Category: Economics

The Duopoly of Intel and AMD Vigorously Compete

(p. B4) While Intel has struggled to move into mass production of its most advanced chips, rival chip maker Advanced Micro Devices Inc. has been challenging the company’s dominance. AMD’s market share in personal computer CPUs climbed above 17% in the first quarter, more than doubling from five years ago, according to Mercury Research. Intel holds almost all of the remaining market share.

. . .

Intel’s struggles with seven-nanometer chips mirror delays in designing and producing its earlier generation of chips based on a 10-nanometer process, an industry term tied loosely to the size of transistors that chips use to make calculations. Intel executives have told investors in the past that once the company conquered its challenges in 10-nanometer technology, sizing down to seven nanometers and beyond could happen more quickly.

. . .

There aren’t any “fundamental roadblocks” with the design of seven-nanometer chips, Chief Executive Bob Swan told analysts on a conference call, adding that Intel had found the root cause of the issue and was taking steps to avert further delays. He said Intel could turn more to external manufacturers, perhaps in combination with its own factories, to meet customers’ needs—a significant shift for a company that has mostly relied on its own manufacturing muscle.

The seven-nanometer delay could harm Intel’s competitive position because Taiwan Semiconductor Manufacturing Co., the largest contract manufacturer of chips in the world, is expected to be making processors with even smaller, more efficient transistors by the time Intel comes out with its chips.

For the full story, see:

Asa Fitch. “Intel Gets Lift From Work at Home.” The Wall Street Journal (Friday, July 24, 2020): B4.

(Note: ellipses added.)

(Note: the online version of the story was updated July 23, 2020, and has the title “Intel Reports Profit Surge but Warns of Further Delays on Advanced Chips.”)

“Fat Cats” Fund Cancer Detection “Holy Grail”

(p. A15) So often the future shows up when you’re looking for something else. In 2013, DNA sequencing company Illumina bought Verinata Health and began offering noninvasive prenatal testing. Using a pregnant woman’s blood, a now-$500 DNA test can spot Down syndrome and other chromosomal conditions. Since then, the use of very invasive needle-to-the-womb amniocentesis testing has dropped.

But that’s not the story here. Of the first 100,000 women tested, 10 (or 0.01%) had unusual chromosome patterns. The fetus was fine, but in each case, the mother had cancer of differing types.

. . .

So Illumina spun out a new company named Grail in Menlo Park, Calif., to do what’s known as Circulating Cell-free Genome Atlas studies. Running DNA sequencing on regular blood samples, Grail generates hundreds of gigabytes of data per person—the well-known A-T-G-C nucleotides, but also the “methylation status,” or whether a particular DNA site’s function is turned on or off (technically, whether or not it represses gene transcription).

. . .

. . . , Grail’s chief medical officer Josh Ofman tells me, “cancer may show up as thousands of methylation changes, a much richer signal to teach machine learning algorithms to find cancer” vs. a single site. “There are 30 million methylation sites in the entire human genome on 100,000 DNA fragments. Grail looks at a million of them.” It takes industrial-grade artificial intelligence to find patterns in all this data, something a human eye would never see.

. . .

Grail is detecting the signature of actual cancer cells in your blood. According to validation data published in the Annals of Oncology, the test can find 50 different types, more than half of all known cancers.

. . .

Grail has raised almost $2 billion, including from Bill Gates and Jeff Bezos. Isn’t that interesting? Though much maligned as fat cats sitting on piles of gold coins and monopolists out to control the world, Messrs. Gates and Bezos are investing in technology—this is not philanthropy—that may save you or a relative’s life someday.

Innovation comes through surprises. This is a big one. And while worrywarts brood over artificial intelligence and robot overlords, early detection of cancer is really what machine learning is meant for. This is the Holy Grail.

