The Future, This Week 12 Oct 18: Nobel, Facebook, and cost per ‘gram

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Intro: This is The Future, This Week. On Sydney Business Insights. I'm Sandra Peter and I'm Kai Riemer. Every week we get together and look at the news of the week. We discuss technology, the future of business, the weird and the wonderful, and things that change the world. Okay let's start.

Kai: Let's start. Today on the future this week: Nobel interventions, now I see you, and cost per gram.

Sandra: I'm Sandra Peter, Director of Sydney Business Insights.

Kai: I'm Kai Riemer, professor at the Business School and leader of the Digital Disruption Research Group. So Sandra, what happened in the future this week?

Sandra: Well our first story comes from the New York Times and of course we're going to talk about the Nobel Prize in Economics which was awarded to William Nordhaus and Paul Romer. And they were announced a couple of days ago at a news conference in Stockholm. Here is the announcement.

File recording: The Royal Swedish Academy of Sciences has today decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2018, with one half to William D. Nordhaus for integrating climate change into long run macroeconomic analysis and the other half to Paul M. Romer for integrating technological innovations in the long run macroeconomic analysis.

Kai: So Sandra it is usually here that you'd tell our listeners that this is not actually a Nobel prize, right?

Sandra: Ah, you are setting me up again. And no, this is a prize in honour of Alfred Nobel. And it's been around for almost 50 years.

Kai: 49 years which means you can tell that story again next year when it's 50.

Sandra: We will tell this story every year but the Nobel Memorial Prize in economics science and it's actually in memory of Alfred Nobel, and was established by the Swedish central bank actually with a large donation. So it can now be awarded alongside the other Nobel Prizes established back in the late eighteen hundreds.

Kai: So last year we talked about Richard Thaler and his contribution to behavioural economics, the concepts of nudge if you might remember. We'll put the link in the show notes. This year we have two recipients of the award. Yale economist William D Nordhaus, and New York University economist Paul M Romer. And while they are being awarded for two different achievements in economics, both of their contributions share an important similarity which is stressing the positive role that government interventions play in designing, creating and shaping functioning markets.

Sandra: And as the Royal Swedish Academy of Sciences reminds us, the award was given out this time around for addressing some of the most basic and pressing questions about how we can create long term sustained and sustainable economic growth.

Kai: So, William Nordhaus was honoured for his contribution to integrate action against climate change into economic models. In particular for demonstrating the positive effect that a tax on carbon will have in organising markets away from polluting technologies to cleaner more sustainable ways of energy generation.

Sandra: So short aside here, as a lapse the economist I think we need to remind listeners that Nordhaus's work started back in the 1970s and he's really spent almost four decades trying to persuade governments to address climate change. So in the 1970s there were these rising concerns about pollution, so he began arguing that the government should actually require companies that pollute to pay for the damage that they did to public health, to the environment and so on. And since the 1970s this has become the dominant way to think about how to address the impacts of climate change.

Kai: So the idea here is that a tax on carbon will allow market players to sort out what the best way of fixing the problem is. As opposed to politicians or governments having to pick the best course of action in fighting climate change by integrating a cost on carbon we are enabling markets to account for the costs that such pollution have on the climate and the environment, thereby allowing market players to pick the most cost effective and best way of actually solving the problem. So from an economic standpoint from a market design standpoint it is pretty clear that this should be the best solution. However Nordhaus has been on the record famously saying that he is increasingly frustrated that governments and politicians have not taken up these ideas. A frustration shared by many climate scientists and many people advocating for action against climate change. And just recently in June, the Sydney Morning Herald has again called carbon tax the two most toxic words in Australian politics, after then Prime Minister Julia Gillard was famously ousted on the back of trying to introduce a tax on carbon to the Australian economy. Ever since this has been a no-go area for successive governments. And for those listeners not from Australia, we just want to remind them that at the time a concerted effort by mining companies and special interest groups led to a well-funded campaign that in the end led to ousting Prime Minister Julia Gillard. And Sandra is jumping up and down in her seat because yes, it is a contentious topic in Australia. But the reason we're going there and we're bringing it up because this announcement comes in the same week as the UN has released its latest report on the issue of climate change yet again showing, depressingly, how urgent action now has become.

