Automation’s Effect, Social Media and Good News

Last year for a client we interviewed a variety of small companies regarding their challenges and opportunities in doing business. It was remarkable how many of them commented on the difficulties they faced in competing with large companies. And not natural differences stemming from economies of scale but rather from rent seeking that has been unfairly built into our regulatory and legal systems. So we recently read with interest and focus the most important book of 2017, The Captured Economy: How the powerful enrich themselves, slow down growth and increase inequality* by the libertarian leaning economist Brink Lindsey and the politically liberal Steve Teles (theirs is not a partisan treatise, both parties are guilty in not addressing the central problems outlined in the book). The Captured Economy details–using data, case studies and anecdotes–how rent seeking is out of control in the United States, at all levels of government–federal, state and local. It explains how and why the finance industry has become too large a part of our economy, why doctors, lawyers and dentists are so expensive and why it costs too much to buy a house or rent an apartment. It explains how rent seeking is a large reason for the increasing income inequality in our country. One hopes political leaders of all stripes, at all levels of government, will read the book, absorb its lessons and apply them. We hope you, dear readers (some of whom are political leaders yourselves) will too. The issues and solutions outlined in this book are among the top four most important facing our country. So even as we work to become part of the one percent without the benefit of rent seeking, we present more information on automations effect around the world, examine restrictions on social media globally and continue our efforts to remind people of good news. It’s this week’s International Need to Know, switching the channel from CBS Morning News to the Today Show–er, uh, turning on the radio to NPR–oh crap, we give up.

*Our PhD thesis is an examination of the steady lengthening of book’s subtitles.**

**The subtitle of our thesis is too long to print here.

Without further ado, here’s what you need to know.

Automations Effect Around the World

Last week we linked to a report predicting that in 40 years all jobs will be taken over by robots. Perhaps, but even if this does not occur, continued automation of certain jobs will take place over the coming years. Which countries will be most effected? McKinsey attempts to quantify this in an update to an earlier report on automation. It states that China is at risk for the most people losing jobs to automation between now and 2030 with 102 million Chinese workers predicted to lose jobs to automation during that time period. But that’s partly a function of China’s size. When looking at percentage of workforce, Japan sees the largest job loss, followed by Germany and the U.S. Japan is at risk of 46% of their workforce losing jobs to automation. This is a startling number but salved somewhat by the fact that Japan’s overall workforce is shrinking due to aging demographics. McKinsey speculates that with new job category creations, Japan may not suffer as badly as that 46% figure indicates. Nonetheless, unless automation creates huge increases in productivity (GDP, as we have noted before, increases only through growth of working age population and increases in productivity), Japan is likely to continue to have slow GDP growth. And most countries will face economic adjustments due to automation over the next decade.

The Freedom of Social Media

So we confess: We miss the golden age of blogs and mourn the advent of social media. We are no Luddite but we wonder if social media, so far, is a net negative for humanity. Nonetheless, we also take note of where social media is free and where it is heavily governed, via a new report from Freedom House.  According to the freedom monitoring organization, “Online content manipulation contributed to a seventh consecutive year of overall decline in internet freedom, along with a rise in disruptions to mobile internet service and increases in physical and technical attacks on human rights defenders and independent media.” Freedom House notes, of course, Russia’s efforts at information manipulation, including in the U.S. election, but also reports that the number of governments attempting to manipulate information online has steadily increased since they began monitoring the phenomenon in 2009. “Venezuela, the Philippines, and Turkey were among 30 countries where governments were found to employ armies of ‘opinion shapers’ to spread government views, drive particular agendas, and counter government critics on social media.” The attacks are not all virtual: “The number of countries that featured physical reprisals for online speech increased by 50 percent over the past year–from 20 to 30 of the countries assessed.”There’s a reason why free speech is the first amendment.

Good News Corner

In our continuing attempts to remind ourselves that the world is on the whole continuing to get better (despite the news in the two previous stories!), we point to the latest data on child mortality estimates from the World Bank released earlier this week. This data shows that “between 1990 and 2016, the global under-five mortality rate dropped by 56 percent.” Not too shabby. In fact, the last decade has seen more progress in decreasing child mortality than the previous decade. We are doing better and better. Of course, there is more work to do as still even now 15,000 children die every day. And some places are doing better than others. More than 80 percent of global under-five deaths occur in just two regions–Sub-Saharan Africa and South Asia. The second chart below shows the countries with the highest child mortality rates–Somalia tops the dubious list–and those with the lowest–Iceland!  But even admitting there is more work to do, we should note our darn good progress.