For the full commentary, see:

Andy Kessler. “INSIDE VIEW; Cancer Screening Leaps Forward.” The Wall Street Journal (Monday, July 6, 2020): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date July 5, 2020, and has the same title as the print version.)

Tough Advice from Experienced Advisers Helps Us Acquire Skills

(p. R6) Recent studies suggest that people tend to favor advisers who are positive, cheerleader-types over tough talkers and voices of experience. But such preferences, the researchers also say, often lead to detrimental results, a finding with wide-ranging implications for companies and managers.

A paper published in March [2020] in the Journal of Experimental Psychology: General summarized the findings of six connected studies. Subjects of inquiry included: what characteristics people predict they will use when selecting an adviser; those people’s actual adviser selections; and the potential consequences of these decisions.

. . .

And when researchers looked at the outcomes of these decisions, they noted a disturbing pattern. Those who relied primarily on cheerleader-types generally underperformed those who were guided more by expertise.

Catherine Shea, an assistant professor at Carnegie Mellon’s Tepper School of Business who focuses on organizational behavior and theory, says that choosing an experienced mentor who may be rough around the edges can be like taking cough medicine.

“It tastes awful, but it works,” she says. “Sometimes you really do need the skill set, and sometimes the nice person is not going to give it to you.”

For the full story, see:

Cheryl Winokur Munk. “People Want Mentors Who Are Their Cheerleaders. That May Not Be Wise.” The Wall Street Journal (Monday, June 15, 2020): R6.

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

(Note: the online version of the story has the date June 14, 2020, and has the title “People Like Their Mentors to Be Cheerleaders. That May Be a Mistake.”)

The March 2020 paper mentioned above is:

Hur, Julia D., Rachel L. Ruttan, and Catherine T. Shea. “The Unexpected Power of Positivity: Predictions Versus Decisions About Advisor Selection.” Journal of Experimental Psychology: General (published online in advance of print on March 16, 2020).

Oppenheim Recommends Diamond’s “Well-Researched,” “Well-Written,” and “Fascinating” Openness to Creative Destruction

Charles Oppenheim is an Information Science expert whose recent focus has been intellectual property. He is currently a visiting professor at Robert Gordon University in Aberdeen, Scotland. (I do not remember ever meeting him.) Oppenheim has written a gracious, though mixed, review of my book Openness to Creative Destruction: Sustaining Innovative Dynamism. Although mixed, what he likes outweighs what he dislikes. Below I quote his first and his final paragraphs.

(p. 82) The author is a well-known professor of economics in the United States. In this book, well researched and supported by numerous references, his philosophy of life is made clear – and a rather worrying philosophy it is, as we shall see. The book addresses the question of how to encourage innovation and entrepreneurship in an advanced economy such as that of the United States.

. . .

(p. 83) This is a well-written book with an easy style that will appeal to economists, students and perhaps the general public. It is supported by a large number of references, as well as figures and tables. It has an exemplary index. Diamond covers interesting ground and provides some fascinating histories of the development of many of the inventions we now take for granted. Such a pity that Diamond’s argument is so one-sided, and that he fails to take into account moral, ethical and environmental concerns in his optimistic vision of how innovation can make economies thrive. The book is recommended, but treat its contents with caution.

For the full review, see:

Oppenheim, Charles. “Openness to Creative Destruction, Arthur M. Diamond Jr. (2019), Oxford University Press.” Prometheus: Critical Studies in Innovation 36, no. 1 (March 2020): 82-83.

(Note: ellipsis added.)

My book, reviewed by Oppenheim, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Disney Will Only Re-Open a Park When It Can “Cover Its Variable Costs”

(p. B14) Disney Chief Executive Officer Bob Chapek has maintained that the company wouldn’t reopen a park without at least the ability to cover its variable costs, but analysts expect more will be needed to get parks fully back into the black. Bernstein analyst Todd Juenger estimates Disney’s parks would need to be at 60% of their “normal run-rate attendance” to reach break-even on a pretax basis.

