Creative Destruction – Page 12

Business Cycles May Arise from “the Summation of Random Causes,” Rather than from Creative Destruction

The Slutsky result summarized below would seem to imply that you can explain business cycles without fingering creative destruction as the culprit, as Schumpeter had seemed to do. The costs of creative destruction are thus reduced, and the case for creative destruction strengthened.

(p. 232) Phil Davies and Joe Mahon investigate “The Meaning of Slutsky.” “A middleaged professor working at a Moscow think tank, [Eugen] Slutsky was virtually unknown to economists in Europe and the United States when he published his landmark paper on cyclical phenomena in 1927. In a bold statistical experiment, Slutsky demonstrated that random numbers subjected to statistical calculations similar to those used to reveal trends in economic time-series formed wavelike patterns indistinguishable from business cycles. The implication was that a similar stochastic process–‘the summation of random causes,’ as Slutsky described it–might be at work in the actual economy, causing prosperity to ebb and flow without the agency of sunspots, meteorological patterns or other cyclical forces. ‘That was a hell of an idea,’ said Robert Lucas, a University of Chicago economist who pioneered modern business cycle theory, in an interview. ‘It was just a huge jump from what anyone had done.’

Source:
Taylor, Timothy. “Recommendations for Further Reading.” Journal of Economic Perspectives 24, no. 2 (Spring 2010): 227-34.
(Note: bracketed name in original.)

The published version of the article summarized by Taylor is:
Davies, Phil, and Joe Mahon. “The Meaning of Slutsky.” The Region (Dec. 2009): 13-17, 42-46.

Personal DNA Data, Smart Phones, and the Social Network Can Democratize Medicine

(p. 236) With the personal montage of your DNA, your cell phone, your social network—aggregated with your lifelong health information and physiological and anatomic data—you are positioned to reboot the future of medicine. Who could possibly be more interested and more vested in your data? For the first time, the medical world is getting democratized. Think of the priests before the Gutenberg printing press. Now, nearly six hundred years later, think of physicians and the creative destruction of medicine.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

Progress Will Slow If Consumers Wait for Doctors to Creatively Destroy Medicine

(p. 195) . . . it remains unclear whether there is adequate plasticity of a plurality of physicians to embrace the digital world and acknowledge that the era of paternalism is passé. My sense is that young physicians who are digital natives will be likely to assimilate but that it will be quite difficult for the vast majority who are in practice and inculcated with an older idea of how medical care should be rendered. Eventually there will be enough digital native physicians to take charge, but that will take decades to be accomplished. In the meantime, consumers are fully capable of leading the movement and contributing to medicine’s creative destruction. And so they must.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.
(Note: ellipsis added.)

“The Resistance from the Priesthood of Medicine Is at Its Height”

(p. 77) In December 2010 in Milwaukee, Wisconsin, Nicholas Volker, a five-year-old boy with a gastrointestinal condition that had not previously been seen, who had undergone over a hundred surgical operations and was almost constantly hospitalized and intermittently septic, was virtually on death’s door. But when his DNA sequence was determined, his doctors found the culprit mutation. That discovery led to the proper treatment, and now Nicholas is healthy and thriving. Even though this was only the first clearly documented case of the life-saving power of human genomics in medicine, (p. 78) few could now deny that the field was going to have a vital role in the future of medicine. Some would argue that the treatment led to an even bigger breakthrough: health insurance coverage of sequencing costs for select cases.
It took the better part of a decade from the completion of the first draft of the Human Genome Project for genomics to reach the clinic in such a dramatic way. To make treatment like Volker’s common will likely take more time still. Even if that’s the ultimate prize, the creative destruction of medicine still has various other, less comprehensive, genomic tools for us to use, based on investigations of things like single-nucleotide polymorphisms, the exome, and more. The material can be a bit heady, but it’s worth pushing through: these tools could effect not just dramatic corrections of faulty genes but a better, more scientific understanding of disease susceptibility and what drugs to take. Moreover, as they empower patients and democratize medicine, they make medical knowledge available to all and deep knowledge of ourselves available to each of us. Nevertheless, at this level, perhaps more than anywhere else in this ongoing medical revolution, the resistance from the priesthood of medicine is at its height. The fight might be tougher than the material, but in neither case can we afford to give up.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

The Kairos of Creative Destruction in Medicine

Wikipedia tells us that “Kairos” “is an ancient Greek word meaning the right or opportune moment (the supreme moment).”

