Yves here. While it is clear more automation of work is in the offing, it’s important to be duly skeptical of tech boosterism, particularly given how central that is to Silicon Valley fundraising and vaporware valuations. For instance, this article starts out with the threat of driverless cars, when independent tech experts deem them to at best be a long way from being a reality, and even then, most likely for long-haul trucking.
Nevertheless, the reason for featuring this post is how it depicts robots as a threat to emerging economies, when the implicit assumption of most English-language business reporting is that advanced economy work is most at risk, while lower-wage jobs are pretty safe.
By Martin Khor, Executive Director of the South Centre, Geneva. Originally published at The Star
The new automation revolution is going to disrupt both industry and services, and developing countries need to rethink their development strategies.
A news item caught my eye last week, that Uber has obtained permission in California to test two driverless cars, with human drivers inside to make corrections in case something goes wrong.
Presumably, if the tests go well, Uber will roll out a fleet of cars without drivers in that state. It is already doing that in other states in America.
In Malaysia, some cars can already do automatic parking. Is it a matter of time before Uber, taxis and personal vehicles will all be smart enough to bring us from A to B without our having to do anything ourselves?
But in this application of “artificial intelligence”, in which machines can have human cognitive functions built into them, what will happen to the taxi drivers? The owners of taxis and Uber may make more money but their drivers will most likely lose their jobs.
The driverless car is just one example of the technological revolution taking place that is going to drastically transform the world of work and living.
There is concern that the march of automation tied with digital technology will cause dislocation in many factories and offices, and eventually lead to mass unemployment.
This concern is becoming so pervasive that none other than Bill Gates recently proposed that companies using robots should have to pay taxes on the incomes attributed to the use of robotics, similar to the income tax that employees have to pay.
That proposal has caused an uproar, with mainstream economists like Lawrence Summers, a former United States treasury secretary, condemning it for putting brakes on technological advancement. One of them suggested that the first company to pay taxes for causing automation should be Microsoft.
However, the tax on robots idea is one response to growing fears that the automation revolution will cause uncontrollable disruption and increase the inequalities and job insecurities that have already spurred social and political upheaval in the West, leading to the anti-establishment votes for Brexit and Donald Trump.
Recent studies are showing that deepening use of automation will cause widespread disruption in many sectors and even whole economies. Worse, it is the developing countries that are estimated to lose the most, and this will exacerbate the already great global inequalities.
The risks of job automation to developing countries is estimated to range from 55 to 85%, according to a pioneering study in 2016 by Oxford University’s Martin School and Citi.
Major emerging economies will be at high risk, including China (77%) and India (69%). The risk for Malaysia is estimated at 65-70%. The developed OECD countries’ average risk is only 57%.
From the Oxford-Citi report, “The future is not what it used to be”, one gathers there are at least three reasons why the automation revolution will be particularly disruptive in developing countries.
First, there is “premature deindustrialisation” taking place as manufacturing is becoming less labour-intensive and many developing countries have reached the peak of their manufacturing jobs.
Second, recent developments in robotics and additive manufacturing will enable and could thus lead to relocation of foreign firms back to their home countries.
Seventy per cent of clients surveyed believe automation and 3D printing developments will encourage international companies to move their manufacturing close to home. China, Asean and Latin America have the most to lose from this relocation.
Thirdly, the impact of automation may be more disruptive for developing countries due to lower levels of consumer demand and limited social safety nets.
The report warns that developing countries may even have to rethink their overall development models as the old ones that were successful in generating growth in the past will not work anymore.
Instead of export-led manufacturing growth, developing countries will need to search for new growth models, said the report.
“Service-led growth constitutes one option, but many low-skill services are now becoming equally automatable.”
Another series of reports, by McKinsey Global Institute, found that 49% of present work activities can be automated with currently demonstrated technology, and this translates into US$15.8tril in wages and 1.1 billion jobs globally.
About 60% of all occupations could see 30% or more of their activities automated. But more reassuringly, an author of the report, James Manyika, says the changes will take decades.
Which jobs are most susceptible? The McKinsey study lists accommodations and food services as the most vulnerable sector in the US, followed by manufacturing and retail business.
In accommodations and food, 73% of activities workers perform can be automated, including preparing, cooking or serving food, cleaning food-preparation areas and collecting dirty dishes.
In manufacturing, 59% of all activities can be automated, including packaging, loading, welding and maintaining equipment.
For retailing, 53% of activities are automatable. They include stock management, maintaining sales records, gathering customer and product information, and accounting.
A technology specialist writer and consultant, Shelly Palmer, has also listed elite white-collar jobs that are at risk from robotic technologies.
These include middle managers, commodity salespeople, report writers, journalists, authors and announcers, accountants and bookkeepers, and doctors.
