First there was Davos Man and then Davos Woman. Get ready for Davos Robot.
Facebook’s Sheryl Sandberg, JPMorgan Chase’s Jamie Dimon and Alibaba’s Jack Ma will share the spotlight with a prize-winning South Korean robot called HUBO at the annual meeting of the World Economic Forum this week in the Swiss ski resort. It’s a presence they’ll have to get used to.
The adult-sized automaton, which can climb stairs and enter and exit a car, will be a star attraction at the conference. It illustrates a looming challenge for the 2,500 elite delegates: How to protect their companies and jobs by harnessing advances in artificial intelligence and robotics, without exacerbating the economic frustration and populist discord spreading around the globe.
“If some of the predictions about tech and employment come true, then we should all be worried,” said Alan Winfield, a professor specializing in robotics at the University of the West of England, who will be speaking in Davos. “There need to be solutions.”
Jostling with robots for the attention of the assembled executives, bankers, politicians and economists will be the slowdown in China and resulting tremors in financial markets, the renewed burst of geopolitical tensions from North Korea to Saudi Arabia, Europe’s migration crisis, and the U.S. presidential ambitions of Donald Trump.
All will shape conversations in the fabled Belvedere Hotel and other venues, which over the past four decades have become the focal point for the world economy one week every January. Stardust will be spread by the likes of Leonardo DiCaprio, Kevin Spacey, and will.i.am.
Soldiers and Generals
About 20 sessions during the four-day conference are devoted to the official theme of “the Fourth Industrial Revolution,” a catch-all term for rapid technological progress.
Sandberg, Facebook’s chief operating officer, will join Microsoft Chief Executive Officer Satya Nadella in debating how it will “transform industries and societies.” Blackstone Group Chairman Stephen Schwarzman and Bank of America CEO Brian Moynihan will address the technological challenges facing finance.
Occupying what organizers have called the “Robot Space” will be a showcase of
HUBO, which was developed at the Korea Advanced Institute of Science and Technology. The robot last year scooped up a $2 million prize for beating 22 international rivals in a competition sponsored by the U.S. Department of Defense.
Other discussions betray anxiety as well as wonder. There are panels on what happens when robots go to war, potentially replacing “both soldiers and generals,” and whether innovation “is failing the middle class” by eliminating jobs. Few experts dispute that the rise of robots and sophisticated software to power them will create winners and losers, as did the steam engine and the advent of mass production.
Oxford University researchers, for example, reckon almost half of American jobs are at risk of being automated within the next two decades. Most notable are high-skill roles that have so far been largely shielded from the advances of technology. A WEF analysis estimates a net loss of 5 million jobs in 15 major economies by 2020.
In finance, Bank of America’s Merrill Lynch unit is already looking to automate investment advice for some clients with accounts under $250,000. Morgan Stanley and Wells Fargo & Co. also say they’ll develop or acquire robo-advisers. Even the most traditionally lucrative corners of investing may not be safe; Highbridge Capital, an in-house hedge fund of JPMorgan, is working with San Francisco-based Sentient Technologies to use so-called artificial intelligence for building investing strategies.
Zuckerberg’s Automated Assistant
Meanwhile Google parent Alphabet Inc., which will be represented in Davos by Executive Chairman Eric Schmidt, has bought a string of robotics companies. And Facebook founder Mark Zuckerberg this month said his personal challenge for 2016 is to build an artificially intelligent home assistant.
“If the executives are smart, they see it as a challenge that they can wield in their firm’s own interest,” said Tim Adams, a former U.S. Treasury official who now heads the Institute of International Finance. Bank of America estimates manufacturing and healthcare alone will see $9 trillion in cost savings in the next decade, while productivity could jump by almost a third in many industries.
The rub is what happens if the losses from the revolution are sufficient to stifle economic demand for the products churned out by machines. One reason to fear this is that the number of people affected could be higher than once thought. McKinsey & Co. researchers estimate that by 2025 robots or automated software will be able to do the jobs of 140 million knowledge workers.
U.S. President Barack Obama, who is dispatching the highest-profile American delegation to Davos since he took office, in this month’s State of the Union address warned that “technology doesn’t just replace jobs on the assembly line, but any job where work can be automated.” That could increase economic frustration that’s already running high in the U.S., Europe and elsewhere.
Disappointment with the current state of economic affairs is a major driver of support for anti-establishment politicians like Trump, said Davos regular Stu Eizenstat, a former official in the U.S. State and Treasury departments who’s now at law firm Covington & Burling LLP. If leaders aren’t careful, we’ll have “a revolution that disenfranchises a lot of middle class people and breeds a lot of resentment,” he said.
Those on the cutting edge of developing new computing systems are more optimistic. At IBM, researchers are working to build products atop the Watson computing platform — best known for its skill answering questions on the television quiz show “Jeopardy” — that will search for job candidates, analyze academic research or even help oncologists make better treatment decisions.
Such revolutionary technology is the only way to solve “the big problems” like climate change and disease, while also making plenty of ordinary workers more productive and better at their jobs, according to Guru Banavar, IBM’s vice president for cognitive computing.
“Fundamentally,” Banavar said, “people have to get comfortable using these machines that are learning and reasoning.”