Early Wealthy Cell Phone Adopters Funded Innovations That “Made Cellphones Affordable to the Masses”

In Openness to Creative Destruction, I argue that early new technologies are often primitive, expensive, and buggy. They are initially bought by the rich who allow the technology to survive while it is being made better and cheaper. See below that cellphones are another example.

(p. A14) On April 3, 1973, four months after the last manned moon mission, a 44-year-old Motorola engineer took a small step onto Sixth Avenue outside the New York Hilton. There Martin Cooper did something commonplace now but at the time revolutionary: He made a call on a cellular telephone.

“Joel,” Mr. Cooper said to the man who picked up, “I’m calling you from a real cellular telephone—a handheld unit.” Joel Engel worked at Bell Labs, the research division of AT&T. Mr. Cooper was calling to gloat about surpassing the phone monopoly.

. . .

“The function of a cellphone—I can’t express it any better—it is to set people free,” Mr. Cooper, 94, says.  . . .  “A cellphone gives a person the freedom to be connected to the rest of the world, wherever they are and whenever they want to.”

. . .

“We expected the first phones to go to wealthy people,” Mr. Cooper says. “To a large extent that was true. But it turns out that one of the biggest users were real-estate people.” They needed to take calls from clients and go out to show properties. “The cellphone allowed them to do both at the same time. They could be showing a home and still answer the call. So to them the phone, even at that huge price, doubled their effectiveness.”

These early adopters, for whom the technology was worth the cost, helped fund further innovation, which ultimately made cellphones affordable to the masses. Advancements in data-transmission, display and input technology made possible the inexpensive, versatile smartphones we take for granted today.

They also brought ill effects, especially for young people, such as compulsive cellphone use and social media that promote both groupthink and bitter division. “Those are all big problems,” Mr. Cooper says.

. . .

But he accentuates the positive. “We are just starting to figure out what the value of the cellphone is,” he says. “Humanity will solve these other problems if the advantages are big enough. And the advantages—the services you get out of the cellphone, the value to you to make you more efficient—are so great that there’s no question in my mind that humanity is going to solve these problems.”

He is confident that the benefits already outweigh the costs. “Today, people are healthier. There are fewer people in poverty. They live longer than ever before. Something has made that happen, and I think the cellphone is one of the contributors.” By improving efficiency, “it has taken away a lot of the time issues, given people more time to do other things.”

For the full interview, see:

Faith Bottum. “THE WEEKEND INTERVIEW; From the ‘Shoe Phone’ to the Smartphone.” The Wall Street Journal (Saturday, April 15, 2022): A13.

(Note: the online version of the interview has the date April 14, 2023, and has the title “THE WEEKEND INTERVIEW; Opinion: From the ‘Shoe Phone’ to the Smartphone.”)

My book that I mention above is:

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

Could Amateur Investors Return the Walt Disney Company to the Principles of Walt Disney?

I wonder what amateur investors could do if they had more serious motives than hatred of elite short-sellers? What if they had the motive, for example, of returning the Walt Disney Company to the principles of Walt Disney? I do not endorse the ambiguity (how much fictional and how much nonfictional) of the book reviewed below. But the GameStop and AMC episodes are intriguing proofs-of-concept.

(p. A15) Until late last year, GameStop was a typical and not very successful corporation. The company sold videogames through a chain of retail outlets and lost money on every sale. But its stock caught the interest of small investors who traded on Robinhood, a mobile trading app, and the stock began to levitate.

From single digits in October 2020 the stock price doubled to 20 late last year. Then, over a few manic days in January, it vaulted “like a lid flying off a pot,” as Ben Mezrich puts it in “The Antisocial Network.” It went up to 77, then 148, then 348 and then an intraday high of 483—at which point GameStop was worth more than $30 billion. Briefly, it was the most heavily traded issue on the stock market.

The source of the mayhem was, to borrow from the book’s subtitle, “a ragtag group of amateur traders.” Few of the devotees who flocked to GameStop thought of themselves as even armchair security analysts. They were infected by crowd psychology and, in some cases, driven by the hope that the high price would punish well-to-do short sellers.

. . .

Even when the price hit the stratosphere, retail buyers professed not to be worried. They would “never” sell; they weren’t concerned with the possibility of losing money. “Oh im [sic] fully aware that I may end up a bagholder,” went one post. “But it’s worth being a bagholder to stick it to those Wall Street f—s who’ve gamed the system for so long at our expense.”

To Mr. Mezrich, such fulminations suggest that a revolution is a-coming. His thesis is vented in excited metaphors. The “pillars” of Wall Street are shaking; Melvin Capital faces an “existential moment” (which, actually, it survived); angry traders constitute a “millennial version of the French Revolution.”

A little of this gas comes from investors; most of it is supplied by Mr. Mezrich. “The Antisocial Network” is built on scenes that the author has re-created; quotation marks, in the main, are conveniently absent. He writes of one novice but gung-ho investor, who worked in a hair salon: “She believed something deeper was happening.” Did she say that? Is it a paraphrase? Is it what Mr. Mezrich thinks she believed?

For the full review, see:

Roger Lowenstein. “BOOKSHELF; Let Them Eat Shorts.” The Wall Street Journal (Tuesday, Sept. 07, 2021): A15.

(Note: ellipsis added.)

(Note: the online version of the review has the date September 6, 2021, and has the title “BOOKSHELF; ‘The Antisocial Network’ Review: Let Them Eat Shorts.”)

The book under review is:

Mezrich, Ben. The Antisocial Network: The GameStop Short Squeeze and the Ragtag Group of Amateur Traders That Brought Wall Street to Its Knees. New York: Grand Central Publishing, 2021.

U.S. Liquified Natural Gas Saves Self-Sufficient China During Energy Crisis

(p. B13) At the height of the trade war in 2019, China all but cut off imports of U.S. liquefied natural gas. Today, China is buying more gas from the U.S. than ever.

The turnabout is one consequence of the global energy shortage that has sent prices soaring. And it is a result of China’s effort to cut carbon emissions by reducing how much coal it burns.

The energy shortage, China’s most severe in many years, has forced the government to curtail operating hours at factories and cut power in some cities. The shortage is due to factors including stronger-than-expected demand for its factory exports as the global economy rebounds from the pandemic, increased movement toward gas from coal to fight pollution and a lack of rain in parts of the country that has hindered its hydroelectricity supply.

For the full story, see:

Brian Spegele. “China Binges on Gas From U.S.” The Wall Street Journal (Wednesday, November 3, 2021): B13.

(Note: the online version of the story has the date November 2, 2021, and has the title “China Binges on U.S. Gas to Manage Energy Shortage, Carbon Footprint.”)