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September 30, 2005
When public information isn't public or free
Are subway maps the private property of the subway system? According to the New York Metropolitan Transit Authority, I guess they are: this from the AP - Subway Authorities Eye IPod-Friendly Maps
It seemed like such a great idea: digitally shrink maps of major subway systems and put them online so people can download them to their iPods for free.
Tens of thousands of people have downloaded maps from http://www.ipodsubwaymaps.com since Web designer and blogger William Bright, 27, created it in early August.
San Francisco and New York City officials were less enthusiastic.
A lawyer for the Metropolitan Transportation Authority sent Bright a terse "cease and desist" letter in mid-September demanding he immediately remove the New York City subway map from his Web site.
. . .
An MTA lawyer sent Bright an e-mail Thursday offering him a one-year license to distribute the maps for free, as long as he promises to update them regularly. The catch: The MTA wants a licensing fee of $500.
$500 to get access to the subway map? What ever happened to the idea that public information should be available to the public? Maybe MTA next will want to put a screen in front of the maps and charge a quarter to look at it -- like those old binoculars at tourist sites.
At least BART had a better rationale for wanting to maintain some control over the information:
BART's chief complaint with Bright's maps was that they didn't reflect changes made to the transit system's route alignment earlier this month.
Our information policy needs to separate the principle of control for accuracy from the need for rent-seeking ownership to create financial incentives. The purpose of conventional copyright is both. Rent-seeking is part and parcel of control.
However, an alternative model -- the Creative Commons copyright system -- allows a separation of the two. For example, this blog operates under the Creative Commons license. It allows me control over who gets to use this for what purposes - and attempts to ensure that appropriate attribution is given. That allows me to exercise some form of quality control. But since this blog is not sustained though royalties, under this system I have waived some of my rights for financial returns, if the information is used for non-commercial purposes.
Maybe the nation's subway system should put their maps into the Creative Commons. Had they done so, it might have saved everyone a lot of aggravation.
Posted by Ken Jarboe at 10:25 AM | Comments (1) | TrackBack
September 29, 2005
Gaming as the techology of the future
When I was an undergraduate engineering student (many, many years ago), it often seemed that my colleagues and I were majoring in pinball. (FYI - pinball and foosball remain the staple of the high-tech company's break-room - similar to the game room of my college dorm). Now, your really can major in pinball - or at least the digital version. According to a story in today's Washington Post - Like Video Games? Now You Can Major in Them:
Carnegie Mellon University and the Georgia Institute of Technology, for example, now offer master's degrees in game development. The University of Southern California offers a graduate degree in interactive media and an undergraduate program in game design. Locally, the University of Baltimore is putting together an undergraduate degree in video game development
This really should surprise anyone. As I mentioned in an earlier post (For the future of the music and movie industry look to video games), gaming is a multibillion dollar industry. According to the OECD study DIGITAL BROADBAND CONTENT: The online computer and video game industry:
Computer and video games is a young industry with rapid growth underpinned by technological development. The global market in 2003 was estimated to be over USD 21 billion compared with USD 32 billion for the recorded music industry; US games revenue in 2001 surpassed film box office ticket sales. The main segments in 2003 were the console off-line (73%) and PC-offline markets (17%). Online and wireless games are still relatively small (6.4 and 3.4% respectively). However, there is a trend towards online games in PCs and consoles. New games are released with some online capabilities, and it is expected that nearly all will become at least in part online. Computer games are R&D and innovation intensive and games programming and design are highly skilled occupations. Market expansion is coming through development of online network technology, diversifying content and developing large-scale online games. The industry is also increasingly seen as strategic by major media, Internet and consumer electronics firms.
Skill development is a key element in advancing the state of the industry, nor is the US the only country confronting the issue:
A pool of qualified personnel is a key element for the game industry, and although software and related ICT-skills are widespread, games skills are to some extent specific to the industry requiring a mix of advanced technological skills, creativity and specific knowledge of online games.
Most specialist games ICT skills are not obtained from formal university or tertiary institution degree courses. This is in part due to the difficulties involved in implementing change in educational systems and in part due to the rapid changes in specialist skills requirements compared with very long lead-times to change formal tertiary courses. Furthermore, in the domain of high-skilled software most skills are not acquired in formal education but usually on the job or in firm- or sector-specific training programmes (OECD, 2004g). Large firms often have training programmes to address current skills needs and to improve their internal software development processes. They recruit experienced programmers or new computer science graduates and provide their own practical training courses. The Electronic Arts University is a good example, providing software engineering courses and programmes in their various studios.
This does not, however, mean that the industry will solve all skill development requirements. Smaller firms may find extensive in-house training too costly if it covers a wide range of specialist skills. Also there may be insufficient training for the industry because employees can leave individual companies after training. To tackle these issues the Korean government has developed a formal game industry education programme. The "Game Academy" provides two-year educational courses as well as short-term improvement courses in game design, programming and related areas and produces 250 game specialists annually. This strategy was further strengthened in 2002 with the introduction of a certification system to evaluate qualifications of game industry technicians (Korean Ministry of Culture & Tourism, 2004). Korea further seeks to attract top educators in foreign countries, and plans international exchange programmes.
Other countries have also started to provide tertiary programmes or have identified skills and job training as key issues for industry development (Forfás, 2004). For example in the United Kingdom there are approximately 22 universities offering 72 degrees/courses in games. This proliferation of courses of various qualities has prompted the UK Department of Education and Skills, Skillset, the sector council for UK audiovisual industries, and bodies such as TIGA to call for industry accreditation of university games courses (Kerr, 2004a). To support the game industry in France, the Ecole nationale de jeux vidéo et des médias interactifs has been created at higher education degree level in Angoul&ecric;me, with first enrolments in September 2004 (Kerr, 2004a). In France as in other countries there are numerous media and multimedia courses which may provide raw graduates for the industry, along with specialised computer engineers.
