

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

(Note:  the online version of the story has the date , 2019, and has the title “Turing Award Won by 3 Pioneers in Artificial Intelligence.”)

“Ridiculous” to Project “Our Psychology into the Machines”

(p. A8)  . . .  the soft-spoken, 55-year-old Canadian computer scientist, a recipient of this year’s A.M. Turing Award — considered the Nobel Prize for computing — prefers to see the world though the idealism of “Star Trek” rather than the apocalyptic vision of “The Terminator.”

“In ‘Star Trek,’ there is a world in which humans are governed through democracy, everyone gets good health care, education and food, and there are no wars except against some aliens,” said Dr. Bengio, whose research has helped pave the way for speech- and facial-recognition technology, computer vision and self-driving cars, among other things. “I am also trying to marry science with how it can improve society.”

. . .

Cherri M. Pancake, the president of the Association for Computing Machinery, which offers the $1 million award, credited Dr. Bengio and two other luminaries who shared the prize, Geoffrey Hinton and Yann LeCun, with laying the foundation for technologies used by billions of people. “Anyone who has a smartphone in their pocket” has felt their impact, she said, noting that their work also provided “powerful new tools” in the fields of medicine, astronomy and material sciences.

Despite all the accolades, Dr. Bengio recoils at scientists being turned into celebrities. While Dr. Hinton works for Google and Dr. LeCun is the chief A.I. scientist at Facebook, Dr. Bengio has studiously avoided Silicon Valley in favor of a more scholarly life in Montreal, where he also co-founded Element A.I., a software company.

“I’m not a fan of a personalization of science and making some scientists stars,” said Dr. Bengio, a self-described introvert, who colleagues say is happiest when hunched over an algorithm. “I was maybe lucky to be at the right time and thinking the right things.”

Myriam Côté, a computer scientist who has worked with Dr. Bengio for more than a decade, described him as an iconoclast and freethinker who would feel stymied by the strictures of Silicon Valley. A communitarian at heart, she said, he shuns hierarchy and is known for sharing the profits from his own projects with younger, less established colleagues.

“He wants to create in freedom,” she said. Citing the credo of student rebels in 1968 in Paris, where Dr. Bengio was born, she said his philosophy was: “It is forbidden to forbid.”

That, in turn, has informed his approach to A.I.

Even as Stephen Hawking, the celebrated Cambridge physicist, warned that A.I. could be “the worst event in the history of our civilization,” and the billionaire entrepreneur Elon Musk has cautioned it could create an “immortal dictator,” Dr. Bengio has remained more upbeat.

. . .

. . .  he dismissed the “Terminator scenario” in which a machine, endowed with human emotions, turns on its creator. Machines, he stressed, do not have egos and human sentiments, and are not slaves who want to be freed. “We imagine our creations turning against us because we are projecting our psychology into the machines,” he said, calling it “ridiculous.”

For the full story, see:

Dan Bilefsky.  “THE SATURDAY PROFILE; Teaching a Generation of Machines, Far From the Spotlights of Silicon Valley.”  The New York Times (Saturday, March 30, 2019):  A8.

(Note:  ellipses added.)

(Note:  the online version of the story has the date March 29, 2019, and has the title “THE SATURDAY PROFILE;  He Helped Create A.I. Now, He Worries About ‘Killer Robots’.”)

Innovative Entrepreneurs Bring Prosperity to the Poor

(p. A17) As the economist Joseph Schumpeter observed: “The capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.”

For Schumpeter, entrepreneurs and the companies they found are the engines of wealth creation. This is what distinguishes capitalism from all previous forms of economic society and turned Marxism on its head, the parasitic capitalist becoming the innovative and beneficent entrepreneur. Since the 2008 crash, Schumpeter’s lessons have been overshadowed by Keynesian macroeconomics, in which the entrepreneurial function is reduced to a ghostly presence. As Schumpeter commented on John Maynard Keynes’s “General Theory” (1936), change–the outstanding feature of capitalism–was, in Keynes’s analysis, “assumed away.”

