This week we talk about weeds, lawn mowers, and California’s Air Resources Board.

We also discuss ornamental lawns, leaf blowers, and two-stroke engines.

Recommended Book: The Lessons of History by Will and Ariel Durant

Transcript

The concept of the modern lawn—a term that originally referred to a somewhat ecologically varied, short-cropped green space that was used for livestock, in contrast to fields that were used for growing agricultural plants—is derived from a variation of the lawns built and maintained by European aristocracy, especially British aristocracy, in the mid- to late-teens centuries, BC.

The concept evolved from a sort of posturing that only wealthy people could manage, back then, before the advent of grass-trimming machinery.

And the flex here was two-fold:

First, here is an expanse of land, which typically would have been put to use, in this case for livestock, but which I, because I'm wealthy, can leave unproductive, untarnished by beasts, and thus for purely beautification and recreational purposes; I can impress people with my sweeping plots of greenery, I can make it uniform and, thus, interesting, in an age in which nature is still being wrestled with and perfection by any standard is rare, and I have enough people working for me that all this maintenance, despite its incredible weight, all that grass in some cases being hand-scythed and sheered by human beings toiling all day long—I can afford to do that. So, look upon my fields, my vast tracts of ornamental land, and be amazed.

So simply setting aside land for this aesthetic-focused purpose was big, but so was maintaining such a thing in a period in which that maintenance was the consequence of long, hard, expensive human labor.

That ornamentality became more accessible to more people with the advent of early mowing machines, the first of which was unpowered, made from wrought-iron, and used a cylinder of blades that would spin when you pushed it.

That was invented in 1830 in England, and from there these Budding Machines, named after the inventor, Edward Budding, were sold to entities with large expanses of land, like the Oxford colleges and Regents Park Zoological Gardens, which in turn helped Budding, mostly financially, evolve his machine, which was then manufactured at a larger scale and licensed to other companies that wanted to make their own version of the same.

Within a decade, these mowing devices had been augmented so they could be pulled by horses, donkeys, and other beasts of burden.

Just over sixty years after that first model was built by Budding, the first steam-powered mower, still pulled by animals, usually, but much more powerful, was patented, and then eventually built and sold, and by 1900 a popular model of steam-powered mower, the Ransomes' Automaton, which is just a wonderful and steampunk name for anything, was dominant in the English market, and the first riding lawn mowers arose around the same time, as seats for operators were added on to the increasingly complex machines.

Mower designs started to show up in patent offices elsewhere around the world around this same time, as the concept of lawns had already spread globally, due to the British Empire's presence and influence, and in the US, the concept of the ornamental lawn was especially appealing: landowners who were gobbling up vast expanses of the—by their standards, basically uninhabited North American continent—were adding these sorts of areas to their growing estates, and the US Civil War meant that some of these landowners were finding themselves with a lot less abundant human labor—of the inexpensive and slave variety, at least—than before, thus the market for mowers, to maintain these brag-worthy lawns, grew quickly from the mid-1860s, onward.

The first gas-powered lawn mowers were produced in Lansing, Michigan back in 1914 by a company called Ideal Power Mower Company, and that same company went on to develop the first-ever self-propelled riding lawn mower, of the sort that would be recognizable today, as it didn't need a horse or other animal to pull it, and this collection of mowing-related innovations, combined with the rapid expansion of suburbs around the United States following World War II—which was partially the consequence of trying to keep war-era manufacturing operating at scale, post-conflict, but also the flood of money that entered the economy as veterans were all but given access to higher-education and cheap loans for houses in rapidly developing city outskirts—that ended up being exactly the right combination of elements to help the lawn spread still further, into a country that was looking to flaunt its wealth a bit, and in which a large number of people were suddenly becoming homeowners, with little patches of lawn all to themselves, adopting the standards of landowners that came before them, including using these patches of non-house land more or less exclusively as decoration.

What I'd like to talk about today is an impending, near-future disruption the lawn care industry faces as a consequence of the global shift toward renewable energy.

—

It's estimated that about 2% of the total continental US landmass is lawns.

The data on this vary, as this is mostly based on estimates from state-level agencies, which are imperfect, and from entities like NASA which have provided satellite imagery that helps us clarify, with decent resolution, which patches of land are covered by what sorts of materials; but it can only ever really be estimates, because of the nature of what's being measured.

But whatever the specific figure, lawns of the ornamental, just kind of sitting there and not doing anything variety, are immensely popular in the United States, and that's made them popular in many other countries, as well, as just like the British Empire was able to spread their norms globally by throwing around money and military units, US norms and priorities tend to spread through the country's vast and powerful media apparatus—so just like American-style malls and toilets and dating and hamburgers, American-style lawns have popped up all over the place, for better and for worse, though by most metrics, mostly for worse.

And that's because lawns are almost uniquely net-negatives for the environments they occupy and bump up against.

Lawns are typically monocultures, meaning plant-life that doesn't adhere to the visual norms of the prioritized green, green grass of a certain length and shape, is killed, sometimes only at great expense and with much effort, and often at the expense of local species, including pollinators and other food-web staples.

Lawns require substantially more watering than a varied collection of local plant-life.

They also generally necessitate the application of chemicals to prevent or kill-off weeds and other undesirable elements—weeds, of course, being any plant that isn't uniform grass of the kind we want to see.

Turf of the kind typically prioritized for these sorts of lawns also has incredibly shallow roots of less than half an inch, which is part of why they require so much watering—they can't get what they need from the soil, themselves—but this also leads to compacted soils over time, which keeps it from absorbing as much water as it might, otherwise, which leads to more flooding and runoff issues, the soil basically eroding into storm sewer systems, which can clog and block them, compounding flooding issues, rather than helping with them.

Another fairly significant issue inherent in ornamental lawns is the volume of greenhouse gas emissions—alongside pollutants—that are churned into the air by all the equipment people use to maintain them.

According to data from the US Environmental Protection Agency, using a modern gasoline-powered lawnmower for one hour emits about the same volume of nitrogen oxide and volatile organic compounds—like benzene, formaldehyde, and tetrachloroethylene, all stuff you don't want in the air or environment—as driving a modern car 45 miles.

These lawn care tools are responsible for about 5% of the US's total air pollution, and oil spills associated with filling up lawnmowers and other such equipment tally an estimated 17 million gallons across the US each year, that spilled gas then finding its way into the local ecosystem, impacting plant and animal life, but also the drinking water humans ultimately use and consume.

Now, gasoline does actually make it into these devices, unspilled, and around 800 million gallons of gasoline is consumed through their use, each year, and because many pieces of lawn care equipment are powered by two-stroke rather than four-stroke engines, the fuel blends with the oil used for lubrication, and consequently around a third of it doesn't fully combust—and as a result emissions from tools and vehicles using two-stroke engines are around 124-times higher than from engines without that blending issue.

Four-stroke engines are a bit better than two-stroke, but still not great: a four-stroke engine-powered land mower used for an hour generates emissions equivalent to driving a passenger vehicles about 300 miles.

Leaf-blowers are also pretty brutal machines, in terms of emissions and pollution.

A typical, off-the-shelf leaf-blower releases more hydrocarbons into the environment than a pickup truck, and research from 2017 suggested that gas-powered leaf blowers, lawn mowers, and other such lawn equipment can produce more ozone-depleting pollution in the state of California than all of the passenger vehicles in the state, combined, leading to an announcement and warning on the issue by the California Air Resources board, that year.

That and similar concerns were the primary motivations behind a recent decision to ban the sale of new gas-powered lawn tools in the state beginning in 2024.

The argument is this:

These types of engines, those that power lawn-care tools, create just a boggling amount of pollution and other emissions, and that's an especially pressing issue in California, which is highly populated, filled with cars, and which has areas that are deserts—like Los Angeles and its metro area—where folks spend gobs of time, energy, and resources, including very finite resources like water, trying to maintain lawns that struggle to survive in the, again, desert where they've been installed.

So all that being true, it makes sense to try to temper at least some of this issue by making it more difficult to acquire and use these highly polluting tools, forcing people to either spend less time, energy, and resources on these unproductive, decorative spaces, or to just buy electric versions of the same, which are, today, widely available, and which can be powered by electricity that is generated cleanly, by solar, wind, etc.

This ban is not without controversy: folks who have these sorts of devices already will be able to keep using them, and it's not a big issue to acquire a new gas-powered whatever if you really want to do so, but it will likely have some effect in that it makes it more difficult to casually acquire one, and in that it makes alternatives like electric versions of the same, and bigger changes like xeriscaping one's yard—using local plants and rocks and things like that, instead of generic green grass, in areas that are short on water—more thinkable for more people.

What it does, in other words, is marks a moment at which a transition in this norm might be kicking off, and that's alarming for business entities that make these sorts of tools and which haven't transitioned their catalog over to electric versions, yet, but also for folks for whom the electrification of things has become a culture-war issue, and for whom—for instance—the idea of not being able to install new gas stoves or buy new gas-guzzling cars feels like an overstep, like oppression, on the part of regulators and other government ne'er-do-wells.

There's also the noise element to this discussion: lawn-care equipment with gas-powered motors are incredibly loud, and there's an ever-growing body of evidence that this kind of noise is bad for animals, bad for human stress-levels, and can itself be partially ameliorated by the far, far quieter electric versions of the same, which tend to be something like 15-20 decibels quieter—and with every 6 decibels sound difference, the volume of noise doubles, so that's a pretty substantial change, even if big electric lawn mowers are far from silent.

All that said, gas mowers are the more developed and iterated technology, and they'll tend to be cheaper up front, and at times more powerful and convenient in some ways; and the same is broadly true across the arsenal of available lawn tools on the market, today.

So even though electric versions tend to be massively better in terms of environmental and public and personal health, and far superior in terms of the noise they generate, the amount and cost of maintenance, and the ease of handling, gas versions are still cheaper and sometimes more powerful, and likely will remain so for some time—though bans like this impending one in California make it more likely that costs on the e-versions will come down quickly, as the market expands, competition picks up, and norms shift, leading to more iteration, more cost-savings, and more overall power for these tools, as well.

California is just one state, of course, but their regulations tend to spill-over into other states, as they often opt for stricter regulations on things like passenger vehicle fuel efficiency and the use of potentially cancer-causing chemicals in products, and because their market is huge and on average quite wealthy, which means companies don't want to be left out of the California market, but it also seldom makes sense to produce two versions of every product, one for California and one for the rest of the US, so those tighter restrictions often inform the shape their products take, elsewhere, as well.

And though these sorts of tools exist everywhere around the world, these days, North America makes up about 58% of the $25 billion global power lawn- and garden-equipment market, so if this ban is implemented successfully, and then informs the state of things across the US, there's a good chance this industry could shift relatively quickly, in its entirety, leading to a far more rapid than would be the case, otherwise, transition away from inefficient and loud motors, to a cleaner version of the same, and at a more basic level, maybe more consideration for decorative lawn alternatives in relevant regions, as well.

Show Notes

https://www.des.nh.gov/sites/g/files/ehbemt341/files/documents/2020-01/ard-22.pdf

https://psci.princeton.edu/tips/2020/5/11/law-maintenance-and-climate-change

https://www.theatlantic.com/magazine/archive/2019/04/james-fallows-leaf-blower-ban/583210/

https://ww2.arb.ca.gov/our-work/programs/zero-emission-landscaping-equipment

https://ww2.arb.ca.gov/news/carb-approves-updated-regulations-requiring-most-new-small-road-engines-be-zero-emission-2024

https://www.consumerreports.org/home-garden/lawn-mowers/gas-vs-electric-lawn-mower-which-is-better-a1057954260/

https://www.bloomberg.com/news/articles/2023-11-20/gas-lawn-care-ban-in-california-tests-electric-leaf-blower-appeal

https://archive.ph/XCJNI

https://www.washingtonpost.com/national/health-science/how-bad-for-the-environment-are-gas-powered-leaf-blowers/2013/09/16/8eed7b9a-18bb-11e3-a628-7e6dde8f889d_story.html

https://en.wikipedia.org/wiki/Xeriscaping

https://blogs.scientificamerican.com/anthropology-in-practice/the-american-obsession-with-lawns/

https://en.wikipedia.org/wiki/Lawn

https://en.wikipedia.org/wiki/Lawn_mower

https://en.wikipedia.org/wiki/American_Civil_War

This week we talk about methane, the UAE, and organizational capture.

We also discuss climate change, broken governmental promises, and Dr. Sultan Ahmed Al Jaber.

Recommended Book: Raw Dog by Jamie Loftus

Transcript

The United Nations Climate Change Conferences, often referred to as COP meetings, short for "Conference of the Parties," are formal, annual meetings where issues related to climate change are discussed by attendees.

These meetings have been occurring at their yearly cadence since 1995—though the November 2020 meeting was put off till November 2021, because of the COVID pandemic that almost entirely dominated international attention and governmental efforts, that year.

COP meetings are held in different locations around the world, with host countries chosen from among those that offer to provide the requisite facilities and services for all attendees, which can represent a who's who of governments and businesses; so this isn't quite an Olympics level of commitment and expense, but it is quite an undertaking, as those host countries need to provide security for all those leaders, translation services for six different working languages, and they also need to help engage stakeholders, ranging from diplomats to the CEOs of the world's biggest companies, flogging support for the meetings themselves, but also the core themes of each meeting, which vary from year to year.

These themes are important, as they've historically led to some of the most vital agreements we've seen between nations and other stakeholders, including the Kyoto Protocol, which was an early, 1990s-era emissions-reduction agreement between wealthy nations, and the Paris Agreement, which expounded upon that same general concept, though with much more aggressive targets and a wider scope of things the signatories had to take into consideration.

On November 30 through December 12 of 2023, signatory nations and other entities will meet for the COP28 meeting, this time hosted in Dubai, in the United Arab Emirates.

This is interesting for several reasons, but the most prominent—and the reason this choice was controversial—is that the UAE, like many other nations in the region, is a huge fossil fuel producer, about 30% of its total economy reliant on oil and gas exports.

What's more, the President-Designate for COP28—the person who was put in charge of running things, but also getting those aforementioned stakeholders in line, making commitments, showing support, doing all the things they need to do to make this a successful COP meeting with something to show for their efforts—is Dr. Sultan Ahmed Al Jaber: the Minister of Industry and Advanced Technology for the UAE, the chairman of the Abu Dhabi Future Energy Company, also called Masdar, and the head of the Abu Dhabi National Oil Company—the first CEO to serve as a COP President, and, well, definitely the first oil company CEO to head up a meeting meant to help the world deal with climate change that's being amplified by the products his company is producing and selling.

What I'd like to talk about today is COP28 and what we might expect to emerge from this very unusual, but also quite significant, get together.

—

Al Jaber's appointment as the COP president for this year's meeting was a controversial choice, to say the least.

Dubai being selected as the host-city was one thing, but an oil executive running the show? This reeked, to some commentators and analysts, at least, as a sort of organizational capture: the United Nations either overrun by financial interests to the point that those interests were able to insert themselves even into this increasingly vital annual summit, or—maybe—the organization overcome by a naive sort of optimistic earnestness, wanting to get everyone involved, including those in some ways most responsible for the climate-related issues we face, to the point that the reins were ultimately handed over to one of those people, to do with as he and his ilk please.

It's unclear which of these, or other possibilities explain this, again quite controversial choice of host city and president, but there has already been some more obvious, scandalous behavior arising from this meeting, beyond the jarring dissonance of having oil people run a climate change-focused meeting.

Back in June of 2023, it was reported that the UAE's state oil company, Adnoc, was able to read emails to and from the official COP28 summit office, despite claims that the latter's email system was kept separate from the former's.

