The Intangible Economy

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March 31, 2005

Farming in the future

I have long argued just as the industrial revolution mechanized agriculture (essential turning family farms into outdoor food factories), the information revolution will transform manufacturing into a knowledge-intensive activity. But that does not leave agriculture back in the industrial age. Farming is already becoming an information-intensive activity - from the use of remote-sensing satellites and GPS to indicate exactly where water, fertilizer and pesticides should be applied to up-to-the-minute information on markets and the use of sophisticated financial instruments.

But farming in small nations has always been a problem case, especially in the industrial model where nations with large agricultural areas (US, Australia, Argentina) could reap the benefits of economies of scale. In the I-Cubed Economy, is there a future for smaller farms or will they simply disappear?

Birthe Linddal Hansen, of the Copenhagen Institute for Futures Studies, argues that smaller agricultural nations, such as Denmark, still have a place in the economy. But they must move from the industrial logic of production to the information logic of customization:

We need to rely on quality instead of quantity, on processing instead of bulk, on taste instead of price, on individuals instead of multitudes, on nature instead of chemistry, on advanced technology instead of industry, on diversity instead of standardisation.

Danish agriculture will have to replace the industrial logic and its concomitant rationality with a logic that takes into account the fact that tomorrow's consumer already has become enmeshed with the modern knowledge, enlightenment, dream, and self-actualisation society. Tomorrow's food producers, farmers and manufacturers alike, will have to plan their production so as to catch the attention of the consumers and offer them products, choices, quality, variation, and possibilities to an extend that surpasses anything we see in Denmark today, be it quality, delivery, or taste variation. Danish agriculture and food processing must contribute to creating attractive needs for tomorrow's customers before the customers can see it themselves. They must be able to offer the customers far more unique taste experiences than they can today. They must give the customers a clean conscience about Nature, extend them a helping hand when it comes to health concerns, and give them pleasant associations vis-à-vis nature and production, not the least when it comes to their own food preparation.

I'm not sure I agree with all of her argument, especially relying on the self-actualized consumer:

Tomorrow's consumer won't just ask for menu and wine list, he will demand a raw ingredient chart so that he'll know what he's eating and where the ingredients came from.

But her emphasis on variety, customization and higher value-added products is very much right on target. We see this with the resurgence of farmer's markets in the US and the growth of higher-end grocery stores, such as Whole Food and Harris Teeter.

I don't think that such higher-end production will completely replace cheap mass production. Cost still matters.

High-end production does offer a viable alternative strategy for agricultural producers in countries like Denmark, who are facing global competition of eggs from Thailand, steaks from Argentina, and milk from New Zealand.

Posted by Ken Jarboe at 9:37 AM | Comments (0) | TrackBack

March 30, 2005

Publishing questionable information?

There is a new website that publishes information on schools. Run by a collaborative that includes Standard & Poor's, the Council of Chief State School Officers and others, the site (School Matters) contains a
variety of data on schools. But, as a story in today's Washington Post ("S&P Opens A Rating Service On Schools") points out, not everyone is happy with the quality of the data presented:

some school district administrators said some Web site numbers are wrong, out of date or easily misinterpreted. Sharon Ackerman, assistant superintendent for instruction in the Loudoun County schools, said staffing trends and class size numbers for 2002 to 2003 were out of touch with reality. One page of the Web site said some schools in Loudoun averaged 132 students in each classroom, she said.

Of most concern to me is the attempt to create analytical scores. The site includes S&P developed indicators (ratios). However, when you attempt to access them, you first get the following warning:

Stop! Use S&P Ratios with Care.

Standard & Poor's (S&P) provides ratios to help education stakeholders understand the complexities surrounding public education. S&P intends for these ratios to inform the decision-making that can help improve student performance, and does not intend for these ratios, alone, to be used to draw conclusions about school systems' performance. With the hundreds of facts and figures used to evaluate school systems, S&P offers these ratios as a place to begin asking diagnostic questions.

S&P acknowledges that data are not perfect and that even the best statistics have limitations. These ratios should be considered with other academic, financial, and demographic indicators provided on this website. Pulling individual data points out of context to create a ranking is a serious misuse of the data and S&P strongly discourages users of this website from using data in this way.

You are also given the options of going to the welcoming statement by former NC Governor Jim Hunt (advisor to the project) which includes the following warning:

Using RaMP, or one of S&P's other indicators like the Return on Spending Index (RoSI) or the Performance Cost Index (PCI), helps users understand the complexities surrounding public education. However, these ratios should not be used alone to draw conclusions about education performance. These ratios should always be considered with other academic, financial, and demographic indicators provided on the website. I also urge you to read the SchoolMatters glossary and user advisory to better understand the proper use of S&P ratios.

Now, I'm sure that there must be a lot of heavy internal politics that is going on over these warning statements. But I am still mystified as to why they are doing that. Would S&P put out data about companies with such heavy caveats? If not, then why do it about schools. Maybe someone can enlighten me.

Posted by Ken Jarboe at 4:59 PM | Comments (0) | TrackBack

Information (like and not like time) is still money

The Wall Street Journal has a story today ("New Web-Watching Tools Pique Interest of Investors") about how some technology-savvy investors are using news aggregation software (such as RSS) to glean the latest tidbit that will given them an advantage in the stock market.

This reminds me of the old stories of Rothschild and news of the battle of Waterloo. Information has always been power -- and money. But we need to remember that there are two ways that information equal money. The first is the use of information that no one else has -- be it insider information or first-recipient information. That type of information is only powerful in zero-sum situations (I use the information to outsmart you in a transaction). This is what economists call information-asymmetry (and won Joseph Stiglitz a Noble Prize). And once that information is used, its value goes to zero (when everyone knew the outcome of Waterloo, Rothschild's information was worthless). In this way, in information is like time; a scarce commodity that is easily used up.

But information is also not like time. It is something that continues to build on itself. As New Growth Theory teaches us, information, knowledge, technological advance and innovation are the result of economic production. However, knowledge and information differ from traditional factors of production in important ways. Information and knowledge are non-rival, meaning that more than one person can use the economic good at the same time (e.g. a software program). Therefore, they are only excludable by law rather than through physical possession (excludability refers to the ability of someone to prevent others from using the economic good) - otherwise known as intellectual property rights. As a result, the spillovers from knowledge make the accumulation of knowledge self-perpetuating. Not only is the growth of knowledge self-perpetuating, there are increasing rather than diminishing returns. In the neoclassical model, the growth effect of simply adding more capital and labor diminishes over time; it takes more and more input to maintain the same growth. Knowledge is different; it continues to grow itself.

This is the type of information that has lasting value. Unlike hot stock tips, it is the foundation of the I-Cube Economy.

