Friday, October 19, 2018

The lack of comprehensive political economy goals will create concurrent pecuniary and environmental disasters for the U.S. Gen X and later generations

Part 4.  The 2018 Huawei Porche is the warning
"canary" in the American political economy "mine"

Since 2012, the canary in that American gold mine known as our tech sector has become less alive and cheerful. Consider this:

  • "We must…deal quickly with the fusion of the online world and the world of industrial production. In Germany, we call it Industrie 4.0. Because otherwise, those who are the leaders in the digital domain will take the lead in industrial production." - German Chancellor Angela Merkel at the 2015 World Economic Forum in Davos explaining German government investment in technological research and innovation that began in 2012.
  • “We will implement the 'Made in China 2025' strategy, seek innovation-driven development, apply smart technologies, strengthen foundations, pursue green development and redouble our efforts to upgrade China from a manufacturer of quantity to one of quality.” - Chinese Premier Li Keqiang in 2015 explaining Chinese government investment in technological research and innovation in the context of achieving the Chinese Dream announced in 2012.
  • "We want you to keep going with the incredible innovation. There's nobody like you in the world. There's nobody like the people in this room. Anything we can do to help this go along, we're going to be there for you. You can call my people, you'll call me -- it doesn't make any difference -- we have no formal chain of command around here." - U.S. President Donald Trump in 2016 to a room full of tech leaders including, among others, Apple CEO Tim Cook, Alphabet/Google CEO Larry Page, Facebook COO Sheryl Sandberg, Amazon CEO Jeff Bezos, and Tesla CEO Elon Musk.

In those few brief moments by the end of 2016, the views of the chosen German and Chinese leaders in glaring contrast to chosen U.S. leader summarized the threat to the 21st Century American political economy. Not understanding the importance and complexity of 21st Century political economics is a level of ignorance the United States cannot afford to accept in its leaders. That ignorance is preferred by Americans will assure concurrent pecuniary and environmental disasters for the American generations following the baby boomers.

In this week of 2018 we were reminded again that the canary in our technology mine is nearing death.

Huawei Technologies Co., Ltd., the largest telecommunications equipment manufacturer in the world, headquartered in Shenzhen, Guangdong Province, China, announced its Mate 20 series of "phablet" smartphone devices. (As Wikipedia explains: "The phablet is a class of mobile devices combining or straddling the size format of smartphones and tablets.")

To replace the six month old Mate 10 model, the Mate 20 series includes the Porsche Design Huawei Mate 20 RS with 8GB of RAM and 512GB of storage. Of course its stylish design is the result one of Huawei's continuing German partnerships - in this case Porche. As with all the new Mate 20 Pro line, its three cameras on the back - a 40-megapixel main camera, a 20-megapixel wide-angle lens, and an 8-megapixel telephoto camera - is the result of Huawei's other continuing German partnership - in this case Leica.

At a whopping $2,000 one might think Huawei devices might not be popular. But that Porsche version is the just the flashy top of a very large line of significant devices. Huawei this year surpassed Apple to become the second largest smartphone maker even though the company’s best phones aren’t officially sold in the U.S.

Now, the company’s new homegrown Kirin 980 chipset doubles down on the whole Artificial Intelligence (AI) and machine learning hype with not one, with two built-in neural processing units (NPUs) which, among the cool things it does (most of which we don't yet know about), gives the phone is the ability to try out new AI-powered camera tricks like predictive auto-focus which uses the NPU to help better anticipate the movement of your subject, or selective color mode which uses the NPU to detect people and automatically change the pictures background to black-and-white while keeping the person in full color, all in real-time.

The Kirin 980 chipset performs AI-assisted image recognition tasks at a rate of 4,500 images per minute, compared to the Snapdragon 845 at 2,371 and Apple’s A11at 1,458. It's important even though we know the others will catch up.

There's other seemingly unnecessary cool stuff like the Mate 20 Pro has a beefed up battery system goes a step further by also offering reverse wireless charging to wirelessly charge devices like a Note 9 or an iPhone X/XS.

Not that I want to spend my money on any of this computing power in my smartphone, yet. Then again, Huawei intends to put the Kirin 982 through its far less costly sub-brand Honor with the release of the Magic 2.

