Creating Wealth

Creating wealth is entirely different from just transferring it.  The service sector lives off transferred wealth. They are in essence, moving money from one pocket to another.  So, how does a country or economy actually create wealth?  Basically, there are three ways to do it:

1.       Manufacture it

2.       Mine it

3.       Grow it

I used to tell my sons when they were younger that the wealth was only created when it came from the ground.  Even in manufacturing, the wood, steel, plastic, etc. had to come from beneath the earth’s surface.

China is able to finance the United States’ debt because they have become the manufacturer to the world.  One reason the U.S. isn’t totally defunct is because we still remain an agricultural power house (number 3), for now, but that is for a future post.

Come See Nova Microwave and Res-net Microwave in Boston

Nova Microwave and its sister company Res-net Microwave will be exhibiting this September in Boston at the Electronic Design Innovation Conference and Exhibition (EDI CON USA).  It is their first time showing at this event which will be held from September 11-13, 2017 at the Hynes Convention Center in Boston, MA.

With more than 100 exhibitors and 88 educational sessions, EDI CON promises to be an informative event for all those who attend, not to mention a beautiful time of year to be in Boston.

So, stop by our booth (#610) and see Res-net’s and Nova’s latest products and innovations.   Put your business card in the bowl and try out your luck in the raffle of a brand new GoPro®.   We look forward to seeing you in Boston.

Driverless Cars

There has been a lot of talk about driverless cars.  I am not a fan, as I like to be in control of my own vehicle.  The idea of a computer guiding my vehicle to a destination that has been keyed into the dashboard makes me uneasy, to say the least.

That being said, I just noticed that my car (Jeep) just hit 55,555 miles on the odometer.  At first glance, that seems fairly normal for 2 years’ worth of driving.  Then I started to do the calculations.  At an average of 60 miles per hour (I do a lot of highway driving), I just spent about 926 hours in my car over the past 2 years or just over 38 days.  That is over a month of time spent behind a windshield and fairly unproductive time.  It is even worse for those with long computes and congested traffic.

If I had been in a driverless car, I could have been catching up on reading the newspaper, trade magazines, or answering emails.  So, although we may be losing some control with this new technology, we may be gaining an even more precious resource, time.

The Future of NAFTA -- Is There One?

NAFTA is now 20 years old. Has it been good for the three countries involved: the U.S., Canada, and Mexico? Has it led to an improvement in the living conditions of the majority of persons living in each of the countries? Can any productivity improvement in the three countries be credited to the effects of NAFTA? These were proponent claims and promises at the time. Are these still the hoped-for benefits 20 years later?

One opinion: "NAFTA brought neither the huge gains its proponents promised nor the dramatic losses its adversaries warned of." (see reference 1)

Another: "Growing trade deficits with Mexico and Canada after NAFTA took effect reduced (U.S.) employment in high-wage, traded goods industries, resulting in a substantial loss of wage income for such workers. This contributed to growing inequality in wages and falling demand for workers without a post-secondary education, males in trade-related production, and minorities.....NAFTA has also hurt workers in Mexico and Canada in many different ways, as documented elsewhere in this report. Without major changes in NAFTA to address unequal levels of development and enforcement of labor rights and environmental standards, continued integration of North American markets will threaten the prosperity of a growing share of workers in the United States and throughout the hemisphere." (see reference 2, dated Sept. 2006 ).

So, if NAFTA was bad for the majority of people in each of the countries, then who was it good for? And, was it truly bad, or would continued protectionist and (here-and-there) isolationist economic policies in each of the countries have made matters even worse? 

Proponents argue that because NAFTA created rules for safer, border-crossing capital investment, so dollars and pesos could follow opportunity and spread wealth. Critics counter that the improved investment freedom increased instability for currently-employed workers, and shifted economic power and quality-of-life influences away from governments, and square into the hands of multinational corporations. They further counter that most of the wealth did not make its way to "the people," but only to the upper-most wealthy.

And so, the arguments continue.

But to simply matters a bit, NAFTA is a trade agreement in a corner of the world where political boundaries have become secondary to the hopeful benefits of economic cooperation between three adjacent and friendly countries. On the surface, the notion sounds like a fine one. 

However, today, multinational corporations are much more adept than 20 years ago at ferreting out opportunity and jumping continents to develop workforces, industries, and markets. Does that make NAFTA less relevant now than in 1993 as far as multinational corporations are concerned? Maybe so.

