Ged Carroll

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  • The rise & fall of American growth

    The rise and fall of American growth

    It has been five years since The rise and fall of American growth was written by Robert J Gordon. When it was first published it was a New York Times bestseller and won awards from the FT and McKinsey. I felt that it was particularly interesting to go back and visit now, given current economic circumstances and the view that its data provides on the techno-optimism versus techno-pessimism that is currently raging on.

    The Rise and Fall of American Growth

    Understanding the author’s perspective

    Robert J Gordon developed his career as an economist in a crucible. He started his career during a time of battle between Keynesian and the monetarist supporting economists. Keynesian ideas had reached their peak in the 1950s. It was challenged by economists such as Milton Friedman and George Stigler. Both of whom were from the Chicago School. The Chicago School was the University of Chicago. It became a centre for economic conservativism. The Chicago School At his time, drew on the likes of Hayek for its ideas.

    Gordon became a ‘New Keynesian’. They assume that there is imperfect competition in price and wage setting to help explain why prices and wages can become “sticky”. They do not adjust instantaneously to changes in economic conditions. Wage and price stickiness, and the other market failures present in their models, imply that the economy may fail to achieve full employment. They argue that macroeconomic stabilisation by the government and the central bank leads to a more efficient macroeconomic outcome than a laissez faire policy would.

    American growth and techno-optimism

    The techno-optimism viewpoint is that continuing technology innovation is going to bring about a new golden age. There are essays trading perspectives on this back-and-forth.

    Gordon’s research suggests that the kind of growth suggested by techno-optimists as an outcome is usually because of very special circumstances.

    When he looked at American growth through the 19th century; growth had occurred in short spurts and much of it wasn’t driven by technology, but was multiple factors coming together. He further posits that those factors that drove American growth are unlikely to be repeated in the future.

    The last spurt of this growth was during the irrational exuberance of the dot com era.

    As you’d expect from an economist, Gordon pulls together to support his ideas very carefully and it is based on empirical analysis. IT has driven little economic growth, which makes one wonder about the benefits of digital transformation as touted by management consultancies.

    Gordon’s work is also an argument against globalisation, at least for the American economy. It brings into question the American dream.

    Finally, with technology unlikely to drive the kind of stellar growth promised, it brings into question the massive premium set on growth stocks over the long term and venture capital investments in the technology sector and the current Silicon Valley model.

    Gordon’s current research is focused on looking at European and American growth so it will be interesting to see commonalities and differences. I expect to see a spurt of growth from second generation mobile devices that freed up small businesses by providing an instantaneous connection with the customer. Rather than relying on an answer machines or a member of their family as receptionist.

    The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War: 70 (The Princeton Economic History of the Western World, 70)

    More book reviews can be found here.

    More information

    Robert Gordon’s academic papers here.

    Answering the Techno-Pessimists (complete) – Noahpinion 

    Interview: Patrick Collison, co-founder and CEO of Stripe – Noahpinion

  • Handset industry of South Korea + more

    South Korea’s handset industry

    South Korea’s handset industry is leading indicator of supply chain shift – Samsung has chosen to place two thirds of its global production capacity at 360 million phones near Hanoi, Vietnam and one third in Noida, India. At the same time, a group of American brands led by Apple have asked their Taiwan-based OEMs to set up production facilities in India. Taiwan’s three largest manufacturers Wistron, Pegatron and Foxconn all have production lines up and running in India. Before this, Taiwan-based notebook computer manufacturers had already moved their production to major ASEAN countries. It is a definite trend that manufacturers are relocating part of their production out of China into ASEAN countries and South Asia – Apple can learn a lot from South Korea’s handset industry. Apple’s approach to its supply chain compared to the handset industry looks risky. It is betting on Chinese behaviour that seems to run counter to Xi Jingping-era China. More on handset industry related content here.