. . .

On Thursday, [June 25, 2020] UBS reported results of a survey of 2,000 U.S. consumers conducted earlier this month. In that survey, among the respondents who had cited worries about social distancing as keeping them from visiting, nearly two-thirds said they would only consider attending a Disney park once a vaccine is available.

For the full story, see:

Dan Gallagher. “The Magic Kingdom Is Losing Its Spell.” The Wall Street Journal (Saturday, June 27, 2020): B14.

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

(Note: the online version of the story has the date June 26, 2020, and has the title “Disney’s Parks Need a Cure.”)

Reduce Spread of COVID-19 “With Plenty of Fresh Air” in Buildings

(p. B5) One way to reduce the spread of coronavirus is to maintain ventilation .

. . .

Modifications from equipment manufacturers such as Trane Technologies PLC, Carrier Global Corp. and Johnson Controls International PLC include filtering indoor air more thoroughly, drawing more outdoor air into buildings and deploying ultraviolet light against the virus inside ventilation systems.

“More fresh air and cleaner air are the direction that customers are going. This is top-of-mind for building owners and contractors,” said Jeff Williams, president of global products for Johnson Controls, maker of York-brand heating and air-conditioning equipment.

. . .

Research released this spring by the Department of Homeland Security found that coronavirus particles decay faster at a room temperature of 78 degrees Fahrenheit with a relative humidity of 50% than at lower temperatures and humidity. Add in a strong dose of ultraviolet light, and the virus decays by 90% in less than seven minutes, according to the department. Humans’ immune systems also are more effective against viruses in warmer, more humid conditions, according to a Yale University study published in May 2019.

“We can minimize the spread of the virus in the summer when there is plenty of sunlight and higher humidity. They’re actually effective in a defined space,” said Luke Leung, epidemic task force leader for the American Society of Heating, Refrigerating and Air-Conditioning Engineers, a trade association.

. . .

Recirculated air should include about 20% outdoor air to effectively dilute coronavirus particles, the Atlanta-based engineers’ society says. Many buildings’ air handlers were set up to draw less outdoor air, to maximize energy efficiency.

“The past few years there was a lot of emphasis on energy saving and there was less outside air in buildings,” said Seth Ferriell, chief executive of SSC Services for Education, a Tennessee-based company that manages ventilation systems for schools and universities. The firm has a contract to upgrade air handlers at Texas A&M University.

Mr. Ferriell estimated that increasing the amount of outdoor air in a building by 50% would drive up natural gas or electricity costs by as much as 15% a year because that additional air has to be cooled or heated to match the desired interior temperature.

For the full story, see:

Bob Tita. “Virus Spurs Ventilation Boost.” The Wall Street Journal (Thursday, July 9, 2020): B5.

(Note: ellipses added.)

(Note: the online version of the story has the date July 8, 2020, and has the title “Offices Try to Combat Coronavirus With More Fresh Air.” The last couple of paragraphs quoted above, appeared in the online, but not the print, version of the article.)

Jim Pethokoukis Asks Art Diamond How to Increase Innovative Dynamism

Jim Pethokoukis recently posted an abbreviated transcript of our conversation on his Political Economy podcast about my Openness to Creative Destruction: Sustaining Innovative Dynamism book.

Posted by Arthur Diamond on Thursday, August 6, 2020

Transcript of Political Economy Podcast Interview with Arthur Diamond on Openness to Creative Destruction

The lightly edited transcript was posted on July 30, 2020 on the American Enterprise Institute web site.

Yesterday Jim Pethokoukis posted a lightly edited transcript of my conversation with him on his American Enterprise…

Posted by Arthur Diamond on Friday, July 31, 2020

“The Ever-Evolving Standards of Wokeness”

(p. A6) . . . I was pleased this month when “Hamilton” became available to watch on the streaming service Disney+. But now the show is being criticized for its portrayal of the American Founding by many of the same people who once gushed about it. Is it a coincidence that affluent people loved “Hamilton” when tickets were prohibitively expensive, but they disparage it now that ordinary people can see it?

