Thought Starters: the outlook for the global and the Chinese economy, India’s middle class, the growing importance of migration and publishing in the digital age

Thought Starters provides me with a chance to look through articles, research and opinion pieces, highlighting interesting trends, developments and changes in the world you and I live in. This edition looks at forecasts for the year ahead, China’s economy and India’s middle class, migration’s growing role in contemporary societies, publishing in the digital age and lots more.

The Economist has published its forecast for the global economy which sees a further shift in momentum from emerging to developed markets, although India, China and Indonesia are seen as top performers:

Emerging markets losing their grips

Malcolm Scott takes a closer look at the slowdown in China’s economy, suggesting that it’s not nearly as significant as some of the more vociferous critics are suggesting:

China's slowdown in context

India as The Economist’s figures above suggest, is one of the powerhouses of the global economy and the country’s growing middle class is seen as providing enormous opportunities for local and international brands. The problem is there are wide variations in estimates of India’s middle class depending on the spending power you apportion to the Indian rupee as the Research Unit for Political Economy shows:

Some estimates of India's middle class

The Wall Street Journal in its profile of demographic trends has taken a closer look at the globe’s growing migrant population. Kim Mackrael and Charles Forelle in their broader analysis of immigration contrast Canada’s more assimilationist and economically driven policies with those of Europe. Whilst I’d argue that Europe is currently in a very different position to Canada due to its proximity to Syria, it does provide some valuable pointers as the continent faces an ageing population:

A growing migrant pool

Angus Hervey provides an important reminder that for many important human development indicators things are on the up (although this is certainly no argument for complacency). Among the indicators he points to are reductions in poverty, malnutrition, polio, infant mortality and AIDS deaths and improvements in universal education, internet access and financial inclusion:

Global poverty has reached a record low

Felix Salmon looks at the maturing of the fintech sector as it  focuses on providing tangible improvements on services offered rather than rhetoric about turning the financial sector upside down:

The problems such fintech companies are trying to solve aren’t the type that can be tackled by a few hyperactive coders in a garage. Rather, they require dozens of different skillsets, not to mention the ability to manage them all. In that sense, the startups are becoming much more like the banks they’re seeking to disrupt. That’s Lunn’s Great Convergence. No one believes the banks are going to solve these problems. The trillion-dollar question is, can the fintech companies do something important and socially useful before they, like the banks, become bogged down in regulation and bureaucracy.

Om Malik reports on how the movement towards a software enabled world has moved a lot of business categories into a winner takes all market (eg Amazon, Uber, Google). It’s also worth adding that innovations in technology and business strategy can see even these advantages quickly fall over time if management aren’t vigilant:

This loop of algorithms, infrastructure, and data is potent. Add what are called network effects to the mix, and you start to see virtual monopolies emerge almost overnight. A network effect occurs when the value of a product or service goes up with the number of people using it. The Ethernet inventor Bob Metcalfe called it Metcalfe’s Law. Telephone services, eBay, and Skype are good examples of the network effects at work. The more people who are on Skype, the more people you can call, and thus the more likely it is that someone will join.

While physical book sales in the US are on the up according to Nielsen BookScan figures, ebooks are heading in the opposite direction with a consolidation around the Kindle and Kobo platforms according to Michael Kozlowski’s report:

In a few short years most digital bookstores will be out of business and Amazon and Kobo will likely be the only players left standing.  The only digital bookstores that will survive will be companies offering both hardware/software solutions to encapsulate people into their walled gardens.  The destruction of the digital book market has already been set in motion and nothing will stop from the industry from collapsing.

In 2013 Amazon created a media storm by announcing they were working on drone delivery with commentators debating whether this was a real story or a public relations stunt. Two years on and the pathway to drone delivery looks clearer. Dan Wang looks at where drone logistics have proven successful and where we’re likely to see it make real inroads in the near future:

Amazon Drones vs Current Delivery Options

As we start a new year we’re seeing various commentators giving their prognosis for the year ahead. Fred Wilson and Bob O’Donnell make good starting points.

Finally, it’s worth watching Extra Credit’s review of China’s Sesame Credit which has seen the Chinese Government collaborate with Tencent and Alibaba on gamifying good behaviour by Chinese citizens. A case of Nudge theory heading in a distinctly dystopian direction:

The featured image is an INTI mural from the Artesano Project in Nagua, Dominican Republic.

