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What Happened? - Automation

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In the distant future, no one needs to work. Energy is available wherever people can set up a solar panel, windmill, or hydro-turbine. Artificial Intelligence (AI) units, distant descendants of today’s 3D printers, are capable of producing anything a person can program into them. Just by asking, anyone can have anything they want. People trade energy credits or donate energy to projects that interest them.

See for example HBR on "Computers Create Jobs and Inequality at the Same Time".

 

This is the post-labour economy imagined by today’s sci-fi writers. Indeed, science fiction has been speculating on what post-labour economies might look like for more than 100 years, In a post-labour economy, people don’t need to work in order to live or access goods. In fact, work has nothing to do with wealth or value.

 

But sci-fi authors are no longer the only ones interested in the post-labour economy. Recently, economists and political theorists have been debating what shape the system might take and grappling with the challenges that it will present. They need to find answers quickly – as for some, the post-labour economy is almost here[1].

 

The accelerating improvement in the dexterity, agility, versatility, and intelligence of robots raises a number of hard questions about the future of human society. Employees in increasing numbers of professions find themselves under threat of being displaced by robots, algorithms, and other AIs. The pace at which existing professions are being disrupted and transformed by new technology looks set to outstrip the speed at which humans can re-skill and re-train.

 

According to the Director-General of the International Labour Organisation[2]:

 

  • Already, every year, an additional 200,000 industrial robots come into use. In 2015, the total is expected to reach 1.5 million. Adapting the labour market to a world of increasingly automated workplaces will be one of the defining challenges of our era.

 

  • No country can afford to ignore this transformation. Globally, some 200 million people are unemployed, up 27 million since 2008. There is a critical need to anticipate coming technological changes and provide the global workforce with the education and skills needed to participate in the modern labour market.

 

  • By 2050, the global population will surpass nine billion. The number of people aged 60 years and over will have tripled. Three-quarters of the elderly will be living in what are now developing countries, and the majority of them will be women. These demographic shifts will further revolutionise the labour market, social-security systems, economic development, and the world of employment.

 

He concludes that in addition to training the labour force for an age of further automation, sustainable economies must offer protections for workers in good times and bad. The nature of a worker’s relationship with his or her employer is changing. People entering the labour market are increasingly finding only short-term or temporary contracts; often, they are forced to take informal work or emigrate for a job. These trends are exacerbating income inequality.

 

As a result, mitigation policies are necessary. Along with a robust system of unemployment benefits, social protections such as healthcare and pensions are essential for overall worker security and to ensure a healthy economy. And yet only 20% of the world’s population has adequate social-security coverage; more than half lack any coverage at all.

 

In response, a group of London Futurists recently assembled an international panel of writers with important things to say on the subject of the future of work (see video for detailed discussion of their ideas).

 

However, this is a topic on the minds of not only futurists, but also increasingly of business leaders. Indeed, the 2015 World Economic Forum in Davos discussed how artificial intelligence (AI) has the potential to solve difficult social problems, help us think faster and become more efficient, but the impact on our daily lives will be pronounced, so how do we reap the benefits while avoiding negative consequences?

 

 

 

Technology can now do many more things that used to be unique to people[3]:

 

  • Rethink Robotics’ Baxter, a dexterous factory robot that can be programmed by grabbing its arms and guiding it through the motions, sells for a mere $25,000 (equivalent to about $4 an hour over a lifetime of work, according to a Stanford University study).

 

  • ISOFT’s Amelia, a virtual service desk employee, is being trialled by oil industry companies, such as Shell and Baker Hughes, to help with employee training and inquiries.

 

  • Meanwhile, doctors are piloting the use of Watson, IBM’s supercomputer, to assist in diagnosing patients and suggesting treatments.

 

  • Law firms are using software such as that developed by Blackstone Discovery to automate legal discovery, the process of gathering evidence for a lawsuit, previously an important task of paralegals.

