Economics – Page 105 – artdiamondblog.com

Millions of Dollars and 30 Years Later, A.I. Still Has Lacks Crucial Common Sense

(p. B6) SAN FRANCISCO — Microsoft’s co-founder Paul Allen said Wednesday [February 28, 2018] that he was pumping an additional $125 million into his nonprofit computer research lab for an ambitious new effort to teach machines “common sense.”
. . .
“To make real progress in A.I., we have to overcome the big challenges in the area of common sense,” said Mr. Allen, who founded the software giant Microsoft in the 1970s with Bill Gates.
. . .
In the mid-1980s, Doug Lenat, a former Stanford University professor, with backing from the government and several of the country’s largest tech companies, started a project called Cyc. He and his team of researchers worked to codify all the simple truths that we learn as children, from “you can’t be in two places at the same time” to “when drinking from a cup, hold the open end up.”
Thirty years later, Mr. Lenat and his team are still at work on this “common sense engine” — with no end in sight.
Mr. Allen helped fund Cyc, and he believes it is time to take a fresh approach, he said, because modern technologies make it easier to build this kind of system.
Mr. Lenat welcomed the new project. But he also warned of challenges: Cyc has burned through hundreds of millions of dollars in funding, running into countless problems that were not evident when the project began. He called them “buzz saws.”

For the full story, see:
CADE METZ, “A.I.’s Greatest Challenge: Digitizing Common Sense.” The New York Times (Thursday, March 1, 2018): B6.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the article has the date Feb. 28, 2018, and has the title “Paul Allen Wants to Teach Machines Common Sense.”)

By Many Metrics, Life Is Better Than Ever

(p. A15) . . . , Mr. Easterbrook argues, “at no juncture in American history were people better off than they were in 2016: living standards, per-capita income, buying power, health, safety, liberty, and longevity were at their highest.”
A potent counter to today’s unwarranted pessimism, the author claims, is not just the evidence that can be seen (rising employment, wages, wealth, health, lifespans and so on) but what has not been seen. Granaries, for instance, are not empty: The many predictions made since the 1960s that billions would die of starvation have not come true. “Instead, by 2015, the United Nations reported global malnutrition had declined to the lowest level in history. Nearly all malnutrition that persists is caused by distribution failures or by government corruption, not by lack of supply.” In fact, obesity is rapidly becoming a global problem.
Similarly, even though there are occasional panics, “resources have not been depleted despite the incredible proliferation of people, vehicles, aircraft, and construction.” Instead of oil and gas running out by the year 2000, as some in the 1970s predicted, both “are in worldwide oversupply” along with minerals and ores.
. . .
Data supporting this author’s optimistic observations are presented throughout “It’s Better Than It Looks.” Similar catalogues can be found in books like Steven Pinker’s “Enlightenment Now” (2018), Johan Norberg’s “Progress” (2016), Peter Diamandis and Steven Kotler’s “Abundance” (2012) and Matt Ridley’s “The Rational Optimist” (2010). I even touched on some of the same points in my own “The Moral Arc” (2015). Apparently, though, this chorus is not loud enough, since pessimism remains as prominent as it ever was.

For the full review, see:
Michael Shermer. “BOOKSHELF; Why Things Are Looking Up; Though declinists in both parties may bemoan our miserable lives, Americans are healthier, wealthier, safer and living longer than ever.” The Wall Street Journal (Wednesday, Feb. 28, 2018): A15.
(Note: ellipses added.)
(Note: the online version of the review has the date Feb. 27, 2018, and has the title “BOOKSHELF; ‘It’s Better Than It Looks’ Review: Why Things Are Looking Up; Though declinists in both parties may bemoan our miserable lives, Americans are healthier, wealthier, safer and living longer than ever.”)

The book under review, is:
Easterbrook, Gregg. It’s Better Than It Looks: Reasons for Optimism in an Age of Fear. New York: PublicAffairs, 2018.

