Danny Crichton

I just finished reading this short interview with Cullen Roche, who has some out-of-mainstream views on current monetary economics. One of his major points concerns the importance of heterodox economics to the current discussion about the global financial system: "Many of the heterodox economists are overlooked though some take extreme political positions which explains why the mainstream shuns them."

This is an unfortunate state of affairs. Most economics departments are still filled with professors trained in the neoclassical economic approach to the economy, which is by far the reigning paradigm in the field. The rigorous exclusion of alternative theorists in economics is, in my humble view, one of the major reasons that few predicted the financial developments of the last year. The only area where some have gotten through is in behavioral economics, although even this sub-field certainly takes neoclassical economics as its core paradigm.

Unfortunately, economics, like venture capital and finance, is an imprecise science. There are techniques and tools that allow us to reduce complex phenomenon into its constituent parts, but it can be difficult to understand the interaction of these different variables. Economics is less mathematical in real life, and far more human. People follow others, get excited, get depressed, and just do irrational things. Unfortunately, I feel that we are going the wrong direction in academic disciplines of guaranteeing a plurality of intellectual viewports.

One of the advantages that Silicon Valley has over other innovation regions is the sheer number of start-ups that are in existence. We have an amazing level of diversity in almost every space, and if a particular approach is not around, entrepreneurs have an opportunity to fill it and potentially have a lucrative exit. In fact, some of the most important corporations here developed from doing something the opposite of

The Christian Science Monitor has an article today on innovation at Samsung in light of the decision in the Apple/Samsung patent case. The newspaper reports that there are increasing calls for Samsung to ditch its fast-follow strategy in lieu for in-house innovation:

Samsung should “stop fighting it,” says James Rooney, chairman and CEO of the Seoul advisory firm Market Force. “It’s time to stop copying others. Samsung would be far better advised not to fight it. To continue fighting it is to give themselves a bad name.”

Despite the massive repercussions that could arise from these rulings, I find this patent litigation tedious and rather boring. These cases always end up being extremely technical, and are usually better windows into the American legal system than any notion of innovation. For instance, there has been controversy that the jury moved too quickly to make a judgment and ignored significant evidence.

My personal prediction has been that Apple and Samsung will settle the case after the judgment, and that was echoed in the CSM article as well:

“They clearly have an enduring relationship,” says Morris. In the end, he believes, Samsung should pay to license Apple intellectual property. “Appeals will be difficult,” he says. “I doubt if they can overturn the outcome.”

This is a logical outcome, but it would be a shame if Samsung failed to take the message of these proceedings to heart. Internal innovation is ultimately more lucrative - the company can sell better products to more customers and build mindshare among consumers as a leading innovative company. To do that though, the company is going to have to adapt, and it so far has shown little willingness to do so.

Let's get philosophical for a second. What is reality? This is an on-going area of debate, dealing with human perception, reasoning and verification. When we see something, is it just us, or is it in the "real world"? Since none of us can inhabit another's mind, it is impossible for us to truly understand what another person perceives.

Today, there are increasingly visible fragmented realities. Different people can have radically dissimilar notions of the world, from science to personal values. This has been true forever -- in the 1500s for instance, members of the Aztec civilization had different realities than Europeans did. Yet, there was little interaction between these disparate groups, and these realities rarely clashed (of course, they eventually would, leading to the history of colonialism and imperialism of the past few centuries).

Due to the power of the internet and mass media, there has been a blending of realities to create a sort of global norm, while simultaneously, there has been a strengthening of alternative realities. Pop culture from Hollywood is blasted throughout the world building connections between cultures and their underlying realities. At times, the power of this global culture can seem inescapable -- there are even KFCs in Mecca these days.

Yet, some realities seem to be hunkering down, fighting off this global synchronization. We got to witness this dynamic the past weekend with the comments from Congressman Akin in Missouri regarding "legitimate rape." That phrase, while deeply disturbing, was hardly the worst part of his language. Akin also intimated his view that women have the ability to willingly abort fetuses on a lark. That is his reality.

There continue to be different realities in this country, but generally, they are compatible with each other. Different religions, ethnicities, and politics generally get

I have now added a new theme for mobile. If you are using an iPhone or Android phone, you should be automatically converted to a far more pleasing single-column layout. If there are any issues, please send me an email.

In the last few years, there has been a growing criticism of the high cost and low impact of contemporary higher education. On the micro-level, individuals like Peter Thiel have devoted significant resources to creating alternative pathways to traditional higher education institutions, while on the macro-level, there is stronger oversight by Congress and politicians regarding the value of education today.

