Laws for Driving Automation Won’t Write Themselves

The notion of cars driving themselves from point to point has its appeal; if widely used, the technology can reduce accidents, decrease carbon emissions, and make life easier for commuters and those who are unable to drive. While still very much in the research and development phase, driverless cars have a future for which regulators need to plan now. Thoughtful, comprehensive legislation and standards would remove one of the main barriers to widespread testing and use in the United States.

The laws, however, won’t be so simple to enact if they are to take into account all of the stakeholders, variations in geography, and other factors, nor should they be. Given that this is not an industry where companies can operate and ask forgiveness later, advocacy and collaborative crafting of the laws are crucial. Each state, and even city, has taken a different approach- whether that is whole-hearted support and incentives, silence, or apprehensive permission to test. Rideshare companies, car manufacturers, and dozens of startups are all working towards automation in different ways, and testing is already happening in some cities.

In Texas, testing has been happening since 2015, and a bill passed in 2017 allows testing without a driver behind the wheel. Texas preemption laws can keep tech companies from being blindsided by municipal legislation, the uncertainty of which leads to greater risk in establishing testing sites in a city. The same kind of process could work on a national level, allowing companies to adapt to cities and climates uniformly, thus increasing the pace of development.

While it might be faster to create a centralized government policy, the regulation of motor vehicles in the US has always been individual states’ responsibility. What currently exists is a patchwork of regulation and individual state/city road rules. On a federal level, the Department of Transportation (DOT) has released voluntary guidance, assistance and best practices to industry and states to advise on safe integration of technology into the transportation sector. The DOT’s stated priorities are to modernize and standardize regulation, be proactive, and ensure safety and freedom. A handful of states have many of the same priorities, but many have yet to develop legislation for this new technology.

Regardless, governments at every level need to work cooperatively with companies, forming partnerships. Both sides want to ensure safety, and cities want to keep pace with technological and economic growth. The private sector would thus avoid being surprised by regulation, and could be granted licenses to test and commercialize. Unexpected regulatory changes, like AB 5 to the rideshare industry, pose a major risk to operations, for which the investment is already so high. Updated, smart city infrastructure would also benefit development and ensure that cars can operate as designed.

Additionally, consumer privacy and the role of data must be considered. With the massive amount of data being collected by the driverless vehicles’ sensors and cameras, AV companies need to create a standard for how much of that they are willing to share. For example, the doorbell company, Ring, became a valuable tool for law enforcement, but the company had to first come to an agreement with authorities as to what could be shared without compromising the privacy of Ring’s customers. While it is unlikely that autonomous vehicle operators want to become that tightly integrated with local law enforcement, the data being shared with cities will be a point of negotiation and discussion. Data could be evidence of progress in key safety metrics, if framed and disclosed appropriately, but can also serve many other purposes, the implications of which need to be carefully considered.

Currently, companies are attempting to impact regulation on a grassroots level, building relationships with cities in advance of actually rolling out the technology, in order to capture future market share. The use of driverless technology will undoubtedly disrupt a number of industries, and therefore will require legislation that is created in conjunction with state agencies, advocacy groups, and other key stakeholders. This adoption will happen gradually, over the span of the next several decades. Automated long-haul freight transport, for example, is already far along in its development. More and more personal vehicles will soon have partial automation, like Tesla on freeways and predetermined and mapped routes. Then over time, Levels 4 and 5 of driving automation can be achieved.

Testing is essential for increasing the safety of what will eventually be a dramatically different landscape. To test on roads with everyday people, companies need more defined regulation and best practices. So while the age of autonomous vehicles in cities all over the country may not be here yet, but lawmakers should act as if it is.

Laws for Driving Automation Won’t Write Themselves

March 2020: A Stomach-Churning Month for Stock Markets

March 2020 will live in infamy in the history of the financial markets. The New York Times recently reported that the financial world witnessed the following within a span of thirty-one days: the S&P 500 suffering its worst one-day drop since 1987 before recording its best three-day run since 1933, a crash in oil prices, and interest rates plunging to record levels leaving Wall Street pundits speechless.

