Category Archives: Net

Can capitalism be saved from itself?

By Homi Kharas – 2018 may yet turn out to be the year when a great battle of ideas takes place between those who argue for unfettered markets and those who would try to save capitalism from itself.

The first battle is about getting prices right. Capitalism is a great engine, but the road it takes is signposted by prices.

Get the prices wrong and the engine moves fast but in the wrong direction. And, going into 2018, many prices are wrong.

A few examples: the price of carbon, the price of dumping plastic into oceans, and the price of unpaid family care. As a broad proposition, there is a paradox in our system; in most countries, labor is taxed and fossil fuels are subsidized, while politicians and citizens in these countries insist they want more jobs and less pollution. With carbon emissions rising to record levels and employment rates falling, the price distortions are taking a toll.

In 2017 alone, natural disasters cost America $306 billion—almost equal to what economic growth last year added to GDP ($364 billion).

The second battle is around competition. Capitalism delivers for society as a whole when there is strong competition. It delivers for individual companies and their shareholders when competition is weak.

Today’s economies are seeing more concentration. In the U.S., 75 percent of industries have become more concentrated over the past two decades, generating abnormal returns. With more companies enjoying economic rents from patent and copyright returns, competition is becoming harder to achieve and winner-take-all companies are emerging.

Individual countries are unlikely to drive systemic change—this is a case where collective action on a negotiated path forward is most desirable. Yet wholesale change is also the least likely scenario. more>

Restoring Social Cohesion: A Project For 2018 And Beyond

By Michael D. Higgins – Addressing the changes and the fracture in the relationship between the citizen and society has been a matter of great importance for me throughout my Presidency.

It is a relationship that was fraying long before the onset of the Global Financial Crisis, but it has markedly lost cohesion in these last ten years, aggravated by a global macro-economic policy response that saw the losses in so many economics socialized while the gains of the financial sector were not just privatized, but concentrated at the peak of the wealth and income pyramid. Unprecedented programs of austerity became mainstream for citizens and countries reeling from the consequences of an era characterized by a new form of lightly regulated speculative capital.

The transition, in its day, between The Theory of Moral Sentiments (1759) of Adam Smith and his Wealth of Nations (1776) drew a more extensive debate in the eighteenth century than the changes in contemporary international economies, that are in our time presented as near inevitable, and that are being delivered as their sole policy choice to publics suffering the burden of what Pope Francis has called a ‘plague of indifference’. This includes not just the authors of policies but weary publics that are looking away, averting their gaze from deepening inequalities, the welfare of workers, the plight of migrants. He was referring to publics that, in the absence of technical literacy, felt they could not initiate change, were forced to accept what was socially damaging as ‘inevitable’.

The persistence of a failure to critique or challenge a political economy which maintains and even deepens existing inequalities of income, wealth, power and opportunity within societies and between nation-states is eroding social cohesion. more>

Bitcoin Energy Consumption Index

Digiconomist – Ever since its inception Bitcoin’s trust-minimizing consensus has been enabled by its proof-of-work algorithm. The machines performing the “work” are consuming huge amounts of energy while doing so. The Bitcoin Energy Consumption Index was created to provide insight into this amount, and raise awareness on the unsustainability of the proof-of-work algorithm.

Note that the Index contains the aggregate of Bitcoin and Bitcoin Cash (other forks of the Bitcoin network are not included). A separate index was created for Ethereum, which can be found here.

To put the energy consumed by the Bitcoin network into perspective we can compare it to another payment system like VISA for example. According to VISA, the company consumed a total amount of 674,922 Gigajoules of energy (from various sources) globally for all its operations. This means that VISA has an energy need equal to that of around 17,000 U.S. households. We also know VISA processed 111.2 billion transactions in 2017.

With the help of these numbers, it is possible to compare both networks and show that Bitcoin is extremely more energy intensive per transaction than VISA. more>

Updates from Ciena

Retail Digitization… Friend or Foe?
By Brian Lavallée – The retail industry is one of the most competitive industries today, placing enormous pressure on the retailers who are continually striving to reinvent, reinvigorate, and rejuvenate their position with buyers, who are more informed than ever due to readily available online resources, long before they enter a brick and mortar store.

The same assets that consumers use to become increasingly informed can and are also being leveraged by retailers to best become the store of choice to sell their products – networks and data analytics.

The wealth of readily available and free online resources allows customers to perform advanced reconnaissance by researching product specifications, product field performance, as well as comparative product analysis pricing, performance, warranty, and user experience. This means that consumers are extremely informed before they purchase a product and often more so than the salesperson.

In short, the digital transformation has forever reshaped customer behavior and the shopping experience, which means retailers must change to this new shopping environment often by leveraging the very same tools that created the shopping ninja – networks and analytics – which allow retailers to create the required digital shopping experience that today’s consumers want and need. more>

Online giants must accept responsibility for impacts on the physical world

By Mark Muro, Jacob Whiton, and Sifan Liu – Despite record profits, these are tough times for Big Tech. In 2017, the industry and society each began to realize the full ambiguity of tech’s transformations of the wider world.

To be sure, many of the era’s disconcerting tech-related mega-trends have tangled origins and predate the current “digitalization of everything” quantified in our recent report.

Yet as tech columnist Farhad Manjoo has noted, the rise of the giant tech platforms has now been linked to a long list of troubling developments (along with the creation of much value).

These developments range from such online concerns as fake news, online echo chambers, and addictive product design to broader analog challenges such as the rise of inequality, the hollowing out of the job distribution, and the spread of the gig economy and automation.

