Economic models are changing. We must deal with it.


During this presidential primary voters are most interested in jobs and the economy. Candidates are discussing “plans” to “bring jobs back to America.” However, we are moving in an economic direction no one ever anticipated. None of the candidates is discussing the amazing changes that are occurring. The future won’t look anything like the past.

Let’s look at a few examples. Which company is the largest taxi company in the world? The answer is Uber. They do not own a single taxi cab! Which company is the largest hotelier in the word? The answer is Airbnb. They do not own a single hotel room! While Amazon.com isn’t the world’s largest retailer, it is bigger than Home Depot and Target and is far and away the fastest growing retailer. They do not own a single store!

[Source: Into the future… By Udo Gollub at Messe Berlin]

I am a radiologist. The company that spent the most time “lobbying” me was Kodak. When I became a radiologist every image was recorded on photographic film that was processed by large film developers both of which were supplied by Kodak. In 1998, Kodak had 170,000 employees and sold 85% of all photo film and developing paper worldwide. Within just a few years, their business model disappeared and they went bankrupt. Did you think in 1998 that 3 years later you would never take pictures on paper film again? Do you remember the Simon and Garfunkle smash hit, Kodachrome? The youth of America would stare at you in confusion if you even uttered the word Kodachrome.

I have said many times in my posts that I believe in creative destruction. Creative destruction is a process through which something new brings about the demise of whatever existed before it. The term is used in a variety of areas including economics, corporate governance, product development, technology and marketing. While this is a good thing, we need to be prepared for its ramifications.

[From the Gollub/Berlin article – I have changed the sequence in the article and edited to some degree] What happened to Kodak will happen in a lot of industries in the next 10 years – and most people don’t see it coming…

It will now happen with Artificial Intelligence… autonomous and electric cars… 3D printing… and jobs. Welcome to the 4th Industrial Revolution… (and) the Exponential Age. 

It is the “exponential age” for which we must prepare. It is extremely difficult for the human brain to grasp the power of exponential growth. This will be evident in the development of artificial intelligence. When it happens it will be so fast there will be NO TIME TO ADAPT!

Autonomous cars: In 2018 the first self driving cars will appear for the public. Around 2020, the automobile industry will start to be disrupted. You don’t want to own a car anymore. You will call a car with your phone, it will show up at your location and drive you to your destination. You will not need to park it, you only pay for the driven distance and can be productive while driving. Our kids will never get a driver’s license and will never own a car. It will change the cities, because we will need 90-95% fewer cars… (We) will save a million lives each year (worldwide).

Plan for a lot of car companies to go bankrupt! The same is true for automobile insurance companies. Without accidents, the insurance will become many times cheaper. Their car insurance business model will disappear. Good. NO MORE GIEKO COMMERCIALS! I hate that gecko!

3D printing: The price of the cheapest 3D printer came down from $18,000 to $400 in just 10 years. In the same time, it became 100 times faster. All major shoe companies started 3D printing shoes… In China, they already 3D printed a complete 6-story office building. By 2027, 10% of everything that’s being produced will be 3D printed.

However, the truly unfathomable change will be through artificial intelligence.

Artificial Intelligence: Computers become exponentially better in understanding the world. This year, a computer beat the best Go player in the world, 10 years earlier than expected. In the US, young lawyers already don’t get jobs. Because of IBM Watson, you can get legal advice (so far for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans. So if you study law, stop immediately. There will be 90% fewer lawyers in the future. Only specialists will remain.

It would behoove you to read the two part article referenced in the footnote. The exponential growth of artificial intelligence is difficult to comprehend, because exponential growth is so rapid humans cannot grasp the reality of it. While current artificial intelligence is functioning at the level of a mouse brain, within 30-40 years it will function at a low level of human brain intelligence. But, let’s say it reaches the level of a four-year-old child at 10 AM. By 10 PM it will have an IQ of 12,000. It will be GOD! There will never be a need for another “invention.” The only question for us will be: Nice God! Evil God!

Roy Filly

Footnote: And thanks to CPF for sending this to me. You are well advised to read both articles in their entirety.

An Intelligence Explosion

AI Caliber 1) Artificial Narrow Intelligence (ANI): Sometimes referred to as Weak AI, Artificial Narrow Intelligence is AI that specializes in one area. There’s AI that can beat the world chess champion in chess, but that’s the only thing it does. Ask it to figure out a better way to store data on a hard drive, and it’ll look at you blankly.

