Sex with robots?

David Levy, a researcher of artificial intelligence and apparent master of the titillating title, has recently published a book called, Love and Sex with Robots in which he claims that by 2050, humans will have robots as companions, both personal and sexual. PC World (and many othes) has picked up on the story and got a coveted interview with the robot prognosticator.

“By mid-century, I don’t think the difference between robots and humans will be any more than the difference between people who live in Maine and people who live in the bayou of Louisiana,” he noted. “People will be surprised to know that robots will have emotions like ours and they’ll be sensitive to our emotions and needs.”

But what about the robot sex, doc?

Yes, Levy was quick to say that humans will have sexual relationships with robots, perhaps within five years — sooner than most might think.

Good to know. Dr Levy is 62 years old — a fairly convenient age to start making predicitions for 43 years into the future. Keep up the good work.

This forecast, though, reminds me of an infamous debate I once had over (1) whether it would ever be possible and (2) if it would ever be considered morally allowable to have sex with a hologram. On (1), I will defer to the nanotechnologists and the  hologrosophers. On (2), I will defer to my significant other. As for Dr. Levy, he has the following to offer:

 If your predictions about the technology come true, will you be having sex with robots?

I would certainly want to try one just out of curiosity. I don’t believe that I would want to keep one for regular interactions because I’m happily married and don’t feel the need for one.

And would your wife accept that?

I wouldn’t feel like I was cheating on her. We haven’t discussed this because it’s hypothetical, but I think she would just perceive it as another form of masturbation.

Would you mind if she tried one?

No, no. Why not?

Quote of the day

This is such a great one, I had to include it.

“Words ought to be a little wild for they are the assault of thought on the unthinking.”

– John Maynard Keynes, quoted in the London Independent and cited in The Week

Wind power in Malawi

It’s hard not to be excited by this recent story of William Kamkwamba, a Malawian who took the initiative to electrify his family’s home himself, using wind power. Why?

“I was thinking about electricity,” says Mr. Kamkwamba, explaining how he got hooked on wind. “I was thinking about what I’d like to have at home, and I was thinking, ‘What can I do?’ “

The story is simple, but I found the article missing a few critical observations. Here is the basic outline:

Mr. Kamkwamba’s wind obsession started six years ago. He wasn’t going to school anymore because his family couldn’t afford the $80-a-year tuition.

When he wasn’t helping his family farm groundnuts and soybeans, he was reading. He stumbled onto a photograph of a windmill in a text donated to the local library and started to build one himself. The project seemed a waste of time to his parents and the rest of Masitala.

“At first, we were laughing at him,” says Agnes Kamkwamba, his mother. “We thought he was doing something useless.”

The laughter ended when he hooked up his windmill to a thin copper wire, a car battery and a light bulb for each room of the family’s main house.

The family soon started enjoying the trappings of modern life: a radio and, more recently, a TV. They no longer have to buy paraffin for lantern light. Two of Mr. Kamkwamba’s six sisters stay up late studying for school.

“Our lives are much happier now,” Mrs. Kamkwamba says.

A few points to note. First, he had time to read. Other members of his family were able to work productively and therefore probably are not infected with the HIV virus. Second, he had a good idea, based on his reading and problem-solving. He was able to consider making an investment of time and energy in a project that would deliver substantial benefits in the future. I take this to mean that he is not starving. Third, he didn’t ask anyone for a grant to build his windmill, he just did it. He didn’t even think that USAID might be interested in funding such a project (I bet they would).

Feel free to ignore the story and just watch the video.

Thanks, Dad.

If you’re disgusted with our choices for President, be thankful you’re not South African

For those who think that Obama is too inexperienced, Hillary is a Machiavellian power-monger, Romney is a flip-flopper, Giuliana is unstable, and McCain is too old, take a look at the choices offered to South African voters. The Economist recently highlighted the tragic state of South African domestic politics as they ramp up to next year’s presidential election. The process itself is as flawed as the electoral college — the African National Congress, the country’s ruling party since the end of apartheid in 1994 and a virtual certainy to win every election, decides the presidential nominee, and hence, the future president, in a closed meeting of its members.

