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The Deus Ex Machina of Digital Transformation: Leading to More Inflation

So, it looks like we are deliberately making the choice to use technology and the almighty digital power of big data to somehow connect everything that can be connected.

And the story goes that this alone will allow us to save electricity and water, make us more efficient and transition to sustainable and clean sources of energy.

But think about all the minerals needed for the chips inside all the things that we want to connect. The smart meters that measure your water or electricity consumption, the sensors inside your new fancy self-driving car, for the alarm system in your home, for the VR set that allows you to get into the metaverse, for the servers that power the new games in that multiverse, for the new smart clothing that will cool you down because it’s too hot outside, for the smart fridge that tells how much milk is left inside your smart bottle, for your smart coffee maker that will make a cappuccino delivered just for you because the algorithms know you even better than you do yourself, and on and on and on. It’s endless innovation but unfortunately futile too.

Some experts are indeed starting to pull the alarm bell.  All this transformation requires an incredible amount of natural resources, something human history has never ever seen and witnessed. It’s like that snake eating its own tail.

As we highlighted in our previous post, we are about to use 30% to 90% of known natural reserves of all essential minerals in the coming 30 years.

And all experts agree about the disastrous environmental effect of a mine. Some of these impacts are actually permanent. In Europe, the destructive impact of Roman gold mines exploited 2,000 years ago still continues today. It is very likely that the same will happen with the mines we are exploiting nowadays. This rush on natural mining resources expected in the next 30 years, all done in the blind faith that it will save the earth, will actually destroy it.

There is a myth that we all need to tone down in our collective minds. It’s a myth about mining. That myth is best shown in Charlie Chaplin’s movie “The Gold Rush” in 1925. It tells the story of gold diggers who rushed to the mountains of California hoping to make instant fortune. All these gold diggers rushed with their simple tools in the middle of 19th century, pulled by the overcredulity that all you had to do was to just look through some rubbles and dirt, and that your fortune would be made.

But that is far from reality, really, really far from it.

The truth is that in order to find 1 gram of gold, one tiny little gram, you need to move 1 ton of dirt. Yes 1,000 kilograms !!! That’s 0.0001% of the dirt you are moving. But the only way to extract that 1 tiny little gram, is to actually use a lot of chemicals, the kind of stuff that does not evaporate just like that. The kind of stuff that poisons soils for quite a while, and even for ever. So you first have to destroy entire mountains, and then poison the soils, for ever, all this in the name of our smartphones and fancy electronic toys.

But if that was only about gold, then we could almost say that we could live with it. In fact, the other minerals are also quite scary. For platinum, 1,000 kilograms of dirt would give you between 3 and 15 grams of platinum. For lithium, the percentage ranges between 0.05% to 0.15%; for uranium it’s 0.1% to 0.3%; for copper it’s 0.3% to 2%; for cobalt it’s 0.5% to 2.5%. And the list goes on. So think about the mountains that need to be destroyed.

So as you see, all these new sustainable technologies do have to rely on these resources. As a result, in order to implement these technologies that we believe will save the planet, we are actually accelerating its destruction.

We are indeed trying to save the planet by destroying it.

So, in the end, it looks like we are doing all this just to be able to maintain our life style. All this is done in order to rearrange the chairs on the deck. But the ship is sinking, and it will go so much faster if we don’t realize that it is time to rub our eyes and wake up from that delusion.

Perhaps the real question is as follows; should we all start to adjust our life style? And here the question has to be addressed to richer nations.

May be it starts with something as simple as walking or biking? But there too, we also have to ask ourselves about inequality. Those who can afford to walk and bike in richer nations are precisely those who are at the top of the scale. They can walk and bike because they do have the means and income to live not too far from where they work. While for those who live far enough from an urban center, because rents are too high, then they have to use a car, very often an old car, because that’s all they can afford, or have a very long daily commute.

That’s why inflation cannot be transitory as we have been told just a few months ago by central bankers. Because in order to extract all that stuff within the next 30 years, a lot of water will be needed, among other things. Water that will necessarily come from local communities that were using it to grow their much needed crops and food, to nourish themselves and raise their families. Water that will become increasingly scarce and which is part of every single value chain. Every single object in your house has to rely on water for its manufacturing.

Indeed, in order to pull that stuff from the ground, everything else will have to be made more scarce. Hence the inflationary pressure that becomes unavoidable.

And guess what, because of that increased competition for resources, it also leads to wars. Peace Pilgrim understood that many decades ago and that’s why she decided to keep walking.

Let me know if you have any other questions and feel free to comment.

References: In French: “Ruée Minière au XXIe Siècle” by Aurore Stephant.

The Deus Ex Machina of Digital Transformation, Is It Really Going to Save Us ?

With the current digital transformation initiatives across the globe, we are currently dreaming of a world where artificial intelligence will eventually create a world self organized around the goals of efficiency and greater productivity.

And we are engaged on this path while committing to remain in the +2 degrees climate scenario. We are putting our entire faith and soul on technology hoping that our innovative technological marvel will save us like a Deus ex machina, out of nowhere. Mind you, that’s how all of us have been formatted, in our schools and leadership programs, truly convinced that some hidden free market deities will intervene and reward us.

