Monday, August 27, 2012

Tom and Mish and Robots

Earlier we posted an article by Michael "Mish" Shedlock running down many of the developments in the increasingly automated nature of modern work. In the follow-up, he provides some good summaries for two of the “conventional” views on automation, one shared by the minority and one by the majority. The pessimistic view he describes via an email from a friend:
When the vast bulk of production and services can be produced and delivered by computers, robotics, smart systems, and ubiquitous computing devices with only a small fraction of the human labor force we have today, we have no choice but to devise a system of income creation and distribution radically different than we have today or face unprecedented scale of labor underutilization, loss of purchasing power, collapse of the economy, and the risk of systemic societal collapse.
For the optimistic, cornucopian side, he uses another email:
10 and 20 years from now, there will be jobs we cannot even conceive of now. Just as today there are jobs and industries no-one could conceive of 20 years ago. Only 70 or 80 years ago, about 70% of the population worked in agriculture. Today not even 2% of the population works in agriculture and it produces an output that is an order of magnitude greater. This is the very definition of economic progress - to free up people from the drudgery of manual labor, so they have the time to do things that add far more value to our world.
Here’s a tip: if your entire argument rests upon “something we can’t even conceive of now”, then you’ve pretty much lost the argument. Case closed. Relying upon something we can’t even imagine isn’t much of an argument. Neither is saying since everything worked out in the past *, it will always happen in the future. And a lot of those things that “add more value” to the world lately seem to be Wall Street frauds and swindles. Is that what he meant?

Notice how this is the exact same solution put forth by Peak Oil deniers: “something” will come along, some energy source we can’t even think of today, and save us all so we can keep society going exactly the way it has been. The reason no one can name it is because no one has thought of it before. Again, not much of an argument. At least those who claim that thorium-based nuclear reactors will continue another few centuries of economic growth are basing their argument on something that actually exists.

Even this happy story of farmers all becoming office workers is not really true. Nothing has truly replaced manufacturing for over thirty years. First we all going to be “service workers”, i.e we’d all work for the nation’s new largest employers- Walmart and McDonalds. Or else we could all become “knowledge workers” writing iPhone apps or something. Yet since America was deindustrialized, we’ve had nothing but permanent downward mobility and ever-worsening economic conditions for the majority of people for over forty years. Much of the Rust Belt is in an advanced stage of decay, looking like the bombed out Bantustans of Africa and traktorgrads and magnetogorsks of the former Soviet Union. Rural America has been entirely given over to paranoid reactionary politics incubated by fundamentalist megachurches, while the only occupations are government jobs, minimum-wage scut work work and cooking up meth. I don’t  think America since deinsutrialization has been much of a success story, even when computers are factored in. Where is this new job growth going to come from, again? His conclusion:
Yet, I believe that some new technology will eventually come along that will again create enormous numbers of jobs. I strongly suspect it will be energy related. In the meantime, however, until something does come along, we are in a creative destruction phase in which technological advancement destroys more jobs than it creates. Unfortunately this current phase can last quite some time, perhaps even a decade or more. Those looking for jobs now do not have a decade, and the wait is extremely painful.
Yup, it will eventually come along; we’ll just to wait until this mysterious technology we can’t even conceive of solves our unemployment problems and ignites another two hundred years of economic growth. "Something to do with energy?" Something? Are we all going to run in hamster wheels? Or maybe we can make the unemployed into a kind of Soylent Green and burn it in our cars. I’m reminded of Kunstler’s quip that the American public has been conditioned to expect miracles.

And in the meantime? Crickets chirping. And add to this the fact that the plutocracy is bound and determined to eliminate the social safety net in the name of eliminating “dependence” on government – it’s the cornerstone of the Romney campaign (along with tax cuts for the wealthy). It looks like we’re in for a long, tough wait. Will society survive?

Obviously this analyst as a free-market fundamentalist has an inherent bias. But I would wonder why none of these financial pundits are aware of the most common caveat found at the head of every stock prospectus:

“Past performance is not a guarantee of future results.”

