Category Archives: Economics

Should Robots Be Built To Feel Pain?

My latest article on Impakter, just published, about AI and how we should organize our future with sentient machines. Should we build them to feel pain and other emotions? What is the point of it? What are the dangers?

 Neku – Robot Lover Song (Featuring Aline) in Youtube video

What is the role of pain in our lives?  Pain, we can all agree, is unpleasant, both physically and emotionally. Pain acts as an alarm when faced with danger. Pain can be excruciating, tragic, the forerunner of death. In short, when we feel pain, we feel more alive than ever. Now that robots play an increasing role in our society, should we design robots as sentient machines with the ability to feel pain?  

Robots are everywhere in manufacturing, in agriculture, in transport and distribution, in communications, in the home. And they appear not just as androids like the famous science fiction author Isaac Asimov visualized 75 years ago, but in a vast range of devices, from autonomous vacuum cleaners to whole factory production lines and military drones.

Arguably, it might make sense to endow some of them with the capacity to feel pain in situations where it could help the machine foresee a threat and save itself from possible damage. But should it be endowed with merely a series of physical reactions demonstrating pain or should it feel it as an emotion the way we humans feel it?

When a machine feels pain, will it cry?

Or an equally valid question: should it cry?

The question of whether robots should feel pain may sound futile, but it’s not. With advances in computing power, particularly with quantum computing just around the corner, we are close to being able to create robots with General Artificial Intelligence. Not just a specific ability like beating human champions at difficult games like chess and Go, but a “general” intelligence that could lead soon to the dreaded Singularity, the point where Artificial Intelligence will surpass human intelligence.

In short, we are headed towards a world where science fiction meets reality, where our planet hosts two types of “sentient machines”, us and the robots.

How to Organize a World full of Sentient Machines

Scientists have been working on this for several years, notably Beth Singler  and Ewan St John Smith, both at Cambridge University.

Read the rest on Impakter, click here

Find out about our future with robots. Should love and sex be part of it? Let me know what you think!

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Filed under Digital Revolution, Economics, politics, science fiction, Sociology, Tech

Universal Basic Income: Why It’s Not The Solution


My latest article on Impakter, here’s the start:

M-Pesa station in Kenya, 2019. This mobile service greatly facilitated GiveDirectly’s experiment

It’s become conventional wisdom that technological progress destroys jobs but also creates new ones balancing out the loss after a painful period of adjustment. Painful for those out of a job who are too old or unable to learn new skills. It’s also conventional wisdom that with the tech revolution unleashed by Silicon Valley, this time will be different. That the jobs destroyed by Artificial Intelligence (AI), by computers and robots, will never be replaced. Tech entrepreneurs, like Elon Musk, Mark Zuckerberg and Sam Altman in the lead, and a growing number of politicians and social scientists, are however confident that they have a solution: Universal Basic Income (UBI).

Is UBI really a solution? And how serious is the disruption caused by automation of tasks and are most jobs left for humans only the low-paid ones in personal services? Is there another, better solution?

Here, I will argue that the disruption is not likely to be as devastating as predicted in most current studies with scary titles like “How The Robots Will Take Away Your Jobs and Kill The Economy”. And in any case, there’s another, better solution than UBI: Supplementary income to top up the difference and make non-automated jobs pay better. Call it: Utility-Added Income (UAI) – because it would recognize the utility (the value, the usefulness) to the whole community of jobs that are undervalued by the market in an AI-filled world, like personal services, nurses, care-givers, teachers.

So, in an AI-filled world, are we facing a devastating disruption in the job market, with permanent unemployment for the majority of humans? To be fair, not all tech titans and artificial intelligence experts think a tech Armageddon is around the corner.

One famous scientist, Fai Ku Lee, thinks otherwise. He developed the world’s first speaker-independent, continuous speech recognition system as his Ph.D thesis at Carnegie Mellon. This is a man worth listening to, he knows what he’s talking about, he once worked for Apple and Google and is now a successful Chinese venture capitalist based in Beijing, helping China become a leader in AI. He is also a best selling author and in the closing section of his latest book, AI Superpowers: China, Silicon Valley, and the New World Order, he explains how  creativity and compassion are the key to creating lasting and non-replacement jobs in an AI-filled future.

