Questioning Innovation

I haven’t quite worked through my reaction to some recent pieces in the Financial Times that seem to merit comment, so forgive me for picking out a just a couple of tidbits that still might serve as grist for discussion.

One thing that has long bothered me is the worship of innovation. Relatively early in my career, I had a consulting gig with a venture capital firm where my job was to look at oddball deals. I learned that quite a few bona fide inventions and technology improvements, even though they might seem cool and engineers would get excited about them, didn’t add up to a business opportunity. The most common failing was they didn’t represent a big enough improvement over the status quo to justify customers making the needed behavior changes to adopt them.

And an even earlier lesson came in college, when I majored in the history and literature of the modern era, which meant the Industrial Revolution to World War II. The first generation, and arguably even two, of the Industrial Revolution led to a decline in worker incomes in England. The revolutions of 1848 were mass pushback against the dislocations of the rise of factory work. So while industrialization eventually increased living standards, the transition costs exacted a great toll on laborers who didn’t live long enough to reap the benefits. And we are now suffering the long-term cost of environmental degradation.

So I have to confess to not being persuaded by the handwringing over the US losing out in 5G. Early last year, I heard a staffer in the Department of State say it was common knowledge that there was no business case for it, which would be news to anyone reading the press. Perhaps that’s the result of the cost of more tightly spaced cell towers.

Obviously device producers would love to force yet more product obsolescence on their users. But how many people really want smart homes, particularly as the tales of misbehaving heaters, stoves, and locks, and worse, bricked systems and vendor failure become common? Yet consumer durable makers are similarly eager to force smart products onto consumers to justify higher prices, no matter how marginal the added utility. And that’s before getting to my pet peeve: I do not want my devices spying on me.

Contrast this Luddite view with the opening section of a Financial Times column earlier this week by Rana Foroohar:

Anyone who still doubts that the US is economically decoupling from the rest of the world should take a look at a proposal the commerce department put forward last week. This would allow its secretary Wilbur Ross to prevent imports of any new technology deemed a “national security threat”. The broad language could apply not only to Huawei chips or Chinese dot-coms, but to European hardware, software and data services, too, if they are deemed to be linked to a “foreign adversary”.

Such a link is very possible now Europe is being pulled into China’s technology orbit via the 5G standards and technologies that make up part of the Belt and Road Initiative. I spoke recently to a senior executive at a strategically important US technology company who told me it is becoming legally tricky for him even to speak to his counterparts in Europe, because of the various restrictions that the Trump administration has put in place.

That’s scary, because one of the most important things the US could do right now to ensure both national security and its own position in the 21st-century digital economy would be to work with allies on transatlantic standards for emerging technologies like 5G, artificial intelligence and so on. In fact, that was a key recommendation in a recent Council on Foreign Relations task force report entitled “Innovation and National Security: Keeping Our Edge.”

If one wants to get worked up about the US actually being a laggard or being at risk of becoming one, it’s a little late to get worked up now. How about what passes for Silicon Valley talent focusing on….help me…apps? How about our slow and overpriced broadband? How about our generally terrible infrastructure, which is imposing a cost on citizens and businesses on a broad basis? America’s lifespan is falling, and the priority is 5G?

And that is of course before weighing the energy costs of new infrastructure and consumer devices. And even if the manufacturers succeed in making the networks more energy efficient, given that 5G would move massive amounts of data, the data center energy costs are likely to make 5G a meaningful global warming net negative.

The reason I am increasingly a Luddite is I see too much use of technology to curtail our economic rights and even now our supposed ownership, or otherwise enable better rentierism. Consider this factoid from an important Martin Wolf piece on how he would go about reforming today’s rigged capitalism:

One of Prof [Thomas] Philippon’s most striking conclusions [in his book The Great Reversal] is that the unit cost of financial intermediation has not fallen in the US over 140 years, despite technological advances. This stagnation in costs has, alas, not meant financial stability. There is also evidence that there is now simply too much credit and debt.

Now I very much need to read exactly what Philippon means by “unit cost” but since he can’t measure internal costs (with shared overheads, this is not a trivial question and firms like McKinsey often get hired to data wrangle and opine), one assumes this is transaction costs. So it is probably safe to conclude that at a minimum that all of the computerization of banking, tremendous extension of consumer lending and investment products, the widespread use of innovations like derivatives (yes, they’ve been around since ancient times, but in nothing like modern variety and volumes), securitizations, automated order matching….hasn’t made finance more efficient, at least from the user end. That presumably means all the efficiency gains were captured by the producers. And since transaction volumes have gone up considerably, you see finance services taking a larger share of economic activity.

Technology is working towards the creation of a new debt cropper society. It may not get anywhere near as far as it did in the Reconstruction Era, but having to pay and pay and pay (then via jacked up financing charges, now via restricted ownership rights leading to unnecessarily high costs, particularly from having to replace consumer durables more often or pay high authorized servicer repair costs), but the trend is underway. First consider this section of a 2010 post by Matt Stoller:

The phrase ‘the man’, as in ‘fight the man’, referred originally to creditors. ‘The man’ in the 19th century stood for ‘furnishing man’, the merchant that sold 19th century sharecroppers and Southern farmers their supplies for the year, usually on credit. Farmers, often illiterate and certainly unable to understand the arrangements into which they were entering, were charged interest rates of 80-100 percent a year, with a lien places on their crops. When approaching a furnishing agent, who could grant them credit for seeds, equipment, even food itself, a farmer would meekly look down nervously as his debts were marked down in a notebook. At the end of a year, due to deflation and usury, farmers usually owed more than they started the year owing. Their land was often forfeit, and eventually most of them became tenant farmers.

They were in hock to the man, and eventually became slaves to him. This structure, of sharecropping and usury, held together by political violence, continued into the 1960s in some areas of the South. As late as the 1960s, Kennedy would see rural poverty in Arkansas and pronounce it ’shocking’. These were the fruits of usury, a society built on unsustainable debt peonage.

