Monday, December 28, 2009

Rising Expectations and Engineering Ethics

Most engineering is carried out in a context of complex global economic and social interactions that share certain underlying assumptions. One of these assumptions is that progress is something like a metaphysical necessity, without which great sectors of the technical economy would dry up and blow away. Why is this, and is it an assumption that should be questioned?

First we should say what we mean by "progress." Progress implies a goal, or at least a desirable direction, and a way to measure movement in that direction. For a simple example, take the memory capacity of flash drives, the little pen-size USB-connected memory sticks that have become ubiquitous in the last four or five years. I think the first one I bought had a capacity of 512 megabytes and cost somewhere around fifty bucks, but I doubt if you can even buy one so small today. Now, a few years later, you can get 16-GB (gigabyte) drives, a factor of 32 larger, for only $27, and next year I expect the price of those will drop and new ones with even more capacity will come along. In this case, progress is easy to measure. Everybody agrees that having more memory on a single flash drive is better, assuming there are no compensating disadvantages such as slower access time, etc. So other things being equal, people will want to buy a drive with more memory over one with less, and the price structure of the market reflects this.

There's nothing automatic or inevitable about the rising memory capacity of flash drives. It's part of a great "roadmap" that the semiconductor industry has planned for many years, a kind of coordinated progress chart that guides research and development, plant investment, and related matters. As long as the underlying physics allows improvements, chip makers will continue to pile more transistors onto each square millimeter, and the memory capacity or processing capabilities of the chips will rise. And the same thing is true of many other technical fields, from software to medical equipment to transportation.

It was economist Joseph Schumpeter who coined the phrase "creative destruction" to describe the way entrepreneurial capitalism constantly developed new products and services that essentially destroyed the markets for previous ones. If Company B can make a 16-GB flash drive and sell it for $27, but Company A can make only 4-GB units that cost them $40 each to make, Company A is out of luck. It has to change or die, and in most of the productive sectors of the economy, change is the rule.

From the consumer's perspective, creative destruction leads to rising expectations: the idea that next year's product will either deliver better performance for the same price, or a lower price for the same performance. In fields where this can truly happen, such as computer hardware and software, this expectation is a reasonable one. But it can lead to a kind of overgeneralization problem, an expectation that since software gets better every year (or at least more complicated), every other product ought to get better too. While great strides have taken place in the application of technology to medicine, for example, I sometimes wonder if we ask more of medical technology than it can deliver. And if we do, especially in the United States, that may explain why our health-care costs are such a large fraction of our total gross domestic product.

From an individual engineer's perspective, creative destruction leads to a kind of employent instability or instant obsolescence that is hard to avoid. Last June, a company in Austin called Silicon Laboratories announced the development of a TV tuner on a chip. Despite the integration of every other part of a digital TV, until recently the "front end" that dealt with the wideband RF signals to be demodulated took the form of a tuner "can" of hand-assembled coils, capacitors, and other components. These tuners were expensive and bulky, but the problems of designing a TV tuner in a CMOS IC were too daunting until a team of about fifteen engineers met the challenge and succeeded. I recently saw a photo of the team, and judging by their faces, not one of the engineers was much over 40. Nobody had gray hair, but a few were bald. To an old geezer like me (I turned 56 last week), this says that certain engineering activities are practically limited to younger engineers who are conversant with technologies and approaches that are generally too hard to master if you are older. I'm sure there are some conventional "can" TV tuner engineers out there who see the handwriting on the wall, or the Silicon Labs chip in the catalog, and are wondering what they'll do next.

Despite the problems this assumption of progress may cause, I'm not sure there's a viable alternative. The grand (and deadly) experiment of managed economies in the old Soviet Union and China showed that market forces are pretty necessary if you are going to have a thriving, up-to-date economy that doesn't limit freedom in a profound way. The few remaining little pockets of traditional Communism around the world (mainly North Korea and Cuba) show by contrast what a dismal thing it is to "freeze" an economy by legal fiat. On a small scale, communities such as the Amish and Mennonites have shown that an organized and thoughtful limitation of new technology is consistent with what appears to be a fruitful, if circumscribed, way of life, although such communities are sort of parasites on the larger unrestricted economy that surrounds them. That is to say, if some bizarre tragedy occurred and killed everybody in the world outside the few Amish and Mennonite communities in the U. S., they would have a much harder time surviving on their own, although they might stand a better chance than the rest of us.

So on balance, it looks like rising expectations and creative destruction are things that we'll have with us for a long time. They are the economic engines that drive many industries, and while we should never take the assumption of progress for granted, we should acknowledge the good it has done.

