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Archive for April, 2011

Esty and Porter’s Call for a Carbon Tax Misses Badly

In yesterday’s New York Times, Connecticut Department of Environmental Protection chief Daniel Esty and Harvard Business School professor Michael Porter issued a call for an “emissions charge” (i.e. a carbon tax) to address the nation’s oil dependence and climate risks, joining a long line of others who continue to do the same. Specifically:

The best way to drive energy innovation would be an emissions charge of $5 per ton of greenhouse gases beginning in 2012, rising to $100 per ton by 2032. The low initial charge, starting next year, would make the short-term burden on consumers and businesses almost negligible…. Our proposal would apply to all greenhouse gas emissions, so that everybody, and every fossil-fuel-dependent form of energy, would be included…Yes, these costs would be passed on to consumers, but this is what motivates changes in behavior and technological investments.

It’s the neoclassical view that’s reverberated throughout the debate for years: get the prices right, get government out of the way, and let the market do its thing. Andrew Revkin has a point when he refers to the piece’s “retro feel.”

Of course, being retro is the least of … Read the rest

Will Yesterday’s Announcement Satisfy the Radical Fringe?

The announcement yesterday morning may have been unexpected, but the revelations were not surprising. Yet today we find ourselves asking, how did we get to this point? Rumors, conspiracy theories, and unsubstantiated claims do not belong in the media, yet for the last week these had reached a new high as allegations, new and old, were endlessly repeated. Virtually every mainstream media outlet covered this story extensively, giving airtime, bandwidth and column space to unsupported claims and helping fan the flames of fear across our nation. The focus had become so intense that other more important issues had been almost ignored. Clearly a few individuals were at the heart of the story and succeeded in turning a few claims into a national debate. Others jumped in with new accusations (again lacking evidence), perhaps as a way to boost their profiles and reputations. Even influential politicians, either led by ignorance or a desire to pander to the radical fringe, jumped on the bandwagon and helped to insinuate that something nefarious might be afoot. And let’s face it—many Americans thought this was true. I’ll even admit that at times I had my
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An Anti-Innovation Strategy: The Heritage Foundations Deficit Reduction and Energy Proposal

The full fact sheet and the information contained in this post was produced by ITIF along with the Americans for Energy Leadership and the Breakthrough Institute. The full report titled Counterpoint: The Heritage Foundation Backgrounder can be found and downloaded here.

Last week the Heritage Foundation released a policy “backgrounder” report calling for a near-dismantling of the Department of Energy’s research budget, including key energy innovation programs that are investing in scientific breakthroughs needed to make clean energy technologies more reliable and affordable. The report suggests that innovation spending increases at DOE are dangerous contributors to the national deficit and inferior financing mechanisms to private sector investment in energy technologies.

Some of the proposals “highlights” include: (1) fully eliminating the Office of Energy Efficiency and Renewable Energy, slashing the $3.2 billion budget, and eliminating proposed advanced nuclear energy technology programs from the Office of Nuclear Energy; (2) eliminating the Innovative Technology Loan Guarantee Program; (3) cutting $1.59 billion from the Office of Science, including the elimination of two of the four Energy Innovation Hubs, elimination of the 46 Energy Frontier Research Centers (EFRCs), elimination of the Workforce Development

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Takeaways from Apple’s Location Data Privacy Incident

Last week two O’Reilly analysts posted a video explaining that Apple’s iOS 4, the operating system used on the iPhone and iPad, contained code that automatically logged a variety of time-stamped data that could be used to pinpoint where a device had been.This would allow someone with access to this data to construct a detailed picture of the device’s location history. Notably, the phone did not log GPS location data, but instead recorded location-related data based on cell towers and wifi networks. Neither has there been any evidence presented to date that this data was transferred to a third-party, such as Apple, a mobile application developer, or an advertiser. Apple has yet to respond to requests for comment from major news outlets or to provide more information about this specific issue; however, Apple has already provided a detailed memo outlining how it uses location-based data. Apple has not yet confirmed whether this memo still accurately reflects their data collection and use policies.

Even though there is no evidence of actual wrongdoing or harm, policymakers have already jumped into the fray. Rep. Edward Markey has called for a Congressional investigation into

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Why use a top-down approach when a bottom-up one will do?

When I worked at the PricewaterhouseCoopers Global Technology Centre during the height of the Internet Bubble, we were regularly visited by what we called the “Invest in <Mumble>” delegations.  These were investment authority groups from cities, states, regions, provinces, and even the occasional Principality.  Their mission: to find out what orders to issue to get a Silicon Valley in their catchment area.

I recall one group who came from an EMEA city and were wondering how to approach the problem of siting a huge multimedia facility that they were planning.  They had a list with what my then-young kids would have called a “bazillion” criteria.  It was a super-sized list, a real top-down approach.

We asked them if there were existing multimedia firms in or around the city.  They said “yes”.  We asked them if they knew which pub or pubs were the watering holes for the troops from the existing firms.  They said “yes.”

