Killing a breakthrough opportunity?

"... [FAA] appears keen to protect special interests, including established aircraft manufacturers and pilot unions."

States The World in 2015 from the Economist in the article "A bumpy take-off".

Consumer focused, and at times consumer driven invention to innovation has been the driver for bigger breakthroughs.  Automation and controlled automation in flight, and what I would call micro-flyers, domain of the enthusiasts to begin with has opened up a new arena of opportunity for application of technology.

"Drones also bring improvements and cost-cutting to film-making, news-gathering, search and rescue, forensic photography, firefighting, archaeological surveying, smokestack inspection and the monitoring of pipelines, volcanoes, pollution and wildlife. The benefits to an economy like America’s could be worth $27m a day, says the Association for Unmanned Vehicle Systems International (AUVSI) in Arlington, Virginia."

Yet, one way leap frog opportunities have been thwarted is regulation, which is overbearing and at times non-sensical.  To highlight the extent of it, the article states:

"… in June the FAA issued a “tremendously rigid” policy interpretation that even expands the definition of aircraft it has the authority to regulate to include boomerangs, frisbees and hand-tossed balsa gliders, says Paul Voss, an engineering professor at Smith College in Massachusetts."

Will the growth of this sector emerge outside of the US due to the constraints being put upon the creativity?  I will be watching these developments closely.  It reminds me of the onerous regulations the Nuclear Regulatory Commission put in place making it cost prohibitive to do anything nuclear in the USA.  For now:

"All this suggests that the FAA’s future rules will not bring America economic benefits on the scale some countries are starting to see, says Brendan Schulman of Kramer Levin Naftalis & Frankel. In August the New York law firm filed three suits against the FAA for regulatory over-reach. The way things are heading, he says, the FAA might require a drone to be flown by two licensed operators with medical certificates who keep it within sight. This would be costly, and might outlaw flights around a leafy tree. Until the autumn of 2015 the issue will remain, unlike the drones themselves, up in the air."

Ghost in the machine

"Phones turn into mind readers."
"This technology is going to be everywhere."

To think on behalf of a smart device's owner, to guide, to suggest, to recommend, to predict, has been the holy grail for marketers such as Procter & Gamble and Unilever for over a century.  The World in 2015 by the Economist declares that this is the year when it all will hit mainstream. And as all marketers know, when a human mind does not have an analogy for a situation, providing a suggestion to ground the mind, and then recommending based on rating is an ideal way to make the consumer an advocate of the recommended product or service.

According to the article:

"… tension between usefulness and creepiness will intensify in 2015 as anticipatory-computing systems extend their reach in three ways."

"First, they will start drawing on more sources of data, beyond the current analysis of browsing history, e-mail, calendar and location."

"… the second area of expansion, as anticipatory computing spreads, like other consumer technologies before it, into the workplace."

"Third, anticipatory computing will move beyond the smartphone to other devices."

Where will be discovery, ability to be lost and learn?  Will this in the end take away the human ability to anticipate and predict, develop deeper experience based neural net?  Only the future will tell.  For now, the inevitability of anticipatory computing is here.

The complete article here concludes:

"Companies will let users decide what to share “and try their best not to cross the digital creepiness line”, says Mr Yamnitsky (Forrester, a consultancy). You might, for example, wish to exclude access to your browsing history or your children’s personal details. “But the issue is you risk being a second-class citizen if you don’t have the tools other people have,” says Mr Tuttle (chief executive of Expect Labs, a startup)."

Middle East: Recipe for a state's health and prosperity

The World in 2015 by the Economist provides insights and foresights for the Middle Eastern countries in its article "It's not all bad" here.

One perspective:

"… the misery of others helps some to thrive. So it is with Dubai. Although the Gulf emirate’s rulers have worked long and hard to make the city-state a better place to live and work, the failure of other regional governments has also driven Dubai’s phenomenal success. Whenever Saudi Arabia or Iran hurl more dissidents in jail, whenever India or Pakistan overtax business, whenever wars and revolutions erupt nearby, entrepreneurial talent and capital gush into Dubai."

