The Industries of the Future

Alec Ross: My brief was to basically be a help, lead special projects that somehow involved technology, and advance America's foreign policy goals. So I should say that did not include, say, setting up her email in the basement, that was somebody else, but what it did include was things like figuring out how to put an anonymous, encrypted crime reporting program into narcotics cartel controlled cities in northern Mexico. It did, for example, include a brief to help civil society organizations around the world learn how to use technology for the purposes of building democratic movements.

So, basically, it was my job to sort of lead the crew of hackers at the State Department.

Rachel Salaman: Interesting, because not many people would have thought that a Secretary of State needed a special advisor on innovation.

Alec Ross: Right. Well, you know, we live in a world now, though, where foreign policy is increasingly shaped by technology and by innovation. And the white shirt, red tie, pin-striped diplomats of the past remain as important as ever, but they also need to have an understanding of our communications networks and of technology, because our communications networks and our technology are doing so much to shape political movement making and shape geopolitical systems around the world.

Rachel Salaman: Now, I mentioned a few of the industries that you predict will come to the fore in the future. What do you see happening in robotics?

Alec Ross: I think the robots of the cartoons in movies from the 1970s will be the reality of the 2020s.

There have been some recent developments in mathematics, for example in the modeling of belief space, which will allow robots to go from being dominantly two-dimensional beings to three-dimensional beings. And I think that the advent of cloud robotics, where robots don't have to have millions of dollars' worth of hardware and software in them to have almost human-like capabilities but, rather, so long as they are connected to the hive mind of the cloud they have powers of cognition.

I think that these two things are enabling the creation of robots that look like they come straight out of science fiction and we'll mainstream them in years to come.

Rachel Salaman: So what are the implications of that for workers, and particularly managers?

Alec Ross: Well, you know, it's interesting. I think that, on the negative side, on the scary side, I think that we are going to see a displacement of labor and new forms of labor.

So, in the past, robots and automation have largely replaced blue collar labor, the work of men with strong shoulders inside ports, factories, mills, and mines. Now that robots are increasingly able to do work that isn't merely manual and routine but increasingly cognitive and non-routine, I think that we will see the beginning of displacement of some white collar labor. You know, the kind of work, for example, that my father did as a country lawyer, where most of what he did for 40 years was prepare big stacks of paper for people to spend 30 minutes signing when they bought or sold a house. It's white collar work, it does involve some measure of cognition, but I believe that that kind of labor can be substituted by artificial intelligence and robotics.

On the positive side, I do see robots taking out work that is dull, dreary or dangerous. Human labor will be able to be focused on that which is uniquely human and should be able to take a lot of the repetition out of our life.

Rachel Salaman: In your book, you say that some of the billions made or saved by using robots should be invested in education for the workers who will be displaced. But training in what? What jobs won't be replaced, and are there enough of them for all the displaced workers?

Alec Ross: Well, whether there is and whether there's some of the new jobs will be enough to replace those that have been displaced by artificial intelligence is an open question, but, in many respects, it's not a new question. We had worries about this with automation in factory processes in the early 19th century. During the early 20th century, with the onset of the Green Revolution and the automation of farms, we were worried that generations of people who had made their livings on farms wouldn't be able to find work elsewhere, and they have.

So it's an open question whether the number of new jobs available are sufficient to make up for those lost. Having said that, we do know that there will be areas of job growth, for example those rooted in things that robots and artificial intelligence can't do, in fields that include skills and aptitudes and behavioral psychology, in persuasion, that require any sort of emotional intelligence.

What I really see is a blending of skills between the humanities and that which is scientific and technological creating the industries of the future.

Rachel Salaman: I notice that you don't explore the potential pitfalls of relying increasingly on robots in your book, things like the risk of technology failing; we've all had Wi-Fi drop-out occasionally. Is this because what you've seen is very reliable?

Alec Ross: Well, I mean, I think that robots are more reliable than humans.

