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...
"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.
The patent system might be strengthened if it were abolished. As far as I can tell, non-pharma patents are little more than a barrier to entry--the big guys cross-license their portfolios to each other and keep the little guys out. In many fields, trade secrets are often easier to protect than patents. I think that jet engines are the most cited example.
Of course, pharma and biotech are truly different. The current model of pharma R&D is truly predicated on patents. Alternative models can be imagined, but they entail much more than the abolition of patent.
The US patent office first changed teh rules about what can be patented. It now encompasses natural this such as genes, that prevents research on certain drug targets. The whole kerfuffle over who is allowed to manufacture drugs that target the BRCA1 and BRCA2 genes was an example. Patent portfolios have become IP weapons, whether as barriers to entry, trading cards, and patents can be used by patent trolls to extort companies. Remember when MicroSoft's Nathan Myhrvold bought up patents to do this?
I would have thought Polanyi (Karl not Michael) would have something to say here. Markets measure society's interest in the creative side of innovation. But society's fear of the destructive side also has a say through non-market institutions. Your guncotton example is a almost literal instantiation of society's reaction to destructive innovations.
Another interesting example of lag in deployment are antibiotics. Fleming is credited with discovering them (by accident) in 1928, but deployment required more discovery by Howard Florey and Chain on the science side:
From Wikipedia: "Although Fleming received most of the credit for the discovery of penicillin, it was Florey and his team at the University of Oxford who made it into a useful and effective drug, ten years after Fleming had abandoned its development."
On the patenting side wikipedia reports:
"Chain suggested applying for a patent on the penicillin process. His motivation was not potential profits, but the danger of it being patented elsewhere. Florey took up the issue with Sir Henry Dale, the chairman of the Wellcome Trust and a member of the Scientific Advisory Panel to the British Cabinet, and John William Trevan, the director of the Wellcome Trust Research Laboratory, but they were adamantly opposed, as they considered the notion of researchers profiting from their work as unethical. The Americans had no such scruples, and took out patents on the deep submergence processes they developed.[135][136] Chain regarded Florey as naive for not patenting the penicillin production process.[137]"
"properly supported market will do as good a job as can be done, and will rapidly develop optimal sub-market organizations of cooperation, 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.
I'm not sure that "Keynesian externalities" exist if the central bank is determined enough. And it need not be very determined if its fiscal friends spend according to NPV >0.
"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."
In 1998, Phillipe Aghion and Peter Howitt wrote a book, Endogenous Growth Theory. It gave an in-depth analysis of the Schumpeterian growth model, based on their 1992 Econometrica paper A Model of Growth Through Creative Destruction. Chapter 7 of that book analytically deals with some issues of development and adoption. It discusses research versus product development, agency considerations in slow versus rapid adoption, the advantages and disadvantages of product market competition and of financial discipline imposed by various modes of finance. I was fortunate to have read that book in grad school. I recommend it, but reluctantly for two main reasons. It is too technical for a general audience. Even if you can grasp the technical aspects, to understand chapter 7 you might have to read at least the first couple of chapters to become familiar with their definitions, notation, and the basic Schumpeterian model.
I wrote another comment on technology adoption. I'm looking at a Youtube video on a 2-day conference on Economics of Creative Destruction, celebrating 30 years of the Aghion-Howitt paper. Easy to find with Google search of the conference title; then videos.
That economists seems to fail to understand reality is hardly surprising, and I suspect that the use of smooth functions and DSGE models creates a false view of the world. We non-economists have that old joke about an economist starting with "Assume a spherical cow..."
Greg Clark's "A Farewell to Alms" has a nice chapter on why cotton machines failed to benefit from cheap labor in India compared to England. A book I once read about the early investment in China was full of what appeared to be unbelievable idiocies by Chinese factory managers using hi-tech equipement, that must have hampered deployment and adoption rates.
The cultural resistance to change, using politics and social pressure manifests itself everywhere. It wasn't that long ago that the world welcomed vaccinations as an unalloyed health benefit. Then I read that N Vietnamese children had their vaccinated arm amputed by parents after US medical teams left their village. The MAGA cultists and QAnon loons think Covid vaccines (and some vaccines in general) are "evil" and pandering pols like Florida's DeSantis actively blocked sensible community health precautions like children getting Covid vaccines and businesses and institutions enforcing mask wearing during outbreaks. Petrostates like Texas actively resist the introduction of renewable energy from solar panels to EVs. What can one say about this self-sabotage?
"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.
The patent system might be strengthened if it were abolished. As far as I can tell, non-pharma patents are little more than a barrier to entry--the big guys cross-license their portfolios to each other and keep the little guys out. In many fields, trade secrets are often easier to protect than patents. I think that jet engines are the most cited example.