In a similar vein of idiocy is the ever-clueless ultimate pundit of “conventional wisdom” Thomas Friedman, once again writing the same column he writes every week, this time with a robot flavor.
And therein lie the seeds of a potential revolution. Rethink’s goal is simple: that its cheap, easy-to-use, safe robot will be to industrial robots what the personal computer was to the mainframe computer, or the iPhone was to the traditional phone. That is, it will bring robots to the small business and even home and enable people to write apps for them the way they do with PCs and iPhones — to make your robot conduct an orchestra, clean the house or, most important, do multiple tasks for small manufacturers, who could not afford big traditional robots, thus speeding innovation and enabling more manufacturing in America.

“If you see pictures of robots welding or painting” in a factory, “you will not see humans nearby because it is not safe” being around swinging robot arms, explains Rethink’s founder, Rodney Brooks, the Australian-born former director of the M.I.T. Computer Science and Artificial Intelligence Laboratory and the co-founder of iRobot, which invented the Roomba vacuum-cleaning robot. Traditional industrial robots are fixed and not flexible, and they take a long time — and a skilled engineer — to program them to do one repeatable task.

“Just as the PC did not replace workers but empowered them to do many new things,” argues Brooks, the same will happen with the Rethink robot. “Companies will become even more competitive, and we will be able to keep more jobs here. ... The minute you say ‘robots’ people say: ‘It’s going to take away jobs. But that is not true. It doesn’t take away jobs. It will change how you do them,” the way the PC did not get rid of secretaries but changed what they did.

Actually, the robots will eliminate jobs, just as the PC did, but they be will lower-skilled ones. And the robots will also create new jobs or enlarge existing ones, but they will be jobs that require more skills. I watched a Rethink robot being tested at the Nypro plastics factory in Clinton, Mass. A single worker was operating a big molding machine that occasionally spewed out too many widgets, which forced the system to overload. The robot was brought in to handle overflow, while the same single worker still operated the machine. “We want the robot to be the extension of the worker, not the replacement of the worker,” said Michael McGee, Nypro’s director of technology.

This is the march of progress. It eliminates bad jobs, empowers good jobs, but always demands more skill and creativity and always enables fewer people to do more things. We went through the same megashift when our agricultural economy was replaced by the industrial economy in the late 19th and early 20th centuries. Therefore, what this election should be about is how we spawn thousands of Rethinks that create new industries, new jobs and productivity tools. Alas, it isn’t. So I’m just grateful these folks here in Boston didn’t get the word.
What can I really say at this point? Does anyone on earth take Friedman seriously anymore? I guess we're still waiting for those good jobs. And as for the new educated workforce that's going to prosper using all those robots, Friedman's earth-based colleague at the Times has a reality check:
 • Half of U.S. children get no early childhood education, and we have no national strategy to increase enrollment.

• More than a quarter of U.S. children have a chronic health condition, such as obesity or asthma, threatening their capacity to learn.

• More than 22 percent of U.S. children lived in poverty in 2010, up from about 17 percent in 2007.

• More than half of U.S. postsecondary students drop out without receiving a degree.

Now compare that with the report’s findings on China. It estimates that “by 2030, China will have 200 million college graduates — more than the entire U.S. work force,” and points out that by 2020 China plans to:

• Enroll 40 million children in preschool, a 50 percent increase from today.

• Provide 70 percent of children in China with three years of preschool.

• Graduate 95 percent of Chinese youths through nine years of compulsory education (that’s 165 million students, more than the U.S. labor force).

• Ensure that no child drops out of school for financial reasons.

• More than double enrollment in higher education.

And the report also points out that “by 2017, India will graduate 20 million people from high school — or five times as many as in the United States.”

As I have mentioned before, a book written last year by Jim Clifton, the chairman of Gallup, called “The Coming Jobs War,” pointed out that of the world’s five billion people over 15 years old, three billion said they worked or wanted to work, but there are only 1.2 billion full-time, formal jobs.