At the time, Stoller’s concern was foreclosures and other forms of debt-induced penury. But this section of Philip K. Dick’s Ubik, which seemed fantastical when I read it in my youth, now appears all too imminent:

He hung up. And abandoned the hope of enticing and/or threatening the clean-up robots into entering his muddled apt. Instead, he padded into the bedroom to dress; he could do that without assistance.

After he had dressed – in a sporty maroon wrapper, twinkle-toes turned-up shoes and a felt cap with a tassel – he poked about hopefully in the kitchen for some manifestation of coffee. None. He then focused on the living room and found, by the door leading to the bathroom, last night’s greatcape, every spotty blue yard of it, and a plastic bag which contained a half-pound can of authentic Kenya coffee, a great treat and one which only while pizzled would he have risen to. Especially in view of his current abominable financial situation.

Back in the kitchen he fished in his various pockets for a dime, and, with it, started up the coffeepot. Sniffing the – to him – very unusual smell, he again consulted his watch, saw that fifteen minutes had passed; he therefore vigorously strode to the apt door, turned the knob and pulled on the release bolt.

The door refused to open. It said, “Five cents, please.”

He searched his pockets. No more coins; nothing. “I’ll pay you tomorrow,” he told the door. Again he tried the knob. Again it remained locked tight. “What I pay you,” he informed it, “is in the nature of a gratuity; I don’t have to pay you.”

“I think otherwise,” the door said. “Look in the purchase contract you signed when you bought this conapt.”

In his desk drawer he found the contract; since signing it he had found it necessary to refer to the document many times. Sure enough; payment to his door for opening and shutting constituted a mandatory fee. Not a tip.

“You discover I’m right,” the door said. It sounded smug.

From the drawer beside the sink Joe Chip got a stainless steel knife; with it he began systematically to unscrew the bolt assembly of his apt’s money-gulping door.

“I’ll sue you,” the door said as the first screw fell out.

Joe Chip said, “I’ve never been sued by a door. But I guess I can live through it.”

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  1. Fazal Majid

    “I heard a staffer in the Department of State say it was common knowledge that there was no business case for it,”

    It’s important to understand what that staffer meant. 5G can run on a number of radio frequency bands, including bands currently allocated to existing 3G to LTE/4G networks. The US carriers have opted to test “millimeter wave networks” in the roughly 30 GHz band (vs. typically 1.9GHz for most 4G networks in the US). Those high frequency bands can carry tremendous amounts of data, but they also literally can’t punch their way out of a paper bag and don’t penetrate buildings. Ideal for Times Square, useless everywhere else. The reason why is that huge swathes of prime spectrum have been allocated to the military.

    The Chinese, on the other hand, use bands in the 2.6—3GHz range that don’t have as much capacity as millimeter-wave, but can actually penetrate inside buildings. This makes the business case for Chinese-flavored 5G much less risky and more practical than the military-hobbled US flavor. That’s why even the British who usually slavishly toe the US line, have refused to exclude Huawei from their future 5G networks. They understand that deploying a white elephant millimeter-wave 5G would risk putting them at a competitive disadvantage from substandard vital infrastructure.

    The main benefit of 5G won’t be headline download speeds for customers, or slightly at best improved latency, but much higher capacity for the same amount of spectrum so carriers can keep up with demand without having to pay for the limited amounts of prime spectrum left that is actually usable for data networks.

    1. Ignacio

      OK, your last paragraph explains the benefit of 5G basically for providers and may be for sophisticated users. A plain vanilla consumer like me won’t notice much improvement if whasapp messages are downloaded a few miliseconds faster. Thank you.

      1. Synoia

        It could become slower with 5G.

        Response time depends on two factors:
        1. Speed (bits/second)
        2. Latency

        Speed is the number most discussed and advertised. (Throughput)
        Latency is based on the number of hops, packet switched, between you and the server(s) of the data. (Response time)

        Speed is what you purchase when you upgrade, possibly to fiber. More speed is good for downloads such as movies. It some waht rreduces overall latency.

        Latency is a measure of response time, and the interment fails badly on latency. Latency is important when one interacts with a web site. Latency is measure in seconds, or hops.

        Each data packet must be received, queued and resent at every switch (or hop), in both directions.

        The internet is a packet switching network. It’s latency is in seconds. The old analogue networks replaced by the interment had no packet delays, and had an end to end latency below 10 ms (Milli seconds), but had relatively low data speeds, around 9600 bits/second, compared with fiber at say 1 gbit/sec (One Billion bits per second).

    2. Kent

      I met with some ATT reps last week. They said ATT will not be rolling out 5G anywhere other than big city centers. The rest of us will get their 5Ge technology. Which is basically a better managed 4G.

      The business case for 5G is monitoring things that produce high rates of data changes: traffic, water pressure, temperature, etc… And then acting accordingly. So it can produce a marginal increase in convenience at fairly high cost. But with significant profits to telecom providers.

      Fazal is 100% correct about the spectrum issue. This is a uniquely American issue. We can’t both put the military above all other concerns and have 5G. Pick one.

      1. notabanker

        Why is domestic bandwidth allocated to the military, and why is that taking precedent over domestic use? I’ll pick one, and it’s not the military. Why do they have priority on American soil?

    3. Carolinian

      Thanks for this great comment. My local ATT store has what I think is a 5g antenna outside. It’s this huge metal can, about 8 ft long, on top of a pole. Presumably we’ll be forced to look at these everywhere if 5g becomes the thing.

      But if what you say is true then the whole thing sounds like a boondoggle.

  2. BruceK

    Great quote from Philip K Dick.

    I only read Ubik a few years ago – well after my youth – and thought of IoT as I was reading that. It seems so clear where the path is leading.

    1. Off The Street

      And reminded me of those metered room heaters in England. Keep feeding in whatever change you could scrounge to stay warm. Chappies would arbitrage lower value foreign coins of similar size, like so many centimes when so many pence were indicated, in the pre-Euro days to stick it to the faceless utility. They’d moved on by the time the collector made his rounds.

      1. Synoia

        My solution to metering electric heat was a 250 Watt light bulb for every light (lights were not metered).