Sources: I consulted the Wikipedia article on creative destruction. A news release from Silicon Laboratories describing their TV-tuner chip can be found at

Monday, December 21, 2009

Gold Farming: Not Just a Game

It might have been Isaac Asimov who was once asked in an interview about the future of the job market, and how advances in computing might lead to technological unemployment. (I'd check the quote but my internet modem died yesterday, and all I'll have time to do today is upload this column without any time for online research.) His reply was interesting. He said not only did he believe technological unemployment would not be a problem, but if you looked at the job market ten years from now, many of the jobs people would be doing wouldn't even have names today. They simply didn't exist yet.

I can't think of a better example of this right now than the weird service industry called "gold farming," a byproduct of the rapid expansion of massively multi-player online role-playing games that occurred over the last fifteen years or so. Next month's issue of Scientific American carries a good article describing the rise of this business, which I must admit was news to me, since I am of a generation to whom online role-playing games are as unfamiliar as writing Sanskrit.

It turns out that in many of these games, which millions of people play all around the world now, the designers have seen fit to introduce a medium of exchange, which in World of Warcraft, for instance, is called "gold." Like real money, you can both earn it and spend it. The ways to earn it tend to be pretty boring, much like real life: working in a "mine," cutting "timber," and "killing monsters." (The last one might not be so boring, but still you might get tired of it after a while.) You can spend it on things like medicine to "heal" your "wounds" or "improvements" to your "spaceship." You get the idea: in the shared mental universe of the game, online gold has as real a value as anything else in the game. Only its value transfers to the real world, and players are willing to pay real dollars, yuan, or whatever to get online gold. And as any good economist will tell you, enough demand on the part of enough people will create a market and a supply.

So it turns out that in China, especially, there are rooms full of low-paid service workers "playing" (the quotes now mean it's really working) games with the sole purpose of accumulating gold to sell, usually in online markets separate from the game itself. The game operators and designers try to discourage this sort of thing, but like most online gray markets (e. g. international online gambling), enforcement of a prohibition like that is difficult or impossible.

In absolute terms, this is not a huge market. Although estimates are hard to come by, numbers range from $200 million to $3 billion annually traded in online value. But depending on what happens with virtual worlds, it is an industry that could get a lot bigger in the future.

Ethically speaking, the whole business is under a cloud since the game companies see gold farming as a gross misuse of their service. I suppose it's a little like ticket-scalping, in the sense that gold farming is a purely parasitic activity that would vanish if its host went away. Just as different organizations take different views of ticket-scalpers who resell legitimately purchased tickets despite laws that sometimes make it illegal, you'd think that some game companies would figure out a way to join the farmers instead of fighting them. Why not just make it a part of the game and set up your own online store? The game companies would be at an advantage since they sit at the controls that make the gold in the first place—they wouldn't need to pay roomfuls of people to make gold, it would just come out of the store, like Uncle Sam makes dollar bills. Which of course could lead to online hyperinflation, and a whole nest of other economic nasties.

The reason they don't do this, I suppose, is that they don't want to undercut or short-circuit the whole reason for playing online games in the first place, which is to demonstrate some kind of skill or prowess in front of other real human beings, however disguised. And there is a kind of pretense or implied fraud committed by a person who has purchased a new spaceship or sexy avatar or what have you, with real money instead of earning it in the "proper" way (I promise that's the last pair of quotation marks I will use in this piece.). There is a kind of ethics of gamesmanship or sportsmanship, and in that sense, buying online gold in the real economy is not unrelated to an athlete taking steroids. In both cases, you have people abusing technology to achieve goals in a way that is not admissible under the rules of the game. But some people go ahead and do it anyway.

Well, I've rambled on for eight hundred words without solving the problem of gold farming. Like many other ethical problems, what you think about it depends on your point of view. From the viewpoint of a former real farmer in China, sitting inside and typing all day for what looks to him like good, reliable pay is a step up in the world, never mind that it's against the rules of some company in some country he's never visited. And a truly effective way to do away with gold farming would put all these folks out of work, at least until the next technological job we don't have a name for yet came along. Maybe I'm just the wrong person to consider this subject. The end of yet another year next week reminds me that our time in this real world is finite, and I prefer to spend it dealing with real people in person most of the time, rather than getting dressed up as some screwy avatar and going around doing things I'd never do in real life, or even consider doing. But that's just me.

Sources: The January 2010 issue of Scientific American carries the article "Real Money from Virtual Worlds" by Richard Heeks, pp. 68-73.