    China

    Ketamine and the Return of the Party-State | Palladium Magazine – as China gets richer and its factional lines get drawn across social battles instead of economic ones, we can expect rhetoric about moral regeneration to become more potent. The party’s turn towards encouraging family and child-rearing might well be the first sign of things to come. When all your political capital has been invested in the narrative of national rejuvenation, there’s no easy way out when the low-hanging fruits of the market start to run low

    Former Chinese Party Insider Calls U.S. Hopes of Engagement ‘Naive’ – WSJ – “Wishful thinking about ‘engagement’ must be replaced by hardheaded defensive measures to protect the United States from the CCP’s aggression—while bringing offensive pressures to bear on it, as the Chinese Communist Party is much more fragile than Americans assume,” Ms. Cai wrote. Her 28-page paper is slated for publication this week by the Hoover Institution, a conservative-leaning think tank at Stanford University. A growing roster of Western politicians and analysts has concluded that U.S. diplomacy with China hasn’t paid dividends. But such views are rarely expressed publicly by sources as highly placed as Ms. Cai was just a short time ago. – Pretty reasonable assessment with plenty of empirical evidence to support it

    Fawning and complacent, the West has eased China’s path to power | The Sunday Times – while the statement is true, it also shows how much the tone has changed towards China

    Finance

    Brazil and China in talks to strengthen science and technology ties | ZDNet – China calls for financing to bring plans to reality…..

    France

    France probes fashion retailers for concealing ‘crimes against humanity’ in Xinjiang | Reuters – source told Reuters Uniqlo France, a unit of Japan’s Fast Retailing, Zara owner Inditex, France’s SMCP and Skechers were the subject of the investigation

    Hong Kong

    How Beijing humbled Britain’s mighty HSBC | Reuters – The decision by Baowu to blackball HSBC is part of a clampdown on the global London-based bank by many of China’s gargantuan state-owned enterprises – a campaign described to Reuters in interviews with HSBC bankers, and employees at state companies who have first-hand knowledge of their operations. Controlled by China’s ruling Communist Party, these companies manage the nation’s largest industrial projects and are responsible for $9.8 trillion of revenue annually. The reason for the pullback by state firms isn’t HSBC’s financial soundness, which isn’t in question, but rather Chinese politics. People inside the state enterprises and HSBC say Beijing has grown disenchanted with the bank over sensitive domestic and international legal and political issues, from China’s crackdown in Hong Kong to the U.S. indictment of an executive at Chinese national tech champion Huawei Technologies – this makes HSBC’s pivot to China look foolish

    ‘Unstoppable storm’: rights take back seat under Hong Kong security law | Yahoo! News – from the journalist’s Twitter thread when she shared the article and additional material that didn’t make the cut: “Judges hope to be given more trust and discretion. Prosecution wants more power. What can defense do? …I’m not as naive to believe they won’t come after lawyers. Losing license is the minimum charge.”

    Luxury

    Streetwear Has a Homophobia Problem | Highsnobiety – where to start with this? I think that some of the homophobia is down to in-out group dynamics. Gays have been in the streetwear industry for a long time. Bomber jackets as a streetwear item came from creatives like Judy Blame and the Buffalo Collective

    Media

    America’s New Post-Literate Epistemology | Palladium Magazine – McLuhan believed that the West was due for a period of “re-tribalization,” but by “tribal” he meant much more than the commonly understood definition. Yes, there would be polarization: people would by and large become less civil, less rational, touchier, and more defensive about the smallest things. This much, we already know and see every day. But McLuhan went even further in his use of the term, arguing that electronic media—more so than any political ideology—shifts the sensorial basis of Western society away from the visual, the literate, and the abstract and toward the oral, the tactile, and the tribal. In other words, he saw re-tribalization as a process that will eventually return modern man to the mental and epistemic world of his pre-literate tribal ancestors: the “global village.” Over the long run, this can be quite benign, even sublime: in 1969, McLuhan imagined its endpoint as a society of “mythic integration” where “magic will live again.” Speaking in lofty millenarian terms, he predicted technology would merge humanity “into an inclusive consciousness…a new interpretation of the mystical body of Christ…the ultimate extension of man.”

