Technology and the Economy of the Future_8 pptx

THE LIGHTS IN THE TUNNEL / 234 CopyrightedMaterial–Paperback/Kindle available @ Amazon Trouble in China IfconsumerspendingintheU.S.andtherestofthe de- veloped world remains depressed, China may ultimately find itdifficultto sustain thegrowthit needsto keep its workersemployed.GiantretailersintheUnitedStateswill likelycontinuetoexertextremepressureonChineseman- ufacturers to produce ever cheaper, better and more so- phisticated products. These businesses may have little choicebuttoturnincreasinglytoautomationasawayto improveefficiencyandtrimcosts.Inasocietythatoffers littleinthewayofasafetynet,thesavingrateamongChi- neseworkersmightremainveryhigh,orperhapsevenin- crease, in spite of the government’s efforts to somehow spur consumer spending. All this may lead to increased incidentsofcivilunrestandinstability.  Continuing Instability in the Financial Markets Aseveryoneknows,thecurrentcrisisbeganwiththesub- primemeltdown.Acasecancertainlybemadethatstag- natingwagesplayedaroleinthecauseofthatmeltdown. Obviously,lowwagesmadeitdifficultforthesepeopleto repaytheirloans. Beyondthat,Ithink itisalsotruethat,to some de- gree,themotivationbehindsubprimeloanprogramswas theideaofthe“ownership society.” Basically, inlightof increasingevidencethatwagespaidtoaveragepeopleno longerofferalikelypathtosuccess,weturnedinsteadto thepromiseofrealestatespeculationandtriedtoextendit toasmanypeopleaspossible. Appendix / Final Thoughts / 235 CopyrightedMaterial–Paperback/Kindle available @ Amazon Itdidn’tturnoutwell,andthelessonisthatvirtually allassetvaluesinoureconomyarebasedontheassump- tionthatwearegoingtocontinuehavingavibrantmass marketeconomysupportedbyrobustconsumerspending. Ifthatbasicassumptionisthreatened,weareverylikelyto see increased risk, volatility and, ultimately,deflating val- ues. The “ownership society” idea just isn’t workable— consumersneedincomes(andconfidenceinthecontinuity of those incomes) to support the sustained discretionary spending that powers the economy. Remember: Every- thingthatisproducedbytheeconomyis ultimatelycon- sumedbyindividualhumanbeings. *   Ugly and irrational political battles IftrendssimilartotheonesI’velistedabovedodevelop, andifthereisnocoherentunderstandingandreasonable consensus regarding what is occurring, a dark scenario may develop. Political battles will become even more heated,partisanandirrational.Manypoliticiansmayactin evenmorepurelyself-interestedwaysastheycometoge- nuinelyfearthespecteroftheirownunemployment. Conservatives will likely cling to the idea that taxes should be cut on business even as it becomes clear that such cuts will result in little or no job creation. Liberals   *  GDP is equaltoPersonalConsumer Spending + Business Invest- ment (which occurs in anticipation of future consumer spending) + NetExports(consumer spendinginothercountries) +Government Spending(moneythatthegovernment spendstoprovideservicesto individual people). It all comes down to individual people buying stuff. THE LIGHTS IN THE TUNNEL / 236 CopyrightedMaterial–Paperback/Kindle available @ Amazon may callfor increased job training evenastheprospects formoreeducatedworkersarediminishing.Theymayalso throw their weight behind organized labor, and this will leadtoacontinuingbalkanizationoftheworkforceintoa protectedeliteversusafarlargernumberofhighlyvulner- ableworkers. Appendix / Final Thoughts / 237 CopyrightedMaterial–Paperback/Kindle available @ Amazon Outsmarting Marx Thecentralthesisofthisbookisthat,astechnologyacce- lerates, machine automationmay ultimately penetrate the economy to theextent thatwages no longer provide the bulkofconsumerswithadequatediscretionaryincomeand confidenceinthefuture.Ifthisissueisnotaddressed,the resultwillbeadownwardeconomicspiral. Itmustbeacknowledgedthatthisideaisquitesimilar tothepredictionsthatweremadebyKarlMarxinthemid tolate1800s.Marxpredictedthatcapitalismwouldsuffer from a relentless “accumulation of capital,” resulting in massive unemployment and wages that would be driven downbelowsubsistencelevel.Thisinturnwouldresultin diminishedconsumerdemand,fallingprofitsandultimate- lyeconomiccrisisorevencollapse. Iftheargumentsinthisbookprovecorrect,thenwe may bein thesomewhatuncomfortablepositionofcon- ceding that Marx was, at least in some ways, perceptive aboutthechallengesthecapitalistsystemwouldeventually encounter.That,ofcourse,doesnotmeanthatweshould