Monthly Archives: October 2021

Capitalism’s Core Problem: The Case for Universal Property

Capitalism’s most grie­vous flaws are, at root, problems of property rights and must be ad­dres­­sed at that level.
By Peter Barnes – Capitalism as we know it has two egregious flaws: it relentlessly widens inequality and destroys nature.  Its ‘invisible hand,’ which is supposed to transform individual self-seeking into widely shared well-being, too often doesn’t, and governments can’t keep up with the consequences.  For billions of people around the world, the challenge of our era is to repair or replace capitalism before its cumulative harms become irreparable.

Among those who would repair capitalism, policy ideas abound.  Typically, they involve more government regulations, taxes and spending.  Few, if any, would fundamentally alter the dynamics of markets themselves.  Among those who would replace capitalism, many would nationalize a good deal of private property and expand government’s role in regulating the rest.

This book explores the terrain midway between repairing and re­pla­cing capitalism.  It envisions a transformed market economy in which private property and businesses are complemented by universal property and fiduciary trusts whose beneficiaries are future generations and all living persons equally.

Economists wrangle over monetary, fiscal and regulatory policies but pay little attention to property rights. Their models all assume that property rights remain just as they are forever.  But this needn’t and shouldn’t be the case.  My premise is that capitalism’s most grie­vous flaws are, at root, problems of property rights and must be ad­dres­­sed at that level.

Property rights in modern economies are grants by governments of permission to use, lease, sell or bequeath specific assets — and just as importantly, to exclude others from doing those things.  The assets involved can be tangible, like land and machinery, or intangible, like shares of stock or songs. more>

The search for alien tech

There’s a new plan to find extraterrestrial civilisations by the way they live. But if we can see them, can they see us?
By Corey S Powell – Are we alone in the Universe? And if not, should we be excited – or afraid? These questions are as immediate as the latest Netflix hit and as primal as the ancient myths that associated the planets with spirits and gods. In 1686, Bernard le Bovier de Fontenelle, the long-term secretary to the French Academy of Sciences, put an Enlightenment stamp on speculations about alien life with his book Entretiens sur la pluralité des mondes (Conversations on the Plurality of Worlds). In a series of spirited philosophical conversations, he declared that ‘it would be very strange for the Earth to be so well inhabited, and the other planets perfectly solitary’, and argued that alien beings might attempt to communicate with us or even visit us using some advanced form of flight.

Ever since, each age has featured its own version yearning for contact with life from beyond, always anchored to the technological themes of the day. In 1818, the German mathematician Carl Friedrich Gauss proposed communicating with aliens using a heliotrope, a system of mirrors that he devised to send coded signals using reflected sunlight. After the development of early electric lights, the French inventor Charles Cros suggested that such lamps could be amplified to beam messages to Venus or Mars. Nikola Tesla wrote in 1900 that ‘interplanetary communication has entered the stage of probability’ using newfangled radio waves. A year later, he reported that he had detected likely signals broadcast from another world.

Then the search got stuck. Radio persisted as the alien-hunting medium of choice, even as technology continued to change faster than ever. A full century after Tesla, researchers engaged in the search for extraterrestrial intelligence (commonly shortened to SETI) were still scanning the heavens with antennas and listening for artificial radio transmissions incoming from other worlds. The efforts led to ever-tightening statistical upper limits and a handful of briefly exciting false alarms, but mostly a whole lot of nothing. more>

Engineering Fundamentals: Is Moore’s Law the Wright One? Battery Tech Hopes So

Will Moore’s Law yield to the Wright one for battery technology?
By John Blyler – Scientific laws describe observed phenomena, like Newton’s Law of Gravity. Engineering “laws” tend to focus on design or manufacturing processes, such as Moore’s Law. Although this most famous of engineering laws is really a corollary to a more comprehensive principle (as we’ll see shortly), it is nevertheless so well known that non-semiconductor experts refer to it often in their predictions. For example, several technology advocates have lamented the lack of a Moore’s Law equivalent in the automotive battery space.

“There is a focus (in the battery market) on halving cost while doubling energy density in the next three years,” observed Michael Doyle, Corporate Fellow in Material Sciences in the Dassault Systemes Strategy and Research Team. The specific reference to doubling within a particular time frame mimics Gordon Moore’s famous design and manufacturing law predictions. But let’s see what is behind Doyle’s statement for trends in battery technology.