Why didn’t they site the new multimedia center near those pubs, we asked?  Amazement.  Deep respect for the geniuses from the Tech Centre.  But what had we done except port the old story about the

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Technology Economics: A Market Index (Experimental, of course) of Technology Leaders – the “Rubin 300″

Traditional indices such as the Dow Jones Industrial Average (DJIA) or the Fortune 500 focus on top performers without any considerations other than their market capitalization, share price, revenue, or other 20th-century measures of business performance.

But in a “Technology Economy” technology is a strategic lever, a tool to drive new business growth, protect revenue, reduce business costs, and manage risk. So let’s do an experiment and look at a “new age” Dow Jones Industrial Average – a market index of firms that have been identified as technology leaders. Let’s call it the Technology Leaders Index (TLI). And by building and observing the behavior of the TLI we can test the hypothesis that has gone unspoken and unexplored — Information Technology is a strategic investment and firms that make the best use of it should demonstrate superior market performance.

It is definitely an interesting time to do such an experiment. Between 2008 and 2009, IT investment suffered a global slowdown. The recession led many CEOs to believe IT was one of the main cost pools that could safely be reduced without impacting a firm’s overall performance. As a result, IT

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Hospital Billing: Out of the Middle Ages

No one who reads this blog needs to be reminded that the healthcare business cries out for innovation.  Hopefully the chaotic and strident forces pulling at the industry now will — in the magic Adam Smithian manner — somehow produce net positive forward change.  But not all the change is technological.

I recently went through elective surgery and was blown away by the — I can’t think of any other word for it — Medieval-ness — of the billing process.  I got one bill from the hospital for essentially my stay, one bill for each department in the hospital that had done a procedure, one bill from each of the professionals (above a certain level) who had done the procedures.  Each bill came with no indication that it was a part of the one procedure, the one hospitalization.  They came at different times.  And they dribbled in over the course of maybe 12 weeks (unless there are some I haven’t seen yet; of course there’s no “summary” or notion of an overall master account).

What other industry on Earth works this way?  Try to imagine buying a car like this:

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ARPA-E’s (Semi) New Lease on Life


It wasn’t that long ago that the federal Advanced Research Projects Agency-Energy (ARPA-E) was on the verge of fiscal death. The agency was created in 2007 but didn’t receive a budget until 2009 with $400 million from the Recovery Act. By the beginning of this year, the FY2011 budget battle dragged along and the original funding was running thin. Various proposals were issued first to slash the agency’s budget by $250 million, and then to de-fund the innovative agency entirely.

But those bullets were dodged, and last week’s budget deal provided the agency with $180 million for the rest of FY2011—a reduced amount, to be sure, but better than the alternatives. Yesterday, during a call to announce how ARPA-E would leverage the new funding, Secretary Chu called the agreement a “big victory,” and described the stakes for more severe cuts in blunt terms:

Any new projects would have to have been put on ice. The program would not have been funded.”

Per yesterday’s announcement, $130 million of the new funding will be used for five new game-changing technology programs, all of which demonstrate the agency’s

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Calls to Boost U.S. Manufacturing Do Not Ignore the Gains Still to Be Made from Services

<Update (April 24, 2011): The Manufacturing Extension Partnership’s Manufacturing Innovation Blog picked up and elaborated on this post’s theme in a blog post called “Manufacturing and Services: Together Forever.” The article cites recent data from studies on the express delivery industry and a report by Andy Neely, The Servization of Manufacturing, to reieterate the message of the inseparability of manufacturing and service industries, and the need for thoughtful strategies to bolster the success of both.>

An article in the April 2, 2011 issue of The Economist, “Cash Machines,” argues that “calls to boost manufacturing ignore the gains still to be made from services.” The article trumpets the views of those like Columbia University Professor Jagdish Bhagwati, who reckons that “those who argue in favor of boosting rich-world manufacturing suffer from a ‘manufacturing fetish’.” In terms of boosting job creation and economic growth, The Economist suggests that, “Increasing demand for non-tradable services should do just as well,” (e.g. “as boosting manufacturing”…so that we don’t need to worry about policies to support U.S. manufacturing).

But The Economist perpetuates a false choice. The United States needs both

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Virtual Currencies and the Laws of Economics

Read an article in the Communications of the ACM about “Social Games, Virtual Goods”.  I think unfortunately you have to pay to read that article unless you’re an ACM member, but the good news is it doesn’t say anything earthshattering except that online virtual currencies are not that different from “brick and mortar” ones.

I remember my first serious contact with virtual currencies.  My son was addicted to Worlds of Warcraft (WOW) years ago, a shoot-em-up game where your shooting is every so much more effective if you buy special weapons, charms, and poweres.  How do you buy them?  “Gold” is the virtual currency of WOW, and you earn gold by killing monsters.  In other words, you have to spend time in the WOW virtual world, and time costs you (non-virtual) money.

All straightforward: it’s like paying to go to a movie, except that the movie is immersive and you want to stay in it, for more and more $$.

Then I found out from my son — there was also an article in the New York Times about it around that time — that there were companies in

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