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Icelanders Turn $12 Cod into $3,500 Worth of Products

Blog Post | Adoption of Technology

Icelanders Turn $12 Cod into $3,500 Worth of Products

The export value of Icelandic cod has increased 100 percent in the same time that the annual catch has fallen by 45 percent.

Iceland's Profitable Cod

Something odd has happened to Iceland’s fisheries. In Icelandic waters, cod numbers have hit a historic high. But rather than taking advantage of this bountiful fishing opportunity, the annual catch has decreased by 45 percent since 1981. Over the same period, the total export value of Icelandic cod products has increased by more than 100 percent. The cause of this peculiar and seemingly contradictory trend is partly explained by Iceland’s Ocean Cluster House or what is commonly referred to as the “Silicon Valley of White Fish.”

Overlooking Reykjavik’s harbor, Ocean Cluster House is home to 120 new marine start-ups, all of which are focused on “100 percent fish utilization.” In other words, they are businesses developing ideas that use fish meat, oil, skin, bones and intestines, to draw value out of produce that would otherwise be trashed. “From one cod we can maybe get $12 for the fillet. But if we use the whole round we can get $3,500 for each cod,” explains Ocean Cluster’s founder, Thor Sigfusson. The “value-added approach challenges the notion that a fish’s primary purpose is a fillet,” he notes.

Sigfusson objects to those who believe that “fisheries around the world need more fish to catch.” Instead, he argues that fishermen must reduce waste by utilizing the 55 to 60 percent of the fish that currently remains unused. Thanks to human ingenuity “you can do more with less,” Sigfusson explains. Here are just some of the innovative ideas that are revolutionizing the Icelandic fishing industry and proving human ingenuity can add value to previously unutilized materials and processes:

  • Penzim – a gel product made with enzymes from fish intestines; softens and heals damaged skin, and eases joint pain.
  • Alda – a lemon-flavored health drink developed using marine collagen.
  • Dropi – transformed smelly cod liver medicine into a freshly squeezed luxury good Omega 3 supplement.
  • Kerecis – makes medical bandages from cod skin. Treats wounds, burns and other tissue damage – including treating diabetic foot wounds that could otherwise become infected, resulting in amputation.
  • Omega3 Pectus – Kerecis is also working on a product to be used in breast reconstruction, replacing the nylon support string, with fish skin.
  • Reykjavik Foods – making canned fished into a luxury good by adding truffles and high-end packaging.
  • Dried fish heads, and fish carcass lamps – Ocean Cluster House sells dried fish heads for $8 in their souvenir shop, serving the niche tourist market.
  • Fish jerky – the onsite store now sells this unique type of jerky.
  • Feel Iceland – a company focusing on anti-aging cosmetic products made with marine collagen and enzymes.
  • The Cherry Tree – an art and design store selling clothing and accessories made from fish skin, including bags, belts and bowties.

Ocean Cluster House has begun to spread these efficiency-enhancing practices globally and has its eyes on North American markets, where it is currently estimated that between 40 percent and 47 percent of edible seafood is wasted. Iceland now utilizes 80 percent of each cod that is caught.

Change seen in the Icelandic fishing industry is just one example of the pioneering ways that human ingenuity can create more jobs and add greater value while using fewer or previously unutilized resources. As humanity becomes more educated, interconnected and innovative, other sectors are likely to undergo similar changes, making all of our lives more prosperous.  

Associated Press | Labor Productivity

Productivity Surge Helps Explain US Economy’s Resilience

“Chronic worker shortages have led many companies to invest in machines to do some of the work they can’t find people to do. They’ve also been training the workers they do have to use advanced technology so they can produce more with less.

The result has been an unexpected productivity boom.”

From Associated Press.

Blog Post | Science & Technology

AI, Tractors, and the Slow Diffusion of Labor-Saving Devices

Productivity and economic growth are a tide that lifts all boats, whether we're talking about agricultural machinery or ChatGPT.

“You can see the computer age everywhere but in the productivity statistics,” wrote economist and Nobel laureate Robert Solow in a 1987 book review. While computing was making massive strides in the 1980s and ’90s—cumulating in the internet mania and dot-com bubble and its burst—it took a long time before we saw large, economy-wide impacts of this revolutionary general-purpose technology. Computers, internet, and (smart) screens have made the modern world unrecognizable from what it was just a few decades ago, but the process took a lot longer than most techno-optimists suggested then—and their followers are suggesting now.

