Economics of Technology – Page 23

German Car Makers in No Rush to Catch Up to Tesla

(p. A7) When Elon Musk rolled out the new Tesla Model X at the end of September [2015], some grumbled that the Silicon Valley car maker’s all-electric luxury crossover was coming to market two years too late. It depends on who you ask. The Big Three German auto makers only wish they could catch the tail of Mr. Musk’s rocket.
I’m not talking about units sold, though Tesla’s target of 50,000 cars in 2015 is a respectable chunk of the global luxury-sedan market. But Tesla has taken more hide off German prestige and sense of technical primacy. I mean, the Model X was just rubbing their noses in it with those “falcon” doors, right? In executive interviews at the Frankfurt Auto Show any praise of Tesla was guaranteed to land on the table like a paternity suit.
. . .
I wonder if any traditional auto maker whose existence does not hang in the balance can ever have enough belly for the EV long game?
Even if the Germans had market-bound EVs in mass quantities, there is the concurrent problem of charging. As the estimable John Voelcker of Green Car Reports notes, the luxury incumbents have no plans to challenge Tesla on charging availability. Tesla has hundreds of charging stations in the U.S. and Europe and plans for hundreds more–all free to owners.
. . .
I am struck by the lag time. This isn’t about profit and loss but industry leadership. The Germans are headed where Tesla already is and, taking Frankfurt as the measure, they are in no great hurry to get there.

For the full commentary, see:
Dan Neil. “RUMBLE SEAT; How Tesla Leaves its Rivals Playing Catch Up.” The Wall Street Journal (Sat., Oct. 10, 2015): D11.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the commentary has the date Oct. 8, 2015.)

“Robots Take Away Subhuman Jobs”

(p. A21) Joseph F. Engelberger, a visionary engineer and entrepreneur who was at the forefront of the robotics revolution, building robots for use on assembly lines and fostering another, named Seymour, to handle chores in hospitals, died on Tuesday [December 1, 2015] in Newtown, Conn. . . .
. . .
Mr. Engelberger was a force in robotics from its early days, in the 1960s, when his company, Unimation, in Danbury, Conn., developed the Unimate, a robotic arm that would greatly accelerate industrial production lines.
. . .
Labor unions and some corporate managers resisted robotics at first, worrying, as Mr. Engelberger later put it, “that the robots can take all the jobs away.”
He disagreed with that notion.
“It’s unjustified,” he told The New York Times in 1997. “The robots take away subhuman jobs which we assign to people.”
Unimate proved to be more precise than the human hand in completing some repetitive and dangerous tasks. Automobile makers employed the arm to weld and move vehicle parts, apply adhesives to windshields and spray-paint car bodies — jobs that had posed chemical hazards to workers.

For the full obituary, see:
JEREMY PEARCE. “Joseph F. Engelberger, a Leader of the Robot Revolution, Dies at 90.” The New York Times (Thurs., DEC. 3, 2015): A33.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the obituary has the date DEC. 2, 2015, and has the title “Joseph F. Engelberger, a Leader of the Robot Revolution, Dies at 90.”)

Perfect Reliability Is Not Worth the Cost

(p. B4) Say what you will about Plain Old Telephone Service, but it worked. The functionality of POTS, as it was known, was limited to making calls, and they were expensive. But many traditional phone companies offered 99.999% reliability, which allowed for about five minutes of downtime a year.
Today’s networks are far less expensive, infinitely more capable and nowhere near as reliable as the wired-to-the-wall phone, . . .
. . .
To some extent, contemporary networks suffer from inattention. The old phone system worked so well because regulators in certain countries like the U.S. said it had to, and enough money was set aside to fund an army of technicians and engineers to oversee it. That generally isn’t the case with modern, digital networks and IT infrastructure, and companies often neglect this nuts-and-bolts technology.
. . .
Underneath it all, the economics of falling prices carry a trade-off. Consumers get more for their money in the mobile, digital era, but that often leaves margin-stretched companies with fewer resources to invest in robustness and maintenance. Reliability is as much a function of business and risk management as it is about tech.
“I don’t know if people are sweating that detail as much as they used to,” said Mr. Bayer, previously CIO of the Securities and Exchange Commission.
. . .
Former NYSE Euronext Chief Operating Officer Lawrence Leibowitz told the Journal in 2013 the public shouldn’t expect market technology to function perfectly, a goal that would be too expensive to implement even if it were technically feasible.

