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Software is Crushing Cost of Living with AI

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The age of automation is upon us and machines are going to rule the world! Or… are they? Perhaps not, but Artificial Intelligence (AI) continues to surprise us in ever more complex endeavors. Not convinced? Check out how an AI learns a Nobel Prize experiment in just an hour:

 

 

Or how about Google’s DeepMind algorithm beating a Go master, you know, the game that includes more combinations of moves than there are atoms in the universe!

 

 

Experts believe this is going to change everything; it just might, and we at Wiredelta® are at least striving to play our part in automating web and mobile development with smart algorithms. But first, let’s look at how AI is revolutionizing the world we live in.

 

What is Artificial Intelligence?

According to Wikipedia, an “intelligent” machine is a flexible rational agent that perceives its environment and takes actions that maximize its chance of success at some goal. Putting it more simply, an AI resembles the human mind in activities like learning and problem-solving.

 

Surprisingly, the idea of an artificial object being able to think like a man dates back to antiquity! Even the ancient Greeks aspired to something that could bypass their ordinary means.

 

The Western world has been obsessed with AI ever since. In the 1990’s, AI began to be used for logistics, data mining, medical diagnosis and other areas. Nowadays, the improvements in deep learning (advanced statistical techniques), access to large amounts of data, and faster computers have made it possible to make huge steps forward in machine learning.

 

You may still be thinking of AI as something fictional that belongs mainly to movies; however artificial intelligence is not quite about robots ruling the world! All the progress made is already subtly introducing AI everywhere, radically changing our lives.

 

AI is taking on every aspect of our life

Although it may seem a thing of the future, AI is already present in our everyday life. Let’s take IBM’s AI called Watson as an example. The company has recently bought Merge Healthcare, which specializes in healthcare technology, and now IBM is using their database of pictures to make Watson learn about the human body.

 

As a result, in 2015 IBM launched Watson Health. This may lead to significant advances in illness diagnosis; Watson will be more accurate than even the best professionals in healthcare! Watson’s services have also been acquired by many businesses, which are willing to automate their operations.

 

 

AI is also present in our electronic devices. Microsoft’s Kinect, which provides a 3D body–motion interface for the Xbox 360 and the Xbox One, uses algorithms that emerged from lengthy AI researches. These algorithms are also used to power intelligent personal assistants like Siri, Google Now, and Cortana in our smartphones.

 

Moreover, a company called Yseop uses artificial intelligence to turn unstructured data into intelligent comments and recommendations in natural language. Yseop can write financial reports, executive summaries and more analyzing thousands of pages per second! Furthermore, as if it wasn’t impressive enough, Yseop’s AI can do that in different languages.

 

Besides Yseop, heavyweights like Google’s Natural Language Processing and Facebook’s fastText are open to third-party developers to use. It’s going to be interesting to see what incredible innovations will come out from third-party developers building on top of these API’s.

 

Lastly, you can find AI in services like web search or automatic translation between languages; these represent a high level of machine intelligence controlled by people. In an interview with the Financial Times, Google’s Larry Page states that “It’s learning from you and you’re learning from it”, adding that “In some sense, the internet is already that: it’s a combination of people and machine intelligence to make our lives better.”

 

So, what are some insights for the future? 

The possibilities are endless (heck, even turning photos into videos!); and we’re going to see more and more innovations like these in every field. In web development, AI is starting to make an impact. In the near future, a website or an app could be automatically built just by telling your computer what you want.

 

That would mean that a website could be able to build other websites by itself, without the user having any technical knowledge. In this way, you could start a business in a matter of minutes! This is what we at Wiredelta call “software building software”, and we are striving to bring this idea to life. The question many ask when humanity approaches full automation, even within software development, is what happens to income. There are a wealth of articles, like this one, about income. Here, however, we want to flip the coin and look at the costs instead.

 

Costs of living are going to plummet

Ok, AI is taking over our lives, but what is the economic impact of such a huge shift? Well, according to various sources, including the World Economic Forum and Larry Page, the acceleration of artificial intelligence will kill off millions of jobs in the near future!

 

While this cannot be ruled out, it’s also important to notice that such a huge shift will make production more efficient, and as a result prices significantly. Economists compare the development in AI to the time when the industrial revolution hit. Back then, machines took manual labor jobs and many were nervous that farmers would become unemployed and starve to death. That didn’t happen.

 

In this great post, Peter Diamandis explains how costs of living are supposedly expected to plummet in the next twenty years. This will happen thanks to the demonetization of the expenditure areas that take most of our incomes. According to him, “demonetization” means the ability of technology to take a product or service that was previously expensive and make it substantially cheaper or potentially free (in the extreme boundary condition). In other words, it basically means removing money from the equation through automation.

