One of my favourite economic theories is the wonderfully named “Baumol’s cost disease”. It’s one of those rare things that’s relatively straightforward to understand, but that explains an awful lot about the world. It’s the subject of this week’s article, which ponders whether there might be a cure for individual businesses who find themselves suffering from it.
This week’s article
Businesses worry about keeping costs in check compared to their competitors. But they’re subjected to forces beyond just their own industries – and can suffer from “cost disease” as a result. But is there a cure?
This week’s four interesting links
Why does Tokyo seem to work so well? It’s a city of nearly 40-million people, but its standard of living is high and it hasn’t suffered either the choking car-dominance of cities like LA or the crazy real estate prices of… well, almost everywhere else.
Cole Lubchenko asks why, and concludes that Tokyo’s decentralised nature, relaxed zoning rules, and prioritisation of public transport have created a city that’s easy to get around, that isn’t constrained by a focus on a single centre, and that continually reinvents itself to suit its inhabitants’ changing needs:
“When you take the time to understand what makes the city special, you will begin to notice more and more of the aspects of Tokyo’s urban design that make the city so easy to be in. It is an ever evolving organism that never loses touch of its human-scale. No matter if you are visiting for the first time – or commuting to work daily – you should always find time to explore a new corner of the metropolis and feel for yourself what makes it work.”
Nuclear fusion is extraordinarily powerful:
“…we discovered that fusion powered the stars only about a hundred years ago, when the British physicist Arthur Eddington put together two pieces of knowledge into what was seen at the time as a wild surmise. The facts he combined were that the sun is made up mostly of hydrogen, with some helium, and that E=mc2.
“Eddington noticed that four hydrogen atoms weigh a tiny bit more than one helium atom. If four hydrogen nuclei somehow fuse together, in a series of steps, and form helium, then a little bit of mass must be “lost” in the process. And if one takes seriously that most famous of equations, then that little bit of mass becomes a lot of energy – as much energy as that amount of mass multiplied by the speed of light, squared. To give a sense of this ratio: If you converted a baseball into pure energy, you could power New York City for about two weeks. Maybe that process – hydrogen crashing into hydrogen and forming helium, giving off an extraordinary amount of energy in the process – was how the sun and all the stars burned so bright and so long. Eddington, in a paper laying out this theory, closed with an unusual take on the story of Daedalus and his son Icarus. Eddington argued in defense of Icarus, saying it was better to fly too high, and in doing so see where a scientific idea begins to fail, than it was to be cautious and not try to fly high at all.”
It’s also remarkably safe, and generates no problematic waste – unlike nuclear fission. But it’s always just around the corner, and has never really progressed towards commercial viability. But there are still scientists working on it, still progress is being made, and this New Yorker article looks at one particular team’s efforts to solve the (many) remaining problems. #
A thoughtful take on Web3 from Robin Sloan, who usefully approaches it neither from the perspective of cantankerous get-off-my-lawn cynicism nor credulous this-will-fix-everything naïvety.
Sloan has interesting technical objections:
“I feel like this simple premise is often lost in the haze: the Ethereum Virtual Machine, humming heart of Web3, is a computer that charges you many dollars to execute a very small program very slowly. It does so in an environment with special properties, and in some cases, those properties are worth the expense. In others… it’s like running your website on a TRS-80 with a coin slot.”
But his most powerful points are social:
“A key characteristic – really, a key aesthetic – of most (all?) blockchains is immutability. They are ledgers, after all. But, these days, where the internet is concerned, I find myself more interested in the opposite; in mutability and ephemerality. I like things that can change and grow, then vanish.
“I am a BIG fan of deletion, an operation basically antithetical to Web3.
“What do we lose when we lose deletion?”
Beautiful, useful, and thought-provoking: what more can you ask for from a building? #