Category Archives: Media

Complexity Economics Shows Us Why Laissez-Faire Economics Always Fails

By Eric Liu and Nick Hanauer – Over the last three decades, an unprecedented consolidation and concentration of earning power and wealth has made the top 1 percent of Americans immensely richer while middleclass Americans have been increasingly impoverished.

Traditional economic theory is rooted in a 19th- and 20th-century understanding of science and mathematics. At the simplest level, traditional theory assumes economies are linear systems filled with rational actors who seek to optimize their situation. Outputs reflect a sum of inputs, the system is closed, and if big change comes it comes as an external shock. The system’s default state is equilibrium. The prevailing metaphor is a machine.

But this is not how economies are. It never has been. As anyone can see and feel today, economies behave in ways that are non-linear and irrational, and often violently so. These often-violent changes are not external shocks but emergent properties—the inevitable result—of the way economies behave.

The traditional approach, in short, completely misunderstands human behavior and natural economic forces. The problem is that the traditional model is not an academic curiosity; it is the basis for an ideological story about the economy and government’s role—and that story has fueled policymaking and morphed into a selfishness-justifying conventional wisdom.

It is now possible to understand and describe economic systems as complex systems like gardens. And it is now reasonable to assert that economic systems are not merely similar to ecosystems; they are ecosystems, driven by the same types of evolutionary forces as ecosystems. Eric Beinhocker’s The Origin of Wealth is the most lucid survey available of this new complexity economics. more>

AI’s Ethical Implications: The Responsibility Of Firms, Policymakers and Society?

By Frederick Ahen – The market for AI is massive.

The expertise needed in the field is growing exponentially; in fact, firms are unable to meet the demand for specialists. Contributions of AI to both advanced and emerging economies is significant and it is also powering other fields that once depended on manual labor with painstakingly slow processes.

For example, precision agriculture now uses drones to help irrigate and monitor plant growth, remove weeds and take care of individual plants. This is how the world is being fed.

Journalists are using drones to search for truth in remote areas. Driverless cars are being tested. Drones are doing wonders in the logistics and supply chain areas. But drones are also used for killing, policing and tracking down criminal activities.

There are many other advantages of AI in the health sector, elderly care and precision medicine. AI machines have the capacity to do things more efficiently than humans or even tread spaces that are more dangerous for humans.

This is the gospel. Take it or leave it.

But there is more to the above. What is also true is that ‘the world is a business’ and business is politics that controls science, technology and information dissemination. These three entities know how to subliminally manipulate, calm, manage and shape public sentiments about anything.

They control how much knowledge we can have and who can be vilified for knowing or speaking the truth, demanding an ethical approach to the production and use of AI or turned into a hero for spinning the truth.

So, the question is, which industrial policies will promote the proper use of AI for the greater good through ethical responsibility in the midst of profits, power, politics and polity? more>

Updates from Chicago Booth

Blockchain’s weakest links
By Chana R. Schoenberger – Blockchain” has become a business buzzword. Commentators, thought leaders, and business experts are highlighting how the distributed-ledger technology promises to revolutionize business and logistics. Universities are teaching courses in blockchain. Blockchain jobs are “booming in Asia,” reports CNBC.

Blockchain “lets us imagine a world that’s not dominated by Google, Facebook, or, for that matter, the [US National Security Agency], one where we, the people, the core components of global society, get to say how our data is managed,” reads The Truth Machine: The Blockchain and the Future of Everything.

It’s a lot of attention for what is essentially an accounting technology. The plumbing behind financial services is generally unaccustomed to such publicity.

Companies are expected to spend $2.1 billion on blockchains by 2018, and $9.2 billion by 2021, according to research firm IDC. But first, like any new technology or market—and blockchain is both, in some sense—it has to overcome a few issues to prove its staying power.

For starters, there are different types of blockchains, and researchers have identified some potentially severe challenges facing the most ubiquitous type, known as “proof-of-work.” The choices companies and others make in the near future about which system to use, and how to use it, will determine how blockchain systems progress—and if blockchain does indeed mark a next era of tech.

