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Economics Geopolitics Technology

Emergence of the New five data sisters

On August 28, 1928, in Achnacarry Castle of the Scottish Highlands, there was a private appointment among a Dutchman, an American and an Englishman. If anyone knew the potential of oil, which could turn the fortune of corporations and empires, it was them. The Dutchman was Henry Deterding of Shell, American was Walter Teagle of Standard Oil the current Exxon and the Englishman, Sir John Cadman from Anglo-Persian Oil Company, soon to become BP.

With fuel-hungry ships, planes, and tanks on one side and the fast developing automobile industry on another side, when the oil became “the blood of every battle and economy”, it was these corporations that the oil men founded later known as the seven sisters, became the cartel that waged the merciless contest of money. There were times prior to the 1973 oil crisis when these Seven Sisters controlled around 85 percent of the world’s petroleum reserves.

Now let us consider the same perspective for the data. Since the time of counting, we have used information for making decisions. But it was never before this information used to be so concentrated in the hands of a five new emerging sisters. ‘Google’, ‘Facebook’, ‘Amazon’, ‘Apple’ and ‘Microsoft’. If we consider Google, there are over 100 million active users. It also has youtube with 1 billion unique monthly visitors. Facebook boasts around 2 billion monthly active users (Let alone the Instagram and the marketplace). Apple too has over 1 billion devices that are actively used around the world. Over half of the product searches happen on Amazon that has over half a billion active users. As far as the oldie Microsoft is concerned, 1.2 billion users use their product globally across over 100 countries. With Internet of things (IoT) developing, the world we survive is turning to a mine that churns out the new precious commodity data.

So what is the data that these companies are collecting from their users? They gather the information such as ad clicks, device details, email addresses, facial details, IP and location details, phone numbers, personal profile, search queries and the time information.They do it through cookies, device tracking and third party codes that we may not be much aware. We may not be even so much concerned about this information. But it makes a lot of logical sense for these companies to understand and predict the user behaviors. We will understand their power when PWC estimates the addressable market size of data to be at $1.3 trillion by 2019.

The question that whether the data is the new oil is not new. The data explosion has been predicted since 2006. There are 3 characteristics that are common for any resource that become such a powerful economic driver.

First is it’s omnipresence. If you consider the oil, it is not just a driver of our car. It is vital to the production of many everyday essentials. Oil’s refined products are used to manufacture almost all chemical products, such as plastics, fertilizers, detergents, paints and even medicines, plus a whole host of other products that you might not expect. Overall only 60-70% of the oil is consumed in the transportation sector that includes land, air, and water. Balance is consumed in chemicals and pharmaceuticals industry.

If the same parlance is taken, the mobile and smart devices that we use ever day has become the opportunities for interactions that produce customer data. The 2017 global edition of the GSMA’s ‘Mobile Economy’ report reveals that there is a 5 billion mobile subscriber base out of the global population of 7.5 billion. This is massive !!

Second is its economics. Through its extensive supply chain, the oil and gas industry employs hundreds of thousands of people and make a major contribution to the global economy in terms of global trade and technologies. Over 5-6 million people work directly in this industry globally and several million more indirectly. According to market research by IBISWorld, a leading business intelligence firm, the total revenues for the oil and gas drilling sector came to $5 trillion in 2014. 2015 estimates for global gross domestic product range between $77 trillion and $127 trillion. The oil and gas drilling sector make up between 6% and 8% of the global economy.

If we take the statistics, according to Forrester Research, Global tech industry is over $3 trillion and approximately it is over 3% with an average growth rate of over 5%.

The third is the potential for high correlation to the global economy. If we look at the correlation between the oil prices and the global economy, it is fairly complicated. The prices of the oil determine the fiscal and monetary policy of the governments.The fluctuations of its price could severely impact the corporate and sovereign ratings thus driving the investments in and out of a country. This is a direct impact on the common man whose daily life is impacted in all ways by the fluctuations of this commodity.

Similarly, if we take the impact of data, it is the dark horse that drives the consumer behavior. The targeted advertisements and customized product launches for specific user requirements are the ways to go.

But can we expect the nationalization drive that happened in the oil-rich nations will not happen again? The way in which governments responded to the 7 sisters, by nationalizing the oil resources, we possibly could see the nationalization of data. Since the new 5 sisters are extracting this resources free of cost and profiting from it, it may not be long enough to see this transformation. But I never expected that the history would repeat so perfectly.

