Chart of the Day: 12 technologies will drive our economic future

The Washington Post cites a chart from a study by McKinsey Quarterly:

Most of the aforementioned technologies can be summed as the entwined functionalites of the ongoing revolutions of big data, communications and smart manufacturing. Such technologies are bound to decentralize the global economy that would intensify frictions with the current state of centralized political systems. 

Yet if central bankers and power insatiable politicians have not been pushing the economic system to Hades, I would dwell heavily on the above technologies.

War on 3D Printed Guns: US Government Censors 3D Blueprints

Here is what I earlier wrote

With the proliferation of 3D printed guns, the next step governments will likely take is to regulate 3D.

As predicted, the US government forced a takedown of 3D gun blueprints

From the Forbes:

The battle for control of dangerous digital shapes may have just begun.

On Thursday, Defense Distributed founder Cody Wilson received a letter from the State Department Office of Defense Trade Controls Compliance demanding that he take down the online blueprints for the 3D-printable “Liberator” handgun that his group released Monday, along with nine other 3D-printable firearms components hosted on the group’s website Defcad.org. The government says it wants to review the files for compliance with arms export control laws known as the International Traffic in Arms Regulations, or ITAR. By uploading the weapons files to the Internet and allowing them to be downloaded abroad, the letter implies Wilson’s high-tech gun group may have violated those export controls.

“Until the Department provides Defense Distributed with final [commodity jurisdiction] determinations, Defense Distributed should treat the above technical data as ITAR-controlled,” reads the letter, referring to a list of ten CAD files hosted on Defcad that include the 3D-printable gun, silencers, sights and other pieces. “This means that all data should be removed from public acces immediately. Defense Distributed should review the remainder of the data made public on its website to determine whether any other data may be similarly controlled and proceed according to ITAR requirements.”

Unfortunately for the US government, the markets have already anticipated such a move. There has been more than 100,000 downloads of the blueprint prior to the takedown.

Again from the same article:

Wilson, a law student at the University of Texas in Austin, says that Defense Distributed will in fact take down its files until the State Department has completed its review. “We have to comply,” he says. “All such data should be removed from public access, the letter says. That might be an impossible standard. But we’ll do our part to remove it from our servers.”

As Wilson hints, that doesn’t mean the government has successfully censored the 3D-printable gun. While Defense Distributed says it will take down the gun’s printable file from Defcad.org, its downloads–100,000 in just the first two days the file was online–were actually being served by Mega, the New Zealand-based storage service created by ex-hacker entrepreneur Kim Dotcom, an outspoken U.S. government critic. It’s not clear whether the file will be taken off Mega’s servers, where it may remain available for download. The blueprint for the gun and other Defense Distributed firearm components have also been uploaded several times to the Pirate Bay, the censorship-resistant filesharing site.

So the US government will have to extend its censorship to cover New Zealand based Mega and Pirate Bay.

But since the technology is already out, this will find various ways to spread. Thus the US government will have their hands full in instituting controls.

The cat and mouse chase between marketplace and regulators on the 3D technology has began.

The World’s First Fully 3D Printed Gun: The Liberator

The advent of 3D printing technology are one of the many major manifestations of the deepening information age or the digital economy.

Meet the world’s first entirely 3D Printed Gun: the Liberator

Writes Andy Greenberg at the Forbes

Eight months ago, Cody Wilson set out to create the world’s first entirely 3D-printable handgun.

Now he has.

Early next week, Wilson, a 25-year-old University of Texas law student and founder of the non-profit group Defense Distributed, plans to release the 3D-printable CAD files for a gun he calls “the Liberator,” pictured in its initial form above. He’s agreed to let me document the process of the gun’s creation, so long as I don’t publish details of its mechanics or its testing until it’s been proven to work reliably and the file has been uploaded to Defense Distributed’s online collection of printable gun blueprints at Defcad.org.

Update: Here’s my full account of Defense Distributed’s first test-firings of the Liberator, including firing it by hand.

All sixteen pieces of the Liberator prototype were printed in ABS plastic with a Dimension SST printer from 3D printing company Stratasys, with the exception of a single nail that’s used as a firing pin. The gun is designed to fire standard handgun rounds, using interchangeable barrels for different calibers of ammunition.

Technically, Defense Distributed’s gun has one other non-printed component: the group added a six ounce chunk of steel into the body to make it detectable by metal detectors in order to comply with the Undetectable Firearms Act. In March, the group also obtained a federal firearms license, making it a legal gun manufacturer.

The 3D printing technology continues to evolve. From simple tools, 3D printers have now covered complex products such as guns, guitars or even cars. 3D will increasingly make many tools “homemade”. Even healthcare trends will be influenced by 3D, I pointed to jawbone replacement and lately 3D technology has enabled printed lab grown human livers. 

The widening diffusion of 3D printers will reconfigure today’s economic system.

