Category Archives: Science & Technology

Who Were the Puerto Rico 3,000; How Did They Die?

The death rate per 10,000 rises after Hurricane Maria a year ago, but more in line with historical trends before a “displacement adjustment.” Source: George Washington University

So, who were those 3,000 Puerto Ricans who died because of Hurricane Maria last year?  What killed them?  The storm down south and the controversy swirling over our illustrious President’s defensive tweet sent me searching for data.

It turns out there is no list of names.   There is no accounting of what causes of death were attributable to the aftermath of the devastating storm.  In fact, having now scanned the George Washington University report at the heart of this all, I have an itching feeling they missed a big statistical point.

The bottom line is that the researchers developed a model and made a projected estimate of the number of deaths to be expected on the island during the six months following the storm, based on previous year’s death numbers.   They then factored in the fact that a full 8 percent of the population, 280,000 people roughly, left the island following the storm.

With that population change factored in, the “expected” number of deaths was about 3,000 fewer than the 16,000 deaths which were recorded September through February.  Those 3,000 “excess” deaths above the projection are the one’s being attributed to the effects of the storm.  I’m rounding because their report admits the projection is not exact.  The chart I included above notes the higher death rate per 10,000 people.

There are not 3,000 death certificates noting hurricane-related causes (loss of electricity, stress, poor transportation response) and the authors chide the local medical community for not being sufficiently exact in filling out their death certificates.  So they are left with models and projections and estimates, which have translated into MSM-accepted Truth.

Here’s my question, the itch not addressed in the report, that I saw:   Who left?  Who departed following the storm?  Would the elderly, infirm and impoverished have been the ones to decamp to the mainland?  Or would they have been the one’s left behind?  Doesn’t the shift in the baseline also at least in part explain this?  The death rate really only jumped dramatically when you reduce the baseline population.

Had those people who left stayed, the number of deaths might have been the same (and then more in line with past history.)  Are they assuming mortality should have gone down after the migration but didn’t, and that’s a sign the storm continued to kill 500 more per month?

We estimate that in mid-September 2017 there were 3,327,917 inhabitants and in mid-February 2018 there were 3,048,173 inhabitants of Puerto Rico, representing a population reduction by approximately 8%. We factored this into the migration “displacement scenario” and compared it with a “census scenario,” which assumed no displacement from migration in the hurricane’s aftermath. We found that, historically, mortality slowly decreased until August 2017, and that rates increased for the period of September 2017 through February 2018, with the most dramatic increase shown in the displacement scenario accounting for post-hurricane migration (emphasis added).”

No question, the number of deaths from this kind of disaster is not – and never has been – limited to the people killed at the height of the storm.  But are the numbers being fudged here just a bit?  You must consider who could and would leave and who could not, and the population left behind.  But that takes away this wonderful cudgel for beating Trump (and it’s his own damn fault for taking the bait).

Gee, if you take a population and subtract 8 percent – most of them younger, healthy and affluent – is there anyplace in the world where you would NOT see an uptick in the death rate among those left behind?  Just asking.

AI – Nirvana or Apocalypse (for Virginia)?

Smells like tech spirit – Artificial Intelligence may be on its way to becoming the buzziest buzz-term in the buzzword laden history of the buzz-o-sphere.  No prior trend has engendered the societal debate that AI has sparked.  Scientistsbillionairespoliticianspoetspriestsbutchersbakers and candlestick makers have all gotten into the game.  Ok, the candlestick maker reference was hogwash but give that industry time … something will come up.  Everybody has an opinion and the opinions are “all over the map”.  Artificial intelligence will either be the recreation of Eden on Earth (without the troublesome snakes and apples) or the kind of zombie apocalypse that gives zombies nightmares.  Either way. it seems clear that AI will have a profound effect on how we live, work and play in Virginia.

“I’m sorry Dave, I’m afraid I can’t do that.”   Concerns about computers getting too big for their britches go back a long way.  Generation after generation had their fears of computer overlords generally mucking things up.  The average American Baby Boomer first learned the perils of artificial intelligence in 1968 from HAL of 2001: A Space Odyssey fame.  Thirty three years later everybody laughed when 2001 came and went without any psychotic computers in evidence (give or take the Apple Newton).  But here we are 17 years later and there are some very serious people with some very serious concerns.  Why did concerns about AI go from the realm of entertainment to a serious debate about the start of nirvana vs the end of mankind?

