Comments, observations and thoughts from two bloggers on applied statistics, higher education and epidemiology. Joseph is an associate professor. Mark is a professional statistician and former math teacher.
Obviously, you can't compare a piece of technology in development to one that's up and working. The Falcon Heavy isn't a proposal or a prototype; it's a viable vehicle currently in use. The engineers at SpaceX deserve a great deal of credit for solving daunting technical challenges, but it's important to note that it took them much longer than they anticipated and, more to the point, there's nothing revolutionary about the technology. For that, you'd have to look someplace like this.
Sabre: the ‘Holy Grail’ in space technology
Researchers
have spent decades trying to crack the problem of how to fly from earth
to space and back again, writes Peggy Hollinger.
But
it took a combination of rocket and nuclear science to make the
breakthrough that is now drawing interest from around the world in
Reaction Engines’ Sabre technology.
“It was pretty
clear that the rocket needed a bit of a leg up and the only place to get
that was from the Earth’s atmosphere,” says Alan Bond, one of Reaction
Engines’ three founders.
“But the [speed] you get out
of conventional jet engines isn’t enough. Somewhere in 1982 . . . I
realised that a bit of theory I had used on nuclear engines 10 years
before could actually help. So the hybrid air-breathing rocket engine
came into existence.”
The engine combines jet and
rocket technologies thanks to its unique pre-cooler, which extracts heat
from air flowing in at high speeds of up to Mach 5 — several times the
speed of sound.
This enables it to be used by the
engine, which then uses the heat energy to power a turbocompressor. When
at the edge of the atmosphere, the engine switches into rocket mode,
using liquid oxygen to break through into orbit.
Unlike
partially re-usable launchers being developed by the likes of SpaceX of
the US, Sabre does not need to carry large quantities of liquid oxygen,
and will not have to discard stages of the craft during flight.
It could be what the industry describes as the “Holy Grail” — a single stage to orbit system.
This is an interesting piece from a 1907 issue of Scientific American, but what really caught my eye and the reason I'm sharing it with you is that I was under the impression that speculation about animals' problem-solving and tool-building ability was something that scientists first started seriously discussing in the mid-20th century. This account from the generally sober journal shows that the notion was at least considered suitable for serious discussion.
Someone will say that mass shooting are rare. Moreover, if a future schoolyard shooter can’t get an AI rifle, he will use an only marginally less lethal weapon. Thus, preventing civilians from legally owning AI rifles would save only a few lives and only trivially reduce the total of gun deaths. So, really, aren’t you just virtue-signalling?
Because, if it is serious, it misunderstands technological advances, public health, and legal systems all at once.
1) Technology is incremental. No one tweak is likely to have a 100% success rate. The modern cell phone is the product of a thousand small tweaks over decades improving efficiency. We did not go from huge analog radios to cell phones in one step.
2) Medical and public health advances are never 100% effective. Vaccines reduce infectious disease but they rarely eliminate it (smallpox being a nice exception). Tactics like hand washing do not drop the rate of disease transmission to zero. Seat belts do not eliminate auto fatalities, even if they reduce them. Josh Marshall is good on this point.
3) Laws reduce risks they do not eliminate them. We have a lot of laws that reduce risks but don;t drop them to zero. We have screeners for airplanes; nobody thinks that they are 100% effective but they are thought to reduce risk. We require people to be licensed to drive not because it drops the rate of accidents to zero but because it reduces the rate.
I mean one could argue that particular guns are important for some reason or another, or that a specific law is bad. But it is the balance between cost and effectiveness -- the effectiveness of a specific intervention may be low but so might the cost. It isn't "virtue signaling" to note that a small improvement in a battery is better, even if it took hundreds of them to make a big difference.
And if we want to make these types of arguments (total benefit is small) then I have an idea for making airports more efficient.
This is a big deal. Not as big as some of the hype would lead you to believe and not big in the way most people think, but it is a big deal.
