Technology

Why AI Is the ‘New Electricity’



Just as electricity transformed the way industries functioned in the past century, artificial intelligence — the science of programming cognitive abilities into machines — has the power to substantially change society in the next 100 years. AI is being harnessed to enable such things as home robots, robo-taxis and mental health chatbots to make you feel better. A startup is developing robots with AI that brings them closer to human level intelligence. Already, AI has been embedding itself in daily life — such as powering the brains of digital assistants Siri and Alexa. It lets consumers shop and search online more accurately and efficiently, among other tasks that people take for granted.

“AI is the new electricity,” said Andrew Ng, co-founder of Coursera and an adjunct Stanford professor who founded the Google Brain Deep Learning Project, in a keynote speech at the AI Frontiers conference that was held this past weekend in Silicon Valley. “About 100 years ago, electricity transformed every major industry. AI has advanced to the point where it has the power to transform” every major sector in coming years. And even though there’s a perception that AI was a fairly new development, it has actually been around for decades, he said. But it is taking off now because of the ability to scale data and computation.

Ng said most of the value created through AI today has been through supervised learning, in which an input of X leads to Y. But there have been two major waves of progress: One wave leverages deep learning to enable such things as predicting whether a consumer will click on an online ad after the algorithm gets some information about him. The second wave came when the output no longer has to be a number or integer but things like speech recognition, a sentence structure in another language or audio. For example, in self-driving cars, the input of an image can lead to an output of the positions of other cars on the road.

Indeed, deep learning — where a computer learns from datasets to perform functions, instead of just executing specific tasks it was programmed to do — was instrumental in achieving human parity in speech recognition, said Xuedong Huang, who led the team at Microsoft on the historic achievement in 2016 when their system booked a 5.9% error rate, the same as a human transcriptionist. “Thanks to deep learning, we were able to reach human parity after 20 years,” he said at the conference. The team has since lowered the error rate even more, to 5.1%.

The Rise of Digital Assistants

Starting in 2010, the quality of speech recognition began to improve for the industry, eventually leading to the creation of Siri and Alexa. “Now, you almost take it for granted,” Ng said. That’s not all; speech is expected to replace touch-typing for input, said Ruhi Sarikaya, director of Amazon Alexa. The key to greater accuracy is to understand the context. For example, if a person asks Alexa what he should do for dinner, the digital assistant has to assess his intent. Is he asking Alexa to make a restaurant reservation, order food or find a recipe? If he asks Alexa to find ‘Hunger Games,’ does he want the music, video or audiobook?

And what’s next for the digital assistant is an even more advanced undertaking — to understand “meaning beyond words,” said Dilek Hakkani-Tur, research scientist at Google. For example, if the user uses the words “later today,” it could mean 7 p.m. to 9 p.m. for dinner or 3 p.m. to 5 p.m. for meetings. This next level up also calls for more complex and lively conversations, multi-domain tasks and interactions beyond domain boundaries, she said. Moreover, Hakkani-Tur said, digital assistants should be able to do things such as easily read and summarize emails.

After speech, ‘computer vision’ — or the ability of computers to recognize images and categorize them — was the next to leap, speakers said. With many people uploading images and video, it became cumbersome to add metadata to all content as a way to categorize them. Facebook built an AI to understand and categorize videos at scale called Lumos, said Manohar Paluri, a research lead at the company. Facebook uses Lumos to do data collection of, for example, fireworks images and videos. The platform can also use people’s poses to identify a video, such as categorizing people lounging around on couches as hanging out.

What’s critical is to ascertain the primary semantic content of the uploaded video, added Rahul Sukthankar, head of video understanding at Google. And to help the computer correctly identify what’s in the video — for example, whether professionals or amateurs are dancing — his team mines YouTube for similar content that AI can learn from, such as having a certain frame rate for non-professional content. Sukthankar adds that a promising direction for future research is to do computer training using videos. So if a robot is shown a video of a person pouring cereal into a bowl at multiple angles, it should learn by watching.

At Alibaba, AI is used to boost sales. For example, shoppers of its Taobao e-commerce site can upload a picture of a product they would like to buy, like a trendy handbag sported by a stranger on the street, and the website will come up with handbags for sale that come closest to the photo. Alibaba also uses augmented reality/virtual reality to make people see and shop from stores like Costco. On its Youku video site, which is similar to YouTube, Alibaba is working on a way to insert virtual 3D objects into people’s uploaded videos, as a way to increase revenue.

