Tag Archives: forecasts

50 years of warnings about the new industrial revolution. It’s here. Ignore the naysaysers.

Summary:  The new Industrial Revolution is now upon us. We have sufficient warning and, with the experience from the earlier ones, should be able to navigate through it to a prosperous future without massive suffering during the transition. This is the latest in a long series about what might be the major economic event of the 21st century. {1st of 2 posts today.}

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 warned us
  3. Jeremy Rifkin’s bleak forecast
  4. Politics of new industrial revolution
  5. Conclusions
  6. For More Information

 

(1) Prepare for the future: close our eyes

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.

The development of semi-intelligent machines, with simple sensory systems and IQ equivalents of 60+ (in a small domain), will destroy a large fraction of today’s jobs.  Perhaps we’ll find new forms of employment.  Perhaps we will develop new economic systems which require fewer people to work.  If delayed into the second half of the 21st century, the almost inevitable population crash (esp. following the invention of a contraceptive pill for men) will make automation a cure — not a curse.  All of these solutions will require innovation, wisdom, luck — and time.

But the need to adapt is not obvious to everybody. In her deep 1989 book In The Age Of The Smart Machine: The Future Of Work And Power Shoshana Zuboff does not even use the word “unemployment” — or mention the potential for massive job losses.

This “robot revolution” is long-predicted and now arriving, but some interpret that it took long to arrive as evidence that it will not come. For example, past week Elizabeth Garbee at Slate wrote “This Is Not the Fourth Industrial Revolution” — “The meaningless phrase got tossed around a lot at this year’s World Economic Forum.”

Here are three forecasts of the coming robot revolution. Let’s learn from their insights, and get ready.

(2)  Science fiction then; now our future

The effects of automation were visible to some people long ago. One of the first was James Blish, as in this his A Life for the Stars (1962), the second of his Cities in Flight series. This passage describes what New York might look like in the late 21st century.

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.

The world-wide dominance of such machines, Chris’s father had often said, had been one of the chief contributors to the present and apparently permanent depression:  the coming of semi-intelligent machines into business and technology had created a second Industrial Revolution, in which only the most highly creative human beings, and those most fitted at administration, found themselves with any skills to sell which were worth the world’s money to buy.

(3) Jeremy Rifkin’s bleak forecast warns us to prepare

Jeremy Rifkin is a Jeremiah of our time. But as a stopped clock is right twice a day, he scores occasionally — as in The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era (1995):

The Information Age has arrived. In the years ahead, new, more sophisticated software technologies are going to bring civilization ever closer to a near-workerless world. In the agricultural, manufacturing, and service sectors, machines are quickly replacing human labor and promise an economy of near automated production by the middecades of the twenty-first century.

The wholesale substitution of machines for workers is going to force every nation to rethink the role of human beings in the social process. Redefining opportunities and responsibilities for millions of people in a society absent of mass formal employment is likely to be the single most pressing social issue of the coming century.

… We are entering a new phase in world history-one in which fewer and fewer workers will be needed to produce the goods and services for the global population. The End of Work examines the technological innovations and market-directed forces that are moving us to the edge of a near workerless world. We will explore the promises and perils of the Third Industrial Revolution and begin to address the complex problems that will accompany the transition into a post-market era.

… In the past, when new technologies have replaced workers in a given sector, new sectors have always emerged to absorb the displaced laborers. Today, all three of the traditional sectors of the economy agriculture, manufacturing, and service — are experiencing technological displacement, forcing millions onto the unemployment rolls.

The only new sector emerging is the knowledge sector, made up of a small elite of entrepreneurs, scientists, technicians, computer programmers, professionals, educators, and consultants. While this sector is growing, it is not expected to absorb more than a fraction of the hundreds of millions who will be eliminated in the next several decades in the wake of revolutionary advances in the information and communication sciences.

… The restructuring of production practices and the permanent replacement of machines for human laborers has begun to take a tragic toll on the lives of millions of workers.

