Creative Destruction – Page 17

New York City Would Creatively Adapt to Global Warming

“Rising Currents: Projects for New York’s Waterfront In this MoMA show, a model by Architecture Research Office marries a wholly new landscape to Lower Manhattan’s streets.” Source of caption and photo: online version of the NYT article quoted and cited below.

Much is in doubt about “global warming” including how much the globe will warm, and how fast, to what extent the benefits of global warming would balance the costs, and what actions (such as Nathan Myhrvold’s creative plan) might be taken to counteract global warming.
But one certainty is that if governments leave innovative entrepreneurial capitalism alone, human creativity will find ways to adapt in order to increase the benefits and reduce the costs.
Few cities have displayed as much creative destruction in architecture as New York. (One book on New York architecture was even called The Creative Destruction of Manhattan“). The article quoted below describes some visions of how New York City might adapt to an increase in sea level that might result from global warming.

(p. C21) “Rising Currents: Projects for New York’s Waterfront,” a new show at the Museum of Modern Art, reflects a level of apocalyptic thinking about this city that we haven’t seen since it was at the edge of financial collapse in the 1970s, a time when muggers roamed freely, and graffiti covered everything.

Organized by Barry Bergdoll, the Modern’s curator of architecture and design, the show is a response to the effects that rising sea levels are expected to have on New York City and parts of New Jersey over the next 70 or so years, according to government studies. The solutions it proposes are impressively imaginative, ranging from spongelike sidewalks to housing projects suspended over water to transforming the Gowanus Canal into an oyster hatchery.
. . .
(p. C23) A general interest in re-examining parts of the urban fabric that we take for granted, like streets, piers and canals — as opposed to the more familiar desire to create striking visual objects — is one of the main strengths of the exhibition. A team led by Matthew Baird Architects, for example, has focused on a huge oil refinery in Bayonne, N.J., that, if current estimates hold, will be entirely under water before our toddlers have hit retirement age. Rather than taking the predictable and bland route of transforming the industrial site into a park, the team proposes a system of piers that would support bio-fuel and recycling plants, including one that would produce the building blocks for artificial reefs out of recycled glass.
Those large, multipronged objects, which the architects call “jacks,” could be dumped off boats in strategically chosen locations, where their forms would naturally interlock to create artificial reefs once they settled at the bottom of the harbor. The jacks are magical objects, at once tough and delicate, and when you see examples of them from across the room at MoMA, their heavy legs and crushed glass surfaces make them look almost like buildings.
But here again, what’s really commendable about the design is the desire to look deeper into how systems — in this case, global systems, both natural and economic — work. According to Mr. Baird’s research, the melting of the ice cap could one day create a northern shipping passage that would make New York Harbor virtually obsolete. The manufacturing component of the design is meant as part of a broader realignment of the city’s economy that anticipates that shift.

For the full story, see:
NICOLAI OUROUSSOFF. “Architecture Review; The Future: A More Watery New York.” The New York Times (Fri., March 26, 2010): C21 & C23.
(Note: ellipsis added.)
(Note: The online version of the article is dated March 25, 2010 and has the title “Architecture Review; ‘Rising Currents: Projects for New York’s Waterfront’; Imagining a More Watery New York.”)

The book I mention in my comments is:
Page, Max. The Creative Destruction of Manhattan, 1900-1940. Chicago: University of Chicago Press, 2000.

“We Don’t Lie Out Here; We Just Remember Big”

(p. W11) Americans love a winner and they remember what they want to remember, and so let us now remember the Central Overland California & Pike’s Peak Express Co.–known from the day it began 150 years ago on April 3, 1860, as the Pony Express.

We remember the Pony Express as one of the most enduring and endearing of American stories, a tale of the frontier, a story of bold entrepreneurs, daring young horsemen, true riders of the purple sage and all that. In truth, the venture hemorrhaged money from day one, was doomed by technology (another particularly American story), lasted a mere 78 weeks, ruined its backers and then disappeared into what historian Bernard DeVoto called “the border land of fable.” Across the wide Missouri, fact and fantasy collided and the Pony Express became “a tale of truth, half-truth and no truth at all,” as another historian observed.
. . .
The service was shut down in the flash of a telegrapher’s key when the transcontinental telegraph was completed in October 1861. The records of the business, if there were any records, were lost. That would prove liberating for later chroniclers.
. . .
If the Pony Express continues to thrill and baffle us, consider the words of an old horseman in western Nebraska who advised me when I expressed some concerns about the pedigree of this yarn. “We don’t lie out here,” he explained kindly. “We just remember big.”

For the full commentary, see:
CHRISTOPHER CORBETT. “Real (and Fake) Hoofbeats of the Pony Express.” The Wall Street Journal (Fri., APRIL 2, 2010): W11.
(Note: ellipses added.)

