CAMBRIDGE – In the world of economics and finance, revolutions occur rarely and are often detected only in hindsight. But what happened on February 19 can safely be called the end of an era in global finance.
On that day, the International Monetary Fund published a policy note that reversed its long-held position on capital controls. Taxes and other restrictions on capital inflows, the IMF’s economists wrote, can be helpful, and they constitute a “legitimate part” of policymakers’ toolkit.
Rediscovering the common sense that had strangely eluded the Fund for two decades, the report noted: “logic suggests that appropriately designed controls on capital inflows could usefully complement” other policies. As late as November of last year, IMF Managing Director Dominique Strauss-Kahn had thrown cold water on Brazil’s efforts to stem inflows of speculative “hot money,” and said that he would not recommend such controls “as a standard prescription.”
So February’s policy note is a stunning reversal – as close as an institution can come to recanting without saying, “Sorry, we messed up.” But it parallels a general shift in economists’ opinion. It is telling, for example, that Simon Johnson, the IMF’s chief economist during 2007-2008, has turned into one of the most ardent supporters of strict controls on domestic and international finance.
The IMF’s policy note makes clear that controls on cross-border financial flows can be not only desirable, but also effective. This is important, because the traditional argument of last resort against capital controls has been that they could not be made to stick. Financial markets would always outsmart the policymakers.
Even if true, evading the controls requires incurring additional costs to move funds in and out of a country – which is precisely what the controls aim to achieve. Otherwise, why would investors and speculators cry bloody murder whenever capital controls are mentioned as a possibility? If they really couldn’t care less, then they shouldn’t care at all.
One justification for capital controls is to prevent inflows of hot money from boosting the value of the home currency excessively, thereby undermining competitiveness. Another is to reduce vulnerability to sudden changes in financial-market sentiment, which can wreak havoc with domestic growth and employment. To its credit, the IMF not only acknowledges this, but it also provides evidence that developing countries with capital controls were hit less badly by the fallout from the sub-prime mortgage meltdown.
The IMF’s change of heart is important, but it needs to be followed by further action. We currently don’t know much about designing capital-control regimes. The taboo that has attached to capital controls has discouraged practical, policy-oriented work that would help governments to manage capital flows directly. There is some empirical research on the consequences of capital controls in countries such as Chile, Colombia, and Malaysia, but very little systematic research on the appropriate menu of options. The IMF can help to fill the gap.
Emerging markets have resorted to a variety of instruments to limit private-sector borrowing abroad: taxes, unremunerated reserve requirements, quantitative restrictions, and verbal persuasion. In view of the sophisticated nature of financial markets, the devil is often in the details – and what works in one setting is unlikely to work well in others.
For example, Taiwan’s use of administrative measures that rely heavily on close monitoring of flows may be inappropriate in settings where bureaucratic capacity is more limited. Similarly, Chilean-style unremunerated reserve requirements may be easier to evade in countries with extensive trading in sophisticated derivatives.
With the stigma on capital controls gone, the IMF should now get to work on developing guidelines on what kind of controls work best and under what circumstances. The IMF provides countries with technical assistance in a wide range of areas: monetary policy, bank regulation, and fiscal consolidation. It is time to add managing the capital account to this list.
With this battle won, the next worthy goal is a global financial transaction tax. Set at a very low level – 0.05% is a commonly mentioned rate – such a tax would raise hundreds of billions of dollars for global public goods while discouraging short-term speculative activities in financial markets.
Support for a global financial-transaction tax is growing. A group of NGOs have rechristened it the “Robin Hood tax,” and have launched a global campaign to promote it, complete with a deliciously biting video clip featuring British actor Bill Nighy (www.robinhoodtax.org). Significantly, the European Union has thrown its weight behind the tax and urged the IMF to pursue it. The only major holdout is the United States, where Treasury Secretary Tim Geithner has made his distaste for the proposal clear.
What made finance so lethal in the past was the combination of economists’ ideas with the political power of banks. The bad news is that big banks retain significant political power. The good news is that the intellectual climate has shifted decisively against them. Shorn of support from economists, the financial industry will have a much harder time preventing the fetish of free finance from being tossed into the dustbin of history.
