Sunday, August 2, 2015

Rise of the Robots

You remember all those science fiction movies where robots run things?  They seemed pretty far fetched at one time, but lately not so much.  In the past various technological breakthroughs have disrupted business and society, but after a few adjustments our standard of living rose and everyone seemed to find a job that helped pay their bills.  Times are a changing.  Martin Ford helps explain in "The Rise of Robots."

You could always get a job maintaining the machine.  People would be paid enough salary they could afford to buy other things and keep  other people working.  We are rapidly evolving towards where less and less people are needed to even watch a machine and wages will not be enough to generate enough spending for other jobs.

To illustrate how the situation is progressing, Martin quotes from an American government study covering the years 1998 to 2013.  In that period when the American population climbed by millions and the GDP went up $3.5 trillion (allowing for inflation) but the hours worked were the same for both 1998 and 2013; 194 billion hours.

Computers can analyze immense details using the cloud and are becoming increasingly analytical, creative and replicable.  Their judgment is being considered more reliable in some cases than human judgment.  Artificial Intelligence has had many false starts, but is progressing.  Robots will have access to incredible amounts of information and have ever increasing abilities to sort through, analyze and make decisions.

Reading the news one can see future conflicts.  A much greater ability to automate fast food already exists, but has been put on hold partly for the availability of cheap labour.  With talk of minimum wages going to $15 an hour attitudes will change.  Automation also has the advantage of being perceived as more hygienic.  Education and health fields are perhaps the most difficult for automation, but already inroads are being made.

60 years ago some of my public school teachers were predicting a world taken over by robots, but they saw it as creating a leisure world for the masses.  Today the bottom line is that the robotic revolution will increase profits for those at the top while those at bottom will have great difficulty in getting a job and most jobs will have lower wages.  The rate of change is very likely to accelerate.

Martin Ford takes on myths.  Too many economists (and others) see a (distant) problem, but take it for granted that society will adjust with only minor concerns.

China is supposed to pick up the consumption slack, but with one child policy they are aging rapidly--women are scarce and men have to save up money to attract marriage partners.  They too are replacing cheap labour with robots.

Demographics with aging population will release job opportunities for the young.  Actually robots have been snapping up opportunities faster than graduates are available.   In Japan with the most aging population, robots are becoming critical.  A personal investment in Honda was predicated strongly on this idea as they are among the world leaders in robotics.

Education is not the solution envisioned by politicians.  First most jobs are repetitive and computers are taking over more and more tasks not only of the repetitive jobs, but now encroaching on the territory of professionals.  In fact we also have is credential creep, meaning education is just moving the bar on job qualifications without actually being necessary for performance.

While some are touting the role of the job creators others see a different reality.  Investors and business owners are looking to minimize the cost of labour.  Off shoring is only one concrete indication and robotics is an even bigger force.  When people lose a job, when their wages are diminished, when the future seems uncertain (job creators are supposedly concerned about uncertain regulations), when credit dries up, people stop spending.  When that happens business slows down.  A more basic problem become how to distribute purchasing power.

Henry Ford is credited with paying his workers enough in wages to actually buy one of his cars.  Robots don't buy anything, although they do consume maintenance.

The author's suggested remedies will run up against the party of the status quo, otherwise known as Republicans (and they have their counterparts in the rest of the world.)  Change is discomforting to the status quo, even though we are all part of the change.  Those at the top want to stay on top, those on the bottom are scrambling not to lose their ranking in the pecking order.

Guaranteed income in one form or another should be adopted.  It needs to be set to be liveable, but not to eliminate incentives.  Martin suggests education could warrant higher pay, even if just to have more productive leisure time.  Taxpayers contributed to research leading to technology innovations  (http://www.johnfdavidson.com/2015/07/the-entreprenurial-state.html) and that fact can help rationalize the guaranteed income as a dividend.  A safety net does not just make some people lazy, it also gives others the confidence to take a risk that could result in necessary innovation.

Martin refers to Thomas Piketty's book and adds that robotics could just accelerate inequality.

Those in power have never been in a better position to consolidate their power, but many concerned citizens and voters can impose a different perspective.  Unemployment (and under employment) are top of mind for voters and vested interests can manipulate government bodies to bend to their will.  At the same time climate change can be tackled without losing a lot of jobs (but losing profit for those invested in fossil enterprises), but again can end up being part of legislative blockage.  A lot of choices to be made.  We all need to be better informed.  This book deserves a lot of attention.

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