JimPinto.com - Connections for Growth & Success™
No. 111 : February 14, 2003


Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.

Contents:
  • Impending war - the Orange alert
  • Automation Insights
    • Invensys faces tough year-end
    • Rockwell not acquired - yet
  • The new global job shift
  • The future needs us
  • Man vs. Machine chess match ends in tie
  • eFeedback:
    • Who is the bully?
    • Reaction against the 2013 tech-office
    • Tech-trends have positive significance

Impending war - the Orange alert

In this increasingly polarized world, it is evident that terrorists are plotting and scheming to wreak havoc wherever and whenever they can. The un-nerving thing is that no one knows when, nor where, nor how the next attack will come. The surprise and shock of 9/11 has irretrievably changed our lives in this new century.

As I write this, the color-coded terrorist alert status in the US has been raised a notch to Orange alert, or HIGH, the second-highest possible (the highest is Red-alert or SEVERE). Paradoxically, we are advised to go about our normal business keeping an eye open for suspicious activities. One wonders how much extra wheel-spinning an over-anxious populace generates for the FBI.

The administration claims that there is indeed significant evidence for raising the level of alert, that these are not just-to-be-safe tactics. We were caught by surprise on 9/11, and no one wants another incident to occur without at least some kind of forewarning.

Supposedly, the higher alert status is not due to the impending war with Iraq. However, anti-war extremists around the world are clearly generating increased terrorist activity.

As the war clouds gather, there is still considerable doubt regarding whether or not it is acceptable for the US to attack Iraq without UN approval. With domestic anti-war polls uncomfortably high, some observers wonder whether the increased alert is perhaps just a scare-tactic that will push more people into accepting that the war is justified. What does it do for you?

And what will it be like to move to Red-alert? Would that be the equivalent of wartime conditions? Surely we recognize that an attack on Iraq, even a quick win, will cause repercussions - not only from those few who are loyal to the Saddam regime, but from other extremists who feel that the US is simply bullying its way into territorial supremacy and control of oil. Indeed, in a human sense, a rapid victory will humiliate the enemy and exacerbate the backlash!

The era of controlling populations with tanks, guns, missiles and fighter aircraft is declining with the passing of the past century. The US is clearly the most powerful force in the world and its military power can conquer any country. But, the omni-present media makes the process instantly visible to the world and pushes ever-increasing numbers of extremists into violent re-action.

Bombs and missiles, however powerful or plentiful, cannot stop individuals from rebellion and terrorism. In the current Mid-East conflict, the tanks and guns that Israel sends to wreak revenge after suicide bombings do nothing to stop the next suicide bomber.

In a world with millions of intercontinental air travelers every day, even with the utmost vigilance will seem powerless to stop a hundred suicidal passengers like the maniacal shoe-bomber. And what can be done to stop increasing numbers of desperate people from infiltrating and undermining our open society?

A universal war on all forms of terrorist violence can be the only memorial to its victims. Killing thousands more innocent Iraqi victims, even in a righteous quest to depose their dictator, will not reduce terrorism but increase the specter. The cancer of terrorism took several decades to develop and it is clear that it will take a long time to eradicate. It involves changing the mindsets of whole generations. A sustained international coalition against all forms of terrorist violence would be the only true memorial to the already-too-many victims of transnational terrorism.

Click Website - US Dept. of Homeland Security

Click Cato Institute - One year later: Orange Alert

Click CNN - What's Behind Latest Orange Alert

Automation insights

Invensys faces tough year-end
Rick Haythornthwaite had better come up with some results for Invensys by fiscal year-end (March 30) or face a serious decline of the already hard-hit stock. At the end of trading on Thursday, 13 Feb. 03 Invensys stock dropped to 37p, among the biggest decliners in the UK FTSE 100. This is now some 60% below the level of Haythornthwaite's own stock options (100.35p, July 02). One wonders how long he will stay. And why?

On 9 Feb. 03, the UK Sunday Telegraph commented (summarized):

    "Plunging worldwide industrial demand has overshadowed the restructuring by Invensys CEO Rick Haythornthwaite. Sadly, we fear there is further bad news in the pipeline: Invensys has a serious pension fund deficit - estimated to be 250m, the weak dollar is a problem, and fears (perhaps unjustified) that the company could be hit by a string of asbestos claims. Invensys faces a tough few months, despite Haythornthwaite's best efforts. Advice to stockholders: Sell."
Invensys had planned to be listed on the New York Stock Exchange last year. But according to a recent release, listing will be deferred until there is an improvement in the market. Indeed, with the recent stock decline, there is danger that Invensys will lose its UK FTSE listing.

