EC101: Links for 26th December, 2019

  1. On some articles about Baumol’s cost disease.
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  2. A topic that is very, very dear to my heart: teaching economics better, and to younger folks.
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  3. A topic on which I changed my mind this year, and therefore this year ought to count as a success. Props to Murali Neelakantan for helping me do so! On patents.
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  4. Two sets of links about this year’s Nobel. One set is rather informative
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  5. While the other is more critical.

EC101: Links for 28th November, 2019

  1. “The zeroth step, of course, is being open to the process of unlearning. We come with our own biases, shaped by our varied experiences and perceptions. But our experience or knowledge is not always indicative of the macroreality. An unrelenting hold on what we have already learnt is the equivalent of the sunk cost fallacy in economics.”
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    Pranay Kotasthane has a new newsletter out, and it is worth subscribing to. Stay humble and curious is the gist of his zeroth lesson, and the other points are equally important. Go read, and in my opinion, subscribe.
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  2. “China is still a one-party state, but it owes much of its current prosperity to an increase in liberty. Since Mao died, his former subjects have won greater freedom to grow the crops they choose, to set up businesses and keep the profits, to own property, and to move around the country. The freedom to move, though far from absolute, has been transformational. Under Mao, peasants were banned from leaving their home area and, if they somehow made it to a city, they were barred from buying food, notes Bradley Gardner in “China’s Great Migration”. Now, there are more rural migrants in China than there are cross-border migrants in the world.”
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    The rest of this article from the Economist is about migration to the cities – and I find myself in complete agreement – many, many more people in India need to live in her cities. But also see this!
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  3. “Mazzucato traced the provenance of every technology that made the iPhone. The HTTP protocol, of course, had been developed by British scientist Tim Berners-Lee and implemented on the computers at CERN, in Geneva. The internet began as a network of computers called Arpanet, funded by the US Department of Defense (DoD) in the 60s to solve the problem of satellite communication. The DoD was also behind the development of GPS during the 70s, initially to determine the location of military equipment. The hard disk drive, microprocessors, memory chips and LCD display had also been funded by the DoD. Siri was the outcome of a Stanford Research Institute project to develop a virtual assistant for military staff, commissioned by the Defense Advanced Research Projects Agency (DARPA). The touchscreen was the result of graduate research at the University of Delaware, funded by the National Science Foundation and the CIA.”
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    Mariana Mazzucato, about whom more people should know, on the role of the government in today’s economy.
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  4. “Back in the early 1970s, Xerox had figured out a strategy to block competitors in the photocopying business. It took out lots of patents, more than 1,000 of them, on every aspect of the photocopy machine. As old patents expired, new ones kicked in at a rate of several hundred new patents each year. Some of the patents were actually used by Xerox in producing the photocopy machine; some were not. There was no serious complaint about the validity of any individual patent. But taken as a whole, Xerox seemed to be using the patent system to lock up its monopoly position in perpetuity. Under antitrust pressure from the Federal Trade Commission, Xerox in 1975 signed a consent decree which, along with a number of other steps, required licensing its 1,700 photocopier patents to other firms.”
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    Timothy Taylor adds grist to the anti-patent mill.
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    “Thinking about how to facilitate a faster and broader dispersion of knowledge and productivity gains seems like a potentially important part of explaining the current economic picture and suggesting a policy agenda.”
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    That’s the concluding part of the blog post. Just sayin’!
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  5. Every time I begin to think I kind of understand macroeconomics

Etc: Links for 20th September, 2019

  1. Nepali chai.
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  2. Who owns the smiley face?
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  3. “The feeling that overwork can induce is much more than tiredness; it induces an anxiety that places the sufferer in a rather hellish place between shutting down and waking up. Full wakefulness isn’t possible because the nervous system and body are so overburdened. But neither is a state of rest because there is a feeling that the sufferer’s always behind herself. Always chasing the next task. Always feeling that they haven’t done enough, which in turn induces the tendency to cynicism and indifference often associated with the condition.”
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    On burnout.
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  4. Inside Samsung’s secretive lab.
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  5. Japanese folks aren’t too excited (yet) about the Olympics.

EC101: Links for 12th September, 2019

Following on from my review of “Launching The Innovation Resistance”, here is a selection of five papers from its bibliography that I enjoyed going over.