As the March roller coaster continued, many disciplined investors expressed feeling overwhelmed by the turn of events playing out in the stock markets. While some investors that managed to survive the dot-com crash and the financial crisis of 2007-08 have since adopted durable trading techniques, they were unprepared for the speed at which markets crashed.

An enormous and decisive fiscal response was required to rescue the financial markets. U.S. lawmakers did respond and enacted a $2 trillion spending package. The U.S. Federal Reserve also went all out and announced that it would buy as much government debt as needed to bolster the housing market and Treasury bonds. This response allowed the financial markets to recover somewhat; however, the month of March was the worst month for the S&P 500 since October 2008.

As of April 8, 2020, U.S. stock prices rose, building on their gains for the week. At the close of trade, the S&P 500 was up at about 23 percent from its March low. The gains highlight a hope that the peak of the COVID-19 pandemic is near or past. The growth rate of coronavirus cases in New York is slowing. China has lifted its lockdown in Wuhan. Austria, Denmark, and the Czech Republic are also considering lifting their respective coronavirus restrictions.

However, having calmer markets does not mean the worst is over. As consumers stay indoors and factories remain shut, unemployment is on the rise. According to the U.S. Bureau of Labor Statistics, the unemployment rate jumped to 4.4 percent, while the number of unemployed workers increased by 7.14 million in March alone. This number is expected to increase in April. A recent labor market survey revealed that the true scale of damage has only just begun. However, the impact of this data on the financial markets remains to be seen.

This is clearly a time of uncertainty, particularly as it relates to the stock markets. While the markets are clearly building from stimulus package gains and the hope that the coronavirus pandemic is receding, it remains to be seen whether the economic fallout from the global shutdown will have a long-lasting impact on the financial markets. The truth is simple: nobody knows how long this uncertainty will last.

March 2020- A Stomach-Churning Month for Stock Markets

 

COVID-19 Effects on the VC Market and the $2.2T Stimulus Package

Unlike in the stock markets, where highly volatile public equities respond to a financial crisis in a matter of hours, in the venture capital (“VC”) industry such a response is typically reflected over time. This is because VC’s deals and financing rounds are typically closed after weeks or months of negotiations. Regardless, the economic slowdown brought by the coronavirus will be seen in the VC ecosystem as well.

Setbacks in deals currently being negotiated have already been noticed by Pitchbook: valuations have decreased and deals terms have been weighted in favor of investors again. Therefore, startups currently in need of capital are likely to face more protective provisions for investors, such as liquidation preferences and dividend rights. Consequently, the VC market is prone to test the role of nontraditional investors and Corporate Venture Capitalists (CVCs) in the industry, and M&A activity should follow the IPO’s retrenchment while corporations focus on liquidity and maintaining operations instead of investing.

Amidst uncertainty, an example from China provides hope for the VC ecosystem: after capital raised and deal volume fell more than 60% in the first six weeks of the year, in comparison to the same period in 2019, Chinese firms showed recovery and tracked 66 VC deals during the week that ended on March 28.

The U.S. Government’s response to the pandemic, the CARES act signed into law on March 27, provides a historical stimulus package of $2.2 trillion. This relief measure dedicates around $377 billion to the small businesses through lending checks administered by the Small Business Administration (SBA). Albeit considered a generous program – since the loans turn into grants for those who maintain payroll – the private market (PE and VC) may be seen as forgotten by the relief bill, mostly due to the “affiliation rule”.

Loans under the CARES Act are provided to companies with less than 500 employees, but for the private equity-owned companies and some VC-backed startups, they are counted as “affiliates” in their PE/VC portfolio, thus this threshold is met by including employees from all the companies under the same portfolio. Other excluded companies are those whose VC investors control over 50% of their voting stock, or if two or more VC firms combined “are large compared to other stock holdings.” “Ownership” and “control” are key elements to verify the SBA’s requirements for applying startups.

Although some contractual requirements tied to loans were waived by the bill, such as collateral and personal guarantees, others were assigned: no stock buybacks, no dividends distribution, and no large layoffs. Also, some employees at PE/VC firms not eligible for the loans may benefit from the individual checks provided by the bill – all taxpayers earning less than $75k annually will receive $1,200.

