Congress hasn’t determined the artificial intelligence behavior it wants to regulate

Congress’ attempt at AI legislation

The 116th Congress has three bills or resolutions of note sitting in a number of committees that attempt to address the use of artificial intelligence in American society.  H.Res. 153 is intended to support the development of guidelines for the ethical development of artificial intelligence.

Meanwhile,  HR 2202 seeks to establish a coordinated Federal initiative to accelerate artificial intelligence research and development of the economic and national security of the United States, while H.R. 827 is concerned about training and retraining workers facing employment disruption by artificial intelligence.

The bills and resolution are more exploratory versus regulatory in nature.  They don’t expressly get at any behavior that needs to be regulated.  The nascent characteristic of artificial intelligence development along with government’s inability to keep regulation at the same pace as technology development may be in part the reason for the “let’s see what we have here” stance of early regulation.  In other words, Congress may just be getting a feel for what AI is while taking care not to interfere with the innovation needed to further develop the technology.

On the other hand, these bills could help Congress get ahead of the issue of labor disruption. Workers read about AI’s capacity to replace jobs that are more pedestrian or mundane; jobs currently occupied by lower income workers.  The prediction about labor disruption won’t leave certain higher-waged jobs untouched either as AI platforms, data mining, and machine learning threaten professions such as accounting or law.  By determining the data needed to thoroughly analyze the impact and growth of artificial intelligence; identifying the industries that will benefit most from or be harmed the most by AI; and comparing today’s existing job skills with the job skills that will be needed in order to work alongside AI, Congress contribute to alleviating labor force disruption.

The Human-Machine Relationship

Unlike a number of dire predictions of the emergence of “SkyNet” and terminator-like machines subjecting humans to slavery or worse, most analysts and commentators see AI as a tool that augments human capabilities, making humans better or more productive.  The emphasis will be on collaborative intelligence, with human and machine working together.  And how well that relationship works depends on how well humans program the machine.

Another consideration is artificial intelligence’s ability to self improve.  The goal of AI development is to build an artificial intelligent agent that can build another AI agent, preferably with even greater capabilities.  The vision is to move from AI’s narrow, single-task capabilities to a more general AI, a concept that sees AI exhibiting greater abilities across multiple tasks, much like humans.

Possible targets of legislation or regulation

If legislation or regulation is to target the machine-human relationship, elected officials and regulatory heads will have to consider their policy initiatives impact on:

  • the ability of humans to train machines;
  • the ability of humans to explain AI outcomes;
  • the ability of machines to amplify human cognitive skills;
  • the ability of machines to embody the the human skills necessary that lead to the extension of human physical capabilities;
  • the ability of artificial intelligence to self-improve;
  • the difference between “safe” AI (the ability to maintain consistency in AI outcomes) versus “ethical” AI (ensuring that AI platforms are not a threat to human life.

Conclusion

Just like the application of artificial intelligence, Congress’ foray into regulation of AI is nascent.  This is the time for AI’s stakeholders to either begin or maintain efforts to influence all levels of government on AI’s use in the commercial sector.

 

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Traders don’t concern themselves with Trump tweets anymore

What the Business Media is Reporting

After the November 2016 presidential election, the new rallying cry was the “Trump Effect” as supporters of the newly minted president sold the narrative that Mr. Trump’s administration would be good for the financial markets and the economy as a whole.  Mr. Trump’s Twitter pronouncements on NAFTA, manufacturing, and trade with China seemed to embolden markets, but as noted in this article in The Financial Times, Mr. Trump’s tweets no longer get the attention of traders.

What is getting the attention of traders?  According to Bloomberg.com, among trader concerns are the dovish comments of central banks.  The Federal Reserve has been signaling that it may take a break from rate hikes.  Low yielding debt, according to Bloomberg analysis, has been scaring investors, however, increases in yields scare asset managers given the threat to values that result from the inverse relationship between yields and asset prices.

Bloomberg estimates that, under the rule of duration,  a full percentage point increase in yields could result in a seven percent erosion in market value.  The bond markets may be looking at a $2 trillion loss.

Government Moves Traders Should be Concerned About

This is budget season as committees in Congress review agency requests.  According to the Congressional Budget Office, the U.S. government is facing a Fiscal Year 2019 budget deficit of $897 billion.  Unless the government can close this gap with increased revenues or less spending, it will go into the debt markets, issuing bonds to help close the gap.

As the deficit widens, there will be an increase in supply of government bonds, a fall in bond prices, and an increase in interest rates.  Funds will be taken out of the private sector portion of the economy and move into government coffers.  In other words there will be less money available to invest in factories, plant, and other infrastructure necessary for economic growth.

While the Federal Reserve gets a lot of play in the media, traders should not allow the glitz that the media paints on the central bank to distract them from the budget activities of Congress.  Congress, as keeper of the purse strings, has a key role in managing the economy.  Its processes, while a lot more mundane than a presidential tweet, are important to monitor.