Technology cycles and marginal productivity improvements

A thought prompted by The Breathless Rhetoric (and Prosaic Economics) of Virtual Reality by David Sax.

Sax says, in the context of the current excitement over virtual reality technology,

As Robert J. Gordon, an economist at Northwestern University, pointed out in his recent book “The Rise and Fall of American Growth,” past digital panaceas have not even tended to lead to economic progress, let alone to transformative leaps. Though we may view the ability to summon warm cookies to our doors with the tap of a finger as a great advance, in reality, Gordon cautions, the greatest economic benefits Americans are likely to see from digital technology may already be behind us.

Curious, I called Gordon up, to ask whether he thinks virtual reality will be any different. He was predictably skeptical. “We had a period of about thirty years where we went all the way from offices filled with typewriters and reams of paper and file cabinets to the modern flat-screen, paperless office,” he told me. That transformation spurred productivity, and, in turn, growth, in numerous ways, for instance by freeing workers from some repetitive tasks and jobs. “I don’t see V.R. as [bringing the] same kind of productivity gain as that,” Gordon said.

Why not? Because, he argued, V.R. only has the power to incrementally shift existing practices. Gordon cited the steady introduction of new classroom technology in Northwestern’s lecture halls as an example. It has slightly changed the way he teaches, he said, but not what, how, or how much his students learn. “The reality is that students are learning the same material, and getting the same scores on tests as ever before,” he said. He saw little to suggest that the results would be different if his students were learning from home with V.R. goggles on.

The fleshy truth, it would seem, is that the business world’s great challenges are challenging precisely because they’re complex in ways that individual technological solutions cannot adequately address. V.R. may provide a boost to the entertainment industry, or, as Zuckerberg hopes, to social-media platforms, but translating these gains into widespread progress will be another matter. The problems that businesses and economies face involve a messy nexus of data, culture, circumstances, and human behavior—problems that, for now at least, must still be wrestled with in actual reality.

A couple of related but separate thoughts.

I have long argued that we do not focus enough on productivity as an end goal in itself. We focus on improving education, improving our transportation infrastructure, improving our governance, all with very specific end goals in mind. That is fine as far as it goes. It i, however,s not entirely coincidental that the outcomes are, aside from their particulars, an increase in overall productivity. But few, if any, of these projects/policies are, in their own right, justified solely on their impact on productivity. I think that is a conversation we need to have. It will save us from empty promises and overheated rhetoric (to some degree.)

The second thought is to do with cycle times. Out technology cycle times have shrunk dramatically from 45 years (at the beginning of 1900) to fifteen years and they are on track for even shorter cycle times. I wonder, though, whether this is in part because any individual technology platform is unlikely to lead to the type of aggregate productivity improvement we have seen in the past. In those days, a new technology, such as electrification, came in and spread across all sectors of the economy and private life. It was a pervasive technology that yielded productivity improvements everywhere.

Today, I suspect, our "new" technologies often only touch some segment of the economy. Yes, they increase productivity but only in a narrow sliver. Perhaps we are experiencing shorter cycles because each platform is pertinent to a narrower and narrower range activities and therefore have a declining marginal impact on overall productivity?

Lest we forget—lest we forget!

I become frustrated and jaundiced with the constant ideological focus of authoritarians who seek to deprive others of their liberties, often under the auspices of critical race theory and its ilk. The constant manufacture of fake outrage and race hoaxes is simply a surfeit of cognitive pollution. It is easy to become so jaundiced as to discount all racial injustices, throwing the baby out with the bathwater.

The horrors of slavery past become easy to gloss over owing to the advocacy excesses of today. Those past accounts rendered in words are often simply not read. They are too jarring. Fortunately there are those such as J.M.W. Turner with his Slavers Throwing overboard the Dead and Dying—Typhon coming on, 1840 who can serve to keep the awareness and horror of that past institution alive.

From Wikipedia:

J.M.W. Turner was inspired to paint The Slave Ship in 1840 after reading The History and Abolition of the Slave Trade by Thomas Clarkson. In 1781, the captain of the slave ship Zong had ordered 133 slaves to be thrown overboard so that insurance payments could be collected. This event probably inspired Turner to create his landscape and to choose to coincide its exhibition with a meeting of the British Anti-Slavery Society. Although slavery had been outlawed in the British Empire since 1833, Turner and many other abolitionists believed that slavery should be outlawed around the world. Turner thus exhibited his painting during the anti-slavery conference, intending for Prince Albert, who was speaking at the event, to see it and be moved to increase British anti-slavery efforts. Placed next to the painting were lines from Turner's own untitled poem, written in 1812:

"Aloft all hands, strike the top-masts and belay;
Yon angry setting sun and fierce-edged clouds
Declare the Typhon's coming.
Before it sweeps your decks, throw overboard
The dead and dying – ne'er heed their chains
Hope, Hope, fallacious Hope!
Where is thy market now?"