The disconnection of the bill with the private market may be related to its purpose: the prevention of mass homelessness, starvation and a wave of business closures, rather than stimulating growth. Nonetheless, it should not be forgotten that the US VC Market, despite the financial crisis of 2008, registered record-performance years in the last decade. Beholding a new challenge, the industry might have to adapt once again and may rely on a Global VC dry powder speculated to be of about $188.7 billion as of mid-year 2019, translated into two-and-a-half years of capital available.

COVID-19 Effects on the VC Market and the $2.2T Stimulus Package

 

Airlines Refuse to Collect Passenger Data That Could Aid Coronavirus Fight

In the wake of the COVID-19 pandemic, the Health and Human Services Department issued a temporary rule requiring airlines to pass on contact information of exposed international passengers to the Center for Disease Control and Prevention (CDC). The rule will be in effect until the end of the pandemic, and enables the CDC to “require airlines to collect, and provide to CDC, certain data regarding passengers and crew arriving from foreign countries.”

This is not the first time that the CDC has demanded that passenger information be monitored. In 2014, the Ebola outbreak revealed a huge gap in the infrastructure and, according to the CDC, it was the scarcity of contact information that restricted its ability to reach those affected. Data collection on passengers is a tactic that has been adopted by countries like South Korea to help combat the spread of the virus. The CDC believes that this is the only mechanism by which it can efficiently obtain the information it needs for a holistic response to a communicable disease outbreak, in a regulatory vacuum during such emergencies.

This gap in infrastructure dates back to the SARS outbreak, when the airlines refused to hand over information such as people’s names, phone numbers, email addresses, the addresses where they would be staying in the United States and emergency contact information. The reason provided was that the collection of this data would take many months, and the retooling of computer systems was an arduous task. Neither the government nor the airlines attempted to put a system in place, and the 2014 Ebola outbreak witnessed a similar handicap in mitigation efforts. Subsequently, a mandatory rule requiring air carriers to collect and share information with the CDC was met with fierce lobbying and a promise to adopt a voluntary solution within a year of the government watering down the rule. A few years later, there is still no system in place, and a temporary rule to gather detailed information is met with disregard and ambiguity.

There is no doubt that there are privacy concerns with the collection of such personal data. Airlines also believe that further introducing an app to facilitate the collection will give the government far too much data than required. In the present political climate, privacy rights, especially in Europe, have only compounded growing technical issues for airlines. CDC officials have also made a point of telling the airlines about $250,000 fines for non-compliance with this rule by mid-March. Interestingly, third party ticketing websites cater to nearly half of the industry’s customers, and may also be able to provide quantitative information. This could be a viable option considering that the collection of such information may seem like a terrible burden on an already distressed industry. The CDC opened the rule to public comments and here’s hoping that there is a concrete solution to this institutional gap.

Airlines Refuse to Collect Passenger Data That Could Aid Coronavirus Fight

Last Resort to Prevent Financial Crunch

Around the world, economic catastrophe has shaken up governments and they have resorted on economists to flip through the pages of the 2008 global financial crisis playbook. To keep afloat the sinking economies amid the coronavirus pandemic, governments are pumping liquidity into the banking system to prevent the stock market from crashing. It is unclear whether these measures may lessen the panic, but the shock has grappled the corporate giants globally and requires a quick response.

For the world, witnessing the acute shortage of dollars for the second time in a century is a threat to global financial activity, which depends on the use of dollars. To contain the fallout from the crisis, America’s central bank, with the world’s biggest dollar reserves, must step forward to lend money, not just to its financial institutions, but to act as a spine for the entire world.

With uncertainties hovering over, the Federal Reserve (“the Fed”) has stepped forward to funnel trillions of dollars to the central banks around the world. For many, the question remains “How long will the Fed continue to feed other economies?” In 2008, the dollar shortage was only limited to banks in Europe and America, but the present crisis requires the Fed to leave its comfort cushion, since it has to supply dollar liquidity to a polycentric world economy, amid the coronavirus crisis.

