Innovative New Products Often Expensive at First, But Price Soon Falls


AdoptionInnovationsGraph.gif Source of graph: online version of the NYT article quoted and cited below.

(p. 14) To understand why consumption is a better guideline of economic prosperity than income, it helps to consider how our lives have changed. Nearly all American families now have refrigerators, stoves, color TVs, telephones and radios. Air-conditioners, cars, VCRs or DVD players, microwave ovens, washing machines, clothes dryers and cellphones have reached more than 80 percent of households.
As the second chart, on the spread of consumption, shows, this wasn’t always so. The conveniences we take for granted today usually began as niche products only a few wealthy families could afford. In time, ownership spread through the levels of income distribution as rising wages and falling prices made them affordable in the currency that matters most — the amount of time one had to put in at work to gain the necessary purchasing power.
At the average wage, a VCR fell from 365 hours in 1972 to a mere two hours today. A cellphone dropped from 456 hours in 1984 to four hours. A personal computer, jazzed up with thousands of times the computing power of the 1984 I.B.M., declined from 435 hours to 25 hours. Even cars are taking a smaller toll on our bank accounts: in the past decade, the work-time price of a mid-size Ford sedan declined by 6 percent.



For the full commentary, see:
W. MICHAEL COX and RICHARD ALM. “You Are What You Spend.” The New York Times Company, Week in Review section (Sun., February 10, 2008): 14.

Private Airlines “Are Pulling Along a Slow-Moving Government Agency”

 

     "Delta Air Lines uses G.P.S. technology to reduce the time its planes spend on the runway."  Source of caption and photo:  online version of the NYT article quoted and cited below. 

 

(p. C1)  WASHINGTON, Sept. 4 — At Hartsfield-Jackson Atlanta International Airport, Delta Air Lines said its jets take off an average of 10 minutes after pushing back from the gate — three minutes faster than in previous years.

Using new technology, planes take off following a narrow route, so that that jets right behind them taking different routes do not have to wait as long. That makes the system move a bit faster.

“The pilots say, ‘Wow, this is kind of neat,’ ” said Joseph C. Kolshak, executive vice president for operations at Delta.

Delta, and also Alaska Airlines and U.P.S., is demonstrating pieces of the possible future of the nation’s air traffic system, hinting at what aviation might be like — if the airlines and the federal government can get the details worked out.

All three airlines use refinements based on the constellation of G.P.S., or global positioning system, satellites. Many of these save at most a few minutes. But in a crowded system plagued by delays, that may be enough to help smooth out bottlenecks.

The carriers’ use of satellite navigation and other tools and techniques represents a step toward replacing a 50-year-old system of radar and radio beacons.

In the process, they are pulling along a slow-moving government agency, the Federal Aviation Administration, that is eager for better air traffic control systems but short on money and the authority to put changes in place.

It is a revolution in technology, but also in politics. Previously, the F.A.A. usually bought new systems on the ground and told airlines to equip themselves to use them; now the airlines are taking the initiative to outfit their planes, with safety regulation from the F.A.A.

Airlines are even developing their own approach patterns for airports, which has almost always been a government job.

U.P.S. Airlines, working with Aviation Communications and Surveillance Systems, based in Phoenix, is developing a landing pattern based on separating planes by time, not distance, so they land at the briefest safe interval.

“We’re going to create the future, because we think we know (p. C5) where it’s going to go,” said Karen Lee, director of operations at U.P.S. This is in contrast to the traditional way of doing business, typified by “the F.A.A. tells us what the roadmap is,” she said, then “we’ll start building the stuff to do it.”

 

For the full story, see:

MATTHEW L. WALD.  "For Airlines, Hands-On Air Traffic Control."  The New York Times  (Weds., September 5, 2007):  C1 & C5. 

 

UPSplaneGPSdevice.jpg    "A device that U.P.S. installed in the cockpit of one of its cargo planes to display traffic information."  Source of caption and photo:  online version of the NYT article quoted and cited above.

 

“Sometimes It Pays to Read the Old Literature”

(p. A1) Researchers in New York believe they have solved one of the great mysteries of the flu: Why does the infection spread primarily in the winter months?

The answer, they say, has to do with the virus itself. It is more stable and stays in the air longer when air is cold and dry, the exact conditions for much of the flu season.