But hey, my point here is these phones are the canary-killing methane in the American technology innovation mine. Because its all in the AI.

Our use of a phablet or smart phone with AI isn't the issue. It's what Trump's favorite female world leader German Chancellor Angela Merkel referred to (click on the image to see the official website) - .

The term "Industrie 4.0", sometimes shortened to I4.0 or simply I4, originates from a project in the high-tech strategy of the German government which, as explained in Wikipedia, promotes the automation and data exchange in manufacturing technologies including cyber-physical systems, the Internet of things, cloud computing, and cognitive computing. Industry 4.0 is commonly referred to as the Fourth Industrial Revolution which is an early 21st Century phenomenon. It is also a portent of significant economic change as humanity confronts the exigencies of adaptation to climate change in the mid-to-late 21st Century.

Germany, with its 82,293,457 people (equal to 25% of the U.S. population), is not the future concern. It is China by virtue of its 1,415,045,928 people (equal to 4.3 times the U.S. population) that the Koch Bros funded Neoliberals see as the future concern should the Chinese successfully incorporate the principles of Industrie 4.0 into their economy.

The Neoliberal concern is that both Germany's and China's political economies, to different degrees, are structured to "share the wealth" while the U.S. political economy is structured to "hoard the wealth."

As pointed out in other posts in this series, after an economic period of relying on low-cost exports and transforming the peasantry into a modern work force in manufacturing and service industries, China's goals are the Two 100s:
  • the poverty-elimination goal of China becoming a “moderately well-off society” by about 2020, the 100th anniversary of the Chinese Communist Party, and 
  • the modernization goal of China becoming a fully developed nation by about 2049, the 100th anniversary of the People’s Republic.
And the Chinese Dream has four parts:
  1. a Strong China (economically, politically, diplomatically, scientifically, militarily); 
  2. a Civilized China (equity and fairness, rich culture, high morals); 
  3. a Harmonious China (amity among social classes); 
  4. a Beautiful China (healthy environment, low pollution).
The curious question is what kind of American would find this threatening enough to start a trade war with China?

Those Huawei phones represent the 2015 Made in China 2025 plan based upon Industrie 4.0 which is a “strategic initiative to establish Germany as a lead market and provider of advanced manufacturing solutions. Industrie 4.0 represents a paradigm shift from centralized to decentralized smart manufacturing and production. Smart production becomes the norm in a world where intelligent ICT-based machines, systems and networks are capable of independently exchanging and responding to information to manage industrial production processes.”

The German government is investing hundreds of millions of dollars into Industrie 4.0-related activities including academic research and industrial trials. The Chinese government is investing hundreds of millions of dollars into Made in China 2025 including academic research and industrial trials. As noted in this series, the United States has nothing the equivalent of Industrie 4.0 or Made in China 2025 (go to the linked page and read the numerous in-depth articles on the Chinese effort).

What we have is one American-branded Huawei retail competitor, Apple. For well over a decade Apple "phablets" have not been manufactured in the United States. And Apple, as a good-by-Neoliberal-standards corporation, has stored hundreds of billions of dollars of income offshore to avoid paying federal and state taxes and neither distributing the profits to investors nor employees.

The American Not-Very-Deep State - the FBI, CIA, NSA and The Director of National intelligence - have been warning American's not to buy from Huawei. In February FBI Director Chris Wray said the government was “deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain positions of power inside our telecommunications networks.”
In 2008 the U.S. government blocked bids by Huawei to buy U.S. telecommunications companies. They claim that the company has demonstrable links to the Chinese government noting that Huawei's founder and CEO, Ren Zhengfei, held a high rank in the engineer corps of China's People's Liberation Army (PLA).

You be the judge.

Ren attended the Chongqing University in the 1960s, and then joined the People's Liberation Army (PLA) research institute to work as a military technologist reportedly in the PLA's Information Technology research unit. During most of his time in the PLA, Ren was excluded from joining the Communist Party of China, due to his parents' social background and their ties to the Kuomintang (the pre-1949 opposition to the Communist Party).

As a soldier Ren was tasked to establish the Liao Yang Chemical Fiber Factory. Subsequently, he held positions as a Technician, an Engineer, and was lastly promoted as a Deputy Director, which was a professional role equivalent to a Deputy Regimental Chief, but without military rank.