Last year had a strong 1990s feel to it: 2023 became the year of AI worries, with ChatGPT and other large language models making a bid for disrupting all manner of industries. Writers, musicians, lawyers, editors, physicians, graphic designers, and more were some of the professions seemingly at risk of losing their livelihood to machines that quickly replicate their work at a fraction of the cost.

We should draw two conclusions from these large language models and past technological transitions: First, some of their features are truly remarkable and can very well compete with (some) lawyers, writers, musicians, or graphic designers over the next few years. Second, radical, labor-saving technologies are slow to diffuse across the economy, so these mainly middle-class professions are probably safe from mechanization and automation a while longer.

Take the iconic horses-to-tractor transition in agriculture over the 20th century. From invention and commercial availability, tractors took decades to overtake horses. The same was true for steam engines, that iconic energy invention powering the Industrial Revolution—which itself was both one of most radical and life-changing events in all of human history and pretty dull on account of its slow changes.

“Over the sweep of history the tractor has indeed had an immense impact on people’s lives,” The Economist said in December 2023, “but it conquered the world with a whimper, not a bang.” In all ages, tech innovations have defused across societies slowly: the old technology remains relevant for decades. Even in the 1930s, two to three decades after the first tractors were built, there was more equine than mechanical horsepower on American farms. Scholars usually put the cutoff point for when tractors overtook horses on farms after World War II, a generation or more after they were first employed.

The story in The Economist also highlights the connection to real wages and overall economy. Productivity and economic growth are a tide that lifts all boats. A rule of thumb is that labor-saving technology gets adopted only once it makes sense to replace labor with machines. That happens when the machines get good enough, the cost of running them falls sufficiently, or the alternative uses for labor get high enough.

For the first few decades of the tractor’s existence, they weren’t obviously better than the source of literal horsepower that preceded them. They were expensive to run, were not that powerful, and couldn’t do many things that a horse could. For one, they compelled farmers to purchase gasoline—a resource they didn’t have—rather than putting horses out to grazing on land or having children (or cheap labor) tend to the animals—resources that they did have. And during the Great Depression in America, cheap labor wasn’t that hard to come by.

In time, those trends reversed; real incomes and better-paid manufacturing jobs bid labor away from the farms, and the demographic transition to smaller families meant that children couldn’t be routinely relied upon to, for example, care for the animals. In economic speech, the optimal size of farms grew, and on these larger farms the now much better tractors came into their own right.

In contrast, the labor that large language models like ChatGPT purport to displace is often highly remunerated, while the costs of running the operations are pretty low, which suggest that artificial intelligence (AI) might displace some such workers.

Yann LeCun, chief AI scientist at Meta/Facebook, is less convinced. In an interview with Wired magazine’s Steven Levy, LeCun says that “chatbots can produce very fluent text with very good style. But they’re boring, and what they come up with can be completely false.” For Reason magazine last year, I reflected on the promise of ChatGPT along similar lines: “Bad writers, cheating students, lazy professors, and journalists echoing press releases have clearly met their match. But the more human, creative, authentic storytelling that is the center of all meaningful writing has not.”

The tractor attempted to compete directly with a farming industry routinely employing over a third of the labor force in the 1800s and early 1900s in the United States, constituting some 15 percent of gross domestic product. What is the total addressable market for large language models and by extension general AI? Statista estimates that the market size of AI in the United States, a $27 trillion economy, is some $100 billion—a fraction of a percent. Even if that grows seven-fold this decade in line with projections (nothing to scoff at!), that’s also not as revolutionary as most pundits have claimed in this the first year of their widespread adoption.

Solow, who died late in 2023, might have repeated his statement about this new form of the computer age. Like the computer in the 1990s, the onset of AI and large language models make more media puff and noise than they have real-world, real-economy impact.

There is some suggestion that adoption of new technology and consumer items happen somewhat faster today than, say, in the 1940s or 1980s, but not by a lot. Still, what is more likely to happen than mass white-collar unemployment is that we’re going to have a symbiosis for a while. The old human-labor technology and the new machines will coexist, and human workers will gradually employ the machines in different ways. An evolution, not a revolution.

At the end of the day, writes Mike Munger for the American Institute for Economic Research, ChatGPT is just a calculator. And like calculators did, it will obsolete some human labor. And that will be fine.

Wall Street Journal | Labor & Employment

Companies with Robots Now Need Human “Robot Wranglers”

“Rutenberg, a robot technician and trainer at Amazon, is among a new class of workers responsible for corralling and managing the robots, fixing minor maintenance issues and keeping tabs on their locations. The professionals say the machines they work with tend to perform their tasks with precision but often also a little naiveté.”

From Wall Street Journal.