At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, ranging from zeitgeist to futuristic, and encapsulate them in our weekly ‘Ten Interesting Things’ product. Some of the most fascinating topics covered this week are: Economy (Ray Dalio on America’s capitalist system), Technology (A cybersecurity firm’s sharp rise and stunning collapse; Quantum computing takes flight), Science (Humans would get new powers to alter the genome!), Investing (Jim Simons learnt the task of the game – beating the market) and Astronomy (Prepping for a flood of heavenly bodies).Here are the ten most interesting pieces that we read this week, ended November 15, 2019.1) Ray Dalio - America’s capitalist system is broken!
The billionaire financier and founder of Bridgewater Associates, the largest hedge fund in the world with $160 billion in assets, Ray Dalio says that the world has gone mad and the system is broken. Dalio, 70 and worth almost $19 billion, does not elucidate what that paradigm shift will be in his post, but he has been outspoken in his criticism of the very capitalist system that made him successful. In an interview with CBS' "60 Minutes" in July, Dalio said the U.S. economy must change or there will be a "conflict" between the rich and the poor. And in January, he said "capitalism basically is not working for the majority of people."
Mr. Dalio says that we are in a situation known as "pushing on a string." the U.S. government is out of money — and still spending, as deficits continue to grow. Governments need to fund obligations like pensions and healthcare. "Since there isn't enough money ... there will likely be an ugly battle to determine how much of the gap will be bridged by 1) cutting benefits, 2) raising taxes, and 3) printing money..." Dalio writes.
Mr. Dalio says higher taxes and less benefits will continue to create tension between the rich and the poor. "The rich/poor battle over how much expenses should be cut and how much taxes should be raised will be much worse," Dalio wrote on LinkedIn. "Because the 'trickle-down' process of having money at the top trickle down to workers and others... is not working, the system of making capitalism work well for most people is broken." 2) Is Economic Winter Coming?
[Source: Project Syndicate
How would a normal recession period be? Workers would become more difficult to find, wages would start climbing, corporate profit margins would tend to shrink, and firms would start raising prices. Fearing inflation, the central bank would then raise interest rates, which in turn would depress corporate investment and spur layoffs. Aggregate demand would fall as consumers, fearing for their jobs, reduced their spending. Growth would slow significantly, signaling the beginning of a recession. This cycle would then be followed by a recovery. Once inflation had abated, the central bank would cut interest rates to boost demand.
But Raghuram G. Ranjan, former Governor of the Reserve Bank of India, feels that the reason for the next recession would be the White House. When the Fed embarked on raising rates last year, US President Donald Trump’s administration doubled down on its trade war. After markets started tumbling in late 2018, the Fed backed off. With a comprehensive deal to resolve the trade war nowhere in sight, and with a formal impeachment inquiry into Trump now underway, the Fed is unlikely to tighten monetary policy anytime soon. Moreover, Trump has made it clear that he will blame the Fed in the event of a recession.
While recessions are, by their very nature, unpredictable, the greatest near-term threat to the economy is not rising interest rates or various financial excesses, but, instead, unforeseen actions in areas like trade or geopolitics. If the world had fewer wannabe strongmen, the global economy would be much stronger than it is. Unfortunately, most of today’s authoritarian leaders are there because voters put them there. But that is a discussion for another day. 3) A cybersecurity firm’s sharp rise and stunning collapse
[Source: The New Yorker
In this longish article, the author elaborately delves into the ups and downs of cybersecurity firm. Robert Boback, a chiropractor, got into the business of cybersecurity, with one of his patients, Sam Hopkins, after watching “60 Minutes”, a report by Lesley Stahl about pirated movies. They soon started a company named Tiversa; a portmanteau of “time” and “universe.” It was also an anagram of veritas: Latin for “truth,” but scrambled. They could track who is sharing what on the web. Be it in any format, they could track it. They could also track data theft.
When the demand arrived, Mr. Boback asked his staff to draw up a list of companies that fit the criteria. In August, the Privacy Institute sent the Federal Trade Commission a spreadsheet of eighty-four companies that had suffered security failures. None were Tiversa clients; eleven had worked with Tiversa for a time and then stopped. Mr. Boback understood that he could exploit this information.