. . .

(p. A22) To his surprise, Dr. Palese stumbled upon a solution that appeared to be a good second best.

Reading a paper published in 1919 in the Journal of the American Medical Association on the flu epidemic at Camp Cody in New Mexico, he came upon a key passage: “It is interesting to note that very soon after the epidemic of influenza reached this camp, our laboratory guinea pigs began to die.” At first, the study’s authors wrote, they thought the animals had died from food poisoning. But, they continued, “a necropsy on a dead pig revealed unmistakable signs of pneumonia.”

Dr. Palese bought some guinea pigs and exposed them to the flu virus. Just as the paper suggested, they got the flu and spread it among themselves. So Dr. Palese and his colleagues began their experiments.

. . .

As for Dr. Palese, he was glad he spotted the journal article that mentioned guinea pigs.

“Sometimes it pays to read the old literature,” he said.

 

For the full story, see:

GINA KOLATA. “Study Shows Why the Flu Likes Winter.” The New York Times (Weds., December 5, 2007): A1 & A22.

(Note:  ellipses added.)

 

Fraternal Odd Fellows Helped Each Other Without Depending on the Government

 

   The officers’ banquet of the annual convention of the Sovereign Grand Lodge of the Independent Order of Odd Fellows.  Source of the photo:  online version of the NYT article quoted and cited below.

 

Before the New Deal and the Great Society, voluntary mutual assistance organizations provided insurance and help in the face of life’s setbacks.  One such fraternal orgainization was the Odd Fellows. 

 

(p. 12)  Since his installation as top Odd Fellow, Mr. Robbins has warned that this order, dedicated to caring for the widowed, the orphaned and the needy, is in a “state of crisis.” Members are dying by the thousands, local lodges are closing by the dozens, and actual participation among the 289,000 members is dropping. If the people sitting before him do not heed his call to replenish the ranks, they will be the Odd Men and Women Out — defunct, extinct, done.

“Unless we can do something to turn the membership losses into significant gains in the next couple of years,” he says later, “we may be at a point where we can’t recover.”

Once we were a nation of joiners, and so many joined the Odd Fellows, a fraternal organization whose name stems from an English journalist’s observation in 1745. He found it “odd” to see “fellows,” rather than the aristocracy, helping widows, orphans and one another. The name stuck, oddly.

In many communities, you can still find an old I.O.O.F. building, a place of some mystery, where the rituals would include acting out the story of the Good Samaritan. Members were to apply that story to real life by aiding their brothers and sisters, chipping in to pay burial costs, for example. You merely had to express belief in one Creator to be eligible; atheists and pantheists need not apply.

Odd Fellows tended to frown on alcohol, loved bestowing medals on one another, and reveled in seeing their sword-carrying, uniformed brothers, the chevaliers of the Patriarchs Militant, march in Main Street parades. In their small worlds, Odd Fellows mattered.

Then came social changes to dull the appeal of fraternal organizations. Tighter government regulations forced the Odd Fellows out of their signature cause, orphanages, while baby boomers found all the pomp and secrecy to be, um, silly.

. . .

A toast then, to all national leaders of the world, as is Odd Fellows custom. Another toast, to all fraternal leaders of the world. Dinner, remarks, benediction, recessional to the strains of the “Battle Hymn of the Republic.” Odd Fellows and Rebekahs everywhere, good night.

 

For the full story, see: 

DAN BARRY.  "A Grand Gathering, but One With a Solemn Note."   The New York Times, Main Section  (Sunday, August 26, 2007):  12.

(Note:  ellipsis added.)

 

OddFellows2.jpg    "The Independent Order of Odd Fellows, dedicated to caring for the widowed, the orphaned and the needy, is in a “state of crisis.”"  Source of the photo:  online version of the NYT article quoted and cited above.

 

Government Biologists Spend Big Bucks Protecting Wrong Fish

CutthroatTrout.jpg

“Without DNA tests, the rare greenback cutthroat trout, left, and the Colorado River cutthroat fish are difficult to tell apart.” Source of caption and photo: online version of the NYT article quoted and cited below.

 

(p. 26) DENVER, Oct. 13 (AP) — State and federal biologists, who are smarting from research showing that they may have been protecting the wrong fish the past 20 years, are regrouping in their efforts to restore the rare greenback cutthroat trout to Colorado waters.