 

  • Rio Tinto’s “mine of the future” in Western Australia has 53 autonomous trucks moving ore and big visions for expansion.

 

  • Even the taxi-sharing company Uber is in on the act – it has just announced it will open a robotics research facility to work on building self-driving cars.

 

The upshot will be many people losing jobs to software and machines, says Silicon Valley-based futurist Martin Ford, whose book The Rise of the Robots comes out this year[4]. Meanwhile, nearly half of almost 2,000 experts recently surveyed by the Pew Centre said technology will have displaced more jobs than it creates by 2025.

 

Indeed, the UK Sunday Times suggested recently (February 2015) that Amazon, for example, creates less employment than it creates, notably in retail. One study reportedly suggested that the company employs only 14 people for every $10m in sales; a high-street chain would employ 47 people for the same sales.

 

Ford’s book follows last year’s influential The Second Machine Age by Erik Brynjolfsson and Andrew McAfee, business school academics at the Massachusetts Insitutute of Technology (MIT) Sloan School of Management. They also warned we face significant overall job loss from computers, robots and automation unless we institute radical change. There is no economic law that says technological progress has to result in job creation and shared prosperity, they say. Rather, we are about halfway into a century-long transformation that moves us from merely automating physical work to automating mental work, a process that started with the first computer boom in the 1970s. The effects are just becoming noticeable now because exponential growth by its nature takes time to build up.

 

Indeed, PwC has itself recognised this accelerating trend. The New Era of Automation report suggests, inter alia, that:

 

  • 53% of all occupations are estimated to be replaced by digital technology within the coming twenty years. That is almost 300 million jobs within the OECD-region.

 

  • Computers have already surpassed our abilities, in areas where we earlier had the “human advantage".

 

  • When the first machine age matured, processes began to change to really exploit the new technology – resulting in a tenfold productivity increase. We are now facing a similar shift in the second machine age, with the automation of knowledge work.

 

All the necessary technologies are already here[5], or will mature within the next 5-10 years and thus be readily available. Both the cost and barrier to automate will then go down rapidly. Early adopters and innovators have already begun their journeys and there is a strong momentum right now in certain areas. The speed will be different depending on industry and function, but all will go through it in one way or another.

 

Two new studies, one from a group of Oxford University academics, another from analysts at the Gartner Group, both say the invasion of the smart machines is coming quicker than most of us think

.

a) the Gartner Group release

 

b)The study from the Oxford Martin Program on the Impacts of Future Technology, says the same thing on a slightly different time scale. Their analysis shows that 45 per cent of American jobs could be taken by computers within two decades.

 

In short, our current economic model where rich people bring their capital and everyone else brings their labour may no longer work when the capital, in the form of robots and computers, is actually the labour too[6].

 

Indeed, an even newer report from the Oxford Martin School and Citi calls for long term thinking to mitigate the negative effects of an ever more automated and digital economy[7]. The latest Citi GPS Report, Technology at Work: The Future of Innovation and Employment, explores trends in automation and points to sluggish job creation caused partly by increasing automation. The report highlights the key challenges, explores some of the new technology brought on by the digital age and sets out an agenda for change, arguing that secular stagnation in the digital age can only be avoided by a shift towards inclusive growth.

 

 

 

 

Implications for businesses and individuals

 

 

As with all previous major technological changes, organisations and individuals will be affected. What is different from previous shifts is that the current one affects all aspects of a company's value chain. Both the individual and the organisation need to adapt to deal with this new shift. Possible responses include the following:

 

 

  • If competitors start to automate their processes, companies have a large incentive to keep up to be equally cost-effective.

 

  • The cost of classical means of outsourcing is increasing mainly due to higher labour costs in outsourcing countries. Together with reduced control when offshoring drives companies to find onshore alternatives – automation is an obvious candidate.

 

  • Many occupations are getting increasingly complex and more difficult for a human being to handle efficiently. Adding support through machines and technology could improve the efficiency and quality of these processes.

