Russia after Putin...

Predictions of a breakup (Nextbigfuture via Instapundit, Stratfor). But as a friend wonders, what will happen of their black budgets and nuclear arms?

Half price gasoline?

This could be huge... (TechnologyReview via Instapundit):

At a pilot plant in Menlo Park, California, a technician pours white pellets into a steel tube and then taps it with a wrench to make sure they settle together. He closes the tube, and oxygen and methane—the main ingredient of natural gas—flow in. Seconds later, water and ethylene, the world’s largest commodity chemical, flow out. Another simple step converts the ethylene into gasoline.

The white pellets are a catalyst developed by the Silicon Valley startup Siluria, which has raised $63.5 million in venture capital. If the catalysts work as well in a large, commercial scale plant as they do in tests, Siluria says, the company could produce gasoline from natural gas at about half the cost of making it from crude oil—at least at today’s cheap natural-gas prices.

Government and Basic Research

A friend had this on his Facebook wall leaving me a bit conflicted:

I have had this conversation almost word-for-word with a historian friend before.

I would also respond by saying that we have no clue where curiosity driven research will lead us. A lot of cures and medical breakthroughs (X-Rays, fMRI, penicillin) came from research that seemed esoteric and silly to outsiders.

source: www.smbc-comics.com

What should the role of government be in basic research? On one hand I'm not sure it should be zero, but given limited resources, what's the limit?

I also made the mistake of assuming that business doesn't do basic research because of its intangible benefits and large costs - but that's not quite true (Cato):

When University of Pennsylvania economist Edwin Mansfield studied the 1960-70 behavior of 16 major American oil and chemical companies, he found that all 16 invested in pure science. The more a firm invested in basic science, the more its productivity grew.

Zvi Griliches of Harvard University, in a study of 911 large American companies, discovered that the companies that engaged in basic research consistently outperformed those that neglected it.

Most of the benefits of a company’s basic science are indeed “captured” by competitors. When Hiroyuki Odagiri and Naoki Murakimi studied the 10 largest Japanese pharmaceutical companies, which collectively enjoyed $13 billion sales in 1981, they found that on average each company had an annual return of 19 percent on its own investment in research and development. But each company obtained the equivalent of a 33 percent annual return on the R&D done by the other nine companies. Each company was, therefore, apparently free riding on the other nine.

But there is no such thing as a free ride in R&D. Only highly skilled research scientists can capture other people’s science. And since the best scientists are those who are actually doing research, to retain their services, companies have to fund them with considerable generosity and considerable freedom.

Thus we see that “capture” is the solution to, not the problem of, the industrial exploitation of pure research. Basic science is so vast, worldwide, and so unpredictable that no individual company can hope to cover its own needs. So companies have to fund scientists’ in-house pure research to retain their services as agents of capture.

There's also another pretty comprehensive argument at the Cobden Centre.

Depending on who you ask, in the case of the Large Hadron Collider that led to the discovery of the Higgs Boson particle, the cost was as much as $14 billion dollars (StackExchange). It's clearly a discovery that few if any private firms could have undertaken on their own - but that also presumes that the funds were spent efficiently.

On the other hand, we've also seen interesting discoveries/innovation as a result of the X-prizes - but these are defined outcomes when some important discoveries, as noted above, have happened by accident (not that this precludes other unintended discoveries from happening). On the privatize everything side of the argument, it's unclear that these discoveries wouldn't have been achieved in the private sector - and if governments weren't involved, maybe they would have happened earlier (or the counter argument might be given the state of intellectual property rights, some patent troll may have sat on these much needed innovations and/or prevented their development - but that's more a call for a rethink of how property rights are rewarded in the first place).

There are a number of private foundations that aim to fund breakthrough research like Peter Thiel's Breakout Labs that gives grants for early-stage scientific research that is too speculative or long-term to interest the for-profit sector (Wikipedia). I also don't think that scientists are immune to waste and the creation of costly bureaucracies. Further, whenever government is a funder, it tends to crowd out other funds - whether it be in competing for researchers or picking favorites. So what's the balance to strike and are governments currently striking that balance?

Update: Is the LHC a worthwhile project? (Debate.org)

A Fight to Watch

I've never really understood California. For as much as you get the beach bum 'live and let live' type vibe when you're there and for all the technological innovation being churned out in silicon valley, the people seem to consistently elect politicians who have this affinity for unions, regulations and bigger government.

