Club Troppo

Since I posted this post on my problems with my wireless broadband, I’ve received constant emails from around the Tropposphere on how I am going with the problem, begging for a sequel.  Well folks, I can report the next exciting episode is that I contacted Optus at the end of my 30 day guarantee and told them that what they’d served up was a crock of shite and that I wanted to cancel the contract.  I’ve just signed up with Three, and I get 1 Gig a month for $15 plus $5 per month for the modem - which is cuter and littler than the previous ‘dongle’ (their word).  I can also upgrade it temporarily to the 2 Gig service for double the price - which I’ll need to do during christmas when I use it solidly over the six week Christmas break.

They said it wouldn’t work on Mum’s farm out past Hall, but because she’s about to move to a retirement village in town, I went with them and prepared to use a dialup for the next week or so. This halves the cost of access, so it’s a Good Thing.  Three were also pretty good to deal with - less waiting and so on. (Though they refused to send me a connection if I couldn’t nominate a home base that had Three access.  I told them that this was used for travelling - hello, is anyone home - but rules are rules and they told me that I would have had to go into a store to get the service if I had been in a base that didn’t have coverage.  Anyway I did.

Anyway, I tested it on Mum’s farm, and it works just fine and dandy - I’ve just clocked it at 2177 kbps download and 350 kbps upload. (I suspect the problem with Optus was a technical one - as reception was good.  On one occasion a technician told me some settings needed changing, but I wasn’t in the trouble zone when I rang and, though I repeated this lead to a couple of techies I talked to at Optus, nothing came of it.  Anyway I’m saving money and getting better service now, so there you go, a bit of bad technical advice is sometimes a boon).

One thing I’ll have to watch is that outside the metropolitan area if it can’t rustle up the Three network it can go onto roaming and you get charged a bomb for that.  Anyway, I don’t seem to have that problem where I am, and like most people I just want metro coverage outside this, so I’m a happy camper.

So I recommend it.  In fact, if you want to email me on nicholas AT gruen DOT com and then DOT au, I’ll send your details to Three which means you and I will each get $25 for our trouble if you sign up.

It used to be that the daydream of every programmer was to write the next great Unix shell or the next great text editor. Nowadays it seems to be writing the next great web framework.
(Continued)

A fascinating tale of the very early days when calculations were done with slide rules and log tables, a ‘computer’ meant ‘female employee with a calculator’, and why Visicalc was not always destined to be the first computerised spreadsheet.

John said, “Well, I’ve developed a computer program that works the same way. All you have to do is to define the formulas for each column of the spreadsheet and give the data. The computer does the calculations just like the computer ladies used to do and gives you a printout that looks just like a spreadsheet. I think it’ll be just the ticket for those people who don’t know how to program in FORTRAN. It will open up the use of computers to lots more people.”

I thought about it for all of 30 seconds, and said, “John, that’s the dumbest idea I’ve ever heard.”

Added: Speaking of VisiCalc, it turns out that you can still download it from creator Dan Bricklin’s website.

OK Geeks, I have a question for you.  Tell me where my reasoning is wrong.

1. Linux is in many respects a superior operating system to Windows, and seems to work perfectly well for people who know what they’re doing as a desktop operating system.
2. The runaway success of products like the ASUS Eee PC shows that Linux can be made sufficiently user friendly for ordinary mugs to use it - at least as an OS on their backup PC.
3. There are a bunch of things it seems that Linux continues to do less well.  I haven’t used it - except to boot it from a CD and it seemed to work fine, but I didn’t do much on it - but I understand that there are quite a few details like picking up drivers and so on that can be painful on Linux.
4. So my main question is why Google and/or a consortium of large firms in the industry (and perhaps elsewhere like Wal-Mart for instance, not to mention Asian governments and businesses) don’t band together to lead an open source initiative to produce a version of Linux that maximises userfriendliness. (Part of the problem is the fragmentation of standards - there are lots of Linux distros out there, so just agreeing on one they’d promote would be very helpful).  IBM spends something like a billion dollars annually on Linux coding, you’d think it wouldn’t take much of a share of this - especially with other firms and individuals chipping in - to get Linux to at least the state that Windows is at.  Windows Vista is a big ugly morass of programming, so now couldn’t be a better time.

