College Questions

College Questions: What’s going on with the USA and China?

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Continuing on with this series, I have a new question to answer surrounding the ever-present USA vs. China debate. The question at hand looks something like this:

Explain China, Hong Kong, and all of the global politics that are going on related to it. What is the chess game that is being played?

I feel it necessary to make a large disclaimer upfront that I’m not a pro at economics and that this is a highly, highly complex set of topics to cover. This will be pretty shallow and there will definitely be some opinions involved. I will also disclose upfront that I’m not a fan of China and tend to bias against China. As a reminder, this series is effectively me taking 1 hour to learn a subject and then 1 hour to write it – with no edits! It’s a verbal vomit of my thoughts onto the page.

Now, that all said… strap in!

To start out with, China and Hong Kong should be viewed as separate entities, as they historically were. For much of China’s history, they have been a communist state. They are still very much considered a communist state today but have a much more interesting economic agenda that we will likely cover later. In 1972, President Richard Nixon went to China with a lot of economic advisors as China was starting to undergo an economic change that focused largely on expanding their trade and presence globally.

This is separate than Hong Kong which was a British colony up until 1997 in which the British transferred “ownership” of the territory over to China proper. Since then, they have historically operated as one country but with 2 separate systems in place (communism vs. capitalism).

Why did China want to take back ownership of Hong Kong? I think the answer is pretty simple. Hong Kong had the global exposure and trade policies already in place that China could leverage. They could subtly attract global corporations to doing business with China through Hong Kong, unlocking billions of potential people to sell to. Pair that with business-friendly policies and you’ve got yourself a recipe for rapid growth. Oh, did I mention that in order to do business with China you effectively have to sign over your corporation? In essence, you have to have a company sponsor you whose origins are in China already – with the exception of a handful of large corporations (think Boeing).

This is where shit gets hairy. While China has IP rules, they don’t really follow international IP rules. For example, if you were to have your plans for your toy and manufacture them in China, you will almost certainly have a Chinese knock off to compete with your exact product at a fraction of the cost. In my opinion, the Chinese knew that Americans almost always choose the cheaper option and so they could effectively undercut American companies. The real reason they could do this is that the taxation was completely backwards. While USA corporations were not only taxed at a corporate level but also had import taxes into China, whereas China could import into the USA with effectively 0% taxes, making it impossible for USA corporations to compete. This is largely true on physical goods and gets a little more tricky with software or complex IP.

In the case of complex IP specifically with large corporations, China has been known to go to extremes to get their hands on it. In one scenario, they were actually charged for stealing IP from a massive flash memory maker called Micron.

You’d think that the USA would start to get worried about this, right? Nope. In fact, the opposite happened during the 2000’s with massive globalization. China created a massively strategic plan that was effectively a grassroots campaign to enter the USA market. In order to gain leverage on the USA, they purchased a lot of the debt we accrued during the 2000s Afghanistan and Iraq war, putting us a bit on our heels in terms of economic leverage. They then started to push massive donations into Universities to help influence agendas and normalize a Chinese culture. If you go onto any major campus in the USA today, you’ll find something called a Confucius Institute. Taken directly from Wikipedia, this is the description:

Confucius Institute is a public educational organization under the Ministry of Education of the People’s Republic of China, whose stated aim is to promote Chinese language and culture, support local Chinese teaching internationally, and facilitate cultural exchanges.

The way I read into this is effectively a long-played game to normalize a culture that is the polar opposite to the United States.

If we fast forward to today, the Trump Administration has made it clear that they are fighting hard against China to level the playing field once again. There’s an absolute metric fuckton of political interests at play here with massive money to protect the status quo with China. While each administration has extremely shady elements going on, a great example of how deep these interests can go is exemplified in former Vice President Joe Biden and his son. Hunter Biden flew on Air Force Two to China with his dad, Joe Biden, in December of 2013. Shortly after they got back to the United States, Hunter Biden’s private equity firm received a $1.5B PE deal from China. Shady, no?

So, let’s just assume that there are a lot of deep, entrenched interests to make sure that certain agreements continue to stay in place in order to benefit a few elites. If we go along with that conspiracy theory, a lot of the follow actions make a lot more sense.

