At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, including investment analysis, psychology, science, technology, philosophy, etc. We have been sharing our favourite reads with clients under our weekly ‘Ten Interesting Things’ product. Some of the most interesting topics covered in this week’s iteration are related to ‘the Amazon machine’, ‘the importance of experiences in learning’, and ‘the great AI paradox’.
Here are the ten most interesting pieces that we read this week, ended December 22, 2017.
1) The Amazon machine [Source: ben-evans.com ] When you look at large manufacturing companies, it becomes very clear that the machine that makes the machine is just as important as the machine itself. For instance, there’s a lot of work in the iPhone, but there’s also a lot of work in the machine that can manufacture over 200mn iPhones in a year. Ben Evans in this piece says that more than any of the other big tech platform companies, Amazon is a machine that makes the machine. People tend to talk about the famous virtuous circle diagram - more volume, lower costs, lower prices, more customers and so more volume. However, the operating structure of Amazon - the machine - is just as important, and perhaps less often talked about. Amazon at its core is two platforms - the physical logistics platform and the e-commerce platform. Sitting on top of those, there is radical decentralisation. Amazon is hundreds of small, decentralised, atomised teams sitting on top of standardised common internal systems. If Amazon decides that it’s going to do (say) shoes in Germany, it hires half a dozen people from very different backgrounds, and it gives them those platforms, with internal transparency of the metrics of every other team.
These are the famous ‘two pizza teams’. The obvious advantage of a small team is that you can do things quickly within the team, but the structural advantage of them, in Amazon at least (and in theory, at least) is that you can multiply them. You can add new product lines without adding new internal structure or direct reports, and you can add them without meetings and projects and process in the logistics and e-commerce platforms. This means not so much that products on Amazon are commodities (this much is self-evident) but that product categories on Amazon are commodities. This model has two obvious consequences for Amazon. The first is that it can scale almost indefinitely - if you can launch x in y without a meeting or a new organization structure, the speed of expansion into new categories is limited mostly by your ability to hire and to procure (and also by consumers’ willingness to buy a new category online). The second is that the buying experience for any given product category ultimately needs to fit a lowest-common-denominator model. The platform teams cannot easily create custom experiences for each new category. Amazon can go almost indefinitely broad, but not necessarily deep - hence there are questions as to what categories might *need* a deeper experience - most obviously, now, higher-end clothing.
There’s a third consequence, too: those atomised teams don’t actually need to work for Amazon. This is the insight behind both AWS, which at its heart gives external teams wholesale access to the e-commerce platform, and Marketplace, which does the same for the logistics platform. AWS is now 10% of Amazon’s revenue, and the fees charged to third-party vendors using marketplace are close to 20%. AWS is obviously today much more than wholesale access to Amazon’s internal technology, but the straight unbundling of internal capabilities is pretty straight-forward in Marketplace, and Marketplace is now around half of the total volume of goods sold through Amazon. If the constraint to the model’s growth is how fast you can hire product teams and sign supplier agreements, letting other people do it for you and charging them a margin lets you scale that much faster, and with less risk.
Ben says that the earlier narrative for AWS was that this entity must be burning cash and that it was another example of the idea that the company operates by buying market share at breakeven or a loss. However when it was later realized (post-split) that it was profitable, the narrative inverted - the cash from AWS was supposedly subsidizing the loss-making purchase of market share elsewhere in the business. Ben believes both narratives were based on a false premise. The atomised teams are all at varying stages of development - some are large and some small, some old and very profitable, some new and making startup losses. The net income and FCF lines you see are the aggregate of all of those hundreds of teams, and so don’t really tell you anything much - Amazon invests cash from profitable units into the creation of new, unprofitable units, and you have no real idea what the distribution looks like. It entirely possible there are many more units apart from AWS that are profitable.
