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First they came for…

Looking at the news today, this was very apt to quote…

“First they came for the Communists
And I did not speak out
Because I was not a Communist

Then they came for the Socialists
And I did not speak out
Because I was not a Socialist

Then they came for the trade unionists
And I did not speak out
Because I was not a trade unionist

Then they came for the Jews
And I did not speak out
Because I was not a Jew

Then they came for me
And there was no one left
To speak out for me”

~ German Lutheran Pastor Martin Niemöeller 

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Part IIa: In Defense Of Government

This weekend I was listening to Fareed Zakaria on GPS @CNN (a program that I love) and he mentioned another aspect of government that I hadn’t covered in my post on “In Defense of Government”

His point was that we look towards our government to avoid catastrophes – and he mentioned this in respect to the climate crisis.

What really got me thinking was – this is a crucial and very under appreciated function. Essentially if the government is successful in averting the crisis, it is a non event (who remembers the collective action to fix the ozone layer hole in the atmosphere and globally phasing out CFL based coolants in refrigeration), since history does not remember the mundane – and hence the success of the institution is always under appreciated.

While if the government fails spectacularly (for e.g. The World Wars – that’s one for the history books – recounted and studied as a tale of misery and suffering for generations).

So how do we address this inherent bias in human nature – probably by also including our spectacular (although under appreciated) successes in avoiding crisis and a careful meticulous analysis of failure of strategy and policy on disasters – not just a tale of human suffering.

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Part V: Future Of Work

Future Disruptions and New Maladies – what the future may hold…..

  • An aging population without a plan to take care of our old and infirm.
  • AI and ML: Machines are getting smarter and more intelligent. AI seems to be able to do a lot of the cognitive jobs currently held by humans.
  • Automation: Think self driving cars, trucks and other vehicles; IVRs that perform the jobs of CSRs, chat bots etc.
  • Are humans a single planet species? Can we defy gravity at scale (mass transportation as opposed to a few infrequent transgressions into space) – Will this open up new frontiers to explore and eventually inhabit new worlds?
  • Will we discover other intelligent species/civilizations? Again new frontiers for engagement outside our current boundaries of work – think Star Ship Enterprise and its crew – “Space: the final frontier. These are the voyages of the Starship Enterprise. Its continuing mission: to explore strange new worlds; to seek out new life and new civilizations; to boldly go where no one has gone before”.

All of these can be looked at as either opportunities or threats – it is what we make of it.  Change is never comfortable, but depending on how we embrace and adapt to it may mean our survival or ultimately demise.

Our response to these changes may take the following shape –

Protectionist Policies – Have they ever worked?

When we domesticated animals, did humans that performed manual labor, resist the entry of animals? – no, instead they evolved to managing these animals and accomplishing more work than what they could do individually.

Did humans resist mechanization – yes, but it wasn’t a disruption that they could resist for long because industrialization came with a number of benefits: it raised living conditions, increased life expectancy and also provided a preponderance of additional time that could be productively used in the pursuit of other interests and goals.

So why do we believe that the same response will be successful for the next round of redefinition of work?

Innovation: Can we reimagine work that humans do?

Why do we assume assembly line work is actually adding value?

Humans were first domesticated by agriculture and forced to leave their hunter-gatherer life style. For work that needed more strength than a single human, we used animal power for tasks such as ploughing or extracting oil.

Then came automation – where we invented gears, pulleys and mechanical arms or wheels driven by motors and generators to perform the  work on our behalf.

Next came CNC machines which in addition to the mechanical aspect of doing the job, could also be programmed to do the work without human intervention.

The final frontier is AI – where an automaton (or a software program since not all realms of work are physical) could sense the environment and determine the best action in order to achieve a set of finitely defined goals

I think we are ok as long as “we” get to define the goals but there are larger fears in society that when these automatons/programs take over and set their own goals – why would any human be needed?

Is that the right question? I do not know … does anyone?

Can AI and Intelligent robots really be an ally instead of a threat?

True if we do not hang on to our traditional definition for work and instead look for different ways to create value.

Will be a possibility if an alien species attacks us and we collaborate with our own robots to ward off this threat.

May be necessary if humans are not suited to be a space faring race and we need robots to help us in this hostile environment.

We will need them when we are older and frail and younger humans do not have the inclination or interest to look after us.

If we want to succeed, we will need to change the game …and have a plan for our workforce to transition to this new definition of work.

 🙂

 

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Part III: Consequences Of Rampant Capitalism…

We have seen a rapid growth in various world economies over the last century. It has been especially pronounced after world war II. Although of late this growth is not equally shared across the population. This results in income inequality and a sub set of the population loses all hope for upward mobility.

This segment of population is completely discounted and does not value the democratic choice that they exercise in elections, and consequently they make their decisions based on either  unachievable promises or even protectionist and racist policies.

 

 

Once the value of the vote goes down, what you see is election of Incompetent or Callous leaders into the government, which further endangers the existence of democracy or capitalism.