But what if this does not happen at all? What if these beliefs in an almighty technology are pure fantasy?

After all, when you look at the requirements needed for this digital transformation and the energy transition, you start to see that all the resources needed to convert the analog world to the digital world are mind boggling. To build all these new electrical vehicles, all these new electrical networks, all these sensors and servers, all these digital infrastructures embedded in new bridges and roads, all these initiatives to convert older polluting technologies to sustainable and clean digital technology, all this will require a staggering amount of resources. Mining experts estimate that within a constrained scenario of +2 degrees for climate change, the new technological and energy transition will require the following consumption within the next 3 decades; 90% of copper known reserves, 87% of known reserves of beauxite, 83% of known reserves of cobalt, 60% for nickel, 30% for lithium.

That is staggering isn’t it? Some of the same experts are now concerned; the very efforts we are initiating to mitigate the very causes that lead to climate change, are actually leading to even greater damaging effects than the ones we are trying to avoid.

Which leads me back to Dune. In that novel, we are placed somewhere in the future, thousands of years ahead. And civilizations seem to have transcended technology. They seem to have taken what they needed from it and even imposed boundaries with it. We may want to examine this relationship that we have with technology while it’s still time. Because using between 30% to 90% of reserves of the most essential resources in such a short amount of time does not seem that sustainable to me.

And we might even discover, sooner than we think, that the very countries that have been able to preserve and protect their environment are the ones that are going to be the best prepared to handle the challenges of climate change.

So what if we each prepared individually for a world where less of these reserves are going to be needed? We may even have to reintroduce some elements of analog technology in our daily lives. This may sound far fetched, but it may have to come much sooner than we think.

Feel free to comment and share your thoughts.

 

Supply Chains in Motion, The Disruptions that are Changing the World (II)

Few days ago, I had a chance to talk to you about the shifting shapes of global supply chains given the current conditions. Many signals are noticeable and I highlighted just a few of them.

The phosphate and fertilizers current tensions which are likely to have a major impact on agribusiness and food supplies.

I also highlighted the most recent developments in Mexico regarding lithium mining. The recent law passed by the Mexican parliament will probably send shockwaves throughout whole branches of industry like electronics.

And of course, there is also the impact of sanctions on the gas and oil supplies coming from Russia.

Each of these topics deserves a more in-depth exploration and I promise we will do that soon.

For the time being, we are just painting a broader picture. The attempt of capturing these noticeable developments will help us identify broader patterns. So for the time being, I suggest we will just make an inventory of such developments as they unfold. My role is to bring to your attention what is likely to emerge for the more medium and longer term.

Another of these examples that is noteworthy, is the construction of a major cable linking Morocco and the UK.

We are talking here about a sea cable linking southern Morocco and the United Kingdom. The length of that cable will be the longest in the world of its kind with approximately 3,800 kilometers under water. It is expected to provide 8% energy needed in the UK by 2030. That energy will come through solar and wind power plants in Morocco. They should be operational by 2030, and will be located on around 1,500 square kilometers. According to today’s interview on SkyNews, the project is still under study and will be conducted by a company called XLINKS in the UK.

This is the kind of development that shows how supply chains are shifting right now. Some of these shifts are short term, and others will have longer term implications.

That’s what I wanted to share with you.

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.

 

Supply Chains in Motion, The Disruptions that are Changing the World (I)

We can all see that supply chains across all industries and value chains are in the process of complete transformation. They are shaken as we speak. It would take hours of presentation that only an in-depth course would be able to perform. So at this point, I am only offering you in the next few minutes a broad picture.

Let’s capture some of these signals that are indicative of these shifting supply chains and value chains.

The three events that I am mentioning here reveal how changes are underway across the spectrum of all value chains and supply chains.

Fertilizers: Morocco is in the process of capturing the lead from Russian fertilizers. This is will have a broad impact on the food industry and agribusiness. It is very likely that Morocco will emerge as a winner of this situation. Morocco is the global leader in phosphate, the key component for fertilizers.

According to the website Morocco World News, prices have already started to spike up seriously.

What this is also likely to trigger is a reshuffling of traditional supply chains in food, commodities and energy. Some of the most important players in recent decades have always been what we call the ABCD (Archer Daniels Midland, Bungee, Cargill and Dreyfus). These are companies that have an absolute leadership around the world, from the financing of trade to the delivery of these commodities. Their operational processes will surely shift as the current events unfold.

Lithium: Mexico is nationalizing its Lithium. Batteries and electronics will likely react. Will send shockwaves throughout that whole branch of production. A move by the Mexican government that shows how geopolitics, business interests and natural resources are totally intertwined. Broadly speaking, it shows how the holders of industrial processes of production are in the hands of industrial groups that are located in industrial countries. Among these countries, some belong to the west (Europe and North America) and others belong to the group of already emerged nations and/or emerging nations like the BRICS, with China appearing as a fully emerged country.

Natural Gas Russia is already blocking exports of gas and oil to Poland and Bulgaria as a reaction to their refusal to pay in Rubles. Other European Union countries are preparing to substitute their imports of gas and oil from Russia with other sources around the world.

