Thursday, 9 April 2015

The Race to the Bottom to Accelerate?WE

Who Will "Win" this Race in the Valley?

I've recently returned "home" to the San Francisco Bay Area after a couple of years living in Paris, France.  During my exile, I kept a very loose eye on the news and developments, which, as Eliza Doolittle ("My Fair Lady") summed correctly -"without much ado, we will all muddle through without you" - carried on in my absence.

It seems that the "culture" of the Valley has become more widely and acutely discussed.  Picking apart the ins and outs has become almost a sport.  The "bro" culture. The rush to make huge sums of money.  The rise (in the past) and triumph (in the present) of the "nerds."  Some of the analyses have been more accurate than others.  In particular, the most aggressively ignorant meme is that companies in Silicon Valley are "too white and male," a claim that is plainly belied by even a high-school level knowledge of statistics.  For example, the hot tech companies - e.g., Facebook, Twitter, Google, have workforces that are approximately 50% white, in a country where more than two of three people are.  But then, it's not 'sexy' to publish the more truthful headline that "Tech Companies Are Too Asian."

Now, I do not subscribe to these sort of phony claims that a successful company is "too" anything - if the best minds overselect for Asians, then it stands to reason that the successful company would overselect for Asian employees.  You fish in the lake where the fish are.

The rhetoric has gotten more shrill and the volume louder about why the tech world is insufficiently welcoming to women.  "Gender" bias is a the hottest topic (aside: the abuse of the word "gender" is just one more surrender in the steady retreat of linguistic standards. Why people are squeamish to use the real world, "sex," escapes me.)  

The recent case of Ellen Pao, a former employee at the archetypical venture capital (VC) firm of Kleiner, Perkins, as roiled the valley.  Pao was enmeshed in a nasty battle with her former employer, ostensibly because she failed to be made a partner in the firm, complained about it, and eventually got fired.  Pao sued Kleiner in a multi-million dollar "gender" (sic) discrimination suit, which she eventually lost.

Setting aside the inherent sense of self-worth of a 30-something who had delusions of grandeur, the discussion has touched off many arguments in the Land of Lean In.

Pao made news today as the CEO of Reddit, a social media site headquartered up the peninsula in San Francisco.  Pao, under the rubric of looking to level the pay gap between male and female employees at Reddit, announced that Reddit will not engage in salary negotiations as part of its hiring process.  Citing data that men are more likely to negotiate pay, and to be more aggressive (and successful) than women when they do, the practice will not continue.
Men negotiate harder than women do and sometimes women get penalized when they do negotiate. So as part of our recruiting process we don’t negotiate with candidates. We come up with an offer that we think is fair. If you want more equity, we’ll let you swap a little bit of your cash salary for equity, but we aren’t going to reward people who are better negotiators with more compensation.
At first blush, this strategy seems like a blow for equality.  

But is it?  

As I see it, the end-game here is to depress salaries stealthily.  Pao and Reddit appear to be championing equality (which in a sense, is existentially true), and they will likely draw kudos for the effort.  But this equality is likely to come not because women are going to see more money, but because male employees are going to see less.

If one thinks about the issue for more than three seconds, it's obvious, isn't it?  What sort of employee has more leverage to demand higher pay, the entry or mid-level engineer, or the candidate being sought for upper management?  Did Pao herself accept the first offer from Reddit, or did she negotiate her pay and equity? 

The de facto outcome of this move, if duplicated, will almost surely shift more of the income away from the middle (who will no longer be able to negotiate for more pay) and towards the top (who have far more leverage to expect/demand more pay, or worse, to C-suite employees whose pay is set by boards of puppets controlled by their friends). 

Women are being used here as part of a long-term strategy, either consciously or unconsciously, to undermine wages.  It's a trend that is not new.  I've long believed that, if proper analyses were conducted on the wage structure in the developed world, the entry of women in large numbers into the workforce would almost surely be a significant factor in wage stagnation/suppression.  

