Obama on technological unemployment

In his New Yorker interview, Obama also had a few things to say about technological unemployment.

Trump had triumphed in rural America by appealing to a ferment of anti-urban, anti-coastal feeling. And yet Obama dismissed the notion that the Republicans had captured the issue of inequality. “The Republicans don’t care about that issue,” he said. “There’s no pretense that anything that they’re putting forward, any congressional proposals that are going to come forward, will reduce inequality. . . . What I do concern myself with, and the Democratic Party is going to have to concern itself with, is the fact that the confluence of globalization and technology is making the gap between rich and poor, the mismatch in power between capital and labor, greater all the time. And that’s true globally.

“The prescription that some offer, which is stop trade, reduce global integration, I don’t think is going to work,” he went on. “If that’s not going to work, then we’re going to have to redesign the social compact in some fairly fundamental ways over the next twenty years. And I know how to build a bridge to that new social compact. It begins with all the things we’ve talked about in the past—early-childhood education, continuous learning, job training, a basic social safety net, expanding the earned-income tax credit, investments in infrastructure—which, by definition, aren’t shipped overseas. All of those things accelerate growth, give you more of a runway. But at some point, when the problem is not just Uber but driverless Uber, when radiologists are losing their jobs to A.I., then we’re going to have to figure out how do we maintain a cohesive society and a cohesive democracy in which productivity and wealth generation are not automatically linked to how many hours you put in, where the links between production and distribution are broken, in some sense. Because I can sit in my office, do a bunch of stuff, send it out over the Internet, and suddenly I just made a couple of million bucks, and the person who’s looking after my kid while I’m doing that has no leverage to get paid more than ten bucks an hour.”

One thing I am going to really miss about Obama is the way he has the ability to really understand and articulate the issues facing our country and world so well. I don’t expect that from Trump or the people he is appointing. I would be perfectly happy to be proved wrong.

all opinions are now equal

David Remnick from the New Yorker interviewed Obama before, during, and after the election. I don’t want to write a lot of words rehashing the election for a couple reasons. First, everyone else is doing that. Second, I suspect we need to put some time and distance between us and the election before we can decide which combination of the many theories is correct (for example, Trump was a genius at connecting with the middle class, white Americans are a bunch of ignorant, paranoid racist assholes, Hillary was a uniquely weak candidate, Russia and/or the FBI stole the election, a majority of Americans actually preferred Hillary, Biden or Sanders would have won easily, it was essentially a tie and the electoral college is just quirky and outdated, etc.)

Obama offered a theory though that rang at least partly true to me, and I actually find it disturbing.

“Until recently, religious institutions, academia, and media set out the parameters of acceptable discourse, and it ranged from the unthinkable to the radical to the acceptable to policy,” Simas said. “The continuum has changed. Had Donald Trump said the things he said during the campaign eight years ago—about banning Muslims, about Mexicans, about the disabled, about women—his Republican opponents, faith leaders, academia would have denounced him and there would be no way around those voices. Now, through Facebook and Twitter, you can get around them. There is social permission for this kind of discourse. Plus, through the same social media, you can find people who agree with you, who validate these thoughts and opinions. This creates a whole new permission structure, a sense of social affirmation for what was once thought unthinkable. This is a foundational change…”

The new media ecosystem “means everything is true and nothing is true,” Obama told me later. “An explanation of climate change from a Nobel Prize-winning physicist looks exactly the same on your Facebook page as the denial of climate change by somebody on the Koch brothers’ payroll. And the capacity to disseminate misinformation, wild conspiracy theories, to paint the opposition in wildly negative light without any rebuttal—that has accelerated in ways that much more sharply polarize the electorate and make it very difficult to have a common conversation.”

That marked a decisive change from previous political eras, he maintained. “Ideally, in a democracy, everybody would agree that climate change is the consequence of man-made behavior, because that’s what ninety-nine per cent of scientists tell us,” he said. “And then we would have a debate about how to fix it. That’s how, in the seventies, eighties, and nineties, you had Republicans supporting the Clean Air Act and you had a market-based fix for acid rain rather than a command-and-control approach. So you’d argue about means, but there was a baseline of facts that we could all work off of. And now we just don’t have that.”