    ‘Crypto Keepers’ NFT-Backed Drama Series Hatched by AMM Global – Variety – the production company spun out of Hong Kong’s Asia Television – a former free to air TV station

    Facebook, Twitter, Google Threaten to Quit Hong Kong Over Proposed Data Laws – WSJ – the problem is that the online platforms don’t put teeth behind it. Like taking unilateral action against Chinese advertisers and Chinese media. Lets assume that Facebook, Twitter and Google would have to leave Chinese territories. They can then squeeze China two ways:

    1. China’s small factories rely increasingly on direct to consumer sales through Facebook and Instagram advertising. As does product aggregators like Wish.com and Shein. Squeezing them out of advertising would send 10,000s of Chinese employees out of work
    2. Shutting out China’s SOEs (Air China etc) and Chinese media accounts would severely cripple China’s external united work front efforts to influence the global market

    Vietnam

    Vietnam to phase out 2G, 3G serivces starting 2022 – Vietnam’s Ministry of Information and Communication (MIC) has decided to start phasing out 2G and 3G technologies within the country in 2022 in a bid to encourage people to use smartphones and promote digital society.

  • White Motorcycle & other things this week

    White Motorcycle Concepts WMC250EV

    I have watched this video by White Motorcycle Concepts a few times and still don’t quite get it. White Motorcycle have hollowed out the centre of their motorcycle, to allow air flow through the middle of the bike rather than cutting the air cleanly. The little that I have seen make it hard to discern the effect of Bernoulli’s principle on the shape of the White Motorcycle.

    Tenacious D channel the Beatles

    Tenacious D are better known for their homage pieces to metal bands. For a charity single donating to Doctors Without Borders – they try and channel The Beatles. Its hard as The Beatles had so many sounds that they changed abruptly and crashed into each other.

    I think they did pretty well.

    Stories, players and games

    Nigel Scott has put together an interesting set of ideas on business and marketing. There’s some bits I’d disagree with (are Google, Facebook et al really changing the game, or just costing marketers more?). Really worthwhile going through it all here.

    Akira behind the scenes

    This brief look behind the scenes looks like an excerpt from a longer programme. But it gives an idea into the work which went into making the animated film Akira. The precision and level of detail is mind boggling.

    Gimme 5 mixes

    Gimme 5, the label of long time streetwear distributor Michael Kopelman have a library of good mixes up on Soundcloud and I have been listening to their back catalogue. They’re worthwhile listening to for their eclectic mix of material.

    #MyAppleDaily art project

    Chinese artist Badiucao is publishing a blank template of the paper’s front page for each day that the Apple Daily isn’t published. The idea is to encourage people to publish their own front page instead.

    More from Badiucao here.

    my apple daily introduction

  • Machine learning powered services + more

    Machine learning powered services

    Intelligent Relations – Matt Muir nails this in his take down of their machine learning powered media relations platform – Vapid, largely-pointless busywork which despite its almost universal lack of import is nonetheless treated by its practitioners as somehow REALLY VITAL and with a reverence normally reserved for stuff that matters rather than with the disregard appropriate for an industry staffed largely by double-figure-IQ morons. Anyway, that’s all by way of preamble to the introduction of Intelligent Relations, a new company which is set to make PR even worse if you can imagine it. Intelligent Relations (it sounds…it sounds like an escort agency for the sort of people who bother applying to Mensa, is what it sounds like) is PR, but with AI! That’s right, AI! The MAGICAL SECRET SAUCE that makes EVERYTHING BETTER and definitely isn’t a sign that someone is attempting to sell you some magic beans! Just listen to this – “GPT-Powered Outreach, 24/7 analysis of all relevant public event data to identify opportunities and pitch your company’s stories faster than the competition…Relentless customized global outreach based on AI-ranked relevancy to your brand. Generate responses that start, nurture, and build personal relationships with media influencers. Put your execs and your company in the heart of the conversation. No agency. You own your relationships – not your PR firm…Precisely worded campaigns, aggressively scaled with technology. Faster than humans, more personal than email blasts.” So, er, you are outsourcing the writing of pitch emails, and followups, to a machine? Have, er, you read any non-tweaked GPT-3 generated copy recently? – All of this stuff about machine learning powered media relations reminded me of the start of my agency career.

    I was working with an agency that was part of the Interpublic Group. We were riding the technology boom of the mid-to-late 1990s. This was a series of booms that were inter-related.

