Category: Economics of Technology

As Consumers Accept Surge Pricing, More Will Accept Congestion Pricing Too

(p. B2) With remarkable consistency, the research finds the same thing: Whenever a road is built or an older road is widened, more people decide to drive more. Build more or widen further, and even more people decide to drive. Repeat to infinity.
Economists call this latent demand, which is a fancy way of saying there are always more people who want to drive somewhere than there is space for them to do it. So far anyway, nothing cities have done to increase capacity has ever sped things up.
The extent of this failure was chronicled in a 2011 paper called “The Fundamental Law of Road Congestion,” by the economists Gilles Duranton, from the Wharton School of the University of Pennsylvania, and Matthew Turner, from Brown University.
The two went beyond road building to show that increases in public transit and changes in land use — basically, building apartments next to office buildings so that more people can walk or bike to work — also fail to cut traffic (or do so only a little).
This doesn’t mean public transit and land planning are bad ideas, or that widening freeways is a bad idea. When roads are bigger, more people can get around. More people see family; more packages are delivered; more babies are lulled to sleep. It just means that none of those measures have done much to reduce commute times, and self-driving cars seem unlikely to either.
That’s where charging people during busy times comes in. “Maybe autonomous cars will be different from other capacity expansions,” Mr. Turner said. “But of the things we have observed so far, the only thing that really drives down travel times is pricing.”
This is because the average person prefers the privacy and convenience of riding in a car.
. . .
“This idea of congestion pricing is not completely dismissed the way it once was,” said Clifford Winston, an economist at the Brookings Institution.
Mr. Winston said the eventual introduction of self-driving cars would probably lessen consumer opposition to paying more to use roads during peak periods. Ride-hailing apps have taught consumers to accept surge pricing, and people are generally less resistant to paying for something new. The result would be something like variably priced lanes dedicated to fleets of robot vehicles.
If that happens, one of the hidden benefits of this revolutionary new technology will be that it got people to accept an idea that economists started talking about at least a century ago. And you get home a half-hour earlier.

For the full story, see:
Conor Dougherty. “A Cure for Traffic Jams.” The New York Times (Weds., March 8, 2017): B1-B2.
(Note: ellipsis added.)
(Note: the online version of the story has the title “Self-Driving Cars Can’t Cure Traffic, but Economics Can.”)

Entrepreneur Rothblatt Was Highest-Paid Female CEO in 2013

(p. 3) Martine Rothblatt, a serial entrepreneur, has a unique perspective on female 1 percenters. She not only founded Sirius Satellite Radio, but also founded and serves as chief executive of United Therapeutics, a pharmaceuticals company. Ms. Rothblatt was the highest-paid female chief executive in the country in 2013, with compensation of $38 million, yet she does not see her success as a victory for women. She was born as Martin and underwent gender reassignment surgery in 1994.
“I’ve only been a woman for half of my life, and there’s no doubt that I’ve benefited hugely from being a guy,” she told Fortune magazine.
In an interview, Ms. Rothblatt had some surprising suggestions for helping women reach the top. She supports eliminating “say on pay” rules that allow shareholders to vote on executive compensation, and eliminating shareholder advisory groups. “If shareholders do not like the pay a woman is receiving as C.E.O., they should simply sell the stock, and vice versa,” she said.

For the full commentary, see:
ROBERT FRANK. “INSIDE WEALTH; Plenty of Billionaires, but Few Are Women.” The New York Times, Sunday Business Section (Sun., Jan. 1, 2017): 3.
(Note: the online version of the commentary has the date DEC. 30, 2016, and has the title “INSIDE WEALTH; Why Aren’t There More Female Billionaires?”)

