Smart Cities

It seems to me….

“Smart cities are those who manage their resources efficiently. Traffic, public services and disaster response should be operated intelligently in order to minimize costs, reduce carbon emissions, and increase performance.” ~ Eduardo Paes[1].

Many cities are experiencing exponential growth as people move from rural areas in search of better jobs and education[2]. The urban population is growing with nearly two-thirds of Americans and 54 percent of the world currently living in cities. And this number is increasing: by 2050 75 percent of the human population will be urban dwellers[3]. Some changes are necessitated as cities are responsible for 70 percent of global carbon dioxide emissions. Urbanization is an issue with which all cities must necessarily deal and many of them are seeking ways to better serve their constituents.

Cities’ services and infrastructures are being stretched to their limits in terms of scalability, environment, and security as they adapt to support population growth. Urban visionaries and planners are seeking to develop a sustainable economy to improve energy efficiency and minimize carbon-emission levels. Along with cities’ growth, innovative solutions are crucial for improving productivity (increasing operational efficiency) and reducing management costs.

While the definition of a smart city remains somewhat imprecise, it basically is an ultra-modern urban area that is addressing the needs of its businesses, institutions, and especially citizens. While the objective of both a smart city and smart urbanism is the same – the life of its citizens – there are primary difference. Historically, architects of ancient cities did not take into consideration long-term scalability; e.g., housing accessibility, sustainable development, transport systems, and growth; there is no scalable resource management that may be applied from one decade to another.

Not every city will have the same goals and needs to become a smart city; the technologies a smart city needs vary based on the region and the country. Considerable planning is necessary as just implementing various technologies simply because they exist is not sufficient. Even if an implementation is successful in one location, it does not guarantee it will be equally successful elsewhere.

Smart city planning is being able to adapt and be significantly more agile than in the past utilizing IoT sensors and technology to connect components across the city to derive data and improve the lives of citizens and visitors. Leveraging advances in smart infrastructure, information, and communications technologies combined with data analytics can help cities as well as energy, water, telecom, and transportation companies meet their goals to becoming “smarter”. If not planned for, there isn’t any way to take advantage of the opportunities afforded by technology, the opportunities that are being revealed through data, and the opportunities afforded by having different city systems work together in a much more interconnected way.

Citizens are demanding more out of their cities than in the past. Not only are cost savings and efficiency important, they’re expecting the same services and opportunities from cities that they receive from leading technology and service providers. An improved customer experience, cost efficiencies, resiliency enhancements, or sustainability improvements are not possible without smarter planning.

Simply inundating smart city projects with data does not work due to access, analytics, availability, and the ability to turn big data into insights. It’s important to break down urban silos so that each department within a city knows on what the other is working. Data also needs to be unconstrained as it moves between systems with due attention to intellectual property, security, and privacy concerns. Privacy issues must balance the need to provide sufficient information to improve service while preserving personal confidentiality.

Data collection and analysis is a key component of a smart city to provide predictive analytics. Sensors, especially IoT sensors, actuators, and technology are necessary to connect components across the city and they impact every layer of a city from under the streets to the air its citizens breath. Examples are support for multi-modal transportation, smart traffic lights, and smart parking as well as overall energy usage using smart grids and smart meters.

The massive amounts of data collected must be quickly analyzed and patterns derived from the collected data. Open data portals are one option that some cities have chosen in order to publish city data online so anyone can access it and use predictive analytics to assess future patterns.

Initiatives are underway in numerous locations in many different countries. Cities across the U.S. have begun to draw on the reams of data at their disposal – about income, burglaries, traffic, fires, illnesses, parking citations… – to tackle many of the problems of urban life. President Obama in 2016 announced a “Smart Cities” federal initiative to research and leverage more than 25 new technology collaborations to help local communities tackle key challenges such as reducing traffic congestion, fighting crime, fostering economic growth, managing the effects of a changing climate, and improving the delivery of city services. Cities are finding more ways to use the considerable amounts of data at their disposal.

Cities are caught between the proverbial rock and a hard spot: most are experiencing substantial budget constraints, unable to adequately maintain schools or infrastructure (water, sewer, transportation…), while attempting to increase operating efficiency by investing in expensive technology without any guarantee of success. They must attempt to plan and implement an integrated solution maximizing the economy, society, environment, and welfare of its communities and that facilitates supporting the shift towards more sustainable behavior among all stakeholders: users, companies, and administration.

The only reasonable way for cities to reduced public spending is to increases their efficiency and quality of services but in addition coping with financial constraints, many also encounter political opposition from departmental Balkanization protecting internal fiefdoms – data and operational silos. Even many constituents accepting the advantages of system implementation seek to delay investment believing current critical priorities must be resolved prior to what they consider to be non-crucial expenditures.

To reap the benefits of the smart cities movement requires the U.S. to get “smart” in more ways than one. At stake is not just greater livability and sustainability but the jobs and investment that accrue to communities at the cutting edge of innovation.

That’s what I think, what about you?

[1] Eduardo da Costa Paes is a Brazilian politician who is the former mayor of the city of Rio de Janeiro.

[2] Khatoun, Rida, and Sherali Zeadally. Smart Cities: Concepts, Architectures, Research Opportunities, Communications of the ACM, August 2016, pp46-57.

[3] Urban Population Growth, World Health Organization (WHO), http://www.who.int/gho/urban_health/situation_trends/urban_population_growth_text/en/.

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Automation and Human Labor

It seems to me….

