Tag Archives: economics

The Cost of Patent Trolls

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Interesting new paper on the cost of Patent Trolls in the US.

In the past, “non-practicing entities” (NPEs), popularly known as “patent trolls,” have helped small inventors profit from their inventions. Is this true today or, given the unprecedented levels of NPE litigation, do NPEs reduce innovation incentives? Using a survey of defendants and a database of litigation, this paper estimates the direct costs to defendants arising from NPE patent assertions. We estimate that firms accrued $29 billion of direct costs in 2011. Moreover, although large firms accrued over half of direct costs, most of the defendants were small or medium-sized firms, indicating that NPEs are not just a problem for large firms.

For reference, $29 billion is more than NASA’s budget ($19 billion in the same time period). This is a huge problem that has real impacts on our economy and our recovery.

 

Ruining the Curve

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New research points that the bell curve isn’t really a natural distribution, but what happens when you put humans under constraints:

Human performance, by this account, does not often fit the bell curve or what scientists call a normal distribution. Rather, it is more likely to fit what scientists call a power distribution.

…

Aguinis said the bell curve may describe human performance in the presence of some external constraint — such as an assembly line that moved at a certain speed.

“If you had a superstar performer working at your factory, well, that person could not do [a] better job than the assembly line would allow,” Aguinis said. “If you unconstrain the situation and allow people to perform as best as they can, you will see the emergence of a small minority of superstars who contribute a disproportionate amount of the output.”

As someone that has often “ruined the curve”, this doesn’t really surprise me. The curve is so easy to ruin, because it was entirely artificial in the first place.

Stop the Presses

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I had an interesting conversation earlier this week with a co-worker about our local paper, the Poughkeepsie Journal, having thrown up a paywall on their website. He’s a good decade plus older than I am, and we’re bother Poughkeepsie Journal subscribers, which means we both have unlimited access to their digital content.

I think the current PJ approach is a disaster. Not because making people pay for digital is a bad thing, but because of the way they are doing it. They’ve spent all this money on a “virtual paper”, this goofy web app that makes it look like an actual paper. I thought it was aweful, my colleage quite liked it.

And that’s the point. The people that want the digital paper to act like a physical paper, are all older than 40, and are aging out. Anyone younger than that has had the Web for their adult life, and wants their information in a digital first state. You want people in their 20s and 30s to buy your product, you need to make it native to them. Not doing so is just a going out of business strategy.

Where’s my clean, responsive website, that seemlessly works in mobile, tablet, and desktop? Where’s my urls to articles that work forever, so if I want to link something in a blog, twitter, or facebook, I don’t generate a broken link after 7 days when you shuffle it off to a different archive site, or loose it forever after 30 days. Where’s my setting to turn off advertising on the digital site as a subscriber? Where’s my kindle version?

And the answer is, no where. And that’s why most of the friends I have that are younger than me completely scoff at paying for a Poughkeepsie Journal subscription. Want to see this stuff done right? Got check out the Boston Globe, and read about what they did. That’s worth a digital only subscription.

There are solutions out there, and I actually think that if you make a compelling digital product, people (especially people in their 20s and 30s) will pay for it. But digital has to be the first priority of the organization, and right now, for Gannett (the PJ parent company), it seems like it’s about 15th priority. The one bright spot I’ve seen is the Poughkeepsie Journal is really doing a good job with twitter. I suspect that’s because they are doing that independent of Gannett (who uses the same antiquated CMS backend for all their papers, compare Poughkeepsie Journal to Burlington Free Press some time). So I think the folks at PJ might actually get it, but they are hampered by a parent company that doesn’t.

Here’s to hoping they make the leap past this very broken digital attempt and into something digital native, while there is still cash in the bank. I want the Poughkeepsie Journal to still be around in 10 years, and that’s not going to be true based on the path they are currently on.

Economist on Labor in China

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Via Mike Daisey’s blog I was led to the following bit by the Economist:

Anyway, that’s one angle: sweatshops are awful, but working a tiny rice farm is clearly worse, judging by the workers’ own preferences. However, the stance one takes on this depends on the question one is asking. An article on hardships in the garment industry in New York in 1909 might have elicited the response that things couldn’t be too bad since people were still immigrating from eastern Europe by the millions to take these jobs. Clearly they were better off working in a sweatshop in Manhattan than leading a miserable existence of poverty and repression in a shtetl in Poland. But at the same time, these workers were angry enough at the conditions they were subjected to that they staged the massive shirtwaist strike that year. Needless to say, that kind of politically free labour organisation is much harder to conduct in China because the state bans the formation of independent unions not controlled by the Communist Party. There’s a sequence in Mr Daisey’s piece where he describes seeing Foxconn’s perfectly open blacklist of employees who are to be immediately fired and not accepted at other factories because they are “troublemakers”; Mr Daisey notes that in a fascist dictatorship, you don’t have to resort to euphemisms the way management does in democracies. And that, too, rings true from my talks with underground Vietnamese labour activists. It’s hard to say how big the discount is on the manufacturing price of an iPhone due to the Chinese state’s ability to repress the formation of labour unions, but it’s not zero.

And I think that really hits an important point. Manufacturing in a totalitarian state means that there is an extra pressure against wage increase because labor organizing is a punishable crime.

There is some other great stuff in the article as well, so you should read the whole thing.

Freakonomics off the rails

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Great post at American Scientist about how Freakonomics has gone off the rails.

In our analysis of the Freakonomics approach, we encountered a range of avoidable mistakes, from back-of-the-envelope analyses gone wrong to unexamined assumptions to an uncritical reliance on the work of Levitt’s friends and colleagues. This turns accessibility on its head: Readers must work to discern which conclusions are fully quantitative, which are somewhat data driven and which are purely speculative.

I loved their first book, but as the author says, the strongest part was around Levitt’s own peer reviewed research. As they’ve gotten further away from that over the years, the methodology has become a lot more hear say and writing to a deadline.

The Seeds of Psychohistory?

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Isaac Asimov’s Foundation series was based on the idea that in the future overall societal events, like the rise and fall of governments, could be modeled mathematically.

Folks at the New England Complex Systems Institute have proposed a paper that looks at global food prices as compared to food riots and unrest, which in many cases directly preceeded much larger overthrows of governments. It’s a really interesting read.

This is not yet peer-reviewed published, so take that with the appropriate caution. The paper makes a point about the fact that many countries no longer have much of a local food system, which means they are directly impacted by global food price index. Two major statistical factors in the rise of global food prices are cited as commodity speculators and US corn ethanol policy.

I encourage interested people to read the whole paper, available on arXiv.

Hidden City Ticketting

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I knew that Airline pricing was pretty crazy, but I didn’t realize it was this crazy:

Passengers flying to or from airports that are dominated by a single carrier — like Memphis, Newark or Dallas/Fort Worth — pay fares 20 or 30 percent higher than at non-hub airports. The prices are even more inflated when you’re flying from a smaller city with a limited number of flights. A nonstop one-way ticket from Des Moines to Dallas/Fort Worth is $375 onAmerican Airlines, for example — more than the $335 Delta will charge you to fly from Miami to Anchorage.

But what happens when you’re interested in flying American from Des Moines to Los Angeles, which hosts a more competitive airport? That flight is only about half the price ($186), despite its being more than double the distance. Now, here’s the trick: American flights from Des Moines to L.A. have a layover in Dallas. If you want to travel to Dallas, the best way to get a reasonable fare is to book the flight to Los Angeles instead, and simply get off the plane at Dallas.

There is an article on NY Times with a great graphic showing route comparisons. I wonder if this becomes enough of a thing, how the airlines will react.