As a Colonel, John Boyd developed a framework to help train combat fighter pilots that became known as the OODA Loop (for observe, orient, decide, and act). He argued that the key to tactical success in combat is to obscure your intentions from your opponent while you simultaneously clarify and anticipate his intentions. By operating at a faster tempo in rapidly changing conditions, you both inhibit your opponent from adapting or reacting to changes and suppress his awareness of your actions. You cause an opponent to over- or under-react to uncertainty, ambiguity, or confusion. In military parlance, adopted by many technology strategists, you get inside their OODA Loop.

As an example, Barack Obama has been well inside Mitt Romney’s OODA Loop for the past month on issues of gender equality. His statements have frequently caused Romney to react in ways that Obama has clearly anticipated and exploited. But that’s another post. Today’s question is, has Amazon penetrated Apple’s OODA Loop with respect to eBooks? It sure looks like it.

The story begins in 2001, when Amazon observes Apple’s iTunes business model. Amazon CEO Jeff Bezos must have been awed watching Steve Jobs turn digital music, which was free and widely pirated, into a money machine. Jobs integrated a device (iPods), a store (iTunes), and a wholesale deal with music labels for content under which they agreed to let him set the retail price of tracks (it would be $.99). Within a few years, Apple was the world’s largest music retailer and record stores were a distant memory (although a very fond one). Steve Jobs had figured out how to compete with free — the first but not last technology leader to perform this trick.

Amazon copied Apple in building its book market. It built a device (Kindles), tied to its store and it bargained with book publishers for a wholesale deal for content. Like Jobs, Bezos insisted that publishers let him set the retail price, which he targeted at $9.99 per book. It is likely that publishers in some cases set wholesale prices higher than that and Bezos lost money on early book sales, but as the market grew, his pricing power grew with it and the full cost of each eBook declined as well. Bezos knew that when Apple entered the book market late, they would be forced to either a) stick to their traditional wholesale model, where he had a significant first mover advantage, knew more about online retailing, and held a brand advantage (do you really think “book” when you think iTunes?) or b) try to compete by attracting publishers and letting them control the product price. Bezos knew he would win either way.

Bezos also knew that “talent copies, genius steals” did not apply to Steve Jobs, who never copied anybody. He had a pretty good idea that Apple would try to convince publishers to adopt “agency pricing“, which, in contrast to wholesale pricing, gives the publisher the right to set the retail price and pays the retailer a commission. Jobs knew that agency pricing would attract publishers who resented price pressure from Amazon and that publishers backed by Apple would force Amazon to raise ebook prices. But only the largest publishers were strong enough to threaten to withdraw content from Amazon — most stuck with their wholesale pricing deals. Bezos raised prices reluctantly and selectively to keep large publishers from defecting. That’s why some ebooks now cost $14.99 on Amazon, while most cost $9.99.

Better yet, Bezos also knew that the manner of Apple’s entry into the book market looked a lot like price-fixing. Price fixing rarely gets you into trouble when, as in Apple’s music or Amazon’s book terms, you force retail prices lower, but collaborative arrangements that lead to higher prices to consumers frequently incur the wrath of the Department of Justice Antitrust Division. Bezos also understood that Apple could fall afoul of laws against price-fixing, even though Amazon, not Apple, has an effective eBook monopoly. A monopoly is generally not illegal unless you use it to jack up prices.

So what does Amazon do the day the Department of Justice discloses its investigation into Apple’s alleged price fixing? It lowers eBook prices. Apple has an estimated 15% share of the eBook market (courtesy, one suspects, of simple iPad users who don’t know any better). That share is heading nowhere but down under the agency model, which is why Apple should give it up as part of a quick settlement with the DOJ. I would not want to be eBook strategist Eddy Cue at Apple this week.

But Apple’s is not the only OODA loop in Bezos’ crosshairs. He is also deeply inside the heads of publishers, whose cockpits are blaring with enemy radar lock-in sirens — the last sound many fighter pilots ever hear. As he often does, Clay Shirky said it best:

Publishing is not evolving. Publishing is going away. Because the word “publishing” means a cadre of professionals who are taking on the incredible difficulty and complexity and expense of making something public. That’s not a job anymore. That’s a button. There’s a button that says “publish,” and when you press it, it’s done.

Amazon has demonstrated a much greater ability than Apple to observe, orient, decide, and act to dominate the eBook market. This is the second sign of peak Apple in as many weeks and another indication that Jeff Bezos has taken over from Steve Jobs as the reigning strategist of the technology world. That said, eBooks is not the most important market where these two companies will go head to head. That would be payments, because nobody else has 100 million credit cards on file. Bezos should think very hard about this one. Apple owns a big piece of mobile and can be on his tail payments in about 40 seconds.

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Welcome to American colleges and universities, which are both the envy of the world and ripe for disruption. It’s a big business (about $350 billion in the US alone) and a really soft target. It is, after all, run by tenured scholars whose idea of competition is a snarky jibe in the faculty lounge. The dons have allowed their costs to not only rise faster than family incomes, but faster than health care costs, which ain’t easy. That they have lasted this long is due to the monopoly they enjoy on certifying talent. As Kevin Carey noted in a recent New Republic article,

The historic stability of higher education is remarkable. As former University of California President Clark Kerr once observed, the 85 human institutions that have survived in recognizable form for the last 500 years include the Catholic Church, a few Swiss cantons, the Parliaments of Iceland and the Isle of Man, and about 70 universities. The occasional small liberal arts school goes under, and many public universities are suffering budget cuts, but as a rule, colleges are forever.

Small wonder that thousands of startups are now focusing on the market for higher education. Even the guy who discovered disruption, Clayton Christensen, has declared that online technologies will thoroughly disrupt education at all levels, predicting that half of all K-12 classes will be taught online by 2019.

During the past five years, online higher education has gone mainstream. The Sloan Foundation estimates that more 30% of all enrolled college students, some six million people, participated in on-line learning at accredited U.S. colleges and universities in 2011 and that the U.S. market for online higher education grew 12-14 percent annually between 2004-2009.

Many educators are realizing that the explosion of online education not simply due to its lower cost; it is often higher quality as well. Sometimes this is because of dramatically higher investment in course and instructor development. Christensen notes that the largely online University of Phoenix spends about $200 million each year developing online teachers and highlights a key difference with traditional universities: “..Harvard defines research as creating new knowledge, while The University of Phoenix defines it as finding new ways to provide knowledge. It blows the socks off of us in their ability to teach so well.”

Online education is quickly killing the in-class lecture, since recorded lectures have obvious advantages. Students can watch them when they are ready — after they are off work or when the kids are asleep. They can replay the confusing bits or skip the obvious parts. Most important however, is that the lectures themselves are more likely to delivered by world class teachers like Norman Nemrow, whose online accounting course has been taken by several hundred thousand students or by Walter Lewin, the MIT physicist whose lectures are shown on television. Supposedly over five million people have taken his intro to physics course (watch his promo reel below to see why. What? Your professor did not have a promo reel?)

It is not only lectures that fare better online. Instructors in online classes can measure outcomes and tailor the course to the needs of each student. Modern learning management systems provide live seminars with multi-location live video, backchat, social media, and many other capabilities not available in a classroom. Quizzes can be graded instantly so that both faculty and students get feedback fast enough to change course. Algorithms distill questions from thousands of students so that they can be answered either live or off-line. Students can undertake projects online with “classmates” who have never been on the same campus — or even the same country.

This is a time of vast experimentation with online education technologies. Two years ago, the Kahn Academy began to attract huge notice as a self-tutoring tool based on the brief lectures of one talented teacher. A year ago, 2Tor closed a large Series C and got very serious about providing major universities with technology, marketing, and course development assistance. A month ago, Google’s self-driving car maven Sebastian Thrun gave the talk at BLD in Munich that launched Udacity after 160,000 students from around the world completed his Stanford-based online computer science course (268 students achieved perfect scores on all the quizzes). In October, Knewton, an education technology startup, raised $33 million in its 4th round of funding to roll out its adaptive online learning platform. Earlier this year, Apple launched a suite of authoring and course scheduling tools to allow universities to move content to iTunes University. Only yesterday ShowMe launched its 2.0 platform that takes the Kahn Academy model and makes it social — anyone can use the platform to teach anything.

Universities are developing their own online education initiatives, often plagued by a terrifying thought: what if online education is just another form of digital media? They know full well that that as books, movies, and music, moved online, few incumbents survived. In each case:

• Content was disaggregated and mashed. Just as record albums were broken into songs, ringtones, and clips, educational content is unlikely to remain entirely within current disciplines or courses. Literature will not remain separated from history, nor calculus from chemistry. As technology makes it easier to recombine and repurpose courseware, it may become possible for two students to complete the same course without confronting the same content in the same sequence or manner. New forms of learning will produce certifications not limited to degrees, concentrations, or even courses.

• Engagement became social.  Digital movies benefitted Hollywood much less than YouTube and Netflix. It should not surprise us to see more learning become self-paced, socially certified, and delivered outside of colleges and universities. Startups may increase the demand for formal education, but they could also substitute for it just as many of the needs once filled by campus fraternities or alumni associations are now met by online social networks.

• Value shifted from content creators to aggregators. Book publishers and music labels learned that aggregators of content (Amazon and iTunes) hold a lot of cards. Will universities aggregate and distribute high quality educational content regardless of its origin? Or will universities, like film studios, attempt to remain relevant by offering exclusive, premium-priced, high-quality, proprietary content protected through careful online distribution and syndication? Top universities are betting on the Hollywood model, which is not only under sustained attack, but presumes producers who control their IP. Universities, in contrast, rarely limit the ability of their faculty to sell lectures and other courseware to the highest bidder, even though the university paid the professor to produce the content. In no other industry is such theft conceivable — a fact that Udacity will not be the last to exploit.

