50 Things Made The Modern Economy (S-1)

1. Plough

Imagine a catastrophe, the end of civilization. But you are one of the lucky few who survived. Without phone, electricity, internet, or fuel, surranded by the rackage of modernity, without the lifeblood of modern technology, what would you start again?  What would be needed at the ember of civilization alive?
The answer is simple: a plough!!!
It's the plough that kick-started civilization in the first place, that, ultimately made our modern economy possible.

12,000 years ago, the nomadic people were hunting and foraging their way into every niche they could find around the world.
The world emerging from a cold snap. Things started to get hotter and drier. People in up mountains found plants and animals were dying. So, they, followed the animals, moved to the river valley for water.

Then, farming emerged: break up the crust of the soil, bring nutrients to the surface, letting moisture sip deeper out sight of the harsh sun. At first , it was a sharp stick held in hand, then a plough pulled by two cows.

Farm was well established in 2000 years ago Rome and 900 years ago Song Dynasty China. Farmers were 5 or 6 times more productive.

One fifth of the population to feed the whole. The four fifthwere freed up to specialize in other things: baking, building,  constructing roads, making cities, building civilizations.

The problem was more plantiful supply of food created more competition of control of the surplus. The competition creates rulers and ruled, masters and servants, the inequality of wealth.

The plough did more than creating the under pinning civilization with all its benefits and inequalities.

Different ploughs led to different civilizations.
The first simple scratch plough was emerged in middle East and worked well for thousand years. Then it spreaded to the Mediterranean where it's the ideal tool for dry soils.

Then the mould board plough. First in China 2000 years ago, later in Europe. It cuts a long, thick ribbon of soil and turns it upside down. In a dry soil, it's a counter-productive exercise squanders precious moisture. But in fertile, wet called North Europe, it's the supior improving drainage and killing deep-rooted weeds, turning them into mere compost.

The dry soil scratch plough requires two animals to pull it. It works best in cris-cross pattern.
Farming seemed as an individualistic practice. A farmer could live alone with plough, Oxen, and land.

The wet clay mould board plough requires team of 8 oxen or horses, most efficient in long thin strips.
As a result, farming is a community practice--people share plouhs,  animals, and resolve disagreements, gather in village.

The plough ushered in monorail system in Northern Europe, and reshaped family life.
The heavy plough is men's work. Yet, wheat and rice needed more preparation than nuts and berries. So the women were preparing food in home.
Archaeology evidence, skeleton from 9000 years ago, suggested women had arithmer in knees and feet; there were more pregnancies; thus sexual politics(the heir sort of things).

The question of whether inventing the plough was entirely a wise idea was raised.
The plough, along with those benefits, enabled the rise of mythoginy and tyranny.
Early farmers were in far worse health because of lack in vitamins; their height shrunk about 15cm at average; and other diseases and childhood malnutrition.

Someone put it:"Agriculture was the worst mistake in human history!!!"

Why agriculture spred so quockly?
We've already seen the answer: the food surplus enabled larger population and societies to afford soldiers; army would be sufficiently powerful to drive the remaining hunter gather tribes off all but the most marginal land.

2. The Cold Chain

Guatemala has a rough history caused by distribution and dispute between the governments and the United Food Company on arable land and, it led to a coup detat a 36-year civil war in 1954.

The co-funder of the United Food Company is Lorenzo Dow Baker. Started as a sailor, he was an adventurer. In 1870, he and his ship ferried some gold stuff passing a river there. The ship stranded a leak on the way home back New England. It had to dock in Jamaca for repairs.
Baker had money and liked gamble. So he bought bananas. He had managed it, just, to ship them back to sell them for profit. And he want back Jamaca for more.
Bananas became a delicacy in port cities such as Boston and New York.
But banana was a risky business. Its shelf life was on the cust of the sailing time. When they arrived, they were too ripe to survive the onward journey inland.
If only to keep them cool on route,  they would ripe slowly.

A refridging ship was required.
Two years before Baker's first journey from Jamaca, Argentina's government offered a price to anyone who could keep beef cold enough and long enough to export it overseas.

For a century, scientists knew how to artificially make colder by compressing some gas into liquids then letting the liquids absorb heat as it evaporates again.
But successful commercial applications remained delucive.

1876, the French engineer Charles Tellier fit up a ship packed with meat and sailed to Brunes Aeris as a proof of concept. After 105 days at sea, the meat was still fit at eat.

1902, there were 460 refridging ships sailing around the world transporting bananas, meat, etc.

Frederick McKinley Jones, an African American boy self-taught himself into a prolific inventor.
1938, he solved the transporting refriged goods and vibration on road problem and started his new company Thermal King--the supply chain that could keep perishable goods at controlled temperatures.

In warm summer day as 25 degrees, fish and meat could only last a few hours; fruit get moldy a few days; carrots, three weeks. But in cold chain, fish and meta for a week; fruit for a month; roots vegitables like carrots for a year.

It also widen our choices of food. Those tropical fruits could reach anywhere.
It improve our nutritions; enable the rise of supermarket; due to less trips to shops, it free women to work.

In low-income countries, refrigerator was the first thing to buy. In China, the ratio was 1 in 4 household to 9 in 10 within a decade.

It goes beyond the perishable food. Different growing condition means it can make environmental sense and economic one as well.

Economic logic tells us that specialization in trade will increase the value of production in the world. Sadly, it's no guarantee that value would be shared fairly.
Guatemala, the country that still exports bananas and other produces, has the high malnutrition rate.

One of the reason of such inequality economists all agree on is the institutions: corruption; political stability; and rule of laws.

3. Welfare State

Women in politics are sometimes accused of conciously exploiting their faminality to get in a male dominated world.
Frnpances Perkins did it in an unusual way--she tried to remind men of their mothers. Plainly dressed, she refined the way she acted based on careful observations of what seemed to be effective in persuading men to accept her ideas.
"Maternal" or "Parental" ideas--any parents want to shield their children from harm. She believe that government could do the same for their citizens.

She became the Secretary of Labour under the Franklin administration in 1933 when the Great Depression was ravaging America--one third were unemployed; those in jobs were seen their wages decreased sharply.

The New Deal: a minimum wage benefits for unemployed, and pensions for the elderly.

Such welfare state idea can be traced back to half a century before her, and was proposed by Otto von Bismarck, the Chancellor of German Empire.
But it's during Perkins' era that various welfare states took their recognized morden shape across the developed world.
Details differed from place to place, measure to measure, time to time. The same basic idea links every welfare states is the ultimate responsibility for ensuring people don't starve on the street should lie not with family or charity or private insurances but with government.

Such idea has its enemies: whether to mother too much? If over-protective parenting stunts personal growth, then, might too-generous welfare states stunts economic growth?

It's a plausible worry. Could one accumulates benefits from the welfare system more than incomes from jobs? Yes!
In 2013, 9 European countries confirmed it. A single mother could have marginal tax rate nearly 100%, which meant if she took part time job to earn extra cash, she'd immediately lose it in reduced benefits. Such a welfare trap hardly sensible.

But it's also plausible to think welfare states can improve economy.
If one lose his job, he would be no rush into another one. He would get enough time to find a new position to better use of his skills;
Entroprenours might take risks when he knew bankruptcy is no catastrophe.

Does it boost or stunt economy? It's a wash. A balanced out sum.
It dosen't make the pie smaller or bigger. But it does change the size of each individual slice--help to keep a lid on inequality. At least, it used to.

It works not so well in the last two decades. It's creaking under the weight of rapidly changing world.
Demographic change: people live longer.
Social change: women are out for jobs; more self-employment.
Globalization:  employer were used to be more geographically rooted than today's foot-loose multinationals. They couldn't easily relocate jurisdictions with less burdens some regular nations and taxes due to mobility of labour.

One of the biggest way it shapes the morden economy was to take heed of demands for much radical change.

Otto' s motive was defensive.
One U.S. governor wanted run for presidency on the slogan "Share on wealth" and 19th promise of confiscate fortune from the rich. But he was shot dead in 1935.

It's said that another industrial revolution is coming now--robots come for job.

Inequality, sharply occurred in 1980s and 1990s, has been widened further. AI might do those new jobs better.
If human labour is nneeded less, keeping social stitch together may require us to re-invent the welfare state.

Thomas More's "Utopia" in 1516 assured a universal basic income--a world where everyone got regular cash handout enough to meet their basic needs.
Such trials have been done in many places: 1970s, Dauphin, a Canadian town where, under he welfare system, schooling were better; mental hospitals had less patients; people didn't give up working.

But it's expensive! If given each American adult 12,000 per year. That's about 70% of federal budget.

While there was no idea of pension in 1920s, it's rolled out across the nation in 1935.
  

4. Property Register

"Some of the most important parts of our modern economy can't be seen, but they can be heard!" concluded by a Peruvian economist Hernando de Soto who is a big name in developed economies and his energetic opposition to Peru's Maoist terrorists made him a target for assassin three times.
While walking through the fields in Bali, Indonasia in 1990s, dogs' barks claimed different territories. Then, Hernando returned to capital Jakarta to discuss setting up a formal register of property rights.
His big idea is to make sure that the legal system can see as much as the dogs in Bali.

The Indonasian government was trying to formalize the property rights, while others were trying to abolish it all together.

In 1970s, China, Maoism won the rebels but the government. So, anyone could own anything was seditious, bourgeois thinking. Everything belongs to the collective.

But if you don't own anyhing, why bother to look after it?!
A group of farmers secretly agrees a daring plan: instead of farming as a collective, they would informally divide the land and each keep whatever surplus they produced after meeting collective quoters.
A treason as an agreement in Communist eye, their farm produced more in one year than the previously five years combined.

Luckily, that was the year of 1978, the the  new leader Deng set it as the beginning of China's breakneck transformation from utter poverty to the largest economy on the planet.

It show even informal property rights can be powerful.
But in one critical way, one wants to a loan to improve one's house, build a business,  the lenders want a collectral. To prove the house is mine requires an invisible web of information that the legal system and banking system can use.

So to think this invisible web is the difference between an asset and being capital--an asset recognized by the financial system.

In poor countries, a lot assets are informally held. That's what he called "dead capital" which is useless for securing a loan.
He estimated: at the start of 21st century, about 10 trillion dollars of dead capital across the developing world. That's more than 4000 dollars per person. But other economists argued it's about 3 to 4 trillions.

To make asset become capital and get the web woven needs government inforcing property rights. That's one of the few things that everyone on the spectrum agrees a government should do.
It's not an altruistic measure. To get mortgage, and you can tax it.

The first morden property registry was in Napoleon France when Napoleon needed to fund his incessian wars.

In mid 1900s, the idea of land registry was spreaded quickly through Britain. Government drew up maps and allocated tital lease.
 
Nobody had any power and mush interest in the fact that the indigenous people have their own claim on the land.

In U.S., instead of top-down approach, they adopted the bottom-up one. Instead of calling squatters criminals, they called them the bold pioneers.
Government tried to formalize property claims using Pre-emption Act in 1840, and Homesteading Act in 1862.

The rights of native people who lived there for thousands years were not regarded as much significance.

It's hardly justice. It's profitable. By turning a land-grab into a legally recognized property right, these land registry unlocked decades of investment and improvement.

Economists suggested that for developing countries,  the bottom-up method works.

Dose this solve the dead capital problem? It depends.
It depends wether there is a banking system capable of lending, an economy worth borrowing money to invest in, and how smoothly the property registry works.

Get it right, the results will be impressive.
The countries with quicker, simpler registry also have less corruption, less grey market activities, more credit, more private investment.

Property register is unfashionable, invisible piece of inferstructure. But without it, developed countries would go to the dogs!

5. Management Consulting 

2008, Mumbai textile plant, the chaos scene: rubbish piled up outside and inside, flammable junk, uncovered containers of chemicals, the yarn produced were scarcely neater--bundled up and protected in white plastic bags, but this bags were scattered around in unmarked piles.

Such shambolic condition was typical in Indian textile factories. And it procided opportunity as well--a team from Standford university and world bank conducted a novel experiment:they sent management consultants to tidy up some of those companies and tracked what happened to their profits. It would conclusively tell us wether the management consultants are worth their fees.

Raise such question with a sceptical tone. Consultants battle a stereotype of charging exorbitant fees for advice that, on close inspection, turns out to be either meaningless or common sense.
But it's still the big business. Globally, 125b are charged.

Where did it begin?
In a noble way, economic change creates a new challenge and visionary men in business provide a solution.
In the late 19th century, the US economy was expending fast. Thanks to railway and telegraph, it was integrating. More national markets, less collection of local ones.
So, it began an unprecedented wave of merges and consolidations, creating giant household names such as General Electric, ATNT, etc.

James Mckinsey, a big character, tall, loves cigar, published 《Budgetary Control》in 1922.
It's revolutionary to cooperate Americans by not using traditional history accounts to provide a picture of how the business was doing of the past year but drawing up accounts for an imaginary cooperative future--these future accounts will set out business plans and goals that will be broken down department by department. Later, when the actual account were draw up, they could be compared to the plan which, then, could be revised. It helped managers take control.
And his idea caught on with remarkable speed--by the mid 1930s, he hired himself out for 500$ per day(worth 25,000$ in today's money). But he died at the age of 48.

His man and his company went on.
In 1960s, the company did not business, but practice; had not jobs, but engagements; was not a company, but a firm. It was THE Firm!
It's advocacy of scientific approach to management transformed the business world. It required reputation as, perhaps, the world's most elite employer.

But why don't company owners simply employ managers who studied these scientific approaches themselves?
Partly because government regulators cleared a niche for them.
The Glass Steagall Act in 1933 was a far-reaching piece of American financial legislation which made it compulsory for investment banks to commission independent financial research into the deals they were brokering. Fearing conflicts of interests, it forbade law firms, accountancy firms or the banks themselves from conducting this work, thus making it a legal requirement for banks to hire management consultants.
In 1956, as a follow-up, the justice department banned the merging IBM from providing advice about how to instore or use computers.

Minimizing conflicts interests was a noble aim, but it didn't work so well. Some scandles as inside trading, etc.
All consultants claim that their expertise is giving the tax-payers the value for money.

Back to the Indian textile factories.
Those consultants put some structure into those jumbled textile factories, instituted new routines,  provanced maintenance,  proper records, systematic storing of spares and inventory, and recording of quality de-facts. And it worked. The production was 17% up which could easily pay the excentric fees.

When an idea was used simply and humbly,  it can pay dividends.

6. Double-entry Bookkeeping

1495, Da Vinci put one entry into his to-do-list(written in mirror-writing and interspersed with scatches): learn multiplication from the route from Luca Pacioli!

Luca Pacioli, a renaissance man – he was a conjuror, a master of chess, a lover of puzzles, a Franciscan Friar, and a professor of mathematics. But today he’s celebrated as the most famous accountant who ever lived, the father of double-entry bookkeeping.

But he didn't invent the Double-entry Bookkeeping. It had being used two centuries earlier, around 1300s.

Venetians had abandoned Roman system of writing numbers and embracing Arabic numerals. They might take idea of bookkeeping from Islamic world or India where tantalizing hints had it that it dated back thousand years.
Or, may be a local Venetian invention repurposing the new Arabic mathematics for commercial purposes.

Before the Venetian style caught on, accounts were rather basic. An early medieval merchant was little more than a travelling salesman. He had no need to keep accounts – he could simply check whether his purse was full or empty. But as the commercial enterprises of the Italian city states grew larger, more complex and more dependent on financial instruments such as loans and currency trades, the need for a more careful reckoning became painfully clear.

In 1366-1410, it started as financial diary, but the teeny business grows more complex, it needs something more sophisticated.
In 1380s, the bookkeeping was used.

1494, Pacioli wrote a book --an enormous survey of everything about mathematics. Among it, 27 pages were spent for "The most influential work in the history of capitalism". The first description of double-entry bookkeeping to be set out clearly, in detail, and with plenty of examples.

In essence, it has two key elemets:
A), a method for taking inventory and keeping on top of day to day transactions using two books--a rough memorandum and a tidier, more organized journal;
B), the third book --the lodger as the fundation of he system--every transaction was recorded twice in the ledger.

The system helps to catch errors, because every entry should be balanced by a counterpart.

During the Industrial Revolution, it became seen not just as exercising mathmetic perfectionists, but as a tool to guide practical business decisions.

Josiah Wedgwood, the pottery entroprenour, was one of those who benefited from it.
1772, Europe faced recession. Josiah's warehouse was crammed with unsold stocks, his workers stood idle.
His response:  turn to double-entry bookkeeping to understand where, in his business, the profits emerging and how to expand them.
The solution : expand the production, and cut the price to win new customers.

Others followed. Thus the displine of management accounting was born.

An ever-growing system of matrix and benchmarks and targets that is leading us inexorably into the modern world.
In it, accounting does have one more role to play--it's about ensuring shareholder in the business recieve a fair share of cooperate profits when only the accountants can say there these profits really are.

Then, scandles in the 21st century and more recently show all these accounts do not completely protect customers.

Account freud is not a new game:
The first company to require major capital investment was British Railway in 1830s and 40s which needed vast up-front investment before they could own anything from customers. Investment pulled in, when railway magnents couldn't pay the dividend investors expected, they simply faked heir accounts. By 1850s, the entire railway had collapsed inegmany!

It's a powerful financial technology, but it doesn't protect us from outright freud and it may lure us into complacency!  

7. S-Bend

"Gentility of speech is at an end! It stinks!!!" The funder and editorian put it at London city press.

The stink in question is partly materpharical.
Politicians were failing to tackle obvious problem: As its population grew, London's system for disposing human waste became inediquent. To relieve the pressure on cesspits which were prone to leaking, overflowing and belching explosive methane, the authority has instead started introducing sewage into gullies which, originally, is for rain water and emptied directly into the river Thames. So it's the literal stink, the Thames became an open sewer.

Michael Faraday described the scene:"the water is an opac pale brown fluid; near the bridges, the faculents rolled up in clouds so dense that they were visible at the surface."

Colora was rife. The disease cost 1 in 100 death.

Joseph Bazalgette, the civil engineer, planned to dig a new close sewage to pump the water far from the city.

Michael Faraday warned:"Let's the hot season give a sad proof of the folly of our carelessness!"
The heat wave in 1858 did proof it--"The Great Stink"

If you live in a city with modern sanitation, it’s hard to imagine daily life being permeated with the suffocating stench of human excrement. For that, we have a number of people to thank – not least a London watchmaker called Alexander Cumming. He is renowned for his mastery of intricate mechanics. (King George III commitioned him to make an elaborated instrument to record atmospheric pressure; he also pioneered in microtome--a device for cutting altra-fine sliver of wood for microscopic analysis.)

In 1775, he patented S-Bend. The missing ingredient in creating flushing toilet, and with it, the public sanitation.
Before him, the toilet was so smelly. The pipe connected the toilet to the sewer allowing wastes to be flushed away, also allowing odors wolf back up.
Cumming's solution is simplicity itself: bend the pipe. Water settles in the dip stopping smells coming up; flushing the toilet, replenish the water.

While we moved on alphabetically from S-bend to U-bend, the same insight was deployed.

But the roll-out was slow.
In 1851, a life time after patent, flushing toilet was still so novel in London to cause excitement when introduced at the Great Exhibition in Crystal Palace.
"To spend a penny." was coined as an euphemism to express emptying one's glender.

Added to the weight of popular discontent, as politicians dragged their heels of finding the funds for Joseph's sewage system. We still haven’t reliably managed to solve the problem of collective action – of getting those who exercise power or have responsibility to organise themselves.

According to WHO' report, the people enjoyed sanitation system were from one in fourth in 1980 to two in third today. But there at still 2.5 billion people around the world have no such sanitation system.
Improved sanitation itself has low bar: hygenically separate human excretor from human contact. But still fewer than half of the global population access to such standard.

