New World Order of the AI Economy
By: Matt Vasey
Tags: Artificial Intelligence, Robotics, World Economic Forum, Economics, China

In conjunction with other global trends, Artificial Intelligence is rapidly tearing down the old barriers to building new world orders. As a result the next century will be dominated by countries that rapidly adapt to the new AI Economy. The assumptions that the next century will be the “Chinese Century” may be proved wrong if China cannot adapt to the AI Economy.

The AI Economy is built on three pillars:

AI Workforce: Labor pool with broad set of skills including AI researchers, AI implementors, and AI Literate workers adept with robotics and automation AI Infrastructure: Data sharing, algorithm exchange, labor mobility, and low-cost energy will be needed to support continued AI innovation AI Social Contract: Worker displacement will create significant resistance. Retraining, guaranteed income schemes, and other transition costs will be absorbed by leading countries adopting the AI Economy

Pax Britannica (1815- 1914) — Map reproduction courtesy of the Norman B. Leventhal Map & Education Center

Old World Orders:

Since the early 1800’s the world orders of Pax Britannica (1815–1914) , the American Century (1917–2017) and the emergence (or perhaps re-emergence) of the Chinese Century (2017 — present) have been driven by similar economic and political rules.

1. Readily available and low-cost labor, energy, and raw materials

2. Institutional and government support of industry providing access to capital, political stability, and international trade

3. Continued innovation that drives marginal production costs down, worker productivity up, supporting increased living standards

Since 1800 rapid adoption of new technologies including the telegraph, steam power, electricity, assembly lines, automation and recently robotics have delivered early adopters with durable advantage and supremacy on the world stage.

As China prepares to assume economic supremacy for the next century, perhaps the rules have changed. Importantly energy costs are rapidly moving towards “zero marginal cost” per Jeremy Rifkin (2015), and the increased diffusion of military and political power as Fareed Zakaria first outlined in his 2009 book “The Post American World” are reducing the barriers to new entrants to the super power game.

The most fundamental rule change is the mainstream adoption of artificial intelligence (AI) and the realization of huge AI driven productivity gains in terms of automation, efficiency, and accuracy. AI and automation fundamentally change the economic foundation of the previous world orders.

Digital Workers are robots that do repetitive tasks running as programs in the cloud or on desktop computers not entirely unlike the characters in the 1999 science fiction film “The Matrix”. This has been commonly known as Robotic Process Automation, but the new generation of digital workers are using computer vision, advanced machine learning to execute work at 100 times the speed of traditional human workers Physical work is increasingly being done using industrial robots to replace human workers. Computer vision and robotics advances are rapidly shrinking the circle of things that can only be done by humans. Robot adoption is racing ahead, even in markets where low-cost labor is still abundant Complex decisions made with fuzzy facts have long been the domain of human subject matter experts whose organic neural network brains could contemplate all of the data and make the best split-second decisions. Today this advantage is narrowing, where deep learning systems consistently outperform humans in cognitive, vision, translation, signal processing, complex system analysis and a myriad of other tasks

Building the AI Economy:

First Priority: AI Workforce

The demand for AI and robotics savvy workers already far outstrips the current supply. As the AI Economy ramps this impedance mismatch will become a gating factor for innovation. To avoid this we need to immediately make investments in adapting our workforce. China is already creating “AI Cities” and building this AI capability with full support of the Chinese government as Kai-Fu Lee outlines in his book “AI Superpowers: China, Silicon Valley and the New World Order” . Future leaders need to build this muscle with:

Recruit and retain (in country) the best AI talent to universities to pursue research and support undergraduate AI education. Fund postgraduate research in AI with grants, challenges, and industry focused co-innovation programs

Broaden science, engineering and mathematics undergraduate degree requirements to include core AI education and practical experience

Fund robotics and mechatronic training programs technical and 2 year colleges coupled with tight collaboration with industry robotics providers

China is currently investing heavily in this area ranking #1 in AI research , #1 in AI patents, #1 in AI venture capital investment, #2 in the number of AI companies, and #2 in the largest AI talent pool per the “Center For a New American Security” paper Understanding China’s AI Strategy

Second Priority: AI Infrastructure

Recent news on AI has consistently focused on the privacy concerns and bias related to data gathering and usage. From personal data being gathered for training virtual assistants to AI gauging criminal intent of shoppers it is clear that any issues remain to be solved. China has taken an expedient approach to data gathering, and could use this access to leapfrog other global AI competitors.

National data sharing programs are critical to building up the training sets needed to build the next generation of AI — the west will need to resolve privacy and ethics concerns quickly Open algorithm exchange as well as commercial algorithm exchange will be a critical success factor. IP laws will need to adapt to facilitate a flow of ideas and ML models Labor mobility, and low-cost energy will be needed to support continued AI innovation

Already we are seeing businesses form just to close these data gaps, as detailed in this IEEE article: IEEE Spectrum Article but these models present much commercial friction

Third Priority: AI Social Contract:

Recent global political and economic conditions have heightened nationalism and immigration concerns around the world. This is in part due to the start of worker displacement from automation in the workplace. The leading AI Economics will address these social issues with an AI optimized social fabric or safety net to avoid political friction to change