6. #OReillyAI @timoreilly
1. Are we done yet, solving the worldâs problems?
âTechnology is the solution to
human problems. We wonât
run out of work till we run
out of problems.â
#Verge #NextEconomy @timoreilly
Nick Hanauer
12. #OReillyAI @timoreilly
Text
#Verge #NextEconomy @timoreilly
âBack in the 1930s, when there were homeless encampments in Washington, D.C., very
much like the homeless encampments that are now under the I-280 in San Francisco,
the federal government invested capital in new industries to create jobs for millions of
people. They created tax codes that redistributed from the rich to the poorâŚ.
One obvious step, Hyman says, would be to put to work the "great sloshing pool of
money" that investment banks and companies have been keeping on the sidelines since
the financial crisis. Pay workers more so they have more to spend, and invest in creative
risk-taking and innovative ideas, as happened during the New Deal.
The New Dealâs Reconstruction Finance Corporation not only helped light up America â
moving it from 10 percent of homes having electricity in 1930 to more than 60 percent a
decade later â it also funded research in the Defense Plant Corporation.
âIt was fundamentally about investment in edgy technology, so things like
aerospace, aluminum extraction, synthetic rubber were all brought to scale,â Hyman
says. âAerospace before 1939 had fewer people working in it than worked in candy
manufacturing. And after World War II, the aerospace industry was four times the size of
the pre-war car industry. This is incredible scale and scope of an endeavor, to utterly
transform the economy in about five years, by using idle capital.â
15. #OReillyAI @timoreilly
The use of automation by business to reduce labor costs and increase
profits is a social and political choice, not an economic law!
17. #OReillyAI @timoreilly
2. As some things become commodities, other
things become more valuable
"When attractive profits disappear at one stage in the value chain
because a product becomes modular and commoditized, the opportunity
to earn attractive profits with proprietary products will usually emerge at
an adjacent stage."
-- Clayton Christensen
Author of The Innovator's Solution
In Harvard Business Review, February 2004
18. #OReillyAI @timoreilly
Macarthur fellow Dave Hickey argues in his
book Air Guitar that when the automobile
became a commodity, Harley Earl, who
headed the design division at General Motors
after World War II, turned the auto industry
from one driven by manufacturing innovation
into one driven by design -- in effect, an "art
market," one that "stopped advertising
products for what they were, or for what they
could do, and began advertising them for
what they meant. Apple did this for the
computer industry.
21. #OReillyAI @timoreilly
Rich economies indulge in things that appear to be
useless, but are really all about status
âI consider the pyramids to be a monument to the insufficiency of all
human enjoyments. He who has built for use till use is supplied must
begin to build for vanityâ
Samuel Johnson,
Rasselas (The Choice of Life)
1753
22. #OReillyAI @timoreilly
âIt has been estimated that
between one-fifth and one-third
of women in Seoul have gone
under the knife, and one poll
reported by the BBC puts the
figure at fifty per cent or higher
for women in their twenties.
Men, by one account, make up
fifteen per cent of the marketâ
24. #OReillyAI @timoreilly
3. Economic Transformation Takes Time and Effort!
Goldman Sachs
Investment Research
estimates it wonât be till
2060 that all vehicles are
autonomous! The AI
transformation itself will
drive the economy for
decades to come!
30. #OReillyAI @timoreilly
What we fight with is so small.
And when we win, it makes us small.
This is how we grow: by being defeated,
decisively, by constantly greater beings.
(Paraphrase of âThe Man Watching,â
by Rainer Maria Rilke)
34
Editor's Notes
Others here are talking about AI as technology. Iâm going to spend a few minutes sharing my thoughts about the impact of AI on the economy.
AI has gotten a bit of a bad rap in the media these days, with folks like Stephen Hawking, Elon Musk, and Bill Gates worrying that when true general AI arrives, it might not have our best interests in mind. I wonât deny that we should be thinking about the long term consequences of what we do with this technology, as with so many others. But I think the fear mongering has gotten a bit out of hand.
We hear how self-driving trucks will put millions of Americans out of work.
How increasing numbers of human tasks - including white collar jobs â are now susceptible to automation. While there are concerns, thatâs a lot of fear mongering! there are also huge possibilities for AI to help build a better world.
As a result, we see calls for Universal Basic Income, with the assumption that there will be nothing left for humans to do once corporations outsource all the work to machines. While I think Universal Basic Income is an intriguing idea, I donât think we need it because there will be nothing left for humans to do. I see three reasons why weâll never run out of jobs for people.
