Does Elon Musk think AI is socialist?

Our tech overlords tell us that artificial intelligence (AI) will soon create a world of abundance while solving our major problems such as climate change. Just so you know who I'm talking about, I have previously defined our tech overlords as "a grab bag technology companies, technology scientists and inventors, and technology investors and journalists who have bewitched the modern world through inventions that speed up our daily lives without necessarily making them better."

In a recent interview with The Economist magazine, tech overlord-in-chief Elon Musk explained that "[i]f you have vast numbers of robots with vast amounts of digital intelligence, you have a sort of a quasi-infinite economy." In such an economy, "anyone can have anything they think of." He added that "money won't matter in 2036" because everyone will have a high income without working. This is a Star Trek version of the future, he explained.

Musk's views exemplify the tech industry fantasy of a push-button, voice-activated future world of abundance portrayed in the many Star Trek television series and movies. Any serious viewer of the series and movies knows that in the Star Trek future, poverty has been eliminated, people do not need money and in fact, everything you want or need is available to you.

Taking a break - no post this week

I am taking a break this week and plan to post again on Sunday, July 26.

Plankton decline, 'Soylent Green' and the future of civilization

Last week I watched the 1973 dystopian film thriller "Soylent Green" for the first time in probably 30 years. The film depicts a society in which climate change has put most of the world into a hellish, near perpetual heat wave (at least during the summer), dramatically increased the inequality of wealth (with the fortunate few living in luxury apartments with air-conditioning), and caused a scarcity of food such that most people are reduced to eating what is called "soylent," a processed wafer-like food that supplies essential nutrients (the production of which is monopolized by one huge corporation called the Soylent Corporation).

You don't have to stretch your mind all that much to see that a lot of what is depicted in "Soylent Green" is already coming true. I found one part of the plot particularly prescient in predicting the decline of plankton in the oceans. You see, in the film plankton form the basis for one type of soylent, namely soylent green. (Soylent red and yellow are also available but less desirable.)

Ostensibly a crime drama, the film follows a police detective played by Charlton Heston who is trying to solve the murder of one of the members of the board of directors of the Soylent Corporation. Ultimately, the detective stumbles onto a forbidden secret: The plankton in the oceans are dying thus threatening the worldwide food supply. As the investigation continues, the detective penetrates a production facility for soylent green where he discovers (spoiler alert!) that soylent green is now being made from recycled bodies of the dead, a sort of civilization-wide cannibalism.

Something's gotta give: The American West and the dwindling Colorado River

Depending on whom you talk to the Colorado River serves either 35 million or 40 million people, all of whom are having to reconsider how much water they use and how they use it in the wake of an ongoing megadrought that arrived at the beginning of this century. The changes are no longer in the "let's-discuss-this" phase as the federal government threatens to impose up to a 40 percent cut in river water allocations over the next 10 years if the seven western states—Colorado, New Mexico, Wyoming, Utah, Arizona, Nevada, and California—and the 30 recognized tribal jurisdictions with water rights don't agree among themselves about how to divvy up the dwindling Colorado River.

There isn't as much water as there used to be and that means that not everything people are using water for now will get its previous allotment. No doubt the volume of water representing the 52 percent of the total river withdrawals currently taken for agriculture could be reduced through conservation and efficiency measures. But it turns out that "conservation" in some instances might mean simply leaving fields unplanted for lack of water. And, it's not as if efficiency measures haven't already been implemented as irrigated agriculture in the Colorado basin has been transitioning to the much more efficient drip irrigation away from traditional surface irrigation. I could not find any statistics for this, however. So, it's not clear how much more water savings could be achieved through the installation of additional drip irrigation in place of surface irrigation.

Then, there is the 18 percent of the water withdrawals currently going to municipal water systems. The people in those cities have taken seriously the need to reduce water use. Even though those systems now serve 24 percent more residents today than in the year 2000, those systems use 18 percent LESS water. How much further could these cities reduce water consumption? It's almost certain that the easiest forms of reduction have already taken place. The next leg down in water consumption will be harder.

Taking a break - no post this week

I am taking a break this week and plan to post again on Sunday, July 5.

Why the U.S.-Iran MOU (probably) won't prevent the approaching energy cliff

The outline of conditions and topics for a negotiated settlement of the U.S.-Iran conflict called a Memorandum of Understanding (MOU) and signed by both sides last week in all probability won't prevent the approaching energy cliff. That cliff will be the result of fast-depleting commercial and strategic inventories of oil and oil products around the world that have acted as buffers in the wake of the suspension of almost all tanker traffic through the Strait of Hormuz during the conflict—tankers believed to carry about 20 percent of the world's daily needs of oil.

As I explained in a previous piece, the world is fast approaching "tank bottoms," that is, the depletion of usable oil and oil products inventory. When that inventory effectively runs out, there will be a bidding war for oil and oil products to replace the millions of barrels per day that will still be needed but unavailable from inventories as the drama in the Persian Gulf continues.

