DannyQuah

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Category Archives: technology

This growth model is just not sustainable in the long run

Memo to: Thomas Alva Edison, Menlo Park
Cc: China, Asia 2013; East Asia, Asia 2013; Singapore, Asia 1995
From: Totally Far-sighted Experts Who Will Turn Out To Be Correct
Date: 29 March 1879

Dear Mr Edison:

Your laboratory is unbalanced and unsustainable. You rely overly on old men in white laboratory coats, doing painstaking experiments on physical materials.  This model of innovation is not sustainable in the long run.Abraham_Archibald_Anderson_-_Thomas_Alva_Edison_-_Google_Art_Project

Your “light bulb”, “phonograph”, and “motion picture camera” projects: Cotton and linen thread. Wooden splints. Tinfoil. Seriously?

You face an imminent middle-level physical-usage trap.

All your projects are materials-based. You think of innovation based on discipline and on working in teams. You think of invention happening in an industrial research laboratory. You think hard work is what makes innovation.  You could not be more wrong.

The future instead is weightless and digital, not physical. Innovation requires freedom from control, from oversight, and from humdrum discipline. Your research trajectory is headed entirely in the wrong direction. The future lies not in New Jersey but on the other coast, Silicon Valley. There, nimble 20-year-olds working alone or in small groups, wearing only white T shirts and cut-off blue jeans, cut software code on gleaming but skinny notebook computers, doing things like “algorithms” and “search” and “big data”. You think you get innovation and invention by driving your large-scale teams hard to produce results. Instead, you should be providing your employees with free pizza and soda, and organising frisbee afternoons—all the while providing lots of unicycles and juggling toys in the workspace. Innovation needs to be free-wheeling, loose, and unstructured. And, please, call that workplace not a laboratory but a “campus”.

Google-blog-send-Street-View

(Editorial note – good gosh, these have all turned out to be correct!  Edison really should have listened and stopped trying to make better light bulbs with that old-fashioned unsustainable model of innovation.)

We urge you to stop tinkering with your innovation methods before your physical materials-based experiments lead to a total collapse of your unbalanced and outmoded research laboratory.

Your innovation model is just not sustainable in the long run.

Successful modern technology: Demand trumps supply


Successful technology in economic growth is not just about pushing out the frontier; it’s about bringing everyone along. Put another way, it’s about raising the average, not just the very top of the distribution.

This lesson has been with humanity ever since at least 14th-century China’s epic fail, although admittedly most of the time we are oblivious of it, given scholarly obsession with technology having to do with only supply-side productivity.

Almost exactly a year ago, Apple overtook Microsoft to become the world’s most valuable technology company (and the world’s second most valuable company, period). Last month, Apple overtook Google to become the world’s most valuable brand.

John Ross (30 May 2011) puts in context what is now simultaneously the world’s most valuable technology company and the world’s most valuable brand:

“Apple of course, by most industries’ standards, is a high tech firm. But Apple is not famous for fundamental technological research. It did not create the laser – as did AT&T and the Hughes Aircraft Corporation – or the transistor – as did AT&T and Texas Instruments. It was not a company that produced the world’s first microprocessor, as did Intel – a company continuing to demonstrate technological prowess in the recently announced revolutionary three dimensional Tri-Gate microprocessor.”

Instead,

“Apple’s outstanding skill – shown in its series of world beating products stretching from the Macintosh, through iPod, iPhone to iPad – is to mass produce products which the user can individualize.”

Now, for some observers, that final phrase might come as a bit of a let-down. What, not whizz-bang tech that you might find only in Iron Man’s armor, or some spiffy widget that makes assembly lines run faster? No.

Moreover, the statement is not even correct. For the more technical of the IT crowd, Apple’s products are the exact opposite of customizable. Compared to Linux, say, Apple’s OS is closed; and compared to other computing boxes, Apple’s hardware can be pried open only by simultaneously breaking an explicit legal agreement. Customization of the iPhone via jailbreaking is sanctioned only by the Library of Congress, not by Apple itself.

But there lies the nugget of truth for why technology now is so much more fun and in-your-face for so many: For the average user, Apple products are customizable enough.

Consumer tastes, not the needs of raising industrial productivity, provide the leading force shaping modern technological development. Demand trumps supply.

Martial arts on the mean streets of East Asia

In his book Angry White Pyjamas Robert Twigger, the prize-winning poet and author, and martial artist, describes how in the 1930s Gozo Shioda would prowl the streets of Kabuki-cho Tokyo, looking to fight street gangs and test his martial arts skills.

Decades after, Gozo Shioda went on to establish the Yoshinkan style of aikido.  In the eyes of some, Shioda and his teacher Morihei Ueshiba were at one point Japan’s greatest martial artists.

Ueshiba used to tell his students “On no account go looking for fights.”  Shioda, like many other good martial arts students, completely ignored his teacher on this.  

Instead, out of the situations in which Shioda constantly found himself, he formulated his own rules, like “In a fight against many, always make the first blow count against the strongest man.”

Shioda felt that you only really understand what aikido is when you have to use it in life-or-death situations.  His own aikido-enlightenment moment came when, cornered by four gang members, he used aikido techniques to break the arm of one of his attackers and the leg of another, and incapacitated a third by a single punch to the solar plexus.  According to Shioda’s autobiography he appreciated only then how aikido wasn’t something you just practiced in a safe environment.

I have friends who train in aikido but I myself do taekwon-do, the birthplace of which is Korea.  So, that balmy July evening in Seoul when my taekwon-do training partner James and I came out of his dojang, we reminded one another of what Ueshiba and Shioda would have said, had they been walking Seoul’s crowded streets alongside us.  James, who has started training seriously in hapki-do as well, pointed out to me how in modern Korean language you say taekwon-do players but hapki-do fighters.