Turn to the candidates. On the one hand, Thabo Mbeki has been a steady hand at the helm of the economy, but his secretive, clique-ish management techniques have been off-putting to many. Moreover, he may be trying to change the constitution to enable him to serve a third term (the ANC can do this because they have a two-thirds majority). His approach to diplomacy with Zimbabwe has been woeful, and his approach to South Africa’s AIDS crisis has been, well, bizaare (garlic, anyone?). On the other hand, we have Jacob Zuma. Zuma was acquitted of raping an HIV-positive woman a few years ago, though it emerged during the trial that he did have sex with her. Don’t worry — he took a shower afterwards to prevent himself from catching the virus. Zuma has campaigned without actually enumerating his economic policies, though his support from trade unions is worrying, as South Africa cannot risk veering off to the left (the economy needs to grow by 6+% per year to help reduce its exceptionally high unemployment). Moreover, he has already (as vice president) allegedly conducted several shady, back-office arms deals and possibly taken bribes for influence.

Should South Africans amend the constitution to enable a technically competent, though scarily authoritarian to stay in power, or should they elect an uneducated populist with a questionable moral code? Hard choices indeed. I’d much rather be a voter in Iowa.

Tax the Tall – Part II

More on the proposal by Greg Mankiw to tax the tall, which seems reasonable only when compared with our arcane, loophole-ridden tax system. I discussed this earlier, and Overcoming Bias has recently highlighted the irrational outcry against Mankiw as a result of the paper. Listen, if it increases efficiency and still manages to be mildly progressive, it’s hard no to support it. Does anyone like the AMT?

Smart Grids — How long will it take?

I feel like this has been coming for several years now, but with $100 oil and all the hub-bub about renewable energy, it surprises me that we don’t see more press coverage — and more new business ventures — focused on energy efficiency. Forbes characterizes the problem well, and discusses some of the incredibly innovative (and seemingly easy-to-implement) solutions that companies are developing.

First, the state of the current grid is, well, dismal. (Kind of reminds me of hospitals, but that’s a fish for another day).

One of the biggest and oldest networks around, the U.S. electric grid seems hopelessly stuck between the 19th and 21st centuries. It’s broken up for historical and regulatory reasons into 8 regional transmission systems and some 130 smaller “control areas.” While many systems are computerized, grid operators at the higher levels still communicate largely by phone and fax. Hundreds of thousands of switches and circuit breakers must be operated manually, and the main transmission lines have little instrumentation to monitor the second-by-second flow of electricity from unpredictable new sources like windmills. “If Thomas Edison came back to life, he’d recognize our electric utility system immediately–and that’s not a good thing,” says Jesse Berst, publisher of Smartgridnews.com, in Redmond, Wash.

Each year U.S. electric utilities waste tens of billions of cubic feet of natural gas on “spinning reserves,” for example, generators that are running below top efficiency so they can supply electricity on a moment’s notice. From 5% to 20% of capacity is in reserve at any given time.

Why explore for oil or natural gas when you get more juice from what’s already out there? Here’s how we might start to fix the problem.

In a yearlong trial run that ended in the spring, 200 or so homes on Washington’s Olympic Peninsula engaged in a daily bidding war for electricity. It was a sort of robotic Ebay auction in which the thermostat in one house, say, bid against the clothes dryer in another for scarce electrons. The loser would turn off and wait for prices to drop before jumping back onto the grid. Engineers at the federally funded Pacific Northwest National Laboratory showed that by equipping appliances and thermostats with a few cheap microchips and Internet connections, they could cut peak demand by as much as 50%. That’s a big number, because 8% to 12% of peak demand for power capacity comes during the busiest 1% of hours. Most of the extra supply comes from inefficient gas-turbine generators.

Such an experiment would have been sci-fi a few years ago. But ubiquitous silicon and broadband have suddenly made such second-by-second tinkering with demand possible, and the idea of upgrading the century-old electric grid to make it more efficient isn’t so crazy anymore.

CenterPoint Energy of Houston, for example, plans to install 2 million Internet-capable electric meters over the next five years. The utility likes the $120 devices: They eliminate the need for meter readers and contain wireless chips that communicate with Internet-enabled appliances in the home, letting consumers use a simple Web-based program, say, to raise the air-conditioning thermostat when electricity prices rise or turn on the dishwasher in the middle of the night when prices are low. “We’re on the threshold of being able to digitize the system,” says Thomas Standish, the head of regulated operations at CenterPoint. The grid “is one of the last things that can be completely transformed by this technology.”

This is an area desperate for smart solutions. Several entrepreneurs will make a ton of money — I hope I discover them before you do.

