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Month: April 2024

Canada’s Approach to AI Regulation Walks a Perilous Tightrope

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Fresh off the heels of his $2.4 billion artificial intelligence (“AI”) capacity-building announcement, Prime Minister Trudeau has positioned himself as an AI evangelist, citing the technology’s ability to unlock economic activity, improve productivity, and reduce the time workers spend on repetitive tasks.1

For a country predicted to be the worst-performing economy among advanced economies over the next decade, we can’t afford to be on the sidelines of the AI ecosystem – but we also can’t dive in head-first without strong, principled regulation in place. Today, the uncertain status of Bill C-27, Canada’s Digital Charter, indicates we are simply not ready for this moment.

Workers, vulnerable populations and wider society need assurance that Canada is safeguarded through robust AI regulatory policy. Without those assurances, we will fail to ensure the responsible development and use of AI. And the consequences for society may be irreversible.

Regulating AI is a delicate affair; too much regulation and you risk slowing major economic advancements, not enough regulation and you risk perpetuating the well-documented harms of AI. Regulators around the world are called upon to walk this tightrope, including those here at home.

Fortunately, the EU, the U.K. and the U.S. all leave Canada with teachable lessons on how we should embark on this journey.

The EU: The earliest mover

The EU passed the first-ever legislation comprehensively governing AI by the narrowest of margins. Despite tense negotiations and fears that these talks would amount to nothing, the EU AI Act sets a positive standard and a clear signal that emerging AI will exist within the purview of the public good.

Many have expressed skepticism over the ability for regulators to adequately govern AI, given knowledge barriers and the slow policymaking process relative to the latest advancements in AI.

In line with this thinking, some claim the EU AI Act is inattentive to unlocking the innovative benefits of AI. These detractors say it will lead to disastrous consequences for Europe’s economies. They maintain the legislation will make firms less competitive, less profitable and talent will migrate to more innovation-friendly countries. In short, they assert it is a precautionary tale for other countries beginning to regulate the technology.

But every tale has at least two sides. And industry experts and academics alike are making strong calls to government to pass serious, comprehensive legislation to regulate AI. Calls that, no doubt, will not be easy to answer. But difficulty is never an excuse to eschew responsibility. And if Canada wants to follow through on its intentions to develop AI responsibly, we must instead find a middle path that balances innovation and the responsible development of these powerful new tools.

The U.S.: Move fast and break things

In the U.S., the Office of Science and Technology Policy published the ‘Blueprint for an AI Bill of Rights,’ a comprehensive but unenforceable document surveying the risks posed by AI and potential solutions. While some hail this as a monumental advancement towards AI governance by the U.S., the excitement is unwarranted.

Without enforceability, the Bill of Rights is effectively a weak plea to AI companies. There’s still a great deal of work before the U.S. is anywhere close to accomplishing a feat like the EU AI Act, and it does not look like its legislators have the ambition for this.

Instead, experts observe that the U.S. approach to tech regulation prioritizes a “relentless pursuit of innovation and uncompromised faith in markets as opposed to government regulation.” The ‘move fast and break things’ approach, characteristic of American enterprise, has predictably found its way into AI governance discourse. Discussions regarding self-regulation and industry-specific regulation suggest fundamental opposition to comprehensive AI rules. Therefore, the U.S. is set up for a mix of patchwork industry specific regulations and enterprise-specific compliance measures. The bottom line? The private sector will ultimately take the lead and self-regulate.

Although self-regulation carries a host of potential benefits, it does not sufficiently protect citizens from the risks posed by AI as industries tend to opt for the paths of least resistance and least burden. In Canada, we cannot take this same approach and need robust regulations in place. Yes, our innovators must move fast – but we also must have safeguards in place to protect against what they might break.

The U.K.: AI Doomerism

There is a relatively new school of thought on AI regulation that expresses a greater concern over the apocalyptic potential of AI instead of addressing its immediate societal impacts. This is known as AI Doomerism and the U.K. is ground-zero.

Organizations such as the Future of Life Institute and theories such as Effective Altruism popularized this view of the future of technology and society. These organizations and philosophies greatly influence AI governance discourse in the U.K. However, many AI policy researchers warn that AI Doomerism entirely misses the immediate risks AI poses to society such as algorithmic bias and job displacement, urging regulators to ignore the sci-fi scenarios and concern themselves with the former.

So, while the U.K.’s approach to AI governance might look like it is safeguarding against AI’s potential consequences, its current standard for regulation is lower and more attractive for tech companies looking to avoid government oversight. From my perspective, the philosophy of AI Doomerism allows the U.K. government to boast about being conscientious of the societal impacts of technology in the long-term, while doing little to mitigate the pressing impacts in the near-term.

What does this mean for Canada?

Canada stands at a pivotal juncture and the task ahead is not to take the easy path, but the right one. As we learn from the promise and perils of the EU’s groundbreaking strides, the U.S.’s market-driven ethos, and the U.K.’s emphasis on existential threats, it’s clear that Canada must articulate a clear and comprehensive vision on AI regulation. And it must be one that places societal well-being at the helm, encourages innovation, and remains firmly anchored to ethical standards.

