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The Zero Economic Value Citizen
I have an article today in the Harvard Business Review, co-authored with legendary Silicon Valley marketer and venture capitalist Bill Davidow. It’s the first piece Bill and I have co-bylined since we wrote The Virtual Corporation twenty years ago. I don’t know if it will have the same impact as that book did, but it should.
In the article, Bill and I note that the current pace of technological change (though few people noticed, Moore’s Law basically went vertical in 2005), combined with the rise of artificial intelligence, robotics, and the Internet of Things, means that our machines are rapidly assuming an ever-greater role in our economic life. Henry Adams despaired in the 19th century that the rate of progress — about 2 percent — was almost too much for mankind to keep up with. We’re now running at 40 percent.
You’ve read the warnings from Elon Musk, Stephen Hawking and other forward-thinkers that AI poses a potential long-term existential threat to humanity. In fact, we don’t have to look that far. As a growing number of jobs — mostly manual labor, but increasingly blue-collar and soon white-collar— disappear to automation we are already creating what Bill and I call the Zero Economic Value Citizen: people for whom artificial intelligence has rendered their skills or jobs without value. We suspect that many of those millions who have already dropped out of the workforce are just such ‘ZEV’ citizens.
What is the solution? We’re not sure there is one. Government is too slow and stupid. Education, even if the unions weren’t resisting change, probably can’t keep up either. And as our machines get smarter they will continue capturing jobs ever further up the IQ scale.
Are we all destined to become ZEVs? A good question. And what do we do then? I’d like to hear your thoughts.
Published in General
Somehow all those illegal aliens crossing our border didn’t get the memo that their jobs have been automated.
That’s an interesting point. If the machines can fix the machines, that would make them alive, it seems to me. Living things, unlike machines, have agendas of their own, and might do things other than just serve us. That might represent an upper limit on technological advance.
Just speculating wildly here.
Just guessing (I have no business experience), but there are probably a mountain of regulations they would have to wade through to legally open their own store. Regulation favors big companies with legal departments.
Really? People lamenting the loss of something they found to be good is annoying to you? I suppose you’re right that it could easily become unproductive wallowing (which can be annoying), but noticing that some sacrifices might not be worth a modern car and an Iphone is hardly unreasonable bellyaching.
What you say about adaptation is true. In the near term, though, many people just aren’t that adaptable, especially considering that much of what has been considered to be a good route for adaptation in the past isn’t as effective (getting into “the computers” often isn’t much better than seeking to become a produce manager at a supermarket anymore); technological advancement might be beginning to outpace the ability of the average and below average to adapt. All too often government work has been the adaptation of choice. In the long term, the OP is asking what that general adaptation(s) might look like.
Right, they’ll only get that memo once they’re allowed to come out of the shadows and it costs just as much to employ them as it does any other US citizen. Or once Skynet develops its first migrant-farmer-bot and chef-bot.
If by “getting into computers” you mean understanding how to navigate a head-shot in Counter Strike, then OK. But hard technical computing skill (Java programmers, big data architects, SAP analysts, etc…) are most definitely a far better option than a produce manager.
If automation was killing off low skill, high labor jobs then there wouldn’t be a shadow to hide in. The jobs wouldn’t exist at any cost.
Sure, but “hard technical computing skill” is still probably not an option at all for a sizable portion of the population. When humans are no longer needed for increasingly high-acuity functions then avenues for productive adaptation get narrower for the average or below average. Don’t they? Then again, I agree with you that no one can reasonably predict what will happen in 50 years and that humanity is kinda known for its ability to adapt, so maybe not. It might be fun at least, if not beneficial, to try to puzzle out how intellectually inapt part of the population will adapt to life in an intellectually intensive world.
That’s not necessarily true; automated production still costs something, and if shadow labor costs less then it will win out (not to mention that the shadow labor seems to be competing more with the people who’ve already adapted to the service economy). Anyway, we’re not just talking about the level of automation in existence today, we’re also considering the great advances yet to come. Eventually, I agree, if the predictions are correct then there will be no shadow.
There have been a number of dystopian / utopian explorations of this in sci fi. What seems plausible to me is that future generations will probably spend a lot more time engaged in a virtual economy. Think World of Warcraft, but more immersive. But who knows really?
Hmmm. So we’re talking Wall-E. Or maybe The Matrix. I always thought that the Matrix wasn’t such a bad deal. Life on the ship in Wall-E, however, not so much.
There is a fun one out called Ready Play One which is sort of a mix between the two. The world in that one is one where the real economy has been in the doldrums for years due to an energy shortage, where travel of any kind is very expensive. A programmer created a sort of virtual universe that people could pay to use, with lots of free places like virtual schools. The twist is that this programmer had come of age in the 80s, had died childless, and had created a contest where the winner would inherit the entire company controlling the world. To solve the contest, the players had to understand all sorts of 80s cultural references.
