On Artificial Intelligence

I have long struggled with what artificial intelligence actually is. I often have problems with concepts that don’t seem to fit my frame of reference. I don’t know why this happens with some concepts and not with others. In general I like ambiguity. But whereas game theory never gave me an issue, spaces with more than three dimensions did. And whereas I love obscure and uncertain elements in economics, I always struggled with some parts. There seems to be a stop switch inside my brain, a switch that is almost random but rather final when applied.

Today, I think I managed to overcome the switch, and in the end it was as simple as reading a Wikipedia article. Last month I read through a long and rambling survey in The Economist about artificial intelligence in business, and I hated it. It seemed little more than a list of computing applications, without any real structure and with far less of the deduction and conclusion that Economist surveys usually include.

I was frustrated, and I wondered if my blockage might be one of definition. The survey made some attempt, but I then found that the articles did not really fit the definition used. So I tried Wikipedia. A quote worked wonders for me. It was a quip – Artificial Intelligence is whatever hasn’t been done yet.

I found this quip to be a beautiful definition, and it succeeded in removing my blockage. Artificial intelligence is some technological advance using computers that closes the gap between what a machine can achieve and what a human can. Actually, it is even simpler. It is any technological advance using computers, because the rest of the definition is moot. Since humans can use machines, machines can’t overtake us, except in things like speed of processing. So if some advance is really an advance, it will close the gap, but never to zero.

The insight solved many things for me. First, it helped me understand why AI is so old. Apparently, the term was first coined in 1956. A good friend of mine joined Shell with me in 1982 and was assigned to a unit working on AI. I didn’t really understand what that was, but it sounded exciting. Now I realize that the point is to sound exciting. The concept is so generic that it was never really invented, merely coined, in the same way that we always practiced customer relationship management even before someone coined the term CRM. So something like voice recognition has moved progressively from science fiction to dream to goal to flawed reality to mainstream application, and it is only in the last step that it ceases to be classified as AI.

So why the big fuss now? It is because several enabling advances have come at the same time, to make more things feasible. It is a period of high computing innovation. If I was being cynical, I might note that banks and analysts are especially tuned in to innovation just now, since there is no recession to fight and also a dearth of other star investment opportunities. The current situation is highly reminiscent of 1999-2000, the internet boom. The same thing happened then.

I actually had relevant roles for Shell during the internet boom, first as head of strategy for European retail, and then as e-commerce head for the technical business, the job I held that I was least qualified for, in every conceivable dimension. I had no technical qualification, no relevant network, and barely understood what the internet was.

Still, at least I was able to learn some lessons from that crazy time, including that few others really knew what the internet was either, and those that did didn’t know what to do with it. In the early days this field attracted misfits, computer people who did not like the discipline and commercial constraints of IT departments. These people, Shell and external, came through my office in a line looking for funding. They had pictures of computing flow charts, and utopian dreams. What they usually did not have was any commercial or practical sense.

It was fun trying to work out a path forward in this situation. Some ideas seemed to have some merit but would be expensive or complex, while others had little upside. So I tried to work out what our core strengths as a business were, and to look for ideas that leveraged those. I found few.

I even had one idea myself, one not involving any flow charts, and I regret that I didn’t follow it up with more energy, because it might just have worked. In retail, I wondered if we could use selected stations as local delivery points, recognising that delivery at home for large or valuable goods was not ideal, and that Shell had the core strengths of convenient space manned for long hours and with car parking. This is still a challenge for Amazon and others, and it is possible that we could have made a large deal with them that could have survived and even changed the landscape.

I also have plenty of experience of failed initiatives from this era. We were rapidly growing our shop business at the time, and were learning about supply chains and layouts and vagaries of demand and supply. Some consultant sold us the idea of a global system tracking all the goods from point of sale systems, so we could be more efficient and squeeze our suppliers. This was maybe twenty years too early. Even at a national level, our data quality was far too low and scale far too small to benefit from such an investment. We were arrogant enough to think we could do a better job than a local retailer in predicting the demand of ice cream next week.

At the time, we also thought that our loyalty schemes and our card processing systems gave us a competitive advantage via the customer data gathered. This one was only ten years too early. At the time, we had no real idea how to use the data profitably. Now, it has become not just possible but even core and necessary for businesses like Shell’s.

That was 1999 and we all know what happened to that bubble. 95% of the ideas came to nothing, stock prices ballooned then collapsed, but in the end Amazon and a few others were left not only standing but becoming titans to this day.