That’s because many video sites struggle with profitability. “YouTube still loses money,” said Xiaofeng Ren, a chief scientist at Alibaba.

Rosie and the Home Robot

But with all the advances in AI, it’s still no match for the human brain. Vicarious is a startup that aims to close the gap by developing human level intelligence in robots. Co-founder Dileep George said that the components are there for smarter robots. “We have cheap motors, sensors, batteries, plastics and processors … why don’t we have Rosie?” He was referring to the multipurpose robot maid in the 1960s space-age cartoon The Jetsons. George said the current level of AI is like what he calls the “old brain,” similar to the cognitive ability of rats. The “new brain” is more developed such as what’s seen in primates and whales.

George said the “old brain” AI gets confused when small inputs are changed. For example, a robot that can play a video game goes awry when the colors are made just 2% brighter. “AI today is not ready,” he said. Vicarious uses deep learning to get the robot closer to human cognitive ability. In the same test, a robot with Vicarious’s AI kept playing the game even though the brightness had changed. Another thing that confuses “old brain” AI is putting two objects together. People can see two things superimposed on each other, such as a coffee mug partly obscuring a vase in a photo, but robots mistake it for one unidentified object. Vicarious, which counts Facebook CEO Mark Zuckerberg as an investor, aims to solve such problems.

The intelligence inside Kuri, a robot companion and videographer meant for the home, is different. Kaijen Hsiao, chief technology officer of creator Mayfield Robotics, said there is a camera behind the robot’s left eye that gathers video in HD. Kuri has depth sensors to map the home and uses images to improve navigation. She also has pet and person detection features so she can smile or react when they are around. Kuri has place recognition as well, so she will remember she has been to a place before even if the lighting has changed, such as the kitchen during the day or night. Moment selection is another feature of the robot, which lets her recognize similar videos she records — such as dad playing with the baby in the living room — and eliminates redundant ones.

“Her job is to bring a spot of life to your home. She provides entertainment — she can play music, podcasts, audiobooks. You can check your home from anywhere,” Hsiao said. Kuri is the family’s videographer, going around the house recording so no one is left out. The robot will curate the videos and show the best ones. For this, Kuri uses vision and deep learning algorithms. “Her point is her personality … [as] an adorable companion,” Hsiao said. Kuri will hit the market in December at $799.

“About 100 years ago, electricity transformed every major industry. AI has advanced to the point where it has the power to transform” every major sector in coming years.–Andrew Ng

Business Response to AI

The U.S. and China lead the world in investments in AI, according to James Manyika, chairman and director of the McKinsey Global Institute. Last year, AI investment in North America ranged from $15 billion to $23 billion, Asia (mainly China) was $8 billion to $12 billion, and Europe lagged at $3 billion to $4 billion. Tech giants are the primary investors in AI, pouring in between $20 billion and $30 billion, with another $6 billion to $9 billion from others, such as venture capitalists and private equity firms.

Where did they put their money? Machine learning took 56% of the investments with computer vision second at 28%. Natural language garnered 7%, autonomous vehicles was at 6% and virtual assistants made up the rest. But despite the level of investment, actual business adoption of AI remains limited, even among firms that know its capabilities, Manyika said.

Around 40% of firms are thinking about it, 40% experiment with it and only 20% actually adopt AI in a few areas.

The reason for such reticence is that 41% of companies surveyed are not convinced they can see a return on their investment, 30% said the business case isn’t quite there and the rest said they don’t have the skills to handle AI. However, McKinsey believes that AI can more than double the impact of other analytics and has the potential to materially raise corporate performance.

There are companies that get it. Among sectors leading in AI are telecom and tech companies, financial institutions and automakers. Manyika said these early adopters tend to be larger and digitally mature companies that incorporate AI into core activities, focus on growth and innovation over cost savings and enjoy the support of C-suite level executives. The slowest adopters are companies in health care, travel, professional services, education and construction.

However, as AI becomes widespread, it’s a matter of time before firms get on board, experts said


Who Leaked the Paradise Papers?