Certainly, the technological trend will improve productivity per worker that remains, and increase the profitability of companies that survive.
But there are adverse effects including loss of jobs and incomes for those who are replaced by the new technologies.
What can be done to slow down automation or at least to cope with its adverse effects?
The Bill Gates proposal to tax robots is one of the most radical. The tax could slow down the technological changes and the funds generated by the tax could be used to mitigate the social effects.
Other proposals, as expected, include training students and present employees to have the new skills needed to work in the new environment.
Overall, however, there is likely to be a significant net loss of employment, and the potential for social discontent is also going to be large.
As for the developing countries, there will have to be much thinking about the implications of the new technologies for their immediate and long-term economic prospects, and a major rethinking of economic and development strategies.
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on the driverless – not sure whether this made it to you:
http://www.thedrive.com/tech/8300/can-sully-transform-the-world-of-self-driving-cars
Well, a good and quick word picture:
Goldman Sachs used to employ 600 cash equity traders not too long ago, now they only employ 2 thanks to improvements in automation.
Bank of America recently opened 3 fully automated branches, employing 0 humans.
Café X opened in San Francisco, a fully automated coffee shop employing 0 humans. (And no doubt some geeks will patronize that sorry establishment???)
Rolls Royce came out with a fully automated container tanker ship operating system, no crew required!
There have been driverless farm tractors now for quite some time.
I am not confident about the future . . . .
We will know when the future arives when they automate white colar crime.
Already happened years ago.
What do you think high frequency trading has been doing all this time?
Yes its legal within the letter of the law, but from a ethical real world perspective being able to influence price changes on stocks or to make money by making others pay the price is fraudulent.
I did not see mechanics as threatened. “Everything breaks, I’ll never be out of a job.” is what one mechanic said to me, grinning.
We were working on airplanes.
Robotics are a Transformational Industry riding on the advances of computer brains for them.
10 years is as much as a century now. The phone call is the new in person.
Engineers in the discipline of engineering if given the problem will give us holistic Systems, & I don’t see Systems Engineers losing work.
If we allow ourselves to accept that our goal is a better world & life for us, we can engineer that world.
If we allow ourselves to set as the goal lives of peace & prosperity for everyone, instead of the few, we can create that system.
Goals matter.
Government is an exercise in Systems Engineering. It is created to either oppress the people or liberate the people.
What is wrong with the goal of allowing many to live well simply engaged in the life of the mind?
When the Civilization of Rome collapsed, there were those monks whose lives revolved around scholarship & beer, and we are glad of it, aye?
This is a great summation of what “tech” offers us.
“10 years is as much as a century now.”
So, then, the self driving car that’s been 1 or 2 years away for 10 years now, has actually already happened, and no one but you realized it?
Grand sounding dubious platitudes, with sneers for anyone who doubts them.
If we allow Ourselves to stop falling for your PR, it’s possible that some advances could be made, IN SPITE OF the people that continue to regurgitate this dribble.
I keep waiting for a CGI’d lie-spewing hate monger kleptocrat? http://www.truth-out.org/news/item/39848-beyond-the-acid-filled-jacuzzi-sinister-truths-about-bannon-s-fascism it’s not like algorithms would be that hard to code?
I believe a crucial statement is this one:
And history bears this conclusion. Automation was always intended to eliminate people working in a specific field and replace them with machines.
Automation of agriculture eliminated agricultural jobs, to the point that the fraction of the population devoted to producing food went from about 80% to much less than 5% nowadays. Displaced peasants went to work in industry.
Automation in industry similarly eliminated workshop jobs (typically only about 10%-15% in Western countries nowadays, 20%-25% in heavily industrial countries like Germany and Switzerland). Displaced industrial workers went to work in services.
Where are displaced service workers going to work when the next wave of automation reduces the fraction of industrial employment to about 5% and the fraction of service workers from 60%-70% to 20%?
Will the solution to just let those superfluous people “die faster”?
The solution should be to have a universal basic income, which allows us to enjoy the fruits of this technological marvel we’ve created after centuries of back-breaking work and innovation.
That is the whole point in the first place, isn’t it?? You know, to relax and enjoy life while the machines do the work? The demand from the universal income funds the production of robots which do the work, which creates the services/goods which we then demand more of, a beautiful circle! Leaving us free to get away from the machinistic, robotic, wage-slave existence and back towards creativity, love, art, community, etc.
Yes, the ultimate solution was found long ago in Iain Banks outstanding SF book,
The Player of Games
Right. The real issue is that all of the extra wealth, time, and resources that will be generated by machines taking the load off of humanity’s back is going to be funneled into the hands of the few, instead of being distributed to everyone, as it should be. The robots are not the problem. It’s the handful of people pointing around at everyone else on Earth, going “You all owe us!”.
To which one has to say:
With all those poor unemployed, good luck keeping paying customers.