The Explosion in UBI Experiments

Fai Ku Lee’s reassuring words notwithstanding, people are in a panic. There is a plethora of UBI experiments around the world, as this map (updated to 3 April 2019) illustrates:


UBI experiments in progress and planned around the world April 2019

In the U.S., UBI research is fast becoming serious business. Four Stanford graduate researchers are currently setting up a platform to map UBI research that should come online soon in 2019. The aim, as they explain,  is “to provide pertinent summaries of articles, research papers, books produced on UBI to date, highlighting important findings from each and ensuring that core areas such as health, crime, stigma, childhood poverty and gender equity are covered”.

There is even a UBI Cities Toolkit called Basic Income In Cities: A Guide to City Experiments and Pilot Projects. Launched in early November 2018 at the National League of Cities annual meeting, the toolkit highlights emerging practices and shares insights on the process of designing UBI experiments “in ways that are ethical, rigorous, informative and consequential for local and national policymaking”.

Unquestionably, even if some people like Fai Ku Lee see a silver lining in the AI revolution, most experts do not and the world is on a UBI research binge.

The most advanced experiments are in Finland and Kenya. Let’s take a look at both. Note that I’m not including here the “redditto di cittadinanza” (citizen’s income) that the populist Italian government started distributing last month because  it hasn’t been set up as a UBI experiment with a control group. It’s merely political pork to fill a 5 Star Movement electoral promise. But even the best of UBI experiments have not given satisfactory results, and here’s why.

What’s Wrong with UBI Experiments

To find out what’s wrong with UBI and what my proposed solution is, please go to Impakter, click here. If you have a minute to write a comment either here or on Impakter, please do, I’d love to hear what you think!

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Trump’s Trade Wars: The End of American Supremacy?

Today Trump opened another battlefront in his trade wars, with duties slammed on Chinese goods worth $34 billion. Expect China to retaliate with counter tariffs on US imports. China’s commerce minister was quick to announce: “China promised to not fire the first shot, but to defend national core interests and the interests of the people, it has no choice but to strike back as necessary”. A few hours later, China filed a complaint with the World Trade Organization, its second one.

Conventional wisdom has it that nobody wins from a trade war. Is it wise to ignore it? Trump has no doubts, he is convinced his trade wars will Make America Great Again.

This reminds me of the Italian captain who sank his own boat out of bravado. Remember Captain Francesco Schettino who famously sank the Costa Concordia cruise ship off the Italian island of Giglio in January 2012? He did this serenading a pretty lady in the dead of night, showing off his ability to sail close to the rocks. The ship hit the shore, capsized and 32 passengers and crew died.

Think of that beautiful cruise ship as a metaphor for the international order that America built after World War II, ensuring peace and prosperity through, inter alia, global trade. Now, Trump, like Captain Schettino, is steering the world ship towards the rocks while serenading his base:

Extraordinary. Watch how Trump’s audience looks enraptured, captivated by his show. And the numbers Trump throws around are totally out of context. Consider what he says of Canada, referring in a tone of outrage to a 275% tariff barrier. As if US farmers don’t have access to Canada’s markets because of it.

Is that the case? The fact is that 275% tariff barrier (which is indeed outrageous) only concerns a very small section of the market, milk and milk products. On average, trade barriers with Canada, as with all other advanced countries, are very low, around 2% to 5%. Not really enough to drive imbalances in trade.

The Real Causes of US Trade Deficits

US trade deficits have other causes, and they are nothing new. They’ve been going on since the 1960s, arising mainly from:

The rest on Impakter, click here and let me know what you think!

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Filed under Economics, politics

Trade War with China: Who Wins?

We are now facing an escalating trade war between the US and China – started by the US. The question is: can the US win? And what will it cost the world?

It is worth listening to Carlos Gutierrez, co-chairman at Albright Stonebridge Group, a major global corporation and former U.S. Commerce Secretary who spoke on 18 June on “Bloomberg Daybreak: Americas”:

He reminds us that the free-trade agreements that have been brokered since the 1980s are not as bad as Trump would have it: they have consistently given the US a surplus. The point is: There never was a similar agreement with China. And he doesn’t mince words in describing the dangers for the whole world. He urges restraint.