Last year, Elise Giannone demonstrated that the divergence of cities’ wages since 1980—after decades of convergence—reflects a mix of technology’s increased rewards to highly skilled tech workers and local industry clustering. more>

Is the next financial crisis looming

By Ross Barry -The strong performance of many share markets around the world has led many to speculate that another major correction may not be too far away. History has shown us, over the past 300 years or so, that major corrections have occurred every nine to 10 years, on average, albeit some have come closer on the heels of the one before, while others have been more than 20 years apart.

History has also shown us that financial manias and crashes are almost always an outworking of three things – an accumulation of large volumes of idle capital (savings), financial innovation and leverage. Most have also occurred following a strong, speculative surge in markets and a few years into a new phase of higher interest rates.

The less opportunities there are to deploy savings to create new wealth, the more they accumulate in safer stores of wealth. And the more wealth is stored rather than used creatively, the more the return on idle savings declines. The fact that yields on cash and bonds around the world are currently at, or below, zero per cent in real terms, tells us that there is a lot of storing going on right now.

We have seen this throughout history in the shadowy practice of “melting debt” in the 1860s, the proliferation of margin lending by Wall Street firms in the 1920s, the development of futures, options and “repo” markets in the late-1980s, and again with the mass production of highly leveraged CDOs built from sub-prime mortgages in the mid-2000s.

Too often, unfortunately, when productive risk-taking in an economy dries up, clever agents turn to new and resourceful ways to repackage riskier assets and promote them as something seemingly safer.

What makes investors succumb to the lure of such things is a whole study unto itself. more>

Economics is quantum

BOOK REVIEW

The Money Formula: Dodgy Finance, Pseudo-Science, and How Mathematicians Took Over the Markets, Author: David Orrell.
Quantum Mind and Social Science, Author: Alexander Wendt.
Laws of Media: The New Science, Author: Marshall McLuhan.

Money and brains are both quantum phenomena – so it’s not surprising that economics is overdue for a quantum revolution
By David Orrell – In recent years there have been many calls for economics to reinvent itself, most noticeably from student groups such as the Post-Crash Economics Society, and Rethinking Economics. In 2017, the United Kingdom’s Economic and Social Research Council announced that it was setting up a network of experts from outside economics whose task it would be to ‘revolutionize’ the field. And there have been countless books on the topic, including my own Economyths (2010), which called for just such an intervention by non-economists.

But progress has been slow.

One problem is that, while there have been many demands for a revolution, the exact nature of the revolution is less clear. Critics agree that the foundations of economics are rotten, but there are different views on what should be built in its place.

But what if the problems with economics run even deeper?

What if the traditional approach has hit a wall, and the field needs to be completely reinvented?

What if, as with 19th-century physics, the problem comes down to ontology – our entire way of thinking and talking about the economy? more>

Is Your Startup Stalled? Pivot to Blockchain

By Erin Griffith – In the high-stakes world of venture-backed startups, not growing is the same as dying. Historically, stalled companies sought a sympathetic acquirer or quietly shut down. Now, startups have a new potential lifeline: They pivot to blockchain.

The rush by startups into cryptocurrencies mirrors similar moves among publicly traded companies, where shares of several cheap, thinly traded stocks have spiked after merely adding the word bitcoin or blockchain to their names.

Even the stock price of the parent company of Hooters leapt nearly 50% at the mere mention of blockchain in a press release. The Securities and Exchange Commission has taken note, halting trading in some cases, because of the risks these currencies posed to inexperienced investors.

The rush by startups into cryptocurrencies mirrors similar moves among publicly traded companies, where shares of several cheap, thinly traded stocks have spiked after merely adding the word bitcoin or blockchain to their names.

Even the stock price of the parent company of Hooters leapt nearly 50% at the mere mention of blockchain in a press release. The Securities and Exchange Commission has taken note, halting trading in some cases, because of the risks these currencies posed to inexperienced investors. more>

Updates from Ciena

Year in Review: Ciena’s Top 8 Announcements of 2017
By Bo Gowan – We started off the year in January with a new member of our Blue Planet family: Blue Planet Analytics. Built for the new world of Big Data, Blue Planet Analytics generates deep network insights to help network operators make smarter, data-driven business decisions.

Paired with Blue Planet’s orchestration and policy systems, Blue Planet Analytics helps operators to continue on the path to a more autonomous network and is a strategic evolution of Ciena’s Blue Planet software suite.

Following shortly after our Blue Planet Analytics news was the unveiling of a much anticipated Blue Planet offering: Manage, Control and Plan (MCP).

MCP brings together all aspects of network operations within a single, unified interface, providing customers real-time software control and advanced visualization across Ciena’s packet and packet optical portfolios. For our existing packet and optical customers, Blue Planet MCP is a new way of managing their network. more>

Intel flaws hint at tech “too big to fail” risk

By Liam Proud, Robert Cyran – Tech groups like Amazon, Facebook and Alphabet are attracting increasing political heat for their dominance of markets like e-commerce, social media and web search.

But a recently discovered security flaw in chips made by Intel, Advanced Micro Devices and ARM highlights another important concern: bugs potentially affecting hardware found in the majority of computing devices.

Scale helps justify the massive investment needed to develop improved semiconductor technology and produce chips. Intel last year said it would spend $7 billion on a U.S. factory, and it had already started building the facility years ago. The dominance of a few players also helps ensure compatibility between machines. The downside is that hardware flaws like the newly revealed Meltdown and Spectre affect a huge number of users and could become systemic.

It’s an analogous problem to vulnerabilities in the once-dominant Microsoft Windows operating system – or, in the agricultural world, to a disease affecting widely used crop variety, like the preponderant but under-threat Cavendish banana.a more>