Episode 99: Robots in Business w/ Martin Ford

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This is The WealthAbility® Show with Tom Wheelwright. Way more money, way less taxes.

Tom Wheelwright:

Welcome to the WealthAbility Show where we're always discovering how to make way more money and pay way less taxes. Hi, this is Tom Wheelwright, your host, founder, and CEO of WealthAbility. So, artificial intelligence is big in the news right now. People are worried about it. People like Elon Musk have warned about it. Bill Gates has warned about it. And I have to wonder, is this a huge… something to fear or is this something to embrace? Is this something that we can use in our business? Is this something that our jobs are going to go away? Exactly where, is AI going to take business and investing into the future? And today we have a very special guest Martin Ford who is one of the absolute worldwide experts on artificial intelligence just released a book “Rule of the Robots”. Martin, it is absolutely an honor and a privilege to have you on our show.

Martin Ford:

Well, thank you very much for having me.

Tom Wheelwright:

So if you don't mind, just give us a little of your background and how you got into the artificial intelligence base.

Martin Ford:

Okay. My background was in computer engineering and I worked as an engineer doing both hardware and software design. For many years, I ran a small software company but around 10 years ago or so, I began to notice even in my own business that I was running, the impact that these technologies were having. And in particular, I became interested in the potential impact on the workforce, on the potential for a lot of jobs to be automated. And that's when I wrote my first book on this subject and I've written now four books. One of which is comprised of interviews with some of the top people in the field but basically all the books focus on artificial intelligence and robotics and its impact on society and on the economy. And that's sort of the area that I've kind of focused on. And that of course has brought me to this point where I've just released Rule of the Robots: How artificial intelligence will transform everything, which is my most recent book.

Tom Wheelwright:

This is a fascinating topic to me. You know, you talk about jobs being eliminated and I'm a CPA. And I look at, and I want to talk about in a little bit about how blockchain and AI might work together, because I think blockchain also has the same potential impact on jobs. And so what do you see coming? I mean, just in a general feeling, is this something that is going to so disrupt society that there just aren't going to be many jobs or will it be like most transformational technologies or it just changes the type of jobs we do?

Martin Ford:

Well I think it's going to do both of those things. I'm certainly not arguing that AI is going to completely disrupt everything and everyone is going to be out of a job, at least not anytime in the foreseeable future. But really, the central thesis of my book is that AI is going to be almost like electricity in the sense that it's going to be everywhere. It's going to touch everything going to transform everything. And it's certainly not all negative. I mean, we tend to focus on the challenges that come with it, but there are going to be enormous positive impacts as well, and opportunities associated with artificial intelligence.

Martin Ford:

I think that in fact, it's going to be a technology that's indispensable to us in terms of meeting a lot of the challenges that we face. It's going to jumpstart innovation, scientific research, medical research, areas like this are going to get a huge boost from AI but at the same time, it's going to have a very real impact on the job market. And it comes coupled with other concerns as well. It's something that we need to embrace, but also have open eyes about the impact and adjust to those impacts.

Tom Wheelwright:

So when you think about how it impacts the job market and how many workers are needed. Where do you see the biggest impacts? In other words, where do you see where… For example in blockchain, I look at blockchain going. We are not going to have bookkeepers in five years. I seriously don't think we'll need bookkeepers because blockchain will take care of that. Where do you see AI having the biggest impact in? What sectors of the economy?

Martin Ford:

Right? It's not so much about sectors of the economy as it is the nature of the work.

Tom Wheelwright:

Got it.

Martin Ford:

The kinds of jobs that are going to be susceptible to automation within the relatively near future are those jobs that are fundamentally predictable, right? Where if you've got some kind of a job where you come to work and you're facing the same types of challenges again and again, not necessarily wrote repetitive, like standing on an assembly line, but just repetitive in the sense that you're leaving a trail of data that encapsulates what you're doing in that job and eventually a machine learning algorithm might come along and analyze that data and figure out how to do that job. And it's really important to note that it doesn't matter whether it's a blue collar job, working in a fast food restaurant, working in an Amazon warehouse, those are the kinds of jobs that we tend to associate with automation.

