Happy Holidays

This year’s Holiday Top Ten list reflects some of the entertaining ideas I found reading books and scouring the internet for work and fun.??Take your morning coffee or tea, find a comfortable seat, and scroll through the list stopping wherever you find something worth a look.?I hope you enjoy them as much as I have.

Thanks to all my friends who helped make this year more invigorating and enjoyable than one would have expected. And my heartfelt best wishes to everyone for a safe and healthy Holiday Season and New Year.??

1.??????Bretton Woods Redux

The international arrangements that established the post-war economic order were forged from the dire consequences of WWII.?Less evident from our modern vantage point was the heavy-handed politics at play behind the scenes. This drama is brought to life in Benn Steil's book, The Battle for Bretton Woods, which documents how the US wrested control at the formation of the WB/IMF to establish the US dollar as the gold-backed reserve currency.?The protagonists are Harry Dexter White, a communist-sympathizing American Ph.D economist, and John Maynard Keynes, the brilliant Cambridge mathematician without an economics degree.?

At the conclusion of Bretton Woods, Keynes commented: ?“We have perhaps accomplished here in Bretton Woods something more significant that what is embodied in this Final Act. We have shown that a concourse of 44 nations are actually able to work together at a constructive task in amity and unbroken concord. . . . If we can continue in a larger task as we have begun in this limited task, there is hope for the world.” What will history say for our current "concourse" of nations?

This graph shows the 120-year trend in reserve currencies and the transition to a US-dollar dominated world.?What will the next 100 years reveal:?Renminbi, bitcoin?

2. Putting the Science in Political Science

For those with children born after 2000 you probably have heard of Minecraft, the most popular video game in history. (Yes, more popular than Pac Man.)?If you want to learn about it read this Wikipedia page.?My teenage son helped me understand the potential of the game when he shared this?video with me (Thanks Malcolm).?

The video is about the State Experiment which is the closest you can get to a lab experiment in political science.?The game’s designer established a Minecraft world with 4 islands (biomes) that were populated randomly by 200?players and hosted over a 10-day period.?The goal was to see what would result from untethered human interaction. The video (30 minutes) recounts the experiment and its outcome.??If you have time and a willingness to bear some teenage humor, you will find this entertaining and a validation of the proposition that "all politics is local” because, in fact, “all localities are political"

3. ??????COP(t)-in

A lackluster COP26 had some wins but seemed to overemphasize “climate ambition" over climate action.?In the absence of greater political will (see Bretton Woods Redux) I think it is important to ask: what we can do as individuals???That is answered, in part, in the book Regeneration: Ending the Climate Crisis in One Generation by Paul Hawken. ?The book contains a series of short 2-page chapters that are factual, informative and make engaging reading -- something like a cross between National Geographic and the World Earth Catalog for climate knowledge. ?It explains how the planet and its denizens can be saved and demystifies concepts like biochar, geothermal energy, and smart buildings.?The book has a Climate Punch List that is useful for homeowners and has a website to estimate your families carbon impact here.?

This year I have tried to develop a life-style that is carbon-free ?-- or at least less carbon-intensive.? We are reducing our meat consumption by adding vegetarian meals to our diet. (This may dismay some meat exporting countries as reported here). For those who don't want to give up something, then consider adding something to your diet. This article explains the?carbon-reducing benefits of kelp and here a case is made for adding seaweed to your diet.?Also consider donating time to work on the online crowd-sourcing tool Picture Pile which helps scientists answer environmental questions by crowd-sourcing the classification of remote satellite images. ?One recent campaign on forest loss sought to explain the loss of tropical tree-cover using high-resolution imagery to identify the cause of deforestation in 150,000 locations. The tool is described here and here.??

4.???End of Economics:?Part I

A foundational pillar of economic analysis is cost benefit analysis.?What could be simpler than adding up monetary costs and gains to arrive at sensible conclusion on whether a project or policy is worthwhile???This article identifies the proverbial "fly in the soup."?Based on an exhaustive review of over 2,000 public investments the authors find that there is a systematic underestimate of costs and, in most cases, overestimate of benefits.?In the real world this results in cost overruns that are not compensated by benefit overruns. Thus, we have a misallocation of investment.?

What is the source of the bias??Over optimism.?The behavioral tendency of planners to underestimate the costs of scope change, inflation, business cycles, weather etc. and to consistently overrate their ability to mitigate these risks.?They conclude: "With behavioral science we say to public investment planners and managers, “Your biggest risk is you!” Maybe we should all become behavioral economists.

??5. 15-Minute City

The demographic push of population growth and steady rise of urbanization requires building the equivalent of 1 New York city every 30 days for the next 40 years.?Mostly concentrated in Africa.?The choice of how we build these cityscapes impacts society and the environment in numerous ways.?That is why the concept of the 15-Minute City is so appealing.?First adopted in Paris under leadership of Mayor Ann Hidalgo, the Mayor’s "smart city" envoy, Carlos Moreno, describes the concept in this presentation.?If it sounds appealing to live in city were your major needs can be met within a 15-minute walk use this mapping site to discover if you live in or near a 15-minute city. My hometown of Bethesda, Maryland does not qualify.