consideradopting Marx’s solution. He advocated theab- olition of private property, acentrallyplanned economy, and perhaps most chillingly, the overthrow of govern- mentsanda“dictatorshipoftheproletariat.”Inthewake of the collapse of communism, these ideas have been shownunequivocallytobe non-starters. They deserveto besweptintothedustbinofhistory. Theanswertotheproblemisclearlytoadaptoursys- tem.Thefreemarketeconomyisnotanaturalphenome- THE LIGHTS IN THE TUNNEL / 238 CopyrightedMaterial–Paperback/Kindle available @ Amazon non.Itisreallyamachinethatwehavebuiltandrefined overcenturies:itisanenginethatisfundamentallydriven byincentives.Marxwantedtotakeasledgehammertothat engine.Ourjobistotuneit,andevenre-engineeritifne- cessary,sothatitwillcontinuetopowerprosperityindefi- nitely.  Appendix / Final Thoughts / 239 CopyrightedMaterial–Paperback/Kindle available @ Amazon The Technology Paradox Mostpeoplewhowatchmoviesorhavereadsciencefic- tionnovelsarefamiliarwiththepotentialparadoxesasso- ciatedwithtimetravel. Forexample,ifyouwereableto travelbackintimeandthendosomethingtopreventyour parents from meeting before you were born, or perhaps killayoungerversionofyourself,thenyouwouldpresum- ablyceasetoexist.Whileweobviouslydon’tneedtowor- ry too much about the practical problems of owning a timemachine,Ithinkthatthereisasomewhatanalogous issueassociatedwiththefutureoftechnology. Manytechnologistswhothinkdeeplyaboutthefuture believethatgenuinelyamazing thingsare possible.These visions include things such as truly intelligent machines and advanced nanotechnology that would allow us to transform matter, generate abundant clean energy and perhapscreatetangibleobjectswiththesameeasethatwe nowcreategraphicsonacomputerscreen.Thereisalsoa greatdealofspeculationaboutfantasticmedicaladvances thatmightcuremajordiseasesandperhapsevendramati- callyextendthehumanlifespan. *    *  While many diet books are a bit ambitious in terms of what they promise,RayKurzweilandTerryGrossmantakethingstoanentirely newlevel with two books (Fantastic Voyage: Live Long Enough to Live Forever and Transcend: Nine Steps to Living Well Forever) based on the premise that ifyou can justhold on longenough to make ittothe point of extraordinary technological acceleration (the “Singularity”), you should be abletotakeadvantageofthecontinuous medicalad- vancesthatwillensue,andthenmanagetobecomeessentiallyimmor- tal. You won’t find many other books that discuss subjects such as THE LIGHTS IN THE TUNNEL / 240 CopyrightedMaterial–Paperback/Kindle available @ Amazon TheessentialpointIwanttomakeisthatallthistruly amazingstuffwillrequireenormousinvestment.Certainly,tril- lionsofdollarswillneedtobeinvestedinordertomake such technologies a reality. As I have pointed out throughout this book, such investment cannot occur in theabsenceofrobustconsumerdemand.Withinthecon- textofthefreemarketeconomy,noinvestorwouldmake suchaninvestmentunlessheorsheanticipatesavibrant marketfortheresultingtechnology. IwouldalsoarguethatthelevelofautomationIhave beendiscussinginthebook—inotherwords,theideathat a substantial fractionof routine,average jobs willbeau- tomated—representsamuchlowerpointonthetechnolo- gycurvethanall thisreallyfantasticstuff.Therefore,itwill occurfirst.AsIhavepointedout,iftechnologypermanently eliminateshugenumbersofworkers—and createsperva- sive fear in the minds of those who still have jobs— consumer demand would surely suffer dramatically. The bottomlineisthat,ifoureconomicmodelisnotadapted to the new reality, technology could essentially kill itself off.Itisquiteeasytoimagineascenarioinwhichtechnol- ogyreachedacertainpoint,butthensloweddramatically orevenhaltedbeforegettingtothereallyamazingthings.   advancedartificialintelligenceandcybernetics—andalsohaveplenty ofrecipesforhealthydishes.  