Liebowitz Unchained

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Robert Vienneau

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Nov 11, 2002, 8:21:32 PM11/11/02
to
"Paul David has been promising a rejoinder for about ten years
now."
-- Stan Liebowitz

Paul David's article, "Path dependence, its critics and the quest for
'historical economics'", is available somewhere on the Web - I think
at a Stanford site. I downloaded the 2000 version some time ago.


"'Earnings are a decision variable, not a requirement,' says Prof.
Arthur, the economist. 'If everyone thinks you're doing fine
without earnings, why have them?'"
-- Apparently the Wall Street Journal

"This is a truly amazing quote....Surely Professor Arthur has been
misquoted. Or then again, maybe not."
-- Stan Liebowitz

"It should be noted that a firm has no incentive to
treat 'investment' expenditures of the kind referred to above
as anything other than costs of current operations unless it
wants to adjust its earnings figures to show a better profit
position for the sake of attracting investors or enhancing its
general reputation. We have argued that firms prefer to retain as
much of their earnings as possible for reinvestment in the firm.
To treat certain types of reinvestment expenditures as costs may
permit a higher total retention of earnings (as is well known
for depreciation) both because it may reduce the pressure to
pay higher dividends and because it reduces taxable income of
of the firm where corporate income is taxed. So long as profit
figures are 'satisfactory' there is, on the contrary, an
incentive to increase expenditures which are in fact for the
purpose of increasing profits in the future and to call these
expenditures 'current costs'."
-- Edith Penrose (1959)

--
Try http://csf.colorado.edu/pkt/pktauthors/Vienneau.Robert/Bukharin.html
To solve Linear Programs: .../LPSolver.html
r c A game: .../Keynes.html
v s a Whether strength of body or of mind, or wisdom, or
i m p virtue, are found in proportion to the power or wealth
e a e of a man is a question fit perhaps to be discussed by
n e . slaves in the hearing of their masters, but highly
@ r c m unbecoming to reasonable and free men in search of
d o the truth. -- Rousseau

David Friedman

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Nov 11, 2002, 9:29:09 PM11/11/02
to
In article <rvien-F5542E....@news.dreamscape.com>,
Robert Vienneau <rv...@see.sig.com> wrote:

> "Paul David has been promising a rejoinder for about ten years
> now."
> -- Stan Liebowitz
>
> Paul David's article, "Path dependence, its critics and the quest for
> 'historical economics'", is available somewhere on the Web - I think
> at a Stanford site. I downloaded the 2000 version some time ago.

http://216.239.51.100/search?q=cache:xHWir05yspwC:www-econ.stanford.edu/f
aculty/workp/swp00011.pdf+%22Path+dependence,+its+critics+and+the+quest+f
or&hl=en&ie=UTF-8

It consists of a lengthy, jargon ridden argument about the underlying
theory of path dependency. But one thing notably absent is any rebuttal
to Liebowitz and Margolis on the historical facts--which according to
them Paul David got wildly wrong.

Paul David has been promising a rebuttal for a very long time. If this
is it, then he is conceding that he was wrong about the historical
facts. Alternatively, twelve years after Liebowitz and Margolis
published "The Fable of the Keys," Paul David still hasn't gotten around
to answering it.

Or, as a third alternative, the answer is in some other article. Anyone
have one to offer?

--
www.daviddfriedman.com

susupply

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Nov 12, 2002, 10:24:37 AM11/12/02
to

"David Friedman" <dd...@daviddfriedman.com> wrote in message
news:ddfr-45FE5C.1...@sea-read.news.verio.net...

> Paul David has been promising a rebuttal for a very long time. If this
> is it, then he is conceding that he was wrong about the historical
> facts. Alternatively, twelve years after Liebowitz and Margolis
> published "The Fable of the Keys," Paul David still hasn't gotten around
> to answering it.
>
> Or, as a third alternative, the answer is in some other article. Anyone
> have one to offer?

Oh, Robert knows painfully well there is none. He's been humiliated about
as often as Arthur and David over this.

In this particular version of, "L&M are being mean to me", David slyly
admits he was wrong with such as:

"Arthur's (1989) phrase `lock-in by small historical events' is evidently a
gloss that should not be read too literally....".

Too bad for all those dot com entrepreneurs who lost their investors' shirts
by taking the earlier Arthur and David "too literally". Carl Shapiro and
Hal Varian being among those who helped popularize the ideas about which
David now says he was just kidding.


susupply

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Nov 12, 2002, 10:36:41 AM11/12/02
to

"Robert Vienneau" <rv...@see.sig.com>

who may one day find himself the target of a Paul Krugman column,

wrote in message news:rvien-F5542E....@news.dreamscape.com...

> We have argued that firms prefer to retain as
> much of their earnings as possible for reinvestment in the firm.
> To treat certain types of reinvestment expenditures as costs may
> permit a higher total retention of earnings (as is well known
> for depreciation) both because it may reduce the pressure to
> pay higher dividends and because it reduces taxable income of
> of the firm where corporate income is taxed. So long as profit
> figures are 'satisfactory' there is, on the contrary, an
> incentive to increase expenditures which are in fact for the
> purpose of increasing profits in the future and to call these
> expenditures 'current costs'."
> -- Edith Penrose (1959)

Which is how Enron, Global Crossing and a few other disasters came to be.
In the WSJ article from which Arthur is quoted, the story is that the "new
economy" is fundamentally different. Arthur and his sidekick were
frequently the economists upon whom these gurus relied. And now, after the
disasters, we get:

Robert Vienneau

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Nov 12, 2002, 3:33:58 PM11/12/02
to
In article <ddfr-45FE5C.1...@sea-read.news.verio.net>, David
Friedman <dd...@daviddfriedman.com> wrote:

Liebowitz and Margolis have some points about historical facts, at least
when it comes to the Dvorak keyboard. However, they are unlikely to
use empiricalism to successfully address David's point if they do not
understand David's point. It would be a manifestation of
anti-intellectualism - an attitude unworthy of serious scholars - to
complain about "jargon" like "ergodicity" and "stochastic processes"
in this context. It is fairly clear that L and M do not understand the
theory of path dependence, given their highly debatable representation
of it. And so they are unable to fully address the theory with their
historical facts. At least, that's what I get out of David's article.
In other words, the article I pointed to does indeed refute L and M.

If you want empirical examples, try:

Douglas J. Puffert, "Path Dependence, Network Form, and
Technological Change", 2000,

also available on the Web.

By the way, David, we see ignorant smearing elsewhere on this
thread of some of your economist colleagues. Here's an opportunity
for you to discourage uncivilized conversation. Will you take
it?

susupply

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Nov 12, 2002, 6:21:42 PM11/12/02
to

"Robert Vienneau" <rv...@see.sig.com>

suddenly fastidious about respecting the same people he often claims are
socialized to be ignorant,

wrote in message news:rvien-7516F8....@news.dreamscape.com...

> By the way, David, we see ignorant smearing elsewhere on this
> thread of some of your economist colleagues. Here's an opportunity
> for you to discourage uncivilized conversation. Will you take
> it?

At least Robert is still consistently self-unaware. As the above was
preceded by his:

> It is fairly clear that L and M do not understand
the
> theory of path dependence, given their highly debatable representation
> of it. And so they are unable to fully address the theory with their
> historical facts. At least, that's what I get out of David's article.

Meaning Robert is demeaning two professional economists, without having read
their work, merely on the say so of a third economist who is clearly
double-talking his way around admitting he was wrong.

David Friedman is correct that the quote from Stan Liebowitz about the
...um...tardiness(?... is that civilized enough for you Robert) of Paul
David's reply, is about the typewriter keyboard story. That QWERTY thing
that David promised to address sometime or other, but hasn't yet.

So Robert is in error in his claim:

> In other words, the article I pointed to does indeed refute L and M.

And, actually it doesn't refute anything at all in Liebowitz and Margolis
anyway. It's just Paul David appealing to his own authority, and hoping
there are enough Vienneaus out there willing to fall for it.

> If you want empirical examples, try:
>
> Douglas J. Puffert, "Path Dependence, Network Form, and
> Technological Change", 2000,

That would be the same Doug Puffert who shortly afterward, in April of 2001,
had to concede:

<< My thanks to Patrick Sullivan for forcing me to read more carefully (see
posting reproduced below). I retract my misinterpretation of Liebowitz' and
Margolis' definition, and I will remove the analogous discussion in footnote
3 of my contribution to Paul David's Festschrift.

<< My apologies to Liebowitz and Margolis for thinking, and writing, that
they
could make such a blunder. Mea maxima culpa. >>

And who also couldn't summon up an answer to this blunt question in the same
forum from Peter Lewin:

<< BTW, while we are talking about the real world, I am curious to know, do
you
believe that QWERTY is a case of inefficient lock-in? What is your take on
LM's
historical evidence? Are they similarly confused on this? >>

But at least Doug was willing to debate us publicly. Something Peter and I
will never see from Paul David.

David Friedman

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Nov 12, 2002, 8:44:55 PM11/12/02
to
In article <rvien-7516F8....@news.dreamscape.com>,
Robert Vienneau <rv...@see.sig.com> wrote:

> Liebowitz and Margolis have some points about historical facts, at least
> when it comes to the Dvorak keyboard. However, they are unlikely to
> use empiricalism to successfully address David's point if they do not
> understand David's point. It would be a manifestation of
> anti-intellectualism - an attitude unworthy of serious scholars - to
> complain about "jargon" like "ergodicity" and "stochastic processes"
> in this context. It is fairly clear that L and M do not understand the
> theory of path dependence, given their highly debatable representation
> of it. And so they are unable to fully address the theory with their
> historical facts. At least, that's what I get out of David's article.
> In other words, the article I pointed to does indeed refute L and M.

Paul David is an economic historian. If his historical claims are
false--claims he thought important when he was making them in the
context of making arguments for path dependence--he has an obligation to
say so. It would even be appropriate to thank Liebowitz and Margolis for
correcting his errors. So far as I can tell he hasn't. Instead he writes
condescending articles claiming that the people who pointed out his
facts were wrong don't really understand his arguments.

Liebowitz and Margolis have not, in any of their stuff I read, claimed
that path dependency was logically impossible. The two arguments they
made, at least in the pieces I read (aside from the Microsoft book I
haven't followed the recent stuff), were that the idea of network
externalities were less new than claimed, and that their real effects
did not seem to be very large. For the latter they offered empirical
evidence.

I should add that I didn't work through the Paul David article/speech we
are now discussing in detail--that would have taken a substantial effort
and I'm not sufficiently interested in the question. But I saw nothing
that rebutted the arguments L&M actually make.

> By the way, David, we see ignorant smearing elsewhere on this
> thread of some of your economist colleagues. Here's an opportunity
> for you to discourage uncivilized conversation. Will you take
> it?

I'm afraid I don't know what smearing you are talking about, perhaps
because I haven't read all of the thread. I'm friendly with all three of
the people in question--for a force of evil Paul David is a very nice
fellow. But I think he owes Liebowitz and Margolis a public concession
on the historical facts, and at least as far as I can tell he hasn't
offered it. Certainly he didn't when I discussed the question with him
some years back. He said he was going to publish a rebuttal to their
"Fable of the Keys"--and the article we have been discussing doesn't
qualify.