The winter of their discontent.  AI has gone through a series of boom and bust cycles over the decades from the hype of the 1970s and 80s to the last of the so-called AI winters from about 1990 through 2011.  In some ways the public’s fascination with AI elevated the highs and made the lows all that much lower.  In 1981 Japan’s MITI funded the Fifth Generation Computer Systems project with $850M.  The ambitious program would build a new generation of computers designed for AI along with the AI software needed to make the dream come true.  An impressive list of goals was drawn up.  Ten years later the goals had not been met.  Twenty, even thirty years later many of the goals from 1981 were still elusive.  Then, in 2011, came one of those bizarre occurrences that sort of change everything.

Your answer must be in the form of a question.  In January 2011 IBM’s AI platform, named Watson, played Jeopardy! against the two best human Jeopardy! players in history and beat them soundly.  The AI winter was over.  In reality, AI research had been going on at IBM and elsewhere during the so-called AI winter but the Jeopardy! contest reawakened the public’s fascination with AI.  AI research was often called something other than AI during the AI winter because of the stigma AI had developed.  Kind of like the way liberals now call themselves progressives.  There were neural networks, expert systems, knowledge engineering, etc.  However, it was AI.  The Watson Jeopardy! match put AI back in the public’s imagination and it’s been “off to the races” ever since.

The Last Question.  Google followed IBM with a more impressive AI demonstration.  In 2016, using its Deep Mind AI platform, Google defeated the reigning human Go master.  Go is a 3,000 year old Chinese board game that has been notoriously hard for AI platforms to successfully play due to the mind-boggling number of possible moves.  These advances, and many more, explain why the debate over AI and the future of mankind has reached such a fever pitch.  It appears that this time … AI is finally real.

Come out Virginia.  Don’t let ’em wait.  You backward states start much too late.  Ok, apologies to Billy Joel but Virginia has a long history of denying the present and ignoring the future.  In a world where Russian bots already stand accused of meddling in American elections Virginia needs a frank discussion regarding the escalating capabilities of automation and AI.  Will bots affect the 2019 Virginia elections?  How will automation impact Virginia’s economy?  Was it coincidence that Steve Haner’s by-line started appearing on BaconsRebellion about the same time that AI-powered bots began posting on social media?

— Don Rippert

Quincy Patterson – Welcome to Virginia (Tech)!

Photo Credit: Bleacher Report

Windy City Blues. The City of Chicago has been much maligned of late, mostly for its high murder rate but also (I suspect) for its loudly liberal mayor – Rahm Emanuel.  Emanuel is a favorite target of conservatives. The per capita rate of murder in Chicago is high but far from the highest in the nation. That dishonor belongs to St Louis. Some find it easy to dismiss Chicago as a place of hopelessness, losing its population (true),  in a state teetering on the verge of bankruptcy (maybe). I know a different Chicago. The City that Works. From Oak Street Beach to the Shedd Aquarium, from Rush Street to the Miracle Mile, Chicago is a fine American city full of fine Americans. Hell, the Cubs even won the World Series. But this is not the story of Chicago but of one remarkable Chicagoan, Quincy Patterson, who will soon be coming to The Old Dominion.

The City of Broad Shoulders. Quincy Patterson certainly has broad shoulders. At age 17 he’s 6’4” tall and weighs 230 pounds. He can reputedly throw a football almost 80 yards. All of this made him a four-star quarterback recruit wooed by colleges and universities across the nation. But he chose us, or more precisely, he chose Virginia Tech. So what? Good high school quarterbacks are not all that noteworthy and Virginia Tech has a long tradition of playing top tier college football. Why is this young man’s story worth telling? The answer: Four point four from an Academy school.

Four point four. That’s not his 40 yard dash time (although it might be close), it’s Quincy Patterson’s Grade Point Average (GPA) on a 4 point scale. He achieved that stratospheric GPA by taking a slew of AP courses at Eric Solorio Academy High School, a public high school located in the Gage Park area of Chicago. During one noteworthy semester of his junior year Quincy achieved the staggering GPA of 4.7. He also scored an impressive 680 on his math SAT. While I assume Mr. Patterson has aspirations to lead the Hokies to gridiron glory or to play in the NFL that’s not what he was talking about last February. He was talking about his passion for engineering, the major he will pursue at Virginia Tech.

