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Nouriel Unplugged - Rise of the Machines: Downfall of the Economy?

The following is from an e-mail exchange with a number of interlocutors.

*****
My sense is that Roubini, Brynjolfsson, McAfee, Wladawsky-Berger, and others are talking about a significant restructuring of the economy as a subsequent stage of development following on the agrarian > industrial > services sequence.  This restructuring, as Ken points out, has, as did the other restructurings, significant social impact.
It’s not just the development of income inequality, which we all know about, but there seems to be the development of a capability gap which, while likely always there, has been underscored by the authors mentioned above.  I doubt the area of the two squares is proportional to the data, but I often think in pictures and this is what emerged.  IC means the combination of income and capability.

There is a bridge between the two groups and people move back (see The Vanishing Male Worker: How America Fell Behind) and forth over that bridge.  How they move back and forth is related to the prior topic of discussion between several of you.  Whether people want to move back and forth is a different and equally interesting question.

I am unable to imagine any alternative to the above picture short of revolution.  Under the assumption that revolution is not desirable, then some way must be found to manage the IC structure for maximum mutual benefit (Dave’s “We are each better off when all of us are better off”).  Trickle down?  Socialism?  Single party rule?

Final point.  It’s generally true that the Higher IC consume more resources per capita than Lower IC.  What are the resource limitations that should concern us?

May you live in interesting times.”  Supposed Chinese curse.
*****
Posted on Thursday, December 18, 2014 at 08:20AM by Registered CommenterJames Drogan | CommentsPost a Comment

Nouriel Roubini adds to...

...the discussion of the Third Industrial Age in Rise of the Machines: Downfall of the Economy?  Courtesy of Tyler Cowen at Marginal Revolution.

I'm concerned that organizations responsible for preparing young men and women are not considering the impact of these potential future developments on the learning experience and, as a consequence, not properly preparing students for their future.

Posted on Friday, December 12, 2014 at 08:11AM by Registered CommenterJames Drogan | CommentsPost a Comment

one of the nice things about the Internet...

...is that it provides venues where you can natter on, unfiltered by editors, and largely unencumbered by an audience.

Posted on Sunday, November 30, 2014 at 06:07AM by Registered CommenterJames Drogan | CommentsPost a Comment

Designing Processes

An interesting article, Software Designs Products by Simulating Evolution, from MIT Technology Review causes me to wonder whether is would be possible to deploy a similar concept to design processes.

Posted on Saturday, November 8, 2014 at 07:28AM by Registered CommenterJames Drogan | CommentsPost a Comment

Knowledge, Decisions and Customer Service

Following is a brief exchange between a student in the current capstone course and me.

Me

Increasingly, it seems, the competitive arena is shifting in the direction of correct decisions at an increasingly fast pace whilst delivering increased value to the customer.  A ship or port, no matter how modern, deep of draft, and large of area, will loose out if it is slow of mind and action; or, if in the acceleration of decision making it tramples on customer service.

This suggests a premium on organization and control systems.  The technology and other hard assets may be the easy part.  Conceiving and designing new systems involving the fundamental redesign of work in the port and terminal may be what provides a competitive edge.  This is what smart people do aided, of course, by smart machines.  Advances of this nature will likely require new terms of engagement amongst various parties.

Student

Professor I completely agree with you. There might be a belief that technology can just come and take the place of so much and make things easier but it goes deeper than that. In fact, more efforts are needed now almost to re-invent the wheel from a technology standpoint. I was just having this conversation with my colleagues the other day about our supply chain system that was implemented about 4+ years ago and how to this day we are constantly trying to re-design it to meet the standards of customer service that should provide. So much has to be visited, so much to be taken into consideration, we are truly dealing with a different animal this day and age.

Posted on Monday, October 13, 2014 at 01:03PM by Registered CommenterJames Drogan | CommentsPost a Comment

The Value of Testing

From John Mauldin, October 3, 2014.

Second, I could see my own thought process evolving and realized again how truly important it is to continually test your ideas in the marketplace.

Posted on Sunday, October 12, 2014 at 06:48AM by Registered CommenterJames Drogan | CommentsPost a Comment

Breaking Inertia

From Dobbs, R., Ramaswamy, S., Stephenson, E., & Viguerie, S. P. (2014, September). Management Intuition for the Next 50 Years.

Change is hard. Social scientists and behavioral economists find that we human beings are biased toward the status quo and resist changing our assumptions and approaches even in the face of the evidence. In 1988, William Samuelson and Richard Zeckhauser, economists at Boston University and Harvard, respectively, highlighted a case in which the West German government needed to relocate a small town to mine the lignite that lay beneath. The authorities suggested many options for planning the new town, but its citizens chose a plan that looked “extraordinarily like the serpentine layout of the old town—a layout that had evolved over centuries without (conscious) rhyme or reason.”

Businesses suffer from a surprising degree of inertia in their decisions about how to back up strategies with hard cash to make them come to fruition. Research by our colleagues showed that between 1990 and 2010, US companies almost always allocated resources on the basis of past, rather than future, opportunities. Even during the global recession of 2009, this passive behavior persisted. Yet the most active companies in resource allocation achieved an average of 30 percent higher total returns to shareholders annually compared with the least active. The period ahead should raise the rewards for moving with agility and speed as digitization blurs boundaries between industries and competition in emerging markets heats up.

 

Posted on Friday, October 10, 2014 at 12:36PM by Registered CommenterJames Drogan | CommentsPost a Comment

The Emergent World of Work

I have previously commented on the matter of technology and jobs (Our Past and Their Future: Views on Education and Work).  Related to this is an interesting blog post by Irving Wladawsky-Berger, A Useful Framework for Analyzing the Impact of Technology on Jobs.