It’s disturbing to me because I really had the sense during the election that facts didn’t matter at all. I don’t think human nature is particularly good at analyzing and understanding the nature of complex problems, and our education system is not particularly good at helping us to overcome our innate tendency to oversimplify and misdiagnose these problems. But at least detecting and agreeing on the facts needs to be the common launching point for reasoned debate. If we are no longer even attempting to establish the facts, we can’t even get to that starting point for problem solving and we have actually taken a step back as a civilization.

I don’t want to blame the millennial generation for everything, but I do think the educational culture that generation grew up in and the new media culture are intertwined. I think this generation was encouraged to formulate and express opinions much more than I was at the tail end of generation X. This is not bad in itself. Young people need to be trained to establish the facts, understand the larger systems those facts are embedded in, define the problem, propose and discuss solutions. But that doesn’t mean all conclusions, opinions, and proposed solutions should be given equal weight. When young people express opinions, they need to get supportive but firm feedback from people with more experience and seasoned judgment, because that is how they gain their own experience, judgment and problem solving ability.

Now of course I want to offer some prescription for fixing this. Well, I am not feeling too optimistic at the moment. If we were rowing against the current before, now we seem to have turned the canoe around and we are enthusiastically rowing with the current toward the whirlpool. Like I said, I need some time and distance to think more objectively.

Structure Sensor

Structure Sensor is a gadget that can supposedly measure an entire room and make a 3D computer model of it in seconds.

Capture dense 3D models with the push of a button

When used as a 3D scanner, Structure Sensor allows you to capture dense geometry in real-time. This enables you to simulate real world physics and create high-fidelity 3D models with high-resolution textures in seconds. The possibilities are incredible.

Measure entire rooms all at once

The magic of 3D depth sensing begins with the ability to capture fast, accurate, dimensions of objects and environments.

And Structure Sensor doesn’t just capture one dimension; it captures everything in view, all at once. Large-scale reconstruction tasks are easy with Structure Sensor & Structure SDK.

It’s $379. I don’t deal with interior design personally, but I know that surveying on engineering projects can be incredibly expensive and time-consuming. If there are technologies that could make it quick, cheap and easy, that would be a game changer.

climate change and agriculture

This section of the World Economic Forum’s 2016 Global Risk Report explains in a fair amount of detail how climate change is likely to cause food shortages.

The risk to food security is especially great because agriculture is already straining to meet a rapidly growing demand from a finite resource base. The combined impact of a rising population and growth of the middle class – wealthier people eat more cereal-intensive meat – is set to drive a demand increase of 60% by 2050.3Yet the global average yield growth for cereals has slowed in recent years; it already lags behind demand growth. This gap cannot be covered by an expansion of cropland because of the need to protect forests and other areas of high value for conservation and carbon sequestration. Agriculture is increasingly competing with other uses for land – such as urbanization, transport, bioenergy, forestry and mining – and so crop production is pushed towards ever more marginal soils.4

Yet more worrying is the fierce competition for water, the lifeblood of agriculture. Water withdrawals have increased threefold over the last 50 years, and demand is anticipated to rise by a further 40% by 2030.5 With a shift in global production towards intensive systems that rely on groundwater resources for irrigation, along with the current growth in demand for water-intensive animal products, agriculture becomes even thirstier. At the same time, urbanization and industrialization in emerging and developing economies are also driving up demand for fresh water in energy production, mineral extraction, and domestic use, further stretching the already tight supply.6

Against this backdrop of tightening constraints, climate change seriously threatens food security in two ways. First, it will harm agricultural production: rising temperatures and changing rainfall patterns will slow yield gains, contributing to higher food prices and an increasingly precarious supply-demand balance that will make markets more prone to volatility. Second, it will increasingly disrupt food systems: more extreme weather will destabilize tighter markets and exacerbate volatility, imperil transport infrastructure and trigger local food crises. As a result, the risks of humanitarian emergencies, national or regional instability and mass migration will increase. In the words of a former Executive Director of the World Food Programme, “without food, people have only three options. They riot, they emigrate, or they die.”7 The security implications will be felt by developing and developed countries alike.

In other words, the world might be in trouble on food even if climate change were not a factor. The combination of heat and drought that will be brought on by climate change will add to the risk, potentially destabilizing many populous areas of the world. The world’s response to climate change has been too little, too late, but at least there have been steps in the right direction the last few years. Being willfully ignorant of the risk and reversing the small progress we are making would be an evil, immoral thing to do.

exit polls

I hate the election outcome, and yet you won’t find me out in the streets protesting just because I’m a sore loser. You might find me out in the streets if and when the new administration starts taking immoral actions, such as denying people access to health care, reversing progress on climate change, or endangering the stability of the international financial system.

