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Will Inflation drive the tech sector?

Arthur Hanson

Well-known member
The big question that is being overlooked in the financial community is the impact of inflation to drive a technological surge that could radically alter almost all business decisions. Technology has the power to automate many tasks at the lower end, but the real payoff would be to automate high end tasks using AI/ML coupled with big data, just like Tesla uses the data feedback from its fleet to help automate and improve its self-driving functions and systems. Automating low end tasks is a given, but automating even the high end professions to an even greater degree than it is now will come into play with the use of big data combined with AI/ML on platforms that are curated by a few and greatly leverage the productivity of people working in the professions. EDA is an ideal example of this and much of this structure could be applied to numerous fields, like medical where forty percent of a doctors time is spent on diagnostics, an area that could be greatly automated with low cost sensors of numerous types tied to a smartphone, not only improving diagnostics greatly but constantly accelerating advancements from the constant accumulation of more data. This is just a thumbnail brief of a trend that could propel the semi and tech sector even faster than it is already advancing. 5G worldwide will only accelerate these trends. It might even to drive down costs in many more areas than it has already done and reverse inflation as it has done with cell phones, led lighting, the reliability and increased fuel efficiency of autos, to name just a very few of the examples already out there. All this could actually greatly accelerate the semi/tech sector even faster than it is moving now with an ever greater impact on the world's finances and even social structure. The accelerating Any thoughts, comments, or additions solicited and welcome.
 
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It has always struck me that the highly demarcated job structure in health results in many decisions being taken by people more skilled (and expensive) than needed in many cases. In other words, an opportunity for cost saving.

Note also that health and education costs in Western countries continue to rise much faster than inflation.

So how is it that the cost and efficiency (and deflationary) effects of Moore's Law have had so little effect - so far - in these fields ? There has been ample time for these to work through. And it is surely necessary that the cost spirals in these areas are reined in. Necessary for society as a whole, if not for those employed in these areas.

My suspicion is that it is in these very large and wholly or partly government regulated organisations that change is hardest to achieve.
 

count

Active member
I think there will be significant deflation in education in coming years. The quality of online education has improved considerably, and online degrees are becoming more accepted as substitutes for in person degrees in many fields.
 

Arthur Hanson

Well-known member
It has always struck me that the highly demarcated job structure in health results in many decisions being taken by people more skilled (and expensive) than needed in many cases. In other words, an opportunity for cost saving.

Note also that health and education costs in Western countries continue to rise much faster than inflation.

So how is it that the cost and efficiency (and deflationary) effects of Moore's Law have had so little effect - so far - in these fields ? There has been ample time for these to work through. And it is surely necessary that the cost spirals in these areas are reined in. Necessary for society as a whole, if not for those employed in these areas.

My suspicion is that it is in these very large and wholly or partly government regulated organisations that change is hardest to achieve.
I wrote in a forum in Barron's that US medical was the largest criminal organization in the world by comparing US medical to Canadian medical that rates seven ranks better in results/quality at half the price per patient. Since US medical consumes twenty percent of a twenty trillion dollar economy this means waste, inefficiency, and fraud take in two trillion a year. It took the powers that be at Barron's almost two months to approve my comments and this means it was fully tested and vetted by some of the finest minds available. US medical is as ripe for change and reform as any fully dysfunctional organization is. US medical also gave us the opioid epidemic with everybody from manufacturers, to distributors, to doctors fully involved or looking the other way. This is a prime mega-market for tech to reduce costs and increase quality.
 
I wrote in a forum in Barron's that US medical was the largest criminal organization in the world by comparing US medical to Canadian medical that rates seven ranks better in results/quality at half the price per patient. Since US medical consumes twenty percent of a twenty trillion dollar economy this means waste, inefficiency, and fraud take in two trillion a year. It took the powers that be at Barron's almost two months to approve my comments and this means it was fully tested and vetted by some of the finest minds available. US medical is as ripe for change and reform as any fully dysfunctional organization is. US medical also gave us the opioid epidemic with everybody from manufacturers, to distributors, to doctors fully involved or looking the other way. This is a prime mega-market for tech to reduce costs and increase quality.
We have just been watching "Dopesick" about Purdue pharma and the opiod epidemic. This story is not well enough known in Europe. Surely no coincidence that Purdue didn't even get close to approval in Germany. Textbook example of "regulatory capture" as it's known. End result - something approaching licenced stealth killing by Purdue.