Another perspective:

"Since it joined the OECD in 2010, Israel has outperformed the rest of the rich-country club on many measures. GDP per person matched Italy’s in 2013. After decades of reliance on foreign aid, Israel now has a healthy trade balance as well as a stock of some $80 billion in investment overseas. Energy dependence is also a thing of the past: Israel has been quick to exploit abundant offshore gas reserves, which already fuel most electricity generation. Meanwhile a virtuous circle involving high-quality universities, strong government backing and dynamic entrepreneurs generates continued innovation and success in the high-tech sector, exemplified in 2014 by Intel’s decision to expand its already large manufacturing presence with an additional $6 billion microchip factory."

Let's see how 2015 unfolds.

Africa: Entrepreneurs driving growth, yes?

"Young entrepreneurs and those they inspire are the lifeblood of Africa’s rise."

I have long held the belief that an entrepreneur is different from a businessman or a business woman.  I also believe that entrepreneurs cannot be trained, and through experiential learning become who they are.

Mr. Tony Elumelu, chairman of Heirs Holdings states as much and ties Africa's success, if it is to be, with the entrepreneurial lot, in an article here from The World in 2015 by the Economist.  Following is a keen insight from him:

"… we are already seeing how entrepreneurship is transforming Africa. But in Africa, business growth alone is not the full story. It is perhaps not even the most important part. Entrepreneurship matters especially for its potential to transform society."

The only point I disagree with Mr. Elumelu is that though young entrepreneurs do buck the trend, and redefine and create new business models through shear risk taking, Africa's entrepreneurism must also rely on the middle aged and old for their deep and rich experience of Africa's cultural and commercial history.

An economically healthy and growing Africa is a need for the world today, was yesterday, and must be tomorrow.

Real estate: The young of the US and Europe

"In 2012 a whopping 36% of Americans aged 18-31 were living in their parents’ homes, up from 32% in 2007. Several things will prompt them to pack their bags in 2015."

States The World in 2015 from the Economist.  And why would it be so for the United States?

"First, the job market will improve. Unemployment has tumbled from around 10% after the financial crisis to 6% in 2014, and it will fall further in 2015."

"Second, the cost of housing will remain reasonable in America, except in crazy places like New York and San Francisco. The ratio of house prices to average incomes has crept up recently, but is far below its peak in 2006."

"Third, many young Americans who live with their parents will no longer be able to stand it any more."

And what about Europe:

"Parents in Europe may not be so lucky, alas. Nearly half of European 18- to 30-year-olds still live with their parents, thanks to sky-high youth unemployment in some countries. In Italy four-fifths of young adults live at home. Many young Italian men like having mamma cooking and cleaning for them but cannot persuade a wife to sign up for the same arrangement. Funny, that."

Enjoy the complete article here.

Human population distribution

No conclusions here, simply The World in 2015 by the Economist highlights the distribution of human population from now till 2060.  Based on your experiences and inclinations, you will glean interestingl insights. See the complete article here.

Land Rover Defender: In praise of an icon at an end

"Airbags, low emissions, all seats facing forward and pedestrians’ rights do not fit easily into the Land Rover ethos. They are blamed for delivering the coup de grâce."

Bemoans an article in The World in 2015 by the Economist regarding the Land Rover Defender here.  Having had the privilege to have driven one into a rice paddy filled with water at the age of 12 and then having driven it out, washing it down at a friend's "tube well", my uncle the owner none the wiser of anything happening, I can attest to the Defender's abilities.  It is sad to hear that this icon will be concluding its life shortly.  The picture reproduced from the the magazine here speaks volumes!  Given of course you know who the driver is.

Land Rover Defender, RIP!

Oil production: US v Saudi Arabia?

An excellent talk by Dr. Vinod Khosla demystified and threw away expert forecasts on oil pricing in his keynote at TIECON 2011, see here on YouTube at time index 7:30.