Progressive, ameliorative change is what poor people in poor countries need most of all. In “The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty,” Harvard Business School’s Clayton Christensen and co-authors Efosa Ojomo and Karen Dillon return the entrepreneur and innovation to the center stage of economic development and prosperity. The authors overturn the current foreign-aid development paradigm of externally imposed, predominantly government funded capital- and institution-building programs and replace it with a model of entrepreneur-led innovation. “It may sound counterintuitive,” the authors write, but “enduring prosperity for many countries will not come from fixing poverty. It will come from investing in innovations that create new markets within these countries.” This is the paradox of the book’s title.

Continue reading “Innovative Entrepreneurs Bring Prosperity to the Poor”

Private Firms Build Costly Complex Cable Infrastructure

(p. B1) Nearly 750,000 miles of cable already connect the continents to support our insatiable demand for communication and entertainment. Companies have typically pooled their resources to collaborate on undersea cable projects, like a freeway for them all to share.
But now Google is going its own way, in a first-of-its-kind project connecting the United States to Chile, home to the company’s largest data center in Latin America.
. . .
(p. B7) Inside the ship, workers spool the cable into cavernous tanks. One person walks the cable swiftly in a circle, as if laying out a massive garden hose, while others lie down to hold it in place to ensure it doesn’t snag or knot. Even with teams working around the clock, it takes about four weeks before the ship is loaded up with enough cable to hit the open sea.
The first trans-Atlantic cable was completed in 1858 to connect the United States and Britain. Queen Victoria commemorated the occasion with a message to President James Buchanan that took 16 hours to transmit.
While new wireless and satellite technologies have been invented in the decades since, cables remain the fastest, most efficient and least expensive way to send information across the ocean. And it is still far from cheap: Google would not disclose the cost of its project to Chile, but experts say subsea projects cost up to $350 million, depending on the length of the cable.
. . .
Poor weather is inevitable. Swells reach up to 20 feet, occasionally requiring the ship captain to order the subsea cable to be cut so the ship can seek safer waters. When conditions improve, the ship returns, retrieving the cut cable that has been left attached to a floating buoy, then splicing it back together before continuing.
Work on board is slow and plodding. The ship, at sea for months at a time, moves about six miles per hour, as the cables are pulled from the giant basins out through openings at the back of the ship.
. . .
“It really is management of a very complex multidimensional chess board,” said Ms. Stowell of Google, who wears an undersea cable as a necklace.
Demand for undersea cables will only grow as more businesses rely on cloud computing services. And technology expected around the corner, like more powerful artificial intelligence and driverless cars, will all require fast data speeds as well. Areas that didn’t have internet are now getting access, with the United Nations reporting that for the first time more than half the global population is now online.
“This is a huge part of the infrastructure that’s making that happen,” said Debbie Brask, the vice president at SubCom, who is managing the Google project. “All of that data is going in the undersea cables.”

For the full story, see:
ADAM SATARIANO. “Underwater Freeways for Your Puppy Posts.” The New York Times (Tuesday, MARCH 12, 2019): B1 & B6-B7.
(Note: ellipses added.)
(Note: the online version of the story has the date MARCH 10, 2019, and has the title “How the Internet Travels Across Oceans.”)