“I see robotic technology getting rid of the dangerous, the dirty, and the just plain boring jobs. Some people say, ‘You can’t. People won’t have anything to do.’ But we found things that were a lot easier than backbreaking labor in the sun and the fields. Let people rise to better things.” ~ Rodney Brooks[1].

The U.S., with the rest of the advanced nations closely following, is on the verge of an unparalleled social evolution which many conservatives prefer to deny. The current extent of economic transformation, primarily due to technology change, exceeds that of all previous cultural advances and is potentially the greatest economic and social threat we face. Our economic model is in a rapid transition but most conservatives just don’t get it. It is unfortunate that real change normally only occurs as a result of some crisis but now is the time to begin to adjust our national economic model for a post-manufacturing world.

An important lesson from the industrial revolution is that as traditional jobs disappear, it is necessary to ensure that people of all ages are sufficiently educated to prepare and take advantage of the new emerging roles in their immediate future. Ignoring these trends and continuing to prepare children with skills for roles that will no longer exist is definitely not the answer. Clinging to business models of the past or attempting to recreate the good-old days is equally disadvantageous. These changes demand new skills, new mindsets, new competencies, and new institutions.

Human labor is currently indispensable in manufacturing but similar to equine labor a century ago, as robots grow increasingly nimble, humans are appearing more vulnerable. Humans still remain far more cognitively adaptable than industrial robots but a parallel to the fate of the horse must be considered as a possibility.

Increased robot density has not correspondingly resulted in increased employment among any group of workers, even those with university educations, though automation should yield savings to both manufacturers and consumers which could then be spent on other goods or services; labor liberated by technology should gravitate toward tasks and jobs in which humans retain an advantage[2].

Instead, automation has resulted in a reduction of human wages necessitating some reallocation of workers. Each additional industrial robot per thousand workers has reduced wages across the economy by 0.5 percent. Real wage growth in many rich economies has been disappointing for much of the past two decades. An overwhelming share of the growth in employment in rich economies over the past few decades has been in services, nearly half in low-paying fields like retail and hospitality. Employment in such areas has been able to grow, in part, because of an abundance of cheap labor.

Low pay leads to policies that complicate labor-market adjustment. Instead of eliminating excess labor, wealthy economies provide some social support: unemployment benefits, social security or disability payments, and assistance with housing and food.

The growing demise of middle-skill jobs could cause employment polarization where lower paid workers serve the more affluent without any opportunity for upward mobility. As technology continues to pervade every aspect of human life, change, both within us and around us, will remain the only constant.

Two-thirds of Americans believe it likely that in 50 years robots and computers will do much of the work currently done by humans[3]. Despite their expectations that technology will encroach on human employment in general, most workers believe their own jobs or professions will still exist throughout that 50-year period. Only 10 percent of workers fear the possibility of losing their current jobs due to workforce automation; competition from lower-paid human workers and broader industry trends pose a more immediate concern.

Education, training, and research will be key to future economic well-being. For those unable to complete the increasingly difficult academic challenges, alternatives such as infrastructure maintenance and improvement provide potential employment alternatives. It is highly doubtful that a permanently unemployed social class would ever be tolerated by the U.S. electorate so suitable available alternatives will be increasingly necessary as automation and computerization progressively eliminate many current employment opportunities.

Though an increase in immigration is usually not considered beneficial to employment opportunities, immigrants historically have created a disproportionate percentage of new companies and corresponding employment with either no effect or an increase in native-born wages or opportunities. U.S. immigration is slow, complex, inefficient, and highly bureaucratic but relatively simple steps still could be taken including elimination of the annual cap on H1-B visas, automatically providing H1-B visas to all foreign students receiving an advanced degree, and offering a special “startup visa” category for any potential immigrant entrepreneurs who provide verification of venture capital funding.

There isn’t any mystery to the recommended course of action to respond to increasing computerization and automation. The correct response is stated in almost all ECON-101 textbooks – politicians just need to go back to school rather than blindly attempting to enact measures based on political ideology rather than well-proven facts. If they would like some recommendations for basic economics texts:

Mankiw, Greg. Principles of Economics (conservative)
Samuelson, Paul. Economics: An Introduction to Analysis (liberal)

Commonly advocated recommendations for responding to these threats do not change regardless of whether the economist is a conservative or a liberal. Problematically, regardless of party affiliation, politicians typically reject proven advice preferring either the simplest solution or to ignore it and hope it goes away. But that no longer is sufficient.

There is much that can be done. The best response is to provide free higher educational access, at least through the Bachelor’s degree level or alternatively at community colleges to obtain program certification or vocational training for those not otherwise admitted to college programs.

Infrastructure upgrades to our nation’s roads, bridges, tunnels, electrical grid (renewable energy), water and sewer, railways, air transport, waterways… would provide significant positive long-term fiscal benefits to both federal or state governments. Improved infrastructures result in rapid overall productivity growth and a stabilization (or even reversal) of the recent large rise in income inequality. Establishment of a National Infrastructure Bank would enable greater private sector co-investment in infrastructure projects and also allow for the rigorous analysis required to direct support to projects with both the greatest returns to society and the long-run economic benefits that can justify up-front investments. Additionally, infrastructure projects provide employment opportunities for those not able to qualify for higher education or vocational training.