The Entrepreneur as the Agent of Creative Destruction

(p. 132) . . . the function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on. Railroad construction in its earlier stages, electrical power production before the First World War, steam and steel, the motorcar, colonial ventures afford spectacular instances of a large genus which comprises innumerable humbler ones–down to such things as making a success of a particular kind of sausage or toothbrush. This kind of activity is primarily responsible for the recurrent “prosperities” that revolutionize the economic organism and the recurrent “recessions” that are due to the disequilibrating impact of the new products or methods. To undertake such new things is difficult and constitutes a distinct economic function, first, because they lie outside of the routine tasks which everybody understands and, secondly, because the environment resists in many ways that vary, according to social conditions, from simple refusal either to finance or to buy a new thing, to physical attack on the man who tries to produce it. To act with confidence beyond the range of familiar beacons and to overcome that resistance requires aptitudes that are present in only a small fraction of the population and that define the entrepreneurial type as well as the entrepreneurial function. This function does not essentially consist in either inventing anything or otherwise creating the conditions which the enterprise exploits. It consists in getting things done.

Source:
Schumpeter, Joseph A. Capitalism, Socialism and Democracy. 3rd ed. New York: Harper and Row, 1950.
(Note: ellipsis added.)

Light in “Meet Me in St. Louis”

Source of photo: http://www.thejudyroom.com/louis/pictures/mmisldvd%23674.html

As Brad DeLong has noted, we take for granted the spectacular technological advances of the last 200, and especially, the last 100 years. One of the more notable of these, the spread of electricity that allowed electric illumination, occurred around the year 1900.
We forget how electric illumination made cities safer, and increased our freedom to choose the timing of work and leisure activities.
The awe inspired by electric lights also usually has been forgotten, but is occasionally recalled. One good source is a segment of a documentary produced by UNO television in 1998, to mark the centennial of Omaha’s long-forgotten Trans-Mississippi Exposition.
I recently ran across another in viewing the closing scenes of the Judy Garland classic “Meet Me in St. Louis.” In the final scene, the family finally makes it to the St. Louis Fair, and observes the display of electric lights.

For DeLong’s comment, peruse the early pages of his marvelous draft:
DeLong, J. Bradford. “Cornucopia: The Pace of Economic Growth in the Twentieth Century.” NBER Working Paper w7602, March 2000.

The UNO documentary had the unfortunate title “Westward the Empire: Omaha’s World Fair of 1898.”

Source of photo: http://www.thejudyroom.com/louis/pictures/judytomlarge.html

Establishments Assume New Methods Are Unsound Methods

(p. 188) For the next two years, Conway coordinated her efforts under Sutherland at PARC with Mead’s ongoing work at Caltech. But she was frustrated with the pace of progress. There was no shortage of innovative design ideas; computerized design tools had advanced dramatically since Mead’s first efforts several years before. Yet the industry as a whole continued in the old rut. As Conway put it later, the problem was “How can you take methods that are new, methods that are not in common use and therefore perhaps considered unsound methods, and turn them into sound methods?” [Conway’s italics].

She saw the challenge in the terms described in Thomas Kuhn’s popular book The Structure of Scientific Revolutions. it was the problem that took Boltzmann to his grave. It was the problem of innovation depicted by economist Joseph Schumpeter in his essays on entrepreneurship: new systems lay waste to the systems of the past. Creativity is a solution for the creator and the new ventures he launches. But it wreaks dissolution–“creative destruction,” in Schumpeter’s words– for the defenders of old methods. In fact, no matter how persuasive the advocates of change, it is very rare that an entrenched establishment will reform its ways. Establishments die or retire or fall in revolution; they only rarely transform themselves.

Source:

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.
(Note: italics in original.)

Doctorow’s “Makers” Novel Paints Unrealistically Bleak View of Life with Creative Destruction

Source of book image: http://www.globalnerdy.com/wordpress/wp-content/uploads/2009/11/makers.jpg

Awhile back I mentioned a science fiction book that made use of the process of creative destruction. Here’s a discussion of another one—called Makers, it apparently adopts the unlikely premise that a world of creative destruction would have a 20% unemployment rate. (I say “unlikely” because the evidence is that in a world of creative destruction, as many new jobs are created as old ones are destroyed.)

(p. A19) Consider the world of “Makers,” the latest by best-selling writer Cory Doctorow. This novel is set in a not-too distant future, when the creative destruction of technological change has created an economy so efficient, with profit margins so thin, that traditional companies can hardly stay in business.

