The “Sputnik Moment” for research

Noah Smith writes:

U.S. prosperity depends on something called local multipliers. This means that stuff that we export brings in revenue from other countries, that then gets spread around the country via various service industries. In a 2010 paper, economist Enrico Moretti attempted to quantify this effect, and found the following:
[F]or each additional job in manufacturing in a given city, 1.6 jobs are created in the nontradable sector in the same city. As the number of workers and the equilibrium wage increase in a city, the demand for local goods and services increases. This effect is significantly larger for skilled jobs, because they command higher earnings. Adding one additional skilled job in the tradable sector generates 2.5 jobs in local goods and services. The corresponding figure for unskilled jobs is one. The multiplier also varies across industries. Industry-specific multipliers indicate that high tech industries have the largest multiplier.

This is an interesting perspective. I prefer to track these “parallel” resources because they offer insights into the probable long term direction of the technology industry. There is a general wariness into consumer tracking, for example, with a counter push from the regulators.

Venture Capitalists are punters, with “short-term bets”. Software (or services) don’t create anything substantial, except for paper wealth and “unicorn valuations”. They merely feed into created ecosystems. For example, do we need “cloud computing”? It gives an unparalleled insight into your code to your potential competitor and it doesn’t matter how much the cloud service providers pinky swear your data is safe. These issues get muddled when multiple geographies are involved – each one having differential data retention laws.

Coming back to the VC’s. Besides paper wealth, they also create significant hot air and hype. It is essential to have drumbeats for the “new sector” and ingenious people using the PR machinery to showcase their “acqui-hires” but it also leads to attrition and wasted efforts to create meaningful long-term infrastructure.

Let the VC’s invest in factories and create manufacturing behemoths. That requires nurturing and understanding of consumer mindset. The only people who benefit from Google’s rampant monopolisation are lawyers and lobbyists.

The Sputnik moment for research, in the pandemic era requires a recalibration of what we want to achieve. The end goal is not duplication or hair splitting of statistics. It should be creation of something meaningful.