Basic research is the seed corn of future innovation. Support for science and engineering research needs to be increased as this will be the primary source of tomorrow’s jobs. Economists have agreed for decades that spending on science is one of the best ways to generate jobs and is a major component of modern economic growth. Basic and applied R&D that the private sector is unlikely to sufficiently support requires sustained direct funding by the Federal Government to create a knowledge base of potentially transformative ideas that are the critical building blocks of innovation. Federally funded academic R&D is instrumental in creating and sustaining a world-class higher education system that prepares the next generation of U.S. scientists and engineers. It also is a primary means of attracting and training high-ability international students, researchers, and faculty.

Business startup assistance is necessary as new and small businesses employ a disproportionate number of employees compared to large established corporations but they require regulatory simplification and deregulation. The main goal of commercial development is improving the economic wellbeing of communities through efforts that entail job creation, job retention, tax base enhancements, and quality of life. Business incubators help new and startup companies to develop by providing services such as management training or office space.

Low-interest loans are necessary to help businesses purchase land, refurbish buildings, and obtain new equipment. Bond programs help lower the cost of borrowing for a business; interest on a bond is much lower than on traditional bank loans. Tax credits and increased use of preferential zoning is essential to encourage/discourage desirable and undesirable business expansion and retention. Low-cost workforce training provided for businesses and industries enabling them to remain competitive can be provided through a variety of county or state programs. Business cluster group strategies are increasingly also used to assist business retention and expansion by sharing concerns such as infrastructure, zoning, and quality of life enabling a more powerful voice to be heard influencing business climate improvement. One-stop permitting centers enable businesses to quickly begin or expand operations.

A formal means of facilitating prospective employee/job position matching should be created. Currently many seeking employment rely on word-of-mouth referrals but a local, national, and even global job opportunity database would be beneficial along with local job fairs and counselors providing search assistance.

Whether fully accepted or not, the U.S. is transitioning to a post-industrial economy. Without proper planning and foresight, the process could be unnecessarily traumatic. The opportunities it presents are extensive but will require social change and investment if its potential is to be fully realized.

That’s what I think, what about you?

[1] Rodney Allen Brooks is an Australian roboticist, Fellow of the Australian Academy of Science, author, and robotics entrepreneur most known for popularizing the actionist approach to robotics.

[2] Will Robots Displace Humans As Motorised Vehicles Ousted Horses?, The Economist, http://www.economist.com/news/business-and-finance/21719761-probably-not-humans-have-lot-learn-equine-experience-will-robots?cid1=cust/ednew/n/bl/n/20170330n/owned/n/n/nwl/n/n/na/19950/n, 1 April 2017.

[3] Smith, Aaron. Public Predictions for the Future of Workforce Automation, Pew Research Center, http://www.pewinternet.org/2016/03/10/public-predictions-for-the-future-of-workforce-automation/, 10 March 2016.

Resurgence Of Racism

It seems to me….

“Hatred, racism, and extremism have no place in this country.” ~ Angela Merkel[1].

The last fifty years have been an unprecedented period of human rights progress in the U.S.: civil rights, women’s rights, minority rights, and sexual acceptance. Unfortunately, while having always lurked just beneath the surface, there has been a recent resurgence of bigotry as shown by recent events in Charlottesville, VA, and elsewhere.

How can anyone be so debased as to advocate the indefensible? 750,000 Americans died in the Civil War. That rebellion is a historical fact to be acknowledged but it was fought over an immoral and repulsive issue: slavery. To support symbols of the Confederacy or its primary protagonists is to lend affirmation to the belief of racial inferiority. Just as the Federal Republic of Germany disavows any overt display associated with the Nazi era, it is well past time to move on and eliminate explicit reminders of that chapter in our history from public exhibition or dialogue. It is unfortunate that such obvious festering symbols of institutional and personal animosity and exclusion were ever erected.

No one should in any way equate the indignation and righteous response of those outraged by the advocacy of debased beliefs to those espoused by white supremacists, neo-Nazis, the Ku Klux Klan, or similar organizations. Trump has erroneously attempted to conflate our nation’s founders with rebels who fought to divide it. To compare the memory of George Washington or Thomas Jefferson for having been slave owners with current racist extremism is delusional. Such groups and their supporters should be labeled as to what they actually are: domestic terrorists.

While violence was provoked by both demonstrators and protestors in Charlottesville, VA, something never acceptable, it also is incorrect to equate the expression of hate and inferiority with standing for equality and self-respect. There isn’t any equivalence of principles expressed by alt-right demonstrators and those who oppose them. White supremacy deserves to be treated as what it is: a scourge upon our nation whose existence must be collectively recognized in all its various forms of expression as repugnant, condemned, and any remaining vestiges and symbolism eradicated.

The U.S. is a nation of immigrants – a composite of races, nationalities, beliefs, orientations… – it is our very individual uniqueness that characterizes us as a nation. To afford any segment special privilege or importance above another is to disparage all of us. Undeniably, Caucasians have in the past been privileged; African-Americans, especially, have been denied equality.

Some Caucasians feel they are being bypassed by structural changes in the economy that are narrowing their options. The heart of their grievances appears to be based on class frustrations, not race. While minorities provide a relatively easily identifiable target, if the white demonstrators want to blame someone, they ought to point their fingers at the wealthy whites on Wall Street and in Washington, not on blacks and other minorities. There were very few people of color on corporate boards in the 1980s when manufacturing was being off-shored. They were not among the executives in Detroit when the auto industry acted to destroy public transit systems. They were not attending business schools graduating MBAs teaching predominantly white students to move operations to countries where labor was cheaper. They were not extolling the virtues of businesses like Walmart decimating entire Main Streets across small-town America. They were not on educational boards cutting funding to inner-city and predominantly black neighborhoods. It is not people of color indorsing politically motivated disenfranchisement.