Sandra: Indeed, the new United Nations report released on Monday in South Korea warns that the international community will have to very quickly respond and have a coordinated response to environmental regulation and do this on the scale that is unprecedented. And I think it's important to remind the listeners here that even though Professor Nordhaus is from the United States, the United States has recently gone back on many of the policies that they have implemented to address climate change through during the Trump administration. Professor Nordhaus famously developed the model that actually helps assess the cost of climate change, including things like the floodings that ensue or the fact that we are unable to produce enough food, so crop failures - a model that's called the Dynamic integrated Climate Economy model or the DICE model.

Kai: Which he famously and consciously named to highlight that we are actually gambling with the future of our planet.

Sandra: And this model this approach has remained the in the strict standard then it underpins the report has been released. But famously Professor Nordhaus has reminded us that even though we understand the science of climate change, we understand the facts of this change, and we understand what steps need to be taken by countries to address it we have no good models for how to bring countries together to do this sort of change scare tactics.

Kai: Okay so let's not forget the second guy.

Sandra: Buzz Aldrin.

Kai: No Professor Romer. Who received the other half of the Nobel Prize for his work on integrating the role of governments. For driving innovation into economic modelling.

Sandra: Okay so again economics sidebar here because economists up to that point have long studied how economies work, and understood that innovation was influenced by the way people behave. But the economists had no good model or no good understanding on how innovation came about.

Kai: Which means that innovation was regularly treated more like a lightning bolt from heaven or something that just falls out of the sky but not something that could actually be systematically understood or influenced.

Sandra: Romer was quite intrigued by the fact that seemingly in modern times innovation had started to accelerate. So back in the eighties and back in the nineties he started working on this idea that maybe there is a way that nations could actually improve innovation, foster innovation. By both investing in innovation and by governing the ways in which intellectual property was protected or was rewarded but only to a certain extent, so as to encourage people to do more of it. So basically what Romer was arguing is that policy made the difference in how much innovation you had and hence made the difference for economic growth. And different policies accounted for different rates of economic growth.

Kai: And it is no coincidence that Romer would receive the other half. It is pretty clear that the Committee is making a statement with awarding those two economists at this point in time the Nobel prize. Because of the fact that many economists and indeed climate scientists more broadly are of the opinion that only a combination of putting a price on carbon to curb emissions and spurring innovation and the development of new technologies will at this point in time allow us to keep global warming at an agreeable level.

Sandra: And here again is where Nordhaus and Romer come together, in that they both looked at these problems at scale. While they both saw benefits in organisations or small communities doing something about these matters, both saw - whether it was the solution to climate change or whether it was large scale innovation - as something that needed to be fostered at a national or international level.

Kai: And that is indeed what 91 authors from 40 countries agree it will take to curb global warming to a maximum of one point five degrees.

Sandra: Which is the threshold that the report says we must limit global warming to rather, than the previously agreed cap of 2 degrees Celsius. And this is what we would have to do to avoid extreme consequences like floods and droughts and extreme heat. The report also says that given current trends this threshold could be reached as soon as 2030, and that we will have to reduce carbon dioxide emissions by up to 45 percent from the levels that we were experiencing in 2010 to reach net zero by 2050 which is a very, very, very ambitious target.

Kai: And we leave you with Professor Nordhaus's words. "We understand the science, we understand the effects of climate change, but we don't understand how to bring countries together." So the report just published is one attempt to again raise the issue and try to galvanise cooperation among countries. But the outlook is not great without the US coming to the table at this point in time.

Sandra: Our second story continues the long line of privacy stories we've been discussing over the past few weeks.

Kai: And it's Facebook again. The Associated Press titled Facebook wants people to invite its cameras into their homes.

Sandra: So Associated Press tells us that Facebook is finally launching its first device that has a Facebook brand on it. A device that has a screen and also a camera meant to live in your home and make it easier for you to call people via the Facebook Messenger.

