THE FOCUSED MIND

According to the American Chemistry Council, the U.S. industry has plans to construct 30 new chemical refineries in the next five years.

One of the less discussed effects of the recently developed abundance of natural gas is the secondary impact on other industries of abundant and affordable fossil fuels, especially of industrial feed stocks such as ethane. With several companies announcing multi-billion dollar refinery projects, the chemical industry and the related plastics industry could be in for a sizable expansion in employment and exports.

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The trucks are huge, measuring as tall as three stories high and carrying loads in excess of 500 metric tons.  They are constantly on the move, kicking up dust at the Rio Tinto mine in Pilbara region of Australia.  The only odd part about this massive movement of earth is the fact that the trucks are driverless; they’re drones, working steadily and continuously without human touch. Rio Tinto’s mine of the future project is underway and includes robots that enter mines first to sample soil and take pictures of support systems to keep humans at a safe distance.  The Swedish company Sandvik has also deployed autonomous heavy equipment and robot vehicles in several mines around the world.

New robots developed in New Zealand have neural networks onboard that can test mine tunnels and, like mine inspectors, can detect flaws and risks.  Normal guidance systems for autonomous vehicles depend on GPS, which is not available underground, and so mine robots use ultrasonic and RF signals to identify where they are.  Sandvik’s robots use constant contact with operators above ground via Wi-Fi signals. Rio Tinto is working on an autonomous rig drill that can bore holes and even assess various rock strata on its own.  Drone-based mining is another example of digital technology completely restructuring an industry.

Taking risky human tasks and getting machines to do them is good for curtailing human injuries, but that switch also reduces the number of jobs that humans can do.  Autonomous trucks are displacing decent-paying jobs, a money-saving efficiency for the company but a troubling reality for the unemployed and the consumer economy that depends on their having salaries to spend in markets and stores.  As machines steadily eat away at the human job market, what industry is going to provide new jobs, or are we headed toward steadily higher unemployment?

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You would have to be actively avoiding the news to have missed hearing about the shootings that took place in Aurora, Colorado last month or outside of the Empire State Building last Friday.

Another attack which made headlines occurred August 5 when Wade Michael Page murdered six congregants and wounded a police officer at a Sikh temple in Wisconsin.   Since Page, who had a 9/11 tattoo, was killed during the attack, it will never be known if the violence was a result of him believing that the Sikh temple was a house of Muslim worship.  However, in addition to the attack in Wisconsin, there have been numerous recent attacks against Muslims that haven’t generated front-page news.  Consider:

–         On August 4, teenagers pelted a mosque in Hayward (CA) with fruit.

–         On August 5, a man vandalized a mosque in North Smithfield (RI).

–         On August 6, a mosque in Joplin (MO) was burned to the ground.

–         On August 7, two women threw pieces of pork at the site of a proposed Islamic center in Ontario (CA).

–         On August 10, a man allegedly shot a pellet rifle at a mosque near Chicago.

–         On August 12, attackers fired paintball guns at a mosque in Oklahoma City.

–         On August 12, a homemade bomb filled with acid was thrown at an Islamic school in Lombard (Ill).

–         On August 15, assailants threw a Molotov cocktail at the home of a Muslim family in Panama City (FL).

While the shootings in Aurora and New York City seem to be related to mental instability and the economic times, what can be made of these incidents, spread across 6 states, in less than two weeks, more than a decade after the September 11 attacks?

In 2000, we wrote a Briefing entitled, “Bombs and Networks” in which we noted a rash of terrorist attacks spread across the globe. Our intelligence suggested that a network of terrorists were working together and sharing information with a common goal.   While we don’t have enough information now to infer the same thing, it does raise several questions:   Are certain Americans feeling comfortable venting their anger at people who think differently than they.  Are more and more angry Americans reading similar online material that might be preaching such hatred.  Or are some of these attacks part of a coordinated set of actions.  If the answer lies with either of the first two questions, then we can expect more of such attacks in the months ahead, but if the answer is with the third question, then even bigger things could be on the horizon.

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In the past year, lawsuits have been filed against:

–         A wind farm in Oregon

–         A solar plant 130 miles outside of San Francisco

–         A solar plant northeast of Los Angeles

–         A 500-megawatt wind project in a remote part of Montana

These lawsuits haven’t been filed by coal, gas or oil companies, but rather by numerous environmental groups.  A recent U.S. Chamber of Commerce report, “Project No Project” found 140 renewable projects that have been delayed or killed by environmental groups.  Additionally, an analysis in the journal “Policy Review” found that every one of the nearly two dozen solar, wind and geothermal projects under review in the Southwest desert faces “varying degrees of opposition from environmental groups.”  The common reason for the lawsuits –  endangered animals.

The environmental groups are definitely anti-coal and most are anti-gas.  They are pro-solar and pro-wind, but yet they are so concerned with endangered animals (not judging) that they choose to shut down these potential alternative sources.

With the abundance of U.S. gas keeping prices for that energy source low, and Chinese subsidies making profitability a challenge for U.S. solar and wind companies, what will become of the U.S. clean energy industry if it can’t even get the environmental groups on the same page?

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Historians have often wondered whether any U.S. President but a Republican like Richard Nixon could have ever been able to open official relations with China without facing a huge backlash at home.  Similarly, they have wondered whether any U.S. President but a Democrat like Bill Clinton could have ever signed a bill seriously reforming federal welfare laws without facing an avalanche of criticism.  We could be at the beginning of another one of those unique moments.