Economic cost of this on-going failour to roll-out proper sanitation are many in varied from healthcare for diarrhea diseases to foregone revenue from hygiene-conscious tourists.

World Bank has tried to tot up the price tag.
In Africa, about 1 or 2 percentage of GDP; in India, about more than 6%……

The challenge is personal sanitation is not something that market necessarily provides.

Toilets cost money, but deficating in the street is free.

In the balancing between bearing the cost and benefiting the public, it's a positive externality in economic parlance.

Goods which have positive externality tend to be bought at a slower pace than society as a whole prefer.

Creating the system is a major undertaking financially and logistically.

Because of the externality problem, such a project might not appeal to investors. It requires determined politicians, willing tax-payers, and aell-functioning municipal governments. And it seems those are in short supply.

It cost ten years for Joseph Bazalgette to comlete the sewage system. But it's only 18 days to let London lawyers to rush through the necessary legislation of his plan.  Why such a sudden impressive alacrity? There was a quirk of geography: the Parliament building is next to the River Thames……those politicians failed to shield the stink from lawyers.

If only concentrating politicians' mind were all that easy! 

8. Radar

In Kenya's rift valley,  out-bound cargo airflights were grounded because Icelandic volcano had spude a cloud of dangerous ash into Europe's airspace, without spear the slightest thought for him.
This show how much the modern economy relies on flying. There were 10 million people per day travelling on the plane.

Trace the extence of our reliance on air travel to many inventions: jet engine, or the air plane itself.
Sometimes one invention needs another to unlock its full potential.
For the aviation industrial, it starts with the development of the "Death Ray". Or the attempt to develop the "Death Ray".

In 1935, officials in British Air Ministry officials were worried about falling behind Nazi Germany in the technological arms race. They correctly predicted that the next war would be dominated by air power.
The "Death Ray" idea intrigued them.

Robert Walson Walt was at the radio research station. He post an abstract question to his college Skit Willkins:suppose there was 8 pints of water hanging 1km above the ground and want to heat the water from 98°F to 105°F. How much radio sequence power would you require from a distance of 5km.
Wilkins was no fool about this: the 8 pints is the blood volume of an adult, the 105°F is warm enough to kill you.
So, they agreed the "Death Ray" was hopeless. It takes too much power.

But they also saw opportunity: any alternative way to spend the cash that the administration had allotted on research--to transmit radio waves, and detect from the echo that location of on-coming aircraft long before they could be seen.
They dashed the memo,  and that is the "Radio Detection and Ranging", the Radar.

Meanwhile, Germany, Japan, and America are also work on it separately. It's the British who made the breakthrough in 1940.

The resonate captive magnetron- -a radar transmit far more powerful than its predecessors.

British leaders plotted to use magnetron as the bargaining chip for American secrets in other fields.
When Churchill was in power,  he decided "desperate time called desperate measures". British tells American what they have and ask for help.
The "Death Ray" stuns American. They established a lab in MIT.
The radar it developed detecting submarines and planes helped to win the war.

But urgency in times of war could be quickly lost in times of peace.
Civilian aviation needed radar, given how quickly it's expending.
In 1945, when the war was over, U.S. domestic airline carried 7 million passengers;  in 1955, it was 38 million.

The busier the sky the more useful radar would be to prevent collisions.

But the roll-out was slow and patchy.
Staffs then always planed in advance to ensure no two airplanes would be in the same place at the same time.

Avoiding collision was down to the four-word protocol:"See and Be Seen."
On 30th June, 1956, two airplanes took off three minutes apart from LA airport. They intersected above Grand Canyon but in different heights. Then thunder clouds developed. One of them tried 25 angle up through the cloud to give passengers the view…… And there was no survivors.

What risk we are willing to run for the economic benefits is pertinant again.

We have high hopes for un-manned airo-vehicles. Drones are used for everything: from movie making to crops sprung.
Amazon wants the sky soon to be buzzing with grocery deliveries.

Drones have sense and avoid technology which is good. Is it good enough?
The crash of airplanes concentrated minds.
It technology existed to prevent things like this, shouldn't we make it more effective to use it?
Within 2 years, the Federal Aviation Administration was born in U.S..  

Today, it's 20 times busier in American sky--taking-off and landing is at average of 2 per minute.

9. Market Research

In the early years of the 20th century, US car makers had it good. As quickly as they could manufacture cars, people bought them. By 1914, that was changing. In higher price brackets, especially, purchasers and dealerships were becoming choosier. One commentator warned that the retailers could no longer sell what their own judgement dictated – they must sell what the consumer wanted.
That commentator was Charles Coolidge Parlin, widely recognised as the man who invented the very idea of market research. And he was the first professional market researcher.
One century later, the market research profession is huge: in the United States alone, it employs around half a million people.

Parlin was tasked taking the pulse of U.S. automobile market. He's been hired by a magazine publisher of widely-read periodicals at that time, such as 《The Saturday Evening Post》,etc.
The magazine was depended on advertising revenue. They could sell more advertising space if advertising were perceived as more effective. If researching market might make it possible to device more effective advertisements.

In 1911, the publisher had a new division of his company to explore this vaguely perceived idea.
It's first head of this division was Parlin who started himself by emersing in agriculture machinery and later to department stores.
Not everyone saw value in his activities. He needs a defident justification of his job's existance.

The invention of market research marks an early step in a broader shift from a “producer-led” to “consumer-led” approach to business – from making something then trying to persuade people to buy it, to trying to find out what people might buy and then making it.

The "Producer-led" approach was examplified by Henry Ford's- -"any colour as long as it's black!"

During 1914 to 1926, only black model tins were rolled on Ford's production line. Black colour was cheap and durable.
All the remain was to persuade customers what they want is black!

Few company nowadays would simply produce what convenient and hope to sell it. A panoply of market research techniques helped to determine what might sell: surveys,  focus groups, best testing.

In the late 1910s, companies started setting up heir own market research.
Over the next decade,  U.S. advertising budgets got doubled and became more scientific.
1930s, Geoge Pilot pioneered in opinion polls.
1941, the first focus group was conducted in Robert Kin Martin.

Systematically investigating consumer preference was only part of the story.
Companies also realized it's possible to systematically change them.
Robert coined the phrase "role model" to describe successful, cool, savvy individuals who routinely feature marketing campaigns.

The nature of advertising was changing. It's no longer merely providing information, but trying to manufactory desires.
Eg: Edward Bernads pioneered the field of public relations and propaganda.  In 1929, he helped the American tobacco company to persuade women that smoking in the public was an act of female liberation. "Cigarettes were torch of freedom!"

Today, attempts to discern and re-direct public preference shape every corner of the economy.
Should we worry about he reach and safistication of cooperate efforts to probe and manipulate consumer psyches?
One positive view from an economist:"like chivalry lovers, the best market orientating company helps us discover desires we never knew we had, and the ways of fulfilling them we never imagine!" People are showing off, through our purchases, such as peacocks impress peahens at tails.

In 1899, Thorstein Veblen coined the concept of conspicious consumption and leisure.

Such view was manifested in the signalling power of consumers purchase.
"The pleasure car is the traveling representive of man's taste or refinement. A dilapidated car is like a decrepit horse advertises that the driver is lack in funds or lack in pride."

Signalling, these days, is more complex than merely displaying wealth. People choose deferent brands of cars for green credential and safety-conscious.

These signaling are carrying meaning only because brands spent decades consciously try to understand and respond to consumer desires and to shape them.

10. Plastic

"Unless I'm very much mistaken, this invention will prove important in the future!" Leo Baekeland wrote in his journal on July 11th, 1903.
Baekeland was born in Belgium with a father the copper without education and a mother the domestic servant who encouraged him to go for night school from where he won the scholarship to the Univercity of Gent.
He got his doctoral in Chemistry at the age of 20. Then moved to New York with his wife, his tutor's daughter, and made a fortune by inventing a new kind of photographic printing paper.
He built himself a home laboratory to indulge himself of tinkering with chemicals and kept journals.
On 22ed, July, 1907, his entry read:"Today marks the 23th anniversary of my doctorship. I'd like to remain a student until the death calls me again to rest!"
When death called him at the age of 80, he'd become eccentric recluse dining on tin food.

Just in that hot and saltry July 1907, the first synthetic plastic was invented by him, and named "Baklite", which made him the cover face of Time magazine.

He was right about it future importance. Because plastics are now everywhere.
It takes 8% of oil production; half row materials; half energy.

Bakelite didn't hold back in its advertising blurb.
Humans had transcended the old taxonomy on animal, mineral, and vegetable. Now it's the fourth kingdom whose boundaries are unlimited.

It sounds hyperbolic, but it's true. Scientists previously had thought about approving and mimicking natural substances.
Earlier plastics, like celluloid, was based on plants.
Baekeland himself has been seeking an alternative to shellac--a resinous secreted by beatles used for electrical insulation.
But he quickly realized that Bakelite could be far more versatile than that. It's a "material for thousand uses!" It's used in many fields and even in the first atomic bomb.

Bakelit's success shifted mindsets: what other artificial materials might be possible with property you could necessarily find in nature?
In the 1920s to 30s, plastics were pouring out of labs around the world. There was polystyrene, often used for packaging; nylon, popularised by stockings; polyethylene, the stuff of plastic bags. As the Second World War stretched natural resources, production of plastics ramped up to fill the gap. And when the war ended, exciting new products like Tupperware hit the consumer market.

Not long then, the image of plastics gradually changed.
In the film "Graduates", one senior member gave the young protagonist the career advice as if about to reveal the secret of life itself by just a word:"Plastic!!!"
It crystallized the changing connotation of the word. For old generation, plastics equals to opportunity, modernity; for young ones, it's phoney, superficial.

Half a century on, dispite its image problem, plastic production has been up for 20 folds. And it will doubled again in the next 20 years.

There comes the grow in evidence of environmental problems.
The chemicals in plastics affect animals' development and reproduce;
when plastics end up in landfills, the chemicals seep into groundwater;
when in ocean, some creatures eat them.

On the another side of the ledger, it benefits economy and the environment as well.
Vehicles made with plastic parts are lighter and consume less feul;
plastic packaging keeps fruits fresh longer thus less waste;
plastic bottles are safer than glass ones on children's playground.

Eventurally,  we have to get better in recycling plastics.
Only one in seventh plastic packaging is recyclable.

Any technology solutions?
The Protocycler--when being fed in your plastic waste, it will give filament of 3D printer.

Bakelite was revolutionary as star track replicater as to us. It was simple, cheap synthetic product that was ruff enough to replace ceramic tableware; beautiful enough to be used in jewry……it's the mirical material that we take for granted.

The latest technology can upcycle plastic trash mixed in with agriculture waste and nylon particles to create new materials with new properties. 

And Baekeland would appreciate it.

11. Seller Feedback

In Shanghai,  a taxi driver found a will-taker in an online forum to make up a journey for 1.60 dollars. Or he could make a step further by buying hack phones to fake multiple fake identities for a ride with himself.
Why doing so? Because he's willing to run the risk to being caught. And because someone is willing to pay him to give people rides in his car.

Investors in Uber and its rivals have run up billions of dollars losses in paying people to share car journeies.
Naturally, they are trying to stemp out those imaginary journeies.  But what about those  subsidising genuine rides? They are convinced that's a smart idea though it's so bizzar and even perverse.

Everyone involved is rationally pursuing economic incentives.

To see what's going on, we have to understand the phenomenon that spawned many buzz words: crowd-based capitalism, collaborative consumption, the sharing economy, the trust economy……

Take an example of giving a lift to this basic idea.
One of the reason why it's not easy and feeble to give some one a lift while you two are supposed heading the same direction is we do not know each of us exist.
The function of matching people who have "coincidental wants" is among the most powerful ways the internet is shapping the economy.
1995, Mark Fraser, who gave lots of presentations, wanted a laser pointer. He tried to find one online. That's the first transaction on eBay.

The second reason is no idea of who you are.  I might think you world attack me, and you think I'm a serial killer.
Hich-hiking was a popular pursuit a few decades ago, but after some sensational reported murders, it fell out of fashion.

Trust is the essential component of market.
In developed economies, enablized trust is everywhere: brands, money-back guarantees,  repeat transactions with the seller who can be easily located……

But the new sharing economy lacks those enablized.
In 1997, eBay introduced a feature that helped solve the problem: Seller Feedback. Jim Griffith was eBay’s first customer service representative; at the time, he says “no-one had ever seen anything like [it]”. The idea of both parties rating each other after a transaction has now become ubiquitous. You buy something online – you rate the seller, the seller rates you. Or you use a ride-sharing service, like Uber – you rate the driver, the driver rates you. And a few positive reviews set our mind at ease about a stranger. Jim Griffith is not sure eBay would have grown without it. Online matching platforms would still exist, of course – but perhaps they’d be more like hitch-hiking today: a niche pursuit for the unusually adventurous, not a mainstream activity that’s transforming whole sectors of the economy.

Platforms like Uber, EBay……create real value. They tap in capacity that would go to waste: spare rooms, etc.

But there are always be losers. Not all heart-warming stories.
It easily leads to cut-throat capitalism. Those compitions between brands and less-known brands are so fierce.

Many countries have rules to protect workers: guaranteed working hours, working conditions, minimum wages, etc. They are trying to make a living after all.

Some regulations protect customers, too, say, from discrimination.

A business has the network effects.
That's why Uber like companies invest massive in subsidising rights and giving credits to New customers. They want to get big first.

Matching people with particular wants really is useful.

12. Paper Money

A young Venetian merchant named Marco Polo wrote a remarkable book chronicling his travels in China around 750 years ago. The Book of the Marvels of the World was full of strange foreign customs Marco claimed to have seen. One, in particular, was so extraordinary, Mr Polo could barely contain himself: “tell it how I might,” he wrote, “you never would be satisfied that I was keeping within truth and reason”. Marco Polo was one of the first Europeans to witness an invention that remains at the very foundation of the modern economy: paper money.

Modern money isn't made of paper, it's made of cotton fiber or flexible plastic weave.
Chinese money wasn't quite paper money either. It's black sheet derived from the bark of mulberry trees. Signed by multiple officials and with the seal smothered in bright red vermilion authanticated by the Chinese emperor Genghis Khan.

Whatever these notes were made of, the value didn't come from the preciousness of the substance as will the gold or silver coin. Instead, the value was created purely by the authority of the government.
 
Paper money is, sometimes, called "pheatre money"--the Latin word means let it be done.

The Chinese paper money circulated very well. Well, the gold was in tight hold by the emperor.

Well, the mulberry money isn't new. It emerged 300 years earlier, around the year 1000, in SiChuan china--the strategic place where gold and silver were forbiddened to circulate in case for leaking into foreign lands. So, the governemnt ordered iron coins there.

Iron coins were not practical because it's too heavy to carry.
It's no surprise merchants in SiChuan began to experiment with an alternatives--JiaoZi or exchange bills or "I-owe-u".
A well-known entrusted merchant would write an IOU and promise to pay it later. Soon, these IOUs started to trade freely.
The paper money promised to repay and had marketable value all of its own. It could  pass around from people to people without being redeemed.
Merchant got interests of free loan, as long as his IOU continued to circulate. Better still, it's a loan that he's never been asked to repay.
The Chinese government thought these benefits ought to be reclused to them. So, they took two steps: first, they regulated the issue of JiaoZi and produced rules about how they should look; second, They made it outlaw of private JiaoZi and took over the whole business themselves.

Such operation was conducted in many other countries and around the world. They traded in premium because it's so easy to carry around than metal coins.

Government issued JiaoZi could be redeemed for coins on demand. It treats the paper notes as a place held of real value.
Government soon moved to "pheatre" system: maintaining the pricile but abandoning the practice of redeeming it for metals. People could bring JiaoZi to the government treasury for crisp new ones.
It's a modern step.

Government's I-owe-U circulates despite the fact that they can not be redeemed. For governemnt, "pheatre money" represents temptation: a government with bills to pay can simply print more money; when more money chase the same amount of goods and services, the prices keep going up.

The temptation proved too good to be resisted.
Within few decades of its invention in the 11th century, JiaoZi got devalued with trading just 10% of its face value.
Other countries suffered even worse. 1946, Hungary, the price of a cup of coffee could be raised during just a cup of coffee time. Price tripled everyday there.

They yarn for the return of the gold standard when paper money could be redeemed for a little piece of precious metal.
But economists disagreed: low and predictable inflation causes no problem; and it's even lubricative to the economic activities.

In 2008 financial crisis, U.S. federal reserve pumped trillions of dollars into the economy without creating inflation.
The printing press was metaphorical. These trillions were created by key-strokes on computers in banking system.
"The great central bank causes the digits on computer screen making into something like spreadsheet to pass for money!" The wide-eye Marco Polo might exclamated.

Technology has changed, but what pass for money continues to astonish.


13. Limited Liability Company

Nicholas Murray Butler was one of the great thinkers of his age: philosopher; Nobel Peace Prize-winner; president of Columbia University. When in 1911 Butler was asked to name the most important innovation of the industrial era. Steam? Electricity? Both would be reduced to comparative incompetence without something else! His answer was somewhat surprising. “The greatest single discovery of modern times,” he said, “is the limited liability corporation”.

It's odd to say the LOC was discovered, but they didn't just appear from nowhere.
The word "incooperative" means take on bodily form, not a physical one but a legal one.
In the laws' eyes, the cooperation is something different from people own it or run it or work for it. It's a concept law maker has to dream up.
Without laws, the cooperation can't do certain things like own asset, enter into contract, the world would be meaningless.

The legal ingredients that comprise a cooperation came together in a form we recognize in England on New Year's eve 1600.
Back then, creating a company, you need a royal charter.
The legal body created that night was charged with handling all of England's shipping trade east of the Cape of Good Hope. It had 280 merchants as shareholders.
The charter granted these merchants limited liability for the company's actions.

Before that, investors were personally liable for everything the business did. If your partner failed to pay the debt, debter would come after you not just for the value of your investment but for everything you owed.
Such business usually only occurred only within family members, or at a push, with trusted friends whom you knew very well.
That would limit the capital you could raise. It's ok for local and small business. But handling England's trade with half of the world was a weighty undertaking.

The cooperation Queen Elizabeth I created was called Eastern India Company. Over the next two centuries, it's ruled more like a colonial government: vast employees, army, civil servants, and even issued own coins.

The idea of LLC caught on.
1811, New York state introduced it, mainly for manufactory companies.
Other states and countries followed on. Britain got it in 1854.

The 《Economist》sniffed it then by claiming if you wanted limited liability, you could have agreement through private contracts.

LOC proved its worth: the new industrial technology in the century needed capital, a lot. Eg: a railway company needed raise large sums to pay tracks before it could make a penny in profit.

Here is the problems. In Adam Smith's 1776 《The Wealth Of Nations》, he dismissed the idea that professional managers would do good job of looking after shareholders money.
In principle, he was right. There always temptation for managers to play fast-and-loss with investors' money.

Well, we evolved cooperative governance laws to protect shareholders' money.

The tension is: the idea of cooperative social responsibility where a company may donate charity, decide to embrace labour or environmental standards above what law demands. In some cases, that's smart brand building and it pays off in higher sales. In others, ,angers using shareholders' money to buy social status or require life.

Economists argued: the social responsibility is to maximize profits. If legal, you make money. If people don't like it, change the law.
The trouble is the company can influence the law too. They can fund lobbyists, donate to electoral candidate's campaigns.

The East cooperation quickly learned remaining cozy relationship with British politicians who duely bail it out whenever it got into trouble.
1770, a famine in Bango clobbered the company's revenue. British legislators saved it from bankruptcy by exampting it from terrifs on tea exports to American colony, which led to the Boston Tea Party and eventually the Independent Proclamation of America!
U.S. itself owes its existance to excessive cooperative influence on politicians.

Cooperative power is even greater today.
In the global economy, cooperation can move to off-shore.
In 1874, They revoted charter as the ultimate sanction.