  1. “Using a sample of engineered mice that are linked to specific scientific papers (some affected by the NIH agreements and some not), we implement a differences-in-differences estimator to evaluate how the level and type of follow-on research using these mice changes after the NIH-induced increase in openness. We find a significant increase in the level of follow-on research. Moreover, this increase is driven by a substantial increase in the rate of exploration of more diverse research paths. Overall, our findings highlight a neglected cost of IP: reductions in the diversity of experimentation that follows from a single idea.”
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    The title of the paper is much more entertaining: Of Mice and Academics(!)
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  2. Understanding patent thickets (Note: this is a JSTOR link, you may not be able to download the paper. If so, my apologies!)
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  3. The patent paradox revisited (Again, a JSTOR link)
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  4. On roses and patents (I really enjoyed reading about this in the book, and therefore this paper as well)
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  5. On the history of patent law.

Notes from Launching the Innovation Resistance by Alex Tabarrok

After Murali’s talk in Gokhale Institute the previous week, I got around to reading this book. What follows are some of the highlights from my reading of the book on Kindle, along with a quick review of the book.

Key takeaways (for me):

  1. Alex Tabarrok ends his own post on the book over on MR by saying “although we share a few common themes that perhaps due to differences in personality Tyler focuses on describing problems while I am more excited to promote solutions!”
    That comes through in both the title of the book as well as what I think is they key question for Tabarrok: “What combination of incentives and foundation will bring the greatest innovation to the modern world? How can we create a 21st-century Renaissance?”
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  2. “But there is also a more fundamental critique: After hundreds of years of experience, there is surprisingly little evidence that patents actually do promote the progress of science and the useful arts.”
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    This has been an eye-opener for me: both from Murali’s talk as well as this book. There just isn’t that much evidence that patents have worked.
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  3. “Firms innovate because they know that if they don’t, someone else will. In this kind of industry, instead of stimulating innovation strong patents may create a “resting on laurels” effect. A firm with strong patents may reduce innovation, secure in the knowledge that patents protect it.”
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    And it may actually be even worse! Patents may actually discourage innovation, let alone protect it.
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  4. “Overall, however, the ODA did create real innovation, and as the number of new drugs for rare diseases increased, the mortality rate for people with rare diseases fell.”
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    The Orphan Drug Act seems to have been one of the few things that can be used as an argument in favor of patenting.
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  5. “When asked to rate various sources of competitive advantage only 4 percent of corporate managers regarded patents as highly effective. Much more effective was getting a head start, learning by doing, and investing in complementary sales and service.”
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    “The aircraft patent-war slowed innovation in the American aircraft industry so much that just prior to World War I the government forced the industry to share its patents for reasons of national security.”
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    …were real eye-openers for me
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  6. So what might be the solution, if not patents?
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    “The major vice of a prize fund is that it replaces a decentralized process for rewarding innovation with a political process.” In this regard, you might want to read this book, by Peter Diamandis
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  7. “I see two views of humanity. In the first view, people are stomachs. More people mean more eaters and less for everyone else. In the second view, people are brains. More brains mean more ideas and more for everyone else.”
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    And patents, of course, are a way to restrict ideas.
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  8. “From Florence in the 14th century to Great Britain in the 19th and the United States in the 20th, the leading economic power has always been a leading educational power.”
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    Alex Tabarrok goes on to speak about the usual econometrician’s worries about a statement like that, but all that notwithstanding, this is exactly why India’s education standards (outcomes?) need to be way higher.

 

Overall, definitely recommended.

EC101: Links for 5th September, 2019

All five links from Marginal Revolution today, in relation to a talk that was held at the Gokhale Institute yesterday, by Murali Neelakantan. This is a topic that I am becoming more interested in, so you might see more posts about this topic.

