Monthly Archives: May 2021

Economist Dennis Snower Says Economics Nears a New Paradigm

Beyond any shadow of a doubt, there is a change in the air, as economics nears its Copernican Moment.
By Dennis J. Snower – This is probably the most exciting and fruitful time ever to become an aspiring economist. Why? Because economics is reaching its Copernican Moment – the moment when it is finally becoming clear that the current ways of thinking about economic behavior are inadequate and a new way of thinking enables us to make much better sense of our world. It is a moment fraught with danger, because those in power still adhere to the traditional conventional wisdom and heresy is suppressed.

Up to the 16th century, the conventional wisdom on astronomy conformed to Aristotle’s cosmology and Ptolemy’s astronomy. In Aristotle’s system, the earth is the center of the universe and the heavenly bodies are part of spherical shells of aether. These shells fit around one another in a clear order: Moon, Mercury, Venus, Sun, Mars, Jupiter, Saturn, and the fixed stars. All these spheres are put in motion by the Prime Mover. By the 16th century, Ptolemy’s astronomy was regarded as in accord with the conventional reading of the Bible, the ultimate source of all knowledge.

Ptolemy’s system encountered endless difficulties in accounting for the empirical evidence, which were addressed through the repeated application of geometric “fixes” (eccentrics, epicycles, and equants). The underlying methodological requirement was to retain the Aristotelian system as the foundation for our understanding of the universe and then to depict each “fix” as a divergence from this accepted foundation. Thus, to be taken seriously as an astronomer, it was necessary to master the Aristotelian and Ptolemaic systems and to develop superstructures on them. Copernicus did not follow this intellectual path, but he did not dare to publish his heliocentric theory until the year of his death, in 1543. In 1632 Galileo published a book supporting Copernicus’ heliocentric theory, was summoned before the Inquisition, and recanted. The Church had the hard power of the Inquisition and the soft power of scholastic theology on its side.

In the academic discipline of economics, we are currently experiencing a tame analogue to these first throes of the scientific revolution. The punishment for heresy is not execution, but intellectual oblivion. more>

Updates from McKinsey

What’s next for digital consumers
Consumers say they will spend less time in digital channels once the pandemic ends. Here’s what it means for companies.
By Neira Hajro, Klemens Hjartar, Paul Jenkins, and Benjamim Vieira – The COVID-19 pandemic has driven rapid adoption of digital channels across countries and industries, but digital’s growth has plateaued in the past six months and may begin to slip back once the pandemic eases—even as total digital adoption stays well above prepandemic levels. That’s one of the findings from a new McKinsey survey of global consumer sentiment conducted in April 2021. Companies can look to hold on to newly digital consumers by improving digital experiences, investing in “phygital,” and putting consumer trust at the heart of all they do.

The survey suggests that industries across regions experienced an average of 20 percent growth in “fully digital” users in the six months ending in April 2021, building on previous gains earlier in the pandemic. During that same time period, it was primarily younger people joining the ranks of digital users.

But, with consumers having reached high levels of digital penetration in most regions and industries, the acceleration into digital channels now seems to have leveled off in both Europe and the United States, with consumers in some industries saying that they will be using digital channels less frequently once the pandemic ends. As a result, even as total digital adoption remains above prepandemic levels, many industries and regions may see a modest negative net change in postpandemic digital use relative to 2020.

The industries most vulnerable to the loss of digital consumers may be those that saw the biggest gains in digital adoption during the pandemic. New adopters had little choice during lockdowns but to embrace digital channels, and the channels they entered were more likely to have been newly built and with a less satisfying user experience than established ones. more>

Updates from Ciena

3 network capabilities that agencies need to keep up with cyberthreats
As malicious cyberattacks continue to grow, agencies need to ensure they’re deploying the best possible lines of defense to keep data and systems safe. Jim Westdorp, Ciena’s Government Chief Technologist, details the three network capabilities agencies need to keep up with cyberthreats.
By Jim Westdorp – Cybersecurity has always been a priority for government leaders, but today’s remote work environment is changing the security landscape. Now, government agencies are facing the challenge of securing and managing assets in the cloud while protecting exponential growth in network traffic across disparate locations.

Network termination points and traffic used to originate from office buildings and data centers but with COVID-19 forcing people to work from home, traffic has moved from commercial offices to residential networks served by the public internet, providing a larger attack surface for adversaries.

At the same time, low levels of automation, along with many manual processes in the network operations center, demand greater efforts to detect and mitigate security breaches. Unfortunately, traditional security techniques, such as firewalls and intrusion detection systems, no longer offer enough protection against today’s sophisticated threats, especially across a distributed work environment.

As malicious actors and cyberattacks continue to grow, agencies need to ensure they’re deploying the best possible lines of defense to keep data and systems safe. That security starts with the network — but not just any network. Here are the three key network capabilities needed to help agencies keep up with cyberthreats. more>

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GE eyes 100% hydrogen-fueled power plants by 2030

By Frédéric Simon – While fossil gas is often seen as a transition fuel towards a fully decarbonized energy mix, GE Gas Power sees low-carbon gas as “a destination technology” with the potential to convert power plants to run 100% on clean hydrogen by 2030.