In Mao or Starlin' s economy, it's the hierarchy,  not the market, decided what to produce; while  it's exactly the hierarchy, not the market, make the decision within he cooperation.

"Regulators are now too timid about exposing market-dominated cooperation to a blast of healthy competition. "

LLC, after all, helped us investors pull their capital without taking unacceptable risks. It enabled big industrial projects, stock market, index ones. It plays a foundational role in creating modern economy. 

14. Dynamo

For investors, the burst of .com bubble came a bit of shock. They raise sums of money on the premise that world wide web would change everything.
In spring of 2000, stock market collapsed.

In 1987, before the web, it's the spreadsheet and databases that were appearing in every work place and having no impact whatsoever.

The leading thinker on economic growth Robert Solo put it:"You can see the computer age everywhere but in the productivity statistics."

The best measure we have is total factor productivity to track the overall economy import in innovation.
When total factor productivity is up, economy is squeezing more outports out of imports. Eg: machinery, human labour, education, etc.

In 1980s, the slowest rate was witnessed. Technology was booming, but productivity stagnant.  It's called the "productivity paradox".

What might explain it?
Let's rewind 100 years when another remarkable energy was proving disappointing--electricity.
Investment in electricity-driven factories, such dynamos and motors, were huge, but the surge in productivity did not appear.

The potential of electricity seemed clear.
Light bulbs in late 1970s; 1881, Edison's electricity generating stations in Manhattan and London; within a year, selling electricity as commodity; a year later, the first electric motor used to drive manufactory machinery.

Yet, in 1900s, less than 5% driving power was from electrical motor. Most factories were still in the age of steam. A steam-powered factory must be awe-inspiring. The mechanical power came from a single massive steam engine. Belts transforming power between work shops on the same floor or even vertically. Belts towers enclosed them to prevent fire from spreading through the gaps.
Steam engine rarely stopped. If a single machine needed to run, coal fire needed to be fed.

Some factories experimented by replacing a steam engine with an electrical one drawing clean and modern power from nearby generation station.
After such a big investment, they disappointed with the cost-savings.
Because to take advantage of electricity, factories had to think in a very different way.

Electrical motor could do much more:
It allow power to be delivered exactly where and when it was needed. Small steam engin could be hopelessly inefficient. Instead a huge steam engine in one place, there could be many small electrical ones in every work unit.
The power wasn't transmitted through a single massive spinning shaft,  but through wires. Factories became light and airy.
Instead of arranging factories on a logic shaft in the steam age, electricity one arranged factories on the logic of production line.
The old ones were dark, dense, packed around shafts; the new ones were spread out with winds and windows to bring natural lights and air.
The old ones let the steam engine set the pace; the new ones let the workers set the pace.
Factories could be cleaner, safer, more efficient.

But you couldn't get these results simply by ripping the steam engines. You needed to change everything: the architecture,  production process, the way workers recruited, trained, and paid.

In the end, the change was unavoidable.
Electrical engines were cheaper and more reliable.
American workers became more expensive(thanks to the law of limited immigration from Europe). Workers were hired not by quantity but by quality.
New ideas of manufacturing of using electrical motor spred.

In 1920s, productivity in America went up at the pace that was never seen before or since.
Paul David, an economy historian, gave credit to the fact that manufactory finally figured out how to use technology that was half a century old. To change their archetecture, logistics,  personnel  to take advantage of  electrical motor took 50 years.

In the year 2000, half a a century after the first computer program,  productivity was picking up a bit.
The difference of such reward gap was companies were willing to reorganize, to take advantage of what computer have to offer--decentualizing, outsourcing, streamlining supply chains, offering more choices to customers.

The revolutionary technology means it changes everything. Changing everything takes time, imagination, courage and hard work.

  
15. Lead Patrol

"Lead petrol is safe!", its inventor Thomas Midgley was sure of it. And he demonstrated it by washing his hand in the petrol.(one thing disingenuous was the fact that he just spent some time in Florida recuperating from lead poisoning. )

October, 1924, oil makers and laboratory workers were not so lucky, they were seriously ill and died within a week.

Better working practice could make terraethyllead  (TEL) safe to produce.

But, was it really sensible to be added to petrol?
General Motor first proposed to add lead into petrol a couple of years earlier. Scientists were alarmed concerning the public health problem.
In May, 1925, pushed by the public pressure,  a debate(examplify the two extremes to approach to any new idea that looks risky but useful) was held in Washington DC.
On one corner, the businessman claimed it as "a gift from God!" and the continuous development of motor fuels was essential in our civilization.
On the other corner,  the doctors put it as the chance not worth taking. Lead poisoning is inevitable.

Lead has been poisoning people for thousand years.
1678, leadwhite, the pigment for painting, made people suffer ailments as dizziness in head, continuous pain in the bows, blindness, and stupidity.
In Roman times, it's used in water pipe. The word "plummer" is from Latin version lead. "Water went through earth and pipe is more wholesome than through lead!" A philosopher put this 2000 years ago(by observing the colour of skin of those workers).

How much pollution is the price worth paying for progress?
When countries get richer, they get dirtier, and later, the clean up. This is called the "environment Kuznet curve".
If you are poor, you prioritize material gains. As your income grew, you want to spend some on a nicer, safer environment.

Anyway, it solved the problem--it enabled engines to use higher compression ratios which made cars more powerful.
However, it's not the only way to solve them. Ethyl-alcohol has much the same effect. And it wouldn't mass your head unless you drink it.

Many experiments had been done. Why General Motor push TEL?
Because anyone on farm can distill alcohol from grain. It couldn't be patented, nor its distribution profitably controlled. TEL could.

It's not until 1970s when U.S. levied tax on lead petrol and finally ban it as a part of clean air legislation, thus making America move down the far side of the environmental "Kuznet curve".

20 years later, in the 1990s,  rates of violent crime started to go down.
Children's brain are especially susceptible to chronic lead poisoning. Kids who didn't breath lead petrol fuels grew up to commit less violent crime. Rates can test hypothesis. Different U.S. states has phased down lead petrol at different times. By comparing the dates of clean-air legislation with subsequent rise data, the statistics proved it: 56% of the drop were partly due to cars switching to un-leaded petrol.

How US get this so wrong for so long?
A tale of disputed science and delayed regulation, maybe. As the same as other products as we all know the slow killers. People want to ban things aren't always interested as people like visionaries.
Sometimes, there are obstructive cranks.

Midgley's second major contribution to civilization-CFC which improved refrigerator but destroied the Ozone layer.
In his middle age, afflicted by Polio, he applied his inventive mind to lifting his weakened body out of bed but only found himself killed by his system of pullies and strings.


16. Department Store

1888, the flamboyant American Harry Gordon Selfridge was touring great department stores in Europe to see what tips could be picked up for his then employer Chicago's Marshell Field who was populizing the aphorism of "The customers are always right!" which has not yet be the case in Europe.

Two decades later, Selfridge back in London opening his own department store on Oxford street. Now a global maca for retail, then an unfashionable backwater near a newly opened underground line station.
Selfridge caused a sensation due partly to its sheer size, covering 6 acres, and the largest glass sheets in the world, and the most sumptuous shop windows displays.

More than scale, what set his store apart was the attitude. He introduced Londoners a whole new shopping experience, one honed in the department stores of late 19th century America. He swept away previous shopkeepers’ customs of keeping shopper and merchandise apart to one where “just looking” was positively encouraged.
In cabinet behind the locked glass doors, or high up on shelves that could be reached only by ladder. He, instead, laid out open isles displayed we now take for granted. Where you can touch upon them, pick it up, and inspect it from all angles without a salesperson hovering by your side.
In the full-page newspaper adverts Selfridge took out when his eponymous department store opened in London in the early 1900s, he compared the “pleasures of shopping” to those of “sight-seeing”.

Shopping had long been bound up with social display. They were places for those upper-classes not only to see but to be seen.

He had no truck with snobbery and exclusivity.  His adverts pointedly made clear that the “whole British public” would be welcome – “no cards of admission are required”.

Management consultants nowadays talk about "fortunes to be found at the bottom of the pyramid!" He was way ahead of them.
In his Chicago store, he appealed to the working classes by the slogan "bargain as the basement".

The idea was in the air.
Anoher trailblazer was Irish immigrant Alexandra Turney Stewart.
He introduced New Yorkers to the shocking concept that not hustling customers the moment hey walk through the door. He called this policy the "free entrance"!
And the "clearance sale": periodically moving on the last stock and knock down the prices to make room for new.
He offered no refunds. He made customers pay in cash and settle their bills quickly (traditionally, customers string out their lines on credit for up to a year! )
Another insight he applied in his store was low markups. Not everyone likes to haggle. A fair price was offered and you just take it or leave it. In his own words:"It's the lowest price I can afford. Only a small profit on each sale can be an enlarged area of business making possible a large accumulated of capital."

His great department store became the Cathedral of Commerce in which you can buy anything from cradle to grave. "The birth of total shopping."
He died as one of the richest men in New York.

The glory of city centre department stores faded a little by the rise of cars came along with the out-of-town shopping malls where land was cheaper.

Both of them did it when women were gaining social and economic power.
The stereotype of women spend in more time in shopping has its credit.
According to the study: men like shopping with easy parking and short pick-up lines so that they can do the shopping and go away; women prioritize aspects of the shopping experience like the friendliness of the sales assistants.

Recognising that his female customers offered profitable opportunities that competitors were neglecting, one of his quietly revolutionary moves was the introduction of a ladies’ lavatory. Selfridge saw that women might want to stay in town all day, without having to use an insalubrious public convenience or retreat to a respectable hotel for tea whenever they wanted to relieve themselves.

He could justifiable claimed to help emancipate women. A social reformer.

17. Barbed Wire

Late in 1876, John Warne Gates built a wire fence in a military plaza in the middle of Texas.
John Warne Gates, later nicknamed "Bet-a-Million Gate" began to take bets with onlookers--whether powerful long horns could break the fragile-seeming wire. They couldn't.

The orders of these wires soon came in. The advertisements of the time touted it this fence as “The Greatest Discovery Of The Age”. It's “lighter than air, stronger than whiskey, cheaper than dust”. We simply call it barbed wire.  That might seem hyperbolic, even making allowances for the fact that the advertisers didn’t know that Alexander Graham Bell was just about to be awarded a patent for the telephone. But while modern minds naturally think of the telephone as transformative, barbed wire wreaked huge changes in America, and much more quickly.

The best wicked barbed wire was twisted around strand of smooth wire, then a second strand of smooth wire is twisted to get together with he first to stop the bard from sliding around.

Farmers snapped it up.
The reason American farmers were so hungary for barbed wire was because the 《Homestead Act》of 1862. It spesified: any honest citizen, including women and freed slaves, could lay claim a 160-acre of land in American western territories. All they have to do was built a home there, work the land for five years.
But the prairie was a vast and uncharted expense of tall, tough grasses, a land suitable for nomads,  not sattlers. It'd long been the territory of the native American. After European arrived, they pushed west and cowboys roam free herding cattles over the boundless plains.

Settlers needed fences from those free-roaming cattles trampling on their crops. There wasn't enough spare wood for building fences, no working of thorn bush hedges(slow-growing and inflexible) or smooth wire fence(often pushed through by cattles).

The lack of fencing was lamented. Barbed wire was the solution.

But it also sparkles ferocious disagreement.
Farmers staked out their property that once belonged to various native tribes who described the wire "the devil's rope".
Old-time cowboys live on the principle that cattle could graze across the plain freely--the law of open range.
Such wire caused nasty wounds and infection on cattles and made them die in thousands on their route towards South when the blaze came in.

The attraction of barbed wire was it could force legal boundaries. But many of the fences were illegal too. Some attempted to commander common land for private purpose.
Thus, the "fence-cutting wars", death warns, gunshots.

Such conflicts are reflected on philosophical debate.
The English 17th philosopher John Lodge, having great enfluence on the funding fathers of USA, puzzled over how anybody may legally come to own land.
He argued: We all own our labour. By working the land, you come to own it.
"Nonsense!" claimed Jeam-Jacques Rousseau, the 18th century philosopher. In his 《Discourse On Inequality》, he protested the evils of enclosure. "The first man who has enclosed a piece of land besalting himself by saying:This was mine. And this man was the real funder of civil society. "

It'sodern true modern economies were built on private property, on the legal fact that the most things have a owner, usually a person or a cooperation.
It also built on the idea that private property is good thing. Because private property gives people incentive to invest, to improve what they own, whether it's a patch of land in American middle west, an apartment in Dakota,  or a piece of interlectural property such as the rights to Mickey Mouse.

The story of how barbed wire changed the west is also the story of how property right change the world, also of how, even in the sophisticated economy, what the law says sometimes matter less than simple practicality.

The 1862 《Homestead Act》laid out the rules of who owned what in he west territories. But those rules didn't mean much before they were reinforced by Barbed wire.

As for those wires, the production of it were in pipeline in 1880 that it could circle the world 10 times.


18. Tax Heaven

The process of avoiding tax maybe bored and confused.
Tax heaven depends on making it, at the best, difficult to get your head around financial flows; at worst, impossible to find any facts.
Accounting techniques that make your head hurt enable multi-national businesses such as Google, Ebay, IKEA, to minimize their tax bills completely legally.

Tax is like membership fees for a club. It feels unfair to dodge the fees, but still expect to benefit from its services.

Sometimes, they function like any other safe heaven allowing persecuted minorities to escape the oppressive rules of home.
Jews in Nazi Germany asked secret Swish banks to hide their money. Swish banks soon undid the good to their reputation by proving just happy to help Nazi to hide the gold they managed to steal and reluctant to give it back to the people they stolen from.

Tax heaven is controversial for two reasons: tax avoidance, and tax evasion.
Tax avoidance is legal. It's legal to set up boarder-hopping structures only if you can earn enough to justify the accountants' fees.

If everyday folks want to justice their tax bill, their options are limited to various forms of tax evasion which is illegal.

British tax authorities reckoned the much of the tax evasion comes from countless such infractions,  often small the stuff rather than wealthy entrusting their money in banks who shown they can keep a secret.

Banking secrecy started in Switzerland.  The first known regulations limiting when banks can share information about their clients were passed in 1713 by the great console in Geneva.
In 1920s, secretive Swiss banking took off, many European nations hiked taxes to repay their debts from WWI. And rich Europeans looked ways for hiding their money.
1934, Swish banks made it a criminal offence for banks to disclose financial information.

The euphemism for tax evasion nowadays is offshore.
The real reason for the rise of offshore heaven is historical. Some islands are not capable for farming nor for manufacturing but good for financial services.
The dismantling of European Empires in the decades after WWII let tax revenue leak to those islands.

The economist Gabriel Zucman is the inventor of an ingenious way to estimate the amount of wealth hidden in the offshore banking system. In theory, if you add up the assets and liabilities reported by every global financial centre, the books should balanced. But they don’t. Each individual centre tends to report more liabilities than assets. Zucman crunched the numbers and found that, globally, total liabilities were eight percent higher than total assets. That suggests at least eight percent of the world’s wealth is illegally unreported. Other methods have come up with even higher estimates.

The problem is particularly acute in developing countries.
His solution is transparency:  creating global register of "who owns what" to end banking secrecy and annihilating preserving shell operating and trusts.

But tax avoidance is a subtler and more complex problem.
As rising taxes met increasing globalization in 1920s, there were leeway to choose where to put their profits, thus opening doors to some dubious accounting tricks.
It's estimated that 55% U.S. rooted profits are offshore, costing us taxpayer 130b a year.
The losses in developing countries, the amount is many times as they get from foreign aid.

The solutions are conceivable: profits could be taxed globally with national governments devising ways to apportion which profit is deemed taxable where.
A similar operation is already exist to apportion national profits made by US companies to individual states.

It needs political desire to tackle tax heavens. The measures took by OECD so far lacked teeth.
Clever people can earn more from exploiting loopholes than trying to close them.
Individual governments face incentives to compete to lower tax. Small percentage of something is better than a large percent of nohing.

The biggest problem is tax heavens mostly benefit financial elites.


19. Infant Formula

A sort of canon fire or canon noise troubled locals for three days near Indonasian islands. It was the eruption of Mount Tambora. Stratovolcano in Indonasia.
A cocktail of toxic gas, liquefied rock rolled down the volcano slopes at the speed of hurricane.  It killed thousands. It left its height 4000 feet shorter than before.
The year was 1815. Slowly a vast cloud of volcanic ash drifted across the northern hemisphere, blocking the sun.
In Europe, 1816 was called "the year without summer". Crops failed, desperate people are rats, cats, and grass.

In Germany, town of Dashdat, a 13-year-old boy, Justus von Liebig was impressed by this scene. He grew up by helping in his father's paint factory; later became a chemist(amongst the most brilliant of his age); then, driven by the discovery that might help prevent hunger, he pioneered in nutritional science--the analyse of food in terms of fats, proteins, and carbohydrates; he invented beef extracts.

Liebig invented something else too: the infant formula.
Launched in 1865, his soluble food for babies was a powder comprising cow’s milk, wheat flour, malt flour and potassium bicarbonate. It was the first commercial substitute for breastmilk came from rigorous scientific study.
Not every baby has a mother who can breastfeed. Indeed, not every baby has a mother.

Before modern medicine, 1 in 100 childbirth killed the mother. It's little better in the poorest countries today. About 1 in 20 mother couldn't make enough milk.
Before the formula, there were substutes from goat's and donkey's milk. Many were given “pap”, a bread-and-water mush, from hard-to-clean receptacles that teemed with bacteria.

In the early 1800s, only two-thirds non-breastfeeding babies could live through to see their first birthday. The wet nurses were needed--a respectable profession for the working girl but an early casualty of Liebig's invention.

Liebig's formula hit the market at a propitious time.
The germ theory was increasing well-understood. The rubber teeth was just invented too.
The appeal of formula began spread beyond women who can't breastfeeding. The soluble food for babies democratized the lifestyle choice that previously open only to the well-to-do.

It's a choice that now shapes the modern workplace.
To those mothers who want or need to back to work, formula is a "God sent". Taking-time-out may damage their careers.  A gap in earnings opened up between men and women because of the motherhood. Women take time off, employers pay less in response.

There are both biology and culture reasons why women are more likely than men to take  time off when they start families.
We can't change the biological structure of human bodies. But we can change workplace culture.
More and more countries follow the Scandinavian lead to let dads have legal right of take-time-off.
More leaders, like Mark Zarkburg of FaceBook, make example of encouraging them to take it.

There is one problem--the formula is not that good for children.
Babies tend to get sick more often which leads to more medical treatment and parents taking time off;
The death rate: 800,000 a year death of infants could be prevented by breastfeeding.

Selling formula could be lucrative.
Formula's advertisement is always controversial.  Because formula is more addictive than tobacco.

Liebig labelled his formula "as nutritiously similar as possible".
In 1890s, the advertising of formula was as the "state of art"!
1974, it's labelled as the baby killer in Africa which led into a "war on want" and boycott for years.
1991, there was the global code for marketing formula substutes.  But it's no hard law and was wildly flaunted.

Some people do trading on breastfeeding milk for about 100 dollars per litre!

Liebig's formula sounded the deathnell for wet nurse as a profession. Maybe the global supply chain bring it back!


20. Index Fund

What is he best investment int he world? Maybe Warren Buffett,  the world’s most successful investor whose assests accumulated decades of savy investment has the answer. In a letter he wrote to his wife, advising her how to invest after he dies, he offers some clear advice: pick the most mediocre investment you can imagin, put almost everything into “a very low-cost S&P 500 index fund”.
Index funds passively track the market as a whole by buying a little of everything, rather than trying to beat the market with clever stock picks – the kind of clever stock picks that Warren Buffett himself has been making for more than half a century. Index funds now seem completely natural and part of the very language of investing. But as recently as 1976 they didn’t exist.

