Category Archives: Economy

How democracy can win again

Democratic erosion in Hungary is symptomatic of structural problems afflicting most democracies, even threatening the future of civilization.
By Gergely Karácsony – My political awakening coincided with the systemic changes that unfolded following the collapse of communism in Hungary in 1989. I was both fascinated and overjoyed by my country’s rapid democratization. As a teenager, I persuaded my family to drive me to the Austrian border to see history in the making: the dismantling of the Iron Curtain, which allowed east-German refugees to head for the west. Reading many new publications and attending rallies for newly established democratic political parties, I was swept up by the atmosphere of unbounded hope for our future.

Today, such sentiments seem like childish naivety, or at least the product of an idyllic state of mind. Both democracy and the future of human civilization are now in grave danger, beset by multifaceted and overlapping crises.

Three decades after the fall of communism, we are again forced to confront anti-democratic political forces in Europe. Their actions often resemble those of old-style communists, only now they run on a platform of authoritarian, nativist populism. They still grumble, like the communists of old, about ‘foreign agents’ and ‘enemies of the state’—by which they mean anyone who opposes their values or policy preferences—and they still disparage the west, often using the same terms of abuse we heard during communism. Their political practices have eroded democratic norms and institutions, destroying the public sphere and brainwashing citizens through lies and manipulation.

Nativist populism tends to be geared toward only one purpose—to monopolise state power and all its assets. In my country, the regime of the prime minister, Viktor Orbán, has almost captured the entire state through the deft manipulation of democratic institutions and the corruption of the economy. Next year’s parliamentary election (in which I am challenging Orbán) will show whether Hungary’s state capture can still be reversed. more>

Updates from McKinsey

The autonomous plant: Entering a new digital era
The requirements of the energy transition present significant industry challenges. Energy companies must embrace new technologies, transform management systems, and expand workforce capabilities.
By Gopal Chakrabarti, Dominik Don, Micah Smith, and Premal Vora – Energy companies are operating in uncertain times. They face societal pressure and increased regulation to significantly reduce fossil-fuel dependency, primarily characterized by reliance on transport fuels, plastics, and other refining and petrochemical products. Under these conditions, companies are looking to maximize the health and resilience of downstream operations—particularly in oil and gas and chemicals—by adopting new automation and digital technologies, enabling increased levels of data usage and performance transparency, as well as faster decision loops.

Many of these changes were already occurring and have only accelerated during the COVID-19 pandemic, resulting in a newfound sense of urgency. Yet digital strategies remain challenging for the energy sector for several reasons, namely keeping up with increased decarbonization efforts, workforce changes, and accelerated technological innovations. Many companies have responded with short-term solutions but remain indecisive about how to identify priorities in the years to come.

Autonomous plants are a promising solution. Such future plants link technology, data, and advanced visualizations with operations to ensure that assets learn from each action taken, as well as from historical data and derived insights. These plants react to asset health and economic conditions and progressively improve their operations over time to run with a lower carbon footprint as well as more safely and more profitably.

Our research shows that all plants, irrespective of their maturity levels, are primed to identify and adopt digital technologies to move toward autonomy. The building blocks are now in place, the technologies are available, and the required skill sets are coming into focus. more>

How to Build a Better Chiplet Packaging to Extend Moore’s Law

Packaging approaches like chiplet tech can extend Moore’s Law. But what does that mean for chip design product developers and fabs?
By John Blyler – Moore’s Law may not be dead, but it certainly has been challenged significantly beyond the 28nm process node. Fortunately, there are ways to extend Moore’s Law’s cost, feature, and size benefits. One way is to use chiplets – or modular dies – that effectively bypass Moore’s Law by replacing single silicon die with multiple smaller dies that work together in a unified packaged solution.

This approach provides much more silicon to add transistors compared to a monolithic microchip. As a result, chiplets are expected to return to the two-year doubling cycle that has been the cornerstone economics of the semiconductor business since 1965.