(4) Politics of a new industrial revolution

For a grim look at our future see Progress Without People: New Technology, Unemployment, and the Message of Resistance by David F. Noble (1995). See his Wikipedia bio. The opening chapters are from his 1983 series of articles in Democracy about “Present Tense Technology”. The series opens with this stark warning from “Technology’s Politics“:

There is a war on, but only one side is armed: this is the essence of the technology question today. On the one side is private capital, scientized and subsidized, mobile and global, and now heavily armed with military spawned command, control, and communication technologies. Empowered by the second industrial revolution, capital is moving decisively now to enlarge and consolidate the social domination it secured in the first.

… Thus, with the new technology as a weapon, they steadily advance upon all remaining vestiges of worker autonomy, skill, organization, and power in the quest for more potent vehicles of investment and exploitation. And, with the new technology as their symbol, they launch a multi-media cultural offensive designed to rekindle confidence in “progress.”

On the other side, those under assault hastily abandon the field for lack of an agenda, an arsenal or an army. Their own comprehension and critical abilities confounded by the cultural barrage, they take refuge in alternating strategies of appeasement and accommodation, denial and delusion, and reel in desperate disarray before this seemingly inexorable onslaught —- which is known in polite circles as “technological change.

What is it that accounts for this apparent helplessness on the part of those whose very survival, it would seem, depends upon resisting this systematic degradation of humanity into mere disposable factors of production and accumulation?

Conclusions

“We’re all sorry for the other guy when he loses his job to a machine. When it comes to your job, that’s different. And it always will be different.”
— Dr. McCoy, star date 4729.4, in the Star Trek episode “The Ultimate Computer.“

We have no excuse for being caught unaware and letting this new technology destabilize our society and cause widespread suffering. With modest planning we can enjoy its fantastic benefits without pain. Failure to plan for these obvious developments might mean some tough times ahead for America.

Our world in their hands.

(5)  For More Information

If you liked this post, like us on Facebook and follow us on Twitter. See all posts describing how the 3rd industrial revolution has begun. Also see the posts about the evidence that we’ve entered a period of secular stagnation. And especially see these…

For deeper analysis see these books…

Daniel Davies’ insights about predictions can unlock the climate change debate

Summary: Here are three powerful insights by Daniel Davies about predictions by experts. He used them to predict the outcome of the Iraq War. This post applies them to the public policy debate about climate change; you can use them to provide insights on other intractable problems.  This is another in a series about validating the case for public policy action to fight climate change.

Solutions

Daniel Davies is a London-based analyst and stockbroker; he writes at his blog and the Leftist website Crooked Timber. Here he explains how he was able to accurately predict the disastrous outcome of our invasion of Iraq (different entirely from the theory-based predictions of those using history and 4GW). It is well-worth reading in full. His insights have great power and apply to many business and public policy issues — such as climate change. Excerpt…

… Here’s a few of the ones I learned {at business school} which I considered relevant to judging the advisability of the Second Iraq War.

Good ideas do not need lots of lies told about them in order to gain public acceptance.

I was first made aware of this during an accounting class. …

Fibbers’ forecasts are worthless.

Case after miserable case after bloody case we went through, I tell you, all of which had this moral. … If you have doubts about the integrity of a forecaster, you can’t use their forecasts at all. Not even as a “starting point”. …

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Why did the Fed raise rates? For the opposite of the reason they gave…

Summary: The Fed Governors told us they planned to raise rates, and months ago told us when they would do so. But their explanation of why they raised rates makes little sense. We can see their thinking by looking at the economic projections released at the Open Market Committee meetings. They raised rates not because the economy was accelerating to “take-off” speed, but because it was not.

Economy

After a year of waffling and flip-flopping, the Fed finally decided to raise rates, a decision that had the surprise of a sunrise. Yet there is a behind-the-curtain drama of clashing hopes and fears by the Fed’s governors and staff. This conflict does not appear in their statements or press conferences, but in their economic projections. Let’s start with their hope for continued economic growth: the predictions released yesterday for GDP and the fed funds rate.

See my analysis at Wolf Street.

This El Niño is not Godzilla. What can we learn from the 2 years of hype?

Summary: After two years of hype (often hysterical), this El Niño might peak in December and then rapidly decline. No “super monster” or “Godzilla” El Niño; just severe weather (we won’t know how severe until it ends). With the UN Conference of Parties in Paris (COP21) still running in Paris, it’s time to start thinking about lessons learned if activists are wrong and this El Niño doesn’t wreck destruction on the world.