White nationalism isn’t simply an extremist political ideology[2]. It is in some ways an alt-religious movement providing its adherents with its own twisted version of what all religions supply to adherents: a personal sense of who they are, a social sense of where they belong, and a spiritual sense of why their life matters. When faith communities do not provide these healthy life-giving human needs, then death-dealing alt-religions will fill the gap. But white supremacists are blaming the wrong slices of society for their angst. Racial divides are not what’s plaguing vast stretches of white America – deepening class divides are. The national economy and sense of well-being are on a downward slide that has accelerated in recent decades. Almost everyone who is not living in wealthy enclaves – usually coastal cities or inland hubs – is facing a descending spiral that’s been decades in the making. These are the same stretches of suburban and rural America that elected Trump, elected the right-wing House Freedom Caucus, where hate groups are concentrated, and where many of those arrested in Charlottesville came from.

Rather than uniting us as a single nation, Trump has fanned the flames of separation with his psychopathic egocentricity. Gone are any lingering hopes of unifying an increasingly bitterly divided nation. He has repeatedly refused to moderate his demagogic impulses in deference to the office he now holds.

Now, Americans are increasingly sorted into think-alike communities that reflect not only their politics but their demographics[3]. We have assigned ourselves into camps separated not only by ideology but now by unacceptance of each other’s facts. We impugn each other’s motives, doubt each other’s patriotism, denigrate each other’s news sources, and hold different value systems in our core institutions of religion, marriage, and education.

Even Robert E. Lee said the time had come to put aside the Confederate flag. Lee was so sensitive during his final years with extinguishing the fiery passions of the Civil War that he opposed erecting monuments on the battlefields where the Southern soldiers under his command had fought against the Union. He wrote “I think it wiser moreover not to keep open the sores of war, but to follow the examples of those nations who endeavored to obliterate the marks of civil strife and to commit to oblivion the feelings it engendered”.

While best to have never been initially permitted, all remaining monuments and symbols of that unfortunate time in our history should be removed and racism in all its many forms condemned.

It is stated in the Declaration of Independence, “We hold these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness”. Isn’t it time we lived up to that ideal?

That’s what I think, what about you?

[1] Angela Dorothea Merkel is a German politician, leader of the Christian Democratic Union since 2000, and Chancellor of Germany since 2005.

[2] McLaren, Brian D. The ‘Alt-Right’ Has Created Alt-Christianity, Time, http://time.com/4915161/charlottesville-alt-right-alt-christianity/, 25 August 2017.

[3] Taylor, Paul. The Demographic Trends Shaping American Politics In 2016 And Beyond, Pew Research Center, www.pewresearch.org/fact-tank/2016/01/27/the-demographic-trends-shaping-american-politics-in-2016-and-beyond, 27 January 2016.

The Problem With Renewable Energy

It seems to me….

“The more successful you are in increasing renewables’ penetration, the more expensive and less effective the policy becomes.” ~Rolando Fuentes[1], The Clean-Energy Paradox.

There are several projects attempting to develop “smart” technology that will bring the energy grid into the 21^st century while delivering reliable, efficient, affordable power to homes and businesses[2]. These would support feeding extra power from home solar collectors, for example, into the grid without throwing it out of balance and triggering potential outages. While extensive progress has been made, much more remains necessary.

Conversion has wide support: 65 percent of Americans are in favor of developing alternative energy sources compared to only 27 percent who would emphasize expanded production of fossil fuel sources[3]. About eight-in-ten (81 percent) Democrats and independents who lean toward the Democratic Party favor developing alternative sources instead of expanding production from fossil fuel sources. Republicans and Republican-leaning independents are closely divided: 45 percent say the more important priority should be developing alternative sources while 44 percent say expanding production of oil, coal, and natural gas should be given higher priority.

Renewable energy sources, primarily from photovoltaic systems (solar) and wind turbines, are growing faster than any other energy source and their falling costs have now made them competitive in many areas with fossil fuels. It can be expected that renewables will account for half of the growth in global energy supply over the next 20 years: the world is entering an era of clean, unlimited, and cheap power[4].

It is imperative that we convert our existing power generation capability from carbon to one based on renewable energy and to do so relatively quickly. This is justifiable not only in response to global-warming but also from an economic perspective: it creates entirely new industries and corresponding employment opportunities. Future energy generation should primarily be distributed throughout existing structures rather than concentrated in large generating facilities as now. Unfortunately, many recommendations overly-simplify how this can be achieved failing to consider the many problems involved in its actual accomplishment.

Supplanting our current energy system infrastructure will require substantial investment over the next few decades to replace obsolete carbon-based power plants, which still produce over 80 percent of the world’s energy, and to upgrade the pylons and wires that bring electricity to consumers. The downside is that the more solar generation is deployed, the more it lowers the price of power from any source making it more difficult to manage the transition to a carbon-free future. During this transition, it is necessary that many generating technologies, clean and dirty, remain profitable if the lights are to stay on: some industry subsidies will be necessary. Without a new approach, the renewables revolution could stall.

Renewables are intermittent, which means that in systems where the infrastructure was designed before intermittency became an issue – almost all of them, in practice – fossil-fuel, hydroelectric, and nuclear plants are needed as much as ever at times when the sun does not shine or the winds do not blow. If traditional plants are shut out of the market by low-cost renewables, they will not be available when needed.

