JimPinto.com - Connections for Growth & Success™
No. 158 : 15 July 2004

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

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Fast-depleting Oil resources

During a recent discussion with a friend who I respect as a knowledgeable, well informed person, the subject of oil and energy independence came up. He shrugged off my concern about fast-depleting oil resources, "Ah, that's just a jittery rumor to raise oil prices - the world still has 1,000 years worth of oil resources!"

I was surprised at this denial. We looked on Google together, and found several different links. Here's a summary:

  • The rate of oil discovery is declining.
  • Demand for oil is increasing and will continue to grow.
  • Current reserve estimates can't be trusted, since they tend to be exaggerated for political or business reasons.
  • Alternate oil sources are inadequate to offset any meaningful reduction in traditional crude supplies.
According to Hubbert and other experts, US oil resources topped out in the mid-70's, and world oil resources will peak within this present decade. After that, we'll simply be using up reserves. Several oil estimates show that world oil reserves will dry up within the next 50-100 years, maybe less.

Interestingly, we found a '99 quotation from Dick Cheney, while he was still Chairman of Halliburton, "Producing oil is obviously a self-depleting activity. By 2010 we will need on the order of an additional 50 million barrels a day."

We are already embedded in enormous oil infrastructure investments made over the past century - exploration, extraction, refineries, pipelines, storage, distribution, down to several gas-stations on every street corner. This represent tremendous inertia which cannot and will not be overcome without broad, concerted action. Only major Government involvement can bring solutions. And even that will take decades. The longer we wait, the worse the problem becomes. Perhaps it is inevitable that revolution will come only after the situation becomes a major crisis.

By mid-century, the world will need to double energy production from its current level. Somehow, humanity must find a basis for energy prosperity in the 21st century. For worldwide peace and prosperity, it must be cheap, clean and sustainable.

Click Hubbert Peak of Oil Production

Click Dick Cheney, Peak Oil and the Final Count Down

Click Visit the American Energy Independence website

Click Book: Out of Gas - by David Goodstein

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Nanotechnology provides energy solutions

When asked what he would do today, if he was starting out again as a teenager, Michael Dell said "Nanotechnology". When asked what growth business he would start from scratch today, Jeff Bezos said "Nanotechnology".

I keep bringing up the point that small, incremental changes will not be sufficient to solve the world's energy problems. But, I am optimistic that technology revolutions will. Nanotechnology is at the forefront. It will generate a whole new spread of products and services that will drive wealth and job creation.

Nanotechnology will be a major contributor to energy independence if the right investments are made. Nanotechnology such as nanotubes, nanowires and nanocomposites for batteries, will bring orders of magnitude improvements. Nanostructured membranes, nanohorn electrodes, nanocatalysts will make fuel cells smaller, lighter and more affordable.

Many people feel that clean, nuclear energy is the only energy-efficient solution. France, for example, gets 75% of its electrical power from nuclear energy, and exports electricity to neighboring countries. But, oil and environmental-safety lobbies seem to insert a major influence in the US, to the extent that only some 20% of US electrical power comes from nuclear energy.

In any case, if cheap electricity was available, critical innovation is needed to allow gigawatts of electrical power to be transported over continental distances. Nanotechnology in the form of single-wall carbon nanotubes (or buckytubes) forming quantum wires will be important in this electrical transmission revolution.

Click Richard Smalley - Nano-energy will save the Earth

Click Nanotechnology helps solve the world's energy problems

Click Book: Nanocosm - Nanotechnology and the Big Changes Coming

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The advantages of moving more work offshore (not cost)

With all this noise about joblessness caused by work moving offshore, it is clear that major companies continue to move in that direction - for the obvious profit motives.

A recent report (May 2004) by the influential Boston Consulting Group recommends that US companies should speed up the move of offshore operations, including research and development, to China and India.

In blunt terms, well-respected BCG warns American companies that they risk extinction if they hesitate to shift facilities to countries with low costs. That is not only because the potential savings are significant, but also because many US executives think that the quality of American workers is deteriorating.

BCG warns: "Companies that wait will be caught in a vicious cycle of uncompetitive costs, lost business, underutilized capacity and the irreversible destruction of value." This amid generally upbeat news as strong economic growth has begun fueling an increase in jobs, which has diminished public debate about off-shoring.

The BCG report shows the clear pressures on corporate America to shift jobs overseas. Many economists believe the trend will benefit the US economy overall by improving productivity, and that new job creation will more than compensate for the jobs migrating to China and India. BCG suggests that the movement of jobs abroad is likely to accelerate strongly in coming years.

Particularly troubling is the report on confidential discussions with BCG clients who had low opinions of American employees, compared with foreign labor. Not only are factory workers in low-cost countries much cheaper, but they quickly achieve quality levels that are equal to or higher than their US counterparts.

A high percentage of BCG clients expressed significant concerns about the erosion of skills in the US work force - machine operators who are unable to handle specialized equipment, or make the transition to new machinery. In contrast, offshore workers are eager to learn, and apply new skills.