He says that Prime fits into this, incidentally, as a third pillar, next to logistics and ecommerce. Every piece of perceived value that Amazon can add to Prime makes you more likely to sign up and less likely to cancel, and once you have it, as a sunk cost, you are much more likely to route other online (and increasingly many offline) purchases through it. The best parts of Prime, from Amazon’s point of view, are things with no marginal cost, such as TV. Amazon buys TV shows to get you to buy toilet paper, and your shifting your toilet paper buying from Walmart to Amazon has a Life Time Value that dictates the TV acquisition budget. Amazon, then, is a machine to make a machine - it is a machine to make more Amazon. The opposite extreme might be Apple, which rather than radical decentralization follows a carefully structured approach. This allows Apple to create certain kinds of new product with huge efficiency but makes it pretty hard to add new product lines indefinitely. For tech firms, what this means is there are certain kinds of project that they can deliver very well repeatably and predictably and there are some it cannot. If the machine is designed to do X, it will struggle at Y no matter how clever the people. A lot of the story of Amazon for the last 20 years is of how many Ys turned out to by Xs - how many categories that people thought could not be sold online and could not be sold as commodities turned out to be both.
2) Seek new experiences, not facts if you want to learn [Source: Financial Times] This brilliant op-ed piece by Anjana Ahuja highlights a recent study published in the journal Personality and Social Psychology Bulletin which reveals that the personality trait of openness, which reflects the ability to live in the moment, is more crucial to learning than intellectual curiosity, which describes a penchant for academic knowledge, abstract ideas and intellectual pursuits. The research, implies that the current teach-and-test mode of schooling is not terribly good at turning out proficient learners. Rather than encouraging children to memorise facts and sit a string of exams, we would be better off encouraging them to be enthusiastic explorers of whatever environments they find themselves in, whether a classroom or a convenience store. That way, learning becomes a natural feature of everyday life rather than a purposeful activity geared to a particular outcome. Many academics subscribe to the “investment theory” of adult intelligence, first proposed in the 1940s by psychologist Raymond Cattell. He theorised two components to intelligence: first, cognitive ability; second, the propensity to “invest” that ability, or exploit it. That second component is where personality comes in. You might be naturally smart, but if you are also lazy then success may elude you.
Historically, the more academically inclined have traditionally been thought to be good learners. Dr. Sophie von Stumm, a developmental psychologist at the London School of Economics, set out to scrutinise the extent to which personality fits into this picture. She recruited about 650 people to variously undergo four tests of differing academic rigour: the easiest required volunteers to peruse a website on Croatian lakes, while the most demanding was a long multiple-choice test on a dense 2,000-word academic text. The volunteers were also given separate tests to gauge their openness to experience, one of the so-called big five personality traits, and to measure their intellectual curiosity. The paper’s conclusion was unexpected and provocative: intellectual curiosity didn’t have a bearing on how well volunteers performed on the tests but openness to experience did. The correlation was largely independent of cognitive ability.
As Dr. von Stumm explains: “Being open to information means you absorb all of it without any judgment that it will be helpful.” In other words, people who are “open” are always taking in information — and consequently always learning. To become better learners, then, we should become more receptive to the world, eagerly embracing everything on offer. Unfortunately, personality traits remain rather stable over time. One does not change from a wallflower to a cultural wanderer overnight. But while traits don’t really budge, emotional states do. One notable attribute of people who score highly on measures of openness is their imagination and their capacity to engage emotionally with their environment. This is, perhaps, the secret formula when it comes to learning: success is about making students feel for a subject.
3) Mumbai: Broken City [openthemagazine.com] While Juhu in Mumbai is famous as the address of many film stars, Versova is the home for many television actors. For a long time, Versova was also less crowded and cleaner. Then, as the landscape of Mumbai degenerated, rubbish began to get strewn around. Groups of local residents came together for cleanliness drives. One of them became famous over the last two years because of astute use of social media to publicise their clean-up work. A few weeks ago they announced that the drive was being halted temporarily. Its organiser tweeted that he was fed up because they were ‘abused by goons for picking up garbage’, which had not been cleared because of administrative lethargy. Rishi Aggarwal, a well-known activist in Mumbai, remembers helming a clean-up exercise at Versova beach over a decade ago between 2003 and 2006. He says, “I am preparing a map showing the catchment from which waste is getting into the nullahs (drains). You are not giving waste management services to the slums, so they tie it into the bag and throw it into the nullah. Every day, 5,000 to 10,000 garbage items are thrown down into the sea. How much are you going to pick up on the beach?”. He adds “People are making big money transporting waste to dumping grounds. Almost [Rs] 300, 400 crore goes in that kind of deals.”
