Future of Work - Axios
Featured

Future of Work

Welcome back. Please invite your friends and colleagues to join the conversation. Let me know what you think about what you are reading here and in the daily stream. Just reply to this email, or drop me an email at steve@axios.com. Let's start with a raging discussion among those in the AI community.

1. The problem with "AI washing"

Lazaro Game / Axios

We are in a robot-and-artificial intelligence bubble, and experts are starting to push back. Among their gripes: over-the-top hype of AI's capabilities and its near-term danger to society.

One of those grumbling is Rodney Brooks, a father of modern robotics. He tells Axios that we are not near an age of super-human machines — robots are here, but not about to take over:

  • "AI is not inherently powerful. In hundreds of years, it could be different. But we aren't on the cusp of this."
  • Some companies are making exaggerated claims of AI capability in their products.
  • "AI washing is very, very prevalent," Brooks says, forecasting "some disappointments ahead — a bubble that bursts."

Where we are now: In terms of commercial products, we are in an age of simple robots doing the simplest of tasks again and again, mainly because no one has yet invented one that reliably does something more complicated that is actually in demand. We are talking machines like the Roomba, the robot vacuum cleaner of which Brooks is a co-inventor. "Customers want something that out of the box will just work, at a price they want to pay," he says. "And they don't want to read a manual."

Where we're going: The greatest near-term need is robots that will help the elderly stay in their homes, he says. "We will be lucky if we have enough robots to fill the gaps needed for the aging population. They will be dumb robots."

Read the rest of the post here.

2. China declares AI race with U.S.

Sean Welton / Creative Commons

AlphaGo's defeat of Go master Ke Jie has led China to a Sputnik moment, per the NYT. That worries U.S. artificial intelligence experts.

In a plan released Thursday, China declared that it will catch up to the U.S. in AI research by 2020, and a decade later, "become the world's premier artificial intelligence innovation center."

  • In short, China said that it — and not the U.S. — will dominate artificial intelligence.
  • This is not an ambush: Just nine months ago, the Obama Administration itself put down U.S. chips on AI in a 58-page white paper issued on White House stationery. The study counted up back-to-back years of $1 billion in unclassified U.S. government investment in AI research in 2015 and 2016, in addition to billions more by U.S. tech giants every year, and smaller companies.
  • But the Trump administration is trying to dial back on government science spending.

Add in China's suggestion of multiples of U.S. spending in the coming decade and a half, the colossal foothold already grabbed by Chinese giants Baidu, Tencent and Alibaba, the discouragement that Trump has instilled in foreign science and tech students from staying in the U.S., and Chinese investment in U.S. AI startups, and you start to understand why U.S. experts are concerned.

Go deeper: Read the rest of the post here.

3. E-commerce's next victim: commercial real estate

Creative Commons

The shift to on-line shopping is now striking at the underlying value of malls, and commercial real estate as a whole.

  • About $120 billion in U.S. commercial mortgages mature this year: Borrowers went delinquent on about $2.4 billion of it in June alone, according to Trepp, a real estate data provider, quoted by the WSJ. It was the largest rise in delinquencies in six years, according to Fitch, the rating agency. Fitch's silver lining: it's not as bad as it expected at the beginning of the year.
  • Still, more defaults are coming: The credit industry expects delinquencies on such debt to escalate over the coming year, according to a new poll of portfolio managers, and to spread globally.
  • Look at this number: In the FT, Blackstone executive Nadeem Meghji said the value of regional malls in smaller cities may be down 40% on average over the last two years.
  • We are only seven months into the year: Again from the FT, retailers say they will close 76 million square feet of store space this year, almost as much as they announced in all of 2016.

"Second-order effects": Joe Brusuelas, chief economist at RSM, an auditing firm, tells Axios that the plunge in valuations is likely to spread to office buildings and other commercial real estate. That will then affect surrounding communities. "They won't have those property taxes," he said.