The U.S. military is challenging the National Rifle Association (NRA) to pull back its support for a law it managed to get past Congress that prohibits professionals from discussing whether or not an individual owns or have has access to a gun at home.  The Pentagon, by its own words, is facing an “epidemic” of soldier suicides – 206 troops so far this year – and it would like to be more aggressive in removing the suicide’s weapon of choice – a gun – from the surroundings of individual soldiers who an officer thinks could be at risk.  The new law prevents officers from asking a soldier if he or she has a gun at home that does not belong to the military.

U.S. military commanders are expressing frustration over their dealings with the NRA, and that has actually caused some backpedaling at the NRA.  Given the recent series of mass shootings among citizens, this first direct challenge to the NRA’s seeming invincibility should be interesting to follow. Pentagon commanders could pull off another of those unique historic events:  forcing change where others could not.

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J.C. Penney CEO Ron Johnson has outlined his plans to make the retailer a “mall within a mall,” including in-store shops and a central “town square.”  In August, the company introduced free haircuts for kids for the back-to-school period. In the Levi’s shop denim bar, J.C. Penney has added iPads.   Store traffic in the first 10 days of the back-to-school season declined much less than in the first-half while sales were about 2 percent better than the spring.

If the company starts and ends with back-to-school haircuts and jean store iPads, the strategy won’t amount to much, but Johnson may be onto something. As we have recently written, consumers are now valuing experiences above all else, and if J.C. Penney is able to transform itself from a retailer to a provider of experiences, then they will be on the path to success.

What kind of experience will work is, of course, the critical question.  In the past, shopping, itelf, was the experience, but online capabilities have undermined the shopping experience and made it cumbersome…and often more expensive.  Various apps that provide “check in” can appeal to some and real-world games have had some appeal, but they are not likely to last.  Restaurants have learned that experience is not just ambience but is a focus on the food, with the biggest successful experiences coming to those restaurants that focus on the local-foods, farm-to-table model.  These feature locally grown produce from named farms and offer clientele the opportunity to visit the farms and participate in food and wine tasting related to the local-food experience.

Retailers might need to think through the restaurant example to find the kinds of experiences that physical retailers can use — selling internationally produced goods that look like those on sale everywhere else could become a market loser.

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A legal battle between the FDA and dismissed employees is making its way through the courts and various government bodies. The FDA admitted to monitoring every keystroke made by five employees and to capturing all the data stored on their computers and USB sticks and to monitoring all e-mails sent and received on their computers whether using government or personal accounts. The software also took screenshots of their computer monitors every five seconds.  The captured information included messages sent to the government’s Office of Special Counsel, which investigates whistle-blower complaints and is meant to protect whistle-blowers from retaliation.

While this case (the dismissed scientists are suing the FDA) is complicated, it does raise increasingly prevalent question regarding the rights of free speech and association, guaranteed under the fourth amendment. The NSA data center now going up in the deserts of Utah extends the reach of the government’s surveillance operations. Watergate was surely for amateurs.

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The Diagnostic and Statistical Manual of Mental Disorders, generally accepted as the professional authority on mental illnesses, will include “Internet use disorder” in its appendix next year.  Such a position means that scientists believe there is a concern that deserves additional research before deeming it a condition.  “It is [a] basic cultural recognition,” explains psychologist Kelly McGonigal, “that people have a pathological relationship with their devices.  People feel not just addicted, but trapped.”

This reassessment of how humans are relating to devices that connect them to the Internet comes at a time when the equities market has turned away from Facebook stock. Even the director of the executive offices at Facebook is encouraging people to turn off their screens.  People, he has noted, “need to notice the effect that time online has on your performance and relationships.” Reactions are surfacing elsewhere. For instance, the football coach at Florida State University now requires that all players disconnect from Twitter for the entire season. “It’s a distraction,” he observed.

In essence, society seems to be entering an era in which all things Internet are undergoing a revaluation.  “We’re done with this honeymoon phase,” explains Soren Gordhamer, who in 2010 started organizing an annual conference called Wisdom 2.0, which encourages the pursuit of balance in the digital age. “And now we’re in this phase that says, ‘Wow, what have we done?’”

We expect the Internet and entities connected to it will increasingly come under scrutiny, as digital technology joins the wide-ranging reassessment process we have called “Rethinking Everything.”

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Personal,  a website that launched last November, encourages members to upload information (ranging from the trivial to the sensitive, including items such as student loan records, medical prescriptions and retirement accounts) into a “vault” and then grant access to other people or companies as they choose.  Later this year, Personal plans to add a marketplace where people will be able to sell access to their information.  An organization call the Personal Data Ecosystem Consortium formed in 2010 to encourage similar efforts and now has 30 members.

We’ve written in the past that individuals are willing to give up their information, or at least look past privacy concerns, if they were getting something in return, and companies such as Personal would appear to be well positioned to take advantage of that perspective.

However, as we have discussed recently in a context we call the Data Arms Race, companies are now swimming in information, and many have successfully gained valuable consumer data without paying anything to the consumer.

Additionally, as cyber-criminals well know, something as seemingly valuable as a credit-card number now sells for only a few cents on the black market because so many have been stolen that the market for them has collapsed.  That is, information is easy to get.

It would appear to us that while companies value data more than ever, they likely won’t pay the consumer much for it.

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Two thousand former professional football players recently consolidated their 80 separate lawsuits into one mega action against the NFL, charging the league knew of the effects of concussions in the game, kept the information private and did nothing to protect players.

Some outside observers are suggesting an analogy between this suit and early suits against the tobacco industry, suits that also claimed the industry knew of damage their products caused but chose to do nothing.  Last year, Sunday Night Football outperformed American Idol to become the country’s most watched television show of the year.  If this lawsuit brings results, what will advertisers and even the networks do to avoid being seen as contributors to the damage?  General Motors has already pulled out of the Super Bowl because the cost was too high.  What kind of impact could this lawsuit have?

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