Entrepreneur Marconi Was Driven by Wireless Communication Project

(p. C5) Marconi is another example of the Victorian “self-made man,” in this case a precocious youth fascinated by electricity and electrical wave pulses.
. . .
Sending the letter “S” in Morse code to his assistant, Mignani, on the far side of the meadow several hundred yards away was great, but not enough. What if, instead, Mignani took the receiver to the other side of the hill, out of sight of the house, and then fired a gunshot if the pulses got through? “I called my mother into the room to watch the momentous experiment. . . . I waited to give Mignani time to get to his place. Then breathlessly I tapped the key three times. . . . Then from the other side of the hill came the sound of a shot. . . . That was the moment when wireless was born.”
. . .
A combination of technological insight, organizational skill and business acumen gave him, like Steve Jobs in the next century, his place in history. To the end of his life Marconi was driven by a vision of the whole world communicating through wireless waves in the air.
. . .
. . ., Mr. Raboy exhaustively if deftly tells the tale of the next few critical years: Marconi’s long stay in England, the search for funding (without losing control), the critical establishment of patents, the embrace by officials in the British Post Office and Royal Navy, the ship-to-shore and ship-to-ship wireless transmissions. There’s a fine chapter on the critical long-range, trans-Atlantic experiments in 1901. These were conducted in wintry, gusty Newfoundland, whose supportive provincial government grasped almost immediately what Marconi offered: instant and vastly less expensive communication to Canada, Boston and New York and, above all, to Britain and its empire. Little wonder that such powerful entities as the (state-subsidized) Anglo-American Telegraph Co. were alarmed at this interloper. . . .
In 1909, at the age of 35, the Italian entrepreneur would stand up proudly to receive the Nobel Prize in physics.

For the full review, see:
PAUL KENNEDY. “When the World Took to the Air; Like Steve Jobs, Marconi combined technological insight, organizational skill and business acumen.” The Wall Street Journal (Sat., Sept. 10, 2016): C5-C6.
(Note: ellipses internal to second quoted paragraph, in original; other ellipses, added.)
(Note: the online version of the review has the date Sept. 9, 2016, an has the title “The World’s First Communications Giant; Like Steve Jobs, Marconi combined technological insight, organizational skill and business acumen.”)

The book under review, is:
Raboy, Marc. Marconi: The Man Who Networked the World. New York: Oxford University Press, 2016.

“Thank You, Industrialization” (Thank YOU, Hans Rosling)

The TED talk embedded above, is one of my favorites. I sometimes show an abbreviated version to my Economics of Technology seminar.

(p. B8) Hans Rosling, a Swedish doctor who transformed himself into a pop-star statistician by converting dry numbers into dynamic graphics that challenged preconceptions about global health and gloomy prospects for population growth, died on Tuesday in Uppsala, Sweden. He was 68.

The cause was pancreatic cancer, according to Gapminder, a foundation he established to generate and disseminate demystified data using images.
. . .
Brandishing his bubble chart graphics during TED (Technology, Entertainment and Design) Talks, Dr. Rosling often capsulized the macroeconomics of energy and the environment in a favorite anecdote about the day a washing machine was delivered to his family’s cold-water flat.
“My mother explained the magic with this machine the very, very first day,” he recalled. “She said: ‘Now Hans, we have loaded the laundry. The machine will make the work. And now we can go to the library.’ Because this is the magic: You load the laundry, and what do you get out of the machine? You get books out of the machines, children’s books. And Mother got time to read to me.”
“Thank you, industrialization,” Dr. Rosling said. “Thank you, steel mill. And thank you, chemical processing industry that gave us time to read books.”

For the full obituary, see:
SAM ROBERTS. “Hans Rosling, Swedish Doctor, Teacher and Pop-Star Statistician, Dies at 68.” The New York Times (Fri., FEB. 10, 2017): B8.
(Note: ellipses added.)
(Note: the online version of the obituary has the date FEB. 9, 2017, and has the title “Hans Rosling, Swedish Doctor and Pop-Star Statistician, Dies at 68.”)

