Innovation, Artificial Intelligence and the Economy

Technology Hub 2017

John Ptacek

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Skyline Technologies

@jptacek / www.jptacek.com

jptacek@skylineTechnologies.com

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Agenda

• Some Economic History
• Artificial Intelligence
• What is Coming
• What to Do

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Agricultural Revolution

• Really the British Agricultural revolution
• Mid 17th Century to late 19th Century
• British Population Boom (5.5 million in 1700 to 9 million in 1801)
• Major turning point in history
• Technology -> Increased production -> Money saved -> Fewer workers ->Cities
• Set the ground for the Industrial Revolution

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Industrial Revolution

• 18th and 19th centuries
• Britain is the birthplace
• Agrarian Society moves to cities
• Early 1800s see first locomotives; by 1850 - 6,000 miles of roads
• Textile Industry, Iron Industry, Transportation/Steam
• British population boom: 9M to 16.8M in 1850...to 30.5M in 1901

Information/Technological Revolution

• 1950s -> now
• Automation
• Globalization

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Information Revolution - Efficiency

• 1979 - General Motors was 4th largest company in world
• 853,000 employees worldwide, 618,000 in US, 4.8 million vehicles, 5.6 cars/employee
• Today’s largest car maker: 250,000 employees, 3 million vehicles, 12 cars/employee
• Today Apple/Alphabet go back and forth
• 72,000 employees at Google
• 116,000 employees at Apple
• WhatsApp
• Facebook buys it for $22 billion for a 55-person company
• Impossible two decades ago

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Information Revolution - Disruption

• Manufacturing: Higher productivity but job loss
• 1970s: 19.5 million jobs, 2009: 11.5 million. Aug 2017: 12.4 million.
• 270% increase in value
• Displaced workers -> new skills or service workers
• Job growth from small companies

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Blue Collar

• Jobs disappearing from traditional rural areas
• Inflation-adjusted earnings of young people declining
• Skillsets not mapping to job demands
• Unemployment is not lack of jobs
• Jobs are not at home

Wealth Concentration

• Highest level of wealth concentration in recent times
• Happiness corresponds to low levels of economic disparity

Wealth Changes since 1991

Wealth Concentration

Impact

• People are getting stressed
• Globalization backlash
• Opioid crisis in US
• 60,000 people are dying a year
• Gov Christie "We have a 9/11-scale loss every three weeks"
• Costs
• $25 billion health care
• $5.1 billion police/emergency
• $25.6 billion lost earnings
• Goldman Sachs - Fewer prime working-age men participating in labor force

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Revolution

• Efficiency creates productivity and creates disruption
• People need jobs, capital responds
• Information revolution has generated massive economic growth, a lot of it concentrated, impacting blue collar workers and workforce

Artificial Intelligence

• Everyone has a different definition!
• Today, two things: machine learning and interacting devices

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Artificial Intelligence - Machine Learning

• Massive growth in recent years
• Cloud and Mobile have provided massive scale
• Alexa/Google Home train voices
• Maps drive GPS and speed
• Ridesharing app real time pricing

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Artificial Intelligence - Games

• Deep Blue beats Chess Grandmaster Kasparov in 1997
• Brute Force
• DeepMind/AlphaGo beats Go Master Jie in May 2017
• Machine learning
• OpenAI beats Dota 2 player Ishutin
• Simplified Fog of War (not as complex)
• DeepMind is learning Starcraft
• Fog of War

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Artificial Intelligence - Driving

• Uber self-driving truck delivered 50,000 cans of beer in Oct 2016
• Alphabet’s (Google’s) Waymo has driven more than 3 million miles as of May
• Planes don’t allow pilots at certain times

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Artificial Intelligence - White Collar

• White Collar jobs are going to be impacted like Blue Collar
• Finance - World's biggest fund manager (BlackRock) replacing traders with AI
• Finance - May 6, 2010 stock market flash crash, 9% drop in 30 minutes
• Lawyers - Machine learning reduces discovery time
• Doctors - Machine learning better breadth
• Doctors - Cancer cell detection 89% accuracy, humans 73%
• Tax accountants, insurance underwriting, telemarketers, etc.

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Artificial Intelligence - Disruption

• The number one job per capita in 40 states will be disappearing
• Goldman Sachs predicts, at peak disruption, 25,000 jobs a month will disappear due to self-driving vehicles
• Jobs that will be in demand will have a skill gap
• Frey and Osboren predict that 47% total US Employment is vulnerable to automation in next 20 years
• Others predict much less: 9%
• President Obama warned Congress that 62% of jobs at risk

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What Comes Next

• It sounds scary
• Efficiency will increase wealth and new jobs will emerge
• The issue is pace
• Economic Inequality will be greatest challenge
• Ideas percolating around, not MY ideas

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What Comes Next - Education

• We have to think different
• Education system moves slower than government
• Job Mortgage
• Jerry Kaplan approach
• Employers will need workers
• Workers will need jobs
• Companies sponsor learners based on need
• Workers build skill
• Tax incentive based on hiring
• Education loans paid out of future earnings

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What Comes Next - Education

• Less Importance on College Degrees, Accelerate Real World Work
• Prepare Students to Learn in Real World

