The Drive For AI: 2 Systems

Summary

• Artificial Intelligence is the process that takes all the information collected in databases and turns it into something new and more productive.
• The Chinese government is the driving force behind the country's development of bigger and more inclusive databases in order to drive economic growth global leadership.
• In the United States, the private sector is the driving force behind economic advancement and in recent years has advanced the use of AI to accelerate its pace.
• This battle appears to be where the economic and scientific evolution of these competitors is going and where future dominance is going to come from.
• This battle is particularly important to investors because this is where future economic performance is going to come from.

Tony Studio/iStock via Getty Images

China has been pushing the edge of building databases to head up the growth and spread of information to create and develop their leadership into the new era. I have just written about what China is attempting to do in this space.

The development of Artificial intelligence, AI, is also a part of this effort.

The United States government is making nowhere near the effort that China is to build databases.

The advances in the United States, as would be expected, are coming from the private sector.

Supporting data come from the advancements being made in the world of Artificial Intelligence, the world that uses the information sources being developed.

John Thornhill writes about these advancements being seen in the world of AI in the United States.

"AI is increasingly being used in many more specific, invisible and productive ways across industry and in the hard sciences."

"Perhaps more narrowly defined in most cases as machine learning, AI has become a powerful technological tool that is being used to optimize search engines, accelerate drug discovery, invent new materials, improve weather prediction and deepen our understanding of mathematics, biology, chemistry, and physics."

"That diffusion of AI into almost every corner of the economy and society is going to profoundly affect us all."

In other words, AI, and machine learning are exploding in the United States, and are exploding primarily in the private sector.

A Private Sector Phenomenon

Whereas in China, the government seems to be the driving force behind the building of databases, in the United States, the private sector is at the head of the effort to move as quickly as possible into the future.

Mr. Thornhill speaks of the concern that this evolution in the United States will lead to "lopsided development" that favors the private sector but leaves universities, civil society, and government starved to advancement.

Mr. Thornhill discusses the need to keep expertise in academia, inside the public sector, so as to develop a common infrastructure.

He even speaks of the development of "national research clouds" that will broaden the access of AI.

But, this sounds exactly what I was describing in the earlier post discussing what is happening in China.

The concern here is the imbalances that might take place in the world. In China, their effort is too authoritarian in nature. In the United States, Mr. Thornhill is worried about unchecked corporate power.

Note the conclusion Mr. Thornhill reaches:

"Increasingly, it is private companies that are becoming the centers of leading-edge AI research and are reaping almost all of the gains."

And, it has been technology companies, in recent years, that have attracted all the university AI experts.

A Stanford study showed that in North America the private sector has hired 60 percent of all the newly minted Ph.D. students in AI in 2021.

Only 24 percent remained in academia.

A decade ago, the split was roughly equal.

Where The Money Is

A further study from Stanford indicates that in 2021 global private investment in AI was around $93.5 billion. This is double the amount going into this work in 2020.

And, the number of AI patents has increased 30-fold since 2015.

Furthermore, in this age of inflation, the median price of a robotic arm has fallen by 46.2 percent over the past five years.

The times, "they are a'changin'."

Over the past five years or so, there has been a real change in the focus of AI.

Previous to the current movement in this field, the approach was one of deductive logic.

The new move has applied inductive logic to the approach and brought neural networks into the development of innovations.

One can see in the textbooks used in the field that this movement has contributed to major advances in the development of AI.

And, many in the field believe that the advances made are only just a start. The belief is that the switch, allowed by more advancements in computer technology, has just begun to open up what can be done.

So, the growth of both the focus on the assembly of larger and larger databases, as well as the refinement of the logical approach to the derivation of outcomes has opened up the field to one of much greater productivity.

Mr. Thornhill gives us the example of one firm, a firm called DeepMind, which uses a database of protein structures, has now accumulated more than 350,000 users in over 190 countries.

Here we see how scale is achieved in the evolution of information technology techniques.

The Private Sector

Speaking of the private sector, however, it is very important to realize the very exceptional times we are in.

I have worked in the venture capital space and the Angel finance space since the early 1990s.

I have never seen a time quite like the past two years in this area.

We have experienced the spread of the Covid-19 pandemic and have also endured an economic recession, even though it was a very short one.

But, the amount of energy and effort that has gone into the creation of the "new" has been truly exceptional.

Innovation is taking off, unlike anything I have seen in my lifetime. The money is there. I have written about the availability of money in this space.

But, also the people are there who are waiting and ready to create something new.

People are getting access to information in a way and in a quantity that has never been seen before. One way or another, people are getting access to the new databases that are being created. The knowledge is being collected and listed.

And, these people are also putting their know-how together in a way that has never really ever been done before.

AI and machine learning are right there leading the field.

The world is changing right there in front of us.

We Do It Our Way, And The Chinese Do It Their Way

This is the battle going on. And, to me, this is the most important battle that is going on.

History shows, as I have stated many times before, that information grows and spreads.

It is this disequilibrium feature of the world that drives all advancement that takes place.

Governments, businesses, and investors cannot ignore this reality of economic growth and development. This is what is driving on value over time.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Comments

[hawkeyec]

@John M. Mason

You've highlighted several issues here. For the last two or three decades roughly half of the new PhDs in the US have come from offshore. It seems perpetually difficult for the US educational system to generate candidates for our highest levels of education. Those who come from offshore are often the best of the best and many go back "home" when they are done, taking the source of our expertise with them. I taught business subjects at the university level for 40 years. My school for the last 35 of those years not only has arrangements with several Chinese schools to send students to our programs, but also runs two AACSB accredited MBA programs in China, in Hong Kong and Shanghai. Over the years I taught many Chinese students and as a group they were much better than most of my native students.

You also highlight the difference in AI strategies between the US and China. Here, companies take our data, build databases, and sell them for profit. It is harder for me to see my own medical data than it is for Google to see it and sell it. I live in KC, home of Cerner, the largest firm in the medical records business. What do you suppose they do with all that data? Frankly, many people applaud the fact that our market system stealing our data is somehow wonderful. Not it isn't, our personal data is being taken from us to sell to advertisers. I use an ad blocker on most of my Internet activity (two key sites won't let me use it). It keeps track of the number of blocked ads. Just this morning alone that number is over 1500 and climbing fast. Some will argue that the fact that China uses the government to build its databases is somehow evil. In case people don't know the NSA has a huge facility in a remote part of Utah where they collect and store all electronic communications produced in the US: e-mails, phone calls (so-called land lines are actually being converted to easily captured VIOP), general data transmission, internet traffic, etc., all ostensibly to protect us from terrorists. So we get it from both sides here, government and business. I'm not a conspiracy guy, NSA really doesn't hide this program.

[Peter Peeters - old]

@hawkeyec - Thanks for your comment.

[kevinconnolly]

In education------- grade school through high school the United States ranks 26th out of 30 in the survey------the Chinese, Taiwanese, South Korea and Japanese rule the roost. Without foreign PHD's where would American high tech be?? The hand writing is on the wall for a declining U.S. and A.I. will not be our only loss in a world driven by top notch educational systems based on MERIT!!

[Peter Peeters - old]

May be that the difference is,that AI in China is done in a more sophistic way by more extended organisations and better fundamental Investigation is done, especially in Europe.