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Innovation, Artificial Intelligence and the Economy

May you live in interesting times is an old curse. Well, we certainly are living in interesting times! Over the last 5-10 years, we have seen enormous growth in computing power driven by cloud infrastructure and mobile phones. This has resulted in tremendous economies of scale; driving down the cost of consuming and utilizing computational resources. As a result, the goals of Artificial Intelligence become realized at a much greater pace than the vast majority of people have anticipated, and it will bring changes.

I have written in the past about Google’s DeepMind and the Game of Go. It was long thought that a computer being able to beat a champion Go players was at most a decade or two away. However, this happened last summer with Google’s DeepMind platform.

Google built on the success of DeepMind and utilized it with their language translation service, Google Translate. This has resulted in order of magnitude increases in the ability to translate between languages. Google stated that the night they turned on Deep Mind for their translation platform, they saw a greater increase in fluency than they had in the previous 10 years of improving the platform. In fact, Google now believes their DeepMind platform has created its own, intermediary language that it uses to translate between different languages, independent of programmers telling it to. It did it on its own. This is crazy Sci-Fi stuff!

So what happens when Sci-Fi becomes part of the real world? Disruption, always lots of disruption. If you look at the economic impact of the Information Revolution, it is amazing. In the 1970s General Motors employed 800,000 workers around the world. Today, they are still the largest car manufacturer, but employ 250,000 people, a fraction of the number in the 70s. Also, their market cap has reduced greatly and they are no longer the largest company in the globe. Manufacturing companies across the world share similar stories.

Part of the reason for this change is automation. Technology has invaded manufacturing facilities and has reduced the number of humans involved in creating physical objects. This trend is only continuing. Foxconn, which manufactures iPhone for Apple and is the one of the largest electronic manufactures in the world is hard at work on factory automation. Recently, in a Foxconn facility in Kunshan, they reduced the workforce at their plant from 110,000 to 50,000 people, 60,000 workers. In fact, Foxconn is working on automating their entire assembly line, resulting in numerous workers losing their jobs.

So, we can see the impact of large investment in automation and technology driving down manufacturing costs and reducing headcount. In the recent United States election, one of the big tenets of President-elect Trump’s campaign was to bring back manufacturing jobs and repeal or modify trade deals like the North American Free Trade Agreement (NAFTA) and Trans-Pacific Partnership (TPP). The issue though, those jobs have in many instances disappeared, not because of trade deals, but because of automation. Manufacturing jobs peaked in 1979 at 19.5 million and currently sit around 12.3 million. Apple is currently rumored to be exploring manufacturing iPhones in the US with a partner like Foxconn. If those jobs though are automated, employing very few people than traditional manufacturing, have we done anything more than make ourselves feel good?

If we look at our current economy and take a company like Google, which battles back and forth with Apple for the largest market cap in the world, employs 60,000 people, an order of magnitude less than GM did when it was the world’s biggest company in the 70s. Further, consider a company like Whats App, which FaceBook bought for 22 billion dollars several years ago. At that time, Whats App was a 55 person company. The idea of a company being worth 22 billion dollars and employing 55 people was a ludicrous proposition only two decades ago.

Okay, the economy is changing, manufacturing jobs are disappearing and being replaced by technology and automation. Where does Artificial Intelligence fit into this? Well, how technology replaced jobs held by blue collar workers, Artificial Intelligence has the ability to do the same to White Collar/Knowledge worker jobs.

If one looks at the finance industry and the massive recession that hit in the late 2000s, a lot of that was driven by computers. How so you ask!??! Many of the large trading houses have automated programs that are responsible for trading based on market conditions. The complexity involved in the housing market of the late 00s was too much for people to understand or trade. Wall Street firms hired exceedingly smart folks in Physics and Mathematics and had them develop automated trading programs. These people, called quants, created programs that in many cases replaced traders on the floor. They moved quicker, don’t let emotion get in the way and their decisions were made on data. They also created complex financial models, for example derivatives, that helped drive the Great Recession of the 00s.

With the quickly realized gains in AI, the cost of implementing the technology will be reduced, and the way AI disrupted Wall Street firms is going to be heading into more and more industries. It is possible, that computer programmers of the future will be replaced by AI jobs. If AI apps can build a better Go To Market program for a product brand, will organizations continue to employ numerous brand manager employees when a computer is better able to execute? Will the knowledge worker of today, who creates the program, be replaced by the AI program of tomorrow, with the role of the (much fewer) knowledge worker being setting the conditions for the AI program. It is quite possible.

