Ross: The Industries of the Future

The importance of a book like “The industries of the future”1 by Alec Ross can hardly be overstated.  By his own admission, “This industries_future_smallbook explores the industries that will drive the next 20 years of change to our economies and societies” (pg. 12). Whether or not the author succeeds in his ambitious task, surely he starts from quite a vantage point: former Senior adviser for innovation to Secretary of State Hillary Clinton, during the time he spent in the role he oversaw the transition to digital ecosystems of many an operation across the globe. The book is really a rich mine of potential showstoppers, giving lots of references to keep track of going forward. Due to the scope of the book, a review will be given here of its main undercurrents.

The problems addressed in the book naturally cluster into a neatly organized structure explored in another section of this blog. Here a quick summary:
  1. Robotics
  2. Genomics
  3. Algorithmic money, markets and trust
  4. Big Data
CH 1: HERE COME THE ROBOTS
WHAT. Cutting edge advances in the robotics landscape will be differentiated by country:
“Just as wealthier and poorer citizens reside at different technological levels, so do wealthier and poorer countries” (p.19) – where the “big five” (Japan, China, US, South Korea, Germany)  will be able to accrue huge benefit from their incoming preeminence in the robotics ecosystem.
WHY. What is the reason of this Cambrian explosion in the robotics ecosystem? Because of the confluence of enabling technologies, (p23): improvements in Belief Space (Bayes); cloud (swarm) robotics; new materials

The impact will be ubiquitous:  Automotive Industry (driverless cars: Google X), Operating Room (SEDASYS, also Nanorobots for cancer radiation), Academy (Aldebaran teaching computer science classes), Hospital and Human Care (therapeutic robots) etc.

The adoption pattern of those technologies will consist by initial high up-front capex (robot labor cost) that create offsetting savings in opex (human labor cost) (pgg. 37ff). Decisions like the Taiwanese Foxconn swapping robots for 1mio humans (pg. 35) – if scaled up, will create huge geographical tensions in f.e. China where a forced urbanization policy to keep labor cost down has been enacted by fiat for more than 30 years.
WHERE: Different countries will react to the shifting landscape in different ways:
while everywhere “the ratio of [capex and opex] will determine the future of work related patterns” (pg. 37), there will be places like Africa where the robotics revolution, because married to frugal innovation, will provide leapfrogging opportunities.
CH 2: THE FUTURE OF HUMAN MACHINE
The opening remark is wonderful: “The last trillion-dollar industry was built on a code of 1s and 0s. The next will be built on our own genetic code” (pg. 44) and “Genomics is going to have a bigger impact on our health than any single innovation of the 20th century” (pg. 74). Why is Ross so optimistic?
After the sequencing of the entire human genome (2000) “the size of genomic market” wyma96injyhrskhekdfetoday because of falling cost of sequencing and commercialization is where e-commerce was in 1994 (p 48). Think of PGDx Personal Genome Diagnostic or “liquid biopsy” – i.e. comparison of tumor cell with normal cells in same individual via Big Data analytics; think of CRISPR and designer babies; think of  Craig Venter’s latest projects: (a) Synthetic Genomics xenotransplantation (see here) and (b) Human Longevity Inc (p 62).
Here the old debate nature vs nurture risks resurfacing in a ghastly shape, whereby the socioeconomic fault lines (nurture) can be frozen in biological terms (nature). Moreover, and more concretely – by now this is not a Western-only enterprise: not no more. With Beijing Genomic Institute, China is willing to win the genomic battle, as US did win the internet race (pg. 66).
  • More books/talks on this here.
CH 3:  CODE-IFICATION OF MONEY, MARKETS, TRUST
This section argues that the code-ification and app-ification of money, markets, payments and trusts is a big inflection point for the disintermediation of large part of the current economy. Square, Alipay or Google-Wallet are the next iteration of digital money – while African based M-Pesa has succeeded in leapfrogging the banking system altogether in countries (like Kenya) where the physical infrastructure is lackluster or non-existent.