Thought Starters: the fallacy of maximising shareholder value, the impact of climate change on your wallet and our responses to ISIS

The following is a look through articles, research and opinion pieces highlighting interesting trends, developments and changes in the world you and I live in, with an emphasis on technology.

The following figures presented by DoubleLine Capital’s Jeffrey Gundlach point to the fact that the global economy isn’t out of the woods yet:

Global nominal GDP growth

Steve Denning uses Roger L. Martin’s analysis in Fixing the Game to point out how management’s focus on maximising shareholder value comes at the expense of long term value creation and ultimately society:

“In today’s paradoxical world of maximizing shareholder value, which Jack Welch himself has called “the dumbest idea in the world”, the situation is the reverse. CEOs and their top managers have massive incentives to focus most of their attentions on the expectations market, rather than the real job of running the company producing real products and services.”

Om Malik covers the release of the latest Ericsson Mobility Report, highlighting growing penetration of different technologies (smartphones, mobile internet etc) and the regions where we’re forecasted to see  particularly strong growth:

Connected devices forecast

We’re seeing technology have an increasingly significant role in the employment landscape as machine learning, robotics and a growing array of sensors expand the range of tasks we can automate. The Bank of England’s Chief Economist, Andrew G Haldane recently gave a speech where he explored these changes and their implications which can be found in an abbreviated form on re/code:

Average probability of automation by occupation

Chris Field and Katharine Mach profile the work of Marshall Burke, Solomon Hsiang, and Edward Miguel who have researched the economic impacts of climate change. With the Paris Climate Change Conference fast approaching, now is an important time to make your concerns known about global warming to your local government – not one to stand on the sidelines for:

“Their conclusion delivers two blockbusters. First, in contrast to past studies, they argue that 21st century warming could lead to huge global-scale macroeconomic impacts. The best estimate from Burke and colleagues is that business as usual emissions throughout the 21st century will decrease per capita GDP by 23% below what it would otherwise be, with the possibility of a much larger impact.

Secondly, they conclude that both the size and the direction of the temperature effect depend on the starting temperature. Countries with an average yearly temperature greater than 13°C (55°F) will see decreased economic growth as temperatures rise.”

Before you suggest the issue of climate change is too difficult, it’s worth reviewing research at the Atmosphere/Energy Program at Stanford University which points to the feasibility of a move to a society that doesn’t rely on fossil fuels: 

“In a few decades, the world could be powered by nothing but wind, water, and sunlight. That’s the conclusion of a new study released just before world leaders head to Paris to strike a climate deal.

“These are basically plans showing it’s technically and economically feasible to change the energy infrastructure of all of these different countries,” says Mark Z. Jacobson, director of the Atmosphere/Energy Program at Stanford University, who worked with University of California colleagues to analyze energy roadmaps for 139 countries.”

Chain founder Adam Ludwin is interviewed for Andreessen Horowitz’s podcast focusing on the growing world of blockchain innovation. Among the subjects covered are the merging cultures of finance and tech, the price of bitcoin, the importance of blockchain (rather than bitcoin) and a review of  private and permissioned blockchains and uses for colored coins and sidechains:

Michael Vakulenko looks at at how the movement to self driving cars is likely to unseat traditional manufacturers’ position in the car market. Among the particular technologies and innovations he points to as catalysing change are services and apps, transportation platforms, fleet routing and navigation:

“It’s still too early in the game to say which companies will dominate the future transportation market. One thing is a safe bet: The future transportation ecosystem will look very different from the existing automotive industry. It will resemble modern technology ecosystems with their platform business models, permissionless innovation by developers, and domination of software-centric companies.”

