Category: Economics of Technology

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.”)

Those Who Don’t Like High-Tech Can Buy Low-Tech

(p. A1) Dan Dolar was ready to take a break from the distractions of his smartphone. So he bought another phone.
The 47-year-old IT worker, who lives in Manteca, Calif., now typically carries his new 3.8-inch Palm “companion device” around with him on weekends, leaving his bigger Samsung Galaxy Note 9 at home.
The new gadget helps when he’s “living that dad life,” he said, while reducing the potential distractions. Without his big smartphone, he said, “I’m not compelled to get that dopamine rush.”
Smartphone-fatigued consumers are renegotiating their relationships with their devices. A growing contingent is embracing a new crop of mini-(p. A13)malist phones, priced around $300 to $350, to wean themselves off premium models that keep them constantly connected.
Some are concerned that social media-usage is robbing them of interpersonal connections and making them less attentive. Others are annoyed by recent data privacy scandals at large internet and social-media companies–or they want the simple practicality of carrying a smaller phone.

For the full story, see:
Sarah Krouse. “One Solution for Smartphone Addicts–Another Phone.” The Wall Street Journal (Tuesday, March 12, 2019): A1 & A13.
(Note: the online version has the date March 11, 2019, and has the title “Smartphone Addicts’ New Tactic to Break Their Habit: Buy a Second Phone.”)

Farsighted Engelbart Saw That Computers “Would Aid Humans, Not Replace Them”

(p. A15) On Dec. 9, 1968, Doug Engelbart of the Stanford Research Institute presented what’s now known as “The Mother of All Demos.” Using a homemade modem, a video feed from Menlo Park, and a quirky hand-operated device, Engelbart gave a 90-minute demonstration of hypertext, videoconferencing, teleconferencing and a networked operating system. Oh, and graphical user interface, display editing, multiple windows, shared documents, context-sensitive help and a digital library. Mother of all demos is right. That quirky device later became known as the computer mouse. The audience felt as if it had stepped into Oz, watching the world transform from black-and-white to color. But it was no hallucination.
. . .
The coolest thing about this story is that, starting 20 years ago, Doug Engelbart was my next-door neighbor.
. . .
One of Engelbart’s biggest influences was Vannevar Bush’s 1945 essay, “As We May Think,” which envisioned a “memex” machine–a portmanteau of “memory” and “index”–that would enhance human cognition. While I chased my kids’ errant basketballs in his backyard, Doug would tell me about this sort of “human augmentation,” arguing that computer science was developing in ways that would aid humans, not replace them.

For the full commentary, see:
Andy Kessler. “Life as We Know It Turns 50; The 1968 ‘Mother of All Demos’ showed the world a vision for modern computing.” The Wall Street Journal (Monrday, Dec. 3, 2018): A15.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 2, 2018.)

Slide Rule Whiz Kid Helped Invent Calculator That Made Slide Rule Obsolete

(p. B12) Jerry Merryman, a self-taught electrical engineer who helped design the first pocket calculator, died on Feb. 27 [2019] in Dallas.
. . .
In 1965, two years after he joined the electronics maker Texas Instruments without a college degree, the company asked Mr. Merryman and two other engineers to build a calculator that could fit into a shirt pocket.
He designed the fundamental circuitry in less than three days, and when Texas Instruments unveiled the device two years later, the moment marked a transformational shift in the way Americans would handle everyday mathematics for the next four decades.
“Silly me, I thought we were just making a calculator, but we were creating an electronic revolution,” Mr. Merryman told the NPR program “All Things Considered” in 2013.
With this device, Mr. Merryman and his collaborators, Jack Kilby and James Van Tassel, also pioneered rechargeable batteries and “thermal printing,” which used heat to print numbers onto a special kind of paper. Speaking with NPR, Mr. Merryman said he was reminded of their work whenever he used a cellphone or was handed a thermally printed receipt by a grocery store cashier.
. . .
After a stint with the railroad — he packed ice into refrigerator cars carrying bananas — Mr. Merryman worked as an engineer at a local radio station. Then, in the late 1950s, he enrolled at Texas A&M University in nearby College Station. He left without finishing his degree.
. . .
Mr. Merryman immediately joined a team that was developing what were called integrated circuits, the breed of microchip that would later drive personal computers. His boss was Mr. Kilby, who had helped build the first integrated circuit in 1958. (Mr. Kilby, who later shared the 2000 Nobel Prize in Physics for this work. died in 2005.)
Seven years later, these microchips had yet to find their market niche, and Texas Instruments’ president at the time, Patrick E. Haggerty, decided that the company needed to prove its worth with a consumer product. He called for a pocket calculator.
. . .
During his brief stint at Texas A&M, Mr. Merryman entered a contest alongside 600 other students. They competed to see who was best at using a slide rule, the wood and plastic device that helped with multiplication, division, trigonometry and other mathematical calculations.
After buying a used slide rule for $6, Mr. Merryman won the contest with a nearly perfect score. “Hearne Student ‘Pulverized ′em’ in A&M Contest,” the headline in the local paper read.
Just a few years later, he helped make the slide rule obsolete.

