Category Archives: Economic development

The next energy revolution: The promise and peril of high-tech innovation

By David Victor and Kassia Yanosek – The technology revolution has transformed one industry after another, from retail to manufacturing to transportation. Its most far-reaching effects, however, may be playing out in the unlikeliest of places: the traditional industries of oil, gas, and electricity.

Today, smarter management of complex systems, data analytics, and automation are remaking the industry once again, boosting the productivity and flexibility of energy companies. These changes have begun to transform not only the industries that produce commodities such as oil and gas but also the ways in which companies generate and deliver electric power. A new electricity industry is emerging—one that is more decentralized and consumer-friendly, and able to integrate many different sources of power into highly reliable power grids. In the coming years, these trends are likely to keep energy cheap and plentiful, responsive to market conditions, and more efficient than ever.

But this transition will not be straightforward. It could destabilize countries whose economies depend on revenue from traditional energy sources, such as Russia, the big producers of the Persian Gulf, and Venezuela. It could hurt lower-skilled workers, whose jobs are vulnerable to automation. And cheap fossil fuels will make it harder to achieve the deep cuts in emissions needed to halt global warming. more> https://goo.gl/YB2Yry

Connecting People to Prosperity in the Exponential Age

By Vanessa Bates Ramirez – “Our assumptions about how economies function no longer seem to hold true entirely because of exponential technology.”

This claim came from entrepreneur and Singularity University faculty member, Amin Toufani.

In what he calls exponential economics or “exonomics,” Toufani breaks the tech-driven changes happening in the modern economy into seven pillars: people, property, production, price, power, policy, and prosperity.

Toufani pointed out that exonomics’ ultimate goal is to connect people and prosperity.

“Technology is empowering all of us, and people seem to be doing what companies used to do and companies seem to be doing what governments used to do,” Toufani said.

The democratizing effect of information technology is enabling small teams to have an outsized impact. He showed a graph of collaboration app Slack’s user growth, and it’s practically a vertical line. A few years old, Slack reaches millions of users, many of whom pay for the service, and was recently valued upwards of $9 billion.

The kicker? Slack was created by a team of 12 software developers. And it’s far from the only such example. more> https://goo.gl/wpBRPz

Will robots make job training (and workers) obsolete?

By Harry J. Holzer – Automation eliminates the number of workers needed per unit of good or service produced. By reducing unit costs it raises productivity and, in a competitive market, product prices should decline. All else equal, this will raise consumer demand for the good or service in question.

Whether or not this rise in product demand is sufficiently large to raise overall employment for the product depends on whether the fall in workers needed per unit of production is proportionately lesser or greater than the rise in the numbers of units demanded; if lesser, than product demand will rise.

Labor economists believe that workers mostly pay for general skill development (often in the form of lower wages, when the training occurs on the job), while employers are willing to share more in the costs of developing worker skills more specific to their needs.6 A shift away from specific towards more general skill training will thus involve a shift of the costs of training away from employers towards workers (or the public), and less sharing of any risks involved in whether the market rewards those skills over time.

Some workers whose tasks can mostly be performed by machines will be displaced, while demand is enhanced for others who can work along with the new machines—perhaps as technicians or engineers but also in a range of newer tasks that the machines cannot perform, including more complex analysis or social interactions with customers and coworkers. more> https://goo.gl/pveH2W

A Magic Wand for France?

By Anders Åslund – In the early days of his presidency, the French public is behind him; recent polling puts his approval rating at 62%. Yet goodwill can dissipate quickly, which is why Emmanuel Macron must move to capitalize on his early mandate by implementing reforms of fiscal policy, taxation, the labor market, and education, to name but a few areas where change is long overdue.

France’s most immediate problems are anemic growth and inadequate job creation. For the last 12 years, France’s GDP has increased by barely 1% a year, less than the mediocre uptick in the European Union as a whole, while unemployment currently hovers just above 10%.

Only five EU countries – Croatia, Italy, Cyprus, Spain, and Greece – have higher unemployment rates.

Part of the unemployment challenge is tied to hidden costs. France has some of the highest labor costs for hourly employees in the EU, and a natural consequence is tepid hiring. With inequality also growing, many French are rightly upset that labor is taxed much more than capital gains. Indeed, France’s payroll taxes amount to 19% of GDP – far exceeding the EU average of 13%.

Likewise, government spending, at 57% of GDP – is the highest in the EU, where the average is 47%. This burden is excessive, and significantly hinders economic growth. more> https://goo.gl/jxchXt

Related>

The Left And Science In LaLaLand?

By Wolfgang Kowalsky – How did we get into that situation?

First, a fading consensus, not only on Europe but also on the liberal form of representative democracy, is not a totally new trend. It is an incremental, not an underground movement with some disruptive events above the surface.

It started half a century ago when some so-called New Philosophers – and in parallel a so-called New Right – saw the light of day and developed a hegemonic strategy based on the ideas of Italian Marxist philosopher Antonio Gramsci. Together, the New Philosophers and the New Right had much more impact than expected.

The struggle between different political concepts which is the foundation of liberal democracies is superposed by the trend to use the political battle to push for limiting democracy, which is presented as too bureaucratic, too dominated by compromises and endless discussions. The justification behind this trend is to simplify complex issues, to avoid long discussions and to facilitate recourse to immediate action along the line of ‘Promises made, promises kept’ – tactic to cement hegemony over one’s own clientèle.

