Axios Future

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October 02, 2018

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1 big thing: Forecasting famine

Somali boys in a line, carrying metal dishes
Somali boys wait in line at a UN food distribution center in Mogadishu, Somalia. Photo: Giles Clarke/Getty Images

When famine strikes, relief agencies are typically hamstrung from providing meaningful help — until the suffering attracts big cable news coverage, which then sparks sufficient donations from wealthy countries.

What's new: Leading U.S. tech companies say they have invented a system that uses artificial intelligence to forecast famine, allowing for proactive intervention before crisis strikes. This early-warning tool could prevent widespread suffering while helping developing countries prepare for a new economy in which automation has swept away low-skilled jobs, Axios' Kaveh Waddell writes.

The details: Developed by Google, Microsoft and Amazon, the system is meant to identify signs of an impending food shortage by monitoring environmental factors like natural disasters and droughts, plus agricultural data and violent conflict.

  • It’s called the "Famine Action Mechanism," because its forecasts are tied to donation and intervention plans that are set in motion when algorithms sound the alarm.
  • The companies are working with the World Bank, the UN and the International Committee of the Red Cross to test the system in South Sudan, Niger, Mali, Chad and Somalia.
  • "This could actually end famines," World Bank President Jim Kim told reporters today at Stanford University. The World Bank says that 124 million people currently require food aid to survive.

Why it matters: Early action can stave off the lasting effects of famine, which — beyond causing sickness and death — can stunt children's growth and disadvantage them for life.

  • These disadvantages will become more pronounced in the new automation-driven economy. As robots take over repetitive manual labor, workers will need to rely on cognitive skills like problem-solving and adapt quickly to new opportunities.
  • Adults who were malnourished as children will "probably be unable to adjust to these changes," Kim said.

For the 2019 World Development Report, which will be released next week, the World Bank has developed a new index measuring "human capital" — that is, people’s potential to contribute to the economy — that it says should guide developing countries through automation-driven upheaval.

  • The index combines education data with mortality and childhood stunting rates to measure how economically productive a child born this year would be by the time she turns 18, all factors remaining constant.
  • The differences in productivity between countries are stark, according to the report:
In countries with the lowest human capital investments today, our analysis suggests that the workforce of the future will only be one-third to one-half as productive as it could be if people enjoyed full health and received a high-quality education.
— Final draft of the 2019 World Development Report

The bottom line: "We are at a very dangerous time," says Kim. "You've got to accelerate your investments in human beings and try to use technology to make that quicker."

2. A bidding war for workers

Amazon's Aurora, Colorado fulfillment center. Photo: AAron Ontiveroz/Denver Post/Getty

When President Trump threatened to go after Amazon, Jeff Bezos didn't say a word publicly. When Sen. Elizabeth Warren accused the company of antitrust violations, it stayed mum. But not long after Sen. Bernie Sanders called out Amazon for paying its workers too little, the e-commerce giant raised its salaries.

What's going on: Amazon — unlike some other companies with similar size and influence — has been largely immune to public pressure. But in a super-tight labor market, with dozens of retailers vying for the same pool of warehouse workers, Amazon can't afford bad press that might push workers away, Axios' Erica Pandey reports.

Driving the news: Amazon today announced a $15 minimum wage for 350,000 employees, both full time and seasonal. It said workers already getting $15 will also see a small increase. Currently, Amazon says it pays workers based on where they work, with minimums ranging from $10 to $14 per hour, reports the WSJ.

The big picture: There is an all-out bidding war for warehouse and other low-wage workers. Amazon's wage hike follows a commitment by Target to increase its minimum wage to $15 by 2020. Walmart has raised its minimum to $11 an hour, and Costco went to $14 an hour in June.

  • Warehouses and distribution centers will add 452,000 workers by next year, predicts CBRE, an investment and market research firm.
"They are competing for the same workers to do almost the same thing in fulfillment centers within hundreds of yards of each other. ... That gives the worker some leverage."
— Mark Muro, the Brookings Institution

The backdrop: Sanders recently introduced the "Stop BEZOS Act," which would make big companies with huge numbers of workers at low wages — like Amazon and Walmart — pay the government for the federal assistance their employees receive.

  • But today, Sanders was among those praising Bezos. "I want to give credit where credit is due," he said.

Sign of the times: Amazon Books in Manhattan's Herald Square is split into two parts: the bookstore and a coffee shop operated by Amazon, but staffed by workers who are paid by a contractor. I asked workers on both sides about the wage hike.

  • Amazon employees declined to comment. But one of the baristas said, "We already get paid more."

3. Americans don't move away from weak economies like they used to

Adapted from Brookings; Chart: Naema Ahmed/Axios
Adapted from Brookings; Chart: Naema Ahmed/Axios

It used to be that, to get ahead, less-affluent Americans would often move to a more prosperous state or city. Now, though, they are moving a lot less, and when they do, they largely end up in just another struggling area.

Why it matters: This trend, cited in a new report by the Brookings Institution's Hamilton Project, reverses a pattern in which incomes in the poorest and richest parts of the U.S. had tended to converge and tamp down inequality.

  • Instead, the rich places in the U.S. are getting richer, and the poorest places are stuck in poverty, writes Axios' Stef Kight.

The big picture: The quintile of counties with the weakest economic prosperity also have some of the lowest mobility rates, says Jay Shambaugh, a co-author of the report. That is, many people don't — or can't — move toward higher wages and better jobs.

The backstory: Over the past several decades, companies and industries tended to move to cheaper land and labor. The invention of air conditioning made it easier to run manufacturing plants in the South, and improved roads and transportation systems allowed for expansion to the middle of the country. At the same time, Americans moved toward higher wages and better jobs.

  • But that's no longer the case. Due to increased home values in desirable places, the tech boom and other factors, people can't always afford to move there.
  • Even if their hometown experiences an economic shock like the collapse of an industry or a depression, people stay put, Shambaugh said.
  • Meanwhile, prospering states and counties are continuing to benefit from the tech boom.

4. Worthy of your time

South Korean military remove propaganda loudspeakers in the demilitarized zone. Photo: Chung Sung-Jun/Getty

A step back on trade (Jeffrey Schott — Peterson Institute)

A history of weaponized social media (Joe Uchill — Axios)

Silicon Valley's thinking monoculture (Farhad Manjoo — NYT)

B0ts are manipulating bitcoin price (Paul Vigna, Alexander Osipovich — WSJ)

Uber, Lyft and ambulances (Austin Frakt — NYT)

5. 1 sleep thing: Betting on bed-in-a-box

Mattress-Domino in a parking lot in western Germany. Photo: Frank Rumpenhorst/AFP via Getty Images

Last week, we reported that old retailers are learning new tricks from the younger upstarts. That's happening right now in the mattress business.

What's going on: For decades, a few mattress kings ruled America — Tempur Sealy and Serta Simmons among them. Then, hip startups like Casper, Leesa and Tuft & Needle sold millennials on the concept of the affordable, but high-end bed-in-a-box that arrives at your door. Now, the big players are playing catch-up, Erica writes.

  • Walmart already offers a bed-in-a-box through its own brand, Allswell.
  • Serta Simmons, a legacy company, is merging with Tuft & Needle, which is only 6 years old.
  • But Amazon scared all the incumbents when it announced Monday that it's launching its own private label mattress, which will be eligible for two-day shipping.

The bottom line: Companies have learned to beware of Amazon's moves into their areas. The tech giant has endless data on what people want to buy, deep pockets and a habit of winning.