Third book read 2019: Kai-Fu Lee “AI Super Powers: China, Silicon Valley, and the New World Order”.

Two weeks ago Kai-Fu Lee visited the Norwegian government before going to World Economic Forum, and it made me pick up his recent book on why China’s innovation culture is surpassing Silicon Valley, Artificial Intelligence is eating the world for breakfast, and we need new models to get it. 

Unless you have been living under a rock for the last couple of years, you have noticed that AI is reshaping the world as we know it. It is happening now, and nobody really knows the consequences. It cannot be fully understood in the same terms previous new technologies have been introduced and we need new models to understand it. 

Like, really soon. 

This what makes it a pleasure to read one of the world’s most respected leaders in AI, Kai-Fu Lee. Lee has thirty plus years’ experience within AI and top positions at Apple, Microsoft and, recently was head of Google in China, and knows how to simplify the complexity of AI just enough.

He is good at describing all the usual cases which AI will transform our lives. From autonomous and self-driving everything, to platforms, to healthcare, to governance, and its consequences. But, he is even better when it comes to explaining why the general differences in the world will increase at an exponential rate, why white-collar workers will be hit hard this time, and why universal basic income will never be the answer. 

The most interesting part is in the explanation of why China is surpassing the US as the global leader of AI startups and innovation. I.e. when explaining why being the world’s Xerox machine has fostered a unique startup culture by the following dynamic: 

A// In most parts of the world, when you get your product right and it becomes a commercial success, you can claim a victory and be reasonably protected by copyrights and regulations. B// In China, the logic is the opposite. That point is when the competition begins. When you get your first product right, for example by making a Facebook rip-off and gain millions of users and income, that is when the copy-competition starts. C// That is when 5000 other similar platforms are launched, the real war is on, and only the great ones survive, and you end up with super platforms of platforms like WeChat. 

Copyrights and intellectual property rights were originally designed and applied to foster innovation, by securing investments in innovation processes and then incentives to make the first moves. By that, society motivated capital to contribute to the greater good of innovation. Is that still the case? Are your investments into innovation still secured by the regulated protection ideas? Are the most successful companies driven by IP? Not so much. With only a few exceptions these days.  

On top of that, since 2014 China did what everybody thought was impossible. To literally - top down - install complete startup ecosystems and cultures in the top cities. Starting with "Avenues of Entrepreneurs", filling them with investors, founders, tech-talents, researchers, low rent - and scale-ups.

They saw what only a few could see: Re-organizing an innovation system with all its heavy institutions and legacy is just as difficult, or even more so, than re-organizing any large organization. It is simply easier, faster, and more effective to start a new. On the side. They employed the same logic that makes it possible for startups to out compete traditional companies.  

With the same simple elegance, Lee explains what it has always made sense to me. Universal basic income (UBI) will never be the answer to capitalism’s coming inability to create new jobs. UBI is a product of an extreme individualistic laissez faire culture growing out of Silicon Valley where the regulation phobia is so strong that it makes sense to even put the responsibility for unemployment to be left alone for individuals to solve. Through a small income… Lee presents some better solutions.

As long as there are problems in this world, by nature, there will always be jobs. And there will always, by human nature, be problems to solve. Just because companies will not be able to pay for the jobs within a capitalistic structure, it does not mean society cannot employ people to solve it. Lee puts this simple insight into a solution on how to finance and use “Social Investment Stipends” as the next phase of job production. He also sketches out new VC schemes and impact investments, and this is what makes the book an instant classic. It also lays some groundwork for future solutions on exponentially growing inequalities and job loss following the AI revolution.

Conclusion #Recommended.