I’d like to thank the academy. The Academy for Urban School Leadership (AUSL) is a Chicago non-profit school management organization founded 17 years ago. It manages 32 public schools in Chicago including Quincy Patterson’s alma mater. Beyond educating fine young people like Mr. Patterson the AUSL also operates the Chicago Teacher Residency Program, a yearlong urban teacher-training program. The paid training program provides the teacher-to-be with preparation, a teacher’s license and a master’s degree. In return, the teacher commits to teach in one of the AUSL managed schools for at least four years. Since its inception over 850 teachers have graduated from the program.

Observations and Implications. First, Virginia Tech will probably be an even better football team over the next few years. Second, Virginia Tech should be congratulated for staying focused on academics and engineering along with football while recruiting Quincy Patterson. Patterson had a number of fine schools on his final list including UNC, NC State and Illinois. Patterson says it was the focus on engineering and academics that made the difference for him. Third, the public-private alliance that spawned the AUSL in Chicago bears further study for possible applicability in Virginia. A future column will deal with the details of that program along with commentary from supporters and critics.

Nobody’s perfect. In an interview with the Pilot Online Quincy Patterson said, “I went on a road trip and got to see Virginia and Virginia Tech in the one day.” Ugh! And he chose Tech?!? Quincy, Quincy, Quincy … transfers are always available. Mr Patterson, if you happen to read this drop me a line. I know a great place for an authentic Chicago dog, let’s talk about Virginia universities! Until then, welcome and good luck.

— Don Rippert

Coming to a Military Near You: Robots, Drones and Artificial Intelligence

Paul Scharre, director of the Technology and National Security Program at the Center for a New American Security.

On Sept. 26, 1983, Lieutenant Colonel Stanislav Petrov was on duty in bunker Serpukhov-15 outside Moscow when sirens began blaring and a red backlit screen flashed a warning. The Soviet Union’s new Oko satellite-early warning system had detected what appeared to be an intercontinental ballistic missile launch from the United States. Then another. Then three more. It appeared that the Soviet Union was under nuclear attack. But Petrov was uncertain. A surprise attack by only five ICBMs made no sense. He called ground-based radar operators for confirmation. The ground radars detected nothing. Going with his gut, Petrov concluded that the new system had malfunctioned. He now didn’t launch a counter strike.

As it turned out, Petrov was right. Sunlight reflecting off cloud tops had triggered a false alarm. Thanks to one man’s intuition, nuclear war was averted, said Paul Scharre, author of “Army of None: Autonomous Weapons and the Future of War,” in a speech at Saint Stephen’s Episcopal church last night.

What would a machine have done in his place, Scharre asked. It would have done whatever it was programmed to do — even if it meant the destruction of the world.

Robots enhanced by artificial intelligence are coming on fast. We can see the technology in driverless cars, in the algorithms that drive stock market trading, and in weapons deployed by armed forces around the world. Some 16 countries now have armed drones. The Islamic State has weaponized machines that cost $300 retail. On a grander scale, the United States recently launched its first robotic submarine killer, which at $30 million a pop are a lot cheaper to build and operate than $2 billion destroyers.

There doesn’t seem to be any halting the rush toward using robots and AI to enhance our military, said Scharre. In the long run, they’re cheaper. Robots don’t need health care, they don’t ask for pensions, and their morale doesn’t suffer from continual overseas deployments. Also in war, as in finance, speed is crucial. Machines working on a faster decision-making curve will beat slower machines — and humans.

Computers can pound grand masters at chess and even beat humans at the infinitely more complex game of Go. Designers know how to program robots to abide by strict rules so they always obey the law. That’s great when situations are clear and predictable. But no one has figured out how to imbue technology with the kind of intuition that Stanislav Petrov displayed when he questioned the Oko system, Scharre said. No one has figured out how to imbue robots with the ability to make moral decisions in situations of conflict and ambiguity.

These moral issues are of more than remote interest to Virginians. Elected representatives such as U.S. Senator Mark Warner and former Governor Terry McAuliffe are enthusiastic proponents of developing autonomous vehicles and drones as an economic development strategy. The Old Dominion also is home to armed forces that will deploy AI-enhanced technologies — and home to some of the tech companies that write the code for Artificial Intelligence.

Despite misgivings, the U.S. has little choice but to pursue the technologies behind autonomous vehicles and weapons systems. Other countries are working on them, Scharre warns. China aspires to becoming the world leader in AI. If we fall behind in the race, we risk losing our military primacy.

Preserving the global balance of power, averting nuclear catastrophe, and probing the existential angst of robots are fine and dandy, but what about us? I mean, what’s the impact on Virginia? I asked Scharre, who resides in Northern Virginia, what an “Army of None” would mean for the military presence in the Old Dominion.

