Wednesday, December 16, 2015

Mapping Yesterday's Economic Geography, Today

The economy we measure isn't the economy we have.

Theme: Ironic demography

Subject Article: "Time travel: An isochronic map shows where to go, how long it took to get there – and what changes were on the way."

Other Links: 1. "Commentary: Modernising Economic Statistics: Why It Matters."
2. "Demographic Deception."
3. "American Experience Transcript: Henry Ford."
4. "Seattle Is the Next Detroit."
5. "What GDP can’t tell us: Politicians pay too much attention to this outdated indicator of economic growth."

Postscript: Lurking beneath the surface of my last two posts is the debate about the productivity paradox. Either the best days of innovation are behind us or ahead of us. Regardless, the benefits of new technologies aren't showing up in the productivity statistics. For the techno-optimists, a possible (partial) explanation:

This theory asserts that productivity growth in health care is inherently low for the same reason it is in education: Productivity-enhancing technologies cannot easily replace human doctors or teachers. In contrast with, say, manufacturing — a sector in which machines have rapidly taken over functions that workers used to do, and have done them better and more cheaply — there are, at least for the time being, far fewer machines that can step in and outperform doctors, nurses or other health sector jobs.

To be crude, the growing share of eds/meds employment for the overall labor market may be dragging down the efficacy of technology to boost productivity. What if the world is on the cusp of rapid advances in the productivity and efficiency of health care services? What if, indeed:

My favorite example is electronic medical records (my wife is a doctor), which have tremendous potential to enhance the efficiency of healthcare delivery in the US. Even today, most information on patient care is transmitted between clinics and hospitals, and between generalists and specialists, by fax and telephone. A less efficient system is hard to imagine – other, that is, than attempting to coordinate patient care in the traditional way while undertaking the transition to electronic record keeping. New systems are being adopted and serially abandoned as their deficiencies are discovered. Different medical clinics and hospitals are installing systems that are incompatible and unable to communicate with one another.

Doctors will one day look back on all of this as healthy experimentation. For the moment, however, they are tearing their hair out. They are delivering less patient care as they spend more time hunched over their laptops, inputting data that adds nothing, currently, to their productivity.

Once all health care data is digitized, innovation should come fast and furious.

Monday, December 14, 2015

Seattle Is the Next Detroit

Henry Ford and Detroit radically changed the economic geography of the world. Now, Jeff Bezos and Seattle are poised to do the same.

Theme: Economic geography

Subject Article: "Amazon growing faster than ever — adds record 18,000 workers in quarter to top 183,000 globally."

Other Links: 1. "Beyond Rust: Metropolitan Pittsburgh and the Fate of Industrial America."
2. "The Second Machine Age Is Dying."
3. "Amazon’s unprecedented growth is too risky for Seattle."
4. "Census: Seattle is the fastest-growing big city in the U.S."
5. "Seattle’s population boom approaching Gold Rush numbers."
6. "American Experience Transcript: Henry Ford."
7. "Cities of Knowledge: Cold War Science and the Search for the Next Silicon Valley."
8. "American Experience: Silicon Valley."
9. "‘The Rise and Fall of Urban Economies.’"

Postscript: Amazon will remake economic geography in more ways than just the cloud:

Amazon has been investing heavily in the logistics needed to extend all the way through its delivery chain. It is buying its own truck trailers, hiring on-demand delivery workers and building a new type of delivery hub — with technology that has thus far been kept under wraps — in major cities from Seattle to New York.

Analysts believe door to door delivery could be the next big sector that Amazon disrupts, in the same way it shook up cloud computing services by launching Amazon Web Services.

“The logical next step is, if you are going to have all this infrastructure, why not open it up to be a competitor to logistics networks like FedEx and UPS,” says Scot Wingo, executive chairman of ChannelAdvisor, a software provider for retailers that use Amazon and eBay. “I fully believe it’s something they could go after and be successful at.”

AWS is a much bigger disruption than the reinvention of logistics. In fact, the cloud allows Amazon to take on FedEx and UPS, dominating online retail. For now, I thinking AWS will shape where we work. A new type of delivery hub could shape where we live.