Categories
Economics Environment Technology

Technologies in the new era of agriculture

I had been on a casual chat with my brother in law, who is running agri-business in Africa. I was surprised with the efficiency with which the agricultural economy was running and how the farmers are even using drone technology to do aerial surveillance of their farms. Curious on these advancements, I decided to do some research on the new developments in the field of agriculture.
The agriculture as a sector has a mammoth problem in hand – to feed the 9.6 billion people (as per FAO prediction) who are going to inhabit the planet by 2050. If this number is achieved by our efforts, then the food production must increase at least by 70% from the current levels. This has to be achieved despite the limited availability of cultivable lands, increasing need for fresh water and change in weather patterns that would come with the impact of climate change.
There are a few technologies that I found interesting and could change the way the food comes to our table. Have you ever imagined what is the average time for a newly harvested apple to reach to your table? One week, one month, three months..sorry! On an average, it takes around eleven months to reach your table. By that time you can be pretty sure that it is just a sugar ball rather than a fruit rich in antioxidants. So what if we could do a teleportation of such food items from one corner of the world to another corner. It is not a new Starwars movie in making.
Through the Open Agriculture Initiative at MIT Media Lab, we have made personal food computers possible. This could possibly make you and me the farmers of the future. This is a tabletop-sized, controlled environment provides agriculture technology platform that uses robotic systems to control and monitor climate, energy, and plant growth inside of a specialized growing chamber. By manipulating climate variables such as carbon dioxide, air temperature, humidity, dissolved oxygen, potential hydrogen, electrical conductivity, and root-zone temperature we will be able to yield various phenotypic expressions in the plants, means we would be able to create a “climate recipe” suiting our taste. Through this project, this information can be shared across the globe on an open architecture platform to develop customised fresh vegetable and fruit recipe.Soo tomorrow we could have an apple made suiting the crispiness and sweetness customised for our taste buds. It could potentially allow farmers to induce other abnormal conditions such as drought and saline environment producing desirable traits in specific crops that wouldn’t typically occur in nature.
Another silent breakthrough happening is the creeping of Internet of Things (IoT) to the agriculture. We have started to use remote sensing technologies to make agri-farms more intelligent – means to make smart farms or feedback farms. So how do such farms work? These farms use remote sensing technologies that would observe, measure and respond to inter and intra-field variability in crops using the data gathered from farm and crop yields, atmosphere and soil-mapping, food and fertiliser consumption and weather data and apply feedback to the support systems. Such information collection is done not just in farming, but also in livestock and fishing. There are companies such as Anemon from Switzerland and eCow and Connected Cow from UK that tracks the health of livestock and recommend live solutions to the owners.Similar technologies are coming in the fish farming too. Eruvaka from India has developed a system that would control pH, dissolved oxygen, physical composition of water thus helping the water quality to be maintained effortlessly in aquaculture.
The main concerns that could come in implementing such cutting edge techniques are the ownership of data and the issues in communicating the technicalities to the farmers. In 2000, there were 525 million farms on record, out of which not a single farm was connected to the Internet of Things. IBM expects that by the year 2025 with the same base of 525 million farms, there will be 600 million sensors in use at these farms and by 2050, there will be two billion sensors used in 525 million farms – representing a major shift towards technological advancements.
Another development that would be of my interest is the one that has been developed during the interplanetary exploration endeavours of NASA in the late 60s. Since the travel time to Mars could take a year or even longer and the space on board and the resources were limited, NASA had figure out how to produce food with minimal inputs. It involved single-celled microorganisms that used hydrogen from water and the carbon from the carbon dioxide exhaled by the astronauts and converted into a nutritious, carbon-rich crop and eventually to a meal. The types of microbes that they used were called hydrogenotrophs – nature’s supercharged carbon recyclers. These organisms created a virtuous carbon cycle that would sustain life onboard a spacecraft, thus creating a closed-loop carbon cycle.
How beautiful would it be if we can convert the increased carbon levels in our atmosphere to edible food and solve the problem of hunger? To cope up with the incoming demand of the food, I believe the modern agriculture simply cannot sustainably scale to meet that demand. We could use the existing land resources to get better outputs through the new methods of the web and dig out the techniques that could have been used for our interplanetary expeditions.
The future of food is not about fighting over what can be done and what cannot be done. The future of food is about networking the billions of farmers and the consumers and empowering them with a platform to ask and answer the question, “What if?”
Categories
Economics Environment

Economics of fashion and pollution

It is my daughter’s holy communion and my entire family was busy in getting the best fashionable attire for her. When I had the first look of the attire it was soft as silk and was magnificent. Angels would shame seeing her in that attire. As my usual practice, I was curious to know what was the material that was used for making such a beautiful attire. The content list detailed it out as 70 percent polyester and 30 percent silk. I did not take it much seriously when I saw the attire. But over the evening, I just thought of checking out what is the impact of such synthetic fashion polymers on the environment.

Over the past few decades, there has been a major shift in the materials chosen by manufacturers, designers and consumers for the clothes they are going to work and wear. There were times when we had created trade routes for the finest silk. We also know how cotton played a central role in shaping the modern social and economic institutions including the United Stated of America and the United Kingdom.