Monday, December 14, 2009

The EPA's New CO2 Teeth

The U. S. Environmental Protection Agency has just got itself a new pair of choppers. It did this last week (Dec. 7, to be exact) by finding that greenhouse gases (GHGs) such as carbon dioxide, in the EPA's own words, "threaten the public health and welfare of the American people." Their reasoning is that if we keep emitting GHGs at the current rate, we will contribute to the apocalyptic disaster of global warming that many nations of the world are currently talking about in Copenhagen. And admittedly, if Manhattan turned into a scuba-divers-only tour and the entire Midwest became a North American version of the Sahara, you could argue that the public health and welfare of the American people was threatened, to say the least. But there is more to the story than that.

Why does just finding this officially give the EPA sweeping new powers? Because in 2007, the U. S. Supreme Court found that GHGs fit within the Clean Air Act's definition of air pollutants. In calling these findings "long overdue," EPA head Lisa Jackson managed to get in an indirect swipe at the Bush Administration, which quite reasonably refused to rush out a bunch of new regulations following the Supreme Court ruling. What does this latest EPA action mean for industries and consumers who depend on engineered products such as gasoline and automobiles?

Potentially, a lot. Earlier in the fall, the EPA announced a new set of fuel-economy standards it was hoping to implement, once it figured out if GHGs were really a threat. Now that it has done that, there's nothing other than Congress to stand in the way of the EPA implementing those standards. Briefly, they ramp up the light-duty vehicle average fleet fuel economy from about 30 MPG to over 35 MPG by 2014. Something bad will happen to any automaker whose fleet doesn't meet these standards. There are other ways of meeting these standards besides raising fuel economy, but they are things like increasing the number of all-electric vehicles in the fleet, which is even harder than making cars that guzzle less gas.

In times of low to moderate fuel prices, the American consumer has historically shown little interest in fuel-efficient cars. But if the EPA has its way, Mr. Consumer will buy fuel-efficient vehicles or go without. I drive a Honda Civic that gets just about 35 MPG, and I like it. But some people have large families or other valid, non-environmentally-hostile reasons for needing a bigger vehicle that gets fewer miles per gallon. To me, it is a restriction of freedom to tell these people that they simply can't get what they need, or if they do, there better not be very many of them because the automakers can't make that many gas-guzzlers without making an equal number of toy cars that get 50 MPG or something. The whole thing becomes a headache, and starts reminding me of old stories out of the former Soviet Union.

Forgive me if I've told this one before, but it's supposedly true. After the Revolution of 1917, a bureaucrat was put in charge of nail production. His job was to figure out how to set the goal for nail factories. So he decided to make them produce X number of nails per year, and sent out telegrams to all the factories with the order.

Only a couple of months later, he got back telegrams reporting compliance with his order—somehow the factories had fulfilled their entire year's quota in only a few weeks. This pleased him greatly. Then he started hearing rumors on the street that all was not well at hardware stores. Going to a nearby store, he found that the only nails you could get were tacks and finishing nails—in other words, the smallest nails the factories could make and still call them nails.

Well, he knew how to fix that. He went back to his office in the Kremlin and sent out another telegram revoking the first order, and setting the new quota in terms of pounds of nails. You can imagine what happened next. Pretty soon he went to the hardware store and found the only kind of nail you could buy were giant spikes weight a couple of kilograms each.

I never found out how the bureaucrat solved his nail problem, but the point is clear. When the free-market mechanism of prices and supply in response to prices is replaced by any kind of government-imposed regulation, things tend to get out of whack, and the wants and even needs of consumers tend to go by the wayside. The right to drive a big gas-hungry car is not enshrined as such in the Constitution, but the right of property is. And if the EPA starts biting the industry which helps make Texas the largest emitter of carbon dioxide in the nation—the oil-refining industry—it may effectively render this multi-billion-dollar investment worthless, and drive refining offshore to countries whose regulations are less hostile to industry, but whose governments may be more hostile to us—Venezuela, for instance. How would you like our gasoline supply to depend on whether Hugo Chavez got up on the right side of his bed this morning? That seems to be a "threat to the public health and welfare of the American public" that takes precedence over some longer-term, uncertain, and politically charged issue which in any case could turn out to be a waste of our effort if the other countries of the world don't regulate GHGs as strenuously as we do. And China and India have so far shown very little inclination to get serious about it.

