Joe Weisenthal Really Likes My "Slouching Towards Utopia"!
x& raises very important questions about economists’ false beliefs that modern science has solved the problem of (1) discovery, that our patent & copyright systems do as good a kludgy job as can be...
& raises very important questions about economists’ false beliefs that modern science has solved the problem of (1) discovery, that our patent & copyright systems do as good a kludgy job as can be done about (2) development, and that the major diseases afflicting (3) deployment & (4) diffusion can be properly & easily treated with a good dose of neoliberal shrink-the-rapacious-state snake oil…
Joe Weisenthal writes:
Joe Weisenthal: Markets: Things You Need to Know to Start Your Day: Americas: ‘It's summer, so this is when people like to talk about books, and what they're reading at the beach and all that stuff. And so on that note, over the weekend I finished up Slouching Towards Utopia <http://bit.ly/3pP3Krk>, which is Brad Delong's book on the economic history of the 20th Century (or rather the Long 20th Century, which he defines as 1870-2010). I'm not gonna write up a review or go into it much, though I'll say that it was excellent, interesting, and the writing was unusually delightful, given the topic… <https://www.bloomberg.com/news/newsletters/2024-06-17/five-things-you-need-to-know-to-start-your-day-americas>
First of all: My spirits are greatly lifted by the fact that Joe liked the book!
Second of all: SO YOU ALL GO BUY BOOK NOW!! <http://bit.ly/3pP3Krk>
Third of all: I am even more impressed by the fact that Joe finished the book! The full book file is 188,000 words (admittedly, including the index and some notes that did not make it into the first edition but that I want to include when I revise the book.) That means that Joe has spent a huuuuge amount of time sharing his brain with the sub-Turing instantiation of the mind of the author that we spin up, run on our own wetware, converse with, and often argue with whenever we read a book—that is, with me! It is a huge favor to me that he has spent so much time hanging out—only in an internal-mental-dialogue way, admittedly—with me (or a compressed-network low-parameter version of me)!
Fourth: I want a review! Since I cannot redownload anything from the sub-Turing instantiation of my mind that ran on Joe Weisenthal’s wetware for so long at the beach, I feel cheated and deprived of my rightful feedback—particularly with respect to what I got bigtime wrong about the book!
But Joe goes on:
One thing (among many) that stood out was his discussion of why the last century saw the emergence of such a gigantic gap between rich countries (the US, Western Europe, and also parts of East Asia) vs. almost everyone else. He writes that in theory this shouldn't have taken place. In theory, it should have been easy for poorer countries to take advantage of various technological breakthroughs discovered first elsewhere: “Many global-south economies had managed to take some advantage of technologies from the global north in their domestic production. Others had benefited substantially from enhanced and richer markets for their exports. But the results were strikingly at variance with the expectations of neoclassical, neoliberal, and neoliberal-adjacent economists like myself, who hold that discovery is—or should be—more difficult than development, that development is more difficult than deployment, and so that the world economy should "converge" over time. Between 1911 and 1990 that did not happen. The opposite did: the world economy diverged to a stunning degree.”….
It's interesting to think about what everyone's talking about now here in the US. So much of the angst in the US is about the challenge in deploying advanced, cutting-edge technologies…. The technological discovery part (which economists might have assumed was the real bottleneck) isn't the aspect people are concerned with. It's the deployment. Tracy Alloway and I have done a few interviews with Jigar Shah… of the Loan Program Office at… Energy… [who] now has hundreds of billions of dollars in lending capacity…. Much of… technology [is what]… DOE have been working on literally for decades…. The challenge is getting something… into the field… operating in an efficient, competitive manner…. And of course this is true with things that aren't at the cutting edge technologically as well….