Clearly Trump is not listening. A few hours after Gutierrez talked to Bloomberg, Trump had threatened an additional 10% tariffs on another $200 billions worth of goods:

Trying to answer the question of “who wins a trade war”, Bloomberg has rounded some major experts asking them what they thought. While the answers are interesting, they all focus on the short term and unfortunately don’t go beyond are the framework of classical economic analysis which overlooks geo-political factors:

  • China has limited room to retaliate in a trade war escalation: It only buys $130 billion worth of American goods while the US deficit with China runs to $375 billion; this is a “high stakes game of poker” and “China will run out of U.S. imports that it can hit with tariff countermeasures long before the U.S. does” (Rajiv Biswas, IHS Markit Singapore);
  • China needs to open up to global innovation and investment: “both China and the U.S. and other countries can really benefit from this Made-in-China 2025 strategy” (William Zarit, chairman of American Chamber of Commerce in China);
  • This is creating a “perfect storm” for China’s export Industry: it’s not just Trump’s tariff war but also the probable US Senate ban on ZTE, the Chinese electronic producer that Trump wanted to save; such a ban would  stop it from importing the American chips it needs for its phones and other products, hitting at the very heart of Made-in-China 2025 strategy;
  • There will be winners and losers, for example, China will need to buy agricultural goods from other sources than the US and that will benefit countries like Australia and Brazil; many Asian countries that are part of the China value chain will be hit.

Instead, to evaluate the dangers from a trade war, we need to look at the longer term and more broadly to geo-political factors. And here, the picture is not so reassuring.

The trade war with the US is but a battle in a much larger war. A battle that surely hurts in the short run, but will leave China victorious in the long run. Because China has acquired the “soft power” weapons to win.

Forget the Trade War: China’s Soft Power is Poised to Conquer the World

What has been happening since Trump took over the White House is this: A political void has been created, a void in world leadership that China is eager to fill, and most likely will.

Consider the facts.

Read the rest on Impakter, click here.

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Trump Watch: G7, the Gig is Up!

The G7 fiasco was not entirely a surprise, but the extent of the damage done is stunning. Here’s my assessment of the future of the G7 (it’s coming up against China-led Shanghai Cooperation Organization that met at the same time as the G7!). The article is on Impakter, here is the opening:

This G7 was like no G7 ever since it was founded in 1997.  Even before leaving for Canada, Trump rocked the boat, suggesting the G7 should be a G8, with Russia back in – conveniently forgetting why Russia was kicked out in 2014 (for invading Crimea and abetting rebels in Eastern Ukraine).

Then he turned up late. A bilateral meeting with Macron had to be postponed. He missed most of a working breakfast on the issue of women, he skipped the climate change meeting. He left nearly a whole day early to fly to Singapore for his “historic nuclear summit” with North Korea’s dictator – even though this meeting is still two days off.

In the end, Trump blew it up, refusing to sign onto a joint communiqué he had agreed to before leaving. Expect the G7 never to be the same again – at least not until America produces another President.

In his news conference before leaving, Trump was his usual aggressive self, grousing about unfair tariffs slapped on the United States by its closest allies – a claim roundly rejected by economists. Far from being huge as Trump claims, average trade-weighed tariffs are marginal: the latest WTO data (2015) shows that for the EU they stood at 3 percent, Canada at 3.1 percent and the US was slightly lower, at 2.4 percent.

The problem is that they vary by product and in the US, states slam on additional barriers. Not to mention Buy American laws that keeps foreigners out of US government procurement. Moreover, it appears that Trump confuses the European VAT for a tariff. In short, the US trade deficit is not caused by tariffs but by Americans’ purchasing preferences.