“Today, we have a 50% hydrogen capability for combustion in our largest baseload gas turbines” used for power generation, said Martin O’Neill, vice president at GE Gas Power.

The company’s objective, he explained, is to continue research and development in order “to advance the percentage of hydrogen combustion capability towards 100% by 2030,” he told a EURACTIV event earlier this month.

However, getting there would require a rapid scale up in the production of clean hydrogen, he added. And that will only be possible if multiple sources of low-carbon hydrogen are added to the mix, including so-called “blue hydrogen” where emissions are somehow captured and stored. more>

Colonial Pipeline Darkside ransom hack shows nobody safe

By Kostis Geropoulos – The largest pipeline system for refined oil products in the US, the Colonial Pipeline, was shut down last week after a ransomware cyberattack. On May 12, the pipeline initiated the restart of operations but the attack highlights the risk of cyber-security threats against important energy infrastructures. It was later reported that Colonial Pipeline paid nearly $5 million as a ransom to hackers after the company fell victim to the cyberattack.

Marcin Zaborowski, policy director of the GLOBSEC Future of Security Program, told New Europe on May 13 that companies must assume that sooner or later they will become cyber-security targets. They must invest in the state-of-the art security programs, which must be constantly updated,” he said, arguing that the blockchain technology provides best protection against unwanted interference of third parties.

Andrey Yarnikh, head of strategic projects at Russia’s Kaspersky lab, told New Europe on May 14 currently, encryption ransomware programs are one of the most dangerous trends for the Internet. “Encryption mechanisms rarely give a chance of successful decryption, this is the case when it is much easier and cheaper to prevent infection than to correct the consequences of an attack that has already occurred,” Yarnikh said.

Colonial Pipeline had to shut it down on May 8 following a cyberattack which later the FBI confirmed that the Darkside ransomware was responsible for the compromise of the pipeline networks. “We continue to work with the company and our government partners on the investigation,” the FBI said in a statement.

Zaborowski explained that the Darkside operates like a business, which can be contracted to perform an attack on a selected services and demand ransom in exchange for decryption tools. “It’s highly effective and commercially minded,” he said. more>

Updates from Chicago Booth

Building Hope
With support from Booth alumni mentors, students at a Near West Side high school are launching successful entrepreneurial ventures.
By Margaret Currie – David Lewis, ’13, has always been passionate about education. A board member for Booth’s Alumni Club of Chicago, he also serves on the board of Chicago Hope Academy, a Christian high school on the city’s Near West Side with a student body that’s primarily Black and Latinx.

Last spring, Lewis began thinking about how he could leverage Booth’s alumni network to invest in the Hope community.

“The kids from Chicago Hope look a lot like I did when I was growing up in Gary, Indiana,” said Lewis, cofounder of Circumspect Capital. “I wanted to find a way to tap into Booth’s resources to support a cause that’s dear to my heart, particularly for this socioeconomic demographic.”

Lewis approached Chicago Hope leaders with the idea of forming a partnership between the school and Booth’s Chicago-based alumni club. The initial plan was that Booth alumni would lead a resume workshop at Hope, but the partnership quickly expanded into a four-part speaker series complemented by one-on-one mentoring.

“When we reached out to alumni, they told us that they wanted to do more than read a few resumes,” Lewis said. “They wanted to create relationships that allow them to not only help students build their personal brand but also be a sounding board for ideas and considerations.” more>

Updates from Ciena

What is ZR+?
You may be familiar with 400ZR, but thanks to continued innovation in coherent optical technology, network operators can also look forward to a new generation of longer-reach, multi-rate pluggable coherent solutions – “ZR+”. The generic term ZR+ means different things to different people, so learn about the wide range of different solutions it encompasses, the industry standards and MSAs driving their development, and additional coherent pluggable capabilities addressing even higher performance.

By Patricia Bower – Global optical networks continue to evolve, necessitating new and innovative solutions to meet the requirements of network operators to maximize fiber utilization and reduce the cost of data transport. Coherent optical transmission has been the key technology supporting both requirements over the last decade— and this will continue for the next stages of network evolution.

In early 2020, 800G-capable performance-optimized transport systems were introduced and have since been deployed around the world allowing customers to benefit from new network efficiencies and cost savings from this latest generation of coherent technology. What’s next?

In 2021, coherent pluggables supporting data rates from 100G to 400G and optimized for low power and small space requirements for high-density modular systems will start to be deployed in networks. This latest generation of products extend the economic benefits of coherent innovation into new application areas.