The US economy faces a challenge that for much of the 20th century we might have associated with developing economies…. Technology… exists…. The hard part is in the coordination and cooperation required to get them running… <https://www.bloomberg.com/news/newsletters/2024-06-17/five-things-you-need-to-know-to-start-your-day-americas>
Indeed: (1) discovery, (2) development, (3) deployment, and (4) diffusion. We economist types are in awe of the real scientists, and think that scientific discovery is the real hard part—learning enough about what is really going on so that you can reliably control nature. Like I was reading yesterday about the discovery of guncotton—nitrocellulose:
Wikipedia: Nitrocellulose: ‘Around 1846 Christian Friedrich Schönbein… was working in the kitchen of his home in Basel, he spilled a mixture of nitric acid (HNO3) and sulfuric acid (H2SO4) on the kitchen table. He reached for the nearest cloth, a cotton apron, and wiped it up. He hung the apron on the stove door to dry, and as soon as it was dry, a flash occurred as the apron ignited…. The patent rights for the manufacture of guncotton were obtained by John Hall & Son in 1846, and industrial manufacture of the explosive began at a purpose-built factory at Marsh Works in Faversham, Kent…. The manufacturing process was not properly understood and few safety measures were put in place. A serious explosion… killed almost two dozen workers, resulting in the immediate closure of the plant. Guncotton manufacture ceased for over 15 years until a safer procedure could be developed… <https://en.wikipedia.org/wiki/Nitrocellulose>
Why does nitrocellulose have a spontaneous ignition point of roughly 300F (so that you can make it and store it, if you do it carefully), and a flash point of roughly 50F (so you need to store it very carefully, and it will let off a lot of energy if disturbed)? Figuring out what was actually going on does not appear to have been straightforward, as the key task was to figure out how it is that -NO2 groups can form and then be (a) stable enough to hang around, while (b) still produce a lot of energy when they are transformed. As I understand it, (b) is almost a given considering how much the nitrogen atom would prefer to be in an N2 rather than an NO2. But why (a)?
The process uses a mixture of nitric acid and sulfuric acid to convert cellulose into nitrocellulose…. Nitrocellulose is… a nitrate ester. The glucose repeat unit (anhydroglucose) within the cellulose chain has three OH groups, each of which can form a nitrate ester…. Eplosives are mainly the trinitrate…. The chemical equation for the formation of the trinitrate is:
3 HNO3 + C6H7(OH)3O2 H2SO4→ C6H7(ONO2)3O2 + 3 H2O….
The principal uses of cellulose nitrate is for the production of lacquers and coatings, explosives, and celluloid… <https://en.wikipedia.org/wiki/Nitrocellulose>
But by now our scientists are so good and know so much. We have demonstrated knowledge of how and capability to turn lead (well, bismuth) into gold via nucleon bombardment. We have the secret of the Philosopher’s Stone: we literally know how to turn lead (Pb: 82p, 125n) into gold (AU: 79p, 118n), as alchemists from Zosimos of Panopolis to Isaac Newton of Cambridge had sought, and beyond. But that knowledge does not a profitable business create: Physical Review C transmutation-via-nucleon-bombardment paper coäuthor Glenn Seaborg guestimated that “it would cost more than one quadrillion dollars per ounce to produce gold by this experiment…” There are enormous remaining tasks for “pure science”, but they involve figuring out how to use what we know about physics, chemistry, and biology to manage very complex and adaptive systems. Beyond that, our tasks are all further down the chain—finding a sufficiently resource-efficient economically-viable pathway, and proceeding from there.
We economists tend to say that the market can do most of the job—at least once we have taken care of Pigouvian positive and negative production-and-use externalities, Beveridgian wealth externalities, and Keynesian macroeconomic externalities. That part of the job that the market cannot do with respect to science and (1) discovery we throw over the wall to Michael Polanyi and his ideas about the “fiduciary institution” of science. That part of the job that needs to be done with respect to (2) development we claim that patent and copyright system handles in its kludgy way about as well as can be handled. And as for the rest—(3) deployment and (4) diffusion—we say that the properly supported market will do as good a job as can be done, and will rapidly develop optimal sub-market organizations of coöperation, as long as it is protected from rapacious and predatory governments that exist at many levels, and that are survivals from the day of pre-liberal societies of domination.
