Others here are talking about AI as technology. I’m 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 won’t 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 – are now susceptible to automation. While there are concerns, that’s 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 don’t think we need it because there will be nothing left for humans to do. I see three reasons why we’ll never run out of jobs for people.
The first reason is that there’s 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: “Technology is the solution to human problems. We won’t run out of work till we run out of problems.”
Mark Zuckerberg and Priscilla Chan’s announcement last week their intention to fund an initiative to cure all disease within their children’s lifetime is a great example. It’s hard to imagine that AI won’t 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 we’re 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 today’s economy what World War II was for the Great Depression – an urgent call to refocus on big challenges, one that needs all of us – 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, it’s clear that the kinds of investments and retooling that AI will bring – and that meeting the economic challenges of the 21st century will bring – 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 don’t 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, “God did not make being an auto worker a good job.” 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 “managers” like us. Human income inequality is a bug in many of the systems we’re building, and it’s our job as managers of the systems that employ people today to fix that bug.
It’s not AI we should be afraid of. It’s the dominant ideology that says that people don’t 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 won’t 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 “creative premium” 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 “an art market,” 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. We’re 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 “art market” product. People aren’t 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.
I’ve always loved this quote from Samuel Johnson, the creator of the first English dictionary, but also a remarkable essayist and poet. “I 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 vanity…”
I thought of this recently when reading this New Yorker article about plastic surgery in South Korea. “It 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.” 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?
That’s the second reason why I think we’ll 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. It’s easy to underestimate the amount of economic activity that’s involved in simply updating our technology! Goldman Sachs Investment Research estimated that it won’t 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. We’re 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. There’s a long way to go! As Jeff Bezos likes to say, “It’s still day one!”
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 Google’s voice interface on my phone, I realized that to get the most out of speech, you have to go all in. So I think there’s 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 media’s behavior during the current US election, feeding Trump’s 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 “the market” – 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 “activist investors” 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, we’ll need to understand how network storms are manipulable, and when and how they need to be regulated.
And that’s the theme of a new event I’ve been working on, which I call The Next Economy Summit. I’m trying to get people to stop being afraid of the tools of the future, and instead to put them to work on the world’s 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 Ludd’s rebellion of 1811 didn’t realize that descendants of those machines would make unbelievable things possible. We’d tunnel through mountains and under the sea, we’d fly through the air, crossing continents in hours, we’d build cities in the desert with buildings a half mile high, that we’d put spacecraft in orbit around Jupiter, that we’d smash the atom itself! What is impossible today, but will become possible with the technology we are now afraid of?
I’d like you to remember this advice from Rainer Maria Rilke’s 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, “Winning 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.” 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.
#OReillyAI @timoreilly 1. Are we
done yet, solving the world’s problems? “Technology is the solution to human problems. We won’t run out of work till we run out of problems.” #Verge #NextEconomy @timoreilly Nick Hanauer
#OReillyAI @timoreilly Text #Verge #NextEconomy
@timoreilly “Back 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 poor…. 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 Deal’s Reconstruction Finance Corporation not only helped light up America — moving it from 10 percent of homes having electricity in 1930 to more than 60 percent a decade later — it also funded research in the Defense Plant Corporation. “It was fundamentally about investment in edgy technology, so things like aerospace, aluminum extraction, synthetic rubber were all brought to scale,” Hyman says. “Aerospace 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.”
#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
#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.
#OReillyAI @timoreilly Rich economies indulge
in things that appear to be useless, but are really all about status “I 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 vanity” Samuel Johnson, Rasselas (The Choice of Life) 1753
#OReillyAI @timoreilly “It 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 market”
#OReillyAI @timoreilly 3. Economic Transformation
Takes Time and Effort! Goldman Sachs Investment Research estimates it won’t be till 2060 that all vehicles are autonomous! The AI transformation itself will drive the economy for decades to come!
#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 “The Man Watching,” by Rainer Maria Rilke) 34