    • Telecoms boom, came from deregulation, the rise of data services, globalisation and the internet
    • Enterprise software boom driven by Moore’s Law, the ability to interconnect systems and exchange data at rates previously unseen. There was a strong incentive to replace old systems due to concerns about the millennium bug
    • Mobile boom as GSM networks and their CDMA equivalent democratised the mobile phone and allowed for nascent data services
    • The dot.com boom as companies built service layers over the top of data networks. Much of the ambition was way ahead of where technology was
    • Hardware boom. Businesses and consumers needed to get online

    Our CEO at the time Larry Weber came over to the office in Covent Garden, met clients and held court. He turns around to the junior staff and tells them how soon they won’t have to worry about manually contacting journalists or compiling status reports. Instead, the contact work will be outsourced to the Philippines (thanks to the telecoms boom). And data that was entered once in the company intranet WeberWorks would through the power of Lotus Notes be diced into the reports that the clients needed.

    WeberWorks in its first iteration was a proof of concept, not a viable product. Though I believe that the successor agency Weber Shandwick stuck with developing the platform.

    22 years later and agency life faces much the same problems, except an algorithm is touted to replace Filipino call centre workers in this scenario. What does machine learning powered media relations have that a Filipino call centre doesn’t? How will the PR profession grow when the on-ramp for people to learn how it works is now taken over by a machine learning powered media relations service instead?

    A lot of PR technology is based on the expectation that (machine learning powered) content will be fed into a media sausage factory and coverage will come out. But relationships are important, as journalists get hundreds of pitches and press releases per day.

    Consumer behaviour

    Phoenix eyes’ on catwalk of mainland academy’s fashion gala draw fire for insulting China ｜Appledaily – Some netizens accused the university of humiliating China after a video of the event on YouTube showed that most of the models either had an eye shape known as phoenix eyes, or were using eyeliner to present the same appearance. The eye shape, which is identified by a slight upward lift at the outer corner of the eye, is considered a desirable facial feature. However, some people regard it as a harmful stereotype reinforced by Western culture and the fashion industry. One influential blogger on Weibo, China’s dominant social media platform, said that because this look conforms with the stereotypes of ethnic Asians it carries a meaning of serious humiliation – this might be what passes for woke in China. The story was originally published in the English version of the Apple Daily Hong Kong on June 21, 2021 three days before the paper closed down. I have linked to to a Wayback Machine archive of the article.

    Political trolling twice as popular as positivity, study suggests – BBC News – unsurprising as taps into system 1 thinking

    Economics

    Competition and concentration | Financial Times – The 1980s financialisation of the US economy created a mindset that manufacturing did not matter — and that it should therefore be shifted to lower-cost labour markets. The high value-added stuff, including R&D, would remain onshore. It didn’t turn out like that. Like any other activity in life, manufacturers learn by doing, which means that the most effective innovation usually takes place alongside production. That’s why so many of America’s most impressive companies, including Intel, shifted a lot of their R&D to China – great take on globalisation here. It also gives a sense of where the FT’s view is on the process

    Private equity ‘raid’ on UK companies sparks furious row in City | Financial Times – best quote in the comments ‘The British should be relieved to have their assets stripped by relatively familiar, relatively transparent organizations. It may be the Chinese next.’

    The Evolution of Corruption in China | Foreign Affairs – corruption comes in distinct flavors, each exerting different social and economic harms. The public is familiar with three main types. The first is petty theft: police officers shaking down people on the street, for example. The second is grand theft: national elites siphoning off massive sums from public treasuries into private accounts overseas. The third is speed money: petty bribes paid to regular officials to bypass red tape and delays and grease the wheels of bureaucracy. All three types are illegal, vociferously condemned, and rampant in poor countries. But corruption comes in another, more elusive variety: access money. In this kind of transaction, capitalists offer high-stakes rewards to powerful officials in exchange not just for speed but also for access to exclusive, lucrative privileges, including cheap credit, land grants, monopoly rights, procurement contracts, tax breaks, and the like. Access money can manifest in illegal forms, such as massive bribes and kickbacks, but it also exists in perfectly legal forms – I was thinking of the favoured firms during the British empire and the chaebols during the Park presidency in South Korea. The chumocracy of UK politics is closer to speed money

    Ideas

    Digital Addiction Hunt Allcott, Matthew Gentzkow, and Lena Song (NBER.org working paper) – Many have argued that digital technologies such as smartphones and social media are addictive. We develop an economic model of digital addiction and estimate it using a randomized experiment. Temporary incentives to reduce social media use have persistent effects, suggesting social media are habit forming. Allowing people to set limits on their future screen time substantially reduces use, suggesting self-control problems. Additional evidence suggests people are inattentive to habit formation and partially unaware of self-control problems. Looking at these facts through the lens of our model suggests that self-control problems cause 31 percent of social media use. – or in other words social media is like big food, the illegal drugs industry, alcohol, tobacco and gambling (PDF)

