2014 Top 10 Things that make me pessimistic for the future

A few days ago, we covered the top things in 2014 that made me optimistic, but unfortunately, there were also many things that left me more pessimistic for the future. Here are the top 10 of pessimistic events and trends.
  1. Internet balkanization – One of the unfortunate effects of the Snowden leaks has been previously democratic countries such as Germany and Brazil wanting to join Iran and China in creating their own walled-in pockets of the internet. Add the increased efforts of Russia and Turkey to crack down on internet freedoms in their countries, and the future for an open internet is starting to look bleak.
  2. 5,000 deaths to jihadi terrorism in November – Already before the awful Taliban attack on the school in Pakistan, new statistics had just been released saying that there had been 5,000 deaths due to jihadi terrorism in November alone, a trend that doesn’t seem likely to stop anytime soon. Many of these are perpetrated by Boko Haram, and get much less attention in Western media than similar attacks by ISIS/Al Qaeda offshoots.
  3. Lone wolf attacks – This year has seen an uptick in lone wolf attacks, such as the Sydney cafe hostage situation recently. These kind of lone wolf attacks, which might be inspired by ISIS, but not affiliated with them, are very hard for security agencies to intercept, and seem to be on the increase.
  4. Failure to punish anyone for the financial crisis – The moment for punishing anyone for the financial crisis and making any substantial changes to the unstable parts of the financial system seems now to have passed. It is also striking to see how fines for manipulating interest rates or currency rates, as seen with this year’s Libor and FX scandals, are now seen almost just as an expected cost of doing business.
  5. Europe’s Google war – Instead of trying to stimulate innovation within Europe, several countries in Europe and members of the European Parliament seem instead set on counterproductive measures such as calling for the breakup of Google and implementing “the Google tax”. Not to mention the whole Right to be Forgotten-fiasco. The European Parliament should focus instead of creating local competitors.
  6. 23 and me ban – The US is not immune to putting in place bans on innovative companies, as we have seen with the ban on 23 and me to continue their revolutionary genome mapping service. We are just in the beginning of the genomics revolution, but it seems backward by the FDA to ban 23 and me from continuing their service.
  7. Crime as a service – As everything goes on-demand over the internet, apparently a new trend is crime as a service, where teams of hackers can be hired for a cheap sum to perform cybercrimes. This might even have been the case in the Sony hack.
  8. Antibiotic super-resistance – This year has seen a continue uptick in hospital cases of antibiotic resistance, due to over usage for livestock and over-prescription to unnecessary illnesses. This risks setting us back to the middle ages. The recent acquisition by Merck of Cubist shows the huge need in this area.
  9. The Third Industrial Revolution from a global equality perspective – While 3d-printing and additive manufacturing techniques seem set to bring about massive productivity gains in developed countries, there is also a fear that this means that the next set of countries won’t see the uptick in living standards that the last set of production countries (China, East Asia) saw by being the factories for the world.
  10. Technological innovation driving returns to capital rather than labor – It is an unfortunate side effect of technological innovation that, while the service benefits might be shared among the many, the financial benefits tend to accrue only to existing capital, due to the tendency of new innovations to create monopolies and lower the cost of inputs such as labor.

Amazon unveils drone delivery plans

With Amazon unveiling its plans for drone delivery, they’re upping the stakes in their fight with Google, both in terms of autonomous vehicles (Drone delivery versus autonomous cars), as well as in the ongoing fight over which company fulfills the most of our geeky, utopian fantasies. Bezos continues to fight the good fight, soon to dominate print innovation through Washington Post and retail innovation through Prime Air.

Although, we mustn’t forget all the regulatory hurdles this has to pass.

The video Bezos unveiled can be found here. I talked about delivery by drones in China in an earlier post. Another earlier post talked about Google being the most utopian of the current big tech companies, which I might have to revisit. This post discussed other new delivery mechanisms.

I just hope this will be included free of charge in my existing Prime subscription! Amazon doesn’t care about profits, right?

Latest interesting uses for drone technology

UAV over Pakistan

The use of drones is expanding more and more, with new innovative uses popping up regularly. Here are some of the latest examples:

  1. Using drones to save lives. This Wired article describes how a octocopter could carry defribillators to people in medical emergencies in remote areas.
  2. Delivering packages (and cakes!). So far, not allowed in the US, but Chinese companies are exploring its potential. China is catching up quickly in the military UAV arena, as outlined by HuffPo here, and seems likely to surpass the US soon in the civilian area, given the more stringent US regulations.
  3. As often, Burning Man points the way forward. Their department of Mutant Vehicles, which sounds like something out of a Philip K. Dick novel, issued usage instructions for drones at the Burning Man festival. Perhaps something that the FAA could learn from.
  4. As is often the case, it’s only when the usage is really proven to be useful that regulation is adapted. So perhaps the use of drones to fight the Yosemite fire could spur faster legislation around its use cases.
Photo credit: Swamibu (Creative Commons)

What will become of the new global middle class in light of the emerging markets storm?

