- Arvind's Newsletter
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- Arvind's Newsletter
1.Business warriors: Pakistan's $100 billion Military Inc. An old story updated in the Economic Times. Some excerpts:
A peacock at an army general's house would surprise anyone, for what's normally expected at such a place is a ferocious dog. But that tells the story of Pakistan's generals, admirals and air marshals who have enriched themselves by running a $100 billion business empire, the biggest conglomerate of Pakistan. Pakistan's military runs close to a hundred different businesses. You can't get out of a grocery store or a shopping mall without having bought a few items manufactured by a military company. From cornflakes to breads and biscuits and cement to fertiliser, the military makes and sells everything. From airlines to logistics companies and banks to insurance, the military runs everything.
Think of Pakistan's military as a holding company with several subsidiaries. The military runs six so-called foundations such as the Fauji Foundation and Army Welfare Trust, ostensibly for the welfare of the serving and retired army personnel. These foundations own businesses and companies which are run by serving and retired military personnel and often fronted by civilians. The profits are ploughed back into military welfare activities but in reality a substantial chunk goes to the top military brass who keep their hands firmly in the till. Fighting on the border and then in the boardrooms is all in a day's work for the military. The phrase 'boardroom battles' would ring truer in Pakistan than anywhere else.
The military companies often have low transparency, and the tax and regulatory agencies prefer to look away. In a country that has been ruled half the time by military dictators and the other half mostly by "hybrid governments" that ceded actual power to the military, insist on looking at the balance sheet of a military company and you will yourself looking down the barrel of a gun instead. The military enterprise dominates Pakistan's economy so much that it does one-third of all manufacturing. You can rightly say, after Mao Tse-tung — the founder of a totalitarian economy — that Pakistan's political-economy grows out of the barrel of a gun.
However, never before have people turned on the military. Defying the military had so far been the job of poets and intellectuals. Now Imran Khan has democratised the dissent. The military built its business empire on an excuse that often resonates with the masses of a third-world country — the politicians are corrupt and cynical but the military is honest and efficient. When Pakistan teeters on the edge of default and common people riot over basic food items, the military's argument doesn't hold water. For long, Pakistanis have looked at the Military Inc's enclaves of luxury in disbelief and awe, but now the contrast is sharper. Nothing much may change in the short run in Pakistan but the 'strawberry revolution' has made one thing certain — the preening peacocks of the Military Inc. are now fair game for the masses.
2.The economist Tyler Cowan in his popular blog Marginal Revolution writes about “ The importance of cognitive endurance in education” based on findings of new field study in India by Christina Brown, Supreet Kaur, Greta Kingdon and Heather Schofield.
An excerpt:
Schooling may build human capital not only by teaching academic skills, but by expanding the capacity for cognition itself. We focus specifically on cognitive endurance: the ability to sustain effortful mental activity over a continuous stretch of time. As motivation, we document that globally and in the US, the poor exhibit cognitive fatigue more quickly than the rich across field settings; they also attend schools that offer fewer opportunities to practice thinking for continuous stretches.
Using a field experiment with 1,600 Indian primary school students, we randomly increase the amount of time students spend in sustained cognitive activity during the school day—using either math problems (mimicking good schooling) or non-academic games (providing a pure test of our mechanism).
Each approach markedly improves cognitive endurance: students show 22% less decline in performance over time when engaged in intellectual activities—listening comprehension, academic problems, or IQ tests. They also exhibit increased attentiveness in the classroom and score higher on psychological measures of sustained attention. Moreover, each treatment improves students’ school performance by 0.09 standard deviations.
This indicates that the experience of effortful thinking itself—even when devoid of any subject content—increases the ability to accumulate traditional human capital. Finally, we complement these results with quasi-experimental variation indicating that an additional year of schooling improves cognitive endurance, but only in higher-quality schools. Our findings suggest that schooling disparities may further disadvantage poor children by hampering the development of a core mental capacity.
3.Olympic swimming in the Seine ? By 2024 this will be a reality says a report in the New York Times (Hopefully).
Considered by many the most romantic river in the world, the Seine is also smelly, murky and — after big Saturday nights — fringed with the filthy residue of partygoers. During huge rainstorms, 40 portholes dotting the river’s paved banks gush with sewage."
However, Organisers of the 2024 Summer Games promised a waterway clean enough for Olympic swimmers and then Parisians to swim in.
For years, workers across greater Paris have been implementing what is known as the Swimming Plan — an engineer’s dream, involving thousands of new underground pipes, tanks and pumps designed to prevent damaging bacteria from flowing into the Seine, particularly during storms. If successful, the plan will yield a river clean enough for Olympians and, later, citizens, to swim in.
“Do we have a 100 percent guarantee? The answer is no,” said Pierre Rabadan, the deputy mayor heading up the city’s Olympic plans, including the cleanup of the Seine in time for it to host two long-distance races and the swimming legs of the triathlon. “If it rains for a week continually before the races, we know the quality of water — even with all the work that has been done — probably won’t be excellent.”
