Thursday, May 30, 2013

Works wanted: science fiction for serious economic research

As a fan of science fiction I have often been disappointed how poorly the genre has explored economics and social change. Although, I have to say William Gibson fills in the socio-economic world better than most.

Nevertheless, I increasingly feel that we are beginning to live in the future. Being inspired by Intel's Tomorrow Project, I have been thinking wouldn't it be great if some science fiction writers or really good 'economics' communicators could take up the challenge of writing short stories about the near future focused on jobs and industries. I know that this may sound like scenario writing but the difference is good fiction writers I think would be better at the story-telling and by starting at level of individuals it may provide a richer set of ideas from which to work rather than the rather macro scenarios.

FIRST, academic writing by its nature simplifies down the externalities so that it can concentrate on a single phenomena for analysis. This is necessary. BUT, academic writing can never then reverse back out of the pit to integrate. In this way the writings are rather abstract, dry and difficult to apply.

SECOND, fiction writers focus on people and and their relationships - they naturally focus on networks of people, organisations and technologies (and always have). The rise of academic network analysis is rather late to the scene (just e.g. read Agatha Christie). Further, it comes naturally to fiction writers to think in terms of how technology gets used - its social context. This I am afraid is a challenge for many academics and even more so for engineers.

THEREFORE, fiction writings could play the role of integrators, helping us connect abstract thinking about trends and patterns and what that means for the lives in real people's lives..

Now, okay I'm not very good at this, but here is a couple of starts....

What might the life of a 'tasker' be like in 2028 (15 yrs away)?

John lives with his family in a small condo in a typical North American city, he used to be a taxi driver, but there are no taxi drivers now that taxi companies have all adopted auto-piloted vehicles. It is hard for him to make a living, there are very few full time 'jobs' anymore and both he and his partner gave up looking years ago. They make a living from being 'taskers'. In many ways it is similar to being a taxi driver. There is lots of work but you have to bid your price for any particular piece of work and then wait to for notification of which work you got. It is challenging because you can cost yourself money - something that you learn with experience.

You also need to specialise, just like in the 'good ol days'  there is a huge variety of tasks so getting good at some is important. There are office taskers and computer software taskers, home help taskers and many more varieties. However, the new apps that facilitate the ranking of quality work has made the process easier. If you have a good 'star' ranking you can bid a little more than those who don't get good marks, still you don't want to over-price yourself. ..........

What might a journey work look like if we don't solve the energy problem?

Its 2035 and despite the promises that a fix for the fuel shortage was coming just around the corner it still hasn't arrived. In European cities with mass transit systems people can still cover large distances to cross town. However, in North American cities with vast distances between home and work the dysfunctions are becoming greater. Unlike Asian cities where the populations have returned to the bicycle, cities like LA, Chicago and many others are just too vast to be viable. Far too much space was devoted to the now disused roads.

Ranjeeta and her husband work from home, a remodelled tower block in what was once one of the outer business districts.  They are both software engineers that do contract projects mainly for Indian IT companies that  outsources their work all over the world.

As cities have begun the fragment and self destruct somewhat, working from home and community provided office space has been the only alternative for many. The return to local communities has been a dramatic shift in time. Cities are quickly becoming a vast set of villages centred around schools and shops but which butt into each other.  Downtown cores, once the core agglomerations of jobs have been rapidly renovating buildings into apartment spaces. The Vancouverisation of North America has been rapid. More people live downtown than ever before.....

Ranjeeta .......

Okay, so I won't make a living writing science fiction but we need to make the abstract more real. What are 'logics' of for the big decisions of today.

Thursday, May 16, 2013

Megashift: Mapping Future Scenarios

About a year ago I started to write a blog on the shape of the future. Some of my blogs I let sit to mature so leaving it a year isn't unusual. Anyway I had started to think of future scenarios as being constructed around three enormous tectonic plates that were colliding and pulling apart along the fault lines of technologies. 

But across the year this now doesn't seem nuanced enough. It is nevertheless, I think, a good place to start a discussion. So I will start with the tectonic plates concept and then move to the matrix concept.

The Tectonic Plates of Scenario Building

We are seeming facing an interesting future with three continental plates in our global landscape on the move.

1. Economic geography
2. Social economic equality (in advanced economies)
3. The state of the environment and natural resource use.

The fault lines for these plates are created by technology.

The fault lines between these three plates is technology. Just as in global geography tectonic plates push against each other along the fault lines and where plates are pushed apart or sucked under. So in our social world technology is playing a similar role.

