Efficiency Skills Are “Profoundly Different from” Innovation Skills

(p. A15) How do you deliver performance now while developing the products you’ll need in the future? The skills required to support established franchises, he argues, are profoundly different from those required to develop new ones. Management techniques such as Six Sigma, focused on efficiency and execution, tend to be bad for innovation, which is intrinsically messy and inefficient. Companies need a different approach to nurture the radically original projects, or “loonshots,” that are essential for long-term success.
. . .
In Mr. Bahcall’s view, the principal obstacle to innovation isn’t that there are too few creative ideas–indeed, there are plenty of artists, he says. The problem is that original proposals are both discomfiting and imperfect, hence reflexively rejected before they can develop enough to prove themselves in the field.
. . .
Organizations can miss innovation opportunities by accepting the conventional wisdom, Mr. Bahcall observes, a problem he describes as “false fails.” Consider the Facebook predecessor Friendster. Mr. Bahcall explains that while most investors decided that the failure of Friendster was evidence that social-network efforts weren’t sticky enough to retain customers, Peter Thiel’s investment team wasn’t so sure. They dug into the data and were “stunned by how long users stayed with the site,” despite the irritating crashes that dogged the platform. Hence Mr. Thiel’s fund was an early investor in Facebook, confident that, with appropriate attention to the underlying technology, the platform could succeed. Eight years later, he sold most of his Facebook stake and pocketed roughly $1 billion.

For the full review, see:
David A. Shaywitz. “BOOKSHELF; In Praise of Wild Ideas; Innovative proposals can be both imperfect and discomfiting–and are often rejected before they can develop enough to prove themselves viable.” The Wall Street Journal (Tuesday, March 19, 2019): A15.
(Note: ellipses added.)
(Note: the online version of the review has the date March 18, 2019, and has the title “BOOKSHELF; ‘Loonshots’ Review: In Praise of Wild Ideas; Innovative proposals can be both imperfect and discomfiting–and are often rejected before they can develop enough to prove themselves viable.”)

The book under review, is:
Bahcall, Safi. Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries. New York: St. Martin’s Press, 2019.

Vernon Smith Offers More Advance Praise for Openness to Creative Destruction

Adam Smith said that we seek security–more cautious than enterprising–because we suffer more in falling from a better to a worse situation than we ever enjoy in rising from a worse to better. Yet Smith provided opportunity for James Watt, an upstart 22 year-old mechanical genius that was denied him by the local corporations; thus launching a spectacular career of innovation. Others, from Tom Edison to Steve Jobs, followed. Diamond’s book is about our need to nourish and reduce the obstacles to that creative engine; to give freedom to the flower of innovation that we all be enriched.

Vernon Smith, Nobel Prize in Economics, received in 2002.

Vernon Smith’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.

Mycologists Cure Ailing Bees

(p. 4) Sometime in the 1980s, microscopic mites that had been afflicting honeybees outside the United States found their way to Florida and Wisconsin and began wreaking havoc across the country.
. . .
This mite, Varroa destructor, injects a slew of viruses into bees, including one that causes shriveled wings, a primary factor in widespread colony collapse. Worse, these parasites have rapidly developed resistance to synthetic pesticides.
Beekeepers in the United States lost an estimated 40 percent of their colonies between April 2017 and April 2018. But we might be able to save honeybees at least from this parasitic scourge without chemical intervention. I along with scientists at Washington State University and the United States Department of Agriculture recently published in Scientific Reports, a journal from the publishers of Nature, a study that could inspire a paradigm shift in protecting bees.
Our research shows that extracts from the living mycelial tissue of common wood conk mushrooms known to have antiviral properties significantly reduced these viruses in honeybee colonies, in one field test by 45,000 times, compared to control colonies.
. . .
Nature can repair itself with a little help from mycologists.

For the full commentary, see:
Paul Stamets. “Saving Bees With Mushrooms.” The New York Times, SundayReview Section (Sunday, Dec. 30, 2018): 4.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 28, 2018, and has the title “Will Mushrooms Be Magic for Threatened Bees?”)

The commentary is related to the author’s book:
Stamets, Paul. Mycelium Running: How Mushrooms Can Help Save the World. New York: Ten Speed Press, 2005.

Peter Boettke Offers Advance Praise for Openness to Creative Destruction

Prometheus didn’t ask permission for Zeus to bring fire to the humans. It cost him dearly, as Zeus punished him in a rather vicious manner. But human beings were made infinitely better off with fire. Art Diamond relays this story to us precisely because he wants us to understand the great benefits that entrepreneurial innovation deliver for mankind, and yet how the true innovator is often despised and disrespected by the prevailing orthodox establishment. If Prometheus had to get permission before giving fire to man, then man would have never gotten the benefits of fire. Similarly, if our entrepreneurial innovators had to get permission prior to introducing their innovation, we would still be walking around or perhaps at best riding on the backs of beasts but I doubt we would have seen the benefits of automobiles, let alone planes, and we would very well not have modern conveniences such as indoor plumbing, let alone air travel, cell phones, and the world wide web.

Peter Boettke, Professor of Economics & Philosophy, George Mason University; Director F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center.