• The product went global. Books, movies, and music are licensed or sold in tightly controlled, nationally bounded markets, but digital media is naturally global because there are far fewer natural distribution barriers. This means more customers, which is why universities are now lusting after talented and wealthy Indian and Chinese students who are (at the moment anyway) willing to pay US-type tuition for a degree from a globally prestigious institution.

• Prices fell as comparison shopping became easier. It appears that the revenue optimal price for eBooks is between $2 and $5, depending on the author and in some cases the publisher. For songs it is between $1-$2, forcing record labels and publishers to seek entirely different business models to monetize their content. As a result, many of media markets actually shrank as they went online (if you only measure product sales. In music, for example, the market is about the same size, because concerts and merchandise make up for losses in record sales). Once

The response of universities to the rise of online education is like the response of Barnes and Noble to online bookselling. Faced with the rise of Amazon.com in the 1990s, the chain store simply created barnesandnoble.com. When Amazon launched the Kindle, they launched the Nook and merchandised it in their increasingly irrelevant bookstores. But the winner of this contest will of course be the company that is not forced to carry the cost of several hundred bookstores. Open Yale, MIT’s Open Courseware and MITx courses, Stanford’s Massively Open Online Courses including Corsera, and many others like it all share the Barnes and Noble problem: they need to price their offering to pay for extraordinarily high fixed cost institutions. Their disruptors do not.

Barnes and Noble charges customers for a wide range of activities unrelated to book purchases. It designed many of its stores as community centers where authors and  could meet readers. It built fun sections for kids to discover books. It integrated Starbucks in many locations. But books are simply not going to be sold in stores much longer, so these activities added more cost than value and ended up making the problem worse. Likewise, many institutions of higher education support multiple activities with tuition: research, sport, socialization, teaching, and credentialing. Online education exposes the fault lines between these different businesses, just as Amazon did with Barnes and Noble.

• Research. Top schools recruit faculty based on their ability to contribute new knowledge to their field not on their ability to teach. This is terrific for graduate students, who apprentice and occasionally indenture themselves to senior faculty, but suboptimal for undergraduates because the correlation between insightful research and capable undergraduate teaching is somewhere between weak and negative. Once undergraduates can receive a higher quality education at a lower cost by studying online, many will do so. Once Amazon made books cheaper, nobody wanted to pay for those kids play areas — not even people who liked them.

• Sports. That giant sucking sound is money draining from university budgets to support massively wasteful professional sports programs — while managing to abuse college athletes in the process. Intercollegiate sports are fine. Division 1 football and basketball is a scandal — and both universities and the NCAA know it.

• Teaching. Teaching and learning are rapidly becoming another online interactive social media. Some online learning will doubtless be indistinguishable from games. This part of what a university does will be rapidly mashed, commodified, and redistributed, just as books and movies have been. Universities often claim that they make use of these online technologies in “hybrid” classrooms. This is like selling Nooks in bookstores: the customers who buy will never come back.

• Socialization. Residential undergraduate programs deliver to young people a group of peers and the experience of learning independently with them. Some of what the university provides is in loco parentis — a structured environment for 18-22 year olds to transition to self-sufficiency as they learn. The question is how much families will pay for this service. As high quality online education becomes universally available, middle class families will be very tempted to forgo residential colleges for their kids. Now that families cannot enhance their incomes by working longer hours, sending a second adult to work, or borrowing easy money against overvalued homes, families will be willing to cut back on college expenses if it does not compromise the quality of their children’s education.

• Credentialing. Credentials are necessary for employers and future education institutions to distinguish between similar candidates. Many markets with this problem rely on brands or other signaling effects (watch how you select wine next time you are confronted with dozens of plausible choices). University degrees emerged long ago as a critical signal of professional capability independent of what the degree holder knows. Part of this is because of selection effects, as Malcom Gladwell explained some years ago:

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He was right.

Bardacke, a respected labor activist and educator based in Watsonville California, was first mentioned in this blog six years ago in connection with his research on Cesar Chavez. Like Bill Gates and Mark Zuckerberg, he dropped out of Harvard after his freshman year and moved west to change the world. Unlike them, he joined the Berkeley Free Speech Movement and has had an abiding interest in radical politics ever since. In the early 70s, I traveled to China with Bardacke to get a first hand look at Mao’s proletarian dictatorship. Frank admired all things proletarian; I feared the dictators. Bardacke often views the world through a different template than I do, but I have learned a lot from him and continue to have enormous respect for his views.

Bardacke became a farmworker – one of a handful of Anglos and surely the only former Harvard student to work the celery fields. He became fluent in Spanish and formed friendships with many of the union staff and farmworkers who appear in his book. He spent more than a decade interviewing every major participant in the drama, reading every known book on the farmworkers and scouring every archive. He received help in managing this massive project from faculty in history and politics at nearby UC Santa Cruz.

The result, Trampling Out the Vintage: Cesar Chavez and the Two Souls of the United Farmworkers, is the most complete account yet of the rise and fall of the UFW. It is also an epic, Shakespearean drama with all of the elements of a Hollywood blockbuster. The pitch meeting would be surreal:

OK, picture this: we have a conservative Catholic who fasts and marches like he’s Ghandi. He courts progressive clerics and hires liberal Jews and alienated Anglos to mobilize immigrant Mexicans and Philipinos to fight Slavic and Italian growers. At first David slays Goliath, but then he morphs into King Lear and destroys his newly built kingdom amidst slaughter and recrimination. We’ve got side plot romances between devotees who work for $5/week and bad food trying to raise farmworker pay. We’ve got violent Teamster, UFW, and grower thugs straight out of the Sopranos. We’ve got a certifiably batshit human potential guru who wreaks havoc getting everyone to criticize everyone else. And under the carpet here somewhere, we may even have communists trying to advance a proletarian revolution without a proletariat. How can we miss?”

Astonishingly, it is a true story and Bardacke delivers it with intelligence and compassion. Unique among labor historians, he grounds his analysis in “the work itself”, with brilliant, memorable descriptions of how different stages of production for different crops in different regions of California all affect the ability and willingness of different crews to self organize. He describes clearly why organizing was often sustained by the tight-knit, highly skilled lechugeuros or the celery cutters, not the garlic or asparagus workers or those in ladder crops. He describes the skill and endurance that the work requires, introduces leaders that arise from various crews, and captures in fine detail how they interact with a union that was built on a very different set of principles from farm work. In a decade spent organizing waiters, housekeepers, nurses, bartenders, machinists, cannery workers, and assembly workers, I observed precisely these differences. The work itself shapes our propensity to organize. Bardacke is the first writer to apply this principle to the fields and he does so with a deep understanding and compassion for the work.

Bringing an existing union into a workplace is an act of industrial combat not for the faint of heart — but starting a new union from scratch is a herculean task that almost always fails.  I started a company that has lasted more than a decade, a public agency that lasted three years, and a union (United Espresso Workers – I was a bit early) that lasted all of three weeks. With the proud exception of the United Farmworkers, I cannot think of a single independent union formed in the United States in the past 50 years that was not sponsored and controlled by an incumbent union (I can think of several that tried and died – but none who made it).

This was not always true — new unions once spawned regularly in the US. There are many reasons for the change, but the lack of competition between unions has positioned them nicely for extinction. Organizations evolve through the mutation, variation, and selection that is always produced by competition. The labor movement stopped growing the instant the AFL joined with the CIO and prohibited unions from competing with each other. When two teachers unions competed, both grew. The instant the Teamsters stopped raiding the UFW, growth stopped. I hated the Teamsters (who were kicked out of the AFL-CIO for corruption and are not subject to the noncompete provisions) and I took a nasty beating from them once, but like sharks or wolves, they have their place in the ecosystem. (I am aware of no union leader who agrees with this view, by the way. Most feel that they have all the competition they can handle from employers).

But for a brief moment following the civil rights movement in the 1960s, a new labor union arose in the United States and in the least likely place. If you had asked in 1960 where in the economy a new union might appear, you would never have selected the farmworkers of California. Organizers prefer workers who are tied to one place and to one employer, not workers who are seasonal and often itinerant. Probably wrongly, organizers prefer workers who are covered by labor laws, which had always exempted farmworkers. Organizers like English-speaking Americans, not Tagalog or Spanish-speaking immigrants or Braceros who are tolerated for a season then ushered back to Mexico. A dozen or so failed efforts by farmworkers to form agricultural unions seemed to validate Marx and Lenin’s belief that workers would organize once they were forced into factories and worked for a single employer.

Bardacke demonstrates that Cesar Chavez succeeded in organizing farmworkers because he was, at heart, a brilliant and hard-working Alinksy-trained community organizer. As a community organizer, Chavez pioneered an enormous innovation that had the potential to transform labor organizing: he mastered the secondary boycott (illegal for most workers under the federal labor law, which thoughtfully excludes farmworkers). Chavez tirelessly organized enormous boycott operations in grapes, lettuce, and against major retailers including Safeway.

Farmworker boycotts were the Occupy movement of the 70s and 80s – a way for college students, community activists, and middle class young people to participate directly in the tough work of social change. And credit Chavez’s brilliant leadership, it worked magnificently: faced with effective boycotts, growers raised wages and improved working conditions and politicians begged the army of grass-roots Chavistas to help register voters and turn them out on election day. The UFW became a powerful force for social change.

