The Progress of Urban Development

This is a quick departure from the blog’s main topics, but I’ve been writing a series for The Atlantic Cities launch, sponsored by Dow, on “The Progress of Urban Development.” The last post went up today, so all 31 are up here. I like some posts better than others, so I thought I’d share a few of my favorites here:

High-Speed Rail and the New Regional Economics

Aside from the particular merits of any individual project, high-speed rail is arguably a crucial component of an economic strategy centered around mega-regions, defined as large, contiguous economic areas containing multiple cities and their surrounding suburbs. As AtlanticSenior Editor and academic Richard Florida has argued, mega-regions are the relevant economic unit for the 21st century. And even a casual comparison between U.S. mega-regions and proposed high-speed rail lines reveals a connection.

How Cities Innovate

Technology is a major driver of economic growth in the modern world. But technological progress is not equally distributed around the globe. It is no accident that web startups are concentrated in Silicon Valley, biotech firms in Boston, and so on. In fact, approximately 20 metropolitan regions account for most of the world’s technological innovation, as measured by patents, an imperfect but widely acknowledged measure. It is no surprise that cities are drivers of technology innovation worldwide, and that a couple dozen cities are disproportionately innovative. Understanding why is crucial for promoting economic growth as well as for informing cities’ strategies for boosting innovation. The economic logic behind this is fairly simple and revolves around the concept of “clusters.”

A World With Fewer Farmers

In 1900, 41% of the U.S. workforce was employed in agriculture. Today, that number isless than 2%. Yet, the sector has kept pace with increasing demand for agricultural goods, thanks in large part to advances in mechanization and labor productivity. To many, these trends are inexplicably linked to the worst features of industrial agriculture, including unsustainable use of pesticides and commercial fertilizers, or to the decline of the family farm. But the relationship between urbanization and agriculture is more complicated. Understanding it is critical to the promotion of sustainable development throughout the world.

What “Food Miles” Misses

Scholars emphasize that assessing the environmental impact of food is an extraordinarily difficult task. But there is agreement that food miles are just one piece of the puzzle. For city dwellers this offers some relief. Eating local is not the end-all-be-all of environmental consciousness. So how can consumers make better food choices? The place to start is agreeing on a common definition for sustainable food production. And life-cycle analysis, though difficult, may offer a path forward. Some have pushed for food labels to include greenhouse gas emissions across the entire life-cycle. Others have emphasized that a price on greenhouse gas emissions would help food prices reflect their environmental impact. Eating sustainably is certainly still up for debate. And asking just how far food traveled to arrive on your plate is still a relevant question. It just isn’t the only one.


NPR on patent trolls

A friend asked for my thoughts on NPR’s piece from a few weeks back on “patent trolls.” Whereas, I am fairly confident about my views on copyright, I’m much less so with respect to patents. But hopefully my response below represents at least a decent starting point for thinking about their efficacy. What follows is my email response to my friend, lightly edited, mostly to add capital letters….

The piece fit pretty well w/ what i’ve seen elsewhere and it’s specifically about software patents. a couple quick things:

1) The point of patents are to incentivize innovation. That’s it. Not to grant people rights to their god given property or whatever. It’s a consequentialist framework.

2) Best I can tell there is near consensus in the software and computer science worlds that software patents are a bad idea. I base that on references I’ve read elsewhere, what’s said in the piece itself, conversations I’ve had with programmers and a talk I went to earlier in the year by a notable comp scientist.

3) It’s completely possible that software patents make no sense but that other areas of patent law are either working well or even are not strong enough. While I think the case for shortening copyright terms is 100% airtight, I don’t pretend to have a view about, say, pharmaceutical patents. Software, though, seems much clearer.

Now to look at the best argument presented in favor of today’s crazy software patent setup, from the NPR piece:

IV, for its part, says its job is to encourage invention, not to bring products to market.

Imagine an inventor out there — someone with a brilliant idea, a breakthrough. This inventor has a patent, but companies are stealing his idea. And this inventor doesn’t have the money or legal savvy to stop them. That’s where IV comes in. It buys this inventor’s patent, and it makes sure that companies who are using the idea pay for it.

(IV = intellectual ventures, a “patent troll”)

So this seems pretty sympathetic right? If not for this, lone inventors couldn’t reap the rewards of their creations. They’d be stolen by big companies. So there are 2 lines of attack against this i think.

a) The piece points out this isn’t realy how it works. This is a shady business for big money based a lot around big companies vying against each other, not about protecting small guys

b) Even if it were like that, we have to go back to the purpose of patents. The purpose of patents is to get innovation. So if a guy invents something and a company steals it, is that bad? Only if no one was going to invent it otherwise. if, absent the incentive, that innovation is never brought into the world.

That sounds harsh, and even i dislike he idea of someone else making money off another person’s idea. But we have to respect the point of intellectual property, which is incentives.

And just as importantly, the above fake scenario preys on our leaning to prize “invention” and “ideas” and undervalue execution. Talk to any investor or entrepreneur and they will tell you that it’s execution that makes a successful product. So when we bemoan the guy who didn’t get paid for an “invention” we miss a lot of the value add. To create a new thing takes more than an idea. Whether the idea itself should be given protection under IP needs to be based on the consequentialist view described above.

