You are currently browsing the monthly archive for December 2016.

The Mice and Rats Are Winning

By Shlomo Maital


   A fierce ongoing war is being waged, between humans and rats. And guess who is winning?  The rats.  The animal kind, not the human kind.

   Writing in The Guardian, Sept. 20, Jordan Kisner has some interesting and little-known facts about rats.

   * “A male and female left to their own devices for one year – the average lifespan of a city rat – can beget 15,000 descendants.”   That is partly why they are winning. The more we kill them, the more they reproduce (birth rates rise when the rat population declines)..and man, can they reproduce. And like humans, they have sex for fun, too – 10 times a day.

   * “How is it that we can send robots to Mars and yet remain unable to keep rats from threatening our food supplies? Still, here they are. According to Bobby Corrigan, the world’s leading expert on rodent control, many of the world’s great cities remain totally overcome. “In New York – we’re losing that war in a big way,” he told me.”

   * “Frankly, rodents are the most successful species,” Loretta Mayer told me recently. “After the next holocaust [nuclear war], rats and Twinkies will be the only things left.” Mayer is a biologist, and she contends that the rat problem is actually a human problem, a result of our foolish choices and failures of imagination. In 2007, she co-founded SenesTech, a biotech startup that offers the promise of an armistice in a conflict that has lasted thousands of years. The concept is simple: rat birth control.”

     How does rat birth control work?

   “SenesTech, which is based in Flagstaff, Arizona, claims to have created a liquid that will do exactly that. In tests conducted in Indonesian rice fields, South Carolina pig farms, the suburbs of Boston and the New York City subway, the product, called ContraPest, caused a drop in rat populations of roughly 40% in 12 weeks. This autumn, for the first time, the company is making ContraPest available to commercial markets in the US and Europe. The team at SenesTech believes it could be the first meaningful advance in the fight against rats in a hundred years, and the first viable alternative to poison. Mayer was blunt about the implications:   “This will change the world.” “

      SenesTech administers the rat birth control pill through liquid. “ After a series of tests, they quickly settled on a liquid, rather than solid, formulation. Rats have to drink 10% of their body weight every day to survive, and so are always looking out for something potable. “We compared the [two] and they peed on the solid and drank the liquid,” Dyer told me. “Rats are pretty straightforward.” “

     Rats have evolved over many many thousands of years. They are perfectly designed for survival in hostile environments. They are tough as nails. And they are winning. They are, as Mayer herself put it, a more successful species than us. Long after we’re gone, they will still be here.  Best we can do?   Make them practice family planning….




The Analytical Geometry of a Trump Administration

By Shlomo Maital


   After the pundits and experts totally missed the Trump electoral wave, they now weigh in with predictions about what Trump and his administration will do. I’ve read these carefully, and they are largely frivolous, as frivolous as the punditry that assumed a Clinton victory.

     However, NYT columnist Ross Douhat weighs in today (Dec. 29), at the year end, with some wisdom, based strangely enough on analytical geometry.   Consider, Douhat says, an X Y diagram.

       On the X axis, place Trump’s policies. They can run from populism all the way to conservatism. Populism would involve spend-spend. Conservatism would involve cut-cut, put government at all levels on a starvation diet. Where will the Trump administration be?

         On the Y axis, place Trump’s approach to governance, ranging from ruthless authoritarianism (Putin-style dictatorship) to utter chaos (an inexperienced administration rife with scandals, incompetent and unable to organize a paper bag). Except for the scandals, remind you at all of the Obama 8-year term?   Where will Trump be?

         Here are four possibilities, according to Douhat: 1. Authoritarian-populist: Trump panders to the masses, ignores the Congress, uses executive mandates…sort of how he ran his businesses (into the ground). 2. Chaos-populist: Trump flies around the country and the world, gets nothing done, and ultimately, lets Paul Ryan (House Speaker) become the de facto President, because, well, being President is both boring and hard work, and you need to read a lot, and Trump only reads tweets. 3. Chaotic, conservative. Congress cancels Obamacare, with no replacement and millions have no health insurance. America’s role in the world shrinks, as the U.S. deals with its own internal mess. 4. Authoritarian-conservative. Trump is ‘managed’ by his conservative appointees and the Congress.     There is a fifth possibility: a Sweet Spot: X = 3, Y = 3, competence without dictatorship, moderate conservatism without cruelty.

