Category Archives: Quotable

Manufacturing is changing, and so is productivity

Two excellent articles on increasing productivity, and why this will not result in many new jobs:

Davison describes the new kind of manufacturing, where everything is done by multi-step, highly complex machines, producing small series, requiring very high-skilled workers with rather sophisticated education. But they also need unskilled workers doing simple things, like moving parts between machines. The problem is, the pay scale for the second type is very low, and the difference in training to get to the skilled level so high, that no company will provide it:

For Maddie to achieve her dreams—to own her own home, to take her family on vacation to the coast, to have enough saved up so her children can go to college—she’d need to become one of the advanced Level 2s. A decade ago, a smart, hard-working Level 1 might have persuaded management to provide on-the-job training in Level-2 skills. But these days, the gap between a Level 1 and a 2 is so wide that it doesn’t make financial sense for Standard to spend years training someone who might not be able to pick up the skills or might take that training to a competing factory.

It feels cruel to point out all the Level-2 concepts Maddie doesn’t know, although Maddie is quite open about these shortcomings. She doesn’t know the computer-programming language that runs the machines she operates; in fact, she was surprised to learn they are run by a specialized computer language. She doesn’t know trigonometry or calculus, and she’s never studied the properties of cutting tools or metals. She doesn’t know how to maintain a tolerance of 0.25 microns, or what tolerance means in this context, or what a micron is.

The reason Maddie – hardworking and dedicated – has a job is simply one of distance: Shipping fragile parts to China for the unskilled operations is too risky and expensive. So Maddie has a job, but not career prospects. And the company’s management is facing very hard competition – their customers see them as a distributor – and is constantly scanning for things that can be outsourced or bought from another vendor.

Mandel describes the differences in productivity increases from improving productivity in domestic production – doing things smarter – and lowering cost by bargaining and optimizing the supply chain before it reaches the domestic organization. Both show up as productivity improvements, but have vastly different effects on domestic jobs:

But here’s the rub: both of these corporate strategies— domestic productivity improvements and global supply chain management—show up as productivity gains in U.S. economic records. When federal statisticians calculate the nation’s economic output, what they are actually measuring is domestic “value added”—the dollar value of all sales minus the dollar value of all imports. “Productivity” is then calculated by dividing the quantity of value added by the number of American workers. American workers, however, often have little to do with the gains in productivity attributed to them. For instance, if Company A saves $250,000 simply by switching from a Japanese sprocket supplier to a much cheaper Chinese sprocket supplier, that change shows up as an increase in American productivity—just as if the company had saved $250,000 by making its warehouse operation in Chicago more efficient.

This is known as import bias, and may be a problem, as it overestimates domestic productivity increases. Mandel goes on to show that this bias affect both left and right, and the difference in views is largely one about how to effectuate a change: Stimulus or tax relief.

Both authors advocate better data and better education as a way out, but quick fixes they aren’t. This is a real puzzler.

Waiting for Christmas (with help from Tim Minchin)

Tim Minchin, UK-based Australian comedian, composer and contrarian, performs what is my favorite Christmas tune, his “White wine in the sun”, which manages to be sentimental, smart, atheistic (or at least skeptical) and deeply felt, which I think everyone should be. Especially at Christmas, which is about so much more than religion.

And I am not just saying that because I am 3501 miles from home, with the family arriving for a prolonged Christmas visit, or because, just like me, Tim met his wife when he was seventeen and they stay together, but because this song describes the best parts of Christmas – indeed, the whole purpose of Christmas – quite precisely.

Looking forward to Christmas far to often is attributed to consumerism (at least for small children) or has to be legitimized through some religious reference, such as the inevitable pre-Christmas op-eds about how we are losing sight of what the holidays are all about, etc. etc.

So, this year as any other, I am looking forward to Christmas with our little rituals.

