A solution to the coming job apocalypse!

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.

Servants Bowing to their betters
Photo by ullstein bild via Getty Images.

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.

Door to the Future - Dreamstime-159868760
ID 159868760 © 9194202 | Dreamstime.

Conclusions

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

Ideas! For some shopping ideas see my recommended books and films at Amazon. Also, see a story about our future: Ultra Violence: Tales from Venus.

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…

  1. The promise and peril of automation.
  2. At last economists see the robot revolution. Here’s why they worry.
  3. The robots are coming, bringing hope of a better future.
  4. A warning about the robot revolution from a great economist.
  5. How Robots & Algorithms Are Taking Over.
  6. Tech creates a social revolution with unthinkable impacts that we prefer not to see — About sexbots.
  7. AI will reshape the world. Films show how.
  8. 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
Available at Amazon.
Rise of the Robots
Available at Amazon.

11 thoughts on “A solution to the coming job apocalypse!”

  1. I wonder if a population crash would help us here – in the short term it would create a lot of potential job opportunities (caring for the demographic bulge on its way out) and the material resources would not necessarily go anywhere. At a certain point you run into the issue they were discussing in the 1930s – what do you do with all this production if nobody can buy it?

    Thank you for bringing up Solon. I had never heard about him at length! It is good to look back at heroic figures, as you have mentioned.

    1. Sf,

      “I wonder if a population crash would help us here”

      Too complex and speculative a hypothetical to analyze. But the Black Death had some beneficial effects on Europe, but the costs were horrific. See Barbara Tuchman’s A Distant Mirror: The Calamitous 14th Century.

      But a drop in fertility could help, as a shrinking homogenous well-educated population seems well-suited for the 21st century. See Japan refuses to die, soon to become a 21st century star.

      This the is opposite of the growing multi-cultural poorly-educated population the West’s elites are trying to create (cheered by many economists). The combination of social instability and widespread unemployment will put us under immense internal stress.

      “what do you do with all this production if nobody can buy it?”

      There are two answers to that. First, that’s one purpose of income redistribution. Second, how many of our elites would trade slower economic growth for a larger share of power within society? After all, they are already rich. Maslow’s Hierarchy of Needs.

  2. Hi Larry- I stopped in from auticulture. I poked arpund a bit and before I read further I see you were a big promoter of the peak oil scare. Have you recanted? So many people were way wrong about that, and got seriously manipulated to rachet up the fear. I can’t get seem to get JH Kunstler to issue a mea culpa. He stll thinks peak oil just around the corner I guess. Just curious if you have reversed your position? Are you writing about it anymore?? peace

    1. Bob,

      “I see you were a big promoter of the peak oil scare.”

      I was a big debunker of the peak oil scare. Somebody is lying to you, or you are making stuff up. I presented information from a wide range of authoritative sources, with different forecasts. None predicted imminent geological peaking. None supported the cornucopians’ dream of unlimited cheap oil.

      My personal opinion was that Robert Hirsh (and most other established experts) was correct, and that peaking was 20+ years in the future (ie, beyond our ability to reliably forecast) – and that it was likely in the mid-21st century if rapid economic growth continued.

      See these posts. They read quite well even today.

      1. Myths about Peak Oil – part I: There are not enough petro-engineers!, 15 November 2007.
      2. Good news about Global Oil Production!, 10 January 2008.
      3. More good news about Peak Oil, on the demand side, 16 January 2008.
      4. Peak Oil Doomsters debunked, end of civilization called off, 8 May 2008. This is my favorite.
      5. Spreading the news: the end is nigh! , 8 May 2008.
      6. Recovering lost knowledge about exhaustion of Earth’s resources (such as Peak Oil), 27 January 2011. Essential reading to understand the subject.
      7. A look at forecasts for peak oil – and the end of civilization, 13 July 2012.
    2. Bob,

      Another follow-up note! I’m rushed at the moment, so replying in pieces.

      “Are you writing about it anymore??”

      There is no point writing about issues off the public’s radar screens. In the past my forecasts have proved quite accurate (as such things go), but too far ahead of the public to get much traffic. So I’m focusing more on trying to find the cutting edge – ahead of the pack, but not too far. But with mixed success.

      Cybersecurity was and is too far ahead. Ditto my posts about the new industrial revolution and its effects. My guess (guess!) is that I’ll be reposting these in a few years – where they’ll get good pageviews.

      I have written about energy policy in the context relevant today – climate change and the rush to expensive interruptible but renewable sources. And the possibility that fusion might come out of the lab in the next decade (ie, it has matured to the point that private investors are putting big money in).