It turns out that “Army of None” makes a clever title for a book but is a bit of a misnomer. If there’s one thing that the U.S. Army and the Marines have learned from their long campaigns in Afghanistan and Iraq, it’s that they need manpower to fight insurgencies. While technology can make American soldiers more effective, they can’t substitute for boots on the ground.

Conversely, Scharre said, the Navy and Air Force are the branches of the armed services that have the most to gain from automation. The Navy doesn’t care how many men and women it takes to run a warship. Actually, the fewer the better — highly automated vessels mean less payroll, less pension cost, less deployment fatigue and more money for new weapons systems. By this logic, if the Navy aggressively adopts autonomous systems, the long-run outlook could be a much smaller (though higher tech) Navy payroll in Hampton Roads.

How about the tooth-to-tail ratio? The U.S. Defense Department famously has as many civilian employees today as combatants, the consequence of massive bureaucratization. Is there any hope, I asked, of replacing administrative drones with AI-enhanced drones? Scharre was noncommittal. It might be possible to use AI to improve the efficiency of business processes, just as it is in the private sector, he suggested. But don’t look for a massive displacement of excess admirals and generals, much less a wholesale riffing of mid-level functionaries.

Robots, it seems, do not yet constitute a constituency that can lobby for the advancement and preservation of their interests. Career employees in Northern Virginia’s defense bureaucracy are safe for now.

21st Century Wealth Creation: block.one

Dan Larimer. Photo credit: Roanoke Times

Nine years ago Dan Larimer was broke, living with his parents, driving a 2001 Nissan Altima, and recovering from a messy divorce. Today Forbes magazine estimates his net worth at $600 million. The source of the 35-year-old Virginia Tech graduate’s fortune? Crypto-currency.

As the Roanoke Times‘ Jacob Dimmit tells the story, when Larimer was down and out, he managed to scrape up $20 to purchase 400 bitcoins. Today, those coins are worth about $4 million.

But a fortuitous purchase of bitcoin isn’t what made him one of Virginia’s wealthiest people. Fascinated by crypto-currencies, Larimer began creating his own. He launched his first crypto-currency, BitShares, in 2014. The value of all BitShares now exceeds $400 million. Then he launched Steemit, the first social network to operate on a blockchain. That currency now has a market cap of $600 million.

Now Larimer is working on his latest and greatest project, block.one, which he hopes will outdo bitcoin. Block.one’s coin, EOS, already ranks as the ninth largest cryptocurrency by market value, worth $4 billion. And he’s barely gotten started.

Block.one is headquartered in the Cayman Islands to avoid government taxes and oversight, but the engineering office is in Blacksburg. The company is self-funding, selling a digital token that operates similarly to bitcoin. The plan is to develop software and applications on top of the blockchain technology upon which bitcoin and other crypto-currencies are based.

As the Roanoke Times describes it: “Block.one will create software that it releases into the public for free. Developers will use those tools to create their own applications that run on their own blockchains, much like the way Bill Gates and Microsoft created the Windows operating system for all sorts of personal computers.” It’s not clear from the article how Block.one is supposed to make a profit, but, hey, there’s a lot I don’t get about the technology.

“Chronicling wealth is a big part of what we do,” Jeff Kauflin, co-author of the Forbes Richest People in Crypto-Currency list, told the Roanoke Times. “Crypto is a legitimate asset class now. There’s a lot of wealth that’s been created based on it, hundreds of billions. We at Forbes think it should be treated as a legitimate asset class.”

Clearly, Larimer is a genius. With the encouragement of his father, a defense contractor, he began writing software on a Macintosh II as a fifth-grader. When he exhausted all of the Advance Placement computer science classes during his junior year in high school, he just taught himself. When he started at Virginia Tech, he tested out of three semesters of coursework.

A turn towards libertarian thinking. In Blacksburg, Larimer got married, had children, and then got divorced. He and his ex crafted a deal under arbitration. The courts overturned parts of the deal, leaving him feel cheated. “That was my first experience with the government not respecting arbitration,” he said said. “I view violence as a shortcut to governance. So I made it my mission in life to find free market solutions to securing life, liberty, property and justice for all.”

Larimer said he believes cryptocurrencies, and the blockchain technology that power them, can provide fairer solutions to all sorts of societal woes. Currency is the beginning, but Larimer said the technology has the potential to reach much further.