I don’t doubt for a second that there are a lot of errors and inefficiencies in the U.S. election system. That is because it is so decentralized and disorganized. I doubt it is hackable on a broad scale though, just because it is so decentralized and disorganized. The fact that the results were so consistently surprising in so many states to me is further evidence that the polls and exit polls were just biased.

The exit polls are just weird though, as Jonathan Simon points out. The election result is different from the pre-election polls by several percentage points in Trump’s favor. One explanation that is consistent with the facts is that the way “likely voter” was defined by the pollsters was wrong. In other words, enough “unlikely voters” turned out to deliver the election to Trump.

This logic is a little harder to assign to exit polls though. Exit polls are supposed to be a random sample of people who actually voted. The exit polls in this election were very consistent with the pre-election polls, and very inconsistent with the vote count. What could explain that? Either the sample of people who actually voted has to be biased, or people have to have lied on a large scale, and in a very consistent and biased way.

I don’t have the answer. I think we need to accept these election results and move on. But a thorough review of the process to make sure it is as transparent and verifiable as possible in the future would be a great idea.

70-99% chance of a U.S. Southwest “megadrought”

According to USA Today,

A group of researchers estimated in a new study published Wednesday that if emissions of greenhouse gases continue unchecked, the odds of a monster drought ravaging the region for 35 years or longer this century would be between 70 percent and 99 percent, depending on a range of precipitation scenarios.

On the flipside, the scientists found that if steps are taken to aggressively reduce greenhouse gases, the risks of a decades-long drought could be cut nearly in half…

The researchers found that under a “business-as-usual” emissions scenario, the risk of a decades-long drought would be 90 percent in the southwestern U.S. if precipitation is unchanged. If there’s a modest increase in precipitation, the region would still face a 70 percent risk of a megadrought by the end of the 21 century. And if precipitation decreases under that warming scenario, the scientists estimated the risk at 99 percent.

Nice job, states like Utah and Arizona, voting to go back to “business as usual” just when, after 40 years of inertia when we already should have known better, we were taking some modest steps in the right direction. Perhaps your neighbors in Colorado, New Mexico (not to mention Old Mexico), and California have reasons to be less than happy with you.

technological unemployment

This New York Times Magazine article about an American returning home after living abroad is mostly fluff, but it did contain these few interesting paragraphs on technological unemployment.

One day, I drove down Highway 101 to Silicon Valley to meet Reid Hoffman, a partner at the venture-capital firm Greylock and the chairman of LinkedIn, the professional-social-networking company, which was then in the process of being sold to Microsoft for $26.2 billion. Hoffman founded LinkedIn the same year I left for Beijing; now he was a billionaire. He is politically active, having supported and advised Obama and raised money for and donated money to Hillary Clinton. I mentioned how the election had become a referendum of sorts on globalization and trade, yet there had been little discussion about the next big earthquake — artificial intelligence, or the approaching world of self-driving cars, smartphones that can diagnose a melanoma and much more. Globalization may have ravaged blue-collar America, but artificial intelligence could cut through the white-collar professions in much the same way.

Hoffman said the reactions to artificial intelligence range from utopian to dystopian. The utopians predict huge productivity gains and rapid advances in medicine, genetic sequencing, fighting climate change and other areas. The dystopians predict a “Robocalypse” in which machines supplant people and, possibly, threaten humanity itself. “My point of view,” he said, “is that it is a massive transformation and does really impact the future of humanity, but that we can steer it more toward utopia rather than dystopia with intelligence and diligence.”

Either way, another major economic shift is coming, perhaps sooner than people realize. Hoffman said that many of the jobs in today’s economy will change fundamentally during the next 20 years. On the same day I met with Hoffman, Uber announced a pilot program to test self-driving vehicles in Pittsburgh. It also bought a company developing self-driving trucks. “We have to make sure that we don’t have a massive imbalance of society by which you have a small number of people that own the robots and everyone else is scrambling,” he said.

