Work In The Age Of Automation: What’s The Worst That Could Happen?

Michael Dean
Work In The Age Of Automation: What’s The Worst That Could Happen?

What will our future be like if, as an influential Oxford study has predicted, 47 percent of total US employment is at “high risk” of being lost to automation?

This is not just an American phenomenon; only last week on the BBC’s Panorama programme, Angus Knowles-Carter of Deloitte predicted that “roughly one third of today’s jobs in the United Kingdom are potentially at risk from automation in the next 10 to 20 years – and that’s about 10 million jobs.”

In my last post we saw the positive outlook. Built on the idea that although new technologies will reduce the number of jobs available, “techno-optimists” believe they’ll also spur massive economic growth and cost reductions, to such a degree that we’ll all be better off. (If we act to reform our economic and social policies accordingly.)

In part two, we’ll look at a less rosy picture being painted by the likes of economists Robert Gordon and Tyler Cowen, along with Martin Wolf, chief economics commentator at the Financial Times.

This opposing group argue that the economic growth potential from these new technologies is being overestimated. They do not, however, overlook the chance of mass job losses due to automation.

Once in a lifetime

At the heart of the skeptic’s argument is an observation of history, rather than a prediction of the future – an emphasis on “past, not prologue” as Martin Wolf calls it in his recent essay for Foreign Affairs.

Wolf argues that the unprecedented economic growth in industrialised economies between the late 19th Century and the 1970s, will remain exactly that: unprecedented.

He shares this view with influential economist Robert Gordon, who goes further and suggests that American economic growth may be over: “There are four headwinds that are just hitting the American economy in the face. They’re demographics, education, debt and inequality. They’re powerful enough to cut growth in half. So we need a lot of innovation to offset this decline.”

But – and this is the crux of their argument – new innovations have almost no hope of being as powerful as those from the Second Industrial Revolution:

Electric light, running water, the internal combustion engine, radio and the telephone all arrived in an incredible couple of decades; in fact the car and the lightbulb over the course of a few months.

When compared to the last two decades, our inventions have been trivial, explains Wolf: “Just consider the shift from a world without telephones to one with them, or from a world of oil lamps to one with electric light. Next to that, who cares about facebook or the iPad? Indeed, who really cares about the Internet when one considers clean water and flushing toilets?”

These breakthroughs powered almost a century of growth and lead to further revolutionary inventions including the airplane, the washing machine and the refrigerator (that helped liberate women from days of domestic labour each week), television, and air conditioning.

From a broader perspective, Tyler Cowen has claimed that America may have simply, ‘eaten all the low hanging fruit’. The drivers of economic growth up until recently have all been events that cannot be repeated – for example, a massive abundance of free land, or women entering the labour market.

Gordon makes a similar point, mentioning how the maximum speed we could travel “increased from the horse (6 miles per hour) to the Boeing 707 (550 mph)” over the course of 60 years. We made that huge jump once, and since – with the commercial failure of Concorde – we’ve practically gone no faster than we could in 1957.

It’s hard to disagree that this really lays down the gauntlet to the likes of machine learning and robotics, if they’re to generate the kind of explosive economic growth we enjoyed in the first half of the 20th Century.

Burning down the house

Let us – given that this post is dedicated to the pessimists’ view – consider a most difficult scenario. That these new technologies do, as predicted, replace almost 50 percent of current human occupations over the next 20 years – and due to their characteristics do not replace the majority of these jobs, nor generate huge growth, but instead concentrate wealth (and with it power) further.

Author Andrew Keen has warned that we don’t need to look to the future to see this trend. Consider a previous generation’s photo sharing business, Kodak. In the year it laid off more than 2000 workers, Instagram, with a total of 13 workers sold to Facebook for $1 Billion.

Keen argues that technology tends towards creating “winner-takes-all” markets, and the ‘creative destruction’ brought about by disruptive businesses, could, when replicated across our economy, be weighted heavily towards destruction.

Economists Jeffrey Sachs and Laurence Kotlikoff also suggest that these new technologies will raise inequality levels between generations.

The richer and more experienced older generation have skills that are harder to automate than those just entering the job market, thus the downward pressure on wages caused by automation will be felt largely by the young.

As the young are known to save more than the old (who are shortly headed for retirement), shrinking incomes will have the knock-on effect of depressing the national saving rate and the future stock of capital.

Fewer savers means less money to investment in businesses and infrastructure, further “lowering the wellbeing of today’s young generation and of all future generations!”

Road to nowhere(?)

How do we save ourselves from this dystopian future of techno-feudalism? Martin Wolf makes two sound assessments: “First, new technologies bring good and bad. We must believe we can shape the good and manage the bad. Second, we must understand that education is not a magic wand.”

As we saw in part one, techno-optimists Erik Brynjolfsson and Andrew McAfee emphasise that we’ll need to learn how to “race with the machines” and not against them. This is difficult explains Wolf, when “we do not know what skills will be demanded three decades from now.”

References and bibliography:

Brynjolfsson, Erik – TED: The key to growth? Race with the machines (2013)
Brynjolfsson, Erik & McAfee, Andrew – The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (2013)
Brynjolfsson, Erik & McAfee, Andrew – Race Against the Machines (2012)
Cowen, Tyler – The Great Stagnation: How America Ate All the Low-Hanging Fruit, Got Sick, and Will (Eventually) Feel Better (2011)
Frey, Carl Benedikt & Osborne, Michael A. – The Future of Employment: How Susceptible Are Jobs To Computerisation? (2013)
Gordon, Robert J. – TED: The Death of Innovation, the End of Growth (2013)
Gordon, Robert J. – Why Innovation Won’t Save Us (2012)

Keen, Andrew – The Internet Is Not the Answer (2015)
McAfee, Andrew – TEDx: Are droids taking our jobs? (2012)
Piketty, Thomas – Capital in the Twenty-First Century (2013)
Sachs, Jeffery D. & Kotlikoff, Laurence L. (2012) Smart Machines and Long-Term Strategy
Thompson, Derek – A World Without Work (2015)

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