Posted by Ken Jarboe at 1:55 PM | Comments (0) | TrackBack

Customized manufacturing

Is that age of mass production really over? Is customized production ready to sweep away the last remaining remnants of the industrial age? Well, maybe yes and maybe no. Last year, many of us received emails from SN World Foundation marketing a "mini-plant" manufacturing solution from the SCINet Corporation. These plants are 40 ft mobile containers for over 700 types of production:

Bakeries, Water purification, Dehydrated food elaboration, Steel Nails, Welding Electrodes, Tire Retreading, Reinforcement Bar Bending for Construction Framework, Sheeting for Roofing, Ceilings and Façades, Plated Drums, Aluminum Buckets, Injected Polypropylene Housewares, Pressed Melamine Items (Glasses, Cups Plates, Mugs, etc.), Mufflers, Construction Electrically Welded Mesh Plastic Bags and Packaging, Medical assistance mobile units, Sanitary Material (Hypodermic Syringes, Hemostatic Clamps, etc)

This sounds good -- but I don't know how widespread these systems are. And it appears that they are design to be part of larger factory layout -- similar to a plant laid out in work modules.

Now comes a story in the The Economist that describes a "fab lab" developed at MIT

a collection of commercially available machines that, while not yet able to put things together from their component atoms, can, according to its inventor, be used to make just about anything with features bigger than those of a computer chip. Among other tools it includes a laser cutter that makes two-dimensional and three-dimensional structures, a device that uses a computer-controlled knife to carve antennas and flexible electrical connections, a miniature milling machine that manoeuvres a cutting tool in three dimensions to make circuit boards and other precision parts, a set of software for programming cheap computer chips known as microcontrollers, and a jigsaw (a narrow-bladed cutting device, not a picture puzzle).

The story notes that these are really for rapid prototyping of new inventions, especially in developing countries. While not yet ready for prime-time manufacturing, these mini-production systems are being used for low-volume localized needs. For example:

In Norway, Sami animal herders-who are among Europe's last nomads-are using fab labs to make radio collars and wireless networks to track their charges.

I'm not sure that these two examples herald the end of mass production. But, they are clear illustrations of the direction that things may be headed. While we may always have a demand for standardized, high volume products, there are lots of products that can best be created in a customized, lower-volume production process. This information-intensive customized production process may no longer be confined to the realm of science fiction - but may be the next wave of the industrial revolution.

Posted by Ken Jarboe at 11:42 AM | Comments (0) | TrackBack

March 29, 2005

Can you copyright the Crusades?

There is a nasty little copyright fight brewing -- over a nasty piece of history: the Crusades. Author James Reston Jr. is suing 20th Century Fox for stealing his ideas. Reston claims that Fox's new movie "Kingdom of Heaven" is based on his book "Warriors of God: Richard the Lionheart and Saladin in the Third Crusade."

The legal issues seem clear cut, as pointed out in a story today's New York Times:

Michael J. Plonsker, a lawyer with the Los Angeles firm Alschuler Grossman Stein & Kahan who litigates such cases, said winning them was difficult but not impossible. "History is not copyrightable," Mr. Plonsker said. "But if the manner in which you tell about a historical event is a particular expression of character or sequence of events, that is copyrightable. If you can show that the defendant had access and that the works are substantially similar, which is the legal standard, then you can win."

But it will come down to a case of "who-said-what." Fox claims their writers never even read Reston's book while Reston claims the producer and directors had already optioned the book.

Interestingly, when Oliver Stone did his movie on Alexander the Great, he not only paid tribute to the author of the book he used -- Robin Lane Fox -- he gave the author his greatest wish: to lead a cavalry charge in one of Alexander's victories. Lane Fox also used the tie-in with the movie to reissue his book "Alexander the Great" complete with book jacket blurb from Stone.

That is the way that synergy from ideas is supposed to work in the intangible economy. Maybe Reston and 20th Century Fox can settle their lawsuit along the same lines.

PS - and in the irony department, 20th Century Fox is advertising an other of its movies on Grokster, at the same time it is party to the Supreme Court case against the file-sharing software (see yesterday's post). Thanks to BoingBoing for this tip.

Posted by Ken Jarboe at 8:36 AM | Comments (0) | TrackBack

March 28, 2005

Closing the barn door -- the Grokster case

Tomorrow, the Supreme Court will hear oral arguments in the case of
MGM vs Grokster (for background and documents from both sides, see the Electronic Freedom Foundation's site). Gorkster and the other defendants are peer-to-peer file sharing systems that MGM (and others) claim facilitate illegal copying and sharing of copyrighted materials (specifically music and videos). Technically, the case is an extension of the 1984 Sony Betamax case concerning secondary liability for copyright infringement (can the maker of the technology be held liable for the infringement by the users).

However, the case may already be irrelevant. A recent study by the Pew Internet & American Life Project, Music and Video Downloading Moves Beyond P2P shows that about half of the people who download music or videos have found ways outside of traditional peer-to-peer networks or paid online services to swap their files - most often direct sharing from an iPod or MP3 player or through email or instant messaging.

If millions of people are sharing their favorite tunes via email, nothing short of a massive police-state can stop it.

As has been stated so often as to become almost a cliche, digital technology has fundamentally altered the nature of the music business (and soon, the movie business) -- just like the printing press altered the business of writing. Those industries need to develop a new business model. Steve Jobs amazing success at Apple with the iPod is an example of what can be done (see story in Business 2.0). Larry Lessig's Creative Commons is another example, as more and more artists use the concept (see Washington Post story "Creative Commons is Rewriting Rules of Copyright")

But more creative thinking (in what is supposed to be a "creative industry") is desperately needed.

Posted by Ken Jarboe at 12:37 PM | Comments (0) | TrackBack

March 22, 2005

Information wars

As I mentioned last week (see posting Control over Information), there are growing concerns that the Federal government is severely restricting access to public information by the public in the name of protecting the public. A good example of the clash between access and security is this story in today's Wall Street Journal, "Information Incognito":

Ever since Sept. 11, 2001, the federal government has advised airplane pilots against flying near 100 nuclear power plants around the country or they will be forced down by fighter jets. But pilots say there's a hitch in the instructions: aviation security officials refuse to disclose the precise location of the plants because they consider that "SSI" -- Sensitive Security Information.

"The message is; 'please don't fly there, but we can't tell you where there is,' " says Melissa Rudinger of the Aircraft Owners and Pilots Association, a trade group representing 60% of American pilots.

Determined to find a way out of the Catch-22, the pilots' group sat down with a commercial mapping company, and in a matter of days plotted the exact geographical locations of the plants from data found on the Internet and in libraries. It made the information available to its 400,000 members on its Web site -- until officials from the Transportation Security Administration asked them to take the information down. "Their concern was that [terrorists] mining the Internet could use it," Ms. Rudinger says.

We had a similar issue here in DC (that I worked on in my role as a local elected official). The CSX rail line runs within blocks of the Capitol building (also past the Department of Energy, the FEMA building and within sight of the Pentagon). CSX used to ship tank cars of ultrahazardous material, such as chlorine. (Remember that chlorine spill in South Carolina that killed 8 people in a rural area? Imagine if that had happened 2 blocks from the U.S. Capitol).

