The Genesis of the Career Entrepreneur

I have begun in earnest to read through Annalee Saxenian’s “Regional Advantage,” charting the computer industry’s genesis in both Silicon Valley and along Boston’s Route 128. As she explains, the culture of work and the resulting firm structures in Silicon Valley differed significantly from those in Boston, giving it critical advantages to become the preeminent region of technology development.

Even in the early days of the 1950s and 1960s, the West Coast had a far more open and decentralized network of employees, which contributed to intense knowledge sharing. Employees moved between competitors and would even help arch rivals solve problems. By way of contrast, Boston’s regional structure was based on hierarchical and independent firms. Knowledge in this region was located vertically within the company, which severely limited its ability to spillover and create new opportunities.

According to one executive:

“Here in Silicon Valley there’s a far greater loyalty to one’s craft than to one’s company. A company is just a vehicle which allows you to work. If you’re a circuit designer it’s more important for you to do excellent work.” [emphasis added]

From the beginning, the culture of work in the Valley was ad hoc and fluid. Engineers, programmers and other technical manufacturers became their own career entrepreneurs. Silicon Valley thus presaged by decades the labor market that we increasingly find ourselves in that has become a cause of concern. As a side comment, Saxenian mentions that many Silicon Valley workers far more rooted in the region than others. While the company man of the 1950s might move among the various arms of the firm to gain experience, which could be in different states, in the Valley, you would just move down the street. To me, that speaks volumes to the importance of regional knowledge hubs.

Value As a Result of Pricing Mobile Data Use

I was reading over the comments my former colleagues at the International Center for Law and Economics and TechFreedom filed on Title II reclassification to find these two paragraphs of pure Alchian bliss:

With most current pricing models, consumers have little incentive or ability (beyond the binary choice between consuming or not consuming) to prioritize their use of data based on their preferences. In other words, the marginal cost to consumers of consuming high-value, low-bit data (like VoIP, for example) is the same as the cost of consuming low-value, highbit data (like backup services, for example), assuming neither use exceeds the user’s allotted throughput. And in both cases, with all-you-can-eat pricing, consumers face a marginal cost of $0 (at least until they reach a cap).

The result is that consumers will tend to over-consume lower-value data and under-consume higher-value data, and, correspondingly, content developers will over-invest in the former and under-invest in the latter. The ultimate result—the predictable consequence of mandated neutrality rules—is a net reduction in the overall value of content both available and consumed, and network under-investment.

Information wants to be expensive as well as free

Famously, Stewart Brand noted that “information wants to be free.” But, that statement leaves off the other half of the phrase, thus burying the complexity of his thinking. In an email, he explained,

In fall 1984, at the first Hackers’ Conference, I said in one discussion session: “On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”

He continues in his book, “The MIT Media Lab”:

Information wants to be free because it has become so cheap to distribute, copy, and recombine—too cheap to meter. It wants to be expensive because it can be immeasurably valuable to the recipient. That tension will not go away. It leads to endless wrenching debate about price, copyright, ‘intellectual property’, the moral rightness of casual distribution, because each round of new devices makes the tension worse, not better.

 

When Policy Becomes a Battleground for Lifestyles

The WSJ quotes a section of Richard Wagner ’s “Economic Policy in a Liberal Democracy” (1996):

Suppose medical care is financed through state budgets, or, equivalently, through private insurance that is constrained by government to charge common pricing. Once this happens, a new network of interests is created. People who make relatively low use of a service form a natural interest group in opposition to those who might make relatively high use. What was once a matter of a simple toleration of different choices of life-styles under conditions where the choosers bear the costs associated with their choices, becomes a matter of political concern. In the presence of collective provision or common pricing, activities that entail above-average costs, actuarially speaking, will be shifted partially on to those whose activities entail below-average costs.

The state necessarily becomes involved as a battleground for the adjudication of disputes over personal life-styles. When economic activity was organized according to the principles of property, contract, and liability, a society could tolerate peaceably a variety of such life-styles because those who conducted more costly patterns of life would pay for them. But once the market principle of personal responsibility is abridged for some principle of collective responsibility, interest groups are automatically established that will bring personal life-styles on to the political agenda.

What Economic Environment Will TV Unbundling Create?

