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Inflation | Learning by Proxy

Price discovery in any market takes place when demand meets supply.

Over the last couple of years, it has been very difficult for demand to meet supply simply because of the number of disruptions that have taken place in the supply chain. This has further been exacerbated by the fact that people have been hoarding things because of the uncertainty surrounding availability, access, etc. 

When demand exceeds supply prices go up. This rise in price is called inflation.

Capitalism seeks growth. Growth can only arrive when demand rises. When the growth in demand is not met by commensurate growth in supply, inflation is the result. 

The government use fiscal and monetary policies to control inflation. If demand is more than supply; either make it difficult for consumers to borrow (increase interest rates) or make it easier for producers to expand supply (stimulus, subsidies, etc). 

Since the Second World War, a cornerstone thesis of policymakers across the globe has been to keep inflation low.

Why?

Deflation, which is the opposite of inflation often results in revenues shrinking even if demand exists. Lesser revenue would lead to layoffs and therefore further decrease in demand. So nobody wins. 

If inflation is high, goods and services become more and more expensive over time. People will spend only on things that are absolutely essential and even that, sparingly. Consumption drops. The other way in which this scenario plays out – employers are forced to increase the salary of employees. That lowers margins. 

Let me illustrate this with some data from the US.

Source: Official Data

This is US Dollar Inflation since 1635. Throughout history, It was normal to have deflationary years. Prices went up and then markets collapsed and prices went down. That is all fine, till you reach 1948. After the Second World War, there was a focus on reigning in Inflation. Leaving out the fiasco caused by the Oil Embargo in the 1970s, inflation has been quite sedate. 

Source: Official Data

At the same time, what we also notice is that buying power has collapsed since the Second World War. The absence of deflationary years ensured that prices kept going up. This resulted in more money being required to buy the same goods. For most of American history, $1000 dollars from 1800 could have bought $1000 dollars worth. In other words, the buying power of $1000 remained strong.

In the last 50 years, you would need 10s of thousands of dollars to buy what $1000 dollars could have bought in 1800.

Source: Official Data

Another way of showing the collapse of buying power.

In this context let us look at the rising inflation that is being witnessed in 2022. 

For more than 2 decades now, the US has had an inflation rate of 1% to 3.5%. If you buy an item for $10, a year later it is likely going to cost you $10.1 – $10.35. Nobody would even notice this. Worse, at a one per cent inflation over a prolonged period of time, while prices might move from $10 to $12/$13, it happens so gradually that nobody would realise the changes taking place. The sudden doubling of inflation makes the changes in pricing obvious. 

For companies that need to compensate their workers, when inflation is at 1% giving them a 3% hike and letting them know that they are going to comfortably beat inflation is easy. The more blue-collar your work, the truer this is.

As inflation hits 7%, claiming to be providing a hike 3 times the inflation becomes far more difficult. A worker who is paid $30,000 per year is offered a 3% increment or $900 more the next year. The minimum wage stagnated at the same level for decades. 

This is the advantage of a low inflation environment. The top managers and executives in the company are able to give themselves 20%  to 50% in salary hikes without causing too much hurt (they are fewer in number) to the shareholders while giving little to nothing to the people who make the wheels go around.

The chasm between what the country’s corporate leaders and their workers earn is widening to Grand Canyon-like proportions, according to new research that shows CEO compensation surged 940% between 1978 to 2018 while the average worker saw a meagre 12% pay hike over the same 40-year period.

Source: CBS News 

Simply divide 940% by 40, you get a respectable 23.5%. Through multiple recessions, stock market collapses, etc. CEOs have managed to pay themselves more! In that same period, the average worker saw their salary increase 12% or 0.3% per annum.

Then comes a term popularised by Alfred Rapport in 1986 – Shareholder Value. The thesis is that the sole purpose of the company was to maximise shareholder value. Not stakeholders but only shareholders. And managers who maximise shareholder value (read CEO) are rewarded with money. Often this maximisation happened at the expense of all own the other stakeholders. The environment suffered; employees (esp Blue Collar) were paid incredibly poorly, and sweatshops were invented.

Source: Times Now

Source: Livemint

Source: BBC

Source: Investopedia

The issue at hand is not inflation. It is the possibility that corporations would have to dish out unprecedented salary hikes to retain employees. The pressure on Biden is not from the consumer, it is from corporate leaders.

The unfortunate truth is, we will see the other side of this inflationary peak much sooner unless COVID has a say in it. COVID has battered the world and its economies and still, Apple managed to sell more iPhones in 2020 and 2021 than ever before. This is because of the liquidity that the stimulus has introduced into the market.

That tap will be closed. Demand will fall.

Inflation will climb down in less than 2 quarters. The leaders will project this as incredible economic shepherding. It will be hailed a victory. The corporates will continue to dish out measly single-digit salary hikes.

The rich can continue to get richer and the poor can continue to get poorer.

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Real Philanthropy | Learning by Proxy

Earlier this year I had written a piece on Philanthropy where I had mentioned how the wealthy have been using foundations as a vehicle for tax evasion. In fact, under the guise of charitable foundations, these billionaires are using these are vehicles to influence policy across the world to get preferential treatment and make themselves even more wealthy.

As the year draws to a close and a new one dawns I want to write about the good things that are happening in philanthropy. Of all the Billionaires out there, one seems to be taking ‘giving away’ seriously and doing a good job of it.

Mackenzie Scott.

For those of you who do not know, she is the former wife of Amazon founder, Jeff Bezos.

Scott has not only begun to make good on her word, but she’s doing so at a record pace and with total control over where her money goes: In a little more than two years, Scott, who is worth $57 billion, has given $8.6 billion to 780 organizations promoting issues including gender equity, racial justice, public health and beyond. She has done so without an office or even a mailing address, and with scant evidence of a full-time staff. Instead she works with her husband Dan, researchers and advisers from nonprofit consulting firm Bridgespan. She answers to no one, has no board of directors (that we know of) and, because she’s not making gifts through a charitable foundation, no reporting requirements, either. (In comparison, the Gates Foundation, which has nearly 1,800 employees, made $5.8 billion in grants in 2020. Scott distributed slightly more than $5.8 billion that year.)

And, crucially, she employs a “no-strings attached” giving philosophy, meaning each organization can use the funds however they see fit. “It empowers receivers by making them feel valued and by unlocking their best solutions,” Scott wrote on Medium in June.

Source: Forbes

Just for perspective; Bill and Melinda Gates Foundation has 1763 employees across 9 offices. Giving money away should not require that many people. You just need one person to sign the cheques is it not?

There are others who are also stepping up to put more money where it is really needed. One of the crusaders comes from the unlikeliest of places. Robert Downey Jr, better known for his role as Iron Man is bringing a group of philanthropists together to provide fast grants to scientists who are working on challenging problems.

If we really want to get the planet to net zero emissions, we need to transform how we produce and consume electricity. We need newer, more-efficient transportation, and a food supply that doesn’t rely on deforestation. We need climate-friendly agriculture and better ways to preserve ecosystems. We must capture and remove existing greenhouse gases. We need constant iteration for efficiency. For all the above we need the best minds working on the right problems, and quickly.

Unfortunately, if there’s one major shortcoming of our existing scientific institutions, it’s speed. In the earliest days of the pandemic, as researchers raced to understand COVID-19 and test ideas for response, a group of outsider philanthropists stepped up to create Fast Grants for quick-turnaround financial resources for new questions and ideas. The program did more than just fund projects, it showed that there was a more effective, less bureaucratic way to support scientists.

[…]

Funding risky research first requires bets on risky new models. To help stop the leaks on the scientific talent funnel, our team is launching a new program: the FootPrint Coalition Science Engine.

We are in the business of supporting entrepreneurial scientists and we are in agreement that the major impediments are the obvious limitations of decision-making by committee. We’re trying something different. FootPrint Coalition is funding early research in brand new environmental fields, and doing it under the direction of esteemed Science Leads who can move quickly and fund at their discretion. The FootPrint Coalition Science Engine builds off suggestions made in the Funding Risky Research paper. It operationalizes the “loose-play funding for early-stage risky explorations” but doesn’t bind it to universities.

We’re doing it “in public” on the Experiment funding platform, a website for crowdfunding science research projects, so anyone can participate as a cofunder.

Source: Fast Company

In the meantime, Laurene Powell Jobs is taking a slightly different track to do her giving. She created the Emerson Collective, but unlike other Billionaires who hide under the guise of a foundation, she has incorporated it as an LLC. She is using the money to invest in causes that she believes in and supporting entrepreneurs others may not necessarily.

