Tag Archives: automation

The promise and peril of automation: now everyone sees the challenge

Summary: It was long denied,  but now everybody sees the coming of the next industrial revolution. We enter the next phase, when experts assure us that the obvious will not happen, that the dynamics of past industrial revolutions would not repeat (although they don’t explain why). Today we look at experts grappling with these issues, and see some simple truths.

Robot-human partnership

Don Klumpp | Photographer’s Choice | Getty Images

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Now that the 3rd industrial revolution has appeared on the front pages, Pew Research polls experts to learn its consequence: “AI, Robotics, and the Future of Jobs“, Aaron Smith and Janna Anderson, 6 August 2014 — Excerpt:

The vast majority of respondents to the 2014 Future of the Internet canvassing anticipate that robotics and artificial intelligence will permeate wide segments of daily life by 2025, with huge implications for a range of industries such as health care, transport and logistics, customer service, and home maintenance. But even as they are largely consistent in their predictions for the evolution of technology itself, they are deeply divided on how advances in AI and robotics will impact the economic and employment picture over the next decade.

… Some 1,896 experts responded to the following question: Will networked, automated, artificial intelligence (AI) applications and robotic devices have displaced more jobs than they have created by 2025?

Half of these experts (48%) envision a future in which robots and digital agents have displaced significant numbers of both blue- and white-collar workers — with many expressing concern that this will lead to vast increases in income inequality, masses of people who are effectively unemployable, and breakdowns in the social order.

The other half of the experts who responded to this survey (52%) expect that technology will not displace more jobs than it creates by 2025. To be sure, this group anticipates that many jobs currently performed by humans will be substantially taken over by robots or digital agents by 2025. But they have faith that human ingenuity will create new jobs, industries, and ways to make a living, just as it has been doing since the dawn of the Industrial Revolution.

Most of the answers are exercises in making stuff up, just faith-based guessing (see examples here). Which is sad, as they disregard the painfully gained knowledge from previous industrial revolutions. History, economics, political science, and sociology give insights as to what we can expect from the massive increase in productivity that might loom ahead. But using our imagination is more fun.

There are others with a more scholarly approach, such as the study described by Matthew Yglesias in “Robots won’t destroy jobs, but they may destroy the middle class“, VOX, 23 August 2014 — Excerpt:

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Journalists warn us about the coming revolution, but we don’t listen

Summary: We have little confidence in journalists, although they have warned us well of past perils. Now a new challenge arrives, the 3rd industrial revolution. We refuse to prepare for its dangers. Here we review some of the many news articles about what’s happening, so we cannot say we weren’t warned.

A woman in the robot office

The last office worker

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Contents

  1. Journalists report, but we don’t listen
  2. Journalists report: long-form analysis
  3. The daily news tells the story, in chapters
  4. For More Information
  5. The Robot bedmate is coming

(1) Journalists report, but we don’t listen

We have low confidence in the news media (see Gallup’s Confidence in Institutions Poll), but perhaps the fault lies in the audience as much as the journalists. Nothing demonstrates our broken OODA loop (observation-orientation-decision-action process) as vividly as our inability to see what journalists tell us.

Our invasion and occupation of Iraq began with lies; it ended with our ignominious eviction — having accomplished nothing of value to the US. Journalists reported each step of our folly (amidst much chaff from the hawks). Yet three years later many American remain unaware of these — often belligerently holding to their lies and myths.

So it also goes with climate change. The pause in warming of the atmosphere since roughly 2000 has been reported by journalists (fitfully, amidst much chaff from alarmists), telling us about its recognition by climate scientists (followed by their research into its causes and likely duration).

In both cases journalists reported both the key information, and the chaff by activists seeking to conceal this information. As citizens, consumers of news, we have a responsibility to sort the news to see the facts, not just whine that we were misled. Now this information cycle begins again with the start of a third industrial, widespread automation of white-collar jobs.

(2) Journalists report: long-form analysis

Here are articles about the great changes about to come, reshaping America. Everybody will be affected, even professionals who smirk at job losses in the lower class. Astonishing changes. But not so amazing as our blindness to them, even as the clock already runs.