The argument somebody made, I think in this thread, that he was
responsible for .com firms thinking that they could make money by losing
money in the process of establishing standards, is an interesting one. I
have similarly argued that his ideas may have been behind the failed
attempt to establish the Clipper chip as an encryption standard. In
either case, I don't think a scholar is responsible for how other people
use his ideas, as long as he is honest in giving the arguments that he
thinks are correct. My complaint about Paul David isn't that he argues
for the existence and importance of network effects and path dependency
but that he apparently did some very sloppy historical scholarship and
has, so far as I know, never admitted his error.

--
www.daviddfriedman.com

Tim Lambert

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Nov 12, 2002, 9:45:38 PM11/12/02
to
David Friedman <dd...@daviddfriedman.com> writes:

> In article <rvien-F5542E....@news.dreamscape.com>,
> Robert Vienneau <rv...@see.sig.com> wrote:
>
> > "Paul David has been promising a rejoinder for about ten years
> > now."
> > -- Stan Liebowitz
> >
> > Paul David's article, "Path dependence, its critics and the quest for
> > 'historical economics'", is available somewhere on the Web - I think
> > at a Stanford site. I downloaded the 2000 version some time ago.
>
> http://216.239.51.100/search?q=cache:xHWir05yspwC:www-econ.stanford.edu/f
> aculty/workp/swp00011.pdf+%22Path+dependence,+its+critics+and+the+quest+f
> or&hl=en&ie=UTF-8
>
> It consists of a lengthy, jargon ridden argument about the underlying
> theory of path dependency. But one thing notably absent is any rebuttal
> to Liebowitz and Margolis on the historical facts--which according to
> them Paul David got wildly wrong.

I don't know about the historical facts, but Liebowitz and Margolis
most definitely got the facts about HCI research wrong. They wrote:
"that the mathematical simulations of typing, which show no advantage
for Dvorak".

In fact, Don Norman, who conducted the simulations they refer to,
states that he found that Dvorak was 10% faster. This is in "The
Design of Everyday Things", which is not an obscure book - it is the
most widely read book on HCI out there.

Tim

David Friedman

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Nov 12, 2002, 10:57:49 PM11/12/02
to
In article <tnadked...@oolong.orchestra.cse.unsw.EDU.AU>,
Tim Lambert <lam...@cse.unsw.EDU.AU> wrote:

> I don't know about the historical facts, but Liebowitz and Margolis
> most definitely got the facts about HCI research wrong. They wrote:
> "that the mathematical simulations of typing, which show no advantage
> for Dvorak".
>
> In fact, Don Norman, who conducted the simulations they refer to,
> states that he found that Dvorak was 10% faster. This is in "The
> Design of Everyday Things", which is not an obscure book - it is the
> most widely read book on HCI out there.

What are you quoting--their book, or "Fable of the Keys?"

--
www.daviddfriedman.com

Samuel Barber

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Nov 13, 2002, 5:21:22 AM11/13/02
to
David Friedman <dd...@daviddfriedman.com> wrote in message news:<ddfr-90A68B.1...@sea-read.news.verio.net>...

> The argument somebody made, I think in this thread, that he was
> responsible for .com firms thinking that they could make money by losing
> money in the process of establishing standards, is an interesting one. I
> have similarly argued that his ideas may have been behind the failed
> attempt to establish the Clipper chip as an encryption standard.

It recently worked for PayPal. They deliberately lost a large amount
of money up front to build a user base, gradually increased prices,
and eventually turned the corner into profitability (shortly before
being acquired by Ebay, another successful network effects dotcom).
They were also a bit lucky in that they launched their service a
couple months before any competing service was available, allowing
them to get an early lead.

Unfortunately, I didn't profit from my insight into PayPal, since EBay
was able to acquire it for essentially no premium. The pre-IPO
investors did great, of course.

Sam

Robert Vienneau

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Nov 13, 2002, 5:16:06 AM11/13/02
to
In article <ddfr-90A68B.1...@sea-read.news.verio.net>, David
Friedman <dd...@daviddfriedman.com> wrote:

> In article <rvien-7516F8....@news.dreamscape.com>,
> Robert Vienneau <rv...@see.sig.com> wrote:

> Liebowitz and Margolis have not, in any of their stuff I read, claimed
> that path dependency was logically impossible.

The problem is that when L and M define path dependence, they seem
to focus on aspects that don't seem to be part of what Arthur and
David consider essential. I think L and M strike many as presently
their "facts" in such a tendentious manner that many simply
disbelieve them.

<http://www.mwbrooks.com/dvorak/dissent.html>

> > By the way, David, we see ignorant smearing elsewhere on this
> > thread of some of your economist colleagues. Here's an opportunity
> > for you to discourage uncivilized conversation. Will you take
> > it?

> I'm afraid I don't know what smearing you are talking about, perhaps
> because I haven't read all of the thread. I'm friendly with all three of
> the people in question--for a force of evil Paul David is a very nice
> fellow.

I was not referring to Liebowitz, Margolis, Arthur, or David.

> The argument somebody made, I think in this thread, that he was
> responsible for .com firms thinking that they could make money by losing
> money in the process of establishing standards, is an interesting one.

There you go. Do you remember having the same sort of discussion
about James Donald with Dan Clore and David Graeber?

Anyway, David, you are here defending disreputatable nonsense, at
best:

Patrick Sullivan wrote:
----------------------------------------------------------------

> In this particular version of, "L&M are being mean to me", David slyly
> admits he was wrong with such as:

> "Arthur's (1989) phrase `lock-in by small historical events' is evidently
> a

> gloss that should not be read too literally....".

> Too bad for all those dot com entrepreneurs who lost their investors'
> shirts
> by taking the earlier Arthur and David "too literally". Carl Shapiro and
> Hal Varian being among those who helped popularize the ideas about which
> David now says he was just kidding.

-----------------------------------------------------------------

And here's the passage from Paul David's article, which has nothing
to do with the above comments:

"By contrast, as the term 'lock-in' has been used in my work and
that of Arthur (1989), it simply is a vivid way to describe the
entry of a system into a trapping region ­ the basin of attraction
that surrounds a locally (or globally) stable equilibrium. When a
dynamic economic system enters such a region, it cannot escape
except through the intervention of some external force, or shock,
that alters its configuration or transforms the underlying
structural relationships among the agents. Path dependent systems -
which have a multiplicity of possible equilibria among which
event-contingent selections can occur - may thus become locked in
to attractors that are optimal, or that are just as good as any
others in the feasible set, or that take paths leading to places
everyone would wish to have been able to avoid, once they have
arrived there.

From this vantage point, ARTHUR'S (1989) PHRASE 'LOCK-IN BY SMALL
HISTORICAL EVENTS' IS EVIDENTLY A GLOSS THAT SHOULD NOT BE READ
TOO LITERALLY; it is a convenient contraction of the foregoing
reference to the way in which trapping regions may be entered -
although somewhat unfortunate, in allowing a hasty reader to
suppose that the antecedent events somehow have created the local
stability, or locked-in state. To be more precise, albeit more
cumbersome, one should say that such configurations are
self-sustaining (Nash) equilibria; that in the case of a path
dependent process some particular historical event caused ­ that
is, initiated the sequence of transitions that effectively
selected, one rather than another among such configurations to
be realized as the systemıs emergent property.

In some circumstances, as in the case of pure coordination games
(where there are strategic complementarities in the dynamic
interactions among agents) there is no Pareto-ranking of a
multiplicity of available equilibria from amongst which a path
dependent, branching process can make a selection. Which
coordination point is reached is a matter of welfare indifference
to the parties involved. A coordination equilibrium, thus, provides
us with the paradigmatic situation in which individuals are content
to remain doing something, even though they would be happier doing
something else if everybody would also do that other thing too. The
reason they donıt change what they are doing is, generically, that
there are information imperfections that make it unlikely that a
decentralized process can get everyone coordinated to move elsewhere,
collectively. Now notice that while incomplete information may be
critical in blocking spontaneous escapes from dominated coordination
equilibria, it is not a necessary condition for decentralized market
processes to select such states. This is another reason why presenting
'lock-in' as a particular (pernicious, and supposedly uncommon) form
of 'path dependence' is an invitation to further analytical
confusions."
-- Paul David (emphasis added)

So, David, we see ignorant smearing on this thread of some of your


economist colleagues. Here's an opportunity for you to discourage
uncivilized conversation. Will you take it?

--

susupply

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Nov 13, 2002, 9:58:19 AM11/13/02
to

"Tim Lambert" <lam...@cse.unsw.EDU.AU> wrote in message
news:tnadked...@oolong.orchestra.cse.unsw.EDU.AU...

> I don't know about the historical facts, but Liebowitz and Margolis
> most definitely got the facts about HCI research wrong. They wrote:
> "that the mathematical simulations of typing, which show no advantage
> for Dvorak".
>
> In fact, Don Norman, who conducted the simulations they refer to,
> states that he found that Dvorak was 10% faster. This is in "The
> Design of Everyday Things", which is not an obscure book - it is the
> most widely read book on HCI out there.

You are correct, you do not know historical facts. BTW, David's famous
paper claimed between 20% and 40% faster, so even if this book you are
pushing is correct you are only half way to the lower figure.

Anyway, here are the "historical facts" as cited in the work of Liebowitz
and Margolis:

<< [Hisao] Yamada as much as admits that experimental findings reported by
Dvorak and his supporters cannot be assigned much credibility [snip]

<< He cites a 1973 study based on six typists at Western Electric where
after
104 hours of training on DSK, typists were 2.6 percent faster than they had
been on Qwerty.

<< Similarly Yamada reports that in a 1978 study at Oregon State University
after 100 hours of training typists were up to 97.6 percent of their old
Qwerty
speed. Both of these retraining times are similar to those reported by
Strong
and not to those in the Navy study.

[snip]

<< The most recent studies of the relative merits of keyboards are found in
the
ergonomics literature. These studies provide evidence that the advantages of
the Dvorak is either small or nonexistent. For example A. Miller and J. C.
Thomas conclude that "the fact remains however that no alternative has shown
a
realistically significant advantage over the Qwerty for general purpose
typing." In two studies based on analysis of hand-and-finger motions R. F.
Nickells Jr. finds that Dvorak is 6.2 percent faster than Qwerty, and R.
Kinkhead finds only a 2.3 percent advantage for Dvorak. ....

[my note, here is where your guy, Norman, enters Stan and Steve's paper]

< < Simulation studies by
Donald Norman and David Rumelhart find similar results:

" We studied expert typists by using our simulation model. Here, we
looked at the [QWERTY] and Dvorak layouts, as well as several alphabetically
arranged keyboards. The simulation showed that the alphabetically organized
keyboards were between 2% and 9% slower than the [QWERTY] keyboard, and the
Dvorak keyboard was only about 5% faster than the Sholes.


" These figures correspond well to other experimental studies that compared
the
Dvorak and Sholes keyboards and to the computations of Card, Moran, and
Newell
. . . for comparing these keyboards.... For the expert typist, the layout of
keys makes surprisingly little difference. There seems no reason to choose
Sholes, Dvorak. or alphabetically organized keyboards over one another on
the
basis of typing speed. "

[Back to Stan and Steve:]

<< The consistent finding in the ergonomic studies is that the results imply
no
clear advantage for Dvorak. ....At the very least, the studies indicate that
the speed
advantage of Dvorak is not anything like the 20-40 percent that is claimed
in
the Apple advertising copy that David cites. Moreover, the studies suggest
that
there may be no advantage with the Dvorak keyboard for ordinary typing by
skilled typists. It appears that the principles by which Dvorak
''rationalized"
the keyboard may not have fully captured the actions of experienced typists
largely because typing appears to be a fairly complex activity. >>

And then there is the report that Robert Vienneau referenced in
characteristic fashion in February of 2001:

<<...here's a paper, which I haven't
read, apparently providing empirical evidence of the superiority
of Dvorak over QWERTY:

<< http://www.santafe.edu/sfi/publications/Abstracts/98-05-041Eabs.html >>

Which paper claims that Dvorak is all of 4.0% faster.