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What Comes Next - Basic/Universal Income

• Universal Income - All citizens receive a standard amount of money to cover basic expenses (food, rent, clothes)
• First Proposed by Nixon - some liberals AND conservatives like it
• Post-scarcity economy
• Automation makes abundances
• Costs will be drive down
• Elon Musk World Government Summit (Feb 2017): “It’s Going to be Necessary”

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What Comes Next - Universal Income

• How to pay?
• Absorb Current System Costs (food stamps, welfare, HUD)
• Reduce Size of Government
• Tax Robots
• Tax Economic Gain
• Fees on Economic Transactions

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What Comes Next - Public Benefit Index

• Broader Market Participation
• Average US Household net worth $600K
• 6% growth is $40,000 household
• Distribution of assets is NOT equal
• Incentives via tax rate to disperse growth
• More dispersed shareholders, lower tax rate
• Cost savings could be dispersed to public to lower future tax rate
• Benefit card gives you stock ownership
• Make Social Security less opaque

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What Comes Next - PBI/Basic Income

• Incentivize people for public good
• Volunteers, police, firemen, teachers
• Renaissance in Art, Music?
• MORE Entrepreneurship?

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What Comes Next - It Will Be Hard

• There are No Answers
• Current Political State Means We Won't Talk About it

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Call To Action

• Start Having Conversations With People
• Inform People Around You
• Elect Political Leaders Who Are Aware

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Questions

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Skyline Technologies

@jptacek / www.jptacek.com

jptacek@skylineTechnologies.com

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Sources

Brief History of General Motors Corp - http://www.mlive.com/business/index.ssf/2008/09/a_brief_history_of_general_mot.html ��Facebook's WhatsApp acquisition now has price tag of $22 billion - https://www.reuters.com/article/us-facebook-whatsapp/facebooks-whatsapp-acquisition-now-has-price-tag-of-22-billion-idUSKCN0HV1Q820141006 ��Reality check: U.S. manufacturing jobs at 1940s levels - http://money.cnn.com/2017/04/07/news/economy/us-manufacturing-jobs/index.html ��The Incredible Shrinking Incomes of Young Americans - https://www.theatlantic.com/business/archive/2014/12/millennials-arent-saving-money-because-theyre-not-making-money/383338/ ��Chart: The Largest Companies by Market Cap Over 15 Years - http://www.visualcapitalist.com/chart-largest-companies-market-cap-15-years/ ��The Wealth Inequality Problem in One Chart - http://www.visualcapitalist.com/wealth-inequality-problem-one-chart/ ��Do we understand the impact of artificial intelligence on employment? - http://bruegel.org/2017/04/do-we-understand-the-impact-of-artificial-intelligence-on-employment/ ��As Robots Rise, How Artificial Intelligence Will Impact Jobs - https://www.forbes.com/sites/haroldstark/2017/04/28/as-robots-rise-how-artificial-intelligence-will-impact-jobs/#a71bddd7687d ��Union-membership-declines-inequality-rises - http://www.epi.org/news/union-membership-declines-inequality-rises/ ��The Cost of the Opioid Crisis - https://www.newyorker.com/magazine/2017/09/18/the-cost-of-the-opioid-crisis ��Waymo's self-driving cars are racking up miles faster than ever - https://www.theverge.com/2017/5/10/15609844/waymo-google-self-driving-cars-3-million-miles ��UBER'S SELF-DRIVING TRUCK MAKES ITS FIRST DELIVERY: 50,000 BEERS - https://www.wired.com/2016/10/ubers-self-driving-truck-makes-first-delivery-50000-beers/ ����

Sources

The most common job in every state - http://www.npr.org/sections/money/2015/02/05/382664837/map-the-most-common-job-in-every-state

Self-driving cars could cost America's professional drivers up to 25,000 jobs a month, Goldman Sachs says - https://www.cnbc.com/2017/05/22/goldman-sachs-analysis-of-autonomous-vehicle-job-loss.html ��THE FUTURE OF EMPLOYMENT: HOW SUSCEPTIBLE ARE JOBS TO COMPUTERISATION? Frey & Osborne - http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf ��PREPARING FOR THE FUTURE OF ARTIFICIAL INTELLIGENCE National Science and Technology Council Artificial Intelligence, �Automation, and the Economy - https://www.whitehouse.gov/sites/whitehouse.gov/files/images/EMBARGOED%20AI%20Economy%20Report.pdf ��Obama just warned Congress about robots taking over jobs that pay less than $20 an hour - http://www.businessinsider.com/obama-warns-congress-about-robot-job-takeover-2016-3 ��Jerry Kaplan Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence, Yale University Press ISBN: 9780300213553��Nixon’s Basic Income Plan - https://www.jacobinmag.com/2016/05/richard-nixon-ubi-basic-income-welfare/ ��Universal Basic Income’s Growing Appeal - http://www.nationalreview.com/corner/436282/universal-basic-incomes-growing-appeal ��Elon Musk doubles down on universal basic income: 'It's going to be necessary' - http://www.businessinsider.com/elon-musk-universal-basic-income-2017-2