The book, The Industries of the Future, is neither utopian nor dystopian. Most people who write books about the future believe that either, on the one hand, we're going to live to be 150 years old, happy, healthy, wealthy, and wise, lacking for nothing, or it's written sort of curled up in the fetal position with fists clenched. I think that life is much more up the middle and I think that The Industries of the Future, my book, is much more up the middle. You know, I like to think of myself as a realistic idealist.

Now, if you're asking about technology failing, I think that humans are much less reliable doing repetitive work than machines, so, you know, I don't think that that's a big concern. I think the concern that I do focus on in earnest in The Industries of the Future is around this issue of labor displacement.

Rachel Salaman: Yes, which we've touched on a little bit. You predict that life sciences will be another area of intense development, and particularly genomics. How far off do you think we are from a time when everyday people can benefit from the medical advances that are taking place now in labs and specialized trials, like the new targeted gene treatment for cancer, for example?

Alec Ross: Well, it's the year 2016 now, I would guess by 2022 or 2023.

You know, I think that, as with so much of innovation, I think that the benefits accrue initially to wealthier segments of society, and so it's people who are able to pay on their own for these kinds of treatments and these kinds of diagnostics who will be the first beneficiaries. And until their costs go down and are absorbed in national health services or insurance programs, it will continue to be the wealthier that most benefit.

Now, given the pace of the costs going down and given what I project to be the developments and the technology, I do think it will probably be six, seven, eight years from now when the ability to benefit from these technologies is truly universal.

Rachel Salaman: That seems quite soon.

Alec Ross: Yes. No, I think that the pace of change is going to happen fairly rapidly. Part of the reason why I wrote The Industries of the Future is that, as quickly as change has come upon us over the last 10 or 20 years, I think the pace of change is only going to accelerate. So I wrote the book in part to equip people with some tools that they can use to prepare themselves and prepare their children to position themselves as well as they possibly can.

Rachel Salaman: Yes. Now, you call one section in your book "The Codification of Money, Markets and Trust." Could you tell us about that?

Alec Ross: Yes. So there are fields that have been completely transformed by digitization. You know, I'm thinking about fields that have persuasion at their core, things like advertising, electioneering. Obviously technology's had a big impact in helping motivate people to vote and whom to vote for. It's also changed fields like publishing. Obviously publishing looks absolutely nothing today like it did 15 years ago because of the Internet. But there are other fields that have not been completely turned on their ear yet but I think which soon will.

So let's talk about the legal profession. An experience with someone's lawyer today is very similar to what it was in the 1950s, 1960s, 1970s, and the process of things like, say, buying and selling a house, when my wife and I bought a house two years ago the process we went through was indistinguishable from the process that my parents went through when they bought the house that I grew up in in the 1970s.

Part of that is because very high value transactions, where you need five 9s worth of trust - 99.999 per cent of trust - we aren't comfortable making that an exclusively electronic transaction. I do think that there are technologies that are mainstreaming now that will enable the kind of five 9s of trust, so that fields like the legal field can and are actually transformed.

Rachel Salaman: So what are the implications then? I suppose there are labor market implications. What else?

Alec Ross: Consumer surplus. So let's go back to the experience that my wife and I had buying a home. When we bought the home and the seller wanted to sell us the home, the process of getting to the actual closing took nearly two months. The closing costs were probably $10,000. It was many hours of time from accountants and lawyers. That process, which took two months and probably cost us $10,000, in the future should be able to take two hours and cost us closer to $10 than $10,000.

So part of why these technologies can and will get a good foot is it creates consumer surplus. So the money that we aren't spending and the time that we aren't spending is now ours.

Rachel Salaman: Your views on the so-called sharing economy are very refreshing. This is things like Airbnb and Uber, and you point out that, really, it's just another business model and there's not really much sharing going on. So why do you think this new business model has been framed as somehow local and altruistic?

Alec Ross: Well, I think it is a sort of brilliant marketing. You know, let me be clear, I am not anti-Airbnb or anti-Uber. I think that taking a latent good, like an extra bedroom in someone's apartment, if that can be put to productive use, all the better for it.