        1. California Bob

          I hope you’re kidding. Most household light fixtures and wiring are adequate for 60W–with a margin of safety–you could very well burn your house down

  3. John B

    It is certainly true that a lot of new technology developments lead nowhere, or worse. Yet also seemingly lackluster innovations can over time develop into something quite useful. The steam engine in ancient times was only a toy, and then merely a better mining pump device; it took the development of other technologies in manufacturing and metallurgy to make it useful for transport.

    The metaphor I think of involves explorers along the coast of the New World. At first they see only a lump of rock, a sandy coast, a cliff; then they go left or right, and land disappears. Have they found an island? The mouth of a bay? A passage? They had to spend decades exploring inlets, estuaries, and barrier islands to know if they had found a continent — centuries looking for a northwest passage around it — and in each one there were snags, rocks, shoals, and, soon, shipwrecks.

    Now, it’s still an open question of technology will destroy human civilization or the species: climate change, artificial intelligence, novel biological weapons, or new nuclear weapons delivery devices seem like good candidates. It ought to be the role of government to try to deal with the consequences of the technology; neoliberalism’s relentless effort to dismantle government and prevent international cooperation may kill everyone. Still, on balance, given that you never know where innovation will lead, I’d rather have a bias toward too much than too little. In any case, once we reached a certain point in the technological exploration process I don’t think we can stop.

    1. hunkerdown

      You’re making the mistake (I hope) of conflating invention with innovation, of equating research with marketization. Necessity is the mother of invention. Greed is the mother of innovation and her unfitness for the task shows.

      1. Anon

        Yes, and the exploration of the New World (West coast anyway) was catalyzed by the discovery of Old World metals (gold) that brought the “conquerors” wealth and glory. Kind of like the innovators today?

        Little concern for the proletariat (Native Americans).

  4. GramSci

    Illuminating, but to Yves’ main point, do we really need more spectrum so we can have pay-per-use doorknobs?

  5. TheCatSaid

    So many challenges facing today’s true innovators (and they do exist), including:

    * Patent system is broken (outsourced to UK-controlled SERCO; US congressional servers have been forwarding info to Pakistan for likely decades–these servers used by US Patent Office)
    * Patent system is only useful for big players–a small person who takes out a patent will face predators in all directions. Maybe keeping as know-how is better than patenting, but funders (another predatory source!) typically want patents. Having a patent only gives permission to sue. Personal experience (neighbor who invented & patented key basic cell phone technology had it stolen by Philipps, he sued them, eventually Philipps settled with him but for a pittance–he deserved billions, but had to settle for maybe 6 figuers as they’d driven him to bankruptcy with legal delays)
    * Inventors with a true technology innovation typically don’t understand the complexities and difficulties of bringing it to market, including understanding the depth of what’s involved in integrating new technology with other components in a system (including pesky details like regulations)
    * Patenting is prohibitively expensive for small players, and ironically is no guarantor of originality (a current blog mentions they found through detailed analysis that something like 35% of patents granted were repetitions of things that already existed–US patent office made this more common some years ago)
    * Inventors with a true technology innovation typically don’t understand how all-too-common it is that their invention be bought out by a big player (including governments, for “national security”) who do this as a means to prevent disruptive new technology from interfering with established players. Defensive patenting is a common strategy for major players.

    These are just a few of the challenges. Shark-infested waters abound, even (or especially) with regard to the most potentially significant new developments.

    I’d also like to reinforce your point that in the case of non-significant innovations, customers often choose to do nothing–not to buy the latest new thing at all.

    I wish I had some great suggestions to offer. Finding partners with the right strength, experience and integrity seems key. (Government support bodies cannot be counted on to help with this, sadly. All too often things are not what they seem.)

  6. Bobby Gladd

    Great post. Tweeted out. The “new debt cropper society” indeed. “Everything As A Service” Indeed. The “innovators” “capturing all of the efficiency gains” indeed.

    The Best Things in Life are FEE! (the standing joke in the obscenely profitable subprime bank wherein I worked in risk mgmt)

  7. TheCatSaid

    And yet–M-CAM found that by rigorously investigating companies’ innovation profile–IIRC involving linguistic analysis going “backwards” 2 patent generations and projecting forward 2 patent generations considering commercial market development and relevance–they can put together a bucket of stocks that consistently outperforms the more-well-known-but-less-innovative comparison companies within the same industries.

    I don’t know their “secret sauce” but they believe they can analyze genuine innovation and do so in the context of its market biosphere.

    As down as I am about “innovation” per my previous comment, especially as a touted buzzword, the real thing is valuable. There are just so many hurdles to developing and rolling out significant innovations!

    1. Yves Smith Post author

      Tell me how “innovative” Amazon’s 1-click patent is.

      Tell me how “innovative” the 80+% of new drug applications are, which are merely minor reformulations whose main purpose is to extend patent life.

      Patents, particularly method patents, increasingly serve as means of rentierism as opposed to rewarding invention. But being a rentier is very profitable.

      1. TheCatSaid

        Those are exactly some of the points that M-CAM has made in numerous blog posts! Many patents have been awarded that do not qualify as genuine invention at all.

        That’s why M-CAM analyzes patents in a way that brings this to light, so they can differentiate among the really new stuff (and in markets and applications that show likelihood of responding positively to genuine new input) and the phony/insignificant new stuff like drug patents that are “merely minor reformulation”. For one example, see here:

        M-CAM would not consider counting a company’s patent portfolio as meaningful unless one is also analyzing them and considering the quality of patents it cites in its “past” (e.g., is a patent built on other previous non-inventive patents?) as well as future directions per their own market analyses.

        They regularly do free public comparative analysis of specific patent portfolios of publicly traded companies, which can be revealing indeed. (See “Patently Obvious” section on their website, )

        I don’t like Amazon for different reasons, but they doesn’t mean they lack innovation when compared with others in the order-fulfillment space. I think some of their innovation is immoral. (And I believe their innovations in ” fulfillment, logistics, data management services, finance and robotics”–i.e., not just “One-Click”!–were likely the result of Bezos’ two grandfathers’ high-level work in DARPA and nuclear industry related to novel sourcing/supplier agreements and logistics–little known facts.)

