Abundance

Abundance by Ezra Klein and Derek Thompson

The United States has adopted a lawyer-centric regulation system that slows progress and makes development slow and expensive. Much of the problem comes originally from the left. Activists successfully argued that laws originally written to apply to the government would apply to private parties also (as they were enabled by the government.) Environmental studies and the like become a way to quash development, while also taking time and money. Further "good intentions" also drive up costs. Government funds typically come with many compliance requirements that all cost money. These may include building standards, the type of people that can be hired, local outreach and impact and much more.

California high speed rail is case in point. Billions have been spent and there is still no rail line. China could easily build 400 miles of high speed rail for the cost that California has spent to build nothing. California started planning for high speed rail before China did. Today China has 30,000 miles. California has none.

This book is written by liberals and aimed at liberals. The right is occasionally mentioned when they intentionally dismantle programs (such as when Reagan ended solar subsidies.) The right has also learned the bureaucratic was of the left. Rather than fight all plans, they just require more studies.

There are examples when things have got done quickly. Operation Warp Speed delivered COVID vaccines much quicker than usual. However, a lot of groundwork had been made. The concept of an mRNA vaccine had been proposed decades earlier, but rejected (for being "different" and "not as good"). However, some companies were still running with it and ready to leap. The government helped provide funding and regulatory guarantees and then got out of the way. The vaccines were developed, tested and manufactured quickly and helped save many lives. (This is in contrast to the overly cautious approach to testing in the pandemic which lead to greater viral spread and cost many lives.) Another case mentioned was replacement of a damaged section of I-95. The government got out of the way and was able to build a replacement quickly.

The biggest problem with the narrative is the value judgement of "what is good". The interstate highway system was seen as something very good, yet it destroyed cities and lead to dependence on cars. Many of the future scenarios envision massive public building projects to expand solar, high speed rail and other green technology. Will these pan out? Or will some of the negatives outnumber the positives? Or will it be something that is outdated? There is danger in subsidies targeting the wrong thing or missing the mark. They mention renewables are much cheaper than fossil fuels. Yet use of solar died off when subsidies were dropped. Why was this? If industry relies on subsidies, it is open to changing whims of government. If it is a pure cost benefit, it is much clearer. Blue states tend to pass laws and subsidies for renewables, but red states have become the leaders in bringing on new renewable capacity.

The book also discusses science and innovation. There is a lot of money sloshing around and many publications. However, very little of it is useful. There is a reluctance to fund younger scientists or projects that differ significantly from the status quo. (There are some interesting quotes from James Evans on the sociology of science.) Like in the case of infrastructure projects, there is a desire to ensure that money does not go to waste. However, this is carried to far and ends up creating the waste.

The Myth of the Entrepreneurial State

The Myth of the Entrepreneurial State by Deirdre N. McCloskey and Alberto Mingardi

This book has good ideas, but is not well written. It was written as a refutation of Mazzucato's Entrepreneurial State. It tries too hard to refute points and often comes across as pedant bickering. The style is also very loose and casual. It is a book, but barely.

Despite the poor writing, the argument is sound. The state is just not good at entrepreneurship. It is very bad at picking winners. It is even bad at picking areas to invest. The lack of signals can cause it to spend way too much time investing in the wrong things. It is much more inclined to protect the status quo. After all, the state is beholden to voters who tend to like their current jobs and have difficulty seeing what could happen in the future. Central planning has been a huge failure nearly everywhere it is tried. Touted benefits of government regulation are often "fixes" to excesses that previous regulation encouraged.

The government can take credit for encouraging some innovations. It has played a huge role in the economy and thus some would be hits. However, to achieve these hits, it was required to take money out of the economy. Could there have been even greater innovations elsewhere? The Concorde was the result of huge amounts of government outlays to provide supersonic travel. It does not fly anymore. Was that money well spent? Would it have been better to allocate it elsewhere?

In the end, the state is made up of people. In a democracy, these people are selected by voters. It may be nice to envision a technocratic elite that have thoroughly studied in the area and can provide the guidance of what would be best for the country in the long term future. Alas, what we typically get is politicians with their own beliefs and cronies. Democrats are not too happy with Trump being empowered to redirect science funding. However, in empowering the state, you are beholden to people to act in whatever way they see fit. 

The Pattern Seekers: How Autism Drives Human Invention

"If-and-then" is the key to human innovation and domination. That point is repeated over and over in Pattern Seekers. The second half of the book dives down into the evolutionary history of homo sapiens and analyzes how humans came to dominate.

The first part of the book focussed more on the different types of people and what they excel at. Most people are near the center of the bell curve for systematizing and empathy (with women skewing more empathetic and men more systematizing) However, inventors tend to be very high on the systematizing end. Their brains are often the scientific method in action. Autism is often manifest as high systematizing with low empathy. Studies have shown that children of engineers tend to be overrepresented on the autism spectrum. There was a plan to do a detailed study of MIT graduates to see autism correlation. However, the president of MIT stopped it, for fear that it would cast the university in a bad light. The end of the book includes a short quiz to scale yourself on the two spectrums. (I came up heavily skewed towards systematizing.) 

Our current education system does a great disservice to those on the autism spectrum. The conventional general education system has moved more to the "fuzzy" instruction and away from the more concrete. This often results in very smart students struggling. (Ironically, at the same time, we are super concerned about the lack of people in STEM.)  It would be better for us to focus on the strengths of those strong in the "in-built" scientific method. These people may coast through some classes in school, but struggle greatly with the social interactions. As a society it would benefit everyone to acknowledge the different ways in which people think. Future Edisons may by languishing as we spent effort trying to make them something they are not rather than let them move the human race forward.