On almost every front—transport, housing, roads, waste, quality of life—Mumbai is crumbling and while there could be reasons pinpointed for each of these factors, at its heart, the meta cause is governance. Recently, in a column in The Mint, Amol Agrawal, a PhD student at IIM Bangalore who is doing his thesis on banking history, traced how Mumbai took over from Kolkata as India’s financial centre, ‘By 1918, Calcutta and Bombay controlled 43% and 40% respectively of rupee companies and 73% and 19% for sterling companies. “Mumbai moved from being a cotton textile hub to a financial hub, entertainment hub and so on. It has clearly shown its resilience so far. Compare this to Calcutta, which just could not as the British started to leave the city”.
Agrawal, who also runs an insightful blog on economics, had earlier written about an Italian urban economist Mario Polèse who had come out with a framework to rank cities according to resilience. “There is no scope for complacency. Mumbai has to think a lot about infrastructure and connect the city to people. The most resilient and happening cities across the world are hardly just about metros and fancy things. They are more about history, culture, open spaces, and above all, the importance of pedestrians. It is amazing how much people walk in these cities and there is no shame at it. In India and in Mumbai, we are always thinking of taking the auto, taxi, etcetera, for wherever,” Agrawal says. On September 29, 2017, when a stampede killed more than 20 people on a railway foot over bridge in Elphinstone Road station, it was something that seemed almost inevitable.
The carrying capacity of the trains has increased, a metro rail network is being created, there’s also a coastal road in the pipeline, and yet even all this might not be enough. Ashok Datar, chairman of the Mumbai Environmental Social Network, believes the city is going in the opposite direction with these mega projects. He says, “Transport is all about numbers. We don’t seem to understand numbers at all. Delhi, after having 213 km network which Mumbai cannot even aspire for, has a ridership of 2.8 million commuters whereas Mumbai’s suburban railway has 7.5 million. Mumbai’s much abused bus system carries more people than Delhi Metro. The solution, he believes, is to decongest the roads and encourage bus travel. But, in fact, the public bus service has seen a steep reduction in people travelling on it. Bus travel reduced from 4.2 to 2.9 million over the last ten years. On the Western Express Highway, you now take 2.5 hours to travel instead of 45 minutes seven or eight years back.” Datar is part of an authority, set up by the government to coordinate the activities of different agencies that oversee the city’s transport. “It is a completely impotent agency, people talk talk talk with no action. They fight with each other as if it is India and Pakistan. Railways and municipality, BEST and municipality. Turf wars are tremendous. Hardly anyone is working for the city. They are all working for their organisations or themselves. Complete lack of governance,” he says.
In August this year, the municipality cleared a development plan, which included creating 1 million affordable houses, basic amenities for slum dwellers who make up over 40% of city population but are squeezed into one-tenth its space, protecting open spaces by rehabilitating those who have encroached on it, raising the Floor Space Index which will allow more construction and create hundreds of thousands of jobs. The Comprehensive Transportation Study 2008 clearly mentions that 44% of people in Mumbai walk to work. How does this happen? Assuming 40% of the people live in slums, a large number of them are working in housing complexes as domestic helps. They walk to work. Ramesh Nair, India CEO of the real estate services and investment management firm Jones Lang LaSalle, believes that there is no threat to Mumbai’s position as a financial hub in India, but, in a globalised world, there will be longer term competition from other international cities. He thinks that the Metro and coastal road will considerably improve transportation. Activists like Datar are not so sanguine about Mumbai’s future unless there is radical shift in the mindset of planners and citizens. He compares the number of school buses in Mumbai, 8,000, to the number of public transport buses, 4,000, half of the former. Why, he asks, have students stopped walking to school?
