What to Expect: The Threat of Chinese AI, Techno-Nationalism, and Corporation-State
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What to Expect: The Threat of Chinese AI, Techno-Nationalism, and Corporation-State


WASHINGTON - January 31, 2019

The world economy, politics, and technology are facing serious problems in 2019. First, China demonstrates the technological superiority of an undemocratic regime: not only is the development of Chinese AI ahead, well ahead of the West, but it also threatens the independence of Western democracies. Secondly, there is an acute issue of data protection proposed to answer techno-nationalism and the "sovereign internet." Third, corporations have reached such a scale that they compete with the state for voters. And there’s robotics, gender equality and the global crisis of freedom of speech. What’s to follow in 2019 became clear from last week's World Economic Forum (WEF) in Davos.

The WEF is a non-governmental organization founded in 1971, whose members are about 1,000 major companies and organizations from around the world. The WEF’s main calling card was the organization of annual meetings in the Swiss Davos. At these meetings, leading businessmen, scientists, politicians of the highest level and major officials from around the world gather, speak and communicate. They discuss global trends, problems and achievements in the field of economy, politics and technology, enter into partnerships and develop common approaches. The famous concept of the fourth industrial revolution is one of the most important and high-profile brainchilds of the WEF meetings.

Chinese technology threatens the whole world

George Soros is a legendary American investor and philanthropist whose charities, conventionally called the Soros Foundation, have been struggling with authoritarian regimes for many decades. Soros, like WEF founder Klaus Schwab, considers himself a disciple of the British philosopher Karl Popper and a follower of his ideas about an open society. In general, when it comes to the "world government," his name is one of the first that springs to mind. Soros now sets the ideological priorities for the Western open society, appointing its main enemies. A year ago, his speech in Davos hit Facebook (which had consequences for Zuckerberg); this year Soros was unambiguous in his thesis: China is the main enemy of democracy and an open society.

What to Expect: The Threat of Chinese AI, Techno-Nationalism, and Corporation-State

In the world, there is a struggle for the digital market, with China in the lead. This gap poses a threat to the West: Very soon, Chinese technology will be able to crack any security system around the world.

It would be similar to conspiracy theories if not for the scandal of 2018 with microchips the size of a sharpened pencil, which were found in the server systems of key American corporations and government agencies. The chips were mounted on computer boards purchased in China for installation in important structures for the US state and allowed manufacturers to monitor all processes in the host computer.

Apple, a significant part of the production of which is based in China, has lost its place in the technology race: Half of humanity is already using smartphones, and the second half will be provided by companies such as Huawei and Xiaomi. According to George Soros, "China wants to dictate the rules and procedures governing the digital economy, as its platforms and technologies dominate emerging economies." The world community is afraid: Since the whole world is sitting on Chinese smartphones, then it is China that will hack everyone.

The Chinese threat is even more visible when it comes to the internet of things, which requires ultra-fast internet coverage. One of its main problems is considered to be vulnerability to hackers.

Now it's clear that internet technical support (5G) will be engaged in the same Chinese firms that are already ahead of American companies in the production of smartphones. If the Chinese were to distribute the internet in Western society, there would be no security guarantee, given their hackers and microchips for surveillance.

Therefore, at the Davos economic forum, China was perceived as threat number one. And that is what provides Donald Trump with unanimous support from the major American capitalists: They strongly encouraged him to unleash a trade war with the Chinese. In his message, George Soros openly advises, first of all, to get the telecommunications companies Huawei and ZTE out of the market:

"Instead of unleashing trade wars with the world, the US needs to focus on China. You cannot condone ZTE and Huawei -- they need to be dealt with. If these companies dominate the 5G market, they will pose an unacceptable threat to world security."

It is these companies’ products that Trump wants to ban American firms from buying.

What to Expect: The Threat of Chinese AI, Techno-Nationalism, and Corporation-State

China is not the only authoritarian regime in the world, but it is certainly the richest, strongest and most advanced in machine learning and AI. According to Soros, "That makes Xi Jinping the most dangerous opponent of those who believe in the concept of open society."