Looking back, that wasn’t the only time I happened to venture near the forefront of AI. In 1979, I was in a team that may have created the first route finder tool for the UK. Nowadays Waze and its competitors are everywhere, but in 1979 this could have been described as AI. We created a database of junctions and links and an algorithm to work out the cheapest route between any places. To get from North London to South London, the algorithm considered millions of available routes, including via Scotland. It had the key elements of rapid computing power and a large data set. Nowadays, such algorithms add the extra dimension of variable travel time based on up to the minute data, but at the time even our simple algorithm needed all the computing power we could muster.  

Will this current excitement about AI end in tears as well? The last bubble arose because of the internet, this one because of the step changes in computing power and data availability coming onstream. Reading the Economist survey, I am sure that most stories will end in failure once again. If I had to pick winners, I would stick with the same ones as last time, because they have existing scale and knowhow, and, critically, data. And there will be some fabulous advances buried among the debris. I would also try to learn from my own lessons. The critical success factors are usually in business rather than technology – is there a way of making money, and are key strengths relevant and in place? In the technology, look for the weakest link – often something about incentives, or data quality, or boundaries like the last mile or battery life.

And now I know what AI is, at least well enough for my own head, I won’t be so mentally repelled. It turns out what I was doing 45 years ago without knowing it, and in the same way what seems amazing now will seem routine in ten years time. I think I also understand better why Hawking and others think AI is a global threat. I don’t think it is anything about mad machines taking over or aliens or science fiction. It is simply about speed. Algorithms can model anything a human can devise, but at warp speed. So, for example, leaving nuclear weapon strategy and implementation in the hands of computers is completely feasible, but very dangerous, because things can spiral out of control faster than humans can easily stop them. So it is all about controls: how humans intervene to put tripwires into computer executions. With some of the current batch of humans in positions of influence, I can see what Hawking was getting at. 

How Broken is the USA?

The USA can be an exasperating place, but also an exhilarating one. We hear all the time of systems being broken and of gridlocked politics, yet somehow New York can work rather well. Further, people still want to come to live here. There is an immigration problem because people want to immigrate. Russia and China don’t have immigration problems.

But it is still possible that things are broken, perhaps beyond repair. A great company can be doomed a generation before it actually goes bankrupt, and smart analysis can reveal how. A great brand and strong legacy can mask problems for a long time. The same can be true of countries.

The USA certainly has a wonderful legacy, and some enduring strengths. The land is vast and fertile and blessed with natural resources, yet under-populated and located with natural defences. Its people are largely immigrants, people who have chosen to come and displayed the drive to follow their dream, hence energetic and optimistic. The time of colonization enabled a first class constitutional and justice system. Good choices were made in long-past wars, leaving a legacy of influence and wealth. Many of these advantages will endure.

But look a bit more closely, and much of the key structure of society really is broken, and that portends ill for the future, especially because few of the broken elements appear easily fixed.

Start with health and welfare. The USA remains the only advanced country where basic health care is not a right. Virtually the only thing that the Obama administration was able to enact was a partial fix for this, but even that is being unwound. Healthcare costs the economy double what it does in key competitors, yet outcomes are worse. Life expectancy has lagged other nations for many years and is now actually declining. The recent UN happiness report partly attributed the poor ranking of the USA to three related epidemics, of obesity, opioids and depression, yet almost no public policy effort attempts to counteract these. Incentives remain skewed – a visit to a medical practitioner can resemble that to a bank. This is one broken system, and not one that can be fixed easily.

Next, take education. US universities are lauded around the world and indeed generate influxes of talent and innovation. But their costs are out of control, and increasingly access is restricted to the wealthy. Meanwhile, public schools resemble jails and produce results among the worst in the developed world and let down the disadvantaged most of all, because funding is local and hence skewed to richer areas. Public policy is a proxy battle between unions and greedy entrepreneurs, fought over charter schools and common testing, but for goals other than fixing the broken system.

Justice is little better. The court system is good, but public policy has led to dogma and disaster. A third of black men will see the inside of a jail, a huge multiple of the share in any other developed country. Violence is endemic, including by police, who kill a large but unmeasured number of citizens each year. By contrast, in Norway or Germany or Japan the number of bullets fired annually by police is in single digits, and each one leads to a public outcry. The cost of justice excludes most citizens. The effects of all of this will take generations to heal, even if public policy were to become more enlightened.

Infrastructure, another key fuel of the economy, is crumbling. Roads are more potholed than in any advanced nation. Bridges collapse, water systems poison people, and public transport barely exists outside of a few large cities.