With all those new poor who will need the products the automatons make or the services the automatons provide?
The wealthy think they can let the middle/poor class wither into 3rd World-esque poverty who will gradually be kicked out the cities (as they either lose their property or can’t afford rent) and forced to live in shanty towns or favelas so they don’t have to be seen or thought of.
Who knows, maybe they’ll get their way. The wealthy in South America have been getting their way for decades if not over a century after all.
We will never run out of jobs because there will always be lots and lots of people with no other assets who need to work for a paycheck in order to fund their daily lives. If all the factory and trucking jobs go away (count me skeptical) and then all the lawyers and accountants, that only means more workers available for home health care and restaurant work, feeding and bathing the 10%.
We may well run out of good jobs; we seem well on the way to that already. But that is a much different issue.
Don’t forget the sex trade!!
That was a really nonsensical comment, no offense intended.
I think the more likely scenario isn’t a jobless future, in the literal sense of the term, but rather extreme inequality of opportunity. In essence, there’s a small number of people doing very well in jobs that cannot be automated, a growing number of of people who either unemployed or working low-wage jobs that also cannot be automated but not a lot of mobility because much of the middle has been hollowed out.
Even if this scenario becomes reality is not likely go happen today or tomorrow–it probably years or even decades away. Nonetheless, the United States is going to face a choice when it happens, or as we get closer to it: do we maintain the “I got mine, the poor should just take responsibility and work harder” mentality, or do we decide that even the least well-off deserve some basic standard of living?
The United States is in real trouble if the former mentality prevails.
Agreed. There are still many jobs that require humans to perform. The mentality that service & social-service jobs are of low value is a factor that contributes to the extreme wealth inequality. For too long we’ve bought the myth that wealth = success. My preference is to continue eating food cooked with creative human hands & stuck with a needle by a living, bleeding, feeling nurse. Let the tech & business wonks eat e-cake.
The problem with service and social skill jobs is that they’re generally low skill and absolutely swamped with excess labor at this point which has created a farcical race to the bottom situation which has forced wages and benefits into the gutter.
Even semi-skilled jobs that require a certification, like nursing, are undergoing this right now as its one of the few jobs that is relatively easy to train for and find work in that pays OK.
Kyle Reese:
While Kyle was talking about the Cyberdyne Systems T-800 Model 101, he might as well have been talking about corporate america’s relentless quest to squeeze more from fewer workers.
FIrst it was stagnant wages, then it was process improvement teams, then it was more hours, then it was downsizing, then it was the change from defined benefit to defined contribution, then it was less health insurance coverage per dollar, then it was outsourcing and off-shoring and then it was contingency labor and statement of work arrangements.
Through it all, the corporation’s prime directive has been to reduce the cost of labor on the balance sheet and now we are at the end game — automation. Finally, corporations can eliminate 90% or more of workers and replace them with capital expense items.
Oh, the joy of it all in the corner suites! Just think … no more wages to pay, no more recruitment expenses, no more training expenses, no sick pay or vacation pay, no more health insurance premiums, no more FICA taxes, no more OSHA requirements, no more limits on hours or days worked … my God it’s a 24/7/365 money machine!
It’s like a capitalist’s fever dream come true — just a few handpicked executives at the top overseeing a tireless legion of robots and automated processes that churn out profits day and night, without end — and it all can be expensed!
I’m afraid not even Sarah Conner is gonna stop this juggernaught.
You never know – with all the Internet of S(family blog) updates we’ve been seeing, how hard could it be to hack these robots and reprogram them to eliminate the jackasses in the C suites?
to squeeze more from fewer workers
That’s called “productivity”. Without it, we’d all still be living on farms growing our own food, working from sunup to sundown.
Reading through the processes described by the comment you are responding to, they generally do not involve net efficiency gains. They are largely redistributive processes that transfer money from one set of people to another.
Not distinguishing between “developments that increase profits for stockholders” and “the developments that made it so we aren’t all subsistence farmers” is not only confused, it functions straightforwardly as lobbying on behalf of specific interest groups.
I’ve continually had to point this out in discussions with people, particularly my father (an avid reader of the Economist and consumer of CNN, so we know where he stands on basically everything), that – no matter what we say about whether the jobs will come back or become technicians or be replaced – the big problem with our social organization is that it has absolutely no answer whatsoever to what to do with superfluous people.
If there is no job for you, you die. Our society will pity you, perhaps offer you charity, but certainly not a job. Capitalism is organized in such a way that, faced with an unemployment problem that won’t go away, it has no answer whatsoever. It often refuses to even recognize there is a problem in the first place.
If we had a better system, unemployment would be recognized as something which exists and is to be dealt with. There will always be unemployed people, because if we look at the last few centuries, there always were these unemployed people. It’s been a few centuries and we have not reorganized ourselves to deal with this problem on the economic level, just the political level (insofar as the two can be split up) and even then we seem to resent that and want to undo it.