Mokyr Credits the Great Enrichment to a Culture That Values Scientific Inquiry

(p. A13) Life is “solitary, poor, nasty, brutish and short” Thomas Hobbes proclaimed in 1651, and it had been that way ever since humans had inhabited the Earth. At the time Hobbes wrote those words, life expectancy averaged about 30 years old in his native England and income per person typically was around $5 a day (in 2016 dollars). Thanks to the Industrial Revolution and the Great Enrichment that followed, the typical subject of Queen Elizabeth II lives to almost 80 and has an income of over $100 a day. Perhaps more impressively, most people in the world today face the prospect of living at least that well within a generation or two.
What brought about the Great Enrichment? And why did it all start in England? Joel Mokyr, in his fine book, attributes it to the unique and productive culture that evolved there. It was a culture that welcomed change and favored scientific inquiry that spurred radical technological improvements.
. . .
According to Mr. Mokyr, three factors led to the ultimate triumph of the new modern search for scientific truth over the largely inaccurate “science” of the ancients. First, Europe’s fractured political environment was a blessing: Scientists who were banned or ostracized in one political jurisdiction fled to other locales more tolerant of their views. The controversial Franciscan monk, Bernardino Ochino (1487-1564), for example, was often in trouble and moving to evade authorities, leading him to flee from Italy to Switzerland and later, England, Poland and Moravia. Second, the invention of Gutenberg’s printing press around 1440 enormously lowered the cost of widely disseminating knowledge over large areas. Third, an extraordinary intellectual community evolved–Voltaire and others called the Republic of Letters–that made the dissemination of new information (through letters to fellow scientists) obligatory for anyone who wanted to gain respect in the growing international community of scientists.

For the full review, see:
RICHARD VEDDER. “BOOKSHELF; The Genesis of Prosperity; What brought about the Great Enrichment? And why did it start in England? It had a culture that embraced change and scientific inquiry.” The Wall Street Journal (Fri., Nov. 11, 2016): A13.
(Note: ellipsis added.)
(Note: the online version of the review has the date Nov. 10, 2016.)

The book under review, is:
Mokyr, Joel. A Culture of Growth: The Origins of the Modern Economy, Graz Schumpeter Lectures. New Haven, CT: Princeton University Press, 2016..

“Tax and Regulatory Policies” Influence Intel to Build Arizona Chip Plant

(p. B1) SAN FRANCISCO — Intel, the world’s largest computer chip manufacturer, will invest $7 billion to finish a factory in Arizona, adding 3,000 jobs, the company’s chief executive said on Wednesday after meeting with President Trump at the White House.
The completion of the factory, which will complement two other Intel semiconductor plants in Chandler, Ariz., had been under consideration for several years.
Standing beside Mr. Trump in the Oval Office, Brian Krzanich, Intel’s chief executive, said the company had decided to proceed now because of “the tax and regulatory policies we see the administration pushing forward.”

For the full story, see:
VINDU GOEL. “Intel Will Invest $7 Billion in Chip Plant in Arizona.” The New York Times (Thurs., FEB. 9, 2017): B1-B2.
(Note: the online version of the story has the date FEB. 8, 2017, and has the title “Intel, in Show of Support for Trump, Announces Factory in Arizona.”)

IBM Advance May Help Sustain Moore’s Law

(p. B3) In the semiconductor business, it is called the “red brick wall” — the limit of the industry’s ability to shrink transistors beyond a certain size.
On Thursday, however, IBM scientists reported that they now believe they see a path around the wall. Writing in the journal Science, a team at the company’s Thomas J. Watson Research Center said it has found a new way to make transistors from parallel rows of carbon nanotubes.
The advance is based on a new way to connect ultrathin metal wires to the nanotubes that will make it possible to continue shrinking the width of the wires without increasing electrical resistance.
One of the principal challenges facing chip makers is that resistance and heat increase as wires become smaller, and that limits the speed of chips, which contain transistors.
The advance would make it possible, probably sometime after the beginning of the next decade, to shrink the contact point between the two materials to just 40 atoms in width, the researchers said. Three years later, the number will shrink to just 28 atoms, they predicted.
. . .
. . . , during the last decade, the pace and power of semiconductor technology has begun to slow. The switching speed of computer chips stopped increasing because heat created by ultrafast processors was rising to the point where the chips would break.
More recently, for most of the industry, the cost of transistors has ceased to decline with each new generation. This has undercut the tremendous power of the technology to create new markets. And this year, Intel announced that the challenges and costs of bringing a new generation of technology to market had forced it to slow the every-two-year pace it had been on for more than a decade.
Now the industry has a new reason for optimism.

