Category: Economics of Technology

“Thank You, Industrialization” (Thank YOU, Hans Rosling)

The TED talk embedded above, is one of my favorites. I sometimes show an abbreviated version to my Economics of Technology seminar.

(p. B8) Hans Rosling, a Swedish doctor who transformed himself into a pop-star statistician by converting dry numbers into dynamic graphics that challenged preconceptions about global health and gloomy prospects for population growth, died on Tuesday in Uppsala, Sweden. He was 68.

The cause was pancreatic cancer, according to Gapminder, a foundation he established to generate and disseminate demystified data using images.
. . .
Brandishing his bubble chart graphics during TED (Technology, Entertainment and Design) Talks, Dr. Rosling often capsulized the macroeconomics of energy and the environment in a favorite anecdote about the day a washing machine was delivered to his family’s cold-water flat.
“My mother explained the magic with this machine the very, very first day,” he recalled. “She said: ‘Now Hans, we have loaded the laundry. The machine will make the work. And now we can go to the library.’ Because this is the magic: You load the laundry, and what do you get out of the machine? You get books out of the machines, children’s books. And Mother got time to read to me.”
“Thank you, industrialization,” Dr. Rosling said. “Thank you, steel mill. And thank you, chemical processing industry that gave us time to read books.”

For the full obituary, see:
SAM ROBERTS. “Hans Rosling, Swedish Doctor, Teacher and Pop-Star Statistician, Dies at 68.” The New York Times (Fri., FEB. 10, 2017): B8.
(Note: ellipses added.)
(Note: the online version of the obituary has the date FEB. 9, 2017, and has the title “Hans Rosling, Swedish Doctor and Pop-Star Statistician, Dies at 68.”)

Mokyr Credits the Great Enrichment to a Culture That Values Scientific Inquiry

(p. A13) Life is “solitary, poor, nasty, brutish and short” Thomas Hobbes proclaimed in 1651, and it had been that way ever since humans had inhabited the Earth. At the time Hobbes wrote those words, life expectancy averaged about 30 years old in his native England and income per person typically was around $5 a day (in 2016 dollars). Thanks to the Industrial Revolution and the Great Enrichment that followed, the typical subject of Queen Elizabeth II lives to almost 80 and has an income of over $100 a day. Perhaps more impressively, most people in the world today face the prospect of living at least that well within a generation or two.

What brought about the Great Enrichment? And why did it all start in England? Joel Mokyr, in his fine book, attributes it to the unique and productive culture that evolved there. It was a culture that welcomed change and favored scientific inquiry that spurred radical technological improvements.

. . .

According to Mr. Mokyr, three factors led to the ultimate triumph of the new modern search for scientific truth over the largely inaccurate “science” of the ancients. First, Europe’s fractured political environment was a blessing: Scientists who were banned or ostracized in one political jurisdiction fled to other locales more tolerant of their views. The controversial Franciscan monk, Bernardino Ochino (1487-1564), for example, was often in trouble and moving to evade authorities, leading him to flee from Italy to Switzerland and later, England, Poland and Moravia. Second, the invention of Gutenberg’s printing press around 1440 enormously lowered the cost of widely disseminating knowledge over large areas. Third, an extraordinary intellectual community evolved–Voltaire and others called the Republic of Letters–that made the dissemination of new information (through letters to fellow scientists) obligatory for anyone who wanted to gain respect in the growing international community of scientists.

For the full review, see:

RICHARD VEDDER. “BOOKSHELF; The Genesis of Prosperity; What brought about the Great Enrichment? And why did it start in England? It had a culture that embraced change and scientific inquiry.” The Wall Street Journal (Fri., Nov. 11, 2016): A13.

(Note: ellipsis added.)

(Note: the online version of the review has the date Nov. 10, 2016.)

The book under review, is:

Mokyr, Joel. A Culture of Growth: The Origins of the Modern Economy, Graz Schumpeter Lectures. New Haven, CT: Princeton University Press, 2016.