As if to underscore that point, the Center for American Progress pointed out that “between 2000 and 2008, China graduated 1.14 million people in the STEM, or Science, Technology, Engineering and Math, subjects; the United States graduated 496,000.”

But instead of dramatically upping our investment in our children’s education so that they’ll be able to compete in a future that has more educated foreign job seekers, we seem to be moving in the opposite direction. A White House report issued last Saturday noted that:

“Since the end of the recession in June 2009, the economy lost over 300,000 local education jobs. The loss of education jobs stands in stark contrast to every other recovery in recent years, under Republican and Democratic administrations.”
Starving The Future (Charles M. Blow)

Thankfully, nearly all the comments do a terrific job of shredding Friedman's (and Mish's) arguments. Be sure and click on the Reader Picks tab – it’s much more informative than reading the actual column. Just for starters:
Two questions:

(1) Will the number of higher-skill jobs created equal the number of low-skill jobs eliminated?

(2) Will the higher-skill jobs created pay more than the low-skill jobs eliminated and just where will the net increase in revenue to pay those higher salaries come from?

I guess that's three questions. Sorry.
    Bob Hanle
    Madison, WI
Oh great, just what we need. Now, instead of just needing to go to school until you're 28 to get a Masters in SuperNewJobOfTheFutureEngineering so you can finally get a decent job, you'll have to go BACK to school when you're 32 to get a degree in Uberrobotics Programming so you can get a different decent job. That job will last until you're 40, just long enough to think it's safe to have a couple kids and finally start paying off your education loans. By then, there'll be a NEW new technology which will require you to go back to school AGAIN to get re-re-educated in something else, leading to a couple more years of fearful unstable living, and of course more thousands of dollars in student loans, so that hopefully you can get one of the 15 jobs left out there, if one of the other 200 million PhDs in roboto-electrico-engineero-therapeutics don't get it first. By the time our kids are our age, they'll have to go to school for 50 years just to get their first job.

    Baltimore, MD
I hesitate to write this because I know it will be misunderstood. But I am sick of technology, sick of "innovation" for the sake of "innovation." Sick of competition to make jazzier toys, more necessary gadgets, more ways for corporations and government to control out lives. Tell me about people finding cures for disease, helping the disadvantaged, composing beautiful music, writing poetry. Don't tell me about the umpteenth amazing gadget I'm going to be expected to buy.
    New York
Unless we decide to practice eugenics (Ugh. Gataca, anyone?), the fact is that many people don't have the intellectual horsepower to do anything other than low-skilled jobs.

Most of us don't have the intellect to do the kind of work being done at CERN, in high tech incubators & start-ups, at MIT & Cal Tech, etc. I'm not stupid, but you could train me until the cows come home, and I'm never going to be a competent particle physicist. Add to that, many of us don't have the native intellect to function well in complex administrative and technical roles in a typical office setting.

Sure, nurture counts, but all the education in the world won't turn a person of below-average intelligence into a person who'll succeed at complex and intellectually demanding tasks.

It's all well and good for those with above-average intellect and a good education (the two don't always go together) to cheer the loss of low-skilled jobs. But there are people who, with all the dedication and training in the world, can do only those jobs.

We can't train our way out of the central question, which is what will become of all the people on this earth who don't have a role to play in the creative and productive activities that contribute to a solid, sustainable, knowledge-based economy? That excess population exists now and will only grow in the future, as our population soars and automation eliminates more and more "low-skilled" jobs. What are we going to do about it? 
    SF Bay Area
"The PC did not get rid of secretaries but changed what they did." Sir, you must live an isolated life. Secretaries went from one per VP/executive to one per six five years ago and are now virtually non-existent. As Vonnegut foresaw in Player Piano in 1953, technology will make most humans obsolete in most workplaces. The engineers and executives and consultants and analysts are next at risk. In the end, as Vonnegut imagined, there will be a few very rich and many very poor and unemployed. Those of us in the second category will be relegated to comforting and entertaining one another. Might as well get good at it.
And so on...