(p. x) With a medical profession that is particularly incapable of making a transition to practicing individualized medicine, despite a new array of powerful tools, isn’t it time for consumers to drive this capability? The median of human beings is not the message. The revolution in technology that is based on the primacy of individuals mandates a revolution by consumers in order for new medicine to take hold.

Now you’ve probably thought “creative destruction” is a pretty harsh term to apply to medicine. But we desperately need medicine to he Schumpetered, to be radically transformed. We need the digital world to invade (p. xi) the medical cocoon and to exploit the newfound and exciting technological capabilities of digitizing human beings. Some will consider this to be a unique, opportune moment in medicine, a veritable once-in-a-lifetime Kairos.
This book is intended to arm consumers to move us forward.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.
(Note: italics in original.)

“Our World Has Been “Schumpetered””

“Schumpeter” is now a verb!

(p. v) In the mid-twentieth century Joseph Schumpeter, the noted Austrian economist, popularized the term “creative destruction” to denote transformation that accompanies radical innovation. In recent years, our world has been “Schumpetered.” By virtue of the intensive infiltration of digital devices into our daily lives, we have radically altered how we communicate with one another and with our entire social network at once. We can rapidly turn to our prosthetic brain, the search engine, at any moment to find information or compensate for a senior moment. Everywhere we go we take pictures and videos with our cell phone, the one precious object that never leaves our side. Can we even remember the old days of getting film developed? No longer is there such a thing as a record album that we buy as a whole–instead we just pick the song or songs we want and download them anytime and anywhere. Forget about going to a video store to rent a movie and finding out it is not in stock. Just download it at home and watch it on television, a computer monitor, a tablet, or even your phone. If we’re not interested in getting a newspaper delivered and accumulating enormous loads of paper to recycle, or having our hands smudged by newsprint, we can simply click to pick the stories that interest us. Even clicking is starting to get old, since we can just tap a tablet or cell phone in virtual silence. The Web lets us sample nearly all books in print without even making a purchase and efficiently download the whole book in a flash. We have both a digital, virtual identity and a real one. This profile just scratches the surface of the way our lives have been radically transformed through digital innovation. Radically transformed. Creatively destroyed.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

Openness to Creative Destruction Will Speed Health Care Progress

Source of book image: http://si.wsj.net/public/resources/images/OB-RQ412_bkrvme_DV_20120202132402.jpg

Eric Topol has bucked the medical establishment before. In entries on August 20, 2006 and on December 26, 2006 on this blog, he was quoted as arguing that stents were being overused. Now he argues that the medical establishment is slowing progress that could reduce disability and extend life. He advocates the sequencing of each of our genomes and a medical revolution that will fine-tune treatment to our genomic differences.
Many agree with Topol’s view of the future of medicine, but many medical schools are neglecting teaching future doctors about the therapeutic implications of individual genomics.
Topol calls for the creative destruction of medical education and other medical institutions.
The early part of the book is weak because it discusses subjects on which Topol is not an expert—such as the history and applications of information technology. In these sections, he too often tediously explains the obvious and widely known. Sometimes in this section of the book, he is just wrong, as when (p. 14) he claims that Werner Sombart originated “creative destruction.”
After the early chapters the book comes into its own when Topol discusses medical advances and challenges. While his early prose may be aimed too low, his later prose may be aimed too high—but it is better to be talked up to than down to, and the best of the later chapters contain some fascinating descriptions of what is happening on the frontiers of medicine, and what could be happening if we change policies and institutions to make medicine more open to creative destruction.
In the following few weeks, I will be quoting several of the more important or thought-provoking passages.

Book discussed:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

Information Technology Enables Massive Process Creative Destruction

(p. 2) . . . I want to argue that something deep is going on with information technology, something that goes well beyond the use of computers, social media, and commerce on the Internet. Business processes that once took place among human beings are now being executed electronically. They are taking place in an unseen domain that is strictly digital. On the surface, this shift doesn’t seem particularly consequential — it’s almost something we take for granted. But I believe it is causing a revolution no less important and dramatic than that of the railroads. It is quietly creating a second economy, a digital one.
. . .
(p. 5) Now this second, digital economy isn’t producing anything tangible. It’s not making my bed in a hotel, or bringing me orange juice in the morning. But it is running an awful lot of the economy. It’s helping architects design buildings, it’s tracking sales and inventory, getting goods from here to there, executing trades and banking operations, controlling manufacturing equipment, making design calculations, billing clients, navigating aircraft, helping diagnose patients, and guiding laparoscopic surgeries. Such operations grow slowly and take time to form.
. . .
(p. 6) Is this the biggest change since the Industrial Revolution? Well, without sticking my neck out too much, I believe so. In fact, I think it may well be the biggest change ever in the economy. It is a deep qualitative change that is bringing intelligent, automatic response to the economy. There’s no upper limit to this, no place where it has to end.
. . .
I think that for the rest of this century, barring wars and pestilence, a lot of the story will be the building out of this second economy, an unseen underground economy that basically is giving us intelligent reactions to what we do above the ground.