But the UFW was only briefly a powerful labor union. Bardacke correctly diagnoses the boycott as creating a formidable tension within the UFW. He frames the tension between labor and boycott organizing as a struggle between the “two souls” of the UFW. The metaphor is fraught. As Bardacke demonstrates, the UFW collapses not because it has two souls, but because none of its activities were organized, financed, or led in a manner that enable them to grow. The problem is not that community organizing is a distraction – most American labor unions lack a community service organization and are much the weaker for it. This is tragic: having discovered and refined one of the few recent innovations in union organizing, Chavez cannot let it grow. Instead, he strangles his own child.

One of the heros of Bardacke’s book is Marshall Ganz, one of America’s most innovative labor organizers. Ganz also dropped out of Harvard, but moved south to organize for civil rights before heading west. After his exile from the UFW, Ganz helped the Silicon Valley Central Labor Council build a powerful neighborhood-based political organization for the 1984 elections. He was terrific at posing fundamental questions – and at directing me and others to writers and thinkers who helped answer them. In 1984 he urged me to read, of all things, a business book, In Search of Excellence. I quickly developed an appetite for business writing. decided to get trained in it, and ended up working with the book’s authors. Marshall returned to Harvard, got his degree after a 28 year hiatus, and now teaches at the Kennedy School. (His version of the UFW story, told in Why David Sometimes Wins, is a fine companion volume. It suffers for being his PhD dissertation and dwells more deeply on theories of organizing and less on the dynamics of local struggles).

So let’s ask a Marshall Ganz-like question: what does it take for an organization to grow successfully? Venture capitalists, a group not deeply concerned with the welfare of those who produce their salads, obsess about this question. There are at least as many answers as there are VCs, but common elements include:

• A big market. If there is not substantial demand for the product or service an organization produces, the organization cannot get very big.

• Positive unit economics. If serving one more person imposes more cost on the organization than it generates in revenue, then growth makes no economic sense and the organization will depend for growth on funding from charity or government. Anyone can sell a dime for a nickel; selling a nickel for a dime means that an organization has to add at least a nickel’s worth of value if it wants to grow.

• Customer or member acquisition costs that scale. Every organization has a cost of acquiring a customer that must be repaid over the lifetime of that customer or member. Smart organizations exhibit declining COA: the cost of acquiring each incremental customer declines with scale. Very smart organizations (and effective social movements) are viral: COA approaches zero as current participants recruit new ones. See Facebook, Google, or Arab Spring.

• Leadership. Growth is very, very demanding on an organization. Everyone in a fast-growing organization has to grow with it: jobs change radically every few months. Not everyone grows at the same pace, so leaders must recruit furiously, communicate direction and values continually, promote and replace people regularly, and test what works all the time. It is stressful and a lot of fun – ask anyone who has been involved in a fast-growing company, boycott, strike, or organizing campaign.

Back to the fields. Boycotts have completely different economics than labor organizations. Boycotts have huge markets: liberals eager to shop their conscience. Churches and colleges do the recruiting at very low cost to the boycott sponsors. Every convert adds more value (the grapes they don’t buy) than cost (the very low cost of volunteers leafleting).

Unions are different. The market for a membership organization of farmworkers is not small, but it is small enough that the UFW needed to capture almost all of it because, as Bardacke notes, organizing half an industry penalizes the organized growers. A union has a responsibility to organize the remaining growers and will frequently be cheered on quietly by those who have signed. More fundamentally, unions need to grow big enough to achieve minimum economic scale: they cannot fund the fixed cost of their operations if they are too small. Unions with fewer than a half a million members are nearly always too small to operate efficiently across the US (meaning that most unions in the United States waste money because they are too small). The UFW never had 100,000 members — although its field operations were mostly in California. Bardacke would counter that the democratic character of the union matters more than its size, which is true, but creating organizations that are not economically sustainable is a bad idea. Unions do this all the time.

Unions have a second problem, to which Chavez developed a unique but ultimately unworkable solution: the economics of labor organizing are often unattractive. Campaigns, negotiations, and strikes are expensive and uncertain of success. If unions file for elections on half of the campaigns they run, win half of the elections they file on, and negotiate contracts successfully 80 percent of the time, then every successful contract has to finance four unsuccessful campaigns and potentially a strike. If the campaigns and the negotiations are labor intensive and the union bears all of those costs, then the economics of organizing turn heavily on the cost and productivity of staff and on the cost and duration of strikes.

The Chavez solution to this dilemma was simple but utterly unsustainable: pump talented people through the organization. Those of us who worked boycott operations worked 14-16 hour days, often 7 days a week. We were paid $5/week and had to beg for donated food to eat. Once we were burned out, the UFW happily replaced us in a process Chavez once compared with pumping water. At any given time during large boycots, hundreds of young people slaved on the campaigns for months and sometimes years. Staff at headquarters (located in the small misnamed town of La Paz), were likewise furnished with living quarters, food, and a miniscule stipend. Chavez personally approved all expenses. From here, it looks like a cult – although from inside the cult, it looked like La Causa and stands today as some of the best work many of us ever did. Regardless of how it feels or looks however, and regardless of the ethics of exploiting volunteers on behalf of underpaid farmworkers, an organization without a core of talented, motivated leaders simply does not scale. Volunteers are not enough — and finding people like Marshall Ganz and Eliseo Medina to fight year after year for farmworkers without paying them even farmworker wages is simply unrealistic.

Bardacke does not go deeply into union economics in part because there is a much bigger tension restricting growth: a command and control organization. Chavez not only micromanages, but much worse, he prohibits local labor or boycott operations. Centrally led boycott operations could work: boycotts demand a consistent message and negotiations with a single adversary and since allied organizations delivered most of the volunteers with help from a skeletal UFW staff, there were relatively few local issues to resolve. But labor organizations are built in hundreds of unique workplaces. This is in part due to the work itself: the problems of lechugueros are simply not the same as tomato workers or lemon pickers. More important however, is that without elected reps, stewards, and ranch committee members, contract negotiations suffer because strike threats lose credibility. Without a credible strike threat, backed in this case by a credible boycott threat, growers rationally refuse to negotiate. Chavez tried to run the union from the top, like he built and ran the boycott. When George Meany and others derided the UFW as “not a real union”, they were wrong at the level of the fields. But in their description of La Paz, they were right.

Bardacke reveals Cesar Chavez to be a brilliant community organizer who campaigned for farmworkers but did not empower them. Bardacke plots the tragic trajectory of the UFW from an authentic movement led by a charismatic leader to one paralyzed by demoralized staff that could see no way to grow a union beyond the constraints imposed by its increasingly unstable founder. Chavez died afraid of his own organization, which he had shriveled into a family business devoted to nonprofit services, La Raza not La Causa, and promoting the Chavez legacy. The union was all but gone.

Bardacke masters an enormous amount of material to relate these events skillfully. He salts his prose with stories and characters straight out of Steinbeck. He rarely leaves the reader guessing about his point of view: Walter Reuther, the brilliant activist who built the United Auto Workers (and marched with Cesar in Delano) is a worthless hack because he voted against seating the Mississippi Freedom Delegation in 1964 and drove communists from the union. Those who cross the US border illegally are noble immigrants deserving of union embrace; those who cross picket lines legally are scabs deserving of UFW tire-slashing and intimidation (but not of UFW efforts to call La Migra and send the illegals among them home). Teamster and grower goons are thugs; Manual Chavez, designated hitter for his nonviolent cousin and other UFW punks are charming rogues who firebomb field sheds and beat their opponents. Those who seek to impose Synanon’s destructive ideology on the UFW are obviously crazy and should be driven from the union; those who seek to advance various communist or nationalist ideologies within the organization are dedicated activists who should be protected. Trampling Out the Vintage is a beautiful work despite these caricatures; it would be even stronger without them. It is a book that deserves a wider distribution and better copy editing than Verso, a niche left publisher, can provide. It would also be nice had Verso published the book electronically (then again, Frank confesses in the postscript that he composed the early chapters of the book on a typewriter!)

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But amidst the carnage, a funny thing happened: the music industry grew larger even though it had fewer labels and far fewer retailers. Revenue from CDs was replaced by revenue from live concerts, ring tones, downloaded singles, merchandise, and sponsorships. The new industry has its challenges (many of them traceable to lousy music), but it has hardly collapsed.

This transformation presages the coming destruction of traditional book publishing and retailing, even as their overall publishing industry grows. Here are the seven reasons that bookstores and traditional book publishers are doomed.

7. Americans have stopped reading books. This is a non-trivial problem (after all, we did not stop listening to music). But the landmark National Endowment for the Arts study “Reading at Risk” confirms what we intuitively know: Americans read less than we used to. 43% of Americans read no books outside of work or school — a number meaningfully lower than Canada or most European countries.

Those who do read books, don’t read many of them. About 24 percent of Americans read eight or more books in 2002, a lower percentage of “strong readers” than two thirds of European countries surveyed. Only 16% of the US population reads a book or more each month. According to Morgan Stanley, 20% of all book buyers purchase a majority of all books. Men read much less than women. NPR reports that among active readers, women typically read nine books in a year, compared with only five for men. Women read more than men in all categories except for history and biography.

When most of us read, we prefer magazines and online articles that are shorter and less demanding than books. Kind of like you are doing right now.

6. Many of the books we read are crap. The largest single book category is still romance novels — a fact so embarrassing to the New York Times and other tastemakers that they exclude the category entirely from best seller lists. These bodice-rippers, together with religion, self-help, fantasy, and thrillers, account for a majority of books sold in the US (Gothic romance, which did not exist before 1972, by itself accounts for a majority of all paperback sales). Nearly all of these sales are to women, but women buy and read a lot more books than men even if you adjust out the Harlequins.

