📬Global Shipping Risks UP, Consumer Sentiment DOWN
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In this edition of S3T:
- 🚢 Shipping Costs and Emissions Soar: Black Swan events are increasing shipping costs and emissions, likely driving inflation higher in the second half of 2024.
- 📈 Persistent Inflation and Interest Rates: Hopes for interest rate cuts in 2024 are fading, causing continued financial strain from high borrowing costs and unmeasured inflation.
- 🏦 Big Tech and Economic Stagnation: Trust in tech innovation is waning, with claims that Big Tech's monopolistic grip creates more problems than solutions, stifling innovation and economic growth.
- 📚 Book Highlight: Ruchir Sharma's "What Went Wrong With Capitalism" discusses the stagnation in US industries, the need for innovation, and the shortcomings of current economic policies.
- 🌍 Global Crypto Innovation: Crypto adoption outside the US is driving significant innovation, especially in Latin America and the Caribbean.
- 💳 MasterCard's New Crypto Network: MasterCard launches a new Crypto Network to facilitate cross-border payments using blockchain technology.
- ♿ Change Leadership in Action: Delta Flight Products introduces new cabin designs to accommodate wheelchair-dependent passengers, marking significant progress in airline accessibility.
🎧 Listen to this episode on the S3T Podcast - Be sure to follow the S3T podcast so you never miss a show!
Opinions expressed are those of the individuals and do not reflect the official positions of companies or organizations those individuals may be affiliated with. Not financial, investment or legal advice. Authors or guests may hold assets discussed.
Global Shipping Risks UP, Consumer Sentiment DOWN
The latest University of Michigan Consumer Survey showed consumer confidence fell 10% in May amid concerns about inflation and unemployment.
- Severe credit card delinquencies - credit card debt more than 90 days overdue - rose to a 14 year high. Younger borrowers are hardest hit.
- Shipping industry Emissions and Costs are being driven up by a mix of Black Swan events, threatening to drive inflation higher in the 2nd half of 2024.
- Hopes for interest rate cuts in 2024 seem to be fading - meaning people will continue to suffer from higher borrowing and credit costs in additional to the kinds of perennial inflation that the Fed doesn't measure (and that interest rates don't influence).
As detailed in previous editions of S3T, there is a big difference between the Federal Reserve's preferred measure of inflation (aka the inflation rates reported) vs the perennial inflation that everyday families experience.
The whole point of measuring inflation was to ensure things are affordable.
Ultimately to maintain a stable prosperous society, you must ensure a level of common financial stability or else there will be increasing unrest and instability.
Inflation has fallen from 7.1% in 2022 to 2.7% this past March, but things feel less affordable than ever. This should tell us that our way of measuring inflation is broken.
Affordability indexes that tracks the actual buying power of different levels of income do a better job of measuring the financial stress of wage earners, and the kinds of voter frustration for example that led to the "surprise results" of the 2016 election.
How we got here
Ruchir Sharma's new book "What Went Wrong With Capitalism" offers a compelling diagnosis of how policymakers on both sides of the political divide have lost their way, engineering the conditions that set up the pervasive inflation impacting Americans today and stifling meaningful innovation. Key takeaways:
- "Three of every four US industries have ossified" into entities that "prosper by lobbying regulators and killing off competitors, not by innovating."
- Smaller newer innovators need a playing field that offers them a credible chance to "challenge - creatively destroy - old concentrations of wealth and power."
- "Today’s policymakers are status quoists, indulging the same old impulse to rescue, regulate and spend" which gets us "gravy days for markets and billionaires, not society as a whole."
Sharma argues that Biden's spending and Trump's tax cuts are really two versions of the same "suite of habits - borrow, bail out, regulate, stimulate" that provides the most help to the financial oligopolies closest to the money spigot.
Big Tech Kraken
Trust Barometer 2024 - global sentiment that tech innovation is mismanaged and out of control.
The Edelman 2024 Trust Barometer - a yearly survey of what people trust/mistrust around the world, discovers this year that people are losing trust in innovation. Summary at the link above, full 88 page report (PDF) here.
Instead of creating beneficial solutions, the kinds of tech advancements produced by Big Tech in recent decades seem to have created large intractable problems kept in place by Big Tech's beyond-monopolistic grip on every aspect of the modern economy.
GenAI expectations about productivity gains are exaggerated; focus on getting up the learning curve
MIT Economics Professor Daron Acemoglu does the math on how GenAI might boost productivity over the next 10 years. It's a lot lower than the consultants are claiming. Acemoglu's approach:
- considers latest research on how tasks are streamlined or automated by AI,
- compares against gains made by other technologies like robotics,
- calculates a total factor productivity (TFP) per Hulten's Theorem.
One factor Acemoglu identifies - that I believe will be a real Achilles heel: many of the tasks that could be automated do not have "clearly defined objective measures of success, and often involve complex context-dependent variables."
Highly Recommended for more context: What we learned from a year of GenAI building with LLMs (O'Reilly). Valuable lessons and tactics from real world trial and error of several current practitioners: how to evaluate and improve outputs, design human-in-the-loop flows, RAG and more.
Big AI woos big publishers
A leaked presentation suggests OpenAI is approaching publishers with offers of preferred placement in ChatGPT outputs in exchange for agreement to use the publishers content.
- OpenAI would gain the ability to train on a publisher’s content and the license to display that information in ChatGPT products, complete with attribution and links.