Of course, pharma and biotech are truly different. The current model of pharma R&D is truly predicated on patents. Alternative models can be imagined, but they entail much more than the abolition of patent.
The US patent office first changed teh rules about what can be patented. It now encompasses natural this such as genes, that prevents research on certain drug targets. The whole kerfuffle over who is allowed to manufacture drugs that target the BRCA1 and BRCA2 genes was an example. Patent portfolios have become IP weapons, whether as barriers to entry, trading cards, and patents can be used by patent trolls to extort companies. Remember when MicroSoft's Nathan Myhrvold bought up patents to do this?
I would have thought Polanyi (Karl not Michael) would have something to say here. Markets measure society's interest in the creative side of innovation. But society's fear of the destructive side also has a say through non-market institutions. Your guncotton example is a almost literal instantiation of society's reaction to destructive innovations.
Another interesting example of lag in deployment are antibiotics. Fleming is credited with discovering them (by accident) in 1928, but deployment required more discovery by Howard Florey and Chain on the science side:
From Wikipedia: "Although Fleming received most of the credit for the discovery of penicillin, it was Florey and his team at the University of Oxford who made it into a useful and effective drug, ten years after Fleming had abandoned its development."
On the patenting side wikipedia reports:
"Chain suggested applying for a patent on the penicillin process. His motivation was not potential profits, but the danger of it being patented elsewhere. Florey took up the issue with Sir Henry Dale, the chairman of the Wellcome Trust and a member of the Scientific Advisory Panel to the British Cabinet, and John William Trevan, the director of the Wellcome Trust Research Laboratory, but they were adamantly opposed, as they considered the notion of researchers profiting from their work as unethical. The Americans had no such scruples, and took out patents on the deep submergence processes they developed.[135][136] Chain regarded Florey as naive for not patenting the penicillin production process.[137]"
"properly supported market will do as good a job as can be done, and will rapidly develop optimal sub-market organizations of cooperation, 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."
Maybe. But its worth a try.
"Keynesian macroeconomic externalities."
I'm not sure that "Keynesian externalities" exist if the central bank is determined enough. And it need not be very determined if its fiscal friends spend according to NPV >0.
"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."
In 1998, Phillipe Aghion and Peter Howitt wrote a book, Endogenous Growth Theory. It gave an in-depth analysis of the Schumpeterian growth model, based on their 1992 Econometrica paper A Model of Growth Through Creative Destruction. Chapter 7 of that book analytically deals with some issues of development and adoption. It discusses research versus product development, agency considerations in slow versus rapid adoption, the advantages and disadvantages of product market competition and of financial discipline imposed by various modes of finance. I was fortunate to have read that book in grad school. I recommend it, but reluctantly for two main reasons. It is too technical for a general audience. Even if you can grasp the technical aspects, to understand chapter 7 you might have to read at least the first couple of chapters to become familiar with their definitions, notation, and the basic Schumpeterian model.
I would also read chapters 13 and 14 of the book mentioned in my previous comment.
So that's why my tung oil wood finish repeatedly says, "Don't leave the wipe rags sitting in big piles, you idiot!"
Chip Wars by Chris Miller is informative on the deployment part including especially coordination and cooperation for semiconductors.
In this, Joe has good taste.
:-)
I wrote another comment on technology adoption. I'm looking at a Youtube video on a 2-day conference on Economics of Creative Destruction, celebrating 30 years of the Aghion-Howitt paper. Easy to find with Google search of the conference title; then videos.
That economists seems to fail to understand reality is hardly surprising, and I suspect that the use of smooth functions and DSGE models creates a false view of the world. We non-economists have that old joke about an economist starting with "Assume a spherical cow..."
Greg Clark's "A Farewell to Alms" has a nice chapter on why cotton machines failed to benefit from cheap labor in India compared to England. A book I once read about the early investment in China was full of what appeared to be unbelievable idiocies by Chinese factory managers using hi-tech equipement, that must have hampered deployment and adoption rates.
The cultural resistance to change, using politics and social pressure manifests itself everywhere. It wasn't that long ago that the world welcomed vaccinations as an unalloyed health benefit. Then I read that N Vietnamese children had their vaccinated arm amputed by parents after US medical teams left their village. The MAGA cultists and QAnon loons think Covid vaccines (and some vaccines in general) are "evil" and pandering pols like Florida's DeSantis actively blocked sensible community health precautions like children getting Covid vaccines and businesses and institutions enforcing mask wearing during outbreaks. Petrostates like Texas actively resist the introduction of renewable energy from solar panels to EVs. What can one say about this self-sabotage?