Kai: Aptly named Facebook portal, it is your portal to connect with your friends at any point in time via video uplink. The special feature of it is that an A I built in into the device works with an image recognition feature that will follow you around the house and zoom in to the person speaking. So you could be in your kitchen doing the cooking doing the dishes and the camera will keep you in focus while you are talking to your friend on the other end of the line.

Sandra: And let's remind our listeners that Facebook is targeting it's 2 billion user base with this device, and it's following in the long line of devices released by Google and Apple and Amazon, all in the smart speaker live in your house type of category. None of which up till now have featured a camera.

Kai: And indeed Facebook also integrates with Amazon's Alexa and the device will also execute Alexa subskills. Now tech crunch in yet another article about this announcement, short and sweet titles: "Facebook, are you kidding?" And they seize on the timing of the release of the device. First of all saying that a hardware device from Facebook has long been speculated about and has long been expected to be released years ago. And it is curious that Facebook would come out with a device that puts a camera into people's home at this point in time. After Cambridge Analytica and the many recent stories about privacy breaches. And so the question really is: Do we trust Facebook with a video link in our homes? Or social tech crunch asks.

Sandra: So indeed Facebook has come out and said that they won't listen to, or view, or keep the contents of these conversations. But let's remind our listeners that Facebook actually has the demonstrated ability not only to do so but also to use things like facial recognition to identify other people who might be in your house. Voice recognition and so on to really be able to tell a lot about what is going on in the picture. Even the ability to recognise items that might be in your house or in the surrounding environment and use those things as we've discussed in the previous pattern application that Google has to tell for instance social class of the people involved in a particular scene and so on. Facebook has said that they will not use any of this feature to identify the people in the video calls and would also allow users to disable the microphone and the camera or to block these things.

Kai: But of course Facebook will know who you are talking to and for how long and the portal also comes with a feature where you can link the device to your mobile phone and allow Facebook to know when you're at home. So that the portal call feature can be enabled, and people can actually reach you on your portal via your Messenger when you're near the device. Again disclosing your location and the times at which you are at home to Facebook. So even though they might not at this point in time listen to what you speak. The metadata will be equally important to Facebook and their use and advertising of course. But to me this is also not the main point. While we could argue that the many articles that have come out questioning the privacy implications of this. To what extent Facebook assurances that they won't do this might just be the usual corporate bullshit. My point is that Facebook allows us to portray this beautifully and carefully curated picture of the perfect nature of our lives. While our homes are usually the private space where we can be ourselves and anyone who's living with children at home knows that it takes a fair bit of effort to actually get the house ready to have guests over. Would I want someone to dial into my house and see the mess that we so carefully hide that might just destroyed the perfectly curated picture we portray of ourselves on Facebook and social media. More generally, I would seriously question who would want this device in the house where a call can come in and not taking the call might just be rude. Why would I want to just show everyone the mess that is in the kitchen or the toys that lay scattered around the living room. Is that really something that a broad population would want. And Sandra I think gets ready to disagree with me here.

Sandra: Yeah, I think this is one that we might disagree on.

Kai: Dah dah dah

Sandra: And my claim is that there are many people who wouldn't mind this and who actually would welcome this. And in the same way they very carefully curate and act out certain scenes in other parts of their lives - and let's remember this comes on the back of many platforms now that broadcast their lives to the public. Think Twitch, people playing games that just broadcast what they do all the time. Think people who show you what they are cooking in their houses, who have channels about playing with their babies, where there are cats and there are dogs. This is just another manifestation of this aspect of our lives

Kai: Seriously?

Sandra: Not seriously - sadly.

