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Wednesday, June 11, 2014

No. 000011 Development of Knowhow and Bottlenecks

Later, about Eric Cantor.

First, wooden boards, artisan cheese makers, and knowhow.

Artisan cheese makers have been raising an objection to an FDA policy that cheese should not be aged on wooden boards because such may permit Listeria to develop.

The Cheese Underground, here, reports the dispute, leading to an endless number of comments attacking the FDA. In doing such all are making one of the most fundamental of mistakes about public policy, a mistake routine before the Missouri General Assembly and the Saint Louis Board of Alderman.

Both the FDA and every single commenter assumes that his or her past experiences (and even more limited knowledge about past experiences) is a basis on which to estimate either the risk and or the need for action.

To the contrary, Nassim Nicholas Taleb has shown our past experiences show that we routinely underestimate the likelihood of risks by assuming that the past is a guide to the future.

If one gains that key insight they will come to realize that, contrary to Ronald Reagan's assertion that government is the problem, it is both the FDA and the opposition who are the problem.

Government in its most basic aspects has but two functions: (1) it acquires information; and (2) it acts on the information acquired.

Regarding using boards in food preparation we have also discovered that wood has bacteria fighting properties.

Thus for 20 years policy makers have faced fork in the road. Based on the new studies, Dr. Cliver said in 1993 to the New York Times, "Wood may be preferable in that small lapses in sanitary practices are not as dangerous on wood as on plastic."

Everyone needs to realize that that our persistent underfunding of education and research and development has developed this blockage over a period of more than 20 years.

There appears to be no reason that we cannot develop a decision tree on the first, second, third, and so forth order effects of the decision before us and to develop the knowhow about how to most safely age cheese.

We do not want cheese makers selling cheese that kills people (the FDA is acting in response to a reported Listeria linked death.

Instead, commentators are captured by the Big Mule idea of the Hancock Amendment, that the growth of government can be limited without regard to costs of acquiring the information and knowhow needed to govern.

To the contrary, the law of diminishing returns applies to information, making the acquisition of the last piece of knowledge at times quit expensive.

But, we have no choice but to incur that cost for only such very expensive information can give use the know how for new job creation.

In sum, this conflict is actually the pivot point of economic growth. The knowhow, whether to use wooden boards or some other surface for cheese, is a road block to the expansion of cheese production and sale.

Two economists have recently explained this, first by story and the second mathematically.

Ricardo Hausmann, writing for Project Syndicate, The Mismeasure of Technology:

One idea about which economists agree almost unanimously is that, beyond mineral wealth, the bulk of the huge income difference between rich and poor countries is attributable to neither capital nor education, but rather to “technology.” So what is technology?
The answer explains the unusual consensus among economists, for “technology” is measured as a kind of “none of the above” category, a residual – Nobel laureate Robert Solow called it “total factor productivity” – that remains unexplained after accounting for other production inputs, such as physical and human capital. As Moses Abramovitz aptly noted in 1956, this residual is not much more than “a measure of our ignorance.”
So, while agreeing that technology underpins the wealth of nations sounds more meaningful than confessing our ignorance, it really is not. And it is our ignorance that we need to address.
In an important book, W. Brian Arthur defines technology as a collection of devices and engineering practices available to a culture. But devices can be put in a container and shipped around the world, while recipes, blueprints, and how-to manuals can be posted online, putting them just a few clicks away. So the Internet and free trade should make the ideas and devices that we call “technology” available everywhere.
# # # 
So, if ideas are easy to copy and devices are easy to ship, why do differences in “technology” persist between countries?
As a Venezuelan who is seeing his country collapse at this very moment, I do not doubt that there have been many instances in human history during which those in power have prevented progress. But I am also struck by how often governments that embrace the goal of shared growth – post-apartheid South Africa is a good example – fail to achieve it.
Such governments promote schooling, free trade, property rights, social programs, and the Internet, and yet their countries’ economies remain stuck. If technology is just devices and ideas, what is holding them back?
The problem is that a key component of technology is knowhow, which is an ability to perform a task. And knowhow, unlike devices and ideas, neither involves nor can be acquired through comprehension.
The tennis champion Rafael Nadal does not really know what it is that he does when he successfully returns a serve. He just knows how to do it; putting it in words is impossible, and any effort to do so would not make the rest of us better players. As the scientist and philosopher Michael Polanyi would say of such tacit knowledge, we know more than we can tell.
So we do not need extractive elites or other evil forces to explain why technology does not diffuse. Technology has trouble diffusing because much of it requires knowhow, which is an ability to recognize patterns and respond with effective actions. It is a wiring in the brain that may require years of practice to achieve. This makes its diffusion very slow: As I have argued previously, knowhow moves to new areas when the brains that hold it move there. Once there, they can train others.
Moreover, now that knowhow is becoming increasingly collective, not individual, diffusion is becoming even slower. Collective knowhow refers to the ability to perform tasks that cannot be carried out by an individual, like playing a symphony or delivering the mail: neither a violinist nor a letter carrier can do it alone.
Likewise, a society cannot simply imitate the idea of Amazon or eBay unless many of its citizens already have access to the Internet, credit cards, and delivery services. In other words, new technologies require the previous diffusion of other technologies.
That is why cities, regions, and countries can absorb technology only gradually, generating growth through some recombination of the knowhow that is already in place, maybe with the addition of some component – a bassist to complete a string quartet. But they cannot move from a quartet to a philharmonic orchestra in one fell swoop, because it would require too many missing instruments – and, more important, too many musicians who know how to play them.
Richard Serlin, reviewing The Second Machine Age, writes of the need for skilled workers (by skilled I am sure he would agree with the foregoing concept of workers with the knowhow how to use the new technology):

The biggest current problem with this is there's a bottleneck. And it's a very serious one – skilled workers. It's relatively easy to keep building more and more and more robots, and computers, and facilities, and high-tech machines (at least if you have the skilled workers), but to produce enough trained engineers, and business managers, and skilled technicians, etc. to complement, and keep employed, all of the billions of unskilled workers globally, that's what we're not nearly up to the task for. That's the bottleneck, or at least the biggest and hardest one.

Without far more skilled workers – many highly skilled – there will not be nearly enough need for the masses of unskilled workers. There just won't be anything for them to do that's a high-tech production method like we've discussed without more skilled workers. All you'll be able to do with them is the primitive production method that employs only unskilled workers. And that production method is so relatively low output, it will be paid too little in raw materials to create non-poverty, or perhaps even subsistence, wages for most of the workers.

So it looks like to me the solution depends most on attacking this bottleneck, skilled labor – and the right skills needed for an L2 package. You do this, and you keep employing more and more of a smaller and smaller number of remaining unskilled workers, until their unutilized numbers get small enough to push their wages to a middle class, or at least non-destitute, level.
In sum, we are not looking at ridiculous regulation. When you look at this issue before the FDA what you are seeing is the ridiculous way our culture is dealing with information and knowhow.

What you are seeing is a bottleneck of skilled labor arising from a lack of knowhow about aging cheese safely.