Is the consortium of journalists fronting for an intelligence agency?

By Holman W. Jenkins, Jr.

Commerce Secretary Wilbur Ross at the Confederation of British Industry's annual conference in London, Nov. 6.
Commerce Secretary Wilbur Ross at the Confederation of British Industry's annual conference in London, Nov. 6. Photo: mary turner/Reuters


With the latest leak of international financial records comes evidence of one unambiguous crime that won’t be investigated—the theft of the papers themselves from Appleby, a global law firm based in Bermuda.

Rather, the trope the press strains to enact is that the clients whose documents were stolen are themselves guilty of shady doings. Commerce Secretary Wilbur Ross, who ran a private-equity firm, owns a stake in a shipping firm that has a Russian customer. Yuri Milner, a Russian fund manager who controls stakes in Facebook and Twitter, has his own investors, among which is a state-owned Russian bank.

The so-called Paradise Papers are the latest electronic document dump received by the so-called International Consortium of Investigative Journalists. The previous dump, known as the Panama Papers, in unminced words was described by Vladimir Putin’s personal spokesman as a direct attack on Mr. Putin.

This is not to rule out a sincere whistleblower or the proverbial 400-pound teenager, but when so much hacking for commercial or political purpose these days is attributed to national actors, the question does leap to mind: Which nation’s intelligence agency might be responsible for the leak? And what is the motive? Are the many whose financial privacy has been invaded merely collateral damage in an attempt to hit a single target?

Divulged by the consortium is only that the Paradise Papers, like the Panama Papers, were bestowed upon a German newspaper, the Süddeutsche Zeitung. How the papers came to be stolen and deposited in the hands of the media is one subject that does not stir the investigative juices of the world’s media. The press’s job apparently is to follow where the documents lead, not where they come from. Is this not a blind spot? Is there not something strangely blinkered, if not actively disingenuous about a consortium (virtually a monopoly) of investigative journalists that seems to exist to do the bidding of its undisclosed sources?

Go back to Mr. Ross: The news reports based on the documents do not allege his shipping stake was illegal. They do not allege his foreign-registered holding company was illegal. They do not allege he failed in any disclosure duty.

So what exactly is going on here? Does the media stand ready to publish stolen bank records of anybody and everybody it finds interesting?

Such massive document thefts don’t just happen; they are motivated. The press stories all come with a manufactured ambience of whistleblowing unsupported by any claimed fact. The leaker’s motivation is not even intimated to exist as a question.

All this comes as Americans are encouraged to presume that it’s shocking if any American actually knows a Russian. To have done business is beyond the pale.

Such ninnyism is of extraordinarily recent vintage. Two years ago, while detailing the seamy role of the Clinton Foundation in a Russian nuclear deal, the New York Times also correctly noted not once but three times that promoting business ties with Russia, at the time, was the avowed and consistent policy of the U.S. government right up until Mr. Putin’s Crimea grab in 2014.

When Paul Manafort was cavorting with Putin-backed Ukraine President Viktor Yanukovych in 2013, the latter said “we have to move towards European integration” at an event attended by Bill Clinton and hosted by Victor Pinchuk, a Ukrainian oligarch and Yanukovych supporter who gave at least $10 million to the Clinton Foundation.

We could go further back. At least one big company was happy with Jimmy Carter’s election: Georgia-based Coca-Cola , which saw a chance to catch up with Pepsi, which had ridden into Brezhnev’s Russia on Nixon’s coattails.

Anything is possible that is not precluded by the laws of physics, including a criminal conspiracy of Mr. Putin and Donald Trump. If anybody did or said anything truly damning, our guess is Mike Flynn, in some context or other, suggesting to a Russian contact that Mr. Trump’s promise of better relations would not come about if he were not elected.

But a charge of conspiracy requires proof, not just a general dislike of Mr. Trump. Not for the first time we suggest the useful parallel is not Watergate but the Pentagon Papers. The moment begs for a coming clean on how so much U.S. government-sponsored trade, investment, political lend-lease (Manafort, the Podestas) and, yes, openness to Russian kleptocrats buying Fifth Avenue apartments and Miami condos, didn’t succeed in making Mr. Putin a friend.