I’m a computer programmer. If your program has a bug, it won’t get fixed by ignoring it. I know that, from the perspective of the rich, the bugs are features, but I’m asking us as a whole: Why do we put up with this?
The race to the bottom in quality, which is the third phase of our decline and fall after the race to the bottom in prices and compensation. “Good enough” thinking by people in charge who have no idea what good looks like, and whose personal reality distortion field and corporate feudal governing structure prevents anyone from doing anything about it. Consumers, who like voters “have no where else to go”, accept their crappified products and services so that we have landfills full of appliances that die a month after their warranty runs out, operating instructions that are incomprehensible or nonexistent, firmware in IOT devices whose bad design allows them to be veritable DDoS engines, and a healthcare system whose outcomes are a threat to every measure of a healthy society.
So true about the decline of quality. Seems the goal now of many manufacturers is to figure out the cheapest way to mimic the actual product so that it looks good enough on the shelves or in an online picture.
I can’t tell you how may consumer electronics I’ve bought lately that look like the real thing, and even work like the real thing for a few weeks or months, before starting to go wonky — settings change arbitrarily, features become inaccessible, the whole thing enters into an entropic death spiral.
Same with other goods as simple as socks. They look like the real thing in the package and they seem to fit like real socks when you put them on. But after one or two washings, one sock shrinks to half size, while the other elongates to double in length. Or you wear a hole in the bottom after just a day or two. It’s like many products are now designed and made to function more as set decoration than as real products.
Contrast this with products made year a few generations ago. For example, we still use an old clothes iron that has to be 40 or 50 years old and it work like a champ. No fancy electronics or features, but it’s built like a frickin’ tank and will probably outlast me.
Everyone’s been noticing this, particularly in the last 10 years. At least people I know have been talking about this a lot for several years now. That there’s nothing in between. It’s either high end extremely expensive (which is sometimes not that good quality anyhow!) or it’s total crap.
Nothing for the middle class? Because they already decided there’s no middle class anyway anymore?
My spouse spent a couple hours researching tires before buying them for my 2008 Subaru Impreza Outback Sport (which takes larger than typical tires), last week in anticipation of the blizzard conditions. In the end, we wound up spending around $800 (including installation & balancing or whatnot)… and that was basically the minimum to get anything like decent quality.
We’re not wealthy, but we could handle it.
What about people who can’t? Who don’t have that much in their bank accounts and don’t have reasonable access to credit?
Who have to buy cheap but not inexpensive, and then drive dangerously or buy cheap but not inexpensive again very soon later. (Particularly since the roads in our area are terrible.)
They wind up paying more overall and/or endangering us all.
It often occurs to me that this quality problem isn’t just a problem for people who can’t afford quality, it’s a problem for everyone.
If modest income people can’t afford good healthcare, there’s not enough available for those who can.
If modest income people can’t afford decent tires, they’re still on the same roads with other people… the same roads everyone has to drive that are in poor condition or continuous states of construction barriers.
There’s just no logical reason that even rich people wouldn’t have a problem with this state of affairs.
basic income guarantee, or public works jobs guarantee, pretty basic solution.
Not so basic politically though, apparently.
or both. One issue that is seldom mentioned with jobs is how abusive many work places are, I mean verbal abuse for example going on all day long. And the toll this takes on everyone of course, but most especially those who are vulnerable psychologically to begin with (have depression, anxiety, PTSD, etc.). This is not a personal account btw, but near enough to the source.
They really should be able to quit for a government job anytime they want to. And if that doesn’t work out either, for a stipend to live off. Why are workplaces abusive? Well some is the pressures of the profit motive etc., but some is just jerks in a hierarchical system where they are thus allowed to abuse others lower on the hierarchy than them because it’s a hierarchy.
There is no doubt that some jobs will be created when existing jobs are automated–so yes some people will find work doing these. However, it’s not likely to be that many in the grand scheme of things and may not be enough to offset the number of jobs lost.
Another key point is on the topic of education. Certain people like to bash schools but the truth is that it is very hard to educate people for jobs that don’t exist yet. Furthermore, retraining for most well-paying jobs often takes several years, so it’s a bit of a gamble as the whether what you’re retraining for will still be in demand when you’re done. I’m not against retraining by any means–it can be valuable; however, the problem is a lot more complicated than education alone.
As for your final question, I think the reason we put up with it is psychological. Facing up to the realities of unemployment essentially means acknowledging that capitalism isn’t always fair. By ignoring it we can kind of pretend that the system is fair, even though it isn’t.
Salty, as a former IT type myself, whose creations are used billions of times a day by the masses — I am in full agreement with you.