Before we wreck our economy in order to help fix something that others may break anyway (if it breaks at all), I hope the Congress will take a second look at what the EPA is doing and have a spell of calm reasonableness, which will allow them to restrain that agency from doing serious and perhaps irrevocable harm to the U. S. economy. But their recent performance does not encourage me in this hope.

Sources: The EPA's own news release on its finding is at A Wall Street Journal article describing some industries' reaction to the finding is at The Dec. 21, 2009 issue of National Review (p. 40) carries an excellent article "Priceless is Worthless" by Kevin D. Williamson on how necessary prices are to the proper functioning of any important sector of the economy. And I blogged on the EPA's proposed finding last Apr. 20, 2009 when they announced it for public comments, 380,000 of which did not dissuade the agency from going ahead anyway.

Monday, December 07, 2009

Power to the Television: California's Challenge

California likes to think of itself as leading the nation in various progressive measures such as environmental consciousness. Last Nov. 18, the California legislature passed a law that will require all televisions sold in the state to comply with increasingly restrictive regulations on power consumption. By 2013, new TVs sold in that state will have to use only about half the power they do now, on average.

Why single out TVs for power-consumption laws? For one thing, the big flat-screen devices that have chased the old cathode-ray tube models out to the garbage dump (which is another environmental issue we won't go into right now) tend to use a lot more power than all but the largest older-style TVs. Of course, those with long enough memories can recall the really old days of early vacuum-tube color televisions. The first guy in our neighborhood to buy a color TV bought his about 1964. He had it installed in a wall in his living room, and the thirty or so tubes generated so much heat it had to have its own cooling fan. Transistors improved this situation drastically, but when large-screen flat-panel liquid-crystal displays (LCDs) and especially plasma displays were introduced, the power required went back up to what it was in the pre-transistor days. For example, a 65-inch plasma unit (the Panasonic TC-P65S1), even though it is "Energy-Star qualified" (a voluntary industry rating), takes as much as 700 watts from the wall socket, although its average power consumption is a more modest 360 watts. Still, that's like running six 60-watt bulbs all the time, or a dozen energy-efficient fluorescent bulbs.

Should California do this? Or is it an unfair intrusion of government into private enterprise's business?

Manufacturers are unhappy about it for two reasons. One, if they do nothing and keep making some energy-hungry models, they won't be able to sell them in California, which by some estimates is a tenth of the 35-million-unit annual TV market in the U. S. Two, if they bite the bullet and redesign their TVs to use less power, they spend engineering capital on a feature that isn't all that attractive to the consumer—capital they could otherwise use for developing new features or improving the product in other ways.

But efficiency is such a reigning watchword in engineering that I expect the power consumption average would have come down on its own sooner or later, if not quite as fast as it would have if California hadn't shoved its oar in. Already many models meet the new standards, which shows that the lawmakers are not flying in the face of physical reality, which some regulations do. Which reminds me of a cautionary tale.

Over Thanksgiving, I was talking with my brother-in-law, who works for one of the largest privately-held refining companies in the U. S. He told me the story of some new diesel-fuel regulations that require refiners to blend in 10% biodiesel with all the diesel they sell. This is fine, he said, except that biodiesel tends to wax up at a very high temperature compared to ordinary diesel fuel. At a meeting with the new Obama-administration regulators, his engineers mixed up a batch of diesel according to the new regulations and put it in a cooler to simulate typical January weather in Minnesota. When they pulled it out of the cooler at the meeting and passed it around, it was a cloudy, jelly-like mess, which would run a diesel engine about as well as a tankful of Jell-O. They asked the regulators what they should do about it. "You'll be having to replace a lot of fuel filters," they said. In other words, it's not our problem, it's yours. His company eventually found a workaround that involved asking retailers to do some mixing on their own, but if they forget, their customers end up with jelly in their tanks and the whole situation is not a happy one at all.

Compared to that, the California regulations are mild and well within reason. As LCD technology improves, the plasma screen may go the way of the vacuum tube in any event. It is an inherently less efficient technology, and the only reason it's out there at all, that I can see, is because it was easier to make large plasma displays a few years ago than it was to make LCD displays of equal resolution. And as LED light sources become more efficient, that efficiency bonus will be available to the flat-panel makers, and things will tend to improve in the efficiency department almost naturally. There is a huge incentive to make efficient displays for battery-powered devices anyway, and a lot of that technology can be adopted by the plug-in-device manufacturers without a lot of trouble.

My own feeling of what the best thing is to do about TV power consumption, is to turn the durn thing off, but that's just me.

Sources: A good summary of the California regulation and its effects can be found in the Washington Post online edition for Nov. 27 at