Which brings us back to the Paradise Papers, which may—may—be a down payment on such an air-clearing. Like the Panama Papers before them, they are particularly suggestive of how Mr. Putin may have used Mr. Milner, or in the case of the Panama Papers, cellist Sergei Roldugin, to hide his own often-alleged offshore wealth.

If the press bothered to care who leaked the papers, we might be able to make more intelligent inferences about their significance.


Britain is overexposed to its ruling class

If government is weak, or strong but wrong, little stands between us and its doings

Janan Ganesh


In London on Monday, a man with no ministerial experience began his first full week in charge of the world’s fifth-largest defence budget. Gavin Williamson’s predecessor quit over stories of sexual harassment that have stained the British parliament even more than the liberties it used to take with expenses. Across town, corporate leaders sat through the “modern industrial strategy” of Theresa May, who has spent most of her now-frail premiership blanking them and lacks the votes to do much of anything after the third consecutive general election with a tight result.

Despite this tour of familiar ailments — amateurism, scandal, electoral indecision — Britain is not unique in its political dysfunctions. But it is almost unique in its vulnerability to them. The ancient concentration of power in national government, and within that the executive branch, and within that the prime minister, makes for a weirdly all-or-nothing system for a country that, right down to its gentle official religion, seldom commits when it can hedge.

In Britain, an effective government can build a welfare state, as the Labour party did after 1945, or free an economy, as the Conservatives did from 1979. Poor ones, such as most of those elected in between, can maim the economy and bring the basic governability of the kingdom into doubt. Britain is exposed like almost no other nation in the rich world to the strange human variable that is politics.

When they voted for populist propositions in the same year, Britain and America became entwined in political analysis. It was useful to think of Brexit and the presidency of Donald Trump as parallel experiments with national sovereignty in the two countries that had all but evangelised for globalisation since the 1980s. When France, Germany and the Netherlands took a different course in their own elections this year, the anglophone pair stood out even more as a distinct, coherent bloc.

The difference is that America is designed to prosper despite its politics. Even a president whose party runs the legislature must contend with the hard-wired fragmentation of power within Washington, and between Washington and the states. This institutional balance, which acts like the stop-loss on a headstrong trader’s account, is now strained as at no time since the civil war. It might yet buckle. But at least there is something there to buckle.

I used to believe that Britain, too, could succeed irrespective of its politics. I grew up in the mid-1990s, when economic and cultural life bloomed despite the agonies of government. Looking back, however, the nation’s resilience hinged on an artful prime minister, Sir John Major, and an opposition that sought more continuity than change. The human element stabilised a fraught structural situation.

The mistake is to see America, rather than Britain, as the international exception. Most mature democracies have codified balances, this set against that, to limit the reach of mere politics into the authentic life of the nation. In recent times, Australian politics has become an extended series of I, Claudius, all intrigue and the dagger, with four prime ministers in a five-year period. In September, Australia completed its 104th consecutive quarter of economic growth — the longest expansion in modern times anywhere in the world. Canberra may as well be on the moon.

Even France, with its Jupiterian presidency, has strong mayors, extra-parliamentary actors such as the trade unions and a bureaucratic class that is trained to within an inch of its life. Wading through these force fields to change the country is, for good or bad, beyond most leaders. And what centralisation there is only goes back to 1958, when Charles de Gaulle established the Fifth Republic. Britain’s is deeper, an uninterrupted legacy of the absolute monarchs.

America’s ragged infrastructure, French resistance to change, the lack of reforms in Italy: the absence of a decisive centre comes with costs the British might not be willing to wear. But our own system errs the other way. It trusts the life of the nation to a few offices and prays for worthy occupants. If the government is weak, or strong but wrong, little stands between us and its doings. Without EU membership, which restrains government in ways that pro-Europeans should celebrate not deny, that concentration of power intensifies.

Ostensibly dry and abstract, constitutional reform should be viewed as a practical hedge against bad government. If any good comes from the rolling fiasco of British public life, it will be a resolve to limit the nation’s exposure to its own ruling class. The country that can least afford to get its politics wrong is getting its politics wrong.


Donald Trump’s Federal Reserve

KENNETH ROGOFF

Project Syndicate

CAMBRIDGE – With the appointment of Jerome Powell as the next Chair of the United States Federal Reserve Board, Donald Trump has made perhaps the most important single decision of his presidency. It is a sane and sober choice that heralds short-term continuity in Fed interest-rate policy, and perhaps a simpler and cleaner approach to regulatory policy.