We hear often about how real wages have been flat since 1980 - a date conveniently chosen because of the election of Ronald Reagan.  In fact, wages began flattening about a decade earlier.  Just after women becan to move in larger numbers into the US economy.  

As the chart above shows, real wages closely paralleled productivity right up until the early 1970s, and then split.  Household income has continue to grow - slowly - but real hourly wages actually fell.  How is it possible that household income ticked up, but wages fell?  

I haven't done the modelling, but I would be highly curious to see the results of anyone who has.  

The laws of supply and demand cannot be repealed - if the supply of workers is increased significantly, what effect is that likely to have on wages?  

Pao's efforts are just the latest salvo.  And make no mistake; it's not stochastic.

A year ago, the big tech employers in the Bay Area (Apple, Google) settled a lawsuit surrounding collusion in hiring and recruiting from each other's workforce with effect that depressed wages for tech workers.  

Negotiation over pay relies on leverage - if you're a highly valuable candidate, you always have the option to say, "No.  I don't accept this offer" and walk out the door.  But if the company has a gentleman's agreement that competitors also will not negotiate or "poach" employees, that leverage is gone.

The leaders of these companies are not stupid - Pao is not stupid, with degrees from Princeton and Harvard - so they surely must see where this is going.  

In this case, to more money for people like Ellen Pao, who rather than being called out as the rapacious businesswoman that she actually is, will be championed as a fierce feminist fighter.


Tuesday, 7 April 2015

A Future So Bright, You Have to Wear Shades?

When the End Comes, All That Will Be Left Is Us

Today, I came across this interview given by Apple co-founder Steve Wozniak.  IMHO, Wozniak was the real brains behind The Fruit Factory, whereas Steve Jobs was the guy who understood what the market wanted, or perhaps more accurately put, telling the market what it should want.  

The Woz was being interviewed by an Australian journal after a recent announcement that he had applied for and received permanent residency in that country.  His son lives in Sydney, and Woz has apparently long fostered a desire to "live and be buried" in the Land Down Under.

Among the topics Wozniak held forth on was his increasingly dim view of the future of mankind in a world of artificial intelligence.  He joins an increasing list of impressive minds (Stephen Hawking, Elon Musk) warning us of the risk of summoning the demon, as they say.

The basic idea is quite simple and familiar to anyone who has seen one of the various films in the catalogue of dystopic futures (The Terminator franchise, Logan's Run).  Humanity create computers and/or robots with true AI, the machines, not being subject to the same biologic limits as human beings, quickly become "smarter" and faster than their creators, and subsequently become our overlords.

With catastrophic consequences:
Like people including Stephen Hawking and Elon Musk have predicted, I agree that the future is scary and very bad for people. If we build these devices to take care of everything for us, eventually they'll think faster than us and they'll get rid of the slow humans to run companies more efficiently,
Woz imagines a few alternatives for human beings:
Will we be the gods? Will we be the family pets? Or will we be ants that get stepped on? I don't know about that … But when I got that thinking in my head about if I'm going to be treated in the future as a pet to these smart machines … well I'm going to treat my own pet dog really nice.
Aside from the fact that one ought to treat one's pets "really nice" irrespective of how our future turns out, I remain unconvinced of the proposition of real "AI."  I've written before about how I view the threat of AI, but suffice it to say that I am an adherent to John Searle's argument against "strong AI,"  Essentially, machines will never really be thinking or understanding in the sense that people commonly describe them; rather, they will be made to simulate these processes.

But Wozniak, and Musk, and certainly Hawking are to be listened to when they warn of these risks, Of course, machines do not need to do more than simulate intelligence with reasonable effect.  The problem here is what responsibilities we abdicate to machines.  How much autonomy we give them rather than how "smart" they are.

A more pressing question I would pose to Woniak et al is the immediate future of a workforce where machines can simulate the jobs we do.  A couple of recent publications, including the book Our Kids: The American Dream in Crisis by Harvard researcher Robert Putnam examine the reality that the ability to win and maintain life in the great American middle class has become increasingly challenging.  It's well-reported that wages have been more or less stagnating since about 1972, and that the trend is accelerating and for larger cohorts of Americans.  