If the current political upheaval in the U.S. and elsewhere is caused by the onset of technological unemployment, we could truly be in trouble, because not only is it going to get worse, it is being completely misdiagnosed. When an illness is misdiagnosed, it can be treated in ineffective or even completely counterproductive ways. If underemployment caused by technological progress is the root of our current problems, the solutions have to lie in providing people with the skills they need to work with the new technology, helping people to build an ownership stake in the technology, lowering barriers to startups and innovators, and providing a safety net for those still left behind through no fault of their own. Instead, we are talking about subsidizing outdated technologies and industries, blaming mythical internal and external enemies for our problems, and removing the limited safety net we have fought so hard to build up until now.

inflation

The Economist says inflation could be on the verge of a comeback.

Some economists reckon a sustained rise in inflation is overdue. Most of the rich world is out of recession, emerging markets seem to have put the worst of their commodity bust behind them, and in a few places, like America, low unemployment has at last given way to accelerating wage growth. It is possible, some suppose, that the weak growth and sustained disinflation of the past half-decade has blinded markets and policy-makers to the potential for a sharp swing in the other direction, toward uncomfortably high inflation.

The rest of the article goes on to poo-poo the idea that inflation may be on the verge of a comeback. But we’ll see.

Washington State carbon tax voted down

I wrote recently about a carbon tax referendum in Washington State. Sadly (in my view), it was voted down.

The carbon tax initiative (I-732) garnered only 42 percent of the vote in Washington State. The tax was supposed to be revenue neutral by lowering the state sales tax by 1 cent and provide tax rebates of up to $1,500 per year to 460,000 low-income households. The initial $25 per ton would have boosted the price of gallon of gas by about 25 cents, and added 2.5 cents to each kilowatt-hour of coal-fired electricity, and 1.25 cents to electricity generated by natural gas. Interestingly, the proposal which aimed to cut emissions of carbon dioxide that are contributing to man-made global warming was opposed by many leading environmentalist groups. Why? Largely because of the tax’s revenue neutrality. The climate activists wanted to use the revenues to “invest” in various projects such as subsidizing solar and wind power schemes, mass transit and job training for folks put out of work by climate policies.

It’s unfortunate. Let’s review: Taxes on externalities (which occur when the activity of Group A results in a profit while unfairly imposing a cost on Group B) are a good thing for at least three reasons. First, they give Group A to engage in less of the offending activity because they now have to pay the cost rather than imposing the cost on someone else. Second, if Group A decides the activity is still worthwhile, revenue is raised for the government which it can spend on some worthy cause, like helping Group B. Third, the revenue raised by taxing bad things can be used to reduce taxes on good things, like work and savings and investment and making a profit without hurting other people. All this is good for people and the economy as a whole. The only party hurt is Group A, which had no right to profit at everyone else’s expense in the first place. The reason we don’t do this more is that Group A is able to use some of its profits to buy off politicians and mount propaganda campaigns to convince the public to vote against their own interests.

learn about carbon trading and R

This is pretty cool – an interactive website that lets you explore a real-world carbon trading research problem while learning new tricks in R.

Many economists would agree that the most efficient way to fight global warming would be a world-wide tax or an emmission trading system for greenhouse gases. Yet, if only a part of the world implements such a scheme, a reasonable concern is that firms may decide to relocate to other parts of the world, causing job losses and less effective emmission reduction…

In their article ‘Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme’ (American Economic Review, 2014), Ralf Martin, Mirabelle Muûls, Laure B. de Preux and Ulrich J. Wagner study the most efficient way to allocate a fixed amount of free permits among facilities in order to minimize the risk of job losses or carbon leakage. Given their available data, they establish simple alternative allocation rules that can be expected to substantially outperform the current allocation rules used by the EU.

As part of his Master’s Thesis at Ulm University, Benjamin Lux has generated a very nice RTutor problem set that allows you to replicate the insights of the paper in an interactive fashion. You learn about the data and institutional background, run explorative regressions and dig into the very well explained optimization procedures to find efficient allocation rules. At the same time you learn some R tricks, like effective usage of some dplyr functions.

It’s an interesting question at a time when some U.S. states and Canadian provinces have started introducing carbon trading and taxation schemes that differ from their neighbors (sometimes because their neighbors have nothing at all). Perhaps there is a win-win where a policy can gradually phase out less productive, dirtier industries while replacing them with cleaner and higher-value-added industries, then sharing enough of the wealth so everyone benefits.