Although Powell is not a PhD economist like current Fed Chair Janet Yellen and her predecessor, Ben Bernanke, he has used his years as an “ordinary” governor at the Fed to gain a deep knowledge of the key issues he will face. But make no mistake: the institution Powell will now head rules the global financial system. All other central bankers, finance ministers, and even presidents run a distant second.

If that seems hyperbolic, it is only because most of us don’t really pay attention to the Fed on a day-to-day basis. When the Fed gets it right, price stability reigns, unemployment remains low, and output hums along. But “getting it right” is not always easy, and when the Fed gets it wrong, the results can be pretty ugly.

Famously, the Fed’s efforts to tame a stock-market bubble in the late 1920s sparked the Great Depression of the 1930s. (Fortunately, of the candidates Trump was considering for the Fed post, Powell is the one least likely to repeat this mistake.) And when the Fed printed mountains of money in the 1970s to try to dull the pain of that decade’s oil shocks, it triggered an inflationary surge that took more than a decade to tame.

At times, the rest of the world seems to care more about Fed policy than Americans do. Little wonder: perhaps more than ever, the US dollar lies at the heart of the global financial system. This is partly because much of world trade and finance is indexed to the dollar, leading many countries to try to mimic Fed policies to stabilize their exchange rates.

Powell will face some extraordinary challenges at the outset of his five-year term. By some measures, stock markets look even frothier today than they did in the 1920s. With today’s extraordinarily low interest rates, investors seem ever more willing to assume greater risk in search of return.

At the same time, despite a strongly growing US and global economy, inflation remains mystifyingly low. This has made it extremely difficult for the Fed to normalize policy interest rates (still only 1%) so that it has room to cut them when the next recession hits, which it inevitably will. (The odds of a recession hitting in any given year are around 17%, and that seems like a good guess now.)

If Powell and the Fed cannot normalize interest rates before the next recession, what will they do?

Yellen insists that there is nothing to worry about; the Fed has everything under control, because it can turn to alternative instruments. But many economists have come to believe that much of this is smoke and mirrors.

For example, so-called quantitative easing involves having the Fed issue short-term debt to buy up long-term government debt. But the US Treasury owns the Fed, and can carry out such debt purchases perfectly well by itself.

Some argue for “helicopter money,” whereby the Fed prints money and hands it out. But this, too, is smoke and mirrors. The Fed has neither the legal authority nor the political mandate to run fiscal policy; if it tries to do so, it runs the risk of forever losing its independence.

Given that monetary policy is the first and best line of defense against a recession, an urgent task for the new chair is to develop a better approach. Fortunately, good ideas exist, and one can only hope that Powell will quickly move to create a committee to study long-term fixes.

One idea is to raise the Fed’s inflation target. But this would be problematic, not least because it would breach a decades-long promise to keep inflation around 2%. Moreover, higher inflation would induce greater indexation, ultimately undermining the effectiveness of monetary policy. Paving the way for effective negative-interest-rate policy is a more radical – but by far the more elegant – solution.

Bank regulation is also part of the Fed’s mandate. The 2010 Dodd-Frank financial-reform legislation, which has spawned 30,000 pages of rules, has been a boon for lawyers. But the massive compliance costs ultimately fall on small and medium-size businesses. It would be far better simply to require banks to raise much more of their resources in equity markets instead of through bonds. That way, shareholders, not taxpayers, would take the big hit in a crisis.

I have not mentioned the elephant in the room: the threat to the Fed’s independence posed by a president seemingly intent on challenging all institutional norms. When President Richard Nixon was intent on being re-elected in 1972, he put heavy pressure on then-Fed Chair Arthur Burns to “juice” the economy. Nixon was re-elected, but inflation soared and growth collapsed. No one should be wishing for a replay – even if Nixon eventually was impeached.


Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University and recipient of the 2011 Deutsche Bank Prize in Financial Economics, was the chief economist of the International Monetary Fund from 2001 to 2003. The co-author of This Time is Different: Eight Centuries of Financial Folly, his new book, The Curse of Cash, was released in August 2016.