Before index fund, you need index.
1884, Charles Dow, the financial journalist,  had a bright idea that he could take some price of some famous companies stocks and average them, then publish the average as going up and down. He ended up founding not only the Dow-Jones company but also the Wall street Journal.
The Dow-Jones average didn't prevent to do anything much except tracking how shares were as a whole. They quickly became the meat and drink of business reporting around the world.

The autumn of 1974, Paul Samuelson,  the world's famous economist, took an interest. He revolutionized the way economics was practiced and taught, making it more mathematical,  more engineering and less like a debating club.
His book《Economics》has been the best selling textbook for 30 years, and he won the Nobel memorial prize in economics.

It had already improved the most important idea in financial economics that if investors were thinking rationally about the future, the price of assets like shares and bonds should fluctuate randomly. 
It sounds paradoxical. But he intuition is all the predict movements have already happened.
Lots of people would buy a share at a seemingly bargain price, then the price went up, then it's no longer a bargain any more.

The so-called "Efficient Market Hypothesis" is not quite true. But it's truish because it's harder to beat the stock market. Most investors won't beat the market, even some one did, it won't last long.

In the article 《Challenge To Judgement》, he advised people should quit their investment.

Index Fund: a way for ordinary people to invest the performance the stock market as a whole without paying a fortune in fees for fancy professional fund managers to try and fail to be clever.

John Bogle made such wish come true.
He set up the first index fund in August 1976, and waited investors to rush in. But investors didn't. His Vanguard Group was ridiculed as Bogle's folly.
He kept faith. And slowly people started to catch on.

Active funds are expensive. People pay analysts handsomely. The annual fees accumulated was mounted up that it could eat away more than one fourth of the profit.
The super cheap Index Fund looked, over time, to be perfect alternative to active fund without all the costs.
So, slowly and surely, investors grew, and many imitators went with the flow.

Index investing is a symbol of the power of economists to change the world they study.
They changed the way the market worked for better or worse.
There were other financial products such as derivatives emerged.

Some think the "Efficient Market Hypothesis" itself played a part in the financial crisis by encouraging something called "Mark to market accounting" where bank accountants would figure out what its assets worth by looking their value on financial market.
The risk is: such accounting leads to self-reinforcing booms and bursts, as everyone's books suddenly and simultaneously look brilliant or terrible.

Samuelson think the Index Fund cchanged the world for the better. It already saved ordinary investors' hundreds of billions dollars.

In a speech in 2005, 90 years old was his age, Samuelson gave the credit to Bogle who, as he put it, elevated the long term return of mutual fund owners.

Something new under the sun.


21. Tally Stick

Oxford's Ashmolean museum home to art and antiquities from around the world. The Money Gellary, next to the cafe in the basement, houses lots of coins.  Most money is not in the form of coin at all. Most of our monetary history hasn't survived in he form that could grace the museum.

1834, the Brittish government decided to distort 600 years of precious monetary artifacts which has unfortunate consequences in more ways than one.

Tally sticks, 20cm long, were made from willow harvested along the banks of the Thames in London(humble stick of willow wood called exchequer tallies). The stick would contain a record of the debt. It might say, for example, “9£ 4s 4p from Fulk Basset for the farm of Wycombe”. Fulk Basset, by the way, might sound like a character from Star Wars but was in fact a Bishop of London in the 13th century. He owed his debt to King Henry III. Now comes the elegant part. The stick would be split in half, down its length from one end to the other. The debtor would retain half, called the “foil”. The creditor would retain the other half, called the “stock”. (Even today British bankers use the word “stocks” to refer to debts of the British government.) Because willow has a natural and distinctive grain, the two halves would match only each other.
The tally stick system enabled something radical to occur. If you had a tally stock showing that Bishop Basset owed you five pounds, then unless you worried that Bishop Basset wasn’t good for the money, the tally stock itself was worth close to five pounds in its own right - like money; a kind of debt, which can be traded freely.

The Tally sticks show what money really is. It's debt. A particularly kind of debt one could trade it freely, circulating from person to person.

On Monday, May 4th, 1970, whole banks in Ireland were announced closure which might drag on weeks or months. But Irish people were calm. They wrote checques--a paper-based instructions to transfer money from one bank account to another, to each other. The cheques could be fulfilled not until he banks reopened or started to clear the bank ledges.
The system was fragile. It's clearly open to abuse by people who wrote cheques to who knew would eventually bounce.
There was always the risk that people lost track of their finances too and started unknowingly writing cheques that they couldn't afford and wouldn't be able to honour.
The biggest risk of all was the trust would start the frail. People would start to refusing receiving cheques as payments.
Yet. The Irish kept written cheques. Because their business were small and local, and people knew each other.
The dispute was resolved in November.  The Irish economy was still in one piece.
The only problem: the banklog of 5b pounds, almost 100b dollars in today's money, would take another 3 months to clear.

Another example of cheques were passed around without cashed in was in 1950s. The British soldiers in HongKong would pay their bills with cheques on accounts back in England.

The HongKong cheques, like the Irish ones, the Tallysticks, have become the private money.
They were money, though quasi-money. Money in a particularly unvarnished form, like an engine running with a cover off, or a building with scaffolding up, heir money were the underlying mechanism laid bear.

Those disc of metal won over the tallysticks to survive.

The Tally sticks met an unfortunate end:
It was abolished and replaced by paper money ledges in 1834 after decades' attempts to modernize.  To celebrate, it was decided to burn the sticks, the six centuries of irreplaceable monetary records, in a coal fire stove in House of Lords rather than letting Parliamentary staffs take them home for fire wood. Burning a cartload or two of tallysticks is a wonderful way to start a raging chimney fire. So it was. House of Lords, House of Commons, then almost the entire Palace of Westminster, the building as old as the tallystick itself, were burned to the ground.

Perhaps the patrons saints of money history were having their revenge!!!  

22. Passport

"Depend upon it, we are half enough greatful to God for our national privileges." Musings from England publisher John Gatsby in the mid 19th century.
This was before the passport system.
We are ever familiar to some one who pass the boarder control: you stand in a queue, you prefer your standardized bookboch to an uniformed official, perhaps she quizzes your journey while the computer check your name against the terrorists watchlist.

For most of the history, passport as not so ubiquitous nor routinely used. They were, essentially, a thread, a letter from some powerful person requesting anyone that traveller met to let them pass unmolested. 

The concept of passport as protection goes back in Biblical times and protection was privilege not right.
An English gentleman who wants the passport before venturing across a channel, once needed to unearth some personal social link to the relevant governemnt minister. The more zealously beaurocratic continental nations had realized the passport's potential as a tool of social and economic control.

Even a century earlier, the citizen of France had to show paperwork not only to leave the country but also travel from town to town.
While wealthy countries today secure their boarder to keep unskilled workers out, municiple authorities historically used them to stop skilled workers from leaving.

As the 19th century progressed, the railway and the steam boat made travel mush faster and cheaper. Passport was unpopular.
Napoleon III put it:"It's an oppressive invention, an embarrassment,  an obstacle to the peaceable citizen!" He abolished it in 1860.
More and more countries followed. In 1890s, it's no passport required to visit America, although it would be helpful if you were white; in South America, passport free travel was in the constitution; in China and Japan, foreigners needed passports only to venture inland.

By the turn of 20th century, it seemed it's possible passport might soon disappear all together.

It seems a natural fact of life that the name of the country on the passport determines where we can travel and work legally at least.
It’s a relatively recent historical development – and, from a certain angle, an odd one. Many countries take pride in banning employers from discriminating against characteristics we can’t change: whether we’re male or female, young or old, gay or straight, black or white. It’s not entirely true that we can’t change our passport: if you’ve got $250,000, for example, you can buy one from St Kitts and Nevis. But mostly our passport depends on the identity of our parents and location of our birth. And nobody chooses those.

There is no public clamour to judge people not by the colour of their passport, but by the content of their character.
Less than three decades of the fall of the Berlin wall, migrant controls are back in fashion. Trump's boarder wall; Schengen zone cracks on the pressure of migrant crisis.
European authorities scramble to distinguish refugees from economic migrants. The assumption being that someone isn't fleeing persecution, someone merely wants a better job or life shouldn't be let in.

Politically, the logic of restriction on migration is increasingly hard to dispute. Yet, economic logic points to he opposite direction.

In theory, where ever you allow people move to where the jobs are, output rises.
In practice, all migration creates winners and losers. It seems more winners. In wealthy countries, five out of six people are made better off by the arrival of migrants.

Why this doesn't translate to support for open boarders?
There are practical and culture reasons why migration could be badly managed.
The losses tend to be more visible than the gains.
Those Mexican came in to pick fruits. Then, there were the cheaper food for everyone, which was too widely spread and too small to notice; The cost was the Americans lose jobs, which produced vocal unhappiness.

The economic logic of migration seems more compelling when it doesn't involve crossing boarders. 

How much might global economic output rise if anyone could work anywhere? Some economists have calculated it would double. By the turn of the 20th century only a handful of countries were still insisting on passports to enter or leave. Today, migrant controls are back in fashion. It can seem like a natural fact of life that the name of the country on our passport determines where you can travel and work – legally, at least.

The world would be much richer if passports were died out in the early 20th century. Why not? Because of the WWI.
With security concerns triumphing ease of travel, governemnts composed new strict control on movement. It approved unwilling to relinquish their powers once peace returned.

1920, the newly formed legion nation "International Confrenece on Passports Customformalities and Through Tickets" effectively invented the passport we know it. Since 1921, the passport is supposed to be 15.5cm×10.5cm, 32 pages, bound in cardboard with a photo. The formet has changed remarkable little since.

Anyone with heir right colour passport can only count their blessings.  

23. Interllecture Property 

In January 1842, the great novelist Charles Dickens arrived in Boston America, greeted as a rockstar, he was hoping to put an end to cheap, sloppy, pirated copies of his work in the US. They circulated there with impunity because the United States granted no copyright protection to non-citizens.
In a bitter letter, he compared this situation to be mugged and paraded to the street in ridiculous cloths! "Is it tolerable that besides to be robbed, rifled, an author should be forced to appear in any form, in any vulgar dress, in any atrocious company?" A powerful melodramatic materpher.
The truth is the case Dickens is demanding, he legal protection for ideas that, otherwise, could be freely copied and adapted had never been so clear-cut.

Patents and copyright grant a monopoly, and monopolies are bad news. Dickens’s British publishers will have charged as much as they could get away with for copies of Bleak House; cash-strapped literature lovers simply had to go without. But these potential fat profits encourage new ideas. It took Dickens a long time to write Bleak House. If other British publishers could have ripped it off like the Americans, perhaps he wouldn’t have bothered. Intellectual property reflects an economic trade-off – a balancing act. If it’s too generous to the creators then good ideas will take too long to copy, adapt and spread. But if it’s too stingy then maybe we won’t see the good ideas at all.

One might hope that the trade-off might be carefully weighed up by benevolent technocrats, but it's always been curled by politics.
In Dickens' day, American literature and American innovation were in their infancy. The U.S. economy was in full bloom copying mode. They want the cheapest possible access to the best ideas that Europe could offer. American newspapers filled their pages with embracing copying.

A few decades later, when American's own writers and innovators spoke more powerful voices, American law makers began to take an increasingly fine view of interllecture property. Newspaper, once opposed copy right, now rely on it.
Similar transition can be found in developing countries today. China didn't have copy right at all until 1991.

The modern form of interllecture property originated, as most things did, in 15th century Venice. Venecian patents were explicitly designed to encourage innovation.
They applied consistent rules:
The inventor would automatically receive a patent if the idea was useful;
The patent was temporary. When it last, it could be sold, transferred,  or even inherited;
The patent would be forfeited if it's not used.
The patent could be invalidated if the invention was proved to be closely based on previous idea.

They were very modern rules. They, soon, created very modern problems.
During British industrial revolution, engineer James Walt had a great idea of a steam engine. He spent months to build a prototype, and more effort into securing the patent. His influential business partner Mathew Bolton even got the patent extened by lobbying parliament. They used it to extract lisencing fees and cruching rivals.

The details might be grubby. But surely does famous invention worth it? Maybe not!
Economists argued what truly unleash steam power industry was the expiry of the patent in 1800.
James and Mathew redirected their attention from litigation towards producing the best steam engine in the world. They kept price as high as ever, and the order books swelled.
Instead of incentivising innovations, patent delayed them.

Since then, interllecture property right has grown more expensive. Copy right terms have been growing ever longer.
In U.S., it was 14 years and renewable once. Now, 70 years after death of the author.

Patent became more broader. They have been granted on vague ideas. Such as Amazon's one-click purchase.
More things fall under the scope of Interllectur property, including plants, buildings, software.

Interllecture property is very valuable to its owners, which justifies the cost of employing expensive lawyers and lobbyists. Meanwhile the cost of the restriction are spred widely over people who bearly notice them.

Economists have radical response to these problems--scrap interllecture property altogether.
There at other rewards for inventing things:
Getting the first advantage over competitors;
Establishing a strong brand;
Enjoying a deeper understanding of what makes a product work.

Others think it going too far.
For example: new medicines cost innormous in invention, while trivial in copying.

Some still argue that the interllecture property is too broad, too long, too difficult to challenge. The narrower, briefer production would restore the balance and still give plenty incentives to create new ideas.

Charles Dickens himself found there was a financial upside to weak copyright protection. After a quarter of a century of his initial stay in U.S., he returned to England where he found his family was, ruminously expensive. He needed to make some money. He reckoned that so many people had read cheap knock-off of his stories that he could cash in on his fame with a lecture tour. After the back of pirate copies of his work, he made a fortune as a public speaker.

Perhaps the interllecture property was worth more when given away.

24. Video Game

Earlier 1962, a student in MIT, Peter Samson was on his way back home. When he stepped off the train, gazed up the starfield, a meteor strayed across the heavens. Instead of gasping the beauty of such creation, he had his brain grown out of the habit of looking at the real stars as the result of spending way too mush time playing Space War.
His near hallucination was the precursor of countless digital fever dreams to come.

He, and his fellow hackers, were the players of the first video game that opened the door to a social craze and massive industry which shaped our economy in Mor profound ways than we realized.

Before Space War, computers were intimidating: large, grey, cavinance in purpose-built rooms, closed off to all but those highly trained. Vast and expensive, forbidding and cooperate, computing was what banks did, and cooperation, and military. Computers worked for the suits.

In the beginning of 1960s, in MIT, there were more relaxed environment for computers.
The term "hacker" was born with the meaning of, not the modern one of mass media sense of manavolous crackers of security systems, some one would experiment, cut corners, produce strange effects.

The PDPI in MIT was the new type of computer with the size of a refrigerator that was easy to use and powerful, and with a video display.
The Star War, two players video game, was programmed by Peter Samson.

In one way, the economic legacy of Star War is obvious: as computers became cheaper enough to store in our home, the game industry blossomed.
Computer game now rival film industry for revenue. It becomes culturely important too.

Beyond the money we spend on them, games effect the economy in other ways.
First, virtual world can create real jobs.
Economist Edward Casanova estimated the GDP of online world role-playing games. (Performing mundane tasks to accumulate treasure which they can use to buy enjoyable capabilities for their characters.)
Some player buy virtual stuff by real money on platforms like eBay.
Virtual swatch shops for those require digital short-cuts to get straight to the good stuff. Someone earn millions just selling virtual game characters.

For most people, virtual worlds are not place to earn money but place to enjoy spending time.
A 2011 survey showed nearly half a billion people worldwide spend two hours a day on playing video games and more are within easy reach.
Here comes the final economic impact: how many of these people are choosing virtual fun over boring work for real money?
Edward gave a speech a decade ago in Washington DC:"If your choice is a Starbucks server or a star war captain, what really is so crazy about deciding to take command in an imaginary world!"

In 2016, four economists presented research into a puzzling fact about the US labour market. The economy was growing, unemployment rates were low, and yet a surprisingly large number of able-bodied young men were either working part-time or not working at all. More puzzling still, while most studies of unemployment find that it makes people thoroughly miserable, the happiness of these young men was rising. The researchers concluded that the explanation was simply that this cohort of young men were living at home, sponging off their parents and playing videogames. They were deciding, in the other words, not to join the modern economy in some low-paid job, because being a starship captain at home is far more appealing.


25. Cuneiform

People used to think that writing was the gift from God. The Egyptians thought literacy was divine; a benefaction which came from the baboon-faced god Thoth--the God of Knowledge. And the Greeks and people in Mesopotamia had the similar thought.

Why ancient civilization developed writing was a mystery for a long time. Was it for religious or artistic reasons? Or to send massages to distant armies?
The mystery deepened in 1929 when a German archaeologist Julias Jodan unearthed a vast libery of clay tablets 5000 years old written in abstract script--“cuneiform” – came from Uruk, a Mesopotamian settlement on the banks of the Euphrates in what is now Iraq.

Uruk was huge in that time and was one of the world's first true cities. It produced writing that no modern scholar can decipher.
Uruk posed another puzzle to archaeologists: the ruins of Uruk and other Mesopotamian cities were littered with little clay objects, conical,  spherical,  cylindrical.  "They were shaped like the commodities of daily life that were stylized and standardized." What were they for?

Until a French archaeologist Denies Schmandt-Besserat solved it in 1970s. She catalogued these things collected from Tukey to Pakistan.  Some were 9000 years old. She believed that these objects had the simple purpose--corespondance accounting. Shaped like loves were for counting loves; shaped like jars were for counting jars.
People just needed to look to the quantities and verify that sum.

Ishango bones found in Congo, the number of objects matched the tally marks on thigh bones of Barbon. That was 20,000 years ago.

Uruk tokens took it further: because it's to keep track of accounting lots of different quantities. It could be used both to add and subtract. That's what the urban economy requires such as trading, planning, and even taxation.

It brought something else rather revolutionary: those abstract marks on cuneiform tablets matched the tokens.
The record of the back and forth of the tokens which themselves were recording of back and forth of things like sheeps, grains, jars of honey.

Soon, people then found it's simpler to make the marks of stylists. So cuneiform was the stylized picture of impression of token representing a commodity.

The tablet was the world's first account, and written contract too.
There's small leap between a record of what's been paid and the record of future obligation to pay.

The combination of the tokens and clay cuneiform writing let to a brilliant verification device: a hollow clay board called Bula.
On the outside, the parties of the contract could write down details of the obligation including the resources that would be paid; on he inside, the token represented the deals. The outside and inside combined verified each other.

Such records of purchase orders and receipts that made life in a complex society possible.
Most financial transactions are based on split written contracts, insurances,  bank accounts, government bonds, cooperate share, mortgage agreements.

Uruk provided us another innovation too: the superior system of abstract symble for different numbers. The numerical system was powerful enough to express large quantities. Handrands, thousands, or even trillions.

But there is the problem. The problem of dealing where the obligation and long range plan between people who didn't know each other well or even didn't meet each other.
Solving it needed a string of innovations: account, contract, and the first mathematics,  the first writing.

Writing was developed as a tool, a tool to run an economy.

26. Air-conditioning

Can we control the weather at pushing a button to make it warmer, cooler, wetter, or drier? The implication would be innormous. No more droughts, heat waves, icy roads, desert become verdant, crops grow never fail.

Climate change has sparked crazy sounding ideas for hacking the climate. Such as spring sulphuric acid into upper atmosphere; dumping quicklime into the oceans…… We know we are near position near controlling the weather outdoors.
We can control the weather indoors now.

Ever since our ancestors mastered the fire, getting warmer when it's cold was done. But cooling down when it's hot has been more of a challenge.

The Roman Emperor Elagalus made earlier attempt to air-conditioning by bringing snow to his palace, and let the breezes bring the cooler air inside.
It's not a scalable solution.