By Dani Rodrik, Professor of Political Economy at Harvard University’s John F. Kennedy School of Government, is the first recipient of the Social Science Research Council’s Albert O. Hirschman Prize. His latest book is One Economics, Many Recipes: Globalization, Institutions, and Economic Growth.
Copyright: Project Syndicate, 2010.
www.project-syndicate.org
COMMENTS : Nico 06:56 11 Mar 10
The state has not only kept the structures in place, but has given the banks unlimited access to not only the taxpayers, but the money supply. These banks now, due to the mergers and acquisitions of weaker banks, are even more powerful economically and politically. Lastly, there hasn't been any serious attempt at reform yet, and its has been over a year since the crisis began. It is becoming increasingly obvious that private ownership of finance is doomed to reach these proportions of instability, because of Minsky argues, stability leads to instability and it also leads to agents who have lots of money and have disproportionate political influence, because of much lower costs associated with 'rent-seeking'. In addition, the ability of capital to aggregate has no end leads to the subsumption of democracy under the tyranny of the market. We are all seeing this happen, but does anyone really have an answer to this crisis, an answer that would not just recreate the conditions in teh future, without some radical change? I don't think its possible, but I could be convinced otherwise.
http://perspectivos.blogspot.com/
Friday, 12 March 2010
The MBA – is it still relevant?
I WAS in Manila for a gathering of governors and trustees of the Asian Institute of Management. Among them were the cream of the Makati business community, and a cross-section of entrepreneurs and scholars from India to Korea and Japan, as well as from the United States, Britain and Australia.
Supported by the Harvard Business School (HBS), the institute was founded 42 years ago. It’s the oldest post-war business school in Asia. This set me thinking about the MBA (Master of Business Administration) in the wake of the financial crisis.
A thirtysomething asks: “Don’t we ever learn?” He’s referring to the Generation Y’s concern over negative perceptions about banks and bankers, following big bankruptcies in the early 2000s, and now exacerbated by the financial crisis.
We seem to be stuck in an evolving quagmire of intense rage against big business’ bloated profits and outlandish bonuses. To be blunt, there is loss of confidence in financial institutions – investment banks, credit rating agencies and regulators even, including business schools. Surely, MBAs have lost a bit of their lustre.
I’m angry because many people at the heart of the crisis – from Christopher Cox (former US Securities and Exchange Commission chairman) and former Treasury Secretary Hank Paulson (ex-Goldman Sachs chief) to former Merrill Lynch CEOs Stan O’Neal and John Thain, and Rick Wagoner, the ousted General Motors CEO – each carry a Harvard MBA. They should have known better.
To be fair, although some of the worst culprits had MBAs from other schools, lots of others didn’t (Bernard Madoff for one). It is easy to confuse correlation with causation.
I am angry because the teaching of ethics and values-based leadership was not taken seriously enough. Critics point to many MBAs being not well-equipped to make good judgements, and didn’t have enough good sense to take corporate social responsibility (CSR) to the next level.
I am angry because many MBAs have a dangerous overdose of quantitative models, with underexposure to management of systems-wide risks. MBAs are good at analysis, not always at managing.
Still, greedy appetites in a “corrupt” eco-system can overpower even the best management education. For comfort, CEOs (with MBAs) of Canada’s two largest banks did just fine. While Wall Street bankers had no qualms in gearing their borrowing at 34 to 1, Canadian institutions played it safe with 18 to 1. They are doing well, of course, while their US counterparts are on life support.
A little bit of history
The MBA started life in the 1900s (at HBS in 1908). The aim was to train professional managers to run large institutions (like Standard Oil and GM) so that they wouldn’t take undue advantage of markets and consumers. CSR was also strongly advocated. Giant enterprises need to be managed for the public’s good, not for short-term gains.
After World War II, the Ford and Carnegie Foundations supported serious reviews to modernise the MBA. It was a time of market liberalisation. Nobel-winning economist Milton Friedman and the Chicago School increasingly dominated business thinking. Their ideology glorifies markets as efficient and capable of regulating themselves, and all managers have to do is to maximise shareholder value.