Privately, the company told government officials (not me) that they had rerouted those tank cars, although we continued to see tank cars (supposedly empty, I presume) pass by. CSX has now admitted publicly (as part of a lawsuit) that they reroute these shipments away from the specific line just south of the Capitol. However, for the longest time they pointedly refused to say whether the tank cars were still using this rail line or not. They said they would not comment on security measures. We argued that telling everyone there were no ultrahazardous materials on that line would reduce the threat by taking away a terrorist target.

In the course of these arguments, I would like to say that their silence on the issue made as much sense as declaring a non-fly zone and then not telling pilots about it. After reading the Journal article, I now know why this argument carried little weight.

Posted by Ken Jarboe at 8:46 AM | Comments (2) | TrackBack

March 21, 2005

Losing jurisdictional advantage - the case of Miami

At one time, Miami was considered the unofficial capital of Latin America. But that seems to be changing due to heightened security restrictions (according to a story in the Wall Street Journal - "Panama Seeks Miami's Heat"). The story relates how Panama is consciously seeking to undermine Miami's role:

Complaints about stepped-up U.S. border scrutiny since the Sept. 11, 2001, terrorist attacks are prompting many Latin American travelers to do more than gripe: They are using places like Panama City's Tocumen International Airport as a regional hub instead of Miami, once the preferred way station for Latin fliers making connections to Europe or North America or even destinations within the region.

It is just one way in which Panama is taking advantage of the post-Sept. 11 environment to help itself -- usually at the expense of Miami. The small isthmus nation, normally off the radar of international travelers and investors, also is luring banks that want to protect back-office operations from terrorist attack and is pitching itself as a safe but friendly port-of-call for businesses as diverse as cruise ships and call centers. Panama's historical ties to the U.S. and its relatively large number of English speakers -- 14% of the population -- also make it an attractive alternative to Miami.

As Professor Maryann Feldman has pointed out, a locality's competitive advantage come from a strategy of differentiation, not low cost (see "Constructing Jurisdictional Advantage" at the Athena Alliance website). Panama seems to be doing just that -- "avoid the hassles of Miami," they are saying. "We are different, better." That does not bode well for Miami's own jurisdictional advantage - which was to be better that any other city in Latin America. We will see if the city leaders take the Panamanian threat seriously and either revamp their activities or change their strategy. Or whether they just drift, like the frog in the pot of water who doesn't notice that the heat has been turned up until it is too late.

Posted by Ken Jarboe at 11:31 AM | Comments (0) | TrackBack

March 17, 2005

Does sports-based economic development pay off?

In these posting (and elsewhere) I have made the case that tourism-based economic development is a great way to diversity the economic base and build on local amenities. However, not all tourism is positive - according to Professor Victor Matheson. In an interview with Business Week (The Final Four: Economic Air Ball?) he talks about has problems with the idea that cities who host the NCAA basketball championships gain any real benefit:

Since 1970, cities that have hosted the men's Final Four actually experienced [a slowdown in] economic growth. So the year that they host the Final Four, economic growth is actually lower in that city than in other years.

The reason:

Remember, the Final Four crowds out all kinds of other activity in a city. So while you're bringing basketball fans in town, you're reducing other business and tourist activity, and you're reducing business among people who actually live in the city. People tend to stay away from the city and stay away from the craziness.

The real trap is building a new facility for the event. Matheson is an ardent critic of any economic benefit from the "build it and they will come" strategy.

He is also skeptically of any spillover benefits:

There are certainly some nonmonetary benefits, but it's ridiculous to say hosting the Final Four has these immeasurable benefits. I certainly don't know of a business that has moved to a city because it hosted a sporting event. So if you point to the image factor, I'm not sure what you're getting for that.

And the second thing is, just because you host an event doesn't mean you'll be making a positive image. Jacksonville hosted the Super Bowl and you had a lot of people coming back saying "Hey, it's nice, but there's not much to do there." Munich with the '72 Olympics certainly didn't come out with a better image.

I agree that large events don't automatically translate into economic benefit. In part, it depends on if they are one shot or if they can be leveraged into an ongoing activity. I would also argue that bringing in a big-time sports event does not draw upon the unique local intangible assets. Nor do such events necessarily help build local assets.

Spending a lot of city money on a one-shot outsider event is probably a waste of time and resources. Using those resources to build up a cultural amenity that will bring people back over and over again makes more sense.

Posted by Ken Jarboe at 12:53 PM | Comments (0) | TrackBack

Eminent Domain and Intellectual Property

Can eminent domain be used in the case of intellectual property? It may sounds farfetched, but the Washington DC City Council is exploring the idea as a way of cutting health care costs. Councilmember David Catania, who has been leading the charge in the city to encourage re-importation of drugs from Canada, is proposing legislation (Bill 16-114)to use eminent domain to seize the formula and contract with a cheaper generic manufacturer. (See story in Washington Post, District section.)

It is an interesting concept - but there any many twists to the tale. First are the limitations on the use of eminent domain. The Supreme Court is currently looking at that in case of Kelo v. City of New London.

More fundamental is the notion of ideas as property. The proponents of stronger intellectual property rights constantly portray this as a property right. "It is mine, I own it, you can't take it away." They make the moral and legal arguments based on the age old concepts of the sanctity of private property.

However, others have argued that the concept of intellectual property is fundamentally flawed. It is not "property" but a government-granted right of monopoly - similar to the old AT&T monopoly over the phone business or an airport landing right. Larry Lessig puts it succinctly in his book, the Future of Ideas (p. 205):

A patent is a form of governmental regulation. It is a state-backed monopoly granting exclusive rights to an “inventor” for an invention deemed useful, novel, and nonobvious.

This view of intellectual property is not just some left-wing idea. As Judge Richard Posner and William Landes have argued (from the right):

Equating intellectual property rights to physical property rights overlooks the much greater governmental involvement in the former domain than in the latter, at least in a mature society in which almost all physical property is privately owned, so that almost all transactions involving such property are private. Government is continuously involved in the creation of intellectual property rights through the issuance of patents, copyrights, and trademarks. Skeptics of government should hesitate to extend a presumption of efficiency to a process by which government grants rights to exclude competition with the holders of the rights. Friedrich Hayek, than whom no stronger defender of property rights can easily be imagined, warned that "a slavish application [to intellectual property] of the concept of property as it has been developed for material things has done a great deal to foster the growth of monopoly and . . . here drastic reforms may be required if competition is to be made to work. In the field of industrial patents in particular we shall have seriously to examine whether the award of a monopoly privilege is really the most appropriate and effective form of reward for the kind of risk-bearing which investment in scientific research involves."

There are also international ramifications of this proposed legislation. If governments in the US can seize intellectual property, every developing nation in the world who has tried the same thing will feel vindicated (and emboldened to do so). While compulsory licensing requirement such as this have been ruled illegal in international trade, exceptions have been carved out for AIDS and other drugs (see Comsumer Project on Technology).

The hearings on the bill may put the drug companies (and others) in an awkward position. If they maintain their conceptual framework that patents are property, then they have to explain why the application of eminent domain does not apply. If they argue that IPR is not property, but a government-granted right, then they have to argue why the government can't limit or take away that right in cases of public health emergencies (this is essentially the argument that was generally successfully used in the case of AIDS drugs in South Africa). My guess is that they will argue both contradictory positions simultaneously. It will be interesting to watch.