Notice that the current trend of technological innovation leads to decentralization, or bottom-up or niche markets. Such trend basically represents a diametrical opposite of the industrial age platform based on centralization, or top down or mass markets. Yet policymakers have been forcing upon the public, centralized policies that contradicts the direction of markets. So naturally, the struggle for domination will mean social frictions from these antipodal forces.

Take 3D printed guns; 3D will enable the public to autonomously design and manufacture their own guns even at home. So many if not all of the gun control regulations may be rendered “obsolete” by sheer technicalities. This comes even as the media passionately debates on them. 

With the proliferation of 3D printed guns, the next step governments will likely take is to regulate 3D. Such applies also to various vested interest groups, particularly manufacturing and other sectors that will be threatened by the 3D technology.

But since 3D printing or additive manufacturing, as the Wikipedia.org explains represents “a process of making a three-dimensional solid object of virtually any shape from a digital model” implementing social controls on a non-specific module would make such controls ambiguous and or ineffective. So technology will run rings around old industrial era statutes.

In short, the trend of technology advancements and politics have been in a collision course. There will be a winner and a loser.

War on Bitcoin as US Government Tightens Grip

INCREASINGLY desperate governments around the world will resort to various ways and means of preventing people from safeguarding their savings from legal depredation. Thus, the attacks on gold or even cash transactions or hoarding.

Bitcoins are now seen as a threat by the US government and will be subject to "regulations".

Notes the Zero Hedge (bold original)

Just six weeks after the US Treasury decided enough-was-enough with this upstart non-fiat, non-controlled-by-TPTB currency (and applied money-laundering reglations), US financial regulators are now looking for supervisory control over Bitcoin. As The FT reports, CFTC's Bart Chilton notes "it's not monopoly money - real people have real risk in these instruments," and  that regulating the controversial cyber-currency "is sure something [CFTC] needs to explore." Chilton's remit to regulate this "shadow currency" is predicated on it becoming a basis for derivative contracts as opposed to purely transactional (akin to the monitoring of physical oil transactions that can influence crude futures.) Since the Treasury's March decision, at least three North American companies have had their accounts seized by the banks but while this attempt to control the virtual currency follows the ECB's 'ponzi attack' last year, the 'regulators' may note that, "even if US regulations make it hard for Bitcoin businesses to operate in the US, that doesn’t mean it will make it difficult for people to use Bitcoin as a currency in the US. Bitcoin is a world currency."

The war over bitcoins showcases the volatile transition from the industrial age to the information age or the Third Wave.  

It is interesting to see how governments will try to close the gap between the digital marketplace, where the latter would be constantly innovating ahead, while the former will also be constantly in a chase over "controlling" innovations.

 

So far bitcoin has been in consolidation after the recent crash, which has coincided with gold-commodities

China’s Cheap Drones: A Threat to Whom?

This article is worried that China’s cheap clones may end up in the wrong hands, or could be owned and used by the adversaries of the US government.

From Technewsdaily.com

Cheap drones made in China could end up arming potential U.S. foes such as North Korea, Iran and terrorist organizations.

China already makes drones that don't quite match up to U.S. military drones, but for a fraction of the cost. The Chinese military envisions such unmanned autonomous vehicles (UAVs) scouting out battlefield targets, guiding missile and artillery strikes, and swarming potential adversaries, such as U.S. carrier battle groups…

China has built a huge military-industrial complex to support its growing drone fleet, which consisted of about 280 military drones as of mid-2011, according to a report released by the Project 2049 Institute on March 11. Chinese manufacturers supplying the military and state agencies also have begun seeking foreign buyers in a global drone market that aerospace and defense market research firm Teal Group estimates to be worth $89 billion over the next 10 years…

The idea of cheap, China-made drones may not tempt countries such as Japan, South Korea, Taiwan, Australia or NATO allies that want to buy the best U.S. or Israeli drone hardware. Instead, China is seeking buyers in the Middle East and Africa at glitzy expositions such as China’s biennial Zhuhai Air Show.

While such concern could partially be true, considering the estimated $89 billion market, my guess is that China’s cheap drones will likely threaten politically connected US drone providers/suppliers more than terrorists or US foes having access to them. 

Besides, anti-drone laser weapon system has already been developed. Foes of the governments are likely to use them than use drones.

Yet demand for commercial drones has been estimated to reach 10,000 according to the US Federal Aviation Administration (FAA). 

Many of such demand come from hobbyists.

A good example of the growing commercial use of drones has been in photography or cinematography particularly in the covering of field events. The Golf Channel used a drone to film a recently held tournament, according to the Business Insider.

The point is commercialization of drones will likely mean more price competition, more innovation, more applications and an increasing use of them by the markets. China's cheap drones may be one factor in driving the commercialization of drones.

CNN: 3D Printed Assault Weapons Available by End of April

The technology is there and continues to improve, so applications will also continue to expand to cover wide ranges of products, including controversial guns.