Here's how TechCrunch describes a potentially disruptive business under attack:

Last week San Francisco car matching startup UberCab was served a cease and desist order by the city of San Francisco because it did not have taxi licenses or taxi insurance and went beyond the normal scope of a limo service by picking people up right away.

As UberCab (which has now changed its name to Uber) serves primarily tech industry elite, there is much Internet debate over whether this is another case of “Innovation vs. Establishment” or a startup just straight up breaking the law.

Michael Arrington inked an editorial that noted out "The outpouring of support from the community will be huge. And given that this model has potential to shake up the industry is all the major metropolitan areas across the country, there’s going to be a ton of interest in this case from all around. And UberCab will bathe in free publicity."

I can't help but love fights like this. As it turns out, the publicity has been very helpful to Uber (peHUB):

“Given the cease-and-desist [orders], it’s been a busy week,” laughs Kalanick. “We’ve seen waves of social media interest. We were a trending topic on Twitter. It’s business as usual at this point, but with a lot more attention and activity.”

It’s great news for a company that right now has plans to move into new markets, including New York and Los Angeles, and will undoubtedly be facing knockoffs if it doesn’t hustle.

Maslow's Hierarchy of Needs and Confirmation Bias?

Something to explore later when I have more time, but is Megan McArdle saying that Maslow's Hierarchy of Needs was developed to fit his view of the world rather than his observations of it? From a passage she quotes on her blog [emphasis mine] (the Atlantic):

Maslow admired many people I admire, Abraham Lincoln for example. But he and I can't admire Lincoln through some objective lens as psychologists or scientists. We can only say we admire Lincoln with the same level of objectivity that someone else might admire Jefferson Davis. Maslow wanted to give an objective validation that, for example, the Viet Nam war protestor was objectively superior to the Viet Nam general, the environmentalist was objectively superior to the captain of industry etc. Many cultural elites ate it up, just as Soviet elites ate it up when their psychiatrists said that anyone who didn't love the government was mentally ill and needed electroshock treatment post-haste.

Psychologists and social scientists generally still venture repeatedly today into the territory of human values and attempt to claim the ability to make objective judgments about which are the most healthy or scientifically validated. They don't ever seem to learn that they are often just trying to rationalize cultural fashions: In the 1940s the "mentally healthy" person was one who respected tradition, but he morphed into the to-be-pitied "organization man" in the 1950s. Psychologists valorized divorce as the "mentally healthy choice" for those who were not "growing" in the 1970s, whereas today they tend to say that it's better to stick it out and stop complaining so much.

Over the years, I've heard that the Hierarchy of Needs wasn't evidence based nor had there been much corroborating research but this is the first time I've heard how it was developed. Definitely something to explore further.

The Real Elixir of Youth

Our co-op students started two days ago. I'd have to say that the boundless energy is both energizing and exhausting. I guess I've been procrastinating about this post since we first went just north of Wuhan to visit a colleague's alma matter (actually I've been procrastinating about a great deal many things).

So there are a few questions that I've thought about in the past but never really had much of a resolution - is it better to hire students straight out of school and be the first to inevitably jade their sense of idealism and purpose and who ultimately run away bitter after spending countless hours on training (hey, we all know lots of people who that's happened to), or is it better to hire older mature workers who cost more but who can also be stuck in their ways - or worse, add negatively to culture? Another problem is that I suspect you're probably more likely to get things like this. Maybe it's not an either/or but combination of. This is ever more complicated by China (and even Hong Kong) and the very rapid change that nearly everyone has seen.

I haven't been having much success at hiring younger staff in Hong Kong. By younger I optimistically mean people even my age (at the ripe age of nearly 30). If it isn't the experience, it's the lack of enthusiasm and lack of stability. My colleague in Hong Kong says that it's about "young people today" which I suppose I should act all offended. Fortunately I have now delegated full responsibility for supervision, hiring and firing to her (though it makes sense since I am never there).

I believe culture matters. I believe it matters a lot. It doesn't take much to poison the pool. Younger workers more easily drink the kool-aid but that isn't to say that there aren't those older and more experienced who won't either. We'll see. Personally my initial thoughts are that students just out of uni are fantastic if given the proper guidance and structure while given the liberty to perform (but isn't that the key for all employees?). The thing I think most companies neglect is the resources for the adequate coaching. Hopefully I'll be ebullient (always wanted to use that word) in the future and have much to report.