Summary: One aspect of the industrial revolution now beginning is the coming wave of automation from the combination of semi-intelligent machines, better algorithms, improved cheap sensors, and more skilled manipulators. Most hope that the jobs lost will be replaced by new jobs, just as unemployed farmers got jobs in factories and unemployed factory workers got jobs in services. These hopes are right – and wrong. Here is why.
“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
— Attributed to Roy Charles Amara as paraphrased by Robert X. Cringely.
There will be many new positions open after the job apocalypse.
First, see the job apocalypse
The coming job apocalypse will transform the economy to a degree without precedent, much as nuclear weapons transformed war. It was described by Erik Brynjolfsson and Andrew McAfee (both of MIT) in “Will Humans Go the Way of Horses?” in Foreign Affairs, July/Aug 2015 — “Labor in the Second Machine Age.”
“For many decades, horse labor appeared impervious to technological change. Even as the telegraph supplanted the Pony Express and railroads replaced the stagecoach and the Conestoga wagon, the U.S. equine population grew seemingly without end, increasing sixfold between 1840 and 1900 to more than 21 million horses and mules. The animals were vital not only on farms but also in the country’s rapidly growing urban centers, where they carried goods and people on hackney carriages and horse-drawn omnibuses.
“But then, with the introduction and spread of the internal combustion engine, the trend rapidly reversed. As engines found their way into automobiles in the city and tractors in the countryside, horses became largely irrelevant. By 1960, the United States counted just three million horses, a decline of nearly 88% in just over half a century. If there had been a debate in the early 1900s about the fate of the horse in the face of new industrial technologies, someone might have formulated a “lump of equine labor fallacy,” based on the animal’s resilience up till then. But the fallacy itself would soon be proved false: once the right technology came along, most horses were doomed as labor.
“Is a similar tipping point possible for human labor? Are autonomous vehicles, self-service kiosks, warehouse robots, and supercomputers the harbingers of a wave of technological progress that will finally sweep humans out of the economy?”
Wassily Leontief (1973 Nobel Laureate in Economics) was among the first to predict this in his famous “National Perspective: The Definition of Problems and Opportunities“, a chapter in The Long-Term Impact of Technology on Employment and Unemployment by the National Academy of Engineering (1983). He describes the great wave of job extinction – of horses. Cutting their wages did not save their jobs, nor will it save our jobs. This is a brief excerpt; it is well worth reading in full.
“Any worker who now performs his task by following specific instructions can, in principle, be replaced by a machine. 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.
“Reduction in the price of labor – that is, in the real wage rates – can and in certain instances did postpone its replacement by machines for the same reason that a reduction of oats rations allocated to horses could delay their replacement by tractors. But this would be only a temporary slowdown in the process; improvements in the efficiency of tractors and other inanimate means of production can be expected to proceed without any limits, while reductions in feed rations or wages have definite limits.”
By now the inevitable results are apparent. See these posts looking ahead at the coming job apocalypse.
See what happens after the job apocalypse
Consider the world of plutocrats amidst the amidst the wealth created by automation (as it goes to the owners of the machines). With a massive pool of unemployed. There are several scenarios.
(1) There is a massive demand by plutocrats for servants. Not like in Upstairs Downstairs. People would lose nice middle-class jobs and get servile low-skill jobs. In the “Gig Economy”, servants would be poorly paid and badly treated – and have insecure jobs. This would work, unless there was a revolution.
(2) There is a massive demand for servants (“personal-care workers”) helping the disabled and the elderly. All of them could get their own servants – if a benevelent government funds them. These could even be paid at salaries providing a middle-class lifestyle. But why limit the jobs to only personal service? We could take the unemployed retail workers, accountants, and journalists and put them to work cleaning our cities and other such jobs. Our cities could look like the gleaming City of Oz! We could force the unemployed to work at menial jobs or starve.
The essence of this is making income contingent on work, however menial. On the other hand, the selection of the people receiving servants would have to be rigorous. It would create in effect a caste system. There would be those who the government pays to work and those to whom the government gives servants.
(3) The government could just give money to the unemployed or low-income workers to provide a guaranteed minimum income (see here and here) – or just provide a universal basic income by sending send checks to everyone.
All of these solutions would require a massive redistribution of national income by the government from the rich to the proles. Probably with little effect on income inequality. Or we could do little or nothing, and make the revolution certain.
How could we do these things?
A new industrial revolution under our system would probably boost inequality from its already high level. Massive profits for those at the top, unemployment for much of the public. Massive redistribution of national income would offset this. The growing national “pie” would make this easier to do.
But there are few precedents in history for such projects that even attempt to reduce inequality, let alone to successfully do so. There are the reforms of Solon the Lawgiver of Athens, who laid the foundation for Athen’s greatness. He stands so tall in history since the scale of his reforms have seldom been equaled.
A more familar precedent is the New Deal and its post-WWII follow-ons. While effective, achieving them required two world wars, the Great Depression, and the Cold War. And its effects, obtained at such a high cost, lasted for only a few generations.
These are just a few of the limitless scenarios ahead of us. History warns us that mastering the powers given us by the next industrial revolution will not be easy. But it won’t be the first time we defied history. The Republic is in its third century, a unique accomplishment in history. We can make more new records. We must start to prepare soon.
This is a follow-up to Let’s prepare now for the job apocalypse.
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…
- The promise and peril of automation.
- At last economists see the robot revolution. Here’s why they worry.
- The robots are coming, bringing hope of a better future.
- A warning about the robot revolution from a great economist.
- How Robots & Algorithms Are Taking Over.
- Tech creates a social revolution with unthinkable impacts that we prefer not to see — About sexbots.
- AI will reshape the world. Films show how.
- The new industrial revolution will change everything.
For deeper analysis see these books…
- The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson and Andrew McAfee (2014).
- Rise of the Robots: Technology and the Threat of a Jobless Future by Martin Ford (2015).