4) European coal staring into abyss [Financial Times] More than half of the coal-fired power stations in the EU are lossmaking and almost all will be by 2030, according to a study that says the fossil fuel faces a “death spiral” in Europe. Analysis of more than 600 power plants by Carbon Tracker, the climate think-tank, estimates that EUR22bn of losses could be avoided by phasing out coal in the EU by the end of the next decade. However, there are divisions within Europe over how fast to withdraw from coal as governments balance their climate commitments with the need for energy security.
Coal plants still provide the backbone of the electricity system in parts of Europe but they are facing increasing economic headwinds from regulatory measures to reduce emissions, as well as rising competition from renewable power. Some 54% of EU coal plants are already running at a loss, according to Carbon Tracker, and this will increase to 97% by 2030 if European governments take the action needed to meet their climate targets under the Paris agreement. It will be cheaper to build new onshore wind and solar capacity than to operate existing coal plants in the EU by 2024 and 2027, respectively. This is because of the falling cost of renewable technology coupled with more stringent air pollution standards due in 2021 and rising “carbon prices” levied on CO2 emissions.
Utilities are keeping lossmaking plants open for a variety of reasons, including hopes of higher power prices in future and reluctance to take on the cost of closure and clean-up. Political intervention to protect jobs in the power sector and in coal mining was also a factor in some places.
Several western European nations, including the UK, Denmark and the Netherlands, have already committed to close all their coal plants by 2030 or earlier. But Poland and other central European countries remain heavily dependent on the fuel. Germany, which has the biggest fleet of coal plants in Europe, accounting for about 40 per cent of its power capacity, is caught between the two camps. Many large European utilities, such as Enel of Italy and Vattenfall of Sweden, have been reducing exposure to coal but often by selling their plants rather than closing them. EPH, a privately owned Czech company, has been among the most prolific buyers, building a portfolio of coal and gas plants across Europe at knockdown prices.
Mixed signals over the future of coal was encapsulated by the Spanish government’s move last month to stop Iberdrola, the country’s largest utility, from closing its last two coal power stations because of energy security concerns.
5) The great AI paradox [Source: MIT] We have come across various ideas of artificial intelligence (AI) taking most of the jobs in near future. But, to really see what’s going on, we have to be clear on what has been achieved, and what remains far from solved, in artificial intelligence. The most stunning developments in computing over the past few years stem from breakthroughs in a particular branch of AI, adaptive machine learning. As Hector Levesque, a computer scientist at the University of Toronto, wrote in his book “Common Sense, the Turing Test, and the Quest for Real AI”, the idea behind adaptive machine learning is to “get a computer system to learn some intelligent behavior by training it on massive amounts of data.” This wasn’t really possible until about a decade ago, because previously there was not sufficient digital data for training purposes, and even if there had been, there wasn’t enough computer horsepower to crunch it all. After computers detect patterns in the data, algorithms in software lead them to draw inferences from these patterns and act on them. The reason why machines are way better at things that are outright impossible for people is because they can process superhuman amounts of data.
Patrick Winston, a professor of AI and computer science at MIT, says it would be more helpful to describe the developments of the past few years as having occurred in “computational statistics” rather than in AI. One of the leading researchers in the field, Yann LeCun, Facebook’s director of AI, said at a Future of Work conference at MIT in November that machines are far from having “the essence of intelligence.” That includes the ability to understand the physical world well enough to make predictions about basic aspects of it—to observe one thing and then use background knowledge to figure out what other things must also be true. Another way of saying this is that machines don’t have common sense. There’s a big difference between a machine that displays “intelligent behavior,” and one that is actually intelligent. When you ask Amazon’s Alexa to reserve you a table at a restaurant you name, its voice recognition system, made very accurate by machine learning, saves you the time of entering a request in Open Table’s reservation system. But Alexa doesn’t know what a restaurant is or what eating is. If you asked it to book you a table for two at 6 p.m. at the Mayo Clinic, it would try.