Invensys insists that its year-end forecasts remain unchanged, though many analysts don't believe that can happen. To avoid having to issue a profits-warning, the remaining core companies are being asked to deliver earnings no matter what it takes - the end-of-the-year crunch that was always Yurko's game. One insider complained: "The prognosis is death by a thousand cuts. Employees are engaged in a real life version of the TV game 'Survivor'."

Click UK Guardian - Profit warning talk dogs Invensys

Click Invensys weblog - commentary, feedback

Rockwell not acquired by Eaton - yet
Well, my prediction that Rockwell would be sold to Eaton in January 2003 did not come to pass. People who joined-the-dots to make the guess, including many insiders, are insisting that something is still brewing - with Eaton, or perhaps someone else.

Many close associates think that Don Davis (64) wants out, and is simply holding out for the best price. Don had previously stated to insiders that his target price is in the 30's - but the stock still remains at about 21. A surge to almost 24 in early January fuelled some speculation that something was afoot. But, not yet.

In the meantime, (3 Feb. 2003) Rockwell acquired Interwave Technology, an independent Manufacturing Enterprise Solutions (MES) consulting integrator. Terms of the transaction were not disclosed.

A leading industry observer commented:

    "In my opinion, Rockwell has acquired a pig in a poke. And this after letting Ron Wichter and everybody at GMS go. Interwave is a troubled Wonderware integrator. I know of three integrator firms who are making a living going around after Interwave and cleaning up their projects."
To stay tuned, read the JimPinto.com Rockwell weblogs.

Click Rockwell weblog - commentary and feedback

Click Rockwell Automation acquires Interwave Technology

The new global job shift

Business Week (Feb. 3, 2003) has an excellent article "The New Global Job Shift". Here is a summary, which includes some of my own tweaks and comments.

The latest round of globalization is moving more and more upscale jobs offshore. The exported work include basic research, chip design, engineering, financial analysis and many other high-income jobs that were previously considered key local positions. Can America lose these jobs and still prosper?

This movement of knowledge-work is one of the biggest trends reshaping the global economy. The first wave of job export started two decades ago with the exodus of manufacturing jobs - shoes, cheap electronics, toys - to developing countries. After that, simple service work like processing credit-card receipts and writing tedious software code migrated to low-labor-cost countries.

These days, a lot of higher level engineering hardware and software design jobs are going offshore as part of corporate downsizing. But layoffs aren't just happening because demand has dried up - there is an underlying drive for lower costs and higher productivity. Analysts predict that by the year 2015, at least 3.3 million white-collar jobs and $136 billion in wages will shift from the US to low-cost countries.

The driving forces are digitization, the Internet, and high-speed data networks that girdle the globe. Today, jobs that previously seemed truly leading-edge, like designing a revolutionary microprocessor, can easily be performed overseas. That's why Intel and Texas Instruments are hiring Indian and Chinese engineers to design chips. Dutch consumer-electronics giant Philips has shifted R&D on most televisions, cell phones, and audio products to Shanghai.

Virtually every sector of the financial industry is undergoing a similar revolution. Processing insurance claims, selling stocks, and analyzing companies can all be done in Asia for one-third to half of the cost in the US or Europe. Wall Street investment banks and brokerages, under mounting pressure to offer independent research to investors, are buying equity analysis, industry reports, and summaries of financial disclosures from financial analysts in India. By mining web databases, offshore staff can scrutinize credit histories, access corporate financial disclosures, and troll oceans of economic statistics. Even Wall Street jobs paying $80,000 are getting easier to transfer; big brokerages are starting to use Indian financial analysts for number-crunching work.

What makes this trend so viable is the explosion of college graduates in low-wage nations. The Philippines, with a population of 75 million, churns out 380,000 college grads each year, with an oversupply of accountants trained in US accounting standards. India already has a staggering 520,000 IT engineers, with starting salaries of around $5,000. US schools produce only 35,000 mechanical engineers a year; China graduates twice as many.