Assault weapons from 3-D Printing will be available by the end of April according to this report from CNN (hat tip lewrockwell.com)

Firearms 3D printer Cody Wilson of Defense Distributed and the Wiki Weapon project has been making wave after wave with every one of his statements, updates, videos and blog posts. He’s been making the circles, with an interview with Vice Magazine and now CNN.

His most recent proclamation is will alarm many, bring hope to a few, but leaves us with our heads scratching. Wilson has said that they will have the technology to 3D print a firearm by “the end of April.”

“Well to have a printable gun — it’s my intention to have that done by the end of this month and we’re at the end of March now so it’s my intention to have it done by April,” he said. This would, in theory, prompt a new era in personal firearm manufacturing and a new paradigm for gun control.

“The assumption is one day the technology will become more ubiquitous and widespread,” Wilson said on “The Lead with Jake Tapper.”

“It will fall in price, and materials will be developed in a better place than they are now, so yes, if you were to have one in your home and you have the gun file, you can just click print and have the gun.”

The rate of advance of 3D technology will only render prohibition and other regulatory statutes obsolete. Of course, we expect government eventually to attempt to "regulate" 3D. But again such measures are bound to lag and thus fail.

3D technology in combination with others (mobile computing, nanotech and etc...) will change the way we do things and force us to specialize. A wider adaption of the 3D technology also means the path towards social decentralization.

Cancer treatment that kills every kind of cancer tumor

The information age will continue to bring about massive technological breakthroughs in various aspects of life. 

The “one drug that rules them all” in terms of cancer treatment may have just been discovered

From NY Post (hat tip EPJ)

Researchers might have found the Holy Grail in the war against cancer, a miracle drug that has killed every kind of cancer tumor it has come in contact with.

The drug works by blocking a protein called CD47 that is essentially a "do not eat" signal to the body's immune system, according to Science Magazine.

This protein is produced in healthy blood cells but researchers at Stanford University found that cancer cells produced an inordinate amount of the protein thus tricking the immune system into not destroying the harmful cells.

With this observation in mind, the researchers built an antibody that blocked cancer's CD47 so that the body's immune system attacked the dangerous cells.

So far, researchers have used the antibody in mice with human breast, ovary, colon, bladder, brain, liver and prostate tumors transplanted into them. In each of the cases the antibody forced the mice's immune system to kill the cancer cells.

"We showed that even after the tumor has taken hold, the antibody can either cure the tumor or slow its growth and prevent metastasis," said biologist Irving Weissman of the Stanford University School of Medicine in Palo Alto, California.

Classroom-less World: The World is your Classroom

The information age will be more about disruptive innovations or reconfiguring specific social activities via decentralized platforms. 

This should apply to education where online classes may be a transition towards a more decentralized paradigm: ‘Socialstructed learning’ or the world as your classroom.

Socialstructed learning as defined by Ms. Marina Gorbis writing at fastcoexist.com “is an aggregation of microlearning experiences drawn from a rich ecology of content and driven not by grades but by social and intrinsic rewards. The microlearning moment may last a few minutes, hours, or days (if you are absorbed in reading something, tinkering with something, or listening to something from which you just can’t walk away). Socialstructed learning may be the future, but the foundations of this kind of education lie far in the past.”

How the possible transition will go about, again Ms. Gorbis

Today’s obsession with MOOCs is a reminder of the old forecasting paradigm: In the early stages of technology introduction we try to fit new technologies into existing social structures in ways that have become familiar to us.

MOOCs today are our equivalents of early TV, when TV personalities looked and sounded like radio announcers (or often were radio announcers). People are thinking the same way about MOOCs, as replacements of traditional lectures or tutorials, but in online rather than physical settings. In the meantime, a whole slew of forces is driving a much larger transformation, breaking learning (and education overall) out of traditional institutional environments and embedding it in everyday settings and interactions, distributed across a wide set of platforms and tools. They include a rapidly growing and open content commons (Wikipedia is just one example), on-demand expertise and help (from Mac Forums to Fluther, Instructables, and WikiHow), mobile devices and geo-coded information that takes information into the physical world around us and makes it available any place any time, new work and social spaces that are, in fact, evolving as important learning spaces (TechShop, Meetups, hackathons, community labs).

We are moving away from the model in which learning is organized around stable, usually hierarchical institutions (schools, colleges, universities) that, for better and worse, have served as the main gateways to education and social mobility. Replacing that model is a new system in which learning is best conceived of as a flow, where learning resources are not scarce but widely available, opportunities for learning are abundant, and learners increasingly have the ability to autonomously dip into and out of continuous learning flows.

The good news is that the radical decentralization of the educational process will translate to its democraticization. With learning resources becoming more “abundant”, this means prices will fall towards zero bound— yes free education. And this means that education will span to cover greater number of people who will have access to specialized learning. This will also mean lesser politicization of the industry.

On the other hand, education service providers will have to discover other sources of revenues.