So what am I missing?

I think I may have spoken too soon in my praise of Optus Wireless Broadband in this recent post - well the absence of a link brings me to my point - broadband shmoardband.  My ‘broadband’ was too slow to allow me to put in a link.  I just did a speed test on it and it’s about 10% faster than a dialup link.  It’s often that slow.  I rang Optus and complained. They said this was standard when the network was congested.  Well it wasn’t standard on my last service and it isn’t standard on ADSL.  And even if it happened a bit, that’s one thing.  It’s happening a lot.  I’m not happy.  If you are making a choice about this anytime too, you have been warned.

Based on the idea that a bleg is a blogged bit of begging, here is a blogged offer - a bloffer.

I’ve just escaped from my Telstra wireless broadband subscription after two expensive years.  If anyone wants my modem, just let me know and come round and pick it up.  You have to plug it in and all, but otherwise it’s a go anywhere wireless broadband modem.  Just email me on nicholas AT gruenxxx DOT com DOT au and remove the ‘xxx’s.

Meanwhile I continue to be surprised that no-one that I know of offers wireless broadband by the gigabyte - rather than on a plan where you pay a fixed fee for each month.  I realise it wouldn’t be for everyone, but there must be plenty of people in my position who use it only when they travel and then only occasionally. In my case I need to be able to use it for two weeks at a stretch - and once a year for six and so Telstra’s 1 Gig limit was getting very cramped.  They were charging $60 per month for 1 Gig (counting the downloads and uploads unlike ADSL). Optus are now giving me 5 gig a month for $40 per month which is a bit better.  But it’s quite a bit slower.  No idea why.

Johnathan Schwartz is my favourite CEO. If computer industry CEOs were available as trading cards, I’d have Schwartz, Steve Jobs and maybe Mark Shuttleworth and stop my collection there.

What makes Schwartz such a good CEO is that he is a nerd. Business schools like to push the line that a “good” manager (where “good” is defined as “alumnus of our school”) can manage and lead any company in any industry. Essentially the argument is that management transcends technology, regulation and the like: that business is a spotlessly abstract activity that can be performed anywhere.

What rubbish. I don’t dispute that business and management are disciplines unto themselves, but it’s a bit rich to pretend that any Harvard graduate can waltz in and run a successful firm in an industry they know nothing about.
(Continued)

I recently bought an ultra-portable computer which seems pretty good.  It’s an ASUS U2E. The installation of Windows Vista has given me new reasons to hate Microsoft, but I won’t go on about that here.  (I have uninstalled Office 2007 as 2003 is better and I’m seriously considering switching back to Apple - I’ve not used them since the days when I was an Apple user and, almost all the work I did was in Word and Word was pretty much the same on Windows and on Apple, so I couldn’t see the point any more.)

One thing is a problem however. The ASUS software brings up a dialogue box prompting me to update the BIOS.  I do this by clicking on the relevant boxes and the dialogue box indicates that an update for the BIOS is loading.  It then tells me that I should restart the computer, enter the BIOS and load defaults. This is presumably to install the new update into the BIOS.  I reboot, enter the BIOS by hitting F2 as the computer boots up. It tells me that if I want to load defaults, I should press F9 - which I do and then when I ‘exit and save’ it loads up Windows and Bob’s your uncle.  I even get a new dialogue box without any empty radio boxes to tick telling me the BIOS is updated.

Then the next time I boot up the computer the original dialogue box appears.  And I’m back to square one. Just to fit the mood, I tried to load an image of the dialogue box I see initially, but it wouldn’t work.  Anyway, it’s not important.

Any ideas oh Troppodillian ones?