     Douhat says “this is Donald Trump we’re talking about, so a happy medium seems unlikely”.

     What do YOU think? Where is America’s X and Y going to be?


5 Disrupted Industries Under Threat

By Shlomo Maital


   Only older readers will recall the slide rule – the way engineers made calculations, before the calculator, based on the logarithmic rule (the product of two numbers is the anti-log of  the sum of their logarithms, and a slide rule can add two numbers…). The moment the calculator appeared, the slide rule became obsolete. The leading slide rule company never saw it coming.

       Déjà vu. According to the Financial Times, there are five major industries, to which this may happen, as disruptive technologies emerge. Will their leaders see the light in time? Stay tuned. Meanwhile: My advice is:   While others flee these industries, as sinking ships, you, innovator, think about how you can reinvent them and revitalize them. It can be done!

     Here they are:

  • “Industry threatened: High-street travel agents.   Reason why: More travellers booking online.   Tui is the world’s largest tour operator, running high-street travel agencies under the Thomson and First Choice brands, writes Murad Ahmed. But its chief executive Fritz Joussen says the “end game” is to morph into a different kind of business — less reliant on selling package holidays and more focused on owning and operating hotels and cruise ships.
  • Industry threatened: Small component manufacturers and distributors. Reason why: Growing use of on-site 3D printing to make parts.   Any concertgoer knows it is easier to print tickets than pick them up or hope they arrive in the post, writes Patrick McGee. Businesses will soon realise the same applies to spare parts, equipment and electronics. The explosion of 3D printers is expected to shake up entire supply chains, allowing companies to print much of what they need rather than order it, often from overseas. Bosch Rexroth, the drive and control unit of the private German electronics group, projects that in five to 10 years up to 40 per cent of the manufacturing equipment it uses could be printed instead of purchased.
  • Industry threatened: Motor insurers. Reason why Fewer vehicle collisions with increased use of driverless cars.     Imagine a future in which fleets of driverless cars move quietly and carefully around our cities and countryside, seamlessly picking up and dropping off passengers. There are fewer cars on the roads, and those that are there tend to have fewer collisions. For some, this is utopia. For the world’s insurers it may be just the opposite. Motor insurance is one of the mainstays of the industry. It generates about $260bn in annual premiums for major global insurers and $17bn in profits, according to research from Morgan Stanley and Boston Consulting Group. They estimate that the motor insurance industry has a market value of about $200bn. New technology, the analysts say, puts a big chunk of that under threat in a variety of ways. First, fewer cars and fewer accidents mean less demand for insurance. In mature economies the market size could shrink by more than 80 per cent by 2040. Second, the insurance that is needed will be bought by companies such as car manufacturers, rather than by consumers. And as carmakers and tech companies get better at collecting and using data, they may be in a stronger position to sell insurance than the insurance industry itself.
  • Industry threatened Financial advisers.   Reason why: Growth of automated financial advice websites and tougher regulation. Traditional financial advisers have encountered a blizzard of regulation in recent years and now face being usurped by algorithms. The profession began to run into trouble in 2006 when the UK financial watchdog announced a probe into how funds were being sold to retail investors. New rules introduced in 2013 fundamentally altered advisers’ business model, banning fund houses from paying them commission and increasing the minimum level of qualifications advisers should have. Liberatum, an association for financial advisers, estimates that 13,500 advisers left the industry following the introduction of the new rules, while the UK’s Financial Conduct Authority puts the figure at 2,000.
  • Industry threatened:  Car repair garages. Reason why: More drivers switching to low-maintenance electric cars. Electric cars are often marketed to consumers on the basis that they are cleaner and cheaper to run than petrol or diesel rivals, writes Peter Campbell. But because they contain virtually no moving parts — other than the wheels — battery cars boast another advantage: there is almost nothing to go wrong under the bonnet. While that may be good news for motorists, it spells trouble for the thousands of garages that make a living servicing and fixing petrol or diesel cars. The aftersales sector is not only a huge source of jobs within the industry, it is also one of the most profitable parts of the motor sector. “The business of selling cars is very low margin,” says Philippe Houchois, an automotive analyst at Jefferies. “But as long as we have cars with an internal combustion engine the repairs will continue to be the main source of earnings for dealers.” While an internal combustion engine in a car sold today may have several thousands of moving parts within it, an electric Tesla contains just 18 moving pieces, according to Credit Suisse. “Electric motors need virtually nothing doing to them,” says Steve Nash, chief executive of the Institute of Motor Industry, a professional body in the UK.”