 

 

 

Now don’t get me wrong, Capitalism is the only economic system we have seen work – all others like socialism, communism, dictatorship, fascism etc. have all failed the test of time. The question really is how to temper capitalism to not become its own biggest enemy and threaten its own (and democracy’s) survival.

 

 

Our next post is a plan to tackle this….

 

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Part IV: A Plan To Address The Maladies We Have Seen…

So what is the crux of the problem:

  • Capitalism promotes migration of jobs and work to the cheapest possible location;
  • Probably ethically right since it rewards the group that is the most desperate, but is unfair to the group that has a net outward migration of jobs
  • Results in massive job losses and desperation in one location while net influx of jobs and prosperity in another
  • Retraining and a repurpose of labor at source location is usually not attempted or isn’t very successful
  • The group losing the jobs is politically powerless to resist or prevent it

Let’s do a simple SWOT analysis of all the players involved :

Company:

Strength:  Capital; Agile Business and Production Processes

Weakness: Bad Political Reputation, and hence opponents try to fight this practice using protectionist/nationalist policies

Opportunity:  Find the optimal production cost to maximize profits and share holder returns

Threat:  Competition achieves a lower per unit cost of production and thus  loss of market share

Investors & Share Holders:

Strength: Capital

Weakness: Run towards the best returns, sometimes very short term focussed rather than long; i.e. support a steep discount rate

Opportunity:  Deploy capital that can be most productively used; Employ private equity/venture capital investment constructs to lock in capital to generate superior returns in the medium term instead of meagre short term gains.

Threat: Other investors generating better returns

Workers at the outbound location:

Strength: Political say at the local level

Weakness: No Capital to invest

Opportunity: Human capital that is free

Threat: A lower cost location comes up and takes on the production and jobs from them; Not trained in anything other than what they are currently doing

Workers at the inbound location:

Strength: Political say at the local level

Weakness: No Capital to invest

Opportunity: Human capital that is free

Threat: Another lower cost location comes up and takes over the production and jobs from them; May not have any training

Given the incentives, a capitalistic society gravitates towards specializing and optimizing labor, capital and production usually towards the detriment of its own workers but in favor of its investor class.

What I propose:

Change the game to utilize the strengths for each player – investors to provide capital to competitive projects, localities to use their resources to set up the right competitive projects using local resources and labor, executors that have a proven track record to implement the projects in a transparent and efficient manner, operators to run the venture profitably and an infrastructure exchange that removes friction from investment, project execution, operation and the ability to move investments in and out of these projects that compete for being a better investment.

Infrastructure Exchange Market

What?

An open market place for micro/ project level sponsorship.

Starts with a contractual agreement between sponsors/implementors/operators on initial project parameters

Proposal put up for bit to the investors – micro credit – or ordinary shares available to folks with a well defined investment profile

Types of projects accepted:

– wind farms

– solar farms

– energy storage pods

– efficiency projects – reduce energy consumption run rates

– later could move to any infrastructure project – build roads / bridges etc.

Why?

– a way to fund infrastructure from goal minded folks that believe in sponsoring a projects goals while making sure of decent returns on investments

Goals can be

– renewable energy

– create jobs

– reduce pollution

– build infrastructure

– competition drives performance

– easy in and out through trading in the infrastructure bank exchange

How?

– sponsors propose projects on exchange

– investors buy in interest; when project fully invested in – kicks off

– implementors run with it and complete execution

– hand over to operators that run and produce steady annuities

– project shares trade on exchange in terms of how well they are doing and can be traded

– all activities have a std set of metrics that are measured and published for full transparency

– create a path for projects to fail and be winded down

– create market on which mature projects performing as annuities can be traded and folks can move in and out of the projects

– should you create it as a bond structure – like infrastructure bonds backed by local/state government?

When?

– create exchange with functionality for each participant

– get investors to fund operations

– sign up sponsors / implementors / operators

Where?

– where there is the greatest need

– local governments struggling with creating jobs but have local resources that can be leveraged

– Examples of local resources

– Land

– Wind power

– Solar power

– Hydro power

Who?

Initial investors – those that fund the exchange

Implementors – those that set up the projects initially

Operators – those that run and maintain the projects – create local jobs;

Investors – who fund the projects

Sponsors – local governments/state that can provide resources (e.g. Land lease/ rent etc)

 

An exchange like the one described above will align the incentives between the workers and the investors to create a win-win situation for both….

We are currently working on a prototype for the platform….watch this space…

 

 

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Part II: In Defense Of Government

We find “The Government” to be a common punching bag for most folks – politicians and common citizens alike.

Our politicians rail against a corrupt and ineffective government pointing to us  the ills of big government and why the regulations imposed by the government are stifling our industry.

There are folks that talk about the deconstruction of an institution that has evolved over centuries of human development. It seems, everyone has an example of some egregious behavior that they use to justify painting the whole institution bad and in need for pruning. And the travesty of the situation is that there is no one standing on the other side defending this vital institution and its usefulness.

