James Pethokoukis

Politics and policy from inside Washington

Relitigating the 1990s boom

Oct 19, 2010 16:32 UTC

Over at e21, former Bush administration official Joel Harris provides a nice reminder about the real  foundation of the 1990s boom. And it was not the Clinton tax increases:

The story of the 1990s economy holds an important lesson for today’s tax debate, but it’s not the one the Administration intends by invoking it. While the Clinton-era expansion did indeed take place under higher tax taxes, it was largely due to crucial changes in IT production and investment that led to growth and once-in-a generation productivity gains. The lesson here is a basic but important one: the past doesn’t predict the future. If the Administration believes there are similar productivity gains on the horizon that will lift the U.S. economy out of its financial crisis-induced hangover, it should explicitly identify the source of these gains. Otherwise, the 1990s experience provides no guidance for what to do about the tax policy set to expire on January 1.

Cocky CEOs have more innovative companies

Jun 2, 2010 17:27 UTC

That is the conclusion of this paper, “CEO Overconfidence and Innovation,”out of the University of Toronto:

In this paper we study the relationship between CEO overconfidence and innovation. We use a simple career concern model to show that CEO overconfidence can increase innovation. The model also predicts that the impact of overconfidence will be stronger when product market competition is more intense. We find strong empirical support for these predictions.

In particular, overconfident CEOs obtain more cite-weighted patents, and this effect increases with product market competition. These findings suggest that overconfident CEOs are more likely to initiate a significant change in their firm’s innovation strategy. … Our findings are complementary to those in Aghion,Van Reenen and Zingales (2009). While they show that institutional ownership encourages innovation by reducing the likelihood that a CEO is dismissed after a decline in profits, our results show that overconfidence encourage innovation by reducing the CEOs internal beliefs about the likelihood of failure.

Silicon Valley getting no love from Obama White House

Nov 18, 2009 20:24 UTC

Peter Thiel, billionaire founder of PayPal who now operates a hedge fund and a VC fund:

My observation on it is that it’s striking how few people from Silicon Valley are represented in the Obama administration in any sort of capacity. The only cabinet level person who is even remotely from Silicon Valley is the secretary of energy, who i guess was a physicist at UC Berkeley.  People supported Obama over Hilary Clinton in the primary in Silicon Valley in a big way and in a weird way its translated into like no influence at all.

Is there where economic growth will come from?

Sep 11, 2009 14:15 UTC

Barry Ritholtz ticks off ten technologies:

My top 10 list (in order of biggest near term potential):

1. Nano Technology (Think of the line “Plastics” in The Graduate).

2. Green (low carbon) Energy  (generation)

3. Battery technology  (storage)

4. Genomics/Stem Cell Research

5. Web 2.0/3.0 — smaller, niche companies using increased bandwidth

6. Robotics — the continued replacement of humans by machine, for both labor and judgement

7. Life extension Technologies (not disease cures, but actual extension technology)

8. Bio-Agriculture (GMF, etc.)  Feeding 15 billion people will require some technological breakthroughs.

9. Atmospheric Engineering — modifying Earth’s biosphere to keep it hospitable to Humans in the face of an ice age or global warming;

10. Terra forming/Extra Planetary Colonization (uh-oh, time to go)

COMMENT

I like the list. Although, I would place Robotics/AI higher on the list. I would also place green energy and Genomics/Stem Cell lower.

My reasoning is this. Robotics/AI/UAV are going to dominate the future US military- that is a lot of R&D and spending. They will also continue to remake manufacturing efficiency. They will become more human like, and there will be greater human-Robot/AI interaction. AI will also factor heavily in advanced web. Matrix here we come!

While green energy is currently the rage, we do not have an energy shortage per-se in this country currently, and not globally except for China & India. It will be a self-sustaining industry, but I doubt it will be a major player.

I also downgrade genomics/stem cell technology, because of the inherent weaknesses in the pharma industry and the fact that the tech is still in infancy. We discovered how to clone years ago, but this has yet to develop into a behemoth industry. There will be a lot of trial and error, and moral/ethical debates. However, genomics/stem cell technologies will contribute to, and advance life extension technology. Really, they should be one category.

Otherwise, a very interesting list. Thanks for posting it!

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