I have a whole other set of thoughts on the idea vs. execution thing, and what i described to you is the mainstream entrepreneurial view, NOT my own view (though my own view also places relatively less value on initial ideas or “inventions”) but that’s a separate topic.


Paul Romer and The Great Stagnation

Today I downloaded Tyler Cowen’s new e-book The Great Stagnation for $4, along with Amazon’s Kindle app for Android. It’s got both the publishing and economics blogospheres all aflutter so I’m looking forward to the read. But what kind of blogger would I be if I didn’t comment first, read later?

Cowen had an op-ed a few weeks back in The New York Times that laid out his basic claim. Here’s one bit:

The numbers suggest that for almost 40 years, we’ve had near-universal dissemination of the major innovations stemming from the Industrial Revolution, many of which combined efficient machines with potent fossil fuels. Today, no huge improvement for the automobile or airplane is in sight, and the major struggle is to limit their pollution, not to vastly improve their capabilities.

Although America produces plenty of innovations, most are not geared toward significantly raising the average standard of living…

…Will the Internet usher in a new economic growth explosion? Quite possibly, but it hasn’t delivered very good macroeconomic performance over the last decade.

Cowen is brilliant, and I’m looking forward to the longer version of his argument, but I want to consider a more optimistic take on our economic moment by another brilliant economist, Paul Romer. What follows is from Romer, interviewed by libertarians Arnold Kling and Nick Schulz in their book From Poverty to Prosperity (which I can testify is valuable and interesting even to non-libertarians).


…this may be the most important question in human history: why have we had technological change and why has it been speeding up over time? …

…it may be inherent in the process of discovery that the more we learn the faster we can learn. It’s a notion that was captured by Newton when he said that he could see farther because he stood on the shoulders of giants. That was the first model that I tried for the speeding up phenomenon, that the more we learn the more we can learn…

…So it’s that kind of analysis, thinking of ideas as recipes – really, instructions for combining together small numbers of physical objects – that persuades, I think, anybody who works through the logic that the number of things we could have even tried up to this point in time is so small compared with the number of things that are possible, that we’re just extremely early in this discovery process. For as far as you want to project into the future of humans, we won’t run out of new things to discover. And as I conjectured in the beginning, it may even be that the more we learn about this process – the science of DNA, the science of materials, or our understanding of quantum mechanics – the more we learn about this stuff, the better we get at finding new, ever more valuable mixtures…

…The second-round answer, which I think may actually capture more of the truth, is that it may get easier to discover as you learn more things, or it may not, but what we’ve done is created better institutions over time so that we now exploit the opportunities much more effectively than we used to.

I believe Cowen wants to challenge this both on whether technological change has in fact been speeding up, and whether the technological changes we’ve seen recently are the same kind of economic game-changers we saw in the 20th century. I don’t know what role he would attribute to institutions. Which model is more accurate? I have no answer to that. But the Romer interview at least offers an alternative conceptual lens to Cowen’s. (You can read the full interview with Romer here.)

Cowen also argues that America has eaten up a lot of the “low-hanging fruit”, in education for instance, as described in the clip below:

It’s an interesting point. But once again for a more optimistic take I’ll point to Romer:

We’re going through this shift in the economy where the fraction of human effort that goes into actually physically rearranging things – bending metal, doing manufacturing, and so on – is going down over time and the fraction that’s going into discovering the right formula or recipe is going up over time. And that’s a really good thing, because all of the value really comes from finding the new recipes. If you picture the innovative activity of one hundred years ago and you think of it as U.S. Steel, most of the workers there were involved in literally bending or melting metal – doing the physical rearrangement – and a relatively small number of people were coming up with, say, better ways to extract iron from ore…

…So we’re going through this transformation where a larger and larger fraction of the labor force is engaged in problem-solving, sifting through possible ideas, and a relatively small fraction of people actually stamps out the pills or bends the metal.

(That bit combined with some other comments offers an interesting take on Julian Simon’s work, both approving and disapproving of his work on population and innovation.)

So in education the question may be whether we can innovate fast enough to outpace declining marginal student aptitude. Romer’s model suggests that as more minds spend time thinking about how we educate, rather than spending that time grading tests, passing out papers, etc., that innovation could speed up. Cowen’s suggests that each student we attempt to get through school is likely to be harder than the last. Will more minds working on better educational recipes mean better education, and therefore more minds devoted to finding other useful recipes? Or have we already eaten all the low-hanging fruit?

Perhaps I’ll have more to say after I finish Cowen’s book.


Age of the Winklevi

Vanity Fair published a piece this week on a lawsuit against the Huffington Post by two Democratic political consultants “for failing to acknowledge what they claim was their critical role in the creation of the Huffington Post”. Politico reported the story about two months ago under the headline “2 Dems claim Arianna Huffington stole website idea”.winklevoss

Wait, what?  What exactly was the “idea” for the Huffingon Post?