I see worrying signs that Pfizer is trying to turn the Covid vaccination into an ongoing yearly subscription model (a la Microsoft 365). Is this the blockbuster product Big Pharma has been waiting for ? The driver for Purdue seems partly to have been patent expiry on existing products cratering their revenues.
 

count

Active member
We have just been watching "Dopesick" about Purdue pharma and the opiod epidemic. This story is not well enough known in Europe. Surely no coincidence that Purdue didn't even get close to approval in Germany. Textbook example of "regulatory capture" as it's known. End result - something approaching licenced stealth killing by Purdue.

I see worrying signs that Pfizer is trying to turn the Covid vaccination into an ongoing yearly subscription model (a la Microsoft 365). Is this the blockbuster product Big Pharma has been waiting for ? The driver for Purdue seems partly to have been patent expiry on existing products cratering their revenues.
Opioids and vaccines are not comparable.

With OxyContin, you have what's essentially a Schedule II narcotic, and the company gamed the system in such a way that it was being prescribed for stuff as trivial as toothaches. Vaccines aren't narcotics. Nobody is going to take a vaccine for non medical purposes. Vaccines aren't going to get diverted for abuse. You're not going to have crime rates spiking all over the country driven by people trying to get their hands on vaccines. You're not going to have tent cities of people sticking vaccines into their arms.

Pharma didn't capture the regulators in this case either. It was the opposite, where they regulators went to the pharma companies and said "We need a vaccine, we need it as quick as possible, we know vaccines aren't usually profitable, so here's a bunch of money to go develop and manufacture them, and we'll preorder billions of doses".
 
Opioids and vaccines are not comparable.

With OxyContin, you have what's essentially a Schedule II narcotic, and the company gamed the system in such a way that it was being prescribed for stuff as trivial as toothaches. Vaccines aren't narcotics. Nobody is going to take a vaccine for non medical purposes. Vaccines aren't going to get diverted for abuse. You're not going to have crime rates spiking all over the country driven by people trying to get their hands on vaccines. You're not going to have tent cities of people sticking vaccines into their arms.

Pharma didn't capture the regulators in this case either. It was the opposite, where they regulators went to the pharma companies and said "We need a vaccine, we need it as quick as possible, we know vaccines aren't usually profitable, so here's a bunch of money to go develop and manufacture them, and we'll preorder billions of doses".
I'm not saying the two cases are the same. What I am saying is that there is now a danger that the current pandemic vaccination need is manipulated into a probably unnecessary recurrent program. It's much the same with the attempt to normalise annual flu vaccinations - this creates a nice recurring revenue stream for the pharma companies but is of very little social value. While - in my current view - the vaccines are partially beneficial and not harmful (unlike OxyContin), I think the social cost/benefit will shortly turn negative. That won't stop Pfizer trying.
 

count

Active member
I'm not saying the two cases are the same. What I am saying is that there is now a danger that the current pandemic vaccination need is manipulated into a probably unnecessary recurrent program. It's much the same with the attempt to normalise annual flu vaccinations - this creates a nice recurring revenue stream for the pharma companies but is of very little social value. While - in my current view - the vaccines are partially beneficial and not harmful (unlike OxyContin), I think the social cost/benefit will shortly turn negative. That won't stop Pfizer trying.
I think the comparison to the annual flu vaccine is more appropriate, and I think the cost/benefit of annual flu vaccines is very strongly positive.

A vaccine booster might cost $50 (that's on the high side), and lets say it reduces the chance of getting a mild case of symptomatic Covid by around 50% and the potential for serious illness by 90%. So in a given year I might be reducing my risk of getting mild Covid from 50% to 25%, and serious Covid from 2% to 0.2%. Even getting mild Covid sucks - you lose a week of your life feeling sick, not being able to work, see friends, ect. To me that alone is worth more than $50 - and I'm not even paying out of pocket. That's also why I get my flu vaccine, being sick sucks and I'd rather not be.