You know, the evidence is that people who rent out space in Airbnb, it plays an important role in helping them make their mortgage payments, but what I don't believe is that this is inherently altruistic and I don't buy into the framing of it as the sharing economy, because nobody is sharing anything. Try to participate in the sharing economy without your credit card and you're not going to have much luck.

So what this really is, is it's just another form of innovative business model. It makes an entrepreneur, a micro entrepreneur, out of everybody and a market place out of anything. And I think that there are positive aspects to this and I think that there are negative aspects to this.

On the positive side, I think that the ability to create more hotel stock, for example, makes staying in a hotel more affordable. Instead of having to book up a hotel in a busy city months ahead of time and pay ridiculous amounts of money, there is more stock. And further, the payment for it doesn't go to a corporation, it can go to a household and a household that very well might need the money.

Similarly with Uber, I think that traditional taxi licenses are nothing to necessarily celebrate. You know, I have a feeling that most taxi systems are not necessarily maximizing the public good. I know that varies city to city, but I use Uber in a variety of different places where I think the taxis are awful.

On the negative side, part of what the sharing economy does is it makes individuals more rooted in themselves than an employer. And while that freedom is certainly admirable, if something bad happens, if somebody gets injured while at work or if somebody gets sick or if somebody does this for years and years and works without a pension, there are negative implications to this, and the ones who are going to have to end up filling the gap are government.

So one thing that I think the sharing economy does inadvertently do is it creates more of a burden for government, and by implication for taxpayers.

Rachel Salaman: So what can be done to mitigate those risks you've identified, and by whom?

Alec Ross: I would love for entrepreneurs to develop insurance models, to develop personalized pension programs that they can pay into and that they can collectively negotiate with the platform companies to pay into. You know, I would love to see a market-based solution to this rather than a solution rooted in government regulation.

Rachel Salaman: Now, in the book, you talk about Bitcoin and other digital currencies. What are we to make of them? Will they ever become mainstream, do you think?

Alec Ross: Well, I think of Bitcoin like I think of those search engines from the 1990s. You know, back in the 1990s I used search engines with names like AltaVista, Infoseek, WebCrawler, and none of those search engines exist anymore but the category of Internet search is larger and more powerful than it's ever been. There's this thing now called Google.

So I think of Bitcoin like one of those search engines from the 1990s. I don't think that it will rise as a competitive currency to the dollar, the yen, the Yuan, the Euro, the pound, but what I do think is that there are a number of very positive aspects about a digital currency and that I could see a currency created that mitigates against the negatives of Bitcoin.

So in four or five years, perhaps, we've all forgotten that there ever was such a thing called Bitcoin, but there is a digital currency that doesn't have Bitcoin's flaws, which suddenly does take root and which could become a legitimately international digital current.

Rachel Salaman: That would change things quite considerably for many people, wouldn't it. It would have massive implications.

Alec Ross: And I think most of those implications would be positive, because here too, I think, the principle effect would be creating consumer surplus.

So, right now, the amount of money that is spent by immigrant workers on remittances. If a Bangladeshi worker is working on a construction site in the United Arab Emirates and sending money back to Bangladesh, the fees are remarkable. And, in fact, it's basically a usurious system that costs tens of billions of dollars. If we're able to take the fees in international transfers from being usurious to being just a few pennies, this creates, I think, terrific savings.

I also think that economies in frontier countries with very weak national currencies, if they're able to transact in a digital currency, it helps the entrepreneurs in that country. If you are working in Gabon, your European or American counterparts have zero interest in doing business with you, rooted in the Gabonese currency. But if you're able to move money around quite easily using a digital currency, I think that that helps mainstream the Gabonese entrepreneur.

Rachel Salaman: You also talk about the Internet of things in your book. What impact will that have on our home and work lives?

Alec Ross: So, as you and I have this discussion, there are 16 billion Internet-connected devices in the world. This is the sum of our mobile phones, our computers, everything that has an Internet connection - 16 billion. By 2020, that number will have grown from 16 billion to 40 billion, and it's not because we're suddenly going to walk around with a mobile phone in every pocket. On the contrary, it is because of the creation of the Internet of things, where we are putting sensors and an Internet connection on top of everything.