To give machines the power to think would require imbuing computers with common sense and the ability to flexibly make use of background knowledge about the world. Maybe it’s possible. But there’s no clear path to making it happen. How might a computer detect, encode, and process not just raw facts but abstract ideas and beliefs, which are necessary for intuiting truths that are not explicitly expressed? Levesque uses this example: suppose I ask you how a crocodile would perform in the steeplechase. You know from your experience of the world that crocodiles can’t leap over high hedges, so you’d know the answer to the question is some variant of “Badly.” What if you had to answer that question in the way a computer can? You could scan entire world’s text for the terms “crocodile” and “steeplechase,” find no instances of the words’ being mentioned together and then presume that a crocodile has never competed in the steeplechase. So you might gather that it would be impossible for a croc to do so. You would have used a flawed and brittle method that is likely to lead to ridiculous errors.
So while machine-learning technologies are making it possible to automate many tasks humans have traditionally done, there are important limits to what this approach can do on its own—and there is good reason to expect human labour to be necessary for a very long time. Also, just because no one has a clue now about how to get machines to do sophisticated reasoning doesn’t mean it’s impossible. Max Tegmark, an MIT physics professor stays clear of predicting when truly intelligent machines will arrive, but he suggests that it’s just a matter of time, because computers tend to improve at exponential rates. Also, the question of whether it will be used wisely, safely, and fairly, or it will warp our economy and social fabric remains. In “WTF?: What’s the Future and Why It’s Up to Us”, Tim O’Reilly, a tech publisher and investor, sees an even bigger, overarching problem: automation is fueling a short-sighted system of shareholder capitalism that rewards a tiny percentage of investors at the expense of nearly everyone else. Sure, AI can be used to help people solve really hard problems and increase economic productivity. But it won’t happen widely enough unless companies invest in such opportunities.
6) Bitcoin bubble follows a classic pattern of investment mania [Financial Times ] Investment bubbles must be respected. They do not come from thin air, but rather from a reality that has been misperceived. Internet stocks, canals, railroads and motor cars all had a great future ahead of them when they were at the centre of bubbles. A brief bubble in ethanol in 2006 grew out of an increasing global preoccupation with climate change and the search for alternatives to fossil fuels. Bubbles in Japan in 1989 and China in 2007 grew out of two of the most extraordinary stories of economic growth in history. In all cases, there was an exciting growth story to be told, but the growth was in the future and impossible to value with any confidence in the present. Greed swamped fear as people saw prices rise. But the reality was positive, just misperceived.
So what exactly is the misperception that is driving the mania for bitcoin? Some basic facts for those lucky enough to avoid the excitement: bitcoin is a revolutionary form of digital money that allows transactions on decentralised computer networks. Money resides in your own computer “wallet”, not in a bank’s ledger. It is protected with state of the art cryptography. Since its introduction almost a decade ago, bitcoin has spurred the most impressive burst of entrepreneurial activity since the first wave of investment in the worldwide web. Only the resolutely unimaginative could fail to be excited by the technology. As with the internet two decades ago, its potential to be transformative is evident. But this does not necessarily extend to the price of bitcoin itself. As the dotcom bubble proved, even the most exciting long-term technology can also inflict grievous long-term losses on you if it gets sufficiently overvalued.
Wonderful though the technology could well be, there is no possible valuation scheme that would justify raising its price fivefold through the first 11 months of this year. Price is following the classic pattern of an investment mania. And the reason has to do with more than an exciting technology. Central banks have continued easy monetary policy since the crisis in a bid to prop up asset prices and spark activity. Stocks look blatantly overvalued. Bonds look even more so. Art has never fetched such big prices. The bitcoin is only an absurd appendage to what is already a “bubble in everything”. Thus bitcoin might be seen as a bet against rampant asset price inflation, and an attempt to protect against a forthcoming implosion as higher interest rates finally lead the financial house of cards to collapse. But that does not explain everything. Gold is up about 10 per cent for the year. That is less than the growth in stocks, and it has been falling during the latest overdrive phase in bitcoin.
Rather, bitcoin mania can be attributed to broader social conditions. Demand is greatest in the countries of the Pacific Rim, with South Korea, Taiwan, Japan and China all trying to curb extreme interest in trading the currency. Especially in China, demand reflects a distrust in governments, and not just in their currencies. This also seems to be true of demand for bitcoin in the US, where backers seem keen to go far beyond doing without banks or central banks. They seem far more interested in cutting governments out of the equation altogether. If not truly anarchist, the demand for bitcoin reflects a radical and global breakdown of trust in existing institutions.
