Economics Science Technology

The Reconn Reader: Feb 22, 2019

Each week, I share some of the most interesting articles I’ve come across in the past seven days. Here is this week’s selection. Inclusion does not mean endorsement. -CA


World & Politics

Swedbank Dirty Money Plot Thickens After CEO Analyst Call

The development comes as a $230 billion scandal engulfing Danske continues to spread, with financial regulators in Denmark and Estonia now under investigation by the European Banking Authority. Danske is accused of letting a tiny branch in Estonia become a hub through which illicit funds from the former Soviet Union made their way to the West. The bank is under criminal investigation by the U.S. Justice Department and investors are bracing for fines, potentially of billions of dollars. (Bloomberg)

Eastern Europe’s problem isn’t Russia

Problems of corruption and cronyism are writ even larger in Moldova and Ukraine. Moldova in particular looks like a “captured state” where business and politics are fused together and large parts of the state are required to serve the needs of powerful individuals, rather than the national interest. Both countries face elections this spring in which there will be an unedifying choice of candidates with dubious track records.(Politico Europe)

Compared with the older, more bureaucratic social-safety nets in Europe, Asia and the Americas, the new ones in Africa can seem rather ropy and ad hoc. But they are gradually becoming less so. With help from the World Bank, Senegal is creating an impressive national social register containing many details about the country’s poorest people. Its main welfare scheme is already beginning to feel permanent, because it has created a constituency in favour of its perpetuation. Ousmane Basse, Senegal’s director of welfare strategy, says that the programme would be hard, if not impossible, to abolish. (The Economist)

Stop Obsessing About China

In fact, by these very measures, China was at the top once before: in the nineteenth century, China had the world’s largest economy and the largest military. It also ran a trade surplus with other great powers. Yet many Chinese citizens today think of this era as a “century of humiliation” during which their country lost huge chunks of territory and most of its sovereign rights to smaller rivals, most notably the United Kingdom and Japan. Similarly, nineteenth-century Russia had Europe’s largest GDP and military, but it suffered a series of crushing defeats by the United Kingdom, France, and Germany that culminated in the collapse of the Russian empire in 1917. In the last century, the Soviet Union outpaced the United States by most measures of gross resources, including industrial output, military and R&D spending, and the number of troops, nuclear weapons, scientists, and engineers. It still lost the Cold War. (Foreign Affairs)



Business & Economics

Does Amazon’s Retreat from New York Signal the End of Corporate Subsidies?

Once you get an employer that has a large need for certain employment skills, you get other businesses that will also locate nearby,” Johnston said. “That’s why Rochester had not just Kodak but Bausch & Lomb and Xerox. It’s why Fleet Street was called Fleet Street or Madison Avenue called Madison Avenue. That’s why this had potential for other development.” Polls of locals in Queens showed that the majority actually supported the deal. The fact that Amazon didn’t fight harder to make it work suggests that the company is sensitive to criticism and also that it knows it can get an equally good deal in another city. “That they were willing to walk so quickly suggests they were not worried about replacing the deal somewhere else,” Johnston said. (New Yorker)

The End of Employees

“I haven’t yet met a CEO who’s not surprised by how many people who touch their products aren’t their own employees,” says Carl Camden, president and CEO of staffing agency Kelly Services Inc. Outsourcing and consulting brought in 14% of Kelly’s revenue in 2016. Eventually, some large companies could be pruned of all but the most essential employees. Consulting firm AccenturePLC predicted last year that one of the 2,000 largest companies in the world will have “no full-time employeesoutside of the C-suite” within 10 years. (Wall Street Journal)

The Rise of the WeWorking Class

WeWork has stepped into this breach, purporting to offer the best of both worlds. On the one hand, it speaks the language of autonomy: You can choose to sit at a table or a booth or a couch, you can come and go as you please, and if you rent an actual office, you can decorate it like a tiki bar or a nuclear submarine if you fancy it. On the other, however, it speaks the language of belonging, awarding freelancers like me the chance to go to office holiday parties, to feel as if our lives have been enlivened by the scuttlebutt around the ambiently professional boathouse. With a stable corporate culture, especially in a unionized shop, these two wants aren’t contradictory: Solidarity among colleagues can give strength and definition to any individual employee’s sense of independence. But in the floating economy that WeWork equips, there’s something uneasy about the company’s à la carte promises. (New York Times)

The Feedback Fallacy

Just as your doctor doesn’t know the truth of your pain, we don’t know the truth about our colleagues, at least not in any objective way. You may read that workers today—especially Millennials—want to know where they stand. You may occasionally have team members ask you to tell them where they stand, objectively. You may feel that it’s your duty to try to answer these questions. But you can’t—none of us can. All we can do—and it’s not nothing—is share our own feelings and experiences, our own reactions. Thus we can tell someone whether his voice grates on us; whether he’s persuasive to us; whether his presentation is boring to us. We may not be able to tell him where he stands, but we can tell him where he stands with us. Those are our truths, not his. This is a humbler claim, but at least it’s accurate. (Harvard Business Review)

“The problems with the euro are problems with governance,” said Catherine Schenk,” an economic historian at the University of Oxford. “It has been deeply flawed from the outset. It doesn’t look like a very safe haven to go to from the U.S. dollar.” By contrast, the dollar looks like a uniquely rare creature on the global landscape — a currency free of existential fears. (New York Times)