Since the arrival of NYLON the first synthetic fibre, fifty years ago, synthetic and man-made materials have taken centre stage. As of now, industry is filled with polyester, acrylic and nylon. The shift is not irrational. Synthetics are cheaper and easier to produce in large quantities. Even though these materials are good for the bottom line, it is damaging the environment in a big way. Considering a number of pollutants expelled by the clothing and apparel industry, from the estimates of Forbes, the industry is responsible for over 10% of global emissions, an estimate that gives an idea of the grand scale we are talking about.

The plastics are made from the petroleum gases and petroleum liquids, which are by-products of petroleum refining. As per rough estimates by OPEC, in a single year, almost 70 million barrels of oil are used in the manufacturing of polyester alone. This includes the consumption of oil both as a raw material and as fuel to generate the necessary energy used in the process. Globally we consumed 100 million tonnes of textiles in 2016. In that, over 65 million tonnes were petroleum based. As highlighted in Elizabeth Cline’s Overdressed: The Shockingly High Cost of Cheap Fashion, this quantum of production requires 145 million tonnes of coal and a couple of trillion gallons of water.

On the consumption side, in developed economies, it is estimated that each consumer buy anywhere between 60-70 garments every year and in developing economies it is around 20-30 garments and possibly in underdeveloped countries it may even be 0-5 too. This wide disparity of the fashion is supposed to encourage us for recycling the clothes. But do we do so?

According to the Environmental Protection Agency, 84 percent of unwanted clothes in the United States went to either a landfill or an incinerator and not to recycling. What is the impact? If we are talking about natural fibres, unlike banana peels, these natural clothes can’t decompose. The chemicals used in bleaching, dying and printing leach from the textiles and improperly sealed landfills into groundwater. The incinerators also release toxins into the air. The agency estimates that if the trashed textiles are put into a recycling program it be equivalent to taking 7.3 million cars and their carbon dioxide emissions off the road. The synthetic fibres, like polyester, nylon and acrylic on the other end take hundreds of years, if not a thousand, to biodegrade.

After this understanding, I am not so sure whether I should be in shame or the should believe that the angels would shame.

Possibly the closed-loop textile recycling could be an answer where the technology will enable a circular flow of resources in textiles. If we could separate blended fibre garments, dyes and other contaminants thus producing fibres comparable in quality and price to that produced from virgin-derived resources, the technology could be revolutionary. Tomorrow may come where we could get a discount on purchases for returning our own worn garments and could get fresh fashion made from old fashion.  Adidas, Levi’s, Nike and H&M are leading this game and would be the firms that could impact the future of what we wear and not the traditional Prada, Burberry and Gucci.

Categories
Economics Technology

Universal Basic Income – all pay and no work

How do you feel when you get paid freely for doing no work? In my previous post, we had discussed the possibility of Universal Basic Income (UBI) proposed by Thomas Paine – the price tag that we have given for the new era of the unemployed because of the emergence of automation and technology. It may surprise you to know that a partial UBI already existed in Alaska since 1982 and that a version of basic income was experimentally tested in the United States in the 1970s.

So let us understand the dynamics of universal basic income. A study, released by Oxfam, showed that just 57 billionaires in India have the same wealth as that of the bottom 70 percent population of the country. To give a global perspective, just 8 billionaires have the same amount of wealth as the poorest 50 percent of the world population. This statistics gives the extent of global income inequality. Now wonder we have just 32 million of 3210 million population of the world owns over 40 percent of the world wealth.

Anyway, what is the need of this universal income? It is predicted that automation will create nearly 15 million new jobs by 2025, but at the same time, wipe out nearly 25 million. The 10 million who is going to lose the jobs in the process would be the people who would find it difficult to upgrade their skills or those who are too old to switch the jobs. But how would they survive? Will the world of technology be morally responsible for supporting them?

Even some of the biggest technology tycoons including Elon Musk who are talking about changing the world for the better seem deeply concerned on what the very same technology could do to jobs in the long haul making universal basic income “necessary.” It is not just the individuals who are concerned about this. The entire political spectrum is concerned about this huge income disparity. The idea of unconditional or universal basic income is like social security for all. The cause of this thought is not just from the rising income inequality arising from technology dominance. It has the origins from the decades of stagnant wages, the transformation of lifelong careers into sub-hourly tasks, and world-changing events like Brexit and the vision of Trump. All of these concerns are pointing to the need to start a permanent income guarantee for everyone that could take care of the basic needs of an individual.

How will this make sense in the new economy? If we look at the operational aspect of this concept, it is a negative tax. An interesting process in which those earning below a certain point are given an additional income, and those earning above a certain point are taxed on additional income. To cut it short, even Ambani would receive the same amount as a person below the poverty line. Only difference it that Ambani will pay far more than that amount in new taxes for the government to pay for it.