The first reason is that thereâs so much left to do! Nick Hanauer, who was one of the speakers at my Next:Economy Summit last year, put it best when he said: âTechnology is the solution to human problems. We wonât run out of work till we run out of problems.â
Mark Zuckerberg and Priscilla Chanâs announcement last week their intention to fund an initiative to cure all disease within their childrenâs lifetime is a great example. Itâs hard to imagine that AI wonât play a major role in achieving that ambitious goal.
Al is already being used in both clinical practice and in research. Deep mind is sifting through millions of eye scans.
Startups like Enlitic are using machine learning to spot tissue abnormalities.
How about Climate Change? Do we think weâre going to be able to lick it without totally transforming our economy, our power grid, our logistics, and developing new kinds of science-driven adaptation?
Climate change might well be for todayâs economy what World War II was for the Great Depression â an urgent call to refocus on big challenges, one that needs all of us â humans and machines.
And God knows, we are already seeing the scourge of war, and the massive refugee crisis that it has set in motion. Do we just accept that as the cost of doing business? Or can we solve for that, rebuilding as the US helped rebuild Europe after the scourge of World War II?
In any event, itâs clear that the kinds of investments and retooling that AI will bring â and that meeting the economic challenges of the 21st century will bring â will be a key part of driving the economy for many years to come. In his new book,Borrow, Louis Hyman talks quite a bit about the New Deal and some things that people donât really know about it, like the funding of the Defense Plant Corporation that led to the development of the US aerospace industry. We need to get the trillions in uninvested capital off the sidelines and into the massive job of building a better future.
Some of the most pernicious problems in our society are the unequal distribution of income. As AI takes on more work, will the owners of AI reap extraordinary gains, or will we distribute it more fairly? The choices we make are essential.
As my friend David Rolf of the SEIU said to me before my Next:Economy summit last year, âGod did not make being an auto worker a good job.â We have to do the same hard work that was done in the industrial economy to make jobs good for ordinary people again, not just for âmanagersâ like us. Human income inequality is a bug in many of the systems weâre building, and itâs our job as managers of the systems that employ people today to fix that bug.
Itâs not AI we should be afraid of. Itâs the dominant ideology that says that people donât matter, that the need for business to maximize profits is as natural as the law of gravity.
The use of automation by business to reduce labor costs and increase profits is a social and political choice, not an economic law! I made this case in an article I wrote recently on LinkedIn, arguing that the rules of economics that we take for granted are more like the rules of a game than the laws of physics. There are underlying laws, but there is a layer of rules on top that are designed to create various outcomes. And those rules could be optimized to make the game better.
Could AI help us better understand how to play the game of economics, how to make the game better for everyone, much as the contest between Deep Mind and Lee Sedol unveiled beautiful new moves in the game of Go?
The second reason why we wonât run out of jobs is what Clayton Christensen called The Law of Conservation of Attractive Profits. Back in 2004, I used this principle to explain why Google would win out over Microsoft, and the web would win out over Windows. As proprietary software was commoditized by open source and the open standards of the internet, I knew something else was going to become valuable, and came to the conclusion that it was big data and collective intelligence. We should always ask ourselves this question: what is being commoditized, and what is becoming valuable? These questions are going to be raised anew in the age of AI.
More broadly, there is a kind of âcreative premiumâ that drives value in our economy. Think of how the ascent of Apple as one of the most valuable companies in the world began with a bold stroke asserting that being a mac user MEANT something different from being an ordinary computer user. Macarthur fellow Dave Hickey argues in his book Air Guitar that when the automobile became a commodity, Harley Earl, who headed the design division at General Motors after World War II, turned the auto industry into what he called âan art market,â one driven by manufacturing innovation into one driven by design -- one that "stopped advertising products for what they were, or for what they could do, and began advertising them for what they meant. Apple did this for the computer industry. In rich societies, every industry is an art market.
Macarthur fellow Dave Hickey argues in his book Air Guitar that when the automobile became a commodity, Harley Earl, who headed the design division at General Motors after World War II, turned the auto industry from one driven by manufacturing innovation into one driven by design -- in effect, an "art market," one that "stopped advertising products for what they were, or for what they could do, and began advertising them for what they meant. Apple did this for the computer industry.
This is why a huge amount of economic activity in rich societies is not about the basics of life but about self expression, experience, and status. When people have money, they spend it on better experiences. And the economic competition is to offer differentiated experiences, expressions, and status. Consider food, and the intense creative competition between restaurants. Weâre not all eating low cost flavorless goop that has all the right nutrition but no aesthetic value!
Well, maybe some of us are! But even Soylent is a kind of âart marketâ product. People arenât just buying a commodity, they are buying a value judgment. Think of the creative premium embodied in concepts like Organic, Gluten Free, Farm to Table.
Another version of the same principle is the status economy.