“Loose Coupling”. Don’t snigger, because loose coupling is one of the most important ideas in software development: that program A should be able to use program B without caring about how B does its job.

Coupling has parallels everywhere in every day life. The economic theory of price signals is one — how firms allocate resources is, in general, supremely unimportant to the buyer. All the buyer knows is the price. Loosely coupled economies are flexible, with individual firms able to connect to each other without having to bear the costs and complexities of knowing how their suppliers and buyers do business. They can stick to their knitting.
(Continued)

The following paragraph is an abstract of the paper “The Effect of Employer Access to Criminal History Data on the Labor Market Outcomes of Ex-Offenders and Non-Offenders” by Keith Finlay

Since 1997, states have begun to make criminal history records publicly available over the Internet. This paper exploits this previously unexamined variation to identify the effect of expanded employer access to criminal history data on the labor market outcomes of ex-offenders and non-offenders. Employers express a strong aversion to hiring ex-offenders, but there is likely asymmetric information about criminal records. Wider availability of criminal history records should adversely affect the labor market outcomes of ex-offenders. A model of statistical discrimination also predicts that non-offenders from groups with high rates of criminal offense should have improved labor market outcomes when criminal history records become more accessible. This paper tests these hypotheses with criminal and labor market histories from the 1997 cohort of the National Longitudinal Survey of Youth. I find evidence that labor market outcomes are worse for ex-offenders once state criminal history records become available over the Internet, and somewhat weaker evidence that outcomes are better for non-offenders from highly offending groups. Results for ex-offenders demonstrate the presence of imperfect information about criminal records by employers. The non-offender results are consistent with statistical discrimination by employers. Estimates may be confounded by a short sample period and ongoing human capital investments, but the research design provides a unique setting for testing theories of statistical discrimination.

Should we publish these records or not?

I put the above up immediately I saw the abstract. Now I’ve seen another abstract that is equally relevant to the issues of discrimination in the labour market - and who should suffer it. It’s closer to my heart, because I detect a ‘lemons’ effect at the bottom end of the market, something I’ve observed in my own behaviour as a hirer of labour.

Beyond Signaling and Human Capital: Education and the Revelation of Ability by Peter Arcidiacono, Patrick Bayer, Aurel Hizmo
In traditional signaling models, education provides a way for individuals to sort themselves by ability. Employers in turn use education to statistically discriminate, paying wages that reflect the average productivity of workers with the same given level of education. In this paper, we provide evidence that education (specifically, attending college) plays a much more direct role in revealing ability to the labor market. We use the NLSY79 to examine returns to ability early in careers; our results suggest that ability is observed nearly perfectly for college graduates but is revealed to the labor market much more gradually for high school graduates. As a result, from very beginning of the career, college graduates are paid in accordance with their own ability, while the wages of high school graduates are initially completely unrelated to their own ability. This view of ability revelation in the labor market has considerable power in explaining racial differences in wages, education, and the returns to ability. In particular, we find no racial differences in wages or returns to ability in the college labor market, but a 6-10 percent wage penalty for blacks (conditional on ability) in the high school market. These results are consistent with the notion that employers use race to statistically discriminate in the high school market but have no need to do so in the college market. That blacks face a wage penalty in the high school but not the college labor market also helps to explains why, conditional on ability, blacks are more likely to earn a college degree, a fact that has been documented in the literature but for which a full explanation has yet to emerge.

Dave Bath of Balneus fame has accepted my repeated naggings to hop onto my nascent (and currently on hold) Ozblogistan network. David has in the past few days started posting at The Wonkery, a site devoted to all things to do with inquiries, reviews and other instruments of consultative, report-driven policy making.

As Dave writes:

Wonkers-in-residence might disagree with what you say to government, and not only defend your right to say it, but encourage you to say it.

Posts and comments (apart from the occasional editorial like this one) will usually cover one or more of the following items…

• Notices of government (and departmental inquiries);
• Preliminary musings of Wonkers-in-residence while preparing their own submissions;
• Notice and/or review of particularly interesting submissions as they are made available on government websites
• Reviews of parliamentary (majority and minority) reports once the inquiry has finished, particularly if there is a gross mismatch between the submissions and the report.