Boettke’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.

Chinese “Entrepreneurs Were Like Famished Goats Set Free from a Pen and Allowed to Flourish”

(p. 11) YULIN, China — For months, Zhao Faqi was a folk hero for entrepreneurs in China — an investor who fought the government in court and online, and against the odds, seemed poised to win. He accused officials of stealing his rights to coal-rich land, and ignited a furor by accusing China’s most powerful judge of corruption.
Now, Mr. Zhao has dropped out of sight — and the authorities want to erase his story.
. . .
The state news media has painted him as a cunning schemer. A judge who supported his case was paraded on television. A crusading former talk show host who helped bring the case to light has fallen silent.
Mr. Zhao’s arc from self-declared victim to officially designated villain has been dramatic even for China, where the party controls the courts and businesspeople can abruptly fall from grace. Mr. Zhao’s descent — and possible disappearance — is a demonstration of the hazards that entrepreneurs face in taking on powerful Chinese officials.
“I’ve faced a lot of risks and pressure because of this lawsuit,” Mr. Zhao said in an interview in Beijing a few weeks before he disappeared. Chinese entrepreneurs, he said, yearned for the rule of law to replace arbitrary power. “You can’t say someone is protected one day, and take away protection the next day.”
Mr. Zhao drew support from liberal economists and lawyers who have been unsettled by Mr. Xi’s reverence for communist tradition and support for state-owned companies, which he has urged to grow “stronger, better and bigger.”
. . .
Mr. Zhao, 52, was among the entrepreneurs who plunged into business after Deng Xiaoping, then China’s paramount leader, unleashed market overhauls. At the time, Mr. Zhao said, entrepreneurs were like famished goats set free from a pen and allowed to flourish.
“But we’re seeing this vitality steadily shrink,” he said.
. . .
. . . , Mr. Zhao’s phone has been turned off, and he appears to have gone into hiding or official custody.

For the full story, see:
Chris Buckley. “Chinese Entrepreneur Takes On the System, and Drops Out of Sight.” The New York Times, First Section (Sunday, March 10, 2019): 11.
(Note: ellipses added.)
(Note: the online version of the story has the date March 9, 2019.)

Innovative Entrepreneurs Bring Prosperity to the Poor

(p. A17) As the economist Joseph Schumpeter observed: “The capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.”
For Schumpeter, entrepreneurs and the companies they found are the engines of wealth creation. This is what distinguishes capitalism from all previous forms of economic society and turned Marxism on its head, the parasitic capitalist becoming the innovative and beneficent entrepreneur. Since the 2008 crash, Schumpeter’s lessons have been overshadowed by Keynesian macroeconomics, in which the entrepreneurial function is reduced to a ghostly presence. As Schumpeter commented on John Maynard Keynes’s “General Theory” (1936), change–the outstanding feature of capitalism–was, in Keynes’s analysis, “assumed away.”
Progressive, ameliorative change is what poor people in poor countries need most of all. In “The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty,” Harvard Business School’s Clayton Christensen and co-authors Efosa Ojomo and Karen Dillon return the entrepreneur and innovation to the center stage of economic development and prosperity. The authors overturn the current foreign-aid development paradigm of externally imposed, predominantly government funded capital- and institution-building programs and replace it with a model of entrepreneur-led innovation. “It may sound counterintuitive,” the authors write, but “enduring prosperity for many countries will not come from fixing poverty. It will come from investing in innovations that create new markets within these countries.” This is the paradox of the book’s title.
. . .
One example that the authors cite is Tolaram Group, a Singapore-based conglomerate that created the instant-noodle market in Nigeria, pushing out 4.5 billion packets annually and generating revenue of almost $1 billion a year. Sourcing, manufacturing, distributing and selling its Indomie-branded noodles required that Tolaram invest in a broad and deep logistics and distribution chain; create a retail network; develop specialized training; acquire its own electricity generation; build a water and sewage-treatment plant; and construct a deep-water port in the city of Lekki. Had Tolaram waited for the Nigerian government to address these infrastructure and institutional challenges before investing in the country, the company would still be waiting. Other examples include British businessman Mo Ibrahim’s pan-African Celtel, which built a cellphone network across 13 African countries and gained 5.2 million customers in six years, and India’s Narayana Health, which has brought the cost of open-heart surgery down to $1,000.
. . .
Instead of a book of glib answers, they present something much more powerful–a work of creative destruction for today’s failed development-policy paradigm.

For the full review, see:
Rupert Darwall. “BOOKSHELF; A Better Way to Fight Poverty; The current foreign-development paradigm of government-funded programs should be replaced by an entrepreneurial model.” The Wall Street Journal (Thursday, January 31, 2019): A17.
(Note: ellipses added.)
(Note: the online version of the review has the date Jan. 30, 2019, and has the title “BOOKSHELF; ‘The Prosperity Paradox’ Review: A Better Way to Fight Poverty; The current foreign-development paradigm of government-funded programs should be replaced by an entrepreneurial model.”)

The book under review, is:
Christensen, Clayton M., Efosa Ojomo, and Karen Dillon. The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty. New York: HarperBusiness Press, 2019.