The big trend at work here is the interplay of dispersion and concentration: local communities of buyers and sellers are surely empowered by the availability of decentralized, peer-to-peer (payment) solutions (like M-Pesa) but at the same point the central routing of these transaction is operated in a progressively more and more centralized way.  “Coded markets like eBay and Airbnb simultaneously concentrate and disperse the market. With coded markets available to even the smallest vendors, a trend has arisen that pushes economic transactions away from physical stores and hotels toward individual people. .. .The route through which it is dispersed, however, redirects each of those transactions through a small number of technology platforms usually based in California or China” (pg. 93)

But arguably the deepest innovation coming from techno-utopianism in the markets, payment & trust ecosystem is Blockchain (original paper by Nakamoto; some links here).  An investor is quoted saying (pg. 115) that “the problem with the Internet from 1995 to 2010 was that it enabled information dissemination and communication but lacked any ability to transfer value between individuals. From 1995 to 2010 every industry in information services was transformed beyond recognition – newspapers, music, TV, etc. – as was any industry involved in communication and connection between individuals – phone fax auction recruiting etc. […] Conversely from 1995 to the present day there has been almost no impact by the Internet on the financial services or legal industries.”
The importance of Blockchain and distributed ledgers as an enabling ecosystem where smart contracts can render entire industries obsolete or radically disrupt their internal workings (like in the financial industry) deserves its own section, which will be regularly updated – hence the discussion on this can finish by quoting MIT Media Lab director Joy Ito (p 116): “My hunch is that the Blockchain will be to banking law and accountancy as the Internet was to media commerce and advertising. It will lower costs, dis-intermediate many layers of business and reduce friction. As we know one person’s friction is another person’s revenue”.
  • More books/talks on this here.
CH 5: DATA: THE RAW MATERIAL OF THE INFORMATION AGE
WHAT: A few figures first: “As recently as 2000, only 25 percent of data was stored in digital form. Less than a decade later, in 2007, that percentages had skyrocketed to 94 percent” (pg. 154). This is the dataquake.  “Big data is just the application of the commodification of computing power combined with the wider availability of cloud computing” (pg. 157).
The areas which will be visited by most action are;
–  Human interface in Machine Translation (pg 159): “Universal machine translation will accelerate globalization on a massive scale”. Advances in bioacoustic engineering will deliver sleek interfaces, no more robotic voice in the next 10 years;

–  Precision Agriculture: native, or retasked as Monsanto with FieldScripts (pg 162)

will reshape the agribusiness landscape: “The promise of precision agriculture is that it will gather and evaluate a wealth of real-time data on factors including weather, water and nitrogen levels, air quality, and disease – which are not just specific to each farm or acre but specific to each square inch of that farmland” (pg 162);
–  FinTech (pg 168ff). The financial industry is in essence an information processing operation.   “A bank is basically a giant ledger of contracts that have future positive and negative cash flows. A bank’s entire income is based on how the present value of those cash flows changes moment to moment” (pg. 170). FinTech arises because banks struggle to roll up their analytics to one central view of their cash flows. Standard Treasury, the “digital first” bank, aims to exactly that. Another FinTech area is the real-time screening: “In a coded-money economy, a lender knows a merchant’s true value because it has real-time access to its books” (pg. 171). Knowing all the transaction allows Square Capital (ibidem) to open credit lines and grow the business of its clients with unprecedented accuracy;