Stubborn things, these facts.

susupply

unread,
Nov 13, 2002, 10:20:55 AM11/13/02
to

"Robert Vienneau" <rv...@see.sig.com>

still licking his self-inflicted wounds,

wrote in message news:rvien-AA03A2....@news.dreamscape.com...

> The problem is that when L and M define path dependence, they seem
> to focus on aspects that don't seem to be part of what Arthur and
> David consider essential. I think L and M strike many as presently
> their "facts" in such a tendentious manner that many simply
> disbelieve them.
>
> <http://www.mwbrooks.com/dvorak/dissent.html>

And Robert isn't having anything to do with "tendentious" argument! What a
hoot the above cited article is:

<<--------------quote----------------------
You might hear comments from time to time about studies showing Dvorak is
"no better than QWERTY," or words to that effect. All such comments that
I've heard seem to echo an article, "The Fable of the Keys," by S. J.
Liebowitz and Stephen E. Margolis, published in the Journal of Law &
Economics, vol. XXXIII (April 1990).

.... I will address its implications as if they were clearly stated claims:

Claim: Dvorak Is a Fraud, Studies Prove It's No Better
Claim: Dr. Dvorak Was a Mercenary Huckster
Claim: Dvorak's Keyboard Failed, So It Must Be No Good
Claim: It Was Always Easy To Convert Typewriters
Claim: QWERTY Was Designed Ergonomically
Claim: The QWERTY Standard was Established by Competition
Claim: Market Economics Prove Dvorak Is Inferior

The "Fable" article spews forth a host of references to various studies. In
the article's view, studies that present Dvorak in a good light are
"suspicious," having been "influenced" by Dvorak and his supporters. Of
course, in the article's view, it is not possible that Dvorak and his
supporters were influenced by their studies!

[snip]

The "Fable" article belabors the point that the Navy cannot produce a copy
of its study, and that the article's authors had to obtain it from Dvorak
International. The authors clearly want us to think this is suspicious, but
keep in mind we are speaking of a Government agency in a chaotic time (World
War II). ....

The article also makes much of the fact that the Navy study and some others
used questionable practices that might favor Dvorak unfairly. But the
article cannot and does not say that these practices, such as averaging
certain test scores or throwing out "unfair" preliminary tests, did favor
Dvorak, only that they might favor Dvorak. In each case, it seems the
original investigators thought (rightly or not) that they were correcting a
statistical bias. In hindsight, the "Fable" article second-guesses the
investigators and assumes they were biased in favor of Dvorak.

But what about studies showing Dvorak is worse than QWERTY? There aren't
any! The "Fable" article's star performer is a 1956 GSA study conducted by
Dr. Earl Strong. (More than one aspersion against Dvorak springs from Dr.
Strong.) In short, Dr. Strong recommended against the Dvorak layout, but
why?

The "Fable" article uses a different slant, but here's what it tells us: The
GSA study put 10 QWERTY typists through a blistering 25-day regimen,
training four hours a day in Dvorak to reach their pre-conversion speed.
Four hours a day! A well-worn rule of thumb (Dvorak cites studies from the
1920's) is that it's a waste of effort to speed drill for more than two
hours daily. After this torture, Strong found that the overtrained Dvorak
typists didn't gain from additional training as fast as 10 fresh QWERTY
typists did.

[snip]

At best, Dr. Strong's study is ambiguous. More realistically, it is a gross
example of why you should not put blind faith in studies. In any skill,
there is usually a burst of progress when you start speed training after a
time of routine work. Clearly, the burned-out Dvorak group would have to be
exceptional to match (as they nearly did) the progress of the slack QWERTY
group. Studies are often ill-conceived, but how could Dr. Strong make such a
horrible error in his study's design?

[snip]

What's worse, Dvorak introduced his layout in the midst of the Great
Depression. This was followed closely by the pressures of Word War II, and
then the powerful opposition of Dr. Strong. Those are tough hurdles for any
technology to clear.

[snip]

Mind you, I don't really give a damn about QWERTY's relevance to free-market
theory. I'm not really in this to convert QWERTY typists, although I've
helped a lot and they've all thanked me for it. I'm really in this because
people are teaching their children to type on a keyboard that could very
well torture them for life. These people might have good reasons, given
circumstances, but the relative cost of retraining isn't one of them.
--------------------endquote--------------------->>

High quality Vieneauian scholarship, as usual.

susupply

unread,
Nov 13, 2002, 10:23:02 AM11/13/02
to

"Samuel Barber" <ope...@yahoo.com> wrote in message
news:37991aef.02111...@posting.google.com...

> It recently worked for PayPal. They deliberately lost a large amount
> of money up front to build a user base, gradually increased prices,
> and eventually turned the corner into profitability

All start up businesses lose money up front.


susupply

unread,
Nov 13, 2002, 10:46:21 AM11/13/02
to

"Robert Vienneau" <rv...@see.sig.com>

getting down to brass tacks,

wrote in message news:rvien-AA03A2....@news.dreamscape.com...

> And here's the passage from Paul David's article, which has nothing


> to do with the above comments:
>
> "By contrast, as the term 'lock-in' has been used in my work and
> that of Arthur (1989), it simply is a vivid way to describe the
> entry of a system into a trapping region ­ the basin of attraction
> that surrounds a locally (or globally) stable equilibrium.

Which is typical Davidian weaseling. Here's what he actually wrote in his
now infamous paper:

<< The story of QWERTY is a rather intriguing one for economists.....
competition in the absence of perfect futures markets drove the industry
prematurely into standardization on the wrong system...where decentralized
decision making subsequently has sufficed to hold it.
Outcomes of this kind are not so exotic. For such things to happen seems
only
too possible in the presence of strong' technical interrelatedness, scale
economies, and irreversibilities due to learning and habituation. >>

and, in the original, "on the wrong system" is italicized for emphasis.

So, most of the rest of David's paper is just as David Friedman described
it.

Actually, Friedman was being polite. The entire paper is deliberately
written in turgid prose to disguise what Paul David is up to, slyly
conceding that L&M have destroyed his argument.

At least he dropped his most ridiculous explanation in his latest. We all
remember his 1998 try:

<< Getting attention was a first requirement, and so my talk would start out
with
references to Sex. Seizing the audience's attention was one thing, but how
to
keep it? One generally reliable tactic of reinforcement suggested itself:
the
application of a stimulating shock. What is the subject that jolts
economists
even more than mention of Sex? Inefficiency! So, I would have to produce a
story involving an economic process that could not shake loose from the
influence of past events, and one in which rational autonomous agents were
led
to a shared, collective outcome that would judged to be no better for some,
and
for others definitely worse than a feasible alternative. And if that didn't
suffice, more "shock" would have to be applied: show that although all the
players individually might wish to choose otherwise were they only able to
wipe
away the past and start again, it was more than likely that they would go on
living with their unsatisfactory (Pareto inferior) situation -- because of
the
difficulties or expense of coordinating the actions that would be needed for
them to collectively achieve an escape. I do freely admit to having seized
upon
the history of typewriter (and computer) keyboard layouts as providing me
with
just such a rhetorical device.

<< Whatever novelty may be associated with my paper 'Clio and the Economics
of
QWERTY' resides largely in the surprising audience response, rather than in
either the story's ingred ients or its challenging message....>>

Of course, in all this time Paul David and Brian Arthur have been unable to
come up with an example that does satisfy their original claims.


susupply

unread,
Nov 13, 2002, 2:03:59 PM11/13/02
to

"Robert Vienneau" <rv...@see.sig.com>

civilized conversationalist par excellence, but not much good at semantics,

wrote in message news:rvien-AA03A2....@news.dreamscape.com...

> Patrick Sullivan wrote:


> ----------------------------------------------------------------
>
> > In this particular version of, "L&M are being mean to me", David slyly
> > admits he was wrong with such as:
>
> > "Arthur's (1989) phrase `lock-in by small historical events' is
evidently
> > a
> > gloss that should not be read too literally....".
>
> > Too bad for all those dot com entrepreneurs who lost their investors'
> > shirts
> > by taking the earlier Arthur and David "too literally". Carl Shapiro
and
> > Hal Varian being among those who helped popularize the ideas about which
> > David now says he was just kidding.
> -----------------------------------------------------------------
>
> And here's the passage from Paul David's article, which has nothing
> to do with the above comments:

[snip]

> ...ARTHUR'S (1989) PHRASE 'LOCK-IN BY SMALL


> HISTORICAL EVENTS' IS EVIDENTLY A GLOSS THAT SHOULD NOT BE READ
> TOO LITERALLY; it is a convenient contraction of the foregoing
> reference to the way in which trapping regions may be entered -
> although somewhat unfortunate, in allowing a hasty reader to
> suppose that the antecedent events somehow have created the local
> stability, or locked-in state.

Here's a more recent (1998) interview with Brian Arthur, in which we shall
see that Paul David (and by extension his worshiper, Robert) is full of it:

http://www.strategy-business.com/media/pdf/98209.pdf

<<----------quote------------
Every 50 or 100 years, the economy
goes through a shift like this, involving
deep structural changes. ....

As we're shifting more and more
into high technology....high-tech markets operate under increasing,
rather than diminishing, returns.
That's something I've been arguing
since the early 80's. At the time,
it was considered very odd and weird.
It's like saying that there could be reverse
gravity. ....

.... In these markets,
you don't hear that Bill Gates has just
bought a steel company and that company
is about to take over all of the
steel in the United States. You simply
don't hear that. Or that somebody's
started a small lumber company and
in five years there is an I.P.O. and that
person is now worth half a billion dollars.

This is not like Netscape.
In high tech, though, there are two
or three characteristics that overturn
diminishing returns and give you increasing
returns, meaning the more
you get ahead, the more advantage you
have toward getting further ahead.
-------------endquote------------>>

Everyone paying attention? Arthur, contrary to what his colleague is
claiming, believes he's really on to something radical; "reverse gravity",
and "the more you get ahead, the more advantage you have toward getting
further ahead".

Back to Brian Arthur in his own words:

<<-------------quote---------------
If two or more products or companies are competing,
if one gets sufficiently ahead, it
gets more and more advantage. Under
certain circumstances, that can often
be enough to sort of tilt the market and
lock it in. So it locks into whatever gets
ahead. ....

[my note: David claimed we shouldn't take Arthur's phrase too literally]

... What I am saying is that under increasing
returns, and under very specific
mathematical conditions, markets
become unstable. One product,
one company, can take a great deal of
the market, 70, 80, 90 percent. ....it doesn't
necessarily have to be in the computer industry.

You get these dominances. In
high tech, you see companies getting
very wealthy, cash rich, buying other
companies, merging, and so on. ....

...If you are in a technically
based industry, then it's not
sufficient to think in terms of lowering
your cost, improving your quality,
keeping products moving out the
door. That's the traditional challenge
for what I call the bulk manufacturing
economy. But in high tech, that's no
longer sufficient. If these markets are
unstable, they can lock in to something
and become dominated.

