Musk vs. Zuckerberg

July 25, 2017

Today’s news is that Elon Musk and Mark Zuckerberg have opposing views of the future of Artificial Intelligence.

Musk says, “AI is a fundamental risk to the existence of human civilization in a way that car accidents, airplane crashes, faulty drugs or bad food were not — they were harmful to a set of individuals within society, of course, but they were not harmful to society as a whole.” Musk’s concerns start with driverless vehicles and a wide variety of blue collar and white collar jobs he expects to be lost. Then, he extends to the potential for criminal use, even use to start wars.

Zuckerberg responds, “I think people who are naysayers and try to drum up these doomsday scenarios — I don’t understand it. It’s really negative and in some ways I actually think it is pretty irresponsible.”

In a previous post entitled Better World or Worse World, I examine a variety of elements of the present and future global condition, noting that computers, artificial intelligence, robotics, and machine learning have the potential for significant disruption. In Good News and Bad News, I note that we face the potential that 5 million drivers of vehicles are likely to lose their jobs to driverless technology as it advances across the next 10-20 years, very soon. There are estimates that as much as 47% of US jobs are vulnerable to technological replacement. Musk thinks even more.

I’m privileged to be a Fellow in Harvard’s Advanced Leadership Initiative this year. My favorite professor, an expert on inequality, and I had a discussion about the future of technology at the end of the Spring semester. I took the view that Musk expresses. He took the Zuckerberg view. I don’t want to be a pessimist. Really I don’t.  But as much as I respect my professor, I have two problems with the optimistic view about all this. One problem is lack of any specifics as to how those 5 million will recover good jobs, jobs paying the $62,931 average pay for truck drivers. Second, in the absence of any logical explanation for replacement jobs, I find it hard to understand failing to plan for the possible downside.

The common “explanation” for the positive scenario is based on nothing other than history. Reference is made to the agricultural/industrial transformation in the 20th century. In the late 19th Century, more than 50% of Americans worked on farms. Today, with mechanization, we only require 2% of Americans as workers on farms, to provide far more quantity and much higher quality food than was produced in 1900. The argument is that the citizens of 1900 could not have predicted how the large agricultural cohort of labor would be absorbed into the advancing industrial economy. But, it happened.  Of course, the transition was disruptive and painful, but across a few decades, new opportunities of work for most did evolve. One only wonders whether government planning and action might have alleviated some of the pain. Think Grapes of Wrath, by John Steinbeck. And this says nothing about the criminal and dark side possibilities of technology advancement–e.g., robot and drone warriors.

So, maybe, just maybe, there will be some kind of yet unimaginable transition from the industrial economy to the digital economy, the knowledgeable economy. I certainly acknowledge it is theoretically possible for a wide variety of new opportunities for creative work being unleashed by advancing artificial intelligence and related technology. I certainly hope so.

But I don’t want to see a big segments of the next generation suffer through a transition that has no attempt at planning or support for those to be displaced during the change. I watched such an unassisted transition take place in my hometown of High Point, North Carolina, when virtually the entire textile and furniture industries abruptly moved to China in the 1990s, and government did nothing to help workers move, find other employment, or gain new skills. The US was all about globalization and open borders then. I suppose government was taking the optimistic view–things will work out in time.

I don’t see how we can justify taking the optimistic view about the future of technology, unless we  actively plan to do our best to anticipate the problems and prepare proper protections and assistance for the displaced. Isn’t this what government should be doing–trying to prepare the nation for the future?

 

 

What the American People Want

July 27, Da Lat, Vietnam

I hate it when politicians tell me what “the people” think or want, what Americans care about or don’t, unless the politicians provide evidence from polls or research that supports their statements–and, they never do. The American people want…” starts the common phrase from candidates and politicians. The American people want to repeal Obamacare. The American people want a big border wall. The American people do not want immigrants from Muslim countries. And on and on.

