A meteor shower of novel terms

by Kumar David

Recent decades have seen a flood of terminology. Nerds and wonks are familiar with the game but ordinary folk like you and I are somewhat at a loss. What’s the difference between AI (Artificial Intelligence) and Robotics, what will be the consequence of the “technology wars” between the US and China, what’s the difference between dirigisme and dirigiste, what is the distinction between liberalism and market capitalism, what will a US government debt-default mean for global economy and polity. Allow me to explore some of these topics in layman’s language which is all I am competent to do.

Technology

Last Christmas Day they chopped me up and a robot took out my gall-bladder. The surgeon opened up my body cavity inserted a robot which he guided with many signals and removed the gall-bladder. There was no artificial intelligence (AI) involved; no self-learning, neural-network or Garry Kasporov-beating Deep-Blue computer chess marvel.

Robotics is not AI but they cooperate happily in mundane applications. You want to park your car in a tight space – no problem. An AI module senses the coordinates fed-back by sensors (you have heard of radar haven’t you?) and decides how to move the car, then the robotics takes over and adjusts the mechanical gadgets like gears and brakes and moves the vehicle. One or two well-coordinated adjustments and your BMW is snugly fitted into a tight spot.

A nightmare for university and senior school teachers is what are known as “large-language modules”. You send off your key-words and a few dollars to a not so nice commercial outfit and bang comes back an essay ready to fool your teachers. AI uses algorithms such as artificial neural networks that repetitively corrects parameters to enable a computer model to fit the demand as perfectly as possible like your mind keeps “firing” neurons to help it comprehend the experiences it is exposed to. AI, nerds claim is winning this battle but autonomous decision making AI is still in the scope of science fiction (Arthurs C Clark/ Stanley Kubrick, “2001, Space Odyssey” stuff, and Sci-Fi is not within the scope of this piece.

While I am on technology let me talk about Sino-American chip wars. On the mass production side the intention is to starve the opponent of commercial ability to compete in business; the Americans especially are feeling the heat and want to freeze the Chinese out of markets, but there is also the strategic side. Chips that go by exotic names like XQR5V FX-130 pack millions of logic cells in an ultra-thin wafer.

There are militarily useful (aerospace grade and radiation resistant) versions that sell for $170,000 though the general price is only $30 -40,000. Taiwan Semi-Conductor Manufacturing Corporation (TSMC) is the largest and most sophisticated semiconductor chip manufacturer in the world and produces 90% of world’s high-performance chips and controls over 50% of the semiconductor foundry market. The other top semiconductor manufacturers are Samsung and Hyundai of South Korea, Intel in the US and Japan’s Toshiba.

Trade and markets

Dirigisme and dirigiste are words of French origin describing state influence in the economy of a nation. The former is where the government sets and monitors important policy directions as in France (pensions, retirement age and investments vehicles; dirigiste is where the state is more aggressive and exercises a greater degree of centralized power and may even decide what is to be produced, vets foreign investment and directs resource allocation (South Korea, Singapore, Japan and of course China and Vietnam).

Why not use my box on Ownership Forms and place dirigiste to the left of dirigisme. Stalinist style state control stands high on the left this side (maybe even outside and on top of the box) and wide-ranging laisses-faire at the bottom of the Capitalism box. This illustration is not an analysis but a simple illustration of the spaces we are working with.

The second graph needs explanation. The ordinate (y-axis) shows the income growth of different income groups while the abscissa (x-axis) shows how much different income groups benefitted from income growth in the 1988-2008, 30-year, period. For example the group in the middle (about 50% income percentile) saw its income increase by 80% over the 30-years, the very rich (the global elite) saw its income rise by 60% in the same 30-years while at the poorest were completely locked out and saw almost no increase in their real income over the 30-years. It’s the middle income group (elite workers, traders, market dealers) that has had it good during the post-war boom while the middle-classes (professionals, intellectuals) in the developed has seen their real-incomes fall slightly.

Finance and business

It’s time to change track to capitalism, finance and business. Laisses faire where each economic agent makes individual decisions is the only way a complex modern economy with a millions decisions to make each day can function – the invisible hand. This has political consequences; it encourages economic rationalism that strengthens capitalist norms. From 1760 to 1848 the bourgeoisie historically played a most revolutionary role. “During its rule of scarce one hundred years, it has created more colossal productive forces than all previous generations; it has played a revolutionary role.

It accomplished wonders surpassing Egyptian Pyramids, Roman Aqueducts and Gothic Cathedrals. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they ossify. All that is solid melts into air; all that is holy is profaned and man is compelled to face with sober senses his real conditions of life”. In a word the exhaustive million-fold decision making that a complex modern economy is dependent on for its survival needs independence.

There are more, esoteric to simple folk like you and me, terminological demands that can no longer be avoided if one is to participate in conversation in the Twenty-first Century. A few examples are sovereign debt default, primary surpluses (surpluses before debt-interest payment), debt-restructuring, and currency-liberalisation vs. currency-control. What is the yield curve? The yield curve – also called the term structure of interest rates – shows the yield on bonds over different times to maturity.

The shape of the yield curve on government bonds conveys information about expectations for the economy. Finally there is the interest rate – inflation trade off. I am afraid that the layman today cannot avoid knowing something about these matters if he is to be an informed voter and participant in public discourse. I am certainly not going to inflict any of this on you but I do warn you that you must spruce up your background knowledge if you intend to be an informed voter.

There is one last novelty in modern times, that is, the possibility of Sovereign Default in the United States. US Federal borrowing currently stands at $31 trillion and rising. The government will run out of cash to pay salaries, health-care, and pensions and for military bases. It’s debt to GDP ratio is 123%. Congress could (I think will) enact legislation to raise the borrowing ceiling and avoid sovereign default but the scene is grim.

With a Trump-Ramasamy ticket on the horizon the short-term scene is grim. Because of the dominant position of the United States in financial markets, the importance of the dollar in global payments mechanisms and US strategic preponderance the world is facing a grim scenario. I hope my readers will probe these topics.

I will close with comments on rescuing the local (Lankan) economy. The critical requirement, by hook or by crook, the absolute imperative is to increase economic output. Belt-tightening (whose and to what degree), export-oriented production and taxation have all to be factored. Does Ranil’s jingbang or Anura Kumara’s cohorts have a plan and a vision to meet these challenges?