But it is quite clear that we are wrong.
References:
Aleklett, K, & al. 1981. “Energy dependence of 209Bi fragmentation in relativistic nuclear collisions”. Physical Review C. 23:3 (March). <https://journals.aps.org/prc/abstract/10.1103/PhysRevC.23.1044>.
DeLong, J. Bradford. 2022. Slouching Towards Utopia: An Economic History of the Twentieth Century. New York: Basic Books. <http://bit.ly/3pP3Krk>.
Fischer, Frank, &Alan Mandell 2009. “Michael Polanyi's Republic of Science: The Tacit Dimension”. Science as Culture. 18:1 (March), pp. 23-46. <https://doi.org/10.1080/09505430802705889>.
McGuire, J.E. 1967. “Transmutation & Immutability: Newton's Doctrine of Physical Qualities”. Ambix> 14:2 (June), pp. 69-95. <https://www-tandfonline-com.libproxy.berkeley.edu/doi/epdf/10.1179/amb.1967.14.2.69>.
Weisenthal, Joe. 2024. "Markets: Things You Need to Know to Start Your Day: Americas: June 17." Bloomberg. <https://www.bloomberg.com/news/newsletters/2024-06-17/five-things-you-need-to-know-to-start-your-day-americas>.
Here’s the full thing:
Joe Weisenthal: Markets: Things You Need to Know to Start Your Day: Americas: ‘It's summer, so this is when people like to talk about books, and what they're reading at the beach and all that stuff. And so on that note, over the weekend I finished up Slouching Towards Utopia <http://bit.ly/3pP3Krk>, which is Brad Delong's book on the economic history of the 20th Century (or rather the Long 20th Century, which he defines as 1870-2010).
I'm not gonna write up a review or go into it much, though I'll say that it was excellent, interesting, and the writing was unusually delightful, given the topic.
One thing (among many) that stood out was his discussion of why the last century saw the emergence of such a gigantic gap between rich countries (The US, Western Europe, and also parts of East Asia) vs. almost everyone else. He writes that in theory this shouldn't have taken place. In theory, it should have been easy for poorer countries to take advantage of various technological breakthroughs discovered first elsewhere: “Many global-south economies had managed to take some advantage of technologies from the global north in their domestic production. Others had benefited substantially from enhanced and richer markets for their exports. But the results were strikingly at variance with the expectations of neoclassical, neoliberal, and neoliberal-adjacent economists like myself, who hold that discovery is — or should be — more difficult than development, that development is more difficult than deployment, and so that the world economy should "converge" over time. Between 1911 and 1990 that did not happen. The opposite did: the world economy diverged to a stunning degree…”
Obviously the context here is, as mentioned, poorer, developing economies. But it's interesting to think about what everyone's talking about now here in the US.
So much of the angst in the US is about the challenge in deploying advanced, cutting-edge technologies. Thinking about the energy transition, or attempts to revitalize US semiconductor manufacturing, or batteries, or EVs, or anything else, almost all the discourse is about how the actual building is what's difficult here. At least for the most part, the technological discovery part (which economists might have assumed was the real bottleneck) isn't the aspect people are concerned with. It's the deployment.
Tracy Alloway and I have done a few interviews with Jigar Shah, the head of the Loan Program Office at the Department of Energy. Thanks to the Inflation Reduction Act, his office now has hundreds of billions of dollars in lending capacity to help qualifying early stage clean energy companies get the funding they need to get their technology up and running and out into the market.
A point that he consistently makes is that the technology risk itself isn't the hard part. Much of what's emerging is technology that people at the DOE have been working on literally for decades. The main challenge is not in coming up with something new that might work to produce clean energy. The challenge is getting something that's shown to work out into the field, and operating in an efficient, competitive manner. One key ingredient to making that happen is finding the necessary capital which is where the LPO has a role.
