July 30, 2004
India: the big outsourcing hub of patent ideas
July 29, 2004
How about it??
Segway Inventor to speak at Inventors Conference
July 28, 2004
Ousourcing Patent Serches
IQ matters!
The Bell Curve revisited
The Bell Curve starts out by talking about how we live in an era where people get sorted by cognitive ability into socioeconomic classes. In 14th century England if you were a peasant with a high IQ or a noble with a low IQ it didn't affect your life, reproductive potential, or income very much. In our more meritocratic and vastly more sophisticated economy a smart kid from a lower middle class might make it to the top of a big company (cf. Jack Welch, who paid himself $680 million as CEO of GE) or at least into a $300,000/year job as a radiologist. For the authors of the Bell Curve the increasing disparity in income in the U.S. is primarly due to the fact that employees with high IQs are worth a lot more than employees with low IQs. They note that we have an incredibly complex legal system and criminal justice system. So you'd expect people with poor cognitive ability to fail to figure out what is a crime, which crimes are actually likely to be punished, etc., and end up in jail. (A Google search brought up a report on juvenile justice in North Carolina; the average offender had an IQ of 79.) If they stay out of jail through dumb (literally) luck, there is no way that they are ever going to be able to start a small business; the legal and administrative hoops through which one must jump in order to employ even one other person are impenetrable obstacles to those with below-average intelligence.
The trend that the decade-old Bell Curve book misses is telecom and outsourcing. The authors assume that an American with high IQ will have a higher income and better standard of living than an American with low IQ. That's the sorting function of an advanced economy. They don't get into the question of whether it is sustainable that an American with low IQ should have a higher income than someone in India or China with a high IQ. Statistically, due to their sheer hugeness, you'd have to expect that there are more really smart people in India and China than the total population of the U.S. If the sorting-by-IQ process were efficient across international borders you'd expect that an American with an IQ of 100 should be making less than an Indian with an IQ of 120. Given that a lot of brilliant well-educated people in India are getting paid less than $5,000 per year, this is a bit worrisome those of us here who are fat, dumb, and happy. [Imagine that you were running a company. Would you rather employ a local high school graduate with an IQ of 90 or an Indian college grad with an IQ of 130 via Internet link?]
For us oldsters, one unexpected piece of cheerful news from this book is that younger Americans are getting genetically dumber every year. Even if you ignore the racial and immigrant angles of the book that created so much controversy back in 1994 it is hard to argue with the authors' assertion that smart women tend to choose higher education and careers rather than cranking out lots of babies. As a middle-aged (40) guy whose own cognitive abilities are beginning to fade due to neuron death I felt sure that there would be no place me for in the America of 2050. Our population is predicted to reach 450 million or so, i.e., the same as India had back when we were kids and our mothers told us about this starving and overpopulated country. An individual person's labor in India has negligible economic value--the American firm Office Tiger gets 1500 applicants, many of whom are very well qualified, on a good day in Chennai. It would seem that no enterprise would need an old guy's skills in a country of 450 million; why bother when there are so many energetic young people around? And how would we be able to afford a house or apartment if there are 450 million smart young people out there earning big bucks and putting pressure on real estate prices? But if the book is right most of those young people will be dumb as bricks.
[Update: The Sunday New York Times has a long article in the Business section "Hourly Pay in U.S. Not Keeping Pace With Price Rises" about how American workers in jobs that don't require high IQs are losing ground compared to the middle class and compared to inflation. Raw labor isn't worth very much right now.]
# Posted by Philip Greenspun on 7/16/04; 4:18:31 PM - Comments [20] Trackback [1]
Software patent---- for whoes benefit
There's a pretty disturbing thread going on a TheServerSide. It was supposed to be a discussion about Hibernate, unfortunately its degenerated into an extremely heated and personal shouting match between the Ward Mullins (CTO of ThoughtInc) and Gavin King (co-author of Hibernate). Apparently, Ward is taking the playbook out of SCO, and playing the Patent FUD game. That is, if you're not a commercial entity, then the software you're distributing hasn't been cleared by the lawyers and it just might be possible that you might be violating someone's intellectual property (i.e. IP). Software Patents is now a weapon of choice to spread Fear, Uncertainty and Disinformation against a competitor. It doesn't matter that your patents will hold up in the court of law, it doesn't matter if you can extract compensation, what seems to matter is that you can make customers of a competitor think twice. It's an extremely bad situation, where business is won, rather than competing on merits, but on mudslinging.
In fact the trend looks like it's turning for the worse as evidence by two recent articles from CNET. Overture's business strategy to leverage its patent portfolio. Pinpoint, a company who's sole business model is suing other companies for patent infringement. We are now seeing the horrible consequences of the US patent office misguided policies to allow the patenting of software and business practices and to compound it with turning the office into a money making business rather than a public trust. The US software industry could eventually consist mostly of intellectual property lawyers trying to untangle the patent mess. The reality is, the rampant approval of questionable software patents has made it impossible for any software written to avoid infringing on an existing patent.
The only reason why we don't see even more rampant lawsuits is that its simply not worth it to sue someone without deep pockets. That however doesn't prevent companies for making unsubstantiated threats. So far things have remain relatively sane, that's because the bigger companies don't risk suing each other, afterall they all have something to lose. However, what happens if you've got companies with nothing to loose, that is companies whose sole business is not making software but rather suing companies. They aren't worried about a counter suit, you can't sue a lawyer for suing you.
The future looks pretty grim, it doesn't help that a lot of companies are already outsourcing IT work outside the US, maybe that's just the only place to legally do innovative software development. U.S. Software firms for all intents and purpose would end up as subsidiaries of law firms. The consolation maybe that you can still make a living programming only using "standards". Just make sure you don't innovate, that's something you either have to clear with the lawyers or done offshore!