Issues related to gender inequality in the game industry reflect a more general issue of womens' professional training (OECD, 2004g). An important prior step will be to raise interest in technologies and the use of ICTs. A number of policies have been implemented, e.g. the e-skills UK initiative to offer Computer Clubs for Girls (CC4G) or its ITBeat scheme designed to encourage girls to rethink their attitudes to careers in information technology. Another local example was the competition by Wired Sussex, first run in 2003, to encourage teams of girls to produce a game design outline (Haines, 2004a).
Least you think that gaming is just a peripheral industry, look at the spill-overs. Technology advances are driving gaming. And, as important, gaming is driving technological advances.
Technology originally developed for games is increasingly used in other applications. Games developments in computer images, graphics resolution, high-speed interactivity, and touch feedback are used in other applications. Many of these technologies had theirs origins in defence (e.g. flight simulators, pilot helmets, etc.) and medical imaging where virtual modelling developed for training and computer image construction led to developments in game creation. Until recently, this was mostly one-way, with applications developed in more established industries being used in simpler forms in the game industry.
However, with advances in consumer hardware processing power this relationship is changing. Games imaging technology has potentially significant use for architecture, design and engineering applications, and games 3D-software in a range of training programmes and medical applications where interactivity is important. This trend is expected to intensify with advances in game software and hardware technology.
Even more exciting is the potential for advances in the gaming industry to feed into the educational process:
There has been growing recognition that games, particularly because of their interactive nature, may provide useful tools for education (KPMG for the Danish Ministry of Culture, 2004). The benefits come from the use of games technologies and experience in devising educational tools, rather than coming from using games devised for non-educational purposes, as there is no strong empirical evidence that critical learning skills from games are "transferable". In part limited direct effects of games on education may be due to few games so far being specifically developed for education, and commercial games have only limited educational aims (Kerr, 2004b).
However, research on the potential of games to serve as learning tools concluded that "video games have the potential to lead to active and critical learning." (Gee, 2003). Pilot schemes by the British Educational Communications and Technology Agency (BECTA) have shown that there are benefits from using games technologies in education. Research initiatives on the potential for games to be used in education include: The Education Arcade (educationarcade.org) a consortium of international game designers, publishers, scholars, educators, and policy makers investigating the educational potential of video games (the US MIT's Games to Teach); the NESTA Futurelab projects in the UK; and the ECsupported Kaleidoscope (Network of Excellence), and the EC mobile M-learning project (see also section in the Policy Framework below). Furthermore, public interest and non-profit groups dealing with public health and humanitarian issues (e.g. UNICEF) have developed interactive games to reach the new Internet generation.
Of course, we have been down this road before. Television was touted as having great potential for education. In fact TV has had a large impact on education -- it is just that TVs overwhelming use for entertainment and marketing has eclipsed its educational activities.
I suspect that gaming will do the same. The vast majority of activity will be entertainment oriented. That should not blind us to the potential for using the technology for other purposes. Those kids getting their degrees in gaming at Carnegie Mellon University and Georgia Tech might just as easily come up with the next generation's equivalent of McGuffey Readers.
Posted by Ken Jarboe at 09:14 AM | Comments (1) | TrackBack
September 26, 2005
WIPO's upcoming annual meeting
For those of you interested in the future direction of international intellectual property rights, I recommend this summary of the upcoming annual meeting of the World Intellectual Property Organization (WIPO) from the blog Intellectual Property Watch - WIPO's Future Work, Past Credibility On Table At General Assemblies.
WIPO has a big agenda, including: IP in development; patent law harmonization; a new Broadcasters' Rights Treaty; the issue of Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore; and the Convention on Biological Diversity.
Another resource is the Consumer Project on Technology WIPO information web site, especially the web page on the Broadcasters Rights Treaty.
Posted by Ken Jarboe at 12:57 PM | Comments (0) | TrackBack
September 23, 2005
It takes a network, part 2
I was at an EDA conference yesterday where a major topic of discussion was the report of the Strengthening America's Communities Advisory Committee, which was released in July. The SACAC, as it has become known in economic development circles, was established by the Secretary of Commerce earlier this year to take a look at the nation's economic development programs - as part of the Administration's proposal (called "Strengthening America's Communities) to consolidate economic and community development programs (which the critics fear is really a way of cutting the funding for these programs).
The report notes the problems with the 2004 hurricane recovery efforts in Florida and talks about the numerous Federal programs. The SACAC endorsed the concept of consolidation but also called for the creation of a Cabinet-level inter-agency council to coordinate programs. Apropos my earlier posting (It Takes a Network) - I strongly agree with the coordinating council. No amount of consolidation will ever eliminate the overlap and duplication - and over-consolidation would stifle flexibility and innovation. I continue to believe, however, that a specific agency tasked with focused recovery activities is needed to cope with natural or, as Phil Singerman calls them, unnatural disasters (plant closings, based closings, etc.). That would free up EDA and other agencies to focus on longer-term activities.
By the way, the report also repeats what I and many others have said about the importance of intangibles in economic development, specifically mentioning human capital, higher education and amenities as key regional assets.
Posted by Ken Jarboe at 08:16 AM | Comments (0) | TrackBack
September 22, 2005
. . . and too much information
While the Professors at Wharton are asking about whether technology is too complex (see previous posting Unusable technology), David Wessel of the Wall Street Journal is asking whether we have too much information -Better Information Isn't Always Beneficial:
How about the service offered by LegalMetric LLC, a start-up founded by patent lawyer Greg Upchurch? Contemplating a patent-infringement case in Delaware? For $795, Mr. Upchurch will tell you which judges rule most swiftly and which tend to favor patent holders. Making a motion for summary judgment? Mr. Upchurch can tell you how the judge has ruled on similar motions versus his peers.
These data always have been available in court files, but putting the pieces together was so expensive no one did it. Now, it's on the U.S. federal judiciary's Web site. Mr. Upchurch and his two employees download dockets, key information into a database and push a button so their software generates detailed reports.