–  Our quantified selves: Delegating more and more of our decisions to non-human actors will trigger important questions regarding our agency. 4a48f0fc0642f24699278951c93f3770“Serendipity fades with everything we hand over to algorithms. Most of these algorithms are noiseless. They gently guide us in our choices. […] And because they constitute the value of a company’s intellectual property, there is an incentive to keep them opaque to us” (pgg. 180-1)
A couple more points: “When data goes from being unstructured to structured, it takes on the values and prejudices baked into its formulation” (pg 183) and “Correlations made by big data are likely to reinforce negative bias” (pg. 184). A thoughtful discussion on this -Dataism- is in an article by Yuval Harari, see Financial Times article.
  •  More books/talks on this here.
 Concluding remarks
Is Silicon Valley going to exert increasing gravitational pull or the decentralization triggered by commodification of big data ecosystems (AWS) will allow business to spread across the geographical avenues of domain expertise?  Where will be the focal points of the “next economy” and its accompanying class? Alpha cities (London, Tokyo, NY, Singapore) and places like Estonia “The Little Country that could” (see its e-residency scheme) and Israel, or the geographical gradient will be less steep?
“With these platforms the Valley has become like ancient Rome. It exerts tribute from all its provinces. The tribute is the fact it own these platform businesses. […] The value flows to one of the places of the world that can produce tech platforms. So the global regional inequality is going to be unlike anything we have ever seen”, argues an investor2 (p 94) in the book.
Will the vision of world leaders be commensurate to such scenarios? The big forces shaping our future – technology, platform & free-lance economy, environment no longer fall into old ideological divides. The twin faiths of the Age of Extremes – capitalism and communism – were both based on epistemological fallacies: the first that the randomness of the economic process could be eliminated in toto; the second that such randomness acts for the benefit of human society. “The principal political binary of the last half of the 20th century was communism versus capitalism. In the 21st century it is open versus closed” argues Ross (pg 215). On such a hopeful note our review of Alex Ross wonderful book terminates. It should be mandatory reading for all thinking people.

1. [ Ross, Alec. The industries of the future Simon & Schuster , 2016]
2. [ Charlie Songhurst, see here]

Silicon Valley and Utopia

In a deep contribution (“Occidente senza Utopie”, Il Mulino, 2016: see video below: Italian), Massimo Cacciari argues first that there is a substantial conceptual difference between ‘Utopia’ and ‘Prophecy’ – where the latter denotes the act of the outsider addressing the powers that be by virtue of some superhuman, god-given remit; while the former consists in spelling out the full potentialities of the present ‘material conditions’,  and hence in projecting forward the tendencies that (bound by current limitations) lie hidden below the surface of them.

Antonio Sant'Elia, Citta' Nuova

The analysis of Cacciari traces this distinction back to the time when Europe articulated for the first time the concept of ‘Utopia’ – with Thomas More, Tommaso Campanella and, lately, in its most accomplished form, Francis Bacon.
In ‘The New Atlantis’ (text), Francis Bacon showed that the remit of a rational government must be coextensive to the pursuit and advancement of science. That is why, in Spinoza, ‘libertas philosophandi’  is necessary condition for good government: in other words, according to those scenarios, the single most important project of the modern world is to advance the scientific inquiry, to cast society in its rational mold. All the political and social conditions that stand in the line of this advancement need to be overcome. The same idea is entertained by Karl Marx – who simply stresses the inherent contradictions of such a project, but never questions its ultimate validity. Who is the torch-bearer for today’s utopia? Is Cacciari correct in saying there is none?

Our predicament is the same as it was in Bacon’s times: we also struggle because the political / social structures we live by are not adequate to the material conditions. The material conditions are the vastness of the social wealth – produced by the social brain of our societies,  in the form of specialization, and massive productivity increase due to the application of science to the productive process. If Bacon’s project is the deepest and fullest of projections among all those early modern Utopies, a renewed, more cogent, formulation of his utopia was due, immediately after WWII, to MIT Vannevar Bush, in his pioneering “As We may Think” (see also his influential report “Science: the endless frontier”). Again then: who is today the torch-bearer for utopia?
One must just read geneticist Craig Venter‘s Life at the Speed of Light, the discussions in Bill Gates blog, consider Elon Musk’s The Boring Company or ponder Jerry Kaplan’s suggestions in Human need not apply to answer this question. The new Atlantis – the carrier of Utopia today  – is indeed Silicon Valley, and its entrepreneurs, computer scientists and thinkers. Today, utopia – again in the sense of extrapolating or liberating the potentialities of the present ‘material conditions’  – is there.

Vision today means exploring CRISPR or Internet of Things (IoT), AWS and Reinforcement Learning, Platooning of driverless vehicles or smart contracts powered by a distributed ledger: this is a genuine Cambrian explosion. But as technology is nothing more than the social brain, vision is also reflection on schemes of distributed ownership of assets

“As we transition to a world where most of work currently requiring human effort and attention succumbs to automation, it is essential to distribute the benefits of our increased wealth beyond those who land the remaining good jobs or are lucky enough to accumulate private assets” (Kaplan, Humans need not apply, pg. 186).

and hence flotation of ideas like Universal Basic Income or PBI (Public Benefit Index – see Kaplan, HNNA, p180), computational ethics, or “job mortgages”, basically a modern free market incarnation of the apprenticeship secured by the future earned income as  “Our current system of vocational training, largely a holdover from medieval apprenticeships and indentured servitude, is in need of significant modernization” (Kaplan, HNNA, pg 13 and pgg 157ff).