To achieve these aims, the mistakes and successes of our allies are vitally instructive. We must not succumb to deregulatory pressures from the U.S. and U.K. and give up the ambitious project of comprehensive AI regulation the EU has proven to be possible.

The Digital Charter will be more than a policy—it will be a statement of our national ethos in the digital age. As such, it is essential that it demonstrates a balance between AI regulation based on firm principles and the encouragement of AI innovation. There is no inherent need to compromise one for the sake of the other; rather, they can coexist for everyone’s benefit.

 

References

1 https://www.pm.gc.ca/en/news/news-releases/2024/04/07/securing-canadas-ai2 Digital Empires by Anu Bradford.

Low polls give Justin Trudeau’s Liberals the freedom to make gutsy moves that will help the country

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Spring has sprung and with it the Liberal government is clearly waking up from a long period of hibernation.

The string of spending announcements leading up to Budget 2024 amounted to the most energetic activity we’ve seen in some time.

And guess what?

It’s still not working. Not even close.

A $2.4 billion investment in the AI sector? Too little. A new multibillion-dollar plan to finally “solve” Canada’s housing crisis? Too late. The overall budget? Gives new meaning to the phrase “a dollar short and a day late.”

And while the Liberals may be waking up from a long winter’s nap, the polls never took a break — the latest reveal the Conservatives are now leading by 20 points, their largest lead yet.

Faced with this kind of political dynamic, governments typically adopt two positions, both of which are entirely unhelpful to their legacy, never mind their short-term re-election prospects.

The first is optimism, a sentiment that breeds a narrow mentality that refuses to engage with the possibility your opponents will assume power and has your government whistling past the graveyard, always believing you will be back to finish your work.

The second is one of pessimism and paralysis. One that believes the clock has run out. One that sees the office water cooler conversations reduced to a “Why bother? The new guys will just undo everything we do.”

The truth is both positions miss the point. As the saying goes, the pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails. This approach, of neither misguided optimism nor idle defeatism, but of pragmatic determination is the one Justin Trudeau must adopt in the lead up to the 2025 election; because it is this approach that history proves is the most effective way for the Liberals to make their remaining time count most.

Time and again, newly minted governments trade on the energy and momentum that carries them into office. Immediately, they set about reversing course on the major priorities of the previous government. They make a triumphant show of “turning the ship around.” But here’s the challenge: once the electoral fog clears and that new government is confronted with the serious work of actually governing, it inevitably runs up against the vicissitudes and fundamental difficulties of changing some of these very politicized initiatives around.

Prime examples are, of course, free trade and the GST. For years, Brian Mulroney’s opponents confidently declared they would tear up both once they assumed the mantle of power, yet never did.

The brute reality is, of course, that the Conservatives will undoubtedly uproot many of the Liberal’s major policies. The Tories’ pledge to “Axe the Tax” is no mere idle threat. And it’s equally true that, if they are successful, a Pierre Poilievre government will arrive with many more commitments to which they are equally committed.

While I fully expect that a new Conservative government will implement far more of their promises than has been seen since then-premier Mike Harris took office in 1995, they simply won’t be able to do them all. And here is where the opportunity for the departing Liberal’s comes in.

The Liberals should seize upon those issues that have long plagued us but the solutions for which have not been possible until a government is unpopular and in its dying days.

Those that have required the heavy lifting that no previous government has had the guts to resolve: opening up our economy to greater international competition (particularly those areas where we pay more for services than other countries), eliminating agricultural supply management, ridding us of interprovincial trade barriers, finding new ways to bring our natural resources to market.

Far from being constrained, the reality is the Liberals are actually in a unique position to take far more aggressive swings to solve these problems; problems that aren’t simply solved by spending money we don’t have, but through ingenuity and genuine political courage.

Every once in a while, you can actually rearrange the deck chairs on the Titanic with some effect.

Home is where the votes are: Canada’s 2024 Budget

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Chrystia Freeland’s fourth budget is less a fiscal plan than a political manifesto. She’s chosen again to spend in areas where the Liberals understand they are politically vulnerable while raising taxes on those who will cost them the fewest votes in the next election.

The finance minister and others in cabinet have been rolling out in a steady stream of new spending initiatives since Easter, $53 billion in total for housing, school food programs, a national disability benefit and other measures.

The goal is clear. The Liberals want to convince Millennial and Gen Z voters that they will help make life more affordable.

The flip side is that Freeland had to raise taxes to pay for these promises and to remain inside her fiscal guardrails – keeping the deficit at or below $40.1 billion while lowering the debt-to-GDP ratio this year and into the future.

The cost, according to many economists, is that there’s little in the budget to address Canada’s growing productivity gap with other industrialized nations, a gap the OECD projects will continue in the decades ahead threatening Canadians’ standard of living.

But the future for the Liberals is now with an election at most 18 months away. They need this spending to shore up support among younger voters, the ones who helped them win the past three elections, and to retain the support of their junior partners, the NDP.

The budget title sums up the theme, “Fairness for Every Generation.”

Fairness in this budget means higher taxes of more than $20 billion to be borne by a select group of mostly older Canadians.