The refrain from Rudyard Kipling's much later poem, Recessional, from 1897 seems oddly fitting, "Lest we forget"

God of our fathers, known of old,
Lord of our far-flung battle line,
Beneath whose awful hand we hold
Dominion over palm and pine—
Lord God of Hosts, be with us yet,
Lest we forget—lest we forget!

The tumult and the shouting dies;
The Captains and the Kings depart:
Still stands Thine ancient sacrifice,
An humble and a contrite heart.
Lord God of Hosts, be with us yet,
Lest we forget—lest we forget!

Far-called our navies melt away;
On dune and headland sinks the fire:
Lo, all our pomp of yesterday
Is one with Nineveh and Tyre!
Judge of the Nations, spare us yet,
Lest we forget—lest we forget!

If, drunk with sight of power, we loose
Wild tongues that have not Thee in awe,
Such boastings as the Gentiles use,
Or lesser breeds without the Law—
Lord God of Hosts, be with us yet,
Lest we forget—lest we forget!

For heathen heart that puts her trust
In reeking tube and iron shard,
All valiant dust that builds on dust,
And guarding calls not Thee to guard,
For frantic boast and foolish word-
Thy Mercy on Thy People, Lord![

Trojan Horses in Vietnam

Small Wars, Faraway Places by Michael Burleigh is a goldmine of interesting details.

Discussing the First Vietnam War between the French and the Vietnamese in the early 1950s, Burleigh makes a dreadful pun.

Although there were itinerant brothels, staffed by brave and colourfully dressed women from the Algerian Ouled Nail tribe that honoured the activity as a way of earning matrimonial dowries, many French troops acquired a permanent congai or common law wife, a popular practice too among their Vietnamese comrades, who simply moved their real wives into camps de maries. The vulnerability this created was manifest, and a third of the French posts that fell were betrayed from within by Viet Minh Trojan whores.

Newtonian determinism versus statistical probabilities

From Critical Mass by Philip Ball.

The shift from Newtonian determinism to statistical science is what makes a physics of society possible. It was not a smooth ride; but as we shall now see, it may have been bumpier still if scientists and philosophers had not already begun to appreciate that society itself is fundamentally a statistical phenomenon.

Diversity chicken and egg question

Interested to come across by chance two research papers which 1) rebut the common wisdom and 2) comport with commonsense.

The issue is whether diversity on company boards improves company performance or not. The right-thinking argument is that they do. Diversity always includes gender diversity, usually racial diversity, sometimes industry diversity and occasionally geographical diversity. They almost never include class diversity.

The complicating factor is that large companies usually only get focused on board diversity once they have become successful. Diversity almost comes across as a luxury which they can now afford. Once a company has established itself and become part of the regulatory system, there are big dividends to head nod towards the diversity advocates. But that doesn't answer the real, underlying, question. Does board diversity precede company success and can that diversity be credited for better decision-making.

In theory the idea is attractive and plausible. But counterarguments are easy to conjure as well.

When Passionate Advocates Meet Research on Diversity, Does the Honest Broker Stand a Chance? by Alice H. Eagly argues that there is no causative relationship between outcomes and nominal board diversity.

In an ideal world, social science research would provide a strong basis for advocacy and social policy. However, advocates sometimes misunderstand or even ignore scientific research in pursuit of their goals, especially when research pertains to controversial questions of social inequality. To illustrate the chasm that can develop between research findings and advocates’ claims, this article addresses two areas: (a) the effects of the gender diversity of corporate boards of directors on firms’ financial performance and (b) the effects of the gender and racial diversity of workgroups on group performance. Despite advocates’ insistence that women on boards enhance corporate performance and that diversity of task groups enhances their performance, research findings are mixed, and repeated meta-analyses have yielded average correlational findings that are null or extremely small. Therefore, social scientists should (a) conduct research to identify the conditions under which the effects of diversity are positive or negative and (b) foster understanding of the social justice gains that can follow from diversity. Unfortunately, promulgation of false generalizations about empirical findings can impede progress in both of these directions. Rather than ignoring or furthering distortions of scientific knowledge to fit advocacy goals, scientists should serve as honest brokers who communicate consensus scientific findings to advocates and policy makers in an effort to encourage exploration of evidence-based policy options.

OK. One study. But it wasn't the only one that randomly floated across my radar in the past 24 hours.

The second one was Does Gender Diversity Promote Nonconformity? by Makan Amini, et al.