For the full story, see:
JOHN MARKOFF. “IBM Scientists Find New Way to Shrink Transistors (Measuring in Atoms).” The New York Times (Fri., OCT. 2, 2015): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date OCT. 1, 2015, and has the title “IBM Scientists Find New Way to Shrink Transistors.”)

The IBM advance is documented in:
Cao, Qing, Shu-Jen Han, Jerry Tersoff, Aaron D. Franklin, Yu Zhu, Zhen Zhang, George S. Tulevski, Jianshi Tang, and Wilfried Haensch. “End-Bonded Contacts for Carbon Nanotube Transistors with Low, Size-Independent Resistance.” Science 350, no. 6256 (Oct. 2, 2015): 68-72.

Economic Growth Depends Mainly on Micro Policies and Serendipity

(p. A2) In the long run, . . . , potential growth is a job for microeconomic, not macroeconomic, policy. It requires countless, painstaking fixes: raising labor-force participation with training and safety-net programs that don’t discourage work; investment-friendly tax and regulatory policies to incentivize investments that take years to pay off, if ever; and trade deals that let firms market their products to the entire world. It will also take some serendipity as firms keep hunting for the next miracle technology. No one foresaw how the information revolution would revitalize productivity in the 1990s, and the next such breakthrough will probably surprise us as well.

For the full story, see:
GREG IP. “CAPITAL ACCOUNT; Rewriting Recent Economic History.” The Wall Street Journal (Mon., June 2, 2016): A2.
(Note: ellipsis added.)
(Note: the online version of the story has the date June 1, 2016, and has the title “CAPITAL ACCOUNT; Post-Recession Rethink: Growth Potential Dimmed Before Downturn.”)

Musk Unveils Bold Private Enterprise Plan to Colonize Mars

(p. B3) Entrepreneur Elon Musk unveiled his contrarian vision for sending humans to Mars in roughly the next decade, and ultimately setting up colonies there, relying on bold moves by private enterprise, instead of more-gradual steps previously proposed by Washington.
Mr. Musk–who in 14 years transformed his closely held rocket company, Space Exploration Technologies Corp., into a global presence–envisions hosts of giant, reusable rockets standing more than 300 feet tall eventually launching fleets of carbon-fiber spacecraft into orbit.
The boosters would return to Earth, blast off again into the heavens with “tanker” spaceships capable of refueling the initial vehicles, and then send those serviced spacecraft on their way to the Red Planet. The rockets would be twice as powerful as the Saturn 5 boosters that sent U.S. astronauts to the Moon. Each fully developed spacecraft likely would carry between 100 and 200 passengers, Mr. Musk said.

For the full story, see:
ANDY PASZTOR. “Musk Offers Vision of Mars Flights.” The Wall Street Journal (Weds., Sept. 28, 2016): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date Sept. 27, 2016, and has the title “Elon Musk Outlines Plans for Missions to Mars.”)

Blockchain Is a Process Innovation That Will Make Financial Records More Reliable and Easier to Access

(p. A13) Until the mid-1990s, the internet was little more than an arcane set of technical standards used by academics. Few predicted the profound effect it would have on society. Today, blockchain–the technology behind the digital currency bitcoin–might seem like a trinket for computer geeks. But once widely adopted, it will transform the world.
Blockchain offers a way to track items or transactions using a shared digital “ledger.” Blocks of new transactions are added at the end of the chain, and encryption ensures that it remains unbroken–tamper-proof and error-free. This is significantly more efficient than the current methods for logging and sharing such information.
Consider the process of buying a house, a complex transaction involving banks, attorneys, title companies, insurers, regulators, tax agencies and inspectors. They all maintain separate records, and it’s costly to verify and record each step. That’s why the average closing takes roughly 50 days. Blockchain offers a solution: a trusted, immutable digital ledger, visible to all participants, that shows every element of the transaction.

For the full commentary, see:
GINNI ROMETTY. “How Blockchain Will Change Your Life.” The Wall Street Journal (Tues., Nov. 8, 2016): A13.
(Note: the online version of the commentary has the date Nov. 7, 2016, and has the title “KEYWORDS; Is Engine of Innovation in Danger of Stalling?”)