From Turing to Musk to Industry 4.0

We are on the cusp of major changes in education, technology and industry owing to forces that we are powerless to overcome.  It’s natural to fear change on a large scale.  But, we shouldn’t be afraid.  We should embrace the change. 

I’m talking about the impact of artificial intelligence (AI) on society and the workplace. Boston Consulting Group (BCG) has labeled the coming paradigm Industry 4.0.  In their studies, nine technologies from the Industrial Internet of Things (IIOT) to Big Data are integrated to change not just the factory floor but also how businesses will change their product and service offerings.

Our challenge is to understand how new technology will change the workplace and how we should educate our children (See “Is the Education WeWant the Education We Need?” and “Don’t Send Your Kids to College”).  Is it a little scary?  Yes, it is.  Some fear that not only will robots take our jobs but also they might take over society.

Big thinkers from Alan Turing to Elon Musk have contemplated technological singularity for decades.  What’s that?  Here’s a simple definition from Wikipedia:

“The technological singularity is a hypothetical event in which artificial general intelligence (constituting, for example, intelligent computers, computer networks, or robots) would be capable of recursive self-improvement (progressively redesigning itself), or of autonomously building ever smarter and more powerful machines than itself…”

Many think machines will never outsmart humans.  After all, how can a machine know more than its human programmers?  Rather than debate how we might determine if we have reached singularity, Turing designed a test to take the guesswork out of the evaluation.

The Star Trek series showed us how it might happen as the impatient-with-human-failings Mr. Spock was replaced in the Next Generation by Data, an android with access to all the information in the universe and the irrefutable logic to apply it in any situation. 

The real-life manifestations of this Sci-Fi are everywhere.  But not in robot form.  Fitbit collects data and coaches us to be healthier.  Netflix collects our movie preferences and recommends films for us to watch.  Next we will see self-driving cars that use sensors and software to get us to work more safely than we can on our own.

How will Industry 4.0 change businesses and, by extension, jobs?  Futurists contemplate that product offerings will evolve into services.  Everything-as-a-Service (XaaS) describes how it would look. GeneralMotors recently invested $500M in Lyft, a ride sharing company.  Why? Well, instead of buying a car in the future, you might buy transportation services. 

Does that seem far-fetched?  Well, when ride-sharing services evolve into fleets of on demand self-driving vehicles to take where you want to go when you want to go there, you won’t much care if you own a car.  And, further you won’t care if the self-driving car that picks you up is a Chevy, Ford or Toyota. 

Don’t believe me?  What kind of plane transported you on your last business trip or vacation?  You might remember the airline and whether you had a good experience with their service.  But, it’s unlikely that you remember whether Boeing or Airbus made the plane.  Nor, do you care!

So, what happens to your job in this new world?  BCG concludes that government and industry should work together to “[a]dapt school curricula, training, and university programs and strengthen entrepreneurial approaches to increase the IT-related skills and innovation abilities of the workforce.” (I speculated about this need in “Our Future:Educated People or Just Educated Robots?”)

In other words, we need to change the way we educate our children.  Workers of the future will be required to understand how to interpret data as well as turn a wrench.  Low cost labor will no longer be a global competitive advantage.  The spoils will go to those who those who can provide a high-skilled workforce. 

Politicians on the left and right seek to make us afraid of the foundational changes necessary to support this paradigm shift (free trade agreements, common core, charter schools, immigration, automation of the factory floor).  After all, if you want to get elected, tell people what to be afraid of and who to blame.

But, it’s fair to say that technology has consistently improved our lives for centuries – from steam engines to electrification to car and air travel to modern electronics.  Rather than raising the specter of job losses from automation and free trade agreements, our political and thought leaders should be creating a vision of a future of better schools, better jobs and better lifestyles.

WHO WILL LEAD?

The Hunger Games: not everyone is a winner

An edited version of this post appeared in the December 18th edition of the Rochester Business Journal

My wife and I have moved around the country quite a bit, following one professional opportunity or another – nine states at last count.  When it came time to settle into semi-retirement, we decided to return to Rochester for one simple reason:  it’s a great community. 

When you live in many regions of the country, you notice differences – those things that most people don’t think about because they’re ingrained in the local culture.  They’re taken for granted. 

So, what sets New York apart from other places we’ve lived? 

A broad swath of the population expects the government to affect positive social and economic outcomes. 

Last week’s award of $500 Million in economic development funds is a perfect example.  It was greeted with enthusiasm by one and all.  The common refrain from all those interviewed by WXXI’s Morning Edition was “everyone is a winner!”

Everyone, that is, except the New York taxpayer.

New York and other northeast states have been losing jobs and population for decades; and, it’s not just because Florida, Texas and Arizona have better weather.  It’s because of high taxes and overbearing regulation. 

The Empire Center reports, “Between 2010 and 2014, all regions of New York have lost population due to domestic migration – the movement of residents to other states”.  Meanwhile, the independent Tax Foundation ranks New York 49th on its State Business Tax Climate Index and further points out that, in the first decade of this century, New York lost more than 1.9 million taxpayers representing some $119 Billion in adjusted gross income.  That’s investable and taxable income.

“So what?” you might say.  We’re getting something back for our tax dollars.  The plan developed by the Finger Lakes Regional Economic Development Council (FLREDC) “leverages” tax dollars to great effect.  Businesses will be enabled to grow by virtue of the governance of a local steering committee that guides the investment of funds and reports on its activities and results to the state government.  Private capital will be attracted to the region, jobs will be created and the region will be revitalized. 

Here’s an alternative view. Government consistently misallocates capital.  When the FLREDC’s plan mentions “leverage”, they’re talking about contributing taxpayer dollars to the projects of private developers and enterprises pretending to free market status. The coalition of business leaders, non-profits and government agencies that will determine how the funds will be invested each have their own agendas.  There is a real cost to this kind of oversight. Capital doesn’t necessarily go where it will get the best return. 

It’s hard to blame business leaders for playing the hand they’ve been dealt.  But, is that how we want things to work?

At some level, the governor recognizes these problems.  He has created tax-free zones at college campuses to attract new businesses.  And, the recent restructuring of regulations affecting craft brewers was an uncharacteristic response to the needs of small business owners.  

So, why hasn’t that awareness translated into broad-based tax and regulatory reform?  Why does he – and, by extension, we – prefer high taxes and state control of the investment of capital? 

Your guess is as good as mine.  

When I have challenged business people on this matter, I get one of two responses.

“At least we got our share,” is a common refrain. Hence the competition’s nickname:  The Hunger Games.  We win and someone else loses. 

A more thoughtful response is the assertion that we should be happy to have government collaborating rather than regulating.  It’s a move in the right direction.  But, is it really? 

New York’s problems in retaining jobs are structural.  The right direction would be to restructure – to reduce taxes and reform our regulatory regime.  A one-time grant of a large sum of money does nothing to advance the process. 

What if this project does not yield the expected results?  We would be back where we started.  The high cost of doing business in New York will continue to drive away businesses and population.

Wouldn’t it make more sense to emulate the policies of states that are taking our jobs?