Tag Archives: automation

Why Japan can become an economic star of the 21st century

Summary:  Today we look at the future of Japan, and speculate at how well it will cope with the new industrial revolution. Their unique strengths (sometimes wrongly considered weaknesses) suggest that the 21st century might see the sun again rising over Japan. America too will face this challenge; we should watch and learn from Japan.   {1st of 2 posts today. It is a revised version of posts from 2013 and 2014}

Contents

  1. A falling population is a boon for Japan
  2. A new Industrial Revolution
  3. Japan: suited to be a star of the 21st Century
  4. For More Information

 

(1)  A falling population is a boon for Japan

Japan’s government has worried about its overpopulation since the Meiji Restoration when they had about 3 million people (1868). They encouraged emigration to Korea, to no effect. They had 50 million in 1910, 100 million in 1967, and a peak in 2008 at 128 million — all crowded into a narrow urban belt along the coast. At their current level of fertility, by 2100 their population might be half of today’s, back to the level of 1930.  If fertility continues to fall, population might fall to 60 million (1925) or even 50 million (1910).

The effect on Japan’s environment would be wonderful. Japan could become a garden with the cleaner technology of that future era (a common question in grade-school history will be “Teacher, what is ‘pollution’?”).

See this graph showing the coming evolution of the age distribution in Japan (source; see more information from their National Institute of Population and Social Security Research).

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Happy Meals: now made with 20% less people!

Summary:  By now everybody sees that a new industrial revolution has begun, but few clearly see its dynamics. This post looks at one example: the debate about wages. Raise wages or lower them, it makes little difference compared to the new technology that does jobs both cheaper and better.  {1st of 2 posts today.}

Minimum Wage Meme: False

 

Funny but false, showing a deep misunderstanding of how automation works…

 

Mike Konczal demolishes fantasies about a post-work world in his rebuttal to Derek Thompson’s article in The Atlantic (discussed here yesterday): “The Hard Work of Taking Apart Post-Work Fantasy” at the Roosevelt Institute. However, he believes several false elements of consensus thinking, such as this: “If wages are stagnant or even falling, what incentive is there to build the robots to replace those workers?

Economist Gregory Clark gives an example showing why that’s false in A Farewell to Alms: A Brief Economic History of the World (2007)…

There was a type of employee at the beginning of the Industrial Revolution whose job and livelihood largely vanished in the early twentieth century. This was the horse. The population of working horses actually peaked in England long after the Industrial Revolution, in 1901, when 3.25 million were at work. Though they had been replaced by rail for long-distance haulage and by steam engines for driving machinery, they still plowed fields, hauled wagons and carriages short distances, pulled boats on the canals, toiled in the pits, and carried armies into battle.

But the arrival of the internal combustion engine in the late nineteenth century rapidly displaced these workers, so that by 1924 there were fewer than two million. There was always a wage at which all these horses could have remained employed. But that wage was so low that it did not pay for their feed.

Horses then, people now. New technology allows machines to do their jobs cheaper and better. McDonald’s shows how this works as they install kiosks allowing people to enter their own orders. They’re already used at “McDonalds in Switzerland“. In the US they’re being tested where “The McDonald’s of the future lets you customize your burgers“.

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Three visions of our future after the robot revolution

Summary: During the past 2 years the robot revolution has come into view, and all but Right-wingers living in fantasy-land have begun to realize it might (like the previous ones) produce large-scale social disruption and suffering. But to prepare for these changes we must first image what kind of world they’ll create. Here we look at three visions about what lies ahead for us.  {1st of 2 posts today.}

“We did not come to fear the future. We came here to shape it.”
— Barack Obama’s speech to Congress, 9 September  2009.

Dark futures

 

Contents

  1. The center-left sees the problem
    ……and offers mild solutions.
  2. Realistic analysis and prescriptions.
  3. Visions of dark futures.
  4. For More Information.

 

(1)  The center-left sees the problem and offers mild solutions

Slowly, people have come to see the coming robot revolution (aka, a new industrial revolution), even economists. The Left has adopted this issue, as they have climate change, as a means to enact long-sought changes in the US economy. Like climate change, their solutions are far too small for the problem described.

(a) A World Without Work” by Derek Thompson in The Atlantic, July/Aug 2015 — “For centuries, experts have predicted that machines would make workers obsolete. That moment may finally be arriving. Could that be a good thing?” Typical of The Atlantic. Long, meandering, confused mish-mash of issues. Never confronts the core issue of how people will earn money to live. Lots of nonsense about people living by selling crafts to each other.