Iâve always loved this quote from Samuel Johnson, the creator of the first English dictionary, but also a remarkable essayist and poet. âI consider the pyramids to be a monument to the insufficiency of all human enjoyments. He who has built for use till use is supplied must begin to build for vanityâŚâ
I thought of this recently when reading this New Yorker article about plastic surgery in South Korea. âIt has been estimated that between one-fifth and one-third of women in Seoul have gone under the knife, and one poll reported by the BBC puts the figure at fifty per cent or higher for women in their twenties.â He who has built for use till use is supplied must begin to build for vanity! Think also how common tattoos have become. In a future of genetic engineering, brain-machine interfaces, and other augmentation, what new kinds of fashion might we expect?
Think how common tattoos have become. In a future of genetic engineering, brain-machine interfaces, and other augmentation, what new kinds of fashion might we expect?
Thatâs the second reason why I think weâll never run out of jobs, even in a world where AI can do more and more of the routine tasks we do today.
The third reason is that economic transformation takes time and effort. Itâs easy to underestimate the amount of economic activity thatâs involved in simply updating our technology! Goldman Sachs Investment Research estimated that it wonât be until 2060 that all existing vehicles will be upgraded to full autonomy, because unlike mobile phones, which are typically turned over every year or two, vehicles remain in use for an average of 20 years! But even pure digital transformation takes time. Weâre 25 years into the commercial internet era, and online advertising is just on the cusp of passing television. Amazon, for all its success is only 20% the size of Walmart. Thereâs a long way to go! As Jeff Bezos likes to say, âItâs still day one!â
Much closer to home, bots and conversational interfaces are going to completely upset the balance of power in the computer industry, leading to a huge amount of new competition, economic retooling, and startup activity. My argument is probably too involved to go into in the short time I have here, but in summary, when I compare Alexa interactions with Googleâs voice interface on my phone, I realized that to get the most out of speech, you have to go all in. So I think thereâs going to be a revolution not just in speech controlled devices for the home, but an entire turnover of the mobile operating system and app ecosystem.
But we do have a responsibility to get the transformation right!
I wrote a piece about this recently, entitled The Great question of the 21st century: whose black box do you trust? I wrote about the role of algorithms in shaping the choices that businesses make. In our current presidential election, we see how news organizations have adapted their behavior to please the crowd, with the worst impulses amplified by social media algorithms. In our economy, we see the growing role of finance in building businesses that are designed to maximize profits rather than human utility. These are algorithms that need debugging and improving!
You can make a credible argument that the mediaâs behavior during the current US election, feeding Trumpâs candidacy, invested in horse-race reporting, was driven by the way that media is now fundamentally driven by social media algorithms. You must please the algorithms if you want your business to thrive.
Similarly, companies must please âthe marketâ â our system of executive (and in silicon valley, all employee) compensation via stock options means that even companies like Apple that have no need to raise capital from financial markets are still under the thumb of âactivist investorsâ like Carl Icahn, who, like Donald Trump, have learned to make the algorithms work in their favor. And of course, back in 2008 we saw how unscrupulous Wall Street banks manipulated markets with derivatives that had little relationship to any underlying reality. These are bugs in markets that are increasingly algorithmic, and in some ways are like spam or viruses. In the age of AI, weâll need to understand how network storms are manipulable, and when and how they need to be regulated.
And thatâs the theme of a new event Iâve been working on, which I call The Next Economy Summit. Iâm trying to get people to stop being afraid of the tools of the future, and instead to put them to work on the worldâs great problems. I want us to use AI to build a rich society for everyone, so we can get on with the fundamentally human job of entertaining and caring for each other. I want us to remember always to build AI as if people matter. http://conferences.oreilly.com/nextcon/economy-us
If we let machines put us out of work, it will be because of a failure of imagination and will to make a better future!
Those weavers who smashed machine looms in Ned Luddâs rebellion of 1811 didnât realize that descendants of those machines would make unbelievable things possible. Weâd tunnel through mountains and under the sea, weâd fly through the air, crossing continents in hours, weâd build cities in the desert with buildings a half mile high, that weâd put spacecraft in orbit around Jupiter, that weâd smash the atom itself! What is impossible today, but will become possible with the technology we are now afraid of?
Iâd like you to remember this advice from Rainer Maria Rilkeâs poem, The Man Watching. He describes how Jacob and the other wrestlers of the Old Testament used to wrestle with angels. They had no hope of winning, but they were strengthened by the fight. Rilke goes on to say, âWinning does not tempt that man. What we fight with is so small, and when we win, it makes us small. What we want is to be defeated, decisively, by progressively greater beings.â So, relish your challenges, and keep picking big fights. We need to invest in the future. Painting by Eugene Delacroix, from a photo I took in St. Sulpice in Paris.