        While I don’t agree with Amazon’s ethos, that doesn’t mean they are not innovative per their actual IP portfolio. Their strategic advantages in this respect could be among the reasons they have been able to crowd out others . So–possibly “good behavior” in relation to innovation strategy from a business perspective, but probably “very, very bad behavior” in relation to ethics, monopolistic behavior, and how it actually obtained some of its IP.

        (Other than relentless HousatonicITS deep-dig work investigating the Bezos family tree, I have not seen anyone talk about the hidden background to Amazon’s success.)

  8. Synoia

    5G is mostly moot, because it extrapolates the current “technosphere” into the future, without considering Climate Change. It used to be predicted that climate change would hit mid to end of this century. That estimate is being proven optimistic, and that denial or misplaced optimism will define our future.

    We will have a difficult time keeping current installed technology working (For example power in California). 5 G deployment will not be a priority in the mitigation for climate change.

    The US is a mostly coastal civilization, dependent on available infrastructure, roads. power, water and sewers. With the loss of the coasts and attendant infrastructure from climate change the US population has to move inland, but that land is already owned and will become very expensive, and a huge opportunity for rent extraction.

    This is my personal, gloomy, view of the future. I’d like to be wrong, but if wishes were horses beggars would ride.

    1. Loki

      You make a key point. The impact of pending environmental changes (SL rise, rainfall, storm intensity, T extremes, etc.) and associated shifts in crop yield, water quality, loss of habitat, biodiversity, and on and on, are going to come down on us like a ton of bricks. And as pointed out above, we have made zero substantive changes in preparation, because … why, exactly? Is it still Infrastructure Week?

  9. Summer

    “…one of the most important things the US could do right now to ensure both national security and its own position in the 21st-century digital economy would be to work with allies on transatlantic standards for emerging technologies like 5G, artificial intelligence and so on. In fact, that was a key recommendation in a recent Council on Foreign Relations task force report entitled “Innovation and National Security: Keeping Our Edge…”

    Wow. US diplomacy. “Working with allies to keep the US’s Edge…”

    Should let “allies” know all they need to know.

  10. Livius Drusus

    Your point about all of the fuss over 5G while American infrastructure is crumbling and more and more Americans are dying deaths of despair is why I always say that our dystopian future is more likely to be cyberpunk as opposed to apocalyptic,at least in the short term. We will see increasingly advanced technology alongside the most wretched human misery.

    Even today there is a huge contrast between the images of an affluent, happy, high-tech society that you see on TV commercials and the reality that I see which is public squalor, rotting infrastructure, rising homelessness and the everyday misery of a population increasingly given to substance abuse, suicide and other indicators of poor health. Even the people I know who are the “winners” of society, the well-educated professionals, are unhappy and burnt out by their jobs and the increasingly intense competition required to gain and keep any kind of social status in this society.

    I agree with the comparison to the early industrial age. It is possible that the system might resolve much of the human suffering I described above but we are facing other crises directly related to unrestrained economic growth and technological development, primarily climate change but also the possibility of nuclear war, robotic armies, mass surveillance and the unforeseen consequences of biological engineering. So while living standards might improve for the masses in the future it might come at the cost of even more devastating crises later on and the potential loss of meaningful human freedom. This is enough reason to make a Luddite position respectable in my view.

    1. Louis Fyne

      whether it was Elon/his PR firm tapping into the zeitgeist or synchronicity….the theme for Tesla’s Cybertruck debut and post-party was cyberpunk.

  11. Summer

    I have a sneaking suspicion that software as a service creeping into music will crapofy to the point where recording studios have a new heydey.

  12. .Tom

    Telecom is infra.

    Yves talks about the economic cost of bad infrastructure. We were taught in geography at school that communications infra, roads, ports, phones,… , enables economic activity. That’s always seemed reasonable to me. When after college i went to work in telecom I felt good about what I was doing. I still think so.

    It’s not the network’s fault that the data extraction business is so screwed up. Many people and firms do useful work over the same networks. If fast reliable broadband is worth investing in as infra, the same should apply even more to fast reliable mobile data.

  13. The Rev Kev

    The long term aim of our techno-society is that in the end, you will not trully ‘own’ anything. Corporations will eventually be the only entities that will be able to own things. People will only be able to license things whether it is a service, a book, your music, your car – everything. You will be able to rent or lease possessions but not actually own them in any real sense.
    Actually it may be worse than that. We will all have a digital persona which is our identity as time goes by. One that we are already using to make online purchases, book tickets and fares, keep in contact with other people – the whole gamut of a modern society. But as you cannot control it, it will be a form of turnkey control as a government may restrict what you can do (as happens in China) or lock you out altogether. Or a corporation may do the same for a perceived social infringement (see Black Mirror’s “Nosedive”).

    1. .Tom

      I am as sick and tired of the BS simplistic ideology (propaganda) of innovation as I am of free market etc. but I’m not going to let the drivel of the propagandists cloud my view of what technology development can be useful for. The problems come from the screwed up distribution and use of social and economic power, not from having communications networks that perform well and are open to everyone at reasonable cost.

      1. Carey

        >The problems come from the screwed up distribution and use of social and economic power

        Goes with the territory, as far as I can see.

    2. Thuto

      I was going to make the same point about this “asset-lite” way of life where everything is available “as-a-service” (or to borrow a more apt description: the age of “hypercapitalism where all of life is a paid-for experience” as Jeremy Rifkin put it in his seminal book The Age of Access discussing the same subject).

      The whole thing is sold as a boon to consumers of course, unchaining them from the burden of ownership and promising a life of freedom where everything is available at the click of a mouse (or the tap of an app). That this concentrates power in all its multiple variants (e.g. surveillance power) in the hands of the ownership class is never mentioned, or that being “de-platformed” for “violation of our community standards” as the tech industry parlance goes can quickly turn said freedom into a nightmare where even the most basic necessities of life become inaccessible as you point out.