The More Governments Tax, the Less Workers Work

(p. A17) European countries trail the U.S. in working hard and controlling taxes, and their economies have lagged in comparison. France has a tax-to-GDP ratio of about 44%, and in Italy it’s 43%. The French and Italians work almost 30% fewer hours per person than Americans. Notably, the French economy has flatlined since 2010 while Italy’s has contracted.
These patterns are not a coincidence: High taxes discourage work and capital formation. Data from the Organization for Economic Cooperation and Development suggests that a 1% increase in a nation’s tax rate is associated with a 1.4% decrease in hours worked per person in the working-age population. U.S. data dating to the 1970s also shows that higher taxes cause workers to limit their hours, reducing economic output.

For the full commentary, see:
Winkler, Rolfe and Justin Lahart. “Government Spending Discourages Work; The French and Italians pay higher taxes and put in 30% fewer hours per person than Americans.” The Wall Street Journal (Tuesday, Feb. 27, 2018): A17.
(Note: the online version of the commentary has the date Feb. 26, 2018.)

Art Diamond Predicts a 40% Chance that Elon Musk Will Make It to Mars

(p. A1) What are the chances that readers will make it to the end of this article? About 40%.
If you do make it, that prediction will look smart. If you don’t, well, we said the odds were against it.
Such is the nature of the 40% rule, a favorite forecasting tactic of Wall Street analysts and other prognosticators trying to make a bold call without being too bold.
Former British Prime Minister Tony Blair said last month there’s a 40% chance that Brexit will be reversed; Citigroup Inc. analyst Jim Suva wrote that there’s a 40% chance Apple Inc. buys Netflix Inc.; and Nomura Holdings Inc. economist Lewis Alexander said there’s a 40% chance Nafta gets ripped up.
The nice thing about 40% is that you never have to say you were wrong, says Peter Tchir, a market strategist at Academy Securities. Say you predict the Dow Jones Industrial Average has a 40% chance of hitting 30000 before year-end.
“Get it right and you can say ‘See, I was telling everyone it could happen,’ ” he says. “Get it wrong and you can weasel your way out: ‘I didn’t say it was likely, I just said it was a strong possibility.’ “

For the full story, see:
Winkler, Rolfe and Justin Lahart, “How Pundits Never Get It Wrong: Call a 40% Chance.” The Wall Street Journal (Tuesday, Feb. 27, 2018): A1 & A10.
(Note: the online version of the article has the date Feb. 26, 2018, and has the title “How Do Pundits Never Get It Wrong? Call a 40% Chance.”)

Independent Snapchat Entrepreneurs Turned Down Facebook’s Three Billion Dollars

(p. A17) Snap Inc. provides a remarkable story, not only because it has accumulated so many users so rapidly but also because it has remained an independent company in the shadow of Facebook, which in 2012 acquired Instagram, also photo-centered, for $1 billion. A year later, noticing Snapchat’s power to attract young users, Facebook offered Snap’s founders $3 billion for the company, a figure that the book’s publisher has rounded down for the title. Mr. Spiegel, the chief executive, said “no,” and Snap’s current market capitalization, around $23 billion, would seem to be sweet vindication. But Snap has yet to figure out how to convert its many users into net profits, and Instagram has shown no compunction about copying Snapchat features and has grown even faster.
. . .
In Mr. Spiegel’s view, sharing snaps–of anything–was enjoyable because the images were ephemeral and didn’t have to be composed for posterity. “It seems odd that at the beginning of the internet everyone decided everything should stick around forever,” he said.

For the full review, see:
Randall Stross. “BOOKSHELF; A Startup in Focus; Snapchat was born when casual photos replaced text messages among Stanford students. It now boasts 187 million daily users.” The Wall Street Journal (Monday, Feb. 12, 2018): A17.
(Note: ellipsis added.)
(Note: the online version of the review has the date Feb. 11, 2018, and has the title “BOOKSHELF; Review: A Startup in Focus; Snapchat was born when casual photos replaced text messages among Stanford students. It now boasts 187 million daily users.”)