Also traditional education institutions will need to redraw their business models in order to adapt with the current changes otherwise face extinction.

Bitcoins: Safehaven from Cyprus Debacle and Officially Recognized by the US Treasury

I questioned yesterday the wisdom of mainstream’s assault on bitcoins, where the Economist calls bitcoins a “bubble”.

Well it figures that the recent spike in the public's interests on bitcoins has partly been a ramification or an offshoot to the Cyprus savings grab debacle

Here is Businessweek/Bloomberg,

Since Sunday, a trio of Bitcoin apps have soared up Spain’s download charts, coinciding with news that cash-strapped Cyprus was planning to raid domestic savings accounts to pay off a $13 billion bailout tab. Fearing contagion on the other end of the Mediterranean, some Spaniards are apparently looking for cover in an experimental digital currency.

“This is an entirely predictable and rational outcome for what’s happening in Cyprus,” says Nick Colas, chief market strategist at ConvergEx Group. “If you want to get a good sense of the stress European savers are feeling, just watch Bitcoin prices.”

The value of the virtual currency has soared nearly 15 percent in the last two days, according to the most-recent pricing data. “One hundred percent of that is due to Cyprus,” says Colas. “It means the Europeans are getting involved.”

So aside from gold, bitcoins appear to be a major beneficiary from the Euro crisis. So which shows more signs of a bubble: bitcoin or fiat money?

Yet for those who claim bitcoin lacks the widespread acceptance, well, they fail to take account that even the US Treasury now officially recognizes bitcoins.

From Bradley Janzen of Freebanking.org

Financial Crimes Enforcement Network (FinCEN) is the bureau of Treasury that enforces the Bank Secrecy Act (which requires banks to spy on their customers for the government).

FinCEN Issues Guidance on Virtual Currencies and Regulatory Responsibilities

To provide clarity and regulatory certainty for businesses and individuals engaged in an expanding field of financial activity, the Financial Crimes Enforcement Network (FinCEN) today issued the following guidance: Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies. The guidance is in response to questions raised by financial institutions, law enforcement, and regulators concerning the regulatory treatment of persons who use convertible virtual currencies or make a business of exchanging, accepting, and transmitting them. Convertible virtual currencies either have an equivalent value in real currency or act as a substitute for real currency. The guidance considers the use of virtual currencies from the perspective of several categories within FinCEN's definition of MSBs.

News Release: http://www.fincen.gov/news_room/nr/pdf/20130318.pdf

Guidance: http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf

Welcome to the mainstream bitcoin.

Well, my favorite iconoclast Nassim Taleb has great words to say about bitcoins at the reddit.com: (hat tip Zero hedge)

Bitcoin is the beginning of something great: a currency without a government, something necessary and imperative.

A sentiment I share. 

Bitcoins could herald the epoch of decentralization or the information age and importantly perhaps a transition to F. A. Hayek's denationalization of money

Social Media in the Shadow of the War on Drugs

In the light of Mexico’s war on drugs, social media has reportedly replaced traditional media as the main source of information

From Juan Carlos Hidalgo of the Cato Institute,

Unfortunately, one of the biggest casualties from the bloodshed that besets Mexico is freedom of the press. Drug cartels have targeted traditional media outlets such as TV stations and newspapers for their coverage of the violence. Mexico is now the most dangerous country to be a journalist. However, a blackout of information about the extent of violence has been avoided because of activity on Facebook pages, blogs, Twitter accounts, and YouTube channels…

Andrés Monroy-Hernández from Microsoft Research presented the findings of his paper “The New War Correspondents: The Rise of Civic Media Curation in Urban Warfare” which shows how Twitter has replaced traditional media in several Mexican cities as the primary source of information about drug violence.

Hmmm. Things have been changing at the margins.

South Korea: Mini Skirt Regulation Provokes Outrage

All sorts of civil restrictions seem to be cropping up from governments worldwide.

In South Korea, new regulations on mini skirt, which domestic officials label as “excessive” public exposure, have prompted for public outrage.

From Korea Times

A decree to fine those who engage in “excessive” public exposure passed at a Cabinet meeting presided over by President Park Geun-hye ignited controversy Monday.

The decree is expected to go into effect starting March 22.

People were outraged by the 50,000 won fine, as it brought back memories of similar restrictions on skirt lengths in the 1970s under the rule of the late President Park Chung-hee.

Many netizens criticized the decree as a signal of a return to the authoritarian era.

Social networks services, such as Twitter and Facebook, were buzzing with critical comments ― ranging from who decides the standards of decency to whether the decree will apply to swimming pools and gymnasiums.

Considering that South Korea ranks as one of the most wired or web connected nation in the world, it would be interesting to watch the forces of decentralization “netcitizens” square off with her centralized government.

The trend to regulate everything seem also an offshoot to bubble cycles, where the expanding sphere of political control represent growing signs of desperation by political forces over failed policies. Such also signifies the attempt to divert the public's attention from real problems.

