futurism Archives - Bankers Anonymous

This post could leave you feeling strange, bewildered, or skeptical, as it does me. I know I’m outside of my comfort zone.

Tim Urban’s posts on AI

A reader sent me a series of Tim Urban papers on the coming Artificial Intelligence revolution. Reading the two-part series (Part I, and Part II) is one of those mind-bending experiences that people otherwise achieve by paying a lot of money, traveling to Bali, and using exotic mild-altering substances.

As the Keanu Reeves character once said in the movie Speed: “Whoa.”

And sure, there’s the economic impact to consider from Artificial Intelligence, which we can somewhat easily imagine. But then there’s the impact beyond that, the part that leaves me feeling shaky.

In myriad industries – data management, financial trading, the military, manufacturing, robotics, and gaming to name a few – artificial intelligence experts are training computers in intelligent functions. The economic impact is massive and promises accelerating gains.

Of course we use artificial intelligence already in everyday life in ways unimagined just ten years prior, before the widespread use of iPhone-type devices and apps. My mapping app tells me the best route to drive my kids to school. Siri responds to my voice to tell me who won the World Series in 1918. (If you need Siri to answer that last one, sigh, you know nothing.)

In a paper resulting from a National Bureau of Economic Research conference in September 2017, “Artificial Intelligence and Economic Growth” economists attempt to grapple with the Artificial Intelligence revolution. Is it something that will offer incremental improvements in automation, with the analogy that we move up the automation foodchain, like from the plow to the tractor to the combine-harvester in the 19^thand 20^thCenturies?

Or does AI instead change the rate at which we innovate, such that economic development occurs at an accelerating pace? Change in this second case happens exponentially – like we see in graphs of population explosions, or the spread of infectious diseases. If AI helps automate physical production – or even more compellingly – automate idea production, then an exponential economic growth explosion due to AI seems increasingly plausible.

The economics paper argues that one big effect will be economic gains to people who control capital versus people who provide labor. That makes intuitive sense since increased automation favors the investor over the worker. From a financial perspective, the innovators who achieve the biggest breakthroughs in AI will likely reap huge rewards. So, plausible long-term effects of AI include accelerating economic growth and accelerating inequality. Which, okay, sounds like a path we’re already on.

But the most intriguing part of Tim Urban’s papers has to do with the question of whether artificial intelligence advances so quickly that we achieve the Singularity? And if so, when? And then what?

The Singularity

The Singularity, if you’re not a sci-fi or artificial intelligence nerd, refers to that future moment when machine or artificial intelligence gains enough self-learning momentum that it becomes “unbound,” no longer limited to human input or human-level intelligence to advance. It simply surpasses us and keeps on gaining intelligence.

If that happens, we don’t have a good way of understanding the economic (not to mention moral, environmental, or existential) implications. On the positive side, a super-intelligent machine could solve problems that humans simply can’t solve. On the negative side, what guarantee do humans have that a super-intelligent machine wouldn’t disregard our humanity, in the pursuit of solving whatever task it’s working on? The “turn the computer off and turn it back on” hack that the IT department always tells us to do won’t work when the super-intelligent machine knows that trick in advance.

Here’s a bewildering and unsettling thought, as suggested by Tim Urban, who himself builds on the work of other futurists and data scientists. The Singularity may happen in my lifetime.

The “in my lifetime” statement is a crazy-sounding claim, except that it’s backed by a sort of rough consensus belief among computer scientists, economists, and experts on the rapidly observable change in computing power and artificial intelligence technology over recent decades.

Normally I don’t go in for this kind of fuzzy futurism, except for one thing. AI advances are driven by the mathematics of exponential growth. And the mathematics of exponential growth leads us to previously unexpected results. Bear with me here for a moment on an analogy from finance, where I am more comfortable.

Things that Compound Grow

A guiding principle of this blog, my book on personal finance, and everything I try to teach about finance is that the exponential growth of invested money leads to an unexpectedly wealthy future. Since exponential growth occurs in technology, artificial intelligence, and other areas of economic growth as well, I have to be open to the unexpected future there as well.

Machine computation speeds have increased by a factor of 10 raised to the power of 11 (10 with 11 zeros after it) since World War II, comparing the giant vacuum tube machine of 1943 to today’s fastest computer. Most lay people know a popular version of what’s known as Moore’s Law, which observes that computing power doubles every 18 months. Miniaturization, memory storage, and costs all improve in similarly exponential ways. Continuing our compounding improvements in AI, futurists estimate that computers are on pace to match total human intelligence somewhere between 2045 and 2080. From there, rapid advances would likely far surpass human intellectual capacity.

As Tim Urban concludes in his paper, the big issue in artificial intelligence really isn’t economic gains.

Nor is the big issue whether China or some other country is getting ahead of the United States in research into AI. That last issue is kind of like worrying about who will finally capture the Iron throne when Winter is Coming.

