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1 big thing: A world of tech fiefdoms

Illustration: Sarah Grillo/Axios

Tensions are rising in the U.S.-China tech rivalry, but they may ultimately be resolved peaceably, says a leading Chinese technologist who predicts the two powers will develop separate commercial fiefdoms and rarely cross swords directly.

Axios' Kaveh Waddell reports: In a scenario that conflicts with what most experts foresee, Kai-Fu Lee, a former executive at Microsoft, Apple and Google, paints a largely bloodless future:

  • American and Chinese tech titans will remain thoroughly entrenched at home, retaining the loyalty of their consumer base.
  • In terms of business abroad, they will carve out their own geographical spheres of technological influence that mostly do not overlap.

"China and the U.S. are in parallel universes," said Lee, speaking last week at the O’Reilly AI Conference in San Francisco.

What's next: History suggests that tech giants in the U.S. and China will fight for business. But Lee argues that American tech will rule in Europe, while China captures big market shares in Southeast Asia, Africa and the Middle East.

  • Competition over artificial intelligence might look different. Both countries are attempting to amass the brightest AI researchers and biggest investments, and from there, they plan to build military superiority.

The big picture: Although Chinese tech companies started from behind, by copying American products, their technology is often now equivalent or better.

  • WeChat’s features outstrip Facebook Messenger and WhatsApp, forming what Lee describes in his forthcoming book, "AI Superpowers," as a "digital Swiss Army knife for modern life" — and Weibo has similarly leapfrogged Twitter.
  • Amazon can't hope to compete with Alibaba or JD.com on their turf, either.
  • The only way for a foreign company to break in is to somehow identify a space that Chinese companies haven’t filled yet. For instance, if Waymo could wedge itself into the Chinese market — a leap made difficult by local rules for foreign companies — it might have an advantage over younger, homegrown self-driving ventures, Lee said.

Despite a more permissive U.S. business environment, Chinese companies can’t easily slip in there, either, says Lee — partly because of probable American wariness of how a Chinese business would handle their personal data.

  • Few of Amazon's U.S. customers are likely to flock to Alibaba, for instance.
2. Jobs and mistrust

Jobs crises generate mistrust. Here, a jobs line in New York, 1935. Photo: Mirrorpix/Getty

A decade after the financial crash helped to crater U.S. public faith in their leaders, American workers seem to be growing more confident, economists say, quitting their jobs at the highest rate in 17 years in search of better employment.

What's going on: U.S. businesses had more than a half-million unfilled jobs in July, the Bureau of Labor Statistics reported today. That calculates out to 0.91 available workers for every job, according to Joe Brusuelas, chief economist at RSM.

  • Last week, the BLS reported that joblessness held steady at 3.9% in August. One of the most visible byproducts is a resignation rate of 2.4% of jobs, the highest since April 2001, the beginning of the recession.
  • "Workers are feeling more and more confident in this labor market," says Nick Bunker, an economist with Indeed.com, the jobs site. They "are leveraging the tighter labor market to find new opportunities and employers are poaching workers from other firms."
  • And the jobless rate may go lower yet: Mark Zandi, chief economist at Moody's Analytics, expects the rate to fall to 3.2% by late next year or early 2020.

What does not yet appear to be changing is the profound public mistrust that grew out of the crash, the NYT's Andrew Ross Sorkin reports today.

It will take a lot more time to fall away, economists tell Axios.

  • "The loss of trust following the near economic collapse a decade ago will not be repaired by a truncated, late-cycle improvement in wage conditions near the end of a single business cycle," said RSM's Brusuelas. "That is the work of a generation accompanied by significant reform and a reduction in economic inequality."
  • "I think low unemployment and improving wage growth is lifting spirits and will eventually restore faith in the economy," says Zandi. "This will take time, as people’s mistrust in the economic system has been long in the making."
3. The future of AI and depression

Illustration: Sarah Grillo/Axios

During a conversation, humans can grasp a friend's mood or intent by relying on subtle vocal cues or word choice. Now, researchers at MIT say they have developed an algorithm that can detect if the same friend has depression, one of the most widely suffered — and often undiagnosed — conditions in the U.S.

