Aug 22, 2018

Axios Future

By Bryan Walsh
Bryan Walsh

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1 big thing: Crashed and on your own

Illustration: Sarah Grillo/Axios

Ten years ago, hubristic Wall Street geniuses came this close to destroying the global economy, saved largely by the Fed feeding trillions of dollars into banks in the U.S. and around the world.

But the 2008 financial crisis is not really over: It continues to reverberate in the form of still-recovering economies and massive global distrust in institutions.

  • Even as the U.S. stock market bull run made history today, the memory and residue of the crash are primary reasons why economists and policymakers are on the lookout for the next big financial crisis.
  • If a new crisis is brewing, it's in emerging markets, says Adam Tooze, a Columbia University professor and author of Crashed, a history of the 2008 financial crisis. Emerging economy stock markets are already down about 10% this year in aggregate.

Why it matters: This time, unlike in 2008 and 2009, it may be that no one comes to the rescue, given new U.S.-China tensions, frayed trans-Atlantic relations, and Trump Administration hostility to multi-lateral actions.

I caught up with Tooze by phone on his U.K. book tour. The new problem is China, which by 2015 had borrowed $1.7 trillion in foreign currency to finance its investments.

Tooze called China "the hub of a complex of emerging market economies," with connected manufacturing and other supply lines, commodity and product sales, and countless other businesses relying on the yuan.

  • A big danger is movements in the yuan, he said. "One of the nightmares is that China would allow its currency to move dramatically and bring down all of the emerging markets," he said.
  • Emerging market economies, he said, do not have the same cash reserves as China to tide them through a devaluation crisis, he said.
  • Already, the yuan has devalued by about 10% against the dollar this year. "We are probably testing the limits and the world is watching anxiously," he said.

Read the whole post.

2. The creeping revolution

Illustration: Rebecca Zisser/Axios

Big inventions seem to arrive suddenly — one day we are calling from phone booths, and the next from miniature super-computer-texting-GPS-cellphones pulled from our back pocket.

But you will likely miss the next new thing if your main lens is the shot out of nowhere, according to Vanessa Colella, Citi's chief innovation officer.

  • In a new report, Colella writes that game-changing technological or social shifts are usually detectable not in sudden bursts, but in steady, inexorable acceleration.
  • "We live in an age of on-line, headline-grabbing, wow, in-your-face news," giving rise to expectations of instantaneous invention, Colella, who also heads Citi's venture capital arm, tells Axios. "But most profound change takes quite a bit of time."

Why it matters: Some of the biggest shifts will flow from trends, concepts and ideas with which we are long familiar, Colella says, such as the rise of women in the work force, eSports, anti-aging medicine, and solid-state batteries.

The Steve Ballmer lesson: Colella writes of the former Microsoft CEO predicting in 2007, the first year of the iPhone, that the device would fail "to get significant market share."

  • Ballmer's crucial mistake: missing slow revolutions. The equivalent of smart phones had been around for more than a decade, most conspicuously in the Blackberry. Meanwhile, technology was progressing slowly in other ways.
  • "By neglecting steady, continuous advancements in computing power and mobile technology, Microsoft missed the smartphone phenomenon and saw its market capitalization fall from $642 billion in 2000 to $270 billion in 2014," she writes.

Read the whole post, including Colella's forecasts.

3. Letting a bot be a bot

Illustration: Sarah Grillo/Axios

In a move toward humility, robot designers are increasingly shunning the Westworld dream of machines whose behavior is indistinguishable from people's, and opting for greater honesty about what's truly possible now.

Axios' Kaveh Waddell writes: When people assume a machine can do what a human does, they can be disappointed at best — and at worst get hurt. Visualizations, explanations and signals that show how robots are actually able to interact can better set expectations, and build the right amount of trust.

Societal acceptance is the make-or-break issue. "We don't want to build another Google Glass that's going to be rejected by society," Ali Kashani, head of R&D at Postmates, a delivery company that uses sidewalk bots, tells Axios.

Autonomous vehicles are at the front lines of the tension between aping humans and highlighting a bot’s bot-ness.

