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Let the Iowa fiasco serve as a warning — new technology isn’t always the answer Opinion

Let the Iowa fiasco serve as a warning — new technology isn’t always the answer Opinion

Last week, the entire world witnessed the shambles of the vote counting in the Iowa Democratic caucus.

It should have been straightforward — but adding all the votes up in a consistent way took a whole week.

The list of errors is as long as your arm. In some precincts, for example, the total number of votes reported exceeded the number of eligible voters. But the main source of the problem seems to have been a mobile phone app that the Iowa Democratic Party used to collect results from caucus sites.

A system was in place which had stood the test of time through many election campaigns. But it was old-fashioned. It needed to be “modernised”. Hence the app.

Many layers of modern management share this obsession with technology for technology’s sake.

Financial institutions, for example, are fixated on apps: apps to manage day-to-day expenses, apps to help manage investments, apps to boost savings for your old age.

No doubt some of these have their uses. But the idea that apps can make major changes to the behaviour of individuals, and therefore drive productivity and prosperity, is something of a pipe dream.

As a further example of technology’s counter-productive impact, consider an elderly relative of mine who is in a care home. On entry, you used to sign the visitors book and enter the time of arrival; on exit, you put the time you were leaving — with a pen. A new computer system has been installed. It takes several times longer to enter these details. As far as I can judge, virtually no visitors use it.

Nobel laureate Bob Solow famously pronounced 30 years ago that “you can see the computer age everywhere but in the productivity statistics”.

In the 1980s, the decade to which Solow was basically referring, personal computers and fax machines were the cutting-edge of new technology. It seems like the Stone Age compared to the technology available to us now. Yet Solow’s problem remains.

Productivity growth was very low during the most recent decade, despite the massive advances made in technology. There are clearly many reasons for this. But one of them is, quite simply, that technology is often being introduced in situations where it is quite unnecessary. As a result, people become less rather than more productive.

More generally, new technology is proliferating in areas where the potential productivity gains are not that high. For example, it is convenient when buying a round of drinks to be able to tap your card rather than delve into your pockets for loose change, but it is unlikely that this innovation enables more drinks to be sold in any given pub or bar.

Similarly, self-service checkouts in supermarkets help avoid standing in long queues, but these rely on customers being willing to supply their own labour for free, rather than requiring paid staff to scan the goods for them.

The Iowa app incident is a source of amusement, but it may be telling us something more profound about why productivity growth remains low. New technology is being applied when it is simply not needed.

As published in City AM Wednesday 12th February 2020
Image: Iowa State Line via Flickr by Tony Webster licensed for use CC BY 2.0
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It’s not cutting-edge AI we should fear, but mediocre automation

It’s not cutting-edge AI we should fear, but mediocre automation
If there were a betting market in future winners of the Nobel prize in economics, MIT’s Daniel Acemoglu would be at pretty short odds. His highly innovative work has already won him a string of prizes. So his research is always worth following – especially when he challenges the conventional wisdom, as in his paper in the latest issue of the Journal of Economic Perspectives. Economists are usually optimistic about the impact of new technology. The innovation itself destroys jobs – the Luddite riots in the early nineteenth century, for example, were in direct response to the displacement of skilled handloom weavers by the new machinery in textile factories. But this, along with all subsequent waves of innovation, enabled goods and services to be produced more cheaply. As a result, the spending power of everybody else in the economy increased, and new jobs were created. Mass production in factories during the industrial revolution was of course a phenomenon without precedent in the history of the world. Other completely revolutionary technologies followed, such as the railways and electricity.  The rapid advance of robots and artificial intelligence seems to be the latest example of a transformative new technology. Acemoglu argues that it is not these “brilliant” (as he puts it) technologies which threaten jobs and wages. These enable things to be produced much more cheaply than before, substantially boosting real incomes elsewhere in the economy. Then new kinds of goods and services can be created as a result of the increase in spending power. Rather, the risk to overall employment and living standards comes from the introduction of “so-so technologies”, which generate only small productivity improvements. Examples of so-so technologies include automated customer service, which has displaced human service representatives. It is, however, generally deemed to be low-quality, and thus unlikely to have led to large productivity gains. The cost of your bank charges or your supermarket shop have not exactly been reduced much by the introduction of automated answering systems or self-service check-outs. But jobs have been lost as a result. Acemoglu suggests a key reason why modern economies have, as he puts it in the jargon, “moved along this [particular] innovation possibilities frontier”. In the US and also here in the UK, the tax system has evolved in ways which subsidise the use of equipment and penalise the use of labour through payroll taxes such as our employers’ national insurance contributions. Interestingly, he also points the finger at the big tech companies. Their business model is based on automation and small workforces. The impact of innovative technology which destroys particular jobs needs to be counterbalanced by innovation elsewhere, which creates new tasks, new jobs which no one had previously thought of. We have had some, such as software and app development and database design, but nowhere near enough. Governments need to rethink the tax system as it applies to investment and employment. And they need to rebuild support for long-term innovation, which gives more scope to invent completely new jobs.
As published in City AM Wednesday 8th May 2019
Image: Self Checkout by Ben Schumin via Wikimedia is licensed under CC-BY 2.0
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Artificial intelligence will dominate every aspect of our lives, but it won’t replace us