But NAFTA also helps define North America as a place where the rules are clear: Your money is safe; we're not a manufacturing dumping ground for the world; there are definite limits to the exploitation of labor and clear requirements for workplace safety; our countries respect each other and won't be unfairly played against each other.

NAFTA has its troubles. The EU even more and bigger troubles. But both are basically sound and good examples of multinational cooperation and of what someday "could be." Both are works in progress in hopes of very long-term benefits.

Some say NAFTA hasn't proven itself worthwhile.  Maybe 20 years isn't quite enough time.

reference 1: https://www.foreignaffairs.com/articles/canada/2013-12-06/naftas-mixed-record

reference 2: http://s2.epi.org/files/page/-/old/briefingpapers/173/bp173.pdf (page 24)

The Next Recession

When will we have the next recession?  Nobody really knows for certain.  The better question may be how will be combat the next recession?  The Federal Reserve cannot reduce interest rates to a below zero percentage rate.

Some presidential candidates have suggested lowering corporate taxes.  That would definitely help by ensuring companies had more cash for expansion, but many politicians will not touch this for political reasons.  Also, it still may not result in enough job creation to offset the economic downturn of a major recession.

Does this mean that the next recession will be longer and more extensive than normal?  If any recession does have a normal time period, the answer may be yes.  The tools we use to bring an economy out of the economic downturn are already the being employed to prop up or subsidize the current economy.  So, what happens when this economy takes a turn for the worse and where would it be it we were not already “stimulating“ it?

Defense Spending Increase

Whoever the next president is going to be, this person is going to have to make a decision about defense spending and whether to increase it, decrease it, or maintain the current rate.

Donald Trump, a Republican candidate, has made increasing defense spending one of the pillars to his campaign’s platform.  In doing so, he was brought the defense spending debate to the forefront of the 2016 Presidential Campaign.

From 2010 to 2015 the total defense budget has deceased over 25% based on numbers from the U.S. Department of Defense (National Defense Budget Estimates).  If what is budgeted for FY2016 is included, it would be a 31% decrease over those 6 years.

The year 2010, was extraordinary, in that we were in the middle of 2 conflicts.  So, perhaps that 2010 number is an anomaly.  The question then becomes, have we cut back too far?  Have we gone from one extreme (spending too much) to another (spending too little) or have we just “righted the ship”?  Only time will tell.

Tag! Soon Artificial Intelligence Will Find You.

In May, 1997 the world's chess champion, Gary Kasparov, lost a 6-game challenge to Deep Blue, an IBM supercomputer. An advantage to the computer's programmers was the full history of Kasparov's previous public matches -- his style -- as well as that of dozens of other grand masters and their moves in various opening-, middle-, and end-game scenarios.

To give Deep Blue credit, its moves were the result of algorithm-driven analyses (e.g. how important is a safe king position compared to a space advantage in the center, etc.), according to the results of 700,000 or more grandmaster games. The machine could explore up to 200 million possible chess positions per second in this way. This wasn't just a memory exercise.
The rest is history.

Since then, developers have combined various forms of data (financial, scientific research, social, etc.) with application algorithms and massively parallel processing to aid human observation, pattern recognition, detection, forecasting, and decision making. Meanwhile, improved software and heuristic decision making have permitted much smaller dual I-Core microcomputers to perform as well as or better at chess than Deep Blue.
But, until recently, a computer's ability to truly "learn," that is, to write its own algorithms and rules according to data presented, has not been achieved -- and here comes the part you may not like....

You see, processing and working through mountains of data is no problem for computers these days. The problems arise when the rules (algorithms) become so complex for certain tasks that they just can't be written -- by a human. And, as it happens, identification of people and other objects by comparisons of characteristics or traits (for example, five pictures, same person, different pose) is an incredibly difficult set of algorithms to write.

Now, who might have access to those five mug shots of you, as well as your name "tagged" in each one? And who might have the same data on 50 million or more additional individuals? In a word -- Facebook. We and our Facebook friends have created a huge data garden from which to enable algorithm development via AI. 

Just wondering. How does that make you feel?

We at E.T.I. are looking forward to the day when AI in a supply chain gives us five more days notice on a rush order for a difficult part, or, when our AI can talk to your AI. Until then, from our point of view, caution is required on where AI is heading, who's taking it there, and whose rules they're following.