Anyway, it's no wonder his mantra is Deploy, Deploy, Deploy. At least as he sees it, it's not the discovery that's most difficult, it's the getting it out into the real world part.
And of course this is true with things that aren't at the cutting edge technologically as well. Nuclear has been around for a long time, and likely has a role to play in improving the grid. But it's hard to deploy, at least in the US, at least in some categories.
So to an extent, the US economy faces a challenge that for much of the 20th century we might have associated with developing economies. The technology to achieve things people want exists. Thinking them up and showing they can work is not the hard part. The hard part is in the coordination and cooperation required to get them running… <https://www.bloomberg.com/news/newsletters/2024-06-17/five-things-you-need-to-know-to-start-your-day-americas>
"Nuclear has been around for a long time, and likely has a role to play in improving the grid. But it's hard to deploy, at least in the US, at least in some categories."
If the US and the world had imposed a sufficiently high carbon price in the 1990s, nuclear power would probably have displaced coal, and the subsidies needed to get solar PV and wind started on the path of cost reduction might never have happened.
As it is, there is no economic role for nuclear anywhere. China is building a handful every year because China is building everything. And Russia is offering cheap financing to keep Rosatom on life support. But in any economy where new investment has to yield a return, nuclear is not going to happen.
Discovery may be hard, but it is often not well rewarded. What we reward these days is deployment and, for much of recent "tech," the value of deployment is dependent on network effects (i.e. how many customers you have) not necessarily the quality of one's implementation or vision. The rewards got to he who is "first to build dominant market share," not he who discovers a new technology.
The reality is that there is often a delay of 10 to 15 years, at least, between when a fundamental innovation is discovered and when it is deployed. Thus, 20-year patents can't really protect true inventions. (No, I am not arguing for longer patent terms.) What patents do is protect those who deploy systems which, at best, provide incremental improvements to fundamentally new ideas. Mass deployment usually happens after most relevant patents, if they existed, have expired.
Consider "Hypertext" or HTML. The basic idea was largely described by Vannevar Bush in his article "As We May Think," in the July 1945 Atlantic Monthly. Later, in the 60's and 70's, Ted Nelson elaborated on the core idea and renamed Bush's "associative links" to "Hypertext Links." In the 80's, many of us implemented Hypertext systems but found that because there were very few networked systems in those days, hypertext implementations were limited to single-system implementations. ("Help Text" systems provided an early use of hypertext.) When Tim Berners-Lee at CERN finally implemented HTML, he was fortunate that internetworking among research labs had grown enough to make multi-machine hypertext viable and to provide him with a world-wide distribution channel. (Note: My own Hypertext system had been used by a few folk at CERN before TBL's HTML system...) But, it wasn't TBL, or any of the other old-time hypertext implementors who profited from HTML. Those who profited were those who deployed it, not those who originally created or developed the idea.
The same story can be told of much of what Silicon Valley is famous for deploying. Search engines, neural networks, database systems, chat systems, groupware, office automation, social networks, etc. were all essentially fully formed, but not widely deployed, long before Silicon Valley became a thing. Silicon Valley's "innovators" have primarily innovated in business models and methods, not by creating new technologies.
Fundamental discoveries or inventions are, in themselves, often of little immediate economic value. The more fundamental they are, the more likely that their utility will depend on the co-creation of some essential and new infrastructure before they can be deployed and thus monetized. Of course, because deployment is both easier and more profitable than creation, that means that vast resources will be spent on building and protecting the network effects upon which many innovations rely. Today, one might innovated in a variety of areas, but those who do often find themselves bought out cheaply before they have a chance to compete with incumbents or prevented by superior marketing (not technology) from growing their marketshare.
So, yes, discovery and creation is hard and deployment is technically easier. However, while creation requires innovation, deployment requires infrastructure and financial capacity -- both things that are not often available to actual creators or innovators.