Tom Nesler, the state biologist, had hoped to see the fish removed from the endangered species list during his career. He concedes that might not happen if it turns out some of the greenback populations biologists thought they were saving are actually the similar but more common Colorado River cutthroat trout.

A three-year study led by University of Colorado researchers and published in August found that out of nine fish populations believed to be descendants of original greenbacks, five were actually Colorado River cutthroat trout.

The recovery effort was thought to be near its goal of establishing 20 self-sustaining greenback populations.

“Hey, science happens,” said Mr. Nesler with a shrug as he discussed the findings.

. . .

The Colorado Division of Wildlife has spent an average of $320,000 annually for the past five years to restore the greenback. Most of the money has come from state lottery revenue; no state tax dollars have been used.

. . .

“Science is not about proof and certainty,” he said, “it’s about testable hypotheses.”

 

For the full story, see:

THE ASSOCIATED PRESS. “After Possible ‘Oops,’ a Trout Rescue Project Regroups.” The New York Times, First Section (Sun., October 14, 2007): 26.

(Note: ellipses added.)

 

High-Tech Meters Increase Parking Efficiency

 

MitscheleFredHighTechMeter.jpg    "Fred Mitschele with his high-tech meter."  Source of photo:  online version of the NYT article quoted and cited below.

 

Hight-tech parking meters like the ones described in the article quoted below, could be used to make real-time changes in parking prices.  Higher rates during busier periods, would assure available spaces, which would reduce wasted time searching for parking spaces, thereby reducing congestion, and pollution. 

 

(p. 14)  If drivers want to use cash, the meters, which connect to a wireless network, can send text messages to the drivers’ cellphones to remind them to add more money.

The meters also communicate with traffic officials who can track which meters are being used and which ones need to be ticketed and serviced. To ensure that drivers do not skip out without paying, sensors the size of hockey pucks buried in the asphalt detect when cars pull in. A camera inside the meter takes pictures of license plates to help with enforcement.

. . .

The meters are just one example of how telecommunications are increasingly being integrated into toll and fee collection. E-ZPass, for instance, relies on radio frequency tags, cameras and networks to transmit data.

 

For the full story, see: 

KEN BELSON.  "MOTORING; Wait a Minute. My Parking Meter Is Calling."  The New York Times, SportsSunday Section  (Sun., September 9, 2007):  14.

(Note:  ellipsis added.)

 

Chinese Price Ceilings on Diesel Fuel Cause Shortages

CoalShnxiProvinceChina.jpg
“Looking for usable coal at a cinder dump in Shanxi Province in China. Inadequate coal in the north limited power production.” Source of the caption and photo: online version of the NYT article quoted and cited below.
The article quoted below uses the word “tariff” in the sense of “price.”

(p. C4) HONG KONG — The Chinese government issued an “urgent notice” on Wednesday to the country’s power generators, coal companies and railways to address an electricity shortage that has led to rationing in more than a third of China’s provinces in recent weeks.
The rationing, mostly achieved by telling factories that their power will be shut off for a day or two each week, coincides with the annual frenzy of factory production to meet orders before shutting down for the Chinese New Year holidays, which fall in early February this year.
. . .
Power executives and government statements attributed the electricity shortfall this winter to a confluence of problems. Many of the problems appear to have their roots in the government’s imposition of a long list of price controls in recent months in an attempt to tamp down inflation, which reached 6.9 percent at the consumer level in November.
Trucks did not deliver adequate coal stockpiles to power plants before winter snows arrived in northern China, partly because of nationwide diesel shortages. Refiners had cut back on the production of diesel because price controls were forcing them to sell the diesel for slightly less than the cost of the crude oil needed to make it.
. . .
Low electricity tariffs, particularly for residential users, have been another problem.
The central government issued an official “suggestion” to provincial governments last fall that they not allow increases in electricity tariffs charged to customers, as part of national price controls.
Provincial governments have responded by freezing tariffs, and even reducing them in the case of Guangdong Province in southeastern China, the home of much of the country’s export-oriented light industry.
The low tariffs have made it uneconomical for oil-fired plants to operate, and many have stopped doing so.
“It makes absolutely no sense for anyone to run a diesel- or oil-fired plant. They’re all shut down,” said a power company executive in China who asked not to be identified because of the sensitivity of commenting on regulatory policies.
The executive added that even when ordered by the government to resume operating at a loss, many state-owned oil-fired plants had not done so, scheduling maintenance and repairs instead.