Investment in supply beyond what the market requires results in excesses and depresses prices. Renewable energy has negligible or zero marginal running costs once operational since the wind and the sun are free. In a market that prefers energy produced at the lowest short-term cost, wind and solar take business from providers that are more expensive to run, such as coal plants, depressing power prices and therefore overall revenues. The higher the penetration of renewables, the more difficult these problems become.

New technology can help remedy the problem. Digitalization, smart meters, and batteries are enabling companies and households to smooth out their demand in several ways such as by doing some energy-intensive work at night which helps cope with an intermittent supply. Small, modular power plants, which are easy to scale up or down, are becoming more popular as are high-voltage grids that can move excess power around the network more efficiently. The bigger task is to redesign power markets to reflect the new need for flexible supply and demand. Policymakers should be clear they have a problem and that the cause is not renewable energy but an out-of-date system of energy pricing.

The more renewable generators there are, the more they drag down prices. At times when renewables can meet all the demand, making fossil-fuel prices irrelevant, wholesale electricity prices collapse or sometimes even turn negative with commercial energy producers paying the grid to eliminate excess power (the power must go somewhere). The more renewables there are in the system, the more often such collapses occur.

The fall in utility revenues is not just bad news for fossil-fuel-era incumbents in generation and transmission businesses, it also is becoming a problem for the renewables themselves requiring efforts to decarbonize the electricity supply that justified their promotion in the first place.

In the long run, and with massive further investments, electrical power grids redesigned for systems with considerable renewable energy could go a long way to resolving this problem. Grids with an abundance of built in storage capacity; grids large enough to reach out to faraway renewables when those nearby are catatonic; grids sufficiently intelligent to help customers adapt demand to supply – all have their champions and their role to play but long-run solutions do not solve short-term constraints. For now, countries with an abundance of renewables need to keep older fossil-fuel capacity available as a standby if only to cover peaks in demand. This often means additional subsidies, known as capacity payments, for plants that would otherwise be uneconomical. Such measures keep the lights on but also means that fossil-fuel production capacity clings on.

When fewer people rely on the grid, there are also fewer left to share the costs. This results in a so-called “utility death spiral”. As more customers generate their own electricity, the more utilities have to raise prices to the existing customers that remain, which in turn makes them more likely to leave the grid.

How this nibbling leads to a system upon which all can rely, and who pays for its various parts that are public, rather than private, remains obscure. The process will definitely be sensitive to politics, because, although voters give little thought to electricity markets when they are working, they can get angry when prices rise to cover new investments – and they scream very loudly when the lights go out. That suggests progress may be slow and fitful and that it possibly could stall if all aspects of the problem are not considered leaving climate risks largely unabated.

Utility companies are entitled to a fair profit on what has been a substantial investment in resources and infrastructure both prior to and during this conversion. It also will be necessary for them to evolve their basic business model to continue providing an acceptable level of customer support. As energy production by customers increases, current power generation facilities will need to be decommissioned. To remain viable, energy utilities will need to change to providing three categories of service: energy generation, energy distribution (the grid), and energy storage. Each represents an opportunity for an industry struggling to enter a new era. While the opportunity is there, the question is whether an established and adverse industry is able to willingly adapt to a future not of its choice.

That’s what I think, what about you?

[1] Rolando Fuentes-Bracamontes is a Fellow at the King Abdullah Petroleum Studies and Research Center, KAPSARC, researching business and regulatory models for the Utilities of the Future.

[2] ‘Bits & Watts’: Integrating Inexpensive Energy Sources Into The Electric Grid, Kurzweil News, http://www.kurzweilai.net/bits-watts-integrating-inexpensive-energy-sources-into-the-electric-grid?utm_source=KurzweilAI+Weekly+Newsletter&utm_campaign=df83f49bab-UA-946742-1&utm_medium=email&utm_term=0_147a5a48c1-df83f49bab-282211389, 25 October 2016.

[3] Two-Thirds Of Americans Give Priority To Developing Alternative Energy Over Fossil Fuels, Pew Research, http://www.pewresearch.org/fact-tank/2017/01/23/two-thirds-of-americans-give-priority-to-developing-alternative-energy-over-fossil-fuels/, 23 January 2017.

[4] Wind And Solar Power Are Disrupting Electricity Systems, The Economist, http://www.economist.com/news/leaders/21717371-thats-no-reason-governments-stop-supporting-them-wind-and-solar-power-are-disrupting?spc=scode&spv=xm&ah=9d7f7ab945510a56fa6d37c30b6f1709, 25 February 2017.

The Need For Economic Reform

It seems to me….

“There is a need for financial reform along ethical lines that would produce in its turn an economic reform to benefit everyone. This would nevertheless require a courageous change of attitude on the part of political leaders.” ~ Pope Francis[1].

A recent poll conducted by the Harvard Institute of Politics[2] found that only 19 percent of Americans ages 18 to 29 identified themselves as “capitalists”; apparently a majority of U.S. citizens are uncomfortable with their nation’s economic foundation; a system that over hundreds of years turned a fledgling society of farmers and prospectors into the most prosperous nation in human history. The 2016 presidential campaign raised questions of who exactly the system is working for and against, as well as why eight years and several trillions of dollars of stimulus following the financial crisis, the economy continues to grow so slowly.

Despite politically-motivated nefarious comments to the contrary, the U.S.’s economic problems reach far beyond any simplistic quick-fix solutions being more symptomatic of a condition that threatens in equal measure the wealthy and the poor, the conservative and the liberal. The U.S. system of market capitalism itself is broken.