Martin Ford:

But in many cases, it's even easier to automate the white collar job, which is, you know, you mentioned bookkeepers or really anyone doing a repetitive quantitative analysis, even cranking out the same report again and again even if it involves writing. We've now got AI systems that are becoming very good at writing. And those systems are, for example, deployed by some of the largest media companies that they're essentially automating journalism in some areas. And you will read those and you won't be able to tell that it was written by a machine rather than a person. So it's going to be an extraordinarily powerful technology that I think is going to impact virtually every sector of the economy. And that's what makes it different from the kinds of disruptions that we've seen in the past, right?

Martin Ford:

I mean you will hear people say, for example, that well agriculture mechanized, right? And we lost millions of jobs in agriculture which is true. And it didn't create unemployment throughout the economy, right? And the reason of course is that there was then a rising manufacturing sector, which absorbed those workers. And later on, there was a rising service sector which absorbed workers but this time around what we're really going to see is an across the board impact. I mean there isn't any sector, any industry, any part of the economy that's not going to be touched by artificial intelligence. So I do think that we're probably going to see an unprecedented scenario at some point within the next decade or two.

Tom Wheelwright:

So there's a lot of talk about artificial intelligence and AI, could you break it down and really just kind of walk through so that the average…if you were to describe this to a six year old, okay? How would you describe AI and what does AI…basically, what does it do with data? What is it that allows it to so effectively learn.

Martin Ford:

Right. So artificial intelligence is you know quite simply what it sounds like. It is a machine taking on capabilities, solving problems, doing the kind of “thinking” that a human mind might do except that the technologies that we currently have are extremely narrow. I mean, machines can in a sense take on intellectual tasks. They can think, most importantly they can learn but in a very narrow way and very narrow domains. We don't have anything that yet comes close to the kind of broad based general intelligence that a person has or even your dog or your cat has. I mean that in itself is a form of general intelligence as well. Machines are much more narrowly focused in that they do very specific things. They can learn to do specific things, for example, to recognize faces, facial recognition, to translate languages. We've got systems that can do that. And in many cases, they are superhuman within that extremely narrow domain because they're fast.

Martin Ford:

Machine learning system has the ability to look at incomprehensible amounts of data, right? More data than any human being could ever begin to sift through let alone to assimilate. And based on that, it can learn and become extraordinarily proficient at doing very narrow things. And that's where it's being leveraged. So it's being…. these systems, because they have access to so much data and so much compute power, can learn to make predictions and so forth and analyze things in ways that human beings would not be able to do and that's where the power is coming from.

Tom Wheelwright:

Where do you see it from? I mean, let's take business for example. Okay. Cause a lot of our listeners are business owners, where do you see that kind of an application in a business setting? Where are businesses, business owners going to be able to do things that they can't do right now?

Martin Ford:

Well, it depends on the kind of business and the size of the business. At the moment, you know the businesses that are leveraging the most tend to be the larger businesses, right? That have access to lots of data. So it might be operational data coming from machines used by the business in a factory. And you can use artificial intelligence to analyze that and to improve operations. For example, Google uses artificial intelligence to manage the power usage within its cloud computing facilities because these are massive facilities with lots of data. You can do the same thing with financial data and so forth. So the businesses that are best positioned to use this right now tend to be those that have some scale on lots of data.

Tom Wheelwright:

Do you think it'll give us some predictability? So do you think it will actually be able to assimilate data and be able to predict what we ought to be doing in the future? Or do you think that will still need humans for that?

Martin Ford:

No. I mean, definitely prediction is one of the things that AI is best at but again within narrow domains. Not, sitting back and thinking holistically about the whole future of the world, but making very specific predictions. So for example, in the field of law, there are already systems that are beginning to do what previously only very experienced lawyers could do. For example, look at a court case and decide what's the likelihood this case is going to be appealed in the future? What's the likelihood that it will be over ruled? What's the likelihood that a particular legal contract might be breached in the future and so forth? And it's able to do that by looking at vast amounts of data of similar cases that have unfolded in the past. So in these kinds of applications, we're already seeing impact. Of course, you're talking about Wall street in investing. The big hedge funds have already got AI systems that are constantly looking at market data and predicting and even trading autonomously on that data. So it's definitely being leveraged in important ways.