No one company or government controls the software, so authority is decentralized. It’s based on computer algorithms, so the subjectivity is removed from the equation. A contract agreed to by two parties, whether it’s the transfer of a bitcoin or a separation agreement, is set in stone and cannot be relitigated.

“Right now in the current system, I have no way to know if that’s your car,” Larimer said. “I have to go ask the government. And if there’s a dispute between us, I have to go ask the government. The government will decide and they may or may not honor our contract.”

In the future, Larimer imagines, vehicle registrations will be stored in a blockchain, or a public ledger containing the information on every vehicle transaction to ever occur.

A block will be created when a vehicle rolls off the assembly line, then another when it’s sold at a dealership. When that owner decides to sell the car on Craigslist, they accept payment and in exchange add another block transferring ownership yet again.

If there’s an argument years later about who owns the vehicle, anyone can look back at the public ledger, called the blockchain, track the chain of blocks back to the manufacturer and determine the rightful owner.

This would be a vehicle registration system that would give unprecedented transparency, where deals could never be undone and the government would be completely uninvolved.

Bacon’s bottom line: We live in strange and unsettled times. I cannot begin to fathom how information-age alchemists can conjure up billions of dollars from the ether through the creation of crypto-currencies. Such digital prestidigitation seems to nullify all the axioms and maxims for slow-and-steady wealth accumulation that I grew up with. I can’t begin to imagine the creative destruction that crypto-currencies and blockchain will unleash, and I have no ability to augur who the winners and losers will be, much less how to preserve the modest wealth that I have accumulated. If you’re on the wealth-creating end, it must be an exhilarating time. If you’re on the sidelines, it’s most disconcerting.

I will say this: If crypto-currencies and blockchains are going to transform the world, I’d like to see one of the epicenters of change arising in Blacksburg. If Block.one turns out to be the next Microsoft, Apple, Google, or Amazon, I’m glad that Virginians will see some benefit from it.

This Bitcoin Mania Is out of Control

If you don’t understand how to mine bitcoin, try reading this Wall Street Journal graphic. You still won’t understand, but at least you’ll have tried. (Click for larger image.)

If people want to invest in bitcoin, or invent competing cryptocurrencies, or dedicate their computers to “mining” bitcoin by solving computationally difficult puzzles, well, it’s a free country and they can do what they want. As a political-policy commentator, I would never advocate banning such endeavors. As a social commentator, I am moved to ask, are these people out of their minds? What a socially useless activity.

As a economic-development commentator,  however, I must cheer the initiative of Frederick Grede, Michael Adolphe, and other principals of Bcause, a company that aspires to become the largest bitcoin mining operation in North America. The Virginia Beach-based company has raised $5 million in funding led by Japanese financial-services firm SBI Holdings and plans to raise more.

A Wall Street Journal article today describes how Michael Poteat, an engineering student at Old Dominion University, started mining bitcoin four months ago. He purchased 20 “mining rigs,” computers that solve complex equations to generate new coins. The 20-year-old kept tripping the circuit breaker in his house, and he struggled to find a place to accommodate his operations. “It’s just difficult as an individual to handle all the logistics,” he says.

Then Poteat came across Bcause, which provides the infrastructure, security, and electricity to enable large-scale bitcoin mining.  The WSJ elaborates:

Bitcoin miners are rewarded with new coins and transaction fees for performing the calculations that make the bitcoin network tick. The more valuable a bitcoin is, the greater the incentive to start mining. But the more miners who participate, the more computations are needed to earn rewards.

The process can be expensive and cumbersome, requiring specialized hardware and large amounts of power. Such challenges have long prompted miners to share space and resources. Now, companies that harbor mining equipment are fielding more requests than ever. …

Bcause is one of the firms that have sprung up to cater to aspiring bitcoin miners. In an old beverage warehouse in Virginia Beach, the start up is running thousands of rigs for clients from the U.S. to Asia. … Bcause has contracts with clients to house about 60,000 mining rigs and will serve retail clients by renting out spare machines, a process known as “cloud mining.” It has about 5,000 machines up and running, and plans to outfit another site in eastern Pennsylvania.

The profitability of mining bitcoin hinges on the cost of buying the mining rigs — the Antminer S9 is the most popular — electricity, and, of course, the price of bitcoin. Right now, despite a recent slide, the price is still high by historical standards, and bitcoin mining is said to be “insanely profitable.”