The Technology Policy Institute just went live with a video of their OTT event, exploring TV unbundling. There is a lot of solid material, but Laura Martin, a Senior Analyst at Needham & Company, explained what would happen if we went to an unbundled world:

  • As soon as you unbundle, you lose advertising revenue. Immediately, you have to double the cost because of lost ad dollars.
  • 1/2 of the revenues come from ads and the other 1/2 comes from subscription.
  • Currently, the market is $150 billion a year for TV revenue with a $400 billion in market cap.
  • Remember, in order for Nielson to measure for ads and thus calculate ad dollars, you have to reach 20 million homes.
  • By her projections, only 30 channels of 500 would reach this number. So, the other 400 or so would have to double their costs to consumers.
  • Currently, everyone one of those channels reaches the homes out of the 150 million, and there is an easy way to change channels.
  • Subscriptions are 5 year terms and tend to step up over time.
  • So, advertising moves away from TV the fastest in a la carte world.
  • Currently, the cost of content is $40 per household and what we would see is about 15 channels, which is generally the average around the world.
  • Everyone does consume the major 15 channels, but households tend to have passion channels that will lose out in this world.

Bruce Owen also noted that if we force suppliers to provide services a la carte, then how do we know if they are pricing the various channels correctly? We will have to look at costs because supplying the bundle costs less than supplying the a la carte channels. So, we are in a world of rate regulation.

Notes & Quotes from Eli Pariser’s “The Filter Bubble: What the Internet Is Hiding from You”

“To my preteen self, it seemed clear that the Internet was going to democratize the world, connecting us with better information and the power to act on it. The California futurists and techno-optimists in those pages spoke with a clear-eyed certainty; an inevitable, irresistible revolution was just around the corner, one that would flatten society, unseat the elites, and usher in a kind of freewheeling global utopia.” pg 3

The Filter Bubble introduces three dynamics we’ve never dealt with before: first, you are alone in it, as it is you own personal bubble. Second, it is invisible in its actions. Finally, you don’t choose to enter into the bubble. pp 9-10

“As the cost of communication over large distances and to large groups of people has plummeted, we’re increasingly unable to attend to it all,” leading to what blogger and media analyst Steve Rubel calls the attention crash. p 11

The world of personalization is appealing as a “return to a Ptolemaic universe in which the sun and everything else revolves around us.” p 12

“In the filter bubble, there’s less room for the chance encounters that bring insight and learning” p 15 My reaction: What does Kirzner have to say about this?

“To be the author of your life, professor Yochai Benkler argues, you have to be aware of a diverse array of options and lifestyles. When you enter a filter bubble, you’re letting companies that construct it choose which options you’re aware of. You may think that you’re the captain of your own destiny, but personalization can lead you down a road to a kind of informational determinism in which what you’ve clicked on in the past determines what you see next—a Web history you’re doomed to repeat.” p 16

Robert Putnam defined two kinds of social capital: in-group oriented bonding capital represents those events when you meet an old friend, while bridging capital occurs when lots of people from different backgrounds come together to meet each other, like in a townhall. p 17

Bridging capital creates our sense of the public – a space where we address the problems that transcend our niches and narrow self interests. p 17

“The structure of our media affects the character of our society. The printed word is conducive to democratic argument in a way that laboriously copied scrolls aren’t. Television had a profound effect on political life in the twentieth century—from the Kennedy assassination to 9/11—and uts probably not a coincidence that a nation whose denizens spend thirty-six hours a week watching TV has less time for civic life.” p 18

By the mid-1990s, “Most of the programming was horrendous and boring: infomercials for new kitchen gadgets, music videos for the latest one-hit-wonder band, cartoons and celebrity news.”   p 21 My reaction: Yet within the next decade, this dearth of content had birthed the Sopranos, GoT, Breaking Bad.

Jaron Lanier – “The idea of ‘intelligent agents’ is both wrong and evil… The agent question looms as a deciding factor in whether [the Net] will be much better than TV, or much worse.” But even more, there was another problem, the perfect agent would presumably screen out most or all advertising. p 23 My reaction: So is no advertising the goal of technology?