Telecommuting: 10% of US Employees are Home Based

I wrote here and here denoting of how the forces of decentralization, which has been underpinned by the deepening of technology innovation trends, will likely upset on mainstream’s mantra of urbanization. 

Work will increasingly become mobile and move away from fixed time and or location as globalization spreads.  And such dynamic will reconfigure people’s lifestyles.

We are seeing more signs of such dynamic in play through increases in home based employment which now accounts for 10% of US employment.

From the Wall Street Journal Blog, (bold mine)

About one in 10 workers toils at least partly from home now, an emerging trend that could boost the productivity of the entire economy.

The U.S. Census Bureau said in a report Tuesday that some 13 million people, or 9.4% of the working population in 2010, worked at least one day at home per week, compared with just 9.2 million people in 1997, when 7% worked at least partly from home. People working either entirely or partly from home were more likely to be in management and business. Those in computer, engineering and science jobs saw among the biggest shifts home-ward: “Home-based” work in these fields jumped around 70% from 252,000 workers in 2000 to 432,000 workers in 2010. (Home-based workers work exclusively or part of the time from home.) According to Census figures, 5.8 million people or 4.3% of the U.S. workforce worked from home most of the week in 2010 — an increase of about 1.6 million since 2000.

Around the world, advances in technology are making it easier for millions to work from home. But there is much debate over the benefits of telecommuting Yahoo  Chief Executive Marissa Mayer set off a recent round of debate when she ended the company’s work-from-home arrangements.

Public or private projects based on the concept of centralization, such as urbanization, will be faced with greater risks.

Here Comes 3D Printed Cars

As part of the deepening of the information age, the 3D Printing revolution will affect large parts of today’s economy.

From Wired.com

Picture an assembly line not that isn’t made up of robotic arms spewing sparks to weld heavy steel, but a warehouse of plastic-spraying printers producing light, cheap and highly efficient automobiles.

If Jim Kor’s dream is realized, that’s exactly how the next generation of urban runabouts will be produced. His creation is called the Urbee 2 and it could revolutionize parts manufacturing while creating a cottage industry of small-batch automakers intent on challenging the status quo.

Urbee’s approach to maximum miles per gallon starts with lightweight construction – something that 3-D printing is particularly well suited for. The designers were able to focus more on the optimal automobile physics, rather than working to install a hyper efficient motor in a heavy steel-body automobile. As the Urbee shows, making a car with this technology has a slew of beneficial side effects.

Jim Kor is the engineering brains behind the Urbee. He’s designed tractors, buses, even commercial swimming pools. Between teaching classes, he heads Kor Ecologic, the firm responsible for the 3-D printed creation.

“We thought long and hard about doing a second one,” he says of the Urbee. “It’s been the right move.”

Kor and his team built the three-wheel, two-passenger vehicle at RedEye, an on-demand 3-D printing facility. The printers he uses create ABS plastic via Fused Deposition Modeling (FDM). The printer sprays molten polymer to build the chassis layer by microscopic layer until it arrives at the complete object. The machines are so automated that the building process they perform is known as “lights out” construction, meaning Kor uploads the design for a bumper, walk away, shut off the lights and leaves. A few hundred hours later, he’s got a bumper. The whole car – which is about 10 feet long – takes about 2,500 hours.

Pls. read the rest here.

The problem I see with the competition poised by 3D Printing could be that incumbent companies may lobby to impose regulatory obstacles (e.g. safety and energy standards, etc…) on them.

Nevertheless, 3D Printing seems yet at the fringe of the technology adaption cycle. (chart from evocator.org)

Deepening of the Information Age: More Signs of Telecommuting

Why I don’t buy the mainstream’s embrace of the supposed deepening trend of urbanization? Because the past is hardly the future. Technological advances extrapolates to increasing decentralization of social activities. And this covers commercial activities that can be seen from corporate operations. 

Proof?

From Wall Street Journal Blog

With nearly half its employees working from home now, Aetna Inc. is convinced it is saving a good deal of money with no adverse effect on productivity.

A nine-month experiment at Ctrip, China’s largest travel agency, overseen by academic economists at Stanford and Beijing University, suggests Aetna’s experience may not be unique.

Ctrip, was looking to save money on real estate costs and cut turnover. It asked 996 employees in its Shanghai call center if they’d be interested in working at home four days a week. Half were interested, and 252 qualified for the experiment by virtue of having at least six months on the job and broadband access from a quiet corner of their home. Those with birthdays on even days were selected to work at home, those with odd birthdays stayed in the office, making this the sort of random experiment that academics relish.

And as I noted in the past

I would add that increasing specialization will hallmark the knowledge economy. And specialization will diminish the economics of urbanization.

The changing nature of work can be exemplified by the telecommuting jobs, which have been rapidly growing.