But what about people then choosing not to work? Isn’t that a huge burden too? It is an interesting topic to debate. Let us look at implementing this in a developed market like the US where the data is handy. According to Gallup in the US, 70% of workers are not engaged in what they resulting in a productivity loss of around $500 billion per year. With UBI coming in, this disengaged workforce will say “no thanks” to the labour market enabling an opportunity for the rest of the people who want to do the jobs they want. The result is a transformed labour market of more engaged, more employed, better paid and more productive workers. Fewer people are excluded, and there’s perhaps more scope for all workers to become self-employed entrepreneurs. In addition, there are proven positive effects on social cohesion and physical and mental health.

Based on the evidence we already have and continue to build with the trial run of such a scheme in Mongolia, Finland and India, I firmly believe unconditional basic income as a new equal starting point for all. For resource-rich countries like Kuwait and Saudi Arabia, it will be an efficient method of utilisation and transfer of resource incomes. For populated countries like India and China, it will help the reduce the leakage of subsidies provided by public welfare distribution.Lastly, in developed economies, it will compensate for the advances in artificial intelligence, robotics, and other technologies that have questioned the future of work.

In addition, there are proven positive effects on social cohesion and physical and mental health. Based on these evidence we already have and with the trial run of such a scheme in Mongolia, Finland and India, I firmly believe unconditional basic income as a new equal starting point for all. For resource-rich countries such as Kuwait and Saudi Arabia, it will be an efficient method of utilisation and transfer of resource incomes. For populated countries like India and China, it will help to reduce the leakage of subsidies provided by public welfare systems. Lastly, in developed economies, it will compensate for the advances in artificial intelligence, robotics, and other technologies that have questioned the future of work.

If things work out as planned by the governments, we might have a better place to live with more equitable distribution of wealth.

Categories
Economics Fintech

In search of efficiency – financial exclusion and technological unemployment

Every day we hear about the firms that try to make the world a better place. The new age technology firms want to erase the sources of inconvenience and delay that irritate their consumers. Every time I take the ride-hailing services of Uber to avoid the waiting time for taxis, the Book my show to avoid the queues in the cinema halls, and pay through PayTM to avoid the inconvenience of cash, I always hear about operational efficiency. Such applications claim to bring convenience for the users and run campaigns on their ethos of innovations.
But are they sincerely doing what they are supposed to solve? Do the end users need such innovations? Do these product innovations eliminate too much of hassle? In short, are they aiding society rather than harm?
Let us take a recent economic hype created by the politicians and central bankers – the demonetization. When I went through the pain of demonetization, I realised that it is not just Indians who are suffering through the pain of cashless economy. This time when my quarterly debit card statement came, I scrolled through it. To my surprise hardly there was any cash debit from my account. Enormous emphasis is placed on improving online infrastructure and online activity, particularly in the Banking and Finance sector. When we are moving so aggressively to the presence-less, paper-less and cash-less economy, we tend to forget a few fundamentals.
Many of us are happy to tap cards or phones to get to a taxi, buy a coffee or pay for groceries. But it raises the prospect of a time when we no longer carry any cash at all.
This results in no spare change for the busker on the streets, the person sleeping rough in need of a hot drink, and the donation box. This might be the rise of a cashless nation that would be mean with street vendors, small merchants and the poorest inhabitants who cannot afford the instruments of so-called convenience. It may so happen then we may further divide the mainstream society based on such media of convenience – The traditional and the modern. The societies that are in dearth need for the financial inclusion may put pressure on the same traditional who are to be banked and signed up to the financial system through financial inclusion. Many of such poorest traditional are likely to remain outside of that system creating a bigger danger of financial exclusion.
In a keynote delivered at Mobile World Congress by Ajay Banga, Mastercard’s CEO spoke about the growing global risk of creating islands, where the unbanked traditionals transact only with each other. According to Fung Global Retail & Technology, even in Sweden and Netherlands that could become the world’s first completely cashless society, significant enthusiasm gap has emerged between the traditionals and the moderns.
Now let us look at the second aspect of automation and convenience. To give a perspective, a report put out in February 2016 by Citibank, in partnership with the University of Oxford, predicted that 47 percent of US jobs and 35 per cent of UK jobs are at risk of automation. In China, it’s a whopping 77 per cent, while across the OECD it’s an average of 57 percent. And three of the world’s ten largest employers, Foxconn, Walmart, and the US Department of Defence, are now replacing their workers with robots.
Predictions that automation will make humans redundant have been made before. During the Industrial Revolution textile workers, protested that machines and steam engines would destroy their livelihoods. The difference between the previous waves of automation and the current one is that workers had the option of moving from routine jobs in one industry to routine jobs in another in the earlier. But now the same data techniques that allow companies to improve their marketing and customer-service operations also give them the raw material to train machine-learning systems to perform the jobs of more and more people.
Are these developments leading to the concept of Universal Basic Income proposed by Thomas Paine, the 18th-century radical? Is this the price tag that we have given for the new era of the unemployed? Need to wait and see how the technologists, governments and central bankers would tame this problem.
Categories
Economics Technology