Behavioral retargeting – targeting the same ad over a network for a good or product that was previously searched for. p 44

“Everything which bars freedom and fullness of communication sets up barriers that divide human beings into sects and cliques, into antagonistic sects and factions, and thereby undermines the democratic way of life.” John Dewey p 47

The New York Times has traditionally been able to command high ad rates because advertisers knew it attracted a premium audience—the wealthy opinion-making elite of New York and beyond. p 49

“Many Internet watchers (myself included) cheered the development of “people-powered news”—a more democratic participatory form of cultural storytelling. But the future may be more machine-powered than people-powered.” pg 52

Lippman, in 1920, wrote that “the crisis in western Democracy is a crisis in journalism.” p 54

Disintermediation is the elimination of middleman, which is what the Internet is doing to every business, art and profession that aggregates and repackages, noted Dave Winer in 2005. p. 59

Media comes from the Latin for middle layer, which separates us from the real world. p 60

According to Pew, more Americans lost faith in news agencies between 2007 and 2010 than the previous 12 years. p. 63

“The Washington Post ombudsman described journalists’ often paternalistic approach to readers: ‘In a past era, there was little need to share marketing information with the Post’s newsroom. Profits were high. Circulation was robust. Editors decided what they thought readers needed, not necessarily what they wanted.’” p. 73 My reaction: In other words, competition for attention was minimal for years and producers didn’t have to respond to what audiences wanted, but what they felt they should have. Now we are seeing personalized content that seems to satiate base desires. So the natural question, is democracy really this fragile?

Clay Shirky noted that most people mostly skipped over the political parts of the newspaper, adding that “The question is how can the average citizen ignore the news of the day to the ninety-ninth percentile and periodically be alarmed when there is a crisis? How do you threaten business and civi leaders with the possibility that if things get too corrupt, the alarm can be sounded?” p 75. My reaction: This is exactly the criticism that Zynep heaped during Fergueson. The problem is that no filters yeild a lot of misinformation.

AJ Liebling – “Freedom of the press was for those who owned one.” p. 75

Naive realism is the idea that the world we see is the one true world. p 81  My reaction: Stretching back to Plato, there has been a strand of paranoid realism, that the true world is unseen. I can’t help but think that at its root, idealism is just a holdover of animism from a more primal time.  

The filter bubble can get in the way of learning because it blocks what researcher Travis Proulx calls meaning threats, the unsettling occurrences when our information is not congruent and we search for new answers. p. 89 My reaction: This is seriously uncommon as we know from the confirmation bias literature.

Curiosity is aroused when were presented with an information gap, which gives us a sensation of deprivation of information. The filter bubble hides things invisible, we’re not as compelled to learn about what we don’t know. p 91

“First, the filter bubble artificially limits the size of our ‘solution horizon’ — the mental space which we search for solutions to problems. Second, the information environment inside the filter bubble will tend to lack someof the key trait thats spur creativity. Creativity is a context-depenednet trait: We’re more like to come up with new idea in some environments than in others; the contexts that filtering creates are the ones best suited to creative thinking. Finally, the filter bubble encourages a more passive approach to acquiring information, which is at odds with the kind of exploration that leads to discovery” p 94

According to Arthur Koestler, creativity is bisociation when two matrices of thought: “Discovery is an analogy no one has ever seen before.” For Hans Eyseneck, creativity is the search for the right set of ideas to combine. pp 94-95

In the evolutionary view of innovation, random chance is necessary. Innovation requires serendipity. Donald Campbell and Dean Simonton have been pursuing a line of thought that considers innovation as a kind of evolutionary process, which can be summed up as “blind variation, selective retention.” p 96

Ahron Kantorovich and Yuval Ne’eman, two historians of science, argue that blind variation doesn’t benefit science much. Big moments of change, however, require it. p 97

“But overall, there will tend to be fewer random ideas around—that’s part of the point” p 97

For Arthur Cropley, creatives have “wide categories.” p 99 My reaction: Does the filter bubble reinforce these wide categories or reduce them?