4. Worthy of your time

SoftWear

  1. Evil sci-fi robots are already here and attacking society (Tim Wu at NYT)
  2. The business of artificial intelligence (Brynjolffsen/McAfee at Harvard Business Review)
  3. Robotics experts dismiss Musk's call for AI regulation (Axios)
  4. Why Japanese have so few babies: a lot of men can't afford to get married (The Atlantic's Alana Samuels)
  5. Sew-bots and their threat to developing economies (FT's Kiran Stacey and Anna Nicolaou)

5. 1 vindicated thing: A much-lambasted forecast

AT&T Tech Channel

In 1995, Clifford Stoll, an infectiously enthusiastic astronomer who mildly resembles Emmett Brown, Marty McFly's wild-haired scientist friend in Back to the Future, forecast our Internet miasma, one not of carefree democracy but "handles, harassment, and anonymous threats."

For that, he was sent into scientific purgatory, forever to be mocked and trolled. As we know now from fake news bots, the 2016 U.S. election, and the blocked Chinese internet, Stoll was right, per Rob Howard at Medium.

Not entirely right, mind you: Stoll, for instance, did not foresee the reasonably safe transfer of money through cyberspace, or the cratering of malls. But he was sufficiently accurate to deserve a massive apology from the scientific and tech community, including:

  • "A network chat line is a limp substitute for meeting friends over coffee."
  • "Who'd prefer cybersex to the real thing?"
  • "What's missing from this electronic wonderland? Human contact."

Featured

Former UK ambassador to US compares Trump to 1933 Germany

Peter Westmacott, the former British ambassador to the United States from 2012 to 2016, said on Twitter today that President Trump's leadership has "shades of 1933 Germany," hinting that it might embolden autocrats around the world.

Why it matters: As a former representative in Washington for one of America's strongest allies, Westmacott's words carry serious weight on the world stage — and provide a look into how key European nations might currently feel about dealing with the Trump administration.

Featured

Trump attacks “weak” Jeff Flake the day after Phoenix rally

President Trump snuck in a dig at GOP Senator Jeff Flake, calling him "weak" on crime and border security, while thanking Phoenix for the "amazing" crowd that came out to watch his speech last night.

This isn't the first time Trump has gone after Flake on Twitter. Last week, Trump tweeted that he was "toxic" and signaled his support for Flake's opponent in the 2018 Senate race, Dr. Kelli Ward.

The Trump-Flake ongoing feud initially began when Flake openly opposed Trump during his presidential campaign. He also sharply criticized Trump and condemned the Republican Party for enabling Trump's rise to the presidency in his book, "The Conscience of a Conservative." Trump's recent flurry of tweets attacking Flake is the president's way of retaliating.

Featured

China bought a third of the world's robots last year

Eugene Hoshiko / AP

China bought 90,000 robots and took a third of the market share in 2016, according to an International Federation of Robotics estimate. By 2019, they'll buy nearly 40% of new robots, the organization projects.

  • Why it matters: China could become an even larger force in the export economy, per Bloomberg's analysts.
  • Robots haven't lowered wages in China yet. Manufacturing workers saw raises of more than 50% between 2010 and 2014. But "the rising use of robots ... threatens to exacerbate domestic income inequality" by shifting gains to the owners of capital, Bloomberg reports.
  • Due to its massive population, China still has a relatively low number of robots per humans. There are about 50 robots for every 10,000 workers, compared to the global average of about 75. Beijing wants 150 robots for every 10,000 workers by 2020, the Federation reports.
Featured

There are 3,500 troops in Afghanistan the Pentagon didn't tell you about

U.S. Gen. John Nicholson, top U.S. commander in Afghanistan, left, talks with Col. Khanullah Shuja, commander of the national mission brigade of the Afghan special operations force, and U.S. Gen. Joseph Votel, head of U.S. Central Command, at Camp Morehead in Afghanistan. Lolita Baldor / AP

There are currently more than 12,000 U.S. troops serving in Afghanistan — 3,500 of them the Pentagon failed to publicly disclose, the Wall Street Journal reported. The Pentagon has disclosed the 8,400 military members stationed in Afghanistan long-term, but kept hidden the number of troops that are sent to the area on a temporary status. The number of troops from other groups such as special forces are almost always kept secret.