The global market for processor microchips that utilize chiplets in their manufacturing process is set to expand to $5.8 billion in 2024, rising by a factor of nine from $645 million in 2018, according to Omdia(Image Source: IEDM 2017, AMD Dr. Lisa Su keynote) more>

Culture Clash: A Lesson from the Theranos Case

KNOWLEDGE@WHARTON – There’s much more at stake than a potential 20-year prison term for Theranos founder Elizabeth Holmes, whose federal fraud trial opened last week. Her case has come to symbolize the perpetual conflict between big tech and health care.

“It’s a culture clash, to be sure,” Wharton health care management professor Lawton R. Burns said in an interview with Wharton Business Daily on SiriusXM.

The startup culture in Silicon Valley and beyond moves at warp speed, he said. When investors are enthusiastic about a promising new venture, the hype builds and the dollars roll in. Theranos reached a valuation of $9 billion on a bogus claim that it developed a revolutionary lab test capable of screening for a range of conditions on a single drop of blood. It was exactly the sort of cost-efficient solution that big tech is known for, so it’s little wonder that investors fell for the pitch from the charismatic Holmes, who fashioned herself after Apple visionary Steve Jobs.

But there’s almost always friction when big tech turns its eye toward health care as “virgin turf to apply all of this new, cool stuff to,” said Burns, who is co-author of the book Big Med: Megaproviders and the High Cost of Health Care in America. “The question is whether or not all this stuff is going to work and transform health care or, conversely, at the extreme, just crash and burn.” more>

America is still stuck in the world 9/11 built

By Sean Illing – Did 9/11 pave the way for Donald Trump?

That’s a big question, and until I read Spencer Ackerman’s new book, Reign of Terror: How 9/11 Destabilized America and Produced Trump, I hadn’t really thought about it. Ackerman is a longtime national security journalist who’s covered the “war on terror” since its inception roughly two decades ago.

Ackerman’s answer to the above question is yes, but his thesis is even more pointed: The war on terror — and the panoply of excesses it unleashed — eroded the institutional armor of American democracy and left the country defenseless against its own pathologies. And those pathologies, which Ackerman lays out with meticulous attention, prepared the ground for a figure like Trump.

Reading Ackerman’s book was a bit of a whirlwind. I was 19 years old when the Twin Towers fell. I’ll never forget watching the planes hit the wall. I’ll never forget how confused and angry I was. And I’ll never forget the thoughts running through my mind as I realized I was heading to boot camp in just four months. more>

Updates from Chicago Booth

How to streamline the US college application slog
By Brett Nelson – For many students in the United States, applying to college is a massive undertaking—from researching programs and visiting campuses to writing essays and corralling recommendations. The process, often stressful, can involve considerable time, effort, and cost.

But it doesn’t need to be so difficult, research suggests. If universities told students up front their odds of being accepted, the process could be more efficient and ultimately less costly for applicants and the colleges themselves, according to Microsoft Research’s Nicole S. Immorlica and Brendan J. Lucier, Chicago Booth’s Jacob Leshno, and Stanford’s Irene Y. Lo. A more streamlined approach would also bring the US system more in line with how many other countries handle college admissions, including Australia and Israel.

The current process—which includes researching colleges, taking standardized tests, writing essays, and soliciting recommendation letters—might consume more than 100 hours, according to college guidance service CollegeVine (plus perhaps 50 more to prepare for entrance exams such as the SAT). US guidance counselors encourage students to apply to at least six schools, suggests a 2016 survey by Cappex, a college research service. Plenty of students courting the most competitive institutions end up applying to even more to shrink the chances of total rejection.

Colleges, meanwhile, spend time and money creating marketing materials, conducting campus tours, and reviewing applications to end up with a full (but not too full) class of students each year. more>

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Space Market Is Poised for Growth. But What Industries Will Benefit First?

Everyone wants a piece of the new space race action. AIAA ASCEND may help break it down.
By John Blyler – Space seems to be the new black. Everyone wants to be a part of the current “space race.” A new awareness of our extra-terrestrial potential is emerging from the amazing crafts that take us into the earth’s orbit and beyond to the structures that will be needed to support humans on other planets.

The space market has also become a growth engine for the high-tech industry. In contrast to the last space race, today’s launch costs are down. Technological advances and public interest mean space exploration is well on course to be the next trillion-dollar industry.