Technology based disruption hasn’t received the same level of media attention in education as it has in other sectors with the possible exceptions MOOCs reflecting a more constrained funding pool and the comparatively complex web of different stakeholders. The NMC Horizon Report: 2015 K-12 Edition provides a valuable review of emerging innovations in the primary and secondary education sector, with technologies typically augmenting rather than replacing current ways of working:

Edtech Trends

The New York Times‘ experiment with Google Cardboard has gained lots of plaudits for pushing the boundary for online journalism at scale. Whilst the experiment has catalysed interest in these new formats, Will Smith stresses the need for fully featured virtual reality platforms such as Oculus Rift to differentiate themselves from Google Cardboard:

“In the meantime, if you enjoyed your first taste of VR, courtesy of Cardboard and 360 video, that’s great! Welcome to the future! But if that first taste of VR turned your stomach, please know that it doesn’t have to be this way. The problems that affected you have been solved—you just need better hardware than comes free with the Sunday paper.”

Steve Albini wrote the essay The Problem with Music in 1994 critiquing the music industry and its ability to both give musicians money and then take it back with a litany of expenses. Albini gave an update of sorts last year at the Face the Music conference where he saw musicians as now being in a better position to take control of their own destiny:

The Socio-Economic Segregation in European Capital Cities project has been looking at levels of inequality and the proximity of the rich and poor in 12 different cities across Europe. Richard Florida’s summary of the research points to a general trend of increasing income inequality (measured by Gini coefficient) and residential segregation (measured by index of dissimilarity) across Europe, although Tallinn and Oslo make for interesting outliers:

European Cities Economic Segregation and Inequality

ISIS’ attack on Paris on the 13th of November was a tragedy which has led to some important discussions about how we deal with the threat of terrorism. The Economist’s look at global deaths from terrorism puts the deaths in perspective, pointing to how much the West has in many cases been spared the worst effects of terrorism:

Global deaths from terrorism

The attacks have led to renewed calls for backdoors in secure products and encryption software. Kim Zetter provides a valuable rebuttal starting with the lack of evidence to support the view that the terrorists used encryption technology.  She then goes on to point out that there will always be homebrewed encryption alternatives, encryption doesn’t hide metadata and weakening existing products ultimately makes everyone vulnerable:

“If Snowden has taught us anything, it’s that the intel agencies are drowning in data,” EFF Attorney Nate Cardozo says. “They have this ‘collect it all mentality’ and that has led to a ridiculous amount of data in their possession. It’s not about having enough data; it’s a matter of not knowing what to do with the data they already have. That’s been true since before 9/11, and it’s even more true now.”

Adam Shatz writing for the London Review of Books reports more broadly on ISIS’ aims with the terrorist attacks and the options the West has in reducing chances of future incidents:

“Now IS is unrivalled among jihadist groups, and no one knows quite what to do that won’t make the problem worse. Anything that can be done now risks being too little, too late. It’s true that IS is no match, militarily, for the West. The attacks of 13 November were in the anarchist tradition of the ‘propaganda of the deed’, and we shouldn’t fall for it: the social order of Europe isn’t in jeopardy. But it would also be a mistake to underestimate the problem. IS has managed to insert itself, with no small amount of cunning, and with acute sensitivity to feelings of humiliation, into two of the most intractable conflicts of our time: the relationship of European societies to their internal, Muslim ‘others’ and the sectarian power struggles that have engulfed the lands of Iraq and Syria since 2003.”

One of my real concerns is that the attacks could further marginalise Muslim populations already living in Western Europe and USA and lead to the closing of borders to refugees fleeing turmoil in places like Syria and Afghanistan. By doing this, the West would essentially be handing ISIS a victory of sorts as Adam Taylor reports:

“The very same refugees entering Europe are often the very same civilians who face the indiscriminate violence and cruel injustice in lands controlled by the Islamic State in Iraq and Syria (though, it should be noted, many in Syria are also threatened by the brutal actions of the Syrian government). Globally, studies have shown that Muslims tend to make up the largest proportion of terror victims, with countries such as Syria and Iraq registering the highest toll.

If Muslim refugees come to Europe and are welcomed, it deeply undercuts the Islamic State’s legitimacy. Aaron Zelin, a fellow at the Washington Institute for Near East Policy, has helpfully catalogued some of the Islamic State’s messages on the refugees pouring into Europe from the Middle East. The messages give the impression of deep discomfort and even jealousy that the Muslim population the Islamic State so covets for its self-proclaimed “caliphate” would rather live in “infidel” Western lands.”