Critics argue that this very thinking got us into so much trouble today. This is the point made by HBS professor R. Khurana in his 2007 book on the history of MBAs, From Higher Aims to Hired Hands, which concludes that business schools (B-schools) have veered from their original purpose of “training managers to rule in the name of society”.
This new preoccupation with quantitative methods and mathematical models, including the use of advanced analysis, unfortunately gave MBAs the illusion of being able to control financial risks. Moreover, their teaching was flawed by ignoring a good sense of ethics (“largely a waste of time” anyway) and imparting lots of moneymaking know-how.
I overheard this at MIT-Sloan last summer: “In physical science, three laws explain 99% of behaviour; in finance, 99 laws can explain at best only 3%.”
The trouble with rankings
As I see it, BSRs (B-school rankings) are part of the problem. Sure, market pressure from BSRs exert the needed competition to improve curricula and teaching. But undue attention to drive up BSRs can have unintended consequences: (i) higher starting pay means admitting the more mature; (ii) stress on higher paying sectors skewa curriculum to favour Wall Street; (iii) funds are misdirected towards coaching students to perform well at interviews so as to raise job offers; and (iv) the focus on professional education is undermined – instead, students ask: “How can I make the most money?”
Ratings target short performance drivers, and needlessly bias B-schools’ marketing efforts. Prof J.M. Podolny (Apple University and formerly of Harvard, Yale and Stanford) was emphatic: “I do object to the manner in which rankings have legitimised most business schools’ myopic focus on the short term.”
Management education adds value
When asked whether the MBA is still relevant, HBS professor Quinn Mills gives a quick and crisp response: “Yes and more than ever.” According to him, business has become more important as financial crises challenge political stability and economic welfare.
MBA training helps students better understand the ecosystem and master developments. The education has two elements – one is about business and economics and the other, management and leadership.
The first looks outside the firm to its context (customers, suppliers, regulators, markets), while the second looks inside the firm to its effectiveness, efficiency, planning and implementation. Both are important to the success of individuals in a leadership position.
Mills is convinced the problems in financial markets involve more than the business element. Problems arise in what financial firms are doing to others and to each other, not in how efficiently they are managed. Many say it’s all a leadership problem. If Wall Street firms were better led – less greedy and more responsible - these problems would not arise. Many major MBA programmes emphasise technicalities of finance – training people to work in banks, not to lead them. It is in financial engineering that problems have arisen.
Unfortunately, nations have yet to reform financial regulation. Sad to say, B-schools have not sufficiently revised curricula to reflect lessons from the crisis, though in individual courses and cases, there is much that is now up-to-date.
Financial engineering continues to be taught, but is also updated to reflect disasters that have occurred (complicated securitisation, credit default swaps and complex derivatives) so that similar errors might be avoided in future. Also, ethics courses have been strengthened in response to dramatic cases of fraud (Madoff, Stanford, etc). Hopefully, students are better prepared to meet the world as it now is.
Through it all, acceptances to MBA programmes are significantly up in 2009. In the end, this simply means more business as usual.
Too little core revamp
Nevertheless, there has been since a lot of soul searching, including at HBS. Prof Nabil El-Hage (HBS senior associate dean) has this update: “We concluded that teaching critical thinking skill is one area we must do better. Our students go on to be leaders; they need to know how to think and challenge the status quo in a clearly analytical fashion.”
He adds: “The other, perhaps more mundane, area is risk management. This is difficult to teach. It is not exciting, it is not fun, and it is not so much about leadership. But if businesses focus strictly on the upside and lose sight of inherent risks, then crises are bound to recur. So, we are thinking long and hard about how to deal with this.”
In the final analysis, I believe real change will come through punishment by the one factor B-schools understand best: the market.
A promise to be ethical
The original sin of B-schools has been that there has been no real focus on business ethics and CSR. In the post-Madoff era, this is now urgent. But quality teaching is a problem since these “were kind of shunted in” after the early 2000s scandals, wrote P.D. Broughton, in his tell-all book about his years at HBS, Ahead of the Curve. Khurana confirms ethics was brought in like “academic theatrics” and have been since “quietly abandoned or marginalised”.
