Risk Radar & Risk Shifts

ISSUE 02 2019

BILLIONAIRE BACKLASH

& KASHMIR CONFLICT & AI’S VULNERABLE WORLD Oxfam Executive Director Winnie Byanyima Executive Director Oxfam RISK RADAR & RISK SHIFTS RISK RADAR / 02 19 03

year in a row, but only for poorer people as they are more likely to be overweight, smoke, and drink than their wealthier counterparts. While last summer U. S. president Trump’s Council of Economic Advisers concluded that the country’s war on poverty “is largely over and a success”, that feeling is not shared by those who are experiencing financial insecurity, struggling to pay for costs of living, healthcare, quality housing and good food. The precarious circumstances of the current young generation has led to the rise of Millennial socialism. This is remarkable in the U.S., traditionally a profoundly anti-socialist country. Especially the young generation is burdened with the financial insecurity resulting from the Global Financial Crisis, In the U.S., the wealth gap between generations is growing, younger generations are weighed down by student debt and stagnant wages. This feeds the feeling that that economic growth has mainly benefited the rich and that the global elite cur- Homeless in the U.S. rently in power is not taking accountability for the growing inequality. Politicians like Bernie Sanders and Al- Viktor Orbán - Source: Flickr exandria Ocasio-Cortez respond to this feeling saying that a system that allows billionaires to exist while some people don’t have access to public health is wrong. Alexandria Ocasio-Cortez has called for a 70% marginal tax rate on people who earn over $10 million a year. In addition, in the run-up to the 2020 elections, democrats are distancing themselves from the heavily funded former progressive candidate Hillary Clinton and from the self-funding billionaires (like Michael R. Bloomberg) who are considering a run for the Democratic presiden- tial nomination. Moreover, similar to Labour in the U.K., they promise young Americans free college tuition in times of the student loan debt crisis. 1. Billionaire backlash In the future, technology may further drive inequality. At the WEF, panelists from the political and techno- logical domain all agreed that 4IR technologies such as AI could further exacerbate inequalities and that such Last month, the debate about world’s growing inequality intensified. Just before the Annual meeting of technology could better be harnessed to ensure welfare reached those who needed it. The rise of AI puts at the World Economic Forum (WEF) in Davos, Oxfam published a report showing that world’s 26 richest risk the current jobs of low-skilled, uneducated workers, while creating prosperous new industries that don’t individuals own the same wealth as the poorest half, while in 2017 that number was ‘still’ 43. In 2018, the employ very many workers. Because the largest companies in the world by market value in 2018 are now tech wealth of the world’s billionaires increased by 12%, while the poorest half of humanity saw their wealth giants, Californian governor Gavin Newsom has proposed a “digital dividend” that would let consumers share shrink by 11%. At the WEF, critics like Dutch historian Rutger Bregman, Oxfam executive director Winnie in the billions of dollars made by technology companies in the most populous U.S. state. Byanyima and ‘Winners Take All’ author Anand Giridharadas pointed to the participants’ responsibility for As measures to elevate those living in poverty or precarious conditions are not going to improve lives in the exacerbating inequality. Giridharadas has argued that many billionaires approach philanthropy as a kind near future, the debate on inequality will intensify. The effects of living in such conditions become more vis- of branding exercise maintaining the current system. Instead of talking about philanthropy, billionaires in ible; this will further feed the awareness that a large part of society is not experiencing progress. As a result, Davos should be talking about taxes, Bregman concluded. Especially Bregman’s remarks on taxes stirred dissatisfaction with the wealthy elites who are in power will grow, something already embodied by the Yellow up debate. In February, billionaire Bill Gates tweeted a chart showing how humanity had made progress in Vests movement. Anti-billionaires populism might rise and the growing popularity of socialist ideas, even in a terms of reducing poverty over the last two centuries. The tweet sparked an intense online debate about liberal minded country like the U.S., could point to a future where the redistribution and wealth social safety global poverty. Jason Hickel responded in The Guardian that the $1.90-a-day line is be too low and that nets will be introduced. The question of how further technological advancements will either divide or serve the number of people able to afford basic necessities on a daily basis had actually decreased. As empha- entire societies remains the big unknown. sized in a Bloomberg article, the question about what the world’s richest should do about the growing inequality has remained unanswered for over a decade now, with a possible social backlash against the Possible implications: rich becoming more likely. • Growing unease with excessive wealth, polarization between different classes in Western societies In wealthy countries, life is precarious for a growing number of people. The problem of growing inequality • Social movements and unrest, backlash against global elites in the shape of national Yellow Vests like in these countries is not so much the fact that a small group of individuals get wealthier, but rather that movements the most vulnerable are still struggling to obtain basic necessities. The effects of this struggle are becom- • Stricter tax policies, measures against tax-havens ing ever more visible. In the U.K., for instance, almost 20% of children under 15 live in a home where the RISKS MARKED ON THE RISK RADAR AS NUMBER 1: RISING INEQUALITY parents cannot afford to put food on the table. And in the U.S., life expectancy has dropped for the third RISK RADAR & RISK SHIFTS RISK RADAR / 02 19 05

