Category Archives: Economic development

Preventing digital feudalism

By Mariana Mazzucato – The use and abuse of data by Facebook and other tech companies are finally garnering the official attention they deserve. With personal data becoming the world’s most valuable commodity, will users be the platform economy’s masters or its slaves?

Prospects for democratizing the platform economy remain dim.

Algorithms are developing in ways that allow companies to profit from our past, present, and future behavior – or what Shoshana Zuboff of Harvard Business School describes as our “behavioral surplus.” In many cases, digital platforms already know our preferences better than we do, and can nudge us to behave in ways that produce still more value. Do we really want to live in a society where our innermost desires and manifestations of personal agency are up for sale?

Capitalism has always excelled at creating new desires and cravings. But with big data and algorithms, tech companies have both accelerated and inverted this process. Rather than just creating new goods and services in anticipation of what people might want, they already know what we will want, and are selling our future selves. Worse, the algorithmic processes being used often perpetuate gender and racial biases, and can be manipulated for profit or political gain. While we all benefit immensely from digital services such as Google search, we didn’t sign up to have our behavior cataloged, shaped, and sold.

To change this will require focusing directly on the prevailing business model, and specifically on the source of economic rents. Just as landowners in the seventeenth century extracted rents from land-price inflation, and just as robber barons profited from the scarcity of oil, today’s platform firms are extracting value through the monopolization of search and e-commerce services. more>

Linear Labs Promises a Moonshot for Electric Motor Technology

By Dan Carney – There is something almost as absurd afoot in Texas now; an electric motor startup making amazing performance claims that arose from a father/son project to improve upon the traditional Aeromotor windmill (a San Angelo, Texas product) for pumping water from wells.

Linear Labs CEO Brad Hunstable makes claims about the effectiveness of what the company dubs the Hunstable Electric Turbine, an electric motor (or generator) that would seem improbable if not for the fact that he says products employing motors from Linear Labs will hit stores early next year.

Consider this, the HET produces 2-3 times more torque than a conventional motor of the same size and specifications, it can be manufactured with no specialized tools or processes at comparable cost to traditional motors, it runs at lower voltage and uses simpler control electronics and it does all of this using iron ferrite magnets rather than the expensive rare earth Neodymium magnets that rely on Chinese suppliers.

It was developed while U.S. Military Academy alum Brad Hunstable and his father, nuclear power engineer Fred Hunstable collaborated on development of a old-fashioned many-vane-style water-pumping windmill, with the notion that it could be upgraded for use in the developing world to also produce small amounts of electricity.

The generator needed to work using the back-and-forth motion of the water pumping shaft that descends from the windmill to the well, so their generator was linear rather than rotary in motion. Hence “Linear Labs.”

A breakthrough in designing that motor led to the idea of applying their new configuration to electric motors. more>

Updates from ITU

How can AI help make our roads safer?
ITU News – What does a fully autonomous, electric, high-performance race car have to do with the United Nations Sustainable Development Goals (SDGs)?

For starters, the vehicle, developed by Roborace, is providing a testing ground for new efforts to build public trust in how next-generation vehicles could improve road safety and reduce the 1.35 million annual road deaths worldwide (SDG 3.6). Increased use of autonomous, electric, connected vehicles could also reduce emissions, improve traffic flows — and provide affordable, safe and sustainable transport systems to underdeveloped nations (SDG 11.2).

But how do we go from race track to the road?

A panel of experts – Bryn Balcombe, CSO at Roborace and Founder of the Autonomous Drivers Alliance; Lucas di Grassi, Formula-E World Champion and CEO at Roborace; and Fred Werner, Head of Strategic Engagement at ITU’s Standardization Bureau – met at Web Summit 2019 to discuss how AI will make our roads safer, and how ITU is helping lead the charge. more>

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New Microeconomics: How Evolution Explains Resource Distribution

By Blair Fix – Through years of schooling, mainstream economists are trained to ignore the obvious facts about human nature. The theories that economists learn make it impossible for them to understand human sociality.

Economists are trained that humans are asocial ‘globules of desire’. This is Thorstein Veblen’s satirical term for ‘homo economicus’, the economic model of man.

As Veblen makes clear, economists’ model of human behavior is bizarre. Indeed, the assumptions are so far-fetched that one wonders how this ‘theory’ ever gained acceptance. I’ve spent years trying to make sense of homo economicus as a scientific theory. I’ve concluded that this is a waste of time. Economists’ selfish model of humanity is best treated not as science, but as ideology.