But students are not happy. Last summer, I attended Harvard’s Commencement, when new HBS graduates took on the MBA Oath, saying essentially greed is not good. This is a voluntary student-led living pledge to “act with utmost integrity and in an ethical manner” and to guard against “behaviour that advances my own narrow ambitions but harms the enterprise and society it serves”.
This is not unlike that of Columbia: “I adhere to principles of truth, integrity and respect. I will not cheat, steal or tolerate those who do.”
What’s being done appears serious, mirroring the Hippocratic Oath of doctors “not to do wrong” or the US lawyers’ pledge to “uphold law and constitution.” When I was at Harvard for the Commencement, 200 (grading class of 800) had already signed up.
This movement has been contagious. Diana Robertson of Wharton doesn’t think it will just fade. “It’s coming from students; we’ve not seen such surge of activism since the ‘60s.” For Khurana, it is now timely to transform business management into a true profession. This will involve licensing and an oversight body to police members. But he is not optimistic this will happen. It’s still very much work-in-progress.
Mills doesn’t see how business can really gain. The management/leadership element of MBA, he says, is too much an art for it to be professionalised. The finance side is already governed by a quasi-professional standard – the fiduciary responsibility rule (a financial advisor is legally bound to put clients’ interests above all). In practice, this rule is already not much honoured by financial advisors, money managers and courts. Mills sees little reason why new professional rules will perform better. He has a point.
How best to regain trust
We may not feel it as much in Asia. But even on Wall Street, there is resentment building up on the way MBAs are educated. The world has changed. B-schools have yet to change with it. To reduce distrust, MBAs need to show they value what society values.
As I see it, what is not taken seriously enough are the “soft” disciplines (leadership, values and ethics) and greater attention to detail (big picture education is not good enough). Leadership responsibilities need to be brought to the forefront – not just the rewards.
There are no quick fixes. Podolmy pointed to five possible ways: (a) foster greater complementary – integrate the mix of disciplines, linking analytics to values; (b) appoint team teaching – ensure “hard” and “soft” disciplines are jointly taught, giving a holistic understanding of problems and solutions; (c) incentivise qualitative research – cultivate a more eclectic approach, encouraging faculty to better weave “soft” disciplines into the main fabric of education; (d) stop competing on rankings – regain professional focus and downplay money as the end-all of business; and (e) withdraw the degree – oaths work when behaviour is monitored and credentials withdrawn on violations.
I think these warrant serious consideration. They are difficult to accept and hard to implement. Once upon a time, kings engaged jesters to bring them down to earth. Maybe, it’s now timely for B-schools to do likewise by encouraging faculty and students to prick bubbles, expose management fads, and even rough up “hero” managers. Yes, in a sense, to bite the hand that feeds them.
Realistically, I am convinced such changes are unlikely since it requires B-schools to re-invent themselves. Says Dean Light of HBS: “The crisis has not resulted in a systematic reinvention of curriculum, nor should it.” After all, as in every crisis, enrolment is up. So what’s your problem?
Source: Tan Sri Lin See-Yan - Former banker Lin is a Harvard-educated economist and a British Chartered Scientist who now spends time promoting public interest. Feedback is most welcome at
starbizweek@thestar.com.my
Supported by the Harvard Business School (HBS), the institute was founded 42 years ago. It’s the oldest post-war business school in Asia. This set me thinking about the MBA (Master of Business Administration) in the wake of the financial crisis.
A thirtysomething asks: “Don’t we ever learn?” He’s referring to the Generation Y’s concern over negative perceptions about banks and bankers, following big bankruptcies in the early 2000s, and now exacerbated by the financial crisis.
We seem to be stuck in an evolving quagmire of intense rage against big business’ bloated profits and outlandish bonuses. To be blunt, there is loss of confidence in financial institutions – investment banks, credit rating agencies and regulators even, including business schools. Surely, MBAs have lost a bit of their lustre.
I’m angry because many people at the heart of the crisis – from Christopher Cox (former US Securities and Exchange Commission chairman) and former Treasury Secretary Hank Paulson (ex-Goldman Sachs chief) to former Merrill Lynch CEOs Stan O’Neal and John Thain, and Rick Wagoner, the ousted General Motors CEO – each carry a Harvard MBA. They should have known better.