The concern was that this state oil company, which would seem to have immense financial interest in slowing or stopping the transition from fossil fuels to renewables, as the longer they can keep legally and profitably pumping and selling, the more profit they can wring from their existing assets, they could see what was being said by and to the folks behind this climate summit, which is ostensibly at least meant to help speed up that transition away from fossil fuels.

Those concerns were confirmed by The Guardian, and though the COP28 office altered their digital setup after the reporting was done, this added fuel to the concern-fire that was already burning because the UAE and Al Jaber were in charge of things; it seemed like they would have every reason in the world to put their thumbs on the scale and nudge the meeting in favor of the fossil fuel industry, given the chance, and this email issue seemed to confirm that notion.

There have also been concerns that the UAE authorities will weaponize their already widespread digital surveillance apparatus—which is generally used to stifle religious and political freedoms in-country—to target COP meeting attendees with the same, tracking their actions and communications with spyware, among other violations.

A letter was written to the UN by a bunch of politicians from the EU and US, asking the body behind the COP meetings to remove Al Jaber, and a slew of organizations and activists have separately done the same.

The counterpoint presented by the UAE and Al Jaber himself, though, alongside supporters of how this meeting is coming together, including, at times at least, the US climate envoy John Kerry and EU climate chief Frans Timmermans, is that alongside his role running a state-owned fossil fuel company, Al Jaber also founded and runs Masdar, which invests heavily in renewable energy, and which is meant to serve as a foot in the door for the UAE as they attempt to reduce their reliance on fossil fuels; Masdar has invested in renewable projects in 40 countries, so far, and have targeted builting 100GW of renewable energy capacity by 2030.

Under Al Jaber, Abu Dhabi's National Oil Company has invested in carbon capture and green hydrogen projects, and has been investing in nuclear and solar power, as well.

None of these efforts compare to the investments that have been made, under his leadership, in fossil fuel capacity; it's night a day.

But the argument in his favor is that he's a skilled energy world executive, and one that is actually making practical moves to transition to renewables: he's not doing it overnight, but he's actually doing something, and that makes him a credible source for usable ideas as to how other companies can do the same, while also putting someone at the reins who knows how to talk to and deal with energy executives—many of whom couldn't care less about investing in renewables—and that means it's possible he might be able to get them to make these sorts of iterative changes, as well.

He's a choice that doesn't preach to the choir, basically; he's meant to preach to those who aren't yet convinced.

And this will be a COP meeting with a LOT of oil industry higher-ups in attendance; which theoretically at least supports the assertion made by critics that the meeting has been captured, serving as a safe space for fossil fuel industry representatives who want to paint themselves as eco-friendly and thus, empowered to play a role in determining how quickly, or slowly, the transition to renewables occurs.

But the counterpoint to this regulatory capture theory is that having true-believers at the helm—folks who see the oil industry as villains, in many cases—having them running things, hasn't historically served to get these oil companies to do anything except deny deny deny and do what they can to further entrench themselves in their existing energy source and business models; so maybe this, putting one of their own at the front of the room, and one of them who seems to be comfortable keeping a foot in both worlds, maybe that will help shift their collective stance a bit.

Beyond the hubbub over who's hosting the show, there are also a few other interesting things to watch as this year's COP meeting unfolds.

The first is that the US and China recently came to a new agreement to dramatically increase the production of renewable energy, tripling global capacity by 2030 in order to reduce their emissions and displace fossil fuels.

The US and China's emissions, combined, account for something like 38% of the world's total, so anything these countries do in this space is already a big deal.

But the last time the US and China landed on this sort of agreement, back in 2015, the language they used ended up informing the Paris Agreement that was made real at that year's COP meeting—an agreement meant to limit global warming to 1.5 degrees Celsius; so it could be that this new agreement also feeds into a larger, more international and inclusive agreement, once again.

That said, there's a lot of arguably justified concern that this year's COP, like many previous COPs, will be a lot of talk without much or any action.

It's easy to make commitments in a context in which one's words will net one's country a lot of goodwill in the press, but a lot more difficult to actually live up to those commitments—as governments around the world have discovered time and time again with climate-related issues.

Our newest climate data indicate we'll likely fly right by the 1.5 degrees C average warming milestone this decade: much earlier than was previously estimated, and early enough that many experts are saying that goal, keeping temperature increases below that level, which has become a bit of a rallying cry for environmentalists and entities shifting to renewable energy, in recent years, they say it's probably out of reach.

It's still important that we reduce emissions and halt heating as soon as possible, in other words, but the number we've held up as being an aggressive, optimistic goal that is nonetheless achievable might not be realistic, anymore.

That new report is far from the last word on this, but a seeming inability to live up to climate commitments, combined with ever-bettering data-collection and computational resources has left us with a much higher-resolution understanding of how bad the situation is, and a much steeper mountain to climb if we want to accomplish even the relatively less-impressive goals that are still within reach; which makes the whole concept a tougher sell, especially when it seems easier to just throw up one's hands in frustration or disbelief, rather than making the sacrifices that might be necessary to get where we ostensibly need to be.

And that's the second main, interesting thing to be watching here: the impact that better tools and data from those tools, and research done with that better data, will have on these discussions and the overall timber and tone of what people are saying.

These new talks are arriving in the wake of some significant new developments in methane-tracking capabilities: satellites that allow researchers to pinpoint methane emissions hotspots, which in turn tells them which governments are failing to cap emitting wells, or which businesses are, as was the case in Kazakhstan recently, a local mining company allowing methane to flow freely from their infrastructure, causing untold damage that can be relatively inexpensively remedied once the emitting entities know what's happening and if the right kind of pressure is applied, to force their hand—two variables that are increasingly likely to align, appropriately, because of these new tools and techniques.

Satellites capable of providing other sorts of high-resolution data, like where CO2 emissions are the worst, for instance, down to the level of an individual power plant, can also help us figure out where our problems are centralized, but they also allow us to name-and-shame, with receipts, if necessary, to force entities that would otherwise try to deny and sweep this kind of thing under the rug to acknowledge their failure in this regard, making issues that they currently might record as externalities, internal, in turn making it more likely something will be done, rather than these issues being ignored and compounding over time.

And third, one of the many commitments countries—especially wealthy countries—have made over the course of previous COP meetings, is to provide a bunch of money to less-wealthy countries meant to help pay climate-related reparations, and for a transition to renewables, helping them bypass the emissions-related excesses today's wealthy countries have indulged in.

Those already wealthy countries are the source of the vast, vast majority of today's emissions, and the idea is to help not-yet-wealthy countries scale-up and become richer without also creating more emissions as a consequence: a reasonable-sounding ambition, but that kind of pivot is not cheap or easy.

The aid many countries have been told they would get as part of this effort hasn't yet materialized, though—$100 billion was promised by wealthy countries for poorer countries by 2020, to kick things off, to help them move toward renewables, and for losses and damages caused by existing climate change impacts.

And that was meant to be just the initial round of funding that would eventually lead to trillions a year.

Even that initial $100 billion didn't arrive, though, and while you could argue that some other, fairly immediate concerns reared their heads in 2020 that necessitated the rerouting of those funds toward other, pandemic-related issues, this is often touted of an example of just how untrustworthy these wealthier countries and their promises are; even the initial promise was a lie, so why shouldn't these countries that were lied to pursue whichever path is best for them and their immediate fortunes, whatever the consequences, like those wealthier countries were able to do in previous decades and centuries?

Those are big questions, but probably the biggest one is whether those attending COP28 will be able to get an actual commitment to phase-out fossil fuels on the table, and then adopted by those participating.

Many nations, including the most powerful and emitting in the world, have been unwilling to do this, consisting adopting weaker language, making smaller, pseudo-promises, not quite stepping up to the plate on a firm commitment to that kind of transition, instead opting for language that allows wiggle-room and doesn't upset any of the existing fossil fuel-related global systems, including existing energy businesses, but also countries—like the UAE and the US—that are major fossil fuel exporters.

Most analysts don't expect that language to arrive at this meeting, either, and the general consensus is that we'll probably see another relatively, iterative step in the right direction across many metrics at COP28; maybe something based on all that new data with a little more enforcement-related teeth, but likely not a big enough step to close the gap between where we thought we were, and where we now realize, because of the most up-to-date climate findings, we actually are.

Show Notes

https://www.axios.com/2023/11/13/environment-co2-pollution-satellite

https://archive.ph/ODvEK

https://www.theguardian.com/environment/2023/jun/07/uae-oil-firm-cop28-climate-summit-emails-sultan-al-jaber-adnoc

https://archive.ph/Ta5hk

https://www.amnesty.org/en/latest/news/2023/11/uae-concerns-around-authorities-use-of-digital-surveillance-during-cop28/

https://www.energyvoice.com/renewables-energy-transition/380412/masdar-renewable-energy-hydrogen/

https://www.reuters.com/business/environment/global-warming-will-reach-15c-threshold-this-decade-report-2023-11-02/

https://cleantechnica.com/2023/11/18/us-china-agreement-sets-the-tone-for-cop28/

https://www.theguardian.com/environment/2023/nov/17/cop28-host-uae-breaking-its-own-ban-on-routine-gas-flaring-data-shows

https://insideclimatenews.org/news/17112023/harder-to-kick-climate-can-from-cop28/

https://grist.org/international/international-climate-finance-adaptation/

https://www.atlanticcouncil.org/blogs/new-atlanticist/what-the-eu-and-us-want-to-get-done-at-cop28/

https://www.nytimes.com/2023/11/14/climate/us-china-climate-agreement.html

https://www.politico.com/news/2023/11/10/cop28-host-uae-pushes-oil-producers-for-climate-pledges-00126619

https://www.washingtonpost.com/climate-environment/2023/11/15/un-climate-cop26-pledges/?stream=top

https://www.ghgsat.com/en/newsroom/worlds-first-commercial-co2-sensor-in-orbit/

https://www.bloomberg.com/news/articles/2023-11-15/exxon-ceo-says-making-big-oil-villains-harms-net-zero-drive?stream=top#xj4y7vzkg

https://www.politico.eu/article/eu-promises-substantial-climate-damage-funding-pledge/

https://www.bbc.com/news/science-environment-67143989

https://archive.ph/KHWOL

https://www.bloomberg.com/news/features/2023-11-13/gulf-nations-must-overhaul-everything-to-meet-climate-goals?cmpid=BBD111523_GREENDAILY

https://www.semafor.com/article/11/10/2023/the-battle-lines-to-watch-at-cop28

https://www.bloomberg.com/news/articles/2023-10-04/the-bankers-are-back-finance-industry-plans-for-cop28?cmpid=BBD111523_GREENDAILY#xj4y7vzkg

https://unfccc.int/sites/default/files/resource/cma2023_12.pdf

https://www.wri.org/research/state-climate-action-2023

https://www.axios.com/2023/11/20/un-climate-change-emissions-gap?stream=top

https://en.wikipedia.org/wiki/United_Nations_Climate_Change_conference

https://unfccc.int/process-and-meetings/conferences/the-big-picture/what-are-united-nations-climate-change-conferences/how-cops-are-organized-questions-and-answers

https://www.uae-embassy.org/discover-uae/climate-and-energy/uae-energy-diversification

This week we talk about Rubinomics, government spending, and US federal debt.

We also discuss the Government-Household analogy, the House of Representatives, and the looming government shutdown.

Recommended Book: Quantum Supremacy by Michio Kaku

Transcript

Early in November 2023, the credit firm Moody's lowered its outlook on the US government's credit rating from "stable" to "negative," pointing at a huge decline in debt affordability—the government's ability to borrow money cheaply, basically—and an ever-increasing, already gargantuan deficit as its primary justifications for that change.

And those issues are on top of another standoff in the House of Representatives over funding the government, which, if something isn't done, will come to a head on November 17.

A previous agreement struck by the previous House Speaker, Kevin McCarthy, expires on that day, and if a new collection of 12 funding bills, which are what allows the government to pay for things, are not passed by then, the government could be shut down, possibly further diminishing the government's rating, on top of the many other consequences of not providing funding for things like national defense, energy and water development, and the Justice Department.

This new reduction in outlook by Moody's follows a recent downgrade by Fitch back in August, when that ratings firm dropped the US government's rating from AAA to AA+, largely because of all the down-to-the-wire negotiations about funding the government that have roiled Congress over the past few years, and what that kind of tumult does to a government's ability to say for 100% certain that they'll pay their debts and never default; the US has never defaulted on its debt, but the possibility becomes more realistic-seeming each time these politicians fail to provide funding for essential government functions, including, debt-paying.

Fitch also, like Moody's, cited the general diminishment in fiscal circumstances across the government, though, referring to a collection of variables that have been weighing down the state's capacity to acquire cheap debt.

Ratings are one such variable, as each decrease in a nation's credit rating makes debt more expensive, folks and other states buying bonds and treasuries and the like demanding more interest for the same amount of loaned money—which is what those sorts of financial instruments are, at the end of the day.

But beyond reputation, there are also factors like high interest rates, hiked by the Fed in order to tamp-down on inflation, and the accumulated interest payments that must be paid on previous debt taken out by the government to pay its bills.

So in addition to the government suddenly having to pay more interest on all its new debt, it also has to pay more and more interest on its existing debt, and that latter figure is compounding to the point that a lot of folks who are otherwise generally unconcerned about such things, are starting to take what could turn out to be practical notice.

What I'd like to talk about today is Rubinomics, government spending, and why the US federal debt is becoming a political talking point once more.

—

In the context of federal spending, fiscal responsibility refers to the balancing of a state's budget so that its spending is almost always close to, or below its revenue.

So if a government brings in a trillion dollars in revenue, from taxes, for example, and spends a trillion dollars to keep agencies running, infrastructure maintained, and its military up to date, that's a balanced budget.

If that same government were to spend a trillion and a half dollars without increasing tax revenues, though, it would have a deficit of half-a-trillion dollars.

And if it were to spend less than it pulls in, if it were to reduce the social safety net programs it provides or spend less on its military, and thus only spent a half-trillion of the trillion it earns in taxes, that would represent a surplus of a half-trillion dollars.

This is similar, at its most basic, at least, to how an individual might manage their money.

Spend more than you make and you'll tend to go into debt, spend less than you make and you can sock money away or invest it, and spend exactly what you make, and your bills will all be paid without accruing debt.

This comparison, though intuitive in a way, at least for the purposes of defining the outline of how this works, is also quite flawed—and economists have given it a name, potentially to make criticizing it that much easier: they call it the Government-Household analogy.

And this analogy is often-touted by politicians, usually when they want to criticize their opponents for their spending by making it seem like they're less capable and responsible than the average heads of a household; why should we good, hardworking citizens be required to assiduously manage our personal economies, but these freewheeling politicians can't seem to balance a budget of billions or trillions of dollars?

The analogy falls apart, though, when you look at the specifics of a household versus a government.

Governments, after all, can literally print money if they so choose. They also tend to get far favorable terms on debt, can increase their budgets by raising taxes, and, oddly, if you think of a government as a household, different facets of a government can owe other facets money, so part of the debt owed might be owed to itself.

While this analogy is often convincing to voters, then, it's not terribly useful as a model for economists and folks working to actually manage budgets of the scale and with the peculiarities of a government's budget.

All that said, there are pros and cons to every possible approach to government debt, as running a deficit, spending more than is pulled in via taxes, means that a state can invest in more programs and infrastructure, and just like a company taking on debt to invest in more manufacturing capacity or warehouses or restaurant locations, that can mean setting things up for growth in the future: a healthy, happy, secure, well-educated populous will tend to do better than the opposite, so spending money on programs that improve and amplify those sorts of things can lead to more revenue sometime later.

On the other hand, just like any other debt, federal debt tends to be paid back with interest, and that means the government taking on such debt will not just be on the hook to pay back the initial, principle amount they borrowed, but more than that—and possibly, especially if debt accrues for a long while, or accrues during periods of high interest rates, for them specifically, or more globally, they could be on the hook for a lot more than that.

