Contributor Post Created with Sketch. Silicon Valley, Economists Worried that Robots Will Cause Mass Unemployment

 

It’s my experience that technologists — at least of the entrepreneurial persuasion — are generally a bit more aggressive than economists with forecasts of rapid tech advancement as well as the potential disruption to labor markets. But maybe the economists are starting to come around to the Silicon Valley view. This from the Bank of England blog:

There is growing concern in the global tech community that developed economies are poorly prepared for the next industrial revolution. That might herald the displacement of millions of predominantly lesser-skilled jobs, the failure of many longstanding businesses which are slow to adapt, a large increase in income inequality in society, and growing industrial concentration associated with the rapid growth of a relatively small number of multi-national technology corporations.

Economists looking at previous industrial revolutions observe that none of these risks have transpired. However, this possibly under-estimates the very different nature of the technological advances currently in progress, in terms of their much broader industrial and occupational applications and their speed of diffusion. It would be a mistake, therefore, to dismiss the risks associated with these new technologies too lightly.

In other words, this time just might be different. So why exactly are BOE economists Mauricio Armellini and Tim Pike taking seriously the idea that tech progress won’t be labor augmenting as opposed to labor replacing, on net? Part of their argument is that not only are there plenty of general purpose technologies with huge mass application potential, but they’re far more scalable and spreadable than in the past:

The technologist Hermann Hauser argues there were nine new General Purpose Technologies (GPTs) with mass applications in the first 19 centuries AD, including the printing press, the factory system, the steam engine, railways, the combustion engine and electricity.… Most of these GPTs took several decades to gain traction, partly because of the large amounts of investment required in plant, machinery and infrastructure. So there was sufficient time for the economy to adapt, thus avoiding periods of mass unemployment. But the pace of technological progress sped up rapidly since the 19th century. Hermann identifies eight GPTs in the 20th century alone, including automobiles, aeroplanes, the computer, the internet, biotechnology and nanotechnology. Most recent innovations have been scalable much more quickly and cheaply. They have also been associated with the emergence of giant technology corporations — the combined market capitalisation of Apple, Google, Microsoft, Amazon and Facebook is currently about $2½ trillion. The faster these new waves of technology arise and the cheaper they are to implement, the quicker they are deployed, the broader their diffusion, the faster and deeper the rate of job loss and the less time the economy has to adapt by creating jobs in sectors not disrupted by GPTs.

And how fast will it take for deep disruption? Again, Armellini and Pike:

The timing and magnitude of these structural changes to the economy are extremely hard to predict. But the speed at which developed economies adopt robotics technologies is perhaps increased by policies in many countries that seek to reduce income inequality in society, such as increases in minimum wage rates, thereby incentivising R&D and capital expenditure in labour-saving machinery and equipment. Another factor stimulating global investment in robotics technologies is demographics. Japan has experienced a declining population since 2010, reflecting minimal immigration levels and falling fertility rates since the 1970s. With the population (and labour force) projected to decline by as much as one-fifth over the next 50 years, incentives to invest in automation technology are high. So it is perhaps not surprising that Japan has one of the largest robotics industries in the world, employing over a quarter of a million people.

So what to do about the cabbies and delivery truck drivers? Should we slow down the pace of automation with a robot tax, as Bill Gates has mused? Certainly there are tech folks worried about a backlash. And perhaps that is seeping into the political conversation. I noticed this on Twitter from savvy RealClearPolitics analyst Sean Trende, commenting on an Axios piece about self-driving trucks:

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  1. Joseph Eagar Member
    Joseph Eagar Joined in the first year of Ricochet Ricochet Charter Member

    Technology is not a god. It’s a tool. How far we take it is up to us.

    • #1
    • March 1, 2017, at 3:42 PM PST
    • 1 like
  2. blood thirsty neocon Inactive

    I’d like to propose a couch pact: you can sleep on my couch if your job gets taken by a robot, and I can sleep on yours if mine gets taken.

    • #2
    • March 1, 2017, at 4:13 PM PST
    • 2 likes
  3. The Reticulator Member

    Joseph Eagar (View Comment):
    Technology is not a god. It’s a tool. How far we take it is up to us.

    That’s how the Amish look at it. They decide adopt new technologies all the time, but not before looking at how their will affect their spiritual and community life. But I don’t know how we can decide such things on the scale of larger communities or nations.

    • #3
    • March 1, 2017, at 8:33 PM PST
    • 1 like
  4. Hypatia Inactive

    What worries me is, WTF are people going to do with themselves if we don’t have a “daily grind”? ( I mean, I assume that, just like now, people who are out of work won’t starve, in our country anyway; we do have a vast social safety net). Will it be like in Star Trek, everybody wearing velour sweatsuits and pursuing personal fulfillment (did the crew get paychecks?) will it be like J.K.Rowling’s universe where it seems like everybody works for the Ministry of Magic if they work at all?