China, Trump and the North Korean nightmare

Beijing could get drawn into a war on the península

Gideon Rachman


With the threat of another Korean war looming, this week’s US-China summit in Beijing could be the most important in decades.

Most western commentary on North Korea has focused on President Donald Trump’s warnings of “fire and fury” to combat the regime’s nuclear threat. But the Korean crisis also poses a huge risk to China. If a war breaks out, China will literally be on the frontline — potentially exposed to nuclear fallout, refugee flows and dramatic shifts in the regional balance of power.

These acute risks have produced a startling variety of opinions among Chinese experts about the best way forward. There are some who even argue that China and the US should co-operate in joint military operations against North Korea. Others take a completely different line — contending that Washington’s policy is leading to disaster, and that it is time for Beijing to break publicly with the US.

Beijing’s official position avoids either of these dramatic alternatives. Instead, the government of President Xi Jinping is pressing to restart diplomacy through a “freeze for freeze” policy.

The idea is that North Korea would freeze the development of its nuclear weapons, in return for the US freezing military exercises that alarm Pyongyang.

In principle, this sounds like a decent idea. In practice, neither North Korea nor the US seem willing to take the steps needed to make the policy work.

Given this reality, the Chinese are having to consider other more radical alternatives. One senior official argues that by agreeing to US demands for tougher sanctions on North Korea, China has lost its influence in Pyongyang. So, the official argues, China should now attempt to rebuild ties with the Kim Jong Un regime — even if that means antagonising the US administration.

But, among Chinese academics, there are eminent figures who take a radically different position. These hawks argue that a nuclear North Korea is a profound threat not just to South Korea, Japan or the US — but to China itself. In strategic terms, the growing North Korean threat may well persuade both South Korea and Japan to acquire their own nuclear weapons — which would sharply increase tensions within East Asia.

Chinese experts also fret about the dangers of a North Korean nuclear test going wrong, or of an accident at the Yongbyon nuclear facility, near the border. Any such development would pose serious environmental risks to China. “Yongbyon could be our Fukushima,” worries one academic — referring to the 2011 nuclear accident in Japan.

North Korea is now estimated by the Chinese to have 40-60 nuclear weapons. If any were used during a conflict, the risks to China would be enormous.

All of this leads some Chinese experts to consider a radical alternative — perhaps Beijing should co-operate with the US, in a joint military action, aimed at toppling the Kim regime and seizing its nuclear weapons. Such a strategy would allow China to take active steps to defend its own security — rather than helplessly watching a conflict unfold from the sidelines. Offering to ally with the Trump administration might also allow China to secure a new “grand bargain” over postwar arrangements. The Chinese could, for example, look for guarantees that US troops would withdraw from a unified Korea — and might also seek concessions on other regional security issues, such as the status of Taiwan or the South China Sea.

Any joint military operations, however, would be fraught with risk. Above all, there is the fear that North Korea could launch a devastating retaliation — using either nuclear weapons or conventional artillery. To avoid this, one Chinese expert speculates that an attack on the Kim regime could begin by using an electromagnetic pulse weapon (EMP), designed to disable all electronic communication in North Korea — so making it impossible to co-ordinate defences or launch nuclear weapons.

However, while the US and China are both known to have worked on EMP weapons, they have never been used. It would be extremely risky to rely on an untried weapons system to disable the North Korean nuclear threat.

Given all these considerations, an alternative school of thought argues that, if the Trump administration launches a strike on North Korea, the sole Chinese military response should be to advance 50km into North Korea, to protect its border, and to prevent uncontrollable flows of refugees. One nationalist academic argues that a US pre-emptive strike might ultimately benefit China. America’s allies, such as South Korea and Japan, would be appalled and would break their ties with the US, destroying American influence in the Pacific, or so the thinking goes.

But there would also be costs if China tried to watch a conflict from the sidelines. The humanitarian consequences would be horrendous. And even a limited advance into North Korea would risk drawing Chinese troops further into the conflict. But if China sat the fighting out completely, it would risk looking like an impotent bystander as the US fought a war in a country that remains a Chinese ally and neighbour.

In Washington, there is a saying that “North Korea is the land of bad options”. It looks that way from Beijing, too. The problem is that, with North Korea’s nuclear weapons programme advancing fast, doing nothing may not be an option, either.