How Psychologists Define Innovation

By Shlomo Maital



   “In the physical realm, a behavioral innovation is a new, useful, and potentially transmitted learned behavior, arising from asocial learning (innovation by independent invention) or a combination of asocial and social learning (innovation by modification), that is produced so as to successfully solve a novel problem or an existing problem in a novel manner”. *

     The Latin root of the word “innovation” is “nova”, or novel. This is of course a necessary condition for something to be called an innovation, though novel is definitely moderated by geography — I tell my students that if they introduce an idea proven successful elsewhere, but that does not exist in their town, city, region or country, it is still an innovation.   But child development experts have offered a new dimension to innovation – that of social learning. The definition above appears in a recent article in Child Development. (My wife drew my attention to it). I think it contains a hugely significant point.

       Innovation can be ‘asocial’, or non-social. (Note, this is NOT anti-social!). That is, an individual comes up with a powerful innovation, on their own. A “eureka” moment. But I believe most innovations are a combination of asocial and social learning – once you have an idea, you need to share it, discuss it, test it, build a team… this is a social process.

         Innovations solve problems. This too is an essential part of the definition. An innovation that is brilliant, complex, technical – and solves no problem, or creates no value, is not an innovation.

       A key point emerging from this article:   Global benchmarking.   Countries share social problems. E.g. aging, poverty, inequality, corruption, ….   They tackle problems in different ways. Some are innovative and successful. Some are innovative but fail ultimately.   Countries do not sufficiently learn from one another. For instance: The world faces a huge problem with job creation, as robots emerge to do much of our daily work. How to deal with it? Finland is trying an experiment, in Oulu, a far-north city with a great university.   They are paying a monthly sum to everyone, to encourage them to take risky jobs, with startups, without worrying about the salary.   The world should watch this experiment closely.

     Countries everywhere, and cities, and regions, and towns, should be trying social experiments… tackling tough social problems with creative innovative approaches. Many will fail. Some will work. There should be a global network of such experimenters.   This is evolution put to work in the service of humanity. Yet in my experience, countries try hard to invent their own wheels.. and mainly do it badly.  

       Social learning is not just an individual process, it is also a process in which whole countries can learn from one another. But do they?   Not nearly enough.

* “Eureka!: What Is Innovation, How Does It Develop, and Who Does It?” Kayleigh Carr, Rachel L. Kendal, and Emma G. Flynn, Durham University.   Child Development, Sept.-Oct. 2016

Did Open Borders Destroy U.S. Manufacturing?

By Shlomo Maital


   In the recent US Presidential election, Donald Trump campaigned largely on how trade (i.e. imports, open borders) has destroyed blue-collar jobs. His voters agreed.

     But is this true? Have globalization, open trade in goods and services, and cheap imports, destroyed good US jobs? Or were there other causes?

     You won’t find a more authoritative answer than that from MIT, in Suzanne Berger’s 2013 book Making in America:   From Innovation to Market (MIT Press), based on her work with the MIT Task Force on Production in the Innovtion Economy.

       Here are some relevnt passages:

Even taking into account job losses resulting from outsourcing as well as import competition, it was difficult as recently as a decade ago to find clear evidence of a heavy impact of open borders on manufacturing employment. …In 2003, [such job losses] involved less than one percent of layoffs; in 2004 they went up to 2 per cent. …job losses in manufacturing were mainly the result of productivity gains which might reduce the total numbers of those needed to produce a finite quantity of goods. …[Studies showed] the bottom line was that Chinese imports accounted for 33 per cent of manufacturing job decline between 1990 and 2000 and 55 per cent between 2000 and 2007.   But [focusing mainly on rising Chinese productivity and falling China-facing trade barriers] 16 per cent of manufacturing job losses between 1990-2000, and 26 per cent between 2000 and 2007, were attributable to rising import competition from China.”