The collective, as The Post describes it, is “equal parts think tank, foundation, venture capital fund, media baron, arts patron and activist hive.” The collective invests in private companies not because the goal is to make money but because, she says, Silicon Valley has demonstrated that “amazing entrepreneurs who … are 100 percent aligned with our mission” can help find solutions that might elude a nonprofit.

Because Emerson is formed as a limited liability company rather than a foundation, it has the flexibility to do more than make grants to nonprofit groups. It can support advocacy groups, launch its own activist campaigns and contribute to political organizations.

[…]

“What’s fascinating is that by listening to all these founders, she has basically put founders at the head of each of the sectors of Emerson Collective, so that she’s really funding entrepreneurs inside the collective who want to disrupt their spaces,” Conway told The Post. “She wants people to innovate in their sector — education reform, getting the Dream Act passed. So Emerson has become like an accelerator for causes around social change.”

Source: CNET

But with this new crop of philanthropists, one sentiment seems to be clear, they are not going to be taking their wealth to their graves. Whether it is Laurene Powell Jobs…

“I inherited my wealth from my husband, who didn’t care about the accumulation of wealth,” she told the New York Times. “I’m not interested in legacy wealth buildings, and my children know that. If I live long enough, it ends with me.”

The sentiment, which she doesn’t appear to have expressed before, syncs with a building consensus among some of tech’s wealthiest people: That the rich should give away their money today, rather than later, and that the heirs of long-dead billionaires shouldn’t have so much power in society centuries later.

Source: Vox

Or MacKenzie Scott

“My hope is that MacKenzie’s style of giving inspires the philanthropic sector, and inspires other donors to give in a way that supports bold, big visions,” says Favianna Rodriguez, who works to aid communities of color in Oakland, California. “We don’t have a lot of time. We’re looking at the crisis of the epidemic, the economic crisis, the climate crisis, and this moment of racial reckoning.”

With $57 billion still to give away, Scott has big plans to continue to affect real change and have a lasting impact on the historically underfunded and overlooked. As she puts it: “Generosity is generative. Sharing makes more.”

Source: Forbes

So in the end, it seems like it really is possible to give away a lot of money. As the old adage goes; if there is a will, there is a way.

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Internet | Learning by Proxy

All of us use the internet. The mere fact that you are reading these words is because of the internet. Today, your phone has software, your car has software, your refrigerator has software, even my weighing scale has a software. Software is everywhere. Have you ever wondered what software the internet runs on?

The internet was originally created as a project to communicate with soldiers on the battlefield. As the war with Russia (the hot one, not the cold one) never came to pass, that same technology found other applications. People started experimenting and building on it. The fundamental was to build a system through which data could flow. A protocol. While there were many competing protocols, the one that was free eventually won out. It is called the HyperText Transfer Protocol (HTTP).

HTTP is like the pipes that regulate the flow of data on the internet. That data needs to be stored somewhere. Servers store those data. Webservers are software that helps a server handle HTTP requests.

Open-source software (OSS) is computer software that is released under a license in which the copyright holder grants users the rights to use, study, change, and distribute the software and its source code to anyone and for any purpose. Open-source software may be developed in a collaborative public manner. Open-source software is a prominent example of open collaboration, meaning any capable user is able to participate online in development, making the number of possible contributors indefinite. The ability to examine the code facilitates public trust in the software.

Source: Wikipedia

Open-source software allows anyone to alter the source code and create a newer, better version, or add features and share it. Often many people simultaneously work on open source software and share their development with the rest of the developer community working on it. This makes the software better for everyone. Keeping it open source also makes it free to use.

While there were several competing server technologies including the likes of Microsoft and Oracle; most of the tinkerers who went on to build almost everything you use on the internet used Open Source Software for their servers because it is free. I can get a WordPress server with software setup for $5 today. That is the startup cost on the internet.

The Apache HTTP Server was one of the most popular open-source server software released in 1995. It is Open source (explained above), cross-platform (works on various hardware), web-server software. WordPress powers about 30% of all websites on the internet, it runs on Apache.

In the spirit of Open Source Software, a developer by the name of Ceki Gülcü created a Java-based logging utility called Apache Log4j. Log files store what is happening within certain systems so that if an error occurs it is possible to figure out what went wrong.

When a utility is useful many people adopt it. It comes down to the person who wrote it, to maintain it. Often there are several bugs that get discovered over time and they need to be fixed as they get discovered.

Dependency

Source: XKCD

Log4J was written in 2001 and that developer has been maintaining it since – free of cost. But, last week a zero-day vulnerability was discovered which allows arbitrary code execution.

zero-day (also known as 0-day) is a computer-software vulnerability either unknown to those who should be interested in its mitigation (including the vendor of the target software) or known and a patch has not been developed. Until the vulnerability is mitigated, hackers can exploit it to adversely affect programs, data, additional computers or a network.

Source: Wikipedia

Think of it as a birth defect that you just realised exists.

Arbitrary code execution allows the attacker to run any code that they wish on the machine.

Last week it was discovered…

The vulnerability in Log4J is extremely easy to exploit. After sending a malicious string of characters to a vulnerable machine, hackers can execute any code they want. Some of the earliest attacks were kids pasting the malicious code in Minecraft servers. Hackers, including some linked to China and Iran, are now seeking to exploit the vulnerability in any machine they can find that’s running the flawed code.

And there’s no clear end in sight. The Log4J issue amounts to a long-term security crisis expected to last months or years. Jen Easterly, director of the US Cybersecurity and Infrastructure Security Agency, has said this is “one of the most serious flaws” she’s ever seen.

Source: MIT Technology Review

The problem is that almost half the Internet is built using this and that means almost everything that we use is right now vulnerable at some level. The first problem is that there is no clear idea of the fix and they are working on it and besides who funds it?

“The team is working around the clock,” Yazici told me by email when I first reached out to him. “And my 6 a.m. to 4 a.m. (no, there is no typo in time) shift has just ended.”

In the middle of his long days, Yazici took time to point a finger at critics, tweeting that “Log4j maintainers have been working sleeplessly on mitigation measures; fixes, docs, CVE, replies to inquiries, etc. Yet nothing is stopping people to bash us, for work we aren’t paid for, for a feature we all dislike yet needed to keep due to backward compatibility concerns.”

[…]

As pressure and critics pile on the Log4J team, old questions of fairness are being asked about the open-source world.

“Fairness is a problem,” says Ceki Gülcü, who founded Log4 . “There’s this weird imbalance, where you profit from something but you don’t give anything back.”

The public is also almost completely ignorant of the immense role—and risk—of the free-labor-powered open-source software that runs the internet. OpenSSL powers encryption, for example, and Linux is behind the most widely used operating systems on the planet, including Android.

[…]

In 2018, the developer behind a popular open-source project called ua-parser-js quit, unwilling to work for free anymore. The software is used by big tech firms including Google, Amazon, and Facebook. The person who took control of ua-parser-js then hijacked the software and added malicious code to the project to steal cryptocurrency.

Source: MIT Technology Review

The greatest problem is that a lot of the infrastructure that we take for granted is built out of passion and love for software. Entrepreneurs who profess ‘passion’ don’t really build much of use. Even if they do, they use an elitist tool called Patents to put a lock on it. This stops it from being of any benefit beyond the same company. At the same time, they all continue to use all of the open-source solutions and build their wealth on them.

Wait there is more…

So far, the vanguard of Log4j hacking has primarily comprised cryptominers, malware that leeches resources off of an affected system to mine cryptocurrency. (These were extremely popular a few years ago, before everyone realized that the real money’s in ransomware.) Some nation-state spies have dabbled as well, according to recent reports from Microsoft and others. What’s seemingly missing is the extortion, the ransomware, the disruptive attacks that have defined so much of the past two years or so. This won’t be the case for long.

[…]

Log4Shell is also relatively trivial to exploit. Just send a malicious piece of code and wait for it to get logged. Once that happens, congratulations; you can now remotely run whatever code you want on the affected server.

It’s that combination of severity, simplicity, and pervasiveness that has the security community rattled. “It is by far the single biggest, most critical vulnerability ever,” says Amit Yoran, CEO of cybersecurity firm Tenable and founding director of US-CERT, the organization responsible for coordinating public-private response to digital threats.

So far, though, that calamity seems slow to manifest. Hackers are absolutely targeting Log4j; security firm Check Point has seen over 1.8 million attempts to exploit the vulnerability since Friday, according to spokesperson Ekram Ahmed. At some points, they’ve seen over 100 attempts per minute. And state-sponsored groups from China and Iran have been spotted using Log4Shell to establish footholds in various targets. Still, for now, cryptominers reign.