Posted by Ken Jarboe at 8:49 AM | Comments (1) | TrackBack

March 16, 2005

The innovative organization - not what you think

When someone says the word "innovation," what organizations do you immediately think of? IBM, Apple, Proctor & Gamble, Southwest Airlines? What about the San Francisco Symphony? Yup, and that is according to the Wharton Business School. A recent special section of the Knowledge@Wharton on Five Takes on Creative Leadership highlighted the Symphony as a leader in creativity and innovation.

And you think that the creation of music is a free flowing activity. Think again. According to the description, a symphony is highly structured:

Imagine leading an organization whose most highly skilled white-collar employees are controlled so rigidly that they are told exactly how to perform their sophisticated tasks; how to hold their bodies while doing so; when to take bathroom breaks; even how to dress, with no individuality permitted and no personal feedback given.

Yet, the San Francisco Symphony has "gained an international reputation for creativity and innovation." They have done so by creative mechanisms to encourage creativity outside of the structure of the performance (such as a musical advisory committee of orchestra members, small group performances organized by the musicians, and highlighted the musician's skills in multi-media program and TV broadcasts).

They have also done it by fully embracing the notion of differentiation. By focusing on doing things differently from other symphonies, they have created their own following and are constantly pushing for new ideas. That is the essence of an innovative organization.

Posted by Ken Jarboe at 9:40 AM | Comments (0) | TrackBack

March 15, 2005

Britain gets it!

Britain's chief financial office, Chancellor of the Exchequer, Gordon Brown, understands the meaning of innovation in the I-Cubed Economy. From the Financial Times of London:

Gordon Brown will use Wednesday's Budget to tackle the challenge posed by other emerging market economies such as China, by commissioning a review into how Britain's creative industries can help its struggling manufacturers.

The chancellor will ask George Cox, chairman of the Design Council, to examine how the UK's expertise in advertising, software, the media and universities can be exploited to boost industrial competitiveness. Mr Cox, former head of the Institute of Directors, will report in time for this year's pre-Budget report.

The review is to be accompanied by a study into the economic potential of creativity and £10m or more of extra funding for the Arts Council, for training.

I have been arguing for a long time that innovation is more than just science and technology. (See National Innovation Policy: An Urgent U.S. Need.) Nor is the solution simply building up the "creative" sectors. As the story about Brown notes:

He is concerned that too few businesses are exploiting the expertise of creative industries. His plans include a new design centre in Newcastle.

"The chancellor recognises that, in the years ahead, manufacturers must move towards high value-added and creative products to unlock new markets," a Treasury official said.

Infusing creativity and innovation into the manufacturing sector is the path toward prosperity. It is heartening to see that at least one politician gets it.

Posted by Ken Jarboe at 10:35 AM | Comments (1) | TrackBack

Taking control of your medical information

Last week, I posted an item about how more IT in the medical centers is not necessarily the same as better information. As it turns out, there is an alternative to the hospital-centered and controlled system. A story in this morning's Washington Post, "A Personal Record," describes the emergence of personal health records (PHR).

Patient-owned PHRs differ from electronic medical records (EMRs), which are created and controlled largely by health care providers. (It's the EMR concept that the Bush administration is trying to expand.)

PHR sponsors, which include a growing number of health plans and hospitals, are betting that more Americans -- particularly those with chronic ailments and those who care for children and aging parents -- will soon demand digital, comprehensive medical records.

"People are already in the business of managing their health information. They just don't realize it," said Andrew Barbash, chief medical and information officer of Bethesda-based Laxor. He says doctors routinely rely on patients for symptoms, medical histories, medication status and other information. PHRs can ensure the information reaches providers whether the doctor asks for it or the patient remembers to provide it.

Laxor subscribers, like those of most PHR systems, enter conditions, treatments, medications, allergies and other information via Web-based forms. Blood pressure readings, doctor visits and test results can be included, and the Laxor PHR can remind patients of appointments or screening tests.

Unlike other PHR products, Laxor employs personal health information managers to help subscribers set up a PHR and deal with physicians or providers.

FollowMe, a service that's been around for almost five years, is a PHR pioneer. In addition to the usual PHR features, FollowMe includes an e-mail account and a printable emergency card with photo and direct links to information sources like the National Library of Science's MedlinePlus. Members can also store scans and labs, and upload documents.

CapMed calls its PHR product "a medical Quicken" because of its similarities to the popular personal finance software. Unlike Web-based products, CapMed sits on a user's computer and saves medical records via a portable flash drive (which can be linked to most personal computers of recent vintage) or CD. Users can share them with whomever they wish.

WebMD's Health Manager service offers numerous whistles and bells. Subscribers' pages can include health news, content and tools customized to their conditions and interests. Subscribers can compare drug costs based on their insurance coverage or download data from medical devices such as an EKG machine. WebMD's PHR can translate medical codes into plain language.

PHRs are not without problems. The article raises privacy concerns, which are also a concern with the EMRs. A greater concern to me is the proliferation of types of systems and means of access. If the doctors can't quickly and easily access the information, the systems are useless. We would be back to all the flaws of the EMRs, as discussed in the earlier postings. However, if the health plans are involved in the systems, one can reasonable expect some form of technical standards to solve the interface problem (as the engineers would say).

In any event, the growth of these systems shows both the need for better information and the alternative to the hospital-controlled system.

Posted by Ken Jarboe at 8:11 AM | Comments (0) | TrackBack

As goes Ohio . . .

In politics, the old saying is "as goes Ohio, so goes the nation." That was certainly true in the last election. But is it also true in economics?

Not according to a story in Monday's Wall Street Journal, "Ohio Offers Clues On Cause of Low Growth". The story points out that Ohio has a higher than average unemployment rate, even higher than neighboring manufacturing states like Pennsylvania.

But, Ohio may lead the nation in the new direction of innovation-led economic development based on local intangibles assets - if it follows the strategy described in the article:

The key is to build on the expertise in production and materials. For instance, the polymers industry is big in Ohio, thanks to the state's history of tire-making. Cleveland-based metal and forging companies are now making hip-replacement implants out of titanium, and chrome coatings for medical instruments that make them easier to disinfect. Logistic companies are sprouting up to take advantage of its central shipping location.

The state can build on its inherent strengths, including its Midwest location. Shipping, mainly over highways and through ports on Lake Erie, is booming because the state is centrally positioned in terms of trucking goods to the Northeast and Southeast. To attract drivers, trucking companies are raising wages. Logistics companies are sprouting up. Northeast Ohio has top universities and health-care facilities, notably the Cleveland Clinic.

Sounds like the makings of a smart strategy to me.

Posted by Ken Jarboe at 7:35 AM | Comments (0) | TrackBack

March 14, 2005

Control of information

This is National Government in the Sunshine Week. Not declared by Congress or the President, but by the media, including the American Society of Newspaper Editors. So expect to see a number of stories about access to information and transparency of government processes. One of the first stories is an AP review of the issue: Government Reducing Access to Information.