Part of this is, no doubt, that brains exposed to constant media are not well wired for long form reading. We prefer writing that is built around tidy lists…oops. Nice essay to this effect by Alan Jacobs (hey, if you have read this far, you can manage it).

5. We can easily get books for free. Just Google “Torrent” and “Books” along with anything else and you will be directed to many sites that enable you to download books as pdf files easily readable on a tablet or an eReader. The site I checked helps you steal any of several dozen books on religion, most of which presumably counsel the reader against theft.

It is always hard to estimate the economic impact of illicit downloading. I wonder if the net effect isn’t positive, even if authors howl. WordPerfect marketer Pete Peterson had a sensible point when he said that “if someone is going to steal software, I hope they steal ours”. Every illegal download is not a lost sale — but every time a reader finishes a book and raves about it, the marketing leads to new sales. Realizing this, most publishers will let you read the first chapter for free anyway. If we see publishers offering books for free but with advertising, we will know that the torrent sites have struck a nerve.

My current bet is that it won’t happen for the same reason that iTunes curbed illegal music downloading. Customers like the ancillary content and the reliable file quality enough that if the experience is frictionless and the price sensible, we will pay.

4. “Books” are mutating.  Like music and movies, books are becoming a service, not a product. Today Amazon launched its Kindle Lending Library, which turns books into a service like Spotify for music or Netflix for movies. The number of publishers who have embraced this idea? Zero. These guys would rather face the Torrent sites than let Amazon loan their books. But publishers need to monetize their back list. Over time, they will do a deal with Amazon, even if they require Amazon to purchase a new copy after a finite number of rentals. Many publishers require libraries to do that now — and would doubtless oppose libraries as socialist if Ben Franklin hadn’t established libraries before they got organized.

Books have become protean. Sites like Byliner and the Atavist are publishing long form essays by well known authors. This writing is longer than most essays but shorter than a book. Sometimes the pieces are free, sometimes paid, and sometimes, as in the case of a recent piece by author John Krakauer, free for the first 50,000 downloads, then paid. Inkling, a San Francisco startup, takes textbooks and transforms them into socially enabled multimedia iPad apps that end up not looking much like textbooks at all. They have just released The Professional Chef, the bible textbook produced by the Culinary Institute of America. You can buy the book or you can just buy a chapter. It features photos, note sharing between cooks, demonstration videos, etc. Their south of market neighbor,  Blurb, does the opposite: it converts your online blog into a nicely bound book you can give to mom. O’Reilly makes many of its books available by the chapter and lets you join a club to get lifetime book updates and access to community events. EBrary lets academic subscribers read huge online libraries and charges by the page for printing or copying.

3. Robo-books.  I shared a taxi yesterday with a guy who bragged that his wife “cranks out eBooks”. She writes 2-3 books each week the same way some kids write college papers: by stealing content and re-writing enough of it to not get caught. Of course, free market capitalism being the spectacular engine of innovation that it is, some late night huckster even sells Autopilot Kindle Cash that helps “your ten year old kid publish 10 to 20 new Kindle books a day.”

The impact of the resulting spam “books” has been extraordinary. In 2002, about 250,000 books were published in the US; about 15% of these books were self published. By 2010, the number of books had increase thirty times. 3.1 million books were published in the US — about 8,500 “books” per day and 90% of these books were self-published.  In response, Amazon has been forced to “curate” the user experience, meaning that they must try to filter the output of products like Amazon Kindle Cash. If they are wise, they will start charging “authors” $20 to publish their “books”, and deploy the same software that faculty use to detect even clever plagiarists.

Amazon's best selling Single

2. Economics. Amazon has put the publishing industry on notice by hiring respected industry veteran Larry Kirschbaum. In a sly reference to the music industry, Kirshbaum launched Amazon Singles. A single is what it sounds like — a chapter, not a book. It can be an article or an essay, like this terrific one by Hitchens on Bin Laden. In books as with music, you often want just the single, not the entire album.

By promoting authors whose books sell, Amazon has also created self-published millionaires. John Locke and Amanda Hocking are the superheroes of self-publishing. By making millions, they have helped transform self publishing from an industry backwater inhabited by the untouchables to a place where writers no longer share sales with publishers. Importantly, writers price their books and they have become smart about demand elasticity. Locke discovered that his CIA  novels increased twenty fold when he dropped the price from $1.99 to $.99.

“It wasn’t so long ago that an aspiring author would … don a pair of knee pads and assume a supplicating posture in order to beg agents to beg publishers to read their work. And from way on high, the publishers would bestow favor upon this one or that, and those who failed to get the nod were out of the game. No more.”

This trend will affect all publishers. Famous authors will wonder why they share revenue  with publishers. New authors (like Amanda Hocking) will demand enormous advances once they establish a reputation as a successful self-published writer. Because the profitability of the publishing industry turns on the ability of a few popular authors to subsidize the great majority of unprofitable ones, the defection of popular authors is especially threatening.

Publishers and retailers are being badly disintermediated not only because they add too little value, but because they add unnecessary costs. Traditional book retailing is insanely wasteful: at any given time about a quarter of the books are moving backwards in the supply chain because retailers can return product, usually without penalty, to distributors or publishers. I am not aware of any other industry that permits this. These and other costs make printed books more and more more expensive. Price increases, not unit sales, account for nearly all of the “growth” in the sales of traditional books. Trade book prices have risen twice as fast as inflation for more than a decade. Libraries now pay more than $80 per book, in part because library books require specialized processing.

1. Amazon. The number one reason that bookstores will close and publishers will die in large numbers is that Amazon is continuing to take a page from the Apple playbook and create a user experience that is integrated from content development to ecommerce and the device. They are not identical models: we will not see Amazon stores any time soon, nor Apple publishing, but clearly Amazon has learned a lot from Apple.

Indeed one could argue that they learned too well. Walter Isaacson’s asserts in his recent biography of Steve Jobs that Apple won the battle over agency pricing (they let the publisher set the price and took a cut, whereas Amazon set the price as the retailer and paid publishers a commission). In truth, Amazon won and Isaacson got the story wrong. Customers care enormously about price and convenience, as a quick glance at iBooks reveals: it is a wasteland. By combining a preeminent retail experience, offering books as physical, print on demand, or eBooks, featuring buy-back programs and used books, offering Singles, Publishing, and now Libraries, Amazon controls the reading waterfront. They are quickly taking the oxygen out of traditional book retailing and publishing.

When the dust settles, we will see the same thing we saw in music. Spending on what we read will go up with economic growth or a bit faster. But it will go to very different players for very different products than in the past.

Fine. 

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I have always loved printed books. I like discovering them and reading them. I like how they look, feel, and smell. I like rooms filled with books like the reading room of the British Museum or the New York Public Library or the rare book room at Shakespeare’s. I like the cluttered shelves of professor’s offices and books that become like old friends.  (Lawyers offices I like less. Identical leather bound volumes suggest a rigid mind. Doesn’t do it for me). 

If I visit your house, I will head for your public bookshelves. Scanning what you display and claim to read tells me about you. If you visit my house, you will find loaded bookshelves in the bathrooms, the bedrooms, and the basement. To say nothing of the offices.  

I love bookstores. I like discovering books but I also like seeing and smelling that many books. For many years when our kids were little, my wife and I had a babysitter show up every other Saturday night, just so we would get some time together. We were often too tired to plan real dates, so as I backed the car out of the driveway, I’d say “where to?”. We quite often ended up at a bookstore — our idea of a hot Saturday night. 

I started an online book company to support small bookstores and frequently preached the endurance of printed books. “Books have been around for five centuries. We believe in the form factor. If you don’t, you should not invest in this business”. I often joked that only eBook company CEOs actually read eBooks. Until recently, I not only bought more printed books than electronic ones, I also bought more books in stores than online. 

For me, it’s hard to imagine a life without printed books. But each year starting now, paper books will get scarcer, brick and mortar bookstores will become tougher to sustain, and the odds that I learn what you are reading from your shelves diminishes. For my grandkids, printed books will be like old maps: wonderous objects worthy of reverence — but nothing you’d actually use. 

In reporting earnings today, Amazon CEO Jeff Bezos noted that his company had achieved two milestones. Amazon enjoyed its first ten billion dollar quarter (when I entered the online book business in 1997, Amazon sales were about ten million dollars a month — 3 thousand times smaller than today).

More significantly however, was the reason for this growth.

“Kindle (electronic) books have now overtaken paperback books as the most popular format on Amazon.com. Last July we announced that Kindle books had passed hardcovers and predicted that Kindle would surpass paperbacks in the second quarter of this year, so this milestone has come even sooner than we expected.”

Amazon is not the entire economy, of course. Most books are still printed — but the shift to electronic books is accelerating, thanks to exploding sales of readers — especially iPads and Kindles.

As soon as 2013 and certainly by 2015, consumers will buy more electronic books than printed books. Outside of college towns and large cities, music stores disappeared five years ago — even though MP3 players integrated with online stores are only a decade old (the first iPod did not come out until two weeks after 9/11. Full iTunes integration and the acquisition of a lot of music took a bit longer).

As Mary Meeker’s chart from the recent Web 2.0 conference illustrates, iPad, iPod, and iPhone (all workable readers) adoption has been much faster than any technology in history. Faster than browsers and faster than DVDs. And her data exclude Kindles and Nooks.

Unlike music, supply is not a constraint on the growth of this market. Amazon has been patiently building its eBook inventory for years, long before sales could possibly justify it (I seriously doubt that Amazon has yet to see a dollar of profit on eBooks if you measure all eBook costs to date vs all eBook revenues). Whereas music was content constrained for years, books have arguably been device constrained until recently.

