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    Random Technology Notes

    Jan 13 • Economic History, Innovation, Macroeconomic Measurement • 366 Views

    In 1810, Nicholas Appert, a cook and bottler, inserted some food in a Champagne bottle, sealed it, and placed it in boiling water. Described by James Burke in Circles: Fifty Roundtrips Through History, Technology, Science, Culture, a French newspaper said that this new way to preserve food “brought spring and summer to winter.” (p. 40) It also brought Appert a prize of 12,000 francs from the “Society to Encourage French Inventors” (an approximate translation).

    But that was only the beginning. From champagne bottles, the tin can was only an idea away. Developed in Great Britain by a gentleman who obtained Appert’s patent, the tin can enabled a British ship captain, looking for the Northwest Passage in 1818, to carry a supply of carrots and peas, gravy and roast veal.

    Fast forward to 2011. You will enjoy looking at a more recent innovation, a “robot” that dispenses ketchup (aka the Heinz Automato).


    The Economic Lesson

    In an Econtalk interview, George Mason University’s Robin Hanson explains that our interpretation of the impact of technology on economic growth depends on the time frame. Viewed in smaller increments, like the past century, we see relatively consistent growth rates of maybe 4%. However, when we step back and look at the past 10,000 years, then growth patterns look quite different. Instead of a consistent march forward, we see growth spurts. For example, the onset of farming represented a growth spurt as did the Industrial Revolution.

    Hanson believes that as each new spurt fueled future growth, the standard of living improved much faster than previously. Consequently, a current spurt could have an immediate impact. His name for the growth spurt phenomenon is technological singularity. 


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    Luxury or Necessity?

    Jan 12 • Behavioral Economics, Demand, Supply, and Markets, Households, Macroeconomic Measurement • 364 Views

    Can you live without your TV? Cell phone? Dishwasher? A Pew Research survey discovered that your answer in 2006 might have been different from now.

    Cars were at the top with 88% of all respondents saying they needed one. But still, the number was 3% less than 2006. For microwave ovens, the recession created a massive switch with 21% fewer people saying they had to have one. For cell phones, as you might have guessed, opinion remained constant. For 2006 and 2009, 49% of all survey participants said that the cell phone was a necessity.

    And, whether or not the recession directly affected you, your opinion about luxuries and necessities probably changed.

    The Economic Lesson

    Difficulty with paying rent or the mortgage was experienced by 21% of all respondents, contact with joblessness by 27%, and losing more than 20% in investment accounts by 47%. Seeing that so many people were specifically impacted while even those who had not been hit directly had a new outlook conveys the severity of the recent recession.

    Do you feel that the 2009 stimulus package was an appropriate response?


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    Solar Panel Comments

    Jan 11 • Demand, Supply, and Markets, Developing Economies, Economic Debates, Environment, Government, International Trade and Finance • 348 Views

    Sometimes there’s much more behind a solar panel than you would expect.

    Solar energy was in the news because the U.S. Congress, hoping to support U.S. production, has prohibited the Department of Defense from buying Chinese made solar technology. And yet, Chinese made solar equipment is 20% cheaper than U.S. made solar equipment.  Choosing between deficit concerns and “Buy American,” you can see the answer.

    Like China, Germany is a major producer of solar panel equipment while the U.S. is not. And, like the U.S., Germany subsidizes solar panel purchases. One problem, though, is that Germany is not quite the right place for the panels. As one researcher said, “The lasting legacy is a massive bill, and lots of inefficient solar technology sitting on rooftops throughout a fairly cloudy country.”

    The Economic Lesson

    Incentives seem to be everywhere when looking at solar power. U.S. consumers buy more because the U.S. government gives them money for buying solar technology. Meanwhile, the Chinese government makes the panels cheaper by subsidizing their manufacture.

    A demand/supply graph perfectly illustrates the results. With price the y-axis and quantity the x-axis, supply shifts to the right as subsidies lower cost and encourage producers to make more. Meanwhile, demand shifts to right because buyers also receive subsidies. The result? For Chinese made solar panels, price is lower.


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    Mothers and Human Capital

    Jan 10 • Households, Innovation, Labor, Thinking Economically • 320 Views

    In The Wall Street Journal, a Chinese mother discusses her rules for her children which include: 1) only A’s, 2) no play dates, 3) no parts in school plays, 4) no TV,  5) no sleepovers, 6) play the piano or violin for several hours daily. Continuing with her rationale, she explains that she helps her children feel good about themselves because she makes sure that they excel.

    By contrast, according to this article, “Western” style childrearing emphasizes treating children’s psyches gently. They compliment and encourage. They leave room for individual decision-making and choices.

    Your comments about the different approaches?

    The Economic Lesson

    Defined as the education that makes us more productive, human capital can develop at home, at work, at school. As economists, we know that developing human capital is crucial for economic growth.

    Calling the 20th century “The Human Capital Century” in The Race between Education and Technology, Harvard’s Claudia Goldin and Laurence Katz discuss the spread and impact of universal secondary education. As the United States moved from mandatory primary education in a handful of states to universal, non-gender education through secondary school for everyone, the benefits spread far beyond the schoolhouse. Economists cite the correlation between education and technological progress, between education and health, and the summary result, between education and growth.

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    Banana Worries

    Jan 9 • Demand, Supply, and Markets, Developing Economies, Economic History, International Trade and Finance, Thinking Economically • 365 Views

    The banana could be in trouble. According to a New Yorker article and video, a devastating banana fungus has struck banana plantations in Asia, Australia and the Pacific. We should note, though, that we are referring only to the Cavendish banana.

    Did you know that while there are multiple banana varieties, virtually all bananas that are imported here are the Cavendish? And, we only have the Cavendish because its predecessor, the Gros Michel, was eradicated by a fungus. At the time, growers scrambled to find a substitute and selected the Cavendish. Less tasty but unscathed by the fungus, it became our banana of choice. Indeed, many of us eat more bananas than apples and oranges combined.

    So, what will happen? This takes us to banana R&D (Research & Development). On plantations and in labs, growers and scientists are trying to develop resistant strains of bananas so that the Cavendish can survive. So far, Latin American plantations, including Ecuador, a major Chiquita supplier, have not been affected.

    The Economic Lesson

    Banana R&D represents much more than advancing banana technology. It takes us to who does research and its importance.  For example, government funds research at universities, in the Department of Defense, and the National Institutes of Health. Through tax policy and patents, it encourages research in the private sector. Meanwhile, pursuing their self-interest, businesses ranging from pharmaceutical firms to banana growers engage in basic and applied research.

    Basic research has no direct purpose except to discover something new. Applied research is directed toward a specific objective. The development part of R&D refers to methods that move from discovery to production.

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