The last time the US government had a balanced budget was in 2001, and it's enjoyed the same for five years total in the past five decades—four of which were the years leading up to and including 2001, the fifth being 1969.

This is such a rare state of affairs, in part, because the general economic consensus, amongst economists in the US, at least, is that federal debt isn't a big deal, that it tends to lead to more benefits than downsides, and that it is therefore prudent to not balance the budget, most of the time, because doing so leads to austerity—severe cuts in vital programs and other investments—and that hobbles the nation and its capacity for growth over the long-haul.

Balancing the budget just to balance the budget, then, isn't really such a good thing, according to this prevailing theory; it's a compelling rallying cry for some folks occupying some spots on the ideological spectrum, traditionally those on the conservative side of things more than the left, but not spending also comes with consequences, and those consequences tend to outweigh the downsides of accruing some amount of debt, year to year.

This mainstream sensibility about debt, though, was subbed-out during that 1998-2001 period, during the Bill Clinton administration, when the Treasury Secretary, Robert Rubin, implemented a policy that became known as Rubinomics, which was defined by an attempt to keep the federal budget balanced as part of a larger effort to control inflation and interest rates—the theory being that this would improve perception of the US economy, which in turn would lead to more investment, local and international, and would allow US economic entities, and thus, US citizens, to flourish.

There's been a fair bit of debate as to whether this theory was proved-out by Ruben's policies.

Yes, the US economy absolutely killed it while Clinton was in office, and yes long-term interest rates on treasuries and bonds dropped, making it less expensive for the government to take on debt when it wanted to borrow money for whatever.

The country's GDP averaged around 4% during that period, inflation maintained a 2.5% rate, which is just north of the 2% rate the Fed prefers, and the US economy saw its longest continuous period of expansion at any point in history.

But, and this is a big but, those variables might have also been tweaked by the so-called "peace dividend" of the late-1990s, which was defined by a post-Cold War drawdown of military activity and thus, military spending around the world during that span of time.

They may also have been influenced by a series of new trade agreements, hands-off monetary policies, and the benefits of new technologies that were finally being exploited for profitable purposes after a long period of investment, like the consumer internet.

So there's a chance that Rubinomics played a role in all that monetary flourishing, but there's also a chance that it was either just one of several influences, or maybe it was mostly just a bystander, or even a downward pressure, on the same, the flourishing primarily or totally the consequence of other variables.

Today, part of the aforementioned drama playing out in the US House of Representatives is being driven by a focus on reducing the federal deficit, the total debt the US owes, which recently hit an all-time record high of something like $33 trillion, which carries a total interest payment, as of 2023, of somewhere between $659 billion and a cold trillion dollars a year, depending on who's numbers and analysis you use.

That interest payment, at that level, has become one of the top expenses, of any expense category, for the government, surpassing things like the cost of all transportation and veteran's benefits payments, and approaching, or surpassing, depending on which figure you use, the cost of Medicare or the Military.

It's primarily, right now at least, the further right members of the House that are demanding substantial cuts to the budget, the Senate mostly keen to keep spending levels where they are, and the majority of House Republicans seem happy to do the same, though Democrats are more likely, on average, to want higher levels of spending nearly across the board, again, right now—who wants what tends to change, at least in the specifics, every decade or so.

And this is such a big issue right now in part because of that ballooning deficit, and in part because there's just a lot to spend on, these days, with military and humanitarian funding for Ukraine and Israel on the table, alongside investments in renewable energy infrastructure, in health care, and in other such—by some estimates at least—foundational elements of the government's various programs and priorities.

Last weekend, reports from within the House indicated that the new house Speaker, Mike Johnson, wants to pass a stopgap funding bill to avoid a government shutdown before the November 17 deadline, and to do so, he wants to break the funding extension into two parts, rather than having Representatives vote on all 12 funding bills all at once.

Each bill would cover different aspects of government funding and would extend spending a little further into the future, keeping spending levels where they are, currently, and providing no new funds to Ukraine or Israel—the former of which is a sticking point for a lot of conservative Representatives, and though this approach is meant to win over enough people from both sides of the aisle to get a stopgap funding bill passed in time to avoid a shutdown, folks across the political spectrum have seemed generally unhappy with it; voting on this could begin as soon as today, and we'll see if people are unhappy in the sense that they didn't get what they want, but they're okay to keep fighting for those things they want while the government stays open, or if they're unhappy in the sense that they'll play chicken with a government shutdown in order to prove their point; for what it's worth, analysts seem pretty mixed on whether this will work or not, at the moment.

This general topic, that of the deficit, is likely to only become a more pressing issue, and thus, a more potent political hot potato, as interest rates, which look likely to stay high for at least another year, increase the debt-load the US government has to tend to, making debt more expensive for the government, and safe investment vehicles like treasuries more lucrative for investors—which can have the knock-on effect of making stocks and similar, riskier investments less appealing, possibly hindering economic investment and development even as the government watches the interest payments balloon as an increasingly major expense on its accounting spreadsheets.

Show Notes

https://www.investopedia.com/ask/answers/042415/what-are-pros-and-cons-operating-balancedbudget.asp

https://edition.cnn.com/2023/11/11/politics/house-speaker-mike-johnson-pitches/index.html

https://archive.ph/iyAwI

https://www.investopedia.com/terms/r/rubinomics.asp

https://www.pewresearch.org/short-reads/2023/02/14/facts-about-the-us-national-debt/

https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/

https://www.nbcnews.com/politics/congress/-ungovernable-house-republicans-nix-votes-two-funding-bills-shutdown-d-rcna124441

https://www.reuters.com/world/us/where-are-12-us-govt-funding-bills-avert-shutdown-2023-11-08/

https://www.washingtonpost.com/business/2023/10/20/interest-debt-payment-treasury/

https://www.tandfonline.com/doi/abs/10.1080/00213624.2007.11507047

https://nbcnews.com/politics/congress/house-republicans-unveil-plan-avert-government-shutdown-week-rcna124629

https://www.reuters.com/world/us/where-are-12-us-govt-funding-bills-avert-shutdown-2023-11-08/

https://www.reuters.com/markets/us/moodys-changes-outlook-united-states-ratings-negative-2023-11-10/

https://www.ft.com/content/226b4ebc-f405-4e03-8b40-44cd9fbb69d0

https://www.reuters.com/markets/us/fitch-cuts-us-governments-aaa-credit-rating-by-one-notch-2023-08-01/

This week we talk about regulatory capture, Open AI, and Biden’s executive order.

We also discuss the UK’s AI safety summit, open source AI models, and flogging fear.

Recommended Book: The Resisters by Gish Jen

Transcript

Regulatory capture refers to the corruption of a regulatory body by entities to which the regulations that body creates and enforces, apply.

So an organization that wants to see less funding for public schools and more for private and home schooling options getting one of their people into a position at the Department of Education, or someone from Goldman Sachs or another, similar financial institution getting shoehorned into a position at the Federal Reserve, could—through some lenses at least, and depending on how many connections those people in those positions have to those other, affiliated, ideological and commercial institutions—could be construed as engaging in regulatory capture, because they're now able to control the levers of regulation that apply to their own business or industry, or their peers, the folks they previously worked with and people to whom they maybe owe favors, or vice versa, and that could lead to regulations that are more favorable to them and their preferred causes, and those of their fellow travelers.

This is in contrast to regulatory bodies that apply limits to such businesses and organizations, figuring out where they might overstep or lock in their own power at the expense of the industry in which they operate, and slowly, over time, plugging loopholes, finding instances of not-quite-illegal misdeeds that nonetheless lead to negative outcomes, and generally being the entity in charge in spaces that might otherwise be dominated by just one or two businesses that can kill off all their competition and make things worse for consumers and workers.

Often, rather than regulatory capture being a matter of one person from a group insinuating themselves into the relevant regulatory body, the regulatory body, itself, will ask representatives from the industry they regulate to help them make law, because, ostensibly at least, those regulatees should know the business better than anyone else, and in helping to create their own constraints—again, ostensibly—they should be more willing to play by the rules, because they helped develop the rules to which they're meant to abide, and probably helped develop rules that they can live with and thrive under; because most regulators aren't trying to kill ambition or innovation or profit, they're just trying to prevent abuses and monopolistic hoarding.

This sort of capture has taken many shapes over the years, and occurred at many scales.

In the late-19th century, for instance, railroad tycoons petitioned the US government for regulation to help them bypass a clutter of state-level regulations that were making it difficult and expensive for them to do business, and in doing so—in asking to be regulated and helping the federal government develop the applicable regulations—they were able to make their own lives easier, while also creating what was effectively a cartel for themselves with the blessing of the government that regulated their power; the industry as it existed when those regulations were signed into law, was basically locked into place, in such a way that no new competitors could practically arise.

Similar efforts have been launched, at times quite successfully, by entities in the energy space, across various aspects of the financial world, and in just about every other industry you can imagine, from motorcyclists' protective clothing to cheerleading competitions to aviation and its many facets—all have been to some degree and at some point allegedly regulatorily captured so that those being regulated to some degree control the regulations under which they operate, and which as a consequence has at times allowed them to create constraints that benefit them and entrench their own power, rather than opening their industry up and increasing competition, safety, and the treatment and benefits afforded to customers and workers, as is generally the intended outcome of these regulations.

What I'd like to talk about today is the burgeoning world of artificial intelligence and why some players in this space are being accused of attempting the time-tested tactic of regulatory capture at a pivotal moment of AI development and deployment.

—

At the tail-end of October, 2023, US President Biden announced that he was signing a fairly expansive executive order on AI: the first of its kind, and reportedly the first step toward still-greater and more concrete regulation.

A poll conducted by the AI Policy Institute suggests that Americans are generally in favor of this sort of regulatory move, weighing in at 68% in favor of the initiative, which is a really solid in-favor number, especially at a moment as politically divided as this one, and most of the companies working in this space—at least at a large enough scale to show up on the map for AI at this point—seem to be in favor of this executive order, as well, with some caveats that I'll get to in a bit.

That indicates the government probably got things pretty close to where they need to be, in terms of folks actually adhering to these rules, though it's important to note that part of why there's such broad acceptance of the tenets of this order is that there aren't any real teeth to these rules: it's largely voluntary stuff, and mostly only applies to the anticipated next generation of AI—the current generation isn't powerful enough to fall under its auspices, in most cases, so AI companies don't need to do much of anything yet to adhere to these standards, and when they eventually do need to do something to remain in accordance with them, it'll mostly be providing reports to government employees so they can keep tabs on developments, including those happening behind close doors, in this space.

Now that is not nothing: at the moment, this industry is essentially a black box as far as would-be regulators are concerned, so simply providing a process by which companies working on advanced AI and AI applications can keep the government informed on their efforts is a big step that raises visibility from 0 to some meaningful level.

It also provides mechanisms through which such entities can get funding from the government, and pathways through which international AI experts can come to the United States with less friction than would be the case for folks without that expertise.

So AI industry entities generally like all this because it's easy for them to work with, is flexible enough not to punish them if they fail in some regard, but it also provides them with more resources, both monetary and human, and sets the US up, in many ways, to maintain its current purported AI dominance well into the future, despite essentially everyone—especially but not exclusively China—investing a whole lot to catch up and surpass the US in the coming years.

Another response to this order, though, and the regulatory infrastructure it creates, was voiced by the founder of Google Brain, Andrew Ng, who has been working on AI systems and applications for a long time, and who basically says that some of the biggest players in AI, today, are playing up the idea that artificial intelligence systems might be dangerous, even to the point of being world-ending, because they hope to create exactly this kind of regulatory framework at this exact moment, because right now they are the kings of the AI ecosystem, and they're hoping to lock that influence in, denying easy access to any future competitors.

This theory is predicated on that concept I mentioned in the intro, regulatory capture, and history is rich with examples of folks in positions of power in various spaces telling their governments to put their industry on lockdown, and making the case for why this is necessary, because they know, in doing so, their position at the top will probably be locked in, because it will become more difficult and expensive and thus, out of reach, for any newer, smaller, not already influential and powerful competitor, to then challenge them moving forward.

One way this might manifest in the AI space, according to Ng, is through the licensing of powerful AI models—essentially saying if you want to use the more powerful AI systems for your product or research, you need to register with the government, and you need to buy access, basically, from one of these government-sanctioned providers. Only then will we allow you to play in this potentially dangerous space with these highest-end AI models.

This, in turn, would substantially reduce innovation, as other entities wouldn't be able to legally evolve their AI in different directions, at least not at a high level, and it would make today's behemoths—the OpenAI's and Meta's of the world—all but invulnerable to future challenges, because their models would be the ones made available to everyone else to use; no one else could compete, not practically, at least.

This would be not-great for smaller, upstart AI companies, but it would be especially detrimental to open source large language models—versions of the most popular, LLM-based AI systems that're open to the public to mess around with and use however they see fit, rather than being controlled and sold by a single company.

These models would be unlikely to have the resources or governing body necessary to step into the position of regulator-approved moderator of potentially dangerous AI systems, and the open source credo doesn't really play well with that kind of setup to begin with, as the idea is that all the code is open and available to take and use and change, so locking it down at all would violate those principles; and this sort of regulatory approach would be all about the lockdown, on fears of bad actors getting their hands on high-end AI systems—fears that have been flogged by entities like OpenAI.

So that collection of fears are potentially fueling the relatively fast-moving regulatory developments related to AI in the US, right now; regulation, by the way, that's typically slower-moving in the US, which is part of why this is so notable.

This is not a US-exclusive concern, though, nor is this executive order the only big, new regulatory effort in this space.

At a summit in the UK just days after the US executive order was announced, AI companies from around the world, and those who govern such entities, met up to discuss the potential national security risks inherent in artificial intelligence tools, and to sign a legally non-binding agreement to let their governments test their newest, most powerful models for risks before they're released to the public.

The US participated in this summit, as well, and a lot of these new rules overlap with each other, as the executive order shares a lot of tenets with the agreement signed at that meeting in the UK—though the EO was US-specific and included non-security elements, as well, and that will be the case for laws and orders passed in the many different countries to which these sorts of global concerns apply, each with their own approach to implementing those more broadly agreed-upon specifics at the national level.

This summit announced the creation of a international panel of experts who will publish an annual report on the state of the art within the AI space, especially as it applies to national security risks, like misinformation and cybersecurity issues, and when questioned about whether the UK should take things a step further, locking some of these ideas and rules into place and making them legal requirements rather than things corporations agree to do but aren't punished for not doing, the Prime Minister, Rishi Sunak said, in essence, that this sort of thing takes time; and that's a sentiment that's been echoed by many other lawmakers and by people within this industry, as well.

We know there need to be stricter and more enforceable regulations in this space, but because of where we are with this collection of technologies and the culture and rules and applications of them, right now, we don't really know what laws would make the most sense, in other words.

No nation wants to tie its own hands in developing increasingly useful and powerful AI tools, and moving too fast on the concrete versions of these sort of agreements could end up doing exactly that; there's no way to know what the best rules and regulations will be, yet, because we're standing at the precipice of what looks like a long journey toward a bunch of new discoveries and applications.

That's why the US executive order is set up the way it is, too: Biden and his advisors don't want to slow down the development in this space within the US, they want to amplify it, while also providing some foundational structure for whatever they decide needs to be built next—but those next-step decisions will be shaped by how these technologies and industries evolve over the next few years.

The US and other countries are also setting up agencies and institutes and all sorts of safety precautions related to this space, but most of them lack substance at this point, and as with the aforementioned regulations, these agency setups are primarily just first draft guide rails, if that, at this point.

