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AI needs all of us

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There’s no way I can be unbiased about Verity Harding’s new book AI Needs You: How we can change AI’s future and save our own, given that it began with a workshop Verity convened and the Bennett Institute hosted in Cambridge a few years ago. The idea – quite some time before the current wave of AI hype, hope and fear – was to reflect on how previous emerging disruptive technologies had come to be governed. After some debate we settled on space, embryology, and ICANN (the internet domain naming body), as between them these seemed to echo some of the issues regarding AI.

These discussions set the scene for Verity’s research into the detailed history of governance in each of these cases, and the outcome is a fascinating book that describes each in turn and reflects on the lessons for us now. The overall message is that the governance and use of technology in the public interest, for the public good, is possible. There is no technological determinism, nor any trade-off between public benefit and private innovation. The ‘Silicon Valley’ zeitgeist of inevitability, the idea that the tech is irresistible and society’s task is to leave its management to the experts, is false.

The implication of this – and hence the book’s title – is that: “Understanding that technology – how it gets built, why, and by whom – is critical for anyone interested in the future of our society.” And hence the ‘Needs You’ in the title. How AI develops, what it is used for an how – these are political questions requiring engaged citizens. This is why the historical examples are so fascinating, revealing as they do the messy practicalities and contingency of citizen engagement, political debate, quiet lobbying, co-ordination efforts, events and sheer luck. The embryology example is a case in point: the legislation in the UK was based on the hard work of the Warnock Commission, its engagement with citizens, tireless efforts to explain science; but also on years of political debate and a key decision by Mrs Thatcher about its Parliamentary progress. The resulting legislation has since stood the test of time and also set an ethical and regulatory framework for other countries too. The lesson is that the governance of AI will not be shaped by clever people designing it, but as the outcome of political and social forces.

The book is beautifully written and a gripping read (more than you might expect for a book about regulating technology). There are quite a few new books on AI out this spring, and there are others I’ve read in proof that are also excellent; but this will definitely be one of the ones that stands the test of time. Not for nothing did Time magazine name Verity as one of the 100 most influential people in AI. She is now leading a Bennett Institute Macarthur Foundation-funded project on the geopolitics of AI. I’ll be in conversation with her at Waterstones in Cambridge on 14th March.

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Translation

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Translating Myself and Others by Jhumpa Lahiri was a left-field choice for me, a book of essays about writing in English and then Italian and translating her own texts – and those of others. But I enjoyed it, not least because it made me think about the English-to-English translation needed in inter-disciplinary work. We use the same word for subtly or even significantly different concepts. Capital is an obvious example, but also discounting, efficiency, optimization, rational and many others. The first stage of any project with people from other backgrounds is a translation stage. Hard work, but also so satisfying when there are moments of illumination of how other people think about a common question.

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Markets won’t save humanity

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In his series of books (Banking Across Boundaries, Rentier Capitalism, The New Enclosure, Our Lives in Their Portfolios) Brett Christophers has provided a forensic analysis of the fundamental plumbing of the global and (especially) UK economy. For example, the first of these identified the statistical construct of ‘financial intermediation services indirectly measured’ (FISIM) as an artefact inflating the apparent contribution of the financial sector to the economy and thus enhancing its political lobbying power. He was the first researcher to point out this consequence (and is cited in my GDP book). Our Lives in Their Portfolios assembles evidence on the scale and scope of private equity ownership of assets in the US and UK, and the adverse consequences for the ability of key infrastructure to provide continuing services.

He continues this grand project of analytically dissecting the neoliberal economic order (even before it has entirely died) – at its most extreme in the UK – in his new book, The Price is Wrong: Why Capitalism Won’t Save the Planet. The book is a persuasive assault on the idea that renewable energy generation has become cheap enough that capitalist self-interest will ensure the green transition without continuing government subsidy and regulation. The analysis has three key points.

First, as the legacy industry fossil fuel generation has high sunk costs and low investment needs, whereas renewables need upfront financial investment as high fixed and low marginal cost generators. Second, the once vertically-integrated electricity business now has a separate wholesale market into which generators sell power, so investors in renewables need to earn their return from selling electricity to the grid. Third, the habit (it seems to be no more) of pricing wholesale electricity at the highest marginal cost makes the potential return to renewables investment dependent on highly volatile prices. Without either feed-in-tariffs or contracts-for-difference to reduce the volatility, a more important purpose than subsidising the renewables generators, it is hard for the rate of return calculation to stack up.

The book has a lot of fascinating detail about the structure of electricity markets, in India China and elsewhere as well as the US, UK and EU. Other design details matter. For example, it matters who bears the cost of connecting new generators to the grid – if it is they themselves rather than spreading the cost over the industry, that is another obstacle to investors earning an adequate return on wind or solar. For wind and solar farms are generally located where land is cheap and the power has to get to where people live, but land is expensive.