For lawyer and client, this knowledge can be very valuable. But does it increase the chances that the judge will come to a just decision?
It is the sort of information that Nobel laureate Kenneth Arrow labeled "socially useless but privately valuable." It doesn't help the economy produce more goods or services. It creates nothing of beauty or pleasure. It simply helps someone get a bigger slice of the pie. Sure, if the product helps win cases, then both sides will buy it -- just as both sides in high-stakes product-liability cases invest in jury-selection experts and software -- and neither will have an unfair advantage. But does that make the society better off?
Too much to contemplate right now. Suffice it to say that the old saying "more is not necessarily better" applied to information and technology and the rest of the I-Cubed Economy.
Posted by Ken Jarboe at 05:00 PM | Comments (0) | TrackBack
Unusable technology
The latest posting on the Knowledge@Wharton asks an important question:
Are We Developing New Technologies Faster than Consumers Can Use Them?.
My answer: probably. A lot of new product development (most, in fact) ultimately fail. What bothers me with the new technologies is that usability often falls victim to geek coolness. It is what I call the "electronic swizzle-stick" approach: yes, technologically we can do that, but why?
While you ponder that, read what the good folks at Wharton have to say about over-engineered and over-complex products.
Posted by Ken Jarboe at 02:58 PM | Comments (0) | TrackBack
Property rights as an institution .. and an intangible asset
I have long respected the work of Hernando DeSoto and recommend his books highly. His work on the importance of property rights, especially the property rights of the poor, the excluded and the dispossessed, in economic development has had a major impact. He has pointed out that a major barrier to development in many countries is the inability of the poor to document, control and financially leverage the assets they have. In many ways, the poor are richer than they seem, but are unable to build on that wealth. They remain locked in the informal economy.
However, I've always had trouble reconciling DeSoto's work with what I know about the importance of intangible assets in economic development - not just physical property and financial assets.
At a speech yesterday at New America Foundation, DeSoto helped me understand the connection. (Click here for a webcast of the conference, including the session with DeSoto's speech at the end of the conference.) His main message is that what counts with property rights isn't just the property. It is the commitment to the rule of law in economic transactions and the sense of inclusion within and under that rule of law. It is about the social contract, not just about the real estate.
In contrast to many, DeSoto does not believe you can create a middle class and reduce poverty simply by creating a market system. Nor can you create markets by fiat. Building markets is very difficult. Markets are legal institutions as much as markets. For example, you need property rights and contract law to allow for market transactions. The market institutions, as Noble-laureate Douglass North argued, are key. These must be developed from the ground up, not imposed from top down, so that they actually work out in the field.
During the question and answer period, De Soto acknowledged the importance of the standard types of intangibles: human capital, education, reputation as a factor of creditworthiness. (His comments on intangibles come at 1 hour and 4 minutes into the session - including his answer to my question on human capital.)
But, in essence, he had already pinpointed the key intangible: that social contract - the respect for the rule of law and the myriad of social organizations and institutions that make the economy work.
Without all the intangibles wrapped up in those institutions, which we in "developed" countries take for granted, economic development is simply not possible.
Posted by Ken Jarboe at 07:44 AM | Comments (0) | TrackBack
September 21, 2005
Innovation everywhere
Innovation isn't just the "next big thing" - to quote the mantra of the dot-com boom. It is everywhere and in many areas. Witness the examples from the recent Asian Innovation Awards, as reported in today's Wall Street Journal - "Necessity Meets Creativity":
Forget, for a moment, the idea that an innovation has to be something new, either in terms of the problem it solves or when it was invented.
Just ask Mohammad Saidullah, an Indian honey seller in his 60s, who has been peddling his amphibious bicycle around the flood-prone plains of Bihar -- and once or twice across the Ganges -- for the past 30 years.
It's not much to look at -- a sky-blue tangle of spokes, paddles and wooden floats -- but it has finally gotten some recognition. Discovered by an Indian organization called the Honey Bee network, which collects data on such initiatives via a web of students, nongovernment groups and volunteers, his contraption earned Mr. Saidullah a life-time achievement award in January from India's National Innovation Foundation. And now he's one of 12 finalists for this year's Asian Innovation Awards, presented by The Asian Wall Street Journal in association with Global Entrepolis@Singapore. The awards honor people and companies who improve quality of life or business productivity.
What is more remarkable is the staggering amount of innovation:
The Honey Bee project has discovered more than 50,000 innovations in the Indian backwoods, some of which have also made it to the AIA's final 12.
And that is just in India! You should read about the innovations from other Asian countries.
Posted by Ken Jarboe at 07:08 PM | Comments (0) | TrackBack
Creating an intangible asset
For most people, the term "intangible asset" brings to mind intellectual property — patents, copyrights, trademarks — what we call intangible goods. It may, for regular readers of this blog, also bring to mind what we call intangible competencies, such as leadership, creativity, innovative processes, etc.
However, accountants have long recognized an extensive list of intangible goods — rights that can be bought or sold. Some of these are customer contracts, client lists, distribution networks, distribution rights, development rights, food recipes, franchise agreements, noncompete covenants, leasehold interests, procedural manuals, solicitation rights, subscription lists, and supplier contracts. For a full listing see our white paper, Reporting Intangibles.
The examples listed above are based on organizational know-how, business relationships and contracts. However, a number of intangibles are government created, in the form of a grant of a right. These include airport gates and landing rights, broadcast and other FCC licenses, permits, and use rights such as drilling, water, air, mineral, timber cutting, and route authorities.