400ZR is an example of one of the first 400G solutions in this new class of pluggable coherent products to hit the market and will initially be used by hyperscale data center operators for single-span connectivity between data centers.  Implemented predominantly in QSFP-DD form factors, 400ZR will serve the specific requirement for large-scale switch fabric extension by plugging directly into router faceplates for massive parallel data center interconnect of 400GbE for distances of 80 – 120km. more>

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Rising Inflation: More Than Just Transitory?

Why investors shouldn’t dismiss recent upside surprises in U.S. inflation as a temporary phenomenon and how they can recalibrate their strategy.
By Lisa Shalett – Investors who braced for a sharp rise in April’s U.S. inflation readings from last year’s muted levels early in the pandemic were still surprised by the 4.2% year-over-year surge in the consumer price index (CPI)—double the highest projection in a Bloomberg survey of economists, even after hints in March of a coming uptick.

The CPI data released last week weren’t the only concerning indicators of inflation’s resurgence. The producer price index, which tracks wholesale and manufacturing costs, increased by 6.2% year-over-year in April—the highest reading since the U.S. Bureau of Labor Statistics started tracking the data in 2010—after rising 4.2% year-over-year in March. Perhaps most concerning, these moves came with strong gains in the “core” readings, which strip out volatile commodity-related drivers, such as food and energy prices.

While many, including the Federal Reserve, see the jump in prices as “transitory,” we believe it’s much more than just a blip. To be sure, some short-term inflation drivers, such as supply-chain bottlenecks, are likely to subside. However, we believe this post-pandemic business cycle has ushered in a new period of sustained higher fiscal spending, higher inflation and rising long-term interest rates. In particular, we see five secular shifts that could contribute to this dynamic, each of which can be summed up using terms that begin with the letter D:

  • Deglobalization: In the past decade, globally optimized supply chains helped to check price inflation. Now, the COVID-19 pandemic has likely sped up a shift toward deglobalization that could return supply chains to the U.S., which could contribute to consumer price inflation.
  • Deficits: Federal debt and deficits are exploding in the wake of unprecedented amounts of stimulus meant to counter pandemic disruptions. With the Fed essentially buying new government debt, dramatic growth in the money supply could be inflationary.
  • Dollar debasement: More stimulus to keep long- and short-term rates low would likely drive inflation through further declines in the value of the dollar against other major currencies.

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Germany’s renewable electric plan gets green light from EU

New scheme lifts some important barriers for the use of electrolysers in order to produce hydrogen
By Kostis Geropoulos – The European Commission has approved, under EU State aid rules, the prolongation and modification of a German scheme to support the production of electricity from renewable energy sources and from mine gas, as well as reductions of charges to fund support for electricity from renewable sources, the EU’s competition chief said.

The German Renewable Energy Act (Erneuerbare Energien Gesetz – EEG) 2021 scheme will provide important support to the environmentally-friendly production of electricity, in line with EU rules, European Commission Executive Vice-President in charge of competition policy Margrethe Vestager said.

“Thanks to this measure, a higher share of electricity in Germany will be produced through renewable energy sources, contributing to further reductions in greenhouse gas emissions and supporting the objectives of the Green Deal,” she said. “The scheme introduces new features to ensure that aid is kept to the minimum and electricity production occurs in line with market signals, while at the same time ensuring the competitiveness of energy-intensive companies and reducing pollution caused by ships in harbour. In this way, the scheme provides the best value for taxpayers’ money, while minimizing possible distortions of competition,” Vestager added.

The scheme also introduces small modifications to the German EEG surcharge reductions for energy intensive companies, a dedicated rule for surcharge reductions for hydrogen for energy intensive companies, as well as EEG surcharge reductions to promote the use of shore-side electricity by ships while at berth in ports.

Hydrogen Europe Secretary General Jorgo Chatzimarkakis told New Europe on April 30 the new scheme lifts some important barriers for the use of electrolysers in order to produce hydrogen. “This is good news and important signal for investments in the sector of ‘HydroGenewables,’” he said. more>

Updates from Chicago Booth

How to forge relationships with the ‘enemy’
By Alice G. Walton – When it comes to seemingly insurmountable conflicts, the one between Israelis and Palestinians ranks high.

But a Maine summer camp program called Seeds of Peace, which brings together Jewish Israeli and Palestinian teens, has been overwhelmingly successful at facilitating not just tolerance but close, positive relationships, suggests research by Facebook’s Shannon White and University of California at Berkeley’s Juliana Schroeder (both graduates of Chicago Booth’s PhD Program), along with Booth’s Jane L. Risen.

The work grew out of previous research by Schroeder and Risen, who in 2014 studied the program and found that campers’ attitudes toward people of the other nationality (in the “outgroup”) became significantly less negative after completing the program, particularly for campers who said they’d formed a close relationship with someone from the outgroup.

Why was that the case? To find out, White, Schroeder, and Risen analyzed data from surveys they collected of more than 500 participants who attended one of the Seeds of Peace summer camps between 2011 and 2017. Schroeder and Risen surveyed the teens before their camp stay began, including how positive, sympathetic, and anxious they felt toward or about members of the other group. more>

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