  1. “It is less commonly recognized by the critics, however, that tougher IP protection may induce more foreign direct investment. Why for instance invest in a country which might subject your patents and copyrights to an undesired form of compulsory licensing?”
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    A typically Cowenian (and by that I mean contrarian) statement, and therefore also likely to be at least somewhat true. MR on Why TPP in IP law is better than you think.
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  2. “It’s hard to believe that the extension of copyright for decades after an author’s death can appreciably increase artistic creation and innovation, thus the public has gained little from copyright extension. What has been lost?”
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    Alex Tabarrok on the tragedy of the anti-commons.
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  3. “Patents are supposed to increase the progress of the useful arts.”
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    Are patents out of control?
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  4. “Walt Disney was long-dead when his copyright to Mickey Mouse was extended. Rumors to the contrary, Walt ain’t coming back no matter how much we incentivize him with a longer copyright.”
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    Alex Tabarrok is rather exasperated with copyright protectionism.
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  5. “How can we increase innovation? I look at patents, prizes, education, immigration, regulation, trade and other levers of innovation policy.”
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    Alex Tabarrok’s blog post on his book, “Launching the Innovation Resistance”

Links for 28th May, 2019

  1. “On March 18, 2013, at the Motera B ground, a scraggy-haired stick figure bowls his last two overs, landing (or trying to land) yorker after yorker. Looking on is former India coach John Wright, then head coach of Mumbai Indians. The batsmen are Mumbai openers Aditya Tare and Shoaib Shaikh. The No. 3, Abhishek Nayar, remembers: “Two pure batsmen at the crease, two overs of unbelievable yorkers. We couldn’t get him off the square.” Tare returns to the dressing room and says that the strange bowler was “a lot sharper than you thought”. One ball hits a batsman’s footmark, shoots up over wicketkeeper-captain Parthiv Patel’s head and zips over the boundary line. In the gallery, Wright sits up. Woah. The lad has wheels. “With some players you see something different and you go… there’s something there. It was the same that day. Real wheels.” He watches two overs, talks to Parthiv, makes a phone call to HQ, and Bumrah is invited to sign up for the IPL’s richest franchise.”
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    Sharda Ugra in The Cricket Monthly on Jasprit Bumrah – but as Niranjan Rajadhakshya recently pointed out, really on development. Also, I was completely wrong about the IPL – it has, without a shadow of a doubt, been a boon for cricket in general, and Indian cricket in particular. Mea culpa!
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  2. “The overall messages that emerge from our analysis are as follows. First, we find evidence that NPEs can be beneficial in improving allocation of technologies to end users (benign middleman), but also use the patent system to threaten litigation on downstream firms (stick-up artist). Second, the existence of NPEs in the market for ideas could discourage downstream innovators and encourage upstream innovators.Third, we show that the overall impact of NPEs on innovation is far from immediate, and depends on many forces in the market. A key question for understanding the impact of NPEs on innovation is what fraction of patent-infringing firms are innovators. On the academic side, researchers can further explore the role of non-innovators versus innovators in patent infringement. On the policy side, our work suggests that “patent trolls” need to also be understood in their multiple roles, instead of putting them into the single box of benign or malevolent.”
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    The importance of opportunity cost, the role of patents, and how difficult it can be to understand how markets and market participants work, in one slightly complex article. Worth a read, for sure.
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  3. “The scale of the potential changes seems hard to imagine. But look back through history, and humanity’s relations with the living world have seen three great transformations: the exploitation of fossil fuels, the globalisation of the world’s ecosystems after the European conquest of the Americas, and the domestication of crops and animals at the dawn of agriculture. All brought prosperity and progress, but with damaging side-effects. Synthetic biology promises similar transformation. To harness the promise and minimise the peril, it pays to learn the lessons of the past.”
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    The Econommist examines, lucidly as always, the impact that synthetic biology might have on our future.
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  4. “The Heckman Curve describes the rate of return to public investments in human capital for the disadvantaged as rapidly diminishing with age. Investments early in the life course are characterised as providing significantly higher rates of return compared to investments targeted at young people and adults. This paper uses the Washington State Institute for Public Policy dataset of program benefit cost ratios to assess if there is a Heckman Curve relationship between program rates of return and recipient age. The data does not support the claim that social policy programs targeted early in the life course have the largest returns, or that the benefits of adult programs are less than the cost of intervention.”
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    On whether the Heckman Curve makes sense or not, from an empirial viewpoint. Again, for reasons of opportunity cost and the perils of policy planning.
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  5. “Many regard the falloff in the creation of high-wage jobs as the inevitable result of advances in artificial intelligence and robotics. It isn’t. Technology can be used either to displace labor or to enhance worker productivity. The choice is ours. But to ensure that such decisions benefit workers, governments need to coax the private sector away from its singular focus on automation.”
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    Darren Acemoglu helps us understand the importance of complements and substitutes, and how policy making, in spite of its many perils, remains important.