A new example of a government created intangible comes from the Administration's new plan for tradable fishing rights— see Rule Changes Are Proposed for Fisheries — New York Times:
The Bush administration on Monday proposed using market-based incentives to govern saltwater fishing in certain areas, a tradable ticket to fish designed to impose order in waters prone to overfishing.A version of the system is already in operation — see Bush Aims for Market Approach to Fishing - Washington Post:
In Alaska, for example, fishermen are granted a portion of the allowed halibut catch and can trade these quotas among themselves; in most U.S. fisheries, regulators govern the annual catch by limiting how many days fishermen operate and how much they collect each trip.Needless to say, the proposal is not universally endorsed:
But the move to give fishermen private property rights to a public resource, along with the administration's overfishing plan, angered many environmentalists who say Bush's proposal does not do enough to protect overexploited fish stocks.
There is nothing new in government creation of private property rights to a public resource. Tradable pollution rights have become a stable of market-based environmental protection systems.
In fact, some argue that the entire intellectual property rights system is the government creation of private property rights to a public resource. It is certainly a government created property right — a state grant of an economic monopoly, as Judge Richard Posner, a leading conservative/libertarian thinker has pointed out. (For more on Posner's views on IPR, see Landes and Posner, The Political Economy of Intellectual Property Law.) The argument that ideas are a public, rather than a private, resource is a little more involved (see for example James Boyle, The Second Enclosure Movement and the Construction of the Public Domain).
The question I have is whether once created, the government can eliminate or take away these rights? If the market place is to operate efficiently, the stability of property rights and contracts must be adhered to. On the other hand, these grants were given for a specific public purpose — in this new case to prevent overfishing. Do these rights then become so entrenched as to out live the public good they were meant to improve? Isn't that partially what happened in 17th and 18th Century France when so many state-granted rights not only impeded economic development but help spark a revolution?
Posted by Ken Jarboe at 09:23 AM | Comments (0) | TrackBack
September 20, 2005
Mixing and matching tangible and intangible assets
A great story in today's New York Times about the combination of tangible and intangible assets - Controlling Quality: The Hard Road to Building a Brand:
When Craig and Randy Rubin started Hi-Tex Inc. in November 1993, they never intended to open a factory. "Our charter was no bricks and mortar," said Ms. Rubin. The business, in West Bloomfield, Mich., was set up, she added, to be a branding and a technology company.
Now, 12 years later, they have more than $25 million in annual sales, 52 employees and a hard-won appreciation for how much day-to-day control it takes to turn a promising technology into a reliable brand. And, yes, they have a factory.
The story relates how the company had started with a technology and a trade name -- for a fabric that was breathable yet tough, impervious to liquid, stain-resistant and antimicrobial. Production was contracted out. But, at some point, the production process broke down. Deliveries were late and the product failed because a key step in the process was skipped. By losing control of the production process, the owners lost control of the intangibles that made them an early success: quality and reliability
An outside contractor had been fine when producing Crypton was a relatively simple business of running uniform white fabric through a series of coatings. But the company's growth added complexity. The mills' Jacquard fabrics needed pretesting to make sure they could be transformed into Crypton and inspecting to verify that the process worked. Hi-Tex itself was adding new fabrics with different weights, requiring experimentation and separate runs. Besides, if sales kept growing, the business would eventually be too big for a single contractor.
So, they did the unthinkable - they started doing it themselves.
Lesson one: intangibles like brand are only as good as the tangible product behind them.
Lesson two: control of the production process is an important intangible
Lesson three: tangible products (and the production processes behind them) will always remain an important part of the Intangible Economy. Product, brand, design, technology - all are an integral mix.
When anyone tells you we can survive as a service economy (or what I've called a royalty economy) based on our "innovation" alone -- tell them the story of Craig and Randy Rubin.
Posted by Ken Jarboe at 11:39 AM | Comments (0) | TrackBack
September 19, 2005
Schools as community centers
In a number of earlier postings, I have argued that education requires more than schools. Education needs to be a life-long activity -- and that does not mean simply going back to take a class or two after graduation. It means learning as a continual day-to-day activity. Learning confined to schools buildings and class rooms is incomplete. Thus, it requires going beyond, outside of and around the formal educational process. Learning and education is too important to be left to schools.
The concomitant proposition is that schools need to function outside and beyond the formal educational enterprise. They need to serve as community resources in the broadest sense of the term. Now comes a New Video and Discussion Guide Champion "Schools as Centers of Community":
The "Schools as Centers of Community" model of school planning and design is growing increasingly popular in the United States. Schools are becoming a gathering place - a place of lifelong learning, shared health and fitness facilities, and a host of other services to enhance community and student success. At its core, this is also a question of design. In order to create "schools as centers of community," architects, educators, designers, local officials, and residents must think differently about our schools and create spaces that reflect a new understanding of the school building.
Thinking differently about our schools -- both physically and programmatically. What a great idea!
Posted by Ken Jarboe at 10:32 AM | Comments (0) | TrackBack
September 15, 2005
the disfunctionality of FEMA?
In may earlier posting, I mentioned the need to rebuild FEMA as an organization. Bob Herbert's column in today's New Tork Times gives just one example of the problems. Herbert tells the horrific story of patients and staff as New Orleans' Methodist Hospital - Sick and Abandoned:
Everybody's suffering would have been eased if the emergency relief effort mounted by the hospital's owner, Universal Health Services in King of Prussia, Pa., had not been interfered with by FEMA. Company officials sent desperately needed water, food, diesel fuel to power the hospital's generators and helicopters to ferry in the supplies and evacuate the most vulnerable individuals.
Bruce Gilbert, Universal's general counsel, told me yesterday, "Those supplies were in fact taken from us by FEMA, and we were unable to get them to the hospital. We then determined that it would be better to send our supplies, food and water to Lafayette [130 miles from New Orleans] and have our helicopters fly them from Lafayette to the hospital."