. . .

The upper classes are driven to distinguish themselves from the little people even beyond art. This explains the ever-evolving standards of wokeness. To become acculturated into the elite requires knowing the habits, customs and manners of the upper class. Ideological purity tests now exist to indicate social class and block upward social mobility. Your opinion about social issues is the new powdered wig. In universities and in professional jobs, political correctness is a weapon used by white-collar professionals to weed out those who didn’t marinate in elite mores.

. . .

To understand the neologisms and practices of social justice, you need a bachelor’s degree from an expensive college. A common refrain to those who are not fully up to date on the latest fashions is “Educate yourself.” This is a way of keeping down people who work multiple jobs, have children to care for, and don’t have the time or means to read the latest woke bestseller.

For the full commentary, see:

Rob Henderson. “‘Hamilton’ Loses Its Snob Appeal.” The Wall Street Journal (Weds., July 15, 2020): A19.

(Note: ellipses added.)

(Note: the online version of the commentary has the date June 14, 2020, and has the same title as the print version.)

Blacks in Detroit Have Public Transit to Die For

(p. A1) DETROIT — Paris Banks sprayed the seat with Lysol before sliding into the last row on the right. Rochell Brown put out her cigarette, tucked herself behind the steering wheel and slapped the doors shut.

It was 8:37 a.m., and the No. 17 bus began chugging westward across Detroit.

. . .

This hardscrabble city, where nearly 80 percent of residents are black, has become a national hot spot with more than 7,000 infections and more than 400 deaths. One reason for the rapid spread, experts say, is that the city has a large working-class population that does not have the luxury of living in isolation. Their jobs cannot be performed from a laptop in a living room. They do not have vehicles to safely get them to the grocery store.

(p. A12) And so they end up on a bus. Just like the No. 17 — a reluctant yet essential gathering place, and also a potential accelerant for a pandemic that has engulfed Detroit.

For the full story, see:

John Eligon. “No Choice but Shoulder to Shoulder on the Bus.” The New York Times (Thursday, April 16, 2020): A1 & A12-A13.

(Note: ellipsis added.)

(Note: the online version of the story was updated April 16, 2020, and has the title “Rolling Through the Pandemic.”)

Despite Global Trading Routes, in Year 1000 Most Ordinary People Rejected the Unfamiliar

(p. C8) Valerie Hansen’s “The Year 1000: When Explorers Connected the World—and Globalization Began” is a gripping account of exploration and ingenuity, sweeping across the economic alliances and great networks of trade that connected disparate regions around the globe. By touching down in different parts of the world at that precise moment, Ms. Hansen reveals the social and economic changes that linked individuals and societies in astonishing ways.

. . .

People navigated along the trading routes from China to the Persian Gulf and East Africa, and from Scandinavia to North America and the Caspian Sea, long before da Gama, Magellan and Columbus. But for most ordinary people life was still circumscribed. Globalization in 1000 may have opened the world to rulers—and busy ports and cities like Quanzhou and Bukhara may have hosted culturally and religiously diverse populations—but there was little sense of a wider, cosmopolitan embrace of a common humanity. “The most important lesson we can learn from our forebears is how best to react to the unfamiliar,” Ms. Hansen writes. “Those who remained open to the unfamiliar did much better than those who rejected anything new.”

For the full review, see:

Karin Altenberg. “Setting The Globe Spinning.” The Wall Street Journal (Saturday, May 23, 2020): C8.

(Note: ellipsis added.)

(Note: the online version of the review has the date May 22, 2020, and has the title “The Year 1000’ Review: Setting the Globe Spinning.”)

The book under review is:

Hansen, Valerie. The Year 1000: When Explorers Connected the World—and Globalization Began. New York: Scribner, 2020.