From the creation of a unified national bond and banking system in the U.S. in the late 1790s until the early 1970s, finance took individual and corporate savings and funneled them into productive enterprises creating new jobs, new wealth, and, ultimately, economic growth. Finance; which today includes everything from banks and hedge funds to mutual funds, insurance firms, trading houses, and similar enterprises; no longer primarily serves business. Over the past few decades finance has turned away from this traditional role. Today only a fraction of all the money circulating through financial markets actually makes it to Main Street businesses.

The textbook description of the financial sector, “the intermediation of household savings for productive investment in the business sector”, constitutes only a minor share of today’s banking business. It is estimated that only around 15 percent of capital coming from financial institutions today is used to fund business investments whereas it would have been the majority of what banks did earlier in the 20^th century: the role of the capital markets and the banking sector in funding new investment is decreasing.

The financial sector now represents around 7 percent of the U.S. economy, up from about 4 percent in 1980, currently takes around 25 percent of all corporate profits – but creates only 4 percent of all jobs. When finance becomes that large, the economy gradually becomes a zero-sum game between financial wealth holders and everyone else: the average person is losing.

Finance has long been considered to be at the very pinnacle of the economic hierarchy of an advanced service economy that graduated from agriculture and manufacturing but the unintended consequences of this misguided belief now endangers the very system the U.S. has prided itself on exporting around the world.

This economic illness has a name: financialization. Financialization; a big, unfriendly word with broad disconcerting implications; is an academic term for the trend by which Wall Street and its processes have come to reign supreme in the U.S. permeating not just the financial industry but also much of U.S. business. It includes everything from the growth in size and scope of finance and financial activity in the economy; to the rise of debt-fueled speculation over productive lending; to the ascendancy of shareholder value as the sole model for corporate governance; to the proliferation of risky selfish thinking in both the private and public sectors; to the increasing political power of financiers and the CEOs they enrich; to the way in which a “markets know best” ideology remains the status quo.

While this revolution is often blamed on bankers, it was facilitated by shifts in public policy from both sides of the political aisle and crafted by the government leaders, policymakers, and regulators entrusted with keeping markets operating smoothly. The shifts were bipartisan and, to be fair, often seemed like good ideas at the time but also came with unintended consequences. The shift encompasses Reagan-era deregulation, the unleashing of Wall Street, and the rise of the so-called ownership society that promoted owning property and further tied individual healthcare and retirement to the stock market. It now manifests itself in myriad ways: a housing market that is bifurcated and dependent on government life support, a retirement system that has left millions insecure in their old age, a tax code that favors debt over equity….

Debt is the lifeblood of finance. As finance has captured a greater and greater piece of the national pie, it has, perversely, all but ensured that debt is indispensable to maintaining any growth in an advanced economy such as the U.S. where 70 percent of output is dependent upon consumer spending.

In the early 1980s, new companies made up half of all U.S. businesses but the number of new firms as a share of all businesses declined by 44 percent between 1978 and 2012.

Emphasis on short-term share-boosting management is largely responsible for the drastic cutback in research-and-development outlays in corporate America, investments that are the seed corn for future prosperity.

The system is in need of major restructuring. The U.S. needs tax system reform, for the government to take more direct action on job creation and poverty reduction, and to address inequality in a meaningful way. The largest banks need to be broken up; none should be permitted to become too large to fail. The hold of financial-oriented thinking in every corner of corporate America needs to be dismantled. Business education needs to be reformed. A tax system that treats one-year investment gains the same as longer-term ones and induces financial institutions to push overconsumption and speculation rather than healthy lending to small businesses and job creators needs to be changed. We need to rethink retirement, craft a smarter housing policy, and restrain a money culture filled with lobbyists who violate the U.S.’s essential economic principles.

Financial institutions must provide a clearly measurable benefit to the real economy: they no longer do and that must be changed.

That’s what I think, what about you?

[1] Pope Francis, born Jorge Mario Bergoglio, is the 266^th Pope of the Roman Catholic Church.

[2] Foroohar, Rana. American Capitalism’s Great Crisis, Time, http://time.com/4327419/american-capitalisms-great-crisis/?xid=time_socialflow_twitter, 12 May 2016.

The Post-Industrial Economy

It seems to me….

“Our working hypothesis is that the status of knowledge is altered as societies enter what is known as the postindustrial age and cultures enter what is known as the postmodern age.” ~ Jean-Francois Lyotard[1].

Over the past 50 years, the countries that have grown the most are those that have opened themselves to global markets. Globalization substantially benefited the U.S. economy by providing access to new markets and supporting growth in areas of our national strength. While some low-end jobs such as in some manufacturing areas were lost, they were primarily in fields easily automated and subject to job elimination.

The public’s wariness toward global engagement also extends to U.S. participation in the global economy. Nearly half of Americans (49 percent) say U.S. involvement in the global economy is a bad thing because it lowers wages and costs jobs; fewer (44 percent) see this as a good thing because it provides the U.S. with new markets and opportunities for growth.

While some workers were displaced, the vast majority of people in the U.S. benefited from lower-cost products and a higher standard of living. While there have been some recent gains in wage compensation, recovery from the economic crisis of 2009 has been slower than desired (though better than in all other economically-advanced countries). More rapid improvement was constrained by lack of government investment providing free higher and vocational education, training, and retraining support.

For the U.S., globalism has produced enormous advantages. The key driver depressing wages and eliminating jobs in the industrialized world is technology, not globalization. For example, between 1990 and 2014, U.S. automotive production increased by 19 percent but with 240,000 fewer workers. With 5 percent of the world’s population, it dominates the global economy in technology, education, finance, and clean energy. One in five U.S. jobs is a result of trade and that percentage is rapidly growing. The U.S. maintains the world’s primary reserve currency giving it substantial economic advantage.