“Tax and Regulatory Policies” Influence Intel to Build Arizona Chip Plant

(p. B1) SAN FRANCISCO — Intel, the world’s largest computer chip manufacturer, will invest $7 billion to finish a factory in Arizona, adding 3,000 jobs, the company’s chief executive said on Wednesday after meeting with President Trump at the White House.
The completion of the factory, which will complement two other Intel semiconductor plants in Chandler, Ariz., had been under consideration for several years.
Standing beside Mr. Trump in the Oval Office, Brian Krzanich, Intel’s chief executive, said the company had decided to proceed now because of “the tax and regulatory policies we see the administration pushing forward.”

For the full story, see:
VINDU GOEL. “Intel Will Invest $7 Billion in Chip Plant in Arizona.” The New York Times (Thurs., FEB. 9, 2017): B1-B2.
(Note: the online version of the story has the date FEB. 8, 2017, and has the title “Intel, in Show of Support for Trump, Announces Factory in Arizona.”)

IBM Advance May Help Sustain Moore’s Law

(p. B3) In the semiconductor business, it is called the “red brick wall” — the limit of the industry’s ability to shrink transistors beyond a certain size.
On Thursday, however, IBM scientists reported that they now believe they see a path around the wall. Writing in the journal Science, a team at the company’s Thomas J. Watson Research Center said it has found a new way to make transistors from parallel rows of carbon nanotubes.
The advance is based on a new way to connect ultrathin metal wires to the nanotubes that will make it possible to continue shrinking the width of the wires without increasing electrical resistance.
One of the principal challenges facing chip makers is that resistance and heat increase as wires become smaller, and that limits the speed of chips, which contain transistors.
The advance would make it possible, probably sometime after the beginning of the next decade, to shrink the contact point between the two materials to just 40 atoms in width, the researchers said. Three years later, the number will shrink to just 28 atoms, they predicted.
. . .
. . . , during the last decade, the pace and power of semiconductor technology has begun to slow. The switching speed of computer chips stopped increasing because heat created by ultrafast processors was rising to the point where the chips would break.
More recently, for most of the industry, the cost of transistors has ceased to decline with each new generation. This has undercut the tremendous power of the technology to create new markets. And this year, Intel announced that the challenges and costs of bringing a new generation of technology to market had forced it to slow the every-two-year pace it had been on for more than a decade.
Now the industry has a new reason for optimism.

For the full story, see:
JOHN MARKOFF. “IBM Scientists Find New Way to Shrink Transistors (Measuring in Atoms).” The New York Times (Fri., OCT. 2, 2015): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date OCT. 1, 2015, and has the title “IBM Scientists Find New Way to Shrink Transistors.”)

The IBM advance is documented in:
Cao, Qing, Shu-Jen Han, Jerry Tersoff, Aaron D. Franklin, Yu Zhu, Zhen Zhang, George S. Tulevski, Jianshi Tang, and Wilfried Haensch. “End-Bonded Contacts for Carbon Nanotube Transistors with Low, Size-Independent Resistance.” Science 350, no. 6256 (Oct. 2, 2015): 68-72.

Economic Growth Depends Mainly on Micro Policies and Serendipity

(p. A2) In the long run, . . . , potential growth is a job for microeconomic, not macroeconomic, policy. It requires countless, painstaking fixes: raising labor-force participation with training and safety-net programs that don’t discourage work; investment-friendly tax and regulatory policies to incentivize investments that take years to pay off, if ever; and trade deals that let firms market their products to the entire world. It will also take some serendipity as firms keep hunting for the next miracle technology. No one foresaw how the information revolution would revitalize productivity in the 1990s, and the next such breakthrough will probably surprise us as well.

For the full story, see:
GREG IP. “CAPITAL ACCOUNT; Rewriting Recent Economic History.” The Wall Street Journal (Mon., June 2, 2016): A2.
(Note: ellipsis added.)
(Note: the online version of the story has the date June 1, 2016, and has the title “CAPITAL ACCOUNT; Post-Recession Rethink: Growth Potential Dimmed Before Downturn.”)