To pump dollars into the global financial systems, the Fed utilize “liquidity swap lines” to improve liquidity conditions in dollar funding markets in the US and abroad. This is done by providing the foreign central banks with US dollars and deliver them to the financial institutions in their jurisdiction, during times of market stress. In 1960, this system was deployed to circulate funds between the central banks wresting with upholding the exchange rates of the Bretton Woods system. economic gap, the Fed has widened the swap network to include all the 14 banks it supported in the 2008 financial crisis. The news brought back the skyrocketed exchange rate of the dollar in Brazil and South Korea.

The swap lines reflect the influence that America’s central bank exerts on controlling the economies trading in the dollar-based financial system, while also serving as a tool of geopolitics. To many, this system of trading network provides financial stability and security to countries allied with American banks. However, no swap lines were ever extended to Russia and China, which was the reason that they never fall prey to American politics.

Countries, which were once a marginal part of the world’s economy are now the emerging economies and key drivers of global growth, which includes China in the main lead and Indonesia, Malaysia, Thailand, and Turkey are also on the forefront. But China was already a main driver of global growth and today its economy is larger than ever, along with its holdings of American assets. As of now, the foreign debt on Chinese business has surged to $1.3 trillion and is less sustainable with the increase in the dollar value.

Relations between the US and China are strained over trade issues, which was further deteriorated after President Trump’s recent characterizing of the coronavirus as the “Chinese Virus,” in an era when the US Treasury market is shaking badly. With the prevailing conflicts, the Fed should manage good relations with China’s central bank by extending its swap line to China.

To avoid further losses, the White House and Congress should set aside their political motives and adjust their political discourse to join hands with the emerging economies in this crucial time to people. Especially, when the pandemic has wreaked havoc due to the dollar-based financial system.

Last Resort to Prevent Financial Crunch

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

How the Coronavirus Is Forcing the Japanese Workplace to Modernize

Across the globe, the spread of the coronavirus is suspending international travel, rattling financial markets, and forcing businesses and schools to close. And its impact will likely outlive its containment. With more than 1000 active cases at the time of writing, Japan is among the countries most heavily hit by the disease. And while much ink has rightfully been spilled on criticizing the government’s response, some Japanese businesses have shown remarkable flexibility that deserves further inspection.

Like a flash of lightning illuminating a nighttime landscape, the coronavirus exposed issues that have long plagued Japanese workers: long working hours, an overemphasis on face time in the office, and the chronic lack of childcare facilities. Further exacerbating these problems was the unprecedented move by the government last week to close all schools in the country—a move that will leave as many as 13 million pupils at home. With a severe shortage of daycare facilities at the best of times, this move jeopardized millions of working mothers. And how were Japanese businesses to protect the safety of their employees without excessively disrupting business?

“Looking at these results, I’m seriously thinking about the need for an office at all,” tweeted GMO Internet Group CEO Masatoshi Kumagai on February 16. His company is allowing 4,000 employees to work from home. Telework is still a novel concept by Japanese standards. But the coronavirus has forced Japanese businesses to finally explore the option. For instance, Dentsu Inc., Japan’s largest advertising agency, has announced that it will allow its 5,000 headquarters employees to work from home. For a company that was prosecuted in 2017 for the death of an employee that was allegedly caused by overworking, this is a notable development. Other notable examples include Mitsubishi, Panasonic Corp., and Shiseido. In addition, many companies are reducing their business hours and allowing more flexible working schedules. The result has been a pronounced traffic decrease in Tokyo’s otherwise overcrowded train system.

Flexible working hours, teleworking, and reducing overtime are all measures long encouraged by the Abe government and were envisioned by its 2018 labor reform bill. Since its enactment, the labor law puts a cap on the hours of overwork per month and aims to reduce disparities in working conditions between regular and non-regular employees. But the law only furnishes minimum requirements; changing how people work is ultimately something that must be driven by businesses themselves. And in Japan, face time is still often more important than actual output. A hierarchical and conservative work environment makes employees afraid to leave before their supervisors have done so. The same culture also discourages women from having children or mothers from reentering the workforce. As a result, working hours are notoriously long, and Japan’s gender equality persistently ranks as one of the worst among developed countries.