Soon they were minting money with several clients which included the US government agencies as well. They had something that even the C.I.A. didn’t possess. But to gain corporate clients, the tactics they used weren’t something they would be proud of as a company. Tiversa’s story involves everything that you can think of for a blockbuster movie; fraud, snooping, blackmailing, conspiring, and more.4) Quantum computing takes flight
Quantum computers promise to perform certain tasks much faster than ordinary (classical) computers. In essence, a quantum computer carefully orchestrates quantum effects (superposition, entanglement and interference) to explore a huge computational space and ultimately converge on a solution, or solutions, to a problem. But now, in a paper in Nature, Arute et al. report quantum supremacy using a 53-qubit processor. Arute and colleagues chose a task that is related to random-number generation: namely, sampling the output of a pseudo-random quantum circuit. This task is implemented by a sequence of operational cycles, each of which applies operations called gates to every qubit in an n-qubit processor.
The demonstration of quantum supremacy involved sampling the solutions from a pseudo-random circuit implemented on Sycamore and then comparing these results to simulations performed on several powerful classical computers, including the Summit supercomputer at Oak Ridge National Laboratory in Tennessee. Summit is currently the world’s leading supercomputer, capable of carrying out about 200 million billion operations per second.
This demonstration of quantum supremacy over today’s leading classical algorithms on the world’s fastest supercomputers is truly a remarkable achievement and a milestone for quantum computing. However, much work is needed before quantum computers become a practical reality. In particular, algorithms will have to be developed that can be commercialized and operate on the noisy (error-prone) intermediate-scale quantum processors that will be available in the near term. Arute and colleagues’ demonstration is in many ways reminiscent of the Wright brothers’ first flights. 5) Humans would get new powers to alter the genome!
Millions world over are awaiting organ transplants. But there simply aren’t enough hearts, lungs, livers, and kidneys to meet demand. For decades, scientists have dreamed of using animals to help fill the gap. They’ve been particularly interested in harvesting organs from pigs, whose physiology is similar to our own. Unfortunately, pigs also present some big biological challenges, including the fact that their genomes are chock full of genes that code for what are known as retroviruses, which could pose a serious threat to patients who receive porcine organs. Nessa Carey, a biologist with a background in the biotech and pharmaceutical industry, and the author of “Hacking the Code of Life: How Gene Editing Will Rewrite Our Futures”, offers a brisk, accessible primer on the fast-moving field, a clear-eyed look at a technology that is already driving major scientific advances.
In 2015, George Church, a geneticist at Harvard University, announced a stunning breakthrough: Working with pig cells, he and his colleagues had managed to disable 62 copies of a retrovirus gene in one fell swoop. “This would have been virtually impossible and a logistical nightmare with older forms of genetic modification,” writes Nessa Carey. But by using the new gene editing technology known as Crispr, the task was a relative cinch. Though there are several different approaches to gene editing, the most prominent – and the one that really supercharged the field – is Crispr. But in 2012 and 2013, two teams of scientists reported that it was possible to hack this system to slice into any strand of DNA, at any complementary location they chose. The cell would repair the severed DNA, but it would do so imperfectly, disabling the gene in question. In the following years, scientists refined that technique.
The new approach is cheaper, easier, and faster than older methods of genetic engineering, which were first developed in the 1970s. Gene editing has enormous potential for medicine. But the ethics of human gene editing can be enormously fraught. That’s especially true when scientists modify sperm cells, egg cells, or early embryos, making tweaks that could be passed down to subsequent generations. Even in the face of these questions, at least one scientist has already forged ahead. In November 2018, He Jiankui, a researcher, shocked the world by announcing that the world’s first gene-edited babies, twin girls, had already been born. Months earlier, when they were just embryos, He had edited their CCR5 genes, which code for a protein that allows HIV to infect human cells. By disabling the gene, He hoped to engineer humans who would be protected from HIV infection.6) Jim Simons learnt the task of the game – beating the market
Jim Simmons, a mathematician, was sure that he could master financial speculation. He later launched his investment company, Monemetrics, combining the words “money” and “econometrics” to indicate that he would use math to analyze financial data and score trading gains. Simons would hire a team of big brains to pore through the market’s data to identify trends and develop mathematical formulas to profit from them. He didn’t knew where to start, but he did have an ideal partner in mind for his fledgling firm: Leonard Baum, a former colleague and mathematician who had spent time discerning hidden states and making short-term predictions in chaotic environments. Simons just had to convince Baum to risk his career on Simons’ radical, unproven approach.