How the Poor, Hungry, and Determined Can Persevere and Succeed

(p. B1) “I believe tech can be a road to the middle class for large numbers of Americans,” said Mr. Hsu, a co-founder and the chief executive of Pursuit, a nonprofit social venture. “But there’s real skepticism about that among people who see the winners in technology as a small network of the privileged.”
He is using Pursuit, housed in a former zipper factory in Long Island City, the Queens neighborhood where Amazon had intended to locate, to try to prove those skeptics wrong.
The venture is a small yet innovative player in a growing number of nonprofits developing new models for work force training.
(p. B5) Their overarching goal is upward mobility for low-income Americans and the two-thirds of workers without four-year college degrees.
Pursuit, according to its donors and to work force experts, stands out for the size of the income gains of its graduates and its experiment with a kind of bond to finance growth. It is a program worth watching, they say, and beginning to attract attention nationally.
About 85 percent of Pursuit’s 300 graduates have landed well-paying tech jobs within a year. They work as software engineers both at major corporations like JPMorgan Chase and at start-ups like Oscar Health. They earn $85,000 a year on average, compared with $18,000 before the Pursuit program.
. . .
Max Rosado heard about the Pursuit program from a friend. Intrigued, he filled out an online form, and made it through a written test in math and logic, interviews and a weekend workshop with simple coding drills, joining the 10-month program in 2016.
At Pursuit, Mr. Rosado, who has a two-year community college degree in liberal arts, got an intensive immersion in programming languages, concepts and projects. But the curriculum also covered so-called soft skills like making presentations, working in teams and writing résumés and thank-you notes.
Today, Mr. Rosado, 30, is an engineer at GrubHub, the meal delivery service, working on its smartphone software. In his previous jobs, in back office and sales associate roles in stores, he earned $15,000 to $20,000 a year. He makes nearly $100,000 now, he said.
. . .
Pursuit screens applicants for many characteristics, but those mainly fall into two categories: problem-solving skills and perseverance. The program, Mr. Hsu said, looks for people who are hungry and determined, willing to put in the time and effort to become a software developer, but also able to adapt to new and unfamiliar environments.

For the full story, see:
Lohr, Steve. “A Way Out of Poverty and Into an $85,000 Tech Job.” The New York Times (Saturday, March 16, 2019): B1 & B5.
(Note: ellipses added.)
(Note: the online version of the story has the date March 15, 2019, and has the title “Income Before: $18,000. After: $85,000. Does Tiny Nonprofit Hold a Key to the Middle Class?”)

Firms Moving from Silicon Valley to Texas

(p. A3) SAN FRANCISCO–California’s economy is adding jobs far faster than affordable places to live, forcing some employers to leave the state as they expand.
. . .
Karen Holian, 44 years old, joined the startup Lottery.com when it was founded here in 2015. Though a San Francisco native, Ms. Holian, a marketing manager, was excited when the company last year moved to Austin, Texas, because she could finally plan to buy a home.
“In San Francisco, that never seemed like a possibility,” she said. A mother of two, she is for now renting a four-bedroom house for $2,000 a month, a third of what a comparable place costs in her hometown.
Lottery.com CEO Tony DiMatteo said that as the company grew, he found it difficult to persuade current and prospective employees to move to the area. “We can give them a much better bang for their buck if we’re not in San Francisco,” he said.
. . .
Carl Guardino, chief executive of the Silicon Valley Leadership Group, said CEOs tell him “that any new job that doesn’t absolutely need to be in the Bay Area is located outside of the Bay Area.” The public-policy advisory group counts some 360 companies, including Silicon Valley’s largest, as members.
. . .
Texas has drawn more companies leaving California over the past decade than any other state, according to research by Joe Vranich, a relocation consultant who encourages businesses to leave California.
Housing costs are “a major selling point for us,” said Mike Rosa, senior vice president of economic development for the Dallas Regional Chamber. “It’s a factor in just about every [relocation] search we see.”

For the full story, see:
Nour Malas. “Firms Quit California Over Costs.” The Wall Street Journal (Tuesday, March 20, 2019): A3.
(Note: ellipses, and bracketed year, added; bracketed word, in original.)
(Note: the online version of the story has the date March 19, 2019, and has the title “California Has the Jobs but Not Enough Homes.” The sentence quoting Karen Holian appeared in the online, but not the print, version.)

