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Archive for December, 2010

U.S. Led Nations in Manufacturing Productivity Gains in 2009

The Bureau of Labor Statistics has released data comparing 19 nations in percent change in manufacturing productivity, output, and hours between 2008-2009. International manufacturing productivity, 2009″ indicates that U.S. manufacturing output per hour grew 7.7 percent, more than any other nation. Japan (-11.4 percent) and Germany (-9.3 percent) took up the rear.

The U.S. ranked 6th in change in output (-5.9 percent) and 18th in change in hours (-12.6 percent), the relatively large drop in hours reflecting the high productivity gains.

To what extent are U.S. productivity gains the result of capital improvements? (Annual expenditures on machinery and equipment dropped 22.8 percent.) Increased physical demands on individual workers? (The number of production/nonsupervisory workers per manufacturing establishment fell by an estimated 12.2 percent.) What are the implications for competitiveness? Comments welcome.


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Has the FCC Created a Stone Too Heavy for It to Lift?

After five years of bickering, the FCC passed an Open Internet Report & Order on a partisan 3-2 vote this week. The order is meant to guarantee that the Internet of the future will be just as free and open as the Internet of the past. Its success depends on how fast the Commission can transform itself from an old school telecom regulator wired to resist change into an innovation stimulator embracing opportunity. One thing we can be sure about is that the order hasn’t tamped down the hyperbole that’s fueled the fight to control the Internet’s constituent parts for all these years.

Advocates of net neutrality professed deep disappointment that the FCC’s rules weren’t more proscriptive and severe. Free Press called the order “fake net neutrality,” Public Knowledge said it “fell far short,” Media Access Project called it “inadequate and riddled with loopholes,” and New America Foundation accused the FCC of “caving to telecom lobbyists.”  These were their official statements to the press; their Tweets were even harsher.

Free marketers were almost as angry: Cato denounced the order as “speech

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A Baby/Bathwater Kind of Thing

The Washington Post’s lead gadget writer, Rob Pegoraro, graced us with the benefit of his expertise yesterday in a column on the FCC’s Open Internet order (FCC votes for a half-measure on net neutrality;) In short, he’s not happy.  His FCC post is actually more closely related to the frustrations expressed in a preceding post reviewing the video calling services provided by a game controller, the Xbox Video Kinect, than he apparently realizes.

Pegoraro fails to find satisfaction with video calls over the Kinect:

The major disappointment here was the horrendous quality of the video, considering that I had about 5 million bits per second of upstream bandwidth at each end of the test. The footage looked unmistakably pixelated. 

He notes that fellow gamers experience video problems as well. He might try video Skype as an alternative, but alas, that allegedly peer-to-peer service is down today due to a system-wide software problem with the “super-nodes” that run its directory service. When Skype’s on vacation and Kinect’s too pixelated to be of any use, the would-be video caller might fall back on the Cisco Umi system built on

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The Federal Role in Encouraging Innovation: The “I’s” Have It

Last week, in a well-reportedaddress,NewYorkMayorMichaelBloombergmadean impassioned argument that stimulating innovation is an essential federal economic role around which Democrats and Republicans can and should find common ground. Bloomberg called innovation “capitalism’s most powerful force” and said “Unless we innovate, we cannot hope to succeed. And if we do innovate, there is no way we can fail.”

The mayor then laid out six steps towards creating an innovation-based economy: instill confidence, promote trade, reform regulations, cut business taxes, invest in job training, and fix immigration.

I’m one with the mayor regarding the importance of innovation and the need and opportunity for bipartisan fashioning of a federal role to encourage it. While I agree in general with his six bullet points, I think the “how” of a federal effort requires several more elements. Moreover, it’s important to understand how the various elements connect with one another.

Riffing off of the key term “innovation,” each of the elements begins with the letter “I,” so I’ll call the framework the “I formation.” Here’s the framework, the explanation follows.


Institutions    Individuals

Investment    Information    Incentives

International Markets   Immigration

Intelligent Government

Let’s take them row by

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Thoughts on the Commerce Report on Privacy

Following on the heels of the FTC’s report on privacy, the Department of Commerce released its much anticipated green paper on online data privacy on Thursday in a report titled Commercial Data Privacy and Innovation in the Internet Economy: A Dynamic Policy Framework. Below is a summary of the major recommendations in the report, as well as an overview of some big picture takeaways.