Similarly, engineers in low-cost countries tend to be more motivated than US equivalents. BCG cites General Electric, Motorola, Alcatel and Siemens as examples of companies that have set up R&D centers in both India and China to leverage the engineering talent - faster, better and lower cost results.

Perhaps there are fundamental principles of human nature and motivation at work here. How can an American engineer, already living in a 3-bedroom home with a 2-car garage, compete against his Indian equivalent who lives with his extended family in a tiny apartment? How can the motivation of a US factory worker compare with a Chinese laborer whose only alternative is pulling rice from mud?

This brings to mind a discussion I had with an old Japanese friend. "Pinto-san," he asked, "have you ever starved?" He had, during the war when he was a boy. His message: "You cannot simulate hunger."

Click Boston Consulting Group - Send more jobs offshore

Click The US is losing its competitive edge

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Decision-making across the enterprise

Consider how managers made decisions just a few decades ago. Information was gathered through a variety of mechanisms in isolated sections and departments. This was passed up a human chain, usually in a financial reporting timeframe - monthly, quarterly and annual information, to facilitate analysis and adjustment. So, the job of a manager was to shuffle old, in many cases outdated, reports.

Today, a plethora of software tools and web services are available for enterprise integration. Perhaps the key job for the future CEO is simply to determine and monitor the key performance indicators (KPIs), letting local decision-making achieve results for the integrated enterprise.

My article, "Decision making across the enterprise" is in the June 2004 issue of "Automation World". You might enjoy it.

Click Pinto article - Decision-making across the enterprise

Click Automation World - Decision-making across the enterprise

Click Enterprise decision making

Click Getting Enterprise Decision Making to Work

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Editorial - Independence day meditations

These are the thoughts of a first-generation American, someone who is not here by accident of birth, but by choice. The flame of patriotism burns fresh!

In the past, when I was abroad people asked me, "Are you American?" The query was made with respect, admiration and a tinge of envy. When the horrific events of 9/11 occurred, the world shared America's grief. Americans felt an outpouring of sympathy from the global community.

But the American response to terrorism has alienated the world. The Afghan war seemed to be righteous vengeance, tracking down bin Laden, the mastermind. But, instead of ensuring his capture by using our own trained troops, we made a tactical mistake by sending locals to find him in the mountains. And so, through incompetence or bad luck, bin Laden remains at large.

Extending the fight against terrorism with a pre-emptive strike against Iraq, based on trumped-up excuses, puts America at odds with the world. Just this week I heard President Bush declare in a campaign speech, "America is safer without Saddam!" I couldn't believe that anyone would believe that. Indeed, I do believe that he is underestimating the intelligence and wisdom of most Americans who see through the charade.

Staunch US ally Hosni Mubarak of Egypt warned that a pre-emptive strike against Iraq would produce "100 new bin Ladens". And more than a year after "Mission accomplished" was declared on the flight deck of a majestic aircraft carrier, US troops continue to lose their lives in a tarnished cause.

The powerful must set the highest standards of justice, else power degrades to bullying. The true quality of power is self-restraint, and swift justice for offenders. Today, America is demonstrating neither. In the eyes of the world, when the most powerful country in the world does something wrong, no one is punished. The world asks, "Where is American Justice?"

The bi-partisan Senate Intelligence Committee announced last week that the information provided as justification for the war was wrong. To date, no one has been held accountable. After insisting that WMD was a "slam dunk", CIA Director George Tenet resigned "for family reasons". There have been no repercussions in the Administration. Dead quiet. Again the world asks, "Where is American Justice?"

The Abu Ghraib prisoner abuse scandal was evidently sanctioned at high levels, but kept hidden till the pictures leaked out. In the eyes of the world, these transgressions demanded immediate high-level accountability. But there was no admission of error. No pre-emptive apology. As of yet, only low-level pawns are being penalized. Not a single top-level American has been fired. Again the world cries, "Where is American Justice?"

Some 600 prisoners are held in Guantanamo Bay with no formal status or legal rights. It took two years for the Supreme Court to point out the error. But, there has been no admission of error, no apology, no redress for those few who may be innocent. And again the world cries, "Is this American Justice?"

Americans are not safe abroad anymore. American athletes have been warned not to wave the US flag during their medal celebrations at this summer's Olympic Games in Athens for fear of provoking crowd hostility and anti-US reaction.

At regular intervals, Homeland Security announces new warnings of new terror alerts. They don't know where. They don't know how. But the warnings keep reminding us of the dangers here at home. And the President campaigns, "America is safer without Saddam!"

America's strongest ally, Britain's Tony Blair, is in deep trouble too for quoting faulty intelligence. If Blair loses his Prime Ministership, America may lose its strongest coalition partner, as it lost Spain. And others too are showing signs of dropping out.

Every day more American soldiers die. America continues to shoulder the burdens of a war that was wrong, an occupation with unpunished brutality, an alienated world community, and no exit strategy on the horizon. And still no one steps forward to accept responsibility. Meantime, the President is campaigning against gay marriage.

Over the past two centuries many Americans fought and died to build an image that was respected the world over. American freedom of speech and democracy were admired. The world saw America as open, fair and just.

