Common Knowledge and the New Cold War
Technology is the battleground between East and West. Who are the foot soldiers? It's time to take The Sniff Test.
The Common Knowledge Game
Common knowledge is what everyone knows that everyone knows. Whether it is actually true doesn’t matter. Keynes explained this with the example of a newspaper beauty contest. Picking the most attractive person means choosing who you think that most people will think that most people will choose. Got it?
This is why media has so much hold over us. Where do you find out what everyone else is thinking? The editors at the BBC, the Daily Mail and CNN tell us. Our Instagram feed has the answer, or our Reddit sub-group. Cult leaders take advantage of common knowledge to enforce conformity.
There are different levels of common knowledge. Taylor Swift won the Superbowl is global knowledge. Labour wins the next election is regional. Central banks use interest rates to control inflation is common knowledge in investing circles. You don’t fight the Fed.
AI is a weapon for spreading common knowledge. It feeds on your personal data and responds with a consensus shaped by everyone else’s. ChatGPT can code better than 45% of developers and pass Google’s exam. Of course it can. If you are a mid-performer you will beat 45% of people and Google’s exam is designed to be passed.
To win the technology war you must collect as much data as possible. This means having the most used apps, the most watched videos and the largest networks. China has the advantage of over a billion people. US tech benefits from global appeal. The battle lines of the new cold war are drawn.
The New Cold War
Common knowledge during the old cold war was that the side with most military hardware wins. Hence we ended up with enough nuclear warheads to blow up the world several times over. The US won because it had the strongest economy and the Soviet Union ran out of money. This lesson is not lost.
Technology gets progressively cheaper. We see this in warfare. Drones costing a few thousand dollars terrorise Red Sea shipping, driving up the price of goods in the West. One operator can control 100 drones and the technology has replaced fireworks for public celebrations.
The US cannot keep throwing $2 million missiles at thousand dollar drones. The rules of engagement must be changed so the strongest economy wins again. The common knowledge that opposing America is a losing strategy must be restored.
Energy and Compute
The technology adviser Azeem Azhar estimates that the world’s computational power has risen 60 billion times since 1971. Sam Altman, CEO of OpenAI, is reported to be seeking $7 trillion to invest in chips for AI. That’s twice the GDP of the UK. He tours the world to recruit investors for the cause. He ties countries into the technological Pax Americana.
Nvidia owns the most popular semiconductor chips for AI. Its CEO disputes Altman’s number. But likes ripples on a pond, the first iteration of the news is the one everyone remembers. The counterclaims and denials are not common knowledge.
Pax Americana works like any empire in history. America controls the seas and guarantees the security of trade. Other countries may take advantage of this, provided they use the dollar and trade primarily with the US. China was welcomed at the beginning of the century, but as it became clear it did not respect the rules it is now the enemy. This is the new cold war.
The technological Pax Americana works this way. US companies supply the latest technology and if you want it, then you must be part of the supply chain supporting it. That means energy and computing power. If the US tells you not to sell to China then you don’t.
The US was dragged into World War II by the surprise attack on Pearl Harbor. The economic stranglehold placed on Japan left it with no choice but to attack. This lesson is not lost on America. Hence sanctions on Russia can be circumvented and China has access to lesser technologies. Both survive but not thrive.
Covid was a genuine shock to common knowledge. Global supply chains froze and drove up inflation. Higher interest rates did not stop this because they squeeze demand rather than raise supply. If you cannot get goods through the Suez Canal it doesn’t matter how high rates go.
Technological Pax Americana therefore requires more control over the supply chain. This means computing power and energy. The Taiwan Semiconductor Manufacturing Company is trying to build new capacity in Arizona, but the lack of skilled workers hampers efforts. Globalisation has stripped America of skills.
China controls green energy. Like technology, this promises to be almost free. Also like technology, the materials and means of creating it continue to be costly. The Biden administration has written an open-ended check to anyone investing in semiconductors and green tech. The result will be excess like the surplus of nuclear warheads. This does not matter.
The cost of supplying new technology is the point and it’s the total bill that counts. The US can afford the biggest bill. Surplus supplies drive down prices, which is the opposite of what happened during Covid. When it becomes cheaper to produce the cutting edge technology in which America excels, then America wins.
The lessons of the cold war include that debt is America’s friend. Others try and keep up but eventually crack. The price for the debt is a growing wealth divide and inefficiencies throughout the economy. This is less important than winning the war. National defence is a reason to abandon all sorts of norms, from spending limits to political liberty.
But technological Pax Americana has another cost for the people.
The Magnificent Seven
Reed Hastings, who co-founded LinkedIn, believes that every professional will have an AI copilot by 2028. We will also have them for our personal lives. AI will have access to our phone calls, emails, conversations and cameras.