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Techno-utopians keep us ignorant of the past so we cannot see the future

Summary: A new industrial revolution has begun. Knowledge of previous ones can guide us, preparing us for its likely dynamics and showing us the political actions necessary to distribute it’s benefits. But the 1% are working against us, seeking to return us to the pre-New Deal era of inequality and profitable (for them) instability. Keeping us passive is the key to their success; keeping us ignorant is one way to do that.

Comet 's office of the future

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Contents

  1. The past helps us see the future
  2. The world of yesterday
  3. The world of tomorrow, emerging today
  4. Jeff Bezos shows us our high-tech future
  5. For More Information

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(1)  The past helps us see the future

The previous industrial revolutions produced great new wealth from increased productivity, but distributed only by politics:  collective action producing new public policy.

The future need not resemble the past, but it’s a likely scenario. The technopians, like Marc Andreessen (@pmarca on Twitter) vividly describe the wonders of the future, but actively deny the political action probably necessary to realize it. They’re brilliant, educated people. How could they ignore this history? The simple answer: they’re not stupid; they believe that we are stupid.

(2)  The world of yesterday

“Knowledge itself is power.”
— Thomas Hobbes’ Sacred Meditations (1597)

This works in reverse as well. Our amnesia shifts power from our hands to those of others. A people that have lost their past cannot learn, and so cannot prepare for the future.

The advent of the first two industrial revolutions produced great wealth, but concentrated in few hands — with massive unemployment and poorly paid workers in unsafe conditions. This resulted from policy, not happenstance, as the 1% bitterly fought efforts to change the Gilded Age political system and distribute the bounty of America’s material and technological riches.  This, plus a financial system run by and for the 1% (e.g., creditor-friendly deflation) produced incredible (and unnecessary) hardship accompanied by economic instability.

As a result America’s second industrial revolution started and ended with decade-long depressions (the Long Depression and Great Depression), with frequent use of violence to suppress workers (see this list of private and State violence against unions).

Due to our sanitized children’s history, Americans know little of our history between the Civil War and WW1 (other than the cowboys). We cannot see the sad real history behind our fables (e.g., see “Little Libertarians on the prairie“), let alone learn from it.

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Nike swooshes us into a future of fewer jobs, low pay

Summary: The Third Industrial Revolution has arrived. Slowly arrived, but not so slowly that we cannot see its effects. Here we look at one company’s participation in the revolution, and the effects. It’s a lesson of what’s coming, which we pay for with the scarcest of resources: time.

Brain in a bulb

 

Contents

  1. Nike joins the 3rd industrial revolution
  2. Looking ahead at the results
  3. Implications for the 21st century
  4. For more information

 

(1)  Nike takes a step into the 3rd industrial revolution

The emerging nations have grown through the outsourcing of manufacturing jobs from the developed nations, relying on companies like Nike, and hoping to follow in the footsteps of America, Europe, and Japan.  Now they’re ready to transition from low-value-added jobs to those requiring more training and skill. Unfortunately the third industrial revolution has arrived, disrupting this natural evolution — destroying jobs while the resulting unemployment keeps wages low for all workers — both skilled and unskilled.

And of course they lack the unions that boosted wages and improved working conditions in the developed nations. The gains from increasing economic productivity go to the managers and shareholders of the megacorps. Let’s see this process at work…

Nike to tackle rising Asian labour costs“, Financial Times, 27 June 2013 — Excerpt:

Nike is to tackle rising labour costs at its Asian factories by “engineering the labour out” of its shoe and clothing production as it seeks to defend its profits. Don Blair, Nike’s chief financial officer, said its objective was to reduce the number of people making its products as he highlighted the impact of a sharp increase in wages in Indonesia.

The US sports group and other multinational manufacturers are also battling a sustained rise in Chinese labour costs. Mr Blair said: “I think the longer-term solution to addressing a lot of these labour costs has really been engineering the labour out of the product and that really is with technology and innovation.  He cited Nike’s Flyknit running shoe, whose upper part is a machine-knitted yarn. Nike is also using 3D printing technology to make prototype soles for professional athletes.

Cutting factory workers could also reduce Nike’s exposure to criticism over labour practices at its contractors, which has dogged it sporadically since the first big anti-sweatshop campaigns of the 1990s. In January this year activists criticised Nike’s suppliers in Indonesia for seeking exemptions to the minimum wage, which are allowed for companies that cannot afford to raise pay.