For the full obituary, see:
Metz, Cade. “Jerry Merryman, 85, Co-Creator Of Calculator That Fit in Pocket.” The New York Times (Saturday, March 9, 2019): B12.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the obituary has the date March 7, 2019, and has the title “Jerry Merryman, Co-Inventor of the Pocket Calculator, Dies at 86.” The online version says that the page number of the New York edition was D6. I cite the page number in my National edition.)

.

Hybrid Jobs Are Less Likely to Become Obsolete

(p. R14) Jobs that tap both technical and creative thinking include mobile-app developers and bioinformaticians, and represent some of the fastest-growing and highest-paying occupations, according to a new report from Burning Glass Technologies, a labor-market analytics firm in Boston.
The company analyzed millions of job postings to better understand the skills employers are seeking. What they discovered was that many employers want workers with experience in such new capabilities as big-data gathering and analytics, or design using digital technology. Such roles often require not only familiarity with advanced computer programs but also creative minds to make use of all the data.
. . .
People who fail to update their skills will qualify for fewer jobs. In 2013, Burning Glass found, one in 20 ads for design, media and writing jobs requested analysis skills. In 2018, one in 13 postings did. In 2013, one in 500 ads for marketing and public-relations pros asked for data-visualization skills. By 2018, the ratio had increased to one in 59.
People in hybrid jobs are also less likely to become professionally obsolete. Highly hybridized jobs have only 12% risk of being automated, compared with a 42% risk for jobs overall, says Burning Glass.

For the full story, see:
Lauren Weber. “The ‘Hybrid’ Skills That Tomorrow’s Jobs Will Require.” The Wall Street Journal (Tuesday, Jan. 22, 2019): R14.
(Note: ellipsis added.)
(Note: the online and print versions have the same dates and titles.)

The Burning Glass Technologies report mentioned in the passages above, is:

Sigelman, Matthew, Scott Bittle, Will Markow, and Benjamin Francis. “The Hybrid Job Economy: How New Skills Are Rewriting the DNA of the Job Market.” Boston, MA: Burning Glass Technologies, Jan. 2019.

Deirdre McCloskey Offers Advance Praise for Openness to Creative Destruction

Astoundingly rich in ideas and stories, Diamond’s sweet and beautiful book is more: an open-handed guide to what really matters in explaining, and sustaining, the Great Enrichment of 3,000 percent per person 1800 to the present. Diamond assuages the ancient fear of betterment, recently haunting us with spooks of AI and technological unemployment. He shows conclusively that an “innovative dynamism” enriches us all, materially and spiritually. The poor are bettered. The jobs are bettered. Read the book and be bettered, freed from specious and politically poisonous worries about economic change.

Deirdre McCloskey, UIC Distinguished Professor of Economics and of History Emerita. Author of Bourgeois Equality and many other works.

McCloskey’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.

Neuroscience Maverick Funds His Own Research

(p. B4) Mr. Hawkins has been following his own, all-encompassing idea for how the brain works. It is a step beyond the projects of most neuroscientists, like understanding the brain of a fruit fly or exploring the particulars of human sight.
His theory starts with cortical columns. Cortical columns are a crucial part of the neocortex, the part of the brain that handles sight, hearing, language and reason. Neuro-(p. B4)scientists don’t agree on how the neocortex works.
Mr. Hawkins says cortical columns handle every task in the same way, a sort of computer algorithm that is repeated over and over again. It is a logical approach to the brain for a man who spent decades building new kinds of computing devices.
All he has to do is figure out the algorithm.
A number of neuroscientists like the idea, and some are pursuing similar ideas. They also praise Mr. Hawkins for his willingness to think so broadly. Being a maverick is not easily done in academia and the world of traditional research. But it’s a little easier when you can fund your own work, as Mr. Hawkins has.
. . .
In 1979, with an article in Scientific American, Francis Crick, a Nobel Prize winner for his DNA research, called for an all-encompassing theory of the brain, something that could explain this “profoundly mysterious” organ.
Mr. Hawkins graduated from Cornell in 1979 with a degree in electrical engineering. Over the next several years, he worked at Intel, the computer chip giant, and Grid Systems, an early laptop company. But after reading that magazine article, he decided the brain would be his life’s work.
He proposed a neuroscience lab inside Intel. After the idea was rejected, he enrolled at the University of California, Berkeley. His doctoral thesis proposal was rejected, too. He was, suffice to say, an outlier.
. . .
U.S. Robotics acquired Palm in 1996 for $44 million. About two years later, Mr. Hawkins and Ms. Dubinksy left to start Handspring. Palm, which became an independent company again in 2000, acquired Handspring for $192 million in stock in 2003.
Around the time of the second sale, Mr. Hawkins built his own neuroscience lab. But it was short-lived. He could not get a lab full of academics focused on his neocortical theory. So, along with Ms. Dubinsky and an A.I. researcher named Dileep George, he founded Numenta.
The company spent years trying to build and sell software, but eventually, after Mr. George left, it settled into a single project. Funded mostly by Mr. Hawkins — he won’t say how much he has spent on it — the company’s sole purpose has been explaining the neocortex and then reverse engineering it.