Till the 19th century, a Boston entroprenour Fredric Tudor who carved blocks of ice from frozen lake in New England in winter, and insulated them in sawdust, and shipped them to warmer climate for summer. Such activity created ice-famine in New England until artificial ice powder came into being.

Air-conditioning as we know it began in 1902. A New York printing company got frustrated in varying layers of humidity levels when printing colour. Printing colour requires the same paper to be printed four times--cyan ink, magenta, yellow, and black. The humidity in rounds may expend or contract the paper. 1mm in mis-alignment looks awful.

Willis Carrier, the young engineer, took the commission from Bafflo Forge co. His solution was circulating air that will chilled by compressed monihia, which might maintain the humidity at constant 55%.
Bafflo co sold it in wherever humidity posed a problem from textile factories, flower mills to Gellit Co. where excessive moisture rusted the razer blaze.

1906, he ushered comfort applications in public buildings. He called his system the "weather maker". The movie theatre in early 1920s were where the public first experienced the aor-conditioning. By contrast, there was 4 tons of ice consumed per day in 1880.

Air-conditioning is a transformative technology. It had a profound influence of where and how we live.
It has changed demographics too. It makes the rise of cities like Dubai, Singapore……
As residential units spread rapidly across America in the second half of the 20th century, population boom also appeared in the sun-belt, the warmer south of the country where population grew from 28% to 40%.
Retirees, who moved from North to South, led the change of the political balance. One critics argued that "it's the air-conditioning elected Ronald Reagan!" Reagan came into power in 1980 when half of the world's air-conditioning consumption was in America.
Air-conditioning in Chinese household jumped from 1% to more than two thirds in 10 years. In India and Brizel, the figure of growth were at double digital rates.
There are still more room for growth in other tropical cities.

The booming air-conditioning is good for many reasons.
Beyond the obvious, the life in tropic is more comfortable with it than wihout it: lower the mortality during heatwaves; decrease fights among inmates in prisons; improve math scores in exam halls; boost productions in offices……
When it comes to productivity vs keeping cool, study shows people's productivity peaks during 18-22 degrees.

But there is the inconvient truth--Making cooler inside by making warmer outside.
Air-conditioning units pump hot air out of buildings, which increases the night temperatures by 2 degrees.
The electricity that powers the air-conditioning is often made by burning gas or coal. It's the green house gas when they leak.

Pursuing cleaner, greener energy is urgent. It will be 8-fold increase in energy consumption by 2050.

When we get the invention to control the outside weather too?!


27. Elevator 

Lifts and elevators are mass transportation system.
China builds almost two thirds of a million elevators per year;  The tallest building in the world Clefer in Dubai has 300,000 square metres of floor space; Sears Tower in Chicago has more has 400,000 square metres.

The fact that so many people can work together in large buildings on compact size is only possible because of elevator, or the safe elevator.

Elevators have existed for a long time.
People in ancient Greece tended to build one;
1743, Paris Versailles, Louis XV used one to clandestinely visit his mistress;
Matthew Boulton and James Watt, two giants of Britan's industrial revolution produced steam engines that ran muscular industrial elevator for the mines.

When it comes to lift people, people demand the safe ones, the demonstrating safe ones.

In 1853, the world fair in New York, Elisha Otis climbed onto a platform which was then hoisted high above a large crowd of onlookers, nervy with anticipation. A man with an axe cut the cable, the crowd gasped, and Otis’s platform shuddered – but it did not plunge. “All safe, gentlemen, all safe!” he boomed. The city landscape was about to be turned on its head by the man who had invented not the elevator, but the elevator brake. The safety elevator is an astonishingly successful mass transit system which has changed the very shape of our cities.

The world turned on its head is right. Because the elevator transformed where in the building the highest status areas are. So that the garret could turn into penthouse and attics loft apartments.

The elevator flourished alongside two complimentary sets of innovations--the steel and reinforced concrete that made practical to build tall buildings; the subways, the other urban transsit system that could bring large numbers of people into dense urban cause.
In Manhattan,  elevator and subway are symbiotic. Without the density the skyscrapers provide, it will be hard to run a subway system efficiently. Without subway, nobody will get ot the skyscrapers. Thus, it turns out a green urban environment. 80% Manhattan residents are willing to take subways, on foot or by bike to commute between office and home. 10 times the rate of America as a whole.

Similar stories can be found across Singapore to Sydney.  They tend to be highly desirable places to live as measured by people's willingness to pay high rents; they are creative as measured by high output of patents and high rates of start-ups; they are rich as measured by economic output per person; reletive to rural and suburban area, they are environmental utopia.

With low energy use per person and low consumption of petrol, this minor miracle of wealth, creativity, and vitality in a modest environment foot print would be impossible without the elevator.

Yet, the elevator seems unfairly underrated.
People grumble about the waiting time. And its safety and as a faithful servent that are too often ignored.

It continues to evolve.
The challenge of ever taller skyscrapers are being met by super light elevator ropes. By computer controllers allowing two lifts to shuttle up and down in a single shaft independently.

But often the older, simpler idea still works.
Eg: making the wait time pass more quickly by putting full-length of mirror in the elevator lobby.

It's natural energy efficient,  because elevator carts have counter-weights.

Still room for improvement.
Eg: the Empire State Building was recently retrofitted in a 500m dollars effort to reduce the building carbon emissions. Elevator with regenerative brakes so when the full cart comes down, empty one heads up, the elevators supply power backs to the building.

Rocket mountain institute, a showcase for environment-efficient design idea, provides high-tech coating on the Windows, crimped film triple glazing, water re-use system, and energy-saving heating exchanges.

One of those most environment-friendly techniques is on display in buildings all around us. It's green-motor transport moves billions of people every day. Yet, it's so overlooked, it can hide in plain sight as the answer to a lateral thinking puzzel.


28. Contraceptive Pill 

The contraceptive pill had profound social consequences. Everyone agrees with that. Margaret Sanger, the birth control activist, urged scientists to develop it. She wants to liberate women sexually and socially, to put them more equal footing with men.

But the pill wasn’t just socially revolutionary. It also sparked an economic revolution, perhaps the most significant of the late twentieth century.
What the pill offered to women was it worked. Compared to some unappealing tricks to prevent pregnancy such as crocodile stuff in ancient Egypt, cider oil recommended by Aristotle, or half a lemon as a cervical cap by casanova, and some modern ones as sponge, diaphragm, and the condom which often cracks and has the failure rate of 18%, the pill only has failure rate of 6% or even less to the one in twenties.

The pill gave women control in other ways.
Condom meant negotiating with partners, and it's messy. The decision to use the pill was women's. It's private, neat and discrete.

The pill was first proved in America in 1960. It took off almost immediately. In 5 years, half of the married women in birth control were using it.
The real revolution came when un-married women could use oral contraceptive pills.
Around 1970, young, unmarried women in USA were easier to get the pill. In mid 1970s, it was overwhelmingly used among women aged between 18 to 19.

That was when the economic revolution also began.
Starting in America since 1970s, women flocked to particular kinds of degrees as law, medicine, dentistry, and NBA. Previously, there was 90% male dominance in medicine, more than 95% in NBA, and 99% in dentistry. Then, women surged into all these causes in their university attendance.

By giving women control of their fertility, the pill allowed women to invest in their careers. A sexually active woman who tried to become a doctor was doing the equivalent of building a factory in an earthquack zone. Just one bit of bad luck, the expensive investment would be trashed.

Before the pill, women married young.
Now, the pill changed both the dynamics:
a), unmarried women could have sex with substantially less risk of unwanted pregnancies;
b), babies came later at the time women chose themselves,and more investment in career.

There were many other thing were changing for women in the 1970s:
The legalization of abortion; laws against sex discrimination;  social movement of feminism.
And young men were being drifted to fight in Vietnam,  leaving employers keen to recruit women in their places.

A careful statistical study by the Harvard economists Claudia Goldin and Lawrence Katz strongly suggests that the pill played a major role in allowing women to delay marriage, delay motherhood and invest in their own careers. The consequences of that are profound.
The enrollment in professions sored, so did the wages.

Japan proved the pill in 1999, almost two decades after American did, and the gender inequality was obvious.

The tiny little pill continues to transform the world economy.

29. TV Dinner

In 1965, women in America still spent lots of time in catering for their families.
The way educated women spend their time in the United States and other rich countries has changed radically over the past half a century. Women in the US now spend around 45 minutes per day in total on cooking and cleaning up; that is still much more than men, who spend just 15 minutes a day. But it is a vast shift from the four hours a day which was common in the 1960s.

The radical change in the way that food we eat is how we prepared it.
It's the introduction in 1954 of the TV Dinner--presented in a space age aluminum tray and prepared so that the meat and vegetables would all require the same cooking time.
The frozen turkey tray TV Dinner was developed by bacteriologist Betty Cronin who worked for Swanson food processing company which was looking for ways to keep busy after the business of supply of ration of US troop has dried up.

The TV Dinner was just part of panoply of changes rose by the availablity of freezers, microwave, preservatives,  and production lines.

Food was the last cottage industry.  But food preparation has been industrialized. It's been outsourced to restaurants and take-aways, ready-to-eat/cook meals.
 
The invention of the industrial meals, in all forms, has led a profound shift in the modern economy.
The most obvious is the spending on food is changing. People got more and more meals outside home. One in fourth foodspending were outside the home in 1960s. In 2015, the landmark had reached: American spent more on meals outside home than the grocery store.

Even within the home, food is processed to save the chef's time and effort. Such things as, the obvious one, the TV dinner; The less obvious ones, the chopped salad in bags, meatballs, jars of sauce, pre-grated cheese, tea packaged in individual permeated bags……
Though all bizzar to the older generations, it's about saving time.

These innovations are a modern phenomenon. During 1920s--1960s, little was changed to the time spent on homecooking, no matter what women's role was.

In 1960s, these patten began to shift.

The innovation responsible for imancipating women, actually, is the washing machine which is clean, efficient, and replaces work that was always drudgery.

The revolution wasn't in the lives of women. It was in the lemon fresh will start to smell.
Data acclaimed that washing machine didn' save a lot of time. Because we didn't wash cloth very often.
Meals take time. The ready-meal did save time. We'd rather not be starved than be stink.

The availablity of ready-meals has regretable side effects.
The obesity rate rise sharply in developed countries in 1970s to the early 21st century. Because the cost of eating a lot calories has fallen dramatically both in financial terms and in terms of cost of time.
Take the humble potato as the example. Before the WWII, it had to be baked, washed, boiled, chopped, fried. After the war, the fried sliced chips were done in factory, then re-fried in shops or at home. Because of the rise of fried potato, the potato consumption rose 1/3 during 1977 ~1995.

Such convience comes at a cost.
In the USA, calory intake rose 10% in 1970s--1990s. It's not consumed in calorific regular meals, but in snacking, processed convience food.

The industrialization of food, symbolized by the TV Dinner, changed economy in two important ways:
First, it freed women from hours of domestic chores, removing a large obstacle to them for adopting serious professional careers.
Second, by making empty calories ever to acquire, to also freed our weist line to expand.

The real challenge is how to enjoy the benefit without also suffering the cost.


30. Gramophone

215 years ago,  Elizabeth Billington was a British soprano in the 18th century. She was so famous, London’s two leading opera houses scrambled desperately to secure her performances. In 1801 she ended up singing at both venues, alternating between the two, and pulling in at least £10,000. A remarkable sum, much noted at the time. But in today’s terms, it’s a mere £687,000, or about a million dollars; one per cent of a similarly famous solo artist’s annual earnings today.

60 years after the singer's death, Alfred Marshall analysed the impact of the electric telegraph which, then, connected America, Britain, India, and even Australia. He put it:"Thanks to such modern communication, men who were once obtained commanding position are able to apply their constructive or speculative genius to undertakings vaster and understanding wider area than ever before."

The world's top industrialists were getting richer and faster. The gap between them and the less outstanding entroprenours was growing. Because the number of people who can be reached by human voice was strictly limited.

Two years later, 1877, on Christmas Eve, Thomas Edison applied patent for his phonograph--the world's first machine to be able to record and reproduce the sound of human voice.

A French publisher developed the first phono-autographer--a visual record of sound of human voice, which is just like seismergrapher recording earthquack.
But no one might convert the record back to sound again.

Soon enough, the application of his new technology became clear. They recorded singer's singing and sold the recorders. Like making carbon copy on he typewriter, single performance can only be captured three to five photographs at once.
In 1890s, singer George.W.Janson was reported to sing 50 times a day to make 200 records.

One German made it record on a disc rather than Edison's cylinder.  This open the way to mass production.
Then the radio, film were followed.

For those stars,  new technology meant wider fame and more money.
For singers, it was a disaster.  One could listen at home with the best performance. Why pay to hear a merely compitant tribute act in person?

Edison's phonograph led the way towards a "winner-takes-all" dynamic in the performing industry.
The good ones became super stars. The less good made from making comfortable living to struggling paying their bills.
Small gaps in quality became vast gaps in income.

1981, one economist called this the "Super Star" economy.

Technology innovations have created "Super star" in other sectors too.
Setallite TV was to footballers what the gramophone to musicians and the telegraph to the 19th century industrialists.

Technology shifts can dramatically change who gets what. A sudden change in earning power.

Through the 20th century, new innovations, such as cassette,  CD, DVD, maintained the economy model created by the gramophone.
At the end of the century, came the mp3 format and the fast internet connections, which make people search online for free.

In 2002, David Bowie put it:"music is like running water or electricity……" to describe how cheap it is.
Artists stopped using concert tickets as a way to sell out albums and started to using albums  as a way to sell concert tickets.
Amplification, stadium rock, global tours, endorsement deals meant the most admired musicians can still profit from vast audience.

Inequality remains alive and well. The top 1% earn over 5 times more the money from concerts than the bottom 95% put together.

The gramophone may be per se, but the ability of technology change to alter who wins who loses is always with us.

31. Battery

Murderers in early 19th century London feared surviving their executions. That’s because their bodies were often handed to scientists for strange anatomical experiments.
If George Foster, executed in 1803, had woken up on the lab table, it would have been in particularly undignified circumstances. In front of a large London crowd, an Italian scientist with a flair for showmanship was sticking an electrode up Foster’s rectum. His body flinged, fist clinged, mouth grimaced, eyes twitched and open……
This is how the story of the battery begins – a technology which has been truly revolutionary.

Foster's body was being galvanized--the word coined by Italian scientist Luigi Galvani the uncle!!!
His nephew found animal electricity in 1780.
And the Galvanism inspired Mary Shelley's Frankenstein.

Galvani was wrong about the animal electricity, but he was wrong in a useful way!!! He showed his experiment to his colleague Alessandro Volta who had a better intuition of what's going on.

The importance is the fluids that conducted electricity allowing charge to pass between different types of metal. When the two metals were connected, the circuit was completed, and the chemical reaction caused electron to flow.

1800, a constant steady current was generated by zink, copper, and piles of socked cardboard. Such battery was not practical, and was short-lived, un-rechargeable.
1859, rechargeable battery made from lead, lead dioxide, sulphuric acid.
1886, the first dry battery was invented as the modern ones.
1985, a century more later, a Japanese scientist patented ithium ion battery. Sony later commercialized it. It's light, highly reactive, allowing to store large amount of power into small space.
But, it has the alarming tendency to explode when it's exposed to water and air. So it needed clever chemistry to make it stable.
Motorola had its first Mobile phone unleashed on the market which was like a "brick" with 1kg and only 30m of talking time.
1990, laptop was clunky, being charged repeatedly.
Now the sleek altro-portable ones can last for a long whole flight.

Where is the battery that is light, rechargeable in seconds, never deteriated with repeated use? We are still waiting.

The truly revolutionary development in battery may be not in technology itself, but in its use.
We used to think battery is the thing that allow us to disconnect the grid. We may since see them that make the grid work better.

The cost of renewable energy gradually coming down. Even cheap renewables pose a problem: They don't generate power all the time. People access to coal, gas, nuclear, when the renewable power drained.

When compare the cost of power cuts and he cost of carbandioxide emitions,  the solar power only generates 20% more.

We need better ways of storing energy.
You may pumping waters uphill when you have energy spare, then then you need water, letting them flow back down through a hydropower plant. Such conduct is in limited supply.

How to get the better battery?
It depends partly on the extend to which regulators nudge the industry at that direction;  partly on how quickly battery cost come down.
Electric car manufacturer Tasla has built a gigantic ithium ion battery factory in Nevada.
Through sheer economic of scale to make the cost down.

We are still long way from a world in which electricity grids, transportation networks can operate entirely on renewables and battery. The aim is becoming conceivable in the race to limit climate change. The world needs something to galvanize it into action.


32. Public Key Cryptography

The year was 1977, two graduate students were standing beside their professor who were giving the humdrum-sound International Symposium on Information Theory and update their work on Public Key Cryptography. (The Stanford researchers received letter from the shadowy agency of U.S. governemnt:"If they publically discuss their findings, that would be deemed legally equivelant to exporting nuclear arms to a hostile foreign power!")

Cryptography is the study of sending secret massages. It's thought being in practical use in spies and criminals.

About three decades earlier, other brilliant academics had won the war by breaking the enigma code and enable the allies to read secret German communications.
Now, Stanford researchers were freely deceminating information that might help adversaries in future wars to encode their massages in ways U.S. couldn't crack.

The perverse general who wanted to prevent such publication has the reasonable concern. Throughout history, the development of cryptography has been driven by conflict.
2000 years ago, Julius Caesar sent encoded massage to far-flung outpost Rome Empire. He shifted the alphabet by pre-determined number.
The new maricle was to convert the letter into numbers, then perform some complicated mathematics on them. Still the massage recipient has to know how to enscramble the numbers by performing the same mathematic in reverse. This is called the Symmetrical Encryption. It's like securing a massage with a pad lock having first given recipient a key.

The Stanford researchers were interested in whether encryption could be as-symmetrical.

1976, the RSA Encryption. It's named after the three researchers at MIT who turned theory into practical technique.
Take a very large prime number – one that is not divisible by anything other than itself. Then take another. Multiply them together. That is simple enough, and it gives you a very, very large “semi-prime” number. That is a number that is divisible only by two prime numbers. Now challenge someone else to take that semi-prime number, and figure out which two prime numbers were multiplied together to produce it. That, it turns out, is exceptionally hard. Some mathematics are a lot easier to perform in one direction than another.

Public key cryptography works by exploiting this difference. In effect, individual publishes his own semi-prime number, his own public key, for anyone to see. RSA algorithm allows others to encrypt massages with that number. In such a way, they could be decrypted only by some one who knows the two prime numbers that produced it. It's as if you could distribute pad lock for the use of anyone who wants to send you a massage. Pad locks that only you can unlock. They don't need your private key to protect he massage. They just snapshot one of your pad lock around it.
It takes unfeasible amount of computing power.

Professor understood the world was changing and electronic computing would become more important. Many private transactions would be impossible if there is no way for citizens to communicate securely--emails, purchasing online, banking app, websites.
Without Public Key Cryptography,  anyone would read your massages, see your passwords, copy your credit card details.

Public Key Cryptography also enables websites to prove their authenticity. Without it, there will be more fishing scams. The internet will be far less economically useful.

The ideal situation, at least from the government perspective, would be if encryption could not be easily cracked by ordinary folk or criminals that would be secure the internet's economic advantages. Yet, the governemnt would still be able to see what's going on.
That's what The National Security Agency,  the NSA, was facing in 2013 when Snowdon showed how NSA perusing that goal. That debat rumbles on: if we can't restrict encryption only to the good guys, what power should the state have to snoop and with what safe cards.

Another technology is the quantum computing which is more quicker than ordinary computer, though it's only in its early days.


33. Robot

A size and shape of an office copier, traverses the warehouse floor, each arm has a camera on its knuckle,  the left arm eases the cardboard forward on the shelf, the right arm reaches in and extracts a bottle.
As most robots are from Japan, this one was showcased in 2015 by Hitachi with hope to be selling it by 2020.
It's speedy, dexterously as an good old-fashion human.

