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?
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.