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Category: economics

So much talk about AI and robots taking our jobs. Well, guess what, it’s already happening and the rate of change will only increase. I estimate that about 5% of jobs have been automated — both blue collar manufacturing jobs, as well as, this time, low-level white collar jobs — think back office, paralegals, etc. There’s a thing called RPA, or Robot Process Automation, which is hollowing out back office jobs at an alarming rate, using rules based algorithms and expert systems. This will rapidly change with the introduction of deep learning algorithms into these “robot automation” systems, making them intelligent, capable of making intuitive decisions and therefore replacing more highly skilled and creative jobs. So if we’re on an exponential curve, and we’ve managed to automate around 5% of jobs in the past six years, say, and the doubling is every two years, that means by 2030, almost all jobs will be automated. Remember, the exponential math means 1, 2, 4, 8, 16, 32, 64, 100%, with the doubling every two years.

We are definitely going to need a basic income to prevent people (doctors, lawyers, drivers, teachers, scientists, manufacturers, craftsmen) from going homeless once their jobs are automated away. This will need to be worked out at the government level — the sooner the better, because exponentials have a habit of creeping up on people and then surprising society with the intensity and rapidity of the disruptive change they bring. I’m confident that humanity can and will rise to the challenges ahead, and it is well to remember that economics is driven by technology, not the other way around. Education, as usual, is definitely the key to meeting these challenges head on and in a fully informed way. My only concern is when governments will actually start taking this situation seriously enough to start taking bold action. There certainly is no time like the present.

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Artificial intelligence has the potential to create trillions of dollars of value across the economy—if business leaders work to understand what AI can and cannot do.

In this episode of the McKinsey Podcast, McKinsey Global Institute partner Michael Chui and MGI chairman and director James Manyika speak with McKinsey Publishing’s David Schwartz about the cutting edge of artificial intelligence.

David Schwartz: Hello, and welcome to the McKinsey Podcast. I’m David Schwartz with McKinsey Publishing. Today, we’re going to be journeying to the frontiers of artificial intelligence. We’ll touch on what AI’s impact could be across multiple industries and functions. We’ll also explore limitations that, at least for now, stand in the way.

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Hughes, 34, now devotes his time to evangelizing for higher taxes on the rich, such as himself. He’s proposing that the government give a guaranteed income of $500 a month to every working American earning less than $50,000 a year, at a total cost of $290 billion a year. This is a staggering number, but Hughes points out that it equals half the U.S. defense budget and would combat the inequality that he argues is destabilizing the nation.

Chris Hughes thinks $290 billion a year is a small price to pay for equality.

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Yes!

New research from North Carolina State University and the University of Colorado Boulder finds that steep declines in the use of coal for power generation over the past decade were caused largely by less expensive natural gas and the availability of wind energy – not by environmental regulations.

“From 2008 to 2013, coal dropped from about 50 percent of U.S. to around 30 percent,” says Harrison Fell, an associate professor of resource economics at NC State and co-lead author of a paper on the work.

“Coal boosters blamed stiffer regulations, calling it a ‘war on coal.’ But that same time period saw a steep drop in the cost of natural gas and an increase in wind . We wanted to know how big a role each of these factors played in driving down the demand for coal.”

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Pilots programs are underway in Canada and rural Kenya. India — with a population of more than 1.3 billion residents — is considering establishing a universal basic income as well. Finland’s trial with a universal basic income, in which payments were given to 2,000 unemployed people, will come to an end this year.

Longtime basic income advocates say we’re closer than ever to adopting the program, as fears of automation mount.

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Recently, Elon Musk had the chance to share his thoughts on universal basic income (UBI) at the World Government Summit in Dubai. At the Summit, Musk had the opportunity to talk about the future, and the challenges the world will face in the next hundred years – including artificial intelligence (AI), automation, and the job displacement expected to come with it.

When asked about the challenges civilization is set to face in the near future, Musk began by noting the threat of artificial intelligences that surpass humanity.

He stated, “deep artificial intelligence, or artificial general intelligence, where you can have artificial intelligence that is much smarter than the smartest human on Earth, this is a dangerous situation.”

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Nearly 10% of global GDP is spent on health care, according to the latest data from the WHO. Rich countries spend an average of 12%, with America an outlier well above that; middle-income ones (including China) 6%; and low-income ones just under 6%. In developed countries, 60% of health spending comes from public sources. In poor economies the figure is around 40%. As economies grow and governments are able to allocate more resources to health, the share of individual out-of-pocket spending typically falls. But the variation in such spending in poor countries suggests that the health systems they end up with depend on their choice of public policies.

IN 2013 A GROUP of doctors and health economists argued in the Lancet that a “grand convergence” would be possible over the next two decades. If governments spent more on health, and more wisely, mortality rates in the poorest countries could fall to those seen in the healthiest middle-income ones. That would amount to saving 10m lives a year.

To see what a high-quality health-care system in a developing country looks like, consider the case of Farida Waree, a 55-year-old housewife in Thailand. In early 2016 Mrs Waree felt a lump on her right breast. She went to her local primary-care centre, which referred her to Nakornayok provincial hospital. She was diagnosed with cancer, and over the next year was given a mastectomy, chemotherapy and Herceptin, an anti-cancer drug. Five years earlier her treatment might have cost her 800,000 baht (about $25,000), much more than she and her family could have afforded. Instead, nearly all the costs were covered under Thailand’s Universal Coverage Scheme. The cancer is now in remission. “I consider myself very fortunate,” she says.

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The central role of public spaces in the social, cultural, political and economic life of cities makes it crucial that they’re accessible to everyone. One of the most important qualities of accessible public spaces is safety. If people do not feel safe in a public space, they are less likely to use it, let alone linger in it.

Perceptions of are socially produced and socially variable. It is not simply the presence of crime – or “threatening environments” – that contributes to lack of safety or fear.

All sorts of measures are put in place to make public spaces safer, from design to policing. But when we consider the effectiveness of these measures, we always have to ask: whose safety is being prioritised?

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Even more importantly, it will have wider repercussions on the overall development of China itself. Inevitably, it will hinder the country’s ambition to narrow the technology gap with the developed West.

China’s reliance on key technologies from the West shows it still needs the developed economies much more than they need China.

By Cary Huang

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