We often frame the issue of access to information and knowledge in terms of ownership -- who owns the intellectual property rights. But the real issue is one of control. Ownership of a patent or copyright allows one to dictate the conditions of use. However, what if the information is publicly owned? Who gets to dictate the conditions of access and use? In most cases, it is the government, especially if they can claim that it is government-owned, rather than publicly-owned. That gives the government the ability to deny access to the information, just like a monopoly holder of a copyright can deny access. The AP story describes how it is becoming harder to gain access to government information, even through the Freedom of Information Act.

Another version of control is manipulation. Sunday, the New York Times ran a large story on covert attempts by the government to control the news through prepackaged stories:

In all, at least 20 federal agencies, including the Defense Department and the Census Bureau, have made and distributed hundreds of television news segments in the past four years, records and interviews show. Many were subsequently broadcast on local stations across the country without any acknowledgement of the government's role in their production.

In my mind, the problem with this practice is not the Administration's attempt at public relations or political spin. One can argue that these news shows are the video equivalent of the press release. What bothers me is how these "video press releases" get presented to the public.

An examination of government-produced news reports offers a look inside a world where the traditional lines between public relations and journalism have become tangled, where local anchors introduce prepackaged segments with "suggested" lead-ins written by public relations experts. It is a world where government-produced reports disappear into a maze of satellite transmissions, Web portals, syndicated news programs and network feeds, only to emerge cleansed on the other side as "independent" journalism.

It is also a world where all participants benefit.

Local affiliates are spared the expense of digging up original material. Public relations firms secure government contracts worth millions of dollars. The major networks, which help distribute the releases, collect fees from the government agencies that produce segments and the affiliates that show them. The administration, meanwhile, gets out an unfiltered message, delivered in the guise of traditional reporting.

Between tighter control over access and manipulation, I wonder if we are losing the concept of the government as provider of objective public information. As we move forward in the information age, that would be great loss indeed.

Posted by Ken Jarboe at 2:46 PM | Comments (0) | TrackBack

Investing in intangibles - the Highway bill

Last week, the House passed a huge ($284 billion, six-year) "transportation" bill. I put in those quote markers because this bill is about more than transportation (and we can certainly so longer call it a "Highway" bill). While most of the money still goes to hard transportation projects (roads, bridges, etc.) there are a number of research, technology, education and information-related programs.

What strikes me most, however, is looking through the list of congressionally earmarked projects. I'm not going to get into whether earmarks are good or bad - but the certainly are an indicator of local priorities. And in this bill, while the vast majority of the projects again are hard transportation projects, there are a number of earmarks for museums, visitor centers, historic houses, recreational areas, recreational (bike, snowmobile, horse) trails, etc. Also I found it interesting that one of the leading anti-earmark organizations -- Taxpayers for Common Sense -- chose to highlight many of these non-transportation projects in their analysis of the bill.

These programs are geared not to moving people from place to place (transportation), but to getting people to come to a certain location. It is amenities-led economic development - which is a growing trend in this intangible economy.

At the end of last year, a similar project - $100,000 grant to the Punxsutawney Weather Discovery Center - was singled out of the massive Federal spending bill as the example of pork. As I said at the time, layoff the groundhog!

Since economic activity is no longer merely a process of combining capital, energy, materials and labor, local economic requires identifying and utilizing that there intangible assets. One of the major economic intangibles that a community possesses is its unique cultural and historic resources. It is important not just as part of the multi-billion dollar tourism industries. It is also important for creating the environment for attracting high-talent, high creative workers to populate those creative industries. These assets are an important foundation upon which communities can build their local economy. In New York City, it's Broadway; in Punxsutawney, it's Phil.

Posted by Ken Jarboe at 8:45 AM | Comments (0) | TrackBack

March 12, 2005

Senator Sarbanes to retire

Yesterday, Senator Paul Sarbanes of Maryland announced that he would not be seeking re-election next year. Paul Sarbanes is one of the leading thinkers in the U.S. Senate - on economics and other subjects. He is one of the few people who can go head to head with the likes of Alan Greenspan. Sarbanes was trained as a lawyer, but learned his economics at the feet of Walter Heller, whom he served as Administrative Assistant when Heller was Chairman on the Council of Economic Advisors under President Kennedy.

While I never worked directly for Senator Sarbanes, I had the privilege of interacting with him during my time on Senate staff. I particularly remember the times in the late 80's and early 90's when Sarbanes, as Chair of the Joint Economic Committee, Senator Jim Sasser as Chair of the Senate Budget Committee and Senate Donald Riegle (my boss at the time) as Chair of the Senate Banking Committee would engage in lengthy discussions of economic policy on the Senate floor.

The Senate will lose a little bit of its luster when he departs.

Posted by Ken Jarboe at 9:05 AM | Comments (0) | TrackBack

March 11, 2005

Is Greenspan offering a free lunch?

Alan Greenspan still says that there is no free lunch -- in fact, he said it again yesterday in his comments on globalization to the Council on Foreign Relations. But, in reading his remarks, I'm not so sure he means it. In his speech, Greenspan makes it very clear that he is not worried about the current account deficit: the budget deficit, yes; the trade deficit, no. His lack of concern is based up the evolving economic structure that may give us a free snack, if not a free lunch:

Has something fundamental happened to the U.S. economy that enables us to disregard all the time-tested criteria for assessing when economic imbalances become worrisome? Regrettably, the answer is no; the free lunch has still to be invented. We do, however, seem to be undergoing what is likely, in the end, to be a one-time shift in the degree of globalization and innovation that has temporarily altered the specific calibrations of those criteria.

In Greenspan speak, that means the economic rules have changed. This is not quite the "New Economy" that Wall Street hyped before the bubble burst (and disavowed immediately afterwards). No, Greenspan has long recognized and talked about a fundamental shift occurring in the nature and location of product -- what we call the I-Cubed (Information, Innovation, Intangible) Economy. But whether this shift will allow the continued build up of foreign debt and whether the end of the build up will be through a hard or soft landing is still unclear to me.

Greenspan (and the Fed in general) argue that a soft landing is not only possible, but likely:

Should globalization continue unfettered and thereby create an ever-more flexible international financial system, history suggests that current account imbalances will be defused with modest risk of disruption. Two Federal Reserve studies of large current account adjustments in developed countries, the results of which are presumably applicable to the United States, suggest that market forces are likely to restore a more long-term sustainable current account balance here without substantial disruption. Indeed, this was the case in the second half of the 1980s.

In fact, he specifically dismisses (by damning with faint praise) the hard landing view as the product of old, industrial-age thinking:

We have, I believe, a reasonably good understanding of why Americans have been able to reach farther into global markets, incur significant increases in debt, and yet not suffer the disruptions so often observed as a consequence. However, a widely held alternative view of the past decade cannot readily be dismissed. That view holds that the postwar paradigm is still largely in place, and key financial ratios, rather than suggesting an evolving economic structure, reflect extreme values that have materialized within an unchanged structure and must eventually adjust, perhaps abruptly.

