By J Mulraj
Jan 8-14, 2023
Yes, if the myopic polity gets off its high horse!
The latest of several exciting technological innovations is ChatGPT. A chatbot, launched by OpenAI in November 2022, it performs as a code editor, an idea generator and a writing organizer. So promising is ChatGPT that Microsoft is in talks to invest $ 10b., valuing the firm at $ 29 b. Not bad for a firm started in 2015. Elon Musk was one of the founders.
Technology is a double edged sword, bringing both benefits and downsides. ChatGPT, as a writing organizer, can, one day, replace me and write this column. As it can replace writers of simple code. And pose a big threat as a search engine, to Google. Google, Apple, Amazon are all developing their own versions. But AI (artificial intelligence) will help lead advances in productivity, that will be the main thrust of economic growth in future. Manufacturing companies use AI to automate routine processes and, because they respond faster than people, are able to do more with less.
For example, Trintech, a global company, provides specialized accounting SaaS (software as a service) to help firms prepare and present their monthly, quarterly and annual accounts, including most of the FORTUNE 100 companies. Trintech used Dell Technologies to automate, helping it triple its user base and revenue.
There are several new technologies that will revolutionize the way we live and work. Bernard Marr, author, thought leader and Forbes columnist, explains five important trends in this video . These are AI, Metaverse Technologies/Virtual Reality, Programmable World, Web3 Technologies, An Intelligent and Connected World. Readers should see the video, as Bernard explains these trends well.
In healthcare things like CRISPR, a powerful tool for editing genomes, can help edit genomes of those suffering, e.g., with sickle cell disease or thalassemia. Also protein folding developed by Deep Mind, an AI research company acquired by Google, which will bring down the cost of drug discovery significantly. Several others like 3D printing (which eliminates wastage of raw material in manufacture and in construction, being an additive process of manufacture), Quantum computing, Nuclear Fusion, which will provide limitless clean energy, though a decade away, IoT, where machines talk to each other, improving factory productivity, Blockchain, 5G, Remote Surgery, Autonomous Vehicles, and many more, are being developed.
These technologies will make life easier, will have a deflationary impact, produce medical cures for various illnesses, improve productivity leading to higher standards of living and improve the lot of humankind. All technologies are a double edged sword, and will create disruptions, job losses, and anguish, therefore need to be properly planned for. Sadly, in India, we don’t see the Government educating the people, especially the young, about such changes, especially at the primary education levels. It should.
One wonders whether we will reap the benefits of these technologies, or will be denied it by a myopic and obdurate global polity that sits atop its high horse and prefers conflict, even risking, as we are, a nuclear one.
Global leaders have, sitting on their high horses, driven the world towards disaster.
Political leaders have sown discord, leading to horrible consequences, Because of discord and distrust, globalization is winding down. It was globalization that, by helping products and services be provided by the most efficient player, that helped reduce inflation. With increased on-shoring and friend-shoring, inflationary pressures will remain.
Political leaders, sowing discord, have, by not sitting across a negotiating table, failed to prevent a horrific war in Ukraine. Russia is now waiting for the snow to freeze, end Jan, before a major assault. The West is providing Ukraine with more advanced weapons. The fear is that, should Russia feel it faces an existential threat, it may resort to use of nuclear war. This was entirely avoidable by dismounting from the high horse.
Financial leaders and Central bankers have indulged in an orgy of reckless money printing, mesmerized by the insane Modern Monetary Theory (MMT), one that says it’s okay to keep printing money without any backing. Thanks to enormous injections of money in QE policies, inflation is now rampant. Interest rates are raised to fight it, which risks recession. Recessions that could have been avoided if bankers had got off their silly MMT high horse.
Foreign policy leaders sitting on their high horses of differing viewpoints are imperiling several important inter Governmental discussions that need to be had. On climate change. On Nuclear disarmament and protocols. On developing and enforcing trade rules. And technology standards (China has apparently bypassed US sanctions by developing a new technology for photonics chips, ones that don’t need a lithography machine to produce). For discussing these vital issues, it’s far simpler for participants to get off their high horses than it is to raise the table.
So the world finds itself in a right royal mess. The promises of technology look like an ephemeral mirage, more’s the pity. The benefits from it look so near, and yet so far.
US inflation, which is a clue for the next Fed interest rate hike, fell, end Dec, to 6.45%, down from 7.11% end Nov, but still way higher than the 2% target. It is low because China has not fully opened up its economy; when it does, later, it’s demand will cause a surge in the price of crude oil (now at $ 84/b, down from $ 120) which can easily go back to $120. This week China opened up for domestic and international travel. As the Chinese visit family during their new year, they would spread Covid to a largely unvaccinated, older, population. Healthcare, especially in rural areas, will become severely strained.
Raising interest rates not only triggers a recession, it also paves the way for a debt servicing crisis. The world has issued far too much debt to be able to service it. The US will find it even more difficult to raise new debt if the move towards de-dollarization gains momentum. China is increasing its gold reserves, to offer investors an alternative to the USD, namely a gold backed renminbi. Both Japan and China, two large holders, have sold US Treasury Bills.
Last week the BSE Sensex gained 361 points to end at 60261.
If, on Feb 1, Chairman Powell lowers the rate hike to 0.25%, as opined by WSJ correspondent, Nick Timiraos, the stock market would rally. That may be an opportunity to get lighter and create liquidity for a later re entry. In India, retail investors, who acted as a bulwark against the foreign institutional investors (FIIs), have shifted a bit towards fixed interest (bank deposit rates have gone up). Hence any attempt by FIIs to flee to the safety of home markets, would not be so easily absorbed by mutual funds buttressed by retail investors’ inflows. And if Powell sticks to his plan, and to a 0.5% hike, which I believe he will, the downslide will continue.
It’s high time that the global polity commences talks to end the Ukraine war, and other talks to resume fair trade, reduce nuclear stockpile, protect the environment and lower discord. We call all, the, look forward to gaining the benefits of amazing new technologies.
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