Tag Archives: Industrial economy

Are Index Funds Evil?

A growing chorus of experts argue that they’re strangling the economy—and must be stopped.
By Frank Partnoy – Index funds have grown exponentially since John Bogle founded Vanguard in the mid-1970s.

The top three families of index funds each manage trillions of dollars, collectively holding 15 to 20 percent of all the stock of major U.S. corporations. Best of all for their investors, index funds have consistently beaten the performance of stock-pickers and actively managed funds, whose higher fees may support the Manhattan lifestyle of many bankers, but turn out not to deliver much to customers.

Concerns about the potential dangers of shareholder diversification first surfaced back in 1984, not long after index funds themselves did. Julio Rotemberg, then a newly minted economist from Princeton, posited that “firms, acting in the interest of their shareholders,” might “tend to act collusively when their shareholders have diversified portfolios.” The idea, which Rotemberg explored in a working paper, was that if investors own a slice of every firm, they will make more money if firms compete less and collectively raise prices, at the expense of consumers. Knowing this, the firms’ managers will de-emphasize competition and behave more cooperatively with one another. more> https://goo.gl/AWXivG

Updates from GE

Sea Change: GE’s French Wind Turbine Factory Will Power Germany’s Renewables Revolution
By Tomas Kellner – GE is a relative newcomer to offshore wind. The company explored the field a decade ago and returned to the industry in 2015, when it acquired the energy assets of Alstom, and built its first wind farm in Long Island Sound near Block Island, Rhode Island, last year. As the inaugural offshore wind farm in the United States, the project made a splash even though it holds just five turbines. But Merkur, which will have 66 turbines, is a much bigger beast. “This one is special,” says Pascal Girault, who runs the Saint-Nazaire plant. “Everything is big.”

Girault spent the early part of his career managing supply chains for the car industry, but ramping up production for Merkur is no Sunday drive. Workers in Saint-Nazaire make generators and assemble nacelles for the 6-megawatt GE Haliade turbine. The nacelle is the casing on top of the tower that shelters the generator and other equipment. It includes some 30,000 components.

Adding to the task’s complexity, the composite blades for the machines’ 150-meter-diameter rotors come from GE’s LM Wind Power factory in Spain. The steel segments for the tower are being made in Germany and China. U.S. and European companies supply electronics and mechanical components for the converter and generator. “The scale and the speed of the project are challenging,” Girault says. more> https://goo.gl/GSScqV

Updates from Autodesk

Autodesk Highlights Next-Gen Storytelling & Collaboration Tools at SIGGRAPH 2017
Autodesk – Leading up to SIGGRAPH 2017, Autodesk released a series of updates for its media and entertainment tools, including Autodesk Media & Entertainment Collection, Autodesk Maya, Shotgun, Arnold, Autodesk 3ds Max, and Autodesk Flame. Engineered to streamline and accelerate production on films, TV shows, games and immersive experiences, the new releases include improvements and user-requested enhancements that connect creative workflows and teams, helping them bring engaging stories to life for a worldwide audience.

“The continued growth of AR and VR and steady flow of new productions from Netflix, Amazon and others, mean animation and VFX houses are in more demand than ever. We’re focused on helping our customers create, connect and compute faster and more efficiently so they can balance their increasing project loads with tighter schedules and budgets,” Chris Bradshaw, Senior Vice President, Media & Entertainment, Autodesk, stated. “Everything we’re showing at SIGGRAPH streamlines production and equips artists with the tools to handle nearly any creative scenario.” more> cadinnovation.com

Remaking the Presidency

By Joseph P. Williams – The willingness to buck convention, smash important precedents and use Twitter like a shotgun has historians and analysts considering whether the impulsive CEO president, unbound by political customs and arguably unaware of limits to his authority, has redefined the office for his successor while tailoring it for himself.

“Trump was elected to blow up the office,” says Jeremi Suri, a historian and scholar at The University of Texas-Austin. Mission accomplished, Suri says – but at a price, for the Republican Party, the president’s own legacy and perhaps American democracy.

“You’re going to see something about presidential reforms coming out of this horrible period we’re in right now,” Suri says. Trump, he says, has destroyed “the myth of a true government outsider” running the country, and likely has paved the way for an experienced outsider, like a governor or low-profile congress member, to take his place.

