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The Best-Case Scenario for Automation? Still Worrisome for Workers
Just how much should workers really worry about the rise of the robots? Will technological advancement make most workers better or worse off?
Economist David Autor offers what is probably a best-case scenario in his new paper “Polanyi’s Paradox and the Shape of Employment Growth.” Autor argues that “journalists and expert commentators” who fret about automation fail to understand that (a) many complementarities between man and machine will raise wages for the tech savvy; (b) the decline of middle-skill jobs should ease since many of the remaining jobs — medical support, skilled trade — require both routine task skills and skills involving “interpersonal interaction, flexibility, adaptability and problem-solving;” and (c) machines are limited by their lack of common sense and intuitive understanding of how the world works. For instance: A human doesn’t need to scan a database of images to figure out what a chair is or what makes for a good chair. (Here is decent New York Times summary of the paper.)
So don’t fear, just invest more in making ourselves smarter. Particularly for the middle-skill, middle-wage jobs, “they do at least demand two years of post-secondary vocational training. Significantly, mastery of “middle skill” mathematics, life sciences, and analytical reasoning is indispensable for success in this training.”
To put a spin on an old joke, perhaps in the future there will be just a single, automated megafactory that can make everything. It will employ just two living creatures, a man and a dog. The man’s job will be to feed the dog, while the dog’s job will be to keep the man away from the machines. If your concern is that robots will take all the jobs, then Autor’s paper — as well as the history of automation – does provide comfort.
But that is not really the prime concern of automation worriers. Rather it’s something more like the hyper-meritocracy scenario posited by economist Tyler Cowen. Self-starting, entrepreneurial STEM-savvy workers — maybe 10% or 15% of the population — will find high-paying jobs plentiful, while everybody else — assuming you’re conscientious and hardworking — will be employable as personal trainers, valets, nannies, and such. In his paper, Autor notes that the supply of brain jobs — or, if you prefer, “abstract task-intentive jobs — is not growing as fast as the potential supply of highly-educated workers. As a result, those workers “seek less educated jobs, which in turn creates still greater challenges for the lower educated workers competing for routine and manual task- intensive work.”
So the low-skill jobs and what’s left of the middle-skill jobs face a glut of potential workers, holding down wages. This is support of the Cowen “average is over” scenario. Even Autor concedes that adjusting to automation is “frequently slow, costly, and disruptive.” It would seem, then, that one possible solution — beyond education — is to create more of those high-value, “abstract, task-intensive jobs.” And doing that means creating more startups firms with the potential to become high-growth companies. Start-ups generate the “disruptive innovation” that creates new goods, services, and jobs. One criticism of firms such as Apple, Facebook, and Google is that, while they create good-paying jobs, they don’t create that many jobs versus profits. And if that’s just the nature of these tech firms, then perhaps the solution is producing many more of them. There is evidence, however, that high-growth entrepreneurship began declining around 2000. So what to do? As Erik Brynjolfsson, coauthor with Andrew McAfee, of The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, who explained in a podcast with me earlier this year, “We think we can take action to do a lot, to re-skill people, to encourage more entrepreneurship that will invent and discover new occupations and jobs for some of those people, the 85 percent or whatever the number is that have their previous jobs automated.”
Published in General
I was not terribly impressed with Tyler’s book, and responded to it in this post:
http://chicagoboyz.net/archives/40176.html
If “robots” will eliminate jobs en masse, who is going to buy all the stuff produced by all the robots and then how does the owner(s) of said robots get rich?
Really two extremes here:
1) Large numbers of workers slave away at starvation wages to be competitive with machines/capital. Most workers are trapped in a 19th century economy with gadgets and services from the 21st century given away by companies as loss-leaders, charity or by government mandate. Only a select few participate in the 21st century economy as complements to machines as opposed to cheap substitutes for machines..
2) Machines outcompete workers in every field that can hold many of them. Massive unemployment is supplemented with welfare. Businesses pay for the welfare state out of their profits. Profits not wages comprise most income. Only a select few exercise independent economic power forming the Lords and Ladies of a neo-feudal system.
I suspect we muddle through somewhere between the two extremes with labor participation rates for working age adults hitting 30-40% and most people as happy underemployed peasants owning little and responsible for little. Basically slacker capitalism supplemented by massive income transfers.
The job skills problem comes at the same time as formal education becomes more expensive and less flexible.
Specialization comes at a price. The chief mechanism in capitalism for keeping employers in line is the ability for workers to go elsewhere if not satisfactorily compensated. But specialization has the opposite effect … the more specialized you are, the fewer alternatives you have, which means you have less credibility to threaten to quit.
And again, while all this is happening, the formal education system is costing more. Students preparing for a high tech world already have a huge burden. Further, there’s no way that highly specialized studies can anticipate and satisfy the skill sets needed five to ten years ahead of graduation.
The key, I think, is in the ability of the education system to prepare graduates for a quickly-changing job market. There’s only one way to do that …
… stop teaching them what to think, and start teaching them how to think.