Source: WIRED

The foundation of what the internet stands on is being taken care of by soldiers who are often unpaid. Now, just imagine, not having the internet for 1 month or losing everything that you have stored on the internet. What would you pay to avoid that? Those who have profited off the internet should certainly start paying.

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Indian Crypto Policy | Learning by Proxy

In most countries there exist laws that forbid monopolies. But there are things that government likes to monopolise. One of the things that it loves to monopolise is the issue of currency.

A currency is a store of value, that is provided legitimacy by an authority. In most cases the government.

Cryptocurrency is a decentralised currency that has no issuing authority, nor does it have an underlying basis for its value. Nobody is ascribing it value except for what the market assumes.

Most importantly, they are cutting in on the government’s monopoly.

Gold was used as currency for a very long time. In fact, when paper-based currencies were first introduced, they were promised to provide an equivalent amount in gold. Then America decided to go fiat. A fiat currency does not have any underlying basis, its value is solely derived from the issuer. Almost every economy followed suit.

Gold has all of the properties of a currency but you would never find anyone tossing a 10 gm gold biscuit across the counter to buy a laptop. Gold instead is treated as an asset to invest in.

The boiling frog is an apologue describing a frog being slowly boiled alive. The premise is that if a frog is put suddenly into boiling water, it will jump out, but if the frog is put in tepid water which is then brought to a boil slowly, it will not perceive the danger and will be cooked to death. The story is often used as a metaphor for the inability or unwillingness of people to react to or be aware of sinister threats that arise gradually rather than suddenly.

Source: Wikipedia

Most governments did not even take notice of cryptocurrencies when they came into circulation more than a decade ago. It was too technical, hard to understand and even harder to own. But just like the proverbial boiling frog, the governments are suddenly faced with an animal that they know not how to tame.

The government has two policy levers using which it controls the economy.

The Fiscal Policy refers to the use of government spending as well as tax policies to influence economic conditions. Direct investment towards certain sectors and subsidise certain areas to encourage adoption/investment.

The other is the monetary policy which the government does not directly control. It is set by the central bank by controlling the issue and circulation of money as well as the interest rates prevalent in the banking system.

Cryptocurrency upends both.

If transactions are to be undertaken with cryptocurrency, the government no longer has visibility of the transactions because crypto is blessed with anonymity. This really disrupts tax policy.

The central bank has no means to stimulate or dampen demand when transactions are taking place outside of the banking system and interest rates are market-determined and not policy determined.

Cryptocurrency, therefore, is a nightmare for most governments. Further, banning it outright is only going to result in rampant black markets emerging and it would become impossible to control and to know.

Cryptocurrency has become like an unwanted relative living at home. Can’t get rid of them but neither do you want to keep them.

With that let me welcome you to the flip-flop regulation of the Indian crypto market.

The parliamentary panel yesterday (Nov. 15) met representatives of crypto exchanges, Blockchain and Crypto Assets Council (BACC), among others, for a deeper understanding of the issues involved and the business. This was the first such meeting.

While they agreed that a regulatory mechanism was necessary, none of the stakeholders could decide who must take the onus of regulating the swelling cryptocurrency ecosystem in India.

[…]

The law was earlier intended to “prohibit all private cryptocurrencies in India.” But certain exceptions will be permitted to promote the underlying technology of cryptocurrency—and its uses—according to the Lok Sabha bulletin (pdf) released in January.

Meanwhile, the burgeoning popularity of virtual tokens in India has caught the fancy of urban Indians, as well as millennials in tier-2 and -3 cities. At yesterday’s meeting, experts said cryptocurrencies were some “sort of investors’ democracy.”

Source: Quartz

The government is unsure. It does not even want to call cryptocurrency, currency. Calling it currency gives it an aura of legitimacy and therefore would cut in on the monetary policy side. So the government wants to refer to it as a crypto asset. Akin to gold, something you invest in and not use for transacting. Further, taxing and regulating assets or securities trade is a normal activity that the government does.

The question that arises is who will regulate and how will it be taxed?

There have been proposals to have SEBI handle the trading of crypto ‘assets’. But then SEBI deals with securities such as shares, and crypto is nothing like shares. Then should RBI do it?

Every day there is a new leak and every other day it is countered.

There is one thing that is happening for certain – policy paralysis.

Prime Minister Narendra Modi will take a final decision on the regulatory framework for cryptocurrencies amid conflicting views among stakeholders, two persons familiar with the development said. A high-level meeting was held on Thursday to consider all the options as also stakeholder views including the concerns voiced by the Reserve Bank of India.

The options include a complete ban on private cryptocurrencies, a partial ban, allowing all categories of crypto products with regulation, or just a select few with regulation, one of the persons said.

Source: Economic Times

How could you have a policy on the table and everything from a complete ban to regulated usage still be in consideration? There seems to be no direction whatsoever.

In the meantime, well-funded crypto startups are running ads all over television and newspaper to grow as fast as possible. They all seem to be prescribing to the thinking – once you become too big to fail, they will be forced to regulate you.

Source: Twitter

Source: Twitter

Let us see how long the indecision lasts at the centre.

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Joining Atoms | Learning by Proxy

In 1919 a New Zealander conducting research in Manchester was playing around with the Nitrogen Atom, his name was Ernest Rutherford. Over the next 10 years, there was much that was learned about the structure of the atom. While Rutherford, Einstein and Bohr did not arrive at a solution to the problem of unlocking the power of an Atom; it was Enrico Fermi who figured it involved bombarding heavier elements.

It was actually two German scientists, Otto Hahn and Fritz Strassman, living in Nazi Germany working at the University of Berlin, collaborating with a Jewish refugee Lise Meitner, who had escaped to Sweden, that showed that Nuclear Fission was possible by bombarding Uranium. Despite the Second World War, the scientific publications were working rather well and the news of the experiments got around to the US.

Robert Oppenheimer was hired to build an uncontrolled nuclear fission chain reaction device. No sooner was it built, America dropped it on Japan.

Nuclear Fission uses heavy atoms such as Uranium because they are unstable. These atoms are bombarded by a neutron which affects their stability and causes them to undergo decay into lighter but more stable atoms (relatively) along with the release of a lot of energy and three more neutrons. Those neutrons can trigger more reactions and that is what makes the chain reaction possible.

In the meantime, there was another kind of nuclear reaction that involved combining light atoms such as Hydrogen which was being studied in 1920. When two Hydrogen atoms are subjected to a lot of energy (heat), they fuse together to produce a heavier atom, Helium. This is also accompanied by a tremendous release of energy. It was known for a long time that stars produce their energy through Fusion. It was not until 1950, with the consistent input of several scientists building on Ernest Rutherford’s experiment that the principle and the execution of Nuclear Fusion were understood.

Fission is inherently a chain reaction. You just need to control the chain reaction with the removal of the extra neutrons that are being generated. This is usually done by inserting rods made of lead or carbon that absorb the extra neutron. But the by-product in the case of Fission is even more radioactive and needs to be disposed of safely. Not to mention, the fuel, Uranium is hard to find, very rare and hard to handle.

The accidents at Chernobyl, Three Mile Island and Fukushima have shown that the cost of losing control of a Nuclear Fission plant can be catastrophic. At Chernobyl, the control rods were pushed in a little late, this kept the reactor from turning into a bomb but caused the container to rupture which has left the entire area radioactive even today.

In the case of Fusion, the reaction is harder to start and sustain. The by-product apart from Energy is relatively safer. Also, the input, Heavy Hydrogen is quite easily available in our seas. As one scientist put it, a reaction that powers the sun sounds really dangerous but it is easier to put out than a match.

I pushed a black button. A purring noise began. “That’s the sound of the vacuum draining the air from the glass tube,” Mumgaard said. He turned a valve, releasing a tiny bit of hydrogen gas into the tube. A hot-pink glowing light appeared, nested within the glass tube like a matryoshka doll. The magnetic field that contained the pink plasma was visible in the form of empty space between the glass and the glow. “That pink is the superheated plasma,” Mumgaard said. “It’s at least a thousand degrees. But touch the glass.” The glass was cool. “Now touch the copper wires.” They were warm, but not hot. The warmth of the copper wires was not on account of their proximity to the superheated plasma but, rather, because copper is not a perfect conductor; some of the energy running through it is lost in the form of heat. Superconductors lose almost no heat—which is energy.