Because bitcoin mining is a proof-of-work system, miners use electricity to run computers as they race to solve math problems to earn the right to validate the next block in a blockchain, and thereby win a bitcoin reward. This has raised another big concern with Nakamoto’s system: energy use.

As Bitcoin prices surged, so did mining and its impact on the power grid. If Bitcoin were a country, it would rank 39th in worldwide energy usage, behind the Philippines (38th) and ahead of Austria (40th), more>

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Is a Recession Coming?

By Derek Thompson – Cascading stock prices might seem like a random crisis if you’ve been paying attention to the overall economy, which is booming. At 3.7 percent, the official unemployment rate is the lowest of this century. Job satisfaction is at its highest level in more than a decade. Small-business and consumer confidence hit record highs this year.

Observing the gap between Wall Street jitters and Main Street optimism, some are inclined to point out that “the stock market is not the economy.” But you should resist that temptation. The stock market is not the entire economy. (Neither is wage growth or health-care spending.) Rather, the stock market is a part of the economy that reflects both the value of capital investment in public companies and a prediction of their future earnings. As labor costs increase (good news for workers), and interest rates creep up (good news for traditional savings accounts), cost of business increases for many large companies, which can hurt their stock value.

For many years, corporate profits thrived as labor costs were low. Now corporate profits are at risk as labor costs are rising.

One way to predict the likelihood of a recession today is to look back at the past few downturns and evaluate whether the U.S. economy is in danger of repeating history. more>

The Boundary Between Our Bodies and Our Tech

By Kevin Lincoln – Many of the boundary lines in our lives are highly literal, and, for the most part, this is how we’ve been trained to think of boundaries: as demarcations shored up by laws, physical, legal, or otherwise, that indicate exactly where one thing ends and another begins. Here is the border of your property; here is the border of your body; here is the border of a city, a state, a nation—and to cross any of these boundaries without permission is to transgress.

But one of the most significant boundary lines in our lives is not this way, and one piece of ubiquitous technology is making this line increasingly permeable and uncertain, at a cost that we may only be starting to comprehend.

The debate over what it means for us to be so connected all the time is still in its infancy, and there are wildly differing perspectives on what it could mean for us as a species. One result of these collapsing borders, however, is less ambiguous, and it’s becoming a common subject of activism and advocacy among the technologically minded. While many of us think of the smartphone as a portal for accessing the outside world, the reciprocity of the device, as well as the larger pattern of our behavior online, means the portal goes the other way as well: It’s a means for others to access us. more>

Updates from Adobe

Bringing the Quirk to Corporate Work
By Charles Purdy – Michael Lomon is a motion graphics designer, comic book artist, and illustrator—he’s also clearly a time-management wizard: in addition to holding down a full-time job creating motion graphics for QVC UK, he takes on freelance commissions, develops personal projects, and co-parents two young children.

Currently based in London, Lomon grew up in Manchester, England, where he discovered animation during his studies at art school. Earlier on, he’d come to drawing through a love of comics—he cites Neil Gaiman’s The Sandman series as an early influence. “That was quite a big deal for me,” he says. “Growing up, I was passionate about sport, but I wasn’t good in any way. The Sandman, and then the whole world of alternative ’80s comics—Transmetropolitan, Hellblazer…getting into those is what really got me drawing. And I have carried on ever since.”

By the time he was 17, he knew he’d be making a life as an artist, and a stop-motion experiment at university got him interested in animation. At first he was just using Adobe After Effects and Premiere Pro for editing, but after a friend got a job doing motion graphics, he was motivated to dive deeper. more>

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Click Here For The Brave New World Of Work

By Steve Coulter – Technology is transforming the world of work, but social democrats and others appear unsure how to respond. Progressives embrace change but want technology to benefit the many and not just the few who develop, own or exploit it. Trade unions, moreover, must confront the impact of IT and automation on work as it’s the jobs and conditions of their members that are on the line.

What, then, is a ‘progressive’ approach to the ‘new’ economy?