The evidence on Teach for America

The Economist weighs the debate on the effectiveness of teachers who are part of the Teach for America program. For anyone remotely familiar with our public education system, it’s hard not to support both the mission and the logic behind Teach for America.

Only about half of Americans growing up in poverty complete high school, and those who do reach only an eighth-grade standard. In an effort to solve that problem, Teach for America (TFA) recruits top college graduates—usually people without teaching qualifications or experience—and asks them to spend two years teaching some of the nation’s poorest children. “We need fundamental systemic change and we believe our people can help be a force for that,” says Wendy Kopp, TFA’s founder and CEO.

There are arguments to be made on both sides. On the one hand, many factors other than teacher quality drive poor student performance, including home life issues and lack of parental involvement. And TFA’s teachers typically only stick around for their minimum two-year commitment. On the other hand, some studies have shown that students taught by TFA teachers tend to perform better on mathematics exams than a randomly selected sample of classmates tought by traditionally certified teachers. And TFA certainly creates an entire segment of future leaders who understand the challenge of public education firsthand.

However, the crux of the debate goes beyond TFA’s role and purported effectiveness. The Economist summarizes it nicely — and I’d like to see more folks summarize the debate over education in the following terms.

Ultimately, TFA isn’t meant to solve the teacher-quality crisis or end teacher shortages or even to create lifelong teachers. It hopes to improve the public education system by convincing young leaders to teach. Critics say the model is wrong, and that the problem lies with parents or pupils or funding, not the teachers. But Michael Podgursky, an economist, says schools can’t use home life as an excuse. Andy Rotherham, a former Clinton administration official who now serves on the Virginia Board of Education, is confident TFA will ultimately succeed. “Public education in the United States is…being de-regulated, and that never happens without a fight. What it really boils down to is producer interest versus consumer interest. In the sweep of American history it may take a while, but the consumers ultimately win.”

Consumers of education need to assert their demands more vocally in the marketplace — here’s hoping Teach for America helps them do that.

Can Greed Save Africa?

A must-read article for development and emerging market finance folks like myself. On the one hand, I think it’s absolutely fantastic that this issue and the broader debate it represents (what is the best way to get Africa out of its poverty trap?) is on the cover of BusinessWeek. On the other hand, like the DotCom bubble and the infamous 1979 article proclaiming the “Death of Stocks” (just before one of the best bull markets in history), I worry that when investing in Africa appears on the cover of Newsweek, the market for “frontier” investing may have topped out. Well, here’s hoping it’s the former, rather than the latter.

Regardless, the article highlights many of the positive benefits of private investment in emerging markets.

Masoud Alikhani is no moral crusader; he thinks the “We Are the World” movement of the 1980s, which sought donations to end African hunger, “made beggars of whole nations.” The burly 66-year-old is among the new wave of investors at the tenuous nexus of venture capital and agribusiness in Africa. Five months ago he pitched a large hedge fund in New York on the merits of ESV Biofuels, as his company is called. The fund’s partners agreed to take a tour of the facility in January. “We are capitalists and opportunists,” says Alikhani. “We are doing this to make money. That’s the only way to help.”

Already, ESV has become the province’s biggest private employer, with a staff of 620. Locals who hadn’t earned money in years are making from $60 a month to as much as $2,000 for managers. “When we started, we told people it is a startup, a cash-eating animal,” says Said Alikhani. “The faster we begin production, the sooner the benefits come to all.”

Inhassune’s revival is already under way. Mosquito control, power lines, and potable water have quickly arisen from a barren stretch of bush. “I’d be the last person in the history books to go down as a philanthropist,” says Renier van Rooyen, ESV’s South African on-site manager. “But you cannot run a business when your workers are out with malaria or sick from dirty water.” On a warm weeknight, villagers greet the season’s first rainfall with dancing and singing. “There was nothing here before,” shouts Ineve, a fieldworker, over beating drums. Others proudly brandish newly issued government ID cards. ESV employees have been lining up behind the schoolhouse for hours to register to vote for the first time in their lives.

Women stand out as the most eager beneficiaries of the ESV experiment. Many walk as far as five miles each way to get to the plantation. (The Alikhanis say they plan to import bicycles from London.) Women are also disproportionately willing to budget the time and money to tend small patches of onions, maize, and papayas, which they sell at Inhassune’s new 20-stall marketplace. In a nation haunted by AIDS, “women who work are not subordinate to the will of men with risky behaviors,” says Pablo Smango, a public-health inspector in Beira, Mozambique’s second largest city. “They control more of their own destiny.”