Dave is also using the site as a jumping off point for his polite crusade to get governments around Australia to provide RSS feeds for important streams of documents, such as press releases, reports, notices, announcements and the like.

Nominally I am one of the Wonks-in-Residence, but at the moment it’s mostly Dave’s prodigious output that makes it go. We are keen to get a few more Wonks-in-Residence, so if you believe in having input into policy, do drop by.

John Quiggin and Dan Hunter have written a very interesting survey article on Web 2.0. They characterise the new innovation on the web as the innovation of the amateur. Their choice of word is deliberately provocative, and also rehabilitative. As they note, at least in the wake of a couple of centuries of industrial revolution, amateurs have a bad name - as opposed to ‘professionals’ who didn’t exist as a class when the industrial revolution got going.

So the basic analysis is that we’ve come full circle. Innovation was not conceived of as a professional thing, or even a particularly capitalist or self-interested thing when Adam Smith was writing at the beginning of the industrial revolution. The authors note a couple of places where Smith’s inherent sympathy with the people at the bottom of the hierarchies of the time is made manifest - as when he gives anecdotes of young children and workers innovating with simple ideas that make a big difference over time. (See footnote 17). And remember that this is one of Smith’s great economic arguments against slavery - with all surplus stolen from him the slave has no incentive to suggest improvements to the way he works, and indeed has an incentive not to propose improvements so as not to appear lazy.

Now after a hiatus in which innovation was corralled into the image of capitalist rationality we find that there’s an explosion of pre/post capitalist innovation of the amateur, motivated in multifarious ways, but often not for money, and in ways that money might actively get in the way of. So it’s well worth reading.

Now for a bunch of concerns. I hasten to add before going on with them over the fold, that the fact that I’m articulating concerns is that, as is often the case in academic discussion, the fact that one’s eye mostly goes to what one thinks of as weaknesses shouldn’t be taken to suggest that I’m not a fan of the paper. I think it’s interesting, convincing at least in its central message about the (re)new(ed) importance of amateur production and recommend it for your attention. (Continued)

You’ve heard of the tragedy of the commons and if not you can look it up here. But as the public commons burgeons on the internet and in the headlong rush of at least a substantial portion of the corporate sector towards open innovation (or more open innovation) there’s another phenomenon which goes by the inelegant title of the tragedy of the anti-commons.

Indeed, this epithet is sufficiently inelegant that I’ve proposed my own version as the heading to this post. It’s not too elegant itself, but it is at least a bit more descriptive. The issue arises when there are complex and often unpredictable relations between things in which people have clear property rights. In real property we have managed these conflicts quite well. Thus land can be resumed for the common good, and various kinds of restrictions on the owner can be imposed based on various considerations such as past usage or current utility. Thus land is subject to leases that have previously been agreed, to easements, to adverse possession, to mining rights of various kinds and to native title. All of these rights can simultaneously cohere in a single piece of land.

Consider how much more complex it might be to have efficient arrangements where property rights have been granted in ideas or in their expression where there are all sorts of complexities and unexpected connections in a long and unpredictable supply chain from basic science through to a commercialised product travelling via basic reagents, genes, molecules, analytical, measurement and manipulative scientific tools all of which can be patented.

In the 1980s the list of a drug’s properties eligible for patenting was relatively limited. They included:

• Primary uses
• Processes and intermediates
• Bulk forms
• Simple formulations
• Composition of matter

During the 1990s the catalogue grew to 18, nearly four times the amount of a decade earlier, to include patents on such additional aspects as:

• Expansive numbers of uses
• Methods of treatment
• Mechanism of action
• Packaging
• Delivery profiles
• Dosing regimen
• Dosing range
• Dosing route
• Combinations
• Screening Methods
• Chemistry Methods
• Biological Target
• Field of use