Why it matters: The real total number of troops is important in deciding how many more troops will be sent to the country after President Trump's announcement on Monday night. The new strategy is expected to include sending about 3,900 troops to Afghanistan within the next few weeks, military officials told WSJ.

Go deeper with an Axios graphic showing the number of U.S. troops and private contractors in Afghanistan since 2007, here.
Featured

Google and Walmart in a joint offensive against Amazon

Google's Home device. (Walmart)

Walmart and Google are escalating a fierce battle to own virtual assistant shopping, jointly challenging Amazon's towering dominance over the already-lucrative new space in retail, per the WSJ's Jack Nicas and Laura Stevens.

Google is offering up its Home virtual assistant (photo above) and Walmart its vast inventory. As of next month, they will team up on Google Express, the internet giant's e-commerce marketplace. In doing so, they are going against Amazon's Echo.

  • The mountain is steep: As of July, Amazon raked up 45 cents of every dollar spent on-line, up from 43 at the start of the year. Walmart earns just 2 cents. Google's House personal assistant is 26% of the market; Echo is the rest.
  • But the prize is too large to ignore: Amazon has already decimated whole swaths of brick-and-mortar retail, and now has an early grip on the new voice-activated virtual assistant market. Walmart does not want to end up like Macy's and Barnes & Noble, and Google is not satisfied to be an also-ran in e-commerce.
  • So big players are aligning: Walmart is also doing test runs using Uber and Lyft in an attempt to speed the delivery of fresh produce bought through Google Home.

How it works: Pioneered in China, sophisticated voice-activated devices are one of the next waves of technology. Before you know it, you will use virtual assistants for much of your shopping, household chores and office work.

  • It's easier after you get started: Once you've bought a certain brand of toothpaste or toilet paper, you can simply tell your assistant, "toothpaste," and it will have the same brand shipped to you.
  • Free shipping: Amazon has chalked up much of its gains through its $99-a-year Prime program, which offers free shipping. Against that, Google and Walmart are dropping their annual fee entirely if your order hits a minimum, like $25 or $35. The jury is out whether that will prove more effective than Amazon Prime.
Featured

How Netflix knows what you want

Matt Rourke / AP

Four out of five shows watched on Netflix were found by subscribers thanks to recommendations offered them, AP's Frazier Moore reports:

  • "Most every row of program suggestions (even generic-seeming categories like "Comedies" and "Dramas") is tailored for each subscriber."
  • "[A] legion of Netflix 'taggers' screens every program, tagging different elements that compose it."
  • "Viewer habits gathered by Netflix from its 100 million accounts worldwide add more grist to the mill."
  • An example of the secret sauce: "[F]ans of the 2015 film 'The Big Short,' which deals with Wall Street dirty tricks, have been found to respond to the money monkeyshines that animate 'Ozark.'"
Featured

An onstage version of Trump 'screaming at the television'

Rick Scuteri / AP

Instant media reactions to Trump's Phoenix rally, which was followed by protests that police dispersed with tear gas, rubber bullets and pepper spray.

  • CNN's Don Lemon: "He is clearly trying to ignite a civil war in this country. ... He certainly opened up the race wound from Charlottesville. ... A man backed into a corner, it seems, by circumstances beyond his control — and beyond his understanding."
  • NBC's Kristen Welker: "[T]his whole Charlottesville criticism ... has really been getting under his skin. This was his attempt to sort of revive the argument, to re-litigate it."
  • Fox News' John Roberts: "The president had ... a clear win last night with his speech about the new policy on Afghanistan ... But now he's completely changed the subject again."
  • Jon Favreau of Pod Save America, and co-founder of Crooked Media: "Trump's angry that the media reported exactly what he said so he held a speech to deliver a sanitized, redacted version on live television ... I believe Trump just called out the @crookedmedia! ... Trump's going to shut down a government that's controlled entirely by his own party. Very cool."
  • MSNBC's Lawrence O'Donnell, on the omission of "many sides": "The president has lied to his audience tonight."
  • CNN's Brian Stelter began his late-night Reliable Sources newsletter with the single word: "Poison."
  • CNN's Brian Lowry: "[M]uch of this felt like an aging rock band playing the hits ... But he seemed to ratchet up the rhetoric on his enemies list, which has grown lengthier."
  • N.Y. Times Jeremy Peters, to Brian Williams on MSNBC: "In a lot of ways, what we heard from President Trump tonight was just an extended version of the shouting matches that he's been having behind closed doors at the White House, whether it's screaming at his aides, or screaming at the television. ... I see someone who just doesn't want to lose an argument."
  • WashPost's Bob Costa, to Brian Williams: "Steve Bannon, gone from the White House, but he might as well have been a ghost at this Phoenix event. He hovered over everything."
Featured

