Jan 10, 2019

Axios Future

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1 big thing: A new paradox for Mr. Disruption

Illustration: Rebecca Zisser/Axios

Two decades ago, Harvard Professor Clay Christensen shook the icons of big business by identifying a paradox — some of the ostensibly most unassailable companies in the U.S. were teetering and collapsing like Gulliver, undone by small, seemingly inferior upstarts. How could this be? In "The Innovator's Dilemma," Christensen explained why, and how they could fix it.

Now, Christensen is after a new, much larger target. In "The Prosperity Paradox," he and two co-authors seek to unravel why, despite decades of aid amounting to a cumulative $4.3 trillion, many poor nations remain impoverished. In terms of income per capita, at least 20 of these countries are worse off after the assistance.

Quick take: What wealthy countries are chronically doing is attacking only the outward signs of poverty — bad water, poor roads, disease. They should stop.

  • We have heard the "aid is wasted" thesis before, and from almost anyone else's pen, this one too could easily sound glib.
  • But Christensen and his co-authors Efosa Ojomo and Karen Dillon argue that education, water wells, medical care and electricity only seem to attack poverty.
  • What they fail to do is get at the root — the cause — of poverty, and so do not set in motion sustained economic prosperity.

Their answer to the paradox: Nurture local companies making basic products that innovatively satisfy an unserved need, and employ a lot of people. And keep doing it, going through local government and entrepreneurs themselves. The result can be a market that takes off, providing cash money in addition to access to gainful employment and upward social mobility.

"It's a process, not an event. It's a process of becoming very prosperous," Christensen tells Axios.

Christensen says the same concepts that informed his first book apply to poverty and prosperity.

  • The kind of market-beating companies he is talking about create comparatively low-performance products that nonetheless succeed because of low price, small size, greater convenience, simplicity, or other factors.
  • The more such businesses there are, the more a culture of prosperity forms, and crowds out corruption and other forms of bad governance.

Easier said than done, right? Christensen has an answer to that, too, with a list of potential businesses that he thinks would take off in nearly any impoverished country.

  • Hard, sanitary, cheap flooring for homes.
  • Cheap heart or eye surgery.
  • Cheap electric cars.

In Christensen's view, these markets are ripe for an agile entrepreneur: "It's part and parcel of disruption."

To start out, Christensen presents sometimes surprising facts:

  • We know the world is better off: Since 1990, deep poverty has plunged from 35.3% of the global population to 9.6%, lifting a billion people out of poverty, mostly in China.
  • What many might not know is that in the 1850s, the U.S. was poorer than present-day Mongolia, Angola and Sri Lanka. Infant mortality was three times worse than today's sub-Saharan Africa.
  • Since then, their own versions of development have carried the U.S. and China out of poverty, along with Japan and South Korea. But sub-Saharan Africa has become worse.

As an example of what can happen in the right circumstances, Christensen argues that popular breakthroughs like the Ford Model T, the Singer sewing machine and the Kodak one-shot transformed the American economy by creating a culture of innovation.

  • One thing that happens with such products is that they create a "pull" that ignites other innovations, creating profits and taxes that fund infrastructure and schools, necessary components of a further-growing local economy.
2. A bat-like overdose monitor

Photo: Mark Stone/University of Washington

Using the same principle as a bat bouncing sound waves off its surroundings, a new smartphone app developed at the University of Washington looks for signs of opioid overdoses. The app employs inaudible sound to detect drops in a person's breathing rate, according to a paper published today.

Axios' Kaveh Waddell writes: More than 115 people die from opioid overdoses every day in the U.S. Antidotes like naloxone can quickly reverse an overdose, but a monitor could grasp what's going on first so that help could be summoned.

How it works: "Second Chance" monitors a drug user's breathing rate, watching for a dangerous drop below 7 breaths per minute.

  • From 3 feet away, the app uses a smartphone speaker and microphone to track breathing as well as telltale signs of an overdose, like a nodding head.

The UW team ran a test at a safe injection site in Vancouver, where drug users volunteered to run the app while injecting opioids under supervision.

  • The app identified precursors of overdose 90% of the time, and it caught two overdoses during the test.
  • Since each overdose is preceded by multiple precursors, the probability of missing an overdose is small, co-author Shyam Gollakota, a UW computer science professor, tells Axios.
  • The app detected overdoses 19 out of 20 times in a second test where volunteers were anesthetized to simulate overdose.

What's next: The researchers are applying for FDA approval.

  • In its next iteration, the app will prompt users to interact if their breathing becomes too slow ("Are you OK?") and can call 911 or emergency contacts if they don't answer.
3. Indebted forever

Photo: Getty

One in four indebted Americans expect to die before they can pay it off, according to a new study.

Axios’ Stef Kight writes: This actually is better news than last year. In its 2018 nationwide survey, CreditCards.com found that 30% of adults in debt thought they would go to their graves before paying.

  • This year, 65% of indebted Americans said they had no idea when they would be able to pay off their debt, compared with 68% a year ago.

By age group: Millennials (18–37) expect to be debt-free by age 43; Gen Xers said age 54; and baby boomers, 66.

4. Worthy of your time

Illustration: Sarah Grillo/Axios

How "algos" changed the rhythm of the market (Robin Wigglesworth — FT)

Tech is the new politics (Mike Allen, Jim VandeHei — Axios)

Storm clouds for the global economy (World Bank)

Pan Am 103 and a 30-year quest for justice (Garrett Graff — Wired)

Algorithms are saying, "Short everything" (Stephanie Yang — WSJ)

5. 1 huge thing: Copying the Forbidden City

The real deal. Photo: Frédéric Soltan/Corbis/Getty

A film studio in Hengdian — China's Hollywood — is so big that it has a life-size, picture-perfect replica of Beijing's 180-acre Forbidden City, Erica writes.

The big picture: The replica is only one small set in the studio, which covers 2,500 acres in total and is the scene for films and TV series set in the old days, reports Inkstone News. For those shots, it has numerous replicas of Chinese palaces.

One startling stat: China is projected to be the world's largest film market by 2020. It is adding 25 theater screens per day. The number of screens has surged 14x, from about 3,500 in 2007 to about 50,000 in 2017. And they have doubled since 2014, when there were about 23,500.