So let me take on the defense for the institution called the “Government”, which allows us to cooperate in very large numbers, prescribes and maintains a rule of law and is able to undertake projects at a scale that is impossible/unsustainable for an individual/family or a small group.

Governments came about when humans started gathering into communities. They were three primary reasons to create a government –

  • Establishing a common benchmark of behavior in society and establish conformance
  • Achieve scale where an individual/family or small group could not
  • Making outsize bets in pushing expertise in any domain – agriculture, industry or technology (for e.g. core science) where short or medium term benefits may not justify a rational private investment

Establishing the Rule of Law:

Humans felt the need to create rules for common behavior that all members within a community to adhere to. Anyone not adhering to these rules was given punishments or incarcerations. The institution developed as a checks and balances for keeping civil behavior.

Bringing the Benefits of Scale:

If you look historically, humans formed collectives and villages/towns/cities etc. to take advantage of the power of the collective. There were some projects/endeavors that were beyond the scope of an individual or a small group like a family to accomplish. Hence we humans invented the construct of “The Government” to allow us to cooperate in larger numbers. For e.g.  maintaining a military for offense or defense or build roads that are more than point to point connections and useful for the entire community.

Before we assign all the blame to the government and we dismantle it – we also should be willing to give up all the gains achieved by this institution.

Are we ready to give up on our military, or our highways, the internet, the GPS system, antibiotics and miracle drugs we have on the market. All of these are innovations that started as government projects and were then handed over to private enterprise.

 

I do not discount the criticism leveled by some that there are government agents that take advantage of their power, or even some individuals who are free riders on the rest of society. Yes, you can find bad apples in any group, but let’s not use these examples to discredit the institution and forgo the benefits of having a functioning and effective government.

 

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Part I: In Defense Of Globalization

 

The world has changed drastically since the end of World War II. It has become much smaller and more connected. Advancements in science and technology have made it possible for communication, trade, and commerce to occur almost instantaneously. Trade barriers have been broken, international borders have been blurred, and the transfer of goods, people, and ideas happens daily across borders. This brave new world that was entered after the war is caused by a process called globalization. Globalization, according to Wikipedia, “is the action or procedure of international integration arising from the interchange of world views, products, ideas, and other aspects of culture.” Globalization has changed the world for the better, and it should become the standard for humanity. Its benefits include, but are not limited to, per capita and revenue growth, the spread of democracy through the developing world, and a general interconnectedness between the human species brought about by the social, technological, and ideological exchanges across the world.

Since the 1990s, trade agreements like NAFTA have made it easier for companies to move across borders and maximize revenues. Companies that were once limited to operations in very few countries were able to create jobs where labor was cheapest, resulting in more employment, and a rise in standard of living in poor countries, like China. China’s economy is a prime example of the economic benefits that globalization has produced. China has become a hub for manufacturing, with companies like Apple producing most of their products there. Since 1990, GDP per capita increased exponentially, going from USD 317.885 in 1990 to USD 8,027.684 in 2015. Higher individual wages also correlated with a higher total GDP. GDP in China went from 360.859 billion USD in 1990 to USD 11.008 trillion in 2015. This huge increase in economic value is thanks to the countless companies that have taken advantage of China’s booming population and workforce. This in turn raised incomes for the majority of the Chinese populace. Standards of living have been going up, and outbound tourism from China has been steadily increasing, from 4 million people in 1999 to 50 million people in 2015. China is just one example of the profound effects globalization on a population. As the winds of globalization inevitably sweep across the world, many developing countries will turn in to booming, prosperous nations. According to the Peterson Institute of International Economics, “A sophisticated model predicts that global free trade, removing all post-Uruguay Round barriers, would lift world income by $1.9 trillion ($375 billion for Japan, $512 billion for EU and EFTA, $537 billion for the US, $371 billion for developing countries, $62 billion for Canada, Australia, New Zealand).” This “global free trade”, brought about by trade deals like NAFTA and TPP, will enable labor to spread around the world and increase incomes across the board for citizens of the globe. However, globalization has come under fire from many people, including US President Donald Trump. His entire campaign was directed against globalization, claiming it took away jobs from “ordinary, hardworking Americans”. It is true, that free trade drives companies to shuffle jobs around different countries, potentially leaving some people behind. The key to solving this issue is adaptability. Globalization hastens the pace of innovation across industries, thanks in no small part to the input of ideas from around the globe. New innovations can create new avenues for moneymaking, thus creating newer jobs in the places that lost them. To maximize global revenue, trade deals between nations should make it easier for companies to move across borders, all while keeping a balance of power between people, corporations, and governments. In fact, trade deals like these should include councils of representatives from corporations, governments, and unions, enabling openness and transparency in all facets of the economy. If such a system is implemented on a global scale, the prosperity of the human race will soar.