Thanks to the authoritarian political system, Chinese online technologies are developing much faster than in democratic countries.

The strong development of technologies and their integration in the socio-political life of society will only strengthen the Chinese regime in which the state (in contrast to the state of the USA) can afford to treat the corporations as their property and use the collected data about the residents of China to their advantage.

"Open societies are forced to regulate companies that produce instruments of control, while authoritarian regimes can declare them their ‘National Champions.’ This approach has allowed some Chinese government companies to catch up and even overtake multinational giants," Soros said.

Big data-unregulated digital weapons

IBM CEO Virginia Rometti said: "Everyone says that big platforms like Facebook and Google own a huge array of people's data. In fact, they own only 20% of the data collected in the world. The remaining 80% are owned by companies whose heads that time sat in this room." At this point the heads of companies Procter&Gamble, Hitachi, SAP SE and IBM sat in the room. To ensure that these figures don't seem unfounded, Rometti cites the statistics of her company: IBM services are used by almost 100% of the world's banks, 90% of airlines and 50% of all telecommunications.

But to the sincere horror of many speakers, China is ahead of Western corporations in the development of AI precisely because, at this stage of the development of algorithms, the main fuel of their progress is huge amounts of data on people. Skeptics, however, say that the PRC's Big Data about people is too homogeneous since it is collected mainly from representatives of Chinese culture and is not as diverse as the Western one -- that is, it seems to be of not so high a quality.

Rometti noted that due to the democratic nature of Western countries seeking to regulate data collection, they are seriously losing data collection of their own citizens to China.

What to Expect: The Threat of Chinese AI, Techno-Nationalism, and Corporation-State

China does not hesitate to collect as much data as possible from Western fitness trackers, smartphones and smart home kits, but European and American companies don't have Big Data on hundreds of millions of Chinese because it's protected by Chinese law.

It turns out that democratic laws are slowly but surely developing in the direction of protecting citizens from surveillance but stand in the way of free collection of information, which is necessary for the development of key AI technology of the 21st century. As one person said in Davos conference: "We live in an era of Big Data, not artificial intelligence."

Perhaps in the near future, the "right turn" will continue already on the fuel of the technological race. Perhaps it is worth waiting for political climate changes and an even greater shift to the right in European countries and America.

World War Web: Sovereign internet and techno-nationalism

In Davos, the concept of the "sovereign internet" -- networks of billions of people separated by digital "iron curtains" -- was seriously discussed.

What to Expect: The Threat of Chinese AI, Techno-Nationalism, and Corporation-State

The concept of techno-nationalism is most clearly formulated by retired General John R. Allen:

"Techno-nationalism is a growing idea that deserves close attention. It comes from growing in the latest Big Data analytics capabilities, the creation of supercomputers and the emergence of data access, which a few years ago no one even could not imagine. I believe that over time we'll see the development of techno weenies. Data protection, including personal data of citizens and the protection of our cyber networks will force us to develop a more holistic method to the technological environment as an independent sphere of sovereignty."

Digital corporations compete with the state

In Western society, "digitalization means privatization": Recognizing the corporation's freedom, the state should give it a part of its powers, and become weaker as an institution.

John R. Allen spoke perfectly on this at Davos:

"The rise of digital power in the West is paradoxical. The more economic possibilities for our technology companies, the more markets they conquer. The more you invest — the more they become similar to the digital state, given the number of the population to which they can at any time be affected. We use the term ‘digital citizen’ because there are so many people in the world who are connected to digital companies in their daily lives much more closely than with their sovereign government."

It would seem that the market economy in general and the US as a state in particular should only benefit from the prosperity of American corporations.

However, in the context of the fourth industrial revolution, IT giants have grown to such a size technologically, financially, and socially that they have begun to threaten the government and the market. The US military's ability to influence citizens' lives, including the people's compliance with government directives, seems to be a serious threat.