Tom Wheelwright:

So what are you most concerned about when it comes to the Rule of the Robots? What causes you the biggest concern?

Martin Ford:

Well, the concern that I've been most focused on is the potential for a lot of jobs to disappear. And as I said before, we're primarily focusing on those kinds of jobs that are predictable, where someone is doing the same kinds of things again and again, but that kind of work probably is half of the workforce, right? And you know, most or at least half of the people in our workforce probably come to work and they do things that for the most part are predictable in this sense. So it's potentially a huge impact. We're talking about tens of millions of jobs just in the United States. And this is something that I think is going to unfold over the next decade or two. And it's going to put enormous pressure on our workforce because some people will adapt to this.

Martin Ford:

They will be able to transition into areas that are not susceptible to automation and that generally would be things like creative jobs, things where you're really thinking outside of the box, building something new, or it might be jobs that really require lots of interaction with other people. You know, building complex relationships with people. Again, this is something that machines are beginning to do, but it will be a long time before they can do that. And then a third area that's relatively safe are skilled trade type jobs like electricians, plumbers that require lots of mobility and dexterity and unpredictable environments. Cause we can't build a robot that can do that kind of job. That's still science fiction. So there are areas that are going to be relatively safe, but I think it's going to be very difficult for the huge number of impacted people to necessarily transition into those jobs. [crosstalk 00:13:00]

Tom Wheelwright:

Let me ask you this question. If you are a 16 year old right now, what area would you want to be going into to make sure that you are in a job of the future given where AI is going?

Martin Ford:

Right. I mean, I think one of the most important things is to focus on something that you genuinely are passionate about, that you enjoy because that's going to improve the chances that you're going to be very good at it. Because I mean, what we're going to see it's not just about occupations being impacted. It's about the jobs within occupations. I mean in the future, there will still be accountants, but a lot of the accounting work and the bookkeeping work as you've mentioned, is going to disappear but there still will be roles for people in that occupation and in that profession that are doing more creative things, that are working with clients, that are building relationships and so forth. Those are the kinds of jobs that are going to be safe. But if you are the person that is just sitting in front of a computer doing routine [crosstalk 00:13:55] of data and that's it, then you're definitely going to be vulnerable to automation. And relatively in the future, you want to avoid that kind of thing.

Tom Wheelwright:

You mentioned something earlier about the legal profession and research. I mean, a computer presumably can read all the court cases, right? We go in and do research on court cases and we'll catch whatever. Basically we're using computers now to help us do that research, but we can't assimilate all of it. And what I heard you saying is, well, look, the computer can assimilate so much information. They can actually come up with the amount of information and tell you, okay, here's what's going to happen. And here's the possible conclusion of this case.

Martin Ford:

Right, exactly. So if you want to be a lawyer, if you're a young person, you're thinking you would like to be a lawyer, you want to position yourself so you're working in a courtroom doing something dynamic, arguing cases, coming up with new legal strategies or working directly with clients to build relationships. You really don't want to position yourself so you're going to be the person sitting in front of a computer or used to be in the law library researching case law or analyzing the details of contracts and never really talking to people, just working with information because that's the kind of thing that is almost certainly going to be automated. So you want to stay away from that kind of focus and make sure that whatever occupation you're going into, whether it's law or accounting or business consulting or whatever that you're focused on really, the interpersonal aspects of it, the networking aspects of it, the creative aspects of it and so forth, because these are the areas that at least for the foreseeable future is going to be a lot harder to automate.

Tom Wheelwright:

Well, you're speaking my language. I've been telling accountants this for years that they're in grave danger of losing the 80% of what they do and that we need to start talking about looking at more creative things to do and being at but what I see from AI and I'd like your take on AI as it combines with blockchain, because blockchain is really the audit mechanism to make sure things are accurate. And when you combine those two together, what do you see will be the… what kind of tools do you think we're going to have in the business environment, in the future?

Martin Ford:

Well, I mean, it's hard to predict that but what I would say is that the nature of the blockchain of course is to make everything online, right? To put everything in a format where it's going to be accessible to artificial intelligence. So it'll be easier for AI to interface with that kind of a system than when you have things in many different formats in many different areas. So this is a little bit like what you see in China now. Not specifically with blockchain, but they have been kind of a first mover in mobile payments. So all the transactions that in many cases here in the West are actually offline are in most cases online there and there is data associated with those transactions and that makes it much more accessible to artificial intelligence. And this is one of the reasons that China is such a strong competitor with us that they have some advantages in terms of access to just vast amounts of data that can then be leveraged by these algorithms.