As a hosting service, Bcause says it is insulated from price volatility because it doesn’t invest in the mining equipment or the cryptocurrency itself. However, it does plan to build out a one-stop shop for trading bitcoin, including a clearinghouse, and derivatives exchanges.

I confess: I don’t get it. I don’t understand what bitcoin is good for, other than as a vehicle for maniacal speculation. I don’t understand how bitcoin mining works. Maybe there is some social utility from all this fevered activity, but maybe we’re just bystanders to the 21st tech-economy answer to the 17th-century Dutch tulip bulb mania. Will bitcoin become the Next Big Thing, like the Internet, that will revolutionize commercial transactions and transform our lives? I don’t know. Will it crash and burn? I don’t know.

Peter Diamandis, serial tech entrepreneur and founder of the X Prize Foundation, spoke at the Richmond Forum earlier this month. He made the case that technological change is accelerating, driven by the geometric increase in computational power and the growing capabilities of Artificial Intelligence. A colleague of Ray Kurzweil, the author who coined the phrase, “The Singularity,” Diamandis said that technology is rapidly approaching escape velocity in which change will no longer be in human hands. So, yeah, it won’t be long before the robots take over.

Curse you, bitcoin!

In a world in which all the rules are changing, how do we know what to do? Will our skills and knowledge be worth anything a decade or two? What will happen to our pension funds and personal investments as half the companies in any given portfolio is disrupted and rendered worthless? Will there be any work to do, or will robots do it all for us? Will there be any purpose or meaning to human existence?

UVa Snags $27.5 Million Computer Research Grant

Kevin Skadron

Thanks to a $27.5 million grant from the Semiconductor Research Corp., the University of Virginia’s Department of Computer Science is tackling one of the most pressing problems in computer science and engineering — the so-called “memory wall,” reports the Daily Progress.

As health care, science and technology systems grow more and more data-intensive and analytics become more sophisticated, current computer systems are unable to feed data to the processor fast enough, wasting time and energy. That gap between needed power and ability, first articulated by UVa professor emeritus William Wulf and graduate student Sally McKee, is often called the “memory wall.”

The 20 faculty members on Skadron’s team will investigate how to rebuild the entire computer processing system, from better memory chips and wiring to new software that can process complex and fragmented problems. They are focusing on several specific areas of application, including advanced genomics, new cancer biomarkers and predictive home health care.

“The volume of data here, as well as the ways that we have to mine it, are basically impossible to work with in today’s systems,” Skadron said. “But if we can make that tractable, we can help do things like diagnose cancer patients.”

From an economic development perspective, the grant sounds like unalloyed good news. Kevin Skadron, chairman of the computer science department, says that he expects the university will garner some intellectual property rights from the research, providing funding for more research and innovation at the university. Who knows, perhaps UVa’s computer science school will form the nucleus of a Charlottesville-based innovation ecosystem that spins off new enterprises and highly paid private-sector jobs.

The program also could contribute to Virginia’s workforce development. According to a university press release, the center will create opportunities for undergraduate students to get involved in research as well as internships with companies that are program sponsors. Tens of thousands of IT jobs in Virginia are going unfilled, and this program conceivably could increase the supply of qualified workers (although it’s not clear if Ph.D.s with expertise in computer design match up with the skills demanded by Virginia’s IT companies).

Before we get too excited, it’s also worthwhile asking, “Who’s paying for all this?” As the Daily Progress notes, “Over the past few years, UVa’s School of Engineering & Applied Sciences has been pouring investment into cyber infrastructure.”

In other words, UVa had to make a big investment to get the computer-science program to the point where it could attract the “memory wall” research grant. How big of an investment? The Daily Progress did not think to ask, and UVa apparently did not volunteer a number. Moreover, there is the matter of overhead. Research contracts typically allocate a negotiated percentage of the grant to cover overhead such as lab space, computers, the labor-intensive grant-application apparatus, and general administration. It would be useful to know how much this research grant pays for, and whether it fully covers all costs.

In recent posts, Bacon’s Rebellion has asked to what extend university R&D programs are subsidized by undergraduate tuition. Interestingly, the new Center for Research in Intelligent Storage and Processing in Memory, or CRISP, will fund positions for about 100 Ph.D. students. One might infer from the wording of the press release that the graduate-student positions will be fully funded by outside money. If that inference is correct, perhaps we can likewise assume that graduate student stipends are not being subsidized by undergraduate tuition. But we don’t know for sure until someone asks.