Read the original Uber pitch deck

To mark the ninth anniversary of the original Uber idea (then called "UberCabs"), co-founder Garrett Camp posted online the company's first pitch deck. Back then, Uber's business was all about providing private car rides to its members in a more efficient (thanks to smartphones and tech) and affordable way.

  • The deck claimed customers shouldn't have to wait for more than five minutes to get picked up, and predicted early on that passengers would want to share rides.
  • The original service was focused on premium rides, but the original deck mentioned eventually turning to less expensive cars like the Toyota Prius. Uber's first UberX cars, in 2012, were in fact Priuses.
  • Today, countless companies describe themselves as "the Uber of X." Back in 2008, Uber compared its concept to another existing company: NetJets, a Berkshire Hathaway subsidiary that sells part ownership or shares of private business jets.
Featured

Phoenix police use tear gas at Trump rally protests

Matt York / AP

Police deployed tear gas, pepper spray, stun grenades and rubber bullets on Tuesday night to break up protest crowds after President Trump's rally in Phoenix, Arizona.

  • "Officers responded with pepper spray to break up the crowd after people tossed rocks and bottles and dispersed gas, Phoenix police spokesman Jonathan Howard said," the AP's Jacques Billeaud and Clarice Silber reported from Phoenix.
  • "But some witnesses said that events unfolded differently," per NYT's Simon Romero, "with protesters throwing a water bottle or two in the direction of the police, before the police fired tear gas into the crowd."
  • "The handling by the police of this peaceful protest was reprehensible," Jordan Lauterbach, a 31-year-old bartender, told the NYT. "I was gassed tonight for exercising my right to express my views. I was disgusted by that."

Videos and tweets below:

Featured

The shift in Medicare spending

Medicare is the largest purchaser of health care services in the country, and over the past decade, there's been a gradual change in how those taxpayer dollars are spent, according to data from the independent Medicare Payment Advisory Commission.

Since 2006, Medicare is shifting money from physician practices and inpatient hospitals (where a person needs an overnight stay), and toward private health insurers and other companies that run the Medicare Advantage and Part D prescription drug programs. Spending also has increased in outpatient settings.

Data: Medicare Payment Advisory Commission; Chart: Chris Canipe / Axios

Why it matters: The Affordable Care Act contributed to some of this shift by cutting Medicare payments to hospitals. But what's happening in Medicare is representative of the health care system at large: the shift to defined benefits and narrow networks of hospitals and doctors, and avoiding hospitalizations whenever possible.

Where more Medicare funds are flowing:

  • Medicare Advantage: Roughly 20 million seniors and disabled people are now enrolled in the politically popular program, which represents 27% of all Medicare dollars. Seniors give those plans high marks, and it's a profitable business for insurers. But there are concerns that Medicare Advantage isn't saving money and that insurers are gaming the program.
  • Part D: The growth of drug prices has blown away the growth of pretty much every other economic good, and Medicare is barred from negotiating discounts with manufacturers. That inevitably has resulted in more money going into the Part D program (14% of all Medicare spending), and the benefits managers that run it.
  • Outpatient hospital departments and clinics: Technology has made it possible for Medicare enrollees to get some procedures and go home the same day, and it's cheaper than treating someone in the hospital. But hospitals also have been buying physician offices and controversially converting them into hospital outpatient departments, resulting in higher fees for the same services.