Jun 18, 2017 - Economy

How to get rich as AI takes over the world

In 2014, MIT economists Andrew McAfee and Erik Brynjolfsson created a new zeitgeist with a book declaring The Second Machine Age — a time of technological advancement as revolutionary as the first machine age that saw the widespread adoption of electricity and the automobile.

Now they are back with Machine, Platform, Crowd, a guide for business leaders through the thicket presented by artificial intelligence, tech companies with tremendous reach, and the power of the crowd.

Thought bubble: McAfee and Brynjolfsson have delivered another smart roadmap for business executives. But not so much for society, for whom they have two simple messages: buckle up, and kill before being killed. That's not good enough. Our political leaders, for starters, sorely need advice for navigating internet-fomented hacking and cyber crime.

The authors divide their new book into three main themes:

1) The Machine: Artificial intelligence is growing exponentially more powerful. Successful business leaders should recognize this, and move briskly to replace human labor with machines, especially in cases when humans are subject to cognitive biases. Fields where machines will be masters despite our thoughts about human creativity are architecture, design and musical composition.

This doesn't mean no role for human decision makers, but the opposite, the authors argue: The need for management will grow as organizations marshal talent and technologies to solve problems that only humans can identify and understand.

2) The Platform: The most successful businesses will be "platforms" rather than sell products. That is, they will emulate Facebook, which is a destination for a lot of other activities, such as connecting with friends and family, sharing pictures and messages, and reading content disseminated there by publishers.

The secret sauce of platforms is how their value compounds as more people use them, what is called "network effects." Consider the iPhone: when Steve Jobs opened up its apps to third-party developers, he drove sales for both his phone and app developers.

3) The Crowd: Business leaders can learn from Jobs, who with his iPhone was harnessing the expertise of the crowd to balloon Apple's value. They have an an unprecedented opportunity to draw on the brainpower of experts across different fields, thus magnifying the possibility of resolving difficult problems.

Google is another example of the power of the crowd. As an innovation on Yahoo, which was human-curated, Google ranked pages based on how many sources linked to it. By leveraging collective opinion, Google at once made Yahoo's search engine all-but obsolete.

Our thought bubble: All of this is sensible enough. But when McAfee and Brynjolfsson get to individuals, they can sound brutal in a Darwinian way: set aside your fears of AI, they advise, and embrace it faster than their competitors.

  • The power of networks and the crowd has already shaped the world in a fashion with no real oversight. The Internet allows widespread cybercrime and hacking. Facebook whips up the velocity of fake news, undermining the Democratic process. Finally, Google and Amazon are using network effects to amass fortresses of data that will fend off competitors for generations to come. Our historical anti-trust sensibilities make us conflicted by corporate size; but do the so-called fearsome five — Amazon, Apple, Facebook, Google and Microsoft — get a pass?

Our political leaders need to step in and protect ordinary people. Among the answers we need:

  • What control should individuals have over their own data?
  • Who should have access to wireless spectrum and broadband Internet service, and at what price?
  • Should companies be permitted to become monopolies from their ownership of data?
  • How will we distribute the wealth in an economy dominated by platform-owning AI behemoths?

The speed at which technology develops seems to be accelerating, but not our ability to agree on the direction of political policy. If we get our answer to this intensifying storm wrong, the new economy and our politics could develop in ways we would never wish for. This is as important as who gets rich from the coming AI tsunami.

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