Ironically, the most recent of the Fed studies he refers to
(Financial Market Developments and Economic Activity during Current Account Adjustments in Industrial Economies) is heavily based on the experiences of industrialized nations in the early 1980's. Only one of the 23 data points is later than 1993 (Austria in 1999) and only 5 are post-Cold War (as defined by the fall of the Berlin Wall - only 2 are post-Soviet Union). It is unclear to me that these cases are still relevant in the current "evolving economic structure."

I worry that the "ever-more flexible international financial system" that Greenspan is relying on is just as prone to wide swings and shocks as the previous systems -- and maybe even more so. Paul Blustein's new book on the Argentina default is entitled And the Money Kept Rolling In (and Out). That title, I think, sums it up. In his August 2003 piece for the Washington Post, "Argentina Didn't Fall on Its Own", Blustein notes that:

Globalization is supposed to keep problems like Argentina's from occurring. In theory, international financial markets reward sound economic policies by steering capital to countries that practice them. The influence of the capital inflow makes a government even more disciplined, because policymakers know that otherwise investors may yank their money out.

In this new age of hypercapitalism, Dr. Greenspan may very well be right that increased globalization makes the hard landing less likely. But age of hypercapitalism is also the age of intangibles, including brand and trust and reputation. And, as we have all seem, those assets can quickly disappear like a snow shower on a spring day.

Posted by Ken Jarboe at 3:04 PM | Comments (1) | TrackBack

Jan trade in intangibles

The January trade figures show the balance of trade in intangibles still holding steady at slightly over $6.6 billion monthly. Both exports and imports increased slightly.

However, the overall trade deficit for January climbed to the second highest on record, climbing to $58.3 billion, compared with $55.7 billion in December. The change was powered by a surge of imports, up $2.9 billion from December while export grew only a paltry $0.4 billion. The surge in imports came in the face of a slight decrease in total cost of oil imports due to the falling dollar. Analysts lay the blame on US companies raising prices rather than competing for market share (from the Wall Street Journal):

"With the dollar declining, it was expected that exports would surge," wrote Joel L. Naroff, chief economist at Naroff Economic Advisors, in a note to clients. "They are not and part of the problem is that U.S. firms are increasing prices rather than going all out to get market share."

I am going to repeat what I've said last month and the month before: intangibles are not, and can not, offset our huge and growing deficit in goods. While we are an intangible economy, trade in pure intangible will not save us. The power of intangibles is how they operate within all sectors of the economy, not as a separate sector. We need to harness our intangibles to re-invigorate our goods trade if we are to get our dangerous trade deficit under control.

Note: we define trade in intangibles as the sum of "royalties and license fees" and "other private services". The BEA/Census Bureau definitions of those categories are as follows:

Royalties and License Fees - Transactions with foreign residents involving intangible assets and proprietary rights, such as the use of patents, techniques, processes, formulas, designs, know-how, trademarks, copyrights, franchises, and manufacturing rights. The term "royalties" generally refers to payments for the utilization of copyrights or trademarks, and the term "license fees" generally refers to payments for the use of patents or industrial processes.

Other Private Services - Transactions with affiliated foreigners, for which no identification by type is available, and of transactions with unaffiliated foreigners. (The term "affiliated" refers to a direct investment relationship, which exists when a U.S. person has ownership or control, directly or indirectly, of 10 percent or more of a foreign business enterprise's voting securities or the equivalent, or when a foreign person has a similar interest in a U.S. enterprise.) Transactions with unaffiliated foreigners consist of education services; financial services (includes commissions and other transactions fees associated with the purchase and sale of securities and noninterest income of banks, and excludes investment income); insurance services; telecommunications services (includes transmission services and value-added services); and business, professional, and technical services. Included in the last group are advertising services; computer and data processing services; database and other information services; research, development, and testing services; management, consulting, and public relations services; legal services; construction, engineering, architectural, and mining services; industrial engineering services; installation, maintenance, and repair of equipment; and other services, including medical services and film and tape rentals.

Posted by Ken Jarboe at 9:19 AM | Comments (0) | TrackBack

March 10, 2005

Better IT is not the same as better information - the health care example

From the Emperor's New Clothes file comes a story in yesterday's New York Times, Doctors' Journal Says Computing Is No Panacea. The story tell how

research papers and an editorial published today in The Journal of the American Medical Association cast doubt on the wisdom of betting heavily that information technology can transform health care anytime soon.

It seems that the fancy new IT which the President and others are pushing as a solution to our health care costs is as likely to cause errors as eliminate them.

Anyone who has every worked with a computer understands that the machines often seem to create as many problems as they solve. Part of the problem is poor system design. As the Times story relates:

One paper, based on a lengthy study at a large teaching hospital, found 22 ways that a computer system for physicians could increase the risk of medication errors. Most of these problems, the authors said, were created by poorly designed software that too often ignored how doctors and nurses actually work in a hospital setting.

I firmly believe that well-designed IT systems can reduce the risk of errors, as was pointed out in the Institute of Medicine (IOM)(a sister organization to the National Academy of Science) study To Err Is Human: Building a Safer Health System. But the systems must be built around the information and how the information is used -- not around the latest technological wiz-bang technique. And the IOM study contained a comprehensive set of recommendations, including behavioral changes such as learning from errors -- not just throwing more computers at the problem.

I also firmly believe that the claims of more IT will reduce health care cost are likely to fail. There is a long history of new technologies that have improved the quality of health care while at the same time increasing costs. Theoretically, improved information will improve productivity. In practice, health care is a very labor intensive activity -- part of the High-Touch economy.

There are also many other things that can be done to improve the quality of health care. In 2003, the IOM published Priority Areas for National Action: Transforming Health Care Quality. That study outlined a number of areas we should focus on:
- Care coordination (cross-cutting)
- Self-management/health literacy (cross-cutting)
- Asthma-appropriate treatment for persons with mild/moderate persistent asthma
- Cancer screening that is evidence-based-focus on colorectal and cervical cancer
- Children with special health care needs
- Diabetes-focus on appropriate management of early disease
- End of life with advanced organ system failure-focus on congestive heart failure and chronic obstructive pulmonary disease
- Frailty associated with old age-preventing falls and pressure ulcers, maximizing function, and developing advanced care plans
- Hypertension-focus on appropriate management of early disease
- Immunization-children and adults
- Ischemic heart disease-prevention, reduction of recurring events, and optimization of functional capacity
- Major depression-screening and treatment
- Medication management-preventing medication errors and overuse of antibiotics
- Nosocomial infections-prevention and surveillance
- Pain control in advanced cancer
- Pregnancy and childbirth-appropriate prenatal and intrapartum care
- Severe and persistent mental illness-focus on treatment in the public sector
- Stroke-early intervention and rehabilitation
- Tobacco dependence treatment in adults
- Obesity (emerging area)

With all this work to be done, focusing our health care policy on one area-increased use of IT-seems to me to be extremely short sighted.

Health case is enabling sector for the rest of the economy. Improving health care will improve the productivity and well-being of the overall economy. And bringing down costs will help our competitiveness. But just don't look to more IT to be the panacea.