What does our world economy look like if what happens to manufacturing jobs happens to white collar jobs? To be honest, it looks pretty scary. Obviously, just as the Information revolution created new opportunities and new job types, these will emerge in an AI world. However, the world’s largest business employed 800K people and 30 years later, the world’s largest company employs 60K workers, it is quite possible there will be a lot fewer jobs.

College has always been a path for the American dream and a way to get into White Collar jobs. What happens though if there just aren’t jobs for the college educated? Folks like Elon Musk have started thinking about it… One of the ideas being floated around is that we have a universal income for each citizen. Finland just rolled out a two year basic income trial for unemployed citizens. Switzerland also recently had a ballot initiative for a universal income, that failed by a large margin, but it has started a conversation. The income could be created by different taxation policies for large companies generating lots of wealth, without employing lots of people. Countries, especially here in the US, are a far from having this conversation. However, as the demand for good paying jobs increases, and the economy, through automation creates less demand, there are societal problems that are going to need to be addressed.

In the states we have just left an election cycle where President-elect Trump very successfully campaigned to bring manufacturing jobs back to the US. In England, they recently voted for to leave the European Union, with one of the tenets of the Brexit campaign to bring back jobs to England. When we talk about bringing back manufacturing jobs that have not moved overseas, but disappeared, we all have a long journey in front of us. When the technological innovation that has reduced manufacturing jobs begins to happen to knowledge workers…. well, may you live in interesting times!

Would love to hear your thoughts or ideas to address this changing world. Hop on the comments below.

Links

  1. The Death of Moore’s Law - https://jptacek.com/2016/05/DeathOfMooresLawAndTheGameOfGo/

  2. Google's AlphaGo AI beats Lee Se-dol again to win Go series 4-1 - http://www.theverge.com/2016/3/15/11213518/alphago-deepmind-go-match-5-result

  3. The Great A.I. Awakening - http://www.nytimes.com/2016/12/14/magazine/the-great-ai-awakening.html?_r=0

  4. Google Translate AI invents its own language to translate with - https://www.newscientist.com/article/2114748-google-translate-ai-invents-its-own-language-to-translate-with/

  5. A brief history of General Motors Corp - http://www.mlive.com/business/index.ssf/2008/09/a_brief_history_of_general_mot.html

  6. Foxconn replaces '60,000 factory workers with robots' - http://www.bbc.com/news/technology-36376966

  7. Foxconn boosting automated production in China - http://www.digitimes.com/news/a20161229PD206.html

  8. The manufacturing jobs delusion - http://www.economist.com/blogs/buttonwood/2017/01/economics-and-finance

  9. Apple exploring the possibility of moving iPhone manufacturing to United States - http://appleinsider.com/articles/16/11/17/report-claims-apple-iphone-assemblers-tasked-to-develop-us-manufacturing-plans

  10. Facebook $22 Billion WhatsApp Deal Buys $10 Million in Sales - https://www.bloomberg.com/news/articles/2014-10-28/facebook-s-22-billion-whatsapp-deal-buys-10-million-in-sales

  11. Elon Musk Thinks Automation Will Lead to a Universal Basic Income - http://fortune.com/2016/11/06/elon-musk-universal-basic-income/

  12. Finland trials basic income for unemployed - https://www.theguardian.com/world/2017/jan/03/finland-trials-basic-income-for-unemployed

  13. Why Switzerland’s Universal Basic Income referendum matters, even though it failed - https://qz.com/699739/why-switzerlands-universal-basic-income-referendum-matters-even-though-failed/

This post originally appeared at Skyline Technologies


 

Online Security Best Practices

With the news full of journalist, politicians, celebrities and other people having their email and phone accounts hacked, it is a constant reminder that we should be vigilant about protecting ourselves online.

While no one can ensure you are 100% safe from online hacking, we have a bunch of steps for you to keep yourself secure in an increasingly hostile digital world.

Different Passwords - First and foremost, use a different password for sites you visit. When 116 million LinkedIn was hacked in 2012, those users’ email address and passwords eventually ended up online in 2016. Users who use the same password on LinkedIn as their Gmail account quickly found themselves vulnerable.

Password Pattern - I try and use a pattern for all the sites I visit that makes each sites password, pretty unique. What does this mean? I will use a base password that has both numbers and special characters, for example, Justin20!^Bieber. I will then append a set of characters for the website I am visiting. For example, the first two letters of the domain or the first two vowels of the site. So my password for Google, taking the first two vowels from google.com of oo, would be Justin20!^Bieberoo. You can develop your own password pattern, and then use it where applicable. Don’t be like me though and tell people your pattern!

Change Your Password - If a site gets hacked and no one tells you until three years later, that is bad. You can decrease the chances of hackers changing. Every year as you kick off your New Year’s resolutions, include changing your password for sites that are important; such as mail, phone accounts and banking.