These jobs are based on the web, are flexible and are not location sensitive (working from home, or elsewhere).

The trend of web and knowledge based work localization and flexibility will further deepen.

Many Wealthy Chinese Exit China

More accounts of wealthy Chinese reportedly seeking safehaven by emigration.

From CNBC.com 

A new report in China shows that 150,000 Chinese – most of them wealthy – emigrated to other countries in 2011. While that number may not seem high for a country of more than a billion people, the flight of China's richest – and the offshoring of their fortunes – could cost the country jobs and economic growth, according to the study from the Center for China and Globalization and the Beijing Institute of Technology.

"The private economy contributes more than 60 percent of China's GDP and it absorbs a majority of employees. So if private business owners emigrate with their capital, it would mean less investment in the domestic market, so fewer jobs would be created," Wang Huiyao, director of the Center for China and Globalization, told the state-run China Daily today.

The fleeing millionaires mainly made their money in real estate, foreign currency and deposits and stocks, among other fields, according to the report. They are mainly leaving Beijing, Shanghai and coastal provinces such as Zhejiang, Guangdong and Jiangsu.

I guess there could be various personal reasons for these. Some may even be cronies or relatives of Chinese officials who may be trying to protect their wealth

But many of the exiting wealthy class appear to be jumping from the proverbial frying pan to fire.

More from the same article.

China's wealth flight, however, has been America's gain. The United States was the top destination for wealthy Chinese in 2011, according to the report. Canada and Australia came second and third.

The report said that the United States had granted 87,000 permanent resident permits to Chinese nationals in 2011. Of those, 3,340 were approved through special investment visas, which allows wealthy foreigners to apply for American citizenship if they agree to invest more than $500,000 on job-creation projects. The program has become largely Chinese, with more than more than two thirds of all of the visas granted going wealthy citizens of mainland.

Chinese migrants to the US will likely be faced with higher taxes, and the prospects of instability from America’s degenerating fiscal and political conditions

Yet recent developments suggest that there has been a ballooning tension between China’s centralized ‘communist’ government and the fast expanding decentralized forces from the entrepreneurship class. The new leaders seem to represent the status quo fundamentally employing the same Keynesian policies.

Eventually either the Chinese government will adapt political reforms to conform to the changes of the economy or that Chinese government will have to reverse the recent economic reforms. Such transition increases the risks of political instability where perhaps fleeing wealthy Chinese could be a symptom

War on Internet: Internet Freedom Prevails over UN Sponsored Regulations

The United Nations via the International Telecommunication Union has failed in her mission to put a centralized legal kibosh on the internet.

From Forbes.com

For the last two weeks some of the planet’s most oppressive regimes have faced off against some of the most powerful Internet advocates in an effort to rewrite a multilateral communications treaty that, if successful, could have changed the nature of the Internet and altered the way it is governed.

On Thursday night that effort failed, as a US-led block of dissenting countries refused to sign the proposed updates, handing the United Nation’s International Telecommunication Union a humbling defeat.

The United States, which framed its dissent as defending “the open Internet,” was joined by more than 80 other countries, including Australia,Canada, Chile, Costa Rica, the Czech Republic, Denmark, Egypt, Finland, Greece, Italy, Japan, Kenya, the Netherlands, New Zealand, Poland, Portugal, Qatar, Sweden and the United Kingdom. (Some of the non-signers seemed to be seeking to avoid making too overt of a political statement, saying, regrettably that they could not sign because they had to “consult with capital.”)

On Friday, the remaining members of the ITU, which is made up of 193 countries, signed the treaty, known as International Telecommunications Regulations, but the gesture in many ways was hollow.

Like other U.N. agencies, the ITU strives for consensus, and it’s within that consensus that the ITU derives its authority. The ITU can’t force a country to abide by its treaties, but if representatives of all member countries agree to a global telecommunications framework, and subsequently pass laws enforcing the framework, the ITU itself grows stronger.

Dissenting countries led by the US have not really been for defending “open internet”, as the US for instance have pursued various forms of social media censorship (some examples see here here here and more). The difference, I think, is that these supposed “open internet” faction don’t want to be tied up with or submit to a global regulator via such treaty.

They seem to prefer approaching the internet via domestic policies.

The same article seem to give such a hint,

Interpreted as a power grab by the United Nations, the secrecy rang alarm bells. Distrust of the ITU began to approach panic after the contents of more controversial proposals became known. Some of the proposals endorsed by authoritarian countries would have increased censorship, potentially restricted the free flow of information and undermined the voluntary framework that forms the basis of today’s Internet.

In addition, upholding the treaty may also extrapolate to the dilution of power by the opposing bloc to the UN consensus led by authoritarian governments which would be unacceptable to opposition many whom are developed economies.

The good news is that forces of decentralization embodied by the internet continues to sow division on governments. Such factionalism will likely be more pronounced when the next debt crisis surfaces.