Notably, the EU seems to be orienting around somewhat sterner regulations, but they haven't been able to agree on anything concrete quite yet, so despite typically taking the lead on this sort of thing, the US is a little bit ahead of the EU in terms of AI regulation right now—though it's likely that when the EU does finally put something into place, it'll be harder-core than what the US has, currently.

A few analysts in this space have argued that these new regulations—lightweight as they are, both on the global and US level—by definition will hobble innovation because regulations tend to do that: they're opinionated about what's important and what's not, and that then shapes the direction makers in the regulated space will tend go.

There's also a chance that, as I mentioned before, that this set of regulations laid out in this way, will lock the power of incumbent AI companies into place, protecting them from future competitors, and in doing so also killing off a lot of the forces of innovation that would otherwise lead to unpredictable sorts of outcomes.

One big question, then, is how light a touch these initial regulations will actually end up having, how the AI and adjacent industries will reshape themselves to account for these and predicted future regulations, and to what degree open source alternatives—and other third-party alternatives, beyond the current incumbents—will be able to step in and take market share, nudging things in different directions, and potentially either then being incorporated into and shaping those future, more toothy regulations, or halting the deployment of those regulations by showing that the current direction of regulatory development no longer makes sense.

We'll also see how burdensome the testing and other security-related requirements in these initial rules end up being, as there's a chance more attention and resources will shift toward lighter-weight, less technically powerful, but more useful and deployable versions of these current AI tools, which is already something that many entities are experimenting with, because that comes with other benefits, like being able to run AI on devices like a smartphone, without needing to connect, through the internet, to a huge server somewhere.

Refocusing on smaller models could also allow some developers and companies to move a lot faster than their more powerful but plodding and regulatorily hobbled kin, rewiring the industry in their favor, rather than toward those who are currently expected to dominate this space for the foreseeable future.

Show Notes

On the EO

https://www.aijobstracker.com/ai-executive-order

Reactions to EO

https://archive.ph/RdpLh

https://theaipi.org/poll-biden-ai-executive-order-10-30/

https://www.nytimes.com/2023/10/30/us/politics/biden-ai-regulation.html?ref=readtangle.com

https://qz.com/does-anyone-not-like-bidens-new-guidelines-on-ai-1850974346

https://archive.ph/wwRXj

https://www.afr.com/technology/google-brain-founder-says-big-tech-is-lying-about-ai-human-extinction-danger-20231027-p5efnz

https://twitter.com/ylecun/status/1718670073391378694?utm_source=substack&utm_medium=email

https://stratechery.com/2023/attenuating-innovation-ai/

First take on EO

What EO means for openness in AI

Biden’s regulation plans

https://www.reuters.com/technology/eu-lawmakers-face-struggle-reach-agreement-ai-rules-sources-2023-10-23/

https://archive.ph/IwLZu

https://techcrunch.com/2023/11/01/politicians-commit-to-collaborate-to-tackle-ai-safety-us-launches-safety-institute/

https://indianexpress.com/article/explained/explained-sci-tech/on-ai-regulation-the-us-steals-a-march-over-europe-amid-the-uks-showpiece-summit-9015032/

This week we talk about Peronists, Milei, and Argentina’s inflation rate.

We also discuss Justicialism, Bullrich, and military coups.

Recommended Book: Future Starts Here by John Higgs

Transcript

Peronism, sometimes called Justicialism, after the Justicialist party, whose name is derived from the concept of social justice, and which is the main Peronist party in Argentina, has been the dominant political force in the country since the mid-20th century.

The word Peronism comes from the labor secretary-turned-president of Argentina, Juan Perón, who's wife, Eva Perón you might have heard of, but Juan came into that labor secretary position after playing a role in a military coup in 1943, and was then elected president in 1946.

His platform was broadly predicated on new social programs, support for unions, and supporting his wife's efforts to attain rights for migrant workers, among other, adjacent efforts.

In 1955, though, under the Peróns' leadership, the country was experiencing high levels of inflation and other economic issues, alongside political repression from the Peronists—making it difficult for anyone else to step in and take any of their power, basically, despite being ostensibly democratic—so the military overthrew them in 1955, and the party was banned until 1973 when open, non-military-controlled elections were held again; and Perón won that election, returning to the presidency after nearly two decades.

Juan died a year after returning to office, and his widow, his third-wife Isabel, who was also his vice president before he died, stepped in to run the country, but she was overthrown by the military in another coup in 1976.

Argentina was then run by a military dictatorship until 1983, when democracy returned, political parties were able to function again, and from that point forward, Peronist parties have dominated Argentine politics, their candidates holding the presidency for 28 of the 40 years between then and today, despite the very mixed record of Perón and others who have run as Peronists.

And fundamental to that mixed record is the Peronist party's seeming inability to manage Argentina's economy.

The Peronists have always promised a great deal to Argentinian voters, including social benefits, allowing workers to negotiate as unions with their employers, and offering legal protections and the other benefits of citizenship to people and groups that have traditionally been disenfranchised—all of which was has earned them accolades over the years from groups across the political spectrum.

That said, the party and all its offshoots have also been accused of being authoritarian, coasting to power on populist messages and demagoguery, stripping would-be political opponents of their rights and sicing their supporters on them, initiating violence against them, in some cases, and in general creating an ideology that sounds great on paper, but which, when put into practice, is often tainted by the power-hoarding efforts of those in charge; and all these efforts, on top of those other issues, tend to be unsustainable, leaving Argentina in precarious economic situations over and over again.

That economic unsustainability is part of what has made Argentina something of an outlier in South America; despite having all the ingredients of a decently successful, burgeoning state—like its neighbor to the north, Brazil—it somehow, over and over again, has stumbled into economic catastrophe, leaving it drowning in debt, stagnating, suffering from chronic inflation, and generally declining even when its regional peer-nations have enjoyed economic boom-times.

What I'd like to talk about today is Argentina's 2023 presidential election, the people and ideas involved, and what a November run-off might mean for the country's fortunes, moving forward.

—

On October 22, 2023, Argentina held a general election, during which voters cast ballots for most government positions, including provincial governors, all the way up to President.

That election for the top-billing role has been especially closely watched by the international community, as the main contenders leading up to the vote included the current Minister of the Economy from a Peronist party called the Renewal Front, a National Deputy and minor celebrity from Buenos Aries, who was the candidate for the Libertarian Party, and the former Minister of Security running under the banner of a center-right party called Republican Proposal.

In the country's August primaries, the Libertarian candidate, a shock-jock-style economist named Javier Milei, took first place, alarming pretty much everyone in established Argentine politics, and the international economic community, because of his radical and unusual ideas about how economics and the government should work in the country.

But he took first place in those primaries, with the center-right candidate, Patricia Bullrich, taking second, and the Peronist Renewal Front candidate, Sergio Massa, took third place; the first time the candidate from the Peronist party has been relegated to third place in the country's primaries.

And that made the October general election quite the event, as there was reason to believe the two parties that typically vie for government leadership, the authoritarian-left Paronists and the center-right Republican Proposal, might be usurped by this radical outsider who has wild ideas and has been favorably compared to former US President Donald Trump for his outlandish statements and on-camera antics.

As it turned out, though, once the votes were cast—and voting is compulsory in Argentina, for people ages 18 to 70, and citizens ages 16 and 17 are allowed, but not required, to vote—the Peronist candidate took first place with nearly 37% of the votes, the firebrand Milei got almost 30%, and the conservative Bullrich took not quite 24%.

That third-place position means Bullrich will not be able to participate in the runoff election scheduled for November 19, which has been disappointing for many international analysts, as she was thought to be the adult in the room, so to speak, in all things monetary, as her proposed policies have been generally more in line with international standards in countries that don't suffer from the wild levels of inflation and other economic catastrophes Argentina has seen on a near-continuous basis since the mid-20th century.

Instead, the country's voters will choose between the Peronists—under whose party leadership and policies the country has suffered through a half-decade monetary crisis, and a relative outsider who has suggested, among other things, that the government should end as much spending as possible in order to rush to a balanced budget, including killing off all those social programs, that the country's Central Bank should be abolished, and that Argentina should do away with the peso and adopt the US dollar as its official currency.

Milei has also said that he believes abortion should be banned in all cases, including when a women has been raped, that COVID vaccines are scams, as is feminism, that minority groups are trying to take over the country, using what he calls cultural marxism, which is a conspiracy theory held by far-right nationalist groups around the world, that sex education shouldn't be taught in schools, that climate change is a hoax, that anyone who wants to own a gun should be able to get one, and that taxes should never be increased.

None of which is terribly beyond the norm for far-right, at times extreme far-right groups in other nations, but with rare exceptions those groups aren't typically at the center of political discourse, and aren't winning large portions of the total vote—which Milei has done, in part on the back of votes from young people who seem to enjoy his antics and dramatic, sweeping platform.

Many people have reportedly voted for him, though, based on exit polling and other surveys, because the status quo in the country, currently and for a long while, has just been abysmal for the everyday person.

Some estimates suggest that Argentina will tally an inflation rate of about 140% in 2023, which is just staggering if you think about the implications of what that means for the value of a person's income and savings, and what it implies about how people should behave; for comparison, the wealthy world has been flipping out over inflation rates of medium- to high single-digits, and this is many times that, a situation that incentivizes people to immediately spend or convert into other currencies all money they bring in as soon as possible, because it will be worth substantially less tomorrow if they hang onto it.

And while Milei's many and often radical beliefs aren't everyone's cup of tea, the protest vote—voting against the way things are, today, even if the alternative isn't ideal for other reasons—seems to have been strong during those primaries, and only a little less-potent during the general election that triggered this run-off, because no one attracted the 45% of the votes necessary to win outright, and part of why is that instead of just two serious candidates in the race, Milei presented voters with an opportunity to burn it all down, basically, and nearly a third of the voting population took him up on that.

Massa, who isn't exactly a continuity candidate, since he's heading a party he founded to, in his words, "build the Peronism of the 21st century," is still Peronist enough that many people consider him to be nearly an incumbent, as the presidency is currently held by a Judicialist politician, and the two parties share enough of the fundamentals to make them commodity products in the eyes of many voters.

Probably at least in part because of that similar-enough status, Massa was able to pull in a dominant portion of the general election votes; but while Massa has a core body of enthusiastic supporters, people who really believe in what he's trying to do, evolving the Peronist model to make it work better, basically, some people have said they're voting for him because he's not as crazy as Milei, and thus seems less likely to set fire to the government just for the sake of setting fires. Despite the current state of affairs, then, some voters are seeking continuity not because they like what's happening, but because they fear what could happen under a different guiding hand.

Whomever takes the lead and thus, the presidency, will have a raft of issues to contend with, beyond inflation and economics.

The country is set to undergo negotiations with the IMF in November, the same month as the runoff election, and it has seen the worst grain harvest in about 60 years as a consequence of a significant drought—and grain is its main export, so this could nudge the country even closer to default, and make those negotiations with the IMF even more fraught, as foreign reserve accumulation targets it wants to achieve could drift out of reach if those exports falter too badly and it's unable to procure the necessary volume of internationally tradable currencies.

The Economist ran an editorial following the general election, in which it proposed that the outcome, which will see Massa and Milei in a runoff in late-November, is the worst of all possible outcomes, as it suggests that, first, Argentine voters aren't interested in a non-bombastic alternative vision for how the country could be run, as they relegated the center-conservative candidate Bullrich to third place, and thus, she's no longer in the running, and second that it's just astonishingly difficult to bring outsiders into a political system that has been so dominated by Peronists for so long, despite the shortcomings of the Peronist system that have plagued the country's economy for decades.

That, of course, is a economics-focused perspective, which is perhaps fitting for a publication like the Economist, but because of that focus, it fails to consider the obvious benefits, for many average, non-economist people, at least, of having a government that introduces and protects social safety net and human rights-related benefits, even when doing so isn't economically sustainable; you can absolutely argue that it's short-sighted to burn a candle with an insufficient length of wick, but they've managed to do so for a good long while, even if progress in that department has often been more of a shamble than a steady run.

Argentina is looking down the barrel of its sixth recession in a decade, it has had to go through 22 economic bail-out programs since 1956, and it's in debt to the tune of $56 billion to the IMF.

There's no clear way out of that kind of financial pit, especially considering all the other challenges the country also faces now, and will face in the near-future.

It's possible that at some point a politician will step into power who has a sense of how to both address the pervasive and persistent economic issues the country struggles with, and allow citizens to retain their rights, their social safety nets, and other sticking points that have been traditionally vital to voters; but it seems unlikely, failing some kind of major deviation from their proposed platforms, at least, that either of the candidates still in the running in this election will be that politician.

Show Notes

https://www.reuters.com/world/americas/argentinas-massa-milei-battle-woo-9-million-swing-votes-2023-10-24/

https://www.vox.com/world-politics/2023/10/21/23925549/argentina-election-javier-milei-right-youth

https://www.wsj.com/world/americas/argentines-vote-to-choose-president-in-country-hard-hit-by-economic-crisis-956c8f12

https://apnews.com/article/milei-argentina-chainsaw-fed35a37c6137b951e4adada3d866436

https://apnews.com/article/argentina-election-milei-massa-vote-bullrich-cead0d423f2e51444b48770af618940b

https://www.aljazeera.com/news/2023/10/23/argentina-heads-to-runoff-as-economy-minister-leads-far-right-outsider?traffic_source=rss

https://www.nytimes.com/2023/10/23/world/americas/argentina-election-runoff-milei.html

https://archive.ph/OpBmT

https://en.wikipedia.org/wiki/2018%E2%80%93present_Argentine_monetary_crisis

https://en.wikipedia.org/wiki/2023_Argentine_general_election

https://en.wikipedia.org/wiki/2023_Argentine_primary_elections

https://www.bbc.com/news/world-latin-america-67156220

https://www.reuters.com/world/americas/analyst-view-argentina-vote-headed-runoff-between-ruling-peronist-radical-milei-2023-10-23/

https://en.wikipedia.org/wiki/Javier_Milei

https://en.wikipedia.org/wiki/Economy_of_Argentina

https://en.wikipedia.org/wiki/Renewal_Front

https://en.wikipedia.org/wiki/Alberto_Fern%C3%A1ndez

https://www.economist.com/leaders/2023/10/23/argentinas-election-result-is-the-worst-of-all-possible-outcomes

https://www.reuters.com/world/americas/how-argentinas-massa-pulled-off-election-upset-with-tax-cuts-bus-fares-2023-10-23/

https://www.aljazeera.com/news/2023/3/9/argentinas-grain-harvest-suffers-under-worst-drought-in-60-years

https://en.wikipedia.org/wiki/Peronism

https://en.wikipedia.org/wiki/Economic_history_of_Argentina

https://www.aljazeera.com/economy/2023/9/13/inflation-continues-to-climb-in-argentina-as-presidential-election-nears

https://en.wikipedia.org/wiki/2018%E2%80%93present_Argentine_monetary_crisis

This week we talk about fuel efficiency, the California EPA, and Scope 3.

We also discuss the EU’s emission reporting efforts, regulations, and business incentives.

Recommended Book: Undue Hate by Daniel F. Stone

Transcript

The California Air Resources Board, or CARB, is a California government agency that resulted from the 1967 merging of the state's Bureau of Air Sanitation and its Motor Vehicle Pollution Control Board. It's part of California's larger Environmental Protection Agency, and its purpose is to make the air cleaner, healthier, and as free of toxins as possible.

Falling under that remit is the setting of vehicle emissions standards: the minimum miles-per-gallon of fuel efficiency vehicles must offer in order to be sold in the state.

And California is the only state that's allowed to set such standards, as the federal US government is generally the setter of such things—but the Clean Air Act of 1967 allows the state to get permission to set its own standards from the US government, and then as long as the EPA doesn't find their standards arbitrary or broadly inconsistent with the goals of the US's ambitions, and as long as they're more ambitious than the US's standards for such things, they must grant that permission.