One that I particularly hate goes like this: “People [implying all people] don’t care about inequality.” The argument follows that [all] people don’t care if the CEO of Wells Fargo makes 300 times the income of the average Wells Fargo employee. After all, the Board of Directors makes that determination based on what other comparable companies pay their CEO’s, and based on the performance the Board assesses for the corporation.

People only care, goes the argument, that they have a decent job and some steady (albeit modest) annual increase in wages. According to US Census Bureau, since 1980, GDP rose by 154%, corporate profits rose by 182%, average income for the top 1% rose by  190%, and median household income rose by only 16%. I can’t help wondering how anyone could not care. I wonder whether those who say people don’t care would be happy to see it even more unequal. No limits?

Nicholas Kristof summarizes this era of increasing inequality in his NY Times column of July 23: “Since the 1970s we’ve seen a long-term trend toward cutting taxes and social services, and there have been a series of grim consequences: rising inequality, stagnant high school graduation rates, rising incarceration rates, rising narcotics use, stagnant earnings for the bottom half of Americans, and so on.” And still people don’t care?

There are many ways to measure economic inequality. Most common are the Gini index, comparisons by tiers, or by measuring consumption instead of income. And, we now know a great deal about wealth inequality, which is greater (worse) than income inequality. Pew Research provides a quick summary. The bottom line is that no matter how you measure it, inequality is very high, and in almost all serious studies, it has increased dramatically since around 1970. My posts offer references and evidence supporting my view that most Americans, most global citizens, do in fact care about inequality.

In a previous post entitled Inequality Matters, I address the reasons inequality matters just as much as all other factors that are offered as sufficient substitutes: shared prosperity, opportunity, mobility,  having “enough,” and other such positive outcomes. In Relative Status Matters, I address some of the feelings about inequality that appear to be universal and result in the kinds of negative outcomes Kristof mentions. I also refer to the research which documents these correlations.

But I don’t argue that all Americans care. Pew reports that significantly more Democrats care than do Republicans. I’ll venture to suggest motivations for some of those saying “People don’t care.” First, the speaker may not care about inequality, because he is enjoying the fruits of inequality in the upper crust. Second, he (or she) believes everyone is capable of being rich if they only try hard enough. Some believe they made it all the way to the top echelon based on nothing other than their own drive–forgetting advantages of birth, excellent schools, help along the way, luck, and certainly anything at all that the vast governments of their cities, states, and country did to lay the foundation for individual success.

Granted this is a complex subject. It seems abundantly clear that CEO compensation is not guided by performance, but rather by cronyism among Boards of Directors and compensation consultants, and could be modified by regulation or tax incentives. It is not so easy to imagine how to adjust for star athletes and entertainers. But higher tax rates do offer one part of the solution.  Emanuel Saez and others have calculated that raising the top marginal tax rate from 42.5% (average of US and all states and local governments) to 73% would maximize revenue–i.e., there would be no diminution of investment up to this rate.

What is clear is that the current high level of inequality is not the inevitable and natural consequence of democracy and capitalism. Rather, it is the result of decades of legislation that have increasingly favored corporations and the wealthy at the expense of the working man and woman. The vast extent of such changes across the period since 1970 are well chronicled in books by Robert Reich and Joseph Stiglitz, among others.

I suggest all would-be-influencers stick to documented evidence when speaking of what people want. Or, better still, stick to what we want, and why.

We all have many wants. Top of my list is for a reversal in the pendulum swinging toward higher inequality. I want a concerted effort by all three branches of government to restore and strengthen the rights and protections of the working man. I want a top level commitment to shared prosperity. I want to see inequality return to where it was in the 1960’s. We had billionaires then, but they contributed much more in taxes than now, and still felt highly motivated to start businesses and invest.

That’s what I want.

 

Basic Psychology

July 16, 2017, Da Lat, Vietnam

Basic psychology has long provided fundamental sound advice for relationship differences. Don’t start out criticizing the other person. Don’t tell them they are wrong. Don’t try to prove you’re right. Don’t give instructions for what they should do better.

