Saturday, January 18, 2014

What Are People Good For 2014 - Preview

INNOVATION, the elixir of progress, has always cost people their jobs. In the Industrial Revolution artisan weavers were swept aside by the mechanical loom. Over the past 30 years the digital revolution has displaced many of the mid-skill jobs that underpinned 20th-century middle-class life. Typists, ticket agents, bank tellers and many production-line jobs have been dispensed with, just as the weavers were.

Optimism remains the right starting-point, but for workers the dislocating effects of technology may make themselves evident faster than its benefits. Even if new jobs and wonderful products emerge, in the short term income gaps will widen, causing huge social dislocation and perhaps even changing politics. Technology’s impact will feel like a tornado, hitting the rich world first, but eventually sweeping through poorer countries too. No government is prepared for it.

Why be worried? It is partly just a matter of history repeating itself. In the early part of the Industrial Revolution the rewards of increasing productivity went disproportionately to capital; later on, labour reaped most of the benefits. The pattern today is similar. The prosperity unleashed by the digital revolution has gone overwhelmingly to the owners of capital and the highest-skilled workers. Over the past three decades, labour’s share of output has shrunk globally from 64% to 59%. Meanwhile, the share of income going to the top 1% in America has risen from around 9% in the 1970s to 22% today. Unemployment is at alarming levels in much of the rich world, and not just for cyclical reasons. In 2000, 65% of working-age Americans were in work; since then the proportion has fallen, during good years as well as bad, to the current level of 59%.

Worse, it seems likely that this wave of technological disruption to the job market has only just started. From driverless cars to clever household gadgets (see article), innovations that already exist could destroy swathes of jobs that have hitherto been untouched. The public sector is one obvious target: it has proved singularly resistant to tech-driven reinvention. But the step change in what computers can do will have a powerful effect on middle-class jobs in the private sector too.

Until now the jobs most vulnerable to machines were those that involved routine, repetitive tasks. But thanks to the exponential rise in processing power and the ubiquity of digitised information (“big data”), computers are increasingly able to perform complicated tasks more cheaply and effectively than people. Clever industrial robots can quickly “learn” a set of human actions. Services may be even more vulnerable. Computers can already detect intruders in a closed-circuit camera picture more reliably than a human can. By comparing reams of financial or biometric data, they can often diagnose fraud or illness more accurately than any number of accountants or doctors. One recent study by academics at Oxford University suggests that 47% of today’s jobs could be automated in the next two decades.

Yet however well people are taught, their abilities will remain unequal, and in a world which is increasingly polarised economically, many will find their job prospects dimmed and wages squeezed. The best way of helping them is not, as many on the left seem to think, to push up minimum wages. Jacking up the floor too far would accelerate the shift from human workers to computers. Better to top up low wages with public money so that anyone who works has a reasonable income, through a bold expansion of the tax credits that countries such as America and Britain use.

Innovation has brought great benefits to humanity. Nobody in their right mind would want to return to the world of handloom weavers. But the benefits of technological progress are unevenly distributed, especially in the early stages of each new wave, and it is up to governments to spread them. In the 19th century it took the threat of revolution to bring about progressive reforms. Today’s governments would do well to start making the changes needed before their people get angry.
Coming to an office near youThe effect of today’s technology on tomorrow’s jobs will be immense—and no country is ready for it Er, I'm sorry, but optimism is not the right starting point from where I sit. Maybe if you're the sort of person The Economist is writing for it is.
A few hours before I interviewed Erik Brynjolfsson and Andrew McAfee, the co-authors of “The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies,” the U.S. Department of Labor released a disappointing jobs report. The U.S. economy had only created 70,000 new jobs, the lowest monthly total since 2011. More alarming, the labor-force participation ratio (the share of Americans working or looking for work) had fallen to 62.8 percent — the lowest mark since 1977.

The news was a depressing, but timely, reminder of why “The Second Machine Age” is an important book. Brynjolfsson is the director of the MIT Center for Digital Business. McAfee is a principal research scientist at the same institution. Their first co-authored book, “Race Against the Machine,” made a compelling case that recent advances in technology are placing workers under unprecedented pressure. Automation is destroying jobs, but in contrast to past history, new jobs are not being created in adequate compensation for what’s lost, (a point all too well underlined by the latest jobs report). “The Second Machine Age” reexamines this relentless march of the robots, but in the context of a technological landscape in which change is accelerating significantly faster than what could even have been imagined just a few years ago.

The emergence of Big Data, the exponential growth unleashed by decades of Moore’s Law (more and more computing power for less and less cost), and the logic of what the authors call “recombinant innovation” — the mixing and matching of our powerful new tools into a bewildering array of even newer, even more powerful tools — have replaced hype with a bewildering new reality. We’re headed somewhere new at high speed, and with no apparent ability to put on the brakes.