For the full story, see:
KEITH BRADSHER. “Pinched by Price Controls, Power Plants in China Scale Back.” The New York Times (Thurs., January 24, 2008): C4.
(Note: ellipses added.)

Puzzle: Entrepreneurial Silicon Valley Donates Mainly to Democrats

 

    Source of graphic:  online version of the NYT article quoted and cited below.

Entrepreneurship thrives when government is small, so it puzzles me when the entrepreneurs in Silicon Valley embrace the Democrats, who generally advocate bigger government.
Of course, my Wabash professor Ben Rogge used to point out that there are always cross-currents that go in a different direction from the mainstream. And among the Democrats, there are what used to be called “new Democrats” who appreciate Schumpeter, and entrepreneurship, and dynamism.
Plus, some Democrats are more respectful of personal, lifestyle choices, and in Silicon Valley, that may be what is given the most weight.
Or, more cynically, maybe there’s a public choice explanation—that Silicon Valley donates to Democrats as a form of ‘insurance,’ in the hope that if the Democrats are elected, they will refrain from over-regulating and over-taxing Silicon Valley. (Even more cynically, compare the case of Florida’s sugar-subsidy-rich Fanjul brothers, one of whom donated huge bucks to the first Bush, while another donated huge bucks to Bill Clinton.)
(Another factor is that, alas, entrepreneurs often do not pay much attention to what conditions encourage entrepreneurship.)

(p. C4)  In a flip from the primary season for the 2000 presidential election, 60 percent of the contributions so far from people in the technology field here are going to Democrats. The Democratic candidates raised $1.4 million from the industry in the first half of this year, while Republican candidates raised $890,000. That total is up from $1.2 million in the first six months of each of the last two presidential primary races.

 

For the full story, see: 

LAURIE J. FLYNN.  "In Primary, Tech’s Home Is a Magnet." The New York Times  (Fri., August 24, 2007):  C1 & C4.

 

Persistence and Efficiency Matter More than Teamwork and Enthusiasm, for CEO Success

 

 





Source of image: online version of the WSJ article quoted and cited below.

 

(p. B3)  What are the traits that chief executives of successful companies share? A new study suggests that hard-nosed personal virtues such as persistence and efficiency count for more than “softer” strengths like teamwork or flexibility.

The findings are sure to intensify debate about how much toughness is appropriate in a CEO. Some famously hard-charging bosses of big companies have retired or been shunted aside in recent years. Successors at companies such as General Electric Co., International Business Machines Corp. and Hewlett-Packard Co. are seen as quieter, less strident team-builders.

But the new study, by three University of Chicago business-school professors, draws on detailed personal assessments of 313 CEO candidates to present a starker view of good leadership’s ingredients. Of these candidates, 225 were hired. Their subsequent performance fuels most of the study’s conclusions.

“We found that ‘hard’ skills, which are all about getting things done, were paramount,” says lead author Steven Kaplan, a professor of finance and entrepreneurship. “Soft skills centering on teamwork weren’t as pivotal. That was a bit of a surprise to us.”

Prof. Kaplan and colleagues Mark Klebanov and Morten Sorensen didn’t size up the CEOs themselves. Instead, they tapped into a consultant’s database long coveted by academic researchers. It contains assessments of individuals’ strengths and weaknesses compiled by ghSmart Inc. The Chicago management-assessment company evaluates CEO candidates on behalf of corporate clients.

For the full story, see:

GEORGE ANDERS. “THEORY & PRACTICE; Tough CEOs Often Most Successful, A Study Finds.”  The Wall Street Journal  (Mon., November 19, 2007):  B3.

Included with the WSJ article was an interesting summary table:

LEADING PROFILE

Here are five CEO traits that correlate most closely with business success at buyout companies — and five that score lowest, according to University of Chicago researchers.