In the next election cycle, “we’re likely to see a full sweep – a new Congress intent on curbing presidential power and recalibrating the checks and balances.”

“The Trump style of the presidency has only resonated with about 30 to 35 percent of the public,” says Jonathan Turley, who notes that a president’s public-approval rating is directly proportional to his or her leverage with Congress. That means Trump is operating at a power deficit, he adds, and therefore “I’m not sure that future presidents would view this administration as a model to replicate.” more> https://goo.gl/Dv7Dwn

Away from Oil: A New Approach

By Basil Oberholzer – Two main problems arise from the connections between monetary policy, financial markets and the oil market: the first is financial and economic instability caused by oil price volatility. The second is an environmental problem: a lower oil price inevitably means more oil consumption. This is a threat to the world climate.

Is there a joint answer to these problems? There is. While hitherto existing policy propositions like futures market regulation or a tax on fossil energy face some advantages and disadvantages, they are not able to deal with both the economic instability and the environmental problem at the same time. What is proposed here is a combination of monetary and fiscal policy. Let’s call it the oil price targeting system.

First, to achieve economic stability in the oil market, a stable oil price is needed. Second, to reduce oil consumption, the oil price should be increasing. So, let us imagine that the oil price moves on a stable and continuously rising path in order to fulfill both conditions. To implement this, the oil price has to be determined exogenously. Due to price exogeneity, speculative attacks cannot have any influence on the price and bubbles cannot emerge anymore. The oil price target can be realized by monetary policy by means of purchases and sales of oil futures. Since the central bank has unlimited power to exert demand in the market, it can basically move the oil price wherever it wants. more> https://goo.gl/eUh85j

Public Education Vs. Public Schooling

BOOK REVIEW

Deschooling Society, Author: Ivan Illich.

By Kerry McDonald – Until we separate public education from public schooling–to truly “de-school” our perspective on learning–we will be mired in a debate about reforming one, singular method of education (that is, mass schooling), while ignoring other methods of education that could be better.

The industrial model upon which compulsory public schooling was founded in 1852 is no longer relevant in a new economy that increasingly values creativity over conformity, knowledge workers over factory laborers. Despite the fact that sociologists and economists believe we have left the Industrial Age for the Imagination Age—an era defined by creativity and innovation and technological application—American education is stuck with an outdated system of mass schooling. Instead of adapting to the changing needs of a creative culture, American schooling has sought to become even more restrictive and entrenched. We need a new model of learning, separate from our modern experiment with mass schooling, that taps into the innate, self-educative capacity of humans.

A perfect example of educational webs, as opposed to funnels like school, is the public library. Libraries are ideal examples of existing, taxpayer-funded, community-based, non-coercive learning hubs. They are openly accessible to all members of a community and, unlike public schools, do not segregate by age or ability. They offer classes, lectures, cultural events, ESL lessons, computer courses, mentoring opportunities and a whole host of other public programming. They are brimming with gifted facilitators who love “learning, sharing, and caring” and who are eager to help guide community learning. more> https://goo.gl/heaclm

Updates from GE

Beyond Bitcoin: Digital Currency Among Many Industrial Applications For Blockchain
By Mark Egan & Dorothy Pomerantz – Ben Beckmann works as the lead scientist in the complex systems engineering lab at GE Global Research in Niskayuna, New York. In 2012, he made a seemingly inconsequential wager: He bet one of his colleagues that the electronic currency bitcoin would fail.

Bitcoins started trading for pennies after the currency launched in 2009. Today, you can buy one bitcoin for $2,200. Beckmann lost the bet and took his colleague for a nice meal. “If we had taken the $100 we spent on dinner and invested it in bitcoins at the start, we would be millionaires,” Beckmann laughs.

Losing the bet pushed Beckman to take a closer look at the code behind bitcoin. He and others at GE discovered that the real magic that made it work was a public digital ledger called blockchain that keeps a chronological record of all bitcoin transactions. But the currency is just one blockchain application. The technology could be used for tracking trade, contracts, and even renewable energy.