      Viewed in isolation these “as-a-service” propositions may even make sense, that they confer a disproportionate amount of power to their owners is what poisons the well as the corrupting influence of too much power tends to play out in all too familiar ways.

      1. Synoia

        …unchaining them from the burden of ownership and promising a life of freedom where everything is available at the click of a mouse…

        Hmm – I contemplate the difference between a wife (long term relationship) and other (transactional relationship) with ownership and fee-for-service.

        Society frowns on that transactional behaviour.

  14. Wukchumni

    There’s been no innovation really in one of my favorite pursuits, putting one foot in front of the other and vice versa repeatedly.

    You still have to walk your walk…

  15. Reality Bites

    The business case problem with 5G is that it is not about cellphones or the apps that run over them. It is meant to be infrastructure used to power advanced AI, autonomous vehicles, IoT expansion and the like. These technologies are constantly “right around the corner” yet never truly there. Most honest specialists in the field say that fully autonomous vehicles are at least 10 years off. That also completely discounts the necessary transportation infrastructure upgrades that would be critical to such a rollout.

    The spectrum issue also requires a bit more analysis. The FCC prioritized milimeter wave spectrum because more of it is open and it can carry high speeds. The most valuable spectrum, called midband, is the most valuable because it can reach further and support fast speeds. The problem is that satellite companies already hold much of this spectrum and they are fighting efforts to reallocate it. There was an article in NC about the fights over the L Band spectrum fight. This will only get tougher for the FCC as they continue to try to prioritize the telecom companies’ interests.

    The 5G fight is also a story of the broader short term financialization craze. Bell Labs, Lucent, and other leading companies were sold off or engaged in financial shenanigans that led to them losing their edge in R&D. The telecom companies also chose to outsource actual telecom infrastructure to third parties and simply rent it from them. This is the business model of companies like American Tower. This model has led to lagging investment in broadband and upgraded cell services outside of core, high margin areas. The companies choose to find new ways to milk the existing consumer base instead of doing actual improvements or useful innovation.

  16. Ben Oldfield

    I live in rural Ireland and have no access to fibre. I used satalite broadband for Internet connection which was OK but had a noticeable delay in reaction. I now use a 5G system to provide me with broadband.

    1. PlutoniumKun

      I’d be curious to know where you are, because so far as I’m aware 5G (or at least, what they call ‘5G’) has only been rolled out in Ireland in a few experimental city centre locations, and then only as a PR job. The key problem in rural areas for 5G is the need for a very dense network of transmitters, and there is no way any private provider will pay for the number of new masts required. There are lots still being built, and all are on 3G and 4G specifications, which indicates to me that certainly in Ireland, there are no active proposals for a 5G network.

  17. Samuel Conner

    Re: Ubik and the nightmare of “everything as ‘fee for service’ “, I have some hope that there may be a rebellion in terms of open-source low-ish technology. Corey Doctorow’s Walkaway is a high-tech vision; I don’t expect to live to see that, but low-tech perhaps.

    This site is a lot of fun to poke around:

    I especially like the idea of a relatively low-cost built-from-off-the-shelf-and-easily-machined-components device for mass producing stabilized-earth block for wall construction (can’t find a link for a working device though I’m sure I have seen videos [perhaps of another organization’s efforts]; OSE’s model appears to still be in development).

    This is intriguing, too:

    I suppose that by definition a micro-enterprise is ‘worker-owned’; hopefully if such things begin to scale up they will remain so.

    1. Samuel Conner

      Re: the high-production-volume compressed-earth-block machine, in the couple of years since I noticed this (and saw a video of what I thought was an open-source design machine), the concept seems to have gone somewhat main-stream and there are commercial devices available. Perhaps the OSE people are perturbing the markets a little.

    2. MyLessThanPrimeBeef

      I think it is in today’s Links that I read a comment about the book 1984 is not being used as a cautionary tale, but as a handbook.

      Is it the same with this book as well?

  18. smoker

    From June 2014, By David Golumbia Permissionless Innovation

    There may be no more pernicious and dishonest doctrine among Silicon Valley’s avatars than the one they call “permissionless innovation.” The phrase entails the view that entrepreneurs and “innovators” are the lifeblood of society, and must be allowed to push forward without needing to ask for “permission” from government, for the good of society. The main advocates for the practice are found at the Koch-directed and -funded libertarian Mercatus Center and its tech-specific Technology Liberation Front (TLF), particularly Senior Research Fellow Adam Thierer; it’s also a phrase one hears occasionally from apparently politically-neutral “internet freedom” organizations, as if it were not tied directly to market fundamentalism.

    Whether or not “innovators” would be better off in achieving their own goals without needing to ask for “permission,” the fact is that another name for “permission” as it is used in this instance is “democratic governance.” Whether or not it is best for business to have democratic government looking over the shoulders of business, it is absolutely, indubitably necessary for democratic governance to mean anything. That is why libertarians had to come up with a new term for what they want; “laws and regulations don’t apply to us” might tip off the plebes to what is really going on.

    Much to my horror when I did a search for permissionless innovation, moments earlier, to pull up David’s piece, a favorite of mine since I read it, the first link that came up was a horrid .org site of the same name. Turns out the site is sponsored by the libertarian Mercatus Center David discusses above, I guess they bought the permissionless innovation org domain some time after David wrote his piece.

    Among other horrid claims, the site hypes the example of Silicon Valley for other cities to follow. No mention of the inequality, homelessness and despair the Silicon Valley’s Tech Oligarchies have created (the Caltrain commuter tracks increasingly heavily watched for despairing trespassers, particularly after a gruesome spate of teen suicides a few years back).

    Lastly, if its not broke, don’t fix™ it, but if it must be fixed, make it as equitable, simple, durable and repairable as possible – transparently – if it’s considered a societal necessity such as a telephone. Additionally, clean up and put teeth in the corrupted (at the top) US Regulatory boards.