“But perhaps the biggest problem is that the personalize Web encourages us to spend less time in discovery mode in the first place.” p 101

David Gelernter: “One of the hardest, most fascinating problems of this cyber-century is how to add ‘drift’ to the net,” he writes “so that your view sometimes wanders (as your mind wanders when you’re tired) into places you hadn’t planned to go.” p 104

“This is one other way that personalized filters can interfere with our ability to properly understand the world: They alter our sense of the map. More unsettling, they often remove its blank spots, transforming known unknowns into unknown ones…In the filter bubble, things look different. You don’t see the things that don’t interest you at all. You’re not even latently aware that there are major events and ideas you’re missing.” p 106 My reaction: Zeynep made this same argument about Ferguson, and yet it didn’t pan out in actuality.

“Because personalized filters usually have no Zoom Out function, it’s easy to lose your bearings, to believe the world is a narrow island when in facts it’s an immense, varied continent.” p 107

Personalized filters can affect your ability to choose your destiny. As Yochai Benkler explores in “Of Sirens and Amish Children,” (link) to be free you have to be able to not only do what you want, but also know what’s possible to do. The mention of Amish children here refers to Wisconsin v Yoder. p 112

“Your Facebook self is more a performance, less of a behaviorist black box, and ultimately it may be more prosocial than the bundle of signals Google tracks… We’re now in the uncanny valley of personalization. The doppelganger selves reflected in our media are a lot like, but not exactly like, ourselves.” p 115 My reaction: The point here is that identity is a performance, but this seems to be lost..

Dayparting is the name that advertisers use to describe parting the day into sections and advertising for the audiences that watch during that time. p 116

Present bias is the gap between your preferences for your future self and your current self. The current media environment helps to mitigate present bias, by mixing “should” stories with “want” stories, encouraging us to dig into complex issues. p 117

Eckles found that he could increase the effectiveness of marketing materials by 30-40% by tailoring preferred styles of argument and validation to different people. p 120 My reaction: Up from what number?

Your persuasion profile could have a significant financial value, because people would know what kinds of pitches work for you sepcifically. p 121

Persuasion profiling can be done invisibly and therefore its asymmetrical. p 123

Hasher and Goldstein’s 1977 study (link) helped to establish that individuals were more likely to believe a statement if it was said over and over again. My reaction: What about false rumors on Twitter about Furguson and the Boston Bombing?

The feedback effect of selecting/reading someone’s post on FB and then getting their content served to you in return is called the local-maximum problem by Matt Cohler. p 129

“In many ways,” writes NYU sociologist Dalton Conley, “such network-based categorizations are more insidious than the hackneyed groupings based on race, class, gender, religion, or any other demographic characteristic.” Among programmers, this kind of error has a name. It’s called overfitting. My reaction: The traditional demographic lines are how advertisers actually choose those to serve an ad to. Facebook actually goes much further than most in providing detailed information about the individuals. But what does this mean practically?  

kNN (link) p 129

Describing the potential nature of creditworthiness: “Part of what’s troubling about this world is that companies aren’t required to explain on what basis they’re making these decisions” p 132 My reaction: This is just plainly wrong. FCRA requires this.

“The statistical models that make up the filter bubble write off the outliers. But in human life it’s the outliers who makes things interesting and give us inspiration. And it’s the outliers who are the first signs of change.” p 134 My reaction: Is this correct? From what I remember, when more songs are added to the iTunes library, they are chosen, and the same applies to the jukebox. People choose the long tail.

“China’s objective isn’t so much to blot out unsavory information as to alter the physics around it–to create friction for problematic information and to route public attention to progovernment forums.” My reaction: Actually both of these are goals. Considering that there is widespread censorship of information, it is hard to claim that the Party’s goal “not so much.”

James Mulvenon, the head of the Center for Intelligence Research and Analysis, puts it this way: “There’s a randomness to their enforcement, and that creates a sense that they’re looking at everything.” My reaction: Of course, because their goal is enforcement and their culture doesn’t have the pressure of the 1st Amendment or the culture around free speech.

Rather than decentralizing power, as its early proponents predicted, in some ways the Internet is concentrating it. p 141

According to Viktor Mayer-Schonberger, we are now witnessing “a redistribution of information power from the powerless to the powerful.” My reaction: Um, this has always been the case, beginning with writing.See for example , Empire and Communication (link)

If television gives us a “mean world” filter bubbles give us an “emotional world.” Few people seek out information about homelessness, or share it, for that matter. In general, dry, complex, slow-moving problems–a lot of the truly significant issues–won’t make the cut. p 151-151 My reaction: It is unclear if this is a critique of “filter bubbles” or just derision against antipathy for progressive causes.