Instead, start by listening very carefully to the other person. Repeat back what they said in your own words, giving comfort that you heard correctly and understand. Ask questions only to clarify any points you may not fully understand. You might want to say you understand and respect the other person’s point of view.

Only after all this, you may ask if you could now respectfully present your different view. You may ask the other person to kindly listen as you did, without interrupting or challenging, until you have finished explaining your view.

This is basic psychology, understood by anyone who has been in therapy or has read a book on relationships. Why? Because without this kind of approach, a heated argument will almost certainly escalate in name calling and worse. Criticism will result in hardened positions, eliminating any possibilities for agreement or compromise.

Of course, no matter how courteously and respectfully one approaches the solving of a difference, there is always a chance the other party will infer criticism and react to that inference. But, if this kind of preface is observed, and if the process is repeated during the course of discussions, there is a far better chance of working together to solve the problem or finding a compromise.

Why wouldn’t this basic psychology be the right way for Congressmen and the Presidential administration to deal with their important relationships, relationships with  influential politicians of opposing parties?

Note this Trump statement in his address at Liberty University: “Nothing is easier or more pathetic than being a critic, because they’re people that can’t get the job done.”

Many of us are to blame for allowing the acrimonious situation to develop, but no one is more responsible than the person we elected as our President. Along the way to the White House, Donald Trump was demeaning, vicious, and humiliating to all his major opponents. Regrettably, he has either forgotten his promise to “become Presidential,” after the election, or he really just can’t do it.

His continuing targets include all liberal media, but also James Comey, Barack Obama, Chuck Schumer, Nancy Pelosi, the Mayor of London, Angela Merkel, China, Mexico, and pretty much anyone else who disagrees with him. Hasn’t it occurred to him that he needs votes from the other side of the aisle in order to pass critical legislation, and he needs foreign cooperation in foreign policy objectives? Bullying and demeaning those forces will not open their hearts and minds to compromise and solution.

If our President cannot conduct disagreements with courtesy, if he can’t set an example as the current leader of the free world, I suppose we shouldn’t be confused as to why we continue to degenerate into the deeper and deeper abyss of partisanship and acrimony.

Wouldn’t you agree this is near the top of the list of his failures in leadership at the six month mark? As he said at Liberty University, this may be one of the reasons he can’t seem to get the job done.

 

 

Distraction Costs

July 12, Da Lat, Vietnam

We should be focused on the best opportunity, the only realistic opportunity ahead for the US–driving our country forward to lead the knowledge economy of the future. Our underlying objective in this pursuit should be a good job for everyone.

A good job is one that provides enough income for adequate housing, food, and other necessities. A good job provides enough for health care for the family. There is sufficient income to allow a prudent family to save enough to be able to deal with most emergencies. It is adequate to send children to decent schools. We currently have a lot of workers who have jobs, but not “good jobs.” It doesn’t have to be this way.

The jobs problem is at the essence of what troubles our country, resulting in large swaths of voters retreating to populist fringes on the left and the right, and electing Donald Trump, who proved adept at channeling the anger to false targets, such as immigrants and foreign countries.

Instead of focusing on what is essential and critical, we are distracted by the Russian entanglements of the Trump administration. We are also knee deep in bitter acrimony and accusations between polarized political media sources and politicians. Our President wants to turn backward and make a futile attempt to recover the manufacturing economy. Basic manufacturing is now better served by lower cost countries. Our politicians are fighting over how much welfare we can justify.

The current administration seems more interested in increasing the lot of wealthy than in shared prosperity.