For the full story, see:
STEVE ROSENBUSH and STEVEN NORTON. “Network Reliability, a Relic of Business?” The Wall Street Journal (Fri., July 10, 2015): B4.
(Note: ellipses added.)
(Note: the online version of the story has the date July 9, 2015 and has the title “What We Learned From the NYSE, United Airlines Tech Outages.”)

Plastic Buttons Replaced Seashell Buttons, but Technology Can Be Restored

In What Technology Wants, Kevin Kelly has made the point that most obsolete technologies remain available to satisfy nostalgia, or for more practical uses, if the need arises. Below is another example.

(p. C27) In a tan outbuilding overlooking a pond in northeastern Connecticut, equipment for turning seashells into buttons has lain fallow for nearly eight decades. The building’s owner, Mark Masinda, a retired university administrator, is working to transform the site into a tourist attraction.

In the early 1900s, his grandfather William Masinda, a Czech immigrant, supervised a dozen button makers in the building, which is on a rural road in Willington. They cut, drilled and polished bits of shells imported from Africa and Australia to make “ocean pearl buttons” with two or four holes. The area’s half-dozen button factories supplemented the incomes of families struggling to farm on rocky terrain.
The Masinda operation closed in 1938, as plastic flooded the market. “The equipment he had just couldn’t make the transition,” Mr. Masinda said.
. . .
Mr. Masinda is planning to reactivate the equipment and open the site for tours by . . . spring [2016].

For the full story, see:
EVE M. KAHN. “Antiques; Restoring a Button Factory.” The New York Times (Thurs., DEC. 3, 2015): C27.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the story has the date DEC. 3, 2015, and has the title “Antiques; Yale Buys Collection of Scattered Medieval Pages; Restoring a Button Factory.”)

The Kelly book mentioned above, is:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

Tesla Direct Sales Thwarted by Laws that Protect Dealers Instead of Consumers

(p. B3) Tesla Motors Inc. hopes to capture mainstream auto buyers with its Model 3, an electric car it plans to unveil this week at a price about the same as the average gasoline-powered vehicle, but it may need a federal court ruling to succeed.
The Palo Alto, Calif., auto maker’s direct-to-consumer sales are prohibited by law in six states that represent about 18% of the U.S. new-car market. Barring a change of heart by those states, Tesla is preparing to make a federal case out of the direct-sales bans.
The auto maker’s legal staff has been studying a 2013 federal appeals court ruling in New Orleans that determined St. Joseph Abbey could sell monk-made coffins to customers without having a funeral director’s license. The case emerged amid a casket shortage after Hurricane Katrina. The abbey had tried to sell coffins, only to find state laws restricted such sales to those licensed by the Louisiana Board of Funeral Directors.
For now, Tesla is banking on a combination of new legislation, pending dealer applications and other factors to open doors to selling directly in Arizona, Michigan, Texas, Connecticut, Utah and West Virginia. But the company said it is ready to argue in federal court using the coffin case if necessary.
“It is widely accepted that laws that have a protectionist motivation or effect are not proper,” Todd Maron, the auto maker’s chief counsel, said in an interview. “Tesla is committed to not being foreclosed from operating in the states it desires to operate in, and all options are on the table.”
. . .
“There is no legitimate competitive interest in having consumers purchase cars through an independent dealership,” Greg Reed, an attorney with Washington D.C.-based Institute for Justice, a libertarian-leaning law firm, said. He calls Michigan’s laws “anti-competitive protectionism.”

For the full story, see:
MIKE RAMSEY. “Tesla Weighs Legal Fight.” The Wall Street Journal (Tues., March 29, 2016): B3.
(Note: ellipsis added.)
(Note: the online version of the story has the date March 28, 2016, and has the title “Tesla Weighs New Challenge to State Direct-Sales Bans.”)

Tesla Model 3 Excites Venturesome Consumers

America’s venturesome consumers are hungry for products exciting enough to justify enthusiasm. They are desperate for evidence that the future can continue to look bright.