Just as long as it isn’t white. All our snow gear is in Norway. Snow would really let us have an American experience…

Douglas Adams on technology novelty

Found this quote in Jeff Jarvis’ Public Parts, from Douglas Adams’ How to Stop Worrying and Learn to Love the Internet, published in Sunday Times in 1999:

I suppose earlier generations had to sit through all this huffing and puffing with the invention of television, the phone, cinema, radio, the car, the bicycle, printing, the wheel and so on, but you would think we would learn the way these things work, which is this:

1) everything that’s already in the world when you’re born is just normal;

2) anything that gets invented between then and before you turn thirty is incredibly exciting and creative and with any luck you can make a career out of it;

3) anything that gets invented after you’re thirty is against the natural order of things and the beginning of the end of civilisation as we know it until it’s been around for about ten years when it gradually turns out to be alright really.

This is a surprisingly good explanation of a lot of things, and certainly something that should be taken into account by anyone trying to design policy to deal with technology.

What a pity that Douglas Adams died so young. We could need a lot more of his razorblade analysis and learned humor.

Epicurean financial readability

The Epicurean DealmakerThe Epicurean Dealmaker is one of my favorite blogs – witty, learned, topical, writing anonymously and eruditely on topics financial and others. That someone can profess to be an epicurean and at the same time an investment banker may seem like a contradiction in terms, but from his/her writings, the worthy blogger seems to pull it off. May he never be found out – or worse, may he not be found to be an out-of-work high school dropout with a Unix box, a Greek library and CTS.

Anyway, his latest missive on the continuing counterparty risk caused by investment banking consolidation and market monopolization is definitely worth your time and not inconsiderable effort. The causes of the last financial crisis are a alive and well, thank you very much. Lest you think the worthy Epicurean is an insider with an ax to grind, let me offer his elegant, is snarky, caveat emptor defense of the industry as well.

Investment banking and the whole “structured products” industry is so complicated that anyone can get lost – and most politicians and economists seem to avoid discussing it, much like most executives avoid discussing technological and network externalities. It simply is too hard, too complicated, and lacking in easy, sellable solutions. Better to not talk about it, at least not in detail.

By the way, he blames the lawyers for much of the complication of financial regulation. Hard to disagree.

A Hitch-reader’s guide to a mindful galaxy

Hitch 22: Confessions and ContradictionsHitch 22: Confessions and Contradictions by Christopher Hitchens
My rating: 4 of 5 stars

The (almost) definitive word on Christopher Hitchens? No – more of a set of quickly and deftly executed watercolors of a life that, at least in the mind, defies any attempt at categorization.

It is rather ironic, but perfectly in script, that Hitchens spends quite a bit in the book discussing impending death and ever-present knowledge that "the party will continue without me", and then, virtually on the day of the book’s publications, discovers that he has contracted, if that is the word, cancer of the esophagus and will be "a very lucky man" if he lives another five years.

Anyway, read this, as much for the language and argument as for the story itself. It puts you in the presence of a mind that is not encyclopaedic (that would be rather boring) but uses literature, history, language and personal connections and experiences as an arsenal for painting the most multicolored, yet consistent canvases you can imagine.

(Incidentally, this is the first new book I bought for Kindle for PC, and the software works admirably, though I wish it was possible to clip out some text for citations.)

View all my reviews

How will the Internet change how we think?

image The Edge question this year is "How has the Internet changed the way you think?". The result is eminently readable – my favorite so far is George Dyson’s answer, which is quoted here in its entirety:

GEORGE DYSON
Science Historian; Author, Darwin Among the Machines

KAYAKS vs CANOES

In the North Pacific ocean, there were two approaches to boatbuilding. The Aleuts (and their kayak-building relatives) lived on barren, treeless islands and built their vessels by piecing together skeletal frameworks from fragments of beach-combed wood. The Tlingit (and their dugout canoe-building relatives) built their vessels by selecting entire trees out of the rainforest and removing wood until there was nothing left but a canoe.

The Aleut and the Tlingit achieved similar results — maximum boat / minimum material — by opposite means. The flood of information unleashed by the Internet has produced a similar cultural split. We used to be kayak builders, collecting all available fragments of information to assemble the framework that kept us afloat. Now, we have to learn to become dugout-canoe builders, discarding unneccessary information to reveal the shape of knowledge hidden within.

I was a hardened kayak builder, trained to collect every available stick. I resent having to learn the new skills. But those who don’t will be left paddling logs, not canoes.

Short and sweet, in other words. Now, where did I leave that informational adze, what P. J. O’Rourke referred to as the "brief-but-insightful-summary" button?