The media behaves like medieval warriors, catapulting fire bombs at each other. Sean Hannity and Fox News are the loudest extreme media voice for Trump and Conservative causes, finding nothing but praise for the Trump administration. Jake Tapper, Chris Cuomo, and others at CNN stir up liberals with all kinds of suspicions of the Trump inner circle. On the Liberal side of politics, we are daily treated to the concerns of Adam Schiff and Chuck Schumer, and on the other end, Mitch McConnell, Paul Ryan and cohorts amaze everyone with their loyalty and defense of some of the clearly ridiculous behaviors of our new President.

Thus, most of the attention of the public and politicians is focused on these matters, and not on what is certainly the essence of it all. We are all at fault for this. Donald Trump’s administration is at fault for not focusing on the right issues, but rather on such as highly flawed proposals in health care and taxes which are likely to only exacerbate inequality and reduce opportunity. The media is at fault for devoting too much attention to these matters. We the citizens are at fault for not rising up and demanding focus on what is critical.

In the end, much of the Russia hype may well simply boil down to no conspiracy with Russia, just a lot of collaboration, which is detestable, but not illegal. And while many of us would love for President Trump to behave like an adult, at the least, the reality that he seems a petulant child is not the real issue. There are enough other influencers and controls to proceed, even with a child at the helm.

There can be little question that the most critical issue facing the US is creating the pathway to a future economy in which workers can count on good jobs. If we were marching down this path, discontent would drop dramatically. If we focus on jobs of the future with shared prosperity as our goal, the amount of welfare needed will reduce substantially.

There is a huge cost to all the continuing distraction. We are losing ground in repairing infrastructure, in proving health care for all, in education, and most critically in addressing the creation of good jobs for everyone in the future knowledge economy.

 

A New Social Contract is Required

July 4, 2017, from Da Lat, Vietnam

It’s time for a new social contract for the United States of America.  If there is a “contract” of any sort now (implied), it has steadily gravitated over 30 years to the advantage of business and the wealthy. The working class has been abandoned in the pursuit of extreme capitalism.

Consider some of the evidence:

  • Inequality has risen since 1970 to the levels of the Robber Baron era of the 1920s.
  • Millions of manufacturing jobs have been eliminated by technology and globalization, and what work that remains is at much less pay and is less satisfying.
  • While stock market values have advanced to the benefit of those who own stock, corporations have not improved the  lives of their workers. Only precarious or “gig” jobs abound.
  • Poverty in America is about the same as it was in 1970, as a percentage of families. 40 million live in poverty.
  • While we never had health care for everyone, Republicans are threatening to make it unavailable to 22 million more people.
  • Millions of dissatisfied have moved to extremes of opposition to government, and we elected a Populist candidate with little agenda to address this problem.

Notwithstanding this evidence (and much more), Conservatives seem hell-bent on continuing to cater to the wealthy. The single focus is on growth and business, with the implication that if we attend to the best interests of business and economic growth, the rest will take care of itself: Magically, there will be an abundance of good jobs, regardless of our failure to address structural obstacles like globalization and technology. And, regardless of our failures in maintaining global educational excellence, much less advancing it to deal with the new challenges of the knowledge economy. It’s impossible to tell who really believes single focus on business and economic growth is adequate. Some who profess this are simply in deep denial, and don’t see the facts of the last 30 years. The rest know this doesn’t work, except for the wealthy, but they see it seems to sell well to the working class–for a while longer.

Conservatives place emphasis on an American myth–the mobility of “Horatio Alger” America. Here is Paul Ryan: ” A lot of people don’t believe in the American idea anymore. The condition of your birth doesn’t determine the outcome of your life. This is America. You can make it.” Paul, there’s a reason a lot of people don’t believe in that particular American idea anymore. It’s no longer true. Raj Chetty and associates have studied the likelihood of a child earning more than his father, and found that the chances were 90% for children from the 1940s, but have fallen to only 50% for children born in 1980s. It’s worse in low income communities.

We cannot simply continue to cross our fingers on the basis of hoped for growth and increased prosperity for business. Uncontrolled capitalism must be accepted as having little interest in the worker. Workers are only protected to the extent they are critical to production and sales. This is capitalism. Shareholders are the only real constituency.