UVa and Virginia’s other research universities are not accustomed to much oversight of their research programs. Research institutions have been free to pursue their dreams of R&D glory by running monies through an accounting black box. Meanwhile, state policy is to foster university research, even to support it with General Fund dollars, in the name of economic development, so no one in state government is asking questions. 

The Daily Progress reporter didn’t ask where the money is coming from, what investments UVa made to reach the point where it qualified for the grant, and what ongoing obligations it might incur that aren’t covered by the grant. That’s no slight on the reporter — until a few months ago, I would have assumed that the grant meant, “Whoopee! Free money!” Indeed, I still don’t pretend to know how the system works. But I am going up the learning curve, and I’ll keep asking questions.

When Virginia Universities Fund their Own Research, Where Does the Money Come From?

In the previous blog post, Reed Fawell makes the argument that America’s research universities are subsidizing their R&D programs to the tune of some $18 billion a year. The subsidies, which are especially high among public universities, contribute significantly to cost pressures that drive up undergraduate tuition. There is significant variability among universities and higher-ed systems in the fifty states, however. Does the national trend that Reed describes apply to Virginia?

Examine the table below. It breaks down sources of 2016 R&D spending for Virginia’s six leading research universities as well as the total for all U.S. universities. The column headed “institution” covers funding from university sources — tuition, state support, endowments, and the like. All told, Virginia’s six research universities contributed $478 million toward $1.39 billion in R&D. 

How does that contribution compare to the national average for all universities? The following table tells the tale.

The average “institution” contribution for all U.S. universities is 25% of the total raised for research. Virginia Tech, George Mason University, the College of William & Mary (primarily the Virginia Institute of Marine Science), and Old Dominion University all exceeded the national average by wide margins. The University of Virginia and Virginia Commonwealth University fell short of the national average by small margins. In other words, Reed’s critique does apply to Virginia higher-ed institutions.

Furthermore, his argument that research funded by the universities themselves has increased in recent years applies to Virginia institutions as well. This table compares research funding from all sources (“total”) to funding paid with university resources in 2010 and 2016, a period which saw a surge in institutional funding nationally.

The raw numbers aren’t as meaningful as the change in the numbers. In the following table we see the increases in total funding and institutional funding, both in absolute dollars and expressed as a percentage.

Here the variability between individual institutions is evident. Between 2010 and 2016, ODU slashed its institutional support for R&D by $33 million, or 53%. Not surprisingly, total R&D funding declined by a similar amount, $27 million. William & Mary increased its institutional support modestly, by $1.2 million, or $6.3%, and its total R&D funding increase was likewise modest.

By contrast, Virginia Tech pumped $123 million additional institutional dollars into its research program in just four years, while UVa upped its ante by $69 million, VCU by $27 million, and GMU by $24 million.

Unfortunately, the National Science Foundation doesn’t tell us where these so-called “institution” dollars come from. Tuition increases? State aid? Gifts and endowment? Some other source entirely? We don’t know. If the institutional dollars came from gifts and endowments, students and taxpayers have little cause to complain. If the dollars came from state support or undergraduate tuition, it’s a very different story. But the NSF data is not granular enough to allow us to confirm Reed’s hypothesis — that undergraduate tuition is subsidizing research — for specific universities.

To do that, we need to dig deeper. While the universities do publish a lot more data than the NSF does, the data does not necessarily answer the questions we are asking. I’ll poke around and see what I can come up with.

Does Undergraduate Tuition Subsidize University R&D?

Do Virginia Tech undergrads subsidize this research lab? Or does the lab subsidize undergraduate education? Does anyone really know?

It stands to reason that there should be a rational nexus between the cost of providing a college education and the tuition charged to pay for that education. If the cost goes up, tuition needs to go up as well…. And costs have been going up. Reported per-student educational expenditures at public four-year universities increased 16% from 2005 to 2015 in inflation-adjusted dollars, according to the Daily Caller News Foundation.

But Richard Vedder, director of the Center for College Affordability and Productivity, told the Daily Caller that financial information reported by universities is a “purposeful misrepresentation” of the true cost of educating students. “Universities are fundamentally overstating instructional expenditures and fundamentally understating research expenditures,” he said. Continued the Daily Caller:

Only 27.2 percent of full-time faculty at public universities spent nine or more hours a week instructing students in the classroom in the 2014 academic year, down from 39.4 percent in the 1989 academic year, according to a 2014 survey by the Higher Education Research Institute.