Agglomeration through hyperloop transport

A few months back I had been to a prominent hospital since my dad had to undergo an orthopaedic surgery. During my stay at the hospital, I got quite accustomed with the staff and they showed me an uncommon tranport mechanism. It moves the patient’s blood samples and prescription medicines across the hospitals through Pneumatic tubes. They are systems that propel cylindrical containers through networks of tubes by compressed air or by a partial vacuum. Even though it is an age old technology, of the late 19th and 20th century, I was impressed with the precision and the swiftness of the transport. Can such an integrated system be the framework of our future transport? Can this be the older working model of the proposed hyperloop powered by pneumatic energy?

Since the introduction of trains and cars in the early 19th century, nothing much has changed in the industry. We still rely on the modified forms of such transport mechanisms. But is the future going to be the same in the coming decades?

The transportation sector as we see it is around 5 trillion dollar industry. In the next few decades, it will be one of the industries that may see innovations. Such innovations could include driverless cars and public transports, intergalactic or interstellar travels and hyper loops. The hybrid of a Concorde and a railgun and an air hockey table – the hyperloop is expected to take the centre stage of this transformation. Even though it is not an innovative concept, the idea has gained enough of traction. Even India plans for its working hyperloop in the coming decade!  The first outlay is expected from New Delhi to Mumbai in 70 minutes flat, or three times faster than a commercial flight (a max speed of 760 miles per hour). The pilot funding of expected at $120 million. On the revenue side, a single tube could carry 1.44 lakh passengers daily at 40-second intervals with an average ticket price of under Rs 600 (around 10 dollars).

So how does it work? According to Elon Musk, the propounder of the system, it is a tube over or under the ground that contains a special low-pressure environment. The cars are propelled through this tube with high-speed fans that would compress and push the air for their propulsion. These cars would be floated in the chamber with Air bearings that would make these capsules to levitate in the tube to reduce friction. The entire system will be driven by solar power.

Now let us look at the economics of this transportation system. According to World bank the per-mile cost of building this loop is pegged at around $40 million per kilometre compared to High-Speed rail project at $56 million per km.

Can this technology play a bigger role to play in the future of freight transport too – an industry that powers the global trade? Given that we’re planning to move containers and pallets on-demand at speeds far in excess of today’s rail and highway options and far less expensively than by air freight, an integrated framework of such seamless nodal transport would be the future of not just human transport but of the goods too. This will reduce the inventory costs and have a better supply chain around each nodal city. Technically this is mentioned in economics as agglomeration – clustering of people and firms. This can lead to more innovative delivery mechanisms of medical/perishable goods and motivate regional economies for greater specialisation, thus reducing the overall cost and quality of global freight transport.

Categories
Economics Technology

Future of organ transplantation

A few days back, I came to know about my cousin in his 40s who is planning to get his kidney transplanted. He had an acute kidney failure because of his lifestyle and was waiting for a kidney from a donor. I was disappointed by seeing his pain and the inconvenience caused to him by dialysis. This is not just one story, we have millions waiting across the globe for organ transplantation.

Humans have around 10 different organs in our body that can be transplanted. These include kidneys, heart, liver, pancreas, intestines, lungs, bones, bone marrow, skin, and corneas. As per the Donate Life Foundation, 80% of the global organ demand constitute the kidneys with an average wait time of over 3 years. In 2016, for the first time, the organ transplants performed in the United States alone crossed 30,000. But, as we speak approximately four times of that number still awaits lifesaving organ transplants. Furthermore, around 22 people die every day waiting for an organ. From an Indian perspective, 5 lakh people across the India die each year due to non-availability of organs. One out five need a liver, but only one in hundred receive it. Two out of five need a kidney, but only one in twenty receive it.

Even though 8-10 brain dead potential donors are available in Intensive Care Units of any major city hospitals around the globe, the taboo of the donation still constrain the effectiveness of donation. Can the new stream of tissue engineering change the fate of modern demographics?

Yes. The fundamental change of making synthetic organs is going to allow the ageing population of the world to work until a later age before taking their pensions – an imminent concern both in developing and developed countries. The stunning fact is that the majority of the organ transplants are happening over 40 years of age.