  • The blend-in approach would tuck away a car’s sensors and cameras and have the car emulate human driving styles. But people break driving laws regularly, which manufacturers want to avoid.
  •, a self-driving startup, is using the opposite tack, deploying fluorescent-orange autonomous Nissan vans in the northern Dallas suburb of Frisco. They call attention to themselves and encourage drivers and pedestrians to treat them cautiously, the company's CEO, Sameep Tandon, told Axios recently.
  • Electronic panels adorn the outside of the vans, displaying messages like "Waiting for you" that tell pedestrians it's safe to cross, thus replacing the absent driver's nod or wave.

The big picture: At the other extreme, people sometimes initially put too much trust in a car's capabilities, said David Sirkin, an engineer and interaction-design researcher at Stanford.

  • "If a car starts behaving like a person in a few ways, we're going to start expecting it to behave like people do" all the time, Sirkin said. "Except it can't."

Read Kaveh's whole post.

4. In prison and on strike

Lakeview Shock Incarceration Correctional Facility in New York. Photo: Andrew Lichtenstein/Getty Images

For the second day, inmates in 17 states are on strike for, among other demands, higher wages at commercial jobs that often pay them less than $1 an hour and don't lead to work when they are released, reports Axios' Michael Sykes.

Among these jobs: firefighting. More than 2,000 inmates are battling California's wildfires, but the likelihood is that none with a felony record will manage to obtain a firefighting job on release from prison, despite their experience, mainly because of licensing rules.

Why it matters: For-profit companies hire inmates at rates far below minimum wage and manufacture goods at low cost, said Brianna Peril, founder of the Incarcerated Workers Organizing Committee. Rival "businesses can't compete with that," Peril tells Axios.

By the numbers: Nearly 700,000 prisoners have daily jobs through federal correctional programs like Unicor, which made $453.8 million in sales last year, and many work for for-profit companies like McDonalds, Whole Foods and Walmart.

  • The average inmate worker makes 63 cents an hour working non-industry jobs.
  • Industry jobs at state-owned businesses pay an average of $1.41.

This in part is what leads some to call the labor situation "modern-day slavery." The backdrop is that African Americans are 13% of the total U.S. population, but 40% of the country's prisoners.

Read Michael's whole post.

5. Worthy of your time
Expand chart
Adapted from Robert A. Rohde / Berkeley Earth; Map: Harry Stevens/Axios

History's most devastating cyber-attack (Andy Greenberg - Wired)

Paul Singer, doomsday investor (Sheelah Kolhatkar - New Yorker)

Parsing stuck-wages: trucking, construction and childcare (Steve Matthews, Matthew Boesler, Jeanna Smialek - Businessweek)

The fall of global heat records (Andrew Freedman - Axios)

China's 802m Internet users, 788m of them on mobile (Yuan Yang - FT) (charts)

American polarity, in bubbles (John Kelly, Camille François - Tech Review)

6. 1 vanilla scoop: Three years of coming misery

Protecting the harvest in Bemalamatra, Madagascar. Photo: Rijasolo/AFP/Getty

The combined ravages of opportunistic thieves and destructive weather seem to portend at least three bleak years for vanilla ice cream lovers.

What's going on: Most of the world's authentic vanilla extract comes from the southeast African island of Madagascar. But in the last five years, prices have surged about 30 times for reasons including a push for greater quality and, most recently, Cyclone Enawo, which ruined much of last year's Madagascan crop, reports the BBC's Nancy Kacungira.

  • Once you sow a new vanilla plant, it takes three years before it begins to produce pods.
  • Then, from pollination to curing and drying, it takes another year to produce the extract.
  • Most commercial vanilla is synthetic. But for those who want the real thing, these factors mean much higher prices for vanilla products, including ice cream.

The economics have had the usual effect in the world of emerging-market commodities: At night, bands of thieves swoop down and steal pods off the plants in Madagascar. And as a consequence, there has been an outbreak of murder.

  • Kacungira writes: "Several communities have tried and failed to get protection from armed police. Some have taken the law into their own hands. Villagers say in a nearby village, a machete-wielding crowd descended on five suspected gangsters — hacking and stabbing them to death."

Fun fact: Since the 19th century, synthetic vanilla has been "extracted from coal, tar, rice bran, wood pulp and even cow dung."

Bryan Walsh