With that in mind below is a forecast of oil production as presented in The World in 2015 by the Economist.  What do you think?

See other interesting "eye-catching statistical landmarks" in the complete article here.  Note that the article claims:

"The way people think about the world will undergo a radical change in 2015, as assumptions that have held steady for years are overturned."

India and education - the conundrum continues

I wrote about the poor quality of graduates available for hire in India in 2010 here.  Having had personal experience to validate the above, while the only globally top tier Indian academic strength I have worked with have been the India Institute of Technologies and perhaps couple more technology and scientific institutes at most.  Four years on from my blog in 2010, the academic capitalism in India continues to further dilute the already poor pool of capable Indian educated candidates for hire.  See my blog on what I term as academic capitalism here.

The World in 2015 by the Economist's laments:

"If your five-year-old starts school in India in 2015 she will be ready to enrol at university in 2028. That is also the year when India’s population should pass 1.45 billion and become the world’s largest. By then, will there be enough high-quality graduates to ensure the country’s prosperity? No chance—unless a rotten education system is fixed first."

For a country with aspirations for the future, the prospects given current numbers are bleak for sustained economic growth.  The US's economic growth's backbone has been its universities that have defined what scientific research and development, and its engineering applications through education can create.  20th Century is full of these examples.  More poignant is the inflow of talent from across the globe to reinforce this trend.

"Varun Aggarwal of Aspiring Minds, a company that surveys student capabilities, estimates that if university exams were run properly, 70% of students would fail. Of 700,000 engineering graduates in India each year, he reckons only 3% are employable without many months of post-recruitment training. Only 15% of computer-engineering graduates could complete a basic task set in one assessment, he says. Language and other “soft” skills are often poor."

Is India starting to follow the education's commercialization trends I spoke about here what I termed as copy and paste knowledge creation?

As my good friend Dr. Farrokh Mistree emphasizes and I agree, generally speaking of higher education, so does the article conclude for India:

"But still there is no serious funding for research. Only when that is in place will an Indian university make it into a global top 200. Not in 2015, but with luck before 2028."

Next decade and low interest rates

United States' Federal Reserve wields a significant influence on capital and its availability across the globe.  Leverage has been a necessary part of economic growth for companies and nations.  What does the future look like in which monetary policies are able to drive economic growth, and what are the unintended consequences?

The Economist's The World in 2015 has a few interesting thoughts based on the following premise:

"… over time long-term interest rates are highly correlated to long-term growth (see chart), and growth looks likely to be much lower in the coming decade than in the recent past."

I believe calling the chart below "highly" correlated is a going too far.  If it were highly correlated, then the prediction of economic downturns would have been significantly easier and that is not the case.

The big question is why would the above statement be true?  Here are a few viable comments from the article I agree with:

"… the world has a glut of savings and a dearth of investment, and it is the job of interest rates to bring the two into balance. Before the crisis the oversupply of savings could be traced to emerging markets, in particular China. Domestic savings in emerging markets rose from 24% of GDP in the 1990s to above 33% by 2008—and stayed there. That is more than enough to meet the (steep) investment needs of those countries, so they ploughed the excess into rich-country bond markets, pushing down interest rates. China’s current-account surplus has since shrunk, but the euro zone, bludgeoned by austerity, tight credit and weak investment in Germany, has taken its place: its current-account surplus in 2015 will exceed China’s. The global savings glut will put a lid on interest rates."

If the above represents thoughts on emerging economies driven capital movement, here is perspective on developed markets:

"A slower-growing economy needs fewer stores, factories and offices, depresses the return on capital and thus leads to lower investment. Slower-growing productivity holds back incomes and discourages consumer borrowing."

And so going against conventional wisdom upon which many an investors have been hedging their bets, the Economist states their claim:

"… the end of the Fed’s monetary morphine will not spell the end of low interest rates."

Read the complete article here.  I am looking forward to seeing how things play out in 2016 and further out.