I’d like to throw this into the discussion. It’s from someone who is internet famous but he generally puts a lot of research and thought into his videos and this one is… unsettling.
Humans Need Not Apply
This debate is not new, it nearly 200 years old at least. When the first reaper was built, it took 12 men to operate. However, it did the work of 50 men. They were vandalized, and burned, because they were putting men out of work. Since then technologies too numerous to count, have pushed more and more people out of jobs. The result, a higher standard of living for society.
Imagine if that first reaper, and other productivity producing technologies never happened. As individuals all we would produce from a day of hard labor is enough wheat to bake a few loaves of bread. Thus you daily income would be less than the value of a few loaves of bread. You standard of living would be low. Real low.
By increasing the productivity of each person, allow each person could collect higher wages. Plus, they benefited from being able to buy more with those wages because productivity improvements in the goods they consumed brought costs down. Wealth is increased by increasing productivity. It is a good thing.
Blaming unemployment and underemployment on robots serves a political purpose: it gets Obama and his crew off the hook for their incompetent handling of the economy.
We will probably see numerous political proposals like The Elevator Safety and Economic Opportunity Act of 2009:
http://chicagoboyz.net/archives/6618.html
All this increased automation should be resulting in greatly reduced prices for consumer goods, moderating the damage to society from reduced human employment.
However, thanks largely to government monetary policy and corporate welfare, this reduction in prices has only really been seen in the electronics, computer, and media industries. Pretty much every other class of goods continues to increase in price.
The enemy is inflation.
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I find this to be a completely unsatisfactory response as it doesn’t address my question. I said who BUYS the products made by the robots? If people are either 1) making slave wages or 2) there is massive unemployment….who can actually afford the products?
I am driving at a large point here with the logical inconsistency of this centuries old “automation scare”.
I just love this idea of a Hyper-Meritocracy where the world is divided into people who are smart enough to use computers and those who are not.
The economists who publish these theories are using computers. If they’re smart enough to use them, everybody is.
The idea that “using computers” is the key skill is often asserted, and seems to me to be quite an overstatement. Airline pilots use computers, in the form of advanced autopilots and related systems; they also have to know quite a lot about aerodynamics, aircraft performance, aviation regulations and air traffic control procedures, aircraft systems operation, etc. Business logistics experts use computers extensively; they also have to know a lot about the characteristics of various transportation modes, the financial impact of delivery time alternatives, the kinds of deals that can be struck with transportation carriers, etc. And so on.
Computers have been common in business since the 1960s, and extremely common since the late 1980s. It is really time to stop regarding them as a species of magic.
Yeah, you’d think, and yet I’m still employed largely because the people around me mistake an iPad for an Etch-a-Sketch. I have literally fixed a person’s computer by plugging it in. I never thought that ever actually happened in real life, and then it happened to me.
The key is to be “good with computers” in a work environment where everybody else is an idiot.
What a fascinating topic. This idea has been going through my mind for three decades, not that I have found any good answers. I have a couple of clear ideas (expressed clumsily) but no clear conclusion. The end of the line of reasoning may be disturbing for a classical liberal.
There are two fundamentals of an economy:
1. wealth creation – how much stuff gets made
2. wealth distribution – who gets to enjoy it
3. resource allocation – what people do with their time, talent and energy
#1 is not a problem. The whole basis of the fear of the “robotic future” is that the computers take over because they they make more stuff with less effort.
#2 & 3 I don’t have answers for (I may have some clumsy ideas)
#3 is different from the others because it is not fundamental to meeting our needs (though until now, so connected to the others that we often thought it was.) While the others are only steps to meeting our needs, #3 also serves a second goal of keeping us happy.
The new question becomes: how do you organize a society where essentially no work is required to support your needs?
This new situation may be new enough to make Adam Smith obsolete. John Calvin is not: whatever our duty in the afterlife, our duty on earth is to love others. On a societal scale, love is manifest through service to others.
How do you live if your efforts are not needed for survival?
People have been exploring this topic for years: first through royalty, lately through socialism. Usually they’re only valuable as a cautionary tale. They may also have some insight.
*The ridiculous California lefties may really be the wave of the future: With their small $5 loaves of local organic bread and $10 jars of jam they are distributing wealth while minimizing consumption and keeping a simple lifestyle.
*Canadian aboriginals, the result of 80 years of leftist ministrations yield other insights.
Dances with Dependency:
*The nexus of drugs and video games
http://sustainliberty.wordpress.com/2013/07/07/video-games-and-recreational-drugs/
*Will we devote ourselves to lives of meditation and education?
*More threatening: Siri – the electronic friend; the electronic wife – http://www.dailymail.co.uk/news/article-2722779/Japans-sex-doll-industry-reaches-level-creation-perfect-artificial-1-000-Dutch-Wife-comes-realistic-feeling-skin.html
http://aeon.co/magazine/technology/how-will-sexbots-change-human-relationships/
illustrated through Futurama: http://vimeo.com/12915013