Variability of Wind and Solar Increase Costs of Reliable Energy Sources

(p. A17) President Trump mocked the Democrats’ Green New Deal and its renewable-energy aspirations in a recent speech: “When the wind stops blowing, that’s the end of your electric.” But the most destructive consequence of wind and solar power result from periods of oversupply.
Coal and gas generating plants have to be kept on standby and ramped up to cover the shortfall resulting from still air and darkness. That forces them to operate less efficiently and pushes their costs up. During periods of low demand, wind and solar can produce too much electricity, creating gluts and driving wholesale prices negative, meaning grid operators have to pay consumers to burn unwanted energy. That makes nuclear, coal and gas generators unprofitable, necessitating extra subsidies to save the power stations needed to keep the lights on.

For the full commentary, see:
Rupert Darwall. “When There’s Too Much Sun and Wind; The biggest danger of renewable energy is overproduction.” The Wall Street Journal (Monday, March 11, 2019): A17.
(Note: the online version of the commentary has the date March 10, 2019.)

Private Firms Build Costly Complex Cable Infrastructure

(p. B1) Nearly 750,000 miles of cable already connect the continents to support our insatiable demand for communication and entertainment. Companies have typically pooled their resources to collaborate on undersea cable projects, like a freeway for them all to share.
But now Google is going its own way, in a first-of-its-kind project connecting the United States to Chile, home to the company’s largest data center in Latin America.
. . .
(p. B7) Inside the ship, workers spool the cable into cavernous tanks. One person walks the cable swiftly in a circle, as if laying out a massive garden hose, while others lie down to hold it in place to ensure it doesn’t snag or knot. Even with teams working around the clock, it takes about four weeks before the ship is loaded up with enough cable to hit the open sea.
The first trans-Atlantic cable was completed in 1858 to connect the United States and Britain. Queen Victoria commemorated the occasion with a message to President James Buchanan that took 16 hours to transmit.
While new wireless and satellite technologies have been invented in the decades since, cables remain the fastest, most efficient and least expensive way to send information across the ocean. And it is still far from cheap: Google would not disclose the cost of its project to Chile, but experts say subsea projects cost up to $350 million, depending on the length of the cable.
. . .
Poor weather is inevitable. Swells reach up to 20 feet, occasionally requiring the ship captain to order the subsea cable to be cut so the ship can seek safer waters. When conditions improve, the ship returns, retrieving the cut cable that has been left attached to a floating buoy, then splicing it back together before continuing.
Work on board is slow and plodding. The ship, at sea for months at a time, moves about six miles per hour, as the cables are pulled from the giant basins out through openings at the back of the ship.
. . .
“It really is management of a very complex multidimensional chess board,” said Ms. Stowell of Google, who wears an undersea cable as a necklace.
Demand for undersea cables will only grow as more businesses rely on cloud computing services. And technology expected around the corner, like more powerful artificial intelligence and driverless cars, will all require fast data speeds as well. Areas that didn’t have internet are now getting access, with the United Nations reporting that for the first time more than half the global population is now online.
“This is a huge part of the infrastructure that’s making that happen,” said Debbie Brask, the vice president at SubCom, who is managing the Google project. “All of that data is going in the undersea cables.”

For the full story, see:
ADAM SATARIANO. “Underwater Freeways for Your Puppy Posts.” The New York Times (Tuesday, MARCH 12, 2019): B1 & B6-B7.
(Note: ellipses added.)
(Note: the online version of the story has the date MARCH 10, 2019, and has the title “How the Internet Travels Across Oceans.”)

Universal Basic Income Increases Taxes and Does Not Increase Work Among Unemployed

(p. 13) HELSINKI, Finland — A basic income made recipients happier than they were on unemployment benefits, a two-year government experiment in Finland has found. But it did not, as proponents had hoped, make them more likely to work.
. . .
The basic income has been controversial, however, with leaders of the main Finnish political parties keen to streamline the benefits system but wary of offering “money for nothing,” especially ahead of parliamentary elections due in April [2019].
. . .
The higher taxes that the Organization for Economic Cooperation and Development says would be needed to pay for basic income schemes might also be off-putting for voters.
In a review of the Finnish scheme last year, the organization warned that implementing it nationally and cost-neutrally for the state would imply significant income redistribution, especially toward couples from single people, and increase poverty.
The researchers have acknowledged that the Finnish pilot was less than realistic because it did not include any tax clawback once participants found work and reached a certain income level.
Swiss voters rejected a similar scheme in 2016.

For the full story, see:
Reuters. “Experiment Explores Income, Jobs and Happiness.” The New York Times, First Section (Sunday, Feb. 10, 2019): 13.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the story has the date Feb. 9, 2019, and has the title “Finland’s Basic Income Trial Boosts Happiness, but Not Employment.”)

Vernon Smith Offers Advance Praise for Openness to Creative Destruction

Read this book and discover what matters most in economics–ideas and knowledge-how summarized in the word “innovation.” But to fuel innovation resources have to be released from their old incumbent uses and flow into the new. That is the destruction that creates.

Vernon Smith, Nobel Prize in Economics, received in 2002.

Vernon Smith’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.