Science & Technology

Once hailed as unhackable, blockchains are now getting hacked

David Vorick, cofounder of the blockchain-based file storage platform Sia, predicts that 51% attacks will continue to grow in frequency and severity, and that exchanges will take the brunt of the damage caused by double-spends. One thing driving this trend, he says, has been the rise of so-called hashrate marketplaces, which attackers can use to rent computing power for attacks. “Exchanges will ultimately need to be much more restrictive when selecting which cryptocurrencies to support,” Vorick wrote after the Ethereum Classic hack. (MIT Tech Review)

As artificial intelligence changes the world, it changes our language too

Aiporia is a new phenomenon, but can be experienced on a regular basis. For instance, say you are on a website that has a real-time chat feature. You click on it, and up comes a message from “Sarah” asking if you need any help. You may wonder if Sarah is 1) a person named Sarah, 2) a person from another country not named Sarah presenting herself as “Sarah” to be more accessible, or 3) a chatbot named “Sarah.” The confusion of aiporia is magnified further by the fact that all three may be true. Sarah may start out as a chatbot, but when you ask a more challenging question than “How much does shipping cost?”, the chat is continued by someone else, perhaps in another country. If your questions might be elevated to a more senior person, perhaps in the United States, and perhaps and coincidentally named Sarah. Expect aiporia to become more common. (London School of Economics)


Maloney’s body increasingly tried to reject the transplanted hand. “When it finally started to go downhill,” Maloney told me, “it went fast.” A particularly nasty rejection put Maloney in the hospital for about a week. His hand turned red, rashy, and blistery. Afterward it didn’t work as well. The realization that set in took him weeks to say out loud: I no longer want this hand. On March 14, 2013, four years to the day after he got his transplant, he had the surgeons take it off. (WIRED)

The Decline of American Science and Engineering

For recent PhDs the disparity in incentives between remaining in the United States and returning home can be even greater, and top graduates are being targeted. One alternative for them is to remain in a U.S. university, go through two to five years of postdoctoral work earning $50,000 per year, then apply for one of the few good open faculty positions. If fortunate, these promising scientists will then suffer through a six-year pre-tenure period writing grant proposals of meager scientific value in an environment where the main interest of the department head and dean is the number of dollars they bring in. The other alternative is to return to one’s homeland and receive an immediate faculty position at a top university, with funding to build a laboratory and support students. (American Affairs)

Germany Lags Behind Asia in E-Car Battery Race

That seems hard to imagine. Presumably, car companies and battery-makers will need to cooperate even more closely when it comes to battery manufacturing in the future. At a car conference in the German city of Bochum earlier this month, BASF CEO Martin Brudermüller managed to bridge the two positions. He argued that Europe needs to build up its own high-performing battery supply chain: “We shouldn’t make ourselves dependent on battery deliveries from Asia, but should instead invest much more in manufacturing cells of our own.” But he said the supply chain in Europe “doesn’t necessarily need to involve only European companies.” (Der Spiegel)


Culture & History

How former ref Tim Donaghy conspired to fix NBA games

But Dickens didn’t unify the House of Critics and the House of Readers. For a very long time, critics—Poe being one of the few exceptions—dismissed him as a caricaturist: facetious, melodramatic, antic, clumsy, and, on political questions, dangerously out of his depth. There never lived a man as hideous as Quilp. Mr. Gradgrind was not to be credited; Nell was not to be borne. Mirth could not answer tyranny. “Bleak House” was belabored. The novels before “Copperfield” were meringue and treacle; those which followed were burned pot roast. Mr. Dickens did not satisfy. (ESPN)

The Spectacular Failure of the World’s Only Hard Rock Theme Park

Some fundamental aspects of the business plan, however, missed the mark. Hard Rock Park’s marketing campaign leaned on extravagant gimmicks, like hiring the Beatles’ last remaining Magical Mystery Tour Bus and towing it around the country on a promotional tour in 2007. The park’s goofy TV ad was heavy on rock and roll attitude but light on information about the attraction, and management failed to strike marketing partnerships with businesses in the area, overlooking the fact that Myrtle Beach was primarily a regional destination where venues thrived on local cross-promotion. Almost every local I talked to about the park said the $50 ticket price was too high, and complained about the lack of discounts for children and locals. (Noisey)


In his book, Carreyrou muses about an oft-raised question regarding Holmes. Was she just a young person who got in over her head? Or, more dramatically, is something more serious afoot. Is she a sociopath? “I’ll leave it to the psychologists to decide whether Holmes fits the clinical profile,” he writes, “but there’s no question that her moral compass was badly askew.” Former employees raise this question with frequency. One pointed to a formative experience: Holmes’s father, Christian, was an executive at Enron, and the family’s finances were affected by its collapse. Did Holmes, scarred by this experience, vow to revive the family’s fortunes at all cost? Was she a hustler or a con artist, or merely a staggering Mr. Ripley? “One of Elizabeth’s superpowers is she never looks back,” this person said. (Vanity Fair)

The Story Behind the Shortest Movie Review of All Time

“This was in the early days of the guide, when we were, in one fell swoop, practicing reviews of hundreds, indeed, thousands of movies,” he added. “We were trying to find interesting, colorful, precise ways to describe a lot of formulaic movies, and there was an existing book before mine, and we were keenly aware of not even accidentally copying the way they had described those movies. If the plot of the ’40s murder mystery was ‘Man strangles his wife and tries to get away with it,’ how many ways can you say that? And our reviews were much, much shorter in the early guides. Much, much shorter.” (Slate)

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