Why it matters: About 1 in 15 adults — 37 million Americans — experience major depressive episodes, but many times go untreated.

Given a 3D eye scan, AI can diagnose dozens of diseases as accurately as a human expert. From images of tissue samples, AI can detect breast cancer as well or better than human pathologists. And it can find signs of disorders like schizophrenia, PTSD and Alzheimer's in human speech, Kaveh reports.

The latest: Tuka Alhanai, an MIT Ph.D. candidate focused on language understanding, trained an AI system using 142 recorded conversations to assess whether a person is depressed and, if so, how severely. The determinations are based on audio recordings and written transcripts of the person speaking.

How it works: Alhanai used a neural network to find characteristics of speech — like pitch or breathiness — that relate most closely to depression but aren’t correlated with one another. Then she employed another algorithm to surface patterns that most likely point to depression.

  • The system was most accurate when it considered responses in context, Alhanai found. She used a neural network that can find patterns across answers rather than analyze each in isolation.
  • The best-performing system classified 83% of the test cases correctly.

Advantages of a passive system: Someone who is depressed may lack the motivation to see a professional, said Mohammad Ghassemi, Alhanai’s co-author. Without a weighty medical conversation, an AI system might detect depression that may otherwise be missed.

But, but, but: There are early concerns about such use of AI:

  • Assessments should not be carried out surreptitiously, said Alison Darcy, a former instructor at Stanford University School of Medicine and founder of Woebot, a chatbot for mental-health issues.
  • Darcy also questioned the premise behind such systems. "Where is this huge need to diagnose people en masse, over and above what’s already available?"
  • In a WashPost op-ed, Canadian doctor Adam Hofmann argued that algorithms shouldn’t make mental-health diagnoses at all.
4. Worthy of your time

Illustration: Sarah Grillo/Axios

The frugality movement of early retirement (Steven Kurutz — NYT)

The future of fracking and people in Colorado (Amy Harder — Axios)

Philosophers and the terrible things done in their name (The Economist)

Pilot programs in universal basic income (Futurism)

An executive's guide to AI (Michael Chui, Vishnu Kamalnath, Brian McCarthy — McKinsey) (Check out McKinsey Shortlist)

Nobody's home. Urban blight in America (American Banker) (podcast series)

5. 1 green thing: Weed-infused drinks

At a marijuana festival in Berlin. Photo: Carsten Koall/Getty

The markets punished Tesla on Friday when CEO Elon Musk smoked pot on camera with comedian Joe Rogan, but some of the world's largest companies are aggressively embracing the green.

As alcohol consumption around the world keeps falling, big distillers and brewers are putting their money into cannabis-infused, non-alcoholic cocktails, Axios' Erica Pandey writes.

The bigger picture: The world is drinking less alcohol — and that's in part due to the rise of legal weed. Alcohol consumption fell 15% between 2006 and 2015 in U.S. states offering medical marijuana licenses, according to a study by researchers from the University of Connecticut, Georgia State University and Universidad del Pacifico in Lima.

The latest: A string of deals between alcohol companies and cannabis companies illustrates the next big thing in beverages, per CB Insights' Anand Sanwal.

  • Constellation Brands, an American beer, wine and spirits company, is pouring $4 billion into cannabis company Canopy Growth.
  • Heineken’s subsidiary Lagunitas is out with weed-infused sparkling water — a collaboration with AbsoluteXtracts, another cannabis company.
  • Big-time brewer Molson Coors is linking up with The Hydropothecary Corporation to roll out cannabis-infused drinks.
  • Diageo, the drinks giant behind Smirnoff vodka and Guinness beer, may collaborate with a Canadian cannabis company, per Bloomberg.

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