S3T August 18: Regulatory Impact Assessments, AI and vulnerable groups, Argentina, Visa+crypto, Cap preservation, GenAI skills, Honeycreepers...

You made it to Friday! Welcome to new members! Here's the perfect way to cap off your week's accomplishments with some just-in-time learning to position you for success in the week ahead.

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In this edition of the weekly S3T Newsletter:

• Change Leadership Skills: How the Regulatory Impact Assessment framework can help you work with regulators and governance teams to introduce new innovations.
• Macroeconomics: Bitcoin in high inflation economies and the problem with status quo monetary systems. Healthcare economics. .
• Emerging Tech: Deeper perspectives on the risks of AI; how Visa hopes to make crypto payments easier.  
• Nature Notes: Tracking down one of the last of the Hawaiian Honeycreepers.
• For Paying Members: Deeper Dive on Moral Hazard; Plus: Resources for building your GenAI skills

Change Leadership Skills: Learning how to use a Regulatory Impact Assessment

Change leaders who are working in entrepreneurial or government affairs roles will find this especially helpful.

Introducing a new change or innovation that impacts regulations can be tricky

Financial innovation, healthcare innovation, policy changes - like letting people remain in their wheelchairs when they fly...all of these are examples of changes that require you to work with regulators and governance stakeholders.

Here's how to make it more doable

Updating regulations is a difficult complex undertaking, but there are tools and frameworks that change leaders can use to make it more doable.

One key approach is the Regulatory Impact Assessment (RIA). The OECD offers a best practices framework and learning page here.

RIAs offer a structured approach for assessing:

• How current regulations might be having negative impacts
• How proposed regulations might perform
• How current regulations may need to change as new technologies or processes are adopted by industries or communities

Also: If you are an entrepreneur or leader in a small to mid-sized business (often referred to as SMEs), this Annex to the RIA framework will help you understand what kind of interaction to expect and ask for when you are working with regulators.

This will give you a credible structured approach for interacting with regulators. Share this with someone you know who is driving a key industry change.

Macro Economics

Bitcoin in high-inflation economies

In Argentina, a pro-bitcoin anti-central bank candidate has won the presidential primary ahead of a general election in November.  The chart below from Kaiko Research may help explain why:

In Argentina and other nations with high rates of inflation, Bitcoin is seen as a safer store of value.

Context: the problem with status quo monetary systems

For context, Nick Carter's 2019 essay The Cat Is Out Of The Bag is worth revisiting (in spite of its edgy tone) because it lists the primary grievances against the status quo monetary systems of most nations today. Some colorful highlights:

• "The wealth of political elites derives primarily from privileged access to the monetary spigot."
• "And no, cheap financing didn’t help the middle and lower class get a foothold in property… because property values were horrendously inflated in the first place! Property, treated as a store of value for the rich, is precisely where so many of the Fed’s newly-minted dollars settled."
• "Why has the cost of higher education and healthcare outpaced inflation by orders of magnitude? Why is the CPI a sad, pathetic joke? Do consumer goods account for most of your expenditures, or does rent, healthcare, and education?"

While some of us may not have direct experience with these grievances but they do reflect the lived experiences of people around the world, including areas in the US, and can help explain the political events in countries like Argentina.

For a more data-driven deep dive into these foundational issues, see Thomas Piketty's Capital in the 21st Century (HBR summary here, available at most libraries and thrift stores).

Healthcare Economics: Prior Authorization

This fall UnitedHealth plans to reduce its Prior Authorizations by 20%, as payers across the board reconsider the value of this long-standing practice.  

• Prior Authorization - requiring doctors to get authorization from the health insurance company prior to performing certain kinds of treatments - has been a controversial practice some say delays necessary care, harms patients, and saddles doctors with excess paperwork and staff overhead (PDF).
• Not a surprise: Industry insiders have long anticipated that the increasing scrutiny and regulation of prior authorization (here and here) would reduce or eliminate the financial benefits that traditional health insurers gain via prior authorization measures.

Paying Members: deeper dive on Moral Hazard - healthcare's entanglement with the moral hazard logic of traditional insurance helps explain the industry's long reliance on capital preservation mechanisms like prior authorization and can help point the way to designing a better model.

