A Blog by Jonathan Low


Sep 25, 2017

Ideas Aren't Running Out, But They Are Getting More Expensive

Given the pace of innovation over the past two decades, especially in the technology field, it is not surprising that new ideas of sufficient scalability and financial impact are becoming harder to find and more expensive to bring to market.

Which is why increased investment in knowledge, data and innovation is required to maintain economic growth. JL

Nicholas Bloom and colleagues report in Vox:

Data on the research effort across all industries shows the costs of extracting ideas have increased sharply. We see a continuing stream of innovations. There have been technological improvements, but these require the devotion of ever-growing amounts of resources to maintain rates of improvement. But, just as newer oil sources are increasingly costly to extract, coming up with new ideas is getting more expensive. This suggests that unless research inputs are continuously raised, economic growth will continue to slow in advanced nations.

Amazon, Google, Facebook, Microsoft: The Scramble To Beat Apple, Dominate Hardware and Own Your Future

To companies, the Apple 'walled garden' approach promises control of customers and their data. But to consumers, this means loss of control and choice.

The question is whether, at some point, the more technologically sophisticated younger generations will notice. Or care. JL

Chris O'Brien reports in Venture Beat:

The biggest of big tech companies have decided they must control every aspect of how we interact with technology. And that means building out Apple-like ecosystems of gadgets that capture as much of your data as possible and keep it within their walled gardens. To become the world’s most valuable company, Apple has demonstrated the appeal of this integrated approach.

Labor Shortage Gives Workers an Edge. For Now.

Demographics is destiny. At least for the short term.

The peaking of job losses due to globalization, aging boomers, historically low labor participation rates, need for specialized tech skills which are trailing demand - and even overly restrictive algorithmic job search protocols  have created a workforce shortage. It won't last. JL

Eduardo Porter reports in the New York Times:

Even as demand for workers accelerates across the United States, employers must contend with a work force that is growing at its slowest pace in a half-century, as baby boomers age out. Manufacturing workers have lost all the jobs to globalization that they were going to lose. (But) seven years after the recession ended and the job market began to bounce back, only 60% of Americans over the age of 16 are working, about 2.5% fewer than just before the economy took a dive.

Machine Learning Effects: Network Models Create Runaway Leaders

Self-perpetuating effects are generated by better data, which enables more useful and faster machine learning. And that, in turn, attracts more customers whose participation reinforces the cycle.

But these effects are not automatic. They require investment, a knowledge or data-oriented culture  and perceptive management. JL

Nick Beim reports in Tech Crunch:

Learning effects have the potential to generate enormous economic value, as network effects do, if products learn more because they have become more valuable. When more valuable products attract more users that enables machine learning models to make these products more valuable. (But) for learning effects to produce runaway leaders, a company must secure a definitive advantage over its competitors in one of the component areas of learning effects – data, intelligence, product innovation or user/customer growth – and leverage this.

Uber's London Ban: 'There Is a High Cost To a Bad Reputation'

The new CEO appears to get it. But the opportunity cost both of changing Uber's internal culture as well as public perceptions about the company may be high - and take longer than expected. JL

Johana Bhuiyan reports in Re/Code:

London announced it was not renewing the license because of Uber’s lack of “corporate responsibility” reporting criminal offenses that occurred during rides and the use of the greyball software to circumvent local authorities. “ It really matters what people think of us, especially in a global business like ours, where actions in one part of the world can have serious consequences in another. It’s critical that we act with integrity in everything we do, and learn how to be a better partner to every city we operate in.”

How Apple's $1,000 iPhone X Challenges Classic Economic Theory

Raising prices usually causes demand to fall. But in technology now there are some countervailing forces: market saturation and electronic ecosystems.

There are fewer people, globally, who don't have a smartphone, even a relatively expensive Apple product. And the network effects of locking in customers to one operating system with all of its attendant benefits, as well as the real and psychic cost of switching means that suppliers like Apple may find it easier to make up the decreasing market growth with higher prices. For a time, anyway. JL

Josh Zumbrun and Tripp Mickle report in the Wall Street Journal:

Prices tend to fall in technology and products become obsolete fast. Typically, raising the price of a good lowers demand for it. Veblen’s theory posits that some consumers want a product even more when the price rises because the expense broadcasts status, taste and wealth. (And) Smartphone makers are running out of new customers. There are just under 100 smartphones per 100 people in the U.S. and 92 smartphones per 100 people in Europe. To generate more revenue the big smartphone makers increasingly need to push on price.

Sep 24, 2017

Pressure Is Growing To Rein In Tech Giants

As a general rule, leaders only like unbridled power when it is theirs. So there is considerable irony in the fact that Silicon Valley, whose mandarins largely opposed the election of Donald Trump, may have provided the technology that facilitated his victory.

The result of that event, combined with growing concerns about Amazon's, Facebook's and Google's domination of increasing elements of the economy is leading to a once-unthinkable bi-partisan consensus on the need for regulation. To anyone who remembers earlier manifestations of this trend - telephones, electricity and, most recently, Microsoft's perceived hold on computing, this should come not as a surprise, but as an inevitability for which preparations should be made accordingly. JL

Cecilia Kang reports in the New York Times:

The politics for the companies in the United States began to change after the 2016 presidential election, when attention turned to the role social media sites play in shaping public opinion. The scrutiny grew after companies struggled to eliminate fake content from their sites, raising fears that the platforms were too big to manage.After Facebook revealed to Congress that it had accepted money for political ads from fake accounts linked to Russia, (politicans) started calling for new disclosure laws.