To be fair, although some of the worst culprits had MBAs from other schools, lots of others didn’t (Bernard Madoff for one). It is easy to confuse correlation with causation.
I am angry because the teaching of ethics and values-based leadership was not taken seriously enough. Critics point to many MBAs being not well-equipped to make good judgements, and didn’t have enough good sense to take corporate social responsibility (CSR) to the next level.
I am angry because many MBAs have a dangerous overdose of quantitative models, with underexposure to management of systems-wide risks. MBAs are good at analysis, not always at managing.
Still, greedy appetites in a “corrupt” eco-system can overpower even the best management education. For comfort, CEOs (with MBAs) of Canada’s two largest banks did just fine. While Wall Street bankers had no qualms in gearing their borrowing at 34 to 1, Canadian institutions played it safe with 18 to 1. They are doing well, of course, while their US counterparts are on life support.
A little bit of history
The MBA started life in the 1900s (at HBS in 1908). The aim was to train professional managers to run large institutions (like Standard Oil and GM) so that they wouldn’t take undue advantage of markets and consumers. CSR was also strongly advocated. Giant enterprises need to be managed for the public’s good, not for short-term gains.
After World War II, the Ford and Carnegie Foundations supported serious reviews to modernise the MBA. It was a time of market liberalisation. Nobel-winning economist Milton Friedman and the Chicago School increasingly dominated business thinking. Their ideology glorifies markets as efficient and capable of regulating themselves, and all managers have to do is to maximise shareholder value.
Critics argue that this very thinking got us into so much trouble today. This is the point made by HBS professor R. Khurana in his 2007 book on the history of MBAs, From Higher Aims to Hired Hands, which concludes that business schools (B-schools) have veered from their original purpose of “training managers to rule in the name of society”.
This new preoccupation with quantitative methods and mathematical models, including the use of advanced analysis, unfortunately gave MBAs the illusion of being able to control financial risks. Moreover, their teaching was flawed by ignoring a good sense of ethics (“largely a waste of time” anyway) and imparting lots of moneymaking know-how.
I overheard this at MIT-Sloan last summer: “In physical science, three laws explain 99% of behaviour; in finance, 99 laws can explain at best only 3%.”
The trouble with rankings
As I see it, BSRs (B-school rankings) are part of the problem. Sure, market pressure from BSRs exert the needed competition to improve curricula and teaching. But undue attention to drive up BSRs can have unintended consequences: (i) higher starting pay means admitting the more mature; (ii) stress on higher paying sectors skewa curriculum to favour Wall Street; (iii) funds are misdirected towards coaching students to perform well at interviews so as to raise job offers; and (iv) the focus on professional education is undermined – instead, students ask: “How can I make the most money?”
Ratings target short performance drivers, and needlessly bias B-schools’ marketing efforts. Prof J.M. Podolny (Apple University and formerly of Harvard, Yale and Stanford) was emphatic: “I do object to the manner in which rankings have legitimised most business schools’ myopic focus on the short term.”
Management education adds value
When asked whether the MBA is still relevant, HBS professor Quinn Mills gives a quick and crisp response: “Yes and more than ever.” According to him, business has become more important as financial crises challenge political stability and economic welfare.
MBA training helps students better understand the ecosystem and master developments. The education has two elements – one is about business and economics and the other, management and leadership.
The first looks outside the firm to its context (customers, suppliers, regulators, markets), while the second looks inside the firm to its effectiveness, efficiency, planning and implementation. Both are important to the success of individuals in a leadership position.
Mills is convinced the problems in financial markets involve more than the business element. Problems arise in what financial firms are doing to others and to each other, not in how efficiently they are managed. Many say it’s all a leadership problem. If Wall Street firms were better led – less greedy and more responsible - these problems would not arise. Many major MBA programmes emphasise technicalities of finance – training people to work in banks, not to lead them. It is in financial engineering that problems have arisen.
Unfortunately, nations have yet to reform financial regulation. Sad to say, B-schools have not sufficiently revised curricula to reflect lessons from the crisis, though in individual courses and cases, there is much that is now up-to-date.