Again, I actually wish someone would prove me wrong on this. I really do. Tell me exactly what will generate large numbers of well-paying jobs (100,000+ per month just in the US alone) all over the world that the average person can do that provide a good or service that will improve our lives (i.e. not fraud). What is it? What industry? Where is your proof and your numbers? Until then, I think wishful thinking will just keep coming as society deteriorates around us.

Lagniappe link:

* For more about this that - a few paragraphs from this article illustrate the point well:
The debt collection industry is huge in Buffalo and has been for almost twenty years.  There are approximately 5,000 bill collectors and over 100 agencies in Buffalo.  Buffalo, a working-class legacy city with a population of 260,000 and falling, is not the manufacturing mecca it was in the 1940s.  Manufacturing has slowly disappeared over the last thirty-five years and the city has struggled to find a new identity and defined purpose.  Buffalo is a remarkable place with many and varied cultural attractions, distinct architecture and great restaurants, but the high cost of doing business along with high taxes, corrupt poltics and inhospitable winters outweigh the less obvious virtues and discourage industries from situating here.

At its peak, Bethlehem steel employed almost 20,000 people in a massive facility not far from the shores of Lake Erie.  That facility is a brownfield now and Buffalo’s economy is scattered and unmoored, corralling a large working-class with dim prospects, low income and less resources to fund the aging and oversized infrastructure in the absence of large-scale manufacturing.  The call center economy proliferated in Buffalo largely because of cheap and available workers and office space, the sorts of incentives that don’t entice reputable, growing industries to the area.

Collection agencies and call centers have replaced some of the jobs vacated by manufacturers, but the compensation is far less and the jobs themselves are unstable.


  1. Go ahead and delete my comment for rudeness, but you've been taking stupid pills again and therefore I'll have to slap you again. There is no more physical reason for a shortage of jobs or of money than for a shortage of zeroes or of the letter "e", such that we can't count past 9 or say words like "thE". The ruling class may decide to create a shortage or money or jobs, for some reason, or they may decide to create a surplus.

    The medical/industrial complex alone could provide full employment for the entire world. Do you have any idea how many people it takes to keep a decrepit 90-year-old with multiple organ failures alive for another year? I call this the Terry Schiavo economy and we are busy building it right now. Millions of brain-dead elderly and defective babies kept alive on life support in the zombie wards (at least one such zombie ward per Congressional district, naturally) providing jobs for all who want them. I can already hear the testimonials: "Those so-called defective babies are the best damned thing that ever happened to this county. God must have wanted this to happen. Praise the Lord for bringing those defective babies! And shame on evil liberals for suggesting those defective babies should have been aborted instead of kept alive on life support!" "But what about the lack of money?" you shriek. Didn't I tell you to stop taking those stupid pills? There is never a shortage of money. Just print it up. The rich don't care, or shouldn't care (the current fetish about the deficit is just a way to mislead the lower-class Republicans. Wait until the Republicans are in power and, once again they'll start talking about how "Reagan proved that deficits don't matter", as Dick Cheney put it). Money spent caring for the poor ultimately circulates and comes to a resting spot in the only place money can come to a rest--the pockets of those who save rather than spending everything they make. That is, the creditor class, aka the rich. The more money that is printed, the more money that ends up in the hands of the rich. (This, by the way, is why corporate profits are so high right now. All other things being equal, massive government deficits necessarily imply massive corporate profits according to the Keynes/Kalecki equation.)

    Alternatively, the rich might decide not to build this Terry Schiavo economy. Instead, they allow the poor to starve. The poor revolt, in which case there is plenty of work for security forces to keep the revolt under control. Possibly the poor will be imprisoned, providing jobs for guards, or possibly they will be exterminated, at which point the security forces will be laid off and become the new poor and start a new revolt, more exterminations, etc. Eventually, the population will decline enough to eliminate the surplus of labor.