Third Wave Politics: Secessionist Parties in Spain Gains Political Footing

In the information age, forces of decentralization will function as the key agents of social change.

In the realm of politics, such evolutionary transition will likely be channeled through secessionist movements.

In Spain, the secessionist parties of Catalonia may have just gotten the momentum that could trigger a potential chain of events.

From Bloomberg,

Pro-independence parties in Catalonia won a regional vote, strengthening a drive for a referendum on secession in defiance of Spanish Prime Minister Mariano Rajoy.

Catalan President Artur Mas, who called early elections to force the debate on independence, won 50 of the 135 seats in the regional assembly for his Convergencia i Unio party, down from 62, with 99 percent of the vote counted. The separatist Catalan Republican Left, known as the ERC, more than doubled its seats to 21 from 10. Two smaller parties that also back a plebiscite secured 16 seats.

Rajoy, weakened by recession and speculation that Spain needs a European bailout, says a referendum on secession is unconstitutional. Mas’s losses showed his bid for a mandate backfired, leaving him dependent on anti-austerity separatists to govern Spain’s largest regional economy.

“With a majority, Mas could have negotiated for all kinds of goodies to postpone the referendum but clearly that’s not an option anymore,” Ken Dubin, a political scientist at Carlos III University and IE business school in Madrid. “He was hoping he’d have a stronger hand to negotiate some intermediate status, but his bluff has been called.”

Rajoy’s People’s Party won 19 seats, a gain of one. The Socialists took 20 seats, down from 28.

Mas has pledged a referendum within four years. In contrast, the ERC would be willing to declare independence unilaterally in 2014.

The above developments reminds me of, and appear as gradual confirmation of the predictions of futurist Alvin Toffler as elucidated in his highly prescient 1980 book, The Third Wave (p.317)

National governments, by contrast, find it difficult to customize their policies. Locked into Second Wave political and bureaucratic structures, they find it impossible to treat each region or city, each contending racial, religious, social, sexual or ethnic group differently, let alone treat each citizen as an individual. As conditions diversify, national decision-making remains ignorant of the fast-changing local requirements. If they try to identify these highly localized or specialized needs, they wind up deluged with overdetailed, indigestible data…

In consequence, national governments in Washington, London, Paris or Moscow continue, by and large, to impose uniform, standardized policies designed for a mass society on increasingly divergent and segment publics. Local and individual needs are forgotten or ignored causing the flames of resentment to reach white heat. As de-massification progresses, we can expect separatist or centrifugal forces to intensify dramatically and threaten the unity of many nation-states.

The Third Wave places enormous pressures on the nation-state from below.

It is happening.

Online Education: Movement for College Credits Gain Momentum

One of the main objections to online education has been in the aspect of credentials, i.e. it is not recognized by traditional universities and or colleges which makes them less appealing to prospective employers.

I’ve been saying that the deepening of information age will radically transform people’s lifestyle which should include education.

This will happen for many reasons; such as cost efficiency (more profitable), increasing network (more online graduates percolating the job markets will become future bosses, thus will likely decrease resistance; an estimated 4 million students are enrolled online in the US), better performance, greater specialization and or simply more tolerance for online graduates or a combination of all these and perhaps more unidentified factors.

In his defense essay at Cato Unbound on the online education debate, George Mason University Professor and Marginal Revolution blogger Alex Tabarrok (who along with colleague Professor Tyler Cowen has their own free online learning platform university called MR University)  notes of the other advantages:

1. Leverage of the best professors teaching more students.

2. Large time savings from less repetition in lectures (students in control of what to repeat) and from lower fixed costs (no need to drive to university). 

3. Greater flexibility in when lectures are consumed (universities open 24 hours a day) and in the lecture format (no need to limit to 50 minutes).

4. Greater scope for productivity improvements as capital substitutes for labor and greater incentive to invest in productivity when the size of the market increases.

5. Greater scope for randomized controlled trials of educational strategies thus more learning about what works in education.

Read the insightful arguments on the online education here.

Academicians can debate the merits or demerits of online education but the world has been moving forward: traditional colleges are now considering to give credit to online courses.

Notes the USA Today:

The American Council on Education, a non-profit organization that represents most of the nation's college and university presidents, is preparing to weigh in on massive open online courses — MOOCs, for short — a new way of teaching and learning that has taken higher education by storm in recent months.

A stamp of approval from the organization could enhance the value of MOOCs to universities and lead to lower tuition costs for students, who could earn credit toward a college degree for passing a particular course. At issue is whether the quality of the courses offered through MOOCs are equivalent to similar courses offered in traditional classrooms.

The popularity of MOOCs, which have been around for barely a year, has intensified quickly. Top faculty at dozens of the world's most elite colleges and universities are teaching hundreds of online courses in a variety of disciplines to millions of students around the world. The courses are free, but they don't count toward traditional degree programs

Online education will pop the government inflated education bubble and democratize ‘education’ via the competitive free markets. 

