JULY 2019

Takeaways from the Aspen Ideas Festival: Next New World Order and Economic Progress, Part I

Category: Managing Directors, Portfolio Management, Senior Management

By Doug Cohen, Managing Director, Portfolio Management

I had the privilege of attending the 2019 Aspen Ideas Festival in late June, a gathering place for scientists, artists, politicians, historians, educators, activists, and other deep thinkers to present, debate, and discuss some of the most important and fascinating ideas and issues of our time. The sessions generally touched on two broad topics: American Renewal and the Next World Order and Economic Progress.

As we noted after last year’s festival, a former professor of mine at Harvard Business School used to say that you will almost always be well ahead of the pack if you can distill any given class or presentation into three key takeaways—as well as one important issue that went unaddressed. Along those lines, here is Part I of my key observations from the speakers of the most interesting sessions that I attended on the themes of the Next New World Order and Economic Progress. Part II can be read here and Part III here.

My observations and takeaways from sessions on the theme of American Renewal can be found here.

Thinking Machines and the Future of Humanity

Amy WebbQuantitative Futurist, professor of strategic foresight at NYU Stern School of Business, and founder of the Future Today Institute

1) Webb highlighted a global race between China and the US to lead in Artificial Intelligence. The Chinese model emphasizes government collaboration in conjunction with key companies, notably Baidu, Tencent and Alibaba. The US model emphasizes the private sector, notably Alphabet, Microsoft, Amazon, Facebook, IBM, and Apple. The US model emphasizes speed over “safety” and can lead to conflict with the government, something that is not a major factor in China. On balance, she believes the AI revolution is an explosion in slow motion—a 5 to 7-decade journey that that will ultimately result in giant leaps from say to contemporary spam filter to true Artificial General Intelligence (AGI) where a machine has the capacity to understand or learn intellectual tasks much as a human can (something that is already starting to take root).

2) The amount of information being analyzed continues to grow exponentially. Amazon’s Alexa (for example) will soon know your emotional state based on the tone of your voice, whether you are coughing, if you are grumpy, etc. The privacy issues related to the use of all this data are still uncertain. The US government did not anticipate this kind of progress and there is no clear regulation around much of it. We only respond to events, we rarely anticipate them. Indeed, the ambiguity of what is permissible has started to slow US companies down whereas the Chinese are not similarly encumbered.

3) Although there are many logistical challenges to overcome, including those who could game the system, the US may well consider “data dividend” oriented approaches where users who agree to share data receive some form of renumeration. This approach could mitigate some of the long-feared job reductions from AI. Still, there is no question that many traditional white color jobs are at risk, ranging from accountants to consultants to lawyers. Factually, most of the AI work is being done by white men, which Webb believes could be leading to unintended biases. She also believes that too much attention to coding and the like in primary school may end up being counterproductive—that students should be taught to learn how to think first. The challenge of democracy is that we have a government where the key players are constantly coming and going. This has contributed to the lack of dialogue and often ineffective relationship between the US government and the IT companies at the leading edge of AI. The Chinese may well move well ahead of the US if the current trends continue.

--A key question that was not addressed: “What are the key challenges that the Chinese face in trying to consolidate their AI efforts in a public/corporate model?”

China's Next Chapter

Leta Hong FincherA scholar and journalist, her book, Betraying Big Brother: The Feminist Awakening in China, was named one of the best books of 2018 by Vanity Fair, Newsweek, and others

Zak Dychtwald29-year-old CEO of Young China Group, a think tank and consultancy focusing on China’s emerging identity on the world stage and the evolving East and West millennial mindset

Yang LanOne of Forbes’ World’s 100 Most Powerful Women, co-founder and chairperson of Sun Media Group and Sun Culture Foundation, and Her Village Academy

1) This session focused on how the younger generation of Chinese see themselves and their country’s future development. Yang highlighted the dramatic increase in female entrepreneurs in China, many of whom are capitalizing on the rapid increase in domestic consumer spending (including exponential increases in cashless transactions) and the increased prominence of brands that were created in China. Over 70% of Chinese women are now working (“a higher percentage than French men”) and fully half of Chinese college graduates are women. 35% of on-line start-ups are founded by women and Chinese women generally work the longest hours in the world. There is no question though that many Chinese women face discrimination and often have less access to capital. Relatively few women are choosing to have a second child, as is now permitted. Many women believe that a second child would create additional competition for their first child and reduce their ability to succeed in their work lives.

2) Dychtwald highlighted the dramatic growth in spending power from Chinese under the age of 30. In their lifetime (dating back to 1990), this generation has seen US GDP per capita grow by 2.5x in the US but 27x in China. He believes this is the first generation that has enough cultural identity to incorporate more Western values and that griping about the government is common. Many students still travel abroad for college and they tend to bring back an appreciation for elements of freedom they did not previously enjoyed. Along those lines, domestic surveillance has increased over the past few years. At the same time, many see some of the economic challenges that have afflicted those in the west (including protests against Trump, Macron and Brexit) and believe that China has a strong (but far from perfect) balance. They are proud of what China has accomplished.

3) Hong Fincher focused on elements of significant gender inequality within China, which she attributes to discrimination. The arrest of five female activists who passed out stickers to commemorate International Women’s Day in 2015 was a key turning point that to date has backfired on the government. The feminist movement has gained significant strength over the past three years even after the protestors were released and a #MeToo movement has blossomed. She believes the Chinese government has implemented several laws to help protect women, but that they are very often not enforced.

--A key question that was not addressed: “How would the current younger generation respond to a sustained economic downturn, something they have never experienced but is seemingly inevitable?”

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