Arthur Diamond – Openness to Creative Destruction: Sustaining Innovative Dynamism

Arthur Diamond – Openness to Creative Destruction: Sustaining Innovative Dynamism

This book reminded me a bit of Wired cofounder Kevin Kelly’s What Technology Wants in its tech- and innovation-centric hyper-optimism. His optimism isn’t quite as sober as the Julian Simon, Deirdre McCloskey, or Hans Rosling variety, but Diamond’s enthusiasm is contagious. Readers interested in this subgenre might also like John Tamny’s The End of Work and Diamandis and Kotler’s Abundance: The Future Is Better Than You Think.

One useful contribution Diamond makes is a deep dive into just how disruptive new technologies are. For workers, the changes are often less severe than commonly thought. When cars replaced buggies, they still needed wheels, frames, and upholsteries, for example. Those workers’ skills did not become obsolete, though they did have to evolve. Many disruptive technologies take years or even decades for widespread adoption.

Ultimately, Diamond makes a culture-based argument for explaining technological progress. It takes more than research and development, or available capital for entrepreneurs. It takes a culture that approves of such things. People need to be willing to try something new and see if they like it or not. They need to have a certain audacity, or at least a positive view of it. People aren’t likely to give it a go if it makes them a pariah. Though Diamond openly admires Schumpeter—hence the phrase “creative destruction” in the title—ultimately his argument owes more to Joel Mokyr and Deirdre McCloskey.

This Week in Ridiculous Regulations

The 2019 Federal Register has already exceeded its page count during President Trump’s first year in office, with more than a month to spare and almost no activity in the month of January due to the federal shutdown. On a four-day week, three days’ editions of the Federal Register exceed 600 pages, and Friday’s edition was 1,133 pages. An average day’s edition is under 300 pages. The Fall 2019 Unified Agenda is also yet to come out. This week, Congress will likely avoid another shutdown by passing another Continuing Resolution to fund the government through an as-yet undetermined date. Meanwhile, rulemaking agencies published new regulations ranging from serial registration to engines that don’t move.

On to the data:

  • Last week, 49 new final regulations were published in the Federal Register, after 58 the previous week.
  • That’s the equivalent of a new regulation every three hours and 26 minutes.
  • Federal agencies have issued 2,606 final regulations in 2019. At that pace, there will be 2,948 new final regulations. Last year’s total was 3,367 regulations.
  • Last week, agencies published 317 notices, for a total of 19,196 in 2019. At that pace, there will be 21,715 new notices this year. Last year’s total was 21,656.
  • Last week, 2,680 new pages were added to the Federal Register, after 1,591 pages the previous week.
  • The 2019 Federal Register totals 63,563 pages. It is on pace for 71,904 pages. The 2018 total was 68,302 pages. The all-time record adjusted page count (which subtracts skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Four such rules have been published this year. Five such rules were published in 2018.
  • The running cost tally for 2019’s economically significant regulations currently ranges from savings of $4.39 billion to $4.08 billion, mostly from estimated savings on federal spending. The 2018 total ranges from net costs of $220.1 million to $2.54 billion, depending on discount rates and other assumptions.
  • Agencies have published 59 final rules meeting the broader definition of “significant” so far this year. 2018’s total was 108 significant final rules.
  • So far in 2019, 436 new rules affect small businesses; 20 of them are classified as significant. 2018’s totals were 660 rules affecting small businesses, with 29 of them significant.

Highlights from last week’s new final regulations:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Douglas Adams – So Long, and Thanks for All the Fish

Douglas Adams – So Long, and Thanks for All the Fish

The fourth volume of Adams’ Hitchhiker’s Guide to the Galaxy series. After eight long years, our hero Arthur Dent finds himself back on Earth—better, it’s even in his own time. By now, he is more than ready to resume normal life. This being a Douglas Adams book, this is not going to happen. But unlike the previous volumes, the majority of this book takes place on Earth, and Arthur even falls in love.

Arthur receives a mysterious gift of an immaculately made fishbowl in the mail. He soon finds out the all the world’s dolphins have disappeared. Those versed in Hitchhiker’s lore will know that these two things are related.