Appendix / Final Thoughts / 241 CopyrightedMaterial–Paperback/Kindle available @ Amazon Machine Intelligence and the Turing Test Thisbookhasprimarilybeenconcernedwiththepotential economicimpactofwhatresearchersinthefieldofartifi- cialintelligencewouldcallnarrowAI.Inotherwords,ma- chinesandsoftwarethatarecapableofsophisticatedanal- ysis,decisionmakingandreasoningwithinarelativelynar- rowfieldofapplication.Suchmachinesarenotreallyintel- ligentinanymeaningfulsense—buttheyarehighlycom- petentatperformingspecificcomplextasksandmaywell exceedthecapabilityofahumanworker. NarrowAIapplicationsarealreadyinwidespreaduse; expertsystemssuchasthesoftwarethatcanautonomous- lypilotandlandairlinersandmanyoftheadvancedfea- tures built into Internet search engines and multiplayer role playing games fall into this area. Narrow AI is the practicalsideofartificialintelligence,andforthatreason, we can expect that it will attract substantial commercial investment.AsIhavearguedinthisbook,machinesexhi- bitingvastlyimprovednarrowAIcapabilitymayultimately be poised to permanently take over a great many of the moreroutinejobsintheeconomy. WhilenarrowAIisincreasinglydeployedtosolvereal worldproblemsandattractsmostofthecurrentcommer- cialinterest,the HolyGrailofartificial intelligenceis, of course, strong AI—the construction of a truly intelligent machine.TherealizationofstrongAIwouldmeantheex- istenceofamachinethatisgenuinelycompetitivewith,or perhaps evensuperiorto,a human beinginitsabilityto reasonandconceiveideas.TheargumentsIhavemadein THE LIGHTS IN THE TUNNEL / 242 CopyrightedMaterial–Paperback/Kindle available @ Amazon thisbookdonotdependonstrongAI,butitisworthnot- ingthatiftrulyintelligentmachineswerebuiltandbecame affordable, the trends I havepredicted here would likely beamplified,andtheeconomicimpactwouldcertainlybe dramaticandmightunfoldinanacceleratingfashion. ResearchintostrongAIhassufferedbecauseofsome overlyoptimisticpredictionsandexpectationsbackinthe 1980s—long before computerhardware was fast enough to make true machine intelligence feasible. When reality fellfarshortoftheprojections,focusandfinancialback- ingshiftedaway fromresearchintostrongAI.Nonethe- less,thereisevidencethatthevastlysuperiorperformance andaffordabilityoftoday’sprocessorsishelpingtorevital- izethefield. ResearchintostrongAI canberoughlydivided into twomainapproaches.Thedirectcomputationalapproach attemptstoextendtraditional,algorithmiccomputinginto therealmof true intelligence. This involves the develop- ment of sophisticated software applications that exhibit generalreasoning.Asecondapproachbeginsbyattempt- ingtounderstandandthensimulatethehumanbrain.The Blue Brain Project, 57  a collaboration between Switzerland’s EPFL (one of Europe’s top technical universities) and IBM, is one such effort to simulate the workings of the brain.Onceresearchersgainanunderstandingofthebasic operating principles of the brain, it may be possible to build an artificial intelligence based on that framework. Thiswouldnotbeanexactreplicationofahumanbrain; instead,itwouldbesomethingcompletelynew,butbased onasimilararchitecture. Appendix / Final Thoughts / 243 CopyrightedMaterial–Paperback/Kindle available @ Amazon When might strong AI become reality—if ever? I suspectthatifyouweretosurveythetopexpertsworking inthefield,youwouldgetafairlywiderangeofestimates. Optimistsmightsayitwillhappenwithinthenext20to30 years. Amorecautiousgroup would placeit 50or more yearsinthefuture,andsomemightarguethatitwillnever happen. True machine intelligence is an idea that, in many ways,intrudesintotherealmofphilosophy,andforsome people,perhapsevenreligion.Whatisthenatureofintel- ligence? Is intelligence algorithmic? Can it be separated fromconsciousnessorself-awareness?RogerPenrose,one of the world’s top mathematical physicists, has written severalbooks 58 suggestingthattrueartificialintelligenceis unattainableusingconventionalcomputersbecausehebe- lieves that intelligence (or at least consciousness) has its rootsinquantummechanics—theareaofphysicsthatgo- vernstheprobabilistic,andseeminglybizarre,interactions thatoccurbetweenparticlesofsubatomicsize. IfstrongAIdoesarrive,howwillweknow?Thatisa question that was first askedbyAlan Turing nearlysixty years ago. Turing, a legendaryBritish mathematician and codebreakerduringWorldWarII,isoftenconsideredto bethefounderofcomputerscience.In1950,Turingpub- lishedapaperentitled“ComputingMachineryandIntelli- gence,”inwhich he proposed atesttoanswer theques- tion:“Canmachinesthink?” Turing’stestwasbasedonagamepopularatparties at the time. In today’s terms, it amounts to a three-way instant messaging conversation. One participant is a hu- [...].. .THE LIGHTS IN THE TUNNEL / 244 man judge The other participants are another person and a machine—both of whom attempt to convince the judge that they are human by conducting a normal conversation If the judge can’t tell which participant is which, then the machine is said to have passed the Turing Test The Turing Test is perhaps the most well-known and accepted