If you think a week of your life is worth less than $50 or even $200 I'd suggest you are severely undervaluing the value of your life. That's the direct cost/benefit on the individual level.

Now you mentioned social cost, which implies negative externalities. Do you think people getting vaccinated is going to have a negative impact on the people around them? Because when you talk about social cost that's what it implies. I would argue there are positive externalities.
 
I think the comparison to the annual flu vaccine is more appropriate, and I think the cost/benefit of annual flu vaccines is very strongly positive.

A vaccine booster might cost $50 (that's on the high side), and lets say it reduces the chance of getting a mild case of symptomatic Covid by around 50% and the potential for serious illness by 90%. So in a given year I might be reducing my risk of getting mild Covid from 50% to 25%, and serious Covid from 2% to 0.2%. Even getting mild Covid sucks - you lose a week of your life feeling sick, not being able to work, see friends, ect. To me that alone is worth more than $50 - and I'm not even paying out of pocket. That's also why I get my flu vaccine, being sick sucks and I'd rather not be.

If you think a week of your life is worth less than $50 or even $200 I'd suggest you are severely undervaluing the value of your life. That's the direct cost/benefit on the individual level.

Now you mentioned social cost, which implies negative externalities. Do you think people getting vaccinated is going to have a negative impact on the people around them? Because when you talk about social cost that's what it implies. I would argue there are positive externalities.
My point remains that part of what pharma companies do is create new medical conditions to which they can then provide solutions. Purdue created "breakthrough pain". There are lots of pyschiatric conditions which have been pushed by the pharma industry. It's just part of what they do. They will create the "need" for annual Covid vaccinations if you let them - regardless of whether they are needed (which is not yet known).

I personally do not believe the annual flu vaccination is of any value. I never take it. Hasn't cost me anything. So we'll just have to disagree here.

You cannot complain about the ever rising cost of medical care if you voluntarily choose to take non-essential medication and normalise its use and do not instead prioritise preventative healthcare - like getting fit and healthy living and eating. It is perhaps not entirely coincidental that US the US has both high medical costs and high obesity levels (as just one example).
 

count

Active member
My point remains that part of what pharma companies do is create new medical conditions to which they can then provide solutions. Purdue created "breakthrough pain". There are lots of pyschiatric conditions which have been pushed by the pharma industry. It's just part of what they do. They will create the "need" for annual Covid vaccinations if you let them - regardless of whether they are needed (which is not yet known).

I personally do not believe the annual flu vaccination is of any value. I never take it. Hasn't cost me anything. So we'll just have to disagree here.

You cannot complain about the ever rising cost of medical care if you voluntarily choose to take non-essential medication and normalise its use and do not instead prioritise preventative healthcare - like getting fit and healthy living and eating. It is perhaps not entirely coincidental that US the US has both high medical costs and high obesity levels (as just one example).
The pharma industry isn't creating a false need for annual vaccines. Covid isn't some subjective experience.

Ultimately your "need" for an annual vaccine depends on your risk tolerance. Now what pharma companies might do is try to convince people that the risk of covid is higher than it actually is, but my argument is it doesn't take much risk at all to justify getting vaccinated. Like I said, avoiding getting sick once every couple of years for a week should more than justify the cost of a vaccine for most people. And if you think the cost of a Covid vaccine is high... think about the cost of a Covid hospitalization or hell, even a weeks supply of NyQuil costs more than the vaccine.
 
We've strayed some way from the original question : "Will Inflation drive the tech sector ?". Largely my doing ...

Coming back again to the original question. Or perhaps even reversing it - "Does the tech sector drive inflation ?" - an initial thought occurred to me triggered by the vaccination discussion and also thinking about cryptocurrencies.

And this is that where tech is doing a good job (computing, communications, ...) it tends to be deflationary. But there are other cases (cryptocurrencies arguably have no real social value and are massively wasteful in energy - as well as diverting computing resources from arguably more useful applications and raising the cost of computing for everyone) where they are inflationary.

Perhaps that's too simplistic a way to look at this. I wonder how well this might hold in general ?

The tech sector also frequently throws up "solutions" in search of a problem. As - arguably - does the pharma industry.
 