The inventor-heroes of “Makers” take technology to its conclusion: They figure out a way to use three-dimensional printers to produce copies of machines and most anything else at close to no cost. This sparks “New Work,” with geeky investment bankers scouring the country to fund promising artisans who use the technology to build things cheaply. The heroes also run a series of entertainment rides across the country in abandoned Wal-Marts, until Disney unleashes its lawyers on them.
Mr. Doctorow, a Canadian living in London, has a keen eye for the pressures on contemporary business. In the novel, an M.B.A. brought in to work with the inventors explains, “The system makes it hard to sell anything above the marginal cost of goods, unless you have a really innovative idea, which can’t stay innovative for long, so you need continuous invention and reinvention, too.”
. . .
In the world of “Makers,” and perhaps in our own world, “we’re approaching a kind of pure and perfect state now, with competition and invention getting easier and easier–it’s producing a kind of superabundance.”
Mr. Doctorow paints a bleak picture of the process of getting there, even if many of us take a more benign view of increasingly efficient capitalism. “Makers” features widespread unemployment, with 20% of workers relocating to look for jobs. Even with scientific advances–obesity is solved, for example–life is brutal. There are squatter neighborhoods alongside abandoned strip malls.

For the full story, see:

L. GORDON CROVITZ. “Technology Is Stranger Than Fiction; Best-selling writer Cory Doctorow on change and its discontents.” The Wall Street Journal (Mon., NOVEMBER 23, 2009): A19.
(Note: ellipsis added.)

John Mackey: “I Believe in the Dynamic Creativity of Capitalism”

Whole Foods CEO John Mackey. Source of the caricature: online version of the WSJ interview quoted and cited below.

(p. A11) “I honestly don’t know why the article became such a lightning rod,” says John Mackey, CEO and founder of Whole Foods Market Inc., as he tries to explain the firestorm caused by his August op-ed on these pages opposing government-run health care.
. . .
. . . his now famous op-ed incited a boycott of Whole Foods by some of his left-wing customers. His piece advised that “the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us closer to a complete government takeover of our health-care system.” Free-market groups retaliated with a “buy-cott,” encouraging people to purchase more groceries at Whole Foods.
. . .
What Mr. Mackey is proposing is more or less what he has already implemented at his company–a plan that would allow more health savings accounts (HSAs), more low-premium, high-deductible plans, more incentives for wellness, and medical malpractice reform. None of these initiatives are in any of the Democratic bills winding their way through Congress. In fact, the Democrats want to kill HSAs and high-deductible plans and mandate coverage options that would inflate health insurance costs.
. . .
Mr. Mackey’s latest crusade involves traveling to college campuses across the country, trying to persuade young people that business, profits and capitalism aren’t forces of evil. He calls his concept “conscious capitalism.”
What is that? “It means that business has the potential to have a deeper purpose. I mean, Whole Foods has a deeper purpose,” he says, now sounding very much like a philosopher. “Most of the companies I most admire in the world I think have a deeper purpose.” He continues, “I’ve met a lot of successful entrepreneurs. They all started their businesses not to maximize shareholder value or money but because they were pursuing a dream.”
Mr. Mackey tells me he is trying to save capitalism: “I think that business has a noble purpose. It’s not that there’s anything wrong with making money. It’s one of the important things that business contributes to society. But it’s not the sole reason that businesses exist.”
What does he mean by a “noble purpose”? “It means that just like every other profession, business serves society. They produce goods and services that make people’s lives better. Doctors heal the sick. Teachers educate people. Architects design buildings. Lawyers promote justice. Whole Foods puts food on people’s tables and we improve people’s health.”
Then he adds: “And we provide jobs. And we provide capital through profits that spur improvements in the world.
. . .
“I don’t think anybody’s too big to fail,” he says. “If a business fails, what happens is, there are still assets, and those assets get reorganized. Either new management comes in or it’s sold off to another business or it’s bid on and the good assets are retained and the bad assets are eliminated. I believe in the dynamic creativity of capitalism, and it’s self-correcting, if you just allow it to self-correct.”
That’s something Washington won’t let happen these days, which helps explain why Mr. Mackey felt compelled to write that the Whole Foods health-insurance program is smarter and cheaper than the latest government proposals.

For the full interview, see:
STEPHEN MOORE. “The Conscience of a Capitalist; The Whole Foods founder talks about his Journal health-care op-ed that spawned a boycott, how he deals with unions, and why he thinks CEOs are overpaid.” The Wall Street Journal (Sat., OCTOBER 3, 2009): A11.
(Note: ellipses added.)