It seemed impossible that the pink plasma inside the tube, which was as hot as lightning, wasn’t in some way dangerous. Couldn’t some of it leak out of the magnetic bottle, with catastrophic consequences? As an answer, Mumgaard twisted a valve to let a tiny bit of air into the glass tube; the plasma vanished. “People think of fusion like they think of fission, as this overwhelming reaction, but, really, it’s such a delicate process,” Whyte said. “It’s like a candle in the wind. Anything can blow it out. Even a single human breath.”

Source: New Yorker Magazine

Nuclear Fusion is considered the holy grail of energy research. If we could create our own small sun that can power our energy requirements, would that not be just amazing.


So why have we not done it?

For starters, the reaction required, need us to produce temperatures in excess of 150 million degrees. Don’t need to bother with the units, just know that it is insanely hot. This has been created thus far using lasers which heat up air into plasma.

The second issue is ensuring that it can keep the reaction going in containment. Unlike the Fission reaction where the risk is of turning the reaction into a bomb, here the challenge often is that the reaction will fizzle out and stop if not enough heat is being produced. The Sun is a huge magnetic bottle. That magnetism contains the reaction within it. Makes it possible for the temperature and the reactions to sustain and perpetuate.

To solve the issue of containment, most devices use powerful magnetic fields to suspend the plasma in midair to prevent the scorching temperatures from melting the reactor walls. Looking something like a giant doughnut, these “magnetic containment devices” house a ring of plasma bound by magnetism where fusion will begin to occur if a high enough temperature is achieved. Russian physicists first proposed the design in the 1950s, although it would be decades before they actually achieved fusion with them.

Source: Discover Magazine

Also money. This kind of work requires a lot of iteration and therefore a lot of money. Can you imagine the power bill you will run up trying to create a plasma heated to 150 million degrees?

Creating a magnetic field or magnets that can hold the fusion in containment where it can continue to perpetuate has been the biggest challenge that has plagued scientists though.

In 1976, the U.S. Energy Research and Development Administration published a study predicting how quickly nuclear fusion could become a reality, depending on how much money was invested in the field. For around 9 billion a year in today’s dollars—described as the “Maximum Effective Effort”—it projected reaching fusion energy by 1990. The scale descended to about a billion dollars a year, which the study projected would lead to “Fusion Never.” “And that’s about what’s been spent,” the British physicist Steven Cowley told me. “Pretty close to the maximum amount you could spend in order to never get there.”

[…]

Estimates of the cost of the Manhattan Project, which produced atomic weapons in four years, vary, but it is commonly said that the scientists were given a “blank check.” This year, the U.S. government will spend some 670 million dollars on nuclear fusion. That’s a lot of money, but 650 billion—the amount the I.M.F. estimates that U.S. taxpayers spent on fossil-fuel subsidies last year—is quite a bit more.

Source: New Yorker Magazine

Fusion has had a tough time getting the support that it requires.


Now there is a lot of funding chasing it!

Helion Energy, a clean energy company committed to creating a new era of plentiful, zero-carbon electricity from fusion, today announced the close of its $0.5 billion Series E, with an additional $1.7 billion of commitments tied to specific milestones.

The round was led by Sam Altman, CEO of OpenAI and former president of Y Combinator. Existing investors, including co-founder of Facebook Dustin Moskovitz, Peter Thiel’s Mithril Capital and notable sustainable tech investor Capricorn Investment Group also participated in the round. The funding includes commitments of an additional $1.7 billion dollars tied to Helion reaching key performance milestones. Round-leader Altman has been involved in the company as an investor and chairman since 2015.

Source: TechCrunch

Yes! That is Billion, not Million.

Zap Energy, a pioneer in fusion energy technology, today announced that it has raised $27.5 million in Series B funding. The round was led by Addition, with participation from Energy Impact Partners, GA Capital and Fourth Realm, as well as existing investors Chevron Technology Ventures and LowerCarbon Capital. The new financing comes just nine months after closing a $6.5 million Series A funding round, following the achievement of a major scientific milestone in late 2020 that brings Zap Energy closer to energy breakeven.

Source: BusinessWire

The fusion energy field just keeps getting hotter. British Columbia’s General Fusion on Tuesday said that it has raised $130 million in funding to develop its ambitious clean energy technology.

And the announcement teased to the promise of more cash to come, stating that this was merely “the prelude to a large financing round being prepared for 2022.” The latest round brings the funding total to approximately $300 million.

Amazon founder and former CEO Jeff Bezos is a longtime backer of General Fusion and his VC arm Bezos Expeditions participated in the round.

Source: GeekWire

And then the largest agricultural landowner in America, who would not allow the scientists in Cambridge to release the formulation for the COVID vaccine because his philanthropy ‘incubated’ them and whose recent philanthropy to humanity has been the Omicron – Bill Gates – has been investing in the space for a long time through a fund called Breakthrough Energy. He along with the man who ensures that his employees wear adult diapers to work because time is money and has so much money that going to space is the only way he can blow it up – Jeff Bezos – are investing together. This one is definitely going to be a winner.

Sorbom did make it work: He got the job, and 12 years later, Sorbom has his doctorate from MIT and is co-founder and chief scientific officer of Commonwealth Fusion Systems, a rapidly growing company spun out of Sorbom and his co-founders’ research. CFS aims to commercialize fusion, a safe and virtually limitless source of “clean energy,” to combat climate change. The company is funded by the likes of Jeff Bezos and Bill Gates by way of energy innovation investment fund Breakthrough Energy.

Source: CNBC

Fusion Energy seems to be closer than ever.

Fusion scientists often speak of waiting for a “Kitty Hawk moment,” though they argue about what would constitute one. Only in retrospect do we view the Wright brothers’ Flyer as the essential breakthrough in manned flight. Hot-air balloons had already achieved flight, of a kind; gliders were around, too, though they couldn’t take off or land without a catapult or a leap. One of the Wright brothers’ first manned flights lasted less than a minute—was that flight? An A.P. reporter said, of that event, “Fifty-seven seconds, hey? If it had been fifty-seven minutes, then it might have been a news item.”

[…]

In 1901, the chief engineer of the United States Navy wrote, of heavier-than-air flight, “A calm survey of natural phenomenon leads the engineer to pronounce all confident prophecies for future success as wholly unwarranted, if not absurd.” At the time, the Wright brothers were studying aerodynamics in a makeshift wind tunnel; after one particularly disheartening summer at Kitty Hawk, Wilbur confided to Orville his feeling that “not in a thousand years will man fly.” Two years later, they flew their plane for twelve seconds; not too many years after that, they were flying for hours, performing figure eights for large crowds. In response to a report that President Theodore Roosevelt intended to fly with Orville soon, Orville said that, though he wouldn’t turn down a request from the President, he did not think it wise for the President to take such chances.

Source: New Yorker Magazine

It may arrive sooner than most people think!

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Learning by Proxy

Immigration | Learning by Proxy

A bus driver in Sweden is paid on an average of 14500 Swedish Krona; that translates to about USD 1600 a month. A bus driver in India is paid about Rs 15500 a month which translated to about USD 210. The Swedish bus driver would probably jump out of his bus and run in terror if he is asked to drive on Indian roads. He is probably less skilled than the Indian driver who needs to be able to navigate some of the worst traffic, not to mention, children, cows, dogs and most importantly the Indian roads.

Even so, the Swede is paid almost 8 times as much! Why?

Immigration restriction.

Immigration has been at the heart of almost all of the right-wing movements across the western world.


Until about 300 years ago, most countries were not very well defined. Borders and rule were quite malleable and most often it was determined by he who had the greater might. Most places were forts with an agglomeration of buildings around them, whoever occupied the fort ruled the land. Countries changed hands regularly. It is only after the first world war that the contours of stable borders and identities started to emerge even in Europe. The hardening of those borders resulted in the second world war! Then they just decided to let people move about how they pleased and called it the European Union.

For a large part of the 20th century, the population was exploding across the globe. The population of the planet went from a little over 1.6 Billion people in 1900 to close to 8 Billion today.

Source: Our World in Data

There were always more people getting added to the economy, so the economy continued to grow as consumption grew. At the same time, since consumption was growing, more jobs got created and people were needed to fill those jobs. The population of some countries grew faster than others and this ultimately determined the standard of living. In the countries where labour was in short supply, the price of labour was higher – such as in Sweden and vice-versa.

Over the years, as the standard of living increased, the cost of child-rearing also increased. If you take a 3% increase in cost year over year across 50 years since the second world war, what used to cost 100 dollars in 1940, cost USD 438 by 1990.