Financial engineering continues to be taught, but is also updated to reflect disasters that have occurred (complicated securitisation, credit default swaps and complex derivatives) so that similar errors might be avoided in future. Also, ethics courses have been strengthened in response to dramatic cases of fraud (Madoff, Stanford, etc). Hopefully, students are better prepared to meet the world as it now is.
Through it all, acceptances to MBA programmes are significantly up in 2009. In the end, this simply means more business as usual.
Too little core revamp
Nevertheless, there has been since a lot of soul searching, including at HBS. Prof Nabil El-Hage (HBS senior associate dean) has this update: “We concluded that teaching critical thinking skill is one area we must do better. Our students go on to be leaders; they need to know how to think and challenge the status quo in a clearly analytical fashion.”
He adds: “The other, perhaps more mundane, area is risk management. This is difficult to teach. It is not exciting, it is not fun, and it is not so much about leadership. But if businesses focus strictly on the upside and lose sight of inherent risks, then crises are bound to recur. So, we are thinking long and hard about how to deal with this.”
In the final analysis, I believe real change will come through punishment by the one factor B-schools understand best: the market.
A promise to be ethical
The original sin of B-schools has been that there has been no real focus on business ethics and CSR. In the post-Madoff era, this is now urgent. But quality teaching is a problem since these “were kind of shunted in” after the early 2000s scandals, wrote P.D. Broughton, in his tell-all book about his years at HBS, Ahead of the Curve. Khurana confirms ethics was brought in like “academic theatrics” and have been since “quietly abandoned or marginalised”.
But students are not happy. Last summer, I attended Harvard’s Commencement, when new HBS graduates took on the MBA Oath, saying essentially greed is not good. This is a voluntary student-led living pledge to “act with utmost integrity and in an ethical manner” and to guard against “behaviour that advances my own narrow ambitions but harms the enterprise and society it serves”.
This is not unlike that of Columbia: “I adhere to principles of truth, integrity and respect. I will not cheat, steal or tolerate those who do.”
What’s being done appears serious, mirroring the Hippocratic Oath of doctors “not to do wrong” or the US lawyers’ pledge to “uphold law and constitution.” When I was at Harvard for the Commencement, 200 (grading class of 800) had already signed up.
This movement has been contagious. Diana Robertson of Wharton doesn’t think it will just fade. “It’s coming from students; we’ve not seen such surge of activism since the ‘60s.” For Khurana, it is now timely to transform business management into a true profession. This will involve licensing and an oversight body to police members. But he is not optimistic this will happen. It’s still very much work-in-progress.
Mills doesn’t see how business can really gain. The management/leadership element of MBA, he says, is too much an art for it to be professionalised. The finance side is already governed by a quasi-professional standard – the fiduciary responsibility rule (a financial advisor is legally bound to put clients’ interests above all). In practice, this rule is already not much honoured by financial advisors, money managers and courts. Mills sees little reason why new professional rules will perform better. He has a point.
How best to regain trust
We may not feel it as much in Asia. But even on Wall Street, there is resentment building up on the way MBAs are educated. The world has changed. B-schools have yet to change with it. To reduce distrust, MBAs need to show they value what society values.
As I see it, what is not taken seriously enough are the “soft” disciplines (leadership, values and ethics) and greater attention to detail (big picture education is not good enough). Leadership responsibilities need to be brought to the forefront – not just the rewards.
There are no quick fixes. Podolmy pointed to five possible ways: (a) foster greater complementary – integrate the mix of disciplines, linking analytics to values; (b) appoint team teaching – ensure “hard” and “soft” disciplines are jointly taught, giving a holistic understanding of problems and solutions; (c) incentivise qualitative research – cultivate a more eclectic approach, encouraging faculty to better weave “soft” disciplines into the main fabric of education; (d) stop competing on rankings – regain professional focus and downplay money as the end-all of business; and (e) withdraw the degree – oaths work when behaviour is monitored and credentials withdrawn on violations.