Bangalore (India), Manila (Philippines), Shanghai (China), Budapest (Hungary) and many more tech-centers in developing countries have become the new back offices for Corporate America, Japan, and Europe. Even Bulgaria, Romania, and South Africa, which have a lot of educated people but remain economic backwaters, are tapping the global market for services.

US engineers, accountants and other professionals are headed for a tough readjustment. Things will not bounce back to "the good old days"; the trend is clearly downward. Just two years ago, senior software engineers were paid up to $130,000 a year; the same jobs now pay less than $100,000. Computer help-desk jobs used to make about $55,000; now they get $30,000. Companies like Dell have located most of their telephone tech-support to India. The trend is spreading to virtually every kind of knowledge-work.

We must recognize that many jobs cannot go offshore because they require face-to-face contact with customers. Americans will continue to deliver medical care, negotiate deals, audit local companies. The US will become primarily a financial and distribution center. Talented and innovative people will adjust, as they always have.

Some analysts (including me) think that the US will see a net gain from this shift - as with previous globalization waves. The US labor force and capital will simply be redeployed to higher-value industries and cutting-edge R&D. Silicon Valley gurus are already talking about the next wave of US innovation coming from the fusion of software, nanotech, and life sciences. The waves of change will continue to increase the levels of productivity and value.

Click Business Week (Feb. 3, 2003) - The New Global Job Shift

Click When back-office work moves overseas

Click Peter Drucker: Managing in the Next Society

The future needs us

Freeman Dyson (Professor of Physics Emeritus at Princeton) has written an interesting review of Michael Crichton's novel PREY - and goes on to present his own arguments against control of technology to avoid the dangers.

Dyson points out that we might enjoy the novel as a story, without worrying whether it might come true. Or, we may read it as an urgent warning of dangers lying ahead, which is how Michael Crichton intended it to be read; it's scary because it may be real in the techno-future.

Dyson recognizes that biotechnology in this new century is as dangerous as nuclear power was in the last. The dangers do not come from any particular technology (such as nanorobots or autonomous agents) but rather from the possibilities of moving forward without fully understanding the consequences. The problem is the inexorable quest for progress, with impatience that causes incomplete knowledge and understanding of the complexities of life. The message is that technology, irresponsibly applied, spells danger and even death.

Freeman Dyson agrees that the basic message of PREY is true - the growth of nanotech and biological knowledge will bring grave dangers to human society and to the ecology of our planet. The rest of his excellent and insightful essay is concerned with the question of what can be done to mitigate the dangers.

Bill Joy, in his by-now famous Wired magazine article: "Why the Future doesn't need us" became a spokesman for the precautionary view: any technology that brings with it a risk of major disaster must be prohibited, regardless of the costs of prohibition. Here was a high-tech leader arguing passionately for a slowing-down of technology that might become dangerous. Read that article (weblink below) - it is significant.

Dyson takes the opposite, libertarian view: risks are unavoidable, and no possible course of action will eliminate risks. Action must be based on the balancing of risks against benefits and costs. When any prohibition or control of dangerous science and technology is contemplated, one of the costs that must be considered is human freedom. And clearly, uncontrolled activity will progress (in uncontrolled nations) no matter what.

In January 2001, at the annual meeting of the World Economic Forum in Switzerland, Bill Joy and Freeman Dyson debated the question: Is our technology out of control? Bill Joy took the precautionary side, and Dyson took the libertarian side. In this review, Dyson provides excerpts and quotations from Bill Joy's comments, and summarizes both points of view.

Dyson's essay is a superb and enlightening review of the importance and dangers of future technologies in the development, and possible destruction, of life in this new century. In these uncertain times, technology will bring "inflection points" that cause revolutionary changes. Read Freeman Dyson's article to understand the issues.

Click Freeman Dyson - The Future needs us

Click Bill Joy's famous Wired Mag. article -
Why the Future doesn't need us

Click Jim Pinto on Nanotech & Self-organizing systems
- Michael Crichton's PREY:

Man vs Machine - chess match ends in tie

Russian chess grandmaster Garry Kasparov, rated No. 1 by the World Chess Federation, agreed to a draw in the last game of his match with Deep Junior, a computer created by two Israeli programmers that beat 18 other programs in a worldwide competition last summer.