What amazes me is the lack of ability of commentators and journalists to link only two of these at a time.
So there will be amazing stories of growth and change particularly in India and China aided by technology - which if extrapolated will mean that they have such and such an economy in 20 years. The problem is the world doesn't work this way. Everything is linked and always has been.

The Roman Empire grew on the back of resource expansion, the British Empire grew on the back of resource access / cheap resources. However, today we don't have cheap resources anymore. China and India will have to grow while resource costs rise. Their growth will indeed be the main driver of those resource prices. So is growth even possible in conventional terms in this model?

This is megashift and this is the challenge before us.

Economic Geography

Development studies of the late 1980s were unanimous that up to that point there had probably only been one country to transition up the development ladder and that was Japan. Today, a number of countries are dramatically improving their standard of living. More importantly if we look at cities rather than nation states we see even bigger changes.

Korea and Taiwan improved first but now parts of Brazil, Russia, India, China and South Africa are doing much better as well. Watch any of Hans Rosling's talks on TED for more illumination. This in many ways is a great thing. Too many people for too long have lived in great poverty and moving towards a world where more people can live better lives is to be welcomed. One of the leading drivers of such change is the geographic split in production that has been enabled by current technological trajectories.

So reducing global poverty - doing better than ever before.

But with that comes costs like the tragic building collapse recently in Bangladesh, poor pay and conditions for the workers and increasingly poorer quality clothing in the OECD countries.

Large Scale Growing Inequality in 'Wealthy' Countries

So wealth is being distributed downward to the very poor, but is wealth becoming more equal - no.

There have been any number of reports over recent years on the growing inequality in advanced economies. While the poor and the middle class tread water the rich have been getting richer - fast. The Conference Board of Canada 2011, the OECD (Divided We Stand 2011) and other organisations have all reported in the last few years on this issue. It Matters because the more uneven a society the greater the likelihood there is for the bonds of societal cohesion to breakdown. Note that the rich can also evade taxes in a phenomenal way.

In an article last year Hay and Muller  (2012) ‘That Tiny, Stratospheric Apex That Owns Most of the World’ – Exploring Geographies of the Super-Rich' Geographical Research 50(1):75–88, had this to say.

Capgemini and Merrill Lynch (2010) identify two wealthy groups. The first, who currently number 10.9 million globally are described as High Net Worth Individuals (HNWI). These people hold financial assets in excess of $1 million. This figure includes the book value amounts of private equity holdings, as well as publicly quoted equities, bonds, funds, and cash deposits. It excludes primary residences, collectibles, consumer durables and consumables. In 2010, HNWI wealth totalled $42.7 trillion (compared with World Gross Domestic Product in 2009 of $58.26 trillion [World Bank, 2011]).
So 10.9 million people hold assets [note that is not income in any year] that is equal to 72.8 per cent of the planet's gross income in a single year.   

Long term social / economic inequity is not good for economies or the people themselves.

Natural Resources and Ecological Services 

Because we still do national accounts in a way that only poorly represents the natural wealth of nations it is very challenging to discuss the situation globally for the environment. But let us just say here that massive economic growth as is being driven in China and India particularly is simply not sustainable under current conditions. That is not t say development is impossible but development is a pressure on resource use and global innovation adoption that is very different to rapid development. I hope to explore more this topic in an upcoming blog series on Marco-Innov-nomics.

A recent Economist article notes that we are just about to pass the 400ppm (parts per million) Co2 level. In 1958 the reading at the key observatory at Mauna Loa was only 315ppm. That is a rise of a third in atmospheric carbon in 55 years.

A Matrix approaches to scenarios

The issues analysis depicted above while true does not capture the complexity or the dynamic interactions.

In the diagram below I have three categories; trajectories (such as existing economic development pathways), technologies and economic consequences.

Now, for each of these categories what I have listed are only a sample. All three categories can interact in unpredictable ways.

For example, continued development in China will increase the demand for energy, raising the price. That can lead to a general economic stagnation for everyone because as soon as growth starts the price goes up.  It can drive innovation as we have seen for new ways of exploiting existing resources (fracking natural gas), but this then as negative consequences for climate change which may then start to genuinely effect economies - with less predicable weather and crop failure / water resource issues - which may slow fracking because it needs water. Lastly it can and will induce greater uptake of alternate energy innovations.

Although I scan the scenario and foresight literature, I only recently came across an article which comes close to taking this rather complicated view of foresighting, although I don't think the article develops the idea  far enough. Yanuar Nugroho and Ozcan Saritas (2009) 'Incorporating network perspectives in
foresight: a methodological proposal' Foresight VOL. 11 NO. 6 2009, pp. 21-41