The Second Machine Age

The Second Machine Age, by Erik Brynjolfsson and Andrew McAfee, two MIT professors and researchers, offers mostly an economist’s point of view on the consequences of the technological changes that are remaking civilisation.

Although a fair number of chapters is dedicated to the technological innovations that are shaping the first decades of the 21st century, the book is at its best when the economic issues are presented and discussed.

The book is particularly interesting in its treatment of the bounty vs. spread dilema: will economic growth be fast enough to lift everyone’s standard of living, or will increased concentration of wealth lead to such an increase in inequality that many will be left behind?

The chapter that provides evidence on the steady increase in inequality is specially appealing and convincing. While average income, in the US, has been increasing steadily in the last decades, median income (the income of those who are exactly in the middle of the pay scale) has stagnated for several decades, and may even be decreasing in the last few years. For the ones at the bottom at the scale, the situation is much worst now than decades ago.

Abundant evidence of this trend also comes from the analysis of the shares of GDP that are due to wages and to corporate profits. Although these two fractions of GDP have fluctuated somewhat in the last century, there is mounting evidence that the fraction due to corporate profits is now increasing, while the fraction due to wages is decreasing.

All this evidence, put together, leads to the inevitable conclusion that society has to explicitly address the challenges posed by the fourth industrial revolution.

The last chapters are, indeed, dedicated to this issue. The authors do not advocate a universal basic income, but come out in defence of a negative income tax for those whose earnings are below a given level. The mathematics of the proposal are somewhat unclear but, in the end, one thing remains certain: society will have to address the problem of mounting inequality brought in by technology and globalisation.

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The wealth of humans: work and its absence in the twenty-first century

The Wealth of Humans, by Ryan Avent, a senior editor at The Economist, addresses the economic and social challenges imposed on societies by the rapid development of digital technologies.  Although the book includes an analysis of the mechanisms, technologies, and effects that may lead to massive unemployment, brought by the emergence of digital technologies, intelligent systems, and smart robots, the focus is on the economic and social effects of those technologies.

The main point Avent makes is that market mechanisms may be relied upon to create growth and wealth for society, and to improve the average condition of humans, but cannot be relied upon to ensure adequate redistribution of the generated wealth. Left to themselves, the markets will tend to concentrate wealth. This happened in the industrial revolution, but society adapted (unions, welfare, education) to ensure that adequate redistribution mechanisms were put in place.

To Avent, this tendency towards increased income asymmetry, between the top earners and the rest, which is already so clear, will only be made worst by the inevitable glut of labor that will be created by digital technologies and artificial intelligence.

There are many possible redistribution mechanisms, from universal basic income to minimum wage requirements but, as the author points out, none is guaranteed to work well in a society where a large majority of people may become unable to find work. The largest and most important asymmetry that remains is, probably, the asymmetry that exists between developed countries and underdeveloped ones. Although this asymmetry was somewhat reduced by the recent economic development of the BRIC countries, Avent believes that was a one time event that will not reoccur.

Avent points out that the strength of the developed economies is not a direct consequence of the factors that are most commonly thought to be decisive: more capital, adequate infrastructures, and better education. These factors do indeed play a role but what makes the decisive difference is “social capital”, the set of rules shared by members of developed societies that makes them more effective at creating value for themselves and for society. Social capital, the unwritten set of rules that make it possible to create value, in a society, in a country or in a company, cannot be easily copied, sold, or exported.

This social capital (which, interestingly, closely matches the idea of shared beliefs Yuval Harari describes in Sapiens) can be assimilated, by immigrants or new hires, who can learn how to contribute to the creation of wealth, and benefit from it. However, as countries and societies became adverse at receiving immigrants, and companies reduce workforces, social capital becomes more and more concentrated.

In the end, Avent concludes that no public policies, no known economic theories, are guaranteed to fix the problem of inequality, mass unemployment, and lack of redistribution. It comes down to society, as whole, i.e., to each one of us, to decide to be generous and altruistic, in order to make sure that the wealth created by the hidden hand of the market benefits all of mankind.

A must-read if you care about the effects of asymmetries in income distribution on societies.

Intel buys Mobileye by $15 billion

Mobileye, a company that develops computer vision and sensor fusion technology for autonomous and computer assisted driving, has been bought by Intel, in a deal worth 15.3 billion dollars.

The company develops a large range of technologies and services related with computer based driving. These technologies include rear facing and front facing cameras, sensor fusions, and high-definition mapping. Mobileye has been working with a number of car manufacturers, including Audi and BMW.

Mobileye already sells devices that you install in your car, to monitor the road and warn the driver of impeding risks. A number of insurance companies in Israel have reduced the insurance premium for drivers who have installed the devices in their cars.