 

Demonetization has already started

A good example of how technology has demonetized a business is photography. In the golden Kodak years photography was really expensive; you had to buy a camera, new films, maintain the camera etc. Nowadays, prices in the photography sector are ridiculously low compared to what they used to be. Even better, your phone’s camera is completely free: no films, no lens to buy, no photographic rolls. It’s been completely demonetized! Thanks to this technological revolution, now virtually anyone can take pictures.  

 

In Diamandis’ book “Abundance”, a chart shows how $900,000 worth of products between 1969 and 1989 are available in your smartphone that you had to otherwise purchase separately. Quite a lot of money!

 

Actually, if you think about it, it makes sense; twenty years ago, people owned a camera, a video camera, a CD player, a stereo, a video game console, a mobile phone, a watch, an alarm clock, a set of encyclopaedias, a world atlas and a whole bunch of other assets that easily added up to more than $900,000. Today, all these objects that were an inextricable part of our life, are now free on our smartphones. For most of us, such products are so commonplace as they’re “free” parts of other products that we basically forgot that they once used to be very expensive.

 

 

Commentators will respond to the table above that cost of living is not driven by the smartphone market. They are correct, it’s just a fraction of our expenses. So let’s look at what we actually spend money on.

 

How we spend money

Surprisingly, how we spend our money today is pretty consistent regardless of where you are from. After all, there is more that connects than separates us, despite what politicians would like us to believe. An example is how we spend money in 2011 in three large economies: The United States, China, and India.

In the US, 33% of the average American income was spent on housing, followed by 16% spent on transportation, 12% spent on food, 6% on healthcare, and 5% on entertainment. Almost 75% of Americans’ expenditures come from housing, transportation, food, personal insurance, health, and entertainment.

In China, there is a similar breakdown—food, housing, transportation, and healthcare make up the majority of the expenditures. Interestingly, in China, consumers care significantly more about looking good and eating better than in the US—nearly half of consumer income goes to clothes and food.

In India, with a population of 1.2 billion people, expenditures on food, transportation, and miscellaneous goods and services are most prominent. Housing and healthcare represent a smaller portion of expenditures than in the US and India.

These differences likely represent cultural differences in each of the three very different countries—but overall, you see that the majority of expenditures are distributed in the same seven categories:

  1. Transportation
  2. Food
  3. Healthcare
  4. Housing
  5. Energy
  6. Education
  7. Entertainment

Let’s break down each one and see how AI is going to drive down cost within these categories.

1. Transportation

The automotive market is a trillion dollar market that is being demonetized, starting with recently IPOed Uber and Lyft that has driven the cost per mile down to $2-$3. But this is just the beginning. Tesla expects to roll out robotaxis in 2020, crushing cost per mile down to $0.18 or less!

If the past decade is any indication, other car manufacturers will follow Tesla and deploy their own self-driving cars. Uber and Lyft will have to respond accordingly, replacing drivers (their primary cost) with algorithms. This will increase competition and drive down cost per mile even further, eventually hitting zero. As a result, car ownership will not make financial sense, just like owning your own server to keep your website running doesn’t make any sense today.

Think about all of the related costs to car ownership that will disappear: auto insurance, auto repairs, parking, fuel, parking tickets. Your overall cost of getting around will be next to nothing.

2. Food

Diamandis states in his book Abundance that the cost of food has dropped thirteenfold over the past century. That reduction will continue. On top of that, we will learn how to efficiently produce food locally through vertical and urban farming. That is a big deal, because 70% of food’s retail price comes from transportation, storage and handling!

Also, as we make genetic and biological advances, we will learn how to increase crop yield, which will drive down cost even further. AI is going to drove most of these advances, helping tremendously by providing easy access to sophisticated algorithms that help farmers and citizens to optimize food production and even print food altogether.

 

3. Healthcare

Healthcare is roughly split into four major categories: (i) diagnostics, (ii) surgery, (iii) chronic care, and (iv) medicines, which all experience unprecedented levels of progress thanks to AI.

(i) Diagnostics: AI has already demonstrated the ability to diagnose cancer patients better than the best doctors, producing an image and diagnose pathology, looking at genomics data and draw conclusions, or sort through gigabytes of phenotypic data. All of this happening instantaneously, driving down the cost of diagnostics to the cost of electricity.

(ii) Surgery: In the near future, the best surgeons in the world will be robots, and they’ll be able to move with precision and image a surgical field in high magnification. The AI that powers these robotic surgeons can call upon a vast amount of data from millions of previous robotic surgeries, outperforming the most experienced human counterpart. Again, with the cost approaching zero.