Musk Unveils Bold Private Enterprise Plan to Colonize Mars

(p. B3) Entrepreneur Elon Musk unveiled his contrarian vision for sending humans to Mars in roughly the next decade, and ultimately setting up colonies there, relying on bold moves by private enterprise, instead of more-gradual steps previously proposed by Washington.
Mr. Musk–who in 14 years transformed his closely held rocket company, Space Exploration Technologies Corp., into a global presence–envisions hosts of giant, reusable rockets standing more than 300 feet tall eventually launching fleets of carbon-fiber spacecraft into orbit.
The boosters would return to Earth, blast off again into the heavens with “tanker” spaceships capable of refueling the initial vehicles, and then send those serviced spacecraft on their way to the Red Planet. The rockets would be twice as powerful as the Saturn 5 boosters that sent U.S. astronauts to the Moon. Each fully developed spacecraft likely would carry between 100 and 200 passengers, Mr. Musk said.

For the full story, see:
ANDY PASZTOR. “Musk Offers Vision of Mars Flights.” The Wall Street Journal (Weds., Sept. 28, 2016): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date Sept. 27, 2016, and has the title “Elon Musk Outlines Plans for Missions to Mars.”)

Blockchain Is a Process Innovation That Will Make Financial Records More Reliable and Easier to Access

(p. A13) Until the mid-1990s, the internet was little more than an arcane set of technical standards used by academics. Few predicted the profound effect it would have on society. Today, blockchain–the technology behind the digital currency bitcoin–might seem like a trinket for computer geeks. But once widely adopted, it will transform the world.
Blockchain offers a way to track items or transactions using a shared digital “ledger.” Blocks of new transactions are added at the end of the chain, and encryption ensures that it remains unbroken–tamper-proof and error-free. This is significantly more efficient than the current methods for logging and sharing such information.
Consider the process of buying a house, a complex transaction involving banks, attorneys, title companies, insurers, regulators, tax agencies and inspectors. They all maintain separate records, and it’s costly to verify and record each step. That’s why the average closing takes roughly 50 days. Blockchain offers a solution: a trusted, immutable digital ledger, visible to all participants, that shows every element of the transaction.

For the full commentary, see:
GINNI ROMETTY. “How Blockchain Will Change Your Life.” The Wall Street Journal (Tues., Nov. 8, 2016): A13.
(Note: the online version of the commentary has the date Nov. 7, 2016, and has the title “KEYWORDS; Is Engine of Innovation in Danger of Stalling?”)

Decrease in Number of Tech Startups Results in Less Job Creation

(p. A10) Since 2002, the number of technology startups has slowed, hurting job creation. In a 2014 study, economists Javier Miranda, John Haltiwanger and Ian Hathaway said the growth of tech startups accelerated to 113,000 in 2001 from 64,000 in 1992.
That number slumped to 79,000 in 2011 and hasn’t recovered, according to the economists’ calculations using updated data. The causes include global competition and increased domestic regulation, says Mr. Haltiwanger, an economics professor at the University of Maryland.

For the full story, see:
Jon Hilsenrath and Bob Davis. “‘America’s Dazzling Tech Boom Has a Downside: Not Enough Jobs.” The Wall Street Journal (Thurs., Oct. 13, 2016): A1 & A10.
(Note: the online version of the story has the date Oct. 12, 2016, and has the title “‘America’s Dazzling Tech Boom Has a Downside: Not Enough Jobs.”)

The Haltiwanger paper mentioned above, is:
Haltiwanger, John, Ian Hathaway, and Javier Miranda. “Declining Business Dynamism in the U.S. High-Technology Sector.” Feb. 2014.