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Experts see that the 3rd Industrial Revolution is upon us. How many jobs will be lost?

Summary:  It’s been almost 4 years since the first article appeared on the FM website warning about the next wave of job losses from automation. Now experts slowly begin to grapple with this problem, estimating its magnitude, extent, and possible solutions. Here we look at three of these. Properly managed, the 3rd industrial revolution will be an unmixed blessing to all. But only if we manage it better than we’re doing with simpler problems 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 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.

Economic possibilities for our grandchildren” by John Maynard Keynes, The Nation, 11 October 1930. He had confidence in our ability to solve both economic and political problems of modernization.

Jobs of the Future

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Contents

  1. Retail: an example of the coming wave of losses
  2. Number crunching to estimate the jobs at risk
  3. A more realistic analysis
  4. For More Information

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(1)  Retail: an example of the coming wave of losses

The next industrial revolution will improve productivity in many ways, not just the simple machine-replace people exchange seen so often in the past.

Fifteen million people work in retail, plus millions more in jobs supporting them. A large fraction of those jobs will go away in the next decade as e-commerce gains market share. Salespeople, the people that run and maintain the companies and the stores, the people that maintain the buildings — a widening circles of impact.

Here’s one of the many articles appearing as the inevitable approaches: “The Tipping Point (E-Commerce Version)“, Jeff Jordan (Partner, Andreessen Horowitz), 14 January 2014 — Excerpt:

We’re in the midst of a profound structural shift from physical to digital retail. The drivers of this shift are simple:

  • Online retail has strong cost advantages over its offline counterparts and is rapidly taking share in many retail categories through better pricing, selection and, increasingly, service.
  • These offline players have high operational leverage and many cannot withstand declining top-line revenue growth for long.
  • The resulting bankruptcies of physical retailers remove competition for online players, further boosting their share gains.

So, how has this shift been playing out? Recent data suggests that it’s happening faster than I could have imagined.

Online Share of Retail

From Recode, 14 January 2014

The data suggests that there are two very different patterns going on with respect to e-commerce penetration. The two largest categories — “Food and Beverage” and “Health and Personal Care” — show e-commerce penetration well below the overall average. These categories essentially are the domains of grocery stores and drug stores, and e-commerce (at least to date) has achieved only modest penetration of these massive categories (but Amazon Fresh has designs on changing that).

… One additional observation is that the pace of online share gain in the specialty retail categories shows absolutely no signs of slowing down.

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50 years of warnings about the next industrial revolution. Are we ready?

Summary:  Today we look at three early predictions about the 3rd Industrial Revolution, now upon us. We have sufficient warning (and the experience from the first two industrial revolutions), and should be able to navigate through it without massive suffering — to a prosperous future. This is the latest in a long series about what might be the major economic event of the 21st century (links to earlier posts at the end).

On September 23 {William the Conqueror’s} fleet hove in sight, and all came safely to anchor in Pevensey Bay. There was no opposition to the landing. The local fyrd had been called out this year 4 times already to watch the coast, and having, in true English style, come to the conclusion that the danger was past because it had not yet arrived had gone back to their homes.

— From A History of the English-Speaking Peoples by Winston Churchill

Danger, Construction Ahead

There is a safe path to the future.
“Danger, Construction Ahead” by Kay Sage (1940)

Contents

  1. Preparing by closing our eyes
  2. James Blish: science fiction warning
  3. Jeremy Rifkin’s bleak forecast
  4. David Noble looks at the politics of the 3rd industrial revolution
  5. For More Information

(1) Prepare by closing our eyes

As our world has grown richer and our technology more powerful, our ability to anticipate troubles increases. Yet that’s so only if we make the effort to do so.  Too often we fail to even try. Extreme weather (i.e., hundred-year events), climate change, peak oil, and the next Industrial Revolution all show this sloth at work.

All of these are visible problems, long forecast. Yet rather than make use of this warning time, which allows gradual, careful preparation, we interpret failure of the event to arrive as evidence that it will not come.