In that case, business strategy has
to go far beyond the usual adages
about costs down, quality up, core
competency. High tech adds a new layer
of complication. You have to allow
that you are playing games where the
winner can walk off with a great deal of
the market and the losers are left with
practically nothing, even if their products
are technically brilliant, and the
cost is right. So basically the strategies
are very much the strategies you
would apply in presidential primaries.
You want to build up market share, you
want to build up user base. If you do,
you can lock in that market.

[my note: there's that phrase we shouldn't be taking too literally again]

...this creates
an unstoppable bandwagon.

But if you go into the market and
think that you have a wonderful product
uct and it's sufficient just to make sure
it's technically brilliant and priced
right, you're going to get blindsided or
creamed by somebody else's bandwagon.

In high tech, you have to realize
that you must build up a user base
and go from there. ....

...we're moving more and
more into a technically based economy.
If we are looking at technology,
then we have to realize that increasing
returns are legion in these markets,
and not just an exception. That leads
to a very different way of thinking,
about instability, timing, bandwagons.
....

People innovate and innovate
and innovate in high tech. They are
readying these products, they're getting
them going, with the knowledge
that if they lock in the market, they're
going to get very rich and if they don't,
they're going to lose everything.
------------endquote---------------->>

This interview appeared in a publication titled "Strategy and Business", I
remind Robert.

David Friedman

unread,
Nov 13, 2002, 4:30:32 PM11/13/02
to
In article <rvien-AA03A2....@news.dreamscape.com>,
Robert Vienneau <rv...@see.sig.com> wrote:

> So, David, we see ignorant smearing on this thread of some of your
> economist colleagues. Here's an opportunity for you to discourage
> uncivilized conversation. Will you take it?

If you are talking about Hal Varian and Carl Shapiro, I'm afraid I have
no idea what writings of theirs are being referenced.

--
www.daviddfriedman.com

susupply

unread,
Nov 13, 2002, 7:15:07 PM11/13/02
to

"David Friedman" <dd...@daviddfriedman.com> wrote in message
news:ddfr-A17826.1...@sea-read.news.verio.net...

> If you are talking about Hal Varian and Carl Shapiro, I'm afraid I have
> no idea what writings of theirs are being referenced.

Robert isn't referring to them, he's just pouting.

However, Stan Liebowitz referenced "Information Rules" in his latest book.
He criticized them for repeating the David version of the keyboard story,
especially they made a reference, in a footnote, to one of L&M's papers,
thus they should have known better.

He also points out that they were among many to fall for the "first mover
advantage" myth. Specifically, in their Lessons for entrepreneurs, in their
chapter 6.


Robert Vienneau

unread,
Nov 13, 2002, 7:44:28 PM11/13/02
to
In article <ddfr-A17826.1...@sea-read.news.verio.net>, David
Friedman <dd...@daviddfriedman.com> wrote:

I was not referring to Liebowitz, Margolis, Arthur, or David as
doing the smearing.

Consider:

"By contrast, as the term 'lock-in' has been used in my work and
that of Arthur (1989), it simply is a vivid way to describe the
entry of a system into a trapping region ­ the basin of attraction
that surrounds a locally (or globally) stable equilibrium. When a
dynamic economic system enters such a region, it cannot escape
except through the intervention of some external force, or shock,
that alters its configuration or transforms the underlying
structural relationships among the agents. Path dependent systems -
which have a multiplicity of possible equilibria among which
event-contingent selections can occur - may thus become locked in
to attractors that are optimal, or that are just as good as any
others in the feasible set, or that take paths leading to places
everyone would wish to have been able to avoid, once they have
arrived there.

From this vantage point, ARTHUR'S (1989) PHRASE 'LOCK-IN BY SMALL
HISTORICAL EVENTS' IS EVIDENTLY A GLOSS THAT SHOULD NOT BE READ
TOO LITERALLY; it is a convenient contraction of the foregoing
reference to the way in which trapping regions may be entered -
although somewhat unfortunate, in allowing a hasty reader to
suppose that the antecedent events somehow have created the local

stability, or locked-in state..."


-- Paul David (emphasis added)

Is Paul David "slyly admit[ing] he was wrong" here, especially
in the emphasized phrase? The adjective "slyly" suggests there is
something dishonest about what Paul David is saying here. Is this
suggestion justified by the text?

Has any evidence been presented that "all those dot com entrepreneurs
who lost their investors' shirts" took anything mistaken from "the
earlier Arthur and David"? Is there any evidence at all that "Carl
Shapiro and Hal Varian [were] among those who helped popularize the
ideas about which David now says he was just kidding"? In particular,
does Paul David now say in the above text that he was "just kidding"?


So, David, we see ignorant smearing ("slyly", "just kidding") on


this thread of some of your economist colleagues. Here's an
opportunity for you to discourage uncivilized conversation. Will
you take it?

--

Mark Patrick Witte

unread,
Nov 13, 2002, 11:02:58 PM11/13/02
to
In article <aqts4a$dnt$2...@slb5.atl.mindspring.net>,

susupply <susu...@mindspring.com> wrote:
>
>"Robert Vienneau" <rv...@see.sig.com>
>
>still licking his self-inflicted wounds,

Like Triumph the Insult Comic Dog, I suspect Venal licks himself a

James A. Donald

unread,
Nov 14, 2002, 12:47:33 AM11/14/02
to
--
David Friedman:

> > The argument somebody made, I think in this thread, that he
> > was responsible for .com firms thinking that they could
> > make money by losing money in the process of establishing
> > standards, is an interesting one. I have similarly argued
> > that his ideas may have been behind the failed attempt to
> > establish the Clipper chip as an encryption standard.

Samuel Barber


> It recently worked for PayPal. They deliberately lost a large
> amount of money up front to build a user base, gradually
> increased prices, and eventually turned the corner into
> profitability (shortly before being acquired by Ebay, another
> successful network effects dotcom). They were also a bit
> lucky in that they launched their service a couple months
> before any competing service was available, allowing them to
> get an early lead.

e-gold followed a policy of making money from the beginning.
They are, in consequence, much smaller than PayPal, but on the
other hand, they are growing fast, and have made a lot more
money than PayPal has (any positive number being larger than a
negative number.)

Thus while PayPal has certainly gained a commanding lead by
losing money, it is far from clear that network effects will
suffice to lock out competitors indefinitely and allow them to
attain significant monopoly profits.

When the dust finally settles, we will be able to set a dollar
value on how big network effects are for PayPal's business. The
dust has not settled yet. The theory is that network effects
will enable them to reap monopoly profits for a long time. We
have not yet seen those monopoly profits.

--digsig
James A. Donald
6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG
YKg6TrBL1LN923rIDvdnc/3VH1LTAx+y+wGw0QUW
4ylPCced4Hk/Jseq/i4khlm9SVTEPRN7TDbsBQJaq


Samuel Barber

unread,
Nov 14, 2002, 5:30:24 AM11/14/02
to
"susupply" <susu...@mindspring.com> wrote in message news:<aqts4b$dnt$3...@slb5.atl.mindspring.net>...

Usually because of fixed costs, though, not because they give away the
product. PayPal lost more money the more people used it. That's
unusual.

Sam

Samuel Barber

unread,
Nov 14, 2002, 8:53:39 AM11/14/02
to
James A. Donald <jam...@echeque.com> wrote in message news:<sqd6tu4rgbmo5kakd...@4ax.com>...

> When the dust finally settles, we will be able to set a dollar
> value on how big network effects are for PayPal's business. The
> dust has not settled yet. The theory is that network effects
> will enable them to reap monopoly profits for a long time. We
> have not yet seen those monopoly profits.

All of PayPal's venture-funded direct competitors are out of business,
and it's not likely that any new ones will be funded. There is still
the possibility that the major banks could get together and create a
rival service. That would be a formidable competitor. One reason this
might not happen is that the new network would compete with existing
profitable banking networks, and companies are always relunctant to
cannabalize business. PayPal is not yet a threat to the banks (I think
it will be someday).

Sam

susupply

unread,
Nov 14, 2002, 9:24:56 AM11/14/02
to

"Samuel Barber" <ope...@yahoo.com> wrote in message
news:37991aef.02111...@posting.google.com...

> All of PayPal's venture-funded direct competitors are out of business,


> and it's not likely that any new ones will be funded. There is still
> the possibility that the major banks could get together and create a
> rival service. That would be a formidable competitor. One reason this
> might not happen is that the new network would compete with existing
> profitable banking networks, and companies are always relunctant to
> cannabalize business. PayPal is not yet a threat to the banks (I think
> it will be someday).

I'm not familiar with what PayPal does, could you briefly explain their
business. And tell me what the network effects are in their case.


Tim Lambert

unread,
Nov 14, 2002, 9:44:22 AM11/14/02
to
David Friedman <dd...@daviddfriedman.com> writes:

The quote is from Reason Online:

http://reason.com/9611/ltr.sl.shtml

Tim

Tim Lambert

unread,
Nov 14, 2002, 10:02:15 AM11/14/02
to
"susupply" <susu...@mindspring.com> writes:

> "Tim Lambert" <lam...@cse.unsw.EDU.AU> wrote in message
> news:tnadked...@oolong.orchestra.cse.unsw.EDU.AU...
>
> > I don't know about the historical facts, but Liebowitz and Margolis
> > most definitely got the facts about HCI research wrong. They wrote:
> > "that the mathematical simulations of typing, which show no advantage
> > for Dvorak".
> >
> > In fact, Don Norman, who conducted the simulations they refer to,
> > states that he found that Dvorak was 10% faster. This is in "The
> > Design of Everyday Things", which is not an obscure book - it is the
> > most widely read book on HCI out there.
>

> << The most recent studies of the relative merits of keyboards are found in
> the
> ergonomics literature.

> ... Dvorak is 6.2 percent faster than Qwerty,
> ... a 2.3 percent advantage for Dvorak. ....
> ... Dvorak keyboard was only about 5% faster than the Sholes.
> ... Dvorak is all of 4.0% faster.

Gee, even the studies you cited consistently show Dvorak to be better.

If you want to find out what HCI experts think about this matter, you
could consult Don Norman's book , or the "Handbook of Human-Computer
Interaction" (which also suggest that the difference is about 10%).

> Stubborn things, these facts.

Indeed. The facts show that there *is* an advantage to Dvorak,
despite what Liebowitz says. But I get the feeling that you would
prefer to believe Liebowitz, rather than the facts.

Tim

susupply

unread,
Nov 14, 2002, 10:13:20 AM11/14/02
to

"Robert Vienneau" <rv...@see.sig.com>

again writing without first reading what he wants to discuss,

wrote in message news:rvien-EA1036....@news.dreamscape.com...

> Has any evidence been presented that "all those dot com entrepreneurs
> who lost their investors' shirts" took anything mistaken from "the
> earlier Arthur and David"?

As Keynes famously put it: "The ideas of economists and political
philosophers, both when they are right and when they are wrong, are more
powerful than is commonly understood. Indeed the world is ruled by little
else. Practical men, who believe themselves to be quite exempt from any
intellectual influence, are usually the slaves of some defunct economist."

quoted by Stan Liebowitz in "Re-Thinking the Network
Economy"

And shortly after quoting Keynes, Stan starts quoting assorted stock market
analysts and business journalists who got their ideas from somewhere. Such
as this from a column in "eCompany":

<< "We have the first-mover advantage," Women.com CEO Marleen McDaniel told
CNBC in June 1999. "They have the first-mover-advantage," a Zona Research
analyst told a reporter, explaining why eToy's stock was a steal. "Eve.com
is an outstanding e-commerce opportunity with a first-mover advantage,"
Idealab founder Bill Gross bragged in a press release. As Draper Fisher
Jurvetson partner Tim Draper told USA Today in October 1999, the first-mover
is "usual the (company) that's going to win it." >>

Stan dryly notes that each one of the above mentioned companies soon went
belly-up.