Kai: Seriously sadly. So you reckon that this is a device that plays into the hands of the YouTube generation. The YouTuber who will broadcast how they fry some eggs, and you know read a book to the world. I can't see this. Now the whole idea of Instagram is that we portray a reality that doesn't exist right? So a carefully curated picture that we put up in some clothes that look good on camera, that were chosen specifically for that one shot but that are not actually they are to be worn. So what I'm saying is we portrayed this reality that doesn't really exist and everyone kind of tacitly understands that. Bringing people into your home with this camera. That would mean that we would have to actually arrange our houses like an Instagram set. That we carefully curate what is in the picture. And I mean, who has the time, who would want to do this one? Certainly not I. Yeah, I'm clearly not the target market here. But if that is the case then I could argue Facebook is a little late to the market because this already exists. You know on YouTube, on Twitch, creating those channels. But this is really not what's happening here. We need to be reminded that this is really for your Messenger list. The friends that you have on your Messenger to call you whenever you're home to actually have a face to face chat. Maybe that is appealing to some if they are happy to keep their houses in order. Maybe that's a good motivation for hiding the mess just outside the camera spectrum. Maybe people will put little markers on the floor to indicate what is on camera and whatnot, so child's play and kitchen mess happens outside of the window that the camera can see. But I still question the usefulness of this.

Sandra: I feel this is one of those stories that will set both off on rants where I really don't think this is about usefulness. I mean there are so many things that we do that bring little value into the lives of the people who invest so much time and energy into doing this. And this is one of our other stories for today that comes from our magazine paper cost per like is the new cost per wear.

Kai: And really both of these stories are interesting from the point of view of how technology shapes our behaviours and how the way in which we collectively take to invent new practices on the back of technology comes back to really have an influence on how people live their lives potentially. And we have to wait with Facebook portal in our homes but most certainly with how Instagram has brought about a culture of dressing up and carefully curating experiences that we broadcast. In particular when it comes to not so much creating but portraying the perfect holiday experience. Which is what this article is about.

Sandra: The article reports on this entire group of people who, rather than asking "What am I going to wear?" before going on holiday, are asking "What am I going to wear for Instagram on my holiday?". And it talks about people spending a lot of time curating the images that they will want to take on their holiday, figuring out the perfect outfit, the perfect sandals, the perfect hat, the perfect sunglasses, so that they can acquire these before going on a holiday.

Kai: So it's really a matter of envisioning the kind of places someone will go to. What colours and outfits would portray best those places, and then actually doing shopping before the holidays with the express intent to creating those pictures to feed their Instagram channels.

Sandra: So thinking about whether it's a getaway or a wedding or a honeymoon or the trip of a lifetime. Thinking about what exact moments are worth documenting and in what kind of outfit. Which reminds me of our previous podcast the round hashtag #vanlife.

Kai: One of our most popular stories.

Sandra: Which we again link in the show notes, and which directly harks back to this. And this goes to complement that story by showing us that actually the clothes that are starting to trend in images from trips are no longer the ones that are the comfortable sneakers to wear, or the t shirt that is actually appropriate for the climate and so on. But rather the ones that are in really vivid colours with particular shapes that photograph well and so on.

Kai: That will make people stop when they're scrolling through a feed because the colours stand out. And a nice and colourful stripy dress that no one would want to actually wear in real life will play very well in order to get more likes on Instagram. Or so the article says. And the article also makes the point that this plays straight into the fast fashion phenomenon, whereby the quality of the clothes is absolutely not the main concern because those clothes will not be worn sometimes a second time or at least many times. At least not on a second photograph in most instances. So it is really important what it looks like, but comfort or quality is really not of any particular concern.

Sandra: Which brings us to one of our other very well received stories from the past 12 months which revolved around waste in the world of fashion. Which we will also link in the show notes. And we're reminding our listeners that a company like Zara would be introducing a couple of thousand new items every single month to cater to this sort of trends, a company like ASOS is introducing nearly 15,000 clothing items every month to cater to these trends.

Kai: So what I find interesting here is this entire practice of planning our experiences, curating wardrobe, composing images to satisfy the content needs of one's followership on Instagram. I can see the appeal in an artistic sense that composing those colours and having matching outfits that might be fitting to a Greek island or an Italian city. What concerns me or what I really can't relate to is the temporality of this practice. Because it's a relentless pace. People will have to keep producing content. It's a constant endeavour to feed the beast and the question is for what. What is the goal? What is the achievement? Because the moment I stop the moment, I fall out of fashion or not following the latest trends producing images that get likes, I'm falling behind. I'm dropping back. I don't get to kick off more likes. So my question would be is this not the treadmill? Will people not over time become frustrated or burn out? What is the lasting sense of achievement that I get from this this is really something that puzzles me, which I can't relate to.

