Seeking a New Infrastructure Investment Strategy

  In the Nikkei newspaper, University of Tokyo professor Noriyuki Yanagawa wrote an article titled, “With IT Development, Investment will also Change.” This is a very important point.

 His argument is as follows.
1. IT such as the Internet, applications, social networking, etc., is already becoming the base of an energized sharing economy and block chain. Google and Amazon, etc., have developed open source AI and related services.

2. These new technologies are infrastructure that stimulates investment. New types of infrastructure like this are important, and IT and AI are the engines that produce the new infrastructure, the infrastructure of infrastructure.

3. Private sector companies are responsible for the new infrastructure, and have the characteristic of encouraging change and development. The strategy is to increase investment in superior new infrastructure, and thus increase the number of businesses that use it.

 This theory could lead to the reform of public economics. Infrastructure such as roads, airports, water, electric power, etc., which are public assets, have not been run as businesses, but as a fulfillment of the “public” role of national and local governments, charitable corporations, etc. Tax revenues and fees for usage covered the costs.

 The new infrastructure is provided by purely private companies at no charge. By using economies of scale, they receive revenues from derived business, as well as from big data such as customer information.

 As a supporter of this, Professor Yanagawa has higher expectations for large corporations than for venture companies. I also believe that, rather than depending on venture companies because it’s a new field in Japan, it is more realistic to treat it as infrastructure with large-scale investment from large companies.

 However, one problem is that both IT- and AI-related infrastructure cross national borders, and as restrictions can’t be imposed on foreign investment, powerful global companies tend to dominate. Another point is that national power can’t compete. This is another reason why the concept of public economics as being based on measures put into operation by sovereign nations must be reconsidered.

 On the other hand, “the failure of the markets” as described in public economics is another topic for discussion here. The issue is how to overcome greatly reduced investment in infrastructure. Professor Yanagawa also mentioned that the decline in capital investment due to infrastructure utilization will lower the total economic demand. I want him to analyze this as part of the study of economics.

 Reaching across industries is one of the characteristics of the new infrastructure. This is because new rules different from conventional sector-specific business laws are required.

 In order to maximize the welfare of these new infrastructures, the recommended policy is to promote investment and broaden the benefits of utilization.

 The government must break down the vertical divide, and decide on measures for the easing of regulations and rules for the promotion of utilization. Tax measures to promote investment in and use of the new infrastructure will also be effective.

 On the other hand, targeting measures to cultivate certain fields through subsidies are likely to fail. Rather, it seems better to encourage private investment by making the government itself a leader of demand.

 For this reason, a comprehensive strategy is required. The government offices of IT and Intellectual Property are in charge of hardware/software strategy, and Professor Yanagawa and I participate, but we really want a different strategy theory to encourage new infrastructure investment.


AI Research and Development Enters a New Phase

 According to a paper entitled “The Collaboration of 3 Ministries for AI Research,” 3 government ministries, the Ministry of Internal Affairs and Communications, the Ministry of Education, Culture, Sports, Science and Technology, and the Ministry of Economy, Trade and Industry are collaborating to promote basic research, applied research, standardization, and human resources development in the field of artificial intelligence.

 Research and development, as well as demonstrations, will be conducted with the goal of implementation of the Internet of Things, with AI at the core, in society and business. The accumulation of big data in each field, and the quantitative and qualitative expansion of sensors are advancing the IoT. The collaboration between government ministries is meant to avoid focusing on AI research alone, and to work towards implementation in society.

 Newspapers reported that in order to promote cooperative development with over 20 companies, the Ministry of Education, Culture, Sports, Science and Technology will request 10 billion yen, which will become 100 billion yen over 10 years.

 The idea has impact, but will it work? and other typical concerns are coming up. The thought comes to mind that if Google, Apple, and other corporate giants invest about that much into the field a year, can the country really afford to spend its meager tax revenues this way? It's hard to forget that the development of the 5th generation of computers cost 50 billion yen over 10 years and still failed.

 Apparently, however, this move is different from what has happened up till now. That's what I felt after speaking with officials at the Ministry of Education, Culture, Sports, Science and Technology. I offer 3 possible reasons.

1. Selection
 In April of 2016, Riken Institute of Physical and Chemical Research launched the Center for Artificial Intelligence Project. Masashi Sugiyama, a 41-year-old University of Tokyo professor, was made director of the center. This shows an intention to entrust this project to the young.