This sale is another strong indication that autonomous and computer assisted driving will be a mature technology within the next decade, changing profoundly our relation with cars and driving.

The products of Mobileye have been extensively covered in the news recently, including TechCrunchThe New York Times and Forbes.

Image by Ranbar, available at Wikimedia Commons.

European Parliament committee approves proposal to give robots legal status and responsibilities

The committee on legal affairs of the European Parliament has drafted and approved a report that addresses many of the legal, social and financial consequences of the development of robots and artificial intelligence (AI).

The draft report addresses a large number of issues related with the advances of robotics, AI and related technologies, and proposes a number of european regulations to govern the utilization of robots and other advanced AI agents.

The report was approved with a 17-2 vote (and two abstentions) by the parliament’s legal affairs committee.

epstrasbourg

Among many other issues addressed, the report considers:

  • The question of legal status: “whereas, ultimately, robots’ autonomy raises the question of their nature in the light of the existing legal categories – of whether they should be regarded as natural persons, legal persons, animals or objects – or whether a new category should be created”, advancing with the proposal of “creating a specific legal status for robots, so that at least the most sophisticated autonomous robots could be established as having the status of electronic persons with specific rights and obligations…”
  • The impact of robotics and AI on employment and social security, and concludes that “consideration should be given to the possible need to introduce corporate reporting requirements on the extent and proportion of the contribution of robotics and AI to the economic results of a company for the purpose of taxation and social security contributions; takes the view that in the light of the possible effects on the labour market of robotics and AI a general basic income should be seriously considered, and invites all Member States to do so;”
  • The need for a clear and unambiguous registration system for robots, recommending that “a system of registration of advanced robots should be introduced, and calls on the Commission to establish criteria for the classification of robots with a view to identifying the robots that would need to be registered;”

 

The White House report on the future of Artificial Intelligence

The US administration has released a comprehensive report on the future of Artificial Intelligence (AI). According to the White House blog, the report surveys the current state of AI, its existing and potential applications, and the questions that progress in AI raise for society and public policy.

washington04The report includes a large number of recommendations related to the need for society, in general, and federal agencies, in particular, to pay attention to the impact of AI in the economy, security, safety and quality of life of the countries. These recommendations include, among others:

  • investigating further the consequences of AI and automation in the job market;
  • including ethics, security, safety, privacy and related topics in the university curricula of AI, machine learning and computer science;
  • closely monitoring and reporting the advances in this area, by the subcommittee on AI and machine learning;
  • prioritizing basic and long-term AI research by the Federal Government.

The report provides a rather comprehensive analysis of the impact of AI in fields as diverse as the job growth, national security, transportation safety and social justice, and may contribute to raising awareness in the society about the impact of this important technology.

 

 

 

Tesla announces full self-driving ability for all its cars

Tesla motors announced all current and future Tesla cars will be built with a ‘Full Self Driving Hardware’ package. This package is the next step in the development of Autopilot, and it will enable Model S, Model X and Model 3 cars to handle junctions, twisting rural roads and parking lots.

According to the press release, this hardware includes eight surround cameras providing 360 degree visibility around the car at up to 250 meters of range, twelve updated ultrasonic sensors, and a forward-facing radar with enhanced processing ability.

tesla_parking

The video released by Tesla, on Tesla website, shows the car driving autonomously in a number of different road conditions and parking itself after searching for a free parking space. Elon Musk tweeted “When searching for parking, the car reads the signs to see if it is allowed to park there, which is why it skipped the disabled spot.” He added that in 2017 a driverless Tesla will travel from LA to NYC.

 

You can now hail a Uber self-driving car

If you are in Pittsburgh, you can now hail a Uber self-driving vehicle, and see for yourself what the fuss is all about. In fact, you can even ask Siri to hail you a Uber car, which will come by itself and take you wherever you want. Or simply use the easy-to-use Uber app that has already changed the world of private transportation so much.

As you can see on the video, the car comes with a resident engineer. However, he or she does is not normally involved in driving the vehicle, and is there mostly to reassure the customers and, possibly, to obey existing regulations.

Although many people (about a third of Americans, the polls say) are still wary of using driverless vehicles, Uber took a step forward and made, this week, the technology available to anyone who wants to try it.

As The Verge reports, the technology still has a few quirks, but the self-guidance systems of the Ford Fusion cars used manage to address most of the challenges normally posed to a Pittsburgh driver.

Uber users in other cities will have to wait a little more, as the system, extensively developed by CMU researchers, is certainly more mature to be used in Pittsburgh that in other places around the world.

Video source: Uber