  3. Its very puzzling, and I obviously must read the books which are referenced.

    The argument seems to be that present day automation is different in some way from earlier automation, and that the increased productivity it delivers will lead to unemployment. I’m not sure why or if this will happen.

    Earlier automations didn’t, did they? They led to increased production with similar numbers of workers, and the result was a huge increase in the availability of goods and a fall in their prices.

    If you think about it not as automating out jobs but increasing worker productivity then doesn’t it start to look very different from this account? Take the auto industry as a for instance. It went from hand craft coach building, to Ford’s production line mass production, to the present situation where Wolfsburg is producing thousands of cars a day (incredible stat I have read somewhere). In electronics we moved from hand soldering of discrete components to pick and place, surface mount, integrated circuits and heavily automated production, but the result has been a huge boom in product quantities and a fall in their price.

    I recall in my lifetime looking at assembly lines lined with workers picking and placing components in PCBs going into soldering. Now they have all gone of course, and thousands of PCBs are coming off an automated line, as a result of which all the previous workers are employed, but in many more plants, and now they all have smartphones.

    Its quite unlike the horse situation, isn’t it? In the horse situation it was not that the productivity of horses was increasing. Its that they were being replaced while the task being done stayed the same. In our situation, you could open more factories and make more stuff with the same number of people.

    Marxists used to argue that technological progress was built into capitalism because of competition between capitalists, and that this would lead to increased productivity which would lead to the capitalists taking the surplus, and to wage levels and standards of living falling to survival levels. It didn’t happen. Instead we had rises in living standards and the consumer goods boom.

    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.

    Its reminiscent of the original Marxist argument about capitalists, the owners of the ‘means of production’. Is it any more valid than the original?

    I have to read the books carefully before coming to any firm conclusions. Going in, I can’t see that current automation is different in kind from the previous automations of the industrial era and don’t see any specific arguments to show that the result is going to be a poverty stricken underclass at the mercy of a capitalist machine owning class. Any more than that is what ealier automations produced.

    Surely productivity improvements, which is another way of putting it, are the basis for the increased living standards we have seen in our lifetimes. At least, those of us who are of a certain age…?

    Well, I shall read the books carefully, and may well turn out to have missed the point in this. As always, thanks for the stimulating argument and the references.

    1. The argument is that AI development is distinct from prior developments due to being able to act autonomously. Prior advancements amplified an individual, but did not remove the need for one. A tractor without a driver sits idle. AI can be the driver, manage the planting schedule, fuel the tractor, and even call in for repairs/replacement. In theory, an industry could be automated to the point where there is zero direct human involvement.

      That said, I don’t buy into the doom & gloom scenarios. Instead, what I think is likely to happen is that due to being cheap, goods produced by automation will be seen as low status. We already see that to a degree with “handmade” and “artisanal” becoming marketing buzzwords. You probably recall advertisements of companies promising direct human interaction instead of automated responses (‘get a person, not a machine’). As a result of desire for status & human interaction, there will continue to be a market for things done by people.

      1. Jason,

        “The argument is that AI development is distinct from prior developments due to being able to act autonomously.”

        That’s quite backwards. The evolution of smart machines (AI has too many sci fi connotations) is continuous and incremental. Algos, such as credit scoring systems that give loan approvals, have operated “autonomously” for a long time. Automated systems on assembly lines operate as autonomously as human workers – ie, until something screws up. Kiosks in fast food joints, robots in Amazon’s warehouses, and self-serve checkout lanes in stories operate as or more autonomously as the people they replace.

        “In theory, an industry could be automated to the point where there is zero direct human involvement.”

        That’s Star Trek, and of no relevance to what’s happening now and in the near future.

        “I don’t buy into the doom & gloom scenarios.”

        I have no idea what that means. Do you mean Data on Star Trek, or replacement of many cashiers by kiosks and self-serve check-outs?

        “what I think is likely to happen is that due to being cheap, goods produced by automation will be seen as low status.”

        Like cars by Toyota and Honda? I don’t think so.

        “We already see that to a degree with “handmade” and “artisanal” becoming marketing buzzwords.”

        Those have microscopic market share. You might as well say that Ikea’s furnature will be replaced by Chippendale antiques.

        “As a result of desire for status & human interaction, there will continue to be a market for things done by people.”

        This is the usual nonsensical “rebuttal to a mad extreme said by nobody.” The job market can be massively destabilized by a 10% automation. A 20% shift could create another great depression. That is, without new policies to fairly distribute the bounty produced by automation.

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