Salaries have not kept pace with costs and this has resulted in a population implosion in those countries. There are not too many young people available to take up work!

Immigration and Globalisation are two sides of the same coin. The first push back on immigration started in the 1980s and by the Clinton years in the 1990s was already a huge issue in America. For large companies, technology came to their rescue and made outsourcing/offshoring possible. This moved jobs outside of the western economies without the problem of having to deal with immigration.

Outsourcing and increased penetration of both air and shipping routes over the last 30 years moved both knowledge and manufacturing processes out of the western world. China, Vietnam, Bangladesh, Taiwan and others absorbed a lot of the manufacturing from across the globe. While a lot of the knowledge processes were shifted to India and Eastern European countries like Poland, Romania, Czech, Bulgaria, etc.

Even so, there is always work in industries such as hospitality that cannot be outsourced. Many of these jobs were performed by immigrants. Those same immigrants would cover exorbitant fees to ensure that their child got educated and did not end up in the kind of jobs that they did. 2020 disrupted life and many of those who were unable to find work or cover for themselves left the western countries. They went back home.

As the global economy heats up and tries to put the pandemic aside, a battle for the young and able has begun. With fast-track visas and promises of permanent residency, many of the wealthy nations driving the recovery are sending a message to skilled immigrants all over the world: Help wanted. Now.

In Germany, where officials recently warned that the country needs 400,000 new immigrants a year to fill jobs in fields ranging from academia to air-conditioning, a new Immigration Act offers accelerated work visas and six months to visit and find a job.

Canada plans to give residency to 1.2 million new immigrants by 2023. Israel recently finalized a deal to bring health care workers from Nepal. And in Australia, where mines, hospitals and pubs are all short-handed after nearly two years with a closed border, the government intends to roughly double the number of immigrants it allows into the country over the next year.

Source: New York Times

They WANT immigrants suddenly!

The poor reproduction rate in western countries has been laid bare. They just don’t have enough young people. Further, the pandemic forced many of the old people to retire and they may never join the labour force again. This is forcing these countries to re-assess how they evaluate immigrants.

In advanced economies, the immigration measures being deployed include lowering barriers to entry for qualified immigrants, digitizing visas to reduce paperwork, increasing salary requirements to reduce exploitation and wage suppression, and promising a route to permanent status for workers most in demand.

Portugal’s digital nomads can stay as long as they want. Canada, which experienced its fifth consecutive year of declining births in 2020, has eased language requirements for residency and opened up 20,000 slots for health workers who want to become full residents. New Zealand recently announced that it would grant permanent visas, in a one-time offer, to as many as 165,000 temporary visa holders.

One of the sharpest shifts may be in Japan, where a demographic time bomb has left diapers for adults outselling diapers for babies. After offering pathways to residency for aged-care, agriculture and construction workers two years ago, a Japanese official said last week that the government was also looking to let other workers on five-year visas stay indefinitely and bring their families.

Source: New York Times

The issues are severe when it comes to industries like hospitality and healthcare. Many healthcare professionals have quit out of exhaustion that has been wrought by the pandemic. Working 20 hour days, 7 days a week and not being able to meet their families for fear of infecting them has taken a toll on them whether they are doctors or nurses.

The effects of Brexit are getting more and more obvious to the British.

Net immigration to the United KJingdom fell by almost 90 percent last year to its lowest level since 1993 due to the impact of COVID-19 and Brexit, official figures showed on Thursday.

The Office for National Statistics released a first provisional estimate showing that 34,000 more people moved to the UK last year than emigrated, down from 271,000 in 2019.

“Immigration was much lower in 2020 than in previous years, likely caused by a combination of the coronavirus pandemic and Brexit,” the ONS said.

Source: AlJazeera

In the western world, the ‘Immigrant Crisis’ has gone from, too many immigrants trying to enter the country to not enough of them coming in!

While I think, in a matter of another couple of years this situation might be forgotten as things get back to normal. COVID has certainly taken the veil off the lie that immigrants are dependant on rich nations. The truth is that rich nations are very heavily dependant on immigrants to keep their economies running and also to keep themselves rich. Immigrants, irrespective of the kind of work they do are paid far less than citizens. In the US, a family headed by an immigrant would end up earning 33% less than one headed by a US Citizen according to Forbes.

I doubt their need will make this inequity disappear. But if the pandemic situation persists much longer, it may leave these countries starved of immigrants for years to come. Who knows, in the meantime, those very same people might bring about change in their own countries and leave the west behind?

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Learning by Proxy

Fuels | Learning by Proxy

In the 1870s Edison invented the Tungsten based Incandescent bulb. As soon as he invented it, he saw the potential of the bulb lighting up every household. He had till then been working with Direct Current (DC) and envisaged a network where DC could be supplied to every house and business. The only problem, DC did not transmit well. As you transmitted direct current over long distances, due to losses (heat and other) in the wires, not much would reach the destination. He came up with the idea of stepping up the voltage using transformers which in his network would be placed at every mile. This was unwieldy and expensive.

In the meantime, an apprentice had suggested using Alternating Current (AC). Tesla was scorned by Edison and he finally left Edison to help George Westinghouse create the AC network. By 1890, the world has settled for the AC network.

Despite the horse murders that Edison committed in the middle of New York to show how unsafe AC was, he failed.


A similar tug of war was underway since the 1990s between battery power and hydrogen fuel cell-powered cars. Momentarily, it would seem that battery had won the war thanks to the PR offensive by Elon Musk.

As the world realises that the days of coal are numbered, there is an increasing push towards renewable energy. The trouble with renewables is supply. The sun is not out throughout the day, the wind will not blow when you want it to, and in the winters rivers will not flow with the same force as during the summers.

This implies that there is a need to capture as much of that energy as we can when it is available and use it later. Batteries, well… We are going to run out of Lithium by the end of this decade. While we can hope that Elon will mine it on the moon, there are better alternatives.

Utimately a fuel is a store of energy.

In the olden days, one way of storing human energy was by raising water to an altitude, you could then convert the potential energy of the water into kinetic energy and have energy at your disposal when you wanted. Today, it is possible for us to store energy by splitting water into Hydrogen and Oxygen. The Hydrogen can then be converted into energy through a fuel cell or by combustion.

Suddenly the debate does not seem to be settled!

There are many ways in which you can manufacture hydrogen. each method is colour coded.

Green hydrogen is produced through water electrolysis process by employing renewable electricity. The reason it is called green is that there is no CO2 emission during the production process. Water electrolysis is a process which uses electricity to decompose water into hydrogen gas and oxygen.

Blue hydrogen is sourced from fossil fuel. However, the CO2 is captured and stored underground (carbon sequestration). Companies are also trying to utilise the captured carbon called carbon capture, storage and utilisation (CCSU). Utilisation is not essential to qualify for blue hydrogen. As no CO2 is emitted, so the blue hydrogen production process is categorised as carbon neutral.

Gray hydrogen is produced from fossil fuel and commonly uses steam methane reforming (SMR) method. During this process, CO2 is produced and eventually released to the atmosphere.

Black or brown hydrogen is produced from coal. The black and brown colours refer to the type bituminous (black) and lignite (brown) coal. The gasification of coal is a method used to produce hydrogen. However, it is a very polluting process, and CO2 and carbon monoxide are produced as by-products and released to the atmosphere.

Turquoise hydrogen can be extracted by using the thermal splitting of methane via methane pyrolysis. The process, though at the experimental stage, remove the carbon in a solid form instead of CO2 gas.

Purple hydrogen is made though using nuclear power and heat through combined chemo thermal electrolysis splitting of water.

Pink hydrogen is generated through electrolysis of water by using electricity from a nuclear power plant.

Red hydrogen is produced through the high-temperature catalytic splitting of water using nuclear power thermal as an energy source.

White hydrogen refers to naturally occurring hydrogen.

Source: H2 Bulletin

The two colours of hydrogen that are of most interest today are Green and Blue. India is making a big push towards producing green hydrogen. With the ambitious goal of increasing renewable capacity to 500GW, there is a need to make the most of that energy.

Gail India has launched a tender for what would be India’s largest electrolyser as the nation aims to build up its green hydrogen capacity.

Gail chairman Manoj Jain confirmed at the India Energy Forum by CERAWeek that his company had launched a global tender to procure a 10-megawatt electrolyser capable of producing 4.5 tonnes per day of hydrogen.

Source: Upstream Online

Apart from GAIL, IOC and several other Indian giants have made announcements to the effect. The UK based Ineos has announced plants across Norway, Belgium and Germany.

