Wednesday, June 14, 2006

Usenet as an Information source: Example

Recently, on the Usenet group rec.arts.sf.fandom, someone posted a detailed account of the history of a GM electric car called the EV1, produced in the 90's and then abandoned; the account was based on the poster having seen a preview of a documentary. The obvious implication of the account was that the car had been suppressed by a conspiracy between GM and Chevron, although GM's motive for suppressing it was left rather vague. I was suspicious of the account, which fitted better into the political ideology that the poster seemed to have than into my view of how the world works, but didn't know enough to judge if my suspicion was justified.

Today, there was a response—by someone who worked for the division of GM that produced the car. The response debunked essentially all of the original post, in detail. A few samples:

General Motors lost two billion dollars on the project, and lost money on every single EV1 produced. The leases didn't even cover the costs of servicing them.

The range of 130 miles is bogus. None of them ever achieved that under normal driving conditions. Running the air conditioning or heater could halve that range. Even running the headlights reduced it by 10%.

Minimum recharge time was two hours using special charging stations that except for fleet use didn't exist. The effective recharge time, using the equipment that could be installed in a lessee's garage, was eight hours. ...

NiMH batteries that had lasted up to three years in testing were failing after six months in service. There was no way to keep them from overheating without doubling the size of the battery pack. Lead-acid batteries were superior to NiMH in actual daily use.

It struck me as a wonderful example of a point I made in an earlier post—how useful Usenet is as a source of information. Once you find a newsgroup with a reasonable number of smart people having diverse positions, you get to watch both sides of an argument, for free, and end up with a reasonable idea of what the best case is that can be made for each.

And, of course, the thread is still going, so we get to watch and see if there is a persuasive rebuttal to the rebuttal.


At 3:10 PM, June 14, 2006, Anonymous Matt said...

I'm curious why you think Chevron wouldn't want to suppress a technology that made economic sense as a competitor to the gasoline engine. Chevron has lots of long-term investments in things like pumping contracts and pipelines and oil platforms at so forth, and if the demand for gasoline were to decrease then they'd expect to see the value of those assets fall. All else being equal, don't they have an incentive to try to see to it that that doesn't happen?

At 4:18 PM, June 14, 2006, Blogger Glen said...

Speaking of usenet as an information source, you might want to respond to this. Some arguments never end, apparently...

At 6:24 PM, June 14, 2006, Anonymous Tom Courtney said...

I'm curious why you think Chevron wouldn't want to suppress a technology that made economic sense as a competitor to the gasoline engine.

I don't want to put words in David's mouth, but depending on the make-up of Chevron, it may be in their interests for prices to be low. If oil becomes expensive enough, it becomes profitable to extract expensive oil (like from shale), which Chevron doesn't necessarily have rights to. If Chevron judges that the current price gives it a better market position than an increased price would because of more entrants into the marketplace, then trying to suppress the technology would be a mistake.

Furthermore, having an incentive isn't enough. The problem is that making a deal with GM won't cut it - they need one with Ford, Toyota, Honda, Volkswagon, etc.

At 6:33 PM, June 14, 2006, Anonymous Šimun said...

As far as communication channels go, Usenet is probably the most efficient. That's what I like about it.

However, I think that the system still hasn't "peaked". There is redundancy, noise and the problem of shifting subjects and losing focus in prolonged discussions.

For example, usually a reply responds to several points in the original article. It would make sense to separate them into new subthreads, but people almost never do it. This little effort would improve readability tremendously!

Then there are other tweaks and methods, from better graphics to collaborative filtering.

Efficiency doesn't matter much for low traffic recreational groups, but I'm having in mind heavy use, like politics, where it is obviously paramount.

At 6:56 PM, June 14, 2006, Anonymous Matt said...

If oil becomes expensive enough, it becomes profitable to extract expensive oil (like from shale), which Chevron doesn't necessarily have rights to.

But that doesn't matter to Chevron: Would you rather own N barrels of oil in a world where there are few other sellers and the price is low, or in a world where there are many other sellers and the price is high?

Furthermore, having an incentive isn't enough. The problem is that making a deal with GM won't cut it - they need one with Ford, Toyota, Honda, Volkswagon, etc.

Right: I don't see any argument that car makers have a plausible incentive. But David also mentioned that he doesn't think Chevron has an incentive, and I'm curious why that is.

At 7:12 PM, June 14, 2006, Anonymous Anonymous said...

Some topic-specific forums allow "karma points" which people can award to one another if a post helps them. From introspection I know I tend to get really wrapped up in earning these ethereal points, and provided more thoughtful replies because of them. Even better (methinks) is when knowledgable parties have an added financial incentive to correct one another's misapprehensions and generally provide useful knowledge, as in Robin Hanson's idea futures market proposal.


At 7:21 PM, June 14, 2006, Blogger David Friedman said...

The reason I don't find the Chevron argument convincing is that it depends on Chevron having control over the alternative technology--in this case a particular sort of battery. But if they have control over that, they can make more money licensing it than suppressing it.

Consider a much simpler case. I can produce gasoline for $2 a gallon, and make lots of money because it costs everyone else $3, which is the current price. I have a technology which will let cars run on water, using no gasoline at all. The amount customers will pay me to license that technology is $3/gallon times current consumption, since that's what they will save. But that has to be much more than my profit, which is only $1/gallon and only on my fraction of the market.

This is a more complicated case, but the same basic logic should apply. I imagine with enough ingenuity one could set up a situation where it would pay to suppress the technology, perhaps because price discrimination was much harder with the new tech than the old or something similar, but it would require some work and isn't the natural result one would expect.