Many reasons are offered - the usual suspects about racism, corporate rapacity, educational deficiencies.  But what to make of the reality that machines that can simulate human beings with greater skill can plainly replace us?  The argument since the rise of machines is that automation is part of creative destruction - the automobile put the buggy whip maker out of business, but created jobs for the mechanic.  The ATM reduces our need for bank tellers, but requires people who can make, program, and maintain the devices.

The central problem with this argument is the assumption that there is no upper limit to human abilities; that we will forever be able to create new occupations.  That does not seem to me a sustainable view.  

John Derbyshire wrote in a book entitled (without irony) We're Doomed:
The assumption here is that like the buggy-whip makers you hear about from economic geeks, like dirt farmers migrating to factory jobs, like the middle-class engineer of 1960, the cube people of today will go do something else, creating a new middle class from some heretofore-despised category of drudges. But… what? Which category of despised drudges will be the middle class of tomorrow? Do you have any ideas? I don’t. What comes after office work? What are we all going to do? The same thing Bartleby the Scrivener did, perhaps, but collectively and generationally.
What is the next term in the series: farm, factory, office…? There isn't one. The evolution of work has come to an end point, and the human race knows this in its bones. Actually in its reproductive organs: the farmer of 1800 had six or seven kids, the factory worker of 1900 three or four, the cube jockey of 2000 one or two. The superfluous humans of 2100, if there are any, will hold at zero. What would be the point of doing otherwise? [emphasis mine]
Machines that can function as lawyers or doctors - they will need people to make, train, and maintain them.  But I suspect not on a 1:1 basis.  Likely not on a 10:1 or 100:1 basis.  That's an awful lot of smart, educated people who are going to have to find something to do.  

If the current trends (e.g., the guy with graduate degrees working as a salesman at Macys) hold, as bad as such a future will be for the educated, it's going to be cataclysmic for those lower down the education scale.  Someone perhaps capable of graduating high school or perhaps completing a couple of years of community college is going to find that he is competing for jobs with men and women who are much smarter than they.  

The "solutions" (universal pre-school, 'free' community college) are going to bump into biological realities.  And fast.

More from Woz, who spent a few years as a teacher after he became independently wealthy:
Computers in schools were very new when I was teaching, and they didn't really succeed. They didn't change how smart we'd come out thinking; we're just more powerful at getting answers and knowing things by using the internet
The idea that methods or tools will make people "smarter" is not grounded in reality.  These tools increase the reach of our existing abilities.  They extend them.  But they do not change their nature.  Much like the fact that better running shoes allow human beings to run faster, they cannot make us fly.

And in this case, the machines will always be able to carry out "mental" tasks faster than we can.

So I am not terribly concerned about the threat of AI to humanity.  The economic challenges posed by "smart" machines are going to be nasty, and they are going to arrive much sooner,  Some argue that they've arrived already.

I suggest that people like Wozniak and Musk should be much more concerned about the immediate future of human beings rather than the ultimate fate of humanity.

Wednesday, 1 April 2015

Days of Future Past

Who says "you can't go back?"  

We are about to find out if the old adage is true or not, as recently, I changed jobs - and companies - to take an exciting new position.  The plus side: more responsibilities, more opportunities, more visibility.  More money.

But there is a price to everything, and in this case, that price means giving up the final few months I had living in Paris.  

It was a very tough choice. 

Needless to say, Paris is a fabulous place to live; we've enjoyed just about everything from the food, the history, the culture, and the architecture to the perks of living in the centre of Europe, a location that has allowed us to visit a dozen countries in Europe and Africa.

However, life forces choices, and being a grown-up means, sometimes, making decisions that you'd rather avoid.  As the sub-text of this blog paraphrases John Lennon, life is what happens when you're making plans.