(p. B2) DETROIT — Despite a steady stream of new models from a number of automakers, sales this year of electric and hybrid vehicles have failed to keep pace with the growth in the overall American market.
But if the market for electrified cars was slumbering, Tesla Motors woke it up with a jolt Thursday [March 31, 2016] with the unveiling of its coming Model 3 lineup of affordable, zero-emission vehicles.
Given that electric and hybrid vehicles account for only about 2 percent of last year’s record-setting sales in the United States, the extraordinary reaction to Tesla’s first mass-market model was a vivid demonstration of the potential demand in the segment.
“It shows that the future of electric vehicles is not necessarily bleak,” said Alec Gutierrez, an analyst with the research firm Kelley Blue Book. “Maybe we’ve been waiting for the right products that resonate with consumers.”
Tesla said on Friday that it had booked reservations — at $1,000 each — from nearly 200,000 people for the first Model 3 sedans, which will not be available until next year.
With a starting price of $35,000 and a battery range of 215 miles, the new Tesla is a big leap in the company’s expansion beyond expensive luxury models.
“The final step in the master plan is a mass-market, affordable car,” Elon Musk, Tesla’s chief executive, said at the lavish introduction of the Model 3 held at the company’s design studios in Hawthorne, Calif.

For the full story, see:
BILL VLASIC “In Clamor for new Tesla, Signs of an Electric Future.” The New York Times (Sat., APRIL 2, 2016): B2.
(Note: bracketed date added.)
(Note: the online version of the story has the date APRIL 1, 2016, and has the title “Tesla’s New Model 3 Jump-Starts Demand for Electric Cars.”)

Tech Replaces Labor When Government Raises Labor Costs

(p. A11) In late 2013, Chili’s and Applebee’s announced that they were installing more than 100,000 tableside tablets at their restaurants across the country, allowing customers to order and pay their bill without ever talking to a waiter. The companies were soon followed by Buffalo Wild Wings, Panera Bread, Olive Garden and dozens of others. This means fewer servers covering more tables. Quick-service restaurant chains are also testing touch-screen ordering.
. . .
So why the increased use of technology? The major reason is consumer preference. Research shows that many appreciate the speed, order accuracy, and convenience of touch screens. This is particularly so among millennials who already do so much on smartphones and tablets. I’ve watched people–young and old–waiting in line to use the touch screens while employees stand idle at the counter.
The other reason is costs. While the technology is becoming much cheaper, government mandates have been making labor much more expensive.
In 2015, 14 cities and states approved $15 minimum wages–double the current federal minimum. Additionally, four states, 20 cities and one county now have mandatory paid-sick-leave laws generally requiring a paid week of time off each year per covered employee. And then there’s the Affordable Care Act, which further raises employer costs.

For the full commentary, see:
ANDY PUZDER. “Why Restaurant Automation Is on the Menu; Forget about robot waiters, but technology helps cut government-imposed costs. And consumers like it.” The Wall Street Journal (Fri., March 25, 2016): A11.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date March 24, 2016.)

Obama Says Stimulus Worked at Battery Plant Where CEO Remains “Frustrated” at Losses

(p. A12) JACKSONVILLE, Fla. — President Obama on Friday [February 26, 2016] used a visit to a high-technology battery plant in Florida to argue that the hundreds of billions of dollars in federal subsidies he signed into law during his first days in office had bolstered the economy, transformed the nation’s energy sector, and positioned the United States for a strong rebound.
But Mr. Obama’s trip to the Saft America factory here, opened in 2011 with a $95.5 million investment from the Department of Energy, also highlighted the challenges that have tempered the economic recovery and the difficulty that the president has had in claiming credit for it.
. . .
After touring the facility and watching a large robot named Wall-E assembling one of the batteries, the president called the factory “tangible evidence” that his stimulus package had worked and said that the economy was better off for it. “We took an empty swamp and turned it into an engine of innovation,” he said.
That engine, though, has sputtered as it has struggled to start here. Saft, based in Paris, announced last week that it was reducing the factory’s value because it had still not gained profitability in the competitive lithium-ion battery market. Saying he was “frustrated,” the company’s chief executive projected the plant might not be profitable for a few more years.

For the full story, see:
JULIE HIRSCHFELD DAVIS. “Obama Praises Stimulus at Battery Plant.” The New York Times (Sat., FEB. 27, 2016): A12.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date FEB. 26, 2016, and has the title “Obama Points to Florida Factory as Evidence That Stimulus Worked.”)

