Bigmouth Golden Series

The Economist's new column Schumpeter, looking at the Kraft-Cadbury affair, makes a good reflection about how brands are affected by mergers and acquisitions:

Most Britons would rather eat scorpions than Hershey bars.

On the significance of the events; Capitalism edition

Reflecting on how the world changed since the Berlin Wall’s end, 20 years ago this week, The Economist makes a very good statement:

At present capitalism is too often judged by the excesses of a few bankers. But when historians come to write about the past quarter-century, Lehman Brothers and Sir Fred “the Shred” Goodwin will account for fewer pages than the 500m people dragged out of absolute poverty into something resembling the middle class. Their success is not just a wonderful thing in itself—the greatest leap forward in economic history. It has also helped spur on other chaotic freedoms: look at the way ideas, good, bad and mad, are texted around the world.

“We can’t solve problems by using the same kind of thinking we used when we created them”

Russ Ackoff, pioneer systems engineer and operation research thinker passed out on October 29th. The Economist makes a very nice obtuary:

The meltdown of the financial system during 2007-08 was a classic example of the dangers of putting atomised thinking ahead of systems thinking. The conventional wisdom judged the efficiency of markets by the accuracy of individual prices rather than on their robustness in the event of shocks or their vulnerability when liquidity dries up. The performance of individual financial institutions was judged by their profits, their capital cushions and their risk-management systems, which were supposedly becoming ever more sophisticated but failed to detect the approaching systemic collapse.

Ideas on innovation

At The Enlightened Economist blog, a very good review of Brian Arthur’s book “The Nature of Technology”:

(...) much of Arthur’s demystification of innovation is highly desirable and warranted. Rather than being an isolated moment of intuition, innovation is usually the product of experience, careful articulation of problems and the organised exercise of reasoning imagination in looking for new connections between inherited building blocks of thought and technique.

Indeed it is always important to remember that, despite the magical aura, innovation has an evolutionary nature - even when it is revolutionary.

Innovative funding for innovative ideas

The X PRIZE Foundation announced it will receive up to $5.5 million in funding from the American Recovery and Reinvestment Act, on behalf of the U.S. Department of Energy (DOE) to support its latest effort called Automotive X PRIZE.

With its goal to “bring about radical breakthroughs for the benefit of humanity”, the prize is a nice initiative to put incentives on new entrepreneurs on this technology field – especially considering the low availability of Venture Capital resources during this economic hard times.

It remembers me of an AAAS conference in 2008, where Dr. Stephen A. Merrill, of The National Academies, showed the importance of X Prizes-like funding in promoting innovation.

Stem cell Rocks!

At the New Scientist's blog Short Sharp Science:

the former Black Sabbath guitarist Tony Iommi has damaged his hand so much from his noise-making that he has had to have stem cell therapy to mend it (...)

How magic?

Wired reports - again - about an "impossible" engine technology called Emdrive:

"The Emdrive is an electromagnetic drive that would generate thrust from a closed system — “impossible” say some experts. To critics, it’s flat-out junk science, not even worth thinking about. But its inventor, Roger Shawyer, has doggedly continued his work. (...) While the argument over the drive’s impossibility continues, so does the engineering work. The problem is that nobody wants to talk about it."

Reading this, two of Clarke's technology laws come to mind:
- When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong.
- Any sufficiently advanced technology is indistinguishable from magic.

Here today; revolution tomorrow

A thought-provoking piece at the New Scientist: Seven questions that keep physicists up at night.

This is the kind of stuff that keeps me –as an innovation researcher – up at night: from which of these questions will emerge the next industrial revolution?

Just think about Plank staying up at night, over the black body problem –then you have the digital technology. The 20th Century would have been very different without those Plank’s asleep nights.

So what is next? I am betting on “What is reality really?”

The world is (still) changing fast

R.I.P. GeoCities (1994-2009)
...and almost nobody remember about it. What about Blogger (or Tweeter) by 2014?

How things work?

Might be the pink paper the quintessential element of the economic journalism?

Bigmouth Golden Series - the best sentences in town

Benn Steil @ Financial Times: "when the facts are on our side, we pound the facts; when theory is on our side, we pound theory; and when neither the facts nor theory are on our side, we pound Keynes – and to great effect." (Keynes and the triumph of hope over economics)

More on incentives - patent chapter

A very interesting question at Slashdot: “To what extent do the traditional contours of patent law need to change in response to new technologies with a different set of market realities (biotech drugs are 22 times more expensive on average, and development costs for generics will be substantially higher) and in what direction? Need every new technological category get its own patent rules, and how do those rules get decided?”

If rational agents respond to incentives (see below), does a flat incentive approach works on patents?

On religion and economics

Johan Norberg @ Financial Post: "Capitalism without bankruptcy is like Christianity without hell -- it loses its ability to motivate humans to be prudent or respect their fears". Or as said at Mankiw's favorit textbook: "People Respond to Incentives".