For the full story, see:
Cade Metz. “A New View of How We Think.” The New York Times (Monday, Oct. 15, 2018): B1 & B4.
(Note: ellipses added.)
(Note: the online version of the story has the date Oct. 14, 2018, and has the title “Jeff Hawkins Is Finally Ready to Explain His Brain Research.”)

Medtronic Founded in Garage

(p. A1) In the mid-1950s, heart pacemakers were bulky devices that had to be wheeled around on carts and plugged into a wall socket. A heart surgeon in Minneapolis asked Earl Bakken if he could make something better. After consulting a back issue of Popular Electronics, Mr. Bakken within a few weeks fashioned a wearable pacemaker powered by a battery.
. . .
Mr. Bakken, who died Oct. 21 [2018] at the age of 94, had no inkling he was creating anything more than a local repair shop when he and a brother-in-law, Palmer Hermundslie, set up Medtronic. “We didn’t analyze or study the market,” he wrote in “One Man’s Full Life,” a 1999 memoir. “We just did it.”
Medtronic’s inventions eventually sustained him physically as well as financially. “I’m on my second pacemaker, and I’m on about my third or fourth insulin pump,” he told the St. Paul Pioneer Press in 2010. “So I’m glad I invented the company, or I wouldn’t be sitting here.”
. . .
Noting his talents, university medical personnel sometimes asked Mr. Bakken to fix their equipment. He noticed that few hospitals had technical staffs to maintain their electrical gear. A chat with his brother-in-law, Mr. Hermundslie, prompted them to fill that niche by setting up a repair shop inside a garage.
. . .
In 1957, a power outage was blamed for the death of a baby dependent on a plug-in pacemaker. A University of Minnesota heart surgeon, Dr. C. Walton Lillehei, asked for alternative technology. Mr. Bakken found a design for an electronic metronome in Popular Electronics and used that as the model for a circuit. He housed the circuitry in a metal box small enough to be taped to a patient’s chest. After a successful test on a dog, Dr. Lillehei began using the device. Articles he wrote about it created a stir, and soon Medtronic was receiving orders from around the world.

For the full obituary, see:
James R. Hagerty. “Founder Started Medtronic as a Local Repair Shop.” The Wall Street Journal (Tuesday, Oct. 27, 2018): A6.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the obituary has the date Oct. 26, 2018, and has the title “Medtronic Founder Earl Bakken Turned a Tiny Repair Shop Into a Giant of Medical Technology.”)

The autobiography mentioned above, is:
Bakken, Earl E. One Man’s Full Life. Fridley, MN: Medtronic, Inc., 1999.

George Bittlingmayer Offers Advance Praise for Openness to Creative Destruction

For tens of thousands of years, before the Age of Innovation, human beings merely survived by hunting, gathering or tilling, and lived in caves or dirty, squalid huts. In marked contrast, the average person alive today enjoys a standard of living and access to entertainment, medical services, travel, and communications technology that our ancestors would have regarded as miraculous. Art Diamond skillfully shows how we got the many wonders we take for granted – everything from indoor plumbing to SUVs to iPhones – by telling the stories of the determined tinkerers, iconoclasts and visionaries who wouldn’t take “no” for an answer. They succeeded because they were willing to wage the good fight and because they could draw on flawed but ultimately supportive legal, cultural and economic institutions. Diamond also addresses the question of whether the Age of Innovation has run its course, and he provides a timely warning about the dangers that current political and intellectual forces pose to the many potential innovations yet to come. The Age Innovation may end, but whether it does is largely in our hands.

George Bittlingmayer, Economist, Angel Investor, and Professor Emeritus, University of Kansas.

Bittlingmayer’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.