2. Kashmir conflict

Although the Kashmir region knows a long history of turmoil between Pakistan and India following the partition of British India in 1947, the conflict has intensified over the course of the last months. After 40 Indian military personnel were killed after a bomb attack in Kashmir, India sought retaliation for terrorist activity in the region and crossed the line for the first time since the 1971 war. India carried out a so-called pre-emptive strike against one of the largest terrorist training camps in Pakistan and claimed that 300 people died in the attack. However, the Pakistan government claims the attacks had not affected anyone and Prime Minister of Pakistan Imran Khan stated that “Pakistan shall respond at the time and place of its choosing”. The bold rhetoric and the fact that both India and Pakistan ratcheted up involvement in the conflict is due to compelling domestic reasons. While for Khan, the revived conflict is a first test in foreign policy, the conflict is of relevance to Prime Minister Modi as he is preparing for elections in May and the conflict is a chance to project himself as a strong leader. Modi sent out the Kashmir Mountains message that India is safe in his hands, boosting his muscular image in the electoral strategy of Hindu nationalism in order to climb in the polls. This is very much needed, since his party already lost three regional elections, and since the nation struggles with Kashmir, is an intense one since the control of water has long been central to many visions of stagnating job growth and agricultural crisis in the country. nationhood in India and continues to be so under Modi. Although a conflict over water is too Next to new escalation in the conflict between the archrivals and nuclear powers, risky for both parties, if the tensions in the region and the slide towards unilateralism continues, the region is subject to great power play. Tibet is among the bordering countries of local people on both sides of the border will be carrying the real costs. However, Pakistan is a the disputed region. Pakistan has collaborated with China extensively on the China– water-stressed nation and thus this is the weak spot India can hit its rival. It is in this light, that Pakistan Economic Corridor (CPEC). While Pakistan sees China as a counterweight to India’s recent move to fund the building of a dam near Kabul could be seen as a way to reduce India, Pakistan has served as a channel for China’s influence in the Muslim world to water flow to Pakistan. China. And thus, although China is calling for de-escalation of the conflict, it defends Although the developments in Kashmir are fast-moving and the underlying reasons span wider Pakistan against India. For instance, China continues to protect Masood Azhar, the than regional ones, the conflict is unlikely to be resolved anytime soon. However, chances are leader of the Jaish-e-Mohammed group believed responsible for the Kashmir attack small that it will escalate into a war again. The superpowers active in the region have their own killing 40 Indians. Moreover, the U.S. is another superpower keeping a close eye on interests in keeping the region stable. The U.S. has a strong interest in trying to prevent the use the unfolding conflict in the region, as it has been clashing with China over Belt And of nuclear weapons, India is its major defense partner and Pakistan has been a longtime partner. Road Initiative projects in Pakistan. Pakistan is replacing the U.S. with China as their For China, the CPEC requires a stable region. Both superpowers will use the threat of diplomatic key power in the region and following the removal of U.S. military from Afghanistan, and economic sanctions in order to avoid escalation. Pakistan is opening and hosting talks with the Taliban. The developments unfolding in Kashmir thus already looks more like a proxy war than a regional conflict. Possible implications: Another factor that is shaping the conflict between the bordering countries is water. As • More violence in the Kashmir region with Modi increasing aggression as an electoral strategy India and Pakistan were torn apart at Partition, this included critical water resources • Unfolding tensions between superpowers China, U.S. in the region that had been shared under British India. In an interview with Foreign Policy, the • Water crisis in Pakistan writer of ‘Unruly Waters’, expert in how water has shaped South Asia’s history and politics, Sunil Amrith, the conflict is describes as the ‘mother of all transnational water RISKS MARKED ON THE RISK RADAR AS NUMBER 2: KASHMIR CONFLICT conflicts’. He says the water conflict over the Indus River, which runs straight through RISK RADAR & RISK SHIFTS RISK RADAR / 02 19 07

