Irving Wladawsky-Berger

The MIT Second Machine Age Conference

A couple of weeks ago I attended MIT’s Second Machine Age Conference, an event inspired by the best-selling book of the same title published earlier this year by MIT’s Erik Brynjolfsson and Andy McAfee.  The conference presented some of the leading-edge research that’s ushering the emerging second machine age, and explored its impact on the economy and society.  It was quite an interesting event.  Let me discuss a few of the presentations as well as my overall impressions. 

In his opening keynote, Brynjolfsson explained what the second machine age is all about.  “Like steam power and electricity before it, the explosion of digitally enabled technologies is radically transforming the landscape of human endeavor.  Astonishing progress in robotics, automation, and access to information presents major challenges for institutions from small businesses and communities to large corporations and governments, but it also creates opportunities to rethink how we live and work in profoundly positive ways.” 

The machines of the industrial economy, - the first age, - made up for our physical limitations, - steam engines enhanced our physical power, railroads and cars helped us go faster, and airplanes gave us the ability to fly.  For the most part, they complemented, rather than replaced humans.  The second age machines are now enhancing our cognitive powers, giving us the ability to process vast amounts of information and make ever more complex decisions.  They’re being increasingly applied to activities requiring intelligence and cognitive capabilities that not long ago were viewed as the exclusive domain of humans.  Will these second age machines complement or replace humans?

On the Complex Evolution toward Mobile Digital Payments

On September 9, Apple announced Apple Pay, an easy, secure way to make mobile payments using their latest devices, - the iPhone 6’s and Apple Watch.  The reaction to the announcement has been mostly positive: “[F]or now, at least, analysts believe if there is any company to persuade consumers of the mobile wallet’s value, it is Apple.”  Same with the payments community:  “Well, hello Apple, and welcome to the payments industry.  We’ve been holding the door open for you for a long time.” 

Apple Pay is embracing a number of industry standards, including NFC (near-field communications) for contact-less payments; Secure Element, a dedicated device chip; and network-based tokenization to protect sensitive financial data.  Apple is collaborating with the big credit card networks, several banks and a number of merchants in the development and deployment of Apple Pay.  In addition, the company is hoping to stimulate innovation by publishing their APIs so developers can embed Apple Pay services in their apps.

Currently, the digital payments infrastructure is quite fragmented, with different players pursuing different standards.  By embracing key industry standards, Apple Pay could encourage their widespread acceptance around the world, and thus help coalesce this fragmented payment ecosystem.  In addition, by reaching out to financial institutions, merchants, application developers and others, Apple is helping bring together the different players in the payments ecosystem, something that’s absolutely essential to succeed in such a complex undertaking.

A Useful Framework for Analyzing the Impact of Technology on Jobs

Last week I discussed a recent Pew Research report on the impact of AI, robotics and other advanced technologies on the future of jobs.  The report was based on the responses of nearly 1,900 experts to a few open-ended questions, including “Will networked, automated, artificial intelligence (AI) applications and robotic devices have displaced more jobs than they have created by 2025?”  The expert’s responses to this question where divided down the middle. 

Beyond predictions based on responses to a survey, can one develop an overall framework to help analyze these critical issues?  Along this line, I like a recent paper by MIT economist David Autor, - Polanyi’s Paradox and the Shape of Employment Growth.  The paper was presented at the annual Jackson Hole Federal Reserve symposium, a gathering of some of the world’s most prominent central bankers, finance experts and academics, where the theme this year was “Re-evaluating Labor Market Dynamics”.  The paper carefully laid out its arguments based on existing empirical evidence.  Let me summarize its key points. 

Computers have made huge advances in automating many physical and cognitive human tasks, especially those tasks that can be well described by a set of rules.  But, Professor Autor argues, despite continuing advances in AI and robotics, the “challenges to substituting machines for workers in tasks requiring flexibility, judgment, and common sense remain immense.”

AI, Robotics, and the Future of Jobs

The Pew Research Center has been marking the 25th anniversary of the World Wide Web with a series of reports on the Internet and our digital lives.  I’ve discussed two of the reports, first The Web at 25 in the US, followed by Digital Life in 2025.  I’d now like to discuss a third Pew report, - AI, Robotics and the Future of Jobs, - which was published in early August.

The impact of technology on jobs is a very important subject.  “The economic challenge of the future will not be producing enough.  It will be providing enough good jobs,” wrote Harvard professor and former Treasury Secretary Larry Summers in a recent WSJ article.  These concerns are not new.  In a 1930 essay, English economist John Maynard Keynes wrote: “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come - namely, technological unemployment.  This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.”

As it turned out, the 20th century saw the creation of many new jobs and industries.  But, fears of technological unemployment have been rising in the emerging digital economy, as our increasingly smart machines are being applied to activities requiring intelligence and cognitive capabilities that not long ago were viewed as the exclusive domain of humans. 

The Pew Research report explored the impact of AI and robotics on the future of employment based on the responses of nearly 1,900 experts to a few open-ended questions, including: “Will networked, automated, artificial intelligence (AI) applications and robotic devices have displaced more jobs than they have created by 2025?; and “To what degree will AI and robotics be parts of the ordinary landscape of the general population by 2025?”