Sunday, December 09, 2018

Uber, Moore's Law and the limits of the technofix

Uber remains a darling of the tech world. It is regarded as a disruptive upstart that recognized the unused capacity of privately-owned automobiles and their owners. It unleashed that capacity on cities worldwide using cellphone technology to provide discount rides to customers, ones who might otherwise have taken traditional taxis or public transportation.

It's a truism that startups burn through money like bonfires burn through tinder. But nine years in after becoming a worldwide company, Uber is still burning cash—$1 billion in the most recent quarter and $4.5 billion altogether in 2017.

To understand how Uber continues to enchant the investment and tech worlds despite its miserable financial record requires a little background. The dominant metaphor in the tech world is Moore's Law. Moore's Law is named for Gordon Moore, a semiconductor pioneer, who noted the doubling of transistors on an integrated circuit about every two years. This rapid progress led to rapid increases in the capabilities of computers in terms of speed, memory and computational power even while prices were coming down dramatically. That progress is also seen in the capabilities of practically everything containing circuits including cellphones, cameras and other digital devices.

Sunday, December 02, 2018

Bayer suffering buyer's remorse for Monsanto acquisition

If only Bayer, the German pharmaceutical and agricultural seed and chemical giant, had bothered to ask around before acquiring the American-based Monsanto Company for $63 billion in cash last June.

Two months later a jury delivered a $289 million award (later reduced to $78 million) to a groundskeeper who claimed his frequent exposure to Monsanto's Roundup weedkiller had given him cancer and that the company covered up the danger. (In 2015 the World Health Organization classified glyphosate, the name of the active ingredient in Roundup, as a probable carcinogen. Glyphosate is one of the most broadly used herbicides in the world.)

There are over 8,000 cases pending against Monsanto in the United States and many more will surely be filed. Bayer's stock has lost $38 billion in value since Bayer acquired Monsanto. The company would have done better putting its $63 billion in cash into a hole in the ground.

Sunday, November 25, 2018

Taking a Thanksgiving holiday break

I'm taking a short break from posting this week. I expect to post again on Sunday, December 2.

Sunday, November 18, 2018

Australia's drought, climate change and the future of food

There's a reason that few people are thinking about world grain supplies. Last year saw record worldwide production of grains and record stocks of grains left over.

But this year worldwide production slipped about 2 percent, owing in large part to the plunge in Australia's production caused by an ongoing severe drought. Production is expected to fall 23 percent. Fortunately, in our globalized grain markets, this hasn't affected overall supplies or prices very much as grain stocks are high and supplies are mobile and shipped all over the world as needed.

But Australia is the world's fifth largest wheat exporter, accounting for nearly 9 percent of the total in 2016 according to the Food and Agriculture Organization of the United Nations. In fact, the top five wheat exporting countries account for 56 percent of world wheat exports. The rest of the world is highly dependent on these exporters to make up the difference between what they grow and what they eat.

Sunday, November 11, 2018

Connected and vulnerable: Climate change, trade wars and the networked world

The increasing connectedness of the global economic system has long been touted as the path to greater prosperity and peaceful relations among nations and their peoples. There's just one hitch: Complex systems have more points of failure and also hidden risks that only surface when something goes wrong.

For example, our dependence on cheap shipping to move commodities and finished goods has resulted in a system vulnerable to environmental disruption, particularly climate change, and to rising political and military tensions.

The extreme drought in Germany last summer, the warmest ever recorded in the country, has resulted in such low water in the Rhine River that shipping has been greatly curtailed. Ships can only be loaded lightly so as to avoid running aground. Consequently, many more barges and other vessels have been pressed into service to carry the lighter but more numerous loads along the river. This has driven up the cost of shipping considerably. In addition, fuel tankers have not been able to reach some river ports resulting in scattered fuel shortages. Some industrial installations along the river have had to reduce operations.

The natural inhabitants of the river have also suffered as die-offs of fish and other marine life have spread along the river.

Sunday, November 04, 2018

Is the "world" actually getting better? Depends on your definition of "world"

A frequent critique of the daily news flow is that it is filled with negative events. This is partly a product of the human nervous system. We react very quickly to perceived threats and more slowly to hope of gain or pleasure. Editors and reporters know what will grab people's attention which is why the old adage—if it bleeds, it leads—still applies.

There are, of course, heartwarming stories about miraculous recoveries from illness and injury, rescued animals, and saintly persons doing amazing charitable acts. And, then there is a sub-genre of the feel-good story which I'll call the you've-been-living-in-opposite-land-things-are-actually-getting-better story.

Now as an antidote to the relentless negativity of the news, this kind of story gets attention. And, sometimes we need to be reminded, for instance, that life expectancy continues to rise, child mortality continues to decline, and smoking remains in decline. Humans are capable of making progress by certain measures.

Sunday, October 28, 2018

Shale oil becomes shale fail (and a nice subsidy for consumers)

I'm tempted to say the following to the writers of two recent pieces (here and here) outlining the continuing negative free cash flow of companies fracking for oil in America: "Tell me something I don't already know."

But apparently their message (which has been true for years) needs to be repeated. This is because investors can't seem to understand the significance of what those two pieces make abundantly clear: The shale oil industry in the United States is using investor money to subsidize oil consumers and to line the pockets of top management with no long-term plan to build value.

There is no other conclusion to draw from the fact that free cash flow continues to be wildly negative for those companies most deeply dependent on U.S. shale oil deposits. For those to whom "free cash flow" is a new term, let me explain: It is operating cash flow (that is, cash generated from operations meaning the sale of oil and related products) minus capital expenditures. If this number remains negative for too long for a company or an industry, it's an indication that something is very wrong.

Sunday, October 21, 2018

The risks of synthetic biology in the information society

Knowledge is power. The instructions for making viruses from synthetic strands of DNA are on the internet. And, the strands themselves are available for purchase online. It's called synthetic biology. Right now it's not easy to get the strands you need to make dangerous viruses or to put them together. But it is becoming easier.

That's the issue that exploded concerning the synthetic construction of an thought-to-be extinct horsepox virus. The problem is that the instructions for making horsepox are distressingly useful for constructing a smallpox virus, a virus responsible for hundreds of millions of deaths in the 20th century alone until its eradication. Smallpox, you'll recall, was eradicated through a successful worldwide effort led by the World Health Organization. After 1980 it was no longer necessary to vaccinate people against the disease and very few people alive today have been vaccinated against it.

Not surprisingly, an outbreak resulting from, say, the inadvertent or possibly intentional release of a synthetic smallpox virus from a lab could prove devastating worldwide.

Sunday, October 14, 2018

Climate catastrophe: The median is NOT the message

Anyone who has followed the climate change issue in the last 30 years knows that official forecasts provided by the Intergovernmental Panel on Climate Change (IPCC) are quickly upended by developments and have often been obsolete before they were issued.

The latest report from the IPCC is the first, however, to abandon the measured tone of its previous ones and foretell what it considers a climate catastrophe for human civilization unless the world makes an abrupt U-turn and begins dramatic reductions in greenhouse gas emissions almost immediately.

And yet, even this forecast is probably too conservative in its pronouncements. That's according to Michael Mann, a climate researcher whose famous "hockey stick" graph has been central to understanding the rise in global temperatures and has been replicated again and again using other measures of historical worldwide temperatures.

Sunday, October 07, 2018

Taking a short break - No post this week

I'm taking a short break from posting this week. I expect to post again on Sunday, October 14.