By J Mulraj
Sep 9-15, 2023

In the spirit of Vasudhaiva Kutumbakam

At the recently concluded G20 summit, hosted by Bharat, the theme was Vasudhaiva Kutumbakam, an old Sanskrit phrase saying that the world is one family. Countries need to lock hands and cooperate, for economic, scientific and geopolitical reasons lest, as the illustration shows, some may drop out.

And, indeed, several events proved that the summit was, in its outcome, indicative of the theme.

The African Union was admitted into the G20. The African continent, having 18% of the world’s population, and rich in mineral resources, was, hitherto, represented only by South Africa. So the admittance of The African Union resonated with the theme of the Summit. The leaders discussed the environment, a big global concern, and, though there was no announcement on pledges to reduce carbon emissions by a certain date, the G20 did pledge to triple renewable energy capacity. At the COP 15, held in 2009, developed countries had agreed to create a $100 b. fund to help emerging markets in their energy transition, having emitted a lot of carbon when thy developed.  Regrettably, this fund has not been created.

At the Summit, the Governments of several countries, including India, US, Saudi, UAE, Israel, Germany and other EU countries signed an MOU to set up an India-Mid East- Europe Economic Corridor (IMEC). (see map)  This $20 b. project will provide a rail plus sea route to transport freight  between India and Europe which is expected to cut time by 40% and cost by 30%. Goods would be sent by sea from Mumbai, India, to Jebel Ali, UAE, then by rail, traversing Saudi Arabia, to Haifa, Israel (bypassing the Suez Canal, saving cost of transit and tug boats), then from Haifa to Piraeus, Greece, by sea, and onwards to all of Europe. Another example of Vasudhaiva Kutumbakam, a global effort to benefit mankind by lowering logistic costs of international trade. Along with a rail network, there will also be a high speed fibre network, and a hydrogen pipeline, to facilitate communication and better the environment.

Other initiatives included a boost to greater use of biofuels, and an effort to introduce a global no first use (GNFU) nuclear policy. That is in global interest, too. Why don’t leaders contemplate a NATO like provision, of other members coming to the rescue of a member attacked? Why cant signatories to GNFU pledge that if any of them are attacked with a nuclear weapon, the others would use their nukes to destroy the one who see them first? That, surely, would be an effective deterrent, would it not?

EC President, Ursula Von der Leyen, correctly identified the potential dangers of artificial intelligence, AI, and advocated the need to create a global framework for assessing the risks of generative AI, and the measures needed to control it. AI can become a huge risk for the world and global cooperation will be needed to control it.

To be sure. AI has loads of benefits. It can be used for new drug development, at a far lower cost and a faster speed, it will lead to huge productivity gains and will, as programs like ChatGPT have shown, make life simpler. But it also has risks, which is what Ursula von der Leyen was cautioning about.

In the workplace, eg, Goldman Sachs  assesses that 300 m. jobs will be at risk, with a quarter of all jobs being completely done by AI!.

It is true that generative AI will also generate new jobs, which would, however, require the learning of new skill sets. But a potential disruption of 300 m. jobs poses a huge risk to global economic growth. All large economies are already over indebted to be able to provide support for such large numbers.

AI uses large language models which are defined as deep learning algorithms that can recognize, summarize, translate and generate content. AI is self learning, and can use (or compute) and learn from vast quantities of data. In this podcast Mustafa Suleyman, who founded Deep Mind, later acquired by Alphabet, tells us of the prodigious appetite for compute, which, since 2013, has grown  10X every year for ten years! It is able to recollect and analyze all data.

So, perhaps, a bigger risk is a geopolitical one. Hear this video from The Guardian. In it, a woman gets a call stating that her daughter has been kidnapped. She hears, and recognizes, her daughter’s voice screaming for help. A ransom is demanded, with dire consequences to her daughter if unmet. Luckily for her, she discovers that it’s a scam, and gets away with nothing more than a serious fright.

AI had cloned the daughter’s voice to such perfection that later, when the mother spoke to her daughter, she was still uncertain which was the genuine voice!

This is frightfully scary. Imagine evil players, of whom there is no shortage, cloning the voice of a leader, Biden, Xi, Putin, or anyone and publicly announcing the launch of a nuclear weapon! Given limited response time, a few minutes to be able to intercept it with missiles of your own, the possibility of an unwarranted nuclear war cannot be ruled out.

Last week the BSE Sensex closed at 67838, up 240.

Events that investors should look out for will primarily be in China and USA. In China, at Beidaihe, the resort where Chinese CPC elders meet, President Xi was reportedly reprimanded for the direction the Chinese economy was taking. China’s problems include a collapse of its realty sector, high levels of youth unemployment, exports which have fallen every month for the past six months, unsustainable levels (perhaps $ 9 trillion) of local Governments’ debt, an adverse demographic profile and devastation of crop lands due to floods. The apprehension is that Xi may, in order to divert public attention, attempt an incursion of Taiwan, probably helped by low US strategic petroleum reserves (just 17 days as of July) and low stockpile of weapons (all sent to Ukraine to fight a senseless war).

The political scene in USA is hitting up after House Speaker Kevin McCarthy announced the decision to open an impeachment inquiry into Joe Biden, based on evidence of corruption by his son Joe, of which he may be a beneficiary as ‘the Big guy’ mentioned in an email. Besides that, unless the House approves an interim bill for funding, the US Government will run out of money in a fortnight. Besides that, the collapse of the commercial real estate market (offices, shops and small businesses) will cause a few community banks to fold, triggering a financial crisis.

The problems in the world’s two leading economies, the increasing mutual suspicion amongst global leaders, the opposite of Vasudhaiva Kutumbakam, the dangers of being unable to control AI, and the geopolitical risks attached to that, gives reason to ponder.


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