Category: Economics, Business, & Work

The Secret to a Great Economy – Bloomberg View

Productivity: It’s the difference between wealth and survival.

The problem is, productivity growth is slowing. … A new report by the Organization for Economic Co-operation and Development, however, paints a more nuanced picture. … looked at productivity not at the global or national level, but at the corporate level. Different companies have different technologies, different management systems and different levels of talent. … At a small number of companies, productivity growth hasn’t slowed at all.

Much of Romer’s research is about “excludability,” or the degree to which companies can stop other companies from learning their secrets. Excludability means that new technologies don’t necessarily flow from one company to another. Romer has shown that excludability is, at least in theory, very important to economic growth.
…
[a] possibility — one not suggested by the OECD report — is that intellectual property law is making it harder for companies to use ideas developed at other companies.

Source: The Secret to a Great Economy – Bloomberg View

 

Are bad patent and copyright laws harming productivity and economic growth?

 

I am not sure what data I would use to support my position, but I think the logic is fairly sound: Yes. Bad patent and copyright laws, written for different mediums and a different time, are harming modern productivity growth.

More and more of the world runs on computer code and algorithms. This is born out in “Programmer” job figures, tech company valuation/market capitalizations, and our daily lives (How many things did you touch today that have code inside them as compared to 10 years ago?). Unlike novels, there *is* a single best way to write a lot of code. Prohibiting people from reusing the best code, and protecting/hoarding the best algorithms with patents or as trade secrets, prevents everyone else from benefiting from that code. That is exactly what patent and copyright systems are set up to do in order to encourage investment in creating these things, but I think it is more than fair to demand an accounting of what investment would not have occurred without patent and copyright protections.

  • If some code was going to be written a month later by someone else, should the first party to file claim really get a 20-year patent and 70-year copyright on it?
  • If any expert could have written a particular code solution within a year, had they been presented the problem, then do they deserve such long-lived special legal monopoly (consider that code is obsolete and replaced on average within 18 months)?

I don’t think we aren’t protecting anything new and original which wouldn’t have been created by someone else (and gets created by someone else anyway!) within a few months. We’re instead letting people patent “Doing X *on a computer*!” and letting people claim math a trade secret.

Perhaps one way to get some data would be to examine what kind of companies are in the article’s “Frontier Firms” category, and investigating the source(s) of their income as compared to industry competitors.

  • How many patents do they have and how many bring in licensing revenue?
  • What is the education breakdown of their employees? (not everyone can hire exclusively ivy league post-doc programmers)
  • How much do their intangibles (e.g. trade secrets, brand, network effects) affect revenue?
  • How do their costs, revenue, and profit margins compare to those of other companies? What about at the product level instead of the corporate level (i.e. are certain products or services performing uncharacteristically, possibly indicating the earning of economic rents)?
  • How many competitors, and how close, do they have? (possibly indicating that having no competitors is what makes them more productive)

Ad tech is killing the online experience | Felix Salmon | Media | The Guardian

Advertising is making the mobile web almost unusable by clogging up our bandwidth … This is the tragedy of the commons. It’s your bandwidth, and you’re paying for it, but everybody else is clogging it up with stuff you never asked for or wanted.

it’s a function of misaligned incentives.

When it comes to the economics of online publishing, the first thing to remember is that job No 1 isn’t to get the news to you. Rather, it is to monetise you, by selling you off, in real time, to the highest bidder. This happens every time you click on a link, before the page has even started to load on your phone. Once upon a time, if you and I both visited the same web page at the same time using the same web browser, we would end up seeing the same thing. Today, however, an almost unthinkably enormous ecosystem of scripts and cookies and auctions and often astonishingly personal information is used to show you a set of brand messages and sales pitches which are tailored almost uniquely to you.

That ecosystem raises important questions about privacy and just general creepiness – the way that the minute you look at a pair of shoes online, for instance, they then start following you around every other website you visit for weeks. But whether or not you value your privacy, you are damaged, daily, by the sheer weight of all that technology.

Source: Ad tech is killing the online experience | Felix Salmon | Media | The Guardian

 

the price of efficiency for advertisers is the user experience of the reader. The problem for publishers, though, is that dollars and cents — which come from advertisers — are a far more scarce resource than are page views, leaving publishers with a binary choice: provide a great user experience and go out of business, or muddle along with all of the baggage that relying on advertising networks entails.

More: Why Web Pages Suck – Stratechery by Ben Thompson

This is what oligopoly collusion looks like

JPG made out of the GIF by Quartz, taken from their article What will happen if the US government kills the Comcast-Time Warner Cable merger?.

This is what oligopoly collusion looks like. The two largest corporations in the same industry providing the same product/service just “coincidentally” don’t compete with each other. They also coincidentally come up together in consumer satisfaction surveys — DEAD LAST.

Comcast and Time Warner Cable aren’t just the lowest ranked among pay-TV providers and Internet service providers, but that they account for the four lowest-scoring spots on the entire year’s survey.

Source: Comcast, Time Warner Cable Still Bringing Up Rear In Customer Satisfaction Surveys

Why a Harvard Professor Has Mixed Feelings When Students Take Jobs in Finance – The New York Times

Every profession produces both private returns — the fruits of labor that a person enjoys — and social returns — those that society enjoys.

People in some professions provide a surplus of social returns.

But not everyone contributes in this way. In an influential paper, the economists Kevin M. Murphy and Robert W. Vishny, both at the University of Chicago Booth School of Business, and Andrei Shleifer at Harvard University argue that countries suffer when talented people become what we economists call “rent seekers.” Instead of creating wealth, rent seekers simply transfer it — from others to themselves.

Source: Why a Harvard Professor Has Mixed Feelings When Students Take Jobs in Finance – The New York Times