Research into the labor market impact of ‘digitalization’ falls into three categories. The first tries to assess its impact on total employment by quantifying the number and type of jobs at risk. It has contributed to a surfeit of scare stories in the media about ‘robots taking your job’. The fear animating this is that automation and smart computers will eliminate millions of jobs, condemning people to drudgery or idleness.

There is ample evidence of accelerating shifts in employment patterns due to the replacement of formerly well-paying factory and service jobs by robots and algorithms and the emergence of new forms of economic organization mediating the worker-employer relationship. We are seeing a ‘hollowing out’ of the labor market whereby high and low skilled work is increasing at the expense of medium skilled work, particularly where this involves performance of routine tasks. more>

Why Inequality Matters

By Thorvaldur Gylfason – Since the early 1970s, the share of national income paid to workers in advanced economies has fallen from 55 to 40 percent. A declining labor share goes along with increased inequality in the distribution of income and wealth as well as health. Medical researchers report that the wealthiest one percent of American men live 15 years longer than the poorest one percent and that the wealthiest one percent of American women can expect to live ten years longer than their poorer counterparts. The gap is widening.

Concerns about inequality have recently been thrust to the forefront of political discourse around the world. An important part of the explanation for the surprise victory of Donald Trump in the 2016 US presidential election is that he did well among those voters who felt they had been left behind with stagnant real wages for decades while CEO compensation rose from 20 times the typical worker’s compensation in 1965 to 270 in 2008.

What could workers do?

As film maker Michael Moore puts it, they could throw Molotov cocktails at the powers that be. Trump was their Molotov. Similarly, in the 2016 referendum in the UK, those who felt left behind tended to vote for Brexit. more>

Everyone wants to “teach a man to fish.” But skills training alone doesn’t help the world’s poor.

By Kelsey Piper – Skills training programs take a lot of forms, but there are generally two kinds: programs aimed at individuals, which try to teach them everything they’ll need to take higher-paying local jobs, and programs aimed at business owners and prospective business owners, which try to teach them skills to run a business more efficiently and expand their operations.

Their objectives are laudable, but there’s just one problem: They largely don’t work.

Participation rates in the programs aren’t very high. People who do participate often drop out, if the program lasts more than a few days, and unsurprisingly, it’s hard to teach important results in that time. For that matter, participants might be right to ignore the program or drop out, as research suggests that the programs don’t reliably increase income.

This isn’t to say every skills training program is ineffective. But even the programs that do show results often don’t stand up to cost-benefit analysis: The results they get are worse than if they just gave people the money that is spent on training them.

That said, recent research has found cost-effective results for programs that take a combined approach: training and mentoring, plus direct grants of assets. Those programs, more than just pure skill-training approaches, look to be worth further study and investment going forward. more>

Why Brexit Won’t Cure Britain’s Broken Economic Model

By Simon Deakin – The critical thing with Brexit is to think about trade and regulation as being two sides of the same coin. When we talk about international trade we are really asking, which regulatory regime do we want to sign up to?

Inside the single market there is high degree of harmonization and convergence of rules, or what is sometimes called alignment. Regulatory alignment is the condition of frictionless trade in the European single market. It is a uniquely deep international trading arrangement because of the high degree of regulatory compliance that goes with EU membership.

We can’t achieve regulatory autonomy post-Brexit without giving up frictionless trade. So UK policy makers have to think about the consequences of moving away from the single market.

The first impact will be felt in those industries which rely upon regulatory alignment in order to function. For the car industry, and large manufacturers like Airbus, European supply chains will be very negatively affected by regulatory divergence.

That is why it is not surprising to hear that the car companies are going to put their production on hold if there is a prospect of a hard Brexit. They have said that they will pause their production lines for a while to see how their new supply chain arrangements can work. That will have a very serious impact on jobs.

Restrictions on migration from the EU after the transition period ends will not result in more jobs for British workers. The British government is likely to extend bespoke arrangements to allow firms in sectors such as agriculture, hospitality and construction to employ foreign workers outside the scope of British labor laws.

In some sectors, employers faced with rising wage costs are likely to respond by investing in labor-saving technologies, but that while this will improve productivity, it will not lead to net job creation. more>