Andrew McAfee: Race Against the Machine

Andrew McAfee, coauthor of Race Against the Machine did very interesting TED talk recently on the subject of his book, overlapping heavily with the subject of this blog. The first half of the talk does an excellent job of stating the problem. He demonstrates how businesses are profiting more than ever today, investing in technology more than ever -- but are not hiring. He also talks about how various technologies are starting to catch up and even eclipse humans in cognitive tasks such as translation and writing grammatically-perfect articles, and that 'we ain't seen nothing yet'.


Oddly, while demonstrating that 'droids are coming for your jobs' he also claims that current debate on 'whether these technologies are affecting people's ability to make a living' is 'missing the point entirely'.

For the millions of people people losing their houses to foreclosure, shuffling in the dole queues and soup kitchens, collecting paltry benefits, wallowing in depression and freezing in alleys and tent cities I would say the concern about losing income is exactly on point and in need of urgent focus. Is he saying that we ought to just wait out the storms in a 'laissez-faire' kind of manner and that the problems will spontaneously sort themselves out?

Unfortunately, I think so. He doesn't offer anything in the way of suggested actions and decisions we could be making. Instead, his talk pivots half-way through onto an optimistic feel-good frame which I think has shaky foundations. He points to one good aspect of technology at the bottom of the pyramid -- citing a study of poor rural fishing villages leveraging the power of cell phones to improve their knowledge of the market situation and reduce waste.

Yes, we know that human productivity rises when technology is introduced, and it's initially a huge benefit to independent workers. But what happens when poor fishermen with creaky boats come into competition with hyper-efficient automated fishing operations? On land, where robots have a surer footing, we can see how small, poor farmers suffer in competition with gigantic, scaled and highly automated agribusiness.

A time when hands are not needed to steer the ship and haul the fishing nets can't be too far away, as these are pretty routine tasks, and there's plenty of research going into ship automation. With no income stream to leverage,  information carrier technology becomes increasingly useless, not to mention unaffordable (in the current consumer paradigm).

I'm too am hopeful that technology will benefit the neediest in the world. We know of it's potential, but we can't afford to think that technology will steer itself to that end without heavy political upheaval going on of some kind or another. That's the missing step in the transition that too few people (and almost no prominent futurists and economists) are willing to talk about -- including myself, for now.

Can We Really Depend on Hi-Tech Start-Ups to Power Future Employment?

Many who refute the coming obsopocalypse argue that displacement by technology simply frees people up to do new jobs in more cutting-edge ventures -- ventures often created by the very same disruptive technology. Obviously there new businesses and new jobs categories pop up all the time -- but the related jobs are just not being created in large enough numbers any more.
 
The Kauffman Foundation produced an excellent study last year Starting Smaller; Staying Smaller, America's Slow Leak in Job Creation detailing how new start-up businesses have become increasingly poor engines of employment.

From the report:

''Even before the Great Recession, firms were starting smaller. They were opening their doors with fewer workers than the historic norm and were relatively reluctant to expand their workforces even during good economic times. Since at least the middle of the last decade and perhaps earlier, the growth trajectories and survival rates for these businesses meant that they were contributing fewer and fewer new jobs to the  economy.
[...]
Media and academic commentators who bemoan America’s unusually slow rate of job creation after the 2007–2009 recession are missing what we believe is a longer-term trend that began earlier in the decade and might best be called a slow jobs “leak.”
[...]
In many cases, companies or individuals that once would have been hired as employees of a business now are performing the work on a temporary basis as contractors through other professional service organizations or under their own self-employment contracts. These individuals, while sometimes characterized as "entrepreneurs,” are not likely to employ others or to reach significant scale".

Some of key trends from the report:
-The number of new start-ups has declined significantly in recent years
-The percentage of the new business that are providing jobs for other people (other than the founder) is decreasing -- there's a huge rise of one-person businesses.
-The average number of employees per new business has been declining since 2002 (when 10.8 would be employed) to less than 8 now
-Fewer new businesses are surviving more than 5 years
-Of  the businesses that survive their initial years, and go on to grow their operations, job growth is now slower than the historic norm

The extinct switchboard operator

The report refrained from speculating on the causes of the job growth leaks compared to previous decades. To me, and I believe to anyone who gives it 5 minutes thought, the story seems quite obvious. The timeline completely coincides with the computer revolution, and the growing use of computers makes an increasing number of former roles redundant.

The precipitous decline in job creation of contemporary start-ups is an entirely predictable result of technological development. Advancing technology, especially IT tools in the past 2 decades, increases worker productivity, allowing companies to do more with less workers.