No longer: today, Amazon announced that 

“The U.S. Kindle Store now has more than 810,000 books including New Releases and 107 of 112 New York Times Bestsellers. Over 670,000 of these books are $9.99 or less, including 74 New York Times Bestsellers. Millions of free, out-of-copyright, pre-1923 books are also available to read on Kindle.

800,000 books is not every book, by a long shot. But it is almost every popular book and when you add Google books and the Open Content Alliance, the total number of scanned titles surely approaches ten million. Not all of these are available commercially, yet — but most will be within a few years. (Few people read more than a 2-3 thousand books in a lifetime anyway. The average is surely no more than a hundred).

The availability of very high quality reading software built for a variety of platforms is also not a constraint.

“Amazon added to its growing list of “Buy Once, Read Everywhere” Kindle apps, launching a Kindle app for Windows Phone 7. In addition, the Kindle for Android app was updated to enable users to buy, read and sync over 100 Kindle newspapers and magazines. All Kindle apps let customers “Buy Once, Read Everywhere”–on Kindle, Kindle 3G, Kindle DX, iPad, iPod touch, iPhone, Mac, PC, BlackBerry and Android-based devices. All Kindle apps are free and incorporate Amazon’s Whispersync technology, which allows readers to seamlessly switch between devices.

Finally, storage is not a contraint. 

“With Kindle Worry-Free Archive, books purchased from the Kindle Store are automatically backed up online in the Kindle library on Amazon where they can be re-downloaded wirelessly for free, anytime.

Digital reading is becoming so normal that it will soon be hard to find people who do not read digitally. Already, some magazines are not available in print. There will be the usual death throes: publishers will fight retailers over the cost of book returns (a big but not avoidable cost of brick and mortar retailing). These wars will brief and destructive to both sides.

Borders will close its doors this year. Barnes and Noble may remain open only because they will move out of book sales. They seem likely to take up clothing or electronics or gift cards or coffee. Or furniture or typewriters. Or something.

There are winners, of course. Device makers win (Amazon, Apple). Electronic retailers win (Amazon, Apple). Publishers who get out in front win (Smart: Wall St. Journal, Economist. Dumb: New Yorker, New York Times. Hopeless: magazines and book publishers who refuse to release electronic copies).

Books have had a good run. I am going to miss them.

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The article is condensed from Johnson’s forthcoming  Where Good Ideas Come From: The Natural History of Innovation, which describes the conditions under which “ideas have sex” and multiply. He has also released a YouTube video that is both a captivating summary and a brilliant piece of media. Check it out.

To see the longer form of Johnson’s argument, get the book, or check Johnson’s excellent TED lecture, below.

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Winchester majored in geology at Oxford and worked in the field for many years before turning to writing. His 2001 book The Map That Changed the World: William Smith and the Birth of Modern Geology is a fine treatise on a man whose world map revolutionized shipping, energy, religion, and science and inspired a young Charles Darwin as he sailed across the globe. Winchester followed with Krakatoa: The Day the World Exploded in 2003 – the colorful story of the largest volcanic eruption ever recorded. In 2005 he published A Crack in the Edge of the World: America and the Great California Earthquake of 1906. All three books are cogent history, good science, frequently funny, and in the case of the volume on Smith, compelling biography.

Winchester’s pair of books on the Oxford English Dictionary traces the impact of the
remarkable James Murray, effectively the author of the massive OED. The story, published in the US as The Professor and the
Madman, tells the story of Murray and of one of his most prolific
contributors, an American civil war surgeon, Dr. WC Minor, who,
unbeknownst to Murray, was convicted of murder in England and
authored more than ten thousand entries to the OED from his
book-lined cell in the Broadmoor Asylum for the Criminaly Insane. In
2003, Winchester followed this best-seller with The Meaning of
Everything – the Making of the Oxford English Dictionary. The first is
a classic must-read best-seller; I haven’t read the second.

Winchester has now also produced two excellent books on China. In 1996
he attempted to trace the headwaters of the Yangtze and to use his
journey to highlight the hidden history of the Middle Kingdom. The
resulting travel guilde summary of Chinese history, The River at the Center of the World: A Journey Up the
Yangtze, and Back in Chinese Time, was a great read, even if the premise of the book required a bit of upstream paddling If nothing else, the book confirmed Winchester’s gift for finding editors to send him on lovely trips. (National
Geographic commissioned him to visit each of the six major whirlpools
on earth. Nice work if you can get it!)

Just out and a wonderful summer read is The Man Who Loved China: The
Fantastic Story of the Eccentric Scientist Who Unlocked the Mysteries
of the Middle Kingdom — the life of Joseph Needham. Once again,
Winchester writes a definitive biography of an obscure and slightly odd
British scholar in order to tell a fascinating story.

Joseph Needham was a brilliant Cambridge biochemist. To this day he is
the only scientist ever awarded the Order of the Companions of Honour
by the Queen, and  elected by his peers as Fellow of both the Royal
Society and the British Academy. He married Dorothy Mary Moyle Needham,
also an accomplished biochemist, and also a Fellow of the Royal
Society, (they are the only married couple ever elected to this elite
institution of top scientists).

But the world will not remember Joseph Needham for his biochemistry. We
will will remember instead his work in an entirely unrelated field for
which Needham was untrained and uncredentialed. Needham is the author
of one of the most comprehensive and remarkable works of scholarship
ever published — The History of Science and Technology in China. When he
died in 1998, his "book" had become a multi-scholar project that had produced of seventeen volumes all overseen by Needham. It is now twenty-four.
The work has reshaped not only the West’s understanding of China’s
scientific and technological past — but China’s
understanding of its own history as well.

The research is stunning. Needham realized that Chinese scientists and inventors did not just
develop the compass, gunpowder, paper, and printing before the west –
they invented or discovered just about everything else as well,
from vaccines and tree grafting, coinage and hydrology, to deodorant
and toilet paper. The depth and breadth of Chinese
science and technology is utterly extraordinary — as is the mystery as to why the rate of
innovation in the west suddenly surpassed China’s, known today as "the Needham
question". And the discovery would not
likely have been made by an ordinary scientist.

But Needham was neither an ordinary scientist nor an ordinary human. He was a
hopeless polyglot. He prided himself a committed nudist and Morris
dancer (interests that he graciously pursued separately). He was a non-doctrinaire but nonetheless blinkered socialist (Mao Zedong and Chou Enlai happily exploited
Needham’s prestige for their own propoganda on more than one
occassion).

Perhaps most important, he was a man who effectively took two wives –
the distinguished colleague noted earlier and a graduate student named
Lu Gwei-djen, who anchored the remarkably open manage a trois for more
than fifty years. It was Lu who introduced Needham to China, taught him
to read, write, and speak fluent Mandarin, and collaborated with him on
his life’s most important work. Needham married Lu when Dorothy died (he was, after all, a devout Catholic).

During the second World War, Needham was sent by the British Society
and Churchill to give aid and comfort to scientists in "Free China". This gave Needham extraordinary license to travel
throughout any part of China not occupied by Japan. He was based in
Chongqing (today the largest city in China, with a population as big as California) but traveled very widely and under extraordinarily
difficult circumstances. Wherever he went, Needham met with scientists, ordered essential supplies for them from the UK, gathered
on the history of Chinese science and technology, and
shipped crateloads of books and documents back to Cambridge.

After the war, Needham devoted his life to his magnum opus, helped
found UNESCO (he is credited by many with putting the "S" in the UN’s
Educational, Scientific, and Cultural Organization), and somewhat blindly
promoted the Chinese Communist government (on occasion willfully
overlooking evidence of its brutality and economic failure). But his work has been universally acclaimed and seems likely to be consulted as long as the
OED or Smith’s maps for helping us understand that a great deal of the
science and technology that we take for granted came from China, not
the west.

Winchester loves China and clearly identifies with Needham as strongly
as he did James Murray and William Smith. Once again, Winchester’s research is extensive and
carefully documented, his story highly compelling, and his writing first rate. In
the end, I wish he had been able to shed more light on the Needham question — but
it is unfair to expect him to solve a riddle that eluded Joseph Needham
himself.

A fine read — highly recommended.

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But it was the urinals that made the biggest impression. At my first pit stop, I looked down and noticed that an insect had unfortunately chosen to land directly in the target zone. I took aim and was secretly pleased when I scored a direct hit. When the bug did not flinch, I realized that the joke was on me.

The purpose of the ceramic fly was instantly clear – to minimize needless mopping by reminding men to focus their efforts. Baking an insect onto a urinal reportedly reduces the amount of janitorial work required at the airport. Years later, JFK airport awarded the company that designed Schipol the contract to build the new international terminal in New York – so you no longer have to fly to Holland to witness this miracle of sensible design.

I recalled my visit when Richard Thaler and Cass Sunstein cited the strategic placement of ceramic insects as an example of a “nudge” – a low cost incentive to make the right choice. The two men have just published an important, educational, and fun book titled Nudge. If you read Jam Side Down, you are very likely to read this book, not just because I will recommend it so highly but because everyone who reads it will recommend it so highly.

It is rare for a book to really change the way I see things. I have been exposed to enough bad ideas that I am a slightly jaded intellectual grouch. Too few ideas
strike me as genuinely new and fewer still are presented in a provocative enough manner to make you care whether they are new or not.

So when a book re-frames the way I look at, well, almost everything – I
want to scramble to high ground and alert the village. When the authors are scholars who have been to the wilderness and questioned the sacred tenets of their
respective disciplines, the impact is even more revelatory. If you
liked Freakonomics, Predictably Irrational, or The Logic of Life, you
will like Nudge even better – it packs about 50% more insight per page
and the insights matter more. If you follow the blogs or columns of
Tyler Cowen, Thomas Sowell, or Robert Samuelson, you are in for a treat.