Tom Wheelwright:

Do you see it giving, for example, business owners tools where before they might have to spend even hundreds of thousands of dollars on consultants to give them data that now it will be at their fingertips and they'll have an analysis tool and then the accountant can, for example, could come in and analyze and say, okay, now here's what you can do next with it? Or do you think it will actually go beyond that, we will actually tell the business owner what they should do next?

Martin Ford:

Yeah. I mean, I think both of those are possible. And I think one thing as I said earlier. Right now, what you see is that the primary beneficiaries of this technology are large companies because they have lots of data and they also have the expertise to take advantage of it but that is going to change for sure. The tools are going to become much more accessible. Already, there are many artificial intelligence applications available in cloud computing, right? And most businesses, other businesses are leveraging that and those tools are going to get better and easier to use. So they'll deliver all kinds of capabilities, potential to automate work within your business, to automate a lot of these issues, to use these tools to make predictions, to analyze the data that you have and so forth. So I think it will be actually a boom to small businesses as well eventually to make them more efficient, to offer them more capability.

Martin Ford:

So it is very important for every business owner at every level to be familiar with this technology. Because I think within the next decade, as I said, it's going to be like electricity, right? And in the same sense, you wouldn't run a business that wasn't connected to the electrical grid, right? That would be, you know, suicidal right. In the same way, you're going to have to utilize the AI resources that are out there and they will become much more accessible and much more affordable and easier to deploy.

Tom Wheelwright:

Hey, if you like financial education, the way I do, you're going to love Buck Joffrey's podcast. Buck's a friend of mine, he is a client of mine, he is a former board certified surgeon and he has turned into a real estate professional. So he has this podcast that is geared towards high paid professionals, that's who he is geared towards. So if you're a high paid professional and you're going, look, I'd like to do something different with my money than what I'm doing. I'd like to get financially educated. I'd like to take control of my money and my life and my taxes, I would love to recommend Buck Joffrey's podcast, which is called Wealth Formula podcast with Buck Joffrey. I hope you join Buck on this adventure of a lifetime.

Tom Wheelwright:

So if you were to give people two or three ideas of things they ought to be looking for, things that they could be doing, first of course, I would suggest they read your book. And your books really, because I think you do have to understand what does this technology do? But what are two or three really practical things that people could do to learn about artificial intelligence and actually make use of it in their lives in a positive way?

Martin Ford:

Right? I mean, I think there are lots of resources online. Besides my book, you can look at my Twitter feed MFordFuture, and I'm also often tweeting the latest articles about AI and things like that. If you're interested in going further than that, there are online courses available for free. You can actually learn about the technology if you want to dive into the details. I'm not sure it's necessary for most people to go that far, but you definitely should keep up with it, understand the latest news in AI and how it's moving. And also the issues that we all need to be focused on. I've talked a lot about the potential for jobs to be automated and everyone needs to position themselves within their career I think to make sure that they're well adapted to that.

Martin Ford:

And then there are also a lot of other issues as well, that are important that I also discuss in the book. Issues around privacy, around the use of facial recognition, bias and algorithms. You know, we've seen there are companies using algorithms to screen resumes, for example, that have been biased on the basis of race or gender, things like this are really important issues for all of us, both within individual businesses and as society as a whole.

Martin Ford:

So I think that as good citizens, we definitely need to be aware of these issues as well because it's something that we're all going to need to have a sort of a conversation. As a society we're going to need to make trade offs. For example, about facial recognition. Do we want cameras everywhere, watching us, able to identify us? If we have that it might reduce crime, it might reduce the possibility of terrorism but it would mean giving up a lot of privacy. So that's the kind of thing that we all need to have a conversation about. And in order to engage in that, you really need to understand something about the technology. So I do think it's really important for everyone to sort of come up to speed.