What to Expect: The Threat of Chinese AI, Techno-Nationalism, and Corporation-State

In this sense, as Avril Haines noted -- the first woman in history to work as Deputy Director of the CIA -- US intelligence agencies are forced to calculate the threats coming from corporations, putting them together with dangerous terrorists.

And in this aspect, the Chinese threat appears again. China only has technoweenie full IT elite and the government acts in unison. Western private corporations are more likely to have such independence, and governments are only trying unsuccessfully to curb them. The whole situation is complicated by the fact that large Western companies are transnational, meaning their capital is scattered around the world, and therefore it makes no sense for them to obey the laws and political interests of one country. You'd think they had a head office there. As Bill McDermott (American businessman and CEO of the technology company SAP SE, which specializes in software with its headquarters in Germany) said, since their headquarters are in Germany, someone could consider them a German corporation but they don't think so.

Corporations for people: voluntary or not

Over the past year, it has become obvious that due to the rapid Chinese development, the Western world will have to rebuild. But the question is: Who will manage the restructuring process?

The two main interests -- the government and corporations -- have different tools and problems in their arsenal. The main driver of the modernization of Western states today is legislation, and the main problem is the obligation to the people. Corporations have production facilities and capital, and no binding obligations to people and the only problem is the state with its laws and restrictions.

Now IT giants are trying to prove to both people and governments that they are able and even will be happy to spend a significant part of their income on social and public needs but only at their own discretion, and not on the instructions of the state.

But the public believes that corporations are sociopaths, concerned only with the price of their shares, and corporate leaders are indifferent to everything except their own benefit. And if we recall the financial crisis of 2007-2008, it's not surprising where we have such an opinion. After all, while the middle and low-income classes around the world were seriously affected by the credit bubble, the top companies managers responsible for this crisis were not only not brought to justice but even received awards and compensation.

What to Expect: The Threat of Chinese AI, Techno-Nationalism, and Corporation-State

In America, Alexandria Ocasio-Cortez, the rising political star of social networks and the youngest woman ever elected to the U.S. Congress proposes to increase taxes for the rich twice. Almost 50% of workers will be replaced by robots, and the government is ready to take money from corporations and give them to the victims of the fourth industrial revolution. The WEF discussed the implementation of the basic income project and state programs for adult retraining.

What to Expect: The Threat of Chinese AI, Techno-Nationalism, and Corporation-State

Everyone laughed loudly when Michael S. Dell, the head of the largest computer corporation Dell Technologies, was asked if he supported Congresswoman Ocasio-Cortes’ initiative project to tax 70% from those earning more than $10 million (the current maximum tax rate is 37%). He replied that it would be better to distribute the money through their charities than to entrust such work to the state. And then he listed all of his firm's philanthropic initiatives: investing in education, helping small businesses, and supporting gender equality programs.

In Seattle, where Microsoft has its headquarters, the company undertook to solve the problem of housing for middle-income and low-income employees. In San Francisco, the world's best technological environment for business, there is a crisis of poverty, with the streets crowded with homeless people. Billionaire tech mogul Mark Benioff believes that the solution to the problem of the homeless is the responsibility of corporations that thrive in SF against the impoverishment backdrop.

Ways to survive robotics

The top manager of the  ITcorporation Bill McDermott said: "More than 2/3 of people in modern society are worried that they will lose their jobs, giving in to robots. Try to explain to these people that technology should be loved, I wish you good luck!"

At the Davos forum, there was a lot of discussion about how corporations, which will be more responsible for the robotization of production and the loss of jobs, will be able to compensate for these losses to citizens.

Education and retraining programs paid for by corporations, not by the state, were often mentioned as a solution to this problem.

Virginia Rometti believes that all 100% of the work of the future will change, so it is necessary to introduce the concept of creating "new collars" -- not "blue" and not "white," but still built into the economic and production chain. To do this, she encourages her colleagues to expand the scope of training programs (IBM already spends a billion dollars a year on educational purposes). Rometti told how she oversaw the retraining of a group of her adult "students": a barista, an FBI agent (at the mention of whom she was distorted), a fireman who cannot continue to work because of health problems, and a nurse. This group spent 12 weeks in the retraining program, IBM paid for both the training and the benefits.