The benefits of growth and globalization have admittedly not been shared equally and the pace of change has caused anxiety everywhere but these are the very reasons to invest in people, upgrade their skills, and better integrate communities. It is not a reason to destroy the most peaceful and productive international system ever devised in human history.

After 1945, after the Great Depression and two world wars, western nations established an international system characterized by rules that honored national sovereignty, allowed for the flourishing of global commerce, and encouraged respect for human rights and liberties. This order resulted in the longest period of peace among the world’s major powers, marked by broad-based economic growth that created large middle classes in the West, the revival of Europe, growth in poor countries that lifted hundreds of millions of people out of poverty, and the spread of freedom across the globe.

Globalization is generally considered only in relationship to trade in goods, services, or financial transactions but actually is much more comprehensive enabling communications and interaction between individuals exchanging information, ideas, and innovative concepts. Mobile technologies have transformed the way we live, work, learn, travel, shop, and stay connected. Individuals or corporations are able to compete, connect, exchange, or collaborate globally without limitations of location, distance, or time.

At a time when trade growth in goods and services is slowing, the global flow of digital information including e-commerce, videos, intra-company communications, and searches has enjoyed exponential increases. Small businesses, which create the majority of new jobs, are therefore able to engage in global trade more easily than previously possible (86 percent of tech-based startups engage in cross-border activity). From a worker’s perspective, education rather than trade barriers, currency, and tariffs is key to compensating for job off-shoring.

The changes and trends associated with globalization have been a net gain for most Americans though a vocal minority have been negatively affected. Globalization is not the same as outsourcing and while businesses sought to exploit less expensive labor markets in the past, digitization and advanced manufacturing technologies have now resulted in increased productivity.

The days when manufacturing went looking for cheap labor are almost over. There is increased scope for the next evolution in manufacturing which relies on high quality infrastructure, the right kind of talent in the workforce, and a good business environment. As transportation costs have become a greater percentage of product costs, manufacturing has relocated closer to markets.

Globalization created huge opportunities for growth, many of which were taken by U.S. companies[2]. The global economy is still dominated by large American firms; 134 of Fortune’s Global 500 are American. In cutting-edge industries, the vast majority are also American. These companies have benefited enormously by having global supply chains that can source goods and services around the world, either to lower labor costs or to be close to the markets in which they sell.

Globalization generates opportunities, innovation, and wealth for nations they can then use to address associated problems through good national strategies. The solutions are easy to state in theory: education, skills-based training and retraining, infrastructure…. But they are extremely expensive and hard to execute well.

Criticism of globalization is unfair as it has always provided a financial net benefit for the U.S. Though very little in life comes without cost, off-shoring has somewhat become the scapegoat for lower and middle-class demoralization. This criticism ignores the more relevant question of whether the supposed self-esteem provided by obsolescent manufacturing jobs is actually factual. Marketing efficiency has negatively impacted social cohesion in some regions but this has resulted primarily from advances in automation and computerization, not the more easily politically-motivated denunciation of off-shoring.

Global markets and emerging economies are growing much more rapidly than those in developed countries, in many instances at double the rate of the U.S., with corresponding greater demand. Many U.S. companies’ exports exceed domestic sales. Many of the nations in which these companies are located require investment in local presence and operations in exchange for market access.

Incomes have stagnated or declined since the 2008 recession with the lower-middle class being among the most impacted widening economic inequality. The top priority should not be protecting existing jobs or attempting to force corporations to manufacture in the U.S., it should be on training/retraining for new employment opportunities as the U.S. transitions to a post-industrial society.

The manufacturing leader of yesteryear, the U.S., is experiencing a relative decline in global influence and will almost certainly never return to its former glory as a manufacturing powerhouse but there are still areas in which it can distinguish itself — such as a supplier of extremely high-end, high-margin goods. But … while beneficial, we do not need it.

Prospects for the U.S. and the global economy are good but the tide of populist and protectionist pressures threaten to damage growth and hurt the very same people they claim to protect and must be controlled. Technology and globalization have been the primary drivers of prosperity and will remain so. The transitions must be better controlled by helping and protecting those who are negatively affected by the disruptions that these forces inevitably bring.  It will be necessary to leverage the potential of innovation and globalization to keep living standards rising around the globe.

Globalization is not a zero-sum game. The U.S. cannot quantitatively ease its way to sustainable growth. It has to invest in infrastructure and education, create a strong business environment, and innovate.

Let China and other southeastern Asian countries rule commodities: there are unlimited opportunities for U.S. companies[3] willing to innovate. The problem is not just an issue of manufacturing less expensive products with low-priced labor – it’s linked to a scarcity of skilled labor and actual innovation in this country – something that needs to be addressed in our educational system. It is time to move on to tomorrow’s economy.

That’s what I think, what about you?

[1] Jean-François Lyotard was a French philosopher, sociologist, and literary theorist.

[2] Zakaria, Fareed. Everyone Seems To Agree Globalization Is A Sin. They’re Wrong, The Washington Post, https://www.washingtonpost.com/opinions/everyone-seems-to-agree-globalization-is-a-sin-theyre-wrong/2017/01/19/49bded68-de8b-11e6-918c-99ede3c8cafa_story.html?utm_term=.e5aabb0c1b1d, 19 January 2017.

