Wednesday, 25 July 2012

The Messenger: Martin Ford

I doubt that the threat of job displacement by automation is far from the minds of millions of workers globally. But if you were to base your opinion solely on what the majority of economists, captains of technology, and futurists are saying you would probably miss the story completely. Technological unemployment does not loom large on the mainstream radar, just as wealth inequality was a non-issue until popular unrest exploded onto the streets in recent years.

One exception to the prevailing  myopia is Martin Ford whose timely book Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future  is probably the best extended analysis on the issue to come out this decade.

As a business owner of a tech company, educated and experienced in software trends and economics, Martin Ford is well placed to properly observe the effect of technology on the future economy. More so, perhaps, than the specialized economists and futurists who disagree with him. His breadth of understanding in both fields is evident from the manner in which he anticipates arguments from all quarters.  

Ford has clearly taken pains to make his book accessible to the public in an effort to raise consciousness on the issue. Without oversimplifying the issues, the book is written with enough clarity that even those unfamiliar with economic and technological trends are sure to find this an absorbing read.

Since his tightly-written arguments are difficult to summarize without loss, I'd rather his work speak for itself. Here are a few key snippets (slightly out of order) from Lights in the Tunnel which lay out the core of the problem. He has a lot more to say, so do read the whole thing if you get a chance.

From Lights in the Tunnel:

On The Growing Reach of Automation

‘The continuing advance of computer technology along a geometrically increasing path and the diminishing returns from investment in education seem to make a very strong case that the average worker—and perhaps many above-average workers—are in clear danger of having their jobs automated’. (p 54)

‘The conventional wisdom as generally presented by economists and other analysts is that technology creates jobs. While history has shown that this is indeed true, it also shows quite clearly that the new job types created by technology are very often themselves quickly vaporized by the same phenomenon. The IT jobs that are now being offshored and automated are brand new jobs that were largely created in the tech boom of the 1990s’. (p 57)

‘The fact is that the vast majority of our workers continue to be employed in traditional jobs. The new job types created by technology represent a relatively small fraction of employment and […] often tend not to last very long. (p 61)

‘[E]ntire traditional job categories are at risk of being heavily automated in the not too distant future. To suggest that technology is going to somehow create completely new job categories capable of absorbing millions of workers displaced from traditional jobs is pure fantasy’. (p 62)

‘The specter of near fully automated supermarkets and chain retail stores is cause for genuine concern. These are now the jobs of last resort. These are the jobs that workers displaced from other industries take because there is nothing better available’. (p 79)

‘For knowledge workers, there is really a double dose of bad news. Not only are their jobs potentially easier to automate than other job types because no investment in mechanical equipment is required; but also, the financial incentive for getting rid of the job is significantly higher’ [because of the larger salaries]. (p 73)

On the Decline of Consumption and it’s Consequences

‘As a growing percentage of the population is exposed to direct evidence of ongoing job losses, many people will begin to experience a greatly heightened level of stress and worry. Facing this, individuals will take the obvious action: they will cut back on consumption, perhaps quite dramatically, and try to save more in anticipation of a very uncertain future’. (p 109)

‘In essence, we have succeeded in globalizing labor and capital, but we have really not globalized consumption. To a large extent, workers in low wage countries are not capable of purchasing the goods they are producing’. (p 113)

There is no incentive to produce products if there are no consumers with sufficient discretionary income to purchase those products. This is true even if intelligent machines someday become super-efficient producers. […] If we consider the singularity in this context, then is it really something that will necessarily push us forward exponentially? Or could it in actuality lead to rapid economic decline? (p112)

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