The book is full of both ideas and of examples like the ceramic fly
that leave you thinking “why don’t we always do it this way?” The book
is like a naughty dessert – you start it eagerly, savor each bite, and
feel annoyed that it ends sooner than expected since the
good professors were exceedingly generous with their endnotes.

The authors are faculty of the University of Chicago and both distinguished,
long ball scholars. Thaler is world famous for pioneering “behavioral economics” which
studies the influence of social, cognitive, and emotional biases on
economic decisions. The idea that homo econimus makes choices that are
affected by society, emotions, or consistent errors is heresy among
heirs to Milton Friedman and other rational choice stalwarts at the
University of Chicago (although in most respects, Thaler refines
Friedman instead of refuting him). When Daniel Kahneman received the 2002 Nobel Prize in Economics for his work in Prospect Theory, a cousin of Behavioral Economics, he immediately credited Thaler’s fundamental influence on his thinking.

Cass Sunstein is a highly
influential legal scholar with broad interests . Sunstein has written about roughly every legal topic there is,
including the use and misuse of cost/benefit analysis in public policy
decisions, animal rights, gay rights, methods for aggregating
information such as prediction markets and wikis, FDR’s second bill of
rights (which proposed a right to an education, a right to a home, a
right to health care, a right to protection against monopolies, and
more), presidential impeachment (he actively opposed the impeachment of
Clinton), and constitutional law. Sunstein writes for the New Republic
and frequently blogs at the (Eugene) Volokh Conspiracy and at the
(Lawrence) Lessig blog. He is comically prolific. His CV lists
twenty-eight books and more than three hundred articles (and cautions
that it displays only “a very partial listing”).

The authors have intriguing connections to the Obama campaign. Austin
Goolsby is Obama’s lead economic advisor and Thaler’s colleague and
soulmate. Sunstein was on the law faculty when Obama taught there and,
if you believe the Internet, is dating Harvard’s Samantha Powers who
was (wrongly, wrongly, wrongly) fired by Obama for calling Hillary a
“monster”. (Hillary is not a monster. She is a vampire who will not die
– and Powers should have articulated the distinction). The romance could
also be the nudge behind Sunstein’s decision to leave Chicago to become the director of Harvard’s Program on Risk Regulation.

Both men embrace a political philosophy that they term “libertarian
paternalism”. They deeply respect the right of individuals to make
their own (even palpably stupid) choices and would far prefer to see
government guide choices than ban activities.

The philosophy at first appears oxymoronic – “libertarian” being
conservative to the extent that it is laissez faire and “paternalism”
being liberal to the extent that it favors state intervention or protection.
Squaring the tension between these ideas is the task and the beauty of
the book. The central thesis of Nudge is that like it or not, the way
we structure choices creates incentives. Structuring smarter choices
provides people with a nudge (like judge – not noodge, like stooge. A
nudge is a shove in the right direction. A noodge is a wonderful
Yiddish term for someone who nudges too much and becomes a pain the
ass).

The authors argue that whether we want to or not, we architect choices all the
time. They open with a fine example of a school cafeteria that
discovers that it can nudge kids towards better diets by putting
healthy foods at eye level and in front. They assert further that we can use the
emerging science of choice architecture to nudge people to make choices
that are healthy, pro-education, financially intelligent, and
environmentally sound. You don’t ban stupid choices – but you create
non-punitive incentives for good ones (for example, you make organ
donation an opt-out, not an opt-in program. You save tens of thousands
of lives every year and nobody is any worse off for having structured the choice more intelligently). The notion of choice architecture is
the great idea at the heart of the book.

But why do we need to nudge? Well, because we often make choices that
are not in our self interest – especially if the decisions are complex,
infrequent, or make a difference someday instead of now. In these cases, markets fail
because choice fails. Humans (as opposed to the fictional “Econs” that
the authors mock throughout the book) appear to be well-designed to
make simple decisions with immediate consequences such as stepping off
of the curb – although the authors point out that in the more touristed
precincts of London, even that decision benefits from the “Look Right”
nudge on the sidewalk.

Humans (think Homer Simpson, not Econs like Star Trek’s Mr. Spock) think
poorly when the choices are overly complex or can be delayed without
immediate cost (or worst, both). Signing up for a complex
mortgage or not joining a 401k plan is painless today — and who can
really figure out the implication of all of those choices? And don’t even start on
Medicare Part D. In the face of choices like this, even the Finance faculty
turn out to be more Simpson than Spock. Many of us just go on
auto-pilot. The authors argue that a nudge will at least stack the deck
in our favor and reduce the frequency and severity of bad choices.

The authors look at the architecture of a variety of important choices
from savings and investment decisions to the structure of utility
bills. They look at incentives around marriage and issue an eloquent
call for privatizing the institution, in a chapter that could easily
reframe the same sex marriage debate.

A good example of smart choice architecture is the Save More Tomorrow
Plan which Thaler developed in the mid nineties. Instead of asking
employees to save more and reduce their take home pay, a Save More
Tomorrow Plan asks employees to check a box to increase their savings
rate each time they get a raise. Over time, the result is a dramatic
increase in savings as employees commit to save instead of spending
future income. With a nudge, Thaler has turned the human tendency to
procrastinate and defer pain from a vice to a virtue in a manner that
preserves choice (employees can opt-out, although in practice few do)
and has little if any additional administrative cost.

Transparency figures prominently in many of the nudges that the authors
recommend. They urge that credit card companies be required to annually
disclose how much we’ve spent on late fees and interest payments and to
do it online using standardized definitions that permit consumers to
compare the cost of alternative cards (something that is gruesomely
difficult today). They would surely approve of the stickers on major
home appliances that estimate the cost of energy over a five year
period and would favor a similar sticker for cars showing likely fuel
costs. The authors do not explore nudges that involve reduced transparency like the suggestion that making all political contributions anonymous would immediately reduce the ability of contributors to purchase self-interested legislation.

Unfortunately the book stops short of applying
“libertarian paternalism” to more controversial nudges – perhaps
because the authors do not agree on what to do. For example, many
libertarians regard paid sex between freely consenting adults as
harmless. Others believe that prostitution is always degrading and
should be outlawed. Since the authors resist banning much of anything,
this seems like fertile ground for a nudge.

It would be
easy to ask men to voluntarily forswear paying for sex and post their
names on a public website. Men, in their more upstanding moments, would
enroll knowing that un-enrolling takes 15 days (and the tension between
what the authors call the Automatic Mind and the Reflective Mind –
between our inner Homer Simpson and our inner Spock – underlies a great deal of choice
architecture). The local cat house would be legal and regulated, but
prevented under serious penalty from serving any man on the “do not
call” list. Add the ability of anyone (reporters and wives come to mind) to request an email notification in the event that someone asks that their name be removed and a lot of the controversy and hypocrisy that surrounds paid sex would disappear (and yes, the market for fake IDs would explode).

You could imagine a similar nudge for recreational
drugs, which in almost all cases represent poor choices but for which
the cost of prohibition vastly exceeds the social benefits.
The authors are surely aware that libertarian paternalism can
contribute to a better choice architecture in these controversial cases. Since tenure
is a valuable nudge given to ensure that faculty enjoy complete freedom to
explore society’s most challenging and controversial problems, their reluctance to do so suggests either caution bordering on cowardice or, dare we say it, a
failed nudge.

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Metcalfe’s Law is a lesser known but equally powerful law concerning not hardware but the economics of networks (specifically a telecommunications network, but the Law appears to apply more broadly). It says that the value of a network is proportional to the square of the number of users.  A telephone is an easy example: the first one is useless, the second one can call only one other machine, but the millionth one increases however slightly the utility of each of the other machines (assuming they can connect. You have to count Chinese phones as a separate network if you don’t speak Chinese). Plenty of people debate whether Metcalfe (who invented Ethernet and founded 3Com) got the math right, but the principle seems sound and goes a long way to explaining what economists like to call network effects: businesses in which each participant is better off when a new participant joins. This is a topic for another day, but Microsoft, Google, eBay, iTunes, and a lot of other "can’t live without them" businesses have taken powerful advantage of network effects and Metcalfe’s Law underpins a lot of the economics at work.

Even less well known than Metcalfe’s law is what arrogance and alliteration led me some time back to term Manley’s law, which states that all media wants to be digital, downloadable, and free. Like Moore’s or Metcalfe’s theorems, this is a hypothesis that can be falsified: Moore will be proven wrong the day chip density stops increasing, Metcalfe the day that bigger networks are not more valuable, and me the day that media stops becoming digital or freely exchanged. By now you have noticed that Manley’s law is in  some respects a corollary of the other two – I doubt that it would exist except as a by-product of Moore and Metcalfe.

Manley’s Law is having a good run lately. For simplicity, let’s define media as books, movies, and music — although you could apply it to photographs and several other media types. Music digitized first simply because the files are smaller and people want to listen to the same song more often than they want to read the same book or see the same movie. 

MUSIC

Manley’s law hit the music business so fast and that the New York Times referred this week to “the anarchy sweeping the music industry”.

Music became a digital media on August 17, 1982, when ABBA’s The Visitors became the first CD to roll off an assembly line at a Philips factory in Langenhagen Germany. In 25 years, analog vinyl LP albums have been reduced to an audiophile niche and cassettes and 8-tracks have mercifully disappeared altogether.

Five years ago, iTunes made music commercially downloadable and since then, Tower Records, Musicland, Sam Goody and many smaller retailers have disappeared or been absorbed by chain discounters like Wal-Mart and BestBuy.