There is another IBM educational program titled Pathway to Technology for students. It is a six-year equivalent of high school, at the end of which students can get both a school diploma and a specialist's degree at the same time.

The program operates in 13 countries and 11 states and involves 500 additional companies that provide professionals and teachers to work with students and, after graduation, provide them with internships in these companies. It now has 125,000 children, and most of its graduates are employed at twice the market average in their country.

When 44 million American students and graduates owe $1.5 trillion in education loans to the government and banks, such an educational program, supervised by corporations, is a serious claim that large companies can cope with social obligations better than the state.

Another Silicon Valley IT giant, Peter Thiel, has also launched a program whose foundation provides scholarships to talented high school students on the condition that they drop out of an official educational institution and launch a startup.

All this sounds good, of course, but falsely suggests that for corporations people are more important than profit.

The fact is that further corporation promotion is necessary to achieve greater loyalty and trust. It seems that the industry giants have found the right role model and turned to the experience of the church.

Bill McDermott, picking up the idea of the head of Procter&Gamble, asks: "How to turn the brand into a religion? You know so that people are really loyal to the brand. If you look the economy today, it turns out that companies are losing $1.6 trillion, losing their old customers. And everyone in this room understands that if they increase their attention to their brand by 5%, their profits will increase by 95%."

To illustrate how corporations can increase customer loyalty and perform social and even educational functions, the examples voiced by David Taylor of Procter & Gamble are appropriate.

Procter & Gamble is the world market leader in consumer goods. When you go to the supermarket department with household chemicals, shampoos, Soaps, pads, deodorants, etc., you get into the Kingdom of P&G. Mr. Taylor is proud that his company has long ceased to be just a manufacturer and seller of household chemicals -- they are extremely successful in selling lifestyle and a whole philosophy of life together with their products.

For example, in 2014, P&G sold goods for a record $83.1 billion and then launched an advertising Always pads campaign "Like a girl," designed to combat gender stereotypes and help young girls who in the era of social networks suffer from low self-esteem and at times more often guys engaged in self-harm. Another example is the sensational and hotly discussed Gillette ad campaign, dedicated to the fight against toxic masculinity.

President David Taylor boasted about these projects this year in Davos to colleagues, telling how his company helps people. He then modestly but confidently explained that this is due to the fact that women are the main buyer of his goods, so promoting feminism and gender equality, in particular, the two aforementioned advertising campaigns, helps him to increase the trust of his main buyers.

It seems the formula "Increasing attention to the brand by 5%, leads to an increase in sales by 95%" really works.

This year, let's follow China: They are approaching the digital Olympus -- it will be hot, specialists say. American and European governments will continue high-profile proceedings with Facebook and Google, waiting for new restrictive laws.

What else to see from the Davos forum:

At the meeting devoted to the crisis of media freedom around the world, a cruel figure was mentioned: From 2000 to 2019, the number of journalists sitting in prisons around the world increased from 53 to 251 -- almost five times.

IMF President Christine Lagarde casually said that although mainly wealthy states are concernd about climate change, it is the poor countries and regions that will suffer the most.

The Governor of the Central Bank of Japan Haruhiko Kuroda said that the aging of the population (Japan is the leader in the number of retirees) can be a blessing for the country, as the robotization of production takes place without the indignation of the population about the loss of jobs.

Given the abundance of high-ranking women in Davos, discussions about gender equality and the apparent capitalization of feminism were plentiful. Statistics are disappointing: women account for more than 50% of the world's workforce, but less than 25% of them hold at least junior management positions. This sad data is reflected in the popular joke that there are fewer women in leadership positions in the world than people named John.

What to Expect: The Threat of Chinese AI, Techno-Nationalism, and Corporation-State

But the most relevant joke, which is worth remembering for a long time, was that of Bill McDermott: "In God we trust, but everyone else needs to bring the data."


Author: USA Really