Failure to express minority views may distort the behavior of company boards, committees, juries, and other decision-making bodies. Devising a new experimental procedure to measure such conformity in a judgment task, we compare the degree of conformity in groups with varying gender composition. Overall, our experiments offer little evidence that gender composition affects expression of minority views. A robust finding is that a subject’s lack of ability predicts both a true propensity to accept others’ judgment (informational social influence) and a propensity to agree despite private doubt (normative social influence). Thus, as an antidote to conformity in our experiments, high individual ability seems more effective than group diversity.

Two papers in twentyfour hours rebutting the received wisdom. A swallow does not Spring make nor do two papers answer the underlying question. But they are interesting and I hope that they are a harbinger of informed decision-making over emotional advocacy.

My suspicion is that diversity does matter but in different forms than it currently takes and under particular circumstances.

My guess is that boards with a mix of accomplished executives from different industries (and even countries) along with non-business leaders with demonstrated accomplishments are those best prepared to 1) work together constructively even with differing viewpoints, 2) stand firm on facts, 3) bring a diversity of experience to bear on particular decisions, and 4) challenge CEOs on the most critical decisions.

I think the greatest corporate risk is simply deferral to the CEO. The supineness of boards in the face of strong CEOs is common. Only accomplished peers (in industry or out) who have confidence in their capacities are likely to demonstrate the will to challenge.

Non-business leaders who are currently on boards tend to be advocacy people, academics, community leaders of one sort or another. Fine as far as it goes but they usually do not have the accomplishments and experience to pick their battles and lead challenges when they need to be led.

So, for me, the question is not whether boards need to be diverse. I believe they do. The question is what type of diversity do they need (diversity of accomplishments rather than diversity of gender and race), and to what degree do they need diversity under what circumstances? That is where our research ought to trend. We are at the very beginning and we have a long way to go.

In the most recent recession, it would be interesting to see what correlation there might be between company failure and board diversity. For example, we know two of the car companies failed as did multiple financial institutions. These are exactly the companies whose success a decade earlier led them to pad their boards with diverse talent defined on gender and race. The received wisdom is that those companies should have had better decision-making and therefore failed less frequently than companies with non-diverse boards. I would not be surprised if the data contradicted that assumption.

My suspicion is that the current definition of board diversity is essentially just a form of corporate virtue signalling and therefore is either uncorrelated or negatively correlated with future company success.

Working Together

An old friend JM introduced me to a new poet and one of his poems. I am looking forward to finding more.

Working Together
by David Whyte

We shape our self
to fit this world

and by the world
are shaped again.

The visible
and the invisible

working together
in common cause,

to produce
the miraculous.

I am thinking of the way
the intangible air

passed at speed
round a shaped wing

easily
holds our weight.

So may we, in this life
trust

to those elements
we have yet to see

or imagine,
and look for the true

shape of our own self,
by forming it well

to the great
intangibles about us.

-- from The House of Belonging
©1996 Many Rivers Press

Misery from prejudicial coercive decision making

From Banning credit checks harms African-Americans by Tyler Cowen.

Two separate studies are referenced which illustrate the danger of coercive power used with good intentions but bad consequences. In one, African-Americans are assumed to be disproportionately discriminated against in hiring when their credit history is available. Real world research indicates otherwise.

But a new study from Robert Clifford, an economist at the Boston Fed, and Daniel Shoag, an assistant professor at Harvard’s Kennedy School, finds that when employers are prohibited from looking into people’s financial history, something perverse happens: African-Americans become more likely to be unemployed relative to others.

…What’s surprising is how that redistribution happened. In states that passed credit-check bans, it became easier for people with bad credit histories to compete for employment. But disproportionately, they seem to have elbowed aside black job-seekers.

In the second set of research, there is a similar assumption that allowing employers to administer drug tests will result in disproportionate impact on African-American, leading to a ban on drug testing. Again, real world research indicates the opposite.

A powerful study published last year in the Review of Economics and Statistics shows something of the opposite happening: When employers began to require drug tests for job applicants, they started hiring more African-Americans.
“The likely explanation for these findings is that prior to drug testing, employers overestimated African-Americans’ drug use relative to whites,” the study’s author explained in an op-ed. Drug tests allowed black job applicants to disprove the incorrect perception that they were addicts.
It’s possible that credit checks were playing a similar role to drug tests, offering a counterbalance to inherent biases or assumptions about black job-seekers.

Three conclusions seem equally valid. First, whatever the good intentions might be, no action should be taken without research.

Second, centralized decision-makers should not be regarded as beneficient. They carry negative prejudices against everyone. They carry negative stereotypes of African-Americans and they assume the worst motives of employers. Neither assumption is warranted.

Thirdly, and I think more fundamentally, no action should be taken based on empty assumptions. Always test the evidence first. You can save yourself a lot of misery that way.

