Re: Why growth may stay slow

Michael Lorrey (
Thu, 19 Mar 1998 19:51:40 -0500

Dan Clemmensen wrote:

> Robin Hanson wrote:
> > If productivity can improve very quickly even while the rate of return on
> > investment (ROI) stays low, then my argument for low ROI does not imply slow
> > growth in productivity.
> >
> Thanks for the clarification. I'm interested in growth of the corpus of technical
> knowledge and its rate of increase. Your argument appears to apply to growth
> of the measured economic value of the technology, and may be very valid.
> Leading edge technical products los value very quickly. This is also true of a lot
> of leading edge intellectual property. This may mean that your slow (economic)
> growth and my explosive (technical) growth occuring concurrently.

Yes, as factors like Moore's Law constrict over time, and the present 18 month doubling
rate for digital power becomes shorter, patents on technology for the present cutting
edge are really worthless, since the typical patent takes at least two years to get
awarded. By that time, the technology is already worth less than half what it was worth
when the patent was issued.

How can this be fixed? Other than scrapping the patent system altogether (Mr Crocker
jumps up and down in joy), technology developers will either need to practice much more
secrecy, or establish a much faster patent approval system. Create a huge common
database, and create a Certification for any competent engineer to become a Certified
Patent Examiner, where the Examiner is an independent person that will process and
examine patent applications for a flat fee. The examiner would get paid whether or not
the applicant has legitimate patent claims, much like how architects, mining engineers,
civil engineers are always paid, whether or not the prospect works out for the
developer, so there would be little incentive for unethical behavior.

> I'm sure you are aware of the recent reports of a fear of deflation, and I'm sure
> you understand them better than I. However, technical areas the technological
> deflation is far greater than the economic deflation. As I understand it, one major
> reason tht deflation is "bad" is that consumers will defer pruchases to wait for the
> price to come down, but for PCS and other hi-tech items, the price is coming down
> anyway and always has been.

Yes, the reason for this is that with the shortening of the depreciation turnover
period, peoples internal discount rates are going up. Since earning power is becoming
more and more related to the competitors present state of technological
competetiveness, making investments in technology now is seen as having a greater NPV
than holding off 6-12 months. There are some areas, though, where that doesn't seem to
matter. In the company I'm currently working with, they do large volumes of mailstream
processing, on an IMB mainframe that is over 20 years old. We are slowly moving some
processing over to a dual Pentium NT server, but there is currently a lack of interest
in further automation, as further automation will mean cutting back on jobs here (and
the boys in charge don't like the idea of becomeing a mom and pop shop. They are
Dartmouth guys, after all). As it is, we offer the lowest cost data conversion and
processing services around, so there really isn't any point in fixing what doesn't seem
to be broke.

   Michael Lorrey
------------------------------------------------------------ Inventor of the Lorrey Drive
MikeySoft: Graphic Design/Animation/Publishing/Engineering
How many fnords did you see before breakfast today?