Once on the plane, he tweeted his withdrawal, threatening future tariffs on automobiles and accusing Trudeau of “false statements”:

Then he doubled down with insults, calling Trudeau “very dishonest and weak”:

Something like this has never happened before, and the fact that the American President did it makes it a watershed event. It’s not just a matter of being astonishingly rude to democratically elected colleagues. It’s a matter of starting a trade war with allies that jeopardizes America’s leadership and threatens global prosperity. World politics won’t ever be the same again.

Read the rest on Impakter, click here.

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Filed under Economics, European Union, politics, Uncategorized

Can Cryptocurrencies Ever Become Reliable Means of Exchange?

This is the third article in the Impakter magazine series about Bitcoin. Written by my sociologist friend Hannah Fischer-Lauder, it explores the question of what is needed to make cryptocurrencies usable as means of exchange. Here’s the beginning:

On 23 January, Stripe, the major firm that supports Bitcoin payments – it does so for more than 100,000 businesses online –  announced that it would start winding down its support immediately and stop all transactions by 23 April.

A thunderbolt in a clear blue sky that caught many Bitcoin investors unprepared, did it mark a watershed in the history of digital currencies?

The above describes Stripe services (September 2015) SOURCE: Kineticgrowth.com

If Bitcoin cannot be used as a means of exchange in a potential market of 100,000 businesses, then, surely, it is the end of its role as a currency – after all, enabling transactions is one of the two fundamental roles of currencies. The other is acting as a store of value. And we all know how that went, with Bitcoin’s infamous volatility.

Let’s put the Stripe decision in perspective.

Read the rest on Impakter, click here.

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Bitcoin World: What Next?

I’m starting a series on cryptocurrencies, this is the first article, just published on Impakter:

ICOS: THE RISKS AND HOW TO ADDRESS THEM

 



Recent good news got lost in the midst of a flurry of bad news that shook the Bitcoin world at the end of January, causing a meltdown, with Bitcoin losing two-thirds of its value since hitting a peak of $20,000 in mid-December. Professor Roubini told Bloomberg that Bitcoin is “much worse than the Tulip mania”, that it’s the “mother of all bubbles”. At the time of writing, Bitcoin is still crashing, with no end in sight, though it is still significantly higher than the $900 value recorded a year ago (January 2017).

Among the avalanche of chilling events: the $530 million hack of Coincheck, a Japanese cryptocurrency exchange followed by a raid on the exchange by the Japanese authorities to check whether they had enough funds to repay customers; the Facebook ban on cryptocurrency ads; India’s Finance Minister declaration that cryptocurrencies would not be recognized as legal tender; the subpoena U.S. regulators sent to two of the world’s biggest cryptocurrency players, Bitfinex exchange and Tether, arousing suspicions of price manipulation; the announcement by major American banks (JP Morgan Chase, Bank of America and Citigroup) followed by a UK bank (Lloyds) that, starting in February, they would no longer allow their clients to purchase Bitcoin with credit cards; South Korea Customs Service’s disclosure of illegal Forex tradings of some $600 million worth of cryptocurrencies; North Korea accused of hacking cryptocurrencies and stealing billions of wons;  the finding by a leading cyber security firm that hackers make on average $100 million a year stealing from “miners”.

And yet amongst the wreckage there was some optimistic news. One was the declaration on 31 January from the South Korea Finance Minister that there was no plan to outlaw digital coin trading, which countered an earlier ban announced by the Minister of Justice in September last year.

The other came from the South China Morning Post that announced on January 31 that the Hong Kong authorities would not ban cryptocurrencies but launch in March “a campaign to educate the public” highlighting that “cryptocurrencies have fluctuated in price, are not backed by any physical commodity or the issuer, and are subjected to hacking risks.” Leo Weese, chairman of the Hong Kong Bitcoin Association, is strongly supportive: “We should know the difference between what makes a good ICO [and what doesn’t]” he said, “and how we differentiate between scams and legitimate projects.”

He has good reason to feel this way: ICOs (Initial Coin Offerings) are the vital lymph of cryptocurrency exchanges and for them to function well, there needs to be trust in their legitimacy.

Read the rest on Impakter, click here.

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Bitcoin: The First Digital Ponzi Scheme

If you had invested $100 in Bitcoin in 2011, two years after it was invented, and if you had held onto it through the 2014 crash, when Mt. Gox, the biggest Bitcoin exchange, collapsed, today you’d have (almost) $4 million in your pocket.