For now, human and machines are running warehouses together. But it's to admit that robots are efficiency up to four-fold.

Robots and human are working side by side in factories too.
Robots threaten the human workforce, but their ubiquity and growing competence make them crucial to the modern economy. In 1961 General Motors installed the first Unimate at one of its plants. It was a one-armed robot resembling a small tank that was used for tasks like welding.

Until recently, they are strictly segregated from human workers. Partly because stop human coming to any harm; partly stop them to confuse robots whose working condition could be strictly controlled.

As for new robots, these restrictions are no longer necessary.
Baxter, developed or born in September 2011, can avoid bumping into human, or falling over if human bumping into it. His cartoon eyes can indicate human where it's going to move. And it can learn new tricks from co-workers by showing them what to do.

Those previously off-shored work force can be re-shored and robots are part of it.
They are doing more things, but not as much as as what we expected.

In 1962, a cartoon imagination robot Rosy who could do house chores. But half a century on, Rosy is not coming any time soon.

Robot technology progressed in hardware--better and cheaper sensors: the eyes, the touch of fingertip, the inner ear to balance; in software--getting better brains.

It's about time to get robots to do thinking.
The development of AI can be dated back to 1950s when it's defined as a machine that uses languages, performs abstractions and concepts, solves kinds of problems, reserves for human and improve themselves.

Only in the last few years, the progress of AI started to accelerate. It's called the narrow AI--algorithm can do one thing very well. e.g. facial recognition,  playing Go.
It has process faster, dataset bigger, program better at writing algorithm that learn to improve their own functioning.

That cavity for self-improvement cause some thinkers to worry what would happen to the Artificial General Intelligence--a system could apply themselves to any problem like human can.

Narrow AI is transforming the economy.
It has been taking over white-coller drudgery in areas such as booking-keeping, custom service.
And more prestige jobs are far from safe: software is getting to be as good as experienced lawyers are predicting lines of argument most likely to win a case; investment advice; algorithm are routinely churnning out news reports.

A curious economic trend: a great de-capling between jobs and productivity.
That's a measure of how efficiently an economy takes imports such as human and capital, and turns them into useful stuff.
Historically, better productivity equals to more jobs and higher wages.
Since the turn of the century, that's not been the case.
Some economists worry we are experiencing secular stagnation where there is not enough demand to spare economy into growing, even with interesting rate down to zero or below.

Technology destroys jobs is nothing new. Technology always creates new jobs that has been destroied or better jobs, or different jobs.

It's least conceivable that human would be left to do the worse jobs. Because technology seems to be more progressed at thinking than doing. Robots' brains progress faster than their bodies.

The Jeniffer headset tells human workers what to do in a way that down to details.

If robots beat human at thinking, but human beat robots at picking things from shelf. Why not control a human body with a robot brain!


34. Disposable Razor

"There are clouds upon the horizon of thought, and he very air we breath is pregnant with life that foretells its birth of a wonderful change!" From a book written in 1894 by a man with a vision that ended up shaping how our economy works. In it, he argues:"Our present system of cooperation breeds extrovegents, poverty, and crime." It also advocates:"Equality, Virtues, Happiness in which just one cooperation, the United Company, will make all of life necessities as cost-effectively as possible. It's the end of money too. Instead the manu-labour required to make life-necessities will be shared out with perfect justice. It should take only about five years of each person's life. The rest will be freed up for intellectual pursuit. Ambitious people will compete not for material wealth but to win recognition for promoting welfare and happiness of their fellow beings. All of this will take place in a city called 'Metropolice' located around Lake area where Canada meets New York state. It will run on hydro-power. It will be the only city in Norh America where its citizen will live in mammoth of apartment houses upon a scale of magnificent such as no civilization has ever known. These buildings will be circular, 600 feet across and separated by twice that distance the avenues, walks and gardens. Artificial parks will features pillars, porcelain tile with domes, colour glasses and beautiful designs. They will be an endless gathering of loveliness!"

Well……it was another idea of the author, King Camp Gillette, one year later, to shape our economy. He invented the disposable razor.
If you’ve ever bought replacement cartridges for an inkjet printer you experienced both when you discovered that they cost almost as much as the printer itself.

The business model is "two-part pricing" or the "razor and blades" model--to suck people in with an attractive price, then repeatedly, fleece them for extortionate pricy replacement of blades.
Before him, the razer was atrunky stuff. When it gets dull, you sharpen it, not buy another.
If he device a clever holder of blade to keep it rigid, he could make it much thinner, and hence, much cheaper to produce. He didn't immediently hit upon the "two-part pricing". Initially,  he made both parts expensive.
Gillette razor cost 5 dollars, about one third of an everage person's weekly wage. His philosophical concerns about extrovegent and poverty seemed not to cloud his business decisions.
So eye-wateringly exorbitant was the Gillette razor, in 1913, the Sears Catalogue offered it with an apology that they won't legally allow to discount the price.

The model evolved only later. As Gillette's patent expired, competitors got in the act.

Nowadays, the "two-part pricing" is everywhere.
Sony's Place Station 4 Game; Nespresso makes money not from machine but from coffee pots.

For this model to work, you need some way to prevent customers putting cheap Gillette blades in your razor.
One solution, the legal one, is to patent your blades. But patents don't last forever.
Another one is the technology.  As Nespresso puts chip reader in machine.

The "two-part pricing" works by imposing "switching cost".
If you want to brew another brand's coffee, you have to buy another brand's machine.
There is special preverance in digital goods. If you are used to Place Station game or Kindle, it will be a big thing to switch to another platform.

Switching costs don't have to be financial. They can come in the form of time or hassĺe.
If you are familiar with a software or an app, you are facing to pay for an expensive upgrade or buy an alternative which you have to learn how to use.
That's why software vendors offer free trial;  why banks' utilities offer special treats, Teaser Rate, to draw people in.
When they quietly raise the price, many won't bother to change.

Switching cost can be psychological too.
A result of brand loyalty. When Gillette's patent ends, his revenue went up.

The irony is the "Razor and Blades" model, changing customers' premium for basis like ink and coffee, is about as far as you can get from Gillette's vision of a single United cooperation producing life-necessities as cheaply as possible.
In his books' paroration, he reached new heights of purple prose:"Come one, come all. And join in the ranks of overwhelmingly untied people's party. Let's tear us under the chrysalis which binds within its folds with intellectual men. And let the polar star ever thought find its light in nature's truth."

Evidently, it's harder to inspire new model for society than a new model for business.


35. Clock

1845, a curious feature was added to the clock on St. John church in Extor West England--another minute hand running 14 minutes faster than the original. The railway time.

The human sense of time has long been defined by planetary motion. We talked about days, years long before we knew that the earth rotates its axis and orbits the sun. From waxing and wining of the moon, we got the idea of month. The sun's passages across the sky gives us phrases like mid-day or high noon. Exactly when the sun reaches its highest point depends on where you are looking from. In Extor, it's 14 minutes after some one in London. It has big significance in train transportation system, because the confusion of different times raised risks of collision. 

There’s no such thing as “the correct time”. Like the value of money, it’s a convention that derives its usefulness from the widespread acceptance of others. But there is such a thing as accurate timekeeping. That dates from 1656, and a Dutchman named Christiaan Huygens.

There were clocks before Huygens.
Water clocks appeared in civilization in ancient Egypt to medieval Persia.
Others kept time on marks and candles.
Usually, time wanders about 15 minutes a day.
 
There was the increasingly important area of life where inability to keep time was of huge economical significance--navigation.
By observing the angle of the sun, sailors could figure out their longitude--where they were from north to south. But their longitude of where they were from east to west had to be guessed. Wrong guess could and did lead to disasters.

How could accurate time keeping help?
If you knew wether it's a mid-day at Grinwedge observatory told any other reference point, you could observe the sun, calculate the time difference and work out the distance.

Huygens' pandulant clock was 60 times more accurate than any precious device.
But 15 seconds a day soon mounts up on long sea-faring voyages. And pandulant don't swing nearly on the deck of a lurching ship.

Rulers of maritime nations were actually aware of the longitude problem. The King of Spain offered a price to solve it a century before Huygens.
It was a subsequent price offered by British government that led to a sufficiently acute device being painstakingly refined in 1700 by Englishman John Harrison. It lost only a couple of seconds a day.

After the Extor's added hand, the world agreed the "correct time", the coordinated universal time or UTC.

Usually, the zones maintain the convention of midday being vaguely near the sun's highest point. But not always.
UTC was based on atomic clocks which measure oscillations in the energy levels of electrons.They are accurate within a second every a handrand million years.

 Some cities put prestige over practicality.
But there are places that mini-seconds matter.
The stock market, fortune can be won  by exploiting an arbitrage opportunity an instant before your compitators.
The accurate keeping of universally accepted time also underpins computing and communication networks.

The most significant impact of the atomic clock, as it was first with ships and trains, has been on travel.
The GPS. It was the technology that has revolutionize everything from sailing to aviation, surveying to hiking. But it works only when those satellites agree on the time.
GPS houses 4 atomic clocks made from cesium and obidium. Self-driving cars need sensors and GPS, because the GPS only may have a couple of metres misplace.

Clocks continue to evolve. Some ones are built based on the element called ex-terbium.

Such accuracy have impact on economy? Only time will tell.


36. Google

There is the impression that Google knows everything. All efficiently answered with a tap of a touch screen.
The words 'clever' and 'death' crop up less often than 'Google' in conversation. That’s according to researchers at the University of Lancaster in the UK. It took just two decades for Google to reach this cultural ubiquity. From its humble beginning as a student project at Stanford University California.

How bad the search engines did before Google--mainly, the Lycos in 1998.
Larry Page and Sergey Brin – Google’s founders – were not, initially, interested in designing a better way to search. Their Stanford University project had a more academic motivation.
In academia how often a publish paper is cited is a measure of how much credibility it has. If it's cited by papers which themselves are cited many times, that bestowed even more credibility.

Page and Brin realised when you look at the page on the nascent world wide web, you had no way of knowing which are the pages linked to it. Web links are a bit like academic citations. So if they could find a way to analyse all the links on the web, they could rank the credibility of each webpage in any given subject.
To do this, the first thing they had to do was to download the entire internet. This caused some consternation. It gobbled up nearly half of the Stanford's band-width. After defined their algorithm, they found themselves stumbled upon a new, vastly better way to search on the internet.

With such a useful product, they attracted huge investment. Google went from student project to a private company. Now, it's among the world's biggest companies, bringing profits by the tens of billions.

For the first few years, they burned through maney without much idea about how they could ever make it back. It was the time of .com boom and burst, shares and loses making internet trading at absurd prices based upon the hope that eventually they will figure out viable business models.

It was in 2001, Google found their's. The "pay per click" advertising: advertisers tell Google how much they will pay if someone clicks through to their websites, having search for terms the advertiser specified.
The appeal for advertiser is clear: you pay only when you reach people who just demonstrate interest in your offerings. It's more efficient than posting advertisement in newspapers which, as the result, saw its profit falling off the cliff.

The invention of functional search technology has created value in many ways.
Time saving: Google is three times quick as search in library.
Price transparency.
And the long-tail effects in physical store which focus on limited range of best sellers. But decent search facility that makes it easy to find a needle in the product haystack helped the rise of the online stores offering varieties, customers' choices, and entroprenour can launch niche products more confidently that they will find market.

The problem:
Google dominates the search market--it handling nearly 90% searches globally.
When others rank high in organic search results, Google tweaks the algorithm that decides them. Others may gnash their teeth over the company's power to make or break them. And Google was accused as the judge, the jurary, and the executioner.

Search was a competitive business in the late 1990s. But now it maybe a natural monoplay.  It's hard for a second entry to succeed.
The reason: Among the best ways to improve the usefulness of search results is to analyse which link was altermately click by ordinary people who previously performed the same search. In other words, what the users searched before.
Google has far more of that data than anyone else.
It continues to shape our knowledge for generations to come.


37. Insurance

Legally and culturally, there’s a clear distinction between gambling and insurance. Economically, the difference is not so easy to see. Both the gambler and the insurer agree that money will change hands depending on what transpires in some unknowable future.

Gambling tools, such as dices, date back millanian, around 5000 years ago in Egypt.
Insurance may be equally old. 《The Code Of Hammurabi》, 4000 years old, a law code in Barbalon now Iraq, has 282 rules devoted to the topic of bottomry--a kind of maritime insurance bundled together with business loans (a merchant would borrow money to fund a ship's voyage,  but if the ship sank, the loan didn't have to be paid.)
Around the same time, Chinese merchants were spreading their risks by swapping goods between ships. If one ship went down, it would contain a mix of goods from many different merchants.

These physical shuffling around is a fuss.
It's more efficient to structure insurance as a financial contract instead.

A couple of millania later, Romans did active marine insurance market;
Later still, Italian city states such as Venice developed increasingly safisticated ways to insure the ships in the Maditerrian.

1687, a coffee house opened on Tower street near London docks, comfortable, spacious, and business-boomed. Where there was the gossip about ships, what sailing from where, with what cargo, whether it would arrive safely or not, there was the opportunity for a wager--the bet.
The coffee house owner found the people there were thirsty for information to fuel their bets and gossip, as they were for coffee.
So Edward Lloyd gathered the newsletters which was full if information of ship stuffs and later became Lloyd's List. His coffee house held auctions, insurance on ships' contracts, underwriters.
80 years later, his coffee house gathered a group of underwriters who formed the society of Lloyd's.

Another form of insurance began not in ports but in mountains, not for casino capitalism but for community capitalism. It was Alpine farmers organized mutual aid society agreeing to look each after when there were caw problems.
 
The risk-sharing mutual aids societies are all over the world. They are called governemnts.
Governments got into the insurance business as a way of making money. Instead of selling ordinary bonds which paid in regular instorements until they expired, governemnt sold annuities which paid instorements until the recipient expired.
Annuity is popular. It, too, is a form of insurance--to insure individual against the risk of living so long that all his or her money runs out.

Providing insurance is no longer a mere money spend of governemnt.  It's regarded as a core priority to help citizens to manage some of life's biggest risks such as unemployment, illness, disability, aging.

Faced with deep pool of risks, private insurance often merely peddles.
People in richer countries are expecting insurance from their governemnts; in poorer countries, governments do much help against life-altering risks, such as crop failure, illness and private insurances don't take much interests either because of the low steaks and high costs.

It's a shame to think about this way. Insurance doesn't just provide a peace mind, but a vital element of a healthy economy. The more the economy specializes, the more it tends to produce.

Today the biggest insurance market of all – financial derivatives – blurs the line between insuring and gambling more than ever.
Derivates is a contract let two parties bet on something else. eg: exporter hedges against the rise of the exchange rate.
What derivatives need is the appetite to take risks.

Real economy became the side show, while the side bets became the main event.


38. Paper

Gutenberg printing press was invented by Gutenberg, a Goldsmith in Germany, in 1440s. It is widely considered to be one of humanity’s defining inventions.
Gutenberg figured out how to make large quantity of durable metal type and how to fix that type, firmly enough to print hundreds of copies of page, yet flexibly enough that the type could be re-used to type entirely different page. His famous Bible was object beautiful enough to rival the calligraphy of the monks.

Actually, you can quibble with Gutenberg’s place in history. He wasn’t the first to invent a movable type press – it was originally developed in China.

Even when Gutenberg was inventing in Germany, Korean was clitching their method of writing to make printing easier by cutting tens of thousands characters down to just 28.
It's not true to say Gutenberg singke-handedly created literacy. 600~700 years earlier, literacy was in Abbasid Caliphat in middle East and Africa.

Still the Gutenberg press changed the world. It led to Europe’s reformation, science, the newspaper, the novel, the school textbook, and much else.

But he couldn't have done so without another invention, just as essential but mush more often overlooked -- the paper.

Paper was one of the Chinese ideas 2000 years ago.
It was first used for wrapping precious objects. Then, people began to write on it. It's mush lighter than bamboo, and cheaper than silk.
Soon, the Aribic world embraced it.
Christians in Europe didn't do so in much later. Paper came to Germany just decades before Gutenberg press printing.

What took so long? For centuries, Europeans didn't need it. They had parchment which is made of animal skin. But it's pricy. A Bible require skin from 250 sheep.
Since so few people could read and write, that hardly mattered. But as commercial class rose, with more contracts and accounts, the cheaper writing material used by Aribics started to look attractive, which led to make the economy of printing attractive too.

Printing was only the start of using papers. Wallpaper, posters, packaged milk, making boxes.

In 1870s, the same decade of telephone and ligtballs, British produced paper that was soft, strong, absorbent- -the toilet paper.

Paper can seem charming and artisanal, but it's the quantisential industrial product churned out at an incredible scale.

When Christians embraced paper, they crestedbthe continent's first heavy industry.
Initially, they made paper from Pope's cotton.
Both chemical and mechanical method or processes were involved.
Chemical method was used to breakdown the material;
Mechanical one used to produce energy. An Italian factory used fast flowing mountain streams to power massive drop plant.
Once it was finely macersted, the celluloid from the cotton breaks free and floats around in a kind of thick soup; then thinly poured and allowed to dry when the celluloid reformed as a strong, flexible mat.
Over the years,  the process saw invention after invention, which made paper much quickly and cheaply.

1702, the first daily paper--the Daily Courant.

Then, the inevitable industrial crisis.
Europe and America were so hungry for paper, and it run out of racks.

Another source of cellular that made paper is wood. In mid 19th century, wood became the main source in the West.
Today, paper is made of paper itself in the recycled mode.

When it comes to writing, some say the paper's day is numbered.
The computer will usher in the age of paperless office which has been predicted since Thomas Edison who invented wax cylinder which might record the office memo in the late 19th century.

Paper sales continue to boom.
Computers made it easy to distribute documents without paper. Computer printer made it equally easy for the recipient to put them on paper. Copies, fax machines and printers continues to spew out enough paper to cover the country every 5 years.

The idea of paperless office is less prediction but more of a punchline.

Things are finally changing:
In 2013, the world hit peak paper.
Many of us still prefer the feel of books or physical newspaper to swapping a screen. But the cost of digital distribution is so much lower, and we go for the cheaper option.
Finally, digital is doing to paper what paper did to parchment. Out- competing it not on quantity but on price.
The paper using is declined, but still survived not just on the supermarket shelf, but in the office too.

Old technology has a habit of enduring.  We still use pencils and candles, produce more bicycles than cars.

Paper was not just beautiful home-setting, it was everyday stuff. Over jotting, doodles, you still can't beat the back of an envelope. 


39. Antibiotics

Philip Lymlery runs a campaigning group called "Compassion in World Farming". He was on a trip in china's rural farmland. He didn't there to blame the farmers about their living condition of their pigs (though it's depressing: thousands crammed into crapes with no room to move). He was there to investigate whether a pig disease was polluting the local water ways. The local large commercial farm rejected him. So, he turned back on family farm instead. They did dump waste into the river; they were not supposed to do so; they bribed the local official. Then he noticed a pile of needles. They were the antibiotics that not prescribed from a vet. The farmers injected pig routinely hoping it would stop pigs getting sick.

Crammed and dirty conditions are breeding ground for deseases; routine low-doses of antibiotics can help disease in check. It also fattens animals. 
Those farmers only know making more money from fattened animals.

In burgeoning economy where demand for meat is growing as incomes rise, the use of agriculture antibiotics is set to double in 20 years.
The widespread use of it isn't restricted in agriculture, doctors are guilty too (because it should be buy-over-the-counter). The bacteria busily evolve resistance to drugs. Drug-resistant big can kill 10m people a year by 2050, according to a study. The money put on antibiotics getting useless is pupposed to be 100 trillion dollars.