Godzilla in action

Let’s rewind the news tape to better understand where we are (see the posts at the end for documentation). Last year climate activists warned of the “super monster” El Niño coming. It was a dud. This year they warned of the “Godzilla” El Niño, telling lurid tales of the epic destruction that awaited us. NOAA provided a calming voice of reason, largely ignored by journalists who found the activists provided better clickbait.

In mid-November the major weather models predicted that this El Niño was peaking, and by January would begin a rapid decline in intensity. That was ignored, as journalists trumpeted that this “Massive El Niño sweeping globe is now the biggest ever recorded” (New Scientist, 2 Dec), forgetting to mention by some (not all) metrics, by small amounts (perhaps insignificant), and in the short records.

Eventually the news begins to catch up with the data, seen in technical analysis such as NOAA’s Weekly ENSO report and Bob Tisdale’s El Nino Update.

This El Niño is not over. It might strength again. Many of the effects have yet to appear. But If the models’ forecasts prove accurate, what might we learn from the 2014 and 2015 bouts of El Niño hysteria?

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The climate change crisis as seen from 2100 AD (a business as usual scenario)

Summary: To share the excitement of the UN Conference of Parties in Paris (COP21) let’s imagine how the people of 2100 AD will see the world, an exercise giving us a better perspective on the choices facing us. This post describes a “business as usual” scenario, an antidote to the prophecies of doom flooding the news. This is the fourth post in a series attempting to understand the final chapters of the campaign for public policy measures to fight climate change.

World in A Forest

Introduction

The campaign for public policy action to fight climate change relies on visions of a horrific future. Most of these have their roots in the RCP8.5 scenario used in the IPCC’s Assessment Report 5, one of its 4 Representative Concentration Pathways (RCPs). While AR5 provided little information about RCP8.5, it was appropriately used as a worst case outcome for the 21st century — showing a future where long trends in tech progress and population growth reverse, creating a crowded late 21st century world that (like the 19thC) relies mostly on coal (details here). RCP8.5 should reassure us, showing that this worst case outcome is unlikely.

But before and after AR5 activists (including activist scientists) scored a propaganda coup, wrongly describing it as the “business as usual” scenario — using it to manufacture nightmarish visions without explaining RCP8.5’s unlikely assumptions (many examples here). Journalists loved these stories.

I’ve found no attempts to describe a realistic “business as usual” scenario, so here’s a rough draft as an antidote to the fearmongerers. This describes continued tech progress (solar power was space science in the 1960s, it is on your neighbor’s roof today), declining fertility (Iran’s fertility was 6.0% in 1980, it’s ~1.6 now, far below the replacement rate of 2.1), and consensus estimates of the climate’s sensitivity to CO2.

To frame this description, let’s ask ourselves how might The Britannica’s 2100 edition describe the campaign of 1988 – 2015 for massive public policy action to fight climate change? This exercise can help us gain better perspective about our own time.

A more reasonable “business as usual” scenario, seen from 2100 AD

One interesting if little-known story of the transitional period between the 20th and 21st centuries was the last large-scale outbreak of eschatological fears — that the world’s end was coming, visions of an imminent end time combining fear of death and the fear (or eagerness) for judgment. These were common in western history, becoming more frequent as the rate of social and technological change accelerated during the first three industrial revolutions.

Previous outbursts prepared society, with fears of collapse from pollution, overpopulation, and “peak oil”. See their entries for explanations of these terms. In brief, “pollution” resulted largely from release of byproducts of that era’s industrial chemical processes, before the breakthroughs of catalytic chemistry. People worried about overpopulation before the baby-bust of 2030-2080, never imagining that today only large subsidies for child-rearing maintain our population at 2 billion. Peak oil described fears that centuries of technological process had ended so that the late 21st century would be powered by coal (before the invention of the Flynn-Fletcher fusion generator in 2030).

All of these things were predicted in outline by experts at that time — but people’s fears proved stronger than their confidence, despite the repeated failure of doomsters’ predictions. The movement gained a large following on the Left, but never gained a majority in America — and remained a minority concern in most emerging nations (e.g., in China, many of whose leaders considered it another western tactic to restrict their development).