But the virtual world was nonetheless one where the vast majority of the world stayed plugged in, doing virtual jobs through avatars, buying and selling stuff, and living out their lives in the ultimate of immersive universes.
Fun read, and the audio book is narrated by Will Wheaton.
My point is that if the relationship you and the OP describe, more tech = fewer low skill jobs, was operating at the margin we should observe fewer job opportunities and higher unemployment related to increases in the level of tech. So far, we’ve observed exactly the opposite.
It isn’t so much that I’m annoyed that they look back fondly on it, it’s that they use those fond memories as the impetus for government intervention often based on some incorrect assumption.
Let’s say that, in 1960 70% of a population had the aptitude to stock shelves at a grocery store. With better automation, logistics, communication, maybe that job is now accessible to 80% or 90% of a population. The supply of people who can do the job has increased significantly as the job gotten easier. Those who look back on certain jobs and say, “I remember when you could support a family of 4 on this job” are ignoring the fact that the job has changed in all but it’s name replaced by new jobs that better suit higher-aptitude workers.
So, yes. In some respects, the nostalgia does irritate me because it is often grounded in lazy thinking.
No, I think I understand it very well. Nothing bad ever happens, because capitalism. Everything in the USA is getting better and better, every day, in every way. If I disagree, I don’t love freedom, or something. I’m sorry to be flip, but I’m tired of the lectures.
So let me try again. Jobs have been vanishing because of technology for centuries. In the past, the American political system successfully overcame that political challenge, although not without strife. I recall for example the bitter labor struggles in the Keeweenaw that came about because of the invention of a pneumatic drill that could be operated by two men instead of three, and I already noted that the rise of chain stores such as A&P was also a political issue at one time.
It was able to do so for a variety of reasons. It was a much freer country than today, with vastly fewer idiotic and expensive regulations. It restricted foreign competition with American business via tariffs, which also allowed the large US internal market to provide advantages from economies of scale, also helping exports. And, eventually, it restricted immigration, limiting the supply of labor which kept wages up, as well as encouraging labor saving inventions. End result, the US became the most powerful and wealthy nation-state in history.
Does that sound like the US today?
Nope. The United States today is buried under endless idiotic freedom-wrecking regulations. The US government is quite happy to see the mercantilist government of China deliberately bankrupt American businesses, stealing American intellectual property without any effective complaint. And the government has done everything it can to prevent any effort to secure the US border so as many foreigners as possible can get here, legally or not, with the plain and obvious goal of driving wages into the basement and below.
Economic principles haven’t changed. What has changed is the American political system’s willingness and ability to adapt to reality. As Glen Reynolds says we have the worst political class in our history, and they seem pathologically incapable of anything more than conjuring up endless rationalizations as to why stuffing their own pockets is the highest form of public service.
Meh. Sorry, I’ve lost interest in writing any more on this topic, at least for now.
Xennady, meet Mr. Pethokoukis. Mr. Pethokoukis, meet Xennady. Have a nice conversation.
I used to think conservatives and libertarians agreed on economic freedom and disagreed on the social issues. Your post makes me wonder if we even have the economics in common.
AIG, you can’t go out and build a 60s house today in anything approaching a civilized area; municipal codes won’t allow it. That was my point. People can buy old homes or ancient used cars, but actually building those things new, as opposed to buying something that’s fifty years old, isn’t an option.
That said, you are correct that I had not taken northeastern industrial towns into account in my analysis.
I agree with Xennady, by the way (with the possible exception of trade).
You can think something is a net positive without pretending there is no negative. Net positive is just that — a net. A difference between the good and the bad. Yes, on average, the average person is better off now than they were thirty years ago. But yes, that fact still allows that a number of people would have been better off in the world of 30 years ago than they are today.
Earlier in this thread, someone mentioned that CAD spelled the end of draftsmen, but you don’t see out-of-work draftsmen now. My dad was one of those draftsmen laid off when that job market collapsed from Jimmy Carter’s recession and anonymous’s invention. Yes, he shifted careers several times (burger flipper, cop, nuclear submariner, x-ray tech, sonographer) and now has a decent wage, but it was a long time sailing by the ash breeze. Die-hard free-marketers don’t do themselves any favors by pretending that technological disruptions aren’t painful or that people who’ve lost their jobs should be grateful for the new economy. Yes, a dynamic economy better than a stagnant economy. But just because the medicine is good for me doesn’t mean I have to pretend it tastes good, and some sympathy for the economic losers who find themselves with worthless training and experience would be nice.
And heck, I looked at an appraisal for the standard 50s ranch in Levittown at work today. It was $150K. Adjusted for inflation, that would be ~$16K in 1951 when it was built, over 150% of the original selling price.