The story of antibiotics started with a healthy dose of serendipity.
A young Alexander Fleming was earning a wage in shipping industry; then, he got money from his uncle's death; being enrolled in St. Mary Hospital School in London; became a valued member in rifle club; with more serendipity, got a job in school as a bacteriologist.

In 1928, he failed to tidy up his petri dishes before going home to Scotland on holiday. On his return, he famously noticed that one dish had become mouldy in his absence, and the mould was killing the bacteria he’d used the dish to cultivate.
Being not a chemist,  he couldn't make enough mould. He, then, published his observation, but got no attention.
It was ten years later, Enst Chin, a brilliant Jewish chemist in Oxford, chanced upon Fleming's article by flicking through back-copy medical journals. He, with his colleague Hawrd Florey, set about isolating and purifying enough penicillin for further experiments. It required hundreds of litters of mouldy fluid.

The first taker was a 43 years old policeman who died soon.

It's 1945, penicillin,  the first mass-produced antibiotics, was Rollin off the production lines.
Chin, Florey, and Fleming shared the Nobel Price.

Fleming warned: It's not difficult to make micron to resist penicillin in lab by exposing gem to concentrations that's not enough to kill them.
He worried that an ignorant man might under-dose himself allowing drug-resistant bacteria to evolve.

Any chance antibiotics might speed up the recovery, people will take it.
Giving routine low-doses of antibiotics is he perfect way to breed antibiotics-resistant bacteria.

The incentive was to care about whether dosing pigs seem increase revenue by more than he cost of drugs.
This is the classic example of tragedy of the commons where individuals rationally pursuing their own interest altermately create a collective disaster.

Until 1970s, scientists kept discovering antibiotics. Then, the development pipeline dried up. But, it's possible new antibiotics coming through again.

This is all about incentives. What the world needs is new antibiotics that we out on y shelf, and use only in the driest emergencies. But product that doesn't get used is not much of money spin of a drug company.

Denmark sets an good example: They strictly control the use of antibiotics on pigs. They improve part animals' living condition--making them less crowded, more hygienic, which leads to disease less likely to spread.

Altermately,  it's those incentives that need to change.


40. Billy Bookcase

The Billy Bookcase is the actpchetypal IKEA product.
It's dreamt up in1978 by an IKEA designer Gillis Lundgren who scratched on the back of a napkin. It has sales of 60 odd million worldwide, nearly one in 100 people.
Bloomberg used it to compare purchasing power: every three seconds there will be a Billy Bookcase rolled off the production line in a tiny town in South Sweden.
The workers there have never touched a bookshelf. Their job is attending the machines which imported from Germany and Japan that work 24 hours to cut and glue and pack the various parts of Billy Bookcase. In goes particle board by the truckload 600 tons a day, out comes the ready box products stack 6×3 on pallets.
On the wall in he office of the factory, there hangs the typewritten letter of the very first order from Ikea.

Ikea was not, back then, the global behemoth as it is today with stores in dozens of countries and turnover of tens of billions.
It's funder, Ingvar Kamprad, was just 17 when he used the sum of reward from his father for doing well in school despite dyslexia.

1952, when he was 26, he had yet to get the idea of flat-packing. It was a few years later, when packing a truck for catalogue photo shooting, he got the idea of cutting cost and prices. And he was abscessed with cutting prices.

One way to keep price low is to keep furniture in bits rather than paying labourers for assembling it. It maybe true if out-sourcing the labour to customers was the only thing that make the flat-packing cheap.
Bigger savings comes precisely the problem of transport.
In 2010, Ikea's making sofa's arm rest detectchable helped half the size of packaging and half the truck.

It's not just furniture where constantly questioning product design could read dividends.
Another Ikea icon--the Bang mug, with yearly sales of 25 millions, changed the height off 19th mug to make better use of the space.

It does cost 30% less, partly due to constant tiny tweaks in both product and production method. Also, thanks to sheer economy of scale. The more of something you can commit to make, the cheaper you can get it made.
Back to the factory, its production has got 37 times folds with merely doubled employees.

Penny-pinching isn't all it takes to succeed. Making products both cheap and acceptably good is.
The enduring Billy Bookcase is explained as simple, practical, and timeless. Being praised as "unfussy, uncluttered, modern without trying too hard."

Billy Bookcase is a barebones functioning bookshelf or a blank canvas for creativity.

Economy nerds don't admire Billy Bookcase for its furdernity or flexibility, we admire it for relentlessly finding ways to cut cost and prices without reducing the quality of the product.
That's why the Billy Bookcase is the symbol of how innovation in the modern economy isn't just about snazzynew technology,  but boring efficient systems.

The innovation is about working with the limits of production and logistic finding tiny ways to shave more of the cost or producing something that looks inoffensive and does the job.


41. Compiler
Ones and zeros --the language of computers.
It makes everything clever computer does: make a call, search database, play a game,etc.
Actually, it's not quite true. The one and zero comes down to the presence and absence of current in tiny transistant on semi-conductor chip. The one and zero merely denoted if the current is on or off.

Windows takes 20 gigabytes of hard drive, 170 billions of ones and zeros. If being printed out on A4 paper, it world be 4km high. If it took a second to flip each switch, installing Windows might take 5,000 years.

Every computer have to be programmed like this. The automatic sequence controlled calculator--the Harvard Mark I was invented.
It was 15m long, 2.5m high, a concatenation of wheels and sharves and gears and switches, containing 530m of wires. To make it run, one should let which switch on or off; which wire plugged in where. Then, flip all the switches, plug all the wires, punch all the holes in the paper tape.
Programming it was a challenge to stretch of a mind of mathematical genius.

40 years on, more compact and user-friendly machines--the Commdore 64 was finding their way into schools.
It instructed the computer in the words that were recognizably intuitively human.

Why computer progressed so much since the Mark I?
One reason was the ever tiny components.
But, it also unthinkable that computer could do what they do if programmers couldn't write software like windows in human-like language and have it translated into the 1s and 0s, the currents or not currents.

The thing that made that possible was Compiler.
It starts with the woman Grace Hoper. Born in 1906, received high education thanks to her genda-equality thinking father, she was good at math and later became a professor.

1941, Pearl Harbor provided Hoper the opportunity to sign up into Navy immediently.
Methmatician played an important role in military: while aiming a missile, things like the angle of firing, the distance, the temperature, the humidity, and the speed and direction of the wind should be accurately calculated. The calculation was not complex, but time-consuming for a "human computer" who only relied on pan and paper.

Soon, Hopper was sent to help Howard Aiken to work out what the Mark I could do.

1951, computer was advanced enough to store trunks of "sub-rutines"--those trialed and tested re-usable codes in memory system.

Hoper wrote her first compiler in her spare time. It's a tongue-in-cheek self-eprivation for her to say it's laziness that drove her writing in auctor code or all kinds of symbols. She single-handedly invented the idea of open source software too.
The compiler involved trade-off. It made programming quicker, but the resulting programmes run slowly.

The compiler evolved into COBOL which more fundamentally pave the way for the familiar distinguishing between hardware and software.
In Mark I, hardware was software. There was no patten of switch that would work on other machines. Because other machines could be wired completely differently.
But, if a programme can run on Compiler, it can also run any programme that uses it.

More layers of abstraction have since to come to separate human programmers from knitty-gritty of physical chips, freeing up programming brain power to think about concepts and algorithms, not switches and wires.

Hoper's view of why programmers resisted compiler at first was: it was not about they cared about making programme run more quickly; they enjoyed the prestique of being the only one who can communicate with God-like computer on behalf of the mere mortal who just purchased it. The "High Priest" as she called them.

Now, anyone can programme as Hoper hoped.


42. M-Pesa
In 2009, a group of policemen in Afghanistan received their salaries by text massages. A pilot project making salaries paid by a new mobile money service.
The policemen found their salaries were, previously, somewhere along the line, by some one, skimmed off about 30% in cash payment.

The developing economies have been re-shaped by mobile money--the ability to send payment through SMS.
The ubiquitous kiosks that sells prepaid mobile airtime effectively functioned like bank branches.

This invention was indoors in many places. It, first, took off in Kenya. The idea was started with a presentation made in Johannesburg South Africa in 2003.
The speaker at the world summit for sustainable development gave a speech on "How to encourage large cooperation to help poor countries to develop." In the audience,  has a man with an answer to this question. An official from UK.
He noticed that customers of African mobile networks would transferring pre-paid air time to each other as a source of quasi-currency.

Suppose the official would chip in millions of funds--2 millions, this attracted the speaker's bosses.

The speaker's idea was ambitious but narrow--micro-finance.
Hundreds of would-be entroprenours were too poor for banking system to bother with. They couldn't get loans. Only if they could borrow a small amount, they could start their thriving business.
The speaker wanted to explore having micro-finance clients repay their loans by SMS.

In 2005, the pilot project didn't look destined to be a success. But later on, people started to using it, and using it whole lot more that just paying loans.
According to research, they used it to avoid being robbed on the road (depositing money before a journey, and then withdrawing it on arrival); business would deposit money overnight rather than keeping them in the safe; people paying each other for services.

So, they realised they were on something big.
Kenyans were taking that tool and using it to re-invent money itself.

8 months after the innicual launch, there were a million users; now it's 20 millions.
During that two years, 10% of transferring money economy; now it's nearly a half.

M-Pesa is a textbook leapfrog technology where the invention takes whole. Because other alternatives were poorly developed.
Mobile phone allowed African leapfrog their often inadquant landline networks.
M-Pesa exposed their banking systems too inefficient to turn a profit from serving a low-income majority.

People embraced it so quickly.
In 2014, mobile money accounted 60% in developing countries markets.

Why did M-Pesa take off in Kenya?
One of the reasons is he relaxed approach of banking and telecom regulations. Elsewhere, the beaurocrates haven't always been the forthcoming.
The most likely part is the convience for sending money home.

But too more benefit might be more profound.
The policemen for tackling corruption;  The bribe issue.

In many places, corruption is endemic.
In Afghanistan,  bribe amounts to one forth of the economy; minibus owns one third of revenue to theft and distortion.
Cash transaction facilitates not only corruption but tax evasion as well. When incomes are traceable, it's taxable.

That is the other big promise of mobile money--braodening the tax base by formalizing the grey economy, from corrupt police commanders to tax-dorgging taxi drivers.

Mobile money could eventually lead to quite changing culture.


43. Lightbulb
In the mid 1990s, an economist William Nordhaus conducted a serious of experiment.
The pre-historic technology--lit a wood fire, which people have been gathering, chopping, and burning woods for tens of thousands years.
One day, he, with a menouter lightmetre, burned 10kg of wood and kept track how long it burned for, and recorded the dim flickering fire.
Another day, it's a Roman oil lamp fitted with wig, filled with cold pressed sesame oil. He measured its soft and even glow.

The conclusion: 10kg of wood open fire burned 3 hours; a mere egg-cup of oil burned all day and more brightly and controllablly.

He wanted to understand the conomic significance of the lightbulb.
That's just a part of larger project of shedding light on difficult issue on economists: how to keep track inflation of the changing cost of goods and services.

To see how this was difficult, take the travel methods by comparison:
It's an epic movement for Portugal explorers to trespass two continents; it's a few days when steamed ship was available; it's only a few hours when it comes to plane.
An economic historian could measure the inflation by tracking the price of passengers on the ship; but the airline ticket sailing is much tricky--it would be unfair when people were willing to pay the double price for air travel.

Nordhaus wanted to unbundle the cost of single quality people has always cared about--the illumination which is measured in lumen hours.
A candle gives 13 hours of luments; now, a lightbulb was 100 times brighter than that.

Imagine a hard week’s work gathering and chopping wood, ten hours a day for six days. Those 60 hours of work would produce light equivalent to one modern bulb shining for just 54 minutes.
Thousand years ago, better option came along, the candles from Egypt, the oil lamp from Barbalon. The light they produced was steadier and more controllable, but still prohibitedly expensive.

In an diary entry in May 1743, the then president of Harvord University recorded standard-graphically 78 pound of candle were made in two days and after 6 months they were all gone.
The candle then was, the most common ones, the tallow candle which was made of stinking, smoking sticks of animal fat. There were bee's wax ones then.

Set aside a whole week a year to spend 60 hours devoted exclusively to make candle or earning the money to but them would enable you to burn a single candle for two hours every evening.

Things improved a little as the 18th and 19th century unfolded.
Candles were made of sperm oil. It's no grease spot, won't softening in hot weather, and last much longer with its strong white light.
But they were pricy. To burn all year would cost 8 pound which is over a thousand dollars in today's money.

A few decades later, the gas lamp help to lower the cost and save the sperm whales from extinction. They, too, were inexpensive hassĺe, tipped, dripped, smelt, set fire to things.

Then, came the lightbulb in the 1900s. Thomas Edison's carbon filament bulb can produce 10 days of bright, continuous illumination. 100 times brighter as a candle for the money you were done 60 hours a week of hard labour.

In 1920, that same week of labour would pay for more than 5 months of continuous light from Tungsten bulb.
1990, it's 10 years.
Years later, it's 5 times longer yet by compact fluorescent bulb.
Modern LED lights are cheaper and cheaper.

Switch off lightbulb for an hour could save illumination that have cost our ancestors all week to create; it would take Ben Jammin Franklin and his contemparies all afternoon. But some one in the rich industrial economies today could earn the money to but that lumination in a fraction of a second.

Lightbulb is clean, safe, controllable, no flickering, stink of pig fat or risk of fire.
It's an icon of innovation, transformed our society to one where we can do whatever we want regardless of how dark the night has become.
The price of lightbulb falls far faster than official inflation statistics suggested.

It'snce the thing that once too precious to use, now too cheap to notice.


44. Banking
On the busy Fleet St. There is a stone arch through which anyone may step and travel back in time.
Just few yards South,  in a quiet courtyard, there is a strange circular chapel. Next to it on the column is the statue of two knights sharing a single horse. The chapel is the Temple Church, consecrated in 1185, the London home of the Knight's Templar.

Temple Church is not only just important in architecture,  historical, religious site. It's also London's first bank.

The Knight's Templar were warrior monks. A religious Order with a theologically inspired hierarchy, mission statement and code of ethics. But they're heavily armed and dedicated to a holy war.
The Templer dedicated themselves to the defence of Christian pilgrim to Jeuroselum. Jeuroselum has captured by the first crusade in 1099, and pilgrim streamed in, travelling thousand miles across Europe.
Such long travel brought a problem: you need somehow found months of food and transport and commendation. You also need to avoid carrying cash around and being the target for robbers.
The Templer has that covered. A pilgrim could leave his cash in Temple church in London and withdraw it in Jeuroselum. Instead of carrying cash, he carried a letter of credit. The Knight's Templar were the western union of the crusade.

We don't actually know how did they make such system work to protect themselves from freud. By secret code verifying the document and identity of the traveller?

Anyway, they were not the first in the world to provide such a service. Several centuries ago in  Tang Dynasty China, they used so-called "flying money", a two-part document, allowing merchants to deposit profits in regional office and reclaim that cash back the capital. But that was operated by the governemnt.

Templer were much close to a private bank or a private bank owned by the Pope, allowing allied Kings and Queens across the Europe and run by a partnership of monks sworn to poverty. They did much more than transferring money across long distances. They provided a range of recognizably modern financial services. They broke the deal: If someone wanted to buy an island on the coast of France, like King Henry III did in 1200, Templar made sure the seller got paid. 

The Order lost its existance after European Christian completely lost control of Jeuroselum in 1244 and was dispended in 1312.
Who was to step into the banking vacuum?
1555, the Leo' fair was the greatest fair of international trade in all Europe and dated back to Roman times.
Gossips were starting to spread: an Italian merchant made a fortune by buying  nothing and having nothing to sell at all. All he had was a desk and an ink stand and sit there day after day signing paper with other merchants.

To a new international elite of Europe's great merchant houses, this particular Italian activity was perfectly legitimate--buying and selling debts. In doing so, he was creating innormous economic value. Eg: a merchant who wants to buy something could go to this banker and borrow something called a bill of exchange- -a credit note , an IOU. Its value is expressed in a private currency used by this international network of banks. If the merchant travelled else where, it could be recognized by the local bank there who would exchange it for local currency.
Through such network of bankers, a local merchant could not only exchange currency but also exchange credit worthiness.  A valuable service.
Every few months, agents of this web of banks would meet at great fairs to go through their books net off all the credit notes against each other and settle their remaining debts.

Our financial system today still has a lot of common with this. A shop talks to local bank, local bank talks to the credit bank, the credit bank confirm the account, and this person is good for the money.

The dark side to this banking system:
By turning personally obligations into internationally tradable debts, these medievil bankers were creating their own private money. That was outside the control of Europe's Kings. They were rich and powerful and they didn't need the coin minted by the sovereign.

That's true even today. International banks at locked together in a web of mutual obligation that defys understanding or control. They can use their international reach to side step tax and regulations. And since they are debt to each other of a very real private money, when the banks are fragile, the entire monetary system of the world is fragile.

We are still seeking ways to hold them in check.

King Philip KG of France owned money to Templer who refused to forgive him. In 1307, at now the Temple stop of Paris metro, King Philip launched a raid on Paris Templar, followed by torture and forcing Templar to confess any sin the inquisition could imagin. The Order of the Templar was dispensed by the Pope. The London Temple was rented to lawyers. The last grand master of Templer Jacques de Moley was publically burned to death in central Paris.


45. Barcode
There are two ways to tell the story:
I) the classic fresh of inventive light.
1948, Joseph Woodland was pondering a solution to speed up process of checking out stores by automating the tedious process of recording the transaction. He watched the sand slipping through his hand as he sat on a Florida beach, observing the furrows left behind, an idea came to him. Just like the Morse code that use dots and dashes to convey massages, he could use thine lines and thick lines to encode information, as zebra strikes bull's eye, thus describing a product and its price and a code machine can read.

The idea was workable. But, with the technology at that time, it's costly. But as the computers advanced, lasers were invented, it became more realistic.

The strip-scan system was rediscovered, refined several times over the years.
In the 1950s, thin and thick lines were put on railway carts, so that they could be automatically read by a track-size scanner. 
In the early 1970s, an IBM engineer figured out a rectangle one that would be more compact than the Bull's eye, and developed a system that use lasers and computers that worked so quickly.

Joseph's seaside doodles have become the technology reality.

II) the boring one.
September, 1969, officers from GMA and NAFC met in a motel in a town in Cincinnati with the topic: whether the food producers of the GMA could come to an agreement with the food retailer of the NAFC about an inter-industry product code. GMA wanted to keep the 11 digits they've been using; NYC wanted a 7 digits one which was much simpler and cheaper for the check-out. No agreement was reached then. The meeting was broke up in frustration.

Finally, the UPC was achieved in June 1974. In a supermarket in Tory Ohio, the price of a bag of chewing gum was automatically registered through by being scanned the barcode. The Barcode had been born then.

Barcode is a simple price of cost-cutting technology,  it helps supermarket do their business more efficiently ans so it helps us to enjoy lower prices.
But the barcode dose more than that. It changes the balance of the power in the grocery industry.
Part of the difficulty was getting everyone to move forward on the system which didn't really work without critical method of doctors. It's expensive to in-store the scanners; it's expensive,  too, to re-design packaging with barcode. (Retailers to equip scanners, manufacturers to put barcode on products)

The barcode was changing the tilt of the playing field in favour of a certain kind of retailer.
For a small family-run convient store, the barcode scanner was an expensive solution to problems they didn't really have.
But super market could spread the cost of scanner across many more sales. They value shorter lines of check-out and they need to track the inventory.

The Barcode was generalised in 1970s. Running a huge, diversified logistically complex operation was all so much easier in the world of the barcode.
 
The altermate expression of that fact came in 1988, the discount department store Wal-Mart(the largest one in the world, even larger than the other largest five combined) decided to sell food.
Mal-Mart continues to invest cutting-edge, computer-driven logistics and inventory management. It's a major gateway between Chinese manufacturers and American consumers by commitioning cheap products in bulk in china.