Emerging Tech

AI and Vulnerable Populations

Rolling Stone just released an excellent read about 5 female tech leaders with vital insights on AI's impact, who unfortunately have not been listened to. One thing that stood out to me was how vulnerable populations have been impacted:

• Providing cheap labor powering AI training (one example noted workers in Kenya were underpaid and traumatized by illicit content they had to view when training models).
• Mischaracterized, harmed by bias from poorly trained AI models (and historical data that encapsulated bias behaviors).
• Under-represented (also likely due to bias encapsulated in historical data).

Why this matters: Important context for any change leaders concerned about the ethical use of AI. Many companies are eager to use GenAI ...but leaders will want to consider what we don't yet know or understand about how this technology is made and used.

To borrow an old analogy from the textiles industry: some of you remember back when retail clothing brands rushed to leverage overseas manufacturing to improve their margins. Then the public discovered the ugly reality of sweatshops. Those brands are forever stained by the fact of their own greed and carelessness.

In the case of AI, expect ugly revelations to continue to come to light. As noted previously in S3T, a cross-disciplinary approach to governance is the best bet for ensuring the ethical use of AI that brings benefits and prevents harm.  

GenAI and Jobs

But it's only been 8 months: Alex Kantrowitz issues a (perhaps early)  assertion that GenAI isn't destroying jobs and why some early indicators suggest AI tools generate the need for more human supervisors.

Visa making crypto transactions easier

Ever wanted to make a crypto transaction but couldn't because you needed ETH to pay for gas fees? Visa hopes to eliminate that buzzkill once and for all.

Visa is testing an approach that would let you pay gas fees with your Visa card rather than having to hold ETH. It's brilliant: for a sizable user population, this would make Visa an indispensable element of crypto transactions.  See their detailed paper here.

Bigger Trend: As first noted at this spring's EthDenver conference, crypto teams now recognize that mass consumers want financial services that follow usage patterns they are familiar with vs learning new techniques. Trad-fi players likewise see a huge opportunity to embrace the benefits of crypto while leveraging their digital experience expertise.  Expect a competition to heat up to see who can provide the best benefits for individuals and families.

Nature Notes: Akiapolau'au

This past week I was able to experience the cool alpine air and unspoiled habitat of the Hakalau Forest, one of the last surviving old-growth mountain forest havens for a few rare species of Hawaiian birds. It is literally like stepping back in time. If you stop and look around and listen, you are seeing and hearing what Hawaii was like a thousand years ago. The air is cool and silent except for the call of the original native Hawaiian birds, and the sound of the wind blowing through native trees and giant ferns.

While hiking there, we were so fortunate to encounter the Akiapolau'au, an endangered Hawaiian honeycreeper with an unusual beak.

Notice how different the top and bottom mandibles are. No this is not a deformity. This species uses the bottom to peck - like a woodpecker - but uses the top mandible to dig into crevices and pull out insects. Below the bird uses its curved upper mandible to dig out an insect.

Hawaii Forest & Trail is one of the few tour companies authorized to enter the protected area. Sign up for a future opportunity here:

Hi, I’m Ralph Perrine, founder of S3T Newsletter. Thank you for reading this week’s edition! It's ok to forward the newsletter to a friend or colleague.

I created S3T to empower change leaders with the knowledge and skills they need to navigate the ever-evolving landscapes of economics and emerging tech.

We are all bombarded daily with more headlines and threads than we can keep up with. I strive to select and share the most important developments and insights with a view to helping you be ready for what's coming, make better decisions, and have the impact you want to have.

Your feedback is greatly appreciated and matters to me, always love to hear what you are working on and how S3T can bring more value to your learning and success. Direct message me @ralphperrine on LinkedIn or Twitter anytime.

Cheers,
Ralph Perrine

Opinions expressed are those of the individuals and do not reflect the official positions of companies or organizations those individuals may be affiliated with. Not financial advice. Authors or guests may hold assets discussed.

💯️ For Paying Members: Continuing your learning about GenAI and LLMs