Tom Wheelwright:

Thank you. So I have one final question. This is a rather specialized question, but I think you'll be able to address it. In the most recent budget reconciliation bill, there was a proposal for the government, for the IRS specifically to get data from banks on basically everybody's bank account. And my question is, how do you think the IRS could use that, not how they would use it, but how could they use it? How could they actually… They say they're thinking about, well, it could raise like 600 billion dollars. Outside of asking the accountants to kind of feed it back to them, do you see that as something that really is a viable use for either the states or the federal government to use from a tax policy standpoint?

Martin Ford:

Yeah. I mean there are definitely possibilities there. And I'm not sure to what extent. In that bill, they were proposing that the government would have direct access to data. I think it was something like the banks would have to report transactions more than $10,000 or something in order to find people receiving income that they weren't reporting. But theoretically, if the government really had access to all the transaction data and so forth, of course they could use that. I mean, one of the most important areas where you see AI machine learning use right now is in fraud detection, right? Companies like Visa, PayPal they have algorithms running constantly analyzing data to detect fraud. Right? It basically is a pattern recognition problem where you're looking for something unusual, right? Something that indicates fraud. So you can imagine the government doing something like that if they had access to all the data or you'd have algorithms running constantly looking for tax avoidance or anything criminal [crosstalk 00:24:15]

Tom Wheelwright:

So New York state actually uses… When they look at a convenience store, they look at how many lottery tickets were bought to determine how much income they should be reporting on from a sales tax standpoint. So how much, how many, what's their grocery seat outside of the lottery tickets? And they've been able to analyze that kind of data. And they actually do go after the convenience stores that are taking cash under the table, not reporting their income. So I found that to be fascinating. And that's been, they've been doing that for several years. So you see that accelerating.

Martin Ford:

Yeah. I would imagine that the IRS probably already uses machine learning algorithms on the data that they get from tax returns. Because you could look at the tax returns and find unusual things, patterns and flag returns for audit.

Tom Wheelwright:

Yeah. They've been doing that for years. Yeah.

Martin Ford:

Okay and certainly these technologies will make that a lot more efficient than what they did in the past.

Tom Wheelwright:

You know, Elon Musk and Bill Gates particularly talked about the moral standpoint of AI. And it's interesting how Elon must talk about it because he uses AI so much in his cars. Right? So what do you think should be the restrictions on it? What should it be used for? What shouldn't it be used for?

Martin Ford:

Well, I think AI definitely needs to be regulated in terms of specific applications. Right? So, if it's being used in medicine, of course, then the FDA will probably regulate it. If it's used in self-driving cars, then the department of transportation will be there too to regulate it. But there are other areas where it's sort of falling through the cracks. Like I mentioned, that you've had systems that screen resumes that could be biased. Even instances where systems are used in the court systems, in the criminal court systems and they've been shown to be biased. And there's no agency to regulate that. So I actually think that in the future, we may need a specific agency. Something like the FDA or the SCC specifically geared toward regulating applications of artificial intelligence in these areas where it's very high stakes.

Martin Ford:

But that doesn't mean I would say we want to regulate the technology itself or research into it because I think, again, this is an indispensable technology that we're going to need in order to solve problem like climate change, right? Because we need a lot of innovation in many areas to solve these problems, we definitely don't want to slow the advances down because we need that innovation and because that would definitely also put us at a disadvantage, for example, to China, right? Which is, we're really in a race.

Tom Wheelwright:

Right. They already use facial recognition everywhere.

Martin Ford:

Right, exactly. So, we need to regulate the specific applications of AI where concerns have arisen but we definitely need to embrace the technology itself. And at the same time, we need to find ways to adapt to the impact that's going to have on the job market.

Tom Wheelwright:

Awesome. Well, thank you, Martin Ford. The book is Rule the Robots: How artificial intelligence will transform everything. I'm a big believer in that. Big fan of yours Martin. And thank you so much again, if I got it right. mfordfuture.com?

Martin Ford:

Yeah.com and also on Twitter MFordFuture.

Tom Wheelwright:

Awesome. And thank you so much. And everybody remember that we really have to stay ahead on this technology because this is either going to be the worst thing in the world for us and put us out of work or it's going to be the best thing in the world for us. And when we actually take the advantages that this is going to produce for us, we're going to make way more money and pay way less tax. We'll see you next time. 

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