The question is why the oversimplification and the denial of complex correlations gets more and more support. more> https://goo.gl/nFQFZw

Updates from GE

Taking Charge: GE Bundles Batteries With Largest Steam And Gas Turbines
By Bruce Watson – Ever since the days of Thomas Edison, utilities have been working on ways to balance the grid. In the absence of utility-scale batteries that could store and release megawatts on demand — they remain expensive — the most common balancing tools today are “peakers.” These power plants, which burn either oil or natural gas, can quickly ramp up to full power and pick up the slack when renewables drop off. But even the fastest peakers take several minutes to reach full power, forcing operators to run them at minimum load to keep them ready. Idling, the turbines burn fuel, pump out greenhouse gas emissions and accumulate wear.

But engineers working at GE have now come up with a clever compromise that works kind of like a hybrid car: gas turbine peakers and batteries wrapped in a single, efficient package with sophisticated power-management software. “With a hybrid gas turbine, you don’t have to run the turbine at all,” says Brian Gutknecht, chief marketing officer for GE Power. “If power is called for, batteries can provide immediate power. Meanwhile, you can start up the gas turbine.” By the time the batteries run out of power, the turbine will be up and running — powering the grid and recharging the batteries. more> https://goo.gl/UR1qmM

What the U.S. Can Learn From India’s Government Reform Efforts

By John Kamensky – India’s government is based on the British parliamentary system with career civil servants heading about 80 departments that report to political ministers.

Day-to-day operations are in the hands of career executives with the title of Secretary to the Government of India. It’s a more centralized system and in some respects and faces greater challenges. It serves a population nearly four times the size of the United States, with greater economic disparities.

Its 29 states (and 7 Union Territories) are largely sub-units of the national government with civil servants moving back and forth.

“A 21st century government cannot deliver with 19th century institutions,” Amitabh Kant said, and to that end, the government has identified over 1,000 laws to be reduced, streamlined, or repealed. In addition, the Indian government supports over 680 autonomous bodies (e.g., AMTRAK and the Postal Service are rough equivalents in the United States) and they are reviewing each to determine if they can be devolved or eliminated. more> https://goo.gl/jzRkNN

Updates from Chicago Booth

Identify and rise above load-bearing assumptions
By Linda E. Ginzel – How could you build a really, really tall building without building really, really thick walls?

A man named William Le Baron Jenney came up with the answer. Jenney is widely recognized as the father of the American skyscraper, and according to Chicago lore, he had a breakthrough idea when he observed his wife placing a very heavy book on top of a tall metal birdcage. The cage not only supported the weight of the book, Jenney could see that it could have easily supported a whole stack of books. A stack of books piled high and balancing on a birdcage—what an image.

Jenney introduced the idea of a complete, steel skeleton, and he built the first fully metal-framed skyscraper in Chicago in 1884. Just as his wife used a birdcage to support the weight of a very big book, Jenney used metal columns and beams to support his building from the inside.

This story demonstrates the combined power of shedding a default assumption that weighed people down with making a major conceptual shift, which, in this case, provided architects the strength they needed to build higher.

Many of us face load-bearing assumptions, perhaps about management, strategy, finance, or leadership. For example, you may assume that the economic world is a zero-sum game.

Shedding assumptions is not an easy task because many have served you well in the past, and there is risk in abandoning them. Yet one of the most important skills that you can acquire is a willingness to question your load-bearing assumptions and make a different choice, when necessary. more> https://goo.gl/zR2hFR

Related>

Make Congress Great Again

By Matthew Spalding – Today, the primary function of government is to regulate.

When Congress writes legislation, it uses very broad language that turns extensive power over to agencies, which are also given the authority of executing and often adjudicating violations of their regulations in particular cases. The result is that most of the actual decisions of lawmaking and public policy – decisions previously the constitutional responsibility of elected legislators – are delegated to bureaucrats whose “rules” have the full force and effect of laws passed by Congress.

The modern Congress is almost exclusively a supervisory body exercising limited oversight over administrative lawmakers.

If the development of the rule of law and constitutional government is the most significant accomplishment of the long history of human liberty, the greatest political revolution in the United States since the establishment of the Constitution has been the shift of power away from the lawmaking institutions of republican government to an oligarchy of experts who rule by regulation over virtually every aspect of our lives.

The result is an increasingly unbalanced structural relationship between what amounts to an executive–bureaucratic branch that can act with or without Congress to pursue common goals, and an ever-weakening legislative branch unable or unwilling to exercise its powers to check the executive or rein in a metastasizing bureaucracy. more> https://goo.gl/Jp3xRz

How the Obama phenomenon and Trump earthquake happened

By Reid Wilson – The Hill spent months digging deep into decades of data that illustrate the nation’s changing demographics, economics, culture and politics.

Those glimpses of a changing America are evidence of a series of countervailing demographic, political and economic forces that have long exerted themselves on the nation — and now define the quadrennial struggle between two sides of the political aisle that are deeply polarized along race, class, economic and educational lines.

At the center of the divide are two sets of divergent trends.

The first set contrasts the changing face of America, which is being hastened by the rising influence of the most diverse generation in American history, with a radical political shift among the nation’s still-dominant cohort of older whites, who now act as a more homogenous voting bloc than ever before.

The second set reflects the changing nature of how Americans live, work and build economic power. A generations-long trend toward wage stagnation, automation and globalization is in the final stages of exterminating the blue-collar manufacturing jobs that once sustained America’s middle class in the heartland. more> https://goo.gl/YgDUA0

Related>