What drives this desire for the doubling of density every three years (as opposed to 18 months with semiconductor nodes)? Several issues explained Doyle. Cost is one driver. The reality is that $50,000 for a new car is not an everyman or mass-market solution. So, costs will have to come down, hence the halving prediction. Fortunately, a scale price reduction has been a common occurrence in the semiconductor and automotive sectors. Of course, these sectors are not mutually exclusive as automobiles are dependent upon semiconductors and related technologies. more>

‘History will not Judge us Kindly’

Thousands of pages of internal documents offer the clearest picture yet of how Facebook endangers American democracy—and show that the company’s own employees know it.
By Adrienne LaFrance – Before i tell you what happened at exactly 2:28 p.m. on Wednesday, January 6, 2021, at the White House—and how it elicited a very specific reaction, some 2,400 miles away, in Menlo Park, California—you need to remember the mayhem of that day, the exuberance of the mob as it gave itself over to violence, and how several things seemed to happen all at once.

At 2:10 p.m., a live microphone captured a Senate aide’s panicked warning that “protesters are in the building,” and both houses of Congress began evacuating.

At 2:13 p.m., Vice President Mike Pence was hurried off the Senate floor and out of the chamber.

At 2:15 p.m., thunderous chants were heard: “Hang Mike Pence! Hang Mike Pence!”

At the White House, President Donald Trump was watching the insurrection live on television. The spectacle excited him. Which brings us to 2:28 p.m., the moment when Trump shared a message he had just tweeted with his 35 million Facebook followers: “Mike Pence didn’t have the courage to do what should have been done to protect our Country and our Constitution … USA demands the truth!” more>

The F-35 At 20: How Its Successes, And Failures, Shaped The Aerospace Industry

The takeaway from the last 20 years, according to aerospace analyst Richard Aboulafia, might well be, “You succeeded, but please don’t try that again.”
By Valerie Insinna – On Friday, Oct. 26, 2001, executives and employees from the nation’s two biggest defense primes gathered in boardrooms and sprawling production facilities to watch a Pentagon press conference. At stake: the Joint Strike Fighter competition, which would decide who would dominate the next 40 years of the defense aerospace industry — and rake in hundreds of billions in profits.

It was a moment five years in the making. The Pentagon wanted to buy a single stealth aircraft for the Air Force, Navy and Marine Corps capable of three distinct operational requirements: conventional landings on a runway, landing on aircraft carriers, and performing short takeoffs and vertical landings.

It awarded contracts to Lockheed Martin and Boeing in 1996 to build competing prototypes, known as the X-35 and X-32. By July 2001, Lockheed’s X-35 had proven it could execute a short, 500-foot takeoff, fly at supersonic speeds and then vertically land in a single flight. While Boeing’s X-32 also demonstrated supersonic flight and vertical landings, it did not accomplish them in the same flight.

For the engineers that had designed and developed the two planes, emotions were running high as a group of white-haired defense acquisition officials approached the podium of the Pentagon press briefing room.

And just like that, the competition was over. more>

Updates from Chicago Booth

Don’t rely on central banks to fight climate change
By Jeff Cockrell – In late August, five members of the US House of Representatives issued a statement urging President Joe Biden not to reappoint Jerome Powell, the chairman of the Federal Reserve, when his term expires in February 2022. The group, which included Alexandria Ocasio-Cortez (Democrat of New York), cited two concerns with Powell’s leadership: the Fed’s relaxation of banking regulations and its lack of action “to mitigate the risk climate change poses to our financial system.”

Ocasio-Cortez and her fellow members of Congress are not the first to suggest that central banks—whose policies have traditionally focused on objectives such as price stability and low unemployment—have a role to play in fighting climate change. The British Parliament’s Environmental Audit Committee (EAC) has encouraged the Bank of England to conduct its bond purchases with borrowers’ carbon emissions in mind. Many central banks themselves have also accepted some responsibility for fighting climate change: the European Central Bank says it is “committed to taking the impact of climate change into consideration in our monetary policy framework.”