Source:
Arthur, W. Brian. “The Second Economy.” McKinsey Quarterly, no. 4 (Oct. 2011): 90-99.
(Note: ellipses added.)
(Note: I first saw the passages quoted above on pages 243-244 of Timothy Taylor’s “Recommendations for Further Reading” feature in The Journal of Economic Perspectives 26, no. 1 (Winter 2012).)

Mitt Romney on Innovation and Creative Destruction

Source of book image: http://mittromneycentral.com/uploads/No-Apology1.jpg

(p. 108) Innovation and Creative Destruction

The key to increasing national prosperity is to promote good ideas and create the conditions that can lead them to be fully exploited–in existing businesses as well as new ones. Government is generally not the source of new ideas, although innovations from NASA and the military have provided frequent exceptions. Nor is government where innovation is commercially developed. But government policies do, in fact, have a major impact on the implementation of innovative ideas. The degree to which a nation makes itself productive, and thus how prosperous its citizens become, is determined in large measure by whether government adopts policies that stimulate innovation or that stifle it.
The government policy that has the greatest effect on innovation is simply whether or not the government will allow it. It’s sad but true: Government can and often does purposefully prevent innovation and the resulting improvement in productivity. Recall my hypothetical example of a society in which half the farming jobs were lost due to innovation in the use of a plow? Some nations accept and encourage such “creative destruction,” recognizing that in the long run it leads to greater productivity and wealth for its citizens. But other nations succumb to the objections of those in danger of becoming unemployed and prevent innovation that may reduce short-term employment.
Two centuries ago, more than three-quarters of our workforce actually did labor on farms. Over the succeeding decades, innovations like irrigation, fertilizer, and tractors were welcomed, and eventually large farming corporations were allowed to prosper, despite protests from family farmers and the often heart-wrenching dislocations that accompanied consolidation of farmlands. The result was the disappearance of millions of agricultural jobs and the large-scale migration of Americans from rural regions to our cities. Once there, they provided the labor that powered America’s new industrial age. And at the same time, because farming innovation and productivity were allowed to flourish, America became the leader in agriculture education, research, and industry. Innovations from these sources have enabled us to produce sufficient food to feed not only our growing population but other parts of the world as well.

Source:
Romney, Mitt. No Apology: The Case for American Greatness. New York: St. Martin’s Press, 2010.
(Note: bold in original.)

“It’s All about Creative Destruction”

“LARRY ELLISON: ‘It’s all about creative destruction.'” Source of book image: online version of the WSJ review quoted and cited below.

(p. R6) In Silicon Valley, a spot known for constant change, Larry Ellison has kept his job atop Oracle Corp. . . . for decades. And that gives him a unique perspective on the industry and where it’s headed.

The Wall Street Journal’s Kara Swisher spoke with Mr. Ellison about the state of tech innovation, the future of the Internet–and what keeps him inspired.
What follows are edited excerpts of their discussion.
. . .
MS. SWISHER: A lot of people talk about the end of Silicon Valley, the end of innovation. Do you imagine that?
MR. ELLISON: It’s all about creative destruction. Remember Woody Allen’s great line about relationships: “Relationships are like a shark. It either has to move forward, or it dies.”
That’s true of a company. If you don’t keep your technology current, if you’re not monitoring what is possible today that wasn’t possible yesterday, then someone’s going to beat you to the punch. Someone’s going to get ahead of you, and you’re going to lose your customers to some competitor.
We see a lot of companies in Silicon Valley that are under stress now. But there are a lot of other companies that have come along and are doing interesting things.
. . .
MS. SWISHER: What keeps you going?
MR. ELLISON: Red Bull.
I mean, this is going to sound really corny, but life’s a journey of discovery. I’m really fascinated by people, and by what can be done with technology. I also enjoy the competition, the process of learning as we compete, learning as we exploit these technologies to solve customer problems.
The whole thing is just fascinating. I don’t know what I would do if I retired.

For the full interview, see:
Kara Swisher, interviewer. “Silicon Valley, the Long View; Larry Ellison on how much simpler the consumer has it now.” The Wall Street Journal (Mon., June 4, 2012): R6.
(Note: ellipses added; bold and italics in original.)