“There is nothing like dream to create the future.” –Victor Hugo
MEDIA
Free Trade Makes Us Rich with Scott Lincicome
Yaron Brook and Scott Lincicome discuss how free trade promotes progress and how industrial policy holds it back.
Scott Lincicome is a senior fellow in economic studies. He writes on international and domestic economic issues, including international trade; subsidies and industrial policy; manufacturing and global supply chains; and economic dynamism. You can find him on Twitter at https://twitter.com/scottlincicome.
Connection: Local and Express - Silicon Valley Examined 4
On the Silicon Valley Explored podcast, Robert Hendershott and Don Watkins discuss the benefits, opportunities, and challenges of physical and remote connection.
INSIGHT
Connection and the Division of Labor
By Robert Hendershott and Don Watkins
Last week we talked about how trends in immigration are partly driven by agglomeration effects: for highly skilled workers, being surrounded by people in the same occupations increases productivity. A software engineer is more productive in Silicon Valley than in Ittoqqortoormiit, Greenland.
Reader Jim Brown replied with a thoughtful comment:
It's a good article, but missing is the important wider point that phenomena like “agglomeration,” interconnectedness, spontaneous cooperation, innovation, etc are subspecies of the most important aspect of capitalism - namely, a highly developed division of labor.
The division of labor has been central to how economists think about productivity and progress since Adam Smith. How does Ingenuism, with its focus on connection, relate to the division of labor? It’s a rich topic, but here are some initial observations.
Connection enables a division of labor by allowing people to coordinate their activities and trade the enhanced economic output. Specialization is impossible without connection. But beyond enabling specialization, connection allows knowledge, ideas, and insights to be widely shared and used, and it allows people to collaborate to create new knowledge and insights, all of which drive progress.
Indeed, connection is valuable even in a society without division of labor. Think of ancient Athens. Huge advances were made in virtually every area of knowledge long before there was a pronounced division of labor thanks to a polis where thinkers like Socrates, Thucydides, Plato, Diogenes, and Aristotle came together to exchange ideas.
Even relatively isolated sustenance farmers are better off if they can learn from each other about the best techniques for planting and harvesting corn. The spread of knowledge, ideas, and insights generates more wealth and knowledge than if they remain trapped in a single individual’s head.
But absent a division of labor, the value of connection is limited to what a single person can learn and produce on his or her own. As the division of labor develops, however, connected people discover their comparative advantage and go on to specialize and trade, allowing them to hone different skills and together produce vastly more. You cannot understand what Deirdre McCloskey calls the Great Enrichment without understanding the impact of the division of labor (as well as related phenomena like money, comparative advantage, and political and economic freedom).
Connection magnifies the benefits of a division of labor much like it magnifies the benefits of exploration and learning. A key insight from Adam Smith was that the division of labor is limited by the extent of the market. The more people we are connected to and the easier it is to connect (say, through advances in transportation, the development of money and payment systems, or introducing information technology), the more we can specialize and the more productive we become.
The Internet has taken the gains from the division of labor to a whole new level. And its main contribution to progress is not that it increased specialization (although it has done that). The miracle of the 21st century stems from our enhanced ability to share knowledge, ideas, and insights and collaborate with people across the globe in ways that go beyond specialization. Think of the creation of the COVID-19 vaccines.
In short, we see connection as the foundation enabling the division of labor, an ongoing force that magnifies the benefits of a division of labor, and a factor with enormous value that is distinct from the division of labor. Connection is at the root of the incredible progress we’ve made so far—including from more and better specialization—and it’s at the root of the even greater progress yet to come.
QUICK TAKES
The banality of driverless cars
If you happen to be southeast of Phoenix, you can hail yourself a driverless taxi. What’s the experience like? According to one journalist, it’s exceedingly normal.
The question on all your minds is whether the experience feels safe. The answer, in my view, is a resounding yes. The human in me was inevitably unnerved when first climbing into a driverless car. The rationalist in me quickly came around. Riding with Driver takes on a sense of normalcy. The wheel spinning itself never gets old. But rides, I daresay, can get a bit boring.
That’s a really good sign for the future of driverless cars.
The pull of connection
We’ve been discussing the value of physical connection, including its unique ability to lead to serendipitous interactions. Turns out, that’s leading some tech workers who fled Silicon Valley during the pandemic to return.
Last year, Greg Osuri decided he’d had enough of the Bay Area. . . . “It was just a hellhole living here,” said Mr. Osuri, 38, the founder and chief executive of a cloud-computing company called Akash Network. He decamped for his sister’s roomy townhouse in the suburbs of Columbus, Ohio, joining an exodus of technology workers from the crowded Bay Area.
He missed the serendipity of city life: meeting new people, running into acquaintances on the street and getting drinks with colleagues. “The city is full of that — opportunities that you may never have expected would come your way,” Mr. Osuri said. He moved back to San Francisco in April.
It remains to be seen how many tech workers will return, how many will continue making do with remote work, and whether new tech hot spots like Austin will eventually compete with Silicon Valley. But it’s interesting to see how great a role the value of connection plays in these kinds of choices.