How Innovation Works: And Why It Flourishes in Freedom

Innovation happens best when people have the means and the hunger. Government often steps in to remedy the excesses. Alas, these remedies often make it easier for the entrenched behemoths to manage, while making it more difficult for the nimble entrepreneurs to grown. When societies focus more on collective comforts and equity, innovation will often stall. While we like to admire the insightful inventor, inventions are often "destined to happen". It is very common for several people to have the same innovation at the same time. This is often due to the environment that existed at the time. Innovations are usually based on incremental changes rather than drastic switches in direction.

It is very difficult to predict what innovation will take place. The first half of the twentieth century was dominated by innovation in transportation. Trains, cars, rockets and airplanes all helped people to move around the world much faster than they previously had. People projected personal rocket travel and flying cars. However, transportation innovation pretty much reached its peak by the end of the 1960s. (In some ways it has even regressed. Back then astronauts landed on the moon and individuals could travel on the supersonic Concorde.) There have been small incremental improvements (such as more high speed rail). Yet, somebody from 1970 would not notice much significant change in speed of moving around today.

The last 50 years have been dominated by innovation in communications and computation. We may predict further innovation here. But has that peeked? What will be the next wave of innovation? We may guess biotech, but that may or may not be wrong. 

Innovation can often solve problems that were caused by previous innovation. Today the amount of "stuff" produced and energy consumed is edging downward. The amount of work required to produce light from an LED light bulb is orders of magnitude less than that previously required to produce the same light from candles. People have responded by using more light. However, even this has tapered off as so much light has been used. Many other areas use less physical stuff than before.

The author is concerned that we may "mess up" the innovation machine. Trying to "plan" innovation can often backfire. Regulation can also cause problems. Even intellectual property rights can have a negative impact on innovation. There is a balance that needs to be struck in providing for the current society and enabling the innovations for the future.

The Entrepreneurial State: Debunking Public vs. Private Sector Myths

The state should be more involved in the process of innovation. This is the argument in the Entrepreneurial State. The author points to many examples of state-funding basic research that has been appropriated by private companies and made the founders rich. The government typically gets very little from this. Venture Capital firms often rake in money from their investments, but the government often hopes for nothing more than taxes. In these it is often frustrated with companies using various tax havens to avoid taxation. Companies also use things such as stock buybacks to enrich executives and stockholders rather than employees or customers.

Many of these arguments could easily be turned around. Even when company's avoid income tax, the government gets plenty of revenue from the employee's tax - especially the capital gains on stock sales. Most startups give stock liberally to all employees. Increased stock valuations benefit employees (and can be one of the primary source of employee wealth.) Retirement accounts and pension funds are invested primarily in stocks, thus increased stock valuation benefits pretty much everyone.

The question of value creation is more nuanced. The author focuses on Apple. They are, for practical purposes a design company. Apple products rarely have in-house created innovative technology. Instead, Apple typically packs together existing technologies with minor improvements in a unified slick interface that appeals to the public. The author mentioned that the government earned nothing from the Page Rank algorithm that had been partially funded by a government grant. (Stanford, however, did make a nice killing on it.) What is not mentioned is that while the algorithm was extremely popular and served as the base for Google, it was the advertising keywords that turned that into valuable company. 

There is value in having more knowledge that can then serve as a base for further innovation and products. What is the ideal level of government involvement? Too much and there is little incentive to build on. Not enough and there is nothing that can be used to build. One concern is the huge sums made. If companies can turn people to billionaires, does that mean the government is giving away too much? Should the government collect royalties on technology used? Or perhaps just take a stake in companies as part of the funding.

The government causes the biggest issues when it picks winners. Regulation for something that "seems better" is often stifling. People liked Incandescent lights. The government stepped in to force people to switch to compact fluorescent lights. However, there were a multitude of problems (cost, disposal, etc.) with CFLs. A few years later LEDs came out. They had few of the problems of CFLs and economically made sense. Had the government not jumped in, we would probably still switched to LEDs. 

Significant government innovations often end up having a use outside their original purpose. The internet and GPS both were launched with specific national defense missions in mind. Changes and improvements happened over time. Arpanet was never envisioned as a means to allow kindergartners to attend remote classes. Yet, it gradually expanded to the internet and enabled the myriad of applications we have today. 

Today we often try to jump ahead. Putting a lot of government research in technologies such as solar power or electric vehicles has the danger of "picking winners". (Tesla is profitable only via the multitude of credits and carbon offsets.) Special government support can be difficult to remove, even if it is now detrimental. Fossil fuels, highways, suburban-sprawl and long-distance trucking are all encouraged by government policies while at the same time, the government is funding research and implementing policies to discourage them. Rather than pick winners, the government would be better off focussing on basic research and enact more simple policies.

Government has the advantage of being able to look at the long term. However, it is also subject to short term changes of elected officials. It can be challenging to keep a long term focus. Corporate research labs used to have a long term focus. However, many of these labs have gone away. Ironically, monopolistic power and strength helps justify the existence of these labs. In software development, the open source movement has been a boon. Big companies dedicate significant resources to develop software that is freely available and modifiable by everybody. This is a form of research and development that has been growing significantly and has produced significant innovation.

The author argues that government innovation and support are key for growth. I half buy the argument. In the current state, government tends to be overwhelmed with process and politics. Perhaps the simple solution would be to hand out money and ask smart people to "do stuff".