“Research is systematically favored over teaching, so it is not surprising that teaching loads have been falling, or that the time freed up is used for research,” the Center for College Affordability and Productivity wrote in a 2010 report. …

Charles Schwartz, a professor emeritus at the University of California at Berkeley, also believes departmental research has a significant impact on the cost of undergraduate education.

His calculations indicate that the actual cost to educate an undergraduate student in the University of California system is $7,500 per year, far less than the $13,222 in tuition and fees charged to in-state students in 2013-14.

Bacon’s bottom line: If the Vedder/Schwartz critique is correct, undergraduate students are subsidizing university R&D activities to the tune of billions of dollars per year. In the process, they are taking out ever bigger student loans, selling themselves into debt peonage, and stoking one of the nation’s great social crises.

While it very well might be true that undergraduates are subsidizing R&D — there is no question that the highest-paid faculty are teaching less — I don’t know that to be the case. At meetings of the State Council of Higher Education for Virginia (SCHEV), I have heard the opposite argument being made, that university research subsidizes general education. To the extent that federal grants provide funds to cover research “overhead,” there may be truth to that view.

Here in Virginia, we are schizophrenic on the issue. We want our kids to get the best and least expensive undergraduate education possible. At the same time, we look to our research universities to contribute to economic development through R&D and the local jobs and investment that spins off from that R&D.

Here’s the problem: We can’t hope to strike the proper balance if we don’t know who is subsidizing whom. Higher-ed accounting is a specialized discipline and opaque to outsiders. We are fumbling in the dark. We need more information. The higher-ed establishment has no interest in providing that information, which can only lead to unwelcome calls for change. Only the General Assembly can made Virginia colleges and universities cough up the data. But, sadly, most legislators don’t know what they don’t know, and none of the bills submitted to the General Assembly this year (that I’m aware of) are calling for more cost and accounting transparency.

(Hat tip: Ken Cuccinelli)

Blockchain, Data Analytics, and the Future of Energy and Transportation

Blockchain, a digital ledger in which transactions made in cryptocurrencies are recorded chronologically and publicly, is most closely associated in the public mind with BitCoin, a crytocurrency that is undergoing a mania like the 17th-century Dutch tulip crisis. I venture no predictions about the future of BitCoin, but I’m increasingly reading that blockchain has the potential to disrupt all kinds of industries.

One of those, according to this article in Oilprice.com, is the energy sector. By enabling peer-to-peer trading, blockchain is disrupting traditional markets and enabling decentralized networks. That’s particularly promising for renewable energy and distributed energy grids. Writes the author:

Blockchain has the potential to shake up the energy industry in countless ways, but perhaps the most disruptive would be a new, radical level of transparency. A wide-scale adoption of blockchain would create significantly more transparency at all levels. On a grand scale, every time a barrel of oil is bought or sold, it would be documented on a digital ledger, leaving an unprecedented “paper” trail. While the buyers and sellers themselves will remain anonymous, these transactions will be publicly visible like never before.

But before you break out the bubbly and toast the end to fossil fuels, consider this: The same article discusses how oil & gas companies are using data analytics to help drillers move faster, make better decisions, and recover more oil and gas at a fraction of the price.

(Hat tip: Rick Gechter)

Perhaps the bottom line is this: Blockchain, data analytics, the Internet of Things, and other technologies are enabling a new wave of innovation that will make energy — fossil fuels and renewables alike — cheaper. Does anyone remember the goal of achieving energy independence? Well, we’re almost there. The Persian Gulf can kiss my grits!

Some say the U.S. economy has entered a slow-growth era in which there are no transformative technologies to drive invention and productivity to new heights. Building another social media app won’t make a material improvement to our lives. The pessimists might be right about social media apps, but I suspect that’re missing a lot of action in the real world.

What does this mean for public policy in Virginia? When technology is scrambling the economics of the energy industry, we should be careful about making large, long-term investments that run the risk of becoming obsolete. Absent some technology breakthrough, nuclear is not looking like a good way to go. Speaking in broad generalities, the electricity future looks like renewables and natural gas.

I’d issue the same warning for investment in transportation infrastructure. The Uber revolution, driverless cars, and electric vehicles will upend the personal-mobility industry. There is no way to predict with any confidence how it will shake out. All I can say is that we should scrutinize any large public investment in highways and mass transit predicated on the assumption that the driving and commuting patterns of the next 50 years will look like the driving and commuting patterns of the past 50 years.