The thing to focus on here is cost. I have seen various estimates and, while evaluating them is well beyond my expertise, if you're looking for a nice round number, 50% seems quite reasonable. We will have to see how reliable the system proves (when your payloads are valued in the billions of dollars, reliability is a major consideration) and will have to see how reusable the reusable boosters are, but at this point it certainly looks like Elon Musk has greatly reduced the cost of getting things into orbit.
This is an extraordinary advance, but it is more an accomplishment of determination then innovation. It is important to note just how mainstream the Falcon Heavy approach is. Most of the basic technology goes back to the Apollo program. This is not, in any way, meant to diminish the exceptional work done by the engineers of SpaceX. Getting this system to work on this scale is incredibly challenging, but it's the kind of challenge that probably could've been done by any number of other major players had they expanded the resources and maintained the focus. Musk does not seem to have shown any interest in radical approaches with even greater potential cost savings such as spaceplanes or railguns and that's not necessarily a bad thing. Both here and with Tesla, Musk has a history of making daring business bets but playing it relatively conservative with the technology. It's an approach with a lot to recommend it (though Tesla investors may not feel that way a year from now – – more on that later).
With so many people out to deify Elon Musk (in the case of the notorious Rolling Stone profile, almost literally), there is an enormous temptation to default to the iconoclastic, but it's important to remember that while Musk may not be the person (and certainly not the engineer) he and his accolades would like you to think he is, the man still has extraordinary gifts for promotion, organization, and motivation, and those gifts sometimes produce some worthwhile, even important benefits.
And, yes, watching those boosters land under their own power is really cool.
I just finished a recent post on how companies try to get some investor love by associating themselves with sexy, overhyped sectors of the economy. This Forbes piece by Marius Meland nicely illustrates the point.
It's also of interest for a few other reasons. It fits in with our ongoing thread about the technological innovations spikes around the late 19th/early 20th centuries and in the postwar era. The subject of the interview, Burton Malkiel, is possibly the best person you could talk to about market efficiency versus investor irrationality and the timing (a 1999 comparison of the internet boom to previous stock bubbles) makes the observations look particularly prescient in retrospect.
"Tronics boom" of 1959-1962
With the dawn of the space age, every electronics stock suddenly took off like a rocket on Wall Street, reaching valuation levels not unlike Internet stocks today. And just like a "dot com" can help an obscure offering surge into the stratosphere today, the key to a stocks success could often be found in its name in the 1960s as well.
"I call it the tronics boom because these soaring stocks usually had some form of tron or tronics in their name," says Malkiel, citing such "trons" as Astron, Dutron, Vulcatron and Transitron and "onics" like Circuitronics, Supronics and Videotronics, as well as one company that, for good measure, put together the winning combination Powertron Ultrasonics.
Then, like now, the demand was huge but the IPOs were relatively thin, so that stock prices would soar at the launch.
Investors argued that "tronics" stocks couldn't be valued according to traditional methods because they represented a whole new era of the economy that was nothing like the past. Promoters entered the stage to talk the stocks up further. As a result, stocks soared to multiples of 50, 100 or even 200 times earnings.
But in late 1962, "tronics" stocks and other growth issues came crashing down in a massive sell-off.
[I need to come back to this in more detail later, but just so it doesn't sit in the queue forever, here's a quick rundown of the concept.]
It's not always rational, but investors care a great deal about where the money comes from. Two companies with exactly the same cost and revenue numbers will often be valued very differently. Sometimes, the preferences are based on perceived possibilities for growth or fears about the future of a particular business or market. Other times, it comes down to the sexiness of the industry and/or the buzz and halo effect surrounding the company.
Obviously, management will do everything it can to put their businesses in the hot category. When a company has multiple sources of revenue of varying attractiveness, it will do its best to maximize the perceived portion of the money coming from the cool streams and minimize the perceived amount coming from the uncool.
We saw some really blatant examples of this in the 90s Internet boom – – companies using brick-and-mortar profits to create the impression of online success – – but it certainly preceded that and it's never gone away since.
The lesson that many investors and most business/financial journalists need to take away from this is that, whenever you have a company with multiple revenue streams, one or more of which is particularly sexy, you should always assume you are being to some degree misled about which stream is actually bringing in the profits.
