I'm OK with Canada's modest AI ambitions

Call me a Luddite, but I can't help but be extremely suspicious of the whole world's reckless infatuation with Artificial Intelligence (AI). I'm not saying the whole world is wrong and I am right - well, actually, I kind of am ... - but I just have this feeling that the level of obsession most people are exhibiting over it can't be healthy, and that we are likely headed down a dark rabbit hole of our own construction.

I can't help but feel that, much like 5G communications, we are adopting a huge, expensive and world-changing technology, just because it's there - because we can - not because we need it. AI adoption, and the number of huge, power-hungry data centres under construction, is not equivalent to economic output, or even productivity, although you'd be forgiven for thinking so from the media attention. 

AI is currently keepimg the world's stock exchanges at near record levels, in spite of all the other crap happening in the world, but not for any good logical reasons. Almost all of the big IPOs hitting the stock exhanges are tech related (mainly specifically AI-related). Call it a bubble or whatever other label you prefer. The markets have almost completely decoupled from the economy, and are largely running on the fumes of potential AI profitability. I've seen this movie before; it doesn't end well.

I read so many articles bemoaning Canada's sluggish uptake of AI (here's just one example) compared to our peers. Well, usually compared to the US. 30% of the US's real GDP growth now comes from private investment in IT equipment and software, compared to 5% in Canada, we are told. Data centre construction has increased by 180% in three years in the USA, while Canada doesn't even separate the category out from other spending on transportation, utilities and communications buildings. But is that such a bad thing. Who has it right?

Indeed, there is outright opposition to US-style unregulated expansion of AI data centres (except in US-style unregulated Alberta). Manitoba recently nixed a huge data centre development because, as Premier Wab Kinew explained, "there's a big threat to the environment and not much benefit to.the economy". Well, he's got a point. A similar process played out in Hamilton, Ontario.

Canada does have many AI data centres, hundreds of them, particularly in Quebec, and many more are being built as we speak. It's not like we have our heads completely in the sand. Do we have enough? Well, how long is a piece of string?

The huge bet south of the border on AI, and the all those data centres it relies on, is just that: a bet. The future gains from AI we keep reading about may not actually unfold as predicted, which would leave states, local governments and electricity payers on the hook for many decades.

Canada, generally speaking, is much more environmentally conscious than the US (despite Mark Carney's efforts to change that), and the environmental footprint of AI data centres has come under increasing scrutiny of late. AI requites massive electricity consumption, high water usage for cooling data centres, and heavy raw material extraction for hardware. It's no surprise that some of the strongest opposition to AI and, on a more local level, data centres is from an environmental perspective.

Another element, though, is the increasing Canadian distrust of AI: trust in AI is significantly lower in Canada than the global average, particularly as regards potential job losses. Data centres are the physical embodiment of AI and its perceived threat to society. That distrust of AI extends to the business community in Canada to some extent, which is investing much less in AI than the US.

Once again, is this necessarily a bad thing (as it is usually portrayed)? Is the helter-skelter scramble in the USA actually the right call? The US may be much more conservative than Canada in most respects, but Canadian business tends to be quite circumspect and risk-averse, and that's not always a bad thing (look at how Canadian banks dealt with the 2008 financial crisis compared the Americans).

Here's another thing. An analysis by the Federal Reserve Bank of Minneapolis found that the computer equipment, batteries, switchgear, copper wiring, etc, needed for the US's AI rollout amounted to 23% of all US imports last year, increasing its trade deficit by roughly $200 billion. Canada's AI-related imports,non the other hand, remained pretty much consistent with previous years, and much more manageable.

So, who has it right? History will probably tell, but that doesn't much help today's planners. Mark Carney is making some moves to at least be seen to be doing something on AI, but even his strategy is pretty modest in the scheme of things. And, you know what? I'm OK with that.