During this time, Ren was responsible for a number of technology achievements that were recognized at various levels. For this reason, Ren was selected as a delegate from PLA to attend the National Science Conference in 1978.

In 1982, due to a large PLA reduction-in-force (RIF) which impacted 500,000 active duty personnel, Ren left the army. In 1983, after becoming a civilian, Ren moved to Shenzhen and worked in the electronics business.

In 1987, Ren founded Huawei Technologies Co. Ltd with 21,000 yuan, around US$ 5,000 at the time. Initially Huawei mostly sold telephone exchange equipment from Hong Kong. He now serves as a deputy chairman of the Board of Directors, but he is not among the current three rotating CEOs.
Here's the problem with Huawei. It's employee owned.

Our billionaire-oriented Not-Very-Deep State and some of the business press started challenging that early on. Finally, as reported in 2014 by the Financial Times in Huawei pulls back the curtain on ownership details

    Inside a glass case in a private room in Huawei’s headquarters in Shenzhen, China, are 10 blue books that help answer a question that has vexed the US government: who really owns the huge Chinese telecoms equipment company?
    The centimetre-thick volumes contain the names, ID numbers and other details on the roughly 80,000 employees that Huawei says own almost 99 per cent of the company under an “employee stock option plan”.
    During a tour of the Shenzhen campus, Jiang Xisheng, chief secretary of the board, allowed the Financial Times to examine the books to see the holdings of the staff who own Huawei, through what is called the “Union”, along with founder Ren Zhengfei.
    Leafing through the thousands of pages, it appeared that the vast majority of staff had tens of thousands of shares, while a small group had holdings in the millions. After the FT pointed to an entry with 2.65m shares, Mr Jiang ordered a file from the next room where the contracts are stored to shed light on how shares are awarded.
    The move to show a foreign journalist the books for the first time is part of an effort to rebut criticism that Huawei has been less than transparent about its ownership.
    The company has repeatedly dismissed claims about possible links to the Chinese government as baseless, and the US government has not made public any solid evidence to back up its concerns. But to try to refute such suggestions, Huawei has started gradually pulling back the curtain on its ownership structure.
    Duncan Clark, chairman of telecoms consultancy BDA China, says providing access to the shareholding books is a positive step, but that it will not satisfy critics.
    “It is like a child that tries hard but the results aren’t there. They think it’s unfair, and there is probably an element of that,” says Mr Clark, before adding that the best way for Huawei to answer its critics would be to go public. “Sunlight is the best disinfectant, but they are pulling back the blinds halfway.”

In other words, the United States government will not be happy until American billionaire investment groups can own a significant piece of Huawei. The idea of employee ownership scares our Not-Very-Deep State and business press because it is considered in their Neoliberal minds a form of socialism - ordinary workers sharing in the profits.

Even more scary to our Not-Very-Deep State and some of our billionaire-oriented business press is the realization that that Porsche model "phablet" and the rest of the Huawei line will have the top AI system that ordinary folks can carry around in their hand - admittedly only until Apple and Samsung come up with their next system. But it is AI that will determine who will win the economic race in the 21st Century.

Why it is scary was summarized by Trump's favorite female world leader German Chancellor Angela Merkel  in 2015: "...Those who are the leaders in the digital domain will take the lead in industrial production."

The German Government and the Chinese Government have engaged aggressively in this piece of the political economy. This engagement is something in the United States the Neoliberal-brainwashed deplorable taxpayers/voters wouldn't permit.

Oh, and their President's Administration has officially declared there will be an unavoidable environmental disaster at the end of the 21st Century because most people simply don't care enough to do something about it. But Trump's available for phone calls from America's tech leaders

In the meantime, the headlines are Tesla secures Shanghai site for $2 billion China Gigafactory and Why Google might return to China, even if it means censorship.

Hence the concurrent pecuniary and environmental disasters for U.S. Gen X'ers and later generations. The canary is dying....


This is Part 4 of the series of posts beginning with:

The lack of comprehensive political economy goals
will create concurrent pecuniary and environmental
disasters for U.S. Gen X and all future generations

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