This raises privacy questions that are merely inconvenient. Ever wondered why tech companies want you to download the app? Because they can change the rules of usage and you cannot do anything about it. The web is policed, but apps less so. Once you are on an app, it’s hard to let go.
By now you know that if you are on social media you are the product. Your data is sold to companies so they may target you with ads. The cost of doing this is rising and the reach of the ads falling, as tech companies squeeze others to drive their own revenues. To date there is little alternative, which is why the Magnificent Seven tech stocks dominate the global stock market.
The user experience of social media grows stale. Dopamine is not happiness, it is the desire for another hit. But most people don’t get addicted and look for something new. This is why AI is being rolled out to the masses by big tech companies.
Imagine never forgetting a friend’s birthday. Take a snap of a building on your next city break and AI engages you in conversation about it. Back home, photo the fridge and let AI suggest a tasty meal with what’s in there. After dinner, help your child with homework using helpful hints via your phone.
Once augmented reality glasses are widely available, including rear view capability, AI will know what you look at. It will be able to help you identify things of interest. Or danger, as revealed by this analysis of how women scan the shadows at night while men look straight ahead.
It’s possible that feature length films will be entirely AI generated by the end of next year. Animation, CGI and other forms of rendering from models, will be replaced by generative images. In a few years this technology will be on your phone.
Sound is the same and fake Joe Biden is already calling people pleading with them not to vote in primary elections. The only way to police the AI is with more AI. Waiting for governments to pass laws never keeps pace. All the power will be in the hands of the technology companies, both for good and evil.
Falling in Love
Why will this AI experience be so attractive? Over 90% of communication is non-verbal. Rana el Kaliouby, Deputy CEO of Smart Eye, has been researching machine interpretation of communication for a decade. Her PhD model identified smiles, furrowed brows and raised eyebrows. Today’s version knows 50 emotional, cognitive and behavioural states.
The Journal of the American Medical Association surveyed nearly 200 licensed healthcare professionals. Four-fifths preferred a chatbot’s responses to those of human physicians. The bot’s answer was four times more likely to be ranked as good and ten times more likely to be ranked as empathetic. Sci-fi movies have long predicted we’ll fall in love with machines.
Invest in Cool
Technology concentrates power in the hands of those that already have it. Big tech thrives on data and provides amazing AI experiences to extract more. We’re already happy with Google and Amazon knowing a great deal about us and no one wants the stigma of old tech.
Technology concentrates wealth in the hands of those who already have it. If you are an established A-lister then your digital image is worth a fortune. Over half of Gen-Z kids want to be influencers and they’re onto something. Except that only a few will make it. The rest of us have bursts of popularity controlled by an algorithm, before our reach is taken away until we pay for promotion. This is how Facebook, TikTok and LinkedIn work today.
If you want to invest in AI the advice for the masses is to buy the world’s largest companies. Except that everyone does the same. There is a risk that you are late to the party and the smart money is investing in new startups.
Most of us have no access to these. You need millions to get in on the big venture capital deals and smaller funds are left with so-so products. I was advised by a tech leader to hang out at Stanford and MIT and ask the nerdy looking kids what was cool. Apparently this is how to invest in the future.
AI is going to make other people richer and more powerful. What is it going to do for us?
Fake Home Videos
There are already concerns about deep fakes influencing elections. On the flipside, if anything can be faked then you have plausible deniability. That’s important when you are caught by speed cameras or appear unknowingly in a porn film. It’s less cool if no one can be blamed for crimes committed against you.
What about the friend whose birthday you remembered? They’ll assume your assistant told you and if you don’t send a card, they’ll know it was deliberate. At your next annual review you’ll answer a question and the boss’s AI will tell him you’re lying. It can’t be sure, it’s based on averages, but there’s a good chance you are. This is what it means to take your data and compare it with consensus.
When you marry someone will your copilots be combined? Your partner will know everything about you, including when you are lying. Your darkest thoughts may be shared with them, which while you would never act on them, they probably don’t want to know. Falling in love with a copilot may be of great comfort if it looks like a lost loved one. It’s not so good when your stalker posts images hanging out with you.
Tech companies launch products with clear benefits. Bad actors figure out how to use them and things go wrong until a fix is found. The tech companies focus on the benefits, a few politicians and some media on the costs and nothing changes. The tech is not put back in the box and lasts until something better replaces it.
You will need a digital identity to sign anything you produce. This may be verified by blockchain. This will protect you online, but it’s not ready yet, while the consequences of AI, good and bad, increasingly are.
Privacy and Agency
Technology is the new global battleground. Every geopolitical decision hinges on how it helps win the war. The enemies of the US will need Russia and China. The neutral will be forced to choose. The world is polarised.
Your privacy is lost. Your agency is next. There are going to be horror stories until we figure out a fix. There is safety in numbers however, and you may be lucky. Just don’t fall out with friends.