One could argue that we are currently living in another Renaissance – even if we fail to realize it. Everywhere around us there float new incarnations of old ideas in more stringent, higher-level formulations. There are Turing machines sampling Vivaldi’s acoustic fingerprints and generating new indistinguishable patterns or age-old problem of decentralized command and trust (the Bizantine Generals Problem) being solved with algorithmic trust via distributed ledgers and hashing pools updating the blockchain.

Here the reference is to recasting human social interactions via data analytics, predicting social patterns with Social Physics;  reference is to framing hypotheses about the mechanics of human learning and deploying working implementations of it in DeepMind etc. What we need is new eyes to see this explosion of genius all around us –  I wonder what were people perceiving  in 500bc Athens or in 1450 Florence, what did they experience amidst all the conceptual beauty being produced, if they could feel it somehow.
All this is utopia at its best and Cacciari is wrong. The only problem is complacency, not lack of imagination.

Katharsis

Modern art is an attempt to burst free of the constraints of tight narrative structures, a continuous effort to drill through the strictures of worn-out visual shapes, to pierce a duchamp-davanti-al-grande-vetrohole into tired acoustic patterns. Modernism is an incessant subversion. As someone has already noticed, cinema is just the cusp, the pinnacle of it. The art form that better defines the 20th century is vastly more revolutionary than the usual ‘retinal art’ – to use Duchamp’s infamous characterization of painting.

A metric for modern cinema can then quite possibly be given by how far its concrete instances pursue that visual breakthrough, how far they are willing to proceed in order to subvert exhausted cinematic structures. in-the-mood-for-love-1200-1200-675-675-crop-000000Moving contra gradient to the visually pleasant, to the intellectually predictable should be its unique norm. Modern art-cinema should then be characterized by how much it is our contemporary – and hence how little is frozen in mimetic constraints like 18th century art. Wong Kar-Wai’s ‘In the Mood for Love‘ attempts just that: 1960s Hong-Kong becomes a rich visual tapestry of symbols, a meander of hidden references to psychological epiphanies – like the shiny rice containers, tokens of solitude.

The story of Chow and Su is best captured inthemoodWomanby the recurrent melody which enshrines their movements on screen. They are both rehearsing a relationship that will never happen, they revolve around an intimacy which is never physically attained.
In ancient Greece, κάθαρσις (catharsis) is the self-purification, the act of washing away emotions. Aristotle assigns to tragedy the cusp of cathartic power – the mirroring experienced by the viewer washes away his/her passions. Continuous rehearsal is Chow’s and Su’s catharsis: the artistic bravura of ‘In the Mood for Love’ is our (the viewers’) catharsis.

Free-will – as Libet has shown – is a delusion: also in the choice of films, one December evening; and everything can be cathartic – even a blog post.