As President Trump took office, he and his economic advisors start to prepare for a trade war. They decrease taxes for the majority of Americans to start to increase the overall USA population cash flow. The trade-off here is more USA debt. From there, they start to renegotiate all of their trade deals in order to get more favorable terms. What is actually happening is that they are working to deleverage China by creating alternative trade options. He does this by creating the USMCA trade agreement, pulling out of the TPP in hopes to create a more strategic and favorable trade deal, and then starts to massive in-roads in Africa with Prosper Africa to accelerate a 4th, and cheaper, alternative labor market. The other three markets being China, Indonesia proper, and South America.

I’m sure there are many more but all of this was designed to level the playing field and deleverage China.

And then the trade war starts. It all starts to go south for China starting April 17th of 2017 after the two parties fails to make progress on negotiating on their 100-day plan. Both parties aren’t willing to make the concessions needed to move the deal forward.

What happens from there has been pretty spectacular. The Trump administration starts a “death by a thousand cuts” strategy by starting to incrementally increase tariffs on strategic items that China imports to the USA. China responds in kind by doing the same, however, the blowback to the USA is fairly marginal for two reasons: the tax cuts and the alternative markets created through the renegotiated trade deals. Or at least that is what was intended. Over most consumer goods, 9 categories of goods had seen a significant increase in CPI. Additionally, it clearly impacted the exports of agriculture from USA farmers causing the federal government to have to step in on further subsidies to keep that industry afloat.

Another element at play here is the stock market. Where money flow dramatically impacts political decisions. The Trump administration is clearly working on ways to ensure that the stock market stays “healthy” relative to China by using central financial instruments, such as quantitative easing (QE), to make sure cash is flowing and the stock prices stay high. The USA is trying to force the Chinese hands by reducing the value of their stock market while also forcing them to deplete their cash reserves. The problem with this strategy is that China is considered a currency manipulator. This makes it very difficult to compete on cost of goods imported/exported. For a quick primer on currency manipulation, check out this article.

Alright, so we’ve talked through a bit of the trade war. How does this deal with the Hong Kong uprising?

The reason the Hong Kong protests started to happen was due to something called the ELAB: the Anti-Extradition Law Amendment Bill. Hong Kong citizens oppose this bill because it would enable China to detain and extradite Hong Kong citizens back to China, effectively saying that China rules supersede Hong Kong. This is scary for Hong Kong citizens because China has a very Orwellian approach to governing its citizens. Millions of citizens have been part of this demonstration.

The big reason there is such a blowback is that Hong Kong has been largely pushing for a more democratic society – similar to the USA. There was an attempt to start the revolution back in 2014 with the Umbrella Revolution – a series of sit-ins by students to protest the Chinese government starting to take over the Hong Kong system. There is effectively a multi-government war going on and the Hong Kong citizens are being subjected to being taken over into communism.

As such, you can see the Chinese government continuing to push for a takeover in order to gain a strategic economic lever inside of Hong Kong. It wouldn’t surprise me if the USA government was trying to stir the pot with the local citizens as well.

I’m at the 1-hour mark so I’ll do a quick summary to wrap this up.

  • The USA renegotiated strategic trade partnerships to gain more favorable terms to deleverage China
  • The USA is starting strategic investments into Africa to further open up more markets to buy/sell into in order to deleverage China
  • The USA is incrementally increasing tariffs on China in order to push its stock market down while starving their government tax revenue
  • The USA is betting on the financial “squeeze” to push China to negotiate a fair, bilateral trade agreement as well as renegotiate US debt held by China
  • China has a long term strategy of normalizing their way of operations by effectively infiltrating the USA from the ground up (eg. University influence on the new generation of kids)
  • The Hong Kong protests pose another angle of a challenge for China that is making it hard for them to continue down the path they’re on.

I wouldn’t be doing my job if I didn’t call out one specific example that hits home for me. My genetics company recently had a call with a very large buyer of genetic consumables for genome sequencing from a company called Illumina. In our discussion, we questioned why there are such few organizations in the USA doing whole human genome sequencing. Their answer was astonishing.

What has effectively happened is that a company called Novogene, who is owned by the government of China, created entities in the USA to operate within. The Chinese government buys massive quantities of consumables at a super high discount rate. From there, the Chinese government subsidizes the cost of goods, labor, and real estate in order to bring the price significantly down to a competitive range that USA companies cannot compete with. Companies do business with Novogene because it’s the cheapest option on the market for whole human genome sequencing. Typically, human WGS costs around $800-$1,000 to perform. With Novogene, it’s about $400-$500. What is so bad about this is that the samples are physically shipped to China where the genetic data produced lives. This data is critical for novel allele discovery when aggregated. Now, obviously you need health records for truly targeted drug discovery, however, for a wide range of generics, you can work off of population-based genetic data sets. The generics drug market is on track to reach $380 billion by 2021.