After quoting "eCompany" Stan moves on to "Information Rules", which he
admits is "one of the more reasonable books of advice for the information
economy":

<< First-mover advantages can be powerful and long-lasting in lock-in
markets, especially those in information industries where scale economies
are substantial. If you can establish an installed base before the
competition arrives on the scene, you may make it difficult for the later
entrants to achieve the scale economies necessary to compete. >>

He notes the academic caution in the above; "can be" and "may make it
difficult", but later in their book they're saying:

<< Be prepared to invest to build an installed base through promotions and
by offering up-front discounts. You can't succeed in competetive lock-in
markets without making those investments. >>

Note their, "can't succeed...without".

Then Stan quotes, "Professor Brian Arthur, the pied piper of lock-in",
saying in the Harvard Business Review:

<< Two maxims are widely accepted in knowledge-based markets: It pays to
hit the market first, and it pays to have superb technology. >>

But notes that in the same year he said the above, he discarded the
importance of "superb technology" (in the "Strategy and Business" interview
from which I have already quoted): "...the losers are left with practically
nothing, even if their products are technically brilliant...."

> Is there any evidence at all that "Carl
> Shapiro and Hal Varian [were] among those who helped popularize the
> ideas about which David now says he was just kidding"? In particular,
> does Paul David now say in the above text that he was "just kidding"?

"ARTHUR'S (1989) PHRASE 'LOCK-IN BY SMALL


HISTORICAL EVENTS' IS EVIDENTLY A GLOSS THAT SHOULD NOT BE READ
TOO LITERALLY"

The emphasis on David's line above having been supplied by Robert, since it
is not in the original. Thanks for it, Robert, as well as for the rope with
which I've hanged you.

susupply

unread,
Nov 14, 2002, 10:26:22 AM11/14/02
to

"Tim Lambert" <lam...@cse.unsw.edu.au> wrote in message
news:m3ptt81...@cycloid.localdomain...
> David Friedman <dd...@daviddfriedman.com> writes:

> > What are you quoting--their book, or "Fable of the Keys?"
>
> The quote is from Reason Online:
>
> http://reason.com/9611/ltr.sl.shtml

You've managed to quote, not an L&M paper, but (only part of) a short reply
by them to a letter to the editor. A letter which is deeply ignorant:

<<Liebowitz and Margolis's article is as flawed as the QWERTY keyboard. I
would suggest that they get out from under their papers, books, and research
studies to try a Dvorak keyboard to get at the truth. In the studies they
cite, where two groups competed against each other on the two machines, they
failed to observe that the participants previously all had been QWERTY
typists. This leads to an obvious disadvantage for the Dvorak groups, who
had to overcome their QWERTY habits while attempting to adapt to the new
keyboard layout. The only acceptable study would be one in which all the
participants had never typed before. The result would be quite clear: The
Dvorak is far superior.

<< James Argiro
Deerfield Beach, FL >>

Their reply being:

<< To Mr. Argiro we would note that the mathematical simulations of typing,
which show no advantage for Dvorak, do not have the drawback that he cites.
>>

You forgot to include their: "do not have the drawback that he cites".

susupply

unread,
Nov 14, 2002, 10:33:58 AM11/14/02
to

"Tim Lambert" <lam...@cse.unsw.edu.au> wrote in message
news:m3lm3w1...@cycloid.localdomain...
> "susupply" <susu...@mindspring.com> writes:

> > Stubborn things, these facts.
>
> Indeed. The facts show that there *is* an advantage to Dvorak,
> despite what Liebowitz says. But I get the feeling that you would
> prefer to believe Liebowitz, rather than the facts.

The facts are as L&M have presented them, not as Arthur and David and their
idolators would have them. You yourself just got through quoting only part
of one sentence of a letter they wrote in response to a SPECIFIC criticism.
You disingenuously left out the clause in which the context would have been
made clear.

Further, you have also done a very dishonest edit of my response to you,
conveniently leaving out what your own source has to say:

<< There seems no reason to choose Sholes, Dvorak, or alphabetically

susupply

unread,
Nov 14, 2002, 11:01:51 AM11/14/02
to
We also have Peggy Noonan's brief experience as a speechwriter for Enron to
add to the evidence pile:

http://www.opinionjournal.com/columnists/pnoonan/?id=95001773

<<----------------quote----------------------
Let me tell you what I saw when I was there. I saw cavernous rooms with big
monitors on the walls, and on desks too. The monitors and computers were
blinking out numbers. I remember the numbers and words on the screens as
bright green. Young future Masters of the Universe were standing with
phones, monitoring the numbers, saying things, buying and selling. I met
with a woman famous in the company for being in charge of putting big
natural gas pipelines into Central or South America and India. She seemed
intense and intelligent and, like the men, very Armani but kind of Texas
Armani--everyone well tailored but with more gold, more colors than Wall
Street people, who are sort of more gray-hued.

I thought Ken Lay intelligent, soft-spoken, somewhat opaque. At one point I
met Mr. Lay's wife. ....

And I thought, they spend a lot of money. That was one thing that hit me
hard in Houston: They were "hemorrhaging money!" as Tom Wolfe's Sherman
McCoy said. They were building this and tearing down that, they were, they
told me, talking to legislators in various state houses, lobbying to get
deregulation bills passed. All of it seemed expensive, labor-intensive,
time-intensive.

And it all seemed so tentative, so provisional. The Enron building was huge;
the Enron sign outside, the big tilted E, was huge; the gold earrings on the
women executives were huge; the watches on the men were huge; the paychecks
were huge; the company's ambitions were huge. But all of it seemed to depend
on things that were provisional. If they are able to build the big pipeline
in India, it will be great and profitable--provided it happens. If they are
able to get states to deregulate electricity, and Enron is able to provide
it, and it all goes well, it will be great and profitable--if it happens. If
the Central or South American pipeline goes through and works and runs a
profit it will be great--if it happens. An empire built on ifs. It all
seemed so provisional.

I went away for a few weeks and worked hard and tried to put together a
speech and make a contribution to the annual report, but none of it really
worked. Mr. Lay used at least part of the speech I worked on, about
deregulation and its challenges. Some of what I tried to write for the
annual report made it in. But mostly my contributions weren't helpful, and I
think for two reasons. One was that the guys at the top, and in the middle,
seemed unable to communicate to me exactly what it was the company was doing
to make money. So I didn't absorb the information and make it understandable
to others. The other was that I think I sensed a sort of corporate monomania
at the top--if you can't understand what we're doing then maybe you're not
too bright.

But the key part was that I couldn't help them explain their mission because
I didn't fully understand what their mission was. I understand what the
Kenneth Cole shoe company does. It makes shoes and sells them in stores.
Firestone makes tires. I couldn't figure out how Enron was making its money,
what exactly it was selling, and every time I asked I got a kind of
gobbledygook answer or a cryptic one, like "The future!"

We should all have a realistic sense of our limits, and I decided that one
of mine is that I don't have a mind that appears to be able to understand
the complexities of modern big business. But my dimness was in this case
helpful to me. It meant I would have not a long relationship with Enron but
a short one that lasted about a month. And it allowed me to make another
choice. A friend, on being told I'd been to Houston and was working on an
annual report, told me: "Get paid in stock, that company is golden."
-------------------endquote------------------>>

susupply

unread,
Nov 14, 2002, 12:04:42 PM11/14/02
to

"David Friedman" <dd...@daviddfriedman.com> wrote in message
news:ddfr-90A68B.1...@sea-read.news.verio.net...

>... I don't think a scholar is responsible for how other people


> use his ideas, as long as he is honest in giving the arguments that he
> thinks are correct.

Which reminds me of a surprisingly not well-known, article by the late
George Stigler: A Sketch of the History of Truth in Teaching.

Not available online, unless you have a subscription:

http://ideas.repec.org/a/ucp/jpolec/v81y1973i2p491-95.html

But it is included in his: The Intellectual and the Marketplace, which is
where I'm getting the following:

<<----------------------quote------------------------
....Witness the arrow of consumerism.

It started simply enough: various people--and especially a young man named
Nader--found automobiles less safe than they wished....These zealous patrons
of the public furthermore insisted that defective products be corrected, and
that damage arising in spite of the most conscientious efforts of the
manufacturer should be his financial responsibility. Similar arrows were
soon launched at a score of nonvehicular industries.

This quiver of truth- and safety-minded arrows was thrown for a time at
perfectly appropriate targets--businessmen accustomed to public abuse, who
were naturally able to charge their customers for any amount of safety,
frequent and successful lawsuits, and obloquy. But the arrows of reform
pass through--if they hit at all-the targets at which they are aimed, and in
1973 they hit a professor. Evil day!

In that year a young man named Dascomb Henderson, a graduate of Harvard
Business School (1969) and recently discharged as assistant treasurer of a
respectable-sized corporation, sued his alma mater for imparting instruction
since demonstrated to be false. This instruction...concerned the proper
investment of working capital. One of Henderson's teachers at Harvard, a
Professor Plessek, had thoroughly sold his students on a sure-fire method of
predicting short-term interest rate movements, based upon a predictive
equation incorporating recent movements of the difference between high- and
low-quality bond prices, the stock of money (Plessek had a Chicago Ph.D.),
the number of "everything is under control" speeches given by governors of
the Federal Reserve Board in the previous quarter, and the full-employment
deficit.....Assistant treasurer Henderson...played the long-term bond market
with his corporation's cash, and in the process the cash lost its surplus
character. He was promptly discharged...and sued.

....Henderson's attorney deliberately pursued several lines of attack....

1 ....

2 Professor Plessek did not display proper scientific caution. Henderson's
class notes recorded the sentence: "I'll stake my reputation as an
econometrician that this model will not [engage in intercourse with] a
portfolio manager". This was corroborated, with a different verb, by a
classmate's notes.
3 ....

4. Harvard University was grossly negligent in retaining (and hence
certifying the professional competence of) an assistant professor whose work
had received humiliating professional criticism (Journal of Business, April
1972). Instead, he had been promoted to associate professor in 1972.
....

Harvard...asked for a dismissal...claiming that it was frivolous and
unfounded. Universities and teachers could not be held responsible for
honest errors, or all instruction would be brought to a stop. .... Judge
Howlson (Yale, LL.B. 1940) remanded the case for trial on the merits,
and...remarked: "It seems paradoxical beyond endurance to rule that a
manufacturer of shampoos may not endanger a student's scalp but that a
premier educational institition is free to stuff his skull with nonsense."

...Harvard and Professor Plessek won the case...but by a thin and foreboding
margin. Only the facts that (1) the Plessek equation, as of 1969, looked
about as good as most such equations, and, (2) the plaintiff could not
reasonably be expected to be informed of the failure of the equation as soon
as two years after it was discovered--the lag in publication alone is this
long--excused the errant professor. ....

The university world received the decision with what an elderly Englishman
would call concern and I would call pandemonium. ...Within a breathless
three weeks, a professor at Cornell's medical school had sent an explicit
retraction of his treatment of Parkinson's disease to the last decade's
graduates of the school. This proved to be only the first of a torrent of
such actions; but well before that torrent had climaxed at least ninety-five
suits against universities and teachers had been filed.