Posted by Ken Jarboe at 10:51 AM | Comments (0) | TrackBack
It takes a network
There has been some talk recently about creating a new agency to oversee the Katrina recovery process. Some (such as Senator Kennedy) are calling for a New Orleans and Gulf Coast Redevelopment Authority, modeled after the Tennessee Valley Authority. Senator Ken Salazar calls for an effort similar to the Marshall Plan, including "the creation of a small and effective Cabinet member-chaired task force--that the President would appoint--with State and local participation, and that task force would have a singular focus on this challenge. The task force should develop a plan for reconstruction, identify the costs associated with that plan, and oversee its successful implementation." Former House Speaker Newt Gingrich has called for a revamping of the process and an Assessment Working Group.
I think Speaker Gingrich and Senator Salazar are on the right track -- it takes a network, not a bureaucracy.
But a task force or a working group are not enough -- there needs to be an ongoing coordination point and an agency on the ground that can implement and make sure everyone is pulling in the right direction. For this reason, I would support the creation of a Federal Emergency Recovery Agency (FERA).
But the design of the agency needs to be done right. It should coordinate all of the existing recovery (as opposed to relief) programs -- such as SBA's disaster loans, DOL worker displacement rapid response activities, EDA's grants and loans etc.
As Business Week puts it in San Fran's Lessons for New Orleans:
FEMA's programs aren't intended to help families recoup their full losses or meet permanent housing needs. It does administer The National Flood Insurance Program through contractors, but only homeowners who have purchased policies in advance are eligible.
For long-term housing assistance, individuals must look to other agencies. The SBA offers disaster assistance loans to homeowners with decent credit of up to about $200,000. HUD programs such as the HOME Investment Partnerships Program, and the Community Development Block Grant Program, which are administered at a state and local level, focus on affordable housing.
It's a convoluted brew of programs with even more complex application requirements and procedures, and even those who successfully navigate the process will likely find themselves wanting.
Rebuilding is primarily a local function involving both the public and private sectors. The role of Federal government is to provide support to those local efforts. FEMA's mandate is risk reductions and short-term disaster relief. We need a mechanism for long-term recovery assistance. To use the medical analogy, FEMA's role is that of the emergency room -- immediate stabilization; FERA's role is that of the hospital and rehabilitation centers -- long-term recovery.
FERA needs to be a small, flexible agency to coordination of existing governmental programs. It should insure that all relevant programs and agencies are engaged. It should also insure that Federal funds are spend on top priorities and not wasteful or duplicative. And it should serve as the liaison between Federal programs and state and local activities.
Rebuilding and long-term recovery are not new activities for the Federal government. FERA should build upon experience of both past disaster recovery efforts and efforts in coordinating Federal assistance in economic dislocation, i.e. plant closings and base closings.
The rebuilding of the Gulf Coast will take some time. Passing that task over to a FERA would free up FEMA to concentrate on its primary mission of risk reduction and immediate relief. It would also allow FEMA to concentrate on the task of rebuilding the agency -- a task that recent events have shown is desperately needed.
Posted by Ken Jarboe at 09:18 AM | Comments (1) | TrackBack
September 13, 2005
July trade in intangibles
According to our calculations based on data released this morning by the BEA, the surplus in our balance of trade in intangibles decline slightly in July to a positive $6.53 billion. Imports of intangibles continued to increase faster than exports. Our surplus in intangible trade has now declined every month in 2005.
In earlier posting, I had been reporting that the intangibles trade balance was holding steady. However, services exports and imports for January through June 2005 were significantly revised "to reflect the incorporation of more comprehensive and revised quarterly and monthly data." This revision has had a significant impact on the month to month changes reported in previous postings - which are no longer correct. The newly revised data shows a steady decline this year.
The overall trade deficit decreased in July due most to a $1.1 billion decline in imports.
The deficit in Advanced Technology Products rose significantly in July to $4.2 billion (from a deficit of $3.7 billion in June) as exports rose much greater that the increase in imports. The last monthly surplus in this category was in June 2002 and the last sustained series of monthly surpluses were in the first half of 2001.
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 09:53 AM | Comments (0) | TrackBack
September 12, 2005
Design for Emergencies
Business Week is running a special report on Designs That Can Save Lives. Great ideas and product design. Just what the I-Cubed Economy is all about!
(At least three of these - the Water-Gate Dam, the Watercone - solar water distiller and the UnBathroom - temporary toilet for use in emergencies could have been of immense help in New Orleans. I wonder why they weren't used.)
Posted by Ken Jarboe at 12:44 PM | Comments (0) | TrackBack
Two additional views on New Orleans
Two somewhat opposing views on the future of New Orleans.
George Friedman runs a respected business intelligence company, Stratfor and weights in with "New Orleans: A Geopolitical Prize":
Katrina has taken out the port -- not by destroying the facilities, but by rendering the area uninhabited and potentially uninhabitable. That means that even if the Mississippi remains navigable, the absence of a port near the mouth of the river makes the Mississippi enormously less useful than it was. For these reasons, the United States has lost not only its biggest port complex, but also the utility of its river transport system -- the foundation of the entire American transport system. There are some substitutes, but none with sufficient capacity to solve the problem.
It follows from this that the port will have to be revived and, one would assume, the city as well. The ports around New Orleans are located as far north as they can be and still be accessed by ocean-going vessels. The need for ships to be able to pass each other in the waterways, which narrow to the north, adds to the problem. Besides, the Highway 190 bridge in Baton Rouge blocks the river going north. New Orleans is where it is for a reason: The United States needs a city right there.
Joel Garreau is a Washington Post reporter and editor and author of a fascinating study of urban areas Edge City: Life on the New Frontier. He argues "A Sad Truth: Cities Aren't Forever":
Certainly, as long as the Mississippi River stays within its manmade banks, there will be a need for the almost 200 miles of ports near its mouth. But ports no longer require legions of workers. In the 21st century, a thriving port is not the same thing as a thriving city, as demonstrated from Oakland to Norfolk. The city of New Orleans has for years resembled Venice -- a beloved tourist attraction but not a driver of global trade.
I think I have to side with Garreau on this one. Wholesale trade alone will not be enough to rebuild New Orleans to the size it was before.