That’s what the Winklevoss twins of Facebook fame and founders of the Gemini exchange did: They are, historically, the first believers and biggest investors in Bitcoin and today, now that they’ve turned bitcoin billionaires in 2017 (the only ones so far), they continue to believe in it, saying they won’t give it up, that “long-term, directionally, it’s a multi-trillion dollar asset”.

2017 was a special year. By December, the valuation of Bitcoin and the 700+ digital currencies that it has spawned had grown explosively, from less than $1,000 per bitcoin to over $15,000. 2018 is not looking so good, market cap is falling, but still high:

As shown above: By end 2017, total market capitalization (value) of all digital currencies exceeded $750 billion, though it is now falling fast and stands well below that value (520 billion on January 17, 2018): this is still and extraordinary multiple (16 times) of where it was a year ago SOURCEGLOBAL MARKET CAPITALIZATION CHART 28 April 2013 TO 17 January 2018 

On 17 January, Bloomberg spoke of a 26% slump noting that “traders brave the volatility” though some (rightly) worry about the growing threat from government regulations.

SO WHERE ARE WE GOING WITH BITCOIN?

To find out, read the rest on Impakter, click here.

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Cocaine: The Hidden Cost – Environmental Destruction

This is the second of a two-part article investigating cocaine, just published on Impakter. Part One surveyed the cost in human terms, focusing on Colombia, the world’s top coca producer (see here). Part Two investigates the environmental destruction caused by cocaine and also takes a look at Peru.

Uncle Sam’s fumigation program in Colombia has added a grim dimension to the environmental devastation that is, in any case, inherent to coca production when it is made illegal. When coca fields are mechanically torn up by the army or the police, farmers are pushed deeper and deeper into the jungle to clear more areas to grow coca along with the food needed for their own sustenance.

IN THE PHOTO: RAINFOREST PHOTO SOURCE: ANAHI MARTINEZ ON UNSPLASH

But when coca fields are sprayed with potent herbicides, fumigation turns the fertile earth into a desert, threatening local farmers’ health. In fact, for decades, Colombia has been the only government in the world that has allowed aerial herbicide spraying of coca, hurting its own population. But it did so at the bidding of the United States that ended up paying US$ 2 billion for the spraying.

An extraordinary cost to the American taxpayers with zero results in terms of reduced cocaine supplies.

It had, however, very measurable results in terms of environmental destruction of Colombia’s rainforests – precious not just for Colombia but for the whole world, as they act as major carbon sinks, playing a key role in stabilizing global climate.

To read the rest, click here. I feel very strongly about the conclusion of the article: The solution, in my opinion, is not yet another “war on drugs” to try and limit cocaine supplies (it never works) but treatment to limit demand. Addicts are not children to be punished, they are people who need our help. Your views?

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Cocaine: The Hidden Cost

My latest article, just published on Impakter:

A TRAIL OF BLOOD (PART ONE)

This is the first of a two-part article investigating cocaine. Part One surveys the cost in human terms, focusing on Colombia, the world’s top coca producer, while Part Two investigates the environmental destruction caused by cocaine.

On August 10, President Trump told reporters he was getting ready to “declare the opioid epidemic a national emergency”, in response to a chilling report from the White House commission on the opioid crisis, that said “142 Americans die every day from a drug overdose”, a death toll “equal to September 11th every three weeks”. Trump promised “a lot” would be done to stop drug flows into the US and ensuring young people never use drugs but he didn’t mention access to treatment. And it is not clear exactly how he would proceed, particularly now that natural disasters wrought by hurricanes Harvey and Irma demand attention.

So far, Congress has done little except pass the 21st Century Cures Act that was signed into law by President Obama in 2016. It added US$ 1 billion over two years for drug treatment and disbursement has just started.  Yet Trump talks up the role of the border wall and law enforcement while his proposed budget and congressional efforts to take down Obamacare are going in the wrong direction, preventing access to insurance to pay for treatment.

