Tag Archives: technology

02.08.2013 | Innovation: Where Do Inventors Live?

Hearing about the producer of the high-speed hand dryer, I thought, “Tweaker.” Describing Steve Jobs, Malcolm Gladwell called him a “tweaker.” Like the 19th century inventor who made the spinning wheel spin more smoothly, tweakers make an existing device better.

While we have had hand dryers for a long time, it took a “tweaker” to improve it. Traditional hand dryers take 35 to 40 seconds to dry your hands–if you are patient enough. For 3 1/2 years, Denis Gagnon tried to create a better way. The result was a high-speed hand dryer that did the job in 12 seconds.

The development of the high speed hand dryer was primarily a Massachusetts project. According to a Brookings paper on innovation, Massachusetts is a big center for patents. In an interactive version of the map that follows, Brookings lets you scroll across the dots to see the firms that have the most patents in each area and the number of patents per worker.

From an historical perspective, you can see we might be experiencing a more inventive era.

Sources and Resources: Like all of Malcolm Gladwell’s articles in the New Yorker, this “tweaking” discussion is wonderful. Also interesting, this NPR report provides more details about the origins of the fast hand dryer while here is the link to the overview of the entire Brookings paper on metro patents. Finally, you might want to look at Tyler Cowen’s The Great Stagnation (a $3.99 Kindle price) to see why he believes invention is currently more of a challenge and at econlife’s look at the bacterial merits of fast hand drying.

Note: This entry has been minimally edited since it appeared.

Posted by: adminEcon
Tags: economic growth, high speed hand dryer, innovation, patents, technology
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12.01.2012 | Butter, Health Care and the Spread of Baumol’s Disease

When butter makers had Baumol’s Disease, for centuries, there was no cure.

From the 1700s to 1940, making butter required some cream, a churn and usually a woman with lots of time and energy to crank or plunge a shaft. When, in 1850, someone invented a double chamber thermometer churn that made the cream the optimal temperature, the process remained the same. Even when some churns got bigger, others got smaller and the people at the Dazey Churn & Manufacturing Company used glass instead of wood, still, little changed. As long as butter making remained labor intensive, it was tough to increase productivity.

Similarly, for teaching a class or examining a patient, human energy plays a central role that a machine cannot replace. Centuries ago and now Mozart’s String Quartet in G Minor requires a cellist, 2 violinists, 2 violists. Whether teaching a class, performing a masterpiece or presenting a lecture, it is tough to increase your productivity.

Our Bottom Line: When an industry–especially one based on labor rather than technology– experiences rising costs because it cannot keep up with productivity increases elsewhere, it is afflicted with Baumol’s cost disease. So, when you say that the US healthcare system is sick, now you can add that it is suffering from a case of Baumol’s disease that many say is incurable.

An interesting quote: Senator Daniel Moynihan (1927-2003) was quoted by Dr, Baumol as having said, “You have now explained to me why the Democratic Party is called the party of tax and spend, because we are financing all the things that are affected by the cost disease and Republicans want to short-change them.”

Sources and Resources: For an enjoyable read about Baumol’s Disease, I recommend this New Yorker column while for an academic perspective, this paper provides analysis. My facts about butter came from slate.com and to consider the speed and spread of contemporary innovation, you could look at Tyler Cowen’s The Great Stagnation through an inexpensive ($3.99) Kindle download and his TED talk. Finally, superbly, this NY Times column explains the connection between Baumol’s disease and our health care challenges.

Posted by: adminEcon
Tags: Baumol's cost disease, churning butter, cost of production, education, fiscal policy, labor intensive industries, regulation, rising cost of health care, technology
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11.03.2012 | A Path for Driverless Cars

A self-driving car could be a pleasure…

The day would begin with a pick-up that you scheduled through your phone app. When your self-driving car arrived at your front door, you would get in, check today’s drive time and start to prepare for your first meeting. On the highway, the vehicle could “chain” to a sister model. At the office, it would drop you off and then return home to take your children to school. Or, it might just travel to the city’s periphery to rest for the day in a driverless car parking lot.

Much more than a gadget, “autonomous vehicles,” could make a huge difference.

Additional productivity in the car.
Extra relaxation time.
More safety. (After 50,000 of test miles that had no human intervention, driverless cars had no accidents.)
Less traffic because of “chaining” vehicles.
Fewer parking lots occupying valuable real estate in major cities.
More mobility for non-drivers.
Diminished carbon emissions from more efficient vehicle use.

This video of a Google car on city streets is great, especially when it stops as a garbage truck cuts in front of it and when a group of children cross the street.

New technology means winners and losers. During the beginning of the 20th century as auto ownership multiplied, buggy whips became obsolete and the US horse and mule population plunged from 26 million in 1915 to 3 million in 1960. Meanwhile, suburbia and McDonald’s became possible and gas stations became a necessity.

I know that the introduction of self-driving cars involves countless complexities. But maybe, like the first autos, they could become a transformative technology. If so, we would again have Joseph Schumpeter’s (1883-1950) creative destruction through which existing industries become obsolete because of innovation.