Artificial intelligence will dominate every aspect of our lives, but it won’t replace us

Guess which of the 964 jobs listed in the widely used Occupational Information Network online database is the least susceptible to replacement by artificial intelligence (AI).

The unsurprising answer is that of “massage therapist”.

This is one of the findings of a paper in the latest issue of the American Economic Review by Erik Brynjolfsson and colleagues at MIT’s Sloan School of Management.

But, while this answer might seem obvious, the study itself is a serious and innovative attempt to analyse the potential impact of AI on occupations across the economy.

A key point is that AI technology itself is going through a period of revolutionary progress.

The success of Google’s Deep Mind team in defeating the world champion at the immensely complex game of Go received wide publicity.

Unlike the algorithms which vanquished chess some years previously, the latest AlphaGo programme – improved since its annihilation of the Go champion less than two years ago – does not simply rely on pure computing power to outperform humans. The algorithm starts by knowing absolutely nothing about the game. It becomes stronger by playing against itself and learning as it goes along.

In short, it teaches itself, remembering both its mistakes and its successes. This type of algorithm is very new, and is known as deep learning. The programmes automatically improve their performance at a task through experience.

Brynjolfsson and colleagues regard this as so significant that they describe deep learning as a “general purpose technology” (GPT).

GPTs are technologies which become pervasive throughout the economy, improve over time, and generate further innovations which are complementary.

Historically, they are few and far between. Steam and electricity are examples. If they disappeared tomorrow, we would rapidly be driven back to the living standard which existed several centuries ago.

Deep learning will take years – or even several decades – before anything like its full effects are realised. But we will then look back and find that it is just as hard to imagine a world without deep learning as it is a world without electricity.

What will that look like? The authors analyse 2,069 work activities and 18,156 tasks in the 964 occupations. From this, they build “suitability for machine learning” (SML) measures for labour inputs in the US economy. They find that most occupations in most industries have at least some tasks that are SML. Pretty obvious. But few, if any, occupations have all tasks that are SML.

This latter point certainly is surprising – and from it the MIT team derives a positive message: very few jobs can be fully automated using this new technology.

A fundamental shift is needed in the debate about the effects of AI on work. Instead of the common concerns about the full automation of many jobs and pervasive occupational replacement, we should be thinking about the redesign of jobs and reengineering of business processes.

Economics is often described as the dismal science. But Brynjolfsson’s paper certainly provides very positive food for thought.

As published in City AM Wednesday 6th June 2018

Image: Robots by By Kai Schreiber is licensed under CC2.0
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Neo-Luddites won’t like it, but the UK must keep on (driverless) truckin’

Neo-Luddites won’t like it, but the UK must keep on (driverless) truckin’

The announcement that experiments will take place with driverless lorries on UK motorways ought to be a cause for celebration. Once again, human ingenuity is pushing out the frontiers of technology.

But the general reaction in the media has been one of anxiety and concern. Wholly contradictory arguments have been advanced against them.

Driverless cars it is argued, for example, do not mean that you can summon one to your front door and be taken to and from the pub with impunity. The drink driving laws, the opponents of progress pronounce with confidence, will still apply to the humans being transported. Yet it is also claimed that the concept of responsibility for accidents involving driverless cars does not yet exist. Until it is, they cannot legally be used.

As with the introduction of railways, the law around a revolutionary technology will take some time to evolve. But the idea that a man should walk in front of the train carrying a red flag was soon given short shrift. The new technology was far too convenient to have it impeded in this way.