The Economist Starts a Column Named “Schumpeter”

Source of Schumpeter stairway to innovation graphic (my name for it): http://media.economist.com/images/20090919/D3809WB0.jpg

Thanks to Shane Eloe for alerting me that in their Sept. 19th issue, The Economist started a column named “Schumpeter.” Here are a couple of paragraphs from their first installment:

(p. 78) Joseph Schumpeter was one of the few intellectuals who saw business straight. He regarded business people as unsung heroes: men and women who create new enterprises through the sheer force of their wills and imaginations, and, in so doing, are responsible for the most benign development in human history, the spread of mass affluence. “Queen Elizabeth [I] owned silk stockings,” he once observed. “The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort…The capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.” But Schumpeter knew far too much about the history of business to be a cheerleader. He recognised that business people are often ruthless monomaniacs, obsessed by their dreams of building “private kingdoms” and willing to do anything to crush their rivals.

Schumpeter’s ability to see business straight would be reason enough to name our new business column after him. But this ability rested on a broader philosophy of capitalism. He argued that innovation is at the heart of economic progress. It gives new businesses a chance to replace old ones, but it also dooms those new businesses to fail unless they can keep on innovating (or find a powerful government patron). In his most famous phrase he likened capitalism to a “perennial gale of creative destruction”.

For the full commentary, see:
“Schumpeter; Taking flight; This week we launch a new column on business and management. Why call it Schumpeter?” The Economist (Sat., Sept. 19, 2009): 78.
(Note: the online version was dated Thurs., Sept. 17th)
(Note: ellipsis in original.)

Scientists Believe Life Emerged from a Process of “Creative Destruction” and Global Warming

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

(p. A9) In a paradox of creation, new evidence suggests that devastating avalanches of cosmic debris may have fostered life on Earth, not annihilated it. If so, life on our planet may be older than scientists previously thought — and more persistent.

Astronomers world-wide have been transfixed by a roiling gash the size of Earth in the atmosphere of Jupiter, caused by an errant comet or asteroid that smashed into the gas giant last month. The lingering turbulence is an echo of a cataclysmic bombardment that shaped the origin of life here 3.9 billion years ago, when millions of asteroids, comets and meteors pummeled our planet.
. . .
But in their super-heated plunge through the atmosphere, these asteroids and meteors may have helped create conditions ideal for emerging life. “Everyone focuses on the meteor that hits the ground,” says geochemist Richard Court at London’s Imperial College. “No one thinks about the products of its journey that get pumped into the atmosphere.”
As they vented, they collectively could have imported billions of tons of life-sustaining water into the air every year, Dr. Court and his colleague Mark Sephton recently determined. They calculated that these showers of volatile rocks delivered 10 times the daily outflow of the Mississippi River every year for 20 million years. By analyzing the fumes emitted under such extreme heat, they discovered these rocks also could have injected billions of tons of carbon dioxide into the air every year.
Combined with so much water vapor, the carbon dioxide could have induced a global greenhouse effect. That could have kept any life emerging on Earth safely in a planetary incubator at a time when the planet might easily have frozen because the Sun radiated 25% less energy than today. “The amount of CO2 that was produced is about the same we produce today through fossil fuel use and we know that is a climate-changing volume,” says Dr. Court.
. . .
“It is literally a revolution in our ideas about how our solar system evolved,” says asteroid expert William Bottke at the Southwest Research Institute. “It could be that our form of life today — every living thing that we see today — is due to this bombardment that happened 3.9 billion years ago.”

For the full commentary, see:
ROBERT LEE HOTZ. “SCIENCE JOURNAL; Some Creative Destruction on a Cosmic Scale; Scientists Say Asteroid Blasts, Once Thought Apocalyptic, Fostered Life on Earth by Carrying Water and Protective Greenhouse Gas.” The Wall Street Journal (Fri., AUGUST 14, 2009): A9.
(Note: ellipses added.)

Creative Destruction Is Scary, but “Inevitable and Probably Even Desirable”

(p. 5) Development is a complicated phenomenon. Decades before he popularized the phrase “creative destruction,” Joseph Schumpeter, the Austrian School economist, was honing his ideas about innovation and disruptive change in “The Theory of Economic Development.”

Disruptive change, creative destruction, is what I’m living every day. In the big cities, India’s economic development can seem so simple. Business thrives, the middle and upper classes are celebrating, and the country is moving inexorably ahead.
But around here, where a way of life is disappearing and no one knows what will take its place, where someone seems to lose for everyone who wins, it’s a lot harder to know what to make of India’s economic boom. From my vantage point, development seems both wonderful and frightening; it is both inspiring and, at times, dispiriting.
People sometimes ask me how I feel about India’s economic development. I tell them the truth. I say I don’t know. I say I feel ambivalent about the passing of a world I knew as a child, a transition that I know is inevitable and probably even desirable. But I haven’t reconciled myself to it yet.

For the full commentary, see:
AKASH KAPUR. “An Indian Says Farewell to Poverty, With Jitters.” The New York Times, Week in Review Section (Sun., August 8, 2009): 5.