This week Apple Computer announced that in January iTunes passed Wal-Mart to become the largest music retailer in the United States. CD sales have declined every year since Apple launched iTunes and in recent years CD sales have fallen in double digits each year. In 2006, 38% of US teens did not by a single CD. In 2007, the number was 48%. 

So music became digital and downloadable – but iTunes does not give
music away for free. The company has sold four billion tracks at a buck each, so what about the last part of Manley’s law – that nice bit about media becoming free?

Apple has sold perhaps 130 million iPods (it passed 100 million a year ago). That works out to an average of 33 iTunes tracks for each device.
But iPods hold somewhere between hundreds and thousands of songs, so even if you account for obsolete devices, you have to ask what
people are putting on their iPods if not paid music (or videos) from iTunes?
Answer: they are loading them with free content.

Some of the free content is ripped CDs — and not all of these were paid for (what, after all, are people buying hundreds of blank CDs for, anyway?).

Some free tracks come from MySpace, which according to a Forester analyst now has more than 8 million artists and
bands (and today announced a deal with several music labels to compete with iTunes). iTunes has the largest music catalog in the world with
6 million tracks — so 8 million bands and artists is a really large number. Some of these tracks have never sold a single
copy – but the experience of most long tail media markets is that there are a lot
fewer of these than you might think. Describing the role of MySpace in music, Forester notes that “Acts including Lily Allen,
Sean Kingston, Arctic Monkeys, and Dane Cook were discovered on the
site by users”. (I don’t know most of these artists, although I saw a fast-rising Lily Allen at South by Southwest last year and was
impressed).

P2P file sharing, denounced by the music industry as illegal downloading, continues to grow by double digits each year. Growth may be slowing, but only BigChampagne knows for sure. BigChampagne is a
smart company that has tracked file downloading for years. They sell information about which demographic
groups download what music in different parts of the country. Record companies pay handsomely for the information (thus admitting that sales of CDs and iTunes tracks are a poor indication of what people actually listen to). Record companies use the information to persuade local radio stations to play what is popular. The result is not necessarily more sales — often it just means that more people download the song for free but it really helps plan lucrative concert tours.

Musicians with recording contracts are starting to make their
music available for free – or accept that it is free anyway. Some use
free music to promote concert tours, merchandise, or albums.
Radiohead famously released its album In the Rainbows for direct download and asked people to pay whatever they wanted. About 1.2 million people downloaded the album and some paid. Nine Inch Nails did something similar.

Estimates vary as to how well the Radiohead experiment worked. The high estimates assume
an average price of $8, meaning the band grossed $10 million. The low
estimates assume an average price of $5 with 60% not paying, so the group took in
$2.4 million. Not a flop – but here is the punch line: even though the album was available for free, more than a half million users downloaded free it on a P2P site anyway. Habits are hard to break and free is a tough price point to beat. It turns out that not even free can always compete with free.

MOVIES

Up next: Hollywood. Movies went digital in the 90’s, when DVDs were adopted by consumers faster than any technology in history – DVDs became a majority of movie rentals within five years of its introduction as a consumer product. Note that in each of these markets digital content is not enough — you need a very easy to use device before digital media takes off.

Movies are now widely streamed and downloaded. In January, nearly 79
million viewers, or a third of all online viewers in the U.S., watched
more than three billion user-posted videos on YouTube, according to comScore’s latest report.

Making movies for YouTube has also become much easier with the advent of low cost video cameras like the Flip, which now accounts for 30% of all video camera sales on Amazon.
The little device is a point and shoot videocam that makes recording and
uploading video chimp simple. I am astonished at
the things one can usefully video when shooting becomes this easy.

Commercial films are already available for download at zero marginal cost. Vongo enables
free downloading of studio movies for subscribers, who pay a $10 monthly fee. BitTorrent hosts and clients distribute thousands of
licensed and unlicensed movies in a manner that is not economically different from P2P sharing of music files, although the underlying technology is improved. With iTunes video and cable pay per view offerings also increasing, will movie rental stores follow music stores into oblivion? Yes, they will – and fairly soon. This is why Blockbuster is trying to figure out an online streaming or download strategy. Your neighborhood DVD rental store is toast.

The film industry hopes that the move to Blu-ray Discs (which has now prevailed in the HD
format wars, much as DVD and VHS did before them) will enable stronger cryptography to prevent free sharing of movies. Blu-ray employ
several layers of digital rights management using a standard developed
by a consortium that includes Disney, Intel, Microsoft, Matsushita
(Panasonic), Warner Bros., IBM, Toshiba and Sony. Nonetheless, since it appeared in
devices in 2006, hackers have successfully broken the lock several times. It may be technically possible to encrypt a movie in a manner
than cannot be hacked, but in a war between movie studio
technologists and thousands of smart 17 year olds with too much time on
their hands, history is on the side of the teenagers.

BOOKS

Books will be the last media to go digital for a couple of reasons. First, consumers like the analog form factor. Books are portable, shareable, resalable, and don’€™t require batteries. They
have an emotional impact that only analog media delivers. Books sit on a shelf like Dumbledore’s Pensieve — evoking memories and old friends. You can browse them in
stores in a way that is still hard to duplicate on line.

That said, eBooks have advantages. They are searchable — which matters to researchers, students,  technicians, and search engines that help users discover content. They can be delivered wirelessly, instantly, and cheaply. They are obviously portable.

More fundamentally, analog books are not a great business. Most books lose money for a set of reasons that are very well known. It starts with economically delusional publishers who pay advances to authors that they do not recover in sales. 

Books turn out to be expensive to print, transport, and store.  Booksellers have an almost unrestricted right to return books to distributors –“ a right given to
no other retailer that I am aware of. As a result, 25% of all books in
the economy are moving backwards to distributors or publishers and away from retailers and customers. (These practices may not continue.  HarperCollins just announced a new imprint that will offer no author advances or return rights to retailers).

Worse, 500 new titles are published each day in the US – double the number of ten years ago. Most lose money for their
publisher — indeed most are read by a very small number of people (the
overwhelming majority of books in university libraries, for example,
never circulate at all). During the past decade, publishers have not
sold more books — they have published more titles and they have raised prices. This is neither healthy nor sustainable, especially in the face of strong evidence that all reading, and the reading of books in particular, is in long term decline in most countries.

The first books to go digital are those expected to sell the fewest copies. Lulu, Author House, Xlibris,
and others have developed business models that enable authors to
digitally publish specialized books (meaning books that almost nobody wants to
read). Lightning Press has persuaded a large number of publishers to
digitize their "€œback list"€ (books more than a year old) and and print them on
demand instead of warehousing and remaindering them. As the print on
demand market develops and as electronic readers like the Amazon Kindle or the Sony
Reader become easier to use and affordable, people will buy obscure books
either digitally (cheapest), used (cheap), or printed on demand (most
expensive). Many books will never be printed at all, as the
price of digital books follows music and movies to zero.

For good reason is Apple’s iTunes closely studied by people in the book industry. Apple is the first company to tightly control and seamlessly integrate five critical media assets:
digital content, metadata, a retail website, distribution economics,
and consumer devices. This is not simple game to execute and Apple does it in movies as well as in music. Steve Jobs has denied any
interest in producing a wireless book reader to compete with Amazon’s
Kindle – so you can bet that a team in Cupertino is hard at work building one (Jobs€™ frequently claimed to have no interest in developing a phone or
videos for iPods. For many people, vehement denials from Steve Jobs are the equivalent of product development announcements).

Digital book content is not especially hard to come by. Amazon has
scanned or acquired digital copies of hundreds of thousands of books, as have Google, Microsoft, and Lightning Press (although not all of
these scans are of commercial quality and most do not contain resale
rights). Amazon has high quality metadata (bibliographic information
about the book) but this most of this data is commercially available to competitors.
Amazon has a retail website, although it is optimized for physical, not
digital goods and Amazon has actually lost share as a music retailer
due to a weak download offering. Amazon set a $10 price point for digital books, which looks to me to be $3 too high, and Amazon’s wireless Kindle, although popular, is klutzy by Apple standards.

So figure that an iBook is on the way –
perhaps a jacket pocket version of the MacAir or a larger iPhone  or
both. Apple is likely to come out with a better device and a more
functional website, but Amazon learns fast, knows ecommerce better than
anyone, has powerful metadata, and knows the publishing community
better than Apple does. An alliance between Lulu or Lightning Press and Apple would surprise nobody –“ especially since Amazon has acquired a print on demand company,
BookSurge, and now requires that all POD books use BookSurge as a
condition of appearing on its retail website. This has produced the predictable uproar among authors (which
must make Steve Jobs laugh. It would never occur to him to sell
a media product on his website that he did not fully control).

Will digital books become free? Many
already are free – specifically books whose copyrights have expired. But
without a reader that is as easy to use as an iPod or a DVD player, a digital copy of a
book is not worth much. Once we have a reader that is easy and fun to use, free books
will proliferate. Unlike CDs and DVDs, books will not vanish any time soon,
even though most small bookstores and large bookstore chains are doomed to the fate of their music brethren. Regional bookstores with scale
will survive –€“ and they tend to be the best bookstores now anyway.

All media wants to be digital, downloadable, and free.
A writer, a musician, or a filmmaker has never been an easy vocation
and will be less so as technology makes it a widely accessible
avocation. Those who are used to selling books, movies, and music are in for a
shock –“ digitization has devalued their products and trying to prevent
or reverse this trend is silly and counterproductive. We can and surely will debate
whether this is creative destruction or just plain old destruction –€“ but media products will be increasingly available for free regardless of one’s view of the trend.