What books would you take?

I have read several accounts of Shackleton's 1914 exploratory expedition to the Antarctic, my favorite probably being Endurance by Alfred Lansing.

There are all sorts of archaeology and some of it is a new capacity to reconstruct the recent past. What books were taken to the Antarctic 100 years ago? by Paul Kerley is an example of this phenomenon. There is a photograph of Sir Ernest Shackleton's cabin in the Endurance and on the far wall are shelves of the books he brought with him for the multi-year expedition. The glare and resolution mean that they are simply generic books. However, the Royal Geographic Society recently digitized the expedition's photographs and in that process were able to recapture the necessary resolution and glare control to reveal the books Shackleton brought with him.

A fascinating glimpse into utilitarian and recreational reading on a life-and-death expedition in 1914. In terms of recreation, lots of mysteries and detective stories. There's a copy of Joseph Conrad's first novel.

Interesting insights to a mind of a century ago. Conrad's novel was only a forerunner of his later, more literary work, but it has attracted complimentary attention in recent years as an early instance of a strong female protagonist. There seems to be a proto feminist side to this leader of manly men. In addition to Conrad, there is The Woman's View by Herbert Flowerdew (love the name) which is an advocacy of women's rights. The Morals of Marcus Ordeyne, World's End and Thou Fool are all essentially relationship books. I have linked some of the books to free e-book editions.

Encyclopedia Britannica
Seven short plays by Lady Gregory
Perch of the devil by Getrude Atherton
Pip by Ian Hey
Plays: pleasant and unpleasant, Vol 2 Pleasant by G B Shaw
Almayer's folly by Joseph Conrad
Dr Brewer's readers handbook
The Brassbounder by David Bone
The case of Miss Elliott by Emmuska Orczy
Raffles by EW Hornung
The Grand Babylon Hotel by Arnold Bennett
Pros and cons: a newspaper reader's and debater's guide to the leading controversies of the day by JB Askew
The Brothers Karamazov by Fyodor Dostoyevsky
The Woman's view by Herbert Flowerdew
Thou Fool by JJ Bell
The Message of Fate by Louis Tracy
The Barrier by Rex Beach
Manual of English Grammar and Composition by Nesfield
A book of light verse
Oddsfish by Robert Hugh Benson
Poetical works of Shelley
Monsieur de Rochefort by H De Vere Stacpoole
Voyage of the Vega by Nordenskjold
The threshold of the unknown region by Clements Markham
Cassell's book of quotations by W Gurney Benham
The concise Oxford dictionary
Chambers biographical dictionary
Cassell's new German-English English-German dictionary
Chambers 20th Century dictionary
The northwest passage by Roald Amundsen
The voyage of the Fox in Arctic seas by McClintock
Whitaker's almanac
World's end by Amelie Rives
Potash and perlmutter by Montague Glass
Round the horn before the mast by A Basil Lubbock
The witness for the defence by AEW Mason
Five years of my life by Alfred Dreyfuss
The morals of Marcus Ordeyne by William J Locke
The rescue of Greely by Commander Winfield Scott Schley
United States Grinnell Expedition by Dr Kane
Three years of Arctic service by Greely
Voyage to the Polar Sea by Nares
Journal of HMS Enterprise by Collinson

I preferred characters who carried off their unreality with conviction.

From Slightly Foxed No. 49, Spring 2016. Old Devil in a Dog-Collar by Linda Leatherbarrow, page 87. Reviewing Lorna Sage's Bad Blood . On Lorna Sage, her father and her childhood reading.

He taught her to read before she was 4 and she would take down the books from the shelves in his study and puzzle over the big words while he worked on his sermons. Her name, which he chose for her, came from one of those books - Lorna Doone. Of her early reading she writes: "I didn't want to meet lifelike characters. I preferred characters who carried off their unreality with conviction."

Life is larger than books.

From By the Book by Álvaro Enrigue.

Books can be enormously transformative. A particular book, for a particular child, at a particular time, under very particular circumstances. Otherwise, books are often like the air. We move through it with the most minor of consequence.

Many wish to believe that books are so consistently consequential that they impute enormous concern into the selection of those books, the words that are used, the impressions that might be made, slights and stereotypes communicated, etc. So much worry over nothing. There is no evidence supporting that there is any measurable impact between individual books or even genres of literature and life outcomes. The determining variable is the act of reading, not what is read.

It is also easy to lose sight that even for enthusiastic readers, books are only a small, small proportion of their cumulative daily experience and knowledge. A point made by Enrigue.

If you had to name one book that made you who you are today, what would it be?

Life is larger than books. Any bully has more character-building effects on you than the most moving of books.