What I wonder is who will buy all this “stuff” if people lose their jobs to automation? I know the companies will make more per unit sold, but there has to be a point of diminishing returns.
Which is comical since the point of “robots” is their ability to work 24/7 and fast… so how would the increase in production possibly jive with the loss of consumers? How many toasters can one of the employed families buy?
BTW, the history of the “industrial age” has except for a few brief periods made everybody who had a job work longer hours than they did before. So why is it gonna be different this time?
This is less a paradox if you consider that:
1) Population in advanced countries is inexorably aging, and in several countries (most notably Japan, Germany) is already diminishing.
2) Aging, and then reduction of working age population, will also affect several other important countries in the foreseeable future (notably China, Iran).
3) Hence, both the pool of reasonably skilled workers and solvable customers is going to decrease anyway very soon.
4) The powers that be have no intention to let the number of immigrants in to counterbalance the flailing demography of their countries — and positively humongous, wholly unrealistic immigration quotas would be anyway required to counteract not just population reduction but also population aging.
5) The powers that be have no intention to launch a costly, large-scale endeavour to teach and train the large pool of under-skilled or illiterate people in regions like sub-Saharian Africa or the Indian sub-continent.
6) Hence, to maintain their standard of living, a high degree of automation looks like the proper solution.
Impedance mismatch between demographic trends and automation trends will result in massive unemployment — but why should TPTB care? For them it is just a transition period to suffer through before reaching the nirvana of a life with robotic servants.
> . . . the nirvana of a life with robotic servants.
TPTB would have no fun ordering machines around. Who would they feel superior to?
What I wonder is who will buy all this “stuff” if people lose their jobs to automation?
Other robots, of course. With proper financialisation of the value chain, companies can probably just skip the whole tedium and risk of producing a physical product and just sell the derivatives on it – the Expectation of a Product arriving with some (low) probability sometime in the future (perhaps) must be tradeable.
If they are never getting assigned, then they can just roll those futures/options for ever and never actually produce anything.
And please do not forget all those subprime robots out there!
Once upon a time, an established base of well trained consumers was an integral part of developed economies.
In fact one might go so far as to say they were one the major, if not THE engine of growth, not only consuming products and services voraciously, but also using vast amounts of credit to do so, thus doing their patriotic duty expanding the national money supply, dutifully paying their taxes and generally keeping their economies ticking over until central bankers, and one in particular, was caught sleeping at the wheel.
In this post credit crunch, neoliberalised, globalised world things now look somewhat less rosy for many of these mini ‘wealth generators’ and it is mostly they who conveniently, it has been decreed from above, must pay the highest price for living high on the hog for too long. ‘It’s the screwing you get for the screwing you got,’ as my dear old grandma never said.
Now we are told we have mass automation to add to the growing list of neoliberal ‘victories’ over inefficiencies that constantly blight successful businesses including deunionisation, growing job insecurity, ‘flexible working/ZHCs, little or no wage growth, pitiful pension rights and returns, rising inequality etc amidst a backdrop of ideological driven austerity, corporate tax inversion and evasion (or ‘mitigation’ for the serial apologists out there) asset stripping, debt vehicles, clearly destructive, yet establishment endorsed mergers, iniquitous value extraction,downsizing and rationalisation, importing of ever cheaper labour, PFIS the list goes on…
The once virtuous circle that maintained and sustained societies is becoming ever more vicious, and yet there are still plenty of deluded, self-serving eedjuts out there who not only think that this is ok, but also apparently believe it is sustainable.
It’s the robotic army that concerns me.
After they take your job they’ll take your life.
All armies, police… heck, most all of us are products of conditioned response. Some of us are just easier to slap back together when our victims fight back, or less easily distracted from our master’s instructions?
I understand that some god-awful, slavering, neo-fascist “RoboCop” re-boot’s finally going to happen?
> This concern is becoming so pervasive that none other than Bill Gates recently proposed that companies using robots should have to pay taxes on the incomes attributed to the use of robotics, similar to the income tax that employees have to pay.
I have to conclude that quoting Bill Gates’ proposal to tax robots as something a reasonable society should do, the author has lost his mind.
Has anyone ever seen a robot with money in it’s pocket? Bill is the richest guy on the planet and he points his bony finger at robots and says ‘tax that’ and by implication not me.
What defines a robot in Bill’s mind? Is a robot any machine that can perform a wrist action? If a programmer can get a machine to curtsy, is that a robot? What about machines where no apparent motion happens at all, like Bill’s servers that ‘manufactures’ and sells software, without human intervention once set up at the marginal cost of zero. Does Bill include those as robots? Not likely, as then he would have to admit that the best solution is to tax the crap out of himself. If Bill were honest he would shout from the rooftops, ‘tax me, I’m rich’. Instead we get dishonesty and the notion that certain machines should be taxed, except the ones Bill owns.
