Thursday, October 30, 2014

Graph of the Week

(The Hamilton Project)

Does Engineering Services Have a Cost Disease?

This would be an interesting question for an economics/engineering management graduate student to look at.  From Wikipedia on the notion of the service sector "infected" with a cost disease:

Baumol's cost disease (also known as the Baumol Effect) is a phenomenon described by William J. Baumol and William G. Bowen in the 1960s.[1] It involves a rise of salaries in jobs that have experienced no increase of labor productivity in response to rising salaries in other jobs which did experience such labor productivity growth. This seemingly goes against the theory in classical economics that wages are closely tied to labor productivity changes.

The rise of wages in jobs without productivity gains is caused by the requirement to compete for employees with jobs that did experience gains and hence can naturally pay higher salaries, just as classical economics predicts. For instance, if the retail sector pays its managers 19th century style salaries, the managers may decide to quit and get a job at an automobile factory where salaries are commensurate to high labor productivity. Hence, managers' salaries are increased not due to labor productivity increases in the retail sector, but rather due to productivity and wage increases in other industries.

The original study was conducted for the performing arts sector.[1] Baumol and Bowen pointed out that the same number of musicians is needed to play a Beethoven string quartet today as was needed in the 19th century; that is, the productivity of classical music performance has not increased. On the other hand, real wages of musicians (as well as in all other professions) have increased greatly since the 19th century.

In a range of businesses, such as the car manufacturing sector and the retail sector, workers are continually getting more productive due to technological innovations to their tools and equipment. In contrast, in some labor-intensive sectors that rely heavily on human interaction or activities, such as nursing, education, or the performing arts there is little or no growth in productivity over time. As with the string quartet example, it takes nurses the same amount of time to change a bandage, or college professors the same amount of time to mark an essay, in 2006 as it did in 1966. This is because those types of activities rely on the movements of the human body, which cannot be engineered to perform more quickly, accurately or efficiently in the same way that a machine, such as a computer, can.

Baumol's cost disease is often used to describe consequences of the lack of growth in productivity in the quaternary sector of the economy and public services such as public hospitals and state colleges. Since many public administration activities are heavily labor-intensive there is little growth in productivity over time because productivity gains come essentially from a better capital technology.

Tuesday, October 28, 2014

Management Quote of the Day



From SF Giants General Manager Brian Sabean in a New York Times article by Tyler Kepner - A Giant Among Giants:

"I never really understood, till you do this a while - and this is my 18th year - that when you think it's getting easier, it's actually getting harder to do the job.  Because you're always trying to do something bigger and better. You're always trying to reinvent yourself, reinvent the organization.  It keeps you fresh."

A Pragmatic Approach to Climate Change Engineering

From the Houston-Galveston Area Council: Foresight Panel on Environmental Effects and their list of specific recommendations (Link to the report):
  1. Use historical climate record and credible climate change projections in planning.
  2. Enhance coordination of evacuation plans and communications systems.
  3. Review and strengthen mutual aid agreements to improve intergovernmental coordination and cooperation.
  4. Adopt and implement water conservation plans.
  5. Utilize tree plantings and green roofs for shading, energy conservation and stormwater detention.
  6. Develop heat wave management plans.
  7. Use alternative paving products.
  8. Enhance shoreline erosion management.
  9. Prepare for increase in wildfires.
  10. Prepare for increased illnesses.
  11. Implement stricter emission controls.
  12. Advocate hurricane resistant building standards as the minimum building code standard for new construction in high risk areas.
  13. Avoid new development in areas particularly vulnerable to flooding.
  14. Avoid construction in areas subject to sea level rise.
  15. Preserve wetland and riparian zones.
  16. Implement regional wastewater treatment.
  17. Implement gray water reuse.
  18. Advocate green building standard region wide.
  19. Build compact communities.
  20. Build livable centers.
  21. Consider appropriateness of different modes of transportation.
  22. Consider a longer term view of infrastructure needs than as planned today.
  23. Creation of financial mechanisms,
  24. COGs should assist legislators.
  25. H-GAC should assist local governments with climate change planning.

Monday, October 27, 2014

Infrastructure Asset Management and Art

True innovation is about connecting with ideas from other areas and industries.  The world of art and museums is morphing digitally in ways that would be useful to asset management.  Both art and asset management have a common thread - both are about physical spaces, but with virtual help they could become much more.  Augmented Reality will impact both art and asset management very quickly.

From the Brown Institute for Media Innovation:

Art++ (2014-15)


Meaning Augmenting Art with Technology, Art++ aims to improve the experience of visitors in a museum gallery by proposing a new way of delivering information to them. Using augmented reality, Art++ will offer viewers an immersive and interactive learning experience by overlaying content directly on the objects through the viewfinder of a smartphone or tablet device. The Art++ team consists of Jean-Baptiste Boin, a PhD candidate in electrical engineering at Stanford University, and Colleen Stockmann, assistant curator for special projects at the Cantor Arts Center at Stanford University.


Walking Dead Line of the Night

"Pretty people taste better."