McDonalds, Automation, and the $15 Minimum Wage

It's time for a thought experiment. I’ll pick on McDonalds because they’re big and they happen to be in the headlines at the moment. Those feeling adventurous enough could continue the same logic to nearly any restaurant franchise. 

Assume for a moment, you’ve decided that you want to own your own set of golden arches, and you decide to open up your own McDonalds Franchise. For the sake of round numbers, we'll say that’ll cost you a cool $1M just to open the doors. Most people don't have a spare $1M sitting in their couch, so chances are that you borrowed some/most/all of that... from bankers... with lawyers... Said bankers will eventually want their money back, and there's a chance that they may hire someone to get cranky on their behalf if you don't keep up your end of the deal.

It’s a very expensive operation to be sure, and many franchises fail.  Add to that, the knowledge that on the whole, McDonalds has struggled at times. However,  after McDonalds changed CEOs,  they tried changing a few things, and it looks like they’re heading back into growth territory.

Now the middle class in the United States is being squeezed. You know that some portion of the middle class is currently running your $1M restaurant investment. Your employees' cost of living is going up, while their wages are stagnant or dropping. Looking for a solution to the problem, many in the middle class begin protesting for a higher minimum wage. While you don’t mind the idea of people getting ahead and making progress in life, the issue is that your customers may very well leave if you raise your prices, and your profit margin may disappear  if you raise wages that much. That could leave you broke, laying off all of your employees with a lot of employees/bankers/lawyers angry with you.

Looking for a solution, you hear about this machine that can make more than 300 burgers an hour and do it better than people can. What would you do?

Extra credit for those with strong stomachs: Redo the experiment as the CEO trying to keep 35,000 of the aforementioned franchise owners in business while trying to keep shareholders (similar to the bankers with lawyers) happy. You know very well that you're only one bad earnings report away from being the next former CEO of McDonalds.

What People Are Good At

Machines are becoming proficient at an increasing number of tasks that were previously the domain of humans.

From Cooking to running to playing chess to driving, Machines are doing so much these days that I often ask myself "what am people good at that machines aren’t?"

Machines are very good at following rules. As of yet, they aren’t nearly as proficient at creating the rules. 

Given enough investment and effort, many aspects of everyday business will likely be automated, beginning with the simplest, most time consuming parts of the organization. This effect could potentially cause great economic disruption.
Despite great strides at voice and image recognition, humans are still superior at more abstract pattern recognition. Said another way, I’ve yet to see an AI capability that could be construed as seeing a real-world unsolved need and assembling/creating tools to fill that need. That said, CEOs, and senior leadership roles in companies would theoretically be more difficult to automate than the roles of the people who report to them. Along those lines, programming is a method of creating and expressing rules, and to that end, people with programming experience (leaders or otherwise) could theoretically also make themselves more resilient to automation.

The ability to be flexible and continually learn new skill sets seems like it could prove very valuable in a world where things are continually being automated.

Donald Trump and Bernie Sanders May Have This in Common

By nearly all accounts, the 2016 American election process has been a "black swan event" in that it hasn’t included a lot of the patterns typically displayed in the process of picking an American President.

Baffling the pundits and oddsmakers, Donald Trump and Bernie Sanders both defied the leaders of their newly adopted political parties. They’ve both assembled a following around the shared idea of protectionism. Donald Trump makes it a point to say that we’re going to build a wall to keep Mexicans on their side of the border and then follows up saying that we’re going to beat China at the trade game. For his part, Bernie Sanders picks a slightly different target. Bernie instead chooses to draw the lines of protectionism a bit closer to home, as he drops accusations of greed and blames our neighbors and friends who happen to be CEOs and executives for the plight of the middle class and working poor.

The frustration that Mr. Trump and Mr. Sanders are both channeling seems to be rooted in some degree of economic hardship. What if the future of that hardship doesn’t originate in Mexico, China, or even in corporate board rooms? What if at least some of the frustration is due to jobs being automated on our own soil by technology implemented by companies simply attempting to stay competitive in the marketplace?

Could it be that Donald Trump and Bernie Sanders are each giving different names to the same boogieman: Computer Software?

Ultra-Intelligent Machines May Not Be The Immediate Concern

For the better part of a century, science fiction (I, Robot, Terminator, The Matrix, etc.) has related stories about ultra-intelligent machines that become smarter that people and do some combination of try to kill everyone, take over, and/or treat people as pets. 

I won't say that a scenario like that will never happen. Repeated experiments have pushed my personal perception of what machines can do. However, given how often Siri screws up my questions - I will say that I think there's other concerns may be more likely to happen first.

A bunch of smart people wrote an open letter to warn about the dangers of ultra-intelligent AI, although if you read the article closely, Bill Gates commented that he thought we were “a few decades” from ultra-intelligent machines. 

On the other hand, militaries by definition are constantly trying to one-up their adversaries. As weapon systems continue to advance, they increasingly become complex enough that they require some level of artificial intelligence to control them. 

With the military more or less attempting to Keep up with the Joneses, it will be increasingly difficult not to deploy these weapons systems. Indeed, if my city were faced with a credible threat, I’m not sure I’d argue against deploying AI-controlled anti-projectile lasers to maintain safety. 

To date, the lack of a major news story on the topic makes it seem like these machines have all been rigorously tested. However, the more these systems are deployed, the more it increases the chances of an accident. Think of what would happen if every time Siri messed up, a passenger jet fell out of the sky.

In the near-term at least, it seems to me that under-intelligent machines would be more likely to cause problems than ultra-intelligent machines.