We don’t seek to change the essence of capitalism. Fortunately, we have another party to help with the rest. Government. No one wants onerous controls or excessive regulation, but someone must assure that the long term benefit to the society of supporting businesses extends to the citizens, the workers, and and their communities. Is there any evidence across our centuries of capitalism that left completely on their own, corporations will undertake to assure that there is shared prosperity across our land? No criticism, they’re not designed for that. Government is the referee and must do its job. Can anyone imagine a football game without referees to limit excessive competition?

We need a new social contract–one in which there is a primary objective of shared prosperity. Government must work with businesses and communities to support efforts in which opportunities are spread and shared. Competition will continue, but there must be incentives for sharing technology, information, and even property rights, such that a groundswell of innovation and new business creation can occur. Businesses will be incented to make greater investments in education and in communities where they work and sell. If we prevail in this objective, growth will be strong and our country will recover its vitality and its character.

Only with this new social contract can we make America great again.

 

We Can Afford Health Care

July 1, 2017, from Da Lat, Vietnam

The Conservative arguments that we can’t afford health care for all is rubbish.

Conservatives use the debt and the deficit as their argument for cutting all kinds of programs which are critical to the working class and the poor. “This is unsustainable, we simply cannot afford it, we can’t do this to our grandchildren,” go the arguments. In other words, “We have no choice.” Heard that lately?

Please bear with me in looking at a few numbers: The US federal debt is about $20 Trillion, which is 105% of our GDP. Our 2016 deficit was $587 Billion, about 3.2% of GDP and in line with historical averages.

Five OECD nations have federal debt which is a higher percentage of GDP. None are as strong as the US or have the world’s reserve currency. The US federal government spending as a percentage of GDP is the 4th lowest among 28 OECD countries. It is not a given that our debt is unsustainable, or that it couldn’t safely increase–for the right reasons. Health care for all would strengthen our country.

But for this discussion, let’s stipulate that we can’t increase the deficit or debt. There are many other ways to preserve health care. The Congressional Budget Office originally estimated the Senate bill would reduce the US annual budget deficit by $321 Billion over 10 years. Later estimates reduced the savings to $119 Billion.  But let’s use the earlier CBO number. That’s $32 Billion per year.

Federal spending is about $4 Trillion and when states and municipalities are added in, the total is about $7 Trillion, per year.  $32 Billion is .5% (1/2 of one percent) of $7 Trillion. There are so many ways we can save $32 Billion annually, to continue health care for the 22 Million who will lose it (Congressional Budget Office forecast).

First, we could change to a “single payer” system, something Trump extolled only a few years ago. Economists estimate this could cut our spending on health care from 21% of GDP in 2016 ($3.7 Trillion), to a dramatically lower figure.  There is a clear and indisputable cost advantage to a single payer system. There are many countries demonstrating the cost effectiveness of single payer. California has been developing such a plan. Why can’t the US?

It is a tragedy of our culture that this optimal solution remains indefensible in the the US of today. We are addicted to private sector solutions.

Setting single payer aside for now, there are many other ways to justify retaining health care for all if the cost is only $32 Billion per year, and without increasing the deficit or the debt. We could start by not spending the extra $50 Billion annually that President Trump proposes for the military budget, which is already larger than the next seven nations combined.

Or, could set about to re-engineer the federal government, reduce redundant and out of date regulation, install better management, automate, etc. A 10% savings in the $3.7 Trillion federal budget would generate far more than the projected $32 Billion savings attributed to the Senate bill. Certainly states and cities have similar opportunity.

If only some of the cuts Trump proposes are justified, why not take those savings and keep the military budget at its present level? That’s a lot more than $32 Billion per year.