The article also illustrates the relatively “free lunch” that can be had from some of the assets in Africa. Take, for example, the gas flaring in the Nigerian Delta (now illegal, I believe). Gas pumped out of oil wells can be used for any number of things — energy, for example, or …. fertilizer.

Emerging Capital Partners, the biggest U.S. private equity firm operating in Africa, sees opportunity there. Among its most daring investments is a $35 million stake in Notore Chemicals, a massive fertilizer project in the oil-producing Niger Delta, home to daily kidnappings and an ongoing armed rebellion. Government graft and neglect ran the 12-year-old plant aground in 1999; Emerging Capital bought its stake in the shuttered facility in 2006. “The government figured a dollar in its pocket was more valuable than the $10 it would make by fixing the conveyor belt,” says Genevieve L. Sangudi, a 31-year-old Tanzanian-born, Columbia University-educated MBA who shuttles in from her home in Washington to oversee Emerging Capital’s portfolio.

A trip to Notore’s facilities in the heart of the Delta shows both the promise and the peril of investing there. The first leg of the journey is to Lagos, Nigeria’s commercial capital of 15 million, as dysfunctional and chaotic a city as any on earth. Packed minibuses sit bumper to bumper on overburdened highways as beggars tap windows in search of charity. The landscape is dotted with barbed-wire fences and burning piles of trash. “If someone in Lagos sees a pothole,” goes a local saying, “he doesn’t ask why it isn’t filled, or where to find the gravel to fill it. He wonders: Where can I buy tires big enough to ride over the pothole?’” It takes two hours to travel the 18 miles from the airport to the Protea Kuramo Waters hotel, a high-gated, diesel-generated fortress where, because of the chronic lodging shortage in the city, occupancy is reluctantly granted at $500 a night, a sum that doesn’t guarantee a working toilet.

The next stop in Notore’s private airplane is Port Harcourt, a bleak Delta city an hour away. The locals here have endured years of neglect at the hands of multinational oil companies and government officials easily bribed out of enforcing environmental regulations. Natural gas, a valuable by-product of oil drilling, is simply burned off in open flares, further darkening the Delta’s wretched air. “The Delta is now Nigeria’s biggest risk,” says Bolaji Balogun, 40, founder and CEO of Lagos investment bank Chapel Hill Advisory Partners. “It needs its own Marshall Plan.”

Emerging Capital and Notore want to redirect natural gas to a more beneficial use: nitrogen fertilizer, of which natural gas is the main ingredient. “You cannot let this humongous asset waste away while Nigeria flares gas and imports fertilizer,” says Onajite P. Okoloko, Notore’s 41-year-old chief executive. The Delta native shakes his head as he recalls his father and uncle blaming God instead of tired soil when their maize and fruit crops wouldn’t grow for consecutive seasons. “Half of Nigeria’s economy is agriculture,” he says. And yet “70% of the country sits on arable but poorly used land. Do the math.”

The best part for hedge funds and asset diversifiers extraordinaire?

As markets become ever more closely linked, investors are scouring the globe for assets that don’t move in lockstep with those in the rest of the world. Mainstream emerging markets such as Brazil and India now track 70% to 80% of the market movements of the U.S. and Western Europe, up from 50% a decade ago. Frontier Africa, in contrast, tracks just 10% of emerging market moves and even less of developed markets.

Here’s hoping this argument sways some investors who are on the fence. However, for those who want to argue that rather than the beginning of an African investment renaissance, here is good evidence of a bubble:

Improbable though it might seem, an equity culture has begun to flourish alongside the world’s most extreme poverty. In Kenya, farmers flock to the capital of Nairobi to buy stocks. In Lagos, a new demographic has emerged: Nigerians who have brokerage accounts but no bank account. In Ghana, Ken Nana Yaw Ofori-Atta, a mutual fund manager who has delivered 48% annual gains since 2002, greets a crowd outside his office waiting with cash in hand to buy shares. Imara, a pan-African asset management firm that established the Botswana and Malawi stock exchanges, is even finding opportunity in hyperinflationary Zimbabwe, where the regime of President Robert Mugabe has wreaked havoc on the economy.