On a holistic level, the idea that "everyone should go to college" doesn't make sense. This simplistic refrain fails to consider the individual needs of a diverse population, as well as the actual economic needs of the marketplace. While education most certainly should not be reserved for elites, the logical opposite is not necessarily better.

All this debate about costs though has raised the question: how should you think about investing in further education? Some emphasize elements like quality of living/career, happiness or personal interest as reasons to continue being educated, but economists take a much more utilitarian approach to the question. Instead of focusing on soft qualities, economists (using the Human Capital model) remove the distinction between a financial investment and further education. In other words, the same thought process that guides our decisions with regards to stocks or bonds, for instance, should also be applied to higher education. In summary, we should use the present value of all future gains on income and compare this to the total economic cost of further education.

This process though has some peculiarities, and is the subject of this post.

The Model

What is the cost of further education? This simple question is actually quite complex to answer, so let's start simply and go from there.

The basic human capital model for education is as follows. The cost of education is the price of tuition plus the opportunity cost

Last year, I was working at Google on Google+, and the outlook was grim. There were scores of editorials and blog posts discussing the imminent downfall of the search giant. The issue revolved around "social" -- and the anti-social nature of Google's technology. Google was going to fall to other search engines and Facebook or Quora as people started asking their friends for searches. Furthermore, without social data, Google's search engine wouldn't provide the personalized recommendations that consumers would soon demand, making Google's vaunted search algorithms useless.

Fast-forward to today. The doom is now directed toward Facebook over the issue of monetization. This week, Facebook and particularly Zynga were hammered for failing to meet market expectations, begetting a whole new debate over the actual utility of social.

These ebbs and flows in news coverage, particularly in tech journalism, are commonplace. But, in this case, careful PR management of Google was just as much to blame as the vanities of the press.

The high water mark for the coming Google apocalypse came on March 22, 2012 in a lengthy Gizmodo piece by Matt Honan called "The Case Against Google." In it, he takes the company to task for the kerfuffles related to privacy, and also zeroed in on Google's social problem. This piece generated a lot of attention, and the mainstream press began writing similar pieces as well. The coming death of Google seemed almost imminent.

Yet, less than two weeks later, the narrative would suddenly change on April 4 with the public unveiling of Google's Project Glass, their take on the classic imagined design of the augmented reality glasses. The announcement created a press storm and excitement like nothing that Google had really done in some time, capturing the imagination of readers in a way that

Policymakers across the world desperately desire to increase the levels of entrepreneurship within their borders. Whether it is the United States increasing funds for STEM education in the Educate to Innovate program, the extensive programs for new business formation in South Korea, or building one of the most well-endowed science and technology universities in Saudi Arabia (KAUST), governments are putting new venture formation, entrepreneurs, and science and technology on an ever greater pedestal. They are the panacea to all of our economic problems.

Despite the grand visions of politicians, few policymakers have successfully guided their economies to reach this entrepreneurial target. Saudi Arabia is hardly a paragon of innovation today, despite KAUST's existence for the past few years. The Research Triangle in North Carolina, while not a failure, has never reached its full potential to become a major innovation hub. Today, the only region that looks promising is New York City, where a start-up ecosystem has grown in the ashes of the Wall Street financial collapse and the city government is devoting significant resources to grow and sustain a technical workforce.

Why is it so difficult to build these kinds of regions? I can think of a couple of answers:

• Policymakers aren't entrepreneurs.
  This not only means that it is difficult to build good policies, but it also means that the implementation of the policies can be extraordinarily hard as well.
• Policy often lacks focus.
  I don't believe that building an entrepreneurial region is hard, but what is your price? It's not just about money here, but also attention and time. Are you willing to change every policy (labor law, patents, taxes, etc.) to support such an environment, or do such changes get mired in politics?
• Policy often lacks geographic focus.
  Most entrepreneurship happens in very well-defined regions. In the

I have just finished my research grant in South Korea and returned to the United States. Hopefully, my blog will be updated more extensively in the weeks to come as I begin my professional life again here.

There are a couple of things to look forward to in the next few weeks here:

1. I am currently drafting a (relatively) comprehensive report on the state of Korea's innovation policy. This report, rather than taking the feel of a OECD Country Report, will instead look at people's impressions and feelings based on my interviews in South Korea. Numbers can only take you so far in understanding why people start companies and build innovative enterprises. Psychology, arguably, is more important, and this report will have much to say about the current environment for Korean entrepreneurialism.
2. I will be posting my undergraduate thesis online about the history of Stanford's Computer Science department and the rise of Silicon Valley. I am currently converting the thesis from LaTeX into HTML (retaining all footnotes) and adding in an introduction and executive summary.

Thanks for reading this blog. If you have ideas for stories I should write about, you can always get in touch with me at danny.crichton@gmail.com.