    Innovation

    Losing sight of the Future – Noahpinion – interesting article but the author forgets about energy density as an issue in their own predictions whilst mentioning it as a flaw in prior ones

    Marketing

    The fashion marketing shake-up: As Instagram, Facebook costs surge, where next? | Vogue Business – marketing inflation is hitting the fashion industry as platform and influencer costs surge, but sales don’t. More online related content here.

    North Face Owner Pulled Xinjiang Criticism, Then Reinstated It – WSJ – VF Brands struggling to navigate divergent Chinese and western markets. Its not been a good week for VF Brands as the Futurelight logo court case with Futura is bring a lot of unwelcome attention to the North Face brand and may blow on to its Supreme brand.

    McDonald’s, Wendy’s Cut Back Value Meals, Focus on Pricier Food – this is partly inflation. But I think that they are working an angle to squeeze premium burger brands: Five Guys, Gourmet Burger Kitchen (GBK), Byron Burger and similar

    Retailing

    S.Korea retailer E-Mart buys eBay’s S.Korean business for $3 bln | Reuters – purchased by Shinsegae – part of Samsung chaebol

    Technology

    Panasonic defends $7bn Blue Yonder deal after questions over price | Financial Times – interesting that Panasonic bought Blue Yonder. Blue Yonder is a supply chain software provider

    Wireless

    EE to reintroduce Europe roaming charges in January – BBC News – EE, which is part of BT Group, previously said it had no plans to reintroduce roaming charges in Europe. – No plans meant that they didn’t have their act together at that time, typical BT in other words

  • Apple Daily & other things this week

    Apple Daily

    Hong Kong newspaper Apple Daily closed down. It closed under government pressure. If we’re honest about it, it had been under government pressure for years. Advertisers were reluctant to be in the paper for years, partly due to government sentiment. Despite being Hong Kong’s most popular paper, it was running on loans that Jimmy Lai gave it.

    Apple Daily
    Final print edition of the Apple Daily published in Hong Kong

    It’s end came with a series of cuts. Jimmy Lai has had his assets frozen as part of the national security law related investigation. The Hong Kong government extended these charges to further senior employees of the Apple Daily. Then the Hong Kong government froze the bank accounts of Apple Daily and the related companies.

    The business had 67 million US dollars; so could have kept going for another 18 months until that freeze kicked in. As it was, the last paper would have come out on Saturday. On Wednesday the lead writer was arrested and the board decided to publish its last paper on Thursday. They printed 1,000,000 copies of the final edition which sold out. On previous days they had printed 500,000 to mark the asset freeze as Hong Kongers came out to support them. Back in the late 90s the paper was around 300,000 copies a day. The typical print run was 150,000 copies a day. The paper had about 500,000 paid subscribers. I was one of them. Yes their English copy was almost sub-Guardian standard (but with less typos of course). But their English language news has stories about Hong Kong business and China that other English language outlets didn’t cover.

    The security secretary John Lee warned people not to associate with Apple Daily employees, creating a white terror style scenario.

    A lot of the commentary from people who should know better has been about the Apple Daily‘s tabloid nature. Apple Daily was Hong Kong’s most popular paper for a number of reasons

    But they conveniently ignore Apple Daily‘s pioneering work in internet video journalism. Its investigative journalism and an editorial stance that called government to account. Stories last year included expat police officers breaking planning and property laws. But the Communist Party of China doesn’t want to be examined, let alone held to account.

    Hong Kong writer Sum Lok kei summed it up really well with this post that he put on Twitter

    Yes, ppl are aware of Apple Daily’s failings, their paparazzi arm and all. What is being mourned isn’t exactly the paper, but the possibility of its existence in this city that had prided itself for its witty discretions – now replaced by a monotonic, absolute drone.

    Via @sumlokkei on Twitter

    The Hong Kong government has been very opaque about the kind of journalism that is allowed. It is arbitrary and designed to promote severe self censorship.