The CARB only has 16 total members, two of whom are there just for oversight purposes, so they don't have voting powers, and 12 of the remaining 14 are appointed by the governor of California, and are then confirmed by the state senate.

Each of these members are different sorts of air and pollution experts from different regions across the state, except for two members of the public and one person who serves as the Chair of the group.

This group, though small and relatively humble in terms of the powers granted to them, and resources allotted, has an out of proportion influence because other states can choose to adopt the vehicle fuel standards they set, instead of those set by the US government.

And that's important, because California's fuel standards, since 2009, at least, when they won a court case that confirmed their ability to do this, tend to be more ambitious than those set by the federal EPA; the states that choose to use California's standards are often referred to as CARB states, and there are 16 of them, inclusive of California, as of the 2025 regulatory year.

This capability was temporarily truncated in 2019, when then-President Trump decided to take away California's right to set such standards, and the right to set up other popular—in California and other CARB states—programs, like the ZEV mandate, standing for Zero-Emissions Vehicle mandate, which basically said a certain percentage of fleet vehicles had to be zero-emissions vehicles, the percentage increasing each year—he wanted to take the right to set such things away, saying, in essence, a state government shouldn't be able to do so.

This rule was reverse in mid-2021, which gave California back that power to set standards, and though many carmakers, including Ford, Volkswagen, Honda, and BMW stuck with California's earlier standards, even after they were no longer legally required to do so, because of Trump's actions, seventeen states sued the EPA in 2022, saying, basically, that because California's standards have such a huge impact on how vehicles are developed and sold, car companies adhering to them even when not legally required to do so, because they want to keep selling their cars in California, it unfairly gives them power over the industry that other states don't enjoy.

That lawsuit, Ohio v. EPA, is ongoing, but California's influence in this and many other industries—especially in climate-related spaces—continues for the time being.

What I'd like to talk about today is a recent piece of legislation passed by the California government that could have even bigger and broader implications for corporations across the United States, and around the world.

—

California's Senate Bill 253, also called SB 253, also called the Climate Corporate Data Accountability Act, was signed into law by Governor Gavin Newsom in early October, and its essential function is requiring that large California businesses track, calculate, and disclose their direct and indirect greenhouse gas emissions.

In practice, that means companies that fit the criteria of making more than $1 billion a year will need to report their emissions.

The compulsory reporting of emissions for big businesses is already a pretty big deal, especially in the United States, but this is broadly the case in most countries around the world, too; some few require it, most don't.

And this law will likely affect more than 5,300 companies, which means it will almost immediately have a profound impact on our capacity to understand who's emitting what, in part by goosing the fortunes of companies doing such tracking and computing and reporting, and that, in turn, means we'll have an easier and less-expensive time, in the near-future, getting this sort of information for other purposes, as well—there's not enough business to keep a bunch of emissions-tracking companies in the black right now, but soon, with all these big California businesses needing their services, that will change dramatically.

It won't be tomorrow, though; under this law, the California Air Resources Board has to adopt reporting regulations by January 1, 2025, the impacted companies must started disclosing their Scope 1 and 2 emissions, publicly, in 2026, and in 2027, they must report their Scope 3 emissions, as well.

Scope 1 emissions are those that a company—let's say Apple—emits directly.

So any emissions created by vehicles the company's staff uses while doing business are Scope 1 emissions.

Scope 2 emissions expand the radius of what we're looking at to include the energy produced to power the things they do—for instance, any emissions produced while generating the energy that keeps the lights on at their offices would be Scope 2 emissions; so that's relatively few or zero emissions if they're using solar panels, but substantially more if they're using electricity produced by a gas or coal plant.

Scope 3 emissions are even broader, encompassing not just in-company, direct activity and the production of the energy that fuels that activity, but also the activities conducted by others on their behalf, all the way up and down the supply chain.

So while Apple doesn't directly control the factories where iPhones are made, the emissions from these factories are within their Scope 3 responsibility, wherever those factories happen to be located and who controls them, as is the fuel burned to ship those iPhones from China to their final destinations.

Some of these emissions are relatively easy to track or estimate, others substantially less so.

It becomes a huge undertaking to keep tabs on the shipping fleet activities of other companies that you hire, though, just as it can be tricky to get accurate numbers from entities run by governments where such reporting isn't required, and where the tracking and reporting of such things is consequently uncommon.

Part of why these companies are being given several years of lead-time, then, is to make sure all the California government's i's are dotted and t's are crossed, but it's also to give them the opportunity to figure out how to track and calculate these things, and to give them the ability to do a decent job of it, despite there not being convenient or reliable ways of accomplishing this in many industries and parts of the world, right now.

Much of this is new territory, and this law, among other things, will stimulate the creation of new tracking and calculating and reporting systems and methods.

Many companies, like Apple and Microsoft and Adobe and other tech giants, in particular, already track their emissions, mostly Scope 1 and 2, with a bare few also attempting to keep tabs on their Scope 3 responsibilities, either for ideological reasons or because they want to get ahead of the ball, seeing the writing on the wall about where this is all going and not wanting to be caught flat-footed if and when new laws arrive that require the tracking of such things, with heavy penalties for the failure to do so.

This law levies a penalty of a half-million dollars on companies that fail to report their emissions, but there are no penalties for the volume of the emissions, themselves.

The idea, then, is that this is a first step toward emissions-related fines, but since we can't really fine companies for hardcore emissions when we can't prove they've got them, first we have to make sure there's reliable, accurate tracking practices in place, and all that tracking must be verified by third-party inspectors, which is something this law does require.

But for the time being, this is mostly an exercise in getting everyone used to this new way of doing things, and ensuring the infrastructure for future tracking-related legislation has been installed.

While this is still a pretty new undertaking, in the US and globally, California is not the first entity to pass this sort of legislation.

The European Union has a new law that requires, beginning as soon as January 2024, that large international companies that raise money on European stock exchanges will need to provide data about their emissions, alongside information about their climate risk exposure and their strategies for addressing those emissions and risks.

It's expected that relatively few companies will fall under the auspices of this EU law in 2024, but that by 2025 more than 3,000 US companies will have to follow these guidelines, and more than 50,000 companies, globally, resulting in an expansion of those aforementioned emissions-tracking and assessment businesses, and a lot more companies, globally, taking these sorts of things into consideration, working these sorts of standards into their business models by necessity, and slowly but surely changing their industries and expectations as a consequence.

EU laws have been incredibly influential across a variety of spaces over the past decade or so—their regulations on internet privacy have forced a slew of standards on many global companies, for instance, as it's tricky to differentiate between customers in different parts of the world, online, and it's often just easier to apply the most stringent rules to everyone, rather than trying to splinter the web into EU users and everyone else.

The EU's emissions rules will likely have a similar impact, as businesses don't want to be cut out of the EU market, and in many cases they'll do the math and realize that it's probably worth the investment to just get their emissions reporting systems set up, now, so they don't have to worry about it later when more penalties for this sort of thing are passed in various countries, and so they're not outcompeted by competitors that did make those investments, earlier on.

And California's new standard is likely to be similarly, if not even more impactful, in part because California is a huge economy—it would be one of the top five biggest economies in the world by GDP, if it were a country—and no one wants to be cut out of that market.

In other words: car companies are willing to play ball with California because they want to sell their cars in California without penalty or obstruction, and corporations are likely to play ball with these hefty emissions standards for the same reason: because they want to do business in California, and the investment, though not nothing, is also not as big a deal as having to move elsewhere, or being otherwise hindered in-state in the future; and having similar rules in both California and the EU doubles the incentive for corporations to get their ducks in a row, emissions-tracking-wise.

Worth noting is that both pieces of legislation, in California and the EU, were watered-down a bit before they became law.

California had a similar bill up for debate in 2022, and that one failed to become law, and there was a last-minute effort in the EU by mostly conservative lawmakers to kill off their law before it could be made real; and both pieces of legislation had to be reduced in impact a bit before arrival, to get enough support and avoid the hazards all that opposition represented.

That said, they're both still stronger than anything else that's ever been passed on this subject in a major economy, and they apply to slightly different types of companies, with the EU hitting more and a wider variety of businesses, while California's law encompasses fewer, larger companies.

Also notable is that the US government is attempting to get a similar sort of bill passed, though its version, like its fuel efficiency requirements, will almost certainly be less aggressive than California's version of the same, and while there are efforts to get Scope 3 emissions in there, at least a little, Republicans are threatening to kill the whole thing, even saying they'll subpoena folks from the EPA if they go for anything too strong, by suggesting that the agency is basically collaborating with EU regulators on climate regulations in an illegal fashion.

The leaders of some major US companies, those that aren't impacted by either of these laws, have said they're keen just to get clarity on all this, and would be fine with more regulation, as long as it's consistent and understandable, and doesn't break the bank; they know it's coming, and they'd like to clear the fog of war that's making things complicated for them, right now.

Others have said that any such requirements are nonsense and that the entire exercise is pointless, and that they will thus fight any such regulation to the bitter end.

That latter group is spending more money on lobbyists and such to influence things, so there's a chance the federal US version of this law will be either delayed for a very long time, or will arrive as a wisp of a hint of its former self—but there's also a decent chance these first two, and other, subsequent versions of this type of law passed in other countries, fill in the gaps for a huge number of corporate entities, resulting in similar outcomes to a US federal law, even if that sort of law isn't passed or is so weak that it doesn't really matter, because they, as a pair, force so many companies to make changes if they want to remain competitive, keep their market valuations stable as investors start to take these sort of calculations into consideration, and to ensure they're able to get insurance and maintain decent ratings, as those systems start to adjust to this new reality, as well.

Show Notes

* https://www.nationalgrid.com/stories/energy-explained/what-are-scope-1-2-3-carbon-emissions

* https://archive.ph/exK7V

* https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB253

* https://www.sandiegouniontribune.com/news/california/story/2023-10-07/california-gov-gavin-newsom-signs-law-requiring-big-businesses-to-disclose-emissions

* https://archive.ph/DkXTh

* https://www.greenqueen.com.hk/california-governor-gavin-newsom-signs-landmark-corporate-climate-disclosure-bills/

* https://apnews.com/article/california-climate-change-emissions-disclosure-reporting-companies-123fe15c840b82f960384cbe04f3d955?taid=64ffc13479887800015d66a4

* https://www.ifixit.com/News/81914/california-just-became-the-third-state-to-pass-electronics-right-to-repair

* Mandatory emissions disclosures arrive

* Wins, losses, disasters

* https://apnews.com/article/climate-change-carbon-corporations-damage-pollution-9cb9e7c9feb2a68cb6dc0ae99c5e943a

* https://www.reuters.com/sustainability/sec-chief-says-new-california-law-could-change-baseline-coming-sec-climate-rule-2023-09-27/?stream=top

* https://9to5mac.com/2023/10/11/california-privacy-law/

* https://www.pbs.org/newshour/politics/gov-newsom-signs-new-law-requiring-big-companies-in-california-to-disclose-emissions

* https://www.pbs.org/newshour/nation/analysis-the-potential-global-impact-of-californias-new-corporate-climate-disclosure-laws

* https://www.epa.gov/regulations-emissions-vehicles-and-engines/california-greenhouse-gas-waiver-request

* https://thehill.com/policy/energy-environment/3487755-seventeen-states-sue-epa-for-letting-california-set-vehicle-standards/

* https://climatecasechart.com/case/ohio-v-epa/

* https://en.wikipedia.org/wiki/California_Air_Resources_Board

* https://www.epa.gov/state-and-local-transportation/vehicle-emissions-california-waivers-and-authorizations

This week we talk about the Gaza Strip, the Yom Kippur War, and Egypt.

We also discuss 9/11, charged topics, and sneak-attacks.

Recommended Book: Pinpoint by Greg Milner

Transcript

In 1972, the Egyptian military started building up its offense-capable forces, buying things like MiG fighter jets and T-62 tanks from the Soviet Union, while also gutting its swathe of generals—many of whom attained the rank for political, not experiential reasons—replacing them with more capable versions of the same.

This buildup and swap-out of leadership was being conducted in the lead-up to an invasion of Israel, with the intention of reclaiming territory that Egypt lost during the Six-Day War in 1967: a conflict that saw Egypt, Syria, and Jordan all going to war with Israel, mostly because of the simmering bad relations Israel had had with all its Arab neighbors since the First Arab-Israeli War, which ended in 1949, but the catalyst for that conflict was Egypt threatening to close the Suez Canal and Straits of Tiran to Israeli shipping; something that would be devastating to Israel's economy, and which the Israeli government had previously said would serve as a casus belli—a justification for war—and which was already the casus belli for the aforementioned First Arab-Israeli War.

So the same general ingredients that led to the First Arab-Israeli War in the mid-20th century were in place again in the late-60s: strained relations between Israel and its neighbors, one of those neighbors threatening to clobber the Israeli economy by denying them the use of the Suez Canal and Straits of Tiran for shipping exports, and though the second time around the Egyptian military was pulled back into a defensive position after announcing that ban on Israeli shipping using these water channels, the Israeli military preemptively struck Egyptian forces and launched a ground offensive into Egypt that ended less than a week later.

This conflict left tens of thousands of Arab soldiers from these three countries dead, while Israel only suffered about a thousand fatalities.

The Egyptian, Syrian, and Jordanian governments gave up territory to Israel as part of the ceasefire following this relatively brief war, and the territory Egypt gave up—the Sinai Peninsula and the Gaza Strip, which it had been occupying, directly informed that 1972 buildup of Egyptian forces and recalibration of their military leadership.

Throughout that buildup and booting of generals, though, the Egyptian government tried to get Israel to accept a deal that would involve them giving the Sinai Peninsula back to Egypt in exchange for the Egyptian government formally recognizing Israel's rights as an independent state—something none of its Arab neighbors were willing to do, which perhaps understandably had been an ongoing source of tension in the region.

Everyone, including Israel's most powerful ally, the US, were keen on this agreement, but the Israeli government said no, as the deal wouldn't guarantee their protection from Egypt in the future.

This pissed off a lot of those allies, and the Egyptian government continued to float the idea right up to the moment they attacked Israel in 1973—an attack that was anticipated by essentially everyone, including the Israeli government, because it had become well-understood that the Egyptian government, for reasons both economic and governmental, wouldn't really be able to survive as an independent state without the Sinai territory that was now under Israel's control.

Egypt conducted a bunch of military exercises between May and August of that year, which is why similar exercises, right next to the Suez Canal in late September, were ignored by many in the Israeli establishment as just more exercises, nothing to worry about.

And tens of thousands of the soldiers participating in those exercises were given permission to make their pilgrimage to Mecca a few days before the attack, which reinforced the idea that this was just more posturing on the part of Egypt—and that proved convincing, even though the Israelis received eleven warnings of an impending attack from well-placed sources.

The Israeli government finally scrambled to call up reservists a handful of hours before Egypt moved in, though, and despite being in the position to make a preemptive strike, they were dissuaded from doing so by US leadership, which told them they should do everything they could to avoid being the one to start a new war in the Middle East, also saying that if they did start something, they wouldn't receive any support from the US; the Soviet Union, for their part, made similar efforts to dissuade the Egyptians from starting a new conflict, but to no avail.

What became known, in Israel at least, as the Yom Kippur War, because it began on that holy Jewish holiday, ultimately lasted just shy of three weeks; it saw successful Israeli counterattacks into Syria and Egypt, eventually led to the beginnings of the Israeli-Palestinian peace process, and importantly, led to the 1978 return of the Sinai Peninsula to Egypt as a consequence of the Camp David Accords, which also led to the 1979 Egyptian-Israeli peace treaty—which included Egypt's acknowledgment of Israel as a legitimate nation that should be allowed to exist.