On the one hand, our lives will grow more efficient. So, while we're at work, we can turn the thermostat way down at home, and then, half an hour before getting home, we can turn it back up. So there ought to be less waste. Similarly, the amount of control that we can have over our resources should grow far greater.

The negative side of this, in my opinion, is one really rooted in cybersecurity. As we go from a world of 16 billion Internet-connected devices to 40 billion Internet-connected devices, all of those things that we give an Internet connection are suddenly hackable, and that is worrisome.

You know, one thing I think about, for example, are pacemakers. On the one hand it's a good thing for a grandfather to be able to take a walk in the forest without worrying because, if he has a problem, his cloud-connected pacemaker can shock him. What's scary, though, is imagining a scenario where somebody hacks that pacemaker system in the cloud and shocks everybody who's wearing a pacemaker.

So it's simultaneously lifesaving but also a little scary. And so what it means to me is not that we should stop innovating, it's not that we should stop connecting things to the Internet, rather it's that we need to focus more and more on the security dimensions of it.

Rachel Salaman: Yes, and, in your discussion on cybersecurity in the book, you say that governments and individuals need to balance liberty and security. What are some ways of doing that?

Alec Ross: You know, I think that liberty without security is fragile, security without liberty is oppressive. The best way to balance these things, in my opinion, is to build products and services where security is built in from the outset and where law enforcement to the maximum extent possible can work productively with the technology companies.

But what we can't do is focus so much on security that we lose all of our freedom. And so it is a constant back and forth, the tension between liberty and security on the Internet. I do think that, when in doubt, choose liberty.

Rachel Salaman: In the book, you share your observations about age as well, and how different parts of the world view and empower young people in the world of work. Can you tell us about that?

Alec Ross: Yes. So it's interesting, when I'm in Silicon. I'm 44 years old and when I am in Silicon Valley I'm quite frequently the oldest person at the table. When I am in Europe and I am among business elites, I'm frequently the youngest one at the table. So it's very interesting to me to see the different biases towards people of different ages, society to society.

In much of the United States, notably Silicon Valley, I think there is an almost worshipful attitude given to youth, almost extremely so. By contrast, much of what I see in Mediterranean Europe, it's more Mediterranean Europe than Northern Europe, I think they expect people to get into their 40s before they'll give them the time of day. And I think that both of these are a bit out of balance. I think that Silicon Valley tends to undervalue the wisdom that comes with experience, and I think that Mediterranean Europe loses out on many opportunities to be home to the industries of the future because they will never invest in 20-somethings.

You know, I'm struck by the fact that Oracle, Amazon, Microsoft, Facebook, Google, all of these companies were started by people in their 20s. They could never have started those companies in Mediterranean Europe because they could never have gotten the startup capital. Not only could they not have gotten the startup capital, they probably couldn't have gotten a meeting where they could have even requested the startup capital.

So my view on this age stuff is that communities need to be mindful of their bias, whether it is extremely optimized for people who are older or extremely optimized for people who are younger.

Rachel Salaman: And do you foresee that happening? Do you think Mediterranean Europe will open its mind to more young people's ideas?

Alec Ross: I think so. You know, I see it in Italy. You know, I'm quite struck by the fact that the current prime minister, Matteo Renzi, is comparatively young.

I imagine that many of the great engineers, entrepreneurs, thinkers, and doers who have fled Mediterranean Europe for the United Kingdom, for the United Arab Emirates, or for the United States to work, because of the lack of economic opportunity in their home countries, will at some point come back. And when they do come back, they're going to come back with an entrepreneurial mindset and with an ability to create companies that they will seek to do at home. And I think that that will help transform the local societies and, in so doing, create opportunities for younger people.

So this is something that I think will take a very long time to happen, but I do see evidence of it beginning to happen.

Rachel Salaman: And you say in the book that multicultural fluency is going to be increasingly important in the workforce of the future. Could you talk a bit about that?

