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Thursday
Nov032011

The Robot Revolution

Pithy:

Idea #6: The history of the 21st century will be one of technological singularity and collapse.

More accurate:

The history of the 21st century will be shaped by, on the one hand, labor-saving technologies (with vast and unpredictable effects on society), and on the other hand, peaks in resource production and attendent problems in maintaining complex systems in the face of random disasters, demographic shifts, increasing population, and so on.

For now, let’s focus on the former.

The history of capitalism is one of labor displacement and capital accumulation.  Really expensive tools make increased productivity possible.  Only the rich can afford really expensive tools.  The way to get guaranteed access to work is to sell most of the product of your labor in exchange for access to such tools.  Those that don’t make the trade are out-competed.  The rich get richer.  The new unemployed (since productivity increases exceed demand increases (which are at least somewhat constrained by population increases, but that’s a whole other post)) end up in newer, cooler jobs made possible by the same sort of technological development.  Or so the story goes.

The question is what happens when the newly-created labor demand from technological development is less than the labor-displacement from technological development.  A related question:  What happens when labor saving technology just creates demand elsewhere for not labor but more labor saving technology?

Or: What happens when having your job outsourced to Chinese robots just creates jobs for more Chinese robots?  (The robots are also built by Chinese robots.  In China.)

I’d argue that the marginal cost of adding production through labor-saving technology has probably been lower than the marginal cost of labor in many areas of production for a while.  However, there were a few mitigating factors delaying the robot revolution.  Both have to do with “developing markets”.  First, there was the desire to expand quickly into new markets.  If hiring people is quicker than building more-automated factories, it might be better to do the former than let your competitors beat you to the punch.  Second, there was a desire to produce stuff in areas that didn’t have the infrastructure to support highly-automated production (especially since many of those areas have fewer regulations and lower labor costs).

I think that’s no longer the case.  The most promising developing markets are developed, first-to-market incentives are diminished (i.e. the resource grab is over).  Infrastructure development has also come a long way.  Hence stories like this.

I’m not the only one who’s noticed this trend:

A faltering economy explains much of the job shortage in America, but advancing technology has sharply magnified the effect, more so than is generally understood, according to two researchers at the Massachusetts Institute of Technology.

[…]

During the last recession, the authors write, one in 12 people in sales lost their jobs, for example. And the downturn prompted many businesses to look harder at substituting technology for people, if possible. Since the end of the recession in June 2009, they note, corporate spending on equipment and software has increased by 26 percent, while payrolls have been flat.

Corporations are doing fine. The companies in the Standard & Poor’s 500-stock index are expected to report record profits this year, a total $927 billion, estimates FactSet Research. And the authors point out that corporate profit as a share of the economy is at a 50-year high.

Productivity growth in the last decade, at more than 2.5 percent, they observe, is higher than the 1970s, 1980s and even edges out the 1990s. Still the economy, they write, did not add to its total job count, the first time that has happened over a decade since the Depression.

They concluded on an optimistic note:

Yet computers, the authors say, tend to be narrow and literal-minded, good at assigned tasks but at a loss when a solution requires intuition and creativity — human traits. A partnership, they assert, is the path to job creation in the future.

But that misses both that many people are not capable of “intuition and creativity” jobs (at a high enough level to make a living at it) and, at any rate, that the demand for such jobs will never equal the previous demand for industrial-labor jobs.  Intuition and creativity don’t scale.

I expect this effect will also have a way of trickling up from industrial workers.  As everyone tries to avoid the industrial-work class if at all possible, the struggle for those “creative” jobs becomes more intense.  This analysis from Robert Cringley is telling:

In the near term how do we creatively respond to jobs going overseas? In the longer term what happens if Ray Kurzweil is correct and the Singularity rolls along in 2029 or so and humans suddenly become little more than parasites on a digital Earth?

The easy answer to this problem has been the same since the 1960s — become Paul McCartney. But how many Beatles can the world sustain?

[…]

Where you live counts as much as anything else, too, so position yourself in a city that has high serendipity.  Any kid living with his parents in Palo Alto can get a job today simply because he already has a place to live. No skills required.

[…]

Live in the coolest place, I tell Cole and his brothers. Have the coolest friends. Do the coolest things. Learn from everything you do. Be open to new opportunities. And do something your father hasn’t yet figured how to do, which is every few years take off 138 days and just walk the Earth. [emphasis mine]

Cringley takes an optimistic tone, but I find the content of his post rather grim.  He’s right.  Sure, there are some high-paying jobs that the robots can’t do for now, assuming that not too many others are trying to do the same thing.

But if you want to get into / stay in the middle class after the start of the robot revolution, you’d better be cool.  Have the right connections, be in the right place.  Hopefully have parents wealthy enough to facilitate that and smart enough to realize that it’s not about “job skills” anymore. Social skills are the new middle class job skills.  It’s hard to evaluate those “intuitive” and “creative” jobs, so appearances matter.  As the job search becomes more competitive, attributes not related to job performance matter more.

And be lucky (the repeated “serendipity”).  Maximize your opportunities to benefit from luck.  It’s all a gamble, victory goes to those who can roll (or rig) the most dice.

Hard enough for the middle class.  And for those not currently in the middle class, being either “cool” or “lucky” enough is going to be mighty tough.

Though angry may stil be an option.

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