Decentralised technology plainly permits this possibility. But it is horrifying that people find the notion appealing. Computer networks, we now know, are easily attacked. Cryptography helps, but there are weak points when people enter and leave the blockchain system. Thursday brought news of a major theft of bitcoins. In a decade or so, quantum computing may well be able to sweep aside the best current defences. Meanwhile, most governments around the world are democratic and derive their legitimacy from elections. But trust in democracy itself seems so low that putting trust in wholly unelected developers seems more appealing. With bubbles in bitcoin to go with bubbles in stocks and bonds and cash, are there any “anti-bubbles”? Gold might be one of them. Government another. Faith in the ability of governments to do anything that helps anyone seems to be reaching a crisis point — the rewards could be there for anyone who can demonstrate to people that their governments are working for them, and can deliver something.
7) The real reason we love a suit [Source: BBC] In this article, the author, Sarah Keating talks about the evolution of suits and how it has become an integral part of our daily lives. In 1900, British fashion became a global phenomenon and its favoured sombre suit, an international norm. Nestled in London’s Mayfair neighbourhood is the shopfront of Henry Poole & Co at the heart of Savile Row – a street synonymous with the crème de la crème of men’s suits. Given the price tag of each Henry Poole & Co suit (around $5300), it would be easy to assume bespoke suiting is a luxury reserved for the elite but managing director of the company, Simon Cundey, disagrees. “It’s a functional piece. Gentlemen still feel very relaxed and reassured (wearing it) and happy to be in something that fits them,” says Cundey of its enduring appeal. “A lot of people in our world are very business orientated and don’t have much time to go traipsing around from shop to shop trying to find something that fits. It does cost but if you take the cost of it over ten years, which generally that’s what they should last, that’s a reasonable factor in price.”
In its basic form the suit has existed since the 17th Century, and in its contemporary form since the beginning of the 20th Century. The look has remained essentially constant and proliferated across the globe among the elite and then among ordinary men, and eventually among women adopting variants of the business suit. Director of the Fashion Institute of Technology Museum in New York, Valerie Steele, believes the suit retains its enduring power “because I think it connotes modernity." She says: "I think that it looks modern, it looks efficient. Some would say it is functional, I think it’s more a case of: it carries connotations of modernity and functionalism and status.” Someone who knows a thing or two about the origin of modern suits is fashion designer Sir Paul Smith who has dressed everyone from Pink Floyd and the Beatles to David Bowie. Smith wears a suit every day, including weekend, and it really works for him. He describes how, back then, the people who wore suits were businessmen or going to a wedding, funeral or a job interview. But thanks to Smith and other menswear designers like Giorgio Armani, the traditional suit began to change.
“[We] softened the suit up,” he says of the classic design, “softened the shoulder pads, made the suit more easy to wear because a lot of people were coming out of wearing a denim jacket with a zip up the front or a more casual item.” He says young men might come in to his shop looking for fabrics like chalk stripe but instead of having a white stripe running through it, it might have a lemon stripe. But while Smith was busy making people stand out from the crowd, the classic suit remains. Martin Pel, curator of fashion at the Royal Pavilion in Brighton, calls it: “a great leveller, you can just get on with business rather than having to consider the wearer’s background, where they come from.” Valerie Steele agrees: “There is a sense (that) if you’re wearing the suit, it disappears, there’s nothing conspicuous about you, you’re just dressed appropriately and I think that is very important.”
Steele points to the work of fashion historian Anne Hollander who suggests that “one reason for the longevity of the suit is that it suddenly idealises the body. So through padding in the shoulder, adjusting the proportions, you can create a facsimile of a good-looking body while also just generally veiling less good-looking bodies.” During wartime, adopting this worker silhouette served a different role. In the 1940s women took over men’s roles and also adopted the masculine outline of the suit. Martin Pel explains, “it was utility and it was saying ‘let’s get on with what needs to be done’. Men are at war so women adopted the suit – they didn’t wear trousers; they wore skirts – so it was women getting on with business. It is a utilitarian garment but it is able to be so much more than just a utilitarian garment.”