Maja Vujinovic, technical product manager at GE Digital, is leading a push to explore and develop blockchain across the company. She’s looking at everything from purchase orders and budget reconciliation and parts tracking. “The bank receives a fee for every transaction,” Vujinovic  says. “If we can remove the bank and establish a trust mechanism instead, that will save us a lot of money.” more> https://goo.gl/5XIWo7

Skills and Global Value Chains

OECD – Since 1990s, the world has entered a new phase of globalization. Information and communication technology, trade liberalization and lower transport costs have enabled firms and countries to fragment the production process into global value chains (GVCs): many products are now designed in one country and assembled in another country from parts often manufactured in several countries. To seize the benefits of GVCs, countries have to implement well-designed policies that foster the skills their populations need to thrive in this new era.

GVCs give workers the opportunity to apply their skills all around the world without moving countries: an idea can be turned into a product more easily and those who are involved in production can benefit from this idea.

GVCs give firms the possibility of entering production processes they might be unable to develop alone. At the same time, the demand for some skills drops as activities are offshored, exposing workers to wage reductions or job losses in the short term. In the long term, however, offshoring enables firms to reorganize and achieve productivity gains that can lead to job creation.

The rise of GVCs has prompted a backlash in public opinion in some countries. This negative reaction has sometimes focused on the leading role of multinationals and foreign direct investment. Multinationals can boost production and job creation in the host country by engaging local companies as suppliers, but they can also quickly relocate parts of the production process from country to country. This increases uncertainty about the demand for jobs and skills in each country, while making uncoordinated policy response in each country less effective. Multinationals are often seen as responsible for offshoring jobs while contributing to the increase in top incomes.

In all countries, more educated workers enjoy high job quality than low-educated ones. But the gap in job strain between low-educated and high-educated workers is larger in countries that participate more in GVCs (Estonia, Hungary, Poland and Slovenia). Investing in skills along with increasing participating in GVCs is particularly important in developing economies that tend to be at the lower end of value chains, where working conditions are more often poor.

Strong cognitive skills are not enough on their own to achieve good performance in GVcs and to specialize in technologically advanced industries. Industries involve the performance of several types of tasks, but all require social and emotional skills as well as cognitive skills. To succeed in an internationally competitive environment, countries and industries needs in addition to those related to their domain specializations. more> https://goo.gl/a8hPgv

Can Asia reach high-income?

By Donghyun Park, Abdul Abiad, Gemma Estrada, Xuehui Han, and Shu Tian – In a single generation, Asia has transformed itself from a low-income continent to a middle-income one.

In 1991 more than 90 percent of the region’s population still lived in low-income countries. By 2015, more than 95 percent lived in middle-income countries.

Is the continent now on its way to reaching high income in the next generation?

The experiences of the newly industrialized economies might give some cause for optimism about the region’s prospects. After all, the Republic of Korea made the transition from middle to high income in only 23 years. Yet global experience is far less reassuring. Historically it has taken the typical middle-income country more than half a century to graduate to high-income status, leading some economists to label this the “middle-income trap.”

As countries develop their economies, traditional sources of productivity growth—such as shifting labor from agriculture to manufacturing or the imitation of foreign technologies—decline in importance. Innovation assumes a more central role, especially for upper middle-income countries. Middle-income economies that successfully graduated to high income had 2.5 times more research and development stock per worker as those that did not, for example. more> https://goo.gl/CfPW4u

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Updates from GE

Leaner Than Lean: How Digitalization Transforms Manufacturing
By Randy Stearns – If you want to see the future of manufacturing, follow the Tama River about 45 kilometers upstream from Tokyo’s Haneda Airport to the GE Healthcare facility in Hino, Japan. Inside this outwardly conventional, low-rise suburban business complex is emerging the blueprint for the future of manufacturing, tweak by painstaking tweak.

The Hino factory makes both parts for large medical scanners and small, precision equipment. Compared with similar facilities, its production lines are exceptionally efficient — fast, with less waste, errors and unplanned downtime — thanks in part to the successful integration of advanced digital information technology with operational systems. GE calls this convergence of hardware and software on the shop floor the brilliant factory.

The Hino plant is where the Industrial Internet meets Kaizen, the Japanese concept of continuous improvement pioneered by Toyota after World War II that undergirds Lean methods for eliminating waste in manufacturing. more> https://goo.gl/euCTYE