      1. smoker

        You’re welcome. Thinking about 5g, etcetera, I wish I had also added, [but if it must be fixed] first of all make sure it’s safe , to that last paragraph.

  19. JEHR

    Recently, I have been listening to podcasts which have contained interviews of Cory Doctorow. You know, of course, that there is a portion of Toronto which has decided to have Sidewalk Labs develop a pilot city. Sidewalk is owned by Alphabet and Alphabet is owned by Google (or vice versa). Just listening to Doctorow is mind-numbing and terrifying as he talks about the way the future will look under this kind of surveillance development.

    Imagine having a toaster that will only toast one brand of bread; or a washing machine that will only clean clothes of one chosen brand; or living in a Disney city, or experiencing privatization gone amok. Creepy and scary, I must say.

    Here’s his take on Sidewalk Labs.

      1. drumlin woodchuckles

        Those with one foot in the soup and one foot outside the soup ( so to speak) might be able to leap or jump or climb out of the bowl when the time comes.

  20. David

    “Innovation” simply comes from the Latin word for “new” and hasn’t always had the blindly favourable overtones it has today. For much of history “innovations” were regarded with suspicion, and as guilty until proved innocent. And in practice; most innovations fail, or succeed very slowly in tandem with the continued use of “older” technologies and procedures. (Anyone with the slightest interest in this subject should read David Edgerton’s “The Shock of the Old.”)
    Innovations worth supporting are in general those that make peoples’ lives easier and better. Running water, sanitation, refrigerators (not necessarily freezers) and the bicycle are good examples. And here’s a fun one; Until the 1970s, you couldn’t buy a suitcase with wheels, and it was normal to see travellers hauling heavy suitcases around by hand. The Japanese, with their cultural obsession with making life benri (basically “convenient”) developed the simple idea of putting wheels on a suitcase. I had one in the late 70s, and it drew envious glances everywhere. That’s what I call innovation.

    1. PlutoniumKun

      As someone who lives outside an urban street with cobbles, the early morning noise of wheeled suitcases drives me nuts! Its one reason my building banned Airbnb rentals.

      When faced with an ‘innovation’, I think the first question to be asked is ‘what problem is this solving?’ Most of them seem to fail at this first hurdle.

    2. ambrit

      The “hassle” of having to lug around your own suitcase stems from the massive expansion of the “traveler class.” Previously, only those with significant excess income could afford to travel. This class could also afford to engage ‘lowly’ porters and servants to do the carrying for them. Poor people took steerage and lugged their own suitcases, but conveniently out of sight of the ‘respectable’ classes. Since the social ethos of the time assumed that the poor deserved all the discomfort they could bear, easing their burdens, even through technology, was seen as declasse.
      Thus, the ‘innovation’ here that I see is the fact of your being able to travel at all.

    3. polecat

      So that same ‘innovation’ has segued into primary school children lugging ever-heavier loads of books, supplies, and other schoolish stuff inside wheeled cases & packbacks .. bullet-proofed no less .. as they hurry on into educational disfunction.

      Winning !!

  21. Susan the Other

    The genesis of frivolity. The Cold War’s race for better science, for physics and biology, outstripped our ability to actually use the new knowledge to create an economy. So applied science stepped it up and before we knew it we had consumerism. Turning a profit. Profiteering turned capitalism into disneyland. But the basic science in most cases remains solid. It’s how we use this knowledge that has damaged us all. Killed the planet. Just in time for climate change. What a confluence. And since we stuck like sap to neoliberalism, we just did economic things in desperation. The dictatorship of an absolutely craven ideal. What a pity. But that’s no good reason to throw the baby out with the bathwater. We need to apply science now in a very methodical way – not for idiotic free market gains but for survival. What happens when we all decide we don’t want the latest model smart phone? We can’t stay stupid forever, can we?

  22. JimTan

    It’s been almost ten years since the world came up with its last big breakthrough innovations. The 2000 ‘teens are beginning to look like a lost decade or dark ages with regard to meaningfully new technological innovation. To better highlight this, I think it might be helpful to list a short timeline of commercial innovation over the last few decades:

    First Satellite in Earth Orbit
    Fission Nuclear Power Plants
    Commercial release of Color Television
    Invention of Silicon Transistors, the Integrated Circuit ( Silicon Chip ), and the Integrated Circuit Manufacturing Process ( Planar Process )
    Commercial Release of Photovoltaic Solar Cells
    Kidney Transplant
    DNA Structure Mapped
    Commercial Cable TV
    Standardized Intermodal Shipping Containers and their Container Ships
    Discovery of Macrolide ( including Erythromycin ), and Glycopeptide classes of Antibiotics
    Invention of Pacemakers & Defibrillators
    Discovery of Antipsychotic Drugs

    First Human in Space, Manned Spacecraft Lands on the Moon, Unmanned Spacecraft sent to other Planets, Orbital Satellites
    Internet Precursor ( Arpanet )
    First Lung, Liver, and Heart Transplants
    Vaccines for Polio, Measles, Mumps, & Rubella
    Ultrasound Imaging
    First Coronary Artery Bypass Surgery
    First Laser
    Liquid Crystal Displays
    First High Blood Pressure Medication ( Beta Blockers )
    Contraceptive Pill available to consumers
    Commercially available Solid State Memory ( Floating Gate MOSFET )

    First Commercially available Microprocessor Computer Chips
    Gene Splicing / Recombinant DNA ( the Central Technology behind Genetic Modification & Genetic Engineering )
    CT, MRI, and PET Medical Imaging Devices
    Fiber Optic Telecommunications
    Balloon Angioplasty
    Color Photocopiers & Laser Printing
    Hand Held Electronic Calculators

    Home PC Computers
    Computer Networking Routers
    Space Shuttle
    DNA Fingerprinting
    MiR Space Station
    MagLev Trains
    Computer Software Companies
    Computer Gaming Companies
    Consumer Handheld Video Cameras
    Home Video Cassette Recorders