In the current storm surrounding emerging markets, it’s interesting to analyse what this means for the new emerging global middle class that has been one of the key global demographics stories over the last decade.
At the same time as the middle classes in the developed countries has been squeezed both from the top and the bottom, millions of people from developing countries have joined their ranks. In countries as diverse as China, Indonesia and Brazil, a wide swath of people have seen increased incomes and have started to be referred to as middle class. Over the last years, there has been plenty of excitement regarding how this new middle class will deliver the next wave of growth. BBC has been running a major investigation into the topic lately.
Now however, we are seeing a host of negative news regarding emerging markets, and their growth is coming into question. Does the latest developments mean that the promise of the new middle class will falter? Has the stellar growth we’ve seen in emerging markets over the last years just been an effect of liquidity from developed countries flooding the world with nowhere to go? Will the end of the commodities super cycle spell an end to the boom for emerging markets economies? Or is there a solid underlying growth story?
It is of course not really helpful to talk of emerging markets as one homogeneous category, but that is the way the markets seem to think about them, given the last week’s outflow of money from any country that seems remotely emerging, so let’s look at the story overall.
In a country such as China, we have seen millions already join the “new middle class”. At least if we define a person who saves up a month’s salary to buy a Coach handbag as middle class. China might now be running out of its unlimited supply of labor, and the debt overhang in its cities and companies suggests that it’s in for a significant slow down in growth. But at least they have seen true productivity growth. We will not see the millions of new middle class denizens quietly return to the countryside. Rather, they might start fulfilling that other classic tenet of being middle class – to start demanding political freedoms corresponding to their economic ones.
In Africa, we’re seeing huge steps forward, which has led to some spectacular growth rates, and a more savvy population. The FT argues here that this has the positive benefit of making elections harder to steal over time. Although the ease of the recent Zimbabwe election tells a different story.

One big group of countries is the India, Indonesia and Brazil of the world. The ones who haven’t done the structural reforms they should have when times were good, and the liquidity might just have masked the lack of real economic progress. Even if it’s often said that countries don’t do the needed reforms until the crisis hits, these countries will face a hard time doing so. There will likely not be huge increases in their middle classes soon.

So what’s going on with the middle class in developed countries? Robots are taking its jobs, and the new jobs that are created by technology seem out of reach for the average middle class person, and pay less in any case, as we can see in the app economy. All industrial technology revolutions before the Internet seemed to create more jobs than they destroyed, but so far, the Internet has created no new middle class jobs. The developed world’s middle class seems to be in for a continued decline, with unemployment becoming structural over time, as more and more industries turn more and more digital. 
This will lead to more outrage and radicalization, as we’ve seen in the support for more extreme parties all over Europe. In Greece with 50% youth unemployment it could be understandable that voters turn to more extreme alternatives, but in Germany where growth is still strong? It shows that the content middle class is shrinking even there.
What we should see that would address both these issues is a much larger amount of migration, within countries, and between countries. We’re seeing a little bit of this with the reverse colonization between Portugal and Angola, but we’d need to see a whole lot more. Paradoxically, both in the US and in Europe, we’re seeing much less migration than historically, and, of course, much more resistance to it.
A renewed push to simplify migration globally, maybe as part of TTIP and TPPA, could solve both these issues in one go, as the continued growth of the middle class in emerging markets, and thereby the global economy, would be pushed forward by a medium-tech workforce from developed countries who escape unemployment and early retirement. Even if unrealistic in large scale at the current time, I think we’ll see more of this as these trends all carry on, and are joined by climate change redrawing countries’ boundaries.

Quantifying the unquantifiable

60 trillion

2.5 billion years

$121/day

Lately, there has been some interesting takes on quantifying the unquantifable, on a variety of topics. We always like to see things quantified, but sometimes the result of quantifying things that can’t really be quantified doesn’t really get the desired results. For example the above numbers, they’re very hard to relate to.

First, $60 trillion. This is, according to a new study in Nature, an estimate of the cost of all the methane gas that will be released from a melting Arctic. To put this in context, this is almost the size of the world economy (the GDP of the world is approximately $70 trillion per year, nominal). This of course hinges on tons of assumptions, some of which people are already saying is wrong, but regardless, the amount is just…staggering. It should make anyone realize that our economy and life will be irreversibly changed in a not-too-far future.

Second, 2.5 billion years. This is the aggregate amount of life lost in China due to pollution. It’s a simple calculation, just 5 years per each of the 500 million people in Northern China. But when you arrive at 2.5 billion years, again, you arrive at a staggering number. That’s almost 60% of the entire life span of the earth, just by taking a fraction of the lives of half of the now living Chinese. Even if that saying about more people living on earth now would be larger than the number who’s ever lived turned out to be wrong, it still shows what an extraordinary amount of lives are on earth right now.

Third, $121/day. This is a fun one, apparently the going rate for putting an ad on your thigh. Of course, this is in Japan, where advertising has always moved leaps and bounds ahead of advertising in the rest of the world. Hard to know how they arrived at that number, it’s not really a question you can put to your average focus group. As wrong as this is overall, it also seems illogical that it is in one of the world’s richest countries that people literally “sell their bodies”, versus in poorer countries, where you could see a larger opportunity for it. Hey, Nestle! One to consider.