    I read, I think it was in a Bill Bryson book, that in the nineteenth century in England they started paying clergymen a state salary, as opposed to the traditional “living”, which meant their income depended on the prosperity of their parish. So these well-educated gents suddenly had a lot more leisure, and that resulted in a great flowering of nature exploration, scientific research and taxonomic system development, “the key to all mythologies” type projects.

    if people have well-furnished minds, they can support and make good use of leisure. But if they don’t, we’re going to need Brave New World-type nostrums (Soma, Orgy-porgy) to keep people from running, stir-crazy, OUT of the empty cubicles of their minds.

    Will we get back, before its too late, to institutions of higher education dedicated to furnishing people’s minds with the treasures of our civilization and all great world civilizations?

    It doesn’t look good. So I have a dark, pessimistic vision of hordes of aimless, empty-eyed people, freed from the strictures of daily labor–but freed to WHAT?

    • #4
    • March 2, 2017, at 3:39 AM PST
    • 1 like
  5. I Walton Member

    Why have the experts predicting mass unemployment to be caused by technological change always been wrong? Because they can’t see the future. Why might they be right this time? because the ability of our economy to adjust has been crushed by central regulation and busy body politics and the administrative state hasn’t caught up with the new technologies that move faster than it does. The fear of widespread unemployment will be used by the administrative state to get control of the new technologies. Almost all efforts to centrally organize economies from guilds to vast national and international regulatory regimes are aimed to slow the impact of market change, the relentless creative destruction of markets driven by technology, innovation and trade, to allow time to adjust, but they always slow adjustment, quash the creative part without really dealing with the destructive part. There are ways to deal with these challenges, turning the economy over to the affected special interests isn’t one of them.

    • #5
    • March 2, 2017, at 4:19 AM PST
    • 2 likes
  6. Instugator Thatcher
    Instugator Joined in the first year of Ricochet Ricochet Charter Member

    Came across an article that hinted at this very thing today. It was talking about Ikea and this quote made the point beautifully.

    Look at Gyllensvaans Mobler: compared to the 1980s, it is making 37 times as many bookcases, yet its number of employees has only doubled. Of course, that is thanks to all those German and Japanese robots.

    Wow. An 18.5X improvement in productivity.

    • #6
    • March 2, 2017, at 4:27 AM PST
    • 1 like
  7. JimGoneWild Coolidge

    Back in the 1980’s, I bet the same economists predicted the computer would cause massive unemployment and drive secretaries, clerks, and typing pool workers to suicide. Not!

    • #7
    • March 2, 2017, at 7:59 AM PST
    • 1 like
  8. JimGoneWild Coolidge

    By-the-way, the tractor (a non-autonomous robot) pushed more people out of work than any technology change in history. What happen? People flocked to the cities.

    The biggest barrier to employment is rules and regulations, not robots.

    • #8
    • March 2, 2017, at 8:03 AM PST
    • 4 likes
  9. Instugator Thatcher
    Instugator Joined in the first year of Ricochet Ricochet Charter Member

    JimGoneWild (View Comment):
    The biggest barrier to employment is rules and regulations, not robots.

    This cannot be emphasized enough.

    • #9
    • March 2, 2017, at 9:18 AM PST
    • 2 likes
  10. MarciN Member

    The Reticulator (View Comment):

    Joseph Eagar (View Comment):
    Technology is not a god. It’s a tool. How far we take it is up to us.

    That’s how the Amish look at it. They decide adopt new technologies all the time, but not before looking at how their will affect their spiritual and community life. But I don’t know how we can decide such things on the scale of larger communities or nations.

    Wow. That’s very smart and wise.

    I like the idea of considering things from all angles before we move forward.

    President Bush did that when he was looking at stem cell research. He actually convened a weekend retreat-conference on the subject to look at the issue from every perspective. The stem cell conference was attended by people from all faiths and professions.

    I wish we did more of that sort of thing.

    • #10
    • March 2, 2017, at 10:32 AM PST
    • 2 likes
  11. captainpower Inactive

    MarciN (View Comment):
    President Bush did that when he was looking at stem cell research. He actually convened a weekend retreat-conference on the subject to look at the issue from every perspective.

    He also did that for Social Security reform.

    I remember watching on C-Span ~ 2005 and being excited as he flushed his political capital down the toilet and Republicans politicians fell over themselves to get far far away from him.