All these factors mean that the data point underlying the claim that renewable energy is cheap enough for the market to deliver the energy transition is misleading. This is the ‘levellized cost of energy’ (LCOE) or average net present cost of electricity generation for a generator over its lifetime. Although their zero marginal cost (because the fuel is free) makes renewables attractive on this measure, it ignores the hurdle of the initial and separate calculation of the expected rate of return on the investment in generating capacity. A wind turbine is cheap to operate but costly to install – so how will the developer doing the installation make a profit?

The message I take away is the need to be super-careful about market design in energy. These are state-organised markets (as indeed are all, but even more so in this case). The detail sometimes swamps the thread of the argument, but I’d commend The Price is Wrong to anybody interested in energy transition, and in more broadly in the dysfunctions of modern capitalism.

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A supply-side prime minister

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It’s outside my usual territory but I enjoyed reading Harold Wilson: The Winner by Nick Thomas-Symonds. It’s an unashamedly positive biography of a Prime Minister of my childhood and teenage years, when my main awareness of him was the rather affectionate mimicry by comedian Mike Yarwood. One of the book’s key arguments is that Wilson deserves credit for keeping Britain out of the Vietnam War without falling out too badly with President Johnson.

The economics was more interesting to me. Wilson was an economist who had started out (before the 2nd World War took him into public service and then politics) as an Oxford don. So by academic measures he was a very good economist. Yet he’s associated with the devaluation of sterling and the UK’s postwar balance of payments problems and relative economic decline. On the other hand, he was an advocate of research and innovation (the ‘white heat of technological revolution’ speech), created a separate (from the Treasury) Department of Economic Affairs – as many advocate now – and was a pragmatic nationaliser and believer in active industrial policy (ditto). He thought as much about the supply side as demand management.

Any of the PMs of the pre-2010 past look like titans compared to their more recent successors. What’s also striking is the general calibre of their cabinets and advisors. Wilson had politicians like Denis Healey, Jim Callaghan, Barbara Castle, Richard Crossman and Tony Benn around him, substantial people with much experience outside parliament, intellectual depth, and cultural hinterlands. I wonder what the Wilson Cabinet elected in October 1964 would make of 2024?

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Be happy: think about the Nash Equilibrium

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I loved Kaushik Basu’s new book, Reason to be Happy: Why logical thinking is the key to a better life. Mind you, I love most everything he writes. It’s always incredibly thought-provoking. His Republic of Beliefs is one of the books I recommend to almost everyone.

Reason to be Happy is not so much about logical thinking, although a constant theme is the advice not to waste emotional energy on things one can’t influence. I’d have used the word ‘strategic’ rather than ‘logical’. The book is an accessible and highly readable guide to using game theory both in personal or business life, and in policy. It has always amazed me how unstrategic so many people are, in the simple sense of not thinking about how other people will react to an action or statement. This is just as true of policymakers in government as business executives. Policy effectiveness would improve enormously from applying a game theoretic perspective at least as much as from behavioural insights. (I remember once in a meeting *of economists* pointing out that a certain set of decisions around the EU was the Nash equilibrium so why would we choose another course of action in the UK, and jaws around the table dropped. We chose the equilibrium strategy…)

Anyway, Reason to be Happy makes the practical sense of game theory very clear and gives loads of examples of games modelling situations in life. It also has a strong philosophical thread running through it, a kind of stoicism that the author describes as ‘determinism’. I particularly liked two sections. One describes how collective outcomes can deliver worse results for ‘bystanders’ to the game (such as future generations in the context of environmental impacts) even when some or even all of the players have highly moral motivations. This is due to each player’s payoffs and therefore strategies being altered when other players internalise the payoffs of the bystanders. The book labels this ‘Greta’s Dilemma’: moral intentions do not always lead to moral outcomes. The book also describes the obverse, ‘guilt shelters’, complex decision structures that enable individuals to avoid responsibility for bad outcomes; we are all too familiar with this in the case of corporations. (See also the excellent forthcoming book by Dan Davies, The Unaccountability Machine).

The other section I would pick out here in Reason to Be Happy is the one on the paradox that non-rational behaviour can be rational: the example here is labelled ‘the Traveller’s Dilemma’. Two travellers ask their airline for compensation for damage to an identical item. The airline proposes that each writes down a number between 2 and 100 as their estimate of its value. If they choose different numbers, the one with the lower figure gets that amount plus $2 and the other gets the same figure minus $2. The Nash equilibrium is that each writes down $2, assuming that each knows the other is rational: if one were to write $100, they could reason that claiming $99 instead would give them $101. But the other will know this and undercut them with $98 – and so on back to $2. Now, it is easy to see this is not in fact rational and that both players will see this. “The paradox in the reasoning remains unresolved,” Basu writes. I first came across something similar in Ariel Rubinstein’s wonderful Economic Fables. I suspect the resolution lies in the ambiguity of the word ‘rational’: formal logic versus contextual sense-making.

Reason to Be Happy is a lovely read. Its author points out in can be dipped into in chapter-sized chunks. It won’t turn its readers into stoics (or determinists) but might well spread strategic thinking.

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