The book under review, is:
Gallagher, Billy. How to Turn Down a Billion Dollars: The Snapchat Story. New York: St. Martin’s Press, 2018.

Italian Bureaucracy Leaves Innovative Restaurateur Feeling “Psychologically Violated”

(p. A7) ROME–The campaign leading up to Italy’s national elections on March 4 [2018] has featured populist promises of largess but neglected what economists have long said is the real Italian disease: The country has forgotten how to grow.
Take Gianni Angelilli’s pizzeria in downtown Rome. He uses an innovative dough mix and flexible cooking methods, drawing long lines and rave reviews. But Italy is too bureaucratic, the locals have no money and his ambition isn’t what it used to be, Mr. Angelilli said. If he opens more outlets, they will be abroad.
“Now, foreigners have more desire to eat well than Italians,” he said. “Italy is dead. Italy is finito.”
. . .
Italian politics have become measurably more chaotic since the country’s old party system–largely frozen during the Cold War–collapsed amid corruption scandals in the early 1990s. Data collected by Einaudi economist Luigi Guiso and others show that since 1992, coalitions have become more likely to crumble, lawmakers to defect and governments to need confidence votes in parliament. Politicians jostling for attention push more frequent, longer and more-complicated legislation.
“An excess has cluttered the bureaucratic machine,” says Mr. Guiso. “The country has become cumbersome.”
Yet the weakness of transient politicians has paradoxically made the public administration more powerful, at the same time as constant legal changes immobilize it, he says.
Mr. Guiso has practical experience. He is helping to set up a government-supported program to send young Italians to learn about entrepreneurship in Silicon Valley and at U.S. business schools, and he said Italian civil servants decided a tender offer inviting U.S. organizations to participate could be published in Italian only. After much persuasion, the civil servants agreed to publish the tender in English too–but insisted all applications must be in Italian, said Mr. Guiso. He said political friends apologized, saying there was nothing they could do.
Mr. Angelilli said his encounters with Italian bureaucracy while running his Pinsere pizzeria have left him feeling “psychologically violated.” He said he had to pay a fine recently because his oven’s air extraction, made to comply with European, national and regional laws, ran afoul of new city rules.

For the full story, see:
Marcus Walker and Giovanni Legorano. “The Real Italian Job: Rev Up Productivity.” The Wall Street Journal (Wednesday, Feb. 28, 2018): A7.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the article has the date Feb. 27, 2018, and has the title “Italy: The Country That Forgot How to Grow.”)

High Energy Costs Killed 15,000 of the Poor in Britain in Winter of 2014-2015

(p. A15) Higher costs from policies like stringent emissions caps and onerous renewable-energy targets make it even harder for the poorest citizens to afford gas and electricity.
. . .
In the U.K., the cost of electricity has increased by 36% in real terms since 2006, while the average income has risen only 4%. Environmentalists point out that energy usage has fallen as a result. But they ignore the fact that the poorest households cut back their consumption much more than average, while the richest have not reduced electricity consumption at all. Meanwhile, the share of income the bottom tenth of Britons spend on energy has increased rapidly, to almost 10%, while the share of income spent by the top tenth is still under 3%.
One 2014 poll shows that one-third of British elderly people leave at least part of their homes cold, and two-thirds wear extra layers of clothing, because of high energy costs. According to a report in the Independent, 15,000 people in the U.K. died in the winter of 2014-15 because they couldn’t afford to heat their homes properly.
Climate change is a real challenge for every country, but we need to maintain some perspective. The United Nations’ climate-change panel estimates that global warming could cause damage amounting to 2% of global gross domestic product toward the end of the century. That makes it a problem, but not the Armageddon produced by some feverish imaginations.

For the full commentary, see:
Bjorn Lomborg. “Climate-Change Policies Can Be Punishing for the Poor; America should learn from Europe’s failure to protect the needy while reducing carbon emissions.” The Wall Street Journal (Saturday, Jan. 5, 2018): A15.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Jan. 4, 2018.)