[3] Perlow, Jason. Let China Rule Commodities: Nanolumens’ Lesson For US Companies, ZDNet, http://www.zdnet.com/article/let-china-rule-commodities-nanolumens-lesson-for-us-companies/?tag=nl.e539&s_cid=e539&ttag=e539&ftag=TRE17cfd61, 7 March 2016.

Pro-Life/Pro-Choice

It seems to me….

“I do not believe that just because you’re opposed to abortion, that that makes you pro-life. In fact, I think in many cases, your morality is deeply lacking if all you want is a child born but not a child fed, not a child educated, not a child housed. And why would I think that you don’t? Because you don’t want any tax money to go there. That’s not pro-life. That’s pro-birth. We need a much broader conversation on what the morality of pro-life is.” ~ Sister Joan Chittister[1].

Let me be very clear, I do not like the idea of abortion. I, however, would not be morally able to support completely restricting abortions as I am sufficiently old to remember how such total restrictions prior to Roe v. Wade lead to desperation; a woman must be able to make decisions relevant to her own body and those decisions sometimes result in situations where someone must lose.

Abortion has long been a contentious issue in American politics and one that splits deeply along partisan, ideological, and religious lines. Today, 57 percent of Americans say abortion should be legal in all or most cases while 40 percent think it should be illegal in all or most cases[2]. Liberal Democrats are more likely to favor legal abortion (91 percent vs. 8 percent) compared with conservative Republicans (27 percent vs, 71 percent).

Liberals believe a woman has the right to decide what happens with her body usually considering a fetus to not be a separate human life and consequently to not have individual rights. Most believe the decision to have an abortion to be a personal choice of a woman regarding her own body, that the government must protect this right, and that the government should provide taxpayer funded abortions for women who cannot afford them. Women have the right to affordable, safe, and legal abortions, including partial birth abortion.

Most conservative, on the other hand, contend that human life begins at conception and that abortion is the murder of a human being. An unborn baby, as a living human being, has separate rights from those of the mother to whom they are within, dependent upon, and physically connected. They oppose taxpayer-funded abortion; that taxpayer dollars should never be used for the government to provide abortions; and support legislation to prohibit all partial birth abortions.

Though criminalization of abortion never resulted in a reduction of the numbers of women seeking abortions, republican lawmakers continue to introduce/pass restrictive misogynist laws against woman’s reproductive rights while repeatedly attempting to shut down women’s health clinics. Rightwing anti-choice extremists cut access to birth control but never adopt children from unplanned pregnancies or approve funds for sex education. They cut government programs like school lunches for children and block government financial aid to families who are homeless and/or in need.

Abortion was generally accepted in the U.S. until about 1880. Anti-abortion legislation at that time was part of a backlash against the growing movements for suffrage and birth control and as an effort to control women and confine them to a traditional childbearing role – not in recognition of any rights of the unborn.

Proponents of again criminalizing abortion fail to recall that prior to abortion legalization in 1973, laws prohibiting abortion subjected many women to desperation, fear, and shame and took a heavy toll on women’s lives and health[3]. Poor women, especially women of color, suffered disproportionately as the ability of a woman to obtain an abortion, let alone one that was safe, often depended upon her economic situation, her race, and where she lived. Women with money were able to leave the country or find a physician who would perform the procedure for a high fee but poor women, for the most part, were either at the mercy of incompetent practitioners with questionable motives or unable to find anyone who would perform the procedure. Many attempted dangerous self-abortions, such as inserting knitting needles or coat hangers into the vagina and uterus, douching with solutions such as lye, or swallowing strong drugs or chemicals.

Since many deaths were not officially attributed to unsafe, illegal abortions, it is impossible to know the exact number of lives lost however thousands of women a year were treated for health complications due to botched, unsanitary, or self-induced abortions and many died. Others were left infertile or with chronic illness and pain.

Many favoring re-criminalization of abortion attempt to label physicians performing this procedure as murders but, in reality, in denying the all-to-real psychological imperative of those seeking pregnancy termination, it is they themselves that are the guilt and should be so charged.

Contraception availability seemingly should be one topic on which liberals and conservatives could agree. Wider access to contraception results in lower abortion rates – especially long-term birth control such as intrauterine devices. That this is more effective than legal restriction is demonstrated in California and New York where abortion rates have declined as contraceptive devices have become available in schools and other locations even though no new restrictions were imposed on a women’s right of choice in those states.

Access to safe and legal abortion is vital to women’s health and well-being. The goals of those so-called anti-choice/pro-life hypocrites are not about fetuses or children once born, their agenda is about controlling women’s bodies and women’s futures. As stated, anyone who places a higher value on a child being born than on a child being fed, being educated, or being housed is morally flawed – that is pro-birth, not pro-life. Anti-abortion activists need to question their motivation and basic morality.

That’s what I think, what about you?

[1], Sister Joan D. Chittister O.S.B. is a Benedictine nun, author, and speaker.

[2] Fingerhut, Hannah. On Abortion, Persistent Divides Between – And Within – The Two Parties, Pew Research Center, http://www.pewresearch.org/fact-tank/2017/07/07/on-abortion-persistent-divides-between-and-within-the-two-parties-2/?utm_source=Pew+Research+Center&utm_campaign=53393d5d1c-EMAIL_CAMPAIGN_2017_07_06&utm_medium=email&utm_term=0_3e953b9b70-53393d5d1c-400092341, 7 July 2017.

[3] History of Abortion in the U.S., http://www.ourbodiesourselves.org/health-info/u-s-abortion-history/, 18 May 2016.