“Ordinary People Should Have a Go”

(p. A11) The classical archaeologist and now big-picture historian Ian Morris, whose last book argued that war is good for you, now explains why coal is too. In “Foragers, Farmers, and Fossil Fuels,” Mr. Morris puts “energy capture” at the center of human values since the Ice Age, through three eras: the Foragers to begin with; the Farmers after about 8,000 B.C.; and, in the past few centuries, the Fossil Fuelers.
. . .
A culture favorable to liberty and dignity for commoners came out of the Reformation and 16th-century Holland, spread to Britain and Britain’s colonies in the 18th century, and resulted after 1800 in an explosion of ingenuity.
This Great Enrichment, which Mr. Morris acknowledges but does not explain, increased income per head not by the 100% or 200% of earlier efflorescences but by anything from 2,000% to 10,000%. Routine materialism of Mr. Morris’s sort can’t explain the most important secular event in human history. He wants to pin it all on energy capture. The correct story is one of ideas of human equality changing, starting with a conviction novel in the 17th century in northwestern Europe that ordinary people should have a go. This led to massive innovation, among which was energy capture. We do not have a fossil-fuel civilization. We have a free and ingenious one.

For the full review, see:
DEIRDRE MCCLOSKEY. “BOOKSHELF; Oil on Troubled Waters; In this telling, progress is explained by the rising use of fossil fuels. Yet the Industrial Revolution was powered by water, not coal..”The Wall Street Journal (Mon., July 6, 2015): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 5, 2015.)

The book under review, is:
Morris, Ian. Foragers, Farmers, and Fossil Fuels: How Human Values Evolve, The University Center for Human Values Series. Princeton, NJ: Princeton University Press, 2015.

New Middle-Skill Jobs Combine Technical and Social Skills

Source of graph: online version of the NYT article quoted and cited below, based on Deming paper cited further below.

(p. 4) For all the jobs that machines can now do — whether performing surgery, driving cars or serving food — they still lack one distinctly human trait. They have no social skills.

Yet skills like cooperation, empathy and flexibility have become increasingly vital in modern-day work. Occupations that require strong social skills have grown much more than others since 1980, according to new research. And the only occupations that have shown consistent wage growth since 2000 require both cognitive and social skills.
The findings help explain a mystery that has been puzzling economists: the slowdown in the growth even of high-skill jobs. The jobs hit hardest seem to be those that don’t require social skills, throughout the wage spectrum.
“As I’m speaking with you, I need to think about what’s going on in your head — ‘Is she bored? Am I giving her too much information?’ — and I have to adjust my behavior all the time,” said David Deming, associate professor of education and economics at Harvard University and author of a new study. “That’s a really hard thing to program, so it’s growing as a share of jobs.”
. . .
“If it’s just technical skill, there’s a reasonable chance it can be automated, and if it’s just being empathetic or flexible, there’s an infinite supply of people, so a job won’t be well paid,” said David Autor, an economist at the Massachusetts Institute of Technology. “It’s the interaction of both that is virtuous.”
Mr. Deming’s conclusions are supported by previous research, including that of Mr. Autor. Mr. Autor has written that traditional middle-skill jobs, like clerical or factory work, have been hollowed out by technology. The new middle-skill jobs combine technical and interpersonal expertise, like physical therapy or general contracting.
James Heckman, a Nobel Prize-winning economist, did groundbreaking work concluding that noncognitive skills like character, dependability and perseverance are as important as cognitive achievement. They can be taught, he said, yet American schools don’t necessarily do so.

For the full commentary, see:
Claire Cain Miller. “The Upshot; The Best Jobs Require Social Skills.” The New York Times, SundayReview Section (Sun., OCT. 18, 2015): 4.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date OCT. 16, 2015, and has the title “The Upshot; Why What You Learned in Preschool Is Crucial at Work.”)

The Deming paper referred to above, is:
Deming, David J. “The Growing Importance of Social Skills in the Labor Market.” National Bureau of Economic Research, Inc., NBER Working Paper # 21473, Aug. 2015.

The Autor paper referred to above, is:
Autor, David. “Polanyi’s Paradox and the Shape of Employment Growth.” National Bureau of Economic Research, Inc., NBER Working Paper # 20485, Sept. 2014.

The Heckman paper referred to above, is:
Heckman, James J., Jora Stixrud, and Sergio Urzua. “The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior.” Journal of Labor Economics 24, no. 3 (July 2006): 411-82.