- It would also get to announce the publisher as a preferred partner and work with them to build out these experiences.
Some are calling out the problematic nature of this proposal given the unclear legality of OpenAIs use of 3rd party content in its model training. Publishers might also need to consider how this impacts sales via other channels.
"We believe that people searching with AI models will be one of the fundamental ways that people navigate the web in the future." - Nicholas Thompson, CEO, The Atlantic
The Atlantic magazine and Vox Media reportedly both signed deals with OpenAI this week. Last week Wall St Journal parent company News Corp announced a deal with OpenAI.
Crypto adoption outside US is driving innovation
MasterCard announces a new Crypto Network to enable cross border payments, noting that interest in blockchain as a financial settlement layer for cross border payments continues to be a priority for Latin America and the Caribbean in spite of negative sentiment in the US.
The immature/hostile regulatory environment in the US coincided with losses in the US's share of crypto talent. 72 percent of developers are now outside the US. The recent passing of the FIT legislation may signal a shift in tone in the US. The Biden campaign has begun reaching out to the crypto industry.
Change Leadership Case Study: Slow Progress on Accessibility
S3T readers will recall the interview with Dan Dorszynski last May where he described the shameful status quo in how airlines handle passengers who depend on wheelchairs:
- Wheelchair dependent passengers like Dan are physically removed from their wheelchairs and forced to sit in airplane seats not designed to support them, which routinely subjects them to stress and injury.
- Their wheelchairs are stowed separately, then brought back to them at the end of the flight, frequently damaged.
If you haven't already, I encourage you to read or listen to the interview, documented with photos by Michelle Tricca.
Then, last June at the Aircraft Interiors Expo, Delta Flight Products exhibited the first ever working version of a seating configuration that allows people who depend on wheelchairs to stay in their wheelchairs when they fly. This brought renewed energy to the push for better treatment of wheelchair dependent passengers, and Delta was rumored to be targeting a 2025 timeframe for its first implementation.
This week, at the same annual Aircraft Interiors Expo, Delta Flight Products went a step further and presented a new cabin design for onboard bathrooms that can accommodate passengers in wheelchairs.
The breakthrough here is that this is the first time the industry has acknowledged that airline bathrooms are not sized for people who depend on wheelchairs. You may not realize this, but wheelchair dependent passengers routinely dehydrate themselves ahead of flights because they know they will not be able to use the facilities during their flight. Or it will be such a traumatic embarrassing ordeal, they'd just rather not. So this is good progress.
“We look forward to seeing these products through their testing and certification phases, which will prepare them for aircraft identification & installation, resulting in a more seamless travel journey for the disability community.” - Rick Salanitri, President, Delta Flight Products.
When the first passenger flies in their own wheelchair, and is able to use the facilities on that same flight, this will be an incredible case study in change leadership - what it took to overcome the inertia of an industry, its lobbyists and regulators who all have been content turn a blind eye to needs and safety of passengers - and use regulatory compliance as an excuse.
This is a great time to take a moment to say thank you to the S3T Members who engage with airlines, government agencies and unions to advocate for basic courtesy and safety protocols for passengers who depend on wheelchairs. These efforts add momentum to the tireless grass roots effort by organizations like Rights on Flights and All Wheels Up and many others.
Ralph Perrine
Let others know this is an important issue
I suggest sending a link to the podcast or newsletter website with a short thoughtful note explaining in your own words why this deserves more diligence and focus.
- Share this podcast (and newsletter) with your elected representatives.
- Forward the email newsletter edition of this interview (with Michelle Tricca's photographs) to your friends and family. Encourage them to spread the word.
- If you know someone who works at an airline, airline workers union or aircraft manufacturer, share this podcast and newsletter with them, along with a word of encouragement that you hope they'll solve this, and that you appreciate their focus on this issue.
- Follow @chairsintheair on Instagram
- Contact your airlines and tell them this issue is important to you
- Share a note or tweet of thanks to Boeing (@BoeingAirplanes on Twitter) for starting a study to allow people to stay in their own wheelchairs when they fly. Contact Airbus (@Airbus) and ask them if/when they are doing a similar study. Let them both know this matters.
Get informed and connected
- DOT Secretary Pete Buttigieg pressures on FAA and airlines to address wheelchair issue.
- National Academies report says most airplanes could allow passengers to remain in their own wheelchairs.
- WSU has designed a cabin configuration that allows passengers to remain in their wheelchairs while in flight.
- Skift article on yet another configuration allowing passengers to fly in their own wheelchairs, with additional context on the different groups working to solve this. This article points out that the air industry and the FAA both have historically been unwilling to provide serious funding for studying this issue.
Ways to increase your impact
Learn about narratives and how to change them.
In the wheelchair policy scenario above - and other complex change leadership scenarios - narratives play a key role. For example, in this case the dominant narrative is "We can't afford to do the right thing for people who rely wheelchairs because regulations, profit margins, etc." That narrative is slowly being replaced with "Here's how we can and will do it." Click the link above to learn about replacing old narratives with new ones that mobilize people and drive momentum.
Take the Change Leadership Learning Path
This learning series will take you through 3 tiers of lesson sets, starting with the basics of change leadership, then learning to apply change leadership skills at personal, org and macro levels, then learning more focused advanced skills for dealing with specific challenges - especially in large regulated industries or other complex scenarios. Click the link above or the panel below to start your journey.
Ralph Perrine
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