Economics Future Review

AI Superpowers: China, Silicon Valley and the New World Order by Kai-Fu Lee – An Honest Review

If you haven’t been paying attention, there is a war going on. It’s not a cold war or a hot war – it’s something brand new. We are on the cusp of civilization changing technology reshaping our world and our species – how that reshaping takes place depends on who wins the war. Will it be Silicon Valley and the flawed ‘American Way’ or will it be China and the equally flawed (but for different reasons) ‘Chinese Way’. Or will it be something else? Dr. Kai-Fu Lee, a pioneer and luminary in the field of AI has written this very interesting book to prepare us – read on for a review. 

Essentially, for the last 500 years or so – European and American interests have been calling the shots and as Dr. Lee puts it – China now considers that to have been a mistake which will be corrected soon. He’s not just talking trash here. Dr. Lee has an amazing resume with plenty of experience and time to understand both the American and Chinese way of doing things. In this book – he contrasts the two technology ideologies from the developers to the government intervention to the use case scenarios. The result is a world approaching a crossroads with two very different futures ahead of it. 

While the average American may still think of China as the backwater where children are starving (so clean your plate), the reality is that China has awoken and is developing faster than any nation in world history. Dr. Lee says that the ‘sputnik moment’ was when the AlphaGo computer wholloped the world’s best human player repeatedly. At this point the Chinese government – an authoritarian, nationalist, socialist, and completely centralized entity in charge of nearly 1.5 billion humans put a laser focus on the development of AI and all that it will bring – and without the constraints of a capitalist nanny state that has to appear to be rights and property respecting. 

China is not constrained by property rights, patents, human rights, privacy issues, or unions – all of which prevent Silicon Valley from making the next leap. Dr. Lee compares data to electricity in this race and essentially what he posits is that China has a lot less constraints on it in regards to collecting and using data than the US does and this gives China a huge advantage. In addition, China has a population that values safety and security over liberty and privacy – which makes it much easier to implement all data seeing applications, software, and surveillance systems. 

I’ve read other reviews – and it seems that many of them think that Dr Lee is  playing favorites and painting a picture of China having an advantage because of his Taiwanese heritage and the fact that he has spent a great deal of time living in China. I don’t believe this is true, on the contrary, I think that Dr. Lee understates things due to his American bias and longstanding employment and investments in Silicon Valley. 

The Chinese are already deploying self-driving buses and paying for dinner in restaurants with the same app they buy music, message friends, find ride-shares, and rent bicycles with. We are very early in this race, but the US is already a decade behind. 

Dr. Lee’s breakdown of the factors that each country will lead in and his later breakdown of the jobs that will be affected (almost all of them) are about as good as one can hope to envision the future with. Only time will tell if his projections are accurate.  The important thing about this book, however, is the awareness it brings to the fact that we are in a race most American people aren’t even aware of – and we are losing. 

Finally, at the end of the book, Dr. Lee uses his own experience with cancer and how it changed the way he lives to suggest a more human approach to the future – unfortunately, unless the whole world is suddenly diagnosed wth Stage 4 cancer, this is not likely to resonate with people who have to struggle to pay bills, make rent, get educations, and worry about economic survival today. 

He argues that a sort of paid volunteerism is a better way to stave off the massive unemployment that is coming than an Universal Basic Income

He doesn’t seem to recognize that if thousands of senior citizens are suddenly volunteering to do jobs that require humans – that the humans who would have made a living doing those jobs now have no source of income. It seemed to be a pretty glaring blind spot to me in what was otherwise a very aware book. 

Economics Future Investing Politics

Seven Industries That Will Shape the Future

This morning before the closing bell of the stock market, I released the first baseline number for the Vagorithm Index. Today on October 24, 2018 it was 381.33(+1.64) with the number in parenthesis being my societal volatility index number. On scale 381.33 is our baseline for societal change and and radical disruption. A lower number means that innovation and change are happening at a slower pace, a higher number means that change is happening at a faster pace. The volatility number is the daily deviation from a steady technological growth rate. I do not use the Dow Jones Industrial Index or any other index in determining this value. Instead, I look at the rate of change and appreciation of companies that are working within the seven sectors that I believe are shaping the future around us. We do not see how rapidly the world is changing – but from day to day – the rate of change is faster than the annual rate of change less than a hundred years ago. The sectors below are the sectors which are shaping the future.

1. Bioengineering and Genetic Engineering – At the moment, this sector is moving relatively slow in comparison with others because of the important regulation that constrains what would otherwise be volcanic growth. Our ability to change life itself is moving faster than the regulation can keep up. Not only does this affect things like disease and aging but also the ability to grow food, to repair(or destroy) the environment, and much more. Not only can we change the world, eventually when regulations are satisfied or bypassed, we will be changing ourselves and will no longer be Homo Sapiens of any kind.

2. Distributed Ledgers and Blockchain – IBM is doing amazing work with blockchain and food production – as well as many other sectors. While the jury may seem to be out on Bitcoin and other cryptocurrencies – players behind the scenes are building the future of finance, ownership, and wealth. Do not underestimate the power of distributed ledgers to topple governments and corporations.

3. Renewable Energy – our world was built on fossil fuels. It was fossil fuels that gave the greatest wealth and power to men and nations. Now, like it or not, they are being phased out. Renewable energy on a massive scale is coming and it will being new power structures, new ways of living, and new problems.

4. Artificial Intelligence (and Augmented Intelligence). We already walk around with assistants in our pockets that know everything. The interfaces are getting better. Our brains no longer function like the brains of our grandparents but we still use the same structures – not for long. And then there is the singularity – A.I. will surpass our ability to do everything – and will make everything happen much much faster than it already is.

5. Industrial and Labor Automation. In all liklihood, you are going to lose your job. We are all going to lose our jobs. Things will become cheaper and information will become more expensive. Our entire concept of economics will have to undergo a radical transformation.

6. New Materials. Nano-carbon fibres, lab grown meat, more conductive materials, better building materials. A.I. and automation along with renewable energy sources and bioengineering will change the materials we use in almost every instance. Legacy materials will be like hand made woks, a luxury or oddity – not the norm.

7. Virtual Reality, Artificial Reality, Augmented Reality, Combined Reality. In the not too distant future, you won’t have to put on a headset to enter a virtual world and there is a pretty good chance that the virtual/artificial/augmented world will spill over into the ‘real’ world. Will your self driving car be able to crash into the giant billboard – no, because it won’t physically be there – but it will be there – as real as your cousin that you have only seen on Facebook for the past ten years.

These are the main factors that I’ve incorporated into the Vagorithm. There are a couple of other factors that seem important to me. Is this a financial tool? Maybe. Over time you may be able to use it to chart good entry and exit points for the stock/forex/crypto markets – but my main purpose in creating it and sharing it, is to be able to quantify the level of future that exists in the now over time. For what it’s worth – since I began keeping track of these factors (shortly after the election of 2016) – the level of innovation has decreased by 42%. So, by my reckoning – right now – we are in a period of doldrums when heavy resistance to technological and societal change is feeling it’s power. Ignorance is at its most powerful level since the McCarthy Era when people wore blinders and feared what they didn’t understand. The good news is – when the forces of ignorance are defeated – the level of change is going to be  almost blinding in its speed.