Unlike scientific theories, ideologies are not about the search for ‘truth’. Instead, they are about rationalizing a certain worldview — usually the worldview of the powerful. Economists’ selfish model of humanity is a textbook example.

The discipline of economics emerged during the transition from feudalism to capitalism. During this period of social upheaval, business owners battled to wrench power from the landed aristocracy. To supplant the aristocracy, business owners needed to frame their power as legitimate (and the power of aristocrats as illegitimate). Their solution was devilishly clever. The new business class appealed to autonomy — the mirror opposite of the ideals of feudalism.

Feudalism was based on ideals of servitude and obligation. Serfs were obligated to perform free work for feudal lords. And these lords, in return, were obligated to protect serfs from outside attackers. This web of obligation was rationalized by religion — it was a natural order ordained by God.

To upend this order, business owners championed the ideals of autonomy and freedom. Business owners claimed to want nothing but to be left alone — to pursue profit unfettered by government or aristocratic power. From this world view, the autonomous model of man was born. It had nothing to do with how humans actually behaved. It was about rationalizing the goals of business owners. They wanted power, but they framed it as the pursuit of freedom and autonomy. “Power in the name of freedom” is how Jonathan Nitzan puts it. more>

The New Era of Sustainable Supply Chains

By Mary Page Bailey – To improve sustainability, materials manufacturers are welcoming new digital technologies and process innovations into their global supply chains

From palm oil to plastics, the global supply chains of many critical raw materials are evolving as consumers and manufacturers increasingly seek sustainable and renewable options. Digital technologies, including blockchain, Internet of Things (IoT) sensors and modeling tools, are facilitating these supply-chain transitions by enabling unprecedented data visibility and analyses. At the same time, chemical manufacturers are turning toward process and chemistry innovations to improve the sustainability of their raw materials.

Blockchain, in particular, provides many specific capabilities that are helping manufacturers realize more sustainable sourcing practices. In the plastics sector, for instance, DOMO Chemicals (Ghent-Zwijnaarde, Belgium; www.domochemicals.com) and Covestro AG (Leverkusen, Germany; www.covestro.com), along with the Circularise initiative (www.circularise.com/plastics), are partnering to implement blockchain technology to improve traceability and transparency in plastics manufacturing.

“Blockchain can be applied to many challenges in the plastics value chain, such as complex record keeping and tracking of products. Blockchain serves as a less corruptible and better automated alternative to centralized databases,” says Jordi de Vos, founder of Circularise. Blockchain provides encoded information storage on a network-to-network chain, which validates data to protect business dealings and prevents the theft or manipulation of documents – a unique combination of transparency and security.

The Circularise platform creates a digital twin of a material, component or product to build end-to-end traceability by integrating audit reports, certifications, material parameters and more. In addition to making materials traceable, Circularise aims to protect stakeholders’ privacy – the protocol is specifically developed to enable the disclosure of relevant supply-chain information without having to share sensitive data. more>

Updates from ITU

Why ITU strives to be the world’s most inclusive standardization platform
By Bilel Jamoussi – The global ICT ecosystem is a remarkable feat of engineering and a similarly remarkable feat of international collaboration.

The ICT industry relies on technical standards to an extent rivalled by few other industry sectors.

Our networks and devices interconnect and interoperate thanks to the tireless efforts of thousands of experts worldwide who come together to develop international standards.

International standards provide the technical foundations of the global ICT ecosystem – today’s advanced optical, radio and satellite networks are all based on ITU standards.

95 per cent of international traffic runs over optical infrastructure built in conformance with ITU standards. Video will account for over 80 per cent of all Internet traffic by 2020, and this traffic will rely on ITU’s Primetime Emmy winning video-compression standards.

Standards create efficiencies enjoyed by all market players, efficiencies and economies of scale that ultimately result in lower costs to producers and lower prices to consumers. more>

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The Crisis of Social Media

By Adrian Shahbaz and Allie Funk – Internet freedom is increasingly imperiled by the tools and tactics of digital authoritarianism, which have spread rapidly around the globe. Repressive regimes, elected incumbents with authoritarian ambitions, and unscrupulous partisan operatives have exploited the unregulated spaces of social media platforms, converting them into instruments for political distortion and societal control.

While social media have at times served as a level playing field for civic discussion, they are now tilting dangerously toward illiberalism, exposing citizens to an unprecedented crackdown on their fundamental freedoms. Moreover, a startling variety of governments are deploying advanced tools to identify and monitor users on an immense scale.

As a result of these trends, global internet freedom declined for the ninth consecutive year in 2019.

Social media allow ordinary people, civic groups, and journalists to reach a vast audience at little or no cost, but they have also provided an extremely useful and inexpensive platform for malign influence operations by foreign and domestic actors alike.