 While putting heavyweights like Takeo Kanade of Carnegie Mellon University and Masaru Kitsuregawa, director of the National Institute of Informatics in charge as advisors, Dr. Sugiyama has deployed 30 up-and-coming researchers, mostly in their 30s and 40s, to work underneath him.

 The AIP Center would prefer researchers in their 20s, but compared to every other such national policy up till now, which mainly involved people in their 50s and 60s, this is a drastically different human resources policy. The government is showing its sense of impending crisis.

2. Integration
 When one hears of a collaboration between 3 ministries, the typical image of a meeting with 3 representative bureaucrats shaking hands and not doing much of substance comes to mind. However, this time the Riken Institute of Physical and Chemical Research, the National Institute of Information and Communications Technology (NICT), and the National Institute of Advanced Industrial Science and Technology, each administered by one of the 3 ministries, will work together.
 If the community comes together as one, and if the government gives its encouragement, the researchers will be filled with strength.

 Back when the 5th generation computer plan was proposed to the (former) Ministry of International Trade and Industry, the Ministry of Posts and Telecommunications was promoting a plan for the development of a phone with automated translation (that I was in charge of), and there was ruthless competition with, and even opposition to, AI development. It was the epitome of the adverse effect of a vertically divided government. Competition has value, but the Japan of today can’t afford it.

 This time it is clearly evident that they mean to work together.

3. Humanities
 The Research Institute of Science and Technology for Society established the field of the human and information ecosystem, which deals with social problems caused by technology such as AI, IoT, big data, etc.

 They will be tackling such themes as law and regulations, ethics and philosophy, economics and employment, education, etc.
 AI and robots will steal human jobs. Or they will cause accidents. The distribution of information will lead to an incident. How can these and other anxieties floating around in society be eliminated, or what measures can be taken to counter them? What does society want from the progress of technology?

 In conjunction with the development of AI, expertise in these human matters also needs to be mobilized. Even if AI technology is the same throughout the world, society’s reception of it is a local problem. Whatever other countries do, Japan needs to deal with it. I see seriousness in the attitude towards development integrating humanities and the sciences.


A Mechanism for Sharing Public Policy Relating to the Internet

 The problem started from incorrect content and suspected copyright infringement discovered on a site curated by DeNA, and one after another, CyberAgent, Recruit, KDDI, etc. began hiding or unpublishing the site.

 It is impossible to reach an agreement between the responsibilities of new companies doing business in gray areas, and the public and public institutions.

 10 years ago, when the net safety of young people became an issue, and 5 years ago, when social gaming became an issue, the same IT companies demanded the same response from the same developing businesses.

 But this time the difference is that, instead of government intervention, net users themselves are doing the denouncing. Since there has been no involvement from government, businesses have let their guard down, and let this turn into a much bigger issue. 

 The private sector has attempted to weather the storm through self-regulation, by creating the Japan Internet Safety Promotion Association and the EMA during the young people safety issue, and the Japan Social Game Association during the social gaming issue. I participated in these efforts, pouring my own sweat and tears into coordinating them. We are still working to get over these hurdles. It is important for the industry to show that it can cleanse itself.

The same applies to measures against comment brigading. The New Media Risk Association that was formed in 2012 to promote joint measures between the public and private sectors took a similar approach.

In this case, each company took independent action to close down the site, but we should also demand a response from the industry as a whole. The National Assembly and the administration also consider it a problem, after all.

 For example, if the industry is giving serious thought to how to deal with copyright issues, wouldn’t it be better to begin putting money into a fund to compensate users for their legal expenses?

 Or wouldn’t it be better for the industry to prepare another mechanism such as alternative dispute resolution for cases that don’t reach the level of litigation?

 The sharing economy also has similar aspects. It is a business model that operates in a gray area of business regulations while making use of common resources. While the gray nature of it is what makes it popular, some problems can be anticipated, and along with requiring self-regulation from the private sector, the government is also considering joint measures.

 However, it may not do any good to deal with specific problems with specific industry measures and self-regulations. The importance of the Internet is only going to increase. More specific problems like this are sure to develop in the future. This is the time to come up with some general measures.

 The problems with businesses using the Internet are not limited to so-called IT companies. As Internet user businesses shift to become more technologically advanced, the number of stakeholders will grow, and so will the number of challenges. This is why it’s difficult to settle on a one-size-fits-all solution.

 However, for this reason, a comprehensive private mechanism is required that would allow telecommunications companies and IT companies to cooperate on public policy measures while standing up to the government, so that these measures can be put in place with some flexibility.