    The Terry Schiavo economy is the path of least resistance, but I'm sure you'll focus on the dystopia solution rather that getting to work fixing your own financial future rather than bloviating. That's what this blog is, isn't it? A projection of your own lack of money onto the universe, a projection of your own uselessness to your current employer onto labor in general.

    The current high unemployment will continue for perhaps 5 more years, and then the postponed deluge of boomer retirements begins and the shortage of jobs will turn into a shortage of skilled workers. People won't defer gratification forever. The employment boom will be accompanied by high inflation and massive shortages of medical care (for everyone except the rich). Expect year long waiting lists to get non-emergency treatment, and expect healthcare industry employees to be rude and with no concern for your well-being. Why should they care? With jobs available everywhere, they can't very well be disciplined by the threat of being fired. As for the unskilled workers, they'll go on the dole or provide jobs in the prison industrial-complex, same as always.

    Use your brain.

  2. I'll leave your comment up as it's a testament to your own boorishness and lack of civility. I assume you respond this way because you can hide behind the anonymity of the internet, and if we were speaking face-to-face, I assume you would show more respect. If not, you must be an angry, lonely person. I cannot tell from the coherent parts of your comment how much you are serious or how much you are in jest, but you do make some important points.

    In fact, the growth of the health-industrial complex has been responsible For a huge amount of job growth over the past decade or so. But is it sustainable? Driving around town I lost count of the billboards advertising "become a nurse", and in fact I have said in the past that nurses and engineers are going to be the only jobs that exist in the future (a slight exaggeration, but not by much).

    Your point about not running out of money is exactly correct and a point I've made many times. Money is a measurement, and as Alan Watts put it so well, we can no more run out of money than builders can not construct a building because they run out of inches. However, what's important is how we define rules about how money is created, who gets it, how it flows, and how it is balance with actual resources. This is obvioully a big issue and beyond the scope of this post. The fact that money always ends up in the pockets of those who save rather than spend is a point worth highlighting. This is why Federal Reserve policies are inadequate, as others have noted...(cont'd)

  3. Your asessment of "health care" is basically correct in my observations. It is not health care per se, but heroic, highly technical intervention to keep the old and the sick alive as long as possible by any means necessary. There is no purely economic rationale for this. These patients will never "get better." It's also worth noting that those who need the most intervention are almost always the least able to pay for it (the poor and elderly). How do you build and economy around that? Really, massive socialism is the only way, which is how we currently do it. The mechanism of insurance makes this appear to be capitalism, but it's a lie - you can't "insure" against something that's 100% guaranteed to happen to everyone - getting old, etc. It's really just a transfer masquerading as insurance with a HUGE cut taken by the middleman, and we lie to ourselves claiming we don't have sociaized medicine. We do, it's just private industry running a racket by gouging the rest of us because they can (on a side note, all insurance is a form of socialism - everybody pays in, only certain people collect, and risk is distributed more or less equally. I assume "Tea Party" members carry no insurance of any sort).

    I may borrow/steal the phrase "Terry Schaivo economy". This is in effect what we have now, but it cannot continue. This sort of arrangment is completely unsustainable under the current economic paradigm. This can mean only two things - it will either collapse or the paradigm (profiteering private health firms growing fat on government lagesse stangling the productive economy) will change. This will present a major challenge to the foundations of capitalism itself - will people just stand by and watch their loved ones die because they cannot afford health care? The GOP is betting that they will. It's all well and good to vote Republican as long as the swag keeps coming.

    What you're talking about is essentially a Keynsian program to prop up the economy with healthcare spending. Will that work? Printing up money for nonproductive, nontradable services is not much of an economy. It sounds like the old proverbial economy where everyone takes in each other's laundry (i.e. the 'service' economy). I doubt there is the political will to make that viable.

    I was planning a post on this, and your points helped my clarify my thoughts. I may also digress into my lack of pay and uselessness to my employer, since that is, after all, the driving factor of this blog, no? Again, maybe you want to stop reading if this pisses you off so badly.


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