Political leaders employed individuals to surreptitiously shape online opinions in 38 of the 65 countries covered in this report—a new high.

In many countries, the rise of populism and far-right extremism has coincided with the growth of hyperpartisan online mobs that include both authentic users and fraudulent or automated accounts. They build large audiences around similar interests, lace their political messaging with false or inflammatory content, and coordinate its dissemination across multiple platforms.

Cross-border influence operations, which first drew widespread attention as a result of Russian interference in the 2016 US presidential contest, are also an increasingly common problem.

Authorities in China, Iran, Saudi Arabia, and a growing list of other countries have expanded their efforts to manipulate the online environment and influence foreign political outcomes over the past year. Malicious actors are no doubt emboldened by the failure of democratic states to update transparency and financing rules that are vital to free and fair elections, and apply them effectively to the online sphere. more>

Updates from Chicago Booth

How multinational companies help spread recessions
By Bob Simison – The Great Recession a decade ago was one example of how economic cycles across the world can move in parallel, a phenomenon that economists don’t fully understand. It could be that a common event, such as a surge in oil prices, affects many economies at the same time—or perhaps linkages between countries transmit economic shocks from one country to the world economy.

One such linkage is multinational corporations,  according to Marcus Biermann, a postdoctoral scholar at the Catholic University of Louvain, and Chicago Booth’s Kilian Huber, who explore the role of multinationals in spreading the global recession by analyzing the ripple effects of one German bank’s struggles during the 2008–09 financial crisis.

Commerzbank was Germany’s second-biggest commercial lender behind Deutsche Bank. Losses on trading and investments abroad hammered the bank, especially after Lehman Brothers collapsed in September 2008. Commerzbank’s capital fell by 68 percent between December 2007 and December 2009, which forced the bank to reduce its aggregate lending stock by 17 percent. Biermann and Huber find that this pullback in credit available to German parent companies affected subsidiaries in other countries, thus helping to transmit the economic contraction. more>

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Updates from Ciena

To repeat, or not repeat, that is the question
Are you familiar with unrepeatered submarine cables? As Ciena’s Brian Lavallée often gets asked about this lesser-known technology, he took some time to explain what they are, when to use them, and why they’re important.

By Brian Lavallée – Many new submarine cables have been announced by major Internet Content Providers, such as Google, Facebook, and Amazon, to interconnect data centers. These high-capacity submarine cables traverse oceans by leveraging the latest in wet plant and Submarine Line Terminating Equipment (SLTE) coherent modem technology… but what about the lesser known counterpart of these submarine cable designs, the unamplified submarine cables? I often get asked about unamplified submarine cable networks, so I thought I’d share some of my thoughts in this blog.

Due to the distances and capacities associated with transoceanic submarine cables, optical amplifiers are spaced at regular intervals along the cable to amplify information-carrying wavelengths. Undersea optical amplifiers are similar to their terrestrial counterparts, at least from an optoelectronic perspective, but are installed in one of the harshest telecom operating environments on Earth – the ocean floors, and sometimes several kilometers deep. Amplified submarine cables are more commonly referred to as “repeatered” cables, but this is actually a misnomer.

A traditional optical communications “repeater” regenerates a received optical signal by performing 3Rs – Reamplify, Reshape, and Retime – to restore the quality of received optical signals, which involves OEO (Optical-Electrical-Optical) conversion. Repeaters, also referred to as “regenerators, or “regens” for short, were expensive and power-hungry devices, but were absolutely necessary for the proper transmission of information across great distances. more>

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Why digital strategies fail

By Jacques Bughin, Tanguy Catlin, Martin Hirt, and Paul Willmott – Most digital strategies don’t reflect how digital is changing economic fundamentals, industry dynamics, or what it means to compete. Companies should watch out for five pitfalls.

We find that a surprisingly large number underestimate the increasing momentum of digitization, the behavioral changes and technology driving it, and, perhaps most of all, the scale of the disruption bearing down on them. Many companies are still locked into strategy-development processes that churn along on annual cycles. Only 8 percent of companies we surveyed recently said their current business model would remain economically viable if their industry keeps digitizing at its current course and speed.

How can this be, at a moment when virtually every company in the world is worried about its digital future? In other words, why are so many digital strategies failing?

The answer has to do with the magnitude of the disruptive economic force digital has become and its incompatibility with traditional economic, strategic, and operating models. This article unpacks five issues that, in our experience, are particularly problematic. We hope they will awaken a sense of urgency and point toward how to do better. more>