“The Second Machine Age” is fascinating because it is simultaneously hopeful and wary about how technological change is remaking our lives. The authors make a compelling case that the second machine age will deliver vast “bounty” to humankind. The overall size of the economic pie is sure to grow. As consumers, the options available to us will beggar description. But McAfee and Brynjolfsson are also quite clear-eyed about the alarming reality of how that pie is being sliced up and distributed. The numbers can’t be ignored: The bounty is growing, but so is what the authors call “the spread” — growing income inequality, greater concentration of wealth in fewer hands, unprecedented pressure on labor markets.
Robots Are Stealing Your Job: How Technology Threatens to Wipe Out the Middle Class (Salon)
Their hope is that at some point the rising displacement of human workers by machines will reverse as more people find ways to work in ways complementary to the machine. If that can happen on a massive scale we'll enter a sort of golden age where a large fraction of us become much more productive as a result of working in close coordination and partnership with increasingly powerful computers. Count me skeptical. Why? Computers will get better than humans at a gradually lengthening list of cognitive abilities. I do not expect humans retain any advantage in the long run.

Ever heard of Moravec's Paradox? It summarizes the view of artificial intelligence researchers that it is easier to automate the tasks we do consciously (e.g. examine lots of combinations of ways to put together logic gates to design a computer chip or analyze lots of potential moves in a chess game) than to program a computer to do facial recognition and walking as well as humans. In other words, cognitive abilities that almost all humans possess from a very young age and which get done below the level of conscious reasoning are the hardest to automate.

But just become some tasks are harder doesn't mean they don't eventually get done well by computers. Look at facial recognition. Already you can unlock a tablet or cell phone with a picture of yourself. Also, computers will get better at tasks that require great manual dexterity.

In his book Average Is Over Tyler Cowen (who wrote after Race Against The Machine and was obviously influenced by it) describes how the best chess players are teams of one or two humans with chess playing software. This is an example of complementary strengths of human and computer intelligence resulting in higher performance. Brynjolfsson and McAfee also cite examples such as small sellers on eBay and Amazon who are able to carve new niches because of massively complex online stores and auctions. But the numbers of people who can find and have the skills to develop these niches seem much smaller than the numbers who are getting laid off from factory and middle management jobs.
Race Against Or With Intelligent Machines? (Future Pundit) The blogger, a libertarian, seems to endorse the "Final Solution for the working class" argument in the comments. Apparently he's not familiar with First They Came For...
 On September 23 {William the Conqueror’s} fleet hove in sight, and all came safely to anchor in Pevensey Bay. There was no opposition to the landing. The local fyrd had been called out this year 4 times already to watch the coast, and having, in true English style, come to the conclusion that the danger was past because it had not yet arrived had gone back to their homes.

    — From History of the English Speaking People by Winston Churchill
The effects of automation have been visible to some people many years. Such as science fiction authors An early example is in this from James Blish’s A Life for the Stars (1962, second of his Cities in Flight series):

    The cab came floating down out of the sky at the intersection and maneuvered itself to rest at the curb next to them with a finicky precision.  There was, of course, nobody in it; like everything else in the world requiring an I.Q. of less than 150, it was computer-controlled.

    The world-wide dominance of such machines, Chris’s father had often said, had been one of the chief contributors to the present and apparently permanent depression”  the coming of semi-intelligent machines into business and technology had created a second Industrial Revolution, in which only the most highly creative human beings, and those most fitted at administration, found themselves with any skills to sell which were worth the world’s money to buy.
Progress Without People: New Technology, Unemployment, and the Message of Resistance by David F. Noble (1995). See his Wikipedia bio. The opening chapters are from his 1983 series of articles in Democracy about “Present Tense Technology”:

    Part 1:  “Technology’s Politics“, Spring 1983
    Part 2:  “Explorations”, Summer 1983
    Part 3:  Fall 1983

The series opens with this stark warning:

    “There is a war on, but only one side is armed: this is the essence of the technology question today. On the one side is private capital, scientized and subsidized, mobile and global, and now heavily armed with military spawned command, control, and communication technologies. Empowered by the second industrial revolution, capital is moving decisively now to enlarge and consolidate the social domination it secured in the first.

    … Thus, with the new technology as a weapon, they steadily advance upon all remaining vestiges of worker autonomy, skill, organization, and power in the quest for more potent vehicles of investment and exploitation. And, with the new technology as their symbol, they launch a multi-media cultural offensive designed to rekindle conīŦdence in “progress.”

    On the other side, those under assault hastily abandon the field for lack of an agenda, an arsenal or an army. Their own comprehension and critical abilities confounded by the cultural barrage, they take refuge in alternating strategies of appeasement and accommodation, denial and delusion, and reel in desperate disarray before this seemingly inexorable onslaught —- which is known in polite circles as “technological change.

    What is it that accounts for this apparent helplessness on the part of those whose very survival, it would seem, depends upon resisting this systematic degradation of humanity into mere disposable factors of production and accumulation?
50 years of warnings about the next industrial revolution. Are we ready? (Fabius Maximus)
Let’s return to the report’s tagline, illustrating the poor vision of the future seen here:

    “Is the economy in technological stagnation? Or will computers take all our jobs?”

