Monthly Archives: October 2019

Ending short-termism by keeping score

By Klaus Schwab – As finance ministers gather in Washington, DC, for the World Bank and International Monetary Fund’s annual meetings, they will face no shortage of urgent matters to discuss. Fears of a global recession, the US-China trade war, the fallout of the Brexit talks, and a dangerous debt overhang make this the most stressful economic juncture in a decade. These issues must be discussed, and we should all hope that they can be resolved with minimal damage.

All of this assumes an end to the economic short-termism that underpins policymaking today. For that, we should develop scorecards to track our performance on these long-term priorities. To that end, I have three suggestions.

First, we need to rethink GDP as our “key performance indicator” in economic policymaking.

Second, we should embrace independent tracking tools for assessing progress under the Paris agreement and the SDGs (United Nations Sustainable Development Goals).

Third, we must implement “stakeholder capitalism” by introducing an environmental, social, and governance (ESG) scorecard for businesses.

On the first point, we desperately need to change our overall economic frame of reference. For 75 years, the world marched to the beat of the drum called “Gross Domestic Product.” Now, we need a new instrument. GDP gained traction when economies were primarily seen as vehicles for mobilizing wartime production. Yet today’s economies are expected to serve an entirely different purpose: maximizing wellbeing and sustainability.

It is time to consider a new approach. A group of economists from the private sector, academia, and international institutions, including Diane Coyle and Mariana Mazzucato, has already been working on alternate measures and ways to correct for the failings of GDP.

Their Wealth Project, which evolved from efforts initiated by the World Bank, has offered a number of proposals for how we can move forward. more>

Updates from Chicago Booth

How Norway reduced the rich-poor earnings gap
By Dwyer Gunn – In the United States, vocational and technical education at the high-school level has long been controversial. Critics argue that vocational schools serve as warehouses for disadvantaged students, depriving them of the opportunity to attend college. Advocates maintain that vocational schools provide valuable labor-market skills and may better serve students who struggle with traditional academics or who can’t or don’t wish to attend college.

In recent years, however, a new vision has emerged, one that emphasizes increasing access to alternative educational models while ensuring that students who choose these pathways can still ultimately pursue higher education. Many states are exploring or have launched high-school apprenticeship programs, and there’s been renewed interest in the Career Academies education model, a 35-year-old approach aimed at restructuring high schools to create alternative pathways that lead to higher education or the workplace.

American reformers may find further inspiration in the results of a 25-year-old overhaul of vocational education in Norway. Research by Chicago Booth’s Marianne Bertrand and Jack Mountjoy, along with University of Chicago’s Magne Mogstad, suggests the reforms helped reduce the eventual earnings gap experienced by poor students, particularly boys, although not without some unintended consequences.

The sweeping changes, known as Reform 94, increased access to apprenticeships and altered the country’s vocational-track high-school degrees to allow graduates to attend college after a semester of supplemental academic courses. Before the changes, students in Norway who obtained vocational-track degrees had to restart high school and secure an academic diploma if they wanted to attend college. more>

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Updates from Siemens

Why noise is one of the biggest problems with electric cars
By Steven Dom – Imagine your company is engineering the next line of electric vehicles. You create technical specifications that reduce range anxiety, you’ve perfected the colors that pop and entice customers to buy and with battery technology advancement, you’ve priced it right.

But there are problems with electric cars.

Because the electric vehicle engine emits no noise, pedestrians are more likely to be struck by an electric vehicle. A study by the National Highway Traffic Safety Administration indicated that hybrid and electric vehicles are 57 percent more likely to cause accidents with cyclists, and 37 percent more likely to cause an accident with pedestrians, than a standard internal combustion engine vehicle.

Countries are requiring the quietest cars emit a sound to warn those around the vehicle of its presence.

Now, imagine after creating the ideal electric vehicle, the customers reject it based on the noise it emits. What if your vehicle’s noise is too strange or annoying?

This is just one of the many perils facing the quiet electric vehicle.

The goal of successfully getting an electric vehicle to market, one that a consumer would be interested in and enjoying, was about improving range. In a world lacking in electric vehicle infrastructure, solving range anxiety would allow customers to feel more comfortable driving the electric vehicles to-and-from work and longer trips beyond.

