BP predicted drone technology being used for deliveries
21 Aug 2016 Leave a comment
in economics, economics of media and culture Tags: creative destruction, drones
This plane could cross the Atlantic in 3.5 hours. Why did it fail? – Vox
21 Jul 2016 Leave a comment
in transport economics Tags: creative destruction
Labor, Jobs, and the Modern Economy | Becker Friedman Institute
20 Jul 2016 Leave a comment
in economics, industrial organisation, Joseph Schumpeter, labour economics, politics - USA, population economics, technological progress Tags: creative destruction
Creative destruction in movie ticket sales
06 Jul 2016 Leave a comment
in industrial organisation, movies, survivor principle Tags: creative destruction
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Average top incomes in New Zealand
05 Jul 2016 Leave a comment
in human capital, labour economics, labour supply, occupational choice, poverty and inequality Tags: creative destruction, entrepreneurial alertness, top 1%
The average top income in New Zealand is that of a professional, executive or entrepreneur.
Source: The World Wealth and Income Database.
Nitpicking @stevenljoyce reply 2 @TaxpayersUnion on corporate welfare @JordNZ
05 Jul 2016 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, economics of bureaucracy, industrial organisation, politics - New Zealand, Public Choice, rentseeking, survivor principle Tags: creative destruction, endogenous growth theory, industry policy, innovation, picking losers, picking winners, public goods, R&D, water economics
The best the Minister for Economic Development, Steven Joyce, could do in response to my recent report on corporate welfare was nit-picking. Joyce said my definition of corporate welfare was flawed and that spending on R&D will grow the economy. He said
“To brand things like tourism promotion and building cycle-ways as corporate welfare is, I think, creative but not accurate at all.”
Joyce also said my report was
just somebody picking out a whole bunch of government programmes that in many cases don’t involve payments to firms at all…
Those that do involve payments to firms are specifically designed to encourage the development for example of the business R&D industry. Politicians don’t choose them.
Payments in kind are business subsidies. R&D is so important to the economy that the last thing you want is its direction to be biased by funding from government. Bureaucrats have a conservative bias and do not fund oddballs and long shots. The oddballs and hippies in the picture below could only afford the photo because they won a radio competition in Arizona.
The R&D expenditure that was criticised in my report was commercialisation, not basic research, which was specifically praised. Which research to commercialise is for entrepreneurs.
There is no reason whatsoever to think bureaucrats administering R&D subsidy budgets set by politicians are any better than private entrepreneurs at picking the next big thing.
Page 33 of "An Illustrated Guide to Income" more economic #dataviz at: bit.ly/10M7lqR http://t.co/FcmaqZWB32—
Catherine Mulbrandon (@VisualEcon) May 09, 2013
If bureaucrats were any good at picking winners, were any good at beating the market, they would go work for a hedge fund on an astronomically better salary package. The salary package of one top hedge fund manager exceeds the entire payroll budget of most New Zealand government departments including those administering R&D subsidies and other hand-outs.
Government expenditure in vital areas such as innovation should be justified on the basis of cost-benefit ratios and a rationale for why bureaucrats have superior access to information about the entrepreneurial prospects of unproven technologies and product prototypes.
Subsidies should not be defended because of their popularity and sexiness as Mr Joyce did for the film industry, tourism promotion and ultra-fast broadband
If they told New Zealanders that in their view tourism promotion should be cancelled, the film industry should close down, that their shouldn’t be any ultra-fast broadband…I don’t think people would be that enamoured with it.
On irrigation funding, Mr. Joyce cited a report by NZIER that found irrigation contributes $2.2 billion to the economy. Irrigation is a private good which can funded by pricing it properly including the recovery of capital costs. There is no case for a subsidy.
Public goods have spillovers, private goods such as water and irrigation do not. Users can fund the irrigation themselves buying as little or as much water as they are willing to pay out for out their own pockets. The NZIER report noted that it was not about the case for public funding:
… we are not able to quantify the environmental or social impacts if irrigation had never occurred. We also do not attempt to investigate the relative merits of public versus private sector funding of the schemes.
Will there ever be self-drive cars?
04 Jul 2016 1 Comment
in transport economics Tags: aviation safety, creative destruction, road safety, self drive cars
An astute commentator on the technology Sub-Reddit pointed out that commercial aircraft fly on autopilot but active involvement of pilots is expected. No one ever contemplates the contrary.
The autopilot on a plane has a far less challenging environment than a self driving. Planes do not have to navigate passed other planes within a fraction a second of collision, along with pedestrians and bicyclists.