A ‘patent thicket’ has developed in software for instance. Patents in software are relatively easy to get, and how easy they are to infringe - and indeed whether they’re valid at all - is often quite unclear. As a result as the large companies have acquired huge patent portfolios - often driven by defensive motives. They might be wondering ‘what if my competition beats me to this patent and tries to stop me doing what I was planning to do?’ Even more defensively, as they survey the scene and pay more and more to lawyers to try to figure out what’s patented and what’s not, they may just want patents to retaliate with devastating and paralysing force against any competitor who threatens to paralyse them. Problem is this doesn’t cover them from the actions of lone and well funded patent holders with nothing to lose from trying to enforce them.

Meanwhile there’s good evidence that patents are driving down the rate of innovation in software. And some open source software developers just say that they’re keeping on doing what they’re doing hoping for the best, as they can’t possibly scan the horizon for the patents they might conceivably be violating because if they did they’d never have time to do anything else.

What I hadn’t realised was the extent of the patent thicket developing around those for whom patenting is their economic lifeblood. The diagram above at least shows them appearing to be winners from patents. The diagram below the fold at the end of this post shows how much negative value is added by patents in sectors outside chemicals and pharmaceuticals. But even in the case of chemicals and pharmaceuticals, demonstrating substantial ‘value added’ by private firms from patents, does not demonstrate that this value added is greater than it would be in the counterfactual case where IP was more limited.

Anyway, boning up for a panel I’m doing this week on evergreening in a big conference of generic drug manufacturers (they don’t pay as well as the patent drug manufacturers, but they’ve got a better case in public policy!) I came across the testimony of one Eric Larson, Senior Director, of Pfizer Global Research and Development.

It’s pretty eye opening about the mounting costs of the patent thicket in pharmaceuticals and for the big pharmaceutical manufacturers. The text can be downloaded here (pdf) and is on pages 119-127. (Larson is also the source for the lists above - ppt). Because it’s a transcript there is some jargon and some possibly incorrect transcription, but the content is pretty revealing. Some extracts below the fold.

(Continued)

I was going on about the renewed importance of public goods to the Review Panel on the Innovation System and so they asked me and another economists on the panel to do a bit of a write up for them. For various logistical reasons, the ultimate document was run up by me the night before the next meeting. I’ve reproduced it below the fold with a few nips and tucks mainly to remove typos etc. It’s not rocket science, and readers of my stuff on this blog won’t find anything much that’s terribly new, but nevertheless, for the record, it’s below.

The following notes have been made rather hurriedly to flesh out some comments made in the last meeting. They are intended as an introduction to discussion, rather than as anything definitive.

What is a public good?

The technical definition of a public good is something that is ‘non-rival’ in production and ‘non-excludable’ in consumption.

Non-rivalry in production means that supply to one enables supply to all. Examples include clean air, defence of the realm and a TV broadcast. The first of these two things are non-excludable also – meaning that if you provide them for one, you can’t prevent others accessing them and this makes them pure public goods. TV broadcasts are different because you can encrypt them and then get people to pay for the decryption.

The general theory of public goods says that they are under-produced unless provided collectively. That’s because non-excludability prevents the producer from capturing the full benefits of what they produce. This is true of defence – which is often regarded as the classic public good. But there is actually a class of public goods that are generally provided privately, though they might be better referred to as social assets rather than public goods.

This is the web of social understandings comprising social mores and most particularly language. Language is a public good, but it is not produced by governments or by collectives acting as collectives. It is produced by individuals who are already part of a community (the community that speaks the language).

Economists have typically concerned themselves much less with the former kind of public good than the latter, (the exceptions include Adam Smith who wrote a treatise on the formation of language and a bestseller on culture, socialisation and social mores – The Theory of Moral Sentiments – which incidentally sold much better than the Wealth of Nations during Smith’s lifetime. And Friedrich Hayek who was also concerned with the way in which such public goods emerged spontaneously from the private actions of many people seeking mainly to advantage themselves.) (Continued)