[much more snipped]
----------------------endquote--------------------->>


James A. Donald

unread,
Nov 14, 2002, 12:53:47 PM11/14/02
to
--
"Samuel Barber"

> > All of PayPal's venture-funded direct competitors are out
> > of business, and it's not likely that any new ones will be
> > funded. There is still the possibility that the major banks
> > could get together and create a rival service. That would
> > be a formidable competitor. One reason this might not
> > happen is that the new network would compete with existing
> > profitable banking networks, and companies are always
> > relunctant to cannabalize business. PayPal is not yet a
> > threat to the banks (I think it will be someday).

susupply


> I'm not familiar with what PayPal does, could you briefly
> explain their business. And tell me what the network effects
> are in their case.

Paypal allows people to send money by email. So does e-gold,
backed by private investors, and e-dinar, backed by the
government of Dubai, and e-rand, backed by the smell of an oil
rag and someone's credit card.

Obviously it is convenient to use the same service that
everyone else uses, which is Paypal, which overwhelmingly
dominates the business, almost totally dominates the business,
thanks to their early willingness to suffer extraordinarily
large losses, stupendous losses, to build their business.

But despite this overwhelming and near total domination, and
despite the obvious strength of network effects working in
their favor, their competitors are not in fact going away,
rather seem to be growing.

Thus while network effects obviously matter, we cannot yet tell
if they matter enough to justify the "new economy" strategy of
disregarding losses, in order to set standards in one's own
favor, whether network effects truly "lock in", or merely tilt
the balance a little bit.

--digsig
James A. Donald
6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG

OCDmyJUtdvnUlbgp2KOsADs97l5SzujJe8nzRE5e
4k2cKsA6lHw1ydM1Ul8TgZcYybHulgENNpX4pWIZm


Samuel Barber

unread,
Nov 14, 2002, 5:04:46 PM11/14/02
to
"susupply" <susu...@mindspring.com> wrote in message news:<ar0bfl$kau$1...@slb2.atl.mindspring.net>...

> I'm not familiar with what PayPal does, could you briefly explain their
> business. And tell me what the network effects are in their case.

www.paypal.com

It should be obvious what the network effects are.

Sam

susupply

unread,
Nov 14, 2002, 6:47:02 PM11/14/02
to

"Samuel Barber" <ope...@yahoo.com> wrote in message
news:37991aef.02111...@posting.google.com...

This is exactly the point Stan Liebowitz is making in "Re-Thinking the
Network Economy", way too many people have thought it was obvious, when it
really wasn't. Hence the bloodbath.

I note with some amusement that when I clicked on your paypal url, I saw
four logos for companies that are in the business of transferring funds,
which should tell us something about how strong the network effects are for
this type of activity.


susupply

unread,
Nov 14, 2002, 6:51:42 PM11/14/02
to

"James A. Donald" <jam...@echeque.com> wrote in message
news:f5o7tu8h0cp12hu3p...@4ax.com...

> Paypal allows people to send money by email. So does e-gold,
> backed by private investors, and e-dinar, backed by the
> government of Dubai, and e-rand, backed by the smell of an oil
> rag and someone's credit card.
>
> Obviously it is convenient to use the same service that
> everyone else uses, which is Paypal, which overwhelmingly
> dominates the business, almost totally dominates the business,
> thanks to their early willingness to suffer extraordinarily
> large losses, stupendous losses, to build their business.

I don't see why it is obvious why everyone should want to use the same
service. Network effects can be negative, for one thing.

> But despite this overwhelming and near total domination, and
> despite the obvious strength of network effects working in
> their favor, their competitors are not in fact going away,
> rather seem to be growing.

Which is a sentence contradicting itself.

>
> Thus while network effects obviously matter, we cannot yet tell
> if they matter enough to justify the "new economy" strategy of
> disregarding losses, in order to set standards in one's own
> favor, whether network effects truly "lock in", or merely tilt
> the balance a little bit.

The evidence is very strong that network effects are heavily oversold as
part of a business plan. From what you've just told me about the enormous
losses Paypal took, I'm betting it was a poor bet for them too.


David Friedman

unread,
Nov 14, 2002, 7:48:15 PM11/14/02
to
In article <ar0kr1$rrj$1...@slb0.atl.mindspring.net>,
"susupply" <susu...@mindspring.com> wrote:

>
> "David Friedman" <dd...@daviddfriedman.com> wrote in message
> news:ddfr-90A68B.1...@sea-read.news.verio.net...
>
> >... I don't think a scholar is responsible for how other people
> > use his ideas, as long as he is honest in giving the arguments that he
> > thinks are correct.
>
> Which reminds me of a surprisingly not well-known, article by the late
> George Stigler: A Sketch of the History of Truth in Teaching.

I used to assign that in class. The funny things was how many students
took it for granted that it was real, despite the dates.

--
www.daviddfriedman.com

David Friedman

unread,
Nov 14, 2002, 7:52:23 PM11/14/02
to
In article <m3lm3w1...@cycloid.localdomain>,
Tim Lambert <lam...@cse.unsw.edu.au> wrote:

> Indeed. The facts show that there *is* an advantage to Dvorak,
> despite what Liebowitz says. But I get the feeling that you would
> prefer to believe Liebowitz, rather than the facts.

And you apparently prefer not to read Liebowitz's published work--the
"Fable of the Keys" article and the Microsoft book--in order to find out
what Liebowitz says. He doesn't claim that Dvorak has no advantage. He
claims that if it has an advantage it is not very large, and does not
justify the claims made by Paul David et. al.

--
www.daviddfriedman.com

James A. Donald

unread,
Nov 14, 2002, 8:41:46 PM11/14/02
to
--
On Thu, 14 Nov 2002 09:53:47 -0800, James A. Donald

> Paypal allows people to send money by email. So does e-gold,
> backed by private investors, and e-dinar, backed by the
> government of Dubai, and e-rand, backed by the smell of an
> oil rag and someone's credit card.

I exaggerated: e-rand is very small and perhaps not doing so
well, but is still worth a few hundred thousand, which is more
than "the smell of an oil rag and somebody's credit card."

--digsig
James A. Donald
6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG

HIroBX5dqE1MEs6Giry0f2GPYZ76HXV5Jby3h8m
4B50SkNH+ivKPYJzsEjjNxDnN6XMKYej2v76rTGLB


Samuel Barber

unread,
Nov 15, 2002, 4:45:03 AM11/15/02
to
"susupply" <susu...@mindspring.com> wrote in message news:<ar1cmi$5h7$1...@slb4.atl.mindspring.net>...

> I don't see why it is obvious why everyone should want to use the same
> service. Network effects can be negative, for one thing.

Can you be more specific?

> The evidence is very strong that network effects are heavily oversold as
> part of a business plan. From what you've just told me about the enormous
> losses Paypal took, I'm betting it was a poor bet for them too.

I offered some facts that indicate it was a good bet. Do you have any
non-theoretical reason to think it wasn't?

As far as I know, nobody has argued that network effects, however
strong, provide an absolute immunity to competition. Rather, they are
a hill that a would-be competitor must climb, a barrier that doesn't
exist in markets that don't exhibit network effects.

I don't know how to quantify it, except in vague terms like "strong"
or "weak". Strong network effects exist in cases where the service
would be completely useless to you if you were the only customer, and
much more useful as the users increase.

Sam

Robert Vienneau

unread,
Nov 15, 2002, 5:36:30 AM11/15/02
to
In article <ddfr-EBF4D5.1...@sea-read.news.verio.net>, David
Friedman <dd...@daviddfriedman.com> wrote:

The admission that QWERTY is not as "efficient" as Dvorak seems to
me a retreat for defenders of Liebowitz and Margolis. But David
Friedman should have noted that Liebowitz and Margolis arguably do
not address Paul David's main claim, the existence of path dependence
and lock-in in typewriter keyboards.

Anyways, David Friedman might consider:

"By contrast, as the term 'lock-in' has been used in my work and
that of Arthur (1989), it simply is a vivid way to describe the
entry of a system into a trapping region ­ the basin of attraction
that surrounds a locally (or globally) stable equilibrium. When a
dynamic economic system enters such a region, it cannot escape
except through the intervention of some external force, or shock,
that alters its configuration or transforms the underlying
structural relationships among the agents. Path dependent systems -
which have a multiplicity of possible equilibria among which
event-contingent selections can occur - may thus become locked in
to attractors that are optimal, or that are just as good as any
others in the feasible set, or that take paths leading to places
everyone would wish to have been able to avoid, once they have
arrived there.

From this vantage point, ARTHUR'S (1989) PHRASE 'LOCK-IN BY SMALL


HISTORICAL EVENTS' IS EVIDENTLY A GLOSS THAT SHOULD NOT BE READ

TOO LITERALLY; it is a convenient contraction of the foregoing
reference to the way in which trapping regions may be entered -
although somewhat unfortunate, in allowing a hasty reader to
suppose that the antecedent events somehow have created the local
stability, or locked-in state..."
-- Paul David (emphasis added)

Is Paul David "slyly admit[ing] he was wrong" here, especially
in the emphasized phrase? The adjective "slyly" suggests there is
something dishonest about what Paul David is saying here. Is this
suggestion justified by the text?

Has any evidence been presented that "all those dot com entrepreneurs


who lost their investors' shirts" took anything mistaken from "the

earlier Arthur and David"? Is there any evidence at all that "Carl


Shapiro and Hal Varian [were] among those who helped popularize the
ideas about which David now says he was just kidding"? In particular,
does Paul David now say in the above text that he was "just kidding"?


I assume you can tell that the following two passages, apparently
from the book, "Information Rules", are not contradictory:

"First-mover advantages can be powerful and long-lasting in
lock-in markets, especially those in information industries
where scale economies are substantial."

"Be prepared to invest to build an installed base through


promotions and by offering up-front discounts. You can't succeed
in competetive lock-in markets without making those investments."

And I assume you can tell that the following two passages, apparently
from Brian Arthur, are not contradictory:

"Two maxims are widely accepted in knowledge-based markets: It
pays to hit the market first, and it pays to have superb technology."

"...the losers are left with practically nothing, even if their
products are technically brilliant...."

--

susupply

unread,
Nov 15, 2002, 10:04:56 AM11/15/02
to

"Samuel Barber" <ope...@yahoo.com> wrote in message
news:37991aef.02111...@posting.google.com...
> "susupply" <susu...@mindspring.com> wrote in message
news:<ar1cmi$5h7$1...@slb4.atl.mindspring.net>...
> > I don't see why it is obvious why everyone should want to use the same
> > service. Network effects can be negative, for one thing.
>
> Can you be more specific?

Congestion.

> > The evidence is very strong that network effects are heavily oversold as
> > part of a business plan. From what you've just told me about the
enormous
> > losses Paypal took, I'm betting it was a poor bet for them too.
>
> I offered some facts that indicate it was a good bet. Do you have any
> non-theoretical reason to think it wasn't?

The only "facts" I saw from you were to the effect that they had "turned the
corner into profitably", which I read as; they have not recovered their
losses. Which is a pretty good non-theoretical reason for the strategy
being a bad bet.

> As far as I know, nobody has argued that network effects, however
> strong, provide an absolute immunity to competition.

Paul David and Brian Arthur. But thanks to L&M they've been backpedaling
like crazy from that early claim. Then there are all the business gurus who
have picked up their argument, and popularized it. There are plenty of
examples in "Re-Thinking the Network Economy".

> Rather, they are
> a hill that a would-be competitor must climb, a barrier that doesn't
> exist in markets that don't exhibit network effects.

That's not true. Competing with any established business, in any industry,
is a hill to climb.

