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Sounds Like Bell Labs

Nov 15, 2011 • Businesses, Demand, Supply, and Markets, Government, Innovation, Labor, Thinking Economically • 111 Views    No Comments

Google has a “secret” lab. Called Google X by the NY Times, it sounds like the old Bell Labs.

Before 1984, when AT&T was a monopoly, their research subsidiary Bell Labs employed a battalion of scientists. For some, the assignment was just to “think.” As a result, between 1925 and 1983, Bell Labs created the first fax machine, the original laser, the solar battery cell, light emitting diodes, the UNIX operating system on which the internet is based, digital cell phone technology, and maybe they “heard” the Big Bang.” The transistor, which led to computer microchips, touchtone phones, hi-def TVs and so many other technologies, came from Bell Labs.

Google X might embody some of the same creativity. The NY Times says that they are developing the technology for a driverless car, artificial intelligence, and contemplating a space elevator. Instead of applied research with specific goals to expand existing technology, it appears that Google X is moving beyond.

The Economic Lesson

Research and Development can be divided into 3 categories:

  • Basic research involves no articulated goals. You could throw plates in the air and watch their trajectory.
  • Applied research is more goal oriented. Parameters are constrained by a pre-determined objective.
  • Development, the final stage, involves the practical implementation of the research concept.

An Economic Question: Some say AT&T could support Bell Labs because it was a monopoly. Today, who do you believe can afford to fund seemingly “unproductive” research?

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