method for measuring... Jeremy Rifkin, The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era, NewYork, Penguin Group, 1995 49 Chapter 4: Transition 51 Cornelia Dean, “Scientific Savvy? In U.S Not Much”, NewYork Times, August 30, 2005, web: http://www.nytimes.com/2005/08/30/science/30profile.html 52 See Chris Anderson’s The LongTail: Whythe Future of Business is Selling Less of More, a book... available @ Amazon About / Contacting the Author Martin Ford is the founder of a Silicon Valley-based software development firm He has over 25 years experience in the fields of computer design and software development He holds an MBA degree from the Anderson Graduate School of Management at UCLA and an undergraduate degree in computer engineering from the University of Michigan, Ann Arbor He has a blog... populations, and globalization will change the wayyou live and work, NewYork, St Martin’s Press, 2008 39 Thomas L Friedman, The World is Flat: A Brief History of the Twenty First Century, NewYork, Farrar, Strause and Giroux, 2005, 2006 40 China’s high saving rate the result of government policy, see: Eamonn Fingleton, In the Jaws of the Dragon: America’s Fate in the Coming Era of Chinese Hegemony, NewYork, St... fraction of the jobs that support consumers, the viability of capitalism will ultimately be threatened—unless, of course, our economic rules are adapted to reflect the new reality These issues are beyond the scope of this book For a good introduction to this area, I’d recommend reading “Why the future doesn’t need us,” an article written by Sun Microsystems co-founder Bill Joy for the April, 2000 issue of. .. the interference patterns of quantum electron waves”, Stanford News Service: http://newsservice.stanford.edu/news/2009/january28/small-012809.html 13 Many technologists believe that the exponential progress of information technology will ultimately level off In other worlds, the graph will somedaybecome an “s-curve,” somewhat similar in shape to the graph of human capability that appears later in the. .. However, there is no way to knowhowfar in the future this might occur, and there is little evidence to suggest it will happen anytime soon 14 For more on “quants” and the creation of exotic derivatives, see: Emmanuel Derman, MyLife as a Quant: Reflections on Physics and Finance, NewYork, John Wiley and Sons, 2004 15 Charles Dickens, Oliver Twist 16 James J Heckman and Paul A LaFontaine, The Declining... practice, the rules would need to be further refined, and it seems likely that a panel of judges would be required rather than a single person In my opinion, the main problem with the Turing Test is that it is, as Turing pointed out in his paper, an “imitation game.” What it really tests is the ability of an intelligent entity to imitate a human being—it is not a test of intelligence itself Presumably the. .. sense of security; it glosses over the obvious reality that cockroaches neither land aircraft nor defeat human beings at games of chess When machine capability is focused narrowly, the story is very different I think there is little doubt that in the coming years and decades, our definition of what constitutes “narrow” artificial intelligence is going to broaden quite dramatically If it broadens to the. .. http://en.wikipedia.org/wiki/Instructions_per_second The MacIntosh and Lisa computers used the Motorola 68000 microprocessor with a rating of 1 MIPS 10 Calculating the amount in Bill’s pocket: Google makes this easy Just enter the following in the search box: 01 * 2 ^ ((1986-1975)/2) (replace 1986 with the desired year) 11 Ray Kurzweil, The Singularityin Near: When Humans Transcend Biology, NewYork, Penguin Group, 2005 12 “ “S” and “U” encoded . acentrallyplanned economy,  and perhaps most chillingly, the overthrow of govern- ments and a“dictatorship of the proletariat.”In the wake of the collapse of communism, these ideas. Amazon  49 Blinder,AlanS.,“IsGovernmenttooPolitical?”ForeignAffairs,No- vember/December1997.Web: http://www.foreignaffairs.org/19971101faessay 381 5/alan-s- blinder/is-government-too-political.html  50 JeremyRifkin, The End of Work: The Decline of the GlobalLaborForce and the Dawn of the Post-MarketEra,NewYork,PenguinGroup,1995. . many of the moreroutinejobsin the economy.  WhilenarrowAIisincreasinglydeployedtosolvereal worldproblems and attractsmost of the currentcommer- cialinterest, the HolyGrail of artificial