The opposition to driverless cars and lorries seems almost Luddite in its intensity. People currently employed in and around the activity of driving vehicles will become unemployed. Where will the new jobs come from?

I am writing this in a country house hotel in Aberdeenshire. In the room is a magazine dedicated to weddings. This, a eulogy to expensive popular culture, tells us a great deal about how the labour market evolves.

Many of the activities around modern weddings involved jobs which were either completely non-existent only a few decades ago, or only catered to a tiny number of ultra-rich individuals.

The adverts for venues, for example, usually stress that a dedicated wedding co-ordinator will be assigned to you during the planning stages. And a dedicated wedding events manager will ensure the day itself goes smoothly. Bridalwear experts can be hired to advise on the choice of costumes. People can, and do, pay substantial fees to be told that “if you plan to marry at the height of summer in Spain, a heavy material such as velvet is inadvisable”.

Special courses of dance lessons are available so that the bride and groom can perform a “full-on choreographed, fabulous first dance”. The potential activities around hen and stag events know no bounds. An adventure activity day is offered involving “Segways or zorbing”.

Specific fitness courses are offered to ensure that not only the bride and groom but their entire supporting cast look suitably “toned and sculpted”. Even your faithful pooch can be groomed for the occasion, and look glowing through consuming organic dog food. What a pity there was no advert for vegan canine sustenance.

This is a snapshot of how innovation impacts the economy. Technology enables a product or service to be provided more cheaply and at a higher quality.  Some people directly involved lose their jobs. But everyone else is made better off, and their extra spending creates entirely new types of jobs.

Paul Ormerod 

As published in City AM Wednesday 29th August 2017

Image by Pxhere used under CC0 attribution.
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How to stop tech hubs in urban hotspots from intensifying geographic inequalities

How to stop tech hubs in urban hotspots from intensifying geographic inequalities

Perhaps George Osborne’s most abiding legacy from his time as chancellor will be the creation of the concept of the Northern Powerhouse. Certainly Manchester, its principal focus, is booming.

The landscape of the centre is being altered dramatically by skyscrapers. Peel Holdings, the huge investment and property outfit, is planning to double the size of the development around Media City in the old docks, where the BBC was relocated. The airport, already the third busiest in the UK, is expanding.

All in all, it seems a triumph for modern capitalism. After decades of relative decline, a city is being transformed by private enterprise. But what is really going on?

In a piece this month in the MIT publication Technology Review, urban guru Richard Florida has picked up on a startling new trend in the location of new technology companies in the US.

In the 1980s, there were essentially no high tech companies in city locations. Instead, we had Intel and Apple in Silicon Valley, Microsoft in the Seattle suburbs, the Route 128 beltway outside Boston, and the corporate campuses of North Carolina’s Research Triangle.

Now, urban centres are rapidly becoming the places which attract technology companies. In 2016, the San Francisco metro area was top of the list for venture capital investment, attracting more than three times the amount of the iconic location of Silicon Valley. Google has taken over the old Port Authority building in Manhattan. Amazon’s headquarters are in downtown Seattle.

The impact of this new, high concentration of tech firms is to intensify geographic inequalities. As Florida puts it: “tech startups helped turn a handful of metro areas into megastars. Now, they’re tearing those cities apart.”

A relatively small number of urban areas in America, and within them a small number of neighbourhoods, are capturing all the benefits.

The same sort of thing seems to be going on in Greater Manchester. A few areas are soaring away and attracting wealth and talent. In 1981, fewer than 600 people lived in what the Council describes as “the heart of Manchester”. Now, over 50,000 do, almost all of them young graduates.

But the more traditional outlying boroughs of the city region, especially to the north and east, are struggling to capture any trickle down from this massive transformation. Indeed, they are at risk of losing out, as their young bright sparks are attracted by the life of the inner metropolis.

Richard Florida does not just identify the problem, he suggests some possible solutions. One of which is a programme of building lots of good housing in the outlying areas, supplemented by a top class public transport service. This would keep house prices down, and attract some of the people stuck in rabbit warrens in the urban centres.

Manchester already has a modern tram service. But the new Labour mayor, Andy Burnham, is resolutely opposed to building on the green belt just to the north and east of the city. Yet another example of the sanctimonious intentions of the Left serving to intensify, not reduce, inequality.

As published in City AM Thursday 29th June 2017

Image: Media City UK by Magnus D is licensed under CC by 2.0
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