For us little guys, it makes it nearly impossible to compete with the entire backing of the Chinese government versus our measely $200k investment.

I hope this was interesting to read. Leave a comment if you agree, disagree, have more comments to add, or whatever. I’ll be continuing to play around with this series so if you have a question that you want to me to pour my brain over, let me know!

College Questions: What is the future of AI-Human symbiosis?

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Going to try out a new series where I take questions from random young adults in college on topics surrounding, technology, economics, product development, software, and everything in between. The challenge for myself in these is to literally write this in one, 1-hour sitting – with no editing – and vomit my thoughts out. I’m fully expecting these posts to be random, wild, hyperbolic, and meandering 🙂

To kick this off, I asked a friend and former short term intern – Carson Young. Here is the direct quote from our texts:

“With regard to AI becoming symbiotic with humans or we are the “biomatter”, how would that look? What is the future of neural-link but from a broader perspective? What’s the future of AI symbiosis?”

Psch…. such an easy question to kick this series off… /s

To start with, let’s get a quick grounding on what NeuralLink actually is. NeuralLink falls under the bioengineering category of “brain-machine interfaces” – otherwise known as BMIs. This research was largely kicked off back in the 1970’s at UCLA where DARPA provided a grant to spearhead the research. That was the first BMI related research, however, I’d argue that the real critical research started in 1924 with Hans Berger’s discovery of brain waves. He was, in essence, the first scientist to measure brainwaves with his development of electroencephalography. Or for us layman…the EEG.

There’s been a ton of research performed where humans are provided a task to perform while hooked up to an EEG with the exhaust data producing patterns of brainwave activity required to perform said task. Now, EEGs are considered a noninvasive method for monitoring brainwave activity – meaning that you don’t have to crack open the skull to do so. The downside to this is precision. The brain is super complex so fine-tuning the EEG monitoring down to the neural mesh level is extremely difficult.

If we hop back to BMIs, most methods leverage microelectrodes which are effectively super small electrode monitoring devices. Since the electrodes are physically implanted into the brain, we can get a high degree of precision and locality within monitoring wavelength patterns. The obvious downside to this is that it is both invasive and cannot be made to meet clinically transferable standards because everyone’s brain is different.

So, what has NeuralLink built that is different? From my interpretation of the whitepaper, they’ve effectively developed a new type of electrode and “meshing” of these electrodes. In their words…”minimally displacive neural probes that employ a variety of biocompatible thin-film materials.” To me, the thin-film materials are the most important innovation. Instead of being a specific “point” as other electrodes are often created, their thin-film devices enables a much higher density of sensors to monitor brain activity. You can think of the actual “mesh” of the brian device as a bunch of various threads with sensors in each thread, creating the neural-mesh that most people talk about and that sci-fi tends to evangelize.

I should stop here and say that there is more than just the “thin-film” that is innovative in the whitepaper. They appear to also have developed a new surgical robot to install mesh inside the brain as well as new sensors. I’m avoiding that topic simply because the question at hand is more related to the future of this development.

So, on that note, what the f*ck is the future of this going to be??

Like any predictions, you can take an optimistic or pessimistic approach. For me, I believe that this technology will take a while to develop and even longer to become mainstream. It’s not going to be an easy sell to humans (and more so insurance agencies) to say “hey, implant this thing in your brain.” Nothing could go wrong, right?

There are a lot of concerns I have when I take the pessimistic approach. The first thing that comes to mind is security. I imagine that these devices are going to be specifically designed as one-directional units; meaning that they are simply monitoring and passing information along. It would seem foolish to have it be a bi-directional device simply from a security standpoint. We don’t want people going around and brain hacking each other because you bet your ass we’re that dumb.

Some major open questions that I think will need to be answered before going mainstream:

  1. Will these devices have kill switches?
  2. How do software/hardware updates work? (LOL – imagine regression testing these things…)
  3. What is the physical safety of these devices? (eg. head impacts causing the mesh to move)
  4. What is the lifespan of a neural mesh?

If I put on my futurist hat on, I think BMIs have significant potential for changing humans. Information retrieval would be the most interesting and immediate impact these devices would have. I could effectively search for anything at any point. Humans become a walking fucking Wikipedia. Now, the key here is that I think this will help people be able to retrieve information more effectively but I don’t think that it will dramatically impact intelligence or creativity. Yes, we will be able to learn a broader swatch of items. That said, comprehending and complex problem solving isn’t solved. Those skill sets are learned through teaching kids as well as a large genetic component. So, I think there will still be a large cognitive disparity for innovation but I believe that it will help humans overall become more intelligent.