For example, secretaries, data entry staff and even accountants are found less and less in new companies. The notion of a human secretary at a desk could soon seem as quaint as telephone switchboard operators today.

On Software Automation (and Dilbert)

Serious point to these comics -- automation used to be mainly associated with manual tasks, but we've seen a steady march into elements of office service work that secretaries, call centre operators, bank tellers etc. used to do. In many companies now, even CVs and job applications are being read and discarded automatically by clever software identifying the best fits, so that only a shortlist, a fraction, of the applications is passed to a human for the final decision.

Pretty much any clerical task that can be done using a computer or network can be automated by sufficiently advanced software. Because software is replicable, it is stunningly cheap compared to hiring human brains. Unlike machinery and people, software does not really wear out over time, and it is can be very quickly upgraded. Institutions in the service sector are becoming increasingly lean with IT technologies, a trend that started in the early 90. This is probably why the disruptive start-ups of the internet age don't create as many jobs as they destroy.

Anyway, I've always loved Dilbert, enjoy :)




 



(From Scott Adam's Dilbert cartoon,  www.dilbert.com)

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)

Which Sci-Fi Writer is Going to Address the Real Robot Threat?

When I saw the link advertised by the University of Texas at Dallas advertising ‘sci-fi writer explores fears of human obsolescence’, I was super-excited. Science fiction writers tend to have more imagination than economists. The talk was advertised thus:

‘As smartphones get smarter and computers get faster, humans, who err and just get slower with age, seem to be almost superfluous at times.  But award-winning science fiction novelist Robert J. Sawyer isn’t overly worried.’

I believed I was in for a treat, even if Sawyer was going to disagree with the concerns about the obsopocalypse. I am happy to have my views on this topic challenged in a thorough meaningful way.

Well the talk was good, but very disappointing with regards to the subject I hoped he's explore. Regarding the rise of machine intelligence and robots he focused on three key threats that make for compelling action movies:

1. Intelligent machines exterminate us (as in the Terminator movies)
2. Intelligent machines subjugate us (as in The Matrix movies)
3. Intelligent machines absorb us (as in the Star Trek's Borg threat)

 He makes the argument essentially that, since machines will not be formed in a competitive environment (such as the world we evolved in), machines will not have human sadism, thirst for conquest etc. 

But never does he deal with the fourth threat, the one that the talk appeared to be focused on:

4. Intelligent machines will have absolutely no consideration for us; they will simply replace us in the workforce while our economic prospects plummet.

I can't think of any analogous movies. The story is  too grim .

The real threat?

There’s also a hole in his argument about AI motivation, I feel. While denying that intelligent machines will have any bent for violence and domination, he also states that they will wish to keep humans around even if they attain a ‘god-like’ power because we are ‘creative’, and the ‘only things it can’t predict’. It will be fascinated with our culture and media, such as our YouTube videos and will enjoy absorbing as much as possible of everything we produce. This assumption, however, rests on the basis that the AI is curious, finds chaos relaxing, and has other human traits. Its not at all clear why an AI wouldn't see a lot of our creation as  spam.

And what if, instead, the sophisticated AI of the future is designed to be an emotionless sergeant of control (as many intelligent military/corporate systems are today), its only motivation being to further the interest of its powerful owners? Such an intelligence, sufficiently powerful, might indeed watch your YouTube videos, not to enjoy your humorous contributions to the noosphere, but rather to assess if you are an obstacle to it's master's plans, and to determine your weaknesses.

Nevertheless I’d recommend watching the talk on other grounds. He has an interesting notion that general A.I. will emerge spontaneously, by accident, once software reaches a certain point of sophistication, without us even realizing it.

Growing Mainstream Acceptance of Human Displacement by Tech

A great article from the Economist Magazine -- it's unusual to see this magazine question the standard market ideology.
Difference Engine: Luddite Legacy

From the article:

'[I]f the pace of technological progress is accelerating faster than ever, as all the evidence indicates it is, why has unemployment remained so stubbornly high—despite the rebound in business profits to record levels? Two-and-a-half years after the Great Recession officially ended, unemployment has remained above 9% in America. That is only one percentage point better than the country's joblessness three years ago at the depths of the recession.'

[...]

'[There] is the disturbing thought that, sluggish business cycles aside, America's current employment woes stem from a precipitous and permanent change caused by not too little technological progress, but too much. The evidence is irrefutable that computerised automation, networks and artificial intelligence (AI)—including machine-learning, language-translation, and speech- and pattern-recognition software—are beginning to render many jobs simply obsolete.'