Arthur Hanson

Well-known member
We've strayed some way from the original question : "Will Inflation drive the tech sector ?". Largely my doing ...

Coming back again to the original question. Or perhaps even reversing it - "Does the tech sector drive inflation ?" - an initial thought occurred to me triggered by the vaccination discussion and also thinking about cryptocurrencies.

And this is that where tech is doing a good job (computing, communications, ...) it tends to be deflationary. But there are other cases (cryptocurrencies arguably have no real social value and are massively wasteful in energy - as well as diverting computing resources from arguably more useful applications and raising the cost of computing for everyone) where they are inflationary.

Perhaps that's too simplistic a way to look at this. I wonder how well this might hold in general ?

The tech sector also frequently throws up "solutions" in search of a problem. As - arguably - does the pharma industry.
Tech could actually drive deflation in the medical sector which is the largest industry in the US dollar-wise. There is massive room for improvement in almost every phase of medical. Just the massive amount spent on advertising to the general public which don't have a clue and want to really study options is just one way medical is manipulated its way into a very high cost structure. The ability of big data to revolutionize diagnostics and wearables that give real time data and warnings present large opportunities for the tech sector. Also automation will come into play as an automated blood drawing and testing system has already been built.
 
Another factor here that determines whether tech can be used to cost reduce (deflationary effect) is the extent to which industry sectors are regulated (or over-regulated).

In the recent Covid vaccines case, the UK vaccine approval was successfully pulled forward by improving the efficiency and TAT of the approvals process. Naturally, this was condemned by almost all the [perpetually lazy and scientifically ignorant] media here in the UK who assume that any current process must be both the best and safest possible. Rather than celebrating a breakthrough in the approval process (which was demonstrably inefficient and arguably costing lives through over-regulatiobn). In fact, it is precisely this sort of cycle time reduction process that is needed - another legacy of the semiconductor manufacturing industry that should be leveraged.

Going further, another reason for high medical costs is the balance of the patent system towards manufacturers. In the chip industry, manufacturing cost improvments work their way through to the end users fairly quickly. In big pharma, this likely never happens until patents expire. At which point, the second source producers step in and demonstrate that the IP being protected really costs a fraction of what is being charged.

In both cases, governments and electorates have chosen the high cost route for the benefit of having a well paid and large pharma industry. Without ever - I suspect - really examining the tradeoffs.

I think we will see "reasonable cost at same medical quality and safety" health systems demonstrated outside the UK - please do not assume our allegedly "free" system is any better - and USA well before we ever catch up. Too much inertia and too many vested interests.
 

Paul2

Active member
The big question that is being overlooked in the financial community is the impact of inflation to drive a technological surge that could radically alter almost all business decisions. Technology has the power to automate many tasks at the lower end, but the real payoff would be to automate high end tasks using AI/ML coupled with big data, just like Tesla uses the data feedback from its fleet to help automate and improve its self-driving functions and systems. Automating low end tasks is a given, but automating even the high end professions to an even greater degree than it is now will come into play with the use of big data combined with AI/ML on platforms that are curated by a few and greatly leverage the productivity of people working in the professions. EDA is an ideal example of this and much of this structure could be applied to numerous fields, like medical where forty percent of a doctors time is spent on diagnostics, an area that could be greatly automated with low cost sensors of numerous types tied to a smartphone, not only improving diagnostics greatly but constantly accelerating advancements from the constant accumulation of more data. This is just a thumbnail brief of a trend that could propel the semi and tech sector even faster than it is already advancing. 5G worldwide will only accelerate these trends. It might even to drive down costs in many more areas than it has already done and reverse inflation as it has done with cell phones, led lighting, the reliability and increased fuel efficiency of autos, to name just a very few of the examples already out there. All this could actually greatly accelerate the semi/tech sector even faster than it is moving now with an ever greater impact on the world's finances and even social structure. The accelerating Any thoughts, comments, or additions solicited and welcome.
Look how 2008 happened.

It was a mini tech boom, despite few big dotcomes folding due to financials.

Chinese tech rose up exactly because a lot of big Western dinosaurs died out, and opened them open pastures.
 
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