Simons later changed the name of his company to Renaissance Technologies Corporation, reflecting his developing interest in these upstart companies. Simons came to see himself as a venture capitalist as much as a trader. He spent much of the week working in an office in New York City interacting with his hedge fund’s investors while also dealing with his tech companies. Baum was fine with Simons working from the New York office, dealing with his outside investments, and tending to family matters—he didn’t need much help. Baum was making so much money trading various currencies using intuition and instinct that pursuing a systematic, “quantitative” style of trading seemed a waste of time. Baum liked to purchase investments and sit on them until they rose, no matter how long it took. His penchant for holding onto investments eventually caused sudden losses, however.
By December 2018, Simons had spent more than three decades pioneering and perfecting a new way to invest. He had inspired a revolution in the financial world, legitimizing a quantitative approach to trading. The gains Simons and his colleagues have achieved might suggest there are more inefficiencies in the market than most assume. Renaissance showed that with enough data, computational power and modeling experience, it’s possible to deduce many of the hidden factors moving the security prices otherwise invisible to other investors. For all the unique data, computer firepower, special talent, and trading and risk-management expertise Renaissance has gathered, the firm only profits on barely more than 50% of its trades, a sign of how challenging it is to try to beat the market—and how foolish it is for most investors to try.7) Scientific work is becoming a mixture of disciplines
Since its founding in 1869, Nature has offered a venue for publishing major advances from many fields. To mark its anniversary, they track how papers cite and are cited across disciplines, using data on tens of millions of scientific articles indexed in Clarivate Analytics’ Web of Science (WoS), a bibliometric database that encompasses many thousands of research journals starting from 1900. They extracted references for papers contained in the WoS publication database from 1900 to 2017, capturing close to 700 million citation relationships.
The numbers of papers in every discipline grew exponentially over the past century. Exact rates differ over time, although since about the 1960s, 48% of papers were in the life sciences (with 42% from ‘hard’ sciences and 10% from behavioural science). So how did they analyse? 1) They explored the breadth of disciplines reflected in the references and citations across a journal, capturing the journal’s multidisciplinarity. 2) They explored the interdisciplinarity of individual articles by measuring the diversity of disciplines in the references and citations.
Their analysis shows that the diversity of disciplines in articles’ references and citations is increasing. Roughly speaking, a typical article is inspired by and impacts three times more disciplines this decade than it did 50 years ago. Whereas a typical article published today references articles from the equivalent of 11 disciplines. This is in line with previous analyses suggesting that highly influential work tends to be grounded in deep expertise. 8) There’s a better option to hiding a billion dollars
[Source: The Economist
Back in the good old days of the cold war, strongmen could be strongmen. When Mobutu Sese Seko, the late dictator of what is now the Democratic Republic of Congo, robbed his country into a coma, no one cared. When his household drained 10,000 bottles of pink champagne a year and Mobutu kept a Concorde idling on the runway of his tropical palace, his Western backers turned a blind eye, so long as he did not invite the Soviets into central Africa. Likewise, the Soviets overlooked the equally egregious thievery of their clients in Angola. And a kleptocrat in those days had no trouble finding places to park his squillions. Swiss bankers vied to offer him roomy vaults. Estate agents on the Côte d’Azur rolled out the gold-thread carpet. Recently, however, Western governments have been confiscating looted assets and prosecuting those involved in corruption far beyond their borders.
So here are some steps they can take to safeguard their loot. 1) Stay away from social media: Posing in front of fancy cars and on private jets for Instagram posts can surely get you in trouble. That may impress friends, but it also raises awkward questions about how can he could afford such extravagant toys. 2) Avoid purchases so conspicuous that they make headlines: Kolawole Akanni Aluko, a Nigerian businessman accused of bribery, not only spent $80m on a superyacht—he also reportedly rented it to Jay-Z and Beyoncé for $900,000 a week. These singers attract a certain amount of attention. Mr. Aluko might have avoided unwelcome scrutiny had he bought a less blingtastic boat.