The Barcode isn't just a way to do business more efficiently, it also changes what kind of business can be efficient and how the world economy fits together.


46. iPhone
On January 9th, 2007, the most iconic entroprenour on the planet announced something new, a product that became the most profitable in history, the iPhone(combined iPod, phone, and internet communicator).

There are many ways that iPhone has defined the modern economy. The sheer profitability of the thing. Only 2 or 3 companies in the world that make as much money as Apple does on iPhone alone. It's the fact that creating a new product category- -the smart phone which was not existed 10 years ago, but it's now the object of desire of much of humanity.

There is the way iPhone transformed the markets: for software, music, advertising.
When you dive deeper, the tales are surprising one. Aside from giving credit to those leading figures as being so well-known, ask yourself what actually makes an iPhone aniPhone?
Partly the cool design, the users' interface, the attention to details, the way the software works, the hardware feels. But underneath the charming surface, there are some crutial elements that make it and other smartphones possible.

One economist has made a list of key technologies that make smartphones work:
1, tiny microprocessors;
2, memory chips;
3, solid state hard drive;
4, liquid crystal display;
5, lithium-based battery;
Those are just hardwares.  Software and internet support goes on:
6, fast Fourier transformed algorithm (clever bits of math make it possible to swiftly turn analogue signals such as sound, visible light, radio waves into digital signals that computers can handle);
7, the internet;
8, HTTP and HTML (the language and protocols that turn the hard-to-use internet into easy-to-access WWW)
9, cellular network;
10, GPS;
11, the touch screen;
12, Siri(the voice activated AI agents)

All are important, and some are even indispensable.
While reviewing the history of some of them, the economist found something striking.

It's the Uncle Sam that is the foundational figure of the iPhone? Every single one of the 12 technology was supported, in significant ways, by government, often the U.S. government.

*WWW owns its existance to Tim Berners Lee who was a software engineer employed by Cern--the particle research centre in Geneva which is funded by governements across the Europe.
*Internet itself started as Arp net--a network funded by U.S. department of defence in early 1960s.
*GPS was a pure military technology developed during the cold war and only opened up to civilian use in the 1980s.
*Fast Fourie Transform, a family of algorithm that made it possible to move from a world where the telephone, television, and gramophone worked on analogue signals to a world where everything is digitalized therefore could be dealt with by computer.
(The most common such algorithm was developed, from a fresh of insight, by great American mathematician John Tukey who worked on military application of Presedent Kennedy 's scientific advisory committee in 1963, trying to figure out whether Soviet Union was testing the nuclear weapons.)
*Touch screen was invented by E.A Johnson who was employed by the Royal Radar establishment under the British government. The establishment was commercialized by an American research centre which was funded by U.S. national science foundation and CIA and, later, sold itself to Apple.
*Siri was born on fourth October, 2011 according to her words. In 2000, the U.S. defence advanced research projects agency DARPA commitioned to develop a protal Siri--a virtual officer assistant might help military personnel to do jobs. 7 years later, it was commercialized as a start-up. 2010, Apple stepped in and acquired the results for an undisclosed sum.

For other hard drives, lithium, liquid crystal display, semiconductor themselves, in each case there was scientific brilliance and plenty of private sector entroprenourship involved. Also, lots of cash.

So many thing we at relying on today were homes and commercialized by private sectors.
It was governement funding, governemnt risk-taking made all these possible. That a thought to hold onto as we ponder the technological challenges ahead, feel such as an energy and biotechnology.

Steve Jobs was a genius.  He had side projects as well-- the animation studio Pixer which changed the world of movies when it released the digitally animated film Toy' s Story.
What an utterly champrming toy.


47. Concrete
20 years ago, poor people in a town in Mexico were given concrete to form firm floor. It dramatically improved children's education. Floor were made of dirt there previously. Parasitic worms thrived in dirt, which spreaded diseases that stunt kids' growth. That made them miss school.

Concrete floor is much easier to keep clean. So the kids were healthier and their tests score improved. And parents were happier. And the money well-spent.

Beyond that, concrete often has a less wonderful reputation. It's a by-word for ecological carelessness. It's made of sand, water, and cement which takes a lot of energy to produce and the production process also releases carbon dioxide and greenhouse gas. Though it's emission might be drawfed by steel production.
The world consumes vast quantity of it--5ton per person per year.
As a result, cement industry emits as much greenhouse gas as aviation.

Architecturally,  concrete implies lazy, soulless structures. Yet, it can also be shaped into beautiful forms such as the Sydney Opera House,etc.
It's no surprise that concrete could evoke such confusing emotions. The very nature of this high feels hard to pin down."Is it stone? Or plastic? Or brick or tile?  Or cast iron? The answer is yes and no!"

As a great building material, it has been recognized for millania, perhaps even since the down of civilization.
12,000 years ago, in South Turkey, people were having their first outdoor gathering around because some one figuered out how to make concrete;
8000 years ago, it's used by desert traders to make secret underground systems.
Romans were serious about it. Naturally occurring cement were used from volcanic ash deposits near Pompeii to build acquaducts, bathhouses.
The Pantheon in Rome, soon will reach its 1900th birthday, has the largest dome in centuries, arguably until 1881. Gazing up, you are looking at the concrete.

Bricks, Roman bricks, can be reused. Concrete can't. Concrete can only be reduced to rubbles. The chance of it becoming a rubble depends on how well it's made.
Bad concrete: too much sand and too little cement. It's a death trap in earthquake.
Well-made one: It shall be water-proof, storm-proof, fire-proof. It's strong and cheap.

That's the foundimental contradiction of concrete:  incredibly flexible when you are making sonething; utterly inflexible once it's made.
In he hands of architectsor structure engineers, concrete is a remarkable material you can pull it into a mold, set it to be slim, stiff, strong, almost any shape you like. It can be dyed or just grey; it can be rough, or polished smooth like marble. But the moment the building is finished, the flexibility ends. Cured concrete is stubborn, unyielding material.
In a millennia years, when our steel has rusted, and wood has rotten, there is least a chance that our concrete creation will remain.

Over a century ago, there was a revolution of improvement of concrete, but an improvement with a fatal flaw.
1877, a French gardener was unsatisfied with the arrangement of flower pots. He came up with the idea of concrete pots, reinforced with a steel mash.
Less than 20 years later, it got patented. People used less concrete. And it works still 30 years later.

The reinforced concrete is much stronger and Mor practical. It can span large gaps allowing concrete to sour in the form of bridges and skyscrapers.
But there is the problem. If cheaply made, it would rot from inside as water gradually seeps in tiny cracks and rusts the steel.
This process is destroying inferstructures across US. In 20 to 30 years, China will be the next. China poured more concrete in the 3 years at the beginning of this century than US did in the entire 20th century.

Many schemes to make concrete last longer. Special treatment to prevent water get into he steel; self-healing concrete full of bacteria that concrete limestone which re-seal any cracks; self-cleaning concrete infused with titanium dioxide breaks down smog keeping the concrete sparkling white.  Improved version of technology may even give us street surfaces that cleaning up what's coming out of car exhausts.

Also efforts to figure out ways to reduce energy use and carbon emissions in making concrete.

Perhaps concrete serves the best when we use it simply.


48. Shipping Container
Globalization is the foundimental feature of modern economy.
The statistics back up this: in the early 1960s, global merchandise trade was less than 20% of global output; now, it's around 50%.

There is no other issue where the anxiety of ordinary people is so in conflict with a near unanimous approval of economists. So controversy rages. The argument of trade tend to frame globalization as a policy, maybe even an ideology fueled by acranymic trade deals such as T-tips, TFP~~~

Perhaps the biggest enabler of globalization isn't free trade agreement, but a simple invention: a corrugated steel box of 3m×3m×13m (8f×8f×40f), the shipping container.

How a typical trade journey looked before?
1954, a cargo ship, SS Warrior from New York to Germany. Goods werr in different shipments. The real challenge was physically loading ships: pile barrels of olive, boxes of soap onto a wooden pallet on the dock, the pallet will be hoisted in a sling and deposited in the hull of the ship, until it settled in the place against the curves and bulkhead of the hull. Skillfully packing the cargos, so it wouldn't shift on the high sea.
It's a far more dangerous job than manufacturing or even construction.
And it took ten days to load and unload, and he whole process last about 3 months.
Such a costly, chancy,  time-consuming journey 60 years ago.

A better way came into force--put all the cargo into big standard boxes and move the boxes.

Inventing the boxes is the easy bit. The real challenge was overcoming the social obstacles.
To begin with, the truck in company, shipping company and ports couldn't agree on the standard size of boxes.
Then, stodgy dock workers' unions resisted the idea because of fewer jobs to go around.
U.S. regulators also prefer the status quo the sector has tightly bound with redtape with seperet sets of regulations determining how much shipping and trucking companies could charge. Why not let companies charge whatever the market could bear? Or allow them to merge, putting together in integrated service?

The man who nevigate this maze of hazards,  he inventor of the modern shipping container system was Malcolm McLean.
He knew nothing about shipping, but he knew the trucking, how to play in the system, and how to save money.
He not only saw the potential of shipping container which would fit neatly into a flat-bed truck, he also had the skills, the risk-taking attitude needed to make it happen.
First, he cheekily exploited a legal loophole to gain control of both shipping and trucking companies.
Then, when dockwoeker went on strike, he use the idle time to refit old ships to new container specifications.
He repeatedly plunged into debt;  took on fat cat incombance in Quataroka and revitalized the island's economy by slashing shipping rates to the US; canonly encourage New York port authority to make New Jersey side of the harbour a centre for container-shipping.
The most striking coo took place in the late 1960s, he sold the idea of container- shipping to U.S. military who was bogheaded by shipping equipment to Vietnam.
He found, on the way back, his empty container ship could collect payloads from the then fastest growing economy Japan. So the transpacific trading relationship began in earnest.

A modern shipping port can handle 20 times of cargo as what's in the 1960s, and shorter time, and the colossal ballet of engineering is a choreograph of computer power.
The refrig-container put in a hull section where is powered and temperature monitored, the heavier ones at the bottom to keep the ship centre of gravity low.

Mostly, goods can be shipped reliably, swiftly, and cheaply(less than 50 dollars per ton) now.


49. Haber-Boch Process
An anecdote first: It's a marriage of brilliant minds. Carl, the first women in Germany to pursuit a doctory in chemistry. She persuaded every professor to let her in to observe their lessons as a guest, and she passed each exam. "Science will come to each person who is respectful of gender." The statement when she was awarded doctory.
But frustrated by the gender-inequality society then, reluctantly and resentfully, she let her professional ambitions slide.

To help Germany in the WWI, her husband, having pioneered in chemical weapon, enthusiastically advocated gas in allied troops with chlorine.

1915, the first devastating use of chlorine gas, he was made an army captain, and she took her own life by a gun shot.

During their 14 years of marriage, Haber spent 8 years in making a breakthrough--the Haber-Bosch Process, using nitrohpgen from he air to make ammonia which can then be used as fertilizer, has been called the greatest invention of the 20th Century – and without it almost half the world’s population would not be alive today.

Plants need nitrogen which is one of their five basic requirements, along with: potassium, phosphorus, water, and sunlight.
In a state of nature, plants grow, and they die. The nitrogen they contain returns to the soil and new plants use it to grow. Farmers find various ways to prevent yields from declining over time. As it happened, by restoring nitrogen to their fields. This includes the decomposed, the roots of host bacteria we plenished the soil's nitrogen. That's why includes peas and beans in crop rotation.
But these techniques struggled to fully satisfy plants' appetite for nitrogen. Add more, the plants grow better.
Only in the 19th century, chemistists discovered this: 78% of the air is nitrogen, but not in a form plants can use. In the air, nitrogen consists of two atoms which lock tightly together. Plants need these atoms fixed or compounded with some elements like ammonial-oxidize known as bird poo; or potassia-nitrate called salt Peter in the main ingredient of gun powder.
Reserve of both were found in South America. Being mined and shipped around the world and dug into soil. But by the century end, experts were fretting about its running-out.

The only possible is to convert nitrogen from the air into a form plants can use. That's exactly what's Fritz Haber found out how to do. Driven by, in part, a German lucrative contract form a chemical company BASF, he did it. And the engineer of the company replicated it on an industrial scale.

Haber and Bosch both received a Nobel prize for their invention. But Haber’s place in history is controversial – he is also considered the 'father of chemical warfare' for his years of work on developing and weaponising chlorine and other poisonous gases during World War One.

The process was termed as "technological substitution"--when we seem to have reach some basic phisical limit, then find a work around.
When it's need more food for more people, more land is needed.

The process is like an alchemy,  instead of making more land, making fertilizer. It's renowned as "Brot aus Luft"--"bread from air" But it requires a lot of fossil fuels.
It needs natural gas as a source of hydrogen,  the element to which nitrogen binds to form ammonia, then needs energy to generate extreme heat and pressure. It's nessory, with a catalyst, to break the bonds between air's nitrogen atoms and persuade them to bond hydrogen instead. The process consumes 1% of the world's energy, which means lots of carbon emissions and most of them end up in the air or water.

The ecological concern:
Compounds like nitroxide are powerful green house gases. They pollute drinking water, create acid rain which make soil more acidic which puts eco-system out of kilter and biodiversity under threat.
The long term impact on the environment is still underestimated, having converting so much stable, innert nitrogen from the air into various highly reactive chemical compounds. 

We are in the middle of global experiment. One result of the experiment is clear: planting more food for more people. The figure shot upwards after the process was invented. And varieties of crops also play their parts in the spike of food yields.
The population growth is still heading upwards form 4b to 7.5b.

Back in 1909, Carl thought Haber's gain in military use was her loss.
The process also helped Germany in WWI. Ammonia can make explosives as well as fertilizer. Bombs from air as well.

When Nazi took power in 1930s, none of these contributions out-weighted his Jewish roots. Stripped from his job, kicked out the country, Haber died in a Switz hotel, a broken man.


50. Diesel Engine
The inventor of the engine that bears his name was thinking about his heavy debts and the interest rates that would soon come due on the night of September 29th 1913, on a boat traveling from Belgium across the English channel. He jumped into the black and swirling water below.

To know about who would interested in such an impecunious demise, we rewind the clock for 20 years.
For the context, in 1872, the industrial economy where steamed power for trains and factories, but urban transportation depended on horses.
That autumn, a flu brought U.S. cities to a standstill. Tons of horses' waste coated the city everyday. An affordable, reliable small engine that could replace the horse would be a God-send.

The steamed engine was one of the candidates. Another one was the internal combust engine powered by petrol, gas or gun powder.

When Diesel was a student, both engines were inefficient. They converted only 10% of heat into useful work.
A lecture on the thermal dynamics in Munich where he learnt it's theoretically possible to make an internal combust engine that converts all the heat into work. He set himself into the task of translating the theory into practice.
He felt short. His first engine was only 25% efficient. Even today, the best one is 50%.

Unfortunately,  for Rudolf Diesel and the early versions of his engine, the efficient gains was outweighed by reliability issues. He faced steady stream of refund demanded from unhappy consumers.
This dug the inventor into the financial hole from which he never managed to escape.

Still, he kept working on his engine and it kept getting better.

Meanwhile, other advantages became apparent: diesel engine use heavier fuel than petrol engine.
The heavier fuel was known as diesel which was cheaper to refined from crude oil, and gave less fumes. So it's less likely to cause explosions. It's particularly attractive to military transport.

1904, Diesel got his first engine into France's submarines;
1913, in Europe, the drumbeat of impending war were quickening, the cash-strukened Germany was on route of London.
"Inventor thrown into the sea to stop sell patents to British governemnt!" The headline read.

It was after the WWI, Diesel's invention began to realise its commercial potential. In heavier duty transport applications and cars, his first diesel-powered trucks in 1920s; trains in 1930s; and in 1939, 1/4 of the global sea trade was fueled by diesel.

After the WWII, more powerful and efficient diesel engines let to more enormous ships.
Fuel accounts for around 70% of the cost for shipping goods around the world.
One scientist put it: trade would grow much more slowly, if globalization was powered by steam.
But the economist Bryan Arthur was not sure about that. He views the rise of the combust engine in the last century as an example of path-dependence, a self-reinforced cycle in which existing investments in inferstructure mean we keep doing thing in a certain way.

In late 1914, steam was the least as viable as crude oil for powering cars. But the growing influence of the oil industry ensure that much more money were going to improving the internal combust engine than the steam one.

Diesel designed his engine to use variety of fuels.
1900, the Paris Fair, he demonstrated a model on peanut oil.
1912, he predicted vegetable oil was as an important source of fuel as petroleum products.
The impetus to make it happen, largely dissipated with his death.

The second conspiracy made the big headline of newspaper:"Murdered by agents from big oil trusts!".

Recently, it's a resurgence of bio-diesel which is less polluting than oil fuel. But, it's controversial. It competes for land with agricultural,  pushing up food prices.


In Rudolf's era, the population was smaller and the climate was predictable, which made it's less of concern.

Diesel was excited by he idea that his engine could help to develop poor agricultural economies.

Diesel's body bobbed up along side by another boat 10 days later. It's too badly decomposed for an autopsy.  His body was reclaimed by the wave.  
  

51. Number 51--The Credit Card 

The word "credit" means believe, trust.

In small community, you trusted the people you knew to pay. As cities boomed, things became more awkward. Big department stores couldn't rely on recognizing every customer by sight. So they issued Tokens such as: special coins, key rings, and something resembling dog tag--the "charger plate" in 1928.
Quite revealingly, those things represented status symbols:"I, trusted!"

1947, the first token for, not a single department store, a range of department stores;
1949, Dinners 'Club card aimed the traveling salesmen to buy food, fuel, rent for hotel rooms, etc. About 35,000 people subscribed for the network of facilities;
1950, bank outlets could be found almost all around USA. The Express Card, VISA, MasterCard.

The early credit card has two problems:
I), the chicken and egg one. Retailers would not accept credit card unless lots of people demanded it; while customers couldn't be bothered signing up for the cards unless plenty retailers would accept them.
To overcome the inertia, the Bank of America, in 1951, mailed a plastic card to every customer in California. About 60,000 people.  The card had a 500 dollars limit (About 5000$ nowadays). The "Fresnel Drop"

II), the inconvience.
In old days, you pulled out card, the shop assistant had to phone up the bank and check to a teller to get transaction approved.
Now, new technology makes the process of spending more painless. The magnetic strip which was used on CIA ID card in the early 1960s makes it in this way: swipe a card in a shop,  the massage is sent to the bank, then the visa network computer, then your bank, and approved. The whole digital thumb-up process only needs a few seconds.

So anyone could tap into the network of trust that once only for upstanding members of tight-knit community.

It's a huge culture shift.
You can spend and spend on anything and roll the debt over again and again until you are willing to pay at your own convience. And the 20~30% more for the interest rate.

Such effortless, impersonal credit on tap might be doing strange things to our psychology.
A experiment done by MIT aimed to show whether credit card makes us more relex to spend money.
Two groups of people to be in an auction to bid sport tickets. One group was only allowed to pay by cash; The other the credit card. Eventually, the credit card group bid substantially more, two times more.

In some places, cash has become obsolete.  In Sweden,  only 20% cash in department stores, when it comes to total spending, it's only 1% by value.

Credit card used widely can help us manage money. The risk is it makes easy to spend money that we don't necessarily have.
Rotating credit that distinctive feature of credit card is now around 860b in U.S., about 2500 per adult, almost 400 folds in 50 years.
It makes the household debts the equivalent to sugar rush. It's good for growth in short term, but bad in 3~5 years horizon as well as making banking crisis more easier.

Nine out of ten credit card holders agree that it's too much credit for most people. But when we don't trust each other to wield the powerful financial tool responsibly, we do trust ourselves.