2019: The Year in Pre-view

Who died?  Who thrived? What happened? Who cares?  It was 2018.  It’s over!  So, let’s take a look at what happens next.

Foreign affairs: All eyes are on Syria and ISIS as we end 2018. But, the country to watch is Turkey. 

It is said that nature abhors a vacuum. Pundits adopted the phrase as an idiomatic description of President Obama’s strategy in the Middle East.  His “Pivot to Asia” intended to leave Middle East wars, terrorism and the refugee crisis for Europe to deal with while the US worked to develop beneficial trade relationships with the fast growing economies of Asia.  It seemed to make sense in the context of a shrinking defense budget and economic competition from China and the EU. President Trump’s decision to withdraw our troops from Syria is another step in this direction.

There’s one big problem with this strategy: the vacuum it creates will be filled by Russia.  It’s fair to say that Russia is not much of a military threat to the US.  Their economy is in shambles and, lacking economic power, they don’t have the military might to challenge our global interests.  But, to understand their motives, you must brush up on your geography because geography is destiny.  

To play a role in the global economy, you need access to the sea.  Russia’s access is limited.  Bounded by China to the East, Europe to the West, the Arctic to the North and the southern Asian countries from the Himalayas to the Mediterranean, they are choked off from global trade.  In that context, it’s easy to understand why they would annex the Crimea, support the Assad regime in Syria and create an alliance with Iran.  Ultimately, they hope to exploit cracks in the NATO alliance. So, I expect them to increase pressure on Turkey, a NATO member, by increasing their troop presence not only in Syria but also in Ukraine.  

Is it any wonder Russia wanted Trump in the White House?

Economics:Both the US and global economies have been pumped up by Central Bank interventions and extraordinary growth in government and corporate debt.  

Is the party over? Well, the US Federal Reserve took the punchbowl away when they stopped buying up bonds and started raising interest rates.  So, construction is slowing and the stock market is taking a hit.  Compound those troubles with the economic inefficiency of a trade war and you have the making of a recession. 

It’s fair to say the new Fed Chair is taking appropriate steps to restore interest rates to their natural level.  My greater concern is that they do so while allowing the Fed’s balance sheet to run off. In other words, they are playing with two independent variables simultaneously.  So, when the economy responds, how will we know the cause of that response?

As rates rise, many corporations will incur permanent damage from too much debt and a drop in consumer demand. Our recession may be brief but the deadly combination of overleveraged companies, shoppers rapidly moving from bricks to clicks, a trade war and the Fed’s actions will have a longer lasting effect. 

Going local:  As a nation, we have ceded too much control to a federal government ill suited to address our needs. Liberals have long argued for federal solutions to problems; and lately, conservatives, from the Tea Party to Trump, making bold promises of federal intervention, have joined them.  Yet, nearly everything we need is generated at a local level.  We need better healthcare, better schools, more new businesses, more innovation, more financing, more giving, more connectedness… In short, we need more local control over the institutions that affect our communities.  

It will begin with our schools. Federal and state mandates have imposed unfunded costs on the last important institution over which we have a modicum of local control.  Here in Rochester, our inner city schools have been rated worst in the nation.  Our progressive governor told our local editorial board that he would support reform if and only if it was initiated at a local level.  He was being politically crafty a la Pontius Pilate. He also created an opening for local initiatives to make a difference. 

I hope it will be the beginning of a trend.

Business: Low unemployment and a workforce lacking the skills demanded by highly technical work environments will accelerate the adaptation of artificial intelligence (AI) to practical uses.  It’s already showing up in marketing, warehousing and machine maintenance.  The next wave will likely affect selling. AI will identify cross-selling opportunities, optimize prices and forecast revenue.  It will improve itself by learning from the results.

Like all disruptive technology, the pioneers in this field will be big corporations that can afford the R&D expense.  And, like all disruptive technology, it will eventually become affordable to smaller businesses and trickle down.

Companies that succeed in this new environment will be those that can best capture data, analyze it and generate actionable insights.  

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Predictions are a tricky business.  Will these trends and events take root in 2019?  I’m not sure.  However, I am fairly confident we’ll see them soon enough. 

WHO WILL LEAD? 