But while it’s easier than ever to bring a group of people together, as personalization advances it’ll become harder for any given group to reach a broad audience. In some ways, personalization poses a threat to public life itself. p 154 My reaction: Michael Schudson argues that this is the most appropriate way to consider the electorate.

The most serious political problem posed by the filter bubbles is that they make it increasingly difficult to have public argument. p 155 My reaction: How rare was this to begin with?

They reminded people that there was an election in the first place. They established for everyone what the candidates valued, what their campaigns were about, what their arguments were: the parameters of the debate. And they provided a basis for a common conversation about the political decision we faced–something you could talk about in the line at the supermarket. p 156 My reaction: Voters statistically cannot express what the candidates believe.

The aim of modern political marketing, consumer trends expert J. Walker Smith tells Bill Bishop in The Big Sort, is to “drive consumer loyalty–and in marketing terms, drive the average transaction size or improve the likelihood that a registered Republican will get out and vote Republican. That’s a business philosophy applied to politics that I think it really dangerous, because it’s not trying to form a consensus, to get people to think about the greater good.” p 157 My reaction: Someone has never worked on a campaign nor have they done any historical work in the subject. It is called Jacksonian Democracy.

For both David Bohm and Jurgen Habermas, dialogue was special because it provided a way for a group of people to democratically create their culture and to calibrate their ideas in the world. p 163 My reaction: These kinds of perfect models of democratic communication are naive in the worst sense, as they assume that everyone wants to partake in creating a democratic culture.

Whenever you learn a programming language it is the same, learn how to write the phrase hello world. On this Pariser notes: “A god’s greeting to his invention–or perhaps an invention’s greeting to its god.” p 166

Nearly all geek cultures are structured as an empire of clever wherein ingenuity, not charisma, is king. p 170

Technodeterminism is alluring and convenient for newly powerful entrepreneurs because it absolves them of responsibility for what they do. p 179

Zuckerberg responded to The Facebook Effect: “Where do you wanna start? I mean, I don’t know. It’s interesting what stuff they focused on getting right. Like every single fleece and shirt I had in that movie is actually a shirt or fleece that I own. You know, so there’s all this stuff that they got wrong, and a bunch of random details that they got right. The thing that I think is actually most thematically interesting that they got wrong is — the whole framing of the movie, kind of the way that it starts is, I’m with this girl who doesn’t exist in real life, who dumps me, which has happened to me in real life, a lot — and basically to frame it as if the whole reason for making Facebook and building something was because I wanted to get girls or wanted to get into some sort of social institution. And the reality for people who know me is that I’ve actually been dating the same girl since before I started Facebook, so obviously that’s not a part of it. But I think it’s such a big disconnect from the way people who make movies think about what we do in Silicon Valley — building stuff. They just can’t wrap their head around the idea that someone might build something because they like building things.” mentioned on p 180; (full quote)

On pages 182-183, Pariser recounts Thiel’s idosyncratic views on the world.

MeetUp.com came as a result of 9/11 when its founder began to talk to people on the streets and found a copy of Putnam’s Bowling Alone. Interestingly, Heiferman was just about booed off the stage when he suggested  to a huge MeetUp of programmers that they should get involved in the problems that matter–education, health care, and the environment. p 187

Supercomputer inventor Danny Hillis once said that the greatest achievement of human technology is tools that allows us to create more than we understand. p 203 My reaction: This is the constant tension between theory and engineering.

Things of interesting to read/research:

  • The Social Graph Symposium? (link)
  • Processing the News by Doris Graber
  • The Act of Creation by Koestler
  • Firms that look to deanonymize the web: Peek You, Phorm, BlueCava
  • George Gerbner and the mean world syndrome
  • Do artifact have politics? by Winner (link)
  • The Political Agnosticism of Free and Open Source Software and the Inadvertent Politics of Contrast by Coleman (link)

Is the Bill Maher / UC Berkeley Fiasco Really a Free Speech Issue, Or a Power Struggle?