In the future I envision the proliferation of domestic graduates of Mises Academy, Coursera, Khan Academy, Academic Earth, MIT-Harvard, MR University, Stanford, University of People and more.

Traditional universities will either have to adapt or perish.

ECB Says Bitcoin’s Origin is from the Austrian School

The information age has really began to affect even the state of money.

Digital money outside the ambit of government through the Bitcoin system has been on the rise.

chart from the Economist

The proliferation of Bitcoin has even gotten the attention of the European Central Bank (ECB)

Bitcoin represents a decentralized web based Peer to Peer (P2P) currency system or as defined by Wikipedia.org 

decentralized digital currency created by the pseudonymous entity Satoshi Nakamoto. It is subdivided into 100-million smaller units called satoshis.

It is the most widely used alternative currency, with the total money supply valued at over 100 million US dollars.

Bitcoin has no central issuer; instead, the peer-to-peer network regulates Bitcoins' balances, transactions and issuance according to consensus in network software. Bitcoins are issued to various nodes that verify transactions through computing power; it is established that there will be a limited and scheduled release of no more than 21 million coins, which will be fully issued by the year 2140.

Internationally, Bitcoins can be exchanged and managed through various websites and software along with physical banknotes and coins.

A short video explaining the bitcoin system below:

While skeptics allude to “anonymity” which comes with the innuendo of “illegal” transactions, as attraction to Bitcoins, the ECB in the following paper counters that the genesis of Bitcoins has been from the framework of the Austrian school of economics

Two influences on the Bitcoin says the ECB (See Virtual Currency Schemes October 2012).

First the Austrian Business Cycle.

The theoretical roots of Bitcoin can be found in the Austrian school of economics and its criticism of the current fiat money system and interventions undertaken by governments and other agencies, which, in their view, result in exacerbated business cycles and massive inflation.

One of the topics upon which the Austrian School of economics, led by Eugen von Böhm-Bawerk, Ludwig von Mises and Friedrich A. Hayek, has focused is business cycles.

In short, according to the Austrian theory, business cycles are the inevitable consequence of monetary interventions in the market, whereby an excessive expansion of bank credit causes an increase in the supply of money through the money creation process in a fractional-reserve banking system, which in turn leads to artificially low interest rates.

In this situation, the entrepreneurs, guided by distorted interest rate signals, embark on overly ambitious investment projects that do not match consumers’ preferences at that time relating to intertemporal consumption (i.e. their decisions regarding near-term and future consumption). Sooner or later, this widespread imbalance can no longer be sustained and leads to a recession, during which firms need to liquidate any failed investment projects and readapt (restructure) their production structures in line with consumers’ intertemporal preferences. As a result, many Austrian School economists call for this process to be  abandoned by abolishing the fractional-reserve banking system and returning to money based on the gold standard, which cannot be easily manipulated by any authority.

Second is the Austrian concept of depoliticization of money through competitive free markets

Another related area in which Austrian economists have been very active is monetary theory.  One of the foremost names in this field is Friedrich A. Hayek. He wrote some very influential publications, such as Denationalisation of Money (1976), in which he posits that governments should not have a monopoly over the issuance of money. He instead suggests that private banks should be allowed to issue non-interest-bearing certificates based on their own registered trademarks. These certificates (i.e. currencies) should be open to competition and would be traded at variable exchange rates. Any currencies able to guarantee a stable purchasing power would eliminate other less stable currencies from the market.

The result of this process of competition and profit maximisation would be a highly efficient monetary system where only stable currencies would coexist.

The following ideas are generally shared by Bitcoin and its supporters:

– They see Bitcoin as a good starting point to end the monopoly central banks have in the issuance of money.

– They strongly criticise the current fractional-reserve banking system whereby banks can extend their credit supply above their actual reserves and, simultaneously, depositors can withdraw their funds in their current accounts at any time.

– The scheme is inspired by the former gold standard.

But Austrians have objected to a complete connection for other theoretical reasons.

Although    the    theoretical    roots    of    the    scheme can   be    found    in    the    Austrian    School of   economics,    Bitcoin    has raised serious   concerns among    some    of    today’s    Austrian    economists.  Their    criticism    covers   two     general     aspects:

a)    Bitcoins     have     no    intrinsic     value    like gold;    they     are   mere     bits    stored    in    a computer; and  

b)    the    system    fails    to   satisfy the    “Misean  Regression   Theorem”,    which explains    that    money    becomes    accepted    not because    of    a   government    decree    or    social convention,  but because    it    has    its    roots    in a    commodity    expressing    a certain    purchasing    power.

The world does not exist in a vacuum.

The information age will provide alternatives not only to capital markets (e.g. P2P Lending and Crowd Funding) but to money as well.

Bitcoin or not, the incumbent political system’s sustained policies of debasement will only accelerate and intensify the search for currency alternatives premised on the burgeoning forces of “decentralization”.