Victorian Britain Was “the Most Innovative, Advanced, Sophisticated and Prosperous Economy on the Planet”

(p. A19) Britain rose to global power over a long 18th century that began in 1688 with the Glorious Revolution and closed at Waterloo in 1815. Decline marked the 20th century, especially with the loss of both empire and commercial dynamism under the strain of two world wars. David Cannadine’s “Victorious Century” charts the period between–one in which Britain could be seen as the most innovative, advanced, sophisticated and prosperous economy on the planet.
. . .
Mr. Cannadine presents the liberal spirit of progress as the hero of his tale. It guided Britain through conflicts, social disparities and political transitions while pointing toward a better society.

For the full review, see:
William Anthony Hay. “BOOKSHELF; The Spirit of Progress; Britain managed to balance change and continuity as turmoil and revolution overtook the Continent. Still, the change proved decisive.” The Wall Street Journal (Tuesday, Feb. 20, 2018): A19.
(Note: ellipsis added.)
(Note: the online version of the review has the date Feb. 19, 2018, and has the title “BOOKSHELF; Review: The U.K.’s ‘Victorious Century’; Britain managed to balance change and continuity as turmoil and revolution overtook the Continent. Still, the change proved decisive.”)

The book under review, is:
Cannadine, David. Victorious Century: The United Kingdom, 1800-1906, The Penguin History of Britain. New York: Viking, 2017.

Decline in Startups Reduces Labor Market Dynamism

Source of graphs: online version of the NYT commentary quoted and cited below.

(p. B1) . . . a broad sweep of statistics reveals a peculiar weariness spreading through the economy. Belying breathless headlines about the fabulous opportunities that technology is about to bestow on society, it suggests that many rich market democracies have lost much of their dynamism. Their companies are getting old, and their labor markets are getting stuck. Productivity growth has slumped. And many workers in their prime are peeling off from the labor force.
. . .
(p. B4) . . . , the economy’s ability to generate and support new businesses — agents of creative destruction that bring new products and methods into the marketplace — appears to be faltering across the world. In the United States, the rate of company formation is half what it was four decades ago. And it is slowing in many industrialized countries.
. . .
In a study published on Tuesday [February 6, 2018] by the Hamilton Project at the Brookings Institution, Jay Shambaugh, Ryan Nunn and Patrick Liu explore what economists have figured out about the American economy’s inertia and the fallout for wages and living standards.
The evidence paints a distinct picture of decline: Fewer start-ups mean fewer new ideas and fewer young, productive businesses to replace older, less productive ones. Researchers have found that the decline in companies entering the market since 1980 has trimmed productivity growth by about 3.1 percent.
The dearth of new businesses is also cutting off one of the main paths to workers’ advancement: the outside job offer. Changing jobs allows workers to shift to positions in which they are more productive, and better paid. But labor market fluidity — job switching, creation and destruction — has been declining since the 1980s.
Clear though the pattern may be, the researchers acknowledge that we haven’t yet figured out what is holding the economy’s dynamism back. “This is one of those big, economywide trends,” Mr. Shambaugh told me. “There is room for a lot of stories.”

For the full commentary, see:
Porter, Eduardo. “ECONOMIC SCENE; What to Worry About: Decrease in Start-Ups Is a Sign of Stagnation.” The New York Times (Wednesday, February 7, 2018): B1 & B4.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the commentary has the date FEB. 6, 2018, and has the title “ECONOMIC SCENE; Where Are the Start-Ups? Loss of Dynamism Is Impeding Growth.”)

The paper by Shambaugh, Nunn, and Liu, that is mentioned above, is:
Shambaugh, Jay, Ryan Nunn, and Patrick Liu. “How Declining Dynamism Affects Wages.” In Revitalizing Wage Growth Policies to Get American Workers a Raise, edited by Jay Shambaugh and Ryan Nunn, Washington, D.C.: Brookings, 2018, pp. 11-23.