 

  • Talented individuals are becoming more difficult and expensive to attract and retain for organisations. Automation could therefore lower the pressure of finding people with highly specialised skills.

 

 

 

An individual will need to adjust him-/herself and his/her ability to be able to relate to and work with computers and software. As individuals, we will need to understand where we add value and where a computer can fulfil tasks without our supervision. What is routine and where do we make a difference?  We will also need to constantly review our abilities. Training and the ability to take on new and other roles will increase in importance.

 

 

 

Implications for society

 

The UN has warned[8] that global unemployment levels were expected to rise further over the next five years, and that by 2019, at least 212 million people worldwide could be out of work -- up from 201 million in 2014. This, the UN warns, could eventually contribute to “social unrest” among unemployed youth across the globe.

 

We may even already have seen social unrest as a result of people losing jobs to technology, through movements such as Occupy and the Tea Party.

 

The UN also found that that South Asia and Sub-Saharan Africa accounted for three quarters of the world’s vulnerable employment - referring to people in the workforce who are the least likely to have formal work arrangements and access to social protection programmes.

 

An Oxford University report published last year concluded that 35% of UK jobs were at high risk of disappearing in 10 to 20 years because of automation. An earlier study of the US, which has more manufacturing, suggested 47% of jobs were at high risk.

 

Yet the picture painted by the doomsayers does not resonate with many economists. Jobs will always be “destroyed” by technological change, says David Autor, an economist at MIT, citing how there are not many trained firemen (they shovelled the coal into steam locomotives), typists and lift operators left in advanced economies. But this has not reduced employment in aggregate or lowered earnings levels on average. It has done the opposite: raised productivity on average and led to more interesting, more cognitively challenging, better paid and less dangerous jobs.

 

For the IMF, part of the solution for a world with too much supply and too little demand needs to be public investment in infrastructure, which is lacking – or crumbling – in most advanced economies and emerging markets (with the exception of China). With long-term interest rates close to zero in most advanced economies (and in some cases even negative), the case for infrastructure spending is indeed compelling. But a variety of political constraints – particularly the fact that fiscally strapped economies slash capital spending before cutting public-sector wages, subsidies, and other current spending – are holding back the needed infrastructure boom[9].

 

Solutions?

 

The question for many then is what do humans do next?

 

Recommendations for policymakers include boosting entrepreneurs to enable them to invent the new industries and jobs necessary to replace the old ones and refocusing education to emphasise creativity and interpersonal skills.

 

Many float the idea of basic guaranteed incomes for everyone, or tax credits to supplement low-wage workers. In the UK, the Green Party is working on the idea of “citizens’ income”, and the Swiss population already held a referendum on a national minimum wage in 2014 (though rejected, many expect the topic to arise again soon, in Switzerland or elsewhere).

 

There are optimists too of course, as this imagined headline from 2025[10] well illustrates.

 

With robots paying labour tax, the 99% can be as idle and as comfortable as the elites

Dateline: 4 July 2025

We're living in the age of abundance. The age of the algorithm. The age of... well, automated utopia.

Who would have thought that this soon, with machines doing all the work, we would also have found the solution to technological unemployment? The point is, just as horses became unemployable with the invention of engines, so humans became unemployable in the age of seriously smart machines.

We call it "Roboearth." When a robot arrives from the factory, it's essentially lifeless; it can't do anything useful. But once it's powered up and connected to the robot internet, it can find out how to do anything, from the cloud. So it doesn't need any programming.

Again comes the question: If we don't need human programmers, and even the robots are designed by algorithms and built and maintained by robots, what do people do?

The solution was to tax the robots. Their labour tax goes towards providing everything that humans need for their daily enjoyment of life. Sure, if you want something more than Roboearth normally provides, you have to get up and get creative, really inventive, and invest in something even the algorithms haven't thought of. Something analogue. Then you can charge your own form of 'tax' on the machines.

For the rest of us, it's just, well, so simple. Or is it? Who's really in charge here? Us or the machines?

 

 
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