Every street corner in Seoul has over a dozen schools of taekwon-do and hapki-do.  Every shaded doorway has darkened stairwells leading up to a brightly-lit dojang.  Martial arts training is everywhere.

The other thing found everywhere in Seoul is free WiFi.  When you land in most airports in the world, service providers try to sell you a pay-as-you-go SIM card so you can use your cellphone without incurring high roaming charges.  At Incheon and Gimpo, they try to get you to rent a Skype handset instead.  Why call over cellular networks when you can just log in to the Internet on a cellphone handset, and transmit via VOIP for zero marginal cost?

I think that is truly cool.  It just makes so much sense.

South Korea’s 15-year-olds score highest in the world at problem-solving skills, way ahead of the US, the UK, France, or Germany, in the OECD’s 2006 Program for International Student Assessment Surveys.  Fifteen-year-olds in Hong Kong and Japan score well up there too, right alongside South Korea, and again far, far above the US, the UK, France, and Germany.  The same pattern emerges again for science skills and mathematics skills.

South Korea is a country brimming with clever people, knowledge, and technology, of the most exciting, intelligent, and useful kind.  The same holds for Hong Kong, Japan, and Singapore.  [Singapore will only start to participate in PISA surveys from 2009, and so its formidable student strength in mathematics, science, and problem-solving—apparent to anyone who teaches undergraduate students at any good international university— will only appear in the next OECD round.]

When economists estimate TFP (total factor productivity) to be low for countries such as these, whatever it is that we’re measuring more and more accurately as TFP, it simply can’t be technology—at least, not the way technology is commonly understood.  So what is it that we have ended up estimating better and better?

Oh, back in Seoul, James and I felt that before anything else happened that hot July evening we needed sustenance.  So, taekwon-do player and hapki-do fighter together, we went and had really good Tak Galbi for dinner.  I described to James how in February 2005, after giving a talk on the global economy to Rusal executives in Moscow, I was jumped by 3 men while I was wandering about Red Square in the early evening.  I had then nowhere near Shioda’s presence of mind.  The month after that, I broke my nose fighting in a tournament. But I didn’t consider I had yet had a Shioda moment, and I was just as glad not.

So, after dinner, as all good martial arts students eventually must, I followed Gozo Shioda’s example and I broke the law.  I bought a Kung Fu Panda DVD off a street vendor.  All the while, however, I was thinking about the relative sizes of deadweight loss and ex ante incentives in this picture of monopoly pricing under intellectual property rights.

When I got to Kuala Lumpur in late July, I discovered that Sri Hartamas too has dozens of martial arts schools.  So, August there, I trained with several seriously dangerous-looking hapki-do practitioners at Grandmaster Lim’s dojang in Mt Kiara.  (Thanks to my taekwon-do teacher at LSE Kian-lun Wong for making introductions.  Kian-lun and our LSE taekwon-do club are affiliated with Grandmaster Lim’s Korean Martial Arts organization in Malaysia.)


In this same time I presented papers in Singapore and Seoul; made speeches to LSE alumni in Tokyo, Kuala Lumpur, and Singapore; gave lectures at Bank Negara Malaysia and Khazanah Nasional in Kuala Lumpur; and discussed economics and government policy in Ministerial offices and with numerous panellists on radio and TV throughout Southeast Asia (including the first ever webcam telecast for RTM on 29 August 2008).  I am grateful to Governor Zeti at Bank Negara Malaysia, Chairman Zarinah at Securities Commission Malaysia, Minister Shahrir Samad, Tan Sri Dr Munir Majid, Tan Sri Azman Mokhtar, Malaysia’s Finance Minister Nor Mohamed Yakcop, Singapore’s Finance Minister Tharman Shanmugaratnam, Takatoshi Ito, Bart Thia, Khuong-minh Vu, Dato’ Azman Yahya, Dato’ Dr R. Thillainathan, Carmen Chua, and many others who gave generously of their time to talk to me about the economics of the region wherever I went.


Papers I’ve written recently relevant to the preceding discussion include:

Post-1990s East Asian Economic Growth (October 2008)

Knowledge:  The driver of economic growth (June 2008)




while lectures and presentations include:


Khazanah Megatrends Forum (October 2008, KL: “Shifting sands:  The real side longer term“)

Bank Negara Malaysia lecture (August 2008, KL: “Global growth and inflation“)

LSE Tokyo alumni lecture (July 2008, Tokyo: “Post-1990s East Asian economic growth“) [Photos]

LSE Malaysian alumni lecture (May 2008, KL: “The rise and fall of subsidies“) [Ng Wei-Li's photos]

LSE Asia Forum in Singapore (April 2008, Singapore: “Knowledge: The driver of economic growth”) [video]


[The aikido photograph is of my friend Attila Emam, who is third-dan blackbelt in aikido (and LSE-trained economist now at Securities Commission Malaysia), executing a throw.  The taekwon-do photograph, from September 2007, shows me sparring my instructor Mr Read, who is fifth-dan blackbelt in taekwon-do:  I am executing a jump spinning back kick while he is preparing to deliver a hook kick at my head.  The photograph is a still that I extracted from a video of us sparring.  The 2008 May photograph is of a meeting with Finance Minister Nor Mohamed Yakcop in his Putrajaya office.  The 2008 July photograph is from the LSE Tokyo alumni event at the Roppongi Hills Club.  The 2008 August photograph was taken after my lecture at Bank Negara Malaysia.  I obviously wear Vivienne Westwood way too often.]

 


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