that all people will use these technologies for bad, but given the huge heterogeneity of human beings, even the smallest chance of having a morally corrupt or angry individual with a demonic plan (e.g. creating a huge bomb, spreading a deadly virus) significantly raises the chance of devastating results (i.e. having a vulnerable world). In the WEF Global Risks Report 2019, the vulnerable world created by large-scale AI applications are also listed 3. AI’s vulnerable world among the top risks. For instance, research shows that AI can be used to engineer more and potentially more im- pactful data breaches than we saw in 2018. Historically, the benefits of technologies have outweighed the risks and their destructive capacity. However, this The rapid deployment of AI in many domains is making us vulnerable in many ways. As the balance is now tilting with the decreasing cost of many radical and exponential technologies and open-source scope of AI applications widens, so does the range of failures. Well-known is the case of an software, making it easier for individuals and groups to employ them, possibly with bad intentions (e.g. terrorist Uber autonomous vehicle killing a pedestrian at the beginning of last year. But more and more groups). Advances in DIY biohacking tools might make it easy for anybody with basic training in biology to kill mil- examples of AI making ‘wrong’ decisions are popping up. In the AI Now Report 2018, which lions, cyberwarfare leverages asymmetrical power relations and enables small groups to spread fake stories easily, called 2018 a “dramatic year in AI”, three risks are identified. while advances in AI could trigger an AI arms race, as we wrote in an earlier Risk Radar. As such, the vulnerable First, AI is amplifying widespread surveillance. The rise of unregulated facial recognition sys- world hypothesis offers a new perspective from which to evaluate the risk-benefit balance of the development of tems creates a risk for citizens since the technology is hard to ‘escape’ or to ‘opt out’ of it, while next-gen technologies, as well as a renewed interest in enlarged preventive politics and governance. it is easy for third parties to link other personal data to the once identified face. This leads to insights about persons that have little scientific backing, but are of high impact. History Possible implications: teaches that the pseudoscience of linking characteristics to one’s character or personality has • More systemic flaws in surveillance techniques harming civil rights often led to discriminatory purposes. When thinking of ever-expanding, large-scale surveil- • AI arms race lance techniques, China’s social credit system and surveillance activities in the Xinjiang to exert • Other systemic, yet unforeseeable failure do to the large-scale deployment of AI across multiple domains, for control over the Uighur population comes to mind. However, as the report notes, it is crucial to instance in the Internet of Things that connects billions of devices acknowledge that many of the same infrastructure already exist in the U.S. and is used by law • Shift towards a unipolar world order, in which a centralized body controls the development and deployment of these technologies of mass destruction enforcement – while rarely being open to public scrutiny. In an interview with MIT Technology Vaccination of a baby - Source: Pixnio review, futurist Amy Webb points to this specific risk. PhotoIn China, description the central -authority attribution enables the government to test and build AI services that incorporate data from 1.3 billion people. However, RISKS MARKED ON THE RISK RADAR AS NUMBER 3: AI ARMS RACE in the U.S. this is left to the private sector, by big tech parties who are constrained by the short- term demands of a capitalistic market, make long-term, thoughtful planning for AI impossible. Moreover, large-scale surveillance techniques are spreading over the globe at great speed, of- ten to countries with authoritarian regimes. Second, 2018 showed an enormous increase of governments adopting Automated Decision Systems (ADS) while these often show flaws when implemented. By implementing ADS, govern- ments try to save costs and make systems more efficient in domains like criminal justice, child welfare, education and immigration. However, the risk that come with these systems are that, once a flawed decision is made, the impact of the scale far exceeds that of the human case-by- case decision-making process, automatically affecting large numbers of people. Next to possi- bly affecting big groups of people, ADS are mostly not designed to mitigate incorrect decisions. Moreover, the decisions are even hard to replicate or understand, creating a ‘black box’ prob- lem. The third risk is the fact that man-machine interactions, such as in the case of the Uber acci- dent, there is no discrete regulartory or accountability category in place, called the ‘account- ability gap’. Another point in case is IBM’s Watson recommending unsafe and incorrect treat- ments for cancer patients. As we have written before, concerns are growing over the reliability, openness and fairness of these systems that are increasingly not only informing, but steering human decision-making. The impact of these three risks can be understood in terms of “The Vulnerable World Hy- pothesis” of philosopher and author of the book “Superintelligence” Nick Bostrom. Bostrom states that we have reached a level of scientific and technological progress that has created unprecedented welfare and prosperity, but also rendered humans the capacity to destabilize civilization, fundamentally disrupt economies or even destroy the world. Bostrom doesn’t claim