According to VF, “[plaintiffs] Daou and Boyce say that they were the ones who conceived of ‘a Democratic equivalent of the Drudge Report'”.  If that doesn’t exactly sound like an idea you can steal, that’s because it isn’t.

The actual charge, reports Politico, is “that Huffington and partner Ken Lerer designed the website from a plan [Daou and Boyce] had presented them, and in doing so, violated a handshake agreement to work together.”

This is a strange case, and commenters are already expressing skepticism about the strength of the plaintiffs’ claim, but I’ll defer to lawyers on whether or not any contract was breached.

What disturbs me most about this case is how it’s been presented.  The idea for a liberal Drudge just is not the kind of idea that is protected by our intellectual property regime, and for good reason.  Though the case actually seems to revolve around breach of contract, you wouldn’t necessarily gather as much from how it’s presented in the media.  The Politico headline, in particular, obscures the real issue.

Why does this matter?  My fear is that in the age of constant suits over intellectual property (music, film), and high profile suits that may seem to be about intellectual property (against Facebook or Huffington), we might forget that not every idea is protected by law, and that that is a good thing! Ideas that are protected by law are rightfully the exception, not the rule.

Lawrence Lessig explains how to think about this in The Future of Ideas.  I wish everyone who read the Vanity Fair piece would also read this:

This is a hard fact for lawyers to understand (protected as they are by exclusionary rules such as the bar exam), but most of production in our society occurs without any guarantee of government protection. Starbucks didn’t get a government monopoly before it risked a great deal of capital to open coffee shops around the world. All it was assured was that people would have to pay for the coffee they sold; the idea of a high-quality coffee shop was free for others to take. Similarly, chip fabricators around the world invest billions in chip production plants, with no assurance from the government that another competitor won’t open a competing plant right next door.

In each of these cases, and in the vast majority of cases in a free economy, one person’s great idea is open for others to take. Burger King and McDonald’s; Peet’s Coffee and Starbucks; Peapod and Webvan. No doubt the first movers would like it if others couldn’t use their idea or if others wouldn’t notice their idea until long after a market is set. But it is in the nature of the limits on patent rights, and in the nature of transparency in the market, that innovators in the ordinary market can’t keep their good ideas to themselves.

Some protection for ideas, and a bit more for expression, is provided by the legal system. But this protection is incomplete or leaky. Perfect control is never its character.

Innovators nonetheless innovate. And they innovate because the return to them from deploying their new idea is high, even if others get the benefit of the new idea as well. Innovators don’t simply sit on their hands until a guaranteed return is offered; real capitalists invest and innovate with the understanding that competitors will be free to take their ideas and use them against the innovators.

Thus, rather than puzzling about why anyone would code for free systems, we might as well puzzle about why anyone would innovate without a government-granted monopoly to protect them. Indeed, history will teach that, at an earlier time, this was very much the view. Mercantilists believed that exclusive rights were needed before any investment made sense; the English monarchy at an earlier time protected many ordinary investments through a state-backed monopoly.

Free markets, however, function on a very different basis. We don’t grant every merchant a guaranteed market; we don’t reward every new marketing plan with a twenty-year monopoly; we don’t grant exclusive rights to each new way of doing business. In all these cases, because the market produces enough incentive on its own, the fact that others can free-ride doesn’t kill innovation. (The Future of Ideas, pgs 70-71)


Imagine a smart chair

Hearing others’ visions for the future of the Net can be inspiring.  But a lot of the time it’s not.  One thing I’m struck by with the explosion of social media, in particular, is the shallow nature of the industry’s ambition.  For every person writing about how Twitter can enable political change, five others are preparing slidedecks on how social media can offset your firm’s direct mail budget.  There’s a place for that, of course.  But one of the great things about the internet is that it invites us to consider more radical possibilities for change.

The Success of Open Source

As I was thinking about this I was reminded of a quote from the end of Steven Weber’s 2004 book The Success of Open Source, and I decided it was worth sharing.

(He’s just finished describing Wired editor Kevin Kelly’s vision of smart objects, priced in real-time.)  Weber:

Imagine a smart chair, connected to a lot of other smart things, with huge bandwidth between them, bringing transaction costs effectively to zero.  Now ask yourself, With all that processing power and all that connectivity, why would a smart chair (or a smart car or a smart person) choose to exchange information with other smart things through the incredibly small aperture of a “price”? A price is a single, mono-layered piece of data that carries extraordinarily little information in and of itself.  (Of course it is a compressed form of lots of other information, but an awful lot is lost in the process of compression.)  The question for the perfect market that I’ve envisioned above is, Why compress?  My point is that even a perfect market exchange is an incredibly thin kind of interaction, whether it happens between chairs or between people, whether it is an exchange of goods, ideas, or political bargains.  I want to emphasize that communities, regimes, and other public spheres can come in many different shapes and forms.  The “marketized” version is only one, and it is in many ways an extraordinarily narrow one that barely makes use of the technology at hand.

So there you are.  The point of this blog, really, is to take the internet up on its invitation, and to think more creatively about society and its future.