The Economist’s analysis of health spending and life expectancy point to the fact that there’s a far from direct correlation between the two with the United States’s poor performance in particular standing out:

Health spending and life expectancy at birth

Raffi Khatchadourian has written a thought provoking profile of Nick Bostrom for the New Yorker profiling the latter’s research into whether developments in artificial intelligence and other technologies will lead to human extinction. His approach is definitely more thoughtful than your average Hollywood blockbuster.

The featured image is Phoenix by DALeast in Penang, Malaysia and published in StreetArtNews.

Thought Starters

A mixed collection of materials looking at societal trends and the impact of technology on the way we live.

The McKinsey Quarterly profiles technological disruption, emerging markets growth and ageing population as trends that will have a substantial effect on business in the coming 50 years:

Workers per Dependent

Going on public confidence, we’ve still got a long way to go before the world pulls out of the recession according to research from Pew Research, although reassuringly, UK is among the more confident:

Economic mood

Americans are seemingly chain to their desks, followed not too far behind by the UK according to research from the National Bureau of Economic Research. Salon’s reporting of the research also highlights willingness of Americans and Britons to work weekends and evenings:

Working hours

The Economist profiles  the world  of real time bidding for online advertising which has gained a strong foothold in US and UK markets and looks likely to rapidly spread to the rest of the world:

Real time bidding

Research from Harvard Business School profiled in Forbes contrasts the ROI from search and display advertising. I won’t giveaway who came out on top.

Much has been made of the impact that Amazon is having on the retail sector with effects particularly felt in the book sector. Zachary Karabell’s reporting points to the independents rather than the larger book store chains as proving best able to respond to Amazon’s encroachment.

The Guardian has avoided adding paywalls to its website unlike competitors The Times and the New York Times. What the organisation has done is follow the lead of other move media organisations and establish a membership led events programme offering that will bring its staff more into face to face contact with its readers:

Guardian

The New Statesman profiles bellingcat which looks to use a citizen based journalism model to shed light on conflict zones, with successful reporting from Ukraine and Syria among other locations.

There’s been no shortage of coverage of Apple’s launch event for Apple Pay, iPhone 6 and Apple Watch. Marco Arment looks at what we would like to see with the Apple Watch but then goes on to praise Apple for its ability to produce best in class product design:

The ideal smartwatch would have a high-resolution, color, self-illuminated but not too bright, highly visible yet completely subtle screen that’s always on, but isn’t tacky and doesn’t draw much attention to itself from others. The screen must be as large as possible so you can read and touch it nicely, but as small as possible so it isn’t ostentatious and doesn’t look out of proportion on a wrist. This screen, and all of the other components, must use as close to zero power as possible because the battery needs to last at least a week (ideally much longer), weigh as little as possible, and occupy almost no space.

So it needs to be bright, dim, bold, subtle, large, and small, with a battery that lasts a month with zero mass, and some compelling everyday applications beyond telling time and showing phone notifications. The true design challenge isn’t making it pretty — it’s making it good.

Horace Dediu in his analysis points to Apple’s presentation which highlighting the Watch’s role as timepiece, communicator and health and fitness device but he goes on to suggest that we will see lots more use cases emerge in the coming years.

Whilst much of the consumer attention was on the iPhone and Apple Watch launch, we may well find that it’s Apple Pay that will have the most substantial long term effect  on our society, giving the mobile payments sector an important boost.

For those of you wanting to find out more about the wearable technology sector outside of Apple’s launch, you might want to try PSFK’s recently released presentation:

Tinder has reshaped the way that many people approach dating and relationships. If you’re interested in finding out more about the site, I’d suggest you try Kiera Feldman’s oral history or for a more analytical approach try Anne Helen Petersen looking at how race and social class affects people’s choices on the platform.

Tinder

A lot of noise has been made about the disruptive forces of Silicon Valley. Airbnb founder and CEO Brian Chesky argues that the tech sector should be more selective in their use of the phrase and suggests that Airbnb is more a return to older ways of doing business rather than something totally new:

 Dougald Hine highlights the need for reflection as consumers are faced with an ever expanding hosepipe of information:

The latter requires, among other things, space for reflection – allowing what we have already absorbed to settle, waiting to see what patterns emerge. Find the corners of our lives in which we can unplug, the days on which it is possible to refuse the urgency of the inbox, the activities that will not be rushed. Switch off the infinity machine, not forever, nor because there is anything bad about it, but out of recognition of our own finitude: there is only so much information any of us can bear, and we cannot go fishing in the stream if we are drowning in it. As any survivor of the 1960s counterculture could tell us, it is best to treat magic substances with respect – and to be careful about the dosage.