Traits that matter…

• Persistence
• Attention to detail
• Efficiency
• Analytical skills
• Setting high standards

…and not so much

• Strong oral communication
• Teamwork
• Flexibility/adaptability
• Enthusiasm
• Listening skills


Private Money Supports Quest for Dinosaur DNA

 

   Source of graphic: the online version of the WSJ article quoted and cited below.

 

(p. A1)  JORDAN, Mont. — Prospecting in Montana’s badlands, rock ax in hand, paleontologist Jack Horner picks up a piece of the jawbone of a dinosaur. He examines the splinter, then puts it back and moves on. It isn’t the kind of bone he is looking for.

Prof. Horner is searching for something that many scientists believe no longer exists: dinosaur bones that harbor blood cells, protein and, perhaps, even DNA.

"Most people looking for dinosaurs are looking for beautiful skeletons," he says. "We are looking for information."

. . .  

Prof. Horner, a curator at the Museum of the Rockies in Bozeman, is among the world’s most influential and offbeat paleontologists. He pioneered studies of dinosaur parent-(p. A12)ing behavior, species variation and bone cells. He is dyslexic, a former Special Forces operative of the Vietnam War era, a MacArthur Foundation "genius" fellow, and a chaired professor of Montana State University who never finished a formal college degree.

"The lenses that people normally use to look at stuff are broken in Jack," says Mary Schweitzer, an assistant professor of paleontology at North Carolina State University, who has worked with him for years. "That’s what makes Jack such a good scientist. Every now and then, every field should get a renegade weirdo in it who challenges assumptions."

. . .  

"The chances of finding any [dinosaur] DNA are pretty low," Prof. Horner acknowledges. "I am still hopeful."

In a field mostly outside the mainstream of federal research funding, Prof. Horner has a knack for attracting private grants. Star Wars producer George Lucas, Qualcomm co-founder Klein Gilhousen and Wade Dokken, a developer of Montana real estate, have contributed toward his research, the university says. Nathan Myhrvold, formerly chief technology officer at Microsoft Corp. and co-founder of Intellectual Ventures LLC, is helping to underwrite this season’s fieldwork.

This summer, in Montana’s Hell Creek Formation, Prof. Horner is searching the last landscape inhabited by dinosaurs. More than 65 million years ago, this plain was a wetland where herds of horned Triceratops watered. Today, it is an arid outwash of boulders, cactus and sage. The red and gray soil is littered with white shards of petrified wood that ring like bone china when tapped together and countless crumbs of dinosaur bone.

. . .

"As long as you are not bound by preconceived ideas of what you can find," Prof. Horner says, "there are an awful lot of things you can discover."

 

For the full story, see:

ROBERT LEE HOTZ. "Dinosaur Hunter Seeks More Than Just Bare Bones; Prof. Horner Searches For Traces of Blood, DNA; Lucky Break From T. Rex."  The Wall Street Journal  (Fri., August 24, 2007):  A1 & A12.

(Note:  ellipses added.)

  

     At top, Prof. Horner; at bottom: "Sarah Keenan, 21, an undergraduate at the University of St. Andrews in Scotland who is working this summer for Prof. Horner, covers the fossilized triceratops frill in a protective jacket of plaster."  Source of caption and photos: the online version of the WSJ article quoted and cited above.

 

Bill Gates Reads Julian Simon

(p. A15)  A core belief of Mr. Gates is that technology can erase problems that seem intractable. That belief was deepened, Mr. Gates says, by his study of Julian Simon, a now-deceased business professor who argued that increases in wealth and technology would offset shortages in energy, food and other global resources.
Pacing in his office last week, Mr. Gates retold the story of a famous $10,000 wager between Mr. Simon and Paul Ehrlich, a Stanford University professor who predicted that human population growth would outstrip the earth’s resources.  Mr. Simon bet that even as a growing population increased demand for metals such as tin and copper, the price of those metals would fall within the decade ending in 1990. Mr. Simon won the bet. “He cremated the guy,” says Mr. Gates.  Mr. Ehrlich’s administrator at Stanford University said he was out of the country and couldn’t comment on the wager.

For the full story, see:

ROBERT A. GUTH.  “Bill Gates Issues Call For Kinder Capitalism; Famously Competitive, Billionaire Now Urges Business to Aid the Poor.”  The Wall Street Journal  (Thurs., January 24, 2008):  A1 & A15.