America is getting North America’s largest green hydrogen plant in New York State.

It will create 68 jobs, it seems. A parking lot at a mall creates more jobs in India because we can’t follow signboards!

Hydrogen fuel cell-based cars were derided not because the cars themselves were expensive to make, it was the hydrogen that was crazy expensive to make. While the cost of Lithium-Ion batteries was also high, the electricity needed to feed the battery existed and was prevalent across the eco-system.

Elon Musk never made the cost argument, he always stuck to the same argument that Edison used – Hydrogen was unsafe and could explode. Well, so have lithium-ion batteries. And it is this kind of argument that keep research dollars from flowing into finding ways to make hydrogen transportation safer.

Today, the US has very few hydrogen pumping stations and most of them are in California.

Source: Alternate Fuels Data Center

Europe has an order of magnitude more. Germany alone has over 100!

Source: H2 Live

So does Japan.

With these plants being set up and the large scale generation of Hydrogen, the question of using Hydrogen Fuel cells is again back on the table. Probably why the German car manufacturers never stopped manufacturing Fuel Cell cars.

Source: Mercedes Benz

Now imagine, a company with a technology that is using an element that is dwindling and a process that is hazardous to the environment; another company with a technology that uses a fuel that we are going to produce in abundance, that we will not run out of and one that is safe for the environment.

In the long run which one might win out?

Now you know the real reason, Elon Musk is selling his shares. Not twitter poll; not tax payment; he is shorting Tesla.

But he has learnt to control media through his Twitter account and the media breathlessly reports every little word that flows through there.

In the meantime, the real guys who have been fooled by Musk’s Twitter account seem to be the Chinese.

Chinese lithium mining and battery companies are splurging big, both at home and abroad.

It’s all part of the country’s race to secure supplies of the battery metals and to expand production capacity of lithium-ion batteries, for which demand is forecast to rocket over the next decade.

One senior industry executive captured the sentiment of the red-hot sector in an interview (link in Chinese) this month with Shanghai Securities Times: “Grab the scale, grab [market] share, profit is not a matter of consideration at this stage.”

Source: Quartz

Another Evergrand in the making.

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Learning by Proxy

Third Dimension | Learning by Proxy

In 1903, the Wright brother flew the first plane at Kitty Hawk. They were put into real-world use, a little more than a decade later during the First World War. They were not very strategically important in those days because they did not have much of a range or payload capacity. But by the time the war ended, there were several plane manufacturers who did not know what to do with their production capacity.

In England, just before the First World War, planes had been put to use to create the first airmail service in 1911.

After the world war, many planes were put into service flying airmails across the world. Pilots used to fly line of sight, there was no Air Traffic Controller. That is how we began to exploit the third dimension.

The first air tickets were sold to people in the 1920s, who were willing to sit in the back of an airmail plane and fly to their destination as cargo.

By the 1960s air travel was ubiquitous and the US aviation industry could not get enough planes to meet demand. The number of airlines exploded in the US and trans-Atlantic travel became incredibly fast. This changed the nature of business and commerce forever and gave birth to a very high degree of financial integration between the USA and Europe.

Air travel went from unimaginable to undeniable in 4 short decades.


We are on the verge of another such shift.

3 Kgs – The weight at which a falling drone can become lethal.

8 Kms – Maximum range of a small civilian drone

200 Kms – Maximum range of a winged drone

2 Kms – Maximum payload capacity of a small civilian drone

200 Kg – Maximum payload capacity of a winged civilian drone

So what had held it back?

The Legal Problem

If a 3 Kg drone fell out of the sky on someone, it could kill them and this fact alone has kept drones from being adopted for delivery. This is a headache so far as legislation is concerned especially in extremely litigious countries like the US. There are other issues like overflight – how much of the air above my house do I own?

In 2016, I had written a blog about the law being disrupted. The issue I had highlighted was to do with the Ownership of the drone as opposed to the ownership of the space where it is flying.

In most cities, this alone inhibits drone delivery. The legal grey areas will have to be addressed first. India has at least released 2 versions of the Drone policy.

The Engineering Problem

The bigger problem is that engineers have to constantly play the game of balancing the weight of the drone (read number of batteries) with the range and the payload that it can carry. This is slowly resolving itself as battery technology improves. In the meantime, the long-range flight is undertaken by drones that look like plane-winged drones; rather than the quad-copters that we tend to associate with drones.

For example, in Africa, Zipline has take-off sites and landing sites for winged drones and human presence is needed at these places, it is not 100% automated.


Covid gave the drone industry a huge break!

Under the Telangana government’s ‘Medicines from the Sky’ project, delivery service company Dunzo Digital and tech firm Skye Air will jointly conduct trials for drone delivery of medicines and vaccines. The trials will begin on September 20 in Telangana’s Vikarabad and will continue till September 25.

Skye Air, which focuses on an end-to-end ecosystem for drone-based logistics, is a part of the Dunzo MedAir consortium for the Government of Telangana’s ‘Medicines from the Sky’ project. The company will work in collaboration with Dunzo Digital to enable faster and efficient drone-based healthcare logistics during the six-day trial.

Dunzo Digital, which is backed by Google, is a hyper-local on-demand delivery service company based out of Bengaluru. The company operates in Bengaluru, Delhi, Gurugram, Pune, Chennai, Jaipur, Mumbai and Hyderabad.

Source: India Today

Drones falling out of the sky is not a problem when they are flying over farms and forests. Medicines need to reach far off locations and this prompts laws to be reconsidered and permissions to be provided. Africa has been at the forefront for years now.

In Oct. 2016, Zipline started delivering blood products to 21 Rwandan hospitals on-demand, reducing delivery time from four hours by road to within 20 minutes, using drones that travel up to 100 km per hour at a time.

The company has since added more medical products to its stock, including medicines and covid-19 vaccines, and has delivered packages to more than 2,000 hospitals across Rwanda, Ghana, and the US (where it is based.)

It marked its fifth anniversary last month by reaching 200,000 commercial deliveries, even as it says it serves 75% of the blood needs outside Kigali, Rwanda’s capital. These numbers suggest Zipline has nailed down an efficient model for a complicated task.

Source: Quartz

In the case of Africa, it was the necessity that drove innovation. There are several parts of Africa that are inaccessible through roads during rains. This is something that happens very often in tropical areas. That need drove the adoption of drone deliveries half a decade ago.

In the meantime, the world is waiting for an ‘innovative’ American company to come up with drone deliveries.

Investors are waking up to the need to invest in this segment and to propel innovations because of the pandemic.

Two short-term trends pushed investors to take a serious look at air taxi and cargo drone startups since the start of the pandemic. First, factory shutdownsport closures, and [whipsawing consumer demand] scrambled supply chains, revealing serious vulnerabilities in the way businesses move goods through the global economy. With ports jammedrail yards in disarray, and trucking facing a shortage of personnel and equipment, the idea of using long-range cargo drones to transport boxes no longer seemed so far-fetched. Plus, moving goods (or commuters) through the air could ease traffic in increasingly crowded cities.

Second, governments cut stimulus checks and lowered interest rates to jumpstart their economies. Flush with cheap cash, investors have pumped record-breaking amounts of funding into startups in both 2020 and 2021. And after seeing Tesla’s breakout success, investors have gotten excited about electric vehicles and autonomous driving. “It was, ‘Hey, we’re doing this with cars. We’re starting to do this with trucks. Let’s bring some of that same kind of technology to aviation,’” said Trotter.

Source: Quartz

As expected all the money is going to the companies in the US and Europe who have not really done any real-world deployment. The startups in developing nations are doing far more in the real world and the only thing holding them back is not capital – it is the government.

This year, startups building autonomous drones to carry passengers and packages have raised at least $3.8 billion, up from $1.1 billion in 2020. That compares to just $438 million in venture capital funding for the entire decade between 2009 and 2019, according to data from the investment tracking firm Pitchbook. Most of the recent wave of funding has gone to a few startup winners, including Joby Aviation ($1.6 billion raised), Lilium ($842 million), and Archer Aviation ($656 million).

Source: Quartz

The silicon valley startups are all spending gargantuan sums of money to make air-taxi a reality. The infrastructure, as well as the certifications needed to make this possible, is yet to be fully understood. In the meantime, startups in India and Africa with relatively meagre funding are delivering real-world impact.

Would we be able to leapfrog the West when it comes to exploiting the third dimension?

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Learning by Proxy

COP Out | Learning by Proxy

2021 has been quite a year.