I think these warrant serious consideration. They are difficult to accept and hard to implement. Once upon a time, kings engaged jesters to bring them down to earth. Maybe, it’s now timely for B-schools to do likewise by encouraging faculty and students to prick bubbles, expose management fads, and even rough up “hero” managers. Yes, in a sense, to bite the hand that feeds them.
Realistically, I am convinced such changes are unlikely since it requires B-schools to re-invent themselves. Says Dean Light of HBS: “The crisis has not resulted in a systematic reinvention of curriculum, nor should it.” After all, as in every crisis, enrolment is up. So what’s your problem?
Source: Tan Sri Lin See-Yan - Former banker Lin is a Harvard-educated economist and a British Chartered Scientist who now spends time promoting public interest. Feedback is most welcome at
starbizweek@thestar.com.my
Thursday, 11 March 2010
Quantum Computing Thrives on Chaos
Embracing chaos just might help physicists build a quantum brain. A new study shows that disorder can enhance the coupling between light and matter in quantum systems, a find that could eventually lead to fast, easy-to-build quantum computers.
Quantum computers promise superfast calculations that precisely simulate the natural world, but physicists have struggled to design the brains of such machines. Some researchers have focused on designing precisely engineered materials that can trap light to harness its quantum properties. To work, scientists have thought, the crystalline structure of these materials must be flawlessly ordered — a nearly impossible task.
The new study, published in the March 12 Science, suggests that anxious physicists should just relax. A group of researchers at the Technical University of Denmark in Lyngby have shown that randomly arranged materials can trap light just as well as ordered ones.
“We took a very interesting, different approach: relaxing all these ordered structures and using disorder” as a resource, says study coauthor Peter Lodahl. “Let it play with you instead of playing against you.”
One approach to quantum computing relies on entangling photons and atoms, or binding their quantum states so tightly that they can influence each other even across great distances. Once entangled, a photon can carry any information stored in the atom’s quantum state to other parts of the computer. To get that entangled state, physicists pin light in tiny cavities to increase the likelihood of quantum interaction with neighboring atoms.
Lodahl and his colleagues didn’t set out to trap light. They wanted to build a waveguide, a structure designed to send light in a particular direction, by drilling carefully spaced holes in a gallium arsenide crystal. Because the crystal bends light much more strongly than air does, light should have bounced off the holes and traveled down a channel that had been left clear of holes.
But in some cases, the light refused to move. It kept getting stuck inside the crystal.
“At first we were scratching our heads,” Lodahl says. “Then we realized it was related to imperfections in our structures.” If imperfect materials could trap light, Lodahl thought, then physicists could couple light and matter with much less frustration.
To see if disorder could help materials trap light, Lodahl and colleagues built a new waveguide, this time deliberately placing the holes at random intervals. They also embedded quantum dots, tiny semiconductors that can emit a single photon at a time, in the waveguide as a proxy for atoms that could become entangled with the photons.
After zapping the quantum dots with a laser to make them emit photons, the researchers found that 94 percent of the photons stayed close to their emitters, creating spots of trapped light in the crystal. That’s about as good as previous results using more precisely ordered materials. Intuitively, physicists expect light to scatter in the face of disorder, but in this case colliding light waves built each other up and collected in the material.The quantum dots also emitted photons 15 times faster after a light spot formed around them.
“This is the essence of our discovery: We used localized modes not just to trap light but to enhance interaction between light and matter,” Lodahl says.
That’s the first mile marker on the road to entanglement, notes Diederik Wiersma, a physicist at the European Laboratory for Non-linear Spectroscopy in Florence, Italy. “It has not been achieved as quantum entanglement yet, but it’s the important step that everyone has to make to get there.”
The system produced several separate light traps at once. If the light traps can be entangled with each other, the system could someday lead to a quantum network in a randomly organized crystal.
Wiersma thinks of the potential product as a “quantum brain.” Like a human brain, a quantum brain is not a perfectly ordered structure, he says. “Nature doesn’t need a symmetric structure. It just needs your brain to be working.”
Images: 1) Artist’ impression of light emission in a disordered photonic crystal waveguide./Soren Stobbe. 2) Light bouncing around a disordered crystal spontaneously arranged itself in bright spots, represented by the tall spikes./Luca Sapienza.
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