4.Turks await the results of one of the most crucial elections in their country’s history.
Longtime leader Recep Tayyip Erdogan has towered over Turkish politics for two decades, tightening his grip over the country and eroding democratic institutions at home, while also raising the country’s profile on the international stage. Now, he faces the tightest election of his political career, trailing in the polls behind his opponent, Kemal Kilicdaroglu. Today's vote could end Erdogan's rule and have far-reaching geo-political consequences according to the Wall Street Journal . Polling stations are closed and the result is expected later today. If neither candidate wins an outright majority, a runoff would be held in two week's time.
Google: AI additions to search should stave off rivals, opines the well known Lex column of Financial Times. The demise of Google in search is premature. Excerpts from its analysis.
For Google, artificial intelligence represents both threat and opportunity. Microsoft’s early integration of AI into its Bing search engine posed the first real challenge to Google search’s dominance in years. But Google’s own investments should protect its market share.
The success of a competitor is not a happy reason to roll out change. But it appears to have electrified Google. At the company’s showcase I/O event on Wednesday (named for the 1 and 0 at the start and end of a googol) it announced a significant upgrade to its core online search business, with conversational answers provided by AI tools.
This is not a full overhaul. Links will still be shown. It will start as an invite-only experiment. The event did not elicit gasps of astonishment from the audience. As market leader, Google has more to lose if it rushes out poor performing features.
But steady development will serve the company well as lawmakers grow nervous about AI risks. Google’s plan to watermark AI-generated content means it is carving out a clever role as industry monitor.
Bing will not unseat Google search. As of March, Bing had 100 mn daily active users. Google has over a billion. It has a 94 per cent share of the US mobile search engine market, according to web traffic site StatCounter. That looks secure unless Bing can unseat it as the default on Apple or Samsung devices, which is unlikely. Search revenue was expected to fall in the first quarter but rose 2 per cent year over year.
Adding more AI integrated services means rising costs. Google’s parent company Alphabet expects capex to exceed last year’s $31.5bn total. But Alphabet’s advertising business is huge. It can afford to outspend Microsoft. R&D spend was 60 per cent higher than Microsoft’s last year. Yet at 14 per cent of revenues it was not much higher than Microsoft’s 12 per cent.
There are not yet projections as to how exactly AI services will increase revenues. Will advertisers pay more to appear beside generative AI replies? Maintaining margins requires cost cuts elsewhere. More details on how exactly AI will improve advertising and cloud revenues would be welcome.
So what do we make of the leaked memo by an unknown author from within Google titled “ We have no moat”. A report reviews this in the Economist.
The memo notes that researchers in the open-source community, using free, online resources, are now achieving results comparable to the biggest proprietary models. It turns out that LLMs can be “fine-tuned” using a technique called low-rank adaptation, or LoRa. This allows an existing LLM to be optimised for a particular task far more quickly and cheaply than training an LLM from scratch.
Activity in open-source AI exploded in March, when LLaMA, a model created by Meta, Facebook’s parent, was leaked online. Although it is smaller than the largest LLMs (its smallest version has 7bn parameters, compared with 540bn for Google’s palm) it was quickly fine-tuned to produce results comparable to the original version of Chatgpt on some tasks. As open-source researchers built on each other’s work with llama, “a tremendous outpouring of innovation followed,” the memo’s author writes
This could have seismic implications for the industry’s future. “The barrier to entry for training and experimentation has dropped from the total output of a major research organisation to one person, an evening, and a beefy laptop,” the Google memo claims. An LLM can now be fine-tuned for $100 in a few hours. With its fast-moving, collaborative and low-cost model, “open-source has some significant advantages that we cannot replicate.” Hence the memo’s title: this may mean Google has no defensive “moat” against open-source competitors. Nor, for that matter, does OpenAI.
Not everyone agrees with this thesis. It is true that the internet runs on open-source software. But people use paid-for, proprietary software, from Adobe Photoshop to Microsoft Windows, as well. ai may find a similar balance. Moreover, benchmarking AI systems is notoriously hard. Yet even if the memo is partly right, the implication is that access to AI technology will be far more democratised than seemed possible even a year ago. Powerful LLMs can be run on a laptop; anyone who wants to can now fine-tune their own AI
This has both positive and negative implications. On the plus side, it makes monopolistic control of AI by a handful of companies far less likely. It will make access to AI much cheaper, accelerate innovation across the field and make it easier for researchers to analyse the behaviour of ai systems (their access to proprietary models was limited), boosting transparency and safety. But easier access to AI also means bad actors will be able to fine-tune systems for nefarious purposes, such as generating disinformation. It means Western attempts to prevent hostile regimes from gaining access to powerful AI technology will fail. And it makes AI harder to regulate, because the genie is out of the bottle.
Whether Google and their ilk have lost their moat will soon become apparent.