The danger of the coronavirus is likely to persist in the coming months. It has also forced Japanese companies to conduct a teleworking experiment that, if successful, could encourage a rethinking of work. One hopes that this instance of creative destruction will leave a lasting contribution to the modernization of the workplace in Japan.

How the Coronavirus Is Forcing the Japanese Workplace to Modernize

U.S Markets Plunge as Novel COVID-19 Spread

COVID-19 is an infectious disease that has made people ill on every continent except Antarctica, killing more than ten thousand people. This virus may not be as deadly as the Black Death or the Spanish Flu, but it still has the potential to bring about unprecedented inflation, poverty, and global economic crisis.

As COVID-19 continues to spread, markets have reacted in kind. The S&P 500 entered a bear market for the first time since the financial crisis of 2008, and the Dow witnessed its biggest one-day percentage drop since the 1987 Black Monday crash. Markets worldwide are also facing disastrous drops. European markets recorded their worst session since 2016, and major benchmarks in Asia also closed down.

Every asset class – stocks, bonds, and oil – has come under siege as investors flee toward the safety of cash, pushing the U.S dollar’s value upward. Oil prices are mimicking the 1970s, dropping to nearly $20 per barrel. All 11 sectors of the S&P are in the red zone, with travel and tourism being hit hardest. Marriott is down 34%, United Airlines 33%, MGM Resorts 30% and Alaska Air 32%.

The Federal Reserve has announced that it will slash interest rates to zero and buy $700 billion in government and mortgage related bonds. The Reserve also announced further measures, like potentially injecting $1.5 trillion into the market by buying repurchase agreements.

As the New York Federal Reserve has stated, “these changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak.”

In addition, the Fed announced that it is going to start a crisis-era program of ‘quantitative easing,’ in which the central bank will buy bonds worth billions of dollars to further push down interest rates and keep markets flowing freely. The Fed is also providing generous loans to banks around the country so they can turn around and offer loans to families and various small and medium businesses in need of a lifeline.

However, there is still suspicion among investors that these measures, though robust, will only create a short-term positive response in markets, given that factories have indefinitely stopped producing goods and supply chains are continuously getting disrupted by quarantines and lockdowns.

U.S Markets Plunge as Novel COVID-19 Spread

With COVID-19, The Gig Economy Faces Old Challenges In New Terrain

The gig economy is facing some ups and downs as COVID-19 takes hold in the U.S.

Workers for Uber and Lyft, particularly those who rely on the platforms as their sole source of income, have been greatly affected by COVID-19. Initially, Uber and Lyft halted their carpooling services to stop the spread of the virus, and shelter in place orders have further restricted ridesharing to essential travel only. With more people sticking to their home offices, demand has gone down for ridesharing companies, which has put many workers in serious financial situations. In fact, Uber reportedly recorded a drop in ride volume of up to 70 percent in the hardest hit cities in the U.S.

But while ridesharing is facing demand challenges, delivery is feeling the demand boom. Instacart, a San Francisco-based company, which allows users to get groceries from their favorite stores delivered to their doorstep, announced Monday that the company will be onboarding 300,000 new “full-service” shoppers in light of the increased demand due to social distancing orders. More than one sixth of those shoppers will be located in California. Uber may be preparing to double down on its delivery sector as well, according to TechCrunch, with CEO Khosrowshahi stating that the company may expand delivery into the health sector. Lyft has also reportedly expanded into medical supply and food delivery. Even so, issues surrounding exposure and protection of these workers, who are essential to the social distancing efforts of communities like San Francisco, are top of mind as well.