    Apple Daily the night after it closed down
    images of the now closed Apple Daily fence with tributes from Hong Kongers via Guardians of Hong Kong Telegram channel
    Apple Daily the night after it closed down
    Apple Daily the night after it closed down

    It all hinges around the national security law:

    • Seccession includes acts ‘whether or not by force or threat of force’
    • Subversion or colluding with foreign countries are vague. So Apple Daily were accused with colluding with foreign countries without being in touch with them
    • The law isn’t supposed to be retroactive, yet Apple Daily content from before the July cut-off date is included in its alleged violations
    • China’s definitions of state interests are expansive
    • It is extra-territorial in nature. So this post that I have written could fall foul of inciting hatred of the Hong Kong and Chinese government. Despite the fact that this post is written and hosted outside Hong Kong. If I get shanghai-ed whilst transferring through an Asian airport you know what has likely happened

    But its just the media isn’t it? No.

    • if you’re a strategist in an advertising agency writing about consumer attitudes and touch on areas like what Hong Kong localism means for brands. This would affect how brands position themselves, I wrote similar positions for brands on Brexit supporters versus remain supporters. (Brexit supporters preferred local brands with nostalgia compared to remainers.) Or changes in attitudes to home ownership and buying homewares due to immigration. The kind of things that the government won’t like then you could be doing eight years to life in jail
    • If you write critical piece of analysis on bonds, Chinese or Hong Kong ‘well connected companies’ or forward-looking views on government policies. You could be doing eight years to life in jail
    • If you create a legal opinion on any of the above for a client. You could do eight years to life in jail
    • If you did a frank audit of a well connected company as part of the audit team of an accountancy firm. You could do eight years to life in jail
    • You do legitimate academic research in an area that the Chinese or Hong Kong governments and their hangers on don’t like. You could do eight years to life in jail

    All of this sounds like a bit of an exaggeration?

    While the world was looking on at trials of Apple Daily, major retailer Watsons withdrew special edition water bottles. The water bottles were designed with the slogan #Hong Kong is very beautiful. Presumably, they had originally been created to tap into Hong Kongers love of limited edition things celebrating their city and their love of hiking in oppressively hot weather.

    They were withdrawn due to perceived seccessionist overtones. Hong Kong is actually achingly beautiful with its futuristic skylines and natural environment. By comparison lot of the Chinese mainland is butt ugly like Hubei province or Beijing in winter.

    Bao Choy, a freelance producer who worked at RTHK was fined for ‘improper car plate searches’ carried out investigating Pro-Beijing forces inspired Triad violence at Yuen Long.

    A reporter at pro-Beijing paper Ta Kung Pao who accessed the same database, but was bound over instead.

    The Department of Justice said it agreed with the order, as Wong had a clean record and was working for the pro-Beijing newspaper when he made the licence plate searches.

    Ta Kung Pao reporter off the hook over car searches – RTHK.hk English news (June 17, 2021)

    Hong Kong brought in new film censorship rules banning documentaries on the protests and anything the government doesn’t like.

    The Hong Kong government is expanding its reach into accountancy diminishing the role of Hong Kong Institute of Certified Public Accountants.

    This would give Hong Kong increased insights into NGOs and political parties. Professional bodies in accountancy and law have been seen as a roadblock by the Chinese and Hong Kong governments. The movement against accountancy bodies is mirrored by moves against the legal profession. The latest move to make solicitors senior counsel turns the legal profession upside down.

    You are now restricted in accessing company registry data, making ownership structures opaque. This will provide boundless opportunity for corruption and fraud and Hong Kong becomes as opaque as mainland China.

    And in a news report from Hong Kong’s public service broadcaster RTHK:

    “If it’s a police state, why not? I don’t think there’s any problem with a police state. When we say a police state, I will view the other side, that is the emphasis on security,” 

    Pro-Beijing politician Alice Mak who is a affiliated with the Federation of Trade Unions quoted in Nothing wrong with HK being a police state: lawmaker – RTHK English news service.

    GPS for your feet

    Honda has been putting in thinking into pedestrian navigation that provides haptic direction instructions through your feet.

    More information from SoraNews24.

    Pride inspiration

    June is pride month and one of the best adverts that I have seen is by Pinterest. It has members of the LGBTQI community from around the world talking about sexuality and how they learned about themselves.