A final fact: Asked who pays the summons when the car goes through a red light, Google co-founder Sergey Brin said, “Self-driving cars do not run red lights.”

Sources and Resources: For details on driverless cars, I recommend this paper from KPMG and the Center for Automotive Research (CAR) and a briefer but excellent discussion from the Economist. For a reality check, though, here are articles from CNN on tests in Nevada and California whose legislatures have said that Google and other developers could test their driverless vehicles on their roads as long as a person sits behind the wheel. Also, thanks to economist Timothy Taylor’s The Conversable Economist for an introduction to self-driving vehicles.

My source for this chart on the complexities of making driverless cars a reality was the CAR paper.

Posted by: adminEcon
Tags: Autonomous Vehicles, Cal Tech, California, creative destruction, Google, innovation, Joseph Schumpeter, KPMG/CAR, Nevada, obsolescence, self-driving cars, technology
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09.30.2012 | Who Works the Hardest in the Euro Zone?

I just discovered a surprising statistic.

In the euro zone, judged by hours per week, the Germans are not nearly the hardest workers. Instead Greece, with an average of 42.1 hours is close to the top of the list. By contrast, for 2011, the average German devotes 35.5 hours to a job and the Netherlands, with the lowest time, is 30.5.

Greece????

The reasons that Greeks work long hours relate to where and who. More Greeks are in agriculture where longer hours prevail. Also, in Greece, people tend to work full time or not at all while in Germany there are more part-time opportunities. Finally, more women work in euro zone countries and women tend to work less.

This takes us to a predictable conclusion. Although Germans work less, they are much more productive. A Greek worker generates €20.3 per hour while Germans produce more than double at €42.3. In 2011, at €51.8 an hour, the Irish topped the productivity list and their low corporate tax seemed to be the reason. Attracting multinational firms, they became a magnet for the world’s best technology, technology that boosted Irish productivity to relatively stratospheric levels.

A definition: When we look at productivity, we are comparing factor inputs-land, labor and capital– to the value of the goods and services they create. More output from less input means a more productive economy. It also means resources are then freed to do other work and produce still more.

Sources and Resources: Many thanks to the Brussels WSJ blog where I first saw the Greek German worker hours/productivity comparison. For up-to-date information and analysis on worker hours and productivity, Eurostats has easily accessible data.

Euro Zone Labor Productivity Per Hour Worked

Legend (euro per hour worked):

Lighter yellow: 4.8-10.8
Darker yellow: 10.8-20.2
Lighter green: 20.2-39.2
Dark green: 39.2-46.2
Darkest green: 46.2-68.7
Gray: No data

Productivity per Hours Worked in the Eurozone

Posted by: adminEcon
Tags: capital, employment, factor, Germany, Greece, Ireland, jobs, labor, land, multinationals, productivity, technology, working hours
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05.16.2012 | Learning From the Low End

Sometimes it’s better to be at the bottom than the top.

Explaining, Harvard’s Clay Christensen starts his story with the huge integrated steel firms and ends with the mini mill. Relatively cheaply, the mini mills melted scrap in electric furnaces but their steel was inferior. Responding, the big mills said, “Great. We can make the expensive profitable stuff for cars and washing machines. You can have the low end of this business.”

But it did not work out that way.

The mini mills got increasingly better at steel making until they too could make the high quality products. Imagine a stairway to the top that the mini mills were climbing. Step by step they made more of what the bigger guys produced, gradually improving quality for a lower cost.

Dr. Christensen believes the mini mill lesson is universal. The firm at the top wants to continue making distinctive goods. Meanwhile, though, the firms at the bottom with lower costs and lower quality make cheaper products that are easier to use. Because most customers think they are good enough, they gradually engulf market share.

In a recent interview, Dr. Christensen presented example after example. He talked about disk drives moving from 14 inches down to 5 1/2; the bigger ones were better but the smaller ones became more popular. During the 1950s, the first Sony transistor radios were not as good as RCA or Zenith but, starting with teenagers, they spread. Even phone cameras, at first so bad but still so handy, they improved. You could also add to the list cell phones replacing traditional landlines, discount retailers moving in on department stores, retail medical clinics taking business from traditional doctors’ offices.

You see where this is going. Called disruptive innovation, it all begins at the bottom where, because the product is cheaper, vast numbers of consumers enter a market that had been too expensive for them. The stories are fascinating and told in much greater detail in an excellent New Yorker article, at Dr. Chistensen’s website, and in books he has written that include The Innovator’s Dilemma.

Dr. Christensen reminds me also of Joseph Schumpeter and creative destruction. Whether moving from the bottom up or from an upstart entrepreneur, new ideas destroy the old and fuel capitalism.

Posted by: adminEcon
Tags: bottom of the market, Clay Christensen, creative destruction, disruptive innovation, integrated steel makers, Joseph Schumpeter, steel mini mills, technology, The Innovator's Dilemma
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