How many construction jawbs are destroyed by bulldozers? Those nasty machines steal the potential jawbs of thousands of construction workers who could be employed with a shovel and wheelbarrow.
That’s the level of logic in Bill’s proposal to tax robots.
If we check back over the life of Micro$oft, it becomes obvious that at many times in the past Bill G. has urged the taxing of hardware, but NEVER the taxing of software.
Hmmm… So, in one corner of the ring (how do rings have corners?) we have an autonomous unit powered by renewable, carbon-based, photosynthesized energy with an incredibly complex, highly adaptive neural-processing unit that can’t be replicated with the best software engineering, with incredible self-repair capabilities that are going on every minute and keep it in operation for decades (hopefully).
In the opposing corner we have units that require large and uninterrupted quantities of electricity generated through extremely complex systems (even renewable ones), with very limited flexibility, requiring complex computer codes to remain functional, with no ability to self-repair, and dependent on global supply chains and skilled technicians to remain operational.
If any of the many forces of disruption that threaten our teetering industrial civilization actually come to pass, and surely we’re not imagining all of them, those robots are going to represent another example of wasted resources.
thanks for the clarity
Indeed. Try as I might, I cannot square this robotic revolution with the plummeting EROEI of all the energy sources they will require.
why does this guy think that every sentence has to be a new paragraph. Makes it impossible to read.
It’s a style designed to subliminally appeal to twits, or tweeters, or whatever you call ’em.
There is some evidence that the developed world DOES respond to a need to create employment, even when the employment is regarded by some as a net economic cost to society.
For example, as discussed by Paul Woolley at http://www.newyorker.com/magazine/2010/11/29/what-good-is-wall-street
” “The amount of rent capture has been huge,” Woolley said. “Investment banking, prime broking, mergers and acquisitions, hedge funds, private equity, commodity investment—the whole scale of activity is far too large.” I asked Woolley how big he thought the financial sector should be. “About a half or a third of its current size,” he replied.”
By Woolley’s estimate, one can infer at least 50% of the people employed in the financial sector are not doing value added work.
If the US government can coddle/preserve the financial sector and its coterie of traders, brokers, money managers, economists, financial advisors, arbitrage specialists, risk analysts, media talking heads, think tank workers, and hedge fund managers, then surely the US government COULD also find some task for workers displaced by robots.
And these jobs might be more socially valuable than much of the financial work encouraged by the US government now.
Perhaps even employ people as government artists and writers as was done during the Great Depression.
Note, I work in the electronics industry and have toured factories that manufacture printed circuit boards and printed circuit assemblies. There is already much automation in this industry (numerically controlled machining, high speed chip shooters, automatic optical/x-ray inspection, automatic testing..).
.I view the entire “robots are coming to take your jobs” with skepticism, as frequently automation is spurred because human labor is viewed as too costly, and there is little wage pressure now.
Corporations have pursued inexpensive labor throughout the world, and I suspect they have even more low wage labor opportunities to exploit.
These same corporations will see value in pushing the “robots are coming” theme to help pressure labor costs down.
If robots do arrive in a big way, there will be new, perhaps unanticipated, robotic related “employment” created. For example, perhaps we will have a class of robot thieves, who will capture robots and disassemble them for parts for resale.
In an old is new again theme, these would be similar to the cattle rustlers of the 1800’s.
That there will be disruption is a given and our current efforts should focus on smoothing this out as much as possible with more social safety net, not less payed with higher progressive taxation on either the robots or their masters. Otherwise we may end up with world wars parallel to the conclusion of the last technological disruption of the industrial revolution in the first half of the last century.
My question that I have yet to see addressed and which I would like to throw out to the commentariat is what are the likely new jobs that will evolve in the future? I don’t think it’s a matter of if, but when.
Oh where to begin? It is a law of economics that only issues of little to no impact on real wages can be discussed in the mainstream corporate press, because the issues that are truly important (like forcing population growth thus increasing competition for jobs) are not those that the rich and powerful want discussed.
So let’s try this: we have had the technology to sew clothing on automated machinery for decades. It’s not science fiction, that technology is established. Yet the vast majority of clothing is sewn by hand using cheap labor in asia. Because while an automated shirt-sewing machine is indeed more efficient than any single human worker, the capital costs and investment risks and maintenance demands are so vast that it is uneconomic compared to unlimited disposable 50 cents an hour labor.
So for automated janitors and truck drivers etc., I note two things:
1. We do not currently have that technology perfected. It is still in the early demo stage.
2. Even when we do perfect that technology, if it is uneconomic to build automated shirt-sewing machines, why is it somehow going to be dirt cheap to build automated trucks and janitors? The laser-radars (Lidars) alone used by current ‘self-driving’ vehicles cost over a hundred thousand dollars each. Call me when I can buy one at Wal-Mart for pocket change.