One defining trait of the Yom Kippur War, though, which has remained locked into the collective psyche of the Israeli military establishment in the decades since, was the surprise-attack nature of the conflict, and how Egypt, alongside Syria and Jordan, all hit Israel at a moment in which they weren't fully prepared, and when they had many reasons to believe an attack wouldn't be forthcoming.

What I'd like to talk about today is a more recent attack on Israel that many are comparing to the outset of Yom Kippur war, what we know so far about the conflict and the intentions of those involved, and what might happen next.

—

This is an incredibly fast-moving and emotion-evoking story, so there's a very good chance some component of what I'm about to tell you will have changed before this episode goes live, and that a lot of conversation about it, in personal and broadcast contexts, will be fraught.

But that said, what we seem to know at the moment is this:

Early on the morning of October 7, 2023, Hamas launched a sneak-attack against Israel.

Hamas, which is more formally called the Islamic Resistance Movement, Hamas is an acronym for that name in Arabic, is an organization that governs the Gaza Strip, and has since 2007, when they took control of the region, capturing it, basically, following a five-day conflict with the Palestinian National Liberation Movement, or Fatah—there were elections in the area before that, but since then it's mostly just been Hamas running things, and they have influence in the West Bank—another area within Israel designated for Palestinians, though separated from Gaza by Israeli cities and security infrastructure—as well.

This sneak-attack was, by all indications, almost entirely unexpected and came as a surprise to Israel's military complex, alongside that of allied nations, like the US and European countries; there have been murmurings, as tends to be the case after these sorts of attacks, that some people did know or suspect what was about to happen, it's just that those suspicions were't taken as seriously as they could have, and in retrospect, should have, been.

But this attack caught the Israeli government more or less completely unprepared, and it was fairly complex, involving attacks from the land, the sea, and the air, the latter accomplished using thousands of rockets fired within hours of each other, but also motorized paraglider that allowed fighters to quickly get behind defensive lines, allowing them to secure bases and checkpoints, which in turn allowed more heavily armed commando units to break through the usually well-defended walls and fences guarded by Israeli soldiers, and to then sweep through neighboring areas, killing and capturing as they went.

The killing and capturing was quite brutal: this wasn't a firefight between soldiers, it was largely a wave of well-prepared Hamas fighters rolling through a relatively small number of soldiers, and then butchering, torturing, raping, and kidnapping civilians of all ages.

Current estimates suggest that Hamas militants have killed more than 1,300 people, so far, including people of many different nationalities, but mostly Israeli citizens, and they've wounded several thousand more—primarily during this initial, stealthy attack, which some Israeli higher-ups have called their country's 9/11, because of how out of nowhere it seemed, and how many civilian lives were claimed.

Israel's government officially declared war on Hamas the following day, and have since killed nearly 3,000 people, and wounded at least 9,600 more, according to the Gaza Health Ministry—most of those deaths and injuries the consequence of Israeli counterstrikes, which have until now mostly been in the shape of missiles fired into Gaza.

That "until now" caveat is important, as, as of the day I'm recording this, the day before this episode goes live, the Israeli government has indicated it intends to invade Gaza, beginning in the more-populated northern portion of the Strip, and it reinforced this intention by telling Palestinians in Gaza, via the UN, that they had 24 hours to evacuate to the southern portion of the Strip.

Such an evacuation is easier said than done, though, as more than 1.1 million people live in the area the Israelis were suggesting people should leave, or else, so the Israeli government has gotten pushback from international organizations, as there's no way that many people can safely move that far in that short a period of time, which means Israel risks losing the moral high ground, seeming not to care what happens to everyday Palestinian civilians, despite gesturing at giving them the option of getting out of harm's way before the hammer comes down, Israeli soldiers flooding into the area intent on hunting down Hamas' leadership and collapsing every last bit of their military infrastructure.

And that dynamic, of Israel being just incredibly overpowered compared to Hamas, and using that power against everyday Palestinian civilians, is part of why some outside analysts have suggested the 9/11 comparison is apt; not just because of how the attack happened and who the primary victims were, but because Israel's response, so far at least, has been similar to that of the United States following 9/11: namely, a lot of international support wavers because, back in the day, the US government scrambled to find someone to blame and ended up hurting a lot of innocent people alongside those who were substantially less innocent, and because now, Israel might be readying itself to do the same, everyone feeling really bad for them and what they have suffered, but increasingly wondering if the victim might be setting themselves up to become an even greater victimizer—lashing out as a result of that pain and horror and desperate need to feel some semblance of security and safety again.

As was the case back in 2001, there are many valid perspectives on this, and folks around the world have responded to what's happening in Israel and Gaza in a variety of ways.

Some people, those on what we might call the pro-Israeli side, have argued that Israel was attacked, out of nowhere, a huge number of civilians were killed, other civilians—something like 200 of them—were taken hostage, and this is very not okay, and Israel is well within its rights to hit back at those who hit them first, and to do what they need to do to ensure those who did the initial hitting are not in a position to do so again in the future, even if that means some innocent people are caught in the crossfire.

Others, those on what we might call the pro-Palestine side, have argued that millions of Palestinians have been essentially kept in an open-air prison for almost two decades, and thus it's understandable that they might do whatever they can—or support organizations that will do whatever they can—to hit back at the force, the Israeli government, that came in and took their land, locked them up, and who have trampled their human rights in all sorts of internationally acknowledged ways.

It's also worth noting here that there are plenty of Palestinians who don't like Hamas, and/or who don't agree with what they did in this instance, or with other attacks they've made against other Palestinian groups and Israelis over the years; there are likewise plenty of Israelis who don't agree with the militarization that has occurred under the current, and other recent Israeli administrations.

And it's possible, I think, to acknowledge that it's civilians on both sides that are suffering the most from these attacks, recent and historical, while those at the top often use them as an excuse to continue inciting and justifying violence of all sorts, while reinforcing their own hold and garnering more power for themselves—and can be true of attacks that look a lot like terrorism, and those that are easier to justify in the eyes of the international community.

So there are people on all sides of this, there are uncomfortable discussions happening all around the world, centering on this subject, but the concrete reality on the ground is that Hamas scored a brutal military strike against the much larger and more powerful Israel, Israel is now leveraging that power to hit the residents of the Gaza Strip, including Hamas, hard, and we're all waiting to see how far this will go, and what the broader consequences will be.

Because as horrible as that initial attack was, and as horrible as Israel's counterattack has been, the real fear for many is that this conflict will expand to encompass more players, regional and international.

The most likely entrants would be those that have been involved in previous attacks against Israel, like Egypt and Lebanon and Syria, and while Egypt seems not keen on the idea right now, mostly trying to play peacemaker and trying to keep a flood of hundreds of thousands of Palestinians from fleeing Gaza into their territory, Lebanon has been a bit more fuzzy on the matter: there have been reports of mortar attacks across the border, and some reporters have suggested that the level of attacks are higher than usual, maybe indicating that Hezbollah, which is a major political and military force in Lebanon, could get directly involved in the conflict, seeing it as an opportunity to hit Israel when they're wounded and when their forces and attentions are divided—though it could also be a matter of Hezbollah wanting to pull some of Israel's resources north, which would make their work in Gaza a lot more cumbersome.

That would potentially be doubly-bad, too, because Hezbollah is backed by Iran, which has made no secret of its desire to see Israel wiped off the map, and which is the major force many people on the Israeli side, and on the side of simply not wanting to see the war expand, are worried might decide to get involved, as that would mean a whole nationstate getting its country-scale military involved in the fight, which would substantially complicate things, not to mention seriously raising the potential of a huge body count and a spiral into WWIII.

The Iranian government has said it won't engage militarily with Israel unless Israelis attack them, so that concern would seem to be less pressing at the moment, though it's hard to predict, early on in a conflict, how such statements will age as realities on the ground change, and Iranian officials have made other statements that suggest they're keeping their options open.

There are more distant concerns that the US or Russia or China might get involved, and it seems unlikely that any of those bigger, global players would step in directly at this point, though a huge number of countries have announced military and humanitarian support for Israel, and a few have done the same for the Palestinians, as well; so that's better in some ways, as it reduces the chances of those bigger players coming into direct conflict with each other, but less-good in the sense that it raises the possibility of this turning into a proxy conflict, which could then spin-up into something pretty big, for better and for worse, if things at some point escalate.

Looking further afield, there are concerns within Ukraine that this conflict could pull attention and resources away from Kyiv, redistributing them to Israel, or maybe even just wearing people out on the idea of throwing resources at international conflicts—democratic support for such aid drying up as people start to wonder how much money will be spent and how many of these things we'll see popping up in the coming years.

We're not far enough along to know if that's likely to be the case or not, but it's enough of a concern that Ukrainian President Zelensky has been going out of his way to announce support for Israel, even asking to visit the country, personally, in order to stay front of mind and possibly to build a connection in the eyes of the world between the two conflicts.

One other big development is a pause on efforts by the Israeli and Saudi governments to normalize their relations with each other; this has been a huge, long-term diplomatic effort that could help the Middle East stabilize a bit, and could help the region better interconnect economically and diplomatically, but the Saudi government said they were back-burnering the agreement while Israel is attacking Gaza, and it's anyone's guess as to whether they'll start that back up, and if so, when.

Something else we don't know is Hamas's motive for this attack.

Some speculate that it might be as simple as wanting to hurt a longtime enemy, while others have suggested it might be the lead-in to some other kind of attack: an attritional, weakening blow meant to soften Israel up for an invasion from the north, or an attack from Iran.

Still others contend that it was probably a means of derailing the aforementioned normalizing of relations between Israel and Saudi Arabia—something Hamas would be keen to prevent, and which they may have predicted this sort of attack and Israel's inevitable response to it, would hamstring.

Wilder speculations, for which there's no evidence, as far as I'm aware, suggests that this might be a five-dimensional chess ploy by Russian President Putin, since Putin met with Hamas leaders who traveled to Moscow for the visit in March of 2023, and the group's politburo leader visited Moscow again in early September.

The theory is that Putin wanted to pull international attention and support away from Ukraine, while also punishing Israel for supporting Ukraine, and he did so by either supporting Hamas directly, or via Russia's ally, Iran—and while it has been confirmed that Iran helped Hamas prepare for this attack, there's no confirmation that Russia had anything to do with it; this, and several other pieces of evidence pointing in this direction, so far at least, are all circumstantial.

This gestures at the broader problem right now, though, of trying to understand and contextualize something so horrific, because lacking that deeper understanding, it's difficult to know what will help, what will make things better in a region in which all the variables seem to be set up in such a way that things just get worse and more volatile over time, rather than the opposite, and what will be the consequences of the, as of the day I'm recording this, ongoing counterattack by Israel, and the exploding humanitarian situation that's arising in Gaza as a consequence of that counterattack.

Show Notes

* https://www.reuters.com/world/middle-east/how-israel-was-duped-hamas-planned-devastating-assault-2023-10-08/

* https://twitter.com/IDF/status/1711027540536471994

* https://www.vox.com/world-politics/23910641/israel-hamas-war-gaza-palestine-explainer

* Depressing Take on the Conflict

* Conflict update

* https://www.nytimes.com/news-event/israel-hamas-gaza

* https://www.cbsnews.com/live-updates/israel-hamas-war-gaza-strip/

* https://www.reuters.com/world/middle-east/how-israel-was-duped-hamas-planned-devastating-assault-2023-10-08/

* https://www.axios.com/2023/10/11/zelensky-israel-hamas-war-gaza-visit-netanyahu

* https://www.aljazeera.com/gallery/2023/10/13/palestinians-flee-their-homes-towards-southern-gaza-after-israeli-order

* https://apnews.com/article/israel-palestinians-gaza-hamas-war-refugees-6cf0ff04e513ecec12cf9152656ac1b6

* https://en.wikipedia.org/wiki/Yom_Kippur_War

* https://en.wikipedia.org/wiki/Six-Day_War

* https://en.wikipedia.org/wiki/West_Bank

* https://en.wikipedia.org/wiki/Palestinian_enclaves

* https://en.wikipedia.org/wiki/Palestinian_National_Authority

* https://en.wikipedia.org/wiki/Fatah%E2%80%93Hamas_conflict

* https://en.wikipedia.org/wiki/Hamas

This week we talk about AMD, graphics processing units, and AI.

We also discuss crypto mining, video games, and parallel processing.

Recommended Book: The Story of Art Without Men by Katy Hessel

Transcript

Founded in 1993 by an engineer who previously designed microprocessors for semiconductor company AMD, an engineer from Sun Microsystems, and a graphics chip designer and senior engineer from Sun and IBM, NVIDIA was focused on producing graphics-optimized hardware because of a theory held by those founders that this sort of engineering would allow computers to tackle new sorts of problems that conventional computing architecture wasn't very good at.

They also suspected that the video game industry, which was still pretty nascent, but rapidly growing, this being the early 90s, would become a big deal, and the industry was already running up against hardware problems, computing-wise, both in terms of development, and in terms of allowing users to play games that were graphically complex and immersive.

So they scrounged about $40k between them, started the company, and then fairly quickly were able to attract serious funding from Silicon Valley VCs, initially to the tune of $20 million.

It took them a little while, about half a decade, to get their first real-deal product out the door, but a graphics accelerator chip they release in 1998 did pretty well, and their subsequent product, the GeForce 256, which empowered consumer-grade hardware to do impressive new things, graphically, made their company, and their GeForce line of graphics cards, into an industry standard piece of hardware for gaming purposes.

Graphics cards, those of the dedicated or discrete variety, which basically means it's a separate piece of hardware from the motherboard, the main computer hardware, gives a computer or other device enhanced graphics powers, lending it the ability to process graphical stuff separately, with tech optimized for that purpose, which in turn means you can play games or videos or whatnot that would otherwise be sluggish or low-quality, or in some cases, it allows you to play games and videos that your core system simply wouldn't be capable of handling.

These cards are circuit boards that are installed into a computer's expansion slot, or in some cases attached using a high-speed connection cable.

Many modern video games require dedicated graphics processors of this kind in order to function, or in order to function at a playable speed and resolution; lower-key, simpler games work decently well with the graphics capabilities included in the core hardware, but the AAA-grade, high-end, visually realistic stuff almost always needs this kind of add-on to work, or to work as intended.

And these sorts of add-ons have been around since personal computers have been around, but they really took off on the consumer market in the 1980s, as PCs started to become more visual—the advent of Windows and the Mac made what was previously a green-screen, number and character-heavy interface a lot more colorful and interactive and intuitive for non-programmer users, and as those visual experiences became more complex, the hardware architecture had to evolve to account for that, and often this meant including graphics cards alongside the more standard components.

A huge variety of companies make these sorts of cards, these days, but the majority of modern graphics cards are designed by one of two companies: AMD or Nvidia.

What I'd like to talk about today is the latter, Nvidia, a company that seems to have found itself in the right place at the right time, with the right investments and infrastructure, to take advantage of a new wave of companies and applications that desperately need what it has to offer.

—

Like most tech companies, Nvidia has been slowly but surely expanding its capabilities and competing with other entities in this space by snapping up other businesses that do things it would like to be able to do.

It bought-out the intellectual assets of 3dfx, a fellow graphics card-maker, in late-2000, grabbed several hardware designers in the early 2000s, and then it went about scooping-up a slew of graphics-related software-makers, to the point where the US Justice Department started to get anxious that Nvidia and its main rival, AMD, might be building monopolies for themselves in this still-burgeoning, but increasingly important to the computing and gaming industry, space.

Nvidia was hit hard by lawsuits related to defects in its products in the late 20-aughts, and it invested heavily in producing mobile-focused systems on a chip—holistic, small form-factor microchips that ostensibly include everything device-makers might need to build smartphones or gaming hardware—and even released its own gaming pseudo-console, the Nvidia shield, in the early 20-teens.