But, the city can be more than a tourist attraction -- as important as that is. My key indicator will be how quickly Tulane University recovers. For the Fall semester, Tulane students will be dispersed across the nation. How many return (either in January if that is possible or next Fall) will determine New Orleans' future as a dynamic creative city.
And how many of them are willing to stay in the Big Easy and rebuild the city will tell me if New Orleans will become a Venice or a Milan - a tourist attraction or a creative city with a rich history.
Posted by Ken Jarboe at 10:18 AM | Comments (0) | TrackBack
September 09, 2005
China goes upmarket in apparel
A standard assumption about the old form of globalization is the product-life cycle and the division of labor. New, higher value products are produced in the home country where the product was developed. As the product matures and standardizes, production is moved to cheaper locations. This model fits with the idea of formal versus tacit knowledge I discussed yesterday (Flat or spiky): production of a new product requires the communication of tacit knowledge ("no, its not quite supposed to be like that") whereas standardized products can rely more on formal and codified specifications.
But what happens when the producing country moves up-market into new product development. Then, a part of the supply chain becomes a new competitor and that production requiring tacit knowledge may move to a new location. This has been the history of economic development -- the movement of production to areas which have built creative capacity, not just the flight to low cost sites.
This phenomenon is now occurring in the Chinese apparel industry, according to a recent story in the New York Times, "Chinese Apparel Makers Increasingly Seek the Creative Work":
Even as the Bush administration moves to impose new limits on Chinese garment exports to the United States, textile industry executives here in Xiamen, a coastal city an hour's flight northeast of Hong Kong, say they are already looking a step ahead. They are trying to figure out how more of their workers can move beyond the simple cutting and sewing of garments into what is known as engineering and, someday, the initial sketching of new clothing.
The American competitive strategy right now implicitly relies on holding on to the upscale portions of the market. But there are lots of smart people out there who are shooting for that target as well.
In apparel, it might come down to controlling the local market:
An obstacle to entering foreign markets for most Chinese designers is that current Chinese tastes in clothing are different from those in international markets. China is undergoing a revolution in style and daring, as young people react to centuries of cultural conservatism before and during Communism.
In China, hemlines on fashionable women's skirts are decidedly shorter now than in the West. And the latest trend in wedding dresses is toward garments that are essentially bikinis with a thin gauze connecting the bra and bottom. "You only have enough clothes to cover the parts of the body that have to be covered," Ms. Cai said. "The brides say, 'As long as I'm brave enough to wear this, I'm able to do anything.' "
Liu Baofa, a fashion expert at Fuzhou University, said that China's vast population meant that the country was bound to eventually emerge as a global fashion center. "China has so many people that if you have a design, someone will buy it," she said. "You don't need to be afraid you'll be too creative."
In fashion (as in many industries), there is a tension between local tastes and cosmopolitan tastes. Everyone wants to know what is hot in Milan this season, but products tailored to the local market are what sell. Gaining that local requires local knowledge – the kind you only get from being on the ground. Thus, we may well see China emerge as a global fashion center. But that does not mean it will replace New York or Milan. It will become one more spike in Florida's spiky world (see yesterdays' post).
Posted by Ken Jarboe at 08:47 AM | Comments (0) | TrackBack
September 08, 2005
Flat or spiky?
According to Tom Friedman, The World is Flat. Friedman means that advances in telecommunications and globalization have leveled the playing field so that anyone came compete with anyone else - Indian programmers with Silicon Valley computer jocks; Chinese fashion designers with New York's garment district.
Not so, claims Richard Florida. In forthcoming piece in the Atlantic Monthly - complete with fancy graphics - Florida argues that The World is Spiky.
By almost any measure the international economic landscape is not at all flat. On the contrary, our world is amazingly "spiky." In terms of both sheer economic horsepower and cutting-edge innovation, surprisingly few regions truly matter in today's global economy. What's more, the tallest peaks- the cities and regions that drive the world economy - are growing ever higher, while the valleys mostly languish.
This debate is part of the continuing argument over economic geography - why do certain economic activities end up in certain places. In the I-Cubed economy, the answer to that question is not as straightforward as it may seem. It is no longer about location of natural resources and naturally-occurring transport routes (rivers, oceans, valleys, etc.). The deciding variable is the flow of information.
The issue comes down to clusters versus networks: does innovation and production best occur in geographically concentrated clusters or in distributed networks. The answer is the ubiquitous "it depends." Clearly, much of scientific advancement occurs in networks. For generations, scholars have conducted their business through communications with like-minded fellow in other locations. The World Wide Web was invented to facilitate that type of communications. With increased specialization, a scientist at in one university is more likely to have a closer working relationship with someone working half way around the world than with his or her colleagues in their home department.
However, even in scholarly pursuits there has been a desire for proximity (the reason for the foundation of the Royal Society and other scientific organization). More recently, academia has re-discovered the importance of collaboration and cross-fertilization of disciplines - the person in the office next to you maybe working on a completely different research question but may have some important insights that will help your work.
The production process is the same. In some cases, cross-national production networks are the most efficient (such as in computer components and assembly). In other cases, you need to have your suppliers right next door.
The key variable seems to be the type of information and knowledge that is communicated in these activities. If the information is formal and codified, networks maybe the best means of distribution. This holds true for scientific papers and for detailed production specifications. However, if the information it more tacit, then proximity is important. The nuances of the scientific debate or rapid real-time modifications of either the product or process specifications require closer proximity. As I've stated before in Knowledge Management as an Economic Development Strategy, clusters succeed because they are very effective knowledge management mechanisms for transmitting tacit knowledge. As Alfred Marshall said over a hundred years ago:
When an industry has chosen a locality for itself, it is likely to stay there long; so great are the advantages which people following the same skilled trade get from near neighborhood to one another. The mysteries of the trade become no mysteries; but are as it were in the air, and children learn many of them unconsciously.