> I don't know how to quantify it, except in vague terms like "strong"
> or "weak". Strong network effects exist in cases where the service
> would be completely useless to you if you were the only customer, and
> much more useful as the users increase.

That's not a very good definition. Stan Liebowitz and Steve Margolis have a
considerably more rigorous one in the Palgrave, which is available online
at:

http://wwwpub.utdallas.edu/~liebowit/palgrave/network.html


susupply

unread,
Nov 15, 2002, 10:26:25 AM11/15/02
to

"Robert Vienneau" <rv...@see.sig.com>

continuing to refine his tradition of commenting on work he has not read
(nor even has any plans to read, apparently)

wrote in message news:rvien-D82A6E....@news.dreamscape.com...

> The admission that QWERTY is not as "efficient" as Dvorak seems to
> me a retreat for defenders of Liebowitz and Margolis.

This is most decidedly NOT what L&M have said. How very Male Answer
Syndrome of you, Robert.

> But David
> Friedman should have noted that Liebowitz and Margolis arguably do
> not address Paul David's main claim, the existence of path dependence
> and lock-in in typewriter keyboards.

Oh really, then what has Paul David been whining about all these years?

From The Fable of the Keys:

<< In the economics literature on standards, the popular real-world example
of this market failure is the standard Qwerty typewriter keyboard and its
competition with the rival Dvorak keyboard. This example is noted frequently
in newspaper and magazine reports, seems to be generally accepted as true,
and was brought to economists' attention by the papers of Paul David. ....

<< This article examines the history, economics, and ergonomics of the
typewriter keyboard. We show that David's version of the history of the
market's rejection of Dvorak does not report the true history, and we
present evidence that the continued use of Qwerty is efficient given the
current understanding of keyboard design. >>

I hope Robert doesn't choke on that last sentence.

> Anyways, David Friedman might consider:

[snip the third iteration of the same passage from a Paul David article, and
I note that Robert has again been unable to respond to the mountain of
evidence I've provided refuting David's claim regarding Brian Arthur's
phrase not being taken "too literally".]

> I assume you can tell that the following two passages, apparently
> from the book, "Information Rules", are not contradictory:
>
> "First-mover advantages can be powerful and long-lasting in
> lock-in markets, especially those in information industries
> where scale economies are substantial."
>
> "Be prepared to invest to build an installed base through
> promotions and by offering up-front discounts. You can't succeed
> in competetive lock-in markets without making those investments."

Who said the two phrases were supposed to be contradictory?

They were both offered as the evidence you claimed to want to know about.
Remember, we're not supposed to take "too literally" the phrase "lock-in",
but here's Varian and Shapiro telling entrepreneurs they "can't succeed in
competitive *lock-in* markets", without first losing huge amounts of money.
A lot of investors who took this seriously LOST THEIR SHIRTS.

> And I assume you can tell that the following two passages, apparently
> from Brian Arthur, are not contradictory:
>
> "Two maxims are widely accepted in knowledge-based markets: It
> pays to hit the market first, and it pays to have superb technology."
>
> "...the losers are left with practically nothing, even if their
> products are technically brilliant...."

I see, "it pays", is not contradicted by: "the losers are left with
practically nothing". You have a very odd vocabulary, Robert.


Tim Lambert

unread,
Nov 15, 2002, 10:55:02 AM11/15/02
to
"susupply" <susu...@mindspring.com> writes:

> "Tim Lambert" <lam...@cse.unsw.edu.au> wrote in message
> news:m3ptt81...@cycloid.localdomain...
> > David Friedman <dd...@daviddfriedman.com> writes:
>
> > > What are you quoting--their book, or "Fable of the Keys?"
> >
> > The quote is from Reason Online:
> >
> > http://reason.com/9611/ltr.sl.shtml
>
> You've managed to quote, not an L&M paper, but (only part of) a short reply
> by them to a letter to the editor.

So, what's your point? You don't think that they have to be truthful
in their reply?

> A letter which is deeply ignorant:
>
> <<Liebowitz and Margolis's article is as flawed as the QWERTY keyboard. I
> would suggest that they get out from under their papers, books, and research
> studies to try a Dvorak keyboard to get at the truth. In the studies they
> cite, where two groups competed against each other on the two machines, they
> failed to observe that the participants previously all had been QWERTY
> typists. This leads to an obvious disadvantage for the Dvorak groups, who
> had to overcome their QWERTY habits while attempting to adapt to the new
> keyboard layout. The only acceptable study would be one in which all the
> participants had never typed before. The result would be quite clear: The
> Dvorak is far superior.
>
> << James Argiro
> Deerfield Beach, FL >>
>
> Their reply being:
>
> << To Mr. Argiro we would note that the mathematical simulations of typing,
> which show no advantage for Dvorak, do not have the drawback that he cites.
> >>
>
> You forgot to include their: "do not have the drawback that he cites".

because it's not relevant. The fact is that they claimed that the
mathematical simulations of typing show no advantage for Dvorak, which
is not true.

Here is what Norman says in the "Design of Everyday Things"

-----------------------
There is a better way -- the Dvorak keyboard -- painstakingly
developed by (and named after) one of the founders of industrial
engineering. It is easier to learn and allows for about 10 percent
faster typing, but that is simply not enough of an improvement to
merit a revolution in the keyboard. Millions of people would have to
learn a new style of typing. Millions of typewriters would have to be
changed. The severe constraints of existing practice prevent change,
even where the change would be an improvement.[7]

Endnote 7: Admirers of the Dvorak keyboard claim much more than a 10
percent improvement, as well as faster learning rates and less
fatigue. But I will stick by my studies and my statements. If you want
to read more, including a worthwhile treatment of the history of the
typewriter, see the book Cognitive aspects of skilled typewriting,
edited by Cooper (1983), which includes several chapters of research
from my laboratory.
--------------------------------------

Tim Lambert

unread,
Nov 15, 2002, 11:15:07 AM11/15/02
to
David Friedman <dd...@daviddfriedman.com> writes:

> In article <m3lm3w1...@cycloid.localdomain>,
> Tim Lambert <lam...@cse.unsw.edu.au> wrote:
>
> > Indeed. The facts show that there *is* an advantage to Dvorak,
> > despite what Liebowitz says. But I get the feeling that you would
> > prefer to believe Liebowitz, rather than the facts.
>
> And you apparently prefer not to read Liebowitz's published work--the
> "Fable of the Keys" article and the Microsoft book--in order to find out
> what Liebowitz says.

Huh? Are you saying that the claim he made in "Reason" was a
misprint? Has he retracted it?

> He doesn't claim that Dvorak has no advantage. He
> claims that if it has an advantage it is not very large, and does not
> justify the claims made by Paul David et. al.

However, the HCI studies show that it does have an advantage of about
5-10%. This is not as much as David suggested, but it is large enough
to matter.

Page 1288 of Handbook of Human-Computer Interaction:
-------------------------------------------------
Noel and McDonald (1989) used an artificial intelligence search
procedure to discover the best possible key layout for the standard
keyboard configuration. Their algorithm used the typing model
developed by Norman and Fisher (1982) to direct the search. Their
program considered 50,000 keyboard layouts from the first to the
final iteration of the search. The results indicated that the DSK
was about 10% better than QWERTY, and that the best possible layout
was 1.2% better than DSK.

Conclusions

Most studies have confirmed that DSK is faster than QWERTY. However,
there is disagreement about the size of the difference between the
two keyboard layouts. Earlier accounts claimed that DSK was from 15%
to 50% faster than QWERTY (Yamada, 1980). More recent calculations
give much smaller numbers, ranging from 2.3% to 17% (Kinkead, 1975;
Norman and Fisher, 1982; Yamada, 1980). Because the best design
their search procedure could turn up was only 1.2% better than the
DSK, the results of Noel and McDonald (1989) suggest that it would
be fruitless to attempt to develop a layout in the standard keyboard
configuration significantly superior to the DSK.

Because there are so many unknowns (such as how long it will take a
particular typist to retrain), a switch to DSK would probably not
provide a practical improvement in productivity. With an estimated 5
to 10% increase in output over QWERTY (Noel and McDonald. 1989;
Norman and Fisher, 1982), the switch might be cost effective for
some typists, but essentially worthless for most. For example, a
typist with an average speed of 50 wpm would, after complete
retraining, produce 52.5 to 55 wpm. At roughly 800 words per
single-spaced page, this hypothetical retrained typist, typing
nonstop for eight hours per day, would increase production from
about 30 pages per day up to 31.5 to 33 pages per day. Also. a
typist trained on QWERTY can easily transfer his or her skill to any
other standard keyboard, but a typist trained on DSK could not.
-------------------------------------------------

Tim

Tim Lambert

unread,
Nov 15, 2002, 11:20:02 AM11/15/02
to
"susupply" <susu...@mindspring.com> writes:

> "Tim Lambert" <lam...@cse.unsw.edu.au> wrote in message
> news:m3lm3w1...@cycloid.localdomain...
> > "susupply" <susu...@mindspring.com> writes:
>
> > > Stubborn things, these facts.
> >
> > Indeed. The facts show that there *is* an advantage to Dvorak,
> > despite what Liebowitz says. But I get the feeling that you would
> > prefer to believe Liebowitz, rather than the facts.
>
> The facts are as L&M have presented them, not as Arthur and David and their
> idolators would have them. You yourself just got through quoting only part
> of one sentence of a letter they wrote in response to a SPECIFIC criticism.

In which they falsely claimed that Norman's work found no difference.

> You disingenuously left out the clause in which the context would have been
> made clear.

It is dishonest of you to claim that the context changed their meaning.

> Further, you have also done a very dishonest edit of my response to you,
> conveniently leaving out what your own source has to say:
>
> << There seems no reason to choose Sholes, Dvorak, or alphabetically
> organized keyboards over one another on the basis of typing speed. >>

Pardon? Here is what my source says on the matter:

There is a better way -- the Dvorak keyboard -- painstakingly
developed by (and named after) one of the founders of industrial
engineering. It is easier to learn and allows for about 10 percent
faster typing, but that is simply not enough of an improvement to
merit a revolution in the keyboard. Millions of people would have to
learn a new style of typing. Millions of typewriters would have to
be changed. The severe constraints of existing practice prevent

change, even where the change would be an improvement.7

7. Admirers of the Dvorak keyboard claim much more than a 10 percent


improvement, as well as faster learning rates and less fatigue. But
I will stick by my studies and my statements. If you want to read
more, including a worthwhile treatment of the history of the
typewriter, see the book Cognitive aspects of skilled typewriting,
edited by Cooper (1983), which includes several chapters of research
from my laboratory.

Don Norman "The Design of Everyday Things"

Grinch

unread,
Nov 15, 2002, 1:38:06 PM11/15/02
to
On 16 Nov 2002 03:15:07 +1100, Tim Lambert <lam...@cse.unsw.edu.au>
wrote both....


>However, the HCI studies show that it does have an advantage of about

>5-10%. This is not as much as David suggested but it is large enough to matter.

and...

>Page 1288 of Handbook of Human-Computer Interaction:

>...
> Conclusions
>
> ... a switch to DSK would probably not


> provide a practical improvement in productivity. With an estimated 5
> to 10% increase in output over QWERTY (Noel and McDonald. 1989;
> Norman and Fisher, 1982), the switch might be cost effective for

> some typists, but essentially worthless for most....