Posted by Ken Jarboe at 8:17 AM | Comments (0) | TrackBack

March 9, 2005

Maybe it's the Talent Society

While the Bush Administration and economic neo-cons, like Grover Norquest, are pushing the concept of an "Ownership Society," the free-market may be pushing the "Talent Society." James Surowiecki writes in the latest issue of the New Yorker:

The upshot is that in many knowledge businesses the employees often do better than the shareholders. Investors in the Hollywood studios have historically earned small returns, and yet directors and actors make tens of millions of dollars. In the N.H.L. the past two seasons, players reportedly took home seventy-five per cent of the league's total revenue. Even in Silicon Valley, land of the inflated stock price, companies are so desperate to attract and keep the best and the brightest that workers often prosper at the expense of the capitalists. In 2000, according to a Business Week estimate, Cisco Systems employees earned between five and eight billion dollars in option profits alone-in a year when the company made only $4.6 billion. And, according to the 2003 book "In the Company of Owners," during the tech boom a few years ago employees at the top hundred New Economy companies pocketed almost eighty billion dollars in compensation.

Surowiecki cites the example that whereas C.E.O.s now earn, on average, eight times as much per dollar of corporate profit as they did two decades ago, movie stars and baseball players make forty times as much.

He are derives those figures in part from Roger L. Martin and Mihnea C. Moldoveanu's article "Capital Versus Talent" in the July 2003 issue of the Harvard Business Review. Martin and Moldoveanu argue that, "in industries where shareholders' returns depended on key individuals (human capital) rather than the organization (structural capital), the stars began to demand, and get, more."

They go on to conclude:

As the talent class cashes in on the knowledge it creates, the knowledge-creation process will become a battlefield.

That battlefield extends to a number of areas, e.g. intellectual property ownership and other restrictions, such as non-compete agreements, and to areas of corporate governance. The story goes that J.P.Morgan once took umbrage to some railroad engineers complaining about his interference with their railroad: "Your railroad! Gentlemen, 'your' railroad belongs to my clients!" In today's intangible economy, a modern day Morgan uttering a similar phrase might be met with the engineers' reply: "without us, you have no company."

Posted by Ken Jarboe at 12:16 PM | Comments (0) | TrackBack

March 8, 2005

Krugman calls it "The Debt-Peonage Society"

Paul Krugman is one of the few "main-stream media" people to pick up on Warren Buffett's comment about the "sharecropper society" - see previous posting. But Paul Krugman's comments are about the bankruptcy bill pending before the Senate:

Warren Buffett recently made headlines by saying America is more likely to turn into a "sharecroppers' society" than an "ownership society." But I think the right term is a "debt peonage" society - after the system, prevalent in the post-Civil War South, in which debtors were forced to work for their creditors. The bankruptcy bill won't get us back to those bad old days all by itself, but it's a significant step in that direction.

I still think that Buffett's comment was the more powerful. The Republic will not come to an end because the Congress adopts a flawed bankruptcy law. It might if we continue, as Buffett warns, to sell off the nation a piece at a time.

Posted by Ken Jarboe at 3:05 PM | Comments (0) | TrackBack

March 7, 2005

Buffett on intangibles

In his annual report to shareholders (see yesterday's posting). Warren Buffett opened with a reference to "intrinsic value" and referred reader to his Owner's Manual. An abbreviated version of the Owner's Manual is available at Berkshire Hathaway's website. The concept of intrinsic value is central to Buffett's investment philosophy.

Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.

This concept neatly side-steps the question of accounting for intangible assets by focusing on the ultimate output of the assets, rather than their current market value (if any). The following example illustrates the point:

You can gain some insight into the differences between book value and intrinsic value by looking at one form of investment, a college education. Think of the education's cost as its "book value." If this cost is to be accurate, it should include the earnings that were foregone by the student because he chose college rather than a job.

For this exercise, we will ignore the important non-economic benefits of an education and focus strictly on its economic value. First, we must estimate the earnings that the graduate will receive over his lifetime and subtract from that figure an estimate of what he would have earned had he lacked his education. That gives us an excess earnings figure, which must then be discounted, at an appropriate interest rate, back to graduation day. The dollar result equals the intrinsic economic value of the education.

Some graduates will find that the book value of their education exceeds its intrinsic value, which means that whoever paid for the education didn't get his money's worth. In other cases, the intrinsic value of an education will far exceed its book value, a result that proves capital was wisely deployed. In all cases, what is clear is that book value is meaningless as an indicator of intrinsic value.

That last quote - "book value is meaningless as an indicator of intrinsic value" - should give pause to everyone who thinks the way to solve the intangibles accounting problem is by making sure that everything is included in book value.

Buffett makes clear what he thinks of existing accounting:

Because of our two-pronged approach to business ownership and because of the limitations of conventional accounting, consolidated reported earnings may reveal relatively little about our true economic performance. Charlie and I, both as owners and managers, virtually ignore such consolidated numbers.

On the other hand, not everyone shares Buffett's investment approach. So efforts to clean up the books will continue.

Posted by Ken Jarboe at 9:15 AM | Comments (0) | TrackBack

March 6, 2005

Warren Buffett on the Sharecropper Society

Warren Buffett yesterday released his annual report to shareholders of Berkshire Hathaway. The report has become must reading, both for its business insights and its folksy, straight-forward style. This morning's press took different tacks on Buffet's message. The New York Times highlighted how there aren't any good deals to be found:

The mighty billionaire Warren Buffett says he has "struck out." The CEO of Berkshire Hathaway Inc. wrote in his annual report Saturday that he had hoped to make several multibillion-dollar acquisitions in 2004. He certainly had the money, so the problem? None to buy, he said.

The Sunday's Washington Post take was that Buffett is betting against the dollar:

Berkshire Hathaway Inc. said Saturday its fourth-quarter profit rose 40 percent to $3.34 billion on a $1.63 billion gain from contracts to buy foreign currencies at a future date. Buffett, 74, wrote in his annual letter to shareholders that the nation's trade policies "will put unremitting pressure on the dollar for many years to come."

However, what the press missed was Mr. Buffett's broadside again US trade policy. This is what Mr. Buffett said in his annual letter:

Berkshire owned about $21.4 billion of foreign exchange contracts at yearend, spread among 12 currencies. As I mentioned last year, holdings of this kind are a decided change for us. Before March 2002, neither Berkshire nor I had ever traded in currencies. But the evidence grows that our trade policies will put unremitting pressure on the dollar for many years to come - so since 2002 we've heeded that warning in setting our investment course. (As W.C. Fields once said when asked for a handout: "Sorry, son, all my money's tied up in currency.")

Be clear on one point: In no way does our thinking about currencies rest on doubts about America. We live in an extraordinarily rich country, the product of a system that values market economics, the rule of law and equality of opportunity. Our economy is far and away the strongest in the world and will continue to be. We are lucky to live here.