3. If automation is really an issue, why is productivity growth slowing down? Surely the last human supervising an automated factory would have sky-high productivity numbers. Certainly some jobs are ripe for automation, but overall we are seeing less efficient use of more cheaper labor, not less use of labor period.
Yes. And the point is, as long as you have immiserated labor, it will always be cheaper to have some (many) jobs done by people than by machines. The point of automation is not to do away with the awful jobs, just the good ones. (And by “good” I do not mean “intrinsically satisfying,” only “paying a livable wage.”)
As Gsinbe suggests above, all of these developments are dependent on continued access to cheap energy, particularly fossil fuels. Sorry but you’re just not going to be able to create, run, and maintain an army of robots in an environment of dwindling resources and an economy that’s not very successfully (because it’s so damn late in the petroleum extraction story) attempting to transition to renewables.
Which dwindling resources are you talking about, especially in the context of fossil fuels?
Because there’s no dwindling supply of natural gas, for better or worse. What do you think those methane clathrates under the Arctic and Siberia are composed of?
Whether we want to burn them is another story.
Maybe the smarter kids here can help me with this conundrum: the robots are coming but productivity numbers are lackluster at best. Wouldn’t robots actually taking over show up as a major boost in productivity?
Subsidiarily: in the past, there have been major innovations that disrupted previous labour structures (eg, the cotton gin, the transistor, the production line…). But whether these innovations ultimately result in net job creation or destruction depends not on the new inventions themselves, but rather on whether the gains get reinvested in new productive industry– something that ain’t happening in our world of trampled aggregate demand and ZIRP/QE. So I don’t buy that more robots necessarily means less jobs.
PS apologies for using both “innovation” and “disruption” in a post. Putin made me do it.
My guess would be decreased demand compared to total production capability. A robot probably can make a certain number of widgets faster than a person but if there aren’t people who need them, the widgets will sit there unsold.
Far from the expert here, but when productivity is calculated based on output per unit of input, the output is denominated in units of money so if the increased amount of widgets is sitting on a shelf in a warehouse somewhere, it doesn’t wind up in the output calculation and therefore productivity doesn’t increase. I’ve found it useful recently when reading about economics to think about ‘demand’ as simply equal to population and in terms of need rather than want. At some point you are simply producing more than the population requires and productivity flatlines.
Maybe it’s time for a neologism:
Unput – the amount of cheap crap a robot running full time makes that nobody wants or needs in the first place.
OK now I’m confused about accounting identities. Doesn’t output include everything that is produced, regardless of whether it is sold or inventoried? (i.e., both output and unput and perhaps even dysput [production that detracts from productivity]).
Well that’s probably the fault of my dilettante’s attempt at an explanation. Maybe there are different output calculations used to come up with different totals depending on what you’re looking for? – ie total estimated value of goods and services produced (regardless of whether they’ve been sold) vs. total gross revenue.
Any smart kids out there know?
Capitalism’s worst enemy is abundance. This is why the natural evolution of any capitalist society is toward monopolism. If competition makes production more and more efficient, profits decline toward zero and the majority of businesses die. Survivors monopolize the market and create artificial scarcity. We see than happening today and it will accelerate with technological advancements. Automation of labor produces an “abundance” of labor but without the human consumers to complete the historical market equation. Labor has always been a necessary evil for capitalism as the only objective is profit. Owners need products and services for themselves but they have no institutional concern for the masses. The result will be a small society of elites, serviced by automated systems. The excess labor (people) will be treated as an expense to be eliminated rather than humanity to be sustained.
Excerpts form ” Economic Possibilities for Our Grandchildren:”.
John Maynard Keynes,
(1930)
“We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come–namely, technological unemployment.
This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.
But this is only a temporary phase of maladjustment. All this means in the long run that mankind is solving its economic problem. I would predict that the standard of life in progressive countries one hundred years hence will be between four and eight times as high as it is to-day. There would be nothing surprising in this even in the light of our present knowledge. It would not be foolish to contemplate the possibility of afar greater progress still.”
“Thus for the first time since his creation man will be faced with his real, his permanent problem-how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.
I feel sure that with a little more experience we shall use the new-found bounty of nature quite differently from the way in which the rich use it to-day, and will map out for ourselves a plan of life quite otherwise than theirs.
For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us! There are changes in other spheres too
which we must expect to come. When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many
of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a
possession -as distinguished from the love of money as a means to the enjoyments and realities of life -will be recognised for what it is, a somewhat disgusting morbidity, one of those semicriminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental
disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful inpromoting the accumulation of capital, we shall then be free, at last, to discard. “
http://www.econ.yale.edu/smith/econ116a/keynes1.pdf
Very beautiful.