Su un treno italiano

Come si era potuti arrivare a tanto? pensavo mentre guardavo la ragazza. Sui trent’anni, rossa di capelli & ben piazzata, stava telefonando. Lei un controllore di biglietti su un treno regionale della tratta Roma-Firenze: telefonava ma nessuno rispondeva. Io in uno scompartimento fra i tanti, fuori dal finestrino una stazione fra le tante, asse_roma_berlino_castiglion_del_lago.jpgun altro villaggio Potёmkim – con scritte mai cancellate di un certo Asse Roma-Berlino. Roba vecchia. Nei sedili di fronte a me, tre bei ragazzi africani. Vestiti come mille altri adolescenti Italiani – uno di loro con cellulare LG in mano, tutti con scarpe sportive di ultima generazione. Tre ragazzi Italiani di colore come tanti. La ragazza aveva intimato loro di esibire il biglietto, una, due, tre volte. Loro non si erano nemmeno voltati. Niente. Forse non capivano l’Italiano – in fondo parlavano fra loro una lingua che non capivo. Forse in Inglese avrebbero potuto capirla?
La ragazza ora ha preso il telefono – chiama il capotreno. Io intervengo, in Inglese domando loro se la ragione dell’esibita arrogante indifferenza alla di lei richiesta sia che, forse, non capiscono l’ Italiano. “Non abbiamo biglietti – mi dicono in perfetto Inglese, non abbiamo documenti, non abbiamo nulla”.
La ragazza ha chiamato il capotreno – che sopraggiunge. Un uomo spento. Li invita ad alzarsi. I tre, con postura arrogante, si fanno verso la porta. La stazione e’ arrivata. Scendono, mi salutano in Inglese, ridono e se ne vanno, forse salgono sul treno successivo.
“Non si puo’ fare niente” mi dicono i due ferrovieri, visibilmente umiliati. O forse arresi a uno stato di cose che percepiscono ingiusto ma immodificabile. Mi colpisce la ragazza a cui, ancor giovane, di certo non e’ sfuggito che e’ stata lei a perdere. La dignita’ del suo lavoro, dell’uniforme che indossa e’ stata vilipesa. “Non possiamo fare niente, non hanno documenti, non si sa dove vivano, se prendiamo loro qualcosa andiamo contro alla legge Italiana”.
Allora mi torna in mente un passo de “La Chimera” di Sebastiano Vassalli. Dove si parla delle leggi che nell’ Italia spagnola del 1600 regolavano la coltivazione del riso intorno alle mura della citta’. Le leggi prevedevano che non si potesse coltivare a meno di una distanza minima dalle mura – ma a non piu’ di una massima. Le due misure pero’ erano inconsistenti, ergo in via di legge riso non si poteva coltivare; tutti pero’ coltivavano, creando spazio all’arbitrio di chi quella legge volesse far rispettare. Una legge che creava incentivi perversi per i sudditi dell’Italia spagnola del 1600.
In quel momento ho capito che avevo perso anche io – non solo la ragazza dei biglietti. Le norme che regolano la convivenza civile nel paese Italia, anno domini 2017, non sono meno inconsistenti di quelle descritte da Vassalli. Anche quei tre ragazzi avevano perso, non era questo il paese civile che stavano cercando quando avevano lasciato il continente nero.
L’illegalita’ alligna cosi’, nell’Italia di oggi, fra l’umiliazione di alcuni e l’indifferenza di tutti.

Big Data and AI strategies

We live in the so-called dataquake:

‘A few thousands of years ago, you needed to be a god or goddess if you wanted to be painted, be sculpted, or have your story remembered and told. A thousands years ago you needed to be a king or queen, and a few centuries ago you needed to be a rich merchant, or in the household of one. Now anybody, even a soup can, can be painted.”

Thus Ethem Alpaydin, in the brisk “Machine Learning” (MIT, 2016) . JPMorgan has come up with an insightful introduction to this in the context of quant finance. Here a link to it.

China rightly prides itself of being at the forefront of AI research. Worldwide.
As a visit in one random Chinese supermarket can remind the casual observer,

china_supermarket.jpg

they do have the biggest demographic indeed, and they cannot fail to harness that wealth of human data generating processes to train ever more advanced networks. But what if video games can be used to train networks? What if, as AlphaGo Zero has recently accomplished, there is less and less scope for human agency even at the stage of training such a network? Human data generating processes can at best inhabit a vast region of collinearity, a small spanning set of independent components. See also here.