Planes do not have the follow hyper-accurate maps and turn and swerve almost continuously to avoid a collision as distinct from turbulence or an error that is quickly corrected by pilot before any danger is encountered.
As far as self drive cars will go, I think they will be confined to driver assist functions with a driver always having to have his hands on the wheel.
A peculiarity of self drive cars is the brand name of Googleand Tesla are so strong that they have been able to hold off the usual Luddite reaction to new technologies.
Robots Are Really Bad At Folding Towels
25 Jun 2016 Leave a comment
in economics, economics of media and culture, entrepreneurship, human capital, labour economics, labour supply Tags: creative destruction, robots
Source: Robots Are Really Bad At Folding Towels : Planet Money : NPR.
Tyler Cowen on Joseph Schumpeter
10 Jun 2016 Leave a comment
in development economics, entrepreneurship, industrial organisation, Joseph Schumpeter, survivor principle Tags: creative destruction
Creative destruction in personal computing platforms
09 Jun 2016 Leave a comment
in economic history, entrepreneurship, industrial organisation, survivor principle, technological progress Tags: creative destruction, desktops, entrepreneurial alertness, PCs, smartphones
High US drug prices as a good shot public good @RobinHoodTax
08 Jun 2016 Leave a comment
in applied price theory, comparative institutional analysis, health economics, law and economics, politics - USA, property rights Tags: best shot public goods, creative destruction, drug prices, game theory, good shot public goods, military alliances, NATO, patterns and copyrights, Warsaw Pact, weakest link public goods, World War I
Much is made of the fact that drug prices are lower in Canada and Western Europe as compared to the USA. Indeed, day trips are made across the Canadian border to buy cheaper drugs as compared to the local pharmacy pricin in a US city.
Instead of what is always the relevant public policy question. What would happen in the USA if attempts were made to seriously reduce the price of drugs. The answer is obvious, the incentive to create new drugs would be severely diminished. There are no free lunches in public policy.
Bringing in new drug to the market is a seriously expensive business these days. That is before you consider the commercial risk of inventing a drug that isn’t much better than its competitors.
Of course, you can always be leapfrogged by another drug company brining on a better drug not long after you have brought yours to market. None of this is getting any cheaper.
Innovation by specific drug company is a form of public good production known as best shot public goods. Under a best-shot rule, the socially available amount is the maximum of the individual quantities. There is is a single prize of overwhelming social importance, such as a major drug breakthrough, with any individual’s effort having a chance of securing the prize.
A specialty drug for a year costs more, on average, than most household incomes wpo.st/0y_q0 https://t.co/uss6ikgkYk—
carolyn johnson (@Carolynyjohnson) November 20, 2015
The amount to be produced of a best shot public good depends on the best contribution rather than the usual situation of any contribution is interchangeable. Another example is a large number of people shooting at an incoming missile. The best shot counts, all the others don’t matter.
High drug prices in the USA could be the price of the weakest shot or weakest link public good. Weakest shot public good is where the socially available amount is the minimum of the quantities individually provided. One example a weakest link public goods are military alliances where the success of the alliance depends upon everyone contributing
In the weakest shot or weakest link theory of public good production, the free riding countries of Europe will bring the whole show down by not making their contribution to drug research by buying at good prices from the US pharmaceutical companies.
Perhaps a better way to look at drug innovation is a good shot public good. Someone has to make a reasonable contribution; that has to be the USA because it is such a large market. Without access to good prices in the USA, there wouldn’t be enough of an incentive for drug innovation.
Military alliances such as NATO and the Warsaw Pact probably are examples of good shot public goods. They depend on a number of large countries making their contribution but I always leaned towards the crucial best shot contribution of the USA and former USSR .
In the case of the start of World War I, Triple Entente against Germany was a weaker shot public good. Its defensive wall depended on the strength of the weakest country defending i.e. the unfortified Belgian border (in both wars). The Tripartite Alliance was a best shot public good depending on the strength of Germany’s attack for ultimate success or failure.
The IBM personal computer sold for $4,385 in 1981
08 Jun 2016 Leave a comment
in economic history, economics of media and culture, entrepreneurship Tags: creative destruction, good old days, PCs
Who said mobile phone networks were not contestable?
31 May 2016 Leave a comment
in industrial organisation, politics - New Zealand, survivor principle, technological progress Tags: anti-trust economics, barriers to entry, competition law, creative destruction, network goods, The meaning of competition
Source: New Zealand Commerce Commission.
Utopia, you are standing in it! 
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