To give an economic perspective, today almost one in ten are over 60 years old. By 2050, one in five will be over 60. On the other hand, when we consider the state support for the non-working age population, in 1950, there were 7.2 people aged 20–64 for every person of 65 or over in the OECD countries. But by 2010 this support ratio fell to 4.1 and is projected to reach just 2.1 by 2050. This demographic shift will put undue pressure on the working age population. To avoid this scenario, the option left for the government is to reduce the support to older demographics. This will force the old age population to remain fit and healthy and thus remain productive up to an age over 80. This leaves the septuagenarians and octogenarians to maintain a healthy lifestyle and if required replace the damaged or non-functional organs with fresh ones which would be available both from donors or through tissue engineering. Since we have seen a macro perspective of donations, let us see how tissue engineering is going to solve this problem?

Right after identifying the pluripotency (ability to develop to different organs) of stem cells after cloning Dolly, bio-engineering has gone to a different level of creativity. A few days back, Organovo world’s first publicly traded 3D bio-printing company, announced the medical success of the bio-printed liver and kidney with promising results. Like the complex, multi-cellular tissues found within a person, these human tissues are created through cell division; they mature and integrate into the tissue, forming connections with surrounding cells and contributing functionality throughout their lifespan. As individual cells within the tissue age, they eventually undergo cellular senescence and death—much as they would in a living tissue inside the body. This is the ultimate approach to the shortage of donor organs – manufacture and transplantation of bio-artificial organs. The latest trend is the chimaera – a mixture of cells from more than one species growing together as a single animal – resulting in human organs being produced in other animals. By perfecting the art of growing such chimeric replacement livers, kidneys and pancreases inside the animal hosts, the organ shortage may end. It may so happen that we may be ordering a homo-porcine kidney on Amazon soon by end of this decade.

Categories
Economics Technology

Economics of digital branding – recommendation algorithms

Not so long ago, I remember when I bought my first car. I methodically jotted down my priorities and all the available choices. After several discussion and debate with my better half, I arrived at the one that best met my requirement. I met a dealer in my area and he made the deal. Though it was quite simple then, the new era of digital sale is not the way it used to be. Does this decision of selecting my car getting transformed in the digital era by algorithms?

Today almost all the consumers have become promiscuous on their brand because of the choices available for them. This is just not the case with the brands that we buy every day but even with the brands that we aspire to buy in future. Today’s customer has the option to connect with myriad brands—through new media channels beyond the manufacturer’s and the retailer’s control or even knowledge—and evaluate a shifting array of them, often expanding the pool before narrowing it. After a purchase these consumers may remain aggressively engaged, publicly promoting or assailing the products they have bought through social media collaborating in the brands’ development, and challenging and shaping their meaning. This constitutes the digital identity of the brand. There are three basic elements to the brand identity. The first one is the value the product or the promise that the product tries to fulfil. The second is the aesthetics or the design element of the product. Finally, the fulfilment, which constitutes the economic model of the entire supply chain. These are the factors that structurally drive the information about a brand on the digital environment. This information with the inputs of recommendations that are provided by the digital media forms the basis of our decision making. In such a case, the choice that we make is our own or driven by someone else?

For example, today we have the youtube channels where a child un-box toys to the delight of toddlers around the world (The Ryan’s toy review) and a Swedish gamer with millions of teenage fans (PewDiePie), running one’s own virtual TV channel with multi-million followers and a few billion cumulative views. Have you ever wondered how they get to the top echelons of viewing? – The trick is done by the internet channels through suggestions or recommendations customised to you. The brain of such channels is – the recommender algorithm. The pioneers of this technique are the early adopters of this technology such as Apple, Facebook, Google and Microsoft which help them to make into the top 10 of the world’s most valuable brands. These are the companies that we touch, speak and feel every day and decide what we consume. If you really think the word of mouth marketing is gone, it is not. Today’s word of mouth is the social media. The key reason why the social media giants such as Facebook and Snapchat are so valuable is just because they are the identities of the new digital human.
The recommendation algorithm is used in a variety of areas including movies, music, news, books, research articles, search queries, social tags, experts, collaborators, jokes, restaurants, garments, financial services, life insurance, romantic partners (online dating), and you name it, it is there. The social media platforms and the e-commerce sites analyse the user’s past behaviour based on the links the user had clicked or the products he had purchased and similar decisions made by other users. This recommendation system can either constitute a top-down approach, in which the broad interests of the user is captured on a regular basis and then compared against the behaviour of other users. The recommendations to the user will not only include his interests but also interests of his peer groups. This is a collaborative approach and is the way google works. Using the huge user base it has google applies recommendations across its platforms. So now you know why once you play a specific video, you get similar videos on youtube.