My 100-year-old self, a pig’s heart and my grandson

My 100^th Birthday celebration will take place about mid-century.  You’re all invited. It won’t be easy to reach that age.  My Dad passed away a few years shy of his 90^th.  But, I figure 100 is within reach with the help of a handful of highly skilled people and a lot of technology.

There’s a history of heart disease in my family.  So, I might have a new heart by then – one grown using my stem cells inside a pig or perhaps printed in a 3D printer. 

I may need the help of a home health aid, a robot that first analyzes what pharmaceuticals I need each day by means of a transdermal scan.  It will mix my drug cocktail of the day and administer it through a patch.  

My medication will keep my energy up and an artificial limb may keep me physically able.  I won’t be old and frail – just old.  And, that’s a good thing because my financial planner projected I would have been gone long before my 95^th birthday.  So, I’ll have to work. 

My commute will be comfortable.  A self-driving electric car dispatched directly to my home will pick me up.  Its batteries will be constantly recharged by a system embedded in our highways.  This service will be provided by one of the big three integrated transportation service companies – GM, Uber and Delta (nee Delta Airlines).  I won’t own a car and won’t care which of these companies takes me to work.  I’ll likely choose the one with the best rewards program.

Of course, all this assumes I can keep my skills up to date.  Lots of jobs will be gone by then.  Those wanting to work will have to be either smarter or cheaper than machines enabled by embedded sensors and big data analytics. 

Highly skilled labor will still be much in demand, of course.  If you’re the doctor who can implant my new heart or install my bionic leg, your financial rewards will be great.  Same goes for those who can create the algorithms that will keep modern society functioning.  And, the AI revolution will create lots of new jobs for the post-Millennial generation trained in robot repair, higher math or data analytics -- just not enough to replace the ones that will be lost.

Many Millennials will be unable to find work, as they will have been well educated for 20^th Century jobs.  Taxpayer dollars providing free college educations will have been wasted. 

No worries though.  The government will guarantee a level of income sufficient to maintain a middle-class lifestyle.  The industrial revolution that spawns this new economy will produce vastly more national income.  So, we’ll be able to afford a new, huge safety net. 

My grandson, Jake, will be gainfully employed having graduated from the U.S. Air Force Academy (Class of ’48) and will be on his first tour piloting UAV’s in outer space.  This new network of satellite-based drones will act as a deterrent, capable of launching hypersonic rockets to take out the power grids of any country on earth, disabling their capability to make war or function as a modern society.  The operation of drones still flying within earth’s atmosphere to take out single human targets, like terrorists, will have been turned over to artificially intelligent fire control systems that will analyze data and evolve assassination algorithms consistent with the agreements reached by the industrialized world in the new Geneva Conventions. 

So, if I have to work, how will I earn a good income in this new economy?  Well, I was educated in the 20^th Century before the digital revolution.  So, I will still have skills that will be valued and can’t be replaced by artificial intelligence.  I know how to motivate, negotiate, persuade and coordinate. 

Try to get your robot to do that.

WHO WILL LEAD?

Wanted: an artificially intelligent travel agent

When my son told me his wife was pregnant, my first instinct was to let out a “whoop!”  My second was to buy a plane ticket so I could meet my grandson.  The due date was February and I knew it would be tough (and expensive) to get a ride to Fort Lauderdale at that time of year. 

It turns out that when you make a plane reservation seven months in advance of the trip, you are likely to have your airline change your itinerary unilaterally.  When the change came through in December, I frankly took no notice of it.  Reviewing it now – a few days in advance of our departure – revealed that we are stuck with a four hour layover at JFK, which I look forward to about as much as a bout of e. coli. 

What to do… what to do?

I know what I would have done back in the day.  When I was a 100,000-mile per year business traveler, I would pick up the phone (or have my secretary do it) and ask one of the many travel agents who valued my business to find me a better itinerary without costing an arm and a leg. 

“What’s a travel agent?” you ask.  A travel agent is a person whose job has been disintermediated by the Internet.  There are a few left but many work out of their homes and concentrate on clients who want to go on cruises or exotic vacations.  According to the Department of Labor, their numbers have been reduced by about half since 1990.  The rest of us are stuck with Travelocity, Expedia or one of the many struggling-to-differentiate-themselves apps you can download to your smartphone.