Douglas Adams – Life, the Universe, and Everything

Douglas Adams – Life, the Universe, and Everything

The third volume of Adams’ Hitchikers of the Galaxy series. The opening scene is classic. The previous book ended with protagonist Arthur Dent back on Earth, but stranded alone, two million years in the past. This book begins with Arthur winding his way through several solitary years. One day, out of the blue, a spaceship lands. Is he being saved at last? An alien being walks out, holding a clipboard. “Arthur Dent?” He asks. “Yes.” “Arthur Philip Dent?” “Yes.” “You’re a jerk.” With this, the alien walks back into his ship and flies off. It is another two years before Arthur finds his friend Ford Prefect and off they go on another adventure with ex-President of the Galaxy Zaphod Beeblebrox, Marvin the depressed robot, and others.

Ben Reiter – Astroball: The New Way to Win It All

Ben Reiter – Astroball: The New Way to Win It All

In 2014, the Houston Astros were the worst team in baseball. That summer, Reiter wrote a shock Sports Illustrated cover story hailing them as 2017 World Series champions. Could a team enduring a third consecutive 100-loss season really turn around that far, that fast? They did, and right on schedule. The Astros won the 2017 World Series, just as Reiter predicted three years earlier. Reiter’s book is about how it happened.

Jeff Luhnow became Houston’s general manager before the 2012 season, after showing impressive under-the-radar acumen in the St. Louis Cardinal’s front office. Luhnow and his team clearly had a strategy in mind, and it went above and beyond the Moneyball approach Billy Beane pioneered in the early 2000s to turn his budget-conscious Oakland Athletics into perennial contenders.

Traditional baseball strategy relies on gut instincts. Beane was the first executive to lean heavily on sophisticated statistics, trusting them over the eyes and instincts of veteran scouts to decide which players had potential, or which strategies work best during a game. Luhnow’s approach is a more of a marriage of analytics and scouts.

The break between the Moneyball approach and Luhnow’s approach isn’t nearly so stark in practice. But keeping that in mind, it is a useful narrative device for sussing out what turned Houston around so quickly—and apparently for the long haul.

Indeed, the Astros made it to the World Series again in 2019, falling to the Washington Nationals. And their roster looks like it will remain strong for the foreseeable future. But at the same time, some of the bloom has come off the rose since Reiter’s book came out. In the 2019 stretch run, the team acquired a relief pitcher, Roberto Osuna, who was serving a suspension for domestic violence. A team executive responded to criticism of the move by shouting loudly after an important playoff win how glad he was they picked him up—directly at a crowd of female reporters. He was soon fired, though their have been complaints about the front office’s culture becoming arrogant and not an entirely healthy work environment.

As of this writing, the Astros are also being investigated by Major League Baseball for violating the game’s sign-stealing norms during their championship 2017. it is acceptable, though technically illegal, to steal the other team’s signs with your eyes only. It is against baseball’s written and unwritten rules to steal them with outside technology such as binoculars or cameras, which the Astros allegedly did. It will be interesting to see if the Astros can overcome their scandals and possible hubris and maintain a dynasty that has the potential to become one of baseball’s most dominant.

Ex-Im Reauthorization Vote Today in the House

Over in the Washington Examiner, I have a piece about the Ex-Im reauthorization bill that the House of Representatives will vote on today. I argue that even if this year’s battle ends in defeat, it has already been a significant nearly five-year-long victory, with guaranteed chances for victory in the future:

The Nobel-winning economist Ronald Coase once wrote, “An economist who, by his efforts, is able to postpone by a week a government program which wastes $100 million a year (which I would call a modest success) has, by his action, earned his salary for the whole of his life.” Over the period from 2014 to 2018, Ex-Im’s reduced activity spared taxpayers from nearly $48 billion of risk exposure, or nearly $12 billion per year. Ex-Im’s total portfolio decreased by $52 billion, or an average of $13 billion per year. This is more than a modest success.

Due to Ex-Im’s reauthorization requirement, reformers will have another opportunity in a few years — a lesson in institutional design that should be applied to other agencies.

Read the whole thing here.

Sabine Hossenfelder – Lost in Math: How Beauty Leads Physics Astray

Sabine Hossenfelder – Lost in Math: How Beauty Leads Physics Astray

Hossenfelder brilliantly covers the intersection of philosophy, hard science, and social science. She has a lot of wisdom about certainty, error, doubt, and why quantitative analysis is important and useful, but also prone to abuse. Her thesis is that a scientist’s proper goal is to understand the natural world. In that pursuit, many scientists get a little too caught up in constructing elegant mathematical models. Models and equations are useful when they add to understanding, which they often do. In fact, they are often vital to it. But models are a means, not an end.