On that note, did it not seem like all of us were just too happy to get rid of 2020 and get into 2021? The year is almost finished!!

This year saw forest fires stretch from California to British Columbia in Canada. Thousands of square kilometres of forests were burnt. Historic records were reached. There were also forest fires in Russia and Scandinavia. The South of France saw thousands of acres burnt by forest fires. Brazil and Australia are now getting into their “Forest Fire Season”. India also saw forest fires in Uttarakhand.

The West Coast of the United States also saw severe rains and flooding which went all the way across the mid-west right up to Boston. Belgium and Germany saw unprecedented flooding, they say it will take 10 years to fix the damage caused. Many cities in those countries were waist-deep in water. India and China also saw flooding in various parts of their country. The Indian state of Kerala has had to endure 2 floods this year! Bosnia is flooded as I write this post and so is Chennai in India.

Apart from this phenomena such as cloud bursts and heavy rainfall have become common across the globe.

“We have a climate problem”, would be the understatement of the century.


Earlier in the year, I had written a post on Carbon Markets. My sister declared the article too basic, but that is everything I understood.

I had mentioned,

In 1997, at Kyoto, 84 countries signed the Kyoto Protocol which laid the framework for global action against Climate Change and also created certain standards which we are fighting with even today.

One of the terms agreed upon in the Kyoto Protocol was called Assigned Amount Unit (AAU), which we today refer to as a Carbon Credit. A Carbon Credit represents the allowance to emit greenhouse gases comprising one metric tonne of Carbon dioxide equivalents. This is calculated using the Global Warming Potential of the gas being emitted. For this purpose, the Intergovernmental Panel on Climate Change has created several tables.

The Agreement also created three groups of countries – Annex I, Annex II and Non-Annex. Each would commit to differing emissions from their economies. Most of the countries were part of Non-Annex, which commit to nothing, including the US. Almost every other major western economy is part of either Annex I or Annex II including Russia.

A group of countries called the Conference of Parties meets each year to discuss the state of the climate and how none of them would take any action. The Conference of Parties is abbreviated to COP and this year was the 26th time that they met.

This year close to 190 countries attended the event.

Just what is the problem with taking action?

America would like to implore every country to take action to curtail carbon emissions, especially if the country is underdeveloped or developing. The developing countries like India feel that the British and the Americans had a free run for the last 200 years. We are faced with this problem today because of them!

Why should we be expected to sacrifice growth, to atone for the sins that the west committed? Should the people in the developing countries not have an equal shot at growth?

America would like this to be like the CTBT (Comprehensive Test Ban Treaty), which forbids nations from undertaking nuclear tests. America is the only country that has used nuclear weapons against another. They are NOT a party to the CTBT themselves AND they are the greatest proselytisers from the CTBT.

America still is one of the biggest polluters on the planet. Moving production to China does not mean the consumption does not arise from America. Much like the Chinese worker, who work 16-hour shifts for a pittance, they want 7 Billion people across the world to shoulder the burden of their pollution.

Poor countries, rocked by storms and flooding from climate change, have spent years trying to hold the big carbon-emitters accountable. While most rich nations have fiercely resisted this liability, attendees at COP26 will give it another try in Glasgow next week.

The US is the $2 trillion elephant in the room. That figure is a rough estimate (most likely at the very low end) of how much the world’s largest economy could owe other nations if it accepted liability for the “loss and damage” caused by its historical emissions of carbon dioxide, according to Richard Tol, an economics professor at the University of Sussex. The US and Europe have pumped the most carbon into the atmosphere since the industrial era began, although China is quickly narrowing the gap.

Source: Quartz

Explains why these meetings are useless most of the time.

This year again they met to declare their intentions to do nothing about the crisis. Here are some of the major announcements.

Money: Rich nations have clumsily failed to deliver their promised $100bn to poor countries by 2020. But the former Bank of England governor Mark Carney is looking to move trillions of dollars of private capital towards supporting clean technology. He has gathered 450 organisations controlling 130 trillion dollars, or around 40% of global private assets, and they plan to shift finances to activities that help the move towards zero carbon, such as renewable energy. Critics complain the financial institutions will be allowed to invest in fossil fuels, but it’s a serious and novel offer

Trees: More than 100 countries promised to reverse deforestation by 2030. The pledge includes almost £14bn ($19.2bn) of public and private funds. We’ve seen similar initiatives before, but this one’s better funded

Methane: There’s a pact to cut emissions of the world’s second-worst warming gas, methane, by 30% by 2030. Big emitters China, Russia and India haven’t signed, but it’s hoped they will join later

Creating markets: Forty nations led by the UK and including China, India and the US, will impose standards, incentives and rules, to create markets for new technologies. This could be transformative if it works. The partners might, for instance, agree a date by which a certain percentage of steel is made without using coal. This would give investors the confidence to know that markets for innovative technologies would be available, and could radically lower the price of clean tech worldwide

Clean energy: In what could be a new paradigm for helping countries to transition to clean energy, South Africa will get £6bn ($8.5 billion) to ditch coal, in a deal with France, Germany, the UK, the US and the EU

India: Prime Minister Modi has set aggressive targets for low-carbon power by 2030. Some people are worried that he doesn’t plan to end greenhouse gases until 2070 – but the world will have changed completely by then, and India is likely to be forced economically come into step

UK rules: Most big UK firms and financial institutions will be asked to show how they intend to hit climate change targets. Plans will be submitted to an expert panel to ensure they are not just spin

Source: BBC

Money – There is not any. American Congress is in gridlock to pay for climate action in America, let alone the rest of the world. England —> Self-goal (Brexit). The rest of Europe is also not really certain about contributing. So while there is a lot of talk, there is no idea where the money will come from. Also, the developing countries think the sum should be around USD 1.8 Trillion per year.

Trees – Essentially, they have given themselves a clean chit to go on cutting trees for the next 10 years.

Methane – Same as above.

Creating Markets – They have been agreeing on this since the Kyoto Summit. There is still no clarity. There is not even a real and practical framework let alone an actual market

Clean Energy – Everyone will get money to add renewable capacity but at the same time Coal capacity will also rise. India promises hundred of gigawatts of renewable capacity but we are also building new coal plants.

India – Mr Modi is 71, he made a promise about something that is expected to happen in 2070. I will let that sink in.

UK Rules – More Greenwashing

Greenwashing (a compound word modelled on “whitewash“), also called “green sheen“,[1][2] is a form of marketing spin in which green PR and green marketing are deceptively used to persuade the public that an organization’s products, aims and policies are environmentally friendly.

Source: Wikipedia

So we came away with nothing once again. Not to mention…

1.8ºC: Warming above pre-industrial levels if all net zero pledges and the Global Methane Pledge are fully achieved

$18 billion: Amount of money that could be diverted away from fossil fuels as a result of the new overseas finance pledge

479: Number of officially registered COP26 delegates from Brazil, the most of any country

60: Number registered from China

79%: Share of all countries that have a climate change adaptation plan

4: Countries (out of 195) that signed the Paris Agreement whose national governments have yet to ratify the deal—the remaining holdouts are Iran, Libya, Eritrea, and Yemen

Source: Quartz

Do you know the number of lobbyists from Fossil fuel companies at COP26? 503.

Even if all these ‘pledges’ are met, we will come away with a planet that is still hotter. We have given up on the possibility of going back to pre-industrial levels.

Even if we do manage to set up the Carbon markets successfully and get them operational, there are serious issues that need to be addressed.

Proving “additionality.” Additionality is a major problem in existing voluntary carbon markets: Should a forest conservation project really generate carbon credits if it faces no actual threat of being cut down? Negotiators need to agree on how a selling party should determine baselines for different types of projects.

Matching emissions vs. reducing them. Language like “overall mitigation in global emissions” would require the market to do more than offset emissions in one country with reductions in another. The idea is that carbon credit buyers should receive fewer credits than they pay for, such that trading activity proactively reduces net emissions. The draft text pegs that tax as low as 2% or as high as 30%, with developing countries arguing for the higher end.

How to prevent double-counting. If both the buying and selling countries could count sold credits toward their own emissions targets, it would delegitimize the market.

“Share-of-proceeds.” Some negotiators argue that a share of each trade should be diverted into a fund that developing countries could tap for adaptation. The US and other rich countries are pushing for this to be excluded when trades are conducted bilaterally rather than through a UN-administered marketplace.

Crediting the original credits? Negotiators need to figure out what to do with credits from that smaller carbon market piloted under the Kyoto Protocol. Countries like Brazil and India want to continue selling those credits. Others argue those credits are outdated and should be tossed.