 
   

Rise of the Robots, Brexiting the UK, Sexual Violence Stats

New Orleans continues to be the greatest city in the world (and we’ve seen lots of world cities to compare it to) even though like most cities today the finely manicured claws of gentrification are rooting out some of the creative messiness that makes it great. Nearly every one of our Uber, Lyft and taxi drivers–many of whom are musicians, Mardi Gras Indians and other creative types–told us they now live outside the city (more evidence for our theory that suburbs are going to be more interesting than urban cores). But not even gentrification can completely destroy the glorious soul of the Crescent City. Only in New Orleans would we be able to enjoy an extraordinary concert experience on a random Tuesday night in November. After basking in the sounds of a young brass band busking on the street (the future is in good hands), we walked by a club and heard a band laying down a groove so deep and heavy George Clinton beamed happily on the Mothership. So we popped into the Blue Nile, not even paying a cover charge, and listened to Water Seed tear the house down. Until recently, the band members were Katrina refugees living in Atlanta, now they have returned triumphantly to New Orleans. As we advise you to check Water Seed out, we get down on the rise of the robots, boogie to brexiting the UK and try not to go into a funk about sexual violence data. It’s this week’s International Need to Know, the second line of international news and data. (Note: we’ll be making our world famous stuffing next week for Thanksgiving, back on November 30th)

(Never more proud to be a math major: Video gets good at 1:00)

Water Seed performing Arithmetic @ World Cafe…
1 likes 35 views

Without further ado, here’s what you need to know.

Rise of the Robots

On our flight back from New Orleans we read a sobering article that claims in 40 years robots will take over all jobs. This led us to read with interest the 2017 Industrial Robots report from the International Federation of Robotics. It turns out that last year robotic sales reached a new peak with a 16% increase to nearly 300,000 units. The automotive industry continues to be the largest consumer of robotics followed by the electronics sector. Interestingly, the beverage industry is also seeing a large increase in the use of robotics. Unsurprisingly, given its role in final assembly, Asia is by far the largest purchaser of robots, with nearly four times more than either Europe or the Americas. And, of course, China accounted for nearly a third of all robot sales last year. The top five purchasers of robots are China, Korea, Japan, the U.S. and Germany. Mexico, starting from a relatively low base, is rapidly increasing its use of robots, which should be no surprise given its increased prominence in the automotive manufacturing industry (we need to re-negotiate NAFTA because all our jobs are going to Mexican robots, or, uh, something like that). According to the report, around the world there are now “74 industrial robots installed per 10,000 employees in the manufacturing industry.” South Korea has by far the highest concentration of robots with 631 industrial robots per 10,000 employees. We are a long way from robots doing all work but the report does note that one robotic trend is “smarter” robots, often connected to the cloud–as they become smarter, robots will indeed be able to do more of our jobs. But we must ask: when robots take over will a robot be the executive director of the International Federation of Robots?

Brexiting the U.K.

So what is happening to the UK as it continues to take a long, slow walk off a Brexit cliff? The economy has not cratered but there are many worrying signs as are evident from an economic survey by the Organization of Economic Cooperation and Development (OECD). The UK’s economy is growing but at a much lower rate than the EU’s or other developed economies, per the first chart below.  More ominous, labor productivity has stalled, as you see in the second chart. Net migration to the UK is falling which is apparently what Brexit boosters want but we always believe that people not wanting to come to your country is a bad sign of economic and political health. London, which by a large majority voted against Brexit, continues to spend on infrastructure, much of it from UK funds. But, as you see in the chart below, the parts of the UK which voted for Brexit, received more funds from the EU. And the British education system does not seem to be helping much with the UK doing poorly compared to the OECD average in a number of categories, including the number of students exiting school early. There are reasons for the discontent in much of the British population that led to the Brexit vote. Unfortunately, it is unclear how Brexit fixes those problems. In fact, it exacerbates them. 

Help the Toos

Given recent high profile news, it seems a good time to highlight the chart below detailing reported cases of violence against women around the world. Such data is, of course, incomplete, given that not all countries reported data to the United Nations (only 128 countries reported) and even in countries that did report, there may be underreporting. But of the countries that did report to the UN, Sweden, the UK, Botswana and Australia “had the highest reported rates of sexual violence.” The United States is especially high in rape. In addition to the basic human rights issues, gender inequality is a drag on economic growth. A McKinsey report calculated that improving gender equality would add $12 trillion to the global economy (see 2nd chart below). Me too is both a social and economic matter.