Engineers focused on vehicle architecture including the number of motors driving the wheels, managing the HVAC system’s energy consumption and finding ways to reduce weight, such as using thinner panels and less sound deadening components to provide better mileage. Without the roar of a combustion engine, there was no need to reduce noise. more>

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Updates from Ciena

Mobile backhaul: a key growth driver to fuel fiber investments
It is no secret that communication service providers are facing decreasing margins and increased financial leveraging, struggling to make the investments necessary to respond to the evolution of user and application requirements. Francisco Sant’Anna explains how regional providers can leverage carrier wholesale demand to enable profitable and sustainable fiber investments.
By Francisco Sant’Anna – Fiber has never been as critical as it is today, and this trend is likely to continue for a long time. With the evolution of 4G and initial 5G deployments underway we will see an almost six-fold increase in mobile data-traffic between 2018 and 2023 (according to Ovum’s Network Traffic Forecast: 2018-23, published in December 2018). The result? Massive demand for transport capacity. Combining this with the cell densification needed to deliver suitable coverage at a higher spectrum, mobile services will be a major driver for extending fiber reach.

Residential, business and public sectors are also driving this push for more fiber. Video continues to be the main application, having increased its share of total Internet download traffic from 58 percent to 61 percent from 2018 to 2019, according to Sandvine’s 2019 Internet Phenomena Report. New streaming and operator IPTV solutions are playing a major role in this growth, but on top of that, the evolution of video quality standards is expected to be crucial fuel to the four-fold video traffic increase that Ovum forecasts from 2018 to 2023 in its same report. Consumers’ unrelenting desire for more bandwidth is driving communication service providers on a quest to increase their bandwidth offerings throughout their covered areas, a key factor in a scenario where the largest pipe may have the best chance at winning the customer.

Analysis of recent acquisitions of regional providers shows that the valuation of most of these companies was largely based on their fiber networks. Most reports emphasize the number of fiber route-miles being acquired, with rare mentions of customer base or service expertise. Fiber-miles is the current gold-standard for the telecommunication sector. more>

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How to save capitalism from itself

Meet the CEOs, workers, activists, thinkers, policy wonks, and class traitors leading the way toward a more equitable, humane, and democratic economic system that works for the many and not the few.
By Darren Walker – Capitalism is in crisis.

The United States—and our democratic values, discourse, and institutions—is suffering from unprecedented levels of inequality. Today, the three richest Americans collectively own about as much wealth as the bottom half of the population combined. Worse, extreme levels of economic inequity are only one of the many forms of inequality that plague our nation: We also face rampant discrimination based on race, gender, sexual orientation, ethnicity, religion, and ability. Looming over all of this is the threat of a global environmental catastrophe, which will make every one of these disparities more extreme through droughts, food shortages, and refugee crises.

Today, a growing number of leaders in the business and social sectors are finding ways to make our capitalist system fairer. They recognize that if we create the context and conditions for an inclusive and just economy, the more we can use capitalism’s undeniable productive power to unlock better ideas and outcomes for humankind.

The idea is simple: Everyone affected by the policies and practices of a firm should have a voice in shaping them.

Moving to stakeholder capitalism is not only a matter of doing the right thing, economists such as Harvard University’s Oliver Hart and the University of Chicago’s Luigi Zingales argue. In many cases, it’s also economically more efficient—which will in turn help everyone’s bottom line.

It’s less expensive to not pollute the environment than it is to clean up pollution. It’s less costly to not sell addictive opioids than it is to provide mental and physical care for those who become addicted.

By considering the perspectives of all the stakeholders involved, we can avoid cases like these where everyone involved ends up suffering. more>

This is the one secret to managing an organization

By Maynard Webb – It’s all about people. You don’t have anything if don’t have great people doing great things.

So, what’s the secret? You have to have conviction about what you are doing. You have to have a mindset that says you are doing something amazing and exciting and people will want to be a part of it. In order to attract people to your endeavor, you must believe that it’s an incredible opportunity for others and you must execute and deliver on that promise.

Always be on the lookout for great people, and do so with a mindset of abundance. People are yearning for good opportunities and you have the privilege of being able to offer them a chance. See what you have as what’s scarce—a rare and special opportunity. Instead of thinking of hiring as chore, see it as a gift that can change someone’s life.

Always pick and promote people who will help you and your culture grow.

Don’t eliminate people because they don’t seem like a “culture fit”—embrace differences and stay rigorously focused on the cultural attributes that actually define your company. more>

Updates from Georgia Tech

Diversity May Be Key to Reducing Errors in Quantum Computing
By John Toon – In quantum computing, as in team building, a little diversity can help get the job done better, computer scientists have discovered.

Unlike conventional computers, the processing in quantum-based machines is noisy, which produces error rates dramatically higher than those of silicon-based computers. So quantum operations are repeated thousands of times to make the correct answer stands out statistically from all the wrong ones.

But running the same operation over and over again on the same qubit set may just generate the same incorrect answers that can appear statistically to be the correct answer. The solution, according to researchers at the Georgia institute of Technology, is to repeat the operation on different qubit sets that have different error signatures – and therefore won’t produce the same correlated errors.