The company continued to expand its reach in the gaming space in the mid-to-late-20-teens, while also expanding into the automobile media center industry—a segment of the auto-industry that was becoming increasingly digitized and connected, removing buttons and switches and opting for touchscreen interfaces—and it also expanded into the broader mobile device market, allowing it to build chips for smartphones and tablets.

What they were starting to realize during this period, though—and this is something they began looking into and investing in, in earnest, back in 2007 or so, through the early 20-teens—is that the same approach they used to build graphics cards, basically lashing a bunch of smaller chip cores together, so they all worked in parallel, which allowed them to do a bunch of different stuff, simultaneously, also allowed them to do other things that require a whole lot of parallel functionality—and that's in contrast to building chips with brute strength, but which aren't necessarily capable of doing a bunch of smaller tasks in parallel to each other.

So in addition to being able to show a bunch of complex, resource-intensive graphics on screen, these parallel-processing chip setups could also allow them to, for instance, do complex math, as is required for physics simulations and heavy-duty engineering projects, they could simulate chemical interactions, like pharmaceutical companies need to do, or—and this turned out to be a big, important use-case—they could run the sorts of massive data centers tech giants like Google and Apple and Microsoft were beginning to build all around the world, to crunch all the data being produced and shuffled here and there for their cloud storage and cloud computing architectures.

In the years since, that latter use-case has far surpassed the revenue Nvidia pulls in from its video game-optimized graphics processing units.

And another use-case for these types of chip architectures, that of running AI systems, looks primed to take the revenue crown from even those cloud computing setups.

Nvidia's most recent quarterly report showed that its revenue tied to its data-center offerings more than doubled over the course of just three months, and it's generally expected that this revenue will more than quadruple, year-over-year, and all of this despite a hardware crunch caused by a run on its highest-end products by tech companies wanting to flesh-out their AI-related, number-crunching setups; it hasn't been able to meet the huge surge in demand that has arisen over the past few years, but it's still making major bank.

Part of why Nvidia's hardware is so in demand for these use-cases is that, back in 2006, it released the Compute Unified Device Architecture, or CUDA, which is a programming language that allows users to write applications for GPUs, graphics processing units, rather than conventional computing setups.

This is what allows folks to treat these gobs of parallel-linked graphics processing units like highly capable computers, and it's what allows them to use gaming-optimized hardware for simulating atoms or managing cloud storage systems or mining Bitcoin.

CUDA now has 250 software libraries, which is huge compared to its competitors, and that allows AI developers—a category of people who are enjoying the majority of major tech investment resources at the moment—to perch their software on hardware that can handle the huge processing overhead necessary for these applications to function.

Other companies in this space are making investments in their software offerings, and the aforementioned AMD, which is launching AI-focused hardware, as well, uses open source software for its tech, which has some benefits over Nvidia's largely proprietary libraries.

Individual companies, too, including Amazon, Microsoft, and Google, are all investing in their own, homegrown, alternative hardware and software, in part so they can be less dependent on companies like Nvidia, which has been charging them an arm-and-a-leg for their high-end products, and which, again, has been suffering from supply shortages because of all this new demand.

So these big tech companies don't want to be reliant on Nvidia for their well-being in this space, but they also want to optimize their chips for their individual use-cases they're throwing tons of money at this problem, hoping to liberate themselves from future shortages and dependency issues, and to maybe even build themselves a moat in the AI space in the future, if they can develop hardware and software for their own use that their competition won't be able to match.

And for context, a single system with eight of Nvidia's newest, high-end GPUs for cloud data center purposes can cost upward of $200,000, which is about 40-times the cost of buying a generic server optimized for the same purposes; so this is not a small amount of money, considering how many of those systems these companies require just to function at a base level, but these companies are still willing to pay those prices, and are in fact scrambling to do so, hoping to get their hands on more of these scarce resources, which further underlines why they're hoping to make their own, viable alternatives to these Nvidia offerings, sooner rather than later.

Despite those pressures to move away to another option, though, Nvidia enjoys a substantial advantage in this market, right now, because of the combination of its powerful hardware and the CUDA language library.

That's allow it to rapidly climb the ranks of highest-value global tech companies, recently becoming the first semiconductor company to hit the $1 trillion valuation mark, bypassing Tesla and Meta and Berkshire Hathaway, among many other companies along the way, and something like 92% of AI models are currently written in PyTorch—a machine learning framework that uses the Torch library, and which is currently optimized for use on Nvidia chips because of its cross-compatibility with CUDA; so this advantage is baked-into the industry for the time-being.

That may change at some point, as the folks behind PyTorch are in the process of evolving it to support other GPU platforms, like those run by AMD and Apple.

But at the moment, Nvidia is the simplest default system to work with for the majority of folks working in AI; so they have a bit of a head start, and that head start was in many ways enabled and funded by their success in the video game industry, and then the few years during which they were heavily funded by the crypto-mining industry, all of which provided them the resources they needed to reinforce that moat and build-out their hardware and software so they were able to become the obvious, default choice for AI purposes, as well.

So Nvidia is absolutely killing it right now, their stock having jumped from about $115 a share a year ago to around $460 a share, today, and they're queued up to continue selling out every product they make as fast as they can make them.

But we're entering a period, over the next year or two, during which that dominance will start to be challenged, more AI code transferable to other software and hardware made by other companies, and more of their customers building their own alternatives; so a lot of what's fueling their current success may start to sputter if they aren't able to build some new competitive advantages in this space, sometime very soon, despite their impressive, high-flying, stock-surging, valuation-ballooning performance over these past few years.

Show Notes

* https://www.wsj.com/articles/SB10001424052702304019404577418243311260010

* https://www.wsj.com/articles/SB121358204084776309

* https://www.wsj.com/tech/ai/how-nvidia-got-hugeand-almost-invincible-da74cae1

* https://www.reuters.com/technology/chatgpt-owner-openai-is-exploring-making-its-own-ai-chips-sources-2023-10-06/

* https://www.theinformation.com/articles/microsoft-to-debut-ai-chip-next-month-that-could-cut-nvidia-gpu-costs

* https://en.wikipedia.org/wiki/PyTorch

* https://innovationorigins.com/en/amd-gears-up-to-challenge-nvidias-ai-supremacy/

* https://techcrunch.com/2023/10/07/how-nvidia-became-a-major-player-in-robotics/

* https://en.wikipedia.org/wiki/Graphics_card

* https://en.wikipedia.org/wiki/Nvidia

This week we talk about natural gas, plumes, and satellites.

We also discuss firedamp, AI detection, and emission numbers.

Recommended Book: Excellent Advice for Living: Wisdom I Wish I'd Known Earlier by Kevin Kelly

Transcript

Methane, the name for a chemical made up of one part carbon, four parts hydrogen, is incredibly abundant on earth as it's formed by both geological and biological processes—the former when organic materials are heated up and have massive amounts of pressure applied to them, underground, and the latter through a process called methanogenesis, which basically means certain types of Archaea, a type of life, exhaling methane.

That sort of respiration mostly occurs in organic-breakdown situations, where these microscopic organisms live: so landfills and in the bottom of lakes, where dead stuff falls and is torn apart at a microscopic level by these tiny creatures, but also in the guts of cows and termites and similar beasties, which rely upon their symbiosis with these archaea to help them process the stuff they eat—which they otherwise wouldn't be able to break up and use on their own.

Methane was originally discovered, in the sense that it was noted and quantified, back in the late-18th century, when the Italian physicist and chemist, Alessandro Volta—who among other things also lent his name to an electrical measurement and who is credited with inventing the battery—who was studying marsh gas, marshes being a huge natural source of methane, as it's filled with the sorts of critters that break apart biological materials and release methane as a byproduct.

We've known about this gas for a while, then, and history is filled with examples of different cultures making use of it in relatively simple ways, as an energy source.

And on that note, methane is the primary constituent of what we today call natural gas, though the name methane was only coined by 1866 by a German chemist, August Wilhelm von Hoffman, who derived the term from methanol, which is the flammable, colorless liquid often called wood alcohol which is from whence the gas was first detected and isolated, and before that different cultures referred to it only adjacently, usually because it caused issues they couldn't quite quantify, like, for instance, causing deaths in coal mines—the deathly, gas-pocket-laden air, until methane became an official thing, sometimes referred to as firedamp, which was scary because it could suffocate everyone, or it could explode.

Today, methane, mostly as a constituent of natural gas, is harvested and shuttled all over the world to be burned as a fossil fuel; and similar to other fossil fuels, like oil and coal, that burning releases energy, producing heat, which is used to spin a turbine or heat water in a steam generator.

Natural gas is, in the modern world, generally considered to be superior to other fossil fuel options because it burns relatively cleanly, in terms of pollution, compared to other options, which is nice for folks in the areas where this burning is taking place, but it also releases relatively less CO2 into the atmosphere per unit of heat it produces when it's used for energy, so although it's still very much a fossil fuel and emits greenhouse gases into the atmosphere, it's the best of bad options in many ways, and can be stored and transported in forms that make it quite versatile and even more energy-dense—it can be refined and pressurized into a liquid, for instance, which makes transport substantially easier and each unit of natural gas more useful, but that also allows it to be used as rocket fuel and for similar high-intensity utilities, which is not something that can be said of otherwise comparable options.

What I'd like to talk about today is the role of methane in a world that's shifting toward renewable energy, and why this fossil fuel, which is generally superior to other fossil fuel options, is associated with some unique problems that we're scrambling to solve.

—

Back in June of 2023, scientists announced that they had discovered evidence of a massive methane plume in Kazakhstan.

This plume—the consequence of a leak at a methane prospecting site in this methane-rich country—was later confirmed to be the result of an accident at one of a local energy company's wells at a gas field on June 9, and the company said they were doing what they could to address the issue, and that the purported gas plume was actually just hot clouds of vapor containing minimal amounts of methane; a misidentification, in other words.

The scientists who flagged the plume, though, said this wasn't the case: the satellites they used to identify it contain high spectral resolution imaging hardware, and they don't tend to mistake water vapor for methane—that may have been possible with previous technologies, but these new ones aren't prone to that type of false-positive.

The satellites noted at least nine individual instances of methane plumes erupting from this single site in the month leading up to July 23, alone, and those findings were then confirmed by scientists using similar technologies with the SRON Netherlands Institute for Space Research—and that's alongside the original group's use of two different satellites, the EU's Sentinel-5P and the Italian Space Agency's Prism satellite, the former of which used a spectrometer that was designed specifically to detect methane in this way.

These researchers, using these findings, were able to estimate an emission-rate of somewhere between 35 and 107 metric tons of methane, per hour, into the atmosphere, from this one leak, alone, which has thus caused the same amount of short-term climate damage, in terms of heat amplifying greenhouse effects, as the annual emissions of somewhere between 814,000 and nearly 2.5 million US cars, making it the worst confirmed methane leak from a single source in all of 2023—so far, at least.

And "so far" is doing a lot of work, there, as these sorts of satellites have become increasingly effective tools in researchers' toolkits for identifying these types of leaks, and the software they use to crunch the raw data provided by these increasingly sophisticated detection tools has led to a small revolution in the ability to both notice and pinpoint the source of methane plumes, globally, even in areas where such plumes would have previously gone un-noted, and thus, unaddressed.

And this is important, if you're the sort of person who cares about the amplifying effects of human industry and other endeavors on climate change, because methane, in addition to its explosive volatility and capacity to degrade air quality and mess with ecosystems at ground-level, methane is thought to be responsible for about 30% of the total greenhouse effects we're seeing, today, because—despite only sticking around in the atmosphere for about 7 to 12 years, compared to potentially hundreds of years for CO2—methane is also about 80-times more potent than CO2, in this regard.

So in the short-term, which in this case means the around a decade a given methane particle persists in the atmosphere, it's way, way worse in terms of heat-trapping, compared to CO2.

And though that effect will subside faster than CO2, which can stick around for many generations, rather than a decade or so, we're still churning a lot of methane up there, so this isn't a one-off, temporary thing, it's persistent, the methane that goes away being replaced by more of the same, and those temporary impacts can have long-term repercussions, like melting ice caps, contributing to droughts and floods and extreme storms, and drying up areas that would periodically see irregular wildfires, causing much larger and more potent versions of the same, which in turn churns all the CO2 contained in those trees or peatlands or whatever else that are now burning, into the atmosphere.

So temporary boosts of this magnitude in greenhouse gas effects are not temporary—they can last far past the period in which the gases are actually up there, because of how substantially, and in practical terms, permanently, they change the circumstances on the earth, below.

All of which has led to waves of investment in being able to detect methane leaks, because while many energy companies are incentivized to cap leaky wells, in part because doing so potentially gives them a source of natural gas they can then turn around and sell as fuel, some such entities are more than happy to allow these leaks to just keep leaking, because the cost of identifying and handling leaks is higher than what they can expect to get from capturing and selling that gas, or in some cases because the entities in question are beyond strict regulations that would necessitate they care or act to begin with; there are no consequences for such atmospheric pollution in many parts of the world.

The same is generally true even in more dense and ostensibly regulatorily rich areas like Russia, which is expected to churn by far more CO2-equivalents worth of methane into the atmosphere from leaks and gas burning than any other country—though the US comes in second, followed by Qatar, Iran, Saudi Arabia, and China at a distance sixth.

This is an issue in fairly remote and rural places like Kazakhstan, then, where there's a lot of energy and mining infrastructure, but not so many people, or regulatory bodies with teeth, but also in places like the US, where methane gas leaks are estimated to pump something like 6.5 million metric tons of this gas into the atmosphere every single year, which is roughly the equivalent of the yearly emissions of about 2.5 million US passenger vehicles.

There are means of addressing this issue, and they're generally referred to as "methane abatements," a term that encompasses everything from plugging or tapping those leaks to what cattle are fed—cows emitting a lot of methane because of how they're bred, kept, and fed, and how their microbiota processes that feed.

Fundamental to these abatement options, though, is figuring out where and how to apply them in the first place.

Governments around the world are thus beginning to aggregate the data they have, providing local governance and businesses with the resources they need to start addressing this issue, but the rollout has been slow, in part because the resolution of our view has been quite low, until just recently.

A trio of satellites, including the aforementioned Sentinel 5P, alongside the Sentinel-3 and Sentinel-2, the data they collectively generate paired with machine learning—a type of what we broadly might call artificial intelligence software—has allowed researchers to produce a wealth of automatically produced data on this subject, at a far more granular level than has been possible until now, which in turn has allowed governing bodies to parse that data and identify super-emitters, the worst of the worst in terms of these leaks, while also providing more specific, down to the individual well in an oil facility or in some cases the specific location on a pipeline, where these leaks are occurring; these satellites can also provide estimates as to how much methane is being leaked at a given location, which in turn can help nations, organizations, and corporations prioritize their abatement efforts, accordingly.

We're still in the frontier-stage of this sort of detection and amelioration, but there's more on the way, with satellites optimized for methane detection of this kind launching in the coming years—one of them, the $90 million MethaneSAT, is meant to help global regulators pinpoint hotspots and identify potential underreporting by various entities, which in turn should help put more pressure on those that are intentionally concealing their leaks: something that'll be especially important for holding companies like those in Russia, which are supported in this concealing by their government, to account for their chronically underreported emissions.

These satellites and similar detection tools, though, aren't of much use without efforts to act upon their findings at ground level, just as all the good intentions in the world wouldn't be enough to staunch the upward flow of this gas into the atmosphere, lacking the data required to tell us where to look and what needs to be done.