?6.??????Coin of the Realm

Sometimes an idea that seemed wildly outlandish leads to the realization?"oh, of course that makes sense."?I was reading about Grassroots Economics and the alternative currency being used in Kenya, when I realized that it was a great practical application of blockchain -- something I have written about before.?According to this IMF article Keynes agreed that alternative local currencies are beneficial.?This video describes how the Kenyan currency, Sarafu, works and this paper uses Randomize Control Techniques to show the income benefits from this cash transfer program. The Kenyan currency has reached 41,000 people across 60 villages, with expenditures in 2020 the equivalent of $2.5 million in over 335,000 transactions.

Caveat:?The IMF article notes that an early experiment in Austria used local currency to fund an infrastructure investment that "created jobs and boosted economic activity without stoking inflation. Despite, or because of, strong interest from other localities, and fearing political fragmentation, Austria’s central bank shut down the so-called miracle of W?rgl after two years." Caveat Emptor.

7. Scots and Energy

COP26 in Glasgow, Scotland reminds us that while there are many paths there is a single destination -- net zero.?Some even argue for "absolute zero"?as seen in this impassioned speech by Andrew Forrest?-- a mining executive of the world's 4th largest iron ore company.?

One of the constraints faced on the path is learning how to store energy so that intermittent renewables, like solar and wind, can be used most effectively as explained in this article.?My favorite example of energy storage is in Scotland. ?Combining native frugality with ingenuity, the Cruachan Power Station in the Western Hebrides pumps water uphill to a mountain lake at night (when energy costs less) and drains it through turbines during the day (at peak hours).?This video captures the beauty of the setting and impressive engineering of building a hydroelectric plant inside a mountain.?I have been inside the plant which looks like a setting for a James Bond movie -- you'll see some of that at the end of the clip.

8. ?I’m your Captain

As we look over our shoulders it seems that robots are fast approaching to take our jobs.?While there is some justification for this fear, I think this deserves the verdict of “not proven” based on recent evidence.

For those who fear job-killing technology an editorial written by Artificial Intelligence must have raised their fear level -- in spite of GPT-3's reassuring message that "it" came in peace.?For the more sanguine among us, it was reaffirming that an analysis of the robot author’s artificial neural network here uncovered a human editorial hand that nudged the algorithm with prompts and edits.?On balance it seems this was not a definitive blow to the job security of Op Ed writers.?

The question remains: Can a machine pass the Turing Test??That is, can AI be indistinguishable from a human??One possible litmus test is whether AI can create art.?My colleagues at KPMG predict a film written and created by AI and Computer Generated Images (CGI) will win an Oscar within 20 years. In other art forms, the results are less promising.?For example, machine-written poetry as described in this New Yorker article?does not pass the Turing Test.?Efforts to convert Shakespeare's Sonnets into music using algorithms also has very unmusical results.?

However, there is a program that adopts the approach used by the composer Robert Schuman who wrote a song based on his wife's name -- Clara -- this tool here will convert your name into a few bars of a musical score.??In the final analysis, I think the song that Clara wrote for Robert’s 31st birthday based on a poem, here,?would make any computer jealous of her human skill. ?

9. Thanks to Survival Tips

If you read John Authers Points of Return on Bloomberg Opinion you are familiar with his savvy, daily assessments of financial markets and their animal spirits.?He also offers Survival Tips each day that have been a continuing source of interesting references to books, movies, and music that are welcome during these cabin-fever days of COVID-19.

?In a recent piece, he referenced some Beatle videos, sparked by the recent documentary Let It Be which is based on 150+ hours of film from their final studio sessions.?Here are the links he shared which I pass along: the Beatles documentary?and the song?Get Back.? ?And two versions of Across the Universe -- one of John's most endearing songs.?The original version and the naked version without Phil Spector’s additions.??The lyrics are truly poetic:?"thoughts meander like a restless wind inside a letter box / they tumble blindly as they make their way across the universe".

10. ?Sight Visits

The pandemic has been a "mother of invention" with virtual schooling, zoom office meetings, and new ways to entertain ourselves -- preferably without masks.??For example, museums are now accessible through onscreen virtual tours, both paid and unpaid.?You can enjoy their collections by scrolling through a virtual visit on your iPad or, for a more immersive experience, by using an Oculus 3D viewer. ?

Of course, some sites are still worth seeing in person. The picture is from our visit to Falling Water, the Frank Lloyd Wright-designed home, this Fall with friends (Thanks Kevin, Kristina, Martin, and Ginger).

Here are some of my favorite Virtual Museums and a list of 75 virtual museum tours.?

• ?Louvre?Paris, France (4k version from 2020):?Here
• ?Hermitage: St Petersburg, Russia (way too much to see so here is a sample: The Trompe-L'oeil pictures):?Here
• Getty Museum, Los Angeles, California (street views and image-by-image): Here
• Natural History Museum, Washington, DC:?Here
• Falling Water, Mill Run, Pennsylvania (3D visualization):?Here

Bonus:?Slide show of Van Gogh's art (2-hour screen saver for your TV):?Here

Happy Holidays