But Chicago Booth’s Lars Peter Hansen cautions that monetary policy is a weak substitute for fiscal policy, which is far better suited to address climate change through tools such as carbon taxation and investment in green technologies. Asking central bankers to step in where fiscal policy makers can’t or won’t risks exposing central banks to reputational damage and a loss of political independence, he argues. more>

Related>

Meet General Electric’s flexible power transformer

By Ben Geman – A Mississippi utility is installing what’s being billed as “the world’s first large flexible transformer” — an Energy Department-backed project aimed at boosting grid resilience and smoothing integration of renewables.

Driving the news: GE Research and Prolec GE, working with the Mississippi power company Cooperative Energy, this morning are announcing the launch of a six-month field demonstration at a big substation in Columbia, Mississippi.

Why it matters: The “flexible” transformer has advantages over traditional models customized to specific voltage levels and other conditions, the companies and DOE said.

The big picture: The companies, which released this video promo, said it can better withstand extreme weather and is also an easier and faster replacement when extreme weather has damaged a traditional transformer. more>

The looming harm of tax harmonization

By Akvile Jaseviciute and Bhuvam Patel – The OECD’s proposals to harmonize international tax regimes were generally welcomed by governments without considering potential benefits of tax competitiveness. Blinded by their wish to stop multinational corporations from moving their business to jurisdictions with more favorable tax regimes, few considered the practical implications of OECD’s plans. Currently, OECD countries have divergent tax regimes – the 2021 edition of the International Tax Competition Index produced by the Tax Foundation ranked countries regarding tax competitiveness. Estonia earned the top spot in the ranking because of its relatively low corporate tax rate, while Italy and France fared poorly due to features like punitive wealth and financial transaction taxes. We hence question, why countries with favorable tax systems should be held back by a harmonized but uncompetitive tax regime?

OECD Proposal Problems

Current OECD proposals on tax harmonization focus on ending the perceived tax ‘unfairness’ while providing little practical benefits. The first Pillar aims to set tax brackets universally on companies making global sales above €20 Billion and profit margins of more than 10%. However, in practice, large companies often place the taxpaying burden on other stakeholders – employees or investors. Therefore, instead of benefiting the most vulnerable, the proposal could be detrimental to workers as companies choose to cut wages instead of letting their revenues shrink. If insufficiently considered, such an outcome could further disadvantage low qualification workers, which are already significantly affected by the Covid-19 pandemic. more>

The Time for a Digital-First Strategy Is Now

Bringing your core, ecosystem and edge strategies together is necessary for market survival.
Equinix – Volume 5 of the Global Interconnection Index (GXI) confirms that the pandemic triggered a tectonic shift in increased demand for digital services and accelerated the need to digitize business models by several years. For digital leaders, experiencing years of growth in a matter of months increased their advantage as many implemented their digital-first strategies. For organizations taking a follower approach, where digital transformation was still mostly bound to physical limitations and fixed dependencies, and followers found themselves losing control over business throughput, supply chain, customer engagement and potentially their position in the market.

Digital-first means digital business and technology strategies must become indistinguishable with sustainability central, to close any organization performance gaps, expand opportunity and gain material reforms on digital transformation efforts. As part of this transformation, your digital infrastructure is designed to enable the business to be a disruptor and not one of the disrupted. more>

Updates from McKinsey

The 2021 McKinsey Global Payments Report
By Alessio Botta, Philip Bruno and Jeff Galvin – Last October, when we published McKinsey’s 2020 Global Payments Report, it was already clear that the pandemic’s economic impact would lead to the first decline in global payments revenues in 11 years.

One year later, the picture is unexpectedly positive—on the payments front—despite challenges. Payments revenue did indeed decline—to $1.9 trillion globally—but by less than we anticipated last fall. Indicators point to a nominal but geographically uneven rebound in 2021, bringing revenue back into the range of 2019’s record high. From there, McKinsey projects a return to historical mid-single-digit growth rates, generating 2025 global payments revenue of roughly $2.5 trillion.

The relatively muted 2020 topline numbers mask some important countervailing effects, however, which are poised to reset the scale of opportunity for payments players for years to come. The pandemic accelerated ongoing declines in cash usage and adoption of electronic and e-commerce transaction methods. Revenue gains in these areas were offset by tightening of net interest margins earned on deposit balances. All these trends are expected to outlast the pandemic. The contraction of net interest income—combined with technology breakthroughs and the impact of open banking and fintech innovation—has spurred the creation of revenue models that within five years will offer adjacent opportunities as large as the core payments revenue pool. more>