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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Will automation take your job away? No, argues economist David Autor in a new paper presented at the Federal Reserve conference in Jackson Hole, Wyoming on Friday. Instead, it’ll just push you into a menial low-wage job. … This chart shows that across a whole bunch of different European countries, we’ve seen high-wage jobs grow and low-wage jobs grow while middle-wage jobs shrink.

… Autor says this more or less shows the importance of improving education. Someone who might once have been qualified for a pretty good secretarial job is nowadays only going to be qualified for a job at Chipotle, since modern technology reduces the need for secretaries. To save her from the dismal future of a burrito stomping on a human face forever, she needs to be trained up to the level where she can get a job as an app developer or devising burrito marketing campaigns.

HRP-4c: singing robot
HRP-4c: singing robot

Here we see a version of the ever-popular Say’s Law: supply creates demand. It’s firmly stated as a law in a wide range of contexts, but seldom with much factual support. It sounds great, one of the Swiss Army knives of “economics.”  We should train more people with advanced degrees — and even where there are no shortages, new demand will appear. Perhaps the invisible hand will provide them (that modern usage owes more to Dr Pangloss in Candide than what Adam Smith said in Wealth of Nations).

Yglesias, as usual, dismisses the effectiveness of collective action (why is he so popular on the Left?):

The other view, which Autor doesn’t really mention, is that perhaps a strong labor movement could turn burrito-rolling into a highly paid job. The most likely answer, I think, is that to the extent you try to transform low-wage work into middle-wage work you simply encourage those newly middle class jobs to be automated.

This is quite daft. Jobs that can be automated are automated, as the resulting cost advantages dwarf the effect of any changes in wages.

The reality is not difficult to see. Here’s a cogent summary in a comment by Alex Hall at Brad Delong’s website:. He gives a rebuttal to the strawman argument that robots will “take all our jobs” (Marc Andreessen loves this one).

In the long run, maybe this will work out well. But for actual people for the next few generations, it’s going to be a massive disaster unless a miraculous solution appears. For us, the industrial revolution is pretty great. For a peasant in 1760s Kent whose land was enclosed by the aristocracy, losing everything for the opportunity to dig for scraps in the Thames mudflats was not so wonderful.

The robots don’t need to replace every job, or even most jobs, to cause severe disruption. The US peaked at ~25% unemployment during the Great Depression, and there were two or three credible attempts to overthrow the government. Even if you take the jobs for whom there already exists at least a feasible prototype robot replacement and posit that a fair number (instead of all) get replaced, you rapidly get to 25% unemployment.

Because it’s not just cab drivers and janitors going away. It’s low-end white collar work being replaced by software. It’s professional work being partly moved to machines. Computers are already replacing people at drug research, medical diagnosis (and treatment recommendation), legal discovery.

The next industrial revolution will present great challenges to civilization. The key is not new technology, but successful politics. How can we work together to share the productivity gains from new technology. Failure could create social strife on a scale not seen since the revolutions of the 19th and 20th centuries.

But even before these waves of new technology hit, political and economic forces are already hammering the middle class. Not just the laboring classes, but people with higher educations as well.  Fittingly, the universities are center of this. See “Adjunct professors fight for crumbs on campus“, Colman McCarthy, op-ed in the Washington Post, 22 August 2014 — Excerpt:

As colleges and universities rev for the fall semester, the stony exploitation of the adjunct faculty continues, providing cheap labor for America’s campuses, from small community colleges to knowledge factories with 40,000 students. The median salary for adjuncts, according to the American Association of University Professors, is $2,700 per three-credit course. Some schools raise this slightly to $3,000 to $5,000; a tiny few go higher. Others sink to $1,000.

… Benefits, retirement packages, health insurance? Hardly. Job security? Silly question. An office? Good luck. A mailbox? Maybe. Free parking? Pray. Extra money for mentoring and counseling students? Dream on. Chances for advancement? Get serious.

… AAUP reports that part-timers now make up 50% of total faculty. As adjuncts proliferate, the number of tenured jobs falls. Why pay full salaries when you can get workers on the cheap?

Hordes of adjuncts slog like migrant workers from campus to campus. Teaching four fall and four spring courses at $2,700 each generates an annual salary of $21,600, below the national poverty line for a family of four. In a classroom across the hall, a tenured professor could make $100,000 for teaching half as many courses to half as many students.

HM's virtual model
She’s hot but not real: virtual models will replace many real ones.

For More Information

(1)  For all posts about this see The 3rd Industrial Revolution has begun.

(2) Strategic questions

(3) Dynamics of the robot revolution

  1. The coming big increase in structural unemployment, August 2010
  2. The coming Robotic Nation, 28 August 2010
  3. The coming of the robots, reshaping our society in ways difficult to foresee, 22 September 2010
  4. Economists grapple with the first stage of the robot revolution, September 2012
  5. The coming big inequality. Was Marx just early?, 27 November 2012

(4) First signs of the robot revolution appear

  1. 2012: the year people began to realize the robots are coming, 3 January 2013
  2. Journalists reporting the end of journalism as a profession, 19 March 2013
  3. The next step of computer evolution: becoming bloggers, 20 March 2013
  4. Journalists warn us about the coming revolution, but we don’t listen, 7 July 2014
  5. The next industrial revolution starts. Beware the Pied Pipers who lull us into passivity., 8 July 2014

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4 thoughts on “The promise and peril of automation: now everyone sees the challenge

  1. After reading this post, I wonder whether the title should be “The promise and peril of automation: not everyone sees the challenge” instead of “The promise and peril of automation: now everyone sees the challenge”…

    1. Guest,

      I try to put a positive spin on events, but cannot say your interpretation is wrong.

      Perhaps a neutral expression up is that everybody sees the challenge, but gives different odds on the betting. I consider delusional the optimists’ certainty of a pleasant outcome in all time frames.

      My guess is that a good outcome is likely over the long-term. But as Keynes said, that is faith — but of NO operational significance. We are responsible for the next few steps on the path. Long outcomes depend on too many factors, most of which we cannot reliably predict — some of which we cannot even foresee.

  2. The most profound and immediate effects of the robot/automation revolution will be financial, which will compound the social and political. Because a robot does not receive an income for is labor, nor does it have any need or desire for the products and services it produces. This means consumer spending will disappear as well as the taxation base for the state.

    I know the counter argument says that people will find other jobs, just like when the first industrial occurred, that is people moved from the farm to the factory. As is happening now in China. But I starting the feel that this was a historical once off.

    One possible solution has been the expanded use of credit, that is printed money with an attached legal claim to repay. But this has not worked out to well, as shown by the political economies of Japan, the US, UK and the Eurozone.

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