At state level, the move away from a criminal justice fix to the drug problem has been patchy at best. One reporter from Vox found that at least fifteen states followed Kentucky’s example of tightening penalties for low-level drug offenders, increasing mass incarceration rather than offering treatment.

Yet treatment is key.

The rest of the world, if not the US, has moved on past the obvious failure of the “War on Drugs” to focus on non-military, non-police, non-legal measures as possible solutions. That’s where improved access to treatment comes in. It is part of the UN Agenda 2030 and the Sustainable Development Goal 3, specifically target 3.5 which reads: “Strengthen the prevention and treatment of substance abuse, including narcotic drug abuse and harmful use of alcohol .”

Unfortunately, even within the United Nations, the political discourse is largely focused on other issues, like eradicating poverty as evidenced by the latest “outcome report” of the high-level “political forum” (10-19 July 2017), a ministerial meeting that reviews progress on the SDGs every year. Only one sentence addressed the drug problem: “We reiterate the need to strengthen the prevention and treatment of substance abuse.” Surely stronger statements are required, more needs to be done.

Yet the US-waged “War on Drugs”, started some 60 years ago, and costing an estimated US$ one trillion should have taught us a lesson. It began when President Lyndon Johnson first proposed a toughening of penalties for drug trafficking in 1968; it ballooned with President Nixon in 1971, coming to Colombia, Peru and Bolivia. Whatever improvement America was able to achieve at home, it quickly vanished: Since 2009 there are more deaths from drug poisoning every year in the US than from firearms, motor vehicle crashes, suicide and murders, said a recent US DEA report.

Meanwhile, in the Andean countries, the war left a devastating legacy, clearly traceable to US aerial fumigation programs to stop coca cultivation and anti-narcotics policing that quickly spiraled into full-scale civil war, particularly ferocious in Colombia, pitting Marxist-inspired guerillas against the central government. The war in Colombia lasted until 2016 when the Revolutionary Armed Forces of Colombia (FARCs) agreed to a peace deal with the government, but not before there were some 200,000 dead and five million people forced out of their home.

The lesson from History is clear:  fighting drug trafficking through military or police means solves nothing.

The US is the World’s Largest Cocaine User

The latest report (March 2017) from the Office of National Drug Control Policy on global cocaine trafficking confirms that the US is the largest cocaine user, consuming one third of world production.

Cocaine is known as a “rich man’s drug”, though one form, “crack cocaine” (smoked, not snorted) being much cheaper, is widely used in inner cities and by black communities, ensuring that the drug is prevalent in all social strata.

Cocaine is the second most popular illegal recreational drug in both Europe and the United States behind marijuana. More people use cocaine than heroin, and the number of cocaine users keeps rising (26 percent more in 2015 compared to the previous year, according to the U.S. National Survey on Drug Use and Health).

The street value of cocaine gives an idea of its importance as a recreational drug.  One calculation, often cited, is based on a model developed in 2005 by the UN drug agency (UNODC) which estimated that the US cocaine market exceeds some US$70 billion in street value per year. This is likely to be a conservative estimate but still true today considering that cocaine prices have been (slightly) dropping over the past decade.

US$70 billion spent on cocaine is a lot, as much as Americans spend on playing the lottery, more than on books, video games, movies and sporting events combined (2015 data) – none of which have the devastating impact on health that cocaine has, particularly from chronic use.

PHOTO CREDIT: HÄGGSTRÖM, MIKAEL (2014). “MEDICAL GALLERY OF MIKAEL HÄGGSTRÖM 2014“. WIKIJOURNAL OF MEDICINE 

Coca Production on the Increase

Increased drug supplies mean more deaths: cocaine-related deaths in the United States have increased by about 60 percent since 2010, according to the United States Centers for Disease Control and Prevention.

What makes the situation increasingly dangerous, is that production of cocaine in Colombia is higher than ever: according to the UN, it reached 866 metric tons in 2016, a 34 percent increase over 2015 when the war was still on-going. And that’s 200 million tons more than the average annual production of cocaine a decade ago (it stood around 650 million tons).

But some believe the UN data is too conservative.

Read the rest on Impakter, click here

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