(iii) Chronic care: Taking care of the old and the chronically ill will be done by robots. It is still uncertain how much a robot can imitate human interaction, but my guess is that there will always be the need for some human-to-human caregiving.

(iv) Medicines: Medicine will be discovered and manufactured more efficiently by AI and, perhaps in the near future, be compounded at home with the aid of a 3D printing machine. This kind of machine, or personal robot, can assemble your perfect medicines based on your needs and blood chemistries in that very moment.

Beyond the four areas of medicine, it’s also worth noting the price of genomics sequencing is plummeting at five times the rate of Moore’s Law. Accurate sequencing should allow us to predict which diseases you’re likely to develop and which drugs are of highest use to treat you. And yes, you probably guessed it, AI will be able to do that at scale in a breeze, decreasing the cost of both medical drugs but also the treatment that would otherwise have become critical at a later stage.

4. Housing

Think about what drives high housing costs. Why does a single-family apartment in Manhattan cost $15 million, while the same square footage on the outskirts of New York can be purchased for $150,000?

Location. Location. Location. People flock to high-density, desired areas near their jobs and near entertainment. This increases demand for central housing where supply hasn’t been able to keep up, despite building up towards the sky. As a result, prices have exploded.

Housing will demonetize due to three reasons: (i) Autonomous driving, (ii) VR, (iii) 3D printing. The first two will liberate us from moving to the city without making compromises. The last will allow us to build new housing at a dramatically faster pace and lower cost.

(i) Autonomous Driving: If your commute time is instead time to read, relax, sleep, watch a movie, have a meeting—does it really matter if your commute is an hour?

(ii) Virtual Reality: What happens when your workplace is actually a virtual office where your co-workers are avatars (that btw are becoming indistinguishable from reality)? Would it be necessary to live in the city if you can wake up, plug into your virtual workplace, and work as if you were physically in the office? This opens up all kinds of opportunities. Your virtual self could be powered by an AI that acts and decides like you, but only with your approval. This enables you to attend not just one but ten meetings at a time. You can have hundreds of conversations rather than one at the same time, and you will never feel like a bottleneck for the organisation you work for.

(iii) 3D Printing: A number of companies are now exploring how 3D printed structures and buildings can dramatically reduce the cost of construction and the amount of time it takes to build a building. For example, a company out of China, WinSun, is 3D printing entire apartment buildings. These 3D printers are powered by AI that has already proven capable of building new materials and more powerful structures than humans were able to before.

 

5. Energy

In an hour, five thousand times more energy hits the surface of the Earth from the Sun than all humanity uses in a year. Solar energy is abundant worldwide. Better yet, the poorest countries on Earth are the sunniest. Companies like Tesla are already deploying roof tiles that can capture solar energy so every household can produce their own energy. This is just one of many initiatives.

As of writing this, the cost of solar has dropped to ~$0.02 kWh. The cost of solar will continue to drop as material science advances (e.g. perovskite) with AI finding new ways to increase efficiencies.

 

6. Education

Education has already been demonetized in many aspects, as most of the information you’d learn in school is available online for free. Coursera, Khan Academy, and Ivy League universities like Harvard, MIT and Stanford have thousands of hours of high-quality material online, available to anyone with an Internet connection.

But this is just the beginning. Soon the best professors in the world will be AIs that know the exact abilities, needs, desires and knowledge of any one student, and teach a particular student exactly what he or she needs or wants to know.

Accordingly, the child of a billionaire or the child of a shoemaker will have access to the same superior education delivered by an AI, effectively for free, because guess what, whether the AI teacher has one student or a billion students, doesn’t really matter.

 

7. Entertainment & AI

Entertainment like video and gaming has historically required significant purchases of equipment and services.

Today, with the advent of YouTube, Netflix, Spotify and more, we’re seeing an explosion of channels and options for entertainment.

YouTube has over a billion users—almost one-third of all people on the Internet—and every day, people watch hundreds of millions of hours on YouTube and generate billions of views. All of this for free after the little 5 sec ad. Netflix and Spotify are subscription services that cost $10 to $20 per month, but in return give you access to an incredible amount of video and audio that would make your grandparents faint.

With easily accessible channels, the next hurdle is content, and here AI is crushing it. AI already started to spit out movies and music, dramatically cutting the cost creating entertaining content. This trend will follow, and most likely offer hyper-personalized content for each and every one of us.

 

Conclusion

It is safe to say that AI is an unstoppable revolution that will affect both our private and professional lives. This change will bring tremendous changes especially in the prices of most products, leading to a plunge of the costs of living.

 

Thankfully, Wiredelta is joining the automation party! The possibility of creating a website or app together with AI is going to be the next big leap in the industry. The most important question of all, however, is are you ready for this new AI revolution?

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