So, in the end, we will continue to see both networks and clusters. From a public policy point of view, we need to better understand the operations of both of these forms of communications in order to build up the appropriate public infrastructure and create the economic development location strategies best suited to each.
Posted by Ken Jarboe at 10:00 AM | Comments (0) | TrackBack
September 07, 2005
New Orleans' future
Even as the rescue efforts continue, part of the debate has turned to the question of the future vision of New Orleans. Speaker Hastert has already gotten himself in hot water for suggesting that the city not be rebuilt. As one wag responded, "you mean like we didn't rebuild Chicago after the fire?"
The newest entry into the debate on the future vision for the city is urbanologist Joel Kotkin with a piece in the LA Times, A NEW New Orleans. Unfortunately, Kotkin can't resist using this as an opportunity to continue his anti-"creative class" jihad:
Sadly, even before Hurricane Katrina's devastation, local leaders seemed convinced that being a "port of cool" should be the city's policy. Adopting a page from Richard Florida's "creative class" theory, city leaders held a conference just a month before the disaster promoting a cultural strategy as the primary way to bring in high-end industry.
This would be the easy, bankable way to go now: Reconstruct the French Quarter, Garden District and other historic areas while sprucing up the convention center and other tourist facilities. This, however, would squander a greater opportunity. A tourism-based economy is no way to generate a broadly successful economy.
. . .
Look a few hundred miles to the west, at Houston - a well-run city with a widely diversified economy. Without much in the way of old culture, charm or tradition, it has far outshone New Orleans as a beacon for enterprising migrants from other countries as well as other parts of the United States - including New Orleans.
Houston has succeeded by sticking to the basics, by focusing on the practical aspects of urbanism rather than the glamorous. Under the inspired leadership of former Mayor Bob Lanier and the current chief executive, Bill White, the city has invested heavily in port facilities, drainage, sanitation, freeways and other infrastructure.
At least in part as a result of this investment, this superficially less-than-lovely city has managed to siphon industries - including energy and international trade - from New Orleans. With its massive Texas Medical Center, it has emerged as the primary healthcare center in the Caribbean basin - something New Orleans, with Tulane University's well-regarded medical school, should have been able to pull off.
So, New Orleans should not pursue the "creative economy" but become a biomedical center. Well - guess what -- medical research is part of Florida's creative economy.
Kotkin also exaggerates the loss (if that is possible): "Even a rebuilt, reconfigured Latin Quarter would no doubt seem more Anaheim than anti-bellum." Wrong -- from what I have been told by my contacts with property in the French Quarter is that the anti-bellum core is still very much in place.
I agree with part of Kotkin's message -- if New Orleans only focuses on rebuilding its tourism industry, it will lose an opportunity to rebuild "a city with a thriving economy, a city of aspiration as well as memory." But New Orleans' cultural core is part of its jurisdictional advantage. To ignore that would be folly.
Why oh why does Kotkin insist at every turn in trying to create an either/or -- either you have good infrastructure or you have a "cool city". In this case, he paints a picture of those who want to rebuild the city as a museum versus the sensible types (like him) who want to put money into flood control. Moving beyond the rhetoric, it is clear that both rebuilding the cultural core and upgrading the infrastructure (including flood control) are necessary. The creative economy is built on good infrastructure.
I wish Joel would get over his anti-Florida kick. It takes away from his very important insights on how cities should be run.
Now -- for a different take on the future of New Orleans (and an important discussion of the industrial side), see
see Brad Setser's Web Log on the global economy - specifically his post on "Those Louisiana ports, once again":
A city will rise up again in Southern Louisiana; it just may be a smaller city, one shorn of the tourist trade and entirely based around the hard work of a bulk port and servicing the region's energy infrastructure.
I disagree that the tourist trade will disappear. But clearly the geography of the site continues to work in New Orleans’ favor as a transportation hub.
It remains to be seen whether they can go beyond the industrial vision for the city to build upon their other intangible (and creative) assets.
Posted by Ken Jarboe at 09:20 AM | Comments (2) | TrackBack
September 06, 2005
Old technologies
Old technologies never die; they return in unexpected ways.
WSJ.com - As Telecom Reels From Storm Damage, Ham Radios Hum:
In an age of high-tech, real-time gadgetry, it's the decidedly unsexy ham radio -- whose technology has changed little since World War II -- that is in high demand in ravaged New Orleans and environs. The Red Cross issued a request for about 500 amateur radio operators -- known as "hams" -- for the 260 shelters it is erecting in the area. The American Radio Relay League, a national association of ham-radio operators, has been deluged with requests to find people in the region. The U.S. Coast Guard is looking for hams to help with its relief efforts.
Ham radios, battery operated, work well when others don't in part because they are simple. Each operator acts as his own base station, requiring only his radio and about 50 feet of fence wire to transmit messages thousands of miles. Ham radios can send messages on multiple channels and in myriad ways, including Morse code, microwave frequencies and even email.
And the old fashion canoe was probably the most important means of transportation.
Lesson one: even though we are a complex, sophisticated society, in times of chaos and crisis, simple is better.
(and by the way, remember when everyone said radio was dead as a media of communications? Podcasting, talk radio, web audio -- it is various forms, the radio show is still very much alive.)
Posted by Ken Jarboe at 04:57 PM | Comments (0) | TrackBack
Quality of medical science information
Science is the process of continuing discovery. Part of that process of discovery is testing of hypothesis - normally using statistical methods. However, those tests are not always accurate. A story in the Economist, Scientific accuracy ... and statistics , describes a recently published report by Dr. John Ioannidis, a Greek epidemiologist on quality of medical studies:
One [well-know source of error] is an unsophisticated reliance on “statistical significance”. To qualify as statistically significant a result has, by convention, to have odds longer than one in 20 of being the result of chance. But, as Dr Ioannidis points out, adhering to this standard means that simply examining 20 different hypotheses at random is likely to give you one statistically significant result. In fields where thousands of possibilities have to be examined, such as the search for genes that contribute to a particular disease, many seemingly meaningful results are bound to be wrong just by chance.