No. Rather, if Urban’s summary understanding of our best minds on AI are right – if you give some credence to the Singularity possibly in our lifetime – then the real question Urban asks us to ponder about the Singularity is:

Will It Be A Nice God? ¹

A version of this post ran in the San Antonio Express News and Houston Chronicle.

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This kicker of a phrase is taken directly from the end of Urban’s Part One, and frankly is just too good not to repeat. ↩

Visiting with my brother-in-law this summer, I learned that his theory of stock market investing is “science fiction.” His favorite book of all time is Frank Herbert’s Dune. He enjoys picking companies or funds that anticipate where the world is going in 20 to 30 years. He invests in trends like robotics, artificial intelligence, and the blockchain.

That’s all fine and cool and was particularly interesting to me as I had happened to be reading a related book, by investment advisor and author Ric Edelman, The Truth About Your Future: The Money Guide You Need Now, Later, and Much Later.

Edelman’s book is a guide to personal finance through a futurist’s lens. Everything on our planet is about to be different in astonishing ways, so what should you do about it? In the first half of the book he presents a compelling case that our future – even in our own lifetime – will look quite different from the present. His shorthand for this change is that many of the most important things in our world are subject to “exponential growth.”

Reading the first half of the book is a bit like watching highlight clips of a year’s worth of TED talks about everything from nanotechnology to robotics, and from energy production to life expectancy, to pick a few of his examples. When you track trend lines on these phenomena, as Edelman does, the growth isn’t arithmetic over time. It’s exponential.

What does that mean? When you track exponential, or compounding, growth over time you see those lines that slope gradually upward in the beginning, then turn a bit steeper, until finally the line becomes nearly asymptotic – pointing straight upwards.

Tim_urban_progress — We expect the future to look like the recent past

You’ve no doubt seen population growth charts that do this, or the growth charts of the spread of diseases over time. Or if you’re old, rich, and lucky enough, you’ve noticed that happen to your investment portfolio through the magic of compounding.

I happen to agree with Edelman that in finance, technology, and economics we need to understand compound growth rates – whether about computing power or the growth of money, because the end results go further than our simple brains at first expect. We have a tendency to track and predict growth in an arithmetic rather than exponential way. So I appreciate Edelman’s emphasis in his book that everything is going to look different in the future, beyond what most of us have imagined.

But stepping back from the issue of whether the future will be different, a big question implicitly raised by the publication of a new personal finance book is always whether the world has sufficiently changed or is likely to change in the future, such that readers should pay attention to the change, and therefore the new book?

I have strong ideas about this big question in part because I published a new personal finance book myself, just out this summer. (You should put down this column right now and buy it, by the way.) But anyway, my bias, so you know, is that there’s hardly anything new under the sun when it comes to best personal financial practices. In fact most of what should be known about our best personal finance choices hasn’t changed since Benjamin Franklin’s The Way To Wealth, published 260 years ago.

exponential_change — Tim Urban’s drawings rock

What’s new are ways of reaching people who need the information, or clearer explanations, or updates on new ways of achieving the same results.

Edelman is a well-established financial guru with eight previous books, a radio show, and a large financial advisory practice. I was interested to read how – when he dons the mantle of futurist and claims everything is going to be different in ways we can hardly imagine – he would answer the question of what exactly should we do differently? That’s the second half of his book.

He doesn’t say it this way, but here’s my summation of his advice: Basically, do very little differently. His radical “exponential change is coming and everything is going to be unrecognizably different” thesis leads to what I would still describe as “do mostly all the same things” advice in the second half of the book.

Sure, he tweaks some ideas about long-term care insurance, as that market has evolved somewhat. Also, we’ll all live longer than we expect so we need more money for our retirement years. But, we kind of knew that already.

He highlights an ETF he helped create, an index of companies that will benefit from the exponential growth trend. While I know nothing about the ETF except what he describes in the books, it sounds plausible and something I’ll mention to my brother-in-law the next time we talk. But in a larger sense, I don’t think even that innovative investment product created and promoted by Edelman is essential in any particular way.

One of the more dangerous lies we tell ourselves in personal financial choices is: “it’s different this time.”

Despite the radical transformative TED Talk-ey way he envisions the future, Edelman’s advice is quite staid. That consistency I actually think is a credit to Edelman’s reasonableness, despite his radical-sounding futurism.

If you believe in imminent transformational and exponential growth coming down the pike from nanotechnology, data storage, the blockchain or whatever – and sure, why not, I’ll believe it – that doesn’t necessarily imply transformational changes in the best financial or investing behavior, for most people.

Personally, I’ll just be here saying the same simple things over and over again about finance.

At least until I’m replaced by our robot overlords with a replicant. But then: how will you know the difference?

A version of this post ran in the San Antonio Express News and Houston Chronicle.