May Newsletter: “Let The Data Decide”

21 May 2024

History perhaps gives the Luddites a bad press. Named after the possibly fictional Ned Ludd, this group of workers protested against the new textile machinery that threatened their skilled jobs in the early 1800s. Although society as a whole benefitted from the industrial advancements, the Luddites’ concerns about their livelihoods were valid. Fast forward to today, and we find ourselves at a similar crossroads, with Artificial Intelligence (AI) as the main protagonist.

AI, in its simplest terms, involves teaching computers to solve problems and make decisions by recognising patterns in data. A valuable thing. Now this concept is not new; as Gordon Gekko stated in the 1987 movie “Wall Street,” “The most valuable commodity I know is data.” In Ned Ludd’s time, the valuable commodity was cotton. By the 1830s, machines had taken over the textile industry. The skilled artisan became the factory operative. While cotton became “the very pivot of our national wealth,” it only paid subsistence wages, even as it accounted for 50% of British exports.

Back to today and you can see how AI is about to threaten similar skilled livelihoods. But this time it’s the decision makers at risk. If you think back to the midst of the pandemic chaos, when let’s be honest, none of us had a clue how things would pan out, the mantra became “let the data decide.” Indeed, politicians awarded themselves badges of honour by saying “I follow the science”, “let the data decide.” It made them look smart in a world of uncertainty. Rishi Sunak likes to be known as a ‘data nerd.’ Clever guy?

But four years after the pandemic (yes four years!), the data, it seems, really is deciding. The ‘geeks’, who like to pride themselves on their knowledge are seeing their ‘secret crystal balls’ decimated as data has become ubiquitous. AI is enabling the masses to make expert decisions without the expert. Society as a whole will benefit… but livelihoods will be threatened. Data is moving from “the most valuable commodity” to just a commodity.

For investors its always the implications of change that count. And this change looks to be larger than even the move to the internet. But the winners will be different. At the moment the winners seem to be the data providers, as it was the owners of the cotton mills. But AI moves faster than factory building. Competition develops at light speed. If data is just to become a commodity, rather than a valuable one, the current purveyors of data will see their prices drop sharply. Their crystal balls crushed.

So, investing in the latest thing might prove to be the wrong way to go. There is rarely certainty about the future. But with AI there is one certainty. AI will grow and what it needs to grow above everything is energy. National Grid of the UK expects energy electricity demand to increase by 500%, yes 500%. Now there is an investment thought. As for AI’s impact on society, the data is deciding.