In the past we could not well anticipate, mitigate, or avoid large-scale changes in the world. Plagues, droughts, floods were the natural course of life, often devastating regions — even destroying civilizations. Social and economic changes, like the first two Industrial Revolutions, brought greater wealth — but its poor distribution created massive suffering from pollution and poverty.

That was then, but need not be so today. We can do better. Too often in America we’re not.

Coastal cities such as New York should have defenses against typical storms like Sandy (details here), as do many of the great cities of Europe. Sea levels have been rising for thousands of years, and the world has been warming for two centuries (until roughly 1950 largely from natural causes), with obvious effects that should shape public policy.  Building cities in the desert without assured water supplies courts disaster. Developing new energy sources prepares us for Peak Oil and It’s a long list.

Too often we squander the time provided by advance warnings for the most feckless of reasons: the problems are coming but not yet arrived.

Which brings us to our issue for today: the 3rd Industrial Revolution is upon us. Below are some of the earlier forecasts of its effects during the past half-century. We have no excuse for being caught unaware, destabilizing our society and causing widespread suffering. With modest planning we should enjoy it fantastic benefits without pain. As with driving, reacting without planning might mean more pain than gain.

A Life for  the Stars

(2)  Sci Fi then; fact for the future

The effects of automation have been visible to some people many years. Such as science fiction authors An early example is in this from James Blish’s A Life for the Stars (1962, second of his Cities in Flight series):

The cab came floating down out of the sky at the intersection and maneuvered itself to rest at the curb next to them with a finicky precision.  There was, of course, nobody in it; like everything else in the world requiring an I.Q. of less than 150, it was computer-controlled.

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Looking at America’s future: economic stagnation, or will computers take our jobs?

Summary:  “Is the economy in technological stagnation? Or will computers take all our jobs?” An analysis from the Fed gives us an answer. Another in a series of posts about the future of America’s economy and the coming of the next industrial revolution.

Crystal Ball

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The Productivity Paradox: Is Technology Failing or Fueling Growth?
By Andrew Flowers (senior economic research analyst)
EconSouth, of the Federal Research Bank of Atlanta
Q4 2013
“Is the economy in technological stagnation? Or will computers take all our jobs?”

Opening:

The U.S. economy has grown slowly since the recession ended in 2009, more slowly than in past recovery periods. The depth of the recession, and the financial crisis that exacerbated it, surely explain this sluggishness  — right? Not according to some economists, who think we have a bigger problem on our hands: that the underlying dynamics of the economy are impaired and our ability to innovate new technologies is the root cause of the current stagnation. In other words, they argue, slow growth is the new normal.

But other economists take the opposite stance. These economists say that technology is improving so rapidly that machine intelligence and automation will replace much of human labor. And while overall growth will improve, technology is bound to radically reshape our economy, making it more unequal.

Which story is correct? Let’s look at some evidence found in long-run trends. …

That’s an important question, about which he provides an excellent summary. It is also discussed in several posts (links below). But it’s not our focus today.

Labor market implications

Considering these competing views on productivity and technology, we come to the most salient economic issue of our time: jobs. The rate of technological innovation obviously has major labor market effects. What is the relationship between new technological advances and the current skill distribution of the labor force?

Skill-biased technical change is the economic theory for how advances in technology can increase worker productivity, given compatible skills, but how they also displace certain workers. Think of the automation improvements in U.S. manufacturing. Total inflation-adjusted manufacturing production has never been higher than it is now, and manufacturing productivity, if anything, increased following World War II. But the total number of persons employed in manufacturing industries fell sharply, even more so as a percentage of the labor force.

… Cowen and the authors of Race Against the Machine foresee skill-biased technical change as accelerating in the future. They see the fruits of this third industrial revolution — information technology — as having just begun to disrupt the labor market.

This view is augmented by the recent research of David Autor, an MIT economist, who highlights a slightly different, and perhaps more disturbing, phenomenon: labor market polarization. Autor and his coauthors document the rise in demand for both high- and low-skill occupations alongside a decline in demand for middle-skill workers. They then tie technological automation to this erosion of middle-skill occupations. Manufacturing is one big area where these middle-skill jobs exist.

… If the techno-optimists are correct about the future, the combination of skill-biased technical change and greater labor market polarization will complicate the already serious state of the U.S. labor market.

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