   Bottom line: At most, a third to a half.   And more likely:   one-sixth to one quarter of job losses were due to Chinese imports.  

     So what does that mean?   There were other causes, deeper ones. Labor-saving machinery and automation (robots). Low skills. And dumb policy. Berger notes: “Germany abandoned much of its low-end manufacturingwhile expanding employment in higher value-added segments.”   And America??

             Recently a former senior VP of Intel, Mooly Eden, spoke at Technion and noted that the moment manufacturing wages rose in China, Intel shifted to Vietnam and built 1 million square feet of manufacturing capacity there.  

             China lost jobs – why? Globalization? Or because their productivity failed to keep pace with wage increases?  

             It’s hard to predict the future. But here is one pretty safe guess. While Trump tackles America’s job problem and rebuilds manufacturing, based on a wrong assumption, he will fail.   It won’t help to start a trade war with China. So in four years, his supporters will find that he failed to deliver.

           What then? Will they vote Democrat? Or will we get an even farther-right crackpot candidate, as has happened in Europe?  

Dealing with the Trump Presidency: a Survival Guide for 4 to 8 Years

By Shlomo Maital


OK, so counting four years from Jan. 20, or possibly eight – how do we survive?

Mark Blyth, a political science professor at Brown University, has some sage advice, published in the Washington Post.

   The basic problem: In democracy, we vote for what we want. And increasingly, Blyth notes, we are simply NOT getting it.

“Unsurprisingly, people are beginning to realize that they are no longer getting what they vote for. Instead, they are being asked to pay more and more for what they already receive through taxes, taken from stagnant or declining incomes, which also must service their debts. In such a world it’s great to be a creditor and lousy to be a debtor. The problem for democracy is that most people are debtors. In such a creditor-friendly world, however, democracy is reduced knowing that the menu of policy will never vary. Trump’s win in the Midwest, British voters deciding to leave the European Union, Italy’s referendum and Greece’s revolt against its creditors are all connected in this way.”

     In short: Most of us owe money. A few OWN money. The system has been rigged in their favor. And it may stay that way under Trump, the billionaire.

     So how do we respond? Blyth observes:

     “At the end of the day, when you no longer get what you vote for and when the role of voting is reduced to affirming the status quo, voters will vote for the most undemocratic of options if that is all that is “off the menu.” That’s democracy in action in a world devoid of choice. When you can’t get what you want and most people do not benefit from the economic outcomes of government, it’s also what makes democracy unstable.”

       Americans voted “off the menu” (a minority of them, true) because that was the only choice ‘off the menu’.   And it has made democracy unstable, and is doing so all over the Western democracies.

       We’ll survive this. Take a deep breath. Take a long view.  Watch how the brilliant, wise American Constitution protects its citizens from scoundrels. At some point, centrist politicians will begin to understand that voters want real change, want to unrig the system to help debtors not creditors, and want actions, not promises. It may take a few more ringing defeats, like Trump, Brexit, and Italy to wake these politicians up.

       For four years, or eight years, Americans must say clearly what they want, and vote that ticket in every election. Mid-term elections are only two years away.   How will Trump supporters vote, when they feel they are again, not getting what they want?

There is Only One Eye in Mobileye: And It Saves Lives

By Shlomo Maital


Amnon Shashua and Ziv Aviram

     If 93 per cent of road accidents are caused by drivers, then there has to be ways to help drivers avoid crashes. The problem is a global one. Worldwide, there are 1.5 million road deaths yearly and 15 million injuries as a result of car accidents.

     An Israeli startup called Mobileye, founded in 1999 by two friends, one a Computer Science professor and the other, a CEO specializing in retail, seems to have the answer. Here is the story.