Silicon Valley in 2015 and onwards: A new technology decade on its way

I have been working with Silicon Valley for the past 20 years off and on.  I have been living here for the past year, running a research and innovation center.

For the first decade of this millennia, I noticed a trend which was well articulated by Dr. Gordon Moore that "… corporate R&D is moving away from the kind of fundamental research that wins Nobel Prizes and toward a narrow focus on business goals."  See my blog on the topic here.

I start this year with the hope and I see it as well in the past couple of years that things are making a shift in Silicon Valley from Dr. Moore's concern.  In The World in 2015 from the Economist, my favorite columnist Mr. Adrian Wooldridge, writes:

"In 2015 the buzz (and the money that goes with it) will shift from social media to intelligent devices. … The most successful companies will focus on connecting the virtual and physical worlds. … The year’s buzzword will be “wearables”: for example, medical gadgets that keep a constant watch on your blood pressure, glucose level and food intake, and tell you if trouble is on the way."

Remembering the days of craze about social media in the first half of 2000s, and software doing more than automation in the 1990s, and personal computer like devices in the 1980s, the craze already has established the buzz word IOT (Internet of Things).  Makes me smile as I have never heard such an amorphous term in technology before, perhaps IOT will trump the word innovation in the coming years!  I digress.

What is absolutely thrilling and exciting for me is:

"The rise of intelligent devices will allow the Valley to rediscover its roots as an engineering centre. This Valley was briefly sidelined by the social-networking revolution. But engineers are returning to reclaim their own. Tesla is making cars in Palo Alto. BMW, Mercedes, Samsung, Nissan and General Electric have all established research and design laboratories. Medical-device companies are flocking in."

The types of business that are emerging interestingly all have one specific aspect in common, or essential to their success, data and its analysis for value extraction.  A different technology decade is beginning in the valley.

"Intelligent devices will provide the Valley with a new-found seriousness. Social-media companies essentially dealt with virtual candy-floss: nice to have but, for the most part, hardly essential. The new generation of entrepreneurs will deal in devices that can save lives. Truly, all that is airy will become solid."

Read the complete article here.

Forecast for Energy in 2015

Reproducing the Energy outlook from The World in 2015 by the Economist below.  This will be one I will follow closely to see if reality will match the Economist's predictions.

Interesting to note below is how China continues to focus on nuclear.

"As the global economy ticks up in 2015, overall energy consumption will climb by about 3%, outpacing crude-oil demand, which will creep up by 2%, to 94m barrels a day. After years of splurging, most Western super-majors are aiming for better returns on smaller investments—though Chevron will outspend its far bigger rival, Exxon Mobil, investing $40bn. Big Oil’s success will depend partly on riding the boom in oil caught in American shale rock. Thanks to that, global supplies look very comfortable and the average annual oil price will fall, geopolitical ructions notwithstanding.

A parallel shale-gas “revolution” will spawn a batch of American plants for exporting liquefied natural gas (LNG): the first, Sabine Pass in Louisiana, should start up in 2015. Import terminals in Poland and Lithuania will also begin operations as eastern Europe seeks to slip the yoke of Russian supply.

Strong Asian demand, above all, will help gas producers, as dirty coal loses share to somewhat cleaner gas. China’s attempts to tap its own, vast shale-gas reserves will be hampered by geological barriers and technological shortcomings; the country will speed up in pursuit of a 2015 production target of 6.5bn cubic metres—though to just a fraction of American levels. Given its energy-supply shortfall, Chinese reactor-building will proceed: its first “third generation” AP1000 nuclear plant could clear safety checks by late 2015. Controversially, Japan’s own reactors are also set to start returning to life.

To watch: Sea change. Shipping hasn’t attracted nearly the attention motor vehicles have from proponents of pollution abatement. No longer. From January 1st 2015, sulphur standards affecting ships along European and North American coastlines will tighten considerably. Maritime companies will demand less high-sulphur fuel oil and more gas oil. Eventually, vessels burning LNG could become popular."