Big Firms Can Benefit Consumers

(p. A15) Mr. Wu writes with elegance, conviction, knowledge–and certitude. But he goes over the top in his effort to slay the dragon of the so-called Chicago School of antitrust analysis, which finds its clearest expression in the late Robert Bork’s influential 1978 book, “The Antitrust Paradox.” Bork and the Chicago School insist that “consumer welfare” should be the sole standard for antitrust law. Nothing else matters.
. . .
The deeper source of philosophical disagreement, however, lies in Mr. Wu’s self-proclaimed “neo-Brandeisian” attack on Bork’s underlying worldview. First, Mr. Wu claims that Bork’s consumer-welfare theory shows too little solicitude toward the small businessman, who can be steamrolled by larger businesses with greater economic power. Second, Mr. Wu claims that Bork’s thesis ignores the perverse influence that dominant firms exercise on the overall political system.
Against both challenges, Bork’s position holds up reasonably well. As to the first, the protection of the small businessman comes at a high price. It forces consumers to do business with small firms that may well have a local geographical monopoly, which would be undercut by a larger firm offering better goods at lower prices.
. . .
Similarly, both Brandeis and Mr. Wu have an oversimplified vision of political markets, for economic dominance need not translate into political dominance. Companies like Google and Facebook today enjoy dominant positions with their search engines or social-media platforms, but they face massive political opposition, not only from regulatory authorities but also from skilled political operatives–activist groups, litigation centers, unions, trade associations–who can make their lives a public-relations nightmare.
. . .
Finally, Mr. Wu’s Brandeis fixation blinds him to the distinctive features of modern antitrust litigation, which must contend with often complicated economic arrangements and effects. When American Express tried to prevent its merchants from steering their customers to credit-card companies that charge lower fees to retailers, it was hit with an antitrust lawsuit. But the Supreme Court this year upheld the policy, claiming that it didn’t result in an abuse of market power but was pro-competitive because of indirect effects that improved the benefits to Amex card holders. With his over-concern with bigness per se, Brandeis had nothing to say about these novel issues, and neither, alas, does Mr. Wu.

For the full review, see:
Richard A. Epstein. “BOOKSHELF; Revisiting the Gilded Age; Are Google, Facebook, Apple and Amazon akin to the dominant “trusts” of the late 19th century–and thus deserving of antitrust action?” The Wall Street Journal (Monday, Dec. 3, 2018): A15.
(Note: ellipses added.)
(Note: the online version of the review has the date Dec. 2, 2018, and has the title “BOOKSHELF; ‘The Curse of Bigness’ Review: Revisiting the Gilded Age; Are Google, Facebook, Apple and Amazon akin to the dominant “trusts” of the late 19th century–and thus deserving of antitrust action?”)

The book under review, is:
Wu, Tim. The Curse of Bigness: Antitrust in the New Gilded Age. New York: Columbia Global Reports, 2018.

The Bork book mentioned in the review, is:
Bork, Robert H. The Antitrust Paradox: A Policy at War with Itself. New York: The Free Press, 1993 [first published 1978].

Last Blockbuster Store Flourishes

(p. B3) The second-to-last Blockbuster, a squat blue-and-yellow slab wedged next to a real estate agency in Western Australia, will stop renting videos on Thursday and shut down for good at the end of the month. Two stores in Alaska, part of the final group of Blockbuster outlets in the United States, closed in July.
That will make the Blockbuster in Bend, Ore., one of a kind: a corporate remnant, just off the highway, near a cannabis retailer and a pet cremation service.
. . .
Some Tower Records stores still thrive in Japan long after their parent company declared bankruptcy and closed all of its American stores. There is a Howard Johnson’s in Lake George, N.Y., that is the lone survivor of what was once the country’s largest restaurant chain.
Such holdouts have bucked the norm in the retail and restaurant industries, which have shed stores by the hundreds in recent years.
. . .
The Bend store became a Blockbuster franchise in 2000. It has about 4,000 active accounts and signs up a few fresh ones each day, Ms. Harding said. Some of the new customers are tourists who have traveled hours out of their way to stop in.
. . .
One possible explanation for the store’s long life: Bend is in a region that the city’s mayor, Sally Russell, describes as having “huge expanses with really small communities” that often do not have easy access to the high-speed internet necessary for content streaming.
Many residents of outlying areas stop at Blockbuster during their weekly trips to town to run errands, drawn in part by the store’s seven-day rental policy, Ms. Russell said, adding that the store’s last-in-the-world status could even give it a lift.
“It’s like with old vinyl, and how everyone wants to have turntables again,” she said. “We get to a place where something out of date comes back in — there’s definitely interest in keeping this almost-extinct way of enjoying movies alive.”

For the full story, see:
Tiffany Hsu. “A 9,000-Store Chain Has Closed 8,999. How Does That Work?” The New York Times (Thursday, March 7, 2019): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date March 6, 2019, and has the title “The World’s Last Blockbuster Has No Plans to Close.”)