To Hossenfelder, it is disconcerting how often scientists describe their models and equations as elegant. The word is everywhere. It appears constantly in scientific papers and conferences, in the classroom, and in popular-level books, magazine articles, and documentaries. Scientists sometimes even judge their theories and experimental results to be true or false based on whether they are viewed as beautiful or elegant. Even Einstein fell into this trap with his famous “God does not play dice” remark to express his unease with the Heisenberg uncertainty principle.

This is a problem because the universe does not care if people think it is beautiful or not. f=ma is either true, or it isn’t. Ptolemy’s laws, or Keplers, or Newton’s, or Einstein’s, or the string theorists’ ideas, are each either true or false. The answers do not depend on whether someone thinks they are elegant. Rather than chasing elegant ghosts, a scientist’s goal should be to get as close to objective understanding as possible, given human limitations.

Hossenfelder is a deep enough thinker to realize that our aesthetic sense likely evolved in response to our universe; causality runs both ways. It is not a coincidence that our eyes are most sensitive to the very E-M frequencies the sun sends our way, or that our ears respond precisely to the most common sound frequencies around us. In addition to our sensory organs’ capabilities being determined by evolutionary processes, so too did the way we interpret those sensory inputs.

Aesthetically, people tend to find beauty and elegance in evolutionary success, and ugliness in threats or failures to reproductive success. it is not a coincidence that signs of beauty are almost universally signs of youth, health, and fertility. Most people consider symmetrical faces more beautiful because symmetry correlates with good health, and with good genes. We prefer cleanliness over filth because bacteria and disease are bad for survival and reproductive success. So it makes sense that scientists, as humans who evolved in just this way, both have the aesthetic sense that they do, and that they feel compelled to find it in physics and other sciences.

If a symmetrical face is elegant and beautiful, so is a scientific equation that exactly has a given symmetry, or exactly fits a certain exponent. e=mc2 is much more appealing than, say, e=mc2.1. Some laws, such as this exchange rate between matter and energy, do have this elegant precision. This is fortunate, otherwise humans might never have discovered them! Other phenomena that are just as true are less elegant, such as entropy, the probabilism of quantum mechanics, or the way friction coefficients, alloys, and engineering tolerances all defy perfect precision in practice.

Our search for elegance in scientific research is a longstanding natural impulse redirected in a new and foreign direction. Humans have been a species for perhaps 200,000 years, and proper scientists for just a few hundred years–just a thousandth or two of that time. Our 200,000 years is in turn perhaps a touch more than one three thousandth of the animal kingdom’s existence. Our evolved aesthetic sense is very, very old. As such, it will be some time before evolution is able to adapt to our new social environment and address Hossenfelder’s concerns. Until then, the least we should do is be aware of our elegance problem.

While reading the book, I kept thinking it had just the sort of message that my former economics professor Russ Roberts would enjoy. One of the hallmarks of his approach is a conscious avoidance of certainty, and keeping in mind the difference between good and bad uses of statistics (Russ is also a keen and humble philosophical thinker). As it turns out, Russ had an excellent conversation with Hossenfelder on his EconTalk podcast. It’s worth a listen, especially for those who don’t have time to read the whole book.

Though Hossenfelder’s home is in physics, in several points during the book she acknowledges how her thinking applies to the social sciences. She’s right. Economists in particular would do well to consider her arguments. Her arguments about the parallel uses and abuses of mathematical modeling has some intersection with Jerry Z. Muller’s recent book The Tyranny of Metrics, though Hossenfelder’s arguments are more nuanced and broader-ranging, and have a deeper philosophical foundation.

Lost in Math also reminded me of F.A. Hayek’s The Counter-Revolution in Science, which distinguishes between science and scientism. As Hayek defines the terms, science is the process of learning about the universe and the beings who live in it. Scientism is more about method-worship, valuing mathematical rigor and elegance as its own end. When taken too far, scientism can color results and potentially stunt entire research programs and lines of inquiry.

This has happened in economics. Crudely, science and scientism can be personified as Adam Smith vs. Paul Samuelson–though again, very crudely. Peter Boettke contrasts mainline vs. mainstream economics to make a similar point. Smithian mainline economists are interested in the human condition; mainstream Samuelsonians are a little too interested in technical proficiency and elegant modeling. They would do well to focus a little less on Homo economicus, and a little more on the admirable and real, though admittedly less elegant, Homo sapiens.