IBM Watson RISK RADAR & RISK SHIFTS RISK RADAR / 02 19 09

RISK RADAR EUROPE

KEY RISK SHIFTS FEB 19 1. Billionaire backlash 2. Kashmir conflict The potential political, HEGEMONIC ECONOMICS sociological, economic 3. AI’s vulnerable world and technological threats. PRIORITY OF RISK OTHER TOP EUROPE RISKS

Is a determination of the • Mental health issues likelihood of occurrence CLIMATE CHANGE / NATURAL DISASTERS • Weak southern European and the estimated economies impact. • Spread of infectious 2 1 RISING INEQUALITY disease PROTECTIONISM NEW RISK DETERIORATING RELATIONSHIP RUSSIA AND THE WEST • Unrest and regime change 3 in the periphery of EU • Pension Crisis • Declining internet freedom • Weak Southern European LARGE-SCALE MIGRATION ESTIMATED IMPACT Economies JOB DESTRUCTION DUE TO AUTOMATION • Policy uncertainty

EASTERN EUROPEAN SLOW IMPLOSION • Friction over Arctic Sea • Anti-establishment parties come to power 3 AI ARMS RACE • Terrorism LIKELYHOOD OCCURENCE • Secular stagnation 3 • Global debt glut • Digital Infrastructure TIME HORIZON (IN YEARS) Failures • Exits from the EU

SOCIO-CULTURAL TECHNOLOGICAL 5-10

3-5

1-3 RISK RADAR & RISK SHIFTS RISK RADAR / 02 19 011

RISK RADAR WORLD

FEB 19 KEY RISK SHIFTS The potential political, sociological, economic 1. Billionaire backlash HEGEMONIC ECONOMICS 2. Kashmir conflict and technological 3. AI’s vulnerable world threats. PRIORITY OF RISK IS A DETERMINATION OF THE LIKELIHOOD FOOD INSECURITY OTHER TOP WORLD RISKS OF OCCURRENCE 1 • AND THE ESTIMATED EM insolvency • Deteriorating relationshio IMPACT. KASHMIR CONFLICT 2 CLIMATE CHANGE / NATURAL DISASTERS Russia and the West NEW RISK 1 RISING INEQUALITY • Mental health issues • Protectionism / reform PROTECTIONISM LatAm TENSIONS THROUGHOUT THE MIDDLE EAST • Spread of infectious disease • Competition South Pacific ESTIMATED IMPACT LARGE-SCALE MIGRATION • Pension crisis • Global debt glut • Implosion North Korean State AI ARMS RACE 3 • Water crises LIKELYHOOD OCCURENCE • Territorial disputes South China Sea • African terrorism TIME HORIZON (IN YEARS) • Friction over Arctic Sea • Terrorism • Digital infrastructure failures 5-10 SOCIO-CULTURAL TECHNOLOGICAL • Declining internet 3-5 freedom

1-3 INTERNAL SOURCES Filtering Hegemonic Shifts Filtering Technological Shifts The Macroscope Risk Radar

EXTERNAL SOURCES Bloomberg CNN Edelman Trust Barometer Europa.eu New York Times Reuters South China Morning Post The Atlantic The Guardian Vox VU