The campaign was stymied by early — and fatal — tactical errors. First, they allowed activists of the Left to hijack it as a means to advance their political goals — from increasing government control over the economy to substantially changing the current economic system (e.g., Naomi Klein). This made climate change a partisan issue. Large-scale political change in the US usually requires a bipartisan support, difficult to achieve in the divided governments of the early 21st century. This became almost impossible after climate change policy became politicized.

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Follow the trail from a growing plutocracy to decaying families

Summary:  The social and economic evolution of America will shape 21st century America. This post ties together our rising inequality, falling social mobility, crashing system of higher education, dropping labor force participation, and falling rate of family formation. Another generation of these trends and we’ll have a New America. Time is not our friend.

 

Contents

  1. Looking backwards.
    …..Looking forward.
  2. Inequality: the political revolution.
  3. Social mobility: education failure.
  4. The next gen of America:
    …..indentured servitude.
  5. Men are “Going Galt.”
  6. For More Information.

 

(1) Looking backwards. Looking forward.

In times of rapid change we rely on economists to explain what has happened. However they are usually poor at seeing changes happening now (often they deny their existence, believing that what has been in the past must be so in the future). The massive changes in the social structure of America illustrate how we need their analysis, but have to look beyond it. Let’s trace the logic from our past to our future.

(2)  Inequality: the political revolution

Robert Reich has published another book providing an essential analysis of our time: Saving Capitalism: For the Many, Not the Few. How did we get into this mess?

{It’s} a myth-shattering breakdown of how the economic system that helped make America so strong is now failing us, and what it will take to fix it. … he reveals how power and influence have created a new American oligarchy, a shrinking middle class, and the greatest income inequality and wealth disparity in 80 years. He makes clear how centrally problematic our veneration of the “free market” is, and how it has masked the power of moneyed interests to tilt the market to their benefit.

Reich exposes the falsehoods that have been bolstered by the corruption of our democracy by huge corporations and the revolving door between Washington and Wall Street … He shows that the critical choices ahead are not about the size of government but about who government is for: that we must choose not between a free market and “big” government but between a market organized for broadly based prosperity and one designed to deliver the most gains to the top. …

Paul Krugman’s typically brilliant review in the New York Review of Books expands on Reich’s analysis, putting it in a broader context of history and the evolution of economists’ explanations for trends since the 1970s. The bottom line…

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Recession Watch: the economic indicators that show what’s coming

Summary: As the expansion ages and growth slows, we should begin to watch for signs that the next recession approaches. Here are some tips for doing so without spending much time at it — avoiding the complacency of Wall Street’s economists and the exaggerated darkness of the popular permabears (such as Zero Hedge). {2nd of 2 posts today.}

Economics

What should we watch among the blizzard of economic data? Journalists tend to focus on the numbers most frequently reported, usually about manufacturing and housing. Such as this week’s existing home sales volume (oddly, we don’t similarly obsess over NYSE volume). It’s important for people in that biz, but tells us little about the US economy.

Also big in the news are new home sales, building permits, mortgage applications, and many other housing datapoints. For a simple measure of this industry see total residential construction spending. It shows a continued strong expansion. Tune in next month to see if anything has changed.

Residential Construction Spending

What are the most important economic numbers?

But the often dramatic graphs don’t tell us the importance of those numbers. Here’s one perspective on the big picture…

  • Construction value added: 4% of GDP (housing is 1/3 of this).
  • Goods-producing value added: 19% of GDP (manufacturing is 12% of this).
  • Services value added: 68% of GDP.

Another way to see this relationship: manufacturing new orders were 15% of GDP in 1995; now they’re only 10%. Manufacturers employed 30% of all non-farm workers in 1955; they employ only 9% today. Manufacturing was once the key swing sector of the economy; now we are a services economy. Unfortunately there are few good leading indicators for the service sector. Creating Purchasing Managers Indexes for Services was a creative idea, but untested — and doesn’t make much sense to me: what do they PM’s of service corps do that gives them special insight about the economy?

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