This is a false dilemma. We can get economic stagnation with massive unemployment from automation. In fact the next wave of automation might greatly increase productivity, destroy millions of jobs, shift income from the middle class to the rich (with their high savings rates) — creating at best slow growth. At worst economic decline.
Looking at America’s future: economic stagnation, or will computers take our jobs? (Fabius Maximus)
Automation of service jobs will, like the first industrial revolutions (agriculture, then manufacturing), probably will increase humanities wealth and income. A successful transition requires again managing two challenges:

    Most of the gains will go not to workers, but capital (i.e., owners of the machinery).
    There will be massive unemployment.

That means

    distributing these gains to maintain both social stability democracy,
    creating new jobs for the unemployed — or otherwise supporting them,
    creating new jobs for the next generation.

So far the typical responses have been to assume past success guarantees success today — without the need for special effort (the invisible hand will provide for us) — and education. The first is a Marxist-like faith in history. The second is illogical innumeracy: not everybody can benefit from advanced education (already we produce more undergraduate degrees than the market requires), and there is no evidence that the market for advanced degrees will expand sufficiently to absorb those unemployed by automation.

They still tend look to the past for signs of this new revolution, failing to see that it has barely started — with little recognition of its potential magnitude and the resulting human cost.
The promise and peril of automation (Fabius Maximus) The reference to Marxism is odd, Marx was the first person in history to warn of the effects of mass unemployment through the capitalists' drive for efficiency and  automation, as well as how capitalism tends to undermine the preconditions for its own existence. By and large it's Neoclassical/Neoliberal capitalist economists who dismiss technological unemployment with the "what's happened in the past will happen in the future" argument.
Brynjolfsson and McAfee, whose new book The Second Machine Age is set to be one of the zeitgeist works of 2014, argue that the digital revolution is about to crash into our jobs market. It's taken a while – Time magazine awarded the personal computer machine of the year in 1982 – but, they contend, the technology has now matured to a point where it will have the same scale of impact on production as the steam engine once did.
Similarly, Cowen speculates that the future belongs to a gilded 10%-15% of workers whose skills will augment intelligent machines – the rest can look forward to long-term stagnation or worse. The harsh labour market experience of the young over recent years is a mere taster of what's in store. Growing numbers of low-skilled workers risk being unemployable: there won't be a wage at which it will be worth employing them. Swaths of the working poor will make ends meet only by migrating to areas offering very cheap housing, crumbling infrastructure and low taxes.Welcome to the American future: burgeoning favelas leavened only by free Wi-Fi. 

Time and again – from spinning wheel to steam engine – it has had disruptive implications for the workforce. But labour displaced from field or factory eventually found new, more productive roles, demand expanded, living standards rose...The lag, however, can be a long one. Not long before his death in 1873, John Stuart Mill remarked that the industrial revolution had not yet had much impact. This seemed an extraordinary observation, but it captured at least a partial truth. As the economic historian Brad DeLong has shown, from 1800 to 1870 real working-class wages grew at just 0.4% a year before tripling to 1.2% from 1870 to 1950 (reaching almost 2% in the golden postwar decades). Similarly, we are yet to experience the true gain, whatever it turns out to be, as well as the pain, of the robot era.

To get a better sense of the impact of technology on our labour market we don’t need to rely entirely on frothy speculation about the future. There is a decade or more of research to draw on. The rise of information and communications technology (ICT) is hardly new. The dominant view, both in the UK and elsewhere, is that it has already been eroding a swath of jobs that involve repetitive tasks capable of being automated and digitised. This has disproportionately affected roles in the middle of the income distribution – such as manufacturing, warehousing and administrative roles.

This doesn’t result in lower overall employment – for most economists the main change is to job quality, not quantity.  There has been a rapid growth in demand for high-skill roles involving regular interaction with ICT, as well a rise in lower-paid work that is very hard to automate – from caring to hospitality. Consequently the balance of employment has shifted upwards and downwards with less in between; as Manning puts it, the labour market has been polarising into “lovely and lousy jobs“. The impact of technology has been gradual but inexorable – “it only goes one way”, he tells me. In some sectors the decline in employment and relative pay has been dramatic: the typical heavy goods driver receives less in real terms today than a generation ago.

A narrow focus on technology is also inadequate, as it fails to explain some of the big shifts of the last decade like the explosion in rewards at the very top – 60% of the enormous increase in the slice of income flowing upwards to the richest 1% over the last decade went to those working in finance. To lay this at the door of the anonymous force called “technology” is to excuse way too much. Sure, developments in ICT were relevant, but they don’t explain political choices over deregulation or account for rapacious rent-seeking by the financial elite.  Wage inequality has many authors, from the demise of collective bargaining to the rise of globalisation. As the influential Washington-based EPI thinktank has argued: don’t make robots the fall guy.
 The robots are coming. Will they bring wealth or a divided society? (The Guardian)

The particular demographics of labor force participation are difficult to untangle. But we know for a fact that there are more Americans today than there were at the start of 2008. And yet there are fewer jobs.
The Big Jobs Picture Is Bad (Slate)

Note that technology also makes it easier to control and manipulate people, and easier to kill or imprison anyone who resists (drones, mass surveillance, etc.).

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