Blockchain May Bring Property Rights to the Poor

(p. A15) The great economic divide in the world today is between the 2.5 billion people who can register property rights and the five billion who are impoverished, in part because they can’t. Consider what happens without a formal system of property rights: Values are reduced for privately owned assets; wages are devalued for workers using these assets; owners are denied the ability to use their assets as collateral to obtain credit or as a credential to claim public services; and society loses the benefits that accrue when assets are employed for their highest and best purpose.
. . .
Fortunately there is a new technology that could make a global property-rights registration system feasible. Patrick Byrne, an e-commerce pioneer and the CEO of Overstock.com, has committed a professional staff and significant resources to modernizing the collection and maintenance of property-rights records on a global scale. Blockchain is an especially promising technology because of its record-keeping capacity, its ability to provide access to millions of users, and the fact that it can be constantly updated as property ownership changes hands.
If Blockchain technology can empower public and private efforts to register property rights on a single computer platform, we can share the blessings of private-property registration with the whole world. Instead of destroying private property to promote a Marxist equality in poverty, perhaps we can bring property rights to all mankind. Where property rights are ensured, so are the prosperity, freedom and ownership of wealth that brings real stability and peace.

For the full commentary, see:
Phil Gramm and Hernando de Soto. “How Blockchain Can End Poverty; Two-thirds of the world’s population lacks access to a formal system of property rights.” The Wall Street Journal (Friday, Jan. 26, 2018): A15.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Jan. 25, 2018.)

Virtual Reality Was Intended as a Complement to Physical Reality, Not as a Substitute

(p. A17) The illusion of presence is what drove Mr. Lanier from the start. He envisioned VR not as an alternative to physical reality but as an enhancement–a way to more fully appreciate the wonder of existence. More conventional individuals, their senses dulled by the day-to-day, may be drawn to virtual reality because it seems realer than real; he considered it a new form of communication. “I longed to see what was inside the heads of other people,” he writes. “I wanted to show them what I explored in dreams. I imagined virtual worlds that would never grow stale because people would bring surprises to each other. I felt trapped without this tool. Why, why wasn’t it around already?”
“Dawn of the New Everything” is full of such self-revelatory moments. The author grew up an only child in odd corners of the Southwest, first on the Texas-Mexico border, then in the desert near White Sands Missile Range. When he was nine, his mother, a Holocaust survivor, was killed in a car crash on the way home from getting her driver’s license. The tract house they’d bought burned down the day after construction was completed. The insurance money never came, so Jaron and his father lived in tents in the desert until they could afford to build a real home–which turned out to be a mad concoction of geodesic domes of Jaron’s own design. They called it Earth Station Lanier.
. . .
Lacking a degree from high school, never mind college, he nonetheless parlayed his virtual-reality obsession into a company, VPL Research, that for a few years in the late ’80s made VR seem real, if only in a lab setting. Then came board fights and bankruptcy, and VR disappeared from public view for more than 20 years.
What went wrong at VPL? Unfortunately, you won’t find out here. Mr. Lanier warns us he isn’t going to deliver a blow-by-blow; instead we get a disjointed sequence of half-remembered anecdotes. What does come through is his ambivalence about going into business at all, and his even deeper ambivalence toward writing about it.

For the full review, see:
Frank Rose. “BOOKSHELF; The Promise of Virtual Reality; The story of VR, the most immersive communications technology to come along since cinema, as told by two of its pioneers.” The Wall Street Journal (Tuesday, February 6, 2018): A17.
(Note: ellipsis added.)
(Note: the online version of the review has the date Feb. 5, 2018, and has the title “BOOKSHELF; Review: The Promise of Virtual Reality; The story of VR, the most immersive communications technology to come along since cinema, as told by two of its pioneers.”)

The book under review, is:
Lanier, Jaron. Dawn of the New Everything: Encounters with Reality and Virtual Reality. New York: Henry Holt & Company, 2017.