3) Keep an emergency stash close to hand: The late Robert Mugabe, who misruled Zimbabwe for three decades, always travelled with a suitcase of “coup money”, in case he was ousted while abroad. 4) Claim the assets belong to the state: Teodorin Nguema Obiang, the unaccountably wealthy son of the president of Equatorial Guinea, a tiny oil-rich dictatorship, stopped France from selling his home in Paris by insisting it was owned by his country’s embassy. His lawyers also say that a $100m superyacht seized by the Netherlands was a naval vessel. 5) How about ruling honestly?: Mo Ibrahim, a Sudanese-British telecoms tycoon, has endowed a $5m prize each year for an African president who governs well and retires when his term is up. You can live quite well on $5m. Yet for seven of the 12 years since the Ibrahim prize began, no worthy recipient has been identified.9) The happy, health capitalists of Switzerland
[Source: The New York Times
The Scandinavian trio of Sweden, Denmark and Norway are known to be economic paradise. But, the author of this piece feels that there’s one country which is far richer and just as fair as the mentioned trio. This $700 billion European economy is among the world’s 20 largest, significantly bigger than any in Scandinavia. It delivers welfare benefits as comprehensive as Scandinavia’s but with lighter taxes, smaller government, and a more open and stable economy. Steady growth recently made it the second richest nation in the world, after Luxembourg, with an average income of $84,000, or $20,000 more than the Scandinavian average. Money is not the final measure of success, but surveys also rank this nation as one of the world’s 10 happiest.
This country is none other than Switzerland. Wealth and income are distributed across the populace almost as equally as in Scandinavia, with the middle class holding about 70 percent of the nation’s assets. The big difference: The typical Swiss family has a net worth around $540,000, twice its Scandinavian peer. Also, Switzerland is known to a safe haven for billionaires who want to save paying taxes. Capitalist to its core, Switzerland imposes lighter taxes on individuals, consumers and corporations than the Scandinavian countries do. In 2018 its top income tax rate was the lowest in Western Europe at 36%, well below the Scandinavian average of 52%.
The Swiss excel in just about every major industry other than oil, often by targeting specialized niches, such as biotech and engineering. The country is home to 13 of the top 100 European companies, more than twice as many as in the three Scandinavian nations combined. While most rich countries (including Scandinavia’s) saw their share of global exports fall over the past decade, Switzerland’s continued to rise. Such is the reputation of its engineers and chocolatiers that customers readily pay more for Swiss goods. Switzerland has shown that a pragmatic country can have a business-friendly environment alongside social equality, if it gets the balance right. The Swiss have become the world’s richest nation by getting it right, and their model is hiding in plain sight.10) Prepping for a flood of heavenly bodies
[Source: Quanta Magazine
As a child, Mario Juric, a professor at the University of Washington in Seattle, was intrigued with the celestial bodies. He learned that stars came in different colors, and that these colors signified different temperatures. Somehow he managed to make a local telescope. Now as a professor, he spends much of his time figuring out how to manage the enormous amounts of data that will soon stream in from the Large Synoptic Survey Telescope (LSST), a wide-field telescope that features a 3,200-megapixel camera, the largest in the world. The telescope is expected to generate about 20 terabytes of data a night. In this interview to Quanta, he talks about everything from astronomy to computer science.
Talking about the rise in data changing astronomy, he feels that Astronomy was always a data-limited science. Now a typical survey generates information on hundreds of millions of stars, and then repeat observations of those. And that, of course, creates challenges in processing. Turning this into something that’s useful for constructing theories, for making inferences is a big challenge. He also feels that programming is really becoming as important as the ability to do math to get science done.
When asked whether all of his astrophysics work relate to algorithms and computer programming, he says, “I would say it’s a means to an end. I spend a lot more time focused on the algorithms themselves, but I mostly like to use those things to actually find interesting results. I’m driven by answering problems in astronomy, but I want to make sure I do it in such a way that the next person can build on what I’ve done.” Talking about the big data evolution in astronomy, he says that particle physicists have been dealing with it for a little bit longer, they’re 5-10 years ahead. Oceanography is now entering into the same region. Ecology is entering the same region. The basic tools that you need to know just to do your science are changing.
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