Folks:
More than 110 comments! I am astounded . . .and reminded once again why it so thrilling to post on Ricochet: engaged, smart and well-spoken commenters on both sides of the argument.
I’ve got a lot going on in the next few months — two new books, a novel, teaching and a start-up, among other things — but I intend to pursue this topic further. And I know Bill Davidow also wants to study this subject more in-depth. So look for more from us on this subject, here on Ricochet and elsewhere, in the months to come.
In the meantime, you may enjoy this piece on the ‘real’ Moore’s Law I wrote for Fortune magazine last summer in support of my Intel Trinity book. It offers a glimpse of the technology opportunity/challenge that faces us in the years ahead.
— Michael S. Malone
I know, support for economic freedom is tepid, at best, even among the Ricocheti.
I believe in the free market the way I believe in losing weight by going to the gym. Yes, it really works. Yes, it’s for the best. But it’s still a heck of a lot of work, it’s a lot of pain for the gain, and if you try to sell it as a miracle-cure you’re going to have a lot of unhappy customers.
I am interested in what caused you to think capitalism is being promoted as a “miracle cure.” I think AIG, myself and the others are simply responding to the criticism that the technological change enabled by the free market is somehow resulting, or will result, in less job opportunity. Different opportunity, yes. Less, no.
Certainly not. It is inconceivable that robots could have repaired the leaking pipe above my ceiling or replaced and restored the ceiling to its original condition. I’m sure everyone reading this can provide countless situations in which AI/robotics cannot match the skill set of an accomplished tradesman in the field.
Even if, in theory, those skill sets could be replicated artificially at some point in the distant future, matching the tradesman’s cost-effectiveness would be a formidable challenge.
I agree, however, that increasing numbers of ZEV’s is probably unavoidable given that we continue to welcome into our country too many people with little potential for adding economic value.
I think part of what the OP is driving at is that the advances in technology aren’t just requiring lateral moves (eg the former buggy manufacturers switching to auto manufacturers), but vertical ones (eg a ditch digger becoming an engineer). So yes, new industries are created and then destroyed, but in whichever industry: a laborer is a laborer, a clerk is a clerk, c cashier is a cashier, a machine operator is a machine operator, an engineer is an engineer. The suggestion is that technology may eventually wind up eliminating whole classes of job beginning at the lower part of the spectrum. What percentage of people at the lower end of the spectrum have the ability to make a vertical move? Whatever it is, I’m pretty sure it’s not 100%.
I do find this topic interesting because I solidly believe a few axioms which may be in tension with one another: 1) people can certainly improve themselves through hard work, ingenuity (which humanity as a whole displays), and talent; 2) some people are average or below average and have a lower ceiling than some other people; 3) no one owes you anything (secularly speaking); 4) idle hands are the devil’s workshop – there’s both a personal and a societal interest in finding ways for other people to be productive and reasonably satisfied; 5) capitalism is the best (the only force capable, really) at making stuff efficiently and eventually ensuring an effective allocation of resources system wide; 6) not all material advances count as unqualified progress; 7) while the economic pie isn’t static, it isn’t always growing either; 8) relocating very far away isn’t as doable as it’s sometimes made out to be; 9) these economic changes that people endure can often come in the form of long term decline – and it’s painful; 10) pain is not an excuse to deny reality.
All this and more is swirling around, so I apologize for the word dump. As I say, some of these are in tension with each other and I’ve not been able to find any real firm footing in conversations like these.
And, in the context of the gym, it’s not altogether unreasonable to conclude that the gain is not worth the pain. I think that a certain level of worker has this perspective on capitalism too – not altogether unreasonably. The trouble is that pain can’t be avoided in any event; best to choose your pain if you can.
In the late 1960s, Milton Friedman realized that capitalism was in trouble. Inflation was ratcheting up all over the developed world, with nothing to look forward to but an unending series of balance of payments crises leading to a quasi world government. What is happening in Europe today was happening all over the world then, and the same solutions were being put forth: more government.
In a true flash of genius, Friedman realized that his fellow libertarians had it all wrong: the problem wasn’t any tradeoff between inflation and unemployment, but the gold standard. He came to believe that fixed exchange rates naturally lead to larger government.
In 1971, Richard Nixon took America off the Bretton Woods gold exchange standard; Milton Friedman was one of his advisers. Nine years later, America deregulates under Reagan, and experiences twenty years of growth and low inflation. This would not have been possible had we stuck with fixed exchange rates, as many European countries did.
Milton Friedman challenged the capitalist orthodoxy of his day. If he hadn’t been brave enough to make the case that capitalism needed to be fixed, we would have fallen into corporatist social democracy (socialism) long ago. Think the past six years were bad? A lot of Europe has lived that way for the past three decades.
Sometimes constructive criticism is a good thing.