AI Caliber 2) Artificial General Intelligence (AGI): Sometimes referred to as Strong AI, or Human-Level AI, Artificial General Intelligence refers to a computer that is as smart as a human across the board—a machine that can perform any intellectual task that a human being can. Creating AGI is a much harder task than creating ANI, and we’re yet to do it. Professor Linda Gottfredson describes intelligence as “a very general mental capability that, among other things, involves the ability to reason, plan, solve problems, think abstractly, comprehend complex ideas, learn quickly, and learn from experience.” AGI would be able to do all of those things as easily as you can.

AI Caliber 3) Artificial Superintelligence (ASI): Oxford philosopher and leading AI thinker Nick Bostrom defines superintelligence as “an intellect that is much smarter than the best human brains in practically every field, including scientific creativity, general wisdom and social skills.” Artificial Superintelligence ranges from a computer that’s just a little smarter than a human to one that’s trillions of times smarter—across the board. ASI is the reason the topic of AI is such a spicy meatball and why the words “immortality” and “extinction” will both appear in these posts multiple times.

… I want to pause here to remind you that every single thing I’m going to say is real—real science and real forecasts of the future from a large array of the most respected thinkers and scientists. Just keep remembering that…

There is some debate about how soon AI will reach human-level general intelligence. The median year on a survey of hundreds of scientists about when they believed we’d be more likely than not to have reached AGI was 2040—that’s only 25 years from now, which doesn’t sound that huge until you consider that many of the thinkers in this field think it’s likely that the progression from AGI to ASI happens very quickly. Like—this could happen:

It takes decades for the first AI system to reach low-level general intelligence, but it finally happens. A computer is able to understand the world around it as well as a human four-year-old. Suddenly, within an hour of hitting that milestone, the system pumps out the grand theory of physics that unifies general relativity and quantum mechanics, something no human has been able to definitively do. 90 minutes after that, the AI has become an ASI, 170,000 times more intelligent than a human.

Superintelligence of that magnitude is not something we can remotely grasp, any more than a bumblebee can wrap its head around Keynesian Economics. In our world, smart means a 130 IQ and stupid means an 85 IQ—we don’t have a word for an IQ of 12,952.

What we do know is that humans’ utter dominance on this Earth suggests a clear rule: with intelligence comes power. Which means an ASI, when we create it, will be the most powerful being in the history of life on Earth, and all living things, including humans, will be entirely at its whim—and this might happen in the next few decades.

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About Roy Filly

Please read my first blog in which I describe myself and my goals.
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8 Responses to Economic models are changing. We must deal with it.

  1. Pat says:

    Yikes! Terminator 3 is nearly upon us! Perhaps in our arrogance, ignoring the true God in exchange for mere human achievement, we deserve the slavery such a world will foist upon us.
    And part of this New World is currently in process for radiologists. Watson, via IBM, is currently gathering millions of medical images and reports, refining them for accuracy and compiling a data base to be able to eventually scan a MRI or CT exam and instantly give a more precise and accurate report than the best radiologist! Be prepared!

  2. starchild says:

    Roy – The near future could indeed be unimaginably different. I am optimistic, because I believe entities vastly more intelligent than humans will also be vastly more aware and empathetic. The transition could be tricky though.

    Do you have a link for the story about the 3D printing of a 6-story building in China?

  3. Roxanne A. says:

    Artificial intelligence puts great responsibility on the creators of it to use it wisely. Problem is, there are some who won’t use it wisely, and I can’t see how we can keep those types from getting it. Better hope they can colonize Mars before AI is where they think it will be, as a refuge from some man-caused disaster.

  4. Doug Mayfield says:

    Thanks for a very interesting article. Since I live in Los Angeles, I definitely look forward to ubiquitous self drive vehicles and the possibility that they will reduce the total number of cars on the road.

    But since rush hour is what it is (the simultaneous demand for transport), I wonder if the reduction in cars will be of the order of magnitude of 90-95%. On the other hand, perhaps the computer driven ‘work at home’ revolution will also contribute to a reduction in people on the road. And I have to admit that in Los Angeles, on certain freeways, we have a sort of ’24-7′ rush hour, so anything which helps will be welcome.

    And while I value any intelligence, including artificial, I don’t think that IQ measures creativity so while computers may be become ‘super-adept’ at those skills which IQ measures (pattern recognition, word choice, etc.), I admit a certain skepticism toward the concept of a ‘super race’ of computers.

  5. lucklucky says:

    “You don’t want to own a car anymore.”

    I could reply with: You don’t understand humans…

    Humans are different. Humans do not live only in mega cities. Humans have relationships with their cars.

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