Alec Ross: Yes. I think it's important to recognize that we live in an increasingly global, interconnected world, and the ability to play on a 196-country chessboard is growing ever more important. So, in the same way in which people who began working in business in China, say 10, 12 or 15 years ago, benefited enormously from a decade plus of robust economic growth there, I think that there are vast numbers of other countries that will be quickly developing over the next decade.

I think about Sub-Saharan Africa, for example. I think that, for people my age, the sort of blink impulse is to think of Sub-Saharan Africa in terms of conflict or development assistance. But I think that there's a new reality through much of Sub-Saharan Africa, which is it's not a place rooted in conflict and a need for development assistance, rather it's a fast growing market that's going to have a very good next 10 years.

So I think that the willingness and ability to get some good old-fashioned ink stamps in your passport and work internationally in today's frontier markets, which will be tomorrow's developing markets, and today's developing markets, which will be tomorrow's developed markets, will help position people to be quite competitive in the industries of the future.

Rachel Salaman: So what do you hope people will do after reading your book? Do you want them to just be a bit more informed or would you like them to take action?

Alec Ross: Well, you know, it depends on who the reader is. If the reader is a parent then my hope is that, with the information from The Industries of the Future about parenting, that they'll be able to evaluate the education that their children get at school, identify any gaps, and fill those gaps.

I'll give a personal example, going back to foreign language learning. My children all go to the neighborhood school in Baltimore, Maryland. They do not go to some elite prep school. And we are pleased for them to do this because we think it's ultimately in their interests. But one thing they don't do is they don't learn foreign languages. So one thing that we are doing is we are supplementing our children's education with Mandarin lessons. Similarly, they don't take computer coding classes and we think that computer coding is going to be quite important, so during the summer the children will all be taking computer coding classes.

So ideally, you know, if you read The Industries of the Future and you're a parent, you have tools to help make better informed decisions about the skills and attributes your children need.

If you are somebody in your career, particularly early in your career, then you can have a sense of what the high growth markets will be over the next 10 or 20 years. And if you're an investor, hopefully you will be somewhat educated about what today's billion dollar industries are that will be tomorrow's trillion dollar industries.

Rachel Salaman: So, considering everything you've seen and researched, how optimistic are you about the world of work?

Alec Ross: I'm optimistic and I think that tomorrow will be better than today, but not necessarily for everybody.

You know, I think that there is some nuance out there, commas and semicolons, and I think that, while innovation and the development in science and technology will help us live longer lives, will help give us greater abundance, I also think that it will create some very distinct challenges for the working and middle classes in very high cost labor markets, notably those in Europe and the United States.

So I come down on the optimistic side of the field, but short of utopian.

Rachel Salaman: Is there anything we can do to mitigate those threats for working people who are likely to be hardest hit by these changes?

Alec Ross: Absolutely. So, look, this is the community that I come from. I put myself through university, having to work jobs, working on a beer truck and working as a midnight janitor. So this is who I am by birth and the community that I come from. So I'm quite motivated, understanding the forces that are shaping our future, for us to make those interventions that can help. And the place where we have to start really is on those education programs that most serve the working class and the middle class.

I think that we increasingly need to look at models like the German model, which have very strong technical apprentice programs to help ensure that people in the working class don't fall through the safety net. I also think that we need to look at our universities, putting the most prestigious universities aside, but community colleges, those with two year programs that may not offer full degree programs but different certificates, and help ensure that the education being delivered there really maps to where the job growth is. And there's a role for government as the principal funder of such systems, to place conditionality on its grants and on its funding, to help ensure that the education being delivered is really relevant in the context of where the jobs will be.

So I think that, far and away, the most important response to the changes to come and the stresses on the working and middle class are in the education system.

Rachel Salaman: Alec Ross, thanks very much for joining us today.

Alec Ross: Thank you for having me.

Rachel Salaman: The name of Alec's book again is "The Industries of the Future, How the Next 10 Years of Innovation Will Transform Our Lives at Work and Home."

I'll be back in a few weeks with another Expert Interview. Until then, goodbye.