The other option is a bottoms up approach by identifying the attributes of the product recommended in a standardised form (i.e., the key parameters of search) and identify similar products based on the defined attributes. A nice example is the music genome project. The project gets into the essence of music at the most fundamental level. Over 450 attributes such as gender of lead vocalist, prevalent use of groove, the level of distortion on the instruments, type of background vocals, etc. are used to describe songs. These attributes are mapped to the user preferences to make musical selections of a certain genre based on the user’s preferences. The output is the patented music streaming service powered by the music genome project the Pandora Internet Radio. The movie databases such as Rotten Tomatoes and IMDB also uses the same technique.

Obviously, there has to be a hybrid approach. Netflix uses this approach. It makes recommendations by comparing the watching habits of similar users as well as by offering movies that share characteristics with films that a user has rated highly. This recommendation technique is now extensively used on internet-accessing smart-phones also for GPS navigation and location based services.

But what is the flipside to these recommendation algorithms? They will take off adventure and serendipity on our choices. These algorithms will slowly discourage exploration. Soon there will be a method to the madness and the human behaviour will become more predictable. Amazon will suggest similar books to you, Netflicks will show you the similar movie, SoundCloud will play the similar songs and obviously you will end up taking the same route to the office. So who wins in the end? It would be these internet giants that control the users and their preferences. These goliaths will be able to muscle with the sellers, (I would say the car company, that want me to but the car in future) who want to access the users through their platform. So it is neither me nor my car company that would benefit. It is the broker that wins. This will catapult the oligopoly of our internet companies that touch our daily lives to a different level – driving them to not billion dollar enterprises but trillion-dollar enterprises.

Categories
Economics Ethics Technology

Economics of bodybuilding – the new bot

The best story that I had heard for the week was that of an “aspirational” techno geek of Hong Kong who made a Scarlett Johansson (ScarJo bot) clone. I mean a robotic clone. Though this bot can be the future of objectifying women, I would be happy if I were greeted by one of them when I step into a hotel (which I cannot say in front of my wife, though). But what have we achieved so far from the bionic technology? According to the creator of the ScarJo bot, it took eighteen months and just over $50000 to complete this amazing project in his patio with a 3-D printer and the self-learned software. Moreover, our Siri is a woman and our Cortana is also a woman! On a lighter note, if a bot would exist to perform labour or any personal assistance, I bet it would be a woman and I felt it is so obvious with our physiological and evolutionary requirements.

But what is bionics? It is defined as anatomical structures or physiological processes that are replaced or enhanced by electronic or mechanical components, which would assist in acquiring extraordinary powers or capabilities of being superhuman. Bridging the gap between man and machine, once a science fantasy is now a global industry.

In the age when Europe is lacking people to work in their fabulous factories and China thrashing up its one-child policy considering the exploding old age population, do we need to think an alternate through the bionic humans powered by artificial intelligence? Tomorrow I might have a bionic human in the family – a  cybernetic organism (a cyborg) that knows more about me than I know about myself. These organisms would be a complex hybrid system (may be living or non-living, I am not sure how we will draw the line between living and non-living) combining biological and engineering parts. With the current technology that could control the limbs with the thoughts alone, just as the way in which our limb performs, the extended application of such a technology is limitless. As I had always dreamt during my examinations about getting the access to my classroom notes just through a pen drive plugged into the brain, I believe this possibility is not as far as we think. In future, except the logical decisions that we could take considering the information available, the rest of the data can be loaded and unloaded to the brain as we need.

From the time when amputated humans were assisted with the twigs from the tree to the intelligent eyes that helped the blind to understand the colours of the world, we have made an immense progress in bionics technology. In the new era of the machines when humans are required to satisfy the social and physiological needs of humans, we could see a transformed era of bionics which can reduce the impact of ageing and make the older more mobile. Will this increase the retirement age? Need to wait and see.

As the elderly population grows so is the global bionic industry. Extending the life of ageing limbs and the functioning of the damaged ones, in the next 5 years, this industry is expected to grow over 20 Bn., unless there is a disruptive breakthrough. If such a breakthrough happens it will be much bigger. By 2050, it is expected that the elderly population of the world would be around 16% (around 1.5 Bn.). In developing countries such as  China, the older population (those over age 65) is likely to swell from 110 million today to 330 million by 2050 and that of India from 60 million to 227 million. The key problems for the elderly include the lack of mobility and the companionship. If the new bionics age is able to address these growing needs of the population, it would be the next game-changing field for the years to come.

The bionics will also level the playing field between the physically challenged people and the common human. More than 1 billion people have some form of disability. This corresponds to about 15% of the world’s population. The key disabilities for them are related to the vision and the mobility that are being addressed as we speak. If such new technologies become scalable and mass production of these inventions are achieved, they would turn out to be a boon for the amputated and disabled.