    Searching C-span, looks like he tried after his first election, and again after re-election:

    • #11
    • March 2, 2017, at 10:38 AM PST
    • Like
  12. RushBabe49 Thatcher

    I am a buyer, and tactical at that. When I was just starting out in my field, over 20 years ago, a speaker at one of our conferences told us that computers and MRPII (computer programs that plan production) would be putting me out of a job. Here it is, 20 years later, and I am not only not out of a job, I am very busy and working overtime. Admittedly, I am the only person in my company with my particular job title, but there are roles I play that no one else knows how to do. I’m not worried about being replaced by a machine any time soon.

    • #12
    • March 2, 2017, at 11:56 AM PST
    • 1 like
  13. Profile Photo Member

    JimGoneWild (View Comment):
    Back in the 1980’s, I bet the same economists predicted the computer would cause massive unemployment and drive secretaries, clerks, and typing pool workers to suicide. Not!

    I’m living proof of this, in the 1980’s I was trying to get back into the labor market after being a stay at home Mom for 10 years. I registered with some temp agencies like manpower, did all kinds of clerical jobs, even though I’m a terrible typist, I somehow survived by learning how to use personal computers. Over time I picked up quite a bit skill with PC’s. When I went back to school full time, I also got a very low paying part time job as a student assistant in the schools computer lab. This was the late 80’s, the lab had typewriters and PC’s, they had typing instruction down pat, but their PC instruction was pathetic. I eventually got hired full time as a Instructional Assistant/PC tech, over the next 13 years I worked for the college, I saw the typewriters disappear, and word processing classes expand. So bottom line here is when a manual job disappears due to technology, you go back to school and and get new skills, you learn to use the new technology, or repair and maintain it. I essentially did both, learned to use personal computers, and learned to maintain/repair them.

    • #13
    • March 2, 2017, at 12:12 PM PST
    • 3 likes
  14. ModEcon Inactive

    While I do not ascribe to the alarmist views of unemployment, I do wonder about low skill people.

    The way I see the problem is not about unemployment, it is about wages. If a society only needs 20% of its population working cushy jobs to produce all the goods the entire population could ever need, what happens to the other 80%?

    Let us be clear. We are nowhere near that place. However, arguably, less than 90% of our population in the USA combined with trade is enough to produce everything people need. So really, the question for me is at what point do you have a problem.

    My concern is that America is not going to adapt to the changing economy fast enough. Very quickly I think you would need to remove the minimum wage since people will only be willing to pay for needed goods and optional goods will lower in price thus requiring lower wages to produce and sell those goods.

    This lowering of wages would in theory lower all wages except that some jobs can only be done by the smartest out there. So, while high skill jobs will remain a sellers market where the worker gets to set the price due to relatively high demand due to training, education, and talent, low skill jobs will continue to become more of a buyers market where companies get to set low wages due to a surplus of workers.

    This inequality worries me for the political and social consequences.

    • #14
    • March 2, 2017, at 6:44 PM PST
    • 2 likes
  15. Profile Photo Member

    Hypatia (View Comment):
    What worries me is, WTF are people going to do with themselves if we don’t have a “daily grind”?

    Empirically, daytime TV plus drugs and/or alcohol.

    • #15
    • March 2, 2017, at 7:33 PM PST
    • 1 like
  16. Ralphie Member

    JimGoneWild (View Comment):
    Back in the 1980’s, I bet the same economists predicted the computer would cause massive unemployment and drive secretaries, clerks, and typing pool workers to suicide. Not!

    I remember the little Charlie Caplin Tramp ads for IBM that predicted the end of paper. I think I use more now. Just push a button and out comes copy after copy.

    • #16
    • March 3, 2017, at 8:57 AM PST
    • 1 like
  17. Duane Oyen Member
    Duane Oyen Joined in the first year of Ricochet Ricochet Charter Member

    A large piece of the driverless cars stuff is based on nonsense- and every piece promising that everyone will be unemployed next week cites the driverless cars example. Could that have some effect on delivery drivers employment? Sure, if the legal liability stuff is worked out for very large organizations.

    But so many of the breathless articles you read assume that this is an instant process- in other words, all the rolling stock out there gets junked in 5 years and there will be no auto industry because of ridesharing, thus people outside of NYC will not buy cars or like to drive any more, or care about vehicle styling, etc.

    I’ll pay more attention to this stuff after the electric cars market has hit 10% penetration.

    • #17
    • March 3, 2017, at 11:54 AM PST
    • 1 like
  18. Weeping Member

    Duane Oyen (View Comment):
    But so many of the breathless articles you read assume that this is an instant process

    An instant process? No. But it does seem to be a slow, unstoppable march there.

    • #18
    • March 15, 2017, at 11:30 AM PDT
    • Like

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