Freeland is raising the capital gains inclusion rate from 50 per cent to 66 per cent for individuals, corporations and trusts reporting more than $250,000 in capital gains. The government says the change will affect only the wealthiest 0.13 per cent of Canadians.

No surprise there. A Navigator Discover poll conducted from March 26 to April 1 of 1,500 adults found the vast majority of respondents – 78 per cent – support taxing the ultra-wealthy.

The same poll suggested 85 per cent of respondents across age groups, regions and genders listed the high cost of living as the most important issue for government to address. When asked who was most to blame, they identified corporate greed and Justin Trudeau as the top two culprits.

One of those two is easier to blame than the other. Cue higher taxes on the wealthiest few. Spend billions on the young and the politically restless.

You can find our full analysis of the budget below. For more analysis, or support engaging government on any of the budget announcements, contact your Navigator team or reach out at info@navltd.com.

Government bans on social media will only make them more desirable

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Will Rogers has an old joke about Prohibition: “Why don’t they pass a Constitutional Amendment prohibiting anybody from learning anything? If it works as good as Prohibition did, in five years we will have the smartest people on earth.”

This joke is still funny — more than 90 years later — because it hits at what is essentially a universal truth: people do what authority forbids. And they do it, in many cases, precisely because it is forbidden.

Treatise on human nature aside, the bottom line is that not only has prohibition always been a fool’s errand, it always will be. Scripture underlines it — see the original sinners sporting nothing but fig leaves. History proves it — see the utter failure that was the Eighteenth Amendment.

And yet, calls for precisely this are forcefully growing on a new front: social media.

Last month, Florida Gov. Ron DeSantis banned under-14s from these platforms, while the U.K. has targeted cellphones in classrooms. Closer to home, alongside the ever-raging debate about the Online Harms Act, a TikTok ban seems likelier after the U.S.‘s proposed ban.

This is no casual or ill-intentioned crusade. The motives behind these efforts are clear. And while there are disagreements on the margins, experts uniformly agree that social media is contributing to a mental crisis amongst our youth.

Now, Canadian parents hardly need studies or surveys to evidence the dangers of social media. We can see the facts up close. Everyday. Both in our homes and in our schools. Teenagers captured by exploitative algorithms designed to distract.

Young girls, in particular, are struggling with increased rates of depression and anxiety. And the starkest reality of all: the increased rate of suicide among youth, a grim testament to the despair fostered by social media’s relentless demands and the impossible standards it perpetuates.

Unfortunately, the greater the stakes, the greater the prospect for nonsense. And the highest form, in this case, is the pipe dream that we can simply put the genie back in the bottle and successfully ban social media outright.

While the reasons we can’t are the same that have always applied historically, in this individual case, we must confront pressing new realities. Foremost, is admitting technology will always advance faster than the capacity of legislators in two fundamental respects.

First, their ability to understand it. Just watch the desperate attempts of U.S. senators to grapple with new technologies in recent congressional hearings. If you don’t laugh, you’ll cry.

Second, in their ability to craft legislation that can effectively police it. As multiple failed bills, both here and in the U.S., testify.

But we don’t need anything more than plain common sense to tell us that a blanket ban on social media for children is bound to fail. Any parent will confirm: this new generation is uniquely technically literate and will surely effortlessly outmanoeuvre the most well-intentioned but toothless government restrictions with a few clicks.

Putting corporate purpose at the core of technology decisions

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As we begin to adjust the world of work to the realities of the post-pandemic era, it is critical to recognize that public expectations of businesses have also evolved with the times. From climate change mitigation to social responsibility, citizens expect corporations to articulate a clear view of why they exist and to make decisions about investments and behaviour that are consistent with that mission.

Included in these considerations are decisions about technology: when to use them, how to deploy them and to what end. Of course, the planning and adoption of technology are fundamental to the viability of any business. But technology adoption is not inherently good. Technologies are neither good nor bad – and it is in their use that organizations determine their impact. A purposeful company, therefore, determines the desired outcomes of technology adoption before it makes the investment.

In this thought-provoking new research paper, Dr. Sara Diamond and Dr. Cindy Gordon explore the relationship between technology and corporate purpose, specifically with regards to artificial intelligence (AI) and machine learning (ML). The authors examine why it is so critical that corporate leaders consider the impact of these technologies on their organization as a whole before any decisions on adoption and deployment are made. To guide these processes, they make specific recommendations for board executives and leaders for the effective adoption of AI and ML.

In their expert view, “a purposeful company is skeptical as to whether a new technology or a new use of existing technology is better than current practice. Purpose must look well beyond quarterly profits and instead speak to long-term sustainability and social balance.”

Technologies do not exist in a vacuum. Everything about them – from design to adoption to impacts – is shaped by decisions humans make. Before tackling technological change, therefore, purposeful companies lead by analyzing impacts on their multiple stakeholders and undertaking change in collaboration with communities, users and customers, keeping their investors, shareholders and boards well-informed.

In the end, Diamond and Gordon caution directors to not be swept away by technology for its own sake. Rather, they make a most compelling case that corporate leaders must ensure technology is embedded in a strategy that is genuinely guided by purpose.