The six-game series between Deep Junior and the grandmaster finished 3-3, which Kasparov felt was a good result. The "dangerous reminiscences" of his previous loss to Deep Blue, the IBM supercomputer, weighed heavily on Kasparov's mind.

While he was playing Kasparov knew that, unlike a machine, he could not forget the five previous games; he felt this was a terrible burden. He played himself into a superior position but offered a draw on the 23rd move, surprising chess experts. Deep Junior turned down the offer, but presented its own draw five moves later. Kasparov readily accepted.

Kasparov said he played better than Deep Junior in the deciding game and would have pressed for a win in a similar position against a human opponent. But, he feared that even a tiny mistake that would have been severely punished by the computer. So he acquiesced to a draw.

Efforts to create an omnipotent chess supercomputer have been ongoing since the founding fathers of artificial intelligence began plotting at a Dartmouth University conference in 1956. But there has been little to show for it until Kasparov collapsed spectacularly against IBM's Blue. He is still openly bitter that IBM mothballed Blue rather than agreeing to a rematch. He also contends the refrigerator-sized machine cheated by getting advice from human experts during the games.

Click Man vs. Machine Chess Match Ends in Tie

Click Ray Kurzweil comments on the Human vs. Computer trends

eFeedback

Lance Ruetimann [LRuetimann@swissinfo.org] responded to Dave Rapley's comment (eNews Jan. 31, 2003) that only thing a bully understands is force:
    "Have you thought that the US may be seen as the bully here? You should stand on the outside and experience the world-view of the US as a nation which feels it is their "sovereign right" to do "darn well as they please". This arrogance has cost the lives of over 5,000 Afghan civilians, which is TWICE the number of people who died on 9/11.

    "Bullies are those unhappy individuals that feel they have to dominate and control their environment. They have the power to dominate, and ignore their conscience. With great power, comes great responsibility. Can the USA really take responsibility for their actions?

    "One more point - leave out comparisons with Hitler. The circumstances at that time were much different. The comparison can be turned against you, because Hitler also felt that his view of the world was the only correct one."

Warwick Kinscher [warwick.kinscher@tkl.com.au] from Australia reacted to the tech-forecast about "A day in 2013":
    "My 20 year old son has just commenced training to be a carpenter and builder. In some ways I envy him; I can picture him in 2013, going to work on some building site somewhere in this great country of ours, still carrying a toolbox, hammer and nails. He will be using new construction materials and improved designs, but much of his work will still be by hand, using techniques that are centuries old. He will have the latest impact-absorbing lightweight hammer, but he will still have to swing his arm to drive in that last nail. He will be wearing a hat and the latest 200+, non-stick, non-greasy and fully transparent sunscreen, but he will be outside, enjoying the sunshine and fresh air, feeling his body tire as he works through the day, wiping good honest sweat from his brow, rubbing callouses on his hands, and knowing that he is doing a good job. At the end of the day he will look around to see how far he has progressed - he won't need some electronic gismo to let him know that he has just completed the framing for the roof or walls. And then, at the end of the job, he will proudly hand the keys to another young couple as they, too, start a new phase in their lives.

    "That office in 2013 has terrible Orwellian implications. My son has chosen his occupation because it is, quite simply, fun! The office of 2013 will give us enormous potential to collect and process information, but it can so easily be de-humanizing. If it is to remain an office in which people can work and achieve their potential, we absolutely MUST ensure that the values of trust, achievement, potential and human dignity are preserved, and that above all it retains a sense of FUN!"

Ralph Mackiewicz [remccm@mackiewicz.org] responded to my challenge to come up with positive trends in an uncertain world:
    "The tech-trends discussed in your eNews are themselves indicative of continued economic growth, increasing wealth, and improvements in the quality of life for a great many people. For my part, I don't think we should define our enjoyment of life or judge our world based on a tiny group of irrational violent psychopaths or short-term economic indicators (like stock market indices and economic trends).

    "Our world is a dangerous and wondrous place that has produced tremendous improvement in the human condition for a great many people during thousands of centuries. I don't see why it can't continue. I know that there are problems to solve, tragedies to endure, and justice to dispense. But I'm convinced the world is at its beginning, not its end."

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