The framework consists of five principal recommendations:

  1. Create a comprehensive set of Fair Information Practice Principles (FIPPs) to protect personal data in a commercial context, specifically focusing on principles for transparency, purpose specification and use limitation, and evaluation and accountability.
  2. Encourage the development of a voluntary, enforceable industry code of conduct to supplement FIPPs and address privacy concerns of emerging technologies.
  3. Create a new Privacy Policy Office (PPO) within the Department of Commerce to focus on data privacy. The PPO would act as a convener to develop a multi-stakeholder solutions, best practices and codes of conduct. The PPO would have no enforcement capabilities; the FTC would continue as the primary enforcement agency for privacy.
  4. Work to increase compatibility between the U.S. privacy framework and
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House to Vote on America COMPETES Act After Senate Passes Version on Friday

Late last Friday December 17, the Senate passed an amended version of the America COMPETES Act to reauthorize spending for a number of science, education, and technology programs and agencies. The Senate “hotlined” the bill, enabling it to pass unanimously without a recorded vote. The final Senate-passed version of the America COMPETES bill is available here.

The House is set to take up the Senate’s version of America COMPETES in session Tuesday, December 21 in one of the final acts of the 111th Congress. The legislation includes a number of highly innovative provisions, including those supported by ITIF and others, including ones that would create a National Innovation and Competitiveness Strategy for the United States, facilitate academic technology transfer and commercialization of university research, fund advanced manufacturing research and development, provide federal loan guarantees for innovative technologies in manufacturing, and provide NSF grants in support of post-doctoral fellowship programs in STEM fields. Moreover, the legislation keeps funding for key research agencies on a doubling path.

We urge the U.S. House of Representatives tomorrow morning to pass this vital, bipartisan legislation to invest in American innovation through science and

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Energy Innovation 2010: Moving the Conversation Forward

For 35 years, government and the market have been trying and failing to get energy policy right. Congress has failed to pass large-scale clean energy and climate legislation, while China and other competitors are moving aggressively to take the lead in new energy technology.  And the market has failed to create needed low-carbon technology on its own. To address these issues, we need to get past the old energy policy paradigm – and we just may be turning the corner.

At yesterday’s Energy Innovation 2010 Conference, hundreds of leading thinkers, scientists, public officials, and innovators gathered in Washington, DC to initiate a new conversation on a new policy paradigm: one that recognizes the central role of innovation in resolving the world’s looming energy challenges and boosting American competitiveness. Climate change aside, we can’t rely on carbon for the next 150 years the way we did for the last 150. And we can’t create the transformational energy innovations we need without putting innovation front and center.

Spearheaded by ITIF, the Breakthrough Institute, and a long list of partner organizations (full list of partners and speakers here),

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Court Rules Users Have Expectation of Privacy in the Cloud

On December 14, 2010 the Sixth Circuit Court of Appeals ruled in U.S. v. Warshak that provisions of the Stored Communications Act (a part of the Electronic Communications Privacy Act) allowing law enforcement access to email without a warrant are unconstitutional. As ITIF and others have noted before the Electronic Communications Privacy Act (ECPA), enacted in 1986, has not kept pace with the advancement of technology. ECPA establishes standards for government access to email and other electronic communications in criminal investigations. Of particular concern is the fact that there are different levels of legal protection afforded to the privacy of an individual’s data based on where the data is stored and how long the data has been stored. This means that the privacy of a person’s email may be different if it is stored on his or her PC versus if it is stored with an ISP or a third-party provider in the cloud. These unresolved questions and others about the privacy of data in the cloud present a serious challenge to adoption by some users, especially businesses who wish to assure strong legal protections for their data.

The issue

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The New Energy Conversation

By Rob Atkinson, Ted Nordhaus, and Michael Shellenberger

For forty years, presidents and policymakers have promised and planned for a new energy future just over the horizon. While the rationales have varied – reducing dependence on imported oil, stopping global warming, reducing air pollution, creating clean energy jobs – the song has largely remained the same: America has most, if not all, of the technologies needed today to make a quick and relatively painless transition away from fossil fuels.

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Now Playing: Video Over the Internet

On November 29th, Level 3 Communications lodged a complaint regarding Comcast’s Internet interconnection policy. Level 3 wants exclusive use of 300 Gigabits/second of new capacity within the Comcast network, and objects to paying a fee for this service. The ensuing debate has involved FCC staff and the proposed net neutrality framework currently on the agenda for the Commission’s December meeting. The incident arose because a new Internet application – high-quality streaming of feature-length movies and television programs – is upending long-standing norms of Internet operation and economics by radically increasing the traffic load on ISP networks.

The conflict calls into question the nature of the Internet, the relevance of traditional interconnection practices, and the transition of television viewing from highly specialized facilities to a general purpose network poorly equipped to support it.  Successful resolution of the issues requires careful examination of the factors that determine network costs, changing operational and consumer norms, an innovation-friendly policy perspective, and business models for the Internet Service Provider networks that are becoming more important parts of the Internet as a whole. The Comcast network is presently seven times larger in terms of route-miles than

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