Internet Innovations Only Arose After Entrepreneurs Created PCs

(p. B15) Leo L. Beranek, an engineer whose company designed the acoustics for the United Nations and concert halls at Lincoln Center and Tanglewood, then built the direct precursor to the internet under contract to the Defense Department, died on Oct. 10 [2016] at his home in Westwood, Mass.
. . .
After the war, Dr. Beranek was recruited to teach at M.I.T., where he was named technical director of the engineering department’s acoustics laboratory. The administrative director of that lab was Richard Bolt, who later founded Bolt, Beranek & Newman with Dr. Beranek and Robert Newman, a former student of Dr. Bolt’s.
The company was conceived as a center for leading-edge acoustic research. But Dr. Beranek changed its direction in the 1950s to include a focus on the nascent computer age.
“As president, I decided to take B.B.N. into the field of man-machine systems because I felt acoustics was a limited field and no one seemed to be offering consulting services in that area,” Dr. Beranek said in a 2012 interview for this obituary.
He hired J.C.R. Licklider, a pioneering computer scientist from M.I.T., to lead the effort, and it was Dr. Licklider who persuaded him that the company needed to get involved in computers.
Under Dr. Licklider, the company developed one of the best software research groups in the country and won many critical projects with the Department of Defense, NASA, the National Institutes of Health and other government agencies. Though Dr. Licklider left in 1962, the company became a favored destination for a new generation of software developers and was often referred to as the third university in Cambridge.
“We bought our first digital computer from Digital Equipment Corporation, and with it we were able to attract some of the best minds from M.I.T. and Harvard, and this led to the ARPA contract to build the Arpanet,” Dr. Beranek said.
“I never dreamed the internet would come into such widespread use, because the first users of the Arpanet were large mainframe computer owners,” he said. “This all changed when the personal computer became available. With the PC, I could see that computers were fun, and that is the real reason why all innovations come into widespread use.”

For the full obituary, see:

GLENN RIFKIN. “Leo Beranek, 102, Who Pivoted From Acoustics to Computers, Dies.” The New York Times (Tues, OCT. 18, 2016): B15.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the obituary has the date OCT. 17, 2016, and has the title “Leo Beranek, Acoustics Designer and Internet Pioneer, Dies at 102.” )

Automation Raises Productivity, Consumer Spending, and Creates New Jobs

(p. B1) Since the 1970s, when automated teller machines arrived, the number of bank tellers in America has more than doubled. James Bessen, an economist who teaches at Boston University School of Law, points to that seeming paradox amid new concerns that automation is “stealing” human jobs. To the contrary, he says, jobs and automation often grow hand in hand.
Sometimes, of course, machines really do replace humans, as in agriculture and manufacturing, says Massachusetts Institute of Technology labor economist David Autor in a succinct and illuminating TED talk, which could have served as the headline for this column. Across an entire economy, however, Dr. Autor says that’s never happened.
. . .
(p. B4) . . . a long trail of empirical evidence shows that the increased productivity brought about by automation and invention ultimately leads to more wealth, cheaper goods, increased consumer spending power and ultimately, more jobs.
In the case of bank tellers, the spread of ATMs meant bank branches could be smaller, and therefore, cheaper. Banks opened more branches, and in total employed more tellers, Mr. Bessen says.

For the full commentary, see:
CHRISTOPHER MIMS. “KEYWORDS; Automation Actually Can Lead to More Job Creation.” The Wall Street Journal (Mon., Dec. 12, 2016): B1 & B4.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 11, 2016, and has the title “KEYWORDS; Automation Can Actually Create More Jobs.”)

Bessen more fully presents his ATM example in his book:
Bessen, James. Learning by Doing: The Real Connection between Innovation, Wages, and Wealth. New Haven, CT: Yale University Press, 2015.

Flaws in Early Tech, Solved by Later and Better Tech

(p. A2) Mr. Mokyr says innovators gravitate to society’s greatest needs. In previous eras, it was cheap and rapid transport, reliable energy, and basic health care. Today, seven of the top 10 problems he says are most in need of innovative solutions are instances of bite-back. They include global warming, antibiotic resistance, obesity and information overload. Fixing these problems may weigh heavily on growth. Yet Mr. Mokyr argues past productivity was overstated because it didn’t include those costs.
Nonetheless, he’s an optimist. For every unintended consequence one innovation brings, another innovation will find the answer. Fluoridation cured tooth decay, and automotive engineers found alternatives to leaded gasoline. And distracted driving? Driverless cars may take care of that plague before long.

For the full commentary, see:
GREG IP. “CAPITAL ACCOUNT; When Tech Bites Back: The Cost of Innovation.” The New York Times (Thurs., Oct. 20, 2016): A2.
(Note: the online version of the commentaty has the date Oct. 19, 2016, and has the title “CAPITAL ACCOUNT; When Tech Bites Back: Innovation’s Dark Side.”)