Sandra: Well let's be honest, for a few people this is actually income. So there are influencers who actually get paid for these likes, and who actually get paid to advertise some of these products. For some people it's actually a source of income or it can become a source of income. You get on the treadmill in the hope that you will amass enough likes or enough followers to actually make a good living out of this. Whether this is on Instagram or whether it's on YouTube from advertising in the background if you get over a certain number of views for your channel.

Kai: I get that, in that sense it might be any more or less treadmill than many other jobs.

Sandra: In another sense it's something that we see actually happening not only on platforms like Instagram or YouTube, we see this happening in pretty much every aspect of people's digital lives. Let's remember on Fortnight, a lot of the income that the company makes is from people buying completely pointless outfits and mounts, really just to look different. Just to impress, to have something new, to have something exciting. And we've seen this actually drive significant revenue for a number of companies.

Kai: Yeah I can see that this is something that is enjoyable and the playfulness of it. The sense that I have, and this is sort of coming back to some of the stories we've had on Instagram previously, is that it can very quickly go from an enjoyable activity to an obligation to feed the followership. And to something that can really take over and take on its own life and have agency over you where you really feel the need to produce this content rather than enjoying those experiences.

Sandra: Well in this respect maybe the Facebook portal will become a welcome relief, because it might be a little bit cheaper to put one in your kitchen. And buy a couple of new dishes or change the lemons in the background to oranges or apples rather than buying a completely new outfit and going to Rome.

Kai: Or maybe the opposite happens and having a portal in our homes, people will be a little bit more forthright with portraying their actual realities and showing what life is really like. So maybe, just maybe, this device could actually recover a little bit of that everydayness social media started out with in the beginning where people would just put on there what they do and not worry too much about how they curate the experiences and their own image on social media.

Sandra: And I really think we should stop here with that story, because before we finish we actually do have a very sad announcement. Another one of our Robituaries.

Kai: From Wired magazine, this is a long goodbye to Baxter a gentle giant among robots.

Sandra: Another a gentle robot after our gentle lettuce robot from last week. Rethink Robotics which brought us back suddenly announced that it was planning to cease operating, it was closing down. Hence Baxter's life has come to an end. And Baxter is actually one of those robots that have been really significant in how we understand the interactions between robots and people.

Kai: Says roboticists Stefanie Tellex from Brown University, "in terms of penetration, it's the closest thing we've had to a common platform for manipulation across different research labs.".

Sandra: So what Kai's trying to gather is that Baxter actually was THE robot that proved that industrial robots were these things that could work alongside humans. It was the beginning of warehouse robots and of making human / robot work collaborative. But it also became the standard for researching robots so Baxter, even though it was originally designed for use in warehouses or for industrial use picking objects up, placing objects on the factory line, moving them around, it was later widely adopted for research. What made Baxter quite special was the fact that it had all these things including the stuff that Facebook Portal has - a camera. It also had arms and grippers and various sensors on it. And it was this standalone entity that people could program, could modify, could set and could study.

Kai: And while it was relatively cheap and allowed people to really experiment with robots and built on this as a platform, train it to do certain things, do experiments, do research on the back of it. At twenty-seven thousand dollars, it turns out that the market for research robots was not able to support the company in the long run and the company was unable to move the Baxter platform beyond the research labs of the world to a broader market with broader applications. And certainly interest has shifted a lot recently to different applications of automation such as artificial intelligence, and image recognition, and speech recognition, and all the kind of topics that we've discussed leaving robotics a little bit lagging behind.

Sandra: So, so long Baxter.

Kai: So long Baxter. You've done good.

Sandra: We'll leave you with one of Baxter's performances at the Sydney Opera House alongside an ensemble orchestra playing the marimba and responding to musicians around him.

Kai: And that is all we have time for today.

Sandra: Thanks for listening.

Kai: Thanks for listening.

Outro: This was the future this week made possible by the Sydney Business Insights Team and members of the Digital Disruption Research Group. And every week right here with us sound editor Megan Wedge who makes us sound good and keeps us honest. Our theme music is composed and played live from a set of garden hoses by Linsey Pollak.

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