Now that image has been shattered. Today America is considered militaristic and materialistic, arrogant and self-obsessed. We violate the human principles we preach.

It has taken just a couple of years for our American image to be degraded. It will take a long time for it to be re-built!

Click Mubarak warns of '100 bin Ladens'

Click U.S. athletes told to cool it at Olympics

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In eNews 1 July 2004, I published (unedited) Lee White's response to my political editorial. Tom von Alten [tva@fortboise.org] provided his own rebuttal:
    "The complaint that Bush is alternately portrayed as 'evil mastermind' and 'bumbling idiot' is legitimate. Bush by himself could cause limited amounts of trouble. It has always been Bush *and* -- and his family connections, and his administration. 'Bush was intent on attacking Iraq' is too directly stated, I think. He may have had some lingering personal feelings ("this is the guy who tried to kill my dad") about Saddam, but it's far from clear that he led the thinking, the proposals, or the effort. It seems likely he did not. The problem of groupthink makes it difficult to single out who was ultimately responsible.

    "But White's rebuttal shows those of us who hold views similar to yours the arguments we're going to hear again and again, coming from entrenched patterns of thought that are incredibly resistant to facts. White is merely providing statements of "faith".

      1.'Mr. Bush WAS elected fairly.'

    "As counterpoint to the opposing view, that he was elected unfairly, I would say that the only reasonable statement of fact was that the election in Florida came out a TIE, and was decided by the electoral equivalent of a coin flip. The coin may not have been a FAIR coin, given the bias of the Secretary of State and governor (and political machine) in the state, but it could have gone either way.

    "The system, both in Florida and in the country as a whole, simply cannot accept a tie. There are many legislated tie-breakers, and if and when those don't suffice, ad hoc methods must be obtained. You don't get any more ad hoc than Florida 2000.

      2.'The world still admires America, for the most part.'

    "And everyone else is just jealous. Talk about a fact-free statement of belief! This is canonical.

      3.'WMD's were found in Iraq, but in limited quantities.'

    "This guy should be working for the White House PR dept. Two artillery shells left from the 1980s (in the possession of people who didn't know what was inside) makes this statement true. The disingenuity of such a "truth" doesn't seem to matter.

      4.'Iraq had links to Al-Qaeda.'

    "Also "true" but with substance apparently less hazardous than the two artillery shells.

      5.'The heightened terrorist activities have been taking place in Iraq and Afghanistan, and not the US, haven't they?'

    "This is an ugly argument, but many people find it satisfying. So what if we've created another nexus for terrorism in the world, it's not on OUR shores, so we call it a success. We've had the rebuttal for this brilliant analysis since Hosea 8:7, and the story of Pandora's box."

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CullenL@aol.com [CullenL@aol.com] responded to my editorial about the problems of the democratic process in America:
    "The Electoral College system also serves as a filter to avoid the impact of media attention and voting as a popularity contest. Direct voting is dangerous and can lead to the "strong man" dictatorships.

    "Regarding the method which the parties use to select a presidential candidate. Granted, decisions are made by too few people. More citizens need to become involve in local politics and guide the selection of all elected officials. It is this lack of participation which can destroy democracy.

    "Why is electronic voting more reliable that paper ballots? There will be no way to check for fraud, no backup, no robust control. It bothers me. Will the programmers in Redmond select our next president? It would be far too easy. And undetectable.

    "Marketing is marketing. How can all advertising be declared to be shameful? Much of it is dreadful and disgusting, but this continues only so long as it has effect. What we have is too many "sheeple" who are easily led by nonsense statements by politicians who have learned that they are not bound by electioneering statements. Many of these "sheeple" claim to be intelligent and well educated, which is really scary. Truth in marketing and truth in election rhetoric were lost long ago. Everyone needs to look closely at the integrity of the candidates and their core beliefs. Candidate selection based on only one subject is deadly wrong."

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Kevin Claerhout [Claerhkm@novachem.com] provided this testimonial for the benefits of machine-to-machine (M2M) communications:
    "Just wanted to relate my first experience with an M2M interface...

    "On a recent business trip my luggage and I were separated somewhere along the way. I filed my report with the airline and they gave me a small form with an alphabetic code and a 1-800 phone number. I called the number the next day and was momentarily taken aback by the "canned" voice that answered (it took only a brief moment to realize it was not human). The "voice" successfully asked me several questions, and I was starting to think this was a fantastic use of automation. But when it got to the alphabetic code (the most important piece of information about my claim) it could not recognize the letters as I carefully and deliberately spoke each one. After three attempts, it curtly hung up on me.

    "Fortunately, I checked the airline's web site (only briefly mentioned at the start of the phone call) and I found they had a baggage tracker that allowed me to type in the alphabetic code. I received a prompt e-mail response telling me they had located my luggage and had already given it to a courier to bring to my hotel.

    "I wonder how much better the M2M interface might have worked had they used a numeric instead of an alphabetic code. It has been know for decades that many letters sound alike, but no numbers do. There will always be work for those of us in automation. The key to its power is in the design!"

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