“The idea here is to generate a diversity of errors so you are not seeing the same error again and again,” said Moinuddin Qureshi, a professor in Georgia Tech’s School of Electrical and Computer Engineering, who worked out the technique with his senior Ph.D. student, Swamit Tannu. “Different qubits tend to have different error signatures. When you combine the results from diverse sets, the right answer appears even though each of them individually did not get the right answer,” said Tannu. more>

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Updates from ITU

How Switzerland is winning the battle against e-waste
ITU News – A handful of old mobile phones – different makes and models, all different sizes and colors – lay in a grey bucket. They are about to be chopped into thousands of unrecognizable pieces.

These outdated and unused devices will be given a second life as recycled e-waste. But many phones won’t.

According to the latest estimates, the world discards approximately 50 million metric tonnes of e-waste annually. E-waste is full of hazardous material – including mercury, cadmium and lead – that can cause damage to human health and the environment if not managed properly.

But only 20 percent of global e-waste is recycled. The rest ends up in landfill, burned or illegally traded every year – or is not recycled at all.

In Switzerland alone, a country with a population of just 8.4 million people, there are an estimated 8-10 million smartphones lying unused in homes throughout the country.

“It’s mostly emotional; people are very sentimental about their cell phones,” said Lovey Wymann, Communications for Swico, Switzerland’s digital e-waste agency.

And yet, Switzerland is a good example of how to deal with the growing environmental issue.

Despite being one of the biggest global producers of e-waste – producing 184 kilotons in 2016 – the country collects and recycles roughly 75 percent of this discarded material, with 134 kilotonnes recovered in 2015. When it comes specifically to digital e-waste (for example, mobile phones and other devices), the recycling rate in 2018 was as high as 95 percent. more>

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How to Survive a Recession: 12 Steps You Should Take Now to Protect Your Money

By Diane Harris – “The global economy is facing increasingly serious headwinds,” said OECD chief economist Laurence Boone. “An urgent response is required.”

It shouldn’t exactly come as a surprise then that the latest Gallup poll found about half of Americans now believe that a recession in the next year is likely—a more pessimistic reading than the survey found 12 years ago, just two months prior to the start of the Great Recession.

Even more affluent households are often cash-strapped. Among those making $85,000 or more—the top 25 percent of the income range—the typical family only has enough in liquid savings to replace 40 days of income.

If a recession hits, what would your biggest financial problem be? Taking steps to address that pain point now will make your life a lot easier if trouble comes.

“Your emotions are your best clue,” says Stephanie McCullough. “What stresses you out the most—credit card debt, the feeling that you’re spending beyond your means? Whatever the little nagging voice in your head is telling you is what you should tackle first.”

These moves address the most common contenders for many families.

  1. Pay down the plastic
  2. Earmark spending cuts
  3. Get a check-up

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Updates from Chicago Booth

The evolution of economics and Homo Economicus
By Richard H. Thaler – Early in my teaching career I managed to inadvertently get most of the students in my microeconomics class mad at me, and for once, it had nothing to do with anything I said in class. The problem was caused by a midterm exam.

I had composed an exam that was designed to distinguish among three broad groups of students: the stars who really mastered the material, the middle group who grasped the basic concepts, and the bottom group who just didn’t get it. To successfully accomplish this task, the exam had to have some questions that only the top students would get right, which meant that the exam was hard.

The exam succeeded in my goal—there was a wide dispersion of scores—but when the students got their results they were in an uproar. Their principal complaint was that the average score was only 72 points out of a possible 100.

What was odd about this reaction was that the average numerical score on the exam had absolutely no effect on the distribution of grades. The norm at the school where I was teaching was to use a grading curve in which the average grade was a B or B+, and only a tiny number of students received grades below a C. I had anticipated the possibility that a low average numerical score might cause some confusion on this front, so I had reported how the numerical scores would be translated into actual grades in the class.

Anything over 80 would get an A or A-, scores above 65 would get some kind of B, and only scores below 50 were in danger of getting a grade below C. The resulting distribution of grades was not different from normal, but this announcement had no apparent effect on the students’ mood. They still hated my exam, and they were none too happy with me either. As a young professor worried about keeping my job, I was determined to do something about this, but I did not want to make my exams any easier. What to do?

Finally, an idea occurred to me. On the next exam, I made the total number of points available 137 instead of 100. This exam turned out to be slightly harder than the first, with students getting only 70 percent of the answers right, but the average numerical score was a cheery 96 points. The students were delighted! No one’s actual grade was affected by this change, but everyone was happy. From that point on, whenever I was teaching this course, I always gave exams a point total of 137, a number I chose for two reasons.

First, it produced an average score well into the 90s, with some students even getting scores above 100, generating a reaction approaching ecstasy. more>

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