J. D. Vance, Hillbilly Elegy

“Our elegy is a sociological one” says J.D.Vance at some point in his spellbinding book, “Hillbilly Elegy: A Memoir of a Family and Culture in Crisis”1. Elegy was the funeral chant in ancient Greece – a place to mourn the passing of beloved ones. Vance’s Hillbilly-Elegy-678x1024autobiographical memoir captures the spirit of contemporary America in a rich tapestry of figures. The book is a narrative of geographic segregation, a sequence of snapshots from class-system tourism into white-trash. The real protagonist of this moving account is the loss of the white-dividend in contemporary rust-belt America.
In 2005, the equity research team in the American bank Citigroup circulated an infamous report: it gave currency to the loosely defined concept of ‘plutonomy’. It basically argued that the world economic order had irrevocably changed and that was reflected in the emergence of a new wealthy transnational class whose luxury needs investors should be long on.   Later on, in 2013, another American bank -JPMorgan- came with a report focusing on the (structural) reason of Europe economic under-performance compared with the US: it argued that Europe could not compete with US because of the dead weight of its post WWII welfare state.
During his teens in the industrial Midwest, Jack Vance was oblivious to the complex web of dependencies an economy like the US was and is deeply entrenched in. cimino_deer_hunterBut he had to look no further than his own backyard to assess the genesis of the troubles: a dysfunctional culture. “Social class in America isn’t just about money” (pg. 63), says Vance and “[Hillbillies] were of the same racial order (whites) as those who dominated economical, political and social power in local and national arenas. But Hillbillies shared many regional characteristics with the southern blacks arriving in Detroit” (pg. 31). With precocious intelligence of his predicament, Vance fought his way to becoming a Master in Law at Yale; he wasted no opportunity his unprivileged background could offer: a summer job in a local grocery store became an applied sociology class into eating habits of lower-class: “The more harried a customer, the more they purchased precooked or frozen food, the more likely they were to  be poor. And I knew they were poor because of the clothes they wore or because they purchased their food on food stamps.” (pg . 132) – while the time in the US Marine Corp was a difficult period but secured him a sense of self-discipline, planning, commitment. No one in his close proximity had done quite anything like that before.

One of the readings that enlightened him best was a study by William Wilson, “The Truly Disadvantaged”. “As millions migrated north to factory jobs, the communities that sprouted up around those factories were vibrant but fragile: When the factories shut their doors, the people left behind were trapped in town that could no longer support such large populations with high-quality work. Those who could – generally the well educated, wealthy or well-connected – left, leaving behind communities of poor people.” (pg. 144). But we should not look at his book as a master class in macro-economy: Vance does not articulate the reasons such factories outsourced to Asia, he does not diffuse on China’s opening of special economic zones (1979) -whereby a  billion cheap workers entered the job market, depleting Europe’s and US’s traditional (if a bit pampered) labor constituencies2: Vance does not need to, because his elegy is a most personal cry, it is a most passionate insight into family ties crumbling, into drug addiction and steady downward movement on the socioeconomic ladder. But via his effort, intelligence and ability,  via the examined life -ie peering into  his own predicament- and via the help of valuable mentors along the way, Vance managed to escape his destiny and become a successful Private Equity operator in the Bay Area.

His book is a stark reminder that true enemies to success are within, they are complacency and delusional faiths, as well as self-serving narratives of being disadvantaged. His mentor at Yale, tiger mom Amy Chua, could not have asked more from one of his pupils.


1. [ Vance, J. D. Hillbilly Elegy: A Memoir of a Family and Culture in Crisis. William Collins 2016]
2. Late Eric Hobsbawm had already charted this disarray in “The Forward March of Labour Halted?”

 

Art in Fractured Times

In Madrid, at the Reina Sofia Museum of Contemporary Art, a special exhibition chartsparis_1937 this year the artistic travail Picasso had to endure to realize Guernica for the World Exhibition held in Paris, 1937. Surely that was the most famous of the decade (possibly of the century). miro_spainIt displayed in adjacent order Hitler’s German pavillon, Stalin’s Soviet pavillon and (of course) the Spanish – Republican – one. As it is well known, Picasso realized Guernica for it, while Buñuel supervised the cinematic propaganda effort on behalf of the Republican government. Miro helped his way.  A wonderful book of late professor Hobsbawm – aptly called ‘Fractured Times– charts the same terrain. An exhibition held in London 1996, duly surveyed in its wonderful catalog, also explored the deeply problematic link between art and power in Europe during the 30ies. Black-Mirror-pig-350144That was an age -it seems to me – where artists could still drive the political debate with their accomplishments. Is this a hope that went irreparably lost in our time? The first episode aired by British TV series Blackmirror (deftly called “The National Anthem” ) suggests to me that – in somewhat contrived way – this is till possible in our time.
See also this link, where the ideas of Walter Benjamin are (possibly) updated.