I believe I discuss an analogous simple case--lightbulbs that last ten times as long as the old ones--in _Price Theory_ and probably also in_Hidden Order_.

At 12:22 AM, June 15, 2006, Anonymous Tom Courtney said...

But that doesn't matter to Chevron: Would you rather own N barrels of oil in a world where there are few other sellers and the price is low, or in a world where there are many other sellers and the price is high?

As a general rule, Chevron doesn't get that choice - it pumps the oil it can sell at a profit now, which means it doesn't have cheaply extractable oil for the higher priced days later. Now it might be an advantage for Chevron to be able to sell that oil sooner rather than later, but I would think that by the time we get to the point where we're extracting shale oil profitably, the Big Oil companies won't have cheap oil to pump anymore, and the new situation will depend on comparative advantage of the different options left.

Now of course, in the conspiracy scenario, that might be the time to introduce the suppressed technology.

But yes, really, David's answer is much more compelling - the idea that a cheaper-to-fuel vehicle would end up making more money for Chevron is better.

At 5:22 AM, June 15, 2006, Blogger markm said...

Sometimes companies do make stupid decisions, which might include attempts to suppress new technology that might compete with their existing cash cow. I can think of an example, not of suppression, but of neglect: IBM invented the PC and pushed it enthusiastically until their mainframe people noticed that it had the potential of cutting into the market for 6 and 7 figure computers. After that, the PC division still grew, but far more slowly than it should have, and far more slowly than its competitors in the PC market. The result is that IBM slipped from being the dominant computer company from about 1955-1985 to now being just one of many.

However, one company making a stupid decision is one thing. When an entire industry including at least a dozen independent companies all make the same decision, there's bound to be a good reason for it. If electric cars were practical and profitable with a large market, at least one carmaker would be going after those profits. Instead, I think that the last time electric cars were profitable was the early 1920's - when the gasoline-powered competition was started by hand-cranking, and also required continuous maintenance. At that time, electrics could be sold to little old ladies on the grounds that, although they didn't go very fast or very far, all you had to do was turn the key... As soon as that became true of gas engines, the electrics were doomed.

At 6:39 AM, June 15, 2006, Blogger Marco said...

About the Mises Institute post, I'm afraid I was partly responsible, since I was one of those who quoted the old usenet discussion on their blog.
A couple of weeks ago someone posted an article in praise of Adam Smith on the occasion of the anniversary of Smith's baptism (June 5). Someone pointed out that such a glowing portrait of Adam Smith violated the Gospel according to Saint Rothbard, so the post was followed by one called The Muddled Waters of Adam Smith's Life. Here we learned that

Smith was "an 'infirm and sickly' child, as an adult he was a champion hypochondriac who collected medical tracts, and could be heard murmuring to himself, 'a day in bed - a day in bed.'

Interestingly, a reader pointed out that back in 1998 an article was published on the Quarterly Journal of Austrian Economics which also criticised Rothbard's analysis of Smith. Something like it would probably not be published today, since Rothbard appears to have become become such a cult figure for "Austrians".

At 3:06 PM, June 15, 2006, Anonymous Anonymous said...

I have a gripe about Usenet as a discussion medium: cross-posting. This "feature" turns out to be a major flaw in practice, since it facilitates trolling.

At 11:08 AM, June 16, 2006, Anonymous Anonymous said...

Speaking of usenet, I only recently entered its world and I feel... well, amazed to having discovered it.

But I still dont feel like I'm using it the best way I could, so I seek your advice: Which is the most practical/comfortable way according to you of following usenet? Google Groups, a mail client like Outlook Express, a newsreader like Agent?

Any recommendation would be higly appreciated :-)


At 12:01 PM, June 16, 2006, Blogger Marco said...

I discovered Usenet in the olden days before the WWW. Back then most people used text only newsreaders like tin or rtin. Then my favourite became the Dejanews website, which was later taken over by Google. Now I always use Google Groups.
I wonder if Usenet has a future or if it will be replaced eventually by "private" groups and boards. Some of the most general Usenet groups became unreadable in recent years due to the high volume of spam (for example most of the soc.culture.*) however the more specialistic ones are still fun to read. The problem with moderated groups is that there is no mechanism to reward good moderators and punish bad ones. If a group is badly moderated it's not easy to exploit this by creating an alternative group with the same visibility.

At 5:16 PM, June 16, 2006, Blogger David Friedman said...

Anonymous asks my opinion on using Usenet.

I use MT-Newswatcher, which is one of a family of free newsreaders for the Mac. I find it easier and more convenient than Google.

On the other hand, I use Google to find posts, including old posts of mine, and post from it when I want to respond to what I find. The disadvantage of using a newsreader is that posts disappear from my ISP's news server fairly quickly, whereas Google keeps them.

At 6:01 PM, June 17, 2006, Blogger ChinaLawBlog said...

Great post. I too never believed the story because it made no sense, but I particularly love your comment about how it would have to include Honda, etc. Capitalism certainly has its flaws, but under it good money making ventures are rarely quashed because of [fill in the blank].

At 12:25 PM, November 10, 2006, Anonymous Anonymous said...

Nice to see people doing some constructive criticism, which I don't believe our leaders know how to grasp. Well the media dropped the ball on who killed the electric car, so this movie needed to be created and I feel it jumpstarted the creative juices flowing. I also feel that with our technology and the technology they say we don't have?? GM could solve the battery and range problems. We as Americans need to get back to thinking for ourselves as well as solving problems "we are problem solvers." I'm no economist, but hasn't GM and American auto makers been losing money for some time now?? Make me a 100,000 mile car like Toyota and I might buy American cars.


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