The national balance sheet has a vast and growing deficit. Enabled by having the world’s reserve currency, debt is allowed to grow and competitiveness to progressively decline. Many key programs, such as social security and public pensions, will soon become unaffordable. Yet imposing taxes even to stabilise the situation becomes politically impossible. Locally, many declining cities and states have unsustainable finances too.

The banks were incentivised to create one crippling crisis and appear headed towards another one sooner or later.

Defence appears rather better, at least superficially. The USA certainly has a lot of firepower, and key global assets such as military bases. But look more deeply. Since 1960, almost all key decisions have been deeply flawed, and execution has been poor, constantly outflanked by more agile adversaries. And they are addicted to money, with precious little scrutiny. This is not a recipe for sustained success.

Foreign relations are broken as well. Even before the calumny of the current administration, most of the world’s citizens and many of its governments actively disliked the USA. It is tolerated because of its power and its money. Most Americans live in blissful ignorance of this uncomfortable fact, and make little effort to understand the needs and motives of others.

Business policy is similarly broken, notwithstanding the great success of some USA companies. Arguably, a lot of these successes are riding on the back of defence spending and legacy advantages. But most industries have less competition and hence less innovation than they did, with trends heading in the wrong direction. Protectionism will only hurt competitiveness.

The USA has many wonderfully generous people and strong communities. But there are deep tensions and resentments as well, notably along race and class lines. The ugly history of suppressing the indigenous population will become divisive soon too. These attitudes infect politics, yet public policy tends to exacerbate rather than ameliorate. As an example, housing for the poor becomes progressively less affordable, creating a vicious cycle of eviction, despair, illness and resentment.

Culture is a rare bright spot, at least in the bigger cities. And culture will become more important as communication becomes ever easier and lives cease to be dominated by work. Once the current ugliness over immigration dies down, demographics will once again work in the USA’s favour. The USA does not have the ageing problems of Japan and Germany.

Overall, this is a depressing scorecard. Indeed, most public services are broken or close to breaking point, with adverse trends and almost no legislative progress. Instead, Congress talks about walls and monuments and distant enemies and making rich people even richer. With gerrymandering, lobbying and the dominance of money in politics, this will not improve soon. Meanwhile, the current administration is destroying the civil service, along with its other sins.

A well-run country would be making incremental progress on all the items above. None are actually difficult. It would then be spending serious time contemplating the more difficult issues that are around the corner. Even climate change luddites will have to respond to its effects. The ageing of society, the end of the work-dominated society, artificial intelligence and the impact of autonomous vehicles will all need a response sooner rather than later. Good luck with that, congress.

I don’t want to portray things as worse than they are. Some strengths are enduring. Trump will pass. The next generation are wonderful humans. But I think if the USA were traded on a stock market, it might have a share price like that of GE or Ford or even IBM – great past, reasonable present, but no future. Read Lionel Shriver’s brilliant The Mandibles to get an extreme idea of what that might turn out like.

Fasten your Seat Belts, Driverless Cars are coming soon

The Economist published a large special report on the subject of autonomous vehicles a few weeks ago. As usual, it was comprehensive, well researched and thought provoking. It laid out all the actors involved in the adoption of this new technology – manufacturers, technology firms, regulators and consumers among them.

My main takeaway from the report is that suddenly this change is really upon us, and that it may be one of the most significant global game changers. Five years ago this all seemed like something geeks talked about but with practical application only in the far distant future. Well, the future is now. The technology works, car companies and technology giants are scrambling, and the benefits are too great to be held back by governments for very long. The result will be the best business case study ever, played out in real time over the next ten years; it will be absolutely fascinating.

While there will be losers, such a taxi drivers and truckers, this change is overwhelmingly positive. Roads kill people, and so does pollution. Logistics adds cost and reduces supply of welcome goods. The adoption of autonomous vehicles can make a big dent in the damage from climate change. Easier travel can encourage diverse communities and reduce prejudice. Transport also discriminates against the old and the young and the disabled and the poor – if getting about was as easy as using electricity then all that could be changed.

The special report went into impressive depth. Yet I still wonder whether its mindset was too much stuck in the present. This will change so quickly that many assumptions will prove unreliable. But the report certainly informed, and it set me thinking. I have been drawn to a number of stories, each of which might contain a relevant lesson.

First, look at Uber in New York. One consequence has been stark but rather predictable, that is the demise of the taxi driver, including traditional cab drivers but also Uber drivers. No one is making much money. The yellow cab drivers are up in arms, but I have little sympathy – they abused their monopoly over many years and typically provided poor service. But there has been a second consequence, an unintended one. Uber has hastened the trend for fewer people to own cars and to drive in the city. But it has not reduced traffic, but in many places has increased it. That is because now the streets are clogged with empty Uber cars awaiting business. The takeaway – unintended consequences are everywhere.