(b) The Future of Work in the Age of the Machine” by Melissa S. Kearney, Brad Hershbein, and David Boddy at the Hamilton Project, February 2015. See the slides and transcript from the seminar they held for academics and businesspeople. Their prescription is aggressive application of conventional methods…

The Project’s economic strategy reflects a judgment that long-term prosperity is best achieved by fostering economic growth and broad participation in that growth, by enhancing individual economic security, and by embracing a role for effective government in making needed public investments.

(c) The future of work in the second machine age is up to us” by Marshall Steinbaum at the Washington Center for Equitable Growth, 23 February 2015 — They show that the robot revolution has not yet appeared in the macroeconomic statistics. But it’s coming. Their conclusions are the standard center-left recipe, like those of the Hamilton Project…

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Economists show the perils and potential of the coming robot revolution

Summary: History shows that we oddly focus on small changes coming while ignoring the larger one, because they are truly revolutionary and hence difficult to see and understand. So it is with the third industrial revolution, the oddest so far — and likely to be the biggest. This post shows that some of our top economists have begun to describe what’s coming. As usual with power, it’s great news if we manage it well and potentially horrific if we don’t.  We time to get ready. {1st of 2 posts today.}

Julie Hagerty & Leslie Neilsen in "Airplane!" (Paramount Pictures)

The reality will not be funny. Julie Hagerty & Leslie Neilsen in “Airplane!” (Paramount Pictures)

Robots Are Us: Some Economics of Human Replacement

By Jeffrey D. Sachs (Prof Economics, Columbia), Laurence J. Kotlikoff (Prof Economic, Boston U), Seth G. Benzell, and Guillermo LaGarda.
29  March 2015.

Abstract

Will smart machines replace humans like the internal combustion engine replaced horses? If so, can putting people out of work, or at least out of good work, also put the economy out of business? Our model says yes. Under the right conditions, more supply produces, over time, less demand as the smart machines undermine their customer base. Highly tailored skill- and generation-specific redistribution policies can keep smart machines from immiserating humanity. But blunt policies, such as mandating open-source technology, can make matters worse.

Opening

Whether it’s bombing our enemies, steering our planes, fielding our calls, rubbing our backs, vacuuming our floors, driving our taxis, or beating us at Jeopardy, it’s hard to think of hitherto human tasks that smart machines can’t do or won’t soon do. Few smart machines look even remotely human. But they all combine brains and brawn, namely sophisticated code and physical capital. And they all have one ultimate creator – us.

Will human replacement – the production by ourselves of ever better substitutes for ourselves – deliver an economic utopia with smart machines satisfying our every material need? Or will our self-induced redundancy leave us earning too little to purchase the products our smart machines can make? Ironically, smart machines are invaluable for considering what they might do to us and when they might do it.

… Our simulated economy – an overlapping generations model – is bare bones. It features two types of workers consuming two goods for two periods. Yet it admits a large range of dynamic outcomes, some of which are quite unpleasant.

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How Robots & Algorithms Are Taking Over

Summary: Today we have another essay about the 3rd industrial revolution now under way (aka the robot revolution), reviewing another new book preparing us for what is to come. We’ve had 50 years of warnings, all ignored. We’ll have to move soon to avoid severe social turmoil. Let’s not repeat our ugly 19th C history. {1st of 2 posts today.}

“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 useof labour outrunning the pace at which we can find new uses for labour. ”

— John Maynard Keynes, “Economic Possibilities for our Grandchildren“, The Nation and Athenœum, 11 and 18 October 1930.

Cover of <i>Galaxie</i>, 1959

Cover of Galaxie, 1959. CCI/Art Archive.

Excerpt from
How Robots & Algorithms
Are Taking Over

By Sue Halpern.
London Review of Books, 5 March 2015

Halpern reviews: Nicholas Carr’s The Glass Cage: Automation and Us.

Here is what that future — which is to say now — looks like: banking, logistics, surgery, and medical recordkeeping are just a few of the occupations that have already been given over to machines. Manufacturing, which has long been hospitable to mechanization and automation, is becoming more so as the cost of industrial robots drops, especially in relation to the cost of human labor.

… Meanwhile, algorithms are writing most corporate reports, analyzing intelligence data for the NSA and CIA, reading mammograms, grading tests, and sniffing out plagiarism. Computers fly planes — Nicholas Carr points out that the average airline pilot is now at the helm of an airplane for about 3 minutes per flight — and they compose music and pick which pop songs should be recorded based on which chord progressions and riffs were hits in the past. Computers pursue drug development — a robot in the UK named Eve may have just found a new compound to treat malaria — and fill pharmacy vials.

Xerox uses computers — not people — to select which applicants to hire for its call centers. The retail giant Amazon “employs” 15,000 warehouse robots to pull items off the shelf and pack boxes. The self-driving car is being road-tested. A number of hotels are staffed by robotic desk clerks and cleaned by robotic chambermaids. Airports are instituting robotic valet parking. Cynthia Breazeal, the director of MIT’s personal robots group … $25 million in venture capital funding, to bring Jibo, “the world’s first social robot,” to market.