    Commercial Internet
    Mobile Telephones
    Commercial Release of Rechargeable Lithium-Ion Batteries
    International Space Station
    Mapping the Human Genome
    First Cloned Animals
    Thin / Flat Screen Television and Video Monitors
    CDs / DVDs

    2000 – 2010
    Film-Less Digital Cameras
    Wireless Data Networks and Technology ( Wi-Fi & Bluetooth )
    Touch Screen Smartphones, and Music Players
    Tablet Computers
    Commercial GPS
    USB Flash / Thumb Storage Drives
    Text Messaging
    Digital Video Recorders

    2011 – Now

    1. Roy G

      2010-2019 (the zero year is the first year of the decade):

      SpaceX Falcon 9 (reusable rocket booster)
      SLAM (simultaneous location and mapping) ie. Navigation apps
      Semi Autonomous driving
      Wireless Content Delivery Networks
      Cloud Computing
      Quantum Computers
      Wearable Computers
      GPU Processing
      Machine Learning / Artificial Intelligence
      Virtual Reality
      Augmented Reality
      Ride Hailing
      3D Printers
      Meatless Meat

      1. bfg

        I dont think that we can reasonably say that Quantum computers are an innovation given how nascent the technology still is.

        Also recent innovations in machine learning have got to do more with the advent of greater computing power. In many ways, current models are quite wasteful and one can make the argument that we aren’t necessarily close to artificial intelligence.

      2. JimTan

        Some of these are minor innovations, but I don’t think any are technological breakthroughs.

        SpaceX Falcon 9 (reusable rocket booster) – SpaceX reusable rockets are cost effective, but I doubt that anyone would consider these vehicles a technological step forward from their predecessor – the space shuttle program.
        SLAM (simultaneous location and mapping) ie. Navigation apps – Think this has been around since the early 2000s.
        Semi Autonomous driving – The most complex aspect of semi autonomous driving technology has been around in mining and agriculture for over 10 years now.
        Cloud Computing – Cloud computing is just a data center that is available to many users over the Internet.
        Quantum Computers – Current quantum computers are a symbol not a breakthrough.
        Wearable Computers – Wearable computers like Apple Watch are essentially smaller and correspondingly lower functioning smartphones.
        Machine Learning / Artificial Intelligence – AI Doesn’t Actually Exist Yet
        Virtual Reality – I’m not quite sure what problem Virtual Reality solves, and I think much of its technology is based on the miniaturizations and software integrations which have already been achieved in smartphones.
        Ride Hailing – A smartphone App that lets you order and pay for a Taxi ride is not a technological breakthrough.
        Drones – Most Drones are toys that contain GPS and a miniature high quality camera.
        3D Printers – 3D Printers have been around for decades.
        Meatless Meat – Meat substitutes have been around for a while, but their simulation of real meat flavoring is an interesting new innovation.

          1. Skip Intro

            What are CRISPR and genetic engineering, (not to mention graphene/2D materials, gravity telescopes)? Chopped Liver?

  23. Louis Fyne

    a downside of the “innovation” of electric cars is that it’ll be much harder/expensive for a 3rd owner (aka someone w/less disposable income) to keep a 10+ year old electric car operating as for example Tesla’s integrated powertrain design, proprietary software and parts.

    Most any truck or car can be kept in operation for 15+ years easily, going through multiple owners,—given the defacto open source nature of using analog parts.

  24. Tomonthebeach

    Yves hits the nail a bit off-center when it comes to 5G. But nevertheless, she drives the nail home. My view at the moment is that 5G is the latest Juicero scam. Nobody needs a super-expensive 5G network except the communications industry. Also, how will it cover the entire US – flyover states included? Several years ago, I was on a consulting gig in the deep woods of upstate NY. When I told Google to GPS me back to the airport, it couldn’t. There was no mobile data signal my phone could access – in New York! What is the likelihood that costly 5G infrastructure will ever make it to such places?

    Then there is my skepticism of the slimy, toothy reptile running the FCC, Ajit Pai, who so far seems to be on a mission from ATT – not fulfilling the mission of the FCC. Pai loves 5G.

    Stoller and Wu might caution how 5G would monopolize all communication. Think of the income generated from installing 5G infrastructure and then gouging the public by jacking service prices. Studies have already questioned the safety of being bombarded by 5G waves at close range 24/7. Why fry your brain when you can fry your entire body with your cellphone service? Upon reflection what is the value added by 5G over 4G? Run the quantified answer thru a CBA. I’d be shocked if the answer was that the benefits actually do outweigh the costs. So far, I am not remotely convinced of 5G’s value. I am convinced that it will make the entire world buy new mobile phones, and help monopolize internet, phone, and TV access – at a minimum.

    Lastly, the is the National Security Threat of 5G. Disrupted, 5G could bring civilization to a standstill. 5G might be like asking your enemies to build the hydrogen bomb that your country will use to blow them to smithereens – economically if not literally.

  25. lyman alpha blob

    About that added utility being somewhat marginal –

    The “innovation” trend I have come to loathe is that surrounding payment systems. I still can’t wrap my head around exactly what paypal does other than eliminate the need for parties to exchange bank account numbers and they’ve been around for years.

    I work indirectly with a lot of these new payment companies and they all seem to be parasites, promising increased payment speed or some other nonsense, as they insert themselves as the third or fourth or fifth party into a payment to collect added fees for themselves. They often piggy back onto already existing credit card or ACH payment systems. Essentially they are merely bookkeeping services and the gimmick is to take the work a traditional bookkeeping service would do and pass that on the the party who needs to receive the payment! I have wasted days and days at my job dealing with these [family blog]ers, basically doing their work for them without compensation just so my company can get paid at all. i definitely haven’t noticed that we receive payments any quicker.

    1. Yves Smith Post author

      It doesn’t. Paypal is just arbitraging the cost of having credit card merchant accounts for small businesspeople. The monthly minimum are high if you have your own merchant account.