But of course, historically, this utilitarian use and blending-in through clothing was also used to assert power. China’s Cultural Revolution in 1966 was a brutal attempt by Mao Zedong to forge a new type of country. Like other authoritarian rulers, Mao scrutinised the details of people’s daily lives; what they could read and see and say and even what they could wear. And what they wore was known as the Mao suit, also known as the Sun Yat-sen uniform, after the first great nationalist revolutionary leader Dr. Sun Yat-sen. The suit came in three colours – blue for peasant workers, grey for Communist officials and green for members of the People’s Liberation Army. So, in modern day life in democratic, western civilisations, does the suit still have a role to play? Simon Cundey feels that in business, by wearing a suit, a “gentlemen will feel more reassured that if you’re going to invest in something or meet and discuss a project together… it’s a sort of mark of respect you make the effort to take something serious in life.” “I don’t think the suit will ever die,” says Martin Pel. “I think it’s such a great piece of design. Whether we wear it every day or whether we wear it on occasions, I don’t think it’s ever going to go away.”
8) A journey through the land of extreme poverty: Welcome to America [Source: The Guardian] The UN’s Philip Alston is an expert on deprivation – and he wanted to know why 41mn Americans are living in poverty. The Guardian joined him on a special two-week mission into the dark heart of the world’s richest nation. General Dogon, a veteran of Skid Row streets, was their tour guide. The two men walked block after block after block of tatty tents and improvised tarpaulin shelters in Los Angeles. Men and women gathered outside the structures, squatting or sleeping, some in groups, most alone like extras in a low-budget dystopian movie. When they reach an intersection, General Dogon stopped and presented his guest with the choice. He pointed straight ahead to the end of the street, where the glistening skyscrapers of downtown LA rise up in a promise of divine riches. Then he turned to the right, revealing the “black power” tattoo on his neck, to Skid Row bang in the center of LA’s downtown. That way lies 50 blocks of concentrated human humiliation. A nightmare in plain view, in the city of dreams. They turn right and their two-week long journey into the dark side of the American Dream begins.
Alston’s epic journey has taken him from coast to coast, deprivation to deprivation. Starting in LA and San Francisco, sweeping through the Deep South, traveling on to the colonial stain of Puerto Rico then back to the stricken coal country of West Virginia, he has explored the collateral damage of America’s reliance on private enterprise to the exclusion of public help. The tour comes at a critical moment for America and the world. It began on the day that Republicans in the US Senate voted for sweeping tax cuts that will deliver a bonanza for the super wealthy while in time raising taxes on many lower-income families. “Look up! Look at those banks, the cranes, the luxury condos going up,” exclaimed General Dogon, who used to be homeless on Skid Row and now works as a local activist. “Down here, there’s nothing. You see the tents back to back, there’s no place for folks to go.”
On the first day they met a woman who was a drug addict and now dreams of making it big one day as a writer, poet, an entrepreneur and a therapist. They also met a 67-year-old man who was the most dismissive of the American Dream. Then they reached San Francisco, to the Tenderloin district where homeless people congregate, and walked into St. Boniface church. What Alston saw there was an analgesic for his soul. About 70 homeless people were quietly sleeping in pews at the back of the church, as they are allowed to do every weekday morning, with worshippers praying harmoniously in front of them. “I found the church surprisingly uplifting,” Alston said. “It was such a simple scene and such an obvious idea. It struck me – Christianity, what the hell is it about if it’s not this?”
After his journey from California to Alabama and Puerto Rico to West Virginia, Alston boarded one last plane and headed for Washington, carrying with him the distilled torment of the American people. At one point in the trip Alston revealed that he had had a sleepless night, reflecting on the lost souls they had met in Skid Row. He wondered about how a person in his position – “I’m old, male, white, rich and I live very well” – would react to one of those homeless people. “He would look at him and see someone who is dirty, who doesn’t wash, who he doesn’t want to be around.” Then Alston had an epiphany. “I realized that’s how government sees them. But what I see is the failure of society. I see a society that let that happen, that is not doing what it should. And it’s very sad.”