As of this writing, the Strait of Hormuz has been closed by Iran in response to continuing attacks by Israeli armed forces in Lebanon. The first provision of the MOU is that hostilities are to cease immediately everywhere including Lebanon as a pre-condition to further negotiations. Just as important as whether the strait is open are what each side means by the word "open" and how shipping companies and the insurance firms who insure their tankers understand the risk of transiting the strait.

Here's comes the AI bailout: Why government stakes in AI companies are a sucker's bet

When Bernie Sanders and Donald Trump agree on something, that agreement deserves examination. Both are touting the idea that the federal government should have an ownership stake in major artificial intelligence (AI) companies. For Sanders this would be a way for the American people to share in the wealth generated by AI companies that those companies accumulated through the theft of other people's writing, art works, photos, videos and recordings. And it would give government a seat at the table as a representative of the public in deciding how AI companies will operate in the future. Just how Trump views the purpose of government ownership of a share of AI companies is not yet clear.

Problem is, AI companies are not really generating any wealth. Right now they are simply burning through billions of investor dollars that are heavily subsidizing users with no clear path to profitability. And no, the AI industry is not following the path of previous technologies such as the internet and the smartphone in which costs will rapidly fall as the technology matures and greater numbers of people adopt AI. Years into the AI boom the cost of providing its promised outputs is going up, again with no clear path to bringing the cost down. Adding users does not bring down unit costs because more users require more resources. It's the opposite of the software model where the cost of distributing a piece of already written software to the next customer is close to zero.

I warned last November that artificial intelligence (AI) companies were setting the stage for a bailout, one that will be the result of their deeply flawed AI models that won't remotely deliver what they are promising. AI critic Ed Zitron said in a recent interview that when he asks AI industry boosters to tell him what AI can actually do without using the word "will," they have little to offer. Zitron agreed that while search engines are using AI to provide more sophisticated outputs, those outputs have become more unreliable. "You have to check every single bloody thing. You can't rely on anything," he said.

Our oil "savings account" is dwindling rapidly, more oil price spikes likely

In the coming weeks readers will increasingly see two rarely used phrases in stories covering our dwindling worldwide oil inventories: "operational minimum" and "tank bottoms." The phrases more or less signify the same thing, though the former is more abstract and precise, while the latter is more visual. They signify rapid depletion of existing oil inventories and presage price spikes to come due to the loss of oil supplies from the Persian Gulf because of Iran's closure of the Strait of Hormuz, the maritime artery through which 20 percent of the world's oil previously flowed.

Think of it this way: Let's say you are currently spending your entire weekly salary for living expenses. Then, you suddenly have your salary cut by 20 percent. Believing that the cut is temporary, you dip into your savings account to make up for the loss of income. At the current rate of withdrawal, your savings will last four months. As the weeks go by, your savings account balance dwindles as you continue to live in the style to which you were accustomed before the salary cut. Your boss tells you (frequently!) that your full salary will soon be restored. So rather than cut back on your expenses, you keep spending down your savings believing that all will return to normal before you exhaust your bank account.

That's what is happening in the global economy which had about four months of buffer stocks—essentially, an "oil savings account"—to draw from at the beginning of March. We are getting closer and closer to using up those savings which are in the form of commercial inventories. We are rapidly drawing down those inventories to make up for the loss of oil and oil products from the Persian Gulf.

In fact, a recent analysis suggests that the world oil system will start to experience "operational stress" sometime in June. Operational stress "is the point at which the system begins to experience significant functional strain: price volatility becomes extreme, rationing of refined products begins in the most exposed markets, and the margin for error in supply chain management drops to near zero." This analysis takes into account ongoing strategic petroleum reserve releases around the globe and states that "[e]ven full deployment of strategic reserves buys weeks, not months, at current drawdown rates."

Taking a break - no post this week

I am taking a break this week and plan to post again on Sunday, June 7.

South by Southwest: Water crises hit America

Policymakers, politicians and the media have been talking about the need for better water policy in the desert southwest of the United States for decades. As the Colorado River, a major source of water for much of that area, continues to shrink, policymakers are having a hard time keeping up with nature. A new 10-year plan contemplates cutting water supplies for Arizona, Nevada and California by up to 40 percent depending on availability. Not surprisingly, these states don't like the plan that the Trump Administration said it will impose on the states since they have been unable to come up with an agreement.

The century-old Colorado River Compact governed water allocations to the upper and lower basins of the river. But the compact overestimated water flows and the states along the Colorado have been dealing with that error ever since. Now, a drought that has spanned more than two decades has made matters worse.

I can remember flying into Las Vegas in 2009, looking out my window and seeing the so-called "bathtub ring" around Lake Mead, the lake created by Hoover Dam. The top of the ring indicated where the water level had previously been before the ongoing multi-year drought noticeably lowered the lake level. Las Vegas was at the time involved in what was essentially an emergency project to build a water intake at a deeper level for fear that the surface of Lake Mead would fall below the current intake and deprive the city of 40 percent of its water.  The water authority succeeded in building the intake, but, of course, that didn't do anything to increase water supplies from the Colorado River.