Source: Quartz

Unless there is an agreement in earnest and a willingness to pursue the spirit of the law rather than find loopholes to make it seem like everyone is adhering to the word of the law; there is no point in creating the law.

In the meantime, the best way to defend against climate change would be to avoid events like the COP26 which would have brought thousands of planes to Glasgow burning millions of gallons of fuel only to put up a charade.

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Learning by Proxy

One Trick Pony | Learning by Proxy

In the 18th Century, a cavalry officer by the name of Philip Astley set up an amphitheatre to display horse riding tricks. This was the genesis of the modern circus. The horses used to be made to perform various tricks and amuse the attendees. Some horses could perform only one trick and came to be called One Trick Ponies.


Victor Hugo famously said, “No force on Earth can stop an idea whose time had come”. The corollary if I may offer – No force on Earth can save an idea whose time is gone.


The first company to make a real attempt at building a social network was called theglobe.com. They even IPO’d during the dot-com bubble. They disappeared just as soon as they came to be. Many social networks came after them, but none of them crossed the threshold of 200 Million users.

Had Steve Jobs not walked out on stage in January 2007, and announced the iPhone, god alone knows what atrocious internet we would have been left consuming on our mobile devices. Also had 3G not been launched in October 2007, there would have not much use for all the power that an iPhone packed within it.

It was these two factors that saved a company that was plateauing in 2008 – Facebook. Facebook was born at a time when fortuitously for them mobile internet and smartphones happened to happen at the same time.

Facebook was rather late to jump on the mobile bandwagon. Believe it or not, it was not until August 2011 that the company launched its iOS app. Had they delayed it by one more year, the company would have perished and we would not have had any manipulated elections. But that is not how history played out.

Even before the IPO, the leadership within the organisation knew that Facebook was a One Trick Pony. Just weeks before the IPO, the company closed its acquisition of Instagram for a Billion dollars. While text statuses were fine, Facebook was not really great at handling photos. Instagram had a better product and the writing was on the wall. Sequoia, one of the VC funds that had invested in Facebook was making a USD 250 Million bet on Instagram. When your investors start hedging their bets, you have to be worried. When your biggest investor is hedging their bets, the writing is on the wall.

After the resounding failure of Facebook Messenger, the company bought WhatsApp. In fact, apart from Facebook, the site, the company has been a massive photocopying machine and an incredibly bad one at that. Facebook Gift launched early on in the life of the company was a huge failure. They tried to copy Gmail and launched Facebook Mail with ‘@facebook.com’ ID and that failed as well. Facebook Places was a rip-off of FourSquare; failed. They also launched Poke and Facebook Camera, which was launched after the Instagram acquisition as a competitor and both failed. They even launched a Facebook phone; have you heard of anyone using it.

Even Mark does not! He is very particular about his privacy, I have heard.

Mark tried to acquire Snapchat and when his advances were rebuffed, he copied the features of Snapchat and deployed it to all of their products – Facebook, Instagram and WhatsApp.

After WhatsApp, Mark went and splurged another Billion dollars on a Kickstarter project called Oculus Rift. A VR headgear that has gone nowhere since. Mark has been convinced that people should want to live in a VR world and his belief in that nonsense has only grown since the Pandemic and the increasing reliance on remote work.


Facebook is truly a One Trick Pony. But it does its trick well. Facebook has prioritised revenues and profits over all else. They have designed their algorithms to keep people on the platform for as long as possible. The longer people are on Facebook the more opportunities exist to show ads. The more ads they show, the more the revenue.

Priming is a phenomenon whereby exposure to one stimulus influences a response to a subsequent stimulus, without conscious guidance or intention. For example, the word NURSE is recognized more quickly following the word DOCTOR than following the word BREAD. Priming can be perceptual, associative, repetitive, positive, negative, affective, semantic, or conceptual. Research, however, has yet to firmly establish the duration of priming effects, yet their onset can be almost instantaneous.

Source: Wikipedia

Facebook uses this technique quite often to take you down a rabbit hole of hatred. They notice posts that you engage more with and then offer up more and more related content because that is guaranteed to keep you on the site.

Imagine, I showed you an article on the atrocities that the Belgians committed in Congo. If I showed you the work that the Belgians have done in the field of Ornithology and bird conservation next; you are likely to face enormous cognitive dissonance trying to reconcile the bad that they did, with the good. If instead, I take you down a rabbit hole of Belgian atrocities in Africa, you are already primed for it. Your hatred increases, your blood pressure rises and you are left wanting more.


Incidentally, the company’s refusal to allow one of its employees to work remotely led to the leak of the Facebook papers. Those papers were published last week. They proved that the company was aware of the above.

Early one morning in September 1982, the parents of 12-year-old Mary Kellerman of the Chicago suburb of Elk Grove found their daughter dying on the bathroom floor. Hours earlier, she had complained of a cold, and her parents had given her one capsule of Extra-Strength Tylenol, the nation’s most popular remedy for minor discomfort. Hers was among three poisoning deaths reported that day, and each victim had taken Tylenol caps laced with cyanide. The death toll would soon reach seven.

Drugmaker Johnson & Johnson’s response later became the grist for countless business classes. According to one account from a Department of Defense series on Crisis Communication Strategies, Johnson & Johnson chair John Burke immediately formed a strategy team. “The team’s strategy guidance from Burke was first ‘How do we protect the people?’ and second ‘How do we save the product?’” Note the order.

[…]

Yet the Facebook Papers show the company was aware of multiple harms resulting from its product, arguably with greater impact than the Tylenol case. The company’s own research shows that Facebook posts have encouraged rioters in Myanmar and contributed to teens’ mental health struggles. This is not the result of tampering, as with Tylenol—Facebook’s products are working as designed, albeit with unintended consequences. Presumably fixing that design, after dozens of research projects exposed the shortcomings, would be the company’s top priority. But where is the urgency? That is the question badge posters ask. For all the billions Facebook spends on security, it lowballs safety in many countries where it is short on native speakers of the language.

Source: Wired

Facebook today is a company in duress. It has played a key role in the manipulation of elections in several countries. It has also been a hotbed for conspiracy theories as well as misinformation. The company can almost single-handedly take responsibility for the rise in populist politics across the world as well as the terrible response to COVID-19. Further, products such as Instagram have been shown to cause self-esteem issues amongst teenagers. The situation is terrible.

Nobody seems to be impressed with the Pony’s tricks anymore.

So what do you do? PIVOT.

Welcome to Meta.

The company is doing a couple of things. On the one hand, the company is rebranding itself, Meta. The hope is that the fresh coat of paint would make people forget the excesses of Facebook and at the same time it could also help the management distance itself from the dumpster fire that is Facebook. It would make it seem like one of the products on their portfolio has a problem rather than the entire company being a problem.

The soon to be, Trillion dollar company has also completely lost the trust of the younger generation. Yes, they do flock to Instagram even today but Facebook itself has become irrelevant and the next paradigm is beckoning.

Facebook always had to play second fiddle to Apple and Google because they could not own the platform, they were merely an app on the platform. The company has always tried to own everything. A long time ago, they created their own language FBML to replace HTML. It did not work out. React.js, a language they created to code their app has been a huge success and many developers have adopted it as well. They want to own the platform that comes after Smartphones.

Mark seems certain it is going to be VR, and he seems intent on owning that platform.

A few years ago I spoke to a few executives from Technicolor; they had run experiments to see if people would want to watch movies in VR. What they found was that movie watching was a passive mode of entertainment and nobody wanted to be a part of the movie itself. The results were unequivocal. Just like novels that expect you to make decisions on the plot twist have never been more than experiments, so it is with VR.

Zoom has shown us that many of us just would like to be on regular phone calls rather than in front of a camera.

Mark seems to think that we will use VR to conduct meetings and engage with people; ostensibly, the original purpose of Facebook. I do not claim to have had a great deal of exposure to VR, but VR would be a great platform for gaming from what I have seen and heard. Period. I do not think it will take to other use cases too well.

Rarely does an incumbent manage to come up with the next paradigm. By acquiring Oculus Rift very early, Facebook has short-circuited the market and use-case discovery process. Instead, the company is intent on forcing the use case their emperor deems fit. This effort is bound to fail. Facebook VR will join a long list of failures that the company has amassed over the years.

The only other question that remains unanswered is – Can Facebook manage to escape scrutiny thanks to the rebranding? I doubt it will. Even if it does in America, the odds of escaping unscathed in Europe are slim.