     Shashua recalls being asked at a conference in late 1998 by a car maker whether two cameras could identify the location of a vehicle.   Humans, animals and insects use two eyes to gain perception of depth.    Shashua answered, “Why two? It can be done with one.” He knew this from his computer science research; he had published a seminal article titled “3D visual recognition from a single 2D image” the year before.   The fact that there is only one “eye” in Mobileye was an iconoclastic idea initially rejected by all, and is today, a standard.    Shashua recalls, “We (Shashua and Aviram) decided to develop a company….. The decision was taken when we were on a motorbike trip in the Negev. The company was launched in mid-1999. The idea was to use a single camera along with advanced software to warn drivers. At the time no-one thought this monocular device was possible. It was unique.”

       Mobileye uses visual systems and software to warn drivers of impending collisions.   The device warns drivers if their vehicles are about to stray into another lane, and if they are dangerously close to a vehicle ahead. It has been installed in 12 million vehicles in the world, in Israel, US, Japan and Korea. And it works. In an age when many accidents are caused by drivers distracted by cell phones, it is definitely life-saving.

         Insurance company data audited by an actuary show the device cuts accidents by half. An Israeli Transportation Ministry regulation now requires all heavy vehicles over 3.5 tons to install this device, as of Nov. 1.

       Mobileye is based in Jerusalem, employs 700, will reach revenues of $350 m. this year and net income of some $200 m.   It is partnering with Intel and BMW to prepare the technology for future self-driven cars.  

    Here is the two entrepreneurs’ vision of the future for autonomous driving:

         “Robot cars do not drive like humans,” Shashua observes. “They are too slow, too conservative. Cities won’t agree to this. How can we teach self-driven cars to drive safe, but like humans?   We are proposing a solution. And our future includes this solution. This will be much bigger than the existing car industry. This is “wow” squared!”  

       Aviram adds: “18 years ago, we started a company that had vision-based technology to prevent car accidents.   Today our vision is much wider. We are a provider of infrastructure to enable autonomous driving systems. It will be very hard to produce such systems without Mobileye.     There will be a total change in how and what we drive. There will be no parking lots. People will not own cars. Sales of cars will fall by half. The brand of your car will be of no importance. You will summon a car when needed and it will drive you to where you’re going.”

       “In 20 years,” Aviram claims, “it will be illegal to drive.”   Considering the enormous human toll accidents take today, that may be a breakthrough.

Restart for Globalization? What Went Wrong? What Might Go Right?

By Shlomo Maital


   What went wrong with globalization? Where did we screw it up? My friend Clyde Prestowitz, President Ronald Reagan’s trade negotiator, has summed it up very well in his article in The Atlantic.  

     Put very simply:     America ran up huge trade deficits, $800 b., that lasted for 25 years, borrowing heavily from Asia, mainly. This is known as “living beyond your means”. Why? Americans enjoyed living beyond their means, and Asian countries got a growth engine, from American spending financed by Asian loans.  This is globalization gone awry. Why? Because it cannot be sustained. Eventually trade must be balanced. The system failed, because it did not include ‘balancing mechanisms’ that J. M. Keynes envisioned.

     Here is what Prestowitz envisions for the near term, after the Trump administration begins to change U.S. trade policies:

“The results of the election seem to indicate that-the views of economists and foreign-policy experts notwithstanding-America is about to change course on trade policy. That doesn’t necessarily mean a return to pre-World War II protectionism. It could instead simply mean a revival of the spirit that inspired the foundations of the postwar economic order. That spirit, articulated by the economist John Maynard Keynes, focused on assuring balanced trade-the avoidance of chronic surpluses on the part of some trading partners and chronic deficits on the part of others.”

   So, what will this New Order look like, might look like, in the Age of Trump? Here is Prestowitz’s take:

   “Thus a new order might operate to prevent the misalignment of currency valuations, to abolish or offset the impact of tax subsidies, and to mitigate the implicit subsidization of state-owned enterprises. It has been largely forgotten that one of the key objectives of postwar free-trade policy was to maintain a roughly balanced trade account-a goal that the country is likely about to pursue anew and that will likely affect its policies touching on not just trade, but investments, currency, technology, and labor as well.”  

     Could this story of the ‘restart of globalization’ have a happy end, not just for America but for the world?   An end, without a major crisis?