      1. lyman alpha blob

        Aha! I’ve used paypal a couple times to make payments mainly to see what all the fuss was about and couldn’t figure out how using it was any different than paying directly with a debit or credit card. Never worked at a really small business though and hadn’t thought of that angle – didn’t realize it took away the need for a merchant account. Now I understand why some of the really small businesses my medium sized company deals with ask us from time to time if we accept paypal. Thanks!

  26. Calypso Facto

    I work in tech; I’m a software engineer on a security product that is currently undergoing mass adoption. I’ve been in this industry at this level (but not this company) since the crash and only ended up here because like anyone else who works for a living I had to keep the bills paid. Most of my friends are in similar straits and all of us are burnt-out and depressed and medicated. We know we’re lucky to have the jobs and we are still miserable with the work we do (all of us have to do pager rotations at bare minimum so there is limited work-life balance).

    The only reason I share that is so I can add something to this discussion of imminent AI/Cloud/Surveillance/IOT takeover of our supposed Cyberfuture: all these assumptions of increased app-ification of everything will necessarily require more people like me to keep the whole miserable machine running. The idea that AI is going to reduce the need for the supporting and sustaining engineers who keep the machine running is ludicrous. I guess the idea is that all the zoomers who grew up on social will have the innate computer skills to psychically commune with the machine instead of learning actual software skills?

    Anyway we’re at the point of software crapification across the board in so many industries that I’ve been waiting for some cash-strapped medium-sized municipality get hit with a ransomware attack and then decide to de-digitize their offices… and then finds that productivity improves and costs go down, because the return on technological improvements for most people ceased sometime in the mid-90s.

    1. flora


      all these assumptions of increased app-ification of everything will necessarily require more people like me to keep the whole miserable machine running. The idea that AI is going to reduce the need for the supporting and sustaining engineers who keep the machine running is ludicrous.

      That’s true, everyone at the analyze, design, code, implement, support, and expand level knows this. Unfortunately, it seems the C suites do not know this. They seem to think support either isn’t necessary or is a cost to be cut. I’ve watched heavier workloads of increasing complexity handed to fewer and fewer employees because so many former employees were outsourced to improve the company’s stock price. (Might be one reason there’s so much burnout among the people who actually make this IT world go.) Short example from the car world: CEO buys a new car, never changes the oil or does other maintenance, then wonders why the engine seizes up at a low mileage.

    2. lyman alpha blob

      I think you nailed it with your last sentence. The low hanging fruit has already been harvested.

      What passes for “reducing labor” is often just using tech to slough work from one person to another. If you have fewer accountants but have doubled the size of your IT department to deal with all the inherently buggy accounting software brought in the replace the people, what has really been saved?

    3. VietnamVet

      Intel was directly involved in a lot of the 2000 era innovations. They fired 10,000 employees and have yet to successfully migrate their mainstream CPUs to a smaller die size. They are following in Boeing’s footsteps. Monopolies don’t innovate. If Donald Trump gets reelected, they will be isolated monopolies. Plates can’t keep spinning forever.

  27. eg

    Stoller’s observations about “the furnishing man” are redolent of the company store and all the other manifestations of oligarchy that ran all the way back to the Bronze Age rural usurers.

    We need the Jubilee.

  28. Roy G

    It’s important to decouple technology/innovation from the real source of discontent, which is technology/innovation. Yves alludes to it in her first paragraph, where the hidden thesis is that technology/innovation are merely the handmaidens enabling the business model / profit motive.

    The reason we are seeing such lackluster results is that the business model puts the cart before the horse. This is to say that there are many technologies/innovations that could greatly enhance people’s lives and help the planet, yet they are smothered in the crib because they don’t meet the main criteria, which is generating a windfall profit, while many inferior/harmful/unethical technologies/innovations are advanced precisely because the business class can profit hugely off of them.

    Unfortunately, it’s nothing new, however, it is certainly being made much worse by a.) the network effect b.) the huge amount of floating capital looking for returns and c.) the engineered societal pivot towards money worship and the individual and away from service and community.

    My point is that innovation and technology have been hijacked by commercial interests, which is the true cause of the backlash we are experiencing.

    1. Robert McGregor

      Silicon Valley venture capitalists thought they were going to make “bookoo” money from Uber and Lyft just like they did from Paypal, Google, and Facebook. What a surprise to find that Uber is actually losing $5b per quarter, and with no viable plan on how they are going to ever make money.

      1. drumlin woodchuckles

        Pray that every dollar and every cent ever invested in UberLyft dies and goes to money heaven as every instrument-of-ownership in UberLyft goes to zero forever.

    1. drumlin woodchuckles

      @The Rev Kev,

      That website I offered below . . . the low tech magazine one . . . has on the screen which comes up an announcement of the publication of its ink-on-paper analog book ” The Best of Low Tech Magazine”. That book may be vaguely in the vein of a no-satire version of what you are suggesting.

      And since it is analog, it doesn’t need any batteries to read it. And if the lights go out, it can be read during the daytime by sunlight alone.

      ( And since it is the “best of” and not the “all of” this website, if one gets it before the interweb goes dark for good, one can make hard analog copies of all the low tech website articles which did not make it into the book. . . so as to have them too).

      1. Skip Intro

        Make sure they are thawed before dropping into boiling oil, unless you are keen on fireballs of fry oil…

  29. drumlin woodchuckles

    As innovation comes to taste ever more like ashes in the mouths of its victims, mining the past for better ways to have done things will become ever more popular. Eventually a word may have to be coined for “mining the past for better ways that things used to be done”. I will suggest the word . . . ” retrovation”.

    Here is a retrovation website.

    Here is another.

    The world, even the digital world, is full of other such sites. We should find them and read them and learn what we can before the crashing internet goes dark forever and erases all digitally stored forms of this information in the Digital Dark Age which is coming.

  30. Carey

    Thanks for this comment. I’m trying to does as you suggest, because everything around me strongly suggests that the machine *will* stop, and maybe sooner rather than later.

    “AI! Flying Autonomous Taxis! IoT!”

    Mmm… food water shelter love

    1. drumlin woodchuckles

      Foodwater shelterlove will get you through times of no money better than money will get you through times of no shelterlove foodwater.

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