From the Wladawsky-Berger post.

Professor Autor concludes the paper concludes with a few key personal observations. 

“As physical labor has given way to cognitive labor, the labor market’s demand for formal analytical skills, written communications, and specific technical knowledge has risen spectacularly. . . Thus, human capital investment must be at the heart of any long-­term strategy for producing skills that are complemented rather than substituted by technology.”

 “While many middle skill tasks are susceptible to automation, many middle skill jobs demand a mixtures of tasks from across the skill spectrum. . . many of the middle skills jobs that persist in the future will combine routine technical tasks with the set of non-routine tasks in which workers hold comparative advantage - interpersonal interaction, flexibility, adaptability and problem-solving.”

And finally, “the challenges to computerizing numerous everyday tasks - from the sublime to the mundane - remain substantial,. . . there is a long history of leading thinkers overestimating the potential of new technologies to substitute for human labor and underestimating their potential to complement it.”

As educators and a society we should be asking ourselves whether we are properly preparing our students for their future.  Are our curricula as dynamic as they should be?  Are the processes of adaption in education as adroit as they ought to be?

 

Posted on Saturday, September 13, 2014 at 08:13AM by Registered CommenterJames Drogan | CommentsPost a Comment

At the very least, good economic policy...

...and good governance get out of the way of growth; and at best, they encourage and foster the drivers of growth.

Now, as I showed a few months ago, back at the very beginning of this new econometric world, politicians were looking for economic models that would allow them to pursue their desired political objectives. If your political objective was a small government footprint, you favored certain models which suggested that was the proper course of action. If your political objective was a larger government and income redistribution, you favored other types of models.

John Mauldin, Thoughts from the Frontline, September 1, 2014, http://www.mauldineconomics.com

This edition of Thoughts from the Fronline is worth a full read.

Posted on Monday, September 1, 2014 at 06:53AM by Registered CommenterJames Drogan | CommentsPost a Comment

The Consequences of the Failure of Imagination

Here's an extract from Shevtsova, L., & Cowen, T. (2014, August 30). Putin Ends the Interregnum

Having flipped the global chessboard with his annexation of the Crimea and an undeclared war against Ukraine, Putin effectively ended the most recent period of interregnum and inaugurated a new era in global politics. However, no one yet knows what this era will bring. The global community is still reeling in shock, when it isn’t trying to pretend that nothing extraordinary has in fact occurred. This denial of the fact that the Kremlin has dealt a blow to conventional ideas, stable geopolitical constructs, and (supposedly) successful policies proceeds from the natural instinct for self-preservation. It is also quite natural that the political forces that have grown accustomed to the status quo will try to look to the past for answers to new challenges—this is precisely what those who were unprepared for a challenge always do [emphasis added]. It was easy enough to predict that many politicians and political analysts would explain what Putin has done to the global order by using Cold War analogies. Drawing these historical parallels is potentially useful in only one respect: if they help us to see what is truly new about the current situation, and the scale of the risks involved.

While this concerns geopolitics, the same issue arises in business, education, and other matters.  It brings to mind laws five and eight (Drogan's Laws).

Having flipped the global chessboard with his annexation of the Crimea and an undeclared war against Ukraine, Putin effectively ended the most recent period of interregnum and inaugurated a new era in global politics. However, no one yet knows what this era will bring. The global community is still reeling in shock, when it isn’t trying to pretend that nothing extraordinary has in fact occurred. This denial of the fact that the Kremlin has dealt a blow to conventional ideas, stable geopolitical constructs, and (supposedly) successful policies proceeds from the natural instinct for self-preservation. It is also quite natural that the political forces that have grown accustomed to the status quo will try to look to the past for answers to new challenges—this is precisely what those who were unprepared for a challenge always do. It was easy enough to predict that many politicians and political analysts would explain what Putin has done to the global order by using Cold War analogies. Drawing these historical parallels is potentially useful in only one respect: if they help us to see what is truly new about the current situation, and the scale of the risks involved. - See more at: http://marginalrevolution.com/marginalrevolution/2014/08/putin-ends-the-interregnum.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+marginalrevolution%2Ffeed+%28Marginal+Revolution%29#sthash.JBZVzqgA.dpuf
Having flipped the global chessboard with his annexation of the Crimea and an undeclared war against Ukraine, Putin effectively ended the most recent period of interregnum and inaugurated a new era in global politics. However, no one yet knows what this era will bring. The global community is still reeling in shock, when it isn’t trying to pretend that nothing extraordinary has in fact occurred. This denial of the fact that the Kremlin has dealt a blow to conventional ideas, stable geopolitical constructs, and (supposedly) successful policies proceeds from the natural instinct for self-preservation. It is also quite natural that the political forces that have grown accustomed to the status quo will try to look to the past for answers to new challenges—this is precisely what those who were unprepared for a challenge always do. It was easy enough to predict that many politicians and political analysts would explain what Putin has done to the global order by using Cold War analogies. Drawing these historical parallels is potentially useful in only one respect: if they help us to see what is truly new about the current situation, and the scale of the risks involved. - See more at: http://marginalrevolution.com/marginalrevolution/2014/08/putin-ends-the-interregnum.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+marginalrevolution%2Ffeed+%28Marginal+Revolution%29#sthash.JBZVzqgA.dpuf
Posted on Sunday, August 31, 2014 at 06:59AM by Registered CommenterJames Drogan | CommentsPost a Comment
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