The threat of the virus and economic instability for drivers and delivery workers come at a time where, arguably, gig economy workers have more protection than ever. Uber and Lyft recently lost a battle in a California district court to halt the implementation of AB-5—a controversial California gig worker protection bill that became law in early 2020. In recent weeks, the companies have experienced pressure from activists and lawmakers, including California senators, to implement policies that secure the incomes of gig workers, de-incentivize working while ill, and reduce risk of exposure. Uber, Instacart, and others recently implemented paid sick-leave policy for workers who test positive for COVID-19. Delivery companies like DoorDash and Postmates and others have also introduced “contactless delivery” to limit person to person contact. Additionally, despite its resistance to offering social protections for workers, Uber’s CEO requested that the federal government stimulus include protections for its workers affected by the virus. But coronavirus doesn’t just affect those drivers and delivery workers who are sick, thus it’s likely that pressures will continue as gig workers risk their health to maintain an income.

Either way, recent weeks have shed light on gaps in policy protecting the individuals who are proving to be vital to the health and well-being of our communities during this pandemic. We should all make sure that those gig workers putting themselves at risk for the rest of us in grocery stores, at restaurants, and even at our front doors are tipped well.

With COVID-19, The Gig Economy Faces Old Challenges In New Terrain

Coronavirus Closures Exacerbate Education Gap

In addition to the hundreds of thousands suffering from COVID-19, students have also been harmed by the coronavirus pandemic. Schools have closed in 119 countries, affecting over 860 million students around the world. California Governor Gavin Newsom recently suspended standardized testing and announced the state’s public schools will likely remained closed for the rest of the academic year. Many schools have deployed remote technology to continue instruction, but the sudden switch to distance learning exacerbates academic inequities.

Shutting down schools has become a key part of the social distancing strategy that public health officials have embraced to slow the spread of the coronavirus. Some argue that schools are well suited to spread disease: small classrooms, cafeterias, and busy busses put students, their families, and school employees at risk. Government officials hope that closing schools will help flatten the curve so that the number of patients sick with COVID-19 does not overwhelm the capacity of the healthcare system.

But school shutdowns are costly, and the closures may have long-lasting impacts on students who already face systemic disadvantages. Some school systems lack resources to make the full switch to distance learning. Even large school districts with the resources to shift online still have many students who lack computers or tablets, access to the internet, consistent supervision, or adequate food at home. The more than 1.5 million students who experienced homelessness in 2017-2018 may not have homes at all. As a result, the sudden shift to distance learning in the wake of coronavirus means that the wealthier students in the wealthier schools will likely zoom ahead of those who lack the resources to continue effective learning.

Coronavirus Closures Exacerbate Education Gap

Disrupting Law Firms Proven to be Difficult After $75M Legal-Tech Startup Shuts Down

The legal profession is known to be conservative in many aspects, including with the use of technology. Yet the industry has a proven need for innovation. Entrepreneurs have acted to challenge this conservative approach by providing business-to-business (B2B) services to legal professionals. Providing Software as a Service (SaaS) to law firms has turned out to be a successful business model; however, it is not the same when innovation aims to disrupt the legal industry.

Atrium was a legal-tech startup co-founded by Justin Kan, who is also the co-founder of Justin.tv. That company later rebranded as Twitch and sold to Amazon for $970 million. Atrium aimed to provide software for startups that navigates operational and legal matters, including providing an in-house legal team to companies in need of advice. Atrium raised the interest of startup companies as Kan, the CEO, was a proven entrepreneur. The goal of Atrium was to reduce costs by helping its attorneys spend more of their time doing substantive work, and to translate this into savings for clients.

However, this technology proved not to be cost-efficient. The company was first hit by the decision of some of its lawyers to leave, forming their own law firm and taking Atrium’s clients. Then, the CEO announced Atrium had terminated its software business and would continue operations as a small law firm. According to the CEO, Atrium failed to figure out how to deliver better service than a traditional law firm. Furthermore, customer feedback pointed out that Atrium’s services felt chaotic, rendering customers unsure of their legal representation.

The Atrium case demonstrates that disrupting the legal industry will take time, even if it seems inevitable. There is a mismatch between the increasing cost of hiring a lawyer and the emergence of a large number of startups, seemingly every day. Innovation is most likely to enter the legal industry slowly, as needs are proven and borne out.

Disrupting Law Firms Proven to be Difficult After $75M Legal-Tech Startup Shuts Down