One random thought that popped into my head is how this would change interaction patterns of humans – specifically in social dynamics. For example, if most people have a BMI, how does that impact the dating scene? There are obvious humanistic qualities and genetics that create desirable traits from our evolutionary history – one of them being intelligence. Can you imagine being on a date and immediately retrieve deep historical facts around any topic to woo and win over your potential partner? How bizarre…

If I take Caron’s question more deeply and focus on the word “symbiosis”, I imagine that BMIs will have an ecosystem of other devices they work with – both on your body and in the physical world. I imagine you’d be able to hook it up to a hand device where that hand device can be inserted into other objects, such as a car. From there, your brain is locally hooked up to a car and symbiosis becomes true in every sense of the word. We are already testing haptic feedback suits…imagine giving any inanimate object a human brian and experiencing haptic feedback from that – both physically and mentally?

One of my buddies works at a company called Neurala where they effectively wanted to implant an AI-brain in inanimate objects (like warehouse robots, drones, etc.). With BMIs, we could take something dumb and amplify it with human intelligence based on the interaction points available in that object. For example, with a car, you could imagine a sort of API where, once your BMI is connected with the car, you’d have access to control a menu of items from this dumb device (eg. steering, blinkers, throttle, brakes, car sensors, stereo, etc.). It’s actually kind of creepy thinking about this further, especially if the device becomes bi-directional. You’d basically assume the responsibilities of the sensors from whatever device you’re taking over, creating a perceived extension of your body. What a crazy thought! Imagine having a drone that you could “interface” with. You’d be able to fly that drone wherever with your mind and, assuming bi-directional, you’d experience the “feeling” of flying based on what the sensors provide back to the BMI. The feeling of “height” or “speed” would be a sensation to the human nervous system, creating that tingling feeling and sweaty palms as you took a drone over a cliff of – let’s say – the grand canyon. We’ve all seen the DJI Phantom videos of flying a drone through a sweeping landscape. Now, imagine the “feeling” of that. Pretty nuts.

Although, that brings up something equally as bad which is having a BMI hooked up to something like a strike drone for warfare. Mentally controlling rockets until the point of impact…Where there’s good there’s also evil…

I could also see this manifesting in a totally opposite way…like the Matrix. I can imagine a world where you plug into the “network” and “surfing the web” becomes something more interesting. You could probably pair this with VR/AR to some degree as well. It would be a pretty cool experience being immersed in VR with your brain controlling navigational aspects of web surfing. When you visit Reddit, you really visit it – both mentally and visually.

As I just wrote that, one thing that did pop up as a concern is breaking what “reality” actually means. You hear stories about humans trying LSD or shrooms and visually experiencing a different reality. I wonder if a neural mesh could interfere with the brain’s ability to craft reality for us. I could see that potentially being both awesome and terrifying. I’ll think about that later since that’s a rabbit hole.

Getting back to reality, I think that the early stages of this development is really exciting but will need a large amount of progress in order to be deemed “valuable”. NeuralLink has been able to get 3,072 electrodes in their mesh, which is impressive and a great start. However, estimates provide that the brain has over 100 trillion neural pathways. Just capturing .0001% of the total neural pathways means that we would need to have somewhere around 10,000,000,000 electrodes. Now, I’m sure this is unnecessary given that we’d probably be going after targeted functions (eg. what does moving “left” vs. “right” look like in the brain). I imagine that this device would sort of be like an SDK where you implant it in someone’s brain with a whole bunch of functions, and then there’s a “learning/programming” period where the human goes through a series of actions multiple times that they want to program in the NeuralLink. Once the device captures and programs that, the human can simply think of that action and it will be able to respond. So, getting some ten billion electrodes may not be necessary depending on the complexity of the actions that are going to be allowed/recommended from the device.

It’s been an hour so I’ll stop writing here. Wasn’t expecting this to be a super thought-provoking piece but some of the thoughts around assuming the role of inanimate objects make this a much more interesting topic to explore. It makes me really wonder what it would be like to assume the sensation and “endpoints” of things that my BMI could interact with. What a world that would be.

Thanks for the question, Carson. Hope this was an interesting read for you and whoever else reads this! If you have a question that you want my mind to explore for a bit, feel free to hit me up on Twitter or on my Contact page.