If you can think of a piece of video, be it an old TV show, a musical performance, a stand-up routine, it's probably on YouTube. I've started making a note whenever I think of something I'd like to see (or see again), like this definitive adaptation of Tinker, Tailor, Soldier, Spy...
I'd never heard of electro-culture before coming across this article from a turn-of-the-century issue of Scientific American, but, based on some quick googling, it seems to have been one of those scientific theories (like N-rays and, to a lesser extent, Martian canals) that had a brief run of acceptance and respectability before being dismissed by the scientific community and drifting into the area of fringe beliefs.
The big question reading this today is whether or not the original researchers were frauds or simply incompetence who did a bad job setting up their experiments.
The cover of the issue, depicting Russian battleships, has nothing to do with this article but it's too cool to leave out.
Journalists have a natural tendency to be supportive of efforts to serve some public good. There is undoubtedly an element of self-interest here – – philanthropists and local heroes make for good copy – – but I suspect of main driver is a sincere desire to advance worthwhile causes. This is completely understandable and even, to some degree, praiseworthy, but it can also be dangerous.
Accounts of volunteers cleaning seabirds after an oil spill can create a false sense of having addressed a massive problem. Feel-good stories about imaginative school fundraising projects (disproportionately found in relatively wealthy districts) seldom mention the ways that funding by community can exacerbate educational inequality. Press releases on hedge fund managers always omit the tax benefits, the strings that often accompanied the gifts, and the reputation laundering bought with what is frequently very dirty money (see the Sacklers and the opioid crisis for example).
The damage caused by uncritical and unthinking supportive journalism really kicks into high gear when you combine it with other biases and corrupting factors. This problem is particularly acute with technology. Most journalists quite reasonably see technological progress as being good for society on the whole. Therefore, the default setting of a report of some demonstration or new development is "isn't that great?".
Unfortunately, this default approach is generally combined with a weak grasp of how technology works and progresses, particularly when it comes to things like proposals, prototypes, and producing viable products. Add to that the tremendous role of hype, the enthusiasm for conventional narratives (in this case frequently involving Silicon Valley messiahs, often with what can only be described as magical powers -- see magical heuristics), and the occasional flat out scam. The result is a press corps that ranges from a mainstream that is strongly inclined to believe what they're told to converts with a cultlike faith in Elon Musk and company.
To provide a bit of historical context for our recent posts on infrastructure costs (see here and here), check out this piece from Scientific American in 1907.
The cover of the issue (comparing the NYC skyline to Niagara and Victoria Falls ) has nothing to do with this, but it's still pretty cool.
It's that moment when risk aversion flips and the thought of not making money starts to feel like losing it. I'm not talking about opportunity costs in any kind of rational sense. Instead, I'm referring to having the visceral emotional reaction associated with a deep, costly loss because you didn't buy into the skyrocketing market the day before. People become afraid not to invest in what should obviously be highly risky ventures.
Truly crazy bubbles are driven by this paradoxical combination of greed and fear. They both desire instant wealth and dread the sense of regret that would go with missing it. Individually, either of these emotions can drive otherwise sensible people into irrational behavior. Together, they can spur investment in some laughably bad ideas.
This Washington Post piece by Chico Harlan on a group of Bitcoin investors perfectly illustrates the point.
“Us little guys working our butts off, we can’t get ahead,” Cedric Knight, 35, told Melin. “This is a once-in-a-lifetime opportunity to change my life.”
Knight and others visiting Melin were pinning their hopes on a new form of currency whose potential value the world was only beginning to recognize. Millions of people around the world are chasing after fortune by investing in bitcoin — which has soared by more than 2,500 percent in value in the past two years — and other digital instruments known as cryptocurrencies.
...
“What crypto allows is for the masses to be venture capitalists,” Melin said.
“And guys like me, I’m not in the loop,” Knight said. “This is my chance.”
…
Knight, meantime, went home, cooked dinner and then decided to reopen one of the eight cryptocurrency apps he had downloaded. His account had fallen nearly $500 on the day — his initial $1,500 was below $900 — and he said he was “freaking out.” But then, he thought about what it meant to be a cryptocurrency investor. There would be days such as this. But there might be better days, too — much better days. If there were, he did not want to miss out.