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A warning about the robot revolution from a great economist.

Summary:  Our series about experts has discussed our reliance on bad or biased experts. Today we see the opposite: how we ignore insightful exports, people who could help us see and prepare for the future. An economist and Nobel Laureate warned us of what’s happening today. We didn’t listen then but can still learn from him. Also, let’s learn to listen better to our top experts; it might be an essential skill for our survival in the 21st century.  {1st of 2 posts today.}

Automation robot

Introduction

Sixty years ago science fiction author James Blish described a future in which semi-intelligent machines caused massive unemployment. Of course we did nothing to prepare. Thirty years ago a great economist wrote a paper clearly describing the 3rd industrial revolution that’s now begun (even today it’s one of the clearer statements of the situation). It was part of a major report by the National Academy of Engineering, much of which also accurately described these trends. We have done nothing to prepare, not even to study the problem on a large scale, because the majority of economists had a religious-like faith that future industrial revolutions must run like the first two — so we could go blindly into the future.

“National perspective: the definition of problems”

By Wassily Leontief, Nobel Laureate in Economics.
A chapter in Long-Term Impact of Technology on Employment and Unemployment.
National Academy of Engineering (1983). Red emphasis & headings added.

The great Industrial Revolution triggered by the invention of the steam engine has by now run its course; the age that we are about to enter will be dominated by the sign of the electronic chip. The new wave of tech­nological innovation will carry us forward at least as fast and as far as the last. However, to make full use of these opportunities, our eco­nomic, social, and even cultural institutions will probably have to undergo a change as radical as that experienced during the tran­sition from the preindustrial society to the industrial society in which we live today.

The introduction of successive generations of more and more complex machinery made possible by the discovery of new sources and forms of mechanical energy over the last 200 years not only led to an unprecedented rise in the output of various goods and services, but at the same time freed working men and women from the toil and trouble associated with physical exertion. The role of labor as the dominant factor of production was not reduced but enhanced. The control and guidance of increasingly powerful and intri­cate machinery required that each worker exercise mental capabilities of progressively higher and higher order. The competitive market mechanism translated this steadily increasing demand for labor into higher and higher real wage rates.

As the earning power of an average work­ing family increased, it naturally chose to allocate some part of those earnings to acquiring more leisure time. One might speak of this progress as an increase in voluntary technological unemployment. One hundred years ago, the number of hours worked in the average week in the United States was over 70; by the beginning of World War II, hours per week sank to 42.

Computers and robots replace humans in the exercise of mental functions in the same way as mechanical power replaced them in performance of physical tasks. As time goes on, more and more complex mental func­tions will be performed by machines. Not unlike large bulldozers assigned to earth-moving jobs that could not possibly have been carried out even by the strongest laborers or draft animals, powerful computers are now performing mental operations that could not possibly be accomplished by human minds.

Any worker who now performs his task by following specific instructions can, in princi­ple, be replaced by a machine. That means that the role of humans as the most important fac­tor of production is bound to diminish — in the same way that the role of horses in agricul­tural production was first diminished and then eliminated by the introduction of tractors.

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The robots are coming, bringing hope of a better future.

Summary:  Slowly the outlines of the 3rd industrial revolution becomes clear, and with it the only path to a better future for humanity. Today we have an excerpt from a brilliant article about this by British journalist and novelist John Lanchester.

That means the role of humans as the most important factor of production is bound to diminish in the same way that the role of horses in agricultural production was first diminished and then eliminated by the introduction of tractors. The general theoretical proposition that the worker who loses his job in one industry will necessarily be able to find employment, possibly after appropriate retraining, in some other industry is as invalid as would be the assertion that horses who lost their jobs in transportation and agriculture could necessarily have been put to another economically productive use.

— Wassily Leontief ( Nobel laureate in economics), The Future Impact of Automation on Workers (1986).

A woman in the robot office

Excerpt from “The Robots Are Coming

John Lanchester
London Review of Books, 5 March 2015

Lanchester reviews these books:

We are, Brynjolfsson and McAfee argue, on the verge of a new industrial revolution, one which will have as much impact on the world as the first one. Whole categories of work will be transformed by the power of computing, and in particular by the impact of robots.

… We are used to the thought that the kind of work done by assembly-line workers in a factory will be automated. We’re less used to the thought that the kinds of work done by clerks, or lawyers, or financial analysts, or journalists, or librarians, can be automated. The fact is that it can be, and will be, and in many cases already is. Tyler Cowen’s Average Is Over points towards a future in which all the rewards are likely to be captured by people at the top of the income distribution, especially those who become most adept at working with smart machines.

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