The featured image is by Ben Slow in Vitry, Paris and was found on vitostreet’s Flickr stream.

THOUGHT STARTERS: CONTENT THAT HAS GOT ME THINKING 20

With the recent Google I/O developers conference, there’s been no shortage of coverage of the mobile sector which is reflected in this blog posting. You will also find a critical look at the sharing economy, shopping malls, teens use of social media and the use of longform advertising among other matters.

Figures from PWC forecast that the UK economy will retain its strength over the next fifteen years  driven by a less rapidly ageing population and strong labour force participation when compared to its European counterparts.

April Siese takes a critical look at the sharing economy, pointing out that the benefits are likely to be unequally distributed:

Sharing-economy supporters see services as ways to disrupt the currently ineffective system, though their attempts are firmly targeted at a demographic with a disposable income—and with little regard for the underserved communities that they’re affecting.

James Greiff looks at the decline of the shopping mall in the US, pointing to the growth of ecommerce and social media’s role as social media as meeting place.Missing Mallrats

Monitise have pulled together a report looking at the growing use of mobile technologies and associated financial services globally, with a particular focus  on UK and USA. Mobile payments globally

Digital identity is growing in importance as consumers look to means of connecting a growing array of digital devices and services. In the UK the Government Digital Service is pushing forward with its Identity Assurance programme using third parties to authenticate consumers’ identity. Bob O’Donnell profiles current attempts in a sector that is still only in its early stages of development.

As more of our reading shifts to smartphones, Kevin Roose points to the book as becoming increasingly marginalised as we move away from the printed words and ereaders:

The silver lining of the app-ification of books is that it has increased the potential audience for e-books. Now, everyone with a smartphone has the ability to download and read any e-book from any publisher with a few taps. The bad news is that, if current trends hold, fewer and fewer people will have a device that is strictly for reading. Books are becoming just another app, and the publishing industry’s glorious e-reader future seems to be fading from view.

Bob Lefsetz looks to the future of the music industry as it continues its inexorable move from ownership to streaming.

Kantar have a web resource which allows users to assess changes in smartphone OS market share over time in key markets including UK, France, Germany, USA, China and Japan. BGR reports on collapsing market share on the part of Windows Phone which is looking less and less like a contender in the smartphone marketplace.

Smartphone OS Marketshare

Providing a contrasting approach is Benedict Evans who looks at the marketshare of different mobile operating systems across different market types as well as comparing mobile app revenues from iOS and Android.

Mobile Marketshare

Ben Bajarin contrasts the different approaches of Apple and Google in the smartphone marketplace.

To put it simply, Google’s strategy is dumb glass + smart cloud. Apple’s strategy is smart glass + deep cloud integration/synchronization. This is the clear departure in hardware philosophy the two companies will take. And it will dictate the types of customers each ecosystem has.

In a related piece, Benedict Evans takes a critical look at Amazon and Facebook’s attempts to take a more involved role in the mobile ecosystem.

Samsung is likely to feel the financial squeeze as it faces increasing competition from emerging Android handset manufacturers and an inability to deliver differentiation in other parts of the mobile value chain according to Jan Dawson.

The launch of the Amazon Fire Phone has left a few analysts intrigued or puzzled, particularly given the price point. Michael Mace portrays the move as a market experiment rather than a concerted effort to gain market share within the smartphone sector.

Facebook still dominates among US teenagers despite talk of an exodus as reported in eMarketer and Forrester.

teensocialscatter

Contently talking about short films/longform advertising as a better engage with consumers  who are spending more time with online video and provide opportunities for content that entertains rather than simply disrupts.

The featured image is a piece by Momo for the  Bien Urbain festival in Besançon and was photographed by Laure Saint Hillier & David Demougeot for Ekosystem.

The featured image is a piece by Momo for the  Bien Urbain festival in Besançon and was photographed by Laure Saint Hillier & David Demougeot for Ekosystem.