Other factors that contribute to false results are small sample sizes, studies that show weak effects (such as a drug which works only on a small number of patients) and poorly designed studies that allow the researchers to fish among their data until they find some kind of effect, regardless of what they started out trying to prove. Researcher bias, due either to clinging tenaciously to a pet theory, or to financial interests, can also skew results.
When Dr Ioannidis ran the numbers through his model, he concluded that even a large, well-designed study with little researcher bias has only an 85% chance of being right. An underpowered, poorly performed drug trial with researcher bias has but a 17% chance of producing true conclusions. Overall, more than half of all published research is probably wrong.
That is a very large error rate - and cries out for better quality control.
Part of the problem maybe our continuing lack of bio-medical knowledge. The human body is such a complexity that we are, in many ways, still guessing about how it operates at the micro level. As the Economist points out:
The physical sciences, with more certain theoretical foundations and well-defined methods and endpoints, probably do better than medicine.
Even so, it would be well to remember that the scientific models we create are approximations of the real world - not the real world itself. We are still, ultimately, guessing. And the development of data and information is an ongoing activity - not a static event:
His [Dr. Ioannidis'] thesis that many scientific papers come to false conclusions is not new. Science is a Darwinian process that proceeds as much by refutation as by publication.
The best we can do is continue the research and testing - with full knowledge that what ever we come up with maybe wrong and/or in need of further refinement.
Posted by Ken Jarboe at 09:34 AM | Comments (0) | TrackBack
September 01, 2005
What happens when information disappears.
There is an email going around about an unthought-of dimension of the devastation caused by Katrina -- the loss of key information, in this case legal:
5,000 - 6,000 lawyers (1/3 of the lawyers in Louisiana) have lost their offices, their libraries, their computers with all information thereon, their client files - possibly their clients . . .
Our state supreme court is under some water - with all appellate files and evidence folders/boxes along with it. The 5th Circuit Court of Appeals building is under some water - with the same effect. Right now there may only be 3-4 feet of standing water but, if you think about it, most files are kept in the basements or lower floors of courthouses. What effect will that have on the lives of citizens and lawyers throughout this state and this area of the country? And on the law?
The city and district courts in as many as 8 parishes/counties are under water, as well as 3 of our circuit courts - with evidence/files at each of them ruined. The law enforcement offices in those areas are under water again, with evidence ruined. 6,000 prisoners in 2 prisons and one juvenile facility are having to be securely relocated. We already have over-crowding at most Louisiana prisons and juvenile facilities. What effect will this have? And what happens when the evidence in their cases has been destroyed? Will the guilty be released upon the communities? Will the innocent not be able to prove their innocence?
Our state bar offices are under water. Our state disciplinary offices are under water - again with evidence ruined. . . .
And, then, there are the clients whose files are lost, whose cases are stymied. Their lives, too, are derailed. Of course, the vast majority live in the area and that's the least of their worries. But, the New Orleans firms also have a large national and international client base. For example, I received an e-mail from one attorney friend who I work with on some crucial domestic violence (spousal and child) cases around the nation - those clients could be seriously impacted by the loss, even temporarily, of their attorney - and he can't get to them and is having difficulty contacting the many courts around the nation where his cases are pending. Large corporate clients may have their files blowing in the wind where the high rise buildings had windows blown out.
The same story can probably be told about cases in Mississippi where towns and cities have been completely flatten.
After the Sept 11 attacks, steps were taken to backup and geographically distribute key financial data. But, there are many other forms of key information that we don't adequately protect -- legal evidence as the case in point.
We maybe an emerging information economy - but we are still grasping with what that means. And what the ramifications might be when information disappears.
Posted by Ken Jarboe at 05:31 PM | Comments (1) | TrackBack
In the wake of Katrina
Alan Greenspan is fond of proclaiming that "flexibility" is a key strength of the American economy. In the wake of Katrina, that intangible of flexibility will be put to the test over the coming months. The storm was a personal tragedy for thousands. It will also be a major test of our economic resilience.
Energy prices are the most obvious example. For an economy that is sputtering alone on consumer (over?)spending, the sharp rise in energy prices will be a retardant. More critical will be possible shortages (actual or perceived) due to the supply line disruptions. Long gas lines and closed gas stations may do more psychological than economic damage. But as Keynes remarked, the markets (and economy) are ruled by the "animal spirits".
But energy is only one commodity in play. The ports along the Gulf Coast, especially New Orleans, are major links in our supply chain. New Orleans is also a major freight depot for both rail and trucking. Navigation on the Mississippi is disrupted. Already coffee and other commodity prices are rising due to concerns over supply disruptions. Rising prices may trigger inflationary pressures and prompt a stronger response on interest rates from the Fed.
The rebuilding effort will also have disruptive effects. Lumber prices are rising due to the anticipated demand. If lumber prices rise too much, it will put a damper on the home building industry nationwide - with consequences for the overheated real estate market. Insurance companies will take a major hit - with the potential drain of investment capital. And the Federal deficit will again balloon as disaster relief spending soars.
In the short term, the spending on the rebuilding will likely boost standard macro-economic statistics, such as GDP. But the growth will be both mostly illusionary (not really new investment) and short lived. Whether this is a short-term blip or a longer-term drag on the economy remains to be seen. On the optimistic side, there may be an opportunity to leverage the rebuilding into positive growth by updating the area's infrastructure.
Keynes was right about the "animal spirits" - which he described as "a spontaneous urge to action rather than inaction." In the end, Greenspan's touted flexibility - and the courage and ingenuity of the millions of people affected by Katrina - will be our most important intangible assets as we face this tragedy.
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Posted by Ken Jarboe at 08:15 AM | Comments (0) | TrackBack