In a world designed by the miraculous operations of the Neoliberal Market — our world — the way forward becomes clear.
The Market requires robot consumers programmed to shop and buy the stuff the robot makers build. Instead of taxing the robot makers each robot maker will be paid a “wage” — as low as possible — and mated to a robot consumer.
Humans must work to receive wages. Human leisure is immoral. The Market works to maximize human inequality. Inequality is good and should be maximized. For an interim period a few humans will be necessary to fill future employments performing specialized tasks serving master humans.
However the master Market design AI — ever at work to perfect the operations of the Market — will decide after a short time both sets of humans are unnecessary to serve the needs of of a more perfect Market. Humans require too much space which might better serve for production, inventory accumulation, and housing the purchases of robot consumers. Humans use vital energy which will better serve production and consumption.
At some point the Market can stop once all resources have been consumed. All robots can become quiescent and rest. The Market will be perfect.
“The Market requires robot consumers programmed to shop and buy the stuff the robot makers build.”
That’s the idea in ‘The Midas Plague’ by Frederik Pohl, from 1954, around the same time as he wrote THE SPACE MERCHANTS with Cyril Kornbluth.
https://archive.org/stream/galaxymagazine-1954-04/Galaxy_1954_04#page/n7/mode/2up
I have one simple question. If large numbers of workers are replaced by robots who will be able to afford the products they make? Assuming they will make some form of personal consumable or purchasable products. if there is no market for their products seems like a bad investment to me.
A simple response, this has been going on for quite some time, and will until the predatory capitalist economy finally collapses.
How can I state this? You often hear the phrase, “consumption makes up 70% of the economy” or similar such assertions, but they never state the percentage of the populace which is make those 70% purchases! Instead, people assume 70% of the people are buying stuff overall, which is incorrect.
There has been a shrinking, and in some years dramatically shrinking, number of people doing the major consumer purchases and purchasing, such that today the majority of that 70% is done by primarily 15% of the populace.
Good times . . . .
Why is white-collar prefaced with elite? Are salespeople, accountants and “report writers” now part of the mythical overlord class? Didn’t think so.
I do wish joirnalists and “report writers” would stop using elite to refer to the enemy. They are elitist, definitely, but certainly not elites in anyone’s eyes but their own.
The pedant abides
Automation brings its own problems. Readers here should be familiar with the “legacy code” problems surrounding exit from the Euro.
The same problem surrounds the use of robots, under a different name – retraining becomes reprogramming, or in many case the robot become obsoletes, probably well before its cost is fully amortized – abusiness goal of the robot makers.
Some of the perceived savings from robots appear ephemeral, because I doubt any robot, especially its programming, has a 10 year working life, let alone an 40 year working life.
To err is human. Computers, and robots, relentlessly repeat your mistakes.
I see a large future cost in upgrading and robots, especially when driven by the rent extraction class. Aka: “Sorry about your budget for that critical robotic task.”
Greed drives the robotic invasion, and greed carries with it the robotic invasion’s downfall.
I am reminded of Lloyd Blankfien appearing on Charlie Rose a couple.of years back on this subject.
He stated the main issue here in the US is a distribution issue of wealth. Robots are an outlier.
It is wise to start discussing UBI. Quantum computing has made serious leaps and bounds in the last decade. We know particles can and do exist at one time. To be short, the first QC could cover several pathways of information instantly,
Now it is up to several hundred meaning human and beyond intelligence is becoming reality. Those white collar professionals are soon to also be replaced. The gains will accrue to those with capital as Lloyd stated. Hate the guy but he is correct.
We’re probably going to beat mortality in many of our lifetimes while half live in complete squalor. That is how our evolution ends, inglorious indeed.
Here is a link to the Oxford University’s Martin School and Citi job automation and developing countries report
http://www.oxfordmartin.ox.ac.uk/downloads/reports/Citi_GPS_Technology_Work_2.pdf
We are told that black swans usually appear suddenly, and without warning. Automation is the “huge black swan in the room” that is being willfully ignored by policy makers. It’s one of the great looming problems that politicians, in all their usual posturing tend to avoid, deny, or paint a pretty picture about.
Labor is just another line item cost of doing business to any corporate entity. With the corporation’s legal mandate to deliver maximum value to their shareholders, the corporation is driven to reduce costs (including labor) in order to maximize profit. Thus, the legal blind spot that puts whole societies at risk, because the workers (labor) are the very ones that sustain corporations via personal expenditures on goods and services.
Add to the above that the rate of change in automation is exponential. How steep that exponential curve will get is anyone’s guess, but I don’t see it slowing down. Long term (and maybe near long term) world economies (and their citizens) are going to be in deep trouble if nothing is done to ameliorate the negative multipliers caused by automation’s hallowing out of the job market.