When we think of artificial intelligence these days, we tend to focus on robots or perhaps the variety of devices that enable the smart home, like the Nest thermostat or the Roomba vacuum cleaner. 

But, another tool in this budding arsenal of enablers is Big Data.  So, someone, please invent an artificially intelligent travel agent who will take advantage of all that data.  We can call her Siri… no, wait…  That’s already taken.  How about Barbie?  Oh, no…  I’ll call her Cassandra.  (If you prefer a male, perhaps you can call him Brad.)

What would she do?  She would identify all options; call her contact at Jet Blue (or interact with its database) to see if we can make a change with little or no cost.  She would call me and offer a quick overview of the best options, taking into consideration that I would rather leave early than arrive late (Jet Blue’s imposed change has me doing both).

If I were traveling internationally, Cassandra would review the security recommendations of the US State Department; outline the risk of theft and assess the safety of any women on the trip.  She would summarize the best days to travel by reviewing the available fares from major airlines and know if we should wait a month before buying a ticket to get a better price. 

Then she would scan my social media to see which of my friends and colleagues have traveled to the same country recently and message them to gather any recommendations they may have.   She might check Yelp! while she was at it. 

Armed with all that information, Cassandra would plan my travel, make my reservations and send me on my way.  This is not a pipedream.  A startup tech firm, Wayblazer, is using IBM’s Jeopardy-winning Watson to create the future world of travel.  Doesn’t technology always provide a solution to the problem it creates?

I look forward to the day when Cassandra is my travel agent… at least to the extent that a voice recognition error doesn’t ship me off to Auckland when I want to go to Oakland. 

WHO WILL LEAD?

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 Top Topics of 2015

I’m feeling pretty lazy this week. You know, with the food coma and all. It would be pretty easy to simply list the ten most read blog posts of the year.  After all, Google provides and your faithful blogger abides.

But, wouldn’t it be better to focus for just a few minutes on the topics that most resonated with you, my faithful readers, this year?

It’s a rhetorical question; so here goes…

The impact of robotics and artificial intelligence is on the minds of many.  Will new technology take our jobs?  Well, it always has.  In “Our Future:  Educated People or Just Educated Robots?” I explored the impact of robotics on the job market and speculated that our greatest risk was our inability to educate workers fast enough to fill the new jobs that will result from this incipient disruption.

I have managed call centers for a fair share of my career.  So when I read about Mattel’s development of artificial intelligence for a new Barbie doll, I jumped to the potential impact on call centers.  In “What if Barbie Could Pass the Turing Test?” I imagined Barbie replacing the voicemail tree that plagues us all when we call our bank or medical insurer. 

The most widely read of this series was “Advice to Give Your Kid in the Age of AI”.  I cited studies that have identified superior social skills combined with math skills as “the most important element in adapting to a future where Artificial Intelligence replaces people doing routine work”.  Robots are the most visible manifestation of the new age of AI; however, it will be advanced sensing devices and data analytics that drive the need for employees with the right combination of social and math skills.

Perhaps consistent with that theme was a series on the obsolescence of the current university model.  As a follow up to a 2014 post titled “Don’t Send Your Kids to College” I wrote about how “The Free Market for Education is Adapting”.  In a later post titled “It’s Time to Replace Our Universities with…” I wondered “how we as a society can sustain” the current model. The most widely read of the series asks the question “When Will the University Bubble Burst?”

While these topics seem to have resonated with many of you, there was one single post that was the mostly widely read in 2015.  My post criticizing Bernie Sanders, “Let’s understand just what socialism means to us”, generated the most clicks, the most comments and the most vicious attacks on me personally.  Interestingly, no matter how intense the response, no one refuted the premise that free market capitalism is the best economic system to ensure prosperity for all.

One astute reader pointed out that Sanders is not a socialist.  He is a “democratic socialist”.  What’s the difference?  Well, in a purely socialist system, the government would confiscate all private property.  In a so-called democratic socialist system, private ownership would be permitted but profits would be taxed at a very high rate.  In Sanders’ view, the highest rate should be 90%.

So, if an investor risks personal capital and the enterprise fails, that would be his or her loss.  However, a big gain would be taxed away.  Oh yeah!  That would work?

WHO WILL LEAD?