Now consider a journey, say from New York to Boston. If I have a meeting in Boston at noon, I will probably leave home at 6am. If I take the fastest transport, a plane, then of the intervening six hours, the actual journey takes about forty-five minutes. That will be the time when the plane is steaming between the two cities. The rest of the time goes on driving to and from airports, ticketing and security and loading, and taxiing in the ground and the air. It may be quicker to drive. The lesson is that the key technology, that of flight, doesn’t drive the journey time. If the plane went twice as fast, it would only save twenty minutes out of 360. Rather, look at bottlenecks and transfers – that is where the time goes. Runways are few, airports fewer, and ground handling obsessed with security over speed. No matter how smooth autonomous vehicles will travel, it is the bottlenecks and transfers that will define the experience.

Next, travel with me on an NYC bus. Now I live in an apartment, I use the bus quite a lot when I go shopping, because I can’t reliably park my car near the apartment. Everyone knows that buses travel slowly, and most blame traffic congestion, especially from double parking. They are correct, but that is not the main reason buses go slowly. The bigger issue is loading and unloading. Most passengers are old, disabled or loaded down with kids or shopping. It takes a long time to get these people from the stop to their seat via the metro card swipe. The lesson is about who the passengers are. They are not just elegant, fit single unencumbered travelers. The new transport has to be for everyone in every situation. Look at car designs and ads and see how those companies have spent a hundred years failing to heed that message. I have no confidence whatsoever in car manufacturers during this transition.

Next, consider my business career at Shell, at lot of it evaluating locations and investments for petrol stations. We used to look twenty years ahead. That won’t work now. This is just one of many ancillary businesses that will be disrupted out of existence. So will dealerships and mechanics, both big employers, and both big users of suburb space. With shopping malls dying already, it is not just the need to alter roads that will complicate urban design. Land value will be very hard to predict, making some rich and others bankrupt.

Next, here is a brilliant anecdote from the Economist report. I drive on the Southern State Parkway occasionally; it is a road that leads to Long Island and in particular its beaches. I have noticed it has many low bridges, more than most parkways. Now I know why. It was deliberately designed that way, so that buses could not use it and hence poor people, especially blacks, would have less access to those beaches. Isn’t that disgusting? But such outcomes are frequent, and happen every time power and money and special interests outweigh civic benefit. Now look at US society generally. Almost every major public service is broken, and Congress struggles to unblock anything. I have no confidence at all in the US generating good civic outcomes from autonomous vehicles. Instead, I will look to Singapore, Beijing, Dubai and Stockholm. AV’s might accelerate the decline of the US as the predominant global power.

On this subject, I remember a book from the 1980’s by Martin Amis, where he described a dystopian future of outcomes driven only by money. To a great extent, this novel has been quite prescient. One vignette described travelling on a motorway where each lane carried a separate toll, with the outcome that the rich travelled smoothly while most sat in endless jams. That outcome is all too possible with autonomous vehicles.

So I think The Economist did a great job at consolidating the existing debate, but that others will have to take their work forwards. These thinkers will need to be smart, connected and agile. It will be great theatre. The end game should be almost cost-free and hassle-free travel. But there will be missteps and perhaps some poor choices if other interests outweigh civic ones. And missteps can take a long time to fix. Infrastructure is costly to develop. New York has just opened its first new subway line in a hundred years.

I somehow envisage a system with three elements. There could be pods for the last mile, with low capacity but rapid frequency, a hop-on, hop-off service that you call and arrives in seconds and takes you anywhere local. These can also serve rural areas, with longer response times. This connects to a series of hubs in a city, linked by larger pods with higher capacity and using dedicated routes at fast speed. Then even faster vehicles would connect cities in shuttles; these can also be used for freight. The key to making this work would be the ease of transfer between the three elements; it would need to be rapid and seamless.

That would be one possible outcome. The hub connectors could be publicly developed and operated and almost free. But there are other outcomes, more sinister ones. We could see the wealthy running around in designer pods, while the poor are still struggling on buses.

Over the last ten years I have taught three kids to drive, and considered it an essential life skill. Thankfully, I can still drive relatively safely, but the day will come when my reactions are slower. So I look forward to an old age without the need to drive or to walk long distances to subways carrying shopping. And I suspect those three kids will not need to teach their own kids to drive. How marvelous that will be.