Listen when I’m thinking at you!
Scientists have succeeded in translating brainwaves into text, enabling a paralyzed man to “speak.”
Tapping brain signals to work around a disability is a hot field. In recent years, experiments with mind-controlled prosthetics have allowed paralyzed people to shake hands or take a drink using a robotic arm—they imagine moving and those brain signals are relayed through a computer to the artificial limb.
Chang’s team built on that work to develop a “speech neuroprosthetic”— decoding brain waves that normally control the vocal tract, the tiny muscle movements of the lips, jaw, tongue and larynx that form each consonant and vowel. . . .
They . . . said if the technology pans out it eventually could help people with injuries, strokes or illnesses like Lou Gehrig’s disease whose “brains prepare messages for delivery but those messages are trapped.”
A lot of work remains to be done. The process is slow and suffers from accuracy problems and limited vocabulary size. Still, this is the kind of achievement that leaves you speechless.
Drone wars
By and large, the pace and nature of technology make it extremely difficult to find policy solutions to tech problems. Usually, we have to rely on technology to fix technological problems, whether it’s spam filters to clean up our email or software to protect us from hackers. Policy solutions often turn out to solve nothing—or, worse, they can actively suppress innovation.
So it’s a pleasant surprise that the FAA’s recent drone ID rule looks to be a more-or-less sensible way to protect air safety without holding back drone technology. The so-called Remote ID rule is intended to solve a problem posed, not by hobbyist “line-of-sight” drones, but by commercial drones that would fly long-distances through US airspace.
The government said it wouldn’t greenlight beyond-line-of-sight flights in congested airspace until it knew more. Namely: Who’s flying what?
A new rulemaking process was born, one that would put in place technologies that could eventually lead to the safe integration of commercial drone networks in US airspace.
The Remote ID rule addresses the FAA’s safety concerns by requiring each drone to broadcast a unique ID.
The rule, which the Federal Aviation Administration (FAA) called “a major step toward the full integration of drones into the national airspace system,” will pave the way for drone delivery at scale. Eventually, an order-of-magnitude more Americans may regularly engage with drones as a result of it.
It's time to open up the skies.
The myth of the lone genius myth
Here’s a good critique of widespread claims that “the lone genius” is a myth.
The problem here is that the myth of the lone genius is itself a myth. History (ancient and recent) is full of geniuses who came up with a revolutionary idea largely on their own - that’s why the archetype even exists in the first place (Aristotle, Newton, Darwin, Einstein to name the most obvious examples).
We emphasize the role of connection in progress. And it’s certainly true that even lone geniuses depend on connection. But no one takes “lone genius” to mean someone who grows up and achieves amazing things without any human contact. Rather, it’s meant to emphasize their outsized contribution to discovery and invention.
Sure, we shouldn’t have this naive view that these so-called solitary geniuses work 1000% on their own without any input whatsoever from other people, but that doesn’t mean that they didn’t do most of the heavy lifting.
From the perspective of Ingenuism, connection doesn’t discredit the role of the individual in innovation. Instead, it enhances the ability and influence of individual innovators—particularly the geniuses who contribute the most to progress.
Newton, for example, built on the work of Copernicus, Galileo, and Kepler. But this doesn’t make Newton the passive recipient of earlier knowledge. He didn’t ride on the backs of these figures but, to paraphrase the man himself, stood on their shoulders. He added to the knowledge he inherited. That was his achievement—not theirs.
But that achievement would have been of little value had it not been transmitted to the world. Connection is what allows us all to benefit from lone geniuses.
To put it differently, to celebrate the importance of connection is not to embrace egalitarianism. Connection means the connection of individuals, each contributing to human progress—most making small contributes, others making major ones.
RECOMMENDATIONS
Jeff Bezos’s company Blue Origin just sent its first manned rocket into space, with Bezos going along for the ride.
Last week I weighed in on the criticism of the “billionaire space race,” noting that the attempt to make space tourism economical is likely to lead to all kinds of advances we can’t event imagine. As the Wall Street Journal notes:
Several companies are working on constellations of small satellites that could beam fast internet to remote areas that lack it. Novel uses of technology are harder to predict, but surprises happen when smart people are trying to be the first to achieve some milestone. Nobody working on America’s first satellite missions in the 1950s and ’60s could have ever imagined that the Global Positioning System, or GPS, would one day keep millions of people and Uber drivers from getting lost.
But watching the press conference following Blue Origin’s flight, I was struck by another thought. I’ve always been fascinated by the existence of long-forgotten firsts. There was a first person to make fire. A first person to build a wheel. A first person to forge iron.
If humanity ever does figure out how to populate other planets and travel far beyond our solar system, then we are witnessing what may one day be the long-forgotten start of that journey. No, Branson and Bezos aren’t the first to go to space—but they are making serious space exploration possible by discovering how to make it profitable.
I highly recommend checking out the entire press conference, which includes incredible footage from the flight.
Until next time,
Don Watkins
P.S. Want to support our efforts? Forward this email to a friend and encourage them to sign up at ingenuism.com.