What we're really looking at, then, is a moment in time, beginning in 2023, but really kicking into high gear in 2024 through 2030, which is when many countries' first-step, big-deal climate commitments come due, a moment in which a confluence of detection and remediation efforts and techniques is finally emerging, and this confluence could allow us to significantly reduce this category of greenhouse gas emissions, which is great, because up to 75% of methane emissions are thought to be solvable in this way.

Such efforts, in turn, could reduce the rise in global temperatures from greenhouse gases by something like 25%, all unto itself; an incredible win, if we can keep the momentum going and incentives aligned as these new resources begin to spin-up and interoperate and give the folks trying to solve this particular problem the tools they need to do so. 

Show Notes

* https://en.wikipedia.org/wiki/Methane

* https://www.epa.gov/gmi/importance-methane

* https://archive.ph/ODvEK

* https://www.iea.org/energy-system/fossil-fuels/methane-abatement

* https://www.iea.org/fuels-and-technologies/methane-abatement

* https://www.esa.int/Applications/Observing_the_Earth/Copernicus/Sentinel-5P/Tropomi

* https://www.bbc.com/news/science-environment-66811312

* https://www.sciencedirect.com/science/article/pii/S0034425723002675

* https://acp.copernicus.org/articles/23/9071/2023/

* https://en.wikipedia.org/wiki/Methane_emissions

* https://www.edf.org/climate/methane-crucial-opportunity-climate-fight

* https://climate.mit.edu/ask-mit/how-much-does-natural-gas-contribute-climate-change-through-co2-emissions-when-fuel-burned

* https://www.theguardian.com/environment/2023/mar/06/revealed-1000-super-emitting-methane-leaks-risk-triggering-climate-tipping-points

* https://climate.nasa.gov/vital-signs/methane/

* https://www.state.gov/publication-of-u-s-government-funded-methane-abatement-handbook-for-policymakers/

* https://www.esa.int/Applications/Observing_the_Earth/Copernicus/Trio_of_Sentinel_satellites_map_methane_super-emitters

* https://www.cpr.org/2023/08/17/methane-satellite-ball-aerospace-boulder/

This week we talk about Unity, Unreal, and Godot.

We also discuss fee structures, user revolts, and indie game-makers.

Recommended Book: How Big Things Get Done by Bent Flyvbjerg and Dan Gardner

Show Notes

* https://www.statista.com/outlook/dmo/digital-media/video-games/worldwide

* https://www.billboard.com/pro/ifpi-global-report-2023-music-business-revenue-market-share/

* https://www.cnbc.com/2022/07/07/video-game-industry-not-recession-proof-sales-set-to-fall-in-2022.html

* https://en.wikipedia.org/wiki/Video_game_industry

* https://www.washingtonpost.com/video-games/2022/08/22/are-video-games-recession-proof-sort-experts-say/

* https://www.gamedeveloper.com/blogs/unity-s-pricing-changes-are-trying-to-solve-too-many-problems-at-once

* https://www.gamedeveloper.com/business/unity-apologizes-to-devs-reveals-updated-runtime-fee-policy

* https://www.theverge.com/2023/9/22/23882768/unity-new-pricing-model-update

* https://www.theverge.com/2023/9/15/23875396/unity-mobile-developers-ad-monetization-tos-changes

* https://www.theverge.com/2023/9/12/23870547/unit-price-change-game-development

* https://www.washingtonpost.com/video-games/2022/08/22/are-video-games-recession-proof-sort-experts-say/

* https://www.investopedia.com/articles/investing/022216/how-microtransactions-are-evolving-economics-gaming.asp

* https://digitalcommons.uri.edu/srhonorsprog/902/

* https://www.investopedia.com/articles/investing/053115/how-video-game-industry-changing.asp

* https://finmodelslab.com/blogs/operating-costs/video-game-company-operating-costs

* https://www.makeuseof.com/ways-the-rising-costs-of-games-affect-the-industry/

* https://codeswholesale.com/blog/5-ways-to-make-money-in-the-gaming-industry/

* https://gamemaker.io/en/blog/cost-of-making-a-game

* https://www.gamedesigning.org/learn/video-game-cost/

* https://www.reuters.com/technology/video-gaming-revenue-grow-26-2023-console-sales-strength-report-2023-08-08/

* https://www.statista.com/outlook/dmo/digital-media/video-games/worldwide

Transcript

Depending on how inclusive you are with your measurements and the specific numbers you're tallying, the global video game market is expected to pull in somewhere between $187.7 and $334 billion in revenue in 2023.

That's somewhere between 2.6% and 13.4% above 2022 numbers—and again, those figures are pretty far apart because different entities keeping tabs on this industry measure different things, some only looking at direct sales of video games and in-game items, while others look at connected sub-industries, like e-gaming events and service jobs that do customer support for game companies.

Whichever end of that spectrum you look at, though, the global video game industry is a behemoth that's growing every year, and its income surpassed that of the music and film industries, combined, years ago, the global film industry expected to bring in around $92.5 billion in 2023, while the global music industry pulls a paltry $26.2 billion.

The video game market is continuing to grow at a fairly stellar pace, compared to other entertainment categories, as well. And while it was shown not to be entirely recession proof, as had been claimed since the financial crisis of 2007 and 2008, when it remained one of the few industries still growing steadily, that growth balking a bit in 2022, when the industry contracted by 1.2%, it grew substantially at the beginning of the COVID-19 pandemic, and has largely maintained that growth since, which has allowed entities operating in this space to claim more and more entertainment-related marketshare, which in turn has shifted the center of gravity in the media world toward video games and away from other leisure options, including things like travel, vacations, and other things you wouldn't typically think of as being competitors of the video game market.

Since video games really took off, hitting the mainstream in the 1980s, and becoming a big deal in the 1990s with the emergence of user-friendly consoles and 3D graphics, the economics of video games have changed substantially.

Once, video game companies sold games that would play on a user's computer, then consoles—which are basically gaming-focused mini-computers that plug into a customer's TV, or can be carried around in their pockets—those quickly became the new default for many gamers, creating a more optimized gaming experience, though also introducing a new cost for game-makers, as they typically need to pay something to the console-maker to use their tech and have their products work on these platforms.

Retail stores became increasingly important to the gaming industry's budgetary concerns around this time, as they would need to take a cut of the sale price of everything they sold, but also have the flexibility to offer deals to their customers, to incentivize purchases and lure them away from other game stores.

And further toward the base of the development stack, as games became more sophisticated and refined, game-makers had to spend more money on high-end hardware, but also higher-end software tools that would allow them to develop the games, polish them so they could compete with other offerings, and in some cases use what's often called "middleware" to serve as a scaffolding for their game projects—software tools that are sometimes referred to as game engines.

All of which has made the process of producing video games a lot more complex and expensive, and as the industry has become more popular, roping-in more and more customers, more and more entities have popped up, intent on making their own games; and that's fed a spiral toward higher-costs and more complex game-making processes, leading to a lot of enrichment in some cases, and quite a few new business models optimized for different platforms and styles of game, but also quite a few bankruptcies and hostile takeovers, even seemingly successful video game companies sometimes falling short or investing too much in a game that flops, leaving them with insufficient resources to keep the lights on or produce their next product.

What I'd like to talk about today is a recent scandal in the video game industry related to one of those middleware, game engine-making companies, and how they're scrambling to make things right after seemingly losing much of their goodwill and credibility essentially overnight.

—

In early September, 2023, a game engine company called Unity announced that it would be changing its pricing structure, effective Jan 1, 2024, and that set off a wave of outrage and anger from its users, most of which are individual game-makers and game-making companies.

To understand why this response was so widespread and vehement, it's helpful to understand a bit about how game engines work and their role in the modern video game industry.

Fundamentally, a game engine is a piece of software that serves as a framework for making video games.

So while it's not a simple "click a button, get a game" sort of setup, it does dramatically reduce the amount of time and effort required to produce a finished game product, giving users—game-developers of all shapes and sizes—level-editors, physics engines, rendering engines that help them more easily produce and edit 2D and 3D graphics, collision detection tools, which basically track and control how things bump up against each other in the game and what happens when they do, alongside more basic media tools like those that allow for the creation and editing of audio, animations, video content, text, and the like.

Modern game engines also help developers keep the size of their games moderated without losing too much quality, they help with memory management on the developers' computers, they can provide artificial intelligence tools and software that helps them build-out multiplayer functionality—it's a really big and powerful toolkit, so the engine that game-makers choose to use is important, and it shapes every other decision they make, and in some ways the final product, too, because of how easy or difficult things are to do within their specific scaffolding.

Unity makes a very popular game engine that was originally released in 2005 as a Mac-specific product, but it has since become multiplatform, allowing developers to make games for all sorts of computers, consoles, mobile devices, and virtual reality interfaces.

It's perhaps most popular in the mobile gaming space, as it's relatively easy to learn compared to other engines, and is fairly lightweight; and because the mobile gaming space has been growing so rapidly, that's meant Unity has become increasing popular and widespread as a tool, which in turn has had the spillover effect of making it more popular on other platforms, as well—because folks making a mobile game might go on to make a Playstation game next, and may decide to stick with the engine they know, or a gaming company might decide to perch all their games upon the same game engine because that's just a lot easier, both in terms of keeping things simple for developers, and in terms of the costs associated with using a bunch of different engine.

The pricing models used by these game engines vary quite a bit from company to company, but typically they make money by selling licenses to use their products; there's generally a free tier for folks learning to use their tools and who make games below a certain threshold of popularity and profit, but at a certain point they'll need to buy the right to use the engine, which generally also comes with a few bonus perks, like better analytics and error reporting options.

This system has worked for everyone for a long time now, and though some developers have balked at the idea of paying Unity and similar companies for their engines, opting for free and open source options like Godot, instead, the larger gaming industry has generally oriented itself around just a few primary, paid options, including the Unreal Engine owned by Epic Games, the maker of Fortnite, among many other offerings, and Unity, which since its release has been used to make more than 750,000 games, alongside non-game offerings, like augmented reality experiences in Microsoft's HoloLens headset, about 90% of Samsung Gear VR content, machine learning programs like Google's TensorFlow, and even film content, like the backgrounds for the 2019 real-life version of The Lion King and engineering blueprints, like those for cars and buildings.

All of which partially explains why so many people were up in arms about the changes Unity announced, seemingly out of nowhere, to their fee structure in early September.

The old Unity model, again, included a free version of Unity for folks operating below a certain threshold—that threshold has been $200,000 for a while now—and after that folks would pay a monthly fee to use the engine, and that fee would typically cost about $400 per year per game, though it varied quite a bit as folks paid per seat—that is, per developer using the engine—and based on the size of the studio and game they're working on.

Unity's newly announced pricing model, in contrast, would keep a free tier, but would remove some of the cheaper payment options, nudging people up to higher yearly rates, while, importantly, also tacking-on a small fee, somewhere between a cent and twenty cents, for each installation of a game that uses the Unity engine, after a threshold has been crossed.

The announcement also said that Unity would use a secret, internal method of determining download numbers, and folks would be on the hook, in some cases, for something closer to $2,000 a year per game, rather than $400-ish, though that number would also vary wildly based on a game's popularity and reach.

This sparked all kinds of concerns, as it was an additional fee on top of existing fees, costing game-makers more over time, and without providing any new value in exchange, and because it was retroactive, so everyone who had ever used Unity for any game would be on the hook for this new payment structure—meaning, all those 750,000 games or so would potentially be new sources of revenue for Unity, but would be burdened with new expenses for the folks who made them.

All sorts of immediate concerns bubbled to the surface of the gaming community, ranging from worries that small, indie devs would be priced out of the market—folks without big bank accounts to draw upon, and who aren't making games that bring in tons of revenue—to concerns related to the concept of putting a price-tag on downloads: would trolls be able to aim hefty fees on developers they don't like by repeatedly installing and uninstalling their games? Would Unity's tracking software be legit? Would it differentiate new downloads from redownloads, or would someone who buys a game, paying for it once, conceivably be a drain on the developer's bank account forever into the future, because they might install it over and over again, over time, on multiple devices?

This outcry was also laden with a heavy sense of betrayal because it seemed to violate Unity's terms of service, and that outcry grew even louder and more betrayal-laden when it became clear, as folks went back to check the end-user license agreement they'd signed, that Unity had quietly, in the preceding months, gone through and edited its EULA to basically allow themselves to do what they had done, even though previous versions said they would never do such a thing.

The first week after this announcement, as the gaming world unified against Unity, the company's stock tumbled around 16.5% from where it was before the announced change, which is the opposite of what the company had hoped to accomplish—industry analysis suggests that the company is trying to shore-up its numbers, never having been profitable, but finding itself especially pressed for cash right now, and hoping to avoid being in the same situation in the future.

What seems to have happened is they tried to do too much at once, essentially grabbing at immediate cash as much as possible, while also trying to scale-up their future prospects by giving themselves a means of benefitting from the success of the games that use their engine; this isn't an entirely novel concept, as their competitor, Unreal, charges a 5% revenue share from game-makers using their engine, but because this was new, out of nowhere, seemed to come about without the folks running Unity checking-in with anyone in the gaming industry to see if it would be alright, and if so to see what sorts of numbers would be tenable for their business models, and because it was retroactively applied using a seemingly pretty skeezy, secretive method of basically giving themselves permission, on the down-low, after swearing up and down they would never do exactly this—all of it went over quite badly, the gaming world revolted against them, near-universally, and this has led to a huge exodus from Unity to other platforms, including the free and open source Godot, which has quite suddenly received a wave of funds from some of the more successful indie game studios out there, and newfound attention from folks who are learning they can relatively simply port their games from Unity to Godot, saving them the future hassle and expense of dealing with the former.

The alternative floated by some gaming studios and individual makers was to simply pull their games from shelves, and this was also threatened, especially in cases where the games are free to play, and thus tend to garner huge numbers of downloads, but don't make money on all the people who install their game—which means their work would become huge weights around their ledgers, losing them money each year, rather than earning them money.

It took more than a week, but the higher-ups at Unity eventually made some noises about having heard the game-making world and feeling bad about releasing this new model without first seeking their input, and they said they would take another stab at things and get back to them.

They then released a new plan, a new pricing model, that seems to have infuriated people substantially less—a revamp that still includes changes, but apparently less catastrophic ones.

The new plan says they'll rely on game-maker-reported numbers to tally downloads, and they've raised the revenue cap at which folks need to upgrade to $200,000, so below that and you can keep the low-tier Unity Personal plan, which is excluded from this new pricing model, and that roughly lines up with where things were before—and any game that makes less than $1 million in 12 months will also be exempt from the additional, per-install fee.

Perhaps most importantly, though, Unity is now saying games made with previous versions of their engine won't be beholden to this new pricing model, nor would they need to abide by the new terms of service, which among other things says their games need to include a big, Made by Unity splash screen at the beginning, and only those that use the new version being released in 2024 would be required to pay based on downloads, though developers can choose to pay a 2.5% revenue share rather than using the per-installation model—and there's some indication that if they report install numbers, the company will choose whichever is the lowest fee for them, automatically, and charge them that.

All of which seems to have cooled things down quite a lot, though a fair bit of damage has already been done to the company's reputation in the industry; many game-makers are still saying they're intending to port their games away as soon as they're able, and that they won't use Unity in the future, because the people in charge of the company have shown their true colors, have shown that they're willing to renege on previous commitments and promises, and burn the goodwill they've earned over the years, in order to pull in more money, to fill the gaps in their balance sheets.

The company is investing in a big PR push to try to win people back and polish their now-tarnished brand, but it could be a while before they manage to do so, if indeed they do manage to do so.

In the meantime, industry alternatives have seen a big boost in attention and use, and there's a chance we could see more entrants in this space, popping up to take advantage of the hole left by Unity's flub, and introducing entirely new business models that may further innovate on what we've already seen, and allow entirely new game-world business models to arise and flourish.