David Frum has an intriguing post in The Atlantic dealing with the Bill Maher / UC Berkeley fiasco. Here are a couple of the choice paragraphs:

When protesters mobilize against an invited university guest, they are not merely expressing disapprobation of a selection. They are threatening the university with embarrassment or worse unless the university yields to their wishes. It’s the university, not the speaker, who is their target. What they want from the university is not the right to be heard, but the right to veto. More exactly: These battles over campus speakers are not battles over rights at all. They are battles over power.

The anti-Maher protesters explicitly demanded this power for themselves: “Do not force us to tolerate the speaker that you selected, without our input, for our event. We demand the power for students to choose the commencement speakers and to reject the university administration’s suggestions.” But as a matter of fact, Berkeley students do choose their own commencements speakers. Invitations are issued by the elected leadership of a student society whose membership is open to all Berkeley students in good academic standing. The Maher protesters wished to over-ride this process—and to claim for their own pressure group the unique right to speak for all Berkeley students.

Resources on Digital Trade & The Transatlantic Trade and Investment Partnership

I have been trying to educate myself on digital goods, digital trade, and the Transatlantic Trade and Investment Partnership (TTIP). Here are some resources from that research:

  • “Digital Trade in the U.S. and Global Economies” by United States International Trade Commission (Part 1, Part 2)
  • “Digital Drag: Ranking 125 Nations by Taxes and Tariffs on ICT Goods and Services” by Ben Miller and Rob Atkinson at ITIF  (source)
  • “The Importance of the Internet and Transatlantic Data Flows for U.S. and EU Trade and Investment” by Joshua P. Meltzer at Brookings (source)
  • “At a Minimum, Transatlantic Trade Negotiations Should Ditch Investor-State Provisions” by Daniel Ikenson at Cato (source)
  • “The Transatlantic Trade and Investment Partnership: A Roadmap for Success” by Daniel Ikenson at Cato (source)
  • “A Compromise to Advance the Trade Agenda: Purge Negotiations of Investor-State Dispute Settlement” by Daniel Ikenson at Cato (source)
  • “The Obama Administration’s Trade Agenda Is Crumbling” by Daniel R. Pearson at Cato  (source)
  • “EU-US Trade Negotiations Continue Shutting out the Public—When Will They Learn?” by  Jeremy Malcolm and Maira Sutton at EFF (source)

 

Ebola Responses & Institutional Differences

Ebola spreads because of a lack of organized health institutions. NPR recently reported on the health outcomes at Firestone’s rubber plantation in Harbel, Liberia, which has been successful in containing the disease, and on Reddit, a user explains one important part of the economic story that is left out:

A fascinating situation; Firestone was able to avoid the normal externality problems inherent in communicable diseases by fully internalizing the externality through clear property interests in having the town continue functioning. Other communities might always run into the tragedy of the commons problem where no coordinated response can occur because no one is willing to take risk in setting up quarantine areas or be able to enforce them. Additionally:

The Firestone managers had the benefit of backing and resources of a major corporation — something the communities around them did not.

This isn’t just a case of rich western company vs poor downtrodden third world citizens; the problem in Liberia is a lack of advanced infrastructure. Without that, fighting ebola is much more difficult. But in this town, while it’s true that there is backing and resources, there are also good incentive structures. The market pushed a private company to invest in infrastructure, and the value of the assets in Harbel meant that Firestone’s and the community’s incentives were aligned which made this such a success story.

Scientific Vindication Of Classical Rhetoric Studies

Pain might actually have a pro-social function:

“Our findings show that pain is a particularly powerful ingredient in producing bonding and cooperation between those who share painful experiences,” says psychological scientist and lead researcher Brock Bastian of the University of New South Wales in Australia. “The findings shed light on why camaraderie may develop between soldiers or others who share difficult and painful experiences.”

Students of rhetoric might have already suspected that, however. Pathos, one of the traditional appeals set down by Aristotle, is usually translated as emotional appeal. But ancient Greek was a preliterate language that conserved words by attaching multiple meanings onto them. This helps to explain why arete is such an expansive term. Accordingly, pathos meant both to suffer and to experience. In a small way, this study supports this ancient line of thought.