Thus, I've had to say "adieu" to ma vie en rose dans la ville de lumière after a couple of years as an adopted Parisian.  (My wife and son get a temporary stay, as they will be coming along at the end of his school year this summer).

The fall will be difficult, but it will not be fatal.  We're coming back to the US, and in a twist of fate, it is a real homecoming of sorts.  We are moving back to the San Francisco Bay Area, where our son was born and where both my wife and I lived nearly all of our adult lives.

We are no longer going to be, as the title of this blog states, San Jose Refugees.

It is going to be an interesting transition - we've been gone from central California for nearly a decade now.  Just about everything has changed.  I'm no longer young, but decidedly middle-aged, a fact my son reminds me of with frequency and glee.  For a chunk of the previous time, I was single, and for virtually all of it, childless.  I have responsibilities that I hadn't, interests that I didn't, and aches in places I was unawares of.  The BMW convertible is gone.  No; a Honda Odyssey is not on the cards.  A sensible sedan likely is, however.

I visited my old neighbourhood this weekend - it looks very different of course.  Nothing is more constant in the Bay Area than change.  There are many new, fancy high-rise apartments in San Jose that were one and two-storey, mid-century eyesores.  

Today, a shipment of personal items arrived at my temporary, corporate apartment from Paris after some delays at the customs office.  The foreman of the delivery crew asked me if in the past, I had lived on 11th St in San Jose, which of course I had.

Turns out, the guy lived next door to me 20 years ago.  

He was 11 at the time. Now grown, he has three children of his own.  

The world is, indeed, small, even if it's not as "flat" as Tom Friedman would have you believe.

Can you go back?  We are about to find out.

Back to the What?

It's Now 2015, and STILL No "Mr Fusion"

One of the fun things about being a parent is getting to re-live certain moments of your youth with neither guilt (due to unabashed indulgence in some of the less-than-adult pursuits) nor nostalgia.  (NB: recall that the root of the word "nostalgia" is Greek meaning a pain - 'algia' - one feels when remembering one's home - "nostos").  

Had a trip down the guilt-free memory lane recently watching the 1985 movie (I hesitate to call it a classic) Back to the Future with my nine-year old.  Some of the jokes are not as funny as I remember them being, some of the plot twists (Libyan terrorists?) seem terribly dated, and the special effects often seem at a level of cheesiness that they make Kraft Dinner look downright healthy.

One thing struck me, though, and that is, it is now 2015.  The movie was released in the summer of 1985 - nearly exactly 30 years ago.  

One of the chuckle-inducing themes of the story is that the protagonist goes back 30 years to 1955, and we all get to laugh at how primitive, corny, and backwards the people in the 1950s seemed.  Gee, my parents were square, huh?  Glad that I'm not like that.  

Did The Men of Texaco really come running out to service the Chevy when it pulled in?  Did the kids really say things like "swell" and "dreamboat?"

Well, the laugh is on me, as it is now my turn.  

I am sure my own folks had the same feeling, but wow.  Was 1985 really that long ago?  It hardly seems possible.  

As I think about all the "modern" items in the 1985-era McFly household (boom boxes, Sony Walkmen, touch-tone telephones, floppy disk drives, and cassette tapes), it does in many ways seem a different world.  Who could have imagined then the iPhone or wireless internet.  Or the internet, for that matter, which in those days was still a figment of Al Gore's imagination.

I am pretty sure my son - who has lived his entire life in an era where CD technology is largely in the rear-view mirror - regards the artefacts of my youth as Indiana Jones-worthy antiquities.  He's not yet weighed in on feathered hairstyles, parachute pants, or "Wake Me Up Before You Go-Go," but he does at least show some appreciation for Pac Man.

At the end of the movie, Professor Emmett Brown returns from the future in a flying car powered by trash converted to energy in "Mr Fusion."  Despite all the advances of the 30 years in between Hill Valley circa 1985 and today, we still have not achieved flying cars.

Peter Thiell was, in this respect, correct.

Party on, Garth.