“I’m almost afraid not to take the chance,” he said, and soon, he added $260 to his cryptocurrency account.
Another except from Charles Mackay's Extraordinary Popular Delusions and the Madness of Crowds.
I believe "a company for carrying on an undertaking of great advantage,
but nobody to know what it is" was an initial business plan for
Groupon.
Some of these schemes were plausible enough, and, had they been
undertaken at a time when the public mind was unexcited, might have been
pursued with advantage to all concerned. But they were established
merely with the view of raising the shares in the market. The projectors
took the first opportunity of a rise to sell out, and next morning the
scheme was at an end. Maitland, in his History of London, gravely
informs us, that one of the projects which received great encouragement,
was for the establishment of a company "to make deal-boards out of
saw-dust." This is, no doubt, intended as a joke; but there is abundance
of evidence to show that dozens of schemes hardly a whir more
reasonable, lived their little day, ruining hundreds ere they fell. One
of them was for a wheel for perpetual motion—capital, one million;
another was "for encouraging the breed of horses in England, and
improving of glebe and church lands, and repairing and rebuilding
parsonage and vicarage houses." Why the clergy, who were so mainly
interested in the latter clause, should have taken so much interest in
the first, is only to be explained on the supposition that the scheme
was projected by a knot of the foxhunting parsons, once so common in
England. The shares of this company were rapidly subscribed for. But the
most absurd and preposterous of all, and which showed, more completely
than any other, the utter madness of the people, was one, started by an
unknown adventurer, entitled "company for carrying on an undertaking of
great advantage, but nobody to know what it is." Were not the fact
stated by scores of credible witnesses, it would be impossible to
believe that any person could have been duped by such a project. The man
of genius who essayed this bold and successful inroad upon public
credulity, merely stated in his prospectus that the required capital was
half a million, in five thousand shares of 100 pounds each, deposit 2
pounds per share. Each subscriber, paying his deposit, would be entitled
to 100 pounds per annum per share. How this immense profit was to be
obtained, he did not condescend to inform them at that time, but
promised, that in a month full particulars should be duly announced, and
a call made for the remaining 98 pounds of the subscription. Next
morning, at nine o'clock, this great man opened an office in Cornhill.
Crowds of people beset his door, and when he shut up at three o'clock,
he found that no less than one thousand shares had been subscribed for,
and the deposits paid. He was thus, in five hours, the winner of 2,000
pounds. He was philosopher enough to be contented with his venture, and
set off the same evening for the Continent. He was never heard of again
The taxi industry is a special case, though, in that cab and limousine owners and drivers made economic decisions based on rules set by the government. While the medallion system is outrageous and I’m happy to see it disrupted, the fact of the matter is that it was the norm for generations. People saved up or took big risks in borrowing to bid on them based on guarantees from their municipal government. They have every right to expect that same government to either enforce the law against illegal competition or compensate them in some way for the broken contract.
The piece that is very important here is the decision to change the legal framework. Disruption is normal and many people end up as economic losers when conditions change. We are already bad at coping with that.
But all markets are based on rules and laws. We would have no markets at all if force and fraud where not prohibited, for example. The piece that is dodgy here is the evasion of the existing rules in order to build a company. It is fine to lobby to change the rules. But when you have to design your business to evade local regulations then that is a problem. Not because the laws are good -- they are likely not. But because it is not the case that private actors who violate laws that they see as stifling innovation are left alone.
And if government is wrong about a law and needs to backtrack then it makes sense to compensate the losers of the law change. We don't let private property block roads but we do have to buy it back when we put a road in. I think applying the same logic to shutting down taxi licensing agreements is sensible.
People at the turn of the century were fascinated by the bicycle, both as a practical form of transportation and as a sport. Being an age of great inventiveness, lots of variations were tried, some more viable than others.
I've been working on a project involving not only the technological explosion of the late 19th and early 20th Centuries (which introduced the huge hit Daisy Bell)...
... but also the post-war period (where the still remembered Daisy Bell would provide and interesting footnote).
