Rabobank: Sorry, But It’s The “Rise Of The Machines”
By Michael Every of Rabobank
Machine-learning. One hears a lot about it today, perhaps partly because humans don’t learn.
British PM Johnson gave an emotional speech last night to say “Sorry” that 100,000 people have died from Covid-19 there. As was stated here since this crisis began, the fact we cannot go round the corner to see mum and dad is because utopian neoliberalism and the WHO insisted we had to keep international travel open “because markets”. A year later, and the UK is *still* struggling to impose 14-day hotel quarantine for all inbound travel, even as new virus strains that might undo the good work of vaccines are spreading like the original version did in 2020. The UK even admits insisting on quarantine for arrivals from just some locations will see people fly via third countries instead. No human learning going on at all.
In New Zealand, which has been very effective in dealing with Covid because of quarantine, other learning short-falls are evident. Anyone who has lived Down Under knows about Aussie-Kiwi sporting rivalry, and the deep cultural and historical connections between the two. Well, NZ decided to celebrate Australia Day by deepening its free-trade agreement with China. This was despite how China is treating Australia on trade (see this pithy commentary from Oz); that this is something which could happen to NZ too if it ever runs a domestic/foreign policy China does not like; despite President Biden’s desire for the West to stand as one; and the PLA Navy set to exercise in the Gulf of Tonkin off Vietnam (anyone remember that name?). Presumably NZ looked at the EU and thought “Strategic autonomy: good as gold!” This is a huge win for China geostrategically and geopolitically: the economics are largely irrelevant to it.
The IMF just upgraded its global growth forecast for 2021(!) even as much of Europe is going into deeper lockdown and new virus strains raise questions over when things can get back to normal – unless the quarantine policy BoJo and the IMF want to avoid are embraced. Presumably this is due to the bureaucratic pipeline involved in producing the IMF update. It reflects what humans were thinking a few months back – and should be traded that way. Indeed, it coincides with comments from a PBOC advisor that actions need to be taken to prevent market bubbles (too late!) and that local government debt should be capped –which means real, biting fiscal tightening going forwards– even if it means lower GDP growth targets. Let’s add them to no US fiscal stimulus until March, and a smaller one than hoped for, shall we?
Of course, in markets there have been more and more rapid-response ‘algos’ and ‘bots’ trading for a while now: has that improved things? Critics say no, with good reason, looking at self-reinforcing spirals higher and lower triggered by machines that can’t read either nuanced headlines or fundamentals. Proponents would say yes, while counting their cash in this great global upwards spiral. Certainly when one sees the major US market narrative of the last 24 hours has been a horde of stuck-at-home millennial day-traders using Reddit to coordinate an attack on a hedge fund short of a particular stock (that does….actually, who cares what it does?); with Elon Musk in the mix for giggles; and that the IMF and central banks seem to think this is what a “Builders’ Bums Better” policy looks like, as the financial media just nod along too, then one cannot think that perhaps, yes, an artificial intelligence could do a better job of running the world.
On the other hand, let’s keep humans around, eh? The Guardian reports: “US has ‘moral imperative’ to develop AI weapons, says panel”, as a team of American experts argue it is preferable to develop AI war-machines in order to “make fewer mistakes and lead to fewer human casualties.” Of course, this depends on the “morals” of the war: think of Colonel Kurtz in ‘Apocalypse Now’ and his speech on the ban on swear-words painted on the planes dropping napalm on children; on the quality of data – Garbage In, Carnage Out; and on the opponent – if they know what your algo will tell you to do ‘morally’ then they can plan to do something devastating that works around it, which already happens today when stupid humans run wars. It also depends on the system being stable. Can you imagine getting The Blue Screen of Death in a major battle? And will the computer at least say “Sorry” afterwards? Yet before we have to worry about sending someone back in time to kill the mothers of the people on this panel, they have apparently decided that only a human will be allowed to fire nuclear weapons. So no need to ask “Would you like to play a game?” Those can continue to be played elsewhere, however.
Yet there may be a solution other than Global Thermonuclear War. Axios reports Big Tech bigwigs are calling on President Biden to support a US-China tech “bifurcation” to avoid escalation and confrontation. As the story goes, this “felt radical three years ago…but now the strategy has growing bipartisan and even industry support.” This lobby group claims that tech competition is asymmetric, as “China plays by a different set of rules that allow it to benefit from corporate espionage, illiberal surveillance, and a blurry line between its public and private sector,” and that “some degree of disentangling is both inevitable and preferable,” because the alternative to bifurcation is a world in which China’s non-democratic norms have “won.“
Their proposed solutions include:
- The creation of a US national tech analysis and forecasting centre;
- Investing in domestic infrastructure and “ally-centric production,” meaning new supply chains;
- Improving education and letting immigration ensure a strong supply of highly skilled labour;
- Government redesign to guide a “new era of technological statecraft.”; and
- An alliance of democracies called the “T-12” to coordinate responses to tech competition, an “International Technology Finance Corporation,” and the creation of “multilateral trust zones” where integration can be safely achieved.
Where, pray tell, does this place countries like New Zealand, which is about to deepen its pre-existing economic reliance on China? Where does it leave the EU and its aim for “strategic autonomy”? Consider that this is all analogous to the virus quarantine they can’t get right in the UK: how do you ensure tech does not flow in or out through third parties? A solid “Berlin Wall” and spheres of influence would be needed, and there would likely be no room for “strategic autonomy” third-parties as anything other than consumers, not producers – and perhaps not even then if one looks at the Huawei issue.
In short, which states, which sectors, and which firms would be bifurcated by this proposed global bifurcation? Moreover, what happens if *currency* soon becomes part of the issue if/when central banks make their payments systems part of the larger tech infrastructure? That’ll learn those who don’t want to think about these kind of bigger picture issues.
…but for now back to those Reddit hordes.
Wed, 01/27/2021 – 10:05