Add to this growing list of supporters is a community called ASCEND, whose sole mission is to build humanity’s off-world future faster. Recently, they premiered “Fast Forward” – an original on-demand interview series featuring champions of industries pursuing large-scale growth in space.

Powered by the American Institute of Aeronautics and Astronautics (AIAA), ASCEND was launched in 2020 to Accelerate Space Commerce, Exploration, and New Discovery. ASCEND’s centerpiece annual event will convene this November. Join the conversation live in Las Vegas and Washington, DC, and online everywhere during November. nore>

Not seeing the wood for the trees—the EU’s environmental blunder

Supporting a conversion to wood burning has unwittingly incentivised power plants to increase greenhouse gases.
By George Tyler – The European Union is leading the world in adopting limits on greenhouse-gas (GHG) emissions, notably via hefty carbon taxes. New policies always experience teething problems but an EU environmental regulation adopted in 2009 has become an embarrassing own goal.

The regulation classified wood burning as environmentally superior to fossil fuels—even carbon-neutral—and exempted it from carbon taxes. That was intuitive perhaps but an untested presumption adopted in a data vacuum. The notion was that harvesting forests for power-plant fuel would establish a virtuous cycle, with tree regrowth offsetting the wood-burning emissions.

But rigorous subsequent analyses have led experts to debunk the notion of wood as carbon-neutral. In no scenario, even stretching over a century, does replanted forest sequester sufficient carbon. In the most environmentally beneficial scenario, a quarter of a hardwood forest can be harvested for power-plant fuel and, if replanted with hardwood—and the entire forest left untouched and free of fire, drought or infestation during the subsequent century—will sequester all of 66 per cent of the emissions released by the initial burning. more>

 

Wall Street to Mission Control: Can space tourism pay off?

With the COVID-19 pandemic curtailing earthly travel, space tourism may seem like a far-fetched dream—but some companies are betting on high demand.
By Chris Daehnick and Jess Harrington – The space industry saw record-breaking growth in 2020 as investors, undeterred by the COVID-19 pandemic, poured almost $9 billion into private companies. While some of these businesses are simply providing parts and services to government agencies like NASA, others want to venture into space with their own crew and rockets. One ambitious goal, which several companies are now pursuing, involves space tourism for any private citizen willing to pay a hefty fee.

Having private companies lead space exploration ventures was the stuff of science fiction when the human spaceflight era dawned 60 years ago in April 1961. But such companies have now demonstrated the safety and performance of their systems for a full spectrum of operations. Plans to offer private flights are becoming reality, so what does the future hold? To answer this question, we look at industry trends, investment patterns, and the obstacles ahead.

Governments monopolized space exploration in its early days because of the staggering investment and high risks involved. Exhibit 1 shows some of the early milestones of space flight, as well as other important developments through 2000. National pride and the desire to be “first” were also powerful motivators, although many countries now appreciate the value of collaboration, as seen with the International Space Station. Private companies, with vastly fewer resources, had little reason to investigate crewed missions because the likelihood of getting government approval and seeing decent returns was dim. more>

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Updates from Chicago Booth

Who is right about inflation?
The US Fed and consumers have very different expectations about the future
By Brian Wallheimer – Inflation chatter started heating up this spring, along with inflation itself. In April 2021, the US Consumer Price Index, which measures how fast prices change, rose at a 4.2 percent annual rate, more than double the usual target rate. Then in May, the inflation rate soared to 5 percent. With the worst of the pandemic seemingly easing, US consumers were apparently venturing out again and spending at a fast clip.

The figures took inflation watchers off guard. The Wall Street Journal’s editorial page noted that Federal Reserve chairman Jerome Powell had wanted some inflation but would likely be surprised by the force of April’s numbers, saying, “Powell’s inflation ship has come in, albeit more rudely than he probably wanted.”

Financial journalists and investors, always looking for signs of how the central bank will react to signs of inflation or deflation, kicked into high gear, trying to anticipate the timing of any Fed actions.

But consumers—who actually drive inflation—seemed unfazed, apparently already operating with the understanding that prices were rising fast, and would continue to do so. Homeowners remodeling their homes during the pandemic were aware of historically high lumber prices. Home cooks felt the impact on food prices. Buyers of both new and used cars saw prices surge due to a shortage of computer chips. more>

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