Restart for Globalization? What It All Means for Us

By Shlomo Maital


       The rise of rightist leaders and governments worldwide (UK, Europe, US) who oppose globalization (free unhampered movement of goods, services, people, information, money and technology) has brought a great deal of new thinking. Trump wins, Brexit, Renzi resigns, Austria’s far right barely loses, Merkel turns right, LePen is on the rise, Putin makes trouble everywhere… Globalization seeks win-win. Nationalism seeks “we win/you lose”… which can turn into lose/lose easily.    

     Global world trade and finance seem headed for some sort of restart: What are the main implications for people everywhere? What form will this restart of globalization take? Will the free movement of goods, services, people, information, money and technology be impaired? Amidst the enormous fog of uncertainty shrouding the world economy at present, can we make some reasonable predictions? This and several following blogs tackle this daunting task.

     Background: Globalization really began on July 1-10, 1944, at a resort called Bretton Woods, New Hampshire, U.S. at Hotel Mt. Washington. The U.S. convened world economic and financial leaders and in 10 short days redesigned the architecture of the world economy, even as World War II raged.  Here globalization was born: the General Agreement on Tariffs and Trade, which in negotiated rounds lowered trade barriers; the World Bank, which funded infrastructure in poor countries; IMF, the financial fireman; and others.   The goal: first, lower tariffs and trade barriers, to make trade an engine of growth. America opened its markets, and emerging nations benefited greatly. So did the U.S., in part, by gaining a flood of low-price consumer goods; while losing manufacturing jobs. The world gained, with trade becoming the engine of growth; trade grew twice as fast as world GDP.  

     The gains for the US from globalization are amorphous, the losses are tangible and identified with specific people and groups. Globalization brought enormous inequality, with a few big winners and a lot of small losers. Nobody found a way to compensate the losers, or even to try. It was a ticking time bomb. (The illustration above mentions ‘inequality’..nowhere). Wealth concentrated in very few hands. And inevitably it exploded. The losers, blue collar workers, low-to-middle class wage-earners, now take their revenge at the polls. Hence: Trump. And that revenge has just begun.

       Who gets it? Which of the experts has begun to figure this ‘restart’ out? Start with Larry Summers, Bill Clinton’s Treasury Secretary, former Harvard President, and the nephew of two Nobel Economics Laureates, Paul Samuelson (MIT) and Kenneth Arrow (Harvard).   In the New York Times, Summers make these observations:

   “This renaissance of nationalism and resistance to globalization appears to be universal, and not the exclusive preserve of either the left or right. It seems to stem from a profound sense on the part of many groups that their lives are buffeted by forces beyond their control. As people’s distance increases in a geographic sense, in a cultural sense, and in the sense of a lack of shared identity, they lose confidence in their leaders’ abilities to protect them. Insecurity is begetting atavism (the reappearance of bad traits that we thought had disappeared).   These trends pose dangers. For all the problems and challenges, the past 70 years have been a period of unprecedented progress in increasing human emancipation, prosperity, life expectancy and in reducing violence. All of this would be at risk.     We need to redirect the global economic dialogue to the promotion of “responsible nationalism” rather than on international integration for its own sake. … These and other statistics indicate that the United States and Europe are just one recessionary shock away from being caught in a deflationary trap. Japan has been stuck in one for more than a decade, with expectations of decreasing prices prompting consumers to delay spending and save money. Assuring adequate pressure for stimulus needs to become a priority for the Group of 20, to precaution against deflation. The events of 2016 will be remembered either as a point at which we began to turn away from globalization or the one at which the strategies of globalization began to be reoriented away from elite and toward mass interests. As we make our choices over the next few years, the stakes are very high.”

   Top priority, for Summers: Prevent a global recession, as Trump pushes interest rates higher (helps the rich make even more money) and this spreads worldwide, and as trade stops growing and with it, GDP.  

     Implication: In your planning, think about a scenario in which there is renewed global recession. Have you set aside enough? For those who know history: In 1932 the U.S. imposed a tariff on foreign imports, the Smoot-Hawley tariff, bringing retaliation, shrinkage of trade…and ultimately, the Great Recession.  

Blog entries written by Prof. Shlomo Maital

Shlomo Maital