Daily Archives: December 3, 2019

Why Corporations Can No Longer Avoid Politics

By Alana Semuels – For decades, most companies went to great lengths to avoid opining on social issues. No longer.

What’s changed? Frustrated with political gridlock, consumers have turned to business for leadership. “I think business has to pick up the mantle when governments fail you,” Patagonia CEO Rose Marcario told TIME earlier this year. Young consumers are also more likely to patronize brands whose business models claim to include social change.

Nine in 10 members of Generation Z, who account for as much as $150 billion in spending power globally, believe that companies have a responsibility to social and environmental issues, according to McKinsey. In an age when companies have detailed information on customers’ ages, incomes and political persuasions, they’re calculating that these socially aware consumers are more lucrative than those who might be put off by social-justice campaigns.

“In a politically polarized world that is saturated in social media, you’re not going to escape politics,” says Jerry Davis, a professor of management and sociology at the University of Michigan. “This is a sea change–in the past, companies kept their heads down and did their best to never be seen.” more>

We’re All Free Riders. Get over It!

By Nicholas Gruen – Anathematized and stigmatized today, free-riders built the lion’s share of the prosperity we enjoy today.

Does that mean we should ‘share’ or ‘pirate’ more copyrighted things on the internet? Not necessarily. The free rider problem is real enough.

But here’s the thing. In addition to the free rider problem, which we should solve as best we can, there’s a free rider opportunity. And while we whine about the problem, the opportunity has always been far larger and its value grows with every passing day.

The American economist Robert Solow demonstrated in the 1950s that nearly all of the productivity growth in history – particularly our rise from subsistence to affluence since the industrial revolution – was a result not of increasing capital investment, but of people finding better ways of working and playing, and then being copied. A little of this innovation was fostered by intellectual property rights which give temporary monopolies in technology. But much less than you’d think.

Most innovation can’t be patented. And after patents expire in 20 years (it used to be less) it’s open slather. We’re not paying royalties to the estates of Matthew Bolton and James Watt for their refinements to the piston engine. But we’re still free riding on their work. In other words, free-riding made us what we are today.

At the birth of modernity Thomas Jefferson spoke of the free rider opportunity more eloquently than any statesman then or since:

He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation.

Far from wanting to ignore the free rider problem, Jefferson was on top of that too, spearheading the institutionalization of intellectual property. But having done so, throughout his life, including in his administration of patents, he sought balance between dealing with the problems and seizing the opportunities presented by free riding. more>

Updates from Siemens

Artificial intelligence development is changing how industry works
By StevenH – Many industries are going to benefit from artificial intelligence development. It’s hard to say which ones in the long term will find the highest level of success, but we can already see significant benefits in a host of industries.

At its core, artificial intelligence is a tool that can acquire, organize and analyze vast amounts of data to create and parameterize models to recognize patterns and make predictions. AI is delivering many benefits and its continued use is the key to making a business more competitive. By automating some of the repetitive, basic tasks, a company can increase productivity, reduce mistakes and enable quicker, better decisions. In insurance, for example, companies are using AI to automate claims processing. The entertainment industry uses AI to optimize streaming services and suggest content based on an individual’s previous choices and comparing it to the choices of others.

If you’re a business or a company wondering about what to do about AI, whether to use it or even when to use it, then the answer is, Yes. Businesses must think about using AI. Artificial intelligence is a practical tool, and just like banks use it to prevent fraud or healthcare uses its algorithms to scan X rays, companies should look to solve problems and challenges with AI.

In engineering and manufacturing, artificial intelligence is already enhancing the scheduling in a factory by improving downtime and conducting predictive maintenance scheduling. Artificial intelligence saves companies money by reducing costs, for example by collecting data from running machines in the factory and feed it into training for predictive maintenance AI models.

Manufacturers can use these models to detect signs that maintenance is needed, such as changes in vibration signals which might indicate there is a developing problem. They can then schedule a maintenance session at the downtime of their choosing, perhaps overnight on a Saturday where there could be minimal or no loss of production. Naturally, it’s more economical to perform maintenance at the company’s discretion than having an expensive machine offline for several days, while possibly waiting for delivery of replacement parts from somewhere on the other side of the world. more>

Related>

The Adaptive Age

No institution or individual can stand on the sidelines in the fight against climate change
By Kristalina Georgieva – When I think of the incredible challenges we must confront in the face of a changing climate, my mind focuses on young people. Eventually, they will be the ones either to enjoy the fruits or bear the burdens resulting from actions taken today.

Our efforts to reduce greenhouse gas emissions through various mitigation measures—phasing out fossil fuels, increasing energy efficiency, adopting renewable energy sources, improving land use and agricultural practices—continue to move forward, but the pace is too slow. We have to scale up and accelerate the transition to a low-carbon economy. At the same time, we must recognize that climate change is already happening and affecting the lives of millions of people. There are more frequent and more severe weather-related events—more droughts, more floods, more heat waves, more storms.

Ready or not, we are entering an age of adaptation. And we need to be smart about it. Adaptation is not a defeat, but rather a defense against what is already happening. The right investments will deliver a “triple dividend” by averting future losses, spurring economic gains through innovation, and delivering social and environmental benefits to everyone, but particularly to those currently affected and most at risk. Updated building codes can ensure infrastructure and buildings are better able to withstand extreme events. Making agriculture more climate resilient means investing more money in research and development, which in turn opens the door to innovation, growth, and healthier communities.

The IMF is stepping up its efforts to deal with climate risk. Our mission is to help our members build stronger economies and improve people’s lives through sound monetary, fiscal, and structural policies. more>