Another possibility is to look at the need for a mechanised organ that could be developed through the technology. The current transplantation covers only 10% of global need. Either the world has to move to an organised organ market to kerb the black market of the organ smugglers or it should find a biological or mechanical source through technology to build a stockpile of bionic organs that would address the growing global organ demand.

So we should be ready to accept a new family member, who could help us in our old age and possibly a limb or an organ that would be a machine to be part of our aura. The blend of man and machine of the future would be a necessary transition for the generations to come and thus see ourselves as civilised and rational cyborgs.

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Economics Technology

Is the future of food we eat is still a mystery ?

After celebrating the new year, I decided to give my wife a break and hence devour in one of her favourite restaurants. We went to a Japanese restaurant and ordered grilled meat Yakiniku, one of the full-fledged Japanese steak. When I asked the manager about the quality of the meat used in the steak, he conveyed to us that the restaurant uses meat only from sustainable sources. I smiled at him and started to think what would define the sustainability of food consumption, especially meat. I started to wonder how the food platter will look 20 years from now? In the modern era of culinary laboratories such as El Buli and fine dining chefs from Michelin’s, where we refine the science of gastronomy, should we be a little more sensitive about the methods of sustainable agriculture?

Let’s explore how as a human race, we have mastered the techniques of the production and consumption of food. If we take the case of arable land,  one-third of such land is used for agriculture and 70% of that land is used for growing only meat. Is this an efficient way to harness the productivity of nature? On the consumption side, we are doing a commendable job. The world’s population is predicted to hit 9Bn by 2050 and the food demand is expected to increase at least by 60% for cereals and 85% for meat (according to World Bank). How would we satiate this enormous appetite for food?

The post-world war agricultural development in developed countries and green revolution (not so sure whether we should call it a red revolution or green revolution), which encouraged the insensitive use of fertilisers and pesticides in agriculture, have contributed one-third of freshwater pollution with elements such as phosphorus and nitrogen. The insensitive usage of hybrid and GM crops has extinguished the local varieties resulting in soil degradation and sky rocketed sales for the Monsantoes and the Potashcorps of the world. The highly acclaimed “positive effects” of these changes are levelling off in terms of production and pests are getting increasingly resistant to disease. Taking into account the current production rates, our current agricultural output will not meet the projected demand of the world.

Moreover, it would be an amazing fact to note that around 50% of the antibiotics are used in the cultivation of crops and rearing of livestock, not on humans for which they were intended for. By the way, these antibiotics are not being used to fight diseases that spread among animals but to increase their weight, ensuring higher meat output. Interesting paradox !!!

Water stress and desertification that have been the results of global warming are reducing the amount of arable land available every year. Dramatic changes in the consumption patterns of protein rich food in emerging economies such as China and India are going to catalyse the slaughter of livestock day by day. Another interesting anomaly to note is that 20% of food produced or harvested is lost owing to insufficient processing, storage and transport. To give a perspective, every day around 4.4 million apples, 5.1 million potatoes, 2.8 million tomatoes and 1.6 million bananas are thrown as waste. This is not just a waste of produce, but also is a loss of the factors of production.

So how would future generations address these problems? It would be interesting when our kids get us bugs for a protein rich diet. Are we ready to accept the bugs instead of beef?

Even though Creative ideas like Lab-grown meat, 3D printed food on request and the meal in a pill are still in the labs with exorbitantly expensive bills, such technologies will be the way forward for coming generations.  The concoction of algae and living tissue from a livestock currently brews in a sugar scaffolding at a cost of US$32500 to make a piece of burger sized meat. Can the brew be a little cheaper on a larger scale? Something yet to be seen.

But another alternative that can be seen in future could be vertical farming. When the technology becomes more efficient, the current industrial and technology districts may alter it’s size and shape to semi-agricultural factories producing year round produce or carniculture through indoor farming. Even though we haven’t been able to perfect the formula for baby milk since last 200 years, we would be forced to perfect the formula for a meal in the pill if that could partly solve the instant food problem for the rich.

What would be the economic impact of these technologies?

The current consumption of meat is over 200 pounds per person per year in US. (In India, it is just around 6 pounds). It is estimated that around 200 gallons of water are consumed in the process of making a single pound of beef and around half of it is consumed in the process of making poultry. If there is a shift of the Non-vegans in developed economies to any of the alternate sources of protein, the process will have a huge impact on the economics of natural production of food.

If we consider the alternative to eating “cold-blooded bugs”, a change synonymous to the shift of our generation from incandescent bulbs to LEDs, the future food platter would be more sustainable and nutritious. The process of manufacturing bugs consumes so less energy and a lot less land considering the factors of production for other sources of food.

May future generations consider options such as having bugs instead of beef and a deeply learned computer controlled vertical farming, that reduce water usage through hydroponics, thus reducing greenhouse gases.

Hail the kids who would decide that for us !!