Finally, Conservatives keep avoiding the obvious–either raising taxes on people like me (a Patriotic Millionaires offer) or cut some of the “entitlements” for those of us who do not really need them. There’s a lot more than another $32 Billion there.

So, the Conservative arguments about our budget deficit and our federal debt do not hold water. There are many ways to save the money necessary to keep 22 Million people in health care, better still, provide health care for everyone, without increasing the deficit or the debt.

It aways seems to come down to who has influence, and who does not. Those 22 million do not have political influence.

It’s not fair. It’s not right.  It’s a shame.

 

Better World or Worse World?

June 26, 2017, from Da Lat, Vietnam

My brother and I often debate this. Are the people of this world better off today than before, or worse off? He’s on the positive side of this and I am on the negative side.

The answer is both, of course, depending on what segment of our global population, what factor of progress, and what two points in time are being compared.

In my brother’s defense, there is indeed a very long list of improvements the world has enjoyed, say over the last 50 years: All manner of health outcomes, literacy, transportation, access to technology, constantly reducing prices for physical products, even less conflict in many regions of the world. A very poor family in 1967 might not have had a TV, air conditioning, a decent refrigerator, and no mobile phone, of course, just to mention a few of the notable advancements almost everyone can enjoy.

My concern starts with economic inequality. Global poverty has declined dramatically but most of the reduction is in China and India. In the US, poverty has not declined measurably. In 1967, we had 11.4% of our US families in poverty, and in 2015, 10.4%, a negligible improvement. We have about 40 million Americans living under $25,000 for a family of 4, as an example. I’m sure all will agree it’s really tough to survive on that, no matter where you live in the US. Wages for the bottom 20% of our population have not increased in real terms since 1967.

Of course, I acknowledge that a family of four may have better health care, better 2nd hand car, and TV than the same family had in inflation adjusted equivalent wages in 1967.  They may have a mobile phone. You may hold that such a family is better off in eking out an existence.

But two major intangible elements swing the evaluation negative in my opinion: inequality and mobility. Please see previous posts in which I argue that relative status matters, inequality matters. Inequality has skyrocketed across this period. High levels of  inequality are tied to slower economic growth, impaired health results, more crime, and other negative outcomes.  Even those who continue in disbelief as to the negative impacts of inequality, all seem to believe mobility matters. But in tandem with the increase in inequality, mobility (ability to earn more than your father) has steadily declined across the last 50 years in the US.

While physical products cost less, the important costs have increased dramatically–housing and education.  That family of 4 cannot even consider college for their kids. Primary and secondary education is in starved public schools which have deteriorated. They can’t afford to even consider owning a home, and costs in the city have pushed them to slums or to distant suburbs far from good jobs. We’re about to make health care a lot more expensive.

My brother, my sisters, and I are clearly better off than in 1967. We had good public educations, went to college, landed good jobs, enjoyed improving health care, raised families, all of whom went to universities. We clearly enjoy a much better life than my parents’ family did in 1967. But I see how much harder it is for my children to find and land solid jobs, how much more in annual income equivalent is necessary to buy a home and to send my grandchildren to the best schools.

Will the future be better or worse? Climate change, terrorism, global conflict, inequality, mobility…?  At the end of this semester, I discussed my primary concern with a Harvard professor I respect. “Will inequality increase because of robotics, automation, self driving vehicles, artificial intelligence, machine learning, etc.?” He said he’s cautiously optimistic that will not happen. He referred to the way the abundance of agricultural workers no longer needed (when automation came to farming) were absorbed over a few decades into factory jobs. But as to how something like this could happen in the advancing digital age, he did not have a theory. I’m worried.

Whether you think we’re better off or worse off, whether the future will evolve beneficially or harmfully, without intervention, what difference does it make? The implications of taking a stance are probably significant. If you think we’re better off, perhaps you don’t see a need to invest heavily in fixing the problems. If you think the opposite, perhaps you are more motivated to influence change.

I want change. Hoping for a miracle is not satisfactory.