Asia and China, Brains of the Operation, & Billionaires

When someone mentions cutting edge, daring television, the first thought that comes to your mind is probably some dark show on HBO, or a drug drama on FX or a sex comedy on Showtime. But we submit to you that the most daring television show is currently on one of the traditional three networks. It’s The Good Place, which is not particularly dark and has very little sex and violence. But it’s far more daring and cutting edge in both its content and approach than any of the current prestige shows on premium cable. The Good Place stars Ted Danson and Kristen Bell (who will always be Veronica Mars to us) and tackles intelligently and with humor ethics, philosophy and our place in the universe. There simply is no other show on TV like it. We submit it is far more daring and cutting edge to produce a television show tackling existential issues (in a fun and entertaining way) than to make yet another anti-hero, there is no hope viewpoint, violent program. So even as we contemplate the trolley problem, we turn from our role as TV critic to international scribe as we write about what Asia thinks of China, a big advance in AI and the changing of the billionaire guards. It’s this week’s International Need to Know, unindicted but conspiring to bring you important news and data from around the world. (Note: Next week we are in our beloved New Orleans eating alligator cheesecake at Jacque-Imo’s, drinking Pimms Cups at Napoleons and watching the Rebirth at the Maple Leaf–INTN will return Nov 16th)

Without further ado, here’s what you need to know.

What Asia Thinks About China

Despite the perhaps sage advice not to worry what others think about you, as China’s Party Congress ended, Pew Global reminds us of what the rest of Asia’s views of China are. The results are mixed. In terms of the “effects of China’s growing economy,” Australians are quite positive that China’s growth is beneficial for them, with 70 percent saying it’s a good thing. As well they would since Australia’s economy booms when China buys their commodities. Vietnam and India are less sanguine about China’s economic growth (see chart below). China’s growing economy is divisive but its growing military unites Asia with all countries seeing it as a bad thing. Unsurprisingly, South Koreans, Japanese and Vietnamese are most concerned. Those three countries are also most vociferous when asked whether “China’s power and influence is a threat” to their countries. But interestingly, South Koreans are far more concerned about this than Japanese. The Vietnamese too. But all these countries view China at least a little worriedly when asked this question. There is also not a huge amount of confidence in President Xi “to do the right thing regarding world affairs” as you see in the chart below. But Pew also notes that “in two U.S. treaty-allies in the region, Australia and South Korea, people have more confidence in Xi than in Trump.” We are confident such views are having an impact on the world order. 

 

Who’s the Brains of this Operation?

It’s been quite a month for artificial intelligence research. Alphabet announced its new Alpha Go Zero computer beat Alpha Go (which last year easily defeated the best human Go player in the world) 100 games to 1. It did so by teaching itself how to play the game, not by just crunching data. This is both remarkable and a little unsettling. But as we reported a couple weeks ago, China has made rapid progress in the AI sphere and is now also creating one of the largest efforts in the world to map the human brain. Located in Suzhou, the lab, which is a collaboration of government funding and Huazhong University of Science and Technology, hopes within three years to be the largest high-resolution brain mapping center in the world. Currently operating at one-fifth capacity, the lab maps five mouse brains a day, up from one mouse brain every 50 days in 2010. Within five years, they hope to start mapping human brains. Ironically, perhaps by the time we understand the human brain, it will no longer be the strongest intelligence on the planet. Meanwhile, Reuters reports that “Bank of Japan Governor Haruhiko Kuroda on Tuesday brushed off the notion that researchers can use artificial intelligence to analyze his facial expressions and predict changes in monetary policy.” It seems that both Microsoft and Nomura Securities are using software to analyze Kuroda’s facial expressions and predict future Japanese Central Bank policy: “Kuroda’s face shows signs of a policy change about six or seven weeks before the central bank’s board actually decided to adjust policy.” We are either all doomed or going to have become very adept at playing poker.

What’s in a Brain? The Lab in China That Want…0 likes13 views

Billionaire Changing Guards

F. Scott Fitzgerald, polishing his ironic quote on the wealthy with the ultimate dab of the clothes brush, once wrote, “The rich are different than you and me, they have more money” (any billionaire INTN readers are encouraged to contribute to our coffers to make us more alike). This year billionaires have more money than last, $6 trillion up from $5.1 trillion. And, to bury the lede, for the first time there are more billionaires in Asia than in the U.S, 637 to 563. Yes, over the last year the number of Asian billionaires rose by 117, whereas only 25 Americans climbed that wealth mountain. But do not look down-in-the-mouth American ultra-wealthy, your overall wealth still tops Asian billionaires, $2.8 trillion to $2 trillion. China, of course, is a big reason for Asia overtaking America, adding 67 billionaires with India chipping in another 16. Check out the progression below.