9) Super bacteria could soon be eating China’s factory waste [Source: Livemint] In a Hong Kong laboratory, researchers are working with one of the world’s biggest cloth makers to improve its production process using a special ingredient: bacteria. TAL Apparel Ltd., which has factories in mainland China and Southeast Asia, has teamed up with City University to identify bacteria that can clean up more efficiently the vast quantities of waste water the textile industry produces. It’s one of hundreds of efforts by China’s private and state-owned companies to fix a problem that could end up rewriting the playbook of the global fashion industry. After decades of almost unbridled industrial growth that left China with a legacy of rampant pollution, shrinking aquifers and soaring water prices, the government is cracking down on big industrial users, and the textile industry is in the front line. Cloth-making ranks third in China for the amount of waste water it discharges — 3 billion tons a year — after chemicals and paper. The price of ensuring a sustainable water supply in China is yet another expense for factories that are already being squeezed by higher land and labour costs. And while automation and overseas production offer some respite, China’s companies are turning to other technologies to preserve operating margins.
The clean-up goes to the heart of an industry that leveraged decades of cheap labour and capital, and a unique close-knit supply chain of cloth, dyeing, sewing, fasteners, trimmings, labels and logistics, to deliver so-called fast fashion — rapidly shifting style from the catwalk to the mass market at prices that make garments almost a disposable commodity. With that model coming under fire for its environmental record, top brands like H&M Hennes & Mauritz AB, Target Corp. and Gap Inc. have adopted water quality standards for their suppliers and monitor them to protect their reputation with consumers. The problem is how to achieve better environment and labour standards without raising prices for consumers who have become addicted to cheap fashion.
TAL, which opened its first factory in mainland China in 1994, had been buying bacteria from other labs to treat water used in washing cloth. Using bacteria instead of chemicals to digest organic compounds can cut the amount of waste sludge generated by as much as 80% and enables 100% of the water to be recycled in the plant. During a production halt during the week-long Chinese New Year break this year, the bacteria in its system died, so TAL set up a research program that is using DNA sequencing to find a “superbacteria” that would be cheaper and more efficient. But researching and upgrading technology is expensive. For many smaller suppliers on wafer-thin margins, it’s money they don’t have. In a June-July survey of 85 Chinese textile manufacturers by China Water Risk, more than half those polled said they have invested at least ¥2 million to upgrade their factories — equivalent to almost 40% of the average annual profit for a small textile company in 2012.
10) End of smashed phone screen? Self-healing glass discovered by accident [Source: The Guardian] Japanese researchers say they have developed a new type of glass that can heal itself from cracks and breaks. Glass made from a low weight polymer called “polyether-thioureas” can heal breaks when pressed together by hand without the need for high heat to melt the material. The research, published in Science, by researchers led by Professor Takuzo Aida from the University of Tokyo, promises healable glass that could potentially be used in phone screens and other fragile devices, which they say are an important challenge for sustainable societies. While self-healing rubber and plastics have already been developed, the researchers said that the new material was the first hard substance of its kind that can be healed at room temperature.
“High mechanical robustness and healing ability tend to be mutually exclusive,” wrote the researchers, saying that while some hard but healable materials have been developed, “in most cases, heating to high temperatures, on the order of 120°C or more, to re-organise their cross-linked networks, is necessary for the fractured portions to repair.” The new polymer glass is “highly robust mechanically yet can readily be repaired by compression at fractured surfaces”.
The properties of the polyether-thioureas glass were discovered by accident by graduate school student Yu Yanagisawa, who was preparing the material as a glue. Yanagisawa found that when the surface of the polymer was cut the edges would adhere to each other, healing to form a strong sheet after being manually compressed for 30 seconds at 21°C. Further experimentation found that the healed material regained its original strength after a couple of hours.
- Saurabh Mukherjea is CEO, and Prashant Mittal is Strategist, at Ambit Capital. Views expressed are personal.