These are all signs that are shaping that shift. We will keep pointing at them as we go along.

 

Happy New Year of the Tiger and Other Thoughts about Cars (III)

This a follow up to the post I did 10 days ago on February 12 and entitled “Happy New Year of the Tiger and Other Thoughts about Cars” ( II ). If you have not listened yet to the first episode of that very series called “Happy New Year of the Tiger and Other Thoughts about Cars” then I invite to start with the first episode of the series of the same title and posted on February 7. (Keep listening here)

These posts in the series called “Happy New Year of the Tiger and Other Thoughts about Cars” are sort of personal meditations and thoughts about cyberspace. These are thought experiments where I try to grasp the enormous technological shift that we witnessing right now in the world and try to translate them into my own words and expressions. I try to avoid technical aspects as much as I can in order to open different gateways of understanding about what is really happening here. It’s something I am trying to do for myself and figured that I might as well share it as much as I can. And if you want to understand why “Tiger” and why “car”, well, all you have to do is to go back to the first post on February 7.

So look at that street where you’re walking in right now. If you happen to listen while driving, then I urge you to really pay attention to the traffic in front of you and only do what I am about to tell you when you will actually take a walk. So, provided you are taking a walk, look around you and stop for a moment and observe what is happening. Right at this very moment trillions of digital connections are taking place. They are all happening in cyberspace and some of them may be related to the very place where you are standing right now. They are connected to that place, that very moment, either directly or indirectly.

Whatever it is that these connections are related to, they are happening in this invisible world that is right there in front of you. They may be about the Internet connection that is taking place right from your phone at this very moment. They also could be related to the gas consumption that is taking place in that house right there to the left. The gas utility company is measuring the consumption at that very house one fraction of a second after another. Whatever the modalities for that measure could be, this very operation generates data. It could also be about a car that is passing through after having stopped at the red light behind you. The driver is connected to the Internet through his or her smartphone and that too is generating digital impulses that travel throughout the vast web of the Internet.

So I could go on and on about what is happening right there in front of you as you’re walking in your street.

It’s like those webs that spiders weave across space. It’s no coincidence that we call it the web when we refer to the internet.

In fact, I even wonder why we are using that word. Why didn’t we take another name? That word “inter” and “net” is not that fortuitous. The other day I was looking at my garden and saw all those webs that that spiders create secretly across corners and across space. And the more I kept watching and observing, the more I realized that those spiders are like the Internet. I noticed how the more I looked, the more I saw those translucid fishnets that I wouldn’t have noticed had I just kept passing without really taking a pause to observe what’s around me. Some of those webs are pretty big and can span very long distances.

In fact, the silk in spider webs has been recognized to be stronger than steel and even surpasses the elasticity of nylon. So we are using those words, internet, web, world wide web, in reference to what spiders are familiar with. It implies a sense of ever presence, of a reality that surrounds us and in which we bathe, like the plasma of blood. It interconnects and affects anything it touches. So as you walk down the street, take a look all around you, and you’ll notice how you as a person and the house that uses the utility network are both connected that same web, just like in a spider web, where every single nod belongs to a whole that creates that single net.

It’s like a spirit but also invites us to pay attention to the nature of these webs. Nature is always very instructive and that regard it always tends to teach us, if we just take the time to observe.

Let me know you your thoughts and comment here. I will reply to you.

Happy New Year of the Tiger and Other Thoughts About Cars (II)

This morning, I was taking a walk and looked at the street that was unfolding in front of me. And I tried to imagine what that street looked like 200 or 300 years ago. Suddenly I realized that all these houses and concrete were sitting in a landscape that was probably made of trees, little hills on the horizon. So I stopped a minute and I pulled my Instagram account to look at some of the pictures I took few years ago. You can listen to the podcast here.

One of the pictures caught my eyes. It was the picture of a tree in Fort Greene, Brooklyn. That tree was near a monument overlooking the Manhattan landscape, with a quite open urban landscape. You could see that these houses were built over the last 100 and 200 years as well. And suddenly, I realized that the same had happened over the last 200 or 300 years in that landscape in Brooklyn. Under this layer of concrete and houses, a landscape was probably there with forests, trees, rivers and streams.

And all of a sudden, my mind went forward to the future to imagine what might happen in the same street, within the next few years, or even the next few 100 years. My mind tried to imagine these next steps. The last few hundred years has witnessed that layers upon layers of urban infrastructure had been overlaid over our world, over the natural landscape that was made of rivers, hills, valleys. But during the last two decades, it’s another kind of layers that are starting to build themselves upon each others. These are of another kind. Silicon Valley calls it “digital transformation.” The very street where you live, the very neighborhood where you reside, your city, is giving birth to digital layers. Digital layers that live in the cloud.

Several years ago, I went to Istanbul in Turkiye (the city that we used to call Turkey). There are parts of the city where you can see the different layers of history, with ancient ruins all the way at the bottom, then later constructions and so on, all the way to now. That’s what the last 300 years look like. And 500 years from now in the future, what will it look like?