The result will be dozens of new business models. In music, concerts are becoming a huge business -– rapper JayZ (who names these guys?) is reportedly about to sign a $150 million deal with a concert promoter instead of a record label. Ozzfest, the annual heavy metal, hard rock tour and festival founded by Ozzy Osbourne and his wife Sharon makes more money now that the concerts are free because the promoters and the bands do very well from sales of food, merchandise, and yes CDs sold at the concerts.

Behind the new business models will be dozens of new ways to acquire media. As I noted in Gravity Lessons,
when I was a kid, I could consume video content only by watching
commercial television or going to the movie theater.

Today you can still
watch commercial TV or go to the cinema – although it is likely now a
cineplex showing a more movies to smaller audiences. Or you can record TV on your TIVO and skip the ads, you can subscribe
and watch the show ad-free on cable, you can pay-per-view, you can buy
a DVD new, buy one used, you can download a podcast, you can borrow a DVD
from a library, rent it from Blockbuster, download it from
Vongo or a P2P site, subscribe to Netflix, stream it on iTunes, YouTube, or
MySpace, etc. In some cases, you pay for your content – in others (P2P,
libraries, YouTube, Tivo) you do not.

The result is an explosion of choices and a hugely increased chance that you will produce as well as consume media. Consumers today  would never dream of trying to watch every movie available, listen to every song, or read every book. You have to go back to Thomas Jefferson to find a President who could have read every book available in English during
his lifetime. Franklin Roosevelt could have listened to every bit of
music recorded during his lifetime and Jack Kennedy could have watched
every movie. Today a person is almost as likely to create as consume writing, movies, and music during their lifetime. This is only possible because media is increasingly digital, downloadable, and free. 

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Levinson’s account of how shipping containers transformed the world economy reads like a good novel, a story revealed in layers. The plot is a compelling tale of egotistic business innovators struggling to overturn a regulated, moribund, unionized transportation sector. Characters include Malcom McLean, a self-made trucking magnate who understood the power of "inter-modal" containers that could move quickly between trucks, trains, and ships and Harry Bridges, the colorful and incorruptible communist longshoreman and  powerful advocate for civil righs who built the ILWU into a west coast waterfront powerhouse. The setting is a half-forgotten world of tough dockside neighborhoods, federally-backed transportation cartels, and incompetent urban port authorities thriving in a

web of political back-scratching, theft, and corruption that would have made Machiavelli blush.

The result was waste on a scale we can no longer imagine.
Goods were moved by hand from truck to train to ship. Often dockside
work rules required that a truck be unloaded by one crew into a staging
area then loaded by a second crew of longshoremen, some entitled to a
four hour break during every eight hour shift. Ships were packed by
hand and crammed tight with stuff so it wouldn’t shift in transit –
much as I packed the family station wagon this week before heading off
on vacation. The process was repeated from truck to rail car to ship
and then back to rail cars and trucks at the other end. At each stage, local mafia or dock gangs stole their share of the freight. Transporting anything was so expensive that transit costs functioned as hidden tariffs or taxes, depressing trade and constricting economic activity.

Although McLean used the first shipping container in 1954, "logistics" remained a military term, not a business function, until the 1980s. The idea of a global supply chain was unimaginable because in nobody’s wildest dreams would the cost of transporting goods and materials around the world drop so far as to become almost irrelevant. The astonishing impact of "free" computer processing, network bandwidth, and digital storage has been widely noted (they are not literally free, but the marginal cost of each is rapidly approaching zero). Fewer have recognized that the cost of moving most goods to most places is a fraction of what it was fifty years ago. Levinson explains why.

The box" did not create logistics nor by itself create global supply chains, which required new institutions, technologies, and business practices, not just large aluminum containers.Many innovations make a huge impact once a variety of systems are put in place to support the new technology (rural electrification, for example, occurred two generations after Edison invented the light bulb). The full impact of inter modal containers was only realized once they were supported by newly designed ships, docks, trains, and trucks, backed by new shipping methods and technologies, and enabled by the wholesale privatization of port authorities, the elimination of federal regulatory agencies, the destruction of business cartels, and the euthanizing of transport workers unions (which in country after country rationally bargained the price of suicide).

Levinson has a nose for economic drama. He recalls the exploitation and corruption of early twentieth century transportation hubs where generations of immigrant dockworkers formed intensely loyal communities. These men did the tough and dangerous work of loading and unloading ships and lived in resentment of the stevedoring foremen who granted a day of work to any son who offered a higher bribe than his father at the notorious waterfront "shape-ups". (Those not born into longshoring often became merchant seamen — the basis, I now imagine, for my father’s frequent but incomprehensible admonition to "shape up or ship out").

The author details the theft and corruption that became endemic at trucking and shipping docks and notes that the earliest enthusiasts of shipping containers included Scottish whiskey exporters whose export costs had for more than a century included heavy transit losses to thirsty dockworkers. He spends much less time connecting these activities to the financing of the mafia and their cousins, corrupt labor unions. One hopes that this omission was not a courtesy to Teddy Gleason, the mobbed-up former head of the ILA (east coast longshoreman’s union) who Levinson interviewed for the book. As a former labor guy and federal labor enforcer, I know that ILA, the Teamsters, and the Laborers have long been America’s three most corrupt unions. Two of these are heavily dependent upon transportation and have seen their ranks gutted by containerization. (Interestingly, unions lead by communists or socialists, such as the San Francisco-based ILWU may have been ideologically corrupt but were almost always more democratic and much less likely to be on the take from employers or the mob).

The economic potential of containerization revealed itself slowly as shippers and shipping lines searched for ways to lower transportation costs. Levinson makes clear that no revolutionary led this revolution, not even Malcom McLean. Indeed, as in most economic and political revolutions, few of the participants understood the long term consequences of their actions — and many were comically deluded. 

• Companies were clueless. Malcom McLean, having made his fortune by building McLean Trucking into Sea-Land, the pioneer inter modal shipping company, sold his business to RJ Reynolds (the strategic logic being something like "tobacco is a dying business that throws off cash and shipping is a growing business that needs cash so it must make sense for cigarette guys to buy a global shipping business"). McLean attempted to revolutionize shipping again by designing a monstrous ship that traveled 50% faster than its peers and thus made several more round trips each year. Problem was, the price of oil suddenly tripled, the ships were useless, and RJR lost a bunch of money. Disgusted with RJR, McLean sold his shares, bought a competitor and proceeded to build the world’s most fuel efficient tanker — whereupon the price of oil fell and bankrupted his business.

• Cities didn’t get it. Cities had grown up around their ports regarded them as a birthright. They were slow to recognize that the new shipping technologies removed a powerful economic incentive to locate near ports. Incumbent cities like London and Liverpool fought containerization and saw their ports vanish to towns like tiny Felixstowe, a place nobody had ever heard of that is today one of the world’s great shipping centers. Rotterdam, Antwerp, and Hamburg adapted. Lisbon, LeHavre, and Rome did not. Levinson: "Many of the successful ports were privately managed, and in some cases privately financed".

A Chief Engineer of the Oakland port named Nutter got it right and made decisions to build a container port that shut down the ports of San Francisco and Richmond. Houston adapted, Galveston did not. Asia had little adapting to do, but Hong Kong, Singapore, Shenzhen, and especially Shanghai are now huge port cities as are Busan in Korea and Kaoshung in Taiwan. (Rotterdam fought Singapore for years for the title of world’s busiest port. The former measured cargo tonnage handled (total weight of goods loaded and discharged), the latter shipping tonnage handled (total volume of ships handled). Shanghai now beats them both, measured either way. Many cities, including New York and San Francisco, spent hundreds of millions of dollars rebuilding docks long after shipping companies had left only to learn the hard way that shippers are not interested in the expense of unloading cargo on a dense urban peninsula.

• National governments were in all cases part of the problem. Like their local counterparts, were not designed to respond to fundamental technology changes. The chapter Levinson presents on the logistics calamity that was represented by the early years of the war in Vietnam is a wonderful snapshot of the failure of America’s best and brightest to use readily available technology to manage a very complex supply operation. To his credit, Robert McNamara privatized military logistics and the laughable supply problems were sorted out in less than a year.

As regulators, the federal process for approving unique rates for each type of cargo was made irrelevant by containerized shipping. The practice of approving different rates for truck, ship, and rail transport complicated matters further. The decision in the early 1980s to deregulate shipping was incredibly controversial at the time — and blindingly obvious today.

• Labor unions, naturally suspicious of automation that threatened to reduce jobs, paid remarkably little attention to containerization. Like their corporate counterparts, union leaders grew up in a breakbulk world, with goods being shipped in crates, on pallets, in netting, or in the case of lumber or steel, simply  oose in a ship’s hold. The radical labor savings represented by containerization was seen as a small part of the trend toward increased automation, which threatened to reduce the size of shipping gangs. Even farsighted leaders like Bridges simply made sure that the savings from automation would be shared by incumbent longshoremen. This was not a hard deal to sell when, as in New York City, 75% of dockworker jobs were eliminated in a dozen years starting in 1963.

Levinson argues by implication that history makes sense only in retrospect. Nobody in the 1950s or 1960s understood just how radical would be the transformation wrought by an aluminum box any more than we today understand the full impact of the biotechnology revolution. The Box, is history well told by an author who keeps his subject economically and socially tethered. The book, published by Princeton University Press, is massively documented. It would have benefited from photos of the sort a trade press would have required — and also perhaps a chapter on modern uses for containers (they are art galleries, houses, smuggler’s dens, and the nightmare of Homeland Security agencies everywhere). It deserves to become a business classic.

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