But as I argued in a November 10, 2003 article in Fortune, (available at berkshirehathaway.com), our country's trade practices are weighing down the dollar. The decline in its value has already been substantial, but is nevertheless likely to continue. Without policy changes, currency markets could even become disorderly and generate spillover effects, both political and financial. No one knows whether these problems will materialize. But such a scenario is a far-from-remote possibility that policymakers should be considering now. Their bent, however, is to lean toward not-so-benign neglect: A 318-page Congressional study of the consequences of unremitting trade deficits was published in November 2000 and has been gathering dust ever since. The study was ordered after the deficit hit a then-alarming $263 billion in 1999; by last year it had risen to $618 billion.

Mr. Buffet's remarks go on:

As time passes, and as claims against us grow, we own less and less of what we produce. In effect, the rest of the world enjoys an ever-growing royalty on American output. Here, we are like a family that consistently overspends its income. As time passes, the family finds that it is working more and more for the "finance company" and less for itself.

. . .

This annual royalty paid the world - which would not disappear unless the U.S. massively underconsumed and began to run consistent and large trade surpluses - would undoubtedly produce significant political unrest in the U.S. Americans would still be living very well, indeed better than now because of the growth in our economy. But they would chafe at the idea of perpetually paying tribute to their creditors and owners abroad. A country that is now aspiring to an "Ownership Society" will not find happiness in - and I'll use hyperbole here for emphasis - a "Sharecropper's Society." But that's precisely where our trade policies, supported by Republicans and Democrats alike, are taking us.

Strong words from someone who has been around the block a few times!

Posted by Ken Jarboe at 9:50 AM | Comments (1) | TrackBack

March 5, 2005

Talk about an intangible

We all know that losing talent - a key intangible asset - can cost a company. But how about a loss as large as 3 cents a share? That is what the lose of Sammy Sosa is costing the Chicago Tribune. From today's New York Times:

The Tribune Company, the media conglomerate whose holdings include the Cubs, said in a regulatory filing Friday that last month's trade of Sosa to the Baltimore Orioles would cause it to take a $13.5 million pretax charge in the first quarter.

The transaction merited only a two-sentence mention in Tribune's 114-page annual report, filed Friday with the Securities and Exchange Commission.

But Dennis FitzSimons, Tribune's chief executive, said this week that the timing of the trade caused Tribune to accelerate the payment of Sosa's salary, reducing the company's first-quarter net income by nearly 3 cents a share.

Now, I wonder what happened to the valuation of the Orioles?

Posted by Ken Jarboe at 10:01 AM | Comments (0) | TrackBack

March 4, 2005

Brazil and bio-tech

Will Brazil be the new bio-tech powerhouse? While most of the attention on Brazil's new Biosecurity law has been on granting of permission to sell genetically modified organisms (bio-tech seeds), there is another far-reaching provision. Tucked inside the bill is a provision to legalize stem-cell research using leftover frozen embryos. According to AP:

Reversing an earlier decision, the lower house of Congress voted 352 to 60 late Wednesday to permit research with embryos resulting from in-vitro fertilization and frozen for at least three years.

The topic was the subject of fierce debate in the Brazilian Chamber of Deputies:

The vote took more than five hours, and, after the basic text was approved, the Deputies rejected three amendments that proposed eliminating the authorization for research using embryonic stem cells and introducing changes in the way transgenics cultivation is supervised in the country.
The project retains the text approved last year by the Federal Senate. And it permits research use of embryos that have been frozen for more than three years in fertility clinics, while banning human cloning and cloning embryonic stem cells for therapeutic applications.
In the first vote taken in the Chamber, the Deputies opposed authorizing the use of embryonic stem cells for research. March 2, they decided to reject the amendment that proposed removing this authorization from the text.

The next step will be to see if research firms rush to Brazil to set up operations -- and how they are welcomed by the Brazilian government.

Posted by Ken Jarboe at 12:13 PM | Comments (0) | TrackBack

The Queen of Intangibles is back

Love her, hate her, or don't really care, you can't deny the fact that Martha Stewart is the Queen of Intangibles. She has parlayed her style sense into an economic dynamo and vividly demonstrated how intangibles -- including the up and down of one's reputation -- are an integral part of our economy.

Released from prison this morning, now let's see where she goes from here.

Posted by Ken Jarboe at 11:21 AM | Comments (0) | TrackBack

February employment

February's employment numbers were released this morning. BLS reported that employment was up but so was the unemployment rate. According to the New York Times:

The gain of 262,000 jobs in February was stronger than the increase of 225,000 positions that economists were forecasting before the release of the employment report. Payroll growth in February was up from January's sluggish gain of 132,000, which was less than the 146,000 increase initialy reported.

The rise in the overall civilian unemployment rate to 5.4 percent in February was up from 5.2 percent in January. The increase last month came in part as more jobseekers streamed back into the market.

The BLS numbers included general data on occupations. A quick look at the breakdown shows what we all know: those in the professional occupations have lower rates of unemployment that manufacturing and service workers.

Management, business, and financial operations occupations:
below average unemployment rate (2.6 %); but up slighly from Feb 2004

Professional and related occupations:
below average (2.4 %); down significantly from Feb 2004

Service occupations:
above average (7.0 %); down significantly from Feb 2004

Sales and related occupations:
average (5.5 %); down significantly from Feb 2004

Office and administrative support occupations:
average (5.1 %); up slightly from Feb 2004

Farming, fishing, and forestry occupations:
significantly above average (10.8 %); down significantly from Feb 2004

Construction and extraction occupations:
significantly above average (12.2 %); up slightly from Feb 2004

Installation, maintenance, and repair occupations:
slightly below average (4.6 %); same as Feb 2004

Production occupations:
above average (7.5 %); down slightly from Feb 2004

Transportation and material moving occupations:
above average (7.2 %); down significantly from Feb 2004

Unfortunately, we don't have detailed data on monthly changes in occupations. We have annual data at a little finer grain and much more detailed data from November 2003 (released in November 2004).

It would be interesting to see the monthly trends (as well as the annual trends) of those workers who specialize in intangibles.

Posted by Ken Jarboe at 11:06 AM | Comments (0) | TrackBack

March 1, 2005

Re-inventing High School

Bill Gates is on a new crusade -- to re-invent high school. Unlike some reformers, Gates seems to understand that the problem is not that schools are failing, it is schools that are obsolete. As Gates says in a piece in today's LA Times:

Today, even when they work exactly as designed, our high schools cannot teach our kids what they need to know.

I agree -- see my Feb. 2 posting "Don't reform education - redesign." I worry, however, that Gates is not going far enough. He conceives of the problem as a lack of tie into college:

The idea behind the old high school system was that you could train an adequate workforce by sending only a small fraction of students to college, and that the other kids either couldn't do college work or didn't need to.

His solution:

Every politician and chief executive in the country should speak up for the belief that children need to take courses that prepare them for college.

I'm not sure that sending everyone to college is the answer. I think this perpetuates the system of education as something you do in a building when you are young. I would rather see high school as the place where you create learners who will continue their education in multiple avenues -- rather than as a college-prep system for everyone.

As I highlighted in my earlier posting, I think the Partnership for 21st Century Skills is on the right track: bridge the gap between how student live and how they learn. If we make learning part of living, then everyone -- those going on to college and those taking an alternative route -- will be better off.

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