> Also, a


> typist trained on QWERTY can easily transfer his or her skill to any
> other standard keyboard, but a typist trained on DSK could not.
>-----------------

>Tim

David Friedman

unread,
Nov 15, 2002, 1:50:19 PM11/15/02
to
In article <m365uy6...@cycloid.localdomain>,
Tim Lambert <lam...@cse.unsw.edu.au> wrote:

> > And you apparently prefer not to read Liebowitz's published work--the
> > "Fable of the Keys" article and the Microsoft book--in order to find out
> > what Liebowitz says.
>
> Huh? Are you saying that the claim he made in "Reason" was a
> misprint? Has he retracted it?

The claim "made in Reason" was, I believe, in a brief rebuttal to a
letter to the editor. It was indeed misleading, but that's not
surprising in that casual a context.

Someone here, I think on this thread, already quoted what L&M say in
their scholarly article on the subject. Their claim is not zero
improvement but an improvement much smaller than Paul David et. al.
claim.

> > He doesn't claim that Dvorak has no advantage. He
> > claims that if it has an advantage it is not very large, and does not
> > justify the claims made by Paul David et. al.
>
> However, the HCI studies show that it does have an advantage of about
> 5-10%.

That sounds, from my vague memory, as though it is comparable to some of
the results that L&M cited. They referred to a number of different
studies. The general pattern was a small improvement.

--
www.daviddfriedman.com

David Friedman

unread,
Nov 15, 2002, 1:51:58 PM11/15/02
to
In article <m3adka6...@cycloid.localdomain>,
Tim Lambert <lam...@cse.unsw.edu.au> wrote:

> > You've managed to quote, not an L&M paper, but (only part of) a short reply
> > by them to a letter to the editor.
>
> So, what's your point? You don't think that they have to be truthful
> in their reply?

Truthful, yes. Speak precisely, not necessarily. They should have
written "show no large advantage." And that is sufficient for the point
they are making, which is about a particular way of explaining away the
failure of Dvorak to test as much better than Qwerty.

--
www.daviddfriedman.com

David Friedman

unread,
Nov 15, 2002, 1:54:20 PM11/15/02
to
In article <rvien-D82A6E....@news.dreamscape.com>,
Robert Vienneau <rv...@see.sig.com> wrote:

> > And you apparently prefer not to read Liebowitz's published work--the
> > "Fable of the Keys" article and the Microsoft book--in order to find out
> > what Liebowitz says. He doesn't claim that Dvorak has no advantage. He
> > claims that if it has an advantage it is not very large, and does not
> > justify the claims made by Paul David et. al.
>
> The admission that QWERTY is not as "efficient" as Dvorak seems to
> me a retreat for defenders of Liebowitz and Margolis.

A retreat from where? Have you actually read _Fable of the Keys?_


> But David
> Friedman should have noted that Liebowitz and Margolis arguably do
> not address Paul David's main claim, the existence of path dependence
> and lock-in in typewriter keyboards.

"Arguably?" Have you read the article? They discuss in some detail both
Paul David's historical claims, which turn out to be almost uniformly
false, and the underlying argument, which becomes much less convincing
if you think about it for more than five minutes.

--
www.daviddfriedman.com

David Friedman

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Nov 15, 2002, 1:56:31 PM11/15/02
to
In article <37991aef.02111...@posting.google.com>,
ope...@yahoo.com (Samuel Barber) wrote:

> I don't know how to quantify it, except in vague terms like "strong"
> or "weak". Strong network effects exist in cases where the service
> would be completely useless to you if you were the only customer, and
> much more useful as the users increase.

Have you read the Liebowitz and Margolis Microsoft book? They provide
some evidence that, in software, the effects are weak, and they discuss
the various other historical incidents that get offered as examples of
strong network effects.

--
www.daviddfriedman.com

Robert Vienneau

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Nov 15, 2002, 3:34:42 PM11/15/02
to
In article <m3adka6...@cycloid.localdomain>, Tim Lambert
<lam...@cse.unsw.edu.au> wrote:

> "susupply" <susu...@mindspring.com> writes:

> > You've managed to quote, not an L&M paper, but (only part of) a short
> > reply
> > by them to a letter to the editor.

> So, what's your point? You don't think that they have to be truthful
> in their reply?

Patrick Sullivan doesn't think.

Samuel Barber

unread,
Nov 15, 2002, 5:06:35 PM11/15/02
to
"susupply" <susu...@mindspring.com> wrote in message news:<ar326l$pb1$1...@slb4.atl.mindspring.net>...

> "Samuel Barber" <ope...@yahoo.com> wrote in message
> news:37991aef.02111...@posting.google.com...
> > "susupply" <susu...@mindspring.com> wrote in message
> news:<ar1cmi$5h7$1...@slb4.atl.mindspring.net>...
> > > I don't see why it is obvious why everyone should want to use the same
> > > service. Network effects can be negative, for one thing.
> >
> > Can you be more specific?
>
> Congestion.

Ah. But that's a very temporary problem, at least in the cases we're
discussing.

> > I offered some facts that indicate it was a good bet. Do you have any
> > non-theoretical reason to think it wasn't?
>
> The only "facts" I saw from you were to the effect that they had "turned the
> corner into profitably", which I read as; they have not recovered their
> losses. Which is a pretty good non-theoretical reason for the strategy
> being a bad bet.

So every time a company turns from losses to profits, that's a sure
sign of failure? Huh?

> > As far as I know, nobody has argued that network effects, however
> > strong, provide an absolute immunity to competition.
>
> Paul David and Brian Arthur. But thanks to L&M they've been backpedaling
> like crazy from that early claim. Then there are all the business gurus who
> have picked up their argument, and popularized it. There are plenty of
> examples in "Re-Thinking the Network Economy".

Well, I certainly don't want to associate myself with that view,
assuming you are representing it truthfully.

> > Rather, they are
> > a hill that a would-be competitor must climb, a barrier that doesn't
> > exist in markets that don't exhibit network effects.
>
> That's not true. Competing with any established business, in any industry,
> is a hill to climb.

Reading comprehension problems? I didn't say or imply that network
effects are the only hill to climb.

Sam

susupply

unread,
Nov 15, 2002, 7:56:20 PM11/15/02
to

"David Friedman" <dd...@daviddfriedman.com> wrote in message
news:ddfr-8FC4C1.1...@sea-read.news.verio.net...

> The claim "made in Reason" was, I believe, in a brief rebuttal to a
> letter to the editor. It was indeed misleading, but that's not
> surprising in that casual a context.

It wasn't misleading at all, actually, as this:

<< To Mr. Argiro we would note that the mathematical simulations of typing,
which show no advantage for Dvorak, do not have the drawback that he cites.
>>

was a reference to this paragraph in the magazine article:

<< Ergonomic studies also confirm that the advantages of Dvorak are either
small or nonexistent. For example, A. Miller and J Thomas, two researchers
at the IBM Research Laboratory, writing in the International Journal of
Man-Machine Studies, conclude that "no alternative has shown a realistically
significant advantage over the QWERTY for general purpose typing." Other
studies based on analysis of hand-and-finger motions find differences of
only a few percentage points between Dvorak and QWERTY. The consistent
finding in ergonomic studies is that the results imply no clear advantage
for Dvorak, and certainly no advantage of the magnitude that is so often
claimed.>>

And, following the sentence from L&Ms response that is quoted above, is
this:

<< Also, Dvorak did claim that QWERTY typists would also benefit from his
technique. His own Navy study compared retrained QWERTY typists,
appropriately mimicking the decision that faced actual typists (who already
knew QWERTY). Nevertheless, we agree that it would be interesting to have a
controlled experiment starting with new typists. Unlike Mr. Argiro, however,
we cannot claim with certainty what the results will show, although we
believe that he will be proved wrong. >>

Mr. Lambert is guilty of quoting grossly out of context.

susupply

unread,
Nov 15, 2002, 8:20:14 PM11/15/02
to

"Tim Lambert" <lam...@cse.unsw.edu.au> wrote in message
news:m31y5m6...@cycloid.localdomain...
> "susupply" <susu...@mindspring.com> writes:

> > The facts are as L&M have presented them, not as Arthur and David and
their
> > idolators would have them. You yourself just got through quoting only
part
> > of one sentence of a letter they wrote in response to a SPECIFIC
criticism.
>
> In which they falsely claimed that Norman's work found no difference.

That is a lie. They did not mention Norman, either in their response to the
letter writer or in their article. But they do quote from his work in other
articles, of which you are clearly ignorant.

[snip]

> > Further, you have also done a very dishonest edit of my response to you,
> > conveniently leaving out what your own source has to say:
> >
> > << There seems no reason to choose Sholes, Dvorak, or alphabetically
> > organized keyboards over one another on the basis of typing speed. >>
>
> Pardon? Here is what my source says on the matter:

Your source:

Donald A Norman and David E. Rumelhart Studies of Typing from the LNR
Research Group. in Cognitive Aspects of Skilled typewriting 45, (William E.
Cooper ed. 1983).

said:

<< For the expert typist, the layout of keys makes surprisingly little
difference. There seems no reason to choose Sholes, Dvorak. or


alphabetically organized keyboards over one another on the basis of typing
speed. >>

Further, you seem to be relying not on actual typing, but to some sort of
design simulation in your cite:

<< Page 1288 of Handbook of Human-Computer Interaction:

-------------------------------------------------
Noel and McDonald (1989) used an artificial intelligence search
procedure to discover the best possible key layout for the standard
keyboard configuration. Their algorithm used the typing model
developed by Norman and Fisher (1982) to direct the search. Their
program considered 50,000 keyboard layouts from the first to the
final iteration of the search. The results indicated that the DSK
was about 10% better than QWERTY, and that the best possible layout
was 1.2% better than DSK.>>

And then in the conclusions you've provided for us we can read:

<< Because there are so many unknowns...a switch to DSK would probably not


provide a practical improvement in productivity. With an estimated 5
to 10% increase in output over QWERTY (Noel and McDonald. 1989;
Norman and Fisher, 1982), the switch might be cost effective for

some typists, but ***essentially worthless for most***. >>

My *** in the above.

susupply

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Nov 15, 2002, 8:28:42 PM11/15/02
to

"Robert Vienneau" <rv...@see.sig.com>

imitating a character from a Monty Python skit,

wrote in message news:rvien-9AE179....@news.dreamscape.com...

Robert Vienneau

unread,
Nov 16, 2002, 1:51:33 AM11/16/02
to
In article <ddfr-EB39B5.1...@sea-read.news.verio.net>, David
Friedman <dd...@daviddfriedman.com> wrote:

> In article <rvien-D82A6E....@news.dreamscape.com>,
> Robert Vienneau <rv...@see.sig.com> wrote:

> > The admission that QWERTY is not as "efficient" as Dvorak seems to
> > me a retreat for defenders of Liebowitz and Margolis.

> A retreat from where? Have you actually read _Fable of the Keys?_

Yes.

> > But David
> > Friedman should have noted that Liebowitz and Margolis arguably do
> > not address Paul David's main claim, the existence of path dependence
> > and lock-in in typewriter keyboards.

> "Arguably?" Have you read the article? They discuss in some detail both
> Paul David's historical claims, which turn out to be almost uniformly
> false, and the underlying argument, which becomes much less convincing
> if you think about it for more than five minutes.

Any underlying argument "becomes much less convincing if you think about
it for more than five minutes" if you don't notice an
unconvincing strawperson has been presented in its place.

When I first read Paul David's article on QWERTY, it did not strike me
as surpising.

Robert Vienneau

unread,
Nov 16, 2002, 1:58:11 AM11/16/02