Password Manager - There is a lot mental energy expended remembering all of these passwords, even with a pattern. A password manager is a highly recommended approach to dealing with the deluge of passwords we are confronted with.

In general, password managers have plugins that can be used in browser that automatically fill in username and passwords at websites. On mobile platforms, you are prompted via the app to provide a username and password.

Password managers will also generate unique passwords for sites that are highly randomized such as, [email protected]^(+56KsYu8. This level of complexity is hard for hackers to try and crack.

Popular passwords manager include LastPass and 1Password. LastPass recently allowed their free version to connect. Highly recommended.

Update software - It doesn’t matter how complex or strong your passwords are if you are running software that has security flaws that hackers can readily take advantage of. PCs running a 5 year old version of Adobe Flash are going to be open to hackers looking for information.

To alleviate this run modern versions of software. This includes latest versions of Windows 10 (upgrade from Windows XP people!) and MacOs. Make sure you are using an evergreen browser, such as Chrome, Opera, FireFox or Microsoft’s Edge browser. If you are using outdated software, be sure to upgrade.

Is this a real issue? In 2016 hackers used zero day vulnerabilities in Flash, Windows, MySQL, iOS (your Apple iPhone’s operating system) and more. Quickly upgrading your software once vendors have resolved the issue is paramount to protecting yourself.

Two Factor Authentication - An excellent way to improve your online security is use Two Factor Authentication. Two Factor authentication essentially involves two things; a thing you know (such as a password) and a thing you have (such as a phone). Software vendors like Google, MIcrosoft and Apple support two factor authentication, which essentially requires you to provide a password when you log on, and then a number generated by an authentication application on your mobile phone (or another device like a RSA token generator). You can also setup applications to say that a device is trusted (like a home PC), which requires a token to be entered once a month or so.

In these scenarios, even if a hacker has a password to your email, they are required to enter in a token that is running on your mobile phone. In this scenario, if a hacker knows your password and has your phone, you are already in a bit of trouble :)

How serious is this? During the 2016 US Thanksgiving weekend, Google was warning prominent journalists that their accounts were under phishing attacks. Their recommendation, two factor authentication. At a minimum, keep email addresses associated with banking accounts, health and brokerage accounts secure with this approach!

Be Wary of Public WiFi - Public WiFi can be problematic for security conscientious folks. If you are sitting at a coffee shop and doing online banking, it is possible that others on the network could be reading packets on the network and reading confidential information. To bypass this, you can use VPNs when connecting to encrypt traffic or use SSL as identified below.

HTTPS Everywhere - In examples where you are concenred about Public WiFi, or even your work or home network, you can do your best to ensure you are running HTTPS, which is the encrypted version of web page traffic. If you click on an article at http://www.nytimes.com, people can read the content of the page. If you read an article at https://www.nytimes.com, it becomes much more difficult for people to read the content of the page.

Why is this important, especially for public pages that everyone can read? Two reasons, first, if you are reading information at sites that can provide information about you, for example, WebMd articles, you may not want people to know the contents of what you are reading (obviously, in most cases, the not encrypted URL will provide an idea of the content).

Second, for public pages that are not encrypted, the pages can be changed and updated to try and get information about you. For example, if someone intercepts an HTML page from google.com, they could inject a snippet of HTML that asks you to enter your email address and password to google. At that point, game over.

So, if you think clicking around the Internet and changing the link to HTTP sounds like a huge pain, you are 100% correct. Thankfully, most major browser vendors have plugins that will do this automatically. I recommend people use HTTPS Everywhere from the Free Software Foundation. They have plugins for Chrome, FireFox, Opera, etc.

If you want to read more about why encrypting the Internet is important, read this. It is becoming more and more important, so much so that Google is giving higher rankings to secure pages over non encrypted pages.

Protecting yourself on the Internet is becoming more and more important to our connected digital lives. Hopefully the above tips provided you some ideas you can use to increase your security in the online world.

This post originally appeared at Skyline Technologies


 

October New AITP Meeting - Mile of Music

Thanks to everyone who came out to my presentation at the October 2016 New AITP meeting. It was a funnight. I always love talking about Mile of Music and how the team at Skyline created the Festival app.

Turnout pic

My slide deck is online at newaitp1016.jptacek.com/ and the Git repo for the slide deck is at https://github.com/jptacek/NewAITP1016.

Thanks again to everyone who came out and engaged in starting a conversation!


 

John Ptacek I'm John Ptacek, a software developer for Skyline Technologies. This blog is my contains my content and opinionss, which are not those of my employer.

Currently, I am reading Norse Mythology by Neil Gaiman

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